HomeMy WebLinkAboutPier Plaza Group, LLC - 2008-09-02 Recorded in Official Records,Orange County
r: :_, Tom Daly,Clerk-Recorder
111111111111111111111111IIIIl k1i I III 11111111111111[111111 12.00
RECORDING REQUESTED BY
Commonwealth Land Title Co. 2008000430010 01:06pm 09/11/08
AND WHEN RECORDED MAIL TO:
105 59 S15 ROt 1
Pier Plaza Group LLC
225 Plaza Street 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Suite 300
Solana Beach,CA 92075
APN: 024-281-14
Escrow No: 05725283-988-KEI
Title No: 5725283
Space above this line for Recorder's use
SUBSTITUTION Of TRUSTEE AND FULL RECOINVEYANCE
WHEREAS, Pier P was the original Trustor, and First
the original Trustee, and First Hawaiian Bank, the Beneficiary, under
that certain Deed of Trust dated February 4, 1999, and recorded February 4. 1999, as Instrument No.
199900$2736, of Official Records of the County of Orange State of California, and
WHEREAS, the undersigned Beneficiary(ies) desires to substitute a new Trustee under said Deed of Trust, now
therefore,the undersigned hereby substitutes First Hawaiian Bank,as Trustee under said Deed of Trust and does
hereby reconvey, without warranty, to the person or persons legally entitled thereto, the Estate now held by him
thereunder.
Dated: August 14, 2008
BENEFICIARY&SUIBSTITUTED TRUSTEE
First Hawaiian Bank
By; kCheryl Shimabukuro
Title: Vice President
STATE OF Hawaii
COUNTY OF_
Honolulu ss:
On AU3) 1 before me, J. Dods
a Notary Public, personally
appeared Cheryl Shimabukuro, Vice President a and title of the officer)
who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to
the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized
capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of
which the person(s)acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is
true and correct.
WITNESS my hand and official seal. )�\�
Signature I`3�.
J_ I` x
Notary Public of the State of Hawaii
My Commission expires: 2/3/2010 ITh 0OFw A
��Oti
Recorded in Official Records, Orange County
Tom Daly, Clerk-Recorder
llllllllllllllllllllllllllllllllllllllllllllllllllllllllllldl 9.00
2008000430011 01 :06Pm 09/11/08
105 59 U08 2
0.00 0.00 0.00 0.00 3.00 0.00 0.00 0.00
UCC FINANCING STATEMENT AMENDMENT
FOLLOW INSTRUCTIONS front and back CAREFULLY
NAME$PHONE OF CONTACT AT FILER[optionail
T S Aloha,inc. 858-720-2386
S.SENDDAACKNObyLEDGEMENT TO: (Name and Address)
FT S Aloha Inc.(formerly T S Management Corp.)
Attn:Ray Burnett
225 Plaza Street,Suite 300
Solana Beach,CA 92075
LTHE ABOVE SPACE IS FOR FILING OFFICE USE ONLY
la.INITIAL FINANCING STATEMENT FIE R pp tb- This FINANCING STATEMENT AMENDMENT is
199803 V31878 ] YO{n' � �p ll h o_ 1+1JY �/ ❑ to be filed[for record](or recorded)in the REAL
CJ ) X ESTATE RECORDS.
2.®TERMINATION:Effectiveness of the Financing Statement identified above is terrninaled with respect to security interest(s)of the Secured Party authorizing this Termination Statement.
3.®CONTINUATION:Effectiveness of the Financing Statement identified above with respect to security interest(s)of the Secured Party authorizing this Continuation Statement is
continued for the additional period provided by applicable law.
4.❑ASSIGNMENT(full or partial);Give name of assignee in item 7a or 7b and address of assignee in item 7c;and also give name of assignor in item 9.
5.AMENDMENT(PARTY INFORMATION):This Amendment affects❑Debtorg❑Secured Party of record.Check only 9n2 of these two boxes.
Also check 2 g of the"lowing three boma itrid provide appropriate information in Items 6 and/or 7.
CHANGE name and/w address:Give current—rd name In Kenn 6.or 6b;also give new DELETE name:Give recent name ❑ADD name:Complete item 7a or 7b.and also
name(if name change)in item 7a or 7b and/or new address(R address change)In item 7c, to be deleted in item 6a w 6b. hem Tc,also coaplate hems 7d-71;(6 applicable)-
6-CURRENT RECORD INFORMATION:
6.ORGANIZATIONS NAME
OR Pier Plaza Group, LLC(a California Limited Liability Company)
6b.INDIVIDUALS LAST NAME FIRST NAME IM'DDLENAME SUFFIX
7.CHANGED NEW OR ADDED INFORMATION:
70.ORGANI2ATION'S NAME
OR
7b,INDIVIOUAL'S LAST NAME FIRST NAME MIDDLE NAME SUFFIX
7c MAtLING ADDRESS CITY STATE POSTAL CODE COUNTRY
ADO'L INFO RE :7e.TYPE OF ORGANIZATION i7f.JURISDICTION OF ORGANIZATION 7g.ORGANIZATIONAL IDa,if any
ORGANIZATION ;
DEBTOR NONE
S.AMENDMENT(COLLATERAL CHANGE):check only ore box.
Describe collateral[]deleted or Qaddad,or give entire❑restated collateral description,or describe collateral❑assigned.
9.NAME OF SECURED PARTY OF RECORD AUTHORIZING THIS AMENDMENT(name of assignor,if this is an Assignment).If this is an Amendment authorized by a Debtor which
adds collateral or adds the authorizing Debtor,or if this is a Termination authorized by a Debtor,check here❑and enter name of DEBTOR authorizing this Amendment-
9.-ORGANIZATION'S NAME
OR TS Aloha,Inc.(formerly T S Management Corp.)
9b.INDIVIDUAL'S LAST NAME [FIRST NAME MIUOLE NAME SUFFIX
10.OPTIONAL FILER REFERENCE DATA -
FILING OFFICE COPY-NATIONAL UCC FINANCING STATEMENT AMENDMENT(FORM UCC3)-CALIFORNIA(REV.01101108)
i
UCC FINANCING STATEMENTAMENDMENT ADDENDUM
FOLLOW INSTRUCTIONS front and back CAREFUlLY
11.INITIAL FINANCING STATEMENT FILE 0(same as item to on Amendment form)
19980331878
12.NAME OF PARTY AUTHORIZING THIS AMENDMENT(same as item 9 on Amendment form)
12a,0 GAN12A S NAME
TS Aloha,Inc.(formerly T S Management Corp.)
OR 12b. NDIVIDUAL'S LAST NAME FIRST NAME MI DOLE NAME,SUFFIX
13.Use this space for additional Information
THE ABOVE SPACE IS FOR FILING OFFICE USE ONLY
The Transition Continuation Statement recorded on December 5,2002 as Instrument No.2002001100130 is also being terminated.
FILING OFFICE COPY—NATIONAL UCC FINANCING STATEMENT AMENDMENT ADDENDUM(FORM UCC3Ad)(REV.07&9/98)
Recorded in Official Records, Orange County
,�®� C����N Tom Daly,Clerk-Recorder
Laadr"f� 1111111111111111 1111111111111111111111111111111 60.00
WHEN RECORDED MAIL TO: 2008000430012 01:06pm 09111/08
105 59 DI 19
BANK OF THE WEST 0.00 0.00 0.00 0.00 54.00 0.00 0.00 0.00
San Diego CBO#181
1280 4`h Avenue
San Diego,California 92101
SEND TAX NOTICES TO:
BANK OF THE WEST
San Diego CBO#181
1280 4'h Avenue
San Diego,California 92101
SUS2 S 3 FOR RECORDER'S USE ONLY
DEED OF TRUST
THIS DEED OF TRUST is dated August 12,2008 among PIER PLAZA GROUP LLC,whose address is 226 Plaza
St., Suite 300, Solana Beach, California 92075("Trustor"); BANK OF THE WEST,whose address is San-Diego
CBO #181, 1280 4ih Avenue, San Diego, California 92101 (referred to below sometimes as "Lender" and
sometimes as "Beneficiary"); and FIRST SANTA CLARA CORPORATION, a California corporation, whose
address is 1450 Treat Boulevard,Walnut Creek,California 94696(referred to below as"Trustee").
CONVEYANCE AND GRANT. For valuable consideration,Trustor irrevocably grants, transfers and assigns to
Trustee in trust,with power of sale,for the benefit of Lender as Beneficiary,all of Trustor's right,title. and interest
in, to and under the Ground Lease (as described in Exhibit "A" attached hereto and incorporated herein by this
reference); and the leasehold estate created thereby, which Ground Lease and leasehold estate covers the fallowing
described real property,together with all existing or subsequently erected or affixed buildings,improvements and fixtures,
all easements, rights of way, and appurtenances; all water, water rights and ditch rights (including stock in utilities with
ditch or irrigation rights);and all other rights, royalties, and profits relating to the real property,including without limitation
any rights Trustor later acquires in the fee simple title to such real property, and all minerals, oil, gas, geothermal and
similar matters(the"Real Property")located in Orange County,State of California:
See Exhibit"A",which is attached to this Deed of Trust and made a part of this Deed of Trust as if fully set forth
herein.
The Real Property or its address is commonly known as 316—317 Pacific Coast Highway, Huntington Beach,
California 92648.
Trustor presently assigns to Lender (also known as Beneficiary in this Deed of Trust) all of Trustor's right, title, and
interest in and to all present and future leases(including without limitation subleases)of the Property and all Rents from
the Property. This is an absolute assignment of Rents made in connection with an obligation secured by real property
pursuant to California Civil Code Section 2938. In addition, Trustor grants to Lender a Uniform Commercial Code
security interest in the Personal Property and Rents.
THIS DEED OF TRUST, INCLUDING THE ASSIGNMENT OF RENTS AND THE SECURITY INTEREST IN THE
RENTS AND PERSONAL PROPERTY, IS GIVEN TO SECURE (A) PAYMENT OF THE INDEBTEDNESS AND
(B)PERFORMANCE OF ANY AND ALL OBLIGATIONS OF THE TRUSTOR UNDER THE NOTE, THE RELATED
DOCUMENTS,AND THIS DEED OF TRUST. THIS DEED OF TRUST, INCLUDING THE ASSIGNMENT OF RENTS
AND THE SECURITY INTEREST IN THE RENTS AND PERSONAL PROPERTY,IS ALSO GIVEN TO SECURE ANY
AND ALL OF TRUSTOR'S OBLIGATIONS UNDER THAT CERTAIN BUSINESS LOAN AGREEMENT BETWEEN
TRUSTOR AND LENDER OF EVEN DATE HEREWITH. ANY EVENT OF DEFAULT UNDER THE BUSINESS LOAN
AGREEMENT,OR ANY OF THE RELATED DOCUMENTS REFERRED TO THEREIN,SHALL ALSO BE AN EVENT
OF DEFAULT UNDER THIS DEED OF TRUST. THIS DEED OF TRUST IS GIVEN AND ACCEPTED ON THE
FOLLOWING TERMS:
PAYMENT AND PERFORMANCE. Except as otherwise provided in this Deed of Trust, Trustor shall pay to Lender all
amounts secured by this Deed of Trust as they become due, and shall strictly and in a timely manner perform all of
Trustor's obligations under the Note,this Deed of Trust,and the Related Documents.
POSSESSION AND MAINTENANCE OF THE PROPERTY. Trustor agrees that Trustor's possession and use of the
Property shall be governed by the following provisions:
Possession and Use. Until the occurrence of an Event of Default.Trustor may (1) remain in possession and control of
the Property: (2) use,operate or manage the Property,and (3) collect the Rents from the Property
Duty to Maintain. Trustor shall maintain the Property in tenantable condition and promptly perform all repairs,
replacements,and maintenance necessary to preserve its value.
Compliance With Environmental Laws. Trustor represents and warrants to Lender that: (1) During the period of
Trustor's leasehold interest in the Real Property, there has been no use, generation, manufacture, storage,treatment.
disposal, release or threatened release of any Hazardous Substance by any person on, under, about or from the
Property; (2) Trustor has no knowledge of, or reason to believe that there has been, except as previously disclosed to
and acknowledged by Lender in writing, (a)any breach or violation of any Environmental Laws, (b)any use,generation.
manufacture, storage, treatment,disposal, release or threatened release of any Hazardous Substance on, under,about
or from the Property by any prior owners or occupants of the Property,or (c)any actual or threatened litigation or claims
of any kind by any person relating to such matters. and (3)Except as previously disclosed to and acknowledged by
Lender in writing, (a)neither Trustor nor any tenant(including any subtenant).contractor, agent or other authorized user
of the Property shall use,generate,manufacture.store,treat,dispose of or release any Hazardous Substance on,under,
about or from the Property; and (b)any such activity shall be conducted in compliance with all applicable federal. state,
and local laws, regulations and ordinances, including without limitation all Environmental Laws. Trustor authorizes
Lender and its agents to enter upon the Property to make such inspections and tests, at Trustor's expense, as Lender
may deem appropriate to determine compliance of the Property with this section of the Deed of Trust. Any inspections or
tests made by Lender shall be for Lender's purposes only and shall not be construed to create any responsibility or
liability on the part of Lender to Trustor or to any other person. The representations and warranties contained herein are
based on Trustor's due diligence in investigating the Property for Hazardous Substances. Trustor hereby (11 releases
and waives any future claims against Lender for indemnity or contribution in the event Trustor becomes liable for cleanup
or other costs under any such laws; and (2) agrees to indemnify and hold harmless Lender against any and all claims,
losses, liabilities. damages, penalties, and expenses which Lender may directly or indirectly sustain or suffer resulting
from a breach of this section of the Deed of Trust or as a consequence of any use, generation, manufacture, storage,
disposal, release or threatened release occurring prior to Trustor's ownership or interest in the Property,whether or not
the same was or should have been known to Trustor. The provisions of this section of the Deed of Trust, including the
obligation to indemnify, shall survive the payment of the Indebtedness and the satisfaction and reconveyance of the lien
of this Deed of Trust and shall riot be affected by Lender's acquisition of any interest in the Property. whether by
foreclosure or otherwise.
Nuisance,Waste. Trustor shall not cause:conduct or permit any nuisance nor commit,permit,or suffer any stripping of
or waste on or to the Property or any portion of the Property. Without limiting the generality of the foregoing.Trustor will
not remove,or grant to any other party the right to remove,any timber,minerals(including oil and gas),coal clay,scoria.
soil..gravel or rock products without Lender's prior written consent.
Removal of Improvements. Trustor shall not demolish or remove any Improvements from the Real Property without
Lender's prior written consent. As a condition to the removal of any Improvements, Lender may require Trustor to make
arrangements satisfactory to Lender to replace such Improvements with Improvements of at least equal value.
Lender's Right to Enter. Lender and Lender's agents and representatives may enter upon the Real Property at all
reasonable times to attend to Lender's interests and to inspect the Real Property for purposes of Trustor's compliance
with the terms and conditions of this Deed of Trust.
Compliance with Governmental Requirements. Trustor shall promptly comply with all laws, ordinances, and
regulations, now or hereafter in effect,of all governmental authorities applicable to the use or occupancy of the Property,
including without limitation, the Americans With Disabilities Act. Trustor may contest in good faith any such law,
ordinance, or regulation and withhold compliance during any proceeding, including appropriate appeals, so long as
Trustor has notified Lender in writing prior to doing so and so long as. in Lenders sole opinion. Lender's interests in the
Property are not jeopardized. Lender may require Trustor to post adequate security or a surety bond, reasonably
satisfactory to Lender,to protect Lender's interest.
Duty to Protect. Trustor agrees neither to abandon nor to leave unattended the Property. Trustor shall do all other acts,
in addition to those acts set forth above in this section,which from the character and use of the Property are reasonably
necessary to protect and preserve the Property.
Representations and Warranties Relating to the Ground Lease, Trustor represents and warrants to Lender
(1) that the Ground Lease is in full force and effect and is unmodified except as described in Exhibit -A"
attached hereto;
(2) that all rents, additional rents, percentage rents and all other charges payable under the Ground Lease
have been paid to the extent that they were payable prior to the date hereof;
(3) no condition exists, and no event, act or omission has occurred, which is a default under the Ground
Lease(a"Ground Lease Default")or which would be a Ground Lease Default after notice or the lapse of time, or both,
(4) Trustor's interest in the Ground Lease is subject to no liens or encumbrances except those exceptions
expressly approved by Beneficiary in writing;
(5) Trustor owns and holds the Ground Lease and the entire leasehold estate created by the Ground Lease
and has the right under the Ground Lease(or has received all appropriate consents required in order for Trustor) to
execute this Deed of Trust,
(6) Trustor has not received notice from lessor under the Ground Lease of a default thereunder. which
default has not been timely cured; and
(7) to Trustor's knowledge, lessor under the Ground lease is not in default under any of the terms or
provisions thereof on the part of the lessor to be observed or performed.
Compliance with Ground Lease. Trustor will pay all rents and will strictly observe and perform on a timely basis all
other terms,covenants,and conditions of the Ground Lease. Trustor shall enforce the obligations of the lessor under the
Ground Lease to the end that Trustor may enjoy all of the rights granted to it under the Ground Lease. Trustor will
indemnify and hold Lender harmless against all losses, liabilities, actions,suits, proceedings,costs(including attorneys'
fees),claims,demands,and damages whatsoever which may be incurred by reason of Trustor's failure to pay rents or to
strictly observe or perform Trustor's obligations under the Ground Lease. Lender shall have no liability or obligation
under the Ground Lease by reason of its acceptance of this Deed of Trust.
Option. Trustor shall, not later than six(6)months prior to the end of the term of the Ground Lease, provide written
notice to Lender, which notice shall state whether Trustor will exercise the second ten-year renewal option under the
Ground Lease If: (a) such notice provides that Trustor will not exercise its second option to renew the term of the
Ground Lease or(b)not later than five(5)months prior to the end of the term of the Ground Lease Trustor has not: (i)
validly exercised its option to renew such term in accordance with the terms of the Ground Lease and 00 given
evidence, satisfactory to Lender, of such exercise of the option to renew, then all amounts due under the Related
Documents shall be immediately due and payable upon demand by Lender with or without any advance notice In
addition to the foregoing provisions. Trustor hereby appoints Lender as Trustor's true and lawful attorney-in-fact to
act for Trustor and, in Trustor's name,place and stead(upon the failure of Trustor to satisfy such foregoing provisions
with respect to exercise of the second option as necessary to exercise such option),to exercise such option to renew
the term of the Ground Lease in accordance with the terms of the Ground Lease with the full power and authority to
do and perform each and every act and thing which may be necessary or convenient in connection with any of the
foregoing as Trustor might or could do if personally present. Such power of attorney contained in this Section is
coupled with an interest and is therefore irrevocable, provided, however, that the power of attorney contained in this
Section may only be exercised by Lender: (a) if Trustor is in default under the Ground Lease, or(b)if Trustor is in
default under the Related Documents. or (c) upon the filing by Trustor pursuant to any statute of a petition in
bankruptcy or insolvency or for reorganization or arrangement for the appointment of a receiver of all or a portion of
Trustor's property, or(d) upon the filing against Trustor of any such petition, or the commencement of a proceeding
for the appointment of a trustee, receiver or liquidator for Trustor, or of any of the property of Trustor. or a proceeding
by any governmental authority for the dissolution or liquidation of Trustor, or the making by Trustor of an assignment
for the benefit of creditors. Trustor hereby stipulates to the lifting of the automatic stay in effect and relief from such
stay for Lender for the purpose of Lender pursuing its rights and remedies hereunder. The parties hereby
acknowledge and agree that Lender may exercise any and all rights contained in this Section regardless of whether
Trustor elects to renew the term of the Ground Lease,and that Lender may renew the term of the Ground Lease even
if Trustcr elects not to do so.
Other Agreements Relating to the Ground Lease. Trustor further agrees(1)not to surrender,terminate,or cancel the
Ground Lease, (2) not to release the lessor under the Ground Lease from any obligations imposed upon it thereby. and
(3)not to modify, change,supplement,alter:or amend the Ground Lease:either orally or in writing.without Lender's prior
written consent. Any attempt by Trustor to do any of the foregoing without Lender's prior written consent will be void and
of no force and effect At Lender's option, Trustor will deposit with Lender as further security all original documents
relating to the Ground Lease and the leasehold interest in the Real Property. Unless Trustor is in breach or default of any
of the terms contained in this Deed of Trust, Lender will have no right to cancel, modify, change, supplement, alter or
amend the leasehold interest. No estate in the Real Property,whether fee title to the leasehold premises,the leasehold
estate. or any subleasehold estate,will merge without Lender's express written consent, rather these estates will remain
separate and distinct, even if there is a union of these estates in the landlord,Trustor, or a third party who purchases or
otherwise acquires the estates. Trustor further agrees that if Trustor acquires all or a portion of the fee simple title or any
other leasehold or subleasehold title to the Real Property, all of such title will, at Lender's option, immediately become
subject to the terms of this Deed of Trust and the lien of this Deed of Trust shall attach to,cover and be a lien upon such
acquired title with the same force and effect as if specifically encumbered herein. and Trustor will execute. deliver and
record all documents necessary or appropriate to assure that such title is secured by this Deed of Trust Trustor further
agrees that if the Ground Lease is canceled or terminated, and if Lender or its nominee shall acquire an interest in any
new lease of the property demised thereby, Trustor shall have no right, title or interest in or to the new lease or the
leasehold estate created by such new lease. Trustor hereby assigns to Lender Trustors right to seek an extension of
the 60-day period within which Trustor must accept or reject the Ground Lease under Section 365 of the Bankruptcy
Code or any comparable federal or state statute or law with respect to any case, proceeding or other action
commenced by or against Trustor under the Bankruptcy Code or comparable federal or state statute or law. If Trustor
shall desire to reject the Ground Lease under the Bankruptcy Code or any comparable federal or state statute or law.
Trustor shall: at Lender's request, assign its interest in the Ground Lease to Lender in lieu of rejecting the Ground
Lease as described above, upon receipt by Trustor of written notice from Lender of such request, together with the
agreement of Lender to cure any existing default of Trustor under the Ground Lease. Trustor also acknowledges and
agrees that Lender shall have the right to intervene and participate in any arbitration or appraisal proceeding
concerning the Ground Lease if such proceeding, if adversely determined,would be reasonably expected to have a
material adverse effect on Trustor or the Ground Lease, and Trustor shall confer with Lender and its representatives
and cooperate with them to the extent which Lender deems reasonably necessary for the protection of Lender Upon
the request of Lender, Trustor will exercise all rights of arbitration conferred upon it by the Ground Lease. If at any
time such proceeding shall have commenced and an Event of Default shall have occurred and be continuing: Lender
shall have, and is hereby granted, the sole and exclusive right to designate and appoint on behalf of Trustor, the
arbitrator or arbitrators,or appraiser, in such proceeding.
Notices Relating to time Ground Lease. Trustor will promptly notify Lender in writing:
(1) if either Trustor or the lessor under the Ground Lease is in default in the performance or observance of any
of the terms,covenants,or conditions which such party is to perform or observe under the Ground Lease:
(2) if any event occurs which constitutes a Ground Lease Default or which would be a Ground Lease Default
after notice or the lapse of time;or both;
a
(3) if any notice of default is given to Trustor by the landlord under the Ground Lease,
(4) if,pursuant to the Ground Lease,any proceeds received for the Property are deposited with someone other
than Lender whether received from any insurance on the Property or from the taking of any or all of the Property by
eminent domain,and
(5) if any arbitration or appraisal proceedings are requested or instituted pursuant to the Ground Lease
Trustor agrees to provide Lender promptly with a copy of all written materials relating to any of the above and to provide
Lender with such other information as Lender may reasonably request. Trustor agrees that promptly after the execution
and delivery of this Deed of Trust,Trustor will notify the landlord under the Ground Lease in writing of the execution and
delivery of this Deed of Trust and of the name and address of Lender and will deliver a copy of this Deed of Trust to the
landlord
Option to Cure Ground Lease Default. Upon Lender's receipt of any written notice of Trustors default under the
Ground Lease. Lender may, at Lender's option and without notice, cure such default(even though Trustor, or any party
on behalf of Trustor,questions or denies the existence of such default or the nature of the default)and otherwise exercise
any and all of the rights of Trustor thereunder in the name of and on behalf of the Trustor; but no such action by Lender
shall release Trustor from any default under this Deed of Trust. Trustor expressly grants to Lender the absolute and
immediate right to enter upon the Real Property to such extent and as often as Lender in its sole discretion deems
necessary or desirable in order to prevent or cure any such default by Trustor.
DUE ON SALE - CONSENT BY LENDER. Lender may, at Lenders option, declare immediately due and payable all
sums secured by this Deed of Trust upon the sale or transfer,without Lender's prior written consent of all or any part of
the Property (including without limitation Trustor's right, title, and interest in, to and under the Ground Lease and/or the
leasehold estate created thereby), or any interest therein. A"sale or transfer"means the conveyance of the Property or
any interest therein (including without limitation any right, title or interest in, to and under the Ground Lease and/or the
leasehold estate created thereby); whether legal, beneficial or equitable; whether voluntary or involuntary, whether by
outright sale, deed, installment sale contract, land contract, contract for deed, subleasehold interest with a term greater
than three (3)years, lease-option contract, or by sale, assignment, or transfer of any beneficial interest in or to any land
trust holding title to the Property,or by any other method of conveyance of an interest in the Property. If any Trustor is a
corporation, partnership or limited liability company, transfer also includes any change in ownership of more than
twenty-five percent(25%)of the voting stock,partnership interests or limited liability company interests, as the case may
be of such Trustor. However, this option shall not be exercised by Lender if such exercise is prohibited by applicable
law.
TAXES AND LIENS. The following provisions relating to the taxes and liens on the Property are part of this Deed of
Trust.
Payment. Trustor shall pay when due (and in all events at least ten (10) days prior to delinquency)all taxes special
taxes, assessments, charges (including water and sewer), fines and impositions levied against or on account of the
Property, and shall pay when due all claims for work done on or for services rendered or material furnished to the
Property. Trustor shall maintain the Property free of all liens having priority over or equal to the interest of Lender under
this Deed of Trust,except for the lien of taxes and assessments not due and except as otherwise provided in this,Deed of
Trust.
Right to Contest. Trustor may withhold payment of any tax, assessment, or claim in connection with a good faith
dispute over the obligation to pay,so long as Lenders interest in the Property is not jeopardized. If a tier arises or is filed
as a result of nonpayment, Trustor shall within fifteen(15)days after the lien arises or, if a lien is filed,within fifteen 05)
days after Trustor has notice of the filing, secure the discharge of the lien, or if requested by Lender,deposit with Lender
cash or a sufficient corporate surety bond or other security satisfactory to Lender in an amount sufficient to discharge the
lien plus any costs and attorneys'fees, or other charges that could accrue as a result of a foreclosure or sale under the
ken. In any contest,Trustor shall defend itself and Lender, and shall satisfy any adverse judgment before enforcement
against the Property. Trustor shall name Lender as an additional obligee under any surety bond furnished in the contest
proceedings
5
Evidence of Payment. Trustor shall upon demand furnish to Lender satisfactory evidence of payment of the taxes or
assessments and shall authorize the appropriate governmental official to deliver to Lender at any time a written statement
of the taxes and assessments against the Property.
Notice of Construction. Trustor shall notify Lender at least fifteen (15) days before any work is commenced, any
services are furnished or any materials are supplied to the Property, if any mechanic's lien, materialmen`s lien, or other
lien could be asserted on account of the work, services, or materials. Trustor will upon request of Lender furnish to
Lender advance assurances satisfactory to Lender that Trustor can and will pay the cost of such improvements.
PROPERTY DAMAGE INSURANCE. The following provisions relating to insuring the Property are a part of this Deed of
Trust.
Maintenance of Insurance. Trustor shall procure and maintain policies of fire insurance with standard extended
coverage endorsements on a replacement basis for the full insurable value covering all Improvements on the Real
Property in an amount sufficient to avoid application of any coinsurance clause,and with a standard mortgagee clause in
favor of Lender. Truster shall also procure and maintain comprehensive general liability insurance in such coverage
amounts as Lender may request with Trustee and Lender being named as additional insureds in such liability insurance
policies. Additionally, Trustor shall maintain such other insurance, including but not limited to hazard, business
interruption, and boiler insurance, as Lender may reasonably require. Notwithstanding the foregoing, in no event shall
Trustor be required to provide hazard insurance in excess of the replacement value of the improvements on the Real
Property. Policies shall be written in form,amounts,coverages and basis reasonably acceptable to Lender and issued by
a company or companies reasonably acceptable to Lender. Trustor, upon request of Lender,will deliver to Lender from
time to time the policies or certificates of insurance in form satisfactory to Lender, including stipulations that coverages
will not be cancelled or diminished without at least thirty(30)days prior written notice to Lender. Each insurance policy
also shall include an endorsement providing that coverage in favor of Lender will not be impaired in any way by any act,
omission or default of Trustor or any other person. Should the Real Property be located in an area designated by the
Director of the Federal Emergency Management Agency as a special flood hazard area, Trustor agrees to obtain and
maintain Federal Flood Insurance, if available,for the full unpaid principal balance of the loan and any prior liens on the
property securing the loan. up to the maximum policy limits set under the National Flood Insurance Program, or as
otherwise required by Lender,and to maintain such insurance for the term of the loan.
Application of Proceeds. Trustor shall promptly notify Lender of any loss or damage to the Property. Lender may
make proof of loss if Trustor fails to do so within fifteen(15)days of the casualty. If: in Lender's sole judgment. Lenders
security interest in the Property has been impaired, Lender may, at Lender's election, receive and retain the proceeds of
any insurance and apply the proceeds to the reduction of the Indebtedness,payment of any lien affecting the Property.or
the restoration and repair of the Property. If the proceeds are to be applied to restoration and repair,Trustor shall repair
or replace the damaged or destroyed Improvements in a manner satisfactory to Lender. Lender shall, upon satisfactory
proof of such expenditure, pay or reimburse Trustor from the proceeds for the reasonable cost of repair or restoration if
Trustor is not in default under this Deed of Trust. Any proceeds which have not been disbursed within 180 days after
their receipt and which Lender has not committed to the repair or restoration of the Property shall be used first to pay any
amount owing to Lender under this Deed of Trust,then to pay accrued interest,and the remainder,if any.shall be applied
to the principal balance of the Indebtedness. If Lender holds any proceeds after payment in full of the Indebtedness,
such proceeds shall be paid to Trustor as Trustor's interests may appear.
Trustor's Report on Insurance. Upon request of Lender, however not more than once a year,Trustor shall furnish to
Lender a report on each existing policy of insurance showing: (1)the name of the insurer: (2)the risks insured: (31 the
amount of the policy, (4)the property insured, the then current replacement value of such property, and the manner of
determining that value; and (5) the expiration date of the policy. Trustor shall, upon request of Lender. have an
independent appraiser satisfactory to Lender determine the cash value replacement cost of the Property-
LENDER'S EXPENDITURES. If any action or proceeding is commenced that would materially affect Lender's interest in
the Property or if Trustor fails to comply with any provision of this Deed of Trust or any Related Documents.including but
not limited to Trustor's failure to discharge or pay when due any amounts Trustor is required to discharge or pay under
this Deed of Trust or any Related Documents, Lender on Trustor's behalf may(but shall not be obligated to) take any
action that Lender deems appropriate, including but not limited to discharging or paying all taxes, liens.security interests.
encumbrances and other claims, at any time levied or placed on the Property and paying all costs for insuring,
maintaining and preserving the Property. All such expenditures incurred or paid by Lender for such purposes will then
6
bear interest at the rate charged under the Note from the date incurred or paid by Lender to the date of repayment by
Trustor. All such expenses will become a part of the Indebtedness and, at Lender's option, will (A) be payable on
demand, (B) be added to the balance of the Note and be apportioned among and be payable with any installment
payments to become due during either (1)the term of any applicable insurance policy, or (2)the remaining term of the
Note; or (C)be treated as a balloon payment which will be due and payable at the Notes maturity. This Deed of Trust
also will secure payment of these amounts Such right shall be in addition to all other rights and remedies to which
Lender may be entitled upon Default.
WARRANTY; DEFENSE OF TITLE. The following provisions relating to ownership of the Property are a part of this
Deed of Trust:
Title. Trustor warrants that (a) Trustor holds good and marketable title of record to the Personal Property and the
leasehold interest in the Real Property pursuant to the Ground Lease, free and clear of all liens and encumbrances other
than those set forth in the Real Property description or in any title insurance policy,title report or final title opinion issued
in favor of, and accepted by, Lender in connection with this Deed of Trust. and (b)Trustor has the full right, power. and
authority to execute and deliver this Deed of Trust to Lender.
Defense of Title. Subject to the exception in the paragraph above, Trustor warrants and will forever defend the title to
the Property against the lawful claims of all persons. In the event any action or proceeding is commenced that questions
TruStor''S title or the interest of Trustee or Lender under this Deed of Trust. Trustor shall defend the action at Trustor's
expense. Trustor may be the nominal party in such proceeding, but Lender shall be entitled to participate in the
proceeding and to be represented in the proceeding by counsel of Lender's own choice,and Trustor will deliver,or cause
to be delivered,to Lender such instruments as Lender may request from time to time to permit such participation
Compliance With Laws. Trustor warrants that the Property and Trustor's use of the Property complies with all existing
applicable laws:ordinances,and regulations of governmental authorities.
Survival of Representations and Warranties. All representations,warranties and agreements made by Trustor in this
Deed of Trust shall survive the execution and delivery of this Deed of Trust. shall be continuing in nature. and shall
remain in full force and effect until such time as Trustor's Indebtedness shall be paid in full
CONDEMNATION. The following provisions relating to eminent domain and inverse condemnation proceedings are a
part of this Deed of Trust:
Proceedings. If any eminent domain or inverse condemnation proceeding is commenced affecting the Property.Trustor
shall promptly notify Lender in writing, and Trustor shall promptly take such steps as may be necessary to pursue or
defend the action and obtain the award. Trustor may be the nominal party in any such proceeding. but Lender shall be
entitled, at its election. to participate in the proceeding and to be represented in the proceeding by counsel of its own
choice, and Trustor will deliver or cause to be delivered to Lender such instruments and documentation as may be
requested by Lender from time to time to permit such participation.
Application of Net Proceeds. If any award is made or settlement entered into in any condemnation proceedings
affecting all or any part of the Property or by any proceeding or purchase in lieu of condemnation, Lender may at its
election, and to the extent permitted by law, require that all or any portion of the award or settlement be applied to the
indebtedness and to the repayment of all reasonable costs, expenses,and attorneys'fees incurred by Trustee or Lender
in connection with the condemnation proceedings.
IMPOSITION OF TAXES, FEES AND CHARGES BY GOVERNMENTAL AUTHORITIES. The following provisions
relating to governmental taxes fees and charges are a part of this Deed of Trust
Current Taxes,Fees and Charges. Upon request by Lender, Trustor shall execute such documents in addition to this
Deed of Trust and take whatever other action is requested by Lender to perfect and continue Lender's lien on the
Property. Trustor shall reimburse Lender for all taxes, as described below, together with all expenses incurred in
recording. perfecting or continuing this Deed of Trust, including without limitation all taxes,fees, documentary stamps:
and other charges for recording or registering this Deed of Trust.
Taxes. The following shall constitute taxes to which this section applies: (1)a specific tax upon this type of deed of trust
or upon all or any part of the Indebtedness secured by this Deed of Trust. (2) a specific tax on Trustor which Trustor is
authorized or required to deduct from payments on the indebtedness secured by this type of deed of trust. 13)a tax on
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this type of deed of trust chargeable against the Lender or the holder of the Note; and (4) a specific tax on all or any
portion of the Indebtedness or on payments of principal and interest made by Trustor.
Subsequent Taxes. If any tax to which this section applies is enacted subsequent to the date of this Deed of Trust,this
event shall have the same effect as an Event of Default, and Lender may exercise any or all of its available remedies for
an Event of Default as provided below unless Trustor either (1) pays the tax before it becomes delinquent, or (2)
contests the tax as provided above in the Taxes and Liens section and deposits with Lender cash or a sufficient
corporate surety bond or other security satisfactory to Lender.
SECURITY AGREEMENT; FINANCING STATEMENTS. The following provisions relating to this Deed of Trust as a
security agreement are a part of this Deed of Trust
Security Agreement. This instrument shall constitute a Security Agreement to the extent any of the Property constitutes
fixtures and/or other Personal Property, and Lender shall have all of the rights of a secured party under the Uniform
Commercial Code as amended from time to time.From the date of its recording,this Deed of Trust shall be effective as
a financing statement filed as a fixture filing under the Uniform Commercial Code (as amended from time to time
with respect to the Property and for this purpose the name and address of the debtor is the name and address of the
Trustor as set forth in this Deed of Trust and the name and address of the secured party is the name and address of
the Lender as set forth in this Deed of Trust. The Property includes goods which are or may become so affixed to the
Real Property as to become fixtures.
Security Interest. Upon request by Lender,Trustor shall execute financing statements and take whatever other action is
requested by Lender to perfect and continue Lender's security interest in the Rents and Personal Property Trustor shall
reimburse Lender for all expenses incurred in perfecting or continuing this security interest. Upon default, Trustor shall
not remove, sever or detach the Personal Property from the Real Property. Upon default, Trustor shall assemble any
Personal property not affixed to the Real Property in a manner and at a place reasonably convenient to Trustor and
Lender and make it available to Lender within three(3) days after receipt of written demand from Lender to the extent
permitted by applicable law.
Addresses. The mailing addresses of Trustor(debtor) and Lender (secured party)from which information concerning
the security interest granted by this Deed of Trust may be obtained (each as required by the Uniform Commercial Code)
are as stated on the first page of this Deed of Trust.
LEASES OF THE PROPERTY. The following provisions relating to leases of the Property by Trustor are a part of this
Deed of Trust.
Covenants Regarding leases. Trustor agrees:
(1) not to execute any new leases or materially amend or terminate any existing leases affecting the
Property or any part thereof without the prior written consent of Lender;
(2) not to collect any of the Rents for more than one (1) month in advance of the time when the same
become due under the terms thereof,
(3) not to discount any future accruing Rents,
(4) not to execute any other assignments of said leases or any interest therein or any of the Rents
thereunder,
(5) that,notwithstanding any variation of the terms of this Deed of Trust or any extension of time for
payment of the loan secured hereby or any release of part or parts of the Property,the leases and Rents hereby
assigned, insofar as they relate to the unreleased Property,shall continue as additional security in accordance with
the terms hereof;
(5) to hold and account for all security deposits in the manner provided for under the applicable leases;any
state or local laws or ordinances applicable to the Property and under the Related Documents;and
(7) to perform all of the Trustor's covenants and agreements under the leases and not to suffer or permit to
occur any release of liability of the lessees thereunder.
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Representations Regarding Leases. Trustor represents,warrants and covenants to the best of its knowledge
(1) that, the [eases affecting the Property, if any, have been disclosed to Lender and are in full force and
effect,
(2) that such leases and the Rents thereunder have not been heretofore sold, assigned,transferred or set
over by Trustor or by any persor or persons whatsoever-,
(3) that no material default exists on the part of the lessees thereunder, or the Truster as lessor,
(4) that no Rents have been paid by any of the lessees for more than one(1)month in advance.
(5) that the payment of none of the rents have been or, will be waived, released, reduced, discounted or
otherwise discharged or compromised by the Trustor directly or indirectly by assuming any lessee's obligations with
respect to other premises; and
(6) Trustor has good right to sell, assign, transfer, and set over the same and to grant to and confer upon
Lender the rights, interests, powers,and authorities herein granted and conferred.
FURTHER ASSURANCES; ATTORNEY-IN-FACT. The following provisions relating to further assurances and
attorney-in-fact are a part of this Deed of Trust:
Further Assurances. At any time. and from time to time, upon request of Lender, Trustor will make execute and
deliver, or will cause to be made. executed or delivered, to Lender or to Lenders designee, and when requested by
Lender, cause to be filed, recorded, refiled, or rerecorded, as the case may be, at such times and in such offices and
places as Lender may deem appropriate, any and all such mortgages, deeds of trust, security deeds. security
agreements, financing statements, continuation statements, instruments of further assurance, certificates, and other
documents as may, in the sole opinion of Lender, be necessary or desirable in order to effectuate. complete. perfect.
continue, or preserve (1) Trustor's obligations under the Note. this Deed of Trust, and the Related Documents, and
(2)the liens and security interests created by this Deed of Trust as first and prior liens on the Property: whether now
owned or hereafter acquired by Trustor. Unless prohibited by law or Lender agrees to the contrary in writing,Trustor shall
reimburse Lender for all costs and expenses incurred in connection with the matters referred to in this paragraph.
Attorney-in-Fact. If Trustor fails to do any of the things referred to in the preceding paragraph, Lender may do so for
and in the name of Trustor and at Trustor's expense. For such purposes, Trustor hereby irrevocably appoints Lender as
Trustor's attorney-in-fact for the purpose of making, executing, delivering, filing, recording, and doing all other things as
may be necessary or desirable, in Lender's sole opinion, to accomplish the matters referred to in .he preceding
paragraph; provided, however, with respect to such actions as are the subject of the section above entitled 'Option'.
Lender may act as attorney-in-fact with respect to such actions only upon the satisfaction of the conditions applicable
thereto as contained in such section entitled"Option". Such power of attorney contained in this Section is coupled with
an interest and is therefore irrevocable as long as any of the obligations secured by this Deed of Trust remain
outstanding.
FULL PERFORMANCE. If Trustor pays all the Indebtedness when due, and otherwise performs all the obligations
imposed upon Trustor under this Deed of Trust, Lender shall execute and deliver to Trustee a request for full
reconveyance and shall execute and deliver to Trustor suitable statements of termination of any financing statement on
file evidencing Lender's security interest in the Rents and the Personal Property Lender may charge Trustor a
reasonable reconveyance fee at the time of reconveyance.
EVENTS OF DEFAULT. Each of the following,at Lender's option,shall constitute an Event of Default under this Deed of
Trust-
Payment Default. Trustor fails to make any payment when due under the Indebtedness.
Other Defaults. Trustor tails to comply with or to perform any other term,obligation, covenant or condition contained in
this Deed of Trust or in any of the Related Documents or to comply with or to perform any term,obligation. covenant or
condition contained In any other agreement between Lender and Trustor.
Compliance Default. Failure to comply with any other term, obligation,covenant or condition contained in this Deed of
Trust.the Note or in any of the Related Documents.
4
Default on Other Payments. Failure of Trustor within the time required by this Deed of Trust to make any payment for
taxes or insurance,or any other payment necessary to prevent filing of or to effect discharge of any lien.
Default in Favor of Third Parties. Should Trustor default under any ;oar, extension of credit, security agreement
purchase or sales agreement, or any other agreement, in favor of any other creditor or person that may materially affect
arty of Trustor's property or Trustors ability to repay the Indebtedness or perform their respective obligations under this
Deed of Trust or any of the Related Documents.
False Statements. Any warranty, representation or statement made or furnished to Lender by Trustor or on Trustors
behalf under this Deed of Trust or the Related Documents is false or misleading in any material respect,either now or at
the time made or furnished or becomes false or misleading at any time thereafter.
Defective Collateralization. This Deed of Trust or any of the Related Documents ceases to be in full fcrce and effect
(including failure of any collateral document to create a valid and perfected security interest or lien)at any time and for
any reason
Death or Insolvency. The dissolution of Trustor (regardless of whether election to continue is made), any member
withdraws from the limited liability company, or any other termination of Trustors existence as a going business or the
death of any member, the insolvency of Trustor, the appointment of a receiver for any part of Trustor's property, any
assignment for the benefit of creditors, any type of creditor workout, or the commencement of any proceeding under any
bankruptcy or insolvency laws by or against Trustor.
Creditor or Forfeiture Proceedings. Commencement of foreclosure or forfeiture proceedings, whether by judicial
proceeding, self-help, repossession or any other method, by any creditor of Trustor or by any governmental agency
against any property securing the Indebtedness. This includes a garnishment of any of Trustor's accounts, including
deposit accounts,with Lender. However,this Event of Default shall not apply if there is a good faith dispute by Trustor as
to the validity or reasonableness of the claim which is the basis of the creditor or forfeiture proceeding and if Trustor gives
Lender written notice of the creditor or forfeiture proceeding and deposits with Lender monies or a surety bond for the
creditor or forfeiture proceeding.. in an amount determined by Lender, in its sole discretion,as being an adequate reserve
or bond for the dispute.
Ground Lease Default. The occurrence of a Ground Lease Default: or any other event(whether or not Trustor's fault)
which results in the termination or cancellation of the Ground Lease, the Trustor's leasehold estate created thereby
and/or Trustors leasehold rights thereunder.
Breach of Other Agreement. Any breach by Trustor under the terms of any other agreement between Trustor and
Lender that is rot remedied within any grace period provided therein, including without limitation any agreement
concerning any indebtedness or other obligation of Trustor to Lender,whether existing now or later.
Events Affecting Guarantor. Any of the preceding events occurs with respect to any Guarantor of any of the
Indebtedness or any Guarantor dies or becomes incompetent,or revokes or disputes the validity of,or liability under,any
Guaranty of the Indebtedness.
Adverse Change- A material adverse change occurs in Trustor's financial condition, or Lender believes the prospect of
payment or performance of the Indebtedness is impaired.
Insecurity. Lender in good faith believes itself insecure.
RIGHTS AND REMEDIES ON DEFAULT. If an Event of Default occurs under this Deed of Trust at any time thereafter.
Trustee or Lender may exercise any one or more of the following rights and remedies:
Election of Remedies. Election by Lender to pursue any remedy shall not exclude pursuit of any other remedy, and an
election to make expenditures or to take action to perform an obligation of Trustor under this Deed of Trust. after
Trustor's failure to perform,shall not affect Lender's right to declare a default and exercise its remedies.
Foreclosure by Sale. Upon an Event of Default under this Deed of Trust, Beneficiary may declare the entire
Indebtedness secured by this Deed of Trust immediately due and payable by delivery to Trustee of written declaration of
default and demand for sale and of written notice of default and of election to cause to be sold the Property,which notice
Trustee shall cause to be filed for record. Beneficiary also shall deposit with Trustee this Deed of Trust, the Note, other
documents requested by Trustee, and all documents evidencing expenditures secured hereby. After the lapse of such
10
time as may then be required by law following the recordation of the notice of default, and notice of sale having been
given as then required by law,Trustee,without demand on Trustor,shall sell the Property at the time and place fixed by it
in the notice of sale,either as a whole or in separate parcels,and in such order as it may determine,at public auction to
the highest bidder for cash in lawful money of the United States, payable at time of sale. Trustee may postpone sale of
all or any portion of the Property by public announcement at such time and place of sale,and from time to time thereafter
may postpone such sale by public announcement at the time fixed by the preceding postponement in accordance with
applicable law. Trustee shall deliver to such purchaser its deed conveying the Property so sold,but without any covenant
or warranty, express or implied. The recitals in such deed of any matters or facts shall be conclusive proof of the
truthfulness thereof. Any person, including Trustor. Trustee or Beneficiary may purchase at such sale, subject to the
terms of the Ground Lease. After deducting all costs, fees and expenses of Trustee and of this Trust including cost of
evidence of title in connection with sale, Trustee shall apply the proceeds of sale to payment of. all sums expended
under the terms hereof, not then repaid,with accrued interest at the amount allowed by law in effect at the date hereof,all
other sums then secured hereby;and the remainder,if any,to the person or persons legally ent!tied thereto.
Judicial Foreclosure. With respect to all or any part of the Property, Lender shall have the right in lieu of foreclosure by
power of sale to foreclose by judicial foreclosure in accordance with and to the full extent provided by California law.
UCC Remedies, With respect to all or any part of the Personal Property,Lender shall have all the rights and remedies of
a secured party under the Uniform Commercial Code,including without limitation the right to recover any deficiency in the
manner and to the full extent provided by California law.
Collect Rents. Lender shall have the right,without notice to Trustor,to take possession of and manage the Property and
collect the Rents, including amounts past due and unpaid, and apply the net proceeds. over and above Lender's costs
against the Indebtedness. In furtherance of this right, Lender may require any tenant(including any subtenant)or other
user of the Property to make payments of rent or use fees directly to Lender. If the Rents are collected by Lender, then
Trustor irrevocably designates Lender as Trustor's attorney-in-fact to endorse instruments received in payment thereof in
the name of Trustor and to negotiate the same and collect the proceeds. Payments by tenants or other users to Lender
in response to Lender's demand shall satisfy the obligations for which the payments are made:whether or not any proper
grounds for the demand existed. Lender may exercise its rights under this subparagraph either in person, by agent, or
through a receiver.
