HomeMy WebLinkAboutRobert L. Mayer - 1989-04-28 o
THE WATERFRONT
February 8, 1990
Mr, Paul Cook
City Administrator
City of Huntington Beach
2000 Main Street
Huntington Beach, CA 92648
Dear Mr. Cook:
The enclosed checks(4) are the 1989 and 1990 payments per Article XIII. Les5Rr Covenant
to Restrict Use-of City Beach Praoerty in the following two leases:
1. Third Amended and Restated Lease dated April 28, 1989 between The
Redevelopment AgeM of the City of Huntington Beach(Lessor)and Robert
L. Mayer, as Trustee of the Robert L. Mayer Trust of 1982 (Lessee).
2. Lease dated April 28, 1989 between the Redevelopment Agency of the City
of Huntington Beach (Lessor) and Waterfront Construction No. 1 (Lessee).
The checks are applied as follows:
im 1
Mayer Companies Check # 1397 $ 4,444.45
Mayer Companies Check # 1371 S 4,166.67
Waterfront Construction No. 1 Check # 1985 555.55
Waterfront Construction No. 1 Check # 1986 833.33
TOTALS $ 5,000.00 $ 5,000.00
If you have any questions regarding these payments please call me at the number listed
below.
Sincerely,
Brad Younce
Controller
cc: Susan Hunt
Dan Brennan
The Robert Mayer Corporation
660 Newport Center Drive, Suize 105o, P.O. Box 8680, Newport Beach, CA 92658-86f0•Telephone(714)759-&)91
e
TH E WATERFRONT
July 19, 1989
Ms. Connie Brockway �rP �.� �
Clerk of the City of Huntington Beach
2000 Main Street
Huntington Beach,CA 92648
RE: The Waterfront
Memorandums of Lease
Dear Ms. Brockway:
Please find enclosed the following original documents per your request:
1. MeMo-randp-m,Qf I.easg-r asr, 1 L&as
This memorializes the lease of The Waterfront Hilton site.
2. Llemgrandum g[Lease-3rd AMended and.Reslated Itase
This memorializes the 3rd Amended and Restated Lease which covers the
balance of The Waterfront site.
It is not necessary for you to send us a certified copy of these documents.
Lastly, two additional memorandums of lease have recently been forwarded to the
County Recorder's Office for re-recordation. The originals of these will be
forwarded to you when we receive them.
Please call if I can be of any further assistance.
Sincerely, -
Shawn K Mill ern
Project Manager
SKIWeml
encls: Two original Memorandums of Lease
The Robert Mayer Corporation
660 Newport Center Drive,Suite 1050,PO. Box 8680,Newpert Beach,CA 92658-8680-Telephone{7141759-8041
REQUESTED BY
ORIGINkL 89-225546
Recording Requested By and } TICOR TITLE INS.RECORDING REQCO.OF CALIF.
When Recorded Mail To: ) Iyo OWNERSHIP
STATEMENT FMCORDED IN OFFICIAI.AECCRCS
THE ROBERT MAYER CORPORATION $20.001 OF ORAKGc COUNT V CAUFORNIA
P. 0. Box 8680 )
660 Newport Center Drive s PM APR 28-89
Suite 1050 $15.00
Newport Beach, CA 92658-8680 ) C16
Attn: Stephen K. Bone ) Q' �ECORDEA
Re: Phase 1 Lease
MEMORANDUM. OF LEASE
This MEMORANDUM OF LEASE is Made as of the 28 day of L/
_ April , 1989 , by and between THE REDEVELOPMENT
AGENCY OF THE: CITY OF HUNTINGTON BEACH, a public agency
("Lessor") , and WATERFRONT CONSTRUCTION NO. 1, a California Tl
limited partnership ("Lessee") .
R E C Y T A L S:
A. The City of Huntington Beach ("City") and ROBERT L.
MAYER, as Trustee of the Robert L. Mayer Trust of 1982, dated
June 22, 1982, as amended (the "Original Lessee") , are , 1
parties to that certain Second Amended and Restated Lease
dated as of August 15, 1988 (hereinafter the "Original
Lease") , made regarding certain real property located in the
City of Huntington Beach, County of orange, State of
California (the "Original Leased Premises") .
B. Lessor has succeeded to all of the City's fee
interest in the Original Leased Premises and all of the
City,ls right, title, and interest in and to the Original
Lease.
C. Lessee has succeeded to all of the right, title,
and interest of the Original Lessee in and to that portion of
the Original Leased Premises more particularly described on
Exhibit "A" attached hereto and made a part hereof (the
"Premises") . The Lease supersedes the Original Lease with
respect to the Premises.
D. Pursuant to Section 1. 12 of the Original Lease,
Lessor and Lessee have entered into a separate Lease dated as
of April 28, , 1989 (hereinafter the "Lease") , with
respect to the Premises.
1/'�9-225546
E. Pursuant to Section 26.23 of the Lease, Lessor, as
owner of the Premises, and Lessee, as tenant, desire to
execute and record this Memorandum of Lease.
M E M O R A N D U M:
1. Lessor hereby leases to Lessee and Lessee hereby
Teases from Lessor the Premises more particularly described
on Exhibit "A" hereto on the terms and conditions set forth
in the Lease, which is incorporated herein by this reference
as though set forth in full. This Memorandum of Lease is
only intended to provide notice of the existence of the Lease
and shall not be deemed to modify or amend any of the
provisions of the Lease. The Lease is a public record and a
true and correct copy of the Lease is available for public
review and inspection in the office of the City Clerk of the
City of Huntington Beach, whose address is 2000 Main Street,
Huntington Beach, California, 92648. -
2. The Commencement Date of the Lease is April 28, ,
1989.
3. The Lease shall terminate on December 31, 2086,
unless sooner terminated as provided in the Lease.
4. Pursuant to Section 3.1 of the Lease, Lessor hereby
grants to Lessee a right of first refusal to purchase the
Premises subject to the terms and conditions set forth
therein.
5. Pursuant to Article VIII of the Lease, Lessor
hereby covenants with Lessee to restrict the development and
use of certain property adjacent to the Premises (which
adjacent property is defined in the Lease as the "City Beach
Property" and is more particularly described in Exhibit "C"
thereto) as set forth therein.
6. Lessor and Lessee hereby covennat and affirm that
all prior leases between Lessor and Lessee and the respective
predecessors-in-interest of Lessor and Lessee in and to the
Premises or any portion thereof shall be and the same hereby
are terminated and of no further force and effect.
GOVERNMENT CODE 27361.7
-- - ---1--certify-cmder-penaVty--af-,perJur-y that the notary_ eal on the document
to which this statement is attached reads as follows:
Name of Notary Z—,,, 14. (�4�
Date Commission Expires
County where bond is filedV�-
Place of Execution ci a Date
SIGNATURE F 0662-1
STATE OF CALIFORNIA )
COUNTY OF ORANGE )
On Q,pn,� 't.'� 19 Fj , before me, a Notary Public of the State of
Califo nia, personally appeared• ,•.t om *rr...pn"wa a3j -:3 Connie Brockway, known to me to be the Clerk,
of the Redevelopment Agency of the City of Huntington Beach and known to
me to be the persona who executed the within instrument on behalf of said
public agency and acknowledged to me that such public agency executed the SO"A.
89-225546
IN WITNESS WHEREOF, the parties hereto have caused this
instrument to be duly executed as of the day and year first
above written.
"LESSOR" "LESSEE"
THE REDEVELOPMENT AGENCY OF WATERFRONT CONSTRUCTION
THE CITY OF ;tWNTINGTON BEA NO. 1, a California
limited partnership
By: -'� "`'`'`� �`� By: The Waterfront, Inc. ,
a California corpora-
tion, General Partner
ATTEST:
By:
Robert L. Md er
Chairman of The Board/
Chief Financial Officer
LiIIA-k—k
Y
Step en K. Bone
APPROVED AS TO FORM: pre$ dent
` r
Agency
eI]C�C I}u 5el
Special CounselIt
7/112/065580-0001/080
-3--
89-225546
STATE OF CALIFORNIA } .
)ss,
COUNTY OF ORANGE )
On this 4a�day of , 198Q , before me,
the undersigned, a no ary P4blic n and for said State,
personally appeared d--ZF-+— , known to me
to be
the person who executed this instrument as the Chairman of
THE REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH, the
public entity therein named, and acknowledged to me that such
entity executed the within instrument.
WITNESS my hand and official seal.
OFFAL 6
UNDA OFF?
PATTl 6
Naary P&10-ceffl la
'' Slgnat a of Nota Public
Wy CWM Ev.Am 24.1900
(SEAL)
STATE OF CALIFORNIA )
)SS.
COUNTY OF ORANGE )
On this 4th day of April, 1989, before me, the
undersigned, a Notary Public in and for said State,
personally appeared Robert L. Mayer and Stephen K. Bone,
known to me (or proven to me on the basis of satisfactory
evidence) to be the persons who executed the within
instrument as Chairman of The Board and Chief Financial
Officer and President of The Waterfront, Inc. , General
Partner of WATERFRONT CONSTRUCTION NO. 1, the partnership
therein named, and acknowledged to me that they executed the
within instrument.
WITNESS my hand and official seal.
Signature of Notary Publi `
CFFICIAL SEAL
(SEAL) f F IARLA D. ORLOFF
` }IOTIiiY PU:'LIC CALIFOF2A A
pRjt.n-PAL CFFICE IN 1
CRAKCE COUNTY
My Com,zion Exv.APIR It 1991
89-225546
k)G= "A"
ALL TWO CERIAm IA m IN THE: CITY OF HUNI'II+EGIVN mai, axm OF ORMM,
STATE OF CALUUNIA, rlESCRIMD AS MLtOWS
PARCEL 1:
Mr 1 OF ZRALT NO. 3.3045 AS PER MAP FII£D IN BOOK 624 PAGER 4 6 AND 4 7 OF HIIMMr—
IANEEMS MAPS IN ME OFFICE OF THE COUNTY IS03RD R OF SAID OO[1 M.
PARCEL 2:
THAT PC IRTIC$i OF THE NC RTH MF OF THE MXMMASr QUAIaM OF SECTION 14, Tat=
6 SMY H, FLANGE 11 WEST, IN TEE RANCHO IAS MIMS, AS PER IMP FIIID IN BOOK 51,
PAGE 14 OF MAPS, IN THE OFFICE OF THE COUMN RDOO M OF SAID
CCUNTY, E3ESCR= AS FOLTOW:
BEGINNRC AT A FOIIrT IN THE SOUTH LSE OF SAID NCM MF THAT IS DISTANT
THERECH NORTH 89' 43' 07" FAST 103.28 FEET FTM CENTER I3 OF HUNrINO'ICN
Sn=, AS SHMN CK RECICRD OF SURVEY NO. 81-1151, FILED IN BOOT{ 103, PAGES 28
AND 29 OF M=PMS OF MJEZM IN THE OFFICE OF SAID OOUlM HDOMER0 SAID POINT
DING ON A NCN-JlANGE?r 2355.00 FOOT RADUM CURVE THAT IS allMVE ,
A RADIAL TO SAID FOINP 1?EARS IrXEMi 31' 56' 15" F1M; THFMM 5.94
FEET ALMG SAID CURVE THROUGH A CEMMAL ANGLE OF 0' 08' 40" TO THE EE7GINMIG OF
A 32.00 FOOT RADIUS CURVE THAT IS OONCRVE SOCTIfiQM; 7104E WESTERLY 41.11 FEET
A10NG SAID CURVE 7HRO M A CEIMML ANGLE OF 73' 36' 25" TO SAID SOUni LINE;
THENCE LEE 89. 43' 07" FAST 43.24 FEET ALONG SAID SOUM LINE TO ME POINT OF
AIM.
ALL AS SHCM CITE THE ATTACHED PAGE 2 OF THIS F30-IIBIT "A" ATTACHED HF = AND
HALE A PART HEREOF.
MUM "A"
PAGE 1 OF 2
ICr-231
134.1204
89 225546
40"
1in 1� R " 2355 00
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R 32.00'
•�/ L 41.11'
N 31 47'350 E f L 3. N 89*43'07' E 43.24'
2 \ �
PARCEL 2 �_1,L3L51_' 0"
3 RAD
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PARCEL 1
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COAST HIGHWAY
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EXHIBIT "A"
S�ALE� 1" 80' PAGE 2 OF 2
ORIGINAt.
THE WATERFRONT
PHASE 1 LEASE
w
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A
,,. LENS E
by and between
THE REDEVELOPMENT AGENCY OF THE
Id CITY OF HUNTINGTON BEACH,
a public agency
and
r
WATERFRONT CONSTRUCTION NO. It
a California limited partnership
4
IPW
dated as of , 198_
(separate Development Parcel Rio. 1 --
Phase 1 Hotel)
LO
L*
03/02/89
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TABLE OF CONTENTS
Page
ARTICLE I. PREMISES AND TERM 2
1.1 Premises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 Reservation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3 Exceptions to Leasehold Estate 4
1.4 Term of Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.5 Possession of the Premises . . . . . . . . . . . . . . . . . . . . 5
1.6 Date of Lease and Legal Effect 5
1.7 Rent Commencement Date . . . . . . . . . . . . . . . . . . . . . . . . 5
., 1.8 Commencement Date for All Other Obligations . . . 5
1.9 Ownership of Improvements and Furnishings,
Fixtures$ Equipment and Personal Property;
Lessee's Duty to Surrender 5
1.10 Quiet Enjoyment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
•+ ARTICLE II. RENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.2 Initial Rent . . . . . . : . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.2 Rent Increases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.3 Additional Payments 20
2.4 Place of Payment; Late Payments 21
2.5 Lessor's Right to Audit 22
2.6 No Abatement of Rent 24
l
ARTICLE III. LESSEE'S RIGHT OF FIRST REFUSAL TO
PURCHASE PREMISES 25
3.1 Lessee's Right of .First Refusal
to Purchase Premises . . . . . . . . . . . . . . . . . . . . . . . . 25
i. ARTICLE IV, [RESERVED] 28
ARTICLE V. TAXES AND ASSESSMENTS .. . . . . . . . . . . . . . . . . . . . . 28
5.1 Lessee's Obligation for Taxes
and Assessments 28
ti)
ARTICLE VI. CONSTRUCTION OF IMPROVEMENTS; EFFECT
AND DURATION OF COVENANTS IN DDA . . . . . . . . . 36
ARTICLE VII. USE AND COMPLIANCE WITH LAW . . . . . . . . . . . . . 37
7.1 Use of Premises 37
7.2 Grant of Uses; Easements . . . . . . . . . . . . . . . . . . . . . . 40
7.3 Non-Discrimination 41
ARTICLE VIII. LESSOR COVENANT TO RESTRICT USE
OF CITY BEACH PROPERTY 42
8.1 Recitals. . . 42
8.2 Restrictions on Development on City Beach
46 Property. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8.3 Payments. . . . . . . . . . . . 96600 . 446060 . . . . . . . . . . . . . . 47
8.4 Property to be Benefited by City Covenant. . . . 49
8.5 Covenants Run With The Land; Recordation
..+ of Memorandum of Lease. . . . . . . . . . . . . . . . . . . . . . . . . 49
.� ARTICLE IX. 11AINTENANCE OF LEASED PREMISES . . . . . . . . . . . 50
9.1 Lessee's Obligations for Maintenance . . . . . . . . . . 50
ARTICLE X. INSURANCE AND INDEMNITY . . . . . . . . . . . . sees . . . 58
10.1 Lessee's Insurance 58
10.2 Covenant to Indemnify and Hold Harmless . . . . . . . . 66
10.3 Exemption of Lessor 67
�r.
10.4 Waiver of Subrogation 69
ARTICLE XI. UTILITY CHARGES 69
11.1 Utility Charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
v
ARTICLE XII. OFFSET STATEMENT, ATTORNMENT
AND SUBORDINATION 70
�+ 12.1 Off-Set Statement 70
12.2 Attornment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
12.3 Subordination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
W 12.4 No Subordination of Fee 72
60
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ARTICLE XIII. ALTERATIONS AND ADDITIONS 72
13 .1 Alterations and Additions . . . . . . . . . . . . . . . . . . . . . . 72
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ARTICLE XIV. CASUALTY LOSS AND RESTORATION . . . . . . . . . . . 74
14 .1 Non-Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
14.2 Repair of Damage 74
14.3 Continued Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
14.4 Deferral of Rent 76
14.5 Damage: or Destruction in Last Years . . . . . . . . , . . . 77
ARTICLEXV. EMINENT DOMAIN . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
15.1 Condemnation of Premises 78
M 15.2 Partial Condemnation . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
25.3 Lessor's and Lessee's Damages . . . . . . . . . . . . . . . . . . 82
r' ARTICLE XVI. ASSIGNMENT AND SUBLETTING . . . . . . . . . . . . . . . 82
16.1 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
16.2 Bankruptcy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
16.3 Lessor's Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
16.4 No Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
boo
ARTICLE XVII. LEASEHOLD FINANCING: RIGHTS OF
LEASEHOLDLENDER . . . . . . . . . . . . . . . . . . . . . . . 92
17.1 Mortgage of Lease 92
17.2 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
17.3 Rights of Lender . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
17.4 Consent of Lessor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
+� ARTICLE XVIII. DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
18.1 Events of Default 98
t.. 18.2 Remedies . . . . . . . . . . . . .. .. .... .. ... .. . . . . . . . . . . . . 100
18.3 Default by Lessor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
18.4 Legal Expenses and Collection Costs . . . . . . . . . . . . 105
18.5 No Cross-Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106
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�iii)
ARTICLE XIX. HOLDING OVER 107
19.1 Holding Over . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107
ARTICLE XX. OPERATING AND FRANCHISE AGREEMENTS . . . . . . . 108
20.1 operating Agreement 108
20.2 Franchise Agreement 119
ARTICLEXXI. [RESERVED] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . III
ARTICLE XXII. ACCESS BY LANDLORD 111
22. 1 Right of Entry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ill
a
ARTICLE XXIII. FURNITURE, FIXTURE AND EQUIPMENT
' FINANCING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123
PO
23.1 FF&E Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
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ARTICLE XXIV. TRANSFER OF LESSOR'S INTEREST . . . . . . . . . . 115
24.1 Transfer of Lessor's Interest 115
i ARTICLE XXV. FORCE MAJEURE . . . . . . . . . . . . . . . . o . , :, . . . , , 116
bus
25.1 Force Majeure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116
ARTICLE XXVI. MISCELLANEOUS 116
26.1 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116
26.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117
26.3 Relationship of Parties 117
26.4 Broker's Commission 118
26.5 Accord and Satisfaction . . ... . . . . . . . . . . . . . . . . . . . lie
26.6 Time of Essence 118
26.7 Remedies Cumulative 119
26.8 Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119
26.9 Effect of Invalidity . . . . . . . . . . . . . . . . . . . . . . • , . . 119
26.10 Successors and Assigns 120
26.11 Consents . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . 120
26.12 Entire Agreement . . . . 120
26.13 Performance of Lessee Obligations 121
26.14 Quitclaim Deed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121
(iv)
L
26.15 Number and Gender 121
26.16 Interest on Past-Due Obligations . . . . . . . . . . . . . . 121
26.17 Execution of Lease; No Option 122
26.18 Corporate Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . 122
26.19 (Reserved] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122
26.20 Controlling Law 122
26.21 Specific Performance . . . . . . . . . . . . . . . . . . . . . . . . . . 123
.� 26.22 Survival of Indemnities and Warranties . . . . . . . . 123
26.23 Memorandum of Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . 124
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ARTICLE XXVII. ARBITRATION 124
27.1 Commencement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 124
he 27.2 Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125
27.3 Qualifications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126
27.4 Binding Decision 126
27.5 Expert Testimony . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127
27.6 Decision Procedure 127
27.7 Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128
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ARTICLE XXVIII. REPRESENTATIONS BY LESSEE 128
28.1 Representations by Lessee . . . . . . . . . . . . . . . . . . . . . 128
EXHIBIT A - Legal Description of Premises
EXHIBIT B - Legal Description of City Beach Property
...
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(v)
LEASE
THIS LEASE (the "Lease") is executed as of the day
of , 198_ (the "Effective Date") , by and
between THE REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON
BEACH, a public agency ("Lessor") , and WATERFRONT
CONSTRUCTION NO. 1, a California limited partnership
("Lessee") (collectively, the "Parties") , With reference to
the following:
A. Lessor owns that certain real property located
•� generally on the north side of Pacific Coast Highway, between
Huntington Street and Beach Boulevard, in the City of
Huntington Beach, County of Orange, State of California, and
more particularly described on Exhibit "A" attached hereto
and by this reference made a part hereof (the "Premises") .
B. in consideration of the payments to be zmade
hereunder and the covenants and agreements contained herein,
Lessor hereby agrees to lease to Lessee and Lessee hereby
agrees to lease from Lessor the real property hereinafter
defined as the Premises upon the following terms and
conditions.
-1-
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ARTICLE I. PREMISES AND TERM
" 1.1 Premises. Lessor hereby leases the Premises more
particularly described in Exhibit "A" to Lessee, and Lessee
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hereby hires the Premises from Lessor. Any and all
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buildings, structures, and fixtures (other than trade
fixtures, as defined in this Lease) attached to the Premises,
bw and any utilities and related improvements (other than
dedicated public improvements) made to the Premises, and any
and all alterations, additions, and improvements thereto
shall be deemed to be real property and shall hereafter be
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referred to as the "Improvements. "
r.► 1.2 Reservation. Lessor reserves to itself, its
successors and assigns, together with the right to grant and
transfer all or a portion of the same, the following:
(a) The non-exclusive right to enter upon the
Premises in accordance with any rights of Lessor set forth in
this Lease;
(b) Any and all oil, oil rights, petroleum,
i
�* minerals, mineral rights, natural gas rights, and other
hydrocarbon substances by whatsoever name known, geothermal
resources (as defined in California Public Resources code,
Section 6903) , and all products derived from any of the
foregoing, that may be within cr under the land, together
�i with the perpetual right of drilling, mining, exploring,
prospecting and operating therefor and storing in and
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removing the same from the Premises or any other land,
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including the right to whipstock or directionally drill and
mine from lands other than those conveyed hereby, oil or gas
wells, tunnels and shafts into, through or across the
subsurface of the Premises, and to bottom such whipstocked or
directionally drilled wells, tunnels and shafts under and
beneath or beyond the exterior limits thereof, and to
� redrill, retunnel, equip, maintain, repair, deepen and
operate any such wells or mines; without, however, the right
to enter, drill, mine, store, explore or operate on or
through the surface or the upper 500 feet of the subsurface
of the Premises; and
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(c) Any and all water, water rights or interests
therein, no matter how acquired by Lessor, together with the
w right and power to explore, drill, redrill, remove and store
the same from the Premises or to divert or otherwise utilize
such water, water rights or interests on any other property
owned or leased by Lessor, whether such water rights shall be
riparian, overlying, appropriative, percolating, littoral,
6. prescriptive, adjudicated, statutory or contractual; but
without, however, any right to enter upon the surface of the
to Premises in the exercise of such rights and, provided
further, that the exercise of any such rights by Lessor shall
not result in any damage or injury to the Improvements,
,r including without limitation any subsidence of all or any
part of the Improvements.
