EXHIBIT 10.27
LEASE AGREEMENT
THIS LEASE AGREEMENT ("LEASE") is made and entered into as of the date
on which the last one of Landlord and Tenant has executed this Lease, by and
between WALT DISNEY WORLD CO., a Florida corporation authorized to transact
business in the State of California (hereinafter referred to as "LANDLORD"), and
BUILD-A-BEAR WORKSHOP, INC., a Delaware corporation authorized to transact
business in the State of California (hereinafter referred to as "TENANT").
W I T N E S S E T H :
WHEREAS, Landlord owns or leases that certain parcel of land lying and
being in the City of Anaheim, Orange County, California, commonly known as the
"THE DISNEYLAND RESORT(R) PROJECT";
WHEREAS, Landlord (or its Affiliates) is developing within THE
DISNEYLAND RESORT(R) PROJECT a certain retail, dining and entertainment complex,
which is currently known as "DOWNTOWN DISNEY(R)";
WHEREAS, among other things, Landlord intends that the retail, dining
and entertainment facilities of DOWNTOWN DISNEY(R) be of a completely
first-class nature and operation, consistent with the quality and operating
standards of THE WALT DISNEY COMPANY including, without limitation, THE
DISNEYLAND RESORT(R) PROJECT;
WHEREAS, Tenant wishes to lease a portion of a building within THE
DISNEYLAND RESORT(R) PROJECT for the operation of a first-class, high end
specialty retail store selling make-it-yourself plush teddy bears and other
animals and accessories for such teddy bears and animals, all in accordance with
the requirements of this Lease; and
WHEREAS, the parties wish to enter into this Lease for the aforesaid
purposes, subject to the terms and conditions hereinafter set forth.
NOW, THEREFORE, for and in consideration of the terms, covenants and
conditions herein contained, the sums of money to be paid hereunder, and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged by each party hereto, the parties agree as follows:
1. DEFINITIONS; PREMISES; TERM.
1.1. Definitions.
For purposes of this Lease, the following terms shall have the following
meanings, unless the context requires otherwise:
1.1.1. "ADA" shall have the meaning set forth in Section 2.10
hereof.
* - Redacted Text - Confidential treatment requested; omitted portions have been
filed separately with the Securities and Exchange Commission.
1.1.2. "ADDITIONAL RENT" shall have the meaning set forth in
Subsection 3.4.1 hereof.
1.1.3. "AESTHETIC ASPECTS" shall mean, collectively, all
graphics, signage, partitions and materials (and the location thereof), finish,
color, texture, decoration, furnishings, fixtures, equipment, lighting, artwork
and landscaping (and the location thereof) affecting public areas, all
architectural designs (interior and exterior) for the Premises, site plans,
materials, furnishings and artwork (and the location thereof), both interior and
exterior, and all other aesthetic considerations for the Site, the interior and
exterior of the Improvements and the Furnishings.
1.1.4. "AFFILIATE" of a person or entity shall mean: (i) any
person or entity that, directly or indirectly, controls or is controlled by or
is under common control with such person or entity; (ii) any other person or
entity that owns, beneficially, directly or indirectly, ten percent or more of
the outstanding capital stock, shares or equity interests of such person or
entity; or (iii) any officer, director, employee, partner or trustee of such
person or entity, or any person or entity controlling, controlled by or under
common control with such person or entity (excluding trustees and persons
serving in similar capacities who are not otherwise an Affiliate of such person
or entity); provided, however, that Euro Disney SA. and Euro Disney S.C.A.
shall not be Affiliates of Landlord. For the purposes of this definition,
"control" (including the correlative meanings of the terms "controls,"
"controlled by" and "under common control with"), as used with respect to any
person or entity, shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of such
person or entity, through the ownership of voting securities, partnership
interests or other equity interests, by contract or otherwise.
1.1.5. "ANNUAL BUDGET" shall have the meaning set forth in
Subsection 23.1.2 hereof.
1.1.6. "APPLICABLE RATE" shall mean a per annum interest rate
which is equal to the lesser of; (i) * or (ii) the highest rate of interest
then allowable pursuant to applicable Law.
1.1.7. "APPLICABLE RULES" shall have the meaning set forth in
Section 1.7 of the Development Agreement.
1.1.8. "ATTRACTION" shall have the meaning set forth in
Subsection 4.10.2 hereof.
1.1.9. "AUTHORITY" shall have the meaning set forth in Section
22.2 hereof.
1.1.10. "BOOKS AND RECORDS" shall have the meaning set forth
in Subsection 3.3.1 hereof.
1.1.11. "BUSINESS DAY" shall mean any day other than Saturday,
Sunday or a day when most U.S. banks are closed.
* - Redacted Text - Confidential treatment requested; omitted portions have been
filed separately with the Securities and Exchange Commission.
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1.1.12. "CAPITAL BUDGET" shall have the meaning set forth in
Subsection 23.1.2 hereof
1.1.13. "CHANGES" shall have the meaning set forth in Section
4.1.5. hereof.
1.1.14. "CHANGE OF CONTROL" shall have the meaning set forth
in Section 18.2 hereof.
1.1.15. "CLEANUP LAWS" shall have the meaning set forth in
Section 22.2 hereof.
1.1.16. "CLAIMS" shall have the meaning as set forth in
Subsection 1.4.2 hereof.
1.1.17. "COMMENCEMENT DATE" shall mean the earliest to occur
of: (i) the date on which any portion of the business to be operated within the
Premises opens for business to the public, or (ii) the Outside Opening Date.
1.1.18. "COMMON AREAS" shall have the meaning set forth in
Subsection 4.12.1 hereof.
1.1.19. "COMPETING STORE" shall have the meaning set forth in
Section 23.4 hereof.
1.1.20. "COMPLETED" shall have the meaning set forth in
Section 2.12 hereof.
1.1.21. "CONDITIONS OF APPROVAL" shall have the meaning set
forth in Section 1.17 of the Development Agreement.
1.1.22. "CONFIDENTIAL INFORMATION" shall mean all non-public,
confidential or proprietary information that Landlord or any of Landlord's
Affiliates make available to Tenant or any of Tenant's Affiliates, or that
Tenant, or any of Tenant's Affiliates make available to Landlord or any of
Landlord's Affiliates, in connection with this Lease. Confidential Information
shall include, but not be limited to, the specific terms and conditions of this
Lease as well as information related to the past, present and future plans,
ideas, business strategies, marketing programs, activities, customers and
suppliers of Landlord, Tenant, Landlord's Affiliates and/or Tenant's Affiliates.
"Confidential Information" shall not include information that: (i) was, at the
time of its disclosure, already in the possession of the receiving party; (ii)
is or becomes generally available to the public other than as a result of a
breach of this Lease by the receiving party or its Representatives; or (iii)
becomes available to the receiving party on a non-confidential basis from a
source other than the disclosing party or its Representatives; provided,
however, that such source is not to the knowledge of the receiving party bound
by a confidentiality agreement or other legal or fiduciary obligation of secrecy
to the disclosing party.
1.1.23. "CONTRACT DOCUMENTS" shall mean the final plans and
specifications for the Improvements and Furnishings approved by Landlord, in
Landlord's sole discretion.
1.1.24. "CPI" shall have the meaning set forth in Subsection
3.1.2. hereof.
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1.1.25. "DESIGN AND CONSTRUCTION SCHEDULE REQUIREMENTS AND
MILESTONES" shall mean those requirements and milestones attached hereto as
Exhibit C and made a part thereof.
1.1.26. "DEVELOPMENT AGREEMENT" shall mean Development
Agreement No. 96-01 executed by and between Landlord and the City of Anaheim and
dated as of October 22, 1996, and all amendments and modifications thereto.
1.1.27. "DISNEY DOLLARS" shall mean those certain certificates
sold or given by Landlord and its Affiliates which can be redeemed for
merchandise and services at certain locations owned or leased by Landlord and
its affiliates.
1.1.28. "DISNEY PROPERTY" shall have the meaning set forth in
Section 1.25 of the Development Agreement.
1.1.29. "DISNEY SALARIED EMPLOYEE" shall have the meaning set
forth in Subsection 23.5.2 hereof.
1.1.30. "DISNEY STANDARD" shall have the meaning set forth in
Subsection 4.4.1 hereof.
1.1.31. "DOWNTOWN DISNEY(R)" shall mean the retail, dining and
entertainment complex being developed within THE DISNEYLAND RESORT(R)PROJECT.
Although such term is used throughout this Lease, Landlord may change the name
of such retail, dining and entertainment complex in its sole and absolute
discretion, and all references herein to "DOWNTOWN DISNEY(R)" shall be deemed
changed to such new name.
1.1.32. "EARLY TERMINATION FEE" shall have the meaning set
forth in Subsection 23.3 hereof.
1.1.33. "EPA" shall have the meaning set forth in Section 22.3
hereof.
1.1.34. "EVENT OF DEFAULT" shall have the meaning set forth in
Section 20.1 hereof.
1.1.35. "EXECUTION DATE" shall mean the date on which the last
of Landlord and Tenant execute this Lease.
1.1.36. "EXPENSES" shall have the meaning set forth in Section
24.5 hereof.
1.1.37. "EXPIRATION DATE" shall mean the eleventh (11th)
anniversary of the Commencement Date unless this Lease is sooner terminated
pursuant to its terms, in which event the Expiration Date shall be deemed to be
the effective date of such termination.
1.1.38. "FEE MORTGAGE" shall have the meaning set forth in
Subsection 17.1.1 hereof.
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1.1.39. "FEE MORTGAGEE" shall have the meaning set forth in
Subsection 17.1.2 hereof.
1.1.40. "FINANCIAL OFFICER'S CERTIFICATE" shall have the
meaning set forth in Section 23.2 hereof.
1.1.41. "FIVE COUNTY REGION" shall mean the geographic region
comprised of Orange County, California; Los Angeles County, California; San
Diego County, California; Riverside County, California; and San Bernardino
County, California, on the Execution Date.
1.1.42. "FORCE MAJEURE" shall have the meaning set forth in
Section 24.25 hereof.
1.1.43. "FURNISHINGS" shall mean all: (x) furniture, fixtures,
and equipment (including, without limitation, fixtures, display cases and
lighting equipment) for sales areas, corridors and other public rooms and places
and for all storerooms and offices on the Premises; and (y) all Personalty
necessary and/or proper for the complete and comfortable use, enjoyment,
occupancy and operation of a first-class, high-end Build-A-Bear Workshop
specialty store hereafter procured and installed in the Shell Premises at
Tenant's sole cost and expense and in accordance with the Contract Documents.
The term "Furnishings" does not include Tenant's Merchandise, Supplies,
consumable goods or inventory.
1.1.44. "GAAP" shall have the meaning set forth in Subsection
3.3.1 hereof.
1.1.45. "GLA" shall mean the gross leaseable area of the
Premises, calculated to the exterior faces of exterior walls for each level
including any mezzanine. No deductions shall be made for columns, shafts,
stairs, ramps, elevators, or loading docks.
1.1.46. "GOVERNMENTAL AUTHORITY" shall mean all applicable
federal, state, county, city, district, territory and political subdivisions of
the United States and any board, bureau, council, commission, department,
agency, court, legislative body or other instrumentality of the United States or
any state, or any country, city or political subdivision thereof.
1.1.47. "GROSS SALES" shall mean all revenues received by, or
paid to, Tenant or to any other person, corporation or other entity for the use,
account or benefit of Tenant from whatever source (including, without
limitation, (x) the actual sales price, whether wholly or partially for cash, on
credit, or otherwise, for all food, beverages and goods, wares, merchandise and
services of any kind, and (y) all other receipts) arising upon, out of or in
connection with all business conducted on, in and from the Premises, whether for
wholesale, retail, cash, credit, trade-ins or otherwise (including, but not
limited to, sales made by mail, telephone, internet or other method although
said sales may be made or filled elsewhere, all revenues derived from telephone
(including local, long-distance, public telephone booths, etc.) or other
electronic service or interactive media (e.g., the Internet), all deposits not
refunded to purchasers, and all orders taken on, in and from the Premises
although said orders may be filled elsewhere). Each sale on credit (including,
without limitation, sales paid for with Disney Dollars) shall be treated as a
sale for the full price in cash during the month in which such sale is initially
made, without reserve or deduction for inability or failure to collect, and
irrespective of the time when Tenant actually receives payment (whether full or
partial) from its customer or any applicable credit or
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credit card agency. Gross Sales of any sublessee, concessionaire or licensee
shall be treated as if made by Tenant (provided, however, nothing contained
herein shall be deemed Landlord's consent to any sublessee, concessionaire or
licensee). Gross Sales shall exclude: (a) returns to suppliers or vendors; (b)
sales of fixtures or equipment after use thereof in the conduct of Tenant's
business on the Premises provided that such fixtures or equipment are replaced
by now fixtures or equipment to be used for the same use; (c) sales of fixtures
or equipment that are no longer reasonably necessary for the ongoing operations
of the Premises; (d) any amounts received by Tenant on account of insurance
proceeds; (e) cash or credit card refunds made upon transactions included within
Gross Sales not exceeding, however, the sales price of the item upon which cash
or credit refund is made; (f) the amount of any city, county, state or federal
taxes or luxury or excise taxes on sales which are either added to the sales
price or absorbed therein and paid to the taxing entity by Tenant; (g) revenues,
royalties, fees and/or income received by Tenant in connection with franchise
agreements other than with respect to the Premises; (h) proceeds of the sale of
inventory outside the ordinary course of Tenant's business in connection with
any winding down of Tenant's operations at the end of the Lease Term; *
Gross Sales shall include (a) insurance proceeds received as a result
of a loss of Merchandise to the extent that such proceeds exceed Tenant's cost
for such items and (b) the proceeds of business interruption insurance or other
insurance intended to provide or insure payment to mitigate lost sales.
Gross Sales shall not be deemed cumulative from one Lease Year to any
succeeding Lease Year; rather, they shall be computed separately for each Lease
Year on an accrual basis in accordance with generally accepted accounting
principles consistently applied. Nothing contained in this definition shall
authorize any activities by Tenant which are prohibited by (or which are not
expressly permitted by, as the case may be) any other provision of this Lease.
1.1.48. "HAZARDOUS MATERIAL" shall have the meaning set forth
in Section 22.1 hereof.
1.1.49. "HAZARDOUS MATERIALS CONTAMINATION" shall have the
meaning set forth in Section 22.5 hereof.
1.1.50. "IMPROVEMENTS" shall mean (x) all improvements (other
than Landlord's Work) within the Shell Premises required to construct a 5,905
square foot, first-class, high-end Build-A-Bear Workshop specialty store, in
accordance with the requirements of this Lease, all subject to the requirements
of applicable Laws and Project Requirements, and (y) any and all other
improvements (other than Landlord's Work) hereafter located on, or attached or
* - Redacted Text - Confidential treatment requested; omitted portions have been
filed separately with the Securities and Exchange Commission.
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affixed to, the Site and constructed, installed or placed on the Site, all
pursuant to plans and specifications acceptable to Landlord in Landlord's sole
discretion, and any and all modifications, alterations and replacements thereof.
The term Improvements does not include the Site.
1.1.51. "INDEMNIFIED PARTIES" shall have the meaning set forth
in Section 15.1 hereof.
1.1.52. "INDEMNIFIED PARTY" shall have the meaning set forth
in Section 15.3 hereof.
1.1.53. "INDEMNIFYING PARTY" shall have the meaning set forth
in Section 15.3 hereof.
1.1.54. "INDEX" shall have the meaning set forth in Subsection
3.1.2 hereof.
1.1.55. "LANDLORD" shall mean Walt Disney World Co., a Florida
corporation, authorized to do business in the State of California, and shall
include the legal representatives, successors and assigns of Landlord.
1.1.56. "LANDLORD DELAY" shall mean an actual delay in
Tenant's opening for business by the Outside Opening Date which was caused by an
act or omission of Landlord or any Landlord Affiliate which is not permitted by
the terms of this Lease.
1.1.57. "LANDLORD SPONSORSHIP AGREEMENTS" shall have the
meaning set forth in Subsection 5.1.1 hereof.
1.1.58. "LANDLORD'S WORK" shall have the meaning set forth in
Section 2.1 hereof.
1.1.59. "LAWS" shall mean all federal, state, county,
municipal and other governmental constitutions, statutes, ordinances, codes,
regulations, resolutions, rules, requirements and directives, permits, licenses
and officially adopted plans and policies, and all decisions, judgments, writs,
injunctions, orders, decrees or demands of courts, administrative bodies and
other authorities construing any of the foregoing. "Law" shall be the singular
reference to Laws.
1.1.60. "LEASE" shall mean this Lease Agreement, together with
any and all exhibits and attachments which may be part of this Lease Agreement,
as the same may be hereafter amended in accordance with this Lease.
1.1.61. "LEASE YEAR" shall mean a period of twelve (12)
calendar months commencing on October 1 and ending on September 30, and each
succeeding twelve (12) month period during the Term. The first Lease Year shall
consist only of that period of time from the Commencement Date through and
including the following September 30th. To the extent any computation or other
provision of this Lease is based upon, or provides for an action to be taken on,
an entire Lease Year basis, an appropriate proration or other adjustment shall
be made in respect of any Lease Year that consists of periods which are less
than the a full twelve (12)
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calendar month (such proration or adjustment being based upon the actual number
of days in such partial Lease Year).
1.1.62. "LOGO" shall mean, collectively, (x) that certain
design and art work designated by Tenant as its logo, a copy of which is
attached hereto as Exhibit E and incorporated herein by reference, which design
and artwork Tenant has registered with the United States Copyright Office and/or
the United States Patent and Trademark Office, (y) Tenant trademarks approved by
Landlord in Landlord's sole discretion and (z) Tenant Trade Names (such as
Build-A-Bear Workshop, which has been approved by Landlord) approved by Landlord
in Landlord's sole discretion.
1.1.63. "MANAGEMENT AGREEMENT" shall have the meaning set
forth in Subsection 4.15 hereof.
1.1.64. "MANAGER" shall have the meaning set forth in Section
4.14 hereof.
1.1.65. "MERCHANDISE" shall mean any merchandise or other
consumer product.
1.1.66. "MINIMUM NET WORTH" shall have the meaning set forth
in Section 23.2 hereof.
1.1.67. "MINIMUM RENT" shall have the meaning set forth in
Section 3.1 hereof.
1.1.68. "MITIGATION MEASURES" shall have the meaning set forth
in Section 1.44 of the Development Agreement.
1.1.69. "NET WORTH" shall have the meaning set forth in
Section 23.2 hereof.
1.1.70. "OPERATING CONDITIONS, RULES AND REGULATIONS" shall
mean those conditions, rules and regulations set forth on Exhibit F attached
hereto and made a part hereof, and such other rules and regulations which may be
promulgated by Landlord from time to time in its sole and absolute discretion.
1.1.71. "OPERATING BUDGET" shall have the meaning set forth in
Subsection 23.1.2 hereof.
1.1.72. "OSHA" shall have the meaning set forth in Section
22.3 hereof.
1.1.73. "OUTSIDE CONSTRUCTION COMMENCEMENT DATE" shall have
the meaning set forth in Subsection 2.3.1 hereof.
1.1.74. "OUTSIDE OPENING DATE" shall mean the later of (i)
November 1, 2001 or (ii) one hundred twenty (120) days after delivery by
Landlord of the Shell Premises to Tenant.
1.1.75. "PERCENTAGE RENT" shall mean the amount calculated as
Percentage Rent in accordance with Subsection 3.2.1 of this Lease.
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1.1.76. "PERSONALTY" shall mean an article which is a chattel,
is not physically annexed or affixed to the Premises and is capable of being
removed without structural or functional damage to the Premises.
1.1.77. "PERMITTED USE" shall have the meaning set forth in
Subsection 4.1.1 hereof.
1.1.78. "PREMISES" shall mean, collectively, the Shell
Premises, the Improvements and Furnishings. As the context may require,
references to the "Premises" may refer only to a portion or portions of the
Premises. The Premises does not include the Site.
1.1.79. "PREVAILING PARTY" shall have the meaning set forth in
Section 24.5 herein.
1.1.80. "PRIME RATE" shall mean the rate of interest announced
or published by the then largest (as measured by deposits) state chartered bank
operating in California as its "Prime Rate", "Reference Rate" or other similar
benchmark for commercial borrowers then in effect (or if such Prime Rate,
Reference Rate or other similar benchmark is no longer published and announced,
an equivalent substitute therefor).
1.1.81. "PROJECT" shall have the meaning set forth in Section
1.54 of the Development Agreement.
1.1.82. "PROJECT APPROVALS" shall have the meaning set forth
in Section 1.55 of the Development Agreement.
1.1.83. "PROJECT COMPLETION" shall have the meaning set forth
in Section 2.12 hereof.
1.1.84. "PROJECT DESIGN FEATURES" shall have the meaning set
forth in Mitigation Monitoring Program 0067, as defined in the Development
Agreement, as modified.
1.1.85. "PROJECT REQUIREMENTS" shall mean (i) The Disneyland
Resort Specific Plan, (ii) the Development Agreement, including, without
limitation, Applicable Rules, Conditions of Approval, Mitigation Measures,
Project Approvals, and Project Design Features, (ii) the Tenant Design and
Construction Standards, and (iv) the Design and Construction Schedule
Requirements and Milestones and all covenants, terms, conditions, approvals and
requirements contained, incorporated or referenced in any of such documents.
1.1.86. "RECEIVING PARTY" shall have the meaning set forth in
Section 24.3 hereof.
1.1.87. "RELEASE" shall have the meaning set forth in Section
22.1 hereof.
1.1.88. "RENT" shall include, collectively, the Minimum Rent,
Percentage Rent, and any Additional Rent as specified in this Lease.
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1.1.89. "REPRESENTATIVES" shall have the meaning set forth in
Subsection 24.12.1 hereof.
1.1.90. "REQUESTING PARTY" shall have the meaning set forth in
Section 24.3 hereof.
1.1.91. "SALES THRESHOLD" shall have the meaning set forth in
Section 1.5 hereof.
1.1.92. "SHELL PREMISES" shall mean the improvements to be
constructed by Landlord as part of Landlord's Work within the area shown on
Exhibit A attached hereto as the diagram outlining the Shell Premises.
1.1.93. "SIMILAR BUSINESS" shall mean another operation of the
same (or similar) name, theme or concept, or any part thereof, as that of
Tenant's proposed use of the Premises as set forth in this Lease.
1.1.94. "SITE" shall mean that certain site within that tract
or parcel of land owned or controlled by Landlord within the City of Anaheim,
Orange County, California, within or directly adjacent to the Project intended
to be developed by Landlord, on which the Shell Premises is located.
1.1.95. "SUBSTANTIALLY ALL OF THE PREMISES" shall have the
meaning set forth in Section 14.1 hereof.
1.1.96. "SUBSTANTIALLY COMPLETE" shall mean when referring to
Landlord's Work, that all of Landlord's Work is complete in accordance with the
Project Requirements other than punchlist items and exterior work which does not
materially and adversely affect Tenant's ability to commence or complete
Tenant's Work.
1.1.97. "SUPPLIES" shall have the meaning set forth in
Subsection 4.3.1. hereof.
1.1.98. "TAKING" shall have the meaning set forth in Section
14.1 hereof.
1.1.99. "TAKING DATE" shall have the meaning set forth in
Section 14.1 hereof.
1.1.100. "TAXES AND ASSESSMENTS" shall mean any and all of the
following which shall or may during the Term be charged, laid, levied, assessed,
imposed, become due and payable or liens upon, or arise in connection with the
use, occupancy or possession of, or grow due or payable out of or for, the Site,
the Premises (or any part thereof), the Improvements, the Furnishings, or the
Rent, or otherwise with respect to this Lease, at any time during the Term of
this Lease: real property and personal property taxes, ad valorem taxes,
assessments (including, without limitation, special assessments), excises,
permit and impact fees, charges in respect of mitigation measures or otherwise
imposed by Project Requirements, charges made by any public or quasi-public
authority; for or relating to Improvements, Furnishings or betterments related
directly or indirectly to the Premises, sanitary taxes or charges, sewer or
water taxes or charges, rapid transit taxes or charges and any other
governmental or quasi-governmental impositions, charges, encumbrances, levies,
assessments or taxes of any nature whatsoever, whether general
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or special, whether ordinary or extraordinary, whether foreseen or unforeseen
and whether payable in installments or not, related directly or indirectly to
the Premises; together with any tax or other charge levied, assessed or imposed
upon this Lease, the Site, the Premises and/or Improvements, (or the use
thereof) in lieu of or in addition to the foregoing under or by virtue of any
present or future Laws. Taxes and Assessments shall include any tax levied or
imposed upon or assessed against, the Rent reserved hereunder or income arising
herefrom), to the extent the same are in lieu of, in addition to, or a
substitute for any of the Taxes and Assessments hereinabove described. Taxes and
Assessments shall not include any profit, income, revenue or similar tax upon
the income of Landlord or any franchise, corporate, estate, partnership,
inheritance or succession tax on Landlord, except to the extent that any of same
are in lieu of or substitution for any of the Taxes or Assessments.
1.1.101. "TENANT" shall mean Build-A-Bear Workshop, Inc., a
Delaware corporation, and any permitted successors and assigns.
1.1.102. "TENANT IMPROVEMENT ALLOWANCE" shall have the meaning
set forth in Section 2.1. hereof.
1.1.103. "TENANT SPONSOR" shall have the meaning set forth in
Subsection 5.2.1. hereof.
1.1.104. "TENANT DESIGN AND CONSTRUCTION STANDARDS" shall mean
those standards and guidelines for the design and construction of Tenant's
Improvements attached hereto as Exhibit B and made a part hereof.
1.1.105. "TENANT'S EXISTING ALLIANCES" shall have the meaning
set forth in Subsection 5.2.1 hereof.
1.1.106. "TENANT'S WORK" shall include, the initial
construction and erection of any Improvements by or on behalf of Tenant on the
Site and the installation of Furnishings therein in accordance with the approved
Contract Documents.
1.1.107. "TERM" shall have the meaning set forth in
Subsection 1.3.1 hereof.
1.1.108. "THE AUTHORITY" shall have the meaning set forth in
Section 15.1 hereof.
1.1.109. "THE DISNEYLAND RESORT(R) PROJECT" shall mean the
Project.
1.1.110. "THE CITY" shall have the meaning set forth in
Section 15.1 hereof.
1.1.111. "THE DISNEYLAND RESORT SPECIFIC PLAN" or "SPECIFIC
PLAN" shall have the meaning set forth in Section 1.66 of the Development
Agreement.
1.1.112. "THE DISNEYLAND RESORT SPECIFIC PLAN AREA" shall have
the meaning set forth in Section 1.67 of the Development Agreement.
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1.1.113. "THEME PARK" (x) shall have the meaning set forth in
Section 18.78.060.010.0101 of the Anaheim Municipal Code (AMC) (including,
without limitation, Disneyland(R)), and shall include Retail Entertainment
Centers as defined in Section 18.78.030.1105 of the AMC; (y) shall mean all
facilities, the primary business of which is offering rides or similar amusement
devices, including, without limitation, attractions, game arcades, rides,
virtual reality, shows and other entertainment elements, regardless of whether
an admission fee is charged (collectively, "ATTRACTIONS"); and (z) shall mean
any and all areas and facilities (including, without limitation, resorts,
shopping areas, golf courses and restaurants) associated, and/or commonly
marketed, with such Attractions.
1.1.114. "THEME PARK MATERIALS" shall have the meaning set
forth in Section 4.7.2 hereof.
1.1.115. "THREATENED RELEASE" shall have the meaning set forth
in Section 22.1 hereof.
1.1.116. "TI ALLOWANCE CONDITIONS" shall have the meaning set
forth in Section 2.1 hereof.
1.1.117. "TRADE NAME" shall have the meaning set forth in
Subsection 4.8.1 hereof.
1.1.118. "TRANSFER" shall have the meaning set forth in
Section 18.2 hereof.
1.1.119. "TURNOVER DATE" shall have the meaning set forth in
Subsection 1.3.1 hereof.
1.1.120. "UTILITIES" shall mean potable water, sanitary sewer,
natural gas, electrical, telephone, data, telecommunication, cable television,
electricity and storm water connections.
1.2. Premises.
In consideration of the agreements, terms, covenants, conditions, requirements,
provisions and restrictions to be kept, observed, performed, satisfied and
complied with by Tenant, and of the Minimum Rent specified and provided for in
this Lease, and upon the terms and conditions herein stated, Landlord hereby
lets, leases and demises unto Tenant, and Tenant hereby leases, takes and
accepts from Landlord, the Premises, without any representation or warranty
(expressed or implied) by Landlord except as explicitly set forth in this Lease,
subject to the following:
(a) Landlord's written approval, in Landlord's sole
discretion, of (x) all plans and specifications for the construction of the
Improvements and the installation of the Furnishings, and (y) the construction
of the Improvements and the installation of the Furnishings, all in accordance
with this Lease;
(b) All applicable Laws, Project Requirements, the Operating
Conditions, Rules and Regulations, and all building and zoning ordinances;
12
(c) All easements, encumbrances and other matters of record;
(d) All encroachments, overlaps, lot ties, boundary line
disputes or other matters which would be disclosed by an accurate survey or
inspection of the Premises or a review of title matters affecting the Site; and
(e) All terms and conditions set forth in this Lease.
Tenant acknowledges that prior to or subsequent to the Execution Date, Landlord
and/or Landlord's Affiliates may subdivide the Project and/or enter into lot tie
agreements, easements or other matters affecting the Site. This Lease shall at
all times be subject and subordinate to all such subdivisions, lot ties,
easements or other matters affecting the Site. As a condition to entering into
this Lease, Tenant agrees and acknowledges that Tenant and any subtenants and/or
assignees shall execute any and all documents required by Landlord in connection
with such subdivision, lot tie, easement or other matter affecting the Site. If
any such party fails to execute any such agreement upon request, Landlord may
execute such agreement on behalf of such party. In addition, Tenant agrees to
use its best efforts to ensure that Tenant's lenders or creditors, and the
lenders or creditors of any subtenant and/or assignee, execute any and all
documents reasonably required by Landlord in connection with such subdivision,
lot tie, easement or other matter affecting the Site.
1.3. Term.
1.3.1. The "TERM" of this Lease shall be eleven (11) years
commencing on the Commencement Date and continuing for eleven (11) years
thereafter. Landlord shall give Tenant possession of the Shell Premises with
Landlord's Work substantially complete on a date (the "TURNOVER DATE") that is
on or before August 1, 2001, so that Tenant may commence its internal
construction. Subsequent to the Turnover Date, Landlord shall complete
Landlord's Work concurrently with Tenant completing its construction. Tenant
agrees that if Landlord fails for any reason to deliver possession of the Shell
Premises to Tenant on or before the Turnover Date, and such failure results in a
delay by Tenant in opening the Premises to the public for business by the date
designated by Landlord, then Tenant's sole and exclusive remedy in such event
and in lieu of all other remedies (including, but not limited to, cancellation
of this Lease or specific performance, which are hereby expressly waived), shall
be the day for day extension of the Outside Opening Date provided herein;
provided, however, that if Landlord fails to deliver possession of the Shell
Premises to Tenant by January 9, 2002 (subject to Force Majeure or any other
event(s) beyond Landlord's reasonable control), then as Tenant's sole additional
remedy (Tenant hereby waiving any claim for direct, indirect or consequential
damages or any punitive or exemplary damages), Tenant may terminate this Lease
by giving Landlord its written notice of termination. If Tenant elects to
terminate this Lease as aforesaid, then notwithstanding anything herein to the
contrary, the exercise of such right shall be Tenant's sole and exclusive remedy
in such event, in lieu of all other remedies (and other such remedies being
hereby waived by Tenant). Pre-opening occupancy (i.e., it being understood and
agreed that the term "occupancy" as used in this sentence shall not include any
portion of Tenant's business being open to the public for business) of the
Premises by Tenant prior to the Commencement Date shall be subject to all of the
terms and provisions of this Lease excepting only those requiring the payment of
Minimum Rent, Percentage Rent, Taxes and Assessments. Landlord and Tenant each
agree that
13
at the request of either party they will, following the Commencement Date,
execute and deliver a written acknowledgment or agreement acknowledging that
Tenant has accepted possession and reciting the exact Commencement Date of this
Lease.
1.4. Opening.
1.4.1. Tenant acknowledges that DOWNTOWN DISNEY(R) opened to
the public on January 1, 2001, and that substantially all of the businesses
located at DOWNTOWN DISNEY(R) are open and operating as of the date of this
Lease. Tenant understands that it is the desire and intention of Landlord to
have all of the respective businesses to be conducted within and from DOWNTOWN
DISNEY(R) (including the Premises and the business to be conducted by Tenant at
the Premises) open for business as soon as possible. Accordingly, Tenant
acknowledges and agrees that it is a material benefit to Landlord for Tenant to
complete its construction of the Premises and be in a position to open its
business to the public no later than the Outside Opening Date.
1.4.2. Landlord shall not be obligated or liable to Tenant
for, and Tenant hereby expressly waives any claims against Landlord on account
of, any damages, costs or expenses of any nature whatsoever which Tenant or any
other person may incur as a result of any delays, interferences, suspensions,
rescheduling, congestion, disruptions or the like in connection with Tenant's
Work arising from or out of any act or omission of Landlord or any other person
or entity (including, without limitation, any of Landlord's Affiliates), unless
caused by or arising out of Landlord's or Landlord's Affiliate's gross
negligence or willful misconduct. Tenant shall defend, hold harmless and
indemnify Landlord and Landlord's Affiliates against any and all claims,
liabilities, damages, costs or expenses of any nature whatsoever, (herein
"CLAIMS") arising from or out of Tenant's failure to open the Premises to the
public for business on or before the Outside Opening Date, unless such failure
was caused by Landlord Delay, Force Majeure, a Taking or fire or other casualty.
If any claim, action or proceeding is brought against Landlord or a Landlord
Affiliate in connection with any indemnified Claim, Tenant upon notice from
Landlord, shall defend the same at Tenant's expense with counsel approved in
writing by Landlord. Tenant's obligations under this Subsection shall survive
the expiration or earlier termination of this Lease.
1.4.3. If Tenant does not complete Tenant's Work and open the
Premises to the public for business on or before the Outside Opening Date,
subject to a day for day extension for any Landlord Delay, Force Majeure, Taking
or fire or other casualty, then in addition to any other remedies available to
Landlord, Landlord shall have the following non-exclusive options:
(i) At any time thereafter, but prior to the Project
Completion (as defined in Section 2.12 below) of the Work, and the actual
opening of the entire Premises for business to the public, Landlord may
terminate this Lease by providing written notice to Tenant, whereupon the
following shall occur:
(1) Tenant shall immediately surrender possession
of the Premises to Landlord;
14
(2) Landlord shall succeed to ownership of all
of the Improvements (provided, however, that this clause shall not be construed
to grant Landlord the right to use those portions of the Improvements which bear
the Build-A-Bear Workshop Trade Name or the mark of other intellectual property
owned by Tenant); and
(3) Tenant shall have no further rights
hereunder;
(ii) Landlord may elect to not terminate this Lease
and Tenant shall pay to Landlord, in addition to the Rent herein reserved to
Landlord, liquidated damages to compensate Landlord for the Percentage Rent
Tenant would have paid to Landlord had Tenant opened the Premises for business
by the Outside Opening Date, in an amount equal to one hundred percent (100%) of
the annual Minimum Rent payable by Tenant hereunder, prorated on a daily basis,
for each and every day from the Outside Opening Date, until the day on which the
Work is Substantially Completed and the Premises are opened for business to the
public in accordance with the provisions of this Lease. The parties acknowledge
that it will be extremely difficult, if not impossible, to ascertain with
certainty the lost Percentage Rent which might be sustained by Landlord due to
the failure of the Premises to be open for business by the Outside Opening Date,
and, accordingly, the parties have agreed upon the liquidated damages set forth
in this Subsection as fair and reasonable compensation. The foregoing liquidated
damages provisions shall not be considered a penalty pursuant to California Law.
Payment of the amounts described in the immediately preceding paragraph is not
intended as forfeiture or a penalty within the meaning of California Civil Code
Sections 3275, 3369, 3389 or similar authorities, but is intended to constitute
liquidated damages to Landlord in respect of lost percentage rent pursuant to
the requirements of California Civil Code Section 1671. By their respective
initials set forth below, Landlord and Tenant agree that the aforesaid amounts
are reasonable as liquidated damages from Tenant in respect to lost percentage
Rent for Tenant's failure to open the Premises for business by the Outside
Opening Date.
/s/ MC /s/ CH
- ------------------ ------------------
Tenant's Initials Landlord's Initials
(iii) Landlord may, at its election, reenter the
Premises and, without terminating this Lease, at any time and from time to time
relet the Premises or any parts thereof for the account and in the name of
Tenant or Landlord or otherwise to cure any default by Tenant or to exercise any
other right or remedy of Landlord hereunder (provided, however, that this clause
shall not be construed to grant Landlord the right to use those portions of the
Improvements which bear the Build-A-Bear Workshop Trade Name or the mark of
other intellectual property of Tenant). Landlord may execute any leases made
under this provision either in Landlord's name or in Tenant's name and shall be
entitled to all Rents from the use, operation or occupancy of the Premises or
improvements or both. Tenant shall nevertheless pay to Landlord on the due date
specified in this Lease the equivalent of all sums required of Tenant under this
Lease, plus Landlord's expenses, less the proceeds of any reletting or
attornment.
