HomeMy WebLinkAboutRobert L. Mayer Corp. - 1988-08-15 L
ORIGINAL
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THE WATERFRONT
SECOND AMENDED
AND
RESTATED LEASE
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SECOND AMENDED Anil RESTATED LEASE
by and between
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�`• THE CITY OF HUNTINGTON BEACH,
A municipal corporation
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and
ROBERT L. MAYER,
as Trustee of the Robert L. Mayer Trust of 2982,
dated June 22, 1982, as amended
"Lessee"
dated as of August 15, 1988
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08/01/88
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TABLE OF CONTENTS
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ARTICLE I . PREMISES AND TERM
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(w 1.1 Premises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.2 Reservation . . . . . . . . . . . . . . . . . . . . . . . 3
1 .3 Exceptions to Leasehold Estate . . . . . . . . . . . . . . . . 5
2.4 Term of Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2 .5 Termination •
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.6 Possession of the Premises 7
2.7 Date of .Lease and Legal Effect . . 7
1.6 Rent Commencement Date . . . . . . . . . . . . . . 7
1.9 Commencement Date for All Other Obligations . . . 7
' 1. 10 Ownership of Improvements and Furnishings,
a+ Fixtures, Equipment and Personal Property;
Lessee' s Duty to Surrender . . . . . . . . . . . . . . . . . . 7
1 . 11 The DDA; Modification of DDA at Time
of Disposition Transfers 10
1.12 Quiet Enjoyment . . . . . . . . . . . . . . . . . . . . . . . . ... . . . . . 12
�"• ARTICLE I I . RENT
2 . 1 Initial Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2 .2 Rent Increases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.3 Additional Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
2.4 Place of Payment; Late Payments . . . . . . . . . . . . . . . 16
2.5 Lessor' s Right to Audit . . . . . . . . . . . . . . . . . . . . . . . 18
2.6 No Abatement of Rent . . . . . . . . . . . . . . . . . . . . . . . . . . 19
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2.7 Rent Freeze . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE III . LESSEE'S RIGHT OF FIRST REFUSAL
r TO PURCHASE PREMISES
3. 2 Lessee' s Right of First Refusal
to Purchase Premises 21
ARTICLE IV. (RESERVED)
ARTICLE V. TAXES AND ASSESSM:EPITS
5. 1 Lessee' s Obligation for Taxes
and Assessments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
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,d ARTICLE VI . [RESERVED)
ARTICLE VII . USE ANT COMPLIANCE WITH LAW
7.1 Use of Premises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
7.2 Grant of Uses; Easements . . . . . . . . . . . . . . . . . . . . . . 34
7.3 Non-Discrimination 34
rr ARTICLE VIII . LESSOR COVENANT TO RESTRICT
USE OF CITY BEACH PROPERTY
8.1 Recitals. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
w 8.2 Restrictions on Develcpment on City Beach
Property. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
6.3 Payments. . . . . . . . . . . . . . . . . . . . 40
a.• 8.4 Property to be Benefited by City' s Covenant. . . 41
8.5 Covenants Run With The Land; Recordation
of Memorandum of Lease. . . . . . . . . . . . . . . . . . . . . . . . 42
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ARTICLE IX. MAINTENANCE OF LEASED PREMISES
k� 9.1 Lessee' s Obligations for Maintenance . . . . . . . . . . 43
ARTICLE X. INSURANCE AND INDEMITY
10. 1 Lessee' s Insurance . . . . . . . . . . . . . . . . . . 49
10.2 Covenant to Indemnify and Hold Harmless . . . . . . . 57
20.3 Exemption of Lessor . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
10.4 Waiver of Subrogation . . . . . . . . . . . . . . . . . . . . . . . . . 59
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ARTICLE XI . UTILITY CHARGES
12.1 Utility Charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
ARTICLE XII . OFF-SET STATEMENT,
�+ ATTORI.'MENT AND SUBORDINATION
12.1 Off-Set Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
12.2 Attornment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
12.3 Subordination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
22.4 No Subordination of Fee . . . . . . . . . . . . . . . . . . . . . . . 62
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ARTICLE XIII. ALTERATIONS AND ADDITIONS
u 13.1 Alterations and Additions . . . . . . . . . . . . . . . . . . . . . 63
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I ARTICLE XIV. CASUALTY LOSS AND RESTORATION
14. 1 Non-Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
24.2 Repair of Damage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
14.3 Continued Operations . . . . . . . . . . . . . . . . . . . . . . . . . . 66
14.4 Deferral of Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
14.5 Damage or Destruction in Last Years . . . . . . . . . . . 68
14.6 Limitation on Lessee' s Obligation to Restore
and Right to Terminate Lease . . . . . . . . . . . . . . . . 69
i.. ARTICLE XV. EM:VENT DOMAIN
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15.1 Condemnation of Premises . . . . . . . . . . . . . . . . . . . . . . 70
15.2 Partial Condemnation . . . . . . . . . . . . . . . . . . . . . . . . . . 70
25.3 Lessor' s and Lessee' s Damages . . . . . . . . . . . . . . . . . 73
+��► ARTICLE XVI . ASSIGWENT AND SUBLETTING
16.1 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
r.+ 16.2 Bankruptcy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
16.3 Lessor' s Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
26.4 No Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
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ARTICLE XVII. LEASEHOLD FINANCING:
RIGHTS OF LEASEHOLD LENDER
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27.1 Mortgage of Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
T 17.2 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
17.3 Rights of Lender 83
27.4 Consent of Lessor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
+� ARTICLE XVIII . DEFAULT
26.2 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
a 18.2 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
18.3 Default by Lessor . . . . . . . . . . . . . . . . . . . . . . 95
18.4 Legal Expenses and Collection Costs . . . . . . . . . . . 95
ARTICLE XIX. HOLDING OVER
y., 19.1 Holding Over . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
ARTICLE XX. [RESERVED]
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r. ARTICLE XXI . (RESERVED]
ARTICLE XXII . ACCESS BY LANDLORD
22. 1 Right of Entry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
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ARTICLE XXIII . FURNITURE, FIXTURE
AND EQU I PMEIIT FINANCING
6& 23 . 2 FF&E Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 09
ARTICLE XXIV. TRANSFER OF LESSOR'S INTEREST
24. 1 Transfer of Lessor' s Interest . . . . . . . . . . . . . . . . . 100
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ARTICLE XXV. FORCE MAJEURE
25. 1 Force Majeure . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . 102
r.. ARTICLE XXVI . MISCELLANEOUS
26. 1 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
26.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 203
26.3 Relationship of Parties . . . . . . . . . . . . . . . . . . . . . . . 103
26.4 Broker' s Commission . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
26.5 Accord and Satisfaction . . . . . . . . . . . . . . . . . . . . . . . 104
26.6 Time of Essence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
26.7 Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
26.8 Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
Ir 26.9 Effect of Invalidity . . . . . . . . . . . . . . . . . . . . . . . . . . 105
26.10 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . 106
26.11 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106
' 26. 12 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106
26.13 Performance of Lessee' s Obligations . . . . . . . . . . . 207
26.14 Quitclaim Deed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107
26.15 Number and Gender . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107
�,. 26.16 Interest on Past-Due Obligations . . . . . . . . . . . . . . 108
26.17 Execution of Lease; No Option . . . . . . . . . . . . . . . . . 108
26. 18 Corporate Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . 108
26. 19 Reserved . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109
26.20 Controlling Lars . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109
26.21 Specific Performance . . . . . . . . . . . . . . . . . . . . . . . . . . 109
26.22 Survival of Indemnities and Warranties . . . . . . . . 109
+� 26.23 Memorandum of Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . 110
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ARTICLE X.XVII . ARBITRATION
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27. 1 Commencement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110
27.2 Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112
Wk 27.3 Qualifications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
27.4 Binding Decision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
27.5 Expert Testimony . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
U1 27.6 Decision Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114
27 .7 Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114
ho+ ARTICLE XXVIII. REPRESENTATIONS BY LESSEE
28.2 Representations by Lessee . . . . . . . . . . . . . . . . . . . . . 115
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EXHIBIT A - Legal Description of Premises
r EXHIBIT B - Revisions to he Made to Lease at Time of
Disposition Transfer
" EXHIBIT C - Legal Description of City Beach Property
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SEC01M AMENDED AND RESTATED LEASE
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i.►
THIS SECOND AMENDED AND RESTATED LEASE (the "Lease" ) is
+�- executed as of the 15th day of August, 1988 (the
"Effective Date") , by and between THE CITY OF MTINCTON BEACH,
a municipal corporation ( "Lessor" ) , and ROBERT L. M.AYER, as
Trustee of the Robert L. Mayer Trust of 1982, dated June 22,
2982, as amended ("Lessee" ) (collectively, the "Parties" ) , With
r• reference to the following:
A. Lessor owns that certain real property located
generally on the north side of Pacific Coast Highway, between
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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
h" by this reference made a part hereof (the "Premises") .
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B. The Premises have previously been leased by Lessor
v pursuant to the following described instruments:
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I. Lease dated March 28, 1960, as recorded in the
! Official Records of Orange County on January 9, 1961, in
Book 5582 at Page 203;
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2. Option dated January 2, 1962, as recorded in the
i+ Official Records of Orange County on January 17, 1962, in
1 Book 5978 at Page 905;
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3 . Amendment to Lease dated January 3, 1962, as
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recorded in the Official Records of Orange County on
January 17, 1962, in Book 5978 at Page 910;
r' 4. Amendment to Lease dated January 22, 1963, as
recorded in the Official Records of Orange County on
February 1, 1963, in Book 6416 at Page 719;
S. Lease dated February 7, 1967, as recorded in the
-- Official Records of Orange County on February 10, 1967, in
Book 8174 at Page 346; and
6.' Amended and Restated Lease dated November 29,
1983, as referenced in the Memorandum(s) of Lease recorded
in the Official Records of Orange County on December 14,
1983 as instrument no. 83-567981 and 83-567982 and on
.- December 19, 1983 as instrument no. 83-574611 .