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1.3 Exce tions to Leasehold Estate. This Lease is made
subject to:
(a) General and special taxes and assessments for
the current fiscal tax year and all unpaid
bonds and/or assessments; provided, however,
that the foregoing shall not be deemed to be a
w
consent by Lessee to any bonds or assessments
and, provided further, that to the extent that
any portion of the "Beach Boulevard Remnant
Parcel" (as defined in the DDA) is included
within the Premises under this Lease, such
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portion of the. Premises shall not be subject
to any tax or bond lien or assessment; and
(b) All of the "Approved Title Exceptions"
�. applicable to the Premises which are
identified in section 201.1 of the DDA.
1.4 Term of Lease. This Lease shall commence on
198_ (the "Term Commencement Date") , and shall
lbo
terminate on December 31, 2086, unless sooner terminated as
herein provided. For purposes of this Lease, the term "Lease
Year" shall mean a calendar year; except in the event when
the Term commences on a date other than January 1, the first
Lease Year shall be the period from such commencement date to
4
the next succeeding December 31 and, further, if this Lease
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terminates on a date other than December 31, the last Lease
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-4-
Year shall be the period beginning on the January 1 following
the last full Lease Year and ending on such termination date.
1.5 Possession of the Premises. Lessor shall be deemed
to have delivered possession of the Premises to Lessee at the
Term Commencement Date. Lessee hereby acknowledges that it
has viewed and is familiar with the condition of the Premises
and, except as provided in Section 312 of the DDA and the
Scope of Development (Attachment No. 3) thereto, accepts the
Premises in an "as is" physical condition.
1.6 Date of Lease and Legal Effect. The terms,
covenants and conditions of this Lease shall become legally
binding on the Effective Date.
1.7 Rent Commencement Date. Lessee's obligation to pay
rent ("Rent Commencement Date") shall commence on the Term
i
�+ Commencement Date.
1.8 Commencement Date for All Other Obligations. All
other monetary obligations of Lessee including, but not
limited to, the obligation to pay taxes and' assessments,
development fees, and any other sum of money or charges shall
commence as of the Rent Commencement Date.
1.9 Ownership of Improvements and Furnishings,
Fixtures, Equipment and Personal'_Property_: _Lessee Duty To
Surrender. During the entire Term of this Lease, all
Improvements and all furnishings, fixtures, equipment, and
personal property that are made or placed in or on the
Premises by Lessee, and all changes, alterations,
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improvements, and additions thereto, shall be owned by and
considered as the property of Lessee and not Lessor.
.. At the expiration or earlier termination of the Term,
Lessee shall surrender to Lessor the possession of the
" Premises, including the Improvements thereon, in first-class
condition and good order, broom-clean, and in a clean,
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sanitary, and safe condition, quality, and repair, and in
d accordance with this Lease. At such time, all of the
Improvements (which term is intended to exclude FF&E (as
defined in this Lease) , personal property, and any signs
containing a business name, trademark, symbol, logo, or
design) that are made or placed in or on the Premises by
Lessee, and all changes, alterations, improvements and
additions thereto, shall be considered part of the real
60 property of the Premises and shall remain an the Premises and
become the property of Lessor. Lessee shall be entitled to
remove any furnishings, equipment and personal property owned
or leased by Lessee, provided that such removal shall be
completed within thirty (30) days after the expiration or
w. earlier termination of the Term, provided that with respect
1i to trade fixtures, at Lessor's election, (i) each trade
fixture which is not subject to an encumbrance in connection
with financing the acquisition thereof shall become the
property of Lessor for the purchase price set forth below and
shall not be removed by Lessee, and (ii) each trade fixture
which is subject to any encumbrance(s) in connection With
6#
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financing the acquisition thereof may be purchased by Lessor
as provided below.
The price for each such trade fixture shall be Lessee's
depreciated cost based on the estimated useful life of the
subject fixture as determined from Lessee's books and
calculated on a straight line basis. The election shall be
exercised, if at all, by notice given not more than thirty
(30) days nor less than one hundred twenty (120) days before
the expiration of the Term; provided that, in the event of
'w termination other than by normal expiration of the Term, the
notice may be given concurrently with or as a part of the
notice of termination. At Lessor's election, Lessor may
without notice offset against the purchase price any or all
sums then due from Lessee to Lessor. Upon election of Lessor
to purchase any such trade fixtures as aforesaid, Lessee
shall convey good and marketable title to each such trade
fixture to Lessor free and clear of all liens and
encumbrances of any kind whatsoever.
6W
For purposes of this Lease, trade fixtures shall include
all machinery, partitions, furniture, furnishings, doors,
bins, racks, floor coverings, lighting fixtures, gasoline
pumps, water pumps, exterior and interior signs, and other
equipment and personal property installed or placed in or on
the Premises whether or not permanently attached to .the real
property, but shall_ not include elevators, radiators,
boilers, or air conditioning equipment unless those items can
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be removed without injury to the Improvements or to the
Premises. Elevators, radiators, boilers and air conditioning
equipment which cannot be removed without injury to the
Improvements or to the Premises shall be .considered part of
the Improvements for purposes of this Lease.
Lessee shall repair any damage to the Improvements
caused by the removal of any of Lessee's property from the
Premises permitted hereunder. In the event that Lessee
elects to terminate this Lease as a result of casualty damage
or destruction, in accordance with Sections 14.2(a) and 14 .5,
Lessor shall have the right, within thirty (30) days after
6W
receipt of Lessee's notice of termination, to require Lessee
demolish the Improvements and clear them from the Premises, a
in such event the Term shall continue until such work is
completed. All property that Lessee is required to surrender
shall become Lessor's property at termination or expiration
of this Leave. All property that Lessee is not required to
surrender but that Lessee does abandon shall, at Lessor,'s
election, become Lessors property thirty (30) days after
termination or expiration.
Notwithstanding the foregoing, upon Lessor's written
election, delivered to Lessee no later than one (1) year
prior to the expiration of the Term, Lessee shall demolish
W
the Improvements, remove all debris, and leave the Premises
in a clean, level condition. In the event Lessee is so
obligated to demolish the Improvements and clear them from
V
ti
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the Premises, Lessee shall have a reasonable period after the
expiration of the Term, not to exceed ninety (90) days, to
` complete such work, and during such period the public
liability insurance and indemnity provisions of Article X of
this Lease (but no other provisions, including without
limitation Article II) shall remain in full force and effect.
1.10 Quiet Enjoyment. Subject to Sections 1.2 and 1.3
above, upon payment by Lessee of the rents provided herein,
and upon the observance and performance of all of the
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covenants, terms and conditions on the part of Lessee to be
performed hereunder, Lessor covenants and warrants that
Lessee may peaceably and quietly hold and enjoy the Premises
for the Term, without hindrance or interruption by Lessor or
3
any person or entity claiming under or through Lessor.
ARTICLE II. RENT
2. 1 Initial Rent.
(a) initial Rent. From the Rent Commencement Date
until the date set forth in (b) below, Lessee shall pay to
Lessor an annual rent of Thirty-Five Thousand Eight Hundred
Eighty-Nine Dollars ($35,889.00) per Lease Year. Rent for
L any Lease Year less than a full calendar year shall be
prorated by multiplying the annual rent then in effect by a
W fraction in which the numerator equals the number of days in
F such Lease Year and in which the denominator equals 365. The
V
v
F
L+
v
w rent shall be payable in quarterly installments equal to
one-fourth (1/4th) of such annual rent beginning on the Rent
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Commencement Date. Each installment shall be payable in
advance without demand upon the first day of the first month
of each calendar quarter during the Term without deduction or
offset (except as permitted pursuant to Attachment No. 5 of
the DDA) in lawful money of the United States. The rent for
any fractional part of a quarter following the Rent
Commencement Date shall be prorated on a daily basis based on
a ninety (90) day calendar quarter.
W (b) Adjustment of Initial Rent. The initial rent
shall be adjusted to an amount equal to Eighty-Nine Thousand
6d Seven Hundred Twenty-Three Dollars ($89,723.00) per Lease
Year on the earliest of the following dates:
Ld
(i) June 30, 1999, or
(fi) The date on which the City of
Huntington Beach issues its Certificate of Occupancy for
+W the business(es) to be conducted on the Premises, or
(iii) The date which is three (3) years after
the Rent Commencement Date.
2.2 Rent Increases.
16W
(a) Inflation Adjustment. The Annual Rent required
pursuant to Section 2.1(b) above and Section 2.2 (b) below
shall be adjusted upward on January 1, 1994, and on each
subsequent January 1st through the balance of the Tern of
this Lease (the "Adjustment Dates") , excluding only the years
L
in which the market value rent adjustments are made as
w
provided in Section 2.2 (b) , all as provided herein. The
., adjustment shall be calculated upon the basis of 'the United
States Department of Labor, Bureau of Labor Statistics
N Consumer Price Index of Urban Wage Earners and Clerical
Workers, Los Angeles-Long Beach-Anaheim Average, all items
u
(1967 = 100) (the "Index") . The Index published and in
effect ninety (90) days prior to January 1, 1993, shall be
considered the. "Base Year Index". At each Adjustment Date,
6- the rent otherwise due shall be adjusted by the percentage
increase, if any, between the Base Year Index and the Index
published and in effect ninety (90) days preceding the
Adjustment Date. In no event shall the rent following an
Adjustment Date be less than the rent in effect during the
Lease Year immediately preceding such Adjustment Date
notwithstanding the fact that the Index may, as of some
Adjustment Date, be less than the Index as of the previous
Adjustment Date or the Base Year Index. In addition, the
increase in rent pursuant to this Section 2.2 (a) in any given
five (5) Lease Year period shall. not exceed twenty-five
percent (25%) And the increase in rent from one Lease Year to
i6i the next shall not exceed ten' percent (10%) . When the
adjusted rent is determined, Lessor shall give Lessee written
notice of sane indicating how the new figure was computed.
If at any Adjustment Date the Index shall not exist in the
same format as recited in this Section 2.2(a) , Lessor and
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60
Lessee shall agree to substitute any official index published
Y
by the Bureau of Labor Statistics, or successor or similar
.. governmental agency, as may then be in existence and which is
most nearly equivalent to the Index. Should Lessor and
Lessee be unable to mutually agree as to any such substitute
index prior to the date such agreement is required in order
V
to properly and timely comply with this paragraph,
determination of the proper substitute index shall be by
arbitration in accordance with Article XXVII.
�- (b) Market Value Rent _Adjustments. The Annual
Rent payable pursuant to Sections 2.1(b) and 2.2 (a) shall be
6. adjusted on the January 1st following the end of the 24th,
w
44th, 64th, and, if applicable, the 84th full Lease Year
during the Term (the "Revaluation Dates") to an amount equal
to the then-current "Fair Rental value's of the Premises, as
determined in accordance with this Section 2.2 (b) .
The "Fair Rental Value" of the Premises as of any
Revaluation Date shall be equal to the product derived by
multiplying the "Market Value of the Fee" of the Premises as
of the applicable Revaluation Date times the "Market Rental
Value" of the Premises as of such date.
As used herein, the "Market Value of the Fee" of
the Premises on any Revaluation Date shall be the then-
current Market Value of the Fee Interest in the land
constituting the Premises (and not the rental value therefor)
under the actual facts and circumstances existing as of the
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Revaluation Date. On the Revaluation Date occurring at the
end of the 24th and 44th, and, if applicable, the 84th full
Lease Years, the "Market Value of the Fee" of the Premises
shall be determined in accordance with: the then-current and
actual use being made of the Premises as permitted or
required by this Lease and without assuming any change of use
for which any private or governmental permission would be
. required or any change in use whether or not permitted by the
terms of this Lease and without regard to any residual value
for any future uses; the existing actual Improvements on the
Premises (but not the value thereof) , except that the
Improvements shall be assumed to be in the physical condition
and operated in the manner required in Section 9.1(a) below;
all encumbrances affecting the Premises, including but not
limited to, the DDA and all then-existing taxes, assessments,
covenants, conditions, restrictions, rights-of-way, liens,
and easements; and the encumbrance of the Premises by this
Lease and all covenants, conditions, limitations, and
restrictions contained herein. The "Market- Value of the Fee"
�• of the Premises as of the Revaluation Date occurring at the
end of the 64th full Lease Year shall be determined in
accordance with the then-existing highest and best use of the
Premises, consistent with principles of eminent domain, and
otherwise in accordance with the preceding sentence;
L. provided, however, that if Lessee has expended in excess of
fifty percent (50%) of the then-current full replacement
L
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value of the Improvements on the Premises (exclusive of
r
furnishings, fixture, and equipment) at any time between the
end of the 30th full Lease Year and said Revaluation Date,
the "Market Value of the Fee" of the Premises shall be
determined in accordance with the preceding sentence and not
with reference to the highest and best use of the Premises.
As used herein, the "Market Rental Value" of the
Premises as of any Revaluation Date shall be equal to the
then-current average annual percentage return obtained by
owners of land for land similar to the Premises, which shall
in no event be less than six percent (5%) nor more than
fifteen percent (15%) . The determination of the "Market
Rental Value" of the Premises shall also take into
w
consideration all of the factors required to be taken into
consideration in determining the "Market Value of the Fee" of
the Premises as of the applicable Revaluation Date, in
accordance with the preceding paragraph.
Notwithstanding any other provision in this Section
2.2(b) to the contrary, the Annual Rent derived under this
w Section 2.2 (b) shall not result in a rent less than the rent
payable immediately prior to the applicable Revaluation Date
u (except that if the rent has been only temporarily abated,
deferred, or reduced, in whole or in part, as a result of
damage, destruction, or condemnation, such adjustment to the
Annual Rent shall not result in a rent less than the rent
payable immediately prior to the temporary abatement,
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deferral, or reduction; this exception shall not, however,
cause any cessation of an abatement, deferral, or reduction
then in effect) .
The adjusted rent determined as provided in this
Section 2.2 (b) shall be paid as provided in Section 2.1(a)
above.
No later than six (6) months prior to each
Revaluation Date during the Term of this Lease, Lessor and
Lessee shall meet and endeavor to agree upon the "Fair Rental
Value" of the Premises, in accordance with the provisions set
forth herein. If for any reason Lessor and Lessee are unable
hot
to agree upon the "Fair Rental Value" of the Premises on or
r. before ninety (90) days prior to a Revaluation Date, then
such Fair Rental Value shall be determined by arbitration
W conducted within the times, and in the manner, set forth
below:
L..
(i) On or before seventy-five (75) days prior
to the applicable Revaluation Date, Lessor and
Lessee shall jointly attempt to agree on the
6W appointment of a real estate appraiser who is a
member of the American Institute of Real Estate
Appraisers or any successor thereto or the Society
&d of Real Estate Appraisers, or any successor thereto
(or in the event the American Institute or Society
of Real Estate Appraisers or any successor shall
not then be in existence, a disinterested real
W
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4
estate appraiser having appropriate qualifications
to appraise commercial real estate set forth
immediately below) , with at least ten (10) years
professional experience in Southern California in
appraising land and improvements similar to the
Promises. All appraisers selected pursuant to the
provisions hereof shall be impartial and unrelated,
directly . or indirectly, so far as employment of
services is concerned, to any of the parties
W hereto, or their successors. The cost of the
u
services performed by such appraiser shall be borne
equally by the parties. The single appraiser
jointly appointed by the parties shall determine
the Market Value of the Fee of the Premises, the
Market Rental Value of the Premises, and the 'Fair
Rental Value of the Premises in the manner herein
specified and shall render his or her appraisal
within sixty (60) days after said appraiser has
been selected.
5
(ii) Failing the joint action of Lessor and
Lessee within seventy-five (75) days prior to the
applicable Revaluation' Date, Lessor and Lessee
shall each, within an additional fifteen (15) days,
separately at its own cost designate an appraiser
meeting the qualifications stated in subparagraph
(i) above. If two appraisers are appointed and
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they concur on the Market Value of the Fee of the
Y
Premises and the Market Rental Value of the
Premises in the manner hereinabove specified, the
Fair Rental Value determined by them shall be the
Fair Rental Value of the Premises for purposes of
determining the adjustment in rent pursuant to the
formula set forth above. If the appraisers do not
concur, and the difference between the respective
higher and lower determinations of Fair Rental
Value is an amount less than ten percent (10%) of
the amount of the higher determination of the Fair
w
Rental Value, the mean average of the two
determinations shall be the Fair Rental Value of
the Premises for purposes of determining the
adjustment in rent pursuant to the formula set
forth above. The two appraisers shall render their
i respective appraisals within sixty (60) days after
they have been selected. If the difference between
the two determinations exceeds the amount specified
above, the two appraisers shall jointly select a
third appraiser meeting the qualifications set
forth in subparagraph (i) above, and if they are
unable to agree on a third appraiser, either of the
4
parties to this Lease, by giving fifteen (15) days
notice to the other party, may apply to the
presiding judge of the Superior Court of Orange
L.
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County to select a third appraiser who meets the
qualifications set forth in subparagraph (i) above.
-� The third appraiser, however selected, shall be a
person who has not acted in any capacity for either
party. Within fifteen (15) days from the date of
the selection of the third appraiser, all three
appraisers shall meet and the first two appraisers
�. shall present to the third appraiser all of their
findings, data, and conclusions as to the Market
Value of the Fee of the Premises and the Market
Rental Value of the Premises. The third appraiser
6r
shall review all such findings, data, and
conclusions, and shall determine which of the two
appraisers' respective determinations of the Market
�+ Value of the Fee of the Premises and the Market
Rental Value of the Premises are the most
reasonable determinations under the criteria set
forth above and elsewhere in this Lease. The third
appraiser shall not be permitted to make any other
V — independent determination of the Market Value of
the Fee of the Premises or the Market Rental Value
of the Premises. The' appraiser's determinations
found by the third appraiser to be the most
reasonable determinations shall be the Market Value
'bw of the Fee of the Premises and the Market Rental
Value of the Premises for purposes of determining
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the adjustment in rent pursuant to the formula set
forth above. The third appraiser's conclusion
r' shall be reached within thirty (30) days from the
selection of the third appraiser. The expenses
related to the selection and services of the third
appraiser shall be shared equally by Lessor and
..
Lessee.
�• (iii) The Fair Rental Value established under
this Section 2.2(b) shall be binding and conclusive
on the parties for purposes of determining the
adjustment in rent pursuant to the formula set
forth above. If for any reason a Fair Rental Value
6d is not established under this Section 2.2(b) , no
party may avail itself of a Fair Rental Value more
favorable to such party than the value determined
by the appraiser appointed by such party.
(iv) Each appraiser shall certify that he or
she has personally inspected the Premises and
Improvements and all properties used as
u comparisons, that he or she has no past, present or
contemplated future interest in the Premises, the
6,
Improvements or the "Site" (as defined in the DDA) ,
60 or any part thereof, that the compensation to be
received by him or her from any source for making
the appraisal is solely in accordance with this
Lease, that he or she has followed the instructions
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P as set forth in this Section 2.2 (b) for valuing the
Premises and Improvements as of the applicable
Revaluation Date, that neither his or her
employment to make . the appraisal nor his or her
w
compensation therefor is contingent upon reporting
a predetermined value or values, or a value or
values within a predetermined range of values, that
he or she has had at least ten (10) years
professional experience in Southern California in
appraising land and .improvements similar to the
Premises, that he or she is a member of the
American Institute of Real Estate Appraisers or the
Society of Real Estate Appraisers or respective
successors thereto and that his or her appraisal
6W was prepared in conformity with the standards of
professional practice of the Institute or Society
or successor thereto.
2.3 Additional Payments. Except as otherwise provided
In this Lease, all sums of money or charges whatsoever
required to be paid by Lessee to Lessor under this Lease
other than rent shall be due and payable ten (10) days after
demand, without any deductions or offset whatsoever (except
as permitted pursuant to Attachment No. 5 of the DDA) .
Lessees failure to pay any such amounts or charges when due
V shall carry with it the same consequences as Lessee's failure
to pay rent and shall be deemed to be additional rent.
b"
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Lessor shall have no obligation to bill or make demand upon
Lessee for quarterly rent and such rent shall be delinquent
' if not received by Lessor on the date it is due.
2.4 Place of Payment; Late Payments. Lessee agrees to
pay the rental and other charges herein reserved to Lessor at
the address specified in the notice provisions of this Lease
payable to the Redevelopment Agency of the City of Huntington
Ind Beach or to such other person and/or at such other place as
11 Lessor may from time to time designate in writing. Any
b.-
iristallment of rent or any additional charges or rent which
shall not be paid within ten (10) days after the due date
shall bear interest at the rate of three (3) percentage
points above the discount rate of the Federal Reserve Bank of
San Francisco (not to exceed the maximum legal rate permitted
by law) from the day which is ten (10) days after the due
date until the day the rent is paid. In addition, with
W
respect to any delinquent payment of rent or other sum due to
w Lessor (but to no other person or entity) hereunder not paid
within the latter of five (5) days after written notice from
Lessor to Lessee and ten (10) days after the due date, Lessee
shall pay to Lessor as a late charge an additional payment
equal to five percent (5t) of such delinquent payment.
w
Following each second consecutive late payment of rent and/or
additional charges after the latter of five (5) days after
written notice from Lessor to Lessee and ten (10) days after
the due date, Lessor shall have the option to require that
w
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beginning with the first payment of rent due following the
date such second consecutive late payment was due, rent shall
W no longer be paid in quarterly installments but shall be
payable in annual installments in advance; provided, however,
"+ that in the event Lessor exercises such option to require
annual installments of rent and additional charges in advance
r
and thereafter Lessee is not delinquent in the making of any
O such annual installments for a period of five (5) years,
after the fifth such consecutive annual installment is timely
made, thereafter rent will again be payable quarterly in
advance until such time as two consecutive late payments
r
after the latter of five (5) days after written notice from
Lessor to Lessee or ten (10) days after the due date again
occur at which time Lessor shall again have the option to
.� require annual installments as aforesaid. All payments shall
be made in lawful money of the United States. All payments
requiring proration shall be prorated on the basis of a
thirty (30) day month and a ninety (90) day quarter.
w.►
2.5 Lessor's Right to Audit. Lessor shall have the
right at any time and from time to time upon reasonable
notice to Lessee, and at Lessor's expense, to review and
examine at the. Premises the information contained in Lessee's
books, records, and federal and state income tax returns
relating to the gross income and revenues derived from Bales,
rental of hotel rooms, and services provided on the Premises
(but not information relating to expenses or profits of the
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Project or information unrelated to the Project) for the sole
and limited purpose of verifying whether Lessee and any
sublessees, operators and concessionaires conducting business
on the Premises have properly reported and paid taxes all or
a portion of which are collected by or paid, directly or
indirectly, to Lessor or the Agency (including without
limitation sales taxes and transient occupancy taxes)
W relative to the conduct of such business(es) . In addition,
and subject to the same limitations, Lessor shall have the
right for any given period to have such limited information
contained within Lessee's books, records, and tax returns
r
audited by a disinterested, reputable firm of certified
public accountants selected by Lessor at Lessor's expense.
in addition, Lessor shall have the right, for a period not to
exceed five (5) Lease Years prior to each of the Revaluation
Dates specified in Section 2.2(b) above, upon reasonable
6.0
notice to Lessee, and at Lessor's expense, to review and
examine at the Premises the information contained in Lessee's
books, records, and federal and state income tax returns
6d relating to income, revenues, and -expenses of the Project
(but not any information unrelated to the Project) for the
sole and limited purpose of determining the matters
referenced in Section 2.2 (b) . In addition, and subject to the
same limitations, Lessor shall have the right during such
limited period to have such portion- of Lessee's books,
records, and tax returns audited by a disinterested,
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reputable firm of certified public accountants selected by
Lessor at Lessor's expense.