In addition to all other rights and remedies it may have, Landlord shall have
all the rights and remedies of a landlord under Section 1951.4 of the California
Civil Code. Landlord may do all things reasonably necessary for such reletting,
including completing shell and/or improvement
15
construction, repairing, remodeling and renovating of the Site and/or the
Premises and Tenant shall reimburse Landlord on demand for all costs incurred by
Landlord in connection therewith If Landlord relets the Premises it shall apply
any sums received upon such reletting in the following order of priority: (i) to
the payment of any indebtedness other than Rent due hereunder from Tenant to
Landlord; (ii) to the payment of all costs incurred by Landlord in restoring the
Premises to good order and repair, or in completing construction of, remodeling,
renovating or otherwise preparing the Premises for reletting; (iii) to the
payment of all costs (including, without limitation, any brokerage commissions)
incurred by Landlord in reletting the Premises, and in fulfilling Landlord's
obligations with respect to such reletting (such as, by way of example,
providing services or utilities), (iv) to the payment of Rent (and any interest
thereon) due and unpaid hereunder; and (v) the balance, if any, to the payment
of future Rent as the same may become due hereunder. No act by or on behalf of
Landlord under this provision shall constitute a termination of this Lease
unless Landlord gives Tenant notice of termination. Notwithstanding any election
by Landlord not to terminate this Lease, Landlord may at any time thereafter
elect to terminate this Lease for any previous breach or default hereunder by
Tenant which remains uncured or for any subsequent breach or default.
(iv) Regardless of whether Landlord exercises (i),
(ii) or (iii) above, if Tenant fails to have Substantially Completed Tenant's
Work on or before the Outside Opening Date, Landlord may, at its option, at any
time and from time to time, enter upon the Site and the Premises and do whatever
is required to complete the same, including, but not limited to, taking
possession of all materials, plans, tools, fixtures, machines and other
equipment situated therein, and proceeding with all of Tenant's contracts, using
Tenant's contractors, and Landlord shall have no liability to Tenant for any
loss or damage resulting in any way from such action by Landlord, and Tenant
agrees to reimburse to Landlord, promptly upon demand, any expense incurred by
Landlord in taking such action, with interest thereon at the Applicable Rate, if
not so paid on demand.
1.5. Kick-out.
1.5.1. Notwithstanding anything contained herein, if Tenant
fails to achieve annual Gross Sales from the Premises of at least * (the
"SALES THRESHOLD") during the * full Lease Year, Tenant shall have the
one-time right to terminate this Lease upon ninety (90) days prior written
notice to Landlord. To be effective, such right must be exercised by Tenant
within ninety (90) days following the end of the * full Lease Year. Such
termination right shall lapse and be of no farther force and effect if notice of
termination is not served in a timely manner. Such notice of termination shall
be accompanied by evidence, satisfactory to Landlord of the amount of Gross
Sales for the * full Lease Year. If for any reason Tenant is not open for
business 365 days during such * full Lease Year, then the Sales Threshold
shall be prorated for the number of days Tenant is actually open for business
during such time. If Tenant elects to terminate the Lease pursuant to this
Subsection 1.5.1, Tenant shall remain open and operating in accordance with the
terms and provisions of this Lease until the date that is ninety (90) days from
the date Landlord receives Tenant's notice. On or before such date of
termination, Tenant shall reimburse Landlord for the unamortized portion of the
Tenant Improvement Allowance (amortized on a straight-line basis over eleven
(11) years).
* - Redacted Text - Confidential treatment requested; omitted portions have been
filed separately with the Securities and Exchange Commission.
16
1.5.2. Notwithstanding anything contained herein, if Tenant
fails to achieve the Sales Threshold during the * full Lease Year, Landlord
shall have the one-time right to terminate this Lease upon at least one hundred
twenty (120) days prior written notice to Tenant. To be effective, such right
must be exercised by Landlord within one hundred twenty (120) days following the
end of the * full Lease Year. Such termination right shall lapse and be of
no further force and effect if notice of termination is not served in a timely
manner. If for any reason Tenant is not open for business 365 days during such
* full Lease Year, then the Sales Threshold shall be prorated for the number
of days Tenant is actually open for business during such time. If Landlord
elects to terminate the Lease pursuant to this Subsection 1.5.2, Tenant shall
remain open and operating in accordance with the terms and provisions of this
Lease until the date that is specified in Landlord's notice to Tenant, which
date shall not be earlier than one hundred twenty (120) days from the date
Tenant receives Landlord's notice. On or before such date of termination,
Landlord shall reimburse Tenant the difference between (i) the unamortized value
of Tenant's leasehold Improvements (based on Tenant's actual, out-of-pocket
costs verified by bona fide purchase receipts, bills of sale, or other written
evidence reasonably satisfactory to Landlord) (amortized using straight-line
amortization over an 11 year term) and (ii) * (which represents a portion
of the Tenant Improvement Allowance).
2. CONSTRUCTION.
2.1. Scope of Landlord's Work and Tenant's Work.
Landlord shall, at its sole cost and expense, design and
construct the work described on Exhibit D attached hereto as Landlord's Work
("LANDLORD'S WORK"). In addition, Landlord shall design and install (in
accordance with Landlord's standards and design criteria) an HVAC system,
together with one (1) shared, common area service elevator and one (1) public
guest elevator. The approximate location of the elevators is depicted on Exhibit
A. Tenant acknowledges and agrees that the design, construction and installation
of Landlord's Work, as well as the HVAC system and both elevators, shall be in
"as is" condition on the Turnover Date. Tenant shall, at its sole cost and
expense, design and construct the Improvements within and upon the Shell
Premises and install the Furnishings therein in accordance with the terms of
this Lease. Tenant acknowledges that the design and construction of the
Improvements is intended to be a unique, first class Build-A-Bear Workshop
specialty store of an exceptionally high quality which is consistent with a
theme park location, and that the Premises will be Tenant's flagship location in
the greater Los Angeles and Orange County area. Tenant shall spend approximately
* per square foot toward the Improvements and Furnishings. Tenant shall
provide Landlord upon execution of this Lease with a detailed breakdown, in form
reasonably acceptable to Landlord, of how it shall expend funds to design and
construct the Improvements. Landlord shall also have the right from time to time
and at any time, at its expense, to have an independent certified public
accountant selected by Landlord perform an audit or other review of all of
Tenant's books and records regarding the cost of constructing the Improvements
in order to verify the amount spent by Tenant; provided, however, that if such
audit or review discloses that Tenant has not complied with its obligations
under this Section 2.1 (within a five percent (5%) margin of error), then the
cost of such audit or review shall be paid by Tenant to Landlord, upon demand.
Landlord agrees to provide Tenant an allowance in the amount of up to *
toward the Improvements (the "TENANT IMPROVEMENT ALLOWANCE"). The Tenant
Improvement Allowance shall be given to
* - Redacted Text - Confidential treatment requested; omitted portions have been
filed separately with the Securities and Exchange Commission.
17
Tenant in the form of a credit against Rent in accordance with the terms set
forth in the remainder of this Section. Provided that the TI Allowance
Conditions (defined below) have been met, Landlord shall grant Tenant a credit
against Rent up to the amount of * , which credit shall be calculated and
allocated as follows: (a) a credit against Minimum Rent in the amount of *
for the first twelve (12) months of the Term only (commencing on the
Commencement Date); and (b) a credit against Percentage Rent (in the amount of
up to * on Gross Sales which exceed * ) but are less than * , for
the first twelve (12) months of the Term only (commencing on the Commencement
Date). There shall be no credit against Percentage Rent due on Gross Sales of *
or more in any event, and such Percentage Rent shall be due and payable in
accordance with the terms of this Lease. In no event shall the Rent credit
described above extend beyond the * of the Term. For purposes of this Lease,
the "TI ALLOWANCE CONDITIONS" are as follows: (x) Tenant must provide Landlord
with properly executed lien waivers from all of its contractors and
subcontractors or, with respect to an existing lien, must bond over any such
lien; (y) Tenant must deliver bona-fide receipts or other underlying support
documentation reasonably acceptable to Landlord in connection with Tenant's
construction of the Improvements; and (z) Tenant must open for business and must
attain Project Completion (as defined in Section 2.12 below).
2.2. Plans, Specifications and Designs.
All plans, permits, specifications and designs prepared by, for, or on behalf of
Tenant for Tenant's Work and submitted to Landlord shall conform and be
consistent with the Specific Plan, the City of Anaheim General Plan, all Laws
(including ADA) and all other Project Requirements. Tenant's design of its
Improvements shall be strictly in accordance with the Tenant's Design and
Construction Standards and all other design guidelines promulgated from time to
time by Landlord in its sole and absolute discretion, and shall meet the Design
and Construction Schedule Requirements and Milestones. Landlord agrees that it
will not charge Tenant for Landlord's review of Tenant's design, provided that
Tenant does not submit multiple designs to Landlord (except in response to
Landlord's comments).
2.3. Commencement and Completion of Improvements and Furnishings.
2.3.1. Tenant shall commence construction of the Improvements
within the time frame set forth in the Design and Construction Schedule
Requirements and Milestones (the "OUTSIDE CONSTRUCTION COMMENCEMENT DATE"). All
of Tenant's construction shall be completed in accordance with the Tenant Design
and Construction Standards and all other construction guidelines promulgated
from time to time by Landlord in its sole and absolute discretion (provided that
such construction guidelines do not materially delay Tenant's Work and Landlord
gives Tenant advance notice thereof, and Landlord will use reasonable efforts to
give Tenant written notice thereof), and the Design and Construction Schedule
Requirements and Milestones.
2.3.2. If Tenant fails to commence construction by the Outside
Construction Commencement Date (subject to a day for day extension for any
Landlord Delay, Force Majeure, Taking or fire or other casualty), Landlord shall
have the right, at Landlord's sole option, at any time thereafter, but prior to
the actual commencement of construction, to terminate this Lease upon five (5)
Business Days' prior written notice to Tenant, whereupon all documents, plans
and
* - Redacted Text - Confidential treatment requested; omitted portions have been
filed separately with the Securities and Exchange Commission.
18
specifications for the proposed Improvements and Furnishings prepared by Tenant,
or any contractor, engineer, architect or agent of Tenant, shall be delivered to
(and title thereof shall be vested in) Landlord. In addition, whether or not
Landlord has elected to terminate this Lease, if Tenant fails to commence
construction by the Outside Construction Commencement Date, then, commencing on
and continuing until the earlier to occur of: (i) the date on which a new tenant
procured by Landlord has commenced paying rent to Landlord for the Premises (it
being understood, however, that nothing contained herein shall require Landlord
to find or attempt to find such a new tenant); or (ii) the date on which Tenant
commences construction (provided Tenant commences such construction prior to the
date on which Landlord has procured a replacement tenant for the Premises),
Tenant shall pay liquidated damages to Landlord to reimburse Landlord for the
damages that Landlord sustains as a result of Tenant not constructing and
operating the Improvements as aforesaid, in an amount equal to * of the
annual Minimum Rent payable by Tenant hereunder, prorated on a daily basis, per
day, which amount shall be paid monthly, in advance, on the first day of each
month commencing on the Outside Construction Commencement Date. The parties
acknowledge that it would be extremely difficult, if not possible, to ascertain
with certainty the lost Percentage Rent which might be sustained by Landlord due
to the failure to commence construction by the Outside Construction Commencement
Date, and, accordingly, the parties have agreed upon the liquidated damages set
forth in this Section as fair and reasonable compensation. The foregoing
liquidated damages provisions shall not be considered a penalty pursuant to
California Law.
Payment of the amounts described in the immediately preceding paragraph is not
intended as forfeiture or a penalty within the meaning of California Civil Code
Sections 3275, 3369, 3389 or similar authorities, but is intended to constitute
liquidated damages to Landlord in respect of lost percentage rent pursuant to
the requirements of California Civil Code Section 1671. By their respective
initials set forth below, Landlord and Tenant agree that the aforesaid amounts
are reasonable as liquidated damages from Tenant in respect to lost percentage
Rent for Tenant's failure to commence construction of the Improvements by the
Outside Construction Commencement Date.
/s/ MC /s/ CH
- ------------------ --------------------
Tenant's Initials Landlord's Initials
Tenant's obligations under this Section shall survive the termination of this
Lease. Tenant acknowledges and agrees that while the liquidated damages per day
payment will, in accordance with the provisions of this Section, cease if Tenant
commences the work after the Outside Construction Commencement Date (but prior
to Landlord having procured a replacement tenant for the Premises), none of the
deadlines established in this Lease (including, without limitation, the Outside
Opening Date) shall be extended by virtue of such failure of Tenant to commence
construction by such Outside Construction Commencement Date.
2.3.3. In addition to and not in limitation of the foregoing
rights and remedies available to Landlord in the event that Tenant fails to
commence construction by the Outside Construction Commencement Date or to open
for business by the Outside Opening Date as required under Section 1.4 (subject
to a day for day extension for any Landlord Delay, Force Majeure, Taking or fire
or other casualty), Tenant agrees that following termination of this Lease by
Landlord as a result of the failure to commence construction by the Outside
Construction
* - Redacted Text - Confidential treatment requested; omitted portions have been
filed separately with the Securities and Exchange Commission.
19
Commencement Date or failure to open for business by the Outside Opening Date,
neither Tenant nor any of Tenant's Affiliates may, either directly or indirectly
(whether through legal or beneficial means or otherwise) for a period of five
(5) years after the date of such termination, own, hold, develop, construct,
sponsor, manage, operate, lease, license, franchise or otherwise participate in
(whether in conjunction with a third party or otherwise) any Similar Business
within a ten (10) mile radius of THE DISNEYLAND RESORT(R) PROJECT. Tenant's
obligations under this Section shall survive the termination of this Lease.
2.3.4. Notwithstanding anything in Subsection 2.3.2 or 2.3.3
to the contrary, if Tenant did not commence construction on or before the
Outside Construction Commencement Date, but opens for business by the Outside
Opening Date, Landlord shall waive any penalties due under Subsection 2.3.2 and
2.3.3 above.
2.3.5. Once commenced, the construction of the Improvements
and installation of the Furnishings shall be prosecuted with due diligence and
continuity in strict accordance with the Contract Documents (subject to Landlord
Delay, Force Majeure, a Taking, fire or other casualty), so that the Premises
will be ready to be opened for business to the public not later than the Outside
Opening Date.
2.3.6. In the event of any delays or disruptions which would
result in a delay in Tenant completing Tenant's Work by such Outside Opening
Date (subject to a day for day extension for any Landlord Delay, Force Majeure,
Taking or fire or other casualty), Tenant shall take all necessary steps and
accelerate Tenant's Work in order to be open by such Outside Opening Date. All
costs associated with such acceleration (including, but not limited to, overtime
labor costs and extra costs for accelerated delivery of materials or the
Furnishings) shall be borne by Tenant.
2.4. Landlord's Approval of Architect, Contractor, Etc.; Copies of
Contracts.
The architects, engineers and consultants selected by Tenant for the design of
the Improvements, the general contractor selected by Tenant for the construction
of the Improvements and installation of the Furnishings and all subcontractors,
shall be licensed in the State of California and shall be subject to the prior
approval of Landlord, which approval may be granted or withheld in Landlord's
sole discretion. Landlord agrees that if Tenant submits a "short list" of
architects and contractors on or before June 25, 2001, Landlord will respond to
such "short list" on or before July 1, 2001. Tenant shall furnish to Landlord
copies of all contracts for any work in connection with the construction of the
Improvements and installation of the Furnishings (including, without limitation,
all contracts for the purchase of materials and supplies in connection
therewith).
2.5. Inspection.
Landlord shall have the right to inspect any of Tenant's Work at all times
during normal working hours and to maintain at the Premises for that purpose (at
its own expense) such architects, engineers and other technical persons as it
may deem necessary; provided, however, that Landlord shall not thereby assume
any responsibility for the proper performance of Tenant's Work in accordance
with the terms of this Lease, nor any liability arising from the improper
20
performance thereof. In the event that Landlord, during any such inspection,
discovers any material or aesthetic deviation or defect in the construction of
the Improvements or the installation of the Furnishings, Landlord may promptly
notify Tenant and Tenant shall, as promptly as is reasonably possible, correct
the same.
2.6. Cessation of Work.
Tenant shall promptly notify Landlord of all construction schedules and
substantial changes therein. If there should at any time be a stoppage of any
work in excess of, or anticipated by Tenant to be in excess of, five (5)
consecutive days which is not commercially reasonable, Tenant shall, at
Landlord's option, be deemed to be in default hereunder.
2.7. Coordination.
2.7.1. Tenant recognizes that (a) DOWNTOWN DISNEY(R) is open
to the public during hours designated by Landlord in its sole and absolute
discretion, and (b) there may be other construction activities in the immediate
vicinity of the Site. Tenant shall comply with the Tenant Design and
Construction Standards and Landlord's Operating Conditions, Rules and
Regulations regarding access and coordination of Tenant's Work, and Tenant shall
coordinate Tenant's Work to assure that the performance of any of Tenant's Work
(and any other work (including, without limitation, repairs, maintenance and
replacements of or to the Improvements) performed by or on behalf of Tenant in
accordance with this Lease) does not materially disrupt or materially interfere
with activities or traffic at THE DISNEYLAND RESORT(R), and does not materially
disrupt or interfere with any other construction in the vicinity of the Site.
Prior to and during the performance of Tenant's Work, at Tenant's request,
Landlord will provide Tenant with a current schedule of the business hours for
DOWNTOWN DISNEY(R) and a schedule of any proposed Landlord construction
activities in the vicinity of the Premises so that Tenant can adjust its
schedule accordingly. Landlord may change the scope of or schedule of proposed
activities in the vicinity of the Premises from time to time without liability
to Tenant. Landlord may from time to time promulgate construction rules and
regulations concerning, among other things, the coordination, safety and
appearance of the Premises during construction activities, to which Tenant shall
be bound and with which Tenant shall comply.
2.7.2. Tenant agrees that it will not at any time prior to or
during the Term, either directly or indirectly employ any contractor,
subcontractor, mechanic or laborer, or permit any materials in the Premises or
the Project, if the use of such contractor, subcontractor, mechanic or laborer
or such materials would, in Landlord's sole and exclusive opinion, create any
difficulty, work slowdown, sabotage, strike or jurisdictional dispute with other
contractors, subcontractors, mechanics and/or laborers engaged by Tenant or
Landlord or others, or would in any way disturb the peaceful and harmonious
construction, maintenance, cleaning, repair, management, security or operation
of the Project or any part thereof. In the event of any interference or
conflict, Tenant, upon written or oral demand of Landlord or its agent, shall
cause all contractors, subcontractors, mechanics or laborers, or all materials
causing, in Landlord's sole and exclusive opinion, such interference, difficulty
or conflict, to leave or be removed from the Premises immediately. Tenant does
hereby agree to defend, save and hold Landlord harmless from any and all loss
arising thereby, including, without limitation, any reasonable attorneys' fees
21
and disbursements and any claims made by contractors, subcontractors, mechanics
and/or laborers so precluded from having access to the Project.
2.7.3. Lay-Down Area. In order for Tenant to comply with the
Project Requirements, Landlord shall provide (free of charge to Tenant) a
lay-down area for Tenant's construction of its Improvements. Tenant acknowledges
and agrees that no parking will be provided for Tenant or its construction
workers in connection with Tenant's build-out of the Premises.
2.8. Quality of Work.
The quality of all materials and workmanship incorporated into the Improvements
and Furnishings (including, without limitation, repairs, maintenance and the
replacement of or to the Improvements) shall meet the Disney Standard, as
hereinafter defined, and shall be of an exceptionally high level consistent with
a theme park location.
2.9. Prerequisites to Commencement of Tenant's Work.
Before the commencement of any of Tenant's Work, Tenant shall satisfy all of the
following requirements:
2.9.1. Landlord shall have approved the Contract Documents in
writing as herein provided;
2.9.2. The Contract Documents are filed by Tenant (at Tenant's
sole cost and expense) with and approved by all applicable Governmental
Authorities having or claiming jurisdiction, and with any public utility
companies having an interest therein, if required by such utility companies, and
all necessary approvals and permits have been obtained by Tenant at Tenant's
sole cost and expense, and copies thereof delivered to Landlord;
2.9.3. If required by Landlord, Tenant shall, at Tenant's sole
cost and expense, erect and install a temporary enclosure approved by Landlord
in its sole discretion, which shall enclose the Site (or a portion thereof, as
determined by Landlord) during the performance of Tenant's Work, which may
include graphics including (i) a reference to DOWNTOWN DISNEY(R) satisfactory to
Landlord in its sole discretion with respect to size, color, graphics and all
other characteristics and (ii) such other graphics as are approved by Landlord
in its sole discretion. Such enclosure shall meet all state and local fire codes
and any standards required by Landlord's insurers, and shall otherwise comply
with the Operating Conditions. Tenant acknowledges that the windows in the
Premises currently have a display that prevents any view into the Premises, and
that such display shall remain in place until Tenant opens for business;
2.9.4. Tenant has obtained all necessary certificates,
licenses, permits, authorizations, consents and approvals from all applicable
Governmental Authorities;
2.9.5. Before entering upon the Site for performance of any of
Tenant's Work, Tenant shall furnish to Landlord a payment, performance and
completion bond in an amount reasonably satisfactory to Landlord, but not less
than the amount of Tenant's general contract for the completion of Tenant's
Work, and written by a surety company acceptable to Landlord,
22
guaranteeing the full performance and completion of Tenant's Work, and payment
of all amounts in connection therewith, in accordance with this Lease and free
of all liens; and
2.9.6. Tenant shall provide Landlord with evidence that Tenant
has obtained all insurance required by this Lease, including, but not limited
to, builder's risk insurance.
2.10. Compliance with Law.
At Tenant's sole cost and expense, Tenant shall comply with all Project
Requirements, Operating Conditions, Rules and Regulations, and all Laws of all
Governmental Authority (including any agreements entered into by Tenant or an
Affiliate of Tenant with the Department of Justice), with respect to the
Premises or any part or aspect thereof or any aspects of Tenant's construction
of the Improvements and installation of the Furnishings (including, without
limitation, maintenance and the replacement of or to the Improvements and
Furnishings) thereon, and with the requirements and regulations, if any, of any
public utilities, the insurance underwriter (Factory Mutual) or insurance
inspection bureau having or claiming jurisdiction, or any other body exercising
similar functions, and of all insurance companies then writing policies
maintained by Tenant or Landlord providing coverage to the Premises, or any part
thereof, and any provisions of Landlord's insurance coverage of which Landlord
has given Tenant written notice.
Tenant represents and guarantees to Landlord that the construction of the
Improvements (including, without limitation, repairs, maintenance, and
replacement of or to the Improvements) will be performed and completed in a good
and workmanlike manner and in accordance with the provisions of this Lease and
all applicable Laws (including, but not limited to, the Americans With
Disabilities Act of 1990 (42 U.S.C. Section 12101 et seq.), and the related
implementing regulations, codes, rules and accessibility guidelines, as such
acts and related regulations, codes, rules and guidelines may be amended from
time to time (collectively, the "ADA").
2.11. Permits.
Tenant shall obtain any permits (including, but not limited to any applicable
permits from any of the agencies listed below having jurisdiction), licenses or
similar authorizations to design, develop, construct, occupy, operate or use any
buildings, improvements, fixtures and equipment forming a part of the Premises
(including, without limitation, those required by reason of any applicable
environmental Laws) other than in connection with Landlord's Work.
Notwithstanding the foregoing, Tenant shall not submit any applications to
obtain any permits (including, without limitation, demolition, grading and
building permits) or approvals from any governmental or quasi-governmental
agency, including, without limitation, South Coast Air Quality Management
District, Southern California Association of Governments, Regional Water Quality
Control Board, Orange County Flood District and the Orange County Health
Department without first submitting such applications to Landlord for Landlord's
review and approval, which shall be promptly granted or withheld in Landlord's
sole discretion. At Landlord's request, Tenant shall make such modifications to
any permit applications as Landlord reasonably requests. At Landlord's option,
Landlord may elect to obtain any or all permits and approvals from any or all of
the foregoing or other entities and agencies on Tenant's behalf and at Tenant's
expense. Tenant shall, if needed, acquire from Landlord or its Affiliate at
competitive rates any AQMD emission offsets if Landlord or its Affiliate
acquires such. Tenant shall bear the cost of
23
complying with any requirements or conditions imposed by any of governmental or
quasi-governmental agencies and/or authorities in connection with the issuance
of any new permits or the modification of any existing permits in conjunction
with the construction and operation of the Premises.
2.12. Project Completion.
Tenant shall not be deemed to have "Completed" Tenant's Work until: (a) all
exterior and interior signs, furniture, fixtures, equipment, floor and wall
coverings, lighting, Merchandise, and all other items necessary to operate the
Premises as a first-class Build-A-Bear Workshop specialty retail store have been
completed, installed and delivered to the Premises; (b) a certificate of
occupancy and all other required licenses and permits have been issued by the
appropriate Governmental Authorities for the Premises; and (c) Tenant has
provided Landlord with copies of all of the foregoing documents. Tenant shall be
deemed to have attained "PROJECT COMPLETION" (herein so called) of Tenant's Work
once Tenant's Work has been Completed.
2.13. Evidence of Project Completion.
Upon Tenant's Project Completion in accordance with the approved Contract
Documents, Tenant shall procure and provide Landlord, to the satisfaction of
Landlord in its sole and absolute discretion, with copies of: (i) a temporary
certificate of occupancy from the appropriate governmental and
quasi-governmental authorities verifying the Project Completion thereof as
aforesaid; (ii) a certificate from Tenant's architect in charge of Tenant's Work
verifying that Tenant's Work has been so completed, and (iii) a detailed cost
breakdown of all funds expended on the design and construction of the
Improvements and installation of the Furnishings, in form reasonably acceptable
to Landlord. The issuance of the foregoing shall not be deemed to relieve Tenant
of its obligation under the terms of this Lease to complete any and all such
work in accordance with the Contract Documents. Tenant shall deliver a final
certificate of occupancy from the appropriate governmental and
quasi-governmental authorities upon it being issued.
2.14. Cost of Construction.
As soon as practicable after the Project Completion but no later than sixty (60)
days after the opening of the Premises to the public, Tenant shall deliver to
Landlord a written certification and affidavit: (i) setting forth the total cost
to complete Tenant's Work, including architectural, engineering, legal and other
professional fees and costs, and the costs of all Furnishings and supplies
purchased and installed by Tenant to initially operate the Premises; and (ii)
stating that the Premises are free and clear of all liens and encumbrances.
2.15. Removal of Trash.
Tenant shall, at its sole cost and expense, promptly remove from the Premises
all trash and other rubbish which may accumulate in connection with any
construction work (or any other activities) by or on behalf of Tenant in such
manner as prescribed by Landlord.
24
2.16. Project Schedules.
Tenant shall provide project scheduling based upon the Design and Construction
Schedule Requirements and Milestones. The Design and Construction Schedule and
Milestones will serve as an essential measurement of Tenant's compliance with
the terms of the Lease.
Tenant shall, based upon electronic templates provided by Landlord, provide a
project schedule which incorporates a schedule of design submittals, a materials
procurement schedule and a construction activities schedule. The project
schedule shall fully integrate the work of all designers, contractors,
subcontractors and major suppliers. Tenant shall submit the initial project
schedule to Landlord within 21 calendar days of Lease signing. The schedule
shall employ the Critical Path Method in development and maintenance of the
schedule in Precedence Diagram Mode. The CPM network shall incorporate activity
descriptions, sequence, logic relationships, duration estimates and resource
loading. Tenant shall not use any "float suppression" techniques in preparing
the schedule, such as preferential sequencing or logic, special lead/lag
constraints or over-estimating activity durations. Time units for all schedules
shall be in work days, and no construction activity scheduled to commence within
60 days of the data date shall have a duration greater than 5 work days.
Construction activities scheduled to start more than 60 days from the data date
shall not have a duration exceeding 20 days. Tenant shall provide all data files
to Landlord electronically.
Upon first acceptance by Landlord, the project schedule shall become the
"Baseline Schedule" against which all subsequent schedule updates shall be made,
and against which Tenant shall report progress and variances and by which
Landlord will monitor Tenant's compliance with Lease requirements and Design and
Construction Schedule Requirements and Milestones. Landlord and Tenant will
conduct bi-weekly reviews of the progress of Tenant's Work and compare that
progress to the agreed project schedule. This review will include actual
activity start and completion dates and related variances, forecast activity
start and completion dates and related variances and progress of all activities
under way at the time of the review. Landlord and Tenant will conduct monthly
schedule reviews to determine planned versus actual progress to date, compliance
with Lease submittal requirements, Design and Construction Schedule Requirements
and Milestones and any changes to the work plan or implementation required to
comply with the project schedule.
Tenant shall prepare professional quality presentations of all scheduling and
sequencing information and as may be required to communicate its proposed work
plans in restricted areas or to implement its coordination obligations under
this Lease.
2.17. Aesthetic Aspects and Visual Art.
Tenant shall work with Landlord (at Tenant's sole cost and expense) during all
phases of design development to ensure that the Aesthetic Aspects of the
Premises are consistent with the overall architectural scheme and designs of
DOWNTOWN DISNEY(R). Tenant acknowledges and agrees that Landlord requires that
the Premises not contain any works of "Visual art" (as such term is defined or
contemplated in 17 U.S.C. Sections 106A, 113 or successor statutes or similar
Law) without Landlord's prior consent in Landlord's sole and absolute
discretion. If Landlord does consent to the installation or placement of any
such work in or upon the Premises, Tenant shall,
25
prior to any such installation or placement, obtain from all artists and
creators of such work, to the fullest extent permitted by Law, a full and
complete acknowledgment and assignment (or waiver, in the event assignment is
not possible) in favor of Landlord and Tenant (and their respective successors
and assigns) of the benefits of any provision of law known as "droit moral,"
"moral rights" or similar law, to the effect that such artists and creators
acknowledge and agree that such installation or placement may subject such work
of visual art to destruction, distortion, mutilation or other modification by
reason of its removal from the Premises at a later date or otherwise, and such
acknowledgment and waiver shall otherwise be in form and substance satisfactory
to Landlord in its sole discretion.
2.18. Landlord Approval.
Landlord acknowledges that the plan approval process set forth in this Article 2
requires the cooperation of Landlord in expediting Landlord's review of and
comments on proposed plans. Accordingly, Landlord agrees to exercise reasonable
efforts to respond to Tenant's submittals, as soon as reasonably practicable,
from receipt. Landlord's approval hereunder of any plans (including, without
limitation, the Contract Documents and any future alterations, modifications or
additions thereto) shall not be construed as approval of the safety or
structural adequacy of the improvements detailed therein or their conformity to
sound architectural or engineering standards or practices or to any applicable
building codes or other legal requirements, it being understood and agreed that,
as between Landlord and Tenant, Tenant shall be solely responsible for such
matters and Tenant shall hold Landlord and Landlord's Affiliates harmless from
all claims and liabilities arising therefrom. Any of Tenant's Work which does
not conform to the Contract Documents approved by Landlord and all applicable
Laws shall, if so required by Landlord or by Law, be removed or reconstructed by
Tenant at Tenant's cost.
2.19. Ownership of Plans; Exclusive Rights to Design; Ownership of
Improvements.
Landlord shall be furnished with a complete set of "as-built" drawings upon the
Project Completion of Tenant's Work. Landlord shall be deemed the owner of the
Contract Documents and all designs of the Improvements, as well as any additions
or modifications thereto; provided, however, that nothing in this Section shall
be construed to grant Landlord the right to use the Build-A-Bear Workshop Trade
Name, trade mark or other intellectual property owned by Tenant. Such ownership
rights shall not, however, be deemed to subject Landlord to any responsibility
for the safety or adequacy of such plans or to any liability in the event such
plans, or the design represented thereby, are deficient in any manner. Tenant
shall not be entitled to utilize such plans or replicate the design and/or
appearance of the Improvements to be constructed on the Site, at any location
other than the Site, unless Landlord expressly consents in writing to such use,
which consent Landlord may be granted or withheld in Landlord's sole discretion.
Tenant shall be deemed the owner of the Improvements during the Term, and upon
the expiration or sooner termination of this Lease, all right, title and
interest in, to and under the Improvements shall thereupon vest in Landlord
pursuant to the terms of this Lease.
2.20. Furnishings.
Tenant shall, at its own cost and expense and in accordance with the Contract
Documents, procure and install the Furnishings within or upon the Improvements.
Tenant shall be deemed the
26
owner of the Furnishings during the Term, and upon the expiration or sooner
termination of this Lease, all right, title and interest in, to and under that
portion of the Furnishings which constitute non-trade fixtures shall thereupon
vest in Landlord pursuant to the provisions of this Lease.
2.21. Expansion of Premises.
Subject to the provisions of Section 11.1, nothing in this Lease shall be deemed
to authorize Tenant to renovate, alter or expand the Premises, following its
completion, it being understood that Tenant may do so only with the prior
written approval of Landlord, which approval Landlord may withhold in its sole
discretion.
2.22. Signage and Logos.
2.22.1. Approval. All permitted signage and advertising
identifying or otherwise mentioning the Premises, and the use of Landlord's
logos, Tenant's Logos and/or of Tenant's name in signage and advertising, shall
be subject to Landlord's approval, in Landlord's sole discretion. To the extent
that Landlord's guidelines regarding use of logos and/or advertising, which may
be distributed by Landlord from time to time, address such usage, and Tenant's
proposed use complies with Landlord's guidelines, Landlord's approval shall not
be unreasonably withheld. Tenant shall submit to Landlord for Landlord's
approval the relative size of the constituent elements of, and the location,
design and style of lettering and colors in all signage and in all advertising
and promotional materials; the proximity to Tenant's name, and the relative size
of any other name, logo, symbol or other thing, which may be desired to be
included by Tenant.
2.22.2. Additional Signage. Except as approved by Landlord as
part of the Contract Documents and except for small, professionally prepared
interior signs identifying a product for sales, Tenant may not erect or display
any permanent or temporary exterior or interior signage, banners, displays,
announcements or logos without the prior written consent of Landlord, which
consent may be withheld by Landlord in its sole discretion. Landlord reserves
the right to require Tenant to remove any such small interior signs which
Landlord determines, in its sole discretion, to be inconsistent with the Disney
Standard or other than in good quality or taste.
2.22.3. Trademark Registration. All signage and all uses of
Tenant's name by Landlord as permitted elsewhere herein, shall incorporate the
lettering style of Tenant's federal trademark registration as shown on Exhibit E
attached hereto.
3. RENT.
3.1. Minimum Rent.
Commencing on the Commencement Date, and subject to the provisions for the
Tenant Improvement Allowance in Section 2.1 hereof, Tenant shall pay to Landlord
each Lease Year (as such term is hereinafter defined), and Tenant covenants and
agrees that Tenant will pay to Landlord during the Term, at the address
specified in this Lease for the giving of notices to Landlord or at such other
place as Landlord may specify, without any right of set-off, deduction,
27
counterclaim, suspension of abatement, and without any prior notice or demand,
the amount of * ("MINIMUM RENT").
3.1.1. The aforesaid Minimum Rent shall be due and payable in
monthly installments, each in the amount equal to one-twelfth (1/12) of the
Minimum Rent for each Lease Year and shall be prorated for the time period
between the Commencement Date and the commencement of the next Lease Year. Each
such installment shall be due and payable, in advance, on or before the first
(1st) day of each month of the Term, commencing on the Commencement Date. If the
Commencement Date occurs on a day other than on the first (1st) day of the month
in which such date falls, such installment of Minimum Rent shall be prorated
based upon the actual number of days in such month.
3.1.2. Commencing with the second Lease Year and commencing on
the first day of each succeeding Lease Year (each, a "Rent Adjustment Date"),
the Minimum Rent payable by Tenant shall be adjusted to be that product (which
shall in no event be less than the Minimum Rent payable for the preceding Lease
Year), which is derived by multiplying the Minimum Rent payable for the previous
Lease Year by a fraction, the numerator of which shall be the Index (as defined
below) in effect for the month of August in the previous Lease Year and the
denominator of which shall be the Index in effect for (i) the month of August,
2001 in the case of the first Rent Adjustment Date or (ii) the month of August
prior to the preceding Rent Adjustment Date in the case of the second Rent
Adjustment Date and each succeeding Rent Adjustment Date. Notwithstanding
anything to the contrary in the foregoing, in no event shall the Minimum Rent in
any Lease Year exceed * of the Minimum Rent for the previous Lease Year. The
term "INDEX", as used herein, shall mean the Consumer Price Index for All Urban
Consumers, published by the Bureau of Labor Statistics of the U.S. Department of
Labor for Los Angeles-Anaheim-Riverside, California, all items (1982-84=100)
("CPI"); provided, however, that if the CPI described above shall be
discontinued, the Index shall be the index of consumer prices in the U.S. most
closely comparable to the discontinued Index, after making such adjustments in
items included or method of computation as may be prescribed by the agency
publishing the same, or as otherwise may be required to compensate for changes
subsequent to the Commencement Date. In the event a comparable substitute index
is not available, then the price index used in making the CPI-based adjustments
provided for in this Lease shall be the successor thereto, compiled and
published by an agency of the United States government, which determines the
purchasing power of the dollar. If Landlord determines that there is no such
index compiled and published by an agency of the United States government, then
a nationally recognized firm of independent certified public accountants
designated by Landlord shall select a successor price index, government or
private, which best reflects changes in the purchasing power of the dollar, and
the decision of said accountants in selecting such successor price index to be
used hereunder shall be final and binding upon the parties. Landlord shall pay
the fees of said accountants payable in respect of their selection of such
successor price index. In the event the base reference year used in computing
the CPI is changed during the Term, the 1982-84 = 100 index published
concurrently by the Bureau of Labor Statistics shall continue to be used in the
calculation of adjustments hereunder; provided, however, that in the event the
Bureau of Labor Statistics ceases to currently publish the 1982-84 index, then
the adjustments provided for in this Lease shall be calculated based upon the
new base year index, and in such event Landlord shall apply a conversion factor
to such new index for the purpose of making such new index as comparable as
practicable with the prior base year index. Such conversion factor shall be
* - Redacted Text - Confidential treatment requested; omitted portions have been
filed separately with the Securities and Exchange Commission.