Appoint Receiver. Lender shall have the right to have a receiver appointed to take possession of all or any part of the
Property,with the power to protect and preserve the Property,to operate the Property preceding foreclosure or sale, and
to collect the Rents from the Property and apply the proceeds, over and above the cost of the receivership, against the
Indebtedness. The receiver may serve without bond if permitted by law Lender's right to the appointment of a receiver
shall exist whether or not the apparent value of the Property exceeds the Indebtedness by a substantial arnount
Employment by Lender shall not disqualify a person from serving as a receiver.
Tenancy at Sufferance. If Trustor remains in possession of the Property after the Property is sold as provided above or
Lender otherwise becomes entitled to possession of the Property upon default of Trustor, Trustor shall become a tenant
at sufferance of Lender or the purchaser of the Property and shall: at Lender's option,either (1)pay a reasonable rental
for the use of the Property,or (2)vacate the Property immediately upon the demand of Lender
Other Remedies. Trustee or Lender shall have any other right or remedy provided in this Deed of Trust or the Note or
by law
Notice of Sale. Lender shall give Trustor reasonable notice of the time and place of any public sale of the Personal
Property or of the time after which any private sale or other intended disposition of the Personal Property is to be made
Reasonable notice shall mean notice given at least ten (10)days before the time of the sale or disposition. Any sale of
the Personal Property may be made in conjunction with any sale of the Real Property
Sale of the Property. To the extent permitted by applicable law, Trustor hereby waives any and all rights to have the
Property marshalled In exercising its rights and remedies,the Trustee or Lender shall be free to sell all or any part of the
Property together or separately, in one sale or by separate sales. Lender shall be entitled to bid at any public sale on all
or any portion of the Property.
Attorneys' Fees; Expenses. If Lender institutes any suit or action to enforce any of the terms of this Deed of Trust,
Lender shall be entitled to recover such sum as the court may adjudge reasonable as attorneys'fees at trial and upon
II
any appeal. Whether or not any court action is involved,and to the extent not prohibited by law, all reasonable expenses
Lender incurs that in Lender's opinion are necessary at any time for the protection of its interest or the enforcement of its
rights shall become a part of the Indebtedness payable on demand and shall bear interest at the Note rate from the date
of the expenditure until repaid. Expenses covered by this paragraph include, without limitation,subject, however. to any
limits under applicable law, Lender's attorneys' fees and Lender's legal expenses, whether or not there is a lawsuit,
including attorneys' fees and expenses for bankruptcy proceedings (including efforts to modify or vacate any automatic
stay or injunction), appeals, and any anticipated post-judgment collection services. the cost of searching records,
obtain;ng title reports (including foreclosure reports), surveyors' reports, and appraisal fees, title insurance, and fees for
the Trustee, to the extent permitted by applicable law. Trustor also will pay any court costs, in addition to all other suits
provided by law.
Rights of Trustee. Trustee shall have all of the rights and duties of Lencer as set fo,Lh in this section.
POWERS AND OBLIGATIONS OF TRUSTEE. The following provisions relating to the powers and obligations of
Trustee are part of this Deed of Trust:
Powers of Trustee. In addition to all powers of Trustee arising as a matter of law; Trustee shall have the power to take
the following actions with respect to the Property upon the written request of Lender and Trustor: (a)join in preparing and
filing a map or plat of the Real Property,including the dedication of streets or other rights to the public;(b)join in granting
any easement or creating any restriction on the Real Property, and (c) join in any subordination or other agreement
affecting this Deed of Trust or the interest of Lender under this Deed of Trust.
Obligations to Notify. Trustee shall not be obligated to notify any other party of a pending sale under any other trust
deed or lien, or of any action or proceeding in which Trustor, Lender, or Trustee shall be a party, unless the action or
proceeding is brought by Trustee.
Trustee. Trustee shall meet all qualifications required for Trustee under applicable law. In addition to the rights and
remedies set forth above,with respect to all or any part of the Property, the Trustee shall have the right to foreclose by
notice and sale,and Lender shall have the right to foreclose by judicial foreclosure,in either case in accordance with and
to the full extent provided by applicable law.
Successor Trustee. Lender, at Lender's option, may from time to time appoint a successor Trustee to any Trustee
appointed under this Deed of Trust by an instrument executed and acknowledged by Lender and recorded in the office of
the recorder of Orange County,State of California. The instrument shall contain, in addition to all other matters required
by state law, the names of the original Lender, Trustee, and Trustor, the book and page where this Deed of Trust is
recorded, and the name and address of the successor trustee, and the instrument shall be executed and acknowledged
by Lender or its successors in interest. The successor trustee,without conveyance of the Property. shall succeed to all
the title, power, and duties conferred upon the Trustee in this Deed of Trust and by applicable law This procedure for
substitution of Trustee shall govern to the exclusion of all other provisions for substitution.
Acceptance by Trustee. Trustee accepts this Trust when this Deed of Trust,duly executed and acknowledged,is made
a public record as provided by law.
NOTICES. Any notice required to be given under this Deed of Trust shall be given in writing, and shall be effective when
actually delivered, when actually received by telefacsimiie (unless otherwise required by law), when deposited with a
nationally recognized overnight courier,or, if mailed, when deposited in the United States mail, as first class,certified or
registered mail postage prepaid, directed to the addresses shown near the beginning of this Deed of Trust Trustor
requests that copies of any notices of default and sale be directed to Trustors address shown near the beginning of this
Deed of Trust. All copies of notices of foreclosure from the holder of any lien which has priority over this Deed of Trust
shall be sent to Lender's address, as shown near the beginning of this Deed of Trust. Any party may change its address
for notices under this Deed of Trust by giving formal written notice to the other parties,specifying that the purpose of the
notice is to change the party's address. For notice purposes, Trustor agrees to keep Lender informed at all times of
Trustor's current address. Unless otherwise provided or required by law, if there is more than one Trustor, any notice
given by Lender to any Trustor is deemed to be notice given to all Trustors.
STATEMENT OF OBLIGATION FEE. Lender may collect a fee, not to exceed the maximum amount permitted by law.
for furnishing the statement of obligation as provided by Section 2943 of the Civil Code of California.
MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of this Deed of Trust:
12
Amendments. This Deed of Trust, together with any Related Documents. constitutes the entire understanding and
agreement of the parties as to the matters set forth in this Deed of Trust. No alteration of or amendment to this Deed of
Trust shall be effective unless given in writing and signed by the party or parties sought to be charged or bound by the
alteration or amendment.
Annual Reports. If the Property is used for purposes other than Trustors residence, Trustor shall furnish to Lender,
upon request. a certified statement of net operating income received from the Property during Trustor's previous fiscal
year in such form and detail as Lender shall require. "Net operating income" shall mean all cash receipts from the
Property less all cash expenditures made in connection with the operation of the Property.
Caption Headings. Caption headings in this Deed of Trust are for convenience purposes only and are not to be used to
interpret or define the previsions of this Deed of Trust.
Merger. There shall be no merger of the interest or estate created by this Deed of Trust with any other interest or estate
in the Property at any time held by or for the benefit of Lender in any capacity without the written consent of Lender
Governing Law, This Deed of Trust will be governed by,construed and enforced in accordance with federal law
and the laws of the State of California. This Deed of Trust has been accepted by Lender in the State of
California.
Choice of Venue. If there is a lawsuit.Trustor agrees upon Lenders request to submit to the jurisdiction of the courts of
Orange County,State of California.
No Waiver by Lender. Lender shall not be deemed to have waived any rights under this Deed of Trust unless such
waiver is given in writing and signed by Lender. No delay or omission on the part of Lender in exercising any right shall
operate as a waiver of such right or any other right. A waiver by Lender of a provision of this Deed of Trust shall not
prejudice or constitute a waiver of Lender's right otherwise to demand strict compliance with that provision or any other
provision of this Deed of Trust. No prior waiver by Lender, nor any course of dealing between Lender and Trustor.shall
constitute a waiver of any of Lender's rights or of any of Trustor's obligations as to any future transactions.Whenever the
consent of Lender is required under this Deed of Trust,the granting of such consent by Lender in any instance shall not
constitute continuing consent to subsequent instances where such consent is required and in all cases such consent may
be granted or withheld in the sole discretion of Lender.
Severability. If a court of competent jurisdiction finds any provision of this Deed of Trust to be illegal, invalid. or
unenforceable as to any circumstance,that finding shall not make the offending provision illegal, invalid,or unenforceable
as to any other circumstance. If feasible, the offending provision shall be considered modified so that it becomes legal,
valid and enforceable. If the offending provision cannot be so modified, it shall be considered deleted from this Deed of
Trust. Unless otherwise required by law,the illegality, invalidity,or unenforceability of any provision of this Deed of Trust
shall not affect the legality,validity or enforceability of any other provision of this Deed of Trust.
Successors and Assigns. Subject to any limitations stated in this Deed of Trust on transfer of Trustor's interest, this
Deed of Trust shall be binding upon and inure to the benefit of the parties,their successors and assigns. If ownership of
the Property becomes vested in a person other than Trustor, Lender, without notice to Trustor, may deal with Trustor's
successors with reference to this Deed of Trust and the Indebtedness by way of forbearance or extension without
releasing Trustor from the obligations of this Deed of Trust or liability under the indebtedness.
Time is of the Essence. Time is of the essence in the performance of this Deed of Trust.
Waive Jury. To the maximum extent permitted by applicable law,all parties to this Deed of Trust hereby waive
the right to any jury trial in any action, proceeding, or counterclaim brought by any party against any other
party.
DEFINITIONS. The following capitalized words and terms shall have the following meanings when used in this Deed of
Trust. Unless specifically stated to the contrary,all references to dollar amounts shall mean amounts in lawful money of
the United States of America Words and terms used in the singular shall include the plural, and the plural shall include
the singular, as the context may require. Words and terms not otherwise defined in this Deed of Trust shall have the
meanings attributed to such terms in the Uniform Commercial Code.
Beneficiary. The word"Beneficiary"means BANK OF THE WEST.and its successors and assigns
13
Deed of Trust. The words"Deed of Trust"mean this Deed of Trust among Trustor, Lender, and Trustee, and includes
without limitation all assignment and security interest provisions relating to the Personal Property and Rents.
Default. The word''Default"means an occurrence or condition that that after notice or the lapse of time or both,would
constitute an Event of Default.
Environmental Laws. The words"Environmental Laws"mean any and all state, federal and local statutes, regulations
and ordinances relating to the protection of human health or the environment, including without limitation the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended, 42 l C. Section
9601. et seq. ("CERCLA"), the Superfund Amendments and Reauthorization Act of 1986, Pub. L. No. 99-499("SARA").
the Hazardous Materials Transportation Act,49 U.S.C. Section 1801, et seq., the Resource Conservation and Recovery
Act, 42 U.S.0 Section 6901, et seq., Chapters 6.5 through 7.7 of Division 20 of the California Health and Safety Code
Section 25100,et seq.,or other applicable state or federal laws, rules, or regulations adopted pursuant thereto
Event of Default. The words"Event of Default"mean any of the events of default set forth in this Deed of Trust in the
section of this Deed of Trust entitled EVENTS OF DEFAULT.
Ground Lease. The words "Ground Lease" means the lease of the Property between "Landlord" (as defined in the
Related Documents)and Trustor,as such lease is more particularly described on Exhibit"A"attached hereto.
Guarantor. The word "Guarantor" means any guarantor, surety, or accommodation party of any or all of the
Indebtedness.
Guaranty. The word"Guaranty"means the guaranty from Guarantor to Lender. including without limitation a guaranty of
ail or part of the Note.
Hazardous Substances. The words "Hazardous Substances" mean materials that, because of their quantity.
concentration or physical, chemical or infectious characteristics, may cause or pose a present or potential hazard to
human health or the environment when improperly used, treated, stored, disposed of, generated, manufactured,
transported or otherwise handled. The words"Hazardous Substances"are used in their very broadest sense and include
without limitation any and all hazardous or toxic substances, materials or waste as defined by or listed under the
Environmental Laws. The term "Hazardous Substances" also includes, without limitation, petroleum and petroleum
by-products or any fraction thereof and asbestos.
Improvements. The word ''Improvements" means all existing and future improvements, buildings, structures, mobile
homes affixed on the Real Property,facilities,additions,replacements and other construction on the Real Property.
Indebtedness. The word"Indebtedness"means all principal, interest, and other amounts,costs and expenses payable
under the Note or Related Documents,together with all renewals of,extensions of,modifications of,consolidations of and
substitutions for the Note or Related Documents and any amounts expended or advanced by Lender to discharge
Trustor's obligations or expenses incurred by Trustee or Lender to enforce Trustor's obligations under this Deed of Trust.
together with interest on such amounts as provided in this Deed of Trust.
Lender. The word"Lender"means SANK OF THE WEST,its successors and assigns.
Note. The word "Note" means the promissory note dated August 12, 2008, in the original principal amount of
$1,450,000.00 from Trustor to Lender, together with all renewals of, extensions of, modifications of refinancings of.
consolidations of,and substitutions for the promissory note or agreement.
Personal Property. The words"Personal Property"mean all equipment,fixtures,and other articles of personal property
now or hereafter owned by Trustor, and now or hereafter attached or affixed to the Real Property: together with all
accessions, parts,and additions to, all replacements of.and all substitutions for,any of such property, and together with
all proceeds (including without limitation all insurance proceeds and refunds of premiums) from any sale or other
disposition of the Property. The words "Personal Property" also include all tangible and intangible items obtained or
owned by, or in the possession of Trustor that are directly or indirectly related to the acquisition, development, design
construction, permitting, marketing,or habitation of the Real Property or the Improvements to be constructed on the Real
Property, whether heretofore or hereafter issued, prepared, or executed, including without limitation all permits licenses,
authorizations and approvals. trademarks and tradenames, and any and all land use entitlements, development rights.
sewer capacity, approvals,density allocations and other rights or approvals relating to or authorizing the development or
14
occupancy of the Property, plus all utility or other deposits, reimbursement rights, studies, tests, contracts, plans and
specifications,relating to the Property and Improvements.
Property. The word "Property"means collectively the Real Property and the Personal Property(and/or interests in any
of the foregoing)which are encumbered by this Deed of Trust.
Real Property. The words"Real Property"mean the real property,interests and rights,as further described in this Deed
of Trust.
Related Documents. The words"Related Documents"mean all promissory notes,credit agreements, loan,agreements.
environmental agreements,security agreements,mortgages,deeds of trust, security deeds,collateral mortgages,and all
other instruments, agreements and documents, whether now or hereafter existing, executed in connection with the
Indebtedness.
Rents. The word 'Rents" means all present and future leases, rents, revenues, income, issues, royalties, profits, and
other benefits derived from the Property together with the cash proceeds of the Rents.
Trustee. The word 'Trustee" means First Santa Clara Corporation whose address is 1450 Treat Boulevard. Walnut
Creek,California 94596 and any substitute or successor trustees.
Trustor. The word"Trustor"means PIER PLAZA GROUP LLC.
[signatures follow on next page]
lj
TRUSTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS DEED OF TRUST,AND TRUSTOR
AGREES TO ITS TERMS,INCLUDING THE PROVISIONS OF THE NOTE SECURED BY THIS DEED OF TRUST.
TRUSTOR:
PIER PLAZA GROUP LLC
By: TS ALOHA,INC.,Manage f PIER PLAZA GROUP LLC
By: /�z
RAY19URNETT,Chief Financial Officer of TS Aloha,Inc.
CERTIFICATE OF ACKNOWLEDGMENT
STATE OF CALIFORNIA }
}SS,
COUNTY OF SAs>O eGr c� Ya }
}
On Q — Z—of) before me, M, G 45'0 enAQ-Z--a
notary public,personally appeared R V ...Ayr N4-TI who proved
to we on the basis of satisfactory evidence to be the (s)whose rs)js/are subscribed to the within
instrument and acknowledged to me that,be/she/they executed the same in b5/herltheir authorized�aoacitv(ies),and
that bybj�lher/their si nature(s)on the instrument the person ), or the entity upon behalf of which the person(s)
acted,executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true
and correct_
Witness my hand and official seal. M.C.GWEZ
COMM. 81800373
Notary Public-CMdeffim p
8110 Diogo Cou�y
Signature iCow.Et iqk 9
Notary Public
(DO NOT RECORD)
REQUEST FOR FULL RECONVEYANCE
(To be used only when obligations have been paid in full)
To: Trustee
The undersigned is the legal owner and holder of all Indebtedness secured by this Deed of Trust. All sums secured by
this Deed of Trust have been fully paid and satisfied. You are hereby directed, upon payment to you of any sums owing
to you under the terms of this Deed of Trust or pursuant to any applicable statute, to cancel the Note secured by this
Deed of Trust (which is delivered to you together with this Deed of Trust), and to reconvey, without warranty, to the
parties designated by the terms of this Deed of Trust,the estate now held by you under this Deed of Trust. Please mall
the raconveyance and Related Documents to:
Date: Beneficiary:
By:
Its:
EXHIBIT"A"
LEGAL DESCRIPTION AND DESCRIPTION OF GROUND LEASE
THE TERM"GROUND LEASE,"AS USED IN THE DEED OF TRUST TO WHICH THIS EXHIBIT`A"IS ATTACHED,
MEANS THAT CERTAIN LEASE DATED JANUARY 16, 1996, AS AMENDED JULY 7, 1997, JANUARY 5,
1998 AND FEBRUARY 17 1998 (AS SO AMENDED, THE "LEASE").. BY AND BETWEEN THE CITY OF
HUNTINGTON BEACH AND T S MANAGEMENT CORP. ("TSM",', WHICH LEASE WAS ASSIGNED
BY TSM TO TRUSTOR BY AN ASSIGNMENT DATED JULY T 1997, PURSUANT TO WHICH TRUSTOR HAS
ACQUIRED A LEASEHOLD INTEREST IN THE REAL PROPERTY
THE LAND THAT FORMS A PART OF THE"REAL PROPERTY",AS DEFINED IN THE DEED OF TRUST TO
WHICH THIS EXHIBIT"A"IS ATTACHED,IS SITUATED IN THE STATE OF CALIFORNIA COUNTY OF ORANGE.
DESCRIBED AS FOLLOWS.
ALL THAT CERTAIN LAND SITUATED IN THE STATE OF CALIFORNIA, COUNTY OF ORANGE, CITY OF
HUNTINGTON BEACH,AND IS DESCRIBED AS FOLLOWS.
THAT PORTION OF THE RANCHO LAS BOLSAS,AS PER MAP RECORDED IN BOOK 2, PAGE 332 OF
PATENTS, IN THE OFFICE OF THE COUNTY RECORDER OF LOS ANGELES,CALIFORNIA, DESCRIBED AS
FOLLOWS
THAT PORTION OF THE FOLLOWING DESCRIBED LAND WHICH IS ABOVE A DEPTH OF TWENTY FEET f20';
BELOW THE SURFACE THEREOF:
COMMENCING AT THE WESTERLY CORNER OF BLOCK 103 OF HUNTINGTON BEACH TRACT,AS SHOWN
ON A MAP RECORDED IN BOOK 3, PAGE 36 OF MISCELLANEOUS MAPS, RECORDS OF ORANGE COUNTY;
THENCE ALONG THE SOUTHWESTERLY PROLONGATION OF THE NORTHWESTERLY LINE OF SAID BLOCK
103,SOUTH 40'52'00"WEST 179.00 FEET;THENCE AT RIGHT ANGLES SOUTH 49'08'00"EAST 0.67 FEET
TO THE TRUE POINT OF BEGINNING,THENCE SOUTH 40'52'00"WEST 121 00 FEET ALONG A LINE
PARALLEL TO AND 0.67 FEET SOUTHEASTERLY, MEASURED AT RIGHT ANGLES, TO SAID
SOUTHWESTERLY PROLONGATION OF THE NORTHWESTERLY LINE OF SAID BLOCK 103; THENCE AT
RIGHT ANGLE SOUTH 49`08'00" EAST 148-32 FEET,THENCE NORTH 40"52'00" EAST 55.42 FEET, THENCE
SOUTH 49'08 00" EAST 9 74 FEET,THENCE NORTH 85'52'00"EAST 3,01 FEET,THENCE SOUTH 49' 08'00'
EAST 4.14 FEET,THENCE NORTH 40°52'00"EAST 37.34 FEET;THENCE NORTH 491 08'00"WEST 1 10 FEET
TO A POINT ON A NON-TANGENT CURVE CONCAVE SOUTHWESTERLY HAVING A RADIUS OF 10 00 FEET.
A RADIAL BEARING THROUGH SAID POINT BEARS SOUTH 60°34'47" EAST;THENCE NORTHERLYAND
NORTHWESTERLY 19.39 FEET ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 111'07'28"TO A
POINT OF REVERSE CURVATURE WITH A CURVE CONCAVE NORTHEASTERLY HAVING A RADIUS OF 15 00
FEET,A RADIAL BEARING THROUGH SAID POINT BEARS NORTH 08' 17'45"EAST,THENCE
NORTHWESTERLY 16.45 FEET ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 62`49' 17"TO A
POINT WHOSE RADIAL BEARING BEARS SOUTH 71`07'02"WEST; THENCE NORTH 49'08'00"WEST 1.41
FEET;THENCE NORTH 40"52'00"EAST 19.99 FEET;THENCE NORTH 49'08'00°WEST 131.00 FEET TO THE
TRUE POINT OF BEGINNING.
EXCEPTING ANY PORTION OF THE DESCRIBED PROPERTY BELOW THE LINE OF NATURAL ORDINARY
HIGH WATER MARK WHERE IT WAS LOCATED PRIOR TO ANY ARTIFICIAL OR AVULSION CHANGES IN TI IE
LOCATION OF THE SHORELINE_
END OF LEGAL DESCRIPTION
RECORDING REQUESTED BY:
LanMmedu Cww wdal Services
Recorded in Official Records,Orange County
RECORDATION REQUESTED BY: Tom Daly,Clerk-Recorder
BANK OF THE WEST IIIIIIIIIIIIIII IIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIV 27.o(a
San Diego CBO#181
1280 Diego,
Avenue
San Diego, CA 92101 2008000430013 01:06pm 09111/08
105 59 Al2 8
WHEN RECORDED MAIL TO: 0.00 0.00 0.00 0.00 21.00 0.00 0.00 0.00
BANK OF THE WEST
Documentation Center(South)
1977 Saturn Street
Monterey Park, CA 91755
S 72528.3 FOR RECORDER'S USE ONLY
•105048902600000000180460-
HAZARDOUS SUBSTANCES CERTIFICATE AND INDEMNITY AGREEMENT
THIS HAZARDOUS SUBSTANCES AGREEMENT dated August 12, 2008, is made and executed among PIER
PLAZA GROUP LLC, whose address is 225 PLAZA ST, STE 300, SOLANA BEACH, CA 92075 (sometimes
referred to below as "Borrower" and sometimes as "Indemnitor"); and BANK OF THE WEST, San Diego CBO
#181, 1280 4th Avenue, San Diego, CA 92101 (referred to below as "Lender"). For good and valuable
consideration and to induce Lender to make a loan to Borrower, each party executing this Agreement hereby
represents and agrees with Lender as follows:
PROPERTY DESCRIPTION. The word "Property" as used in this Agreement means the following Real Property located in Orange County,
State of California:
See Exhibit "A",which is attached to this Agreement and made a part of this Agreement as if fully set forth herein.
The Real Property or its address is commonly known as 315-317 Pacific Coast Highway, Huntington Beach, CA 92648.
REPRESENTATIONS. The following representations are made to Lender, subject to disclosures made and accepted by Lender in writing:
Use of Property. After due inquiry and investigation, Indemnitor has no knowledge, or reason to believe,that there has been any use,
generation, manufacture, storage, treatment, refinement, transportation, disposal, release, or threatened release of any Hazardous
Substances by any person on, under, or about the Property.
Hazardous Substances. After due inquiry and investigation, Indemnitor has no knowledge, or reason to believe, that the Property,
whenever and whether owned by previous Occupants, has ever contained asbestos, PCBs, lead paints or other Hazardous
Substances, whether used in construction or stored on the Property.
No Notices. Indemnitor has received no summons, citation, directive, letter or other communication, written or oral, from any agency
or department of any county or state or the U.S. Government concerning any intentional or unintentional action or omission on, under.
or about the Property which has resulted in the releasing, spilling, leaking, pumping, pouring, emitting, emptying or durnping of
Hazardous Substances into any waters, ambient air or onto any lands or where damage may have resulted to the lands, waters, fish,
shellfish, wildlife, biota,air or other natural resources.
AFFIRMATIVE COVENANTS. Indemnitor covenants with Lender as follows:
Use of Property. Indemnitor will not use and does not intend to use the Property to generate, manufactno, refine, transport, treat,
store, handle or dispose of any Hazardous Substances, PCBs, lead paint or asbestos.
Compliance with Environmental Laws. Indemnitor shall cause the Property and the operations conducted on it to cornply with any and
all Environmental Laws and orders of any governmental authorities having jurisdiction under any Environmental Laws and shall obtain,
keep in effect and comply with all governmental permits and authorizations required by Environmental Laws with respect to such
Property or operations. Indemnitor shall furnish Lender with copies of all such permits and authorizations and any amendments or
renewals of them and shall notify Lender of any expiration or revocation of such permits or authorizations.
Preventive, Investigatory and Remedial Action. Indemnitor shall exercise extreme care in handling Hazardous Substances if Indemnitor
uses or encounters any. Indemnitor, at indemnitor's expense, shall undertake any and all preventive, investigatory or remedial action
Iincluding emergency response, removal,containment and other remedial action) (a) required by any applicable Environmental Laws or
orders by any governmental authorty having jurisdiction under Environmental Laws, or (b) necessary to prevent or minimize property
damage including damage to Occupant's own property), personal injury or damage to the environment, or the threat of any such
damage or injury, by releases of or exposure to Hazardous Substances in connection with the Property or operations of any Occupant
on the Property. In the event Indemnitor fails to perform any of Indemnitor's obligations under this section of the Agreement, Lender
may (but shall not be required to) perform such obligations at Indemnitor's expense. All such costs and expenses incurred by Lender
under this section and otherwise under this Agreement shall be reimbursed by Indemnitor to Lender upon demand with interest at the
Note default rate, or in the absence of a default rate, at the Note interest rate. Lender and Indemnitor intend that Lender shall have
HAZARDOUS SUBSTANCES AGREEMENT
Loan No: 0000000018 (Continued) Page 2
full recourse to Indemnitor for any sum at any time due to Lender under this Agreement. In performing any such obligations of
Indemnitor, Lender shall at all times be deemed to be the agent of Indemnitor and shall not by reason of such performance be deemed
to be assuming any responsibility of Indemnitor under any Environmental Law or to any third party. Indemnitor hereby irrevocably
appoints Lender as Indemnitor's attorney-in-fact with full power to perform such of Indemnitor's obligations under this section of the
Agreement as Lender deems necessary and appropriate.
Notices. Indemnitor shall immediately notify Lender upon becoming aware of any of the following:
(1i Any spill, release or disposal of a Hazardous Substance on any of the Property, or in connection with any of its operations if
such spill, release or disposal must be reported to any governmental authority under applicable Environmental Laws.
(2) Any contamination, or imminent threat of contamination, of the Property by Hazardous Substances, or any violation of
Environmental Laws in connection with the Property or the operations conducted on the Property.
i3) Any order, notice of violation, fine or penalty or other similar action by any governmental authority relating to Hazardous
Substances or Environmental Laws and the Property or the operations conducted on the Property.
(4) Any judicial or administrative investigation or proceeding relating to Hazardous Substances or Environmental Laws and to the
Property or the operations conducted on the Property.
(5) Any matters relating to Hazardous Substances or Environmental Laws that would give a reasonably prudent Lender cause to
be concerned that the value of Lender's security interest in the Property may be reduced or threatened or that may impair, or
threaten to impair,Indemnitor's ability to perform any of its obligations under this Agreement when such performance is due.
Access to Records. Indemnitor shall deliver to Lender, at Lender's request, copies of any and all documents in Indemnitor's
possession or to which it has access relating to Hazardous Substances or Environmental Laws and the Property and the operations
conducted on the Property, including without limitation results of laboratory analyses, site assessments or studies, environmental audit
reports and other consultants' studies and reports.
Inspections. Lender reserves the right to inspect and investigate the Property and operations on it at any time and from time to time,
and Indemnitor shall cooperate fully with Lender in such inspection and investigations. If Lender at any time has reason to believe that
Indemnitor or any Occupants of the Property are not complying with all applicable Environmental Laws or with the requirements of this
Agreement or that a material spill, release or disposal of Hazardous Substances has occurred on or under the Property, Lender may
require Indemnitor to furnish Lender at Indemnitor's expense an environmental audit or a site assessment with respect to the matters
of concern to Lender. Such audit or assessment shall be performed by a qualified consultant approved by Lender. Any inspections or
tests made by Lender shall be for Lender's purposes only and shall not be construed to create any responsibility or liability on the part
of Lender to any Indemnitor or to any other person.
INDEMNITOR'S WAIVER AND INDEMNIFICATION. Indemnitor hereby agrees to and shall indemnify, defend, and hold harmless Lender and
Lender's officers, directors, employees and agents, and Lender's successors and assigns and their officers, directors, employees and
agents from and against any and all claims, demands, losses, liabilities, costs, fines, penalties and expenses (including without limitation
attorneys' fees at trial and on any appeal or petition for review, consultants' fees, remedial action costs, natural resource damages and
diminution in value) incurred by such person (a) arising out of or relating to any investigatory or remedial action involving the Property, the
operations conducted on the Property, or any other operations of Indemnitor or any Occupant and required by Environmental Laws or by
orders of any governmental authority having jurisdiction under any Environmental Laws, including without limitation any natural resource
damages, or (61 arising out of or related to any noncompliance with or violation of Environmental Laws or any applicable permits or
approvals, or (c) on account of injury to Lender or any person whatsoever or damage.to any property arising out of, in connection with, or
in any way relating to (i) the breach of any covenant, representation or warranty contained in this Agreement, ill) the violation of any
Environmental Laws, permits, authorizations or approvals, (iii) the use, treatment, storage, generation, manufacture, transport, release,
spill, disposal or other handling of Hazardous Substances on the Property, or (iv) the contamination of any of the Property by, or the
presence, release or threatened release of, Hazardous Substances by any means whatsoever (explicitly including without (imitation any
presently existing contamination of the Property, whether or not previously disclosed to Lender), or (d) pursuant to this Agreement.
Indemnitor's obligations under this section shall survive the termination of this Agreement and as set forth below in the Survival section. In
addition to this indemnity, Indemnitor hereby releases and waives all present and future claims against Lender for indemnity or contribution
in the event Indemnitor becomes liable for cleanup or other costs under any Environmental Laws.
PAYMENT: FULL RECOURSE TO INDEMNITOR. Indemnitor intends that Lender shall have full recourse to Indemnitor for Indemnitor's
obligations under this Agreement as they become due to Lender. Such liabilities, losses, claims, damages and expenses shall be
reimbursable to Lender as Lender's obligations to make payments with respect thereto are incurred, without any requirement of waiting for
the ultimate outcome of any litigation, claim or other proceeding, and Indemnitor shall pay such liability, losses, claims, damages and
expenses to Lender as so incurred within thirty(30)days after written notice from Lender. Lender's notice shall contain a brief itemization
of the amounts incurred to the date of such notice. In addition to any remedy available for failure to pay periodically such amounts, such
amounts shall thereafter bear interest at the Note default rate, or in the absence of a default rate, at the Note interest rate.
SURVIVAL. The covenants contained in this Agreement shall survive (A) the repayment of the Indebtedness, (8) any f0reCI1Js Ure.
whether judicial or nonjudicial, of the Property, and (C) any delivery of a deed in lieu of foreclosure to Lender or any successor of Lender.
The covenants contained in this Agreement shall be for the benefit of Lender and any successor to Lender, as holder of any security
interest in the Property or the indebtedness secured thereby, or as owner of the Property following foreclosure or the delivery of a deed in
lieu of foreclosure.
MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of this Agreement:
Amendments. This Agreement, together with any Related Documents, constitutes the entire understanding and agreement of the
parties as to the matters set forth in this Agreement. No alteration of or amendment to this Agreement shall be effective unless given
in writing and signed by the party or parties sought to be charged or bound by the alteration or amendment.
Attorneys' Fees; Expenses. If Lender institutes any suit or action to enforce any of the terms of this Agreement, Lender shall be
entitled to recover such sum as The court may adjudge reasonable as attorneys' fees at trial and upon any appeal. Whether or not any
HAZARDOUS SUBSTANCES AGREEMENT
Loan No: 0000000018 (Continued) Page 3
court action is involved, and to the extent not prohibited by law, all reasonable expenses Lender incurs ;hat in Lender's opinion are
necessary at any time for the protection of its interest or the enforcement of its rights shall become a part of the Indebtedness payable
on demand and shall bear interest at the Note rate from the date of the expenditure until repaid. Expenses covered by this paragraph
include, without limitation, however subject to any limits under applicable !aw, Lender's attorneys' fees and Lender's legal expenses,
whether or not there is a lawsuit, including attorneys' fees and expenses for bankruptcy proceedings (including efforts to modify or
vacate any automatic stay or injunction), appeals, and any anticipated post-judgment collection services, the cost of searching
records, obtaining title reports (including foreclosure reportsi, surveyors' reports, and appraisal fees and title insurance, to the extent
permitted by applicable law. Indemnitor also will pay any court costs, in addition to all other sums provided by law.
Caption Headings. Caption headings in this Agreement are fcr convenience purposes only and ate not to be used to Interpret or define
the provisions of this Agreement.
Governing Law. This Agreement will be governed by federal law applicable to Lender and,to the extent not preempted by federal law,
the laws of the State of California without regard to its conflicts of taw provisions. This Agreement has been accepted by Lender in
the State of California.
Choice of Venue. If there is a lawsuit, Sndemnnor agrees upon Lender's request to submit to the jurisdiction of the :purrs 'uf San
Diego County, State of California.
Joint and Several Liability. All obligations of Indemnitor under this Agreement shall be joint and several, and all references to
Indemnitor shall mean each and every Indemnitor. This means that each fndemnitor signing be!ow is responsible for all obligations in
this Agreement.
No Waiver by Lender. Lender shall not be deemed to have waived any rights under this Agreement unless such waiver is given in
writing and signed by Lender. No delay or omission on the part of Lender in exercising any right shall operate as a waiver of such
right or any other right. A waiver by Lender of a provision of this Agreement shall not prejudice or constitute a waiver of Lender's
right otherwise to demand strict compliance with that provision or any other provision of this Agreement. No prior waiver by Lender,
nor any course of dealing between Lender and Indemnitor, shall constitute a waiver of any of Lender's rights or of any of Indemnitor's
obligations as to any future transactions. Whenever the consent of Lender is required under this Agreement, the granting of such
consent by Lender in any instance shall not constitute continuing consent to subsequent instances where such consent is required and
in all cases such consent may be granted or withheld in the sole discretion of Lender. Indemnitor hereby waives notice of acceptance
of this Agreement by Lender.
Notices. Any notice required to be given under this Agreement shall be given in writing, and shall be effective when actually
delivered, when actually received by telefacsimile (unless otherwise required by law), when deposited with a nationally recognized
overnight courier, or, if mailed, when deposited in the United States mail, as first class, certified or registered mail postage prepaid,
directed to the addresses shown near the beginning of this Agreement. Any party may change its address for notices under this
Agreement by giving formal written notice to the other parties, specifying that the purpose of the notice is to change the party's
address. For notice purposes, Indemnitor agrees to keep Lender informed at all times of Indemnitor's current address Unless
otherwise provided or required by law, if there is more than one Indemnitor, any notice given by Lender to any Indemnitor is deemed
to be notice given to all Indemnitors.
Severability. If a court of competent jurisdiction finds any provision of this Agreement to be illegal, invalid, or unenforceable as to any
circumstance, that finding shall not make the offending provision illegal, invalid, or unenforceable as to any other circumstance. if
feasible, the offending provision shall be considered modified so that it becomes legal, valid and enforceable. If the offending
provision cannot be so modified, it shall be considered deleted from this Agreement. Unless otherwise required by law, the illegality,
invalidity, or unenforceability of any provision of this Agreement shall not affect The legality, validity or enfotceability of any other
provision of this Agreement.
Successors and Assigns. Subject to any limitations stated in this Agreement on transfer of Indemnitor's interest, this Agreement shall
be binding upon and inure to the benefit of the parties, their successors and assigns. If ownership of the Property becomes vested in
a person other than Indemnitor, Lender, without notice to Indemnitor, may deal with Indemnitor's successors with reference to this
Agreement and the Indebtedness by way of forbearance or extension without releasing Indemnitor from the obligations of this
Agreement or liability under the Indebtedness.
Time is of the Essence. Time is of the essence in the performance of this Agreement.
Waive Jury. To the extent permitted by applicable law, all parties to this Agreement hereby waive the right to any jury trial in any
action, proceeding,or counterclaim brought by any party against any other party.
DEFINITIONS. The following capitalized words and terms shall have the following meanings when used in this Agreement Unless
specifically stated to the contrary, all references to dollar amounts shall mean amounts in [awful money of the United States of America.
Word_, and terms used in the singular shall include the plural, and the plural shall include the singular, as the context may require. Words
and terms not otherwise defined in this Agreement shall have the meanings attributed to such terms in the Uniform Commercial Code:
Agreement. The word "Agreement" means this Hazardous Substances Agreement, as this Hazardous Substances Agreement may be
amended or modified from time to time, together with all exhibits and schedules attached to this Hazardous Substances Agreement
from time to time.
Environmental Laws. The words "Environmental Laws" mean any and all state,federal and local statutes, regulations and ordinances
relating to the protection of human health or the environment, including without limitation the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended, 42 U.S.C. Section 9601, et seq. ("CERCLA"}, the Superfund
Amendments and Reauthorization Act of 1986, Pub. L. No. 99-499 ("SARA"), the Hazardous Materials Transportation Act, 49 U.S.C.
Section 1801, et seq., the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq., Chapters 6.5 through 7.7 of
Division 20 of the California Health and Safety Code, Section 25100, et seq., or other applicable state or federal laws, rules, or
regulations adopted pursuant thereto.
Hazardous Substances. The words "Hazardous Substances" mean materials that, because of their quantity, concentration or
HAZARDOUS SUBSTANCES AGREEMENT
Loan No: 0000000018 (Continued) Page 4
physical, chemical or infectious characteristics, may cause or pose a present or potential hazard to human health or the environment
when improperly used, treated, stored, disposed of, generated, manufactured, transported or otherwise. handled. The words
"Hazardous Substances" are used in their very broadest sense and include without limitation any and all hazardous or toxic
substances, materials or waste as defined by or listed under the Environmental Laws. The term "Hazarduus Substances" also
includes, without limitation, petroleum and petroleum by-products or any fraction thereof and asbestos.
Indebtedness. The word "Indebtedness" means all principal, interest, and other amounts, costs and expenses payable under the Note
or Related Documents, together with all renewals of, extensions of, modifications of, consolidations of and substitutions for the Note
or Related Documents and any amounts expended or advanced by Lender to discharge Indemnitor's Obligations or expenses incurred
by Lender to enforce Indemnitor's obligations under this Agreement, together with interest on such amounts as provided in this
Agreement.
Lender. The word "Lender" means BANK OF THE WEST, its successors and assigns.
Note. The word "Note" means the Note executed by PIER PLAZA GROUP LLC in the principal amount of $1,450,000.00 dated
August 12, 2008, together with all renewals of, extensions of, modifications of, refinancings of, consolidations of, and substitutions
for the note or credit agreement.
Occupant. The word "Occupant" means individually and collectively all persons or entities occupying or utilizing the Property,
whether as owner,tenant,operator or other occupant.
Property. The word "Property" means all of Indemnitor's right, title and interest in and to all the Property as described in the
"Property Description" section of this Agreement.
Real Property. The words "Real Property" mean the real property, interests and rights, as further described in this Agreement.
Related Documents. The words "Related Documents" mean all promissory notes, credit agreements, loan agreements, environmental
agreements, security agreements, mortgages, deeds of trust, security deeds, collateral mortgages, and all other instruments,
agreements and documents, whether now or hereafter existing, executed in connection with the Indebtedness.
EACH PARTY TO THIS AGREEMENT ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS AGREEMENT,AND EACH AGREES
TO ITS TERMS. NO FORMAL ACCEPTANCE BY LENDER IS NECESSARY TO MAKE THIS AGREEMENT EFFECTIVE. THIS AGREEMENT IS
DATED AUGUST 12, 2008,
BORROWER:
PIER PLAZA GROUP LLC
TS ALOHA, I C., Manager f PIER PLAZA GROUP LLC
BY:
AY 8 ET ief Financial Officer of TS ALOHA, INC.
LENDER:
BANK OF HE WEST
X
WIL AM BURZYNSKIF Vice President
HAZARDOUS SUBSTANCES AGREEMENT
Loan No: 0000000018 (Continued) Page 5
CERTIFICATE OF ACKNOWLEDGMENT
STATEOF
I SS
COUNTY OF I
On 9 +- 20_10 A before me, M C 6e,&C-2.- A,1 O-T /14Lt.I c-
(here insert name and title of the officer)
personally appeared RAY BURNETT, who proved to me on the basis of satisfactory evidence to be the,prrrg- (s) whose re
subscribed subscribed to the within instrument and acknowledged to me that he;she/they executed the same in hid/her/their authorized ca acit lies),
and that by yslher,their si n,ature(s) on the instrument the UcL:pn(s), or the entity upon behalf of which the, aLrQ, W acted, executed the
instrument_
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.
WITNESS my hand and official seal. M 0-0-
COMM. $1808373 %
Notary Public-California p
Signature San Diego COuaty
Comm, 2 20131 (Seal)
CERTIFICATE OF ACKNOWLEDGMENT
STATE OF
)SS
COUNTY OF �� Q 8 I
On 20QR _before me, A4 C �Oi►►7Gs-- /�}�t�PIL�r N.�H�Is r
(here inserters na and title of 6e officer)
personally appeared WILIAM BURZYNSKI, who proved to me on the basis of satisfactory evidence to be the par— (s) whose ie s)
Hare subscribed to the within instrument and acknowledged to me that Lp/she/they executed the same in.Ws/her/their authorized
canacitu(ies), and that byULj,5;her/their jignature s) on the instrument the rson(s), or the entity upon behalf of which the ersoi(s) acted,
executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.
WITNESS my hand and official seal. M.C.GOMEZ
COMM.81808373
Notary Public-Caliiornie p
San Diego county
Signature CormE (Seal)
LASER PRO Lending, Ver. 5.41.00.004 Copr. Harland Financial Solutions, Inc. 1997, 2008. All Rights Reserved ^CA
C:iCFI1LPLIG210.FC TR-69308 PR-166
EXHIBIT "A"
This EXHIBIT "A" is attached to and by this reference is made a part of the Hazardous Substances Agreement, dated August 12, 2008,
and executed in connection with a loan or other financial accommodations between BANK OF THE WEST and PIER PLAZA GROUP LLC.
DESCRIPTION OF REAL PROPERTY
All that real property located in Orange County,State of California,legally described as follows:
All that certain real property situated in the County of Orange, State of
California, described as follows,
That portion of the Rancho Las Bolsas as per map recorded in Book 2, Page 332
of Patents, in the Office of the County Recorder of Orav) , California,
described as follows: .J-
That portion of the following described land which is above a depth of twenty feet
(20') below the surface thereof:
Commencing at the Westerly corner of Block 103 of Huntington Beach Tract, as
shown on a map recorded in Book 3, Page 36 of Miscellaneous Maps, Records of
Orange County;
Thence along the Southwesterly prolongation of the Northwesterly line of said
Block 103, South 40052'00" West 179.00 feet;
Thence at right angles South 49008'00" East 0.67 feet to the true point of
beginning;
Thence South 40052'00" West 121.00 feet along a line parallel to and 0.67 feet
Southeasterly, measured at right angles, to said Southwesterly prolongation of
the Northwesterly line of said Block 103;
Thence at right angle South 49008'00" East 148.32 feet;
Thence North 401052'00" East 55.42 feet;
Thence South 49008'00" East 9.74 feet;
Thence North 85052'00" East 3.01 feet;
Thence South 49008'00" East 4.14 feet;
Thence North 40052'00" East 37.34 feet;
Thence North 49008'00" West 1.10 feet to a point on a non-tangent curve
concave Southwesterly having a radius of 10.00 feet, a radial bearing through
said point bears South 60034'47" East;
Thence Northerly and Northwesterly 19.39 feet along said curve through a
central angle of 111007'28" to a point of reverse curvature with a curve concave
Northeasterly having a radius of 15.00 feet, a radial bearing though said point
bears North 08017'45" East;
Thence Northwesterly 16.45 feet along said curve through a central angle of
62049'17" to a point whose radial bearing South 71007'02" West;
Thence North 49008'00" West 1.41 feet;
Thence North 40052'00" East 19.99 feet;
Thence North 491108'00" West 131.00 feet to the true point of beginning.
Excepting any portion of the described property below the line of natural ordinary high
water mark where it was located prior to any artificial or avulsion changes in the locations
of the shoreline.
legal rev.(010698)
EXHIBIT "A"
Loan No: 0000000018 (Continued) Page 2
THIS EXHIBIT "A" IS EXECUTED ON AUGUST 12, 2008.
BORROWER:
PIER PLAZA GROUP LLC
TS ALOH ., Mana f PIER PLAZA qqPUP LLC
By:
RAY BUMETT, Chief Financial Officer of TS ALOHA,INC,
LENDER:
BANK OF TH WEST
X
W! AM URZYNS U,Vice resi ent
.<5cF aen i, ,ns .,.=.a.00.00a:oo.rrai�,a emao.i sornoo.. c. eo>.zone. ui Flgnts w-:-...a. c< .._Fria:srr..Fc -r.exc a i„ —_
ORD114G REQUESTED BY:
Recorded in Official Records,Orange County
C��t�SM1�
Tom Daly,Clerk-Recorder
RECORDING REQUESTED BY IIIIIIIIIIIIN IIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIII IIIIIIIIIIIII 210.00
AND WHEN RECORDED MAIL TO: 2008000430014 01:06PM 09/11/08
105 59 C34 69
0.00 0.00 0.00 0.00 204.00 0.00 0.00 0.00
Douglas L.Collins,Esq.
Law Offices of Douglas L.Collins
8491 Sunset Blvd.,Suite 360
Los Angeles,CA 90069
J 725Z 83
LANDLORD CONSENT AND ESTOPPEL CERTIFICATE
FOR PIER PLAZA GROUP LEASEHOLD
This LANDLORD CONSENT AND ESTOPPEL CERTIFICATE(this"Agreement")dated
as of September 02 , 2008 is executed by and between the City of Huntington Beach,
a municipal corporation (hereinafter"Landlord"), and Pier Plaza Group LLC,a California
limiied liability company ("Tenant"), in favor of Bank of the West, a California banking
corporation ("Lender"),with respect to that certain Lease dated January 16, 1996 as amended
July 7, 1997,January 5, 1998 and February 17, 1998(the"Lease"),by and between Landlord
and T S Management Corp. ("TSM"), which Lease was assigned by TSM to Tenant by an
Assignment(the"Assignment")dated July 7, 1997,pursuant to which Tenant has acquired an interest
(the"Leasehold")in the real property described on Exhibit"A"attached hereto and incorporated
herein by this reference(the"Premises"). In the event of any conflict between the provisions of
this Agreement and the provisions of the Lease,this Agreement shall control.
l. Landlord hereby consents to Tenant's encumbrance of the Leasehold,or any part
or parts thereof,under one or more deeds of trust,security deeds,mortgages, sale-and leaseback
documents,assignments of rents or leases,security agreements,financing statements and other
similar documents(collectively,the"Mortgage"),and assigning the Lease and Leasehold,or any
part or parts thereof,and any subleases under the Lease,as collateral security for the obligations of
Tenant under that certain Loan Agreement dated as of August 12 2008(the"Loan
Agreement")by and between Tenant and Lender,and the agreements,instruments and other
documents executed in connection therewith(hereafter collectively referred to herein,together with
the Mortgage and Loan Agreement,as the"Loan Documents").Lender shall have the right to rely on
the security afforded by the Leasehold and to enforce the Mortgage and to acquire and to succeed to
the interest of Tenant under the Lease by foreclosure,whether by judicial sale,by power of sale
contained in any security instruments,or by assignment or deed given in lieu of foreclosure,and
thereafter may,subject to the provisions of Section 15.2 of the Lease,without further consent of
Landlord,sell,transfer or assign the Lease and the Leasehold or sublet the Premises.The obligation
of the Lender and any subsequent owner whose title to the Leasehold is acquired through any
foreclosure sale or deed-in-lieu transaction pursuant to the Mortgage,and any successor or assign of
Lender or such subsequent owner(each of Lender,any subsequent owner and any such successor and
assign hereinafter referred to as a"Transferee")for the performance of the terms of the Lease shall
terminate upon the sale,transfer or assignment of the right,title and interest of such Transferee in the
Leasehold for the Premises to any other person or entity.