Lessee shall, for a period of at least seven (7) years
from the end of each Lease Year, keep sate and intact within
the Premises or at Lessee's offices located no more than
fifty (50) miles From the Premises all of the books, records,
.s
tax return information and other data which are subject to
Lessor's review under this Section 2.5 and regularly kept by
Lessee in the ordinary course of its business. All
information obtained by Lessor in accordance with its rights
under this Section 2.5 shall be treated as confidential by
w
Lessor and its agents and accountants and shall not be
kw disclosed except as required by law or as reasonably
necessary to protect Lessor or to enforce Lessor's rights and
rr remedies and/or Lessee's duties and obligations hereunder.
2.6 No Abatement of Rent. Except as expressly provided
in Sections 14.4 and 15.2 of this Lease, Lessee shall not be
entitled to any abatement, diminution, reduction, setoff or
w
postponement of rent as a consequence of any inconvenience
to, interruption of, cessation of or loss of Lessee's use of
the Premises or Improvements as a result of any reason
w' whatsoever including, without limitation, any events or
unavoidable delays described in Section 25.1 (unless same
results from the improper or wrongful actions of Lessor) .
-24-
�r+
r •
ARTICLE III. LESSEE'S RIGHT OF FIRST REFUSAL
TO PURCHASE PREMISES
3.1 Lessee's Right of First Refusal to Purchase
Premises. Between the Term Commencement Date and the
expiration or termination of this Lease, and so long as
Lessee is not in default hereunder (or is in the process of
.� curing such a default) , Lessor shall not sell, convey,
transfer, or otherwise dispose of all or any portion of or
any interest in the Premises (other' than a pledge of any of
its income under this Lease) until it shall first have
offered such portion or interest to Lessee in the manner
specified below:
(a) Lessor shall deliver a notice (the "Notice")
to Lessee stating (i) Lessor's bona fide intention to sell,
transfer or otherwise dispose of all or any portion of or any
interest in the Premises, (ii) the portion or interest
tw
proposed to be sold, transferred or otherwise disposed of
(the $'Offered Interest") , and (iii) the offering price and
ram' all other material terms for which Lessor proposes to sell,
transfer, or otherwise dispose of the Offered Interest.
(b) Within sixty (60) days after receipt of the
Notice, Lessee or its permitted assignee may accept Lessor's
w.v
offer by delivering to Lessor a writing agreeing to.purchnse
low the offered Interest on the terms offered by Lessor. Any
such acceptance of Lessor's offer shall be accompanied by a
6W
-25-
W
64
R deposit equal to ten percent (10%) of the purchase price
which deposit shall be retained by Lessor as liquidated
damages in the event that the purchase is not completed due
to a default by Lessee. In the alternative, Lessee may
within such period deliver a counteroffer to Lessor. Such
counteroffer shall be binding on Lessee and shall remain
Pff
effective and may be accepted by Lessor for a period of one
•• (1) year from the date of delivery of the counteroffer to
Lessor. In such event, Lessor shall accept or reject
Lessee's counteroffer within said one (1) year period.
During such one (1) year period, Lessor may entertain offers
.r
and counteroffers of third parties to purchase the Offered
Interest. No such action shall be deemed to be a rejection
of Lessee's counteroffer. At any time during said one (1)
w` year period, Lessor may accept offers of third parties so
long as the purchase price for the Offered Interest is in
excess of the price offered in Lessee's counteroffer and/or
the terms of the third party offer are more favorable to
Lessor than the terms of Lessee's counteroffer. Acceptance
�+ by Lessor in writing of an offer or counteroffer of a third
party to purchase the offered Interest shall constitute a
rejection of Lessee's counteroffer. If Lessee accepts
Lessor's offer to sell the Offered Interest, or if Lessor
accepts Lessee's counteroffer to purchase, the parties shall
Yw consummate such purchase promptly in accordance therewith.
-26-
r (c) (i) If Lessee and Lessor do not enter into an
agreement to purchase/sell the Offered Interest as set forth
in subparagraph (b) above, or (ii) if Lessee and Lessor enter
into such an agreement but Lessee fails to complete the
purchase as set forth in subparagraph (b) above, Lessor may
sell the Offered Interest to any person at any price and upon
w
any terms, as Lessor shall determine, provided that such sale
is consummated within one (1) year of the date of the initial
Notice to Lessee and provided further that in the event of
(i) above, the purchase price for the Offered Interest, and
the terms of the sale, shall be no less, or more favorable to
the purchaser, respectively, than the terms of any
counteroffer by Lessee. For purposes of comparing whether an
offer by Lessee is mare or less favorable than an offer by a
third party, any financed portion of the offered purchase
price shall be discounted to present cash value using the
prime lending rate of Wells Fargo Bank or comparable
financial institution. If such sale is not consummated
within said one (1) year period, Lessor shall again be
tow obligated to first offer to sell the Offered Interest to
Lessee as set forth in this Section 3.1. In the event a
person or entity other than Lessee acquires all or any
' portion of or any interest in the Premises, such person or
entity shall take title to such portion or interest subject
,,. to all of the terms and conditions of this Lease.
1w '
-27-
err
ARTICLE IV. [RESERVED]
ARTICLE V. TAXES AND ASSESSMENTS
5.1 Lessee's obligation for Taxes and Assessments.
A
(a) Governmental Charges. In addition to the
rents and other payments required to be paid under this Lease
from the Term Commencement Date through the expiration or
termination of this Lease, Lessee shall be responsible for,
and agrees to pay, prior to delinquency, any and all taxes,
w
assessments, installments of taxes, levies, fees and other
w
governmental charges of every kind or nature (hereinafter
collectively called "taxes") levied or assessed by municipal,
w county, state, federal or other taxing or assessing
authorities or governmental agencies or entities upon,
against or with respect to (i) the Improvements, or any
' portion thereof, (ii) the Premises, or any portion thereof,
including without limitation, Lessor's fee interest in the
Premises, (iii) all fixtures, equipment and any other
property of any kind owned by Lessee or placed, installed or
located within, upon or about the Premises for Which Lessor
might be assessed or which might become a lien on the
Premises if not paid by Lessee, (iv) all alterations,
additions and improvements of whatsoever kind or nature, if
any, made to the Premises or the Improvements, (v) rentals or
-28-
other charges payable by Lessee to Lessor (other than state
and federal income taxes applicable to Lessor) , and (vi) any
other interest in the Premises (including the leasehold
interest created by this Lease) , irrespective of Whether any
of the items described in clauses (i) through (vi) above are
assessed as real or personal property, and irrespective of
whether any of such items are assessed to or against Lessor
�» or Lessee, or any other person. The foregoing obligations of
Lessee shall not constitute a waiver of Lessee's rights to
"+ contest taxes, etc. , as set forth in subparagraph (d) below.
If at any time during the Term any of such taxes are not
V
levied or assessed separately and directly to Lessee (for
60 example, if the same are levied or assessed to Lessor as part
of a larger tax parcel) , Lessee shall pay Lessee's
proportionate share as determined below in (b) . Any and all
taxes and assessments and installments of taxes and
assessments required to be paid by Lessee under this Lease
6d shall be paid by Lessee before each such tax, assessment, or
installment of tax or assessment becomes delinquent and a
�•+ copy certified by Lessee under penalty of perjury of the
official and original receipt for the payment of such tax,
assessment or installment shall promptly be given to Lessor.
(b) Lessee's Allocation. Lessee's proportionate
share of all taxes levied or assessed against or with respect
to the Premises or other matters described in Section 5.1(a)
above, excluding the Improvements, which are not separately
-29-
assessed shall be that portion thereof Which the number of
square feet of the land area of the Premises bears to the
total number of square feet of land area from time to time
levied or assessed with the Premises or any other fair and
equitable manner as mutually determined by Lessor and Lessee.
Lessee's share of taxes levied or assessed against or with
respect to the Improvements which are levied or assessed with
other improvements levied or assessed with the Premises shall
be determined by Lessor and Lessee in a fair and equitable
manner. Should Lessor and Lessee be unable to agree as
described in this subparagraph (b) prior to the date such
agreement is required in order to .properly and timely comply
with this subsection (b) and subsection (a) , determination of
Lessee's proportionate share shall be by arbitration in
** accordance with Article XXVII. The taxes payable by Lessee
pursuant to this subsection (b) and subsection (a) which are
levied or assessed for the fiscal tax year in which the Term
commences and for the fiscal tax year in which the Term of
this Lease ends, shall be prorated on the basis of a 30 day
�+ month and a 360 day year. Lessor agrees to cooperate with
Lessee, at no cost to Lessor, to cause the Premises to be
separately assessed by the County of orange if at any time
the Premises are not so separately assessed,
(c) Substitute Taxes, Should the United States of
America, State of California or any political subdivision
thereof (other than the City of Huntington Beach) or any
_3 0./
r
a
a
governmental authority having jurisdiction (by tray of
substitution for all or any part of the "taxes" otherwise
r
required to be paid in whole or in part by Lessee pursuant to
this Section 5.1 or elsewhere in this Lease, or in addition
,
thereto) either (i) impose a capital levy or a tax,
assessment and/or surcharge of any kind or nature upon,
against, in connection with or with respect to the rentals or
w other charges payable to Lessor by Lessee or other tenants,
lessees, occupants, operators or concessionaires in or of the
Premises and/or (ii) impose a tax or surcharge of any kind or
nature upon, against or with respect to the parking areas or
the number of parking spaces in the Premises, then, in any
such case, such tax, assessment and/or surcharge shall be
deemed to constitute a tax and/or assessment against the
�+ Premises and Lessee shall pay its proportionate share thereof
pursuant to this subsection, as billed by Lessor.
1wr
(d) Contesting Taxes. Lessee shall have the right
to contest, oppose, or object to the amount or validity of
any tax, assessment, or other charge levied on or assessed
�Pw against the Premises or any portion thereof; provided,
however, that the contest, opposition, or objection must be
filed before the tax, assessment, or other charge at which it
is directed becomes delinquent and written notice of the
contest, opposition, or objection must be give to Lessor
before the date the tax or assessment, or other charge
becomes delinquent. No such contest, opposition, or
-31-
objection shall be continued or maintained after the date the
tax, assessment, or other charge at which it is directed
becomes delinquent unless Lessee has met one of the following
conditions:
i
(i) Paid such tax, assessment, or other
charge under protest prior to its becoming
PM
delinquent;
so (ii) obtained and maintained a stay of all
proceedings for enforcement and collection of the
tax, assessment, or other charge by posting such
bond or other matter required by lava for such a
stay; or
(iii) Delivered to Lessor a good and
r
sufficient undertaking in a form reasonably
*� acceptable to Lessor's Executive Director, in an
amount equal to one hundred twenty-five percent
(125%) of the amount in controversy (inclusive of
fines, interests, penalties, costs, and other
expenses that may have accrued or been imposed
lima thereon) and issued by a surety company authorized
'to issue undertakings in California, conditioned on
the payment by Lessee of the tax, assessment, or
charge together with any fines, interest,
tir
penalties, costs, and expenses that may have
accrued or been imposed thereon within thirty (30)
days after final determination of Lessee's contest,
ti.
-32-
opposition, or objection to such tax, assessment,
or other charge.
Lessor shall not be required to join in any
proceeding or contest brought by Lessee unless the provisions
of any law requires that the proceeding or contest be brought
by or in the name of Lessor or any owner of the Premises. In
that case, Lessor shall join in the proceeding or contest or
�. permit it to be brought in Lessor's name but such action
shall be without cost or other liability to Lessor and Lessee
agrees to pay to Lessor all costs incurred by Lessor in
connection therewith.
V
(e) Pa ent. subject to Lessee's rights under
subparagraph (c) , supra, following each second consecutive
delinquent payment of taxes required to be paid by Lessee
*� under this Section 5.1, Lessor shall have the right to elect
to bill Lessee for any amount payable by Lessee under this
Section 5.1 in periodic installments, in advance, from time
to time, but not more often than quarterly, and thereafter
Lessee's failure to pay such amount to Lessor shall carry
w with it the same consequences as Lessee's failure to pay rent
and shall be deemed to be additional rent. In such event,
Lessor may so bill Lessee prior to Lessor's receipt of
assessment notices and/or tax statements or bills covering
any or all of the taxes payable by Lessee hereunder. In the
event the amount of the taxes described in this Section 5.1
for any fiscal tax year has not been made known to Lessor by
-33-
a
., the tax collector at the time of billing, Lessor shall have
the right to estimate reasonably the amount thereof and to
base its billing to Lessee upon said estimated amount, and in
such event Lessor agrees to adjust such billing when the
actual amount of such taxes is made known to Lessor by the
tax collector. In the event Lessor exercises such option to
require Lessee to pay taxes to Lessor in advance (instead of
directly to the taxing authority) and thereafter Lessee is
not delinquent in the making of any such installment payments
for a period of five (5) years, after the fifth year Lessee
shall again be entitled to make its tax payments directly to
the taxing authority until such time as two consecutive
rr delinquent payments again occur at which time Lessor shall
again have the option to require periodic installment
payments of taxes to Lessor as aforesaid. In the event
{ Lessor collects tax payments from Lessee pursuant to this
Section 5.1, Lessor shall promptly pay such taxes prior to
yam, delinquency.
(f) Tax Returns And Statements. Lessee shall, as
between Lessor and Lessee, have the duty of attending to,
preparing, making, and filing any statement, return, report,
v
or other instrument required *or permitted by law in
connection with the determination, equalization, reduction,
or payment of any taxes, assessments, or other charges that
+� are or may be levied on or assessed against the Premises, or
any portion thereof, or any interest therein, or the
4�
--34-
Improvements or other property on the Premises. Lessor shall
cooperate with Lessee, at no cost to Lessor, as reasonably
necessary for Lessee to comply with this subparagraph (f) ,
including providing information and documents in Lessor's
possession to Lessee and executing necessary documents.
(g) Indemnification. Lessee shall indemnify,
defend and hold Lessor, the Premises, Lessor's interest in
the Premises, and any Improvements located an the Premises,
free and harmless from any liability, claim, loss, cost,
bad
expense or damage resulting from any taxes, assessments, or
other charges required by this Article to be paid by Lessee,
any loss, cost, expense or damage, including without
�► limitation attorneys' fees and court costs, incurred by
Lessor or Lessee in connection with any such contest, and
from all interests, penalties, and other sums imposed thereon
and from any sales or other proceedings to enforce collection
of any such taxes, assessments, or other charges.
(h) Payment By Lessor. Subject to Lessee's rights
under subsection (d) , supra , should Lessee fail to pay within
*a the time specified in this Article any taxes, assessments, or
other charges required by this Article to be paid by Lessee,
Lessor may pay, discharge, or adjust such tax, assessment, or
other charge for the benefit of Lessee, but Lessor shall have
no obligation so to do. In such event, Lessee shall promptly
reimburse Lessor for the full amount incurred by Lessor in so
paying, discharging, or adjusting such tax, assessment, or
ti
-35-
other charge together with interest thereon at the rate
required to be paid by Lessee for delinquent rent from the
date of payment by Lessor until the date repayment is
received by Lessor from Lessee.
ARTICLE VI. CONSTRUCTION OF IMPROVEMENTS;
EFFECT AND DURATION OF COVENANTS IN DDA
Lessor and Lessee shall each construct or cause to be
.J
constructed those improvements on and adjacent to the
bd Premises which are required to be constructed by each of them
in accordance with, within the times, and subject to the
w•► terms and conditions set forth in the DDA (including, without
limitation, Article IV thereof (commencing with Section 400) ,
the "Scope of Development" (Attachment No. 3) , and the
"Schedule of Performance" (Attachment No. 4) ) .
Subsequent to Lessee's completion of all improvements
which are its responsibility and Lessor's Issuance ' of its
Certificate of Completion with respect to the Developer
Improvements on the Premises, in accordance with Section 415
of the DDA, Lessee shall have no further obligations under
too
the aforesaid provisions of the DOA.
rr
-36-
a
ARTICLE VII. USE AND COMPLIANCE WITH LAW
' 7.1 Use of Premises.
During the term of this Lease, Lessee shall not use
w
or suffer to be used the Premises other than as a hotel
-
without Lessor's prior written consent. Uses normally
incidental to a hotel use, including without limitation a
�• restaurant, cocktail lounge, cleaning and laundry service,
banquet and catering facilities, meeting roams, gift shop,
magazine stand, barber or beauty shop, travel agency, airline
ticket office, automobile rental operation, and recreational
facilities, shall also be permitted.
Lessee agrees during the entire Term to operate the
Improvements and to conduct its business at all times in a
first class and reputable manner and to cause all subtenants,
operators, concessionaires, and other occupants of the
I'mprovements and Premises to do likewise. Failure by Lessee,
� or any such other person, so to operate shall entitle Lessor,
in addition to other remedies provided in this Lease, to seek
any mandatory injunctive relief to which Lessor may be
entitled.
Not by way of limitation of the foregoing, the hotel to
be operated by Lessee on the Premises shall be operated as a
"First-Class Hotel." As used herein, the term "First-Class
Hotel" shall mean that, subject to any limitations imposed by
the physical structure and configuration of the Improvements
w
--37-
w
w
as initially constructed or changed or altered as permitted
herein, the Improvements shall be maintained and the hotel
shall be operated in a manner at least comparable to the
standard of quality for "first-class" hotels operated and
r
maintained from time to time by any of the following hotel
w
companies: Hilton, Sheraton, Marriott, Radisson, Hyatt,
Guest Quarters, Ramada, or any subsidiaries thereof, in the
110 Southern California area. The designation "first-class" is
intended to reflect the highest standard of hotel operation
60 other than deluxe luxur
y or resort hotels. It is recognized
that not all services and facilities available in one first-
class hotel will necessarily be provided by all first-class
hotels, but that the composite of service and facilities
provided by each first-class hotel will cause the same to be
deemed to constitute a first-class hotel. Lessor and/or
Lessee may request additions or deletions to such list,
subject to the reasonable approval of the other party;
provided, however, in no event shall there be fewer than five
(5) hotel companies on such list at any one time.
�+ Subject to Lessee's rights under the DDA and under the
Development Agreement entered into between Lessee and Lessor
u
on or about August 15, 1988 (the "Development Agreement") ,
Lessee, at Lessee's expense, shall promptly comply with all
1,r
valid and applicable present and future laws. ordinances,
W orders, rules, regulations and requirements of all
governmental authorities having jurisdiction of, or affecting
-38-
u
or applicable to the Premises or Improvements or the
cleanliness, safety, occupancy and use of the same, whether
or not any such law, ordinance, order, rule, regulation or
requirement is substantial, or foreseen or unforeseen, or
ordinary or extraordinary or shall necessitate structural
changes of the Improvements or interfere with the use and
enjoyment of the Premises; provided, that nothing in this
Section 7.1 is intended to constitute a waiver by Lessee of
its vested rights, if any, its rights, if any, to maintain a
W legal nonconforming use, or its rights under the DDA and the
Development Agreement. If any governmental license or permit
ed shall be required for the proper and lawful conduct of
Lessee's business or other activities carried on in the
0+
Premises, then Lessee, at its sole expense, shall duly
Wd procure and thereafter maintain such license or permit, or
cause such procurement and maintenance, and submit the same
for inspection by Lessor. Lessor will cooperate with Lessee,
at no cost to Lessor, as .may reasonably be necessary in order
to assist Lessee in complying with this paragraph, including
making appearances at hearings and executing documents.
In addition, Lessee shall not commit or suffer to be
committed Any waste upon the Premises or any nuisance or
other act or thing which disturbs the quiet enjoyment of
owners or occupants of property adjacent to the Premises;
provided, however, that so long as the Improvements as
constructed and maintained are in full compliance with the
LW
-39-
6,
DDA and all permits and other requirements of law, no claim
of breach of this paragraph ray be made by Lessor based on a
• claim of nuisance. In addition, Lessee shall not remove any
of the Improvements from the Premises, nor waste, destroy or
Y
modify any Improvements or the Premises, except as permitted
by this Lease.
7.2 Grant of Uses; Easements. Lessee may enter into
agreements restricting use or granting easements over the
Premises, provided they are limited to the Term of this Lease
or, in the case of restrictions or easements in favor of
other "Separate ❑evelopment Parcels" within the "Commercial
Portion" of the "Site" (as those terms are defined in DDA) ,
provided they are limited to the term of the lease(s) for
such other Separate Development Parcel(s) . Such restrictions
and easements shall not adversely affect the determination of
the market value of the fee of the Premises or the market
rental value of the Premises as set forth in Article II, and
shall not be . inconsistent with any of the covenants,
conditions, or restrictions on Lessee's use of the Premises
6W as set forth herein. Lessee must obtain Lessor's prior
written consent to any restrictions on the Premises, its use
or its alienation, inconsistent with the foregoing. In
addition, Lessee must also obtain Lessor's prior written
consent to certain assignments of Lessee's interests in the
Premises and this Lease, as more particularly set forth in
Article XVI below.
