HomeMy WebLinkAboutCIM/Huntington, LLC - aka CIM Group, LLC - 2001-03-05-41
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®e CITE' OF HUNTINGTON BEACH
InterOftice Communication
Economic Development Department
TO: Honorable Mayor and City Council Members
VIA: Ray Silver, City Administrator
FROM: David C. Biggs, Director of Economic Development
DATE: March 12, 2001
SUBJECT: CIM California Urban Real Estate Fund/Blocks 104 & 105
The following information is being provided in follow-up to the Agency Board's
approval of the Second Implementation Agreement with CIM for Blocks 104 & 105.
1. Irrevocable Guaranty -- Attached is a copy of the Irrevocable Guaranty
provided by CIM which provides for the Agency to access the financial
resources of the CIM California Urban Real Estate Fund to meet all
financial obligations of CIM under the terms of the DDA. This is the
document to which Murray Kane referred during the staff report and
responses to Agency Member questions on March 5, 2001.
Please feel free to contact me if I can answer any questions or provide any additional
information.
Attachment
xc: Connie .Brockway; City Clerk
Gail Hutton, City Attorney
Murray Kane, Agency Special Counsel
IRREVOCABLE GUARANTY
This IRREVOCABLE GUARANTY ("Guaranty") is dated as of S~
2001 and is entered into by CIM California Urban Real Estate Fund. L.P., a Delaware limited
partnership (the "Fund"), and CIM Management, Inc. (flea CIMG Management, Inc.), a California
corporation, and is made with reference to the following facts:
The Redevelopment Agency of the City of Huntington Beach ("Agency") and CIM Group,
LLC entered into that certain Disposition and Development Agreement dated June 17, 1999,
which Disposition and Development Agreement was supplemented by that certain
Implementation Agreement entered into between the Agency and Developer dated April 6,
2000, and may be further supplemented by that Second Implementation Agreement to the
DDA being negotiated by the Agency and Developer (collectively, the "DDA"). The DDA
is incorporated herein by reference. Any capitalized tenn not otherwise defined herein shall
have the meaning ascribed to it in the DDA.
2. The principals of CIM Group, LLC have established the Fund. The stated objective of the
Fund is to facilitate opportunistic real estate investment/development in the underserved
urban fabric throughout California. The Fund is expected to accept an aggregate of $500
million in investor subscriptions. The investment by the Fund in the DDA and related
agreements has been pre -approved pursuant to the Fund's Amended and Restated Agreement
of. Limited Partnership dated as of December 1, 2000, as amended or supplemented from
time to time ("Partnership Agreement").
3. Pursuant to an Investment Management Agreement entered into between the Fund and CIM
Management, Inc., CIM Management, Inc. has been delegated the power to manage all real
estate investments and other assets of the Fund and is managed and controlled by the same
three principals as CIM Group, LLC, namely: Richard Ressler, Avraham Shemesh and Shaul
Kuba.
4. Pursuant to Section 201.3 of the DDA, CIM_ Group, LLC is obligated to provide the Agency
with a Letter of Credit. This Guaranty shall constitute the Original Letter of Credit as
required by the DDA.
NOW, THEREFORE, for and in consideration of the Agency's execution of the Second
Implementation Agreement to the DDA and as a material inducement to Agency to enter into the
Second Implementation Agreement, the Fund and CIM Management, Inc. hereby covenant with and
represent and warrant to the Agency as follows:
1. Notwithstanding anything to the contrary in the DDA, whenever the Agency has the right to
make a draw on the Letter of Credit as set forth in Sections 201.3 and 201.4 of the DDA, the
Agency shall instead make the draw request to the developer under the DDA\ (the
"Developer").
cg\hb\cinr\irrevocable.guaranty3
February 15, 2001
2. The Fund hereby irrevocably and unconditionally guarantees the prompt payment by
Developer of any such draw requests and the faithful and prompt performance by Developer
of each and every one of the terms, conditions and covenants of Sections 201.1, 201.3 and
201.4 of the DDA relating to the payment of draw requests.
3. If, at any time, Developer shall default in the payment of any such draw requests or in the
performance of any of the terms, conditions or covenants of Sections 201.1, 201.3 and 201.4
of the DDA relating to the payment of any draw requests, the Fund will pay such draw
requests within five (5) business days after written demand, such obligation being an
absolute guaranty of payment. In addition, the Fund will keep, perform and observe such
other terms, conditions and covenants set forth in Sections 201.1, 201.3 and 201.4 of the
DDA in place and stead of Developer within thirty (30) days after written demand.
4. CIM Management, Inc., without joining in this Guaranty as a guarantor of the obligations
described in the foregoing Sections 2 and 3, nonetheless hereby agrees to take any and all
actions required or appropriate under the Fund's Partnership Agreement to cause the
California Public Employees' Retirement System ("CalPERS") and/or any subsequent
investor to the Fund to contribute to the Fund their respective Unpaid Capital Obligations (as
defined and described in more detail in Section 5.1 of the Partnership Agreement) in the
event the Fund does not have the required funds on hand to pay any draw requests described
in Sections 2 and 3.
5. The terms of the DDA may be altered, affected, modified, compromised, accelerated,
extended or changed by written agreement between the Agency and Developer, without
notice to or consent from the Fund or CIM Management, Inc. Subject to any requirements
set forth in the DDA, the Agency may, without notice to or consent from the Fund or CIM
Management, Inc., alter, modify, compromise, accelerate, extend or change the time or
manner for the payment or performance of any of the obligations guaranteed hereunder, and
the Agency may release, substitute or add any one or more guarantors of Developer's
payment of the draw requests and performance under Sections 201.1, 201.3 and 201.4 of the
DDA. Subject to any requirements set forth -in the DDA, the DDA may be assigned by the
Agency or any assignee of the Agency without consent or notice to the Fund or CIM
Management, Inc. In any such event, this Guaranty shall thereafter guarantee the
performance of Developer under the DDA as so changed, modified, altered or assigned. No
exercise or non -exercise by the Agency of any right hereby given the Agency, no dealing by
the Agency with the Fund, CIM Management, Inc. or any guarantor or any other person, and
no change, impairment, release or suspension of any right or remedy of the Agency against
any person, including Developer and any other guarantor, shall in any way affect any of the
obligations of the Fund or CIM Management, Inc. hereunder or shall give the Fund or CIM
Management, Inc. any recourse against the Agency.
6. This Guaranty shall not be released, modified or affected by failure or delay on the part of
the Agency to enforce any of the rights or remedies of the Agency under the DDA, whether
cg\lrb\c im\i rrevocabl e. guaran ty3
February 15, 2001 2
pursuant to the terms thereof or at law or in equity. No provisions of this Guaranty or rights
of the Agency hereunder can be waived in whole or in part nor can the Fund or CIM
Management, Inc. be released from the Fund's or CIM Management, Inc.'s obligations
hereunder except by a writing duly executed by an authorized officer of Developer and the
Executive Director of the Agency or designee.
7. The Fund hereby expressly waives and relinquishes all rights, remedies and defenses
accorded by applicable law to guarantors and the Fund agrees not to assert or take advantage
of any such rights, remedies or defenses, including but not limited to (a) any right to require
the Agency, as a condition to enforcement of this Guaranty, to proceed against Developer or
any other person or to pursue any other right or remedy in the Agency's power before
proceeding against the Fund; (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 the Agency 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 DDA; (e) except for
notices expressly required in this Guaranty or in the DDA, 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 the Fund might be entitled in connection with this
Guaranty or the DDA; (0 any defense based upon an election of remedies by the Agency; (g)
any defense based upon any lack of diligence by the Agency in enforcing the terms of the
DDA; (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 more
burdensome than that of the principal; (i) any duty on the part of the Agency to disclose to
the Fund any facts the Agency may now or hereafter kaiow about Developer, regardless of
whether the Agency has reason to believe that any such facts materially increase the risk
beyond that which the Fund intends to assume, or has reason to believe that such facts are
unknown to the Fund or has a reasonable opportunity to communicate such facts to the Fund,
it being understood and agreed that the Fund is fully responsible for being and keeping
informed of the financial condition of Developer 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 the Agency 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 the Fund that this
Guaranty is in the nature of an absolute guarantee of payment and performance and not of
collection and that the failure of the Agency to exercise any rights or remedies it has or may
have against Developer shall in no way impair the obligation or liability of the Fund
hereunder.
8. No notice of default need be given to the Fund or CIM Management, Inc., it being
specifically agreed and understood that this Guaranty is a continuing guaranty under which
the Agency may proceed forthwith and immediately against Developer or against the Fund or
CIM Management, Inc. following any breach or default by Developer or for the enforcement
cg\hb\cim\irre vocable. guaranty3
February 15, 2001 3
of any rights which the Agency may have as against Developer pursuant to or under the
terms of the DDA or at law or in equity.
9. The Agency shall have the right to proceed against the. Fund and/or CIM Management, Inc.
for any violation of their respective obligations hereunder following any breach or default by
Developer without first proceeding against Developer and (except for notices expressly
required in this Guaranty or in the DDA) without previous notice to or demand upon either
Developer, the Fund or CIM Management, Inc.
10. Until all the terms, covenants and conditions of Sections 201.1, 201.3 and 201.4 of the DDA
are fully performed and observed by Developer, the Fund and CIM Management, Inc. (a)
shall have no right of subrogation against Developer by reason of any payments or acts of
performance by the Fund or CIM Management, Inc. in compliance with the obligations of the
Fund and CIM Management, Inc. hereunder, (b) shall not take any action to enforce any
remedy which the Fund or CIM Management, Inc. now or hereafter shall have against
Developer by reason of any one or more payments or acts of performance by the Fund or
CIM Management, Inc. in compliance with the obligations of the Fund or CIM Management,
Inc. hereunder, and (c) subordinate any liability or indebtedness of Developer now or
hereafter held by the Fund or CIM Management, Inc. to the obligations of Developer to the
Agency under the DDA.
11. The Fund and CIM Management, Inc. have made an independent investigation of the
financial condition of Developer and the ability of Developer to perform the obligations
hereby guaranteed prior to making this Guaranty, and the Fund and CIM Management, Inc.
hereby waive any defense that the Fund or CIM Management, Inc. may have by reason of the
failure of the Agency or any successor- in -interest to the Agency to provide the Fund or CIM
Management, Inc. with any information respecting the financial condition of Developer, or
Developer's ability to perform any of the obligations hereby guaranteed.
12. The obligations of the Fund and CIM Management, Inc. hereunder are independent of the
obligations of Developer, and, in the event of any default hereunder, a separate action or
actions may be brought and prosecuted against the Fund and/or CIM Management, Inc.
whether or not Developer is joined therein or a separate action or actions are brought against
Developer. The Agency's rights hereunder shall 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.
13. The Fund and CIM Management, Inc. hereby waive all rights and defenses the Fund and
CIM Management, Inc. may have by reason of protection afforded to Developer with respect
to the payment of the draw requests pursuant to the antideficiency or other laws of the State
of California limiting or discharging Developer's indebtedness, including, without limitation,
Section 580a, 580b, 580d, or 726 of the Code of Civil Procedure.
eg\hb\cim\irrevocable. guaran ty3
February 15, 2001 4
14. To the extent permitted by law, the Fund hereby waives all rights and defenses it may have to
the payment of the draw requests by reason of the same principals of Developer being the
same principals of the general partner of the Fund.
15. The Fund shall pay to the Agency reasonable attorneys' fees and all costs and other expenses
that the Agency expends or incurs in collecting or compromising any indebtedness hereby
guaranteed or in enforcing this Guaranty against the Fund, and CIM Management, Inc. shall
pay to the Agency reasonable attorneys' fees and all costs and other expenses that the
Agency expends or incurs in enforcing this Guaranty against CIM Management, Inc., in
each case, whether or not suit is filed, expressly including but not limited to all costs,
attorneys' fees and expenses incurred by the Agency in connection with any insolvency,
bankruptcy, reorganization, arrangement or other similar proceedings involving the Fund
and/or CIM Management, Inc. which in any way affect the exercise by the Agency of its
rights and remedies hereunder.