2. True,complete and correct copies of the Lease and the Assignment are attached
hereto as Exhibits"B"and"C",respectively,and are incorporated herein by this reference-
1
3. Each of Tenant and Landlord(as applicable)hereby represents,warrants and
covenants to Lender that:
a. The Lease is unmodified and in full force and effect,and no amendments,
changes or supplements have been made thereto(other than by the amendments dated
July 7, 1997, January 5, 1998 and February 17, I998 and the Landlord Consent and
Estoppel Certificate for Pier Plaza Group Leasehold dated January 5, 1998, all such
amendments attached hereto as Exhibit"A-). The conditions set forth in Section 3 of the
Lease have been met and satisfied and the Effective Date(as defined in Section 3 of the
Lease)of the Lease is June 15, 1997. Without the prior written consent of Lender,(i)neither
Landlord nor Tenant shall amend or modify the Lease,(ii)Landlord shall not accept the
surrender of,and Tenant shall not surrender,the Premises or any part thereof,(iii)neither
Landlord nor Tenant shall terminate or cancel the Lease;any attempt to do any of the
foregoing without Lender's prior written consent shall be null and void. Section 4.2 of the
Lease provides as follows:
4.2 Option to Extend. Provided Tenant is not in material default under
this Lease beyond applicable notice and cure periods when notice under this
subsection is given,Tenant may extend the lease for four further successive
terms of ten(10)years(each such term is individually an"Option Term"),
each commencing on expiration of the preceding term,by giving City written
notice of Tenant's desire to do so at any time not more than six(6)months
prior to nor less than three(3)months prior to expiration of the Term or any
extension thereof.
b. The Lease constitutes the sole and entire agreement between Landlord and
Tenant relating to the Premises.Landlord is the current fee owner of the Premises and the
current landlord under the Lease,and Landlord has not encumbered or mortgaged its interest
in the Lease or the Premises.
C. Tenant has been in possession of the Premises since December 1, 1997.
Tenant has four(4)options to extend the Lease term,each for an additional term of ten(10)
years(each,an"Option").Pursuant to the terms of Section 4.2 of the Lease,the first Option
has been validly and effectively exercised by Tenant,thereby extending the term of the Lease
to September 15,2018,pursuant to that certain notice attached hereto as Exhibit"D"and
incorporated herein by this reference(and Landlord further acknowledges that the Lease is
incorrectly referenced in such notice as being dated"June 15, 1997"and"September 15,
1998"and that the correct date of the Lease is January 16, 1996,and that the applicable
section of the Lease is incorrectly referenced in such notice as"Section 4 4.2_") Lender
shall have the right at any time during the term of the Lease to do any act required of or
permitted by Tenant thereunder(including,without limitation,the exercise of any Option),
and all such acts done or performed shall be effective to prevent a termination of the Lease,
as if the same had been done or performed by Tenant. In the event that Tenant shall fail to
exercise any Option within the time period required under the Lease,Landlord shall give
written notice to Lender of such failure and Lender shall have sixty(60)days.from the
expiration of such time period to exercise such Option for and on behalf of Tenant.The
failure of Landlord to give the aforementioned notice to Lender shall not impair,modify or
otherwise affect Tenant's obligations under the Lease or Landlord's rights and remedies
thereunder.
d. There are not,to Landlord's knowledge,any uncured defaults on the part of
Tenant under the Lease;no event has occurred and no condition exists which,with the
2
giving of notice or the lapse of time or both, would constitute a default under the Lease;
and Tenant has performed and complied with all of the terms, covenants and conditions
contained in the Lease to be performed or complied with as of the date hereof.
e. There are no conditions or events(except as set forth in the Lease)that
would prevent the Lease from becoming effective or would permit a cancellation or
termination of the Lease by Landlord or by Tenant.
f. Tenant has completed construction of the Building in accordance with the
Lease,and(ii)installation of the tenant improvements in the Building in accordance with the
Landlord-approved Restaurant TI Final Plans.
g. The Lease, any New Lease,any replacements thereof,and any sublease
with respect to the Lease are,and shall be at all times,prior and superior to any mortgage,
deed of trust,or other financing relating to the Premises.
4. In the event that Lender(or any purchaser at a sale by Lender)succeeds to the
interests of Tenant under the Lease,the Lease shall continue with the same force and effect as if
Landlord and Lender(or such purchaser)had entered into a lease with the same terms and provisions
as those contained in the Lease and,if Lender succeeds to Tenant's interests under the Lease,Lender
agrees to abide by the terms and conditions of the Lease.
5. Promptly upon demand by Lender from time to time,Landlord shall deliver to
Lender an estoppel certificate executed by Landlord stating the amount of rent payable under the
Lease,the date through which rent has been paid under the Lease,whether or not options to
extend the term of the lease have been exercised,and whether or not there are any defaults,and
the specific nature of any claimed defaults.
6. Landlord agrees to give written notice to Tenant and Lender of any breach by
Tenant under the Lease and of the occurrence of any material default set forth in Section 16.1 of the
Lease(collectively,"Events of Default"). Landlord agrees that in the event Tenant fails to
perform,or to cure the failure of,any term,covenant or condition in the Lease,Lender shall have
60 days from the receipt of the notice of any such breach or Event of Default to cure or commence
to cure the breach or Event of Default,during which time Landlord shall abstain from pursuing
remedies available as a result of the breach or Event of Default. Notwithstanding the foregoing,with
respect to any Event of Default which is incurable by nature or which cannot be reasonably be cured
by Lender because it does not have the right to possession of the Premises and improvements thereon,
Landlord shall not terminate the Lease by reason of such Event of Default if and so long as,within
sixty(60)days from the date Landlord gives to Lender notice of such an Event of Default,Lender(a)
initiates foreclosure,judicially or by trustee's sale,of the Mortgage and thereafter proceeds to
foreclose the Mortgage or to acquire by other means the Leasehold,and(b)keeps and performs all of
the covenants and conditions of the Lease requiring the payment of money and those non-monetary
covenants and conditions reasonably susceptible of performance by the Lender,subject to the notice
and grace period provisions set forth in the Lease. Lender shall be relieved from its obligations to
initiate foreclosure of the Mortgage and to proceed therewith during such time as Lender is legally
strayed(as in the case of a bankruptcy proceeding)or enjoined from so proceeding.If the applicable
Event of Default has been cured prior to the completion of foreclosure of the Mortgage,Lender need
not complete such foreclosure.
7 In the event of any arbitration, appraisal or other proceedings relating to the
Lease(including,without Iimitation,condemnation and insurance settlement negotiations and/or
proceedings), Lender shall have the right to participate in any such proceedings in association with
3
Tenant or on its own behalf as an interested party. In the event of any legal proceedings involving
the Lease,Lender shall be entitled to intervene in such proceedings and be made a party thereto.
Any settlement or other agreement regarding any insurance policy or any condemnation
proceeding to be entered with respect to the Premises shall require the Lender's prior written
consent.
8. In the event of the bankruptcy of Tenant, Landlord agrees to waive the sixty
(60)-day limitation period under Section 365 of the Bankruptcy Code, I 1 U. S C §101 et seg.
(as the same may be amended or recodified from time to time, the "Bankruptcy
Code"),for an initial extension period of thirty(30)days and thereafter such other and further
extension periods as are reasonable and necessary for Lender to perform the undertakings agreed
upon below,provided that all rent and other charges due under the Lease are paid. In
consideration of Landlord's agreement above and to the new lease provisions in favor of Lender
contained below,Lender does hereby undertake and agree for the benefit of Landlord that, if
at anytime a bankruptcy proceeding shall be commenced concerning Tenant-mortgagor
and/or the Leasehold,Lender shall,within the statutory time period or any extension thereof provided
under Section 365 of the Bankruptcy Code for the rejection or assumption of leases,use its reasonable
efforts to diligently and in good faith,obtain or cause the Tenant-mortgagor and/or'Trustee in
bankruptcy to obtain either(i)an abandonment of the Lease by the bankruptcy court pursuant to
Section 554 of the Bankruptcy Code,as amended; or(ii)an assumption of the Lease pursuant to
Section 365 of the Bankruptcy Code,as amended.
In the event that,notwithstanding Lender's compliance with the above provisions of
this Section 8 and all other provisions of this Agreement,the Lease shall terminate prior to the
natural expiration of the term thereof for any reason whatsoever,then, and in any such event,
Lender shall thereupon have the option to obtain a new lease("New Lease")of the Premises in
accordance with and upon the following terms and conditions-
a. Upon the written request of Lender delivered to Landlord within sixty(60)
days after the termination of the Lease as aforesaid,Landlord shall enter into a New
Lease of the Premises with Lender, or its designee,as provided in paragraph(b)
immediately below;provided,however,that if Landlord receives no such written request
within said sixty(60)-day period,then all of Lender's rights to a New Lease hereunder shall
automatically terminate.
b. Such New Lease shall be effective as of the date of termination of the
Lease and shall be for the remainder of the term of the Lease at the same rent and other
charges therein provided and otherwise upon the same agreements,terms,covenants and
conditions contained therein.The New Lease issued hereunder shall have the same relative
priority in time and right as the Lease and have the benefit of and vest in Lender all of the
same rights,title,interest,powers and privileges of Tenant thereunder_The New Lease shall,
subject to the same agreement,terms,covenants and conditions as contained in the Lease,
also transfer to Lender or its designee all buildings,improvements and appurtenances situated
on the Premises,together with all equipment,fixtures and machinery therein;subject,
however,to any obligation set forth in the Lease to surrender such items to Landlord upon
termination or expiration of the Leasehold.Concurrently with execution of the New Lease,
Landlord shall assign to Lender or its designee Landlord's interest in any then existing
sublease under which the subtenant has attomed to and been recognized by Landlord.During
the period between termination of the Lease and execution of the New Lease,Landlord
shall not amend or modify the subleases or take any action which will adversely affect the
Premises or give rise to any liens against the Premises.
4
C. As a condition to and concurrently with delivery of such New Lease,
the lessee named therein shall pay any and all sums which would at the time of the
execution thereof be due under the Lease but for termination as aforesaid, and shall fully
otherwise remedy any existing defaults under the Lease susceptible of cure by Lender,or
such designee,and shall pay to Landlord all costs and expenses,including but not limited to
any insurance premiums paid or incurred by Landlord in order to maintain the insurance
coverage required under the terms of the Lease,and the reasonable attorney's fees,court
costs and disbursements incurred by Landlord by reason of the termination of the Lease
andlor in connection with the preparation,execution and delivery of such New Lease.Any
default which cannot be cured by such lessee until it obtains possession of the Premises shall
be cured by the lessee within a reasonable time after it obtains possession.
d. Lender,if it is the initial lessee under the New Lease,may assign such New
Lease,subject to the provisions of Section 15.2 of the Lease,without Landlord's further
consent,and Lender shall,upon such assignment,be released from all liability for the
performance or observance of the covenants and conditions in such New Lease contained
and on the lessee's part to be performed and observed from and after the date of such
assignment,provided that a certified copy of such assignment be provided to Landlord.
9. All insurance policies obtained by Tenant and covering the Premises shall contain
a standard mortgagee protection endorsement and name Lender as an additional insured,and the
Lender shall be entitled to certificates of such policies.
10. No notice of default under the Lease,notice of intention to terminate the Lease,or
notice of termination of the Lease or any other notice which is given by Landlord to Tenant shall be
binding upon or affect Lender unless it is in writing and a copy of such notice has been given at
substantially the same time and in the same manner to Lender at such address as Lender has last
spe,-zified by written notice to Landlord;provided,however,that no failure of Landlord to provide any
such notice to Lender shall impair,modify or otherwise affect Tenant's obligations under the Lease or
the rights and remedies of Landlord thereunder.Any notices required to be given to Lender hereunder
shall be given to Lender at its address as follows:
Bank of the West
1290 4 h Avenue
San Diego,CA 92101
Attn: William A. Burzynski
With a copy to:
Law Offices of Douglas L.Collins
8491 Sunset Blvd.,Suite 360
Los Angeles,California 90069
IL This Agreement and all rights hereby granted to Lender shall terminate upon
repayment by Tenant of all indebtedness and other amounts owing under the Loan Documents.The
terms and provisions of this Agreement shall bind Landlord and its successors and assigns and shall
inure to the benefit of Lender and its successors and assigns and any subsequent lenders with respect to
the Leasehold in the Premises,and any subsequent purchasers of the Leasehold in the Premises.Notice
of acceptance of this Agreement by Lender is waived.
12. This Agreement shall not be binding upon any party until execution by all parties.
5
I3. This Agreement may be executed in one or more counterparts,each of which shall be
deemed an original,but all of which together constitute one and the same instrument.
14_ The Lease is hereby supplemented,amended and modified in all other respects
necessary to reflect the terms and provisions set forth in this Agreement.Except as expressly modified
herein,the terms of the Lease shall remain unchanged and in full force and effect.
15. This Agreement shall be construed and governed by the laws of the State of
California.
16. Each of Landlord and Tenant acknowledge and agree that the acquisition by either
party of the right,title,interest and estate of the other party in and to the Premises shall not result in
termination or cancellation of the Lease by operation of the principle of merger of estates or
otherwise,notwithstanding any applicable law to the contrary.Each party hereto agrees to provide
further assurances,to take any and all further actions,and to execute,acknowledge,verify,certify,
deliver,enter into,file and/or record any and all other documents,instruments,and agreements
necessary or appropriate to consummate the transactions contemplated by this Agreement-
IT This Agreement cannot be amended,modified or supplemented except by a written
document signed by the affected parties.
[signatures follow on next page]
6
IN WITNESS WI-fREOF,the parties have executed this Agreement as of the date first above
written.
Tenant: Landlord:
PIER PLAZA GROUP,LLC, CITY OF HUNTINGTON BEACH,a municipal
a California limited liability company corporation of the State of California
By: T S Aloha,Inc.,a Hawaii corporation,
formerly known as T S Management Corp.,
its Managing Member Mayor
By:
Ra Burnett,Chief Financial Officer City Clerk
AND INITIATED AND APPROVED:
Director of Community Services
P
ITS:(circle one ecretary/ hief Financial REVIEWED AND APPROVED:
Officer/Asst.Secre reasurer
Lender: City Administrator
BANK F THE WEST
n By. APPROVED AS TO FORM:
J��\
William A.Burzynski,Vice President City Attorney
COUNTERPART
7
ACKNOWLEDGMENTS
STATE OF CALIFORNIA }
�y�_ ) SS.
4 COUNTY OF � -* 1 }
}
On W2 �f1 ,before jue. a notary
public,personally appeared o f who proved to me
on the basis of satisfactory evidence to be the persona hose nameq)isLwrsubscribed to the within
instrument and acknowledged to me that he/shcAhW executed the same in his4wkheir authorized
capacity(!*,and that by hi&lez4theirsignature(s}on the instrument the person(s or the entity upon
behalf of which the persori(Wacted,executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing
paragraph is true and correct_
Witness my hand and official seal.
Si e
c
of�A K NAVABr
Commission#1615802
`zc IT Notary Public-California
San Diego County
STATE OF CALIFORNIA
My Comm.E::pl;cs Oct 231,2009
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COUNTY OF }
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OnAAAUS4 before me, D� �`►^t � a notary
public, onally appear,d r who proved to me
on the basis of satisfactory evidence tb be the person(s)whose name(s)islare 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.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing
paragraph is true and correct.
Witness my hand and official seal.
Signature J�CQUELIMF REED
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ACKNOWLEDGMENT
STATE OF CALIFORNIA }
} SS.
COUNTY OF SG J" D }
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On 3-0 03 before me, k C W. U-Ni IZU�- A a notary
public,Orsonally appeared " V—a ,who proved to me
on the basis of satisfactory evidence to behhe 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.
I certify under PENALTY OF PERJURY under the laws of the State of Califomia that the foregoing
paragraph is true and correct.
Witness my hand and official seal.
JACQUELINE REED
.- COMM.01538889 rn
Signature y r Notary Poblic•Cagtomis
4N isSANDIEGOCOUNTY
My Comm.Exp,Doc 19,208
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STATE OF CALIFORNIA }
} SS.
COUNTY OF }
}
On before me, ,a notary
public,personally appeared who 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.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing
paragraph is true and correct.
Witness my hand and official seal.
Signature
Notary Public
IN WITNESS WHEREOF,the parties have executed this Agreement as of the date first above
written.
Tenant: Landlord:
PIER PLAZA GROUP,LLC, CITY OF 14UNTINGTON BEACH,a municipal
a California limited liability company corporation of the State of California
By: T S Aloha,Inc.,a Hawaii corporation, t
formerly known as T S Management Corp.,
its Managing Member Mayor
By: t'y- '/Z")
Ray Burnett,Chief Financial Officer City Clerk
AND IN TED AND APPROVED:
By: 4 � �
irector of Community ervices
print name r
ITS:(circle one)Secretary/Chief Financial APP OVED:
Officer/Asst.Secretary—Treasurer
Lender: City Admi is or
BANK OF THE WEST
APPROVED AS TO FORM:
By: C� 2 16 �=B
William A.Burzynski,Vice President City Attorney
COUNTERPART
7
ACKNOWLEDGMENT
STATE OF CALIFORNIA }
) ss
COUNTY OF ORANGE }
On September 4, 2008 before me,P. L. Esparza,Notary Public,personally appeared Debbie
Cook, ��,ho proved to me on the basis of satisfactory evidence to be the person whose name is
subscribed to the within instrument and acknowledged to me that she executed the same in her
authof—Azed capacity,and that by her signature on the instrument the person,or the entity upon
behalf of which the person acted,executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the
foregoing paragraph is true and correct.
WITNESS my hand and official seal. 100
e79
/ 110#*CGOM8004
(Notary Signature
ACKNOWLEDGMENT
STATE OF CALIFORNIA )
) ss
COUNTY OF ORANGE )
On September 4,2008 before me, P. L. Esparza,Notary Public, personally appeared Joan L.
Flynn, who proved to me on the basis of satisfactory evidence to be the person whose name is
subscribed to the within instrument and acknowledged to me that she executed the same in her
authorized capacity, and that by her signature on the instrument the person,or the entity upon
behalf of which the person acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the
foregoing paragraph is true and correct.
WITNESS my hand and official seal.
RL
(Notary Signatur
Notary
GOVERNMENT CODE 27361.7
I CERTIFY UNDER PENALTY OF PERJURY THAT THE NOTARY SEAL ON THE
DOCUMENT TO WHICH THIS STATEMENT IS ATTACHED READS AS FOLLOWS:
Name of ► e
Commission Number: Date Commission Expires:
County where Bond is Filed: ®�
Manufacturer/Vendor Number:
Place of Execution: San Diego Date:
Signature:
Dane to giarling
4/94
Rev.Form#R10
EXHIBIT"A"
LEGAL DESCRIPTION
That certain real property located in the County of Orange,State of California,described as follows:
ALL THAT CERTAIN LAND SITUATED IN THE STATE OF CALIFORNIA,COUNTY OF
ORANGE,CITY OF HUNTINGTON BEACH,AND IS DESCRIBED AS FOLLOWS:
THAT PORTION OF THE RANCHO LAS BOLSAS,AS PER MAP RECORDED IN BOOK 2,
PAGE 332 OF PATENTS,IN THE OFFICE OF THE COUNTY RECORDER OF LOS ANGELES,
CALIFORNIA,DESCRIBED AS FOLLOWS:
THAT PORTION OF THE FOLLOWING DESCRIBED LAND WHICH IS ABOVE A DEPTH OF
TWENTY FEET(20')BELOW THE SURFACE THEREOF:
COMMENCING AT THE WESTERLY CORNER OF BLOCK 103 OF HUNTINGTON BEACH
TRACT,AS SHOWN ON A MAP RECORDED IN BOOK 3,PAGE 36 OF MISCELLANEOUS
MAPS,RECORDS OF ORANGE COUNTY;THENCE ALONG THE SOUTHWESTERLY
PROLONGATION OF THE NORTHWESTERLY LINE OF SAID BLOCK 103,SOUTH 40° 52'
00"WEST 179.00 FEET;THENCE AT RIGHT ANGLES SOUTH 49'08'00"EAST 0.67 FEET
TO THE TRUE POINT OF BEGINNING;THENCE SOUTH 40°52' 00"WEST 121.00 FEET
ALONG A LINE PARALLEL TO AND 0.67 FEET SOUTHEASTERLY,MEASURED AT RIGHT
ANGLES,TO SAID SOUTHWESTERLY PROLONGATION OF THE NORTHWESTERLY LINE
OF SAID BLOCK 103;THENCE AT RIGHT ANGLE SOUTH 49'08'00"EAST 148.32 FEET;
THENCE NORTH 400 52'00"EAST 55.42 FEET;THENCE SOUTH 49°08'00"EAST 9.74
FEET;THENCE NORTH 85°52'00"EAST 3.01 FEET;THENCE SOUTH 49'08' 00"EAST 4.14
FEET;THENCE NORTH 40°52'00"EAST 37.34 FEET;THENCE NORTH 49'08' 00"WEST
1.10 FEET TO A POINT ON A NON-TANGENT CURVE CONCAVE SOUTHWESTERLY
HAVING A RADIUS OF 10.00 FEET,A RADIAL BEARING THROUGH SAID POINT BEARS
SOUTH 600 34'47"EAST;THENCE NORTHERLY AND NORTHWESTERLY 19.39 FEET
ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 1110 07' 28"TO A POINT OF
REVERSE CURVATURE WITH A CURVE CONCAVE NORTHEASTERLY HAVING A
RADIUS OF 15.00 FEET,A RADIAL BEARING THROUGH SAID POINT BEARS NORTH 080
17'45"EAST;THENCE NORTHWESTERLY 16.45 FEET ALONG SAID CURVE THROUGH A
CENTRAL ANGLE OF 620 49' 17"TO A POINT WHOSE RADIAL BEARING BEARS SOUTH
71°07'02"WEST;THENCE NORTH 49°08'00"WEST 1.41 FEET;THENCE NORTH 40'52'
00"EAST 19.99 FEET;THENCE NORTH 49°08'00"WEST 131.00 FEET TO THE TRUE POINT
OF BEGINNING.
EXCEPTING ANY PORTION OF THE DESCRIBED PROPERTY BELOW THE LINE OF
NATURAL ORDINARY HIGH WATER MARK WHERE IT WAS LOCATED PRIOR TO ANY
ARTIFICIAL OR AVULSION CHANGES IN THE LOCATION OF THE SHORELINE.
EXHIBIT"B"
Copy of lease(including amendments thereto)
See attached.
SECOND AMENDMENT AMENDING LEASE FOR PREMISES AT
HUNTINGTON BEACH PIER PLAZA,DATED JANUARY 16, 1996,
BETWEEN THE CITY OF HUNTINGTON BEACH
AND T.S. MANAGEMENT CORPORATION,
AS ASSIGNED TO PIER PLAZA GROUP,LLC
THIS SECOND AMENDMENT("Amendment")is made and entered into as of this
l2�day of f"_ , 1998,by and between the CITY OF HUNTINGTON BEACH, a municipal
corporation of the State of California("City")and PIER PLAZA GROUP, a California Limited
Liability Company, ("Tenant").
REC_..UTLS
A. The City and T.S.Management Corp. entered into a lease("Lease")dated January 16,
1996, for the lease of certain portions of the Pier Plaza. Said Lease was amended on July 7,
1997, and the City approved the assignment of the Lease, as amended,to Tenant on July 7, 1997.
A First Amendment substituting for the July 7, 1997 amendment was entered into on January 5,
1998 (First Amendment).
B. The City and Tenant wish to further amend the Lease by amending the legal
description of the property to be leased.
NOW, THEREFORE, in consideration of the mutual covenants herein contained,City
and Tenant agree as follows:
SECTION 1. Exhibit A to the Lease,containing the legal description to the property to be
leased, is hereby amended. The new legal description is attached to this Second Amendment as
"Exhibit A"and incorporated herein as if fully set forth.
1//
11/
I
SECTION 2. Except as amended herein,the provisions of the Lease entered into between the
City and T_S. Management Corp. on January 16, 1996 and assigned to Tenant, and the First
Amendment thereto entered into on January 5, 1998, shall be binding on the parties hereto and
shall remain in full force and effect.
IN WITNESS WHEREOF,the parties hereto have executed the Amendment to Lease as
of the date first written above.
"TENANT: CITY OF HUNTINGTON BEACH,
PIER PLAZA GROUP,LLC. a municipal corporation of the
State of California
By: (mot '
A�r� U::!� -"�!
y Mayor
(print or type name) —
Its:(circle one Chairm residenttVice President ATTEST:
City Clerk Z11 Wyk
By: -� � APPROVED AS TO FORM:
(print or type name)
Its: (circle one Secre ief Financial Officer/
Assi.Secretary-Treasurer �'I City Attorney 19 8
REVIEWED AND APPROVED: INITIATED APPROVED:
City A strator Director of Co unity Services
The foregoing instrument is a correct
copy of the original on file in this office.
Attest t��o',. y� I g-V
City Clerk and Ex-officio Clerk .f L.;e City
Councii of the City of Huntington i}each,
California.
BY Deputy
U
2
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p
Vk
The hereinafter described property and building thereon will continuously be used solely and
exclusively for the operation of restaurants in accordance with deed restrictions from the
HUNUNGTON BEACH COMPANY to the CITY OF HUNTTNGTON BEACH on July 25,
1968:
That portion of the following described land which is above a depth of twenty feet (20) below
the surface thereof:
Commencing at the westerly corner of Block 103 of Huntington Beach Tract in the City of
Huntington Beach, County of Orange, State of California as shown on a map recorded in Book 3,
Page 36 of Miscellaneous Maps, records of Orange County; thence along the southwesterly
prolongation of the northwesterly line of said Block 103, South 40'52'00" West 179.00 feet;
thence at right angles South 49°08'00" East 0.67 feet to the True Point of Beginning; thence
South 40°52'00" West 12I.00 feet along a line parallel to and 0.67 feet southeasterly, measured
at right angles, to said southwesterly prolongation of the northwesterly line of said Block 103;
thence at right angle South 49°08'00" East 148.32 feet; thence Nortli 40°52'00" East 55.42 feet;
thence South 49°08'00" East 9.74 feet; thence North 85°52'00" East 3.01 feet; thence South
49008'00" East 4.14 feet; thence North 40052'00" East 37.34 feet; thence North 49008'00" West
1.I0 feet to a point on a non-tangent curve concave south«esterly having a radius of 10.00 feet, a
radial bearing through said point bears South 60°34'47" East; thence northerly and northwesterly
1939 feet along said curve through a central angle of 111'07'28" to a point of reverse curvature
with a curve concave northeasterly having a radius off 15.00 feet, a radial bearing though said
point bears North 08°17'45" East; thence northwesterly 16.45 feet along said curve through a
central angle of 62°49'17" to a point whose radial bearing bears South 71°07'02" West; thence
North 49'08'00" West 1.41 feet; thence North 40°52'00" East 1999 feet: thence North 49°08'00"
West 131.00 feet to the True Point of Beginning_
Containing an area of 18,298.90 Square Feet.
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EXHIBIT 'B'
BLOC 103 d
3750. 3750' 10 q 8 7 6 5 4 3 2 1
30.00' 30.O0'
M Of HUNTIfIGTON EAG
BOOK 3. PA z 36 M.M.
S.W. GOR R BL K 10
POI OF OMME 4(;EtV T
' PAS no G0A5T HIGHWAY
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SGALE: 1'=60'
�' L9 N 49'08'00" W 131.00' NUMBER vwR cTION D15TANGf
_ r L1 N 405200' E Iq.99'
�? 38�7` —. 2 r
z q }'.OB. `' C1 G_ 3 L2 N 49'080O' W 1.41'
N 44DS OD' W 1.10'
L4 N 4052 00' E 37.34'
IC6 3 L5 N 492800" W 4.14'
p -Q) I L6 N $552 00' E 3.01'
L5 t7 N 4Y08 DO" W V4'
o� 18,2g8.90 5Q. E7. �) L8 N 4052 00' E 55.42'
z L9 N 49"O8 00" W 0.67'
N 4708'05' W 448.32 J NUMSER DELTA RAD105 LENGTH
01 624977' 15.00 16.45
G2 111'07 28' 10.O0 19.3q
ALDEN & SKETCH TO ACCOMPANY
SSOCIATES LEGAL DESCRIPTION
18012 COWAN. SUITE 210, IRv1NE, CA 92614 W.O. No. 0937-404-1 Date 12/03/97
(714) 660-0110 FAX: 660-0418 Engr D.W Chk. JA Sheet 1 Of 1
FIRST AMENDMENT SUBSTITUTING FOR"AMENDMENT TO LEASE"
AND AMENDING LEASE FOR PREMISES AT
HUNTINGTON BEACH PIER PLAZA,DATED JANUARY 16,1996,
BETWEEN THE CITY OF HUNTINGTON BEACH
AND T.S.MANAGEMENT CORPORATION,
AS ASSIGNED TO PIER PLAZA GROUP,LLC
THIS FIRST AMENDMENT("Amendment's is made and entered into as of this
5tL day of , 1998,by and between the CITY OF HUNTINGTON BEACH,a municipal
corporation of the State of California("City)and PIER PLAZA GROUP,a California Limited
Liability Company,{`"Tenant").
RECITALS
A. The City and T.S. Management Corp. entered into a lease("Lease")dated January 16,
1996,for the lease of certain portions of the Pier Plaza,a copy of which is attached hereto as
"Exhibit A"and incorporated herein as if fully set forth. Said Lease was amended on July 7,
1997,and the City approved the assignment of the Lease,as amended,to Tenant on July 7, 1997. '
B. City and Tenant wish to further amend certain provisions of said Lease to reflect the
changed nature of the Project. Tenant intends to develop the Premises and to sublease the upper
and lower floors to two restaurants. Said subleases are subject to the prior approval of City. In
order to preserve ease of understanding of the Lease,this Amendment incorporates the
provisions contained in the July 7, 1997 Amendment to Lease,and is intended as a novation and
substitution of the July 7, 1997 Amendment to Lease.
NOW,THEREFORE,in consideration of the mutual covenants herein contained,City
and Tenant agree as follows:
SECTION 1. Section 2.5 of the Lease is hereby amended to read as follows:
construction rider as amended herein,Tenant's obligations to construct the building on the
Premises shall consist'ofpaying all permit fees associated with the construction of the Premises,
utility connection fees,any and all architectural and construction supervision fees and
construction of all building and landscape improvements on the pad site. Tenant shall submit for
City approval a signage plan consistent with the City's sign code. The expense for placement of
such signs as are approved by the City shall be the sole responsibility of Tenant"
SECTION 2. Section 3 of the Lease is hereby amended to read as follows: .
1 ��/1i�iT�• �:�
"3 EFFECTIVE DATE
This Lease shall be effective as of June 15, 1997."
SECTION 3. Subsection 6.1 of the Lease is hereby amended to read as follows:
"6.1 Minimum Annual Rent
(a) Banc Minimum Annual Rent. From and after the Rent Commencement
Date,Tenant shall pay to City as minimum annual rent for the Premises("Minimum Annual
Rent'),without deduction,setoff,prior notice,or demand,the sum of$210,000.00,for each of
the two(2)years of the Term of this Lease succeeding said Date. For each of the following two
years the Minimum Annual Rent paid by Tenant shall be the sum of$225,000.00. Commencing
with the fifth year after the Rent Commencement Date,and each year thereafter during the Term
and any extension thereof,the fixed Minimum Annual Rent shall be the sum of$240,000.00,
except as adjusted in accord with paragraph(b)of this subsection. One-twelfth of the Minimum
Annual Rent shall be payable monthly in advance of the first day of each month. Should
monthly payments for Minimum Annual Rent be required for any partial month pursuant to any
provision of the Lease,such Rent shall be prorated in accordance with the actual number of days
in the month in which such proration occurs.
Rent shall be payable at the City Treasurer's office of City at 2000 Main
Street,Huntington Beach,California or at such other place or places as City may from time to
time designate by written notice delivered to Tenant. Rent payment shall be considered
delinquent if not paid within 15 days of due date and Tenant shall be subject to default under the
terms and conditions of Section 16.
(b) Periodic A 'us ent. From and after the fifth anniversary of the Rent
Commencement Date,the Minimum Annual Rent shall be adjusted to equal seventy-five(751%)
of the average of the actual Rent received by City over the past five years of operation or
$240,000.00,whicheverls greater."
SECTION 4. Subsection(b)of section 6.2 of the Lease is hereby amended by adding subpart
(13)to read as follows:
"(13) Tips and gratuities,including service charges on prearranged functions."
_ - —SRCT1 N S:-Subsec 6.3 o e ease is here y amen d ore as o ows:
"6.3 Pea "a Rent.
(a) Pentage. In addition to Minimum Annual Rent,during the Term or any
extension thereof,Tenant shall pay to City a sum(Percentage Rent' equal to the amount that the
product of the percentage rate set forth in this paragraph multiplied by all Gross Sales at the
Premises exceeds the Minimum Annual Rent paid during the Operational Year.
2
An"Operational Year"is a one-year period ending December 31. For
purposes of computing the Percentage Rent for any partial Operational Year at the beginning or
end of the Term or any extension thereof,the volume of Gross Sales for that period shall be
adjusted pro rata to the number of months in that partial Operational Year to determine the
percentage rate to utilize.
Percentage Rent will be based on the following annual Gross Sales
percentage:
Sales Volume Per. nta e t
Years 1-5 Years 6-50
UPSTAIRS LEVEL:
Gross Sales from-0-to$6,000,000.00 3% 4%
Gross Sales above$6,000,000.00 5% 5%
Example:At a Gross'Sales of$9,000,000,Percentage Rent in years 1-5 of the Lease
would be as follows:
3%of$6,000,000=$180,000
5%a of$3,000,000=S 1 S50,000
Sub-Total $330,000
DOWNSTAIRS LEVEL:
Gross Sales from.-0-to$4,000,000.00 3% 3%
Gross Sales above$4,000,000.00 4% 5%
Example:At a Gross Sales of$5,000,000,Percentage Rate in years 1-5 of the Lease
would be as follows:
3%of$4,000,000=$120,000
4%of$1,000,000=S 40,000
Sub-Total $160,000
TOTAL RENT TO CITY=$490,000
_ARAWet-parking-fees-shall-be-calc�accers gt velpercentage-rent
Percentage Rent shall be due and payable within thirty(30)days after the end of any Operational
Year.
(b) h4elbad of Pa ent. Tenant shall furnish to City statements of Tenant's Gross
Sales within ten(10)days after the end of each month,and an annual statement of Gross Sales
within ten(10)days after the end of each Operational Year. Each statement shall be signed and
certified to be correct by an officer or employee of Tenant"
SECTION-6. Section 7.2 of the Lease is hereby amended to read as follows:
3
7.2 Operation of Premises Tenant shall operate and manage the Premises in a
first-class manner,comparable to other first-class businesses providing similar facilities.
Tenant agrees that portions of the second floor entry area of the Building shall,
during all business hours,be open to the public as a viewing area free of charge provided that
proper dress is worn and the conduct of a member of the public does not disturb the reasonable
operation of the restaurant,except that such portion may be closed from time to time,at the sole
discretion of Tenant or its subtenant, for private engagements of its restaurant operation.
Notwithstanding the Tenant's or its subtenant's rights to live or recorded
entertainment pursuant to any permit and/or license issued by City or granting authority,Tenant
or its subtenants shall not use or permit the use of the Premises in any manner which(i)creates a
nuisance or an unreasonable annoyance to persons outside the Premises,other than as may be
required by Law or necessary or advisable for safety purposes and other than a customer paging
system,or(ii)violates any Law.
Upon approval by City of the final design plans and operating hours, subtenant
shall be allowed to provide a take-out window for the lower level restaurant.
The parties hereto mutually covenant and agree that Tenant and/or its subtenants,
by keeping and perfo rAing the covenants herein contained,shall at all times during the Tenn of
this Lease peaceably and'quietly have,hold and enjoy the Premises,without unreasonable
hindrance or i.nterruptib by City or City's agents,or by any other person or persons lawfully
claiming by,through or'under City."
SECTION 7. Section'1.9 of the Lease is hereby amended to read as follows:
"7.9 Customer Pam Tenant shall have the exclusive use of 74 parking spaces
within the City-maintained Pier Plaza beach parking lot to be used for valet parking as shown on
"Exhibit B", attached hereto and incorporated herein as if My set forth. It is understood that
Tenant and any subtenaa)s of Tenant approved by City for occupation of the Premises shall
share,on a nonexclusive basis,the use of said 74 parking spaces. The cost of providing such
valet parking shall be shared prorata between restaurant subtenants of the Premises based upon
the estimated sales volume of their respective subleased premises or any other equitable
allocation proposed by Tenant and approved by City.
For additional valet parking,City shall make available to Tenant parking tokens for valet
paz6ain either the Pier Plaza beach parking lot or the Mam Promenade Parking Structure.
Tenant shall provide thdibkens to its subtenants occupying the Premises to be used when the 74
reserved valet parking'spaces are fully occupied. When the valet tokens are being used,valets
shall seek parking spaces within the Pier Plaza beach parking lot or the Main Promenade Parking
Structure on a nonexclusive basis. To meet its parking obligation for the Coastal Development
Permit,the City shall provide the parking tokens to Tenant at a charge of$1.00 per token. The
charge for tokens shall be reviewed every five years during the term of the Lease and adjusted to
reflect 20%of the average daily parking fee at the time of review or if the hourly rates are in use
at 20%of the three hour*mte at that time.
:.�,. 4
It is further understood that the City shall make available to the Tenant up to one hundred
six(106)spaces of the Pier Plaza beach parking lot or the Main Promenade Parking Structure.
Should Tenant wish to reserve valet parking in excess of the 74 spaces granted pursuant
to this Section,it shall-make such reservation request to the Community Services Director or his
designee a minimum of twelve(12)hours in advance of such proposed use. In non-peak season
times(the day after Labor Day through the day before Memorial Day)such request shall be
granted for the Pier Plaza beach parking lot. In peak season times(Memorial Day to Labor Day),
it shall be within the discretion of the City to grant such request, and approval of such request
shall not be unreasonably,withheld. The Director of Community Services or his designee shall
determine if the request can be granted based upon the provisions of the Coastal Development
Permit referencing peak times. In the event the City grants Tenant's request for additional
reserved valet parking,the City shall charge Tenant a rate of 20%of the daily parking fee for the
number of parking spaces requested to be reserved for additional valet parking or, if hourly rates
are in use,at 20%of the hourly rate of the specific hours requested at that time.
Tenant has the option of requesting,at no charge,a maximum of 106 additional valet
parking spaces in the Main Promenade Parking Structure.
In accordance with the California Coastal Commission conditions of approval,Tenant
shall require its subtenants to validate parking at the Main Promenade Parking Structure for those
customers choosing to self park in the Structure. City shall not charge Tenant for the first 3,000
validations used in each calendar month. Validations used in excess of 3,000 per calendar month
shall be paid by Tenant to City at S.254 each or at such rate adopted by the City Council for the
Main Promenade Parking Structure. City shall provide Tenant with validation stamps to be used
by its subtenants of the Premises to validate Main Promenade Parking Structure parking tickets.
Tenant shall always be included under any City parking validation programs for discounted
merchant parking rates and shall receive the best validation rate available to any particular
merchant group.,,
SECTION& Section 7.10 of the Lease is hereby amended to read as follows:
"7.10 Public Rest,Rnoms Notwithstanding anything in this Lease to the contrary,
Tenant shall make available to the general public,including restaurant patrons,any rest rooms
which are a part of the Premises,provided that proper dress is worn and the conduct of the user
does not disturb the reasonable operation of the restaurants. Tenant shall keep the public rest
rooms in good order and repair and in clean and sanitary condition. City shall maintain and keel J_
: PM ev da
Y.
-open eac pu a rest rooms m to ery
SECTION 9. Section 7.12 of the Lease is hereby amended to read as follows:
"7.12 Other Structures City shall not permit permanent structures to be placed on the
beach in front of the Premises or on the Pier Plaza which would obstruct the view and/or
operations of Tenant or its subtenants. City may conduct special events on the beach and on Pier
Plaza where temporary structures are erected. However,such temporary structures will not
obstruct access to Tenant's premises."
5
SECTION 10. Section 7.13 of the Lease is hereby amended to read as follow:
"7.13 Other uses City shall not permit the commercial use of the ten-foot strip of
land in front of the Premises unless first offered to Tenant. If the City desires to permit the
placement of food carts,kiosks,or mobile vending units on the pier, front entry areas to the
Premises or on the Pier Plaza,the City shall first offer such concessions to Tenant."
SECTION 11. Section 15.1 of the Lease is hereby amended to read as follows:
"15.1 ihi 'ono SSlgDment The Parties acknowledge that City is entering into
the Lease in reliance upon the experience and abilities of Tenant and its principals.
Consequently,Tenant shall not voluntarily assign or encumber its interest in the Lease or in the
Premises,or sublease all or any part of the Premises,or allow any other person or entity(except
Tenant's authorized representatives)to occupy or use all or any part of the Premises without the
prior written consent of the City,which consent shall not be unreasonably withheld. Any
assignment,encumbrance,or sublease without such consent shall be voidable and,at City's
election,shall constitute a default."
SECTION 12. Section 15.2 of the Lease is hereby amended to read as follows:
"15.2 Consentt'fmnsfer City's consent to any assignment,sublease,or other transfer
is subject to Tenant providing City with evidence reasonably satisfactory to City that the
proposed subtenant or other transferee has suitable financial strength,experience and character
for operation and control of the Premises,or portion thereof proposed for sublease or transfer,
and that the use of the Premises or portion thereof by the proposed subtenant or other transferee
is consistent with that specified herein,is commercially reasonable,is consistent with City's
operation of Pier Plaza,including,but not limited to,other commercial uses therein. Any
proposed subtenant or other transferee shall agree to abide by the terms and conditions of the
Lease and other conditions imposed upon it pursuant to Law."
SECTION 13. Section U.A.of the Construction Rider to the Lease is hereby amended to read as
follows:
"A. Comm,, ent and Completion of Contraction of Building- After Tenant
- --obtains-the 'ernai o e In errant,at its sole
.cost and expense except as hereinafter provided,shall,through a construction contract with a
licensed,bondable contractor reasonably acceptable to City("General Contractor'),commence
or cause to be commenced construction of the Building and diligently pursue completion thereof
within the applicable time frames set forth herein and in the Lease. Tenant shall not change the
General Contractor without the City's prior written consent,which consent shall not be
unreasonably withheld or delayed. The construction of the Building shall be done in a good and
workmanlike manner with new or like new materials and in substantial conformity with the Final
Plans, subject to the provisions of this Construction Rider. City and Tenant hereby mutually
6
agree to construct the Pier Plaza and the Premises simultaneously. City has provided Tenant
with a staging area as of the date of this Lease Amendment. Such staging area is,and shall be
provided to Tenant on a continuous basis until construction has been completed on the Premises
and a notice of occupancy issued. Such staging area may be provided on a portion of the parking
lot after Pier Plaza is completed. Tenant shall have its General Contractor contact the City at
least thirty(30)days prior to moving onto the site."
SECTION 14. It is the intent of the parties hereto that this Amendment incorporates and amends
the provisions of the Amendment to Lease entered into between the City and T.S.Management
Corp.on July 7, 1997,and assigned to Pier Plaza Group,LLC. It is the further intent of the
Parties that this Amendment operate as a novation of the July 7, 1997 Amendment to Lease and
the latter shall have no force and effect. Except as amended herein,the provisions of the Lease
entered into between the City and T.S.Management Corp.on January 16, 1996 and assigned to
Pier Plaza Group,LLC.shall be binding on the parties hereto and shall remain in full force and
effect.
IN WITNESS WHEREOF,the parties hereto have executed the Amendment to Lease as
of the date first written above..
TENANT: CITY OF HUNTINGTON BEACH,
PIER PLAZA GROUP,LLC. a municipal corporation of the
State of California
BY:
Mayor
(print a name)
Its:(circle o ) dentfVice President ATTEST:
Ag;4s
nm
D� ,c�► City Clerk
By: /l owiee l<ooN APPROVED AS TO FORM:
(print or type Q
Its:(circle one)Secretary -ef Finmcial Off �✓� r z�r 9 q'p
,
-- — ASCL$sa*ry�Tleas+* -—------------ —City-E�tto -
REVIEWED AND APPROVED: INTl'IATE APPROVED:
air..., .
City Ad�n'strator Dhk6for ofid6mmunity Services
7-
,.Y
AMENDMENT TO LEASE
THIS AMENDMENT TO LEASE is made and entered into as of this _day of
Cam, 1997,by and between the CITY OF HUNTINGTON BEACH,a municipal corporation of
the tate of California("City") and TS MANAGEMENT CORP., an Hawaiian corporation
("Tenant").
RECITALS
A. The City and Tenant entered into a lease("Lease")dated January 16, 1996, for the
lease of certain portions of the Pier PIaza,a copy of which is attached hereto as"Exhibit A"and
incorporated herein as if fully set forth.
B. City and Tenant wish to amend certain provisions of said Lease.
NOW,THEREFORE,in consideration of the mutual covenants herein contained,City
and Tenant agree as follows:
SECTION 1. Subsection 6.1 of the Lease is hereby amended to read as follows:
"6.1 Minimum Annual Rent -
(a) Base Minimum Annual Rent. From and after the Rent Commencement
Date,Tenant shall pay to City as minimum annual rent for the Premises("Minimum Annual
Rent"),without deduction,setoff,prior notice,or demand,the sum of$210,000.00,for each of
the two(2)years of the Term of this Lease succeeding said Date. For each of the following two
years the Minimum Annual Rent paid by Tenant shall be the sum of$225,000.00. Commencing
with the fifth year after the Rent Commencement Date,and each year thereafter during the Term
and any extension thereof,the fixed Minimum Annual Rent shall be the sum of$240,000.00,
except as adjusted in accord with paragraph(b)of this subsection. One-twelfth of the Minimum
Annual Rent shall be payable monthly in advance of the first day of each month. Should
monthly payments for Minimum Annual Rent be required for any partial month pursuant to any
provision of the Lease,such Rent shall be prorated in accordance with the actual number of days
in the month in which such proration occurs.
Rent shall be payable at the City Treasurer's office of City at 2000 Main
Street,Huntington Beach,California or at such other place or places as City may from time to
time designate by written notice delivered to Tenant. Rent payment shall be considered
delinquent if not paid within 15 days of due date and Tenant shall be subject to default under the
terms and conditions of Section 16.
(b) Periodic Adjustment. From and after the fifth anniversary of the Rent
Commencement Date,the Minimum Annual Rent shall be adjusted to equal seventy-five(75%)
of the average of the actual Rent received by City over the past five years of operation or
$240,000,00,whichever is greater."
4XAI'D 17 A--�
r
SECTION 2. Subsection 6.3 of the Lease is hereby amended to read as follows:
"6.3 Percentage Rent.
(a) er ent e. In addition to Minimum Annual Rent,during the Term or any
extension thereof,Tenant shall pay to City a sum(Percentage Rent")equal to the amount that the
product of the percentage rate set forth in this paragraph multiplied by all Gross Sales at the
Premises exceeds the Minimum Annual Rent paid during the Operational Year.
An"Operational Year"is a one-year period ending December 31. For
purposes of computing the Percentage Rent for any partial Operational Year at the beginning or
end of the Term or any extension thereof,the volume of Gross Sales for that period shall be
adjusted pro rata to the number of months in that partial Operational Year to detemune the
percentage rate to utilize.