-40-
7.3 Non-Discrimination. Lessee covenants for itself,
its heirs, Executors, administrators, and assigns, and all
persons claiming under or through it, that this Lease is made
and accepted upon and subject to the following conditions
i That there shall be no discrimination against or segregation
of any person or group of persons on account of race, color,
creed, religion, sex, martial status, age, national origin or
., ancestry in the subleasing of the Premises herein leased, nor
shall the . Lessee establish or permit any such practice or
practices of discrimination or segregation with reference to
the selection, location, number, use or occupancy of
.r r
sublessees of the Premises. In the event Lessee enters into
contracts, leases, subleases, or assignments with respect to
any of its interest herein, Lessee shall include in such
arrangements a nondiscrimination clause substantially
conforming to the following:
6a (a) In leases: "The lessee herein covenants by and
.for himself or herself, his or her heirs, executors,
administrators, and assigns and all persons claiming
W under or through him or her, that this lease is made and
accepted upon and subject to the following conditions
"That there shall be no discrimination against or
segregation of any person or group of persons on account
of race, color, creed, religion, sex, marital status,
w„ age, national origin or ancestry in the subleasing,
transferring, use, occupancy, tenure or enjoyment of the
-41-•
r..
r
premises herein leased, nor shall the lessee himself or
herself, or any person claiming under or through him or
her, establish or permit any such practice or practices
of discrimination or segregation with reference to the
selection, location, number, use or occupancy of lessees
of the premises."
(b) In contracts and assignments: 'There shall be
.+ no discrimination against or segregation of any person
or group of persons on account of race; color, creed,
religion, sex, marital status, age, national origin or
ancestry in the subleasing, transfer, use, occupancy,
tenure or enjoyment of the premises, nor shall the
ka transferee (or assignee) himself or herself, or any
person claiming under or through him or her, establish
ba or pernit any such practice or practices of
discrimination or segregation with reference to the
4r
selection, location, number, use or occupancy of the
premises."
ARTICLE VIYI. LESSOR COVENANT TO
AMP
RESTRICT USE OF CITY BEACH PROPERTY
�r
8.1 Recitals.
�. (a) Lessor is one of the owners in fee of that
certain real property located in the City of Huntington
-42-
a.
s
Beach, California, and bounded on the north by the right-of-
way line for Pacific coast Highway, on the east by Huntington
.. Beach State Park, on the south by the mean high tide line of
the Pacific Ocean, and on the west by an imaginary line
extending southward from the westerly side of the
intersection of Pacific Coast Highway and Huntington Street
(hereinafter referred to as the "City Beach Property") . The
,. City Beach Property is more particularly described in Exhibit
"B" attached hereto and incorporated herein by this
~ reference.
(b) Lessee will be constructing, operating, and
w
maintaining on the Premises ocean-oriented, visitor-serving
bo commercial facilities which are designed to take full
advantage of the existing ocean views across Pacific Coast
Highway. Lessee desires to obtain assurances from Lessor
r
that such views will not be obstructed during the term of
W
this lease.
60 (c) Pursuant to the California Coastal Act of
1976, as amended (Public Resources Code Section 30000, et
60 sec ,) , Lessor has prepared and the California Coastal
Commission has certified a Local Coastal Plan (hereinafter
the "LCP") for that portion of the City of Huntington Beach
that is located within the Coastal Zone, including the City
Beach Property. on January 19, 2981, the City Council of
Lessor adopted Resolution No. 4954 adopting the LCP in the
form of the Coastal Element of the City's General Plan; the
-43-
bw
bw
LCP has subsequently been amended through the City Council's
adoption of Resolution No. 5147 on August 2, 1982 , Resolution
No. 5267 on May 16, 1983, and Resolution No. 5341 on January
3, 1984. The LCP is a public record, a copy of which is
" available for inspection at the office of the City Clerk at
the City of Huntington Beach, 2000 Main Street, Huntington
"
Beach, California 92648.
., The LCP requires "Preservation of as much beach
sand area as possible in order to accommodate future levels
No of beach attendance. " (LCP, Section 2.3. ) The LCP further
establishes as a policy the "increased numbers of hotel/motel
b+
rooms and restaurants in the Coastal Zone." (Td. , at Section
3.3. ) The LCP designates the entire City Beach Property for
recreational use in which the "principal permitted uses . . .
are limited to open sand areas, beach related recreational
activities, and under certain conditions, parking lots,
concessions and camping." Id. Figure
(� , at gore 9.11 and Section
9.2.5.) The LCP further "prohibit(s) development of permanent
above-ground structures on the beach sand area„ on the City
W Beach Property with the exception of lifeguard towers and
other public safety facilities, public restrooms and beach
concession stands when located immediately adjacent to paved
parking or access areas, fire rings, volleyball nets, bike
V
trails, bike support facilities, and handicapped access.
Finally, the LCP "prohibit(s) expansion of parking facilities
-44-
i
that would result in the loss of recreational sand area
." (Id. , at Section 9.5.1.)
(d) On October 10, 1983, the City Council of
Lessor adopted Resolution No. 5308 a,b and c, approving and
adopting the Downtown Specific Plan (hereinafter the
"Specific Plan") for the implementation of the LCP. The
entire City Beach Property is located in District Eleven of
the Specific Plan, which is designated for beach-related open
space and recreational uses. District Eleven "is intended to
r preserve and protect the sandy beach area Within the
(Downtown] Specific Plan boundaries while allowing parking
and auxiliary convenience uses." (Specific Plan, Section
4.13. ) Pursuant to the Specific Plan, the only uses and
structures permitted on the City Beach Property are access
facilities, basketball courts, beach concession stands at
intervals no closer than one thousand (1,000) feet and
v
limited to two thousand five hundred (2,500) square feet per
building, bicycle and jogging trails and support facilities,
fire rings, lifeguard towers and other structures necessary
for health or safety, paddleboard courts, surface parking
lots or public transit facilities that will not result in the
loss of recreational sand areas, provided that any tiered
parking shall be designed-so that the top of the structures
including walls, etc. , are located a minimum of one foot
below the maximum height of the adjacent bluff, park offices,
playground equipment, public restrooms, public dressing rooms
-4 5-
6
or showers, shoreline construction that may alter natural
shoreline process (such as groins, cliff retaining wails,
pipelines, And outfalls that are designed to eliminate
adverse impacts on local shoreline sand supply) , and
volleyball net supports.
(e) City and Lessee desire to ensure the long-term
pe
maintenance of the City Beach Property for beach-related uses
consistent with the LCP and Specific Plan, to promote the
development and operation of high-quality visitor-serving
commercial uses on the Premises, and to provide a long-term
source of revenue to the City to enhance the Cityls
w
implementation of the LCP and Specific Plan or for other
64 public purposes as determined by the City in its sole
discretion.
Li 8.2 Restrictions on Development on City Beach Property.
Lessor covenants not to construct or maintain or permit to be
h.d constructed or maintained any improvements or structures on
the City Beach Property excepting only the following: access
facilities, basketball courts, beach concession stands at
intervals no closer than one thousand (1,000) feet and
limited to two thousand five hundred (2,500) square feet per
6B building, bicycle and jogging triils and support facilities,
fire rings, lifeguard towers and other structures necessary
for health or safety, paddleboard courts, parking lots and
public transit facilities that will not result in the loss of
recreational sand area and that will not extend above the
-46-
existing grade of the adjacent stretch of Pacific Coast
Highway, park offices, playground equipment, public
restrooms, public dressing rooms or showers, shoreline
construction that may alter natural shoreline process (such
as groins, cliff retaining walls, pipelines, and outfalls
that are designed to eliminate adverse impacts on local
shoreline sand supply) , volleyball net supports, and
w pedestrian overcrossing(s) of Pacific Coast Highway.
8.3 PayEents. In consideration of Lessor's agreement
to restrict development on the City Beach Property as set
forth herein, Lessee shall pay to Lessor the amounts set
forth below:
u (a) For each Lease Year from. 1989 through 2000,
inclusive, the sum of Eight Hundred Thirty-Three Dollars
and Thirty-Three Cents ($833.33) per Lease Year, payable
in advance on the first day of each such year.
(b) For each Lease Year from 2001 through 2013,
inclusive, or the earlier termination of this Lease, the
sum of One Thousand Six Hundred Sixty-Six Dollars and
�.+ Sixty-Six Cents ($1,666.66) per Lease Year, payable in
advance on the first day of each such year.
L
(c) For each Lease Year from 2014 to 20860
inclusive, or the earlier termination of this Lease, the
sum of one Thousand Six Hundred Sixty-Six Dollars and
W Sixty-Six Cents ($1,666.66) per year adjusted upward as
of January 1, 2014, and each January 1st thereafter as
u
-4'7-
u
provided herein (the "Adjustment Dates") , with such sum
payable in advance on the first day of each such year.
The annual adjustment shall be calculated upon the basis
of the United States Department of .Labor, Bureau of
Labor Statistics Consumer Price Index of Urban Wage
Earners and Clerical workers, Los Angeles-bong Beach-
Anaheim Average, All Items (1967 - 100) (the "Index") .
The Index published and in effect ninety (90) days prior
to the twenty-fifth (25th) anniversary of the Effective
V
Date shall, be considered the "Base Year Index." At each
Adjustment Date, the consideration otherwise due shall
be adjusted by the percentage increase, if any, between
r� the Base Year Index and the Index published and in
effect ninety (90) days preceding the Adjustment Date.
In no event shall the consideration payable on any
Adjustment Date be less than the consideration required
to be paid during the year immediately preceding such
Adjustment Date notwithstanding the fact that the Index
may, as of some Adjustment Date, be less than the Index
" as of the previous Adjustment Date or the Base Year
Index. When the amount of the adjusted consideration is
determined, and at least thirty (30) days prior to the
date payment for the next year is due, Lessor shall give
Lessee written notice of the amount of the •adjusted
consideration indicating how the new figure was
computed. If at any Adjustment Date the Index shall not
-48-
i.�
exist in the same format as recited herein, Lessor and
Lessee shall agree to substitute any official index
published by the Bureau of Labor Statistics, or
successor or similar governmental agency, as may then be
in existence and which is most nearly equivalent to the
Index. Should Lessor and Lessee be unable to mutually
r
agree as to any such substitute index prior to the date
such agreement is required in order to properly and
timely comply with this paragraph 8.3, determination of
the proper substitute index shall be by arbitration
conducted in accordance with the then-prevailing
w
commercial arbitration rules of the American Arbitration
Association or its successor.
8.4 Property to be Benefited by City's Covenant. The
`' covenants set forth in Sections 8.2 and 8.3 are intended to
' burden and benefit the City Beach Property and the Premises.
6
8.5 Covenants Run With The Land; Recordation of
Memorandum of Lease. The parties intend that the covenants
set forth in this Article V111 be enforceable as equitable
�+ servitudes and constitute covenants the burden of which shall
run with the land and bind successive owners of the City
Beach Property and benefit assignees and sublessees of
Lessee's interest in the Premises, all within the
contemplation and for the purposes set forth in Section 1470
of the California Civil Code. Immediately following the
Effective Date of this Lease, Lessor shall cause a Memorandum
-49-
of Lease which specifically references the restrictive
covenant contained within this Article VIII to be recorded
against the City Beach Property.
ARTICLE IX. MAINTENANCE OF LEASED PREMISES
r
9.1 Lessee's Obligations for Maintenance.
(a) Lessee's Obligations. Subject to the
application of Articles XIV and XV in the event of casualty
V
or condemnation, Lessee, at Lessee's expense without cost to
Lessor, shall keep and maintain in first-class condition and
appearance and in good first-class order, condition, quality,
r+ and repair (including replacement of parts and equipment and
ME (as defined in this Lease) , and refurbishing of hotel
`w guest rooms, if necessary) the Improvements and every parr
thereof and any and all appurtenances thereto wherever
located, including, but without limitation, the interior and
w exterior surfaces of all exterior walls, roofs, the exterior
and interior portions of all doors, door frames, door checks,
old trash enclosures, planters attached to the Improvements,
other entrances, windows, window frames, plate glass,
storefronts, lobbies, signs, all plumbing and privately-
maintained sewage and other utility facilities serving the
Premises, including free flow up to the main sewer line,
�+ fixtures, ventilation, heating and air conditioning and
electrical systems (whether or not located in the
-5D-
*m
• r
Improvements) , sprinkler systems, floors and ceilings, and
all other work performed by or on behalf of Lessee, and all
other repairs, replacements, renewals and restorations,
interior and exterior, structural and nonstructural, ordinary
and extraordinary, foreseen and unforeseen. As used in this
Section 9.1(a) , the phrase "first-class condition" with
respect to the Premises and Improvements shall mean that the
6w original Improvements constructed pursuant to the DDA (as
referenced in Article VI above) , as the same may have been
altered or expanded pursuant to this Lease or reconstructed
as a result of a casualty or condemnation as permitted by
6
this Lease, shall be kept in first-class repair, quality, and
physical condition and appearance, and that the Improvements
are of at least comparable quality and value (computed in
1968 Dollars) of the original Improvements as altered,
expanded, or reconstructed as described above. When used in
4-1
this Article, the term "repairs" shall include modifications,
Limprovements, additions, deletions, alterations, replacements
or renewals when necessary, and all such repairs made by
ti. Lessee shall be at least equal in quality and class to the
original work. Lessee shall keep and maintain all portions
of the Premises - and Improvements and the sidewalks adjoining
the same in a clean _and orderly condition free of
accumulation of dirt and rubbish.
If Lessee wishes to make any repairs to the
Improvements which result in a change in use of the
r..r
-51-
E
Improvements permitted by this Lease, or materially adversely
affect the value of the Premises or Improvements or
materially change the external structure or appearance of the
Improvements, then Lessee shall submit to Lessor for its
approval documentation which describes the desired repairs,
including floor plans, building sections, building materials
and components, samples of proposed exterior building
OW materials, and the like, to the extent relevant to the
particular repair. Lessor's approval shall be given within a
we reasonable period of time not to exceed sixty (60) days after
receipt by Lessor from' Lessee of all necessary documents and
information relating to such repairs, and shall not be
unreasonably withheld provided that the proposed repair shall
not, in Lessors reasonable judgment, impair. or diminish the
6d value or structural integrity of the Improvements, have the
likely result of diminishing the income or revenues of Lessee
over the Term of the Lease, or not be in harmony with
neighboring buildings.
In addition to the foregoing, throughout the Term
of this Lease and any extension hereof, Lessee shall keep,
maintain and operate the Premises and the Improvements in
W accordance with all valid and applicable laws of the State of
California and in accordance with all valid and applicable
6j
directions, rules and regulations of health officers, fire
marshals, building inspectors and other proper officials of
the governmental agencies having jurisdiction, and insurance
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-5Z-
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underwriters, and Lessee shall comply with all requirements
of laws, ordinances, rules And regulations and otherwise
affecting the Premises and the Improvements, all at the sole
cost and expense of Lessee; provided that nothing in this
y
section 9.1 is intended to constitute a waiver by Lessee of
its vested rights, if any, to maintain a legal nonconforming
use, or its rights under the DDA and the Development
Agreement.
Furthermore, at any time prior to a Disposition
Transfer pursuant to the DDA, Lessee may, at its option, and
subject to complying with applicable legal requirements,
w
demolish and clear any of the Improvements on the Premises as
.� reasonably determined by Lessee to be necessary or
appropriate to prepare for the development contemplated under
the DDA.
(b) Procedure For_ Resolution -of Disputes Relating
to Lessee,'s Maintenance of the Premises. If at any time
`, Lessee shall fail to comply with the requirements in Section
9.1(a) , but not more frequently than once every twenty-four
too (24) months, Lessor shall be entitled to deliver written
notice to Lessee (herein a "Notice of Deficiency") stating
that the Improvements and/or Premises are or are not in such
condition and setting forth, in detail, the repairs and
replacements, if any, necessary to put the Improvements
dw and/or the Premises in such condition as described above
and/or stating that the operation of the Improvements is or
-53-
is not satisfactory and setting forth, in detail, the changes
I
in operations, if any, necessary to put the operations into
the manner described above. In addition to the foregoing, on
or before the end of the 25th, 50th, and 75th full Lease
Years, Lessor shall inspect the Premises and the Improvements
to determine whether Lessee is in compliance with the
requirements of this Section 9.1 and, if Lessee is not in
compliance, Lessor shall be entitled to deliver to Lessee a
Notice of Deficiency. If Lessee disputes the need for any
w repairs, replacements or changes in operation referenced in
Lessor's Notice of Deficiency, Lessee shall deliver written
Y
notice to Lessor of such dispute within thirty (30) days
after delivery of Lessor's notice and promptly after delivery
thereof the dispute shall be submitted to arbitration as set
forth in Article XXVII of this lease. If the determination
of the arbitrators requires any of the repairs, replacements
or changes in operations set forth in Lessor's notice, or if
Lessee shall not have disputed the requirements set forth in
Lessor's notice, Lessee shall make such repairs, replacements
*w or changes in operation promptly and diligently. Lessee
shall be required to correct any deficiencies in the
maintenance or operations of" the Premises and the
Improvements within a reasonable time exercising due
diligence after notice by Lessor but in no event shall such
W time exceed twenty-four (24) months of such notice, and
during the period that Lessee is proceeding with such
60
-54-
corrections it shall not be deemed to be in default
hereunder.
~ (c) Liens. Subject to the lust sentence of this
Section 9.1(c) , Lessee shall keep the Premises and the
~
Improvements free from any and all liens arising out of any
~
work performed, materials furnished or obligations incurred
by or for Lessee or others, or otherwise affecting the
�+ Premises or Improvements, and agrees to cause to be
discharged of record any mechanic's or materialmen's lien
within twenty (20) days after the lien has been tiled or
within twenty (20) days after receipt of written request from
Lessor, whichever shall be the sooner. Lessee shall give
Lessor at least fifteen (15) days written notice prior to
commencing or causing or permitting to be commenced any work
on the Premises (whether prior or subsequent to the
commencement of the Term) the cost of which is in excess of
$25,000, so that Lessor shall have reasonable opportunity to
file and post notices of non-responsibility for Lessee's
work. If Lessee fails to timely remove or bond for a lien as
�+ provided in this Section 9.1(c) , Lessee shall reimburse
Lessor for any and all costs and expenses which may be
incurred by Lessor by reason of the filing of any such liens
and/or removal of same, such reimbursement to be made within
ten (10) days after receipt by Lessee from Lessor of a
�.. statement setting forth the amount of the costs and expenses.
Lessee may contest any such lien provided Lessee has first
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i
69
secured and posted with Lessor a surety bond or bonds in the
amount of one hundred and twenty five percent (125%) of any
such lien issued by an underwriter reasonably acceptable to
Lessor securing payment of such lien in the event Lessee's
a
contest thereof is unsuccessful or Lessee otherwise fails to
r
have the lien removed of record timely.
(d) Lessor Substitute Performance. In the event
.• Lessee fails, refuses or neglects to commence and complete
any required repairs or maintenance within the times set
forth in Section 9.1(a) or (b) , to remove or bond for any
lien within the times set forth in Section 9.1(c) , to pay any
cost or expense relating to such matters, or otherwise to
perform any act or fulfill any obligation required of Lessee
pursuant to this Section 9.1, Lessor may, but shall not be
required to, make or complete any such repairs, remove such
lien, and pay such cost and expense of Lessee, and Lessee
shall reimburse Lessor for all costs and expenses of • Lessor
thereby incurred within ten (10) days after receipt by Lessee
from Lessor of a statement setting forth the amount of such
�•• costs and expenses which shall be deemed to be additional
rent and subject to the same consequences as herein provided
i�
for failure to pay rent. If reasonably possible under the
circumstances, Lessor shall give Lessee written notice ten
(20) days prior to commencement of any substitute
performance. Any failure by Lessor to give such notice,
however, shall not prejudice Lessor's rights hereunder or
-56-
r
alter Lessee's obligations hereunder. Lessor's rights and
r
remedies pursuant to this subsection (d) shall be in addition
kW to any and all other rights and remedies provided under this
Lease or at law.
11W (e) Ownership of Improvements. The Improvements,
and any FF&E not covered by the definition of "Improvements",
shall be owned by Lessee and, to the extent applicable, by
Lessee's vendors and permitted sublessees and
concessionaires, until expiration of the Lease Term, or the
sooner termination of this Lease. However, Lessee shall not
remove any of the Improvements from the Premises, nor waste,
destroy or modify any Improvements of the Premises, except as
permitted by this Lease. Upon expiration or sooner
termination of this Lease, all of the Improvements (which
M.r term is intended to exclude FF&E, personal property, and any
signs containing a business name, trademark, symbol, logo, or
design) that are made or placed in or on the Premises by
Lessee shall be considered part of the real property of the
Premises and shall remain on the Premises and become the
property of Lessor; Lessee shall have the right to remove all
other property which is not the property of Lessor, provided
w' that such removal shall be completed within thirty (30) days
after the expiration or earlier termination of the Term.
&.r
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do
ARTICLE X. INSUP.ANCE AND INDEMNITY
10.1 Lessees Insurance.
(a) Types. Lessee, at no cost and expense to
r
Lessor, shall, commencing on the date Lessee is given access
to the Premises for any purpose, and during the Term, procure
and keep in full force and effect or cause to be procured and
kept in full force and effect for the mutual benefit of
Lessor and Lessee insurance policies meeting the minimum
w
requirements set forth below or such greater requirements
that are generally obtained from time to time for properties,
improvements, activities, and operations similar to those on
the Premises in the Southern California area:
(i) comprehensive general liability insurance
with respect to the Premises and the operations of or on
behalf of Lessee and all lessees, tenants, licensees,
operators and concessionaires in, on or about the
Premises in an amount not less than Five -Million Dollars
($5,000,000) per occurrence combined single limit bodily
injury, personal injury, death and property damage
liability per occurrence, subject to such increases in
amount as Lessor may reasonably require from time to
two time but not more frequently than every 36 months;
provided, that the percentage increase in coverage shall
s. not be required to exceed the percentage increase in the
Index since the last requested adjustment in coverage.