16. The Fund and CIM Management, Inc. represent and warrant that the persons executing this
Agreement on behalf of the Fund and CIM Management, Inc. have full authority to do so and
to bind the Fund and CIM Management, Inc. to perform pursuant to the terms and conditions
of this Agreement.
17. This Guaranty shall inure to the benefit of the Agency, its successors and assigns, and shall
bind the heirs, executors, administrators, personal representatives, successors and assigns of
the Fund and CIM Management, Inc.
18. 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.
19. 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, I incurred
therein.
20. This Guaranty and all matters that in any way relate to the transactions contemplat6d 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 the Agency.
21. This Guaranty integrates all of the terms and conditions mentioned herein or incidental
hereto, and supersedes all negotiations or previous agreements between the parties with
respect to such terms and conditions. All waivers of the provisions of this Guaranty must be
in writing and signed by the parties, and all amendments hereto must be in wntin� and
signed by the parties.
cg\hb\cim\irrevocable. guarauty3
February 15, 2001
22. This Guaranty may be executed in counterpart originals each of which is deemed to be an
original.
23. Time is expressly declared to be of the essence in this Guaranty.
24. No provision in this Guaranty is to be interpreted for or against either party because that
party or its legal representatives drafted such provision.
25. The parties hereto hereby agree to execute such other documents and to take such other
action as may be reasonably necessary to further the purposes of this Guaranty.
26. The parties hereto further represent and declare that they carefully read this Guaranty and
know the contents thereof, and that they sign the same freely and voluntarily.
CIM California Urban Real Estate Fund. L.P., a Delaware
limited partnership
By: CIM Management, Inc., a California corporation
Its: Investment Advisor
Date: February 28, 2001 By:
Name: Richard S. Ressler
Title: President
Date: February 28, 2001 By:
Name -.-Nicholas V. Morosoff
Title--- -Secretary
cg\hb\cim\irrevocable.guaranty3
February 15, 2001 6
CIM Management, Inc., a California corporation
Date: February 28, 2001 By:
Name: is and S. Ressler
Title: President
Date: February 28, 2001 By:
Name: Nicholas V. Morosoff
Title: Secretary
cg\hb\cim\irrevocable. guaranty3
February 15, 2001 7
CONDITIONAL ASSIGNMENT AND ASSUMPTION AGREEMENT
This CONDITIONAL ASSIGNMENT AND ASSUMPTIONAGREEMENT ("Agreement")
is dated as of March 5 , 2001 and is entered into by and between CIM/Huntington,
Inc, a California corporation, and the Redevelopment Agency of the City of Huntington Beach, a
public body, corporate and politic ("Agency"), and is made with reference to the following facts:
The Agency and CIM Group, LLC ("Developer") entered into that certain Disposition and
Development Agreement dated June 17, 1999, which Disposition and Development
Agreement was supplemented by that certain Implementation Agreement entered into
between the Agency and Developer dated April 6, 2000, and may be further supplemented by
that Second Implementation Agreement to the DDA being negotiated by the Agency and
Developer (collectively, the "DDA").
2. 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").
3. Pursuant to Section 201.3 of the DDA, the Developer and CIM/Huntington, Inc. have been
attempting to acquire fee simple title to Parcel B through voluntary negotiations. As a result,
among other agreements, the CIM/Huntington, Inc. has negotiated that certain Option to
Enter Ground Lease, Acquire Improvements and Escrow Instructions by and between.
CIM/Huntington, Inc. and Ronald A. Mase, Trustee for the Ronald A. Mase Revocable
Living Trust dated February 10, 1995 and Ann L. Mase, Trustee for the Ann L. Mase
Revocable Living Trust dated February 3, 1993 (collectively, the "Owner") dated November
6, 2000 ("Option Agreement") and that certain Ground Lease and Option to Purchase Fee
("Lease") by and between Owner ("Landlord" thereunder) and CIM/Huntington, Inc. and the
Agency (collectively, the "Tenant" thereunder). The Lease pertains to one of the parcels
which comprises Parcel B. The Option Agreement and Lease are hereby incorporated by
reference.
4. Any capitalized term not defined herein shall have the meaning ascribed to it in the Option
Agreement or the Lease, as applicable.
5. The Second Implementation Agreement to the DDA being negotiated by the Agency and
Developer provides the Agency the right, under certain circumstances, to cause the Lease
Commencement Date under the Lease to occur. However, while both CIM/Huntington, Inc.
and the Agency were granted the Option in the Option Agreement, only CIM/Huntington,
Inc. has the right to exercise the Option, the right to review title and certain other rights
under the Option Agreement.
6. For good and valuable consideration, the receipt of which is hereby acknowledged,
cg\lib\cim\assign.agmt4
February 15, 2001
CIM/Huntington, Inc. desires to grant the Agency a conditional assignment of
CIM/Huntington, Inc.'s rights under the Option Agreement and the Agency desires to
conditionally assume CIM/Huntington, Inc.'s obligations under the Option Agreement.
THE PARTIES AGREE AS FOLLOWS:
Grant of Conditional Assignment of Rights. To the extent the Agency has the right to cause
the Lease Commencement Date to occur pursuant to the Second Implementation Agreement
being negotiated by the Agency and Developer, CIM/Huntington, Inc. hereby assigns all of
CIM/Huntington, Inc.'s rights, title and interest to and under the Option Agreement to the
Agency (which assignment shall be effective only during the period during which the
Agency has the right to cause the Lease Commencement Date to occur pursuant to the
Second Implementation Agreement, following which all rights under the Option Agreement
shall revert to the Developer). CIM/Huntington, Inc. hereby agrees to indemnify and hold
the Agency harmless from and against any claims caused by the negligent acts or wilful
misconduct of CIM/Huntington, Inc. during any period that such assignment is not in effect
or by any breach of the Option Agreement by CIM/Huntington, Inc.
2. Conditional Assumption of Obligations. In the event all of CIM/Huntington, Inc.'s rights,
title and interest to and under the Option Agreement are assigned to the Agency pursuant to
this Agreement, the Agency hereby assumes all of CIM/Huntington, Inc.'s obligations under
the Option Agreement arising during the period that such assignment is in effect, the Agency
hereby agrees to perform all such obligations, and the Agency hereby agrees to indemnify
and hold CIM/Huntington, Inc. harmless from and against any claims caused by the
negligent acts or wilful misconduct of the Agency during the period that such assignment is
in effect or by any breach of the Option Agreement by the Agency.
Governing Law. This Agreement shall be governed by the laws of the State of California.
4. Severability of Agreement. If any term or provision of this Agreement, the deletion of which
would not adversely affect the receipt of any material benefit by any party hereunder, shall be
held by a court of competent jurisdiction to be invalid or unenforceable, the remainder of this
Agreement shall not be affected thereby and each other term and provision of this Agreement
shall be valid and enforceable to the fullest extent permitted by law. It is the intention of the
parties hereto that in lieu of each clause or provision of this Agreement that is illegal, invalid
or unenforceable, there be added as a part of this Agreement an enforceable clause or
provision as similar in terms to such illegal, invalid or unenforceable clause or provision as
may be possible.
5. Entire Agreement Waivers and Amendments. This Agreement integrates all of the terms
and conditions mentioned herein or incidental hereto, and supersedes all negotiations or
previous agreements between the parties with respect to such terms and conditions. All
waivers of the provisions of this Agreement must be in writing and signed by the parties, and,
all amendments hereto must be in writing and signed by the parties.
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February 15, 2001 2
and conditions mentioned herein or incidental hereto, and supersedes all negotiations or
previous agreements between the parties with respect to such terms and conditions. All
waivers of the provisions of this Agreement must be in writing and signed by the parties, and
all amendments hereto must be in writing and signed by the parties.
6. Effective Date. This Agreement shall become effective on the date it is signed on behalf of
the Agency, but shall be dated for reference purposes as of the date first set forth above.
7. Counterpart Originals. This Agreement may be executed in counterpart originals each of
which is deemed to be an original.
8. Time of Essence. Time is expressly declared to be of the essence in this Agreement.
9. Attorneys' Fees. If any action, proceeding, or arbitration arising out of or relating to this
Agreement is commenced by either party to this Agreement, then the prevailing party shall
be entitled to receive from the other party, in addition to any other relief that may be granted,
the reasonable attorneys' fees, costs and expenses incurred in the action, proceeding or
arbitration by the prevailing party.
10. Interpretation. No provision in this Agreement is to be interpreted for or against either party
because that party or its legal representatives drafted such provision.
11. Further Assurances. The parties hereto hereby agree to execute such other documents and
to take such other action as may be reasonably necessary to further the purposes of this
Agreement.
12. Voluntary Agreement. The parties hereto further represent and declare that they carefully
read this Agreement and know the contents thereof, and that they sign the same freely and
voluntarily.
Date: �4c riL- 2.21 �Lov'/
ATTEST:
Agency Clerk
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February 15, 2001
REDEVELOPMENT AGENCY OF THE
CITY OF HUNTINGTON BEACH
Executi e Director
3
REVIEWED AND
APPROVED AS TO FORM:
Agency General Counsel
3
APPROVED AS TO FORM:
Kane, Ballmer & Berkman
Date: February 28, 2001
Date : February 28, 2001
cg\bb\cim\assi gn. agmt4
February I5,2001
CIM/Huntington, Inc.
By: /
By: ichard S. Ressler
Its: President
By:
By: Avraham Shemesh
Its: Treasurer
4:
3 y G. NW) L-ON.tOV
Council/Agency Meeting Held:
Deferred/Continued to:
Approved ❑ Conditionally Approved ❑ Denied
CI �r4 's Signature
C
/
Council Meeting Date: March 5, 2001 J
Department ID Number: ED 01-07
Isizogge -Wa
SUBMITTED TO: HONORABLE CHAIRMAN AND REDEVELOPMENT AGENCY
MEMBERS
SUBMITTED BY: RAY SILVER, Executive Director W1W
PREPARED BY: DAVID C. BIGGS, Director of Economic Development
SUBJECT: Accept Option to Enter Into a Ground Lease and Option to Purchase
with the Ronald A. Mase and Ann L. Mase Revocable Living Trusts
and CIM/Huntington Inc. and Approve Second 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 option is proposed as the
method of securing one of the private ownership's interests in the site. This is the second
ground lease to be accepted as part of this project. A Second Implementation Agreement to
the DDA is also being is also needed to permit the Agency the right to exercise the Option
and enter into the ground lease. The Implementation agreement also amends the Schedule
of Performance and accepts CALPERS as CIM's equity partner in the project.
Funding Source: CIM/Huntington, Inc., will be the primary party responsible for the
payments under the proposed ground lease.
Recommended Action:
Motion to:
1. Accept the Option Agreement to enter into a Ground Lease & Option to Purchase with
Ronald A. Mase Revocable Living Trust dated February 10, 1995, and Ann L. Mase,
Trustee for the Ann L. Mase Revocable Living Trust dated February 3, 1993 and
CIM/Huntington Inc. (Attachment No. 3).
�z
REQUEST FOR REDEVELOPMENT AGENCY ACTION
MEETING DATE: March 5, 2001 DEPARTMENT ID NUMBED: ED 01-07
2. Approve the Ground Lease and Option to Purchase Fee and Authorize the Agency
lA Chairperson and Agency SeeI�K to execute the Ground Lease and to record the-',
Memorandum of Lease upon the future exercise of the Ground Lease Option by all the
parties, as set forth in the Second Implementation Agreement (Attachment 4).
3� Approve the Second Implementation Agreement by and between the Redevelopment
Agency and CIM Group, LLC; and Authorize the Agency Chairman and Agency Clerk to
execute the agreement (Attachment 1).
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.
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 Ronald and Ann Mase, the owners of the
property located at 123 Main Street. The property owner has required that the
Redevelopment Agency approve the Ground Lease as a co -tenant.
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 continue the
assembly of parcels for Block 104. Block 105 is now under control of the CIM Group and the
Redevelopment Agency. As a co -tenant under the Ground Lease, the Agency will have a
greater level of control over the parcel.
A Second Implementation Agreement between the Agency and CIM has been prepared.