28
obtained from the Bureau of Labor Statistics if in fact the Bureau publishes
such a conversion factor; otherwise a nationally recognized firm of certified
public accountants designated by Landlord shall select a conversion factor.
3.2. Percentage Rent.
3.2.1. In addition to Minimum. Rent Commencing as of the
Commencement Date, and subject to the provisions for the Tenant Improvement
Allowance in Section 2.1 hereof, Tenant shall pay to Landlord, and Tenant
covenants and agrees that Tenant will pay to Landlord during the Term, at the
address specified in this Lease for the payment of Minimum rent hereunder or at
such other place as Landlord may specify, without any right of set-off,
deduction, counter-claim, suspension or abatement (except as otherwise expressly
provided in this Lease to the contrary), and without any prior notice or demand
the sum of (i) * of its annual Gross Sales which exceed * but are less
than * , (ii) * of its annual Gross Sales which exceed * but are less
than * and (iii) * of its annual Gross Sales in excess of * . The
foregoing is collectively referred to herein as "PERCENTAGE RENT". If Gross
Sales for the then current Lease Year through the end of any month exceeds * ,
Tenant shall pay to Landlord as Percentage Rent, on or before the fifteenth
(15th) day of the succeeding calendar month, the product of the amount by which
Gross Sales exceeds * , multiplied by the applicable Percentage Rent rate
above, less any Percentage Rent payments previously paid by Tenant to Landlord
for such Lease Year during the Term and continuing through that month
immediately following the date in which the Expiration Date occurs. For the
period between the Commencement Date through the next following September 30,
Percentage Rent shall be prorated based on the actual number of days in such
period. To calculate Percentage Rent for such period, Tenant shall calculate the
Percentage Rent that would be due Landlord for the 12-month period following the
Commencement Date, and such amount shall be divided by 365, and the resulting
number shall be multiplied by the actual number of days in the period beginning
on the Commencement Date and ending on September 30 of the same year. Tenant
shall pay such Percentage Rent (if any) on or before the fifteenth (15th) day of
the month succeeding the month in which such 12-month period terminates.
3.2.2. On or before the fifteenth (15th) day of each month
during the Term (including that month immediately following the date in which
the Expiration Date occurs), Tenant shall prepare and deliver to Landlord at the
place designated by Landlord a statement of Gross Sales made during the
preceding month, certified to be true and correct by the chief financial officer
of Tenant or other duly authorized officer of Tenant, together with a copy of
Tenant's monthly sales tax report for such Lease Period submitted to the State
of California, Franchise Tax Board or Department of Revenue. In addition, within
thirty (30) days after the expiration of each Lease Year (including the period
between the Commencement Date and the commencement of the next Lease Year) and
within thirty (30) days after the Expiration Date, Tenant shall prepare and
deliver to Landlord at the place designated by Landlord a statement of Gross
Sales made and sales tax paid during the preceding Lease Year, certified to be
true and correct by Tenant's chief financial officer, as well as a copy of the
sales tax return submitted by Tenant. All such monthly and annual statements
shall be in such form and shall contain such data as Landlord may reasonably
require. If the annual certified statement indicates that the Percentage Rent
for the subject Lease Year theretofore paid by Tenant is less than the
Percentage
* - Redacted Text - Confidential treatment requested; omitted portions have been
filed separately with the Securities and Exchange Commission.
29
Rent which was due and payable, then Tenant shall pay the amount of such
underpayment along with its submission of its annual statement. If the annual
statement indicates that the Percentage Rent for the subject Lease Year
theretofore paid by Tenant was in excess of the Percentage Rent which was due
and payable, then the amount of such excess shall be credited towards the next
installment(s) of Rent due, unless the Term shall have expired or been sooner
terminated, in which event the amount of such excess shall be refunded to Tenant
(after deducting therefrom any amounts owed by Tenant to Landlord); provided,
however, that in no event shall Landlord receive and retain less than the annual
Minimum Rent herein specified (subject to Tenant's right to receive the Tenant
Improvement Allowance pursuant to the provisions of Section 2.1)
3.2.3. Tenant's point of sale system shall be reasonably
acceptable to Landlord. Such point of sale system shall be compatible with
Landlord's computer system so that Landlord may retrieve data regarding Tenant's
sales directly through such means on an as desired basis.
3.2.4. In addition, Tenant shall submit an unaudited daily
report of Gross Sales (including exclusions thereto). Such count shall be
telecopied daily in writing to such person or persons as Landlord may designate
from time to time.
3.3. Required Records.
3.3.1. Tenant shall at all times during the Term keep and
maintain (in accordance with generally accepted accounting principles as are at
the time applicable and otherwise consistently applied ("GAAP") and separately
from any of its other books, records and accounts) accurate, complete and
up-to-date books and records pertaining to all operations at or with respect to
the Premises, including books of account reflecting all Gross Sales and all
matters referred to in this Lease (collectively, "BOOKS AND RECORDS").
3.3.2. Tenant shall record all sales and other transactions
at the time each sale is made, whether for cash, credit or otherwise, in a
non-resettable cash register or registers that contain locked-in cumulative
tapes or electronically produced records with cumulative capacity and such other
features as shall be acceptable to Landlord. The Books and Records shall
include, without limitation: (i) daily electronically produced records or daily
dated register tapes and serially numbered sales slips; (ii) settlement report
sheets of transactions with any permitted subtenants, concessionaires, and
licensees; (iii) electronic, mail or telephone orders; (iv) records showing that
any goods returned by guests was purchased by such guests at or through the
Premises; (v) duplicate bank deposit slips and bank statements; and (vi) such
other records as normally would be required to be kept for the purpose of
examination or audit of Gross Sales by an independent accountant in accordance
with generally accepted auditing standards.
3.3.3. Landlord and its employees, agents or representatives
shall have, at all times during normal business hours, complete access to all
Books and Records. The Books and Records shall be kept at Tenant's principal
address (which is set forth in Section 24.7 hereof) or such other place
acceptable to Landlord. Upon at least 24 hours' prior written notice, Landlord
shall have the right to cause its own or an independent audit of the Books and
Records to be made at any time, at Landlord's cost and expense. Such right of
inspection and audit may be exercised by Landlord at any time within three (3)
years after the end of the Lease Year to which such Books and Records relate,
and Tenant shall maintain all Books and Records for at least such
30
period of time and, if any dispute between the parties with respect to this
Lease has arisen and remains unresolved at the expiration of such period of
time, for such further period of time until the final resolution of such
dispute. Further, each lease or concession agreement or other agreement entered
into by Tenant with a permitted subtenant, concessionaire, licensee or other
person or entity shall contain a provision pursuant to which Landlord is granted
the same rights with respect to the books and records to be maintained as
aforesaid, which provisions Tenant shall use its best efforts to enforce (at
Tenant's sole cost and expense).
3.3.4. If, upon any examination by Landlord or its employees,
agents or representatives of the Books and Records, an error shall be revealed
which results in there being due to Landlord Additional Rent of any nature, all
Rent calculations prior to the date such discovery is made shall be reviewed
(whether or not such Rent has been audited pursuant to this Section) and the
amount of any overpayment or underpayment of Rent which may be disclosed by such
review, together with interest accrued thereon from the date on which such
underpayment or overpayment was made until the amount thereof is paid or
credited at the Applicable Rate, during such period, shall, in the case of an
underpayment, be paid by Tenant to Landlord upon demand, or, in the case of an
overpayment, be credited to the next installment or installments of Rent falling
due (or, if this Lease shall have expired or been sooner terminated other than
by reason of Tenant's default, be repaid by Landlord to Tenant after deducting
therefrom any amount owed by Tenant to Landlord). If such error results in there
being due to Landlord Additional Rent for any Lease Year in an amount equal to
or exceeding three percent (3%) of the Rent theretofore paid by Tenant in
respect of such Lease Year, then the cost of the examination revealing such
error shall also be paid by Tenant to Landlord, upon demand. In addition, if
such error is due to fraud or gross negligence on the part of Tenant or its
agents, accountants or employees, then the same shall be deemed an incurable
event of default and shall permit Landlord, in addition to all its other rights
and remedies under this Lease due to an event of default, to terminate this
Lease.
3.4. Payments of Rent.
3.4.1. All sums of money, other than Minimum Rent and
Percentage Rent, which may be due or payable by Tenant to Landlord under this
Lease (whether contingent or fixed), including any amounts, taxes, fees,
charges, insurance obligations, costs, expenses, obligations, assessments,
payments, disbursements or reimbursements whatsoever payable by, attributable to
or the responsibility of Tenant, are intended and shall be deemed "ADDITIONAL
RENT" for all purposes. Tenant shall pay to Landlord, as "RENT" (herein so
called) hereunder, a combination of Minimum Base Rent, Percentage Rent, and
Additional Rent as specified hereunder (subject to the provisions for the Tenant
Improvement Allowance in Section 2.1 hereof). All such payments of Rent shall be
made in lawful money of the United States of America, without any prior demand
by Landlord and without any deduction or set-off, at the time, in the manner and
in the amounts hereinafter specified by check payable to Landlord mailed or
delivered to Landlord at the address hereinafter specified. All such amounts,
and any and all other amounts which are attributable to, payable by or the
responsibility of Tenant under this Lease, shall constitute "rent" within the
meaning of California Civil Code Section 1951(a).
3.4.2. All payments of Rent due under this Lease shall be made
by check (in current legal tender of the United States as the same is by Law
constituted at the time of such
31
payment) and drawn upon a United States bank or other financial institution;
provided, however, that if an Event of Default shall exist, if any check is
returned because of insufficient funds, or if two or more payments of Rent are
not paid when due in any Lease Year, then Landlord shall have the right, in its
sole and absolute discretion, to require all future installments of Rent
payments be by: (i) wire transfer via the Federal Reserve to an account or
accounts designated by Landlord; (ii) certified or cashier's check; or (iii)
some other method as Landlord may otherwise direct. If any check is returned
because of insufficient funds it shall be deemed that Rent was not received when
due and such payment shall be subject to all penalties and interest provided in
this Lease for a late payment. Any extension, indulgence or change by Landlord
in the mode or time of payment of Rent on any occasion shall not be construed as
a waiver of any provision of this Lease, or as requiring or granting a similar
extension, indulgence or change by Landlord upon any subsequent occasion. No
writing, communication or circumstance of any kind which accompanies or which is
given or transmitted in connection with any payment made or to be made by Tenant
to Landlord shall effect or cause any accord, satisfaction, release or waiver of
any kind against Landlord.
3.4.3. Tenant shall pay as a late charge an amount equal to
five percent (5%) of any installment or amount of Rent not paid when due. In
addition, any such late installment or amount shall bear interest at the
Applicable Rate from the date due until paid in full.
3.4.4. The obligation to pay all Rent reserved herein, which
is due but unpaid as of the expiration or sooner termination of this Lease,
shall survive the expiration or sooner termination of this Lease.
3.4.5. The parties intend that all Minimum Rent and Percentage
Rent received by Landlord shall be entirely net of any costs and expenses
incurred in connection with the Premises, whether ordinary or extraordinary,
whether foreseen or unforeseen, including, without limitation, utilities,
operating costs, changes in Laws, labor and overhead, Taxes and Assessments,
insurance, repairs and maintenance except as provided otherwise in this Lease.
3.4.6. All payments due under this Lease shall be mailed to
such mailing address as Landlord may from time to time designate by notice to
Tenant. Any extension, indulgence or change by Landlord in the mode or time of
payment of Rent, or any sum due to Landlord hereunder on any occasion shall not
be construed as a waiver of any provision of this Lease, or as requiring or
granting a similar extension, indulgence or change by Landlord upon any
subsequent occasion. The subsequent acceptance by Landlord of any payment owed
by Tenant to Landlord under the Lease or the payment of Rent by Tenant shall not
be deemed to be a waiver of any preceding breach by Tenant of any term,
covenant, agreement, condition or provision of the Lease, other than the failure
of Tenant to make the specific payment so accepted by Landlord, regardless of
Landlord's or Tenant's knowledge of such preceding breach at the time of the
making or acceptance of such payment.
3.5. No Abatement of Rent.
No abatement, diminution or reduction of Rent, charges or other compensation
shall be allowed to Tenant or any person claiming under Tenant, and no
abatement, diminution or reduction of Tenant's other obligations hereunder shall
be allowed to Tenant, under any circumstances
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whatsoever including, without limitation, inconvenience, discomfort,
interruption of business or otherwise by virtue of, or arising out of: (i) any
taking of any portion of the Premises; (ii) the making of alterations, changes,
additions, improvements or repairs to the Premises; (iii) any present or future
Laws; (iv) restoration of the Premises after damage, destruction or partial
condemnation; or (v) any other cause or occurrence.
3.6. No Representation as to Amount of Gross Sales.
It is understood and agreed that there has been no promise, guaranty,
representation or warranty of any kind whatsoever made by Landlord or any of its
employees, agents or representatives as to the success or failure of the
business to be conducted within the Premises, including, without limitation, the
minimum or maximum amount of Gross Sales which may or shall be made in the
Premises during any Lease Year during the Term.
3.7. Tax on Rent.
In addition to the Minimum Base Rent and Percentage Rent and any other sums or
amounts required to be paid by Tenant to Landlord or on Landlord's behalf
pursuant to the provisions of this Lease, Tenant shall also be responsible for
and shall pay the amount of any applicable sales, use, excise or personal
property taxes, charges, rates, duties or license fees with respect to Tenant's
payment of Rent under this Lease or assessed against or levied upon any of the
Furnishings, plus any tax measured by gross rentals received from the Premises,
whether the same be levied, imposed or assessed by the State of California or
any other federal, state, county or municipal governmental or quasi-governmental
entity or agency. To the extent possible, Tenant shall cause such taxes to be
billed separately from any such taxes billed to Landlord. If at any time during
the term of the Lease there shall be levied, assessed or imposed on Landlord,
the Premises or the Site by any governmental or quasi-governmental entity, any
general or special, ad valorem or specific excised capital levy or other taxes,
assessments, levies, or charges on the payments received by Landlord under this
Lease and/or any license fee, excise or franchise tax measured by or based, in
whole or in part, upon such payments, or taxes based directly or indirectly upon
the transaction represented by this Lease, and/or any occupancy, use, per capita
or other taxes, based directly or indirectly upon the use or occupancy of the
Premises, then all such amounts shall be and become the responsibility of Tenant
and shall be deemed Rent hereunder. If a separate bill is not issued, any such
sales, use or excise taxes shall be paid by Tenant to Landlord, as additional
Rent, at the same time that each of the Minimum Base Rent and Percentage Rent,
or any other sum or amount with respect to which such taxes are paid by Tenant
to Landlord. Tenant shall be liable at its sole cost and expense for, and
Landlord shall have no liability in respect of, any sales, use or similar tax
(including, without limitation, any and all related or attendant taxes, such as
"local option" taxes, etc.) with respect to any and all Rent. Tenant shall
indemnify and hold Landlord harmless from and against any loss, cost, expense,
liability or obligation which might arise in connection with any such taxes. At
Landlord's request, Tenant shall pay any and all of such taxes to Landlord for
remittance to the appropriate Governmental Authority.
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4. USE; OPERATION.
4.1. Use.
4.1.1. As a material inducement to Landlord to enter into this
Lease, subject to the Project Requirements, Operating Conditions, Rules and
Regulations and standards imposed upon Tenant in this Lease, and subject to
Landlord's approval in Landlord's sole discretion, Tenant shall continuously use
and operate the Premises throughout the Term hereof exclusively as a first-class
Build-A-Bear Workshop specialty retail store offering the display, assembly and
sale at retail of make-it-yourself plush teddy bears and other plush animals,
together with related accessories for such make-it-yourself plush teddy bears
and animals. Incidental to the sale of make-it-yourself plush teddy bears and
animals, Tenant may offer for sale apparel designed and produced exclusively for
Tenant and such other items as are sold in the majority of Tenant's other
stores, all of which incidental uses shall occupy less than * of the sales
area of the Premises. The foregoing shall be deemed the "PERMITTED USE". The
Premises shall be used for the Permitted Use and for no other purpose, and
utilizing no name other than Build-A-Bear Workshop (or such other name as is
used for substantially all other locations of Tenant which have the same
operation as the Permitted Use), unless otherwise approved in writing by
Landlord in Landlord's sole discretion. The Premises shall be used and operated
as aforesaid without interruption, except as otherwise expressly permitted
herein and except for reasonable interruptions in respect of portions
(substantially less than all) of the Premises for reasonable periods for
repairs, renovations, replacements and rebuilding that is pre-approved in
writing by Landlord as to the proposed work and the date and time when such work
will be performed. Except as otherwise provided herein, there will be no
discontinuance or change in use without the prior written consent of Landlord,
which consent Landlord may withhold in its sole discretion.
4.1.2. Tenant shall continuously use and operate the Premises
in strict conformity with the terms of this Lease (including, without
limitation, the Disney Standard and the Operating Conditions, Rules and
Regulations), and for no other use or purpose of any kind or nature whatsoever.
Tenant shall immediately remove and withdraw from sale any goods or services
which may be found objectionable (as determined in Landlord's sole discretion)
to the public welfare and/or Landlord following receipt of written notification
thereof from Landlord.
4.1.3. Landlord shall have the right to approve, in its sole
discretion and on a case-by-case basis, the design and quality of all
Merchandise prior to its display and sale in the Premises, including, without
limitation, theming, size, packaging, appearance, quality, quantity and
appropriateness; provided, however, that nothing contained in this sentence
shall relieve Tenant of its obligations to insure that any Merchandise sold or
offered for sale in the Premises is in compliance with applicable Laws and the
provisions of this Lease. Landlord reserves the right to require Tenant to
remove any items displayed or offered for sale in the Premises which Landlord
determines, in its sole discretion, to be inconsistent with the Disney Standard
or other than in good quality or taste.
4.1.4. Tenant shall not use or occupy the Premises (or any
portion thereof), or permit the Premises (or any portion thereof) to be used or
occupied in violation of any Law, or in any manner which would violate any
certificate of occupancy with respect to the Premises, which
* - Redacted Text - Confidential treatment requested; omitted portions have been
filed separately with the Securities and Exchange Commission.
34
would cause or would be likely to cause damage to the Premises, which would
constitute a public or private nuisance, which would increase the premium cost
of, or invalidate, any insurance policy in force with respect to the Premises,
or which may be deemed by Landlord in its sole judgment as disreputable, immoral
or hazardous. Tenant shall continuously use the Premises and keep the Premises
occupied at all times during the Term, and Tenant shall not abandon, vacate or
cease to use the Premises during the Term. Tenant shall not use or permit the
Premises to be used by the public, as such, without restriction or in a manner
as might tend to impair Landlord's title to, or its reversionary interest in,
the Premises, or in a manner which might make possible a claim or claims of
adverse usage or adverse possession by the public, as such, or of implied
dedication of the Premises or any portion thereof.
4.1.5. Updating Facilities. Tenant shall contribute such sums
as Landlord may require from time to time * , to update and remodel the decor
and Furnishings in the Premises to insure that at all times, the interior
appearance, decor, and Furnishings are of a quality, character, topicality, and
diversity (i) equal or better to the three (3) newest facilities of Tenant that
have the same (or similar) name, theme or content that may hereafter be opened
throughout the world from time to time and/or (ii) if Tenant has not opened any
new facilities, then equal to the then current standards of DOWNTOWN DISNEY(R)
and THE DISNEYLAND RESORT(R) PROJECT. All such changes and alterations shall be
subject to Landlord's approval, which Landlord may grant or withhold in
Landlord's sole discretion. If and to the extent that any such new facilities
opened after Tenant's Work is completed, feature new or different features,
exhibits or characteristics (collectively "CHANGES"), at Landlord's request and
subject to Landlord's approval, which Landlord may grant or withhold in
Landlord's sole discretion, and provided it is not physically impossible to
accommodate such Changes within the Improvements, Tenant shall incorporate any
or all of such Changes within the Improvements within a reasonable period of
time after receiving Landlord's request.
4.1.6. Restriction on Sales. In order to prevent any
diminution in the anticipated revenue to be realized by Landlord through
Percentage Rent payments attributable to revenue derived from the sale of
Merchandise identifying or identifiable with the first-class Build-A-Bear
Workshop specialty retail store to be constructed on the Site, Tenant shall not
sell Tenant's Merchandise identifying "Anaheim", "Disney", "Disneyland(R)", "THE
DISNEYLAND RESORT(R) PROJECT", "Disney's California Adventure(R)" (or such other
name as Tenant or its Affiliates shall name any theme park in THE DISNEYLAND
RESORT(R) PROJECT), "DOWNTOWN DISNEY(R)" (or such other name as the retail,
dining and entertainment complex shall be known) or any name, trademark or
service mark registered to Landlord or any of Landlord's Affiliates, or any
phrase containing the name "Disney", from any location other than the Premises
(including, without limitation, catalog sales), without Landlord's prior written
consent, which consent Landlord may grant or deny in Landlord's sole discretion.
In addition to constituting a default under this Lease, any sales in violation
of this provision shall be deemed to constitute sales that are includable in
Gross Sales attributable to the Premises, for purpose of calculating Percentage
Rent.
4.1.7. Nuisance, et. al. Tenant shall not commit or suffer any
use, occupancy, act or omission, or condition to exist on, under or adjacent to
the Premises which may constitute
* - Redacted Text - Confidential treatment requested; omitted portions have been
filed separately with the Securities and Exchange Commission.
35
a nuisance, public or private, or which may be deemed by Landlord, in its sole
judgment, by Law or by Project Requirement to be disreputable, hazardous or a
nuisance.
4.1.8. Compliance with Law. All operations on the Premises,
and all aspects thereof, shall at all times be in compliance with all Project
Requirements and applicable Laws and all other governmental and
quasi-governmental authorities having or claiming jurisdiction over the
Premises, and of all their respective departments, bureaus and officers, and of
the insurance underwriting board or insurance inspection bureau having or
claiming jurisdiction, or any other body exercising similar functions, and of
all insurance companies from time to time selected by Tenant to write policies
covering the Premises or any part thereof.
4.2. Continuous Operation; Hours; Reservations.
4.2.1. Tenant acknowledges and agrees that the primary purpose
of the Premises is to serve, on a non-exclusive basis, the guests of DOWNTOWN
DISNEY(R) and THE DISNEYLAND RESORT(R) PROJECT. Accordingly, as a material
inducement to Landlord to enter into this Lease, from and after the Commencement
Date, Tenant shall continuously use all of the Premises throughout the Term to
maximize Gross Sales consistent with the terms and provisions of this Lease and
Tenant shall not leave the Premises vacant or suffer or permit any waste or
mistreatment thereof.
4.2.2. Tenant shall continuously keep the Premises open and
available to the public for permitted business activity seven (7) days per week,
365 days per year, during such hours as shall be acceptable to Landlord
(provided, however, that if Landlord changes the hours of operation, Landlord
shall give Tenant reasonable advance written notice thereof, which notice may be
given to the manager on duty). If Landlord determines that the Premises should
remain open for additional or different hours of operation, Tenant shall be
obligated to comply with such determination. Tenant may not change its operating
hours without the prior written consent of Landlord, which Landlord may grant in
its sole and absolute discretion.
4.2.3. Prohibited Uses. All uses of the Premises not expressly
permitted by Subsection 4.1.1 above shall be deemed prohibited. In no event may
any portion of the Premises be used for any exhibitions, shows or other forms of
entertainment. In no event may the Premises contain any video, arcade, virtual
reality or simulator games or attractions. No tickets, vouchers, admission media
or advertising, discounts or promotional materials of any kind may be sold,
distributed, exhibited or otherwise made available to the public within or from
any portion of the Premises without Landlord's express consent, which Landlord
may withhold in its sole and absolute discretion.
4.2.4. Other Prohibited Uses. The Premises may never be used
for the display of any materials, or, subject to applicable Laws, the appearance
of any employee, which is, as determined by Landlord, in its sole and absolute
discretion, pornographic, lewd, vulgar, obscene or immoral.
4.3. Operating Supplies.
4.3.1. Tenant shall be responsible, at Tenant's sole cost and
expense, for all the necessary and appropriate operating supplies for the
Premises (including, without limitation, all
36
paper products, stationery, shopping bags, gift boxes, gift wrap, smallwares,
etc.) (all of the foregoing being hereinafter collectively referred to as the
"SUPPLIES"). Throughout the Term, Tenant shall keep and maintain an adequate
stock and supply of the Supplies, and all Supplies shall be of first-class
quality and consistent with the Disney Standard.
4.3.2. Tenant shall not depict or incorporate (or authorize
others to depict or incorporate) DOWNTOWN DISNEY(R) name, THE DISNEYLAND
RESORT(R) PROJECT name or the word "DISNEY" (or any variation thereof, either
alone or in conjunction with, or as a part of, any other word, mark, name or
title) on any Supplies for the purpose of referring to the location of the
Premises, without obtaining Landlord's prior consent in each instance (which
consent may be granted or withheld in Landlord's sole discretion).
4.4. Disney Standard.
4.4.1. As a material inducement to Landlord to enter into this
Lease, Tenant acknowledges and agrees that: (i) the Premises is located in
DOWNTOWN DISNEY(R) within THE DISNEYLAND RESORT(R) PROJECT; (ii) all guests of
the Premises will reasonably expect, because of its name and location, that the
services and facilities of the Premises, and the manner of providing or offering
of such, will at all times be (1) of the highest quality and standards, (2)
suitable for family purposes, and (3) in conformity with the overall theme,
concept, atmosphere and quality associated with personal services, recreational
activities and family activity associated with THE DISNEYLAND RESORT(R) PROJECT;
and (iii) it is in the best interests of all concerned that all guests of the
Premises be provided with services and facilities of such standard, suitability
and conformity as hereinabove described and that Tenant be held to comply with
such standard, suitability and conformity (all of the foregoing as determined by
Landlord in its sole and absolute discretion from time to time being herein
collectively referred to as the "DISNEY STANDARD").
4.4.2. Throughout the Term, the entire Premises shall be
maintained and operated by Tenant in strict accordance with the terms of this
Lease. Tenant shall satisfy the Disney Standard in all matters relating to the
operation of the Premises, including, without limitation, maintenance, repair,
safety, sanitation, guest service and employee courtesy, appearance, conduct and
discipline, and Landlord shall have the right to inspect the Premises and all
areas thereof at all times to assure itself that Tenant is satisfying the Disney
Standard (as well as any other term or provision of this Lease).
4.4.3. Without limiting the generality of the foregoing,
Tenant understands and acknowledges that Landlord may, in its sole discretion,
designate one or more "Landlord Representative(s)" to inspect and monitor the
Premises for the benefit of Landlord and in order to insure compliance by Tenant
with the terms of this Lease. Tenant shall cooperate at all times with any such
"Landlord Representative(s)" and shall continually provide access to all aspects
of the Premises for such person or persons.
4.5. Operational Conditions and Guidelines.
4.5.1. Standards. Tenant acknowledges that Landlord has very
substantial interests in maintaining the image, reputation, aesthetic appearance
and quality of, and harmony
37
among, the properties owned by Landlord and/or any of Landlord's Affiliates
which include and surround the area of the Premises, and that, accordingly,
Tenant shall comply with and maintain high quality standards for the operation
of the Premises. Tenant shall at all times manage the Premises in accordance
with such reasonable policies and standards as Landlord shall establish from
time to time to assure the continued operation of the Premises as high quality
facilities. Landlord and Tenant shall confer with respect to excessive
complaints by customers of the Premises which come to the attention of Landlord.
If such complaints relate to service, cleanliness or the state of repair or
other condition of the Premises and are reasonably found by Landlord to be
justified, Tenant shall, at its sole cost and expense, remedy immediately the
cause or causes of such complaints. Tenant shall comply with and abide by the
Operating Conditions, Rules and Regulations. Landlord shall have the right, from
time to time during the Term, to make changes, additions to and deletions from
the Operating Conditions, Rules and Regulations promulgated by Landlord.
Landlord agrees to uniformly enforce the Operating Conditions, Rules and
Regulations against all similar retail operations at DOWNTOWN DISNEY(R);
however, Landlord shall not be liable to Tenant for the violation of any rules
and regulations by Landlord, any other tenant, any other occupant of THE
DISNEYLAND RESORT(R) PROJECT, or other person or entity, and the failure to
enforce any Operating Conditions, Rules and Regulations against Landlord, any
other tenant, any other occupant of THE DISNEYLAND RESORT(R) PROJECT, or any
other person or entity, shall not constitute a waiver thereof by Landlord.
4.5.2. Educational Programs. At Landlord's election, Tenant's
employees shall attend orientation programs conducted by Landlord prior to or
reasonably soon after beginning employment at the Premises and on a periodic
refresher basis. Tenant shall pay to Landlord a fee based on Landlord's actual
cost for each such employee scheduled to attend the orientation program and
shall pay such employee its salary for time spent attending such orientation
program. Landlord shall invoice Tenant at the end of each week for employees
scheduled to attend during the preceding week, and Tenant shall pay each such
invoice within seven (7) days of its receipt thereof.
4.5.3. Costumes and Appearance Standards. No costumes or
uniforms to be utilized in the Premises may be used unless first expressly
approved by Landlord in writing, in its sole discretion. Landlord agrees that
the uniform currently used by Tenant at its other locations is approved by
Landlord. In addition, if Tenant changes the uniform used at all of its other
locations, such new uniform shall not be subject to Landlord's prior written
approval, but shall be subject to Landlord's appearance standards and the Disney
Standard. All employees of Tenant shall, while working at the Premises, comply
with Landlord's appearance standards and rules of conduct as set out in the
Operating Conditions, Rules and Regulations or as may be otherwise applicable to
employees of entities operating or sponsoring restaurants, attractions or
corporate displays in THE DISNEYLAND RESORT(R) PROJECT, or any part thereof.
4.5.4. Licenses. Tenant shall maintain throughout the Term,
and deliver copies thereof to Landlord, all licenses and/or permits and/or
certificates from the appropriate governmental and quasi-governmental
authorities required for the operation of the Premises, and shall comply with
all Laws and requirements imposed by the appropriate governmental and
quasi-governmental authorities.
38
4.5.5. Employee Compensation. Tenant shall be solely
responsible for all salaries, employee benefits, social security taxes, Federal
or state unemployment insurance, workers' compensation coverage and any and all
taxes and other charges of any kind whatsoever relating to such employees.
Tenant's employees shall not be entitled to participate in any of Landlord's
employee benefit or welfare plans.
4.6. Tenant to Obtain Services.
Except as otherwise provided in this Lease, Tenant understands and acknowledges
that Landlord shall not be responsible in any manner for providing services to
the Premises, including, without limitation, pest control, cable television,
landscaping, safety or health inspections, sanitation, transportation, etc., it
being understood and agreed that Tenant shall be solely responsible for the
provision of such services in a manner consistent with all Laws and with the
Disney Standard and the Operating Conditions, Rules and Regulations. Tenant
acknowledges, however, that with respect to any services requested by Tenant and
provided by Landlord from time to time in connection with the Premises,
including, without limitation, emergency services (police, fire, medical,
paramedics, ambulance) any costs and expenses to be billed to Tenant in
connection with such services shall include: (i) all direct costs of such
personnel, including, but not limited to, payroll, payroll taxes and fringe
benefit costs (calculated at the appropriate annual composite rate therefor) and
(ii) all overhead costs and expenses directly related to such personnel and the
services rendered thereby (including, but not limited to, departmental,
divisional and administrative overhead and a reasonable allocation of capital
charges for assets used to provide such services, including, but not limited to,
equipment, facilities and training); and that all materials used in connection
with the services rendered pursuant to this section shall be billed at their net
cost to Landlord, plus all overhead costs and expenses related to such materials
(i.e., departmental, divisional and administrative overhead and a reasonable
allocation of capital charges for assets used to provide such materials,
including, but not limited to, equipment, facilities and training).
4.7. Theme Park Materials.
4.7.1. Tenant acknowledges that Landlord and Landlord's
Affiliates have expended substantial time, money and other resources in
connection with the development, management, operation and maintenance of THE
DISNEYLAND RESORT(R) PROJECT. Tenant further acknowledges and agrees that the
unique location of the Premises within THE DISNEYLAND RESORT(R) PROJECT, along
with other unique rights and incidents that inure to Tenant under this Lease,
confers substantial and material benefit upon Tenant. Accordingly, in
recognition of such substantial and material benefit, and as a material
inducement to Landlord to enter into this Lease, and without limiting the
generality of any of Landlord's rights, Tenant covenants and agrees that neither
Tenant nor any of its agents, employees or permitted successors or assigns shall
cause, suffer or permit any portion of the Premises to be used, occupied or
operated for the sale, distribution, display, advertisement, marketing or
promotion of any Theme Park Materials (as hereinafter defined), it being
understood and agreed that Landlord shall have the sole and exclusive right to
sell, distribute, display, advertise, market, promote or otherwise commercially
exploit Theme Park Materials within THE DISNEYLAND RESORT(R) PROJECT.
39
4.7.2. "THEME PARK MATERIALS" shall mean any good or service
which contains, features, depicts, refers to or is derived from or a
manifestation of: (i) any Theme Park or similar attraction or facility
(including, without limitation, the Attractions), or (ii) any fanciful or
animated themes, stories or characters (whether or not owned or created by
Tenant or its Affiliates). The term "Theme Park Materials" shall include, but
not be limited to, admission media or tickets, souvenirs of any kind, apparel,
artwork, plush, posters or jewelry. The term shall also include, but not be
limited to, any brochure, magazine, book, information sheet, flyer, card,
letter, video or audio cassette, record, compact or laser disc or any other
printed or electronic media or material of any kind whatsoever (whether or not
now technologically existent) which promotes, describes or refers to any such
good or service.
4.8. Name of Premises.
4.8.1. The trade name under which Tenant shall operate its
business within and upon the Premises shall be "Build-A-Bear Workshop" (the
"TRADE NAME"). Tenant may not alter or change such Trade Name without the prior
consent of Landlord in its sole discretion; provided, however, that Tenant may
use such other trade name as is used for substantially all other locations of
Tenant which have the same operation as the Permitted Use.
4.8.2. Tenant agrees that it will not permit the Premises to
be used in conjunction with, as a sponsor or supporter for or in support of any
event, activity, business or other commercial enterprise, charitable or other
not for profit venture, physical building, physical improvement, or
governmental, civic or social function without the prior written approval of
Landlord, which Landlord may grant or withhold in Landlord's sole discretion.
4.8.3. Tenant represents and warrants to Landlord that the
Trade Name (and any other name, mark, logo, slogan, design, symbol, figure,
drawing, idea, or other matter associated therewith) is safely and freely
available for use by Tenant and Landlord (as provided in this Lease) and does
not: (i) violate or infringe upon the private, civil or property or other rights
of any kind or nature whatsoever of any person, firm, corporation or other
entity; or (ii) violate any applicable Laws.
4.9. Disney Dollars; Credit Cards; Point of Sale.
Unless Landlord otherwise directs, Tenant shall accept DISNEY DOLLARS, THE
DISNEYLAND RESORT(R) PROJECT hotel identification resort card and other forms of
resort cards, gift certificates and package coupons, distributed by Landlord
and/or any of Landlord's Affiliates to guests at THE DISNEYLAND RESORT(R)
PROJECT, which allow the holder to utilize the same as a means of payment for
the goods and/or services offered for sale within the Premises, and such
acceptance shall be strictly in accordance with the procedures established by
Landlord or any of Landlord's Affiliates. Landlord shall pay, or cause to be
paid, to Tenant, within a reasonable period of time, the total amount of all
such DISNEY DOLLARS, resort cards, certificates and/or coupons, up to any limit
set forth thereon, to the extent Tenant has substantially complied with all
applicable procedures (less any applicable sales tax). The specific terms of
said arrangements, as in effect from time to time, shall be provided to Tenant
in writing prior to the Commencement Date and from time to time thereafter. In
addition, Tenant shall also accept certain credit cards, debit cards, stored
value cards (i.e., so-called "smart"
40
cards), travel cards, travelers cheques and similar devices specified and
requested by Landlord from time to time during the Term (specifically including,
but not limited to, any credit cards, debit cards, stored value cards, travel
cards, travelers cheques or similar devices that are the subject of any
Sponsorship Agreement as described in Exhibit G attached hereto and made a part
hereof, as the same may be amended from time to time pursuant to the terms of
this Lease) as a means of payment for the goods and/or services offered for sale
by Tenant within the Premises, and Tenant shall be responsible for entering into
all necessary agreements with the issuers of such cards and cheques and for
paying all fees, discounts, costs and expenses with respect to such cards and
cheques. Notwithstanding the foregoing, Tenant agrees that Tenant shall not
erect, place or display in any manner within or about the Premises (including,
without limitation, all point-of-sale locations) any advertisements or
promotional materials (including, but not limited to, "take-one" displays)
regarding any credit cards, debit cards, stored value cards, travel cards,
travelers cheques or similar devices (including, without limitation, any
co-branded cards and cheques), without the prior written consent of Landlord in
each instance (which consent may be granted or withheld by Landlord in
Landlord's sole discretion) or except as otherwise permitted in any Sponsorship
Agreement attached as Exhibit G.
4.10. Control of THE DISNEYLAND RESORT(R) PROJECT and Attractions.
4.10.1. Nothing in this Lease is intended or shall be deemed
or construed to grant to or confer upon Tenant any rights whatsoever in respect
of THE DISNEYLAND RESORT(R) PROJECT or any of the Attractions, including,
without limitation, rights in connection with the closing, alteration,
discontinuance, condemnation or casualty loss thereof. Accordingly, without
limiting the generality of the foregoing, Landlord and Landlord's Affiliates
shall have full, ultimate and unfettered control over THE DISNEYLAND RESORT(R)
PROJECT and the Attractions, including, without limitation, the sale of products
or services therefrom and the retention of any profits.