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C. Lessee now holds all of the Lessee' s interest in the
Premises under the Amended and Restated Lease referenced in
Paragraph B.6 above.
D. Lessor and Lessee now desire to restate the Lease and
amend it in certain respects.
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0635n/2460/12 -2-
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In consideration of the payments to be made hereunder and
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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:
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ARTICLE I . PREMISES AND TERM
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i"* 1. 1 Premises. Lessor hereby leases the Premises to
Lessee, and Lessee hereby hires the Premises from Lessor. Any
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and all buildings, structures and fixtures (other than trade
fixtures, as defined in this Lease) attached to the Premises,
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 referred
t to as the "Improvements" .
l.,
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;
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(b) Any and all oil, oil rights, petroleum,
minerals, mineral rights, natural gas rights, and other
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hydrocarbon substances by whatsoever name known, geothermal
#,. resources (as defined in California Public Resources Code,
Section 60,03) , and all products derived from any of the
foregoing, that may be within or under the land, together with
the perpetual right of drilling, mining, exploring, prospecting
and operating therefor and storing in and removing the same
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.. from the Premises or any other land, including the right to
whipstock or directionally drill and mine from lands other than
those conveyed hereby, oil or gas wells, tunnels and shafts
IN 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
r , 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 or.
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or through the surface or the upper 500 feet of the subsurface
of the Premises; and
(c) Any and all water, water rights or interests
therein, no matter how acquired by Lessor, together with the
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
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owned or leased by Lessor, whether such water rights shall be
riparian, overlying, appropriative, percolating, littoral,
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prescriptive, adjudicated, statutory or contractual; but
without, however, any right to enter upon the surface of the
Premises in the exercise of such rights and, provided further,
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that the exercise of any such rights by Lessor shall not result
in any damage or injury to the Improvements, including without
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limitation any subsidence of all or any part of the
6" Improvements.
�• 2.3 Exceptions 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 consent by
Lessee to any bonds or assessments; and
(b) All covenants, conditions, restrictions,
' reservations, rights, rights-of-way, easements
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and all other matters of record or apparent
4 upon a visual inspection of the Premises
affecting the Premises or the use thereof on the
+► Effective Date.
1.4 Term of Lease. This Lease shall commence on
August 25, 1988 (the "Term Commencement Date") , and shall
terminate on January 31, 2013, unless sooner terminated or
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4" extended as herein provided. For purposes of this Lease, the
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tern, "Lease Year" shall mean a calendar year; except in the
! event when the Term commences on a date other than January 1,
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the first Lease Year shall be the! period from such commencement
L date to the next succeeding December 31 and, further, if this
Lease terminates on a date other than December 31, the last
LLease Year shall be the period beginning on the January 1
I ' following the last full Lease Year and ending on such
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termination date.
1.5 Termination. Notwithstanding Section 1.4, the Term of
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40 this Lease shall expire on December 31, 2010, as to -any
} property covered by this Lease which has not been "conveyed" to
Lessee by Lessor on or before December 31, 2004, pursuant to a
"Disposition Transfer", as set forth in Section 301 of the
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"DDA" described in Section 1. 11 below; provided, however, that
in the event that any such Disposition Transfer is delayed past
December 31, 2004, due to a default by the Agency under the DDA
or due to circumstances entitling Lessee to an extension of
titre under Section 703 of the DDA, the Term of this Lease as to
the portion of such "Separate Development Parcel" (as defined
` in the DDA) included within the Premises that has not been so
conveyed to Lessee shall be extended for the period of the
delay (but in no event beyond January 31, 2013) . Nothing in
this Lease is intended or shall be interpreted to limit or
affect Lessee's or Lessor' s respective rights to specific
performance under the DDA.
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1 . 6 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
accepts the Premises in an "as is" physical condition.
1.7 Date of Lease and Legal Effect. The terns, covenants
and conditions of this Lease shall become legally binding on
�►. the Effective Date .
1.8 Rent Commencement Date. Lessee' s obligation to pay
rent ("Rent Commencement Date"-) :hall commence on the Term
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Commencement Date.
a.
1.9 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.
�.� 1.10 Ownership of Improvements and Furnishings, Fixtures,
Equipment and Personal Property; Lessee' s Duty To Surrender.
i.•
During the entire Term of this Lease, all Improvements and all
furnishings, fixtures, equipment, and personal property that
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are made or placed in or on the Premises by Lessee, and all
�., changes, alterations, improvements, and additions thereto,
shall be owned by and considered as the property of Lessee and
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not Lessor.
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At the expiration or earlier termination of the Term,
Lessee shall surrender to Lessor the possession of the
Premises, including the Improvements thereon, in good order,
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+�+ broom-clean, and in a clean, sanitary, and safe condition,
quality, and repair, and in accordance with this Lease. At
such time, all of the Improvements (which term is intended to
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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
property of the Premises and shall remain on 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
` earlier termination of the Term, provided that with respect to
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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
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�+ 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 financing the
acquisition thereof may be purchased by Lessor as provided
below.
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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
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.
For purposes of this Lease, trade fixtures shall include
all machinery, partitions, furniture, furnishings, doors, bins,
racks, floor coverings, lighting fixtures, gasoline pumps,
i.i
water pumps, exterior and interior signs, and other equipment
6A 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 be removed
without injury to the Improvements or to the Premises.
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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 as
permitted hereunder. In th4 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
receipt of Lessee' s notice of termination, to require Lessee to
demolish the Improvements and clear them from the Premises, and
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 Lease. All property that Lessee is not required to
surrender but that Lessee does abandon shall, at Lessor's
w
election, become Lessor' s property thirty (30) days after
termination or expiration.
1.11 The City-Agency Agreement and the. DDA; Modification of
Lease at Time of Disposition Transfers. Lessor and the
w` Huntington Beach Redevelopment Agency (the "Agency") intend to
enter into a Purchase and Sale Agreement (the "City-Agency
Agreement") for the sale of the premises by Lessor to Agency.
On August 15, 1988, the •Agency and Lessee entered into a
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Disposition and Development Agreement ("DDA") with respect to
the "Site" described therein, of which the Premises are a
440
part. The City-Agency Agreement will be and the DDA is a
4.. public record on file in the office of the City Clerk of the
City of Huntington Beach, 2000 Main Street, Huntington Beach,
CA 92648, and reference is made to such agreements for further
particulars. In general, the DDA contemplates the sale by the
Agency to Lessee of "Separate Development Parcels" (as defined
in the DDA) within the "Residential Portion" (as defined in the
t
DDA) of the "Site", and the lea-zing by the Agency to Lessee of
Or.
"Separate Development Parcels" within the "Commercial Portion"
(as defined in the DDA) of the "Site", pursuant to "Disposition
a-
Transfers" (as defined in the DDA) which will occur at the
0„ times, for the consideration, and based on the terms and
conditions set forth in the DDA. The City-Agency Agreement
contemplates the sale by Lessor to the Agency of Lessor' s
' interest in such Separate Development Parcels in time for
Agency to convey the same to Lessee pursuant to the DDA. At
the time Agency acquires City' s interest in the Site or any
Separate Development Parcel thereof, Agency shall be
responsible for all of Lessor' s responsibilities hereunder; as
used herein, the term "Lessor" shall include any successor to
the City' s interest in the Site cr any portion thereof. At the
time of each "Disposition Transfer" of a "Separate Development
Parcel" within the "Site" pursuant to the DDA, this Lease shall
bw be modified as set forth in Exhibit "B" hereto. Lessor and
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+M Lessee each agrees to cooperate and execute modified lease
documents in accordance with Exhibit "B" and to execute all
rw
documents requested by the other to remove any prior and
�..
conflicting leases of record. It is understood and agreed that
except as otherwise specifically set forth in this Lease, a
�.. breach or default by either party under the DDA shall not
constitute a breach or default hereunder, and that a
termination, in whole or part, of the DDA shall not terminate
Lor Modify Lessor's or Lessee's rights or obligations hereunder,
except as may be specifically set forth in Section 1.5 and
i
LO Section 2.1, clause (b) , and elsewhere herein.
1.12 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 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 any person or
entity claiming under or through Lessor.
ko
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f
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ARTICLE II . RENT
L
2. 1 Initial Rent.
S
�• (a) Initial Rent. From the Rent CorLmencement Date
until the date set forth in (b) below, Lessee shall pay to
Lessor an annual rent of Two Hundred Thousand Dollars
i ($200,000) per Lease Year. Rent for any Lease Year less than a
E
full calendar year shall be prorated by multiplying the annual
rent then in effect by a fraction in which the numerator equals
the number of days in such Lease Year and in which the
denoninator equals 365. The rent shall be payable in quarterly
installments equal to one-fourth (1/4th) of such annual rent
beginning on the Rent 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 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.
(b) Adjustment of Initial Rent. Subject to Section
L& 2.7 below, the initial rent shall be adjusted to an amount
equal to Five Hundred Thousand Dollars ($500,000.00) per Lease
Year on the earlier of the following dates%
W
W
u
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(i ) June 30, 1999, or
L (fi ) The date on which Lessee defaults under the
DDA by failing to timely complete construction of the
"Developer Improvements" (as defined in the DDA) on any of
the "Separate Development Parcels" which are the subject of
a "Disposition Transfer", as provided in the DDA; provided,
that in determining whether a default has occurred, Lessee
shall be entitled to the benefits of Sections 601 and 703
of the DDA; and further provided that this subparagraph
(ii) shall not apply to the extent that such default is
�r
committed by any person or entity other than Lessee
hereunder.
+ 2.2 Rent Increases. Subject to Section 2.7 below, the rent
payable under this Lease shall be a minimum of the rent then
payable pursuant to Section 2 .1 above increased as set forth in
this Section 2 .2.
