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HomeMy WebLinkAboutCIM/Huntington, LLC - aka CIM Group, LLC - 2000-04-03Recorded in Official Records, Orange County Tom Daly, Clerk -Recorder 111111111111111111111111111111111111111111111111111111111111 48.00 THIS DOCUMENT HAS 2009000511364 08:00am 09/28/09 BEEN PREPARED BY 117 92 A17 M11 008 11 AND WHEN RECORDED RETURN TO: 0.00 0.00 0.00 0.00 30.00 0.00 0.00 0.00 C1M/Huntington, LLC 6922 Hollywood Blvd., 9th Floor Los Angeles, California 90028 Attn: General Counsel SECOND AMENDED AND RESTATED MEMORANDUM OF LEASE AND OPTION TO PURCHASE AND AMENDMENT OF GROUND LEASE Assessor's Parcel No. 024-152- 024 THIS SECOND AMENDED AND RESTATED MEMORANDUM OF LEASE AND OPTION TO PURCHASE AND AMENDMENT OF GROUND LEASE (this "SECOND RESTATED MEMORANDUM") is executed effective as of September 1, 2009 (the "Effective Date"), by and between CIM/Huntington, LLC, a California limited liability company, and the Redevelopment Agency of the City of Huntington Beach (collectively, "Tenant"), whose address is 6922 Hollywood Boulevard, Suite 900, Hollywood, CA 90028, and Dolores L. Cracchiolo and Salvator W. Cracchiolo, as trustees for the Declaration of Trust dated June 12, 1979, and Salvator W. Cracchiolo and Barbara F. Cracchiolo, as trustees of the Cracchiolo Family Trust dated March 28, 2003, collectively with their successors and assigns ("Landlord"), whose address is 1304 Pacific Coast Highway, Huntington Beach, CA 92648. PRELIMINARY STATEMENT: Landlord and Tenant entered into that certain lease (the "Original Lease") dated as of March 8, 2000, and in connection therewith a Memorandum of Lease was recorded in the Orange County Recorder's Office on June 21, 2001 as Instrument No. 20010411099 of Official Records (the "Original Memorandum"), which incorporated by reference the Original Lease. The Original Memorandum was replaced in its entirety by that certain Amended and Restated Memorandum of Lease that was recorded on September 5, 2005 as Instrument No. 2005-707181 of Official Records (the "First Restated Memorandum") This SECOND RESTATED MEMORANDUM replaces in its entirety the FIRST RESTATED MEMORANDUM, and the terms, provisions and conditions of that certain Amended and Restated Ground Lease and Option to Purchase dated as of June 30, 2005 (the "Restated Lease") are incorporated herein by this reference to the same extent as if recited in their entirety herein. Pursuant to the terms, provisions and conditions of the Restated Lease, Landlord has leased to Tenant, and Tenant has rented and leased from Landlord, certain premises (the "Premises") that are described on Exhibit A attached hereto (the "Land"), which Exhibit A replaces the Exhibit A attached to the FIRST RESTATED MEMORANDUM in its entirety. Unless otherwise expressly provided herein, all defined terms used in this SECOND RESTATED MEMORANDUM shall have the same meanings as are ascribed to such terms in the Restated Lease. CIM 11untington Cracchiolo Second Restated Memo of Lease v4 NOW, THEREFORE, Landlord and Tenant hereby make specific reference to the following terms, provisions and conditions of the Restated Lease: 1. In consideration of the rentals and other sums to be paid by Tenant and of the other terms, covenants and conditions on Tenant's part to be kept and performed pursuant to the Restated Lease, Landlord leases to Tenant, and Tenant takes and hires, the Premises. The Lease term commenced as of the Commencement Date (as defined in the Restated Lease) and expires at midnight on the Expiration Date (as defined in the Restated Lease), unless extended as provided below or terminated sooner as provided in the Restated Lease. 2. Tenant has the option to extend the term of the Restated Lease for up to two (2) additional successive periods of twenty-five (25) years each and one additional successive period of twenty-four (24) years, by written notice to Landlord not less than 180 days prior to the expiration of the term of the Restated Lease, each such option to be executed in accordance with the Restated Lease. 3. Tenant has certain rights to purchase the Premises as set forth in the Restated Lease. 4. The Restated Lease is a "true lease"; the only relationship created thereby is that of landlord and tenant. 5. Original copies of the Restated Lease are in the possession of Landlord and Tenant. The Restated Lease contains other terms not herein set forth but which are incorporated by reference herein for all purposes, and this SECOND RESTATED MEMORANDUM is executed for the purpose of placing parties dealing with the Premises on notice of the existence of the Restated Lease and, where appropriate, its contents, and shall ratify and confirm all other terms of the Restated Lease as fully as if the same had been set forth herein. 6. Notwithstanding anything to the contrary contained herein, except for the legal description of the Land, nothing in this SECOND RESTATED MEMORANDUM shall modify, supersede, diminish, add to or change any or all of the terms of the Restated Lease or be deemed to create or grant any rights, liabilities or obligations of or to any party or third parties other than as specifically set forth in the Restated Lease. In the event of any conflict between this SECOND RESTATED MEMORANDUM and the Restated Lease, the terms and conditions of the Restated Lease shall control. 7. This SECOND RESTATED MEMORANDUM may be executed in one or more counterparts, each of which shall be deemed an original, except that the legal description of the Land subject to the Restated Lease as set forth in this SECOND RESTATED MEMORANDUM shall be controlling. CtM Huntington Cracchioio Second Restated Memo of Lease v4 IN WITNESS WHEREOF, the parties hereto have caused this SECOND RESTATED MEMORANDUM to be duly executed as of the Effective Date. TENANT: LANDLORD: CIM/HuntingtJLLCa California 'ty company By:} r Avraham Shemesh, Treasurer Redevelopment Agency of the City of Huntington Beach By: Chairman ator W. Cracchio o, t�efore Declaration of Trust dated June 12, 1979 r Dolores L. Cracchiolo, trustee for the Dec ation of Trust dated Jun .12, 1979 arbara . Cracchiolo, trustee of the Cracchio o F ily rust date arch 2 , 0 vator W. Cracchiolo, trustee of the Cracchiolo Family Trust dated March 28, 2003 CIM Huntington Cracchiolo Second Restated Memo of Lease v4 REDEVELOPMENT AGENCY OF THE CITY OFAUNTINGTON BEACH ATTEST: Agency.+C�lerk VED AS TO FORM: Counsel APPROVED AS TO FORM: 06-682,009/383 l0 CALIFORNIA ALL-PURPOSE ACKNOWLEDGEMENT STATE OF CALIFORNIA COUNTY OF LOS ANGELES On September, 15, 2009, before me, Lory Ann Apilado, a Notary Public, personally appeared Avraham Shemesh, who proved to me on the basis of satisfactory evidence to be the person(&) whose names} Wave subscribed to the within instrument and acknowledged to me that he/she4hey executed the same in his/heFAheir authorized capacity(ies}s and that by his/her4heir signature(s) on the instrument the person(g)-, or the entity upon behalf of which the person(s)-acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. r By: j. Lo Ann Apilado, Notary Public SEAL ------------ LORY ANN AKLAW Commission # 1834030 notary Public • California Los Angeles County U E 1� Xm."m, f� irss Jaa 29, 2013 STATE OF CALIFORNIA ss. COUNTY OF ,J ) On 1 Nx before me, (here insert name and title of the officer , personally appearedi-44.a-r(insert name(s) of signer who proved to me on the basis of satisfactory evidence to be the personX whose named a; -subscribed to the within instrument and acknowledged to me that t,1 � executed the same in -h�lhcir- authorized capacity(iN, and that by erAklsignature on the instrument the person{§),,or the entity upon behalf of which the person(s`,acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official se . Signature�`�� (Seal) 6008995030 STATE OF CALIFORNIA ss. COUNTY OF before me,) �14� '�'-E✓, (here insert name and title of the officer), personally appeared-5'��uk rv/r.-C , GA4� S--/• (insert name) of signer(s.)) who proved to me on the basis of satisfactory evidence to be the person) whose' names) -a bscribed to the within instrument and acknowledged to me that Q�i der executed the same in i authorized capacity(, and that by i -signature j on the instrument the persono, or the entity upon behalf of which the persoP(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature (Seal) C�ax� K1 Commission # 6 I0282 Notary Put*c - Cawomio Oronge County L0,11MY CM=- ftfts Jon 13,201 6009995030 STATE OF CALIFORNIA ss. COUNTY OF 4 ) On 13 -zroq before me,�.•_<< (here insert name and title of the office , personally appeared &%, o/4 (insert name(,g)+of si ner(*)�who proved to me on the basis of satisfactory evidence to be the persono whose jPar.-,subscribed to the within instrument and acknowledged to me that executed the same in -14s/ er heir -authorized capacity), and that by V/�fheir-signature(x�on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature (Seal) CA1'HERINE KERSMN wa163o wary CaNlotrdrnj o orange cot"ry my catun. Exph� ►an 13,201 0008995030 CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT wM_ State of California County of ?oa before me, L - Date � Here Insert Name an;Zll&� Tillthe Officer personally appeared f74�� .14 - ��LSd tii �¢,�/y le P. L. ESPAR A Commission # 1857021 i Notary Public - California i Orange County D My Comm. E res Aup 4, 2013 Place Notary Seal Above who proved to me on the basis of satisfactory evidence to be the persortowhose namq j ' ar ubscribed to the within instrument and acknowledged to me that iae/s#ae ' executed the same in his' a eir uthorized capacity(sand that by lais,43er ei ignaturedDon the instrument the perso<ss� or the entity upon behalf of which the persor s�acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS d n i i4Notar Signature ' Signatu OPTIONAL Though the information below is not required by law, it may prove valuable to persons relying on the document and could prevent fraudulent removal and reattachment of this form to another document. Description of Attached Document Title or Type of Docu Document Date: _/Lyi7,Q�n �. ZC.1C�9 Number of Pages: . Signer(s) Other Than Named Above: Capacity(ies) Claimed by Signer(s) Signer's Name: i. 1 Individual col Corporate Officer — Title(s): _ Partner— Limited J General _-- Attorney in Fact • Trustee Top of thumb here Guardian or Conservator I., Other: r Is Representing: Signer's Name:e�+� 1� Individual ST• Corporate Officer — Title(s): �Y J Partner — ❑ Limited F . General _ J Attorney in Fact • Trustee 1_ Guardian or Conservator I Other: ___ ner Is Representing Top of Ihumb here ©2007 National Notary Assxiation • 9350 De Soto Ave., P.O. Box 2402 • Chatsworth. CA 91313-2402 • www.NationalNotary.org Item 45907 Reorder Call Toll -Free 1.800-876-6827 Exhibit A The "Property" An undivided 4.505% interest in and to: Lot i of Tract No. 16406, In the City of Huntington Beach, County of Orange, state of California, as shown on map recorded in Book 870, Pages 47 to 50 inclusive of Miscellaneous Maps, in the bffice of the County Recorder of said County. Except therefrom all that portion of said land lying below a depth of 500 feet measured vertically from the present surface of the ground. Except therefrom: Parcel A: That portion of Lot 1 of Tract No. 16406, in the City of Huntington Beach, County of Los Angeles, State of California, as per map recorded in Boost 870 Pages 47 to 50 inclusive of miscellaneous maps, records of the office of the county recorder of said county, more particularly described as follows: Commencing at the intersection of a line parallel with and distant 2.83 feet Northeasterly, measured at right angles, from the Southwesterly line of said Lot 1 with that certain course along the Southeasterly boundary of said Lot 1, said course being shown as North 410 37' 10" East 124.55 feet; thence North 48' 21' 52" West, along said parallel line, 4.70 feet to the point of beginning; thence, along the following 10 courses and distances: 1. North 480 21' 52" West, along said parallel line, 336.83 feet; 2. North 41° 38' 08" East, 148.50 feet; 3. South 480 2 V 52" East, 77.00 feet; 4. South 64155' 17" East, 19.30 feet; 5. South 480 21' 52" East, 30.00 feet; 6. North 410 38' Or East, 182.00 feet; 7. South 480 21' 52." East, 275.00 feet; 8. South 41138' 08" West, 211.58 feet; 9. North 480 21' 52" West, 63.67 feet, 10. South 41° 38' 08" Wet, 124.42 feet to the point of beginning. Except therefrom that portion thereof lying above elevation 25.66 feet (NAVD 88). Also except therefrom that portion thereof lying below elevation 9.00 feet (NAVD 88). Also except therefrom that portion indicated as "Components" as defined in Article 1.18 of the declaration of Covenants, Conditions and Restrictions and Grant of Reciprocal Easements. Parcel 5: 6008995030 Exhibit A-1 That portion of Lot 1 of Tract No. 16406, in the City of Huntington Beach, County of Orange, State of California, as per map recorded in Book 870 Pages 47 to 50 indusive of miscellaneous maps, records of the office of the county recorder of said county, more particulady described as follows: Commencing at the intersection of a line parallel with and distant 2.83 feet Northeasterly, measured at right angles, from the Southwesterly line of said Lot 1 with that certain course along the Southeasterly boundary of said Lot 1, said course being shown as North 410 37' 10" East 124.55 feet; thence North 480 21' 52' West, along said parallel line, 4.70 feet; thence along the following 14 courses and distances! 1. North 480 2V S2 feet, along said Parallel line, 336.83 feet; 2. North 410 38' 08" East, 148.50 feet to the point of beginning; 3. North 480 21' 52" West, 15.93 feet to a point of the Northwesterly line of said Lot 1; 4. North 410 37' 11" East, along said Northwesterly line, 40.75 feet; S. South 480 21' 52" East, 15.93 feet; 6. North 410 38' 08" East, 2.00 feet; 7. South 480 21' 52" East, 43.83 feet; S. South 590 00' 03" East, 52.82 feet; 9. South 770 09' 19" East, 21.11 feet; 10. South 486 21' 25" East, 11.25 feet; 11. South 410 38' 08" West, 57.17 feet; 12. North 48° 21.' 52" West, 30.00 feet; 13. North 64a 55' 17" West, 19.30 feet; 14. North 48° 21' 52" West, 77.00 feet to the point of beginning. Except therefrom that portion thereof lying above and between an elevation of 38.79 feet on the Northwesterly line of said Parcel 2 and an elevation of 26.33 feet on the SoutheasteHy line of said Parcel 2 (NAVD 88). Also except therefrom that portion thereof lying below and between an elevation of 30.46 feet on the Northwesterly line of said Parcel 2 and an elevation of 18.00 feet on the Southeasterly line of said Parcel 2 (NAVD 88). Also except therefromltheV", i.on�3g4i+co�,las,'Components=.as defined in Article 1.18 of the Declaration of /.,4.kMl1j � rti'� 10 �'I( 3 flai itTR i'J fill D A di i!ijfr Covenants, Conditions and Restrictions and i'rant of f�ecrprocit 17ai Easements. JAFI2 =iliT sir,:6F3 "±! 'is i�.sltt'?;t5i fy-� fl?ifi,Rt, ,tI �E-?SSi".D"?'d -IM V0t11'A1ljj'fjqj'.; 6009995030 Exhibit A-2 THIS IS A TRUE CERTIFIED COPY OF THE �``ERa•�CCo COUNTY CLERK -RE COR RECORD IF IT BEARS THE SEAL, qa imPRINTED IN PURPLE, OF THE ORANGE of e COUN�fR� U u � o � . DATE: "� ORANGE COUWTY STATE OF CALIFO CERI' MATION FEE: APN: 024-153-24 RECORDING REQUESTED BY Old Republic Title Company Escrow No: 2476008966 WHEN RECORDED MAIL TO CIM/Huntington, LLC-General Counsel 6922 Hollywood Blvd., 9th floor Los Angeles, CA 90028 Recorded in Official Records, Orange County Tom Daly, Clerk -Recorder IIIIIII11111111111111111111111111111111111111111111111111111 39.00 2009000511365 08:00am 09/28/09 117 92 M 11 008 10 0.00 0.00 0.00 0.00 27.00 0.00 0.00 0.00 SPACE ABOVE THIS LINE FOR RECORDER S USE Memorandum of Subground Lease, Option to Purchase Fee and Agreement Containing Covenants Affecting Real Property Lease term is less than 99 years DW/dw MEMORANDUM OF SUBGROUND LEASE THIS DOCUMENT HAS BEEN PREPARED BY AND WHEN RECORDED RETURN TO: CIM/Huntington, LLC 6922 Hollywood Blvd., 9`h Floor Los Angeles, California 90028 Attn: General Counsel MEMORANDUM OF SUBGROUND LEASE, OPTION TO PURCHASE FEE AND AGREEMENT CONTAINING COVENANTS AFFECTING REAL PROPERTY Assessor's Parcel No. 024-152- 24 THIS MEMORANDUM OF SUBGROUND LEASE (this "Memorandum") is executed effective as of August 25, 2009 (the "Effective Date"), by and between CIM/Huntington, LLC, a California limited liability company, and the Redevelopment Agency of the City of Huntington Beach (collectively, "Sublandlord"), whose address is 6922 Hollywood Boulevard, Suite 900, Hollywood, CA 90028 and City Hall, 2000 Main Street, Huntington Beach, CA 92648, and CIM/Huntington, LLC, a California limited liability company ("Subtenant"), whose address is 6922 Hollywood Boulevard, Suite 900, Hollywood, CA 90028. PRELIMINARY STATEMENT: Sublandlord and Subtenant entered into that certain sublease dated as of April 16, 2001 and amended as of June, 2005 (as amended, the "Subground Lease") , the terms, provisions and conditions of which are incorporated herein by this reference to the same extent as if recited in their entirety herein. Pursuant to the terms, provisions and conditions of the Subground Lease, Sublandlord has subleased to Subtenant, and Subtenant has rented and subleased from Sublandlord, certain premises (the "Premises") described on Exhibit A attached hereto (the "Land"). Unless otherwise expressly provided herein, all defined terms used in this Memorandum shall have the same meanings as are ascribed to such terms in the Subground Lease. NOW, THEREFORE, Sublandlord and Subtenant hereby make specific reference to the following terms, provisions and conditions of the Lease: I. In consideration of the rentals and other sums to be paid by Subtenant and of the other terms, covenants and conditions on Subtenant's part to be kept and performed pursuant to the Subground Lease, Sublandlord leases to Subtenant, and Subtenant takes and hires, the Premises. The Sublease term commences as of the Commencement Date (as defined in the Subground Lease) and expires as specified in the Subground Lease, unless extended as provided below. 2. Subtenant has the option to extend the term of the Subground Lease for up to two (2) additional successive periods of twenty-five (25) years each and one additional successive period of twenty-four (24) years, by written notice to Sublandlord not less than 210 days prior to the expiration of the term of the Subground Lease, each such option to be executed in accordance with the Subground Lease. 3. Subtenant has certain rights to purchase the Premises as set forth in the Subground Lease. 4. The Subground Lease is a "true lease"; the only relationship created thereby is that of Sublandlord and subtenant. 5. Original copies of the Subground Lease are in the possession of Sublandlord and Subtenant. The Subground Lease contains other terms not herein set forth but which are incorporated by reference herein for all purposes, and this Memorandum is executed for the purpose of placing parties dealing with the Premises on notice of the existence of the Subground Lease and, where appropriate, its contents, and shall ratify and confirm all other terms of the Subground Lease as fully as if the same had been set forth herein. 6. Notwithstanding anything to the contrary contained herein, nothing in this Memorandum shall modify, supersede, diminish, add to or change any or all of the terms of the Subground Lease or be deemed to create or grant any rights, liabilities or obligations of or to any party or third parties other than as specifically set forth in the Subground Lease. In the event of any conflict between this Memorandum and the Subground Lease, the terms and conditions of the Subground Lease shall control. 7. This Memorandum may be executed in one or more counterparts, each of which shall be deemed an original. 8. Sublandlord and Subtenant will execute, acknowledge and deliver an amendment to this Memorandum as set forth in Section 30 of the Sublease. IN WITNESS WHEREOF, the parties hereto have caused this Memorandum to be duly executed as of the Effective Date. SUBTENANT: CIM/Huntington, LLC, a California limited liability company By: -- v ham Shemesh, Treasurer S[1BLANDLORD: CIM/Huntington, LLC, a California limited liability company By: — Avraham Shemesh, Treasurer t Agency of the City of Beach (Agency) Executive Diibctor VIEWED AND APPROVED AS TO FORM: Ap-,encvjeneral Counsel APPROV>uI�AS TO FORM: KANE, BALLNIP4 & BERKMAN REDEVEL� Q4PMENT AGENCY OF THE CITY OF VWTMGTON BEACH FCFF $ A- W14 56" ATTEST: �-�� �- Agency Clerk Ro,e/^1 406 AA APPROVED AS TO FORM: jen:cyle—neral Counsel gi�� (01 APPROVED AS TO FORM: Agency Sp oun 1 06-682.009/38310 CALIFORNIA ALL-PURPOSE ACKNOWLEDGEMENT STATE OF CALIFORNIA COUNTY OF LOS ANGELES On September 24, 2009, before me, Lory Ann Apilado, a Notary Public, personally appeared Avraham Shemesh, who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/am subscribed to the within instrument and acknowledged to me that he/she4hey executed the same in his/her4heir authorized capacity(ies3, and that by his/herAbeiw signature(s) on the instrument the person(s)-f or the entity upon behalf of which the person(s*acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. By: Lory An Apilado, Notary Pu c SEAL LORY ANN APILADO Commission # 1834030 < •,� Notary Public - California i a Los Angeles County r My Comm. Ex ires Jan 29, 2013 CALIFORNIA ALL-PURPOSE ACKNOWLEDGEMENT STATE OF CALIFORNIA COUNTY OF LOS ANGELES On September 24, 2009, before me, Lory Ann Apilado, a Notary Public, personally appeared Avraham Shemesh, who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/awe subscribed to the within instrument and acknowledged to me that he/&heAkey executed the same in his/fir authorized capacity(ies)and that by his/fir signature(s) on the instrument the person(s); or the entity upon behalf of which the persore(s -acted, executed the instrument. I certify wader PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official se 1. By: Lory Ann Apilado, Notary Public SEAL CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT State of California personally appeared P L. ESPARZA Commission # 1657021 Rotary Public - California z Orange County M Comm. E res 4, 2013 w Place Notary Seal Above who proved to me on the basis of satisfactory evidence to be the person whose name4Dis/are subscribed to the within instrument and acknowledged to me that t e xecuted the same in k thei uthorized capacity ies and that by he signature on the instrumen the person s[�' or the entity upon behalf of which the persons acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my d nd icial -oI. Signature sigrijFre of N ry Public OPTIONAL Though the information below is not required by law, it may prove valuable to persons relying on the document and could prevent fraudulent removal and reattachment of this form to another document. Description of Attached Document Title or Type of Document:��'��u-/�"i Document Date:AL(.C4Z7 d S_-y2AWNumber of Pages: Signer(s) Other Than Named Above: Capacity(ies) Claimed by Signer(s) Signer's Name: 57Q40 �L�-�/� SyA) L.J Individual �—= �4�r.� Corporate Officer — Title(s):TD�L. I I Partner --- U Limited LJ General _ L.J Attorney in Fact LJ TrUStee I I Guardian or Conservator I Other: Is Representing: Signer's Name: 0�!/` U Individual Corporate Officer — Title(s): _ e-V [:I Partner — U Limited J General LJ Attorney in Fact - e N 6511 U Trustee I Guardian or Conservator ^I Other: r Is Representing: Top of thumb here 02007 Nationat Notary Association- 9350 De Soto Ave.,P.O.Box2402-Chatsworth, CA91313-2402-www.NationalNotary.org Item#5907 Reorder:CallTell-Free 1-80"76-6827 Exhibit A The "Property" An undivided 4.505% interest in and to: Lot 1 of Tract No. 16406, in the City of Huntington Beach, County of Orange, State of California, as shown on map recorded In Book 870, Pages 47 to 50 Inclusive of Miscellaneous Maps, in the Office of the County Recorder of said County. Except therefrom all that portion of said land lying below a depth of 500 feet measured vertically from the present surface of the ground. Except therefrom: Parcel A: That portion of Lot 1 of Tract No. 16406, in the City of Huntington Beach, County of Los Angeles, State of California, as per map recorded in Book 870 Pages 47 to 50 inclusive of miscellaneous maps; records of the office of the county recorder of said county, more particularly described as follows: Commencing at the Intersection of a line parallel with and distant 2.83 feet Northeasterly, measured at right angles, from the Southwesterly line of said Loft i with that certain course along the Southeasterly boundary of said Lot 1, said course being shown as North 410 37' 10" East 124.55 feet; thence North 480 21' 52" West, along said parallel line, 4.70 feet to the point of beginning; thence, along the following 10 courses and distances: 1. North 480 21'52" West, along said parallel line, 336.83 feet; 2. North 410 38' 08" East, 148.50 feet; 3. South 481121' 52" East, 77.00 feet; 4. South 640 55' 17" East, 19.30 fleet; 5. South 480 21' 52" East, 30.00 feet; 6. North 410 38' 08" East, 182.00 feet; 7. South 480 21' 52" East, 275.00 feet; 8. South 410 38' 08" West, 211.58 feet; 9. North 4810 21' 52" West, 63.67 feet; 10, South 410 38' 08" Wet, 124.42 feet to the .paint of beginning. Except therefrom that portion thereof lying above elevation 25.66 feet (NAVO 86). Also except therefrom that portion thereof lying below elevation 9.00 feet (NAVE) 88). Also except therefrom that portion indicated as "Components" as defined in Article 1.18 of the declaration of Covenants, Conditions and Restrictions and Grant of Reciprocal Easements. Parcel S. 6005995030 Exhibit A-1 That portion of Lot 1 of Tract No. 16406, in the City of Huntington Beach, County of Orange, State of California, as per map recorded in Book 870 Pages 47 to 50 inclusive of miscellaneous maps, records of the office of the county recorder of said county, more particularly described as follows: Commencing at the intersection of a line parallel with and distant 2.83 feet Northeasterly, treasured at right angles, from the Southwesterly line of said Lot 1 with that certain course along the Southeasterly boundary of said Lot 1, said course being shown as North 410 37 10" East 124.55 feet; thence North 480 21' 52' West, along said parallel llne, 4.70 feet; thence along the following 14 courses and distances: 1. North 486 21'52 feet, along said Parallel line, 336.83 feet; 2. North 410 38' 08" East, 148.50 feet to the point of beginning; 3. North 4810 21' 52" West, 15.93 feet to a point of the Northwesterly line of said Lot 1; 4, North 410 37' 11" East, along said Northwesterly line, 40.75 feet; 5. South 48, 21' S2" East, 15.93 feet; 6. North 411,38' 08" East, 2.00 feet; 7. South 4811 21' 52" East, 43.83 feet; 8. South 590 00' 03" East, 52.82 feet; 9. South 770 09' 19" East, 21.11 feet; 10. South 48° 21' 25" East, 11.25 feet; 11. South 41° 38' 08" West, 57.17 feet; 12. North 480 21' 52" West, 30.00 feet; 13. North 640 55' 17" West, 19.30 feet; 14. North 48' 21' 52" West, 77.00 feet to the point of beginning. Except therefrom that portion thereof tying above and between an elevation of 38.79 feet on the Northwesterly line of said Parcel 2 and an elevation of 26.33 feet on the Southeasterly line of said Parcei 2 (NAVD 88). Also except therefrom that portion thereof lying below and between an elevation of 30.46 feet on the Northwesterly line of said Parcel 2 and an elevation of 18.00 feet on the Southeasterly line of said Parcel 2 (NAVD 88). t13fi:xi5:')7fs•;��:s`.►':> r rZq,.:a:-z Ar♦ ��� Also except there�frT that port'ran.indkzted aas'"Components" as defined in ArticleF 1 1 �afttG,i ,i er Ora` ron of Covenants, (55 itlons-"and Restrictions and,Trant,o€ Ftecipro:cal Eag&4ents Is = r ,to . <1 I rr:rfi :rsrr,Y„ 6008995030 Exhibit A-2 TpIIS IS A TRUE CERTIFIED COPY OF THE �� ��E�ft RfCOUNTY CLER�.RER CO RECORD IIFIT REARS THE SEAL, o IMPRINTED IN PURPLE OF THE ORANGE ®J� @� ORANGE COUNTY DATE: STATE OF CA➢.IFOUIA CERIM CATION PEE: ORDING FIRSTCAMER CAN TITLE REQUESTED COMPANY NATIUNAUCOMMERCIAL SERVICES r:0Mh1ERC1.AuiNDUSTRIAL DIVISION THIS DOCUMENT HAS BEEN PREPARED BY AND WHEN RECORDED RETURN TO: Fragner & Pace Law Corporation 300 S. Grand Avenue, 14th Floor Los Angeles, California 90071 Attn: Matthew C. Fragner, Esq. jq(65 —17(, ?67- M r Recorded in Official Records, Orange County Tom Daly, Clerk -Recorder 111111111111IIIIIIIIIIIIIIIIIIIIIII11111IIg111111111111111111 30.00 2005000707181 04:17prn 09/07/05 117 48 L02 9 0.00 0.00 0.00 0.00 24.00 0.00 0.00 0.00 AMENDED AND RESTATED MEMORANDUM OF LEASE AND OPTION TO PURCHASE Assessor's Parcel No. 024-152-02 and 024-152-03 and 024-152-04 and 024-152-05 and 024 152 10 and 024-152-11 and 024-152-12 and 024-152-13 and 024-153-01 and 024- 153-02 and 024-153-03 and 024-153-10 THIS AMENDED AND RESTATED MEMORANDUM OF LEASE AND OPTION TO PURCHASE (this "RESTATED MEMORANDUM") is executed effective as of June 30, 2005 (the "Effective Date"), by and between CIM/Huntington, LLC, a California limited liability company, and the Redevelopment Agency of the City of Huntington Beach (collectively, "Tenant"), whose address is 6922 Hollywood Boulevard, Suite 900, Hollywood, CA 90028, and Dolores L. Cracchiolo and Salvator W. Cracchiolo, as trustees for the Declaration of Trust dated June 12, 1979, and Salvator W. Cracchiolo and Barbara F. Cracchiolo, as trustees of the Cracchiolo Family Trust dated March 28, 2003, collectively with their successors and assigns ("Landlord"), whose address is 19712 Quiet Bay Lane, Huntington Beach, CA 92648. PRELIMINARY STATEMENT: Landlord and Tenant entered into that certain lease (the "Original Lease") dated as of March 8, 2000, and in connection therewith a Memorandum of Lease was recorded in the Orange County Recorder's Office on June 21, 2001 as Instrument No. 20010411099 of Official Records (the "Original Memorandum"), which incorporated by reference the Original Lease. This RESTATED MEMORANDUM replaces in its entirety the Original Memorandum, and the terms, provisions and conditions of that certain Amended and Restated Ground Lease and Option to Purchase dated as of June 30, 2005 (the "Restated Lease") are incorporated herein by this reference to the same extent as if recited in their entirety herein. Pursuant to the terms, provisions and conditions of the Restated Lease, Landlord has leased to Tenant, and Tenant has rented and leased from -1— CIM Huntington Cracchiolo Amended and Restated Memorandum of Lease v I Document Number: 2005000707181 Page: 1 of 9 Landlord, certain premises (the "Premises') described on Exhibit A attached hereto (the "Land"). Unless otherwise expressly provided herein, all defined terms used in this RESTATED MEMORANDUM shall have the same meanings as are ascribed to such terms in the Restated Lease. NOW, THEREFORE, Landlord and Tenant hereby make specific reference to the following terms, provisions and conditions of the Restated Lease: I . In consideration of the rentals and other sums to be paid by Tenant and of the other terms, covenants and conditions on Tenant's part to be kept and performed pursuant to the Restated Lease, Landlord leases to Tenant, and Tenant takes and hires, the Premises. The Lease term commenced as of the Commencement Date (as defined in the Restated Lease) and expires at midnight on the Expiration Date (as defined in the Restated Lease), unless extended as provided below or terminated sooner as provided in the Restated Lease. 2. Tenant has the option to extend the term of the Restated Lease for up to two (2) additional successive periods of twenty-five (25) years each and one additional successive period of twenty-four (24) years, by written notice to Landlord not less than 180 days prior to the expiration of the term of the Restated Lease, each such option to be executed in accordance with the Restated Lease. 3. Tenant has certain rights to purchase the Premises as set forth in the Restated Lease. 4. The Restated Lease is a "true lease"; the only relationship created thereby is that of landlord and tenant. 5. Original copies of the Restated Lease are in the possession of Landlord and Tenant. The Restated Lease contains other terms not herein set forth but which are incorporated by reference herein for all purposes, and this RESTATED MEMORANDUM is executed for the purpose of placing parties dealing with the Premises on notice of the existence of the Restated Lease and, where appropriate, its contents, and shall ratify and confirm all other terms of the Restated Lease as fully as if the same had been set forth herein. b. Notwithstanding anything to the contrary contained herein, nothing in this RESTATED MEMORANDUM shall modify, supersede, diminish, add to or change any or all of the terms of the Restated Lease or be deemed to create or grant any rights, liabilities or obligations of or to any party or third parties other than as specifically set forth in the Restated Lease. In the event of any conflict between this RESTATED MEMORANDUM and the Restated Lease, the terms and conditions of the Restated Lease shall control. 7. This RESTATED MEMORANDUM may be executed in one or more counterparts, each of which shall be deemed an original. -2— CIM Huntington Cracchiolo Amended and Restated Memorandum of Lease v1 Document Number: 2005000707181 Page: 2 of 9 IN WITNESS WHEREOF, the parties hereto have caused this RESTATED MEMORANDUM to be duly executed as of the Effective Date. TENANT: LANDLORD: CIM/Huntington, LLC, a California limited liability company By: Avr emesh, Treasurer Redevelopment Agency of the City of Huntington Beach Chairman Salvator W. Cracchiolo, trustee for the Declaration of Trust dated June 12, 1979 Dolores L. Cracchiolo, trustee for the Declaration of Trust dated June 12, 1979 Barbara F. Cracchiolo, trustee of the Cracchiolo Family Trust dated March 28, 2003 Salvator W. Cracchiolo, trustee of the Cracchiolo Family Trust dated March 28, 2003 -3— CIM Huntington Cracchiolo Amended and Restated Memorandum of Lease vt Document Number: 2005000707181 Page: 3 of 9 IN WITNESS WHEREOF, the parties hereto have caused this RESTATED MEMORANDUM to be duly executed as of the Effective Date. TENANT: CIM(Huntington, LLC, a California limited liability company By: Avraharn Shemesh, Treasurer Redevelopment Agency of the City of Huntington Beac By. / , Executive Director x LANDLORD: vator W. Cracchiolo, trustee for the Declaration of Trust dated June 12, 1979 Dolores L. Cracchiolo, trustee for the Decl ation of Trust dated June 12, 197 1404 101 ®r Barbara _ Cracchiolo, trustee of the Cracchiolo Family Trust dated March 28, 2003 Salvator W. Cracchiolo, trustee of the Cracchiolo Family Trust dated March 28, 2003 -3— CIM Huntington Cracchiolo Amended and Restated Memorandum of Lease vI Document Number: 2005000707181 Page: 4 of 9 STATE OF CALIFORNIA ) ss. COUNTY OF Z vJ On J - / a 0 . befo e me, 1f/ 1'1 elo ?a 111C , personally appeared AVRgdAm JAe rnt I (here insert name and title of the officer), personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. WITNESS my hand and official seal. Signat Cam. (Seal) STATE OF CALIFORNIA ) ) ss. COUNTY OF ELLEN JO ROSE Commission # 1520364 z Notary Public — Califomla; r : Los Angeles County My Comm. Expires Oct 18, 2008 On before rne,2�tigpersonally appeare , r.�'/ t'c wwne (here insert name and title of the officer), personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(+ whose name(s) is/ape--subscribed to the within instrument and acknowledged to me that hefshe/hey-executed the same in his/her/their-authorized capacity(}es), and that by .his/her/their-signature( on the instrument the personf-S), or the entity upon behalf of which the persons} acted, executed the instrument. WITNESS my hand and official seal. :� `yr t Y ♦ � Signatu. (Seal} -5- CIM Huntington Cracchiolo Amended and Restated Memorandum of Lease v1 Document Number: 2005000707181 Page: 5 of 9 STATE OF CALIFORNIA ) ) ss. COUNTY OF On 3 J\10 Z01�5 before me, onally appeared L. CrI.xe(here insert name and title of the officer), personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. WITNESS my hand and official seal. Signature STATE OF CALIFORNIA ) ss. COUNTY OF OC-51-2 ) On .� 3'y �.�, before me, L r�.+�- �rc�rl� di personally appeared _iv.+6r- W , G,4441(here insert name and title of the officer), personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. WITNESS my hand and official seal. Signature (Seal) -5— CIM Huntington Cracchiclo Amended and Restated Memorandum of Lease vl Document Number: 2005000707181 Page: 6 of 9 GOVERNMENT CODE 27361.7 I CERTIFY UNDER THE PENALTY OF PERJURY THAT THE NOTARY SEAL ON THE DOCUMENT TO WHICH THIS STATEMENT IS ATTACHED READS AS FOLLOWS: NAME OF NOTARY: JUDITH ANN MACDONALD COMMISSION NUMBER: 1483542 DATE COMMISSION EXPIRES: MAY 10, 2008 COUNTY WHERE BOND IS FILED: ORANGE VENDOR NUMBER: NNAI PLACE OF EXECUTION: ORANGE COUNTY, CALIFORNIA DATE: August 26, 2005 SIGNED: MA I T. OMAS, III FIRST AMERICAN TITLE INSURANCE CO. I CERTIFY UNDER THE PENALTY OF PERJURY THAT THE NOTARY SEAL ON THE DOCUMENT TO WHICH THIS STATEMENT IS ATTACHED READS AS FOLLOWS: NAME OF NOTARY: FRANK CRACCHIOLO COMMISSION NUMBER: 1421381 DATE COMMISSION EXPIRES: MAY 31, 2007 COUNTY WHERE BOND IS FILED: ORANGE VENDOR NUMBER: NNA1 PLACE OF EXECUTION: ORANGE COUNTY, CALIFORNIA DATE: August 26, 2005 SIGNED: !� ACI T. OMAS, III FIRST AMERICAN TITLE INSURANCE CO. Document Number: 2005000707181 Page: 7 of 9 STATE OF CALIFORNIA � ) COUNTY OF K "j ss. �)n U St l v 7 4D.6 before me, , 4 (. personally appeared (here insert name and title of the officer), personally known to me to be the person(,&) whose names) is/ —are 6-'-'-ed to the within instrument and acknowledged to me that he/sbeAhe executed the same in hiss authorized capacity(ies), and that by hiss signatures} on the instrument the person(-e), or the entity upon behalf of which the personfs}-acted, executed the instrument. WITNESS my hand and official seal. K. COPELAND COMM. #1409904 U NOTARYPUBLIC-CALIFORNIA n U ORANGE COUNTY F ?9v COMM. EXPIRES APRIL 8, 2007 J Signature 4 &�I--�Seal) STATE OF CALIFORNIA ) ss. COUNTY OF ) On before me, , personally appeared (here insert name and title of the officer), personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signatures) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. WITNESS my hand and official seal. Signature (Seal) -5- CIM Huntington Cracchiolo Amended and Restated Memorandum of Lease v I Document Number: 2005000707181 Page: 8 of 9 Exhibit "A" All that certain land situated in the State of California, County of Orange, City of Huntington Beach, described as follows: Parcel A: Lots 9, 10, 12, 14, 16, 18, 20, 22, 24, 26, and 28 in Block 104 of Huntington Beach as shown on a Map recorded in Book 3, Page 36 of Miscellaneous Maps, records of Orange County, California. Excepting therefrom the Southeasterly 2 and 5/8th inches of said Lot 9. Also excepting therefrom all that portion of said land lying below a depth of 500 feet measured vertically from the present surface of the ground. Parcel B: Lots 1, 2, 3, 6 through 21 inclusive, 23, 25 and 27 in Block 105 of Huntington Beach as shown on a Map recorded in Book 3, Page 36 of Miscellaneous Maps, records of Orange County, California. Also excepting therefrom all that portion of said land lying below a depth of 500 feet measured vertically from the present surface of the ground. Parcel C: Lots 4 and 5 in Block 105 of Huntington Beach as shown on a Map recorded in Book 3, Page 36 of Miscellaneous Maps, records of Orange County, California, Also excepting therefrom all that portion of said land lying below a depth of 500 feet measured vertically from the present surface of the ground. Document Number: 2005000707181 Page: 9 of 9 THIS IS A TRUE CERTIFIED COPY OF THE t,-IRK.RF RECORD IF IT BEARS THE SEAL, IMPRINTED IN PURPLE, OF THE ORANGE o� COUNTY CLERK -RECORDER. ca DATE:BAR 0 8 7012 o - y � CERTIFICATION FEE: COUNTY CLERK -RECORDER ORANGECOUNTY STATE OF CALIFORNIA — ). B lw� kc)o. icy_ Council/Agency Meeting Held: i" 3" oo pop Deferred/Continued to: Approved ❑ C nditionally Approved ❑ Denied ty er s Signature Council Meeting ate: gpril 3, 2000 Department ID Number: ED 00-17 CITY OF HUNTINGTON BEACH REQUEST FOR REDEVELOPMENT AGENCY ACTION SUBMITTED TO: HONORABLE CHAIRMAN AND REDEVELOPMENT AGEN& =, MEMBERS 7T." . 's SUBMITTED BY: RAY SILVER, Executive Director (a t" PREPARED BY: DAVID C. BIGGS, Economic Development Director SUBJECT: Approve Ground Lease & Option to Purchase with Frank,,":," Cracchiolo, et.al., and CIM/Huntington, Inc. (APN 024-152-10) and Approve an Implementation Agreement with CIM Group, LLC Statement of Issue, Funding Source, Recommended Action, Alternative Action(s), Analysis, Environmental Status, Attachment(s) Statement of Issue: The Redevelopment Agency is party to a Disposition and Development Agreement (DDA) with CIM/Huntington, Inc., for the redevelopment of Blocks 104/105. The DDA anticipates the completion of site assembly by CIM/Huntington, Inc., and/or the Redevelopment Agency. A long-term ground lease is proposed as the method of securing one of the private ownerships interests in the site. Since a Ground Lease was not originally contemplated as the means of site assembly, a First Implementation Agreement to the DDA is also needed. Funding Source: CIM/Huntington, Inc., will be the primary party responsible for the payments under the proposed ground lease. Recommended Action: Motion to: 1. Approve the Ground Lease and Option to Purchase with Frank Cracchiolo, et.al.; and 2. Authorize the Agency Chairperson and Agency Secretary to execute the Ground Lease. 3. Approve an Implementation Agreement by and between the Redevelopment Agency and CIM Group, LLC; 4. Authorize the Agency Chairman and Agency Clerk to Execute the Implementation Agreement. Alternative Action(s): 1. Direct staff to pursue modifications to the proposed ground lease and/or implementation agreement ; or 2. Do not approve the proposed ground lease and/or the implementation agreement. REQUEST FOR REDEVELOPMENT AGENCY ACTION MEETING DATE: Aparil 3, 2000 DEPARTMENT ID NUMBER: ED 00-17 Analysis: Blocks 104/105 are the area bounded by Main Street, Walnut Avenue, Sixth Street, and Pacific Coast Highway in downtown. The development site covered by the CIM/Huntington DDA excludes the Oceanview Promenade building and the historic Worthy property. The project proposed for the site includes a mix of retail, restaurants, a specialty market, a 130-room hotel and parking. Under the terms of the DDA, the developer and Redevelopment Agency are to cooperate to complete the assembly of the site through the acquisition or incorporation of seven privately owned parcels in the site. CIM has negotiated a proposed Ground Lease with Frank Cracchiolo, the owner of the sole privately owned parcel in the Block 105 portion of the site. The property owner has required that the Redevelopment Agency approve the Ground Lease as a co -tenant. A summary of the proposed lease terms is set forth in Attachment 1. The entire Ground Lease and Option to Purchase Fee is Attachment 2. Approval of the proposed Ground Lease will meet the Agency's contractual obligation in relation to implementation of the DDA. In addition, the proposed Ground Lease is an effective way to incorporate this property into the project site and in effect complete site assembly for Block 105. As a co -tenant under the Ground Lease, the Agency will have a greater level of control over the parcel. Since the completion of site assembly was not anticipated to be done through a Ground Lease, an Implementation Agreement between the Agency and CIM has been prepared. This Implementation Agreement further defines the relationship between the Agency and Developer given the terms of the Ground Lease. It also provides a method to value the Ground Lease in order to assign a cost factor for the financial provisions of the DDA. Environmental Status: Completion of site assembly is contemplated under the terms of the CIM/Huntington, Inc. DDA that was deemed exempt under Environmental Assessment 99-9. Attachment(s): 1. I Ground Lease Term Summary. 2. Ground Lease and Option to Purchase Fee. 3. l Implementation Aqreement. RCA Author: D. Biggs - 5909 Document6 -2- 3127100 3:08 PM Old Republic Title Company 201 E. Sandpointe, #700, Santa Ana, CA 92707 opal Phone: (714) 549-3800 Fax: (714) 549-1733 October 17, 2001 CITY CLERK CITY OF HUNGINTON BEACH P.O. BOX 190 HUNTINGTON BEACH ,CALIF Attention: CONNIE BROCKWAY Your Reference: CRACCHIOLO Our Order Number: 402976 -4 We are enclosing the following items: Preliminary Report Supplemental Report Copies of Recorded Documents: Item(s) Copies of CC&R's: Item(s) 7 Plat Maps ® Other RECORDED COPY OF MEMORANDUM OF LEASE 7 Other Mary Jayne Graser, Title Officer C RECORDING REQUESTED BY Recorded in Official Records,COunty of Orange OLD REPUBLIC TITLE COMPANY IIIIIII IIIIIIIIIIIIIIIIIIIIIIIIIlIIIIIIII II Clerk-Recorder .00 WHEN RECORDED RETURN TO Name: FRANK CRAC20010411099 04:03PM 06/21/01 Address: 19712 Quiet let Bay I,n. City,St.: 'Huntington Beach, CA 9264V6 30 M11 12 Zip 2310.00 2310.00 0.00 0.00 22.00 0.00 0.00 0.00 Order No. 402976-4 SPACE ABOVE FOR RECORDERS USE TITLE(s) OF DOCUMENT MEMORANDUM OF LEASE 7-_F,,e �� �� 5 ,t/DT 7zc FXc�EO 99 ycy4 S Assessors Identification Number (AIN) 024 - 152 — 10 DOCUMENTARY TRANSFER TAX: $4,620.00 COMPUTED ON FULL VALUE OF PROPERTY BEING LEASED MEMORANDUM OF LEASE THIS DOCUMENT HAS BEEN PREPARED BY AND WHEN RECORDED RETURN TO: FRAGNER LAW CORPORATION 333 S. Grand Avenue Suite 3030 Los Angeles, California 90071 Attn: Matthew C. Fragner, Esq. Assessor's Parcel No.: 024-152-10 MEMORANDUM OF LEASE THIS MEMORANDUM OF LEASE (this "Memorandum") is executed effective as of April 16, 2001 (the "Effective Date'), by and between CIM/Huntington, LLC, a California limited liability company (successor -in -interest to CIM/Huntington, Inc.), and the Redevelopment Agency of the City of Huntington Beach (collectively, "Tenant"), whose address is c/o CIM Management, Inc., 6922 Hollywood Boulevard, Suite 900, Hollywood, California 90028, and Frank M. Cracchiolo, Trustee for the Revocable Trust dated June 12, 1979, and Salvator W. and Barbara F. Cracchiolo, collectively with their successors and assigns ("Landlord"), whose address is 19712 Quiet Bay Lane, Huntington Beach, California 92648. PRELIMINARY STATEMENT: Landlord and Tenant entered into that certain lease (the "Lease") dated as of March 8, 2000, the terms, provisions and conditions of which are incorporated herein by this reference to the same extent as if recited in their entirety herein. Pursuant to the terms, provisions and conditions of the Lease, Landlord has leased to Tenant, and Tenant has rented and leased from Landlord, certain premises (the "Premises") described on Exhibit A attached hereto (the "Land"). Unless otherwise expressly provided herein, all defined terms used in this Memorandum shall have the same meanings as are ascribed to such terms in the Lease. NOW, THEREFORE, Landlord and Tenant hereby make specific reference to the following terms, provisions and conditions of the Lease: 1. In consideration of the rentals and other sums to be paid by Tenant and of the other terms, covenants and conditions on Tenant's part to be kept and performed pursuant to the Lease, Landlord leases to Tenant, and Tenant takes and hires, the Premises. The Lease term commenced as of April 16, 2001 and expires at midnight on April 16, 2026, unless extended as provided below. 2. Tenant has the option to extend the term of the Lease for up to two (2) additional successive periods of twenty-five (25) years each and one additional successive period of twenty-four (24) years, by written notice to Landlord not less than 180 days prior to the expiration of the term of the Lease, each such option to be executed in accordance with the Lease. 3. Tenant has certain rights to purchase the Premises as set forth in the Lease. 4. The Lease is a "true lease"; the only relationship created thereby is that of landlord and tenant. 5. Original copies of the Lease are in the possession of Landlord and Tenant. The Lease contains other terms not herein set forth but which are incorporated by reference herein for all purposes, and this Memorandum is executed for the purpose of placing parties dealing with the Premises on notice of the existence of the Lease and, where appropriate, its contents, and shall ratify and confirm all other terms of the Lease as fully as if the same had been set forth herein. 6. Notwithstanding anything to the contrary contained herein, nothing in this Memorandum shall modify, supercede, diminish, add to or change any or all of the terms of the Lease or be deemed to create or grant any rights, liabilities or obligations of or to any party or third parties other than as specifically set forth in the Lease. In the event of any conflict between this Memorandum and the Lease, the terms and conditions of the Lease shall control. 7. This Memorandum may be executed in one or more counterparts, each of which shall be deemed an original. IN WITNESS WHEREOF, the parties hereto have caused this Memorandum to be duly executed as of the Effective Date. TENANT: ATTEST: Agency Clerk APPROVE'AS TO FORM: Agency ,Svecie3 Counsel LANDLORD: CIM/Huntington, LLC By: CIM California Urban Real Estate Fund, L.P., its manager and sole member By: CIM Urban Fund GP, LLC, its general partner By: (�`�,✓ Ric har S. essler, President By: vrahamm Shemeshh,, Treasurer By: Nicholas V. Morosoff, Secretary Redevelopment Agency of the City of Hunts ton Beach ByY_ ,_ h6x'4� Chairman Frank M. Cracchiolo, Trustee Salvator W. Cracchiolo Barbara F. Cracchiolo 3 IN WITNESS WHEREOF, the parties hereto have caused this Memorandum to be duly executed as of the Effective Date. TENANT: CIM/Huntington, LLC LANDLORD: By: CIM California Urban Real Estate Fund, L.P., its manager and sole member By: CIM Urban Fund GP, LLC, its general partner By: Richard S. Ressler, President By: Avraham Shemesh, Treasurer By: Nicholas V. Morosoff, Secretary Redevelopment Agency of the City of Huntington Beach By: Chairman `�C"E c-, Exhibit A Legal Description LOTS 4 AND 5 OF BLOCK 105 OF HUNTINGTON BEACH TRACT, IN THE CITY OF HUNTINGTON BEACH, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 3 PAGE(S) 36 OF MISCELLANEOUS MAPS, IN THE OFFICE OF THE COUNTY RECORDED OF SAID COUNTY. STATE OF CALIFORNIA ) ) ss. COUNTY OF LOS ANGELES ) On 4/25/01 before me, Ellen Jo Rose , personally appeared Richard S. Ressler, personally known to me (or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his authorized capacity, and that by his signature on the instrument the person, or the entity upon behalf of which the person acted. executed the instrument. WITNE h fficial seal. Sign (Seal) STATE OF CALIFORNIA ) ) ss. COUNTY OF LOS ANGELES ) E iss 10 ROSE , Commmission # 1243113 ., Notay Pub;c - Coriforr'a Lcs MgE-ies County My Canvn. F,pjes NovZi.3'03 On 4/25/01 before me, Ellen Jo Rose , personally appeared Avraham Shemesh, personally known to me (or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his authorized capacity, and that by his signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument. WITNE n icial seal. Signa (Seal) STATE OF CALIFORNIA ) ) ss. COUNTY OF LOS ANGELES ) '...., �,-,...•-,.<"F.u:'N JO ROSE " • ^�_..'T:°�: • Commission; 1243113 r4ctary Pubtic - California i .,`� Los Angeles County "Ccrnm. E#as Nov23 XM On 4/25/01 before me, Ellen Jo Rose , personally appeared Nicholas V. Morosoff, personally known to me (or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his authorized capacity, and that by his signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument. WITNE ant�teaM Signat ELLEN JO ROSE Commission # 1243113 [ tactory Public - Cofifortia Los Mgeies County My Comm. &pies Nov23,7003 P �armrw• STATE OF CALIFORNIA 1 ss. COUNTY OF ORANGE a On,A)C'; L -19'd n ( before me, ,�e N1vlahc. u personally appeared Frank M. Cr cchiolo, or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his authorized capacity, and that by his signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument. WITNESS my hand and official seal. Signature IZ�L l (1{)CG1 1 STATE OF CALIFORNIA KATHY IR-N= N:ALFIC C r.rr a r= 1 i 55595 E� 25. 2CX71 ,�d::m. ss. COUNTY OF ORANGE On 0 ; p L_ jc( '7oot before me :�jNJir, personally appeared Salvator W. Cracchiolo, or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his authorized capacity, and that by his signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument. WITNESS my hand and official seal. KATHY IRENE M,A! ETIC , c ,. r r - I T66596 Signatur Se \:-,2520W STATE OF CALIFORNIA ) ss. COUNTY OF ORANGE On -or-', L M..)no l before me, �c�personallly appeared Barbara F. Cracchiolo, (or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to me that she executed the same in her authorized capacity, and that by her signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument. WITNESS my hand and official seal. KA HY IRenE M.A_EfIC Signatur *a- � _- o fordo STATE OF CALIFORNIA ) ) ss, COUNTY OF ORANGE ) On pp 1 before me, (' ���„ e—`r—, personally appeared Pmn %ic. f7�� Al �— (here insert name and title of the officer), personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) islare subscribed to the within instrument and acknowledged to me that lie/she/they executed the same in hisYbethheir authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. WITNESS my hand and official seal. �I CIOPHE "Ohm AM_ Signature&9.9;� (Seal) WCan+m EV*w � .. Government Code 27361.7 I certify under penalty of perjury that the Notary Seal on the document to which this statement is attached, reads as follows: Name of Notary: �'FIJ /i 1 A Vendor No.: / V AJ� / Commission No.: Date Commission Expires: County: t-. © iCri G PIPS Place of Execution: Los P es X J f`) By Old Republic Tittle Company: Date: Government Code 27361.7 I certify under penalty of perjury that the Notary Seal on the document to which this statement is attached, reads as follows: Name of Notary: Vendor No.: Commission No.: Date Commission Expires: ` County: Place of Execution: By Old Republic 'l Ttle Company: Date: Government Code 27361.7 I certify under penalty of perjury that the Notary Seal on the document to which this statement is attached, reads as follows: Name of Notary: o " r ` J G a /iif A c - ---. Vendor No.: 7v, /"'+ / .- Commission No.: ! I to fo Date Commission Expires:: Q /�IAa- .a � 1 0 l� County: ,S11 AJ & L V Place of Execution: R A')G By Old Republic Title Company: ,h- JX.Cl f Cam' Date: ) Government Code 27361.7 I certify under penalty of perjury that the Notary Seal on the document to which this statement is attached, reads as follows: Name of Notary: Vendor No.: Commission No.: Date Commission Expires: _ County: Place of Execution: By Old Republic Title Company: Date: Government Code 27361.7 I certify under penalty of perjury that the Notary Seal on the document to which this statement is attached, reads as follows: Name of Notary: >° , r Vendor No.: 'V N,+ J-- - Commission No.: 1 r% 7 Opt Date Commission Expires: i II_�� I I� County: Place of Execution: By Old Republic title Company: - Date: Government Code 27361.7 I certify under penalty of perjury that the Notary Seal on the document to which this statement is attached, reads as follows: Name of Notary: Vendor No.: Commission No.: Date Commission Expires: County: Place of Execution: By Old Republic Title Company: Date: 9,CT-17-01 11:50.FROM=OLD REPUBLIC TITLE ID:7145491733 PACE 2/3 P.ECORDING REQUESTED BY (iI,I) REPUBLIC TITLE COM7ANY WHEi4 RECORDED RETiJ X TO FRANK C1?ACC3I0IA 29712 (.u;e-t Bay inn. _rgton aeach, CA Order No. 40291" Recorded in Official Records,County of Orange GaryL. Granville Clerk -Recorder lll�[IIIIlII[l�il�![�fllll 28.00 20010411099 04:03pm 06/21/01 9264V6 30 M11 12 2310.00 2310.00 0.00 0.00 22,00 0.00 0.00 0.00 SPACE ABOVE FOR RECORDEPS L-SE TITLE(s) OF DOCUMENT MEMORANDUM OF LEASE A.=s,!�smrs Identification Number (.UN) 024 - 152 — 10 DOCUMENTARY TRANSFER TAX: $4,620.00 / 'COMPUTED ON FULL VALUE OF PROPERTY BEING LEASED n Z,/ `7."- 1 11:51 FROM -OLD REPUBLIC TITLE ID:7145431733 PAGE 3/3 MEMORANDUM OF LEASE THIS DOCUMIIVT HAS BEEN PREPARM BY CND WHLN RECORDED RETURN TO- A(sl`iER LAW CORPORATION 333 S. Grand Avenue Suite 3030 Los Angeles, California 9007I Attn: Matthew C_ Frape , Esq- Assessor's Parcel No.. 024-152-10 MEMORANDUM OF LEASE THIS MEMORANDUM OF LEASE (this ` MemoranduM") is executed offective of April 16, 2001 (the Effective Date), by and between CRv1/Hmxdngton, LLC, a 'California limited liability company (successor -in -interest to CiMMuntington, Inc), and the Redevelopment Agency of the City of Huntington Beach (collectively, whose address is clo C51 Managcrrtcnt, Inc., 6922 Hollywood Boulevard, Suite 900, Hollywood, California 90028, and Frank M. Cracchiolo, Trustee for the Revocable Trost dated June 12,1979, and Sah-ator W. and Barbara F. Cracchiolo, collectively with their successors and assigns (" dlord'), whose address is 19712 Quiet Bay Lanc, Huntington Beach, Califomia 92648. PRELD41NARY STATEMENT: Landlord and Tcn= entered into that certain lease (thc "Lease") dated as of March 8, 2000, the terms, provisions and conditions of which are incorporated hcscan by this reference to the salve extent as if recited in their entirety hcrciv- Pursuant to the 'ems, provisions and conditions of the Lease, Landlord has leased to Tenant, and Tenant has rented and leased from Landlord, certain premises (the"Premises") described on Exhibit A attached hereto (the "Land"). Unless otherwise expressly provided herein, all defined terms tsed in this Memorandum shall have the same meanings as are ascribed to such terms m the Lease. NOW, THEREFORE, landlord and Tenant hereby make specific reference to the following teams, provisions and conditions of, the Lease: I . In consideration of the rentals and other sums to be paid by Tenant and of the other tetins, covenants and conditions on Tenant's part to be kept and _,'-ZI 11:50 FROM:OLD REPUBLIC TITLE ID:714S491733 PAGE 1/3 �_�` County Y`ypa Doc=eut Z fo=atzou pagas Copies Status Orange I)3iZy Docents 2001,411099 12 Z Printing CITY O. HUNTINGTON BEACH 2000 MAIN STREET OFFICE OF THE CITY CLERK CONNIE BROCKWAY CITY CLERK May 17, 2001 To: Old Republic Title Company From: Connie Brockway, City Clerk City of Huntington Beach CALIFORNIA 92648 �a 1 5�-'J PI,rie -7-� S' 76 Today, Mr. Frank Cracchiolo informed me that he wishes you not to record the attached Memorandum of Lease between CIM1Huntington, LLC and the Redevelopment Agency fo the City of Huntington Beach and Frank M. Cracchiolo until he has had the opportunity to review these documents with his attorney. Mr. Cracchiolo requested me to ask SPL & Co. Messenger Service to deliver these documents to Old Republic Title Company. Connie Brockway City Clerk City of Huntington Beach 05L CL-C-f Y-A (Telephone: 714-536-5227 ) MEMORANDUM OF LEASE THIS DOCUMENT HAS BEEN PREPARED BY AND WHEN RECORDED RETURN TO: FRAGNER LAW CORPORATION 333 S. Grand Avenue Suite 3030 Los Angeles, California 90071 Attn: Matthew C. Fragner, Esq. Assessor's Parcel No.: 024-152-10 MEMORANDUM OF LEASE THIS MEMORANDUM OF LEASE (this "Memorandum") is executed effective as of April 16, 2001 (the "Effective Date"), by and between CIM/Huntington, LLC, a California limited liability company (successor -in -interest to CIM/Huntington, Inc.), and the Redevelopment Agency of the City of Huntington Beach (collectively, "Tenant"), whose address is c/o. CIM Management, Inc., 6922 Hollywood Boulevard, Suite 900, Hollywood, California 90028, and Frank M. Cracchiolo, Trustee for the Revocable Trust dated June 12, 1979, and Salvator W. and Barbara F. Cracchiolo, collectively with their successors and assigns ("Landlord"), whose address is 19712 Quiet Bay Lane, Huntington Beach, California 92648. PRELIMINARY STATEMENT: Landlord and Tenant entered into that certain lease (the "Lease") dated as of March 8, 2000, the terms, provisions and conditions of which are incorporated herein by this reference to the same extent as if recited in their entirety herein. Pursuant to the terms, provisions and conditions of the Lease, Landlord has leased to Tenant, and Tenant has rented and leased from Landlord, certain premises (the "Premises") described on Exhibit A attached hereto (the "Land"). Unless otherwise expressly provided herein, all defined terms used in this Memorandum shall have the same meanings as are ascribed to such terms in the Lease. NOW, THEREFORE, Landlord and Tenant hereby make specific reference to the following terms, provisions and conditions of the Lease: 1. In consideration of the rentals and other sums to be paid by Tenant and of the other terms, covenants and conditions on Tenant's part to be kept and performed pursuant to the Lease, Landlord leases to Tenant, and Tenant takes and hires, the Premises. The Lease term commenced as of April 16, 2001 and expires at midnight on April 16, 2026, unless extended as provided below. 2. Tenant has the option to extend the term of the Lease for up to two (2) additional successive periods of twenty-five (25) years each and one additional successive period of twenty-four (24) years, by written notice to Landlord not less than 180 days prior to the expiration of the term of the Lease, each such option to be executed in accordance with the Lease. 3. Tenant has certain rights to purchase the Premises as set forth in the Lease. 4. The Lease is a "true lease"; the only relationship created thereby is that of landlord and tenant. 5. Original copies of the Lease are in the possession of Landlord and Tenant. The Lease contains other terms not herein set forth but which are incorporated by reference herein for all purposes, and this Memorandum is executed for the purpose of placing parties dealing with the Premises on notice of the existence of the Lease and, where appropriate, its contents, and shall ratify and confirm all other terms of the Lease as fully as if the same had been set forth herein. 6. Notwithstanding anything to the contrary contained herein, nothing in this Memorandum shall modify, supercede, diminish, add to or change any or all of the terms of the Lease or be deemed to create or grant any rights, liabilities or obligations of or to any party or third parties other than as specifically set forth in the Lease. In the event of any conflict between this Memorandum and the Lease, the terms and conditions of the Lease shall control. 7. This Memorandum may be executed in one or more counterparts, each of which shall be deemed an original. 2 IN WITNESS WHEREOF, the parties hereto have caused this Memorandum to be duly executed as of the Effective Date. TENANT: ATTEST: Agency Clerk APPROVED AS TO FORM: Agency .9-p . Counsel. "FAMl� CIM/Huntington, LLC By: CIM California Urban Real Estate Fund, L.P., its manager and sole member By: CIM Urban Fund GP, LLC, its general partner By: ((� Richard S essler, President By: Avraham She mes ` Treasurer Nicholas V. Morosoff, Secretary Redevelopment Agency of the City of Huntington Beach By: A", 9!4,� � hairman Frank M. Cracchiolo, Trustee Salvator W. Cracchiolo Barbara F. Cracchiolo 3 IN WITNESS WHEREOF, the parties hereto have caused this Memorandum to be duly executed as of the Effective Date. TENANT: LANDLORD: CIM/Huntington, LLC By: CIM California Urban Real Estate Fund, L.P., its manager and sole member By: CIM Urban Fund GP, LLC, its general partner By: Richard S. Ressler, President By: Avraham Shemesh, Treasurer By: Nicholas V. Morosoff, Secretary Redevelopment Agency of the City of Huntington Beach By: Chairman See ci4c-z-ked 3 Exhibit A . Legal Description LOTS 4 AND 5 OF BLOCK 105 OF HUNTINGTON BEACH TRACT, IN THE CITY OF HUNTINGTON BEACH, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 3 PAGE(S) 36 OF MISCELLANEOUS MAPS, IN THE OFFICE OF THE COUNTY RECORDED OF SAID COUNTY. rd STATE OF CALIFORNIA ) ) ss. COUNTY OF LOS ANGELES ) On 4/25/01 before me, Ellen Jo hose personally appeared Richard S. Ressler, personally known to me (or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his authorized capacity, and that by his signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument. WIT SS hand an 'al seal. Signat eal) STATE OF CALIFORNIA ) ) ss. COUNTY OF LOS ANGELES ) On 4/25/01 before me, Ellen Jo Rose , personally appeared Avraham Shemesh, personally known to me (or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his authorized capacity, and that by his signature on the instrument the person, or the entity upon behalf of which the person acted. executed the instrument. STATE OF CALIFORNIA ) ) ss. COUNTY OF LOS ANGELES ) On 4/25/01 before me, Ellen Jo Rose , personally appeared Nicholas V. Morosoff, personally known to me (or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his authorized capacity, and that by his signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument. 5 STATE OF CALIFORNIA ss. COUNTY OF ORANGE ) Q��D\lu On before me, �, r✓ �', personally appeared Frank M. Cr cchiolo, or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his authorized capacity, and that by his signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument. WITNESS my hand and official seal. Signature 4 l STATE OF CALIFORNIA ) ) ss. COUNTY OF ORANGE ) KATHY IRENE 1AA' ETI 1 56596 z ?uCiic — Cali`Omia z —r nce ,vy Ccrnm. Exp;re; Ce—c 25, 2001 v� On fl pT ;(�q , oo( before in NWoVc,. , personally appeared Salvator W. Cracchiolo, or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his authorized capacity, and that by his signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument. WITNESS my hand and official seal. Signatur ea h STATE OF CALIFORNIA ss. COUNTY OF ORANGE KATHY IRENE MALETIC Commission = 1166596 Z Notcry �ubfic — California > Cronae County r/y Comm. Exp;res Dec25, 2001 On A06 L In o 1_ before me; k��ipersonally appeared Barbara F. Cracchiolo, (or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to me that she executed the same in her authorized capacity, and that by her signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument. WITNESS my hand and official seal. Signatur4 J�eal) l KATHY IRENE M,ALETIC Commission 1166596 Z Q ^:c'a.ry Pubilc — California Z r Crance County A/.y Comm. Exp,res Dec 25, 2001 R STATE OF CALIFORNIA ) ) ss. COUNTY OF ORANGE ) On '5 .�00 I before me,(�j�� "G��e,�s►c� , personally appeared ap. ffiTcc�Ph>�uc� (here insert name and title of the officer); personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) i�g/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in l-�s/�K/their authorized capacity(ies), and that by hid/�e /their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. WITNESS my hand and official seal. Signature4" (Seal) 7 P. BEACHCITY OF HUNTINGTON 2000 MAIN STREET OFFICE OF THE CITY CLERIC CONNIE BROCKWAY CITY CLERK May 17, 2001 To: Old Republic Title Company From: Connie Brockway, City Clerk City of Huntington Beach CALIFORNIA 92648 Today, Mr. Frank Cracchiolo informed me that he wishes you not to record the attached Memorandum of Lease between CIM/Huntington, LLC and the Redevelopment Agency fo the City of Huntington Beach and Frank M. Cracchiolo until he has had the opportunity to review these documents with his attorney. Mr. Cracchiolo requested me to ask SPL & Co. Messenger Service to deliver these documents to Old Republic Title Company. 7- Connie Broc kway City Clerk City of Huntington Beach a -) off'' (Telephone: 714-536-5227 ) MEMORANDUM OF LEASE THIS DOCUMENT HAS BEEN PREPARED BY AND WHEN RECORDED RETURN TO: FRAGNER LAW CORPORATION 333 S. Grand Avenue Suite 3030 Los Angeles, California 90071 Attn: Matthew C. Fragner, Esq. Assessor's Parcel No.: 024-152-10 MEMORANDUM OF LEASE THIS MEMORANDUM OF LEASE (this "Memorandum") is executed effective as of April 16, 2001 (the "Effective Date"), by and between CIM/Huntington, LLC, a California limited liability company (successor -in -interest to CIM/Huntington, Inc.), and the Redevelopment Agency of the City of Huntington Beach (collectively, "Tenant"), whose address is c/o CIM Management, Inc., 6922 Hollywood Boulevard, Suite 900, Hollywood, California 90028, and Frank M. Cracchiolo, Trustee for the Revocable Trust dated June 12, 1979, and Salvator W. and Barbara F. Cracchiolo, collectively with their successors and assigns ("Landlord"), whose address is 19712 Quiet Bay Lane, Huntington Beach, California 92648. PRELIMINARY STATEMENT: Landlord and Tenant entered into that certain lease (the "Lease") dated as of March 8, 2000, the terms, provisions and conditions of which are incorporated herein by this reference to the same extent as if recited in their entirety herein. Pursuant to the terms, provisions and conditions of the Lease, Landlord has leased to Tenant, and Tenant has rented and leased from Landlord, certain premises (the "Premises") described on Exhibit A attached hereto (the "Land"). Unless otherwise expressly provided herein, all defined terms used in this Memorandum shall have the same meanings as are ascribed to such terms in the Lease. NOW, THEREFORE, Landlord and Tenant hereby make specific reference to the following terms, provisions and conditions of the Lease: 1. In consideration of the rentals and other sums to be paid by Tenant and of the other terms, covenants and conditions on Tenant's part to be kept and performed pursuant to the Lease, Landlord leases to Tenant, and Tenant takes and hires, the Premises. The Lease term commenced as of April 16, 2001 and expires at midnight on April 16, 2026, unless extended as provided below. 2. Tenant has the option to extend the term of the Lease for up to two (2) additional successive periods of twenty-five (25) years each and one additional successive period of twenty-four (24) years, by written notice to Landlord not less than 180 days prior to the expiration of the term of the Lease, each such option to be executed in accordance with the Lease. 3. Tenant has certain rights to purchase the Premises as set forth in the Lease. 4. The Lease is a "true lease"; the only relationship created thereby is that of landlord and tenant. 5. Original copies of the Lease are in the possession of Landlord and Tenant. The Lease contains other terms not herein set forth but which are incorporated by reference herein for all purposes, and this Memorandum is executed for the purpose of placing parties dealing with the Premises on notice of the existence of the Lease and, where appropriate, its contents, and shall ratify and confirm all other terms of the Lease as fully as if the same had been set forth herein. 6. Notwithstanding anything to the contrary contained. herein, nothing in this Memorandum shall modify, supercede, diminish, add to or change any or all of the terms of the Lease or be deemed to create or grant any rights, liabilities or obligations of or to any party or third parties other than as specifically set forth in the Lease. In the event of any conflict between this Memorandum and the Lease, the terms and conditions of the Lease shall control. 7. This Memorandum may be executed in one or more counterparts, each of which shall be deemed an original. 1A IN WITNESS WHEREOF, the parties hereto have caused this Memorandum to be duly executed as of the Effective Date. TENANT: ATTEST: Agency Clerk. APPROVE`AS TO FORM: Agency Counsel CIM/Huntington, LLC By: CIM California Urban Real Estate Fund, L.P., its manager and sole member By: CIM Urban Fund GP, LLC, its general partner By: _ Richar S. essler, President By: ZA�vraham Shemesh, Treasurer Y• B �Y /-� Nicholas V. Morosoff, Secretary Redevelopment Agency of the City of Hunti ton Beach By: Chairman LANDLORD: Frank M. Cracchiolo, Trustee Salvator W. Cracchiolo Barbara F. Cracchiolo IN WITNESS WHEREOF, the parties hereto have caused this Memorandum to be duly executed as of the Effective Date. TENANT: LANDLORD: CIM/Huntington, LLC By: CIM California Urban Real Estate Fund, L.P., its manager and sole member By: CIM Urban Fund GP, LLC, its general partner By: Richard S. Ressler, President By: Avraham Shemesh, Treasurer By: Nicholas V. Morosoff, Secretary Redevelopment Agency of the City of Huntington Beach By: Chairman S-ge c,�{ C-'C'k e AC L��9 3 Exhibit A Legal Description LOTS 4 AND 5 OF BLOCK 105 OF HUNTINGTON BEACH TRACT, IN THE CITY OF HUNTINGTON BEACH, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 3 PAGE(S) 36 OF MISCELLANEOUS MAPS, IN THE OFFICE OF THE COUNTY RECORDED OF SAID COUNTY. 2 STATE OF CALIFORNIA ) ) ss. COUNTY OF LOS ANGELES ) On 4/25/01 before me, Ellen Jo Rose , personally appeared Richard S. Ressler, personally known to me (or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his authorized capacity, and that by his signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument. WITNE h fficial seal. Sign (Seal) STATE OF CALIFORNIA ) ) ss. COUNTY OF LOS ANGELES ) EUEN JO ROSE s Commission # 1243113 Notary Public - California Los Angeles County My Comm. E tw'ov23, 2M On 4/25/01 before me, Ellen Jo Rose , personally appeared Avraham Shemesh, personally known to me (or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his authorized capacity, and that by his signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument. WITNE icial seal. Signa `---{deal) STATE OF CALIFORNIA ) ss. COUNTY OF LOS ANGELES ) -,. Eii-E-IN JO ROSE Commission#1243113 Z Jr Notary Public - Coliforria r #� Los Angeles County MY Cornm. Ex�es Nov23, 20MO3 On 4/25/01 before me, Ellen Jo Rose , personally appeared Nicholas V. Morosoff, personally known to me (or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his authorized capacity, and that by his signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument. WITNES an d offici 1 seal. Signat ea r -- -EF�� N JO ROSE�.r-,..Comsion # 1243113 Zr r_., Notary Public - California Los Angeles County My Comm. Ekes Nov23, 2 M 5 y MAMOIXOM MOON-,", ss. COUNTY OF ORANGE ) �QJ\D t a� On- before me, personally appeared Frank C M. r cchiolo, or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his authorized capacity, and that by his signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument. WITNESS my hand and official seal. Signature STATE OF CALIFORNIA KATIHY IRENE t4A E IC E% Comm, sion = . 166596 <z �;� 'v'cryMuolio — California Z crcnae Ca..r'fy - My:or~'m. Exp-;re: D,--- 25, 2001 ss. COUNTY OF ORANGE On hoof before mper-sonally appeared Salvator W. Cracchiolo, or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his authorized capacity, and that by his signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument. WITNESS my hand and official seal. Signatur , § a , l , STATE OF CALIFORNIA ss. COUNTY OF ORANGE KA, H , IRE\E MALETIC `C�. rr. - i roe C L V- �y CorrM. EX ., i 25, 2001 On _� L j� ,a o-o l before me; ,k�lipersonally appeared Barbara F. Cracchiolo, (or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to me that she executed the same in her authorized capacity, and that by her signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument. WITNESS my hand and official seal. Signatur4 y� eal) <.AT HY '',RENE: VA! ET 1C Croce County Exec:; D,--- 25,2001 6 STATE OF CALIFORNIA ) ) ss. COUNTY OF ORANGE ) On p ! before me,personally appeared 44 f Lein 1e BitockuJiva (here insert name and title of the officer), personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) Oare subscribed to the within instrument and acknowledged to me that lay/&he/they executed the same in l ie1wt/their authorized capacity(ies), and that by kiT/bw/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. WITNESS my hand and official seal. Signature (Seal) nqy m• .l�I&M File Notes Office ®f the City Clerk Huntington reach, California -�"- 00 Gm fl±� I � La UAA- Eras ME ClApy) aV f 1V61� i CNN CT'y Tb Et.*NIv Implementation Agreement IMPLEMENTATION AGREEMENT by and between REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH, Agency and CIM GROUP, LLC Developer hb\cim\imp.agmt.5 March 30, 2000 IMPLEMENTATION AGREEMENT This IMPLEMENTATION AGREEMENT ("Agreement") dated as of , 2000, is entered into by and between the REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH ("Agency") and CIM GROUP, LLC ("Developer"). RECITALS A. The Agency and Developer entered into that certain Disposition and Development Agreement dated June 17, 1999 ("DDA"), which is hereby incorporated by reference. Reference herein to the DDA shall include any and all Attachments thereto. B. Pursuant to the DDA, the Developer is obligated to develop and operate certain improvements ("Project") on real property consisting of parcels already owned by the Agency (collectively, "Parcel A") and other parcels currently owned by third parties (collectively, "Parcel B"). C. Pursuant to Section 201.3 of the DDA, the Developer has been attempting to acquire fee simple title to Parcel B through voluntary negotiations. As a result, the Developer has negotiated that certain Ground Lease and Option to Purchase Fee ("Lease") by and between Frank M. Cracchiolo, Trustee for the Revocable Trust dated June 12, 1979, and Salvator W. and Barbara F. Cracchiolo (collectively, the "Landlord") and CIM/Huntington, Inc. and the Redevelopment Agency of the City of Huntington Beach (collectively, the "Tenant"). The Lease pertains to one of the parcels which comprise Parcel B ("Leased Premises"). The Lease is hereby incorporated by reference. Any capitalized term not defined herein shall have the meaning ascribed to it in the Lease or the DDA, as applicable. The parties desire that the Agency be a co -tenant with CIM/Huntington, Inc. under the lease. D. The Agency is agreeable to entering into the Lease as a co -tenant provided that the Agency and Developer enter into this Agreement setting forth the Agency's and Developer's responsibilities under the Lease. E. The parties are entering into this Agreement for good and valuable consideration, the receipt of which is hereby acknowledged. hb\cim\imp. agmt.5 March 30, 2000 TERMS 1. Pre -Commencement Date Period. From the date hereof until the occurrence of the first Trigger Event (as hereinafter defined) and the execution of the Sublease (as hereinafter defined) or cancellation of the Lease, as applicable, the provisions set forth below shall apply. As used herein, "Trigger Event" shall mean the earliest to occur of the (a) Commencement Date as defined in the Ground Lease, (b) the Close of Escrow under the DDA, or (c) the termination of the DDA. 1.1 The Developer shall be responsible, at its sole cost and expense, for performing all obligations of Tenant under the Lease. Said obligations shall include, without limitation, the following to the extent applicable prior to the Commencement Date of the Ground Lease: paying Basic Rent or Additional Rent, paying taxes, obtaining and maintaining all required insurance policies, repairing and maintaining the Leased Premises, complying with all laws, rules, and regulations, and indemnifying the Landlord, all as more particularly set forth in the Lease. 1.2 The Developer may pay or may cause to be paid any monies due under the Lease or obtain any required or necessary consents from Landlord. 1.3 The Agency shall not terminate the Lease without the Developer's prior written consent. The Developer shall prohibit CIM/Huntington, Inc. from terminating the Lease without the Agency's prior written consent. 1.4 Developer shall defend (with counsel chosen by Agency and City), indemnify and hold harmless Agency, the City of Huntington Beach ("City"), and their respective directors, officials, officers, employees, agents, contractors and consultants (collectively, "Agency Indemnified Parties") from and against all claims, liability, loss, damage, costs or expenses (including attorneys' fees and court costs) arising from or as a result of the death of any person or any accident, injury or loss or damage whatsoever caused to any person or to the property of any person arising out of or in connection with Developer's or CIM/Huntington, Inc.'s use or occupancy of the Leased Premises, any activity, work, or other thing done, permitted, or suffered by Developer or CIM/Huntington, Inc. in or about the Leased Premises, or arising from any reason or cause whatsoever in connection with the use or occupancy of the Leased Premises by any party during the term of the Lease, or the exercise of any right of Tenant under the Lease, or the performance of any obligation by Tenant under the Lease, except to the extent caused by the negligence or wrongful act of any Agency Indemnified Parties. 1.5 Developer shall further defend (with counsel chosen by Agency and City), indemnify and hold harmless Agency, the City, and their respective directors, officials, officers, employees, agents, contractors and consultants from and against all claims, liability, loss, damage, costs or expenses (including attorneys' fees and hb\cim\imp.agmt5 March 30, 2000 court costs) arising from any breach or default by Developer in performing any obligations to be performed by Developer under the terms of this Agreement. 2. Commencement Date 2.1 Right to Cause Lease Commencement Date to Occur (a) Developer's Rights. The Developer shall have the right to cause (or have CIM/Huntington, Inc. cause) the Lease Commencement Date to occur at any time, provided the Developer first gives the Agency at least five (5) business days prior written notice. (b) Agency's Rights. In the event that the Agency reasonably and in good faith believes that the Lease shall terminate unless the Lease Commencement Date immediately occurs, the Agency shall have the right to cause the Lease Commencement Date to occur, provided the Agency first gives the Developer at least five (5) business days prior written notice. The Agency also has the right to cause the Lease Commencement Date to occur pursuant to the provisions of Section 4.1(a) below. 2.2 Developer's DDA Election. If pursuant to Section 2.1(b), the Agency causes the Commencement Date under the Lease to occur, within fifteen (15) business days of said Agency election, the Developer must provide written notice to the Agency Executive Director indicating whether the Developer elects to proceed under the DDA or terminate the DDA. If the Developer does not provide the Agency Executive Director with such notice within said 15 business day period, the Developer shall be deemed to have elected to terminate the DDA. The Developer may only elect to proceed under the DDA so long as the Developer is not in default under the DDA past any applicable cure period. 