This Implementation Agreement defines the relationship between the Agency and Developer
given the terms of the Ground Lease since a Ground lease was not anticipated as the
method of site acquisition. It also provides a method to value the Ground Lease in order to
assign a cost factor for the financial provisions of the DDA, it also clarifies that Ground lease
payments are eligible acquisition costs.
The Second Implementation Agreement also amends the Schedule of Performance under
the Disposition and Development Agreement as follows:
RCA21mpAgree -2- 02/27/01 10:00 AM
REQUEST FOR REDEVELOPMENT AGENCY ACTION
MEETING DATE: March 5, 2001 DEPARTMENT ID NUMBER: ED 01-07
a. CIM is concurrently providing in the form of an Irrevocable Guarantee a Letter of
Credit to the Agency.
b. The date for the Close of Escrow has been extended until November 1, 2001.
The Second Implementation Agreement makes clear that any exercise or consideration of
exercise by the Agency of its power of eminent domain pursuant to or in connection with
the DDA is at the Agency's sole and absolute discretion. The Second Implementation
Agreement also revises the three sections in the DDA, which are ambiguous on this point.
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. 1 Second Implementation Agreement
2. Summary of Terms.
3. Option Agreement to Enter Into a Ground Lease.
4. Ground Lease and Option to Purchase Fee.
RCA Author: Gus Duran X1529
RCA21mpAgree -3- 02/27/01 10:01 AM
Second Implementation A�' g� rat ;�'� + l ee� f
��
ATTACHMENT #1
4
SECOND IMPLEMENTATION AGREEMENT
by and between
REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH,
Agency
and
CIM GROUP, LLC
Developer
hb\cim\imp.agmt\2nd.imp.agmt5
February 16, 2001
IMPLEMENTATION AGREEMENT
This SECOND IMPLEMENTATION AGREEMENT ("Agreement") dated as of
March 5 , 2001, 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, which Disposition and Development Agreement was
supplemented by that certain [First] Implementation Agreement entered into between the
Agency and Developer dated April 6, 2000 (collectively, the "DDA"). The DDA 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, among other agreements,
the Developer has negotiated that certain Option to Enter Ground Lease, Acquire
Improvements and Escrow Instructions by and between CIM/Huntington, Inc., a California
corporation and Ronald A. Mase, Trustee for the Ronald A. Mase Revocable Living Trust
dated February 10, 1995 and Ann L. Mase, Trustee for the Ann L. Mase Revocable Living
Trust dated February 3,1993 (collectively, the "Owner") dated November 6, 2000 ("Option
Agreement") and that certain Ground Lease and Option to Purchase Fee ("Lease") by and
between Owner ("Landlord" thereunder) and CIM/Huntington, Inc. and the Agency
(collectively, the "Tenant"). The Lease pertains to one of the parcels which comprises Parcel
B ("Leased Premises"). The Option Agreement and the Lease are hereby incorporated by
reference. Any capitalized term not defined herein shall have the meaning ascribed to it in
the Option Agreement, 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. Due to the lengthy negotiations Developer has had with Owner and other property owners of
Parcel B, Developer has been unable to comply with the Schedule of Performance.
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February 16, 2001
Therefore, the parties also desire to enter into this Agreement in order to extend certain dates
in the Schedule of Performance and to clarify certain other matters which have arisen since
the date the parties entered into the DDA.
F. The parties are entering into this Agreement for good and valuable consideration, the receipt
of which is hereby acknowledged.
TERMS
I. Lease, Option Agreement.
A. 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 Lease, (b) the Close of
Escrow under the DDA, or (c) the termination of the DDA.
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 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.
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.
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.
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
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February 16, 2001 2
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.
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 from any breach or default by
Developer in performing any obligations to be performed by Developer under
the terms of this Agreement.
B. Commencement Date
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
I.D. L(a) below.
2. Developer's DDA Election. If pursuant to Section I.B.L(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.
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February 16, 2001 3
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 I.B.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.
4. Developer Elects to Terminate DDA. If pursuant to Section I.B.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.
C. 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.
hb\cim\imp. agmt\2nd.imp. agmt5
February 16, 2001 4
D. Termination of the DDA
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
I.D.L(a) above, the Developer may elect to cause the Lease
Commencement Date to occur pursuant to Section I.B.3. above,
provided that in the alternative, the Developer may elect to cause
CIM/Huntington, Inc. to cancel the Lease or allow the option
represented by the Option Agreement to lapse (if such right exists
under the Lease or pursuant to agreement with Landlord).
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 and assumption agreement assigning all of
CIM/Huntington, Inc.'s rights, title and interest under the Sublease to the
Agency (with the Agency assuming all obligations under the Sublease) 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.
E. 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
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February 16, 2001 5
prohibit CIM/Huntington, Inc. from doing any of the following, without the prior
written consent of the other party:
Perform any act or fail to perform any act which would constitute an Event of
Default under the Lease or the Option Agreement or which would lead to an
Event of Default under the Lease or the Option Agreement;
2. Terminate the Lease or the Option Agreement in whole or in part (except as
provided in Section I.B.4. above);
3. Modify or amend the Lease or the Option Agreement in whole or in part; or
4. Prejudice or adversely affect the rights of the Tenant under the Lease.
F. 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 (1) $840,000 plus (2) 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 (3)
reimbursable costs, if any, as set forth in Section 201.2(a) of the DDA plus (4) so
long as the Lease Commencement Date occurs under the Lease, costs actually paid
by CIM/Huntington, Inc. as an Option Payment pursuant to Section 3. of the Option
Agreement; provided, however, if the DDA is terminated prior to CIM/Huntington,
Inc. paying at least $840,000 in total Rent (as defined in the Lease), then the
difference between $840,000 and the actual total Rent paid 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.
G. 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.
H. 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.
I. mace 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.
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February 16, 2001 6
J. 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.
K. 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.
L. 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.
M. 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 assigmment and assumption agreement shall
be consistent with the terms and conditions of this Agreement and the Sublease.
II. Schedule of Performance. The Schedule of Performance (Attachment No. 3 to the DDA) is
hereby deleted in its entirety and replaced by the Amended Schedule of Performance, which
is attached hereto as Exhibit C and fully incorporated herein by this reference (and the date
set forth in such Exhibit C as the required date for the submission of the Original Letter of
Credit shall supercede any deadline(s) set forth in Section 201.3(b) of the DDA).
III. Eminent Domain.
A. The parties to the DDA acknowledge and agree that any exercise or consideration of
exercise by the Agency of its power of eminent domain pursuant to or in connection
with the DDA, including, without limitation, any decision by the Agency to hold a
hearing on a resolution of necessity, shall be at the Agency's sole and absolute
discretion.
B. Without limiting the generality of the foregoing, the parties desire to clarify the
following provisions in the DDA relating to the Agency's exercise of eminent
domain:
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February 16, 2001 7
1. Section 205(d) is hereby deleted in its entirety and replaced with a new
Section 205(d) as follows:
"In the event the Condemnation Parcel is conveyed pursuant to
subsection (b) above, the Agency shall diligently proceed with all
condemnation actions to obtain final judgments in such matters on or
before the date set forth in the Schedule of Performance, and take any
other action necessary to perfect the transfer of title to the
Developer."
2. Section 214.6 is hereby deleted in its entirety and replaced with a new
Section 214.6 as follows:
"If the Agency has chosen, it its sole discretion, to proceed with any
condemnation actions, at the reasonable request of the Developer and
otherwise as warranted by the circumstances in the opinion of the
Agency, Agency shall apply for appropriate pre -condemnation orders
for the purpose of permitting Developer to make all appropriate tests
and inspections where owners' consent for entry cannot be obtained."
3. Section 505.2(b) is hereby deleted in its entirety and replaced with a new
Section 505.2(b) as follows:
"Prior to the Agency drawing funds from the Original Letter of
Credit, the Agency may terminate this Agreement, at its option, in the
event that (1) in the sole discretion of the Agency, the Agency
determines not to use the Agency's power of eminent domain to
authorize the acquisition of all or any part of Parcel B or (2) in the
sole discretion of the Agency, the Agency does determine to use its
power of eminent domain, the Agency in its sole discretion
determines not to adopt a resolution of necessity pursuant to
California Code of Civil Procedure Sections 1245.210 et sec .
Nothing herein changes any of the preconditions set forth in this
Agreement on the Agency's right to draw on the Original Letter of
Credit or any additional letter of credit delivered to Agency under this
Agreement."
IV. Section 107 of the DDA. The second and third paragraphs of Section 107 of the DDA are
hereby deleted in their entirety and replaced with new second and third paragraphs as
follows:
`By March 15, 2001,' Developer shall assign all of its rights and delegate all of its duties
under this Agreement to a new entity formed by the principals of Developer, namely:
CIM/Huntington, LLC, a California limited liability company, whose Limited Liability
hb\cim\imp.agmt\2nd.imp.agmt5 February 16, 2001 8
Company Articles of Organization were filed with the California Secretary of State on
January 26, 2001. The Agency's approval of CIM/Huntington, LLC as Developer's
assignee under this Agreement is subject to the review and approval by the Agency
Executive Director or designee of CIM/Huntington, LLC's formation and organizational
documents, which approval shall not be unreasonably withheld.
Developer represents and warrants to the Agency the following: (a) CIM/Huntington, LLC
shall have as its sole member CIM California Urban Real Estate Fund. L.P., a Delaware
limited partnership (the "Fund"), (b) the Fund shall be the sole owner and manager of
CIM/Huntington, LLC, (c) pursuant to an Investment Management Agreement entered into
between the Fund and CIM Management, Inc., CIM Management, Inc. has been delegated
the power to manage all real estate investments and other assets of the Fund and is managed
and controlled by the same three principals as Developer, namely: Richard Ressler, Avraham
Shemesh and Shaul Kuba, (d) currently, the sole limited partner ofthe Fund is the California
Public Employees' Retirement System ("Ca1PERS"), and (e) the limited partnership
agreement for the Fund provides the Fund may cause CalPERS to contribute to the Fund
Ca1PERS' Unpaid Capital Obligation (as defined and described in more detail in Section 5.1
of said limited partnership agreement)."
V. Section 201.5 of the DDA. A new section 201.5 is hereby added to the DDA as follows:
"201.5 Lease PUMents
(a) Notwithstanding anything to the contrary in this Agreement, any lease
payment made by Developer, CIM/Huntington, Inc. or any other Developer -related entity
controlled by the principals of Developer pursuant to any long-term lease Developer,
CIM/Huntington, Inc. or other such Developer -related entity, as applicable, may enter into
with a current Site property owner to carry out this Agreement shall be an "Acquisition Cost"
as set forth in more detail in Section 201.2 of this Agreement. The Agency shall have no
obligation to repay or reimburse Developer for any such lease payment except as provided in
the Schedule of Feasibility Gap Payments (Attachment No. 8) and, subject to the provisions
of this Section, the Pre -Conveyance Termination Note and the Pre -Conveyance Termination
Deed of Trust.
(b) Notwithstanding any other provision in this Agreement to the contrary, in the
event of the termination of this Agreement, to evidence the Agency's obligation to repay or
reimburse Developer any lease payment(s) made by Developer, CIM/Huntington, Inc. or any
other Developer -related entity controlled by the principals of Developer as described in
subsection (a) above, the Agency's Executive Director shall, within 15 business days
following such termination, execute and deliver to Developer on behalf of the Agency a Pre -
Conveyance Termination Note (the form of which is appended to this Agreement as
Attachment No. 9), the performance of which shall be secured by a Pre -Conveyance
Termination Deed of Trust, which the Agency's Executive Director shall execute,
hb\cim\imp.agmt\2nd.imp.agmt5 n
February 16, 2001 9
acknowledge and deliver on behalf of the Agency concurrently with such Pre -Conveyance
Termination Note. At such time, the form of the Pre -Conveyance Termination Note shall be
revised to effectuate this Section 201.5.
(c) The Agency shall not encumber any portion of the Site during the term of this
Agreement except in implementing the provisions hereof, and shall not during such term take
any steps to impair the contemplated security to be provided by the Pre -Conveyance
Termination Deed of Trust. The property subject to the Pre -Conveyance Termination Deed
of Trust shall be Parcel A and any portion of Parcel B then owned by the Agency, provided
that the Pre -Conveyance Termination Deed of Trust shall provide for a partial reconveyance
thereunder of any portion of Parcel A or Parcel B which either (i) is conveyed to Developer,
or (ii) is excluded from the Site pursuant to Section 104 of this Agreement, or (iii) is to be
conveyed to a third party as provided by Section 2(e) of the Pre -Conveyance Termination
Promissory Note, subject to concurrent payment of Net Sales Proceeds to Developer."