Percentage Rent will be based on the following annual Gross Sales
percentage:
Sales Volume Percentage Rate
Years 1-5 Years 6-50
UPSTAIRS LEVEL: -
Gross Sales from-0-to$6,000,000.00 3% 4%
Gross Sales above$6,000,000.00 5% 5%
Example:At a Gross Sales of$9,000,000,Percentage Rent in years 1-5 of the Lease
would be as follows:
3%of$6,000,000=$180,000
5%of$3,000,000=$150,000
Sub-Total $330,000
DOWNSTAIRS LEVEL:
Gross Sales from-0-to$4,000,000.00 3% 3%
Gross Sales above$4,000,000.00 4% 5%
Example:At a Gross Sales of$5,000,000,Percentage Rate in years 1-5 of the Lease
would be as follows:
3%of$4,000,000=$120,000
40/a of$1,000,000=S 40,Ooo
Sub-Total $160,000
TOTAL RENT TO CITY=$490,000
Percentage Rent shall be due and payable within thirty(30)days after the end of any
Operational Year.
(b) Method ofPayment. Tenant shall furnish to City statements of Tenant's Gross
Sales within ten(10)days after the end of each month,and an annual statement of Gross Sales
within ten(10)days after the end of each Operational Year. Each statement shall be signed and
certified to be correct by an officer or employee of Tenant."
SECTION 3. Except as amended herein,the provisions of the Lease shall remain in full force
and effect.
IN WITNESS WHEREOF,the parties hereto have executed the Amendment to Lease as
of the date first written above.
TENANT: CITY OF HUNTINGTON BEACH,
TS MANAGEMENT CORP. a municipal corporation of the
State of California
By:
Mayor Rota. d.,IZ _
(print or type name)
Its:(circle on Chairma residentlVice President ATTEST:
City Clerk -2 �-_17 t
By: f11 Jt iy lq- AA'46 K f APPROVED AS TO FORM:
(print r a name)
ItS:(circle one ecretary ief Financial officer/
Asst.Secretary-Treasurer Nu
, tto�y me
REVIEWED AND APPROVED: PROVED:
City Administrator c or a unity Services
F
LEASE FOR PREMISES
AT HUNTINGTON BEACH PIER PLAZA
BETWEEN THE CITY OF HUNTINGTON BEACH
AND T. S. MANAGEMENT CORPORATION
(DUKE'S SURF CITY RESTAURANT)
Table of Contents
Section Page
1 DEFINITIONS 1
2 LEASE OF PREMISES 4
3 EFFECTIVE DATE. 6
4 TERM 6
5 CONDITION OF PREMISES. 6
6 RENT 7
7 BUSINESS PURPOSES AND USE OF PREMISES . 11
8 TAXES,LICENSES AND OTHER OBLIGATIONS . 13
9 UTILITIES AND SERVICES . 14
10 CONSTRUCTION AND ALTERATIONS . 14
11 MAINTENANCE OF PREMISES . 15
12 INDEMNITY AND EXCULPATION;INSURANCE . 16
13 CASUALTY DAMAGE . 20
14 DAMAGE OR DESTRUCTION OF THE PIER . 20
15 ASSIGNMENT, SUBLETTING AND ENCUMBERING .21
16 DEFAULT .22
17 CONDEMNATION .25
18 SECURITY DEPOSIT .26
19 WASTE OR NUISANCE .26
20 NO CONFLICTS OF USE,HAZARDOUS MATERIALS .26
21 CITY'S DEFAULTS/TENANT'S REMEDIES . 27
22 NOTICES .28
23 SURRENDER OF PREMISES .28
24 WAIVER. .29
25 PARTIAL INVALIDITY 29
. 29
27 ENTIRE AGREEMENT;MODIFICATION. . 29
28 TIME OF ESSENCE . 30
29 SUCCESSORS . 30
30 BROKERS . 30
31 TABLE OF CONTENTS;HEADINGS . 30
32 GENDER;NUMBER. .30
33 EXEIIBITS . 30
34 ARBITRATION . 30
LEASE FOR PREMISES
AT HUNTINGTON BEACH PIER PLAZA
BETWEEN THE CITY OF HUNTINGTON BEACH
AND T. S.MANAGEMENT CORPORATION
(DUKE'S SURF CITY RESTAURANT)
THIS LEASE is made and entered into as of the IiV L day of
I99�k,by and between the CITY OF HUNTINGTON BEACH,a
�unic�iporation of the State of California("City")and T.S. MANAGEMENT CORP.,
an Hawaiian corporation("Tenant").
RECITALS
A. Tenant desires to lease ground adjacent to the Huntington Beach Pier("the
Pier")and wishes to construct and operate a full-service restaurant and related retail operations.
B. City desires to lease portions of the Pier Plaza to Tenant for such purposes
in accordance with the terms and conditions set forth in this Lease.
AGREEMENT
NOW, THEREFORE,in consideration of the mutual covenants herein contained,
City and Tenant hereby agree as follows:
I. DEFINITIONS
L I General Definitions. As used in this Lease,the following words and phrases shall
have the following meanings:
(a) Alteration-any addition or change to,or modification of,the Premises
made by Tenant including,without limitation,fixtures.
- -- - (tr}---Author[zed-Retah e'�s-—any o cer, agen, emp ogee,or m -pendent
contractor retained or employed by eithei Party,acting within authority given him by that Party.
(c) CQX-the City of Huntington Beach,a municipal corporation of the State
of California, and any Successor to City's interest in the Pier or in the Premises.
(d) City Administrator-the City Administrator of the City of Huntington
Beach.
(e) Damage-injury,deterioration,or loss to a Person or property caused by
another Person's acts or omissions. Damage includes death.
i
G:Agree•.Paer-2U/4/96
MSK:RLS 95-475
(f) Damages-a monetary compensation or indemnity that can be recovered in
the courts by any Person who has suffered Damage to his person,property,or rights through
another's act or omission.
(g) Expiration-.the coming to an end of the time specified in this Lease as its
duration,including any extension of the Term resulting from the exercise of an option to extend.
(h) Good condition-the good physical condition of the Premises and each
portion of the Premises,including,without limitation,signs,windows,show windows, and
appurtenances. "in good condition"means first-class,neat,clean,and broom-clean, and is
equivalent to similar phrases referring to physical adequacy in appearance and for use.
(i) Hold harmless-to defend and indemnify from all liability,losses,penalties,
Damages,costs,expenses,causes of action, claims,or judgments arising out of or related to any
Damage to any Person or property.
0) Lgw-any,judicial decision,statute, constitution, ordinance, resolution,
regulation,rule, administrative order,or other requirement of any municipal,county, state,
federal,or other government agency or authority having jurisdiction over the Parties or the
Premises,or both,in effect either at the time of execution of this Lease or at any time during the
Term or any extension thereof,including,without limitation, any regulation or order of a quasi- -
official entity or body(e.g.,board of fire examiners or public utilities).
(k) Maintenance-repairs,replacement,repainting, and cleaning.
Q) Party-the City or the Tenant or any successor thereof permitted by this
Lease.
(m) P rs n-one or more human beings,or legal entities or other artificial
persons,including,without limitation,governmental agencies,partnerships, corporations, trusts,
estates, associations,and any combination of human beings and legal entities.
(n) Premises-those portions of the Pier Plaza designated on Exhibit A
attached hereto.
(o) Provision-any term, agreement,covenant, condition,clause,qualification,
,__._.__.—�.��.,�,tr�etior�-reser�,atior�-arather-spp se con o s,
establishes,or limits the performance required or permitted by either Party.
(p) Rent-Minimum Annual Rent,Percentage Rent,Taxes,and other similar
charges payable by Tenant under the Provisions of this Lease.
(q) Rgnt Commencement Date-the Rent Commencement Date for the
Premises shall be the date upon which the City issues a Certificate of Occupancy for the building
to be constructed on the Premises by the Tenant.
2
c:Agrechcr-ZI13r96
MMALS 95-475
(r) Successor- assignee,transferee,personal representative,heir, or other
Person succeeding lawfully, and pursuant to the provisions of this Lease,to the rights or
obligations of either Party.
(s) Termination-the ending of the Term or any extension thereof for any
reason before Expiration.
1 a2 Other Definitions. The following additional terms are defined in the following
sections of this Lease:
(a) ABC § 7.6
(b) Affiliate § 15.4
(c) Building §2.2
(d) City Recital A
(e) Effective Date §3.
(f) First Opportunity Period §2.3
(g) Gross Sales §6.2
(h) Hazardous Material §24
(i) Minimum Annual Rent §6.1(a)
(j) Offer Notice §2.3
(k) Operational Year §6.3(a)
(1) Option Term §4.2
(m) Percentage Rent §6.3(a)
(n) Pier Recital A
(o) Pier Plaza Recital B
(p) Right of First Opportunity §2.3
(q) Subsidiary § 15.4
(r) Successor § 15.4
3
MSK:RiS 95-475
A f
4 lv
(s) Term §4.1
2. LEASE OF PREMISES
2.1 Avreement to Lease. City leases the Premises to Tenant and Tenant leases the
Premises from City for the Term and on the conditions set forth in this Lease.
2.2 Use of Premises. Upon delivery of the Premises,Tenant covenants and agrees to
construct a building thereon in accordance with all of the terms and conditions of the
Construction Rider,attached hereto and incorporated herein by this reference("Building").
Tenant shall make all reasonable attempts to complete construction of the Building within
one year of the date of delivery of the Premises. Construction shall be deemed completed when a
Certificate of Occupancy can be issued thereon in accordance with all provisions of Law. Should
Tenant fail to complete construction within said time frame,unless delayed through no fault of
Tenant,Tenant shall immediately commence payment of rent. City may post a Notice of
Nonresponsibility on the Premises after delivery thereof to Tenant. Tenant covenants and agrees
that it shall complete all interior improvements to the Building and install all fixtures required to
operate and maintain a full-service restaurant therein,within sixty(60)days of issuance of a
Certificate of Occupancy for the Building,and shall thereafter operate and maintain on the
Premises a full-service restaurant, as approved by the coastal development permit obtained by
City. Tenant shall have the exclusive right to provide food,beverages,sundry items, and rentals
on the Premises, except for those concessions operated by Persons other than Tenant and
identified on Exhibit B attached hereto.
It is understood that Tenant will operate a restaurant and may,but is not obligated
to,sublease space for other concessions,provided all subleases,including the identity of the
sublessee(s),rent,and other terms and conditions, shall be approved by City in accordance with
the terms of this lease. Upon execution of an approved sublease,Tenant shalt remain liable to
City for the performance of Tenant's obligations under the Lease.
2.3 Additional Covenants Regazding_Agreement to Lease. City agrees to commence
design and construction of the Pier Plaza immediately upon the Effective Date of this Lease and
to diligently pursue the same to completion. In the event City fails to complete construction of
the Pier Plaza and to deliver the Premises to Tenant within two(2)years of the Effective Date,
Tenant may, at any time prior to City's delivery of possession of the Premises to Tenant,
terminate this Lease,in which case neither Party shall have any further obligation or liability to the
other Party except that(i)the Parties shall have the obligations and liabilities pertaining to
Tenant's right to lease set forth in this subsection,and(i)City shall promptly return to Tenant the
security deposit given by Tenant pursuant to Section 18 for execution of this Lease.
Exercise of the foregoing right of termination shall be Tenant's sole remedy for
City's failure to complete construction;provided,however,that in the event City fails to complete
construction of the Pier Plaza.and the Lease is terminated by Tenant in accordance with this
Section 2.3,Tenant shall have a continuing right of first opportunity to lease any space at the Pier
Plaza proposed to be let by City for a period of one(1)year(the"First Opportunity Period")from
4
G:AgeeXier-245/96
MJK.RLS 95-475
j
the date of such termination(the"Right of First Opportunity"). Prior to offering any space for
lease at the Pier Plaza to any other person or entity during the First Opportunity Period,City shall
offer the space to Tenant,by delivery of a written notice(an"Offer Notice"), on terms not less
favorable than those to be offered to any other party at any time thereafter. Tenant shall have a
period of not less than forty-five(45)days to respond to the Offer Notice by delivering to City a
written notice of acceptance,rejection or counter-offer with respect to City's offer of space at the
Pier Plaza. If Tenant rejects the offer,City may then offer the proposed space at the Pier Plaza
for lease on terms no more favorable to the prospective tenant than those offered to Tenant. No
lease of any space at the Pier Plaza entered into during the First Opportunity Period shall be valid
unless it is fully executed within forty-five(45)days of City's receipt of written notice of Tenant's
rejection of the corresponding Offer Notice;if City fails to enter into a binding lease with a third
party within such forty-five(45)day period,then the Right of First Opportunity shall be in effect
and the provisions of this paragraph shall apply to any future proposed lease of space at the Pier
Plaza and the above procedures shall be repeated(i.e.,City shall provide Tenant with written
notice and a right of first opportunity to lease the space on terms at least as favorable as those to
be offered to any party thereafter,in accordance with the procedure set forth above). If Tenant
provides City with a written counter-offer within forty-five(45)days of receipt of an Offer
Notice,City and Tenant shall negotiate in good faith regarding the proposed lease space prior to
City offering such space to any other person or entity. If such negotiations do not result in a
binding lease between the Parties within sixty(60)days of City's receipt of the written counter-
offer,the offer shall be deemed rejected,and City may then offer the proposed space at the Pier
Plaza for lease to any third party. Upon Tenant's request,City shall file a Notice of Option in the
Official Records of the County where the Premises are located providing notice of the existence
of Tenant's Right of First Opportunity,in a form mutually acceptable to Tenant and City.
City's fdure to complete construction of the Pier PIaza and deliver possession of
the Premises to Tenant within the time permitted by this section shall not operate to give City any
right to terminate this Lease or relieve City of its obligation to diligently pursue completion and
delivery of the Pier Plaza. Tenant shall not be required to spend more than$50,000.00 for design
drawings,construction documents,or tests for engineering reports until such time as City delivers
the restaurant pad to Tenant.
City and Tenant may wish to construct improvements simultaneously. If this is
mutually agreed to,Tenant waives all rights under this subsection 2.3 and a separate agreement
governing the.construction obligations of the Parties shall be entered into by both parties.
-- Z. I s b iya ono Ia iver.KestaurantPad s pant afCisob igaffonlor
construction of the Pier Plaza,City shall prepare and deliver possession of the portion of the
restaurant pad on the premises to Tenant by accomplishing the following:
a. Demolition and cleanup of the existing building.
b. Construction of the Pier Plaza including parking lots,sidewalks,hardscape
and softscape,rough grading of the restaurant pad site,installation of utilities including gas,water
(domestic and fire service),sewer,electric, and telephone and cable TV lines stubbed out as
indicated on the approved plan for the construction of the Pier Plaza.
5
G:Agree:Pier2U/3/96
MMAL4 95.475
7
C. All permit fees connected with the portion of construction to deliver to
Tenant a clean restaurant pad,rough graded with utility stubouts.
2.5 Tenant's Obligations to Construct Restaurant on Pad. Pursuant to either the
construction rider attached hereto or a mutually agreed construction rider to be entered into by
both parties should it be the desire of both parties to construct the Pier Plaza and restaurant
simultaneously, Tenant's obligations to construct restaurant on the pad provided by City shall
consist of paying all permit fees associated with the construction of the restaurant,utility
connection fees,any and all architectural and construction supervision fees and construction of all
building and landscape improvements on the pad site.
3. EFFECTIVE DATE
The Lease shall not be effective until(i)any governmental approval required for
construction of the Pier Plaza has been obtained and the time for any legal challenge to such
approval has passed or a judgment upholding such approval has been finally issued and(ii)the
City Council of City has appropriated funds for construction of the Pier Plaza.
4. TERM
4.1 . Term of Lease. The Lease shall commence upon the Effective Date,and
shall continue thereafter until ten(10)years after the issuance.of a Certificate of Occupancy on
the Building(the"Tenn").
4.2 Option to Extend. Provided Tenant is not in material default under this Lease
beyond applicable notice and cure periods when notice under this subsection is given,Tenant may
extend this lease for four further successive terms of ten(10)years(each such term is individually
an"Option Term"),each commencing on expiration of the preceding term,by giving City written
notice of Tenant's desire to do so at any time not more than six(6)months prior to nor less than
three(3)months prior to expiration of the Tenn or any extension thereof.
4.3 Hold Over. Should Tenant,with City's consent,hold over and continue in
possession of the Premises after expiration of the Term of this Lease or any Option Terra
Tenant's continued occupancy of the Premises shall be considered a month-to-month tenancy
subject to all the terms and conditions of.this Lease, except the provisions of Sections 4.1 and 4.2.
- - --3. CONDITION OF PRMSES
Upon completion of the Pier Plaza in compliance with all of the terms ofthis Lease,
Tenant shall accept the Premises,as well as the improvements thereon and the utility stubouts
thereto, and will provide written confirmation to City that the Premises as well as the utility
stubouts thereon and the landscaping and hardscape thereto are in good,clean, and safe, condition
as of the date of completion. Tenant shall be solely responsible for all restaurant improvements to
bring the Premises from the pad condition delivered to Tenant to fully operational status, in
6
C3:Aprer.Pier-2\t/3/96
MJK:RLS 95-475
accordance with approved plans and specifications. City's approval of Tenant's plans and
specifications shall not be unreasonably withheld, conditioned or delayed-
6- RENT
6.1 Minimum Annual Rent.
(a) Base Minimum Annual Rent. From and after the Rent Commencement
Date, Tenant shall pay to City as minimum annual rent for the Premises("Minimum Annual
Rent"),without deduction, setoff prior notice,or demand,the sum of$150,000.00 for each of
the two(2)years of the Term of this Lease succeeding said Date. Commencing with the third
year after the Rent Commencement Date,and each year thereafter during the Term and any
extension thereof,the fixed Minimum Annual Rent shall be the sum of$200,000.00, except as
adjusted in accord with paragraph(b)of this subsection- One-twelfth of the Minimum Annual
Rent shall be payable monthly in advance on the first day of each month. Should monthly
payments for Minimum Annual Rent be required for any partial month pursuant to any provision
of the Lease, such Rent shall be prorated in accordance with the actual number of days in the
month in which such proration occurs.
Rent shall be payable at the City Treasurer's office of City at 2000 Main
Street,Huntington Beach, California or at such other place or places as City may from time to -
time designate by written notice delivered to Tenant. Rent payment shall be considered
delinquent if not paid within 15-days of due date and Tenant shall be subject to default under the
terms and conditions of Section 16.
(b) lee
JQdic Adjustment. From and after the third anniversary of the Rent
Commencement Date, on each anniversary of the Rent Commencement Date,the Minimum
Annual Rent shall be adjusted to equal seventy-five percent(75%)of the average of the actual
Rent received by City over the past three(3)years of operation or$200,000.00,whichever is
greater.
6.2 Gross Sales
(a) Gross Sales. The term"Gross Sales"as used herein shall mean:
(1) The entire amount of the actual sales price,whether wholesale or
- taihandashvr -
product, commodity,service,commercial paper or forbearance,of ail sales of merchandise
and all charges made by Tenant or its employees or others acting on its behalf,including
but not limited to sub-Iessees for the rendition of goods,merchandise or services of any
kind whatsoever,made from or upon the Premises.
(2) All other receipts of all business conducted in, at or from the
Premises,including all deposits not refunded to purchasers,proceeds,receipts or any
revenue derived whatsoever from the use of Premises.
7
GAVee:Pitt-21113/96
MAuRIS 95-473
(3) Orders taken in or from the Premises although said orders may be
filled elsewhere,and sales by any subtenant in or from the Premises, and all without credit
to Tenant for uncollected credit accounts.
(4) Gross receipts to Tenant of all coin-operated devices which may be
placed in the Premises by Tenant or under any rent concession,percentage or other
arrangement including without limitation,such devices as pinball machines,vending
machines,video games and similar devices(but excluding revenue from telephones that
are collected by a public and/or private utility), except that nothing herein shall be
construed as City's consent to the use of same in the Premises;and
(5) All other revenues or receipts generated by or arising from the use
of the Premises.
(b) Exclusions from Gross Sales. Notwithstanding anything to the contrary
contained herein,Gross Sales shall not include,or if included there shall be deducted(but only to
the extent they have been included),the following:
(1) Sales and use taxes, so-called luxury taxes, consumers' excise
taxes,gross receipts taxes,and other similar taxes now or in the future imposed on the
sale of merchandise or services,but only if such taxes are added to the selling price and
collected from customers.
(2) The transfer or exchange of merchandise between the stores or
businesses of Tenant,if any,where such transfers or exchanges of merchandise are made
solely for the convenient operation of a business owned and operated by Tenant and not
for the purpose of consummating a prior sale made in,to or from the Premises or for the
purposed of depriving City of the benefit of a sale which otherwise would be made in, at
or from the Premises.
(3) The amount of returns to shippers or manufacturers.
(4) The amount of any cash or credit refund made upon any sale where
the merchandise sold or some part thereof is thereafter returned by the purchaser. Each
sale upon installment or credit shall be treated as a sale for the full price in the month
during which such We shall be made,irrespective of the time when Tenant shall receive
payment(whether in full or partial)from its customers.
(5) Sales of trade fixtures or personal property to be replaced by
Tenant which are not stock in trade.
(6) Sums and credits received in the settlement of claims for loss of or
damage to merchandise.
(7) Gift certificates,or similar vouchers,until such,time as they shall
have been converted into a sale by redemption.
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(8) Meals provided for officers or employees without charge.
(9) Meals,goods or products provided for promotional or publicity
purposes without charge.
(10) Cash refunds made to customers in the ordinary course of business.
(11) Value added taxes("VAT")or other taxes added to the selling
price of products and other similar taxes now or hereafter imposed upon the sale of
merchandise or services,whether such taxes are added to the selling price or included
therein.
(12) Uncollectible credit accounts and other bad debts,not to exceed
2%of Gross Sales.
6.3 Percentage Rent.
(a) Percentage. In addition to Minimum Annual Rent,during the Term or
any extension thereof Tenant shall pay to City a sum("Percentage Rent")equal to the amount
that the product of the percentage rate set forth in this paragraph multiplied by all Gross Sales at
the Premises exceeds the Minimum Annual Rent paid during the Operational Year. -
An"Operational Year"is a one-year period ending December 3I. For
purposes of computing the Percentage Rent for any partial Operational Year at the beginning or
end of the Term or any extension thereof,the volume of Gross Sales for that period shall be
adjusted pro rata to the number of months in that partial Operational Year to determine the
percentage rate to utilize.
Percentage Rent will be based on the following annual Gross Sales
percentage:
Sales Volume Percents,ge_Rate
Gross Sales from-0-to$8,000,000.00 4%
Gross Sales above$8,000,000.00. 5%
Exam a es�f$9 00�0A-p 0 , ercentage-rent-would-be
as follows:
4%of$8,000,000= $320,000
5%of$1,000,000= $ 50,,000
Total Rent $370,000
Percentage Rent shall be due and payable within thirty(30)days after the end of any
Operational Year.
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, r
1 !�
(b) Method of P"Ment. Tenant shall furnish to City statements of Tenant's
Gross Sales within ten(10)days after the end of each month,and an annual statement of Gross
Sales within ten(10)days after the end of each Operational Year. Each statement shall be signed
and certified to be correct by an officer or employee of Tenant.
6.4 Late Charge. In the event that any rental payment is not received by the City on
or before the due date as herein provided,a late charge often percent(101/16)of the amount of
each rental payment shall be assessed. If received after the 15th day,but postmarked on or before
the 15th,the payment will be accepted without penalty. This charge will compound monthly until
paid.
6.5 Records and Audit.
(a) Sales and Charges. All sales and charges shall be recorded by means of
cash registers which display the amount of the transaction certifying the amount recorded. The
register shall be equipped with devices which log in daily sales totals,and which shall record on
tapes the transaction numbers-and sales details. At the end of each day the tape will record the
total sales for that day.
(b) Production of Statement.Records and Audit. Tenant agrees to
make available for inspection by City at the Premises a complete and accurate set of Tenant's and _
any sub-lessee's books and records of all sales of merchandise and revenue derived from the
conduct of business in,at or from the Premises from which Gross Sales can be determined and all
supporting sales records,including without limitation all federal,state and local tax returns.
Tenant shall also fiurnish the City copies of Tenant's and any sub-lessee's quarterly California
sales and use returns at the time each is filed with the State of California.
Tenant further agrees that it will keep,retain and preserve for at least two
(2)years all records,books,bankbooks or duplicate deposit books and other evidence of Gross
Sales.
City shall have the right,upon reasonable notice,during the Term and any
extension thereof and within two(2)years after Expiration or Termination of this Lease to inspect
and audit Tenant's books and records and to make transcripts therefrom to verify the payment
due City. Such audit may be made at any reasonable time during normal business hours. Tenant
shall coot with Ci in makin the ins ection. City shall also be entitled,once during each
Operational Year and once within two(2)years after Expiration or Termrrlatron o ease,to-'
an independent audit of Tenant's books of account,records,cash receipts,and other pertinent
data to determine Tenant's Gross Sales,by a certified public accountant to be designated by City,
at City's sole cost and expense. The audit shall be limited to the determination of Gross Sales and
shall be conducted during usual business hours in a manner which minimizes any interference with
the conduct of Tenant's regular business operations.
1f the audit shows that there is a deficiency in the payment of any
Percentage Rent,the deficiency shall become immediately due and payable and if there is an
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overpayment,City shall immediately refund the amount of the overpayment to Tenant. City shall
bear its costs of the audit unless the audit shows that Tenant understated Gross Sales by more
than five percent(5%),in which case Tenant shall pay all City's reasonable costs of the audit.
To the extent permitted by Law, City shall keep any information gained
from such statements,inspections or audits confidential and shall not disclose it other than to
carry out the purposes of this Lease,except that City shall be permitted to divulge the results of
any such audit in connection with any financing arrangements or sale of City's interest in the
Premises.
(c) Tenant's Gross Sales Audit. in the event of any audit by City in
accordance with Subsection(b)of Section 6.5 of the Lease,Tenant may contest the results of
City's audit by performing a confirmatory audit within thirty(30)days of receipt of City's audit
results and supporting evidence,using an independent public accountant reasonably acceptable to
City. If Tenant's audit discloses that City's audit was incorrect by more than five percent(50/6),
then City shall pay the cost of such audit and shall pay the cost of City's audit.
(d) Acceptance. The acceptance by City of any monies paid to City by
Tenant as Percentage Rent for the Premises, as shown by any statement furnished by Tenant,shall
not be construed as an admission of the accuracy of said statement,or of the sufficiency of the
amount of said Percentage Rent payment,but City shall be entitled to review the adequacy of
such payment as herein above set forth.
7. USMSS PUMOSES AND USE OF PREMISES
7.1 Business Purposes. The Premises are to be used by Tenant for the operation of
a restaurant,together with approved retail operations all in substantial accordance with Tenant's
proposal to City for operation of the Premises,relevant portions of which are attached hereto as
Exhibit C,and for no other purpose,except in the case of an assignment or subletting of all or any
portion of Tenant's interest hereunder approved by City pursuant to the terms of the Lease.
7.2 Oueration of Premises. Tenant shall operate and manage the Premises in a
first-class manner,comparable to other first-class businesses providing similar facilities.
Tenant agrees that portions of the second floor entry area of the Building shall,
during all business hours,be open to the public as a viewing area free of charge provided that
proper dress and conduct of a member of the public does not disturb the reasonable operation of
the restaurant,except that such portion may be closed from time to time, at the sole discretion of
Tenant,for private engagements of its restaurant operation.
Notwithstanding the Tenant's rights to live or recorded entertainment pursuant to
any permit and/or license issued by City or granting authority,Tenant shall not use or permit the
use of the Premises in any manner which(i)creates a nuisance or an unreasonable annoyance to
persons outside the Premises,other than as may be required by Law or necessary or advisable for
safety purposes and other than a customer paging system, or(ii)violates any Law.
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7.3 Continuous Operation. Weather permitting, Tenant shall keep the restaurant
on the Premises in operation and open for business each calendar day of the year, except it may
close five(5)days per year. The restaurant shall have the option to serve breakfast,lunch and
dinner daily,with minimum hours of operation to be 5:00 p.m.to 9:00 p.m. daily.
7.4 Advertising Display. Tenant may,at its own expense,place such signs in or upon
the Premises as it deems necessary,provided such signs are consistent with City's zoning and sign
codes,the consent of the Director of Community Services as to the type,design and method of
installation is first obtained,which consent shall not unreasonably be withheld, and proper permits
are obtained. All signage placed by Tenant on,in or about the Premises shall remain the property
of Tenant and shall be removed by Tenant at Tenant's expense upon Termination or Expiration of
this Lease, and any damage caused by such removal shall be repaired at Tenant's expense.
7.5 Independent Contractor. City shall have no interest in the business of Tenant.
7.6 Alcoholic Beverages. Except as permitted by this Section,Tenant shall not sell or
serve alcoholic beverages on the Premises. If Tenant at any time holds a beer,wine or hard liquor
license for the Premises from the California Department of Alcoholic Beverage Control("ABC"),
Tenant is exempt and can engage in the types of sales permitted under that license,and City
hereby consents to such sale of alcoholic beverages. In addition to all other requirements of this
Lease, Tenant shall comply with all of the rules and regulations of ABC and comply with all of the -
terms and conditions of any license granted by ABC.
7.7 No Distress Sales. No auction,fire,bankruptcy,"going out of business"or
other distress sales of any nature may be conducted on the Premises without the prior written
consent of City,which will not be unreasonably withheld,conditioned or delayed.
7.8 Parking and Delivery Access. City shall have the right to control parking by
Tenant's employees by commercially reasonable means,and Tenant shall cause its employees to
comply with the procedures and regulations established by City from time to time to control such
parking.
Tenant acknowledges that neither Tenant nor Tenant's suppliers may operate
vehicles on the Pier Plaza without the prior written consent of City. City hereby consents to
Tenant's use of a one-half(1/2)ton or smaller pick-up truck or comparable vehicle, or such other
vehicle as may be mutually acceptable to City and Tenant,on the Pier Plaza for delivery purposes,
-- moo-longs-not mare tharrane such vehicle operated by Tenant is-on-the Pier-Plazwzt-miy-tbne,-----
unless otherwise approved by City.
7.9 Customer Parking. It is understood that Tenant shall have exclusive use of
sixty-two(62)parldng spaces within the Premises for valet parking. Additional parking may be
necessary for the operation of Tenant's restaurant business. It is further understood that City
shall make available up to one hundred eighteen(I 18)spaces of municipal beach parking or Main
Promenade Parking Structure parking when Tenant makes a request for such parking a minimum
of twelve(12)hours in advance. City has the option of charging twenty percent(20%)of the
daily use fee of the municipal beach parking as set forth by City Council Resolution, Per
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_ 1
California Coastal Commission conditions of approval,Tenant shall validate parking at the Main
Promenade Parking Structure,with the first ninety(90)minutes free.
7.10 Public Rest Rooms. Notwithstanding anything in this Lease to the contrary,
Tenant shall make available to the general public(as well as restaurant patrons)any rest rooms
v which are a part of the Premises. Tenant shall keep the public rest rooms in good order and repair
and in a clean and sanitary condition.
7.11 Smokin . Smoking in the Building shall be regulated by Tenant in accordance
with California Law and the Huntington Beach Municipal Code("HBMC").
8. TAXES,LICENSES AND OTHER OBLIGATIONS
8.1 Pigment of Taxes. Tenant shall pay direct to the appropriate taxing authorities
all possessory interest taxes and all property taxes on personal property located on the Premises,
levied or assessed upon or against the Premises or against Tenant during the Term or any
extension thereof. Such taxes shall be paid at least ten(10)days before delinquency and before
any fine,interest or penalty shall become due or be imposed by operation of Law for their non-
payment,and,upon request, Tenant shall promptly fiunish to the City satisfactory evidence
establishing such payment.
8.2 Payment of Obligations. Tenant shall promptly pay,when due,any and all `
bills, debts,liabilities and obligations incurred by Tenant in connection with Tenant's occupation
and use of the Premises.
8.3 Challenge to Taxes. Any provision herein contained to the contrary
notwithstanding,Tenant shall have the right in good faith,at its sole cost and expense,to contest
the amount or legality of any taxes on or attributable to the Premises,Tenant's personal property
on or about the premises,or Tenant's occupation and use of the Premises,including the right to
apply for reduction thereof If Tenant seeks a reduction or contests such taxes,the failure on
Tenant's part to pay the taxes shall not constitute a default as long as Tenant complies with the
provisions of this section.
City shall not be required to join in any proceeding or contest brought by Tenant
unless the provisions of any law require that the proceeding or contest be brought by or in the
name of City or any owner of the Premises. In that case City shall join in the proceeding or
contest or permLt rt to a rou m i s nameas 1 rto b-ear-arry cast.
If requested by Tenant,City shall execute or join in the execution of any instrument or document
necessary or advisable in connection with any such contest. Tenant,on final determination of the
proceeding or contest, shall immediately pay or discharge any decision or judgment rendered,
together with all costs,charges,interest, and penalties incidental to the decisions or judgment.
Tenant shall indemnify,hold harmless,protect and defend City from and against
any liability,claim, demand,penalty,cost, or expense arising out of or in connection with any
contest by Tenant pursuant to this Section.
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MJKALS 95-175
• 'y -
9. UTILITIES ANT SERVICES
Tenant shall make all arrangements for and pay for all utilities furnished to or used on the
Premises, including, without limitation, gas, electricity, water,refuse removal, telephone service,
cable TV and janitorial service.
Tenant shall keep the Premises free and clean of rubbish and litter and shall deposit
accumulated rubbish and litter in containers designated by City. Trash containers shall be kept in
an approved enclosed area. Tenant shall provide for rubbish removal and container rental.
10. CONSTRUCTION.AND ALTERATION'S
10.1 Alterations. Tenant shall not make any Alterations(other than non-structural
Alterations costing less than$50,000.00)to the Premises without the prior written consent of City
which consent shall not be unreasonably withheld. In granting or withholding its consent to
proposed Alterations by Tenant, City may.- (1) consider the views of the Public regarding the
proposed improvements; (2)require as a condition of such approval that Tenant agree to
amendments to this Lease, including without Iimitation amendments increasing the amount of
Rent payable under this Lease if the proposed Alterations would increase the floor area of the
structures on the Premises; and(3)require Tenant to provide at Tenant's expense appropriate
engineering and feasibility studies regarding the structural integrity of the Premises, provided,
however, that it shall be deemed unreasonable for City to withhold its consent to any Tenant
alterations or improvements which are in substantial conformity with preliminary plans approved
by City and attached hereto as Exhibit D.
10.2 Performance of Work. All work shall be performed in a good and workmanlike
manner, shall substantially comply with the plans and specifications submitted to City and shall
comply with all applicable governmental permits and Laws in force at the time permits are issued.
10.3 Payment for Work. Tenant shall pay all costs for construction done by it or caused
to be done by it on the Premises as permitted or required by this Lease. Tenant shall keep the
-Premises free and clear of all mechanics' liens resulting from construction done by or for Tenant.
Tenant shall defend and indemnify City against all liability and loss of any type
arising out of work performed on the Premises by Tenant, together with all costs and expenses
reasonably incurred by City in negotiating,settling,defending or otherwise protecting against
sueh claim ng-that-Citq-has given- errant wr ttEn notice oP any and a
incurring any such costs and expenses and Tenant has been afforded a reasonable opportunity to
negotiate, settle, defend or otherwise protect against such claims. A
10.4 Ownership of Work. The Building,any fixed improvements to the Premises made
in connection with the Building, and all fixed Alterations shall remain on and be surrendered with
the Premises on Expiration or Termination of the Lease(excluding Tenant's, equipment,
furniture, movable decorations and the like). l/
14
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M.IKALS 95-475
i Its
Notwithstanding anything herein to the contrary, prior to Expiration or within fifteen(I5)
days after Termination of the Lease,Tenant may remove any movable partitions, machinery,
equipment, furniture, and trade fixtures previously installed by Tenant, provided that Tenant
repairs any damage to the Premises occasioned by such removal.
11. MAINTENANCE OF PREMISES
11.1 Maintenance and Repair by Tenant and City. Tenant agrees that it will, at its cost
during the Term of the Lease or any extension thereof,keep the Premises in good condition and
repair. Tenant's maintenance shall include all landscape maintenance within or upon the Premises
that Tenant has caused to be constructed or placed upon the Premises,the washing of bird '
droppings and dirt off the Premises, including roof windows and exterior walls as needed,but not
less than quarterly and graffiti shall be removed by Tenant or painted over as soon as is reasonably
practicable.
Tenant is solely responsible for repairing, and hereby covenants and agrees to
repair all structural or other damage occurring to any portion of the Premises(including,without
limitation,walls,roof windows and walkways)which damage requires more than cleaning or
painting to repair and which is not fully covered by insurance policies required to be carried by
Tenant pursuant to this Lease,whether such damage is caused by weather,vandalism,malicious
mischief or any other cause. Tenant shall cause such repairs to be commenced within three(3)
business days of City's request and shall diligently prosecute the same to completion as soon as
reasonably practicable and in any event within ten(10)days of City's request, except for damage
rendering the Premises totally or partially unusable or inaccessible,in which case the provisions of
Section 13 shall apply.
In the event Tenant fails to commence necessary Maintenance within three(3)
business days after receipt of notice from City that such Maintenance is necessary,City may
undertake such Maintenance or cause such Maintenance to be made,and charge the cost of said
Maintenance to Tenant. The cost of such Maintenance shall be payable as additional Rent
pursuant to Section 15.2(e).
All furnishings,equipment, facilities, improvements, alterations, attachments and
appurtenances not provided by City,but required for the proposed business operation, including .
all kitchen equipment and interior furnishing, shall be maintained in good condition and repair by
Tenant at its cost.
11.2 Entry by City, In case of emergency, if Tenant shall not be personally present to
open and permit an entry into the Premises, City or its Authorized Representatives may enter the
same by a master key,or may forcibly enter the same,without rendering City or such Authorized
Representative liable therefore, and without in any manner affecting the Provisions of this Lease.
During such emergency entry, City or its Authorized Representatives shall accord reasonable care
to Tenant's property. Any entry to the Premises obtained by City in accordance with this Section
shall not under any circumstances be construed or deemed to be a forcible or unlawful entry into,
or a detainer of,the Premises, or an eviction of Tenant from the Premises or any portion thereof.
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I7
City shall be allowed to take all material into and upon the Premises that may be
required therefor and may for that purpose make necessary repairs where reasonably required
because of such emergency, provided that the business of Tenant shall be interfered with as little
as is reasonably practicable, all without the same constituting an eviction of Tenant in whole or in
part. In the-event City determines that any condition(s)exists which poses a significant threat to
public health and safety,City may close the Pier Plaza,in which case,Tenant may have to vacate
the Premises and the provisions of Section 14 of the Lease regarding abatement of rent(Section
142)and Tenant's right to terminate in the event of prolonged closure(Section 14.1)shall apply.
11.3 Additional Covenants of CLty Regarding Operation of the Pier,Pier Plaza and
Maintenance Obligation5. Notwithstanding anything to the contrary contained herein:
(a) City shall, at the earliest time reasonably possible given the circumstances
which may then exist,provide Tenant with prior written notice of its intent to: (i)perform any
Maintenance or remodeling of the Pier or Pier Plaza which may reasonably be expected to
adversely affect,by interference with access,visibility,availability of utilities or otherwise,
Tenant's business operations at the Premises or any portion thereof, or(B)except in the case of
an emergency,enter upon the Premises for any of the purposes set forth in the Lease.
(b) Whenever City elects or is obligated to Maintain the Premises or the Pier
or Pier Plaza or any part thereof under the terms of the Lease or any applicable Law, City shall
proceed with due diligence to undertake such work in accordance with the same plan and design
as existed immediately before such damage or destruction occurred and in accordance with all
applicable Laws. The materials used in said repair or reconstruction shall be as nearly like the
original materials as may then be reasonably procured in the regular supply channels.
(c) City shall exercise its rights and obligations regarding the operation,
Maintenance and remodeling of the Pier Plaza and,where applicable,the Premises,including,
without limitation, City's rights and obligations under Section 11.2 of this Lease,in a manner
which minimizes to the greatest extent possible City's interference with Tenant's use of and
business operations at the Premises. In addition to Tenant's use of, and business operations at,
the rights under Section 21,rent and all other charges under the Lease shall be reduced equitably
during all periods during which City's use,closure or other acts in and to the Pier Plaza materially
interferes with Tenant's use of the Premises or its business operations at the Premises by an
amount equal to the proportionate amount of the Premises rendered unusable by such acts of City.
12.1 ExculRation of City. City shall not be liable to Tenant for any damage to Tenant
or Tenant's property from any cause other than the negligent,intentional or willful acts of City or
its Authorized Representatives. Tenant waives all claims against City for damage to Person or
property arising for any reason other than the negligent,intentional or willful acts of City or its
Authorized Representatives.
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NUK:RI.s 95-475
12.2 Hold-Harmless Clause. Tenant agrees to protect, defend, indemnify and hold
and save harmless City, its officers, employees, and the property of City,including the Premises,
against any and all liability, claims,judgments, costs and demands, however caused, arising
directly or indirectly out of Tenant's occupation and use of the Premises and the obligations or
operations herein undertaken by Tenant,including those arising from the passive concurrent
negligence of City, specifically including,without limitation, any claim, liability, loss, or damage
arising by reason of:
(a) The death or injury of any Person or Persons, including.Tenant or any
Person who is an employee or agent of Tenant, or by reason of the damage to or destruction of
any property, including property owned by Tenant or any Person who is an employee or agent of
Tenant, and caused or allegedly caused by either the condition of the Premises, or some act or
omission of Tenant or of some agent, contractor, employee, servant, sublessee, or concessionaire
of Tenant on the Premises;
(b) Any work performed on the Premises or materials furnished to the
Premises at the instance or request,of Tenant or any agent or employee of Tenant,with the
exception of Maintenance performed by City.
(c) Tenant's failure to perform any provision of this Lease or to comply with
any requirement of Law or any requirement imposed on City or the leased Premises by any duly
authorized governmental agency or political subdivision.
12.3 Insurance. Tenant shall, at its own cost and expense,thirty(30)days prior to
possession, secure and maintain during the entire Term of this Lease and any extensions thereof a
broad form comprehensive coverage policy of public liability insurance issued by an insurance
company reasonably acceptable to City and insuring City, its officers, employees and agents,
against loss or liability caused by or connected with Tenant's occupation and use of the Premises
under this Lease in amounts not less than: combined single limit bodily injury and property
damage,including products/completed operations liability and blanket contractual liability, of
$2,000,000 per occurrence_ If coverage is provided under a form which includes a designated
general aggregate limit,the aggregate limit must be no less than$2,000,000. The policy shall
name City and such of its officers, and employees as have been reasonably designated by City as
additional insureds, and shall specifically provide that any other insurance coverage which may be
applicable to the Premises shall be deemed excess coverage and Tenant's insurance shall be
primary.
12.4 Increase in Amount of Public Liability and Property Damage Insurance. Not more
frequently than once every three(3)years,iC in the opinion of the Risk Manager or consultant
retained by City,the amount of public liability and property damage insurance coverage at that
time is not adequate,Tenant shall increase the insurance coverage as reasonably required by
City's Risk Manager.
12.5 Fire Insurance on Building,and Other Improvements. Tenant at its cost shall
maintain on the Building and other improvements that are or become a part of the Premises a
17.
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MJK:RLS 95-475
. 1
policy of standard fire and extended coverage insurance,with at least full replacement value, in a
form acceptable to the City Attorney.
The insurance policy shall be issued in the names of City and Tenant, as their
interests appear. The insurance policy shall provide that any proceeds shall be made payable to
the City and Tenant jointly.
12.6 Deterininafion of Replacement Value. The"fail replacement value" of the
Building and other improvements to be insured under Section 12.5 shall be determined by the
company issuing the insurance policy at the time the policy is initially obtained. Not more
frequently than once each year, either Party shall have the right to notify the other Party that it
elects to have the replacement value redetermined by an insurance company_ The redetermination
shall be made promptly and in accordance with the rules and practices of the Board of Fire
Underwriters, or a like board recognized and generally accepted by the insurance company, and
each Parry shall be promptly notified of the results by the company. The insurance policy shall be
adjusted according to the redetermination.
12.7 Loss of Rent Insurance. Tenant at its cost shall maintain loss of rent
insurance insuring that the Miinimurn Annual Rent will be paid to City for a period up to six
months if the Premises are destroyed or rendered inaccessible by a risk insured against by a policy
of standard fire and extended coverage insurance with vandalism and malicious mischief
endorsements.
12.8 Workers' Compensation. Tenant shall comply with all of the provisions of the
Workers' Compensation Insurance and Safety Acts of the State of California, the applicable
provisions of Divisions 4 and 5 of the California Labor Code and all amendments thereto; and all
similar state or federal acts or laws applicable;and shall indemnify, defend and hold harmless City
from and against all claims, demands,payments, suits, actions,proceedings and judgments of
every nature and description, presented,brought or recovered against City,for or on account of
any liability under any of the acts which may be incurred by reason of any activity performed by
Tenant under the Lease.
12.9 Waiver of Subrogation. The Parties release each other, and their respective
Authorized Representatives, from any claims for Damage to any Person or to the Building or the
Premises and to the fixtures,personal property,and Alterations of either in or on the Premises
that are.caused by or result from risks insured against under any insurance policies carried by the
Parties, or ertfi—er of them,and in force at the time of any such Damage or required to be came
under this Lease.
Each Party shall cause each insurance policy obtained by it to provide that the
insurance company waives all rights of recovery by way of subrogation against the other Party in
connection with any Damage covered by any Policy. Neither Party shall be liable to the other for
any Damage caused by fire or any of the risks insured against under any insurance policy required
by the Lease. If any insurance policy cannot be obtained with a waiver of subrogation, or is
obtainable only by the payment of an additional premium charge above that charged by insurance
companies I issuing policies without waiver of subrogation,the Party undertaking to obtain the
18
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WICRE S 95-475
^`t 4
insurance shall notify the other Party of this fact. The other Party shall have a period of twenty
(20)days after receiving the notice either to place the insurance with a company that is reasonably
satisfactory to the other Party and.that will carry the insurance with a waiver of subrogation, or to
agree to pay the additional premium if such a policy is obtainable at additional cost. If the
insurance cannot be obtained or the Party in whose favor a waiver of subrogation is desired
refuses to pay the additional premium charged,the other Party is relieved of the obligation to
obtain a waiver of subrogation rights with respect to the particular insurance involved.
12.10 Other Insurance Matters. All the insurance required under the Lease shall:
(a) Be issued by insurance companies authorized to do business in the State of
California,acceptable to City;
(b) Be issued as a primary policy;
(c) Be noncontributing with any insurance that may be carried by City;and
(d) Contain an endorsement requiring thirty(30)days' written notice from the
insurance company to both Parties before cancellation or material change in the coverage, scope,
or amount of the policy.
Each policy, or a certificate of the policy,together with evidence of payment of
premiums, shall be deposited:with City before Tenant's entry on the Premises, and on renewal of
the policy not less than thirty(30)days before expiration of the term of the policy. At the election
of City upon the Expiration of the Lease, City shall reimburse Tenant pro rata for all prepaid
premiums on insurance required to be maintained by Tenant, and Tenant shall assign all Tenant's
right,title, and interest in that insurance to City;in the event of earlier Termination of the Lease,
City shall,at its election,have the right to require Tenant to make such assignment to City upon
City's pro rata reimbursement to Tenant for prepaid premiums. The provisions of the preceding
sentence shall be applicable only to the extent that Tenant's insurance carrier permits assignment
to be made to City. Tenant shall use its best efforts to secure the prior consent of the carriers to
such assignment whenever Tenant obtains,renews or replaces any of the insurance required by
this section.
Either Party may effect for its own account any insurance not required under the
Lease.
12.11 Insurance PKoceeds. City shall promptly pay to Tenant all insurance proceeds,if
any,payable to City for repair or replacement of Tenant's fixtures, equipment, display cases and
other personal property installations or any other item which Tenant is obligated to Maintain or
replace under the Lease in the event of any damage to the Premises caused by fire or any other
casualty or upon the occurrence of any other event requiring such maintenance, repair or
replacement. Notwithstanding anything to the contrary contained herein or in the Lease, (i)if,
during the last year of the Term or any extension thereof,twenty percent(20%)or more of the
Premises or the Pier is damaged or destroyed, or(ii)any damage or repair which City or Tenant
elects or is bbligated under the Lease to undertake will take more than ninety(90)days to repair,
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Tenant shall have the right to terminate the Lease as of the date of such damage or destruction by
written notice to City, given within thirty(30)days after such damage or destruction.