2.3 Developer Causes Commencement Date; Developer Elects to Proceed with DDA. If the Developer has caused the Lease Commencement Date to occur, or if the Developer elects to proceed with the DDA pursuant to Section 2.2 above, the Agency shall execute and the Developer shall cause CIM/Huntington, Inc. to execute a sublease in substantially the form attached hereto as Exhibit A and made a part hereof (the "Sublease") naming CIM/Huntington, Inc. as subtenant thereunder, as well as the Memorandum of Sublease, Option to Purchase Fee and Agreement Containing Covenants Affecting Real Property in the form attached to the Sublease as Exhibit B (the "Memorandum of Sublease"), and the Developer shall execute the Guaranty of Sublease in the form attached hereto as Exhibit B and made a part hereof (the "Guaranty"). If the Developer elects to proceed with the DDA, within thirty (30) days following the date of the Developer's election notice, the Developer shall reimburse the Agency for any costs or expenses incurred by the Agency in connection with, under, or pursuant to the Lease. hb\cim\imp. agmt.5 March 30, 2000 2.4 Developer Elects to Terminate DDA. If pursuant to Section 2.2 the Developer elects to terminate the DDA or the Developer is prohibited from electing to proceed with the DDA because the Developer is in default under the DDA past any applicable cure period: (a) Within (30) days following the date of the Developer's election notice or deemed election, the Developer and the Agency shall take such steps and execute such documents as are necessary to terminate the DDA. (b) Within thirty (30) business days following the date of the Developer's election notice or deemed election, the Agency shall execute and the Developer shall cause CIM/Huntington, Inc. to execute the Sublease and the Memorandum of Sublease naming the Agency as the subtenant thereunder. The Developer shall also cause CIM/Huntington, Inc. to cooperate with Agency in any sub -sublease of the Leased Premises, including, without limitation, joining in or signing any documents or agreements or taking such other actions as may be reasonably necessary. 3. Close of Escrow. If the Close of Escrow under the DDA occurs prior to either of the other two Trigger Events, within thirty (30) days after the Close of Escrow, the Developer shall execute the Guaranty, and the Agency shall execute and the Developer shall cause CIM/Huntington, Inc. to execute the Sublease and the Memorandum of Sublease naming CIM/Huntington, Inc. as subtenant thereunder. 4. Termination of the DDA 4.1 Prior to Either of the Other Two Trigger Events. If the DDA terminates prior to either of the other two Trigger Events, then the following shall apply: (a) By giving written notice within ninety (90) days after the DDA termination, the Agency may elect to cause the Lease Commencement to occur and to proceed with the Sublease with the Agency as subtenant thereunder. In such event, the Agency shall execute and the Developer shall cause CIM/Huntington, Inc. to execute the Sublease and the Memorandum of Sublease naming the Agency as the subtenant thereunder. The Developer shall also cause CIM/Huntington, Inc. to cooperate with Agency in any sub -sublease of the Leased Premises, including, without limitation, joining in or signing any documents or agreements or taking such other actions as may be reasonably necessary. (b) If the Agency does not timely make the election described in Section 4.1(a) above, the Developer may elect to cause the Lease Commencement Date to occur pursuant to Section 2.3 above, provided that in the alternative, the Developer may elect to cause CIM/Huntington, hb\cim\imp.agmt.5 March 30, 2000 Inc. to cancel the Lease (if such right exists under the Lease or pursuant to agreement with Landlord). 4.2 Following Either of the Other Two Trigger Events. If the DDA terminates following either of the other two Trigger Events and the Sublease has been entered into naming CIM/Huntington, Inc. as the subtenant thereunder, then by giving written notice within ninety (90) days after the DDA termination, the Agency may elect to have the Developer cause CIM/Huntington, Inc. to execute an assignment agreement assigning all of CIM/Huntington, Inc.'s rights, title and interest under the Sublease to the Agency or to execute a Sublease subleasing all of CIM/Huntington, Inc.'s rights, title and interest under the Sublease (wherein CIM/Huntington, Inc. is named as the subtenant) and the Memorandum of Sublease naming the Agency as the subtenant thereunder. The Developer shall also cause CIM/Huntington, Inc. to cooperate with Agency in any sub -sublease of the Leased Premises, including, without limitation, joining in or signing any documents or agreements or taking such other actions as may be reasonably necessary. 5. Negative Covenants. Without limiting the obligations of the parties, at no time may either the Developer or the Agency do any of the following, and the Developer shall prohibit CIM/Huntington, Inc. from doing any of the following, without the prior written consent of the other party: 5.1 Perform any act or fail to perform any act which would constitute an Event of Default under the Lease or which would lead to an Event of Default under the Lease; 5.2 Terminate the Lease in whole or in part (except as provided in Section 2.4 above); 5.3 Modify or amend the Lease in whole or in part; or 5.4 Prejudice or adversely affect the rights of the Tenant under the Lease. 6. Rent as Acquisition Costs. The Agency Obligation is partly comprised of Acquisition Costs. For purposes of the DDA, the Acquisition Costs related to the Leased Premises shall be the sum of (i) $1,680,000 plus (ii) relocation costs and expenses approved by the Agency Executive Director or designee related to CIM/Huntington Inc.'s use of the Leased Premises under the Lease plus (iii) reimbursable costs, if any, as set forth in Section 201.2(a) of the DDA; provided, however, if the DDA is terminated prior to CIM/Huntington, Inc. paying at least $1,680,000 in total Rent (as defined in the Lease), then the difference between $1,680,000 and the actual total Rent paid and shall be credited as an off -set by the Agency against amounts owed to Developer by the Agency under the DDA, including, without limitation, the Agency Obligation. hb\cim\imp.agmt5 March 30, 2000 7. Limitation on Project Costs. Except for items included in the express definition of Project Cost in Section 216(c) of the DDA, no payment of any monies by Developer or CIM/Huntington, Inc. under or pursuant to the Lease shall be included in the calculation of Project Costs (as defined in the DDA) by virtue of this Agreement. By way of example, if the Commencement Date under the Lease has occurred and CIM/Huntington, Inc. has paid real property taxes for the Leased Premises pursuant to the Lease during the period of construction of the Improvements (as defined in the DDA), then the amount of such taxes may be included in Project. Costs. Participation Payment. There shall be no impact on the Participation Payment (as defined in the DDA) by virtue of this Agreement or any other provision of the DDA other than as expressly set forth herein. 9. Space Leases. The Agency and Developer acknowledge and agree that Section 316(h) of the DDA applies to leases for occupancy under the Lease or any Sublease naming CIM/Huntington, Inc as subtenant thereunder. 10. Offset Rights. Any monies which the Agency pays or fees or costs incurred by the Agency as a result of Developer's or CIM/Huntington, Inc.'s breach or default under this Agreement, may be off -set by the Agency against amounts owed to Developer by the Agency under the DDA, including, without limitation, the Agency Obligation. 11. Default Under Lease. Any act or omission of the Developer or CIM/Huntington, Inc. which becomes an Event of Default of Tenant under the Lease shall be an Event of Default of Developer under the DDA. 12. Liability of Developer and CIM/Huntington, Inc. Nothing in this Agreement shall relieve the Developer of any of Developer's liabilities and/or obligations under the DDA, this Agreement or the Lease which may have arisen or existed prior to any termination of the DDA by the Developer or any assignment or sub -sublease by CIM/Huntington, Inc. to the Agency. Further, nothing in this Agreement shall relieve CIM/Huntington, Inc. of any of CIM/Huntington, Inc.'s liabilities and/or obligations under the Lease or any Sublease which may have arisen or existed prior to any termination of the DDA by the Developer or any assignment or sub -sublease by CIM/Huntington, Inc. to the Agency. 13. Further Assurances. The parties agree to execute such other documents and to take such other action as may be reasonably necessary to further the purposes of this Agreement. 14. Reciprocal Good Faith Efforts Re: Assignment. At the request of either party, the other party shall cooperate with the other party and use good faith efforts to cause Landlord to allow the parties to enter into an assignment and assumption agreement in lieu of entering into a Sublease, which assignment and assumption agreement shall be consistent with the terms and conditions of this Agreement and the Sublease. hb\cim\imp.agmt.5 March 30, 2000 15. Limitation On Amendment. Except as expressly provided otherwise in this Agreement, the DDA remains in full force and effect, enforceable in accordance with its terms. ("Agency") REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH Date: Chairman ATTEST: Agency Secretary REVIEWED AND APPROVED AS TO FORM: Agency General Counsel 3i-1a1W APPROVED AS TO FORM: Kane, Ballmer & Berkman "Developer" CIM GROUP, LLC ORCHARD CAPITAL CORPORATION, Manager Date: Richard S. Ressler President hb\cim\imp.agmt5 March 30, 2000 Sent by: KANE, BALLMER & BERKMAN 213 625 0931; 03/30/00 2:12PM;)etEax #621;Paae 2/2 15. Limitation On ,amendment. Except as expressly provided otherwise in this Agreement, the DDA remains in full force and effect, enforceable in accordance with its terms. Date: ATTEST: Agency Secretary REVIEWED AND APPROVED AS TO FORM: Agency General Counsel APPROVED AS TO FORM: Kane, Ballmer & Berkman Date: hb\61n�imp.agmz.4 March 29.2000 ("Agency's REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH Chairman "Developer" CIM GROUP, LLC. ORCHARD CAPITAL CORPORATION, Manager 7 Richard S. Ressler President MAR-30-2000 14:15 213 625 0931 95% P.02 03/30/00 THU 17:29 FAX 310 966 1701 CIM GROUP 4� 004 15. Limitation On A.mendmznt. Except as expressly provided otherwise in this Agreement, the DDA remains in full force and effect, enforceable in accordance with its terns. ("Agency") REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH Date: Chairman ATTEST: Agency Secretary REVIEWED AND APPROVED AS TO FORM: Agency General Counsel APPROVED AS TO FORM: Kane, Ballmer & Berkman "Developer" CIM GROUP, LLC Date: F111. hb1,6m\imp•agmt.5 7 Mach 30.:000 Avraham 5hemesh, Treasurer 03i30%00 THU 17:29 FAX 310 966 1701 CIM GROUP z 005 The undersigned agrees to perform all of its obligations set forth in this Agreement. CIM/Huntington, Inc. Date: By: A raham Shgmesh Its: TreasMrar Shaul Kuba I� Secretary hb\cim�mpAgmt.5 March 30. 2000 GROUND LEASE AND OPTION TO PURCHASE FEE by and between Frank M. Cracchiolo, Trustee for the Revocable Trust dated June 12, 1979, and Salvator W. and Barbara F. Cracchiolo (collectively, "Landlord") and CINVHuntington, Inc. and Redevelopment Agency of the City of Huntington Beach (collectively, "Tenant") The Official Seal of the Redevelopment Agency of the City of Huntington Beach is affixed to each page of this agreement. RECEIVED 6 2 0 P 9 I) E P A R T PEN T OF ED%3V,,flV-a 300-003 Hunt. Beach Ground Lse. V8 GROUND LEASE SUMMARY A. Landlord: Frank M. Cracchiolo, Trustee for the Revocable Trust dated June 12, 1979, and Salvator W. and Barbara F. Cracchiolo, collectively with their successors and assigns. B. Tenant: CIM/Huntington, Inc., a California corporation, and Redevelopment Agency of the City of Huntington Beach. C. Commencement Date: Provided Tenant has paid Landlord the first month's Basic Rent, the earliest to occur of (i) issuance of all required building permits for the mixed use hotel and retail project (including subterranean garage and surface parking) (the "Project") which Tenant intends to construct on the Property and other property in the vicinity of the Property, (ii) upon demolition of the improvements on the Property, (iii) when all of the existing space tenants in the existing improvements on the Property vacate the Property at the election or demand of Tenant or the Redevelopment Agency of the City of Huntington Beach, (iv) November 1, 2001 or (v) such earlier date on which Tenant starts paying Basic Rent. D. The Premises: The property leased hereunder (the "Property") is described in the Legal Description attached hereto as Exhibit "A" and incorporated herein by this reference E. Term: Twenty-five (25) years, with three options to extend (the first two options for 25 years each and the third option for 24 years). F. Landlord's address for notices: 19712 Quiet Bay Lane, Huntington Beach, CA G. Tenant's address for notices: 6922 Hollywood Boulevard, Suite 900, Hollywood, California 90028 and to City Hall, 2000 Main Street, Huntington Beach, CA 92648. A copy of all notices shall be sent to Fragner Law Corporation, 333 S. Grand Avenue, Suite 3030, Los Angeles, CA 90071, Attention: Matthew C. Fragner, and to Kane Ballmer & Berkman, 515 S. Figueroa Street, Los Angeles, CA 90017, Attention: Murray Kane. H. Tenant's Basic Rent: (a) $168,000 per annum, payable in equal monthly installments on the first day of each calendar month, as adjusted pursuant to subparagraph (b). (b) Basic Rent Adjustment. (a) Definitions. As used herein -- (i) "Index" means the Consumer Price Index Los Angeles/Anaheim/Riverside (CPI-U) All Urban Consumers (1982-84=100) as published from time to time by the United States Department of Labor's Bureau of Labor Statistics. Should the Bureau discontinue the publication of the above - described index, or publish it less frequently than semiannually, or alter it in some -1- 300-003 Hunt. Beach Ground Lae. V 8 other manner, then Landlord shall adopt a substitute index or substitute procedure which reasonably reflects and monitors consumer prices. (ii) "Base Period Index" means the Index for the calendar month which is four (4) months prior to the calendar month in which the Commencement Date occurs. (iii) "Comparison Month" means the calendar month which is four (4) months prior to the calendar month in which a particular Rent Adjustment Date occurs. (iv) "Rent Adjustment Date" means (i) the date that is the first (lst) day of the first full calendar month following the fifth (5th) anniversary of the Commencement Date (unless the Commencement Date falls on the first (1st) day of a calendar month, in which event the Rent Adjustment Date shall be the fifth (5th) anniversary of the Commencement Date) and (ii) each fifth (5th) anniversary of the date described in clause (i). (c) Adjustment of Basic Rent. Effective as of each Rent Adjustment Date, the monthly Basic Rent payable by Tenant under this Lease shall be adjusted to equal an amount equal to the product of $168,000 and the fraction equal to the Index for the Comparison Month for the applicable Rent Adjustment Date divided by the Base Period Index, provided that any increase in Basic Rent for any applicable Rent Adjustment Date shall not exceed 14% over the Basic Rent in effect prior to such adjustment. (d) Each of CIM/Huntington, Inc. and the Redevelopment Agency of the City of Huntington Beach shall be responsible for the payment of Basic Rent and Additional Rent, and if either fails to pay such amounts, the other shall be responsible for all such payments and any late charges. I. Rights to Terminate Lease. (a) If the Commencement Date has not occurred by October 30, 2001, then at the election of either party by written notice to the other this Lease shall terminate, and any deposit held by Landlord or an escrow holder shall be returned to Tenant. .(b) If the Disposition and Development Agreement dated as of June 17, 1999 between CIM/Huntington, Inc. and the Redevelopment Agency of the City of Huntington Beach (the "DDA") is cancelled or modified in size or scope with respect to blocks 104 or 105 (or the site plan with respect to blocks 104 or 105 is modified), Landlord shall have the right to review the amended DDA and cancel the Lease and cancel the escrow, and at no cost whatsoever to Landlord within 60 days after Landlord has been given a copy of the modified DDA. In the event Landlord decides to cancel the Lease and/or escrow, CIM/Huntington Beach and the Redevelopment Agency of the City of Huntington Beach shall defend his right to do so. The foregoing paragraph (b) shall expire on the date the Commencement Date occurs and the first monthly Basic Rent installment is paid to Landlord. 300-003 Hunt.Beach Ground Lse. V8 _2_ (c) If any material amount of hazardous materials is discovered on the Property within 30 days after the execution of this Lease by all parties, Tenant shall have the right to cancel this Lease by giving Landlord written notice within 5 days after the expiration of such 30 day period. J. Landlord's Right to Cause Sale of Land. Section 32 of the Lease provides Landlord with the right to require Tenant to purchase Landlord's interest in the Property on the twentieth anniversary of the Commencement Date, the expiration of the initial Term and each exercised renewal option. K. Option to Purchase Fee Simple Title to Property. Section 33 of the Lease provides Tenant with the right to purchase Landlord's interest in the Property on the twentieth anniversary of the Commencement Date, the date of expiration of the initial term and each date of expiration of each renewal term. L. Relocation Costs. SUBJECT TO SUCH REPRESENTATION, TENANT SHALL BE RESPONSIBLE FOR ALL COSTS INCURRED IN CONNECTION WITH TERMINATING SUCH TENANCIES AND PAYMENT OF ANY RELOCATION EXPENSES (IF ANY) REQUIRED BY APPLICABLE LAW, AND SHALL INDEMNIFY AND HOLD LANDLORD HARMLESS FROM AND AGAINST ANY SUCH COSTS OR EXPENSES. M. Tenant to Pay Costs of Property and Development. Tenant shall be responsible for all costs incurred with the operation of the Property and construction of Improvements, including without limitation all parking, insurance, open space, set backs, on -site and off -site improvements, liabilities, taxes and repairs. N. Prior Notice. Tenant shall give written notice to Landlord at least ten (10) days prior to commencement of any work, to enable Landlord to post notices of non -responsibility. O. Hold Harmless. (a) Tenant's Indemnification. Tenant shall indemnify, defend, and hold Landlord harmless from and against any and all costs, claims, demands, actions, causes of action, liability, loss, or damage, including attorneys' fees and costs (collectively referred to as "Claims" and Claims that are made by third parties, collectively referred to as "Third Pgly Claims") whether for injury to or death of persons or damage to real or personal property or otherwise, arising out of or in connection with Tenant's use or occupancy of the Property, any activity, work, or other thing done, permitted, or suffered by Tenant in or about the Property, or arising from any reason or cause whatsoever in connection with the use or occupancy of the Property by any party during the Term of this Lease. The provisions of the preceding sentence shall not apply with respect to any active negligence or intentional acts of Landlord, or its agents, servants, contractors and employees (collectively "Landlord Parties") occurring after the date of this Lease. Tenant shall further indemnify, defend, and hold Landlord harmless from and against any and all Third Party Claims arising from any breach or default in the performance of any obligation on Tenant's part to be performed under the terms of this Lease or arising from any wrongful act or negligence of Tenant or any officer, agent, employee, guest, or invitee of Tenant. Tenant, as a material part of the consideration to Landlord, hereby assumes all risk of damage to property or injury to persons in, upon, or about the Property occurring during the term of this 300-003 Hunt.Beach Ground Lse. V8 -3- Lease from any cause other than the active negligence or intentional acts of Landlord Parties occurring after the date of this Lease, and Tenant hereby waives all claims in respect thereof against Landlord. Tenant's obligation to indemnify under this paragraph shall include attorneys' fees, investigation costs, and other reasonable costs, expenses, and liabilities incurred by Landlord. If the ability of Tenant to use the Property is interrupted for any reason, Landlord shall not be liable to Tenant for any loss or damages occasioned by such loss of use unless caused by the active negligence or intentional acts of Landlord Parties. (b) No Liability. Landlord or its agents shall not be liable for loss or damage to any property by theft or otherwise, nor for any injury to or damage to persons or property resulting from fire, explosion, falling plaster, steam, gas, electricity, water, or rain which may leak from any part of the Property or from the pipes, appliances, or plumbing works therein or from the roof, street, or subsurface or from any other place resulting from dampness or any other cause whatsoever, unless caused by or due to the negligent or intentional acts or omissions of Landlord Parties. Tenant shall give prompt notice to Landlord in case of fire or accidents in the Property or of defects therein or in the fixtures or equipment. P. Waste; Refuse. Tenant shall not keep any trash, garbage, waste, or other refuse on the Property except in sanitary containers and shall regularly and frequently remove the same from the Property. Tenant shall keep all incinerators, containers, and other equipment used for the storage or disposal of such matter in a clean and sanitary condition. Tenant shall surrender the Property at the expiration or termination of this Lease free of any Hazardous Materials or contamination caused by Tenant's activities, and free and clear of all judgments, liens, or encumbrances and shall, at its own cost and expense, repair all damage and clean up or perform any remedial action necessary relating to any Hazardous Materials or contamination caused by Tenant's activities. Tenant shall, at its sole cost and expense, remediate in accordance with law or remove any alterations or improvements that may be contaminated or may contain Hazardous Materials caused by Tenant's activities. Q. Definition of Leasehold Mortgage. For purposes of this Lease, the term "Leasehold Mortgage" means a conveyance of a security interest in this Lease and all of Tenant's interests in the Property (collectively referred to as "Tenant's Leasehold Interests") to a lender (a "Leasehold Mortgagee") encumbering Tenant's Leasehold Interest, or the conveyance of Tenant's Leasehold Interests to the Leasehold Mortgagee or its assignee in connection with a foreclosure or a deed in lieu of foreclosure of such loan. Landlord agrees to permit Tenant to pledge Tenant's Leasehold Interests to a Leasehold Mortgagee as security under a Leasehold Mortgage without Landlord's consent. In the event of a default or breach by Tenant of any security instrument securing a Leasehold Mortgage, Landlord shall have the right to cure the default provided such cure is completed at least five (5) business days before the date of foreclosure. In such event, Landlord shall be entitled to reimbursement by Tenant of all costs and expenses incurred by Landlord in curing the default, with interest at the highest rate permitted by law, as Additional Rent (collectively, "Landlord's Cure Payments"), provided in the event of a subsequent foreclosure of a permitted Leasehold Mortgage the party acquiring Tenant's Leasehold Interests shall not be obligated to pay Landlord any of Landlord's Cure Payments. R. Memorandum of Lease. Promptly after the Commencement Date has occurred, all debt and/or equity financing for the initial construction of the Project is in place, and Landlord has received the first month's Basic Rent, Landlord and Tenant shall execute in 300-003 Hunt.Beach Ground Lse. V8 -4- recordable form a Memorandum of Lease and Option to Purchase Fee, substantially in the form attached hereto as Exhibit `B" which is incorporated herein by this reference, which either party is authorized to record. The Memorandum of Lease and Option to Purchase Fee shall be removed from title in the event an Event of Default is not cured within thirty days after written notice, for the duration of such Default, subject to the last sentence of Section 25.5. S. Costs Prior to the Second Anniversary of Commencement Date. Prior to the Commencement Date (including the period beginning with the date of initial negotiations prior to the execution of this Lease) and continuing throughout the period ending two years after the Commencement Date, in the event of any dispute regarding the Lease, or in the event Landlord consults with an attorney or incurs other costs in connection with the Lease, Tenant shall pay all such fees and costs incurred by Landlord, and Tenant shall not be entitled to a reimbursement or recovery of any fees or costs paid by Tenant notwithstanding any other paragraph in this Agreement. T. Other Taxes. If at any time during the Lease Term under the laws of the United States, or any state, county, or city, or any political subdivision thereof in which the building is situated, a tax or excise on rent or any other tax or other charge however described is levied or assessed by any such political body against Landlord on account of ownership of the Property or rentals payable to Landlord hereunder, such tax or excise shall be considered "taxes" for the purposes of this Section 14 and shall be paid by Tenant in the manner provided above, excluding, however, from such tax or excise to be paid by Tenant any amount assessed against Landlord as state or federal income tax, gift tax or inheritance tax. U. References to Frank Cracchiolo. All references in the Lease to "Frank Cracchiolo" shall mean Landlord. 300-003 Hunt.Beach Ground Lse. V8 _5_ GROUND LEASE AND OPTION TO PURCHASE FEE This GROUND LEASE (the "Lease") is dated as of March 8, 2000, between Frank M. Cracchiolo, Trustee for the Revocable Trust dated June 12, 1979, and Salvator W. and Barbara F. Cracchiolo (collectively with their successors and assigns, "Landlord") and CIM/Huntington, Inc., a California corporation, and Redevelopment Agency of the City of Huntington Beach (collectively, "Tenant"), who agree as follows: FUNDAMENTAL INFORMATION 1.1 Landlord: Frank M. Cracchiolo, Trustee for the Revocable Trust dated June 12, 1979, and Salvator W. and Barbara F. Cracchiolo, collectively with their successors and assigns. 1.2 Tenant. CIM/Huntington, Inc., a California corporation, and Redevelopment Agency of the City of Huntington Beach. 1.3 Commencement Date: Provided Tenant has paid Landlord the first month's Basic Rent, the earliest to occur of (i) issuance of all required building permits for the mixed use hotel and retail project (including subterranean garage and surface parking) (the "Project") which Tenant intends to construct on the Property and other property in the vicinity of the Property, (ii) upon demolition of the improvements on the Property, (iii) when all of the existing space tenants in the existing improvements on the Property vacate the Property at the election or demand of Tenant or the Redevelopment Agency of the City of Huntington Beach, (iv) November 11, 2001 or (v) such earlier date on which Tenant starts paying Basic Rent. 1.4 The Premises: The property leased hereunder (the "Pro ert ") is that real property described in the Legal Description attached hereto as Exhibit "A" and incorporated herein by this reference, and any and all buildings, structures, or other improvements either now or hereafter located on the land. 1.5 Term: The Lease term (the "Term") shall commence on the Commencement Date, and shall continue until the twenty-fifth anniversary of the Commencement Date, or to such later date resulting from Tenant's exercise of its options to renew the Term of this Lease as provided in Section 5.3, or on the date resulting from an earlier termination as hereinafter set forth. After the Commencement Date has been determined, Landlord and Tenant shall execute, acknowledge and deliver an amendment of Memorandum of Lease and Option to Purchase Fee setting forth the Commencement Date and expiration date of the initial Term hereof. For purposes of this Lease, the following definitions shall apply: (a) Each 12 month period, beginning on the first day of the month following the Commencement Date, shall be referred to as a "Lease Year." 300-003 Hunt.Beach Ground Lse. V8 -6- (b) The "Term" shall include the initial Term and any applicable Option (as defined in Section 5.3, below). 1.6 Landlord's address for notices: 19712 Quiet Bay Lane, Huntington Beach, CA 92648. 1.7 Tenant's address for notices: 6922 Hollywood Boulevard, Suite 900, Los Angeles, California 90049 and to City Hall, 2000 Main Street, Huntington Beach, CA 92648. A copy of all notices shall be sent to Fragner Law Corporation, 333 S. Grand Avenue, Suite 3030, Los Angeles, CA 90071, Attention: Matthew C. Fragner, and to Kane Ballmer & Berkman, 515 S. Figueroa Street, Los Angeles, CA 90017, Attention: Murray Kane. 1.8 Tenant's Basic Rent: $168,000 per annum, payable in equal monthly installments on the first day of each calendar month, as adjusted pursuant to Section 6.2. 1.9 The Specified Use of the Property. For the Term of this Lease, including any Option (defined in Section 5.3, the Property shall be used as part of a mixed -use development to be constructed on the Property (the "Improvements") and for any other lawful purpose. 1.10 Rights to Terminate Lease. (a) If the Commencement Date has not occurred by October 30, 2001, then at the election of either party by written notice to the other this Lease shall terminate, and any deposit held by Landlord or an escrow holder shall be returned to Tenant. (b) If the Disposition and Development Agreement dated as of June 17, 1999 between CIM/Huntington, Inc. and the Redevelopment Agency of the City of Huntington Beach (the "DDA") is cancelled or modified in size or scope with respect to blocks 104 or 105 (or the site plan with respect to blocks 104 or 105 is modified), Landlord shall have the right to review the amended DDA and cancel the Lease and cancel the escrow, and at no cost whatsoever to Landlord within 60 days after Landlord has been given a copy of the modified DDA. In the event Landlord decides to cancel the Lease and/or escrow, CIM/Huntington Beach and the Redevelopment Agency of the City of Huntington Beach shall defend his right to do so. The foregoing paragraph (b) shall expire on the date the Commencement Date occurs and the first monthly Basic Rent installment is paid to Landlord. (c) If any material amount of hazardous materials is discovered on the Property within 30 days after the execution of this Lease by all parties, Tenant shall have the right to cancel this Lease by giving Landlord written notice within 5 days after the expiration of such 30 day period. 300-003 Hunt.Beach Ground Lse. V8 -7- 2. PURPOSE OF LEASE Landlord has agreed to lease the Property to Tenant in accordance with this Lease, and Tenant will construct, manage and operate the Improvements for the uses permitted by this Lease. 3. AGREEMENT TO LEASE 3.1 Lease of Property. Landlord hereby leases the Property to Tenant, and Tenant hereby leases the Property from Landlord, subject to the provisions and conditions herein set forth, for an amount of rental as described in Sections 6 and 7 hereof; together with all right, title and interest, if any, of Landlord, to the land lying in the streets and roads adjoining the Property, to the center line thereof, and in and to any and all easements and rights of way appurtenant to the Property, subject nevertheless to all public easements and rights of use of such streets, rights of way and easements; together with all awards, rents, issues and profits of whatsoever nature of or with respect to any of the Property and the Improvements, except as expressly reserved to Landlord. 3.2 Ownership of Improvements. The parties agree that during the Term of this Lease, all Improvements located on the Property shall be owned in fee by Tenant. 3.3 Grant of Easements. Within twenty (20) days after Tenant's submission, at no cost to Landlord, Landlord agrees to execute, acknowledge and deliver grants of easements necessary for the development of the Project and Property, as well as subsequent development of the Property during the Term hereof, provided no such easement shall materially diminish the value of the Property. 3.4 Consent to Bond Financing. Upon Tenant's request, with Tenant responsible for all costs, Landlord shall consent, approve and/or vote in favor of any Mello Roos or other bond financing transaction relating to the construction of improvements on or near the Property. 4. ACCEPTANCE OF PROPERTY 4.1 Disclaimer. Except as may be expressly set forth in this Lease, Landlord makes no representations, express or implied, with respect to the legality, fitness, or desirability of the Property for Tenant's intended use or for any other uses. Tenant shall conduct its own investigation to its satisfaction with respect to zoning, local codes and regulations, and other matters affecting Tenant's ability to use and improve the Property for Tenant's intended use. It shall be Tenant's responsibility, at no cost to Landlord, to ensure that zoning of the Property, and all applicable City land use requirements are, as of the date of execution hereof, such as to permit development of the Property and construction of improvements thereon in accordance with the provisions of this Lease and the use, operation and maintenance of such improvements as provided in this Lease. 4.2 Hazardous Substances. Landlord has no knowledge of any other hazardous substance located on the Property, without any duty to investigate or inquire. 300-003 Hunt.Beach Ground Lse. V8 -8- 4.3 Existing Leases. Landlord represents and warrants that there are no leases or contracts binding the Property except for the existing tenants, whose tenancies may all be terminated on 90 days' written notice. SUBJECT TO SUCH REPRESENTATION, TENANT SHALL BE RESPONSIBLE FOR ALL COSTS INCURRED IN CONNECTION WITH TERMINATING SUCH TENANCIES AND PAYMENT OF ANY RELOCATION EXPENSES (IF ANY) REQUIRED BY APPLICABLE LAW, AND SHALL INDEMNIFY AND HOLD LANDLORD HARMLESS FROM AND AGAINST ANY SUCH COSTS OR EXPENSES. 4.4 "AS -IS". Except as expressly provided in this Lease, the Property shall be leased in an "as is" condition, with no warranty or liability, express or implied, on the part of Landlord as to the condition of any buildings on the Property, the soil (or water), its geology, the existence of known or unknown faults or any other conditions relating to the Property. It shall be the sole responsibility of Tenant, at Tenant's expense, to investigate and determine the condition. of any building, soil (and water) relating to the Property and the suitability of the Property for the uses contemplated by this Lease. If the condition of the Property, or any part thereof, is not in all respects entirely suitable for the use of the Property contemplated by this Lease, then it is the sole responsibility and obligation of Tenant to take such action as may be necessary to place the Property and the soil (and water) condition thereof in all respects in a condition that is suitable for such use (provided Tenant shall not be responsible for any such actions if it terminates the Lease pursuant to Section 1.10). 5. TERM 5.1 Initial Term. The Term of this Lease shall commence on the Commencement Date and shall continue for twenty-five (25) Lease Years until the expiration date, as set forth in Section 1.5, above, unless Tenant exercises its right to renew the Lease pursuant to Section 5.3, below, or the Lease is terminated sooner pursuant to the provisions and conditions hereof. 5.2 Surrender. Subject to the damage and reconstruction provisions of Section 24, Tenant shall upon the expiration or sooner termination of this Lease surrender the Property to Landlord in good and clean condition, ordinary wear and tear excepted, including any buildings, structures, improvements or additions then located on the Property which are, during the Term of this Lease, owned in fee by Tenant. 5.3 Option to Renew the Lease. (a) Tenant may, at its option, renew this Lease for two (2) additional periods of twenty-five (25) Lease Years each and one additional period of twenty-four Lease Years (but not to exceed a total Term of ninety-nine (99) years), each such additional period being referred to as an "Option," subject to all the provisions of this Lease, and on the same terms and conditions as for the initial Term. Tenant's right to renew this Lease for the first additional Option and the subsequent Option is subject to the following conditions: (b) Tenant shall give written notice to Landlord of its intent to renew the Lease for each Option at any time at least 180 days prior to the expiration of the initial Term or the first Option, as the case may be. 300-003 Hunt.Beach Ground Lse. V8 _9_ (c) Tenant may not renew the term of this Lease if, at the time notice of intent to renew is given, or at the time of the commencement of the Option, an Event of Default has occurred and is continuing in the payment of Rent (as defined below) or in any other material provision of this Lease, Landlord has given written notice of such Event of Default and such Event of Default remains uncured at the expiration of the period within which Tenant may cure such default as provided in this Lease. Nothing herein shall be construed to waive or limit Landlord's right to terminate this Lease upon any Event of Default by Tenant (including any default in addition to failure to pay Rent) as provided in this Lease, notwithstanding Tenant's exercise of its right to renew hereunder regardless of such other default. (d) In lieu of executing a new lease for any additional Option, each party shall, at the request of the other, endorse on the original Lease or on a true copy of the original Lease that party's signature or signatures, the date the renewal option was exercised, and the words "renewal option exercised." Alternatively, each party shall, at the request of the other, execute a memorandum, in recordable form, acknowledging the fact that the renewal option has been exercised and otherwise complying with the requirements of law for an effective memorandum or abstract of lease. 6. BASIC RENT 6.1 Initial Basic Rent. For the period beginning on the Commencement Date, and continuing thereafter throughout the initial Term, Tenant shall pay Landlord Basic Rent in the amount of One Hundred Sixty -Eight Thousand Dollars ($168,000) annually, as adjusted pursuant to Section 6.2 below. Such initial Basic Rent shall be payable in equal monthly installments, each installment being payable in advance on the first day of each calendar month beginning on the Commencement Date and continuing throughout the Term. Without limiting Tenant's obligations, and as a matter of clarification, each of CIM/Huntington, Inc. and Redevelopment Agency of the City of Huntington Beach shall be responsible for the timely payment of Basic Rent and other rent payable hereunder. 6.2 Basic Rent Adjustment. (a) Definitions. As used herein -- (i) "Index" means the Consumer Price Index Los Angeles/Anaheim/Riverside (CPI-U) All Urban Consumers (1982-84=100) as published from time to time by the United States Department of Labor's Bureau of Labor Statistics. Should the Bureau discontinue the publication of the above -described index, or publish it less frequently than semiannually, or alter it in some other manner, then Landlord shall adopt a substitute index or substitute procedure which reasonably reflects and monitors consumer prices. (ii) "Base Period Index" means the Index for the calendar month which is four (4) months prior to the calendar month in which the Commencement Date occurs. (iii) "Comparison Month" means the calendar month which is four (4) months prior to the calendar month in which a particular Rent Adjustment Date occurs. 300-003 Hunt.Beach Ground Lse. V8 _ 10- (iv) "Rent Adjustment Date" means (i) the date that is the first (1st) day of the first full calendar month following the fifth (5th) anniversary of the Commencement Date (unless the Commencement Date falls on the first (1st) day of a calendar month, in which event the Rent Adjustment Date shall be the fifth (5th) anniversary of the Commencement Date) and (ii) each fifth (5th) anniversary of the date described in clause (i). (b) Adjustment of Basic Rent. Effective as of each Rent Adjustment Date, the monthly Basic Rent payable by Tenant under this Lease shall be adjusted to equal an amount equal to the product of $168,000 and the fraction equal to the Index for the Comparison Month for the applicable Rent Adjustment Date divided by the Base Period Index, provided that any increase in Basic Rent for any applicable Rent Adjustment Date shall not exceed 14% over the Basic Rent in effect prior to such adjustment. 6.3 Tenant's Responsibility. Each of CIM/Huntington, Inc. and the Redevelopment Agency of the City of Huntington Beach shall be responsible for the payment of Basic Rent and Additional Rent, and if either fails to pay such amounts, the other shall be responsible for all such payments and any late charges. 7. ADDITIONAL RENT In addition to any Basic Rent that is due pursuant to this Lease, Tenant shall pay to Landlord, as additional consideration for the lease of the Property, any sums described in this Lease as "Additional Rent." 8. RENT GENERALLY 8.1 Triple Net. All Basic Rent and Additional Rent (collectively, "Rent") shall be paid absolutely net to Landlord, so that this Lease shall yield to Landlord the full amount of the Rent throughout the Term of this Lease. This Lease is and shall be a "Pure Net" or "Triple Net" lease, as such terms are commonly used in the real estate industry, it being intended that Tenant shall pay all costs, expenses and charges arising out of the use, occupancy and operation of the Property. 8.2 Payment. All payments of Rent and of other sums to be paid by Tenant to Landlord pursuant to this Lease shall be paid in lawful money of the United States of America, at the Landlord's address set forth above, or at such other place within the United States or to such other person, firms or corporations as Landlord from time to time may designate in writing. Except as otherwise expressly provided by the terms of this Lease, Landlord and Tenant agree that all sums payable hereunder to or on behalf of Landlord shall be paid without notice or demand. 8.3 Late Charge and Interest. Should Tenant fail, for whatever reason, to make any rental payment required hereunder within ten (10) days after written notice of delinquency, then Tenant shall pay an Additional Rent equal to 4% of the amount due; provided, however, that nothing in this Section 8.3 shall be deemed to limit any of Landlord's other rights or remedies under this Lease or otherwise available at law or in equity. In addition to such late charge, interest shall accrue from the date of delinquency (without requiring written notice) on all delinquent rental payments at the rate of 10% per annum (not to exceed the maximum rate allowed by law). 300-003 Hunt.Beach Ground Lse. V8 -11- 9. TENANT WORK Tenant shall be responsible for all improvement work on the Property in accordance with all applicable provisions of this Lease. 10. USE Tenant shall use the Property only for the specified uses set forth in Section 1.9 above and shall not use or permit the Property to be used for any other purposes. Tenant shall not cause, maintain, or permit any nuisance or waste in, on, or about the Property, normal wear and tear excepted. 11. COMPLIANCE WITH LAW 11.1 No Violation. Tenant shall not use the Property or permit anything to be done in or about the Property which will in any way conflict with any applicable law, statute, ordinance, or governmental rule, regulation or requirement now in force or which may hereafter be enacted or promulgated. Tenant shall, at its sole cost and expense, promptly comply with all applicable laws, statutes, ordinances, and governmental rules, regulations or requirements now in force or which may hereafter be enacted or promulgated, and any applicable requirements of any board of fire insurance underwriters or other similar bodies now or hereafter constituted, relating to the condition, use, or occupancy of the Property. 11.2 Judgment Conclusive. The judgment of any court of competent jurisdiction after all applicable appeals have been exhausted or appeal periods have expired or the admission of Tenant in any action against Tenant, whether Landlord be a party thereof or not, that Tenant has violated any law, statute, ordinance, or governmental rule, regulation, or requirement, shall be conclusive of that fact as between Landlord and Tenant. 12. ALTERATIONS AND ADDITIONS 12.1 No Prior Consent Required. Tenant may make any alterations, additions, or improvements to or on the Property or any building or structure thereon or any part thereof without the prior written consent of Landlord. 12.2 Tenant's Cost. All alterations, additions, or improvements by Tenant shall be made without cost or expense to Landlord, by responsible and licensed contractors. All improvements and equipment shall be designed, built, and installed in accordance with all applicable building codes and regulations, and Tenant shall obtain all necessary building permits. 12.3 Prior Notice. Tenant shall give written notice to Landlord at least ten (10) days prior to commencement of any work, to enable Landlord to post notices of non - responsibility. 12.4 Insurance. For all alterations costing in excess of $100,000, Tenant shall obtain and keep in effect "Builder's All Risk Insurance" during the period of construction and installation of any improvements being made by Tenant, including completed operations 300-003 Hunt.Beach Ground Lse. V8 -12- coverage, with coverage in the amount of at least $2,000,000, increased or decreased every five (5) years by the percentage increase or decrease in the Index from the Commencement Date of this Lease to the anniversary thereof most recently preceding the start of such construction (rounded to a reasonable amount), naming Landlord as an additional insured. Tenant shall deliver to Landlord a Certificate of Insurance evidencing such insurance coverage prior to commencement of the alterations. 12.5 Property Free of Liens. Tenant shall keep the Property free and clear of any and all liens and encumbrances which may arise at any time in connection with any improvement work by Tenant or its agents and contractors. Any mechanic's liens that have been recorded or stop notices that have been delivered shall be paid, settled or otherwise extinguished, discharged, released, waived or bonded around within twenty (20) days after notice thereof to Tenant. In addition, Tenant shall indemnify, defend, and hold Landlord harmless from and against any and all costs, expenses, claims, demands, damages, actions, causes of action, or liabilities of any kind which may arise at any time in connection with any improvement work by Tenant or its agents and contractors, including without limitation the design and installation of equipment and the renovation of the Property, except to the extent such costs, expenses, claims, demands, damages, actions, causes of action, or liabilities relate to the design of offsite improvements provided by Landlord or the negligence or willful misconduct of Landlord, its agents, representatives, employees or contractors. 13. REPAIRS 13.1 Tenant's Obligations. At all times during the Term, Tenant shall, at Tenant's sole cost and expense, (i) keep and maintain any buildings on the Property in good condition .and repair, ordinary wear and tear excepted; and (ii) undertake such maintenance of the Property from time to time as may be reasonable and customary under the circumstances. 13.2 Landlord's Obligations. Landlord shall not under any circumstances be obligated to undertake any maintenance, repair, or replacement of any portions of the Property. Tenant nrnderstands that Landlord is not obligated to maintain the structural portions of any building or structure, including the roof, exterior walls, and foundations of said building or structure:; Landlord shall not be liable for any failure to make any such repairs or to perform any maintenance, whether by reason of any injury to or interference with Tenant's business or otherwise. Tenant waives any obligations which Landlord may have with respect to the tenantability of the Property and the right to make repairs at Landlord's expense under any law, statute, or :ordinance now or hereafter in effect, including without limitation the provisions of California Civil Code sections 1941 and 1942. 14. TAXES 14.1 Payment Prior to Delinquency. Tenant shall promptly pay prior to delinquency, all real estate and real property taxes, or possessory interest tax, assessed against the Prosy, including such added assessment or omitted assessment which may be levied against the Property from time to time by the applicable governmental taxing authority for periods commencing upon the Commencement Date, and any increase in the assessment from time to time based on improvements to the Property. In addition, Tenant shall, during the Term 300-003 Hunt.Beach Ground Lse. V8 -13- of this Lease, pay any levy for the installation, maintenance or operations of local improvements affecting the Property as may be assessed by any governmental boards or bureaus having jurisdiction thereof. Notwithstanding the foregoing, any assessment or impositions for capital or public improvements which may be payable by law at the option of the taxpayer in installments may be so paid by Tenant in installments, together with any required interest. Upon written request of Landlord, Tenant shall furnish in writing to Landlord evidence of payment of all taxes and assessments required to be paid by Tenant during the Term hereof. If Landlord does not receive reasonable evidence of payment within 15 days after written request (which request may not be given until after the due date of such payment), Landlord may, at its option, pay the tax for Tenant. In such case, Tenant shall reimburse Landlord immediately upon demand, plus interest at the rate of ten percent (10%) per annum, as Additional Rent. If Tenant shall be obligated to pay any taxes, assessments, and charges hereunder during a partial year, the amount of any such taxes, assessments, and charges shall be prorated according to the length of time Tenant's obligation shall be in effect during the relevant tax period. 14.2 Tax Protest. Tenant shall have the right, by appropriate proceedings, to protest or contest in good faith any assessment or re -assessment of taxes, any special assessment, or the validity of any taxes or of any change in assessment or tax rate; provided, however, prior to any such challenge Tenant must either (i) pay the taxes alleged to be due in their entirety and seek a refund from the appropriate authority, or (ii) post a bond in an amount sufficient to insure full payment of the taxes. In any event, upon a final determination with respect to such contest or protest, Tenant shall promptly pay all sums found to be due with respect thereto. In any such protest or contest, Tenant may act in its own name; and at the request of Tenant, Landlord shall cooperate with Tenant in any way Tenant may reasonably require in connection with such contest or protest, including signing such documents as Tenant shall reasonably request, provided that such contest or protest shall be at Tenant's sole expense, and in the event any penalties, interest, or late charges become payable with respect to the taxes as a result of such contest or protest, Tenant shall pay the same. In the event Tenant obtains a refund as the result of Tenant's protest or contest and subject to the Tenant's obligation to pay Landlord's costs (if any) associated therewith, Tenant shall be entitled to such refund to the extent it relates to the Property during the Term of this Lease. 14.3 Personal Property Taxes. Tenant shall pay any and all personal property taxes assessed against equipment, trade fixtures, inventory, or other personal property located in, on, or about the Property. Tenant shall indemnify, defend, and hold Landlord and the Property harmless from and against any such personal property taxes. 14.4 Other Taxes. If at any time during the Lease Term under the laws of the United States, or any state, county, or city, or any political subdivision thereof in which the building is situated, a tax or excise on rent or any other tax or other charge however described is levied or assessed by any such political body against Landlord on account of ownership of the Property or rentals payable to Landlord hereunder, such tax or excise shall be considered "taxes" for the purposes of this Section 14 and shall be paid by Tenant in the manner provided above, excluding, however, from such tax or excise to be paid by Tenant any amount assessed against Landlord as state or federal income tax, gift tax or inheritance tax. 300-003 Hunt.Beach Ground Lse. V8 -14- 15. ASSIGNMENT AND SUBLETTING 15.1 Landlord Consent Required. Except for Permitted Transfers, Tenant shall not, under any circumstances, without the express prior written approval of Landlord, Transfer the Property or any portion thereof, or attempt to Transfer all or any portion of its interest in this Lease. Landlord shall grant consent to a proposed Transfer if the proposed transferee is financially qualified and has sufficient experience in the operation and management of similar commercial centers to perform all the agreements, undertakings and covenants of this Lease. To assist Landlord in determining whether the proposed transferee is so qualified, Tenant shall furnish to Landlord at no expense to Landlord, with any request for assignment, reasonably detailed and complete financial statements of the proposed transferee, together with reasonably detailed and complete information about the business of the proposed transferee, including its experience in operating similar commercial centers, the use to be made of the Property and the Improvements by the proposed transferee, together with other information as Landlord may reasonably require to assist Landlord in determining whether the proposed transferee is so qualified. Landlord shall have 30 days after receipt of the information described above to notify Tenant whether it consents or does not consent to the proposed Transfer, provided any disapproval of a request for Transfer shall specify with reasonable detail the reasons for such disapproval. Absent any notification by Landlord during the 30 day period, Landlord shall be conclusively deemed to have consented to the Transfer. A consent by Landlord to one Transfer shall not be deemed to be a consent to any subsequent Transfer. Any attempted Transfer of the Property, this Lease, or any portion or interest therein which is not authorized by this Lease or expressly approved in writing by Landlord shall be void and of no force or effect and, at the option of Landlord, shall constitute a breach of this Lease. 15.2 Involuntary Assignments. Neither this Lease nor any interest therein shall be assignable by operation of law (including, without limitation, the transfer of this Lease by testacy or intestacy). Any involuntary assignment shall constitute a breach of this Lease by Tenant. The following is a non-exclusive list of acts which shall be considered an involuntary assignment: (a) If Tenant is or becomes bankrupt or insolvent or if any involuntary proceeding is brought against Tenant (unless, in the case of a petition filed against Tenant, the same is dismissed within ninety (90) days), or Tenant makes an assignment for the benefit of creditors, or institutes a proceeding under or otherwise seeks the protection of Federal or State bankruptcy or insolvency laws, including but not limited to the filing of a petition for voluntary bankruptcy or instituting a proceeding for reorganization or arrangement; (b) If a writ of attachment or execution is levied on this Lease, where such writ is not discharged within ninety (90) days; or (c) If, in any proceeding or action in which Tenant is a party, a receiver is appointed with authority to take possession of the Property, where possession is not restored to Tenant within ninety (90) days. 15.3 Definitions. (a) As used herein, the term "Transfer" means the sale, transfer or conveyance of Tenant's leasehold interests in the Property, the Improvements thereon, or any 300-003 Hunt.Beach Ground Lse. V8 -15- portion thereof or interest therein, whether voluntary, involuntary, by operation of law or otherwise, or any agreement to do so; the execution of any installment land sale contract or similar instrument affecting all or a portion of the Property or Improvements. (b) "Permitted Transfer" means any of the following: (a) an assignment of this Lease and all of Tenant's Leasehold Interests in the Property to an Affiliate, as defined below; (b) the transfer of any ownership interests in Tenant from one principal to another principal (e.g., from one partner to another partner, from one shareholder to another shareholder or from one member to another member) or to Affiliates of any such principal; (c) any Transfer to CIM Group, LLC; (d) the inclusion of equity participation in Tenant by transfer of limited liability company interests, partnership interests or stock or addition of additional members, partners or shareholders to Tenant or similar mechanism; (e) any Leasehold Mortgage (as defined in Section 31); (f) the leasing, subleasing or licensing for occupancy of all or any part of the Improvements on the Property, or (g) the sublease of the entire Property or material portion thereof to CIM/Huntington, Inc. For purposes of this Lease, "Affiliate" shall mean any partnership in which Tenant is a general partner or owns more than 50% of the rights to distribution, any limited liability company in which Tenant is manager or owns more than 50% of the rights to distribution, or a corporation in which Tenant owns more than 50% of the common stock, or another partnership or limited liability company under common control with Tenant, or any other entity controlled by the party controlling Tenant. 15.4 Agreement to Provide Nondisturbance Agreements. On written request, Landlord will promptly execute, acknowledge and deliver any commercially reasonable form proposed by Tenant providing that in the event of a termination of this Lease, Landlord will recognize the sublease of any subtenant leasing space in any improvements on the Property (each a "Space Tenant") as a direct lease between Landlord and such Space Tenant, provided that any such sublease shall not extend beyond the scheduled term of this Lease and provided the applicable Space Tenant agrees that Landlord will not credit the Space Tenant with rent paid more than one month in advance. 15.5 Consent Not Unreasonably Withheld. Landlord shall not unreasonably withhold, condition or delay its approval of any matter for which its approval is required under this Section 15. Any disapproval shall be in writing and contain Landlord's reasons for disapproval. 15.6 Sublease Rights. Tenant shall have the right to sublease all or any portion of the Property or the Improvements from time to time, and at all times during the term of this Lease, without Landlord's consent; provided, however, that the term of any sublease shall not extend beyond the term of this Lease; any and all subleases shall be expressly subject to all of the terms, covenants and conditions of this Lease and any subtenant shall be required to attom to Landlord in the event of Tenant's default and the termination of this Lease. 16. HOLD HARMLESS 16.1 Tenant's Indemnification. Tenant shall indemnify, defend, and hold Landlord harmless from and against any and all costs, claims, demands, actions, causes of action, liability, loss, or damage, including attorneys' fees and costs (collectively referred to as "Claims" and Claims that are made by third parties, collectively referred to as "Third Party Claims") 300-003 Hunt.Beach Ground Lse. V8 -16- whether for injury to. or death of persons or damage to real or personal property or otherwise, arising out of or in connection with Tenant's use or occupancy of the Property, any activity, work, or other thing done, permitted, or suffered by Tenant in or about the Property, or arising from any reason or cause whatsoever in connection with the use or occupancy of the Property by any party during the Term of this Lease. The provisions of the preceding sentence shall not apply with respect to ,any active negligence or intentional acts of Landlord, or its agents, servants, contractors and employees (collectively "Landlord Parties") occurring after the date of this Lease. Tenant shall further indemnify, defend, and hold Landlord harmless from and against any and all Third Party Claims arising from any breach or default in the performance of any obligation on Tenant's part to be performed under the terms of this Lease or arising from any wrongful act or negligence of Tenant or any officer, agent, employee, guest, or invitee of Tenant. Tenant, as a material part of the consideration to Landlord, hereby assumes all risk of damage to property or injury to persons in, upon, or about the Property occurring during the term of this Lease from any cause other than the active negligence or intentional acts of Landlord Parties occurring after the date of this Lease, and Tenant hereby waives all claims in respect thereof against Landlord. Tenant's obligation to indemnify under this paragraph shall include attorneys' fees, investigation costs, and other reasonable costs, expenses, and liabilities incurred by Landlord. If the ability of Tenant to use the Property is interrupted for any reason, Landlord shall not be liable to Tenant for any loss or damages occasioned by such loss of use unless caused by the active negligence or intentional acts of Landlord Parties. 16.2 No Liability. Landlord or its agents shall not be liable for loss or damage to any property by theft or otherwise, nor for any injury to or damage to persons or property resulting from fire, explosion, falling plaster, steam, gas, electricity, water, or rain which may leak from any part of the Property or from the pipes, appliances, or plumbing works therein or from the roof, street, or subsurface or from any other place resulting from dampness or any other cause whatsoever, unless caused by or due to the negligent or intentional acts or omissions of Landlord Parties. Tenant shall give prompt notice to Landlord in case of fire or accidents in the Property or of defects therein or in the fixtures or equipment. 17. OWNERSHIP OF PROPERTY DURING TERM AND UPON EXPIRATION OR TERMINATION OF LEASE 17.1 Improvements During Term. During the Term of this Lease, all buildings, structures, fixtures, additions and improvements located on the Property shall be owned in fee by Tenant, and Landlord hereby quitclaims its right, title and interest in and to such items to Tenant. 17.2 Improvements After Term. Upon the expiration or termination of this Lease, all buildings, structures, fixtures, additions, equipment, improvements, any subtenant security deposits then held by Tenant (upon delivery of which, Landlord shall assume all obligations to subtenants with respect thereto), and any other real property whatsoever located on the Property shall become part of the realty, become the property of Landlord, and shall be surrendered with the Property. 17.3 Personal Property. Upon termination of this Lease, whether by expiration of the Term or otherwise, the Improvements on the Property, and all personal property not removed by Tenant, shall, without compensation to Tenant, then automatically and without any act of Tenant or any third party become Landlord's property, free and clear of all liens, 300-003 Hunt.Beach Ground Lse. V8 -17- encumbrances or claims to or against them by Tenant or any third person, firm or entity, except if Tenant acquires the Property pursuant to the terms of this Lease or otherwise. Tenant agrees to execute, acknowledge and deliver to Landlord at Landlord's cost any instrument reasonably requested by Landlord to perfect Landlord's right, title and interest in and to the Improvements or the Property. 18. LIENS Except for Leasehold Mortgages, Tenant shall not create or permit any lien or encumbrance, including but not limited to a mechanics' lien, to be attached to or affect the Property by reason of any act or omission of Tenant. Tenant shall indemnify and hold harmless Landlord and the Property against any such lien, encumbrance, or claim of lien or encumbrance, and against any costs in connection therewith, including attorneys' fees. In the event any such lien or encumbrance is attached to, or any claim of lien or encumbrance is made against, the Property by reason of any act or omission of Tenant, Tenant shall, within twenty (20) days after notice thereof to Tenant, cause the lien to be released or post with Landlord a cash bond in an amount reasonably satisfactory to Landlord, including costs and interest; provided, however, that if Tenant fails to do so, then Landlord may, in its sole discretion, either (i) pay and discharge the lien or encumbrance, whereupon Tenant shall immediately reimburse Landlord, as Additional Rent, for all costs and expenses which Landlord may incur in discharging such lien, encumbrance, or claim of lien or encumbrance, plus reasonable attorneys' fees, payable to Landlord upon demand, or (ii) Landlord may exercise such other remedies as may be available to' it by reason of Tenant's failure to comply with its obligations under this Lease. 19. SUBROGATION Neither Landlord nor Tenant shall be liable to the other or to any insurance company (by way of subrogation or otherwise) insuring the other party for any loss or damage to any building, structure, or other tangible property, or any resulting loss of income, or losses under worker's compensation laws and benefits (even though such loss or damage might have been occasioned by the negligence of such party, its agents; or employees), to the extent any such loss or damage is covered by insurance benefiting the party suffering the loss or damage. Landlord and Tenant hereby mutually release each other from liability and waive all right to recover against each other or against officers, employees, agents or representatives of each other for any loss or damage to any person or property caused by or resulting from risks to the extent insured against under any insurance policies carried by the parties; provided, however, this paragraph shall be inapplicable if it would have the effect, but only to the extent that if would have the effect, of invalidating any insurance coverage of Landlord or Tenant. The parties shall, to the extent available, cause each insurance policy obtained here under to provide a waiver of subrogation. 20. TENANT'S INSURANCE 20.1 Casualty Insurance. Tenant shall procure and maintain in force at all times during the Term of this Lease at its cost a policy or policies of fire and extended coverage insurance (all risk of physical loss, and including coverage against malicious mischief and vandalism) covering the Property, in an amount equal to one hundred percent (100%) of the full 300-003 Hunt.Beach Ground Lse. V8 -18- replacement cost (replacement cost new, using materials of a like quality and kind as existed immediately prior to the damage or destruction) of the Property. This insurance shall include endorsements for inflation, debris removal and demolition, building ordinance protection, and plate glass coverage with respect to the Property. During the periods of construction and/or rehabilitation of the Improvements as a whole, Tenant shall carry or cause its contractor to carry Builder's Risk or similar course of construction insurance coverage. Landlord shall be named as an additional insured on the insurance, and the proceeds of any such policy or policies of insurance shall be held and utilized in accordance with the provisions of Section 24 of this Lease. 20.2 Liability Insurance. Tenant shall also procure and maintain at all times during the Term hereof at its cost commercial general liability insurance, insuring Landlord and Tenant against any liability arising out of the use, occupancy, or maintenance of the Property and all areas appurtenant thereto, -including without limitation personal injury and death. Such insurance shall be in an amount not less than $6,000,000 aggregate, $3,000,000 per occurrence, combined single limit (which coverage can be supplied by an umbrella or blanket policy) increased or decreased every five years from the Commencement Date of this Lease to reflect the amounts typically carried by owners of similar projects in Orange County. This policy shall include broad form contractual liability and indemnity coverage which shall insure performance by Tenant of the indemnity and defense provisions set forth in this Lease. The limits of said insurance shall not, however, be construed to limit the liability of Tenant under this Lease. 20.2A Earthquake Insurance. Tenant shall procure and maintain at all times after completion of the initial improvements on the Property earthquake insurance on all Improvements existing on the Property. 20.3 Other Insurance. Tenant shall procure and maintain at all times during the Term of this Lease at its cost (i) worker's compensation coverage, in the amount required by law, (ii) personal injury insurance with endorsement deleting the employee liability exclusion, and (iii) employer's liability coverage in the amount of $1,000,000 for each accident or occurrence. The worker's compensation insurance and the employer's liability coverage shall cover any person or entity employed directly or indirectly by Tenant, any agent acting on behalf of Tenant, and anyone for whose acts Tenant may be liable. 20.4 Insurance Carriers. All insurance which Tenant is required to maintain hereunder shall be on an occurrence basis and shall be with insurance companies having a Best's Insurance Guide rating of B: VIII or better. '20.5 Policy Requirements. As applicable, the insurance required pursuant to this Lease shall: (1) name Landlord as additional insured as its interest may appear; (2) provide that the coverage thereof is primary and non-contributory coverage with respect to all additional insureds; (3) contain a Standard Cross Liability endorsement providing that the insurance applies separately to each insured against whom a claim is filed, and that the policy covers claims or suits by one insured against the other; and (4) provide that the interests and protections of the additional insureds shall not be affected by any misrepresentation, act or omission of a named insured or any breach by a named insured of any provision in the policy which would otherwise result in forfeiture or reduction of coverage. 20.6 Certificates of Insurance. Within five (5) days prior to the execution of this Lease, Tenant shall notify Landlord in writing of the name of Tenant's insurer. Tenant shall 300-003 Hunt.Beach Ground Lse. V8 -19- deliver to Landlord prior to entry on the Property by Tenant certificates of insurance evidencing the existence and amount of such insurance, and showing Landlord (and the other parties designated in Paragraph 20.5 above) as an additional insured on all policies; provided that in the event Tenant fails to procure and maintain such insurance, Landlord may (but shall not be required to) procure same at Tenant's expense. No policy shall be cancelable or subject to reduction of coverage or other modification except after thirty (30) days prior written notice to Landlord by the insurer (or such shorter period of time for such notice as may be the commercial custom and practice in such policies). Tenant shall prior to the expiration of such policies, furnish Landlord with renewals or binders, or (after 10 business days' written notice and failure of Tenant to cure) Landlord may order such insurance and charge the cost to Tenant, which amount shall be payable by Tenant upon demand. All such policies shall be written as primary policies, not contributing with and not in excess of coverage which Landlord may carry, and all policies shall include Tenant's employees as additional insureds. Tenant shall have the right to provide such insurance coverage pursuant to blanket policies obtained by Tenant provided that such blanket policies expressly afford coverage to the Property and to Tenant and Landlord as required by this Lease. Tenant shall, upon request from Landlord, immediately deliver to Landlord copies of all insurance policies (including the declarations pages) in effect with respect to Tenant's business and the Property. 21. UTILITIES Tenant shall make all arrangements for and pay for all services and utilities to the Property; Landlord shall not be responsible or liable to Tenant for interruption or stoppages of utilities or other services to the Property unless caused by the active negligence or willful misconduct of Landlord, its agents or contractors on or around the Property. 22. HOLDING OVER In the event Tenant fails to vacate the Property and fulfill all of its obligations hereunder at the end of the Term, Tenant shall pay holdover Basic Rent at an amount equal to 150% of the amount of Basic Rent in effect immediately prior to the end of the Term, as well as the full amount of all other Rent. Tenant shall further be liable for all direct, proximate and nonconsequential damages incurred by Landlord by reason of the inability to deliver possession of the Property or any portion thereof to any other person. 23. ENTRY BY LANDLORD Landlord reserves and shall at any and all times have the right, but not the obligation, to enter the Property (excluding tenant spaces), for the following purposes: (a) to inspect the Property, provided such inspections shall take place during normal business hours and upon not less than 5 calendar days' written notice, (b) to show said Property to prospective purchasers and tenants, provided such showings shall occur only during the last six months of the Term hereof; and (c) to post notices of non -responsibility. Landlord shall take all reasonable steps to ensure that the business of Tenant and its subtenants shall not be interfered with. Tenant hereby waives any claim for damages for any injury or inconvenience to or interference with Tenant's business, any loss of occupancy or quiet enjoyment of the Property, and any other loss which may occur. Any entry to the Property obtained by Landlord by any means for the 300-003 Hunt.Beach Ground Lse. V8 -20_ purposes specified above shall not under any circumstances be construed or deemed to be forcible or unlawful entry into, or a detainer of, the Property or an eviction of Tenant from the Property or any portion thereof. 24. DAMAGE, RECONSTRUCTION 24.1 Covered by Insurance. In the event the Property is damaged by fire or other perils covered by extended coverage insurance, Tenant shall have the right to use all available insurance proceeds to repair or rebuild the Improvements. If the estimated cost of repairs (including lost rent) is not in excess of available insurance proceeds (including rent loss insurance proceeds), then Tenant shall forthwith repair the same (using the insurance proceeds to pay the cost of such repair) and this Lease shall remain in full force and effect. 24.2 Uncovered by Insurance. (a) In the event the Property is damaged as a result of any cause other than the perils covered by fire and extended coverage insurance, or the estimated cost of repairs (including lost rent) is in excess of available insurance proceeds (including rent loss insurance proceeds), then Tenant shall notify Landlord in writing of the amount by which the estimated cost of repairs exceeds such proceeds (the "Shortfall"), and Tenant shall have the right, within ninety (90) days after receipt of such notice, to elect to provide the Shortfall and proceed with such repairs (using the insurance proceeds and such other funds as Tenant may provide to pay the Shortfall), in which case this Lease shall continue in full force and effect. (b) If Tenant fails to notify Landlord within such ninety (90) day period that it will provide the Shortfall and conduct the repairs, then Landlord shall have the option, within thirty days from the end of the ninety day period described in clause (a), either to (A) provide the Shortfall at Landlord's sole expense and direct Tenant to repair or restore such damage (using the insurance proceeds and such additional funds as Landlord may provide to pay the Shortfall), with this Lease continuing in full force and effect, or (B) give notice to Tenant terminating this Lease as of the date specified in such notice, which date shall be no less than thirty (30) and no more than sixty (60) days after the giving of such notice of termination. In the event of giving such notice of termination, this Lease shall expire and all interest of Tenant in the Property shall terminate on the date so specified in such notice. 24.3 Special Circumstances. Notwithstanding anything to the contrary contained in this Section, Tenant shall have no obligation whatsoever to repair, reconstruct, or restore the. Property, and Landlord shall have no right to instruct Tenant to do so, in either of the following circumstances: (a) the damage occurs during the last three (3) years of the Term of this Lease, or (b) the damage cannot reasonably be expected to be repaired within a period of physical repair of not more than 9 months. In that event, Tenant may at its option terminate this Lease upon (30) days written notice to Landlord that Tenant elects not to repair, reconstruct, or restore the Property. 24.4 Waiver. Tenant shall not be entitled to any compensation or damages from Landlord for loss of the use of the whole or any part of the Property, Tenant's personal property, or any inconvenience or annoyance occasioned by such damage, repair, reconstruction, 300-003 Hunt.Beach Ground Lse. V8 -21- or restoration. Tenant waives the provisions of California Civil Code sections 1932(2) and 1933(4) with respect to any destruction of the Property. 24.5 Excess Insurance Proceeds. If completion of required repair, reconstruction or restoration of the Property does not utilize all insurance proceeds, then Tenant may retain such unused proceeds. If, for any reason, Tenant does not repair, reconstruct or restore the Property, the insurance proceeds for the Improvements (but not personal property or rent loss) shall belong to Landlord as its property. 24.6 No Abatement of Rent. No deprivation, impairment, or limitation of use resulting from any event, repair, reconstruction or restoration contemplated by this section shall entitle Tenant to any offset, abatement, or reduction in rent, nor to any termination or extension of the Term, except as expressly provided in this Lease, and except to the extent caused by the active negligence or willful misconduct of Landlord Parties. 25. DEFAULT 25.1 Event of Default. Upon expiration of the cure periods (without cure) set forth below, the occurrence of any one or more of the following events shall constitute an Event of Default by Tenant: (a) The failure by Tenant to pay Rent or observe or perform any other covenants, conditions, or provisions of this Lease, to be observed or performed by Tenant: or (b) The making by Tenant of any general assignment for the benefit of creditors; or the filing by or against Tenant of a petition to have Tenant adjudged a bankrupt, or a petition or reorganization or arrangement under any law relating to bankruptcy (unless, in the case of a petition filed against Tenant, the same is dismissed within ninety (90) days); or the appointment of a trustee or a receiver to take possession of substantially all of Tenant's assets located at the Property or of Tenant's interest in this Lease, where possession is not restored to Tenant within ninety (90) days; or the attachment, execution, or other judicial seizure of substantially all of Tenant's assets located at the Property or of Tenant's interest in this Lease, where such seizure is not discharged within ninety (90) days. 25.2 Cure Obli ate. Subject to Force Majeure delay, failure or delay by Tenant to perform any term or provision of this Lease constitutes a default under this Lease. Tenant must immediately commence to cure, correct or remedy such failure or delay and shall complete such cure, correction or remedy with reasonable diligence, and during any period of curing shall not be in default, so long as it endeavors to complete such cure, correction or remedy with reasonable diligence, and provided such cure, correction or remedy is completed within the applicable time period set forth herein after receipt of written notice (or such additional time as may be reasonably necessary to correct the default). 25.3 Written Notice. Landlord shall give written notice of default to Tenant, specifying the default complained of by Landlord. Failure or delay in giving such notice shall not constitute a waiver of any default. Except as otherwise expressly provided in this Lease, any failures or delays by either party in asserting any of its rights and remedies as to any default shall not operate as a waiver of any default or of any such rights or remedies. Delays by either party in asserting any of its rights and remedies shall not deprive either party of its right to institute and 300-003 Hunt.Beach Ground Lse. V8 -22- maintain any actions or proceedings which it may deem necessary to protect, assert or enforce any such rights or remedies. 25.4 Monetary Default Cure Period. If a monetary event of default occurs, prior to exercising any remedies hereunder, Landlord shall give Tenant written notice of such default. Tenant shall have a period of thirty (30) calendar days after such notice is received or deemed received within which to cure the default prior to exercise of remedies by Landlord. 