V
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i
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The insurance to be provided by Lessee may provide for a
deductible or self-insured retention of not more than
one Hundred Thousand Dollars ($100,000.00) , with such
amount to increase at such times as Lessor may require
increases in the policy limits as set forth above;
provided that the percentage increase in the deductible
or self-insured • retention shall not exceed the
percentage increase in the Index since the last
requested adjustment; and further provided that Lessee
may maintain such higher deductibles or self-insured
M.
retention as shall be acceptable to the Executive
Director of Lessor or his designee. In the event such
�.. insurance does provide for deductibles or self-insured
retention, Lessee agrees that it will fully protect
Lessor, its boards, officers, and employees in the same
manner as these interests would have been protected had
the policy or policies not contained the deductible or
4, retention provisions. Coverage shall include but not be
limited to, to the extent applicable to the type of
business(es) and operations on the Premises, personal
injury liability (with standard exclusions for liability
v
assumed under contracts and suits brought by employees
deleted) , premises and operation, blanket contractual,
cross liability, severability of interest, broad form
+�. property damage, independent contractors, owned and
non-owned automobile, garagekeeper's liability,
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inkeeper's liability, and dramshop and liquor liability
coverage. Policies shall include a provision (1) that
" coverage shall be primary as respects any loss or claim
arising directly or indirectly out of the operations of
Lessee or others, any policies carried by Lessor shall
be excess and noncontributing with such policy or
policies, and (2) that Lessor shall be an additional
named insured under such policy or policies, and (3)
containing cross liability and severability of interest
clauses providing that the insurance applies separately
to each insured except with respect to the limits of
liability;
(fi) worker's compensation coverage as
required by law;
(iii) with respect to improvements,
alterations and the like required or permitted to be
6w
made by Lessee hereunder and under the DDA, contingent
4
liability and builder's risk (course of construction)
insurance;
(iv) with respect to the Improvements, and
merchandise, stock, trade fixtures, furnishings,
equipment and other items of personal property located
on or in the Premises, insurance against fire, peril of
flood, extended coverage, vandalism and malicious
+�+ mischief, and such other additional perils, hazards and
risks as now are or may be included in standard "all
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J •
risk" forms in general use in orange County, California,
with the standard form fire insurance coverage in an
amount equal to not less than the full current actual
replacement cost thereof, and the additional coverage
provided by the "all risk" coverage in an amount not
less that twenty-five percent (25%) of the full current
actual replacement cost thereof. Lessor shall be an
additional insured under such policy or policies and
such insurance shall contain a replacement cost
endorsenent;
(v) boiler and machinery insurance coverage
r.
for all objects, including but not limited to boilers,
pressure vessels, pressure piping and other major
components or any centralized heating, air conditioning
+� and cooling systems;
(vi). comprehensive automobile liability
insurance coverage for bodily injury (including death)
and property damage which provides total limits of not
less than five million dollars ($5,000,000) combined
�. single limit occurrence applicable to all owned, non-
owned and hired vehicles; and
(vii) Business interruption or loss of income
and rents insurance in amounts reasonably satisfactory
to Lessor but in no event less than an amount sufficient
�.. to cover all rent payable under this Lease and Lesseefs
v
fixed operating expenses, both for a period of twelve
• (12) months from the date of any insured loss.
Subject to the next sentence below, Lessee shall
further require its licensees, concessionaires and subtenants
to maintain insurance at their own expense as follows:
(i) liability insurance in substantially the
same forn as required of Lessee by this Section 10.1 of
this Lease (with the amounts of coverage and deductible
or self-insured retention as reasonably determined by
ow Lessee) ;
(ii) workers compensation insurance in
substantially the same form as required of Lessee by
this Section 10.1 of this Lease;
(iii) both policies of insurance required by
(i) and (ii) above shall have the following
endorsements, copies of which shall be provided to
Lessee and to Lessor, if Lessor so requests;
(aa) inclusion of Lessor as an additional
6.o
named insured as respects this Lease;
(bb) cross liability and severability of
interests clauses providing that the insurance
apply separately to each insured except with
respect to the limits of liability; and
Ld
(cc) stipulation that the insurance is
primary insurance and that neither the Lessor
nor its insurers will be called upon to
-G2-
contribute to a loss. Lessee may satisfy this
. requirement by providing such insurance
.. coverage for its licensees, concessionaires,
and/or subtenants under the insurance policies
it is required to maintain hereunder.
(b) standard. All policies of insurance required
pa
to be carried by Lessee under this Lease shall be written by
VA responsible and solvent insurance companies authorized to do
business in the State of California and having a
policyholder's rating of "A" (excellent) or better, in
"Best's Insurance Reports -- Fire and Casualty." Any such
w
insurance required of Lessee hereunder may be furnished by
Lessee under any blanket policy carried by it or under a
separate policy therefor. A copy of each paid-up policy
r+ evidencing such insurance (appropriately authenticated by the
insurer) or a certificate of the insurer, certifying that
such policy has been issued, providing the coverage required
by this Section and containing provisions specified herein,
hod
shall be delivered to Lessor prior to the date Lessee is
too given the right of possession of the Premises or as Lessor
may otherwise require, and upon renewals, not less than
thirty (30) days prior to the expiration of such coverage.
Lessor may, at any time,_ and from time to time, inspect
and/or copy any and all insurance policies required to be
W procured by Lessee hereunder. In no event shall the limits
-b3-
LO
of any policy be considered as limiting the liability of
Lessee under this Lease.
(c) Specific Provisions in ,Policy. Each policy
evidencing insurance required to be carried by Lessee
pursuant to this Article shall contain the following
provisions or clauses;
ko
(i) a provision that the insurer will not
�. cancel, or materially change the coverage provided by
such policy without first giving Lessor thirty (30)
days' prior written notice; and
(ii) a waiver by the Lessee's insurer of any
u
right to subrogation against Lessor, its agents,
employees or representatives Which arises or might arise
by reason of any payment under such policy or policies
or by reason of any act or omission of Lessor, its
agents, employees or representatives.
(iii) To the extent obtainable, a provision
to the effect that any amounts payable by virtue of
business interruption, loss of earnings, or loss of
.r rents shall be computed and stated separately in any
settlement entered into by the insurer under the policy.
(d) Landlord's Substitute Performance. In the
event that Lessee fails to procure, maintain and/or pay for
at the times and for the durations specified in this section
,. 10.1, any insurance required by this Section, or fails to
carry insurance required by law or governmental regulation,
V
-64-
i
L.
r
Lessor may (but without obligation to do so) at any time or
from time to time, after thirty (30) days written notice to
Lessee, procure such insurance and pay the premiums therefor,
in which event Lessee shall repay Lessor all sums so paid by
Lessor together with interest thereon as provided elsewhere
herein, within ten (10) days following Lessor's written
demand to Lessee for such payment.
.. (e) Commercial Availability. Notwithstanding any
other provision in this Lease to the contrary, Lessee's
4r obligation to procure and maintain insurance, and the
coverage, terms, and conditions of such insurance, shall be
6w
conditioned upon the commercial availability of such
insurance, coverage, terms, and conditions, at reasonable
commercial rates; provided, however, that the foregoing
condition of commercial- availability shall be inapplicable if
the particular insurance coverage is not commercially
available due to the wrongful acts or omissions of Lessee,
dangerous or hazardous activities of Lessee, or activities
not contemplated by this Lease. If at any time during the
term any of the insurance otherwise required pursuant to this
Section 10.1 is not so available, Lessee shall promptly so
notify Lessor, and Lessor and Lessee shall agree upon such
changed, altered, or reduced insurance requirements as shall
be reasonable under the circumstances, provided that the
�. insurance requirements set forth herein shall again take
effect at such time as such insurance again becomes
V
-65-
W
i
commercially available at reasonable commercial rates. In
�. the event Lessor and Lessee are unable to agree on applicable
f insurance requirements, the matter shall be resolved by
arbitration in accordance. with the procedures set forth in
Article XXVII below.
10.2 Covenant to Indemnify and Hold Harmless. Lessee
covenants to defend and indemnify Lessor, its officers,
directors, partners, representatives, agents and employees,
and successors and assigns, and save it and them harmless
from and against any and all claims, actions, losses,
damages, liability, costs and expenses, including attorneys'
fees, in connection with the loss of life, bodily injury
and/or damage to property arising from or out of or in
connection with any occurrence in, upon or at the Premises or
Improvements, or the occupancy or use by Lessee or any other
person of the Premises or Improvements or any part thereof,
or arising from or out of Lessee's failure to comply with any
provision of this Lease or otherwise occasioned wholly or in
part by any act or —omission of Lessee, its agents,
representatives, contractors, employees, servants, customers,
invitees, trespassers, guests, tenants, lessees,
concessionaires, operators or licensees, or their customers
or invitees, excepting only that the foregoing
indemnification and hold harmless agreement shall not apply
in the event of any uninsured willful or actively negligent
- misconduct on the part of Lessor or any of its agents,
-66-
representatives, or employees, or in the event any such
claims, actions, losses, damages, liability, costs, or
expenses arise out of a breach by Lessor of its obligations
under this Lease. In case Lessor shall be made a party to
any litigation commenced by or against Lessee, then Lessee
shall protect, defend and hold Lessor harmless and shall pay
all costs, expenses and reasonable attorneys' fees incurred
or paid by Lessor in connection with such litigation. Lessor
may, at its option, require Lessee to assume Lessor's defense
in any action covered by this Section through counsel
selected by Lessee and reasonably satisfactory to Lessor.
Lessee, as a material part of the consideration to Lessor,
hereby assumes all risk of damage to property or injury to
persons in, upon or about the Premises and Improvements from
�+ any cause whatsoever, and Lessee hereby waives all its claims
in respect thereof against Lessor excepting only damage or
injury arising out of (i) the uninsured willful or actively
negligent misconduct of Lessor or any of its agents,
representatives, or employees, or (ii) a breach by Lessor of
�., its obligations under this Lease.
10.3 Exemption of Lessor. Lessor shall not be liable
for injury, loss or damage to person or property or loss of
business which may be sustained by the person, goods, wares,
V
merchandise or property of Lessee, its employees, invitees or
customers or any other tenant, licensee, lessee, guest,
trespasser, operator, concessionaire or other person in or
4
-67-
V ,
about the Premises or Improvements caused by or resulting
from any cause whatsoever, including, but not limited to,
acts of others, theft, fire, steam, flood, electricity, gas,
or water or rain, which may leak or flow from or into any
part of the Premises, or Improvements, or from the breakage,
leakage, obstruction or other defects of the pipes,
W
sprinklers, wires, appliances, plumbing, air conditioning or
lighting fixtures of the Improvements, whether the injury,
loss or damage or loss of business results from conditions
W arising upon the Premises or from other sources, except that
the foregoing exemption of liability shall not apply (i) to
Lessor in its capacity as a governmental agency (as
distinguished from its capacity as the fee owner of the
Premises) , to the extent that such liability would otherwise
exist in accordance with existing law, (ii) to the extent any
injury, loss, or damage arises out of the uninsured willful
or actively negligent misconduct of Lessor or any of its
agents, representatives, or employees, or (III) to the extent
any injury, loss, or damage arises out of a breach by Lessor
of its obligations under this Lease. Lessee shall give
prompt notice to Lessor in case of any casualty losses in
excess of five percent (5%) of the combined value of the
Improvements, ME, and personal property on the Premises,
and in the event of any lawsuits filed against Lessee arising
�6a out of Lessee's occupancy or operations in which the amount
in controversy exceeds One Hundred Thousand Dollars
-68-
L
($1000000) . Lessor shall not be liable for any damages
arising from any act or neglect of any other tenant, lessee,
concessionaire, licensee, invitee, guest, trespasser,
operator or customer of the Premises or Improvements.
10.4 Waiver of Subrogation. Each party hereto does
hereby waive, remise, release and discharge the other party
hereto and any officer, director, shareholder, beneficiary,
partner, agent, employee or representative of such other
party, of and from any liability whatsoever hereafter arising
from loss or damage for which insurance containing a waiver
of subrogation is carried by the injured party under such
insurance. Lessee shall, upon obtaining the policies of
insurance required hereunder, give notice to the insurance
carrier or carriers that the foregoing mutual waiver of
subrogation is contained in this Lease.
ARTICLE XI. UTILITY CHARGES
11.1 Utility Charges. Lessee shall pay all charges for
L. gas, water, sewer, electricity, telephone and other utility
services used on or in the Premises and/or the Improvements
during the Term. If any such charges are not paid when due,
L Lessor may pay the same after giving Lessee ten (10) days
prior written notice, and any amount so paid by Lessor shall
thereupon become due to Lessor from Lessee as additional
rent. This Section 11.1 is not intended to relieve Lessor
L
-69-
L
S
from its obligations with respect to the provision of
utilities as set forth in Attachment Nos. 3 and 5 to the DDA.
ARTICLE XII. OFF-SET STATEMENT,
ATTORNMENT AND SUBORDINATION
12.1 off-set Statement. The parties shall, at any time
.. and from time to time upon not less than ten (10) days' prior
written notice from the other party, execute, acknowledge and
deliver to such requesting party a statement in writing (a)
certifying that this Lease is unmodified and in full force
w
and effect (or, if modified, stating the nature of such
modification and certifying that this Lease, as so modified,
is in full force and effect) and the dates to which the rent
+r and other charges are paid in advance, if any, without any
offset or defense thereto (if such be the case) and (b)
�r
acknowledging that there are not, to such certifying party's
knowledge, any uncured defaults on the part of the requesting
party hereunder, or specifying the defaults if any are
,. claimed. Any such statement may - be relied upon by any
prospective purchaser or encumbrancer of the Improvements,
W the Premises or of all or any portion of the real property of
which the Premises are a part. Lessee shall bear all costs
with respect to any statements requested of Lessor.
12.2 Attornment. 2n the event any proceedings are
brought for the foreclosure of, or in the event of the
-70-
rr
i
conveyance by deed in lieu of foreclosure, or in the event of
exercise of the power of sale under, any mortgage and/or deed
.. of trust made by Lessor, covering the Premises, or, subject
to Article III, in the event Lessor sells, conveys or
otherwise transfers its interest in the Premises, Lessee
hereby attorns to, and covenants and agrees to execute an
i
instrument in writing reasonably satisfactory to the new
w owner whereby Lessee attorns to the successor in interest and
recognizes the successor as the Lessor under this Lease.
� 12.3 Subordination. Lessee agrees that this Lease
shall, at the request of the Lessor, be subordinate to any
kv
mortgages or deeds of trust that may hereafter be placed upon
rA the fee of the Premises by Lessor and to any and all advances
to be made thereunder, and to the interest thereon, and all
renewals, replacements and extensions thereof, provided the
mortgagees or beneficiaries named in said mortgages or trust
deeds shall agree to recognize the interest of Lessee under
this Lease in the event of foreclosure, in accordance With
IbO
the terms of this Lease. Lessee also agrees that in ' the
w, -- event Lessor and any mortgagee or beneficiary elect to have
this Lease prior to such mortgage or deed of trust, and upon
notification by Lessor or such mortgagee or beneficiary to
Lessee to that effect, this Lease shall be deemed prior in
lien to such mortgage or deed of trust, whether this Lease is
L dated prior to or subsequent to the date of said mortgage or
deed of trust. Lessee agrees that upon the request of
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u
V
Lessor, or any mortgagee or beneficiary, Lessee shall execute
whatever instruments may be required to carry out the intent
- of this Section.
12.4 No Subordination of Fee. Lessor shall have no
W obligation to encumber or otherwise subordinate its fee
interest in the Premises.
ARTICLE XITI. ALTERATIONS AND ADDITIONS
13.1 Alterations and Additions. Without Lessor's prior
written consent, which consent may be withheld or granted in
W
Lessor's sole discretion, and except As permitted in the DDA,
including any of the development plans and approvals obtained
by Lessee thereunder, and further except as set forth in
bow section 9.1 of this Lease, Lessee shall not have the right to
make changes or alterations in the Improvements or the
Premises, except on the following conditions:
(a) Lessee shall not make any alterations, whether
structural or non-structural, which, when completed, will
materially decrease the value of the Premises or the
Improvements, or convert any building into a structure which
i6k is not a complete, self-contained 'operating unit;
(b) Before the commencement of any work, Lessee
shall pay the amount of any increased premiums on insurance
policies provided for hereunder;
- 72-
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(c) Lessor shall in no event be required to make
r
any alterations, rebuilding, replacement, changes, additions
or improvements or repairs to the Premises or Improvements
during the Term; and
"W (d) All such changes, alterations, rebuilding,
' replacements, additions, improvements and repairs to the
rr
Improvements made by Lessee shall be deemed to have attached
to the realty and to have become the property of Lessor upon
the expiration of the Term or upon sooner termination of this
Lease, to the same extent as with the original Improvements.
Lessee shall not remove any of such Improvements, as changed
W
or altered, with the understanding that trade fixtures,
furnishings, and personal property installed by Lessee or its
tenants or lessees shall not be classified as "Improvements"
as that term is used herein and may be removed, provided that
Lessee shall promptly repair any damage caused by such
«r removal. subject to the senior and prior rights of the
owner(s) and persons or entities having a security interest
in any of the trade fixtures, furnishings, and personal
,,. property (if other than Lessee) , in no event, Whether during
the Term of this Lease or upon the expiration of this Lease,
shall Lessee be entitled to remove any trade fixtures,
furnishings, or personal property if Lessee is in default
hereunder, except that during the Term of this Lease Lessee
may remove trade fixtures, furnishings and items of personal
property if the same are immediately replaced by trade
-?3
L.r
fixtures, furnishings and items of personal property of like
quality and value.
ARTICLE XIV. CASUALTY LASS AND RESTORATION
14.1 Non-Termination. Except as provided herein, no
destruction or damage to the Improvements or the Premises by
fire, windstorm or other casualty whether insured or
uninsured shall entitle Lessee to terminate this Lease.
y 14.2 Repair of Damage.
(a) Obligation to Repair Damage_ Due to Casualty
Covered by Insurance. Subject to Section 14.5 below, if the
Improvements shall be totally or partially destroyed or
rendered wholly untenantable by fire or other casualty
required to be insured against by ' Lessee, Lessee shall
promptly proceed to obtain insurance proceeds and take all
steps necessary to begin reconstruction and, immediately upon
W receipt of insurance proceeds, promptly and diligently
commence the repair or replacement of the Improvements to
+� substantially the same condition as they are required to be
maintained in under this Lease, whether or not the insurance
proceeds are sufficient to cover the actual cost of
restoration, and shall complete the same as soon as possible
so that Lessee may continue in occupancy. Subject to Section
61 25.1, in no event shall the replacement period exceed two (2)
years from the date Lessee obtains insurance proceeds.
6W
-74-
Lessor shall cooperate with Lessee, at no expense to Lessor,
in obtaining any governmental permits required for the
restoration. If, however, the then-existing laws of any
other governmental agencies with jurisdiction over the
Premises do not permit the restoration, Lessee may elect to
terminate this Lease by giving notice to Lessor (in which
event Lessee will be entitled to all insurance proceeds) or
Lessee may reconstruct such other improvements as are
consistent with applicable land use regulations and approved
by the City, Lessor and the other governmental agency or
agencies with jurisdiction.
r+
(b) Application of Insurance _Proceeds. All
insurance moneys recovered on account of damage or
destruction, Less the cost, if any, of such recovery, shall
be applied to the payment " of the cost of repairing and
replacing the Improvements. Except as otherwise provided
ti
herein, if net available insurance monies shall be
insufficient to pay the entire cost of such work, or if the
damage or destruction shall be the result of a cause not
required to be insured against, then Lessee shall bear the
cost thereof in excess of the net available insurance monies.
V
14.3 Continued Operations. During any period of repair,
Lessee shall continue, or cause the continuation of, the
operation of the businesses on the Premises to the extent
reasonably practicable from the standpoint of prudent
business management. However, irrespective of the continued
-75-
ti
r
operation of businesses during such period of repair, the
r
rent payable hereunder shall not be deferred (except as
.► provided under Section 14.4) and shall not be abated. Upon
completion of such repair and restoration Lessee shall
a
promptly refixture and restock the Improvements, if
necessary, substantially to the condition prior to the
casualty, or as otherwise required by this Lease, whichever
,�. is greater, and shall reopen for business, if closed by the
casualty. Lessee shall cause all operators, lessees, tenants
and other occupants to do likewise.
14.4 Deferral of Rent. There shall be no abatement or
rd
deferral of rent in connection with any damage or destruction
to the Improvements unless the casualty loss exceeds twenty-
five percent (25%) of the gross usable area of the Premises.
6+ In such event, and only in such event, if Lessee suffers such
a casualty loss due to circumstances that are not due to
`d Lessee's intentional or negligent acts or omissions, the rent
otherwise chargeable pursuant to Article II above shall be
4
reduced temporarily by a fraction, the numerator of which is
the total gross leaseable area of the Improvements from Which
business cannot be conducted during the period of the
casualty loss and the denominator 'of which is the total gross
leaseable area of the Improvenents immediately prior to the
casualty loss. The amount of the temporary reduction shall
not be abated or excused but shall be deferred until the
earlier of (i) the date on which Lessee receives any payment
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r
of business interruption insurance proceeds, or (ii) the date
which is two (2) years subsequent to the date of the casualty
.� loss. on the earlier of such date, the amount of the
deferred rent shall be paid to Lessor, together with interest
w
from the date of the casualty to the date of payment at a
rate equal to three (3) percentage points over the discount
rate of the Federal Reserve Bank of San Francisco (not to
exceed the maximum legal rate permitted by law) .
14.5 Damage or Destruction in Last Years or Due to Cause
Not Required to Be covered By Insurance. If either (i) the
Improvements are destroyed or substantially damaged by fire
or casualty when ten (10) or fewer years remain in the Term,
or (ii) the Improvements are destroyed or substantially
damaged by a casualty which Lessee is not required to (and
w* has not) insured against, then Lessee may cancel this Lease
by written notice of election to Lessor within ninety (9o)
days after such substantial damage or destruction and the
rents and other charges payable by Lessee hereunder shall be
payable through the termination date plus any additional time
L. required for Lessee to comply with the requirements to remove
the Improvements and restore the Premises as required by this
Lease. In such event all sums received by or due to Lessee
on account of insurance covering the Improvements shall be
paid to Lessor except that the Premises shall be re-delivered
to Lessor after removal of the Improvements and debris, if
requested by Lessor within thirty (30) days after Lessee
-77-
delivers to Lessor its notice of termination, and the expense
therefor shall be paid out of the sums received or due on
P account of such insurance or by Lessee, if no insurance is
available therefor. As used herein, "substantial damage"
-
within the last ten (10) years of the Term shall mean damage
or destruction, the reasonably estimated cost of repair of
which is twenty-five percent (25%) or more of the rent
payable during the remainder of the Term. As used herein,
"substantial damage" caused by a casualty not required to be
w (and not) covered by insurance shall mean damage or
destruction which is twenty-five percent (25%) or more of the
replacement cost of the Improvements. In the event Lessee
w, does not timely elect to cancel this Lease as set forth in
the first sentence of this Section 14 .5, Lessee shall
promptly commence and complete the repair, rebuilding and
refurnishing of the damaged or destroyed Improvements in
accordance with Section 14.2.