The annual gent required pursuant to Section 2.1 shall
4" be adjusted upward as of July 1, 1994, and each January 1st
thereafter as provided herein (the "Adjustment Dates") . The
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-Long Beach-Anaheim Average, all items (2967 = 100) (the
"Index") . The Index published and in effect ninety (90) days
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prior to July 1, 1994, shall be considered the "Base Year
Index". At each Adjustment Date, 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
LW rent following an Adjustment Date be less than the rent in
effect during the Lease Year irnediately preceding such
Adjustment Date notwithstanding the fact that the Index may, as
L of some Adjustment Date, be less than the Index as of the
previous Adjustment Date or the Base Year Index. In addition,
L the increase in rent pursuant to this Section 2.2 in any given
five (5) Lease Year period shall not exceed twenty-five percent
(2S%) and the increase in rent from one Lease Year to the next
shall not exceed ter. percent (10;1) . When the adjusted rent is
determined, Lessor shall give Lessee written notice of same
y, 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, Lessor and Lessee shall agree to
substitute any official index published by the Bureau of
6J
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
Li agree as to any such substitute index prior to the date such
agreement is required in order to properly and timely comply
64
with this paragraph, determinaticn of the proper substitute
index shall be by arbitration in accordance with Article XXVII .
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2 .3 Additional Pay:nents. 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. Lessee' s failure to pay
it
any such amounts or charges when due shall carry with it the
same consequences as Lessee' s failure to pay rent and shall be
i
deemed to be additional rent. 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
iw
it is due.
2.4 Place of Payment; Late Payments. Lessee agrees to pay
w
the rental and other charges herein reserved to Lessor at the
address specified in the notice provisions of this Lease
payable to the City of Huntington Beach or to such other person
and/or at such other place as Lessor may from time to time
designate in writing. Any installment 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
4 three (3) percentage points above the discount rate of the
Federal Reserve Sank of San Francisco (not to exceed the
4
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 respect to any delinquent payment of rent or
W other sum due to Lessor (but to no other person or entity)
V •
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i
L
Lhereunder not paid within the latter of five (5) days after
Lwritten 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 (5*/;) of such
delinquent payment. Following each second consecutive late
payment of rent and/or additional charges after the latter of
five (S) days after written notice from Lessor to Lessee and
ten (10) days after the due date, Lessor shall have the option
to require that beginning with the first payment of rent due
following the date such second consecutive late payment was
due, rent shall 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
Lrequire annual installments of rent and additional charges in
advance and thereafter Lessee is not delinquent in the making
Lof any such annual installments for a period of five (5) years,
s
after the fifth such consecutive ennual installment is timely
L made thereafter rent will again be a able p y quarterly in
advance until such time as two consecutive late payments 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
6d
proration shall be prorated on the basis of a thirty (30) day
MW month and a ninety (90) day quarter.
iWA
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2 .5 Lessor' s Right to Audit. Lessor shall have the right
at any time and from time to time upon reasonable notice to
L
3
Lessee, and at Lessor' s expense, to review and examine at the
ry 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 sales, rental of hotel rooms,
and services provided on the Premises (but not information
�r.
relating to expenses or profits of the Project or information
unrelated to the Project) for the sole and limited purpose of
verifying whether Lessee and any sublessees, operators and
i
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) relative to the conduct of such business(es) .
+W 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 audited by a disinterested, 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 safe 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, tax return
6-
information and other data which are subject to Lessor' s review
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0635n/2460/12 -1B-
i�
under this Section 2 .5 and regularly kept by Lessee in the
ordinary course of its business. All information obtained by
i
Lessor in accordance with its rights under this Section 2.5
�+ shall be treated as confidential by Lessor and its agents and
accountants and shall not be disclosed except as required by
law or as reasonably necessary to protect Lessor or to enforce
Lessor' $ rights and remedies and/or Lessee' s duties and
r
obligations hereunder.
i
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
postponement of rent as a consecruence 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 whatsoever
including, without limitation, any events or unavoidable delays
` described in Section 25.1 (unless same results from the
r..
improper or wrongful actions of Lessor) .
2.7 Rent Freeze. Notwithstanding any other provision of
this Lease to the contrary, provided that Lessee is not in
traterial default hereunder or under the DDA (or is in the
process of curing such default in accordance with this Lease or
the DDA) , the Initial Rent set forth in Section 2. 1(a) above
4
shall not -be adjusted pursuant to Sections 2.1(b) or 2.2 in the
event that Lessee does not complete a Disposition Transfer of a
Separate Development Parcel pursuant to the DDA for any of the
following reasons:
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(a) The Agency has com.-nitted a material default under
r.
the DDA; or
(b) The Agency has failed or refused to timely
�• acquire and terminate all of the property interests/occupancies
in the Site or that portion of the Pacific Nobilehome Park
i..
property that must be acquired and terminated pursuant to
Sections 201 and 301 of the .DDA as a condition to the close of
escrow for such Separate Development Parcel; or
(c) Lessor or the Agency have failed or refused to
timely approve any of the plans (including final building
plans) for said separate Development Parcel which are required
to be approved pursuant to Sections 203 and 301 of the DDA as a
condition to the close of escrow for such Separate Development
Parcel, provided said plans are in full conformity with the DDA
and Lessee has exercised best efforts to obtain such approvals;
or
(d) The Agency has unreasonably failed or refused to
r.
timely approve Lessee' s evidence of financing cornnitments for
the development of said Separate Development Parcel which
financing commitments are required to be approved as a
+ condition to the close of escrow pursuant to Sections 204 and
301 of the DDA, and Lessee has exercised best efforts to obtain
such approval; or
(e) The Agency has unreasonably failed or refused to
timely approve a hotel operator or hotel franchisor as to any
Separate Development Parcel on which Lessee is otherwise
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required to construct a hotel, which approvals are required
pursuant to Section 205, 206, and 301 of the DDA as a condition
iW
to the close of escrow for such Separate Development Parcel,
and Lessee has exercised best efforts to obtain such approvals.
L Nothing in this Section 2.7 is intended to limit or affect
Lessee' s right to specific performance under the DDA.
L
r
L ARTICLE III . LESSEE' S RIGHT OF FIRST REFUSAL
11 TO PURCHASE PREMISES
L
3 . 1 Lessee' s Right of First Refusal to Purchase Premises.
L
Between the Term Cotminencement 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
w. Premises (other than a pledge of any of its income under this
Lease) until it shall first have offered such portion or
�1
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 proposed
to be sold, transferred or otherwise disposed of (the "Offered
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1
lob Interest" ) , and (iii) the offering price and all other material
terms for which Lessor proposes to sell, transfer, or otherwise
L
dispose of the Offered Interest.
1
L (b) Within sixty (60) days after receipt of the
j . Notice, Lessee or its permitted assignee may accept Lessor' s
offer by delivering to Lessor a writing agreeing to purchase
the Offered Interest on the terms offered by Lessor. Any such
.0
acceptance of Lessor's offer shall be accompanied by a deposit
equal to ten percent (1001) 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
r.
counter-offer to Lessor. Such counter-offer shall be binding
on Lessee and shall remain effective and may be accepted by
Lessor for a period of one (1) year fron the date of delivery
�.. of the counter-offer to Lessor. In such event, Lessor shall
accept or reject Lessee' s counter-offer within said one (1)
year period. During such one (1) year period, Lessor may
entertain offeru and counter-offers of third parties to
purchase the Offered Interest. Vo such action shall be deemed
to be a rejection of Lessee' s counter-offer. At any time
during said one (1) 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
tii
counter-offer and/or the terms of the third party offer are
more favorable to Lessor than the terms of Lessee' s
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0635n/2460/12 -22-
W
counter-offer. Acceptance by Lessor in writing of an offer or
counter-offer of a third party to purchase the Offered Interest
shall constitute a rejection of Lessee' s counter-offer. If
w Lessee accepts Lessor' s offer to sell the Offered Interest, or
if Lessor accepts Lessee's counter-offer to purchase, the
parties shall consummate such purchase promptly in accordance
therewith.
(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) abcve, Lessor may sell the
Offered Interest to any person at any price and upon 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
counter-offer by Lessee. For purposes of comparing whether an
offer by Lessee is more 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
L (1) year period, Lessor shall again be obligated to first offer
R
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0635n/2460/12 -23-
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Irr '
to sell the Offered Interest to Lessee as set forth in this
Section 3 . 1; provided, however, that Lessee' s rights under this
Article III shall terminate and be of no further force or
i
effect if Lessor and Lessee agree to a proposed sale to Lessee
of an Offered Interest constituting ten percent (10%) or more
of the gross useable area of the Premises and such sale is not
i consummated dui: to a default by Lessee of the terms of the
+
written agreement of sale. In the event a person or entity
+.• other than Lessee acquires all or any portion of or any
c
interest in the Premises, such person or entity shall take
title to such portion or interest subject to all of "the terns
and conditions of this Lease.
w, ARTICLE IV. [RESERVED]
" ARTICLE V. TAXES AND ASSESSMENTS
w
5.1 Lessee' s Obligation for Taxes and Assessments.
(a) Covernnental 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,
assessments, installments of taxes, levies, fees and other
governmental charges of every kind or nature (hereinafter
collectively called "taxes") levied or assessed by municipal,
08/01/88
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L
L
county, state, federal or other taxing or assessing authorities
L 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
.r
fixtures, equipment and any other property of any kind owned by
f
L Lessee or placed, installed •3r 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 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 )
r above are assessed as real or 'personal property, and
a..
irrespective of whether any of such items are assessed to or
against Lessor or Lessee, or any other person. The foregoing
1 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 levied or assessed separately and directly to Lessee (for
4 example, if the same are levied or assessed to Lessor as part
of a larger tax parcel) , Lessee shall pay Lessee' s
u proportionate share as determined below in (b) . Any and all
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{
taxes and assessments and installments of taxes and assessments
required to be paid by Lessee under this Lease 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 cf perjury of the official and original receipt
for the payment of such tax, assessment, or installment shall
{ promptly be given to Lessor.
it
(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
e
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
6" the Improvements which are levied or assessed with other
Improvements levied or assessed with the Premises shall be
i
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
08/01/88
0635n/2460/12 -26-
t
it
pursuant to this subsection (b) and subsection (a) which are
levied or assessed for the fiscal tax year in which the Term
it
co.Tinences 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
6' 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
governmental authority having jurisdiction (by way of
ir.
substitution for all or any part of the "taxes" otherwise
i.
required to be paid in whole or in part by Lessee pursuant to
this Section 5.2 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 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.
