HomeMy WebLinkAboutAbdelmuti Development Company and Paige Communication Corporation - 1999-09-20D . mb s -- �V. Xv.
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Council/Agency Meeting Held: 02f l9 , 0 2-
Deferred/Continued to:
Approved ❑ Conditio ally A prove ❑ Deni d
y CI 'r 's Signature
Council Meeting Date: February 19, 2002
Department ID Number: ED 02-04
CITY OF HUNTINGTON BEACH
REQUEST FOR REDEVELOPMENT AGENCY ACTION
_
C
SUBMITTED TO: HONORABLE CHAIRMAN AND REDEVELOPMENT AGEN9
MEMBERS
SUBMITTED BY: RAY SILVER, Executive Directorexv
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OV
PREPARED BY: DAVID C. BIGGS, Deputy Executive Director —'
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_
SUBJECT: APPROVAL AS TO FORM THE THIRD AMENDMENT TO YAE
n
n
LEASE BETWEEN ABDELMUTI DEVELOPMENT COMPANY AND
PAIGE COMMUNICATIONS CORPORATION
Statement of Issue, Funding Source, Recommended Action, Alternative Action(s), Analysis, Environmental Status, Attachment(s)
Statement of Issue: The Owner Participation Agreement between the Agency and
Abdelmuti Development Company requires the Agency to review and "Approve As To Form"
all leases within the office space of the Oceanview Promenade building.
Funding Source: Redevelopment Tax Increment.
Recommended Action: Motion to:
1. Approve as to form the attached amendment to the lease between Abdelmuti
Development Company and Paige Communications Corporation, a California
Corporation.
Alternative Actions): Do not approve the lease as to form.
Analysis: On May 28, 1991, the Agency entered an Owner Participation Agreement (OPA)
with the Abdelmuti Development Company for the Oceanview Promenade building which
was amended in November 1991 to establish the "Guaranteed Rental Rate."
The Agency's obligation is based on the rent collected from office space on the second floor
and one-half of the third floor, approximately 20,300 square feet in total. If actual rents are
less than the guaranteed rate ($1.90 per square foot), the Agency pays the difference (the
"Rent Differential Payment").
The attached Third Amendment to the office space lease is for 3,369 square feet, which has
been reduced from the existing 3,545 square feet. The reduction came about due to a shared
�. a
deck area. This lease amendment will extend the existing lease for three years beginning
July 1, 2002 and ending June 30, 2005.
The rent under the current Annual Rent Schedule is $73,536.00 and payable $6,128.00 per
month. As of July 1, 2002 the prior Annual Rent Schedule will terminate and the new one will
begin. The new rents will be as listed below.
Lease Term Basic Annual Rent
July 1, 2002 — June 30, 2003 $74,796.00 per year — payable at $6,233.00 per month
July 1, 2003 — June 30, 2004 $76,812.00 per year — payable at $6,401.00 per month
July 1, 2004 — June 30, 2005 $78,840.00 per year — payable at $6,570.00 per month
The current per square foot rental rate is $1.73 and the per square foot rental rates for the
new rent schedule are $1.85 for year one, $1.90 for year two, $1.95 for year three. For two
out of the three years of the lease extension the rents are at or above the $1.90 per square
foot that was established as the fair market value in the appraisal commissioned by the
Agency in 1999. The approval of this lease extension will help to minimize the Rent
Differential Payment.
Environmental Status: NIA
Attachment -
RCA Author: T. Andrusky x1530
The Third Amendment To The Lease
Between Abdelmuti Development Company
And Paige Communication Corporation
ATTACHMENT #1
THIRD AMENDMENT TO OFFICE SPACE LEASE
This Third Amendment to Office Space Lease ("Third Amendment"), dated for reference
purposes as of January_, 2002, is made by and between ABDELMUTI DEVELOPMENT
COMPANY, a California partnership ("Landlord"), and PAIGE COMMUNICATIONS
CORPORATION, a California corporation ("Tenant").
RECITALS
A. Landlord and Tenant have previously entered into that certain Office Space Lease
dated June 30, 1999, as modified by that certain First Amendment to Office Space Lease dated
September 10, 1999 and that certain Second Amendment to Office Space Lease dated
December 22, 1999 (collectively, the "Lease"), demising to Tenant the premises commonly
known as 101 Main Street, Suites 340, 355, 375 & 385 (the "Premises") in the building known as
Oceanview Promenade (the `Building").
B. Landlord and Tenant now desire to amend the Lease to provide, among other
things, for a three (3) year extension of the term of the Lease, all pursuant to the provisions set
forth herein.
C. All terms not defined herein shall have the meanings ascribed to them in the
Lease.
NOW, THEREFORE, for fair and valuable consideration, the receipt and adequacy of
which is hereby acknowledged, Landlord and Tenant hereby agree as follows:
Extension of Lease Term. The term of Lease shall be extended to June 30, 2005.
2. Premises „Square Footage. As of the "Effective Date" (as defined herein), the
rentable square footage of the Premises shall be reduced to 3,369 square feet from 3,545 square
feet. The parties acknowledge that the reduction is due to the shared use of the Deck Area
located in the Expansion Space, and the parties agree that such new square footage shall be used
for all purposes under the Lease as of the Effective Date. No retroactive adjustment of rent,
charges or other expenses of any kind incurred or relating to any time prior to the Effective Date
shall be made in connection with the foregoing reduction in rentable area.
3. Basic Annual Rent. The `Basic Annual Rent" under the Lease is currently
Seventy -Three Thousand Five Hundred Thirty -Six Dollars (S73,536.00) payable Six Thousand
One Hundred Twenty -Eight Dollars ($6,128.00) per month. As of the Effective Date, the Basic
Annual Rent schedule set forth in Item 5 of the Basic Lease Provisions shall be deleted and
replaced with the following:
Lease Term
July 1, 2002 - June 30, 2003
July 1, 2003 - June 30, 2004
July 1, 2004 - June 30, 2005
Basic Annual Rent
S74,796.00 per year - payable at $6,233.00 per month
S76,812.00 per year - payable at $6,401.00 per month
$78,840.00 per year - payable at S6,570.00 per month
267i014820.0001
247218.01 a01/18102
Lease:
4. Pam. The following provision is added at the end of Section 5.4(a) of the
"Not by way of limitation of the foregoing, Landlord hereby
advises Tenant that on June 7, 1999, the Agency and the City of
Huntington Beach (the "City") approved and the Agency entered
into a Disposition and Development Agreement (the "DDA") with
CIM Group, LLC ("CLM"), which provides for the development of
a large mixed -use retail, office, and hotel project within most of
the remaining portions of the two -block area bounded by Pacific
Coast Highway, Main Street, Walnut Avenue, and Sixth Street
excluding the Building. According to the information available to
Landlord, the proposed CIM project has not received all of the
required City discretionary development approvals and the exact
location, size, configuration, and mix of uses has not been
finalized. As currently planned, however, the CIM project would
eliminate virtually all of the surface parking that is currently
available to the public on the proposed CIM project site. The
current plan calls for the development of a subterranean public
parking structure to serve both CIM's proposed uses and other
existing and future public uses, but the amount of subterranean
parking to be provided has not been finally determined and may be
significantly less than the amount needed to accommodate CIM's
own needs, without taking into account existing uses in the area.
Landlord cannot predict if or when the CIM project will commence
construction, but Landlord is aware that the City/Agency has made
statements indicating that construction may commence as early as
2002. If construction does proceed, in all likelihood the existing
surface parking will be eliminated for a substantial period of time
before the subterranean parking is completed and available.
Landlord makes no warranties or representations with regard to the
CIM project. Tenant may obtain further information regarding the
CIM project from David Biggs, the City/Agency's Economic
Development Director, at (949) 536-5909, or from other
appropriate City/Agency officials and employees."
5. Security Deposit. As of the Effective Date, the Security Deposit shall increase
from $4,131.00 to S6,570.00 and Tenant shall pay to Landlord the sum of S2,439.00 (the
resulting difference) on or before the Effective Date.
6. Effective Date. The Effective Date of this Third Amendment shall be July 1,
2002. This Third Amendment is subject to the approval of the Redevelopment Agency of the
City of Huntington Beach (the "Redevelopment Agency"). Should the Redevelopment Agency
disapprove this Third Amendment, it shall automatically become null and void.
7. Conflict. In the event of a conflict between this Third Amendment and the Lease,
the terms of this Third Amendment shall govern and control.
267l014820-0001
247218.01 201 /18/02 -2 -
8. Full Force and Effect. Except as specifically set forth herein, the Lease remains
unmodified and in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this Third Amendment as of
the date first written above.
ABDELMUTI DEVELOPMENT COMPANY,
a California partnership
Ahmad H. Abdelmuti, General Partner
"Landlord"
PAIGE COMMUNICATIONS CORPORATION,
a California corporation
Edward J. Paige, President
"Tenant"
q rTY
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6
OY ATTOMMIUR?
367:014820-0001
24721 B-01 a01118102 -3-
RCA ROUTING SHEET
INITIATING DEPARTMENT:
Economic Development
SUBJECT:
Approval as to Form the Third Amendment to the Lease
between Abdelmuti Development Co. and Paige
Communications Corp.
COUNCIL MEETING DATE:
February 19, 2002
RCA ATTACHMENTS
STATUS
Ordinance (wlexhibits & legislative draft if applicable)
Not Applicable
Resolution (wlexhibits & legislative draft if applicable)
Not Applicable
Tract Map, Location Map and/or other Exhibits
Not Applicable
Contract/Agreement (w/exhibits if applicable)
(Signed in full by the City Attomey)
Attached
Subleases, Third Party Agreements, etc.
(Approved as to form by City Attomey)
Not Applicable
Certificates of Insurance (Approved by the City Attomey)
Not Applicable
Financial Impact Statement (Unbudget, over $5,000)
Not Applicable
Bonds (If applicable)
Not Applicable
Staff Report (If applicable)
Not Applicable
Commission, Board or Committee Report (If applicable)
Not Applicable
Findings/Conditions for Approval and/or Denial
Not Applicable
EXPLANATION FOR MISSING ATTACHMENTS
REVIEWED
RETURNED
FORWARDED
Administrative Staff
( }
( )
Assistant City Administrator (Initial)
( )
{ )
City Administrator (Initial)
City Clerk
EXPLANATION FOR RETURN OF ITEM:
�' CITY OF HUNTINGTON BEACH
2000 MAIN STREET CALIFORNIA 92648
OFFICE OF THE CITY CLERK
CONNIE BROCKWAY
CITY CLERK
LETTER OF TRANSMITTAL OF ITEM APPROVED BY THE CITY COUNCILI
REDEVELOPMENT AGENCY OF THE CITY OF HUNTD;GTO\ BEACH
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T0: 9A-Ja/m 0/" '4�vm/ m4,p, al
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ATTENTION:
DEPARTMENT:
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City, State, Zip jiW Tt cl 7 to
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See Attached Action Agenda Item A '7 Date of Approval OG�
Enclosed For Your Records Is An Executed Copy Of The Above Referenced Agenda Item.
Remarks:
lie
Connie Brockway
City Clerk
Attachments: Action Agenda Page
Agreement
Bonds
Insurance
RCA
Deed
Other
Narw i
_ e1-/ems - _
Department
Z- -,6e✓
RCA
-
Agrecme t
Insurance Other
Name
Department
RCA
Agreement
Insurance other
Name
Department
RCA
Agrec:neat
Insurance Other
Name
Department
RCA
Agre-ment
Insurance Other
Risk Management Dept.
Insurance
Received by Name - Company Name - Date
Gloffowuplcovedu
1 Telephone: 774536-5227 )
lew
I1e/f rn A-7 - V)7A-4 . TPRA y�ObO
Council/Agency Meeting Held:
�4D.t30
Deferred/Continued to:
® Approve 0 rf tiona[iy pr ved ❑ Denie
Clerk's Signature
Council Meeting Date: January 18, 2000
Department ID Number: ED 00-06
CITY OF HUNTINGTON BEACH
i;
REQUEST FOR REDEVELOPMENT AGENCY ACTION a
SUBMITTED TO: HONORABLE CHAIRMAN AND REDEVELOPMENT AGENCY
MEMBERS --�_
.tea
4` f-I
SUBMITTED BY: RAY SILVER, Executive Director aAl 3 '
PREPARED BY: DAVID C. BIGGS, Director of Economic Development
SUBJECT: Approval as to Form: Partial Termination of Lease between Abdelmuti
Development Co. and Vital Technology, Inc. and Second Amendment
between Abdelmuti Development Co. and Paige Communication, Inc.
(Oceanview Promenade)
Statement of Issue, funding Source, Recommended Action, Alternative Action(s), Analysis, Environmental Status, Attachment(s)
Statement of Issue: The Owner Participation Agreement (OPA) between the Agency and
Abdelmuti Development Company requires the Agency to pay the difference between the
"Guaranteed Rental Rate" and the actual amount of the rent collected from a specified
portion of the office space in the Oceanview Promenade. The Agreement also requires the
Agency's approval as to form on all leases within fifteen (15) days of submission to the
Agency.
Funding Source: Redevelopment Tax Increment (FY 1999-2000 Appropriation: $135,000)
Recommended Action: MOTION TO:
1. Approve as to form the attached Partial Termination of Lease between Abdelmuti
Development Company and Vital Technology, Inc. relinquishing 1,115 square feet of
Suite 3A; and
2. Approve as to form a Second Amendment to the Lease between Abdelmuti Development
Company and Paige Communication, Inc. for those 1,115 square feet of Suite 3A for the
remainder of its existing three-year lease (expiring on June 30, 2002) at the rental rate of
$1.90 per square foot per month.
Alternative_ Action(s): Do not approve the partial termination and Second Amendment.
E-3
REQUEST FOR REDEVELOPMENT AGENCY ACTION
MEETING DATE: January 18, 2000 DEPARTMENT ID NUMBER: ED 00-06
Analysis: In May of 1991, the Agency approved an Owner Participation Agreement with the
Abdelmuti Development Company for the development of a 42,000 square foot retail and
office building known as Oceanview Promenade. The provisions of the Agreement (and its
subsequent amendments) require the Agency to make "Rent Differential Payments" on a
monthly basis for an amount equal to the difference between the "Guaranteed Rent" (as
defined in the Agreement) and the "Contract Rent" (the rent actually collected from tenants).
In March of this year, in an effort to better identify current market rents for office space, staff
contracted with an appraiser to perform a rental value appraisal of all the office space in
Oceanview Promenade. The results of this work showed that current rents in the building
lagged the market. The results of the appraisal were shared with the building owner with the
request that, as leases came due for renewal, the appraisal be used as a guide in negotiating
future rents. -
In this transaction, Vital Technology, Inc. is relinquishing 1,115 square feet of space in Suite
3A prior to the expiration of its lease (Partial Lease Termination). The same space is being
immediately re -rented to an adjoining tenant, Paige Communication, lnc. (the original Paige
lease was approved as to form by the Agency in September 1999). The Second Amendment
to the lease represents an increase in rent from $1.60 per square foot per month that was
being paid by Vital to $1.90 per square foot per month that will be paid by Paige over the
remainder of its three year lease (the existing Paige lease and Second Amendment will
expire June 30, 2002 and the commencement date for this amendment will be February 1,
2000).
This rental rate exceeds the appraised value of this space ($1.65 per square foot per month)
and, although rent is level for the remainder of the three-year term, the rate is sufficiently high
to be deemed to include the normal and customary annual escalation over the lease term.
Therefore, staff recommends approval of this transaction.
Environmental Status: NA
Attachment(s):
1. 1 Partial Lease Termination: Vital Technology, Inc.
2. Second Amendment to Lease between Abdelmuti Development Co.
and Paige Communication, Inc.
RCA Author: kohier @ 5457
Vital&PaigeRAA -2- 118/00 8:08 AM
Partial Termination — Abdelmuti Development/Vital
Technology Lease (Oceanview Promenade)
ATTACHMENT #1
0e:-22-99 03:52PM Frui-RUTAN & TUCKER CV.,
7145469035
T-321 P.04/? F-164
PARTIAL TERMINATION OF LEASE
AUD MUTUAL RELEASE AGREEMENT
THIS PARTIAL TERMINATION OF LEASE AND MUTUAL RELEASE AGREEMENT
(this 1,Agreer.enr_a) is dated for reference purposes as of
December 22, 1999, between ABDEL-MUTI DEVFLOP24ENT COMPAINn', a
California general par--nership ("Landlord,-) and VITAL TECHNOLOGY,
!NC., a California corporation ("Tenant,') .
R E C I T A L S;
A. Landlord and Tenant have previously executed that certain
Office Space Lease dared April 16, 1999 (the "Lease") demising to
Tenant Six Thousand Sever_ Hundred Sixty -Five (6,765) rentable
square feet cf space designated as Suite 3A in the building !'mown
as Oceanview Promenade (the "Buildincr"). The Lease commenced May
15, 1999 and is set to expire on May 31, 2002.
13. A portion of the Premises is comprised of an office, a
kitchen and a conference room area and contains Seven Hundred
Sixty -Two (762) rentable square feet (the "Partial Suite 3A,,) In
addition, the Premises includes a deck area contiguous to Partial
Suite 3A comprised of Seven Hundred Seven (707) square feet, of
which only one-half (353) is deemed rentable area (the -Deck
Area'') . The Partial Suite 3A comprised of Seven Hundred Six4_v-Two
(762) rentable square feet and the Deck Area comprised of 'three
Hundred Fifty -Three (35.3) rercab?e square feet collectively contain
One Thousand One Hundred Fifteen (1,115) rentable square feet and
are collectively referred torereir as the ',Released Premises."
The Released Premises is crosshatched on the attached Exhibit "A".
C. Landlord and Tenant desire to partially terminate the
Lease, as to the Released Premises, as of the --Effective Date,,
defined in Paragraph 1.3 of this Agreement, and mutually release
one another from the obligations pertaining to the Released
Premises, subject to the terms and conditions of this Agreement.
D. All terms not defined herein shall have the meanings
ascribed to them in the Lease.
NOW, THEREFORE, in consideration of the mutual covenants and
conditions contained herein, Landlord and Tenant agree as follows:
3o7/0:ia20-00-31/33C901C 2 a12122199
DEC-22-1999 15:57 7145469035 P.04
Dat-22-99 03:52pci Frain—RUTAN 3 TUNA CM. 7145469035 T-321 P.05/0 F-164
ARTICLE i
PARTIAL T^RMINATTON OF LEASE
1.1 Partial Termination cf Lease. Subject to the terms and
conditions set forth below, the Lease, as to the Released Premises,
shall be terminated and cancelled and the term thereof brought tc
an end as of the ',Effective Date" defined in Paragraph 1.3 below.
Accordingly, the Pren-ses shall thereafter comprise Five Thousand
Six Hundred Fifty (5,650) rentable square feet and all references
in she Lease to the ,Premisesll shall mean and refer to Suite 3A,
less the Partial Suite 3A and the Deck Area.
1.2 Basic Annual Rent. The Basic Annual Rent under the Lease
is currently Twelve Thousand One Hundred Sixty -Five and 34/100
Dollars ($12.165.34) per month. As of the Effective Date, she
Basic Annual Rent schedule sec forth in Icem 5 of the Basic Lease
Provisions is deleted and replaced with the following:
Lease Term
February 1, 2000 -
May 31, 2000
June 1, 2000 -
May 31, 2001
June 1, 2001 -
May 31, 2002
Basic Annual Rent
$10,381.34 per month
$111,870.00 -
$115, 260 .00 -
payable $9,322.75
per month
payable 59,6a5.00
per month
1.3 Effective Dace. The "Effective Dar -ell shall be February
1, 2000.
2.4 Vacation by Tenant. Tenant shall vacate the Released
Premises on or before the Effective Date and shall leave the same
in a broom clean, orderly and good condition and state of repair,
subject to such surrender obligations as contained in the Lease,
including obligations pertaining to the removal of equipment and
property from the Released Premises. Notwithstanding "the
foregoing, the Existing Property (i.e., the equipment, trade
fixtures and property located in the Released Premises prior to the
date Tenant took possession of the Released Premises) shall remain
in she Released Premises and belong to Landlord. Tenant
acknowledges that vacation of she Released Premises on or before
the Effective Date in accordance herewith is a material part of the
consideration: for Landlord's agreement to terminate the Lease with
respect to the Released Premises.
1.5 Redevelopment Agency Approval. This Agreement and the
approval of the replacement lease demising the Released Premises is
subject to the approval by the Redevelopment Agency of the City of
P.untington Beach ( --Redevelopment Agency,,) . Should the
267/0L4920-OCO:/21Cn030 2 ai2/22/59 — 2 -
DEC-22-1995 15:58 7145469035 P.05
Dec-22-99 03:53pm From -RATAN d TUCKER U., 7i45469035 T-321 P-DE/09 F-iE4
Redevelopment Agency disapprove this Agreement or such replacement
lease, this Agreement shall be null and void, notwithstanding such
replacement tenants Temporary occupancy or possession of the
Released Premises.
1.6 Mutual Release.
(a) Landlord and Tenanc shall be released and discharged
from their respective obligations to observe the terms and
conditions of the Lease with respect to the Released Premises
on their respective parts to be observed as of the Effeccive
Date, provided chat such release shall not be construed as
releasing Tenant from iss obligations under this Agreement.
including without limitation., the obligations under Paragraph
1.4 above or obligations in the Lease pertaining to Paragraph
1.4, nor shall the same release Tenant from any obligations or
claims accruing under the Lease cr attributable to the period
prior to the Effective Date relating to the Released Premises.
(b) Subject to and except as otherwise set forth in
Paragraph 1 .6 (a) above, Landlord declares that all obligations
and duties of Tenant under the Lease with respect to the
Released Premises are terminated as of the Effective Date.
(c) In cons deratio:: of the termination and release set
forth above, Tenant surrenders all rights in and to the
Released Premises as cf the Effective Date 'and, subject to and
except as otherwise set forth in Paragraph 1.6(a) above,
Tenant, for itself, its heirs, legal representatives and
assigns, releases Landlord, its legal representatives and
assigns, as of the Effective Date, from any and all claims,
debts, liabilities, obligations, demands and causes of action
of any kind or nature, including without limitation,
attorneys, fees and casts, whether known or unknown, based on,
arising out of, or connected with, either directly or
indirectly any term, provision., fact, ever_c or occurrence
related to or contained in the Lease or to any landlord/tenant,
relationship between Landlord and Tenant relating to the
Released Premises, that Tenant had, has or may have against
Landlord based on the Lease a:-:d relating to the Released
Premises.
1.7 Default by Tenant. Tenant acknowledges and agrees that
in the event it defaults under any terms and provisions of this
Agreement or the Lease, Landlord's conditional agreement ro
terminate the Lease with respect to the Released Premises shall be
null and void and Tenant shall be responsible for payment of all
obligations under the Lease relating to the Released Premises and
all damages which Landlord may incur by reason of Tenant's default
hereunder.
DEC-22-1999 15:58 7145469035 P.OS
Dec-22-99 N:53P,. From—,RUTAN & TICKER %'M, 714°469035 T-321 P-O/03 F-164
A.RTI CLE 11
MISCELLANEOUS
2,1 Successors and Assigns- This Agreement shall be hinding
upon and shall inure to the benefit of the parties hereto and their
resnective heirs, personal representatives, successors and assigns.
2.2 --,-me is of the Essence. Time is hereby expressly made of
the essence of this Agreement and each and every term and condition
contained herein.
2.3 Ir_tearation. This Agreement and other documents
expressly incorporated h.erain by reference contain the entire and
exclusive understanding and agreement between the parties relating
to the matters contemplated hereby and all prior or contemporaneous
negotiations, agreements, understandings, representations and
statements, oral or wriccen, are merged herein and shall be of no
further force or effect.