ARTICLE XV. EMINENT DOMAIN
15.1 Condemnation of Premises. If the whole of Lessee's
interest in the Premises shall be taken by any public
authority under the power of eminent domain or sold to public
bad
authority under threat or in lieu of such a taking., except
for a taking for a temporary use, then the Term of this Lease
shall cease as of the day possession shall be taken by such
-78-
public authority, and the rent and other charges shall be
paid up to that day with a proportionate refund by Lessor of
such rent and other charges as may have been paid in advance
for a period subsequent to the date of the taking.
N
15.2 Partial Condemnation.
(a) More Than 25% of Improvements. If more than
twenty-five percent (25%) but less than all of Lessee's
interest in the Improvements shall be taken under eminent
domain, or sold to public authority under threat or in lieu
r.
of such a taking, except for a taking for a temporary use,
Lessee shall have the right either to terminate this Lease as
6W
of the day possession is taken by public authority or, to
continue in the possession of the remainder of the Premises,
upon notifying Lessor in writing of Lessee's intention within
thirty (30) day after the taking of possession by the
condemnor. In the event Lessee elects to remain in
r.r
possession, all of the terms herein provided shall continue
in effect, except that as of the day possession is taken by
public authority, the rent shall be reduced in proportion to
the amount of the Improvements taken. Thereafter, Lessee
shall, at its own cost and expense, make all the necessary
repairs or alterations to the' Improvements, so as to
w
constitute the remaining Improvements a complete
architectural unit(s) , and Lessee, at Lessee's sole cost,
shall similarly act with respect to trade fixtures,
furnishings and equipment.
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(b) 25t or Less of Improvements. Except for a
taking for a temporary use (subparagraph (e) below) and a
taking during the final ten (la) years of the term
(subparagraph (f) below) , if twenty-five percent (25%) or
rr
less of Lessee's interest in the Improvements shall be taken,
w
the Term shall cease, only on the part so taken, as of the
day possession shall be taken by such public authority, and
Lessee shall pay rent up to that day, with appropriate refund
by Lessor of such rent as may have been paid in advance for a
w period subsequent to the date of the taking in proportion to
' the amount of the subject Improvements taken, and thereafter
the rent shall be reduced in proportion to the amount of the
subject Improvements taken. Lessee shall, at its expense,
make all necessary repairs or alterations to the
Improvements, so as to constitute the remaining Improvements
a complete architectural unit(s) , and Lessee, at Lessee's
sole cost, shall similarly act with respect to trade
fixtures, furnishings and equipment.
(c) Partial taking of the Premises exclusive of
ti. improvements. In the event of a taking of less than all of
Lessee's interest in that portion of the Premises exclusive
of the Improvements, this Lease shall remain in full force
and effect, and thereafter the rent shall be reduced in
proportion to the reduction in the fair rental value, if any,
t
of the Premises. If Lessor and Lessee are unable to resolve
a dispute regarding such a reduction in the fair rental value
-so-
of the Premises within thirty (30) days after the taking of
possession by the condemnor, the dispute shall be resolved by
arbitration conducted in accordance with Article XXVII and
with the qualifications of the appraisers/arbitrators and the
determination of value to be generally as set forth in
Section 2.2 (a) .
(d) Sale by Lessor. A sale by Lessor of its
.� interest in the Premises to any authority having the power of
eminent domain, either under threat of condemnation or while
condemnation proceedings are pending, shall be deemed a
taking under the power of eminent domain for purposes of the
r+
allocation of damages under Section 15.3 but not for purposes
of this Section 15.2.
(e) Temporary_ Taking. if there is a taking of
T
Lessee's interest in the Premises and/or the Improvements for
temporary use for a period not to exceed thirty (30) days,
this Lease shall continue in full force and effect, and
r.»
Lessee shall continue to comply with Lessee's obligations
under this Lease, except to the extent compliance shall be
rendered impossible or impracticable by reason of this
temporary taking.
(f) Taking During Final Years of Term. If there
is a total or partial taking of the Improvements during the
f inal ten (10) years of the Term, then Lessee may terminate
this Lease by written notice of election to Lessor delivered
within thirty (30) days after the taking of possession by the
w
R `
condemnor, and after the termination date Lessee shall have
no further obligation to pay rent that would otherwise accrue
after said date.
5 15.3 Lessor's and Lessee's Damages. All damages awarded
for such taking under the power of eminent domain or proceeds
w
from the sale under threat or in lieu of such a taking,
whether for the whole or a part of the Premises, shall be
.. divided among Lessor, Lessee, bender (as defined in Article
XvII) , and any other party holding an encumbrance on the
Premises in accordance with the value of their respective
estates.
w
ARTICLE XVI. ASSIGNMENT AND SUBLETTING
16.1 Assignment. The qualifications and identity of
Lessee are of particular concern to Lessor. It is because of
those qualifications and identity that Lessor has entered
into this Lease with Lessee. Accordingly, Lessee shall not,
except as permitted in this Article XV1, assign all of any
ti. part of this Lease or any of Lessee's rights hereunder
without the prior written approval of Lessor. No purported
assignment in violation of this Lease shall be valid or
effective. Lessor agrees that it will not unreasonably
withhold or condition such approval provided that Lessee is
not in default hereunder. In this regard, Lessor further
agrees that in the event of a request by Lessee to assign
-E2-
Lessee's interest in the Lease or the Premises, Lessor shall
grant such approval provided (i) such assignment is made to a
.� responsible third party who will undertake Lessee's
responsibilities under this -Lease to use and develop the
Premises, or portion thereof, in accordance with this Lease;
(ii) if the assignment occurs prior to the issuance of a
a
Certificate of Completion pursuant to Section 415 of the DDA
that such third party shall demonstrate qualifications and
experience with respect to the type of development proposed
herein and in the DDA to assure the development and operation
of the Improvements, or portion thereof, equal to or greater
W
than the qualifications and experience of Robert L. Mayer, as
w
Trustee of the Robert L. Mayer Trust of 1982, dated June 22,
2982, as amended or successor Lessee; and (iii) such third
•- party shall demonstrate sufficient financial resources or
commitments to assure operation (and, if the assignment
occurs prior to the issuance of a Certificate of Completion
pursuant to section 415 of the DDA, development) of the
Premises, or portion thereof, In accordance with this Lease.
w For purposes of clause (ii) above, Lessor shall approve the
proposed assignee if the assignee demonstrates to Lessor
*' reasonable satisfaction that it possesses the financial
resources and abilities equivalent to or greater than Robert
L. Mayer as at the date of this Lease, provided that the
w foregoing shall not be construed to imply that a proposed
assignee with a net worth less than the net worth of Robert
-83-
L. Mayer as at the date of this Lease shall not be an
acceptable assignee. Lessor may grant or deny such approval
to a third party not meeting any of the foregoing
requirements in Lessor's sole discretion. It is understood
04
that Lessee's entering into a management contract or
contracts and a franchise agreement or agreements shall not
be classified as an assignment for purposes of this Lease;
Lessor's right to review and approve the hotel operator(s)
and franchisor(s) shall be as set forth in Article XX below.
For the proposed assignment to be effective, the
rw
grantee, assignee or transferee :oust: furnish Lessor with a
written and fully executed and acknowledged assignment and
assumption agreement, pursuant to which the grantee, assignee
or transferee agrees to comply with and perform all the
obligations of Lessee under this Lease. All of the foregoing
documents shall be in fora and substance acceptable to Lessor
and its attorneys. The approval by Lessor of one assignment,
4 whether by operation of law or otherwise, shall not be deemed
to be an approval by Lessor of any subsequent assignment.
Notwithstanding any other provision of this Lease to the
contrary, Lessor approval of an assignment of this Lease of
any interest herein shall not be required in connection with
any of the following:
(a) Any transfer to any entity or entities ,in which
a+ either Lessee or Robert L. Mayer retains a minimum of fifty-
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.F
one percent (51%) of the ownership or beneficial interest and
retains management control.
(b) Transfers resulting from the death or mental or
physical incapacity of an individual.
(c) Transfers or assignments in trust for the
benefit of a spouse, children, grandchildren, or other family
members.
(d) A transfer of Lessee's interest in the Premises
to a Lender approved by Lessor in accordance with this
~ Article XVI, including a transfer at foreclosure (or a
conveyance thereof in lieu of a foreclosure) pursuant to a
foreclosure thereof by a Lender.
(e) The conveyance or dedication of any portion of
Lessee's interest in the Premises to the city or other
~' appropriate governmental agency, or the granting of easements
or permits in accordance with this Lease to facilitate the
development or operation of the Premises or the development
or operation of any of the other Separate Development
Parcels" within the "Commercial Portion of the "Site" (as
those terms are defined in the DDA) .
(f) The leasing of any part or parts of a building
or structure for occupancy, or entering into of any
concession agreements, licenses, or other contracts in the
normal course of owning and operating the Improvements on the
+.+ Premises, provided that all requirements of Article XX have
been met.
--85-
, (g) A transfer of stock in a publicly held
corporation or the transfer of the beneficial interest in any
" publicly held partnership or real estate investment trust.
(h) The subdivision and conveyance of individual
hotel units on the Premises solely for purposes of financing
the development, maintenance, and/or operation of a hotel
thereon, in accordance with the DDA, provided that (i) the
•� subdivision of the Premises or portion thereof into
commercial condominium units shall not allow the occupancy of
hotel rooms for any use other than as individual transient
occupancy hotel rooms; and (ii) commercial condominium units
6w
shall not be subdivided or conveyed as a time-share, or
time-share interest in an individual hotel unit (as those
terms are defined in California Business and Professions Code
160 Section 11003.5. as the -same now exists or may hereafter be
amended) , time-shares and tire-sharing arrangements being
strictly prohilpited hereby; provided, however, that it is
understood and agreed that any method of financing allowing
the owner of a condominium hotel unit to occupy such unit for
�+ a period or periods not to exceed the greater of two (2)
weeks per year or ten percent (101) of the number of days per
b.r
year that the unit is occupied by hotel guests shall not be
deemed to be a time-share arrangement.
Lessee shall deliver written notice to Lessor requesting
tr approval of any assignment requiring Lessor approval
hereunder. Such notice shall be accompanied by sufficient
� -86-
r
evidence regarding the proposed assignee's development
qualifications and experience and its financial commitments
and resources to enable Lessor to evaluate the proposed
assignee pursuant to the criteria set forth in the first
paragraph of this Article XVI. Such information shall
include, without limitation, a balance sheet of the proposed
subtenant or assignee as of a date within ninety (90) days of
the request for Lessor's consent and statements of income or
profit and loss of the proposed subtenant or assignee for the
two-year period preceding the request for Lessor's consent,
if the same be available (or such other similar information
6a
as shall be available at the time the request for approval of
60 the assignment is made) , and a written statement in
reasonable detail as to the business and experience of the
proposed subtenant or assignee during the five (5) years
preceding the request for Lessor's consent.
Within thirty (30) days after the receipt of Lessee's
written notice requesting Lessor approval of an assignment,
Lessor shall respond in writing by stating what further
4
+�+ information, if any, Lessor reasonably requires in order to
determine Whether or not to approve the requested assignment.
Upon receipt of such a timely response, Lessee shall promptly
furnish to Lessor such - further information as may be
reasonably requested.
Lessee's request for approval of an assignment and
delivery of necessary information for financing purposes
-87-
aw
r
•
shall be deemed complete twenty (20) days after Lessor's
r'
receipt thereof and Lessee's request for approval of an
-� assignment and delivery of necessary information for all
other types of assignment shall be deemed complete thirty
(30) days after Lessor's receipt thereof if Lessor does not
deny approval or if no timely response requesting further
information regarding the proposed assignee is delivered to
Lessee, or, if such a timely response requesting further
information is received, on the date which is fifteen (15)
" days after the date that Lessee delivers such additional
information to Lessor. Once Lessee's request for approval of
w
an assignment has been accepted as complete or is deemed
complete, Lessor shall not be entitled to demand additional
information or to disapprove the assignment on the basis that
Lessee has not furnished adequate or complete information.
None of the foregoing shall restrict Lessor's rights to deny
approval of any assignment not found acceptable by Lessor
pursuant to this Lease. Any assignment requiring Lessor s
consent shall only be effective upon Lessor's written consent
to such assignment.
Lessor shall approve or disapprove any requested
assignment for financing purposes requiring Lessor approval
within thirty (30) days after Lessee's request therefor is
accepted as complete or is deemed complete, and Lessor shall
approve or disapprove any other type of requested assignment
requiring Lessor approval within forty-five (45) days after
w
-88-
r
s
Lessee's request therefor is accepted as complete or is
deemed complete. Any disapproval shall be in writing and
shall specify the reasons for the disapproval and, if
applicable, the conditions required to be satisfied by Lessee
in order to obtain approval. If Lessee's initial notice
requesting approval of an assignment for financing purposes
(but not any other type of assignment) states that the
.. assignment will be deemed approved unless rejected within the
time required in this Lease, Lessor's failure to timely
disapprove the assignment shall be conclusively deemed to
constitute an approval.
w
No assignment of Lessee's obligations with respect to
the Premises, whether or not Lessor's approval is required
therefor (but specifically excluding those types of
assignments identified in subparagraphs (d) , (e) , and (f) ,
(g) , and (h) ) , shall be effective unless and until the
proposed assignee executes and delivers to Lessor an
L agreement in form reasonably satisfactory to Lessor's
attorney assuming the obligations of Lessee which have been
assigned. Thereafter, the assignor shall remain responsible
to Lessor for performance of the obligations assumed by the
assignee unless (i) Lessor releases the assignor in writing
or (ii) all of the applicable requirements set forth in this
Section 16.1 are fully satisfied and the assignor is not then
in default under this Lease, in which event, assignor shall
remain responsible to Lessor for performance of the
-89-
d, obligations arising prior to the effective date of the
assignment, and shall be released from any obligation or
liability arising subsequent to the effective date of the
assignment.
No consent or approval by Lessor of any assignment
requiring Lessor's approval shall constitute a further waiver
of the provisions of this Article.
w 16.2 Bankruptcy. It is acknowledged and agreed that
this Lease is a lease of real property within the meaning of
Subsection 365(b) (3) of the Bankruptcy Code, 11, U.S.C. To
the extent not prohibited by provisions of the Bankruptcy
Code, it U.S.C. Section 101 et seq. , including Section
,■ 365(f) (1) thereof, Lessee on behalf of itself, creditors,
administrators and assigns waives the applicability of
Sections 541(c) and 365(e) of the Bankruptcy Code of 1978
unless the proposed assignee of the Trustee for the estate of
the bankrupt meets Lessor's standards for consent. Lessor
has entered into this Lease with Lessee in order to obtain
for the benefit of the Premises the unique types of
ti+ facilities, businesses, services and goods which Lessee can
bring to the Premises; the foregoing prohibition on
assignment or subletting is expressly agreed to by Lessee in
consideration of such fact. Any person or entity to which
this Lease is assigned pursuant to the provisions, of the
Bankruptcy Code shall be deemed without further act or deem
to have assumed all of the obligations arising under this
-90-
Leas on and after the date of such assignment. Any such
assignee shall upon demand execute and deliver to Lessor an
instrument confirming such assumption.
16.3 Lessor's Fee. Lessee agrees to reimburse Lessor
for Lessor's reasonable costs and attorneys' fees incurred in
connection with the processing and documentation of any
requested assignment, subletting, transfer, change of
ownership or hypothecation of this Lease or Lessee's interest
in and to the Premises, or any part thereof, which requires
Lessor's approval hereunder, in an amount not to exceed Two
� Thousand Five: Hundred Dollars ($2,500.00.) for each such
assignment (which amount shall be adjusted each year by the
►• consumer price index rating for the most proximate location
or an equivalent standard measure of general inflation) .
16.4 No Waiver. The acceptance by Lessor of any payment
due hereunder from any other person shall not be deemed to be
w
a waiver by Lessor of any provision of this Lease or to be a
L consent to any assignment or subletting. Consent by Lessor
to one or more assignments of this Lease or to one or more
sublettings of the Premises shall not operate as a waiver or
estoppel to the future enforcement by Lessor of its rights
pursuant to the provisions of this Lease.
46.o wy
w
�+ ARTICLE XVII. LEASEHOLD FINANCING:
RIGHTS OF LEASEHOLD LENDER
17.1 Mortgage of Lease. Lessee may only encumber the
leasehold estate created hereby in accordance with the
requirements of this Article and Article XVI.
17.2 Definitions. As used in this Lease, "Leasehold
Mortgage" shall mean any mortgage, deed of trust, or other
security instrument, including, without limitation, an
assignment by Lessee of the rents, issues and profits from
the Premises, which constitutes a lien on the estate created
by this Lease, and which has been approved or is deemed
approved by Lessor, and "Lender" shall mean the owner and
holder of the Leasehold Mortgage.
17.3 Rights of _Lender. - Subject to prompt compliance by
Lender with all obligations imposed on Lender by this Lease,
during the continuance of any Leasehold Mortgage and until
such time as the lien of any Leasehold Mortgage has been
extinguished:
(a) Lessor shall not agree to any mutual
termination nor accept any surrender of this Lease, nor shall
w
Lessor consent to any amendment or modification of this Lease
which would have a material adverse effect on Lender, without
the prior written consent of Lender.
(b) Notwithstanding any default by Lessee in the
performance or observance of any agreement, covenant or
-92-
a
condition of this Lease on the part of Lessee to be performed
or observed, Lessor shall have no right to terminate this
Lease unless an event of default shall have occurred and be
continuing, Lessor shall have given Lender written notice of
such event of default, and Lender shall have failed to remedy
w
such default promptly or to acquire Lessee's estate created
hereby or commence foreclosure or other appropriate
+�+ proceedings in the nature thereof promptly and remedy such
default promptly, all as set forth in, and within the time
6V specified by, this Section 17.3.
(c) Lender shall have the right, but not the
obligation, at any time prior to termination of this Lease to
y, pay all of the rents due hereunder, to effect any insurance,
to pay any taxes and assessments, to make any repairs and
improvements, to do any other act or thing required of Lessee
hereunder, and to do any act or thing which may be necessary
and proper to be done in the performance and observance of
the agreements, covenants, and conditions hereof to prevent
termination of this Lease. All payments so made and all
things so done and performed by Lender shall be as effective
to prevent a termination of this Lease as the same would have
bee if made, done, and performed by Lessee instead of by
Lender.
(d) Should any event of default under this Lease
�► occur, Lender shall have sixty (60) days after receipt of
notice from Lessor setting forth the nature of such event of
-93-
u
�+ default, and, if the default is such that possession of the
Premises may be reasonably necessary to remedy the default, a
bpi reasonable time after the expiration of such sixty (60) day
period within which to remedy such default, provided that (A)
NJ
Lender shall have fully cured any default in the payment of
w any monetary obligations of Lessee under this Lease,
including interest and late fees, within such sixty (60) day
"' period and shall continue to pay currently such monetary
obligations as and when the same are due and (B) Lender shall
bo
have acquired Lessee*s estate in the Premises created hereby
or commenced foreclosure or other appropriate proceedings in
the nature thereof within such period, or prior thereto, and
�-+ is diligently prosecuting any such proceedings. All rights
of Lessor to terminate this Lease as the' result of the
occurrence of any such event of default shall be subject to,
and conditioned upon, Lessor having first given Lender
ti
written notice of such event of default as aforesaid and
Lender having failed to remedy such default or acquire
Lessees estate in the Premises created hereby or commence
foreclosure or other appropriate gzoceedings in the nature
thereof, and diligently conclude such proceedings, as set
forth in and within the time specified by this subparagraph
(d) .
(e) Any event of default under this Lease which by
virtue of the nature thereof cannot be remedied by Lender
shall be deemed to be remedied if (A) within sixty (60) days
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w
after receiving written notice from Lessor setting forth the
nature of such event of default, or prior thereto, Lender
shall have acquired Lessee's estate in the Premises created
hereby or shall have commenced foreclosure or other
r
appropriate proceedings in the nature thereof, (B) Lender
shall diligently prosecute any such proceedings to
r- completion, (C) Lender shall have fully cured any default in
the payment of any monetary obligations of Lessee hereunder,
including interest and late fees, which do not require
t"
possession of the Premises within such sixty (60) day period
and shall thereafter continue to faithfully perform all such
r monetary obligations which do not require possession of the
Premises, and (D) after gaining possession of the Premises
?"- Lender performs all other obligations of Lessee hereunder as
and when the same are due, including without limitation,
curing said event of default.
In addition to the rights set forth in this
r
subparagraph (e) , Lender shall have the option, to be
r- exercised by written notice to Lessor given within the
aforesaid sixty (60) day period, to obtain a new lease of the
Premises upon the following terms and conditions:
(i) Such new lease shall be effective as of
the date of the termination of this Lease and shall be
for the remainder of the Term of this Lease at the same
rental and with the same terms, covenants and conditions
as are set forth herein, and Lender shall assume and be
-95-
responsible for all obligations as lessee thereunder to
the same extent, and subject to the same terms and
conditions as Lessee is responsible hereunder; and
(ii) In addition to paying all current rent
under the new lease, Lender shall pay all unpaid rental
T
f (net of any income Lessor may have received from the
Premises during such period) due pursuant to Article II
of this Lease and any other outstanding charges and
Lender shall cure all other defaults under this Lease
that reasonably can be cured by Lender.
r
In lieu of executing a new lease in its own name,
Lender shall have the right to designate a nominee which
shall become a lessee under the new lease; provided that
T Lessor shall have the same right to approve (or disapprove)
r
Lender's nominee as set forth in Article XVI for Lessor's
r-
approval (or disapproval) of a proposed assignee of Lessee's
interest hereunder and all other conditions contained in (i)
and (ii) above are met.
(f) Subject- to Section 16.2, if Lender is
prohibited by any process or injunction issued by any court
or by reason of any action by any court having jurisdiction
of any bankruptcy or insolvency proceeding involving Lessee
from commencing or prosecuting foreclosure or other
r appropriate proceedings in the nature thereof, the times
f
specified in subparagraphs (d) and (e) above for commencing
'- or prosecuting such foreclosure or other proceedings shall be
r- -96-
i
t extended for the period of such prohibition plus an
additional period of sixty (60) days thereafter; provided
that Lender shall have full cured default in the payment
Y
f of any monetary obligations of Lessee under this Lease and
shall continue to pay currently such monetary obligations as
and when the same fall due.