4.10.2. "ATTRACTION" shall mean any Theme Park, resort, golf
course, structure, facility, arcade, ride, show or other device for
entertainment, or any element, collection or combination thereof, including,
without limitation, DISNEYLAND(R), DISNEY'S CALIFORNIA ADVENTURE(R), DOWNTOWN
DISNEY(R), and which are owned, operated or controlled by one or more Affiliates
of The Walt Disney Company.
4.11. Admissions.
Throughout the Term hereof, Landlord and Landlord's Affiliates reserve the
exclusive right to control admissions and parking to any or all of THE
DISNEYLAND RESORT(R) PROJECT or any or all of its components or elements
(including, without limitation, DOWNTOWN DISNEY(R)) and, at Landlord's or
Landlord's Affiliates option, to charge admission, entrance or parking fees to
any or all of such components or elements as Landlord or Landlord's Affiliates
may determine from time to time in their sole discretion, all of which shall be
for the account of Landlord and Landlord's Affiliates (and Tenant shall have no
rights or interest therein or rights or actions against Landlord as a result of
any actual or alleged damages resulting therefrom). Except as to the food,
beverages and Merchandise sold by Tenant in and from the Premises pursuant to
the terms of this Lease, Tenant shall have no rights or interest under this
Lease in any revenues realized from the sale of services, food, beverages,
merchandise or other items offered
41
for sale (or admission fees) in DOWNTOWN DISNEY(R), the various facilities
therein, or elsewhere in THE DISNEYLAND RESORT(R) PROJECT.
4.12. Common Areas.
4.12.1. Tenant shall have and Landlord hereby grants to
Tenant, and its employees, customers, patrons, suppliers, licensees and
invitees, during the Term of this Lease, a non-exclusive revocable license to
use and enjoy the Common Areas of DOWNTOWN DISNEY(R) in common with Landlord and
all other tenants or occupants of any property in the vicinity of the Site, and
their respective employees, customers, patrons, suppliers, licensees and
invitees; subject, however at all times to the Operating Conditions, Rules and
Regulations and to any other reasonable rules and regulations promulgated by
Landlord and to the terms and provisions of this Lease. "Common Areas" shall
mean, as they may from time to time exist, those portions of DOWNTOWN DISNEY(R)
which are exclusive of gross leaseable area and other areas which are set aside
as the exclusive use areas of Landlord or its designees and shall include,
without limitation, the driveways, entrances and exits, parking areas, roadways,
pedestrian passageways, bridges, sidewalks, walkways, roofs, loading docks,
delivery areas, landscaped and streetscaped areas, and all other areas or
improvements which may be provided by Landlord for the general use of tenants of
DOWNTOWN DISNEY(R) and their agents, employees, and customers. Landlord shall be
responsible for the operation, management, and maintenance of the Common Areas.
The manner in which the Common Areas shall be maintained and expenditures in
connection therewith shall be at the sole discretion of Landlord. Tenant may not
place anything, including, without limitation, vehicles, within the Common Areas
without the prior approval of Landlord which it may withhold in its sole and
absolute discretion. Landlord shall at all times have the right to utilize the
Common Areas for promotions, exhibits, outdoor shows, displays, other product
shows, the leasing of kiosks and food facilities, landscaping, decorative items,
and any other use which, in Landlord's sole judgment, tends to attract customers
to, or benefit the customers or tenants of DOWNTOWN DISNEY(R). * Tenant
acknowledges that the wine bar (and related furniture, fixtures and equipment)
currently located across from the Premises is not a kiosk or cart and is not
affected by the foregoing provision. Without the same constituting or being
considered an eviction or disturbance of Tenant's quiet enjoyment or possession
of the Premises, Landlord may from time to time close any such area for repairs
or alterations, to prevent a dedication of or the accrual of prescriptive rights
therein, or for any other reason permitted by Law, and such closure shall not
entitle Tenant to any abatement of Rent. Landlord shall at all times during the
term of this Lease, subject to the provisions hereof, have the sole and
exclusive management and control of all Common Areas and may at any time and
from time to time during the term hereof, restrain any use or occupancy thereof
that Landlord deems necessary or appropriate in Landlord's sole discretion.
Tenant shall keep said areas free and clear of any obstructions created or
permitted by Tenant or resulting from Tenant's operations. If in the opinion of
Landlord, in its sole and absolute discretion, unauthorized persons are using
any of such areas by reason of the presence of Tenant in DOWNTOWN DISNEY(R),
Tenant, upon demand of Landlord, shall restrain such unauthorized use by
appropriate proceedings. Nothing herein shall affect the right of Landlord at
any time to remove any such unauthorized person from such areas or to prohibit
the use of any such areas by unauthorized persons.
* - Redacted Text - Confidential treatment requested; omitted portions have been
filed separately with the Securities and Exchange Commission.
42
4.12.2. Landlord shall have the right to establish,
promulgate, change, amend, modify and enforce, from time to time, such rules and
regulations affecting and with respect to the use, operation and maintenance of
DOWNTOWN DISNEY(R) and the Common Areas as Landlord in its sole and absolute
discretion shall deem to be necessary, desirable or appropriate from time to
time and Tenant shall and hereby agrees at all times to comply with, abide by
and conform to such rules and regulations. The failure of Tenant to comply with,
abide by or conform to said rules and regulations shall constitute a default by
Tenant under this Lease.
4.12.3. Tenant shall not park any car, truck or delivery
vehicle in the Common Areas, nor permit delivery of supplies and equipment at
any place other than as designated by Landlord.
4.12.4. Landlord reserves the right, from time to time, in
its sole and absolute discretion, to reduce or expand the size of DOWNTOWN
DISNEY(R) and its various component parts, to change the size, number,
configuration, location and legal description of any building locations (other
than the Premises except as provided herein) and buildings within DOWNTOWN
DISNEY(R), and to thereby change the size, configuration, location and legal
description of the Common Areas, provided, however, that such reconfiguration of
the Common Areas shall not materially impede access to the Premises. Landlord
also reserves the right to change the size, configuration, layout and traffic
circulation pattern of all facilities and improvements, from time to time,
located, developed and constructed on the common areas.
4.12.5. Parking Areas-Non-Exclusive Revocable License. Tenant
shall have and Landlord hereby grants to Tenant and its employees, customers,
patrons, suppliers, licensees and other invitees, during the Term of this Lease,
the non-exclusive right, privilege and license, to use and enjoy such parking
areas as may be made available for non-valet parking use to Tenant from time to
time, with Landlord and all other tenants or occupants of any property in the
vicinity of the Site, and their respective employees, customers, patrons,
suppliers, licensees and other invitees; subject, however, at all times, to the
Operating Conditions, Rules and Regulations, and to any other reasonable rules
and regulations promulgated by Landlord, and to the terms and provisions of this
Lease. At Landlord's request, Tenant shall participate in such parking programs
(e.g. validated parking) as are identified by Landlord to Tenant from time to
time. Notwithstanding the foregoing, Landlord agrees that it will not require
Tenant to bear the cost of validated self-parking (as opposed to valet parking)
for those customers of Tenant who are attending a function in the Build-A-Bear
party room on the 2nd floor of the Premises. Tenant agrees to supply supporting
documentation reasonably acceptable to Landlord in connection with any such
validated self-parking. If Landlord deems it necessary to prevent the
acquisition of public rights in any parking areas, or for any other reason in
Landlord's sole discretion, Landlord from time to time, closes and/or relocates
portions of the parking areas, erects private boundary markers or takes such
other steps as it deems appropriate or necessary to accommodate special events
or expand Landlord's facilities, no such action shall be deemed to constitute or
be considered as an eviction or disturbance of Tenant's quiet enjoyment or
possession of the Premises or entitle Tenant to an abatement of Rent. The
parking areas shall at all times be subject to the exclusive management and
control of Landlord. Tenant shall keep said areas free and clear of any
obstructions created or permitted by Tenant or resulting from Tenant's
operations. If in the opinion of Landlord unauthorized persons are using any of
such areas by reason of the presence of Tenant in DOWNTOWN DISNEY(R), Tenant,
upon demand of Landlord, shall
43
restrain such unauthorized use by appropriate proceedings. Nothing herein shall
affect the right of Landlord at any time to remove any such unauthorized person
from such areas or to prohibit the use of any such areas by unauthorized
persons.
4.13. Music and Entertainment.
Subject to the terms hereof, Tenant may provide pre-recorded and/or broadcast
music to Tenant's customers within the Premises. Tenant shall cause all such
music at the Premises to be maintained at a reasonable noise level (the
determination of which shall be in Landlord's sole discretion), in good taste
and suitable for the entire family, including minors, and shall not permit any
profanity, obscenity or objectionable material. Tenant shall obtain Landlord's
approval for the types of music Tenant desires to offer at the Premises, which
approval shall be Landlord's sole discretion. Landlord hereby approves the 2
compact disc recordings currently distributed under the Build-A-Bear Workshop
name for use at the Premises.
4.14. Management Agreement.
Tenant shall not enter into any management or agency agreement relating to the
management or operation of the Premises or any modifications to such management
or agency agreement (collectively, "Management Agreement") without Landlord's
prior written approval (which Landlord may grant or deny in its sole discretion)
of the terms and conditions thereof and of the identity of any manager of the
Premises ("Manager"). If Landlord gives its approval, the Management Agreement
shall provide, among other things, that: (i) upon the expiration or sooner
termination of this Lease or upon termination of Tenant's right to possession of
the Premises for any reason whatsoever, the Management Agreement shall be
automatically terminated without liability for any payment due or to become due
to the Manager by Landlord; and (ii) all fees and other amounts payable by
Tenant to the Manager shall be fully subordinate to the Rent payable by Tenant
to Landlord hereunder.
4.15. Tenant Meetings.
Tenant covenants and agrees that, if requested by Landlord, Tenant's general
manager of the Premises will meet with Landlord, or its representative or
representatives, on a periodic basis throughout each Lease Year in order to
discuss certain aspects of the management, maintenance and operation of the
Premises.
5. SPECIAL COVENANTS AND CONDITIONS.
5.1. Sponsorships of Landlord.
5.1.1. Tenant recognizes that: (i) Landlord or any of its
Affiliates have entered into agreements granting the same, similar or different
rights as those described in this Lease to other individuals, entities or
products in the past, which rights have been, are currently being, and will be
exercised; (ii) Landlord and its Affiliates, in their sole discretion, may enter
into further agreements granting similar or different rights in the future; and
(iii) the approval rights reserved to Landlord in this Lease and the
restrictions and/or limitations set forth in this Lease are necessary to enable
Landlord and its Affiliates to enjoy the benefits of, protect their interests
in, and prevent dilution of, the value of the proprietary rights, licenses and
participations which
44
Landlord and its Affiliates have granted and may continue to grant in the
various registered marks or other rights or properties owned by them. In
particular, and not by way of limitation, Tenant recognizes that, pursuant to
agreements of the type referred to above in this Section, Landlord and its
Affiliates have made certain commitments and in the future reserve the right to
make commitments regarding such proprietary rights and the availability of
products or services within THE DISNEYLAND RESORT(R) PROJECT (said agreements
being collectively referred to herein as the "Landlord Sponsorship Agreements").
Accordingly, to assure the protection of the reputation, appearance and quality
of THE DISNEYLAND RESORT(R) PROJECT, and to preserve the goodwill, image and
reputation of Landlord and its Affiliates, as well as the enjoyment by them of
their respective proprietary rights, Tenant hereby makes the covenants set forth
in this Article, and agrees to cause its employees and agents to comply with the
requirements and restrictions herein to the extent the same are, by the terms of
said sections, to be complied with by Tenant, the due and timely performance of
such covenants and agreements being a condition to and a material consideration
for the rights granted to Tenant under this Lease.
5.1.2. In order to preserve the value and ensure the
non-dilution and the full enjoyment by the beneficiaries of the proprietary
rights, licenses and participations granted under, and of the benefits derived
by Landlord and its Affiliates under, the Landlord Sponsorship Agreements
entered into prior to the Execution Date, Landlord has set forth, in Exhibit G
hereto (when read in conjunction with the provisions of this Section), terms and
conditions which in its judgment are necessary or appropriate for such purposes,
and Tenant hereby covenants and agrees with respect thereto as follows: Tenant
hereby agrees that, with respect to the Premises only, it shall perform, observe
and comply with the terms and conditions set forth in Exhibit G hereto, provided
that with respect to the procurement of said products and services: (i) the
respective cost of the products and/or services does not exceed the lowest
wholesale price at which said sponsor sells the same products or services to any
other similar purchaser, including gratuity and other applicable discounts; and
(ii) said products and/or services meet Landlord's and Tenant's quality
standards and that said products and/or services are appropriate in light of the
concept of the Premises. Tenant shall be obligated to comply with the terms of
this Section and of Exhibit G hereto as and to the extent such terms exist, as
amended, by virtue of any renewals, extensions or amendments of existing
Landlord Sponsorship Agreements or by virtue of any new Landlord Sponsorship
Agreements entered into after the Execution Date with different suppliers;
provided that with respect to the procurement of said products and services: (i)
the respective cost of said products and/or services does not exceed the lowest
wholesale price at which said sponsor sells the same products or services to any
other similar purchaser, including gratuity and other applicable discounts; (ii)
said products and/or services meet Landlord's and Tenant's quality standards and
that said products and/or services are appropriate in light of the concept of
the Premises; or (iii) compliance with such Landlord Sponsorship Agreement shall
not cause a violation or breach by Tenant under any agreement between Tenant and
a Tenant Sponsor approved by Landlord pursuant to the provisions of Section 5.2
hereof. Notwithstanding anything to the contrary in this Section 5.1.2 or
Exhibit G, Landlord acknowledges and agrees that Tenant may offer for sale the
following (subject to the provisions of the Lease other than those in this
Section 5.1), and the same shall not constitute a violation of this Section
5.1.2 or Exhibit G: (a) the items described in Section 4.1.1 above, provided
that the same are branded only by Build-A-Bear Workshop; (b) a 35mm disposable
camera made especially for Tenant (in the form Tenant has submitted to
Landlord), provided that the
45
packaging identifies only the Build-A-Bear Workshop brand and does not identify
or reference the camera manufacturer or distributor; and (c) a tea packet as
part of tea set, provided that the packaging identifies only the Build-A-Bear
Workshop brand and does not identify the tea manufacturer or distributor.
5.1.3. Landlord shall have the right from time to time to
require Tenant at the Premises: (i) to utilize those services and/or types and
brands of products designated by Landlord which are utilized in the operation
and/or maintenance of facilities of the type and caliber comparable to the
Premises; and (ii) to meet such other requirements as Landlord shall from time
to time establish to enjoy the benefits of and to protect and preserve the value
of the said proprietary and other rights of Landlord and its Affiliates;
provided, however, that Landlord shall not have the right, with respect to the
Premises, to so designate any product or service, or to establish requirements
in respect of any person, product, service or thing, which is the subject of any
Landlord Sponsorship Agreement entered into by Landlord (or any of its
Affiliates) after the Execution Date, if and to the extent that doing so would:
(i) have an adverse economic effect on Tenant by preventing Tenant from
procuring products or services of similar type and quality which are then
available to Tenant at prices significantly lower and/or at terms significantly
more favorable to Tenant, than those made available to Tenant for the product or
service designated by Landlord; or (ii) would lower the quality of any product
or service of Tenant then in existence.
5.1.4. Landlord shall notify Tenant of any Landlord
Sponsorship Agreement entered into after the Execution Date, as well as any
renewal, extension, amendment, expiration or replacement of any such Landlord
Sponsorship Agreement that modifies the terms set forth in Exhibit G hereto, and
the terms of Exhibit G hereto shall be deemed amended to reflect the contents of
said notice; provided, however, that any modifications to the terms set forth in
Exhibit G hereto with respect to the procurement of products and services shall
become effective only upon the conclusion of Tenant's use of all previously
acquired products and services. Such notice shall contain the name of the
sponsor, the applicable products and services and Tenant's obligations in
content and form reasonably similar to Exhibit G attached hereto. Tenant
acknowledges and agrees that the terms and conditions set forth in Exhibit G
hereto are in addition to, and shall in no way limit or restrict, the terms and
conditions set forth in this Section or any other provision of this Lease.
5.1.5. Restrictions on Affiliation. In recognition of
existing and future contractual obligations of Landlord to third parties who
have or may in the future be granted exclusive rights to have their products,
services or name utilized or featured in conjunction with all or portions of
properties of Landlord and/or any of Landlord's Affiliates, Tenant acknowledges
and agrees that Tenant and Tenant's Affiliates shall not publicize or otherwise
allow the Premises (i) to be utilized to sponsor, publicize, endorse or
otherwise be used in conjunction with the products, services or identity of any
third parties, or (ii) to be used in conjunction with, as a sponsor or supporter
for or in support of any event, activity, business or other commercial
enterprise, charitable or other not for profit venture, physical building,
physical improvement, governmental, civic or social function, it being the
intent of the parties hereto that Tenant's presence within THE DISNEYLAND
RESORT(R) PROJECT be exclusively associated with Landlord and Landlord's
Affiliates' and Theme Parks owned, managed and as operated by Landlord and/or
Landlord's Affiliates, and that any identification of the Premises with any
third parties not approved by Landlord, in Landlord's sole discretion, could
diminish the value derived
46
by Landlord of Tenant's association with Landlord and/or conflict with certain
of Landlord's contractual obligations and exclusive rights that Landlord has
previously granted to third parties in conjunction with Landlord and Landlord's
Affiliates' Theme Parks. Except as set forth below, the foregoing provisions are
not intended to bar Tenant's Affiliates from entering into national affiliations
or participant relationships with third parties and, in connection therewith, to
engage in national advertising campaigns that might otherwise conflict with the
foregoing provisions, so long as such activities: (i) do not result in a breach
of the obligations of Tenant set forth in this Lease above; and (ii) do not
result in sponsorship of or participation in local events or advertisements only
run in the Five County Region specifically intended to only impact or focus on
the Premises or the Five County Region.
5.2. Sponsorships of Tenant.
5.2.1. Landlord acknowledges that Tenant has existing
corporate alliances with the World Wildlife Federation, ftd.com, Humane Society
of the United States, Toys for Tots, the American Cancer Society, Scholastic,
Inc., Skechers and the Teddy Bear Foundation ("Tenant's Existing Alliances").
Landlord further recognizes that Tenant may desire to enter into certain
sponsorship arrangements after the Execution Date, which sponsorship
arrangements may include rights with respect to the Premises. Accordingly, in
recognition of the existing and subsequent Landlord Sponsorship Agreements as
referred to above, Tenant agrees that all persons or entities having a right of
public exposure or other affiliation or association with Tenant with respect to
the Premises (whether through an "official status" or other similar designation
or association, or otherwise, and including, without limitation, title sponsors,
presenting sponsors and/or corporate sponsors) (each, a "Tenant Sponsor"), shall
be subject to the prior approval of Landlord, which approval may be granted or
withheld in Landlord's sole and absolute discretion. With respect to any product
associated with a Tenant Sponsor or any of Tenant's Existing Alliances which
Tenant proposes to offer for sale or display at or in connection with the
Premises, Tenant shall submit any such proposed product for Landlord's prior
approval. In addition, without Landlord's prior written approval, which may be
withheld in Landlord's sole and absolute discretion, Tenant shall not enter into
any corporate alliance or sponsorship agreement which involves (i) Tenant's
sponsorship or endorsement, in connection with Tenant's location at the
Premises, of any third party event, product, service or identity or (ii) a third
party sponsorship or endorsement of Tenant or Tenant's products which would
affect or be evident from the exterior of the Premises (including Tenant's
exterior signage and all windows in the Premises) or within any portion of the
interior of the Premises which is within five (5) feet of the storefront or
windows of the Premises.
5.2.2. Tenant shall notify Landlord prior to commencing any
discussions for a corporate alliance or sponsorship with a potential Tenant
Sponsor. In conjunction with Tenant's request for Landlord's approval of any
proposed Tenant Sponsor, Tenant shall submit to Landlord the name and types of
products (or types of services, as the case may be) of any proposed Tenant
Sponsor, and such other information relating to such proposed Tenant Sponsor as
Landlord may request. Landlord shall respond to any such request for its
approval within twenty (20) days after receiving such request from Tenant.
Landlord's failure to respond within such 20-day time period shall automatically
constitute Landlord's disapproval of the request (it being understood and agreed
that Landlord's failure to respond within such 20-day period shall
47
only constitute Landlord's disapproval of the request, but shall not constitute
a breach by Landlord of its obligation to respond within such 20-day period).
5.2.3. With respect to any Tenant Sponsor approved by
Landlord pursuant to this Section, the sole affiliation or association of which
is with respect to the Premises, Tenant agrees that one hundred percent (100%)
of the total fee that Tenant and/or Tenant's Affiliate(s) receives from such
Tenant Sponsor shall constitute revenue paid to or received by Tenant with
respect to the Premises and, accordingly, shall be included in Tenant's Gross
Sales under this Lease.
5.2.4. Tenant agrees that it will not grant any rights to
any Tenant Sponsor (or any other sponsor of Tenant) with respect to, or approve
the use by any Tenant Sponsor (or any other sponsor of Tenant) of, the name
"Disney" (either alone or in conjunction with or as a part of any other word,
name or mark) or any marks, fanciful characters or designs of The Walt Disney
Company or any of its subsidiary or other related or affiliated companies in any
advertising, publicity, or promotion; to express or imply any endorsement of its
products and/or services; or in any other manner whatsoever (whether or not
similar to the uses hereinabove specifically prohibited), on the account of such
sponsorship, unless the same is first approved by Landlord in each instance in
Landlord's sole and absolute discretion. Further, without the prior approval of
Landlord in each instance (which approval may be granted or withheld in
Landlord's sole discretion), Tenant agrees that it will not grant any rights to
any Tenant Sponsor (or any other sponsor of Tenant) to take photographs of, take
motion pictures of, televise, make miniatures of, or otherwise use, reproduce or
exploit any part of the Premises in any manner, or through any media.
Additionally, Tenant agrees to advise each Tenant Sponsor (or other sponsor of
Tenant) that such Tenant Sponsor (or other sponsor of Tenant) shall have no
right to use the name "Disney" (either alone or in conjunction with or as a part
of any other word, name or mark) or any marks, fanciful characters or designs of
The Walt Disney Company or any of its subsidiary or other related or affiliated
companies in any advertising, publicity, or promotion; to express or imply any
endorsement of its products and/or services; or in any other manner whatsoever
(whether or not similar to the uses hereinabove specifically prohibited), on the
account of such sponsorship, unless the same is first approved by Landlord in
each instance in Landlord's sole and absolute discretion. Further, Tenant agrees
to advise each Tenant Sponsor (or other sponsor of Tenant) that, without the
prior approval of Landlord in each instance (which approval may be granted or
withheld in Landlord's sole discretion), such Tenant Sponsor (or other sponsor
of Tenant) shall have no right to take photographs of, take motion pictures of,
televise, make miniatures of, or otherwise use, reproduce or exploit any part of
the Premises in any manner, or through any media.
5.2.5. In no event shall any Tenant Sponsor have the right
to place any signs, posters or other materials in or about the Premises or any
other location within THE DISNEYLAND RESORT(R) PROJECT, without the prior
approval of Landlord in each instance, which approval may be granted or withheld
in Landlord's sole and absolute discretion.
5.3. Advertising Signage.
5.3.1. Tenant shall not promote, advertise or publicize
anywhere at DOWNTOWN DISNEY(R) or THE DISNEYLAND RESORT(R) PROJECT, or anywhere
outside
48
of THE DISNEYLAND RESORT(R) PROJECT, its store and Merchandise operations
conducted at the Premises (as opposed to its merchandise operations generally),
except with the prior written approval of Landlord in its sole discretion in
each instance.
5.3.2. Tenant agrees Tenant will not place any signs,
posters or similar materials in or about the Premises without first obtaining
the prior written approval of Landlord, in its sole discretion. The form, color,
materials, design, lettering, location and dimensions of each approved sign,
poster or similar material shall be subject to Landlord's approval, in its sole
discretion, in each instance
5.4. Marketing of the Premises; Press Releases.
5.4.1. Provided Tenant is not in default in respect of any
of its obligations or responsibilities under this Lease, Landlord shall, at
Landlord's sole cost and expense, provide the following services for the benefit
of the Premises: (i) Landlord shall provide a reference to the Premises in any
directories placed by Landlord at DOWNTOWN DISNEY(R) listing all tenants of
DOWNTOWN DISNEY(R) so long as Landlord continues to provide such directories (it
being understood and agreed by the parties that in no event shall Landlord be
obligated to continue to provide such directories and that Landlord may in its
discretion alter or cancel such directories at any time); and (ii) Landlord may
mention the Premises in any overall brochure specific to DOWNTOWN DISNEY(R) to
the extent Landlord elects in its discretion to publish and distribute any such
brochure. Tenant shall pay to Landlord, in connection with Landlord's marketing
of the Project, * for the first full Lease Year (and a prorated amount
thereof for the initial partial Lease Year), and for each Lease Year thereafter,
Tenant shall pay an amount equal to the amount paid by Tenant for the prior
Lease Year multiplied by the Index (which increase shall not exceed * in any
Lease Year). In addition, Tenant shall provide a reasonable marketing program
for the Premises, as approved by Landlord in its sole and absolute discretion.
Tenant and Landlord shall agree on additional joint promotions to be held from
time to time. If requested by Landlord, Tenant will participate in resort-wide
events. The cost to Tenant of such resort-wide events shall not exceed * in
the first Lease Year, which maximum amount shall be compounded each Lease Year
by the amount of the Index (which increase shall not exceed * in any Lease
Year).
5.4.2. The form, style, content, graphics, length, design,
lettering and other aspects or characteristics of the services described in
Subsection 5.4.1 above shall be chosen by Landlord in its sole discretion;
provided, however, that Landlord shall use Tenant's Trade Name in the form in
which it is depicted in Exhibit E.
5.4.3. Tenant understands that Landlord cannot guarantee or
make any representations or warranties of any kind with respect to any of the
services described in Subsection 5.4.1 above.
5.4.4. Except as required by Law, Tenant shall not issue any
press releases or make mention of its association with the Premises, Landlord or
any of Landlord's Affiliates, without the prior written approval of Landlord,
which approval may be granted or withheld in Landlord's sole discretion.
* - Redacted Text - Confidential treatment requested; omitted portions have been
filed separately with the Securities and Exchange Commission.
49
5.5. Promotional Rights of Landlord.
Landlord and its Affiliates shall have the right to photograph, take motion
pictures of, broadcast from, televise, make miniatures of or otherwise use,
reproduce or exploit in any manner, or through any media, on a royalty-free and
worldwide basis, the Premises, or any portion thereof (including any employees
of the Premises), either individually or as an integral part of all or portions
of THE DISNEYLAND RESORT(R) PROJECT or DOWNTOWN DISNEY(R). Tenant agrees to use
its best efforts to obtain from its employees any releases necessary to allow
Landlord to exploit the rights in the foregoing sentence. Landlord and any of
its Affiliates may use, sell or license any such pictures or other reproductions
for any purpose, commercial or otherwise, connected with promoting, advertising
or publicizing DOWNTOWN DISNEY(R), any portion of THE DISNEYLAND RESORT(R)
PROJECT or any other facilities, products or promotions of Landlord, The Walt
Disney Company or their Affiliates, both during the Term hereof and after the
expiration or sooner termination of this Lease, and all of the foregoing
materials and all benefits and revenues obtained from such materials shall be
the sole and exclusive property of Landlord and its Affiliates. Landlord and its
Affiliates shall have the right from time to time and for periods of time
appropriate for the accomplishment thereof, to use the Premises as the scene or
scenes for motion pictures and/or made-for-television films and programs, such
right to be exercisable upon at least five (5) days prior notice and at
reasonable times and in such manner as will cause the least interference with
the operation of the Premises and the provision of services to customers of the
Premises. The duration and nature of the access that Landlord and/or its
Affiliates wish to have to the Premises for such purposes shall be indicated in
Landlord's notice to Tenant (which shall be delivered in accordance with the
provisions of Section 24.7 hereof), and shall be subject to Tenant's approval
with respect to such duration and nature of access, which shall not be
unreasonably withheld or delayed; provided, however, that if Tenant fails to
respond to such notice within five (5) days after receipt thereof, Tenant shall
be deemed to have granted its approval as to the matters set forth therein.
Tenant shall obtain, for the benefit of Landlord and its Affiliates and
licensees, such releases, clearances or other instruments from any of Tenant's
employees as shall be necessary to permit Landlord and its Affiliates and
licensees to make and use or permit to be made and used any photographs, motion
pictures, television, miniatures, or other reproductions for any of the purposes
herein provided. Additionally, Landlord and its Affiliates shall have the right,
without the prior consent of Tenant in each instance, to make use of the Trade
Name (either alone or in conjunction with or as a part of any other word, mark
or name) or any marks or designs of Tenant in any of its advertising, publicity
or promotion of the Premises, DOWNTOWN DISNEY(R) or THE DISNEYLAND RESORT(R)
PROJECT. Landlord's and its Affiliates' right to make reasonable use of the
Trade Name, marks and designs of Tenant shall exist throughout the Term and
shall continue for a reasonable period of time thereafter until Landlord and/or
its Affiliates can remove the same from its existing advertising and promotional
materials. Notwithstanding anything to the contrary contained in this Lease, in
no event shall Landlord make, use or permit to be made or used, any photographs,
motion pictures, videos, compact discs, television programs, miniatures or other
reproductions showing the whole or any part of the interior of the Premises or
Tenant's Trade Name or logo in any manner which would cause any person(s)
viewing such material to associate Tenant with violence, drugs, illegal
substances or items, illegal or immoral activities, gambling, pornography,
nudity, or lewd or prurient activities.
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5.6. Tenants' Association.
In the event that a tenants' or merchants' association shall be formed by
Landlord, in which third-party tenants of Landlord (or Landlord's Affiliates)
within DOWNTOWN DISNEY(R), shall be members and substantially all of the other
third-party tenants at DOWNTOWN DISNEY(R) participate and become members in
such association, Tenant agrees that it shall become a member of, and otherwise
participate fully in and pay a proportionate share of the dues and assessments
of, such association.
5.7. Exclusivity.
5.7.1. Tenant understands and acknowledges that Landlord's
demise of the Premises to Tenant will involve substantial commitments and
expense on Landlord's part and further that the location of the Premises within
THE DISNEYLAND RESORT(R) PROJECT will confer unique and important material
benefits to Tenant. Accordingly, as a material inducement to Landlord to enter
into this Lease, during the Term, neither Tenant nor its Affiliates (and the
respective officers, directors, partners, employees, agents or assign of each of
them) shall either directly or indirectly (whether through legal or beneficial
means or otherwise) own, hold, license, develop, construct, operate, sponsor,
manage or otherwise participate in (whether in conjunction with a third-party or
otherwise) a Similar Business: (a) within seven (7) miles of THE DISNEYLAND
RESORT(R) (other than a Similar Business existing and operating as of January
26, 2001; (b) at The Block at Orange or Irvine Spectrum; or (c) within, adjacent
to or in conjunction with a theme park located within 50 miles of THE DISNEYLAND
RESORT(R) which is not owned, operated, controlled or licensed by Landlord or
any of Landlord's Affiliates.
5.8. Special Events.
5.8.1. Tenant shall participate in all special events,
private parties and cooperative events at DOWNTOWN DISNEY(R), if requested by
Landlord. At Landlord's written request (delivered with at least two (2) weeks'
prior notice in accordance with the provisions of Section 24.7 of this Lease),
such participation shall include, without limitation, closing the Premises (or
any part thereof designated by Landlord) to the public and allowing Landlord to
use the Premises for not more than a total of * periods of * each in any
Lease Year. If Landlord exercises its right to require Tenant to close and allow
Landlord to use the Premises (or any part thereof) as aforesaid, Landlord shall
reimburse Tenant for Tenant's direct, out-of-pocket costs for wages expended by
Tenant in connection therewith within thirty (30) days of invoice by Tenant.
Notwithstanding anything herein to contrary, Tenant does not grant Landlord the
right to operate its equipment at the Premises.
6. PROMOTIONAL RIGHTS; ADVERTISING.
6.1. Use of Name.
DOWNTOWN DISNEY(R), and any or all of its constituent components, shall have the
names as shall be designated by Landlord, from time to time, and Landlord may
change the name of DOWNTOWN DISNEY(R) and/or any or all of its constituent
components, at any time and from time to time, at Landlord's sole and absolute
discretion, without prior notice to or the consent of Tenant. In the event
Landlord elects to change the name of DOWNTOWN DISNEY(R) and/or
* - Redacted Text - Confidential treatment requested; omitted portions have been
filed separately with the Securities and Exchange Commission.
51
any or all of its constituent components, Landlord shall not be liable for any
costs incurred by Tenant associated with the name change on any of Tenant's
advertising or promotional materials, literature, Merchandise, stationery, or
other goods or materials which refer to or depict DOWNTOWN DISNEY(R) and/or any
or all of its constituent components. The names and logos of DOWNTOWN DISNEY(R)
and its constituent components, and the exterior and interior design
characteristics unique to or characteristic of DOWNTOWN DISNEY(R) and its
constituent components shall be the sole property of Landlord.
6.2. Reference to Location of Premises.
Subject to the provisions of this Lease (including without limitation, those set
forth below in this Section), Landlord hereby grants to Tenant, for and during
the Term, the non-exclusive right to make reasonable use of THE DISNEYLAND
RESORT(R) PROJECT name, and DOWNTOWN DISNEY(R) name, solely for the purpose of
referring to the location of the Premises (it being understood that such names
include references to the respective marks and goodwill of Landlord and
Landlord's Affiliates). The right granted to Tenant herein shall be exercised by
Tenant in strict compliance with the following guidelines (and any future
guidelines established from time to time by Landlord):
6.2.1. The DOWNTOWN DISNEY(R) name and THE DISNEYLAND
RESORT(R) PROJECT name shall only be used to refer to the location of the
Premises in connection with Tenant's advertising, publicity and promotion of the
Premises (and not with respect to any person, product, service or thing of any
kind), and may not be used in connection with any advertising or promotion
related to any other business owned and/or operated by Tenant or in any other
respect, without the prior approval of Landlord in its sole and absolute
discretion.
6.2.2. The DOWNTOWN DISNEY(R) name and THE DISNEYLAND
RESORT(R) PROJECT name shall be used only in the exact form, style and
combination then prescribed or permitted by Landlord, in accordance with the
guidelines practiced by Landlord from time to time, in the utmost good taste and
consistent with the image and reputation of Landlord and Landlord's Affiliates.
6.2.3. The DOWNTOWN DISNEY(R) name and THE DISNEYLAND
RESORT(R) PROJECT name, and all rights associated therewith, shall remain the
sole and absolute property of Landlord or Landlord's Affiliates, as the case may
be.
6.2.4. Tenant shall submit to Landlord for approval in all
respects (including subjective aesthetic judgments) all prototype advertising,
publicity and promotional material (including, without limitation, publicity
copies and press releases, artwork and layout) using the DOWNTOWN DISNEY(R)
name, and/or THE DISNEYLAND RESORT(R) PROJECT name, as applicable, together with
a brief statement setting forth the use to which the material will be put, and
the media through which and the period of time during which it will be
distributed or displayed, which shall in no event exceed twelve (12) months
unless resubmitted to, and re-approved by, Landlord. Tenant shall also submit
such other background and supporting material as Landlord shall require so as to
enable it to make an informed judgment and appraisal. All such material shall be
transmitted to Landlord in the same manner required under this Lease for the
giving of notices, addressed to the attention of Landlord's Vice President -
Marketing or its
52
designee, at least thirty (30) days prior to the date of intended use. Tenant
shall not utilize any materials requiring Landlord's approval without first
obtaining the specific approval of such Vice President or its authorized
representative.
6.2.5. Landlord shall notify Tenant of its approval or
disapproval of Tenant's proposed material within ten (10) Business Days of
Landlord's actual receipt of all documentation and information required to be
submitted to Landlord. Landlord will give due consideration to any request made
by Tenant for renewal of any such approval. In the event Landlord fails to
respond within the aforesaid ten (10) Business Day period, Tenant may give
Landlord an additional notice specifying the proposed materials with respect to
which it has failed to respond. If Landlord shall fail to respond to such
additional notice within five (5) Business Days after Landlord's actual receipt
of same, Landlord shall be deemed to have disapproved such use.
6.2.6. Tenant shall furnish to Landlord, at or before the
time.they are forwarded or made available to the appropriate media or the
public, the final proofs of all such material, which shall not differ
significantly from the proposed material approved by Landlord and which shall
indicate the specific use to which they will be put. If Landlord finds any of
such proofs significantly different from the proposed material approved, or
inappropriately or untimely used, then Tenant shall, as soon as practicable
after being notified to that effect by Landlord, cause the withholding or
discontinuance of such material and diligently seek to effect, to the extent
possible, the recall or cancellation of any material already authorized or
begun.
6.2.7. To facilitate the coordination by Landlord of
advertising and promotional efforts, Tenant shall from time to time, but no less
often than quarterly, notify Landlord in writing, so as to afford to it as much
advance notice as is reasonably practicable, of all plans for future
distribution or display of its advertising or promotional material to be used in
connection with the Premises. Such notice shall specify the planned publication
dates and media constituents. Tenant shall use reasonable efforts (such as
weekly meetings) to advise Landlord of any modifications of, additions to, or
cancellations of, any such plans.