25.5 NonMonetM Default Cure Period. If a non -monetary event of default occurs, prior to exercising any remedies hereunder, Landlord shall give Tenant notice of such default. If the default is reasonably capable of being cured within thirty (30) calendar days after such notice is received or deemed received, Tenant shall have such period to effect a cure prior to exercise of remedies by Landlord. If the default is such that it is not reasonably capable of being cured within thirty (30) days, and Tenant (i) initiates corrective action within said period, and (ii) diligently, continually, and in good faith works to effect a cure as soon as possible, then Tenant shall have such additional time as is reasonably necessary to cure the default prior to exercise of any remedies by Landlord. 25.6 Receipt of Notice. Any notice of default that is personally delivered (including by means of professional messenger service, courier service such as United Parcel Service or Federal Express, or by U.S. Postal Service), shall be deemed received on the documented date of receipt by Tenant; and any notice of default that is sent by registered or certified mail, postage prepaid, return receipt required shall be deemed received on the date of receipt thereof. No notice of default may be given by facsimile. 25.7 Remedies. In the event of any default or breach by Tenant and the expiration of any applicable cure period, Landlord may at any time thereafter, in its sole discretion, without limiting Landlord in the exercise of a right or remedy which Landlord may have by reason of such default or breach: (a) Terminate Tenant's right to possession of the Property by any lawful means, in which case this Lease shall terminate and Tenant immediately shall surrender possession of the Property to Landlord. In such event Landlord shall be entitled to recover from Tenant all damages incurred by Landlord by reason of Tenant's default including, but not limited to, the cost of recovering possession of the Property; the worth at the time of the award of each obligation of Tenant which has accrued prior to the date of such termination, but which has not been satisfied; the worth at the time of the award of the amount by which the unpaid rent which would have been earned after the termination until the time of the award exceeds the amount of such rental loss that Tenant proves could reasonably have been avoided; expenses of placing the Property in good order, condition and repair; expenses of reletting, including necessary renovation and alteration of the Property; reasonable attorneys' fees; the worth at the time of award as determined by the court having jurisdiction thereof of the amount by which the unpaid Basic Rent, Additional Rent and other amounts required to be paid by Tenant pursuant to this Lease for the balance of the term after the time of such award exceeds the amount of such loss for the same period that Tenant proves reasonably could be avoided; and all other incidental and consequential damages. Unpaid installments of rent or other sums shall bear interest from the date due at the rate of 10% per annum; 300-003 Hunt.Beach Ground Lse. V8 -23- (b) Maintain Tenant's right to possession, in which case this Lease shall continue in full force and effect whether or not Tenant shall have abandoned the Property. In such event Landlord shall be entitled to enforce all of Landlord's rights and remedies under this Lease, including the right to recover the rent and any other charges and Adjustments as may become due hereunder; (c) Seek specific performance by Tenant, in the case of breach by Tenant of one or more of its covenants herein; (d) Exercise the remedy described in California Civil Code section 1951.4 (lessor may continue lease in effect after lessee's breach and abandonment and recover rent as it becomes due, if lessee has the right to sublet or assign, subject only to reasonable limitations); and/or (e) Pursue and every any other remedy or right now or hereafter available to Landlord under the laws or judicial decisions of the State of California. 25.8 Notice to Leasehold Mortgagee. Whenever Landlord shall deliver any notice or demand to Tenant with respect to any breach or default by the Tenant, Landlord shall at the same time deliver to the Trust and to each Leasehold Mortgagee of record (as defined in Section 31.2) a copy of such notice or demand, which shall describe the default(s) with reasonable detail. 26. EMINENT DOMAIN NOTHING SET FORTH IN THIS LEASE SHALL CONFER ANY RIGHTS NOW OR IN THE FUTURE ON THE CITY OF HUNTINGTON BEACH OR THE REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH ("AGENCY") FOR CONDEMNATION OR EMINENT DOMAIN. IN CONSIDERATION OF THE EXECUTION OF THIS LEASE, AGENCY WAIVES ANY RIGHTS IT MAY HAVE TO CONDEMN ALL OR ANY PORTION OF LANDLORD'S INTEREST IN THE PROPERTY. 27. ESTOPPEL OFFSET STATEMENT 27.1 Tenant Estoppel. Tenant shall, at any time and from time to time upon not less than twenty (20) days' prior written notice from Landlord, execute, acknowledge, and deliver to Landlord a statement in writing certifying that this Lease is unmodified and in full force and effect (or, if modified, is in full force and effect, and stating the modifications) and acknowledging that there are not, to Tenant's knowledge, any uncured defaults on the part of Landlord hereunder (or specifying such defaults if any are claimed), acknowledging that the recipient will rely on the certificate and such other matters as may be reasonable and customary or as needed to clarify any provision of this Lease. Tenant's failure to deliver such statement to Landlord within twenty (20) days after receipt of Landlord's notice shall be conclusively deemed to be Tenant's acknowledgment that this Lease is unmodified except as reflected in recorded instruments and that, to Tenant's knowledge, there are no uncured defaults on the part of Landlord hereunder. 300-003 Hunt.Beach Ground Lse. V8 -24- 27.2 Landlord Estoppel. Landlord shall, at any time and from time to time upon not less than twenty (20) days' prior written notice from Tenant, execute, acknowledge, and deliver to Tenant a statement in writing certifying that this Lease is unmodified and in full force and effect (or, if modified, is in full force and effect, and stating the modifications) and acknowledging that there are not, to Landlord's knowledge, any uncured defaults on the part of Tenant hereunder (or specifying such defaults if any are claimed), the last date Landlord received rent under this Lease, the date such rent was due and the amount thereof, acknowledging that the recipient will rely on the certificate, and such other matters as may be reasonable and customary or as needed to clarify any provision of this Lease. Landlord's failure to deliver such statement to Tenant within twenty (20) days after receipt of Tenant's notice shall be conclusively deemed to be Landlord's acknowledgment that this Lease is unmodified except as reflected in recorded instruments and that, to Landlord's knowledge, there are no uncured defaults on the part of Tenant hereunder. 28. HAZARDOUS MATERIALS 28.1 Prohibitions. Except to the extent it is normal and customary to do so during the construction or operation of commercial property, Tenant shall not: (i) Make, or permit to be made, any use of the Property, or any portion thereof, which emits, or permits the emission of dust, sweepings, dirt, cinders, fumes, or odors into the atmosphere, the ground, or any body of water, whether natural or artificial, in violation of applicable law; or (ii) Discharge, leak, or emit, or permit to be discharged, leaked, or emitted, any liquid, solid, or gaseous matter, or any combination thereof, into the atmosphere, the ground, or any body of water, in violation of applicable law. 28.2 Storage. Tenant shall not use, store or dispose of on the Property any solid, liquid, or gaseous matter, or any combination thereof, which is, or may become, hazardous, toxic, or radioactive including, but not limited to, those materials listed in Sections 66680 through 66685 of Title 22 of the California Administrative Code, Division 4, Chapter 30 (as may be amended from time to time), in violation of applicable law (all of the foregoing collectively referred to herein as "Hazardous Materials"). 28.3 Waste; Refuse. Tenant shall not keep any trash, garbage, waste, or other refuse on the Property except in sanitary containers and shall regularly and frequently remove the same from the Property. Tenant shall keep all incinerators, containers, and other equipment used for the storage or disposal of such matter in a clean and sanitary condition. Tenant shall surrender the Property at the expiration or termination of this Lease free of any Hazardous Materials or contamination caused by Tenant's activities, and free and clear of all judgements, liens, or encumbrances and shall, at its own cost and expense, repair all damage and clean up or perform any remedial action necessary relating to any Hazardous Materials or contamination caused by Tenant's activities. Tenant shall, at its sole cost and expense, remediate in accordance with law or remove any alterations or improvements that may be contaminated or may contain Hazardous Materials caused by Tenant's activities. 300-003 Hunt.Beach Ground Lse. V8 -25- 28.4 Indemnity. Tenant shall indemnify, defend, and hold Landlord harmless from and against (i) any and all claims, demands, judgments, damages, actions, causes of action, injuries, administrative orders, consent agreements and orders, liabilities, penalties, costs, and expenses of any kind whatsoever (collectively referred to as "Claims" and, Claims that are made by third parties, collectively referred to as "Third Party Claims"), including but not limited to Third Party Claims arising out of loss of life, injury to persons, property, or business, or damage to natural resources, in connection with or arising out of any spills or discharges of Hazardous Materials in violation of applicable law, and (ii) from all claims, demands, judgments, damages, actions, causes of action, injuries, administrative orders, consent agreements and orders, liabilities, penalties, costs, and expenses of any kind whatsoever, including but not limited to claims arising out of Tenant's failure to provide all information, make all submissions, and take all steps required by any authority under any Hazardous Materials laws or any other environmental law. Notwithstanding the expiration or termination of this Lease, Tenant's obligations and liabilities under this Section shall continue until the date which is five (5) years following expiration or earlier termination of this Lease, so long as Landlord continues to own the Property or any portion thereof or otherwise remains responsible for any Hazardous Materials on the Property, provided, however, that nothing contained in this provision is intended to or shall have the effect of relieving any party of liability under any applicable statutory or common law. 29. TENANT'S SIGNAGE Tenant shall have the right to place signs on the Property provided such signage shall be for reasonable business purposes and shall not violate any statute, code, or ordinance. 30. MEMORANDUM OF LEASE Promptly after the Commencement Date has occurred, all debt and/or equity financing for the initial construction of the Project is in place, and Landlord has received the first month's Basic Rent, Landlord and Tenant shall execute in recordable form a Memorandum of Lease and Option to Purchase Fee, substantially in the form attached hereto as Exhibit `B" which is incorporated herein by this reference, which either party is authorized to record. The Memorandum of Lease and Option to Purchase Fee shall be removed from title in the event an Event of Default is not cured within thirty days after written notice, for the duration of such Default, subject to the last sentence of Section 25.5. 31. MORTGAGEE PROTECTION PROVISIONS 31.1 Right to Encumber. Tenant and every successor and assign of Tenant (including, but not limited to, any sublessee of Tenant) is hereby given the express right, in addition to any other rights herein granted, and without the necessity of obtaining Landlord's consent, to mortgage its interests in this Lease, and its leasehold estate in the Property, or any part of parts thereof, and any sublease of the Property, under one or more Leasehold Mortgage(s) and to assign this Lease or Tenant's leasehold estate in the Property, or any part or parts thereof, and any sublease, as collateral security for such mortgage(s), upon the condition that all rights acquired under such mortgage(s) shall be subject to each and all of the covenants, conditions and restrictions set forth in this Lease, and to all rights and interests of Landlord herein, none of 300-003 Hunt.Beach Ground Lse. V8 _26_ which covenants, conditions or restrictions is or shall be waived by Landlord by reason of the foregoing, except as expressly provided herein. In the event of any conflict between the provisions of this Lease and the provisions of any mortgage, the provisions of this Lease shall control, except as herein specifically provided. 31.2 Definition of Leasehold Mortgage. For purposes of this Lease, the term "Leasehold Mortgage" means a conveyance of a security interest in this Lease and all of Tenant's interests in the Property (collectively referred to as "Tenant's Leasehold Interests") to a lender (a "Leasehold Mortgagee") encumbering Tenant's Leasehold Interest, or the conveyance of Tenant's Leasehold Interests to the Leasehold Mortgagee or its assignee in connection with a foreclosure or a deed in lieu of foreclosure of such loan. Landlord agrees to permit Tenant to pledge Tenant's Leasehold Interests to a Leasehold Mortgagee as security under a Leasehold Mortgage without Landlord's consent. In the event of a default or breach by Tenant of any security instrument securing a Leasehold Mortgage, Landlord shall have the right to cure the default provided such cure is completed at least five (5) business days before the date of foreclosure. In such event, Landlord shall be entitled to reimbursement by Tenant of all costs and expenses incurred by Landlord in curing the default, with interest at the highest rate permitted by law, as Additional Rent (collectively, "Landlord's Cure Payments"), provided in the event of a subsequent foreclosure of a permitted Leasehold Mortgage the party acquiring Tenant's Leasehold Interests shall not be obligated to pay Landlord any of Landlord's Cure Payments. 31.3 Rights of Lender. If Tenant and/or Tenant's successors and assigns (including, but not limited to, any sublessee of Tenant) shall mortgage its interest in this Lease and its leasehold estate in the Property, or any part or parts thereof as permitted by Section 31.1 above, the following provisions shall apply: (a) No Amendment. There shall be no amendment, cancellation, termination, surrender or modification of this Lease by joint action of Landlord and Tenant without the prior consent in writing of each holder of a lien against or an assignment of this Lease, notice of which has been served upon Landlord. (b) Right to Notice of Default. Landlord shall, upon serving Tenant with any notice of default, simultaneously serve a copy of the notice upon any Leasehold Mortgagee(s). (c) Right to Cure. Any Leasehold Mortgagee shall have the right, but not the obligation, 'at any time prior to termination of this Lease, to pay all of the rents due hereunder, to effect any insurance, to pay any taxes or assessments, to make any repairs or improvements, to do any other act or thing required of Tenant hereunder, and to do any act or thing which may be necessary and proper to be done in the performance and observance of the agreements, covenants and conditions hereof to prevent termination of this Lease. Any Leasehold Mortgagee and its agents and contractors shall have full access to the Property for purposes of accomplishing any of the foregoing. Any of the foregoing done by any Leasehold Mortgagee shall be as effective to prevent a termination of this Lease as the same would have been if done by Tenant. (d) Additional Cure Period. Anything contained in this Lease notwithstanding, if any default shall occur which, pursuant to any provision of this Lease, 300-003 Hunt.Beach Ground Lse. V8 _27_ purportedly entitles Landlord to terminate this Lease, Landlord shall not be entitled to terminate this Lease as to any Leasehold Mortgagee, nor to disturb the right of possession of any subtenant of Tenant, and the notice shall be rendered void as to such parties, if the Leasehold Mortgagee, within sixty (60) days after expiration of the period within which Tenant was permitted to cure the default (or within ninety (90) days after receipt of the notice by the Leasehold Mortgagee if the default is not curable by Tenant), shall both: (i) either (aa) cure the default if the same can be cured by the expenditure of money, or (bb) if the default or breach is not so curable, commence, or cause any trustee under the mortgage to commence, and thereafter to diligently pursue to completion steps and proceedings to foreclose on the interests covered by the mortgage; and (ii) perform or cause the performance of all of the covenants and conditions of this Lease requiring the expenditure of money by Tenant (including all unpaid monetary obligations of Tenant under this Lease) until such time as the leasehold shall be sold upon foreclosure pursuant to the mortgage, or shall be released or reconveyed thereunder, or shall be transferred upon judicial foreclosure or by deed or assignment in lieu of foreclosure. (e) Condition of Termination. All right of Landlord to terminate this Lease as the result of the occurrence of any default shall be subject to, and conditioned upon, Landlord having first given to each Leasehold Mortgagee written notice of the default as required under Section 31.3(b), above, and all Leasehold Mortgagees having failed to remedy such default or acquire Tenant's leasehold estate hereunder or commence foreclosure or other appropriate proceedings in the nature thereof as set forth in Section 31.3(d), above. (f) Suspension of Cure Period. If any Leasehold Mortgagee is prohibited from commencing or prosecuting foreclosure or other appropriate proceedings in the nature thereof by any process or injunction issued by any court, or by reason of any action by any court having jurisdiction of any bankruptcy or insolvency proceeding involving Tenant, the times specified in Section 31.3(d) above, for commencing or prosecuting foreclosure or other proceedings shall be extended for the period of the prohibition, so long as the Leasehold Mortgagee shall have fully cured any default in the payment of any monetary obligations of Tenant under this Lease and shall continue to pay currently those monetary obligations as and when the same fall due, subject to any applicable notice and grace periods. (g) Loss Payable Endorsement. Landlord and Tenant agree that the name(s) of the Leasehold Mortgagee(s) shall, at such Leasehold Mortgagee's request, be added to the "Loss Payable Endorsement" of any and all insurance policies required to be carried by Tenant under this Lease on condition that the insurance proceeds are to be applied in the manner specified in this Lease. (h) No Consent to Foreclosure. Foreclosure of any Leasehold Mortgage, or any sale thereunder, whether by judicial proceedings or by virtue of any power contained in the Leasehold Mortgage, or any conveyance of the leasehold estate hereunder from Tenant to any Leasehold Mortgagee or its designee through, or in lieu of, foreclosure or other appropriate proceedings in the nature thereof, shall not require the consent of Landlord or constitute a breach of any provision of or a default under this Lease, and upon such foreclosure, sale or conveyance, 300-003 Hunt.Beach Ground Lse. V8 -28- Landlord shall recognize the purchaser or other transferee referred to in the preceding sentence in connection therewith as the Tenant hereunder. Further, following such foreclosure or conveyance, any assignment or subleasing by the purchaser or other transferee shall not require the consent of Landlord, despite any other provisions of this Lease to the contrary. (i) Proceeds of Insurance and Condemnation. The proceeds from any insurance policies or arising from a condemnation award to Tenant shall be paid to and held by the Leasehold Mortgagee of highest priority and distributed pursuant to the provisions of this Lease, except that the Leasehold Mortgagee(s) may reserve the right to apply to the mortgage debt (in the order of priority) all, or any part, of the proceeds not used to repair or restore the Property and the improvements located thereon to the extent required herein so long as there then remains at least fifteen years until the scheduled expiration of the term (as may theretofore been extended). 0) Notice of Proceedings. The parties hereto shall give all Leasehold Mortgagee(s) notice of any arbitration proceedings or condemnation proceedings involving Tenant's interest in the Property, or of any pending adjustment of insurance claims, and any Leasehold Mortgagee shall have the right to intervene therein and shall be made a party to such proceedings. The parties hereto do hereby consent to such intervention. In the event that any Leasehold Mortgagee shall not elect to intervene or become a party to the proceedings, that Leasehold Mortgagee shall receive notice and a copy of any award or decision made in connection therewith. (k) Right to Exercise Renewal Options: If Tenant has not timely exercised any option to renew, such option shall not expire until Landlord gives Leasehold Mortgagee written notice and 30 days' in which to exercise such option on Tenant's behalf. (1) Right to Purchase Fee: If Tenant has any right of first offer, presentation or refusal, or any other right to acquire fee simple title to the Premises, such right shall not expire, be rejected or be terminated unless and until Leasehold Mortgagee has been given written notice and 30 days to exercise such acquisition right, provided Leasehold Mortgagee may acquire such fee in its own name or in the name of a designee. In addition, in the event of any Leasehold Mortgagee's foreclosure of Tenant's interest in the Lease, such Leasehold Mortgagee shall have the option to purchase Landlord's interest in the fee at the same price and on the same terms as set forth in Section 33, to be exercised by written notice given to Landlord within 90 days after such foreclosure has been completed. (m) Further Protections. Landlord and Tenant shall cooperate in including in this Lease, by suitable amendment from time to time, any provision which may be reasonably requested by any proposed Leasehold Mortgagee for the purpose of implementing the mortgagee -protection provisions contained in this Section 31 and allowing that Leasehold Mortgagee reasonable means to protect or preserve the lien of its Leasehold Mortgage upon the occurrence of a default under the terms of this Lease. Landlord and Tenant each agree to execute and deliver (and to acknowledge, if necessary, for recording purposes) any agreement necessary to effect any such amendment; provided, however, that no such amendment shall in any way affect the term or rent under this Lease, nor otherwise in any material respect adversely affect any rights of Landlord under this Lease, and Tenant shall pay Landlord's reasonable costs in connection with such amendment. 300-003 Hunt.Beach Ground Lse. VS -29- (n) Additional Agreement. Landlord shall, upon request, execute, acknowledge and deliver to each Leasehold Mortgagee, an agreement prepared by the Leasehold Mortgagee and reviewed by Landlord at the sole cost and expense of Tenant, in form satisfactory to each Leasehold Mortgagee, between Landlord, Tenant and the Leasehold Mortgagee(s), agreeing to all of the provisions hereof. 31.4 Notice. If Tenant shall mortgage its interest in this Lease or its leasehold estate in the Property, or any part or parts thereof, Tenant shall send to Landlord a true copy thereof, together with written notice specifying the name and address of the mortgagee(s) and the pertinent recording data with respect to such mortgage(s). 31.5 New Lease. (a) Landlord agrees that in the event of termination of this Lease by reason of any default by Tenant, or by reason of the disaffirmance hereof by a receiver, liquidator or trustee for Tenant or its property, Landlord if requested by any Leasehold Mortgagee will enter into a new lease of the Property, with the most senior Leasehold Mortgagee requesting a new lease or its designee, for the remainder of the term, effective as of the date of such termination, at the rent and additional rent and upon the terms, provisions, covenants and agreements as herein contained and subject to the rights, if any, of any parties then in possession of any part of the Property, provided: (i) The Leasehold Mortgagee shall make written request upon Landlord for the new lease within sixty (60) days after such Leasehold Mortgagee receives written notice of such termination; (ii) Within thirty (30) days after receipt of the new lease from Landlord complying with the terms of this Section 31.5, the Leasehold Mortgagee shall execute and deliver the new lease to Landlord and shall pay any and all sums which would, at the time of the execution and delivery thereof, be due and unpaid pursuant to this Lease but for its termination; (iii) The Leasehold Mortgagee shall perform and observe all covenants herein contained on Tenant's part to be performed, and shall further remedy any other conditions which Tenant under the terminated Lease was obligated to perform under its terms, in each instance as and to the extent the same are curable or may be performed by the Leasehold Mortgagee; (iv) The tenant under the new lease shall have the same right, title and interest in and to the buildings and improvements on the Property as Tenant had under the terminated Lease immediately prior to its termination; and (v) Notwithstanding anything to the contrary expressed or implied elsewhere in this Lease, any new lease made pursuant to this Section 31.5(a) shall enjoy the same priority in time as the Lease over any mortgage, deed of trust, or other lien, charge, or encumbrance on the Property. (b) Any new lease made pursuant to Section 31.5(a) shall be accompanied by a conveyance from Landlord to the new tenant of title to the improvements (free of any mortgage, deed of trust, lien, charge, or encumbrance created by Landlord) for a term of years 300-003 Hunt.Beach Ground Lse. V8 _30_ equal to the term of the new lease, subject to the reversion in favor of Landlord upon expiration or sooner termination of the new lease. (c) Nothing herein contained shall require any Leasehold Mortgagee to enter into a new lease pursuant to Section 31.5(a), above, nor to cure any default of Tenant referred to above. (d) If a Leasehold Mortgagee shall elect to demand a new lease, Landlord agrees, at the request of, on behalf of and at the expense of the Leasehold Mortgagee, to institute and pursue diligently to conclusion the appropriate legal remedy or remedies to oust or remove the original Tenant from the Property, but not any subtenants of Tenant actually occupying the Property, or any part thereof. Leasehold Mortgagee, as a condition of executing the new lease, shall pay all reasonable costs and expenses, including attorneys' fees and court costs, incurred by Landlord in terminating this Lease, recovering possession of the Property and the Improvements from the representative of Tenant, and preparing the new lease. (e) Unless and until Landlord has received notice from all Leasehold Mortgagees that the Leasehold Mortgagee elects not to demand a new lease as provided in Section 31.5(a), above, or until the period therefor has expired, Landlord shall not cancel or agree to the termination or surrender of any existing subleases nor enter into any new subleases hereunder without the prior written consent of the Leasehold Mortgagee(s). 31.6 Lender's Liability. In the event any Leasehold Mortgagee or any designee of it becomes the Tenant under this Lease or under any new lease obtained pursuant to Section 31.5 a , above, the Leasehold Mortgagee or its designee shall be personally liable for the obligations of Tenant under this Lease or a new sublease only for the period of time that the Leasehold Mortgagee or its designee remains the actual beneficial holder of the leasehold estate hereunder. The initial new tenant under the new lease shall have the right to sublease all or portions of the Property or to assign the new lease without the consent of Landlord, despite any other provision of the new lease to the contrary. 31.7 Definitions. The term "mortgage," whenever used herein, shall include whatever security instruments are used in the locale of the Property, such as, without limitation, deeds of trust, security deeds, and conditional deeds. The term "mortgage," whenever used herein, shall also include any instruments required in connection with a sale -leaseback transaction. The term "mortgagee" shall include the holder of the secured position under each of the foregoing types of instruments, including but not limited to the beneficiary under a deed of trust, the secured party under a security agreement and the lessor in a sale -leaseback transaction. 31.8 Restriction on Easements and Encumbrances by Landlord. Without Tenant's consent (which may be withheld in its sole discretion), Landlord shall not (i) grant any easement, license or access rights over the Property, or (ii) mortgage or otherwise encumber its interest in the Property. 31.9 Quiet Enjoyment. Absent an uncured default by Tenant, Landlord agrees not to disturb the possession, interest or quiet enjoyment of Tenant in the Property for any reason, or in a manner which would materially adversely affect any leasehold mortgage(s). 300-003 Hunt.Beach Ground Lse. V8 -31- 32. LANDLORD'S RIGHT TO CAUSE SALE OF LAND By giving written notice at least 180 days prior to each Purchase Date (as hereinafter defined), Landlord shall have the right to cause Tenant to purchase fee simple title in the Property (the "Fee"), subject to the following: 32.1 Purchase Date. The twentieth anniversary of the Commencement Date and the expiration of the initial Term and each exercised Option shall each constitute a "Purchase Date." 32.2 Purchase Price. In the event such notice is given, Tenant shall purchase the Fee for a purchase price equal to the Basic Rent paid during the calendar year immediately preceding the applicable Purchase Date, divided by .10, but in no event shall the Purchase Price be less than $1,680,000, as adjusted by the same percentage as the rent adjustment made pursuant to Section 6.2. 32.3 Closing. The purchase of the Fee shall take place on or before the applicable Purchase Date through an escrow company selected by Tenant and reasonably acceptable to Landlord. At such closing, Landlord will transfer the Fee to Tenant or its designee, subject only to the title encumbrances of record as of the Commencement Date of this Lease and subject to any other title encumbrances approved by Tenant. The purchase price for the Fee shall be payable in cash. Landlord shall pay documentary and other transfer taxes, the cost of a CLTA Owner's Policy of Title Insurance, one-half of the escrow fees and any other closing costs typically paid by sellers in Orange County; Tenant shall pay recording costs, additional title insurance costs, one half of the escrow fees and any other closing costs typically paid by buyers in Orange County. 32.4 Dilutes. Any disputes regarding the acquisition of the Fee pursuant to this Section 32 shall be resolved pursuant to Exhibit C, provided that any dispute regarding the purchase price shall be determined by a panel of three neutral arbitrators selected pursuant to Paragraph 2(b) of Exhibit C, which panel shall choose either the purchase price submitted by Landlord or the purchase price submitted by Tenant (such panel having no authority to choose any other amount). The party whose purchase price is chosen shall be entitled to its reasonable attorneys' fees. 33.OPTION TO PURCHASE FEE SIMPLE TITLE TO PROPERTY By giving notice at least 60 days prior to a Tenant Purchase Date (as hereinafter defined) (which notice may specify an approximate Tenant Purchase Date reasonably acceptable to Landlord if other than a Purchase Date), Tenant shall have the right to acquire the Fee, subject to the following: As used herein, a "Tenant Purchase Date" shall mean the twentieth anniversary of the Commencement Date, the date of expiration of the initial Term and each date of expiration of each renewed term. 33.1 In the event such notice is given, Tenant shall purchase the Fee for a purchase price calculated as follows: 300-003 Hunt.Beach Ground Lse. V8 -32- The purchase price shall be equal to the Adjusted Basic Rent (as hereinafter defined), divided by .10. The "Adjusted Basic Rent" shall be equal to the product of the Basic Rent (as theretofore adjusted pursuant to Section 6.2), multiplied by the fraction equal to the Index for the month four calendar months prior to the Tenant Purchase Date divided by the Index for the month four calendar months prior to the last date of adjustment pursuant to Section 6.2, provided that the increase in Basic Rent shall not be in excess of a 14% increase from the Basic Rent then in effect, but in no event shall the Purchase Price be less than $1,680,000,as adjusted by the same percentage as the rent adjustment pursuant to Section 6.2 and in accordance with the foregoing. For a Tenant Purchase Date on or after the expiration of the first renewal option, the purchase price shall not be less than the fair market value of Landlord's interest in the fee as encumbered by this Lease, including any residual value. 33.2 The purchase of the Fee shall take place on or before the applicable Purchase Date through an escrow company selected by Tenant and reasonably acceptable to Landlord. At such closing, Landlord will transfer the Fee to Tenant or its designee, subject only to the title encumbrances of record as of the Commencement Date of this Lease and subject to any other title encumbrances approved by Tenant. The purchase price for the Fee shall be payable in cash. Landlord shall pay documentary and other transfer taxes, the cost of a CLTA Owner's Policy of Title Insurance, one-half of the escrow fees and any other closing costs typically paid by sellers in Orange County. Tenant shall pay recording costs, additional title insurance costs, one half of the escrow fees and any other closing costs typically paid by buyers in Orange County. 33.3 Any disputes regarding the acquisition of the Fee pursuant to this Section 33 shall be resolved pursuant to Exhibit C, provided that any dispute regarding the purchase price or the determination of fair market value shall be determined by a panel of three neutral arbitrators selected pursuant to Paragraph 2(b) of Exhibit C, which panel shall choose either the purchase price submitted by Landlord or the purchase price submitted by Tenant (such panel having no authority to choose any other amount). The party whose purchase price is chosen shall be entitled to its reasonable attorneys' fees. 34. RIGHT OF FIRST OFFER 34.1 If at any time after execution of this Lease, Landlord desires to sell the Fee, Landlord shall give Tenant the right to purchase the Fee for a price and terms set forth in a notice given to Tenant (the "ROFO Notice"). Tenant shall have thirty (30) days to decide whether to acquire the Fee on such terms, provided that if Tenant does not elect to purchase the Fee, any Leasehold Mortgagee (in order of priority of the Leasehold Mortgages) shall have an additional 15 days to elect to purchase the Fee. If Tenant (or the Leasehold Mortgagee) elects to acquire the Fee, the closing shall take place within 120 days after the ROFO Notice. Landlord shall pay documentary and other transfer taxes, the cost of a CLTA Owner's Policy of Title Insurance, one-half of the escrow fees and any other closing costs typically paid by sellers in Orange County. Tenant shall pay recording costs, additional title insurance costs, one half of the escrow fees and any other closing costs typically paid by buyers in Orange County. If neither Tenant nor any Leasehold Mortgagee timely elects to acquire the Fee, Landlord shall be free to sell the Fee to any other person (subject to this Ground Lease, any Fee purchase options contained herein and this Section 34), provided that if such a sale does not take 300-003 Hunt.Beach Ground Lse. V8 -33- place within one (1) year after the ROFO Notice is given, or if Landlord intends to sell the Fee at a price lower than that set forth in the ROFO Notice, Tenant and the Leasehold Mortgagees shall be given at least fifteen (15) days' prior written notice during which period Tenant or (if Tenant does not) any Leasehold Mortgagee may elect to purchase the Fee. 34.2 Any disputes regarding the acquisition of the Fee pursuant to this Section 34 shall be resolved pursuant to Exhibit C. 35. GENERAL PROVISIONS 35.1 Waivers. The waiver by Landlord of any term, covenant, or condition herein contained shall not be a waiver of such term, covenant, or condition on any subsequent breach. 35.2 Notices. All notices and demands which may. or are to be required or permitted to be given by either party to the other hereunder shall be in writing. All notices and demands by Landlord to Tenant shall be sent by first class mail, registered or certified mail, postage prepaid, return receipt requested, or by electronic facsimile transmission followed by delivery of a "hard" copy, or by personal delivery (including by means of professional messenger service, courier service such as United Parcel Service or Federal Express, or by U.S. Postal Service), and addressed to Tenant at the address set forth in Section 1.7, or to such other place as Tenant may from time to time designate in a notice to Landlord. All notices and demands by Tenant to Landlord shall be sent by first class mail, registered or certified mail, postage prepaid, return receipt requested, or by electronic facsimile transmission followed by delivery of a "hard" copy, or by personal delivery (including by means of professional messenger service, courier service such as United Parcel Service or Federal Express, or by U.S. Postal Service), and addressed to Landlord at the address set forth in Section 1.6, or to such other person or place as Landlord may from time to time designate in a notice to Tenant. Any notice that is transmitted by electronic facsimile transmission followed by delivery of a "hard" copy, shall be deemed delivered upon its transmission provided any transmission received on a nonbusiness day or after 5:00 p.m. on a business day shall be deemed given on the next business day; any notice that is personally delivered (including by means of professional messenger service, courier service such as United Parcel Service or Federal Express, or by U.S. Postal Service), shall be deemed received on the documented date of receipt by Tenant; and any notice that is sent by registered or certified mail, postage prepaid, return receipt required shall be deemed received on the date of receipt thereof. 35.3 Time is of the Essence. Time is of the essence of this Lease and each and all of its provisions in which performance is a factor. 35.4 Binding on Successors and Assigns. The covenants and conditions herein contained, subject to the provisions as to assignment, apply to and bind the heirs, successors, executors, administrators, and assigns of the parties hereto. 35.5 Force Majeure. Performance by either party hereunder shall not be deemed to be in default where delays or defaults are due to war, insurrection, strikes, lock -outs, riots, floods, earthquakes, fires, casualties, acts of God, acts of the public enemy, epidemics, quarantine restrictions, freight embargoes, lack of transportation, governmental restrictions or 300-003 Hunt.Beach Ground Lse. V8 -34- priority, litigation, unusually severe weather, inability to secure necessary labor, material or tools, delays of any contractor, sub -contractor or supplier, acts of the other party, acts or failure to act of the City of Huntington Beach or any other public or governmental agency or entity (except that acts or failure to act of Landlord shall not excuse performance of Landlord), or any causes beyond the control or without the fault of the party claiming an extension of time to perform. An extension of time for any such cause (a "Force Majeure Delay") shall be for the period of the enforced delay and shall commence to run from the time of the commencement of the cause, if notice by the party claiming such extension is sent to the other party within thirty (30) days of knowledge of the commencement of the cause. Notwithstanding the foregoing, none of the foregoing events shall constitute a Force Majeure Delay unless and until the party claiming such delay and interference delivers to the other party written notice describing the event, its cause, when and how such party obtained knowledge, the date and the event commenced, and the estimated delay resulting therefrom. Any party claiming a Force Majeure Delay shall deliver such written notice within thirty (30) days after it obtains actual knowledge of the event. Times of performance under this Agreement may also be extended in writing by the Landlord and Tenant. 35.6 Costs of Proceedings and Attorneys' Fees. (a) Subject to paragraph (b) below, if any action or proceeding is brought by either party against the other under this Lease or by a Leasehold Mortgagee against any such party, whether for interpretation, enforcement, recovery of possession, or otherwise, the prevailing party shall be entitled to recover all costs and expenses, including the fees of its attorney in such action or proceeding. This provision shall also apply to any postjudgment action by either party, including without limitation efforts to enforce a judgment. (b) Prior to the Commencement Date (including the period beginning with the date of initial negotiations prior to the execution of this Lease) and continuing throughout the period ending two years after the Commencement Date, in the event of any dispute regarding the Lease, or in the event Landlord consults with an attorney or incurs other costs in connection with the Lease, Tenant shall pay all such fees and costs incurred by Landlord, and Tenant shall not be entitled to a reimbursement or recovery of any fees or costs paid by Tenant notwithstanding any other paragraph in this Agreement. 35.7 Severability. Any provision of this Lease which shall prove to be invalid, void, or.illegal shall in no way affect, impair, or invalidate any other provision hereof and such other provisions shall remain in full force and effect. 35.8 No Exclusive Remedies. No remedy or election hereunder shall be deemed exclusive but shall, wherever possible, be cumulative with all other remedies at law or in equity. 35.9 Laws of California. This Lease shall be governed by the laws of the State of California. Proper venue for any action shall be in Orange County, California. 35.10 No Partnership. Nothing contained in this Lease shall be deemed or construed as creating a partnership, joint venture, or any other relationship between the parties hereto other than Landlord and Tenant according to the provisions contained herein, or cause Landlord to be responsible in any way for the debts or obligations of Tenant, or any other party. 300-003 Hunt.Beach Ground Lse. V8 -35- 35.11 Final Agreement. This Lease, including any document or instrument incorporated therein or herein by reference, contains a complete and final expression of the agreement between Landlord and Tenant, and there are no promises, representations, agreements, warranties, or inducements either express or implied other than as are set forth and this Lease. Any and all previous discussions or agreements between Landlord and Tenant with respect to the premises, whether oral or written, are superseded by this Lease. 35.12 Language of Lease. When the context so requires when used in this Lease, the masculine gender shall be deemed to include the feminine and neuter gender and the neuter gender shall be deemed to include the masculine and feminine gender. When the context to requires when used in this Lease, the singular shall be deemed to include the plural. The paragraph and section headings have been used for convenience only, and shall not be used in the interpretation hereof. The term "including" shall mean "including but not limited to." 35.13 Requirement of a Writing. No amendment, change, or addition to, or waiver of termination of, this Lease or any part hereof shall be valid unless in writing and signed by both Landlord and Tenant. 35.14 No Third Party Beneficiaries. The Parties acknowledge and agree that the provisions of this Lease are for the sole benefit of Landlord and Tenant, and not for the benefit, directly or indirectly, of any other person or entity, except as otherwise expressly provided herein. 35.15 Authority of Tenant. The party executing this Lease on behalf of Tenant has full authority to do so and to bind Tenant to perform pursuant to the terms and conditions of this Lease. 35.16 Incorporation by Reference. Each of the exhibits attached hereto is incorporated herein by this reference. 35.17 Interpretation. This Lease has been negotiated at arm's length and between persons sophisticated and knowledgeable in the matters dealt with in this Lease. In addition, each party has been given the opportunity to consult with experienced and knowledgeable legal counsel. Accordingly, any rule of law (including Civil Code section 1654) or legal decision that would require interpretation of any ambiguities in this Lease against the party that has drafted it is not applicable and is waived. The provisions of this Lease shall be interpreted in a reasonable manner to effect the purpose and intent of the parties to this Lease. 35.18 Merger. So long as any Leasehold Mortgagee holds a Leasehold Mortgage, the fee title to the Property and the leasehold estate created by this Lease shall not merge unless all Leasehold Mortgagees expressly consent to the merger in writing. This provision shall apply even if Tenant or Landlord or any third party acquires both the fee title and this Lease. 35.19 Priority. This Lease, and any extensions, renewals or replacements thereof, and any sublease entered into by Tenant as sublessor, and any Leasehold Mortgage or other encumbrance recorded by Leasehold Mortgagee shall be superior to any mortgages, deeds of trust or similar encumbrances placed by Landlord on the Property and to any lien right, if any, 300-003 Hunt.Beach Ground Lse. V8 -36- of Landlord on the buildings, and any furniture, fixtures, equipment or other personal property of Tenant upon the Property. 35.20 Counterparts. This Lease may be executed by each party on a separate signature page, and when the executed signature pages are combined, shall constitute one single instrument. 35.21 Arbitration. With respect to any provision in this Lease which specifically states that disputes regarding such provision are to be resolved pursuant to arbitration, any such dispute shall be submitted to arbitration pursuant to the terms of Exhibit C. 35.22 Reasonable Consent. Unless otherwise specified, no consent or approval to be given by a party shall be unreasonably withheld, conditioned or delayed, provided if a specific time for response is provided, response within such time period shall be deemed reasonable. 35.23 Nondiscrimination. Tenant herein covenants by and for itself, its heirs, executors, administrators and assigns, and all persons claiming under or through it, and this Lease is made and accepted upon and subject to the following conditions: That there shall be no discrimination against or segregation of any person or group of persons, on account of race, color, creed, religion, sex, marital status, national origin or ancestry in the leasing, subleasing, transferring, use, occupancy, tenure or enjoyment of the premises herein leased, nor shall the lessee itself, or any person claiming under or through it, establish or permit such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, sublessees, subtenants or vendees in the land herein leased. 35.24 Conversion of Fee to Undivided Interest. Landlord acknowledges that Tenant is entering into this Lease in connection with the development of a larger parcel of land (the "Development Site") which includes the Property. Tenant anticipates that it or its affiliate. will acquire fee simple title to other parts of the Development Site and that it or its affiliates will acquire a leasehold interest in other portions of the Development Site. At the time Tenant has obtained all debt and/or equity financing for the initial construction of the Project, all building permits needed to commence construction have been issued, and provided the Commencement Date has occurred or Tenant elects to cause the Commencement Date to occur simultaneously Tenant shall have the right to cause Landlord to exchange Landlord's ownership of the Fee in the Property in exchange for receiving an undivided interest in fee simple title to all or a portion of the Development Site (which portion shall include the Property), and in such event Landlord and Tenant shall execute a restatement of this Lease and Memorandum of Lease and Option to Purchase :Fee in reasonable form proposed by Tenant; provided such restated form of this Lease shall require Tenant to make payments of Basic Rent to Landlord, shall not reduce rent payable to Landlord hereunder or increase Landlord's obligations, nor shall any material provision of this Lease be, omitted. Subject to such limitations, such restated Lease may, however, include the other undivided interest holders of the fee interest in such Development Site as landlords. Tenant and Landlord shall cooperate in effectuating a tax deferred exchange, and Landlord's percentage undivided interest shall be calculated based on land area of the Property compared to land area of the real estate in which Landlord will have an undivided interest. For example, assuming the Property contains 5,000 square feet of land area and the Development Site in which 300-003 Hwnt.Beach Ground Lse. V8 -37- Landlord will have an undivided interest is 28,000 square feet of land area, Landlord's undivided interest shall be equal to 17.857%. At Landlord's request, the land areas of the Property and land in which Landlord will have an undivided interest shall be calculated by a licensed land surveyor, at no cost to Landlord. Tenant shall pay all costs incurred by Landlord in connection with such conversion. 35.25 Creation of Air Space Parcels and Conversion to Air Space Lease. Landlord acknowledges that Tenant intends to develop a multi -story mixed use project on the Development Site, which is anticipated to include subterranean parking, retail stores and restaurants and a hotel. In order to assist financing of such project (whether through equity, debt or bond financing), Tenant intends to cause the Development Parcel (or portions thereof) to be subdivided into three or more three-dimensional legal parcels ("Air Rights Parcels"), and Landlord shall promptly cooperate with Tenant by executing, acknowledging (where appropriate) and delivering to Tenant applications, consents, tentative maps, final maps and/or other instruments or documents reasonably requested by Tenant to accomplish such subdivision. In addition, upon written request by Tenant and subject to Landlord's reasonable approval of the form, Landlord and Tenant shall execute new separate ground leases for each Air Rights Parcel including parts of the Property, with the Basic Rent payable hereunder allocated among the Air Rights Parcels as requested by Tenant. Such new separate ground leases shall be in reasonable form proposed by Tenant, provided such form shall not reduce the aggregate rent payable to Landlord hereunder or increase Landlord's obligations, nor shall any material provision of this Lease be omitted. Tenant shall pay all costs incurred by Landlord in connection with such new separate ground lease. 35.26 Lease Null and Void. If this Ground Lease and Option to Purchase Fee is not fully executed and returned to Landlord within 30 days after Landlord delivers 4 executed originals of this Lease to CIM/Huntington, Inc., this Ground Lease and Option to Purchase Fee shall be null and void and of no effect whatsoever at no cost whatsoever to Frank Cracchiolo. 35.27 References to Frank Cracchiolo. All references in the Lease to "Frank Cracchiolo" shall mean Landlord. 300-003 Hunt.Beach Ground Lse. V8 -38- TENANT: ATTEST: Agency Clerk CIM/Huntington, Inc., a California corporation in LI-A Shaul Kuba, Secretary Redeve opment Agen y of the City of Huntington Beach ( ency) By: Chairman PAo f m REVIEWED AND APPROVED AS TO FORM: IV/6111 Agency General Counsel APPROVED AS TO FORM: KANE, BALLMER & BERKMAN ME 4 L-L ,3-9-0 0 Frank M. C cchiolo, Tryistee-\ /) 3_C- _ o 0 j-/Oz�w "Barbara F. Cracchiolo 300-003 Hunt.Beach Ground Lse. V8 -39- Exhibit "A" LEGAL DESCRIPTION LOTS 4 AND 5 IN BLOCK 105 OF HUNTINGTON BEACH, AS SHOWN ON A MAP RECORDED IN BOOK 3, PAGE 36 OF MISCELLANEOUS MAPS, RECORDS OF ORANGE COUNTY, CALIFORNIA. 300-003 Hunt. Beach Ground Lse. V7 J 11 4RCH �O"Nrr WALNUT 14 ?e [2-5 �r 26 r ' ; 25?I $ . COAST 10 D a17 a ? It. 1C�,5 g j i tb i l»1 fl k e 4� - 15 A VEALE 3 � # b b n• A L �. HIGHWAY k TRACT No. tam, AM 636-38 TO 41 INC. mown w cKrc Ic a Nl 3V >• 17 ► ey,� 1760 AC. A i ZU W O uj r V F V LL �a.ea• �1 a � a � a o q z N ZZOaa} � J hZ 0 �Z 0 v� ,,4 11: 0 �i V-1OO' LL N iJ o. y a N ASSESSORS MAP BOOK 24 PAGE 15 COUNTI' OF ORANGE Exhibit `B" MEMORANDUM OF LEASE THIS DOCUMENT HAS BEEN PREPARED BY AND WHEN RECORDED RETURN TO: FRAGNER LAW CORPORATION 333 S. Grand Avenue Suite 3030 Los Angeles, California 90071 Attn: Matthew C. Fragner, Esq. Assessor's Parcel No. MEMORANDUM OF LEASE THIS MEMORANDUM OF LEASE (this "Memorandum") is executed effective as of (the "Effective Date"), by and between CIM/Huntington, Inc., a California corporation, and the Redevelopment Agency of the City of Huntington Beach (collectively, "Tenant"), whose address is 6922 Hollywood Boulevard, Suite 900, Hollywood, CA 90028, and Frank M. Cracchiolo, Trustee for the Revocable Trust dated June 12, 1979, and Salvator W. and Barbara F. Cracchiolo, collectively with their successors and assigns ("Landlord"), whose address is 19712 Quiet Bay Lane, Huntington Beach, CA 92648. PRELIMINARY STATEMENT: Landlord and Tenant entered into that certain lease (the "Lease") dated as of , the terms, provisions and conditions of which are incorporated herein by this reference to the same extent as if recited in their entirety herein. Pursuant to the terms, provisions and conditions of the Lease, Landlord has leased to Tenant, and Tenant has rented and leased from Landlord, certain premises (the "Premises") described on Exhibit A attached hereto (the "Land"). Unless otherwise expressly provided herein, all defined terms used in this Memorandum shall have the same meanings as are ascribed to such terms in the Lease. NOW, THEREFORE, Landlord and Tenant hereby make specific reference to the following terms, provisions and conditions of the Lease: 1. In consideration of the rentals and other sums to be paid by Tenant and of the other terms, covenants and conditions on Tenant's part to be kept and performed pursuant to the Lease, Landlord leases to Tenant, and Tenant takes and hires, the Premises. The Lease term commences as of the Commencement Date (as defined in the Lease) and expires at midnight on the Expiration Date (as defined in the Lease), unless extended as provided below or terminated sooner as provided in the Lease. 300-003 Hunt. Beach Ground Lse. V8 2. Tenant has the option to extend the term of the Lease for up to two (2) additional successive periods of twenty-five (25) years each and one additional successive period of twenty-four (24) years, by written notice to Landlord not less than 180 days prior to the expiration of the term of the Lease, each such option to be executed in accordance with the Lease. Tenant has certain rights to purchase the Premises as set forth in the Lease. 4. The Lease is a "true lease"; the only relationship created thereby is that of landlord and tenant. 5. Original copies of the Lease are in the possession of Landlord and Tenant. The Lease contains other terms not herein set forth but which are incorporated by reference herein for all purposes, and this Memorandum is executed for the purpose of placing parties dealing with the Premises on notice of the existence of the Lease and, where appropriate, its contents, and shall ratify and confirm all other terms of the Lease as fully as if the same had been set forth herein. 6. Notwithstanding anything to the contrary contained herein, nothing in this Memorandum shall modify, supercede, diminish, add to or change any or all of the terms of the Lease or be deemed to create or grant any rights, liabilities or obligations of or to any party or third parties other than as specifically set forth in the Lease. In the event of any conflict between this Memorandum and the Lease, the terms and conditions of the Lease shall control. 7. This Memorandum may be executed in one or more counterparts, each of which shall be deemed an original. IN WITNESS WHEREOF, the parties hereto have caused this Memorandum to be duly executed as of the Effective Date. TENANT: CIM/Huntington, Inc., a California corporation By: Richard Ressler, President Lo Avaham Shemesh, Treasurer Shaul Kuba, Secretary LANDLORD: Redevelopment Agency of the City of Huntington Beach Chairman Frank M. Cracchiolo, Trustee Salvator W. Cracchiolo Barbara F. Cracchiolo STATE OF CALIFORNIA ) ss. COUNTY OF ) On before me, , personally appeared (here insert name and title of the officer), personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. WITNESS my hand and official seal. Signature (Seal) STATE OF CALIFORNIA ) ss. COUNTY OF ) On before me, , personally appeared (here insert name and title of the officer), personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. WITNESS my hand and official seal. Signature (Seal) Exhibit A Legal Description LOTS 4 AND 5 IN BLOCK 105 OF HUNTINGTON BEACH, AS SHOWN ON A MAP RECORDED IN BOOK 3, PAGE 36 OF MISCELLANEOUS MAPS, RECORDS OF ORANGE COUNTY, CALIFORNIA. Exhibit "C" ARBITRATION OF DISPUTES Any dispute to be arbitrated pursuant to the Agreement to which this Exhibit is attached ("Arbitrable Dispute") shall be submitted to arbitration pursuant to Title 9, Sections 1280 and following of the California Code of Civil Procedure and the terms and provisions of this Exhibit. Whenever the terms of this Exhibit and such Sections of the California Code of Civil Procedure conflict, the terms of this Exhibit shall control. 1. Location. Subject to the last sentence of this Section, all Arbitration Proceedings shall be held and conducted in Orange County (the "Arbitration County"). The location for an Arbitration Proceeding within the Arbitration County shall be as mutually agreed by the Parties, but failing such agreement within ten (10) days of a written request by any Party, the Arbitration Proceeding shall be conducted in the regional office of Judicial Arbitration and Mediation Service ("JAMS") in the Arbitration County (or if no such office exists in such County, then in the JAMS regional office closest to the Property). 2. Rules and Selection of Arbitrator(s). Each Arbitration Proceeding shall be conducted under the commercial arbitration rules of JAMS then in effect (provided that in the event of any conflict between such Rules and this Exhibit, the terms of this Exhibit shall control). In no event shall a demand for arbitration be made after the date when institution of legal or equitable proceedings based on the Arbitrable Dispute in question would be barred by any applicable statute of limitations. The arbitrator(s) shall be selected as follows: (a) Unless otherwise provided in the Agreement, any Arbitration Proceeding initiated pursuant to the terms of the Agreement, and any Arbitration Proceeding involving an amount in controversy less than One Million Dollars ($1,000,000), shall be heard by a single neutral arbitrator. The arbitrator appointed must be (a) a former or retired judge of the California Superior Court or any higher court in California, or (b) an attorney with at least 15 years experience, with acquisition and development of retail shopping centers. If agreement is not reached by the Parties on the selection of the arbitrator within one month after commencement of an Arbitration Proceeding by (i) submission of a matter to JAMS in accordance with its commercial arbitration rules and (ii) notice to the other Party of the initiating Party's intention to arbitrate, then such arbitrator shall be appointed by the presiding judge of the Superior Court of the Arbitration County. (b) Unless otherwise provided in the Agreement, any Arbitration Proceeding involving an amount in controversy equal to or greater than One Million Dollars ($1,000,000) shall be heard by a panel of three neutral arbitrators. Each arbitrator appointed must be (a) a former or retired judge of the California Superior Court or any higher court in California, or (b) an attorney with at least 15 years experience with acquisition and development of retail shopping centers. If agreement is not reached by the Parties on the selection of the three arbitrators within one month after commencement of an Arbitration Proceeding by 300-003 Hunt. Beach Ground Lse. V8 (i) submission of a matter to the JAMS in accordance with its commercial arbitration rules and (ii) notice to the other Party of the initiating Party's intention to arbitrate, then such arbitrators shall be appointed by the presiding judge of the Superior Court of the Arbitration County. (c) For purposes of determining whether an Arbitration Proceeding shall be heard by one arbitrator or by three, the term "amount in controversy" shall mean the dollar amount sought by either the Party initiating the Arbitration Proceeding or the Party responding to the Arbitration Proceeding, whichever is greater. 3. Powers of Arbitrator(s). The arbitrator(s) shall have the power to grant all appropriate legal and equitable relief (both by way of interim relief and as a part of its final award), other than punitive damages, as may be granted by any court of the State of California, to carry out the terms of this Agreement (e.g., declaratory and injunctive relief and damages). The Parties expressly waive any right to punitive damages arising out of any Arbitrable Dispute. All awards and orders of the arbitrator(s) (including, but not limited to interim relief) shall be final and binding subject to confirmation, correction or vacation pursuant to California Code of Civil Procedure Sections 1285 and following. 4. Discovery and Rules of Evidence. It is the intention of the Parties that all Arbitration Proceedings be conducted as expeditiously as reasonably possible in keeping with fairness and with a minimum of legal formalities. Therefore, the Parties have agreed that the rules of evidence shall not apply to any Arbitration Proceeding, except that notwithstanding the foregoing the attorney/client privilege and work product protection shall be applicable in all Arbitration Proceedings. The Parties agree that only limited discovery should be allowed in an Arbitration Proceeding and incorporate California Code of Civil Procedure, Sections 1283.1(b) and 1283.05 for this purpose. Unless otherwise ordered by the arbitrator(s) on a showing of substantial need, each side shall be limited to one document production request and one deposition and such discovery shall be complete within 60 days following appointment of the arbitrator(s). In addition the parties shall exchange the names, qualifications and a narrative report stating the opinion and basis therefor of any expert who may be called 15 days prior to the start of the arbitration. 5. Timing. In furtherance of the intent of the Parties expressed in the first sentence of Section 4 of this Exhibit, and unless modified by the arbitrator(s) upon a showing of good cause, all Arbitration Proceedings shall proceed upon the following schedule: (a) within one month from the service of the notice of the request to arbitrate, the parties shall select the arbitrator(s); (b) within 15 days after selection of the arbitrator(s), the Parties shall conduct a pre - arbitration conference at which a schedule of pre -arbitration discovery shall be set, all pre arbitration motions scheduled and any other necessary pre -arbitration matters decided; (c) all discovery allowed by the arbitrator(s) shall be completed within 45 days following the pre - arbitration conference; (d) all pre -arbitration motions shall be filed and briefed so that they may be heard no later than one month following the discovery cut-off; (e) the arbitration shall be scheduled to commence no later than one month after the decision on all pre -arbitration motions but in any event no later than five months following the service of the notice of arbitration; and (0 the arbitrator(s) shall render his or her or their written decision (including without limitation any and all findings of fact and conclusions of law) within one month following the submission 300-003 Hunt. Beach Ground Lse. V8 - ii - of the matter. The Parties intend the foregoing schedule to be an outside maximum timetable, and nothing herein shall prevent the arbitrator(s) from ordering a shorter timetable if the arbitrator(s) conclude(s) that the same is warranted by the circumstances of any particular Arbitration Proceeding. 6. Transcript. All proceedings involving the Parties in an Arbitration Proceeding shall be reported by a certified shorthand court reporter and written transcripts of the proceedings shall be prepared and made available to the Parties. 7. Costs. Subject to Paragraph 35.6(b) of the Lease, the prevailing party shall be awarded reasonable attorneys' fees, expert and non -expert witness costs and expenses, and other costs and expenses incurred in connection with the arbitration unless the arbitrator(s), for good cause, determines otherwise. A post -arbitration proceeding to determine costs, if needed, shall be held within 10 days of notice of the award. Costs and fees of the arbitrator(s) (including the cost of the record of transcripts of the arbitration) shall be borne by the non -prevailing party, unless the arbitrator(s) for good cause determines otherwise. Costs and fees payable in advance shall be advanced equally by the Parties, subject to ultimate payment by the non -prevailing party in accordance with the preceding sentence. 8. Reconsideration. Upon receipt of the written opinion of the arbitrator(s), either Party shall have the right within 10 days to file with the arbitrator(s) a motion to reconsider, and the arbitrator(s) shall then reconsider the issues raised by the motion, may allow the other Party an opportunity to respond thereto, and shall either confirm or change the decision within 10 days after such filing. Such revised or confirmed decision shall then be final and conclusive upon the Parties. The costs (other than the attorneys' fees of the respective parties) of a motion for reconsideration and related proceedings shall be borne by the moving Party. 9. Specific Enforcement. The terms of this Exhibit shall be specifically enforceable under applicable law in any court of competent jurisdiction. The award rendered by the arbitrator(s) shall be final (subject to confirmation, correction or vacation as set forth in California Code of Civil Procedure Sections 1285 and following) and judgment may be entered in accordance with applicable law and in any court having jurisdiction thereof. 10. Interest on Award. Any monetary award of the arbitrator(s) may include interest at the legal rate, which interest shall accrue from the date the claim, dispute or other matter in question was rightfully due and payable under the Agreement until the date the award is paid to the prevailing party. 11. ExtraordinM Remedies. No provision of this Exhibit shall limit the right of any Party to exercise self-help remedies or to obtain provisional or ancillary remedies from a court of competent jurisdiction before, after, or during the pendency of any Arbitration Proceeding. The exercise of such remedy shall not waive the right of any Party to resort to arbitration. ARBITRATION OF DISPUTES NOTICE: BY INITIALING IN THE SPACE BELOW YOU ARE AGREEING TO HAVE ANY DISPUTE ARISING OUT OF THE MATTERS INCLUDED IN THE "ARBITRATION OF DISPUTES" PROVISION DECIDED BY NEUTRAL ARBITRATION AS PROVIDED BY CALIFORNIA LAW AND YOU ARE GIVING UP ANY RIGHTS YOU 300-003 Hunt. Beach Ground Lse. V8 - iii - MIGHT POSSESS TO HAVE THE DISPUTE LITIGATED IN A COURT OR JURY TRIAL. BY INITIALING IN THE SPACE BELOW YOU ARE GIVING UP YOUR JUDICIAL RIGHTS TO DISCOVERY AND APPEAL. UNLESS SUCH RIGHTS ARE SPECIFICALLY INCLUDED IN THE "ARBITRATION OF DISPUTES" PROVISION. IF YOU REFUSE TO SUBMIT TO ARBITRATION AFTER AGREEING TO THIS PROVISION, YOU MAY BE COMPELLED TO ARBITRATE UNDER THE AUTHORITY OF THE CALIFORNIA CODE OF CIVIL PROCEDURE. YOUR AGREEMENT TO THIS ARBITRATION PROVISION IS VOLUNTARY. WE HAVE READ AND UNDERSTAND THE FOREGOING AND AGREE TO SUBMIT DISPUTES ARISING OUT OF THE MATTERS INCLUDED IN THE "ARBITRATION OF DISPUTES" PROVISION TO NEUTRAL ARBITRATION. Landlord's Initials Tenant's Initials 3 `� - 0 O 300-003 Hunt. Beach Ground Lse. V8 - 1V - TABLE OF CONTENTS Page GROUNDLEASE SUMMARY.................................................................................................... 1 ARTICLE 1. FUNDAMENTAL INFORMATION............................................................... 6 ARTICLE 2. PURPOSE OF LEASE..................................................................................... 8 ARTICLE 3. AGREEMENT TO LEASE.............................................................................. 8 ARTICLE 4. ACCEPTANCE OF PROPERTY..................................................................... 8 ARTICLE5. TERM............................................................................................................... 9 ARTICLE6. BASIC RENT................................................................................................. 10 ARTICLE 7. ADDITIONAL RENT.................................................................................... 11 ARTICLE 8. RENT GENERALLY..................................................................................... 11 ARTICLE 9. TENANT WORK........................................................................................... 12 ARTICLE10. USE................................................................................................................. 12 ARTICLE 11. COMPLIANCE WITH LAW..........................'............................................... 12 ARTICLE 12. ALTERATIONS AND ADDITIONS............................................................. 12 ARTICLE13. REPAIRS....................................................................................................... 13 ARTICLE14. TAXES............................................................................................................ 13 ARTICLE 15. ASSIGNMENT AND SUBLETTING........................................................... 15 ARTICLE 16. HOLD HARMLESS....................................................................................... 16 ARTICLE 17. OWNERSHIP OF PROPERTY DURING TERM AND UPON EXPIRATION OR TERMINATION OF LEASE .......................................... 17 ARTICLE18. LIENS............................................................................................................. 18 ARTICLE 19. SUBROGATION............................................................................................ 18 ARTICLE 20. TENANT'S INSURANCE............................................................................. 18 ARTICLE21. UTILITIES...................................................................................................... 20 ARTICLE 22. HOLDING OVER.......................................................................................... 20 ARTICLE 23. ENTRY BY LANDLORD...............................:.............................................. 20 ARTICLE 24. DAMAGE, RECONSTRUCTION................................................................. 21 ARTICLE25. DEFAULT...................................................................................................... 22 ARTICLE 26. EMINENT DOMAIN..................................................................................... 24 ARTICLE 27. ESTOPPEL OFFSET STATEMENT............................................................. 24 ARTICLE 28. HAZARDOUS MATERIALS........................................................................ 25 ARTICLE 29. TENANT'S SIGNAGE.................................................................................. 26 ARTICLE 30. , MEMORANDUM OF LEASE....................................................................... 26 ARTICLE 31. MORTGAGEE PROTECTION PROVISIONS ............................................. 26 ARTICLE 32. LANDLORD'S RIGHT TO CAUSE SALE OF LAND ................................ 32 ARTICLE 33. OPTION TO PURCHASE FEE SIMPLE TITLE TO PROPERTY .............. 32 ARTICLE 34. RIGHT OF FIRST OFFER............................................................................. 33 ARTICLE 35. GENERAL PROVISIONS............................................................................. 34 EXHIBIT A - LEGAL DESCRIPTION EXHIBIT B MEMORANDUM OF LEASE EXHIBIT C - ARBITRATION OF DISPUTES 300-003 Hunt. Beach Ground Lse. V8 _ V _ TABLE OF CONTENTS Page GROUNDLEASE SUMMARY.................................................................................................................................. 1 ARTICLE 1. FUNDAMENTAL INFORMATION....................................................................................... 6 ARTICLE 2. PURPOSE OF LEASE.............................................................................................................. 8 ARTICLE 3. AGREEMENT TO LEASE...................................................................................................... 8 ARTICLE 4. ACCEPTANCE OF PROPERTY............................................................................................. 8 ARTICLE5. TERM....................................................................................................................................... 9 ARTICLE6. BASIC RENT......................................................................................................................... 10 ARTICLE7. ADDITIONAL RENT............................................................................................................ 11 ARTICLE8. RENT GENERALLY............................................................................................................. 11 ARTICLE9. TENANT WORK................................................................................................................... 12 ARTICLE10. USE......................................................................................................................................... 12 ARTICLE 11. COMPLIANCE WITH LAW................................................................................................. 12 ARTICLE 12. ALTERATIONS AND ADDITIONS..................................................................................... 12 ARTICLE 13. REPAIRS............................................................................................................................... 13 ARTICLE14. TAXES...........................................................................................................'......................... 13 ARTICLE 15. ASSIGNMENT AND SUBLETTING.................................................................................... 15 ARTICLE 16. HOLD HARMLESS............................................................................................................... 16 ARTICLE 17. OWNERSHIP OF PROPERTY DURING TERM AND UPON EXPIRATION OR TERMINATION OF LEASE................................................................................................. 17 ARTICLE18. LIENS..................................................................................................................................... 18 ARTICLE 19. SUBROGATION....................:............................................................................................... 18 ARTICLE 20. TENANT'S INSURANCE..................................................................................................... 18 ARTICLE21. UTILITIES.............................................................................................................................. 20 ARTICLE 22. HOLDING OVER................................................................................................................... 20 ARTICLE 23. ENTRY BY LANDLORD.................................:.................................................................... 20 ARTICLE 24. DAMAGE, RECONSTRUCTION......................................................................................... 21 ARTICLE25. DEFAULT.............................................................................................................................. 22 ARTICLE26. EMINENT DOMAIN............................................................................................................. 24 ARTICLE 27. ESTOPPEL OFFSET STATEMENT..................................................................................... 24 ARTICLE 28. HAZARDOUS MATERIALS................................................................................................ 25 ARTICLE 29. TENANT'S SIGNAGE........................................................................................................... 26 ARTICLE 30. MEMORANDUM OF LEASE............................................................................................... 26 ARTICLE 31. MORTGAGEE PROTECTION PROVISIONS..................................................................... 26 ARTICLE 32. LANDLORD'S RIGHT TO CAUSE SALE. OF LAND ......................................................... 32 ARTICLE 33. OPTION TO PURCHASE FEE SIMPLE TITLE TO PROPERTY ....................................... 32 ARTICLE 34. RIGHT OF FIRST OFFER..................................................................................................... 33 ARTICLE 35. GENERAL PROVISIONS...................................................................................................... 34 EXHIBIT A - LEGAL DESCRIPTION EXHIBIT B - MEMORANDUM OF LEASE EXHIBIT C - ARBITRATION OF DISPUTES 300-003 Hunt. Beach Ground Lse. V8 - iv - 300-003 Hunt. Beach Ground Lse. V8 - Vl - TENANT: Agency Clerk REVIEWED AND APPROVED AS TO FORM: Agency General Counsel APPROVED AS TO FORM: KANE, BALLMER & BERKMAN BY: LANDLORD: CIM/Huntington, Inc., a California corporation By: Richard Ressler, President By: Avaham Shemesh, Treasurer By: Shaul Kuba, Secretary Redevelopment Agency of the City of Huntington Beach (Agency) By: Chairman Frank M. Cracchiolo, Trustee Salvator W. Cracchiolo Barbara F. Cracchiolo 300-003 Hunt.Beach Ground Lse. V8 -30- a 0 IMPLEMENTATION AGREEMENT by and between REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH, hb\cim\imp.agmt.5 March 30,2000 Agency and CIM GROUP, LLC Developer The Official Sela of the Redevelopment Agency of the City of Huntington Beach is affixed to each page of this agreement. IMPLEMENTATION AGREEMENT This IMPLEMENTATION AGREEMENT ("Agreement") dated as of 1L- 3 , 2000, is entered into by and between the REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH ("Agency") and CIM GROUP, LLC ("Developer"). RECITALS A. The Agency and Developer entered into that certain Disposition and Development Agreement dated June 17, 1999 ("DDA"), which is hereby incorporated by reference. Reference herein to the DDA shall include any and all Attachments thereto. B. Pursuant to the DDA, the Developer is obligated to develop and operate certain improvements ("Project") on real property consisting of parcels already owned by the Agency (collectively, "Parcel A") and other parcels currently owned by third parties (collectively, "Parcel B"). C. Pursuant to Section 201.3 of the DDA, the Developer has been attempting to acquire fee simple title to Parcel B through voluntary negotiations. As a result, the Developer has negotiated that certain Ground Lease and Option to Purchase Fee ("Lease") by and between Frank M. Cracchiolo, Trustee for the Revocable Trust dated June 12, 1979, and Salvator W. and Barbara F. Cracchiolo (collectively, the "Landlord") and CIM/Huntington, Inc. and the Redevelopment Agency of the City of Huntington Beach (collectively, the "Tenant"). The Lease pertains to one of the parcels which comprise Parcel B ("Leased Premises"). The Lease is hereby incorporated by reference. Any capitalized term not defined herein shall have the meaning ascribed to it in the Lease or the DDA, as applicable. The parties desire that the Agency be a co -tenant with CIM/Huntington, Inc. under the lease. D. The Agency is agreeable to entering into the Lease as a co -tenant provided that the Agency and Developer enter into this Agreement setting forth the Agency's and Developer's responsibilities under the Lease. E. The parties are entering into this Agreement for good and valuable consideration, the receipt of which is hereby acknowledged. hb\cim\imp.agmt.5 March 30, 2000 TERMS 1. Pre -Commencement Date Period. From the date hereof until the occurrence of the first Trigger Event (as hereinafter defined) and the execution of the Sublease (as hereinafter defined) or cancellation of the Lease, as applicable, the provisions set forth below shall apply. As used herein, "Trigger Event" shall mean the earliest to occur of the (a) Commencement Date as defined in the Ground Lease, (b) the Close of Escrow under the DDA, or (c) the termination of the DDA. 1.1 The Developer shall be responsible, at its sole cost and expense, for performing all obligations of Tenant under the Lease. Said obligations shall include, without limitation, the following to the extent applicable prior to the Commencement Date of the Ground Lease: paying Basic Rent or Additional Rent, paying taxes, obtaining and maintaining all required insurance policies, repairing and maintaining the Leased Premises, complying with all laws, rules, and regulations, and indemnifying the Landlord, all as more particularly set forth in the Lease. 