2.4 Modifications. Any alteration, change or modification of
or to this Agreemenn, in order to become effective, shall be made
by written instrument or endorsement thereon and in each such
instance executed on behalf of each party hereto.
2.5 Interpretation. This Agreement shall be construed
according to its fair meaning and as if prepared by bot parties
hereto. Titles and captions are for convenience only and shall not
constitute a portion of this Agreement. As used in this
Agreement, masculine, feminine or neuter gender and the singular or
plural number shall each be deemed to include the others wherever
and whenever the context so dictates.
2.6 Governing Law. This Agreement shall be construed in
accordance with the laws of the State of California in effect at
the time of the execution of this Agreemenc.
2.7 A_ttorneys_'_ Fees. In the event any action is brought
between the parties hereto, seeking enforcement of any of the terms
and provisions of this Agreement, the prevailing party in such
action shall be enticled, to have and to recover from the ocher
party actorneys, fees and other expenses in connection with such
action or proceeding, in addition to its recoverable court costs.
2.8 Notices. Any notice which either party may desire to
give to the other party must be in writing and may be given by
personal delivery, by mailing the same by registered or certified
mail, return receipt requested, postage prepaid, or by Federal
Express or other reputable overnight delivery service, to the parry
to whom the notice is directed at the address of such party
hereinafter set forth, or such other address and to such other
persons as the parties may hereafter designate. Any such notice
shall be deemed given upon receipt if by personal delivery, forty-
eight (48) hours after deposit in the United States mail, if sent
267/01e62C-0001/3309020 = si?/22/53 - 4 -
DEC-22-1999 15:59 7145469035 P.07
Dec-22-99 03:54pm From-RUTAN & TUCi(=R Cal, 7145469035 T-321 P-02/0a F-i64
by mail pursuant to the foregoing, or twenty-four (24) hours after
deposit with a reputable overnight delivery service:
To Landlord: Abdelmuti Development Company
c/o Jack's Surf & Sport
101 Main Street
Huntington Beach, CA 92646
Attn: Mike Abdelmuzi
Telephone: (714) 536-6567
To Tenant: Vita Technology
101 Main Street, Suite 3A
Huntington Beach, CA 92648
Telephone: (714) 960-7711
2.9 Full Force and Effect. Except as specifically modified
herein, the Lease remains in full force and effect, and shall
expire on May 31, 2002.
IN WITNESS WHEREOF, the parties hereto have executed this
Partial Termination of Lease and Mutual Release Agreement as of the
date first above written.
261,/6.-itl_p-0U01/3j0901-0.2 a12/22/99
ABDELMUTI DEVELOPMENT COMPANY, a
California general partnership
By.
"Landlord
VITAL TECHNOLOGY, INC., a California
corporation
By
By:
Its:
Its:
- 5 -
Tenant
"� 1- 4- -� a o
nn4I'P ROirfi7 S TO FORM
'may Cwty Atto- ey
DEC-22-1999 15:59
7145469035
P.es
Second Amendment — Abdelmuti Development/Paige
Communication Lease (Oceanview Promenade)
ATTACHMENT #2
Dec-22-99 03:50pm Frcm—RUTAN & TUCKER CV. 7145469035 T-321 P 02/09 F-164
SECOND ASV F_NDti2ENT TO OFFICE SPACE LEASE
This Second Amendment to Office Space Lease (this "Second Amendment"), dated for
reference purposes as of December 22, 1999, is made by and between ABDELMUTI
DEVELOPMENT COI PANTY, a California partnership ("Landlord"), and PAIGE
CONLM- UNICATIONS CORPORATION, a California corporation ("Tenant").
RECITALS:
A. Landlord and Tenant have previously executed that certain Office Space Lease
dared June 30, 1999, as modified by Char certain First Amenndment to Office Space Lease dared
September 10, 1999 (collectively, the "Lease"), demising to Tenant Two Thousand, Four Hundred
Thirty (2,430) rentable square feet of space designated as Suites 3G and 3H (the "Premises") in
the building known as Oceanview Promenade (the "Building").
B. Tenant desires to lease a portion of Suite 3A comprised of an office, a Kitchen and
a conference room area and containing Seven Hundred Sixty -Two (762) rentable square feet (the
"Partial Suite 3A") and the deck area contiguous to the Partial Suite 3A comprised of Seven
Hundred Seven (707) total square feet ([he "Deck Area"), Three Hundred Fifty -Three (353)
square feet of which is deemed rentable area. The Partial Suite 3A comprised of Seven Hundred
Sixty -Two (762) rentable square feet and the Deck Area comprised of Three Hundred Fifty -Three
(353) rentable square feet collectively contain One Thousand One Hundred Fifteen (1,115)
rentable square feet and are collectively referred to herein as the "Expansion Space." The
Expansion Space is crosshatched on the attached Exhibit "A". The Premises, inclusive of the
Expansion Space, shall contain Three Thousand. Five Hundred Forty -Five (3,545) rentable square
feet.
C. All terms not defined herein shall have the meanings ascribed to Them in the Lease.
NOW, THEREFORE, for fair and valuable consideration, the receipt and adequacy of
which is hereby acknowledged, Landlord and Tenant agree as follows-
1. Expansion Space. - As of the "Effective Date" (as defined herein), the Premises
shall include the Expansion Space and the Premises shall thereafter contain Three Thousand Five
Rundred Forry-Five (3,545) rentable square feet. All references in the Lease to the Premises
shall mean and refer to the Premises inclusive of the Expansion Space.
2. Existing E ui ment. Tenant acknowledges that the Expansion Space contains certain
equipment, trade fixtures and personal property of a previous tenant (the "Existing Property") and
that during the Lease Term Tenant may use the Existing Property, but the Existing Property shall
at all times remain the property of Landlord. At the expiration or termination of the Lease, and
in addition to the obligations in the Lease regarding surrender of the Premises, the Premises shall
be surrendered to Landlord with the Existing Property in good condition and repair.
3 b7%o j ys3o-oca i r3309QS7 2. L 2n 2/9v
DEC--22-1959 15: 5? 7145469035 P.02
Cec-22-99 03:52pm Frvi-R'UTAV & TUCKER CA, 7145469035 T-321 P-03/08 F-164
3. Basic Annual Rent. The "Basic Annual Rent" under the Lease is currently Forty
Fight Thousand One Hundred Fourteen Dollars (-W,114.00) payable Four Thousand Nine and
501100 Dollars ($4,009.50) per month. As of the "Effective Date" (as defined herein), the Basic
Annual Rent schedule set forth in Item 5 of the Basic Lease Provisions, shall be deleted and
replaced with the following:
Lease Term Rasic Annual Rent
February 1, 2000 -
June 30, 2002 $73,536 per year - payable $6,128.00 per month
4. Effective Date. The Effective Date of this Second Amendment shall be February
1, 2000. This Second Amendment is subject to the approval of the Redevelopment Agency of
the City of Huntington Beach (the "Redevelopment Agency"). Should the Redevelopment
Agency disapprove the Second Amendment, it shall automatically become null and void.
5. Conflict: In the event of a conflict between this Second Amendment and the
Lease, the germs of this Second Amendment shall govern and control.
6. Full Force -and 1=ffecz Excepr as specifically modified herein, the Lease remains
in full force and effdct.
IN WITNESS WHEREOF, the parties have executed this Second Amendment as of the
date first written above.
ABDELMUTi DEVELOPMENT COMPANY,
a California general partnership
By:
"LANDLORD'.
P.A.IGE COMMUNICATIONS CORPORATION,
a California corporation
Edward J. Paige,
President
"TENANT"
FOT
At
f' �.;4r ' ttorney
D'C-22-1999 IS: 5? 7145459035 P.03
RCA ROUTING SHEET
INITIATING DEPARTMENT:
Economic Development
SUBJECT:
Approval as to Form: Partial Lease Termination between
Abdelmuti Development. Co. and Vital Technolgy, Inc.and
Second Amendment between Abdelmuti Development Co.
and Paige Communication Oceanview Promenade
COUNCIL MEETING DATE:
I January 18, 2000
RCA ATTACHMENTS
STATUS
Ordinance w/exhibits & legislative draft if applicable)
Not A2plicable
Resolution (w/exhibits & legislative draft if applicable)
Not Applicable
Tract Map, Location Map and/or other Exhibits
Not Applicable
Contract/Agreement (w/exhibits if applicable)
full b (Signed in the City Attome
Not Applicable
Subleases, Third Party Agreements, etc.
(Approved as to form by Ci!Z Attome
Attached
Certificates of insurance (Approved by the Cit Attornejo
Not Applicable
Financial Impact Statement Unbud et, over $5,000
Not Applicable
Bonds if applicable)
Not Applicable
Staff Report If applicable)
Not Applicable
Commission, Board or Committee Report if applicable)
Not Applicable
Findings/Conditions for Approval and/or Denial
Not Applicable
EXPLANATION FOR MISSING ATTACHMENTS
REVIEWED
RETURNED
FORWARDED
Administrative Staff -5-00�Y
Assistant Cit Administrator(Initial)
City Administrator Initial
op,*"
City Clerk
EXPLANATION FOR RETURN OF ITEM:
RCA Author: kohler @ 5457
O
A� CITY OF HUNTINGTON BEACH
InterOffice Communication
Economic Development Department
q q-C _DtS#frL)UF_a
TO: Honorable Mayor and City Council Members J,egs e,
VIA: Ray Silver, City Administrator
FROM: David C. Biggs, Director of Economic Development
DATE: August 20, 1999
SUBJECT: Approval As To Form A Lease Between Abdelmuti Development Co. &
Paige Communication, Inc. — Oceanview Promenade
Agenda Item E-2 (August 16,1999)
At the City Council/Redevelopment Agency meeting of August 161h, the Agency
considered the captioned item. Agency members raised questions regarding the business
points of the Owner Participation Agreement between itself and Abdelmuti Development
Company. There follows a response to those questions, additional background, and
concludes with a revised recommendation.
BACKGROUND
The Agency initially approved an Owner Participation Agreement (OPA) with the
Abdelmuti Development Company on May 28, 1991. This agreement embodied the
basic terms between the Agency and Abdelmuti including the Agency's construction and
long-term loan to Abdelmuti, the terms of repayment and the minimum value of the
improvements. In November 1991, the Agency approved an amendment to the OPA that
introduced the concepts of "Guaranteed Rent" and "Rent Differential Payment" (see
summary of the OPA Attachment No. 1).
The Guaranteed Rent was established at an amount approximately equal to
$1.55/sq.ft./month of rentable space — based on all of the second floor and one-half of the
third floor of office space. The Agency later agreed to also pay S.25/sq.ft./month in
Common Area Maintenance (CAM) charges. Therefore, in the beginning, if the
subsidized portion of the office space was vacant, or rented at an amount below
$1.85/sq.ft./month, the Agency incurred an obligation to pay the difference (the "Rent
Differential Payment"). As required by the OPA, this guaranteed amount increases over
time with inflation and is now equal to about $1.93/sq.ft. and the maximum Agency
payment is currently capped at S38,550/month or $462,600/year.
F- 5
0 0
In 1999, the actual subsidy paid in the first eight months of the calendar year was
$108,799.11, or an average of about $13,600/month. The table below shows the subsidy
each year since payments were begun.
Calendar Year
(or portion thereof)
Total Rent
Differential Payment
1995
$241,084.77
1996
$174,231.81
1997
$156,607.75
1998
$134,259.35
1999 (8 months)
$108,799.11
TOTAL
$814,982.79
The Agency's subsidy obligation continues to the year 2018, or until the rent actually
collected from tenants meets or exceeds the "Guaranteed Rent."
THE CURRENT ISSUE
The Paige Communication Corporation lease that was the subject of the captioned
Agenda item would reduce the current monthly subsidy by $ 3,645.00. It represents a
lease of Suites 3G and 3H totaling 2430 rentable square feet for a term of three years with
rents at S1.50/sq.ft. the first year, $1.60/sq.ft the second year and S1.70/sq.ft. the third
year. The appraisal designates a current market value for this space of S1.65/sq.ft. The
tenant took possession of the premises on July 6, 1999.
Agency Special Counsel Murray Kane has been reviewing the Abdelmuti OPA and
amendments to further clarify the Agency's options related to leases presented to the
Agency for approval. While this review is ongoing in regard to broader approaches to
this issue, there are two options related to the Paige Communication Corporation lease:
1. Approve the Proposed Lease --- This would reduce the amount of vacant space
ant the Agency subsidy by S3,645/month.
2. Disapprove the Proposed Lease — Approval of a proposed lease shall not be
unreasonably denied. However, the lease can be disapproved if the business
terms are not reasonable, such as where the Agency believes rents are below
fair market value. If the Agency disapproves a proposed lease, the Agency
must notify Abdelmuti of the disapproval and the Agency's opinion of fair -
market value.
The Agency's subsidy for the space in question would be reduced to the
difference between the Guaranteed Rent and the Agency's opinion as to fair -
market value, not the contract rent set in the proposed lease. In this case, the
2
•
Agency would have the obligation to pay the difference between $1.93/sq.ft./
month and the Agency's $1.65/sq.ft. fair -market rent, not the SI.50/sq.ft. set
forth for the initial year of the proposed lease. This would reduce the Agency
subsidy by $4,009.50/month.
It is important to note that if Mr. Abdelmuti opted to not proceed with the
proposed Paige Communication Lease because of the Agency disapproval, the
Agency would still consider the space to have been leased at 51.65/sq.ft.
OTHER RECENT ACTIONS
Out of a concern that the rents for office space in Oceanview Promenade have not kept
pace with the Orange County office market, and because some of the original leases were
about to expire, staff interviewed commercial real estate brokers beginning in the summer
of 1998. This research resulted in hiring a real estate appraiser to perform a "rental value
appraisal" for the office space in Oceanview Promenade.
The appraisal firm of The Ellis Group, Inc. was awarded the contract and the appraisal
report was complete in May 20, 1999. Exhibit 3: "Conclusions of Fair Market Rent"
from the appraisal summarizes the determination of value for each suite in the building
adjusted for the "modified full service gross" form of lease used by the building owner
(Attachment No. 2). The table reveals that, even after adjusting for electricity and
janitorial services paid by the tenant and the lack of on -site parking, current rents were
below appraisal.
The appraisal report was shared with the building owner with the recommendations that:
The owner hire a professional commercial real estate broker to represent the building
and aggressively market vacant space and that
■ As renewals for existing tenants are negotiated, rents presented to the Agency are
consistent with the appraisal.
At this time, the owner has hired a broker that is experienced in the downtown
Huntington Beach market and is renegotiating the first renewal to come available since
the appraisal was complete.
THE HISTORICAL CONTEXT
Two historical references are important to the understanding of this Owner Participation
Agreement.
The building owner desired to construct apartments above the commercial space in
Oceanview Promenade. This was contrary to the city's policy for the area. The Agency
staff encouraged the owner to seek restaurant uses for the second floor and use the third
floor (of what was then planned as a three-story building) for its corporate office.
However, the owner's religious convictions forbade the serving of alcohol on the
premises and no restaurant would lease the location without alcohol service. Therefore
the compromise of office use was struck.
Second, Oceanview Promenade was an early project in the revitalization of downtown.
Further, it was an unproven location for office uses and suffered from being freeway
remote — though it has the advantage of ocean proximity and views. A further
disadvantage of office space is it would not have provided the same return on investment
that apartments or restaurants would have provided. Therefore, Agency assistance was
warranted from two perspectives:
1) To provide the owner with a return comparable to similar real estate investments in
other locations and
2) To participate in the greater risk of pioneering office uses in this location and thus
conform to the city's land use policy for the area.
CONCLUSION
As can be seen by recent actions, staff shares the Council's concern regarding achieving
the highest possible rents for the office space in Oceanview Promenade. The table above
also depicts that the Agency's rent differential payments have been declining over time.
Staff believes that the participation of a skilled real estate professional with experience in
the Huntington Beach market place and the data provided to the owner by the Agency's
real estate appraiser will help to reduce the Agency's subsidy still more in future years.
Further supporting this conclusion is the avowed concern of the Council members that
has been clearly expressed to the building owner.
However, in regard to the proposed lease with Paige Communication Corporation, a
revised action is recommended:
Motion to:
Disapprove the proposed lease between Abdelmuti Development Company and
Paige Communications Corporation regarding suites 3G and 3H in the Oceanview
Promenade due to the business terms not being reasonable since the proposed
rents are below a fair -market rent of $1.65/sq.ft./month.
(Stephen: projects:Abdelmuti:ccmemorepaige.doc)
4
0
u
Oceanview Promenade Fact Sheet
ATTACHMENT #1
•
•
Oceanview Promenade
Location: 101 Main Street (Northwest corner of Main Street & Pacific Coast
Highway)
Description: A four-story retail/commercial office building with approximately
16,000 square feet of retail/commercial space and 32,000 square feet
of office space for a total of 48,000 square feet. Jack's Surfboards is
the anchor tenant for the ground floor. Additional tenants include:
Burger King, Bagelmania, The Candy Baron, Nielson's Frozen
Custard and Coffee People.
Construction Construction began in October of 1992 and was completed October
Timeframe: 1993.
Owner The Owner Participation agreement between Abdelmuti Development
Participation Company and the Redevelopment Agency was approved May 2,
Agreement: 1991.
Key Points: A) Agency is committed to loaning the participant up to $3.127
million for construction at 7% interest amortized over 15 years. The
participant must contribute a minimum of $1 million in equity.
B) Agency is responsible for the cost of all off -site improvements
required for the project ($250,000).
C) Agency will pay to subsidize the office space if $1.55 per sq. ft.
is not achieved in free market plus $0.25 per square foot in triple net
charges.
D) Agency is responsible for providing re uired parking on adjacent
Agency parcel (121 spaces). ?e4f11-+ tytty JUA M(JJH--) J_2�3,
Completion Value: $5.5 million
Monitoring: Office rent subsidy payment of approximately $13,000 month is
made on a monthly basis, reconciled annually and audited semi-
annually. Loan repayments of $28,375 are made monthly and
continue to February 2010.
Developer: Abdelmuti Development Company
Mike Abdelmuti, General Partner
113 Main Street
Huntington Beach, California 92648
(714) 536-5582
Contact: Stephen Kohler, Economic Development
(714) 536-5582
C� J
i
Conclusions of Fair Market Rent
ATTACHMENT #2
Exhibit 3
Oceanview Promenade
Conclusions of Fair Market Rent
Suite
Adjustments (PSF) for
Resit PST --
No.
Comments
Refit PSF. FSG
Electricity
Janitorial
(Adjusted)
2A
52.05
S.20
S-10
$1.75
2B
52.05
5.20
$.10
S 1.75
2C
$2.00
5.20
$.10
S 1.75
2D
$2.00
$.20
S-10
S 1.70
2E
Requires
$2.002
$.20
$.10
51.702
substantial tenant
improvements
2G
Requires
$1952
$.20
5.10
51.652
substantial tenant
improvements
3A
$1.95
5.20
$.10
S 1.65
3B
$2.00
5.20
5.10
$1.70
3C
S2.00
5.20
5.10
$1.70
3G/3H
S 1.95
$.20
$.10
S 1.65
1 Adjusted to assume tenant pays for individual electrical and janitorial.
Z Assumes tenant improvement allowance of approximately S25 psf.
Source: Ellis Group, Inc.; Conclusions effective April 20, 1999
_,= = i== i i it = i i= i i i i i i i
Suite
NO. Tenant
2A Scott Presta
• 2I3 IDS Financial Services, Inc.
2C Core Holdings
2D Makasjian
2E Vacant
2G Computer Memory Test Labs
3A Vital Technologies
(Lease out for signature)
313 Martin & Assoc.
40 3C Congressman Dana
Rohrabacher
3G/3H Vacant (former Vital
Technologies)
Exhibit 4
Oceanview Promenade
101 Main Street
Huntington Beach, California
Comparison
of Current and Market Rents
Current Lease Rate'
Reimbursed
Opinion of Market Rent1
Lease
Rentable
CAM
Total
Expiration'
Area fs ' PSF Total
Char'
Actual
Total
PSI'
05/31/01
1,305 $1.50 $1,957.50
$1,957.50
$2,283.75
$1.75
01/12/00
2,669 $1.58 $4,217.02
$107.00
$4,324.02
$4,670.75
$1.75
+ 5-year option
08/31/01
2,557 $1.49 $3,800.00
$3,800.00
$4,474.75
$1.75
+ I -year option
at market
03/31/00
1,670 $1.60 $2,672
$2,672,00
$2,839.00
$1.70
2,171 -0-
-0-
$3,690.704
$1.704
01/14/01
1,230 $1.35 $1,660.50
$1,660.50
$2,029.504
$1.654
05/31/02
6,765 $1.60 $10,824.00
(Year 1)
$10,824.00
$1 1,162.25
$1.65
$1.65 $11,162.50
(Year2)
$11,162.50
$1.70 $11,500.50
(Year3)
$11,500.50
12/31/99
1,156 $1.55 $1,791.00
$46.00
$1,837,00
$1,965.20
$1.70
12/31/00
1,670 $1.55 $2,588.50
$2,588.50
$2,839.00
$1.70
3,5453
' Based on owner's rent roll dated April 8, 1999.
z Adjusted to assume that tenant pays for individual electricity and janitorial.
' May be partially absorbed into new configuration of Suite 3A.
4 Requires substantial tenant improvement allowance.
in
-0- $5,849.25 $1.65
Source: Ellis Group, Inc., Conclusions effective April 20, 1999.
g�l 41aehlex - tC• oG✓
61,6 C. s - Wiz/)
Council/Agency Meeting Held:
Deferred/Continued to:
[; Appmved ElConditiona ly Approved ❑ Denied
Council Meeting Date: August 2, 1999
Signature
Department ID Number: ED 99-40
Poisr�°onGD &4rlZ ,srtr� a-fn CITY OF HUNTINGTON BEACH
rD REQUEST FOR REDEVELOPMENT AGENCY ACTION
C �r 3n�erEr ,per.
o
SUBMITTED TO: HONORABLE CHAIRMAN AND REDEVELOPMENT AGENCY
MEMBERS `F
SUBMITTED BY: RAY SILVER, Executive Director :=+
PREPARED BY: DAVID C. BIGGS, Director Of Economic Development
�:�,,_
>
SUBJECT: Approval as to Form: Lease between Abdelmuti DevelopmenC=
Co. & Paige Communications Corp. (Oceanview Promenade(ZD) n
Statement of Issue, Funding Source, Recommended Action, Alternative Action(s), Analysis, Environmental Status, Attachment(s)
Statement of Issue: The Owner Participation Agreement between the Agency and
Abdelmuti Development Company requires the Agency to review and approve as to form all
leases within the office space of the Oceanview Promenade building.
Funding Source: Redevelopment Tax Increment (total annual cost for all office space is
approximately $160,000).
Recommended Action: MOTION TO:
Approve as to form the attached lease between Abdelmuti Development Company and Paige
Communication Corporation regarding Suites 3G and 3H in the Oceanview Promenade.
Alternative Action(s): Do not approve the lease as to form.
Analysis: On May 28, 1991, the Agency entered into an Owner Participation Agreement
(OPA) with the Abdelmuti Development Company for the Oceanview Promenade building. In
November 1991, the OPA was amended.
As a result, the Agency has an obligation to make up the difference between the rent
collected from office space on the second floor and one-half of the third floor, approximately
20,000 square feet in total, and a "Guaranteed Rental Rate." If actual rents are less that the
guaranteed rate, the Agency pays the difference (the "Rent Differential Payment").