L
08/01/88
0635n/2460/12 -27-
Led (d) Contesting_Taxes. Lessee shall have the right to
j contest, oppose, or object to the amount or validity of any
i.i
tax, assessment, or other charge levied on or assessed against
it 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
F . such contest, opposition, or 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) Paid such tax, assessment, or other charge
under protest prior to its becoming delinquent;
L (ii) Obtained and maintained a stay of all
proceedings for enforcement and collection of the tax,
r, assessment, or other charge by posting such bond or other
matter required by law for such a stay; or -
bo
(iii) Delivered to Lessor a good and 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
r..
expenses that may have accrued or been imposed thereon) and
issued by a surety company authorized to issue undertakings
i�
08/01/88
0635n/2460/12 -28-
�r
in California, conditioned on the payment by Lessee of the
tax, assessment, or charge together with any fines,
interest, penalties, costs, and expenses that may have
accrued or been imposed thereon within thirty (30) days
after final determination of Lessee' s contest, opposition,
L or objection to such tax, assessment, or other charge.
E
L
Lessor shall not be required to join in any proceeding_
i
L 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 cr 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
Le
Lessor all costs incurred by Lessor in connection therewith.
(e) Payment. 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 5.3, Lessor shall have the right to elect to bill
Lessee for any amount payable by Lessee under this Section 5.1
6w in periodic installments, in advar_ce, from time to time, but
not more often than quarterly, and thereafter Lessee' s failure
+-- to pay such amount to Lessor shall carry with it the same
consequences as Lessee' s failure to pay rent and shall be
ram.
deemed to be additional rent. in such event, Lessor may so
bill Lessee prior to Lessor' s receipt of assessment notices
L
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w and/or tax statements or bills covering any or all of the taxes
payable by Lessee hereunder. In the event the amount of the
4+
taxes described in this Section 5.1 for any fiscal tax year has
L not been made known to Lessor by the tax collector at the tine
of billing, Lessor shall have the right to estimate reasonably
the amount thereof and to base i_s 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 Lesser exercises
L
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 installnent
L 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
L consecutive delinquent payments again occur at which tire
Lessor shall again have the option to require periodic
I
6A 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
Lidelinquency.
M Tax Returns And S:atements. Lessee shall, as
between Lessor and Lessee, have the duty of attending to,
preparing, making, and filing any statement, return, report, or
`"' other instrument required or permitted by law in connection
with the determination, equalization, reduction, or payment of
L ,
08/01/88
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I
L
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 Improvements or other
Lproperty 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
Linformation and documents in Lessor' s possession to Lessee and
executing necessary documents.
I
L (g) Indemnification. Lessee shall indemnify, defend
L and hold Lessor, the Premises, Lessor' s interest in the
Premises, and any Improvements located on the Premises, free
and harmless from any liability, claim, loss, cost, expense or
L
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
i�.
other sums imposed thereon and from any sales or other
168 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
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
W
08/01/88
+W 0635n/2460/12 -31-
i+r
1.r
no obligation so to do. In such event, Lessee shall promptly
j„ reimburse Lessor for the full amount incurred by Lessor ir. so
paying, discharging, or adjusting such tax, assessment, or
i
i" 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
;1W Lessor from Lessee.
W ARTICLE VI . (RESERVED]
6
ARTICLE VII . USE ANID COXPLIAMCE WITH LAW
7.1 Use of Premises.
a. Subject to Lessee' s rights under the DDA and under the
Development Agreement entered into between Lessee and Lessor on
or about August 15, 1988 (the "Development Agreement" ) , Lessee,
at Lessee' s expense, shall promptly comply with all valid and
applicable present and future laws, ordinances, orders, rules,
regulations and requirements of all governmental authorities
having jurisdiction of, or affecting or applicable to the
Premises or Improvements or the cleanliness, safety, occupancy
and use of the same, whether or not any such law, ordinance,
W,
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
OS/01/88
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L
L
with the use and enjoyment of the Premises; provided, that
Lnothing 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 legal nonconforming use, or its rights under the DDA
A
and the Development Agreement. If any governmental license or
�1r
permit shall be required for the proper and lawful conduct of
r. Lessee' s business or other activities carried on in the
r Premises, then Lessee, at its sole expense, shall duly procure
i.
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
co=itted any waste upon the Premises or any nuisance or other
act or thing which disturbs the gsiet 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 DDA and all permits
and other requirements of law, no claim of breach of this
paragraph may 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 modify any
Improvements or the Premises, except as permitted by this
Lease.
08/01/88�
0635n/2460/12 -33-
f
I
+� 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 Development 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
6' 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 renal
1
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 as set forth
herein. Lessee crust obtain Lessor' s prior written consent to
ra
any restrictions on the Premises, its use or its alienation,
inconsistent with the foregoing. In addition, Lessee rust also
obtain Lessor' s prior written consent to certain assignments of
r- Lessee' s interests in the Premises and this Lease, as more
particularly set forth in Article XVI below.
Ir.
7.3 Non-Discrimination. Lessee covenants for itself, its
�r
heirs, executors, administrators, and assigns, and all persons
�y claiming under or through it, 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,
M
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f
L
religion, sex, martial status, age, national origin or ancestry
jin the subleasing of the Premises herein leased, nor shall the
Lessee establish or permit any such practice or practices of
3
�.. discrimination or segregation with reference to the selection,
location, number, use or occupancy of sublessees of the
hao Premises. In the event Lessee enters into contracts, leases,
subleases, or assignments w=th respect to any of its interest
herein, Lessee shall include 'in such arrangements a
nondiscrimination clause substantially conforming to the
following:
(a) In leases: "The lessee herein covenants by and
for himself or herself, his or her heirs, executors,
4"
administrators, and assigns and all persons claiming 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
w
race, color, creed, religion, sex, marital status, age,
national origin or ancestry in the subleasing,
transferring, use, occupancy, tenure or enjoyment of the
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
4
selection, location, number, use or occupancy of lessees of
u the premises. "
08/01/88
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L
L
(b) In contracts and assign-rents: "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,
I�r
tenure or enjoyment of the premises, nor shall the
transferee (or assignee) hirr.self or herself, or any person
a.
claiming under or through him or her, establish or permit
r. any such practice or practices of discrimination or
i segregation with reference to the selection, location,
i
number, use or occupancy of the premises. "
r.
ARTICLE VIII . LESSOR COVENANT TO
,w RESTRICT USE OF CITY BEACH PROPERTY
8.1 Recitals.
(a) Lessor is one of the owners in fee of that
certain real property located in the City of Huntington 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 "C" attached hereto and
incorporated herein by this reference.
r..
08/01/88
.. 063Sn/2460/12 -36-
1..
f
(b) Pursuant to the DDA referenced in Section 1. 11
of this Lease, it is contemplated that Lessee will be
constructing, operating, and maintaining on the Separate
Development Parcels within the Ccn►mercial Portion of the Site
ocean-oriented visitor-serving ccrmercial facilities which are
r..
designed to take full advantage cf the existing ocean views
across Pacific Coast Highway. Lessee desires to obtain
6r
assurances from Lessor that such views will not be obstructed
+ during the term of the modified Leases to be entered into
between the Huntington Beach Redevelopment Agency and Leasee
pursuant to Section 1. 11, Exhibit "B" hereto, and the DDA.
(c) Pursuant to the California Coastal Act of 1976,
as amended (Public Resources Code Section 30000, et se . ) ,
«.d Lessor has prepared and the California Coastal Cor,.mission 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
aar
January 19, 1981, the City Council of Lessor adopted Resolution
i„ No. 4954 adopting the LCP in the form of the Coastal Element of
the City' s General Plan; the 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
4 record, a copy of which is available for inspection at the
office of the City Clerk at the City of Huntington Beach, 2000
i
Main Street, Huntington Beach, California 92648.
The LCP requires "Preservation of as much beach sand area
as possible in order to accommodate future levels of beach
F
_ 08/01/88
0635n/2460/12 -37-
ISM'
attendance. " (LCP, Section 2 .3 . ) The LCP further establishes
as a policy the "increased numbers of hotel/motel rooms and
t restaurants in the Coastal Zone. " ( Id, at Section 3.3 . ) The
LCP designates the entire City Eeach Property for recreational
use in which the "principal permitted uses are limited to
lro
open sand areas, beach related recreational activities, and
under certain conditions, parking lots, concessions and
camping. " ( Id, at Figure 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 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 trails, bike support
facilities, and handicapped access. Finally, the LCP
"prohibit(s) expansion of parking facilities 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 preserve
and protect the sandy beach area within the [Downtown) Specific
Plan boundaries while allowing parking and auxiliary
kw
08/01/88
`" 0635n/2460/12 -38-
�r
convenience uses. " (Specific Plzn, Section 4 . 13 . ) Pursuant to
i
+-� 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 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,
+r.
surface parking lots or public transit facilitieE that will not
result in the loss of recreationL1 sand areas, provided that
any tiered parking shall be designed so that the top of the
iw 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 or showers, shoreline construction that ray
w
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) , and
+ volleyball net supports.
(e) City and Lessee desire to ensure the long-term
W�
maintenance of the City Beach Property for beach-related uses
a,
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 City' s
implementation of the LCP and Specific Plan or for other public
purposes as determined by the City in its sole discretion.
08/01/88
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f
Lr
�+ 8.2 Restrictions on Development on City Beach Property.
Lessor covenants not to construct or maintain or permit to be
LM
constructed or maintained any improvements or structures on the
City Beach Property excepting only the following: access
facilities, basketball courts, beach concession stands at
M« intervals no closer than one thousand (1,000) feet and limited
to two thousand five hundre... (2, 500) square feet per building,
bicycle and jogging trails and support facilities, fire rings,
lifeguard towers and other structures necessary for health or
w
safety, paddleboard courts, parking lots and public transit
w, facilities that will not result in the loss of recreational
sand area and that will not extend above the 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 pedestrian overcrossing(s) of Pacific Coast
Highway.