13. CASUALTY DAMAGE
13.1 Destruction of Premises. If the Premises are totally or partially destroyed,
rendering the Premises or any portion thereof totally or partially inaccessible or unusable, Tenant
shall restore the Premises to substantially the same condition as immediately prior to such
destruction(including all trade fixtures, personal property,improvements and Alterations as are
installed by Tenant,which shall be replaced by Tenant at its expense). If the cost of the
restoration exceeds the amount of any available insurance proceeds or if the damage has been
caused by an uninsured casualty or event, or if Tenant reasonably estimates that repairs of the
Premises will take more than six(6)months, Tenant can elect to terminate the Lease by giving
notice of such election to City within sixty(60)days after the date of the occurrence of the
casualty_ Upon such termination, insurance proceeds applicable to reconstruction of the
Building(s) (excluding Tenant's personal property therein)shall be paid to City and Tenant shall
have no further liability or obligations under the Lease.
13.2 Replacement of Tenant's Property. In the event of the damage or destruction of
improvements located on the Premises not giving rise to a Termination of the Lease, Tenant shall,
at its own expense, replace and repair all Tenant's trade fixtures, equipment, machinery, -
furnishings, furniture and inventory as soon as reasonably possible to permit the prompt
continuation of Tenant's business at the Premises.
13.3 Abatement of Rent. In the event of damage or destruction of the Premises and
the Lease is not terminated, Tenant shall continue to utilize the Premises for the operation of its
business to the extent it may be practicable and commercially reasonable,in Tenant's reasonable
judgment,to do so. Rent shall abate as provided in Section 14.2 from the time any damage or
destruction occurs until the earlier of (i)the completion of restoration of the improvements on
the Premises, and(ii) six months after the date of the damage or destruction.
14. DAMAGE OR DESTRUCTION OF ACCESS ROUTES TO PREMISES
14.1 Damage or Destruction of Access Routes. In the event that any access-route to
the Premises is damaged or destroyed so as to render the Premises or a material portion thereof
inaccessible or untenantable, and such damage or destruction cannot reasonably be repaired by
�itywithi;r sixr(6)-munths-afterthe-dates tsf ave a ng o ei er -
(i)terminate this Lease by giving to City written notice thereof(which notice shall be given, if at
all, within thirty(30)days following the date the-City gives notice it cannot make such repairs),in
which case this Lease shall be terminated as of the date,or(ii)give written notice to City within
thirty(30) days following the date City gives notice of Tenant's intention to repair such damage
as soon as reasonably possible at Tenant's expense,in which event this Lease shall continue in full
force and effect;however,Minimum Annual Rent shall be abated in accordance with the
procedures set forth in Section 14.2 for the period from the occurrence of the damage to the
completion of the repairs by the Tenant.
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Any insurance proceeds received by City because of the total or partial destruction
of the Pier Plaza(other than the Premises)shall be the sole property of City, free from any claims
of Tenant, except any and all insurance proceeds, including business interruption insurance,which
would ordinarily flow to the benefit of Tenant.
14.2 Abatement of Rent. Notwithstanding anything to the contrary contained herein,
in the event that Tenant is prevented from using and does not use the Premises, or any portion
thereof, for five(5) consecutive business days("Eligibility Period"), as a result of any damage to
or destruction to the Pier Plaza(unless the Damage or destruction is caused by the negligence or
wrongful intentional act of Tenant or any of Tenant's employees, invitees or customers), then
Tenant's Rent and all other charges under the Lease shall be abated or reduced, as the case may
be, during the period during which Tenant is so prevented from using the Premises, or any portion
thereof, in the proportion that the rentable area of the portion of Premises that Tenant is
prevented from using, and does not use,bears to the total rentable area of the Premises.
However, in the event that Tenant is prevented from conducting, and does not conduct, its
business in any portion of the Premises for a period of time exceeding the Eligibility Period, and
the remaining portion of the Premises is not sufficient to allow Tenant to conduct its business
therein, and if Tenant does not conduct its business from such remaining portion, then during the
period during which Tenant is so prevented from conducting its business therein,Rent and all
other charges under the Lease for the entire Premises shall be abated;provided,however, if
Tenant reoccupies and conducts its business from any portion of the Premises during such period, -
the rent allocable to such reoccupied portion,based on the portion.that the rentable area of such
reoccupied portion bears to the total rentable area of the Premises shall be payable by Tenant
from the date such business operations commence.
15. ASSIGNMENT. SUBLETTING.AND ENCUMBERING
15.1 Prohi$ition of Assignment. The Parties acknowledge that City is entering into
the Lease in reliance upon the experience and abilities of Tenant and its principals. Consequently,
Tenant shall not voluntarily assign or encumber its interest in the Lease or in the Premises, or
sublease substantially all or any part of the Premises, or allow any other person or entity(except
Tenant's Authorized Representatives)to occupy or use all or any part of the Premises within the
first three(3)years of the Rent Commencement Date without the prior written consent of City.
Any assignment, encumbrance,or sublease without such consent shall be voidable and, at City's
election, shall constitute a default. After the third(3rd)year from the Rent Commencement Date,
subject to the provisions of Section 15.2 below,City will not unreasonably withhold approval of
assigrunent,sublease or tranMr.
15.2 Consent to Transfer, City's consent to arty assignment, subletting or other transfer
is subject to Tenant providing City with evidence reasonably satisfactory to City that the proposed
transferee has suitable financial strength, experience and character for operation and control of the
Premises,or portion thereof proposed for transfer,and that the use of the Premises by the
proposed transferee is consistent with that specified herein,is commercially reasonable, and is
consistent with City's operation of Pier Plaza,including,but not limited to, other commercial uses
therein.
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15.3 Voluntary assignment defined. Except as otherwise expressly provided herein, any
dissolution,merger, consolidation, or reorganization of Tenant,or the sale or other transfer
resulting in a transfer of a controlling percentage of the capital stock of Tenant(other than a
transfer by will,devise,bequest, intestate succession, a transfer to or between the family members
of T.S. MANAGEMENT CORP., or a transfer to or between one or more trusts for the benefit of
T.S. MANAGEMENT CORP. and/or their family members), shall be deemed a voluntary
assignment; provided, however,that the sale or transfer of a controlling percentage of the capital
stock of Tenant pursuant to a public offering(s)of equity or debt instruments issued by Tenant, or
other transfers of publicly traded capital stock or debt instruments shall not constitute a voluntary
assignment and shall not require City's consent or approval. The phrase"controlling percentage"
means the ownership of, or the right to vote, stock possessing at least fifty percent(50%)of the
total combined voting power of all classes of Tenant's capital stock issued,outstanding, and
entitled to vote for the election of directors, except for ownership of publicly traded shares,
warrants or similar equity interests in Tenant traded on a national exchange or over-the-counter
markets.
15.4 Exception . Notwithstanding the foregoing paragraphs or anything to the
contrary contained herein, City's consent shall not be required for an assignment or subletting to
an Affiliate, Subsidiary or Successor of Tenant (for purposes hereof;an"Affiliate," a"Subsidiary"
and a"Successor"of Tenant are defined as follows: (a)an"Affiliate"is any corporation which
directly or indirectly controls or is controlled or is under common control with Tenant(for this -
purpose, "control"shall mean the possession, directly or indirectly,of the power to direct or
cause the direction of the management and policies of such corporation,whether through the
ownership of voting securities or by contract or otherwise), (b)a"Subsidiary" shall mean any
corporation or partnership not less than twenty-five percent(25%)of whose outstanding stock
shall, at the time,be owned directly or indirectly by Tenant and which is at least as creditworthy
as Tenant, and(c)a"Successor" shall mean a corporation or partnership in which or with which
Tenant is merged or consolidated,in accordance with applicable statutory provisions for merger
or consolidation of corporations or a corporation or partnership acquiring a substantial portion of
the property and assets of Tenant.
16. DEFAULT -
16.1 Default by Tenant. The occurrence of any one(1) or more of the following
events shall constitute a material default and breach of the Lease by Tenant:
(a) The--vacating-ar-abandvrrinerrt-ofthe P=iises-by Tenaxrt.
(b) The failure by Tenant two(2)times in any six(6)month period to make
any payment of Rent or any other payment required by this Agreement,as and when due,when
such failure shall continue for a period of ten(10)days after written notice thereof from City to
Tenant.
(c) Except as specified in Section 16.1(b),the failure of Tenant to observe or
perform any,of the material covenants, conditions or provisions of this Agreement to be observed
or performed by Tenant where such failure shall continue for a period of thirty(30)days after
22.
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written notice thereof from City to Tenant; provided, however, that if the nature of Tenant's
default is such that more than thirty(30) days are reasonably required for its cure, then Tenant
shall not be deemed to be in default if Tenant commences such cure within said thirty(30) day
period and thereafter diligently prosecutes such cure to completion.
(d) The making by Tenant of any general arrangement or assignment for the
benefit of creditors.
(e) Tenant becomes a"debtor" as defined in 11 U.S.C. Section 101 or any
successor statute thereto (unless, in the case of a petition filed against Tenant, the same is
dismissed within sixty(60)days).
{f) The appointment of a trustee or receiver to take possession of substantially
all of Tenant's assets located at the Premises or of Tenant's interest in this Agreement, where
such appointment is not discharged within sixty(60)days-
(g) The attachment, execution or the judicial seizure of substantially all of
Tenant's assets located at the Premises or of Tenant's interest in the Lease, where such seizure is
not discharged within sixty(60) days.
16.2 Remedies.
(a) Cumulative Nature of Remedies. If any default by Tenant shall
continue uncured, following notice of default as required by the Lease, for the period, if any,
applicable to the default under the applicable provision of this Lease, City shall have the remedies G/ 1
described in this Section 16.2 in addition to all other rights and remedies provided by law or
equity, to which City may resort cumulatively or in the alternative:
(1) Reentry without Termination. City may at City's election reenter
the Premises,and,without terminating the Lease,at any time and from time to time relet
the Premises or any part or parts of them for the account and in the name of Tenant or
otherwise. Any reletting may be for the remainder of the Term or for a longer or shorter
period. City may at City's election eject all Persons or eject some and not others or eject
none. City shall apply all rents from reletting as follows: first,to the payment of
reasonable expenses(including brokers' commissions)paid or incurred by or on behalf of
City in recovering possession, placing the Premises in good condition, and preparing or
..,------.--.altering e-Premises-for-reW*4g; csec-and-,-to--the-reasDnable--expense o new _
subtenants;third,to the fulfillment of Tenant's covenants to the end of the Term. City
may execute any leases made under this provision either in City's name or in Tenant's
name and shall be entitled to all rents from the use, operation, or occupancy of the
Premises. Tenant shall nevertheless pay to City on the dates specified in this Lease the
equivalent of all sums required of Tenant under this Lease,plus City's expenses,Iess the
proceeds of any reletting or attornment. No act by or on behalf of City under this
provision shall constitute a Termination of this Lease unless City gives Tenant specific
notice of Termination.
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MJK:RflS 95-475.
(2) Termination. In the event of a default described in Section 16.1,
City may at City's election terminate this Lease by giving Tenant notice of Termination.
In the event City terminates this Lease, City may recover possession of the Premises
(which Tenant shall surrender and vacate upon demand)and remove all Persons and
property therefrom, and City shall be entitled to recover as damages all of the following:
(A) The worth at the time of the award of any unpaid
Rent or other charges which have been earned at the time of Termination;
(B) The worth at the time of the award of the amount by
which the unpaid Rent and other charges which would have been earned after
Termination until the time of the award exceeds the amount of the loss of such
rental or other charges that Tenant proves could have been reasonably avoided;
(C) The worth at the time of the award of the amount by
which the unpaid Rent and other charges for the balance of the Term after the time
of the award exceeds the amount of the loss of such rental and other charges that
Tenant proves could have been reasonably avoided;
,(D) Any other amount necessary to compensate City for
the detriment proximately caused by Tenant's failure to perform its obligations -
under this Lease or which in the ordinary course of things would be likely to result
therefrom; and
(E) At City's election, such other amounts in addition to
or in lieu of the foregoing as may be permitted from time to time by applicable
California law.
As used in Sections 16.2(a)(2)(A)and(B)above,the"worth at the
time of the awards"shall be computed by allowing interest at the rate of twelve percent
(12%)per annum. As used in Section 16.2(a)(2)(C) above,the"worth at the time of the
award" shall be computed by discounting such amount at the discount rate of the Federal
Reserve Bank of San Francisco at the time of the award, plus one percent(1%). The
amount recoverable by City pursuant to Section 16.2(a)(2)(D)above shall include,but is
not limited to, any costs or expenses incurred by City in Maintaining or preserving the
Premises after such default.
(3) Use of Tenant's Personal Property. City may at City's election
use Tenant's personal property and trade fixtures located on, about or appurtenant to the
Premises or any of such property and fixtures without compensation and without liability
for use or damage, or store them for the account and at the cost of Tenant;provided,
however,that City may not operate the restaurant in any manner tending to indicate that
the restaurant is affiliated with, part of or operated in conjunction with Tenant's business.
(b) Election of RemedX. The election of one remedy for any one item shall
not forecloge an election of any other,remedy for another item or for the same item at a later time.
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MJK:RLS 95-475
(c) City's Right to Cure Tenant's Default. Upon continuance of any
material default beyond applicable notice and cure periods,City may,but is not obligated to,cure
such failure at Tenant's cost. If City at any time,by reason of such failure by Tenant,pays any
sum or does not act,the sum paid by City plus the reasonable cost of performing such act shall be
due as additional Rent not later than five(5)days after service of a written demand therefor on
Tenant, including reasonably detailed documentation of the amount owed. No such payment or
act shall constitute a waiver of default or of any remedy for default or render City liable for any
loss or damage resulting from any such act.
(d) Waiver of Rights. Tenant hereby waives any right of redemption or
relief from forfeiture under California Code of Civil Procedure Sections 1174 or 1179,or under
any other present or future Law,in the event Tenant is evicted or City takes possession of the
Premises by reason of any default by Tenant hereunder.
17. CONDEMNATION
17.1 Eminent Domain;Proceedin¢s. In the event proceedings are taken pursuant
to an exercise of the power of eminent domain by any lawful authority to condemn or otherwise
acquire in excess of ten percent(100/6)of the floor area within the Premises,or which taking
materially and adversely affects the conduct of Tenant's business in the Premises,or in the further
event that the Premises will no longer be suitable for the conduct of Tenant's business operations
at the Premises as a result of any taking,Tenant shall have the option,by written notice to City at
any time prior to the date of the taking by the condemning authority,to terminate the Lease on
thirty(30)days notice to City,unless the condemning authority or its nominee takes possession of
all or any portion of the Premises prior to the expiration of said thirty(30)day period,in which
case the Lease may be terminated by Tenant immediately upon such taking of possession of all or
any portion of the Premises. In the event of termination pursuant to this Section 17.1,Minimum
Annual Rent shall be prorated to the date of Termination,any unearned rent shall be refunded to
Tenant and Tenant shall have no further obligations under this Lease. Tenant shall not grant a
right of entry to any condemnor without the written consent of City.
17.2 Proportionate Termination of Lease. Should Tenant not elect to so terminate the
Lease or should any such taking not be sufficient to allow such option to terminate,the Lease
shall terminate as to the portion of the Premises taken upon the date which possession of said
portion is taken,but the Lease shall continue in force and effect as to the remainder of the
Premises. Tenant shall,in the event of a taking of any portion of the Premises,be entitled to a
r action ur a Munmum Annual Rent thereafter required to be paid,such that the reduced
Minimum Annual Rent will be in the same proportion to the Minimum Annual Rent theretofore
required to be paid that the rentable square footage of the Premises following such a taking bears
to the rentable square footage of the Premises immediately prior to such taking.
17.3 Allocation of Award. In the event that an award is made for an entire or partial
taking or for damage to the Premises or any interest therein in any action in direct or inverse
condemnation or in the event of a taking under the power of eminent domain,the parties hereto
agree that their respective rights to the award or compensation paid shall be as follows:
25
G:Agre c:Pia.2\1l3196
MJK;RL.S 95-475
(a) Tenant shall be entitled to that portion of the award received for the taking
of improvements placed upon the real property within the Premises,including the Building and all
other improvements which Tenant has paid for and caused to be constructed.
(b) Tenant shall be entitled to any award that may be made for the taking of or
injury to Tenant's business and profits,including any amount attributable to Tenant's personal
property,fixtures,installations, or improvements in or on the Premises,Tenant's relocation
expenses,including any"bonus value"attributable to the Lease.
(c) City shall.be entitled to that portion of the award received for the taking of
the real property within the premises,including any improvements made upon the real property
for which the City paid for and constructed thereon.
(d) Any interest payable on the total award shall be divided between City and
Tenant in the same ratio as are the awards granted to them pursuant to the other provisions of this
Section.
18. SECURITY DEPOSIT
Upon execution hereof;Tenant shall pay and maintain at all times hereunder,a security
deposit with City in a sum of not less than Five Thousand and no/100 dollars($5,000.00)to
guarantee the repair and maintenance.of the Premises as provided herein. Such deposit may be in
the form of cash or an assignment of certificate of deposit or savings account. The form of any
such assignment shall be approved by the City Attorney. The interest accrued on the deposit shall
be paid to Tenant annually. A security bond approved by the City Attorney may be substituted
for the above mentioned deposit. Tenant shall increase by$5,000.00 the security deposit for each
option period granted by City.
19. WASTE OR NUISANCE
Tenant shall not commit or permit the commission by others of any waste on the Premises;
Tenant shall not maintain,commit,or permit the-maintenance or commission of any
nuisance as defined in Section 3479 of the California Civil Code on the Premises;and
Tenant shall not use or permit the use of the Premises for any unlawful_purpose
20. NO CONFLICTS OF USE,HAZARDOUS MATERIALS
Notwithstanding anything contained in the Lease to the contrary and subject to Tenant's
rights granted in Section 21, City hereby represents and warrants that,to the best of City's
knowledge,(i)Tenant's contemplated use of the Premises does not conflict with applicable laws,
covenants,conditions or restrictions,and City knows of no reason why Tenant would be unable
to obtain all required permits,licenses and approvals from the appropriate governmental
authorities for such use;(ii)the Pier is not in violation of any environmental laws,rules or
26
G:AS=:Pirn2%1/3/%
MJK RLS 95-475
regulations and Tenant's contemplated uses will not cause any such violation; and(iii)the Pier
and the Premises are free of any and all Hazardous Materials(as hereinafter defined)as of the
date Tenant takes possession thereof. In the event that the presence of any Hazardous Material
(as defined below)not caused by Tenant is detected on the Premises prior to the date the
Premises are delivered to Tenant, City may at its sole discretion either cause all necessary
remedial work to be performed at City's expense,or terminate this Lease,in which event neither
Party shall have any liability or obligation to the other Party,except that City shall return to
Tenant the security deposit,if any,given by Tenant pursuant to Section 18 for execution of the
Lease. In the event that the presence of any Hazardous Material not caused by Tenant is detected
on the Premises after the Premises are delivered to Tenant at any time during the Term of the
Lease or any extension thereof,then in such event,all remedial work shall be performed by City at
City's expense. In the event that such remedial work is performed prior to Tenant opening for
business, Tenant's obligation to open shall be delayed until such remedial work is completed_ In
the event that such remedial work is performed subsequent to Tenant opening for business,
Tenant's obligation to pay Rent shall be abated in direct proportion to the extent Tenant is unable
to conduct its business upon the Premises as a result of such remedial work being necessary or
while such remedial work is being performed. In the event that Hazardous Materials not caused
by Tenant,its Authorized Representatives,or its guests or invitees are detected on the Premises
and the presence thereof or the remediation thereof materially and adversely affects Tenant's
ability to conduct its business in the Premises,then in addition to the abatement of Rent(as
hereinabove described),and for so long as such material.adverse effect continues, Tenant shall
have the right(but not the obligation)to terminate the Lease,upon thirty(30)days' advance
written notice to City. City hereby agrees to indemnify and hold harmless Tenant,its directors,
officers, employees and agents(the"Indemnitees")from and against any.and all liability,including
without limitation, all costs of defense and the cost of any required or necessary repair,
detoxification or cleanup,claimed,threatened or asserted against any Indemnitee arising out of
the use,generation,transportation,storage,release or disposal of Hazardous Materials on or
about the Pier PIaza and/or the Premises by its Authorized Representatives,or its guests or
invitees. "Hazardous Materials"shall mean any oil,flammable explosives,asbestos,urea
formaldehyde,radioactive materials or waste,or other hazardous,toxic,contaminated or
polluting materialized,substances or wastes,including,without limitation,any"hazardous
substances,""hazardous wastes,""hazardous materials"or"toxic substances"under applicable
federal, state and local Law.
21. CITY'SDEFAULTS/TENANT'S REMEDIES
Notwithstanding anything to the contrary contained herein,in the event City fails to
perform any material obligation of City under the Lease within ten(10)days after receipt of
written notice by Tenant to City specifying the nature of such default, or,if the nature of City's
obligation is such that more then ten(10)days are required for its performance,if City fails to
commence such performance within such ten(10)day period and thereafter diligently prosecute
the same to completion,then City shall be in default of said obligation and Tenant may,but shall
not be obligated to,without any limitation on or prejudice to any other rights or remedies of
Tenant under the Lease or at Law,(a)upon five(5)days notice to City cure any such default by
City and City shall reimburse Tenant the amount of all costs and expenses incurred by Tenant in
curing such default,together with interest on the amount of such costs and expenses at the
27
G:Agree:Pier-2%ir3196
I-LI&RIS 95475
maximum rate then allowed by Law,or(b)if City's default materially interferes with Tenant's use
of the Premises for their intended purpose and City fails to cure such default within ten(10)days
after a second demand by Tenant, terminate the Lease, in which case Tenant shall have no further
or continuing obligations thereunder.
22. NOTICES
Any notice,demand,request, consent, approval or communication that either Party desires
or is required to give to the other Party shall be in writing and shall be deemed given as of the
time of hand delivery to the addresses set forth below, or by facsimile transmission,or three(3)
days after deposit into the United States mail,postage prepaid,by registered or certified mail,
return receipt requested. Unless notice of a different address has been given in accordance with
this section,all such notices shall be addressed as follows:
If to City,to: CITY OF HUNTINGTON BEACH
Attention: Director of Community Services
2000 Main Street
Huntington Beach, CA 92648
With a copy to: CITY ATTORNEY
2000 Main Street,P.O. Box 190
Huntington Beach,CA 92648
Fax No. (714)374-1590
If to Tenant,to: DUKE'S SURF CITY
317 Pacific Coast Highway
Huntington Beach,CA 92649
Attn: Sandy Saxten
With a copy to: T.S. MANAGEMENT CORP,
225 Plaza St., Suite 300
Solana Beach, CA 92075
Attn: Bits Parsons
23. SURRENDER OF PREMISES
-- — t e xpzrahon or Termination of the Lease,Tenant shall surrender to City the
possession of the Premises. Surrender or removal of the Building,Alterations,fixtures and trade
fixtures shall be as directed in the Lease. Tenant shall leave the surrendered property and any
other property in good and broom-clean condition,reasonable wear and tear excepted. All
property that Tenant is not required to surrender but that Tenant does abandon shall, at City's
election,become City's property at Expiration or Termination.
28
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MIKAIS 95-475
24. WAIVER
The waiver by City or Tenant of any breach by the other party of any term, covenant, or
condition herein contained shall not be deemed to be a waiver of such term,covenant, or
condition or any subsequent breach of the same or any other terns,covenant, or condition herein
contained. The subsequent acceptance of Rent hereunder by City shall not be deemed to be a
waiver of any preceding breach by Tenant of any term,covenant,or condition of the Lease,other
than the failure to pay the particular rents so accepted,regardless of City's knowledge of such
preceding breach at the time of acceptance of such Rent.
25. PARTIAL INVALIDITY
If any term or Provision of the Lease or the application thereof to any Person or
circumstance shall to any extent be invalid or unenforceable,the remainder of the Lease, or the
application of such term or Provision to Persons or circumstances other than those as to which it
is invalid or unenforceable,shall not be affected thereby,and each term and Provision of the Lease
shall be valid and be enforced as written to the fullest extent permitted by Law.
26. GOVERNING LAW
The Lease shall be governed by the Law of the State of California.
Neither City's execution of the Lease nor any consent or approval given by City hereunder
in its capacity as landlord shall waive,abridge,impair or otherwise affect City's powers and duties
as a governmental body. Any requirements under this Lease that Tenant obtain consent(s)or
approval(s)of City are in addition to and not in lieu of any requirements of Law that Tenant
obtain approval(s)or permits. However,City shall attempt to coordinate its procedures for
giving contractual and governmental approvals so that Tenant's requests and applications are not
unreasonably denied or delayed.
27. ENTIRE AGREEN ENT:MODIFICATION
The Lease contains the entire agreement between the Parties. No verbal agreement or
implied covenant shall be held to vary the provisions hereof,any statements,law or custom to the
contrary notwithstanding. No promise,representation,warranty,or covenant not included in the
Lease has been or is relied on by either Party. Each Party h its._ow anwectien of#13e-
rernzses and examination of the Lease,the counsel of its own advisors,and the warranties,
representations,and covenants in the Lease itself. The failure or refusal of either Party to inspect
the Premises,to read the Lease or other documents,or to obtain legal or other advice relevant to
this transaction constitutes a waiver of any objection,contention,or claim that might have been
based on such reading,inspection, or advice.
No provision of the Lease may be amended or varied except by an agreement in writing-
signed by the Parties hereto or their respective successors.
29
G:Agree:Pim211/3/96
MJK_RLS 95-475
i
71
28, MIE OF ESSENCE
Time is of the essence with respect to the performance of every Provision of the Lease in
which time of performance is a factor.
29. SUCCESSORS
Subject to the Provisions of the Lease on assignment and subletting,each and all of the
covenants and conditions of the Lease shall be binding on and shall inure to the benefit of the
heirs, successors,executors, administrators, assigns, and personal representatives of the respective
Parties.
30. BROKERS
Each Party warrants to and for the benefit of the other that it has had no dealings with any
real estate broker or other agent(attorneys excepted)in connection with the negotiation or
making of the Lease.
31. TABLE Ol~CONTENTS;BEADIN-0
The table of contents of the Lease and the captions of the various sections of the Lease are
for convenience and ease of reference only and do not define,limit,augment,or describe the
scope,content, or intent of the Lease or of any part or parts of the Lease.
32. GENDER;NUMBER
The neuter gender includes the feminine and masculine,the masculine includes feminine
and neuter,and the feminine includes the masculine and neuter,and each includes corporation,
partnership,or other legal entity whenever the context so requires. The singular number includes
the plural whenever the context so requires.
33. EXHIBITS
All exhibits to which reference is made in the Lease and the Construction Rider are hereby
incorporated by reference. Any reference to"the Lease'includes matters incorporated by
reference. _-
34. ARBITRATION
34.1 Disputes Subieq to Mediation and Arbitration. Any dispute between the
parties relating to the interpretation and enforcement of their rights and obligations under Sections
6.3, 10 and 15 of the Lease shall be resolved solely by mediation and arbitration in accordance
with the provisions of Sections 34.2 and 34.3 of the Lease.
34.2 Initial Mediation. With respect to any dispute between the parties that is to be
resolved by arbitration as provided in Section 34.1,the parties shall attempt in good faith first to
30
G:Agree:P ier-2U 13/96
NIJK_RIS 95475
mediate such dispute and use their best efforts to reach agreement on the matters in dispute.
Within ten(10)days of the request of any party,the requesting party shall attempt to employ the
services of a third person mutually acceptable to the parties to conduct such mediation within ten
(10)days of his appointment. If the parties are unable to agree on such third person, or,if on
completion of such mediation,the parties are unable to agree and settle the dispute,then the
dispute shall be referred to arbitration in accordance with Section 34.3.
34.3 Arbitration. Any dispute between the parties that is to be resolved by arbitration
as provided in Section 34.1 shall be settled and decided by arbitration conducted by the American
Arbitration Association in accordance with the Commercial Arbitration Rules of the American
Arbitration Association, as then in effect,except as provided below. Any such arbitration shall be
held and conducted in a mutually acceptable location before one arbitrator,who shall be selected
by mutual agreement of the parties;if agreement is not reached on the selection of an arbitrator
within fifteen(15)days,then such arbitrator(s)shall be appointed by the presiding judge of the
superior court of the county in which the arbitration is to be conducted.
The provisions of the Commercial Arbitration Rules of the American Arbitration
Association shall apply and govern such arbitration, subject,however,to the following:
(a) Any demand for arbitration sMI be in writing and must be made within a _
reasonable time after the claim, dispute or other matter in question has arisen. In no event shall
the demand for arbitration be made after the date that institution of legal or equitable proceedings
based on such claim, dispute,or other matter would be barred by the applicable statute of
limitations.
(b) The arbitrator or arbitrators appointed must be former or retired judges or
"attorneys"with at least seven(7)years experience in real property and commercial matters, or
nonattomeys with like experience in the area of dispute.
(c) All proceedings involving the parties shall be reported by a certified
shorthand court reporter and written transcripts of the proceedings shall be prepared and made
available to the parties.
(d) The arbitrator or arbitrators shall prepare in writing and provide to the
parties factual findings and the reasons on which the decision of the arbitrator or arbitrators-is
based:
(e) Final decision by the arbitrator or arbitrators must be made within ninety
(90)days from the date the arbitration proceedings are initiated.
(f) The prevailing party shall be awarded reasonable expert and nonexpert
witness costs and expenses, and other costs and expenses incurred in connection with the
arbitration, unless the arbitrator or arbitrators for good cause determine otherwise.
(g) Costs and fees of the arbitrator or arbitrators shall be borne by the non-
prevailing party,unless the arbitrator or arbitrators for good cause determine otherwise.
31
G:Ag Ticr-21113/96
MSK:RIS 93-475
(h) The award or decision of the arbitrator or arbitrators,which may include
equitable relief, shall be final and judgment may be entered on it in accordance with applicable law
in any court having jurisdiction over the matter.
(i) The provisions of Title 9 of Part 3 of the California Code of Civil
Procedure,including Section 1283.05, and successor statutes,permitting expanded discovery
proceedings shall be applicable to all disputes which are arbitrated pursuant to this section.
BALANCE OF PAGE INTENTIONALLY LEFT BLANK
32
G:Agee:Pier-2U/3J96
MMPJ-S 95-475
IN WITNESS WHEREOF,the parties hereto have executed the Lease as of the date first
written above.
TENANT: CITY OF HUNTINGTON BEACH,
T.S. MANAGEMENT CORP. a municipal corporation of the
State of California
By:
Mayor
(grin a name)
Its: (circle ondent/Vice president ATTEST:
By: City Clerk
(S ks .-Y, APPROVED AS TO FORM:
(print or type n e) , ��
Its: (circle one)SttretarylChief Financial Officer/
Aast.Secretary-Treasurer
VIE APPROVED: INITIA AP R VED: t"
,try,administrator or of Commu ' Services
33
MJK:RIS 95-475
EXHIBIT`C"
Copy of Assignment
See attached pages.
ASSIGNMENT
lL31r
THIS ASSIGNMENT, dated this Ztk day of 34, 1997, is by and between T.S,
MANAGEMENT CORP., an Hawaiian corporation ("Assignor") and PIER PLAZA GROUP, a
California Limited Liability Company ("Assignee").
1. Imo . On January 16, 1996, Assignor entered into a lease entitled "LEASE FOR
PREMISES AT HUNTINGTON BEACH PIER PLAZA BETWEEN THE CITY OF
HUNTINGTON BEACH AND T.S. MANAGEMENT CORPORATION (DUKE'S SURF CITY
RESTAURANT)"("Lease") a copy of which is attached hereto as "Exhibit A"and incorporated
herein as if fully set forth. Should the Least be amended prior to consent to this Assigrunrnl
being given by the City of Huntington Beach ("City","Lessor"), the use of the term"Lease"
herein shill refer to said Lease as amended.
2. AMONMENT . Section IS of the Lease requires the written consent of
the City prior to an assignment of the Lease.
3. ASSIGNMENT. For value received,receipt of which is hereby acknowledged, and
the agreement of Assignee, set forth below,Assignor hereby assigns to Assignee all of
Assignor's right, title, obligation, and interest in the Lease and hereby delegates to Assignee all
of its duties and obligations under the Lease. However, Assignor understands that the consent of
the City to said assignment,as set forth below, is given with the condition that Assignor remain
liable to fulfill its duties and obUgatdasunder the Lease should Assignee fail to do so, and
Assignor agrees that it will remain bound to City to flalfill its duties and obligations under the
Lease with the right of the City to utilize the full remedies of the law against Assignor should it
be required to do so.
4. ASSUMPTION. Assignee hereby accepts the foregoing assignment and hereby
expressly assumes and agrees to observe, keep,perform, fulfill and to be bound by all of the
terms,covenants and conditions of the Lease, including the making of all payments due to Lessor
under the Lease when due and payable. Assignee understands and agrees that should it fail to do
so and Assignor is required to perform under the Lease in its stead, Assignor may utilize any
remedies the law allows against Assignee.
5. El 111,FORCE A_. EFF •CT. Tha Lease shall remain in full force and effect,
unmodified by this assignment and the City's consent thereto. Any subsequent assignment by
Assignee shall remain subject to all of the terms,covenants and conditions of the Lease, `
including, but not limited to,the consent of the Lessor.
b. COUNTFRpAR_TS. This Assignment may be executed in several counterparts, all of
which together shall constitute one agreement binding on all parties hereto notwithstanding that
the parties have signed separate signature pages.
7. Ai ITHORI'(_'Y O SIGN. The undersigned represent to t✓ity that they have the
authority of the;respective parties to execute this Assignment and make the mpresentations
contained herein.
ASSIGNOR
T.S. MANAGEMENT CORP.
By: �
Name: —7-o h,, S x
Title:
ASSIGNEE
PIER PLAZA GROUP, LLC
$y
Nam . Tots�► S•�u fGr.
Title, I'Y1�-++�ri+y / ►fi+4-TSni
CONSENT ORLE
The CITY OF HUNTINGTON BEACH is the Lessor in the Lease described in the above
asaignmcnt and consents to the assignment of the Lease to PIER PLAZA GROUP, LLC,waiving
nose of the Lessor's rights under the Lease as to the Lessee or the Assignee.
DATE: �________, 1997 LESSOR
CITY OF HUNTINGTON BEACH
011
MAYOR
(:•TTEST'
(z z—
j cTE
GROIN LESSOR CONSENT
[INTENTIONALLY OMITTED]
EXHIBIT"D"
Copy of Notice of Extension
See attached.
July 15, 2008
TS RESTAURANTS
HAWA11 AND CALIFORNIA
Tina Krause
Economic Development Department
CITY OF HUNTINGTON BEACH
2000 Main Street
Huntington Beach, CA 92648
RE: Exercise of Option
Lease Agreement September 15, 1998 by and between The City of Huntington
Beach and TS Aloha, Inc., formerly known as T S Management Corporation and
Assigned to Pier Plaza Group, LLC with First Amendment dated January 5, 1998
City of Huntington Beach:
Pier Plaza Group, LLC requests to exercise the option to extend its lease for an
additional ten (10)years from September 15, 2008 to September 15, 2018 as
described in the lease dated June 15, 1997 Section 4 4.2.
Thank you for your consideration.
If you agree and grant the option for extension, please sign below.
Sincerely,
/�1
John (Sandy}Sa+�
xten
TS Aloha, Inc.
Formerly known as T S Management Corp.,
Member/Manager
Pier Plaza Group, LLC
Approved By:
CITY OF HUNTINGTON BEACH
Date: Z, c),-�%o
CC: Arnie Ross
22S PLAZA STREET SUITE 300 SOLANA BEACH CALIFORNIA 92075 TEL 858-720-2380 FAX 858-720-2381 EMAIL TSCALIF@?-1-com
M'L'1: � K.:�,o i, Liu.ulnyren f,.,;b, ,11a LF,,, i- 4Y�:krk� NL'l.a
kFUKI'� Y,,pn f'—k K010 5 La6ai:- J.Li1LAR'1': K.�.,��.y"L
° CITY OF, HIJl® TING'I ON BEACH
z
� y Inter®ffice Communication
Economic Development Department
TO: Honorable Mayor and Councilmembers
VIA: Paul Emery, Interim City Administrator
FROM: Stanley Smalewitz, Director of Economic Development
Jim B. Engle, Director of Community Services
DATE: September 2, 2008
SUBJECT: LATE COMMUNICATION REGARDING ITEM#16: APPROVE
AND AUTHORIZE THE MAYOR AND CITY CLERK TO
EXECUTE AND RECORD THE LANDLORD CONSENT AND
ESTOPPEL CERTIFICATE FOR OWNERS AND OPERATORS
OF DUKE'S RESTAURANT, PIER PLAZA GROUP (PPG)
LEASEHOLD
The purpose of this memorandum is to offer general information regarding the Estoppel
Certificate for Pier Plaza Group leasehold (Duke's/Savannah's) and to address the issues
brought to staff s attention via Mayor Pro Tem Bohr's email.
An estoppel certificate is essentially a document to give a third party (bank) information
on the relationship between a landlord (City) and a tenant (PPG). In this case, PPG
wishes to obtain a new bank loan for approximately $1.4 million. The loan will be
secured through the leasehold interest in the Duke's restaurant location. The Bank of
New West is requiring the City of Huntington Beach, as property owner under a ground
lease,to sign the Landlord Consent and Estoppel Certificate in connection with their
refinancing.
The estoppel certificate that is being presented for City Council approval includes
improved terms compared to the prior estoppel dated January 5, 1998. The proposed
estoppel adds the specification that in the event of a foreclosure the bank takes subject.to
the existing lease and the use restrictions/city approval rights that are contained therein.
The provision referred to above is Section 15.2 of the lease which states, "City's consent
to any assignment, subletting or other transfer is subject to Tenant providing City with
evidence reasonably satisfactory to City that the proposed transferee has suitable
financial strength, experience and character for operation and control of the Premises,
or portion thereof proposed for transfer, and that the use of the Premises by the proposed
transferee is consistent with that specified herein, is commercially reasonable, and is
consistent with City's operation of Pier Plaza, including, but not limited to, other
commercial uses therein. "
The request for the approval of this estoppel is not related to the terms of the lease
agreement. For clarification purposes, PPG will be exercising its first option to renew
commencing on September 15, 2008. Pursuant to the lease agreement, the Tenant has the
right to exercise its option to renew as stated in Section 4.2, "..."Tenant may extend this
lease for four further successive terms of ten (10)years, each commencing on expiration
of the preceding term, by giving City written notice of Tenant's desire to do so at any
time not more than six (6) months prior to nor less than three (3) month prior to
expiration of the Term or any extension thereof."
City staff is aware that Culinary Adventures (Savannah as sublessee) has filed for
Chapter 11 bankruptcy protection. Although Culinary Adventures plans to close some of
their eateries, Savannah's has been quoted as the company's most profitable restaurant
and is expected to remain in operation. Please see attached email from the CFO of TS
Restaurants which confirms Savannah's solvency.
Regarding the valet parking,the lease agreement with Pier Plaza Group (TS Restaurants)
gives Dukes Restaurant control over 74 dedicated parking spaces for valet parking for
both restaurants. Valet parking has never used the Main Promenade Parking Structure
(MPPS). The Coastal Development Permit and Pier Plaza Group/City agreement allows
them to use an additional 106 spaces (above the 74 dedicated spaces) in the MPPS or Pier
Plaza. During predetermined busy times, the restaurant is given the use of 50 additional
spaces. These times are generally 4:30 to 10:00 p.m. Monday through Saturday and 9:00
a.m. to 10:00 p.m. Sundays. Staff has met with the representatives of Dukes and the valet
company over the years to discuss the signage, times and location of the additional
spaces. The location of the additional spaces has periodically been redesignated to
accommodate the Dwight's Concession south of the restaurants. Signage on the overflow
spaces indicates when the spaces can be used for valet parking and the general public.
Per the Pier Plaza Group/City agreement, the city receives 20% of the Pier Plaza daily
parking fee for the spaces. Duke's Restaurant designates the parking fee charged to the
public for use of its valet parking. The valet parking revenue the city receives annually is
included in the attached financial revenue data.
Please review attachments regarding financial revenue and solvency which were
requested by the Mayor Pro Term.
tk
Attachments:
1. Email from CFO of TS Restaurants
2. Financial Revenue data
Page 1 of 1
Engle, Jinn
From: Ray Burnett[ray.burnett@tsrestaurants.com]
Sent: Tuesday, September 02, 2008 11:52 AM
To: Engle, Jim
Subject: Status of Savannah Bankruptcy
Good morning Jim,
Per your request I am providing this e-mail to give you an update on our understanding of that Culinary
adventures bankruptcy proceedings.
It is my understanding at this time that Culinary Adventures has filed for Chapter 11 bankruptcy protection. Under
this protection, I understand that Culinary Adventures is in the process of reorganizing and consolidating its
operations. To my knowledge Culinary adventures closed 3 locations in the week immediately following the
Chapter 11 filing. As the other locations were closed, a large amount of inventory and supplies were brought to
Savannah on the Beach from those locations. We take this as an indication that they plan to continue operations
at this location.
Further, Management from Culinary Adventures has given no indication that they will be trying to break their lease
at Savannah on the Beach and has not contacted us to renegotiate in any fashion as they had allegedly done with
other locations. Further, it is our understanding that this has been, and continues to be, a successfull location for
Culinary Adventures.
With the understanding that we believe Culinary Adventures will continue its successful operation of the
Savannah on the Beach location, I will attempt to address the concern the City council understandably has over
any potential closure of this location. In the event that Culinary Adventures were to close the Savannah on the
Beach location, the Pier Plaza Group (PPG)would work diligently to continue the success of this location. PPG is
committed to providing a great beachfront restaurant that would continue to successfully and graciously serve the
needs of the residents and visitors to this area. PPG would work with the City of Huntington Beach to provide a
new tenant in a timely manner that honors the intent of this project.
Should you, or any of the City Council Members have any additional questions that you would like to discuss,
please let me know and I will respond as quickly as I can.
Aloha,
Ray Burnett
CFO, T S Restaurants
858-720-2386 (office)
760-822-1805 (cell)
9/2/2008
Dukes/Chimayo (Savannahs) and Valet Services
Annual Revenue: Monthly Base Rent + Annual Percentage of Sales
Calendar Monthly Total Annual %of Sales
Year Rent Rent Amount* Valet*"
1999 $ 17,500 $ 210,000 $ 98,177 $ 308,177
2000 $ 17,500 $ 210,000 $ 134,010 $ 344,010
2001 $ 18,750 $ 225,000 $ 117,826 $ 342,826
2002 $ 18,750 $ 225,000 $ 127,756 $ 352,756
2003 $ 20,000 $ 240,000 $ 146,337 $ 8,747 $ 395,084
2004 $ 21,875 $ 262,500 $ 234,318 $ 9,160 $ 505,978
2005 $ 23,750 $ 285,000 $ 236,291 $ 9,209 $ 530,500
2006 $ 26,750 $ 321,000 $ 226,997 $ 7,832 $ 555,829
2007 $ 30,000 $ 360,000 $ 199,508 $ 9,398 $ 568,906
2008*** $ 33,760 $ 405,120 $ 5,705 $ 410,825
*Percent of sales determined per contract and apportioned annually in January for the prior completed calendar year
**Estimating less than$5,000 per year;further research should be able to produce this amount
***2008 amounts are through July
O' S.
7-,
Council/Agency Meeting Held: lAoor
Deferred/Continued to:
'AAppr e ❑ Conditionally Approved ❑ Denied %�City rk' Ignatur
Council Meeting Date: 9/2/2008 Department ID Number: ED 08-42
CITY OF HUNTINGTON BEACH
REQUEST FOR CITY COUNCIL ACTION
SUBMITTED TO: HONORABLE MAYOR AND CITY COUNCIL MEMB
SUBMITTED BY: PAUL EMERY, INTERIM CITY ADMINISTRATOR
PREPARED BY: JIM B. ENGLE, DIRECTOR OF COMMUNITY SERVICE
STANLEY SMALEWITZ, DIRECTOR OF ECONOMIC�DEVELOPMENT`1�4
SUBJECT: APPROVE LANDLORD CONSENT AND ESTOPPEL CERTIFICATE
FOR PIER PLAZA GROUP LEASEHOLD
Statement of Issue,Funding Source,Recommended Action,Alternative Action(s),Analysis,Environmental Status,Attachment(s)
Statement of Issue: Pier Plaza Group, owners and operators of Duke's Restaurant at the
Pier Plaza, is requesting City Council approval of a Landlord Consent and Estoppel
Certificate. This is required so that Pier Plaza Group can seek new financing.
Funding Source: Not applicable.
Recommended Action: Motion to:
1. Authorize Mayor and City Clerk to approve the Landlord Consent and Estoppel
Certificate for Pier Plaza Group Leasehold and authorize the Mayor and City Clerk to
execute same.
2. Direct the City Clerk to record the same.
Alternative Action(s):
Do not approve the Landlord Consent and Estoppel Certificate for Pier Plaza Group
Leasehold.
/ C.J
REQUEST FOR CITY COUNCIL ACTION
MEETING DATE: 9/2/2008 DEPARTMENT ID NUMBER: ED 08-42
Analysis:
In 1996, the City Council approved a lease agreement with T.S. Management Corporation for
the construction and operation of Duke's Surf City Restaurant. Subsequent amendments
were made by and between the City and TS Management Corporation in which the lease
was assigned to Pier Plaza Group LLC (PPG) by an assignment dated July 7, 1997.
PPG is exercising their first ten-year renewal option which will extend the next term to
September 15, 2018. PPG wishes to obtain a new bank loan for approximately $1.4 million.
The loan will be_secured through the leasehold interest in the Duke's restaurant location.
The Bank of New West is requiring the City of Huntington Beach, as property owner under a
ground lease, to sign the attached Landlord Consent and Estoppel Certificate in connection
with their refinancing.
The City Attorney has worked with PPG's legal counsel to create the new estoppel. The
estoppel document will follow the terms of the prior 1998 estoppel with the added
specification that in the event of foreclosure the bank takes subject to the existing lease and
the use restrictions/city approval rights that are contained therein.
Staff recommends that City Council approved the Landlord Consent and Estoppel Certificate
for Pier Plaza Group Leasehold.
Strategic Plan Goal: L-4 Create an environment that promotes tourism to increase
revenues to support community services and transform the city's economy into a destination
economy.
Environmental Status: Not applicable.
Attachment(s):
1. Landlord Consent and Estoppel Certificate for Pier Plaza Group
Leasehold (Amendments include Lease agreement, Amendments and
Assign ent).
2. Landlord Consent and Estoppel Certificate for Pier Plaza Group
Leasehold dated January 5, 1998.
-2- 8/26/2008 2:28 PM
ATTACHMENT # 1
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
Douglas L.Collins,Esq.
Law Offices of Douglas L. Collins
8491 Sunset Blvd., Suite 360 . . . . . . .
Los Angeles,CA 90069
LANDLORD CONSENT AND ESTOPPEL CERTIFICATE
FOR PIER PLAZA GROUP LEASEHOLD
This LANDLORD CONSENT AND ESTOPPEL CERTIFICATE(this "Agreement")dated
as of September 02 , 2008 is executed by and between the City of Huntington Beach,
a municipal corporation (hereinafter "Landlord"), and Pier Plaza Group LLC, a California
limited liability company ("Tenant"), in favor of Bank of the West, a California banking
corporation("Lender"), with respect to that certain Lease dated January 16, 1996 as amended
July 7, 1997,January 5, 1998 and February 17, 1998 (the "Lease"), by and between Landlord
and T S Management Corp. ("TSM"), which Lease was assigned by TSM to Tenant by an
Assignment(the"Assignment")dated July 7, 1997,pursuant to which Tenant has acquired an interest
(the"Leasehold")in the real property described on Exhibit"A" attached hereto and incorporated
herein by this reference(the"Premises"). In the event of any conflict between the provisions of
this Agreement and the provisions of the Lease,this Agreement shall control.