The attached lease represents the re -tenancy of now vacant space for a term of three (3)
years commencing July 6, 1999, occupying a total of 2,430 rentable square feet with rent
starting at $1.50 per square foot per month and increasing to $1.60 in the second year and
$1.70 in the third year. This will assist in reducing the Agency's obligation.
REQUEST OR REDEVELOPMENT AGEIVY ACTION
MEETING DATE: August 2, 1999 DEPARTMENT ID NUMBER: ED 99-40
Environmental Status: NA
Attachments :
RCA Author: kohler @ 5457
pageraa -2- 07/20/99 2:35 PM
•
Lease Between Abdelmuti & Paige Communications
ATTACHMENT #1
•
OFFICE SPACE LEASE
beUween
ABDELMUTI DEVELOWENT COMPANY,
a California general partnership
AS LANDLORD
and
PAIGE CO>'[MUNICATIC\S CORPCRATICN,
a California corporation
AS 'TENANT
SUITES 3G, 3H
OCEANVIEL; PROMENADE
HUNTINGTON BEACH, CALIFORNIA
.7-11- 1
City Att
B:; F Y orne�
J Le ext _ City. Attorney
2&W014820-IXAi;:i274071.3 uOV29:99
•
ARTICLE I. PREMISES
TABLE OF CONTENTS
SECTION 1.1 LEASED PREMISES . . . . . . . . . . . . . .
SECTION 1.2 ACCEPTANCE OF PREMISES . . . . . . . . . .
SECTION 1.3 USE RESERVATIONS . . . . . . . . . . . . .
SECTION 1.4 BUILDING NAME AND ADDRESS . . . . . . . . .
ARTICLE II. TERM
SECTION
2.1
GENERAL . . . . . . . . . . . . . . . . . .
SECTION
2.2
TENDER OF POSSESSION BY LANDLORD
SECTION
2.3
INTENTIONALLY OMITTED . . . . . . . . . . .
SECTION
3.1
BASIC ANNUAL RENT . . . . . . . . . . . . .
SECTION
3.2
SECURITY DEPOSIT . . . . . . . . . . . . .
SECTION
3.3
OPERATING EXPENSES . . . . . . . . . . . .
ARTICLE IV. USES
SECTION 4.1 USE . . . . . . . . . . . . . . . . . . . .
SECTION 4.2 PROHI3ITION AGAINST SOLICITATION AND OTHER
ACTIVITIES .TTHOUT THE PERMISSICN OF
LA\DLORD . . . . . . . . . . . .
SECTION 4.3 EXCLUSIVE CONTROL OVER COMMON AREA
SECTION 4.4 SIGNS . . . . . . . . . . . . . . . . . .
ARTICLE V. SERVICES
SECTION 5.1 UTILITIES AND SERVICES . . . . . . . . . .
SECTION 5.2 OPERATION AND MAINTENANCE OF COMMON
FACILITIES . . . . . .
SECTION 5.3 USE OF CCMt'Cit FAC L"'� IES . .
SECTION 5.4 PARKIIG . . . . . . . . . . . . . . . . . .
ARTICLE VI. MAINTENANCE OF THE PREMISES . . . . . . . . .
SECTION 6.1 TENANT'S MAINTENANCE AND REPAIR . . . . .
SECTION 6.2 LANDLORD'S MAINTENANCE AND REPAIR
SECTION 6.3 ALTERATIONS BY LANDLORD . . . . . . . . .
SECTION 6.4 TENANT'S ALTERATIONS . . . . . . . . . .
SECTION 6.5 MECHANIC'S LIENS . . . . .
SECTION 6.6 ENTRY AND INSPECTION . . . . . . . . . .
SECTION 6.7 Intentionally omitted.
ARTICLE VII. TAXES P\TD ASSESSMENTS ON TENANT'S PROPERTY
SECTION 7.1 TAXES ON TENANT'S PROPERTY . . . . . . .
SECTIOI 8.1 PRO=IBITION' AND CONSENT . . . . . . . . .
SECTION 8.2 ti0 RELEASE OF T=NA1T . . . . . . . . . .
SECTION 8.3 TRANSFER FEE . . . . . . . . . . . . . .
SECTION 8.4 AFFIL•IATE TRANSFER . . . . . . . . . . .
ARTICLE IX. INSURANCE AND INDEMNITY . . . . . . . . . . .
SECTION 9.1 TENANT'S INSURANCE . . . . . . . . . . .
SECTION 9.2 TENANT'S INDEMNITY . . . . . . . . . . .
ARTICLE X. DAMAGE OR DESTRUCTION . . . . . . . . . . . . .
SECTION 10.1 RESTORATION . . . . .
SECTION 10.2 LANNDLORD'S NON -LIABILITY . . . . . . . .
SECTION 10.3 TENANT'S WAIVER . . . . . . . . . . . .
ARTICLE XI. EMINE1T DOMAIN . . .
ARTICLE XII. SUBORDINATION; L'STCPPEL CERTIFICATE . . .
SECTION 12.1 SUBORDINATION . . . . . . . . . . .
SECTION 12.2 ESTOPPEL CERTIFICATE . . . . . . . .
ARTICLE XIII. DEFAULTS AND REMEDIES . . . . . . . . . .
SECTION 13.1 TENANT'S DEFAULTS . . . . . . . . . .
SECTION 13.2 LANDLORD'S REMEDIES . . . . . . . . .
SECTION 13.3 INTEREST ON TENANT'S OBLIGATIONS; LATE
PAYMENTS . . . . . . . . . . . . . . .
SECTION 13.4 RIGHT OF LANNDLORD TO PERFORM . . . . .
SECTION 13.5 DEFAULT BY LANDLORD . . . . . . . . .
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267!W4 20-0001;32:401.1 a06f29'99
SECTION
13.6
EXPENSES AND LEGAL FEES . . . . . . .
. . 22
ARTICLE XIV.
END
OF TERN! . . . . . . . . . . . . . . . .
. . 22
SECTION
14.1
HOLDING OVER . . . . .
. . 22
SECTION
14.2
SURRENDER OF PREMISES; REMOVAL OF
PROPERTY . _ . . . . . . . . . . .
. . 23
SECTION
14.3
AFFIXED PROPERTY . . . . . . . . . . .
. . 23
ARTICLE XV.
NOTICES
. . . . . . . . . . . . . . . . . .
. . 23
ARTICLE XVI.
RULES
AND REGULATIONS . . . . . . . . . . .
. . 23
ARTICLE XVII.
BROKER'S
COMMISSION . . . . . . . . . . .
. . 24
ARTICLE XVIII.
TRANSFER OF LANDLORD'S INTEREST . . . . .
. . 24
ARTICLE XIX.
INTERPRETATION
. . . . . . . . . . .
. . 24
SECTION
19.1
GENDER AND NUMBER . . . . . . . . . .
. . 24
SECTION
19.2
HEADINGS . . . . . . . . . . . . . . .
. . 24
ARTICLE XX.
EXECUTION
AND RECORDING . . . . . . . . . .
. . 24
SECTION
20.1
CORPORATE AJTHCRITY . . . . . . . . .
. . 24
ACTION
20.2
RECCRDIi:G . . . . . . . . . . . . . .
. . 25
SECTION
20.3
AMENDMENTS . . . . . . . . . . . . . .
. . 25
ARTICLE XXI.
MISCELLANEOUS
. . . . . . . . . . . . . . .
. . 25
SECTION
21.1
NONDISCLOSURE CF LEASE 'TERMS . . .
. . 25
SECTION
21.2
FURNISHING OF FINANCIAL STATEMENTS . .
. . 25
SECTION
21.3
CHANGES REQUESTED BY LENDER _ . . . .
. . 25
SECTION
21.4
GOVERNMENTAL REQUIREMENTS . . . . . .
. . 25
SECTION
21.5
COVENANTS AND CONDITIONS . . . . . . _
. . 26
SECTION
21,6
WORK LETTER . . . . . . . . . . . . .
. . 26
SECTION
21.7
JOINT AND SEVERAL LIABILITY . . . . .
. 26
SECTION
21.8
SUCCESSORS . . . . . . . . . . . . .
. . 26
SECTION
21.9
TIME OF ESSENCE . . . . . . . . . . .
. . 26
SECTION
21.10
CONTROLLING LAB; . . . . . . . . . . .
. . 26
SECTION
21.11
SEVERABILITY . . . . . . . _ _ . .
. . 26
SECTION
21.12
RELATIONSHIP OF PARTIES . . . . . . .
. . 26
SECTION
21.13
_\ABILITY TO PERFORM . . . . . . . . .
. . 26
SECTIONT
21.14
QUIET ENJOYMENT . . . . . . .
. . 27
SECTION
21.15
HAZARDOUS WASTE AND MATERIALS . . . .
. . 27
SECTION
21.16
ENTIRE AGREEMENT . . . . . . . . . . .
. . 27
26r014820-000?:3274671..' a36.?29r99
•
OFFICE SPACE LEASE
BASIC LEASE PROVISIONS
The foregoing Basic Lease Provisions are presented here and
represent the agreement of the parties hereto, subject to further
definition and elaboration in the Additional Lease Provisions and
elsewhere in this Lease. In the event of any conflict between any
Basic Lease Provision and the balance of this Lease, the latter
shall control.
1. Tenant's Name: PAIGE COMMUNICATIONS CORPORATION, a California
corporation
2. Premises, including Floor, Suite No. and Rentable Area:
Third Floor, Suites 3G and 3H, 2,430 rentable square feet.
3.
Commencement Date:
July 6, 1999.
4.
Lease
Term: Three (3)
years ending June
30, 2002.
5.
Basic
Annual Rent:
Lease Term
Basic
Annual Rent.
July
6, 1999 -
$43,740.00
payable at $3,645.00
i,7J
June 30, 2000
per month
July
1, 2000 -
$46,656.00
payable at $3,888.00
1.0
June 30, 2001
per -ionth
July
1, 2001 -
$49,572.00
payable at $4,131.00
June 30, 2002
ner month
6.
Base
Year Ooerating
Expense: N/A
7.
Space
Plan Approval
Date: N/A
8. Security Deposit: $4,131.00; payable on execution of Lease.
9. Prepaid Rent: $3,645.00; payable on execution of Lease.
10. 3roker(s): None
11. Address for Paymencs and-'ot?ces:
To Landlord: b 'elmuti Deve! o ment Company
c/o Jack's Surf & Sport
101 Main Street
Huntington Beach, CA 92648
Attr_: Mike Abdelmuti
Tel.: (714) 536-6567
To Tenant: Paiae Communications Corporation
101 Main Street, Suite 3G
Huntington Beach, CA 92648
Tel.: (714) 71q-7'S0•?q19
12. Minimum Coverage for Comprehensive General Liability Policy:
$2,000,000.00 combined single limit.
13. Addendum: An Addendum consisting of None (if no Addendum
is attached, insert the word none) numbered paragraphs is
attached to and forms a part of this Lease.
14. Rentable Area of Building: Approximately 47,000
rentable square feet.
15. Lease Execution_: In witness whereof the parties hereto have
executed this Lease, consisting of the foregoing provisions
267r01a820-00011327:67 L1 206.+29?99
0 •
and of the Additional Lease Provisions and Exhibizs which
follow, as of June 30, i999.
THIS LEASE SHALL NOT
ABDELMUTI DEVELOPMENT COMPANY, .
BECOME EFFECTIVE UNTIL
a California general partnership
EXECUTED BY LANDLORD AND
DELIVERED TO TENANT AND
THE SUBMISSION OF THIS
By:
FORM OF LEASE BY LAND-
A\J A1od&_Ira"ffo_�.
LORD, OR LA_NDLORD'S
generalZL
partner
AGENT, DOES NOT CONSTI-
TUTE AN OFFER TO LEASE.
"Landlord"
NO EMPLOYEE OR AGENT OF
LANDLORD OR ANY PERSON
WITH WHOM TENANT MAY HAVE
NEGOTIATED THIS LEASE HAS
PAIGE COMMUI`'ICATIONS CORPORATION,
ANY AUTHORITY TO MODIFY
Cal-fornia corporation
THE TERMS HEREOF OR TO
MAKE ANY AGREEMENTS,
REPRESENTATIONS OR
By:
PROMISES UNLESS THE SAVE
Edward J. Paige
ARE CONTAINED HEREIN O.2
`
ADDED HERETO IN WRITING.
Its:
By:
Its.
"Tenant"
MEMORA' -D` M OF ACTUAL COMMENCEMENT AND EXPIRATION DATES
Commencement Date: Rxpiration Date:
26710148'0-00011327,671.1 W6'?9:99 -2-
ADDITIONAL LEASE PROVISIONS
ARTICLE I. PREMISES
SECTION 1.1 LEASED PREMISES. Landlord hereby leases to
Tenant and Tenant hereby hires from Landlord, subject to all the
terms and conditions hereinafter set forth, those certain premises
identified in Item 2 of the Basic Lease Provisions and shown in the
drawing attached hereto as Exhibit "A-1" (the "Premises"). The
Premises are located on the designated floor(s) of that certain
office and retail structure constructed on the real property
legally described in Exhibit "A-i" attached hereto_ Said office
and retail structure is hereinafter called the "Building"_ Said
real property, the Building, and other related improvements and
such additional buildings, and other related improvements as from
time to time may be constructed upon said real property are
hereinafter referred to as the "Project"
SECTION 1.2 ACCEPTA\�CE OF PREMISES. Tenant acknowledges that
neither Landlord nor any agent of Landlord has made any
representation or warranty with respect to the Premises, the
Building and/or the Project., or the suitability or fitness thereof
for the conduct of Tenant's business or for any other purpose,
except as set forth in this Lease. The taking of possession or use
of the Premises by Tenant for any purpose other than construction
shall conclusively establish that the Premises, the Building and
the Project were at such time in satisfactory condition and in con-
formity with the provisions of this Lease in all respects, except
as to any items as to which Tenant shall give Landlord written
notice in reasonable detail, which items shall be limited to any
items required to be accomplished by Landlord pursuant to that
certain Work Letter, if any, being exe=:ed and delivered by
Landlord and Tenant concurrently with this Lease and attached
hereto as Exhibit "B" (Lhe "Work Letter"). Such written notice
shall be given within_ thirty (30) days after the term of' this Lease
commences as provided in Article II below. Failure to submit such
written_ notice in the time prov_ced shall constieute a waiver
thereof. Landlord shall promptly take such action as may be
reasonably required to remedy any actual defects and/or to complete
any work of which it is notified as provided above.
SECTION 1.3 USE RESERVATIONS. Tenant acknowledges that the
exterior demising walls of the Premises and the area between the
finished ceiling of the Premises and the slab of the Building floor
or roof thereabove and between the"in-shed floor of the Premmises
and the foundation or finished ceiling of the uortion of the
Building trerebeloc: have not been !eased to Tenant. Landlord
reserves the use thereof, together with the right to locate or
relocate (both vertically and horizontally), install, maintain,
use, repair and replace pipes, utility lines, ducts, conduits,
flues, refrigerant lines, drains, sprinkler mains and valves,
access panels, wires and appurtenant meters or equipment, and
structural elements leading through, under or above the Premises in
locations which will not materially interfere with Tenant's use of
the Premises.
SEC?TO_T 1.4 BUILDING N. ME AND ADDRESS. Landlord may adopt
any name it may select for the Building and/or the Project, and
Landlord reserves the right to change the name and/or address of
the Building and/or the Project at any time. Tenant shall not use
the name of the Building, the Project or such development for any
purpose other than as the address of Mhe business to be conducted
by Tenant in the Premises, and Tenant shall not acquire any
property right in or to any name which contains said word
combination as a part thereof.
671'014870-0001;3274671.1 a06 ?9r99 — 3 —
ARTICLE II. TERN
SECTION 2.1 GENERAL. The term of this Lease shall be for the
period shown in Item 4 of the Basic Lease Provisions, commencing on
the commencement date as shown in Item 3 of the Basic Lease
Provisions (the "Commencement Date"). Within five (5) days
following the Commencement Date, the parties shall execute a
supplement in the form attached hereto as Exhibit "A-3", stating
the Commencement Date and the expiration date of the term of this
Lease. This Lease is conditioned upon approval by the
Redevelopment Agency of the City of Huntington Beach (the
"Redevelopment Agency"). Notwithstanding that Tenant has taken
possession or is in occupancy of Premises, should the Redevelopment
Agency not approve this Lease, the Lease shall automatically become
null and void.
SECTION 2.2 TENDER OF POSSESSION BY LANDLORD. Landlord may
tender the Premises to Tenant prior to, on or after the estimated
commencement date specified in Item 3 of the Basic Lease Provisions
upon not less than five (5) days' written notice stating that the
Premises will be ready for occupancy on the date specified in such
notice. If Landlord, for any reason whatsoever, cannot deliver
possession of the Premises to Tenant on or before the estimated
commencement date, this Lease shall not be void or voidable nor
shall Landlord be li ab=e to Tenant for any loss or damage resulting
therefrom.
S_CT10N 2 . 3 I_`TENTIONALLY O BITTED .
ARTICLE III. RENT AND SECURITY DEPOSIT
SECTION: 3.1 BASIC ?� NL;AL RENT.
(a) Tenant shall pay the basic annual rent for the Premises
in the total amount, but payable in the equal ; onthly.installmer.ts,
shown in Item 5 of the Basic Lease Provisions, due and payable on
the first day of each month in advance, commencing on the
Commencement Date and continuing throughout the term of this Lease,
except that if the Commencement Date occurs on a day other than the
first day of a man--h, then the rent payable hereunder shall be
prorated on a daily basis and the rent for the partial month
following the Commencement Date shall be payable on the first day
of the term of this Lease. No demand, notice or invoice shall be
required. Tenant shall receive a credit against the first
installment or installments of minimum rental payable under this
Section 3.1 in an amount equal to the prepaid rent specified in
Item 9 of the Basic Lease Provisions. All rents and other sums
payable by Tenant to :landlord under this Lease shall he paid to
Landlord, without offset or deduction, in lawful :coney of the
United States of America at the address for Landlord shown in Item
11 of the Basic Lease Provisions., or to such other person or at
such other place as Landlord may from time to time designate in
writing.
(b) As used herein "Lease Year" shall be a period of twelve
(12) consecutive months commencing on the first full calendar month
during the lease term; provided that the first Lease Year shall
also include any partial calendar month fallowing the Commencement
Date-
(c) Intentionally omitted.
(d) Intentionally Omitted.
(e) In the event that at any time during the term of this
Lease, any governmental law, rule or regulation prohibits or
postpones in whole or in part any increase in the rent or in the
payment of other slams payable by Tenant hereunder to be made
pursuant to this Lease, then, and in either of such events, such
increase or payment shall be made to the maximum extent Derm.i ssible
by lay:' at the time provided in this Lease, and/or at any t7.me or
2G7i0111820-000i:3214671 I a06129i99 - G -
0
times thereafter such increase or payment, or any portion thereof,
may lawfully be made and any such increase in rent, or any portion
thereof, or other sums payable hereunder, or portions thereof, the
payment of which has been so prohibited or postponed, shall
thereafter become due and payable to the maximum extent and at the
earliest time or times permitted by law.
SECTION 3.2 SECURITY DEPOSIT. Tenant has deposited with
Landlord the sum stated in Item 8 of the Basic Lease Provisions, to
be held by Landlord as security for the full and faithful
performance of every Lease provision to be performed by Tenant. If
Tenant defaults with respect to any provision of this Lease,
including, but not limited to, the provisions relating to the
payment of rent, Landlord may (but shall not be required to) use,
apply or retain all or any part of this security deposit for the
payment of any rent or other sum in default, or for the payment of
any other amount which Landlord may spend or become obligated to
spend by reason of Tenant's default or to compensate Landlord for
any other loss or damage which Landlord may suffer by reason of
Tenant's default to the full extent permitted by law. If any
portion of said deposit is so used or applied, Tenant shall, within
n
five (.5) days after written demand therefor, deposit cash with
Landlord in an amount sufficient to restore the security deposit to
its original amount. Landlord shall not be required to keep this
security deposit separate from its general funds, and Tenant shall
not be entitled to interest on such deposit. If Tenant shall per-
form every provision of this Lease to be perfored by it, the
security deposit or any balance thereof shall be returned to Tenant
(or, at Landlord's option, to the last assignee of Tenant's
interest hereunder) within thirty (30) days after the expiration of
the Lease term, provided that Landlord may retain the security
deposit until such time as any amount due from Tenants in accordance
with any provision hereof has been deter-.1'ned and paid in full.
SECTION 3.3 OPERA-_!NG EXPENSES.
Tenant is not obligated to pay any additional sums with
respect to common area maintenance expense, building maintenance
expense or any other expense except as may be specifically set
forth in this Lease.
ARTICLE Iv. USES
SE'CT-ION ; 4.1 USE. Tenant shall use and occupy the Premises
for general office _purposes only and for no other use or purpose
without the prior written consent of Landlord, which consent
Landlord may withhold in its sole and absolute discretion. Tenant
shall not use or occupy the Premises in violation or in conflict
with any "Governmental Requirement" (defined below) but shall, at
Tenant's expense, promptly comply with all present and future laws,
ordinances, statutes, including without limitation the Americans
with Disabilities Act, orders, rules, restrictions, regulations and
requirements of all aovernmental authorities having jurisdiction
over the Premises whether or not the same is substantial, foreseen
or unforeseen, ordinary or extraordinary, or whether the same shall
necessitate Tenant making structural changes or improvements to the
Premises or interfere with the use and enjoyment of the Premises
(herein collectively, "Governmental Requirements"). Tenant shall
not do or permit anything to be done in or about the Premises which
will in any way obstruct or interfere with the rights of other ten-
ants or occupants of the Project or of property adjacent to the
Project, or injure or annoy them, or use or allow the Premises to
be used for any improper, immoral, unlawful or objectionable
purpose, nor shall Tenant cause, maintain or permit any nuisance or
commit any waste in, on or about the Premises or the Project.
Without limiting the generality of the foregoing, Tenant shall not
(i) obstruct or store anything in the common areas (including
service or exit corridors), (ii) place a load upon any floor of the
Premises which exceeds the floor load per square foot which such
floor was designed to carry, or (iii) permit any objectionable
sound or odors to carry outside the Premises. In particular,
267/014820-000113274671-1 a06129f99 - 5 -
Tenant agrees that business machines and mechanical equipment used
by Tenant which cause vibration or noise that may be transmitted to
any other portion of the Building, to such a degree as to be
reasonably objectionable to Landlord or to any occupant, shall be
placed and maintained by Tenant at its expense in setting of cork,
rubber or spring -type vibration isolators sufficient to eliminate
such vibrations or noise. Tenant shall not do or permit to be done
anything which will invalidate or increase the cost of any
insurance policy(ies) covering the Building, the Premises, the
Project and/or property located therein and shall comply with all
applicable insurance underwriters rules, orders, regulations and
requirements of the Pacific Fire Rating Bureau or other applicable
organization performing a similar function. Tenant shall promptly
upon demand reimburse Landlord fcr any additional premium charged
for such policy(ies) by reason of Tenant's failure to comply with
the provisions of this Section, but such reimbursement shall not be
construed as curing Tenant's default for failing to comply with the
provisions of this Section. Tenant shall not, under any
circumstances, allow alcoholic beverages to be served or consumed
within any portion of the Premises.