6.2.8. As a condition to the exercise by Tenant of the right
granted to it in this Section, each such exercise shall be accompanied by such
copyright notice or registration notice as shall be required by Landlord.
Landlord will, from time to time, notify Tenant of the form and content of the
copyright or registration notice to be used.
6.2.9. Neither anything in this Section nor anything
contained in this Lease or in any other document, instrument, correspondence or
communication, shall be deemed or construed to grant to Tenant any rights
whatsoever (except to the extent and in the manner provided herein), and Tenant
hereby covenants that, except as otherwise specifically permissible under this
Lease, it shall not:
6.2.9.1. Use DOWNTOWN DISNEY(R) name, THE DISNEYLAND
RESORT(R) PROJECT name, THE DISNEYLAND(R) name or DISNEY'S CALIFORNIA
ADVENTURE(R) name, either alone or in conjunction with, or as a part of, any
other word, mark, name or title, in any trademark or service mark sense, or in
any other manner;
53
6.2.9.2. Use the names "Walt Disney", "Walter E.
Disney", "Disney" or any variation thereof, either alone or in conjunction with,
or as a part of, any other word, mark, name or title;
6.2.9.3. Use any characters (such as Mickey Mouse),
designs, names, symbols, representations, figures, drawings, ideas of other
matter owned, developed or created by Landlord, The Walt Disney Company, or any
of Landlord's Affiliates in any manner whatsoever;
6.2.9.4. Sell or distribute any literature,
merchandise, souvenirs or other items which refer to or depict: (i) THE
DISNEYLAND RESORT(R)PROJECT, DOWNTOWN DISNEY(R)or (ii) any other property, real
or personal, owned, operated or managed by Landlord or any of Landlord's
Affiliates; or (iii) DOWNTOWN DISNEY(R) or THE DISNEYLAND RESORT(R) PROJECT name
or symbol; provided, however, that subject to the terms of this Lease, Tenant
may sell or distribute any duly licensed consumer products acquired from third
party vendors which incorporates or is a manifestation of the intellectual
property of Landlord or its Affiliates; or
6.2.9.5. Use (or authorize others to use), reproduce,
sell, distribute, display or exploit DOWNTOWN DISNEY(R) or THE DISNEYLAND
RESORT(R) PROJECT name or symbol or the copyrighted works of The Walt Disney
Company, Landlord or any of Landlord's Affiliates.
6.2.10 In the event Tenant fails to comply with or violates
any of the terms of this Section, then Landlord may, in addition to any and all
remedies provided under this Lease or at law or in equity, terminate (in whole
or in part) the right of Tenant provided in this Section, whereupon Tenant shall
withhold and discontinue all further use of its right granted hereunder and
Tenant shall recall and cancel any materials previously distributed or displayed
by Tenant.
6.3. Copyrights.
Any use or reproduction of any copyrighted works of art or other copyrighted or
registered material approved by Landlord shall be accompanied by such copyright
or registration notice as may be required by applicable Laws or by Landlord.
7. PREMISES MANAGEMENT AND EMPLOYEES.
7.1 Premises Management.
Management and operation of the Premises shall at all times be under the direct
supervision and control of Tenant.
7.2. Premises Employees.
The following provisions shall apply with respect to all employees of Tenant
employed in connection with the Premises:
7.2.1. All such employees shall be employees of Tenant and
not of Landlord, any of Landlord's Affiliates or any other person or entity.
54
7.2.2. All such employees shall, as a condition of their
employment or assignment within THE DISNEYLAND RESORT(R) PROJECT, agree to be
subject to and comply with all standards, rules and regulations of Landlord
which may be in effect from time to time and applicable to employees of entities
sponsoring attractions or corporate displays in THE DISNEYLAND RESORT(R) PROJECT
or any part thereof, including, but not limited to, the rules of conduct
(including working hours) and personal appearance standards established by
Landlord for its own employees.
7.2.3. All such employees shall be required to successfully
complete Landlord-sponsored (or sponsored by an Affiliate of Landlord)
orientation and training programs prior to or reasonably soon after beginning
employment and on a periodic basis thereafter as deemed appropriate by Landlord
(such orientation and training programs shall be provided by Landlord to
Tenant's employees at the expense of Tenant).
7.2.4. Landlord shall have the right to approve the
assignment of any such employees and to direct Tenant to reassign any such
employees (and Landlord shall have no liability in connection with any employee
transfer or discharge thereby made by Tenant and Tenant shall hold Landlord
harmless in connection therewith); provided, however, that so long as Tenant has
complied with the requirements of: (i) this Lease (including, without
limitation, the Disney Standard in all respects); (ii) Tenant's own employment
policies; and (iii) all applicable Laws, then Tenant shall not be required to
transfer or discharge any employee of Tenant in accordance with this subsection
if to do so would, in Tenant's reasonable opinion, result in a violation of any
applicable Law.
7.2.5. Tenant shall be solely responsible for all salaries,
employee benefits, social security taxes, Federal or state unemployment
insurance, workers' compensation coverage and any and all taxes and other
charges of any kind whatsoever relating to such employees.
7.2.6. Tenant's employees shall not be entitled to
participate in any of Landlord's employee benefit or welfare plans.
7.2.7. Tenant shall be responsible for such employees'
failure to comply with any of the applicable provisions of this Lease.
7.3. Policies of Employment and Employment Commitment.
7.3.1. Tenant shall maintain policies of employment as
follows:
(a) Neither Tenant nor any of its agents,
employees or contractors shall discriminate against any employee or applicant
for employment on the basis of race, religion, color, sex, national origin,
sexual orientation, disability or on any other basis whatsoever which may
violate any applicable Law. Tenant shall take action to insure that qualified
applicants for available positions are employed. Tenant shall post in
conspicuous places, available to employees and applicants for employment,
notices setting forth the policies of non-discrimination.
(b) Tenant shall, in all solicitations or
advertisements for employees placed by it or on its behalf, state that all
qualified applicants will receive consideration for
55
employment without regard to race, religion, color, sex, national origin, sexual
orientation, or disability and that Tenant is an equal opportunity employer.
7.3.2. Tenant shall recruit, train, supervise, direct,
discipline, and if necessary, discharge personnel working at the Premises. As a
requirement of this Lease, all personnel working at the Premises, management,
non-management, and hourly, must abide by Landlord's appearance standards and
rules of conduct. Employees will adhere to THE DISNEYLAND RESORT(R) PROJECT
practices and policies concerning grooming standards, drug abuse, smoking,
alcohol consumption, eating, using offensive language, fighting, etc. Name tags
shall be worn by all employees. Tenant shall cause all of its employees to
behave in a friendly, respectable, and courteous manner towards all guests and
Landlord, its staff and management. If Landlord believes that any of Tenant's
employees are acting (or failing to act, as the case may be) other than as
required under this Lease, or Landlord or its agents determine that any of such
employees are not performing their duties in a competent manner, Landlord shall
so advise Tenant and Tenant shall promptly arrange to correct the deficiencies
or to replace such employee, as determined by Tenant and approved by Landlord.
7.4. Costumes and Appearance Standards.
All employees at the Premises shall wear costumes or uniforms provided by
Tenant, at Tenant's sole cost and expense, or employees may wear their own
clothing provided such are of a high quality and appearance and are consistent
with the Disney Standard. All costumes or uniforms shall be subject to the prior
approval of Landlord in writing (in Landlord's sole discretion). All costumes,
uniforms or personal clothing shall be maintained, washed and pressed and
otherwise be in a condition equivalent or better than that of the costumes or
uniforms used at public guest facilities owned or operated by Landlord or its
Affiliates within THE DISNEYLAND RESORT(R) PROJECT.
7.5 Employee Parking.
Landlord shall have the right, from time to time, to designate and charge for
certain parking areas for Tenant employee parking, and Tenant agrees that Tenant
and its employees shall not thereafter park in any parking areas except those
areas so designated by Landlord. In order to facilitate the enforcement of such
restriction on Tenant and employee parking, Tenant agrees that it shall, within
three (3) days after each employee's hire date, furnish and provide to Landlord
the automobile license tag numbers of all Tenant and employee vehicles. Landlord
may, in its sole discretion, require that any and all of Tenant's employees at
the Premises submit copies of their driver's licenses and register their motor
vehicles with the Security or other department of Landlord, and that such
employees affix and maintain certain decals to their motor vehicles in order to
obtain access to certain facilities within THE DISNEYLAND RESORT(R) PROJECT.
Tenant shall advise its employees to properly lock and secure their motor
vehicles and to refrain from leaving any valuables in their motor vehicles,
since Landlord does not assume and Landlord hereby disclaims any liability or
responsibility whatsoever for the safety or security of any such employee motor
vehicle or the contents thereof. In the event that Tenant or its employees shall
fail, following one (1) written or oral notice, to: (i) park their motor
vehicles in areas properly designated by Landlord for such parking; or (ii)
otherwise follow the requirements of this
56
Section, then Landlord may, at its sole option, cause any such motor vehicle to
be towed, at Tenant's expense, and/or charge Tenant the sum of $25.00 for each
offense.
8. GUEST SURVEYS.
8.1. Periodic Guest Surveys.
8.1.1. Landlord shall, at its option and expense, have the
right to conduct itself, or to cause Tenant to conduct at Tenant's expense,
guest evaluation and experience surveys at periodic intervals. Any such
evaluation or survey may, at the discretion of Landlord, be conducted in or upon
the Premises or through the use of mail or telephone (or other electronic)
contact. If Landlord wishes to conduct such evaluation or survey by means of
mail or telephonic (or other electronic) contact, upon request therefor by
Landlord, Tenant shall provide at no cost to Landlord, by hard copy and magnetic
media, the names and addresses (and, if available, telephone numbers) of guests
who (i) have voluntarily disclosed such information in Tenant's guest book,
which shall be present at all times on the point of sale counter, (ii) have
voluntarily disclosed such information to the cashier for data entry into the
point of sale system, and/or (iii) have paid for goods or services upon the
Premises by means of a credit or direct debit card (or its equivalent), sorted
by categories as requested by Landlord. The timing of any such surveys described
in the preceding sentence shall be coordinated with Tenant (it being understood
and agreed by Tenant that Tenant shall cooperate with Landlord in such regard),
and such surveys shall be addressed to obtaining such data as Landlord shall
require, and the results thereof shall be shared between Landlord with Tenant,
provided, however, that nothing in this Section 8.1 shall require Tenant to
disclose customer data which Tenant is required to keep confidential, whether by
customer request or by Law.
8.1.2. At Landlord's request, Tenant shall at its expense,
as a component of its operating standards and in addition to any surveys or
evaluations conducted by or at the instance of Landlord as set forth in
Subsection 8.1.1 above: (i) periodically (but no fewer than twice per Lease
Year) conduct guest evaluation and experience surveys, and (ii) place comment
cards or the like in the public areas of the Premises. Tenant shall compile,
analyze and review all data received from such efforts in a form reasonably
acceptable to Landlord and Tenant shall share all of such data with Landlord,
provided, however, that Tenant shall not be required to disclose customer data
which Tenant is required to keep confidential, whether by customer request or by
Law.
8.1.3. The results of any such guest surveys or comment
cards or the like described in the foregoing subsections may be used by Landlord
for all purposes as probative evidence of Tenant's compliance or non-compliance
with the terms of this Lease, including, without limitation, the Disney
Standard.
9. TAXES AND ASSESSMENTS.
9.1. Payment of Taxes and Assessments.
Tenant shall pay as and when they shall become due and payable, as Additional
Rent, an amount equal to all Taxes and Assessments during the Term. Landlord
shall equitably apportion the total amount of Taxes and Assessments for the tax
lot(s) which the Premises is a part among the
57
various tenants and owners affected thereby, either on a square footage,
intensity of use or some other common factor basis, in which event Taxes and
Assessments shall be based upon the proportion of the floor area of the Premises
to the total floor area of all the land and improvements in the tax lot(s) for
which the Premises is a part, or based upon the nature or intensity of use or
some other common factor applicable to Tenant and the various other tenants and
owners. As of the date of this Lease, Landlord estimates that Tenant's pro rata
share of Taxes and Assessments will be approximately * of the Premises.
Tenant shall pay to Landlord, as Additional Rent, Tenant's portion of such Taxes
and Assessments within thirty (30) days of Tenant's receipt of a statement from
Landlord therefor. Tenant shall not be responsible for the personal property
taxes of any person or party other than Tenant (it being acknowledged by the
parties, however, that under present Law Tenant is responsible for filing and
paying its personal property taxes directly to the appropriate Governmental
Authority and that in such event any such equitable allocation would not include
personal property taxes with respect to Tenant's personalty).
9.2. Proration of Taxes and Assessments.
Taxes and Assessments for the calendar years during which the Commencement Date
and the Expiration Date occur shall be prorated so that Tenant pays only that
portion of the Taxes and Assessments for such calendar years allocable to
periods of time during the Term. Such proration shall be computed and made as
soon as practicable after the Commencement Date and the Expiration Date.
9.3. Challenge of Taxes and Assessments.
9.3.1. Tenant shall not contest, challenge or appeal
(directly or indirectly, formally or informally, officially or unofficially) any
Taxes and Assessments levied, assessed or imposed by any Governmental Authority
without the prior written consent and approval of Landlord, which consent and
approval may be granted or withheld by Landlord in its sole and absolute
discretion. Without limiting the generality of Section 15.1 (Indemnity of
Landlord), Tenant acknowledges and agrees that the indemnity provisions of
Section 15.1 shall be deemed to include, without limitation, any and all
increased taxes and/or assessments, penalties or interest, imposed on any
property owned or operated by Landlord or any Landlord Affiliate (together with
all attorneys fees and costs incurred by Landlord or any Landlord Affiliate in
appealing or otherwise attempting to reverse such costs or liabilities)
resulting, in whole or in part, from Tenant's breach of this Subsection 9.3.1.
Landlord reserves the right, but shall not be obligated to do so, to contest,
challenge and/or appeal any and all Taxes and Assessments. If any Taxes and
Assessments are contested, challenged or appealed by Landlord, then Tenant's
proportionate share of Taxes and Assessments shall also include Tenant's
proportionate share of Landlord's cost and expense of contesting such Taxes and
Assessments.
* - Redacted Text - Confidential treatment requested; omitted portions have been
filed separately with the Securities and Exchange Commission.
58
10. UTILITIES; REPAIRS; JANITORIAL SERVICE; TRASH COLLECTION AND SECURITY.
10.1. Utilities.
10.1.1. Except for cable television service and phone
service, Landlord shall cause lines, cables, mains and other conduits and
connections for the delivery of Utilities to be brought to locations fifteen
(15) feet of the Premises, as shall be determined by Landlord in Landlord's sole
discretion. Landlord may, but shall not be required to furnish to Tenant any
Utilities of any kind whatsoever during the Term (including, without limitation,
water, steam, heat, fuel, gas, hot water, electricity, light and power). This
Lease shall be subject and subordinate to any easements that Landlord may elect
to grant to providers of any Utilities to provide service to the Premises.
10.1.2. If Tenant should construct an Improvement which
encroaches upon, or should landscape or otherwise improve on or over, a utility
easement reserved by Landlord hereunder, whether with or without the consent of
Landlord, Tenant shall remove same to the extent necessary to effect the
maintenance, repair or replacement of any Utilities within the easement and
shall restore same, all at its cost and expense.
10.1.3. Tenant shall pay for the cost of providing temporary
utility services to the Premises during construction (including, without
limitation, the performance of Tenant's Work). Tenant shall pay to Landlord the
actual cost for any such temporary utility services furnished by Landlord.
10.1.4. Tenant shall pay all connection fees imposed by any
governmental or quasi-governmental entity or utility or by Landlord or any
Affiliate of Landlord (if such utility is so provided) for or relating to the
Utilities including, but not limited to, connections for telephone, electric,
potable water and waste water lines, and construction costs of connecting to
such Utilities. Tenant shall pay and be responsible for the Utilities (and any
other utilities utilized by Tenant) and shall pay for customary hook-up and
service fees.
10.1.5. Tenant shall make all arrangements for, and pay or
cause to be paid when due all charges for, all Utilities and services furnished
to the Premises or used by Tenant, including, but not limited to, electricity,
water, telephone and sanitary sewer services. Landlord may provide Tenant with
hot and chilled water through Landlord's central plant. Tenant shall pay
Landlord for its usage of hot and chilled water plus its share of the amortized
capital costs of Landlord's central plant plus Tenant's share of the maintenance
and utility costs to run the central plant. Tenant may not audit or review
Landlord's books and records regarding its capital and maintenance costs for its
central plant. If any utility to the Premises cannot be separately metered, or
if Landlord is required by any utility supplier or itself elects to supply the
utility service through a master meter, then Landlord shall equitably apportion
the cost of such utility among the various tenants or users served thereby on
either a square footage basis (based upon the proportion of the leased area of
the Premises to the gross area served through the same master meter) or based
upon the intensity of use by Tenant. If requested by Landlord, Tenant shall, at
Tenant's expense, cause to be installed for the Premises submeters or
information meters on any utility served through a master meter. In the event of
such apportionment or submetering, Tenant
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shall pay to Landlord monthly, as Additional Rent, Tenant's portion of the cost
of such utility, within ten (10) days of receipt of a statement from Landlord
therefor.
10.1.6. If Tenant desires cable television service, it shall
contract through Century Cable; provided, however, in no event shall such cable
television exhibit obscene, pornographic or objectionable content or any content
which is not of the Disney Standard. All public phone service within the
Premises shall be through Vista-United Telecommunications and Tenant shall
contract within such entity for such service.
10.1.7. For any utility serving the Premises, Tenant shall
make all arrangements for, and pay or cause to be paid when due all charges for,
installation of connection hook-ups, back flow preventive devices, and submeters
and/or other devices for the measurement of utilities supplied to the Premises.
10.1.8. In no event shall Landlord be liable or responsible
for any interruption or disruption of utility service and Tenant hereby waives
any and all claims against Landlord for any loss, damage or expense arising out
of or incurred in connection with any of such events.
10.1.9. Landlord reserves the right to grant such easements
to Vista-United Telecommunications and/or any other supplier of utilities
services which are reasonably necessary to enable them to provide utility
services to the Premises or other portions of THE DISNEYLAND RESORT(R) PROJECT.
Further, Landlord reserves the right, at its own cost and expense, to construct,
erect, place, bury, operate, maintain, repair, renew or replace utilities on,
over, under or through any portion of the Premises or to alter the alignment of
any existing utilities on any portion of the Premises, provided that such use
shall not unreasonably interfere with Tenant's use of the Premises.
10.2. No Repairs by Landlord.
Except with respect to the structural elements of the Premises that were part of
Landlord's Work including, without limitation, the roof and slab of the Building
(unless affected by Tenant's actions, normal wear and tear excluded), and any
utilities which run through the Premises which do not exclusively serve the
Premises, Landlord shall not be obligated to repair, maintain or replace any
part of the Premises during the Term.
10.3. Repairs by Tenant.
During the Term, except as provided in Section 10.2 above, Tenant shall perform
all maintenance, repair and replacement of the Premises (including the exterior
thereof and any portion of the Common Area due to the misuse by Tenant). Tenant
shall, at Tenant's sole cost and expense, put, keep, replace, maintain and
repair the Premises so that at all times the Premises shall be in good order and
repair, and in a good, safe and substantial condition, and Tenant shall not
cause or permit any waste or deterioration thereof. Tenant's obligations
hereunder shall be timely performed by Tenant whenever the same may arise during
the Term, whether foreseen or unforeseen, whether interior or exterior, whether
ordinary or extraordinary, and regardless of the time remaining in the Term.
Subject to Article 13 hereof, upon the expiration or sooner termination of this
Lease, Tenant shall leave the Premises in a condition at least as good as the
condition the Premises were in on the Commencement Date, excepting only ordinary
wear and
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tear, depreciation and obsolescence. Tenant acknowledges that the initial
Furnishings will become worn out, defective, obsolete or otherwise inappropriate
under or with respect to the Disney Standard. Accordingly, Tenant shall, at its
sole cost and expense, periodically procure, install, maintain, repair, renew
and replace in, upon or about the Premises all Furnishings necessary or
appropriate for the operation of a first-class Build-A-Bear Workshop store
consistent with the standards of THE DISNEYLAND RESORT(R) PROJECT, and otherwise
in strict conformity with the Disney Standard.
10.4. Standards for Repair and Maintenance.
Notwithstanding the possible existence of any generally accepted industry
standards used in the Anaheim area defining the expression "in good order and
repair, and in a good, safe and substantial condition," Tenant hereby
acknowledges that the overall value, desirability and attractiveness of the
Premises will be substantially augmented and enhanced as a result of its
location within THE DISNEYLAND RESORT(R) PROJECT and that the Disney Standard
materially exceeds any such generally accepted industry standards. Accordingly,
Tenant covenants and agrees that, continuously throughout the Term, the Premises
will be operated and maintained in strict accordance with the Disney Standard.
10.5. Consultation with Landlord.
In order to: (i) fulfill the terms and provisions contained herein; and (ii)
operate, manage and maintain the Premises for the best use, enjoyment, welfare
and benefit of Tenant and Landlord, their successors, assigns and legal
representatives or any other party claiming an interest in the whole or any
portion of the Premises by, through or under either of said parties and the
guests, invitees, lessees and licensees of any of the foregoing parties, there
is hereby imposed upon Tenant the specific duty and obligation to consult with
Landlord and seek its advice, guidance, consent and approval as to all matters
concerning the proper maintenance, operation, repair and replacement of any and
all Improvements, Furnishings, signs, decorative walls, landscaping, and
personal property placed or erected upon the Premises in a manner consistent
with the Disney Standard. The aforesaid duty to specifically consult with
Landlord shall not in any way limit or condition the affirmative obligation of
Tenant to repair and maintain the Premises as set forth in this Article.
10.6. Ultimate Responsibility for Standards.
Notwithstanding anything contained in this Lease to the contrary, the above
provisions and standards shall in no way create, impose or imply that Landlord
has any specific duty or responsibility to either Tenant, its successors,
assigns and legal representatives, any other party claiming an interest in the
Premises by, through or under either Landlord or Tenant or to the guests,
invitees, lessees and licensees of any of the foregoing parties with regard to
the matters addressed herein. Nothing contained herein is intended to set any
acceptable minimum safety or welfare standards and it shall remain the sole
responsibility of Tenant to determine its own minimal levels of acceptable order
and condition for the Premises and to ensure conformity to the terms of this
Lease as well as to all other legal requirements as hereinafter provided, it
being agreed that Tenant shall hold Landlord harmless from all claims and
liabilities arising therefrom.
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10.7. Janitorial, Pest Control and Sitescaping Services.
Tenant shall make arrangements and pay for all janitorial, pest control and
landscaping services for the Premises. Tenant shall have the right to contract
for such services with third parties; provided, however, that the third parties
selected by Tenant shall be subject to Landlord's prior approval in its sole
discretion.
10.8. Trash and Garbage Collection.
Tenant shall temporarily store all of Tenant's garbage and trash in a ventilated
and enclosed area on the Premises, and Tenant shall be responsible for
collecting and transporting all of its garbage and trash to the trash storage
area designated by Landlord as and when required by Landlord. Tenant shall
ensure that all garbage and trash is properly stored in leak-resistant, odor
resistant bags or containers prior to disposal and in accordance with all Laws.
Tenant shall take all necessary means to ensure that no offensive odors (as
determined by Landlord) emanate from the Premises. Tenant shall maintain the
cleanliness and sanitation of the trash area relative to Tenant's use thereof.
All boxes and cartons shall be torn or broken down by Tenant as necessary so as
to be easily accommodated in the bags or containers. Tenant shall not place any
material in any trash or garbage container which cannot be disposed of in the
ordinary and customary course of trash and garbage disposal. Tenant shall comply
with Landlord's recycling plan as set forth by Landlord from time to time.
Tenant shall pre-sort recyclable material and deposit such into designated
containers/areas. Tenant shall be responsible for paying to Landlord (or such
entity as may be designated by Landlord from time to time) (at rates which shall
be competitive with private companies in the area providing the same service or
services) or the City of Anaheim and/or the County of Orange, all fees for the
use of any dumpsters or containers used by Tenant and all charges in connection
with removal of Tenant's trash and garbage from the designated trash storage
area including, without limitation, Orange County Sanitation fees.
10.9. Fire Monitoring.
Tenant shall pay to Landlord the monitoring fees which are established from time
to time for monitoring of the emergency fire system installed (or to be
installed) in the Premises. Such system shall tie into Landlord's fire
monitoring system. Landlord shall not have any liability to Tenant as a result
of any damage, loss or claim sustained by Tenant as a result of any failure of
such system or negligence in the monitoring thereof.
10.10. Sanitation.
Tenant shall be responsible for the normal and customary sanitation and cleaning
of the entire Premises. Further, Tenant shall clean the interior and exterior
walls, air ducts and vent systems pursuant to all applicable Laws and consistent
with the Disney Standard and as otherwise provided in the Operating Conditions,
Rules and Regulations. All cleaners and chemicals utilized in the sanitation of
the Premises by Tenant must be first approved by Landlord in its sole
discretion. Tenant shall promptly forward to Landlord copies of all Orange
County Health Department inspections.
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10.11. Security.
Tenant shall provide its own security within its Premises. Tenant shall provide
security/customer control for Tenant's customer queue lines. All of Tenant's
security plans, systems and processes shall be subject to the prior approval of
Landlord, in Landlord's sole and absolute discretion. Any outside security
companies used by Tenant shall be subject to Landlord's prior approval, in
Landlord's sole and absolute discretion. No armed security is permitted.
Tenant's security alarm system shall tie into Landlord's system. Any armored car
service used by Tenant shall be at Tenant's risk and expense and shall be
approved by Landlord, in its sole and absolute discretion. Tenant's employees
shall follow all guidelines provided under Landlord's emergency action plan.
11. IMPROVEMENTS OR ALTERATIONS.
11.1. Improvements or Alterations.
Except for the construction and installation of the initial Improvements and
Furnishings expressly provided for in this Lease, Tenant shall not make any
exterior improvements or alterations of any kind or nature (even if "minor" or
"decorative") without the prior consent and approval of Landlord in Landlord's
sole discretion in each instance.
* Notwithstanding the foregoing, with respect to changes or alterations in
connection with updating or remodeling the Premises in accordance with
Subsection 4.1.5 hereof, and provided such changes or alterations do not affect
the exterior of the Premises and do not exceed the amount of * in the
aggregate in any Lease Year, Landlord's approval shall not be required. With
respect to any alterations or improvements which require Landlord's consent
hereunder, Landlord agrees to respond to a complete proposal for such interior
alterations or improvements (including plans, specifications and such other
items as Landlord may reasonably request), submitted by Tenant in a form
acceptable to Landlord, within thirty (30) days of Landlord's receipt of a
complete proposal. Failure by Landlord to respond to such proposal within thirty
(30) days of receipt thereof shall be deemed rejection of such proposal. If
Landlord in its discretion permits any improvement or alteration proposed by
Tenant, any such permission shall be subject to such conditions or requirements
as Landlord may in its discretion require, including, without limitation, the
following: (i) any such improvement or alteration shall be at Tenant's expense
and shall be in compliance with the Disney Standard and all applicable Laws,
including, without limitation, the ADA; (ii) any such improvement or alteration
shall not weaken or impair the structural strength or integrity of the building,
alter its exterior design or appearance, materially impair the use of any of the
service facilities, fundamentally affect the character or suitability of the
Premises for the permitted purposes described in this Lease, or materially
lessen or impair their value; (iii) any such improvement or alteration shall not
be commenced until Tenant shall have obtained all certificates, licenses,
permits, authorizations, consents and approvals necessary for such improvement
or alteration, from all Governmental Authorities having jurisdiction with
respect to the Premises or such improvement or alteration, and Landlord, at
Tenant's expense, shall fully cooperate with Tenant in obtaining any such
* - Redacted Text - Confidential treatment requested; omitted portions have been
filed separately with the Securities and Exchange Commission.
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certificate, license, permit, authorization, consent or approval, and shall have
complied with all applicable Lease provisions; (iv) Tenant shall cause all
improvements or alterations to be made and completed with first class materials
and in a good, substantial and workmanlike manner, and in compliance with the
Disney Standard and all Laws, and shall cause all such improvements or
alterations to be diligently prosecuted to completion; (v) Tenant shall promptly
pay all costs and expenses incurred for any such improvements or alterations,
and Tenant shall at all times maintain the Premises free and clear of all liens
for services or labor performed or rendered, or for materials delivered,
supplied or furnished, to or in connection therewith; and (vi) Tenant shall
obtain and maintain in full force and effect builder's risk and commercial
liability insurance covering all work in connection with all improvements or
alterations, in accordance with the provisions of this Lease. Landlord's consent
to any improvements or alterations may be conditioned upon such other factors as
Landlord shall deem appropriate, including a requirement that Tenant deposit
with Landlord a surety bond or other security satisfactory to Landlord to assure
completion of or payment for such improvements or alterations. Except for
Tenant's Personalty, title to all improvements or alterations shall vest in
Tenant immediately upon construction or installation on, or affixation or
annexation to, the Site, but shall subsequently transfer to Landlord upon the
expiration or sooner termination of this Lease pursuant to the terms hereof.
Tenant shall deliver to Landlord within ten (10) days of completion of any
improvement or alteration, as-built drawings of such improvement or alteration,
in form acceptable to Landlord.
12. LEGAL REQUIREMENTS AND LIENS.
12.1. Compliance with Legal Requirements.
Other than in connection with the construction of Landlord's Work by Landlord,
Tenant shall, at Tenant's expense, promptly comply with all legal requirements
affecting the Premises. The phrase "legal requirements affecting the Premises,"
as used in this Section, shall mean and shall include all applicable Laws and
other requirements which relate in any manner to the Premises or any part of the
Premises, or to the use, construction or occupancy of the Premises or any part
of the Premises, including, but not limited to, health and safety codes and
similar requirements, building codes and similar requirements, zoning ordinances
and requirements, use restrictions, fire requirements, safety requirements,
energy-related requirements, environmental requirements and requirements for the
physically challenged (including, without limitation, the ADA).
12.2. Challenge of Legal Requirements.
Subject to the terms of this Lease including, without limitation, maintaining
The Disney Standard, Tenant may, at Tenant's sole cost and expense, upon prior
written notice to Landlord, in Tenant's own name and on Tenant's own behalf, in
good faith, contest any legal requirement affecting the Premises and, in the
event of any such contest, may permit such legal requirement so contested to
remain unsatisfied during the period of such contest and any appeal therefrom;
provided, however, that, if Landlord shall notify Tenant that, in Landlord's
sole and absolute opinion: (i) the Premises or any part thereof will be subject
to loss or forfeiture by virtue of or by reason of such non-compliance; or (ii)
the name, image, reputation, goodwill or proprietary rights of Landlord or any
of Landlord's Affiliates or of any portion of THE DISNEYLAND RESORT(R) PROJECT
will be adversely affected, then such legal requirements shall be complied
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with forthwith or Tenant shall deposit with Landlord a sum of money reasonably
required by Landlord as security to protect the Premises from any loss or
forfeiture and Tenant shall do or cause to be done such other measures as
Landlord shall reasonably require to protect the Premises and such name, image,
reputation, goodwill or proprietary rights.
12.3. No Liens.
Landlord's interest in the Site, the Premises and the Furnishings shall not be
subjected to liens of any nature by reason of Tenant's construction, alteration,
repair, restoration, replacement or reconstruction of any Improvements and/or
Furnishings on the Site, or by reason of any other work performed or allegedly
performed, materials furnished or allegedly furnished to or for Tenant, or by
reason of any other act or omission of Tenant (or of any person claiming by,
through or under Tenant) including, but not limited to, mechanics' and
materialmen's liens. All persons dealing with Tenant are hereby placed on notice
that such persons shall not look to Landlord or to Landlord's credit or assets
(including Landlord's interest in the Site, the underlying real property, any
Improvements constructed thereon or any Furnishings contained therein) for
payment or satisfaction of any obligations incurred in connection with the
construction, alteration, repair, restoration, replacement or reconstruction
thereof by or on behalf of Tenant. Landlord reserves the right to enter upon the
Premises or Site for the purpose of posting Notices of Non-Responsibility or any
other notices which Landlord deems necessary or desirable for the proper
protection of Landlord's interest in the Premises or Site or underlying real
property as are permitted by Law. Tenant shall give Landlord notice of the
intended commencement date of any work on or about the Premises or Site
sufficiently in advance thereof to enable Landlord to post Notices of
Responsibility or such other notices. Tenant has no power, right or authority to
subject Landlord's interest in the Site, the underlying real property, or in
such Improvements and/or Furnishings to any mechanic's or materialmen's lien or
claim of lien. If a lien, a claim of lien or an order for the payment of money
shall be imposed against the Site, the underlying real property, or any
Improvements thereon or Furnishings therein on account of Work performed, or
alleged to have been performed, by or on behalf of Tenant, Tenant shall, within
thirty (30) days after the imposition of such lien, claim or order, cause the
Site, the underlying real property, the Improvements and the Furnishings to be
released therefrom by the payment of the obligation secured thereby or by
furnishing a bond or by any other method prescribed or permitted by Law. Tenant
agrees to indemnify and hold Landlord harmless from and against any and all
claims for mechanic's, materialmen's or other liens in connection with any work
performed or allegedly performed, materials furnished or allegedly furnished, or
other obligations incurred by or for Tenant, and in connection therewith Tenant
shall provide Landlord with immediate notice of any and all liens filed against
the Premises, the Site and/or the underlying real property. If Tenant shall fail
to discharge such lien within the period herein set forth, then in addition to
any other right or remedy of Landlord resulting from Tenant's said default,
Landlord may, but shall not be obligated to, and without releasing Tenant from
any of its obligations, cause such liens to be released by any means permitted
by law, including payment in satisfaction of the claim giving rise to such lien.
Tenant shall pay to Landlord at once, upon notice by Landlord, the full sum paid
by Landlord to remove such liens, together with interest at the maximum rate per
annum permitted by law from the date of such payment by Landlord. If a lien is
released, Tenant shall thereupon furnish Landlord with a written instrument of
release in form for recording in the office of the county recorder, Orange
County, California, or as otherwise necessary to be sufficient to establish the
release as a matter of record.
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12.4. Contest of Liens.
Tenant may, at its option, contest the validity of any lien or claim of lien if
Tenant shall have first posted an appropriate and sufficient bond in favor of
the claimant or paid the appropriate sum into court, if permitted by Law, and
thereby obtained the release of the Site, the underlying real property, the
Improvements and the Furnishings from such lien. If judgment is obtained by the
claimant of any lien, Tenant shall pay the same immediately after such judgment
shall have become final and the time for appeal therefrom has expired without
appeal having been taken. Tenant shall, at its own expense, defend the interests
of Tenant and Landlord in any and all such suits; provided, however, that
Landlord may, at its election, at Tenant's expense, engage its own counsel and
assert its own defenses, in which event Tenant shall cooperate with Landlord and
make available to Landlord all information and data which Landlord deems
necessary or desirable for such defense. Tenant shall do or cause to be done
such other measures as Landlord shall reasonably require to protect the Premises
and Landlord's name, image, reputation, good will or proprietary rights.
12.5. Notice of Nonresponsibility.
Prior to commencement of any of the Work (and any other construction,
alterations, repairs, restorations, replacements or reconstruction on the Site),
Tenant shall take any and all steps necessary and appropriate to protect
Landlord and Landlord's interest in the Site, the underlying real property or
the Premises from becoming subject to any liens or claims of lien.
13. DAMAGE OR DESTRUCTION.
13.1. Damage or Destruction of Premises.
If the Premises is damaged or destroyed by fire or other casualty, Tenant shall
notify Landlord immediately and the following provisions shall determine the
effect of the damage or destruction on this Lease.
13.1.1. Subject to the termination rights of Landlord and
Tenant under this Lease and Landlord's completion of the restoration of
Landlord's Work, Tenant shall repair, reconstruct or replace, Tenant's Work
(including the Furnishings), or the portion thereof so destroyed or damaged
(whichever is reasonably required) at least to the extent of the value and as
nearly as practicable to the character thereof existing immediately prior to
such occurrence. All work shall be subject to Landlord's prior approval in its
sole discretion, shall be started as soon as practicable after the occurrence of
the casualty and, if applicable, the restoration of Landlord's Work, and shall
be diligently completed at Tenant's expense (to which the insurance proceeds
will be applied as hereinafter provided) in accordance with the construction
schedule acceptable to Landlord, and paid for as promptly as Tenant's exercise
of due diligence makes practicable. Tenant shall, however, immediately take such
action as is necessary to assure that the Premises does not constitute a
nuisance, otherwise present a health or safety hazard or detract from the
aesthetics of the neighborhood, such work to be accomplished at Tenant's sole
cost and expense (but Tenant shall be reimbursed out of the insurance proceeds,
which right of reimbursement shall survive the termination of this Lease). All
repairs and reconstruction shall be performed in a manner acceptable to Landlord
which shall in no way interfere with the ongoing operation of
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THE DISNEYLAND RESORT(R) PROJECT. Such repairs and reconstruction shall be
performed after operating hours, if required by Landlord. Tenant shall deliver
to Landlord within ten (10) days of completion of any repair, replacement or
reconstruction, as-built drawings, in form acceptable to Landlord.