8.3 Patents. 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:
(a) For each Lease Year from 1989 through 2000,
Inclusive, the sum of Five Thousand Dollars ($5,000.00) per
a Lease Year, payable in advance on the first day of each
such year.
OB/O1/88
0635n/2460/12 -40-
r
�r
(b) For each Lease Year from 2001 through 2013,
11
inclusive, or the earlier termination of this Lease, the
sum of Ten Thousand Dollars ($10,000.00) per Lease Year,
payable in advance on the first day of each such year.
8.4 Property to be Benefited by City' s Covenant. The
ka covenants set forth in Sections 8.2 and 6.3 are intended to
burden and benefit the City Beach Property and the Premises.
At such time that there is a Disposition Transfer of a Separate
r.
Development Parcel within the Residential Portion of the Site,
pursuant to the DDA, the benefit and burden of this Agreement
shall be removed from such Separate Development Parcel only.
At such time that there is a Disposition Transfer of a Separate
Irr
Development Parcel within the Corunercial Portion of the Site,
wr
pursuant to the DDA, the benefit and burden of this AGree:rent
shall continue in effect with respect to such Separate
w Development Parcel. At such time that the DDA is terminated,
the benefit and burden of Sections 8.2 and 8.3 shall be removed
from any portion of the Premises that has not been the subject
of a Disposition Transfer. Accordingly, after all of the
Disposition Transfers contemplated in the DDA have occurred,
the benefit and burden of this Agreement shall apply to all of
the Separate Development Parcels within the Commercial Portion
of the Site which have been the subject of Disposition
Transfers (with the understanding that if for any reason a
4
Separate Development Parcel within the Commercial Portion of
the Site is not the subject of a Disposition Transfer, the
w
08/01/88
0635n/2460/12 -41-
benefits accruing to the remaining Separate Development Parcels
within the Commercial Portion of the Site which have been the
subject of Disposition Transfers shall not be adversely
affected) , and the benefit and burden of this Agreement shall
bo
not apply to any of the Separate Development Parcels within the
.. Residential Portion of the Site cr any other portion of the
Site. The City and Lessee agree to *cooperate and execute all
documents that nay be reasonably required in order to
effectuate this provision.
w
8.5 Covenants Run With The Land; Recordation of Memorandum
of Lease. The parties intend that the covenants set forth in
this Article VIII 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 and the Separate Development Parcels within the
Commercial Portion of the Site, 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 of Lease
which specifically references the restrictive covenant
contained within this Article VIII to be recorded against the
City Beach Property.
W
w
08/01/88
0635n/2460/12 -42-
1
ARTICLE IX. MAINTENANCE OF LEASED PREMISES
i..
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 or
i•
condemnation, Lessee, at Lessee' s expense without cost to
Lessor, shall keep and maintain in good order, condition,
�hr
quality, and repair (including replacement of parts and
t
�. equipment and £F&E (as defined in this Lease) , and refurbishing
of hotel guest rooms, if necessary) the Improvements and every
" part thereof and any and all appurtenances thereto wherever
located, including, but without limitation, the interior and
exterior surfaces of all exterior walls, roofs, the exterior
and interior portions of all doors, door frames, door checks,
trash enclosures, planters attached to the Improvements, other
entrances, windows, window frames, plate glass, storefronts,
lobby$, 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
6" located in the Improvements) , sprinkler systems, floors and
ceilings, and all other work perfcrmed by or on behalf of
Lessee, and all other repairs, replacements, renewals and
restorations, interior and extericr, structural and
nonstructural, ordinary and extraordinary, foreseen and
unforeseen. When used in this Article, the term "repairs"
t
08/01/88
+. 0635n/2460/12 -43-
I
it
1
shall include a:odifications, improvements, additions,
r� deletions, alterations, replacements or renewals when
necessary, and all such repairs nade by Lessee shall be at
least equal in quality and class to the original work. Lessee
4 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.
I If Lessee wishes to make any repairs to the
4.. Improvements which result in a change in use of the
Improvements permitted by this Lease, or materially adversely
affect the value of the Premises or Improvements or 'materiaily
change the external structure or appearance of the
Improvements, then Lessee shall submit to Lessor for its
r
6) approval documentation which describes the desired repairs,
' including floor plans, building sections, building materials
a.
and components, samples of proposed exterior building
materials, and the like, to the extent relevant to the
particular repair. Lessor' s approval shall be given within a
S
+W 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 Lessor' s reasonable Judgment, impair or diminish the
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.
1 0�/ol/ee
063$n/2460/12 -44-
,r
In addition to the foregoing, throughout the Term of
w this Lease and any extension hereof, Lessee shall keep,
maintain and operate the Premises and the Improvements in
accordance with all valid and applicable laws of the State of
California and in accordance with all valid and applicable
Na
directions, rules and regulations of health officers, fire
marshalls, building inspectc:s and other proper officials of
the goverrziental agencies having jurisdiction, and insurance
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 Section 9. 1 is
f
intended to constitute a waiver by Lessee of its vested rights,
a.� 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,
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 (24)
months, Lessor shall be entitled to deliver written notice to
08/01/88 _
0635n/2460/12 -45-
6#
Mr
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
Y.r '
any, necessary to put the Ir.:provements and/or the Premises in
6, such condition as described above and/or stating that the
operation of the Improvements is or is not satisfactory and
60 setting forth, in detail, the Changes in operations, if any,
necessary to put the operations into the manner described
above. If Lessee disputes the reed for any repairs,
replacements or changes in operation referenced in Lessor' s
w
Notice of Deficiency, Lessee shall deliver written riotice to
Lessor of such dispute within thirty (30) days after delivery
of Lessor' s notice and promptly &fter 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
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
L& but in no event shall such time exceed twelve (12) months of
such notice, and during the period that Lessee is proceeding
with such corrections it shall not be deemed to be in default
,
hereunder,
�. 08/01/88
0635n/2460/12 -46-
(c) Liens. Subject to the last 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 filed 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 secured and posted with
Lessor a surety bond or bonds in the amount of one hundred and
77 twenty five percent (125%) of any such lien issued by an
underwriter reasonably acceptable to Lessor securing payment of
r-
08/01/88
0635n/2460/12 -47-
br
IYr
such lien in the event Lessee' s contest thereof is unsuccessful
60 or Lessee otherwise fails to have the lien removed of record
timely.
4r
(d) Lessor' s 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
q
�. 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
sage consequences as herein provided for failure to pay rent.
'If reasonably possible under the circumstances, Lessor shall
give Lessee written notice ten (10) days prior to commencement
of any substitute performance. Any failure by Lessor to give
w,
such notice, however, shall not prejudice Lessor' s rights
hereunder or alter Lessee's obligations hereunder. Lessor' s
�. rights and remedies pursuant to this subsection (d) shall be in
addition to any and all other rights and remedies provided
under this Lease or at law.
08/01/88
0535n/2460/12 -48-
Il.r
(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
irr
of this Lease, However, Lessee shall not remove any of the
+r. 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 term is intended to exclude
Irr
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 Premies 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
w property of Lessor, provided that such removal shall be
completed within thirty (30) days after the expiration or
+»,F earlier termination of the Term.
w.
ARTICLE X. INSUMME AND INDEMITY
10. 1 Lessee' s Insurance.
r.. (a) Ty2es. Lessee, at no cost and expense to Lessor,
shall, commencing on the date Lessee is given access to the
Premises for any purpose, and during the Term, procure and keep
!rr
y„ 08/01/88_
0635n/2460/12 _ -49-
�Yr
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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 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
L, the Southern California area:
(i) comprehensive general liability insurance
with respect to the Premises and the operations of or en
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 occurrance 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 time
but not more frequently than every 36 months; provided,
that the percentage increase in coverage shall not be
required to exceed the percentage increase in the Index
since the last requested adjustment in coverage. The
insurance to be provided by Lessee may provide for a
deductible or self-insured retention of not pore 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 forty: above; provided that the
percentage increase in the deductible or self-insured '
retention shall not exceed the percentage increase in the 1
oa�ol�sa
0635n/2460/12 -50-
r
pY.
Index since the last requested adjustment; and further
L provided that Lessee may maintain such higher deductibles
or self-insured retention as shall be acceptable to the
L 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,
L its boards, officers, and employees in the same manner as
these interests would have been protected had the policy or
1
L policies not contained the deductible or 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 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, 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 non-contributing with
such policy or policies, and (2) that Lessor shall be an
additional named insured under such policy or policies, and
LN (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;
08JO1J86
.• 0635n/2460/12 -51-
L
L
(ii ) worker' s co:rpensation coverage as required
Lby law;
(iii ) with respect to improvements, alterations
L and the like required or permitted to be made by Lessee
hereunder &nd under the DDA, contingent liability and
L
builder' s risk (course of construction) insurance;
W (iv) with respect to the Improvements, and
i
merchandise, stock, trade fixtures, furnishings, equip.mert
�y and other items of personal property located on or in the
Premises, insurance against fire, peril of flood, extended
�w
coverage, vandalism and malicious mischief, and 'such other
additional perils, hazards and risks as now are or may be
r�
included in standard "all risk" forms in general use in
a.. Orange County, California, with the standard form fire
insuance coverage in an amou.nt equal to not less than the
full current actual replacement cost thereof, and the
additional coverage provided by the "all risk" coverage in
i.
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
k- such insurance shall contain a replacement cost
endorsement;
ir.
(v) boiler and machinery insurance coverage for
r. all objects, including but not limited to boilers, pressure
vessels, pressure piping and other major components or any
r.. centralized heating, air conditioning and cooling systems;
and .
08/01/88
+�• 0635n/2460/12 -52-
(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.