1. Landlord hereby consents to Tenant's encumbrance of the Leasehold,or any part
or parts thereof, under one or more deeds of trust, security deeds, mortgages, sale-and leaseback
documents,assignments of rents or leases,security agreements,financing statements and other
similar documents(collectively,the"Mortgage"),and assigning the Lease and Leasehold, or any
part or parts thereof,and any subleases under the Lease,as collateral security for the obligations of
Tenant under that certain Loan Agreement dated as of August 12 2008(the"Loan
Agreement")by and between Tenant and Lender,and the agreements, instruments and other
documents executed in connection therewith(hereafter collectively referred to herein,together with
the Mortgage and Loan Agreement,as the"Loan Documents"). Lender shall have the right to rely on
the security afforded by the Leasehold and to enforce the Mortgage and to acquire and to succeed to
the interest of Tenant under the Lease by foreclosure,whether by judicial sale,by power of sale
contained in any security instruments,or by assignment or deed given in lieu of foreclosure,and
thereafter may,subject to the provisions of Section 15.2 of the Lease,without further consent of
Landlord, sell, transfer or assign the Lease and the Leasehold or sublet the Premises. The obligation
of the Lender and any subsequent owner whose title to the Leasehold is acquired through any
foreclosure sale or deed-in-lieu transaction pursuant to the Mortgage,and any successor or assign of
Lender or such subsequent owner(each of Lender,any subsequent owner and any such successor and
assign hereinafter referred to as a"Transferee")for the performance of the terms of the Lease shall
terminate upon the sale,transfer or assignment of the right,title and interest of such Transferee in the
Leasehold for the Premises to any other person or entity.
2. True,complete and correct copies of the Lease and the Assignment are attached
hereto as Exhibits"B"and"C",respectively,and are incorporated herein by this reference.
1
3. Each of Tenant and Landlord(as applicable)hereby represents,warrants and
covenants to Lender that:
a. The Lease is unmodified and in full force and effect,and no amendments,
changes or supplements have been made thereto(other than by the amendments dated
July 7, 1997, January 5, 1998 and February 17, 1998 and the Landlord Consent and
Estoppel Certificate for Pier Plaza Group Leasehold dated January 5, 1998, all such
amendments attached hereto as Exhibit"A"). The conditions set forth in Section 3 of the
Lease have been met and satisfied and the Effective Date (as defined in Section 3 of the
Lease)of the Lease is June 15, 1997. Without the prior written consent of Lender,(i)neither
Landlord nor Tenant shall amend or modify the Lease,(ii)Landlord shall not accept the
surrender of,and Tenant shall not surrender,the Premises or any part thereof,(iii)neither
Landlord nor Tenant shall terminate or cancel the Lease;any attempt to do any of the
foregoing without Lender's prior written consent shall be null and void. Section 4.2 of the
Lease provides as follows:
4.2 Option to Extend. Provided Tenant is not in material default under
this Lease beyond applicable notice and cure periods when notice under this
subsection is given,Tenant may extend the lease for four further successive
terms of ten(10)years(each such term is individually an"Option Term"),
each commencing on expiration of the preceding term, by giving City written
notice of Tenant's desire to do so at any time not more than six(6)months
prior to nor less than three(3)months prior to expiration of the Term or any
extension thereof.
b. The Lease constitutes the sole and entire agreement between Landlord and
Tenant relating to the Premises. Landlord is the current fee owner of the Premises and the
current landlord under the Lease,and Landlord has not encumbered or mortgaged its interest
in the Lease or the Premises.
C. Tenant has been in possession of the Premises since December 1, 1997.
Tenant has four(4)options to extend the Lease term, each for an additional term often(10)
years(each,an"Option").Pursuant to the terms of Section 4.2 of the Lease,the first Option
has been validly and effectively exercised by Tenant,thereby extending the term of the Lease
to September 15,2018,pursuant to that certain notice attached hereto as Exhibit"D"and
incorporated herein by this reference(and Landlord further acknowledges that the Lease is
incorrectly referenced in such notice as being dated"June 15, 1997"and"September 15,
1998"and that the correct date of the Lease is January 16, 1996, and that the applicable
section of the Lease is incorrectly referenced in such notice as "Section 4 4.2.") Lender
shall have the right at any time during the term of the Lease to do any act required of or
permitted by Tenant thereunder(including,without limitation,the exercise of any Option),
and all such acts done or performed shall be effective to prevent a termination of the Lease,
as if the same had been done or performed by Tenant. In the event that Tenant shall fail to
exercise any Option within the time period required under the Lease,Landlord shall give
written notice to Lender of such failure and Lender shall have sixty(60)days from the
expiration of such time period to exercise such Option for and on behalf of Tenant.The
failure of Landlord to give the aforementioned notice to Lender shall not impair,modify or
otherwise affect Tenant's obligations under the Lease or Landlord's rights and remedies
thereunder.
d. There are not,to Landlord's knowledge,any uncured defaults on the part of
Tenant under the Lease; no event has occurred and no condition exists which, with the
2
giving of notice or the lapse of time or both, would constitute a default under the Lease;
and Tenant has performed and complied with all of the terms, covenants and conditions
contained in the Lease to be performed or complied with as of the date hereof.
e. There are no conditions or events(except as set forth in the Lease)that
would prevent the Lease from becoming effective or would permit a cancellation or
termination of the Lease by Landlord or by Tenant.
f. Tenant has completed construction of the Building in accordance with the
Lease, and(ii)installation of the tenant improvements in the Building in accordance with the
Landlord-approved Restaurant TI Final Plans-
9- The Lease, any New Lease, any replacements thereof,and any sublease
with respect to the Lease are,and shall be at all times,prior and superior to any mortgage,
deed of trust,or other financing relating to the Premises.
4. In the event that Lender(or any purchaser at a sale by Lender)succeeds to the
interests of Tenant under the Lease,the Lease shall continue with the same force and effect as if
Landlord and Lender(or such purchaser)had entered into a lease with the same terms and provisions
as those contained in the Lease and,if Lender succeeds to Tenant's interests under the Lease,Lender
agrees to abide by the terms and conditions of the Lease.
5. Promptly upon demand by Lender from time to time, Landlord shall deliver to
Lender an estoppel certificate executed by Landlord stating the amount of rent payable under the
Lease,the date through which rent has been paid under the Lease, whether or not options to
extend the term of the lease have been exercised, and whether or not there are any defaults,and
the specific nature of any claimed defaults.
6. Landlord agrees to give written notice to Tenant and Lender of any breach by
Tenant under the Lease and of the occurrence of any material default set forth in Section 16.1 of the
Lease(collectively, "Events of Default"). Landlord agrees that in the event Tenant fails to
perform, or to cure the failure of, any term, covenant or condition in the Lease, Lender shall have
60 days from the receipt of the notice of any such breach or Event of Default to cure or commence
to cure the breach or Event of Default, during which time Landlord shall abstain from pursuing
remedies available as a result of the breach or Event of Default. Notwithstanding the foregoing,with
respect to any Event of Default which is incurable by nature or which cannot be reasonably be cured
by Lender because it does not have the right to possession of the Premises and improvements thereon,
Landlord shall not terminate the Lease by reason of such Event of Default if and so long as, within
sixty(60)days from the date Landlord gives to Lender notice of such an Event of Default, Lender(a)
initiates foreclosure,judicially or by trustee's sale,of the Mortgage and thereafter proceeds to
foreclose the Mortgage or to acquire by other means the Leasehold, and(b)keeps and performs all of
the covenants and conditions of the Lease requiring the payment of money and those non-monetary
covenants and conditions reasonably susceptible of performance by the Lender,subject to the notice
and grace period provisions set forth in the Lease. Lender shall be relieved from its obligations to
initiate foreclosure of the Mortgage and to proceed therewith during such time as Lender is legally
stayed(as in the case of a bankruptcy proceeding)or enjoined from so proceeding_ If the applicable
Event of Default has been cured prior to the completion of foreclosure of the Mortgage, Lender need
not complete such foreclosure.
7 In the event of any arbitration, appraisal or other proceedings relating to the
Lease(including,without limitation, condemnation and insurance settlement negotiations and/or
proceedings), Lender shall have the right to participate in any such proceedings in association with
3
Tenant or on its own behalf as an interested party. In the event of any legal proceedings involving
the Lease, Lender shall be entitled to intervene in such proceedings and be made a party thereto.
Any settlement or other agreement regarding any insurance policy or any condemnation
proceeding to be entered with respect to the Premises shall require the Lender's prior written
consent.
8. In the event of the bankruptcy of Tenant, Landlord agrees to waive the sixty
(60)-day limitation period under Section 365 of the Bankruptcy Code, 1 I U. S C §101 et sea.
(as the same may be amended or recodified from time to time, the "Bankruptcy
Code"), for an initial extension period of thirty(30)days and thereafter such other and further
extension periods as are reasonable and necessary for Lender to perform the undertakings agreed
upon below, provided that all rent and other charges due under the Lease are paid.In
consideration of Landlord's agreement above and to the new lease provisions in favor of Lender
contained below, Lender does hereby undertake and agree for the benefit of Landlord that, if
at anytime a bankruptcy proceeding shall be commenced concerning Tenant-mortgagor
and/or the Leasehold,Lender shall,within the statutory time period or any extension thereof provided
under Section 365 of the Bankruptcy Code for the rejection or assumption of leases,use its reasonable
efforts to diligently and in good faith,obtain or cause the Tenant-mortgagor and/or Trustee in
bankruptcy to obtain either(i)an abandonment of the Lease by the bankruptcy court pursuant to
Section 554 of the Bankruptcy Code, as amended; or(ii) an assumption of the Lease pursuant to
Section 365 of the Bankruptcy Code,as amended.
In the event that,notwithstanding Lender's compliance with the above provisions of
this Section 8 and all other provisions of this Agreement, the Lease shall terminate prior to the
natural expiration of the term thereof for any reason whatsoever, then,and in any such event,
Lender shall thereupon have the option to obtain a new lease("New Lease")of the Premises in
accordance with and upon the following terms and conditions:
a. Upon the written request of Lender delivered to Landlord within sixty(60)
days after the termination of the Lease as aforesaid,Landlord shall enter into a New
Lease of the Premises with Lender, or its designee,as provided in paragraph(b)
immediately below; provided,however, that if Landlord receives no such written request
within said sixty(60)-day period,then all of Lender's rights to a New Lease hereunder shall
automatically terminate.
b. Such New Lease shall be effective as of the date of termination of the
Lease and shall be for the remainder of the term of the Lease at the same rent and other
charges therein provided and otherwise upon the same agreements, terms,covenants and
conditions contained therein_The New Lease issued hereunder shall have the same relative
priority in time and right as the Lease and have the benefit of and vest in Lender all of the
same rights,title, interest,powers and privileges of Tenant thereunder. The New Lease shall,
subject to the same agreement,terms,covenants and conditions as contained in the Lease,
also transfer to Lender or its designee all buildings, improvements and appurtenances situated
on the Premises,together with all equipment, fixtures and machinery therein;subject,
however,to any obligation set forth in the Lease to surrender such items to Landlord upon
termination or expiration of the Leasehold. Concurrently with execution of the New Lease,
Landlord shall assign to Lender or its designee Landlord's interest in any then existing
sublease under which the subtenant has attorned to and been recognized by Landlord. During
the period between termination of the Lease and execution of the New Lease, Landlord
shall not amend or modify the subleases or take any action which will adversely affect the
Premises or give rise to any liens against the Premises.
4
C. As a condition to and concurrently with delivery of such New Lease,
the lessee named therein shall pay any and all sums which would at the time of the
execution thereof be due under the Lease but for termination as aforesaid, and shall fully
otherwise remedy any existing defaults under the Lease susceptible of cure by Lender,or
such designee,and shall pay to Landlord all costs and expenses, including but not limited to
any insurance premiums paid or incurred by Landlord in order to maintain the insurance
coverage required under the terms of the Lease,and the reasonable attorney's fees,court
costs and disbursements incurred by Landlord by reason of the termination of the Lease
and/or in connection with the preparation,execution and delivery of such New Lease.Any
default which cannot be cured by such lessee until it obtains possession of the Premises shall
be cured by the lessee within a reasonable time after it obtains possession.
d. Lender, if it is the initial lessee under the New Lease,may assign such New
Lease,subject to the provisions of Section 15.2 of the Lease,without Landlord's further
consent,and Lender shall,upon such assignment,be released from all liability for the
performance or observance of the covenants and conditions in such New Lease contained
and on the lessee's part to be performed and observed from and after the date of such
assignment,provided that a certified copy of such assignment be provided to Landlord.
9. All insurance policies obtained by Tenant and covering the Premises shall contain
a standard mortgagee protection endorsement and name Lender as an additional insured, and the
Lender shall be entitled to certificates of such policies.
10. No notice of default under the Lease,notice of intention to terminate the Lease,or
notice of termination of the Lease or any other notice which is given by Landlord to Tenant shall be
binding upon or affect Lender unless it is in writing and a copy of such notice has been given at
substantially the same time and in the same manner to Lender at such address as Lender has last
specified by written notice to Landlord;provided,however,that no failure of Landlord to provide any
such notice to Lender shall impair,modify or otherwise affect Tenant's obligations under the Lease or
the rights and remedies of Landlord thereunder.Any notices required to be given to Lender hereunder
shall be given to Lender at its address as follows:
Bank of the West
1280 4 h Avenue
San Diego,CA 92101
Attn: William A. Burzynski
With a copy to:
Law Offices of Douglas L. Collins
8491 Sunset Blvd., Suite 360
Los Angeles,California 90069
11. This Agreement and all rights hereby granted to Lender shall terminate upon
repayment by Tenant of all indebtedness and other amounts owing under the Loan Documents. The
terms and provisions of this Agreement shall bind Landlord and its successors and assigns and shall
inure to the benefit of Lender and its successors and assigns and any subsequent lenders with respect to
the Leasehold in the Premises,and any subsequent purchasers of the Leasehold in the Premises.Notice
of acceptance of this Agreement by Lender is waived.
12_ This Agreement shall not be binding upon any party until execution by all parties.
5
13. This Agreement may be executed in one or more counterparts,each of which shall be
deemed an original,but all of which together constitute one and the same instrument.
14. The Lease is hereby supplemented,amended and modified in all other respects
necessary to reflect the terms and provisions set forth in this Agreement.Except as expressly modified
herein,the terms of the Lease shall remain unchanged and in full force and effect.
15. This Agreement shall be construed and governed by the laws of the State of
California.
16. Each of Landlord and Tenant acknowledge and agree that the acquisition by either
party of the right,title, interest and estate of the other party in and to the Premises shall not result in
termination or cancellation of the Lease by operation of the principle of merger of estates or
otherwise,notwithstanding any applicable law to the contrary.Each party hereto agrees to provide
further assurances,to take any and all further actions,and to execute,acknowledge,verify,certify,
deliver,enter into,file and/or record any and all other documents, instruments, and agreements
necessary or appropriate to consummate the transactions contemplated by this Agreement.
17. This Agreement cannot be amended,modified or supplemented except by a written
document signed by the affected parties.
[signatures follow on next page]
6
IN WITNESS WHEREOF,the parties have executed this Agreement as of the date first above
written.
Tenant: Landlord:
PIER PLAZA GROUP,LLC, CITY OF HUNTINGTON BEACH,a municipal
a California limited liability company corporation of the State of California
By: T S Aloha,Inc.,a Hawaii corporation,
formerly known as T S Management Corp.,
its Managing Member Mayor
By:
Ra Burnett,Chief Financial Officer City Clerk
AND INITIATED AND APPROVED:
Director of Community Services
P
ITS: (circle one Secretary/ hief Financial REVIEWED AND APPROVED:
Officer/Asst.Secre reasurer
Lender: City Administrator
BANK 'V `F THE WEST
APPROVED AS TO FORM:
By:
I
William A. Burzynski,Vice President City Attorney
COUNTERPART
7
ACKNOWLEDGMENTS
STATE OF CALIFORNIA }
}Ss.
COUNTY OF S9 J }
}
On ogJZ 6 a g ,before e, /Xj -- a notary
public,personally appeared W, A, r who proved to me
on the basis of satisfactory evidence to be the person hose name)is/.am5subscribed to the within
instrument and acknowledged to me that he/sha4hey executed the same in hisAwfM eir authorized
capacity(iwi},and that by his/lw.s4hen'signature(s}on the instrument the person(e ,or the entity upon
behalf of which the person(,s3'acted,executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing
paragraph is true and correct.
Witness my hand and official seal.
Si e
o c
4 f F V,
IL
\. Commission# 1615802
W c;_,� Notary Pubic-Catifomia z.
San Dieg' o County
tr,y Comm.t:";Dims Oct 23,2009:
STATE OF CALIFORNIA } - _. r
) SS.
COUNTY OF }
}
On s4 )-to-cog,before me, bk- ILAt(k h-t , a notary
public,Orsonally appeared I ,who proved to me
on the basis of satisfactory evidence tb 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.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing
paragraph is true and correct.
Witness my hand and official seal.
Signature JACQUELINE REED
Otary qbt, COMM.81 536669
UNotary Public
-Caiifomis N
W = �� SAN DIEGO COUNTY
My Comm.Exp.Oec 19,2008
ACKNOWLEDGMENT
STATE OF CALIFORNIA }
���� } SS.
COUNTY OF S6 Y, t }
}
On �1 alb 3 C�`d before me, k.0 L t L�`r p_ ��_,� a notary
public, sonally appeared 0- E q who proved to me
on the basis of satisfactory evidence to behhe 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.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing
paragraph is true and correct.
Witness my hand and official seal.
JACQUEUNE REED
COMM.#1536669
Signature to Notary Pu4NC-Califomia ca
N lic
SAN DIEGO COUNTY
L—,)
My Comm.Exp.Dec 19,2oo8
STATE OF CALIFORNIA }
) SS.
COUNTY OF }
}
On ,before me, ,a notary
public,personally appeared who 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.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing
paragraph is true and correct.
Witness my hand and official seal.
Signature
Notary Public
IN WITNESS WHEREOF,the parties have executed this Agreement as of the date first above
written.
Tenant: Landlord:
PIER PLAZA GROUP,LLC, CITY OF HUNTINGTON BEACH,a municipal
a California limited liability company corporation of the State of California
By: T S Aloha,Inc.,a Hawaii corporation,
formerly known as T S Management Corp.,
its Managing Member Mayor
By:
Ray Bumett,Chief Financial Officer City Clerk
AND IN TED AND APPROVED:
r
By:
JDirector of Community ervices
print name r
ITS: (circle one)Secretary/Chief Financial ;Jy
APP OVED:
Officer/Asst.Secretary-Treasurer
Lender: City Admi is or
BANK OF THE WEST
APPROVED AS TO FORM:
By: T ' ee Z 6 c
William A. Burzynski,Vice President City Attorney 2 log.
COUNTERPART
7
ACKNOWLEDGMENT
STATE OF CALIFORNIA }
) ss
COUNTY OF ORANGE )
On September 4, 2008 before me, P. L. Esparza, Notary Public, personally appeared Debbie
Cook, who proved to me on the basis of satisfactory evidence to be the person whose name is
subscribed to the within instrument and acknowledged to me that she executed the same in her
authorized capacity, and that by her signature on the instrument the person, or the entity upon
behalf of which the person acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the
foregoing paragraph is true and correct.
WITNESS my hand and official seal.
ccnvnmftn*Is"]N
i "Cloy h+a11c
(Notary Signature
ACKNOWLEDGMENT
STATE OF CALIFORNIA )
) ss
COUNTY OF ORANGE )
On September 4, 2008 before me, P. L. Esparza,Notary Public,personally appeared Joan L.
Flynn, who proved to me on the basis of satisfactory evidence to be the person whose name is
subscribed to the within instrument and acknowledged to me that she executed the same in her
authorized capacity, and that by her signature on the instrument the person, or the entity upon
behalf of which the person acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the
foregoing paragraph is true and correct.
WITNESS my hand and official seal. PL
#it7�
o'camm.
(Notary Signatur
EXHIBIT"A"
LEGAL DESCRIPTION
That certain real property located in the County of Orange,State of California,described as follows:
ALL THAT CERTAIN LAND SITUATED IN THE STATE OF CALIFORNIA,COUNTY OF
ORANGE,CITY OF HUNTINGTON BEACH,AND IS DESCRIBED AS FOLLOWS:
THAT PORTION OF THE RANCHO LAS BOLSAS,AS PER MAP RECORDED IN BOOK 2,
PAGE 332 OF PATENTS, IN THE OFFICE OF THE COUNTY RECORDER OF LOS ANGELES,
CALIFORNIA,DESCRIBED AS FOLLOWS:
THAT PORTION OF THE FOLLOWING DESCRIBED LAND WHICH IS ABOVE A DEPTH OF
TWENTY FEET(20')BELOW THE SURFACE THEREOF:
COMMENCING AT THE WESTERLY CORNER OF BLOCK 103 OF HUNTINGTON BEACH
TRACT,AS SHOWN ON A MAP RECORDED IN BOOK 3,PAGE 36 OF MISCELLANEOUS
MAPS,RECORDS OF ORANGE COUNTY;THENCE ALONG THE SOUTHWESTERLY
PROLONGATION OF THE NORTHWESTERLY LINE OF SAID BLOCK 103, SOUTH 40°52'
00"WEST 179.00 FEET;THENCE AT RIGHT ANGLES SOUTH 49'08' 00"EAST 0.67 FEET
TO THE TRUE POINT OF BEGINNING;THENCE SOUTH 40' 52' 00" WEST 121.00 FEET
ALONG A LINE PARALLEL TO AND 0.67 FEET SOUTHEASTERLY,MEASURED AT RIGHT
ANGLES,TO SAID SOUTHWESTERLY PROLONGATION OF THE NORTHWESTERLY LINE
OF SAID BLOCK 103;THENCE AT RIGHT ANGLE SOUTH 49'08' 00"EAST 148.32 FEET;
THENCE NORTH 400 52' 00"EAST 55.42 FEET;THENCE SOUTH 49'08'00"EAST 9.74
FEET;THENCE NORTH 85'52' 00"EAST 3.01 FEET;THENCE SOUTH 49'08' 00"EAST 4.14
FEET;THENCE NORTH 40'52' 00"EAST 37.34 FEET;THENCE NORTH 49°08' 00"WEST
1.10 FEET TO A POINT ON A NON-TANGENT CURVE CONCAVE SOUTHWESTERLY
HAVING A RADIUS OF 10.00 FEET, A RADIAL BEARING THROUGH SAID POINT BEARS
SOUTH 600 34' 47"EAST; THENCE NORTHERLY AND NORTHWESTERLY 19.39 FEET
ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 1110 07' 28"TO A POINT OF
REVERSE CURVATURE WITH A CURVE CONCAVE NORTHEASTERLY HAVING A
RADIUS OF 15.00 FEET,A RADIAL BEARING THROUGH SAID POINT BEARS NORTH 08°
17' 45"EAST;THENCE NORTHWESTERLY 16.45 FEET ALONG SAID CURVE THROUGH A
CENTRAL ANGLE OF 620 49' 17"TO A POINT WHOSE RADIAL BEARING BEARS SOUTH
71'07' 02" WEST; THENCE NORTH 490 08' 00" WEST 1.41 FEET;THENCE NORTH 400 52'
00"EAST 19.99 FEET; THENCE NORTH 49'08' 00"WEST 131.00 FEET TO THE TRUE POINT
OF BEGINNING.
EXCEPTING ANY PORTION OF THE DESCRIBED PROPERTY BELOW THE LINE OF
NATURAL ORDINARY HIGH WATER MARK WHERE IT WAS LOCATED PRIOR TO ANY
ARTIFICIAL OR AVULSION CHANGES IN THE LOCATION OF THE SHORELINE.
EXHIBIT"B"
Copy of Lease(including amendments thereto)
See attached.
SECOND AMENDMENT AMENDING LEASE FOR PREMISES AT
HUNTINGTON BEACH PIER PLAZA, DATED JANUARY 16, 1996,
BETWEEN THE CITY OF HUNTINGTON BEACH
AND T.S.MANAGEMENT CORPORATION,
AS ASSIGNED TO PIER PLAZA GROUP, LLC
THIS SECOND AMENDMENT ("Amendment") is made and entered into as of this
? day of f"- . , 1998, by and between the CITY OF HUNTINGTON BEACH, a municipal
corporation of the State of California("City") and PIER PLAZA GROUP, a California Limited
Liability Company, ("Tenant").
RECITALS
A. The City and T.S. Management Corp. entered into a lease ("Lease") dated January 16,
1996, for the lease of certain portions of the Pier Plaza. Said Lease was amended on July 7,
1997, and the City approved the assignment of the Lease, as amended, to Tenant on July 7, 1997.
A First Amendment substituting for the July 7, 1997 amendment was entered into on January 5,
1998 (First Amendment).
B. The City and Tenant wish to further amend the Lease by amending the legal
description of the property to be leased.
NOW, THEREFORE, in consideration of the mutual covenants herein contained, City
and Tenant agree as follows:
SECTION 1. Exhibit A to the Lease, containing the legal description to the property to be
leased, is hereby amended. The new legal description is attached to this Second Amendment as
"Exhibit A" and incorporated herein as if fully set forth.
Ill
HI
HI
///
1
a SECTION 2. Except as amended herein,the provisions of the Lease entered into between the
City and T.S. Management Corp. on January 16, 1996 and assigned to Tenant, and the First
Amendment thereto entered into on January 5, 1998, shall be binding on the parties hereto and
shall remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed the Amendment to Lease as
of the date first written above.
TENANT: CITY OF HUNTINGTON BEACH,
PIER PLAZA GROUP, LLC. a municipal corporation of the
State of California
By:
Mayor
(print or a name)
Its:(circle one Chairm esidentNice President ATTEST:
City Clerk
By: APPROVED AS TO FORM:
(print or type name)
Its: (circle one Secre hief Financial Officer/ �J ?� j° q$
Asst.Secretary-Treasurer City Attorney
REVIEWED AND APPROVED: INITIATED APPROVED:
City A inistrator Di ector of Co unity Services
The foregoing Instrument is a correct
copy of the original on file in this office.
Attest F,- . /, .� y� 19��
1;91.�
City Clerk and Ex-officio Cheri .;e�City
Council of the City of Huntington Teach,
jCalifornia.
B- Deputy
2
3
EXHIBIT "A"
The hereinafter described property and building thereon will continuously be used solely and
exclusively for the operation of restaurants in accordance with deed restrictions from the
HUNTINGTON BEACH COMPANY to the CITY OF HUNTINGTON BEACH on July 25,
1968:
That portion of the following described land which is above a depth of twenty feet (20') below
the surface thereof:
_Commencing at the westerly corner of Block 103 of Huntington Beach Tract in the City of
Huntington Beach, County of Orange, State of California as shown on a map recorded in Book 3,
Page 36 of Miscellaneous Maps, records of Orange County; thence along the southwesterly
prolongation of the northwesterly line of said BIock 103, South 40'52'00" West 179.00 feet;
thence at right angles South 49'08'00" East 0.67 feet to the True Point of Beginning; thence
South 40'52'00" West 121.00 feet along a line parallel to and 0.67 feet southeasterly, measured
at right angles, to said southwesterly prolongation of the northwesterly line of said Block 103;
thence at right angle South 49'08'00" East 148.32 feet; thence North 40°52'00" East 55.42 feet;
thence South 49°08'00" East 9.74 feet; thence North 85°52'00" East 3.01 feet; thence South
49°08'00" East 4.14 feet; thence North 40°52'00" East 37.34 feet; thence North 49°08'00" West
1.10 feet to a point on a non-tangent curve concave southwesterly having a radius of 10.00 feet, a
radial bearing through said point bears South 60°)4'47" East; thence northerly and northwesterly
19.39 feet along said curve through a central angle of 111°07'28" to a point of reverse curvature
with a curve concave northeasterly having a radius off 15.00 feet, a radial bearing though said
point bears North 08017'45" East; thence northwesterly 16.45 feet along said curve through a
central angle of 62°49'17" to a point whose radial bearing bears South 71'07'02" West; thence
Nortli 49°08'00" West 1.41 feet; thence North 40'52'00" East 19.99 feet, thence North 49'08'00"
West 131.00 feet to the True Point of Beginning.
Containing an area of 18,298.90 Square Feet.
QROFISS/
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EXtfIBIT $'
w
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BLOCA 103 c:1
w-
3750' 3750' 10 9 8 7 6 5 4 3 2 1
30.00' 30.00'
M OF HUNTI GTON BEAG
BOO 3, PA 36 M.M.
5A GOR R BL K 10
POI OF OMME E T
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�F
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N 49'08'00" W 131.00' NUMBER DIRECTION DISTANCE
3817' _ Ll N 4052 00" E 19.99'
P.O .13 -' L
6
2 3 L2 N 49'OS 00" W 1.41'
L3 N 49'OS 00" W 1-10'
z , L4 N 4052 00" E 37.34'
L5 N 49'08 00" W 4.14'
LG N 85'52 00" E 3.01'
L7 L5 L7 N 49'0800' W 9.74'
L8 N 4052 00" E 55.42'
Z I 18,298.90 50. FT. L9 N 49'O8 00' W
NUMBER DELTA RADIUS LENGTH
N 49'OS'00" W 148.32 y
Gl 62'4917' 15-00 16.45
62 111'07 28' 10.00 19.39
*LDEN & SKETCH TO ACCOMPANY
S S O CIATE S LEGAL DE5GIZIPTION
18012 COWAN, SUITE 210. IRVINE. CA 92614 W.O. No. 0937-404-1 pate 12/03/97
(714) 660-0110 FAX: 660-0418 En9r D.W Chk. !-W- Sheet 1 Of l
FIRST AMENDMENT SUBSTITUTING FOR"AMENDMENT TO LEASE"
AND AMENDING LEASE FOR PREMISES AT
HUNTINGTON BEACH PIER PLAZA,DATED JANUARY 16, 1996,
BETWEEN THE CITY OF HUNTINGTON BEACH
AND T.S.MANAGEMENT CORPORATION,
AS ASSIGNED TO PIER PLAZA GROUP,LLC
THIS FIRST AMENDMENT("Amendment") is made and entered into as of this
5ti day of , 1998,by and between the CITY OF HUNTINGTON BEACH,a municipal
the S corporation of tate of California("City')and PIER PLAZA GROUP,a California Limited
Liability Company, (Tenant').
RECITALS
A. The City and T.S. Management Corp. entered into a lease("Lease") dated January 16,
1996, for the lease of certain portions of the Pier Plaza,a copy of which is attached hereto as
"Exhibit A"and incorporated herein as if fully set forth. Said Lease was amended on July 7,
1997,and the City approved the assignment of the Lease,as amended,to Tenant on July 7, 1997.
B. City and Tenant wish to further amend certain provisions of said Lease to reflect the
changed nature of the Project. Tenant intends to develop the Premises and to sublease the upper
and lower floors to two restaurants. Said subleases are subject to the prior approval of City. In
order to preserve ease of understanding of the Lease,this Amendment incorporates the
provisions contained in the July 7, 1997 Amendment to Lease, and is intended as a novation and
substitution of the July 7, 1997 Amendment to Lease.
NOW,THEREFORE, in consideration of the mutual covenants herein contained,City
and Tenant agree as follows:
SECTION 1. Section 2.5 of the Lease is hereby amended to read as follows:
"2-5 - suan to --=
construction rider as amended herein,Tenant's obligations to construct the building on the
Premises shall consist'of paying all permit fees associated with the construction of the Premises,
utility connection fees,any and all architectural and construction supervision fees and
construction of all building and landscape improvements on the pad site. Tenant shall submit for
City approval a signage plan consistent with the City's sign code. The expense for placement of
such signs as are approved by the City shall be the sole responsibility of Tenant"
SECTION 2. Section 3 of the Lease is hereby amended to read as follows:
"3 EFFECTIVE DATE.
This Lease shall be effective as of June 15, 1997."
SECTION 3. Subsection 6.1 of the Lease is hereby amended to read as follows:
"6.1 Minimum Annual Rent
(a) Ras Baso Minimum Annual Rent. From and after the Rent Commencement
Date,Tenant shall pay to City as minimum annual rent for the Premises("Minimum Annual
Rent'),without deduction, setoff,prior notice,or demand, the sum of$210,000.00, for each of
the two(2)years of the Term of this Lease succeeding said Date. For each of the following two -
years the Minimum Annual Rent paid by Tenant shall be the sum of$225,000.00. Commencing
with the fifth year after the Rent Commencement Date, and each year thereafter during the Term
and any extension thereof,the fixed Minimum Annual Rent shall be the sum of$240,000.00,
except as adjusted in accord with paragraph(b)of this subsection. One-twelfth of the Minimum
Annual Rent shall be payable monthly in advance of the first day of each month. Should
monthly payments for Minimum Annual Rent be required for any partial month pursuant to any
provision of the Lease, such Rent shall be prorated in accordance with the actual number of days
in the month in which such proration occurs.
Rent shall be payable at the City Treasurer's office of City at 2000 Main
Street,Huntington Beach,California or at such other place or places as City may from time to
time designate by written notice delivered to Tenant. Rent payment shall be considered
delinquent if not paid wiflvn 15 days of due date and Tenant shall be subject to default under the
terms and conditions of Section 16.
(b) Periodic Adjustment. From and after the fifth anniversary of the Rent
Commencement Date,the Minimum Annual Rent shall be adjusted to equal seventy-five(75%)
of the average of the actual Rent received by City over the past five years of operation or
$240,000.00,whichev&'is greater."
SECTION 4. Subsection(b)of section 6.2 of the Lease is hereby amended by adding subpart
(13) to read as follows:
"(13) Tips and gratuities,including service charges on prearranged functions."
SECTION-5. section 5 a e ease is here y amen eflo re as o7lows:
"6.3 Percetita&Rent.
(a) Percentage. In addition to Minimum Annual Rent, during the Term or any
extension thereof,Tenant shall pay to City a sum(Percentage Rent")equal to the amount that the
product of the percentage rate set forth in this paragraph multiplied by all Gross Sales at the
Premises exceeds the Minimum Annual Rent paid during the Operational Year.
2
An"Operational Year"is a one-year period ending December 31. For
purposes of computing the Percentage Rent for any partial Operational Year at the beginning or
end of the Term or any extension thereof, the volume of Gross Sales for that period shall be
adjusted pro rats to the number of months in that partial Operational Year to determine the
percentage rate to utilize.
Percentage Rent will be based on the following annual Gross Sales
percentage:
Sales Volume Racentagr.Rate
Years 1-5 Years 6-50
UPSTAIRS LEVEL:
Gross Sales from-0-to $6,000,000.00 3% 4%
Gross Sales above$6,000,000.00 5% 5%
Example: At a Gross Sales of$9,000,000,Percentage Rent in years 1-5 of the Lease
would be as follows:
3%0 of$6,000,000=$180,000
56/o of$3,000,000=$150 000
Sub-Total $330,000
DOWNSTAIRS LEVEL:
Gross Sales from,-0-to $4,000,000.00 3% 3%
Gross Sales above$4,000,000.00 4% 5%
Example: At a Gross Sales of$5,000,000,Percentage Rate in years 1-5 of the Lease
would be as follows:
3%of$4,000,000=$120,000
4%of$1,000,000=SS 40,000
Sub-Total $160,000
TOTAL RENT TO CITY=$490,000
-- All salet-parking-fees hall-be-calculated-according-to stairsqeveLpercentage-rent—
Percentage Rent shall be due and payable within thirty(30)days after the end of any Operational
Year.
(b) Method of Payment. Tenant shall furnish to City statements of Tenant's Gross
Sales within ten(10)days after the end of each month,and an annual statement of Gross Sales
within ten(10)days after the end of each Operational Year. Each statement shall be signed and
certified to be correct by an officer or employee of Tenant."
SECTION-6. Section 7.2 of the Lease is hereby amended to read as follows:
3
"7.2 Civerationof Premises Tenant shall operate and manage the Premises in a
first-class manner,comparable to other first-class businesses providing similar facilities.
Tenant agrees that portions of the second floor entry area of the Building shall,
during all business hours,be open to the public as a viewing area free of charge provided that
proper dress is wom and the conduct of a member of the public does not disturb the reasonable
operation of the restaurant,except that such portion may be closed from time to time, at the sole
discretion of Tenant or its subtenant, for private engagements of its restaurant operation.
Notwithstanding the Tenant's or its subtenant's rights to live or recorded
entertainment pursuant to any permit and/or license issued by City or granting authority,Tenant
or its subtenants shall not use or permit the use of the Premises in any manner which(i)creates a
nuisance or an unreasonable annoyance to persons outside the Premises,other than as may be
required by Law or necessary or advisable for safety purposes and other than a customer paging
system,or(ii)violates any Law.
Upon approval by City of the final design plans and operating hours, subtenant
shall be allowed to provide a take=out window for the lower level restaurant.
The parties hereto mutually covenant and agree that Tenant and/or its subtenants,
by keeping and perfoinizng the covenants herein contained, shall at all times during the Term of _
this Lease peaceably and quietly have,hold and enjoy the Premises,without unreasonable
hindrance or interruption by City or City's agents,or by any other person or persons lawfully
claiming by,through or under City."
SECTION 7. Section 7.9 of the Lease is hereby amended to read as follows:
"7.9 Customer Parking Tenant shall have the exclusive use of 74 parking spaces
within the City-maintained Pier Plaza beach parking lot to be used for valet parking as shown on
"Exhibit B",attached hereto and incorporated herein as if fully set forth. It is understood that
Tenant and any subtenants of Tenant approved by City for occupation of the Premises shall
share,on a nonexclusive basis,the use of said 74 parking spaces. The cost of providing such
valet parking shall be shared prorata between restaurant subtenants of the Premises based upon
the estimated sales volume of their respective subleased premises or any other equitable
allocation proposed by Tenant and approved by City.
For additional valet parking, City shall make available to Tenant parking tokens for valet
parking in ei er e P er aza beach parkng lot or the Main Promenade Parking Structure.
Tenant shall provide the tokens to its subtenants occupying the Premises to be used when the 74
reserved valet parking'spaces are fully occupied. When the valet tokens are being used,valets
shall seek parking spaces within the Pier Plaza beach parking lot or the Main Promenade Parking
Structure on a nonexclusive basis. To meet its parking obligation for the Coastal Development
Permit,the City shall provide the parking tokens to Tenant at a charge of$1.00 per token. The
charge for tokens shall be reviewed every five years during the term of the Lease and adjusted to
reflect 20%of the average daily parking fee at the time of review or if the hourly rates are in use
at 20%of the three hour'rate at that time.
t:.,,. 4
It is further understood that the City shall make available to the Tenant up to one hundred
six(106)spaces of the Pier Plaza beach parking lot or the Main Promenade Parking Structure.
Should Tenant wish to reserve valet parking in excess of the 74 spaces granted pursuant
-to this Section,it shall make such reservation request to the Community Services Director or his
designee a minimum of twelve(12)hours in advance of such proposed use. In non-peak season
times(the day after Labor Day through the day before Memorial Day)such request shall be
granted for the Pier Plaza beach parking lot. In peak season times (Memorial Day to Labor Day),
it shall be within the disgretion of the City to grant such request, and approval of such request
shall not be unreasonably.withheld. The Director of Community Services or his designee shall
determine if the request can be granted based upon the provisions of the Coastal Development
Permit referencing peak times. In the event the City grants Tenant's request for additional
reserved valet parking,the City shall charge Tenant a rate of 20%of the daily parking fee for the
number of parking spaces requested to be reserved for additional valet parking or, if hourly rates
are in use,at 20%of the hourly rate of the specific hours requested at that time.
Tenant has the option of requesting, at no charge,a maximum of 106 additional valet
parking spaces in the Main Promenade Parking Structure.
In accordance with the California Coastal Commission conditions of approval,Tenant
shall require its subtenants to validate parking at the Main Promenade Parking Structure for those
customers choosing to self park in the Structure. City shall not charge Tenant for the first 3,000
validations used in each calendar month. Validations used in excess of 3,000 per calendar month
shall be paid by Tenant to City at$.254 each or at such rate adopted by the City Council for the
Main Promenade Parking Structure. City shall provide Tenant with validation stamps to be used
by its subtenants of the Premises to validate Main Promenade Parking Structure parking tickets.
Tenant shall always be included under any City parking validation programs for discounted
merchant parking rates and shall receive the best validation rate available to any particular
merchant group."
SECTION 8. Section 7.10 of the Lease is hereby amended to read as follows:
"7.10 Public Rest Rooms Notwithstanding anything in this Lease to the contrary,
Tenant shall make available to the general public,including restaurant patrons,any rest rooms
which are a part of the Premises,provided that proper dress is worn and the conduct of the user
does not disturb the reasonable operation of the restaurants. Tenant shall keep the public rest
rooms in good order and repair and in clean and sanitary condition. City shall maintain and keep
- open beach pu crest rooms om AM to 10:00 P i every day."
SECTION 9. Section 7.12 of the Lease is hereby amended to read as follows:
"7.12 Other StucAmres City shall not permit permanent structures to be placed on the
beach in front of the Premises or on the Pier Plaza which would obstruct the view and/or
operations of Tenant or its subtenants. City may conduct special events on the beach and on Pier
Plaza where temporary structures are erected. However,such temporary structures will not
obstruct access to Tenant's premises."
5
-w
SECTION 10. Section 7.13 of the Lease is hereby amended to read as follow:
"7.13 Other uses City shall not permit the commercial use of the ten-foot strip of
land in front of the Premises unless first offered to Tenant. If the City desires to permit the
placement of food carts,kiosks,or mobile vending units on the pier, front entry areas to the
Premises or on the Pier Plaza,the City shall first offer such concessions to Tenant."
SECTION 11. Section 15.1 of the Lease is hereby amended to read as follows:
"15.1 Prohibition of Assignment The Parties acknowledge that City is entering into
the Lease in reliance upon the experience and abilities of Tenant and its principals.
Consequently,Tenant shall not voluntarily assign or encumber its interest in the Lease or in the
Premises,or sublease all or any part of the Premises,or allow any other person or entity(except
Tenant's authorized representatives)to occupy or use all or any part of the Premises without the
prior written consent of the City,which consent shall not be unreasonably withheld. Any
assignment, encumbrance,or sublease without such consent shall be voidable and, at City's
election,shall constitute a default."
SECTION 12. Section 15.2 of the Lease is hereby amended to read as follows:
15.2 Consent to Transfer City's consent to any assignment,sublease,or other transfer
is subject to Tenant providing City with evidence reasonably satisfactory to City that the
proposed subtenant or other transferee has suitable financial strength,experience and character
for operation and control of the Premises,or portion thereof proposed for sublease or transfer,
and that the use of the Premises or portion thereof by the proposed subtenant or other transferee
is consistent with that specified herein,is commercially reasonable,is consistent with City's
operation of Pier Plaza,including,but not limited to,other commercial uses therein. Any
proposed subtenant or other transferee shall agree to abide by the terms and conditions of the
Lease and other conditions imposed upon it pursuant to Law."
SECTION 13. Section II.A. of the Construction Rider to the Lease is hereby amended to read as
follows:
"A. Commencement and Completion of Construction of Building- After Tenant
- - obtaii s e-Permits-au&authorizations-covering-oxgic o-n oflhe B-" g, enant, at its sole
cost and expense except as hereinafter provided,shall,through a construction contract with a
licensed,bondable contractor reasonably acceptable to City("General Contractor'),commence
or cause to be commenced construction of the Building and diligently pursue completion thereof
within the applicable time frames set forth herein and in the Lease. Tenant shall not change the
General Contractor without the City's prior written consent,which consent shall not be
unreasonably withheld or delayed. The construction of the Building shall be done in a good and
workmanlike manner with new or like new materials and in substantial conformity with the Final
Plans,subject to the provisions of this Construction Rider. City and Tenant hereby mutually
6
agree to construct the Pier Plaza and the Premises simultaneously. City has provided Tenant
with a staging area as of the date of this Lease Amendment. Such staging area is, and shall be
provided to Tenant on a continuous basis until construction has been completed on the Premises
and a notice of occupancy issued. Such staging area may be provided on a portion of the parking
lot after Pier Plaza is completed. Tenant shall have its General Contractor contact the City at
least thirty(30)days prior to moving onto.the site."
SECTION 14. It is the intent of the parties hereto that this Amendment incorporates and amends
the provisions of the Amendment to Lease entered into between the City and T.S. Management
Corp.on July 7, 1997, and assigned to Pier Plaza Group,LLC. It is the further intent of the
Parties that this Amendment operate as a novation of the July 7, 1997 Amendment to Lease and
the latter shall have no force and effect. Except as amended herein,the provisions of the Lease
entered into between the City and T.S.Management Corp. on January 16, 1996 and assigned to -
Pier Plaza Group,LLC. shall be binding on the parties hereto and shall remain in full force and
effect.
IN WITNESS WHEREOF, the parties hereto have executed the Amendment to Lease as
of the date first written above..
TENANT: CITY OF HUNTINGTON BEACH,
PIER PLAZA GROUP,LLC. a municipal corporation of the
State of California _
By:_
n �ayor
fJlr� /�• C�.��C�fiz..
(print a name)
Its:(circle o )Ch ' 'dent/Vice President ATTEST:
City Clerk
By: /i o5,r,, e t/ /god,/ APPROVED AS TO FORM:
(print or type name
Its:(circle one)Secretary EefFint6al Offs 21f,
12 q
REVIEWED AND APPROVED: INITIATE APPROVED:
CJI�i
City AdnTffistrator D" for of ommunity Services
7
F�
AMENDMENT TO LEASE
THIS AMENDMENT TO LEASE is made and entered into as of this _day of
Cam, 1997,by and between the CITY OF HUNTINGTON BEACH, a municipal corporation of
the Late of California("City") and TS MANAGEMENT CORP., an Hawaiian corporation
("Tenant").
RECITALS
A. The City and Tenant entered into a lease("Lease")dated January 16, 1996, for the
lease of certain portions of the Pier Plaza,a copy of which is attached hereto as"Exhibit A"and
incorporated herein as if fully set forth.
B. City and Tenant wish to amend certain provisions of said Lease.
NOW,THEREFORE,in consideration of the mutual covenants herein contained, City
and Tenant agree as follows:
SECTION 1. Subsection 6.1 of the Lease is hereby amended to read as follows:
"6.1 Minimum Annual Rent -
(a) Base Minimum Annual Rent. From and after the Rent Commencement
Date,Tenant shall pay to City as minimum annual rent for the Premises("Minimum Annual
Rent'),without deduction,setoff,prior notice,or demand,the sum of$210,000.00, for each of
the two(2)years of the Term of this Lease succeeding said Date. For each of the following two
years the Minimum Annual Rent paid by Tenant shall be the sum of$225,000.00. Commencing
with the fifth year after the Rent Commencement Date, and each year thereafter during the Term
and any extension thereof,the fixed Minimum Annual Rent shall be the sum of$240,000.00,
except as adjusted in accord with paragraph(b)of this subsection. One-twelfth of the Minimum
Annual Rent shall be payable monthly in advance of the first day of each month. Should
monthly payments for Minimum Annual Rent be required for any partial month pursuant to any
provision of the Lease,such Rent shall be prorated in accordance with the actual number of days
in the month in which such proration occurs.
Rent shall be payable at the City Treasurer's office of City at 2000 Main
Street,Huntington Beach, California or at such other place or places as City may from time to
time designate by written notice delivered to Tenant. Rent payment shall be considered
delinquent if not paid within 15 days of due date and Tenant shall be subject to default under the
terms and conditions of Section 16.
(b) Periodic Adjustment. From and after the fifth anniversary of the Rent
Commencement Date,the Minimum Annual Rent shall be adjusted to equal seventy-five(75%)
of the average of the actual Rent received by City over the past five years of operation or
$240,000.00,whichever is greater."
x�
e L e��. r
SECTION 2. Subsection 6.3 of the Lease is hereby amended to read as follows:
"6.3 Percentage Rent.
(a) Percentage. In addition to Minimum Annual Rent, during the Term or any
extension thereof,Tenant shall pay to City a sum(Percentage Rent' equal to the amount that the
product of the percentage rate set forth in this paragraph multiplied by all Gross Sales at the
Premises exceeds the Minimum Annual Rent paid during the Operational Year.
An"Operational Year"is a one-year period ending December 31. For
purposes of computing the Percentage Rent for any partial Operational Year at the beginning or
end of the Term or any extension thereof,the volume of Gross Sales for that period shall be
adjusted pro rata to the number of months in that partial Operational Year to determine the
percentage rate to utilize.