SECTION 4.2 PRO1,11IBITION AGAINST SOLICITATTON ADD 07HSR
ACTIVITIES WITHOUT THE PERMISSION OF LA,IDLORD. Tenant hereby
delegates to Landlord full power, authority and control to
regulate, in accordance with the rules and regulations attached
hereto as Exhibit "C" and/or from time to time adopted pursuant to
Article XVI and/or to prohibit the entrance to the Premises, the
Building and/or the Project of all vendors, suppliers, surveyors,
petitioners and others deemed objectionable by Landlord. In the
event said persons are guests or invitees of Tenant, Tenant shall
notify Landlord of this fact. No such person shall be permitted
to enter upon the Project, the Building and/or the Premises unless
and until such person shall have executed Landlord's standard entry
permit, and Landlord shall have determined, in its sole and absolute
discretion and judgment, that such person's activities will not
disturb other tenants, their customers or invitees or distract from
the use of the Building and/or the Premises for their i=er_ded
purposes. Tenant agrees that Landlord may prohibit and exclude, in
whole or in part, vendors of sandwiches and other food items from
the Building, as Landlord may elect, in Landlord's sole and
absolute discretion.
SECTION 4.3 EXCLUSIVE CONTROL.OVER COMMON AREA. It is
expressly agreed and understood tnat control over all uses of the
"Common Facilities" (defined in Section 5.2 below) shall reside
with and be solely exercisable by Landlord in its sole and absolute
discretion. Said areas shall not be available For use by Tenant,
except as herein expressly provided, nor by vendors, surveyors,
petitioners and others without the exoress written consent of
Landlord, which Landlord may withhold in its sole and absolute
discretion.
SECTION 4.4 SIGNS. Tenant may not affix a sign to the
exterior surface of the suite front or any other part o= the
exterior or interior surface of the Building. Except with the
prior written approval of Landlord, which approval may be withheld
in Landlord's sole discretion, Tenant shall not place or allow to
be placed, erected or maintained any sign, decal, placard, name,
ir_signia, trade name, decoration, flashing, moving or hanging
lights, lettering, or any other descriptive words or advertising
matter of any kind or description (herein collectively, "sign" or
"signs") on any exterior door, wall, window, surface or roof of the
Premises or of the Building or on the glass of anv window or door
of the Building, or in any deck or balcony area included within the
Premises or on any sidewalk or other location_ outside the Building,
or within any entrance to the Premises. If Tenant places or causes
to be placed or maintained any of the foregoing without Landlord's
prior approval, the same may be removed by Landlord at Tenant's
expense without not'ce and without such removal constituting a
breach of this Lease or entitling Tenant to claim damages on
account thereof. If Tenant places or causes to be placed or
maintained any of the foregoing with Landlord's prior approval,
267,1014820-000113274671.1 a06!29199 - 6 -
0 0
Tenant shall maintain the same in good condition and repair at
Tenant's sole cost and expense.
ARTICLE V. SERVICES
SECTION 5.1 UTILITIES AND SERVICES. Subject to the
provisions set forth below, Landlord shall f"urnish to the Premises
electricity through a separate meter billed directly to Tenant.
Tenant shall pay for replacement of all fluorescent fixtures and
bulbs as required.
Landlord shall furnish water for drinking, cleaning and
lavatory purposes only, but if Tenant requires, uses or consumes
water for any purpose in addition to ordinary drinking, cleaning
and lavatory purposes, of which fact Tenant constitutes Landlord to
be the sole judge, Landlord may install a water meter and thereby
measure Tenant's water consumption for all purposes. Tenant shall
pay Landlord for the cost of the meter and the cost of the
installation thereof, and for consumption throughout the duration
of Tenant's occupancy. Tenant shall keep said meter and installed
equipment in good working order and repair at Tenant's own cost and
expense, in default of which Landlord may cause such meter to be
replaced, repaired and collect the cost thereof from Tenant.
To the extent any utility service to the Premises is
separately metered or billed to Tenant, Tenant shall pay all
charges for such utility service to the Premises. If any such
charges are not paid when due, Landlord may pay the same, and any
amount so paid by Landlord shall thereupon become due to Landlord
from Tenant as additional rent. If Landlord shall elect to furnish
any utility services to the P remises, "enan:t shall purchase its
requirements thereof from Landlord so long as the rates charged
therefor by Landlord do not exceed those which Tenant would be
required to pay if such services were furnished it directly by a
public utility.
Landlord shall not be liable for any failure to furnish any of
the services or utilities described in this Section 5.1 when such
failure is caused by accidents, breakage, repairs, strikes,
lockouts, other labor troubles or disputes, governmental water,
energy or other conservation programs or any other governmental
requirements, action or inaction, moratorium or other cause beyond
Landlord's reasonable control. Landlord may take into
consideration the availability of energy resources and prudent
energy conservation_ practices, including participation in any
energy conservation association or other arrangements for voluntary
cut -back, load shedding and the like. No failure to furnish any of
such service or utilities shall entitle Tenant to any damages,
relieve Tenant of the obligation to pay the full rent reserved
herein or constitute or be construed as a constructive or other
eviction of Tenant. Tenant shall comply with all rules and
regulations which Landlord may reasonably establish for the proper
functioning and protection of the air conditioning, heating,
elevator, plumbing and electrical systems. Landlord shall at all
reasonable times have free access to all mechanica' installat'ons
of Landlord, including, but not limited to, the air conditioning
equipment and vents, fans, ventilating and machine rooms and
electrical closets. If there is any failure, stoppage or
interruption in said utilities and/or services, Landlord shall use
reasonable diligence to correct the same, repairs and/or
corrections that are the responsibility of a public or private
utility company, excepted.
SECTION 5.2 OPERATION AND MAINTENANCE OF COMMON FACILITIES.
Landlord shall operate and maintain during the term of this Lease
all common facilities within the Building and the Project. The
term "Common Facilities" shall mean all areas within the Project
which are not held, or designated by Landlord to be held, for
exclusive use by persons entitled to occupy space in the Project.
The Common Facilities shall include, without limiting the
generality of the foregoing, driveways, truckways, delivery
20i014820-00011327a671.1 a06129i99 - 7 -
passages, loading docks, sidewalks, ramps, landscaped and planted
areas, exterior stairways and balconies, hallways and interior
stairwells not located within the premises of any tenant, common
entrances and lobbies, mezzanines, elevators, bus stops, retaining
walls, restrooms not located within the premises of any tenant,
lighting fixtures, Building and/or Project identification signs,
irrigation systems and controllers, drains and sewers.
SECTION 5.3 USE OF COMMON FACILITIES. The use and occupancy
by Tenant of the Premises shall include the use of the Common
Facilities in common with Landlord and with all others for whose
convenience and use the Common Facilities have been or may
hereafter be provided by Landlord, subject, however, to rules and
regulations for the use thereof as prescribed from time to time by
Landlord pursuant to Article XVi below. Landlord shall operate,
manage, equip, light, repair, clean and maintain the Common
Facilities in such manner as Landlord may in its sole discretion
determine to be appropriate. Landlord shall at all times during
the term of this Lease have the sole and exclusive control of all
Common Facilities, and may at any time and from time to time during
the term hereof restrain any use or occupancy thereof, except as
authorized by such rules and regulations, as may be changed from
time to time. Tenant shall keeo said Common Facilities free and
clear of any obstructions related to Tenant's opera ions. If, in
the opinion of Landlord, unauthorized persons are using any of said
Common Facilities by reason of the presence of Tenant in the
Building, 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 persons or obstructions. Landlord may temporarily
close any Common Facility for repairs or alterations as provided in
Section 6.2 below, to prevent a dedication thereof or the accrual
of prescriptive rights therein, or for any ether reason deemed
sufficient by Landlord.
SEC'±'IOti 5.4 PARKING.
(a) Tenant acknowledges that no parking areas are provided at
the Project and that Tenant may use the parking structure provided
by the City of Huntington Beach located near the Project.- Tenant
acknowledges that the availability of parking and the rate charged
for parking is subject to change and is not within Landlord's
control.
(b) In the event that any parking surcharge or regulatory
fee, however designated, should be impcsed upon_ or levied or
assessed against the Project, or any portion thereof, by any
governmental agency or authority pursuant to the "Clean Air Act`,
or any plan implemented pursuanz to such Acc or any enact-, ert
amendatory or in substitution thereof, or pursuant to any other
governmental act or decree, Landlord may recover such fees as
Operating Expenses. The foregoing parking provisions are subject
to any governmental regulations which limit parking or otherwise
seek to encourage the use of carpools, public transit or other
alternative transportation forms.
ARTICLE VI. MAINTENANCE OF THE PREMISES
SECTION 6 . 1 TER-TANTT' S MAINTENANCE AND REPAIR.
(a) Tenant at its sole cost and expense shall make all
repairs necessary to keen the Premises in rood order and repair and
in a safe, clean, sanitary, orderly and attractive condition. All
repairs shall be at least equal in quality to the original work,
shall be made only by a licensed, bonded contractor approved in
advance by Landlord and shall be made only at such time or times as
shall be approved by Landlord. Landlord may impose reasonable
restrictions and requirements with respect tc sach repairs
including, without limitation, those applicable to Tenant's al-er-
ations as set forth in section 6.4.
2671014920-0001/3274671.1 0612W99 - 8 -
•
(b) Tenant, at its sole cost and expense, shall install and
maintain fire extinguishers within the Premises and other fire
protective devices as may be required from time to time by
Landlord, by any agency having jurisdiction and/or by the insurance
underwriters insuring the Premises.
SECTION 6.2 LANDLORD'S MAINTENANCE AND REPAIR.
(a) Landlord shall keep and maintain in good repair the roof
(including the structural integrity thereof), foundations,
footings, the exterior surfaces of the exterior walls , the HVAC
system for the Premises and any utility facilities, and the
electrical and mechanical systems in the Building, reasonable wear
and tear excepted, except to the extent such repair is Tenant's
responsibility under Section 6.1 above or the responsibility of a
public or private utility company and except that Tenant at its
expense shall make any such repairs relating to the act or
negligence of Tenant, its agents, employees, invitees, licensees or
contractors. Landlord shall not be liable for any failure to make
any repairs or to perform any maintenance unless such failure shall
persist for an unreasonable time after written notice of the need
for such repairs or maintenance is giver: to Landlord by Tenant.
(b) Except as provided in Section. 10.1 and Article XI below,
there shall be no abatement of rent and no liability of Landlord by
reason of any injury to or interference witill Tenant's business
arising from the making of any repairs, alterations or improvements
in or to any portion of the Project or the Building, including the
Premises, or in or to the fixtures, appurtenances and equipment
therein; provided, however, that in making such repairs,
alterations or improvements, Landlord shall interfere as little as
reasonably practicable with the conduct of Tenant's business in the
Premises.
SECTION 6.3 ALTERATIONS BY LANDLORD.
(a) Landlord reserves the right at any time, and from time to
time, to make changes in or to the Building and the fixtures and
equipment thereof, to make alterations or additions to any building
within the Project, to construct cuher buildings (including free
standing buildings) and improvements wi hin the Project, to enlarge
or reduce the Project and to make alterations therein or additions
thereto, or to any part thereof, to build additional stories on any
building or buildings within the Project, to construct decks,
subterranean or elevated parking facilities, and to sell or lease
any part o- the land comprising zhe Project for the ccnstructicr_
thereon of buildings, which may or may not be part of the Project.
Landlord reserves the right at any time to change the size, con-
figuration, shape, number and extent of the Common Facilities, or
any of them, all as Landlord may deem necessary or desirable in its
sole discretion. No such change described in this Section 6.3(a)
shall entitle Tenant to any abatement or rent or other claim
against Landlord; provided, however, such changes or alterations
shall not deprive Tenant of reasonable access to or use of the
Premises.
(b) As a material inducement to Landlord's entering into this
Lease, Tenant expressly waives and releases any rights it may have
whether granted by statute or otherwise, to make repairs at
Landlord's expense, including, but not limited to, its rights as
contained in Sections 1941, 1941.1 and 1942 of the California Civil
Code.
SECTION 6.4 TENANT'S ALTERATIONS. Tenant shall not make
alterations, additions or, improvements to the Premises nor any
repairs, replacements or restorations to the Premises in excess of
TWO THOUSAND FIVE HUNDRED DOLLARS ($2,500.00) without the prior
written consent of Landlord. Landlord may impose, as a condition
to such consent, such requirements as Landlord, in its sole
discretion, may deem reasonable or desirable, including, but not
limited to, a requirement that all work be covered by a surety bond
in favor of Landlord, guaranteeing the completion of such work free
267/014820-000113274671.1 a06129199 - 9 -
and clear of all subcontractors', mechanics' and mate rialmen's
liens (which bond shall be satisfactory to Landlord) and
requirements as to the manner, time and contractor or contractors
as to or by which such work shall be done. Notwithstanding the
foregoing, no improvements may be made that would diminish the
value of the Premises and, in addition, no improvements may be made
to any mechanical or utility system, the exterior walls or the roof
of the Premises, nor may any improvements of a structural nature be
made without Landlord's approval, which approval may be withheld in
Landlord's sole and absolute discretion. In no event shall Tenant
make or cause to be made any penetration through the roof or the
floor of the Premises without the prior written approval of
Landlord, which approval may be withheld in Landlord's sole and
absolute discretion. Any requirements of the Work Letter applicable
to any initial construction work performed by or under Tenant shall
also be applicable to any such alterations, additions and/or
improvements. All alterations made by Tenant shall be in
accordance with all Governmental Requirements and to the extent
Tenant's alterations trigger alterations or other modifications
within the Building or Project, such alterations or other
modifications shall be _performed by Landlord at the expense of
Tenant. Any request for Landlord's consent to such work shall be
made in writing and shall contain three (3) sets of architectural
plans and specifications (wi:h square footages) describing such
work in detail reasonably satisfactory to Landlord. No such plans
and specifications or any material change thereto shall be
submitted for approval to any federal, state, county or local
government or other governmental agency or association prior to
Landlord's review and approval of same. Failure of Landlord to
respond to such request within thirty (30) days shall be deemed a
denial of such request. Plans and specifications and governmental
applications shall become the property of Landlord upon_ _he
term. i nation or expiration of this Lease and shall be turned over to
Landlord by Tenant upon Landlord's request therefor. Unless
Landlord otherwise agrees in writing, all such alterations,
additions or improvements affixed or built into the,Premises (but
excluding moveable trade -fixtures and furniture) shall become the
property of Landlord as provided in Section. 14.3 below, and shall
be surrendered with the Premises, as a part thereof, at the end of
the Lease term, except that Landlord may, by written notice to
Tenant given at least thirty (30) days prior to the end of the
Lease term, require Tenant to remove all or any portion of any
alterations, decorations, additions, improvements and the like
installed by Tenant, and to repair, or at Landlord's option, to pay
all costs relating to any damage to the Premises arising from such
removal.
SECTION 6.5 MECH A\'!C' S LIENS. Tenant shall keep the Premises
free from any liens arising out of any work performed, materials
furnished, or obligations incurred or alleged to have been incurred
by, for or under Tenant. In the event that Tenant shall not,
within_ twenty (20) days following the imposition of any such lien
(but in any event before an action is filed to foreclose such
lien), cause the same to be released of record by payment or
posting of a proper bond, Landlord shall have, in addition_ to all
other remedies provided herein and by law, the right (but not the
obligation) to cause the same to be released by such means as it
shall deem proper, including payment of or defense against the
claim giving rise to such lien. All sums paid by Landlord and all
expenses incurred by it in connection therewith shall create
automatically an obligation_ of Tenant to pay an equivalent amount,
together with interest thereon_ at the rate _provided in Section 13.3
below, from the date paid by Landlord as additional rent, which
additional rent shall be payable by Tenant on Landlord's demand.
Tenant shall give Landlord no less than twenty (20) days` prior
notice in writing before commencing the construction of any
building, structure or other improvement on the Premises or of any
substantial repairs, alterations, additions, replacements or
restorations in and about the Premises so that Landlord may post
and maintain such notices of non -responsibility or other notices on
the Premises as Landlord deems necessary for protection from such
liens.
267101.320-00011327a57 L1 n06129199 - 1 0 -
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SECTION 6.6 ENTRY AND TNSPEC-ION. Landlord shall at all
times have the right to enter the Premises to inspect the same, to
post notices of non -responsibility, to alter, improve or repair the
Premises or any other portion of the Building, as otherwise
permitted hereunder, all without being deemed to have evicted
Tenant and without abatement of rent and may for that purpose
erect scaffolding and other necessary structures and store
materials, supplies and tools where reasonably required by the
character of the work to be performed, provided that the business
of Tenant shall be interfered with as little as is reasonably
practicable. If during the last month of the term hereof, Tenant
shall have removed substantially all of Tenant's property and
personnel from the Premises, Landlord may enter the Premises and
repair, alter and redecorate the same, without abatement of rent
and without liability to Tenant, and such acts shall have no effect
on this Lease. Tenant hereby waives any claim for damages or
abatement of rent for any injury, inconvenience to or interference
with Tenant's business, loss of occupancy or quiet enjoyment of the
Premises, and any other loss occasioned thereby; provided, however,
this provision shall not excuse Landlord for its own gross
negligence or willful misconduct. As used in this Lease, the term
"gross negligence" shall mean the failure to perform a manifest
duty in reckless disregard of the consequences as a=fecting the
litre or property of another. Landlord shall have the right to use
any and all means which Landlord may deem proper to open_ said doors
in an emergency in order to obtain entry to the Premises, and any
entry to the Premises obtained by Landlord by any of said means
shall not under any circumst.ances be construed or deemed to be a
forcible or unlawful entry into, or a detainer of, the Premises, .or
any eviction of Tenant from the Premises or any portion thereof.
During the last one hundred eighty (180) days of the lease term, or
when an uncured default on the part of Tenant exists hereunder,
Landlord may, at all reasonable times, enter the Premises for the
purpose of displaying the Premises to prospective tenants.
SECTION 6.7 Intentionally omitted.
ARTICLE VII. TAXES AND
ASSESSMENTS ON TENANT'S PROPERTY
SECTION 7.1 TAXES ON TENANT ' S PROPERTY.
(a) Tenant shall be liabe for and shall pay at least forty
(40) days before delinquency, all taxes and assessments levied
against ail fixtures, furnishings, equipment and other personal
property of Tenant Icca:�ed in o-- about the Premises, and ::her_
possible, Tenant shall cause said fixtures, furnishings, equipment
and other personal property to be assessed and billed separately
from the real property of which the Premises form a part. =f any
such taxes on Tenant's personal property or trade fixtures are
levied against Landlord or Landlord's property.and if Landlord pays
the same (which Landlord shall have the right to do regardless of
the validity of such levy), or if the assessed value of Landlord's
property is increased by the inclusion therein of a value placed
upon such personal property or trade fixtures of Tenant and if
Landlord pays the taxes based upon such increased assessment,
Tenant shall pay to Landlord the taxes so levied against Landlord
or the proportion of such taxes resulting frog: such increase in the.
assessment.
(b) If the tenant improvements in the Premises, whether
installed and/or paid for by Landlord or Tenant and whether or not
affixed to the real property so as to become a part thereof, are
assessed for real property tax purposes at a valuation higher than
the valuation at which tenant improvements conforming to Landlord's
building standards in other space in the Building are assessed,
then the real property taxes and assessments levied against
Landlord or Landlord's property by reason of such excess assessed
valuation may, at Landlord's option, be deemed to be taxes levied
against personal property of Tenant and shall, under such
2671014820-00011327-:671.1 06129199 - 11 -
circumstances, be governed by the Provisions of Section 7.1(a)
above.
(c) Upon request, Tenant agrees to provide receipts,
cancelled checks or other documents reasonably requested by
Landlord to confirm Tenant's payment of any taxes and/or
assessments payable by Tenant directly to the taxing authority
under this Lease.
ARTICLE VIII. ASSIGNMENT ANID SUBLETTING
SECTION 8.1 PROHIBITION AND CONSENT.
(a) Tenant shall not, either voluntarily or involuntarily, by
operation of law or otherwise, assign, sublet, sell, encumber,
pledge or otherwise transfer all or any part of the Premises or
Tenant's leasehold estate hereunder, or permit the Premises to be
occupied by anyone other than Tenant or Tenant's employees, without
Landlord's prior written consent in each instance. Any assignment
or subletting which is not in compliance with this Article VIII
shall be void and, at the option of Landlord, shall constitute a
default by Tenant under this Lease and entitle Jandlord to
terminate this Lease. Consent by Landlord to one or more
assignments of this Lease or to one or more sublettings of the
Premises shall not operate to waive Landlord's rights under this
Article VIII. The voluntary or involuntary surrender of this Lease
by Tenant or a mutual cancellation hereof shall not work a merger,
and shall, at the option of Landlord, terminate all or any existing
subleases or subtenancies or shall operate as an assignment to
Landlord of such subleases or subtenancies. If Tenant is a
corporation which, under the then current guidelines published by
the Commissioner of Corporations of the State of California, is not
deemed a public corporation, or is an unincorporated association or
partnership, the transfer, assignment or hypothecation of any stock
or interest in such corporation, association or partnership in the
aggregate in excess of twenty-five percent (25.) or such lesser
interest as may constitute a controllir_c interest, shall be deemed
an assignment within the meaning and provisions of this Section.
(b) If Ter_ar_t desires at any time to assign. this Lease or to
sublet the Premises or any portion thereof, it shall first notify
Landlord of its desire to do so and shall submi_ in writing to
Landlord (i) the name of the proposed subtenant or assignee, (ii)
the nature of the proposed subtenant Is or assignee's business to be
carried on in the Premises; (iii) the terms and provisions of the
proposed sublease or assignment; (iv) such financial information as
Landlord may request concerning the proposed subtenant or assignee,
and (v) such information as Landlord may request regarding the
business experience concerning the proposed subtenant or assignee
during the preceding five (5) years.
(c) At any time within thirty (30) days after Landlord's
receipt of the information_ specified in subparagraph (b) above,
Landlord may, by written notice to Tenant, elect to (i) consent to
the subletting or assignment upon the terms and to the subtenant or
assignee proposed, subject to any conditions deemed appropriate by
Landlord, as determined in its reasonable discretion, including,
but not limited to, the condition that Tenant pay to Landlord upon_
receipt any and all amounts (a) by which the basic rent and
additional rent paid by such subtenant exceeds the sum of the rent
and additional rent to be paid by Tenar__ to Landlord for such space
under this Lease, or (b) of profit received by Tenant from such
assignee; (ii) refuse to give its consent, (iii) sublease the
Premises or the portion thereof so proposed to be subleased by
Tenant or take an assignment of Tenant's leasehold estate hereunder
or such part thereof as shall be specified in said notice upon the
same terms (excluding terms relating to purchase of personal
property, the use of Tenant's name or the continuation of Tenant's
business) as those offered to the proposed subtenant or assignee,
as the case may be; or (iv) terminate this Lease as to the portion
(including all) of the Premises so proposed to be subleased or
2G?10:45_0-00O U32': G: l -1 46.'N:99 - _ 2 -
assigned with a proportionate abatement in the rent payable
hereunder, effective as of the date of the proposed sublease or
assignment. If the Lease is partially terminated as to the portion
of the Premises proposed to be assigned or subleased, a
proportionate abatement will be made in the rent payable hereunder
effective upon the last to occur of: (a) the date Tenant installs
a partition wall satisfying Landlord's reasonable requirements,
separating such portion of the Premises from the balance of the
Premises, which partition wall shall be completed by Tenant at
Tenant's sole cost and expense within sixty (60) days of such
election by Landlord, or (b) the effective date of the partial
termination of this Lease. If Landlord consents to such assignment
or subletting, Tenant may within ninety (90) days after the date of
Landlord's consent, enter into a valid assignment or sublease of
the Premises or portion thereof upon the terms and conditions
described in the information required to be furnished by Tenant to
Landlord pursuant to Section 8.i(b) above, or upon other terms not
more favorable to Tenant; provided, however, that any material
change in such terms shall be subject to Landlord's consent as
provided in this Section 8.1. Failure of Landlord to exercise any
option set forth in clauses (i) through (iv) above within the
thirty. (30) day period for Landlord's notice shall be deemed
refusal of Landlord to consent to the proposed subletting or
assignment.