VI. Section 505.2(a) of the DDA. Section 505.2(a)6 of the DDA is hereby deleted in its entirety and
replaced with a new Section 505.2(a)6 as follows:
666. Developer fails to assign this Agreement within the time and as required by Section
107 hereinabove; or"
VII. Section 505.3 of the DDA. The clause (a) of Section 505.3 of the DDA is hereby deleted in its
entirety and replaced with a new clause (a) as follows:
"(a) all land use entitlements required for the development of the Site pursuant to this
Agreement are not finally approved by the City and all other governmental agencies having
jurisdiction thereof, on.or before October 1, 2001, or"
VIII. Right to Cause Lease Payments or Lease Commencement. Developer hereby agrees that
within five (5) business days following written request therefor from the Agency Executive
Director or designee, Developer shall (A) commence, or shall cause CIM/Huntington, Inc. or
any other Developer -related entity controlled by the principals of Developer (as may be
appropriate or applicable) to commence, making lease payments pursuant to any long-term
lease the Developer, CIM/Huntington, Inc. or other such Developer -related entity, as
applicable, may enter into with a current Site property owner to carry out the DDA or (b)
otherwise effect, or cause CIM/Huntington, Inc. or any other such Developer -related entity to
effect, the commencement of the term of any such long term lease. In such event,
notwithstanding anything to the contrary set forth herein, in the [First] Implementation
Agreement or the DDA, the following provisions shall thereafter apply:
A. The Agency shall execute and the Developer shall cause CIM/Huntington, Inc. to
execute the Sublease and the Sublease (as defined in the [First] Implementation
Agreement) (hereinafter, the "Other Sublease"), as applicable, in each case naming
CIM/Huntington, Inc. as subtenant thereunder, as well as the Memorandum of
bb\cim\imp. a gmt\2 nd. imp. agmt5
February 16, 2001 10
Sublease and the Memorandum of Sublease (as defined in the [First] Implementation
Agreement) (hereinafter the "Other Memorandum of Sublease"), as applicable, and
the Developer shall execute the Guaranty and the Guaranty (as defined in the [First]
Implementation Agreement), as applicable.
B. If the DDA terminates and the Sublease or the Other Sublease has been entered into
naming CIM/Huntington, Inc. as the subtenant thereunder, then within thirty (30)
business days following the termination of the DDA, the Agency shall execute and
the Developer shall cause CIM/Huntington, Inc. to execute an assignment and
assumption agreement assigning all of CIM/Huntington, Inc.'s rights, title and
interest under the Sublease and the Other Sublease, as applicable, to the Agency
(with the Agency assuming all obligations under the Sublease and the Other
Sublease, as applicable) or to execute a Sublease subleasing all of CIM/Huntington,
Inc.'s rights, title and interest under the Sublease and the Other Sublease, as
applicable (in each case wherein CIM/Huntington, Inc. is named as the subtenant)
and the Memorandum of Sublease and the Other Memorandum of Sublease, as
applicable, in each case 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.
IX. DDA in Full Force and Effect. Except as expressly provided otherwise in this Agreement,
the DDA remains in full force and effect, enforceable in accordance with its terms.
X. 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.
Date:
ATTEST:"
Agency-Seeretai5- C/Ff ,<
hb\cim\imp.agmt\2nd.imp. agmt5
Febmary 16, 2001
("Agency")
REDEVELOPMENT AGENCY OF THE
CITY OF HUNTINGTON BEACH
Chairm
11
REVIEWED AND
APPROVED AS TO FORM:
Agency General Counsel
-PD! �14 - 11
�
APPROVED AS TO FORM:
Kane, Ballmer & Berkman
Date: (),q • a() - 0 1
"Developer"
CIM GROUP, LLC
By: ORCHARD CAPITAL CORPORATION,
Manager
r
Richard S. Ressler
President
The undersigned agrees to perform all of its obligations set forth in this Agreement.
Date: 0a:j-0- 01
Date: ()a (�O
hb\cim\imp. agmt\2 nd. imp. agmt5
February 16, 2001
CIM/Huntington, Inc.
4BXi chard �SRessler
Its: President
By: Avraham Shemesh
Its: Treasurer
12
Exhibit A
Form of Sublease
[behind this page]
hb\cim\imp. agmt\2nd. imp, agmt4
February 15, 2001
SUBGROUND LEASE
AND OPTION TO PURCHASE FEE
by and between
CITWHuntington, Inc.
and Redevelopment Agency of the City of Huntington Beach
(collectively, "Sublandlord")
and
300-003 Subground Lease Mase V 1
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:
1. 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 (the "Ground Lease") by and between Ronald A. Mase, Trustee for the
Ronald A. Mase Revocable Living Trust Dated February 10, 1995, and Ann L. Mase, Trustee for
the Ann L. Mase Revocable Living Trust Dated February 3, 1993 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 Mase V. 1
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 Mase V. 1 -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 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 Mase V. 1 -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 1.11).
4.5 Payoff of Existing Loan. Upon 120 days prior written notice from Subtenant,
Sublandlord shall give notice to Landlord to cause the payoff of all amounts due and owing
under that certain deed of trust securing a loan having Progressive Savings Bank as beneficiary
and shall cause such deed of trust to be removed from title. If Landlord fails to timely payoff
such deed of trust and remove it from title, Subtenant shall have the right to payoff such trust
deed (and Landlord shall cooperate in such effort), and in such event Subtenant shall be entitled
to a rent credit against rent owing hereunder in a monthly amount equal to the amount of the
payoff and all out of pocket costs involved in such payoff amortized over 60 months together
with interest at an annual rate of 12.5%, compounded annually.
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.
300-003 Subground Lease Mase V. 1 -4-
(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.
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.
300-003 Subground Lease Mase V. 1 -5-
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.
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
300-003 Subground Lease Mase V. 1 -6
(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
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
300-003 Subground Lease Mase V. 1 -7-
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%)
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 naive; 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 PropertYTaxes. 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.
300-003 Subground Lease Mase V. 1 -8-
15. ASSIGNMENT AND SUBLETTING
15.1 Sublandlord Consent Re uired. 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.
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.
300-003 Subground Lease Mase V. 1 -9-
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/AgencyParties") 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, pennitted, 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.
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 perfonnance 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
300-003 Subground Lease Mase V. 1 -10-
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
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 Subt(Inant, 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.
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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
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
Paragra h�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.
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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
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
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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
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.
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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,
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
300-003 Subground Lease Mase V. 1 -15-
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.
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;
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(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.
26. EMINENT DOMAIN
26.1 Subground Lease Termination Right. If the Property or any portion
thereof is taken under the power of eminent domain, this Subground Lease shall terminate as to
the part so taken as of the date that the condemning authority takes possession of the Property,
provided the Basic Rent shall be proportionately reduced. If only a portion of the Property is
taken or sold under such threat, and Subtenant demonstrates that the economic viability of the
Project is materially affected, Subtenant may terminate this Subground Lease as of the date that
the condemning authority takes possession by delivery of written notice of such election within
twenty (20) days after such party has been notified of the taking or, in the absence thereof, within
twenty (20) days after the condemning authority shall have taken possession.
26.2 Effect of No Termination. If this Subground Lease is not terminated by
Sublandlord or Subtenant, it shall remain in full force and effect as to the portion of the Property
remaining. In such event, Subtenant shall, at Subtenant's own expense, restore the Property to a
complete unit of like quality and character, except as to size, as existed prior to the date on which
the condemning authority took possession.
26.3 Award Allocation.
(a) In the event the Subground Lease is not terminated, all awards for the taking
of any part of the Property or proceeds from the sale made under the threat of the exercise of the
power of eminent domain shall be paid directly to Subtenant, provided, however, that
Sublandlord shall be entitled to any award which is specifically made for the value of the fee as
encumbered by this Subground Lease (including any residual value after the Term).
(a) In the event the Subground Lease is terminated, then:
(i) Subtenant shall be entitled to all portions of the award
specifically made for the fair market value of Subtenant's leasehold (which shall include the fair
market value of any improvements on the Property and the fair market value of any space leases
or any other revenue sources for any improvements on the Property ("Improvement Value"), but
which shall exclude any Excess Value as defined below) and 50% of the Excess Value.
300-003 Subground Lease Mase V. 1 -17-
(ii) Sublandlord shall be entitled to (aa) any award specifically
made for the fair market value of Landlord's interest in the fee as encumbered by this Subground
Lease (including any residual value after the Term, but excluding any Excess Value), and (bb)
50% of the Excess Value.
"Excess Value" shall mean the excess of (x) the sum of the fair
market value of the fee (unencumbered by the Subground Lease and including the Improvement
Value), over (y) the sum of the Improvement Value and the fair market value of the fee as
encumbered by this Subground Lease (including any residual value after the Term).
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:
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(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. 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.
300-003 Subground Lease Mase V. 1 -19-
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
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.
300-003 Subground Lease Mase V. 1 _20_
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:
(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.
300-003 Subground Lease Mase V. 1 -21-
(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
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
300-003 Subground Lease Mase V. 1 -22-
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 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
300-003 Subground Lease Mase V. 1 -23-
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
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,
300-003 Subground Lease Mase V. 1 _24_
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
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.
300-003 Subground Lease Mase V. 1 -25
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
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 transmis"Sion 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.
300-003 Subground Lease Mase V. 1 -26-
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.
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.
300-003 Subground Lease Mase V. 1 -27-
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.
35.10 No Partnership. Nothing contained in this Subground Lease shall be
deemed or construed as creating a partnership, joint venture, or any other relationship between
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 Inter?retation. 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.
300-003 Subground Lease Mase V. 1 _28
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.
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.
300-003 Subground Lease Mase V. 1 _29_
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
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 Mase V. 1 _30_
SUBTENANT:
SUBLANDLORD: CIM/Huntington, Inc., a California corporation
M.
an
WE
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 Mase V. 1 -31-
Exhibit "A"
LEGAL DESCRIPTION
[TO BE ADDED]
300-003 Subground Lease Mass V. 1
Exhibit `B"
MEMORANDUM OF SUBLEASE
THIS DOCUMENT HAS
BEEN PREPARED BY
AND WHEN RECORDED RETURN TO:
Connie Brockway, City Clerk
Office of the City Clerk
City of Huntington Beach
2000 Main Street
Huntington Beach, CA 92648
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 Mase V. 1
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:
I.5
SUBLANDLORD: Redevelopment Agency of the City of Huntington
Beach
ATTEST:
:
Chairman
Agency Clerk
CIM/Huntington, Inc.
In
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 Mase V. 1
(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 naives, 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 Mase V. 1 - 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 Subground Lease Mase V. 1 - in -
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 Mase V. 1 - 1V -
TABLE OF CONTENTS
Page
SUBGROUNDLEASE 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.
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
ARTICLE16.
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
ARTICLE21.
UTILITIES......................................................................................................
20
ARTICLE 22.
HOLDING OVER.................................................................................:........
20
ARTICLE 23.
ENTRY BY SUBLANDLORD............ :.........................................................
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.
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 Mase V. 1 - y -
Exhibit B
Guaranty
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hb\cim\imp.agmt\2nd.imp. agmt4
February 15, 2001
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 between
Sublandlord as Tenant and Ronald A. Mase, Trustee for the Ronald A. Mase Revocable Living
Trust Dated February 10, 1995, and Ann L. Mase, Trustee for the Ann L. Mase Revocable
Living Trust Dated February 3, 1993 ("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
300-003 Mase Guaranty of Sublease v.1
the terms, conditions or covenants of the Sublease to be kept, performed or observed by
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
2
300-003 Mase Guaranty of Sublease v.I
provides that the obligation of a surety must be neither larger in amount nor in other respects
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
3
300-003 Mase Guaranty of Sublease v.I
separate action or actions are brought against Subtenant. Sublandlord's rights hereunder shall
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 Mase Guaranty of Sublease v.l
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 Mase Guaranty of Sublease v. I
Exhibit C
Amended Schedule of Performance
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hb\cim\imp.a gmt\2nd. imp. agmt4
February 15, 2001
ATTACHMENT NO. 3
AMENDED SCHEDULE OF PERFORMANCE
1. Submission -Developer's Deposit. Developer Concurrently with Agency's execution of
shall submit Developer's Deposit to Agency this Agreement.
pursuant to Section 108 of this Agreement.