13.1.2. In the event of a casualty resulting in a loss payment
for Tenant's Work in an amount greater than ten percent (10%) of the total
coverage of all insurance applicable to a loss of such nature, the proceeds of
all insurance policies maintained by Tenant exclusive of amounts for Tenant's
inventory, supplies, Merchandise and other items of Personalty that Tenant may
otherwise remove from the Premises, shall be deposited in an interest-bearing
escrow account in a commercial bank with trust powers and authorized to transact
business in California acceptable to both Landlord and Tenant, and shall be used
by Tenant for the repair, reconstruction or restoration of the Premises. The
form and content of such escrow agreement shall also be acceptable to Landlord
in its sole discretion. Such proceeds shall be disbursed periodically pursuant
to the terms of the escrow agreement by the escrow agent upon certification of
the architect or engineer having supervision of the work that such amounts are
the amounts paid or payable for the repair, reconstruction or restoration. As a
condition to such disbursement, Tenant shall, at the time of such deposit with
such escrow agent, and from time to time thereafter until said work shall have
been completed and paid for, furnish Landlord with adequate evidence that at all
times the undisbursed portion of the funds, together with any funds made
available by Tenant, is sufficient to pay for the repair, reconstruction or
restoration in its entirety. Tenant shall be responsible for depositing any and
all additional funds necessary or appropriate to prosecute all repair,
reconstruction or replacement to full and final completion. Tenant shall obtain,
and make available to Landlord, receipted bills and, upon completion of said
work, full, final and unconditional waivers and releases of lien with respect to
all labor and materials furnished. If Landlord elects to do any of the work due
to Tenant's failure to do so in a satisfactory manner within twenty (20) days of
Landlord's notice thereof, Landlord may use the proceeds to pay for such work.
If any funds remain after said work is fully paid for and approved by Landlord,
the remaining funds will be paid over to Tenant (subject, however, to off-set
for any amounts of any kind owed by Tenant (or any of its Affiliates) to
Landlord (or any of its Affiliates). In the event of a casualty resulting in a
loss payment for the Premises in an amount equal to, or less than, ten percent
(10%) of the total coverage of all insurance applicable to a loss of such
nature, the proceeds shall be paid directly to Tenant, and shall be held in
trust by Tenant for repair, reconstruction or restoration of the Premises as
herein provided, and shall be applied by Tenant towards repair, reconstruction
and restoration (and if any funds remain after said work is fully paid for and
approved by Landlord, the remaining funds will be kept by Tenant; subject,
however, to off-set for any amounts of any kind owed by Tenant (or any of its
Affiliates) to Landlord (or any of its Affiliates)).
13.1.3. If, during the last two (2) Lease Years of the Term,
the Premises shall be totally destroyed or so damaged as to render them
unusable, either Landlord or Tenant may elect to terminate this Lease by written
notice to that effect given to the other party not later than thirty (30) days
after the occurrence of the casualty, whereupon this Lease shall cease and
terminate as of the date of the occurrence; provided, however, that such
election shall not be effective unless and until: (i) any entity having any
claim to the insurance proceeds has released and assigned to Landlord all rights
to the insurance proceeds; (ii) Tenant shall pay or assign to Landlord all
proceeds received or receivable under all policies of insurance covering the
Premises, and
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Landlord must have in fact received, pursuant to this clause (ii) or the
immediately preceding clause (i), all proceeds of insurance required under this
Lease (except for any amount thereof paid with respect to Tenant's inventory,
Supplies, Merchandise and other items of personalty, which Tenant otherwise had
the right to remove from the Premises pursuant to the provisions of this Lease);
(iii) Tenant shall pay to Landlord all Rent due from Tenant with respect to the
period up to and including the effective date of termination; (iv) Tenant shall
cure all defaults of Tenant hereunder other than any in respect of the failure
to make repairs or effect restoration of any damage giving rise to exercise of
Tenant's termination right under this Section; and (v) if such damage or
destruction shall not have been covered by collectible insurance as a result of
the failure of Tenant to maintain insurance in the limits required under this
Lease for any reason, Tenant shall pay to Landlord an amount equal to the excess
of the amount of insurance proceeds that would have been collectible in
connection with such damage if Tenant had not self-insured or maintained
third-party insurance (without any deductible) in accordance with the
requirements of this Lease over the amount of insurance proceeds, if any,
actually collectible (and collected) in connection with such damage. If Tenant
does not elect to terminate this Lease as aforesaid, Tenant shall promptly
comply with the provisions of subsections 13.1.1 and 13.1.2 hereof. All
insurance proceeds payable by reason of any loss of or damage to any of Tenant's
inventory, Supplies, Merchandise and other items of personalty which Tenant
otherwise had the right to remove from the Premises pursuant to the provisions
of this Lease, and the business interruption insurance maintained by Tenant for
the benefit of Tenant, shall be paid to Tenant; provided, however, that no such
payments shall diminish or reduce the insurance payments otherwise payable to or
for the benefit of Landlord hereunder (it being understood and agreed by the
parties hereto that Tenant's right to receive any such proceeds shall be subject
to and subordinate in all respects to Landlord's right to receive Tenant's
insurance proceeds with respect to the Premises and that Tenant shall not
receive or accept any portion of such proceeds unless and until Landlord has
been fully paid for its portion of Tenant's insurance proceeds).
13.1.4. Any damage or destruction due to casualty
notwithstanding, Tenant's obligation to pay Minimum Rent and Additional Rent
required by this Lease shall remain unabated by reason of any damage or
destruction to the Premises, and Tenant's obligation to pay Percentage Rent
required by this Lease shall also remain unabated by reason of any damage or
destruction to the Premises which does not result in a reduction of Gross Sales.
If and to the extent that any damage or destruction results in a reduction of
Gross Sales which would otherwise be realizable from the operation of the
Premises, then Landlord shall receive all loss of income insurance proceeds
equal to the Rent (including Percentage Rent based upon the Percentage Rent paid
for the previous Lease Year) Tenant would otherwise have been required to pay,
and Tenant shall have no obligation to pay Percentage Rent which would have
otherwise been realizable from Gross Sales generated by the operation of the
Premises; provided, however, that if such damage or destruction was caused by
Tenant's gross negligence or willful misconduct, Tenant shall remain liable for
the amount of Percentage Rent which otherwise would have been realizable from
the operation of the Premises, and the basis for the payment of such Percentage
Rent shall be the average Percentage Rent paid by Tenant during the last three
preceding Lease Years (or if three Lease Years have not elapsed, the average
during the preceding Lease Years or if one Lease Year has not elapsed, the
amount derived by annualizing the Percentage Rent from the Commencement Date) as
if such damage or destruction had not occurred.
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13.2. Effect of No-Insurance.
Nothing contained herein shall relieve Tenant of its obligations under this
Article if the destruction or damage is not covered, either in whole or in part,
by insurance, or if the net insurance proceeds shall be insufficient to pay the
entire cost of the repair, restoration or replacement; and Tenant's liability
under this Article shall survive any termination of this Lease (other than a
termination pursuant to Subsection 13.1.3 hereof).
13.3. Event of Default.
Any provision of this Lease to the contrary notwithstanding, if an Event of
Default has occurred and is continuing, or if this Lease is terminated by reason
of the occurrence of an Event of Default, all insurance proceeds and/or
condemnation awards shall be turned over to Landlord, on demand, for application
to restoration of the Premises or as Landlord otherwise directs and Tenant shall
assign to Landlord any and all rights which it has to receive any insurance
proceeds.
13.4. Risk of Loss of Property and Risk of Injury.
Landlord shall not at any time be liable for any loss of or damage to any
property of Tenant or others in or upon the Premises or any adjoining sidewalks,
streets, roads or ways, and Landlord shall not be liable to anyone for personal
damage or injury in or upon the Premises or any adjoining sidewalks, streets,
roads or ways.
13.5. Landlord's Election. Following damage to or destruction of the
Premises, Tenant may request in writing whether or not Landlord elects to
rebuild the Premises to the extent of Landlord's Work. If Landlord elects not to
rebuild, then this Lease shall terminate as of the date Tenant ceases operating
from the Premises due to such damage or destruction. Nothing contained in this
Lease shall require Landlord to repair or rebuild the Premises following damage
or destruction thereto.
14. CONDEMNATION.
14.1. Applicable Definitions and Standards.
For the purposes of this Article: (i) a "TAKING" (and its derivations) shall
mean any condemnation or exercise of the power of eminent domain by any public
authority vested with such power, or any taking in any other manner for public
use, including a private purchase, in lieu of condemnation, by a public
authority vested with the power of eminent domain or a sale by Landlord under
threat of condemnation; (ii) the "TAKING DATE" of any Taking shall mean the
earlier of the date upon which title to the Premises or portion thereof taken is
vested in the condemning authority, or the date upon which possession of the
Premises or portion thereof is taken by the condemning authority; and (iii)
"SUBSTANTIALLY ALL OF THE PREMISES" shall mean all or so much of the Premises
as, when taken, in Landlord's reasonable judgment, leaves the untaken portion
unsuitable for the continued feasible and economic operation of the Premises by
Tenant for substantially the same purposes as immediately prior to such Taking.
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14.2. Total Taking.
If Substantially All of the Premises shall be Taken, then this Lease and the
Term hereby granted shall automatically terminate as of the Taking Date and Rent
shall be prorated to such date. Landlord shall notify Tenant of such
determination made in its reasonable judgment within thirty (30) days after the
date on which title vests in the condemnor.
14.3. Partial Taking.
If this Lease continues in force upon such partial taking, the Rent shall be
equitably and proportionately reduced by Landlord based upon remaining capacity
of the Premises as determined by Landlord.
14.4. Condemnation Award.
Any condemnation award for the Premises, or the portion thereof so taken, shall
be apportioned between Landlord and Tenant as follows:
(a) If this Lease terminates due to a taking or
condemnation, Tenant shall be entitled to the net book value of Tenant's
interest in the Improvements (to the extent paid for by Tenant) (taking into
account the number of years remaining in the Lease Term and Landlord's right to
receive ownership of such Improvements upon termination of the Lease) and
Landlord shall be entitled to the balance of the award. Notwithstanding the
foregoing, if the balance of the award remaining after such allocation to Tenant
is less than the fair market value of the Site as determined by Landlord,
Landlord shall be entitled to the portion of the award in an amount equal to the
fair market value of the Site, and Tenant shall be entitled to the balance of
the award.
(b) If this Lease does not terminate due to such
taking or condemnation, Landlord shall first be entitled to that portion of the
entire award required to restore Landlord's Work. Tenant shall then be entitled
to that portion of the entire award required, pursuant to the terms of this
Lease, for restoration of the Improvements and the Furnishings, and out of the
portion of the award not applied to restoration, Landlord shall next be entitled
to the fair market value of the Premises and/or Furnishings which is so taken.
Then, that portion of the balance of the award, if any, equal to the amount by
which the value of the Improvements and Furnishings and the value of Tenant's
leasehold estate was diminished by the taking or condemnation shall be paid to
Tenant and Landlord shall be entitled to the balance of the award.
(c) If this Lease does not terminate due to a
taking or condemnation, Tenant shall, following restoration of Landlord's Work
by Landlord (to the extent feasible and practicable), with due diligence,
restore the remaining portion of the Premises to a complete, independent and
self-contained architectural unit in accordance with the provisions of the Lease
relating to Tenant's Work. In such event, the proceeds of the award to be paid
to Tenant as set forth in subsection (b) above shall be deposited with a bank
approved by Landlord as if such award were insurance proceeds hereunder, and the
amount so deposited will thereafter be treated in the same manner as insurance
proceeds are to be treated under this Lease until the restoration has been
completed and Tenant has been reimbursed for all of the costs and expenses
thereof;
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and, if the award is insufficient to pay for the restoration, Tenant shall be
responsible for the remaining cost and expense thereof. Minimum Rent shall be
proportionately abated from the date of such taking or condemnation until such
restoration is substantially completed.
(d) Notwithstanding anything contained herein to the contrary,
Landlord has the right to terminate this Lease in the event any portion of the
Premises or any portion of DOWNTOWN DISNEY(R) is taken or condemned for any
public or quasi-public use or purpose.
14.5. Temporary Taking.
If the temporary use (but not title) of the Premises, or any part thereof, is
taken, this Lease shall remain in full force and effect and Tenant shall
continue to pay all Rent hereunder. Tenant shall receive the award for such
temporary taking pertaining to the Improvements and Furnishings, to the extent
it applies to the period prior to the end of the Term; provided, however, Tenant
shall pay to Landlord the portion of the award for such temporary taking
pertaining to the Site and Tenant shall pay to Landlord any remaining balance of
the award.
14.6. Disputes.
If Landlord and Tenant cannot agree in respect of any matters to be determined
under this Section, a determination may be requested of the court having
jurisdiction over the taking and if said court will not accept such matters for
determination, either party may have the matters determined by a board or body
having jurisdiction over the parties or the parties may submit to arbitration.
14.7. Separate Award.
Notwithstanding any provision to the contrary, Tenant shall be entitled to
pursue a separate condemnation award or payment for moving and/or relocation;
provided, however, that same shall not diminish the amounts Landlord is entitled
to receive out of the award pursuant to the provisions of the foregoing
subsections.
14.8. Exclusive Remedy.
This Section shall be Tenant's sole and exclusive remedy in the event of a
taking or condemnation. Tenant hereby waives the benefit of California Code of
Civil Procedure Section 1265.130.
15. INDEMNITY.
15.1. Indemnity of Landlord.
Tenant shall pay and discharge, and shall defend, indemnify and hold Landlord
(and Landlord's Affiliates and the respective officers, directors, agents,
employees, representatives, successors and assigns of each), and the City of
Anaheim, and the Anaheim Public Financing Authority, and their respective
elected and appointed representatives, boards, commissions, officers, agents and
employees (collectively herein, "THE CITY" and "THE AUTHORITY", respectively)
(collectively the
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"INDEMNIFIED PARTIES") forever harmless from, against and in respect of all
obligations, settlements, liabilities, losses, damages, injunctions, suits,
actions, proceedings, fines, penalties, claims, liens, demands, costs, charges
and expenses of every kind or nature, including, without limitation, reasonable
fees of attorneys and other professionals through all appeals, and disbursements
which may be imposed on, incurred by or asserted against the persons hereby
required to be indemnified (but not against any of the same to the extent that a
negligent, willful or intentional act or omission of any of Landlord, its
Affiliates, and their respective officers, directors, agents, employees,
representatives, successors and assigns, or any of such parties required to be
indemnified, gave rise thereto or was the cause of same), arising directly or
indirectly from or out of; (i) any failure by Tenant to perform any of the
agreements, terms, covenants or conditions on Tenant's part to be performed
under this Lease; (ii) any wrongful act, negligence or willful misconduct on the
part of Tenant or its Affiliates, or their respective, officers, directors,
agents, representatives, employees, contractors or invitees, or any failure of
Tenant or its officers, directors, employees, agents or representatives to
comply with any Laws, Project Requirements or Operating Conditions, Rules and
Regulations, or with the directive of any Governmental Authority; (iii) any
misrepresentation, act or omission of or by Tenant, its employees, licensees,
invitees, contractors, subcontractors or materialmen, or the employees, agents,
officers or directors of any of them or anyone for whose acts any of them may be
liable; (iv) any accident, injury or damage which shall happen in or on the
Premises, however occurring, and any matter or thing growing out of the
condition, occupation, construction, maintenance, alteration, repair, use or
operation by any person of or in the Premises, whether such damage, destruction
or injury is caused by or is the fault of Tenant or any contractor,
subcontractor, laborer, supplier, materialman or any other third party retained
by Tenant; (v) any matter or thing growing out of the condition, occupation,
maintenance, alteration, repair, use, management or operation of the Premises;
(vi) any construction, demolition or other thing done by Tenant in, on or about
the Premises, or any part thereof, or any street, alley, sidewalk, garden, curb,
passageway or space adjacent thereto (including, without limitation, the Work);
or (vii) any use, non-use, possession, occupation, condition, operation,
maintenance or management of the Premises or any part thereof or any street,
alley, sidewalk, garden, curb, passageway or space adjacent thereto; or
(viii) any violation by Tenant, whether based on tort, breach of contract,
patent, copyright, trademark or service mark infringement or violations or
otherwise arising directly or indirectly from or out of any use by Tenant or its
Affiliates of the Trade Name (or any other name, mark, logo, slogan, design,
symbol, figure, drawing, idea, or other matter associated therewith); (ix) any
breach or violation of Tenant's representations and warranties expressly set
forth in this Lease; or (x) any other provision of this Lease which provides
that Tenant shall indemnify and/or hold harmless Landlord in respect of the
matters contained in such provision.
15.2. Indemnity of Tenant.
Landlord shall pay and discharge, and shall defend, indemnify and hold Tenant
(and Tenant's Affiliates and the respective officers, directors, agents,
employees, representatives, successors and assigns of each) forever harmless
from, against and in respect of all obligations, settlements, liabilities,
losses, damages, injunctions, suits, actions, proceedings, fines, penalties,
claims, liens, demands, costs, charges and expenses of every kind or nature,
including, without limitation, reasonable fees of attorneys and other
professionals through all appeals, and disbursements which may be imposed on,
incurred by or asserted against the persons hereby required to be indemnified
(but not against any of the same to the extent that a negligent, willful or
intentional
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act or omission of Tenant, its Affiliates, and their respective officers,
directors, agents, employees, representatives, successors and assigns, or any
such parties required to be indemnified, gave rise thereto or was the cause of
same), arising directly or indirectly from or out of: (i) any failure by
Landlord to perform any of the agreements, terms, covenants or conditions on
Landlord's part to be performed under this Lease; (ii) any wrongful act,
negligence or willful misconduct on the part of Landlord or its Affiliates, or
their respective agents, representatives or employees; or (iii) any other
provision of this Lease which provides that Landlord shall indemnify and/or hold
harmless Tenant in respect of the matters contained in such provision.
15.3. Defense Provisions.
15.3.1. Any party seeking indemnification under this Lease (the
"INDEMNIFIED PARTY") shall give notice to the party required to provide
indemnification hereunder (the "INDEMNIFYING PARTY") promptly after the
Indemnified Party has actual knowledge of any claim as to which indemnity may be
sought hereunder, and the Indemnified Party shall permit the Indemnifying Party
(at the expense of the Indemnifying Party) to assume the defense of any claim or
litigation resulting therefrom; provided, however, that: (i) counsel for the
Indemnifying Party who shall conduct the defense of such claim or litigation
shall be reasonably satisfactory to the Indemnified Party; (ii) the Indemnified
Party may participate in such defense, but only at the Indemnified Party's own
cost and expense; and (iii) the omission by the Indemnified Party to give notice
as provided herein shall not relieve the Indemnifying Party of its
indemnification obligations hereunder except to the extent that such omission
results in a failure of actual notice to the Indemnifying Party and the
Indemnifying Party is actually and materially damaged as a result of such
failure to give notice.
15.3.2. The Indemnifying Party shall not, except with the consent of
the Indemnified Party, consent to entry of any judgment or administrative order
or enter into any settlement that does not include as an unconditional term
thereof the giving by the claimant or plaintiff to the Indemnified Party of a
release from all liability with respect to such claim or litigation.
15.3.3. In the event that the Indemnifying Party does not accept the
defense of any matter as above provided, the Indemnified Party shall have the
full right to defend against any such claim or demand, and shall be entitled to
settle or agree to pay in full such claim or demand, in its sole discretion. Any
such defense, settlement or payment by the Indemnified Party shall not
constitute a waiver, release or discharge of the Indemnifying Party's
obligations under this Article, it being understood and agreed that any such
defense, settlement, or payment shall be without prejudice to the right of the
Indemnified Party to pursue remedies against the Indemnifying Party arising out
of or related to the Indemnifying Party's failure or refusal to defend the
Indemnified Party as required herein. Notwithstanding the foregoing, any
Indemnified Party shall have the right to settle any such action or proceeding
at any time, provided that it releases the Indemnifying Party from any further
indemnification obligation hereunder with respect to such settlement.
15.3.4. Neither Landlord, Landlord's Affiliates, the City, nor the
Authority shall have any liability to Tenant for any damage or injury to person
or property, or both, directly or indirectly caused by or arising from, in whole
or in part, any act or failure to act of any of the
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City or the Authority. Tenant shall not sue or otherwise seek recourse against
Landlord, Landlord's Affiliates, the City or the Authority on any claim, demand,
action or cause of action for any such damage or injury to person or property or
both.
15.3.5. The provisions of this Article 15 shall survive the
expiration or sooner termination of this Lease.
16. INSURANCE.
16.1. Coverage.
Commencing at least ten (10) days prior to Tenant taking possession of the Shell
Premises, and thereafter throughout the Term of this Lease, Tenant shall:
(i) Keep the Premises including, without limitation, the
Improvements and Furnishings, (including, without limitation, all alterations,
changes, additions and replacements thereto and thereof) insured against loss or
damage. Tenant shall procure (or cause to be procured), and shall maintain (or
cause to be maintained) in full force and effect at all times during the Term,
such insurance against such risks as is customarily carried with respect to
properties similar to the Premises, paying as the same become due all premiums
therefor, including, without limitation, property insurance on the "special
causes of loss" form (including vandalism, theft, malicious mischief, wind
damage, and sprinkler leakage) in an amount not less than one hundred percent
(100%) of the then full replacement cost thereof, and personal property
insurance on the "All Risk" form in an amount not less than one hundred percent
(100%) of the then full replacement cost thereof. All insurance required
hereunder, and all other insurance maintained by Tenant on the Improvements and
the Furnishings in excess of or in addition to that required hereunder, shall
name as loss payee insureds Landlord, Landlord's Affiliates, the City, the
Authority, any Fee Mortgagee and Tenant, as their respective interests may
appear. At least once every three (3) years, Tenant shall obtain, within ninety
(90) days after the request of Landlord, an insurance appraisal of the
Improvements and the Furnishings and adjust the amount of the foregoing
insurance, if necessary, to limits which will then reasonably assure sufficient
proceeds to replace the Improvements and the Furnishings in the event of a
casualty loss;
(ii) Provide and keep in force commercial general liability
insurance including, without limitation, blanket contractual, broad form
property damage and products/completed operations premises/project site
operations coverage against liability for bodily injury, death or property
damage having a combined single limit of not less than One Million Dollars
($1,000,000) with respect to injuries or damages in any one (1) occurrence with
a Five Million Dollar ($5,000,000) umbrella and automobile liability insurance
covering owned, non-owned or rented automotive equipment having a combined
single limit of not less than One Million Dollars ($1,000,000) with respect to
injuries or damages in any one (1) occurrence with a Five Million Dollar
($5,000,000) umbrella. Said insurance, and any and all other liability insurance
maintained by Tenant in excess of or in addition to that required hereunder,
shall include protection for, and shall name as additional insureds, Landlord
and Landlord's Affiliates, the City and the Authority, and Fee Mortgagee, the
effect of which will insure it (and them) in respect of any and all loss or
liability resulting from personal injury, death or property damage arising or
occurring upon, or in connection with, the Premises, the Improvements or the
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Furnishings (including, without limitation, equipment including, but not limited
to, boilers and elevators) or by reason of the operation of the Premises or
occupancy of the Premises by Tenant (and, if insurance covering the acts or
omissions of the following is available, by any of Tenant's Affiliates). At the
end of each year of the Term, upon Landlord's request, Tenant shall review with
Landlord the limits of the said policy or policies and, at that time, shall
cause such liability limits to be adjusted in view of reasonable exposure
anticipated over the next ensuing year; provided, however, that in no event
shall such limits be adjusted lower than the limits stated above;
(iii) Provide and keep in force loss of income insurance on
the "All Risk" form, in an amount equal to the annual Percentage Rent (based on
the first Lease Year of operation or, to the extent the Premises has not been
operated for an entire Lease Year, based on the anticipated annual Percentage
Rent as determined by Landlord) for the benefit of Landlord, and business
interruption insurance on the "All Risk" form in the amount equal to an entire
Lease Year of gross profit;
(iv) Provide and keep in force workers' compensation
insurance, covering all persons employed by Tenant in connection with the
performance of work of any nature in or about the Premises, in a form prescribed
by the laws of the State of California, and employers' liability insurance;
(v) Prior to the commencement of and during the performance
of Tenant's Work, and as and when Tenant may construct, replace, reconstruct,
restore or make a substantial alteration to, any Improvements and/or
Furnishings, provide and keep in force builders' risk insurance in accordance
with the requirements of this Section 16.1;
(vi) Provide and keep in force such other insurance (with
such limits) as may from time to time be commonly be maintained by tenants with
similar operations;
(vii) All insurance policies required hereunder shall either
extend protection to, or contain a waiver of all rights of subrogation against,
Landlord, Tenant, Landlord's Affiliates, the City, the Authority, and Fee
Mortgagee;
(viii) Procure policies for all such insurance for periods of
not less than one (1) year and renewals thereof from time to time at least
thirty (30) days prior to the expiration thereof; and
(ix) Perform and satisfy the requirements of such insurance
carriers as Tenant may from time to time select hereunder so that companies of
good standing shall at all times be willing to write and continue such
insurance.
16.2. Issues; Coverage.
All insurance policies required hereunder shall be issued by fiscally
responsible insurance companies authorized to do business in the State of
California having an A.M. Best's (or its successor) rating (i) equal to the
lesser of an A+X rating as to property insurance and an A-X rating as to all
other insurance or (ii) with the same insurers which are then insuring the
Disneyland(R) Theme Park; provided, however, that in no event shall the insurer
have a Best's or
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equivalent rating of less than A- VIII and shall name Landlord and Landlord's
Affiliates, the City and the Authority as additional insureds. All such policies
shall require thirty (30) days written notice to Landlord and the City and
Authority prior to any cancellation thereof or change affecting coverage
thereunder. Any insurance coverage required by this Section may be effected by
means of a policy or policies of blanket liability (primary and excess) and
property insurance covering other premises; provided, however, that any such
blanket policy or policies shall specify therein, or Tenant shall furnish
Landlord with a written statement from the insurer or its agent specifying, the
amount of the total insurance allocated to the Premises and the Furnishings,
which amounts shall be no less than the amounts required to be maintained under
this Section. Landlord shall be named as certificate holder and loss payee under
all policies maintained in accordance with Subsections 16.1(i) and (iii). All
insurance policies required hereunder shall state that the coverage provided are
primary to and noncontributory with any insurance program administered or
coverage carried by Landlord, Landlord's Affiliates, the City, the Authority, or
Fee Mortgagee. Each insurance policy: (i) shall be issued by an insurer
authorized under the applicable Laws (and in particular, licensed by the State
of California) to issue the coverage provided by the policy; (ii) shall be
issued on such form of policy, authorized in California, as Landlord may
approve; (iii) shall state that the notice of any claim against Landlord, the
City, the Authority, or Fee Mortgagee shall be deemed to have occurred only when
an officer of Landlord, the City, the Authority, or Fee Mortgagee has received
actual notice of, and has actual knowledge of, the claim; (iv) shall not be
subject to invalidation only as to Landlord, the City, the Authority, or Fee
Mortgagee by reason of any breach or violation by Tenant of any policy
warranties, declarations or conditions or by reason of any act or omission of
Tenant or any of Tenant's officers, employees or agents; (v) shall provide that
any property losses payable thereunder shall be adjusted with Tenant, Landlord,
and Fee Mortgagee; and (vi) shall contain a provision to the effect that the
policy shall not be invalidated, and shall remain in full force and effect, if
any insured waives in writing prior to a loss any or all rights of recovery
against any party for loss occurring to property covered by that policy, and a
provision whereby the insurer itself waives any claims by way of subrogation
against Landlord, its Affiliates, the City, the Authority, and Fee Mortgagee.
Tenant shall not procure or maintain in force any insurance policy which might
have the effect of reducing or diminishing the amounts payable under any of the
policies required by this Lease.
16.3. Payment of Premiums.
Tenant shall pay the premiums (on at least an annual, semi-annual or quarterly
basis) for all insurance policies which Tenant is obligated to carry under this
Section and, deliver to Landlord immediately upon complete execution of this
Lease a copy of the policy or policies, or a certificate or certificates
thereof, along with evidence that the premiums therefor have been paid for at
least the next ensuing quarter-annual period. Tenant shall also deliver to
Landlord copies of all policies, or certificates thereof, of insurance on the
Premises and the Furnishings and of all policies of liability insurance
maintained by Tenant in excess of or in addition to the insurance required by
this Section.
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16.4. Proofs of Loss.
Each party will cooperate with the other party in connection with the collection
of any insurance proceeds that may be payable in the event of loss and execute
and deliver to the insurers such proofs of loss and other documents required for
the recovery of any such insurance proceeds.
16.5. Indemnity.
If, for any reason, Tenant fails to provide and keep in force any or all of the
insurance policies required of Tenant under this Section, then Tenant shall
indemnify Landlord, Landlord's Affiliates, the City, the Authority, and Fee
Mortgagee, and hold Landlord and Landlord's Affiliates, the City, the Authority,
and Fee Mortgagee, harmless from and against any loss which would have been
covered by the insurance Tenant fails to so provide or keep in force. Nothing
contained in this section shall be construed to limit Tenant's indemnity of
Landlord under this Lease. If Tenant defaults on its obligations relative to
insurance as aforesaid, without limitation of any other rights of Landlord,
Landlord may, at its option, purchase insurance on Tenant's behalf and require
Tenant, on demand, to reimburse Landlord for all costs incurred by Landlord in
procuring same, plus interest on such amount, retroactive to the date Landlord
incurred such expense, calculated at a rate of four percent (4%) above the Prime
Rate then in effect.
16.6. Waivers.
Notwithstanding anything contained herein to the contrary, the parties hereto
hereby waive, to the extent covered by applicable insurance maintained by such
party hereunder, excluding any applicable insurance deductible thereto, any and
all rights of recovery, claim, action or cause of action against each other,
their respective agents, officers and employees, for any loss or damage that may
occur to the Premises or the Project, and to all property (including, without
limitation, the Improvements and the Furnishings), of the waiving party or the
property of others under its control whether real, personal or mixed, located in
or about the Premises by reason of fire, the elements, or any other cause
normally insured against under the terms of standard all-risk fire and extended
coverage insurance policies of the type prescribed from time to time for use in
respect of the Premises regardless of cause or origin, including negligence of
the parties hereto, their respective agents and employees. Tenant shall, upon
obtaining the policies of insurance required under this Lease, give notice to
its insurance carrier or carriers that this mutual waiver of subrogation is
contained in this Lease.
16.7. Exclusive Remedy.
This Section 16 and Section 13 of this Lease shall be Tenant's sole and
exclusive remedy in the event of damage or destruction to the Premises and/or
the Furnishings, and Tenant, as a material inducement to Landlord entering into
this Lease, irrevocably waives and releases Tenant's rights under California
Civil Code Section 1932(2) and 1933(4). No damages, compensation or claim shall
be payable by Landlord for any inconvenience, any interruption or cessation of
Tenant's business, or any annoyance, arising from any damage to or destruction
of all or any portion of the Premises and/or the Furnishings. This Lease shall
be considered an express agreement governing any case of damage to or
destruction of the Premises, Improvements, Furnishings or other improvement by
fire or other casualty, and any present or future law which purports to govern
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the rights of Landlord and Tenant in such circumstances in the absence of
express agreement shall have no application.
16.8. Adjustment to Amount of Commercial Liability Insurance Coverage.
Landlord shall evaluate and review the aforesaid amount of commercial liability
insurance on a periodic basis (but not less frequently than every three (3)
calendar years), and shall take into account all relevant factors, including,
without limitation, the then prevailing practices among first-class restaurants
as well as trends in the risk management, current insurance industry and tort
litigation and law, inflation, etc. The amount of such insurance shall then be
adjusted in accordance with such review and evaluation (but in no event shall
such amount be adjusted downward).
16.9. Reports on Insurance Claims.
Tenant shall promptly investigate and make a complete and timely written report
to the appropriate insurance company as to all accidents, all claims for damage
relating to the ownership, operation and maintenance of the Premises, and any
damage or destruction to the Premises and the estimated cost of repair thereof
and shall prepare any and all reports required by any insurance company in
connection therewith. All such reports shall be timely filed with the insurance
company as required under the terms of the insurance policy involved. If
requested by Landlord, a copy of any such reports shall be furnished to
Landlord.
17. FEE MORTGAGES AND FEE MORTGAGEES.
17.1. Fee Mortgages.
17.1.1. "FEE MORTGAGE" shall mean any mortgage, deed to secure debt,
deed of trust, trust deed or other conveyance of, or lien or encumbrance
against, fee simple title to the Site and/or Premises (or any portion thereof)
as security for any debt, whether now existing or hereafter arising or created.
17.1.2. "FEE MORTGAGEE" shall mean the holder of any Fee Mortgage,
together with the heirs, legal representatives, successors, transferees and
assigns of the holder.
17.1.3. This Lease shall be subordinate to any and all Fee Mortgages
now or hereafter encumbering the Site and/or Premises or any part thereof, and
to all renewals, modifications, replacements and extensions of such Fee
Mortgages; provided, however, that, as to Fee Mortgages that become liens of
record after the date of this Lease, the subordination herein contained shall
not be effective unless the Fee Mortgagee thereunder shall, upon request
therefor by Tenant, execute and deliver a non-disturbance agreement, in favor
of Tenant, providing that, in the event its Fee Mortgage shall be foreclosed, so
long as no Event of Default shall have occurred and be subsisting hereunder, and
so long as Tenant shall attorn to the purchaser upon such foreclosure, and so
long as Tenant continues to pay the Rent and to fully and completely keep,
observe, satisfy, perform and comply with all agreements, terms, covenants,
conditions, requirements, provisions and restrictions of this Lease, this Lease
shall not terminate by reason of such foreclosure and Tenant's possession of the
Premises shall not be disturbed. The terms of this Article shall be
self-operative, and no further instrument of
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subordination shall be required. Upon request of any party in interest, however,
Tenant shall execute promptly such instruments or certificates as may be
reasonably required to further evidence the intent of this Article, whether the
requirement is that of Landlord or any other party in interest, including,
without limitation, any Fee Mortgagee.
17.1.4. Notwithstanding the foregoing, if any Fee Mortgagee elects
to have this Lease superior to its Fee Mortgage and states its election in its
Fee Mortgage or by separate recorded instrument, then this Lease shall be
superior to such Fee Mortgage.
18. TRANSFERS.
18.1. No Transfers.
Tenant acknowledges that Landlord has agreed to allow Tenant to lease the
Premises based upon certain factors which are of material importance and
consideration to Landlord, and that one such factor is the particular identity
of Tenant. Tenant further acknowledges and understands that any change in such
identity would likely result in substantially less value for Landlord in respect
of this Lease, thereby substantially impairing the consideration to Landlord to
enter into this Lease with Tenant. Accordingly, any Transfer (as hereinafter
defined) shall be and hereby is strictly and absolutely prohibited, and any
attempted or purported Transfer in violation of this provision shall be null and
void at the sole option of Landlord. In addition, if there is a Transfer,
Landlord shall have the option, exercisable in its sole and absolute discretion,
to terminate this Lease, effective thirty (30) days after any such election by
Landlord.
18.2. Definition of Transfer.
For the purposes of this Article, the term "TRANSFER" shall mean and refer to:
(i) any sale, assignment, sublease, management or operating agreement, franchise
or license agreement, transfer, devise, hypothecation, encumbrance, secured
financing, conveyance or grant (whether voluntary or otherwise) of any kind or
nature by or with respect to Tenant as to any of Tenant's right, title or
interest in, to or under this Lease or the Premises; (ii) any grant of license
or concession or the like to any person or party in respect of the Premises or
any aspect thereof; (iii) Tenant shall (A) in any single transaction or series
of related transactions, consolidate with or merge with or into any other person
or transfer (by lease, assignment, sale or otherwise) all or substantially all
of its properties and assets to another person or group of affiliated persons,
unless such person is an Affiliate of the affected party on the Execution Date,
or (B) experience a Change of Control (as hereinafter defined). For purposes of
this Section, a "CHANGE OF CONTROL" shall be deemed to have occurred: (x) if any
amount of any class of stock of Tenant shall be issued, granted, bargained,
sold, conveyed, transferred, assigned or exchanged after the execution and
delivery of this Lease, and, after such transaction, more than fifty percent
(50%) of the ownership interests or voting control in Tenant shall be owned or
controlled by a party or parties other than the person or persons now owning
such stock or control on the Execution Date; or (y) if the present (i.e., as of
the Execution Date of this Lease) holders of such stock shall enter into, or
otherwise consent to, any shareholder's agreement, voting trust, hypothecation
or any other agreement or understanding of any kind or nature whatsoever
pursuant to which any such holder transfers, assigns, relinquishes, impairs or
restricts his or her right to vote an absolute majority of any of such general
partnership interests or stock. The foregoing shall not be deemed to preclude
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the transfer of stock pursuant to a trust or other agreement which is, in form
and substance, a customary estate planning agreement providing for the orderly
transfer of stock owned by an individual. Notwithstanding anything to the
contrary herein, a Change in Control shall not include an initial public
offering (that is, a transaction in which Tenant becomes an entity whose shares
of stock or other ownership interests sold on a national stock exchange) or,
following an initial public offering, any subsequent sale of ownership interests
or issuance of new ownership interests in Tenant. The term "TRANSFER" within the
meaning of this Article shall apply to (without limitation) any sale,
conveyance, transfer, merger, assignment or exchange, whether made with or
without consideration, and whether arising voluntarily or involuntarily, by
reason of merger, consolidation or reorganization, by operation of law, or
otherwise.
18.3. Permitted Transfers.
18.3.1. Notwithstanding the terms of Sections 18.1 and 18.2 above,
provided that the provisions of Section 18.3.2 below are satisfied, the
following Transfers (collectively, the "PERMITTED TRANSFERS") shall not require
Landlord's consent: (a) any merger, consolidation, sale of all (or substantially
all) of Tenant's stock or sale of all (or substantially all) of Tenant's assets,
provided that substantially all Build-A-Bear retail stores and Build-A-Bear
operations are also transferred in connection with any one of the foregoing, and
provided, further, that the resulting entity has a Net Worth equal to or
greater than the Net Worth of Tenant on the date of execution of this Lease;
(b) the issuance or transfer of stock to (i) employees, (ii) stockholders
existing on the date of this Lease, (iii) entities controlled by such employees
or existing stockholders or (iv) trusts created for their benefit or that of
members of their families; (c) the issuance or transfer of stock in connection
with a venture capital funding, or (d) an initial public offering (that is, a
transaction in which Tenant becomes an entity whose shares of stock or other
ownership interests are sold on a national stock exchange, an over-the-counter
exchange or an inter-dealer securities exchange) or, following an initial public
offering, any subsequent sale of ownership interests or issuance of new
ownership interests in Tenant, provided that any of the foregoing must have been
registered with the Securities Exchange Commission.