Percentage Rent will be based on the following annual Gross Sales
percentage:
Sales Volume Percentage Rate
Years 1-5 Years 6-50
UPSTAIRS LEVEL:
Gross Sales from=0-to$6,000,000.00 30/. 4%
Gross Sales above$6,000,000.00 5% 5%
Example: At a Gross Sales of$9,000,000,Percentage Rent in years 1-5 of the Lease
would be as follows:
3%of$6,000,000=$180,000
5%of$3,000,000=$150,000
Sub-Total $330,000
DOWNSTAIRS LEVEL:
Gross Sales from-0-to $4,000,000.00 3% 3%
Gross Sales above$4,000,000.00 4% 5%
Example: At a Gross Sales of$5,000,000,Percentage Rate in years 1-5 of the Lease
would be as follows:
3%of$4,000,000=$120,000
4%of$1,000,000=S 40,000
Sub-Total $160,000
TOTAL RENT TO CITY=$490,000
7
L
e
Percentage Rent shall be due and payable within thirty(30)days after the end of any
Operational Year.
(b) Method of Payment. Tenant shall famish to City statements of Tenant's Gross
Sales within ten(10)days after the end of each month,and an annual statement of Gross Sales
within ten(10) days after the end of each Operational Year. Each statement shall be signed and
certified to be correct by an officer or employee of Tenant."
SECTION 3. Except as amended herein,the provisions of the Lease shall remain in full force
and effect.
IN WITNESS WHEREOF,the parties hereto have executed the Amendment to Lease as of the date first written above.
TENANT: CITY OF HUNTINGTON BEACH,
TS MANAGEMENT CORP. a municipal corporation of the
State of California
By:
Mayor R°-(I-L
(print or type name)
Its:(circle on Chairm residentNice President ATTEST:
��. �-l�Jr1YLG7
City Clerk -2_ _�?
By: 6jij11j+ Y! A� oi4�So> APPROVED AS TO FORM:
(print or a name)
Its: (circle one) ecretary hief Financial Officer/
Asst.Secretary-Treasurer ty ttor ey7
b_z�—
REVIEWED AND APPROVED: IAT PROVED:
City Administrator c or ofeb9nunity Services
if
LEASE FOR PREMISES
AT HUNTINGTON BEACH PIER PLAZA
BETWEEN THE CITY OF HUNTINGTON BEACH
AND T. S. MANAGEMENT CORPORATION
(DUKE'S SURF CITY RESTAURANT)
Table of Contents
Section Page
I DEFINITIONS 1
2 LEASE OF PREMISES 4
3 EFFECTIVE DATE. 6
4 TERM 6
5 CONDITION OF PREMISES. 6
6 RENT 7
7 BUSINESS PURPOSES AND USE OF PREMISES . 11
8 TAXES,LICENSES AND OTHER OBLIGATIONS . 13
9 UTILITIES AND SERVICES . 14
10 CONSTRUCTION AND ALTERATIONS . 14
1 I MAINTENANCE OF PREMISES . 15
12 INDEMNITY AND EXCULPATION;INSURANCE . 16
13 CASUALTY DAMAGE . 20
14 DAMAGE OR DESTRUCTION OF THE PIER . 20
15 ASSIGNMENT, SUBLETTING AND ENCUMBERING . 21
16 DEFAULT .22
17 CONDEMNATION . 25
18 SECURITY DEPOSIT .26
19 WASTE OR NUISANCE . 26
20 NO CONFLICTS OF USE,HAZARDOUS MATERIALS .26
21 CITY'S DEFAULTS/TENANT'S REMEDIES . 27
22 NOTICES .28
23 SURRENDER OF PREMISES . 28
24 WAIVER. .29
25 PARTIAL INVALIDITY 29 _-
- -- 26 - RNING LAW . 29
27 ENTIRE AGREEMENT;MODIFICATION. . 29
28 TIME OF ESSENCE - 30
29 SUCCESSORS . 30
30 BROKERS 30
31 TABLE OF CONTENTS;HEADINGS . 30
32 GENDER;NUMBER. . 30
33 EXHIBITS . 30
34 ARBITRATION . 30
xh/6,f
1/4/96
LEASE FOR PREMISES
AT HUNTINGTON BEACH PIER PLAZA
BETWEEN THE CITY OF HUNTINGTON BEACH
AND T. S.MANAGEMENT CORPORATION
(DUKE'S SURF CITY RESTAURANT)
THIS LEASE is made and entered into as of the/ -14, day of
199�by and between the CITY OF HUNTINGTON BEACH, a
munici c o pal ration of the State of California("City") and T.S. MANAGEMENT CORP., _
an Hawaiian corporation("Tenant").
RECITALS
A Tenant desires to lease ground adjacent to the Huntington Beach Pier("the
Pier") and wishes to construct and operate a full-service restaurant and related retail operations.
B. City desires to Iease portions of the Pier Plaza to Tenant for such purposes
in accordance with the terms and conditions set forth in this Lease. -
AGREEMENT
NOW,THEREFORE,in consideration of the mutual covenants herein contained,
City and Tenant hereby agree as follows.
1. DEFINITIONS
L 1 General Definitions. As used in this Lease,the following words and phrases shall
have the following meanings:
(a) Alteration-any addition or change to, or modification of, the Premises
made by Tenant including,without limitation,fixtures.
- - —�) Autllarrz�d epresen a fives-any o cer, agent, emp oyee, or independent
contractor retained or employed by either Party,acting within authority given him by that Party.
(c) Qfty-the City of Huntington Beach, a municipal corporation of the State
of California, and any Successor to City's interest in the Pier or in the Premises.
(d) City Administrator-the City Administrator of the City of Huntington
Beach.
(e) Dama e-injury, deterioration, or loss to a Person or property caused by
another Person's acts or omissions. Damage includes death.
i
G:Agee:Pier-2%114/95
MIK:RIS 95-475
J \.J
(f) Damages-a monetary compensation or indemnity that can be recovered in
the courts by any Person who has suffered Damage to his person, property, or rights through
another's act or omission.
(g) Expiration-.the coming to an end of the time specified in this Lease as its
duration,including any extension of the Term resulting from the exercise of an option to extend.
(h) Good condition-the good physical condition of the Premises and each
portion of the Premises, including, without limitation, signs, windows, show windows, and
appurtenances. "In good condition"means first-class, neat, clean, and broom-clean, and is
equivalent to similar phrases referring to physical adequacy in appearance and for use.
(i) Hold harmless-to defend and indemnify from all liability,losses, penalties,
Damages,costs,expenses,causes of action, claims, or judgments arising out of or related to any
Damage to any Person or property.
6) Law-any,judicial decision, statute, constitution, ordinance, resolution,
regulation,rule,administrative order,or other requirement of any municipal,county, state,
federal, or other government agency or authority having jurisdiction over the Parties or the
Premises, or both,in effect either at the time of execution of this Lease or at any time during the
Term or any extension thereof, including,without limitation, any regulation or order of a quasi-
official entity or body(e.g.,board of fire examiners or public utilities).
(k) Maintenance-repairs, replacement, repainting, and cleaning.
0) Par -the City or the Tenant or any successor thereof permitted by this
Lease.
(m) Person-one or more human beings, or legal entities or other artificial
persons, including,without limitation,governmental agencies, partnerships, corporations, trusts,
estates, associations,and any combination of human beings and legal entities.
(n) Premises-those portions of the Pier Plaza designated on Exhibit A
attached hereto.
(o) Provision-any term,agreement,covenant,condition, clause, qualification,
- rest-rfetion,—reservation or-other-stipuiatiorriirthis-L-ease-that-defines ter otfiervv�se con o s,
establishes, or limits the performance required or permitted by either Party.
(p) Rent-Minimum Annual Rent, Percentage Rent,Taxes, and other similar
charges payable by Tenant under the Provisions of this Lease-
(q) Rent Commencement Date-the Rent Commencement Date for the
Premises shall be the date upon which the City issues a Certificate of Occupancy for the building
to be constructed on the Premises by the Tenant.
2
G:Agee:Pier-2\113/96
MJK:RLS 95475
(r) Successor-assignee, transferee, personal representative,heir, or other
Person succeeding lawfully, and pursuant to the provisions of this Lease, to the rights or
obligations of either Party.
(s) Termination-the ending of the Term or any extension thereof for any
reason before Expiration.
1.2 Other Definitions. The following additional terms are defined in the following
sections of this Lease:
(a) ABC § 7.6
(b) Affiliate § 15.4
(c) Building §2.2
(d) City Recital A
(e) Effective Date §3.
(f) First Opportunity Period §2.3
(g) Gross Sales § 6.2
(h) Hazardous Material §20
(i) Minimum Annual Rent §6.1(a)
�) Offer Notice §2.3
(k) Operational Year §6.3(a)
(1) Option Term §4.2
(m) Percentage Rent §6.3(a)
(n) Pier Recital A
(o) Pier Plaza Recital B
(p) Right of First Opportunity §2.3
(q) Subsidiary § 15.4
(r) Successor § 15.4
3
G:Agree:Pier-2115/96
MJK-RIS 95-475
i
(s) Term §4.1
2. LEASE OF PREMISES
2.1 Agreement to Lease. City leases the Premises to Tenant and Tenant leases the
Premises from City for the Term and on the conditions set forth in this Lease.
2.2 Use of Premises. Upon delivery of the Premises, Tenant covenants and agrees to
construct a building thereon in accordance with all of the terms and conditions of the
Construction Rider, attached hereto and incorporated herein by this reference("Building").
Tenant shall make all reasonable attempts to complete construction of the Building within
one year of the date of delivery of the Premises. Construction shall be deemed completed when a
Certificate of Occupancy can be issued thereon in accordance with all provisions of Law. Should
Tenant fail to complete construction within said time frame,unless delayed through no fault of
Tenant, Tenant shall immediately commence payment of rent. City may post a Notice of
Nonresponsibility on the Premises after delivery thereof to Tenant. Tenant covenants and agrees
that it shall complete all interior improvements to the Building and install all fixtures required to
operate and maintain a full-service restaurant therein,within sixty(60)days of issuance of a
Certificate of Occupancy for the Building,and shall thereafter operate and maintain on the
Premises a full-service restaurant, as approved by the coastal development permit obtained by
City. Tenant shall have the exclusive right to provide food, beverages, sundry items, and rentals
on the Premises, except for those concessions operated by Persons other than Tenant and
identified on Exhibit B attached hereto.
It is understood that Tenant will operate a restaurant and may, but is not obligated
to, sublease space for other concessions,provided all subleases, including the identity of the
sublessee(s), rent, and other terms and conditions, shall be approved by City in accordance with
the terms of this lease. Upon execution of an approved sublease, Tenant shall remain liable to
City for the performance of Tenant's obligations under the Lease.
2.3 Additional Covenants Regarding Agreement_to Lease. City agrees to commence
design and construction of the Pier Plaza immediately upon the Effective Date of this Lease and
to diligently pursue the same to completion. In the event City fails to complete construction of
the Pier Plaza and to deliver the Premises to Tenant within two(2)years of the Effective Date,
Tenant may, at any time prior to City's delivery of possession of the Premises to Tenant,
terminate this Lease, in which case neither Party shall have any further obligation or liability to the
other Parry except that(i)the Parties shall have the obligations and liabilities pertaining to
Tenant's right to lease set forth in this subsection, and(ii) City shall promptly return to Tenant the
security deposit given by Tenant pursuant to Section 18 for execution of this Lease.
Exercise of the foregoing right of termination shall be Tenant's sole remedy for
City's failure to complete construction;provided,however,that in the event City fails to complete
construction of the Pier Plaza and the Lease is terminated by Tenant in accordance with this
Section 2.3, Tenant shall have a continuing right of first opportunity to lease any space at the Pier
Plaza proposed to be let by City for a period of one(1)year(the"First Opportunity Period")from
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> 1
the date of such termination(the"Right of First Opportunity"). Prior to offering any space for
lease at the Pier Plaza to any other person or entity during the First Opportunity Period, City shall
offer the space to Tenant,by delivery of a written notice(an"Offer Notice"), on terms not less
favorable than those to be offered to any other party at any time thereafter. Tenant shall have a
period of not less than forty-five(45)days to respond to the Offer Notice by delivering to City a
written notice of acceptance, rejection or counter-offer with respect to City's offer of space at the
Pier Plaza. If Tenant rejects the offer, City may then offer the proposed space at the Pier Plaza
for lease on terms no more favorable to the prospective tenant than those offered to Tenant. No
lease of any space at the Pier Plaza entered into during the First Opportunity Period shall be valid
unless it is fully executed within forty-five(45)days of City's receipt of written notice of Tenant's
rejection of the corresponding Offer Notice;if City fails to enter into a binding lease with a third
party within such forty-five(45)day period,then the Right of First Opportunity shall be in effect -
and the provisions of this paragraph shall apply to any future proposed lease of space at the Pier
Plaza and the above procedures shall be repeated(i.e., City shall provide Tenant with written
notice and a right of first opportunity to lease the space on terms at least as favorable as those to
be offered to any party thereafter, in accordance with the procedure set forth above). If Tenant
provides City with a written counter-offer within forty-five(45)days of receipt of an Offer
Notice, City and Tenant shall negotiate in good faith regarding the proposed lease space prior to
City offering such space to any other person or entity. If such negotiations do not result in a
binding lease between the Parties within sixty(60)days of City's receipt of the written counter-
offer, the offer shall be deemed rejected, and City may then offer the proposed space at the Pier -
Plaza for lease to any third party. Upon Tenant's request, City shall file a Notice of Option in the
Official Records of the County where the Premises are located providing notice of the existence
of Tenant's Right of First Opportunity, in a form mutually acceptable to Tenant and City.
City's failure to complete construction of the Pier Plaza and deliver possession of
the Premises to Tenant within the time permitted by this section shall not operate to give City any
right to terminate this Lease or relieve City of its obligation to diligently pursue completion and
delivery of the Pier Plaza. Tenant shall not be required to spend more than$50,000.00 for design
drawings, construction documents, or tests for engineering reports until such time as City delivers
the restaurant pad to Tenant.
City and Tenant may wish to construct improvements simultaneously. If this is
mutually agreed to,Tenant waives all rights under this subsection 2.3 and a separate agreement
governing the.construction obligations of the Parties shall be entered into by both parties.
? —-Cly's�b lga lon o eliver a auran ad - -ar�of Cl s o lga ion or t e
construction of the Pier Plaza, City shall prepare and deliver possession of the portion of the
restaurant pad on the premises to Tenant by accomplishing the following:
a. Demolition and cleanup of the existing building.
b. Construction of the Pier Plaza including parking lots, sidewalks, hardscape
and softscape, rough grading of the restaurant pad site,installation of utilities including gas,water
(domestic and fire service),sewer, electric, and telephone and cable TV lines stubbed out as
indicated on the approved plan for the construction of the Pier Plaza.
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j 7
4
C. All permit fees connected with the portion of construction to deliver to
Tenant a clean restaurant pad, rough graded with utility stubouts.
2.5 Tenant's Obligations to Construct Restaurant on Pad. Pursuant to either the
construction rider attached hereto or a mutually agreed construction rider to be entered into by
both parties should it be the desire of both parties to construct the Pier Plaza and restaurant
simultaneously, Tenant's obligations to construct restaurant on the pad provided by City shall
consist of paying all permit fees associated with the construction of the restaurant, utility
connection fees, any and all architectural and construction supervision fees and construction of all
building and landscape improvements on the pad site.
3. EFFECTIVE DATE
The Lease shall not be effective until(i)any governmental approval required for
construction of the Pier Plaza has been obtained and the time for any legal challenge to such
approval has passed or a judgment upholding such approval has been finally issued and(ii)the
City Council of City has appropriated funds for construction of the Pier Plaza_.
4. TERM
4.1 Term of Lease. The Lease shall commence upon the Effective Date, and
shall continue thereafter until ten(10)years after the issuance of a Certificate of Occupancy on
the Building(the"Term").
4.2 Option to Extend. Provided Tenant is not in material default under this Lease
beyond applicable notice and cure periods when notice under this subsection is given, Tenant may
extend this lease for four further successive terms of ten(10)years(each such term is individually
an"Option Term"),each commencing on expiration of the preceding term, by giving City written
notice of Tenant's desire to do so at any time not more than six(6)months prior to nor less than
three(3)months prior to expiration of the Term or any extension thereof.
4.3 Hold Over. Should Tenant,with City's consent, hold over and continue in
possession of the Premises after expiration of the Term of this Lease or any Option Term,
Tenant's continued occupancy of the Premises shall be considered a month-to-month tenancy
subject to all the terms and conditions of this Lease, except the provisions of Sections 4.1 and 4.2.
5-�0Ni�ITI N OF PREMISES
Upon completion of the Pier Plaza in compliance with all of the terms of this Lease,
Tenant shall accept the Premises, as well as the improvements thereon and the utility stubouts
thereto, and will provide written confirmation to City that the Premises as well as the utility
stubouts thereon and the landscaping and hardscape thereto are in good, clean, and safe, condition
as of the date of completion. Tenant shall be solely responsible for all restaurant improvements to
bring the Premises from the pad condition delivered to Tenant to fully operational status, in
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` D
accordance with approved plans and specifications. City's approval of Tenant's plans and
specifications shall not be unreasonably withheld, conditioned or delayed.
6. RENT
6.1 Minimum Annual Rent.
(a) Base Minimum Annual Rent. From and after the Rent Commencement
Date,Tenant shall pay to City as minimum annual rent for the Premises("Minimum Annual
Rent"),without deduction, setoff,prior notice, or demand,the sum of$150,000.00 for each of
the two(2)years of the Term of this Lease succeeding said Date. Commencing with the third
year after the Rent Commencement Date, and each year thereafter during the Term and any
extension thereof, the fixed Minimum Annual Rent shall be the sum of$200,000.00, except as
adjusted in accord with paragraph(b)of this subsection. One-twelfth of the Minimum Annual
Rent shall be payable monthly in advance on the first day of each month. Should monthly #
payments for Minimum Annual Rent be required for any partial month pursuant to any provision
of the Lease, such Rent shall be prorated in accordance with the actual number of days in the
month in which such proration occurs.
Rent shall be payable at the City Treasurer's office of City at 2000 Main
Street,Huntington Beach, California or at such other place or places as City may from time to time designate by written notice delivered to Tenant. Rent payment shall be considered
delinquent if not paid within 15-days of due date and Tenant shall be subject to default under the
terms and conditions of Section 16.
(b) Periodic Adjustment. From and after the third anniversary of the Rent
Commencement Date, on each anniversary of the Rent Commencement Date,the Minimum
Annual Rent shall be adjusted to equal seventy-five percent(751/o)of the average of the actual
Rent received by City over the past three(3)years of operation or$200,000.00,whichever is
greater.
6.2 Gross Sales
(a) Gross Sales. The term"Gross Sales"as used herein shall mean:
(1) The entire amount of the actual sales price,whether wholesale or
tail;and—whetherwhoHy-orTartly for-casiroran-credit-orin-exchange-fo-r any cat eul r -—
product, commodity, service, commercial paper or forbearance, of all sales of merchandise
and all charges made by Tenant or its employees or others acting on its behalf,including
but not limited to sub-lessees for the rendition of goods, merchandise or services of any
kind whatsoever, made from or upon the Premises.
(2) All other receipts of all business conducted in, at or from the
Premises, including all deposits not refunded to purchasers,proceeds, receipts or any
revenue derived whatsoever from the use of Premises.
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f _
(3) Orders taken in or from the Premises although said orders may be
filled elsewhere, and sales by any subtenant in or from the Premises, and all without credit
to Tenant for uncollected credit accounts.
(4) Gross receipts to Tenant of all coin-operated devices which may be
placed in the Premises by Tenant or under any rent concession, percentage or other
arrangement including without limitation, such devices as pinball machines, vending
machines,video games and similar devices(but excluding revenue from telephones that
are collected by a public and/or private utility), except that nothing herein shall be
construed as City's consent to the use of same in the Premises; and
(5) All other revenues or receipts generated by or arising from the use
of the Premises.
(b) Exclusions from Gross Sales. Notwithstanding anything to the contrary
contained herein,Gross Sales shall not include, or if included there shall be deducted(but only to
the extent they have been included),the following:
(1) Sales and use taxes, so-called luxury taxes, consumers' excise
taxes, gross receipts taxes,and other similar taxes now or in the future imposed on the
sale of merchandise or services,but only if such taxes are added to the selling price and
collected from customers.
(2) The transfer or exchange of merchandise between the stores or
businesses of Tenant,if any,where such transfers or exchanges of merchandise are made
solely for the convenient operation of a business owned and operated by Tenant and not
for the purpose of consummating a prior sale made in,to or from the Premises or for the
purposed of depriving City of the benefit of a sale which otherwise would be made in, at
or from the Premises.
(3) The amount of returns to shippers or manufacturers.
(4) The amount of any cash or credit refund made upon any sale where
the merchandise sold or some part thereof is thereafter returned by the purchaser. Each
sale upon installment or credit shall be treated as a sale for the full price in the month
during which such sale shall be made,irrespective of the time when Tenant shall receive
payment(whether in full or partial)from its customers.
(5) Sales of trade fixtures or personal property to be replaced by
Tenant which are not stock in trade.
(6) Sums and credits received in the settlement of claims for loss of or
damage to merchandise-
(7) Gift certificates, or similar vouchers, until such,time as they shall
have been converted into a We by redemption.
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(8) Meals provided for officers or employees without charge.
(9) Meals, goods or products provided for promotional or publicity
purposes without.charge.
(10) Cash refunds made to customers in the ordinary course of business.
(11) Value added taxes("VAT")or other taxes added to the selling
price of products and other similar taxes now or hereafter imposed upon the sale of
merchandise or services,whether such taxes are added to the selling price or included
therein.
(12) Uncollectible credit accounts and other bad debts,not to exceed
2%of Gross Sales.
6.3 Percentage Rent.
(a) Percentage. In addition to Minimum Annual Rent,during the Term or
any extension thereof Tenant shall pay to City a sum("Percentage Rent")equal to the amount
that the product of the percentage rate set forth in this paragraph multiplied by all Gross Sales at
the Premises exceeds the Minimum Annual Rent paid during the Operational Year. =
An"Operational Year"is a one-year period ending December 31. For
purposes of computing the Percentage Rent for any partial Operational Year at the beginning or
end of the Term or any extension thereof, the volume of Gross Sales for that period shall be
adjusted pro rata to the number of months in that partial Operational Year to determine the
percentage rate to utilize.
Percentage Rent will be based on the following annual Gross Sales
percentage:
Sales Volume Percentage Rate -
Gross Sales from-0-to$8,000;000.00 4%
Gross Sales above$8,000,000.00. 5%
_ )yxarnple t-a-grass-sales-of-S9,W0,000,,percentage-rent would
as follows:
4%of$8,000,000= $320,000
5%of$1,000,000= $ 50.000
Total Rent $370,000
Percentage Rent shall be due and payable within thirty(30)days after the end of any
Operational Year.
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1 1
(b) Method of Payment. Tenant shall furnish to City statements of Tenant's
Gross Sales within ten(10) days after the end of each month,and an annual statement of Gross
Sales within ten(10)days after the end of each Operational Year. Each statement shall be signed
and certified to be correct by an officer or employee of Tenant.
6.4 Late Charge. In the event that any rental payment is not received by the City on
or before the due date as herein provided, a late charge of ten percent(10%)of the amount of
each rental payment shall be assessed. If received after the 15th day,but postmarked on or before
the 15th,the payment will be accepted without penalty. This charge will compound monthly until
paid.
6.5 Records and Audit.
(a) Sales and Charges. All sales and charges shall be recorded by means of
cash registers which display the amount of the transaction certifying the amount recorded. The
register shall be equipped with devices which log in daily sales totals,and which shall record on
tapes the transaction numbers and sales details. At the end of each day the tape will record the
total sales for that day.
(b) Production of Statement,Records and Audit. Tenant agrees to
make available for inspection by City at the Premises a complete and accurate set of Tenant's and
any sub-lessee's books and records of all sales of merchandise and revenue derived from the
conduct of business in, at or from the Premises from which Gross Sales can be determined and all
supporting sales records, including without limitation all federal, state and local tax returns.
Tenant shall also fiunish the City copies of Tenant's and any sub-lessee's quarterly California
sales and use returns at the time each is filed with the State of California.
Tenant further agrees that it will keep, retain and preserve for at least two
(2)years all records,books,bankbooks or duplicate deposit books and other evidence of Gross
Sales.
City shall have the right,upon reasonable notice, during the Term and any
extension thereof and within two(2)years after Expiration or Termination of this Lease to inspect
and audit Tenant's books and records and to make transcripts therefrom to verify the payment
due City. Such audit may be made at any reasonable time during normal business hours. Tenant
�hASMO zezate with City in makin the ins ection. City shall also be entitled, once during each
Operational Year and once within two(2)years after Expiration or Termination o t s ease,to
an independent audit of Tenant's books of account,records, cash receipts, and other pertinent
data to determine Tenant's Gross Sales,by a certified public accountant to be designated by City,
at City's sole cost and expense. The audit shall be limited to the determination of Gross Sales and
shall be conducted during usual business hours in a manner which minimizes any interference with
the conduct of Tenant's regular business operations.
If the audit shows that there is a deficiency in the payment of any
Percentage Rent,the deficiency shall become immediately due and payable and if there is an
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overpayment, City shall immediately refund the amount of the overpayment to Tenant. City shall
bear its costs of the audit unless the audit shows that Tenant understated Gross Sales by more
than five percent(5%), in which case Tenant shall pay all City's reasonable costs of the audit.
To the extent permitted by Law, City shall keep any information gained
from such statements,inspections or audits confidential and shall not disclose it other than to
carry out the purposes of this Lease, except that City shall be permitted to divulge the results of
any such audit in connection with any financing arrangements or sale of City's interest in the
Premises.
(c) Tenant's Gross Sales Audit. In the event of any audit by City in
accordance with Subsection(b)of Section 6.5 of the Lease,Tenant may contest the results of
City's audit by performing a confirmatory audit within thirty(30)days of receipt of City's audit
results and supporting evidence,using an independent public accountant reasonably acceptable to
City. If Tenant's audit discloses that City's audit was incorrect by more than five percent(5%),
then City shall pay the cost of such audit and shall pay the cost of City's audit.
(d) Acceptance. The acceptance by City of any monies paid to City by
Tenant as Percentage Rent for the Premises, as shown by any statement furnished by Tenant, shall
not be construed as an admission of the accuracy of said statement, or of the sufficiency of the
amount of said Percentage Rent payment,but City shall be entitled to review the adequacy of such payment as herein above set forth.
7. BUSINESS PURPOSES AND USE OF PREMISES
7.1 Business Purposes. The Premises are to be used by Tenant for the operation of
a restaurant, together with approved retail operations all in substantial accordance with Tenant's
proposal to City for operation of the Premises, relevant portions of which are attached hereto as
Exhibit C, and for no other purpose, except in the case of an assignment or subletting of all or any
portion of Tenant's interest hereunder approved by City pursuant to the terms of the Lease.
7.2 Operation of Premises. Tenant shall operate and manage the Premises in a
first-class manner,comparable to other first-class businesses providing similar facilities.
Tenant agrees that portions of the second floor entry area of the Building shall,
during all business hours be open to the public as a viewing area free of charge provided that
proper dress and conduct of a member of the public does not disturb the reasonable operation of
the restaurant, except that such portion may be closed from time to time, at the sole discretion of
Tenant, for private engagements of its restaurant operation.
Notwithstanding the Tenant's rights to live or recorded entertainment pursuant to
any permit and/or license issued by City or granting authority,Tenant shall not use or permit the
use of the Premises in any manner which(i)creates a nuisance or an unreasonable annoyance to
persons outside the Premises, other than as may be required by Law or necessary or advisable for
safety purposes and other than a customer paging system, or(ii)violates any Law.
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MJK RLS 95475
7.3 Continuous Operation. Weather permitting, Tenant shall keep the restaurant
on the Premises in operation and open for business each calendar day of the year, except it may
close five(5)days per year. The restaurant shall have the option to serve breakfast, lunch and
dinner daily, with minimum hours of operation to be 5:00 p.m.to 9:00 p.m. daily.
7.4 Advertising.DisplaX. Tenant may,at its own expense,place such signs in or upon
the Premises as it deems necessary,provided such signs are consistent with City's zoning and sign
codes, the consent of the Director of Community Services as to the type, design and method of
installation is first obtained,which consent shall not unreasonably be withheld, and proper permits
are obtained. All signage placed by Tenant on,in or about the Premises shall remain the property
of Tenant and shall be removed by Tenant at Tenant's expense upon Termination or Expiration of
this Lease, and any damage caused by such removal shall be repaired at Tenant's expense.
7.5 Independent Contractor. City shall have no interest in the business of Tenant.
7.6 Alcoholic Beverages. Except as permitted by this Section,Tenant shall not sell or
serve alcoholic beverages on the Premises. If Tenant at any time holds a beer,wine or hard liquor
license for the Premises from the California Department of Alcoholic Beverage Control("ABC"),
Tenant is exempt and can engage in the types of sales permitted under that license, and City
hereby consents to such sale of alcoholic beverages. In addition to all other requirements of this
Lease, Tenant shall comply with all of the rules and regulations of ABC and comply with all of the
terms and conditions of any license granted by ABC.
7.7 No Distress Sales. No auction,fire,bankruptcy,"going out of business" or
other distress sales of any nature may be conducted on the Premises without the prior written
consent of City, which will not be unreasonably withheld,conditioned or delayed.
7.8 Parking and Delivery Access. City shall have the right to control parking by
Tenant's employees by commercially reasonable means,and Tenant shall cause its employees to
comply with the procedures and regulations established by City from time to time to control such
parking.
Tenant acknowledges that neither Tenant nor Tenant's suppliers may operate
vehicles on the Pier Plaza without the prior written consent of City. City hereby consents to
Tenant's use of a one-half(1/2)ton or smaller pick-up truck or comparable vehicle, or such other
vehicle as may be mutually acceptable to City and Tenant, on the Pier Plaza for delivery purposes,
co-lrng-ds-not-more than-one-such-velucle--operated-by-T-enant-is-on-the-PierPi-aza�e, _..
unless otherwise approved by City.
7.9 Customer Parking. It is understood that Tenant shall have exclusive use of
sixty-two(62)parking spaces within the Premises for valet parking. Additional parking may be
necessary for the operation of Tenant's restaurant business. It is further understood that City
shall make available up to one hundred eighteen(118)spaces of municipal beach parking or Main
Promenade Parking Structure parking when Tenant makes a request for such parking a minimum
of twelve(12)hours in advance. City has the option of charging twenty percent (20%)of the
daily use fee of the municipal beach parking as set forth by City Council Resolution. Per
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,\iJK_RLS 95475
California Coastal Commission conditions of approval, Tenant shall validate parking at the Main
Promenade Parking Structure, with the first ninety(90)minutes free.
}
7.10 Public Rest Rooms. Notwithstanding anything in this Lease to the contrary,
Tenant shall make available to the general public(as well as restaurant patrons)any rest rooms
which are a part of the Premises. Tenant shall keep the public rest rooms in good order and repair
and in a clean and sanitary condition.
7.11 Smoking. Smoking in the Building shall be regulated by Tenant in accordance
with California Law and the Huntington Beach Municipal Code CTBMC").
8. TAXES LICENSES AND OTHER OBLIGATIONS
8.1 Payment of Taxes. Tenant shall pay direct to the appropriate taxing authorities
all possessory intereit taxes and all property taxes on personal property located on the Premises,
levied or assessed upon or against the Premises or against Tenant during the Term or any
extension thereof. Such taxes shall be paid at least ten(10)days before delinquency and before
any fine,interest or penalty shall become due or be imposed by operation of Law for their non-
payment, and,upon request,Tenant shall promptly furnish to the City satisfactory evidence
establishing such payment.
8.2 Payment of Obligations_ Tenant shall promptly pay,when due, any and all
bills, debts,liabilities and obligations incurred by Tenant in connection with Tenant's occupation
and use of the Premises.
8.3 Challenge to Taxes. Any provision herein contained to the contrary
notwithstanding,Tenant shall have the right in good faith, at its sole cost and expense,to contest
the amount or legality of any taxes on or attributable to the Premises,Tenant's personal property
on or about the premises, or Tenant's occupation and use of the Premises, including the right to
apply for reduction thereof. If Tenant seeks a reduction or contests such taxes,the failure on
Tenant's part to pay the taxes shall not constitute a default as long as Tenant complies with the
provisions of this section.
City shall not be required to join in any proceeding or contest brought by Tenant
unless the provisions of any law require that the proceeding or contest be brought by or in the
name of City or any owner of the Premises. In that case City shall join in the proceeding or
contest or permit i-t to be rou m i s name as 16ng�s�Ci y-sit-required�b-earany-cost.
If requested by Tenant, City shall execute or join in the execution of any instrument or document
necessary or advisable in connection with any such contest. Tenant, on final determination of the
proceeding or contest, shall immediately pay or discharge any decision or judgment rendered,
together with all costs,charges, interest, and penalties incidental to the decisions or judgment.
Tenant shall indemnify, hold harmless, protect and defend City from and against
any liability, claim,demand,penalty, cost, or expense arising out of or in connection with any
contest by Tenant pursuant to this Section.
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9. UTILITIES AND SERVICES
Tenant shall make all arrancyements for and pay for all utilities furnished to or used on the
Premises, including, without limitation, gas, electricity, water, refuse removal, telephone service,
cable TV and janitorial service.
Tenant shall keep the.Premises free and clean of rubbish and litter and shall deposit
accumulated rubbish and litter in containers designated by City. Trash containers shall be kept in
an approved enclosed area. Tenant shall provide for rubbish removal and container rental.
1
10. CONSTRUCTION AND ALTERATIONS
1.0.1 Alterations. Tenant shall not make any Alterations (other than non-structural
Alterations costing less than$50,000.00) to the Premises without the prior written consent of City
which consent shall not be unreasonably withheld. In granting or withholding its consent to
proposed Alterations by Tenant, City may: (1) consider the views of the Public regarding the
proposed improvements;(2)require as a condition of such approval that Tenant agree to
amendments to this Lease, including without limitation amendments increasing the amount of
Rent payable under this Lease if the proposed Alterations would increase the floor area of the
structures on the Premises; and (3) require Tenant to provide at Tenant's expense appropriate
engineering and feasibility studies regarding the structural integrity of the Premises, provided,
however,that it shaII be deemed unreasonable for City to withhold its consent to any Tenant
alterations or improvements which are in substantial conformity with preliminary plans approved
by City and attached hereto as Exhibit D.
10.2 Performance of Work. All work shall be performed in a good and workmanlike
manner, shall substantially comply with the plans and specifications submitted to City and shall
comply with all applicable governmental permits and Laws in force at the time permits are issued.
10.3 Payment for Work. Tenant shall pay all costs for construction done by it or caused
to be done by it on the Premises as permitted or required by this Lease. Tenant shall keep the
-Premises free and clear of all mechanics' liens resulting from construction done by or for Tenant.
Tenant shall defend and indemnify City against all liability and loss of any type
arising out of work performed on the Premises by Tenant, together with all costs and expenses
reasonably incurred by City in negotiating, settling, defending or otherwise protecting against
- -Sueh-calm$providing-that-ity-has-given--enrant written-notice-of any`-and-all such-claims-priDrto-
incurring any such costs and expenses and Tenant has been afforded a reasonable opportunity to
negotiate, settle, defend or otherwise protect against such claims. a
10.4 Ownership of Work. The Building, any fixed improvements to the Premises made
in connection with the Building, and all fixed Alterations shall remain on and be surrendered with
the Premises on Expiration or Termination of the Lease(excluding Tenant's, equipment,
furniture, movable decorations and the like). I/
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Notwithstanding anything herein to the contrary, prior to Expiration or within fifteen(15)
days after Termination of the Lease, Tenant may remove any movable partitions, machinery,
equipment, furniture, and trade fixtures previously installed by Tenant, provided that Tenant
repairs any damage to the Premises occasioned by such removal.
11. MAINTENANCE OF PREMISES =
11.1 Maintenance and Repair by Tenant and City. Tenant agrees that it will, at its cost
during the Term of the Lease or any extension thereof,keep the Premises in good condition and
repair. Tenant's maintenance shall include all landscape maintenance within or upon the Premises
that Tenant has caused to be constructed or placed upon the Premises, the washing of bird '
droppings and dirt off the Premises, including roof, windows and exterior walls as needed,but not
less than quarterly and graffiti shall be removed by Tenant or painted over as soon as is reasonably
practicable.
Tenant is solely responsible for repairing, and hereby covenants and agrees to
repair all structural or other damage occurring to any portion of the Premises(including,without
limitation, walls, roof,windows and walkways)which damage requires more than cleaning or
painting to repair and which is not fully covered by insurance policies required to be carried by
Tenant pursuant to this Lease, whether such damage is caused by weather, vandalism,malicious
mischief or any other cause. Tenant shall cause such repairs to be commenced within three(3) -
.business days of City's request and shall diligently prosecute the same to completion as soon as
reasonably practicable and in any event within ten(10) days of City's request, except for damage
rendering the Premises totally or partially unusable or inaccessible, in which case the provisions of
Section 13 shall apply.
In the event Tenant fails to commence necessary Maintenance within three(3)
business days after receipt of notice from City that such Maintenance is necessary, City may
undertake such Maintenance or cause such Maintenance to be made, and charge the cost of said
Maintenance to Tenant. The cost of such Maintenance shall be payable as additional Rent
pursuant to Section 16.2(e).
All fiirnishings, equipment, facilities, improvements, alterations, attachments and
appurtenances not provided by City,but required for the proposed business operation, including .
all kitchen equipment and interior furnishing, shall be maintained in good condition and repair by
Tenant at its cost.
11.2 Entry by City. In case of emergency, if Tenant shall not be personally present to
open and permit an entry into the Premises, City or its Authorized Representatives may enter the
same by a master key, or may forcibly enter the same,without rendering City or such Authorized
Representative liable therefore, and without in any manner affecting the Provisions of this Lease.
During such emergency entry, City or its Authorized Representatives shall accord reasonable care
to Tenant's property. Any entry to the Premises obtained by City in accordance with this Section
shall not under any circumstances be construed or deemed to be a forcible or unlawful entry into,
or a detainer of, the Premises, or an eviction of Tenant from the Premises or any portion thereof.
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City shall be allowed to take all material into and upon the Premises that may be
required therefor and may for that purpose make necessary repairs where reasonably required
because of such emergency, provided that the business of Tenant shall be interfered with as little
as is reasonably practicable, all without the same constituting an eviction of Tenant in whole or in
part. In the-event City determines that any condition(s)exists which poses a significant threat to
public health and safety, City may close the Pier Plaza, in which case,Tenant may have to vacate
the Premises and the provisions of Section 14 of the Lease regarding abatement of rent(Section
14.2) and Tenant's right to terminate in the event of prolonged closure(Section 14.1)shall apply.
11.3 Additional Covenants of City Regarding,_Operation of the Pier. Pier Plaza and
Maintenance 0b1i ag tions. Notwithstanding anything to the contrary contained herein:
(a) City shall, at the earliest time reasonably possible given the circumstances
which may then exist,provide Tenant with prior written notice of its intent to: (i)perform any
Maintenance or remodeling of the Pier or Pier Plaza which may reasonably be expected to
adversely affect,by inerference with access,visibility, availability of utilities or otherwise,
Tenant's business operations at the Premises or any portion thereof, or(h)except in the case of
an emergency, enter upon the Premises for any of the purposes set forth in the Lease.
(b) Whenever City elects or is obligated to Maintain the Premises or the Pier
or Pier Plaza or any part thereof under the terms of the Lease or any applicable Law, City shall =
proceed with due diligence to undertake such work in accordance with the same plan and design
as existed immediately before such damage or destruction occurred and in accordance with all
applicable Laws. The materials used in said repair or reconstruction shall be as nearly like the
original materials as may then be reasonably procured in the regular supply channels.
(c) City shall exercise its rights and obligations regarding the operation,
Maintenance and remodeling of the Pier Plaza and,where applicable,the Premises,including,
without limitation, City's rights and obligations under Section 11.2 of this Lease, in a manner
which minimizes to the greatest extent possible City's interference with Tenant's use of and
business operations at the Premises. In addition to Tenant's use of, and business operations at,
the rights under Section 21, rent and all other charges under the Lease shall be reduced equitably
during all periods during which City's use,closure or other acts in and to the Pier Plaza materially
interferes with Tenant's use of the Premises or its business operations at the Premises by an
amount equal to the proportionate amount of the Premises rendered unusable by such acts of City.
1 L111bE EXCULPA
12.1 Exculpation of City. City shall not be liable to Tenant for any damage to Tenant
or Tenant's property from any cause other than the negligent,intentional or willful acts of City or
its Authorized Representatives. Tenant waives all claims against City for damage to Person or
property arising for any reason other than the negligent,intentional or willful acts of City or its
Authorized Representatives.
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12.2 Hold-Harmless Clause. Tenant agrees to protect, defend, indemnify and hold
and save harmless City, its officers, employees, and the property of City,including the Premises,
against any and all liability, claims,judgments, costs and demands, however caused, arising y
directly or indirectly out of Tenant's occupation and use of the Premises and the obligations or r
operations herein undertaken by Tenant, including those arising from the passive concurrent
negligence of City, specifically including, without limitation, any claim, liability, loss, or damage
arising by reason of:
(a) The death or injury of any Person or Persons, including Tenant or any
Person who is an employee or agent of Tenant, or by reason of the damage to or destruction of
i
any property, including property owned by Tenant or any Person who is an employee or agent of
Tenant, and caused or allegedly caused by either the condition of the Premises, or some act or
omission of Tenant or of some agent, contractor, employee, servant, sublessee, or concessionaire
of Tenant on the Premises;
(b) Any work performed on the Premises or materials furnished to the
Premises at the instance or request of Tenant or any agent or employee of Tenant,with the
exception of Maintenance performed by City. f
(c) Tenant's failure to perform any provision of this Lease or to comply with
any requirement of Law or any requirement imposed on City or the leased Premises by any duly -
authorized governmental agency or political subdivision.
12.3 Insurance. Tenant shall, at its own cost and expense,thirty(30) days prior to
possession, secure and maintain during the entire Term of this Lease and any extensions thereof a
broad form comprehensive coverage policy of public liability insurance issued by an insurance
company reasonably acceptable to City and insuring City, its officers, employees and agents,
against loss or liability caused by or connected with Tenant's occupation and use of the Premises
under this Lease in amounts not less than: combined single limit bodily injury and property
damage, including products/completed operations liability and blanket contractual liability, of
$2,000,000 per occurrence. If coverage is provided under a form which includes a designated
general aggregate limit, the aggregate limit must be no less than $2,000,000. The policy shall
name City and such of its officers, and employees as have been reasonably designated by City as
additional insureds, and shall specifically provide that any other insurance coverage which may be
applicable to the Premises shall be deemed excess coverage and Tenant's insurance shall be
primary.
12.4 Increase in Amount of Public Liability and Property Damage Insurance. Not more
frequently than once every three(3)years,if, in the opinion of the Risk Manager or consultant
retained by City,the amount of public liability and property damage insurance coverage at that
time is not adequate,Tenant shall increase the insurance coverage as reasonably required by
City's Risk Manager.
12.5 Fire Insurance on Building and Other Improvements. Tenant at its cost shall
maintain on the Building and other improvements that are or become a part of the Premises a
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7
policy of standard fire and extended coverage insurance, with at least full replacement value, in a a
form acceptable to the City Attorney. '
r
The insurance policy shall be issued in the names of City and Tenant, as their
interests appear. The insurance policy shall provide that any proceeds shall be made payable to
the City and Tenant jointly.
12.6 Determination of Replacement Value. The"full replacement value" of the
Building and other improvements to be insured under Section 12.5 shall be determined by the
company issuing the insurance policy at the time the policy is initially obtained. Not more '
frequently than once each year, either Party shall have the right to notify the other Party that it
elects to have the replacement value redetermined by an insurance company. The redetermination
shall be made promptly and in accordance with the rules and practices of the Board of Fire
Underwriters, or a like board recognized and generally accepted by the insurance company, and
each Party shall be promptly notified of the results by the company. The insurance policy shall be
adjusted according to the redetermination.
12.7 Loss of Rent Insurance. Tenant at its cost shall maintain loss of rent
insurance insuring that the Minimum Annual Rent will be paid to City for a period up to six
months if the Premises are destroyed or rendered inaccessible by a risk insured against by a policy
of standard fire and extended coverage insurance with vandalism and malicious mischief -
endorsements.
12.8 Workers' Compensation. Tenant shall comply with all of the provisions of the
Workers' Compensation Insurance and Safety Acts of the State of California, the applicable
provisions of Divisions 4 and 5 of the California Labor Code and all amendments thereto; and all
similar state or federal acts or laws applicable;and shall indemnify, defend and hold harmless City
from and against all claims, demands, payments, suits, actions, proceedings and judgments of
every nature and description, presented,brought or recovered against City, for or on account of
any liability under any of the acts which may be incurred by reason of any activity performed by
Tenant under the Lease.
12.9 Waiver of Subrogation. The Parties release each other, and their respective
Authorized Representatives, from any claims for Damage to any Person or to the Building or the
Premises and to the fixtures, personal property, and Alterations of either in or on the Premises
that are.caused by or result from risks insured against under any insurance policies carried by the
Pi-arties, or either o them, an m force at the time o any suc Damage or require trr e&
under this Lease.
Each Party shall cause each insurance policy obtained by it to provide that the
insurance company waives all rights of recovery by way of subrogation against the other Party in
connection with any Damage covered by any Policy. Neither Parry shall be liable to the other for
any Damage caused by fire or any of the risks insured against under any insurance policy required
by the Lease. If any insurance policy cannot be obtained with a waiver of subrogation, or is
obtainable only by the payment of an additional premium charge above that charged by insurance
companies issuing policies without waiver of subrogation,the Party undertaking to obtain the
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insurance shall notify the other Party of this fact. The other Party shall have a period of twenty
(20) days after receiving the notice either to place the insurance with a company that is reasonably
satisfactory to the other Party and,that will carry the insurance with a waiver of subrogation, or to
agree to pay the additional premium if such a policy is obtainable at additional cost. If the
insurance cannot be obtained or the Party in whose favor a waiver of subrogation is desired
refuses to pay the additional premium charged, the other Party is relieved of the obligation to
obtain a waiver of subrogation rights with respect to the particular insurance involved.
12.10 Other Insurance Matters. All the insurance required under the Lease shall:
(a) Be issued by insurance companies authorized to do business in the State of
California, acceptable to City;
(b) Be issued as a primary policy;
(c) Be noncontributing with any insurance that may be carried by City; and
(d) Contain an endorsement requiring thirty(30)days' written notice from the
insurance company to both Parties before cancellation or material change in the coverage, scope,
or amount of the policy.
Each policy, or a certificate of the policy,together with evidence of payment of
premiums, shall be depbsited.with City before Tenant's entry on the Premises, and on renewal of
the policy not less than thirty(30) days before expiration of the term of the policy. At the election
of City upon the Expiration of the Lease, City shall reimburse Tenant pro rasa for all prepaid
premiums on insurance required to be maintained by Tenant, and Tenant shall assign all Tenant's
right,title, and interest in that insurance to City;in the event of earlier Termination of the Lease,
City shall, at its election, have the right to require Tenant to make such assignment to City upon
City's pro rata reimbursement to Tenant for prepaid premiums. The provisions of the preceding
sentence shall be applicable only to the extent that Tenant's insurance carrier permits assignment
to be made to City. Tenant shall use its best efforts to secure the prior consent of the carriers to
such assignment whenever Tenant obtains, renews or replaces any of the insurance required by
this section.
Either Party may effect for its own account any insurance not required under the
Lease.
12.11 Insurance Proceeds. City shall promptly pay to Tenant all insurance proceeds, if
any, payable to City for repair or replacement of Tenant's fixtures, equipment, display cases and
other personal property installations or any other item which Tenant is obligated to Maintain or
replace under the Lease in the event of any damage to the Premises caused by fire or any other
casualty or upon the occurrence of any other event requiring such maintenance, repair or
replacement. Notwithstanding anything to the contrary contained herein or in the Lease, (i)if,
during the last year of the Term or any extension thereof, twenty percent (20%) or more of the
Premises or the Pier is damaged or destroyed, or(R) any damage or repair which City or Tenant
elects or is obligated under the Lease to undertake will take more than ninety(90) days to repair,
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Tenant shall have the right to terminate the Lease as of the date of such damage or destruction by
written notice to City, given within thirty(30) days after such damage or destruction.