2. Submission - Original Letter of Credit. Concurrently with Agency's approval of
Developer shall submit the Irrevocable the Second Implementation Agreement.
Guaranty which shall constitute the Original
Letter of Credit to Agency pursuant to Section
201.3 of this Agreement.
3. Submission - Applications for Grading and Not later than thirty (30) days prior to
Excavation Permits. Developer shall submit to close of escrow.
City for approval applications for grading and
excavation permits and related documents.
4. Submission - Evidence of Financing.
Developer shall submit to Agency for approval
the evidence of financing referred to in Section
215 of this Agreement and the guaranteed
maximum contracts for public parking and
other public improvements.
5. Approval - Evidence of Financing. Agency
shall approve or disapprove evidence of
financing and guaranteed maximum contracts.
Not later than thirty (30) days prior to
close of escrow.
Within 30 days after receipt by Agency.
6. Submission - Hotel Franchise Agreement. Not later than thirty (30) days prior to
Developer shall submit to Agency for approval close of escrow.
or disapproval a proposed Hotel Franchise
Agreement pursuant to Section 403 of this
Agreement.
7. Approval - Hotel Franchise Agreement. Within 30 days after receipt by Agency
Agency shall approve or disapprove the
proposed Hotel Franchise Agreement.
8. Submission - Hotel Management Agreement. Not later than thirty (30) days prior to
hb\cim\dda\amended.sop3 ATTACHMENT NO. 3
Febmary 6. 2001 AMENDED SCHEDULE )OF PERFORMANCE
Developer shall submit to Agency for approval close of escrow.
or disapproval a proposed Hotel Management
Agreement pursuant to Section 402 of this
Agreement.
9. Approval - Hotel Management Agreement.
Agency shall approve or disapprove the
proposed Hotel Management Agreement.
10. Submission - Project Cost Budget. Developer
shall submit to Agency for approval or
disapproval a proposed Project Cost Budget
pursuant to Section 216 of this Agreement.
11. Approval - Project Cost Budget. Agency shall
approve or disapprove the proposed Project
Cost Budget.
Within 30 days after receipt by Agency
Concurrently with submission ofEvidence
of Financing.
Within 30 days after receipt of proposed
Project Cost Budget.
12. Opening of Escrow. Agency shall open escrow No later than 90 days prior to close of
for conveyance of the Site. escrow.
13. Conveyance of Site, Close of Escrow. Agency Not later than November 1, 2001, but only
and Developer shall execute and cause to be if all conditions precedent for conveyance
recorded the Grant Deed. of the Site have been satisfied or waived
by the benefitted party or parties.
14. Commencement of Construction. Developer
shall commence the work and improvements
required for development of the Site.
15. Completion of Construction. Developer shall
complete construction of all improvements.
NOTES:
Within 30 days after close of escrow.
Not later than twenty-four (24) months
after commencement of construction.
1. Deadlines set forth in this Schedule of Performance are subject to the enforced delay
provisions of Section 604 of the Agreement.
2. Extensions may be approved in writing by the Agency's Executive Director pursuant to
Section 308 of the Agreement.
3. Descriptions of items of performance and deadlines in this Schedule of Performance are
not intended to supercede more complete descriptions in the text of the Agreement; and in
the event of any conflict between the text of the Agreement and this Schedule, the text of
the Agreement shall govern.
hb\cim\dda\amended.sop3 ATTACHMENT NO. 3
Februm 6. 2001 AMENDED SCHEDULEbF PERFORMANCE
Summary of Terms
ATTACHMENT #2,
Summary of Terms
Ground Lease and Option to Purchase Fee
Landlord:
Ronald A. Mase, Trustee for the Ronald A. Mase Revocable Living Trust
dated February 10, 1995, and Ann L. Mase, Trustee for the Ann L. Mase
Revocable Living Trust dated February 3, 1993.
Tenant
CIM/Huntington, Inc.
Redevelopment Agency of the City of Huntington Beach.
Location:
APN 024-153-05
123 Main Street
Huntington Beach, CA
Term:
25 years with three options to extend
(25, 25, and 24 years; 99 years in total)
Rent:
$84,000 per annum, plus CPI increase every five years not to exceed 15% per
five-year period.
Option to
E 20 thanniversary date, and at the end of each renewal term.
Purchase:
e Purchase price to be the current rent divided by .10, but no less than
$840,000.
Miscellaneous
■ Tenant to be responsible for relocation costs, if any.
Provision:
Agency waives any rights it may have to condemn all or any portion of
landlord's interest in the property.
■ Landlord's fee interest can be converted to an undivided interest in the
total development site.
■ Landlord's interest can be further subdivided into three or more Air Rights
Parcels.
Summary of Terms
Ground Lease and Option to Purchase Fee
Landlord:
Ronald A. Mase, Trustee for the Ronald A. Mase Revocable Living Trust
dated ebruary 10, 1995, and Ann L. Mase, Trustee for the Ann L. Mase
Revocable Living Trust dated February 3, 1993.
Tenant
CIM/Huntington, Inc.
Redevelopment Agency of the City of Huntington Beach.
Location:
APN 024-153-05
123 Main Street
Huntington Beach,\CA
Term:
25 years with three options to extend
(25, 25, and 24 years; 99 years in total)
Rent:
$84,000 per annum, plus CPI increase every five years not to exceed 15% per
five-year period.
Option to
0 20 thanniversary date, and at the end of each renewal term.
Purchase:
divided by .10, but no less than
Purchase price to be the current rent 71
$1,680,000.
Miscellaneous
■ Tenant to be responsible for relocation costs, if any.
Provision:
Agency waives any rights it may have to condemn all or any portion of
landlord's interest in the property.
® Landlord's fee interest can be converted to an in the
\*dedt
total development site.
e Landlord's interest can be further subdivided iAir Rights
Parcels.
Enter'Option Agreement to
a
..'
OPTION TO ENTER GROUND LEASE ACQUIRE IMPROVEMENTS
AND ESCROW INSTRUCTIONS
(CIM — Mase)
Huntington Beach, California
Escrow No.
This Agreement is dated as of November 6, 2000 and is entered into between
CIM/Huntington, Inc., a California corporation ("CIM"), Ronald A. Mase, Trustee for the
Ronald A. Mase Revocable Living Trust dated February 10, 1995, and Ann L. Mase,
Trustee for the Ann L. Mase Revocable Living Trust Dated February 3, 1993 ("Owner"),
constitutes both an option to enter into a ground lease, acquire improvements and escrow
instructions directed to the Escrow Holder described below, and hereby establishes an
escrow ("Escrow") to accommodate the transaction contemplated hereby.
TERMS AND CONDITIONS
1. Basic Provisions.
1.1 CIM: CIM/Huntington, Inc.
Type of Entity: A California corporation
Address: 6922 Hollywood Blvd.
Suite 900
Hollywood, CA 90028
1.2 Owner: Ronald A. Mase, Trustee for the Ronald A. Mase
Revocable Living Trust dated February 10, 1995, and Ann L.
Mase, Trustee for the Ann L. Mase Revocable Living Trust Dated
February 3, 1993
Address: 17705 Samson Lane
Huntington Beach, CA 92647
1.3 Property: Legally described on Exhibit B.
Street Address: 123 Main Street
Huntington Beach, CA
County: Orange County
Assessor's Parcel No.: 024-153-05
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300-003 Option to Enter Ground Lease (Mase) v.5
1.4 Initial Deposit to be Deposited by CIM Upon Opening of Escrow:
$25,000
1.5 Length of Review Period: Until the Commencement Date as
defined in the Ground Lease.
1.6 Close of Escrow: Upon the Commencement Date as defined in the
Ground Lease.
1.7 Escrow Holder:
Name: Old Republic Escrow Company
Address: Agnes Look, Escrow Manager
Old Republic Escrow
450 N. Brand Boulevard
Glendale, CA 91203
1-800-228-4853 ext 5400
1.8 Brokers Involved:
Name: Keith Bohr Commission Due: $25,200
Address: 415 Townsquare Lane
Suite 219
Huntington Beach, CA 92648
Phone No.: 714 960-7286
1.9 Owner's Counsel
Name: Jerry Brummond
Address: 5160 Birch St. Ste 100
Newport Beach, CA 92660
Phone No. 949 851-6911
1.10 CIM's Counsel:
Name: Fragner Law Corporation
Address: 333 South Grand Avenue, Suite 3030
Los Angeles, CA 90071
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300-003 Option to Enter Ground Lease (Mase) v.5
Phone No.: (213) 620-1610
1.11 Title Company:
Name: Old Republic Title Company
Address: Linda Michele, CIM Account Coordinator
Old Republic Title Company
450 N. Brand Boulevard
Glendale, CA 91203
1-800-388-4853 ext 6527
1.12 List of Exhibits
Exhibit A Ground Lease Form
Exhibit B Legal Description
2. Grant of Option. Owner hereby grants to CIM and the Redevelopment
Agency of the City of Huntington Beach an option (the "Option") to enter into a ground
lease in the form of Exhibit A hereto (the "Ground Lease") for, and to acquire the
improvements currently located on, that certain real property (the "Property") described
on Exhibit B attached hereto, on the terms and conditions hereinafter set forth, together
with all easements and benefits appurtenant thereto. At any time after the execution of
this Option Agreement, until November 1, 2001, CIM shall have the right to exercise the
Option by giving Owner written notice and by submitting into Escrow 3 originals of the
Ground Lease and the Memorandum of Ground Lease attached as Exhibit B to the
Ground Lease, both duly executed by CIM and the Agency. If substantial progress has
been made in furthering the proposed development, then CIM shall have the right to
extend the date for exercise of the Option by up to six months, subject to Owner's
reasonable confirmation of such substantial progress, provided, however, if Owner's
CUP No. relating to the Property has not been extended for a one year
period despite the best efforts of Owner to cause such extension, then the maximum
extension shall not extend beyond the date 90 days prior to the expiration date of such
CUP.
3. Option Payments.
3.1 First Option Payment. Concurrently with the opening of Escrow,
CIM shall deposit the sum of $25,000. Immediately after such deposit, Escrow Holder
shall release to Owner an amount equal to the product of $4,166 and the number of
months from August 7, 2000 until the date of this Option Agreement (any partial calendar
month prorated to reflect the actual number of days elapsed in such month).
3.2 Second Option Parent. On the earlier to occur'of the date which
is 45 days after the date of this Option Agreement and the date the Redevelopment
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300-003 Option to Enter Ground Lease (blase) v.5
Agency of the City of Huntington Beach (the "Agency") executes three originals of the
Ground Lease and deposits such three originals into Escrow (the "Second Date Release"),
Escrow Holder shall release to Owner an amount equal to the product of $4,166 and the
number of months from the date of this Option Agreement until the Second Option Date
(any partial calendar partial month prorated to reflect the actual number of days elapsed
in such month).
3.3 Further Option Payments. Commencing on the date one month
after the Second Release Date, and continuing each month thereafter, Escrow Holder
shall release to Owner an amount equal to $4,166 until the initial deposit is reduced to $0
or CIM terminates this Option Agreement by giving written notice to Owner and Escrow
Holder. After the initial deposit has been reduced to $0 and provided CIM has not
terminated the Option Agreement, CIM shall pay Owner directly the sum of $4,166 per
month until the Close of Escrow. If CIM elects to terminate the Option Agreement prior
to the initial deposit having been paid in full to Owner, the remaining balance of the
initial deposit shall be released to Owner.