(g) Lessor shall mail or deliver to Lender a
duplicate copy of any and all notices of default which Lessor
f may from time to time give to or serve upon Lessee pursuant
( to the provisions of this Lease, and such copy shall be
mailed or delivered to Lender simultaneously with the mailing
or delivery of the same to Lessee. No notice of default by
Lessor to Lessee hereunder shall be deemed to have been given
pp insofar as Lender's rights under this Article XVII are
I
concerned unless and until a copy thereof shall have been
mailed or delivered to Lender as herein set forth. Lessor
r--
shall use its best efforts to comply with this subparagraph
(g) but any failure to so comply shall not create any
�- liability on the part of Lessor.
F
(h) Subject to Section 16.1(f) foreclosure of a
Leasehold Mortgage, or any sale thereunder, whether by
judicial proceedings or by virtue of any power contained in
the Leasehold Mortgage, or any conveyance of the estate in
the Premises created hereby from Lessee to Lender through, or
in lieu of, foreclosure or other appropriate proceedings in
the nature thereof, shall not require the consent of Lessor
-97-
.a
w or constitute a breach of any provision of or a default under
this Lease, and upon such foreclosure, sale or conveyance
Lessor shall recognize Lender as lessee hereunder. In the
event Lender becomes lessee under this Lease, Lender shall
assume the obligations of Lessee under this Lease or such new
lease only for the period of time that Lender remains lessee
thereunder.
�- 17 .4 Consent of Lessor. In the event Lender requires
any modification to the provisions of this Lease in order to
ww secure its loan, Lessor agrees not to unreasonably withhold
consent to such modification so long as such modification
does not have an adverse impact on any interest, right or
remedy of Lessor hereunder.
ARTICLE XV111. DEFAULT
18.1 Events of Default. The word "default," as used in
this Section 18, shall mean and include any one or more of
the following events or occurrences:
(a) The failure by Lessee to make any payment of
rent, or other payment required to be made by Lessee
W
hereunder, as and when due and the continuance of such
6d failure for a period of fifteen (15) days after Lessor shall
have given Lessee written notice specifying the same;
k+ (b) The failure of Lessee to perform any tern,
condition, covenant or agreement of this Lease, excluding the
w
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payment of rent, and the continuation of such failure for a
period of thirty (30) days after Lessor shall have given
Lessee written notice specifying the same, or in the case of
a situation in which the default cannot reasonably be cured
within thirty (30) days, if Lessee shall not promptly, within
thirty (30) days after receipt of such notice, commence to
remedy the situation by a weans that can reasonably be
expected to remedy the situation within a reasonable period
of time, and diligently pursue the same to completion;
(c) The abandonment by Lessee of the Premises or a
substantial portion thereof;
(d) Lessee's (i) application for, consent to, or
suffering of, the appointment of a receiver, trustee or
liquidator for all or for a substantial portion of its
6. assets; (ii) making a general assignment for the benefit of
creditors; (iii) being adjudged a bankrupt; (iv) filing a
b"
voluntary petition or suffering an involuntary petition under
any bankruptcy, arrangement, reorganization or insolvency law
(unless in the case of an involuntary petition, the same is
�• dismissed within thirty (30) days of such filing) ; or (v)
suffering or permitting to continue unstayed and in effect
for ten 10 consecutive days an attachment le( ) y y vy, execution
or seizure of all or a substantial portion of Lessee's assets
u
or of Lessee's interest in this Lease;
4, (e) Any attempt to create time share interests or
time-sharing arrangements in the Premises without Lessor's
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L
w
written consent, except as specifically allowed in connection
with a financing arrangement pursuant to Section 16.1(h) .
V
(f) Lessee,'s failure to operate and maintain the
Improvements and/or Premises as a "First-Class Hotel," as
that term is, defined in Section 7.2 above, after receiving a
w Notice of Deficiency from Lessor under Section 9.1 and the
expiration of any applicable period to correct such
deficiency as provided herein.
18.2 Remedies.
w
(a) General. In the event of any default by
60 Lessee, including the expiration of any applicable cure
period Lessor may:
160 (1) Terminate Lessees right to possession of
the Premises by any lawful means, in which case this
Lease shall terminate and Lessee shall imiaediately
surrender possession of the Premises to Lessor.
In such event Lessor shall be entitled to
�.• recover from Lessee:
(aa) The worth at the time of award of
the unpaid rent which had been earned at the
6. time of termination;
(bb) The worth at the time of award of
the amount by which the unpaid rent which
would have been earned after termination until
the time of award exceeds the amount of such
6W
-loo-
t/
u
loss that Lessee proves could have been
reasonably avoided;
(cc) The worth at the time of award of
the amount by which the unpaid rent for the
balance of the Term after the time of award
exceeds the amount of such loss that Lessee
proves could be reasonably avoided; and
(dd) Any other amount deemed necessary
and/or allowable by applicable statute or
decision to compensate Lessor for all the
detriment proximately caused by Lessee's
Ir
failure to perform its obligations under this
r. Lease or which, in the ordinary course of
events, would be likely to result therefrom,
including, but not limited to, the cost of
recovering possession of the Premises,
expenses of reletting, expenses of restoring
the Premises to the condition required
hereunder (if applicable) , reasonable
attorneys' fees, and any other reasonable
� costs.
u
The "worth at the time of award" of the
amounts referred to in subparagraphs (aa) and (bb) above
shall be computed by allowing interest at the rate equal
w► to the then current discount rate of the Federal Reserve
Board of San Francisco (as the same may change from time
� , -101-
to time) plus three percent (3%) (not to exceed the
maximum legal rate permitted by law) from the dates such
amounts accrued to Lessor until the date of payment by
Lessee. The worth at the time of award of the amount
referred to in subparagraph (cc) above shall be computed
by discounting such amount at two (2) percentage points
above the discount rate of the Federal Reserve Bank of
San Francisco at the time of award.
(ii) Lessor may terminate this Lease by
express written notice to Lessee of its election to do
so. Such termination shall not relieve Lessee of any
obligation hereunder which has accrued prior to the date
of such termination. In the event of such termination,
Lessor shall be entitled to recover from Lessee the
amounts determined pursuant -to paragraph (i) above.
(b) Reasonable Rental Value. In any action for
unlawful detainer commenced by Lessor against Lessee by
reason of any default hereunder, the reasonable rental value
of the Premises for the period of the unlawful detainer shall
be deemed to be the amount of rent and other charges reserved
in this Lease for such period, unless Lessor or Lessee shall
prove to the contrary by competent evidence.
(c) Cumulative Remedies. Except as may be
specifically provided herein, the rights and - remedies
reserved to Lessor and Lessee herein, including those not
specifically described, shall be cumulative and, except as
-102-
• provided by California statutory or decisional law in effect
at the time, either Lessor or Lessee may pursue any or all of
- such rights and remedies at the same time or otherwise.
(d) Lessor's Non-Waiver. No delay or omission of
Lessor to exercise any right or remedy shall be construed as
a waiver of any right or remedy or of any default by Lessee
hereunder. The acceptance by Lessor of rent or any
additional rent hereunder shall not be a waiver of any
preceding breach or default by Lessee of Any provision
W
hereof, other than the failure of Lessee to pay the
particular rent accepted, regardless of Lessor's knowledge of
such preceding breach or default at the time of acceptance of
�- such rent, or a waiver of Lessor's right to exercise any
remedy available to Lessor by virtue of such breach or
default. The acceptance of any payment from a debtor in
possession, a trustee, a receiver or any other person acting
on behalf of Lessee or Lessee's estate shall not waive or
w,. cure a default under Section 18.1(d) .
(e) Lessor's Reentry. Lessee hereby irrevocably
6' consents to Lessor's peaceable reentr
y,ry, if Lessor so elects,
to the Premises upon the occurrence of any of the events of
default specified in Section 18.1 above, including the
expiration of any applicable cure period.
(f) Lessee's Breach. Even though Lessee has
L' breached this Lease and abandoned the Premises, subject to
Lessor's obligation to act reasonably to mitigate its damages
6*
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L
4
and to deduct from any amounts otherwise owing by Lessee to
Lessor as a result thereof, this Lease shall continue in
effect for so long as Lessor does not terminate in writing in
accordance with Section 18.2 (a) (ii) above Lessees right to
W
possession and Lessor may enforce all of its rights and
remedies under this Lease, including the right to recover the
rent as it becomes due. For purposes of Article XVIII, the
following do not constitute a termination of Lessee's right
to possession:
(i) Acts of maintenance or preservation
or efforts to relet the Premises;
4
(ii) The appointment of a receiver on the
initiative of Lessor to protect its interests under this
Lease.
(g) . Lessor-Is Advances. In the event of any
default by Lessee in the payment of money, other than rent,
or the performance of obligations required of Lessee under
this Lease, and the expiration of any period expressly
provided for herein for Lessee to cure said default after the
delivery of notice by Lessor, then in addition to the other
remedies herein granted to Lessor, Lessor mays but shall not
be obligated to do so' and without waiving or releasing
v Lessee from any obligations of this Lease, make any payment
and perform any other act on Lessee's part to be made or
performed as provided in this Lease. All sums paid by Lessor
1
and all necessary incidental costs, together with interest
60
-104-
6j
r
" thereon at the rate of three (3) percentage points above the
discount rate of the Federal Reserve Bank of San Francisco
PO
(not to exceed the maximum legal rate permitted by law) , from
the date of the payment by Lessor shall be payable by Lessee
to Lessor on demand. The sums shall be deemed to be
additional rent and subject to the same consequences as
herein provided for failure to pay rent.
18.3 Default by Lessor. Lessor shall not be deemed to
w
be in default in the performance of any obligation required
to be performed by it hereunder unless and until it has
failed to perform such obligation within thirty (30) days
after written notice by Lessee to Lessor specifying in
reasonable detail the nature and extent of any such failure;
provided, however, that if the nature of Lessons obligation
is such that more than thirty (30) days are required for its
6W performance, then Lessor shall not be deemed to be in default
if it shall commence such performance within such thirty (30)
day period and thereafter diligently prosecutes the same to
completion.
L.
18.4 Legal _ Expenses and Collection Costs. if either
party incurs any expense, including actual costs of
collection, reasonable attorneys, fees, expenses of
w discovery, preparation for litigation, expert witness fees
and litigation expenses and costs, in connection with any
action or proceeding instituted by either party by reason of
` any default or alleged default of the other party hereunder,
6W
-105-
L
L
the party prevailing in such action or proceeding shall be
entitled to recover its reasonable expenses from the other
R
party. For purposes of this provision, in any unlawful
detainer or other action or proceeding instituted by Lessor
based upon any default or alleged default by Lessee
•• hereunder, Lessor shall be deemed the prevailing party if (a)
judgment is entered in favor of Lessor or (b) prior to trial
w or judgment Lessee shall pay the rent and charges claimed by
Lessor, or eliminate the condition(s) , cease the act(s) or
.b
otherwise cure the omission(s) claimed by Lessor to
constitute a default by Lessee hereunder.
18.5 No Cross-Defaults. Except as otherwise specific-
IPA
ally set forth in this Lease, a breach or default by either
party under the Disposition and Development Agreement ("DDA")
bw
entered into between Lessor and Lessee on or about August 15,
1988, as the same may have been amended from time to time,
shall not constitute a breach or default hereunder, and a
I: termination, in whole or part, of the DDA shall not terminate
or modify Lessons or Lessee's rights or obligations
v
hereunder, except as may be specifically set forth in Section
1.5 and Section 2.1, clause (b) , and elsewhere herein.
�r.
-10 fi-
6W
ARTICLE XIX. HOLDING OVER
19.1 Holding Over. This Lease shall terminate and
become null and void without further notice upon the
expiration of the Term herein specified, and any holding over
�. by Lessee after such expiration shall not constitute a
renewal or extension hereof or give Lessee any rights under
this Lease, except when in writing signed by both parties
hereto or as otherwise herein provided. If Lessee shall hold
over for any period after the expiration of the Term, Lessor
may, at its option, treat Lessee as a tenant at will
commencing on the first (1st) day following the expiration of
+� this Lease and subject to all of the terms and conditions
herein contained, except that the annual rental shall be one
hundred fifty percent (150%) of the annual rental applicable
at the date of expiration and the rent shall be payable
quarterly in advance even though the tenancy is at will. If
Lessee fails to surrender the Premises upon the expiration of
this Lease, Lessee shall indemnify, defend and hold Lessor
harmless from all loss, cost, damage, claim or liability,
including without limitation, any claims made by any
succeeding tenant founded on or resulting from such failure
to surrender. Acceptance by Lessor of rent after such
expiration o; earlier termination shall not constitute a
consent to a holdover hereunder or result in a renewal of
this Lease. The foregoing provisions of this Section are in
r
-107-
�y
�r
R .
addition to and do not affect Lessor's right of reentry or
any other rights of Lessor hereunder or as otherwise provided
w
by law.
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ARTICLE XX. OPERATING AND FRANCHISE AGREEMENTS
bw
20.1 Operating -Agreement. Prior to the Effective Date
of this Lease, Lessor has approved the identity of the
proposed operator of the hotel pursuant to section 205 of the
DDA. If at any time during the Term of this Lease, Lessee
w shall desire to have the hotel managed or operated by an
entity other than the one so approved by Lessor, Lessee shall
submit such matter to Lessor for Lessor's approval.
Within thirty (30) days after receipt of Lessee's
request for approval of a hotel operator, Lessor shall
respond in writing by stating what further information, if
any, Lessor reasonably requires in order to determine whether
� or not to approve such. hotel operator. Upon receipt of such
a timely response, Lessee shall promptly furnish to Lessor
6d such further information as may be reasonably requested.
Lessee's request for approval of a hotel operator shall
be deemed complete thirty (30) days after Lessor's receipt
thereof, if no timely response requesting further information
is delivered to Lessee, or, if such a timely -response
requesting further information is received, on the date that
Lessee delivers such additional information to Lessor
r.;
-108-
ti»
fi
(provided that Lessee's additional information is responsive
to Lessor's request) . once Lessee's request for approval of
a hotel operator has been accepted as complete or is deemed
complete, Lessor shall not be entitled to demand additional
information or to disapprove the request on the basis that
Lessee has not furnished adequate or complete information.
Lessor shall approve or disapprove each proposed hotel
operator within forty-five (45) days after Lessee's request
for such approval is accepted as complete or is deemed
rod
complete. Approval will not be unreasonably withheld and
shall be given if Lessee demonstrates that the proposed
operator is a capable, competent, and experienced operator of
"First-Class Hotels" similar in quality, size, and type as
required to be maintained on the Premises pursuant to this
Lease. If Lessor shall disapprove a hotel operator, Lessor
shall do so by written notice to Lessee stating the reasons
for such disapproval.
Notwithstanding any other provision of this Lease to the
contrary, in the event that lessee meets the qualifications
set forth above for an approved hotel operator, nothing in
this Lease shall be interpreted to prevent Lessee from
low
operating and managing the hotel itself.
20.2 Franchise Agreement. Prior to the Effective Date
of this Leas:, Lessor has approved the identity of the
proposed franchisor of the hotel pursuant to Section 205 of
the DDA. If at any time during the Term of this Lease,
-109-
ti.
Lessee shall desire to enter into a franchise agreement with
' any entity other than the franchisor so approved by Lessor,
mid
Lessee shall submit such natter to Lessor for Lessor's
approval.
Within thirty (30) days after receipt of Lessee's
M. request for approval of a hotel franchisor, Lessor shall
respond in writing by stating what further information, if
PW any, Lessor reasonably requires in order to determine whether
or not to approve such hotel franchisor. Upon receipt of
such a timely response, Lessee shall promptly furnish to
Lessor such further information as may be reasonably
requested.
Lessor's request for approval of a hotel franchisor
shall be deemed complete thirty (30) days after Lessor's
w»
receipt thereof, if no timely response requesting further
information is delivered to Lessee, or, if such a timely
response requesting further information is received, on the
40 date that Lessee delivers such additional information to
Lessor (provided that Lessee's additional information is
responsive to Lessor's request) . Once Lessee's request for
approval of a hotel franchisor has been accepted as complete
or is deemed complete, Lessor shall not be entitled to demand
�r.. additional information or to disapprove the request on the
basis that Lessee has not furnished adequate or complete
information.
-110-
Lessor shall approve or disapprove each such proposed
hotel franchisor within forty--five (45) days after Lessee's
request for such approval is accepted as complete or is
deemed complete. Approval will not be unreasonably withheld
and shall be given if Lessee demonstrates that the proposed
�.. franchisor is a capable, competent, and experienced
franchisor of "First-Class Hotels" similar in quality, size,
and type as set forth in Section 9.1(b) above. If Lessor
shall disapprove a proposed hotel franchisor, Lessor shall do
so by written notice to Lessee stating the reasons for such
disapproval.
Notwithstanding any other provision of this Lease to the
w' contrary, in the event Lessee meets the qualifications set
forth above for an approved hotel franchisor, nothing in this
Lease shall be interpreted to prevent Lessee from operating
and managing the hotel itself (without a franchise agreement
with some other entity) .
ARTICLE XXI. [RESERVED]
ARTICLE XXII. ACCESS BY LANDLORD
.+
22.1 Right . of Entry. Lessor and those agents,
contractors, servants and employees of Lessor who are
• -II1-
I
f
identified in writing to Lessee shall have the right, after
reasonable notice to Lessee, to enter the Premises during
normal business hours (a) to examine the Premises or for the
purpose of performing any obligation of Lessor or exercising
r.
any right or remedy reserved to Lessor in this Lease; (b) to
exhibit the Premises to prospective purchasers, mortgagees or
lessees of Lessor's interest therein; (c) to make such
repairs as Lessor may be entitled to make after a default by
Lessee under Article IX above; and (d) to take all materials
into and upon the Premises that may be required in connection
with such repairs, provided that any such entry shall be
performed in a manner which minimizes to the maximum feasible
extent any disruption of Lessee's business operations. If
Lessor exercises its rights of entry in compliance with this
w.
Article XXII, such entry shall not constitute a constructive
or actual eviction of Lessee, in whole or in part, and the
rent shall not abate while any such repairs are being made.
�. If, during the last month of the Term, Lessee shall have
removed all or substantially all of Lessee's property
therefrom, Lessor may immediately enter and alter, renovate
and redecorate the Premises without elimination or abatement
w
of rent and without other compensation and such action shall
have no effect upon this Lease. Nothing herein contained,
however, shall be deemed or construed to impose upon Lessor
any obligation, responsibility or liability whatsoever for
the care, supervision or repair of the Premises.
w
w
r
ARTICLE XXIII. FURNITURE,- FIXTURE
AND EQUIPMENT FINANCING
23.1 ME_Financing. It is contemplated that during the
Term of this Lease, Lessee shall place or cause the placement
i from time to time of furniture, fixtures and equipment
(collectively 'OFF&E") on the Premises which shall be subject
�+ to lease and/or purchase financing encumbrances (collectively
"FF&E Financing") . Prior to Lessee having the right to place
any FF&E on the Premises subject to FF&E Financing, Lessee
shall be required to deliver to Lessor written notice of any
such proposed FF&E Financing at least 60 days prior to the
creation of such FF&E Financing, together with documentation
in reasonable detail so that Lessor may review and approve or
disapprove, in Lessor's reasonable discretion, the FF&E
Financing. Such information shall include, but not be
limited to, the following: (i) a complete description of the
FF&E; (ii) the lease term, rent payments and security
deposits required in connection with any leasing of ME;
w (iii) *the purchase price, terns of payment and conditions of
any purchase or loan in connection with purchasing of FF&E;
and (iv) copies of all relevant documents to be executed
between Lessee and the lender, seller or lessor of the
particular FF&E in question. For a period of thirty (30)
�.. days following receipt by Lessor of the notice from Lessee
a
together with all of the information required above, Lessor
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may approve or disapprove such ME Financing by written
notice to Lessee. Lessor's approval of any such ME
" Financing shall not be unreasonably withheld. In the event
Lessor reasonably objects to all or a portion of such ME
Financing, Lessor shall within said 30-day period give Lessee
written notice of its objection, detailing the reasons
therefor. In such event, Lessee shall be prohibited from
entering into such ME Financing but Lessee may submit to
Lessor such response to Lessor's objections and/or revisions
to the terms and conditions of the ME Financing in order to
satisfy Lessor's objections thereto. Any such newly
w
submitted information shall again be subject to Lessor's 30--
day right to review and reasonably object thereto. Lessor's
failure to timely object within said 30-day period to any
'+ such proposed ME Financing for which proper notice has been
given by Lessee to Lessor shall constitute approval of the
particular ME Financing in question and no further approval
by Lessor for such ME Financing shall be required.
Lessor's rights hereunder shall not be construed as requiring
y Lessor to participate in any way in any such FFAE Financing
nor shall approval by Lessor of any such FF&E Financing
tir
obligate Lessor in any manner.
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ARTICLE XXIV. TRANSFER OF LESSOR'S INTEREST
24.1 Transfer of Lessor's Interest. Subject to Lessee's
rights under Article III above, in the event of any transfer
or transfers of Lessor's interest in the Premises, the
transferor shall, upon. written notice to Lessee, be
r
automatically relieved of any and all obligations on the part
of the transferor (as Lessor) accruing from and after the
date of such transfer, except that the City of Huntington
W
Beach shall remain responsible for performance of its
obligations under Article VIII above restricting the use of
the City Beach Property. The transferee shall be deemed,
without further act or agreement, to have assumed and agreed
to carry out any and all of the covenants and obligations of
one Lessor and be entitled to any rights or benefits conferred
upon Lessor under this Lease. It is specifically understood
that the Huntington Beach Redevelopment Agency may cease to
function prior to the expiration of the Term and that in' such
event, the City of Huntington Beach, as the successor in
interest to the Redevelopment Agency, would automatically
assume all of the Redevelopment Agency's obligations
hereunder and be entitled to 'all of the Redevelopment
Agency's rights and benefits hereunder. Notwithstanding the
foregoing, no such transfer of Lessor's interest in the
r.• Premises shall relieve the City of Huntington Beach of its
w
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obligations under the Developnent Agreement or the Huntington
Beach Redevelopment Agency of its obligations under the DDA.
r'
ARTICLE XXV. FORCE MAJEURE
25.1 Force Ma eure. In the event the performance by
either party of any of its obligations hereunder is delayed
by reason of the act or neglect of the other party, act of
God, stormy or inclement weather, strike, labor dispute,
4/
boycott, lockout or other like defensive action by such
w
party, inability to obtain labor or materials, governmental
restrictions, riot, insurrecticn, war, catastrophe, casualty,
w• act of the public enemy, or any other cause, whether similar
or dissimilar, beyond the reasonable control of the party
from whom such performance is due ("unavoidable delays") , the
period for the commencement or completion thereof shall be
extended for a period equal to the period during which
performance is so delayed.
tow ARTICLE XXVI. MISCELLKNEOUS
26.1 waiver. The waiver by either Lessor or Lessee of
any breach of any term, condition or covenant contained
herein shall not be deemed a waiver of such term, condition
or covenant or any subsequent breach of the same or any other
term, condition or covenant contained herein.