18.3.2. In connection with any transaction referenced in Subsection
18.3.1 above: (a) Tenant shall deliver at least sixty (60) days prior written
notice to Landlord, which notice shall identify any applicable parties, provide
facts to demonstrate the transaction is within the scope of Subsection 18.3.1
and, if applicable, provide any new address(es) for notice and billing purposes;
(b) Tenant shall not be in default under this Lease either at the time of the
notice referred to in clause (a) above or at the time of the relevant Transfer;
(c) the resulting entity shall have substantial experience with operating and
managing the Build-A-Bear Workshop business or a substantially similar business,
and shall have a reputation within the business community similar to that of
Tenant at the time the Lease is executed; and (d) the use of the Premises by
such resulting entity must not violate other agreements affecting the Premises,
Landlord or other tenants or occupants.
18.3.3. Notwithstanding anything to the contrary in this Section
18.3, if at any time during the term of this Lease Tenant is involved in a
Permitted Transfer under Subsection 18.3.1 (a). Landlord may elect, in
Landlord's sole and absolute discretion, to terminate this Lease, effective upon
the date specified in Landlord's notice to Tenant (which shall not be earlier
than 30 days from the date Tenant receives such notice). As of such effective
date, the parties shall
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have no further obligations to each other hereunder except as expressly set
forth herein and further, Tenant shall not be entitled to receive the Early
Termination Fee as set forth in Section 23.3 or any other sums.
18.3.4. Upon assignment of Tenant's leasehold interest pursuant to
this Section 18.3, Tenant shall ensure that the assignee executes and delivers a
written assumption of all of Tenant's covenants, duties, obligations and
liabilities accruing as of the effective date of such assignment, which
assignment and assumption agreement shall be in form and substance satisfactory
to Landlord.
18.3.5. There shall, as a result of any Transfer described in this
Section 18.3, be no change in the Trade Name in use at the Premises and no
change in the business conducted at the Premises without, in each instance, the
prior written consent of Landlord, which Landlord may grant or withhold in its
sole and absolute discretion.
18.3.6. Notwithstanding any Transfer pursuant to the provisions of
this Section 18.3, Tenant shall remain liable for the performance of all
covenants, duties and obligations of the tenant hereunder, except to the extent
that Tenant is not the surviving entity in a merger or consolidation.
18.4 No Release.
Any provision of this Lease to the contrary notwithstanding, no consent by
Landlord to a permitted assignment (nor any transfer of Tenant's interest in
this Lease and/or the Premises (or any portion thereof) pursuant to this Section
or otherwise, and whether or not such transfer is deemed an assignment) shall
operate to release any Tenant-assignor from its obligations hereunder.
18.5. No Division of Interest.
Notwithstanding anything to the contrary set forth in this Section, all
permitted assignments of this Lease must include the entire interest of Tenant
in, under and to this Lease, the Premises, and the Furnishings, and no permitted
transfer of Tenant's interest in the Premises shall be made unless the entity
receiving such transfer also receives assignment of this Lease.
18.6. Payment Guarantee.
Should Landlord consent to an assignment of this Lease, Tenant does hereby
guarantee payment of all Rent, and all other sums herein reserved to Landlord,
and all other obligations due hereunder until the expiration of the Term hereof,
and no failure of Landlord to promptly collect from any assignee, or any
extension of the time for the payment of Rent or any other sum due to Landlord
hereunder, shall release or relieve Tenant or any guarantor from its guaranty or
obligation of payment of Rent or any other sum due to Landlord hereunder or
performance of other obligations hereunder. Should Landlord consent to such
assignment, all amounts of Rent or any other sum due to Landlord hereunder
received by Tenant as consideration for the same, shall be the property of
Landlord and shall be immediately delivered to Landlord by Tenant.
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Any consent by Landlord to an assignment of Tenant's rights hereunder shall be
effective for that transaction only.
18.7. No Waiver.
Consent by Landlord to any Transfer by Tenant hereunder shall not constitute a
waiver of the requirement for such consent to any subsequent Transfer.
19. LANDLORD'S RIGHTS AND LIABILITIES.
19.1. Transfer, Assignment or Encumbrance of Landlord's Interest.
Landlord's right to sell, convey, transfer, assign or otherwise dispose of
Landlord's interest in and to the Premises shall be unrestricted, and, in the
event of any such sale, conveyance, transfer or assignment by Landlord, all
obligations under this Lease of the party selling, conveying, transferring,
assigning or otherwise disposing shall cease and terminate, and Tenant shall
look only and solely to the party to whom or which the Premises are sold,
conveyed, transferred, assigned or otherwise disposed of for performance of all
of Landlord's duties and obligations under this Lease.
19.2. Risk of Loss of Property and Risk of Injury.
Landlord shall not at any time be responsible or liable to Tenant, or those
claiming by, through or under Tenant, for any loss of or damage to any property
of Tenant or others in or upon the Premises or any adjoining sidewalks, streets,
roads or ways, and Landlord shall not be liable to anyone for personal damage or
injury in or upon the Premises.
19.3. Right of Entry.
Tenant shall permit Landlord and Landlord's representatives, agents and
employees to enter the Premises at all reasonable times (provided, however, that
Landlord agrees to provide at least twenty-four (24) hours prior notice to the
manager on duty (which notice may be oral) of Landlord's intent to enter any
non-public area of the Premises) except in case of emergency (in which case no
notice shall be required), for any business purpose with out prior notice,
including, but not limited to, inspecting the Premises, showing the Premises to
prospective purchasers, tenants and Fee Mortgagees, making any repairs or
replacements or performing any maintenance, performing any work on the Premises
that Landlord may consider necessary to prevent or cure deterioration, waste or
unsafe conditions, and to otherwise enforce or carry out any provision of this
Lease. Nothing in this Section shall imply or impose any duty or obligation upon
Landlord to enter upon the Premises at any time for any purpose, or to inspect
the Premises at any time, or to perform, or pay the cost of, any work which
Tenant is required to perform under any provision of this Lease, and Landlord
has no such duty or obligation. Additionally, Landlord shall have the right to
access the Premises to conduct from time to time an ADA inspection or audit of
the Premises, and Tenant agrees to cooperate in the conduct of such
investigation or audit. If Landlord has received prior notice of such ADA
inspection or audit, or of the need for such ADA inspection or audit, Landlord
agrees to give Tenant advance notice thereof (which notice may be oral). If the
investigation or audit detects a violation of Tenant's obligation to keep the
Premises in compliance with the requirements of the ADA after notice by Landlord
or citation or other
82
action by a Governmental Authority, then Tenant shall bear the cost and take
whatever action is necessary to bring the Premises into compliance, and any
out-of-pocket fee or cost incurred by Landlord for such investigation or audit
shall be borne by Tenant and shall be paid by Tenant as Additional Rent under
this Lease on demand by Landlord. Further, if Tenant fails to keep the Premises
in compliance with the requirements of the ADA, Landlord may take whatever
action is necessary to bring the Premises into compliance, and Tenant agrees to
provide Landlord access to the Premises and pay, as Additional Rent, all costs
incurred by Landlord in bringing the Premises into ADA compliance. Landlord,
however, shall have no affirmative obligation to bring the Premises into ADA
compliance and nothing herein shall be construed as creating such an obligation
on Landlord.
19.4. Landlord's Rights to Act for Tenant.
If Tenant fails to pay any Rent or to make any other payment or to take any
other action when and as required under this Lease within any applicable cure
period, Landlord may, without demand upon Tenant and without waiving or
releasing Tenant from any duty, obligation or liability under this Lease, pay
any such Rent or take any such other action required of Tenant, The actions
which Landlord may take shall include, but are not limited to, compliance with
the Disney Standard or the Rules and Regulations, the performance of maintenance
or repairs and the making of replacements to the Premises, the payment of
insurance premiums which Tenant is required to pay under this Lease and the
payment of Taxes and Assessments which Tenant is required to pay under this
Lease. Landlord may pay all incidental costs and expenses incurred in exercising
its rights hereunder, including, without limitation, reasonable attorneys' fees
and expenses, penalties, re-instatement fees, late charges, and interest. All
amounts paid by Landlord pursuant to this Section, and all costs and expenses
incurred by Landlord in exercising Landlord's rights under this Section
(including, without limitation, any applicable sales or use taxes thereon),
shall bear interest at the Applicable Rate from the date of payment by Landlord
and shall be payable by Tenant to Landlord upon demand.
19.5. Landlord's Liability.
Landlord shall have no liability for payment of any sums payable by Landlord
under this Lease or for the performance by Landlord of any other duties or
obligations of Landlord under this Lease beyond the value of the interest of
Landlord in the Premises. In no event shall Landlord be liable to Tenant or
Tenant's employees, agents, representatives or others for any damages of any
kind or nature except actual compensatory damages, it being understood and
agreed by Tenant that all other damages or liabilities (including, without
limitation, indirect, consequential, speculative, exemplary or punitive damages)
are hereby expressly waived.
20. DEFAULT.
20.1. Events of Default by Tenant.
Subject to the cure periods set forth in Section 20.6, each of the following
events shall be deemed to constitute an "EVENT OF DEFAULT" hereunder by Tenant
and shall constitute a breach of this Lease:
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(i) If Tenant shall fail to pay when due any Rent or other
payment of money to be made by Tenant hereunder; or
(ii) If Tenant shall violate or breach, or shall fail fully
and completely to observe, keep, satisfy, perform and comply with, any
agreement, term, covenant, condition, requirement, restriction or provisions of
this Lease (other than the payment of Rent or any other payment to be made by
Tenant); or
(iii) If Tenant becomes insolvent, as defined in the Federal
Bankruptcy Code, Chapter 11, Section 101, Paragraph (32)(A), (B) or (C) (as if
Paragraph (C) applied to all types of entities), or makes an assignment for the
benefit of creditors; or if any action is brought by Tenant seeking its
dissolution or the liquidation of its assets or seeking the appointment of a
trustee, interim trustee, receiver or other custodian for any of its property;
or if Tenant commences a voluntary proceeding under the Federal Bankruptcy Code;
or if any reorganization or arrangement proceeding is instituted by Tenant for
the settlement, readjustment, composition or extension of any of its debts upon
any terms; or if any action or petition is otherwise brought by Tenant seeking
similar relief or alleging that it is insolvent or unable to pay its debts as
they mature; or if any action is brought against Tenant seeking its dissolution
or liquidation of any of its assets, or seeking the appointment of a trustee,
interim trustee, receiver or other custodian for any of its property, and any
such action is consented to or acquiesced in by Tenant or is not dismissed
within ninety (90) days after the date upon which it was instituted; or if any
proceeding under the Federal Bankruptcy Code is instituted against Tenant and an
order for relief is entered in such proceeding or such proceeding is consented
to or acquiesced in by Tenant or is not dismissed within ninety (90) days after
the date upon which it was instituted; or if any reorganization or arrangement
proceeding is instituted against Tenant for the settlement, readjustment,
composition or extension of any of its debts upon any terms, and such proceeding
is consented to or acquiesced in by Tenant or is not dismissed within ninety
(90) days after the date upon which it was instituted; or if any action or
petition is otherwise brought against Tenant seeking similar relief or alleging
that it is insolvent, unable to pay its debts as they mature or generally not
paying its debts as they become due, and such action or petition is consented to
or acquiesced in by Tenant or is not dismissed within ninety (90) days after the
date upon which it was brought; or
(iv) If any assignment or other Transfer of Tenant's interest
in this Lease, or the Premises, the Improvements and/or the Furnishings other
than as may be expressly permitted under this Lease shall be made or deemed to
be made without Landlord's consent, which consent may be withheld or granted in
Landlord's sole discretion; or
(v) If the Premises are used or permitted to be used for any
purpose, or for the conduct of any activity, not permitted by this Lease, and
such use or activity shall not have been discontinued within five (5) days after
the receipt of Landlord's written notice thereof to Tenant; or
(vi) If Tenant shall vacate, abandon or close the Premises or
cease operating during the full operating hours required hereunder; or
84
(vii) If Tenant shall fail to comply with any Project
Requirements, or any Operating Conditions, Rules or Regulations attached hereto
as Exhibit F, or thereafter promulgated by Landlord with respect to the Premises
and such default is not cured within * days after receipt of notice
thereof; provided, however, if such default cannot reasonably be cured within a
* day period, it shall not be deemed a default hereunder if Tenant
immediately and diligently commences and prosecutes such cure to completion,
which, in any event, shall be completed within 30 days after receipt of notice
thereof; or
(viii) If any license, permit, certificate or agreement
required for the operation of the Premises shall fail to issue on or before the
Commencement Date, or thereafter shall be terminated, revoked or not renewed and
is not reinstated within * days thereafter; provided, however, if
such default cannot reasonably be cured within a * day period, it
shall not be deemed a default hereunder if Tenant immediately and diligently
commences and prosecutes such cure to completion, which, in any event, shall be
completed within 30 days after receipt of notice thereof; or
(ix) If (a) any final judgment is entered in any litigation
against Tenant or any of Tenant's Affiliates, or (b) any settlement of any
litigation is entered into by any of the foregoing, which judgment or settlement
materially and adversely affects Tenant's ability to perform any of its
respective obligations hereunder (or would result in Tenant being in default
hereunder); or
(x) Any final judgment in any litigation is rendered
against any of Tenant and/or any of Tenant's Affiliates holding that any of the
foregoing have breached or infringed on any contract, license, trademark or
other rights of third parties, in connection with the names, logos, Merchandise
or concepts employed in the design and/or operation of the Premises, or if
Tenant and/or any of Tenant's Affiliates consent to the settlement of any
litigation involving any of the foregoing claims by agreeing to materially
limit, diminish or change the design, names, logos, Merchandise or concepts
employed in the design and/or operation of the Premises; or
(xi) If Tenant shall fail to comply with any of the terms,
covenants and/or conditions of this Lease, the breach of which are expressly
provided in this Lease as being events of default.
For the purposes of the events of default specified above, the word "TENANT"
shall specifically include, without limitation: (i) any party comprising Tenant,
should more than one person or entity execute this Lease as Tenant; (ii) any
person or entity now or hereafter liable, whether primarily, secondarily or
contingently, for the performance of the duties and obligations of Tenant under
this Lease including without limitation any principal, maker, endorser,
guarantor or surety; (iii) if Tenant or any party comprising Tenant be a general
partnership or a limited partnership, any general partner thereof; (iv) if
Tenant or any party comprising Tenant be a joint venture, any joint venturer
thereof; and (v) if Tenant or any party comprising Tenant be a corporation, any
officer, director or shareholder thereof.
* - Redacted Text - Confidential treatment requested; omitted portions have been
filed separately with the Securities and Exchange Commission.
85
20.2. Landlord's Remedies.
Upon the occurrence of any Event of Default by Tenant, Landlord shall have, in
addition to any other remedies available to Landlord hereunder, at law or in
equity, the option to pursue any one or more of the following remedies (each and
all of which shall be cumulative and nonexclusive) without any notice or demand
whatsoever:
(i) Landlord may terminate this Lease, in which event Tenant
shall immediately surrender the Premises to Landlord, and if Tenant fails to do
so, Landlord may, without prejudice to any other remedy which it may have for
possession or arrearages in Rent, enter upon and take possession of the Premises
and expel or remove Tenant and any other person who may be occupying the
Premises or any part thereof, without being liable for prosecution or for any
claim or damages therefor, and Tenant shall have no further claim to the
Premises or under this Lease;
(ii) Landlord may, at its election, reenter the Premises and,
without terminating this Lease, at any time and from time to time, relet the
Premises and improvements or any parts of them for the account and in the name
of Tenant or Landlord, or otherwise to cure any default by Tenant, or to
exercise any other right or remedy of Landlord hereunder, at law or in equity,
including without limitation the remedy described in Section 1951.4 of the
California Civil Code. In connection with the foregoing, Landlord may execute
any leases made under this provision either in Landlord's name or in Tenant's
name and shall be entitled to all rents from the use, operation or occupancy of
the Premises or improvements or both. Tenant shall nevertheless pay to Landlord
on the due date specified in this Lease the equivalent of all sums required of
Tenant under this Lease, plus Landlord's expenses, less than proceeds of any
reletting or attornment. Landlord may do all things reasonably necessary for
such reletting, including repairing, remodeling and renovating of the Premises
or improvements and Tenant shall reimburse Landlord on demand for all costs
incurred by Landlord in connection therewith;
(iii) Reenter the Premises under the provisions of Subsection
(ii), and thereafter elect to terminate this Lease and Tenant's right to
possession of the Premises;
(iv) In addition to all other rights and remedies it may
have, Landlord shall have all of the rights and remedies of a "lessor" under
Section 1951.4 of the California Civil Code (lessor may continue lease in effect
after lessee's breach and abandonment and recover rent as it becomes due, if
lessee has the right to sublet or assign, subject to any reasonable
limitations). Therefore, if Landlord does not elect to terminate this Lease on
account of any default by Tenant, Landlord may, from time to time, without
terminating this Lease, enforce all of its rights and remedies under this Lease,
including the right to recover all Rent as its becomes due. If Landlord reenters
the Premises under the provisions of Subsection (ii) or (iii) above, Landlord
shall not be deemed to have terminated this Lease or the obligation of Tenant to
pay any Rent or other charges thereafter accruing, unless Landlord notifies
Tenant in writing of Landlord's election to terminate this Lease;
(v) If Landlord relets the Premises it shall apply any sums
received upon such reletting in the following order of priority: (A) to the
payment of any indebtedness other than Rent due hereunder from Tenant to
Landlord, (B) to the payment of all costs incurred
86
by Landlord in restoring the Premises to good order and repair, or in completing
construction of, remodeling, renovating or otherwise preparing the Premises for
reletting, (C) to the payment of all costs (including, without limitation, any
brokerage commissions) incurred by Landlord in reletting the Premises, and in
fulfilling Landlord's obligations with respect to such reletting (such as, by
way of example, providing services and utilities), (D) to the payment of Rent
(and any interest thereof) due and unpaid hereunder, and (E) the balance, if
any, to the payment of future Rent as the same may become due hereunder, but
Tenant shall not in any event have any claim or right to receive any sums so
collected by Landlord, even if such sums exceed the Rents payable hereunder. No
act by or on behalf of Landlord under this provision shall constitute a
termination of this Lease unless Landlord gives Tenant notice of termination.
Notwithstanding any election by Landlord not to terminate this Lease, Landlord
may at any time thereafter elect to terminate this Lease for any previous breach
or default hereunder by Tenant which remains uncured or for any subsequent
breach or default;
(vi) Should Landlord elect to terminate this Lease under the
provisions of Subsections (i) or (iii) above, Landlord may recover as damages
from Tenant the following:
(1) Past Rent. The worth at the time of the award of any
unpaid Rent which had been earned at the time of termination; plus
(2) Rent Prior to Award. The worth at the time of the
award of the amount by which the unpaid Rent which would have been earned after
termination until the time of award exceeds the amount of such rental loss that
Tenant proves could have been reasonably avoided; plus
(3) Rent After Award. 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 rental loss that Tenant proves could be
reasonably avoided; plus
(4) Proximately Caused Damages. Any other amount
necessary to compensate Landlord for all detriment proximately caused by
Tenant's failure to perform its obligations under this Lease or which in the
ordinary course of things would be likely to result therefrom, including, but
not limited to, any costs or expenses (including reasonable attorneys' fees),
incurred by Landlord in (a) retaking possession of the Premises, (b) maintaining
the Premises after Tenant's default, (c) preparing the Premises for reletting to
a new tenant, including any repairs or alterations, and (b) reletting the
Premises, including broker's commission.
"The worth at the time of the award" as used in Subsection (1) and (2) above, is
to be computed by allowing interest at the rate of * per annum. The worth
at the time of the award" as used in Subsection (3) above, is to be computed by
discounting the applicable amount at the Prime Rate of the Federal Reserve Bank
of San Francisco at the time of the award, plus * .
(5) In the event of expiration of this Lease or any
reentry or retaking of possession by Landlord as provided in this Lease,
Landlord shall have the right, but not the obligation to remove all or any part
of Tenant's property in the Premises and to place
* - Redacted Text - Confidential treatment requested; omitted portions have been
filed separately with the Securities and Exchange Commission.
87
such property in storage at a public warehouse at the expense and risk of
Tenant. Any property of Tenant not removed by Tenant upon the expiration of the
term of this Lease, or within five (5) business days after a termination by
reason of Tenant's default, shall be considered abandoned and Landlord, upon
five (5) business days' notice to Tenant, may (unless Tenant removes same within
such five (5) business day period, remove any or all of such property and
dispose of the same in any manner. In the event of a sale of such property,
Landlord shall apply the proceeds thereof, first, to the cost and expense of
sale, including reasonable attorneys' fees; second, to the repayment of the cost
of removal and storage; third, to the repayment of any other sums which may then
or thereafter be due to Landlord from Tenant under any of the terms of this
Lease; and fourth, the balance, if any, to Tenant.
20.3. No Election of Remedies.
Landlord's pursuit of any one or more of the remedies stated hereinabove shall
not preclude pursuit of any other remedy or remedies provided in this Lease or
any other remedy or remedies provided for or allowed by Law or in equity,
separately or concurrently or in any combination. Landlord's pursuit of any one
or more of the remedies provided in this Lease shall not constitute an election
of remedies excluding the election of another remedy or other remedies, or a
forfeiture or waiver of any Rent or other amounts payable under this Lease by
Tenant or of any damages or other sums accruing to Landlord by reason of
Tenant's failure to fully and completely keep, observe, perform, satisfy and
comply with all of the agreements, terms, covenants, conditions, requirements,
provisions and restrictions of this Lease. No action taken by or on behalf of
Landlord shall be construed to be an acceptance of a surrender of this Lease.
Landlord's forbearance in pursuing or exercising one or more of its remedies
shall not be deemed or construed to constitute a waiver of any Event of Default
or of any remedy.
20.4. Right of Injunctive Relief.
In the event of a breach or threatened breach by Tenant of any of the covenants
or provisions hereof, Landlord shall have the right of injunction and the right
to invoke any remedy allowed at law or in equity as if re-entry, summary
proceedings and other remedies were not herein provided for.
20.5. Waivers by Tenant.
To the extent permitted by Law, Tenant expressly waives:
(i) The benefit of all Laws now or hereafter in force,
exempting any goods on the Premises or elsewhere from distraint, levy or sale in
any legal proceedings taken by Landlord to enforce any rights under this Lease.
(ii) The benefit of all Laws now made or which may hereafter
be made regarding any limitation as to the goods upon which, or the time within
which, distress is to be made after the removal of goods, and further relieves
Landlord of the obligation of proving or identifying such goods, it being the
purpose and intent of this provision that all goods of Tenant, whether upon the
Premises or not, shall be liable to distress for Rent.
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(iii) The right to issue a writ of replevin for the recovery
of any goods seized under a distress for Rent or levy upon an execution for
Rent, damages or otherwise.
(iv) The right to delay execution on any real estate that may
be levied upon to collect any amount which may become due under the terms and
conditions of this Lease and any right to have the same appraised. Tenant
authorizes the clerk to enter a writ of execution or other process upon Tenant's
voluntary waiver and further agrees that said real estate may be sold on a writ
of execution or other process.
20.6. Notice to Tenant.
Except with respect to Tenant's maintenance and repair obligations,
notwithstanding anything hereinabove stated, Landlord agrees that Landlord will
not exercise any right or remedy provided for in this Lease or allowed by Law
because of any default of Tenant, unless Landlord shall have first given written
notice thereof to Tenant and Tenant, within a period of five (5) Business Days
thereafter, shall have failed to pay the sum or sums due, if the default
consists of the failure to pay money, or, if the default consists of something
other than the failure to pay money, Tenant shall have failed, within fifteen
(15) days thereafter, to correct such default; provided that if such default is
not curable within such fifteen day period, Tenant shall have failed within such
fifteen (15) day period, to begin the correction of the default or thereafter
failed actively and diligently and in good faith to proceed with and continue
the correction of the default until it shall be fully corrected no later than
sixty (60) days from the date of such event's occurrence. Any such notice shall
be in lieu of and not in addition to, any notice required under California Code
of Civil Procedure Section 1161. Notwithstanding the foregoing, no such notice
from Landlord shall be required, nor shall Landlord be required to allow any
part of the said notice period, nor shall Tenant have any additional opportunity
to cure any of the following breaches (i) if Tenant shall have temporarily or
permanently ceased operating or using the Premises to the extent and in the
manner required herein, (ii) if Tenant defaults in an obligation hereunder which
cannot be cured or (iii) any default described in Subsections 20.1 (iii) through
20.1(xii), inclusive. Notwithstanding anything to the contrary contained herein,
Landlord shall not be required to give any notice called for in this Subsection
more than once in any twelve (12) month period for substantially similar events
of default. Upon second event of default within any twelve month period,
Landlord shall not be obligated to give Tenant any notice or opportunity to cure
such default.
20.7. Notice to Landlord.
Landlord shall in no event be in default in the performance of any of its
obligations in this Lease contained unless and until Landlord shall have failed
to commence to perform such obligation within thirty (30) days after notice by
Tenant to Landlord properly specifying wherein Landlord has failed to perform
any such obligation or shall have failed to proceed thereafter with reasonable
diligence to complete such performance.
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21. REPRESENTATIONS AND WARRANTIES.
21.1. Tenant's Representations and Warranties.
Tenant represents and warrants the following to Landlord, and Tenant
acknowledges that Landlord shall be entitled to rely upon such representations
and warranties:
21.1.1. Tenant is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware and is authorized to
transact business in the State of California;
21.1.2. Tenant, and the undersigned signatories executing this Lease
on behalf of Tenant, are duly authorized and empowered to enter into this Lease
with Landlord.
21.1.3. Neither the entering into of this Lease nor the performance
or satisfaction by Tenant of its obligations and liabilities hereunder nor the
exercise by Tenant of any of its rights or options hereunder will constitute or
result in a violation or breach by Tenant of any judgment, order, writ,
injunction or decree issued against or imposed upon it, or will result in a
violation of any applicable Law.
21.1.4. There is no action, suit, proceeding or investigation
pending or, to the best of Tenant's knowledge and belief after reasonable
inquiry, threatened, which would prevent or impair the demise contemplated by
this Lease or which questions the validity or enforceability of this Lease or
any action taken pursuant hereto in any court or before or by any federal,
district, county, or municipal department, or before or by any commission,
board, bureau, agency or other governmental instrumentality.
21.1.5. No further approval, consent, order or authorization of, or
designation, registration or filing with, any Governmental Authority is required
in connection with the due and valid execution and delivery of this Lease and
compliance with the provisions hereof by Tenant.
22. HAZARDOUS WASTE.
22.1. No Storage or Disposal.
Tenant shall not install, store, use, treat, generate, transport, release or
dispose (or knowingly permit or acquiesce in the installation, storage, use,
treatment, generation, transportation, release, or disposal by Tenant, its
agents, employees, independent contractors, or subtenants) on the Premises of
any Hazardous Material (as herein below defined); provided, however, that Tenant
may use, keep and store certain Hazardous Materials to the extent (and only to
such extent) that: (i) minor amounts of such Hazardous Materials are normally
and reasonably used in connection with facilities similar to the Permitted Use
of the Premises (e.g. cleaning fluids); and (ii) any such activity on the part
of Tenant is in strict accordance with all applicable Laws. Tenant shall
immediately notify Landlord when Tenant learns of, or has reason to believe
that, a release of Hazardous Material has occurred in, on or about the Premises.
Tenant shall further comply with all Laws requiring notice of such releases or
threatened releases to governmental authorities, and shall take all action
necessary to mitigate the release or minimize the spread of contamination to
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the extent caused by Tenant. For purposes hereof, "HAZARDOUS MATERIAL" means any
material that, because of its quantity, concentration or physical or chemical
characteristics, is at any time now or hereafter deemed by any federal, state or
local governmental authority to pose a present or potential hazard to public
health, welfare or the environment. Hazardous Material includes, without
limitation, asbestos in any form; urea formaldehyde foam insulation;
transformers or other equipment which contain dielectric fluid containing levels
of polychlorinated biphenyls in excess of 50 parts per million; petroleum,
including, without limitation, crude oil or any fraction thereof; or any
material or substance defined as a "hazardous substance", "hazardous waste",
"pollutant" or "contaminant" pursuant to the Resource Conservation Recovery Act,
the Comprehensive and Environmental Response Compensation and Liability Act, the
Hazardous Materials Transportation Act, the Toxic Substances Control Act, the
Clean Air Act, and the Clean Water Act as amended, or pursuant to Section 25316
of the California Health & Safety Code; or Section 25140 of the California
Health & Safety Code, or any other federal, state, county, regional, local or
other governmental authority or which, even if not so regulated, may or could
pose a hazard to the health and safety of the occupants of the Premises or
premises adjacent to the Premises; and which is either: (x) present in amounts
in excess of that permitted or deemed safe under applicable Law or (y) handled,
stored or otherwise used in any manner which is prohibited or deemed unsafe
under applicable Law. The term "RELEASE" or "THREATENED RELEASE" when used with
respect to Hazardous Material shall include any actual or imminent spilling,
leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping,
leaching, dumping, or disposal in, on, under or about the Premises. Tenant shall
not install (or knowingly permit or acquiesce in the installation) at, on or
under the Premises any underground storage tanks for the storage of Hazardous
Materials.
22.2. Cleanup Laws.
With respect to the existence or release of Hazardous Materials by Tenant or its
contractors, agents, employees, invitees or any person or entity under Tenant's
control, Tenant shall, at Tenant's own expense, comply with any presently
existing or hereafter enacted environmental cleanup responsibility laws
affecting Tenant's operation of the Premises ("CLEANUP LAWS"). Tenant shall, at
Tenant's own expense, make all submissions to, provide all information to, and
comply with all requirements of the appropriate governmental authority (the
"AUTHORITY") under the Cleanup Laws. Should any Authority require that a Cleanup
plan be prepared and that a Cleanup be undertaken because of the existence of
Hazardous Materials which were installed, stored, used, treated, generated,
transported, released, disposed of, spilled or discharged on the Premises by
Tenant or its contractors, agents, employees, invitees or any person or entity
under the control of Tenant during the Term of this Lease, Tenant shall, at
Tenant's own expense, prepare and submit the required plans and financial
assurances and carry out the approved plans. At no expense to Landlord, Tenant
shall promptly provide all information requested by Landlord for preparation of
affidavits or other documents required by Landlord to determine the
applicability of the Cleanup Laws to the Premises, and shall sign the affidavits
promptly when requested to do so by Landlord.
22.3. Environmental Notices.
Tenant shall promptly supply Landlord with copies of any notices, correspondence
and submissions made by Tenant to appropriate governmental authorities, the
United States
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Environmental Protection Agency ("EPA"), the United States Occupational Safety
and Health Administration ("OSHA"), or any other local, state or federal
authority that requires submission of any information concerning environmental,
health or safety matters or Hazardous Materials. Tenant's liability pursuant to
the terms of this provision shall survive termination of this Lease.
22.4. Audit.
Upon Landlord's reasonable request, at any time and from time to time during the
existence of this Lease, Tenant will provide, at Landlord's sole expense, an
inspection or audit of the Premises from an engineering or consulting firm
approved by Landlord, indicating the presence or absence of such Hazardous
Materials on the Premises. If Tenant fails to provide same after ten (10) days'
notice, Landlord may order same, and Tenant grants to Landlord and its agents,
employees, contractors and consultants access to the Premises and a license
(which is coupled with an interest and irrevocable while this Lease is in
effect) to perform inspections and tests. Notwithstanding the foregoing, the
cost of such inspections and tests shall be a demand obligation owing by Tenant
to Landlord pursuant to this Lease if the results of any such audit reveal that
Tenant is in breach of any of its obligations under this Lease relative to
Hazardous Materials.
22.5. Indemnity.
In addition to and without limiting the generality of any other provisions of
this Lease, Tenant shall and hereby does indemnify and hold Landlord harmless
from and against any and all losses, damages, expenses, fees, claims, demands,
causes of action, judgments, costs, and liabilities, including, but not limited
to, reasonable attorneys' fees and costs of litigation, and costs and expenses
of response, remedial and corrective work and other clean up activities, arising
out of or in any manner connected with: (i) the "release" or "threatened
release" (as those terms are defined in CERCLA and the rules and regulations
promulgated thereunder, as from time to time amended) by Tenant or Tenant's
employees, agents, delegees, invitees, licensees, concessionaires, contractors
or representatives, of any Hazardous Materials; (ii) an occurrence of Hazardous
Materials Contamination, arising out of or in any manner connected with Tenant's
use or occupancy of the Premises; or (iii) any and all claims for injury or
damage to persons or property arising out of exposure to Hazardous Materials
originating or located at the Premises and connected with Tenant's use or
occupancy of the Premises. The term "HAZARDOUS MATERIALS CONTAMINATION" shall
mean and refer to the contamination of the Premises, soil, surface water, ground
water, air, or other elements on, or of, the buildings, facilities, soil,
surface water, ground water, air, or other elements on, or of, any other
property as a result of Hazardous Materials at any time emanating from the
Premises. The provisions of this Section shall survive the expiration or sooner
termination of the Term; and such provisions shall remain in full force and
effect as long as the possibility exists that Landlord may suffer or incur any
such losses, damages, expenses, fees, claims, demands, causes of action,
judgments, costs and liabilities. Notwithstanding anything to the contrary
herein, it shall be the responsibility of Landlord to pay for the cost to remove
any Hazardous Materials required to be removed by a Governmental Authority to
the extent that the presence of such Hazardous Materials is due to any act or
omission on the part of Landlord or an Affiliate of Landlord, or their
respective agents, contractors or employees.
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23. SPECIAL PROVISIONS
23.1. Financial Reports and Other Pertinent Information; Annual Budgets.
23.1.1. As a material inducement to Landlord to enter into this
Lease, Tenant represents and warrants to Landlord that all financial, management
and operational information regarding Tenant previously provided to Landlord by
Tenant, were and are true and correct and accurately report and depict the
financial and operational experience of the entity(ies) and its principals
described therein and does not omit any material facts or information which, if
disclosed, might affect a reasonable landlord's judgment regarding the propriety
of entering into this Lease with Tenant. Within one hundred twenty (120) days
after the end of the fiscal year of Tenant, Tenant shall provide to Landlord a
year-end financial report, prepared by independent certified public accountants
of recognized standing, and certified as being true and correct by the chief
financial officer. Each report shall also be accompanied by an opinion of such
accountants, in a form standard in the industry, to the effect that the same
fairly presents the financial condition of Tenant and the results of its
operations as of the relevant dates thereof.
23.1.2. Not later than sixty (60) days prior to the commencement of
each Lease Year, Tenant shall prepare and submit to Landlord an operating budget
("OPERATING BUDGET") and a capital budget ("CAPITAL BUDGET") prepared pursuant
to the requirements of this subsection. The Operating Budget and the Capital
Budget (together, "ANNUAL BUDGET") shall be prepared in accordance with the
following:
23.1.2.1. Tenant's reasonable estimate of Gross Sales for the
forthcoming Lease Year itemized on schedules on a monthly or quarterly basis,
together with the assumptions, in narrative form, forming the basis of such
schedules;
23.1.2.2. a cash flow projection; and
23.1.2.3. a narrative description of the program for
operating, marketing and managing the Premises for the forthcoming Lease Year,
including, among other things, marketing and advertising budgets, changes in
personnel policies, staffing levels, major events plans, franchise issues and
other matters affecting the performance and operation of the Premises, and
containing a budget of proposed expenditures by category and the assumptions, in
narrative form, forming the basis of such budget.
23.1.3. The Annual Budget shall be used by Landlord and Tenant as
the basis for an annual meeting (the "Annual Planning Meeting") regarding
Tenant's plans in connection with the operation of its business at the Premises
for the Lease Year which is the subject of the applicable Annual Budget. The
Annual Planning Meeting shall be held and attended by the manager of Tenant's
store operated at the Premises or a regional representative of Tenant, on
Tenant's behalf, and by a representative designated by Landlord, on Landlord's
behalf, and shall be held at a place and time reasonably acceptable to the
designated attendees, which shall be not earlier than twenty (20) days after
Landlord's receipt of the Annual Budget. During the Annual Planning Meeting, the
designated representatives of Landlord and Tenant shall, among other things,
review and discuss the following: (i) the results of Tenant's sales at the
Premises for the preceding Lease Year; (ii) the results of the special events,
direct mail, and other advertising
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programs used by Tenant throughout the prior Lease Year and the efficacy of the
same, and Tenant's plans regarding the same for the upcoming Lease Year; (iii)
any plans Tenant has for operational changes, such as remodeling, or any other
changes to the Premises, as well as Tenant's proposed timing for such events;
and (iv) discuss Tenant's staffing plans regarding the Premises for the upcoming
Lease Year, and any significant personnel changes that Tenant has made or plans
to make in connection with its operation of its business at the Premises.