1.2 The Developer may pay or may cause to be paid any monies due under the Lease or obtain any required or necessary consents from Landlord. 1.3 The Agency shall not terminate the Lease without the Developer's prior written consent. The Developer shall prohibit CIM/Huntington, Inc. from terminating the Lease without the Agency's prior written consent. 1.4 Developer shall defend (with counsel chosen by Agency and City), indemnify and hold harmless Agency, the City of Huntington Beach ("City"), and their respective directors, officials, officers, employees, agents, contractors and consultants (collectively, "Agency Indemnified Parties") from and against all claims, liability, loss, damage, costs or expenses (including attorneys' fees and court costs) arising from or as a result of the death of any person or any accident, injury or loss or damage whatsoever caused to any person or to the property of any person arising out of or in connection with Developer's or CIM/Huntington, Inc.'s use or occupancy of the Leased Premises, any activity, work, or other thing done, permitted, or suffered by Developer or CIM/Huntington, Inc. in or about the Leased Premises, or arising from any reason or cause whatsoever in connection with the use or occupancy of the Leased Premises by any party during the term of the Lease, or the exercise of any right of Tenant under the Lease, or the performance of any obligation by Tenant under the Lease, except to the extent caused by the negligence or wrongful act of any Agency Indemnified Parties. 1.5 Developer shall further defend (with counsel chosen by Agency and City), indemnify and hold harmless Agency, the City, and their respective directors, officials, officers, employees, agents, contractors and consultants from and against all claims, liability, loss, damage, costs or expenses (including attorneys' fees and court costs) arising WcimGmp.agmt.5 2 March 30, 2000 from any breach or default by Developer in performing any obligations to be performed by Developer under the terms of this Agreement. 2. Commencement Date 2.1 Right to Cause Lease Commencement Date to Occu (a) Develo erp 's Rights. The Developer shall have the right to cause (or have CIM/Huntington, Inc. cause) the Lease Commencement Date to occur at any time, provided the Developer first gives the Agency at least five (5) business days prior written notice. (b) Agency's Rights. In the event that the Agency reasonably and in good faith believes that the Lease shall terminate unless the Lease Commencement Date immediately occurs, the Agency shall have the right to cause the Lease Commencement Date to occur, provided the Agency first gives the Developer at least five (5) business days prior written notice. The Agency also has the right to cause the Lease Commencement Date to occur pursuant to the provisions of Section 4.1(a) below. 2.2 Developer's DDA Election. If pursuant to Section 2.1(b), the Agency causes the Commencement Date under the Lease to occur, within fifteen (15) business days of said Agency election, the Developer must provide written notice to the Agency Executive Director indicating whether the Developer elects to proceed under the DDA or terminate the DDA. If the Developer does not provide the Agency Executive Director with such notice within said 15 business day period, the Developer shall be deemed to have elected to terminate the DDA. The Developer may only elect to proceed under the DDA so long as the Developer is not in default under the DDA past any applicable cure period. 2.3 Developer Causes Commencement Date; Developer Elects to Proceed with DDA. If the Developer has caused the Lease Commencement Date to occur, or if the Developer elects to proceed with the DDA pursuant to Section 2.2 above, the Agency shall execute and the Developer shall cause CIM/Huntington, Inc. to execute a sublease in substantially the form attached hereto as Exhibit A and made a part hereof (the "Sublease") naming CIM/Huntington, Inc. as subtenant thereunder, as well as the Memorandum of Sublease, Option to Purchase Fee and Agreement Containing Covenants Affecting Real Property in the form attached to the Sublease as Exhibit B (the "Memorandum of Sublease"), and the Developer shall execute the Guaranty of Sublease in the form attached hereto as Exhibit B and made a part hereof (the "Guaranty"). If the Developer elects to proceed with the DDA, within thirty (30) days following the date of the Developer's election notice, the Developer shall reimburse the Agency for any costs or expenses incurred by the Agency in connection with, under, or pursuant to the Lease. hb\cim\imp.agmt.5 3 March 30, 2000 2.4 Developer Elects to Terminate DDA. If pursuant to Section 2.2 the Developer elects to terminate the DDA or the Developer is prohibited from electing to proceed with the DDA because the Developer is in default under the DDA past any applicable cure period: (a) Within (30) days following the date of the Developer's election notice or deemed election, the Developer and the Agency shall take such steps and execute such documents as are necessary to terminate the DDA. (b) Within thirty (30) business days following the date of the Developer's election notice or deemed election, the Agency shall execute and the Developer shall cause CIM/Huntington, Inc. to execute the Sublease and the Memorandum of Sublease naming the Agency as the subtenant thereunder. The Developer shall also cause CIM/Huntington, Inc. to cooperate with Agency in any sub -sublease of the Leased Premises, including, without limitation, joining in or signing any documents or agreements or taking such other actions as may be reasonably necessary. 3. Close of Escrow. If the Close of Escrow under the DDA occurs prior to either of the other two Trigger Events, within thirty (30) days after the Close of Escrow, the Developer shall execute the Guaranty, and the Agency shall execute and the Developer shall cause CIM/Huntington, Inc. to execute the Sublease and the Memorandum of Sublease naming CIM/Huntington, Inc. as subtenant thereunder. 4. Termination of the DDA 4.1 Prior to Either of the Other Two Trigger Events. If the DDA terminates prior to either of the other two Trigger Events, then the following shall apply: (a) By giving written notice within ninety (90) days after the DDA termination, the Agency may elect to cause the Lease Commencement to occur and to proceed with the Sublease with the Agency as subtenant thereunder. In such event, the Agency shall execute and the Developer shall cause CIM/Huntington, Inc. to execute the Sublease and the Memorandum of Sublease naming the Agency as the subtenant thereunder. The Developer shall also cause CIM/Huntington, Inc. to cooperate with Agency in any sub - sublease of the Leased Premises, including, without limitation, joining in or signing any documents or agreements or taking such other actions as may be reasonably necessary. (b) If the Agency does not timely make the election described in Section 4.1(a) above, the Developer may elect to cause the Lease Commencement Date to occur pursuant to Section 2.3 above, provided that in the alternative, the Developer may elect to cause CIM/Huntington, Inc. to cancel the Lease (if hb\cim\imp.agmt.5 4 March 30, 2000 such right exists under the Lease or pursuant to agreement with Landlord). 4.2 Following Either of the Other Two Trigger Events. If the DDA terminates following either of the other two Trigger Events and the Sublease has been entered into naming CIM/Huntington, Inc. as the subtenant thereunder, then by giving written notice within ninety (90) days after the DDA termination, the Agency may elect to have the Developer cause CIM/Huntington, Inc. to execute an assignment agreement assigning all of CIM/Huntington, Inc.'s rights, title and interest under the Sublease to the Agency or to execute a Sublease subleasing all of CIM/Huntington, Inc.'s rights, title and interest under the Sublease (wherein CIM/Huntington, Inc. is named as the subtenant) and the Memorandum of Sublease naming the Agency as the subtenant thereunder. The Developer shall also cause CIM/Huntington, Inc. to cooperate with Agency in any sub -sublease of the Leased Premises, including, without limitation, joining in or signing any documents or agreements or taking such other actions as may be reasonably necessary. 5. Negative Covenants. Without limiting the obligations of the parties, at no time may either the Developer or the Agency do any of the following, and the Developer shall prohibit CIM/Huntington, Inc. from doing any of the following, without the prior written consent of the other party: 5.1 Perform any act or fail to perform any act which would constitute an Event of Default under the Lease or which would lead to an Event of Default under the Lease; 5.2 Terminate the Lease in whole or in part (except as provided in Section 2.4 above); 5.3 Modify or amend the Lease in whole or in part; or 5.4 Prejudice or adversely affect the rights of the Tenant under the Lease. 6. Rent as Acquisition Costs. The Agency Obligation is partly comprised of Acquisition Costs. For purposes of the DDA, the Acquisition Costs related to the Leased Premises shall be the sum of (i) $1,680,000 plus (ii) relocation costs and expenses approved by the Agency Executive Director or designee related to CIM/Huntington Inc.'s use of the Leased Premises under the Lease plus (iii) reimbursable costs, if any, as set forth in Section 201.2(a) of the DDA; provided, however, if the DDA is terminated prior to CIM/Huntington, Inc. paying at least $1,680,000 in total Rent (as defined in the Lease), then the difference between $1,680,000 and the actual total Rent paid and shall be credited as an off -set by the Agency against amounts owed to Developer by the Agency under the DDA, including, without limitation, the Agency Obligation. 7. Limitation on Project Costs. Except for items included in the express definition of Project Cost in Section 216(c) of the DDA, no payment of any monies by Developer or CIM/Huntington, Inc. under or pursuant to the Lease shall be included in the calculation of hb\cim\imp.agmt.5 March 30, 2000 Project Costs (as defined in the DDA) by virtue of this Agreement. By way of example, if the Commencement Date under the Lease has occurred and CIM/Huntington, Inc. has paid real property taxes for the Leased Premises pursuant to the Lease during the period of construction of the Improvements (as defined in the DDA), then the amount of such taxes may be included in Project Costs. Participation -Pa yment. There shall be no impact on the Participation Payment (as defined in the DDA) by virtue of this Agreement or any other provision of the DDA other than as expressly set forth herein. 9. Space Leases. The Agency and Developer acknowledge and agree that Section 316(h) of the DDA applies to leases for occupancy under the Lease or any Sublease naming CIM/Huntington, Inc as subtenant thereunder. 10. Offset Rights. Any monies which the Agency pays or fees or costs incurred by the Agency as a result of Developer's or CIM/Huntington, Inc.'s breach or default under this Agreement, may be off -set by the Agency against amounts owed to Developer by the Agency under the DDA, including, without limitation, the Agency Obligation. 11. Default Under Lease. Any act or omission of the Developer or CIM/Huntington, Inc. which becomes an Event of Default of Tenant under the Lease shall be an Event of Default of Developer under the DDA. 12. Liability of Developer and CIM/Huntington, Inc. Nothing in this Agreement shall relieve the Developer of any of Developer's liabilities and/or obligations under the DDA, this Agreement or the Lease which may have arisen or existed prior to any termination of the DDA by the Developer or any assignment or sub -sublease by CIM/Huntington, Inc. to the Agency. Further, nothing in this Agreement shall relieve CIM/Huntington, Inc. of any of CIM/Huntington, Inc.'s liabilities and/or obligations under the Lease or any Sublease which may have arisen or existed prior to any termination of the DDA by the Developer or any assignment or sub -sublease by CIM/Huntington, Inc. to the Agency. 13. Further Assurances. The parties agree to execute such other documents and to take such other action as may be reasonably necessary to further the purposes of this Agreement. 14. Reciprocal Good Faith Efforts Re: Assignment. At the request of either party, the other party shall cooperate with the other party and use good faith efforts to cause Landlord to allow the parties to enter into an assignment and assumption agreement in lieu of entering into a Sublease, which assignment and assumption agreement shall be consistent with the terms and conditions of this Agreement and the Sublease. hb\cim\imp.agmt.5 6 March 30, 2000 15. Limitation On Amendment. Except as expressly provided otherwise in this Agreement, the DDA remains in full force and effect, enforceable in accordance with its terms. Date: &r�l 1 % 000 ATTEST: r lo,(/4 Agency -Seereta y 61/oit 7 REVIEWED AND APPROVED AS TO FORM: Agency General Counsel APPROVED AS TO FORM: Kane, Ballmer & Berkman Date: hb\cim\imp.agmt.5 March 30, 2000 ("Agency") REDEVELOPMENT AGENCY OF THE CI Y OF HUNTI GTON BEACH Chairman pll o T "Developer" CIM GROUP, LLC By 7 15. Limitation On Amendment. Except as expressly provided otherwise in this Agreement, the DDA remains in full force and effect, enforceable in accordance with its terms. ("Agency") REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH Date: Chairman ATTEST: Agency Secretary REVIEWED AND APPROVED AS TO FORM: Agency General Counsel APPROVED AS TO FORM: Kane, Ballmer & Berkman � °. ram "Developer" CIM GROUP, LLC. ORCHARD CAPITAL CORPORATION, Manager Date: Richard S. Ressler President hb\cim\imp.agmt.4 7 March 29.2000 The undersigned agrees to perform all of its obligations set forth in this Agreement. CIM/Huntington, Inc. Date: ��'i' Secretary hb\cim\imp.agmt.5 March 30, 2000 Exhibit A Form of Sublease [to be provided] hb\cim\imp.agmt.5 March 30, 2000 Exhibit B Guaranty [to be provided] hb\cim\imp.agmt.5 March 30, 2000 SUBGROUND LEASE AND OPTION TO PURCHASE FEE by and between CIM/Huntington, Inc. and Redevelopment Agency of the City of Huntington Beach (collectively, "Sublandlord") and ("Subtenant") 300-003 Subground Lease CIM Huntington, Inc. V2 SU3GROUND LEASE AND OPTION TO PURCHASE FEE This SUBGROUND LEASE (the "Subground Lease") is dated as of , between CIM/Huntington, Inc., a California corporation, and Redevelopment Agency of the City of Huntington Beach (the "Agency") (collectively with their successors and assigns, "Sublandlord") and ("Subtenant"), who agree as follows: FUNDAMENTAL INFORMATION 1.1 Sublandlord: CIM/Huntington, Inc., a California corporation, and Redevelopment Agency of the City of Huntington Beach. 1.2 Subtenant. 1.3 Ground Lease. That certain Ground Lease and Option to Purchase Fee dated as of March 8, 2000 (the "Ground Lease") by and between Frank Cracchiolo, Trustee for the Revocable Trust dated June 12, 1979, and Salvator W. and Barbara F. Cracchiolo as "Landlord" and Sublandlord as "Tenant" by which the Premises have been ground leased to Sublandlord. 1.4 Commencement Date: The Commencement Date under the Ground Lease. 1.5 The Premises: The property subleased hereunder (the "Property") is that real property leased to Sublandlord pursuant to the Ground Lease and described in the Legal Description attached hereto as Exhibit "A" and incorporated herein by this reference, and any and all buildings, structures, or other improvements either now or hereafter located on the land. 1.6 Term: The Subground Lease term (the "Term") shall commence on the Commencement Date, and shall continue until the expiration or earlier termination of the Ground Lease (as the same shall be extended), unless the Sublease is terminated sooner pursuant to the provisions and conditions hereof. After the Commencement Date has been determined, Sublandlord and Subtenant shall execute, acknowledge and deliver an amendment of Memorandum of Sublease, Option to Purchase Fee and Agreement Containing Covenants Affecting Real Property setting forth, among other things, the Commencement Date and expiration date of the initial Term hereof. For purposes of this Subground Lease, the following definitions shall apply: (a) Each 12 month period, beginning on the first day of the month following the Commencement Date, shall be referred to as a "Lease Year." (b) The "Term" shall include the initial Term and any applicable Option (as defined in Section 5.3, below). 1.7 Sublandlord's address for notices: 6922 Hollywood Boulevard, Suite 900, Los Angeles, California 90028 and to City Hall, 2000 Main Street, Huntington Beach, CA 92648. A copy of all notices shall be sent to Fragner Law Corporation, 333 S. Grand Avenue, -1- 300-003 Subground Lease CIM Huntington, Inc V 2 Suite 3030, Los Angeles, CA 90071, Attention: Matthew C. Fragner, and to Kane Ballmer & Berkman, 515 S. Figueroa Street, Los Angeles, CA 90017, Attention: Murray Kane. 1.8 Subtenant's address for notices: 1.9 Subtenant's Basic Rent: Subtenant shall pay all amounts payable under the Ground Lease, excepting only payments required to be made as a result of the negligence or wrongful acts of Sublandlord (other than such negligence or wrongful acts of Subtenant), which amounts Sublandlord shall pay. 1.10 The Specified Use of the Property. For the Term of this Subground Lease, including any renewal period, the Property shall be used as part of a mixed -use development to be constructed on the Property (the "Improvements") and for any other lawful purpose. 1.11 Rights to Terminate Sublease. If the Disposition and Development Agreement dated as of June 17, 1999 between CIM Group, LLC and the Redevelopment Agency of the City of Huntington Beach (the "DDA") is cancelled or terminated and if the Tenant under the Ground Lease has the right to cancel the Ground Lease, then the following shall apply: (a) Agency may exercise the right described in Section 35.26. (b) If the Agency does not timely make such election described in Section 35.26, then Subtenant may elect to terminate the Ground Lease and this Subground Lease by giving written notice to Sublandlord and Landlord. 2. PURPOSE OF SUBGROUND LEASE Sublandlord has agreed to sublease the Property to Subtenant in accordance with this Subground Lease, and Subtenant will construct, manage and operate the Improvements for the uses permitted by this Subground Lease. 3. AGREEMENT TO SUBLEASE 3.1 Sublease of Property. Sublandlord hereby subleases the Property to Subtenant, and Subtenant hereby subleases the Property from Sublandlord, subject to the provisions and conditions herein set forth, for an amount of rental as described in Sections 6 and 7 hereof; together with all right, title and interest, if any, of Sublandlord, to the land lying in the streets and roads adjoining the Property, to the center line thereof, and in and to any and all easements and rights of way appurtenant to the Property, subject nevertheless to all public easements and rights of use of such streets, rights of way and easements; together with all awards, rents, issues and profits of whatsoever nature of or with respect to any of the Property and the Improvements, except as expressly reserved to Sublandlord. 3.2 Ownership of Improvements. The parties agree that during the Tenn of this Subground Lease, all Improvements located on the Property shall be owned in fee by Subtenant. 300-003 Subground Lease CIM Huntington, Inc. V.2 -2- 3.3 Grant of Easements. Within twenty (20) days after Subtenant's submission, at no cost to Sublandlord, Sublandlord agrees to execute, acknowledge and deliver and to require Landlord to execute, acknowledge and deliver grants of easements necessary for the development of the Project and Property, as well as subsequent development of the Property during the Term hereof, provided no such easement shall materially diminish the value of the Property. 3.4 Consent to Bond Financing. Upon Subtenant's request, with Subtenant responsible for all,costs, Sublandlord shall consent, approve and/or vote and to require Landlord to consent, approve and/or vote in favor of any Mello Roos or other bond financing transaction relating to the construction of improvements on or near the Property. 3.5 Authority and Negative Covenants. Any Subtenant which is one of the parties comprising Sublandlord shall have the authority to act on behalf of Sublandlord with respect to the Ground Lease, provided that without the consent of both parties comprising Sublandlord, Subtenant shall not: (a) Perform any act or fail to perform any act which would constitute an Event of Default under the Ground Lease or which would lead to an Event of Default under the Ground Lease; (b) Terminate the Ground Lease in whole or in part; (c) . Modify or amend the Ground Lease in whole or in part; or (d) Prejudice or adversely affect the right of the Tenant under the Ground Lease. 4. ACCEPTANCE OF PROPERTY 4.1 Disclaimer. Except as maybe expressly set forth in this Subground Lease, Sublandlord makes no representations, express or implied, with respect to the legality, fitness, or desirability of the Property for Subtenant's intended use or for any other uses. Subtenant shall conduct its own investigation to its satisfaction with respect to zoning, local codes and regulations, and other matters affecting Subtenant's ability to use and improve the Property for Subtenant's intended use. It shall be Subtenant's responsibility, at no cost to Sublandlord, to ensure that zoning of the Property, and all applicable City land use requirements are, as of the date of execution hereof, such as to permit development of the Property and construction of improvements thereon in accordance with the provisions of this Subground Lease and the use, operation and maintenance of such improvements as provided in this Subground Lease. 4.2 Hazardous Substances. Sublandlord has no knowledge of any other hazardous substance located on the Property, without any duty to investigate or inquire. 4.3 "AS -IS". Except as expressly provided in this Subground Lease, the Property shall be leased in an "as is" condition, with no warranty or liability, express or implied, on the part of Sublandlord as to the condition of any buildings on the Property, the soil (or water), its geology, the existence of known or unknown faults or any other conditions relating to the Property. It shall be the sole responsibility of Subtenant, at Subtenant's expense, to investigate 300-003 Subground Lease CIM Huntington, Inc. V.2 -3- and determine the condition of any building, soil (and water) relating to the Property and the suitability of the Property for the uses contemplated by this Subground Lease. If the condition of the Property, or any part thereof, is not in all respects entirely suitable for the use of the Property contemplated by this Subground Lease, then it is the sole responsibility and obligation of Subtenant to take such action as may be necessary to place the Property and the soil (and water) condition thereof in all respects in a condition that is suitable for such use (provided Subtenant shall not be responsible for any such actions if it terminates the Lease pursuant to Section 1.10). 5. TERM 5.1 Initial Term. The Term of this Subground Lease shall commence on the Commencement Date and shall continue until the expiration or earlier termination of the Ground Lease, unless the Subground Lease is terminated sooner pursuant to the provisions and conditions hereof. 5.2 Surrender. Subject to the damage and reconstruction provisions of Section 24, Subtenant shall upon the expiration or sooner termination of this Subground Lease surrender the Property to Sublandlord in good and clean condition, ordinary wear and tear excepted, including any buildings, structures, improvements or additions then located on the Property which are, during the Term of this Subground Lease, owned in fee by Subtenant. 5.3 Options to Renew the Ground Lease and the Subground Lease. (a) Subtenant may, at its option, cause Sublandlord to renew the Ground Lease and this Subground Lease for two (2) additional periods of twenty-five (25) Lease Years each and one additional period of twenty-four Lease Years (but not to exceed a total Term of ninety-nine (99) years), each such additional period being referred to as an "Option," subject to all the provisions of this Subground Lease, and on the same terms and conditions as for the initial Term, provided, however, that Subtenant shall have no such right to renew if Sublandlord does not have the right to renew the term under the Ground Lease. Subtenant's right to cause such renewal for the first additional Option and the subsequent Option is subject to the following conditions: (b) Subtenant shall give written notice to Sublandlord of its intent to cause such renewal for each Option at any time at least 210 days prior to the expiration of the initial Term or the first Option, as the case may be. (c) In lieu of executing a new sublease for any additional Option, each party shall, at the request of the other, endorse on the original Sublease or on a true copy of the original Sublease that party's signature or signatures, the date the renewal option was exercised, and the words "renewal option exercised." Alternatively, each party shall, at the request of the other, execute a memorandum, in recordable fonn, acknowledging the fact that the renewal option has been exercised and otherwise complying with the requirements of law for an effective memorandum or abstract of lease. 300-003 Subground Lease CIM Huntington, Inc. V.2 -4- 6. BASIC RENT As "Basic Rent," Subtenant shall pay all amounts payable by Tenant under the Ground Lease as and when it becomes due under the Ground Lease, provided that any amounts owing under the Ground Lease due to the negligence or wrongful acts of one or more of the entities comprising Tenant shall be paid by such entity or entities. 7. ADDITIONAL RENT In addition to any Basic Rent that is due pursuant to this Subground Lease, Subtenant shall pay to Sublandlord, as additional consideration for the sublease of the Property, any sums described in this Subground Lease as "Additional Rent." 8. RENT GENERALLY 8.1 Triple Net. All Basic Rent and Additional Rent (collectively, "Rent") shall be paid absolutely net to Sublandlord, so that this Subground Lease shall yield to Sublandlord the full amount of the Rent throughout the Term of this Subground Lease. This Subground Lease is and shall be a "Pure Net" or "Triple Net" lease, as such terms are commonly used in the real estate industry, it being intended that Subtenant shall pay all costs, expenses and charges arising out of the use, occupancy and operation of the Property. 8.2 Payment. All payments of Rent and of other sums to be paid by Subtenant to Sublandlord pursuant to this Subground Lease shall be paid in lawful money of the United States of America to Landlord with respect to Basic Rent, and for Additional Rent, at the Sublandlord's address set forth above, or at such other place within the United States or to such other person, firms or corporations as Landlord or Sublandlord from time to time may designate in writing. Except as otherwise expressly provided by the terms of this Subground Lease, Sublandlord and Subtenant agree that all sums payable hereunder to or on behalf of Sublandlord shall be paid without notice or demand. 8.3 Late Charge and Interest. Should Subtenant fail, for whatever reason, to make any rental payment required under the Ground Lease, Subtenant shall pay any late charge or interest payable by Sublandlord under the Ground Lease. 9. SUBTENANT WORK Subtenant shall be responsible for all improvement work on the Property in accordance with all applicable provisions of this Subground Lease. 10. USE Subtenant shall not use the Property for any use prohibited by the Ground Lease. 300-003 Subground Lease CIM Huntington, Inc. V.2 -5- 11. COMPLIANCE WITH LAW 11.1 No Violation. Subtenant shall not use the Property or permit anything to be done in or about the Property which will in any way conflict with any applicable law, statute, ordinance, or governmental rule, regulation or requirement now in force or which may hereafter be enacted or promulgated. Subtenant shall, at its sole cost and expense, promptly comply with all applicable laws, statutes, ordinances, and governmental rules, regulations or requirements now in force or which may hereafter be enacted or promulgated, and any applicable requirements of any board of fire insurance underwriters or other similar bodies now or hereafter constituted, relating to the condition, use, or occupancy of the Property. 11.2 Judgment Conclusive. The judgment of any court of competent jurisdiction after all applicable appeals have been exhausted or appeal periods have expired or the admission of Subtenant in any action against Subtenant, whether Sublandlord be a party thereof or not, that Subtenant has violated any law, statute, ordinance, or governmental rule, regulation, or requirement, shall be conclusive of that fact as between Sublandlord and Subtenant. 12. ALTERATIONS AND ADDITIONS 12.1 No Prior Consent Re uq ired. Subtenant may make any alterations, additions, or improvements to or on the Property or any building or structure thereon or any part thereof without the prior written consent of Sublandlord. 12.2 Subtenant's Cost. All alterations, additions, or improvements by Subtenant shall be made without cost or expense to Sublandlord, by responsible and licensed contractors. All improvements and equipment shall be designed, built, and installed in accordance with all applicable building codes and regulations, and Subtenant shall obtain all necessary building permits. 12.3 Prior Notice. Subtenant shall give written notice to Sublandlord at least ten (10) days prior to commencement of any work, to enable Sublandlord to post notices of non - responsibility. 12.4 Insurance. For all alterations costing in excess of $100,000, Subtenant shall obtain and keep in effect "Builder's All Risk Insurance" during the period of construction and installation of any improvements being made by Subtenant, including completed operations coverage, with coverage in the amount of at least $2,000,000, increased or decreased every five (5) years by the percentage increase or decrease in the Index (as defined in the Ground Lease) from the Commencement Date of this Subground Lease to the anniversary thereof most recently preceding the start of such construction (rounded to a reasonable amount), naming Sublandlord and Landlord as additional insureds. Subtenant shall deliver to Sublandlord a Certificate of Insurance evidencing such insurance coverage prior to commencement of the alterations. 12.5 Property Free of Liens. Subtenant shall keep the Property free and clear of any and all liens and encumbrances which may arise at any time in connection with any improvement work by Subtenant or its agents and contractors. Any mechanic's liens that have been recorded or stop notices that have been delivered shall be paid, settled or otherwise extinguished, discharged, released, waived or bonded around within twenty (20) days after notice 300-003 Subground Lease CIM Huntington, Inc. V.2 -6- thereof to Subtenant. In addition, Subtenant shall indemnify, defend, and hold Sublandlord harmless from and against any and all costs, expenses, claims, demands, damages, actions, causes of action, or liabilities of any kind which may arise at any time in connection with any improvement work by Subtenant or its agents and contractors, including without limitation the design and installation of equipment and the renovation of the Property, except to the extent such costs, expenses, claims, demands, damages, actions, causes of action, or liabilities relate to the design of offsite improvements provided by Sublandlord (other than Subtenant if Subtenant is one of the entities comprising Sublandlord) or the negligence or willful misconduct of Sublandlord, its agents, representatives, employees or contractors (other than Subtenant if Subtenant is one of the entities comprising Sublandlord). 13. REPAIRS 13.1 Subtenant's Obligations. At all times during the Term, Subtenant shall, at Subtenant's sole cost and expense, maintain and repair the Property as required under the Ground Lease. 13.2 Sublandlord's Obligations. Sublandlord shall not under any circumstances be obligated to undertake any maintenance, repair, or replacement of any portions of the Property. Subtenant understands that Sublandlord is not obligated to maintain the structural portions of any building or structure, including the roof, exterior walls, and foundations of said building or structure; Sublandlord shall not be liable for any failure to make any such repairs or to perform any maintenance, whether by reason of any injury to or interference with Subtenant's business or otherwise. Subtenant waives any obligations which Sublandlord may have with respect to the tenantability of the Property and the right to make repairs at Sublandlord's expense under any law, statute, or ordinance now or hereafter in effect, including without limitation the provisions of California Civil Code sections 1941 and 1942. 14. TAXES 14.1 Payment Prior to Delinquency. Subtenant shall promptly pay prior to delinquency, all real estate and real property taxes, or possessory interest tax, assessed against the Property, including such added assessment or omitted assessment which may be levied against the Property from time to time by the applicable governmental taxing authority for periods commencing upon the Commencement Date, and any increase in the assessment from time to time based on improvements to the Property. In addition, Subtenant shall, during the Term of this Subground Lease, pay any levy for the installation, maintenance or operations of local improvements affecting the Property as may be assessed by any governmental boards or bureaus having jurisdiction thereof. Notwithstanding the foregoing, any assessment or impositions for capital or public improvements which may be payable by law at the option of the taxpayer in installments may be so paid by Subtenant in installments, together with any required interest. Upon written request of Sublandlord, Subtenant shall furnish in writing to Sublandlord evidence of payment of all taxes and assessments required to be paid by Subtenant during the Term hereof. If Sublandlord does not receive reasonable evidence of payment within 15 days after written request (which request may not be given until after the due date of such payment), Sublandlord may, at its option, pay the tax for Subtenant. In such case, Subtenant shall reimburse Sublandlord immediately upon demand, plus interest at the rate of ten percent (10%) 300-003 Subground Lease CIM Huntington, Inc. V.2 -7- per annum, as Additional Rent. If Subtenant shall be obligated to pay any taxes, assessments, and charges hereunder during a partial year, the amount of any such taxes, assessments, and charges shall be prorated according to the length of time Subtenant's obligation shall be in effect during the relevant tax period. 14.2 Tax Protest. Subtenant shall have the right, by appropriate proceedings, to protest or contest in good faith any assessment or re -assessment of taxes, any special assessment, or the validity of any taxes or of any change in assessment or tax rate; provided, however, prior to any such challenge Subtenant must either (I) pay the taxes alleged to be due in their entirety and seek a refund from the appropriate authority, or (ii) post a bond in an amount sufficient to insure full payment of the taxes. In any event, upon a final determination with respect to such contest or protest, Subtenant shall promptly pay all sums found to be due with respect thereto. In any such protest or contest, Subtenant may act in its own name; and at the request of Subtenant, Sublandlord shall cooperate with Subtenant in any way Subtenant may reasonably require in connection with such contest or protest, including signing such documents as Subtenant shall reasonably request, provided that such contest or protest shall be at Subtenant's sole expense, and in the event any penalties, interest, or late charges become payable with respect to the taxes as a result of such contest or protest, Subtenant shall pay the same. In the event Subtenant obtains a refund as the result of Subtenant's protest or contest and subject to the Subtenant's obligation to pay Sublandlord's costs (if any) associated therewith, Subtenant shall be entitled to such refund to the extent it relates to the Property during the Term of this Subground Lease. 14.3 Personal Property Taxes. Subtenant shall pay any and all personal property taxes assessed against equipment, trade fixtures, inventory, or other personal property located in, on, or about the Property. Subtenant shall indemnify, defend, and hold Sublandlord and the Property harmless from and against any such personal property taxes. 14.4 Other Taxes. If at any time during the Lease Term under the laws of the United States, or any state, county, or city, or any political subdivision thereof in which the building is situated, a tax or excise on rent or any other tax or other charge however described is levied or assessed by any such political body against Sublandlord on account of ownership of the Property or rentals payable to Sublandlord hereunder, such tax or excise shall be considered "taxes" for the purposes of this Section 14 and shall be paid by Subtenant in the manner provided above, excluding, however, from such tax or excise to be paid by Subtenant any amount assessed against Sublandlord as state or federal income tax, gift tax or inheritance tax. 15. ASSIGNMENT AND SUBLETTING 15.1 Sublandlord Consent Required. Except for Transfers permitted under or meeting the requirements of Section _ of the Memorandum of Sublease, Option to Purchase Fee and Agreement Containing Covenants Affecting Real Property described in Section 30 below, Subtenant shall not, under any circumstances, without the express prior written approval of Sublandlord, Transfer the Property or any portion thereof, or attempt to Transfer all or any portion of its interest in this Subground Lease. A consent by Sublandlord to one Transfer shall not be deemed to be a consent to any subsequent Transfer. Any attempted Transfer of the Property, this Subground Lease, or any portion or interest therein which is not authorized by this Subground Lease or expressly approved in writing by Sublandlord shall be void and of no force or effect and, at the option of Sublandlord, shall constitute a breach of this Subground Lease. 300-003 Subground Lease CIM Huntington, Inc. V.2 -8- 15.2 Involuntary Assignments. Neither this Subground Lease nor any interest therein shall be assignable by operation of law (including, without limitation, the transfer of this Subground Lease by testacy or intestacy). Any involuntary assignment shall constitute a breach of this Subground Lease by Subtenant. The following is a non-exclusive list of acts which shall be considered an involuntary assignment: (a) If Subtenant is or becomes bankrupt or insolvent or if any involuntary proceeding is brought against Subtenant (unless, in the case of a petition filed against Subtenant, the same is dismissed within ninety (90) days), or Subtenant makes an assignment for the benefit of creditors, or institutes a proceeding under or otherwise seeks the protection of Federal or State bankruptcy or insolvency laws, including but not limited to the filing of a petition for voluntary bankruptcy or instituting a proceeding for reorganization or arrangement; (b) If a writ of attachment or execution is levied on this Subground Lease, where such writ is not discharged within ninety (90) days; or (c) If, in any proceeding or action in which Subtenant is a party, a receiver is appointed with authority to take possession of the Property, where possession is not restored to Subtenant within ninety (90) days. 15.3 Definitions. As used herein, the term "Transfer" shall have the meaning set forth in the Memorandum of Sublease, Option to Purchase Fee and Agreement Containing Covenants Affecting Real Property. 15.4 Agreement to Provide Nondisturbance Agreements. On written request, Sublandlord will promptly execute, acknowledge and deliver any commercially reasonable form proposed by Subtenant providing that in the event of a termination of this Subground Lease, Sublandlord will recognize the subsublease of any subsubtenant leasing space in any improvements on the Property (each a "Space Subtenant") as a direct lease between Sublandlord and such Space Subtenant, provided that any such subsublease shall not extend beyond the scheduled term of this Subground Lease and provided the applicable Space Subtenant agrees that Sublandlord will not credit the Space Subtenant with rent paid more than one month in advance. 15.5 See Section 35.26 for a special right to cause an assignment of Subtenant's interest. 16. HOLD HARMLESS 16.1 Subtenant's Indemnification. Subtenant shall indemnify, defend, and hold Sublandlord, the City of Huntington Beach (the "City") and the Agency's and City's respective directors, officials, officers, employees, agents, contractors and consultants (collectively, the "City/Agency Parties") harmless from and against any and all costs, claims, demands, actions, causes of action, liability, loss, or damage, including attorneys' fees and costs (collectively referred to as "Claims" and Claims that are made by third parties, collectively referred to as "Third Party Claims") whether for injury to or death of persons or damage to real or personal property or otherwise, arising out of or in connection with Subtenant's use or occupancy of the Property, any activity, work, or other thing done, permitted, or suffered by Subtenant in or about the Property, or arising from the Ground Lease or any reason or cause whatsoever in connection with the use or occupancy of the Property by any party during the Term of this Subground Lease. 300-003 Subground Lease CIM Huntington, Inc. V.2 -9- The provisions of the preceding sentence shall not apply with respect to any active negligence or intentional acts of Sublandlord, or its agents, servants, contractors and employees (collectively "Sublandlord Parties") occurring after the date of this Subground Lease, provided the foregoing shall not limit Subtenant's indemnity obligations by reason of Subtenant's negligence or intentional acts. Subtenant shall further indemnify, defend, and hold Sublandlord and the City/Agency Parties harmless from and against any and all Third Party Claims arising from any breach or default in the performance of any obligation on Subtenant's part to be performed under the terms of this Subground Lease or arising from any wrongful act or negligence of Subtenant or any officer, agent, employee, guest, or invitee of Subtenant. Subtenant, as a material part of the consideration to Sublandlord, hereby assumes all risk of damage to property or injury to persons in, upon, or about the Property occurring during the term of this Subground Lease from any cause other than the active negligence or intentional acts of Sublandlord Parties other than Subtenant occurring after the date of this Subground Lease, and Subtenant hereby waives all claims in respect thereof against Sublandlord. Subtenant's obligation to indemnify under this paragraph shall include attorneys' fees, investigation costs, and other reasonable costs, expenses, and liabilities incurred by Sublandlord. If the ability of Subtenant to use the Property is interrupted for any reason, Sublandlord shall not be liable to Subtenant for any loss or damages occasioned by such loss of use unless caused by the active negligence or intentional acts of Sublandlord Parties other than Subtenant. 16.2 No Liability. Sublandlord or its agents shall not be liable for loss or damage to any property by theft or otherwise, nor for any injury to or damage to persons or property resulting from fire, explosion, falling plaster, steam, gas, electricity, water, or rain which may leak from any part of the Property or from the pipes, appliances, or plumbing works therein or from the roof, street, or subsurface or from any other place resulting from dampness or any other cause whatsoever, unless caused by or due to the negligent or intentional acts or omissions of Sublandlord Parties. Subtenant shall give prompt notice to Sublandlord in case of fire or accidents in the Property or of defects therein or in the fixtures or equipment. 17. OWNERSHIP OF PROPERTY DURING TERM AND UPON EXPIRATION OR TERMINATION OF LEASE 17.1 Improvements During Term. During the Term of this Subground Lease, all buildings, structures, fixtures, additions and improvements located on the Property shall be owned in fee by Subtenant, and Sublandlord hereby quitclaims its right, title and interest in and to such items to Subtenant. 17.2 Improvements After Term. Upon the expiration or termination of this Subground Lease, all buildings, structures, fixtures, additions, equipment, improvements, any subsubtenant security deposits then held by Subtenant (upon delivery of which, Sublandlord shall assume all obligations to subsubtenants with respect thereto), and any other real property whatsoever located on the Property shall become part of the realty, become the property of Sublandlord, and shall be surrendered with the Property. 17.3 Personal Property. Upon termination of this Subground Lease, whether by expiration of the Term or otherwise, the Improvements on the Property, and all personal property not removed by Subtenant, shall, without compensation to Subtenant, then automatically and without any act of Subtenant or any third party become Sublandlord's property, free and clear of 300-003 Subground Lease CIM Huntington, Inc. V.2 -10- all liens, encumbrances or claims to or against them by Subtenant or any third person, firm or entity, except if Subtenant acquires the Property pursuant to the terms of this Subground Lease or otherwise. Subtenant agrees to execute, acknowledge and deliver to Sublandlord at Sublandlord's cost any instrument reasonably requested by Sublandlord to perfect Sublandlord's right, title and interest in and to the Improvements or the Property. IS. LIENS Except for Leasehold Mortgages, Subtenant shall not create or permit any lien or encumbrance, including but not limited to a mechanics' lien, to be attached to or affect the Property by reason of any act or omission of Subtenant. Subtenant shall indemnify and hold harmless Sublandlord and the Property against any such lien, encumbrance, or claim of lien or encumbrance, and against any costs in connection therewith, including attorneys' fees. In the event any such lien or encumbrance is attached to, or any claim of lien or encumbrance is made against, the Property by reason of any act or omission of Subtenant, Subtenant shall, within twenty (20) days after notice thereof to Subtenant, cause the lien to be released or post with Sublandlord a cash bond in an amount reasonably satisfactory to Sublandlord, including costs and interest; provided, however, that if Subtenant fails to do so, then Sublandlord may, in its sole discretion, either (i) pay and discharge the lien or encumbrance, whereupon Subtenant shall immediately reimburse Sublandlord, as Additional Rent, for all costs and expenses which Sublandlord may incur in discharging such lien, encumbrance, or claim of lien or encumbrance, plus reasonable attorneys' fees, payable to Sublandlord upon demand, or (ii) Sublandlord may exercise such other remedies as may be available to it by reason of Subtenant's failure to comply with its obligations under this Subground Lease. 19. SUBROGATION Neither Sublandlord nor Subtenant shall be liable to the other or to any insurance company (by way of subrogation or otherwise) insuring the other party for any loss or damage to any building, structure, or other tangible property, or any resulting loss of income, or losses under worker's compensation laws and benefits (even though such loss or damage might have been occasioned by the negligence of such party, its agents, or employees), to the extent any such loss or damage is covered by insurance benefiting the party suffering the loss or damage. Sublandlord and Subtenant hereby mutually release each other from liability and waive all right to recover against each other or against officers, employees, agents or representatives of each other for any loss or damage to any person or property caused by or resulting from risks to the extent insured against under any insurance policies carried by the parties; provided, however, this paragraph shall be inapplicable if it would have the effect, but only to the extent that if would have the effect, of invalidating any insurance coverage of Sublandlord or Subtenant. The parties shall, to the extent available, cause each insurance policy obtained here under to provide a waiver of subrogation. 20. SUBTENANT'S INSURANCE 20.1 Insurance Required by Subtenant. Subtenant shall procure and maintain in force at all times during the Term of this Subground Lease at its cost a policy or policies of insurance in the amount and of the type and by insurance companies required under the Ground 300-003 Subground Lease CIM Huntington, Inc. V.2 -11- Lease. Landlord and Sublandlord shall be named as an additional insured on the insurance, and the proceeds of any such policy or policies of insurance shall be held and utilized in accordance with the provisions of Section 24 of the Ground Lease. 20.2 Policy Requirements. As applicable, the insurance required pursuant to this Subground Lease shall: (1) name Landlord and Sublandlord as additional insureds as their interests may appear; (2) provide that the coverage thereof is primary and non-contributory coverage with respect to all additional insureds; (3) contain a Standard Cross Liability endorsement providing that the insurance applies separately to each insured against whom a claim is filed, and that the policy covers claims or suits by one insured against the other; and (4) provide that the interests and protections of the additional insureds shall not be affected by any misrepresentation, act or omission of a named insured or any breach by a named insured of any provision in the policy which would otherwise result in forfeiture or reduction of coverage. 20.3 Certificates of Insurance. Subtenant shall deliver to Sublandlord prior to entry on the Property by Subtenant certificates of insurance evidencing the existence and amount of such insurance, and showing Landlord and Sublandlord (and the other parties designated in Paragraph 20.2 above) as an additional insured on all policies; provided that in the event Subtenant fails to procure and maintain such insurance, Sublandlord may (but shall not be required to) procure same at Subtenant's expense. No policy shall be cancelable or subject to reduction of coverage or other modification except after thirty (30) days prior written notice to Sublandlord by the insurer (or such shorter period of time for such notice as may be the commercial custom and practice in such policies). Subtenant shall prior to the expiration of such policies, furnish Sublandlord with renewals or binders, or (after 10 business days' written notice and failure of Subtenant to cure) Sublandlord may order such insurance and charge the cost to Subtenant, which amount shall be payable by Subtenant upon demand. All such policies shall be written as primary policies, not contributing with and not in excess of coverage which Sublandlord may carry, and all policies shall include Subtenant's employees as additional insureds. Subtenant shall have the right to provide such insurance coverage pursuant to blanket policies obtained by Subtenant provided that such blanket policies expressly afford coverage to the Property and to Subtenant and Sublandlord as required by this Subground Lease. Subtenant shall, upon request from Sublandlord, immediately deliver to Sublandlord copies of all insurance policies (including the declarations pages) in effect with respect to Subtenant's business and the Property. 21. UTILITIES Subtenant shall make all arrangements for and pay for all services and utilities to the Property; Sublandlord shall not be responsible or liable to Subtenant for interruption or stoppages of utilities or other services to the Property unless caused by the active negligence or willful misconduct of Sublandlord, its agents or contractors on or around the Property. 22. HOLDING OVER In the event Subtenant fails to vacate the Property and fulfill all of its obligations hereunder at the end of the Term, Subtenant shall pay holdover Basic Rent payable under the Ground Lease, as well as the full amount of all other Rent. Subtenant shall further be liable for 300-003 Subground Lease CIM Huntington, Inc. V.2 -12- all direct, proximate and nonconsequential damages incurred by Sublandlord by reason of the inability to deliver possession of the Property or any portion thereof to any other person. 23. ENTRY BY SUBLANDLORD Sublandlord reserves and shall at any and all times have the right, but not the obligation, to enter the Property (excluding subsubtenant spaces), for the following purposes: (a) to inspect the Property, provided such inspections shall take place during normal business hours and upon not less than 5 calendar days' written notice, (b) to show said Property to prospective purchasers and subsubtenants, provided such showings shall occur only during the last six months of the Term hereof; and (c) to post notices of non -responsibility. Sublandlord shall take all reasonable steps to ensure that the business of Subtenant and its subsubtenants shall not be interfered with. Subtenant hereby waives any claim for damages for any injury or inconvenience to or interference with Subtenant's business, any loss of occupancy or quiet enjoyment of the Property, and any other loss which may occur. Any entry to the Property obtained by Sublandlord by any means for the purposes specified above shall not under any circumstances be construed or deemed to be forcible or unlawful entry into, or a detainer of, the Property or an eviction of Subtenant from the Property or any portion thereof. 24. DAMAGE, RECONSTRUCTION 24.1 Covered by Insurance. In the event the Property is damaged by fire or other perils covered by extended coverage insurance, Subtenant shall have the right to use all available insurance proceeds to repair or rebuild the Improvements. If the estimated cost of repairs (including lost rent) is not in excess of available insurance proceeds (including rent loss insurance proceeds), then Subtenant shall forthwith repair the same (using the insurance proceeds to pay the cost of such repair) and this Subground Lease shall remain in full force and effect. 24.2 Uncovered by Insurance. (a) In the event the Property is damaged as a result of any cause other than the perils covered by fire and extended coverage insurance, or the estimated cost of repairs (including lost rent) is in excess of available insurance proceeds (including rent loss insurance proceeds), then Subtenant shall notify Sublandlord in writing of the amount by which the estimated cost of repairs exceeds such proceeds (the "Shortfall"), and Subtenant shall have the right, within eighty-five (85) days after receipt of such notice, to elect to provide the Shortfall and proceed with such repairs (using the insurance proceeds and such other funds as Subtenant may provide to pay the Shortfall), in which case this Subground Lease shall continue in full force and effect. (b) If Subtenant fails to notify Sublandlord within such eighty-five (85) day period that it will provide the Shortfall and conduct the repairs, then Sublandlord shall have the option, within thirty days from the end of the eighty-five day period described in clause (a), either to (A) provide the Shortfall at Sublandlord's sole expense and direct Subtenant to repair or restore such damage (using the insurance proceeds and such additional funds as Sublandlord may provide to pay the Shortfall), with this Subground Lease continuing in full force and effect, or (B) give notice to Subtenant terminating this Subground Lease as of the date specified in such 300-003 Subground Lease CIM Huntington, Inc. V.2 -13- notice, which date shall be no less than thirty (30) and no more than sixty (60) days after the giving of such notice of termination. In the event of giving such notice of termination, this Subground Lease shall expire and all interest of Subtenant in the Property shall terminate on the date so specified in such notice. 24.3 �ecial Circumstances. Notwithstanding anything to the contrary contained in this Section, Subtenant shall have no obligation whatsoever to repair, reconstruct, or restore the Property, and Sublandlord shall have no right to instruct Subtenant to do so, in either of the following circumstances: (a) the damage occurs during the last three (3) years of the Term of this Subground Lease, or (b) the damage cannot reasonably be expected to be repaired within a period of physical repair of not more than 9 months. In that event, Subtenant may at its option terminate this Subground Lease upon (30) days written notice to Sublandlord that Subtenant elects not to repair, reconstruct, or restore the Property. 24.4 Waiver. Subtenant shall not be entitled to any compensation or damages from Sublandlord for loss of the use of the whole or any part of the Property, Subtenant's personal property, or any inconvenience or annoyance occasioned by such damage, repair, reconstruction, or restoration. Subtenant waives the provisions of California Civil Code sections 1932(2) and 1933(4) with respect to any destruction of the Property. 24.5 Excess Insurance Proceeds. If completion of required repair, reconstruction or restoration of the Property does not utilize all insurance proceeds, then Subtenant may retain such unused proceeds. If, for any reason, Subtenant does not repair, reconstruct or restore the Property, the insurance proceeds for the Improvements (but not personal property or rent loss) shall belong to Sublandlord as its property. 24.6 No Abatement of Rent. No deprivation, impairment, or limitation of use resulting from any event, repair, reconstruction or restoration contemplated by this section shall entitle Subtenant to any offset, abatement, or reduction in rent, nor to any termination or extension of the Term, except as expressly provided in this Subground Lease, and except to the extent caused by the active negligence or willful misconduct of Sublandlord Parties other than Subtenant. 25. DEFAULT 25.1 Event of Default. Upon expiration of the cure periods (without cure) set forth below, the occurrence of any one or more of the following events shall constitute an Event of Default by Subtenant: (a) The failure by Subtenant to pay Rent or observe or perform any other covenants, conditions, or provisions of this Subground Lease, to be observed or performed by Subtenant: or (b) The making by Subtenant of any general assignment for the benefit of creditors; or the filing by or against Subtenant of a petition to have Subtenant adjudged a bankrupt, or a petition or reorganization or arrangement under any law relating to bankruptcy (unless, in the case of a petition filed against Subtenant, the same is dismissed within ninety (90) days); or the appointment of a trustee or a receiver to take possession of substantially all of Subtenant's assets located at the Property or of Subtenant's interest in this Subground Lease, 300-003 Subground Lease CIM Huntington, Inc. V.2 -14- where possession is not restored to Subtenant within ninety (90) days; or the attachment, execution, or other judicial seizure of substantially all of Subtenant's assets located at the Property or of Subtenant's interest in this Subground Lease, where such seizure is not discharged within ninety (90) days. 25.2 Cure Obligations. Subject to Force Majeure delay, failure or delay by Subtenant to perform any term or provision of this Subground Lease constitutes a default under this Subground Lease. Subtenant must immediately commence to cure, correct or remedy such failure or delay and shall complete such cure, correction or remedy with reasonable diligence, and during any period of curing shall not be in default, so long as it endeavors to complete such cure, correction or remedy with reasonable diligence, and provided such cure, correction or remedy is completed within the applicable time period set forth herein after receipt of written notice (or such additional time as may be reasonably necessary to correct the default). 25.3 Written Notice. Sublandlord shall give written notice of default to Subtenant, specifying the default complained of by Sublandlord. Failure or delay in giving such notice shall not constitute a waiver of any default. Except as otherwise expressly provided in this Subground Lease, any failures or delays by either party in asserting any of its rights and remedies as to any default shall not operate as a waiver of any default or of any such rights or remedies. Delays by either party in asserting any of its rights and remedies shall not deprive either party of its right to institute and maintain any actions or proceedings which it may deem necessary to protect, assert or enforce any such rights or remedies. 25.4 Monetary Default Cure Period. If a monetary event of default occurs, prior to exercising any remedies hereunder, Sublandlord shall give Subtenant written notice of such default. Subtenant shall have a period of thirty (30) calendar days after such notice is received or deemed received within which to cure the default prior to exercise of remedies by Sublandlord. Any extension of a cure period by Landlord shall likewise extend the cure period hereunder. 25.5 NonMonetM Default Cure Period. If a non -monetary event of default occurs, prior to exercising any remedies hereunder, Sublandlord shall give Subtenant notice of such default. If the default is reasonably capable of being cured within thirty (30) calendar days after such notice is received or deemed received, Subtenant shall have such period to effect a cure prior to exercise of remedies by Sublandlord. If the default is such that it is not reasonably capable of being cured within thirty (30) days, and Subtenant (i) initiates corrective action within said period, and (ii) diligently, continually, and in good faith works to effect a cure as soon as possible, then Subtenant shall have such additional time as is reasonably necessary to cure the default prior to exercise of any remedies by Sublandlord. Any extension of a cure period by Landlord shall likewise extend the cure period hereunder. 25.6 Receipt of Notice. Any notice of default that is personally delivered (including by means of professional messenger service, courier service such as United Parcel Service or Federal Express, or by U.S. Postal Service), shall be deemed received on the documented date of receipt by Subtenant; and any notice of default that is sent by registered or certified mail, postage prepaid, return receipt required shall be deemed received on the date of receipt thereof. No notice of default may be given by facsimile. 300-003 Subground Lease CIM Huntington, Inc. V.2 -15- 25.7 Remedies. In the event of any default or breach by Subtenant and the expiration of any applicable cure period, Sublandlord may at any time thereafter, in its sole discretion, without limiting Sublandlord in the exercise of a right or remedy which Sublandlord may have by reason of such default or breach: (a) Terminate Subtenant's right to possession of the Property by any lawful means, in which case this Subground Lease shall terminate and Subtenant immediately shall surrender possession of the Property to Sublandlord. In such event Sublandlord shall be entitled to recover from Subtenant all damages incurred by Sublandlord by reason of Subtenant's default including, but not limited to, the cost of recovering possession of the Property; the worth at the time of the award of each obligation of Subtenant which has accrued prior to the date of such termination, but which has not been satisfied; the worth at the time of the award of the amount by which the unpaid rent which would have been earned after the termination until the time of the award exceeds the amount of such rental loss that Subtenant proves could reasonably have been avoided; expenses of placing the Property in good order, condition and repair; expenses of reletting, including necessary renovation and alteration of the Property; reasonable attorneys' fees; the worth at the time of award as determined by the court having jurisdiction thereof of the amount by which the unpaid Basic Rent, Additional Rent and other amounts required to be paid by Subtenant pursuant to this Subground Lease for the balance of the term after the time of such award exceeds the amount of such loss for the same period that Subtenant proves reasonably could be avoided; and all other incidental and consequential damages. Unpaid installments of rent or other sums shall bear interest from the date due at the rate of 10% per annum; (b) Maintain Subtenant's right to possession, in which case this Subground Lease shall continue in full force and effect whether or not Subtenant shall have abandoned the Property. In such event Sublandlord shall be entitled to enforce all of Sublandlord's rights and remedies under this Subground Lease, including the right to recover the rent and any other charges as may become due hereunder; (c) Seek specific performance by Subtenant, in the case of breach by Subtenant of one or more of its covenants herein; (d) Exercise the remedy described in California Civil Code section 1951.4 (lessor may continue lease in effect after lessee's breach and abandonment and recover rent as it becomes due, if lessee has the right to sublet or assign, subject only to reasonable limitations); and/or (e) Pursue and every any other remedy or right now or hereafter available to Sublandlord under the laws or judicial decisions of the State of California. 25.8 Notice to Leasehold Mortgagee. Whenever Sublandlord shall deliver any notice or demand to Subtenant with respect to any breach or default by the Subtenant, Sublandlord shall at the same time deliver to the Trust and to each Leasehold Mortgagee of record (as defined in Section 31.2) a copy of such notice or demand, which shall describe the default(s) with reasonable detail. 300-003 Subground Lease CIM Huntington, Inc. v.a -16- 26. INTENTIONALLY DELETED. 27. ESTOPPEL OFFSET STATEMENT 27.1 Subtenant Estoppel. Subtenant shall, at any time and from time to time upon not less than twenty (20) days' prior written notice from Sublandlord, execute, acknowledge, and deliver to Sublandlord a statement in writing certifying that this Subground Lease is unmodified and in full force and effect (or, if modified, is in full force and effect, and stating the modifications) and acknowledging that there are not, to Subtenant's knowledge, any uncured defaults on the part of Sublandlord hereunder (or specifying such defaults if any are claimed), acknowledging that the recipient will rely on the certificate and such other matters as may be reasonable and customary or as needed to clarify any provision of this Subground Lease. Subtenant's failure to deliver such statement to Sublandlord within twenty (20) days after receipt of Sublandlord's notice shall be conclusively deemed to be Subtenant's acknowledgment that this Subground Lease is unmodified except as reflected in recorded instruments and that, to Subtenant's knowledge, there are no uncured defaults on the part of Sublandlord hereunder. 27.2 Sublandlord Estoppel. Sublandlord shall, at any time and from time to time upon not less than twenty (20) days' prior written notice from Subtenant, execute, acknowledge, and deliver to Subtenant a statement in writing certifying that this Subground Lease is unmodified and in full force and effect (or, if modified, is in full force and effect, and stating the modifications) and acknowledging that there are not, to Sublandlord's knowledge, any uncured defaults on the part of Subtenant hereunder (or specifying such defaults if any are claimed), the last date Sublandlord received rent under this Subground Lease, the date such rent was due and the amount thereof, acknowledging that, the recipient will rely on the certificate, and such other matters as may be reasonable and customary or as needed to clarify any provision of this Subground Lease. Sublandlord's failure to deliver such statement to Subtenant within twenty (20) days after receipt of Subtenant's notice shall be conclusively deemed to be Sublandlord's acknowledgment that this Subground Lease is unmodified except as reflected in recorded instruments and that, to Sublandlord's knowledge, there are no uncured defaults on the part of Subtenant hereunder. 28. HAZARDOUS MATERIALS 28.1 Prohibitions. Except to the extent it is normal and customary to do so during the construction or operation of commercial property, Subtenant shall not: (i) Make, or permit to be made, any use of the Property, or any portion thereof, which emits, or permits the emission of dust, sweepings, dirt, cinders, fumes, or odors into the atmosphere, the ground, or any body of water, whether natural or artificial, in violation of applicable law; or (ii) Discharge, leak, or emit, or permit to be discharged, leaked, or emitted, any liquid, solid, or gaseous matter, or any combination thereof, into the atmosphere, the ground, or any body of water, in violation of applicable law. 300-003 Subground Lease CIM Huntington, Inc. V.2 -17- 28.2 Storage. Subtenant shall not use, store or dispose of on the Property any solid, liquid, or gaseous matter, or any combination thereof, which is, or may become, hazardous, toxic, or radioactive including, but not limited to, those materials listed in Sections 66680 through 66685 of Title 22 of the California Administrative Code, Division 4, Chapter 30 (as may be amended from time to time), in violation of applicable law (all of the foregoing collectively referred to herein as "Hazardous Materials"). 28.3 Waste; Refuse. Subtenant shall not keep any trash, garbage, waste, or other refuse on the Property except in sanitary containers and shall regularly and frequently remove the same from the Property. Subtenant shall keep all incinerators, containers, and other equipment used for the storage or disposal of such matter in a clean and sanitary condition. Subtenant shall surrender the Property at the expiration or termination of this Subground Lease free of any Hazardous Materials or contamination caused by Subtenant's activities, and free and clear of all judgements, liens, or encumbrances and shall, at its own cost and expense, repair all damage and clean up or perform any remedial action necessary relating to any Hazardous Materials or contamination caused by Subtenant's activities. Subtenant shall, at its sole cost and expense, remediate in accordance with law or remove any alterations or improvements that may be contaminated or may contain Hazardous Materials caused by Subtenant's activities. 28.4 Indemnity. Subtenant shall indemnify, defend, and hold Sublandlord and the City/Agency Parties harmless from and against (i) any and all claims, demands, judgments, damages, actions, causes of action, injuries, administrative orders, consent agreements and orders, liabilities, penalties, costs, and expenses of any kind whatsoever (collectively referred to as "Claims" and, Claims that are made by third parties, collectively referred to as "Third Party Claims"), including but not limited to Third Party Claims arising out of loss of life, injury to persons, property, or business, or damage to natural resources, in connection with or arising out of any spills or discharges of Hazardous Materials in violation of applicable law, and (ii) from all claims, demands, judgments, damages, actions, causes of action, injuries, administrative orders, consent agreements and orders, liabilities, penalties, costs, and expenses of any kind whatsoever, including but not limited to claims arising out of Subtenant's failure to provide all information, make all submissions, and take all steps required by any authority under any Hazardous Materials laws or any other environmental law. Notwithstanding the expiration or termination of this Subground Lease, Subtenant's obligations and liabilities under this Section shall continue until the date which is five (5) years following expiration or earlier termination of this Subground Lease, so long as Sublandlord continues to own the Property or any portion thereof or otherwise remains responsible for any Hazardous Materials on the Property, provided, however, that nothing contained in this provision is intended to or shall have the effect of relieving any party of liability under any applicable statutory or common law. 29. SUBTENANT' S SIGNAGE Subtenant shall have the right to place signs on the Property provided such signage shall be for reasonable business purposes and shall not violate any statute, code, or ordinance. 300-003 Subground Lease CIM Huntington, Inc. V.2 -18- 30. MEMORANDUM OF SUBLEASE Promptly after the Commencement Date has occurred, Sublandlord and Subtenant shall execute in recordable form a Memorandum of Sublease, Option to Purchase Fee and Agreement Containing Covenants Affecting Real Property, substantially in the form attached hereto as Exhibit `B" which is incorporated herein by this reference, which either party is authorized to record. 31. MORTGAGEE PROTECTION PROVISIONS 31.1 Right to Encumber. Subtenant and every successor and assign of Subtenant (including, but not limited to, any sublessee of Subtenant) is hereby given the express right, in addition to any other rights herein granted, and without the necessity of obtaining Sublandlord's consent, to mortgage its interests in this Subground Lease, and its leasehold estate in the Property, or any part of parts thereof, and any sublease of the Property, under one or more Leasehold Mortgage(s) and to assign this Subground Lease or Subtenant's leasehold estate in the Property, or any part or parts thereof, and any sublease, as collateral security for such mortgage(s), upon the condition that all rights acquired under such mortgage(s) shall be subject to each and all of the covenants, conditions and restrictions set forth in this Subground Lease, and to all rights and interests of Sublandlord herein, none of which covenants, conditions or restrictions is or shall be waived by Sublandlord by reason of the foregoing, except as expressly provided herein. In the event of any conflict between the provisions of this Subground Lease and the provisions of any mortgage, the provisions of this Subground Lease shall control, except as herein specifically provided. 31.2 Definition of Leasehold Mortgage. For purposes of this Subground Lease, the term "Leasehold Mortgage" means a conveyance of a security interest in this Subground Lease and all of Subtenant's interests in the Property (collectively referred to as "Subtenant's Leasehold Interests") to a lender (a "Leasehold Mortgagee") encumbering Subtenant's Leasehold Interest, or the conveyance of Subtenant's Leasehold Interests to the Leasehold Mortgagee or its assignee in connection with a foreclosure or a deed in lieu of foreclosure of such loan. Sublandlord agrees to permit Subtenant to pledge Subtenant's Leasehold Interests to a Leasehold Mortgagee as security under a Leasehold Mortgage without Sublandlord's consent. In the event of a default or breach by Subtenant of any security instrument securing a Leasehold Mortgage, Sublandlord shall have the right to cure the default provided such cure is completed at least five (5) business days before the date of foreclosure. In such event, Sublandlord shall be entitled to reimbursement by Subtenant of all costs and expenses incurred by Sublandlord in curing the default, with interest at the highest rate permitted by law, as Additional Rent (collectively, "Sublandlord's Cure Payments"), provided in the event of a subsequent foreclosure of a permitted Leasehold Mortgage the party acquiring Subtenant's Leasehold Interests shall not be obligated to pay Sublandlord any of Sublandlord's Cure Payments. 31.3 Rights of Lender. If Subtenant and/or Subtenant's successors and assigns (including, but not limited to, any sublessee of Subtenant) shall mortgage its interest in this Subground Lease and its leasehold estate in the Property, or any part or parts thereof as permitted by Section 31.1 above, the following provisions shall apply: 300-003 Subground Lease CIM Huntington, Inc. V.2 -19- (a) No Amendment. There shall be no amendment, cancellation, termination, surrender or modification of this Subground Lease by joint action of Sublandlord and Subtenant without the prior consent in writing of each holder of a lien against or an assignment of this Subground Lease, notice of which has been served upon Sublandlord. (b) Right to Notice of Default. Sublandlord shall, upon serving Subtenant with any notice of default, simultaneously serve a copy of the notice upon any Leasehold Mortgagee(s). (c) Right to Cure. Any Leasehold Mortgagee shall have the right, but not the obligation, at any time prior to termination of this Subground Lease, to pay all of the rents due hereunder, to effect any insurance, to pay any taxes or assessments, to make any repairs or improvements, to do any other act or thing required of Subtenant hereunder, and to do any act or thing which may be necessary and proper to be done in the performance and observance of the agreements, covenants and conditions hereof to prevent termination of this Subground Lease. Any Leasehold Mortgagee and its agents and contractors shall have full access to the Property for purposes of accomplishing any of the foregoing. Any of the foregoing done by any Leasehold Mortgagee shall be as effective to prevent a termination of this Subground Lease as the same would have been if done by Subtenant. (d) Additional Cure Period. Anything contained in this Subground Lease notwithstanding, if any default shall occur which, pursuant to any provision of this Subground Lease, purportedly entitles Sublandlord to terminate this Subground Lease, Sublandlord shall not be entitled to terminate this Subground Lease as to any Leasehold Mortgagee, nor to disturb the right of possession of any subSubtenant of Subtenant, and the notice shall be rendered void as to such parties, if the Leasehold Mortgagee, within sixty (60) days after expiration of the period within which Subtenant was permitted to cure the default (or within ninety (90) days after receipt of the notice by the Leasehold Mortgagee if the default is not curable by Subtenant), shall both: (1) either (aa) cure the default if the same can be cured by the expenditure of money, or (bb) if the default or breach is not so curable, commence, or cause any trustee under the mortgage to commence, and thereafter to diligently pursue to completion steps and proceedings to foreclose on the interests covered by the mortgage; and (ii) perform or cause the performance of all of the covenants and conditions of this Subground Lease requiring the expenditure of money by Subtenant (including all unpaid monetary obligations of Subtenant under this Subground Lease) until such time as the leasehold shall be sold upon foreclosure pursuant to the mortgage, or shall be released or reconveyed thereunder, or shall be transferred upon judicial foreclosure or by deed or assignment in lieu of foreclosure. (e) Condition of Termination. All right of Sublandlord to terminate this Subground Lease as the result of the occurrence of any default shall be subject to, and conditioned upon, Sublandlord having first given to each Leasehold Mortgagee written notice of the default as required under Section 31.3(b), above, and all Leasehold Mortgagees having failed to remedy such default or acquire Subtenant's leasehold estate hereunder or commence 300-003 Subground Lease CIM Huntington, Inc. V.2 _20_ foreclosure or other appropriate proceedings in the nature thereof as set forth in Section 31.3(d), above. (0 Suspension of Cure Period. If any Leasehold Mortgagee is prohibited from commencing or prosecuting foreclosure or other appropriate proceedings in the nature thereof by any process or injunction issued by any court, or by reason of any action by any court having jurisdiction of any bankruptcy or insolvency proceeding involving Subtenant, the times specified in Section 31.3(d) above, for commencing or prosecuting foreclosure or other proceedings shall be extended for the period of the prohibition, so long as the Leasehold Mortgagee shall have fully cured any default in the payment of any monetary obligations of Subtenant under this Subground Lease and shall continue to pay currently those monetary obligations as and when the same fall due, subject to any applicable notice and grace periods. (g) Loss Payable Endorsement. Sublandlord and Subtenant agree that the name(s) of the Leasehold Mortgagee(s) shall, at such Leasehold Mortgagee's request, be added to the "Loss Payable Endorsement" of any and all insurance policies required to be carried by Subtenant under this Subground Lease on condition that the insurance proceeds are to be applied in the manner specified in this Subground Lease. (h) No Consent to Foreclosure. Foreclosure of any Leasehold Mortgage, or any sale thereunder, whether by judicial proceedings or by virtue of any power contained in the Leasehold Mortgage, or any conveyance of the leasehold estate hereunder from Subtenant to any Leasehold Mortgagee or its designee through, or in lieu of, foreclosure or other appropriate proceedings in the nature thereof, shall not require the consent of Sublandlord or constitute a breach of any provision of or a default under this Subground Lease, and upon such foreclosure, sale or conveyance, Sublandlord shall recognize the purchaser or other transferee referred to in the preceding sentence in connection therewith as the Subtenant hereunder. Further, following such foreclosure or conveyance, any assignment or subleasing by the purchaser or other transferee shall not require the consent of Sublandlord, despite any other provisions of this Subground Lease to the contrary. (i) Proceeds of Insurance and Condemnation. The proceeds from any insurance policies or arising from a condemnation award to Subtenant shall be paid to and held by the Leasehold Mortgagee of highest priority and distributed pursuant to the provisions of this Subground Lease, except that the Leasehold Mortgagee(s) may reserve the right to apply to the mortgage debt (in the order of priority) all, or any part, of the proceeds not used to repair or restore the Property and the improvements located thereon to the extent required herein so long as there then remains at least fifteen years until the scheduled expiration of the term (as may theretofore been extended). 