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
. L
same fora 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 Lessee) ;
(ii ) worker' s compensation insurance in
substantially the same forty as required of Lessee by this
Section 10. 1 of this Lease;
(ill) 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
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
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�" 0635n/2460/12 -53-
wr
(cc) Stipulation that the insurance is
primary insurance and that neither the Lessor nor its
insurers will be called upon to 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 to
z
be carried by Lessee under this Lease shall be written by
responsible and solvent insurance companies authorized to do
business in the State of California. Any such 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 evidencing such
insurance (appropriately authenticated by the insurer) or a
y+ certificate of the Insurer, certifying that such policy has
been issued, providing the coverage required by this Section
and containing provisions specified herein, shall be delivered
to Lessor prior to the date Lessee is 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 fron
�+ time to time, inspect and/or copy any and all insurance
policies required to be procured by Lessee hereunder. In no
event shall the limits of any policy be considered as limiting
m.
the liability of Lessee under this Lease.
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0635n/2460/22 -54-
r
(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:
(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 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.
(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, 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.
08/01/88 _
0635n/2460/12 -55
1
A
�i
(e) Commercial Availability. Notwithstanding any
other provision in this Lease to the contrary, Lessee' s
r.,
obligation to procure and maintain insurance, and the coverage,
terms, and conditions of such insurance, shall be conditioned
upon the commercial availability of such insurance, coverage,
terns, 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
w� Lessee, or activities not contemplated by this Lease. If at
any time during the term any of the insurance otherwise
w 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
commercially available at reasonable commercial rates. In the
event Lessor and Lessee are unable to agree on applicable
El insurance requirements, the matter shall be resolved by
arbitration in accordance with the procedures set forth in
Article XXVII below.
wM
08/01/88
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f
1
10.2 Covenant to Inder%nify 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,
ir.
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
W Lessee' s failure to comply with any provision of this Lease or
otherwise occasioned wholly or in part by any act or or.ission
of Lessee, its agents, representatives, contractors, employees,
servants, customers, invitees, trespassers, guests, tenants,
w
lessees, concessionaires, operators or licensees, or their
customers or invitees, excepting only that the foregoing
And
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,
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,
08/01/88
�`` 0635n/2460/12 -57-
j�
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
a►.
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
r. 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,
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
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,
r., obstruction or other defects of the pipes, sprinklers, wires,
06/01/88
0635n/2460/12 -58-
�r appliances, plumbing, air conditioning or lighting fixtures of
the Improvements, whether the injury, loss or damage or loss of
lr
business results from conditions arising upor. the Premises or
j., 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
rr
give prompt notice to Lessor in case of any casualty losses in
excess of five percent (5%) of the combined value of the
+�• Improvements, FF&E, and personal property on the Premises, and
in the event of any lawsuits filed against Lessee arising out
of Lessee' s occupancy or operations in which the amount in
controversy exceeds One Hundred Thousand Dollars ($100, 000) .
a..
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.
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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,
$.
08/01/88
�" 0635n/2460/12 -59-
lad
�r
agent, employee or representatives 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 recquirea
hereunder, give notice to the insurance carrier or carriers
rr
that the foregoing mutual waiver of subrogation is contained in
this Lease.
ARTICLE XI . UTILITY CHARGES
Mr
11. 1 Utility Charges. Lessee shall pay all charges for
rr
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,
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 from its
obligations with respect to the provision of utilities as set
'r forth in Attachment Nos. 3 and 5 to the DDA.
�y
ARTICLE XII . OFFS-SET STATEMENT,
ATTORNMENT AND SUBORDINATION
4 12 .1 Off-Set Statement. The parties shall, at any time
and from time to time upon not less than ten (10) days' prior
08/01/88
i 063Sn/2460/12 -60-
L
L 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 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 and
other charges are paid in advance, if any, without any offset
or defense thereto (if such be the case) and (b) 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, 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.
L.. 22 .2 Attornment. In the event any proceedings are brcught
for the foreclosure of, or in the event of the 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
W
the event Lessor sells, conveys or otherwise transfers its
interest in the Premises, Lessee hereby attorns to, and
covenants and agrees to execute an instrument in writing
reasonably satisfactory to the new owner whereby Lessee attorns
to the successor in interest and recognizes the successor as
the Lessor under this Lease.
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L
�1r
12 .3 Subordination. Lessee agrees that this Lease shall,
r
at the request of the Lessor, be subordinate to any mortgages
L
or deeds of trust that may hereafter be placed upon the fee of
the Premises by Lessor and to any and all advances to be made
L thereunder, and to the interest thereon, and all renewals,
replacements and extensions 'thereof, provided the mortgagees or
a►.
beneficiaries named in said mortgages or trust deeds shall
w.
agree to recognize the interest of Lessee under this Lease in
the event of foreclosure, in accordance with the terms of this
L Lease. Lessee also agrees that in the 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
bw
Lease shall be deemed prior in lien to such mortgage or deed of
trust, whether this Lease Is dated prior to or subsequent to
the date of said mortgage or deed of trust. Lessee agrees that
L upon the request of Lessor, or any mortgagee or beneficiary,
Lessee shall execute whatever instruments may be required to
carry out the intent of this Section.
r..
12.4 No Subordination of Fee. Lessor shall have no
obligation to encumber or otherwise subordinate its fee
interest in the Premises.
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6. 0635n/2460/12 -62-
L
LARTICLE XIII . ALTERATIONS AND ADDITIONS
E
Ir
13 .1 Alterations and Additicns. Without Lessor's prior
written consent, which consent may be withheld or granted in
Lessor' s sole discretion, and except as permitted in the DDh,
including any of the development plans and approvals obtained
by Lessee thereunder, and further except as set forth in
�r
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 hake 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 is
not a complete, self-contained operating unit;
L. (b) Before the commencement of any work, Lessee shall
pay the amount of any increased premiums on insurance policies
L` provided for hereunder;
(c) Lessor shall in no event be required to make any
alterations, rebuilding, replacement, changes, additions or
improvements or repairs to the Premises or Improvements during
the Term; and
(d) All such changes, alterations, rebuilding,
replacements, additions, improvements and repairs to the
Improvements made by Lessee shall be deemed to have attached to
6w the realty and to have become the property of Lessor upon the
08/01/88
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L
r
L expiration of the Term or upon sooner termination of this
ILease, to the same extent as with the original Improvements.
Lessee shall not remove any of such Improvements, as changed or
Laltered, with the understanding that trade fixtures,
furnishings, and personal property installed by Lessee or its
Ltenants 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
' removal. Subject to the senior and prior rights of the
L
owner(s) and persons or entities having a security interest in
L any of the trade fixtures, furnishings, and personal- property
'(if other than Lessee) , in no event, whether during the Tem. of
this Lease or upon the expiration of this Lease, shall Lessee
be entitled to remove any trade fixtures, furnishings, or
�r
personal property if Lessee is in default hereunder, except
E
that during the Term of this Lease Lessee may remove trade
fixtures, furnishings and items of personal property if the
k
+�r same are immediately replaced by trade fixtures, furnishings
and items of personal property of like quality and value.
ARTICLE XIV. CASUALTY LOSS AND RESTORATION
�Ir
�. 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.
08/Ol/88
0635n/2460/12 -64-
LW
LM 14.2 Repair of Damage.
(a) Obligation to Repair Danaae 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
r. to be insured against by Lessee, Lessee shall promptly proceed
to obtain insurance proceeds and take all steps necessary to
begin reconstruction and, iraediately upon receipt of insurance
proceeds, promptly and diligently corn,.mence the repair or
replacement of the Improvements to substantially the same
L condition as they are required to be maintained in under this
Lease, whether or not the insurance proceeds are sufficient to
i.W cover the actual cost of restoration, and shall complete the
same as soon as possible so that Lessee may continue in
L
occupancy. Subject to Section 25. 1, in no event shall the
replacement period exceed two (2) years from the date Lessee
obtains insurance proceeds. 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,
M
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.
48/O1/88
0635n/2460/12 -65-
Yr
(b) Application_of Insurance Proceeds. All insurance
moneys recovered on account of damage or destruction, less the
6a cost, if any
, of such recovery, shall be applied to the pay.�ent
of the cost of repairing and replacing the Improvements.
Except as otherwise provided herein, if net available insurance
r
L 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
Lbear the cost thereof in excess of the net available insurance
monies.
L
. 14.3 Continued Operations. During any period of repair,
L Lessee shall continue, or cause the continuation of, the
operation of the businesses on the Premises to the extent
it
reasonably practicable from the standpoint of prudent business
i management. However, irrespective of the continued operation
of businesses during such period of repair, the rent payable
' hereunder shall not be deferred (except as provided under
�i
Section 14.4) and shall not be abated. Upon completion of such
repair and restoration Lessee shall 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.
iw
08/01/88
0635n/2460/12 -66-
�r.
14.4 Deferral of Rent. There stall be no abatement or
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 useable area of the
Premises. In such event, and only in such event, if Lessee
f
suffers such a casualty loss due to circumstances that are not
Idue to Lessee' s intentional ,or negligent acts or omissions, the
rent otherwise chargeable pursuant to Article 11 above shall be
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
i
loss and the denominator of which is the total gross leaseable
+� area of the Improvements 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
(i ) the date on which Lessee receives any payment of business
�r.
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 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) .
Ir,
w�
oe�ol/se
0635n/246D/12 -67-
24.5 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 Tern, or
(ii) the Improvements are destroyed or substantially damaged by
L a casualty which Lessee is not required to (and has not)
insured against, then Lessee may cancel this Lease by written
L notice of election to Lessor within ninety (90) days after such
Lsubstantial damage or destruction and the rents and other
charges payable by Lessee hereunder shall be payable through
r
L the termination date plus any additional time required for
Lessee to comply with the requirements to remove the
LImprovements 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
ir.
after removal of the Improvements and debris, if requested by
�. Lessor within thirty (30) days after Lessee delivers to Lessor
its notice of termination, and the expense therefor sha11 be
paid out of the sums received or due on 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
k" percent (25%) or more of the rent payable during the remainder
of the Term. As used herein, "substantial damage" caused by a
08/01/88
0635n/2460/12 -6E-
W
w .
casualty not required to be (and not) covered by insurance
shall mean damage or destruction which is twenty-five percent
r.