23.2. Net Worth.
Tenant shall be obligated to maintain at all times during the Term a Net Worth
(as hereinafter defined) in an amount at least equal to $2,000,000 ("MINIMUM NET
WORTH"). As used herein, the term "NET WORTH" shall mean the excess of total
assets over total liabilities, total assets and total liabilities each to be
determined in accordance with GAAP, excluding, however, from the determination
of total assets: (a) goodwill, organizational expenses, research and development
expenses, trademarks, trade names, copyrights, patents, patent applications, and
other similar intangibles; (b) all deferred charges that are not required to be
capitalized in accordance with GAAP or unamortized debt discounts and expense;
(c) treasury stock; (d) securities which are not readily marketable; (e) any
write-up in the book value of any asset resulting from a revaluation thereof;
(f) this Lease; and (g) any items not included in clauses (a) through (f) above
that are treated as intangibles in conformity with GAAP. In addition to the
financial reports of Tenant to be delivered to Landlord pursuant to this Lease
(including Subsection 23.1.1 above), Tenant shall deliver to Landlord, together
with such financial reports, a certificate of Tenant's chief financial officer
in form reasonably required by Landlord ("FINANCIAL OFFICER'S CERTIFICATE"),
certifying the Net Worth of Tenant as of the date of the financial reports being
delivered concurrently therewith and stating that Tenant is in compliance with
its obligations under this subsection, or if not, so stating and including the
reasons therefor. Landlord shall have the right from time to time and at any
time to have an independent certified public accountant selected by Landlord
perform an audit or other review of the Books and Records of Tenant to verify
the amount of Tenant's Net Worth, and Tenant shall cooperate with Landlord in
connection therewith, If Landlord audits or reviews the amount of Tenant's Net
Worth shown in the last Financial Officer's Certificate delivered to Landlord,
and such 24 hours' notice audit or review discloses that either the Net Worth of
Tenant as of such date certified is one percent (1%) or more less than the
amount shown on the Financial Officer's Certificate or that the statements in
such Financial Officer's Certificate regarding Tenant's compliance with its
obligations hereunder is otherwise materially incorrect, then in addition to any
other rights and remedies of Landlord, Tenant shall pay for the cost of the
audit or review. Otherwise, Landlord shall bear the cost of the audit or review.
23.3. Termination Option.
Landlord may, at any time during the Term hereof, terminate this Lease. If
Landlord elects to terminate this Lease pursuant to this Section 23.3, then
Landlord shall pay to Tenant an early termination fee ("EARLY TERMINATION FEE")
equal to (i) the unamortized value of Tenant's leasehold Improvements (based on
Tenant's actual, out-of-pocket costs verified by bona fide purchase receipts,
bills of sale, or other written evidence reasonably satisfactory to Landlord)
(amortized using straight-line amortization over an 11 year term) and (ii) if
(and only if) such
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termination occurs at any time within the first five (5) years of the Term, the
amount of * , which amount shall be payable to Tenant within 90 days of
the termination date specified in Landlord's notice to Tenant. Upon such
termination, the parties hereto shall have no further obligations to each other
hereunder except as expressly set forth herein. This Lease shall be deemed
terminated thirty (30) days after election by Landlord.
23.4. Competing Store.
Landlord agrees that if it allows the operation of another store within THE
DISNEYLAND RESORT(R) which has more than * square feet devoted to the
assembly and sale of make-it-yourself plush bears and/or animals (the "COMPETING
STORE"), then Tenant may, at its option exercised at any time within twelve (12)
months of the date such Competing Store opens for business at THE DISNEYLAND
RESORT(R) PROJECT, elect to terminate this Lease upon no less than 90 days prior
written notice to Landlord. In addition, commencing as of the date such
Competing Store opens for business and continuing until the earlier of (i) the
expiration or earlier termination of this Lease or (ii) the date such Competing
Store ceases to operate at THE DISNEYLAND RESORT(R) PROJECT, Tenant's obligation
to pay Minimum Rent and Percentage Rent, collectively, shall be deemed to be the
amount which is * of Gross Sales, not to exceed the amount of Minimum Rent
and Percentage Rent, collectively, which would otherwise be due Landlord
pursuant to the provisions of Section 3.1 and 3.2 hereof.
23.5. Agreement Regarding Offer or Solicitation of Employment.
23.5.1. As a material inducement for Landlord to enter into this
Lease and in consideration of Tenant's right to operate its business at THE
DISNEYLAND RESORT(R) PROJECT pursuant to this Lease, the rights granted to
Tenant under this Lease and the other terms, covenants and conditions set forth
in this Lease, Tenant agrees that it shall not (and agrees to cause its
Affiliates not to), either alone or jointly, with or on behalf of others, either
directly or indirectly, at any time during the Term and for a period of two (2)
years following the expiration or sooner termination of this Lease (i) offer or
solicit any employment, contract for services or similar engagement to or from
any "Disney Salaried Employee" (as such term is hereinafter defined), or (ii)
encourage or induce any Disney Salaried Employee to terminate, or otherwise
suggest to or discuss with any Disney Salaried Employee the termination of, his
or her employment or other business relationship with Landlord or any of its
Affiliates, whether or not such Disney Salaried Employee would commit a breach
of any contract of employment or services by reason of his or her terminating
such employment or relationship with Landlord or its Affiliate. Tenant
acknowledges and agrees that Disney would be irreparably harmed by any breach or
threatened breach of this Section and, therefore, in addition to any other right
or remedy which Landlord might have under this Lease or at law or in equity as a
result of any such breach, Landlord shall be entitled to seek an injunction
prohibiting Tenant (or its Affiliate, as the case may be) from any breach or
threatened breach of this Section, and Tenant shall not (and shall cause its
Affiliates not to) assert that an injunction is not a proper remedy.
23.5.2. For the purpose of this Section, the term "DISNEY SALARIED
EMPLOYEE" shall mean and refer to any person who is employed or retained by
Landlord or any of its Affiliates and whose base compensation is primarily on a
"salaried" (i.e., not by the hour) basis, and with whom Tenant or Tenant's
Affiliates have had contact with in connection with the
* - Redacted Text - Confidential treatment requested; omitted portions have been
filed separately with the Securities and Exchange Commission.
95
opening or operation of Tenant's business at the Premises. Without limiting the
generality of the foregoing, "salaried/non-exempt persons" (i.e., persons who
receive a salary but who also may be entitled to additional compensation on an
hourly basis for overtime or other extra work) shall be deemed to be "Disney
Salaried Employees."
24. MISCELLANEOUS PROVISIONS.
24 1. End of Term.
24.1.1. Tenant shall, on or before the last day of the Term or upon
the sooner termination of the Term, peaceably and quietly surrender and deliver
to Landlord the Premises, in good condition and repair, reasonable wear and tear
(and damage by fire or other casualty if the termination is pursuant to Section
13 hereof) excepted, and free and clear of liens or encumbrances.
24.1.2. Upon surrender, or upon the expiration or sooner termination
of the Term hereof, whichever first occurs, title to the Premises shall
thereupon, and without further act of either party, vest in Landlord, and Tenant
shall promptly thereafter execute and deliver to Landlord such deed or bill of
sale as Landlord may reasonably request. Such vestiture shall not constitute the
payment of Rent or a payment in lieu of Rent by Tenant to Landlord.
24.1.3. Provided Tenant is not in breach or default of its
obligations under this Lease, Tenant may, at its cost, upon the expiration or
sooner termination of this Lease, remove from the Premises its inventory,
Furnishings (except fixtures affixed to the real property) Merchandise, Supplies
and other items of personalty. If Tenant shall fail to so remove such
personalty, Landlord may, at its option, either remove and dispose of any or all
of the same at Tenant's expense or retain the same, in which latter event all
right, title and interest therein shall pass to and vest in Landlord. Such
vestiture shall not constitute the payment of Rent or a payment in lieu of Rent
by Tenant to Landlord. Tenant shall repair any damage to Landlord's property
resulting from such removal unless the damage is caused by Landlord or any of
Landlord's Affiliates or any of their respective employees, agents,
representatives or contractors.
24.1.4. If Tenant holds over or refuses to surrender possession of
the Premises in accordance with the provisions of this Lease, Landlord shall
have the right, in addition to all other rights and remedies available to it, to
treat such holding over as a tenancy at sufferance or a month-to-month tenancy.
During such holding over period, Tenant shall be obligated to perform all of its
obligations under this Lease (as if this Lease had not so expired or
terminated), except that the Rent during the period of holding over shall be
doubled. During any such holding over period, Landlord shall have no obligations
of any nature whatsoever trader this Lease or otherwise to Tenant.
24.1.5. If the Premises is not timely so surrendered, in addition to
any other rights or remedies which Landlord may have hereunder or at law or in
equity, Tenant shall pay to Landlord all expenses which Landlord may incur by
reason thereof and, in addition, shall indemnify and hold harmless Landlord from
and against all claims made against Landlord by any tenant or tenants succeeding
to the Premises or any part thereof, founded upon delay by Landlord in
delivering possession of the Premises to such tenant or tenants or upon the
improper or
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inadequate condition of the Premises, to the extent that such delay or improper
or inadequate condition is occasioned by the failure of Tenant to perform its
said surrender obligations and/or to timely surrender the Premises. All property
of Tenant or of any other person which shall remain in the Premises after the
expiration or sooner termination of this Lease shall be deemed to have been
abandoned and may be retained by Landlord as its property or be disposed of
without accountability in such manner as Landlord may deem fit and, if the cost
of any disposition exceeds any proceeds from the sale of such property, such
cost shall be paid by Tenant to Landlord upon demand.
24.2. Binding Effect.
The covenants, terms, conditions, provisions and undertakings in this Lease
shall extend to and be binding upon the heirs, personal representatives,
executors, administrators and permitted successors and assigns of the respective
parties hereto.
24.3. Estoppel Certificates.
Within ten (10) business days after a request by either party ("REQUESTING
PARTY") to the other ("RECEIVING PARTY"), the Receiving Party shall execute and
deliver to the Requesting Party an estoppel certificate in recordable form,
which shall certify: (i) that the Requesting Party has fully and completely
performed all of its duties and obligations under this Lease through the date of
such certificate, or, if there has been any failure to perform, that the only
failures are specifically described in the certificate; (ii) that this Lease has
not been modified, and is in full force and effect, or, if there have been
modifications, that this Lease is in full force and effect as modified, and that
the only modifications are those specifically described in the certificate;
(iii) that there are no defenses, claims, counterclaims or rights of set-off
against the enforcement of this Lease, or, if claimed, that they are all
specifically described, as claimed, in the certificate; and (iv) the dates to
which Minimum Rent and Percentage Rent due under this Lease have been paid. The
certificate shall also include such other information as may be reasonably
required by the Requesting Party.
24.4. Rights Cumulative.
All rights, remedies, powers and privileges conferred under this Lease on the
parties shall be cumulative of and in addition to, but not restrictive of or in
lieu of, those conferred by Law.
24.5. Attorneys' Fees.
In the event either party employs an attorney or brings an action against the
other arising out of the terms of this Lease, the prevailing party (whether such
prevailing party has been awarded a money judgment or not) shall receive from
the other party (and the other party shall be obligated to pay) the prevailing
party's reasonable legal fees and expenses (including the fees and expenses of
experts and paraprofessionals), whether such fees and expenses are incurred
before, during or after any trial, re-trial, re-hearing, mediation or
arbitration, administrative proceedings, appeals or bankruptcy or insolvency
proceedings, and irrespective of whether the prevailing party would have been
entitled to such fees and expenses under applicable Law in the absence of this
Section. Without limiting the generality of the foregoing, the term "EXPENSES"
shall include expert witness fees, bonds, filing fees, administrative fees,
transcriptions, depositions or proceedings,
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costs of discovery and travel costs. The term "PREVAILING PARTY" as used in this
Section shall mean that party whose positions substantially prevail in such
action or proceeding, and any action or proceeding brought by either party
against the other as contemplated in this Section may include a plea or request
for judicial determination of the "prevailing party" within the meaning of this
Section. In the event neither party substantially prevails in its positions in
such action or proceeding, the court may rule that neither party has so
substantially prevailed, in which event each party shall be responsible for its
own fees and expenses in connection therewith. In addition, the fees and
expenses for the services of "in-house" counsel (if any) shall be included
within the prevailing party's fees and expenses as fully as if such in-house
legal services were provided by an "outside" attorney or law firm as
contemplated within this Section, irrespective of whether "outside" legal
services are obtained in connection with such matter. The fees and expenses on
the part of in-house counsel as aforesaid shall be determined based upon the
prevailing hourly rates, fees and expenses for an attorney(s) of comparable
experience in the Los Angeles, California area.
24.6. Time of Essence.
Time is of the essence of this Lease. Anywhere a day certain is stated for
payment or for performance of any obligation, the day certain so stated enters
into and becomes a part of the consideration for this Lease.
24.7. Notices.
Any notice, demand, request, offer, consent, approval or communication to be
provided under this Lease shall be in writing and shall be deemed received: (i)
three (3) business days after it is deposited, postage prepaid, in the United
States mail, certified or registered mail with a return receipt requested,
addressed (as the case may be) to Landlord at Landlord's address shown herein,
or to Tenant at the address of Tenant shown herein; (ii) the next delivery day
after it is deposited for overnight delivery with a nationally recognized and
reputable air courier addressed (as the case may be) to Landlord at Landlord's
address shown herein, or to Tenant at the address of Tenant shown herein; or
(iii) the same day it is personally delivered (as the case may be) to Landlord
at Landlord's address shown herein, or to Tenant at the address of Tenant shown
herein. Either party may designate a different address for receiving notices
hereunder by notice to the other party in accordance with the provisions of this
Section. Tenant designates and appoints, as its agent to receive notice of all
dispossessory or distraint proceedings and all notices required under this
Lease, the general manager, assistant manager or person in charge of the
Premises at the time the notice is given, and, if no person is in charge of the
Premises at that time, such service of notice may be made by attaching the same,
in lieu of mailing, on any entrance to the Premises.
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If to Landlord: If sent by U.S. Mail:
Disneyland
1313 Harbor Blvd.
Anaheim, CA 92803-3232
Attention: Vice President
Downtown Disney
With a copy to: Disneyland
1313 Harbor Blvd.
Anaheim, CA 92803-3232
Attention: General Counsel
and
The Walt Disney Company
500 South Buena Vista Street
Burbank, CA 91521-0171
Attention: Corporate Legal-Real Estate
Disneyland, Downtown Disney
If sent by receipted overnight delivery service:
Disneyland
1580 S. Disneyland Drive, Suite 200
Anaheim, CA 92802
Attention: Vice President, Downtown Disney
With a copy to:
Disneyland
1020 West Ball Road
Anaheim, CA 92803-3232
Attention: General Counsel
and
The Walt Disney Company
500 South Buena Vista Street
Burbank, CA 91521-0171
Attention: Corporate Legal-Real Estate
Disneyland, Downtown Disney
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If to Tenant: Build-A-Bear Workshop, Inc.
1954 Innerbelt Business Center Drive
St. Louis, MO 63114-5760
Attention: Maxine Clark
With a copy to: Michael E. Long
Blumenfeld, Kaplan & Sandweiss, P.C.
168 North Meramec Avenue
St. Louis, MO 63105
If any notice is tendered and is refused by the intended recipient, such notice
shall nonetheless be considered to have been given and shall be effective as of
the date provided herein.
24.8. No Representations.
Tenant acknowledges that it has examined the Premises and that it is not relying
upon any representation or warranty, either express or implied, made by Landlord
or any of Landlord's Affiliates or any other person or entity in any way
Affiliated with Landlord, or being or claiming to be an agent, employee or
servant of Landlord, with respect to: the physical condition of the Premises,
the ground, earth or subsoil conditions; the financial reports, data, analyses
or projections that concern the proposed development, operation or projected
occupancy of the Premises; the proposed construction of, or any agreement not to
construct, any other facilities or amenities adjacent to, or in proximity to,
the Premises (including, without limitation, the Attractions); any zoning or
other applicable legal requirements; or any other matter or thing in respect of
the subject matter of this Lease and/or the Exhibits hereto or the transaction
and development contemplated hereby. Without limiting the generality of the
foregoing, Tenant acknowledges and agrees that Landlord makes no representation
or warranty of any kind or nature whatsoever (any such warranty being hereby
expressly disclaimed) with respect to any study, report, analysis, budget or
other information given to Tenant, its agents or representatives by Landlord,
its agents or representatives, and Tenant understands and agrees that all due
diligence regarding the Premises or matters related thereto are the complete and
sole responsibility of Tenant.
24.9. Entire Agreement; No Offer.
This Lease contains the entire agreement of Landlord and Tenant with respect to
the subject matter hereof, and no representations, warranties, inducements,
promises or agreements, oral or otherwise, between the parties not embodied in
this Lease shall be of any force or effect. This Lease may be modified only by a
written agreement executed by both parties with the same formalities as this
Lease. All prior agreements or communications are and shall be merged into this
Lease and shall have no force or effect. Neither any submission of this Lease by
one party to the other, nor any correspondence or other communications between
the parties in connection therewith, is intended or shall be deemed to
constitute an offer of any kind or to create any obligations between the parties
unless and until one or more duplicates of this Lease has been fully executed
and delivered between the parties. Accordingly, any such submission or
communications or correspondence between the parties or their respective agents
or attorneys is
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intended only as non-binding discussions, and either party shall have the
absolute right to withdraw from such discussions without any liability
whatsoever to the other party.
24.10. Severability.
If any clause or provision of this Lease is illegal, invalid or unenforceable
under applicable present or future Laws effective during the Term, the remainder
of this Lease shall not be affected. In lieu of each clause or provision of this
Lease which is illegal, invalid or unenforceable, there shall be added as a part
of this Lease a clause or provision as nearly identical as may be possible and
as may be legal, valid and enforceable. Notwithstanding the foregoing, in the
event any clause or provision of this Lease is illegal, invalid or unenforceable
as aforesaid and the effect of such illegality, invalidity or unenforceability
is that Landlord no longer has the substantial benefit of its bargain under this
Lease, then, in such event, Landlord may in its discretion cancel and terminate
this Lease upon providing at least ninety (90) days advance notice thereof to
Tenant.
24.11. Quiet Enjoyment.
Tenant shall, subject to the terms and conditions of this Lease, peaceably and
quietly hold and enjoy the Premises during the Term without hindrance or
interruption, so long as Tenant fully and completely keeps, observes, performs,
satisfies and complies with all of the agreements, terms, covenants and
conditions, requirements, provisions and restrictions of this Lease to be kept,
observed, performed, satisfied and complied with by Tenant under this Lease and
pays all Rent required to be paid by Tenant under this Lease.
24.12. Confidentiality.
24.12.1. Except as otherwise required by Law or the regulations of
any securities exchange, Landlord and Tenant agree not to disclose Confidential
Information to any third party other than to their respective directors,
officers, employees and agents (and directors, officers, employees and agents of
Affiliates) and advisors (including legal, financial and accounting advisors)
(collectively, "REPRESENTATIVES"), as needed.
24.12.2. Landlord and Tenant agree that they shall be responsible
for any disclosure of Confidential Information by their respective
Representatives that would constitute a breach of this Lease.
24.12.3. In the event of any breach of this Section, the
non-breaching party will be entitled, in addition to any other remedies that it
may have at law or in equity, to injunctive relief or an order of specific
performance,
24.12.4. In the event this Lease (or any part thereof) is required
to be disclosed or described in any manner due to the requirements of any
applicable Law or the regulations of any securities exchange, Tenant shall,
prior to any such disclosure or description, contact Landlord and provide
Landlord with the full particulars of Tenant's belief that such disclosure or
description is required. Following receipt of such notice, Landlord may (but
shall not be obligated to) take such measures as Landlord shall deem necessary
or desirable to challenge any such disclosure or description or to otherwise
redact or minimize such disclosure or description
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as Landlord sees fit. In such event, Tenant shall fully cooperate with Landlord,
it being understood and acknowledged by Tenant that Landlord regards this Lease
as a trade secret and as Confidential Information. Alternatively, Landlord may
authorize and direct Tenant to take such measures in Landlord's behalf in which
event Tenant shall employ its best efforts in good faith to effectuate such
authorization and direction.
24.12.5. Tenant shall not discuss the terms of this transaction or
Tenant's involvement in the Project with any third party including, without
limitation, any member of the press or media. This restriction shall include
making any press release.
24.12.6. The provisions of this Section and the obligations of
Tenant hereunder will survive the Expiration Date or sooner termination of this
Lease for a period of two (2) years.
24.13. Accord and Satisfaction.
Payment by any party, or receipt or acceptance by a receiving party, of
any payment due hereunder in an amount less than the amount required to be paid
hereunder shall not be deemed an accord and satisfaction, or a waiver by the
receiving party of its right to receive and recover the full amount of such
payment due hereunder, notwithstanding any statement to the contrary on any
check or payment or on any letter accompanying such check or payment. The
receiving parry may accept such check or payment without prejudice to the
receiving party's right to recover the balance of such payment due hereunder or
to pursue any other legal or equitable remedy provided in this Lease.
24.14. No Merger.
There shall be no merger of this Lease or the leasehold estate created hereby
with the fee simple estate in the Premises or any part thereof, by reason of the
fact that the same person or entity may acquire, own or hold, directly or
indirectly, this Lease or the leasehold estate created hereby or any interest in
this Lease or such leasehold estate, and the fee simple estate in the Premises
or any interest in such fee simple estate; and this Lease shall not be
terminated except as expressly provided herein.
24.15. Counterparts.
This Lease may be executed in several counterparts, each of which shall be
deemed an original, and all of such counterparts together shall constitute one
and the same instrument.
24.16. Usury Compliance.
Tenant and Landlord intend and hereby agree to comply with any and all
applicable usury Laws. Accordingly, notwithstanding anything to the contrary set
forth in this Lease or any other document executed or delivered in connection
therewith, neither the Applicable Rate nor any late fees nor any other charges
which may be characterized as interest under applicable Law shall exceed the
maximum rate of interest permitted under applicable Law, as it exists from time
to time. Landlord agrees not to knowingly collect or charge interest which will
render any effective interest rate payable with respect to any Minimum Rent,
Percentage Rent or other sum under this Lease usurious under applicable Law, and
Tenant agrees to give Landlord notice of such fact in
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advance of any payment or payments which would render the effective interest
rate payable hereunder usurious to the extent Tenant is or becomes aware of such
fact. If Landlord receives any payment which constitutes interest hereunder
(whether denominated as interest or as other costs, charges and fees which are
characterized as interest under applicable Law) in excess of the maximum lawful
rate of interest payable with respect to any Minimum Rent, Percentage Rent or
other sum under this Lease, then the amount of interest so received by Landlord
in excess of the then maximum lawful rate of interest shall, at the sole option
and discretion of Landlord: (i) be forgiven to the extent of such illegal
excess; or (ii) constitute an advance prepayment of Rent designated by Landlord
and shall thereby be applied in full or partial (as the case may be) reduction
of the then outstanding balance hereunder of such Rent.
24.17. Governing Law.
This Lease shall be governed by, and construed in accordance With, the laws of
the State of California. In the event of any litigation involving this Lease,
other than litigation between Landlord and Tenant instituted by Landlord
regarding the enforcement of Landlord's rights in other jurisdictions, venue for
such litigation shall be vested exclusively either in the California State
Circuit Court for Orange County, California, or in the applicable Federal Court
having jurisdiction in Orange County, California. In the event litigation is
filed in other jurisdictions relating to this Lease, as otherwise permitted
above, the parties hereto hereby agree that it is their intent that other
jurisdictions employ their choice of law rules so as to construe the meaning and
enforceability of this Lease in their jurisdiction in accordance with California
Law.
24.18. Recordation of Lease.
Neither this Lease nor any memorandum hereof may be recorded by Tenant without
first obtaining Landlord's approval, which approval may be withheld by Landlord
in Landlord's sole discretion. Upon Landlord's request, Tenant shall record a
memorandum of lease in the public records of Orange County, California in a form
and substance satisfactory to Landlord, within thirty (30) days of the Execution
Date of this Lease. Landlord shall pay the recording costs. In the event of a
discrepancy between the provisions of this Lease and the memorandum of lease,
the provisions of this Lease shall prevail. Any attempted recordation of this
Lease or any memorandum hereof by Tenant without having obtained Landlord's
written approval, which approval may be granted or denied in Landlord's sole
discretion, shall, at Landlord's option, constitute an Event of Default under
this Lease.
24.19. Waiver of Right of Redemption.
To the extent permitted by Law, Tenant, for itself and for all persons claiming
by, through or under it, hereby expressly waives any and all rights which are or
may be conferred upon Tenant by any present or future Law, including, without
limitation, relief from forfeiture as provided for by Section 1174,1179 and 3275
of the California Code of Civil Procedure, to redeem the Premises and/or the
Furnishings after termination of this Lease or after any warrant to dispossess
or judgment in ejectment or summary proceedings or after re-entry upon the
Premises by Landlord and reacquisition of possession of the Premises and the
Furnishings by Landlord, by summary proceedings.
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24.20. Headings.
The use of headings, captions and numbers in this Lease is solely for the
convenience of identifying and indexing the various Sections and shall in no
event be considered in construing or interpreting any provision in this Lease.
References in this Lease to a given Article shall be construed as a reference to
the entirety of such Article; references to any Section or subsection shall be
construed to include all provisions contained in such Section or subsection.
24.21. Relationship Disclaimer.
The parties hereby acknowledge that it is not their intention to create between
themselves a partnership, joint venture, fiduciary or employment or agency
relationship for the purposes of demising the Premises, or for any other purpose
whatsoever. Accordingly, notwithstanding any expressions or provisions contained
herein or in any other document, nothing in this Lease or in any documents
executed or delivered or to be executed or delivered shall be construed or
deemed to create, or to express an intent to create, a partnership, joint
venture, fiduciary or employment or agency relationship of any kind or nature
whatsoever between the parties hereto.
24.22. No Third Party Beneficiaries.
Nothing in this Lease is intended or shall be deemed to confer any rights or
benefits upon any entity or person other than the parties hereto or to make or
render any such other entity or person a third-party beneficiary of this Lease,
except rights contained herein for the benefit of a Fee Mortgagee.
24.23. Broker and Commission.
With the exception of Hycel Properties, which was retained by and will paid
solely by Tenant pursuant to a separate written agreement, all negotiations
relative to this Lease and the demise of the Premises as contemplated by and
provided for in this Lease have been conducted by and between Landlord and
Tenant without the intervention of any person or other party as agent or broker.
Landlord represents and warrants to Tenant that there are and will be no
broker's commissions or fees payable in connection with this Lease or the demise
of the Premises by reason of Landlord's dealings, negotiations or
communications. Tenant represents and warrants to Landlord that, other than a
brokerage commission due Hycel Properties, which Tenant shall pay in full
pursuant a separate written agreement between Tenant and Hycel Properties, there
are and will be no broker's commissions or fees payable in connection with this
Lease or the demise of the Premises by reason of Tenant's dealings, negotiations
or communications. Landlord and Tenant shall, and do each hereby, indemnify,
defend and hold harmless the other from and against the claims, demands, actions
and judgments of any and all brokers, agents and other intermediaries alleging a
commission, fee or other payment to be owing by reason of their respective
dealings, negotiations or communications in connection with this Lease or the
demise of the Premises.
24.24. Consent or Approval of Landlord.
24.24.1. Tenant hereby acknowledges that Landlord has a very
substantial interest in maintaining the image, reputation, aesthetic appearance,
and quality of, and harmony
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among, the Premises and the properties owned by Landlord or by Landlord's
Affiliates. Accordingly, except where otherwise expressly stated in this Lease
to the contrary, each and every term or provision of this Lease which requires
or which refers to (as the case may be): (i) the approval or consent of
Landlord; or (ii) the satisfaction, judgment, opinion or discretion of Landlord,
shall mean that any such approval or consent, or any such satisfaction,
judgment, opinion or discretion (as the case may be), shall be subject to the
sole and absolute discretion of Landlord. In addition, no provision of this
Lease which may require or permit Landlord to state reasons for denial of any
submission or request shall be construed as a specific statement that any matter
is subject to the reasonable approval, consent, satisfaction, judgment, opinion
or discretion of Landlord.
24.24.2. With respect to those terms or provisions of this Lease in
which Landlord is obligated to use its reasonable discretion, judgment or
approval, if Landlord unreasonably or arbitrarily withholds its consent,
approval or acknowledgment of satisfaction or judgment in respect of any such
matter, Landlord shall have no liability in connection with such withholding or
delay except that: (i) Landlord shall be deemed to have granted such consent or
approval if a court or other body of competent jurisdiction finally determines
(i.e., a final, non-appealable order) that Landlord withheld same unreasonably;
and (ii) if such court or other body determines in such final order that
Landlord acted in bad faith in withholding such consent, the foregoing
exculpatory language contained in this subsection shall not apply.
24.24.3. With respect to any contractor, supplier, service provider
or other third person or party who is subject to the prior approval of Landlord,
such approval shall not be intended (nor shall it be deemed) to constitute any
representations, warranty, assurance, affirmation or other statement on the part
of Landlord regarding the quality, efficiency, honesty, integrity, ability or
other characteristic or aspect of any such person or party, it being understood
and agreed that Tenant shall be solely responsible for its own due diligence
regarding such matters and that Landlord shall in all events be entitled to
assume that Tenant shall have first undertaken such due diligence appropriate to
the circumstances before Tenant presents any such person or party to Landlord
for Landlord's approval.
24.25. Force Majeure.
Except as otherwise expressly provided in this Lease, and except with respect to
any failure to pay any sum due hereunder as a result of bankruptcy, insolvency
or refusal or inability to pay, if either party shall be delayed or hindered in
whole or in part, or prevented from, the performance of any non-monetary
covenant or obligation hereunder as a result of acts of God, fire or other
casualty, earthquake, hurricane, flood, epidemic, landslide, enemy act, war,
riot, intervention by civil or military authorities of government, insurrection
or other civil commotion, general unavailability of certain materials, strikes,
boycotts, lockouts, labor disputes or work stoppage beyond the control of either
party hereto, then the performance of such covenant or obligation, shall be
excused for the period of such delay, hindrance or prevention and the period of
the performance of such covenant or obligation shall be extended by the number
of days equivalent to the number of days of such delay, hindrance or prevention.
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24.26. Landlord's Lien.
TO SECURE THE PAYMENT OF ALL RENT DUE AND TO BECOME DUE HEREUNDER AND THE
FAITHFUL PERFORMANCE OF THIS LEASE BY TENANT, TENANT HEREBY GIVES TO LANDLORD AN
EXPRESS CONTRACT LIEN AND SECURITY INTEREST ON ALL PROPERTY (INCLUDING, WITHOUT
LIMITATION, TENANT'S MERCHANDISE, INVENTORY, SUPPLIES, ETC.) WHICH MAY BE PLACED
IN THE PREMISES, AND ALSO UPON ALL PROCEEDS OF ANY INSURANCE WHICH MAY ACCRUE TO
TENANT BY REASON OF DESTRUCTION OF OR DAMAGE TO ANY SUCH PROPERTY, SUBJECT TO
ONLY TO A FIRST PRIORITY PURCHASE MONEY LIEN ON MERCHANDISE, INVENTORY AND
SUPPLIES (BUT IN NO EVENT ON FIXTURES) IN FAVOR OF FIRSTAR BANK OR ANOTHER BONA
FIDE THIRD PARTY LENDER. SUCH PROPERTY SHALL NOT BE REMOVED THEREFROM WITHOUT
THE WRITTEN CONSENT OF LANDLORD UNTIL ALL ARREARAGES IN RENT THEN DUE TO
LANDLORD HEREUNDER SHALL FIRST HAVE BEEN PAID. ALL EXEMPTION LAWS ARE HEREBY
WAIVED IN FAVOR OF SAID LIEN AND SECURITY INTEREST. THIS LIEN AND SECURITY
INTEREST IS GIVEN IN ADDITION TO LANDLORD'S STATUTORY LIEN AND SHALL BE
CUMULATIVE THERETO. UPON THE OCCURRENCE OF AN EVENT OF DEFAULT, THIS LIEN MAY BE
FORECLOSED WITH OR WITHOUT COURT PROCEEDINGS BY PUBLIC OR PRIVATE SALE, PROVIDED
LANDLORD GIVES TENANT AT LEAST THIRTY (30) DAYS NOTICE OF THE TIME AND PLACE OF
SAID SALE, AND LANDLORD SHALL HAVE THE RIGHT TO BECOME THE PURCHASER, UPON BEING
THE HIGHEST BIDDER AT SUCH SALE. CONTEMPORANEOUS WITH THE EXECUTION OF THIS
LEASE (AND IF REQUESTED HEREAFTER AT ANY TIME BY LANDLORD), TENANT SHALL EXECUTE
AND DELIVER TO LANDLORD UNIFORM COMMERCIAL CODE FINANCING STATEMENTS IN
SUFFICIENT FORM SO THAT WHEN PROPERLY FILED, THE SECURITY INTEREST HEREBY GIVEN
SHALL THEREUPON BE PERFECTED. IF REQUESTED HEREAFTER BY LANDLORD, TENANT SHALL
ALSO EXECUTE AND DELIVER TO LANDLORD UNIFORM COMMERCIAL CODE FINANCING
STATEMENT CHANGE INSTRUMENTS IN SUFFICIENT FORM TO REFLECT ANY PROPER AMENDMENT
OR MODIFICATION IN OR EXTENSION OF THE AFORESAID CONTRACT LIEN AND THE RIGHTS
AND REMEDIES OF A SECURED PARTY UNDER THE UNIFORM COMMERCIAL CODE AS ADOPTED IN
THE STATE OF CALIFORNIA FROM TIME TO TIME.
24.27. Construction of Lease.
This Lease has been fully reviewed and negotiated by the parties hereto and
their respective counsel. Accordingly, in interpreting this Lease, no weight
shall be placed upon which party hereto or its counsel drafted the provisions
being interpreted.
24.28. No Waiver.
No release, discharge or waiver of any provision hereof shall be enforceable
against or binding upon Landlord or Tenant unless in writing and executed by
Landlord or Tenant, as the case may be. Neither the failure of Landlord or
Tenant to insist upon a strict performance of any of the agreements, terms,
covenants and conditions hereof, nor the acceptance of Rent by Landlord with
106
knowledge of a breach of this Lease by Tenant in the performance of its
obligations hereunder, shall be deemed a waiver of any rights or remedies that
Landlord or Tenant may have or a waiver of any subsequent breach or default in
any of such agreements, terms, covenants and conditions.
24.29. Easements for Air, Light and View.
Tenant acknowledges that this Lease does not create, nor will Tenant have, any
express or implied easements for, or other rights to, air, light or view over or
about the Premises.
24.30. Joint and Several Liability.
If two or more individuals, corporations, partnerships or other business
associations (or any combination of two or more thereof) shall sign this Lease
as Tenant, the liability of each such individual, corporation, partnership or
other business association to pay Rent and perform all other obligations
hereunder shall be deemed to be joint and several and all notices, payments and
agreements given or made by, with or to any one of such individuals,
corporations, partnerships or other business associations shall be deemed to
have been given or made by, with or to all of them. In like manner, if Tenant
shall be a partnership or other business association, the members of which are,
by virtue of statute or federal Law, subject to personal liability, the
liability of each such member shall be joint and several.
24.31. Rules of Interpretation.
Except as otherwise expressly provided in this Lease, the following rules shall
apply hereto: (i) the singular includes the plural and the plural includes the
singular; (ii) "or" is not exclusive and "include" and "including" are not
limiting; (iii) a reference to any agreement or other contract includes any
permitted supplements and amendments; (iv) a reference in this Lease to a
section or exhibit is to the section of or exhibit to this Lease unless
otherwise expressly provided; (v) a reference to a section or Section in this
Lease shall, unless the context clearly indicates to the contrary, refer to all
sub-parts or sub-components of any said section or paragraph; (vi) words such as
"hereunder", "hereto", "hereof", and "herein", and other words of like import
shall, unless the context clearly indicates to the contrary, refer to the whole
of this Lease and not to any particular clause hereof; (vii) the headings of the
articles or sections and the numbering or position thereof are for convenience
only and shall not in any way be deemed to affect the meaning of this Lease;
(viii) a reference in this Lease to a "person" or "party" (whether in the
singular or the plural) shall (unless otherwise indicated herein) include both
natural persons and unnatural persons (including, but not limited to,
corporations, partnerships, limited liability companies or partnerships, trusts,
etc.); (ix) all accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with GAAP; and (x) any reference in this Lease to
a "business day" shall include each Monday, Tuesday, Wednesday, Thursday and
Friday that is not a day on which national banks in Los Angeles are closed.
24.32. Survival.
Notwithstanding anything to the contrary contained in this Lease, the provisions
(including, without limitation, covenants, agreements, representations,
warranties, obligations and liabilities described therein) of this Lease which
from their sense and context are intended to survive the expiration or sooner
termination of this Lease shall survive such expiration or sooner termination
107
of this Lease and continue to be binding upon the applicable party including,
without limitation, any indemnity and defense which arise due to an occurrence
which occurred prior to the termination of this Lease or any obligation of
either party to pay money to the other and any audit or review rights granted in
connection therewith.
24.33. Exhibits.
The exhibits referred to in, and attached to, this Lease are hereby incorporated
in full by reference. Unless otherwise expressly provided in the exhibit or the
body of this Lease, in the event of any conflict or inconsistency with the
provisions contained in the body of this Lease and the exhibits, the provisions
contained in the body of this Lease shall control.
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IN WITNESS WHEREOF, Landlord and Tenant have caused this Lease to be
executed on the date set forth below.
LANDLORD:
WALT DISNEY WORLD CO.,
a Florida corporation
By: /s/ Cynthia Harriss
-----------------------
Printed Name: CYNTHIA HARRISS
Title: President
Date of Execution: 6/21/01
TENANT:
BUILD-A-BEAR WORKSHOP, INC.
a Delaware corporation
By:/s/ Maxine Clark
-------------------
Printed Name: MAXINE CLARK
Title: President/CEO
Date of Execution: 6/17/01
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