-12�-
1r. -
r
26.2 Notices. All notices, - demands or other Writings to
be made, given or sent hereunder, or which may be so given or
made or sent by either Lessor or Lessee to the other shall be
deemed to have been given when in writing and personally
delivered or if :nailed on the third (3rd) day after being
deposited in the United States mail, certified or registered,
postage prepaid, and addressed to the respective parties at
their addresses set forth below:
If to Lessor: The Redevelopment Agency of the
City of Huntington Beach
2000 Main Street
Huntington Beach, CA 92648
�. Attention: Chairman
With a copy to: Gail C. Mutton
r City Attorney
City of Huntington Beach
2000 Main Street
Huntington Beach, CA 92648
NOW
If to Lessee: RIM Properties, Ltd.
660 Newport Center Drive, Suite 1050
P. 0. Box 8680
Newport Beach, CA 92658-8680
Attention: Robert L. Mayer
With a copy to: Jeffrey M. Oderman, Esq.
Rutan & Tucker
610 Anton Boulevard, Suite 1400
�ra Costa Mesa, CA 92626
26.3 Relationship of Parties. Nothing contained herein
shall be deemed or construed by the parties hereto, nor by
any third party, as creating the relationship of principal
and agent or of partnership or of joint venture between the
parties hereto, it being understood and agreed that neither
t
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r
the method of computation of rent, nor any other provision
contained herein, nor any acts of the parties herein, shall
be deemed to create any relationship between the parties
hereto other than the relationship of Lessor and Lessee.
26.4 Broker's Commission. Lessor and Lessee each
warrants to the other that it has had no dealings with any
real estate broker or agent in connection with the
negotiation of this Lease. Lessor and Lessee each agree (as
111ndemnitor") to indemnify and defend the other party and
w hold the otter party harmless from all liabilities arising
from any claim by any broker or finder allegedly representing
the Indemnitor, including, without limitation, the cost of
w attorneys' fees and costs in connection therewith. Such
agreement shall survive the termination of this Lease.
26.5 Accord and Satisfaction. No payment by Lessee or
receipt by Lessor of a lesser amount than the rent or other
w
charges herein stipulated shall be deemed to be other than on
account of the earliest due stipulated rent or other charges,
nor shall any endorsement or statement on any check or any
letter accompanying any check or payment as rent or other
charges be deemed an accord and satisfaction, and Lessor
shall accept such check or payment without prejudice to
Lessor's right to recover the balance of such rent or other
charges or pursue any other remedy in this Lease provided.
►.: 26.6 Time of Essence. Time is hereby expressly declared
to be of the essence of this Lease and of each and every
-119-
term, covenant and condition hereof which relates to a date
or period of time.
26.7 Remedies Cumulative. The remedies herein given to
Lessor and Lessee shall be cumulative and are given without
M
impairing any other rights or remedies given Lessor and
Lessee by statute or law now existing or hereafter enacted,
and the exercise of any one (1) remedy by Lessor or Lessee
shall not exclude the exercise of any other remedy.
26.8 Construction. The language in all parts of this
Lease shall in all respects be construed as a whole,
w
according to its fair meaning, and not strictly for or
against either Lessor or Lessee. The article headings in
.. this Lease are for convenience only and are not to be
construed as a part of the Lease or in any way limiting or
'` amplifying the provisions hereof.
26.9 Effect of Invalidity. If any term or provision of
L+
this Lease or the application thereof to any person or
t
circumstances . shall, to any extent, be invalid or
unenforceable, the remainder of this Lease, or the
w' application of its terms and provisions to persons and
circumstances other than those to which it has been held
ti
Invalid or unenforceable shall not be affected thereby, and
ti.
each term and provision of this Lease shall be valid and
enforceable to the fullest extent permitted by law. Ho
4» acquisition by Lessor of all or any of the interest of Lessee
in or to the Premises or the Improvements, and no acquisition
w.
-119-
�,r
f '
•
by Lessee of all or any interest of Lessor in or to the
Premises shall constitute or work a merger of the respective
interest, unless expressly provided for.
26.10 successors and Assigns. This Lease and the
covenants and conditions contained herein shall be binding
upon and inure to the benefit of and shall apply to the
successors and assigns of Lessor and to the permitted
successors and assigns of Lessee, and all references in this
Lease to "Lessee" or "Lessor" shall be deemed to refer to and
include all permitted successors and assigns of such party.
26.11 Consents. Except as expressly provided in this
rr
Lease, where the consent or approval of Lessor or Lessee is
+ required in this Lease, such consent or approval will not be
unreasonably withheld, conditioned, or delayed, nor will the
party giving such consent require the payment of any
consideration for the giving thereof, except as expressly
provided otherwise in this Lease.
26.12 Entire Agreement. This Lease and the exhibits
hereto contain the entire agreement or Lessor and Lessee with
respect to the matters covered hereby, and no other
agreement, statement of promise made by either Lessor or
w
Lessee which is not contained herein, shall be valid or
binding. No prior agreement, understanding or representation
pertaining to any such matter shall be effective . for any
+�+ purpose. No provision of this Lease may be amended or added
-120-
i
.� to except by an agreement in writing signed by Lessor and
Lessee.
26.13 Performance of Lessor's Obligations. whenever in
this Lease it is provided that Lessor is obligated to perform
V
any act, such act shall be deemed performed by Lessor if it
causes the due performance thereof by any other party.
26.14 quitclaim Deed. At the expiration or earlier
termination of this Lease, Lessee shall execute, acknowledge
and deliver to Lessor, within five (5) days after written
demand from Lessor to Lessee, any quitclaim deed or other
w
document required by Lessor or any reputable title company to
remove the cloud of this Lease from the title to the real
property which is the subject of this Lease.
26.15 Number and Gender. Whenever the singular or
low plural is used in this Lease and when required' by the
context, the same shall include the plural, and the singular,
Iw
respectively, and the masculine gender shall include the
�. feminine and neuter genders, and the word "person" shall
include corporation, firm, partnership or association.
26.16 Interest on Past-Due Obligations. Any amount due
from Lessee to Lessor hereunder which is not paid when due
Ind
(including, without limitation, amounts due as reimbursement
to Lessor for costs incurred by Lessor in performing
r
obligations of Lessee hereunder upon Lessee's failure to so
+�+ perform) shall bear interest at the rate of three (3)
{ percentage points above the discount rate of the Federal
-121-
Reserve Sank of San Francisco (not to exceed the maximum
legal rate permitted by law) , from the date due until paid,
unless otherwise specifically provided herein, but the
payment of the interest shall not excuse or cure any default
Le by Lessee under this Lease.
26.17 Execution of Lease; _No Option_. The submission of
K
this Lease to Lessee shall be for examination purposes only,
., and does not and shall not constitute a reservation of or
option for Lessee to lease, or otherwise create any interest
04 by Lessee in the Premises. Execution of this Lease by Lessee
and return to Lessor shall not be binding upon Lessor
hft
notwithstanding any time interval, until Lessor has in fact
6w executed and delivered this Lease to Lessee.
26.18 Corporate Authoritj Each individual executing
this Lease on behalf of a corporation, partnership or other
entity or organization, represents and Warrants that he is
duly authorized to execute and deliver this Lease on behalf
of said corporation, partnership, entity or organization and
that this Lease is binding upon same in accordance with its
w terms. Lessee . shall, at Lessor's request, deliver a
certified copy of a partnership resolution or Certificate
authorizing or evidencing such execution.
26.19 [Reserved]
26.20 Controlling Law. This Lease shall be governed by
and construed in accordance with the laws of the State of
California.
-122-
IW.
26.21 Specific Performance. Nothing contained in this
Lease shall be construed as or shall have the effect of
abridging the right of either Lessor or Lessee to obtain
specific performance of any and all of the covenants or
obligations of the other party under this Lease.
26.22 Survival of Indemnities and Warranties. The
PO
obligations of the indemnifying party under each and every
.� indemnification and hold harmless provision contained in this
r Lease shall survive the expiration or earlier termination of
this Lease to and until the last to occur of (a) the last
date permitted by law for the bringing of any claim or action
with respect to which indemnification may be claimed by the
Iwo indemnified party against the indemnifying party under such
provision or (b) the date on which any claim or action for
which indemnification may be claimed under such provision is
fully and finally resolved, and, if applicable, any
compromise thereof or judgment or award thereon is paid in
6,. full by the indemnifying party and the indemnified party is
reimbursed by the indemnifying party for any amounts paid by
the indemnified party in compromise thereof or upon judgment
or award thereon and in defense of such action or claim,
including reasonable attorneys' fees incurred. The
representations, warranties, and covenants of the parties
L
contained herein shall survive the termination of this Lease
w.• without regard to any investigation made by the parties.
-123-
26.23 Memorandum of Lease. Should either Lessor or
Lessee require, the parties shall execute a short form
' Memorandum of Lease for recording purposes setting forth the
Term Commencement Date and the termination date in a form
reasonably acceptable to both parties.
ARTICLE XXVII. ARBITRATION
27.1 Commencement. Disputed issues arising between
Lessor and Lessee under this. Lease shall be resolved by
arbitration pursuant to this Article XXVII if, and only if,
w
this Lease specifically provides for resolution of such
disputed issue by arbitration. Notwithstanding any other
provision of this Lease to the contrary, if -the parties are
involved in a dispute subject to resolution by arbitration, a
party who in good faith maintains such dispute shall not be
deemed to be in default under this Lease until the final
arbitration decision is rendered, as provided in this Article
XXVII and, in the event such party is the losing party, such
u party fails to cure any default within the times specifically
set forth herein or, if no such time is specified within a
reasonable time. A party desiring to initiate a permitted
arbitration under this Lease shall give notice to the other
party specifying (i) the matter to be arbitrated, (ii) the
Section of this Lease permitting the arbitration, and (ifi)
the name and address of the person designated to act as
rw+
-124-
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r
arbitrator, which person shall be qualified to act as
arbitrator in accordance with the provisions of Section 27 .3.
Within fifteen (15) days after receipt of such notice, the
second party shall give notice to the first party specifying
the name and address of the person designated to act as
arbitrator on the second party's behalf who shall be
qualified to act as arbitrator in accordance with the
provisions of section 27.3. If the second party fails to
give notice to the first party of the appointment of the
second party's arbitrator within the required period, the
w
appointment of the second arbitrator shall be made by
application to the court in the same manner as provided in
Section 27.2 for the appointment of a third arbitrator in a
case where the two arbitrators appointed by the parties, or
the parties, are unable to agree on the appointment of the
third arbitrator.
w
27.2 Procedure. The arbitrators chosen in accordance
with the provisions of Section 27.1 shall promptly meet to
attempt to resolve the disputed matter. If the two
arbitrators are unable to agree upon the question at issue
within thirty (30) days after the second arbitrator is
u
appointed, they shall then have fifteen (15) days jointly to
appoint a third arbitrator who shall be qualified to act as
arbitrator in accordance with the provisions of Section 27.3.
If the two arbitrators are unable to agree upon a third
arbitrator within such fifteen (15) day period, lessor and
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--125-
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Lessee shall then have an additional fifteen (15) days to
select together the third arbitrator. If Lessor and Lessee
d are unable to agree upon the third arbitrator within the
required period, either Lessor or Lessee by giving prior
notice to the other party, shall have. thirty (30) days to
request the Presiding Judge of the Superior Court for the
County of orange, State of California, to appoint as the
third arbitrator an impartial person qualified to act as
arbitrator in accordance with the provisions of Section 27.3,
and the other party shall not raise any question as to the
judge's full power and jurisdiction to entertain the
application and make the appointment. The three (3)
arbitrators shall decide the dispute (if it has not
previously been resolved) by following the procedure set
low forth in Section 27.6.
27.3 Qualifications. The arbitrators shall be chosen
6s
from a class of disinterested experts qualified by training
6A and experience to resolve the particular issue in dispute in
an informed and efficient manner.
27.4 Binding _Decision. In the event of the failure,
refusal or inability of any arbitrator to act, he shall
appoint his successor; provided, however, that any successor
to the third arbitrator shall be appointed in the same manner
as the third arbitrator is to be appointed. The arbitrators
+ shall, if possible, render a written decision within fifteen
(15) days after the appointment of the third arbitrator. A
-126-
r
decision in which any two arbitrators concur shall in all
cases be binding and conclusive upon the parties. Each party
shall pay the fees and expenses of its arbitrator and both
shall share the fees and expenses of the third arbitrator, if
M
any. Each party shall pay the fees and expenses of its
attorneys and any Witnesses it may call.
27.5 E ert Testimony. The arbitrators shall have the
k+ right to consult experts and competent authorities skilled in
the natters under arbitration, but any such consultation
shall be made in the presence of both parties with full right
to cross-examine. The arbitrators shall give a counterpart
Y/
copy of their written decision to each party. The
ko arbitrators shall have no power to modify the provisions of
this Lease (although the arbitrators shall not be prohibited
~' from considering written agreements and other evidence of the
intent and purposes of this Lease) , and the jurisdiction of
60
the arbitrators is limited accordingly.
69 27.6 Decision Procedure. Where an ' issue cannot be
resolved by agreement between any two arbitrators, or by
settlement between the parties during the course of
arbitration, the issue shall be resolved by the three
u .
arbitrators in accordance with the following procedure. The
arbitrator selected by each of the parties shall prepare a
written proposed resolution of the dispute and the reasons
therefor and give counterpart copies to each party and each
of the other arbitrators, with the third arbitrator arranging
-127-
for a simultaneous exchange of these proposed resolutions.
The third arbitrator shall select which of the two proposed
resolutions most closely approximates his determination of
the issue. The third arbitrator shall have no right to
Wa
propose a middle ground or any modification of either of the
two proposed resolutions. The resolution which the third
arbitrator selects shall constitute the decision of the
arbitrators and shall be final and binding upon the parties.
27.7 Enforcement. The judgment or the award rendered in
w any arbitration initiated and conducted in accordance with
this Article XXVII may be entered as a judgment in any court
of competent jurisdiction and shall be final and binding upon
r.: the parties. The arbitration shall be conducted and
determined at any location in the City or in Orange County,
upon which the parties agree, in accordance with the then
prevailing commercial arbitration rules of the American
6W
Arbitration Association or its successor except to the extent
60 such rules are modified as set forth in this Article XXVII.
ARTICLE XXVIII. REPRESENTATIONS BY LESSEE
ti
28.1 Representations by Lessee. The financial
statements and tax returns and other information submitted
and certified to by Lessee as a true, accurate and up-to-date
bud representation to its financial condition including, without
limitation, all of its assets, liabilities, income and
too
-128-
L I�
M
6d
sources of income, have been prepared, certified and
M
submitted to Lessor as an inducement and consideration to
M Lessor to enter into this Lease agreement with Lessee. Said
statements are represented and warranted by Lessee to be
true, accurate and correct and . to accurately and fully
reflect Lesseets true financial condition as of the date of
execution of this Lease by Lessee.
IN WITNESS WHEREOF, the parties hereto have executed
this Lease as of the day and year first above Written.
w
"LESSOR" "LESSEE"
THE REDEVELOPMENT AGENCY OF WATERFRONT CONSTRUCTION
THE CITY OF HUNTINGTON BEACH NO. 1, a California
limited partnership
By: The Waterfront, Inc. ,
By: a California corpora-
Cha rman tion, General Partner
By: %
+�- Attest: aabert L. Mayes{
Cha rma of The and
Secretary By: , A
step e� K. Bone
Approved As to Form: President
Spec al Counsel G,
OC�r�-
Riew and pp oved As to Form
6• Cl—ty Attorney/Agency Attorney
y-Vz-kq `
7/212/065580-0001/006
-129-
wr
FXH= "A"
AIL THOSE CDWa 1 IMM IN THE CITY OF 32UMMM BEACH, C7J[WW OF ORANGE,
STATE OF CALSFOPNIA, DESCRIBE) AS FULMM:
PARE, 1:
w„ 1= 1 OF TRACT 190. 13045 AS PER MP F= IN BOOK 624 PAGES k 6 AND 4 7 OF MISC'.E Lr-
IANE MS MkPS IN ME OFFICE OF TM COUNTY MXPDM OF SAM CMt?IY.
� PARCM 2:
THIN PaMCN OF ME NOHIH HAIF OF THE NMHEAS'T QWM OF SDCITCN 14, 700WLP
6 SCUM, RANGE 11 WEST, IN ME PAN= IAS BOISMe AS PM HAP FIM M BOM 511
PAGE 14 OF MAPS, II1 TRE OFFICE OF ME aXWY FMXRDER OF SAID
03LUTY, DESCRIBED AS FaLtOWS:
ib1 MD40 AT A POINT IN WE SOUM ME OF SAM NORM HkU MW IS DISTANT
THEE W NCFMI 890 43' 07" FAST 103.28 Ff3+T F3M CE{+RM LINE OF HUNIMMION
SIREET, AS MVRN CH REOORD OF SURVEY NO. 81-11.51, FIIED IN BOOK 103, PAGES 28
ALM 29 OF RDOMM OF SURVEY IN ME OFFICE OF SAID OMM RE1001RDER, SA M POINT
ION A NW-TANGENT 2355.00 FUM RADIUS CURVE THAT IS CONCAVE SOMMESTERLY,
A RADIAL TO SAID P03M REAM POM 31' 56' 15" FAST: THENCE NORTHWEMMM 5.94
FEET AIM SAID CET WE 'IIRXCi A C ERMAL ANGIE OF 0' 08' 4 0" TO 7M Fg]MMM OF
y. A 32.00 FOOT RADIUS CURVE THAT IS OWCAVE SOLM=; THENCE NCE WESrOUX 41.21 FEET
AIM SAID CURVE THROUGH A CENTRAL ANGIE OF 730 36' 25" TO SAID SOUTH LUM;
THENCE NOM 89` 43' 07" FAST 43.24 FEET ALCNG SAID SCJ[TIH LUTE TO THE POINT OF
HEGII KING.
ALL AS SFOV CN WE ATTACKED PAGE 2 OF THIS EaUMT "A" MMCfED BERM AND
M EE A PART KE EOF.
6d
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EKEBIT "A"
PAGE 1 OF 2
Wi-231
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L a 5.94'
{�' .•/ 2. A - 73'36'25"
R • 32.00'
L a 41.11'
N 31 47'35" E 3. N 69.434 070 E 43.244
+� PARCEL 2 3 \_RAL 5• L5" E
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COAST H I GMAY
PACIFIC
1
EXHIBIT "A" 3-z•89
��SCALE i 1" _ 60' P AGE 2 OF 2
bi
EXHIBIT "B"
-� THAT PORTION OF FRACTIONAL SECTION 14, TOWNSHIP 6 SOUTH, RANGE 11
WEST, SAN BERNARDINO BASE AND MERIDIAN, IN RANCHO LAS BOLSAS, IN
THE CITY OF HUNTINGTON BEACH, COUNTY OF ORANGE, STATE OF
CALIFORNIA, AS PER MAP RECORDED IN BOOK 51, PAGE 14 OF
MISCELLANEOUS MAPS, IN THE OFFICE OF COUNTY RECORDER OF SAID
COUNTY, DESCRIBED AS FOLLOWS:
COMMENCING AT THE MOST SOUTHEASTERLY TERMINUS OF THE SOUTHEASTERLY
RIGHT—OF—WAY LINE OF HUNTINGTON AVENUE, AS DESCRIBED IN THAT
CERTAIN AMENDMENT TO LEASE, RECORDED IN BOOK 5978, PAGE 9100
�. OFFICIAL RECORDS, (SAID RIGHT—OF—WAY LINE CITED IN SAID AMENDMENT
TO LEASE AS NORTH 37 DEGREES 54 MINUTES 51 SECONDS EAST 299.35
FEET) ; THENCE SOUTHWESTERLY ALONG A PROLONGATION OF SAID RIGHT—OF—
.+ WAY LINE TO THE POINT OF INTERSECTION WITH THE NORTHEASTERLY LINE
OF THAT STRIP OF LAND DESCRIBED IN THAT CERTAIN INDENTURE,
RECORDED IN BOOK 139, PAGE 9 OF DEEDS, RECORD OF SAID COUNTY, SAID
POINT OF INTERSECTION BEING THE TRUE POINT OF BEGINNING; THENCE
mi CONTINUING SOUTHWESTERLY ALONG SAID PROLONGATION OF SAID RIGHT—OF—
WAY LINE TO A POINT OF INTERSECTION WITH THE LINE OF ORDINARY HIGH
TIDE OF THE PACIFIC OCEAN; THENCE SOUTHEASTERLY ALONG SAID
ORDINARY HIGH TIDE LINE TO A POINT OF INTERSECTION WITH THE
EASTERLY LINE OF SAID SECTION 14, THENCE NORTHERLY ALONG SAID
EASTERLY LINE OF SAID SECTION 14 TO A POINT OF INTERSECTION WITH
THE SOUTHWESTERLY LINE OF A STRIP OF LAND DESCRIBED IN THAT
CERTAIN CORPORATION GRANT DEED, RECORDED IN BOOK 259, PAGE 213 OF
DEEDS, RECORDS OF SAID COUNTY(SAID SOUTHWESTERLY LINE CITED IN
SAID DEED AS NORTH 53 DEGREES 06 MINUTES WEST 2579.28 FEET, MORE
bd OR LESS) ; THENCE NORTHWESTERLY ALONG SAID SOUTHWESTERLY LINE TO
THE MOST SOUTHERLY SOUTHEASTERLY CORNER OF A PIECE OF PARCEL OF
LAND DESCRIBED IN THAT CERTAIN INDENTURE, RECORDED IN BOOK 506,
� PAGE 448 OF OFFICIAL RECORDS; THENCE ALONG THE SOUTHERLY LINE
THEREOF NORTH 68 DEGREES 56 MINUTES WEST 193.98 FEET TO THE POINT
OF INTERSECTION WITH THE NORTHEASTERLY LINE OF THAT STRIP OF LAND
DESCRIBED IN THAT CERTAIN INDENTURE RECORDED IN BOOK 139, PAGE 9
6" OF DEEDS, RECORDS OF SAID COUNTY; THENCE NORTHWESTERLY ALONG SAID
NORTHEASTERLY LINE TO THE TRUE POINT OF BEGINNING.
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