(25%) or more of the replacement cost of the Improvements. In
the event Lessee does not timely elect to cancel this Lease as
set forth in the first sentence of this Section 14.5, Lessee
L shall promptly commence and complete the repair, rebuilding and
refurnishing of the damaged or destroyed Improvements in
L accordance with Section 14.2.
L
14.6 Limitation on Lessee' s Obligation to Restore and Right
Lto Terminate Lease, Notwithstanding any other provision of
, this Lease to the contrary, prior to a Disposition Transfer,
L Lessee shall have no obligation under this Article XIV to seek
or obtain insurance proceeds, to restore or repair the
M.+
Improvements, or to continue the operation of the businesses on
w
the Premises, and Lessee shall have no right to terminate this
Lease because of any casualty loss; provided, however, that if
Lessee elects after a casualty loss not to repair or restore
the Improvements, Lessee shall notify Lessor in writing of such
w •
election within a reasonable time, not to exceed one hundred
twenty (120) days, after such casualty loss, and shall
thereafter diligently proceed to demolish and clear any
AM remaining damaged portion of the Improvements from the
Premises. In such event, all insurance proceeds (less
6' insurance proceeds spent to demolish and clear such remaining
damaged portion of .the Improvements) shall be paid to Lessee.
w.
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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 authority
i..
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 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
f charges as may have been paid in advance for a period
subsequent to the date of the taking.
15.2 Partial Condemnation.
(a) More Than 25% oi_IM2rovements. 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 lies of
such a taking, except for a taking for a temporary use, Lessee
�+ shall have the right either to terminate this Lease as 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) days
after the taking of possession by the condemnor. In the event
Lessee elects to remain in possession, all of the terms herein
provided shall continue in effect, except that as of the day
08/01/88
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L
e
F4 + possession is taken by public authority, the rent shall be
reduced in proportion to the amount of the Improvements taken.
W
Thereafter, Lessee shall. at its own cost and expense, make all
r
the necessary repairs or alterations to the Improvements, so as
to constitute the remaining Improvements a complete
i
architectural unit(s) , and Lessee, at Lessee' s sole cost, shall
similarly act with respect to trade fixtures, furnishings and
equipment.
(b) 25% or Less of Improvements. Except for a
taking for a temporary use (subparagraph (e) below) and a
1.� taking during the final ten (10) years of the term
(subparagraph (f) below) , if twenty-five percent (25%) or less
of Lessee' s interest in the Improvements shall be taken, the
Tern shall cease, only on the part so taken, as of the day
�r
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
period subsequent to the date of the taking in proportion to
the amount of the subject Improvements taken, and thereafter
w
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.
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•-► (c) Partial taking or _the _Premises exclusive of
Improvements. In the event of a taking of less than all of
Lessee's interest in that portion of the Premises exclusive of
6. 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, of the
Premises. If Lessor and Lessee are unable to resolve a dispute
i.�
regarding such a reduction in the fair rental value of the
Premises within thirty (30) days after the taking of possession
by the condemnor, the dispute shall be resolved by arbitration
L conducted in accordance with Article X.XVII and with the
qualifications of the appraisers/arbitrators and the
L 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 eninent
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
rr
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
�. 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 Lessee shall
61
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continue to comply with Lessee' -- 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
I� total or partial taking of the Improvements during the final
�. ten (10) years of the Term, they, Lessee may terminate this
Lease by written notice of election to Lessor delivered within
L thirty (30) days after the taking of possession by the
` condemnor, and after the termination date Lessee shall have no
L
further obligation to pay rent that would otherwise accrue
after said date.
L 15.3 Lessor' s and Lessee' s-Damages. All damages awarded
for such taking under the power of eminent domain or proceeds
L
from the sale under threat or in lieu of such a taking, whether
it for the whole or a part of the Premises, shall be divided among
Lessor, Lessee, Lender (as defined in Article XVII ) , and any
+.. other party holding an encumbrance on the Premises in
accordance with the value of their respective estates.
ARTICLE XVI . ASSIGIMNT AND SUBLETTINU
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
L.
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�Yr
1
w
permitted in this Article XVI, assign all of any part of this
Lease or any of Lessee' s rights hereunder without the prior
w 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
60 request by Lessee to assign 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
69. with this Lease; (ii) if the assignment occurs prior to the
issuance of a Certificate of Completion pursuant to Section 415
of the DDA that such third party stall 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 than the qualifications and
experience of Robert L. Mayer, as 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
i. of a Certificate of Completion pursuant to Section 415 of the
DDA, development) of the Premises, or portion thereof, in
Lr
a •
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L
Laccordance with this Lease. For purposes of clause (ii) above,
LLessor shall approve the proposed assignee if the assignee
demonstrates to Lessor reasonable satisfaction that it
i..
possesses the financial resources and abilities equivalent to
or greater than Robert L. Mayer' as at the date of this Lease,
provided that the foregoing shall not be construed to imply
that a proposed assignee with a net worth less than the net
worth of Robert 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.
For the proposed assignment to be effective, the
grantee, assignee or transferee must furnish Lessor with a
written and fully executed and acknowledged assignment and
w
assumption agreement, pursuant to, which the grantee, assignee
6. or transferee agrees to comply with and perform all the
obligations of Lessee under this Lease. All of the foregoing
64 documents shall be in form and substance acceptable to Lessor
and its attorneys. The approval by Lessor of one assignment,
L
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 or
any interest herein shall not be required in connection with
any of the following:
4
L
08/01/88
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1m
W (a) Any transfer to any entity or entities in which
either Lessee or Robert L. Mayer retains a minimum of fifty-one
W
percent (51%) of the ownership or beneficial interest and
W retains management control.
(b) Transfers resulting from the death or mental or
w physical incapacity of an individual.
(c) Transfers or assignments in trust for the benefit
64
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
r.. 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
r.
Lessee' s interest in the Premises to the City or other
w appropriate goverrLmental 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
r. are defined in the DDA) .
(f) The leasing of any part or parts of a building or
I`. structure for occupancy, or entering into of any concession
agreements, licenses, or other contracts in the normal course
I►.
of owning and operating the Improvements on the Premises.
W
08/01/88
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6i
L (g) F. 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
i6 subdivision of the Premises or portion thereof into commercial
condominium units shall not allow the occupancy of hotel rooms
L for any use other than as individual transient occupancy hotel
1 rooms; and (ii) commercial condominium units shall not be
L• 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 Section 11003.5, as
the same now exists or may hereafter be amended), time-shares
' and time-sharing arrangements being strictly prohibited hereby;
provided, however, that it is understood and agreed that any
rw
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 (10%) of
the number of days per year that the unit is occupied by hotel
r.
guests shall not be deemed to be a tine-share arrangement.
4.
Lessee shall deliver written notice to Lessor requesting
approval of any assignment requiring Lessor approval
1,. hereunder. Such notice shall be accompanied by sufficient
evidence regarding the proposed assignee' s development
�r
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6.
r
f
it qualifications and experience and its financial connitments and
resources to enable Lessor to evaluate the proposed assignee
pursuant to the criteria set forth in the first paragraph of
this Article hVI . 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
w
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 as shall be
available at the time the request for approval of the
i.+
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
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
L+ of necessary information for financing purposes shall be deemed
complete twenty (20) days after Lessor' s receipt thereof and
L
08/02/88
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1.4 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
r»
response requesting further information regarding the proposed
„w 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 an assignment has been accepted as complete or is
r.
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
r. consent to such assignment.
Lessor shall approve or disapprove any requested assign.^;ent
for financing purposes requiring Lessor approval within thirty
(30) days after Lessee' s request therefor is accepted as
�r.
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 Lessee' s
request therefor is accepted as complete or is deemed
complete. Any disapproval shall be in writing and shall
1..
specify the reasons for the disapproval and, if applicable, the
r.
08/01/88,
} 0642n/2460/12 -79-
lei conditions required to be satisfied by Lessee in order to
obtain approval. If Lessee' s initial notice requesting
r. approval of an assignment for financing purposes (but not any
other type of assignment) states that the assignment will be
r.
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.
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 agreement in form reasonably
satisfactory to Lessor' s attorney assuming the obligations of
Lessee which have been assigned. Thereafter, the assignor
w
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
a..
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 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.
08/02/88
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lr
No consent or approval by Lessor of any assignment
�r
1 requiring Lessor' s approval shall constitute a further waiver
�r of the provisions of this Article.
16.2 Bankruptcy. It is acknowledged and agreed that this
Lease is a lease of real property within the meaning of
Subsection 36S(b) (3) of the Bankruptcy Code, 11, U.S.C. To the
�,. extent not prohibited by provisions of the Bankruptcy Code, 11
U.S.C. Section 101 et seq. , including Section 365(f) (1)
thereof, Lessee on behalf of itself, creditors, administrators
t 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 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 deed
to have assumed all of the obligations arising under this Lease
on and after the date of such assignment. Any such assignee
shall upon demand execute and deliver to Lessor an instrument
confirming such assumption.
08/01/88
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1.1
,r 16.3 Lessor' s Fee. Lessee agrees to reimburse Lessor for
Lessor' s reasonable costs and attorneys' fees incurred in
`r connection with the processing and documentation of any
requested assignment, subletting, " transf er, change of ownership
Mr
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 ar.,ount 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
w
index rating for the most proximate location or an equivalent
standard measure of general inflation) .
w
+• 16.4 No Waiver. The acceptance by Lessor of any payment
due hereunder frorr. any other person shall not be deemed to be a
waiver by Lessor of any provision of this Lease or to be a
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.
r.�
ARTICLE XVII . LEAS-ZHOLD 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 .
Q8/01/88
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1.