0) Notice of Proceedings. The parties hereto shall give all Leasehold Mortgagee(s) notice of any arbitration proceedings or condemnation proceedings involving Subtenant's interest in the Property, or of any pending adjustment of insurance claims, and any Leasehold Mortgagee shall have the right to intervene therein and shall be made a party to such proceedings. The parties hereto do hereby consent to such intervention. In the event that any Leasehold Mortgagee shall not elect to intervene or become a party to the proceedings, that Leasehold Mortgagee shall receive notice and a copy of any award or decision made in connection therewith. 300-003 Subground Lease CIM Huntington, Inc. V.2 -21- (k) Right to Exercise Renewal Options: If Subtenant has not timely exercised any option to renew, such option shall not expire until Sublandlord gives Leasehold Mortgagee written notice and 30 days' in which to exercise such option on Subtenant's behalf. (1) Right to Purchase Fee: If Subtenant has any right of first offer, presentation or refusal, or any other right to acquire fee simple title to the Premises, such right shall not expire, be rejected or be terminated unless and until Leasehold Mortgagee has been given written notice and 30 days to exercise such acquisition right, provided Leasehold Mortgagee may acquire such fee in its own name or in the name of a designee. In addition, in the event of any Leasehold Mortgagee's foreclosure of Subtenant's interest in the Lease, such Leasehold Mortgagee shall have the option to purchase Sublandlord's interest in the fee at the same price and on the same terms as set forth in Section 33, to be exercised by written notice given to Sublandlord within 90 days after such foreclosure has been completed. (m) Further Protections. Sublandlord and Subtenant shall cooperate in including in this Subground Lease, by suitable amendment from time to time, any provision which may be reasonably requested by any proposed Leasehold Mortgagee for the purpose of implementing the mortgagee -protection provisions contained in this Section 31 and allowing that Leasehold Mortgagee reasonable means to protect or preserve the lien of its Leasehold Mortgage upon the occurrence of a default under the terms of this Subground Lease. Sublandlord and Subtenant each agree to execute and deliver (and to acknowledge, if necessary, for recording purposes) any agreement necessary to effect any such amendment; provided, however, that no such amendment shall in any way affect the term or rent under this Subground Lease, nor otherwise in any material respect adversely affect any rights of Sublandlord under this Subground Lease, and Subtenant shall pay Sublandlord's reasonable costs in connection with such amendment. (n) Additional Agreement. Sublandlord shall, upon request, execute, acknowledge and deliver to each Leasehold Mortgagee, an agreement prepared by the Leasehold Mortgagee and reviewed by Sublandlord at the sole cost and expense of Subtenant, in form satisfactory to each Leasehold Mortgagee, between Sublandlord, Subtenant and the Leasehold Mortgagee(s), agreeing to all of the provisions hereof. 31.4 Notice. If Subtenant shall mortgage its interest in this Subground Lease or its leasehold estate in the Property, or any part or parts thereof, Subtenant shall send to Sublandlord a true copy thereof, together with written notice specifying the name and address of the mortgagee(s) and the pertinent recording data with respect to such mortgage(s). 31.5 New Lease. (a) Sublandlord agrees that in the event of termination of this Subground Lease by reason of any default by Subtenant, or by reason of the disaffirmance hereof by a receiver, liquidator or trustee for Subtenant or its property, Sublandlord if requested by any Leasehold Mortgagee will enter into a new lease of the Property, with the most senior Leasehold Mortgagee requesting a new lease or its designee, for the remainder of the term, effective as of the date of such termination, at the rent and additional rent and upon the terms, provisions, covenants and agreements as herein contained and subject to the rights, if any, of any parties then in possession of any part of the Property, provided: 300-003 Subground Lease CIM Huntington, Inc. V.2 -22- (i) The Leasehold Mortgagee shall make written request upon Sublandlord for the new lease within sixty (60) days after such Leasehold Mortgagee receives written notice of such termination; (ii) Within thirty (30) days after receipt of the new lease from Sublandlord complying with the terms of this Section 31.5, the Leasehold Mortgagee shall execute and deliver the new lease to Sublandlord and shall pay any and all sums which would, at the time of the execution and delivery thereof, be due and unpaid pursuant to this Subground Lease but for its termination; (iii) The Leasehold Mortgagee shall perform and observe all covenants herein contained on Subtenant's part to be performed, and shall further remedy any other conditions which Subtenant under the terminated Lease was obligated to perform under its terms, in each instance as and to the extent the same are curable or may be performed by the Leasehold Mortgagee; (iv) The Subtenant under the new lease shall have the same right, title and interest in and to the buildings and improvements on the Property as Subtenant had under the terminated Lease immediately prior to its termination; and (v) Notwithstanding anything to the contrary expressed or implied elsewhere in this Subground Lease, any new lease made pursuant to this Section 31.5(a) shall enjoy the same priority in time as the Lease over any mortgage, deed of trust, or other lien, charge, or encumbrance on the Property. (b) Any new lease made pursuant to Section 31.5(a) shall be accompanied by a conveyance from Sublandlord to the new Subtenant of title to the improvements (free of any mortgage, deed of trust, lien, charge, or encumbrance created by Sublandlord) for a term of years equal to the term of the new lease, subject to the reversion in favor of Sublandlord upon expiration or sooner termination of the new lease. (c) Nothing herein contained shall require any Leasehold Mortgagee to enter into a new lease pursuant to Section 31.5(a), above, nor to cure any default of Subtenant referred to above. (d) If a Leasehold Mortgagee shall elect to demand a new lease, Sublandlord agrees, at the request of, on behalf of and at the expense of the Leasehold Mortgagee, to institute and pursue diligently to conclusion the appropriate legal remedy or remedies to oust or remove the original Subtenant from the Property, but not any subSubtenants of Subtenant actually occupying the Property, or any part thereof. Leasehold Mortgagee, as a condition of executing the new lease, shall pay all reasonable costs and expenses, including attorneys' fees and court costs, incurred by Sublandlord in terminating this Subground Lease, recovering possession of the Property and the Improvements from the representative of Subtenant, and preparing the new lease. (e) Unless and until Sublandlord has received notice from all Leasehold Mortgagees that the Leasehold Mortgagee elects not to demand a new lease as provided in Section 31.5(a), above, or until the period therefor has expired, Sublandlord shall not cancel or 300-003 Subground Lease CIM Huntington, Inc. V.2 -23- agree to the termination or surrender of any existing subleases nor enter into any new subleases hereunder without the prior written consent of the Leasehold Mortgagee(s). 31.6 Lender's Liability. In the event any Leasehold Mortgagee or any designee of it becomes the Subtenant under this Subground Lease or under any new lease obtained pursuant to Section 31.5 a , above, the Leasehold Mortgagee or its designee shall be personally liable for the obligations of Subtenant under this Subground Lease or a new sublease only for the period of time that the Leasehold Mortgagee or its designee remains the actual beneficial holder of the leasehold estate hereunder. The initial new Subtenant under the new lease shall have the right to sublease all or portions of the Property or to assign the new lease without the consent of Sublandlord, despite any other provision of the new lease to the contrary. 31.7 Definitions. The term "mortgage," whenever used herein, shall include whatever security instruments are used in the locale of the Property, such as, without limitation, deeds of trust, security deeds, and conditional deeds. The term "mortgage," whenever used herein, shall also include any instruments required in connection with a sale -leaseback transaction. The term "mortgagee" shall include the holder of the secured position under each of the foregoing types of instruments, including but not limited to the beneficiary under a deed of trust, the secured party under a security agreement and the lessor in a sale -leaseback transaction. 31.8 Restriction on Easements and Encumbrances by Sublandlord. Without Subtenant's consent (which may be withheld in its sole discretion), Sublandlord shall not (i) grant any easement, license or access rights over the Property, or (ii) mortgage or otherwise encumber its interest in the Property. 31.9 Quiet Enjoyment. Absent an uncured default by Subtenant, Sublandlord agrees not to disturb the possession, interest or quiet enjoyment of Subtenant in the Property for any reason, or in a manner which would materially adversely affect any leasehold mortgage(s). 3 1. 10 Exercise of Rights. At Lender's written request, Sublandlord shall require Landlord to take any action as required of Landlord on Tenant's demand under the Ground Lease. 32. SUBLANDLORD'S RIGHT TO CAUSE SALE OF LAND 32.1 Ground Lease. If Landlord exercises its right under Section 32 of the Ground Lease, by giving written notice within 30 days after receipt of Landlord's exercise notice, Sublandlord shall have the right to cause Subtenant to purchase fee simple title in the Property (the "Fee") on the terms set forth in Section 32 of the Ground Lease. 32.2 Disputes. Any disputes regarding the acquisition of the Fee pursuant to this Section 32 shall be resolved pursuant to Exhibit C. 33. OPTION TO PURCHASE FEE SIMPLE TITLE TO PROPERTY 33.1 By giving notice at least 90 days prior to a Tenant Purchase Date (as defined in the Ground Lease), Subtenant shall have the right to acquire the Fee by causing 300-003 Subground Lease CIM Huntington, Inc. V.2 -24- Sublandlord to exercise the Tenant's option under Section 33 of the Ground Lease, on the terms and conditions set forth in Section 33 of the Ground Lease. 34. RIGHT OF FIRST OFFER 34.1 If at anytime after execution of this Subground Lease, Landlord gives Sublandlord the ROFO Notice defined in Section 34 of the Ground Lease, Sublandlord shall immediately give Subtenant a copy of such ROFO Notice. Subtenant shall have until the expiration of the 30 day period described in Paragraph 34.1 of the Ground Lease to decide whether to acquire the Fee on such terms, provided that if Subtenant does not elect to purchase the Fee, any Leasehold Mortgagee (in order of priority of the Leasehold Mortgages) shall have an additional 15 days to elect to purchase the Fee. If Subtenant (or the Leasehold Mortgagee) elects to acquire the Fee, the Sublandlord shall give Landlord timely notice and shall require Landlord to sell the Fee to Subtenant on the terms and conditions set forth in Section 34 of the Ground Lease. 34.2 Any disputes regarding the acquisition of the Fee pursuant to this Section 34 shall be resolved pursuant to Exhibit C. 35. GENERAL PROVISIONS 35.1 Waivers. The waiver by Sublandlord of any term, covenant, or condition herein contained shall not be a waiver of such term, covenant, or condition on any subsequent breach. 35.2 Notices. All notices and demands which may or are to be required or permitted to be given by either party to the other hereunder shall be in writing. All notices and demands by Sublandlord to Subtenant shall be sent by first class mail, registered or certified mail, postage prepaid, return receipt requested, or by electronic facsimile transmission followed by delivery of a "hard" copy, or by personal delivery (including by means of professional messenger service, courier service such as United Parcel Service or Federal Express, or by U.S. Postal Service), and addressed to Subtenant at the address set forth in Section 1.7, or to such other place as Subtenant may from time to time designate in a notice to Sublandlord. All notices and demands by Subtenant to Sublandlord shall be sent by first class mail, registered or certified mail, postage prepaid, return receipt requested, or by electronic facsimile transmission followed by delivery of a "hard" copy, or by personal delivery (including by means of professional messenger service, courier service such as United Parcel Service or Federal Express, or by U.S. Postal Service), and addressed to Sublandlord at the address set forth in Section 1.6, or to such other person or place as Sublandlord may from time to time designate in a notice to Subtenant. Any notice that is transmitted by electronic facsimile transmission followed by delivery of a "hard" copy, shall be deemed delivered upon its transmission provided any transmission received on a nonbusiness day or after 5:00 p.m. on a business day shall be deemed given on the next business day; any notice that is personally delivered (including by means of professional messenger service, courier service such as United Parcel Service or Federal Express, or by U.S. Postal Service), shall be deemed received on the documented date of receipt by Subtenant; and any notice that is sent by registered or certified mail, postage prepaid, return receipt required shall be deemed received on the date of receipt thereof. 300-003 Subground Lease CIM Huntington, Inc. V.2 -25- 35.3 Time is of the Essence. Time is of the essence of this Subground Lease and each and all of its provisions in which performance is a factor. 35.4 Binding on Successors and Assigns. The covenants and conditions herein contained, subject to the provisions as to assignment, apply to and bind the heirs, successors, executors, administrators, and assigns of the parties hereto. 35.5 Force Majeure. Performance by either party hereunder shall not be deemed to be in default where delays or defaults are due to war, insurrection, strikes, lock -outs, riots, floods, earthquakes, fires, casualties, acts of God, acts of the public enemy, epidemics, quarantine restrictions, freight embargoes, lack of transportation, governmental restrictions or priority, litigation, unusually severe weather, inability to secure necessary labor, material or tools, delays of any contractor, sub -contractor or supplier, acts of the other party, acts or failure to act of the City of Huntington Beach or any other public or governmental agency or entity (except that acts or failure to act of Sublandlord shall not excuse performance of Sublandlord), or any causes beyond the control or without the fault of the party claiming an extension of time to perform. An extension of time for any such cause (a "Force Majeure Delay") shall be for the period of the enforced delay and shall commence to run from the time of the commencement of the cause, if notice by the party claiming such extension is sent to the other party within thirty (30) days of knowledge of the commencement of the cause. Notwithstanding the foregoing, none of the foregoing events shall constitute a Force Majeure Delay unless and until the party claiming such delay and interference delivers to the other party written notice describing the event, its cause, when and how such party obtained knowledge, the date and the event commenced, and the estimated delay resulting therefrom. Any party claiming a Force Majeure Delay shall deliver such written notice within thirty (30) days after it obtains actual knowledge of the event. Times of performance under this Agreement may also be extended in writing by the Sublandlord and Subtenant. 35.6 Costs of Proceedings and Attorneys' Fees. If any action or proceeding is brought by either party against the other under this Subground Lease or by a Leasehold Mortgagee against any such party, whether for interpretation, enforcement, recovery of possession, or otherwise, the prevailing party shall be entitled to recover all costs and expenses, including the fees of its attorney in such action or proceeding. This provision shall also apply to any postjudgment action by either party, including without limitation efforts to enforce a judgment. 35.7 Severability. Any provision of this Subground Lease which shall prove to be invalid, void, or illegal shall in no way affect, impair, or invalidate any other provision hereof and such other provisions shall remain in full force and effect. 35.8 No Exclusive Remedies. No remedy or election hereunder shall be deemed exclusive but shall, wherever possible, be cumulative with all other remedies at law or in equity. 35.9 Laws of California. This Subground Lease shall be governed by the laws of the State of California. Proper venue for any action shall be in Orange County, California. 3 5. 10 No Partnership. Nothing contained in this Subground Lease shall be deemed or construed as creating a partnership, joint venture, or any other relationship between 300-003 Subground Lease CIM Huntington, Inc. V.2 -26 the parties hereto other than Sublandlord and Subtenant according to the provisions contained herein, or cause Sublandlord to be responsible in any way for the debts or obligations of Subtenant, or any other party. 35.11 Final Agreement. This Subground Lease, including any document or instrument incorporated therein or herein by reference, contains a complete and final expression of the agreement between Sublandlord and Subtenant, and there are no promises, representations, agreements, warranties, or inducements either express or implied other than as are set forth and this Subground Lease. Any and all previous discussions or agreements between Sublandlord and Subtenant with respect to the Property, whether oral or written, are superseded by this Subground Lease. 35.12 Language of Lease. When the context so requires when used in this Subground Lease, the masculine gender shall be deemed to include the feminine and neuter gender and the neuter gender shall be deemed to include the masculine and feminine gender. When the context to requires when used in this Subground Lease, the singular shall be deemed to include the plural. The paragraph and section headings have been used for convenience only, and shall not be used in the interpretation hereof The term "including" shall mean "including but not limited to." 35.13 Requirement of a Writing. No amendment, change, or addition to, or waiver of termination of, this Subground Lease or any part hereof shall be valid unless in writing and signed by both parties comprising Sublandlord and Subtenant. 35.14 No Third Party Beneficiaries. The Parties acknowledge and agree that the provisions of this Subground Lease are for the sole benefit of Sublandlord and Subtenant, and not for the benefit, directly or indirectly, of any other person or entity, except as otherwise expressly provided herein. 35.15 Authority of Subtenant. The party executing this Subground Lease on behalf of Subtenant has full authority to do so and to bind Subtenant to perform pursuant to the terms and conditions of this Subground Lease. 35.16 Incorporation by Reference. Each of the exhibits attached hereto is incorporated herein by this reference. 35.17 Interpretation. This Subground Lease has been negotiated at arm's length and between persons sophisticated and knowledgeable in the matters dealt with in this Subground Lease. In addition, each party has been given the opportunity to consult with experienced and knowledgeable legal counsel. Accordingly, any rule of law (including Civil Code section 1654) or legal decision that would require interpretation of any ambiguities in this Subground Lease against the party that has drafted it is not applicable and is waived. The provisions of this Subground Lease shall be interpreted in a reasonable manner to effect the purpose and intent of the parties to this Subground Lease. 35.18 Merger. So long as any Leasehold Mortgagee holds a Leasehold Mortgage, the fee title to the Property and the leasehold estate created by this Subground Lease shall not merge unless all Leasehold Mortgagees expressly consent to the merger in writing. 300-003 Subground Lease CIM Huntington, Inc. V.2 -27- 1. This provision shall apply even if Subtenant or Sublandlord or any third party acquires both the fee title and this Subground Lease. 35.19 Priority. This Subground Lease, and any extensions, renewals or replacements thereof, and any sublease entered into by Subtenant as sublessor, and any Leasehold Mortgage or other encumbrance recorded by Leasehold Mortgagee shall be superior to any mortgages, deeds of trust or similar encumbrances placed by Sublandlord on the Property and to any lien right, if any, of Sublandlord on the buildings, and any furniture, fixtures, equipment or other personal property of Subtenant upon the Property. 35.20 Counterparts. This Subground Lease may be executed by each party on a separate signature page, and when the executed signature pages are combined, shall constitute one single instrument. 35.21 Arbitration. With respect to any provision in this Subground Lease which specifically states that disputes regarding such provision are to be resolved pursuant to arbitration, any such dispute shall be submitted to arbitration pursuant to the terms of Exhibit C. 35.22 Reasonable Consent. Unless otherwise specified, no consent or approval to be given by a party shall be unreasonably withheld, conditioned or delayed, provided if a specific time for response is provided, response within such time period shall be deemed reasonable. 35.23 Nondiscrimination. Subtenant herein covenants by and for itself, its heirs, executors, administrators and assigns, and all persons claiming under or through it, and this Subground Lease is made and accepted upon and subject to the following conditions: That there shall be no discrimination against or segregation of any person or group of persons, on account of race, color, creed, religion, sex, marital status, national origin or ancestry in the leasing, subleasing, transferring, use, occupancy, tenure or enjoyment of the premises herein leased, nor shall the lessee itself, or any person claiming under or through it, establish or permit such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, sublessees, subtenants or vendees in the land herein leased. 35.24 Conversion of Fee to Undivided Interest. Upon Subtenant's written demand, Sublandlord shall make the election contained in Section 35.24 of the Ground Lease to convert the Fee into an undivided interest in the Development Site (as defined in the Ground Lease). In such event, Sublandlord shall cooperate fully with Subtenant in causing such conversion and reformulating this Subground Lease to reflect such conversion. 35.25 Creation of Air Space Parcels and Conversion to Air Space Lease. Upon Subtenant's written demand, Sublandlord shall make the election contained in Section 35.25 of the Ground Lease to subdivide the Property. In such event, Sublandlord shall cooperate fully with Subtenant in causing such subdivision and reformulating this Subground Lease to reflect such subdivision and in accordance with Section 35.25 of the Ground Lease. 35.26 Agency Assigmnent Right. If the DDA is terminated, the Agency shall have the right to cause CIM/Huntington, Inc. to assign all of its rights as Subtenant hereunder to the Agency by giving CIM/Huntington, Inc. written notice within ninety (90) days after the 300-003 Subground Lease CIM Huntington, Inc. V.2 _28_ effective date of such termination (but not later than 5 days before any notice exercising a right to cancel the Ground Lease (if any such right then exists) is due). If such written notice is timely given, CIM/Huntington, Inc. and the Agency shall execute, acknowledge and deliver an Assignment and Assumption of Sublease in form reasonably acceptable to CIM/Huntington, Inc. and the Agency, such assignment containing an assumption of all obligations under the Sublease and an indemnification by the Agency from and against any and all liability, costs, damages and expenses (including attorneys' fees), broadly interpreted, arising out of the Ground Lease and the Sublease. In addition, any indemnification obligation of CIM/Huntington, Inc. in favor of Sublandlord or the Agency contained in the Sublease or the Implementation Agreement relating to the DDA, relating to the Ground Lease or the Sublease shall no longer apply. In such event, the Agency and CIM/Huntington, Inc. shall use their reasonable, good faith efforts to obtain the consent of Landlord to the Assignment of the Ground Lease to the Agency and the release of CIM/Huntington, Inc. from the Ground Lease. 300-003 Subground Lease CIM Huntington, Inc. V.2 -29- SUBTENANT: SUBLANDLORD: CIM/Huntington, Inc., a California corporation Richard Ressler, President Avaham Shemesh, Treasurer Shaul Kuba, Secretary Redevelopment Agency of the City of Huntington Beach (Agency) Chairman ATTEST: Agency Clerk REVIEWED AND APPROVED AS TO FORM: Agency General Counsel APPROVED AS TO FORM: KANE, BALLMER & BERKMAN 300-003 Subground Lease CIM Huntington, Inc. V.2 -30- Exhibit "A" LEGAL DESCRIPTION [TO BE ADDED] 300-003 Subground Lease CIM Huntington, Inc. V. 2 Exhibit `B" MEMORANDUM OF SUBLEASE THIS DOCUMENT HAS BEEN PREPARED BY AND WHEN RECORDED RETURN TO: FRAGNER LAW CORPORATION 333 S. Grand Avenue Suite 3030 Los Angeles, California 90071 Attn: Matthew C. Fragner, Esq. Assessor's Parcel No. MEMORANDUM OF SUBLEASE, OPTION TO PURCHASE FEE AND AGREEMENT CONTAINING COVENANTS AFFECTING REAL PROPERTY THIS MEMORANDUM OF SUBLEASE (this "Memorandum") is executed effective as of (the "Effective Date"), by and between CIM/Huntington, Inc., a California corporation, and the Redevelopment Agency of the City of Huntington Beach (collectively, "Sublandlord"), whose address is 6922 Hollywood Boulevard, Suite 900, Hollywood, CA 90028 and City Hall, 2000 Main Street, Huntington Beach, CA 92648, and ("Subtenant"), whose address is PRELIMINARY STATEMENT: Sublandlord and Subtenant entered into that certain sublease (the "Sublease") dated as of , the terms, provisions and conditions of which are incorporated herein by this reference to the same extent as if recited in their entirety herein. Pursuant to the terms, provisions and conditions of the Lease, Sublandlord has subleased to Subtenant, and Subtenant has rented and subleased from Sublandlord, certain premises (the "Premises") described on Exhibit A attached hereto (the "Land"). Unless otherwise expressly provided herein, all defined terms used in this Memorandum shall have the same meanings as are ascribed to such terms in the Sublease. NOW, THEREFORE, Sublandlord and Subtenant hereby make specific reference to the following terms, provisions and conditions of the Lease: l . In consideration of the rentals and other sums to be paid by Subtenant and of the other terms, covenants and conditions on Subtenant's part to be kept and performed pursuant to the Sublease, Sublandlord leases to Subtenant, and Subtenant takes and hires, the Premises. The Sublease term commences as of the Commencement Date (as defined in the Sublease) and expires as specified in the Sublease, unless extended as provided below or terminated sooner as provided in the Sublease. 300-003 Subground Lease CIM Huntington, Inc. V.2 2. Subtenant has the option to extend the term of the Sublease for up to two (2) additional successive periods of twenty-five (25) years each and one additional successive period of twenty-four (24) years, by written notice to Sublandlord not less than 210 days prior to the expiration of the term of the Sublease, each such option to be executed in accordance with the Sublease. 3. Subtenant has certain rights to purchase the Premises as set forth in the Sublease. 4. The Sublease is a "true lease"; the only relationship created thereby is that of sublandlord and subtenant. 5. Original copies of the Sublease are in the possession of Sublandlord and Subtenant. The Sublease contains other terms not herein set forth but which are incorporated by reference herein for all purposes, and this Memorandum is executed for the purpose of placing parties dealing with the Premises on notice of the existence of the Sublease and, where appropriate, its contents, and shall ratify and confirm all other terms of the Sublease as fully as if the same had been set forth herein. 6. Notwithstanding anything to the contrary contained herein, nothing in this Memorandum shall modify, supercede, diminish, add to or change any or all of the terms of the Sublease or be deemed to create or grant any rights, liabilities or obligations of or to any party or third parties other than as specifically set forth in the Sublease. In the event of any conflict between this Memorandum and the Sublease, the terms and conditions of the Sublease shall control. 7. This Memorandum may be executed in one or more counterparts, each of which shall be deemed an original. 8. [AGREEMENT CONTAINING COVENANTS AFFECTING REAL PROPERTY FROM DDA to be inserted]. IN WITNESS WHEREOF, the parties hereto have caused this Memorandum to be duly executed as of the Effective Date. SUBTENANT: LIZ LIM SUBLANDLORD: Redevelopment Agency of the City of Huntington Beach Chairman CIM/Huntington, Inc. Exhibit A Legal Description STATE OF CALIFORNIA ) ss. COUNTY OF ) On before me, , personally appeared (here insert name and title of the officer), personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. WITNESS my hand and official seal. Signature (Seal) STATE OF CALIFORNIA ) ss. COUNTY OF ) On before me, , personally appeared (here insert name and title of the officer), personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. WITNESS my hand and official seal. Signature (Seal) Exhibit "C" ARBITRATION OF DISPUTES Any dispute to be arbitrated pursuant to the Agreement to which this Exhibit is attached ("Arbitrable Dispute") shall be submitted to arbitration pursuant to Title 9, Sections 1280 and following of the California Code of Civil Procedure and the terms and provisions of this Exhibit. Whenever the terms of this Exhibit and such Sections of the California Code of Civil Procedure conflict, the terms of this Exhibit shall control. 1. Location. Subject to the last sentence of this Section, all Arbitration Proceedings shall be held and conducted in Orange County (the "Arbitration County'). The location for an Arbitration Proceeding within the Arbitration County shall be as mutually agreed by the Parties, but failing such agreement within ten (10) days of a written request by any Party, the Arbitration Proceeding shall be conducted in the regional office of Judicial Arbitration and Mediation Service ("JAMS") in the Arbitration County (or if no such office exists in such County, then in the JAMS regional office closest to the Property). 2. Rules and Selection of Arbitrator(s). Each Arbitration Proceeding shall be conducted under the commercial arbitration rules of JAMS then in effect (provided that in the event of any conflict between such Rules and this Exhibit, the terms of this Exhibit shall control). In no event shall a demand for arbitration be made after the date when institution of legal or equitable proceedings based on the Arbitrable Dispute in question would be barred by any applicable statute of limitations. The arbitrator(s) shall be selected as follows: (a) Unless otherwise provided in the Agreement, any Arbitration Proceeding initiated pursuant to the terms of the Agreement, and any Arbitration Proceeding involving an amount in controversy less than One Million Dollars ($1,000,000), shall be heard by a single neutral arbitrator. The arbitrator appointed must be (a) a former or retired judge of the California Superior Court or any higher court in California, or (b) an attorney with at least 15 years experience with acquisition and development of retail shopping centers. If agreement is not reached by the Parties on the selection of the arbitrator within one month after commencement of an Arbitration Proceeding by (i) submission of a matter to JAMS in accordance with its commercial arbitration rules and (ii) notice to the other Party of the initiating Party's intention to arbitrate, then such arbitrator shall be appointed by the presiding judge of the Superior Court of the Arbitration County. (b) Unless otherwise provided in the Agreement, any Arbitration Proceeding involving an amount in controversy equal to or greater than One Million Dollars ($1,000,000) shall be heard by a panel of three neutral arbitrators. Each arbitrator appointed must be (a) a former or retired judge of the California Superior Court or any higher court in California, or (b) an attorney with at least 15 years experience with acquisition and development of retail shopping centers. If agreement is not reached by the Parties on the selection of the three arbitrators within one month after commencement of an Arbitration Proceeding by 300-003 Subground Lease CIM Huntington, Inc. V.2 (i) submission of a matter to the JAMS in accordance with its commercial arbitration rules and (ii) notice to the other Party of the initiating Party's intention to arbitrate, then such arbitrators shall be appointed by the presiding judge of the Superior Court of the Arbitration County. (c) For purposes of determining whether an Arbitration Proceeding shall be heard by one arbitrator or by three, the term "amount in controversy" shall mean the dollar amount sought by either the Party initiating the Arbitration Proceeding or the Party responding to the Arbitration Proceeding, whichever is greater. 3. Powers of Arbitrator(s). The arbitrator(s) shall have the power to grant all appropriate legal and equitable relief (both by way of interim relief and as a part of its final award), other than punitive damages, as may be granted by any court of the State of California, to carry out the terms of this Agreement (e.g., declaratory and injunctive relief and damages). The Parties expressly waive any right to punitive damages arising out of any Arbitrable Dispute. All awards and orders of the arbitrator(s) (including, but not limited to interim relief) shall be final and binding subject to confirmation, correction or vacation pursuant to California Code of Civil Procedure Sections 1285 and following. 4. Discovery and Rules of Evidence. It is the intention of the Parties that all Arbitration Proceedings be conducted as expeditiously as reasonably possible in keeping with fairness and with a minimum of legal formalities. Therefore, the Parties have agreed that the rules of evidence shall not apply to any Arbitration Proceeding, except that notwithstanding the foregoing the attorney/client privilege and work product protection shall be applicable in all Arbitration Proceedings. The Parties agree that only limited discovery should be allowed in an Arbitration Proceeding and incorporate California Code of Civil Procedure, Sections 1283.1(b) and 1283.05 for this purpose. Unless otherwise ordered by the arbitrator(s) on a showing of substantial need, each side shall be limited to one document production request and one deposition and such discovery shall be complete within 60 days following appointment of the arbitrator(s). In addition the parties shall exchange the names, qualifications and a narrative report stating the opinion and basis therefor of any expert who may be called 15 days prior to the start of the arbitration. 5. Timing. In furtherance of the intent of the Parties expressed in the first sentence of Section 4 of this Exhibit, and unless modified by the arbitrator(s) upon a showing of good cause, all Arbitration Proceedings shall proceed upon the following schedule: (a) within one month from the service of the notice of the request to arbitrate, the parties shall select the arbitrator(s); (b) within 15 days after selection of the arbitrator(s), the Parties shall conduct a pre - arbitration conference at which a schedule of pre -arbitration discovery shall be set, all pre - arbitration motions scheduled and any other necessary pre -arbitration matters decided; (c)i all discovery allowed by the arbitrator(s) shall be completed within 45 days following the pre - arbitration conference; (d) all pre -arbitration motions shall be filed and briefed so that they may be heard no later than one month following the discovery cut-off, (e) the arbitration shall be scheduled to commence no later than one month after the decision on all pre -arbitration motions but in any event no later than five months following the service of the notice of arbitration; and (0 the arbitrator(s) shall render his or her or their written decision (including without limitation any and all findings of fact and conclusions of law) within one month following the submission 300-003 Subground Lease CIM Huntington, Inc. V.Z - n - of the matter. The Parties intend the foregoing schedule to be an outside maximum timetable, and nothing herein shall prevent the arbitrator(s) from ordering a shorter timetable if the arbitrator(s) conclude(s) that the same is warranted by the circumstances of any particular Arbitration Proceeding. 6. Transcript. All proceedings involving the Parties in an Arbitration Proceeding shall be reported by a certified shorthand court reporter and written transcripts of the proceedings shall be prepared and made available to the Parties. 7. Costs. Subject to Paragraph 35.6(b) of the Lease, the prevailing party shall be awarded reasonable attorneys' fees, expert and non -expert witness costs and expenses, and other costs and expenses incurred in connection with the arbitration unless the arbitrator(s), for good cause, determines otherwise. A post -arbitration proceeding to determine costs, if needed, shall be held within 10 days of notice of the award. Costs and fees of the arbitrator(s) (including the cost of the record of transcripts of the arbitration) shall be borne by the non -prevailing party, unless the arbitrator(s) for good cause determines otherwise. Costs and fees payable in advance shall be advanced equally by the Parties, subject to ultimate payment by the non -prevailing party in accordance with the preceding sentence. 8. Reconsideration. Upon receipt of the written opinion of the arbitrator(s), either Party shall have the right within 10 days to file with the arbitrator(s) a motion to reconsider, and the arbitrator(s) shall then reconsider the issues raised by the motion, may allow the other Party an opportunity to respond thereto, and shall either confirm or change the decision within 10 days after such filing. Such revised or confirmed decision shall then be final and conclusive upon the Parties. The costs (other than the attorneys' fees of the respective parties) of a motion for reconsideration and related proceedings shall be borne by the moving Party. 9. Specific Enforcement. The terms of this Exhibit shall be specifically enforceable under applicable law in any court of competent jurisdiction. The award rendered by the arbitrator(s) shall be final (subject to confirmation, correction or vacation as set forth in California Code of Civil Procedure Sections 1285 and following) and judgment may be entered in accordance with applicable law and in any court having jurisdiction thereof. 10. Interest on Award. Any monetary award of the arbitrator(s) may include interest at the legal rate, which interest shall accrue from the date the claim, dispute or other matter in question was rightfully due and payable under the Agreement until the date the award is paid to the prevailing party. 11. Extraordinary Remedies. No provision of this Exhibit shall limit the right of any Party to exercise self-help remedies or to obtain provisional or ancillary remedies from a court of competent jurisdiction before, after, or during the pendency of any Arbitration Proceeding. The exercise of such remedy shall not waive the right of any Party to resort to arbitration. ARBITRATION OF DISPUTES NOTICE: BY INITIALING IN THE SPACE BELOW YOU ARE AGREEING TO HAVE ANY DISPUTE ARISING OUT OF THE MATTERS INCLUDED IN THE "ARBITRATION OF DISPUTES" PROVISION DECIDED BY NEUTRAL ARBITRATION AS PROVIDED BY CALIFORNIA LAW AND YOU ARE GIVING UP ANY RIGHTS YOU 300-003 Subground Lease CIM Huntington, Inc. V.2 - III - MIGHT POSSESS TO HAVE THE DISPUTE LITIGATED IN A COURT OR JURY TRIAL. BY INITIALING IN THE SPACE BELOW YOU ARE GIVING UP YOUR JUDICIAL RIGHTS TO DISCOVERY AND APPEAL. UNLESS SUCH RIGHTS ARE SPECIFICALLY INCLUDED IN THE "ARBITRATION OF DISPUTES" PROVISION. IF YOU REFUSE TO SUBMIT TO ARBITRATION AFTER AGREEING TO THIS PROVISION, YOU MAY BE COMPELLED TO ARBITRATE UNDER THE AUTHORITY OF THE CALIFORNIA CODE OF CIVIL PROCEDURE. YOUR AGREEMENT TO THIS ARBITRATION PROVISION IS VOLUNTARY. WE HAVE READ AND UNDERSTAND THE FOREGOING AND AGREE TO SUBMIT DISPUTES ARISING OUT OF THE MATTERS INCLUDED IN THE "ARBITRATION OF DISPUTES" PROVISION TO NEUTRAL ARBITRATION. Sublandlord's Initials Subtenant's Initials 300-003 Subground Lease CIM Huntington, Inc. V.2 - 1V - GUARANTY OF SUBLEASE Sublandlord: CIM/Huntington, Inc., a California corporation, and Redevelopment Agency of the City of Huntington Beach. Subtenant: CIM/Huntington, Inc., a California corporation. Date of Sublease: As of , as amended from time to time. Guarantor: CIM Group, LLC, a California limited liability company. THIS GUARANTY OF SUBLEASE (this "Guaranty") is dated for reference purposes and executed as of _, 2000, by the guarantor identified above ("Guarantor"), with reference to the following facts: A. Sublandlord and Subtenant have entered into and executed the Sublease described above (as used herein, the term "Sublease" shall mean the Sublease described above, as the Sublease may be amended from time to time) by the terms of which Sublandlord subleased to Subtenant and Subtenant subleased from Sublandlord certain Premises more particularly described in the Sublease. The Premises have been leased to Sublandlord pursuant to a Ground Lease and Option to Purchase Fee (the "Ground Lease") dated as of March 8, 2000 between Sublandlord as Tenant and Frank M. Cracchiolo, Trustee for the Revocable Trust dated June 12, 1979, and Salvator W. and Barbara F. Cracchiolo ("Landlord"). B. Guarantor has a financial interest in Subtenant and a material interest in ensuring that Sublandlord and Subtenant enter into the Sublease. C. Sublandlord would not execute the Sublease if Guarantor did not execute and deliver to Sublandlord this Guaranty. NOW, THEREFORE, for and in consideration of Sublandlord's execution of the Sublease and as a material inducement to Sublandlord to enter into the Sublease, Guarantor hereby covenants with and represents and warrants to Sublandlord as follows: 1. Guarantor hereby jointly, severally, irrevocably and unconditionally guarantees the prompt payment by Subtenant of all rentals and all other sums payable by Subtenant under the Sublease and the faithful and prompt performance by Subtenant of each and every one of the terms, conditions and covenants of the Sublease to be kept and performed by Subtenant, including without limitation all of the obligations of the Ground Lease assumed by Subtenant pursuant to the Subground Lease. If, at any time, Subtenant shall default in the payment of any sums payable by Subtenant under the Sublease or in the performance of any of the terms, conditions or covenants of the Sublease to be kept, performed or observed by 300-003 Guaranty of Sublease V 3 Subtenant, Guarantor will pay such sums payable by Subtenant under the Sublease within ten (10) business days after written demand, such obligation being an absolute guaranty of payment. In addition, Guarantor will keep, perform and observe such other terms, conditions and covenants in place and stead of Subtenant within thirty (30) days after written demand. 2. The terms of the Sublease may be altered, affected, modified, compromised, accelerated, extended or changed by written agreement between Sublandlord and Subtenant, without notice to or consent from Guarantor. Subject to any requirements set forth in the Sublease, Sublandlord may, without notice to or consent from Guarantor, alter, modify, compromise, accelerate, extend or change the time or manner for the payment or performance of any of the obligations guaranteed hereunder, and Sublandlord may release, substitute or add any one or more guarantors of Subtenant's performance under the Sublease. Subject to any requirements set forth in the Sublease, the Sublease may be assigned by Sublandlord or any assignee of Sublandlord without consent or notice to Guarantor. In any such event, this Guaranty shall thereafter guarantee the performance of CB&Huntington, Inc. under the Sublease as so changed, modified, altered or assigned. No exercise or non -exercise by Sublandlord of any right hereby given Sublandlord, no dealing by Sublandlord with Guarantor or any guarantor or any other person, and no change, impairment, release or suspension of any right or remedy of Sublandlord against any person, including Subtenant and any other guarantor, shall in any way affect any of the obligations of Guarantor hereunder or shall give Guarantor any recourse against Sublandlord. 3. This Guaranty shall not be released, modified or affected by failure or delay on the part of Sublandlord to enforce any of the rights or remedies of Sublandlord under the Sublease, whether pursuant to the terms thereof or at law or in equity. No provisions of this Guaranty or rights of Sublandlord hereunder can be waived in whole or in part nor can Guarantor be released from Guarantor's obligations hereunder except by a writing duly executed by an authorized officer of CIM/Huntington, Inc. and the Executive Director of the Agency or designee. 4. Guarantor hereby expressly waives and relinquishes all rights, remedies and defenses accorded by applicable law to guarantors and agrees not to assert or take advantage of any such rights, remedies or defenses, including but not limited to (a) any right to require Sublandlord, as a condition to enforcement of this Guaranty, to proceed against Subtenant or any other person or to pursue any other right or remedy in Sublandlord's power before proceeding against Guarantor; (b) any defense that may arise by reason of the incapacity, lack of authority, death or disability of any other person or persons or the failure of Sublandlord to file or enforce a claim against the estate (in administration, bankruptcy or any other proceeding) of any other person or persons; (c) any defense based upon the failure to give notice of the acceptance of this Guaranty by any person; (d) any defense based upon any modification, compromise, acceleration or change in the terms of the Sublease; (e) except for notices expressly required in this Guaranty, any defense based upon the failure to make, give or serve demand, notice of default or nonpayment, presentment, protest and all other notices of any kind to which Guarantor might be entitled in connection with this Guaranty or the Sublease; (f) any defense based upon an election of remedies by Sublandlord; (g) any defense based upon any lack of diligence by Sublandlord in enforcing the terms of the Sublease; (h) any defense based upon any statute or rule of law which provides that the obligation of a surety must be neither larger in amount nor in other respects 2 300-003 Guaranty of Sublease V. 3 more burdensome than that of the principal; (i) any duty on the part of Sublandlord to disclose to Guarantor any facts Sublandlord may now or hereafter know about Subtenant, regardless of whether Sublandlord has reason to believe that any such facts materially increase the risk beyond that which Guarantor intends to assume, or has reason to believe that such facts are unknown to Guarantor, or has a reasonable opportunity to communicate such facts to Guarantor, it being understood and agreed that Guarantor is fully responsible for being and keeping informed of the financial condition of Subtenant and of all circumstances bearing on the risk of nonperformance of any obligations hereby guaranteed; 0) any defense arising because of an election made by Sublandlord under Section 1111(b)(2) of the Federal Bankruptcy Code or any similar statute; and (k) any defense based on any borrowing or grant of a security interest under Section 364 of the Federal Bankruptcy Code, it being agreed by Guarantor that this Guaranty is in the nature of an absolute guarantee of payment and performance and not of collection and that the failure of Sublandlord to exercise any rights or remedies it has or may have against Subtenant shall in no way impair the obligation or liability of Guarantor hereunder. 5. Except as expressly set forth in this Guaranty, no notice of default need be given to Guarantor, it being specifically agreed and understood that this Guaranty is a continuing guaranty under which Sublandlord may proceed forthwith and immediately against Subtenant or against Guarantor following any breach or default by Subtenant or for the enforcement of any rights which Sublandlord may have as against Subtenant pursuant to or under the terms of the Sublease or at law or in equity. 6. Sublandlord shall have the right to proceed against Guarantor following any breach or default by Subtenant without first proceeding against Subtenant and (except for notices expressly required in this Guaranty) without previous notice to or demand upon either Subtenant or Guarantor. 7. Until all the terms, covenants and conditions of the Sublease are fully performed and observed by Subtenant, Guarantor (a) shall have no right of subrogation against Subtenant by reason of any payments or acts of performance by Guarantor in compliance with the obligations of Guarantor hereunder, (b) shall not take any action to enforce any remedy which Guarantor now or hereafter shall have against Subtenant by reason of any one or more payments or acts of performance by Guarantor in compliance with the obligations of Guarantor hereunder, and (c) subordinates any liability or indebtedness of Subtenant now or hereafter held by Guarantor to the obligations of Subtenant to Sublandlord under the Sublease. 8. Guarantor has made an independent investigation of the financial condition of Subtenant and the ability of Subtenant to perform the obligations hereby guaranteed prior to making this Guaranty, and Guarantor hereby waives any defense that Guarantor may have by reason of the failure of Sublandlord or any successor- in -interest to Sublandlord to provide Guarantor with any information respecting the financial condition of Subtenant, or Subtenant's ability to perform any of the obligations hereby guaranteed. 9. The obligations of Guarantor hereunder are independent of the obligations of Subtenant, and, in the event of any default hereunder, a separate action or actions may be brought and prosecuted against Guarantor whether or not Subtenant is joined therein or a separate action or actions are brought against Subtenant. Sublandlord's rights hereunder shall 300-003 Guaranty of Sublease V. 3 not be exhausted by its exercise of any of its right or remedies or by any such action or by any number of successive actions until and unless all indebtedness and obligations, the payment and performance of which are hereby guaranteed, have been paid and fully performed. 10. Guarantor shall pay to Sublandlord reasonable attorneys' fees and all costs and other expenses that Sublandlord expends or incurs in collecting or compromising any indebtedness hereby guaranteed or in enforcing this Guaranty against Guarantor whether or not suit is filed, expressly including but not limited to all costs, attorneys' fees and expenses incurred by Sublandlord in connection with any insolvency, bankruptcy, reorganization, arrangement or other similar proceedings involving Guarantor which in any way affect the exercise by Sublandlord of its rights and remedies hereunder. 11. If any provision or portion thereof of this Guaranty is declared or found by a court of competent jurisdiction to be unenforceable or null and void, such provision or portion thereof shall be deemed stricken and severed from this Guaranty, and the remaining provisions and portions thereof shall continue in full force and effect. 12. This Guaranty shall inure to the benefit of Sublandlord, its successors and assigns, and shall bind the heirs, executors, administrators, personal representatives, successors and assigns of Guarantor. 13. When the context and construction so require, all words used in the singular herein shall be deemed to have been used in the plural and vice versa, and the masculine shall include the feminine and neuter and vice versa. The word "person" as used herein shall include any individual, company, firm, association, partnership, corporation, trust or other legal entity of any kind whatsoever. 14. In the event any action is brought to enforce or interpret the terms of this Guaranty, the prevailing party in such action shall be entitled to reimbursement by the other party of its costs and expenses, including without limitation its reasonable attorneys' fees, incurred therein. 15. This Guaranty and all matters that in any way relate to the transactions contemplated by this Guaranty shall be governed by the laws of the State of California, and venue of all court actions shall be in Los Angeles or Orange Counties, as selected by Sublandlord. 16. In the event that (i) the Redevelopment Agency of the City of Huntington Beach (the "Agency") exercises the election contained in Section 35.26 of the Sublease; (ii) the Agency becomes the subtenant under the Sublease, or (iii) CIM Group, LLC assigns its rights under that certain Disposition and Development Agreement dated June 17, 1999 (the "DDA") between Guarantor and the Agency to an acceptable transferee pursuant to Section 315 of the DDA or Section 4 of the Agreement Containing Covenants Affecting Real Property recorded pursuant to the DDA or the Memorandum of Sublease, Option to Purchase Fee and Agreement Containing Covenants Affecting Real Property recorded pursuant to the Sublease, then this Guaranty shall expire and be of no further force and effect after the effective date of such event, 4 300-003 Guaranty of Sublease V. 3 without, however, limiting Guarantor's obligations for Subtenant's liabilities accruing prior to such expiration. written. WHEREFORE, Guarantor has executed this Guaranty as of the day and year first above GUARANTOR: CIM Group, LLC By: Name: Title: 5 300-003 Guaranty of Sublease V 3 Ground Lease and Option to Purchase Fee . . ......... ..... . -'' GROUND LEASE AND OPTION TO PURCHASE FEE by and between Frank M. Cracchiolo, 'Trustee for the Revocable Trust dated .Tune 12,1979, and Salvator W. and Barbara F. Cracchiolo (collectively, "Landlord") and CINI/Huntington, Inc. and Redevelopment Agency of the City of Huntington Beach (collectively, "Tenant") 300-003 Hunt Beach Ground Lze. VS TABLE OF CONTENTS Pale GROUNDLEASE SUMMARY.................................................................................................... 1 ARTICLE 1. FUNDAMENTAL INFORMATION............................................................... 6 ARTICLE 2. PURPOSE OF LEASE..................................................................................... 8 ARTICLE 3. AGREEMENT TO LEASE.............................................................................. 8 ARTICLE 4. ACCEPTANCE OF PROPERTY..................................................................... 8 ARTICLE5. TERM............................................................................................................... 9 ARTICLE6. BASIC RENT................................................................................................. 10 ARTICLE 7. ADDITIONAL RENT.................................................................................... 11 ARTICLE 8. RENT GENERALLY..................................................................................... 11 ARTICLE9. TENANT WORK........................................................................................... 12 ARTICLE10. USE................................................................................................................. 12 ARTICLE 11. COMPLIANCE WITH LAW......................................................................... 12 ARTICLE 12. ALTERATIONS AND ADDITIONS............................................................. 12 ARTICLE13. REPAIRS.......................................................................................................13 ARTICLE14. TAXES............................................................................................................ 13 ARTICLE 15. ASSIGNMENT AND SUBLETTING...........................................................15 ARTICLE 16. HOLD HARMLESS.......................................................................................16 ARTICLE 17. OWNERSHIP OF PROPERTY DURING TERM AND UPON EXPIRATION OR TERMINATION OF LEASE .......................................... 17 ARTICLE18. LIENS............................................................................................................. 18 ARTICLE19. SUBROGATION............................................................................................18 ARTICLE 20. TENANT'S INSURANCE............................................................................. 18 ARTICLE21. UTILITIES...................................................................................................... 20 ARTICLE22. HOLDING OVER.......................................................................................... 20 ARTICLE 23. ENTRY BY LANDLORD.............................................................................. 20 ARTICLE 24. DAMAGE, RECONSTRUCTION................................................................. 21 ARTICLE25. DEFAULT...................................................................................................... 22 ARTICLE 26. EMINENT DOMAIN..................................................................................... 24 ARTICLE 27. ESTOPPEL OFFSET STATEMENT............................................................. 24 ARTICLE 28. HAZARDOUS MATERIALS........................................................................ 25 ARTICLE 29. TENANT'S SIGNAGE.................................................................................. 26 ARTICLE 30.. MEMORANDUM OF LEASE....................................................................... 26 ARTICLE 31. MORTGAGEE PROTECTION PROVISIONS ............................................. 26 ARTICLE 32. LANDLORD'S RIGHT TO CAUSE SALE OF LAND ................................ 32 ARTICLE 33. OPTION TO PURCHASE FEE SIMPLE TITLE TO PROPERTY .............. 32 ARTICLE 34. RIGHT OF FIRST OFFER.............................................................................. 33 ARTICLE 35. GENERAL PROVISIONS............................................................................. 34 EXHIBIT A - LEGAL DESCRIPTION EXHIBIT B - MEMORANDUM OF LEASE EXHIBIT C - ARBITRATION OF DISPUTES 300-003 Hunt. Beach Ground Ue. V8 _ V _ GROUND LEASE SUMMARY A. Landlord: Frank M. Cracchiolo, Trustee for the Revocable Trust dated June 12, 1979, and Salvator W. and Barbara F. Cracchiolo, collectively with their successors and assigns. B. Tenant: CIM/Huntington' Inc., a California corporation, and Redevelopment Agency of the City of Huntington Beach. C. Commencement Date: Provided Tenant has paid Landlord the first month's Basic Rent, the earliest to occur of (i) issuance of all required building permits for the mixed use hotel and retail project (including subterranean garage and surface parking) (the "Project") which Tenant intends to construct on the Property and other property in the vicinity of the Property, (ii) upon demolition of the improvements on the Property, (iii) when all of the existing space tenants in the existing improvements on the Property vacate the Property at the election or demand of Tenant or the Redevelopment Agency of the City of Huntington Beach, (iv) November 1, 2001 or (v) such earlier date on which Tenant starts paying Basic Rent. D. The Premises: The property leased hereunder (the "Pro e ") is described in the Legal Description attached hereto as Exhibit "A" and incorporated herein by this reference E. 'Term: Twenty-five (25) years, with three options to extend (the first two options for 25 years each and the third option for 24 years). F. Landlord's address for notices: 19712 Quiet Bay Lane, Huntington Beach, CA 92648. G. 'Tenant's address for notices: 6922 Hollywood Boulevard, Suite 900, Hollywood, California 90028 and to City Hall, 2000 Main Street, Huntington Beach, CA 92648. A copy of all notices shall be sent to Fragner Law Corporation, 333 S. Grand Avenue, Suite 3030, Los Angeles, CA 90071, Attention: Matthew C. Fragner, and to Kane Balhner & Berkman, 515 S. Figueroa Street, Los Angeles, CA 90017, Attention: Murray Kane. H. 'Tenant's Basic Rent: (a) $168,000 per annum, payable in equal monthly installments on the first day of each calendar month, as adjusted pursuant to subparagraph (b). (b) Basic Rent Adjustment. (a) Definitions. As used herein -- (i) "Index" means the Consumer Price Index Los Angeles/Anaheim/Riverside (CPI-U) All Urban Consumers (1982-84=100) as published from time to time by the United States Department of Labor's Bureau of Labor Statistics. Should the Bureau discontinue the publication of the above - described index, or publish it less frequently than semiannually, or alter it in some -1- 300-003 HunL Beach Ground Lse. VB other manner, then Landlord shall adopt a substitute index or substitute procedure which reasonably reflects and monitors consumer prices. (ii) "Base Period Index" means the Index for the calendar month which is four (4) months prior to the calendar month in which the Commencement Date occurs. (iii) "Comparison Month" means the calendar month which is four (4) months prior to the calendar month in which a particular Rent Adjustment Date occurs. (iv) "Rent Adjustment Date" means (i) the date that is the first (1st) day of the first full calendar month following the fifth (5th) anniversary of the Commencement Date (unless the Commencement Date falls on the first (Ist) day of a calendar month, in which event the Rent Adjustment Date shall be the fifth (5th) anniversary of the Commencement Date) and (ii) each fifth (5th) anniversary of the date described in clause (i). (c) Adjustment of Basic Rent. Effective as of each Rent Adjustment Date, the monthly Basic Rent payable by Tenant under this Lease shall be adjusted to equal an amount equal to the product of $168,000 and the fraction equal to the Index for the Comparison Month for the applicable Rent Adjustment Date divided by the Base Period Index, provided that any increase in Basic Rent for any applicable Rent Adjustment Date shall not exceed 14% over the Basic Rent in effect prior to such adjustment. (d) Each of CEV1/Huntington, Inc. and the Redevelopment Agency of the City of Huntington Beach shall be responsible for the payment of Basic Rent and Additional Rent, and if either fails to pay such amounts, the other shall be responsible for all such payments and any late charges. I. Rights to 'Terminate Lease. (a) If the Commencement Date has not occurred by October 30, 2001, then at the election of either party by written notice to the other this Lease shall terminate, and any deposit held by Landlord or an escrow holder shall be returned to Tenant. .(b) If the Disposition and Development Agreement dated as of June 17, 1999 between CIM/Huntington, Inc. and the Redevelopment Agency of the City of Huntington Beach (the "DDA") is cancelled or modified in size or scope with respect to blocks 104 or 105 (or the site plan with respect to blocks 104 or 105 is modified), Landlord shall have the right to review the amended DDA and cancel the Lease and cancel the escrow, and at no cost whatsoever to Landlord within 60 days after Landlord has been given a copy of the modified DDA. In the event Landlord decides to cancel the Lease and/or escrow, CIM/Huntington Beach and the Redevelopment Agency of the City of Huntington Beach shall defend his right to do so. The foregoing paragraph (b) shall expire on the date the Commencement Date occurs and the first monthly Basic Rent installment is paid to Landlord. 300-003 Hunt.Beach Ground Lse. V8 -2- (c) If any material amount of hazardous materials is discovered on the Property within 30 days after the execution of this Lease by all parties, Tenant shall have the right to cancel this Lease by giving Landlord written notice within 5 days after the expiration of such 30 day period. J. Landlord's Right to Cause Sale of Land. Section 32 of the Lease provides Landlord with the right to require Tenant to purchase Landlord's interest in the Property on the twentieth anniversary of the Commencement Date, the expiration of the initial Term and each exercised renewal option. K. Option to Purchase Fee Simple Title to Property. Section 33 of the Lease provides Tenant with the right to purchase Landlord's interest in the Property on the twentieth anniversary of the Commencement Date, the date of expiration of the initial term and each date of expiration of each renewal term. L. Relocation Costs. SUBJECT TO SUCH REPRESENTATION, TENANT SHALL BE RESPONSIBLE FOR ALL COSTS INCURRED IN CONNECTION WITH TERMINATING SUCH TENANCIES AND PAYMENT OF ANY RELOCATION EXPENSES (IF ANY) REQUIRED BY APPLICABLE LAW, AND SHALL INDEMNIFY AND HOLD LANDLORD HARMLESS FROM AND AGAINST ANY SUCH COSTS OR EXPENSES. M. Tenant to Pay Costs of Property and Development. Tenant shall be responsible for all costs incurred with the operation of the Property and construction of Improvements, including without limitation all parking, insurance, open space, set backs, on -site and off -site improvements; liabilities, taxes and repairs. N. Prior Notice. Tenant shall give written notice to Landlord at least ten (10) days prior to commencement of any work, to enable Landlord to post notices of non -responsibility. O. Hold Harmless. (a) Tenant's Indemnification. Tenant shall indemnify, defend, and hold Landlord harmless from and against any and all costs, claims, demands, actions, causes of action, liability, loss, or damage, including attorneys' fees and costs (collectively referred to as "Claims" and Claims that are made by third parties, collectively referred to as "Third Party Claims") whether for injury to or death of persons or damage to real or personal property or otherwise, arising out of or in connection with Tenant's use or occupancy of the Property, any activity, work, or other thing done, permitted, or suffered by Tenant in or about the Property, or arising from any reason or cause whatsoever in connection with the use or occupancy of the Property by any party during the Term of this Lease. The provisions of the preceding sentence shall not apply with respect to any active negligence or intentional acts of Landlord, or its agents, servants, contractors and employees (collectively "Landlord Parties") occurring after the date of this Lease. Tenant shall further indemnify, defend, and hold Landlord harmless from and against any and all Third Party Claims arising from any breach or default in the performance of any obligation on Tenant's part to be performed under the terms of this Lease or arising from any wrongful act or negligence of Tenant or any officer, agent, employee, guest, or invitee of Tenant. Tenant, as a material part of the consideration to Landlord, hereby assumes all risk of damage to property or injury to persons in, upon, or about the Property occurring during the term of this 300-003 Hunt.Beach Ground Lse. V8 -3- Lease from any cause other than the active negligence or intentional acts of Landlord Parties occurring after the date of this Lease, and Tenant hereby waives all claims in respect thereof against Landlord. Tenant's obligation to indemnify under this paragraph shall include attorneys' fees, investigation costs, and other reasonable costs, expenses, and liabilities incurred by Landlord. If the ability of Tenant to use the Property is interrupted for any reason, Landlord shall not be liable to Tenant for any loss or damages occasioned by such loss of use unless caused by the active negligence or intentional acts of Landlord Parties. (b) No Liability. Landlord or its agents shall not be liable for loss or damage to any property by theft or otherwise, nor for any injury to or damage to persons or property resulting from fire, explosion, falling plaster, steam, gas, electricity, water, or rain which may leak from any part of the Property or from the pipes, appliances, or plumbing works therein or from the roof, street, or subsurface or from any other place resulting from dampness or any other cause whatsoever, unless caused by or due to the negligent or intentional acts or omissions of Landlord Parties. Tenant shall give prompt notice to Landlord in case of fire or accidents in the Property or of defects therein or in the fixtures or equipment. P. Waste, Refuse. Tenant shall not keep any trash, garbage, waste, or other refuse on the Property except in sanitary containers and shall regularly and frequently remove the same from the Property. Tenant shall keep all incinerators, containers, and other equipment used for the storage or disposal of such matter in a clean and sanitary condition. Tenant shall surrender the Property at the expiration or termination of this Lease free of any Hazardous Materials or contamination caused by Tenant's activities, and free and clear of all judgments, liens, or encumbrances and shall, at its own cost and expense, repair all damage and clean up or perform any remedial action necessary relating to any Hazardous Materials or contamination caused by Tenant's activities. Tenant shall, at its sole cost and expense, remediate in accordance with law or remove any alterations or improvements that may be contaminated or may contain Hazardous Materials caused by Tenant's activities. Q. Definition of Leasehold Mortgage. For purposes of this Lease, the term "Leasehold Mortgage" means a conveyance of a security interest in this Lease and all of Tenant's interests in the Property (collectively referred to as "Tenant's Leasehold Interests") to a lender (a "Leasehold Mortgagee") encumbering Tenant's Leasehold Interest, or the conveyance of Tenant's Leasehold Interests to the Leasehold Mortgagee or its assignee in connection with a foreclosure or a deed in lieu of foreclosure of such loan. Landlord agrees to permit Tenant to pledge Tenant's Leasehold Interests to a Leasehold Mortgagee as security under a Leasehold Mortgage without Landlord's consent. In the event of a default or breach by Tenant of any security instrument securing a Leasehold Mortgage, Landlord shall have the right to cure the default provided such cure is completed at least five (5) business days before the date of foreclosure. In such event, Landlord shall be entitled to reimbursement by Tenant of all costs and expenses incurred by Landlord in curing the default, with interest at the highest rate permitted by law, as Additional Rent (collectively, "Landlord's Cure Payments"), provided in the event of a subsequent foreclosure of a permitted Leasehold Mortgage the party acquiring Tenant's Leasehold Interests shall not be obligated to pay Landlord any of Landlord's Cure Payments. R. Memorandum of Lease. Promptly after the Commencement Date has occurred, all debt and/or equity financing for the initial construction of the Project is in place, and Landlord has received the first month's Basic Rent, Landlord and Tenant shall execute in 300-003 Hunt.Beach Ground Lse. V8 _4_ recordable form a Memorandum of Lease and Option to Purchase Fee, substantially in the form attached hereto as Exhibit "B" which is incorporated herein by this reference, which either party is authorized to record. The Memorandum of Lease and Option to Purchase Fee shall be removed from title in the event an Event of Default is not cured within thirty days after written notice, for the duration of such Default, subject to the last sentence of Section 25.5. S. Costs Prior to the Second Anniversary of Commencement Date. Prior to the Commencement Date (including the period beginning with the date of initial negotiations prior to the execution of this Lease) and continuing throughout the period ending two years after the Commencement Date, in the event of any dispute regarding the Lease, or in the event Landlord consults with an attorney or incurs other costs in connection with the Lease, Tenant shall pay all such fees and costs incurred by Landlord, and Tenant shall not be entitled to a reimbursement or recovery of any fees or costs paid by Tenant notwithstanding any other paragraph in this Agreement. T. Other Taxes. If at any time during the Lease Term under the laws of the United States, or any state, county, or city, or any political subdivision thereof in which the building is situated, a tax or excise on rent or any other tax or other charge however described is levied or assessed by any such political body against Landlord on account of ownership of the Property or rentals payable to Landlord hereunder, such tax or excise shall be considered "taxes" for the purposes of this Section 14 and shall be paid by Tenant in the manner provided above, excluding, however, from such tax or excise to be paid by Tenant any amount assessed against Landlord as state or federal income tax, gift tax or inheritance tax. U. References to Frank Cracchiolo. All references in the Lease to "Frank Cracchiolo" shall mean Landlord. 300-003 Hunt.Beach Ground Lse. V8 -5- GROUND LEASE AND OPTION TO PURCHASE FEE This GROUND LEASE (the "Lease") is dated as of March 8, 2000, between Frank M. Cracchiolo, Trustee for the Revocable Trust dated June 12, 1979, and Salvator W. and Barbara F. Cracchiolo (collectively with their successors and assigns, "Landlord") and CIM/Huntington, Inc., a California corporation, and Redevelopment Agency of the City of Huntington Beach (collectively, "Tenant"), who agree as follows: FUNDAMENTAL INFORMATION 1.1 Landlord: Frank M. Cracchiolo, Trustee for the Revocable Trust dated June 12, 1979, and Salvator W. and Barbara F. Cracchiolo, collectively with their successors and assigns. 1.2 Tenant. CIM/Huntington, Inc., a California corporation, and Redevelopment Agency of the City of Huntington Beach. 1.3 Commencement Date: Provided Tenant has paid Landlord the first month's Basic Rent, the earliest to occur of (i) issuance of all required building permits for the mixed use hotel and retail project (including subterranean garage and surface parking) (the "Project") which Tenant intends to construct on the Property and other property in the vicinity, of the Property, (ii) upon demolition of the improvements on the Property, (iii) when all of the existing space tenants in the existing improvements on the Property vacate the Property at the election or demand of Tenant or the Redevelopment Agency of the City of Huntington Beach, (iv) November 1, 2001 or (v) such earlier date on which Tenant starts paying Basic Rent. 1.4 The Premises: The property leased hereunder (the "Pro e ") is that real property described in the Legal Description attached hereto as Exhibit "A" and incorporated herein by this reference, and any and all buildings, structures, or other improvements either now or hereafter located on the land. 1.5 Term: The Lease term (the "Term") shall commence on the Commencement Date, and shall continue until the twenty-fifth anniversary of the Commencement Date, or to such later date resulting from Tenant's exercise of its options to renew the Term of this Lease as provided in Section 5.3, or on the date resulting from an earlier termination as hereinafter set forth. After the Commencement Date has been determined, Landlord and Tenant shall execute, acknowledge and deliver an amendment of Memorandum of Lease and Option to Purchase Fee setting forth the Commencement Date and expiration date of the initial Term hereof. For purposes of this Lease, the following definitions shall apply: (a) Each 12 month period, beginning on the first day of the month following the Commencement Date, shall be referred to as a "Lease Year." 300-003 HunGBeach Ground Lse. V8 -6- (b) The "Term" shall include the initial Term and any applicable Option (as defined in Section 5.3, below). 1.6 Landlord's address for notices: 19712 Quiet Bay Lane, Huntington Beach, CA 92648. 1.7 Tenant's address for notices: 6922 Hollywood Boulevard, Suite 900, Los Angeles, California 90049 and to City Hall, 2000 Main Street, Huntington Beach, CA 92648. A copy of all notices shall be sent to Fragner Law Corporation, 333 S. Grand Avenue, Suite 3030, Los Angeles, CA 90071, Attention: Matthew C. Fragner, and to Kane Ballmer & Berkman, 515 S. Figueroa Street, Los Angeles, CA 90017, Attention: Murray Kane. 1.8 Tenant's Basic Rent: $168,000 per annum, payable in equal monthly installments on the first day of each calendar month, as adjusted pursuant to Section 6.2. 1.9 The Specified Use of the Property. For the Term of this Lease, including any Option (defined in Section 5.3, the Property shall be used as part of a mixed -use development to be constructed on the Property (the "Improvements") and for any other lawful purpose. 1.10 Rights to Terminate Lease. (a) If the Commencement Date has not occurred by October 30, 2001, then at the election of either party by written notice to the other this Lease shall terminate, and any deposit held by Landlord or an escrow holder shall be returned to Tenant. (b) If the Disposition and Development Agreement dated as of June 17, 1999 between CHVI/Huntington, Inc. and the Redevelopment Agency of the City of Huntington Beach (the "DDA") is cancelled or modified in size or scope with respect to blocks 104 or 105 (or the site plan with respect to blocks 104 or 105 is modified), Landlord shall have the right to review the amended DDA and cancel the Lease and cancel the escrow, and at no cost whatsoever to Landlord within 60 days after Landlord has been given a copy of the modified DDA. In the event Landlord decides to cancel the Lease and/or escrow, CIM/Huntington Beach and the Redevelopment Agency of the City of Huntington Beach shall defend his right to do so. The foregoing paragraph (b) shall expire on the date the Commencement Date occurs and the first monthly Basic Rent installment is paid to Landlord. (c) If any material amount of hazardous materials is discovered on the Property within 30 days after the execution of this Lease by all parties, Tenant shall have the right to cancel this Lease by giving Landlord written notice within 5 days after the expiration of such 30 day period. 300-003 Hunt.Beach Ground Ise. V8 _7_ 2. PURPOSE OF LEASE Landlord has agreed to lease the Property to Tenant in accordance with this Lease, and Tenant will construct, manage and operate the Improvements for the uses permitted by this Lease. 3. AGREEMENT TO LEASE 3.1 Lease of Property. Landlord hereby leases the Property to Tenant, and Tenant hereby leases the Property from Landlord, subject to the provisions and conditions herein set forth, for an amount of rental as described in Sections 6 and 7 hereof; together with all right, title and interest, if any, of Landlord, to the land lying in the streets and roads adjoining the Property, to the center line thereof, and in and to any and all easements and rights of way appurtenant to the Property, subject nevertheless to all public easements and rights of use of such streets, rights of way and easements; together with all awards, rents, issues and profits of whatsoever nature of or with respect to any of the Property and the Improvements, except as expressly reserved to Landlord. 3.2 Ownership of Improvements. The parties agree that during the Term of this Lease, all Improvements located on the Property shall be owned in fee by Tenant. 3.3 Grant of Easements. Within twenty (20) days after Tenant's submission, at no cost to Landlord, Landlord agrees to execute, acknowledge and deliver grants of easements necessary for the development of the Project and Property, as well as subsequent development of the Property during the Term hereof, provided no such easement shall materially diminish the value of the Property. 3.4 Consent to Bond Financing. Upon Tenant's request, with Tenant responsible for all costs, Landlord shall consent, approve and/or vote in favor of any Mello Roos or other bond financing transaction relating to the construction of improvements on or near the Property. 4. ACCEPTANCE OF PROPERTY 4.1 Disclaimer. Except as may be expressly set forth in this Lease, Landlord makes no representations, express or implied, with respect to the legality, fitness, or desirability of the Property for Tenant's intended use or for any other uses. Tenant shall conduct its own investigation to its satisfaction with respect to zoning, local codes and regulations, and other matters affecting Tenant's ability to use and improve the Property for Tenant's intended use. It shall be Tenant's responsibility, at no cost to Landlord, to ensure that zoning of the Property, and all applicable City land use requirements are, as of the date of execution hereof, such as to permit development of the Property and construction of improvements thereon in accordance with the provisions of this Lease and the use, operation and maintenance of such improvements as provided in this Lease. 4.2 Hazardous Substances. Landlord has no knowledge of any other hazardous substance located on the Property, without any duty to investigate or inquire. 300-003 Hunt.Beach Ground Ise. V8 -8- 4.3 Existing Leases. Landlord represents and warrants that there are no leases or contracts binding the Property except for the existing tenants, whose tenancies may all be terminated on 90 days' written notice. SUBJECT TO SUCH REPRESENTATION, TENANT SHALL BE RESPONSIBLE FOR ALL COSTS INCURRED IN CONNECTION WITH TERMINATING SUCH TENANCIES AND PAYMENT OF ANY RELOCATION EXPENSES (IF ANY) REQUIRED BY APPLICABLE LAW, AND SHALL INDEMNIFY AND HOLD LANDLORD HARMLESS FROM AND AGAINST ANY SUCH COSTS OR EXPENSES. 