SECTION 8.2 NO RELEASE OF TENANT. No subletting or
assignment, even with the consent of Landlord, shall relieve Tenant
of its obligation to pay the rent and to perform all of the ocher
obligations to be performed by Tenant hereunder. Each assignee or
transferee, other than Landlord, shall assume, as provided above,
all obligations of Tenant under this Lease and shall be and remain
liable jointly and severally with Tenant for the payment of the
rent, and for the due performance of all the terms, covenants,
conditions and agreements herein contained on Tenant's part to be
performed for the term of this Lease. No assignment shall be
binding on Landlord unless such assignee or Ten_ar__ shall deliver to
Landlord a'counterpart of such assignment which contains a covenant
of assumption by the assignee satisfactory in substance and form to
Landlord, consistent with the requirements of this Article VIII,
but the failure or refusal of the assignee to execute such
instrument of assumption shall not release or discharge the
assignee from its liability as set forth above. The acceptance of
any payment due hereunder by Landlord from any other person shall
not be deemed to be a waiver by Landlord of any provision of this
Lease or to be a consent to any assignment or subletting.
SECTION 8.3 TR�\SFER FEE. If Landlord consents to an
assignment, sublease or any other transfer by Tenant of all or a
portion of Tenant's interest under --his Lease, Tenant shall pay, or
cause to be paid, in each case a transfer fee of SEVEN HUNDRED
FIFTY DOLLARS ($750.00) in connection with the processing,
documentation and other administrative costs thereof, along with
Landlord's reasonable attorneys' fees incurred in connection_
therewith.
SECTION 8.4 AFFILIATE TRANSFER. Notwithstanding anyth-ng to
the contrary in this Article VII7 or anything to the contrary
contained in this Lease, Tenant shall have the right, without
Landlord's consent, to assign this Lease and/or sublet the entire
Premises to any person, corporation or entity (a) which owns one
hundred percent (100a) of Tenant's stock (Tenant's parent)- (b) any
corporation in which Tenant or Tenant's parent owns one hundred
percent (1000) of the stock thereof (Tenant's subsidiary or sister
corporation); (c) which succeeds to the assets or business of
Tenant or Tenant's parent as a result of merger or consolidation;
and/or (d) which acquires all or substantially all of Tenant's
capital stock or assets; provided that in each such instance W
Tenant shall not be in default under this Lease at the time of said
transfer; (ii) No charge in use of the Premises shall result by
reason of such transfer; (iii) Tenant shall give Landlord written
notice of said transfer at least thirty (30) days prior to said
transfer; (iv) the assignee shall furnish Landlord at least thirty
267;014820-0001I3274671.1 a06?29i99 - 1 3 -
0 0
(30) days prior to the transfer a written instrument reasonably
satisfactory to Landlord by which such assignee agrees to assume
and perform all covenants and conditions of Tenant contained in
this Lease; and (v) in the event of an assignment to a parent or
subsidiary and in the event of an assignment to a company acquiring
all or substantially all of the assets or capital stock of Tenant,
the assignee has a net worth (in 1999 dollars) equal to or greater
than the net worth of Tenant at the time Tenant entered into th_s
Lease. No such assignment or other transfer shall release the
original Tenant or any assignee thereof from liability under this
Lease.
ARTICLE IX. INSURI CE AND INDEMNITY
SECTION 9.1 TENANT'S INSURANCE.
(a) Tenant hereby agrees to maintain in full force and effect
at all times during the term of this Lease, at its own expense, for
the protection of Tenant, Landlord and such other par�ies as
Landlord may from time to time designate, as their interests may
appear, policies of insurance issued by a carrier rated as A+10, or
better, in the latest edition of ?est's Insurance Guide (or a
comparable rating in a comparable guide selected by Landlord, if
Best's Insurance Guide is no longer published) which afford the
following coverages:
(i) Worker's Compensation: -- Statutory
(including broad form all states)
(ii) Comprehensive General
Liability Insurance, -- No4 less than
including Blanket amount stated
Contractual Liability, in Item 12 of
Broad Form Proper:y Basic Lease
Damage, Personal Provisions.,
Injury, Completed
Operations, Products
Liability, Fire
Legal Liability
(iii) So-called "All -Risk Insurance" including without
limitation Fire and Extended Coverage, Vandalism
and Malicious mischief, and Sprinkler Leakage
Insurance, in an amount sufic_ent to cover the
full cost of replacement of all improvements and
betterments to the Premises made by or on behalf of
Tenant (.except to the extent installed by Landlord,
at Landlord's expense, pursuant to the :^:ork Letter)
and all of Tenant's fixtures and other oersonal
property.
(b) Tenant shall deliver to Landlord and to such other named
insureds designated by Landlord at least thirty (30) days prior to
the time such insurance is first required to be carried by Tenant,
and thereafter at least twenty (20) days orior to expiration of
such policy, certificates of insurance �evidencingthe above
coverage with limits not less than those specified above. Such
certificates, with the exception of Worker's Compensation, shall
name Landlord and such other parties as Landlord may designate as
additional insureds and shall expressly provide that the interest
of same therein shall not be affected by any breach by Tenant of
any policy provision for which such certificates evidence coverage.
Further, all certificates shall expressly provide that 1) no less
than thirty (30) days prior written notice shall be given Landlord
and such other named insureds in the event of material alteration
to or cancellation of the coverages evidenced by such certificates
and 2) such coverage evidenced by the certificate is primary and
that any coverage carried by Landlord and such other named insureds
shall be excess and non-contributory with respect to any policies
carried by Tenant.
267,014820-0001J327,671_1 a06!29199 — 1 4 —
0
(c) Upon demand, Tenant shall provide Landlord, at Tenant's
expense, with such increased amount of existing insurance, and such
other insurance in such limits, as Landlord may require and such
other hazard insurance as the nature and condition of the Premises
may require in the sole judgment of Landlord, to afford Landlord
and additional insureds designated by Landlord adequate protection
for said risks.
(d) Landlord makes no representation that the limits of
liability specified to be carried by Tenant under this Article IX,
are adequate to protect Tenant against Tenant's undertaking under
this Lease, and in the event Tenant believes that any such
insurance coverage called for under this Lease is insufficient,
Tenant shall provide at its own expense, such additional insurance
as Tenant deems adequate.
(e) Landlord and Tenant hereby release the other from any and
all liability from or to the other party of every kind and nature
which_ may result from the perils of fire, lightning or extended
coverage perils which cause damage on or to the Premises, the
Building and,/or property within the Building owned by it, such
waiver to include situations where the negligence of one of the
parties hereto or his agent, servant or representative causes or
contributes to the occurrence or the result of damage.
(f) Insurance carried by Tenant against -loss or damage by
fire or other casualty shall contain a clause whereby the insurer
waives its right of subrogation against Landlord. Tenant shall
also obtain and furnish evidence to Landlord of the waiver by
Tenant's worker's compensation carrier of any right of subrogation
against Landlord.
(g) The policy of insurance required to be maintained by
Tenant pursuant to Section 9.1(a)(ii) shay_ include coverage of
Tenant's indemnity in "favor of Landlord as provided in Section 9.2
below.
SECTION 9.2 '-',:'NA-NT' S INDEMNITY. Tenant shall defend,
indemnify and hold harmless Landlord, its agents, and any and all
affiliates of Landlord, including, without 1'xi tation, any
corporation or other entities controlling, controlled by or under
common control with Landlord, from. and against any and all claims
or liabilities arising from Tenant's use or occupancy of the
Pre:�:ises, the Building, the Project or the Common. Facilities or the
conduct of its business or from any activity, work, or thing done,
permitted or suffered by Tenant in or about the Premises, the
Building, the Project and the Common Areas, and shall farther
defend, indemnify and hold harmless Landlord, its agents and
affiliates against and fro- any and all claims or liabilities
arising from any breach or default in the performance of any
obligation on Tenant's part to be performed hereunder, or arising
from any act or negligence of Tenant, or of its agents, employees,
visitors, patrons, guests, invitees or licensees, including
vendors, servicing Tenant at its request, and from and against all
costs, attorneys' fees, expenses and liabilities incurred in or
about any such claims `or liabilities or any actions or proceedings
brought thereon. Notwithstanding the foregoing, Tenant shall not
be 'liable for damnage or injury occasioned by the gross negligence
or willful misconduct of Landlord or its designated agents,
servants or employees, unless covered by insurance Tenant is
required to provide. This obligation to indemnify shall include
Tenant's payment of reasonable attorneys' fees and investigation
costs and all other reasonable costs, expenses and liabilities
incurred or suffered by Landlord from Landlord's receipt of the
first notice that any claim or demand is to be made or may be made_
Landlord may, at its option, require Tenant to assume Landlord's
defense in any action covered by this Section 9.2 through counsel
satisfactory to Landlord. As used in this Lease, the term "gross
negligence" shall mean the failure to perform a manifest duty in
reckless disregard of the consequences as affecting the life or
property of another.
267i014820-0001l3274671.1 n06!29199 — 1 5j —
ARTICLE X. DAMAGE OR DESTRUCTION
SECTION 10.1 RESTORATION.
(a) In the event the Building is damaged by fire or other
perils covered by extended coverage insurance to an extent not
exceeding twenty-five percent (2511) of the full insurable value
thereof and if the damage thereto is such that the Building moray be
repaired, reconstructed or restored within a period of ninety (90)
days from the date of the happening of such casualty and Landlord
will receive insurance proceeds sufficient to cover the cost of
such repairs, Landlord shall commence and proceed diligently with
the work of repair, reconstruction and restoration and the Lease
shall continue in full force and effect. If such work of repair,
reconstruction and restoration is such as to require a period
longer than ninety (90) days or exceeds twenty-five percent (250)
of the full insurable value thereof or if said insurance proceeds
will not be sufficient to cover the cost of such repairs, Landlord
may either elect to so repair, reconstruct or restore and this
Lease shall continue in full force and effect, or Landlord may
elect not to repair, reconstruct or restore and the Lease shall in
such event zerminate . Under any of said conditions, Landlord shall
give written notice to Tenant of its intention within ninety (90)
days of the occurrence of such damage. in the event Landlord
elects not to restore the Building, this Lease shall terminate on
the date thirty (30) days following the date Tenant receives
Landlord's written notice indicating Landlord's election to
terminate.
(b) In the event the Premises or the Building is damaged or
destroyed to the extent of more than ten percent (10%) of its
replacement cost by a casualty not covered by a standard fire and
extended coverage policy of fire insurance, Landlord may elecz to
terminate this Lease on the date thirty (30) days follcw=ng
Tenant's receipt of Landlord's written notice of Landlord's
election to terminate this Lease. If such damage or destruction is
not to such extent, or if Landlord does not elect to terminate this
Lease following such damage, Landlord shall commence and proceed
diligently with the work of re_oair, reconstruction and restoration
and this Lease shall continue in full force and effect.
(c) In the event of any casualty damage, the rental provided
to be paid under this Lease shall be abated proportionately in the
ratio which the Premises are rendered unusable from the date of
destruction through the period of such repair, reconstruction or
restoration unless (i) the Premises were unusable for a period of
three (3) business days or less, or (ii) the damage is due to the
fault or neglect of Tenant, its agents or employees. 'ferant shall
not be released from any of its obligations under this Lease except
to the extent and upon the conditions expressly stated in this
Section 10.1.
(d) if the then existing laws do not permit the restoration
described in this Section 10.1, Landlord may terminate this Lease
by giving written notice to Tenant, in which event this Lease shall
terminate thirty (30) days following Tenant's receipt of' such
notice.
(e) Notwithstanding anything to the contrary contained in
this Article, Landlord shall not have any obligation whatsoever to
repair, reconstruct or restore the Premises or any portion of the
Building when the damage occurs during the last twenty-four (24)
months of the term of this Lease or any extension thereof.
(f) 10 damages, compensation or claim shall be payable by
Landlord by reason of any injury to or interference with Tenant's
business or property arising from any damage or destruction or the
making of any repairs, alterations or improvements in or to any
portion of the Building or the premises or in or to fixtures,
appurtenances and equipment therein..
26' 01»820-000:!3274671.: a06!29:99 - 1 6 -
(g) Landlord's obligation to repair, reconstruct or res-ore
Tenant's leasehold improvements in the Premises shall be limited to
those leasehold improvements originally installed at Landlord's
expense; the repair and restoration of any other leasehold
improvements shall be promptly performed by Tenant, at Tenant's
sole cost and expense, subject to the requirements of Section 6.4
applicable to Tenant's alterations to the Premises.
SECTION 10.2 LANDLORD'S NON -LIABILITY_ Landlord shall not be
liable to Tenant, and Tenant hereby waives all claims against
Landlord for any injury or damage to any person or property in or
about the Premises, the Building or the Project from: any cause
whatsoever, except to the extent caused by the gross negligence or
willful misconduct by Landlord, its agents or employees.
Specifically, Landlord or its agents or employees shall not be
liable for any damage to property entrusted to Landlord's employees
in the Building, nor for loss of or damage to any property by theft
or otherwise, nor for any injury or damage to persons or property
by loss or interruption of business or loss of income resulting
from the following causes, except to the extent caused by the gross
negligence or willful misconduct of Landlord, its agents, servants
or employees; fire, explosion, falling plaster, steam, gas,
electricity, water or rain which may leak or =low from or into any
part of the Premises or from the breakage, leakage, obstruction or
other defects of the pipes, sprinklers, wires, appliances or
plumbing or air-conditioning or electrical works therein, whether
such damage or injury results from conditions arising in the
Premises or in other portions of the Building, or from other
sources. Neither Landlord nor its agents shall be liable for
interference with the light or other incorporeal hereditaments, nor
shall Landlord be liable for damages from any latent defect in the
Premises, the Building or the Project. Tenant shall give c•rom.ot
notice to Landlord in case of fire or accidents in the Premises or
in the Building and of defects therein or in the fixtures or
equipment.
Tenant understands that Landlord will not carry insurance of
any kind on Tenant's furniture or furnishings, fix�ures or
equipment, and that Landlord shall not be obligated to repair any
damage thereto or replace the same.
SECTION 10.3 TENANT'S WAIVER. with respect to any damage
which Landlord is obligated to repair or elects to repair, Tenant,
as a material inducement to Landlord entering into this Lease,
irrevocably waives and releases its rights under the _provisions of
Section_ 1932(2) and 1933(4) of the California Civil Code and all
comparable statutes or rules of law now or hereafter in effect.
ARTICLE XT. EMINENT DOMAIN
If the whole of the Premises or so much thereof as to render
the balance unusable by Tenant shall be taken under Power of
eminent domain or if so much of the Buildina or of the Common
Facilities is/are taken under power of eminent domain as, in
Landlord's reasonable judgment, prevents or substantially impairs
the use of the Building for the uses and purposes then being made
or proposed to be made by Landlord of the Building, this Lease
shall automatica'_ly terminate as of the date of such condemnation.•,
or as of the date possession is taken by the condemning authority,
whichever is earlier. No award for any partial or entire taking
shall be apportioned, and Tenant hereby assigns to Landlord any
award which may be made i n any taking or condemnation affecting the
Premises or any portion of the Project, together with any and all
rights of Tenant now or hereafter arising in or to the same or a.ny
part thereof, provided, however, that nothing contained herein
shall be deemed to give Landlord any interest in or to require
Tenant to assign to Landlord any award made to Tenant for the
taking of personal property and trade fixtures belonging to Tenant
and/or for the interruption of or damage to Tenant's business.
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In the event of a partial taking of any portion of the
Premises which does not result in a termination of this Lease, the
basic annual rent shall be reduced in proportion to the part of the
Premises taken, taking into account any restoration and repair by
Landlord.
No temporary taking of the Premises and/or of Tenant's rights
therein or under this Lease shall terminate this Lease or give
Tenant any right to any abatement of rent hereunder. Any award
made by reason of any such temporary taking shall belong entirely
to Landlord and shall be applied by Landlord against the rent and
the other obligations of Tenant hereunder when such rent and other
obligations first accrue.
Except as provided above, any award or damages payable in
connection with a taking of the Building and/or the Project, or any
portion thereof, under the power of eminent domain shall belong
entirely to Landlord and Tenant shall have no right or interest
therein.
AR'; ICLE XI I . SUBORDINATION; ES'-'OFFEL CERTI?ICATR
SECTION 12.1 SUBORDINATION. On reauest of Landlord, Tenant
will in writing subordinate its rights hereunder to the lien of any
first mortgage or first deed of trust now or hereafter in -force
against the Premises and to all advances made or hereafter to be
made upon the security thereof, in the form required by the holder
of such mortgage or deed of trust. In the event any proceedings
are brought for foreclosure, or in the event of the exercise of any
power of sale under any mortgage or deed of trust made by Landlord
covering the Premises, Tenant shall attorn to the purchaser upon_
any such foreclosure or sale and recognize such purchaser as the
Landlord under this Lease.
SECTION 12.2 ESTOPPEL CERTIFICATE. Tenant shall, at any time
and from time to time, within ten (10) days' after notice from
Landlord, execute, acknowledge and deliver to Landlord a statement
in writing (i) certifying that this Lease is unmodified and in full
force and effect (or, if modified, stating the nature of such
modification and certifying that this Lease, as so modified, is in
full force and effect) and the dates to which basic annual rental,
additional rent and other charges have been paid in advance, if
any, (ii) acknowledging that, to Tenant's knowledge, there are no
uncured defaults on the part of Landlord hereunder, or specifying
such defaults if any are claimed, (iii) certifying that Tenant has
no existing offsets and no right of offset against Landlord, and
(iv) certifying that Tenant has accepted possession of the
Premises. Any such statement may be relied upon by any prospective
purchaser or encumbrancer of all or any portion of the Premises,
Building and/or Project.
ARTICLE XIII. DEFAULTS AN'D REMEDIES
SECTION 13.1 TENANT'S DEFAULTS. The occurrence of any one or
more of the following events shall constitute a default hereunder
by Tenant:
(a) The abandonment or vacation of the Premises by Tenant.
(b) The failure by '"'enant to make any payment of basic annual
rent or additional rent required to be made by Tenant hereunder, as
and when due, where such failure shall continue for a period of
three (3) days after written notice thereof from Landlord to
Tenant, provided, however, that any such notice shall be in lieu
of, and not in addition to, any notice required under California
Code of Civil Procedure Section 1161 et seq. For purposes of these
default and remedies provisions, the term "additional rent" shall
be deemed to include all amounts of any type whatsoever other than
basic annual rent to be paid by Tenant pursuant to the terms of
this Lease.
267101;820-0001i3274671.1 a06129199 - 1 8 -
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(c) Use of the Premises for any purpose other than as
authorized in this Lease.
(d) Assignment or sublease of this Lease or of any interest
therein by Tenant, either voluntarily or by operation of law
(including transfer by testacy or intestacy), whether by judgment,
execution, or other means, withouE the prior written consent of
Landlord.
(e) The failure or inability by Tenant as may be determined
by Landlord to observe or perform any of the express or implied
covenants or provisions of this Lease to be observed or performed
by Tenant, other than those specified in (a) through (d) above,
where such failure shall continue for a period of fifteen (15) days
after written notice thereof from Landlord to Tenant; provided,
however, that any such notice shall be in lieu of, and not in
addition to, any notice required under California Code of Civil
Procedure Section 1161 et secT.
(f) W The making by Tenant of any general assignment for
the benefi- of creditors; (ii) a case is commenced by or against
Tenant.under Chapters 7, 11 or 13 of the Bankruptcy Code, Title 11
of the United States Code as now in force or hereafter amended and
if so commenced against Tenant., the same is not dismissed within
sixty (60) days; (iii) the appointment of a trustee or receiver to
take possession of substantially all of Tenant's assets located at
the Premises or of Tenant's interest in this Lease, where
possession is not restored'to Tenant within thirty (30) days; (iv)
the attachment, execution or other judicial seizure of substan-
tially all of Tenant's assets located at the Premises or of
Tenant's interest in this Lease, where such seizure is not
discharged within thirty (30) days; or (v) Tenant's convening of a
meeting of its creditors or any class thereof for the _purpose of
effecting a moratorium upon or composition of its debts.
SECTION 13.2 LANDLORD'S REMEDIES.
(a) In the event of any default by Tenant, then, in al.:dluion
to any other remedies available to Tandlord at law or in eoaity,
Landlord may exercise the following remedies:
(i) Landlord may terminate this Lease and all rights of
Tenant hereunder by giving writte-n notice of such termination to
Tenant. In the evert that Landlord shall so elect to terminate the
Lease, then Landlord may recover from Tenant:
The worth at zhe time o]E: a-w:ard of the unpaid rent,
charges, and additional rent which had been earned as of the date
of the termination hereof;
The worth at the time of award of the amount by
which the unpaid rent and additional rent which would have been
earned after the date of the termination hereof until the time of
award exceeds the amount of such rental loss that Tenant proves
could have been reasonably avoided;
The worth at the tir-.e of award of the amount by
which the unpaid rent, charges, and additional rent for the balance
of the term hereof after the time of award exceeds the amount of
such rental loss that Tenant proves could be reasonably avoided;
Any other amount necessary to compensate Landlord
for all the detriment proximately caused by Tenant's failure to
perform its obligations under this Lease or which in the ordinary
course of things would be likely to result therefrom, including,
but not limited to, the cost of recovering possession of the
Premises, expenses of reletting, including brokerage commissions,
necessary repair, renovation and alteration of the Premises,
reasonable attorneys, fees, expert witness costs, and any other
reasonable costs; and
267I014820-000113274671.1-06/29199 - 1 9 -
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Any other amount which Landlord may by law hereafter
be permitted to recover from Tenant to compensate Landlord for the
detriment caused by Tenant's default. As used in subparagraphs (i)
and (ii) above, the "worth at the time of award" shall be computed
by allowing interest at the maximum rate permitted by law.
As used in subparagraph (iii) above, the "worth at the time of
award" shall be computed by discounting such amount at the discount
rate of the Federal Reserve Sark of San Francisco at the time of
award plus one percent (1%), but not in excess of ten percent (100)
per annum.
(ii) Pursue the remedy described in California Civil Code
Section 1951.4 and continue this Lease in effect without
terminating Tenant's right to possession even though Tenant has
breached this Lease and abandoned the Premises and to enforce all
of Landlord's rights and remedies under this Lease, at law or in
equity, including the right to recover the rent as it becomes due
under this Lease; provided, however, that Landlord may at any time
thereafter elect to terminate this Lease for such previous breach
by notifying Tenant in writing that Tenant's right to possession of
the Premises has been terminated.
(iii) Nothing in this Article XIIT shall be deemed to
affect Tenant's indemnity of Landlord, for liability or liabilities
based upon occurrences prior to the termination of this Lease for
personal injuries or property damage under the indemnification
clause or clauses contained in this Lease. Such covenants of
indemnification shall survive the termination of this Lease.
(iv) In the event of default by reason of any of the
events stated in subparagraph (f) of Secticn 13.1 above, this Lease
or any interest in and to the Premises shall not become an asset in
any of such proceedings and, in any such event and in addition to
any and all rights or remedies of the Landlord hereunder or by law
provided, it shall be lawful for the Landlord to deplare the term
hereof ended and to re-enter the Premises and take nossession
thereof and remove all persons therefrom, and Tenant and its
creditors (other that. Landlord) shall have no further claim thereon
or hereunder.