4. Escrow.
4.1 Escrow Holder. As escrow (the "Escrow") shall be opened to
consummate the transactions contemplated by this Agreement through Escrow Holder
within five (5) business days after full execution hereof, upon the deposit by Owner and
buyer of an executed copy of this Agreement therein ("Opening of Escrow"). Escrow
Holder shall promptly give written notice to CIM and Owner of the date of Opening of
Escrow. From the date hereof to the Close of Escrow or the termination of this
Agreement, Owner covenants that it will operate the Property and will cause it to be
maintained and insured in the ordinary course of business. Owner shall not execute any
leases or contracts covering all or any part of the Property without CIM's written
approval. .
4.2 Title Report and Underlying Documents. Upon the Opening of
Escrow, Owner will cause Escrow Holder to provide CIM and its counsel (with copies to
Owner and its counsel):
(a) A preliminary title report covering the Property dated not
earlier than the date of this Agreement, such report showing all matters of record and all
items which would be shown as exceptions on a CLTA policy of title insurance. Owner
shall provide CIM and the Escrow Holder with any boundary surveys of the Property in
Owner's possession. If CIM elects, it may cause an additional survey to be performed at
its expense and a new preliminary title report prepared showing all items which would be
shown as exceptions on an ALTA policy of title insurance. Within fifteen (15) days after
receipt of the preliminary title report and all underlying documents, CIM shall give
written notice of any items on such report or reports which CIM disapproves, and Owner
shall have the right (but not the obligation) to cause the removal of such disapproved
items prior to expiration of the Review Period; provided, however, that CIM shall not
disapprove that certain nondelinquent deed of trust securing a loan having a balance no
greater than $150,000. CIM shall have an additional fifteen (15) days to disapprove any
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300-003 Option to Enter Ground Lease (Mase) v.5
items shown on the survey or ALTA preliminary title report, provided such survey must
be completed within sixty (60) days after Opening of Escrow. If Owner elects not to
remove such items, and CIM does not terminate under Section 5 below, CIM shall be
deemed to have waived its disapproval of such items.
(b) A legible copy of each document (recorded or not)
underlying any exceptions shown in said preliminary title report.
4.3 Close of Escrow. Close of Escrow shall be the date upon which
the Memorandum of Lease and the Grand Deed conveying title to the improvements
located on the Property to CIM are recorded in the Official Records of the County in
which the Property is located. CIM shall designate by written notice the date for Close of
Escrow, but in no event later than the date described in Paragraph 1.6 above. If this
Escrow is not in a condition to close by such date, as the same may have been extended
by mutual agreement, the party which is not then in default may (in addition to any other
remedies to which such party may be entitled, including any remedy of liquidated
damages herein provided) in writing demand the return of its money or documents; but, if
both parties hereto are in default, no demand for return thereof shall be recognized until
five (5) days after Escrow Holder shall have mailed copies of such demand to the other
party. If no such demand is made, Escrow Holder shall close this Escrow as soon as
possible.
4.4 Required Conditions of Closing. Escrow Holder is hereby
authorized to record the documents and disburse the funds and documents called for,
provided each of the following conditions has then been fulfilled:
(a) The Title Company can issue a CLTA Leasehold Policy of
Title Insurance, (or, at CIM's option and additional expense, an ALTA Leasehold Policy
of Title Insurance) with liability equal to $850,000, showing the leasehold to the Property
vested in CIM, SUBJECT ONLY TO:
(i) Real property taxes not then delinquent; and
(ii) All conditions and exceptions and other matters
affecting title as shown in the preliminary title report to be delivered to CIM pursuant to
this Agreement, except for such exceptions and other matters which CIM shall have
disapproved (unless later waived) and which Owner prior to the end of the Review Period
agreed to remove in the manner hereinabove provided.
(b) CIM and Owner shall have deposited into Escrow the funds
and documents required in this Agreement.
Escrow Holder is authorized to record any instrument delivered through
this Escrow if necessary or property for issuance of the policy of title insurance referred
to in this Paragraph 4.4.
4.5 Prorations. Escrow Holder shall prorate all real property taxes
which are a lien upon the Property based on the most recent official information available
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300-003 Option to Enter Ground Lease (Mase) v.5
from the Office of the County Tax Assessor, rents and utilities, if any. All bonds and
assessments which are a lien upon the Property shall be paid by Owner upon Close of
Escrow.
4.6 Escrow Charges. At the Close of Escrow, CIM shall pay one-half
of the Escrow fee (plus the amount not payable by Owner pursuant to the next sentence)
and all of Escrow Holder's customary charges to buyers for document drafting, recording
and miscellaneous charges. At the Close of Escrow, Owner shall pay one-half of the
Escrow fee (up to a maximum of $1,000) and all of Escrow Holder's customary charges
to sellers for document drafting, recording, documentary transfer tax, and charges
incurred by Escrow Holder on Owner's behalf. Provided Escrow closes, Owner shall pay
the cost of a CLTA Leasehold title insurance policy and the preliminary title report. If
Escrow fails to close because of Owner's inability to deliver the Property in the condition
required hereunder, Owner shall pay the cost of the preliminary title report and escrow
cancellation charges, if any; if Escrow fails to close for any other reason, CIM shall pay
such costs.
4.7 General Escrow Provisions. CIM and Owner agree to incorporate
into this Option Agreement the General Escrow Provisions normally used by Escrow
Holder and which are not inconsistent with this Option Agreement.
5. Review Period. CIM shall have from the Opening of Escrow until the
expiration of the Option (the "Review Period") to examine and investigate the Property
with respect to all matters, including without limitation, soil composition and condition,
existence of Hazardous Materials (as defined in Paragraph 9(g)), easements, rights of
way, and title exceptions and matters. Owner shall make available to CIM all
information in its possession regarding the Property during the Review Period. At any
time prior to the expiration of the Review Period, CIM shall have the right in its sole and
subjective discretion to terminate this Option Agreement by giving written notice to
Escrow Holder. In the event of such termination, all escrow and title charges shall be
paid by CIM, and all documents delivered into Escrow shall be returned to the depositing
party.
6. Possession, License to Enter for Inspection and Access to Information. As
a precondition of Close of Escrow and a covenant of Owner, CIM shall be entitled to
possession of the Property on the Close of Escrow, free and clear of all tenancies and
occupants, except for a lease to Joe and Dana Cornman dated as of November 1, 1997
(the "Cornman Lease") which will expire no later than October 31, 2001. Between the
date of this Agreement and Close of Escrow, Owner hereby agrees that CIM and its
agents, representatives, contractors and subcontractors may enter upon the Property in
order to inspect the Property and to conduct reasonable soil tests, engineering studies and
surveys, so long as such activities do not damage the Property or impair the drainage of
the Property; provided, however, that CIM shall return the Property to its prior condition
and shall keep the Property free and clear of any mechanics' liens or materialmen's liens
arising out of any such activities, and, provided further, CIM shall indemnify and hold
harmless Owner against costs (including without limitation attorneys' fees), expenses and
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300-003 Option to Enter Ground Lease (Mase) v.5
liabilities, and damages and all claims by third parties arising out of the acts or omissions
of CIM or its agents, representatives, contractors or subcontractors in such activities.
7. Delivery of Documents to Escrow Holder. Owner hereby covenants and
agrees to deliver to Escrow Holder on or prior to the Close of Escrow for disbursement as
provided in this Agreement the following instruments and documents, the delivery of all
such documents being a condition to the Closing of Escrow:
(a) Ground Lease. Three originals of the Ground Lease duly executed
by Owner.
(b) Memorandum of Ground Lease. Three originals of the
Memorandum of Ground Lease in the form attached as Exhibit B to the Ground Lease,
duly executed and acknowledged by Owner.
(c) Grant Deed. Grant Deed in a form reasonably acceptable to the
title company and duly executed and acknowledged by Owner conveying all
improvements on the Property to .the Tenant as named in the Ground Lease.
8. Delivery of Documents and Funds to Escrow Holder by CIM. CIM
hereby covenants and agrees to deliver to Escrow Holder on or prior to the Close of
Escrow for disbursement as provided in this Agreement:
(a) Any documents which CIM is obligated to countersign hereunder,
including without limitation the Ground Lease and the Memorandum of Ground Lease.
(b) CIM's funds made payable to Escrow Holder in accordance to
Section 3 above.
9. Warranties of Owner. Owner makes the following representations and
warranties, each of which (i) shall survive the Close of Escrow, (ii) is material and is
being relied upon by CIM, and (iii) will be true as of the Close of Escrow.
(a) Except for the Cornman Lease, a true and correct copy of which
has been provided to CIM, Owner has not entered into any lease or contract which will
bind the Property after the Close of Escrow, and (except for the Cornman Lease) the
Property is free and clear of all leases and contracts which will bind the Property after the
Close of Escrow of any kind or character. CIM has agreed not to terminate the Cornman
Lease prior to September 10, 2001.
(b) To the best of Owner's knowledge, Owner is not now involved in
or aware of any pending or threatened proceeding, controversy or litigation which will
affect the Property or Owner's ability to perform its obligations hereunder.
(c) The execution and delivery of, and the performance under this
Agreement will not result in a violation, breach, or constitute a default under, any
agreement or instrument of any nature to which Owner is a party or by which it or any of
its properties may be bound.
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300-003 Option to Enter Ground Lease (Mase) v.5
(d) To the best of Owner's knowledge, there is no existing or proposed
or contemplated plan to widen, modify or realign any adjacent street or highway or any
existing, proposed or contemplated eminent domain proceeding which would adversely
affect the Property in any way whatsoever.
(e) There are no notes secured by deeds of trust encumbering the
Property, other than the deed of trust in favor of Brownstone Mortgage with an original
principal amount of $170,000.
(f) To the best of Owner's knowledge, there are no contracts
(executory or otherwise) affecting the Property other than as disclosed in writing to CIM.
(g) To the best of Owner's knowledge, no Hazardous Materials (as
hereinafter defined) are located on or under the Property or in the improvements on the
Property. For the purpose of this Agreement, "Hazardous Material" means and includes
any hazardous, toxic or dangerous waste, substance or material defined as such in (or for
purposes of) the comprehensive environmental response, compensation and liability act,
any so called "Super Fund" or "Super Lien" law, or any other federal, state or local
statute, law, ordinance, code, rule and regulation, order or decree regulating, relating to,
or imposing liability or standards of conduct concerning, any hazardous, toxic or
dangerous waste, substance or material, as now or at any time hereafter in effect, and any
other hazardous, toxic or dangerous waste, substance or material.
Owner covenants to take no action prior to the Close of Escrow which
would make any of the above representations and warranties untrue as of the Close of
Escrow. All warranties and representations are made for the benefit of CIM, and the
breach of any may be waived by CIM in its sole discretion.
Except as expressly provided in this Agreement or the Lease, the Property shall be
leased in an "as is" condition, with no warranty or liability, express or implied, on the
part of Owner 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 CIM, at CIM'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 the 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 the Lease, then it is the sole responsibility and obligation of
CIM 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 CIM shall not be responsible for any such actions if it terminates the Lease
pursuant to Section 1.10 of the Lease).
10. Brokers. CIM shall pay the Brokers the commission described in
Paragraph 1.8 above upon the conveyance of the leasehold to CIM, and CIM shall pay
any fee or commission (if any) due and payable to Pat Hurst arising out of this
transaction. CIM and Owner each represent and warrant to the other that no other broker
or real estate agent has been used in connection with this transaction. Both CIM and
300-003 Option to Enter Ground Lease (Mase) v.5
Owner indemnify and hold the other harmless from and against all claims for other
brokerage commissions or finder's fees payable in connection with the sale of the
Property resulting out of the acts or omissions of such indemnifying party.
11. Miscellaneous Provisions.
11.1 Notices. All notices, demands or other communications required
or permitted to be given in connection with this Agreement, or the transactions
contemplated hereby, shall be in writing, and shall be deemed delivered when
personally delivered to a party (by personal delivery to an officer or authorized
representative of a corporate party) or, if mailed, five (5) business days after deposit in
the United States mail, postage prepaid, certified or registered mail, return receipt
requested, addressed to the parties as follows:
If to CIM: 6922 Hollywood Boulevard, Suite 900
Hollywood, CA 90028
With a copy to: Fragner Law Corporation
333 South Grand Avenue, Suite 3030
Los Angeles, CA 90071
If to Owner: 11705 Samson Lane
Huntington Beach, CA 92647
With a copy to: Jerry Brummond
5160 Birch St. Ste 100
Newport Beach, CA 92660
Any party may change its address for notice by written notice given in
accordance with the foregoing provisions providing an alternative or additional street
address (but no party shall be required to give more than 3 notices to a given party).