4.4 "AS -IS". Except as expressly provided in this Lease, the Property shall be leased in an "as is" condition, with no warranty or liability, express or implied, on the part of Landlord as to the condition of any buildings on the Property, the soil (or water), its geology, the existence of known or unknown faults or any other conditions relating to the Property. It shall be the sole responsibility of Tenant, at Tenant's expense, to investigate and determine the condition of any building, soil (and water) relating to the Property and the suitability of the Property for the uses contemplated by this Lease. If the condition of the Property, or any part thereof, is not in all respects entirely suitable for the use of the Property contemplated by this Lease, then it is the sole responsibility and obligation of Tenant to take such action as may be necessary to place the Property and the soil (and water) condition thereof in all respects in a condition that is suitable for such use (provided Tenant shall not be responsible for any such actions if it terminates the Lease pursuant to Section 1.10). 5. TERM 5.1 Initial Term. The Term of this Lease shall commence on the Commencement Date and shall continue for twenty-five (25) Lease Years until the expiration date, as set forth in Section 1.5, above, unless Tenant exercises its right to renew the Lease pursuant to Section 5.3, below, or the Lease is terminated sooner pursuant to the provisions and conditions hereof. 5.2 Surrender. Subject to the damage and reconstruction provisions of Section 24, Tenant shall upon the expiration or sooner termination of this Lease surrender the Property to Landlord in good and clean condition, ordinary wear and tear excepted, including any buildings, structures, improvements or additions then located on the Property which are, during the Term of this Lease, owned in fee by Tenant. 5.3 Option to Renew the Lease. (a) Tenant may, at its option, renew this Lease for two (2) additional periods of twenty-five (25) Lease Years each and one additional period of twenty-four Lease Years (but not to exceed a total Term of ninety-nine (99) years), each such additional period being referred to as an "Option," subject to all the provisions of this Lease, and on the same terms and conditions as for the initial Term. Tenant's right to renew this Lease for the first additional Option and the subsequent Option is subject to the following conditions: (b) Tenant shall give written notice to Landlord of its intent to renew the Lease for each Option at any time at least 180 days prior to the expiration of the initial Term or the first Option, as the case may be. 300-003 Hunt.Beach Ground Lse. V8 -9- (c) Tenant may not renew the term of this Lease if, at the time notice of intent to renew is given, or at the time of the commencement of the Option, an Event of Default has occurred and is continuing in the payment of Rent (as defined below) or in any other material provision of this Lease, Landlord has given written notice of such Event of Default and such Event of Default remains uncured at the expiration of the period within which Tenant may cure such default as provided in this Lease. Nothing herein shall be construed to waive or limit Landlord's right to terminate this Lease upon any Event of Default by Tenant (including any default in addition to failure to pay Rent) as provided in this Lease, notwithstanding Tenant's exercise of its right to renew hereunder regardless of such other default. (d) In lieu of executing a new lease for any additional Option, each party shall, at the request of the other, endorse on the original Lease or on a true copy of the original Lease that party's signature or signatures, the date the renewal option was exercised, and the words "renewal option exercised." Alternatively, each party shall, at the request of the other, execute a memorandum, in recordable form, acknowledging the fact that the renewal option has been exercised and otherwise complying with the requirements of law for an effective memorandum or abstract of lease. 6. BASIC RENT 6.1 Initial Basic Rent. For the period beginning on the Commencement Date, and continuing thereafter throughout the initial Term, Tenant shall pay Landlord Basic Rent in the amount of One Hundred Sixty -Eight Thousand Dollars ($168,000) annually, as adjusted pursuant to Section 6.2 below. Such initial Basic Rent shall be payable in equal monthly installments, each installment being payable in advance on the first day of each calendar month beginning on the Commencement Date and continuing throughout the Term. Without limiting Tenant's obligations, and as a matter of clarification, each of CPA/Huntington, Inc. and Redevelopment Agency of the City of Huntington Beach shall be responsible for the timely payment of Basic Rent and other rent payable hereunder. 6.2 Basic Rent Adjustment. (a) Definitions. As used herein -- (i) "Index" means the Consumer Price Index Los Angeles/Anaheim/Riverside (CPI-U) All Urban Consumers (1982-84=100) as published from time to time by the United States Department of Labor's Bureau of Labor Statistics. Should the Bureau discontinue the publication of the above -described index, or publish it less frequently than semiannually, or alter it in some other manner, then Landlord shall adopt a substitute index or substitute procedure which reasonably reflects and monitors consumer prices. (ii) "Base Period Index" means the Index for the calendar month which is four (4) months prior to the calendar month in which the Commencement Date occurs. (iii) "Comparison Month" means the calendar month which is four (4) months prior to the calendar month in which a particular Rent Adjustment Date occurs. 300-003 Hunt.Beach Ground Lse. V8 _ 1 0- (iv) "Rent Adjustment Date" means (i) the date that is the first (lst) day of the first full calendar month following the fifth (5th) anniversary of the Commencement Date (unless the Commencement Date falls on the first (1st) day of a calendar month, in which event the Rent Adjustment Date shall be the fifth (5th) anniversary of the Commencement Date) and (ii) each fifth (5th) anniversary of the date described in clause (i). (b) Adjustment of Basic Rent. Effective as of each Rent Adjustment Date, the monthly Basic Rent payable by Tenant under this Lease shall be adjusted to equal an amount equal to the product of $168,000 and the fraction equal to the Index for the Comparison Month for the applicable Rent Adjustment Date divided by the Base Period Index, provided that any increase in Basic Rent for any applicable Rent Adjustment Date shall not exceed 14% over the Basic Rent in effect prior to such adjustment. 6.3 Tenant's Responsibility. Each of CIMIHuntington, Inc. and the Redevelopment Agency of the City of Huntington Beach shall be responsible for the payment of Basic Rent and Additional Rent, and if either fails to pay such amounts, the other shall be responsible for all such payments and any late charges. 7. ADDITIONAL RENT In addition to any Basic Rent that is due pursuant to this Lease, Tenant shall pay to Landlord, as additional consideration for the lease of the Property, any sums described in this Lease as "Additional Rent." 8. RENT GENERALLY 8.1 Triple Net. All Basic Rent and Additional Rent (collectively, "Rent") shall be paid absolutely net to Landlord, so that this Lease shall yield to Landlord the full amount of the Rent throughout the Term of this Lease. This Lease is and shall be a "Pure Net" or "Triple Net" lease, as such terms are commonly used in the real estate industry, it being intended that Tenant shall pay all costs, expenses and charges arising out of the use, occupancy and operation of the Property. 8.2 Pa een_t. All payments of Rent and of other sums to be paid by Tenant to Landlord pursuant to this Lease shall be paid in lawful money of the United States of America, at the Landlord's address set forth above, or at such other place within the United States or to such other person, firms or corporations as Landlord from time to time may designate in writing. Except as otherwise expressly provided by the terms of this Lease, Landlord and Tenant agree that all sums payable hereunder to or on behalf of Landlord shall be paid without notice or demand. 8.3 Late Charge and Interest. Should Tenant fail, for whatever reason, to make any rental payment required hereunder within ten (10) days after written notice of delinquency, then Tenant shall pay an Additional Rent equal to 4% of the amount due; provided, however, that nothing in this Section 8.3 shall be deemed to limit any of Landlord's other rights or remedies under this Lease or otherwise available at law or in equity. In addition to such late charge, interest shall accrue from the date of delinquency (without requiring written notice) on all delinquent rental payments at the rate of 10% per annum (not to exceed the maximum rate allowed by law). 300-003 Hunt.BeachGround Lse. V8 -11- 9. TENANT WORK Tenant shall be responsible for all improvement work on the Property in accordance with all applicable provisions of this Lease. 10. USE Tenant shall use the Property only for the specified uses set forth in Section 1.9 above and shall not use or permit the Property to be used for any other purposes. Tenant shall not cause, maintain, or permit any nuisance or waste in, on, or about the Property, normal wear and tear excepted. 11. COMPLIANCE WITH LAW 11.1 No Violation. Tenant shall not use the Property or permit anything to be done in or about the Property which will in any way conflict with any applicable law, statute, ordinance, or governmental rule, regulation or requirement now in force or which may hereafter be enacted or promulgated. Tenant shall, at its sole cost and expense, promptly comply with all applicable laws, statutes, ordinances, and governmental rules, regulations or requirements now in force or which may hereafter be enacted or promulgated, and any applicable requirements of any board of fire insurance underwriters or other similar bodies now or hereafter constituted, relating to the condition, use, or occupancy of the Property. 11.2 Judgment Conclusive. The judgment of any court of competent jurisdiction after all applicable appeals have been exhausted or appeal periods have expired or the admission of Tenant in any action against Tenant, whether Landlord be a party thereof or not, that Tenant has violated any law, statute, ordinance, or governmental rule, regulation, or requirement, shall be conclusive of that fact as between Landlord and Tenant. 12. ALTERATIONS AND ADDITIONS 12.1 No Prior Consent Required. Tenant may make any alterations, additions, or improvements to or on the Property or any building or structure thereon or any part thereof without the prior written consent of Landlord. 12.2 Tenant's Cost. All alterations, additions, or improvements by Tenant shall be made without cost or expense to Landlord, by responsible and licensed contractors. All improvements and equipment shall be designed, built, and installed in accordance with all applicable building codes and regulations, and Tenant shall obtain all necessary building permits. 12.3 Prior Notice. Tenant shall give written notice to Landlord at least ten (10) days prior to commencement of any work, to enable Landlord to post notices of non - responsibility. 12.4 Insurance. For all alterations costing in excess of $100,000, Tenant shall obtain and keep in effect "Builder's All Risk Insurance" during the period of construction and installation of any improvements being made by Tenant, including completed operations 300-003 Hunt.Beach Ground Lse. V8 -12- coverage, with coverage in the amount of at least 52,000,000, increased or decreased every five (5) years by the percentage increase or decrease in the Index from the Commencement Date of this Lease to the anniversary thereof most recently preceding the start of such construction (rounded to a reasonable amount), naming Landlord as an additional insured. Tenant shall deliver to Landlord a Certificate of Insurance evidencing such insurance coverage prior to commencement of the alterations. 12.5 Property Free of Liens. Tenant shall keep the Property free and clear of any and all liens and encumbrances which may arise at any time in connection with any improvement work by Tenant or its agents and contractors. Any mechanic's liens that have been recorded or stop notices that have been delivered shall be paid, settled or otherwise extinguished, discharged, released, waived or bonded around within twenty (20) days after notice thereof to Tenant. In addition, Tenant shall indemnify, defend, and hold Landlord harmless from and against any and all costs, expenses, claims, demands, damages, actions, causes of action, or liabilities of any kind which may arise at any time in connection with any improvement work by Tenant or its agents and contractors, including without limitation the design and installation of equipment and the renovation of the Property, except to the extent such costs, expenses, claims, demands, damages, actions, causes of action, or liabilities relate to the design of offsite improvements provided by Landlord or the negligence or willful misconduct of Landlord, its agents, representatives, employees or contractors. 13. REPAIRS . 13.1 Tenant's Obligations. At all times during the Term, Tenant shall, at Tenant's sole cost and expense, (i) keep and maintain any buildings on the Property in good condition and repair, ordinary wear and tear excepted; and (ii) undertake such maintenance of the Property from time to time as may be reasonable and customary under the circumstances. 13.2 Landlord's Obligations. Landlord shall not under any circumstances be obligated to undertake any maintenance, repair, or replacement of any portions of the Property. Tenant understands that Landlord is not obligated to maintain the structural portions of any building or structure, including the roof, exterior walls, and foundations of said building or structure; Landlord shall not be liable for any failure to make any such repairs or to perform any maintenance, whether by reason of any injury to or interference with Tenant's business or otherwise. Tenant waives any obligations which Landlord may have with respect to the tenantability of the Property and the right to make repairs at Landlord's expense under any law, statute, or ordinance now or hereafter in effect, including without limitation the provisions of California Civil Code sections 1941 and 1942. 14. TAXES 14.1 Payment Prior to Delinquency. Tenant shall promptly pay prior to delinquency, all real estate and real property taxes, or possessory interest tax, assessed against the Property, including such added assessment or omitted assessment which may be levied against the Property from time to time by the applicable governmental taxing authority for periods commencing upon the Commencement Date, and any increase in the assessment from time to time based on improvements to the Property. In addition, Tenant shall, during the Term 300-003 Hunt -Beach Ground Cse. V8 -13- of this Lease, pay any levy for the installation, maintenance or operations of local improvements affecting the Property as may be assessed by any governmental boards or bureaus having jurisdiction thereof. Notwithstanding the foregoing, any assessment or impositions for capital or public improvements which may be payable by law at the option of the taxpayer in installments may be so paid by Tenant in installments, together with any required interest. Upon written request of Landlord, Tenant shall furnish in writing to Landlord evidence of payment of all taxes and assessments required to be paid by Tenant during the Term hereof. If Landlord does not receive reasonable evidence of payment within 15 days after written request (which request may not be given until after the due date of such payment), Landlord may, at its option, pay the tax for Tenant. In such case, Tenant shall reimburse Landlord immediately upon demand, plus interest at the rate of ten percent (10%) per annum, as Additional Rent. If Tenant shall be obligated to pay any taxes, assessments, and charges hereunder during a partial year, the amount of any such taxes, assessments, and charges shall be prorated according to the length of time Tenant's obligation shall be in effect during the relevant tax period. 14.2 Tax Protest. Tenant shall have the right, by appropriate proceedings, to protest or contest in good faith any assessment or re -assessment of taxes, any special assessment, or the validity of any taxes or of any change in assessment or tax rate; provided, however, prior to any such challenge Tenant must either (i) pay the taxes alleged to be due in their entirety and seek a refund from the appropriate authority, or (ii) post a bond in an amount sufficient to insure full payment of the taxes. In any event, upon a final determination with respect to such contest or protest, Tenant shall promptly pay all sums found to be due with respect thereto. In any such protest or contest, Tenant may act in its own name; and at the request of Tenant, Landlord shall cooperate with Tenant in any way Tenant may reasonably require in connection with such contest or protest, including signing such documents as Tenant shall reasonably request, provided that such contest or protest shall be at Tenant's sole expense, and in the event any penalties, interest, or late charges become payable with respect to the taxes as a result of such contest or protest, Tenant shall pay the same. In the event Tenant obtains a refund as the result of Tenant's protest or contest and subject to the Tenant's obligation to pay Landlord's costs (if any) associated therewith, Tenant shall be entitled to such refund to the extent it relates to the Property during the Term of this Lease. 14.3 Personal Property Taxes. Tenant shall pay any and all personal property taxes assessed against equipment, trade fixtures, inventory, or other personal property located in, on, or about the Property. Tenant shall indemnify, defend, and hold Landlord and the Property harmless from and against any such personal property taxes. 14.4 Other Taxes. If at any time during the Lease Term under the laws of the United States, or any state, county, or city, or any political subdivision thereof in which the building is situated, a tax or excise on rent or any other tax or other charge however described is levied or assessed by any such political body against Landlord on account of ownership of the Property or rentals payable to Landlord hereunder, such tax or excise shall be considered "taxes" for the purposes of this Section 14 and shall be paid by Tenant in the manner provided above, excluding, however, from such tax or excise to be paid by Tenant any amount assessed against Landlord as state or federal income tax, gift tax or inheritance tax. 300-003 Hunt.Beach Ground Lse. V8 -14- 15. ASSIGNMENT AND SUBLETTING 15.1 Landlord Consent Required. Except for Permitted Transfers, Tenant shall not, under any circumstances, without the express prior written approval of Landlord, Transfer the Property or any portion thereof, or attempt to Transfer all or any portion of its interest in this Lease. Landlord shall grant consent to a proposed Transfer if the proposed transferee is financially qualified and has sufficient experience in the operation and management of similar commercial centers to perform all the agreements, undertakings and covenants of this Lease. To assist Landlord in determining whether the proposed transferee is so qualified, Tenant shall furnish to Landlord at no expense to Landlord, with any request for assignment, reasonably detailed and complete financial statements of the proposed transferee, together with reasonably detailed and complete information about the business of the proposed transferee, including its experience in operating similar commercial centers, the use to be made of the Property and the Improvements by the proposed transferee, together with other information as Landlord may reasonably require to assist Landlord in determining whether the proposed transferee is so qualified. Landlord shall have 30 days after receipt of the information described above to notify Tenant whether it consents or does not consent to the proposed Transfer, provided any disapproval of a request for Transfer shall specify with reasonable detail the reasons for such disapproval. Absent any notification by Landlord during the 30 day period, Landlord shall be conclusively deemed to have consented to the Transfer. A consent by Landlord to one Transfer shall not be deemed to be a consent to any subsequent Transfer. Any attempted Transfer of the Property, this Lease, or any portion or interest therein which is not authorized by this Lease or expressly approved in writing by Landlord shall be void and of no force or effect and, at the option of Landlord, shall constitute a breach of this Lease. 15.2 Involuntary Assignments. Neither this Lease nor any interest therein shall be assignable by operation of law (including, without limitation, the transfer of this Lease by testacy or intestacy). Any involuntary assignment shall constitute a breach of this Lease by Tenant. The following is a non-exclusive list of acts which shall be considered an involuntary assignment: (a) If Tenant is or becomes bankrupt or insolvent or if any involuntary proceeding is brought against Tenant (unless, in the case of a petition filed against Tenant, the same is dismissed within ninety (90) days), or Tenant makes an assignment for the benefit of creditors, or institutes a proceeding under or otherwise seeks the protection of Federal or State bankruptcy or insolvency laws, including but not limited to the filing of a petition for voluntary bankruptcy or instituting a proceeding for reorganization or arrangement; (b) If a writ of attachment or execution is levied on this Lease, where such writ is not discharged within ninety (90) days; or (c) If, in any proceeding or action in which Tenant is a party, a receiver is appointed with authority to take possession of the Property, where possession is not restored to Tenant within ninety (90) days. 15.3 Definitions. (a) As used herein, the term "Transfer" means the sale, transfer or conveyance of Tenant's leasehold interests in the Property, the Improvements thereon, or any 300-003 Hunt.Beach Ground Cse. V8 -15- portion thereof or interest therein, whether voluntary, involuntary, by operation of law or otherwise, or any agreement to do so; the execution of any installment land sale contract or similar instrument affecting all or a portion of the Property or Improvements. (b) "Permitted Transfer" means any of the following: (a) an assignment of this Lease and all of Tenant's Leasehold Interests in the Property to an Affiliate, as defined below; (b) the transfer of any ownership interests in Tenant from one principal to another principal (e.g., from one partner to another partner, from one shareholder to another shareholder or from one member to another member) or to Affiliates of any such principal; (c) any Transfer to CIM Group, LLC; (d) the inclusion of equity participation in Tenant by transfer of limited liability company interests, partnership interests or stock or addition of additional members, partners or shareholders to Tenant or similar mechanism; (e) any Leasehold Mortgage (as defined in Section 31); (f) the leasing, subleasing or licensing for occupancy of all or any part of the Improvements on the Property, or (g) the sublease of the entire Property or material portion thereof to CIM/Huntington, Inc. For purposes of this Lease, "Affiliate" shall mean any partnership in which Tenant is a general partner or owns more than 50% of the rights to distribution, any limited liability company in which Tenant is manager or owns more than 50% of the rights to distribution, or a corporation in which Tenant owns more than 50% of the common stock, or another partnership or limited liability company under common control with Tenant, or any other entity controlled by the party controlling Tenant. 15.4 Agreement to Provide Nondisturbance Agreements. On written request, Landlord will promptly execute, acknowledge and deliver any commercially reasonable form proposed by Tenant providing that in the event of a termination of this Lease, Landlord will recognize the sublease of any subtenant leasing space in any improvements on the Property (each a "Space Tenant") as a direct lease between Landlord and such Space Tenant, provided that any such sublease shall not extend beyond the scheduled term of this Lease and provided the applicable Space Tenant agrees that Landlord will not credit the Space Tenant with rent paid more than one month in advance. 15.5 Consent Not Unreasonably Withheld. Landlord shall not unreasonably withhold, condition or delay its approval of any matter for which its approval is required under this Section 15. Any disapproval shall be in writing and contain Landlord's reasons for disapproval. 15.6 Sublease Rights. Tenant shall have the right to sublease all or any portion of the Property or the Improvements from time to time, and at all times during the term of this Lease, without Landlord's consent; provided, however, that the term of any sublease shall not extend beyond the term of this Lease; any and all subleases shall be expressly subject to all of the terms, covenants and conditions of this Lease and any subtenant shall be required to attorn to Landlord in the event of Tenant's default and the termination of this Lease. 16. HOLD HARMLESS 16.1 Tenant's Indemnification. Tenant shall indemnify, defend, and hold Landlord harmless from and against any and all costs, claims, demands, actions, causes of action, liability, loss, or damage, including attorneys' fees and costs (collectively referred to as "Claims" and Claims that are made by third parties, collectively referred to as "Third Party Claims") 300-003 Hunt.Beach Ground Lse. V8 -16- whether for injury to or death of persons or damage to real or personal property or otherwise, arising out of or in connection with Tenant's use or occupancy of the Property, any activity, work, or other thing done, permitted, or suffered by Tenant in or about the Property, or arising from any reason or cause whatsoever in connection with the use or occupancy of the Property by any party during the Term of this Lease. The provisions of the preceding sentence shall not apply with respect to any active negligence or intentional acts of Landlord, or its agents, servants, contractors and employees (collectively "Landlord Parties") occurring after the date of this Lease. Tenant shall further indemnify, defend, and hold Landlord harmless from and against any and all Third Party Claims arising from any breach or default in the performance of any obligation on Tenant's part to be performed under the terms of this Lease or arising from any wrongful act or negligence of Tenant or any officer, agent, employee, guest, or invitee of Tenant. Tenant, as a material part of the consideration to Landlord, hereby assumes all risk of damage to property or injury to persons in, upon, or about the Property occurring during the term of this Lease from any cause other than the active negligence or intentional acts of Landlord Parties occurring after the date of this Lease, and Tenant hereby waives all claims in respect thereof against Landlord. Tenant's obligation to indemnify under this paragraph shall include attorneys' fees, investigation costs, and other reasonable costs, expenses, and liabilities incurred by Landlord. If the ability of Tenant to use the Property is interrupted for any reason, Landlord shall not be liable to Tenant for any loss or damages occasioned by such loss of use unless caused by the active negligence or intentional acts of Landlord Parties. 16.2 No Liability. Landlord or its agents shall not be liable for loss or damage to any property by theft or otherwise, nor for any injury to or damage to persons or property resulting from fire, explosion, falling plaster, steam, gas, electricity, water, or rain which may leak from any part of the Property or from the pipes, appliances, or plumbing works therein or from the roof, street, or subsurface or from any other place resulting from dampness or any other cause whatsoever, unless caused by or due to the negligent or intentional acts or omissions of Landlord Parties. Tenant shall give prompt notice to Landlord in case of fire or accidents in the Property or of defects therein or in the fixtures or equipment. 17.OWNERSHIP OF PROPERTY DURING TERM AND UPON EXPIRATION OR TERMINATION OF LEASE 17.1 Improvements During Term. During the Term of this Lease, all buildings, structures, fixtures, additions and improvements located on the Property shall be owned in fee by Tenant, and Landlord hereby quitclaims its right, title and interest in and to such items to Tenant. 17.2 Improvements After Term. Upon the expiration or termination of this Lease, all buildings, structures, fixtures, additions, equipment, improvements, any subtenant security deposits then held by Tenant (upon delivery of which, Landlord shall assume all obligations to subtenants with respect thereto), and any other real property whatsoever located on the Property shall become part of the realty, become the property of Landlord, and shall be surrendered with the Property. 17.3 Personal Property. Upon termination of this Lease, whether by expiration of the Term or otherwise, the Improvements on the Property, and all personal property not removed by Tenant, shall, without compensation to Tenant, then automatically and without any act of Tenant or any third party become Landlord's property, free and clear of all liens, 300-003 Hunt.Beach Ground Lse. V8 -17- encumbrances or claims to or against them by Tenant or any third person, firm or entity, except if Tenant acquires the Property pursuant to the terms of this Lease or otherwise. Tenant agrees to execute, acknowledge and deliver to Landlord at Landlord's cost any instrument reasonably requested by Landlord to perfect Landlord's right, title and interest in and to the Improvements or the Property. 18. LIENS Except for Leasehold Mortgages, Tenant shall not create or permit any lien or encumbrance, including but not limited to a mechanics' lien, to be attached to or affect the Property by reason of any act or omission of Tenant. Tenant shall indemnify and hold harmless Landlord and the Property against any such lien, encumbrance, or claim of lien or encumbrance, and against any costs in connection therewith, including attorneys' fees. In the event any such lien or encumbrance is attached to, or any claim of lien or encumbrance is made against, the Property by reason of any act or omission of Tenant, Tenant shall, within twenty (20) days after notice thereof to Tenant, cause the lien to be released or post with Landlord a cash bond in an amount reasonably satisfactory to Landlord, including costs and interest; provided, however, that if Tenant fails to do so, then Landlord may, in its sole discretion, either (i) pay and discharge the lien or encumbrance, whereupon Tenant shall immediately reimburse Landlord, as Additional Rent, for all costs and expenses which Landlord may incur in discharging such lien, encumbrance, or claim of lien or encumbrance, plus reasonable attorneys' fees, payable to Landlord upon demand, or (ii) Landlord may exercise such other remedies as may be available to it by reason of Tenant's failure to comply with its obligations under this Lease. 19. SUBROGATION Neither Landlord nor Tenant shall be liable to the other or to any insurance company (by way of subrogation or otherwise) insuring the other party for any loss or damage to any building, structure, or other tangible property, or any resulting loss of income, or losses under worker's compensation laws and benefits (even though such loss or damage might have been occasioned by the negligence of such party, its agents, or employees), to the extent any such loss or damage is covered by insurance benefiting the party suffering the loss or damage. Landlord and Tenant hereby mutually release each other from liability and waive all right to recover against each other or against officers, employees, agents or representatives of each other for any loss or damage to any person or property caused by or resulting from risks to the extent insured against under any insurance policies carried by the parties; provided, however, this paragraph shall be inapplicable if it would have the effect, but only to the extent that if would have the effect, of invalidating any insurance coverage of Landlord or Tenant. The parties shall, to the extent available, cause each insurance policy obtained here under to provide a waiver of subrogation. 20. TENANT'S INSURANCE 20.1 Casualty Insurance. Tenant shall procure and maintain in force at all times during the Term of this Lease at its cost a policy or policies of fire and extended coverage insurance (all risk of physical loss, and including coverage against malicious mischief and vandalism) covering the Property, in an amount equal to one hundred percent (100%) of the full 300-003 Hunt.Beach Ground Lse. V8 _18_ replacement cost (replacement cost new, using materials of a like quality and kind as existed immediately prior to the damage or destruction) of the Property. This insurance shall include endorsements for inflation, debris removal and demolition, building ordinance protection, and plate glass coverage with respect to the Property. During the periods of construction and/or rehabilitation of the Improvements as a whole, Tenant shall carry or cause its contractor to carry Builder's Risk or similar course of construction insurance coverage. Landlord shall be named as an additional insured on the insurance, and the proceeds of any such policy or policies of insurance shall be held and utilized in accordance with the provisions of Section 24 of this Lease. 20.2 Liability Insurance. Tenant shall also procure and maintain at all times during the Term hereof at its cost commercial general liability insurance, insuring Landlord and Tenant against any liability arising out of the use, occupancy, or maintenance of the Property and all areas appurtenant thereto, including without limitation personal injury and death. Such insurance shall be in an amount not less than $6,000,000 aggregate, $3,000,000 per occurrence, combined single limit (which coverage can be supplied by an umbrella or blanket policy) increased or decreased every five years from the Commencement Date of this Lease to reflect the amounts typically carried by owners of similar projects in Orange County. This policy shall include broad form contractual liability and indemnity coverage which shall insure performance by Tenant of the indemnity and defense provisions set forth in this Lease. The limits of said insurance shall not, however, be construed to limit the liability of Tenant under this Lease. 20.2A Earthquake Insurance. Tenant shall procure and maintain at all times after completion of the initial improvements on the Property earthquake insurance on all Improvements existing on the Property. 20.3 Other Insurance. Tenant shall procure and maintain at all times during the Term of this Lease at its cost (i) worker's compensation coverage, in the amount required by law, (ii) personal injury insurance with endorsement deleting the employee liability exclusion, and (iii) employer's liability coverage in the amount of $1,000,000 for each accident or occurrence. The worker's compensation insurance and the employer's liability coverage shall cover any person or entity employed directly or indirectly by Tenant, any agent acting on behalf of Tenant, and anyone for whose acts Tenant may be liable. 20.4 Insurance Carriers. All insurance which Tenant is required to maintain hereunder shall be on an occurrence basis and shall be with insurance companies having a Best's Insurance Guide rating of B: VIII or better. 20.5 Policy Re uirements. As applicable, the insurance required pursuant to this Lease shall: (1) name Landlord as additional insured as its interest may appear; (2) provide that the coverage thereof is primary and non-contributory coverage with respect to all additional insureds; (3) contain a Standard Cross Liability endorsement providing that the insurance applies separately to each insured against whom a claim is filed, and that the policy covers claims or suits by one insured against the other; and (4) provide that the interests and protections of the additional insureds shall not be affected by any misrepresentation, act or omission of a named insured or any breach by a named insured of any provision in the policy which would otherwise result in forfeiture or reduction of coverage. 20.6 Certificates of Insurance. Within five (5) days prior to the execution of this Lease, Tenant shall notify Landlord in writing of the name of Tenant's insurer. Tenant shall 300-003 Hunt.Beach Ground Lse. V8 -19- deliver to Landlord prior to entry on the Property by Tenant certificates of insurance evidencing the existence and amount of such insurance, and showing Landlord (and the other parties designated in Paragraph 20.5 above) as an additional insured on all policies; provided that in the event Tenant fails to procure and maintain such insurance, Landlord may (but shall not be required to) procure same at Tenant's expense. No policy shall be cancelable or subject to reduction of coverage or other modification except after thirty (30) days prior written notice to Landlord by the insurer (or such shorter period of time for such notice as may be the commercial custom and practice in such policies). Tenant shall prior to the expiration of such policies, furnish Landlord with renewals or binders, or (after 10 business days' written notice and failure of Tenant to cure) Landlord may order such insurance and charge the cost to Tenant, which amount shall be payable by Tenant upon demand. All such policies shall be written as primary policies, not contributing with and not in excess of coverage which Landlord may carry, and all policies shall include Tenant's employees as additional insureds. Tenant shall have the right to provide such insurance coverage pursuant to blanket policies obtained by Tenant provided that such blanket policies expressly afford coverage to the Property and to Tenant and Landlord as required by this Lease. Tenant shall, upon request from Landlord, immediately deliver to Landlord copies of all insurance policies (including the declarations pages) in effect with respect to Tenant's business and the Property. 21. UTILITIES Tenant shall make all arrangements for and pay for all services and utilities to the Property; Landlord shall not be responsible or liable to Tenant for interruption or stoppages of utilities or other services to the Property unless caused by the active negligence or willful misconduct of Landlord, its agents or contractors on or around the Property. 22. HOLDING OVER In the event Tenant fails to vacate the Property and fulfill all of its obligations hereunder at the end of the Term, Tenant shall pay holdover Basic Rent at an amount equal to 150% of the amount of Basic Rent in effect immediately prior to the end of the Term, as well as the full amount of all other Rent. Tenant shall further be liable for all direct, proximate and nonconsequential damages incurred by Landlord by reason of the inability to deliver possession of the Property or any portion thereof to any other person. 23. ENTRY BY LANDLORD Landlord reserves and shall at any and all times have the right, but not the obligation, to enter the Property (excluding tenant spaces), for the following purposes: (a) to inspect the Property, provided such inspections shall take place during normal business hours and upon not less than 5 calendar days' written notice, (b) to show said Property to prospective purchasers and tenants, provided such showings shall occur only during the last six months of the Term hereof; and (c) to post notices of non -responsibility. Landlord shall take all reasonable steps to ensure that the business of Tenant and its subtenants shall not be interfered with. Tenant hereby waives any claim for damages for any injury or inconvenience to or interference with Tenant's business, any loss of occupancy or quiet enjoyment of the Property, and any other loss which may occur. Any entry to the Property obtained by Landlord by any means for the 300-003 Hunt.Beach Ground Lse. V8 -20- purposes specified above shall not under any circumstances be construed or deemed to be forcible or unlawful entry into, or a detainer of, the Property or an eviction of Tenant from the Property or any portion thereof. 24. DAMAGE, RECONSTRUCTION 24.1 Covered by Insurance. In the event the Property is damaged by fire or other perils covered by extended coverage insurance, Tenant shall have the right to use all available insurance proceeds to repair or rebuild the Improvements. If the estimated cost of repairs (including lost rent) is not in excess of available insurance proceeds (including rent loss insurance proceeds), then Tenant shall forthwith repair the same (using the insurance proceeds to pay the cost of such repair) and this Lease shall remain in full force and effect. 24.2 Uncovered by Insurance. (a) In the event the Property is damaged as a result of any cause other than the perils covered by fire and extended coverage insurance, or the estimated cost of repairs (including lost rent) is in excess of available insurance proceeds (including rent loss insurance proceeds), then Tenant shall notify Landlord in writing of the amount by which the estimated cost of repairs exceeds such proceeds (the "Shortfall"), and Tenant shall have the right, within ninety (90) days after receipt of such notice, to elect to provide the Shortfall and proceed with such repairs (using the insurance proceeds and such other funds as Tenant may provide to pay the Shortfall), in which case this Lease shall continue in full force and effect. (b) If Tenant fails to notify Landlord within such ninety (90) day period that it will provide the Shortfall and conduct the repairs, then Landlord shall have the option, within thirty days from the end of the ninety day period described in clause (a), either to (A) provide the Shortfall at Landlord's sole expense and direct Tenant to repair or restore such damage (using the insurance proceeds and such additional funds as Landlord may provide to pay the Shortfall), with this Lease continuing in full force and effect, or (B) give notice to Tenant termina6mg, this Lease as of the date specified in such notice, which date shall be no less than thirty (30) and no more than sixty (60) days after the giving of such notice of termination. In the event of giving such notice of termination, this Lease shall expire and all interest of Tenant in the Property shall terminate on the date so specified in such notice. 24.3 Special Circumstances. Notwithstanding anything to the contrary contained in this Section, Tenant shall have no obligation whatsoever to repair, reconstruct, or restore the .Property, and Landlord shall have no right to instruct Tenant to do so, in either of the following circumstances: (a) the damage occurs during the last three (3) years of the Term of this Lease, or (b) the damage cannot reasonably be expected to be repaired within a period of physical repair of not more than 9 months. In that event, Tenant may at its option terminate this Lease upon (30) days written notice to Landlord that Tenant elects not to repair, reconstruct, or restore the Property. 24.4 Waiver. Tenant shall not be entitled to any compensation or damages from Landlord for loss of the use of the whole or any part of the Property, Tenant's personal property, or any inconvenience or annoyance occasioned by such damage, repair, reconstruction, 300-003 Hunt -Beach Ground Lse. V8 -21- or restoration. Tenant waives the provisions of California Civil Code sections 1932(2) and 1933(4) with respect to any destruction of the Property. 24.5 Excess Insurance Proceeds. If completion of required repair, reconstruction or restoration of the Property does not utilize all insurance proceeds, then Tenant may retain such unused proceeds. If, for any reason, Tenant does not repair, reconstruct or restore the Property, the insurance proceeds for the Improvements (but not personal property or rent loss) shall belong to Landlord as its property. 24.6 No Abatement of Rent. No deprivation, impairment, or limitation of use resulting from any event, repair, reconstruction or restoration contemplated by this section shall entitle Tenant to any offset, abatement, or reduction in rent, nor to any termination or extension of the Term, except as expressly provided in this Lease, and except to the extent caused by the active negligence or willful misconduct of Landlord Parties. 25. DEFAULT 25.1 Event of Default. Upon expiration of the cure periods (without cure) set forth below, the occurrence of any one or more of the following events shall constitute an Event of Default by Tenant: (a) The failure by Tenant to pay Rent or observe or perform any other covenants, conditions, or provisions of this Lease, to be observed or performed by Tenant: or (b) The making by Tenant of any general assignment for the benefit of creditors; or the filing by or against Tenant of a petition to have Tenant adjudged a bankrupt, or a petition or reorganization or arrangement under any law relating to bankruptcy (unless, in the case of a petition filed against Tenant, the same is dismissed within ninety (90) days); or the appointment of a trustee or a receiver to take possession of substantially all of Tenant's assets located at the Property or of Tenant's interest in this Lease, where possession is not restored to Tenant within ninety (90) days; or the attachment, execution, or other judicial seizure of substantially all of Tenant's assets located at the Property or of Tenant's interest in this Lease, where such seizure is not discharged within ninety (90) days. 25.2 Cure Obligations. Subject to Force Majeure delay, failure or delay by Tenant to perform any term or provision of this Lease constitutes a default under this Lease. Tenant must immediately commence to cure, correct or remedy such failure or delay and shall complete such cure, correction or remedy with reasonable diligence, and during any period of curing shall not be in default, so long as it endeavors to complete sueh cure, correction or remedy with reasonable diligence, and provided such cure, correction or remedy is completed within the applicable time period set forth herein after receipt of written notice (or such additional time as may be reasonably necessary to correct the default). 25.3 Written Notice. Landlord shall give written notice of default to Tenant, specifying the default complained of by Landlord. Failure or delay in giving such notice shall not constitute a waiver of any default. Except as otherwise expressly provided in this Lease, any failures or delays by either party in asserting any of its rights and remedies as to any default shall not operate as a waiver of any default or of any such rights or remedies. Delays by either party in asserting any of its rights and remedies shall not deprive either party of its right to institute and 300-003 Hunt.Beach Ground Lse. V8 -22- maintain any actions or proceedings which it may deem necessary to protect, assert or enforce any such rights or remedies. 25.4 Monetary Default Cure Period. If a monetary event of default occurs, prior to exercising any remedies hereunder, Landlord shall give Tenant written notice of such default. Tenant shall have a period of thirty (30) calendar days after such notice is received or deemed received within which to cure the default prior to exercise of remedies by Landlord. 25.5 NonMonetary Default Cure Period. If a non -monetary event of default occurs, prior to exercising any remedies hereunder, Landlord shall give Tenant notice of such default. If the default is reasonably capable of being cured within thirty (30) calendar days after such notice is received or deemed received, Tenant shall have such period to effect a cure prior to exercise of remedies by Landlord. If the default is such that it is not reasonably capable of being cured within thirty (30) days, and Tenant (i) initiates corrective action within said period, and (ii) diligently, continually, and in good faith works to effect a cure as soon as possible, then Tenant shall have such additional time as is reasonably necessary to cure the default prior to exercise of any remedies by Landlord. 25.6 Receipt of Notice. Any notice of default that is personally delivered (including by means of professional messenger service, courier service such as United Parcel Service or Federal Express, or by U.S. Postal Service), shall be deemed received on the documented date of receipt by Tenant; and any notice of default that is sent by registered or certified mail, postage prepaid, return receipt required shall be deemed received on the date of receipt thereof. No notice of default may be given by facsimile. 25.7 Remedies. In the event of any default or breach by Tenant and the expiration of any applicable cure period, Landlord may at any time thereafter, in its sole discretion, without limiting Landlord in the exercise of a right or remedy which Landlord may have by reason of such default or breach: (a) Terminate Tenant's right to possession of the Property by any lawful means, in which case this Lease shall terminate and Tenant immediately shall surrender possession of the Property to Landlord. In such event Landlord shall be entitled to recover from Tenant all damages incurred by Landlord by reason of Tenant's default including, but not limited to, the cost of recovering possession of the Property; the worth at the time of the award of each obligation of Tenant which has accrued prior to the date of such termination, but which has not been satisfied; the worth at the time of the award of the amount by which the unpaid rent which would have been earned after the termination until the time of the award exceeds the amount of such rental loss that Tenant proves could reasonably have been avoided; expenses of placing the Property in good order, condition and repair; expenses of reletting, including necessary renovation and alteration of the Property; reasonable attorneys' fees; the worth at the time of award as determined by the court having jurisdiction thereof of the amount by which the unpaid Basic Rent, Additional Rent and other amounts required to be paid by Tenant pursuant to this Lease for the balance of the term after the time of such award exceeds the amount of such loss for the same period that Tenant proves reasonably could be avoided; and all other incidental and consequential damages. Unpaid installments of rent or other sums shall bear interest from the date due at the rate of 10% per annum; 300-003 Hunt.Beach Ground Lse. V8 -23- (b) Maintain Tenant's right to possession, in which case this Lease shall continue in full force and effect whether or not Tenant shall have abandoned the Property. In such event Landlord shall be entitled to enforce all of Landlord's rights and remedies under this Lease, including the right to recover the rent and any other charges and Adjustments as may become due hereunder; (c) Seek specific performance by Tenant, in the case of breach by Tenant of one or more of its covenants herein; (d) Exercise the remedy described in California Civil Code section 1951.4 (lessor may continue lease in effect after lessee's breach and abandonment and recover rent as it becomes due, if lessee has the right to sublet or assign, subject only to reasonable limitations); and/or (e) Pursue and every any other remedy or right now or hereafter available to Landlord under the laws or judicial decisions of the State of California. 25.8 Notice to Leasehold Mortgagee. Whenever Landlord shall deliver any notice or demand to Tenant with respect to any breach or default by the Tenant, Landlord shall at the same time deliver to the Trust and to each Leasehold Mortgagee of record (as defined in Section 31.2) a copy of such notice or demand, which shall describe the defaults) with reasonable detail. 26. EMINENT DOMAIN NOTHING SET FORTH IN THIS LEASE SHALL CONFER ANY RIGHTS NOW OR IN THE FUTURE ON THE CITY OF HUNTINGTON BEACH OR THE REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH ("AGENCY") FOR CONDEMNATION OR EMINENT DOMAIN. IN CONSIDERATION OF THE EXECUTION OF THIS LEASE, AGENCY WAIVES ANY RIGHTS IT MAY HAVE TO CONDEMN ALL OR ANY PORTION OF LANDLORD'S INTEREST IN THE PROPERTY. 27. ESTOPPEL OFFSET STATEMENT 27.1 Tenant Estoppel. Tenant shall, at any time and from time to time upon not less than twenty (20) days' prior written notice from Landlord, execute, acknowledge, and deliver to Landlord a statement in writing certifying that this Lease is unmodified and in full force and effect (or, if modified, is in full force and effect, and stating the modifications) and acknowledging that there are not, to Tenant's knowledge, any uncured defaults on the part of Landlord hereunder (or specifying such defaults if any are claimed), acknowledging that the recipient will rely on the certificate and such other matters as may be reasonable and customary or as needed to clarify any provision of this Lease. Tenant's failure to deliver such statement to Landlord within twenty (20) days after receipt of Landlord's notice shall be conclusively deemed to be Tenant's acknowledgment that this Lease is unmodified except as reflected in recorded instruments and that, to Tenant's knowledge, there are no uncured defaults on the part of Landlord hereunder. 300-003 Hunt.Beach Ground Lse. V8 -24- 27.2 Landlord Estoppel. Landlord shall, at any time and from time to time upon not less than twenty (20) days' prior written notice from Tenant, execute, acknowledge, and deliver to Tenant a statement in writing certifying that this Lease is unmodified and in full force and effect (or, if modified, is in full force and effect, and stating the modifications) and acknowledging that there are not, to Landlord's knowledge, any uncured defaults on the part of Tenant hereunder (or specifying such defaults if any are claimed), the last date Landlord received rent under this Lease, the date such rent was due and the amount thereof, acknowledging that the recipient will rely on the certificate, and such other matters as may be reasonable and customary or as needed to clarify any provision of this Lease. Landlord's failure to deliver such statement to Tenant within twenty (20) days after receipt of Tenant's notice shall be conclusively deemed to be Landlord's acknowledgment that this Lease is unmodified except as reflected in recorded instruments and that, to Landlord's knowledge, there are no uncured defaults on the part of Tenant hereunder. 28. HAZARDOUS MATERIALS 28.1 Prohibitions. Except to the extent it is normal and customary to do so during the construction or operation of commercial property, Tenant shall not: (i) Make, or permit to be made, any use of the Property, or any portion thereof, which emits, or permits the emission of dust, sweepings, dirt, cinders, fumes, or odors into the atmosphere, the ground, or any body of water, whether natural or artificial, in violation of applicable law; or (ii) Discharge, leak, or emit, or permit to be discharged, leaked, or emitted, any liquid, solid, or gaseous matter, or any combination thereof, into the atmosphere, the ground, or any body of water, in violation of applicable law. 28.2 Storage. Tenant shall not use, store or dispose of on the Property any solid, liquid, or gaseous matter, or any combination thereof, which is, or may become, hazardous, toxic, or radioactive including, but not limited to, those materials listed in Sections 66680 through 66685 of Title 22 of the California Administrative Code, Division 4, Chapter 30 (as may be amended from time to time), in violation of applicable law (all of the foregoing collectively referred to herein as "Hazardous Materials"). 28.3 Waste; Refuse. Tenant shall not keep any trash, garbage, waste, or other refuse on the Property except in sanitary containers and shall regularly and frequently remove the same from the Property. Tenant shall keep all incinerators, containers, and other equipment used for the storage or disposal of such matter in a clean and sanitary condition. Tenant shall surrender the Property at the expiration or termination of this Lease free of any Hazardous Materials or contamination caused by Tenant's activities, and free and clear of all judgements, liens, or encumbrances and shall, at its own cost and expense, repair all damage and clean up or perform any remedial action necessary relating to any Hazardous Materials or contamination caused by Tenant's activities. Tenant shall, at its sole cost and expense, remediate in accordance with law or remove any alterations or improvements that may be contaminated or may contain Hazardous Materials caused by Tenant's activities. 300-003 Hunt.Beach Ground Lse. V8 -25- 28.4 Indemnity. Tenant shall indemnify, defend, and hold Landlord harmless from and against (i) any and all claims, demands, judgments, damages, actions, causes of action, injuries, administrative orders, consent agreements and orders, liabilities, penalties, costs, and expenses of any kind whatsoever (collectively referred to as "Claims" and, Claims that are made by third parties, collectively referred to as "Third Party Claims"), including but not limited to Third Party Claims arising out of loss of life, injury to persons, property, or business, or damage to natural resources, in connection with or arising out of any spills or discharges of Hazardous Materials in violation of applicable law, and (ii) from all claims, demands, judgments, damages, actions, causes of action, injuries, administrative orders, consent agreements and orders, liabilities, penalties, costs, and expenses of any kind whatsoever, including but not limited to claims arising out of Tenant's failure to provide all information, make all submissions, and take all steps required by any authority under any Hazardous Materials laws or any other environmental law. Notwithstanding the expiration or termination of this Lease, Tenant's obligations and liabilities under this Section shall continue until the date which is five (5) years following expiration or earlier termination of this Lease, so long as Landlord continues to own the Property or any portion thereof or otherwise remains responsible for any Hazardous Materials on the Property, provided, however, that nothing contained in this provision is intended to or shall have the effect of relieving any party of liability under any applicable statutory or common law. 29. TENANT'S SIGNAGE Tenant shall have the right to place signs on the Property provided such signage shall be for reasonable business purposes and shall not violate any statute, code, or ordinance. 30. MEMORANDUM OF LEASE Promptly after the Commencement Date has occurred, all debt and/or equity financing for the initial construction of the Project is in place, and Landlord has received the first month's Basic Rent, Landlord and Tenant shall execute in recordable form a Memorandum of Lease and Option to Purchase Fee, substantially in the form attached hereto as Exhibit `B" which is incorporated herein by this reference, which either party is authorized to record. The Memorandum of Lease and Option to Purchase Fee shall be removed from title in the event an Event of Default is not cured within thirty days after written notice, for the duration of such Default, subject to the last sentence of Section 25.5. 31. MORTGAGEE PROTECTION PROVISIONS 31.1 Right to Encumber. Tenant and every successor and assign of Tenant (including, but not limited to, any sublessee of Tenant) is hereby given the express right, in addition to any other rights herein granted, and without the necessity of obtaining Landlord's consent, to mortgage its interests in this Lease, and its leasehold estate in the Property, or any part of parts thereof, and any sublease of the Property, under one or more Leasehold Mortgage(s) and to assign this Lease or Tenant's leasehold estate in the Property, or any part or parts thereof, and any sublease, as collateral security for such mortgage(s), upon the condition that all rights acquired under such mortgage(s) shall be subject to each and all of the covenants, conditions and restrictions set forth in this Lease, and to all rights and interests of Landlord herein, none of 300-003 Hunt.Beach Ground Lse. V8 -26- which covenants, conditions or restrictions is or shall be waived by Landlord by reason of the foregoing, except as expressly provided herein. In the event of any conflict between the provisions of this Lease and the provisions of any mortgage, the provisions of this Lease shall control, except as herein specifically provided. 31.2 Definition of Leasehold Mortgage. For purposes of this Lease, the term "Leasehold Mortgage" means a conveyance of a security interest in this Lease and all of Tenant's interests in the Property (collectively referred to as "Tenant's Leasehold Interests") to a lender (a "Leasehold Mortgagee") encumbering Tenant's Leasehold Interest, or the conveyance of Tenant's Leasehold Interests to the Leasehold Mortgagee or its assignee in connection with a foreclosure or a deed in lieu of foreclosure of such loan. Landlord agrees to permit Tenant to pledge Tenant's Leasehold Interests to a Leasehold Mortgagee as security under a Leasehold Mortgage without Landlord's consent. In the event of a default or breach by Tenant of any security instrument securing a Leasehold Mortgage, Landlord shall have the right to cure the default provided such cure is completed at least five (5) business days before the date of foreclosure. In such event, Landlord shall be entitled to reimbursement by Tenant of all costs and expenses incurred by Landlord in curing the default, with interest at the highest rate permitted by law, as Additional Rent (collectively, "Landlord's Cure Payments"), provided in the event of a subsequent foreclosure of a permitted Leasehold Mortgage the party acquiring Tenant's Leasehold Interests shall not be obligated to pay Landlord any of Landlord's Cure Payments. 31.3 Rights of Lender. If Tenant and/or Tenant's successors and assigns (including, but not limited to, any sublessee of Tenant) shall mortgage its interest in this Lease and its leasehold estate in the Property, or any part or parts thereof as permitted by Section 31.1 above, the following provisions shall apply: (a) No Amendment. There shall be no amendment, cancellation, termination, surrender or modification of this Lease by joint action of Landlord and Tenant without the prior consent in writing of each holder of a lien against or an assignment of this Lease, notice of which has been served upon Landlord. (b) Right to Notice of Default. Landlord shall, upon serving Tenant with any notice of default, simultaneously serve a copy of the notice upon any Leasehold Mortgagee(s). (c) Right to Cure. Any Leasehold Mortgagee shall have the right, but not the obligation, at any time prior to termination of this Lease, to pay all of the rents due hereunder, to effect any insurance, to pay any taxes or assessments, to make any repairs or improvements, to do any other act or thing required of Tenant hereunder, and to do any act or thing which may be necessary and proper to be done in the performance and observance of the agreements, covenants and conditions hereof to prevent termination of this Lease. Any Leasehold Mortgagee and its agents and contractors shall have full access to the Property for purposes of accomplishing any of the foregoing. Any of the foregoing done by any Leasehold Mortgagee shall be as effective to prevent a termination of this Lease as the same would have been if done by Tenant. (d) Additional Cure Period. Anything contained in this Lease notwithstanding, if any default shall occur which, pursuant to any provision of this Lease, 300-003 Hunt.Beach Ground Lse. V8 -27- purportedly entitles Landlord to terminate this Lease, Landlord shall not be entitled to terminate this Lease as to any Leasehold Mortgagee, nor to disturb the right of possession of any subtenant of Tenant, and the notice shall be rendered void as to such parties, if the Leasehold Mortgagee, within sixty (60) days after expiration of the period within which Tenant was permitted to cure the default (or within ninety (90) days after receipt of the notice by the Leasehold Mortgagee if the default is not curable by Tenant), shall both: (i) either (aa) cure the default if the same can be cured by the expenditure of money, or (bb) if the default or breach is not so curable, commence, or cause any trustee under the mortgage to commence, and thereafter to diligently pursue to completion steps and proceedings to foreclose on the interests covered by the mortgage; and (ii) perform or cause the performance of all of the covenants and conditions of this Lease requiring the expenditure of money by Tenant (including all unpaid monetary obligations of Tenant under this Lease) until such time as the leasehold shall be sold upon foreclosure pursuant to the mortgage, or shall be released or reconveyed thereunder, or shall be transferred upon judicial foreclosure or by deed or assignment in lieu of foreclosure. (e) Condition of Termination. All right of Landlord to terminate this Lease as the result of the occurrence of any default shall be subject to, and conditioned upon, Landlord having first given to each Leasehold Mortgagee written notice of the default as required under Section 31.3(b), above, and all Leasehold Mortgagees having failed to remedy such default or acquire Tenant's leasehold estate hereunder or commence foreclosure or other appropriate proceedings in the nature thereof as set forth in Section 31.3(d), above. (f) Suspension of Cure Period. If any Leasehold Mortgagee is prohibited from commencing or prosecuting foreclosure or other appropriate proceedings in the nature thereof by any process or injunction issued by any court, or by reason of any action by any court having jurisdiction of any bankruptcy or insolvency proceeding involving Tenant, the times specified in Section 31.3(d) above, for commencing or prosecuting foreclosure or other proceedings shall be extended for the period of the prohibition, so long as the Leasehold Mortgagee shall have fully cured any default in the payment of any monetary obligations of Tenant under this Lease and shall continue to pay currently those monetary obligations as and when the same fall due, subject to any applicable notice and grace periods. (g) Loss Payable Endorsement. Landlord and Tenant agree that the name(s) of the Leasehold Mortgagee(s) shall, at such Leasehold Mortgagee's request, be added to the "Loss Payable Endorsement" of any and all insurance policies required to be carried by Tenant under this Lease on condition that the insurance proceeds are to be applied in the manner specified in this Lease. (h) No Consent to Foreclosure. Foreclosure of any Leasehold Mortgage, or any sale thereunder, whether by judicial proceedings or by virtue of any power contained in the Leasehold Mortgage, or any conveyance of the leasehold estate hereunder from Tenant to any Leasehold Mortgagee or its designee through, or in lieu of, foreclosure or other appropriate proceedings in the nature thereof, shall not require the consent of Landlord or constitute a breach of any provision of or a default under this Lease, and upon such foreclosure, sale or conveyance, 300-003 Hunt.Beach Ground Lse. V8 -28- Landlord shall recognize the purchaser or other transferee referred to in the preceding sentence in connection therewith as the Tenant hereunder. Further, following such foreclosure or conveyance, any assignment or subleasing by the purchaser or other transferee shall not require the consent of Landlord, despite any other provisions of this Lease to the contrary. (i) Proceeds of Insurance and Condemnation. The proceeds from any insurance policies or arising from a condemnation award to Tenant shall be paid to and held by the Leasehold Mortgagee of highest priority and distributed pursuant to the provisions of this Lease, except that the Leasehold Mortgagee(s) may reserve the right to apply to the mortgage debt (in the order of priority) all, or any part, of the proceeds not used to repair or restore the Property and the improvements located thereon to the extent required herein so long as there then remains at least fifteen years until the scheduled expiration of the term (as may theretofore been extended). 0) Notice of Proceedings. The parties hereto shall give all Leasehold Mortgagee(s) notice of any arbitration proceedings or condemnation proceedings involving Tenant's interest in the Property, or of any pending adjustment of insurance claims, and any Leasehold Mortgagee shall have the right to intervene therein and shall be made a party to such proceedings. The parties hereto do hereby consent to such intervention. In the event that any Leasehold Mortgagee shall not elect to intervene or become a party to the proceedings, that Leasehold Mortgagee shall receive notice and a copy of any award or decision made in connection therewith. (k) Right to Exercise Renewal Options: If Tenant has not timely exercised any option to renew, such option shall not expire until Landlord gives Leasehold Mortgagee written notice and 30 days' in which to exercise such option on Tenant's behalf. (1) Right to Purchase Fee: If Tenant has any right of first offer, presentation or refusal, or any other right to acquire fee simple title to the Premises, such right shall not expire, be rejected or be terminated unless and until Leasehold Mortgagee has been given written notice and 30 days to exercise such acquisition right, provided Leasehold Mortgagee may acquire such fee in its own name or in the name of a designee. In addition, in the event of any Leasehold Mortgagee's foreclosure of Tenant's interest in the Lease, such Leasehold Mortgagee shall have the option to purchase Landlord's interest in the fee at the same price and on the same terms as set forth in Section 33, to be exercised by written notice given to Landlord within 90 days after such foreclosure has been completed. (m) Further Protections. Landlord and Tenant shall cooperate in including in this Lease, by suitable amendment from time to time, any provision which may be reasonably requested by any proposed Leasehold Mortgagee for the purpose of implementing the mortgagee -protection provisions contained in this Section 31 and allowing that Leasehold Mortgagee reasonable means to protect or preserve the lien of its Leasehold Mortgage upon the occurrence of a default under the terms of this Lease. Landlord and Tenant each agree to execute and deliver (and to acknowledge, if necessary, for recording purposes) any agreement necessary to effect any such amendment; provided, however, that no such amendment shall in any way affect the term or rent under this Lease, nor otherwise in any material respect adversely affect any rights of Landlord under this Lease, and Tenant shall pay Landlord's reasonable costs in connection with such amendment. 300-003 Hunt.Beach Ground Lse. V8 -29- (n) Additional Agreement. Landlord shall, upon request, execute, acknowledge and deliver to each Leasehold Mortgagee, an agreement prepared by the Leasehold Mortgagee and reviewed by Landlord at the sole cost and expense of Tenant, in form satisfactory, to each Leasehold Mortgagee, between Landlord, Tenant and the Leasehold Mortgagee(s), agreeing to all of the provisions hereof. 31.4 Notice. If Tenant shall mortgage its interest in this Lease or its leasehold estate in the Property, or any part or parts thereof, Tenant shall send to Landlord a true copy thereof, together with written notice specifying the name and address of the mortgagee(s) and the pertinent recording data with respect to such mortgage(s). 31.5 New Lease. (a) Landlord agrees that in the event of termination of this Lease by reason of any default by Tenant, or by reason of the disaffirmance hereof by a receiver, liquidator or trustee for Tenant or its property, Landlord if requested by any Leasehold Mortgagee will enter into a new lease of the Property, with the most senior Leasehold Mortgagee requesting a new lease or its designee, for the remainder of the term, effective as of the date of such termination, at the rent and additional rent and upon the terms, provisions, covenants and agreements as herein contained and subject to the rights, if any, of any parties then in possession of any part of the Property, provided: (i) The Leasehold Mortgagee shall make written request upon Landlord for the new lease within sixty (60) days after such Leasehold Mortgagee receives written notice of such termination; (ii) Within thirty (30) days after receipt of the new lease from Landlord complying with the terms of this Section 31.5, the Leasehold Mortgagee shall execute and deliver the new lease to Landlord and shall pay any and all sums which would, at the time of the execution and delivery thereof, be due and unpaid pursuant to this Lease but for its termination; (iii) The Leasehold Mortgagee shall perform and observe all covenants herein contained on Tenant's part to be performed, and shall further remedy any other conditions which Tenant under the terminated Lease was obligated to perform under its terms, in each instance as and to the extent the same are curable or may be performed by the Leasehold Mortgagee; (iv) The tenant under the new lease shall have the same right, title and interest in and to the buildings and improvements on the Property as Tenant had under the terminated Lease immediately prior to its termination; and (v) Notwithstanding anything to the contrary expressed or implied elsewhere in this Lease, any new lease made .pursuant to this Section 31.5(a) shall enjoy the same priority in time as the Lease over any mortgage, deed of trust, or other lien, charge, or encumbrance on the Property. (b) Any new lease made pursuant to Section 31.5(a) shall be accompanied by a conveyance from Landlord to the new tenant of title to the improvements (free of any mortgage, deed of trust, lien, charge, or encumbrance created by Landlord) for a term of years 300-003 Hunt.Beach Ground Ue. V8 _30_ equal to the term of the new lease, subject to the reversion in favor of Landlord upon expiration or sooner termination of the new lease. (c) Nothing herein contained shall require any Leasehold Mortgagee to enter into a new lease pursuant to Section 31.5(a), above, nor to cure any default of Tenant referred to above. (d) If a Leasehold Mortgagee shall elect to demand a new lease, Landlord agrees, at the request of, on behalf of and at the expense of the Leasehold Mortgagee, to institute and pursue diligently to conclusion the appropriate legal remedy or remedies to oust or remove the original Tenant from the Property, but not any subtenants of Tenant actually occupying the Property, or any part thereof. Leasehold Mortgagee, as a condition of executing the new lease, shall pay all reasonable costs and expenses, including attorneys' fees and court costs, incurred by Landlord in terminating this Lease, recovering possession of the Property and the Improvements from the representative of Tenant, and preparing the new lease. (e) Unless and until Landlord has received notice from all Leasehold Mortgagees that the Leasehold Mortgagee elects not to demand a new lease as provided in Section 31.5(a), above, or until the period therefor has expired, Landlord shall not cancel or agree to the termination or surrender of any existing subleases nor enter into any new subleases hereunder without the prior written consent of the Leasehold Mortgagee(s). 31.6 Lender's Liability. In the event any Leasehold Mortgagee or any designee of it becomes the Tenant under this Lease or under any new lease obtained pursuant to Section 31.5(a), above, the Leasehold Mortgagee or its designee shall be personally liable for the obligations of Tenant under this Lease or a new sublease only for the period of time that the Leasehold Mortgagee or its designee remains the actual beneficial holder of the leasehold estate hereunder. The initial new tenant under the new lease shall have the right to sublease all or portions of the Property or to assign the new lease without the consent of Landlord, despite any other provision of the new lease to the contrary. 31.7 Definitions. The term "mortgage," whenever used herein, shall include whatever security instruments are used in the locale of the Property, such as, without limitation, deeds of trust, security deeds, and conditional deeds. The term "mortgage," whenever used herein, shall also include any instruments required in connection with a sale -leaseback transaction. The term "mortgagee" shall include the holder of the secured position under each of the foregoing types of instruments, including but not limited to the beneficiary under a deed of trust, the secured party under a security agreement and the lessor in a sale -leaseback transaction. 31.8 Restriction on Easements and Encumbrances by Landlord. Without Tenant's consent (which may be withheld in its sole discretion), Landlord shall not (i) grant any easement, license or access rights over the Property, or (ii) mortgage or otherwise encumber its interest in the Property. 31.9 Quiet Enjovment. Absent an uncured default by Tenant, Landlord agrees not to disturb the possession, interest or quiet enjoyment of Tenant in the Property for any reason, or in a manner which would materially adversely affect any leasehold mortgage(s). 300-003 Hunt.Beach Ground Lse. V8 -31- 32. LANDLORD'S RIGHT TO CAUSE SALE OF LAND By giving written notice at least 180 days prior to each Purchase Date (as hereinafter defined), Landlord shall have the right to cause Tenant to purchase fee simple title in the Property (the "Fee"), subject to the following: 32.1 Purchase Date. The twentieth anniversary of the Commencement Date and the expiration of the initial Term and each exercised Option shall each constitute a "Purchase Date." 32.2 Purchase Price. In the event such notice is given, Tenant shall purchase the Fee for a purchase price equal to the Basic Rent paid during the calendar year immediately preceding the applicable Purchase Date, divided by. 10, but in no event shall the Purchase Price be less than $1,680,000, as adjusted by the same percentage as the rent adjustment made pursuant to Section 6.2. 32.3 Closing. The purchase of the Fee shall take place on or before the applicable Purchase Date through an escrow company selected by Tenant and reasonably acceptable to Landlord. At such closing, Landlord will transfer the Fee to Tenant or its designee, subject only to the title encumbrances of record as of the Commencement Date of this Lease and subject to any other title encumbrances approved by Tenant. The purchase price for the Fee shall be payable in cash. Landlord shall pay documentary and other transfer taxes, the cost of a CLTA Owner's Policy of Title Insurance, one-half of the escrow fees and any other closing costs typically paid by sellers in Orange County; Tenant shall pay recording costs, additional title insurance costs, one half of the escrow fees and any other closing costs typically paid by buyers in Orange County. 32.4 Disputes. Any disputes regarding the acquisition of the Fee pursuant to this Section 32 shall be resolved pursuant to Exhibit C, provided that any dispute regarding the purchase price shall be determined by a panel of three neutral arbitrators selected pursuant to Paragraph 2(b) of Exhibit C, which panel shall choose either the purchase price submitted by Landlord or the purchase price submitted by Tenant (such panel having no authority to choose any other amount). The party whose purchase price is chosen shall be entitled to its reasonable attorneys' fees. 33. OPTION TO PURCHASE FEE SIMPLE TITLE TO PROPERTY By giving notice at least 60 days prior to a Tenant Purchase Date (as hereinafter defined) (which notice may specify an approximate Tenant Purchase Date reasonably acceptable to Landlord if other than a Purchase Date), Tenant shall have the right to acquire the Fee, subject to the following: As used herein, a "Tenant Purchase Date" shall mean the twentieth anniversary of the Commencement Date, the date of expiration of the initial Term and each date of expiration of each renewed term. 33.1 In the event such notice is given, Tenant shall purchase the Fee for a purchase price calculated as follows: 300-003 Hunt -Beach Ground Lse. V8 -32- The purchase price shall be equal to the Adjusted Basic Rent (as hereinafter defined), divided by .10. The "Adjusted Basic Rent" shall be equal to the product of the Basic Rent (as theretofore adjusted pursuant to Section 6.2), multiplied by the fraction equal to the Index for the month four calendar months prior to the Tenant Purchase Date divided by the Index for the month four calendar months prior to the last date of adjustment pursuant to Section 6.2, provided that the increase in Basic Rent shall not be in excess of a 14% increase from the Basic Rent then in effect, but in no event shall the Purchase Price be less than $1,680,000,as adjusted by the same percentage as the rent adjustment pursuant to Section 6.2 and in accordance with the foregoing. For a Tenant Purchase Date on or after the expiration of the first renewal option, the purchase price shall not be less than the fair market value of Landlord's interest in the fee as encumbered by this Lease, including any residual value. 33.2 The purchase of the Fee shall take place on or before the applicable Purchase Date through an escrow company selected by Tenant and reasonably acceptable to Landlord. At such closing, Landlord will transfer the Fee to Tenant or its designee, subject only to the title encumbrances of record as of the Commencement Date of this Lease and subject to any other title encumbrances approved by Tenant. The purchase price for the Fee shall be payable in cash. Landlord shall pay documentary and other transfer taxes, the cost of a CLTA Owner's Policy of Title Insurance, one-half of the escrow fees and any other closing costs typically paid by sellers in Orange County. Tenant shall pay recording costs, additional title insurance costs, one half of the escrow fees and any other closing costs typically paid by buyers in Orange County. 