(b) Landlord shall be under no obligation to observe or
perform any covenant of this Lease on its part to be observed or
performed which accrues after the date of any default by Tenant
hereunder. In any action for unlawful detainer commenced by
Landlord against Tenant by reason_ of any default hereunder, the
reasonable rental value of the Premises for the period of the
unlawful detainer shall be deemed to be the amount of the basic
annual rent and additional rent reserved in this Lease for such
period, unless Landlord or Tenant shall prove to the contrary by
competent evidence. The various rights, powers and remedies
reserved to Landlord herein, and those rights, powers and remedies
of Landlord under any other agreement now or hereafter in force
between Landlord and Tenant, including those not speci=ically
described herein, shall be cumulative, and, except as otherwise
provided by California statutory law in effect at the time,
Landlord may pursue any or all of such rights and remedies, at the
same time, or otherwise.
(c) No delay or omission of Landlord to exercise any right or
remedy shall be construed as a waiver of any such right or remedy
or of any default by Tenant hereunder. The acceptance by Landlord
of rent or any additional rent hereunder shall not be W a waiver
of any preceding breach or default by Tenant of any provision
thereof, other than the failure of Tenant to pay the particular
rent or any additional rent accepted, regardless of Landlord's
knowledge of such preceding breach or default at the time of
acceptance of such rent or additional rent, or (ii) a waiver of
Lan_dlord's right to exercise any remedy available to Landlord by
virtue of such breach or default. No payment by Tenant or receipt
by Landlord of a lesser amount than the rent herein stipulated
shall be deemed to be other than on account of the earliest due
267r014820-00011327467 1-1 a06/29199 - 2 0 -
• 0
stipulated rent, nor shall any endorsement or statement on any
check or any letter accompanying any check or payment as rent be
deemed an accord and satisfaction, and Landlord shall accept such
check or payment without prejudice to Landlord's right to recover
the balance of such rent or pursue any other remedy in this Lease
provided. Tenant hereby waives any right of redemption or relief
from forfeiture under California Code of Civil Procedure Sections
1174 or 1179, or under any other present or future law, in the
event Tenant is evicted or Landlord takes possession of the
Premises by reason of any default by Tenant hereunder. No act or
thing done by Landlord or Landlord's agents during the term of this
Lease shall be deemed an acceptance of a surrender of the Premises,
and no agreement to accept a surrender shall be valid unless in
writing and signed by Landlord. No employee of Landlord or of
Landlord's agents shall have any power to accept the keys to the
Premises prior to the termination of this Lease, and the delivery
of the keys to any such employee shall not operate a termination of
this Lease or a surrender of the Premises.
SECTION 13.3 INTEREST ON TENANT'S OBLIGAT=ONS; LATE
PAYMENTS.
(a) Any installment of rent due under this Lease or any other
sum not paid to Landlord when due (other than interest) shall bear
interest at zhe maximum rate allowed by law from the date such
payment is due until paid, provided, however, that the payment of
such interest shall not excuse or cure the default.
(b) Tenant hereby acknowledges that the late payt:ent by
Tenant to Landlord of rent and other sums due hereunder will cause
Landlord to incur costs not contemplated by this Lease, the exact
amount of which will be extremely difficult to ascertain. Such
costs may include, but are no- limited to, administrative,
processing and accounting charges, and late charges which may be
imposed on Landlord by the terms of any mortgage or trust deed
covering the premises. Accordingly, if any installment of rent or
any other sum due from Tenant shall not be received by Landlord or
Landlord's designee within five (5) days after the date due, then
Tenant shall pay to Landlord, in addition to the interest provided
above, a late charge in the amount of five percent (5%) of the
delinquent installment of rent. The parties agree that such late
charge represents a fair and reasonable estimate of the cost
Landlord will incur by reason of late payment by Tenant.
Acceptance of such late charge by Landlord shall in no event
constitute a waiver of Tenant's default with respect -o such
overdue amount, nor prevent Landlord from exercising any of the
other rights and remedies granted hereunder.
(c) Following each second consecutive late payment of rent,
Landlord shall have the option (i) to require that beginning with
the first payment of rent next due, rent shall no longer be paid in
monthly installments but shall be payable quarterly three (3)
months in advance and/or (ii) to require that Tenant increase the
amount, if any, of the security deposit required under Section 3.2
as listed in Item 9 of the Basic Lease Provisions by one hundred
percent (100 a ) , which additional security deposit shall be retained
by Landlord, and may be applied by Landlord, in the mariner provided
in Section 3.2.
SECTION 13.4 RIGHT OF LANDLORD TO PERFORM. All covenants and
agreements to be performed by Tenant under any of the terms of this
Lease shall be performed by Tenant at Tenant's sole cost and
expense and without any abatement of rent. If Tenant shall fail to
pay any sum of money, other than rent; required to be paid by it
hereunder or shall fail to perform any other act on its part to be
performed hereunder, or to provide any insurance or evidence of
insurance to be provided by Tenant, and such failure shall continue
beyond any applicable grace period set forth in Section 13.1, then
in addition to any other remedies provided herein, Landlcrd may,
but shall not be obligated so to do, and without waiving or
releasing Tenant from any obligations of Tenant, make any such
payment or perform any such act on Tenant's part to be rude or
26W014820-"U327467:1.1 a06.12 99 - 2 1 -
performed as provided in this Lease or to provide such insurance.
Any payment or performance of any act or the provision of any such
insurance by Landlord on Tenant's behalf shall not give rise to any
responsibility of Landlord to continue making the same or similar
payments or performing the same or similar acts. All costs,
expenses and other sums incurred or paid by Landlord in connection
therewith, together with interest at the maximum rate permitted by
law from the date incurred or paid by Landlord shall be deemed to
be additional rent hereunder and shall be paid by Tenant with and
at the same time as the next monthly installment of basic annual
rent hereunder, and any default therein shall constitute a breach
of the covenants and conditions of this Lease.
SECTION 13.5 DEFAULT BY LANDLORD. Landlord shall not be
deemed to be in default in the performance of any obligation
required to be performed by it under this Lease unless and until it
has failed to perform such obligation within thirty (30) days after
written notice by Tenant to Landlord, and to any mortgagee or
beneficiary of a deed of trust with an interest in any encumbrance
affecting Landlord's interest in. the Premises, specifying in
reasonable detail the nature and extent of any such Failure;
provided, however, that if the nature of Landlord's obligation is
such that more than thirty (30) days are required for its
performance, then Landlord shall not be deemed to be in default if
it commences such performance within such thirty (30) day period
and thereafter diligently prosecutes the same to completion. If,
after notice to Landlord of default, Landlord fails to cure such
default as provided herein, then Tenant shall have the right to
cure such default at Landlord's expense. Tenant shall not have the
right to terminate this Lease or to withhold, reduce or offset any
amount against any payments of basic annual rent or any other
charges due and payable hereunder, and Tenant's remedy shall be
limited to damages and/or an injur_c`ion. It is expressly
understood and agreed to that any money judgment resulting from any
default or other claim arising under this Lease shall be satisfied
only out of the rents, issues, profits or other income ("Income")
actually received from the operation of the Building and no other
real, personal or mixed property of Landlord (the term "Landlord"
for purposes of this Sec:Aon only shall mean any and all partners,
both general and/or limited, if any, which comprise Landlord),
wherever situated, shall be subject to levy on any such judgment
obtained against Landlord and whether or not such Income is
sufficient for the payment of such judgment, Tenant will not
institute any further action, suit, claim or de„nand, in law or in
equity, against Landlord for or on the account of such deficiency.
Tenant hereby waives, to the extent waivable under law, any right
to satisfy said money judgment against Landlord except from income
received by Landlord for the operation of the Building.
SECTION 13.6 EXPENSES AND LEGAL FEES. If Tenant or Landlord
shall bring any action for any relief against the other,
declaratory or otherwise, arising out of or under this Lease,
including any suit by Landlord for the recovery of rent or
possession of the Premises, the prevailing party shall be entitled
to recover its attorney's fees and costs, including without
limitation, expert witness fees, photocopying, facsimile, messenger
and postage costs, in connection with such suit, and such
attorney's fees and costs shall be deemed to have accrue: on the
commencement of such action and shall be paid whether or not such
action is prosecuted to judgment.
ARTICLE XiV. END OF TERM
SECTION 14.1 HOLDING OVER. This Lease shall terminate and
become null and void without further notice upon the expiration of
the term herein specified, and any holding over by Tenant after
such expiration shall not constitute a renewal or extension hereof
or give Tenant any rights under this Lease, except when in writing
signed by both parties hereto or as otherwise herein_ provided. if
Tenant shall hold over for any period after the expiration of the
Lease term, Landlord may, at its option, treat Tenant as a tenant
2671014820-0001:327.4671.1 a06.129199 - 2 2 -
at sufferance only commencing on the first (1st) day following the
expiration of this Lease and subject to all of the terms and
conditions herein contained, except that the basic annual rent, and
monthly installments thereof, shall be one hundred fifty percent
(1501) of that payable at the date of expiration.
SECTION 14.2 SURRENDER OF PREMISES- REMOVAL OF PROPERTY.
Upon the expiration or the term of this Lease, or upon any earlier
termination of this Lease, Tenant shall quit and surrender
possession of the Premises to Landlord in as good order, condition
and repair as when received or as hereafter may be improved by
Landlord or Tenant, reasonable wear and tear and repairs which are
Landlord's obligation excepted, and shall, without expense to
Landlord, remove or cause to be removed from the Premises all
debris and rubbish, all furniture, equipment, and trade fixtures,
free-standing cabinet work and other articles of any other persons
claiming under Tenant unless Landlord exercises its option to have
any subleases or subterancies assigned to it. Tenant shall repair
all damage to the Premises resulting from such removal, which
repair shall include the patching and filling of holes and repair
of structural damage. In the event that Tenant shall fail to
comply with the provisions of this Section 14-2, Landlord may make
such repairs and the cost thereof shall be additional rent payable
by Tenant upon demand. If requested by Landlord, Tenant shall
execute, acknowledge and deliver to Landlord an instrument in
writing releasing and quitclaiming to Landlord all right, title and
interest of Tenant in and to the Premises by reason of this Lease
or otherwise.
SECTION 14.3 AlF IXED PROPERTY. All fixtures, equipment,
alterations, additions, improvements and/or appurtenances attached
to or built into the Premises prior to or during the term hereof,
whether by Landlord at its expense or at the expense of Tenant or
both, shall be and remain part of the Premises and shall belong to
Landlord unless otherwise expressly provided for in this Lease or
unless such removal is required by Landlord pursuant to the pro-
visions of Section 6.4 hereof. Such fixtures, equipment,
alterations, additions, improvements and/or appurtenances shall
include, without limitation, floor coverings, drapes, paneling,
molding, built-in cabinets, doors, vaults, (exclusive of vault
doors), plumbing, electrical communications and lighting systems,
silencing equipment, all fixtures and outlets for the systems
mentioned above and for all telephone, radio, telegraph and
television purposes, and any special flooring or ceiling
installations.
AcTICLEE XV . NOTICES
Any notice, election, demand, consent, approval or other
communication to be given or other document to be delivered by
either party to the other hereunder may be delivered in person to
an officer or duly authorized representative of the other party, or
may be deposited in the United States mail, duly registered or
certified, postage prepaid, return receipt requested, and addressed
to the other party at the address set forth in Item 11 of the Basic
Lease Provisions hereof, or if to Tenant', at such address or, from
and after the Commencement Date, az the Premises (whether or not
Tenant has departed from, abandoned or vacated the Premises).
Either party may from time to time, by written notice to the other,
served in the manner herein provided, designate a different
address. If any notice or other documents is sent by mail as
aforesaid, the same shall be deemed served or delivered twenty-four
(24) hours after the mailing thereof. If more than one Tenar_c is
named under this Lease, service of any notice upon any one of said
Tenants shall be deemed as service upon all of them.
ARTICLE XVI. RULES AND REGULATIONS
The Rules and Regulations attached hereto as Exhibit "C" by
this reference are hereby incorporated herein and made a part
2671014820-00011327.67,A a06!29199 - 2 3 -
hereof. Tenant agrees to observe faithfully and comply strictly
with such Rules and Regulations, and any reasonable amendments,
modifications and/or additions thereto as may hereafter be adopted
and published by written notice to tenants by Landlord for the
safety, care, security (including restrictions on hours and manner
of access to the Building) good order, cleanliness of the Premises,
Building and/or the Project, or portions thereof. Landlord shall
not be liable to Tenant for any violation of such Rules and
Regulations or the breach of any covenant or condition in any lease
by any other tenant. One or more waivers by Landlord of any breach
of such Rules and Regulations by Tenant or by any other tenant(s)
shall not be a waiver of any subsequent breach of that rule or any
other. In the case of any conflict between such Rules and Regu-
lations and this Lease, this Lease shall control.
ARTICLE XVII. BROKER'S COMMISSION
The parties recognize as the broker (s) who procured this Lease
the firm (s), if any, stated in Item 10 of the Basic Lease
Provisions, and agree that Landlord shall be solely responsible for
the payment of brokerage commissions to said broker(s), and that
Tenant shall have no responsibility therefor unless otherwise
provided in this Lease. Tenant warrants that it has had no
dealings with any other real estate broker or agent in connection
with the negotiation of this Lease, and agrees to indemnify, defend
and hold Landlord harmless from any cost, expense or liability
(including reasonable attorneys' fees in connection therewith) for
any compensation, commissions or charges claimed by any other real
estate broker or agent employed or claiming to represent or to have
been employed by Tenant in connection with the negotiation of this
Lease. The foregoing agreement shall survive the termination of
this Lease.
ARTICLE XVIII. TRANSFER OF L_�IDLORD'S INTEREST
In the evert of any transfer or transfers of Landlord's
interest in the Premises, including a so-called sale -leaseback, the
transferor shall be automatically relieved of any and all
obligations on the part of Landlord accruing under this Lease from
and after the date of such transfer_ It is intended hereby that
the covenants and obligations contained in this Lease on the part
of Landlord shall, subject to the=oregoing, be binding on
Landlord, its successors and assigns, only during and in respect of
their respective periods of owners'_,ip.
ARTICLE XIX. INTERPRET_yTION
SECTION 19.1 GENDER AND NUMBER. Whenever the context of this
Lease requires, the words "Landlord" and "Tenant", as used herein_,
shall include the plural as well as the singular and words used in
neuter, masculine or feminine genders shall include the others.
SECTION 19.2 HEADINGS. The captions, headings, titles,
numbering and indexing of the Articles and Sections of this Lease
are for convenience only, are not a part of this Lease and shall
have no effect upon the construction or interpretation of any part
hereof.
ARTICLE XX. EXECUTION AND RECORDING
SECTION 20.1 CORPORATE AUTHORITY. If Tenant is a
corporation, each individual executing this Lease on behalf of said
corporation represents and warrants that he is duly authorized to
execute and deliver this Lease on behalf of said corporation in
accordance with said corporation's by-laws or a duly adopte4---
resolution of its board of directors, and that this Lease ice- _
binding upon said corporation in accordance with its terms. Tenant
2671014820-0001'3274671.1 a0W29199 — 2 4 —
shall, at Landlord's request, deliver a certified copy of its board
of directors, resolution authorizing or ratifying such execution.
SECTION 20.2 RECORDING. Tenant shall not record this Lease
without the prior written consent of Landlord. Tenant, upon the
request of Landlord, shall execute and acknowledge a "short form"
memorandum of this Lease for recording purposes.
SECTION 20.3 AMENDMENTS. No amendment, addition, revocation_
or ratification of this Lease shall be effective unless in writing
signed by the parties hereto. No actions, policies, oral or
infor:�.al arrangements, business dealings or other course of conduct
by or between the parties shall he deemed to amend this Lease or
revise this Lease in any respect.
ARTICLE XXI. MISCELLANEOUS
SECTION 21.1 NONDISCLOSURE OF LEASE TERMS. Tenant
acknowledges and agrees that the terms of this Lease are
confidential and constitute proprietary information of Landlord.
Disclosure of the terms hereof could adversely affect the ability
of Landlord to negotiate other leases with respect to the Project.
Tenant agrees that it, and its partners, officers, directors,
employees and attorneys shall not disclose the terms and conditions
of this Lease to any other person without the prior written consent
of Landlord, provided, however, that Tenant may disclose the terms
hereof to the independent accountants who audit its financial
statements. It is understood and agreed that damages would be an
inadequate remedy for the breach of this provision by Tenant, and
Landlord shall have the right to specific performance of this
provision and to injunctive relief to prevent its breach or
continued breach.
SECTION 21.2 FURNISHING OE FINANCIAL STATEMENTS. Landlord
has reviewed=inancial statements and tax re4urns if so requested
of the Tenant and has relied upon the truth and accuracy thereof
with Tenant's knowledge and representations of the truth and
accuracy of same and that said statements accurately and fairly
depict the financial condition of Tenant. Said statements are an
inducing factor and consideration for the Tenant. Tenant and/or
guarantors shall promptly furnish Landlord, upon reauest, with
annual financial statements reflecting the then current financial
condition of Tenant throughout the term of chic Lease.
SECTION 21.3 CHANGES REQUESTED BY LENDER. If, in connection
with obtaining financing for the Building, any lender shall request
reasonable modifications in this Lease as a condition to such
financing, Tenant will not unreasonably withhold, delay or defer
its consent thereto, provided that such modifications do not
materially increase the obligations of Tenant hereunder or
materially and adversely affect the leasehold interest hereby
created.
SECTION 21.4 GOVERNMENTAL REQUIREMENTS. Tenant covenants at
all times during the term of this Lease to comply with the
requirements of the Occupational Safety and Health Act of 1970, 29
U.S.C., Section 651 et sea., and any analogous legislation in
California (collectively, the "Act"), to the extent that 4he Act
applies to the Premises and any activities therein, and to co —ply
with all other Governmental Requirements, including, but not
limited to, all laws prohibiting discrimination against any person
or group of persons on account of race, color, creed, sex, national
origin or ancestry and all laws described in Section 4.1 above.
Without limiting the generality of the foregoing, Tenant covenants
to maintain all working areas, all machinery, equipment,
appliances, structures, electrical facilities and the like upon the
Premises in a condition that full complies with the requirements of
the Act, including such requirements as would be applicable with
respect to agents, employees or contractors of Landlord who may
from time to time be present upon the Premises.
267l014820-000162 467t.1 ❑06r29799 - 2 S -
0 0
SECTION 21 . 5 COVE' AN TS AND CONDITIONS. All of the provisions
of this Lease shall be construed to be "conditions" as well as
"covenants" as though the words specifically expressing or
imparting covenants and conditions were used in each separate
provision.
SECTION 21.6 WORK LETTER. Landlord and Tenant each agree to
fully perform their obligations under the Work Letter, if any. Any
default by either party in the performance of its obligations under
the Work Letter shall constitute a default by such party under this
Lease.
SECTION 21.7 JOINT AND SEVERAL LIABILITY. If there be more
than one Tenant, the obligations hereunder imposed upon Tenant
shall be joint and several and the act of or notice from, or notice
or refund to, or the signature of, any one or more of such persons,
with respect to the tenancy of this Lease, shall be binding upon
each and all of the persons executing this Lease as Tenant with the
same force and effect as if each and all of them had so acted or so
given or received such notice or refund or so signed.
SECTION' 21.8 ' SUCCESSORS. Subject to Articles VIII and XVIII
above, all rights and liabilities herein given to, or imposed upon,
the respective parties hereto shall extend to and bind the several
respective heirs, executors, administrators, successors, and
assigns of the parties. Nothing contained herein is intended, or
shall be construed, to confer upon or grant to any person other
than Landlord and Tenant any rights or remedies under this Lease.
SECTION 21.9 TIME OF ESSENCE. Time is of the essence with
respect to the performance of every provision of this Lease in
which time of performance is a factor.
SECTION 21.10 CONTROLLING LAW. This Lease shall be governed
by and interpreted in accordance with the laws of the State of
California.
SECTION 21.11 SEVERABILITY. If any term or provision of this
Lease shall be held invalid or unenforceable to any extent, the
remainder of this Lease shall not be affected thereby and each term
and provision of this Lease shall be valid and enforceable to the
fullest extent permitted by law.
SECTION 21.12 RELATIONSHIP OF PARTIES. Nothing contained
herein shall be deemed or construed by the parties hereto, or by
any third party, as creating the relationship of grin:ipal and
agent or of partnership or joint venture between the parties
hereto, it being understood and agreed that neither the method of
computation of rent, nor any other provision contained herein_, nor
any acts of the parties herein, shall be deemed to create any
relationship between the parties hereto other than the relationship
of Tenant and Landlord.
SECTION 21.13 INABILITY TO PERFORM. In the evert that
Landlord shall be delayed or hindered in or prevented from the
performance of any work or in performing any act required hereunder
by reason of: strikes; lockouts; labor troubles; inability to
procure materials, labor or energy; failure of _Dower; disruption,
reduction, interruption, curtailment or failure of utility, solid
waste disposal or other services; restrictive Governmental Require-
ments- voluntary or involuntary participation, at the request of a
governmental agency or otherwise, in any plan or program involving
allocations, priorities, limitations or restraints regarding water,
fuel or other energy, or otherwise; other governmental action or
inaction; riots, insurrection.; war, fires; floods; earthquakes;
storms; droughts, other Acts of God; or any other reason of a
similar or dissimilar nature not the fault of Landlord in
performing work or doing acts required under the terms of this
Lease, then the performance of such work or the doing of such act
shall be excused for the period of the delay, and the period for
the performance of any work or the doing of such act shall be
extended for a period equivalent to the period of such delay. The
2671014820-0001l3274671.1 a06129I99 - 2 6 -
occurrence of any event constituting a cause for excusable delay
shall not relieve Tenant from any obligations, including payment of
rent, under this Lease.
SECTION 21.14 QUIET ENJOYMENT. Upon payment by Tenant of the
basic annual rent, additional rent and all the charges herein
provided, and upon the observance and performance of all the
covenants, terms and conditions of this Lease on Tenant's part to
be observed and performed, Tenant shall peaceably and quietly hold
and enjoy the Premises for the term hereby demised without
hindrance or interruption by Landlord or any other person or
persons lawfully or equitably claiming by, through or under
Landlord.
SECTION 21.15 HAZARDOUS WASTE AND MATERIALS. Tenant shall
not engage in any activity on or about the Premises or the Project
that violates any Environmental Law, and shall promptly, at
Tenant's sole cost and expense, take all investigatory and/or
remedial action_ required or ordered by any governmental agency or
Environmental Law for clean-up and removal of any contamination
involving any Hazardous Material created or caused directly or
indirectly by Tenant. The term "Environmental Law" shall mean any
federal, state or local law, statute, ordinance or reaulaz:ion
pertaining to health, industrial hygiene or the environmental
conditions on, under or about the Premises, including, without
limitation, (i) the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 ("CERCLA"), 42 U.S.C.