Notwithstanding the prescribed method of delivery set forth above,
actual receipt of written notice by the natural person(s) designated above shall constitute
notice given in accordance with this Agreement on the date received.
11.2 Applicable Law and Venue. This Agreement is made in, and
shall be governed, enforced and construed under the laws of, the State of California.
Venue for any action brought regarding this Agreement or the transaction contemplated
herein shall be in Orange County, California.
11.3 Binding Upon Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective heirs,
estates, personal representatives, successors, and assigns. No assignment shall relieve
the assignor of any liability accruing under this Agreement either before or after the
assignment.
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300-003 Option to Enter Ground Lease (Mase) v.5
11.4 Entire Agreement; Inte rag tion. Together with the attached
exhibits, this Agreement constitutes the entire understanding and agreement of the
parties with respect to the subject matter hereof, and shall supersede and replace all
prior understandings and agreements, whether verbal or in writing. The parties confirm
and acknowledge that there are no other promises, covenants, understandings,
agreements, representations, or warranties with respect to the subject matter of this
Agreement except as expressly set forth herein, or in any instrument executed by the
parties of even date herewith.
11.5 Amendments Only in Writing. This Agreement may not be
modified, terminated, or amended in any respect, except pursuant to an instrument in
writing duly executed by all of the parties hereto.
11.6 Attorneys' Fees. In the event that any party hereto shall bring
any legal action or other proceeding with respect to the breach, interpretation, or
enforcement of this Agreement, or with respect to any dispute relating to any
transaction covered by this Agreement, or in connection with 'any bankruptcy
proceeding relating to a party, the losing party or parties (or the debtor party involved
in the bankruptcy) in such action or proceeding shall reimburse the prevailing party or
parties therein for all reasonable costs of litigation, including the reasonable
noncontingent fees of attorneys, paralegals and other professionals, in such amount as
may be determined by the court or other tribunal having jurisdiction, including matters
on appeal.
11.7 Interpretation. The language of this Agreement shall not be
construed against any party, since all parties have participated in the negotiation and
drafting of this Agreement. The term "including" shall mean "including but not
limited to." All captions and headings herein are for convenience and ease of reference
only, and shall not be used or referred to in any way in connection with the
interpretation or enforcement of this Agreement. As used herein, the masculine,
feminine or neuter gender, and the singular and plural numbers, shall each be deemed
to include the others, whenever and wherever the context so indicates.
11.8 Time of Essence. Time is of the essence of this Agreement.
11.9 Further Assurances. The parties agree to execute any further
documents, and take any further actions, as may be reasonable and appropriate in order
to carry out the purpose and intent of this Agreement.
11.10 No Third Party Benefit. This Agreement is made and entered
into for the sole benefit and protection of the parties hereto, and the parties do not
intend to create any rights or benefits under this Agreement for any person who is not a
party to this Agreement, except for any permitted assignees.
11.11 Counterparts. This Agreement may be executed in one or more
counterpart copies, and each of which so executed, irrespective of the date of execution
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300-003 Option to Enter Ground Lease (Mase) v.5
and delivery, shall be deemed to be an original, and all such counterparts together shall
constitute one and the same instrument.
11.12 Severability_. In the event that any provision of this Agreement
shall be adjudicated to be void, illegal, invalid, or unenforceable, the remaining terms
and provisions of this Agreement shall not be affected thereby, and each of such
remaining terms and provisions of this Agreement shall be valid and enforceable to the
fullest extent permitted by law.
11.13 Waiver. No delay or omission by any party hereto in exercising
any right or power hereunder shall impair any such right or power or be construed to
be a waiver thereof, unless this Agreement specifies a time limit for the exercise of
such right or power or unless such waiver is set forth in a written instrument duly
executed by the party granting such waiver. A waiver by any party hereto of any of the
covenants, conditions, or agreements hereof to be performed by any other party shall
not be construed as a waiver of any succeeding breach of the same or any other
covenants, agreements, restrictions or conditions hereof.
11.14 No Offer. Submission of an unsigned version of this instrument
by a party does not constitute an offer. No binding arrangement will occur until all
parties have executed and delivered this Agreement.
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300-003 Option to Enter Ground Lease (Mase) v.5
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
CIM/ Huntington, Inc., A California Corporation
By:
Avi Shemesoh, Tre; asur
B
Shaul Kuba, Secretary
�-W/ tv-�-
Rdnald A. Mase,`Trustee for the Ronald
A. Mase Revocable Living Trust Dated
February 10, 1995
Anne Mase, Trustee for the Ann
L. Mase Revocable Living Trust Dated
February 3, 1993
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300-003 Option to Enter Ground Lease (Mase) v.5
Ground Lease and Option to
Purchase Fee
ATTACHMENT #4
GROUND LEASE
AND OPTION TO PURCHASE FEE
by and between
Ronald A. Mase, 'Trustee for the Ronald A. Mase Revocable Living 'Trust Dated February
10, 1995, and Ann L. Mase, Trustee for the Ann L. Mase Revocable Laving 'Trust Dated
February 3, 1993
(collectively, "Landlord")
and
CIM/Iluntington, Inc.
and Redevelopment Agency of the City of Huntington Beach
(collectively, "Tenant")
300-003 EB Mace Ground Lease V.8
GROUND LEASE SUMMARY
A. Landlord: Ronald A. Mase, Trustee for the Ronald A. Mase Revocable Living
Trust Dated February 10, 1995, and Ann L. Mase, Trustee for the Ann L. Mase Revocable
Living Trust Dated February 3, 1993, 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: 17705 Samson Lane, Huntington Beach, CA
92647.
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 tent:
(a) $84,000 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-
-1-
300-003 HB Mase Ground Lease V.8
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.
(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).
(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 the monthly Basic Rent then in effect and the fraction equal to the Index
for the Comparison Month for the applicable Rent Adjustment Date divided by the Index for the
prior Comparison Month, provided that any increase in Basic Rent for any applicable Rent
Adjustment Date shall not be less than 10% or greater than 15% 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. 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.
J. 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.
300-003 HB Mase Ground Lease V.8 _2_
GROUND LEASE AND OPTION TO PURCHASE FEE
This GROUND LEASE (the "Lease") is dated as of , between Ronald A.
Mase, Trustee for the Ronald A. Mase Revocable Living Trust Dated February 10, 1995, and
Ann L. Mase, Trustee for the Ann L. Mase Revocable Living Trust Dated February 3, 1993
(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:
1. FUNDAMENTAL INFORMATION
1.1 Landlord: Ronald A. Mase, Trustee for the Ronald A. Mase Revocable
Living Trust Dated February 10, 1995, and Ann L. Mase, Trustee for the Ann L. Mase
Revocable Living Trust Dated February 3, 1993, 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 "Property") 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 HB Mase Ground Lease V.8 _3_
(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: 17705 Samson Lane, Huntington Beach, CA
92647.
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: $84,000 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 Propertt. 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. 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.
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
300-003 HB Mase Ground Lease V.8 _4_
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 AND PAYOFF OF EXISTING LOAN
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.
4.3 ExistingL. 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, but no earlier than November 1, 2001 unless otherwise
permitted by the applicable lease. 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 "ASJS". 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).
4.5 Payoff of Existing Loan. Upon 120 days prior written notice from Tenant,
Landlord shall payoff all amounts due and owing under that certain deed of trust securing a loan
300-003 HB Mase Ground Lease V.8 _5_
having Progressive Savings Bank as beneficiary and shall cause such deed of trust to be removed
from title. If Landlord fails to timely payoff such deed of trust and remove it from title, Tenant
shall have the right to payoff such trust deed (and Landlord shall cooperate in such effort), and in
such event Tenant shall be entitled to a rent credit against rent owing hereunder in a monthly
amount equal to the amount of the payoff and all out of pocket costs involved in such payoff
amortized over 60 months together with interest at an annual rate of 10%, compounded annually.
Notwithstanding the foregoing, Tenant may pay-off such deed of trust prior to the expiration of
the 120 day period, and Landlord may repay Tenant the amount of such pay-off within such 120
day period without any interest expense. If Landlord fails to repay the amount of such pay-off
within such 120 day period, then Tenant shall receive the rent credit described above.
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.
(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.
300-003 HB Mase Ground Lease V.8 _6_
(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 Eighty -Four Thousand Dollars ($84,000) 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.
(iv) "Rent Adjustment Date" means (i) the date that is the first
(1 st) day of the first full calendar month following the fifth (5th) anniversary of the
Commencement Date (unless the Commencement Date falls on the first (1 st) 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 the Basic Rent then in effect and the fraction equal to the Index for the
Comparison Month for the applicable Rent Adjustment Date divided by the Index for the
preceding Comparison Month, provided that any increase in Basic Rent for any applicable Rent
300-003 HB Mase Ground Lease V.8 _7_
Adjustment Date shall not be less than 10% and shall not exceed 15% over the Basic Rent in
effect prior to such adjustment.
6.3 Tenant's ResponsibilitX. 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. At
Landlord's request, such sums shall be paid by Tenant via electronic deposit to Landlord's bank
account. 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 by the tenth day of the calendar month for which payment
is due, then Tenant shall pay an Additional Rent equal to 5% 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).
9. TENANT WORK
Tenant shall be responsible for all improvement work on the Property in
accordance with all applicable provisions of this Lease.
300-003 HB Mase Ground Lease V.8 _g_
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
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.
300-003 HB Mase Ground Lease V.8 _9_
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. ions. 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
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
300-003 HB Mase Ground Lease V.8 -10-
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.
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
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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
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
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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
terns, 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")
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
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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. 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,
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.
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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
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
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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
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
300-003 HB Mase Ground Lease V.8 -16
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 shove 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
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.
300-003 HB Mase Ground Lease V.8 -17-
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,
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
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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 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
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
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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;
(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;
300-003 HB Mase Ground Lease V.8 -20-
(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 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.
26.1 Lease Termination Right. If the Property or any portion thereof is taken
under the power of eminent domain, this Lease shall terminate as to the part so taken as of the
date that the condemning authority takes possession of the Property, provided the Basic Rent
shall be proportionately reduced. If only a portion of the Property is taken or sold under such
threat, and Tenant demonstrates that the economic viability of the Project is materially affected,
Tenant may terminate this Lease as of the date that the condemning authority takes possession by
delivery of written notice of such election within twenty (20) days after such party has been
notified of the taking or, in the absence thereof, within twenty (20) days after the condemning
authority shall have taken possession.
26.2 Effect of No Termination. If this Lease is not terminated by Landlord or
Tenant, it shall remain in full force and effect as to the portion of the Property remaining. In
such event, Tenant shall, at Tenant's own expense, restore the Property to a complete unit of like
quality and character, except as to size, as existed prior to the date on which the condemning
authority took possession.
26.3 Award Allocation.
(a) In the event the Lease is not terminated, all awards for the taking of any part
of the Property or proceeds from the sale made under the threat of the exercise of the power of
eminent domain shall be paid directly to Tenant, provided, however, that Landlord shall be
entitled to any award which is specifically made for the value of the fee as encumbered by this
Lease (including any residual value after the Term).
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(b) In the event the Lease is terminated, then:
(i) Tenant shall be entitled to all portions of the award specifically
made for the fair market value of Tenant's leasehold (which shall include the fair market value of
any improvements on the Property and the fair market value of any space leases or any other
revenue sources for any improvements on the Property ("Improvement Value"), but which shall
exclude any Excess Value as defined below) and 50% of the Excess Value.
(ii) Landlord shall be entitled to (aa) any award specifically made
for the fair market value of Landlord's interest in the fee as encumbered by this Lease (including
any residual value after the Term, but excluding any Excess Value), and (bb) 50% of the Excess
Value.
"Excess Value" shall mean the excess of (x) the sum of the fair
market value of the fee (unencumbered by the Lease and including the Improvement Value),
over (y) the sum of the Improvement Value and the fair market value of the fee as encumbered
by this Lease (including any residual value after the Term).