33.3 Any disputes regarding the acquisition of the Fee pursuant to this Section 33 shall be resolved pursuant to Exhibit C, provided that any dispute regarding the purchase price or the determination of fair market value shall be determined by a panel of three neutral arbitrators selected pursuant to Paragraph 2(b) of Exhibit C, which panel shall choose either the purchase price submitted by Landlord or the purchase price submitted by Tenant (such panel having no authority to choose any other amount). The party whose purchase price is chosen shall be entitled to its reasonable attorneys' fees. 34. RIGHT OF FIRST OFFER 34.1 If at any time after execution of this Lease, Landlord desires to sell the Fee, Landlord shall give Tenant the right to purchase the Fee for a price and terms set forth in a notice given to Tenant (the "ROFO Notice"). Tenant shall have thirty (30) days to decide whether to acquire the Fee on such terms, provided that if Tenant does not elect to purchase the Fee, any Leasehold Mortgagee (in order of priority of the Leasehold Mortgages) shall have an additional 15 days to elect to purchase the Fee. If Tenant (or the Leasehold Mortgagee) elects to acquire the Fee, the closing shall take place within 120 days after the ROFO Notice. Landlord shall pay documentary and other transfer taxes, the cost of a CLTA Owner's Policy of Title Insurance, one-half of the escrow fees and any other closing costs typically paid by sellers in Orange County. Tenant shall pay recording costs, additional title insurance costs, one half of the escrow fees and any other closing costs typically paid by buyers in Orange County. If neither Tenant nor any Leasehold Mortgagee timely elects to acquire the Fee, Landlord shall be free to sell the Fee to any other person (subject to this Ground Lease, any Fee purchase options contained herein and this Section 34), provided that if such a sale does not take 300-003 Hunt.Beach Ground Lse. V8 -33- place within one (1) year after the ROFO Notice is given, or if Landlord intends to sell the Fee at a price lower than that set forth in the ROFO Notice, Tenant and the Leasehold Mortgagees shall be given at least fifteen (15) days' prior written notice during which period Tenant or (if Tenant does not) any Leasehold Mortgagee may elect to purchase the Fee. 34.2 Any disputes regarding the acquisition of the Fee pursuant to this Section 34 shall be'resolved pursuant to Exhibit C. 35. GENERAL PROVISIONS 35.1 Waivers. The waiver by Landlord of any term, covenant, or condition herein contained shall not be a waiver of such term, covenant, or condition on any subsequent breach. 35.2 Notices. All notices and demands which may or are to be required or permitted to be given by either party to the other hereunder shall be in writing. All notices and demands by Landlord to Tenant shall be sent by first class mail, registered or certified mail, postage prepaid, return receipt requested, or by electronic facsimile transmission followed by delivery of a "hard" copy, or by personal delivery (including by means of professional messenger service, courier service such as United Parcel Service or Federal Express, or by U.S. Postal Service), and addressed to Tenant at the address set forth in Section 1.7, or to such other place as Tenant may from time to time designate in a notice to Landlord. All notices and demands by Tenant to Landlord shall be sent by first class mail, registered or certified mail, postage prepaid, return receipt requested, or by electronic facsimile transmission followed by delivery of a `.`hard" copy, or by personal delivery (including by means of professional messenger service, courier service such as United Parcel Service or Federal Express, or by U.S. Postal Service), and addressed to Landlord at the address set forth in Section 1.6, or to such other person or place as Landlord may from time to time designate in a notice to Tenant. Any notice that is transmitted by electronic facsimile transmission followed by delivery of a "hard" copy, shall be deemed delivered upon its transmission provided any transmission received on a nonbusiness day or after 5:00 p.m. on a business day shall be deemed given on the next business day; any notice that is personally delivered (including by means of professional messenger service, courier service such as United Parcel Service or Federal Express, or by U.S. Postal Service), shall be deemed received on the documented date of receipt by Tenant; and any notice that is sent by registered or certified mail, postage prepaid, return receipt required shall be deemed received on the date of receipt thereof. 35.3 Time is of the Essence. Time is of the essence of this Lease and each and all of its provisions in which performance is a factor. 35.4 Binding on Successors and Assigns. The covenants and conditions herein contained, subject to the provisions as to assignment, apply to and bind the heirs, successors, executors, administrators, and assigns of the parties hereto. 35.5 Force Majeure. Performance by either party hereunder shall not be deemed to be in default where delays or defaults are due to war, insurrection, strikes, lock -outs, riots, floods, earthquakes, fires, casualties, acts of God, acts of the public enemy, epidemics, quarantine restrictions, freight embargoes, lack of transportation, governmental restrictions or 300-003 Hunt.Beach Ground Lse. V8 -34- priority, litigation, unusually severe weather, inability to secure necessary labor, material or tools, delays of any contractor, sub -contractor or supplier, acts of the other party, acts or failure to act of the City of Huntington Beach or any other public or governmental agency or entity (except that acts or failure to act of Landlord shall not excuse performance of Landlord), or any causes beyond the control or without the fault of the party claiming an extension of time to perform. An extension of time for any such cause (a "Force Majeure Delay") shall be for the period of the enforced delay and shall commence to run from the time of the commencement of the cause, if notice by the party claiming such extension is sent to the other party within thirty (30) days of knowledge of the commencement of the cause. Notwithstanding the foregoing, none of the foregoing events shall constitute a Force Majeure Delay unless and until the party claiming such delay and interference delivers to the other party written notice describing the event, its cause, when and how such party obtained knowledge, the date and the event commenced, and the estimated delay resulting therefrom. Any party claiming a Force Majeure Delay shall deliver such written notice within thirty (30) days after it obtains actual knowledge of the event. Times of performance under this Agreement may also be extended in writing by the Landlord and Tenant. 35.6 Costs of Proceedings and Attorneys' Fees. (a) Subject to paragraph (b) below, if any action or proceeding is brought by either party against the other under this Lease or by a Leasehold Mortgagee against any such party, whether for interpretation, enforcement, recovery of possession, or otherwise, the prevailing party shall be entitled to recover all costs and expenses, including the fees of its attorney in such action or proceeding. This provision shall also apply to any postjudgment action by either party, including without limitation efforts to enforce a judgment. (b) Prior to the Commencement Date (including the period beginning with the date of initial negotiations prior to the execution of this Lease) and continuing throughout the period ending two years after the Commencement Date, in the event of any dispute regarding the Lease, or in the event Landlord consults with an attorney or incurs other costs in connection with the Lease, Tenant shall pay all such fees and costs incurred by Landlord, and Tenant shall not be entitled to a reimbursement or recovery of any fees or costs paid by Tenant notwithstanding any other paragraph in this Agreement. 35.7 Severability. Any provision of this Lease which shall prove to be invalid, void, or illegal shall in no way affect, impair, or invalidate any other provision hereof and such other provisions shall remain in full force and effect. 35.8 No Exclusive Remedies. No remedy or election hereunder shall be deemed exclusive but shall, wherever possible, be cumulative with all other remedies at law or in equity. 35.9 Laws of California. This Lease shall be governed by the laws of the State of California. Proper venue for any action shall be in Orange County, California. 35.10 No Partnership. Nothing contained in this Lease shall be deemed or construed as creating a partnership, joint venture, or any other relationship between the parties hereto other than Landlord and Tenant according to the provisions contained herein, or cause Landlord to be responsible in any way for the debts or obligations of Tenant, or any other party. 300-003 Hunt -Beach Ground Lse. V8 -35- 35.11 Final Agreement. This Lease, including any document or instrument incorporated therein or herein by reference, contains a complete and final expression of the agreement between Landlord and Tenant, and there are no promises, representations, agreements, warranties, or inducements either express or implied other than as are set forth and this Lease. Any and all previous discussions or agreements between Landlord and Tenant with respect to the premises, whether oral or written, are superseded by this Lease. 35.12 Language of Lease. When the context so requires when used in this Lease, the masculine gender shall be deemed to include the feminine and neuter gender and the neuter gender shall be deemed to include the masculine and feminine gender. When the context to requires when used in this Lease, the singular shall be deemed to include the plural. The paragraph and section headings have been used for convenience only, and shall not be used in the interpretation hereof. The term "including" shall mean "including but not limited to." 35.13 Requirement of a Writing. No amendment, change, or addition to, or waiver of termination of, this Lease or any part hereof shall be valid unless in writing and signed by both Landlord and Tenant. 35.14 No Third Party Beneficiaries. The Parties acknowledge and agree that the provisions of this Lease are for the sole benefit of Landlord and Tenant, and not for the benefit, directly or indirectly, of any other person or entity, except'as otherwise expressly provided herein. 35.15 Authority of Tenant. The party executing this Lease on behalf of Tenant has full authority to do so and to bind Tenant to perform pursuant to the terms and conditions of this Lease. 35.16 Incorporation by Reference. Each of the exhibits attached hereto is incorporated herein by this reference. 35.17 Interpretation. This Lease has been negotiated at arm's length and between persons sophisticated and knowledgeable in the matters dealt with in this Lease. In addition, each party has been given the opportunity to consult with experienced and knowledgeable legal counsel. Accordingly, any rule of law (including Civil Code section 1654) or legal decision that would require interpretation of any ambiguities in this Lease against the party that has drafted it is not applicable and is waived. The provisions of this Lease shall be interpreted in a reasonable manner to effect the purpose and intent of the parties to this Lease. 35.18 Merger. So long as any Leasehold Mortgagee holds a Leasehold Mortgage, the fee title to the Property and the leasehold estate created by this Lease shall not merge unless all Leasehold Mortgagees expressly consent to the merger in writing. This provision shall apply even if Tenant or Landlord or any third party acquires both the fee title and this Lease. 35.19 Priority. This Lease, and any extensions, renewals or replacements thereof, and any sublease entered into by Tenant as sublessor, and any Leasehold Mortgage or other encumbrance recorded by Leasehold Mortgagee shall be superior to any mortgages, deeds of trust or similar encumbrances placed by Landlord on the Property and to any lien right, if any, 300-003 Hunt.Beach Ground Lse. V8 -36- of Landlord on the buildings, and any furniture, fixtures, equipment or other personal property of Tenant upon the Property. 35.20 Counterparts. This Lease may be executed by each party on a separate signature page, and when the executed signature pages are combined, shall constitute one single instrument. 35.21 Arbitration. With respect to any provision in this Lease which specifically states that disputes regarding such provision are to be resolved pursuant to arbitration, any such dispute shall be submitted to arbitration pursuant to the terms of Exhibit C. 35.22 Reasonable Consent. Unless otherwise specified, no consent or approval to be given by a party shall be unreasonably withheld, conditioned or delayed, provided if a specific time for response is provided, response within such time period shall be deemed reasonable. 35.23 Nondiscrimination. Tenant herein covenants by and for itself, its heirs, executors, administrators and assigns, and all persons claiming under or through it, and this Lease is made and accepted upon and subject to the following conditions: That there shall be no discrimination against or segregation of any person or group of persons, on account of race, color, creed, religion, sex, marital status, national origin or ancestry in the leasing, subleasing, transferring, use, occupancy, tenure or enjoyment of the premises herein leased, nor shall the lessee itself, or any person claiming under or through it, establish or permit such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, sublessees, subtenants or vendees in the land herein leased. 35.24 Conversion of Fee to Undivided Interest. Landlord acknowledges that Tenant is entering into this Lease in connection with the development of a larger parcel of land (the "Development Site") which includes the Property. Tenant anticipates that it or its affiliate will acquire fee simple title to other parts of the Development Site and that it or its affiliates will acquire a leasehold interest in other portions of the Development Site. At the time Tenant has obtained all debt and/or equity financing for the initial construction of the Project, all building permits needed to commence construction have been issued, and provided the Commencement Date has occurred or Tenant elects to cause the Commencement Date to occur simultaneously Tenant shall have the right to cause Landlord to exchange Landlord's ownership of the Fee in the Property in exchange for receiving an undivided interest in fee simple title to all or a portion of the Development Site (which portion shall include the Property), and in such event Landlord and Tenant shall execute a restatement of this Lease and Memorandum7of Lease and Option to Purchase Fee in reasonable form proposed by Tenant, provided such restated form of this Lease shall require Tenant to make payments of Basic Rent to Landlord, shall not reduce rent payable to Landlord hereunder or increase Landlord's obligations, nor shall any material provision of this Lease be omitted. Subject to such limitations, such restated Lease may, however, include the other undivided interest holders of the fee interest in such Development Site as landlords. Tenant and Landlord shall cooperate in effectuating a tax deferred exchange, and Landlord's percentage undivided interest shall be calculated based on land area of the Property compared to land area of the real estate in which Landlord will have an undivided interest. For example, assuming the Property contains 5,000 square feet of land area and the Development Site in which 300-003 HuntBeach Ground Lse. V8 -37- Landlord will have an undivided interest is 28,000 square feet of land area, Landlord's undivided interest shall be equal to 17.857%. At Landlord's request, the land areas of the Property and land in which Landlord will have an undivided interest shall be calculated by a licensed land surveyor, at no cost to Landlord. Tenant shall pay all costs incurred by Landlord in connection with such conversion. 35.25 Creation of Air Space Parcels and Conversion to Air Space Lease. Landlord acknowledges that Tenant intends to develop a multi -story mixed use project on the Development Site, which is anticipated to include subterranean parking, retail stores and restaurants and a hotel. In order to assist financing of such project (whether through equity, debt or bond financing), Tenant intends to cause the Development Parcel (or portions thereof) to be subdivided into three or more three-dimensional legal parcels ("Air Rights Parcels"), and Landlord shall promptly cooperate with Tenant by executing, acknowledging (where appropriate) and delivering to Tenant applications, consents, tentative maps, final maps and/or other instruments or documents reasonably requested by Tenant to accomplish such subdivision. In addition, upon written request by Tenant and subject to Landlord's reasonable approval of the form, Landlord and Tenant shall execute new separate ground leases for each Air Rights Parcel including parts of the Property, with the Basic Rent payable hereunder allocated among the Air Rights Parcels as requested by Tenant. Such new separate ground leases shall be in reasonable form proposed by Tenant, provided such form shall not reduce the aggregate rent payable to Landlord hereunder or increase Landlord's obligations, nor shall any material provision of this Lease be omitted. Tenant shall pay all costs incurred by Landlord in connection with such new separate ground lease. 35.26 Lease Null and Void. If this Ground Lease and Option to Purchase Fee is not fully executed and returned to Landlord within 30 days after Landlord delivers 4 executed originals of this Lease to CEWHuntington, Inc., this Ground Lease and Option to Purchase Fee shall be null and void and of no effect whatsoever at no cost whatsoever to Frank Cracchiolo. 35.27 References to Frank Cracchiolo. All references in the Lease to "Frank Cracchiolo" shall mean Landlord. 300-003 HuntBeach Ground Lse. V8 -38- Sent by: KANE, BALLMER & BERKMAN 213 625 0931; 03/28/00 11:10AMj9L&x #511;Page 2/2 TENANT: ATTEST: Agency Clerk CIM/Huntington, Inc., a California corporation Y Ricl�rd Ressler, President Redevelopment Agency of the City of Huntington Beach (Agency) By: Chairman REVIEWED AND APPROVED AS TO FORM: 'y1 e Agency General Counsel Zy / 00 APPROVED AS TO FORM: KANE, BALLMER & BERKMAN 300.003 HuntSeach Ground [sc. VS 3_Q_ o v - ?-6v -39- MAR-29-2000 11:12 213 625 0931 96% P.02 Exhibit "A" LEGAL DESCRIPTION LOTS 4 AND 5 IN BLOCK 105 OF HUNTINGTON BEACH, AS SHOWN ON A MAP RECORDED IN BOOK 3, PAGE 36 OF MISCELLANEOUS MAPS, RECORDS OF ORANGE COUNTY, CALIFORNIA. 300-003 Hunt. Beach Ground Lse. V7 $ WALNUT 14 � Gar _ _ _ '8 ____ _ 6 13—v '_— —%34 tS—� t4 IJ ----- Q K4 23 5 71 11%Q���� _—n_`22 TI h �- I . COAST to #I all 1 6 3 t t B K.IC�S 0 24 AVER E t a e L M. hYGHWAY a Exhibit `B" MEMORANDUM OF LEASE THIS DOCUMENT HAS BEEN PREPARED BY AND WHEN RECORDED RETURN TO: FRAGNER LAW CORPORATION 333 S. Grand Avenue Suite 3030 Los Angeles, California 90071 Attn: Matthew C. Fragner, Esq. Assessor's Parcel No. MEMORANDUM OF LEASE THIS MEMORANDUM OF LEASE (this "Memorandum") is executed effective as of (the "Effective Date"), by and between CIM/Huntington, Inc., a California corporation, and the Redevelopment Agency of the City of Huntington Beach (collectively, "Tenant"), whose address is 6922 Hollywood Boulevard, Suite 900, Hollywood, CA 90028, and Frank M. Cracchiolo, Trustee for the Revocable Trust dated June 12, 1979, and Salvator W. and Barbara F. Cracchiolo, collectively with their successors and assigns ("Landlord"), whose address is 19712 Quiet Bay Lane, Huntington Beach, CA 92648. PRELIMINARY STATEMENT: Landlord and Tenant entered into that certain lease (the "Lease") dated as of , the terms, provisions and conditions of which are incorporated herein by this reference to the same extent as if recited in their entirety herein. Pursuant to the terms, provisions and conditions of the Lease, Landlord has leased to Tenant, and Tenant has rented and leased from Landlord, certain premises (the "Premises") described on Exhibit A attached hereto (the "Land'): Unless otherwise expressly provided herein, all defined terms used in this Memorandum shall have the same meanings as are ascribed to such terms in the Lease. NOW, THEREFORE, Landlord and Tenant hereby make specific reference to the following terms, provisions and conditions of the Lease: 1. In consideration of the rentals and other sums to be paid by Tenant and of the other terms, covenants and conditions on Tenant's part to be kept and performed pursuant to the Lease, Landlord leases to Tenant, and Tenant takes and hires, the Premises. The Lease term commences as of the Commencement Date (as defined in the Lease) and expires at midnight on the Expiration Date (as defined in the Lease), unless extended as provided below or terminated sooner as provided in the Lease. 300-003 -Hunt. Beach Ground Lse. V8 2. Tenant has the option to extend the term of the Lease for up to two (2) additional successive periods of twenty-five (25) years each and one additional successive period of twenty-four (24) years, by written notice to Landlord not less than 180 days prior to the expiration of the term of the Lease, each such option to be executed in accordance with the Lease. 3. Tenant has certain rights to purchase the Premises as set forth in the Lease. 4. The Lease is a "true lease"; the only relationship created thereby is that of landlord and tenant. 5. Original copies of the Lease are in the possession of Landlord and Tenant. The Lease contains other terms not herein set forth but which are incorporated by reference herein for all purposes, and this Memorandum is executed for the purpose of placing parties dealing with the Premises on notice of the existence of the Lease and, where appropriate, its contents, and shall ratify and confirm all other terms of the Lease as fully as if the same had been set forth herein. 6. Notwithstanding anything to the contrary contained herein, nothing in this Memorandum shall modify, supercede, diminish, add to or change any or all of the terms of the Lease or be deemed to create or grant any rights, liabilities or obligations of or to any party or third parties other than as specifically set forth in the Lease. In the event of any conflict between this Memorandum and the Lease, the terms and conditions of the Lease shall control. 7. This Memorandum may be executed in one or more counterparts, each of which shall be deemed an original. IN WITNESS WHEREOF, the parties hereto have caused this Memorandum to be duly executed as of the Effective Date. TENANT: CHVI/Huntington, Inc., a California corporation LN Richard Ressler, President Avaham Shemesh, Treasurer By: Shaul Kuba, Secretary LANDLORD: Redevelopment Agency of the City of Huntington Beach Chairman Frank M. Cracchiolo, Trustee Salvator W. Cracchiolo Barbara F. Cracchiolo Exhibit A to Exhibit B — Memo of Lease Legal Description LOTS 4 AND 5 IN BLOCK 105 OF HUNTINGTON BECH, AS SHOWN ON A MAP RECORDED IN BOOK 3, PAGE 36 OF MISCELLANEOUS MAPS, RECORDS OF ORANGE COUNTY, CALIFORNIA. document2 STATE OF CALIFORNIA ) ss. COUNTY OF ) On before me, , personally appeared (here insert name and title of the officer), personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. WITNESS my hand and official seal. Signature (Seal) STATE OF CALIFORNIA ) ss. COUNTY OF ) On before me, personally appeared (here insert name and title of the officer), personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. WITNESS my hand and official seal. Signature (Seal) Exhibit "C" ARBITRATION OF DISPUTES Any dispute to be arbitrated pursuant to the Agreement to which this Exhibit is attached ("Arbitrable Dispute") shall be submitted to arbitration pursuant to Title 9, Sections 1280 and following of the California Code of Civil Procedure and the terms and provisions of this Exhibit. Whenever the terms of this Exhibit and such Sections of the California Code of Civil Procedure conflict, the terms of this Exhibit shall control. 1. Location. Subject to the last sentence of this Section, all Arbitration Proceedings shall be held and conducted in Orange County (the "Arbitration County"). The location for an Arbitration Proceeding within the Arbitration County shall be as mutually agreed by the Parties, but failing such agreement within ten (10) days of a written request by any Party, the Arbitration Proceeding shall be conducted in the regional office of Judicial Arbitration and Mediation Service ("JAMS") in the Arbitration County (or if no such office exists in such County, then in the JAMS regional office closest to the Property). 2. Rules and Selection of Arbitrator(s). Each Arbitration Proceeding shall be conducted under the commercial arbitration rules of JAMS then in effect (provided that in the event of any conflict between such Rules and this Exhibit, the terms of this Exhibit shall control). In no event shall a demand for arbitration be made after the date when institution of legal or equitable proceedings based on the Arbitrable Dispute in question would be barred by any applicable statute of limitations. The arbitrator(s) shall be selected as follows: (a) Unless otherwise provided in the Agreement, any Arbitration Proceeding initiated pursuant to the terms of the Agreement, and any Arbitration Proceeding involving an amount in controversy less than One Million Dollars ($1,000,000), shall be heard by a single neutral arbitrator. The arbitrator appointed must be (a) a former or retired judge of the California Superior Court or any higher court in California, or (b) an attorney with at least 15 years experience with acquisition and development of retail shopping centers. If agreement is not reached by the Parties on the selection of the arbitrator within one month after commencement of an Arbitration Proceeding by (i) submission of a matter to JAMS in accordance with its commercial arbitration rules and (ii) notice to the other Party of the initiating Party's intention to arbitrate, then such arbitrator shall be appointed by the presiding judge of the Superior Court of the Arbitration County. (b) Unless otherwise provided in the Agreement, any Arbitration Proceeding involving an amount in controversy equal to or greater than One Million Dollars ($1,000,000) shall be heard by a panel of three neutral arbitrators. Each arbitrator appointed must be (a) a former or retired judge of the California Superior Court or any higher court in California, or (b) an attorney with at least 15 years experience with acquisition and development of retail shopping centers. If agreement is not reached by the Parties on the selection of the three arbitrators within one month after commencement of an Arbitration Proceeding by 300-003 Hunt. Beach Ground Lae. V8 (i) submission of a matter to the JAMS in accordance with its commercial arbitration rules and (ii) notice to the other Party of the initiating Party's intention to arbitrate, then such arbitrators shall be appointed by the presiding judge of the Superior Court of the Arbitration County. (c) For purposes of determining whether an Arbitration Proceeding shall be heard by one arbitrator or by three, the term "amount in controversy" shall mean the dollar amount sought by either the Party initiating the Arbitration Proceeding or the Party responding to the Arbitration Proceeding, whichever is greater. 3. Powers of Arbitrator(s). ` The arbitrator(s) shall have the power to grant all appropriate legal and equitable relief (both by way of interim relief and as a part of its final award), other than punitive damages, as may be granted by any court of the State of California, to carry out the terms of this Agreement (e.g., declaratory and injunctive relief and damages). The Parties expressly waive any right to punitive damages arising out of any Arbitrable Dispute. All awards and orders of the arbitrator(s) (including, but not limited to interim relief) shall be final and binding subject to confirmation, correction or vacation pursuant to California Code of Civil Procedure Sections 1285 and following. 4. Discovery and Rules of Evidence. It is the intention of the Parties that all Arbitration Proceedings be conducted as expeditiously as reasonably possible in keeping with fairness and with a minimum of legal formalities. Therefore, the Parties have agreed that the rules of evidence shall not apply to any Arbitration Proceeding, except that notwithstanding the foregoing the attorney/client privilege and work product protection shall be applicable in all Arbitration Proceedings. The Parties agree that only limited discovery should be allowed in an Arbitration Proceeding and incorporate California Code of Civil Procedure, Sections 1283.1(b) and 1283.05 for this purpose. Unless otherwise ordered by the arbitrator(s) on a showing of substantial need, each side shall be limited to one document production request and one deposition and such discovery shall be complete within 60 days following appointment of the arbitrator(s). In addition the parties shall exchange the names, qualifications and a narrative report stating the opinion and basis therefor of any expert who may be called 15 days prior to the start of the arbitration. 5. Timins. In furtherance of the intent of the Parties expressed in the first sentence of Section 4 of this Exhibit, and unless modified by the arbitrator(s) upon a showing of good cause, all Arbitration Proceedings shall proceed upon the following schedule: (a) within one month from the service of the notice of the request to arbitrate, the parties shall select the arbitrator(s); (b) within 15 days after selection of the arbitrator(s), the Parties shall conduct a pre - arbitration conference at which a schedule of pre -arbitration discovery shall be set, all pre - arbitration motions scheduled and any other necessary pre -arbitration matters decided; (c) all discovery allowed by the arbitrator(s) shall be completed within 45 days following the pre - arbitration conference; (d) all pre -arbitration motions shall be filed and briefed so that they may be heard no later than one month following the discovery cut-off; (e) the arbitration shall be scheduled to commence no later than one month after the decision on all pre -arbitration motions but in any event no later than five months following the service of the notice of arbitration; and (f) the arbitrator(s) shall render his or her or their written decision (including without limitation any and all findings of fact and conclusions of law) within one month following the submission 300-003 Hunt. Beach Ground Lse. V8 - ii - of the matter. The Parties intend the foregoing schedule to be an outside maximum timetable, and nothing herein shall prevent the arbitrator(s) from ordering a shorter timetable if the arbitrator(s) conclude(s) that the same is warranted by the circumstances of any particular Arbitration Proceeding. 6. Transcript. All proceedings involving the Parties in an Arbitration Proceeding shall be reported by a certified shorthand court reporter and written transcripts of the proceedings shall be prepared and made available to the Parties. 7. Costs. Subject to Paragraph 35.6(b) of the Lease, the prevailing party shall be awarded reasonable attorneys' fees, expert and non -expert witness costs and expenses, and other costs and expenses incurred in connection with the arbitration unless the arbitrator(s), for good cause, determines otherwise. A post -arbitration proceeding to determine costs, if needed, shall be held within 10 days of notice of the award. Costs and fees of the arbitrator(s) (including the cost of the record of transcripts of the arbitration) shall be borne by the non -prevailing party, unless the arbitrator(s) for good cause determines otherwise. Costs and fees payable in advance shall be advanced equally by the Parties, subject to ultimate payment by the non -prevailing party in accordance with the preceding sentence. 8. Reconsideration. Upon receipt of the written opinion of the arbitrator(s), either Party shall have the right within 10 days to file with the arbitrator(s) a motion to reconsider, and the arbitrator(s) shall then reconsider the issues raised by the motion, may allow the other Party an opportunity to respond thereto, and shall either confirm or change the decision within 10 days after such filing. Such revised or confirmed decision shall then be final and conclusive upon the Parties. The costs (other than the attorneys' fees of the respective parties) of a motion for reconsideration and related proceedings shall be borne by the moving Party. 9. Specific Enforcement. The terms of this Exhibit shall be specifically enforceable under applicable law in any court of competent jurisdiction. The award rendered by the arbitrator(s) shall be final (subject to confirmation, correction or vacation as set forth in California Code of Civil Procedure Sections 1285 and following) and judgment may be entered in accordance with applicable law and in any court having jurisdiction thereof. 10. Interest on Award. Any monetary award of the arbitrator(s) may include interest at the legal rate, which interest shall accrue from the date the claim, dispute or other matter in question was rightfully due and payable under the Agreement until the date the award is paid to the prevailing party. 11. Extraordinary Remedies. No provision of this Exhibit shall limit the right of any Party to exercise self-help remedies or to obtain provisional or ancillary remedies from a court of competent jurisdiction before, after, or during the pendency of any Arbitration Proceeding. The exercise of such remedy shall not waive the right of any Party to resort to arbitration. ARBITRATION OF DISPUTES NOTICE: BY INITIALING IN THE SPACE BELOW YOU ARE AGREEING TO HAVE ANY DISPUTE ARISING OUT OF THE MATTERS INCLUDED IN THE "ARBITRATION OF DISPUTES" PROVISION DECIDED BY NEUTRAL ARBITRATION AS PROVIDED BY CALIFORNIA LAW AND YOU ARE GIVING UP ANY RIGHTS YOU 300-003 Hunt. Beach Ground Lse. V8 ill - MIGHT POSSESS TO HAVE THE DISPUTE LITIGATED IN A COURT OR JURY TRIAL. BY INITIALING IN THE SPACE BELOW YOU ARE GIVING UP YOUR JUDICIAL RIGHTS TO DISCOVERY AND APPEAL. UNLESS SUCH RIGHTS ARE SPECIFICALLY INCLUDED IN THE "ARBITRATION OF DISPUTES" PROVISION. IF YOU REFUSE TO SUBMIT TO ARBITRATION AFTER AGREEING TO THIS PROVISION, YOU MAY BE COMPELLED TO ARBITRATE UNDER THE AUTHORITY OF THE CALIFORNIA CODE OF CIVIL PROCEDURE. YOUR AGREEMENT TO THIS ARBITRATION PROVISION IS VOLUNTARY. WE HAVE READ AND UNDERSTAND THE FOREGOING AND AGREE TO SUBMIT DISPUTES ARISING OUT OF THE MATTERS INCLUDED IN THE "ARBITRATION OF DISPUTES" PROVISION TO NEUTRAL ARBITRATION. � �� A -� andlord's Initials 3 r 9 -Do Tenant's Initials 300-003 Hunt. Beach Ground Lse. V8 - 1V - TENANT: ATTEST: Agency Clerk REVIEWED AND APPROVED AS TO FORM: Agency General Counsel APPROVED AS TO FORM: KANE, BALLMER & BERKMAN BY: LANDLORD: CIM/Huntington, Inc., a California corporation LM Richard Ressler, President By: Avaham Shemesh, Treasurer IRE Shaul Kuba, Secretary Redevelopment Agency of the City of Huntington Beach (Agency) By: Chairman Frank M. Cracchiolo, Trustee Salvator W. Cracchiolo Barbara F. Cracchiolo 300-003 Hunt.Beach Ground Lse. V8 -30- Exhibit "A" SUBGROUND LEASE AND OPTION TO PURCHASE FEE by and between CIM/Huntington, Inc. and Redevelopment Agency of the City of Huntington Beach (collectively, "Sublandlord") and ("Subtenant") 300-003 Subground Lease CIM Huntington, Inc. V2 documeW TABLE OF CONTENTS Page SUBGROUND LEASE SUMMARY............................................................................................. 1 ARTICLE 1. FUNDAMENTAL INFORMATION............................................................... 6 ARTICLE 2. PURPOSE OF LEASE..................................................................................... 8 ARTICLE 3. AGREEMENT TO LEASE.............................................................................. 8 ARTICLE 4. ACCEPTANCE OF PROPERTY..................................................................... 8 ARTICLE5. TERM............................................................................................................... 9 ARTICLE 6. BASIC RENT................................................................................................. 10 ARTICLE 7. ADDITIONAL RENT.................................................................................... 11 ARTICLE 8. RENT GENERALLY..................................................................................... 11 ARTICLE 9. SUBTENANT WORK.................................................................................... 12 ARTICLE10. USE................................................................................................................. 12 ARTICLE 11. COMPLIANCE WITH LAW......................................................................... 12 ARTICLE 12. ALTERATIONS AND ADDITIONS............................................................. 12- ARTICLE13. REPAIRS....................................................................................................... 13 ARTICLE14. TAXES............................................................................................................ 13 ARTICLE 15. ASSIGNMENT AND SUBLETTING........................................................... 15 ARTICLE 16. HOLD HARMLESS....................................................................................... 16 ARTICLE 17. OWNERSHIP OF PROPERTY DURING TERM AND UPON EXPIRATION OR TERMINATION OF LEASE .......................................... 17 ARTICLE18. LIENS............................................................................................................. 18 ARTICLE 19. SUBROGATION............................................................................................ 18 ARTICLE 20. SUBTENANT'S INSURANCE..................................................................... 18 ARTICLE 21. UTILITIES...................................................................................................... 20 ARTICLE 22. HOLDING OVER.......................................................................................... 20 ARTICLE 23. ENTRY BY SUBLANDLORD...................................................................... 20 ARTICLE 24. DAMAGE, RECONSTRUCTION................................................................. 21 ARTICLE25. DEFAULT...................................................................................................... 22 ARTICLE 26. EMINENT DOMAIN..................................................................................... 24 ARTICLE 27. ESTOPPEL OFFSET STATEMENT............................................................. 24 ARTICLE 28. HAZARDOUS MATERIALS........................................................................ 25 ARTICLE 29. SUBTENANT'S SIGNAGE........................................................................... 26 ARTICLE 30. MEMORANDUM OF LEASE....................................................................... 26 ARTICLE 31. MORTGAGEE PROTECTION PROVISIONS ............................................. 26 ARTICLE 32. SUBLANDLORD'S RIGHT TO CAUSE SALE OF LAND ........................ 32 ARTICLE 33. OPTION TO PURCHASE FEE SIMPLE TITLE TO PROPERTY .............. 32 ARTICLE 34. RIGHT OF FIRST OFFER.............................................................................. 33 ARTICLE 35. GENERAL PROVISIONS............................................................................. 34 EXHIBIT A - LEGAL DESCRIPTION EXHIBIT B - MEMORANDUM OF LEASE EXHIBIT C - ARBITRATION OF DISPUTES 300-003 Subground Lease CIM Huntington, Inc. V.2 - V - SUBGROUND LEASE AND OPTION TO PURCHASE FEE This SUBGROUND LEASE (the "Subground Lease") is dated as of , between CIM/Huntington, Inc., a California corporation, and Redevelopment Agency of the City of Huntington Beach (the "Agency") (collectively with their successors and assigns, "Sublandlord") and ("Subtenant"), who agree as follows: FUNDAMENTAL INFORMATION 1.1 Sublandlord: CIM/Huntington, Inc., a California corporation, and Redevelopment Agency of the City of Huntington Beach. 1.2 Subtenant. 1.3 Ground Lease. That certain Ground Lease and Option to Purchase Fee dated as of March 8, 2000 (the "Ground Lease") by and between Frank Cracchiolo, Trustee for the Revocable Trust dated June 12, 1979, and Salvator W. and Barbara F. Cracchiolo as "Landlord" and Sublandlord as "Tenant" by which the Premises have been ground leased to Sublandlord. 1.4 Commencement Date: The Commencement Date under the Ground Lease. 1.5 The Premises: The property subleased hereunder (the "Property") is that real property leased to Sublandlord pursuant to the Ground Lease and described in the Legal Description attached hereto as Exhibit "A" and incorporated herein by this reference, and any and all buildings, structures, or other improvements either now or hereafter located on the land. 1.6 Term: The Subground Lease term (the "Term") shall commence on the Commencement Date, and shall continue until the expiration or earlier termination of the Ground Lease (as the same shall be extended), unless the Sublease is terminated sooner pursuant to the provisions and conditions hereof. After the Commencement Date has been determined, Sublandlord and Subtenant shall execute, acknowledge and deliver an amendment of Memorandum of Sublease, Option to Purchase Fee and Agreement Containing Covenants Affecting Real Property setting forth, among other things, the Commencement Date and expiration date of the initial Term hereof. For purposes of this Subground Lease, the following definitions shall apply: (a) Each 12 month period, beginning on the first day of the month following the Commencement Date, shall be referred to as a "Lease Year." (b) The "Term" shall include the initial Term and any applicable Option (as defined in Section 5.3, below). 1.7 Sublandlord's address for notices: 6922 Hollywood Boulevard, Suite 900, Los Angeles, California 90028 and to City Hall, 2000 Main Street, Huntington Beach, CA 92648. A copy of all notices shall be sent to Fragner Law Corporation, 333 S. Grand Avenue, -1- 300-003 Subground Lease CIM Huntington, Inc V 2 Suite 3030, Los Angeles, CA 90071, Attention: Matthew C. Fragner, and to Kane Ballmer & Berkman, 515 S. Figueroa Street, Los Angeles, CA 90017, Attention: Murray Kane. 1.8 Subtenant's address for notices: 1.9 Subtenant's Basic Rent: Subtenant shall pay all amounts payable under the Ground Lease, excepting only payments required to be made as a result of the negligence or wrongful acts of Sublandlord (other than such negligence or wrongful acts of Subtenant), which amounts Sublandlord shall pay. 1.10 The Specified Use of the Property. For the Term of this Subground Lease, including any renewal period, the Property shall be used as part of a mixed -use development to be constructed on the Property (the "Improvements") and for any other lawful purpose. 1.11 Rights to Terminate Sublease. If the Disposition and Development Agreement dated as of June 17, 1999 between CIM Group, LLC and the Redevelopment Agency of the City of Huntington Beach (the "DDA") is cancelled or terminated and if the Tenant under the Ground Lease has the right to cancel the Ground Lease, then the following shall apply: (a) Agency may exercise the right described in Section 35.26. (b) If the Agency does not timely make such election described in Section 35.26, then Subtenant may elect to terminate the Ground Lease and this Subground Lease by giving written notice to Sublandlord and Landlord. 2. PURPOSE OF SUBGROUND LEASE Sublandlord has agreed to sublease the Property to Subtenant in accordance with this Subground Lease, and Subtenant will construct, manage and operate the Improvements for the uses permitted by this Subground Lease. 3. AGREEMENT TO SUBLEASE 3.1 Sublease of Property. Sublandlord hereby subleases the Property to Subtenant, and Subtenant hereby subleases the Property from Sublandlord, subject to the provisions and conditions herein set forth, for an amount of rental as described in Sections 6 and 7 hereof; together with all right, title and interest, if any, of Sublandlord, to the land lying in the streets and roads adjoining the Property, to the center line thereof, and in and to any and all easements and rights of way appurtenant to the Property, subject nevertheless to all public easements and rights of use of such streets, rights of way and easements; together with all awards, rents, issues and profits of whatsoever nature of or with respect to any of the Property and the Improvements, except as expressly reserved to Sublandlord. 3.2 Ownership of Improvements. The parties agree that during the Term of this Subground Lease, all Improvements located on the Property shall be owned in fee by Subtenant. 300-003 Subground Lease CIM Huntington, Inc. V.2 -2- 3.3 Grant of Easements. Within twenty (20) days after Subtenanfs submission, at no cost to Sublandlord, Sublandlord agrees to execute, acknowledge and deliver and to require Landlord to execute, acknowledge and deliver grants of easements necessary for the development of the Project and Property, as well as subsequent development of the Property during the Term hereof, provided no such easement shall materially diminish the value of the Property. 3.4 Consent to Bond Financing. Upon Subtenant's request, with Subtenant responsible for all costs, Sublandlord shall consent, approve and/or vote and to require Landlord to consent, approve and/or vote in favor of any Mello Roos or other bond financing transaction relating to the construction of improvements on or near the Property. 3.5 Authority and Negative Covenants. Any Subtenant which is one of the parties comprising Sublandlord shall have the authority to act on behalf of Sublandlord with respect to the Ground Lease, provided that without the consent of both parties comprising Sublandlord, Subtenant shall not: (a) Perform any act or fail to perform any act which would constitute an Event of Default under the Ground Lease or which would lead to an Event of Default under the Ground Lease; (b) Terminate the Ground Lease in whole or in part; (c) Modify or amend the Ground Lease in whole or in part; or (d) Prejudice or adversely affect the right of the Tenant under the Ground Lease. 4. ACCEPTANCE OF PROPERTY 4.1 Disclaimer. Except as may be expressly set forth in this Subground Lease, Sublandlord makes no representations, express or implied, with respect to the legality, fitness, or desirability of the Property for Subtenant's intended use or for any other uses. Subtenant shall conduct its own investigation to its satisfaction with respect to zoning, local codes and regulations, and other matters affecting Subtenant's ability to use and improve the Property for Subtenant's intended use. It shall be Subtenant's responsibility, at no cost to Sublandlord, to ensure that zoning of the Property, and all applicable City land use requirements are, as of the date of execution hereof, such as to permit development of the Property and construction of improvements thereon in accordance with the provisions of this Subground Lease and the use, operation and maintenance of such improvements as provided in this Subground Lease. 4.2 Hazardous Substances. Sublandlord has no knowledge of any other hazardous substance located on the Property, without any duty to investigate or inquire. 4.3 "AS -IS". Except as expressly provided in this Subground Lease, the Property shall be leased in an "as is" condition, with no warranty or liability, express or implied, on the part of Sublandlord as to the condition of any buildings on the Property, the soil (or water), its geology, the existence of known or unknown faults or any other conditions relating to the Property. It shall be the sole responsibility of Subtenant, at Subtenant's expense, to investigate 300-003 Subground Lease CIM Huntington, Inc. V.2 -3- and determine the condition of any building, soil (and water) relating to the Property and the suitability of the Property for the uses contemplated by this Subground Lease. If the condition of the Property, or any part thereof, is not in all respects entirely suitable for the use of the Property contemplated by this Subground Lease, then it is the sole responsibility and obligation of Subtenant to take such action as may be necessary to place the Property and the soil (and water) condition thereof in all respects in a condition that is suitable for such use (provided Subtenant shall not be responsible for any such actions if it terminates the Lease pursuant to Section 1.10). 5. TERM 5.1 Initial Term. The Term of this Subground Lease shall commence on the Commencement Date and shall continue until the expiration or earlier termination of the Ground Lease, unless the Subground Lease is terminated sooner pursuant to the provisions and conditions hereof. 5.2 Surrender. Subject to the damage and reconstruction provisions of Section 24, Subtenant shall upon the expiration or sooner termination of this Subground Lease surrender the Property to Sublandlord in good and clean condition, ordinary wear and tear excepted, including any buildings, structures, improvements or additions then located on the Property which are, during the Term of this Subground Lease, owned in fee by Subtenant. 5.3 Options to Renew the Ground Lease and the Subground Lease. (a) Subtenant may, at its option, cause Sublandlord to renew the Ground Lease and this Subground Lease for two (2) additional periods of twenty-five (25) Lease Years each and one additional period of twenty-four Lease Years (but not to exceed a total Term of ninety-nine (99) years), each such additional period being referred to as an "Option," subject to all the provisions of this Subground Lease, and on the same terms and conditions as for the initial Term, provided, however, that Subtenant shall have no such right to renew if Sublandlord does not have the right to renew the term under the Ground Lease. Subtenant's right to cause such renewal for the first additional Option and the subsequent Option is subject to the following conditions: (b) Subtenant shall give written notice to Sublandlord of its intent to cause such renewal for each Option at any time at least 210 days prior to the expiration of the initial Term or the first Option, as the case may be. (c) In lieu of executing a new sublease for any additional Option, each party shall, at the request of the other, endorse on the original Sublease or on a true copy of the original Sublease that party's signature or signatures, the date the renewal option was exercised, and the words "renewal option exercised." Alternatively, each party shall, at the request of the other, execute a memorandum, in recordable form, acknowledging the fact that the renewal option has been exercised and otherwise complying with the requirements of law for an effective memorandum or abstract of lease. 300-003 Subground Lease CIM Huntington, Inc. V.2 -4- 6. BASIC RENT As "Basic Rent," Subtenant shall pay all amounts payable by Tenant under the Ground Lease as and when it becomes due under the Ground Lease, provided that any amounts owing under the Ground Lease due to the negligence or wrongful acts of one or more of the entities comprising Tenant shall be paid by such entity or entities. 7. ADDITIONAL RENT In addition to any Basic Rent that is due pursuant to this Subground Lease, Subtenant shall pay to Sublandlord, as additional consideration for the sublease of the Property, any sums described in this Subground Lease as "Additional Rent." 8. RENT GENERALLY 8.1 Triple Net. All Basic Rent and Additional Rent (collectively, "Rent") shall be paid absolutely net to Sublandlord, so that this Subground Lease shall yield to Sublandlord the full amount of the Rent throughout the Term of this Subground Lease. This Subground Lease is and shall be a "Pure Net" or "Triple Net" lease, as such terms are commonly used in the real estate industry, it being intended that Subtenant shall pay all costs, expenses and charges arising out of the use, occupancy and operation of the Property. 8.2 Payment. All payments of Rent and of other sums to be paid by Subtenant to Sublandlord pursuant to this Subground Lease shall be paid in lawful money of the United States of America to Landlord with respect to Basic Rent, and for Additional Rent, at the Sublandlord's address set forth above, or at such other place within the United States or to such other person, firms or corporations as Landlord or Sublandlord from time to time may designate in writing. Except as otherwise expressly provided by the terms of this Subground Lease, Sublandlord and Subtenant agree that all sums payable hereunder to or on behalf of Sublandlord shall be paid without notice or demand. 8.3 Late Charge and Interest. Should Subtenant fail, for whatever reason, to make any rental payment required under the Ground Lease, Subtenant shall pay any late charge or interest payable by Sublandlord under the Ground Lease. 9. SUBTENANT WORK Subtenant shall be responsible for all improvement work on the Property in accordance with all applicable provisions of this Subground Lease. 10. USE Subtenant shall not use the Property for any use prohibited by the Ground Lease. 300-003 Subground Lease CIM Huntington, Inc. V.2 -5- 11. COMPLIANCE WITH LAW 11.1 No Violation. Subtenant shall not use the Property or permit anything to be done in or about the Property which will in any way conflict with any applicable law, statute, ordinance, or governmental rule, regulation or requirement now in force or which may hereafter be enacted or promulgated. Subtenant shall, at its sole cost and expense, promptly comply with all applicable laws, statutes, ordinances, and governmental rules, regulations or requirements now in force or which may hereafter be enacted or promulgated, and any applicable requirements of any board of fire insurance underwriters or other similar bodies now or hereafter constituted, relating to the condition, use, or occupancy of the Property. 11.2 Judgment Conclusive. The judgment of any court of competent jurisdiction after all applicable appeals have been exhausted or appeal periods have expired or the admission of Subtenant in any action against Subtenant, whether Sublandlord be a party thereof or not, that Subtenant has violated any law, statute, ordinance, or governmental rule, regulation, or requirement, shall be conclusive of that fact as between Sublandlord and Subtenant. 12. ALTERATIONS AND ADDITIONS 12.1 No Prior Consent Required. Subtenant may make any alterations, additions, or improvements to or on the Property or any building or structure thereon or any part thereof without the prior written consent of Sublandlord. 12.2 Subtenant's Cost. All alterations, additions, or improvements by Subtenant shall be made without cost or expense to Sublandlord, by responsible and licensed contractors. All improvements and equipment shall be designed, built, and installed in accordance with all applicable building codes and regulations, and Subtenant shall obtain all necessary building permits. 12.3 Prior Notice. Subtenant shall give written notice to Sublandlord at least ten (10) days prior to commencement of any work, to enable Sublandlord to post notices of non - responsibility. 12.4 Insurance. For all alterations costing in excess of $100,000, Subtenant shall obtain and keep in effect "Builder's All Risk Insurance" during the period of construction and installation of any improvements being made by Subtenant, including completed operations coverage, with coverage in the amount of at least $2,000,000, increased or decreased every five (5) years by the percentage increase or decrease in the Index (as defined in the Ground Lease) from the Commencement Date of this Subground Lease to the anniversary thereof most recently preceding the start of such construction (rounded to a reasonable amount), naming Sublandlord and Landlord as additional insureds. Subtenant shall deliver to Sublandlord a Certificate of Insurance evidencing such insurance coverage prior to commencement of the alterations. 12.5 Property Free of Liens. Subtenant shall keep the Property free and clear of any and all liens and encumbrances which may arise at any time in connection with any improvement work by Subtenant or its agents and contractors. Any mechanic's liens that have been recorded or stop notices that have been delivered shall be paid, settled or otherwise extinguished, discharged, released, waived or bonded around within twenty (20) days after notice 300-003 Subground Lease CIM Huntington, Inc. V.2 -6- thereof to Subtenant. In addition, Subtenant shall indemnify, defend, and hold Sublandlord harmless from and against any and all costs, expenses, claims, demands, damages, actions, causes of action, or liabilities of any kind which may arise at any time in connection with any improvement work by Subtenant or its agents and contractors, including without limitation the design and installation of equipment and the renovation of the Property, except to the extent such costs, expenses, claims, demands, damages, actions, causes of action, or liabilities relate to the design of offsite improvements provided by Sublandlord (other than Subtenant if Subtenant is one of the entities comprising Sublandlord) or the negligence or willful misconduct of Sublandlord, its agents, representatives, employees or contractors (other than Subtenant if Subtenant is one of the entities comprising Sublandlord). 13. REPAIRS 13.1 Subtenant's Obligations. At all times during the Term, Subtenant shall, at Subtenant's sole cost and expense, maintain and repair the Property as required under the Ground Lease. 13.2 Sublandlord's Obligations. Sublandlord shall not under any circumstances be obligated to undertake any maintenance, repair, or replacement of any portions of the Property. Subtenant understands that Sublandlord is not obligated to maintain the structural portions of any building or structure, including the roof, exterior walls, and foundations of said building or structure; Sublandlord shall not be liable for any failure to make any such repairs or to perform any maintenance, whether by reason of any injury to or interference with Subtenant's business or otherwise. Subtenant waives any obligations which Sublandlord may have with respect to the tenantability of the Property and the right to make repairs at Sublandlord's expense under any law, statute, or ordinance now or hereafter in effect, including without limitation the provisions of California Civil Code sections 1941 and 1942. 14. TAXES 14.1 Payment Prior to Delinquency. Subtenant shall promptly pay prior to delinquency, all real estate and real property taxes, or possessory interest tax, assessed against the Property, including such added assessment or omitted assessment which may be levied against the Property from time to time by the applicable governmental taxing authority for periods commencing upon the Commencement Date, and any increase in the assessment from time to time based on improvements to the Property. In addition, Subtenant shall, during the Term of this Subground Lease, pay any levy for the installation, maintenance or operations of local improvements affecting the Property as may be assessed by any governmental boards or bureaus having jurisdiction thereof. Notwithstanding the foregoing, any assessment or impositions for capital or public improvements which may be payable by law at the option of the taxpayer in installments may be so paid by Subtenant in installments, together with any required interest. Upon written request of Sublandlord, Subtenant shall furnish in writing to Sublandlord evidence of payment of all taxes and assessments required to be paid by Subtenant during the Term hereof. If Sublandlord does not receive reasonable evidence of payment within 15 days after written request (which request may not be given until after the due date of such payment), Sublandlord may, at its option, pay the tax for Subtenant. In such case, Subtenant shall reimburse Sublandlord immediately upon demand, plus interest at the rate of ten percent (10%) 300-003 Subground Lease CIM Huntington, Inc. V.2 -7- per annum, as Additional Rent. If Subtenant shall be obligated to pay any taxes, assessments, and charges hereunder during a partial year, the amount of any such taxes, assessments, and charges shall be prorated according to the length of time Subtenant's obligation shall be in effect during the relevant tax period. 14.2 Tax Protest. Subtenant shall have the right, by appropriate proceedings, to protest or contest in good faith any assessment or re -assessment of taxes, any special assessment, or the validity of any taxes or of any change in assessment or tax rate; provided, however, prior to any such challenge Subtenant must either (I) pay the taxes alleged to be due in their entirety and seek a refund from the appropriate authority, or (ii) post a bond in an amount sufficient to insure full payment of the taxes. In any event, upon a final determination with respect to such contest or protest, Subtenant shall promptly pay all sums found to be due with respect thereto. In any such protest or contest, Subtenant may act in its own name; and at the request of Subtenant, Sublandlord shall cooperate with Subtenant in any way Subtenant may reasonably require in connection with such contest or protest, including signing such documents as Subtenant shall reasonably request, provided that such contest or protest shall be at Subtenant's sole expense, and in the event any penalties, interest, or late charges become payable with respect to the taxes as a result of such contest or protest, Subtenant shall pay the same. In the event Subtenant obtains a refund as the result of Subtenant's protest or contest and subject to the Subtenant's obligation to pay Sublandlord's costs (if any) associated therewith, Subtenant shall be entitled to such refund to the extent it relates to the Property during the Term of this Subground Lease. 14.3 Personal Property Taxes. Subtenant shall pay any and all personal property taxes assessed against equipment, trade fixtures, inventory, or other personal property located in, on, or about the Property. Subtenant shall indemnify, defend, and hold Sublandlord and the Property harmless from and against any such personal property taxes. 14.4 Other Taxes. If at any time during the Lease Term under the laws of the United States, or any state, county, or city, or any political subdivision thereof in which the building is situated, a tax or excise on rent or any other tax or other charge however described is levied or assessed by any such political body against Sublandlord on account of ownership of the Property or rentals payable to Sublandlord hereunder, such tax or excise shall be considered "taxes" for the purposes of this Section 14 and shall be paid by Subtenant in the manner provided above, excluding, however, from such tax or excise to be paid by Subtenant any amount assessed against Sublandlord as state or federal income tax, gift tax or inheritance tax. 15. ASSIGNMENT AND SUBLETTING 15.1 Sublandlord Consent Required. Except for Transfers permitted under or meeting the requirements of Section _ of the Memorandum of Sublease, Option to Purchase Fee and Agreement Containing Covenants Affecting Real Property described in Section 30 below, Subtenant shall not, under any circumstances, without the express prior written approval of Sublandlord, Transfer the Property or any portion thereof, or attempt to Transfer all or any portion of its interest in this Subground Lease. A consent by Sublandlord to one Transfer shall not be deemed to be a consent to any subsequent Transfer. Any attempted Transfer of the Property, this Subground Lease, or any portion or interest therein which is not authorized by this Subground Lease or expressly approved in writing by Sublandlord shall be void and of no force or effect and, at the option of Sublandlord, shall constitute a breach of this Subground Lease. 300-003 Subground Lease CIM Huntington, Inc. V.2 -8- 15.2 Involuntary Assignments. Neither this Subground Lease nor any interest therein shall be assignable by operation of law (including, without limitation, the transfer of this Subground Lease by testacy or intestacy). Any involuntary assignment shall constitute a breach of this Subground Lease by Subtenant. The following is a non-exclusive list of acts which shall be considered an involuntary assignment: (a) If Subtenant is or becomes bankrupt or insolvent or if any involuntary proceeding is brought against Subtenant (unless, in the case of a petition filed against Subtenant, the same is dismissed within ninety (90) days), or Subtenant makes an assignment for the benefit of creditors, or institutes a proceeding under or otherwise seeks the protection of Federal or State bankruptcy or insolvency laws, including but not limited to the filing of a petition for voluntary bankruptcy or instituting a proceeding for reorganization or arrangement; (b) If a writ of attachment or execution is levied on this Subground Lease, where such writ is not discharged within ninety (90) days; or (c) If, in any proceeding or action in which Subtenant is a party, a receiver is appointed with authority to take possession of the Property, where possession is not restored to Subtenant within ninety (90) days. 15.3 Definitions. As used herein, the term "Transfer" shall have the meaning set forth in the Memorandum of Sublease, Option to Purchase Fee and Agreement Containing Covenants Affecting Real Property. 15.4 Agreement to Provide Nondisturbance Agreements. On written request, Sublandlord will promptly execute, acknowledge and deliver any commercially reasonable form proposed by Subtenant providing that in the event of a termination of this Subground Lease, Sublandlord will recognize the subsublease of any subsubtenant leasing space in any improvements on the Property (each a "Space Subtenant") as a direct lease between Sublandlord and such Space Subtenant, provided that any such subsublease shall not extend beyond the scheduled term of this Subground Lease and provided the applicable Space Subtenant agrees that Sublandlord will not credit the Space Subtenant with rent paid more than one month in advance. 15.5 See Section 35.26 for a special right to cause an assignment of Subtenant's interest. 16. HOLD HARMLESS 16.1 Subtenant's Indemnification. Subtenant shall indemnify, defend, and hold Sublandlord, the City of Huntington Beach (the "City") and the Agency's and City's respective directors, officials, officers, employees, agents, contractors and consultants (collectively, the "City/Agency Parties") harmless from and against any and all costs, claims, demands, actions, causes of action, liability, loss, or damage, including attorneys' fees and costs (collectively referred to as "Claims" and Claims that are made by third parties, collectively referred to as "Third Party Claims") whether for injury to or death of persons or damage to real or personal property or otherwise, arising out of or in connection with Subtenant's use or occupancy of the Property, any activity, work, or other thing done, permitted, or suffered by Subtenant in or about the Property, or arising from the Ground Lease or any reason or cause whatsoever in connection with the use or occupancy of the Property by any party during the Term of this Subground Lease. 300-003 Subground Lease CIM Huntington, Inc. V.2 -9- The provisions of the preceding sentence shall not apply with respect to any active negligence or intentional acts of Sublandlord, or its agents, servants, contractors and employees (collectively "Sublandlord Parties") occurring after the date of this Subground Lease, provided the foregoing shall not limit Subtenant's indemnity obligations by reason of Subtenant's negligence or intentional acts. Subtenant shall further indemnify, defend, and hold Sublandlord and the City/Agency Parties harmless from and against any and all Third Party Claims arising from any breach or default in the performance of any obligation on Subtenant's part to be performed under the terms of this Subground Lease or arising from any wrongful act or negligence of Subtenant or any officer, agent, employee, guest, or invitee of Subtenant. Subtenant, as a material part of the consideration to Sublandlord, hereby assumes all risk of damage to property or injury to persons in, upon, or about the Property occurring during the term of this Subground Lease from any cause other than the active negligence or intentional acts of Sublandlord Parties other than Subtenant occurring after the date of this Subground Lease, and Subtenant hereby waives all claims in respect thereof against Sublandlord. Subtenant's obligation to indemnify under this paragraph shall include attorneys' fees, investigation costs, and other reasonable costs, expenses, and liabilities incurred by Sublandlord. If the ability of Subtenant to use the Property is interrupted for any reason, Sublandlord shall not be liable to Subtenant for any loss or damages occasioned by such loss of use unless caused by the active negligence or intentional acts of Sublandlord Parties other than Subtenant. 16.2 No Liability. Sublandlord or its agents shall not be liable for loss or damage to any property by theft or otherwise, nor for any injury to or damage to persons or property resulting from fire, explosion, falling plaster, steam, gas, electricity, water, or rain which may leak from any part of the Property or from the pipes, appliances, or plumbing works therein or from the roof, street, or subsurface or from any other place resulting from dampness or any other cause whatsoever, unless caused by or due to the negligent or intentional acts or omissions of Sublandlord Parties. Subtenant shall give prompt notice to Sublandlord in case of fire or accidents in the Property or of defects therein or in the fixtures or equipment. 17. OWNERSHIP OF PROPERTY DURING TERM AND UPON EXPIRATION OR TERMINATION OF LEASE 17.1 Improvements During Term. During the Term of this Subground Lease, all buildings, structures, fixtures, additions and improvements located on the Property shall be owned in fee by Subtenant, and Sublandlord hereby quitclaims its right, title and interest in and to such items to Subtenant. 17.2 Improvements After Term. Upon the expiration or termination of this Subground Lease, all buildings, structures, fixtures, additions, equipment, improvements, any subsubtenant security deposits then held by Subtenant (upon delivery of which, Sublandlord shall assume all obligations to subsubtenants with respect thereto), and any other real property whatsoever located on the Property shall become part of the realty, become the property of Sublandlord, and shall be surrendered with the Property. 17.3 Personal Property. Upon termination of this Subground Lease, whether by expiration of the Term or otherwise, the Improvements on the Property, and all personal property not removed by Subtenant, shall, without compensation to Subtenant, then automatically and without any act of Subtenant or any third party become Sublandlord's property, free and clear of 300-003 Subground Lease C1M Huntington, Inc. V.2 -10- all liens, encumbrances or claims to or against them by Subtenant or any third person, firm or entity, except if Subtenant acquires the Property pursuant to the terms of this Subground Lease or otherwise. Subtenant agrees to execute, acknowledge and deliver to Sublandlord at Sublandlord's cost any instrument reasonably requested by Sublandlord to perfect Sublandlord's right, title and interest in and to the Improvements or the Property. 18. LIENS Except for Leasehold Mortgages, Subtenant shall not create or permit any lien or encumbrance, including but not limited to a mechanics' lien, to be attached to or affect the Property by reason of any act or omission of Subtenant. Subtenant shall indemnify and hold harmless Sublandlord and the Property against any such lien, encumbrance, or claim of lien or encumbrance, and against any costs in connection therewith, including attorneys' fees. In the event any such lien or encumbrance is attached to, or any claim of lien or encumbrance is made against, the Property by reason of any act or omission of Subtenant, Subtenant shall, within twenty (20) days after notice thereof to Subtenant, cause the lien to be released or post with Sublandlord a cash bond in an amount reasonably satisfactory to Sublandlord, including costs and interest; provided, however, that if Subtenant fails to do so, then Sublandlord may, in its sole discretion, either (i) pay and discharge the lien or encumbrance, whereupon Subtenant shall immediately reimburse Sublandlord, as Additional Rent, for all costs and expenses which Sublandlord may incur in discharging such lien, encumbrance, or claim of lien or encumbrance, plus reasonable attorneys' fees, payable to Sublandlord upon demand, or (ii) Sublandlord may exercise such other remedies as may be available to it by reason of Subtenant's failure to comply with its obligations under this Subground Lease. 19. SUBROGATION Neither Sublandlord nor Subtenant shall be liable to the other or to any insurance company (by way of subrogation or otherwise) insuring the other party for any loss or damage to any building, structure, or other tangible property, or any resulting loss of income, or losses under worker's compensation laws and benefits (even though such loss or damage might have been occasioned by the negligence of such party, its agents, or employees), to the extent any such loss or damage is covered by insurance benefiting the party suffering the loss or damage. Sublandlord and Subtenant hereby mutually release each other from liability and waive all right to recover against each other or against officers, employees, agents or representatives of each other for any loss or damage to any person or property caused by or resulting from risks to the extent insured against under any insurance policies carried by the parties; provided, however, this paragraph shall be inapplicable if it would have the effect, but only to the extent that if would have the effect, of invalidating any insurance coverage of Sublandlord or Subtenant. The parties shall, to the extent available, cause each insurance policy obtained here under to provide a waiver of subrogation. 20. SUBTENANT'S INSURANCE 20.1 Insurance Required by Subtenant. Subtenant shall procure and maintain in force at all times during the Term of this Subground Lease at its cost a policy or policies of insurance in the amount and of the type and by insurance companies required under the Ground 300-003 Subground Lease CIM Huntington, Inc. V.2 -11- Lease. Landlord and Sublandlord shall be named as an additional insured on the insurance, and the proceeds of any such policy or policies of insurance shall be held and utilized in accordance with the provisions of Section 24 of the Ground Lease. 20.2 Policy Requirements. As applicable, the insurance required pursuant to this Subground Lease shall: (1) name Landlord and Sublandlord as additional insureds as their interests may appear; (2) provide that the coverage thereof is primary and non-contributory coverage with respect to all additional insureds; (3) contain a Standard Cross Liability endorsement providing that the insurance applies separately to each insured against whom a claim is filed, and that the policy covers claims or suits by one insured against the other; and (4) provide that the interests and protections of the additional insureds shall not be affected by any misrepresentation, act or omission of a named insured or any breach by a named insured of any provision in the policy which would otherwise result in forfeiture or reduction of coverage. 20.3 Certificates of Insurance. Subtenant shall deliver to Sublandlord prior to entry on the Property by Subtenant certificates of insurance evidencing the existence and amount of such insurance, and showing Landlord and Sublandlord (and the other parties designated in Paragraph 20.2 above) as an additional insured on all policies; provided that in the event Subtenant fails to procure and maintain such insurance, Sublandlord may (but shall not be required to) procure same at Subtenant's expense. No policy shall be cancelable or subject to reduction of coverage or other modification except after thirty (30) days prior written notice to Sublandlord by the insurer (or such shorter period of time for such notice as may be the commercial custom and practice in such policies). Subtenant shall prior to the expiration of such policies, furnish Sublandlord with renewals or binders, or (after 10 business days' written notice and failure of Subtenant to cure) Sublandlord may order such insurance and charge the cost to Subtenant, which amount shall be payable by Subtenant upon demand. All such policies shall be written as primary policies, not contributing with and not in excess of coverage which Sublandlord may carry, and all policies shall include Subtenant's employees as additional insureds. Subtenant shall have the right to provide such insurance coverage pursuant to blanket policies obtained by Subtenant provided that such blanket policies expressly afford coverage to the Property and to Subtenant and Sublandlord as required by this Subground Lease. Subtenant shall, upon request from Sublandlord, immediately deliver to Sublandlord copies of all insurance policies (including the declarations pages) in effect with respect to Subtenant's business and the Property. 21. UTILITIES Subtenant shall make all arrangements for and pay for all services and utilities to the Property; Sublandlord shall not be responsible or liable to Subtenant for interruption or stoppages of utilities or other services to the Property unless caused by the active negligence or willful misconduct of Sublandlord, its agents or contractors on or around the Property. 22. HOLDING OVER In the event Subtenant fails to vacate the Property and fulfill all of its obligations hereunder at the end of the Term, Subtenant shall pay holdover Basic Rent payable under the Ground Lease, as well as the full amount of all other Rent. Subtenant shall further be liable for 300-003 Subground Lease CIM Huntington, Inc. V.2 -12- all direct, proximate and nonconsequential damages incurred by Sublandlord by reason of the inability to deliver possession of the Property or any portion thereof to any other person. 23. ENTRY BY SUBLANDLORD Sublandlord reserves and shall at any and all times have the right, but not the obligation, to enter the Property (excluding subsubtenant spaces), for the following purposes: (a) to inspect the Property, provided such inspections shall take place during normal business hours and upon not less than 5 calendar days' written notice, (b) to show said Property to prospective purchasers and subsubtenants, provided such showings shall occur only during the last six months of the Term hereof; and (c) to post notices of non -responsibility. Sublandlord shall take all reasonable steps to ensure that the business of Subtenant and its subsubtenants shall not be interfered with. Subtenant hereby waives any claim for damages for any injury or inconvenience to or interference with Subtenant's business, any loss of occupancy or quiet enjoyment of the Property, and any other loss which may occur. Any entry to the Property obtained by Sublandlord by any means for the purposes specified above shall not under any circumstances be construed or deemed to be forcible or unlawful entry into, or a detainer of, the Property or an eviction of Subtenant from the Property or any portion thereof. 24. DAMAGE, RECONSTRUCTION 24.1 Covered by Insurance. In the event the Property is damaged by fire or other perils covered by extended coverage insurance, Subtenant shall have the right to use all available insurance proceeds to repair or rebuild the Improvements. If the estimated cost of repairs (including lost rent) is not in excess of available insurance proceeds (including rent loss insurance proceeds), then Subtenant shall forthwith repair the same (using the insurance proceeds to pay the cost of such repair) and this Subground Lease shall remain in full force and effect. 24.2 Uncovered by Insurance. (a) In the event the Property is damaged as a result of any cause other than the perils covered by fire and extended coverage insurance, or the estimated cost of repairs (including lost rent) is in excess of available insurance proceeds (including rent loss insurance proceeds), then Subtenant shall notify Sublandlord in writing of the amount by which the estimated cost of repairs exceeds such proceeds (the "Shortfall"), and Subtenant shall have the right, within eighty-five (85) days after receipt of such notice, to elect to provide the Shortfall and proceed with such repairs (using the insurance proceeds and such other funds as Subtenant may provide to pay the Shortfall), in which case this Subground Lease shall continue in full force and effect. (b) If Subtenant fails to notify Sublandlord within such eighty-five (85) day period that it will provide the Shortfall and conduct the repairs, then Sublandlord shall have the option, within thirty days from the end of the eighty-five day period described in clause (a), either to (A) provide the Shortfall at Sublandlord's sole expense and direct Subtenant to repair or restore such damage (using the insurance proceeds and such additional funds as Sublandlord may provide to pay the Shortfall), with this Subground Lease continuing in full force and effect, or (B) give notice to Subtenant terminating this Subground Lease as of the date specified in such 300-003 Subground Lease CIM Huntington, Inc. v.2 -13- notice, which date shall be no less than thirty (30) and no more than sixty (60) days after the giving of such notice of termination. In the event of giving such notice of termination, this Subground Lease shall expire and all interest of Subtenant in the Property shall terminate on the date so specified in such notice. 24.3 Special Circumstances. Notwithstanding anything to the contrary contained in this Section, Subtenant shall have no obligation whatsoever to repair, reconstruct, or restore the Property, and Sublandlord shall have no right to instruct Subtenant to do so, in either of the following circumstances: (a) the damage occurs during the last three (3) years of the Term of this Subground Lease, or (b) the damage cannot reasonably be expected to be repaired within a period of physical repair of not more than 9 months. In that event, Subtenant may at its option terminate this Subground Lease upon (30) days written notice to Sublandlord that Subtenant elects not to repair, reconstruct, or restore the Property. 