13. CASUALTY DAMAGE
13.1 Destruction of Premises. If the Premises are totally or partially destroyed,
rendering the Premises or any portion thereof totally or partially inaccessible or unusable, Tenant
shall restore the Premises to substantially the same condition as immediately prior to such
destruction (including all trade fixtures, personal property, improvements and Alterations as are
installed by Tenant,which shall be replaced by Tenant at its expense). If the cost of the
restoration exceeds the amount of any available insurance proceeds or if the damage has been
caused by an uninsured casualty or event, or if Tenant reasonably estimates that repairs of the
Premises will take more than six (6) months, Tenant can elect to terminate the Lease by giving
notice of such election to City within sixty(60) days after the date of the occurrence of the
casualty. Upon such termination, insurance proceeds applicable to reconstruction of the
Building(s)(excluding Tenant's personal property therein)shall be paid to City and Tenant shall
have no further liability or obligations under the Lease.
13.2 Replacement of Tenant's Property. In the event of the damage or destruction of
improvements located on the Premises not giving rise to a Termination of the Lease, Tenant shall,
at its own expense, replace and repair all Tenant's trade fixtures, equipment, machinery, -
furnishings, furniture and inventory as soon as reasonably possible to permit the prompt
continuation of Tenant's business at the Premises.
13.3 Abatement of Rent. In the event of damage or destruction of the Premises and
the Lease is not terminated, Tenant shall continue to utilize the Premises for the operation of its
business to the extent it may be practicable and commercially reasonable, in Tenant's reasonable
judgment, to do so. Rent shall abate as provided in Section 14.2 from the time any damage or
destruction occurs until the earlier of: (i)the completion of restoration of the improvements on
the Premises, and (ii) six months after the date of the damage or destruction.
14. DAMAGE OR DESTRUCTION OF ACCESS ROUTES TO PRENUSES
14.1 Damage or Destruction of Access Routes. In the event that any access-route to
the Premises is damaged or destroyed so as to render the Premises or a material portion thereof
inaccessible or untenantable, and such damage or destruction cannot reasonably be repaired by
-- ��tY_ withi the after th�dat�6f tlre�asu�l enan shwa - ah ve the ng It to et er
(i)terminate this Lease by giving to City written notice thereof(which notice shall be given, if at
all, within thirty(30) days following the date the-City gives notice it cannot make such repairs),in
which case this Lease shall be terminated as of the date,or(ii)give written notice to City within
thirty(30) days following the date City gives notice of Tenant's intention to repair such damage
as soon as reasonably possible at Tenant's expense, in which event this Lease shall continue in full
force and effect; however, Minimum Annual Rent shall be abated in accordance with the
procedures set forth in Section 14.2 for the period from the occurrence of the damage to the
completion of the repairs by the Tenant.
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Any insurance proceeds received by City because of the total or partial destruction
of the Pier Plaza(other than the Premises)shall be the sole property of City, free from any claims
of Tenant, except any and all insurance proceeds, including business interruption insurance, which
would ordinarily flow to the benefit of Tenant.
14.2 Abatement of Rent. Notwithstanding anything to the contrary.contained herein,
in the event that Tenant is prevented from using and does not use the Premises, or any portion
thereof, for five(5) consecutive business days("Eligibility Period"), as a result of any damage to
or destruction to the Pier Plaza(unless the Damage or destruction is caused by the negligence or
wrongful intentional act of Tenant or any of Tenant's employees, invitees or customers), then
Tenant's Rent and all other charges under the Lease shall be abated or reduced, as the case may
be, during the period during which Tenant is so prevented from using the Premises, or any portion
thereof, in the proportion that the rentable area of the portion of Premises that Tenant is
prevented from using, and does not use,bears to the total rentable area of the Premises.
However, in the event that Tenant is prevented from conducting, and does not conduct, its
business in any portion of the Premises for a period of time exceeding the Eligibility Period, and
the remaining portion of the Premises is not sufficient to allow Tenant to conduct its business
therein, and if Tenant does not conduct its business from such remaining portion, then during the
period during which Tenant is so prevented from conducting its business therein,Rent and all
other charges under the Lease for the entire Premises shall be abated; provided, however, if
Tenant reoccupies and conducts its business from any portion of the Premises during such period, -
the rent allocable to such reoccupied portion,based on the portion that the rentable area of such
reoccupied.portion bears to the total rentable area of the Premises shall be payable by Tenant
from the date such business operations commence.
15. ASSIGNMENT SUBLETTING AND ENCUMBERING
15.1 Prohibition of Assignment. The Parties acknowledge that City is entering into
the Lease in reliance upon the experience and abilities of Tenant and its principals. Consequently,
Tenant shall not voluntarily assign or encumber its interest in the Lease or in the Premises, or
sublease substantially all or any part of the Premises, or allow any other person or entity(except
Tenant's Authorized Representatives)to occupy or use all or any part of the Premises within the
first three(3)years of the Rent Commencement Date without the prior written consent of City.
Any assignment, encumbrance,.or sublease without such consent shall be voidable and, at City's
election, shall constitute a default. After the third(3rd)year from the Rent Commencement Date,
subject to the provisions of Section 15.2 below, City will not unreasonably withhold approval of
t;subie�ortrairsfe . _
15.2 Consent to Transfer. City's consent to any assignment, subletting or other transfer
is subject to Tenant providing City with evidence reasonably satisfactory to City that the proposed
transferee has suitable financial strength, experience and character for operation and control of the
Premises, or portion thereof proposed for transfer, and that the use of the Premises by the
proposed transferee is consistent with that specified herein, is commercially reasonable, and is
consistent with City's operation of Pier Plaza, including, but not limited to, other commercial uses
therein.
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15.3 Voluntary assignment defined. Except as otherwise expressly provided herein, any
dissolution, merger, consolidation, or reorganization of Tenant, or the sale or other transfer
resulting in a transfer of a controlling percentage of the capital stock of Tenant (other than a
transfer by will, devise, bequest, intestate succession, a transfer to or between the family members
of T.S. MANAGEMENT CORP.; or a transfer to or between one or more trusts for the benefit of
T.S. MANAGEMENT CORP. and/or their family members), shall be deemed a voluntary
assignment; provided, however, that the sale or transfer of a controlling percentage of the capital
stock of Tenant pursuant to a public offering(s) of equity or debt instruments issued by Tenant, or
other transfers of publicly traded capital stock or debt instruments shall not constitute a voluntary
assignment and shall not require City's consent or approval. The phrase"controlling percentage"
means the ownership of, or the right to vote, stock possessing at least fifty percent(50%)of the
total combined voting power of all classes of Tenant's capital stock issued, outstanding, and
entitled to vote for the election of directors, except for ownership of publicly traded shares,
warrants or similar equity interests in Tenant traded on a national exchange or over-the-counter
markets.
15.4 Exceptions. Notwithstanding the foregoing paragraphs or anything to the
contrary contained herein, City's Consent shall not be required for an assignment or subletting to
an Affiliate, Subsidiary or Successor of Tenant(for purposes hereof, an"Affiliate," a"Subsidiary'
and a"Successor" of Tenant are defined as follows: (a)an"Affiliate" is any corporation which
directly or indirectly controls or is controlled or is under common control with Tenant (for this =
purpose, "control" shall mean the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of such corporation,whether through the
ownership of voting securities or by contract or otherwise), (b) a"Subsidiary" shall mean any
corporation or partnership not less than twenty-five percent(25%)of whose outstanding stock
shall, at the time, be owned directly or indirectly by Tenant and which is at least as creditworthy
as Tenant, and(c) a"Successor" shall mean a corporation or partnership in which or with which
Tenant is merged or consolidated, in accordance with applicable statutory provisions for merger
or consolidation of corporations or a corporation or partnership acquiring a substantial portion of
the property and assets of Tenant.
16. DEFAULT =
16.1 Default b, Tenant. The occurrence of any one(1)or more of the following
events shall constitute a material default and breach of the Lease by Tenant:
tea)--�-he-vacating-o"b-andonment-vf-the Premises-by- nap . _
(b) The failure by Tenant two(2)times in any six(6)month period to make
any payment of Rent or any other payment required by this Agreement,as and when due,when
such failure shall continue for a period of ten(10)days after written notice thereof from City to
Tenant.
(c) Except as specified in Section 16.1(b),the failure of Tenant to observe or
perform any of the material covenants, conditions or provisions of this Agreement to be observed
or performed by Tenant where such failure shall continue for a period of thirty(30) days after
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written notice thereof from City to Tenant; provided, however, that if the nature of Tenant's
default is such that more than thirty(30)days are reasonably required for its cure, then Tenant
shall not be deemed to be in default if Tenant commences such cure within said thirty(30) day
period and thereafter diligently prosecutes such cure to completion-
(d) The making by Tenant of any general arrangement or assignment for the
benefit of creditors.
(e) Tenant becomes a"debtor" as defined in 11 U.S.C. Section 101 or any
successor statute thereto (unless, in the case of a petition filed against Tenant, the same is
dismissed within sixty(60) days).
(f) The appointment of a trustee or receiver to take possession of substantially
all of Tenant's assets located at the Premises or of Tenant's interest in this Agreement, where
such appointment is not discharged within sixty(60) days.
(g) The attachment, execution or the judicial seizure of substantially all of
Tenant's assets located at the Premises or of Tenant's interest in the Lease, where such seizure is
not discharged within sixty(60)days.
16.2 Remedies.
(a) Cumulative Nature of Remedies. If any default by Tenant shall
continue uncured, following notice of default as required by the Lease, for the period, if any,
applicable to the default under the applicable provision of this Lease, City shall have the remedies
described in this Section 16.2 in addition to all other rights and remedies provided by law or
equity, to which City may resort cumulatively or in the alternative:
(1) Reentry without Termination. City may at City's election reenter
the Premises, and, without terminating the Lease, at any time and from time to time relet
the Premises or any part or parts of them for the account and in the name of Tenant or
otherwise. Any reletting may be for the remainder of the Term or for a longer or shorter
period. City may at City's election eject all Persons or eject some and not others or eject
none. City shall apply all rents from reletting as follows: first,to the payment of
reasonable expenses(including brokers' commissions)paid or incurred by or on behalf of
City in recovering possession, placing the Premises in good condition, an:d preparing or
.altering--he-P-rer-nises-for--rele-tting;-seeond,to-the-reasonable-expens"f-m anew _.._
subtenants;third, to the fulfillment of Tenant's covenants to the end of the Term. City
may execute any leases made under this provision either in City's name or in Tenant's
name and shall be entitled to all rents from the use, operation, or occupancy of the
Premises. Tenant shall nevertheless pay to City on the dates specified in this Lease the
equivalent of all sums required of Tenant under this Lease, plus City's expenses, less the
proceeds of any reletting or attornment. No act by or on behalf of City under this
provision shall constitute a Termination of this Lease unless City gives Tenant specific
notice of Termination.
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(2) Termination. In the event of a default described in Section 16.1,
City may at City's election terminate this Lease by giving Tenant notice of Termination. 3
In the event City terminates this Lease, City may recover possession of the Premises
(which Tenant shall surrender and vacate upon demand) and remove all Persons and ?
property therefrom, and City shall be entitled to recover as damages all of the following:
(A) The worth at the time of the award of any unpaid
Rent or other charges which have been earned at the time of Termination;
(B) The worth at the time of the award of the amount by
which the unpaid Rent and other charges which would have been earned after
Termination until the time of the award exceeds the amount of the loss of such
rental or other charges that Tenant proves could have been reasonably avoided;
(C) The worth at the time of the award of the amount by
which the unpaid Rent and other charges for the balance of the Term after the time
of the award exceeds the amount of the Ioss of such rental and other charges that
Tenant proves could have been reasonably avoided;
_(D) Any other amount necessary to compensate City for
the detriment proximately caused by Tenant's failure to perform its obligations -
under this Lease or which in the ordinary course of things would be likely to result
-therefrom; and
(E) At City's election, such other amounts in addition to
or in lieu of the foregoing as may be permitted from time to time by applicable
California law.
As used in Sections 16.2(a) (2)(A)and(B) above,the"worth at the
time of the awards" shall be computed by allowing interest at the rate of twelve percent
(121/o)per annum. As used in Section 16.2(a)(2)(C)above,the"worth at the time of the
award" shall be computed by discounting such amount at the discount rate of the Federal -
Reserve Bank of San Francisco at the time of the award, plus one percent(1%). The
amount recoverable by City pursuant to Section 16.2(a)(2)(D)above shall include, but is
not limited to, any costs or expenses incurred by City in Maintaining or preserving the
Premises after such default.
(3) Use of Tenant's Personal Property. City may at City's election
use Tenant's personal property and trade fixtures located on, about or appurtenant to the
Premises or any of such property and fixtures without compensation and without liability
for use or damage, or store them for the account and at the cost of Tenant;provided,
however, that City may not operate the restaurant in any manner tending to indicate that
the restaurant is affiliated with, part of or operated in conjunction with Tenant's business.
(b) Election of Remedv. The election of one remedy for any one item shall
not forecloge an election of any other remedy for another item or for the same item at a later time.
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I _
(c) City's Right to Cure Tenant's Default. Upon continuance of any
material default beyond applicable notice and cure periods, City may,but is not obligated to, cure
such failure at Tenant's cost. If City at any time,by reason of such failure by Tenant,pays any
sum or does not act,the sum paid by City plus the reasonable cost of performing such act shall be
due as additional.Rent not later than five (5)days after service of a written demand therefor on
Tenant, including reasonably detailed documentation of the amount owed. No such payment or
act shall constitute a waiver of default or of any remedy for default or render City liable for any
loss or damage resulting from any such act.
(d) Waiver of Rights. Tenant hereby waives any right of redemption or
relief from forfeiture under California Code of Civil Procedure Sections 1174 or 1179, or under
any other present or future Law,in the event Tenant is evicted or City takes possession of the
Premises by reason of any default by Tenant hereunder.
17. CONDEMNATION
17.1 Eminent Domain Proceedings. In the event proceedings are taken pursuant
to an exercise of the power of eminent domain by any lawful authority to condemn or otherwise
acquire in excess of ten percent(10%)of the floor area within the Premises, or which taking
materially and adversely affects the conduct of Tenant's business in the Premises, or in the further
event that the Premises will no longer be suitable for the conduct of Tenant's business operations
at the Premises as a result of any taking,Tenant shall have the option,by written notice to City at
any time prior to the date of the taking by the condemning authority,to terminate the Lease on
thirty(30)days notice to City,unless the condemning authority or its nominee takes possession of
all or any portion of the Premises prior to the expiration of said thirty(30) day period,in which
case the Lease may be terminated by Tenant immediately upon such taking of possession of all or
any portion of the Premises. In the event of termination pursuant to this Section 17.1,Minimum
Annual Rent shall be prorated to the date of Termination,any unearned rent shall be refunded to
Tenant and Tenant shall have no further obligations under this Lease. Tenant shall not grant a
right of entry to any condemnor without the written consent of City.
17.2 Proportionate Termination of Lease. Should Tenant not elect to so terminate the
Lease or should any such taking not be sufficient to allow such option to terminate, the Lease
shall terminate as to the portion of the Premises taken upon the date which possession of said
portion is taken, but the Lease shall continue in force and effect as to the remainder of the
Premises. Tenant shall, in the event of a taking of any portion of the Premises, be entitled to a
-- re uc#non m thethe 1Vlinimum Annual Rent thereafter required to be paid, such that the reduced
Minimum Annual Rent will be in the same proportion to the Minimum Annual Rent theretofore
required to be paid that the rentable square footage of the Premises following such a taking bears
to the rentable square footage of the Premises immediately prior to such taking.
17.3 Allocation of Award. In the event that an award is made for an entire or partial
taking or for damage to the Premises or any interest therein in any action in direct or inverse
condemnation or in the event of a taking under the power of eminent domain, the parties hereto
agree that their respective rights to the award or compensation paid shall be as follows:
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1 d 7
(a) Tenant shall be entitled to that portion of the award received for the taking
of improvements placed upon the real property within the Premises,including the Building and all.
other improvements which Tenant has paid for and caused to be constructed.
(b) Tenant shall be entitled to any award that may be made for the taking of or
injury to Tenant's business and profits,including any amount attributable to Tenant's personal
property,fixtures, installations, or improvements in or on the Premises,Tenant's relocation
expenses,including any"bonus value" attributable to the Lease.
(c) City shall be entitled to that portion of the award received for the taking of
the real property within the premises, including any improvements made upon the real property
for which the City paid for and constructed thereon.
(d) Any interest payable on the total award shall be divided between City and
Tenant in the same ratio as are the awards granted to them pursuant to the other provisions of this
Section.
18. SECURITY DEPOSIT
Upon execution hereof,Tenant shall pay and maintain at all times hereunder, a security
deposit with City in a sum of not less than Five Thousand and no/100 dollars($5,000.00)to
guarantee the repair and maintenance,of the Premises as provided herein. Such deposit may be in
the form of cash or an assignment of certificate of deposit or savings account. The form of any
such assignment shall be approved by the City Attorney. The interest accrued on the deposit shall
be paid to Tenant annually. A security bond approved by the City Attorney may be substituted
for the above mentioned deposit. Tenant shall increase by$5,000.00 the security deposit for each
option period granted by City.
19. WASTE OR NUISANCE
Tenant shall not commit or permit the commission by others of any waste on the Premises;
Tenant shall not maintain,commit, or permit the maintenance or commission of any
nuisance as defined in Section 3479 of the California Civil Code on the Premises;and
Tenant shall not use or permit the use of the Premises for anv unlawful pu�po a—_
20. NO CONFLICTS OF USE HAZARDOUS MATERIALS
Notwithstanding anything contained in the Lease to the contrary and subject to Tenant's
rights granted in Section 21, City hereby represents and warrants that,to the best of City's
knowledge, (i)Tenant's contemplated use of the Premises does not conflict with applicable laws,
covenants,conditions or restrictions, and City knows of no reason why Tenant would be unable
to obtain all required permits,licenses and approvals from the appropriate governmental
authorities for such use; (n)the Pier is not in violation of any environmental laws,rules or
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INUICRL.S 95-475
regulations and Tenant's contemplated uses will not cause any such violation; and (iii)the Pier
and the Premises are free of any and all Hazardous Materials(as hereinafter defined) as of the
date Tenant takes possession thereof. In the event that the presence of any Hazardous Material
(as defined below)not caused by Tenant is detected on the Premises prior to the date the
Premises are delivered to Tenant, City may at its sole discretion either cause all necessary
remedial work to be performed at City's expense, or terminate this Lease,in which event neither
Party shall have any liability or obligation to the other Parry, except that City shall return to
Tenant the security deposit,if any, given by Tenant pursuant to Section 18 for execution of the
Lease. In the event that the presence of any Hazardous Material not caused by Tenant is detected
on the Premises after the Premises are delivered to Tenant at any time during the Term of the
Lease or any extension thereof then in such event, all remedial work shall be performed by City at
City's expense. In the event that such remedial work is performed prior to Tenant opening for
business, Tenant's obligation to open shall be delayed until such remedial work is completed. In
the event that such remedial work is performed subsequent to Tenant opening for business,
Tenant's obligation to pay Rent shall be abated in direct proportion to the extent Tenant is unable
to conduct its business upon the Premises as a result of such remedial work being necessary or
while such remedial work is being performed. In the event that Hazardous Materials not caused
by Tenant,its Authorized Representatives, or its guests or invitees are detected on the Premises
and the presence thereof or the remediation thereof materially and adversely affects Tenant's
ability to conduct its business in the Premises,then in addition to the abatement of Rent(as
hereinabove described),and for so long as such material.adverse effect continues, Tenant shall
have the right(but not the obligation)to terminate the Lease,upon thirty(30)days' advance
written notice to City. City hereby agrees to indemnify and hold harmless Tenant,its directors,
officers, employees and agents(the"Indemnitees")from and against any and all liability,including
without limitation, all costs of defense and the cost of any required or necessary repair,
detoxification or cleanup, claimed,threatened or asserted against any Indemnitee arising out of
the use, generation,transportation, storage,release or disposal of Hazardous Materials on or
about the Pier Plaza and/or the Premises by its Authorized Representatives, or its guests or
invitees. "Hazardous Materials" shall mean any oil,flammable explosives, asbestos,urea
formaldehyde, radioactive materials or waste,or other hazardous,toxic, contaminated or
polluting materialized, substances or wastes,including,without limitation, any"hazardous
substances," "hazardous wastes,""hazardous materials"or"toxic substances"under applicable
federal, state and local Law.
21. CITY'S DEFAULTS/TENANT'S REMEDIES
Notwithstanding anything to the contrary contained herein,in the event City fails to
perform any material obligation of City under the Lease within ten(10)days after receipt of
written notice by Tenant to City specifying the nature of such default, or, if the nature of City's
obligation is such that more then ten(10)days are required for its performance, if City fails to
commence such performance within such ten(10)day period and thereafter diligently prosecute
the same to completion,then City shall be in default of said obligation and Tenant may,but shall
not be obligated to,without any limitation on or prejudice to any other rights or remedies of
Tenant under the Lease or at Law,(a)upon five(5)days notice to City cure any such default by
City and City shall reimburse Tenant the amount of all costs and expenses incurred by Tenant in
curing such default, together with interest on the amount of such costs and expenses at the
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maximum rate then allowed by Law, or(b)if City's default materially interferes with Tenant's use
of the Premises for their intended purpose and City fails to cure such default within ten(10)days
after a second demand by Tenant, terminate the Lease, in which case Tenant shall have no further
or continuing obligations thereunder.
22. NOTICES
Any notice, demand, request, consent, approval or communication that either Party desires
or is required to give to the other Party shall be in writing and shall be deemed given as of the
time of hand delivery to the addresses set forth below, or by facsimile transmission, or three(3)
3
days after deposit into the United States mail,postage prepaid, by registered or certified mail,
return receipt requested. Unless notice of a different address has been given in accordance with
this section, all such notices shall be addressed as follows:
If to City,to: CITY OF HUNTINGTON BEACH
Attention: Director of Community Services
2000 Main Street
Huntington Beach, CA 92648
With a copy to: CITY ATTORNEY
2000 Main Street,P.O. Box 190
Huntington Beach, CA 92648
Fax No. (714)374-1590
If to Tenant,to: DUKE'S SURF CITY
317 Pacific Coast Highway
Huntington Beach, CA 92648
Attn: Sandy Saxten
With a copy to: T.S. MANAGEMENT CORP.
225 Plaza St., Suite 300
Solana Beach, CA 92075
Attn: Bill Parsons
23. SURRENDER OF PREMISES
-- t tExpuation or Terming#ion of the Lease, Tenant shall surrender to City the
possession of the Premises. Surrender or removal of the Building, Alterations, fixtures and trade
fixtures shall be as directed in the Lease. Tenant shall leave the surrendered property and any
other property in good and broom-clean condition, reasonable wear and tear excepted. All
property that Tenant is not required to surrender but that Tenant does abandon shall,at City's
election,become City's property at Expiration or Termination.
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24. WAIVER
1
The waiver by City or Tenant of any breach by the other party of any term, covenant, or
condition herein contained shall not be deemed to be a waiver of such term, covenant, or
condition or any subsequent breach of the same or any other term, covenant, or condition herein
contained. The subsequent acceptance of Rent hereunder by City shall not be deemed to be a
waiver of any preceding breach by Tenant of any term, covenant, or condition of the Lease, other
than the failure to pay the particular rents so accepted,regardless of City's knowledge of such
Preceding breach at the time of acceptance of such Rent.
25. PARTIAL INVALIDITY
If any term or Provision of the Lease or the application thereof to any Person or
circumstance shall to any extent be invalid or unenforceable,the remainder of the Lease, or the
application of such term or Provision to Persons or circumstances other than those as to which it
is invalid or unenforceable,shall not be affected thereby, and each term and Provision of the Lease
shall be valid and be enforced-as written to the fullest extent permitted by Law.
26. GOVERNING LAW
The Lease shall be governed by the Law of the State of California.
Neither City's execution of the Lease nor any consent or approval given by City hereunder
in its capacity as landlord shall waive,abridge,impair or otherwise affect City's powers and duties
as a governmental body. Any requirements under this Lease that Tenant obtain consent(s)or
approval(s)of City are in addition to and not in lieu of any requirements of Law that Tenant
obtain approval(s) or permits. However,City shall attempt to coordinate its procedures for
giving contractual and governmental approvals so that Tenant's requests and applications are not
unreasonably denied or delayed.
27.. ENTIRE AGREEMENT.MODIFICATION
The Lease contains the entire agreement between the Parties. No verbal agreement or
implied covenant shall be held to vary the provisions hereof, any statements, law or custom to the
contrary notwithstanding. No promise,representation, warranty, or covenant not included in the
Lease has been or is relied on by either Party. Each Party has relied-_on its-own-inspectlewo the---
-- ----Prem ses and examination of the Lease,the counsel of its own advisors, and the warranties,
representations,and covenants in the Lease itself. The failure or refusal of either Party to inspect
the Premises, to read the Lease or other documents,or to obtain legal or other advice relevant to
this transaction constitutes a waiver of any objection,contention, or claim that might have been
based on such reading, inspection, or advice.
No provision of the Lease may be amended or varied except by an agreement in writing
signed by the Parties hereto or their respective successors.
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t
L
28. TWE OF ESSENCE
f
Time is of the essence with respect to the performance of every Provision of the Lease in
which time of performance is a factor.
29. SUCCESSORS
Subject to the Provisions of the Lease on assignment and subletting, each and all of the
covenants and conditions of the Lease shall be binding on and shall inure to the benefit of the
heirs, successors, executors, administrators, assigns, and personal representatives of the respective
Parties.
30. BROKERS
Each Party warrants to and for the benefit of the other that it has had no dealings with any
real estate broker or other agent(attorneys excepted)in connection with the negotiation or
making of the Lease.
31. TABLE OF CONTENTS:HEADINGS
The table of contents of the Lease and the captions of the various sections of the Lease are
for convenience and ease of reference only and do not define, limit, augment,or describe the
scope, content, or intent of the Lease or of any part or parts of the Lease.
32. GENDER;NUMBER
The neuter gender includes the feminine and masculine,the masculine includes feminine
and neuter, and the feminine includes the masculine and neuter,and each includes corporation,
partnership,or other legal entity whenever the context so requires. The singular number includes
the plural whenever the context so requires.
33. EXEIIBITS
All exhibits to which reference is made in the Lease and the Construction hider are hereby
incorporated by reference. Any reference to"the Lease"includes matters incorporated by
reference.
34. ARBITRATION
34.1 Disputes Subject to Mediation and Arbitration. Any dispute between the
parties relating to the interpretation and enforcement of their rights and obligations under Sections
6.3, 10 and 15 of the Lease shall be resolved solely by mediation and arbitration in accordance
with the provisions of Sections 34.2 and 34.3 of the Lease.
34,2 Initial Mediation. With respect to any dispute between the parties that is to be
resolved by arbitration as provided in Section 34.1,the parties shall attempt in good faith first to
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�13
mediate such dispute and use their best efforts to reach agreement on the matters in dispute.
Within ten(10)days of the request of any party,the requesting party shall attempt to employ the
services of a third person mutually acceptable to the parties to conduct such mediation within ten
(10)days of his appointment. If the parties are unable to agree on such third person, or, if on
completion of such mediation, the parties are unable to agree and settle the dispute, then the
dispute shall be referred to arbitration in accordance with Section 34.3.
34.3 Arbitration. Any dispute between the parties that is to be resolved by arbitration
as provided in Section 34.1 shall be settled and decided by arbitration conducted by the American
Arbitration Association in accordance with the Commercial Arbitration Rules of the American
Arbitration Association, as then in effect,except as provided below. Any such arbitration shall be
held and conducted in a mutually acceptable location before one arbitrator, who shall be selected
by mutual agreement of the parties;if agreement is not reached on the selection of an arbitrator
within fifteen(15)days,then such arbitrator(s)shall be appointed by the presiding judge of the
superior court of the county in which the arbitration is to be conducted.
The provisions of the Commercial Arbitration Rules of the American Arbitration
Association shall apply and govern such arbitration, subject,however,to the following:
(a) Any demand for arbitration shall be in writing and must be made within a _
reasonable time after the claim, dispute or other matter in question has arisen. In no event shall
the demand for arbitration be made after the date that institution of legal or equitable proceedings
based on such claim, dispute, or other matter would be barred by the applicable statute of
limitations.
(b) The arbitrator or arbitrators appointed must be former or retired judges or
"attorneys"with at least seven(7)years experience in real property and commercial matters, or
nonattorneys with like experience in the area of dispute.
(c) All proceedings involving the parties shall be reported by a certified
shorthand court reporter and written transcripts of the proceedings shall be prepared and made _
available to the parties.
(d) The arbitrator or arbitrators shall prepare in writing and provide to the
parties factual findings and the reasons on which the decision of the arbitrator or arbitrators is
based. --
(e) Final decision by the arbitrator or arbitrators must be made within ninety
(90)days from the date the arbitration proceedings are initiated.
(f) The prevailing party shall be awarded reasonable expert and nonexpert
witness costs and expenses, and other costs and expenses incurred in connection with the
arbitration,.unless the arbitrator or arbitrators for good cause determine otherwise.
(g) Costs and fees of the arbitrator or arbitrators shall be borne by the non-
prevailing party, unless the arbitrator or arbitrators for good cause determine otherwise.
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MJK:RIS 93-473
(h) The award or decision of the arbitrator or arbitrators,which may include Y
equitable relief, shall be final and judgment may be entered on it in accordance with applicable law
in any court having jurisdiction over the matter.
(i) The provisions of Title 9 of Part 3 of the California Code of.Civil
Procedure,including Section 1283.05, and successor statutes,permitting expanded discovery
proceedings shall be applicable to all disputes which are arbitrated pursuant to this section.
BALANCE OF PAGE RMIS ZONALLY LEFT BLANK
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G:AUvwTier-211/3196
MM-RIS 95-475
IN WITNESS WHEREOF,the parties hereto have executed the Lease as of the date first
written above.
TENANT: CITY OF HUNTINGTON BEACH,
T.S.MANAGEMENT CORP. a municipal corporation of the
State of California
By:
Mayor
{printDr type name)
Its: (circle on C 'dentNce President ATTEST:
By: City Clerk
1Cxit t=`�4S APPROVED AS TO FORM:
(print or type n e)
Its: (circle one)Secretary/Chief Financial officer/ ri� i�
AssL Secretary-Treasurer c a%� O e U
REVIE APPROVED: INITIA APPR VED:
1ty Administrator or of Commu ' Services
f
33
G:Agree:Pier-2\1/3/96
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EXHIBIT"C"
Copy of Assignment
See attached pages.
A�SI.SNM ENT
THIS ASSIGNMENT, dated this ZtL day of, ,., 1997, is by and between T.S.
MANAGEMENT CORP., air Hawaiian corporation ("Assignor") and PIER PLAZA GROUP. a
California Limited Liability Company("Assignee").
1. LEASE. On January 16, 1996, Assignor entered into a lease entitled "LEASE FOR
PREMISES AT HUNTINGTON BEACH PIER PLAZA BETWEEN THE CITY OF
HUNTINGTON BEACH AND T.S. MANAGEMENT CORPORATION (DUK.L'S SURF CITY
RESTAURANT)"("Lease") a copy of which is attached hereto as "Exhibit A"and incorporated
herein as if fully set forth. Should the Lease be amended prior to consent to this Assignment
being given by the City of Huntington Beach ("City","Lessor'), the use of the term"Lease"
herein shall refer to said Lease as amended.
2. AS5JGN14ENT PF VISION. Section 15 of the Lease requires the written consent of
the City prior to an assigrunent of the Lease.
3. ASSJQN1ViFNT. For value received,receipt of which is hereby acknowledged, and
the agreement of Assignee, set forth below,Assignor hereby assigns to Assignee all of
Assignor's right, title, obligation, and interest in the Lease and,hereby delegates to Assignee all
of its duties and obligations under the Lease. However, Assignor understands that the consent of
the City to said assignment, as set forth below, is given with the condition that Assignor remain
liable to fulfill its duties and obligadasunder the Lease should Assignee fail to do so, and
Assignor agrees that it will remain bound to City to fulfill its duties and obligations under the
Lease with the right of the City to utilize the full remedies of the law against Assignor should it
be required to do so.
4. AS,SLTMPTION. Assignee hereby accepts the foregoing assignment and hereby
expressly assumes and agrees to observe, keep,perform, fulfill and to be bound by all of the
terms, covenants and conditions of the Lease, including the making of all payments due to Lessor
under the Lease when due and payable. Assignee understands and agrees that should it fail to do
so and Assignor is required to perform under the Lease in its stead, Assignor may utilize any
remedies the law allows against Assignee.
5. FULL FORCE AND EFFECT. The Lcuse shall remain in full force and effect,
unmodified by this assignment and the City's consent thereto. Any subsequent assignment by
Assignee shall remain subject to all of the terms,covenants and conditions of the Lease, `
including, but not limited to, the consent of the Lessor.
6. QOUNTERPAR_TS. This Assignment may be executed in several counterparts, all of
which together shall constitute one agrdement binding on all parties hereto notwithstanding that
the parties have signed separate signature pages.
7. AUTHORITY 0 SIGN. The undersigned represent to laity that they have the
authority of the respective parties to execute this Assignment and make the rcprusentations
contained herein.
ASSIGNOR
T.S. MANAGEMENT CORP.
By: ZACe��
Name: -To h" S�v 4e-4,
Title: GL,4iwwr+.
ASSIGNEE
PIER PLAZA GROUP, LLC
By:
Nam . 7-o,4,7 SAsc7 Gr
Title. !�')aMa�iny / ►ft+w Tsrr�
CONSENT O L,ESSO�t
The CITY OF HUNTINGTON BEACH is the Lessor in the Lease described in the above
assignment and consents to the assignment of the Lease to PIER PLAZA GROUP, LLC, waiving
none of the Lessor's rights under the Lease as to the Lessee or the Assignee.
DATE: , 1997 LESSOR
CITY OF HUNTINGTON BEACH
MAYOR
(-'y rTEST ,
7 -9�
GROUND LESSOR CONSENT
[INTENTIONALLY OMITTED]
EXHIBIT"D"
Copy of Notice of Extension
See attached.
July 15, 2008
TS RESTAURANTS
HAWAII AND CALIFORNIA
Tina Krause
Economic Development Department
CITY OF HUNTINGTON BEACH
2000 Main Street
Huntington Beach, CA 92648
RE: Exercise of Option
Lease Agreement September 15, 1998 by and between The City of Huntington
Beach and TS Aloha, Inc., formerly known as T S Management Corporation and
Assigned to Pier Plaza Group, LLC with First Amendment dated January 5, 1998
City of Huntington Beach:
Pier Plaza Group, LLC requests to exercise the option to extend its lease for an
additional ten (10)years from September 15, 2008 to September 15, 2018 as
described in the lease dated June 15, 1997 Section 4 4.2.
Thank you for your consideration.
If you agree and grant the option for extension, please sign below.
Sincerely,
John (Sandy)Saxten
TS Aloha, Inc.
Formerly known as T S Management Corp.,
Member/Manager
Pier Plaza Group, LLC
Approved By:
CITY OF HUNTINGTON BEACH
By.
Date:_2Z2, ;
CC: Arnie Ross
225 PLAZA STREET SUITE 300 SOLANA BEACH CALIFORNIA 92075 TEL 858-720-2380 FAX 858-720-2381 EMAIL TSCALIF@aol-com
Malibu, t IM1aikiki - 141.'LA GFILL Krn:,::p.;l: L 41;:ik:k:KLOK!' K!MO') L:ha-, • LEILANI'S K.:a,- -11
ATTAc H m E N T #2
�
LANDLORD CONSENT AND ESTOPPEL CERTIFICATE
FOR PIER PLAZA GROUP LEASEHOLD
This LANDLORD CONSENT AND ESTOPPEL CERTIFICATE
("Agreement")dated as of January,!j, 1998 is executed by and between the City of
Huntington Beach, a municipal corporation, (hereinafter"Landlord")and Pier Plaza
Group LLC,a California limited liability company("Tenant"), in favor of Bank of
Hawaii, a Hawaii corporation ("Lender"),with respect to that certain Lease dated
January 16, 1996 as amended July 7, 1997 and January, 1998(the "Lease"),by and
between Landlord and T S Management Corp. ("TSM"),which Lease was assigned by
TSM to Tenant by an Assignment(the"Assignment")dated July 7, 1997,pursuant to
which Tenant has acquired an interest(the"Leasehold")in the real property described
therein(the"Premises"). In the event of any conflict between the provisions of this
Agreement and the provisions of the Lease,this Agreement shall control.
1. Landlord hereby consents to Tenant's encumbrance of the Leasehold,or
any part or parts thereof,under one or more deeds of trust, security deeds,mortgages,
sale-and leaseback documents, assignments of rents or leases, security agreements,
financing statements and other similar documents(collectively,the"Mortgage"), and
assigning the Lease and Leasehold,or any part or parts thereof,and any subleases under
the Lease, as collateral security for the obligations of TSM under that certain Loan
Agreement(the"Loan Agreement") dated as of January , 1997,by and between
TSM and Lender and the instruments and documents executed in connection therewith.
2. True,complete and correct copies of the Lease and the Assignment are
attached hereto as Exhibits"A,"and`B,"respectively.
3. Landlord hereby represents and warrants to Lender that:
a. The Lease is unmodified and in full force and effect, and no
amendments,changes or supplements have been made thereto(other than by the
amendments dated July 7, 1997 and January .S , 1998). The conditions set forth in
Section 3 of the Lease have been met and satisfied and the Effective Date(as defined in
Section 3 of the Lease) of the Lease is June 15, 1997.
b. The Lease constitutes the sole and entire agreement between
Landlord and TSM relating to the Premises.
C. Tenant has been in possession of the Premises as of December 1,
1997.
d. There are not,to Landlord's knowledge, any uncured defaults on
the part of Tenant under the Lease and Tenant has performed and complied with all of the
terms, covenants and conditions contained in the,Lease to be performed or complied with
as of the date hereof.
e. There are no conditions or events(except as set forth in the Lease)
that would prevent the Lease from becoming effective or would permit a cancellation or
termination of the Lease by Landlord or by Tenant.
4. In the event that Lender(or any purchaser at a foreclosure sale by Lender)
succeeds to the interests of Tenant under the Lease,the Lease shall continue with the
same force and effect as if Landlord and Lender(or such purchaser) had entered into a
lease with the same terms and provisions as those contained in the Lease and,if Lender
succeeds to Tenant's interests under the Lease,Lender agrees to abide by the terms and
conditions of the Lease.
5. Promptly upon demand by Lender from time to time,Landlord shall
deliver to Lender an estoppel certificate executed by Landlord stating the date through
which rent has been paid under the Lease,whether or not there are any defaults, and the
specific nature of any claimed defaults.
6. Landlord agrees to give written notice to Tenant and Lender of any breach
by Tenant under the Lease and of the occurrence of any material default set forth in
Section 16.1 of the Lease (collectively, "Events of Default"). Landlord agrees that in the
event Tenant fails to perform, or to cure the failure of,any term,covenant or condition in
the Lease, Lender shall have 45 days from the receipt of the notice of any such breach or
Event of Default to cure or commence to cure the breach or Event of Default, during
which time Landlord shall abstain from pursuing remedies available as a result of the
breach of Event of Default.
7. In the event of any arbitration, appraisal or other proceedings relating to
the Lease,Lender shall have the right to participate in any such proceedings in
association with Tenant or on its own behalf as an interested party. In the event of any
legal proceedings involving the Lease, Lender shall be entitled to intervene in such
proceedings and be made a party thereto.
8. In the event of the bankruptcy of Tenant,Landlord agrees to waive the
sixty (60) day limitation period under Section 365 of the Bankruptcy Code, I 1 U.S.C.
§101 et seq. (as the same may be amended or recodified from time to time,the
"Bankruptcy Code"), for an initial extension period of thirty(30)days and thereafter such
other and further extension periods as are reasonable and necessary for Lender to perform
the undertakings agreed upon below,provided that all rent and other charges due under
6086799.2.010028-1764 2.
the Lease are paid. In consideration of Landlord's agreement above and to the new lease
provisions in favor of Lender contained below, Lender does hereby undertake and agree
for the benefit of Landlord that, if at any time a bankruptcy proceeding shall be
commenced concerning Tenant-mortgagor and/or the Leasehold, Lender shall,within the
statutory time period or any extension thereof provided under Section 365 of the
Bankruptcy Code for the rejection or assumption of leases,use its reasonable efforts to
diligently and in good faith,obtain or cause the Tenant-mortgagor and/or Trustee in
bankruptcy to obtain either(i)an abandonment of the Lease by the bankruptcy court
pursuant to Section 554 of the Bankruptcy Code,as amended;or(ii)an assumption of the
Lease pursuant to Section 365 of the Bankruptcy Code,as amended.
In the event that, notwithstanding Lender's compliance with the above
provisions of this Section 8,the Lease shall terminate prior to the natural expiration of the
term thereof as a result of an actual or deemed rejection of the Lease under any provision
of Bankruptcy Code,then, and in any such event, Lender shall thereupon have the option
to obtain a new lease("New Lease")of the Premises in accordance with and upon the
following terms and conditions:
a. Upon the written request of Lender delivered to Landlord within
sixty(60)days after the actual or deemed rejection of the Lease as aforesaid,
Landlord shall enter into a New Lease of the Premises with Lender,or its
designee, as provided in paragraph(b)immediately below;provided,however,
that if Landlord receives no such written request within said sixty(60) day period,
then all of Lender's rights to a New Lease hereunder shall automatically
terminate.
b. Such New Lease shall be effective as of the date of termination of
the Lease and shall be for the remainder of the term of the Lease at the same rent
and other charges therein provided and otherwise upon the same agreements,
terms, covenants and conditions contained therein. The New Lease issued
hereunder shall have the same relative priority in time and right as the Lease and
have the benefit of and vest in Lender all of the same rights,title, interest,powers
and privileges of Tenant thereunder. The New Lease shall, subject to the same
agreement,terms, covenants and conditions as contained in the Lease, also demise
to Lender or its designee all buildings,improvements and appurtenances situated
on the Premises, together with all equipment,fixtures and machinery therein.
Concurrently with execution of the New Lease, Landlord shalt assign its interest
in and to any then existing sublease under which Tenant has attomed to and been
recognized by Landlord. During the period between termination of the Lease and
execution of the New Lease,Landlord shall not amend or modify the subleases or
take any action which will adversely affect the Premises or give rise to any Iiens
against the Premises.
6086799.2.01 0028-1764 3.
3
C. As a condition to and concurrently with delivery of such New
Lease, the lessee named therein shall pay any and all sums which would at the
time of the execution thereof be due under the Lease but for the termination as
aforesaid,and shall fully otherwise remedy any existing defaults under the Lease
susceptible of cure by Lender, or such designee,and shall pay to Landlord all
costs and expenses, including but not limited to any insurance premiums paid or
incurred by Landlord in order to maintain the insurance coverage required under
the terms of the Lease, and the reasonable attorney's fees, court costs and
disbursements incurred by Landlord by reason of the actual or deemed rejection of
the Lease an/or in connection with the preparation,execution and delivery of such
New Lease. Any default which cannot be cured by such lessee until it obtains
possession shall be cured by the lessee within a reasonable time after it obtains
possession.
d. Lender, if it is the initial lessee under the New Lease, may assign
such New Lease and shall thereupon be released from all liability for the
performance or observance of the covenants and conditions in such New Lease
contained and on the lessee's part to be performed and observed from and after
the date of such assignment,provided that a certified copy of such assignment be
provided to Landlord.
9. Any notices required to be given to Lender hereunder shall be given to
Lender at its address as follows:
Bank of Hawaii
Corporate Hawaii Division
130 Merchant Street,20th Floor
Honolulu,Hawaii 96813
Attn: Peter S.Ho,Vice President
with a copy to:
Carlsmith Ball Wichman Case &Ichiki
555 South Flower Street,25th Floor
Los Angeles, California 90071-2326
Attn: Annie Kun Baker,Esq.
10. This Agreement and all rights hereby granted to Lender shall terminate
upon satisfaction by TSM of all its obligations under the Loan Agreement. The terms
and provisions of this Agreement shall bind Landlord and its successors and assigns and
shall inure to the benefit of Lender and its successors and assigns. Notice of acceptance
of this Agreement by Lender is waived.
6086799.2.010028-1764 4.
Q
11. This Agreement shall not be binding upon any party until execution by all
parties.
12. This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original,but all of which together shall constitute one and the
same instrument.
IN WITNESS WHEREOF,the parties have executed this Agreement as of the
date first above written.
PIER PLAZA GROUP LLC,
a California limited liability company
By: (1A d
17.0h"7 /4•
CITY OF HUNTINGTON BEACH,a
municipal corporation of the State of
-'Califomia
or
ATTEST: APPROVED AS TO FORM:
r
City Clerk 99. k-City Attorney
�~'►�gyg1
REVIEWED AND APPROVED: INITIATE AP VED:
Actin City Administrator i ector, & unity Services
6086799.2.0I0028-1764 5.
RCA ROUTING SHEET
INITIATING DEPARTMENT: Economic Development
SUBJECT: Approve Landlord Consent and Estoppel Certificate for
Pier Plaza Group Leasehold
COUNCIL MEETING DATE: September 2, 2008
RCA ATTACHMENTS STATUS
Ordinance (w/exhibits & legislative draft if applicable) Attached ❑
Not Applicable
Resolution (w/exhibits & legislative draft if applicable) Attached ❑
Not Applicable
Tract Map, Location Map and/or other Exhibits Attached ❑
Not Applicable
Contract/Agreement (w/exhibits if applicable) Attached ❑
(Signed in full by the City Attorney) Not Applicable
Subleases, Third Party Agreements, etc. Attached
(Approved as to form by City Attorney) Not Applicable ❑
Certificates of Insurance (Approved by the City Attorney) Attached ❑
Not Applicable
Fiscal. Impact Statement (Unbudgeted, over $5,000) Attached ❑
Not Applicable
Bonds (If applicable) Attached ❑
Not Applicable
Staff Report (If applicable) Attached
Not Applicable
Commission, Board or Committee Report (If applicable) Attached ❑
Not Applicable
Findings/Conditions for Approval and/or Denial Attached ❑
Not Applicable
C XPLAMAT0OM FOR Nliv WNG ATTACHN EMTS
REVIEWED RETURNED FORWARDED
Administrative Staff
Deputy City Administrator (Initial) ( )
City Administrator (Initial)
City Clerk ( )
EXPLANATION FOR RETURN OF ITEMS:
iv Cler-Ws Use •
RCA Author: T. Krause ext. 1629
Page 1 of 4
Esparza, Patty
From: Krause, Tina
Sent: Wednesday, September 03, 2008 12:32 PM
To: Esparza, Patty
Cc: Mulvihill, Leonie
Subject: Fw: Bank of the West- Duke's
Please see below for loan date.
From: Burzynski, William
To: Krause, Tina
Sent: Wed Sep 03 12:21:49 2008
Subject: RE: Bank of the West - Duke's
�Ye �datee used is 8/12/08....thanks...BB
William A. Burzynski
Bank of the West
1280 4th Avenue
San Diego, CA 92101
(619)235-2560
(619) 231-1836 fax
william.burzynski(cDbankoffhewest.com
From: Krause, Tina [mailto:TKrause@surfcity-hb.org]
Sent: Wednesday, September 03, 2008 11:56 AM
To: Burzynski, William
Subject: RE: Bank of the West -
L
y Clerk needs to fill in the dates on the estoppel before obtaining the Mayor's signature. Do you have a
greement date yet?
From: Burzynski, William [mailto:William.Burzynski@bankofthewest.com]
Sent: Wednesday, September 03, 2008 10:12 AM
To: Mulvihill, Leonie; Douglas L. Collins
Cc: Pickle, Kenneth; Ray Burnett; Krause, Tina
Subject: RE: Bank of the West - Duke's
Thank you so much...Is it possible to send the signed estoppel to me by FEDEX?
BB
William A. Burzynski
Bank of the West
1280 4th Avenue
San Diego, CA 92101
(619) 235-2560
(619)231-1836 fax
william.burzynski(cDbankofthewest.com
From: Mulvihill, Leonie [mailto:lmulvihill@surfcity-hb.org]
Sent: Wednesday, September 03, 2008 9:48 AM
9/3/2008