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.
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.
300-003 HB Mase Ground Lease V.8 -22-
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.
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
300-003 HB Mase Ground Lease V.8 -23-
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
If execution and recordation have not otherwise previously occurred, then
promptly after the Commencement Date has occurred, 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
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
300-003 HB Mase Ground Lease V.8 -24-
permitted by law, as Additional Rent (collectively, "Landlord's Cure Pam"), 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,
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
300-003 HB Mase Ground Lease V.8 -25-
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,
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
300-003 HB Mase Ground Lease V.8 -26-
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.
(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
300-003 HB Mase Ground Lease V.8 -27-
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
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.
300-003 1413 Mase Ground Lease V.8 -28-
(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 J 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).
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 $840,000, as adjusted by the same percentage as the rent adjustment made pursuant
to Section 6.2.
300-003 HB Mase Ground Lease V.8 -29-
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 Purchase Price. In the event such notice is given, Tenant shall purchase
the Fee for a purchase price calculated as follows:
The purpose price shall be equal to the Adjusted Basic Rent (as hereinafter
defined), divided by .10. The "Adjusted Basic Rent" shall be equal to the Basic Rent at the Rent
Commencement Date increased by 15% at each Rent Adjustment Date (as defined in Section
6.2 iv)), including the Rent Adjustment Date that would have occurred commencing in the year
immediately following the Tenant Purchase Date but for the acquisition of the Fee. The 15%
increases shall be determined on a compounded basis so that the increase at each Rent
Adjustment Date represents an increase of 15% over the previously adjusted amount.
For a Tenant Purchase Date after the expiration of the first renewal option, the
purchase price shall not be less than the fair market of Landlord's interest in the fee as
encumbered by this Lease, including any residual value.
33.2 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
300-003 HB Mase Ground Lease V.8 -30_
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 Disputes. 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 Notice. 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
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 Disputes. 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.
300-003 HB Mase Ground Lease V.8 -31-
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
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
300-003 1113 Mase Ground Lease V.8 -32-
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. 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.
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.
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.
300-003 HB Mase Ground Lease V.8 -33-
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,
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
300-003 1113 Mase Ground Lease V.8 -34-
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
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.
300-003 HB Mase Ground Lease V.8 -35-
300-003 HB Mase Ground Lease V.8 -36-
TENANT: 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)
LIM
ATTEST:
Agency Clerk
REVIEWED AND APPROVED AS TO FORM:
Agency General Counsel
APPROVED AS TO FORM:
KANE, BALLMER & BERKMAN
L'In
LANDLORD:
Chairman
Ronald A. Mase, Trustee for the Ronald A. Mase
Revocable Living Trust Dated February 10, 1995
Ann L. Mase, Trustee for the Ann L. Mase
Revocable Living Trust Dated February 3, 1993
300-003 HB Mase Ground Lease V.8 _37_
EXHIBIT "A"
Legal Description
DESCRIPTION
THE LAND REFERRED TO HEREIN IS SITUATED IN THE STATE OF CALIFORNIA, COUNTY OF ORANGE, CITY OF
HUNTINGTON BEACH, AND IS DESCRIBED AS FOLLOWS:
LOT 23 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.
Exhibit `B"
MEMORANDUM OF LEASE
THIS DOCUMENT HAS
BEEN PREPARED BY
AND WHEN RECORDED RETURN TO:
Connie Brockway, City Clerk
Office of the City Clerk
City of Huntington Beach
2000 Main Street
Huntington Beach, CA 92648
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
Ronald A. Mase, Trustee for the Ronald A. Mase Revocable Living Trust Dated February 10,
1995, and Ann L. Mase, Trustee for the Ann L. Mase Revocable Living Trust Dated February 3,
1993, collectively with their successors and assigns ("Landlord"), whose address is
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
300-003 HB Mase Ground Lease V.8
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.
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: CIM/Huntington, Inc., a California corporation
By: --- -
Richard Ressler, President
I=
Avaham Shemesh, Treasurer
Shaul Kuba, Secretary
Redevelopment Agency of the City of Huntington
Beach
Chairman
LANDLORD:
Ronald A. Mase, Trustee for the Ronald A. Mase
Revocable Living Trust Dated February 10, 1995
Ann L. Mase, Trustee for the Ann L. Mase
Revocable Living Trust Dated February 3, 1993
EXHIBIT "A"
Legal Description
DESCRIPTION
THE LAND REFERRED TO HEREIN IS SITUATED IN THE STATE OF CALIFORNIA, COUNTY OF ORANGE, CITY OF
HUNTINGTON BEACH, AND IS DESCRIBED AS FOLLOWS:
LOT 23 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.
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 HB Mase Ground Lease V.8
(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 Us. 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 HB Mase Ground Lease V.8 - 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 HB Mase Ground Lease V.8 - 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.
Landlord's Initials
Tenant's Initials
300-003 HB Mase Ground Lease V.8 - 1V -
TABLE OF CONTENTS
Page
GROUND LEASE SUMMARY.................................................................................................... 1
ARTICLE 1.
FUNDAMENTAL INFORMATION...............................................................
3
ARTICLE 2.
PURPOSE OF LEASE.....................................................................................
4
ARTICLE 3.
AGREEMENT TO LEASE..............................................................................
4
ARTICLE 4.
ACCEPTANCE OF PROPERTY.....................................................................
5
ARTICLE5.
TERM...............................................................................................................
6
ARTICLE 6.
BASIC RENT...................................................................................................
6
ARTICLE 7.
ADDITIONAL RENT......................................................................................
7
ARTICLE 8.
RENT GENERALLY.......................................................................................
8
ARTICLE9.
TENANT WORK.............................................................................................
8
ARTICLE10.
USE...................................................................................................................
8
ARTICLE 11.
COMPLIANCE WITH LAW...........................................................................
8
ARTICLE 12.
ALTERATIONS AND ADDITIONS...............................................................
9
ARTICLE13.
REPAIRS.......................................................................................................
10
ARTICLE14.
TAXES............................................................................................................
10
ARTICLE 15.
ASSIGNMENT AND SUBLETTING...........................................................
11
ARTICLE 16.
HOLD HARMLESS.......................................................................................
13
ARTICLE 17.
OWNERSHIP OF PROPERTY DURING TERM AND UPON
EXPIRATION OR TERMINATION OF LEASE ..........................................
14
ARTICLE18.
LIENS.............................................................................................................
14
ARTICLE 19.
SUBROGATION............................................................................................
15
ARTICLE 20.
TENANT'S INSURANCE.............................................................................
15
ARTICLE 21.
UTILITIES......................................................................................................
16
ARTICLE 22.
HOLDING OVER..........................................................................................
17
ARTICLE 23.
ENTRY BY LANDLORD..............................................................................
17
ARTICLE 24.
DAMAGE, RECONSTRUCTION.................................................................
17
ARTICLE 25.
DEFAULT......................................................................................................
18
ARTICLE 26.
EMINENT DOMAIN.....................................................................................
21
ARTICLE 27.
ESTOPPEL OFFSET STATEMENT.............................................................
21
ARTICLE 28.
HAZARDOUS MATERIALS........................................................................
22
ARTICLE 29.
TENANT'S SIGNAGE..................................................................................
23
ARTICLE 30.
MEMORANDUM OF LEASE.......................................................................
23
ARTICLE 31.
MORTGAGEE PROTECTION PROVISIONS .............................................
23
ARTICLE 32.
LANDLORD'S RIGHT TO CAUSE SALE OF LAND ................................
29
ARTICLE 33.
OPTION TO PURCHASE FEE SIMPLE TITLE TO PROPERTY ..............
29
ARTICLE 34.
RIGHT OF FIRST OFFER.............................................................................
30
ARTICLE 35.
GENERAL PROVISIONS.............................................................................
31
EXHIBIT A - LEGAL DESCRIPTION
EXHIBIT B - MEMORANDUM OF LEASE
EXHIBIT C - ARBITRATION OF DISPUTES
300-003 HB Mase Ground Lease V.8 _ V _
H CITY OF HUNTINGTON BEACH
�- InterOffice Communication
Economic Development Department
TO: Honorable Mayor and City Council Members
VIA: Ray Silver, City Administrator
FROM: David C. Biggs, Director of Economic Development
DATE: March 5, 2001
SUBJECT: AGENDA ITEM F-2 — CIM SECOND IMPLEMENTATION
AGREEMENT
I am providing the following information in regard to Item F-2:
A copy of the power point presentation;
A corrected version of the Summary of Terms (page F-2.71)
Purchase price not less than $840,000; not $1,680,000 indicated in the
Summary of Terms included in the Agenda packet; N[A& 9 Q- ' R�A.
3. Copies of the sections from the Disposition and Development Agreement with
CIM which are modified by the proposed Second Implementation Agreement
The following sections are provided for your reference --
Section 107, paragraphs 2 & 3,
Section 205(d),
Section 214.6,
Sections 505.2(a)6 and 505.2(b).
Please feel free to contact me if I can provide any additional information.
Attachment
xc: Bill Workman, Assistant City Administrator
Gus Duran, Housing & Redevelopment Manager
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[§ 1071 Developer
Developer is a California limited liability company. The principals of CIM Group, LLC
are Shaul Kuba and Avraham Shemesh.
P 2 Within ninety (90) days of the date of approval of this Agreement by Agency,
Developer shall assign all of its rights and delegate all of its duties under this Agreement
to a new entity owned and controlled by (1) CIM Group, LLC, a California limited liability
company, and (2) one of the following: (a) Federal Realty Investment Trust; or (b) Street
Retail West G. P., Inc., a wholly owned subsidiary of Federal Realty Investment Trust; or
(c) subject to the approval of the Agency's Executive Director, another wholly owned
subsidiary of Federal Realty Investment Trust through which Federal Realty Investment
Trust typically invests in retail projects such as the subject development; or (d) another
equity partner first approved in writing by the Agency pursuant to the immediately following
paragraph. Such assignment shall be pursuant to an assignment and assumption
agreement approved as to form and content by the Agency's Executive Director and legal
counsel under which the new entity shall expressly assume and be bound by the duty to
perform all of Developer's obligations hereunder.
P3 Within thirty (30) days of the date of approval of this Agreement by Agency,
Developer may request that the Agency approve a financial coventurer other than Federal
Realty Investment Trust. Such approval by Agency of a substitute financial coventurer
shall be at the discretion of the Agency and shall only be granted if the Agency determines,
based upon evidence and documentation satisfactory to Agency, that such substitute
financial coventurer possesses at least the same financial strength, ability to attract tenants
and ability to assure the success of the subject development as Federal Realty Investment
Trust.
��_• line NOR
(d) The Agency shall diligently proceed with all condemnation actions to obtain final
judgments in such matters on or before the date set forth in the Schedule of Performance,
and take any other action necessary to perfect the transfer of title to the Developer.
r
6. At the reasonable request of the Developer and otherwise as
warranted by the circumstances in the opinion of the Agency, Agency shall apply for
appropriate pre -condemnation orders for the purpose of permitting Developer to make all
appropriate tests and inspections where owners' consent for entry cannot be obtained.
� 1 11 1. •1 • ��'I /
(a) Agency may terminate this Agreement at its option with respect to any
then-unconveyed portion of the Site if (1) any of the following events occurs, (2) Agency
delivers a Default Notice pursuant to Section 502 above; and (3) any pertinent cure period
applicable pursuant to Section 503 with respect thereto has expired:
6. Developer fails to assign this Agreement to the new CIM/Federal
Realty Investment Trust joint venture, within the time and as required
by Section 107 hereinabove; or
(b) Prior to the Agency drawing funds from the Original Letter of Credit,
the Agency may terminate this Agreement at its option in the event that in the sole
discretion of the Agency the Agency determines not to adopt a resolution of necessity
pursuant to California Code of Civil Procedure Sections 1245.210 et = to authorize the
acquisition of all or any part of Parcel B using the Agency's power of eminent domain.
Nothing herein changes any of the preconditions set forth in this Agreement on the
Agency's right to draw on the Original Letter of Credit or any additional letter of credit
delivered to Agency under this Agreement.