Sections 9601 et seq.; (ii) the Resource Conservation and Recovery
Act of 1976 ("RClZA"), 42 U.S.C. Sections 6901 et sea_.; (iii)
California Health and Safety Code Sections 25100 et seq.; (iv) the
Safe Drinking Water and Toxic Enforcement Act of 1986, California
Health and Safety Code Section 25249.5 et seq.; (v) the Federal
Water Pollution Control Act, 33 U.S.C. Sections 1317 et seq.; (vi)
California Water Code Section 1300 et seq.; and (vii) California
Civil- Code Section 3479 et seq., as such laws are amended and the
regulations and administrative codes applicable thereto. The ter:
"Hazardous Material" includes, without limitation, any material or
substance which is (i) defined or listed as a "hazardous waste",
"extremely hazardous waste", "restrictive hazardous waste" or
"hazardous substance" or considered a waste, condition of pollution
or nuisance under the Environmental Laws; (ii) petroleum or a
petroleum product or fraction thereof; (iii) asbestos, and/or (iv)
substances known by the State of California to cause cancer and/or
reproductive toxicity. It is the intent of the parties hereto to
construe the tern.: "Hazardous Materials" and "Environmental Laws" in
its broadest sense. Tenant shall prov=de al. notices required
pursuant to the Safe Drinking Water and Toxic Enforcement Act of
1986, California Health and Safety Code Section 25249.5 et sea.
Tenant shall provide prompt written notice to Landlord of the
existence of Hazardous Substances on the Premises and all notices
of violation of the Environmental Laws received by Tenant.
Tenant's obligations pursuant to this Section 21.15 shall be
referred to in this Lease as "Environmental Com:liance".
SECTION 21.16 ENTIRE AGREEMENT. This Lease and the Exhibits
and other attachments hereto cover in full each and every agreement
of every kind or nature whatsoever between the parties hereto
concerning the Premises and the Building or Project, and all
preliminary negotiations, oral agreements, understandings and/or
practices of whatsoever kind with respect to the Premises or the
Building or Project, except those contained herein or therein, are
superseded and of no further force or effect; no person_, firm or
corporation has at any time had an authority from Landlord to crake
any representations or promises on behalf of Landlord, and Tenant
agrees that if any such representations or promises have been made
by Landlord or others, Tenant hereby waives all right to rely
thereon. No verbal agreement or implied covenant shall be held to
vary the provisions hereof, any statute, law, or custom to the
contrary notwithstanding.
267KA4820-000U327_1671.1 a0W29 99 - 2 7 -
0 0
EXHIBIT "A-1"
Prior to the execution of the Lease to which this Exhibit A-1
is attached, attach a floor plans) of the Building designating the
location of the Premises.
EXHIBIT "A-1"
TO OFFICE SPACE LEASE
2671:01,820-000'-13274671.1 a06'29i99
12)
Go cFt4/,
•
u
EXHIBIT "A-2"
Legal Description of the Project
That certain real property located in the City of Huntington
Beach, County of Orange, State of California, more part_cularly
described as follows:
Lots 1, 2, 3, 4, 5, 6, 11, 13 and 15 in Block 104 of
Huntington Beach in the Cicy of Huntington Beach, County of
Orange, State of California as shown on a map recorded in Book
3, Page 36 of Miscellaneous Maps, Records of Orange County,
California.
EXHIBIT "A-2"
TO O-F ICE SPACE LEASE
26VM4820-000113274671.1 c0629199
E
EXHIBIT "A-3"
CONFIRMATION OF TERM
The undersigned as the Landlord and Tenant under that certain
Office Space Lease dated , for space within the
Huntington Beach, California,
hereby confirm that the term of said Lease has commenced
and that the expiration date of the term of said
Lease is
ASDELMUTI DEVELOPMENT COMPANY, a
California general partnership
By:
Ahmad __. Abdelmuti,
general partner
"Land-ord"
PAIGE CO-wlMUNICATIONS CORPORATION, a
California rporation
By
Its A&A-
Its:
"Tenant"
EXHI3IT "A-3"
TO OFFICE SPACE LEASE
26V014820.00011327,671.1 a06129:99
EXHIBIT "B"
THE WORK LETTER
Tenant acknowledges and agrees that Landlord shall not be
required to perform any work in the Premises and that Tenant
accepts the Premises on the Commencement Date in its then existing
"AS -IS" condition. Tenant further acknowledges that the Premises
contain certain furniture, trade fixtures and personal property,
including thirteen (13) built-in desk modules (the "Existing
Property") and that during the Lease Term Tenant may use the
Existing Property, but the Existing Property shall at all times
remain the property of Landlord. At the expiration or termination
of the Lease, and in addition to the obligations in the Lease
regarding surrender of the Premises, the Premises shall be
surrendered to Landlord with the Existing Property in good
condition and repair.
EXHIBTT "B"
TO OFFICE SPACE LEASE
267;0:4820-OW 32,ab71.1 a-0-624.'99 Page 1
0
EXHIBIT "C"
RULES AND REGULATIONS
ATTACHED TO AND WHICH CONSTITUTE
A PART OF OFFICE SPACE LEASE
The following Rules and Regulations shall be in effect at the
Project. Landlord reserves the right to adopt reasonable
modifications and additions hereto.
(1) The sidewalks, entrances, passages, courts, elevators,
vestibules, stairways, corridors or halls of the Building shall not
be obstructed by any tenant or used for any purpose other than
ingress and egress from the respective premises. The halls,
passages, entrances, elevators, stairways, balconies and roof are
not for the use of the general public, and Landlord shall in all
cases retain the right to control and prevent access. thereto of all
persons whose presence in the judgment of Landlord shall be preju-
dicial to the safety, character, reputation and interests of the
Building and its tenants, provided that nothing herein contained
shall be construed to prevent such access to persons with whom
Tenant normally deals only for the purpose of conducting its busi-
ness on the Premises (such as clients, customers, office suppliers
and equipment vendors, and the like) unless such persons are
engaged in illegal activities. No tenant and no employees of any
tenant shall go upon the roof of the Building without the written
consent of Landlord.
(2) No awnings or other projection shall be attached to the
outside walls of the Building or to balconies without the prior
written consent of Landlord. No hangina planters, 4elevis4on sa+s
or other objects shall be attached to or suspended from ceilings
without the prior written consent of Landlord. No curtains,
blinds, shades or screens shall be attached to or hung in, or used
in connection with, any window or door of the Premises without zhe
prior written consent of Landlord. All electrical ceiling fixtures
hung in offices or spaces along the perimeter of the Building must
be fluorescent and/or of a quality, type, design and bulb color
approved by Landlord. No awnings, furniture, trees or plants or
other personal property shall be placed upon any balcony or patio,
without Landlord's prior written approval.
(3) No sign, advertisement or notice shall be exhibited,
painted or affixed by any tenant on any part of, or so as to be
seen from the outside of, the Premises or the Building without the
prior written consent of Landlord. In_ 4he event of the violation_
of the foregoing by any tenant, Landlord may remove such sign,
advertisement or notice without any liability and may charge the
expense incurred in such removal to the tenant violating this rule.
Interior signs on doors and director tablet shall be inscribed,
painted or affixed for each tenant by Landlord at the expense of
such tenant, and shall be of a size, color and style acceptable to
Landlord.
(4 ) The sashes, sash doors, skylights, windows and doors that
reflect or admit light and air into the halls, passageways or other
public places in the Building shall not be covered or obstructed by
any 4en_ant, nor shall any bottles, parcels or other articles be
placed on the windowsills, balcony or patio railings.
(5) The water and wash closets and other plumbing fixtures
shall not be used for any purpose other than those for which they
were constructed, and no foreign substance of any '.rind shall be
thrown herein. All damages resulting from any misuse of the
fixtures shall be borne by the tenant who, or whose servants,
employees, agents, visitors or licensees shall have caused the
same.
(6) No tenant shall mark, paint, drill into, or in any lv.ay
deface any part of the Premises or the Building. No boring,
EXHIBIT "C"
TO OFFICE SPACE LEASE
267/o14820-000113274671A A6129199 Page 1
stringing of wires or laying of linoleumn or other floor coverings
shall be permitted, except with the prior written consent of
Landlord, and as Landlord may direct. Any tenant permitted by
Landlord to lay linoleum or other similar floor -covering shall not
affix the same to the floor of the Premises in any manner except by
a paste, or other material which may easily be removed with water,
the use of cement or other similar adhesive materials being
expressly prohibited. The method of affixing any such linoleum or
other similar floor covering to the floor, as well as the method of
affixing carpets or rugs to the Premises, shall be subject to
approval by Landlord. The expense of repairing any damage
resulting from a violation of this rule shall be borne by the
tenant by whom, or by those agents, clerks, employees or visitors,
the damage shall have been caused.
(7) If Tenant desires telephone or telegraph connections,
Landlord will direct electricians as to where and how the wires are
to be introduced.
(8) No bicycles, vehicles or animals of any kind shall be
brought into or kept in or about the Premises, and no cooking shall
be done or permitted by any tenant in the Premises, except that the
preparation of coffee, tea, hot chocolate and similar items for
tenants, their employees and visitors shall be permitted. No
tenant shall cause or permit any unusual or objectionable odors to
be produced in or permeate from or throughout the Premises.
(9) No portion of the Building shall be used for manu-
facturing or for the storage of merchandise except as such storage
may be incidental to the use of the Premises for general office
purposes without Landlord's prior written approval. No tenant
shall, without the prior written consent of the Landlord, occupy or
permit any portion of his premises to be occupied or used for the
manufacture or sale of liquor, narcotics, or tobacco in any form,
as a medical office, chiropractor's office, as a barber or manicure
shop, or as an employment bureau or any business other than that
specifically provided for in the Lease. No Tenant shall engage or
pay any employees on its premises except those actually working for
such tenant on its premises nor advertise for laborers giving an
address at its premises. The Building shall not be used for
lodging or sleeping or for any immoral or illegal purposes.
(10) Except with the prior written_ consent of the Landlord, no
tenant shall' sell, or permit the sale at retail, of newspapers,
magazines, periodicals, or theacer tickets, in or from the
Building, nor shall any tenant carry on, or permit or allow any
employee or other person to carry on., the business of stenography,
typewriting or any similar business in or from the Building for the
service or accommodation of occupants of any other portion of the
Building.
(11) Landlord reserves the right to prohibit personal goods
and services vendors (as such term is defined below) from access to
the Building. To the extent that Landlord permits such vendors
access to the Building, such access shall be upon such reasonable
terms and conditions, including but not limited to the payment of
a reasonable fee and provision for insurance coverage, as are
related to the safety, care and cleanliness of the Building, the
preservation of good order thereon, and the relief cf any financial
or ocher burden. on Landlord occasioned by the presence of such
vendors or the sale by them of personal goods or services (as such
term is defined below) to a tenant or its employees. If reasonably
necessary for the accomplishment of the aforementioned purposes,
Landlord may exclude a particular vendor entirely or limit the
number of vendors who may be present at any one time in the
Building. The term "personal goods or services' vendors" means
persons who periodically enter the Building for the purpose of
selling goods or services to a tenant, other than goods or services
which are used by a tenant only for the purpose of conducting its
business on its premises. "Personal goods or services" include,
EXHIBIT " C "
TO OFFICE. SPACE LEASE
267!014920-000113274671.1 a06/29!99 Page 2
P 1�
i+
but are not limited tc, drinkir+g water and ofher beverages, `ood,�i
barbering services; anri shoe shining services. "
(12) No tenant shall make, or permit to be made, any unseemly
or. disturbing noises or disturb or interfere with occupants of this
or neighboring buildings or premises or those having business with
them by the use of any musical instrument, radio, phonograph or
unusual noise, or in any other way.
(13) No tenant shall throw anything out of doors, windows or
skylights or down the passageways.
(14) No tenant, nor any of a tenant' servants, employees,
agents, visitors or licensees, shall at any time bring, keep or use
on the Building any kerosene, gasoline, or inflammable,
combustible, explosive, or corrosive fluid, or any other
illuminating material, or use any method of heating other than that
supplied by Landlord.
(15) No tenant shall sweep or throw or permit to be swept or
thrown from the Premises any dirt or other substance into any of
the corridors or halls or elevators, or out of the doors, windows,
stairways, patios or balconies of the Building, and Tenant shad
not use, keep or permit to be used or kept any foul or noxious gas
or substance in the Premises, or permit or su=fer the Premises to
be occupied or used in a manner offensive or objectionable to
Landlord or other occupants of the Building by reason of noise,
odors and/or vibrations, or interfere in any way with cther tenants
or those having business therein, nor shall any animals or birds be
kept in or about the Building. Smoking or carrying lighted cigars,
cigarettes, pipes, or other lighted smoking materials, in the
elevators and all other comr:on and/or public areas of the Building
is prohibited.
(16) No additional locks or bolts or any kind shall be placed
upon any of the doors or windows by any tenant, nor shall any
changes be made in existing locks or the mechanisms thereof unless
Landlord is first not_fied thereof and gives written: approval.
Each tenant must, upon_ termination of his tenancy, give to Landlord
all keys of stores, offices, or toilets and toilet rooms, either
furnished to, or otherwise procured by, such tenant, and in the
event of the loss of any keys so furnished, such tenant shall pay
Landlord the cost of replacing the same or of changing the lock or
locks opened by such lost key if Landlord shall deem it necessary
to make such change.
(17) All removals, or the carrying in or out of any safes,
freight, furniture, or bulky matter of any description must take
place during the hours which Landlord may determine frog: time to
time. The moving of safes or other fixtures or bulky matter of any
kind must be made upon previous notice to the manager of the
Building and under his/her supervision, and the persons employed by
any tenant for such work must be acceptable to Landlord. Landlord
reserves the right to inspect all safes, freight or other bulky
articles to be brought into the Building and to exclude from the
Building and all such bulky articles which violate any of the Rules
and Regulations or the Lease of which these Rules and Regulations
are a part. Landlord reserves the right to prescribe the weight
and position_ of all safes, which must be placed ,upon supports
approved by Landlord to distribute the weight.
(18) No tenant shall purchase janitorial, maintenance or other
services from any company or persons not approved by Landlord. Any
person employed by any tenant to do janitorial work shall, while in
the Building and outside of the Premises, be subject to and under
the control and direction of the office or management of the
Building (but not as an agent or servant of Landlord, and the
tenant shall be responsible for all acts of such persons). Except
with Landlord's prior written.- approval, no tenant shall perit
janitorial services to be performed durinq the ho-ars of 7:00 a.m.
to 6:00 p.m, Monday t'lrouA Friday. _
EXHIBIT "C"
TO OFFICE SPACE LEASE
2671:01"820-0001,3274671.1 a06129.'99 page 3
•
E
( 9) T.andIord: =_:a;Tare Lhe rig'r:t to arohjibit any advertising
by at,.y renant o:-in'orl, te: u.a to impair the
reputation of the Building or its desirability as an office/retail
building and upon written notice from Landlord any tenant shall
refrain from and discontinue such advertising.
(20) On Saturdays from 12 : 00 p. m. to 8 : 00 a . m. , Sundays, those
legal holidays designated by Landlord, and on other days between
the hours of 5:00 p.m. and 7:00 a.m., access to the Building or to
the halls, corridors, elevators or stairways in the Building, or to
the Premises may be refused unless the person seeking access is
known to the building watchman, if any, in charge and has a pass or
is properly identified. Landlord shall in no case be liable for
damages for the admission to or exclusion from the Building of any
person whom Landlord has the right to exclude. Each tenant shall
be responsible for all persons for whom he requests after hours
access and shall be liable to Landlord for all acts of such
persons. In case of invasion, mob, riot, public excitement, or
other commotion, Landlord reserves the right but shall not be
obligated to prevent access to the Building during the continuance
of the same by closing the doors or otherwise, for the safety of
the tenants and protection of property in the Building.
(21) All doors opening into public corridors shall be kept
closed, except when in use for ingress and egress. Tenants shall
see that the windows, transoms and doors of their premises are
closed and securely locked before leaving the Building.
(22) The requirements of tenants will be attended to only upon
application to the manager of the Building.
(23) Canvassing, soliciting and peddling in the Building are
prohibited and each tenant shall cooperate to prevent the same.
(24) There shall not be used in any space, or in the public
halls of the Building, either by any tenant or others, any hand
trucks except those equipped with rubber tires and side guards.
(25) No vending or coin operated machines shall be placed by
any tenant within his premises without the prior written consent of
Landlord.
EXHIBIT "C"
TO OFFICE SPACE LEA:5)E
267101;820-0001027;671.1 a06r29199 P acre 4
0 0
RCA ROUTING SHEET
INITIATING DEPARTMENT: Economic Development
SUBJECT: Approval as to Form: Lease between Abdelmuti Dev. Co. &
Paige Communications Corp.Oceanview Promenade
COUNCIL MEETING DATE: August 2, 1999
RCA ATTACHMENTS
STATUS
Ordinance (w/exhibits & legislative draft if applicable)
Not Applicable
Resolution (w/exhibits & legislative draft if applicable)
Not Applicable
Tract Map, Location Map and/or other Exhibits
Not Applicable
Contract/Agreement (wlexhibits if applicable)
Si ned in full by the City Attorne
Not Applicable
Subleases, Third Party Agreements, etc.
(Approved as to form by City Attorney)
Attached
Certificates of Insurance (Approved by the City Attorne
Not Applicable
Financial Impact Statement Unbud et, over $5,000
Not Applicable
Bonds If applicable)
Not Applicable
Staff Report If applicable)
Not Applicable
Commission, Board or Committee Report If applicable)
Not Applicable
Findings/Conditions for Approval and/or Denial
Not Applicable
EXPLANATION FOR MISSING ATTACHMENTS
REVIEWED
RETURNED
FOR DED
Administrative Staff Z 1 -
le -Assistant City Administrator Initial
City Administrator Initial
�!
City Clerk
EXPLANATION FOR RETURN OF ITEM:
0
RCA Author: kohler @ 5457
RCA ROUTING SHEET
INITIATING DEPARTMENT:
Economic Development
SUBJECT:
Approval as to Form: Amended Lease Between Abdelmuti
Development Co. & Paige Communication Corporation
COUNCIL MEETING DATE:
September 20, 1999
RCA ATTACHMENTS
STATUS
Ordinance (w/exhibits & legislative draft if applicable)
Not Applicable
Resolution (w/exhibits & legislative draft if applicable)
Not Applicable
Tract Map, Location Map and/or other Exhibits
Not Applicable
Contract/Agreement (w/exhibits if applicable)
(Signed in full by the City Attorney)
Not Applicable
Subleases, Third Party Agreements, etc.
(Approved as to form by City Attorney)
Not Applicable
Certificates of Insurance (Approved by the City Attomey)
Not Applicable
Financial Impact Statement (Unbudget, over $5,000)
Not Applicable
Bonds {If applicable}
Not Applicable
Staff Report (if applicable)
Not Applicable
Commission, Board or Committee Report (If applicable)
Not Applicable
Findings/Conditions for Approval and/or Denial
Not Applicable
EXPLANATION FOR MISSING ATTACHMENTS
REVIEWED
RETURNED
FORWARDED
Administrative Staff
{ )
( )
Assistant City Administrator (Initial)
{ }
( )
City Administrator (Initial)
City Clerk
{ }
EXPLANATION FOR RETURN OF ITEM:
RCA Author: Kohler @ 5457
REQUEST FOR LATE SUBMITTAL
(To accompany RCA's submitted after Deadline
Department: Econo I Subject Approval as to Form/Abdelmuti & Paige Lease —j
Council Meeting Date:
9120/99
Date of This Request: 9113199
REASON (Why is this RCA being submitted late?): Revised Lease submitted which has to
be acted upon within 15 days of receipt.
EXPLANATION (Why is this RCA necessary to this agenda?): See above.
CONSEQUENCES (How shall delay of this RCA adversely impact the City?): Failure to act
may set staae for increased expense to the Agency.
Signature:
&02 � 4w2
Department ead
Q-Approved 0 Denied
Ray Silver
Council/Agency Meeting Held: y r`a o� 9 _
L a
Deferred/Continued to:
1�Y-- City Clerk's Signature
Approved ❑ Conditional) Approved ❑ Denied
Council Meeting Date: September 20, 1999
Department ID Number: ED 99-53
CITY OF HUNTINGTON BEACH
REQUEST FOR REDEVELOPMENT AGENCY ACTION
SUBMITTED TO: HONORABLE CHAIRMAN AND REDEVELOPMENT AGENC'�`��'_
MEMBERS C.
SUBMITTED BY: RAY SILVER, Executive Director QoV
PREPARED BY: DAVID C. BIGGS, Director of Economic Development
SUBJECT: Approval As To Form: Amended Lease Between Abdelmuti
Development Co. & Paige Communication Corp. (Oceanview
Promenade)
Statement of Issue, Funding Source, Recommended Action, Alternative Action(s), Analysis, Environmental Status, Attachment(s)
Statement of Issue: At its meeting of September 7, 1999, the Agency disapproved a
proposed lease between Abdelmuti Development Company and Paige Communication
Corporation on the basis that the terms were not at market rate. Attached is an amended
lease between the parties.
Funding Source: Redevelopment Tax Increment (Agency Share of "Guaranteed Rent"
average for the first eight months of 1999 is S13,600/month or $163,200 projected for the
year.
Recommended Action: Approve as to Form the attached amended lease between
Abdelmuti Development Company and Paige Communication Corporation representing rents
increased to $1.65-sq.fUmonth for three years (previously $1.50/$1.60/$1.70).
Alternative Action(s): Disapprove the amended lease on the grounds that the rent is less
than market value.
Analysis: A lease between Abdelmuti Development Company and Paige Communication
Corporation was first presented to the Agency for "Approval as to Form" on August 2, 1999.
The Consent Calendar item was carried forward to August 16th, at which time the Agency
members expressed concern regarding the economic terms of the lease and requested
additional information from staff. The item was again carried forward to the Agency's
meeting of September P" at which time the Agency approved the staffs alternative
recommendation to disapprove the lease (as contained in a memo to the Agency of
September 3, 1999). The Agency's Executive Director notified the Participant of the
Agency's disapproval in writing (see letter Attachment No. 2). l
� l
REQUEST FOR REDEVELOPMENT AGENCY ACTION
MEETING DATE: September 20, 1999 DEPARTMENT ID NUMBER: ED 99-53
The amended lease attached hereto stipulates increased rents to be paid by Paige. The
previous lease was for a term of three years, commencing July 6, 1999, with rents at $1.50-
sq.ft. /month the first year, $1.60-sq.ft. /second year and $1.70-sq.ft. /third year. The
amended lease stipulates a rent of $1.65-sq.ft. /month for the full term.
This increase in tenant -paid rent will not, however, reduce the Agency's subsidy. By the
terms of the Owner Participation Agreement, the Agency would determine, in its disapproval
of the lease, that the market rent for the space was $1.65 and calculate its subsidy on that
basis regardless of what rent, if any, was paid by the tenant. Therefore, while this amended
lease will help bring tenant -paid rents in Oceanview Promenade more in line with the
Agency's determination of value, in this case it will not reduce the "Rent Differential Payment"
owed to the Participant.
The "Guaranteed Rent" remains at an inflation -adjusted amount of $1.93-sq.ft. /month, or
$0.28-sq.ft. /month more than the tenant -paid rent on these suites, or about $680.441month
($8164.801year). Because the OPA requires that only half of the space on the third floor be
assisted, these numbers may be divided by two to determine the Agency's contribution of
$340.22/month or $4,082.40/year.
The original OPA between the Agency and Abdelmuti Development Company was approved
in May 1991, and it was amended in November of that year, it was amended to introduce the
concepts of "Guaranteed Rental Rate" and "Rent Differential Payment." This lease
represents Suites 3G and 3H totaling about 2,430 rentable square feet.
Environmental Status: NA
Attachment{s]:
Amended Lease Between Abdelmuti Dev. Co. & Paige Communication
Corporation.
2 1 Rav Silver disapproval letter to Abdelmuti Development Co.
RCA Author: Kohler @ 5457
AmndedPaigeRAA -2- 09/13/99 10:39 AM
Amended Lease between Abdelmuti Dev. Co. &
Paige Communication Corp.