24.4 Waiver. Subtenant shall not be entitled to any compensation or damages from Sublandlord for loss of the use of the whole or any part of the Property, Subtenant's personal property, or any inconvenience or annoyance occasioned by such damage, repair, reconstruction, or restoration. Subtenant waives the provisions of California Civil Code sections 1932(2) and 1933(4) with respect to any destruction of the Property. 24.5 Excess Insurance Proceeds. If completion of required repair, reconstruction or restoration of the Property does not utilize all insurance proceeds, then Subtenant may retain such unused proceeds. If, for any reason, Subtenant does not repair, reconstruct or restore the Property, the insurance proceeds for the Improvements (but not personal property or rent loss) shall belong to Sublandlord as its property. 24.6 No Abatement of Rent. No deprivation, impairment, or limitation of use resulting from any event, repair, reconstruction or restoration contemplated by this section shall entitle Subtenant to any offset, abatement, or reduction in rent, nor to any termination or extension of the Term, except as expressly provided in this Subground Lease, and except to the extent caused by the active negligence or willful misconduct of Sublandlord Parties other than Subtenant. 25. DEFAULT 25.1 Event of Default. Upon expiration of the cure periods (without cure) set forth below, the occurrence of any one or more of the following events shall constitute an Event of Default by Subtenant: (a) The failure by Subtenant to pay Rent or observe or perform any other covenants, conditions, or provisions of this Subground Lease, to be observed or performed by Subtenant: or (b) The making by Subtenant of any general assignment for the benefit of creditors; or the filing by or against Subtenant of a petition to have Subtenant adjudged a bankrupt, or a petition or reorganization or arrangement under any law relating to bankruptcy (unless, in the case of a petition filed against Subtenant, the same is dismissed within ninety (90) days); or the appointment of a trustee or a receiver to take possession of substantially all of Subtenant's assets located at the Property or of Subtenant's interest in this Subground Lease, 300-003 Subground Lease CIM Huntington, Inc. V.2 -14- where possession is not restored to Subtenant within ninety (90) days; or the attachment, execution, or other judicial seizure of substantially all of Subtenant's assets located at the Property or of Subtenant's interest in this Subground Lease, where such seizure is not discharged within ninety (90) days. 25.2 Cure Obligations. Subject to Force Majeure delay, failure or delay by Subtenant to perform any term or provision of this Subground Lease constitutes a default under this Subground Lease. Subtenant must immediately commence to cure, correct or remedy such failure or delay and shall complete such cure, correction or remedy with reasonable diligence, and during any period of curing shall not be in default, so long as it endeavors to complete such cure, correction or remedy with reasonable diligence, and provided such cure, correction or remedy is completed within the applicable time period set forth herein after receipt of written notice (or such additional time as may be reasonably necessary to correct the default). 25.3 Written Notice. Sublandlord shall give written notice of default to Subtenant, specifying the default complained of by Sublandlord. Failure or delay in giving such notice shall not constitute a waiver of any default. Except as otherwise expressly provided in this Subground Lease, any failures or delays by either party in asserting any of its rights and remedies as to any default shall not operate as a waiver of any default or of any such rights or remedies. Delays by either party in asserting any of its rights and remedies shall not deprive either party of its right to institute and maintain any actions or proceedings which it may deem necessary to protect, assert or enforce any such rights or remedies. 25.4 Monetary Default Cure Period. If a monetary event of default occurs, prior to exercising any remedies hereunder, Sublandlord shall give Subtenant written notice of such default. Subtenant shall have a period of thirty (30) calendar days after such notice is received or deemed received within which to cure the default prior to exercise of remedies by Sublandlord. Any extension of a cure period by Landlord shall likewise extend the cure period hereunder. 25.5 NonMonetary Default Cure Period. If a non -monetary event of default occurs, prior to exercising any remedies hereunder, Sublandlord shall give Subtenant notice of such default. If the default is reasonably capable of being cured within thirty (30) calendar days after such notice is received or deemed received, Subtenant shall have such period to effect a cure prior to exercise of remedies by Sublandlord. If the default is such that it is not reasonably capable of being cured within thirty (30) days, and Subtenant (i) initiates corrective action within said period, and (ii) diligently, continually, and in good faith works to effect a cure as soon as possible, then Subtenant shall have such additional time as is reasonably necessary to cure the default prior to exercise of any remedies by Sublandlord. Any extension of a cure period by Landlord shall likewise extend the cure period hereunder. 25.6 Receipt of Notice. Any notice of default that is personally delivered (including by means of professional messenger service, courier service such as United Parcel Service or Federal Express, or by U.S. Postal Service), shall be deemed received on the documented date of receipt by Subtenant; and any notice of default that is sent by registered or certified mail, postage prepaid, return receipt required shall be deemed received on the date of receipt thereof. No notice of default may be given by facsimile. 300-003 Subground Lease CIM Huntington, Inc. V.2 -15- 25.7 Remedies. In the event of any default or breach by Subtenant and the expiration of any applicable cure period, Sublandlord may at any time thereafter, in its sole discretion, without limiting Sublandlord in the exercise of a right or remedy which Sublandlord may have by reason of such default or breach: (a) Terminate Subtenant's right to possession of the Property by any lawful means, in which case this Subground Lease shall terminate and Subtenant immediately shall surrender possession of the Property to Sublandlord. In such event Sublandlord shall be entitled to recover from Subtenant all damages incurred by Sublandlord by reason of Subtenant's default including, but not limited to, the cost of recovering possession of the Property; the worth at the time of the award of each obligation of Subtenant which has accrued prior to the date of such termination, but which has not been satisfied; the worth at the time of the award of the amount by which the unpaid rent which would have been earned after the termination until the time of the award exceeds the amount of such rental loss that Subtenant proves could reasonably have been avoided; expenses of placing the Property in good order, condition and repair; expenses of reletting, including necessary renovation and alteration of the Property; reasonable attorneys' fees; the worth at the time of award as determined by the court having jurisdiction thereof of the amount by which the unpaid Basic Rent, Additional Rent and other amounts required to be paid by Subtenant pursuant to this Subground Lease for the balance of the term after the time of such award exceeds the amount of such loss for the same period that Subtenant proves reasonably could be avoided; and all other incidental and consequential damages. Unpaid installments of rent or other sums shall bear interest from the date due at the rate of 10% per annum; (b) Maintain Subtenant's right to possession, in which case this Subground Lease shall continue in full force and effect whether or not Subtenant shall have abandoned the Property. In such event Sublandlord shall be entitled to enforce all of Sublandlord's rights and remedies under this Subground Lease, including the right to recover the rent and any other charges as may become due hereunder; (c) Seek specific performance by Subtenant, in the case of breach by Subtenant of one or more of its covenants herein; (d) Exercise the remedy described in California Civil Code section 1951.4 (lessor may continue lease in effect after lessee's breach and abandonment and recover rent as it becomes due, if lessee has the right to sublet or assign, subject only to reasonable limitations); and/or (e) Pursue and every any other remedy or right now or hereafter available to Sublandlord under the laws or judicial decisions of the State of California. 25.8 Notice to Leasehold Mortgagee. Whenever Sublandlord shall deliver any notice or demand to Subtenant with respect to any breach or default by the Subtenant, Sublandlord shall at the same time deliver to the Trust and to each Leasehold Mortgagee of record (as defined in Section 31.2) a copy of such notice or demand, which shall describe the default(s) with reasonable detail. 300-003 Subground Lease CIM Huntington, Inc. v.a -16- 26. INTENTIONALLY DELETED. 27. ESTOPPEL OFFSET STATEMENT 27.1 Subtenant Estoppel. Subtenant shall, at any time and from time to time upon not less than twenty (20) days' prior written notice from Sublandlord, execute, acknowledge, and deliver to Sublandlord a statement in writing certifying that this Subground Lease is unmodified and in full force and effect (or, if modified, is in full force and effect, and stating the modifications) and acknowledging that there are not, to Subtenant's knowledge, any uncured defaults on the part of Sublandlord hereunder (or specifying such defaults if any are claimed), acknowledging that the recipient will rely on the certificate and such other matters as may be reasonable and customary or as needed to clarify any provision of this Subground Lease. Subtenant's failure to deliver such statement to Sublandlord within twenty (20) days after receipt of Sublandlord's notice shall be conclusively deemed to be Subtenant's acknowledgment that this Subground Lease is unmodified except as reflected in recorded instruments and that, to Subtenant's knowledge, there are no uncured defaults on the part of Sublandlord hereunder. 27.2 Sublandlord Estoppel. Sublandlord shall, at any time and from time to time upon not less than twenty (20) days' prior written notice from Subtenant, execute, acknowledge, and deliver to Subtenant a statement in writing certifying that this Subground Lease is unmodified and in full force and effect (or, if modified, is in full force and effect, and stating the modifications) and acknowledging that there are not, to Sublandlord's knowledge, any uncured defaults on the part of Subtenant hereunder (or specifying such defaults if any are claimed), the last date Sublandlord received rent under this Subground Lease, the date such rent was due and the amount thereof, acknowledging that the recipient will rely on the certificate, and such other matters as may be reasonable and customary or as needed to clarify any provision of this Subground Lease. Sublandlord's failure to deliver such statement to Subtenant within twenty (20) days after receipt of Subtenant's notice shall be conclusively deemed to be Sublandlord's acknowledgment that this Subground Lease is unmodified except as reflected in recorded instruments and that, to Sublandlord's knowledge, there are no uncured defaults on the part of Subtenant hereunder. 28. HAZARDOUS MATERIALS 28.1 Prohibitions. Except to the extent it is normal and customary to do so during the construction or operation of commercial property, Subtenant shall not: (i) Make, or permit to be made, any use of the Property, or any portion thereof, which emits, or permits the emission of dust, sweepings, dirt, cinders, fumes, or odors into the atmosphere, the ground, or any body of water, whether natural or artificial, in violation of applicable law; or (ii) Discharge, leak, or emit, or permit to be discharged, leaked, or emitted, any liquid, solid, or gaseous matter, or any combination thereof, into the atmosphere, the ground, or any body of water, in violation of applicable law. 300-003 Subground Lease CIM Huntington, Inc. V.2 -17- 28.2 Storage. Subtenant shall not use, store or dispose of on the Property any solid, liquid, or gaseous matter, or any combination thereof, which is, or may become, hazardous, toxic, or radioactive including, but not limited to, those materials listed in Sections 66680 through 66685 of Title 22 of the California Administrative Code, Division 4, Chapter 30 (as may be amended from time to time), in violation of applicable law (all of the foregoing collectively referred to herein as "Hazardous Materials"). 28.3 Waste; Refuse. Subtenant shall not keep any trash, garbage, waste, or other refuse on the Property except in sanitary containers and shall regularly and frequently remove the same from the Property. Subtenant shall keep all incinerators, containers, and other equipment used for the storage or disposal of such matter in a clean and sanitary condition. Subtenant shall surrender the Property at the expiration or termination of this Subground Lease free of any Hazardous Materials or contamination caused by Subtenant's activities, and free and clear of all judgements, liens, or encumbrances and shall, at its own cost and expense, repair all damage and clean up or perform any remedial action necessary relating to any Hazardous Materials or contamination caused by Subtenant's activities. Subtenant shall, at its sole cost and expense, remediate in accordance with law or remove any alterations or improvements that may be contaminated or may contain Hazardous Materials caused by Subtenant's activities. 28.4 Indemnity. Subtenant shall indemnify, defend, and hold Sublandlord and the City/Agency Parties harmless from and against (i) any and all claims, demands, judgments, damages, actions, causes of action, injuries, administrative orders, consent agreements and orders, liabilities, penalties, costs, and expenses of any kind whatsoever (collectively referred to as "Claims" and, Claims that are made by third parties, collectively referred to as "Third Party Claims"), including but not limited to Third Party Claims arising out of loss of life, injury to persons, property, or business, or damage to natural resources, in connection with or arising out of any spills or discharges of Hazardous Materials in violation of applicable law, and (ii) from all claims, demands, judgments, damages, actions, causes of action, injuries, administrative orders, consent agreements and orders, liabilities, penalties, costs, and expenses of any kind whatsoever, including but not limited to claims arising out of Subtenant's failure to provide all information, make all submissions, and take all steps required by any authority under any Hazardous Materials laws or any other environmental law. Notwithstanding the expiration or termination of this Subground Lease, Subtenant's obligations and liabilities under this Section shall continue until the date which is five (5) years following expiration or earlier termination of this Subground Lease, so long as Sublandlord continues to own the Property or any portion thereof or otherwise remains responsible for any Hazardous Materials on the Property, provided, however, that nothing contained in this provision is intended to or shall have the effect of relieving any party of liability under any applicable statutory or common law. 29. SUBTENANT'S SIGNAGE Subtenant shall have the right to place signs on the Property provided such signage shall be for reasonable business purposes and shall not violate any statute, code, or ordinance. 300-003 Subground Lease CIM Huntington, Inc. V.2 -18- 30. MEMORANDUM OF SUBLEASE Promptly after the Commencement Date has occurred, Sublandlord and Subtenant shall execute in recordable form a Memorandum of Sublease, Option to Purchase Fee and Agreement Containing Covenants Affecting Real Property, substantially in the form attached hereto as Exhibit `B" which is incorporated herein by this reference, which either party is authorized to record. 31. MORTGAGEE PROTECTION PROVISIONS 31.1 Right to Encumber. Subtenant and every successor and assign of Subtenant (including, but not limited to, any sublessee of Subtenant) is hereby given the express right, in addition to any other rights herein granted, and without the necessity of obtaining Sublandlord's consent, to mortgage its interests in this Subground Lease, and its leasehold estate in the Property, or any part of parts thereof, and any sublease of the Property, under one or more Leasehold Mortgage(s) and to assign this Subground Lease or Subtenant's leasehold estate in the Property, or any part or parts thereof, and any sublease, as collateral security for such mortgage(s), upon the condition that all rights acquired under such mortgage(s) shall be subject to each and all of the covenants, conditions and restrictions set forth in this Subground Lease, and to all rights and interests of Sublandlord herein, none of which covenants, conditions or restrictions is or shall be waived by Sublandlord by reason of the foregoing, except as expressly provided herein. In the event of any conflict between the provisions of this Subground Lease and the provisions of any mortgage, the provisions of this Subground Lease shall control, except as herein specifically provided. 31.2 Definition of Leasehold Mortgage. For purposes of this Subground Lease, the term "Leasehold Mortgage" means a conveyance of a security interest in this Subground Lease and all of Subtenant's interests in the Property (collectively referred to as "Subtenant's Leasehold Interests") to a lender (a "Leasehold Mortgagee") encumbering Subtenant's Leasehold Interest, or the conveyance of Subtenant's Leasehold Interests to the Leasehold Mortgagee or its assignee in connection with a foreclosure or a deed in lieu of foreclosure of such loan. Sublandlord agrees to permit Subtenant to pledge Subtenant's Leasehold Interests to a Leasehold Mortgagee as security under a Leasehold Mortgage without Sublandlord's consent. In the event of a default or breach by Subtenant of any security instrument securing a Leasehold Mortgage, Sublandlord shall have the right to cure the default provided such cure is completed at least five (5) business days before the date of foreclosure. In such event, Sublandlord shall be entitled to reimbursement by Subtenant of all costs and expenses incurred by Sublandlord in curing the default, with interest at the highest rate permitted by law, as Additional Rent (collectively, "Sublandlord's Cure Payments"), provided in the event of a subsequent foreclosure of a permitted Leasehold Mortgage the party acquiring Subtenant's Leasehold Interests shall not be obligated to pay Sublandlord any of Sublandlord's Cure Payments. 31.3 Rights of Lender. If Subtenant and/or Subtenant's successors and assigns (including, but not limited to, any sublessee of Subtenant) shall mortgage its interest in this Subground Lease and its leasehold estate in the Property, or any part or parts thereof as permitted by Section 31.1 above, the following provisions shall apply: 300-003 Subground Lease CIM Huntington, Inc. v.2 -19- (a) No Amendment. There shall be no amendment, cancellation, termination, surrender or modification of this Subground Lease by joint action of Sublandlord and Subtenant without the prior consent in writing of each holder of a lien against or an assignment of this Subground Lease, notice of which has been served upon Sublandlord. (b) Right to Notice of Default. Sublandlord shall, upon serving Subtenant with any notice of default, simultaneously serve a copy of the notice upon any Leasehold Mortgagee(s). (c) Right to Cure. Any Leasehold Mortgagee shall have the right, but not the obligation, at any time prior to termination of this Subground Lease, to pay all of the rents due hereunder, to effect any insurance, to pay any taxes or assessments, to make any repairs or improvements, to do any other act or thing required of Subtenant hereunder, and to do any act or thing which may be necessary and proper to be done in the performance and observance of the agreements, covenants and conditions hereof to prevent termination of this Subground Lease. Any Leasehold Mortgagee and its agents and contractors shall have full access to the Property for purposes of accomplishing any of the foregoing. Any of the foregoing done by any Leasehold Mortgagee shall be as effective to prevent a termination of this Subground Lease as the same would have been if done by Subtenant. (d) Additional Cure Period. Anything contained in this Subground Lease notwithstanding, if any default shall occur which, pursuant to any provision of this Subground Lease, purportedly entitles Sublandlord to terminate this Subground Lease, Sublandlord shall not be entitled to terminate this Subground Lease as to any Leasehold Mortgagee, nor to disturb the right of possession of any subSubtenant of Subtenant, and the notice shall be rendered void as to such parties, if the Leasehold Mortgagee, within sixty (60) days after expiration of the period within which Subtenant was permitted to cure the default (or within ninety (90) days after receipt of the notice by the Leasehold Mortgagee if the default is not curable by Subtenant), shall both: (i) either (aa) cure the default if the same can be cured by the expenditure of money, or (bb) if the default or breach is not so curable, commence, or cause any trustee under the mortgage to commence, and thereafter to diligently pursue to completion steps and proceedings to foreclose on the interests covered by the mortgage; and (ii) perform or cause the performance of all of the covenants and conditions of this Subground Lease requiring the expenditure of money by Subtenant (including all unpaid monetary obligations of Subtenant under this Subground Lease) until such time as the leasehold shall be sold upon foreclosure pursuant to the mortgage, or shall be released or reconveyed thereunder, or shall be transferred upon judicial foreclosure or by deed or assignment in lieu of foreclosure. (e) Condition of Termination. All right of Sublandlord to terminate this Subground Lease as the result of the occurrence of any default shall be subject to, and conditioned upon, Sublandlord having first given to each Leasehold Mortgagee written notice of the default as required under Section 31.3(b), above, and all Leasehold Mortgagees having failed to remedy such default or acquire Subtenant's leasehold estate hereunder or commence 300-003 Subground Lease CIM Huntington, Inc. V.2 _20_ foreclosure or other appropriate proceedings in the nature thereof as set forth in Section 31.3(d), above. (f) Suspension of Cure Period. If any Leasehold Mortgagee is prohibited from commencing or prosecuting foreclosure or other appropriate proceedings in the nature thereof by any process or injunction issued by any court, or by reason of any action by any court having jurisdiction of any bankruptcy or insolvency proceeding involving Subtenant, the times specified in Section 31.3(d) above, for commencing or prosecuting foreclosure or other proceedings shall be extended for the period of the prohibition, so long as the Leasehold Mortgagee shall have fully cured any default in the payment of any monetary obligations of Subtenant under this Subground Lease and shall continue to pay currently those monetary obligations as and when the same fall due, subject to any applicable notice and grace periods. (g) Loss Payable Endorsement. Sublandlord and Subtenant agree that the name(s) of the Leasehold Mortgagee(s) shall, at such Leasehold Mortgagee's request, be added to the "Loss Payable Endorsement" of any and all insurance policies required to be carried by Subtenant under this Subground Lease on condition that the insurance proceeds are to be applied in the manner specified in this Subground Lease. (h) No Consent to Foreclosure. Foreclosure of any Leasehold Mortgage, or any sale thereunder, whether by judicial proceedings or by virtue of any power contained in the Leasehold Mortgage, or any conveyance of the leasehold estate hereunder from Subtenant to any Leasehold Mortgagee or its designee through, or in lieu of, foreclosure or other appropriate proceedings in the nature thereof, shall not require the consent of Sublandlord or constitute a breach of any provision of or a default under this Subground Lease, and upon such foreclosure, sale or conveyance, Sublandlord shall recognize the purchaser or other transferee referred to in the preceding sentence in connection therewith as the Subtenant hereunder. Further, following such foreclosure or conveyance, any assignment or subleasing by the purchaser or other transferee shall not require the consent of Sublandlord, despite any other provisions of this Subground Lease to the contrary. (i) Proceeds of Insurance and Condemnation. The proceeds from any insurance policies or arising from a condemnation award to Subtenant shall be paid to and held by the Leasehold Mortgagee of highest priority and distributed pursuant to the provisions of this Subground Lease, except that the Leasehold Mortgagee(s) may reserve the right to apply to the mortgage debt (in the order of priority) all, or any part, of the proceeds not used to repair or restore the Property and the improvements located thereon to the extent required herein so long as there then remains at least fifteen years until the scheduled expiration of the term (as may theretofore been extended). 0) Notice of Proceedings. The parties hereto shall give all Leasehold Mortgagee(s) notice of any arbitration proceedings or condemnation proceedings involving Subtenant's interest in the Property, or of any pending adjustment of insurance claims, and any Leasehold Mortgagee shall have the right to intervene therein and shall be made a party to such proceedings. The parties hereto do hereby consent to such intervention. In the event that any Leasehold Mortgagee shall not elect to intervene or become a party to the proceedings, that Leasehold Mortgagee shall receive notice and a copy of any award or decision made in connection therewith. 300-003 Subground Lease CIM Huntington, Inc. V.2 -21- (k) Right to Exercise Renewal Options: If Subtenant has not timely exercised any option to renew, such option shall not expire until Sublandlord gives Leasehold Mortgagee written notice and 30 days' in which to exercise such option on Subtenant's behalf. (1) Right to Purchase Fee: If Subtenant has any right of first offer, presentation or refusal, or any other right to acquire fee simple title to the Premises, such right shall not expire, be rejected or be terminated unless and until Leasehold Mortgagee has been given written notice and 30 days to exercise such acquisition right, provided Leasehold Mortgagee may acquire such fee in its own name or in the name of a designee. In addition, in the event of any Leasehold Mortgagee's foreclosure of Subtenant's interest in the Lease, such Leasehold Mortgagee shall have the option to purchase Sublandlord's interest in the fee at the same price and on the same terms as set forth in Section 33, to be exercised by written notice given to Sublandlord within 90 days after such foreclosure has been completed. (m) Further Protections. Sublandlord and Subtenant shall cooperate in including in this Subground Lease, by suitable amendment from time to time, any provision which may be reasonably requested by any proposed Leasehold Mortgagee for the purpose of implementing the mortgagee -protection provisions contained in this Section 31 and allowing that Leasehold Mortgagee reasonable means to protect or preserve the lien of its Leasehold Mortgage upon the occurrence of a default under the terms of this Subground Lease. Sublandlord and Subtenant each agree to execute and deliver (and to acknowledge, if necessary, for recording purposes) any agreement necessary to effect any such amendment; provided, however, that no such amendment shall in any way affect the term or rent under this Subground Lease, nor otherwise in any material respect adversely affect any rights of Sublandlord under this Subground Lease, and Subtenant shall pay Sublandlord's reasonable costs in connection with such amendment. (n) Additional Agreement. Sublandlord shall, upon request, execute, acknowledge and deliver to each Leasehold Mortgagee, an agreement prepared by the Leasehold Mortgagee and reviewed by Sublandlord at the sole cost and expense of Subtenant, in form satisfactory to each Leasehold Mortgagee, between Sublandlord, Subtenant and the Leasehold Mortgagee(s), agreeing to all of the provisions hereof. 31.4 Notice. If Subtenant shall mortgage its interest in this Subground Lease or its leasehold estate in the Property, or any part or parts thereof, Subtenant shall send to Sublandlord a true copy thereof, together with written notice specifying the name and address of the mortgagee(s) and the pertinent recording data with respect to such mortgage(s). 31.5 New Lease. (a) Sublandlord agrees that in the event of termination of this Subground Lease by reason of any default by Subtenant, or by reason of the disaffirmance hereof by a receiver, liquidator or trustee for Subtenant or its property, Sublandlord if requested by any Leasehold Mortgagee will enter into a new lease of the Property, with the most senior Leasehold Mortgagee requesting a new lease or its designee, for the remainder of the term, effective as of the date of such termination, at the rent and additional rent and upon the terms, provisions, covenants and agreements as herein contained and subject to the rights, if any, of any parties then in possession of any part of the Property, provided: 300-003 Subground Lease CIM Huntington, Inc. V.2 -22- (i) The Leasehold Mortgagee shall make written request upon Sublandlord for the new lease within sixty (60) days after such Leasehold Mortgagee receives written notice of such termination; (ii) Within thirty (30) days after receipt of the new lease from Sublandlord complying with the terms of this Section 31.5, the Leasehold Mortgagee shall execute and deliver the new lease to Sublandlord and shall pay any and all sums which would, at the time of the execution and delivery thereof, be due and unpaid pursuant to this Subground Lease but for its termination; (iii) The Leasehold Mortgagee shall perform and observe all covenants herein contained on Subtenant's part to be performed, and shall further remedy any other conditions which Subtenant under the terminated Lease was obligated to perform under its terms, in each instance as and to the extent the same are curable or may be performed by the Leasehold Mortgagee; (iv) The Subtenant under the new lease shall have the same right, title and interest in and to the buildings and improvements on the Property as Subtenant had under the terminated Lease immediately prior to its termination; and (v) Notwithstanding anything to the contrary expressed or implied elsewhere in this Subground Lease, any new lease made pursuant to this Section 31.5(a) shall enjoy the same priority in time as the Lease over any mortgage, deed of trust, or other lien, charge, or encumbrance on the Property. (b) Any new lease made pursuant to Section 31.5(a) shall be accompanied by a conveyance from Sublandlord to the new Subtenant of title to the improvements (free of any mortgage, deed of trust, lien, charge, or encumbrance created by Sublandlord) for a term of years equal to the term of the new lease, subject to the reversion in favor of Sublandlord upon expiration or sooner termination of the new lease. (c) Nothing herein contained shall require any Leasehold Mortgagee to enter into a new lease pursuant to Section 31.5(a), above, nor to cure any default of Subtenant referred to above. (d) If a Leasehold Mortgagee shall elect to demand a new lease, Sublandlord agrees, at the request of, on behalf of and at the expense of the Leasehold Mortgagee, to institute and pursue diligently to conclusion the appropriate legal remedy or remedies to oust or remove the original Subtenant from the Property, but not any subSubtenants of Subtenant actually occupying the Property, or any part thereof. Leasehold Mortgagee, as a condition of executing the new lease, shall pay all reasonable costs and expenses, including attorneys' fees and court costs, incurred by Sublandlord in terminating this Subground Lease, recovering possession of the Property and the Improvements from the representative of Subtenant, and preparing the new lease. (e) Unless and until Sublandlord has received notice from all Leasehold Mortgagees that the Leasehold Mortgagee elects not to demand a new lease as provided in Section 31.5(a), above, or until the period therefor has expired, Sublandlord shall not cancel or 300-003 Subground Lease CIM Huntington, Inc. V.2 -23- agree to the termination or surrender of any existing subleases nor enter into any new subleases hereunder without the prior written consent of the Leasehold Mortgagee(s). 31.6 Lender's Liability. In the event any Leasehold Mortgagee or any designee of it becomes the Subtenant under this Subground Lease or under any new lease obtained pursuant to Section 31.5 a , above, the Leasehold Mortgagee or its designee shall be personally liable for the obligations of Subtenant under this Subground Lease or a new sublease only for the period of time that the Leasehold Mortgagee or its designee remains the actual beneficial holder of the leasehold estate hereunder. The initial new Subtenant under the new lease shall have the right to sublease all or portions of the Property or to assign the new lease without the consent of Sublandlord, despite any other provision of the new lease to the contrary. 31.7 Definitions. The term "mortgage," whenever used herein, shall include whatever security instruments are used in the locale of the Property, such as, without limitation, deeds of trust, security deeds, and conditional deeds. The term "mortgage," whenever used herein, shall also include any instruments required in connection with a sale -leaseback transaction. The term "mortgagee" shall include the holder of the secured position under each of the foregoing types of instruments, including but not limited to the beneficiary under a deed of trust, the secured party under a security agreement and the lessor in a sale -leaseback transaction. 31.8 Restriction on Easements and Encumbrances by Sublandlord. Without Subtenant's consent (which may be withheld in its sole discretion), Sublandlord shall not (i) grant any easement, license or access rights over the Property, or (ii) mortgage or otherwise encumber its interest in the Property. 31.9 Quiet Enjoyment. Absent an uncured default by Subtenant, Sublandlord agrees not to disturb the possession, interest or quiet enjoyment of Subtenant in the Property for any reason, or in a manner which would materially adversely affect any leasehold mortgage(s). 3 1. 10 Exercise of Rights. At Lender's written request, Sublandlord shall require Landlord to take any action as required of Landlord on Tenant's demand under the Ground Lease. 32. SUBLANDLORD'S RIGHT TO CAUSE SALE OF LAND 32.1 Ground Lease. If Landlord exercises its right under Section 32 of the Ground Lease, by giving written notice within 30 days after receipt of Landlord's exercise notice, Sublandlord shall have the right to cause Subtenant to purchase fee simple title in the Property (the "Fee") on the terms set forth in Section 32 of the Ground Lease. 32.2 Disputes. Any disputes regarding the acquisition of the Fee pursuant to this Section 32 shall be resolved pursuant to Exhibit C. 33. OPTION TO PURCHASE FEE SIMPLE TITLE TO PROPERTY 33.1 By giving notice at least 90 days prior to a Tenant Purchase Date (as defined in the Ground Lease), Subtenant shall have the right to acquire the Fee by causing 300-003 Subground Lease CIM Huntington, Inc. v.2 -24- Sublandlord to exercise the Tenant's option under Section 33 of the Ground Lease, on the terms and conditions set forth in Section 33 of the Ground Lease. 34. RIGHT OF FIRST OFFER 34.1 If at any time after execution of this Subground Lease, Landlord gives Sublandlord the ROFO Notice defined in Section 34 of the Ground Lease, Sublandlord shall immediately give Subtenant a copy of such ROFO Notice. Subtenant shall have until the expiration of the 30 day period described in Paragraph 34.1 of the Ground Lease to decide whether to acquire the Fee on such terms, provided that if Subtenant does not elect to purchase the Fee, any Leasehold Mortgagee (in order of priority of the Leasehold Mortgages) shall have an additional 15 days to elect to purchase the Fee. If Subtenant (or the Leasehold Mortgagee) elects to acquire the Fee, the Sublandlord shall give Landlord timely notice and shall require Landlord to sell the Fee to Subtenant on the terms and conditions set forth in Section 34 of the Ground Lease. 34.2 Any disputes regarding the acquisition of the Fee pursuant to this Section 34 shall be resolved pursuant to Exhibit C. 35. GENERAL PROVISIONS 35.1 Waivers. The waiver by Sublandlord of any term, covenant, or condition herein contained shall not be a waiver of such term, covenant, or condition on any subsequent breach. 35.2 Notices. All notices and demands which may or are to be required or permitted to be given by either party to the other hereunder shall be in writing. All notices and demands by Sublandlord to Subtenant shall be sent by first class mail, registered or certified mail, postage prepaid, return receipt requested, or by electronic facsimile transmission followed by delivery of a "hard" copy, or by personal delivery (including by means of professional messenger service, courier service such as United Parcel Service or Federal Express, or by U.S. Postal Service), and addressed to Subtenant at the address set forth in Section 1.7, or to such other place as Subtenant may from time to time designate in a notice to Sublandlord. All notices and demands by Subtenant to Sublandlord shall be sent by first class mail, registered or certified mail, postage prepaid, return receipt requested, or by electronic facsimile transmission followed by delivery of a "hard" copy, or by personal delivery (including by means of professional messenger service, courier service such as United Parcel Service or Federal Express, or by U.S. Postal Service), and addressed to Sublandlord at the address set forth in Section 1.6, or to such other person or place as Sublandlord may from time to time designate in a notice to Subtenant. Any notice that is transmitted by electronic facsimile transmission followed by delivery of a "hard" copy, shall be deemed delivered upon its transmission provided any transmission received on a nonbusiness day or after 5:00 p.m. on a business day shall be deemed given on the next business day; any notice that is personally delivered (including by means of professional messenger service, courier service such as United Parcel Service or Federal Express, or by U.S. Postal Service), shall be deemed received on the documented date of receipt by Subtenant; and any notice that is sent by registered or certified mail, postage prepaid, return receipt required shall be deemed received on the date of receipt thereof. 300-003 Subground Lease CIM Huntington, Inc. V.2 -25- 35.3 Time is of the Essence. Time is of the essence of this Subground Lease and each and all of its provisions in which performance is a factor. 35.4 Binding on Successors and Assigns. The covenants and conditions herein contained, subject to the provisions as to assignment, apply to and bind the heirs, successors, executors, administrators, and assigns of the parties hereto. 35.5 Force Majeure. Performance by either party hereunder shall not be deemed to be in default where delays or defaults are due to war, insurrection, strikes, lock -outs, riots, floods, earthquakes, fires, casualties, acts of God, acts of the public enemy, epidemics, quarantine restrictions, freight embargoes, lack of transportation, governmental restrictions or priority, litigation, unusually severe weather, inability to secure necessary labor, material or tools, delays of any contractor, sub -contractor or supplier, acts of the other party, acts or failure to act of the City of Huntington Beach or any other public or governmental agency or entity (except that acts or failure to act of Sublandlord shall not excuse performance of Sublandlord), or any causes beyond the control or without the fault of the party claiming an extension of time to perform. An extension of time for any such cause (a "Force Majeure Delay") shall be for the period of the enforced delay and shall commence to run from the time of the commencement of the cause, if notice by the party claiming such extension is sent to the other party within thirty (30) days of knowledge of the commencement of the cause. Notwithstanding the foregoing, none of the foregoing events shall constitute a Force Majeure Delay unless and until the party claiming such delay and interference delivers to the other party written notice describing the event, its cause, when and how such party obtained knowledge, the date and the event commenced, and the estimated delay resulting therefrom. Any party claiming a Force Majeure Delay shall deliver such written notice within thirty (30) days after it obtains actual knowledge of the event. Times of performance under this Agreement may also be extended in writing by the Sublandlord and Subtenant. 35.6 Costs of Proceedings and Attorneys' Fees. If any action or proceeding is brought by either party against the other under this Subground Lease or by a Leasehold Mortgagee against any such party, whether for interpretation, enforcement, recovery of possession, or otherwise, the prevailing party shall be entitled to recover all costs and expenses, including the fees of its attorney in such action or proceeding. This provision shall also apply to any postjudgment action by either party, including without limitation efforts to enforce a judgment. 35.7 Severability. Any provision of this Subground Lease which shall prove to be invalid, void, or illegal shall in no way affect, impair, or invalidate any other provision hereof and such other provisions shall remain in full force and effect. 35.8 No Exclusive Remedies. No remedy or election hereunder shall be deemed exclusive but shall, wherever possible, be cumulative with all other remedies at law or in equity. 35.9 Laws of California. This Subground Lease shall be governed by the laws of the State of California. Proper venue for any action shall be in Orange County, California. 3 5. 10 No Partnership. Nothing contained in this Subground Lease shall be deemed or construed as creating a partnership, joint venture, or any other relationship between 300-003 Subground Lease CIM Huntington, Inc. V.2 -26- the parties hereto other than Sublandlord and Subtenant according to the provisions contained herein, or cause Sublandlord to be responsible in any way for the debts or obligations of Subtenant, or any other party. 35.11 Final Agreement. This Subground Lease, including any document or instrument incorporated therein or herein by reference, contains a complete and final expression of the agreement between Sublandlord and Subtenant, and there are no promises, representations, agreements, warranties, or inducements either express or implied other than as are set forth and this Subground Lease. Any and all previous discussions or agreements between Sublandlord and Subtenant with respect to the Property, whether oral or written, are superseded by this Subground Lease. 35.12 Language of Lease. When the context so requires when used in this Subground Lease, the masculine gender shall be deemed to include the feminine and neuter gender and the neuter gender shall be deemed to include the masculine and feminine gender. When the context to requires when used in this Subground Lease, the singular shall be deemed to include the plural. The paragraph and section headings have been used for convenience only, and shall not be used in the interpretation hereof. The term "including" shall mean "including but not limited to." 35.13 Requirement of a Writing. No amendment, change, or addition to, or waiver of termination of, this Subground Lease or any part hereof shall be valid unless in writing and signed by both parties comprising Sublandlord and Subtenant. 35.14 No Third Party Beneficiaries. The Parties acknowledge and agree that the provisions of this Subground Lease are for the sole benefit of Sublandlord and Subtenant, and not for the benefit, directly or indirectly, of any other person or entity, except as otherwise expressly provided herein. 35.15 Authority of Subtenant. The party executing this Subground Lease on behalf of Subtenant has full authority to do so and to bind Subtenant to perform pursuant to the terms and conditions of this Subground Lease. 35.16 Incorporation by Reference. Each of the exhibits attached hereto is incorporated herein by this reference. 35.17 Interpretation. This Subground Lease has been negotiated at arm's length and between persons sophisticated and knowledgeable in the matters dealt with in this Subground Lease. In addition, each party has been given the opportunity to consult with experienced and knowledgeable legal counsel. Accordingly, any rule of law (including Civil Code section 1654) or legal decision that would require interpretation of any ambiguities in this Subground Lease against the party that has drafted it is not applicable and is waived. The provisions of this Subground Lease shall be interpreted in a reasonable manner to effect the purpose and intent of the parties to this Subground Lease. 35.18 Merger. So long as any Leasehold Mortgagee holds a Leasehold Mortgage, the fee title to the Property and the leasehold estate created by this Subground Lease shall not merge unless all Leasehold Mortgagees expressly consent to the merger in writing. 300-003 Subground Lease CIM Huntington, Inc. V.2 _27 This provision shall apply even if Subtenant or Sublandlord or any third party acquires both the fee title and this Subground Lease. 35.19 Priority. This Subground Lease, and any extensions, renewals or replacements thereof, and any sublease entered into by Subtenant as sublessor, and any Leasehold Mortgage or other encumbrance recorded by Leasehold Mortgagee shall be superior to any mortgages, deeds of trust or similar encumbrances placed by Sublandlord on the Property and to any lien right, if any, of Sublandlord on the buildings, and any furniture, fixtures, equipment or other personal property of Subtenant upon the Property. 35.20 Counterparts. This Subground Lease may be executed by each party on a separate signature page, and when the executed signature pages are combined, shall constitute one single instrument. 35.21 Arbitration. With respect to any provision in this Subground Lease which specifically states that disputes regarding such provision are to be resolved pursuant to arbitration, any such dispute shall be submitted to arbitration pursuant to the terms of Exhibit C. 35.22 Reasonable Consent. Unless otherwise specified, no consent or approval to be given by a party shall be unreasonably withheld, conditioned or delayed, provided if a specific time for response is provided, response within such time period shall be deemed reasonable. 35.23 Nondiscrimination. Subtenant herein covenants by and for itself, its heirs, executors, administrators and assigns, and all persons claiming under or through it, and this Subground Lease is made and accepted upon and subject to the following conditions: That there shall be no discrimination against or segregation of any person or group of persons, on account of race, color, creed, religion, sex, marital status, national origin or ancestry in the leasing, subleasing, transferring, use, occupancy, tenure or enjoyment of the premises herein leased, nor shall the lessee itself, or any person claiming under or through it, establish or permit such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, sublessees, subtenants or vendees in the land herein leased. 35.24 Conversion of Fee to Undivided Interest. Upon Subtenant's written demand, Sublandlord shall make the election contained in Section 35.24 of the Ground Lease to convert the Fee into an undivided interest in the Development Site (as defined in the Ground Lease). In such event, Sublandlord shall cooperate fully with Subtenant in causing such conversion and reformulating this Subground Lease to reflect such conversion. 35.25 Creation of Air Space Parcels and Conversion to Air Space Lease. Upon Subtenant's written demand, Sublandlord shall make the election contained in Section 35.25 of the Ground Lease to subdivide the Property. In such event, Sublandlord shall cooperate fully with Subtenant in causing such subdivision and reformulating this Subground Lease to reflect such subdivision and in accordance with Section 35.25 of the Ground Lease. 35.26 Agency Assignment Right. If the DDA is terminated, the Agency shall have the right to cause CIM/Huntington, Inc. to assign all of its rights as Subtenant hereunder to the Agency by giving CIM/Huntington, Inc. written notice within ninety (90) days after the 300-003 Subground Lease CIM Huntington, Inc. V.2 _28_ effective date of such termination (but not later than 5 days before any notice exercising a right to cancel the Ground Lease (if any such right then exists) is due). If such written notice is timely given, CIM/Huntington, Inc. and the Agency shall execute, acknowledge and deliver an Assignment and Assumption of Sublease in form reasonably acceptable to CIM/Huntington, Inc. and the Agency, such assignment containing an assumption of all obligations under the Sublease and an indemnification by the Agency from and against any and all liability, costs, damages and expenses (including attorneys' fees), broadly interpreted, arising out of the Ground Lease and the Sublease. In addition, any indemnification obligation of CIM/Huntington, Inc. in favor of Sublandlord or the Agency contained in the Sublease or the Implementation Agreement relating to the DDA, relating to the Ground Lease or the Sublease shall no longer apply. In such event, the Agency and CIM/Huntington, Inc. shall use their reasonable, good faith efforts to obtain the consent of Landlord to the Assignment of the Ground Lease to the Agency and the release of CIM/Huntington, Inc. from the Ground Lease. 300-003 Subground Lease CIM Huntington, Inc. V.2 -29- SUBTENANT: SUBLANDLORD: CIM/Huntington, Inc., a California corporation I0 Lo IM Richard Ressler, President Avaham Shemesh, Treasurer Shaul Kuba, Secretary Redevelopment Agency of the City of Huntington Beach (Agency) WE Chairman ATTEST: Agency Clerk REVIEWED AND APPROVED AS TO FORM: Agency General Counsel APPROVED AS TO FORM: KANE, BALLMER & BERKMAN 300-003 Subground Lease CIM Huntington, Inc. V.2 -30- Exhibit A Legal Description LOTS 4 AND 5 IN BLOCK 105 OF HUNTINGTON BEACH, AS SHOWN ON A MAP RECORDED IN BOOK 3, PAGE 36 OF MISCELLANEOUS MAPS, RECORDS OF ORANGE COUNTY, CALIFORNIA. Exhibit `B" MEMORANDUM OF SUBLEASE THIS DOCUMENT HAS BEEN PREPARED BY AND WHEN RECORDED RETURN TO: FRAGNER LAW CORPORATION 333 S. Grand Avenue Suite 3030 Los Angeles, California 90071 Attn: Matthew C. Fragner, Esq. Assessor's Parcel No. MEMORANDUM OF SUBLEASE, OPTION TO PURCHASE FEE AND AGREEMENT CONTAINING COVENANTS AFFECTING REAL PROPERTY THIS MEMORANDUM OF SUBLEASE (this "Memorandum") is executed effective as of (the "Effective Date"), by and between CIM/Huntington, Inc., a California corporation, and the Redevelopment Agency of the City of Huntington Beach (collectively, "Sublandlord"), whose address is 6922 Hollywood Boulevard, Suite 900, Hollywood, CA 90028 and City Hall, 2000 Main Street, Huntington Beach, CA 92648, and ("Subtenant"), whose address is PRELIMINARY STATEMENT: Sublandlord and Subtenant entered into that certain sublease (the "Sublease") dated as of , the terms, provisions and conditions of which are incorporated herein by this reference to the same extent as if recited in their entirety herein. Pursuant to the terms, provisions and conditions of the Lease, Sublandlord has subleased to Subtenant, and Subtenant has rented and subleased from Sublandlord, certain premises (the "Premises") described on Exhibit A attached hereto (the "Land"). Unless otherwise expressly provided herein, all defined terms used in this Memorandum shall have the same meanings as are ascribed to such terms in the Sublease. NOW, THEREFORE, Sublandlord and Subtenant hereby make specific reference to the following terms, provisions and conditions of the Lease: 1. In consideration of the rentals and other sums to be paid by Subtenant and of the other terms, covenants and conditions on Subtenant's part to be kept and performed pursuant to the Sublease, Sublandlord leases to Subtenant, and Subtenant takes and hires, the Premises. The Sublease term commences as of the Commencement Date (as defined in the Sublease) and expires as specified in the Sublease, unless extended as provided below or terminated sooner as provided in the Sublease. 300-003 Subground Lease CIM Huntington, Inc. V.2 2. Subtenant has the option to extend the term of the Sublease for up to two (2) additional successive periods of twenty-five (25) years each and one additional successive period of twenty-four (24) years, by written notice to Sublandlord not less than 210 days prior to the expiration of the term of the Sublease, each such option to be executed in accordance with the Sublease. 3. Subtenant has certain rights to purchase the Premises as set forth in the Sublease. 4. The Sublease is a "true lease"; the only relationship created thereby is that of sublandlord and subtenant. 5. Original copies of the Sublease are in the possession of Sublandlord and Subtenant. The Sublease contains other terms not herein set forth but which are incorporated by reference herein for all purposes, and this Memorandum is executed for the purpose of placing parties dealing with the Premises on notice of the existence of the Sublease and, where appropriate, its contents, and shall ratify and confirm all other terms of the Sublease as fully as if the same had been set forth herein. 6. Notwithstanding anything to the contrary contained herein, nothing in this Memorandum shall modify, supercede, diminish, add to or change any or all of the terms of the Sublease or be deemed to create or grant any rights, liabilities or obligations of or to any party or third parties other than as specifically set forth in the Sublease. In the event of any conflict between this Memorandum and the Sublease, the terms and conditions of the Sublease shall control. 7. This Memorandum may be executed in one or more counterparts, each of which shall be deemed an original. 8. [AGREEMENT CONTAINING COVENANTS AFFECTING REAL PROPERTY FROM DDA to be inserted]. IN WITNESS WHEREOF, the parties hereto have caused this Memorandum to be duly executed as of the Effective Date. SUBTENANT: LN I: M. SUBLANDLORD: Redevelopment Agency of the City of Huntington Beach Chairman CIM/Huntington, Inc. Exhibit A Legal Description LOTS 4 AND 5 IN BLOCK 105 OF HUNTINGTON BEACH, AS SHOWN ON A MAP RECORDED IN BOOK 3, PAGE 36 OF MISCELLANEOUS MAPS, RECORDS OF ORANGE COUNTY, CALIFORNIA. STATE OF CALIFORNIA ) ss. COUNTY OF ) On before me, , personally appeared (here insert name and title of the officer), personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. WITNESS my hand and official seal. Signature (Seal) STATE OF CALIFORNIA ) ss. COUNTY OF ) On before me, , personally appeared (here insert name and title of the officer), personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. WITNESS my hand and official seal. Signature (Seal) Exhibit "C" ARBITRATION OF DISPUTES Any dispute to be arbitrated pursuant to the Agreement to which this Exhibit is attached ("Arbitrable Dispute") shall be submitted to arbitration pursuant to Title 9, Sections 1280 and following of the California Code of Civil Procedure and the terms and provisions of this Exhibit. Whenever the terms of this Exhibit and such Sections of the California Code of Civil Procedure conflict, the terms of this Exhibit shall control. 1. Location. Subject to the last sentence of this Section, all Arbitration Proceedings shall be held and conducted in Orange County (the "Arbitration County"). The location for an Arbitration Proceeding within the Arbitration County shall be as mutually agreed by the Parties, but failing such agreement within ten (10) days of a written request by any Party, the Arbitration Proceeding shall be conducted in the regional office of Judicial Arbitration and Mediation Service ("JAMS") in the Arbitration County (or if no such office exists in such County, then in the JAMS regional office closest to the Property). 2. Rules and Selection of Arbitrator(s). Each Arbitration Proceeding shall be conducted under the commercial arbitration rules of JAMS then in effect (provided that in the event of any conflict between such Rules and this Exhibit, the terms of this Exhibit shall control). In no event shall a demand for arbitration be made after the date when institution of legal or equitable proceedings based on the Arbitrable Dispute in question would be barred by any applicable statute of limitations. The arbitrator(s) shall be selected as follows: (a) Unless otherwise provided in the Agreement, any Arbitration Proceeding initiated pursuant to the terms of the Agreement, and any Arbitration Proceeding involving an amount in controversy less than One Million Dollars ($1,000,000), shall be heard by a single neutral arbitrator. The arbitrator appointed must be (a) a former or retired judge of the California Superior Court or any higher court in California, or (b) an attorney with at least 15 years experience with acquisition and development of retail shopping centers. If agreement is not reached by the Parties on the selection of the arbitrator within one month after commencement of an Arbitration Proceeding by (i) submission of a matter to JAMS in accordance with its commercial arbitration rules and (ii) notice to the other Party of the initiating Party's intention to arbitrate, then such arbitrator shall be appointed by the presiding judge of the Superior Court of the Arbitration County. (b) Unless otherwise provided in the Agreement, any Arbitration Proceeding involving an amount in controversy equal to or greater than One Million Dollars ($1,000,000) shall be heard by a panel of three neutral arbitrators. Each arbitrator appointed must be (a) a former or retired judge of the California Superior Court or any higher court in California, or (b) an attorney with at least 15 years experience with acquisition and development of retail shopping centers. If agreement is not reached by the Parties on the selection of the three arbitrators within one month after commencement of an Arbitration Proceeding by 300-003 Subground Lease CIM Huntington, Inc. V.2 (i) submission of a matter to the JAMS in accordance with its commercial arbitration rules and (ii) notice to the other Party of the initiating Party's intention to arbitrate, then such arbitrators shall be appointed by the presiding judge of the Superior Court of the Arbitration County. (c) For purposes of determining whether an Arbitration Proceeding shall be heard by one arbitrator or by three, the term "amount in controversy" shall mean the dollar amount sought by either the Party initiating the Arbitration Proceeding or the Party responding to the Arbitration Proceeding, whichever is greater. 3. Powers of Arbitrator(s). The arbitrator(s) shall have the power to grant all appropriate legal and equitable relief (both by way of interim relief and as a part of its final award), other than punitive damages, as may be granted by any court of the State of California, to carry out the terms of this Agreement (e.g., declaratory and injunctive relief and damages). The Parties expressly waive any right to punitive damages arising out of any Arbitrable Dispute. All awards and orders of the arbitrator(s) (including, but not limited to interim relief) shall be final and binding subject to confirmation, correction or vacation pursuant to California Code of Civil Procedure Sections 1285 and following. 4. Discovery and Rules of Evidence. It is the intention of the Parties that all Arbitration Proceedings be conducted as expeditiously as reasonably possible in keeping with fairness and with a minimum of legal formalities. Therefore, the Parties have agreed that the rules of evidence shall not apply to any Arbitration Proceeding, except that notwithstanding the foregoing the attorney/client privilege and work product protection shall be applicable in all Arbitration Proceedings. The Parties agree that only limited discovery should be allowed in an Arbitration Proceeding and incorporate California Code of Civil Procedure, Sections 1283.1(b) and 1283.05 for this purpose. Unless otherwise ordered by the arbitrator(s) on a showing of substantial need, each side shall be limited to one document production request and one deposition and such discovery shall be complete within 60 days following appointment of the arbitrator(s). In addition the parties shall exchange the names, qualifications and a narrative report stating the opinion and basis therefor of any expert who may be called 15 days prior to the start of the arbitration. 5. Timing. In furtherance of the intent of the Parties expressed in the first sentence of Section 4 of this Exhibit, and unless modified by the arbitrator(s) upon a showing of good cause, all Arbitration Proceedings shall proceed upon the following schedule: (a) within one month from the service of the notice of the request to arbitrate, the parties shall select the arbitrator(s); (b) within 15 days after selection of the arbitrator(s), the Parties shall conduct a pre - arbitration conference at which a schedule of pre -arbitration discovery shall be set, all pre - arbitration motions scheduled and any other necessary pre -arbitration matters decided; (c) all discovery allowed by the arbitrator(s) shall be completed within 45 days following the pre - arbitration conference; (d) all pre -arbitration motions shall be filed and briefed so that they may be heard no later than one month following the discovery cut-off; (e) the arbitration shall be scheduled to commence no later than one month after the decision on all pre -arbitration motions but in any event no later than five months following the service of the notice of arbitration; and (f) the arbitrator(s) shall render his or her or their written decision (including without limitation any and all findings of fact and conclusions of law) within one month following the submission 300-003 Subground Lease CIM Huntington, Inc. V.2 - ii - of the matter. The Parties intend the foregoing schedule to be an outside maximum timetable, and nothing herein shall prevent the arbitrator(s) from ordering a shorter timetable if the arbitrator(s) conclude(s) that the same is warranted by the circumstances of any particular Arbitration Proceeding. 6. Transcript. All proceedings involving the Parties in an Arbitration Proceeding shall be reported by a certified shorthand court reporter and written transcripts of the proceedings shall be prepared and made available to the Parties. 7. Costs. Subject to Paragraph 35.6(b) of the Lease, the prevailing party shall be awarded reasonable attorneys' fees, expert and non -expert witness costs and expenses, and other costs and expenses incurred in connection with the arbitration unless the arbitrator(s), for good cause, determines otherwise. A post -arbitration proceeding to determine costs, if needed, shall be held within 10 days of notice of the award. Costs and fees of the arbitrator(s) (including the cost of the record of transcripts of the arbitration) shall be borne by the non -prevailing party, unless the arbitrator(s) for good cause determines otherwise. Costs and fees payable in advance shall be advanced equally by the Parties, subject to ultimate payment by the non -prevailing party in accordance with the preceding sentence. 8. Reconsideration. Upon receipt of the written opinion of the arbitrator(s), either Party shall have the right within 10 days to file with the arbitrator(s) a motion to reconsider, and the arbitrator(s) shall then reconsider the issues raised by the motion, may allow the other Party an opportunity to respond thereto, and shall either confirm or change the decision within 10 days after such filing. Such revised or confirmed decision shall then be final and conclusive upon the Parties. The costs (other than the attorneys' fees of the respective parties) of a motion for reconsideration and related proceedings shall be borne by the moving Party. 9. Specific Enforcement. The terms of this Exhibit shall be specifically enforceable under applicable law in any court of competent jurisdiction. The award rendered by the arbitrator(s) shall be final (subject to confirmation, correction or vacation as set forth in California Code of Civil Procedure Sections 1285 and following) and judgment may be entered in accordance with applicable law and in any court having jurisdiction thereof. 10. Interest on Award. Any monetary award of the arbitrator(s) may include interest at the legal rate, which interest shall accrue from the date the claim, dispute or other matter in question was rightfully due and payable under the Agreement until the date the award is paid to the prevailing party. 11. Extraordinary Remedies. No provision of this Exhibit shall limit the right of any Party to exercise self-help remedies or to obtain provisional or ancillary remedies from a court of competent jurisdiction before, after, or during the pendency of any Arbitration Proceeding. The exercise of such remedy shall not waive the right of any Party to resort to arbitration. ARBITRATION OF DISPUTE NOTICE: BY INITIALING IN THE SPACE BELOW YOU ARE AGREEING TO HAVE ANY DISPUTE ARISING OUT OF THE MATTERS INCLUDED IN THE "ARBITRATION OF DISPUTES" PROVISION DECIDED BY NEUTRAL ARBITRATION AS PROVIDED BY CALIFORNIA LAW AND YOU ARE GIVING UP ANY RIGHTS YOU 300-003 Subground Lease CIM Huntington, Inc. V.2 - ill - MIGHT POSSESS TO HAVE THE DISPUTE LITIGATED IN A COURT OR JURY TRIAL. BY INITIALING IN THE SPACE BELOW YOU ARE GIVING UP YOUR JUDICIAL RIGHTS TO DISCOVERY AND APPEAL. UNLESS SUCH RIGHTS ARE SPECIFICALLY INCLUDED IN THE "ARBITRATION OF DISPUTES" PROVISION. IF YOU REFUSE TO SUBMIT TO ARBITRATION AFTER AGREEING TO THIS PROVISION, YOU MAY BE COMPELLED TO ARBITRATE UNDER THE AUTHORITY OF THE CALIFORNIA CODE OF CIVIL PROCEDURE. YOUR AGREEMENT TO THIS ARBITRATION PROVISION IS VOLUNTARY. WE HAVE READ AND UNDERSTAND THE FOREGOING AND AGREE TO SUBMIT DISPUTES ARISING OUT OF THE MATTERS INCLUDED IN THE "ARBITRATION OF DISPUTES" PROVISION TO NEUTRAL ARBITRATION. Sublandlord's Initials Subtenant's Initials 300-003 Subground Lease CIM Huntington, Inc. V.2 - 1V - 300-003 Subground Lease CIM Huntington, Inc. V.2 - VI - f #I w VVI o" W 0� Bw err, ull NO, WRo"I'', 41, 4,411 GUARANTY OF SUBLEASE Sublandlord: CIM/Huntington, Inc., a California corporation, and Redevelopment Agency of the City of Huntington Beach. Subtenant: CIM/Huntington, Inc., a California corporation. Date of Sublease: As of , as amended from time to time. Guarantor: CIM Group, LLC, a California limited liability company. THIS GUARANTY OF SUBLEASE (this "Guaranty") is dated for reference purposes and executed as of _, 2000, by the guarantor identified above ("Guarantor"), with reference to the following facts: A. Sublandlord and Subtenant have entered into and executed the Sublease described above (as used herein, the term "Sublease" shall mean the Sublease described above, as the Sublease may be amended from time to time) by the terms of which Sublandlord subleased to Subtenant and Subtenant subleased from Sublandlord certain Premises more particularly described in the Sublease. The Premises have been leased to Sublandlord pursuant to a Ground Lease and Option to Purchase Fee (the "Ground Lease") dated as of March 8, 2000 between Sublandlord as Tenant and Frank M. Cracchiolo, Trustee for the Revocable Trust dated June 12, 1979, and Salvator W. and Barbara F. Cracchiolo ("Landlord"). B. Guarantor has a financial interest in Subtenant and a material interest in ensuring that Sublandlord and Subtenant enter into the Sublease. C. Sublandlord would not execute the Sublease if Guarantor did not execute and deliver to Sublandlord this Guaranty. NOW, THEREFORE, for and in consideration of Sublandlord's execution of the Sublease and as a material inducement to Sublandlord to enter into the Sublease, Guarantor hereby covenants with and represents and warrants to Sublandlord as follows: 1. Guarantor hereby jointly, severally, irrevocably and unconditionally guarantees the prompt payment by Subtenant of all rentals and all other sums payable by Subtenant under the Sublease and the faithful and prompt performance by Subtenant of each and every one of the terms, conditions and covenants of the Sublease to be kept and performed by Subtenant, including without limitation all of the obligations of the Ground Lease assumed by Subtenant pursuant to the Subground Lease. If, at any time, Subtenant shall default in the payment of any sums payable by Subtenant under the Sublease or in the performance of any of the terms, conditions or covenants of the Sublease to be kept, performed or observed by 300-003 Guaranty of Sublease V. 3 Subtenant, Guarantor will pay such sums payable by Subtenant under the Sublease within ten (10) business days after written demand, such obligation being an absolute guaranty of payment. In addition, Guarantor will keep, perform and observe such other terms, conditions and covenants in place and stead of Subtenant within thirty (30) days after written demand. 2. The terms of the Sublease may be altered, affected, modified, compromised, accelerated, extended or changed by written agreement between Sublandlord and Subtenant, without notice to or consent from Guarantor. Subject to any requirements set forth in the Sublease, Sublandlord may, without notice to or consent from Guarantor, alter, modify, compromise, accelerate, extend or change the time or manner for the payment or performance of any of the obligations guaranteed hereunder, and Sublandlord may release, substitute or add any one or more guarantors of Subtenant's performance under the Sublease. Subject to any requirements set forth in the Sublease, the Sublease may be assigned by Sublandlord or any assignee of Sublandlord without consent or notice to Guarantor. In any such event, this Guaranty shall thereafter guarantee the performance of CIM/Huntington, Inc. under the Sublease as so changed, modified, altered or assigned. No exercise or non -exercise by Sublandlord of any right hereby given Sublandlord, no dealing by Sublandlord with Guarantor or any guarantor or any other person, and no change, impairment, release or suspension of any right or remedy of Sublandlord against any person, including Subtenant and any other guarantor, shall in any way affect any of the obligations of Guarantor hereunder or shall give Guarantor any recourse against Sublandlord. 3. This Guaranty shall not be released, modified or affected by failure or delay on the part of Sublandlord to enforce any of the rights or remedies of Sublandlord under the Sublease, whether pursuant to the terms thereof or at law or in equity. No provisions of this Guaranty or rights of Sublandlord hereunder can be waived in whole or in part nor can Guarantor be released from Guarantor's obligations hereunder except by a writing duly executed by an authorized officer of CIM/Huntington, Inc. and the Executive Director of the Agency or designee. 4. Guarantor hereby expressly waives and relinquishes all rights, remedies and defenses accorded by applicable law to guarantors and agrees not to assert or take advantage of any such rights, remedies or defenses, including but not limited to (a) any right to require Sublandlord, as a condition to enforcement of this Guaranty, to proceed against Subtenant or any other person or to pursue any other right or remedy in Sublandlord's power before proceeding against Guarantor; (b) any defense that may arise by reason of the incapacity, lack of authority, death or disability of any other person or persons or the failure of Sublandlord to file or enforce a claim against the estate (in administration, bankruptcy or any other proceeding) of any other person or persons; (c) any defense based upon the failure to give notice of the acceptance of this Guaranty by any person; (d) any defense based upon any modification, compromise, acceleration or change in the terms of the Sublease; (e) except for notices expressly required in this Guaranty, any defense based upon the failure to make, give or serve demand, notice of default or nonpayment, presentment, protest and all other notices of any kind to which Guarantor might be entitled in connection with this Guaranty or the Sublease; (f) any defense based upon an election of remedies by Sublandlord; (g) any defense based upon any lack of diligence by Sublandlord in enforcing the terms of the Sublease; (h) any defense based upon any statute or rule of law which provides that the obligation of a surety must be neither larger in amount nor in other respects 2 300-003 Guaranty of Sublease V 3 more burdensome than that of the principal; (i) any duty on the part of Sublandlord to disclose to Guarantor any facts Sublandlord may now or hereafter know about Subtenant, regardless of whether Sublandlord has reason to believe that any such facts materially increase the risk beyond that which Guarantor intends to assume, or has reason to believe that such facts are unknown to Guarantor, or has a reasonable opportunity to communicate such facts to Guarantor, it being understood and agreed that Guarantor is fully responsible for being and keeping informed of the financial condition of Subtenant and of all circumstances bearing on the risk of nonperformance of any obligations hereby guaranteed; 0) any defense arising because of an election made by Sublandlord under Section 1111(b)(2) of the Federal Bankruptcy Code or any similar statute; and (k) any defense based on any borrowing or grant of a security interest under Section 364 of the Federal Bankruptcy Code, it being agreed by Guarantor that this Guaranty is in the nature of an absolute guarantee of payment and performance and not of collection and that the failure of Sublandlord to exercise any rights or remedies it has or may have against Subtenant shall in no way impair the obligation or liability of Guarantor hereunder. 5. Except as expressly set forth in this Guaranty, no notice of default need be given to Guarantor, it being specifically agreed and understood that this Guaranty is a continuing guaranty under which Sublandlord may proceed forthwith and immediately against Subtenant or against Guarantor following any breach or default by Subtenant or for the enforcement of any rights which Sublandlord may have as against Subtenant pursuant to or under the terms of the Sublease or at law or in equity. 6. Sublandlord shall have the right to proceed against Guarantor following any breach or default by Subtenant without first proceeding against Subtenant and (except for notices expressly required in this Guaranty) without previous notice to or demand upon either Subtenant or Guarantor. 7. Until all the terms, covenants and conditions of the Sublease are fully performed and observed by Subtenant, Guarantor (a) shall have no right of subrogation against Subtenant by reason of any payments or acts of performance by Guarantor in compliance with the obligations of Guarantor hereunder, (b) shall not take any action to enforce any remedy which Guarantor now or hereafter shall have against Subtenant by reason of any one or more payments or acts of performance by Guarantor in compliance with the obligations of Guarantor hereunder, and (c) subordinates any liability or indebtedness of Subtenant now or hereafter held by.Guarantor to the obligations of Subtenant to Sublandlord under the Sublease. 8. Guarantor has made an independent investigation of the financial condition of Subtenant and the ability of Subtenant to perform the obligations hereby guaranteed prior to making this Guaranty, and Guarantor hereby waives any defense that Guarantor may have by reason of the failure of Sublandlord or any successor- in -interest to Sublandlord to provide Guarantor with any information respecting the financial condition of Subtenant, or Subtenant's ability to perform any of the obligations hereby guaranteed. 9. The obligations of Guarantor hereunder are independent of the obligations of Subtenant, and, in the event of any default hereunder, a separate action or actions may be brought and prosecuted against Guarantor whether or not Subtenant is joined therein or a separate action or actions are brought against Subtenant. Sublandlord's rights hereunder shall 3 300-003 Guaranty of Sublease V. 3 not be exhausted by its exercise of any of its right or remedies or by any such action or by any number of successive actions until and unless all indebtedness and obligations, the payment and performance of which are hereby guaranteed, have been paid and fully performed. 10. Guarantor shall pay to Sublandlord reasonable attorneys' fees and all costs and other expenses that Sublandlord expends or incurs in collecting or compromising any indebtedness hereby guaranteed or in enforcing this Guaranty against Guarantor whether or not suit is filed, expressly including but not limited to all costs, attorneys' fees and expenses incurred by Sublandlord in connection with any insolvency, bankruptcy, reorganization, arrangement or other similar proceedings involving Guarantor which in any way affect the exercise by Sublandlord of its rights and remedies hereunder. 11. If any provision or portion thereof of this Guaranty is declared or found by a court of competent jurisdiction to be unenforceable or null and void, such provision or portion thereof shall be deemed stricken and severed from this Guaranty, and the remaining provisions and portions thereof shall continue in full force and effect. 12. This Guaranty shall inure to the benefit of Sublandlord, its successors and assigns, and shall bind the heirs, executors, administrators, personal representatives, successors and assigns of Guarantor. 13. When the context and construction so require, all words used in the singular herein shall be deemed to have been used in the plural and vice versa, and the masculine shall include the feminine and neuter and vice versa. The word "person" as used herein shall include any individual, company, firm, association, partnership, corporation, trust or other legal entity of any kind whatsoever. 14. In the event any action is brought to enforce or interpret the terms of this Guaranty, the prevailing party in such action shall be entitled to reimbursement by the other party of its costs and expenses, including without limitation its reasonable attorneys' fees, incurred therein. 15. This Guaranty and all matters that in any way relate to the transactions contemplated by this Guaranty shall be governed by the laws of the State of California, and venue of all court actions shall be in Los Angeles or Orange Counties, as selected by Sublandlord. 16. In the event that (i) the Redevelopment Agency of the City of Huntington Beach (the "Agency") exercises the election contained in Section 35.26 of the Sublease; (ii) the Agency becomes the subtenant under the Sublease, or (iii) CIM Group, LLC assigns its rights under that certain Disposition and Development Agreement dated June 17, 1999 (the "DDA") between Guarantor and the Agency to an acceptable transferee pursuant to Section 315 of the DDA or Section 4 of the Agreement Containing Covenants Affecting Real Property recorded pursuant to the DDA or the Memorandum of Sublease, Option to Purchase Fee and Agreement Containing Covenants Affecting Real Property recorded pursuant to the Sublease, then this Guaranty shall expire and be of no further force and effect after the effective date of such event, 4 300-003 Guaranty of Sublease V 3 without, however, limiting Guarantor's obligations for Subtenant's liabilities accruing prior to such expiration. WHEREFORE, Guarantor has executed this Guaranty as of the day and year first above written. GUARANTOR: CIM Group, LLC By: Name: Title: 300-003 Guaranty of Sublease V. 3 Ground Lease Term Summary Summary of Terms Ground Lease and Option to Purchase Fee JLau+ l d Frai 1 Craccl ioiv Tf stee for o Zevvcabl`e I rush d ted une 1�g� �1 79 az d ' 3 3r z� $ E Barbara F. Cracch�Qlct . r�+' '- xs✓3:.-3. ;,3, =a;. '-- xo„-.,'>�».x,M. $' Tenant CIM/Huntington, Inc. Redevelopment Agency of the City of Huntington Beach. pca"tr�n'::024-15"_`10 ?r , ! 2 P�.,.,. a 08 rPacific oast Her way- g �' � •,., ,� 3„' „'� 3 333, ,m,- ;�-. ,.: ,,,r.:w .p;,3 :.: "'•.:"' .., ...,, "„ .. •3„"'33; �i.•. ,, s"'%��. "° x3",",.. .. •3 -f- s x zw •• ,'�"3 W,,, �.���,,�, Term: 25 years with three options to extend (25, 25, and 24 years; 99 years in total) x fl00 ' e,r annum plus CPI°:inc ease reve ' :_five .`ears nod Ica 'e cee er . ,.five .ear Y.e ©d.,,;,;:" y p , t r 311,., Option to n 20 anniversary date, 25 anniversary date, and at the end of each Purchase: renewal term. ■ Purchase price to be the current rent divided by .10, but no less than $1,680,000. ,,,,i .., •" m: •3-6'%, ",: ,. , yr: r: .�, 3 1VYiscellanerous=.xk , - " `F .y zx r,' ,F 't3: -i9 ';" iYY.Lrc ":.�.,3=.x£ x - 33�3ar ,n. Tenant,'to be res ©risible for r locate /� ts, ,3 =` , Pro; sion. x ° = 3 ....::x _ .. ...fir " _; ,. '' .,..,.a;r: gene waives= anx r� hts:,�t.' i a .: awe; tq concfenia car an cart £on of r : „. •;all , 1114 W Ala a ; d:s",in/nterest AMthe roE rmj., , ,- ..s., `, a%,: z<°•:. ,A 3i'',.'•;ri l _'aa%,G SS -•Ar. ;,:..,k ..""r/.r.& mh,,•:,', .... '$,,. �,. . . , ;yr�a�Jr ,. k,t.' �:. 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