ATTACHMENT #1
ssp-Ds-sy GS:OEpm From-RUTAN i TUCKER LLF +7145469035 T-620 P 05/06 F-952
FIRST AMENDMENT TO OFFICE SPACE I.EASE
This First Amendment to Office Space Lease (this "Amendment"), dated for reference
purposes as of September 10, 1999, is made by and between ABDELMUTI DEVELOPMENT
COMPANY, a California partnership ("Landlord"), and PAIGE COMMUNICATIONS
CORPORATION, a California corporation ('Tenant").
BEC1TALS:
A. Landlord and Tenant have previously executed that certain Office Space Lease
dated June 30, 1999 (the "Lease") demising to Tenant Two Thousand, Four Hundred Thirty
(2,430) rentable square feet of space designated as Suites 3G and 3H (the "Premises") in the
building known as Oceanview Promenade (the "Building").
B. The Redevelopment Agency for the City of Huntington Beach ("Agency")
disapproved the Lease on September 7, 1999 based upon the current rent structure set forth in
Elie Lease. Accordingly, Landlord and Tenant hereby desire to amend the rent schedule to
obtain Agency approval of the Lease, as required in Section 2.1 therein.
C. All terms not defined herein shall have the meanings ascribed to them in the
Lease.
NOW, THEREFORE, for fair and valuable consideration, the receipt and adequacy of
which is hereby acknowledged, I and]ord and Tenant agree as follows:
1. Basic Annual-&nt. As of the "Effective Date" (as defined herein), the Basic
Annual Rent schedule set forth in Item S of the Basic Lease Provisions is deleted and replaced
with the following:
Eerie Termer Basic Annual Rent
Effective Dare -
June 30, 2002 $48,114.00 - payable $4,009_50 per month
2. Effeclive-Daig. The Effective Date of this Amendment shall be October 1, 1999.
This Amendment is conditioned upon the confirmation and agreement of the terms hereof by the
Agency. Should the Agency disapprove the Amendment, it shall automatically become null and
void.
3. Co ict. In the event of a conflict between this Amendment and the Lease, the
terms of this Amendment shall govern and control.
4. Full -Force and Effecl. Except as specifically modified herein, the Lease remains
in full force and effect.
267l0L4820.000113290421 AM09199
SEP-09-1999 17:09 +7145469035 997 P.05
Sep-09-9S 05:0Eprr
From-RUTAN & TUCKER LLP
+7145469535 T-620 P.06/06 P-952
IN WITNESS WHEREOF, the parties have executed this Amendment as of the date first
written above.
267/01020-= [329i p.,z.1 .09109/99
ABDELMUTI DEVELOPMENT COMPANY,
a California general partnership
Ahmad H. Abdelmuti,
General Partner
"LANDLORD"
PAIGE COMMUNICATIONS CORPORATION.
a California corporation
By:
Edward I. Paige,
President
-2-
"TENANT"
qpp-''AQ-1 q4G ? : mq
4- 7, P PC
Ray Silver Letter to Abdelmuti Dev. Co.
Disapproving Original Lease With Paige Communication
Corp.
ATTACHMENT
#2
City of Huntington Beach
2000 MAIN STREET CALIFORNIA 92648
OFFICE OF THE CITY ADMINISTRATOR
September 13, 1999
Abdelmuti Development Company
101 Main Street
Huntington Beach, CA 92648
Dear Mr. Abdelmuti:
CERTIFIED MAIL
RETURN RECEIPT REQUESTED
Re: Notice of Disapproval of Lease (Suite 3G/3H/Paige Communications
Notice of Appraisal to Determine Guaranteed Rental Rate for Calendar
Years 2000 — 2002, inclusive
Please be advised that on September 7, 1999, the Redevelopment Agency of the City of
Huntington Beach ("Agency") disapproved your proposed lease with Paige
Communications for Suite 3G and 3H on the ground that the rent provided for in the lease
is less than fair -rental value. The Agency's opinion regarding the fair rental values for
the premises in question and the minimum and the minimum acceptable rental amount
required to obtain Agency's approval are $1.65-sq.ft. /month ($4,009.50) for the current
year.
The Agency expressly disagrees with the points raised in the letter from your attorney,
Jeffrey M. Oderman, Esq., delivered to the Agency at its meeting on September 7, 1999.
The Agency believes the appraisal it has obtained for the subject lease rates to be a sound
and reasonable basis for its actions in regard to this matter. Furthermore, the Agency has
been advised by its Iegal counsel that its actions conform to both the spirit and letter of
your Owner Participation Agreement, as amended, with the Agency.
The Agency has received a written request from your attorney, Adam N. Volkert, Esq., to
approve an amended lease with Paige Communications at a flat monthly rental rate of
$1.65. This request will be before the Agency at its meeting of September 20, 1999. The
Agency expressly with many of the assertions made by Mr. Volkert concerning our
agreement with you in his letter. The Agency has not made any blanket statements nor
established any blanket criteria for any proposed lease, except that space is leased for fair
market rent. Each proposed lease and each proposed lease amendment or renewal,
DRUG USE
IS
Mff AB
Telephone (7I4) 536-5202
including the amended Paige Communications lease, will continue to be reasonably
considered by the Agency on its own merits. In that regard, staff will be recommending
that the Agency approve the amended Paige Communications lease, despite the fact that
it contains no escalation provisions in the second and third years. In the future, the
Agency will expect all leases and amendments and renewals, including any amendments
and renewals of the subject lease, to contain appropriate escalation provisions to assure
that fair market rent is charged throughout the term of the lease.
On a separate but related matter, our Agreement with you gives the Agency sole
discretion to require, as to any calendar year, that the Guaranteed Rental Rate be
determined by an appraisal process in lieu of the CPI escalation formula used in the past.
This is to notify you that the Agency requires that the Guaranteed Rental Rate be
calculated and adjusted for the calendar years 2000, 2001, and 2002 based upon an
appraisal of the fair rental value of the second and third floors of the subject building,
utilizing the appraisal method set out in Attachment No. 12 of the Agreement.
Accordingly, if you and the Agency are unable to agree on the appointment of a single
appraiser for such purposes on or before October 1, 1999, both you and the Agency are
required, each at our own expense, on or before October 18, 1999, to designate a
qualified appraiser to determine the Guaranteed Rental Rate by fair rental value appraisal.
Please let us know if you would like to meet in order to jointly attempt to agree on the
appointment of a single qualified appraiser for such purposes.
Sincerely,
Ray Silver,
Executive Director
RS:ls
Xc: Adam N. Volkert, Esq.
RQTAN
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ATTORN E Y S AT LAW
A PARTNERSHIP INCLUDING PROFESSIONAL CORPORATIONS
611 ANTO` BOULEVARD, FOURTEENTH FLOOR
COSTA MESA. CALIFORNIA 92626-1998
DIRECT ALL MAIL TO: POST OFFICE BOX 1950
COSTA MESA, C.ALIFCFR,,IA 92628-11350
TELEPHONE 714-641-5100 FACSIMILE 714-546-9035
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August 16, 1999
xR
Chairman Peter Green and Members of the Board of Directors coo R r �~
Redevelopment Agency of the City of Huntington Beach
City of Huntington Beach
2000 Main Street
Huntington Beach, CA 92648 w i
Re: Oceanview Promenade; Approval of Lease between Abdelmuti Development
Company and Paige Communication, Inc.
Dear Chairman Green and Members of the Board:
On behalf of Abdehnuti Development Company (F'ADC"), I am writing to express our
disappointment that your staff has reversed its prior recommendation of approval and is now
recommending disapproval of the lease between ADC and Paige Communication, Inc. This
reversal of position is based upon a seriously flawed interpretation of the Redevelopment
Agency's contractual obligations under its Owner Participation Agreement ("OPA") with ADC
and is inconsistent with the several year history of Agency approval of other similar office
leases at Oceanview Promenade. We respectfully request that the Agency act consistently with
its own previous course of conduct and the original staff recommendation and approve the Paige
Communication lease. If, instead, the Agency disapproves the Paige Communication lease, the
result very probably will be a much higher Agency financial liability for a totally vacant space.
I apologize for having to deliver this letter to you at the last minute. Unfortunately,
however, even though the Agency staff report on this item was written on August 20, 1999, the
report was not transmitted to my office until late last Friday afternoon, just before the 3-day
holiday weekend, and no one from your staff saw fit in the two weeks since the report was
generated to discuss the matter with us.
ADC's position is outlined below.
Section 201.8 of the OPA requires ADC to submit second- and third -floor office leases
to the Agency for approval and further provides that "Agency shall approve or disapprove such
submittals within fifteen (15) business days after receipt." ADC submitted the Paige
Communication lease to the Agency on July 6, 1999, 44 business days ago.
C4 7
13210t48204)001132912233. 09107 r `
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RUTAN
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A I. OR I E T 5 A T 1 A.
Chairman Peter Green and Members of the Board of Directors
Redevelopment Agency of the City of Huntington Beach
September 7, 1999
Page 2
Notwithstanding its obligations under the OPA, the Agency has rarely, if ever, acted on
one of ADC's office leases in a timely manner. ADC has not made a big deal in the past out
of the Agency's failure to timely perform, however. Instead, ADC has cooperated with your
staff, which has always advised ADC that the Agency's approval is "routine" and a "mere
formality." (That is why approval of the Paige Communication lease originally was placed on
the consent calendar at your August 16, 1999, meeting agenda.)
It is the Agency, not ADC, that suffers financially if ADC is delayed in having a new
office tenant take occupancy in the Oceanview Promenade building. Section 201.8 of the OPA
provides in part that "[t]he portion of the Contract Rent [used for purposes of calculating the
Agency's "Differential Rent Payment" obligation] .. . shall be zero for . . . vacant space
(i.e., unleased and unoccupied) and ... space that is leased but for which no rent is payable.
... " In light of this provision of the contract, with the full knowledge and support of your
staff, and as an accommodation to the Agency, ADC historically has allowed prospective tenants
to occupy their premises prior to Agency approval of their leases. To use Paige Communication
as an example, ADC allowed Paige Communication to occupy its premises on or about July 6,
1999, which, assuming that the Agency were to (finally) approve the lease at your September 7,
1999, meeting, would result in a financial savings to the Agency of $3,645 per month or
approximately $7,500.00 for the period of time between Paige Communication's initial
occupancy and the (belated) time of the Agency's action.
In order to protect itself against the possibility that the Agency might subsequently
disapprove a lease, however, each time ADC has allowed a prospective tenant to occupy the
premises before Agency approval, the lease has contained an express provision that it is subject
to Agency approval and that if for any reason the Agency disapproves it, the lease shall be
considered to be null and void and the tenant shall be required to immediately vacate the
premises. There is such a provision in the Paige Communication lease. (See Exhibit "A"
attached to this letter.)
Accordingly, if the Agency disapproves the Paige Communication lease at tonight's
meeting, the following will occur:
1. ADC will immediately inform Paige Communication of the lease disapproval and
give Paige Communication two choices -- either agree to pay the fair market rent
for the premises as determined by the Agency ($1.65 per square foot for all three
years of the lease term, instead of the currently negotiated $1.50 per square foot
for the first year, $1.60 per square foot for the second year, and $1.70 per square
foot for the third year) or consider its lease null and void and immediately vacate
the premises.
1121014920-000113291223. a09107199
[UTAN
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n r T o Q N E Y S AT LAW
Chairman Peter Green and Members of the Board of Directors
Redevelopment Agency of the City of Huntington Beach
September 7, 1999
Page 3
2. If Paige Communication then elects to pay the higher rent, ADC and the Agency
presumably both will be satisfied. The Agency's Differential Rent Payment will
be reduced (in the first two years of the lease at least) and ADC will receive the
same total amount of compensation.
3. If, however, Paige Communication for any reason does not agree to pay the
higher rent, its occupancy will be immediately terminated, the space will be
vacant (as it would have remained had ADC waited until the Agency acted on the
lease before permitting occupancy), and the Agency will be required under the
OPA to compensate ADC for the entire "Guaranteed Rent" amount of $1.93 per
square foot per month. This includes both the "lost" contract rent from Paige
Communication ($1.50 psf per month for the first year) p us the difference
between the contract rent and the "Guaranteed Rent" (approximately $.43 psf per
month for the first year).
In other words, it is the Agency's gamble. You may save $.15 per square foot per
month for the first year of the Paige Communication lease or you may lose the $1.50 per square
foot per month that you already have "in hand."
Your staff report contains an absolutely inexplicable statement (at page 3) that:
"It is important to note that if Mr. Abdelmuti opted to not proceed
with the proposed Paige Communication Lease because of the
Agency disapproval, the Agency would still consider the space to
have been leased at $1.65/sq. ft."
Respectfully, this statement reflects a complete lack of understanding of the provisions of the
OPA. The OPA, quoted above, most definitely does not allow the Agency to reduce its Differ-
ential Rent Payment based upon the assumption that vacant office space has been leased at a rate
no tenant has agreed to pay based upon the Agency's determination of the hypothetical fair
market rent. Nor does the OPA penalize ADC for submitting a lease and having it disapproved
by requiring ADC to then lease the space to the tenant anyway (at the disapproved rent level)
but suffer a reduction in the Differential Rent Payment by the difference between what the tenant
has agreed to pay and the Agency's fair market rent figure.
ADC has tried to cooperate with your staff in administering the Differential Rent
Payment provisions of the OPA and up until now there has been no significant conflict.
As noted above, ADC has not strictly enforced the time line in the OPA for the Agency to take
action on proposed leases and ADC has accommodated the Agency by allowing prospective
112IOPS20-0001l3291223. 09I07199
[F-UTAN
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Chairman Peter Green and Members of the Board of Directors
Redevelopment Agency of the City of Huntington Beach
September 7, 1999
Page 4
tenants to occupy the premises prior to formal Agency approval of the leases in order to reduce
the Agency's financial exposure. More recently, when the Agency staff presented to ADC the
results of the Ellis Group appraisal, ADC agreed, at your staff's request, to retain an
independent commercial real estate broker to attempt to market the office space and achieve the
slightly higher rent levels that the Agency's appraiser believes to constitute fair market rent,
even though there is nothing in the OPA that requires this action. If, however, the Agency
reverses its history of cooperating with ADC and disapproves the Paige Communication lease,
ADC hereby places you on notice that it will strictly enforce its contractual rights under the
OPA. At a minimum, this will include a demand that the Agency timely respond to requests
for lease approvals. In addition, ADC will not sign awn 1/ new or extended office leases until after
the Agency has approved them. This necessarily will result in significant additional Differential
Rent Payments by the Agency pursuant to the OPA, but so be it. (We estimate the Agency
probably has saved at least $25,000-$30,000 in Differential Rent Payments in the past few years
alone due to ADC's cooperation in allowing prospective tenants to occupy the premises before
the Agency gets around to acting.) Finally, if the Agency really believes that it can disapprove
the Paige Communication lease and thereby reduce its Differential Rent Payment by $1.65 per
square foot for the space occupied by Paige Communication (Suites 3G and I), this ridiculous
interpretation of the lease will be promptly challenged in court. In this regard, please bear in
mind that the OPA contains a provision entitling the prevailing party to recover its attorney's
fees and costs.
ADC believes the contract rent negotiated by ADC and Paige Communication is fair and
reasonable and the Agency should approve the lease. Section 201.8 of the OPA provides that
Agency approval of office leases at Oceanview Promenade shall not be unreasonably denied.
The contract rental rate of $1.50 per square foot for the first year, $1.60 per square foot for the
second year, and $1.70 per square foot for the third year is only slightly under your own
appraiser's determination of fair market rent for the first two years and above your appraiser's
opinion of fair market rent for the third and final year. It is further noteworthy that the
negotiated contract rent is among the highest for any of the office spaces in Oceanview
Promenade (all of which office leases previously have been approved by the Agency) and the
lease is for one of the relatively inferior and hard -to -rent spaces with no ocean view. By way
of comparison, within the past several months alone the Agency has approved a lease for Suite
2A (Presta) at $1.50 per square foot (a prime space with a full ocean view), a lease renewal for
Congressman Rohrabacher's office (Suite 3C) at $1.55 per square foot, a lease for Suite 2D
(Makasjian) at $1.60 per square foot, and a lease for Suite 3A (Vital Technologies) at $1.60 per
square foot for the first year (another prime space with a full ocean view).
In determining fair market rent for the Oceanview Promenade building, Section 201.8
of the OPA requires that the Agency take into consideration both "prevailing market rents in the
1121014920-000113291223. a09107199
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Chairman Peter Green and Members of the Board of Directors
Redevelopment Agency of the City of Huntington Beach
September 7, 1999
Page 5
vicinity" and "the other approved leases in the building on the Site." It is apparent that the
Agency would have to ignore its own previous lease approvals in order to disapprove the Paige
Communication lease. This it cannot do under the OPA.
ADC also questions the validity of the Ellis Group appraisal upon which your revised
staff recommendation appears to be based. Your own appraiser has acknowledged that a "full
ocean view versus no view warrants a $0.20 psf rental premium." (May 20, 1999, Ellis Group
Appraisal Report at p. 9.) He seems to have forgotten this statement, however, when he
finalized the fair market rent for the individual office suites within the Oceanview Promenade
building, since his stated opinion is that the fair market rent for Suites 2A, 2B, and 3A (the three
office suites with full ocean views) is either the same as the fair market rent for Suites 3G and
H (the Paige Communication space) ($1.65 per square foot) or, at most, $.10 per square foot
higher ($1.75 per square foot). (See May 20, 1999, Ellis Group Appraisal Report, Exhibits 3
and 4.)
Your appraiser compares the office rents at Oceanview Promenade unfavorably with the
somewhat higher rents recently achieved at Pierside Pavillion across the street. One of the
primary differences between the two projects, it must be emphasized, is that Oceanview
Promenade has "a complete lack of on -site parking," whereas Pierside Pavillion has an "ample
availability of parking within the project." Ind., pp. 4, 10.) Indeed, by your recent action
in approving the CIM project for the balance of Blocks 104 and 105, the Agency is making
things much worse for Oceanview Promenade and significantly depressing the existing fair
market rents for the Oceanview Promenade building. If the CIM project is implemented, all of
the surface parking within Blocks 104 and 105 (that currently serves Oceanview Promenade) will
be eliminated, the entire area will be turned into a construction zone for probably 18 months or
more (with Suites 3G and H, the space proposed to be occupied by Paige Communication, over-
looking the entire mess), and a Iong-term parking deficit of well over 400 cars will be created.
Office tenants are vitally interested in the availability of adequate, designated, and convenient
parking. What do you think will happen to the fair market rents of the office spaces in
Oceanview Promenade when the parking situation is turned upside down by the CIM project and
office tenants and their employees and clients have to scour the neighborhood for a parking
space or drive blocks away to park in an uninviting public parking structure?
Frankly, the Agency should consider itself fortunate that ADC has been able to lease
Suites 3G and H at all, and especially for the rent that has been negotiated.
Section 201.8 of the OPA contains a provision allowing the Agency to lease the second -
and third -floor offices at Oceanview Promenade itself. If you really are convinced that ADC
is not doing everything within its power to lease the office spaces in the building for the highest
1121014820-000113291223. a0907199
[RUTAN
&TUCKERS
A T T O G \ E Y 5 w T E A v
Chairman Peter Green and Members of the Board of Directors
Redevelopment Agency of the City of Huntington Beach
September 7, 1999
Page 6
rents achievable, rent the space yourself and sublease it for whatever price you can get. If you
can do better than ADC, the Agency will benefit with a reduced Differential Rent Payment.
To summarize, ADC would once again urge the Agency to approve the Paige Communi-
cation lease and direct your staff to continue cooperating with ADC in a manner that minimizes
your Differential Rent Payment obligation to the extent possible. Disapproval of the lease would
very likely result in much more significant negative financial consequences to the Agency.
Very truly yours,
AN & TUCKER, U.P
Jefirdly M.Oderman
JMO: mmw
cc: Mike Abdelmuti
Adam Volkert, Esq.
II21014820=11329I223. a09107/99
OFFICE SPACE LEASE
between
ABDET-MUTI DEVELOPMENT COMPANY,
a California general partnership
AS LANDLORD
and
PAIGE COMMUNICATIONS CORPORATION,
a California corporation
AS TENANT
5
SUITES 3G, 3H
OCEANVIELv PROMENADE
HUNTINGTON BEACH, CALIFORNIA
267!U 14&2U-0W 1g27.671.1 :d16r19/99
EXHIBIT "A," Page 1 of 2
ARTICLE _!I. TERM
SECTION 2.1 GENERAL. The term of this Lease shall be for the
period shown in Item 4 of the Basic Lease Provisions, commencing on
the commencement date as shown in Item 3 of the Basic Lease
Provisions (the "Commencement Date"). Within five (5) days
following the Commencement Date, the parties shall execute a
supplement in the form attached hereto as Exhibit "A-311, stating
the Commencement Date and the expiration date of the term of this
Lease. This Lease is conditior_ed upon approval by tie
Redevelopment Agency of the City of Huntington Beach (the
"Redevelopment Agency"). Notwithstanding that Tenant has taken
possession or is in occupancy of Premises, should the Redevelopment
Agency not approve this Lease,. the Lease shall automatically become
null and void.
SECTION 2.2 TENDER OF POSSESSION BY LANDLORD. Landlord may
tender the Premises to Tenant prior to, on or after the estimated
commencement date specified in Item 3 of the 3asic Lease Provisions
upon not less than five (5) days' written notice stating that the
Premises will be ready for occupancy on the date specified in such
notice. if Landlord, for any reason whatsoever, cannot deliver
possession of the Premises to Tenant on -or before the estimated
commencement date, this Lease shall not be void or voidable nor
shall Landlord be liable to Tenant for any loss or damage resulting
therefrom.
SECTION 2.3 INTENTIONALLY OMITTED.
ARTICLE III. RENT AND SECURITY DEPOSIT
SECTION 3.1 BASIC ANNUAL RENT.
(a) Tenant shall pay the basic annual rent for the Premises
in the total amount, but payable in the equal monthly installments,
shown in Item 5 of the Basic Lease Provisions, due and payable on
the first day of each month in advance, commencing on the
Commencement Date and continuing throughout the term of this Lease,
except that if the Commencement Date occurs on a day other than the
first day of a month, then the rent payable hereunder shall be
prorated on a daily basis and the rent for the partial month
following the Commencement Date shall be payable on the first day
of the term of this Lease. No demand, notice or invoice shall be
required. Tenant shall receive a credit against the first
installment or installments of minimum rental payable under this
Section 3.1 in arr amount equal to the prepaid rent specified in
Item 9 of the Basic Lease Provisions. All rents and other sums
payable by Tenant to Landlord under this Lease shall be paid to
Landlord, without offset or deduction, in lawful money of the
United States of America at the address for Landlord shown in Item
ll of the Basic Lease Provisions, or to such other person or at
such other place as Landlord may from time to time designate in
writing.
(b) As used herein "Lease Year" shall be a period of twelve
(12) consecutive months commencing on the first full calendar month
during the lease term; provided that the first Lease Year shall
also include any partial calendar month following the Commencement
Date.
(c) lnter__ionally omitted.
(d) Intentionally Omitted.
(e) In the event that at any time during the term of this
Lease, any governmental law, rule or regulation prohibits or
postpones in whole or in part any increase in the rent or in the
payment of other sums payable by Tenant hereunder to be made
pursuant to this Lease, then, and in either of such events, such
increase or payment shall be made to the maximum extent permissible
by law at the time provided in this Lease, and/or at any time or
2671014520.OW 4274671.1 aVZ9199 - 4 -
EXHTBIT "A," Page 2 of 2