` 17.2 Definitions. As used in this Lease, "Leasehold
Mortgage" shall mean any mortgage, deed of trust, or other
64 security instrument, including, without limitation, an
assign.-nent by Lessee of the rents, issues and profits from the
4r Premises, which constitutes a lien on the estate created by
this Lease, and which has been approved or is deemed approved
4.
by Lessor, and "Lender" shall mean the owner and holder of the
Leasehold Mortgage.
f
t
17.3 Rights of Lender. Subject to prompt corpliance 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
`t 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.
i, (b) Notwithstanding any default by Lessee in the
performance or observance of any agreement, covenant or
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
such default promptly or to acquire Lessee's estate created
06/01/68
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,
16A
j� hereby or commence foreclosure or other appropriate proceedings
in the nature thereof promptly and remedy such default
pror.ptly, all as set forth in, and within the time 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
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 nay be necessary
and proper to be done in the performance and observance of the
agreements, covenants, and conditions hereof to prevent
w, termination of this Lease. All payments so rude 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 been
if made, done, and performed by Lessee instead of by Lender.
and
(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
default, and, if the default is such that possession of the
Premises may be reasonably necessary to remedy the default, a
reasonable time after the expiration of such sixty (60) day
lei
period within which to remedy such default, provided that
(A) 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
61
08/01/88
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6"
E
shall continue to pay currently such monetary obligations as
and when the same are due and (B) Lender shall 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
r--
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 written notice of such
event of default as aforesaid and Lender having failed to
remedy such default or acquire Lessee' s estate in the Premises
created hereby or commence foreclosure or other appropriate
proceedings in the nature thereof, and diligently conclude such
proceedings, as set forth in and within the time specified by
this subparagraph (d) .
r-
(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 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 appropriate
proceedings in the nature thereof, (B) Lender shall diligently
prosecute any such proceedings to completion, (C) Lender shall
have fully cured any default in the payment of any monetary
obligations of Lessee hereunder, including interest and late
08/01/88
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i
be
fees, which do not require possession of the Premises within
such sixty (60) day period and shall thereafter continue to
be faithfully perform all such 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 subparagraph
(e) , Lender shall have the option, to be 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
(i) Such new lease shall be effective as of the
i 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 responsible
9
L• 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 (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
w.
can be cured by Lender.
1
08/02/88
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}
li.
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 Lessor shall
have the same right to approve (or disapprove) Lender' s nominee
as set forth in Article XVI for Lessor' s 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
i6d of any action by any court having jurisdiction of any
bankruptcy or insolvency proceeding involving Lessee from
commencing or prosecuting foreclosure or other appropriate
proceedings in the nature thereof, the tires specified in
subparagraphs (d) and (e) above for commencing or prosecuting
w.
such foreclosure or other proceedings shall be extended for the
period of such prohibition plus an additional period of sixty
r.. (60) days thereafter; provided that Lender shall have fully
cured any default in the payment 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.
r..
(g) Lessor shall mail or deliver to Lender a
duplicate copy of any and all notices of default which Lessor
may from time to time give to or serve upon Lessee pursuant to
I" the provisions of this Lease, and such copy shall be mailed or
delivered to Lender simultaneously with the mailing or delivery
08/01/88
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rr
of the same to Lessee. No notice: of default by Lessor to
Lessee hereunder shall be deemed to have been given insofar as
Lender' s rights under this Article XV11 are concerned unless
w, and until a copy thereof shall have been mailed or delivered to
Lender as herein set forth. Lessor 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.
i..
(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
60 nature thereof, shall not require the consent of Lessor or
constitute a breach of any provision of or a default under this
L. 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
w
for the period of time that Lender remains lessee thereunder.
17.4 Consent of Lessor.
i' In the event Lender requires any modification to the
provisions of this Lease in order to secure its loan, Lessor
6
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
6J hereunder. '
08/01/88
W 0642n/2460/12 �88-
6r
err
ARTICLE XVIII . DEFAULT
18. 1 Event of Default. The word "default, " as used in
this Section 16, 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 hereunder,
as and when due and the continuance of such failure for a
period of fifteen (15) days after Lessor shall have given
Lessee written notice specifying the same;
a..
(b) The failure of Lessee to perform any term,
Aba condition, covenant or agreement of this Lease, excluding the
payment of rent, and the continu&tion of such failure for a
ba period of thirty (30) days after Lessor shall have given Lessee
written notice specifying the same, or in the case of a
Ifta 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 means 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;
6A
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w
64
64 (d) Lessee' s (i) application for, consent to, or
suffering of, the appointment of a receiver, trustee or
r.
liquidator for all or for a substantial portion of its assets;
(ii) making a general assignment for the benefit of creditors;
(iii) being adjudged a bankrupt; (iv) filing a voluntary
6' petition or suffering an involuntary petition under any
bankruptcy, arrangement, reorganization or insolvency law
L. '
(unless in the case of an involuntary petition, the same is
L. dismissed within thirty (30) days of such filing); or (v)
suffering or permitting to continue unstayed and in effect for
W ten (10) consecutive days any attachment, levy, execution cr
seizure of all or a substantial portion of Lessee' s assets or
of Lessee' s interest in this Lease;
(e) Any attempt to create time share interests or
time-sharing arrangements in the Premises without Lessor' s
written consent, except as specifically allowed in connection
with a financing arrangement pursuant to Section 16.1(h) .
18.2 Remedies.
(a) General. In the event of any default by Lessee,
including the expiration of any applicable cure period Lessor
may:
(i) Terminate Lessee's right to possession of the
Premises by any lawful means, in which case this Lease
shall terminate and Lessee shall immediately surrender
possession of the Premises to Lessor.
In such event Lessor shall be entitled to recover
from Lessee:
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L (aa) The worth at the time of award of the
unpaid rent which had been earned at the time of
termination;
(bb) The worth at the time of award of the
br
amount by which the unpaid rent which would have been
earned after termination until the time of award
ra
exceeds the amount of su:.h loss that Lessee proves
60 could have been reasonably avoided;
(cc) The worth at the tine 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
L• compensate Lessor for all the detriment proximately
caused by Lessee' s failure to perform its obligations
under this Lease or which, in the ordinary course of
events, would be likely to result therefrom,
including, but not limited to, the cost of recovering
f
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.
The "worth at the time of award" of the amounts
referred to in subparagraphs (aa) and (bb) above shall be
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i- -
computed by allowing interest at the rate egaal to the then
w
current discount rate of the Federal Reserve Board of San
■• Francisco (as the same may change from time 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 paynent by Lessee. The worth at
W
the time of award of th4 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 ray 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
L this Lease for such period, unless Lessor or Lessee shall prove
to the contrary by competent evidence..
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r--
(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 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 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 cure a default under Section 18. 1(d) .
(e) Lessor' s Reentry. Lessee hereby irrevocably
consents to Lessor' s peaceable reentry, 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.
i
r
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u
,,, (f) Lessee' s Breach. Ever. though Lessee has breached
this Lease and abandoned the Premises, subject to Lessor' s
obligation to act reasonably to mitigate its damages 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 Lessee' s right to possession and
w' 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;
{i-) The appointment of a receiver on the
initiative of Lessor to protect its interests under this
Lease.
(g) Lessor' s 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 may, but shall not be obligated to do so, and
without waiving or releasing 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
L
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{`
W
Lease. All sums paid by Lessor and all necessary incidental
1 costs, together with interest thereon at the rate of three (3)
percentage points above the discount rate of the Federal
1
L Reserve Bank of San Francisco (not to exceed the maximum legal
rate perriitted by law), from the date of the payment by Lessor
shall be payable by Lessee to Lessor on dentand. The sums shall
be deemed to be additional rent and subject to the same
L
consequences as herein provided for failure to pay rent.
L
18.3 Default by Lessor. Lessor shall not be deemed to be
46a 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
r..
nature and extent of any such failure; provided, however, that
�.. if the nature of Lessor' s obligation is such that more than
thirty (30) days are required for its performance, then Lessor
i6w shall not be deemed to be in default if it shall corn-nence such
' performance within such thirty (30) day period and thereafter
bw
diligently prosecutes the same to completion.
Us
18.4 Legal Expenses and Collection Costs. If either party
+w incurs any expense, including actual costs of collection,
reasonable attorneys' fees, expenses of discovery, preparation
for litigation, expert witness fees and litigation expenses and
4 costs, in connection with any action or proceeding instituted
bo
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w
'• by either party by reason of any default or alleged default of
the other party hereunder, the party prevailing in such action
or proceeding shall be entitled to recover its reasonable
expenses from the other 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
Iw
party if (a) judg::lent is entered in favor of Lessor or (b)
w� prior to trial or judgment Lessee shall pay the rent and
charges claimed by Lessor, or eliminate the condition(s) , cease
S
.. the act(s) or otherwise cure the onission(s) claimed by Lessor
to constitute a default by Lessee hereunder.
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
w 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 nay, at its option, treat Lessee
as a tenant at will commencing on the first (lst) day following
W+
the expiration of this Lease and subject to all of the terms
and conditions herein contained, except that the annual rental
6,
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r
shall be one hundred fifty percent (150%) of the annual rental
applicable at the date of expiration and the rent shall be
w payable quarterly in advance even though the tenancy is at
will. If Lessee fails to surrender the Premises upon the
W
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
or 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 addition to and do
r. not affect Lessor' s right of reentry or any other rights of
Lessor hereunder or as otherwise provided by law.
a.
ARTICLE XX. [RESERVED]
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 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 any right or remedy reserved
6
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Pyy
wi
r 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
AM 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 Article XXII, such entry shall
+ not constitute a constructive or actual eviction of Lessee, in
i
whole or in part, and the rent shall not abate while any such
repairs are being grade. If, during the last month of the Term,
Lessee shall have removed all or substantially all of Lessee' s
b., property therefrom, Lessor may immediately enter and alter,
renovate and redecorate the Premises without elimination or
abatement of rent and without other coirpensation and such
action shall have no effect upon this Lease. Nothing herein
contained, however, shall be deemed or construed to impose upon
"h Lessor any obligation, responsibility or liability whatsoever
for the care, supervision or repair of the Premises.
64
6a
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ARTICLE XXIII .
FURNITURE, FIXTURE AND EQUIPMENT FINANCING
23. 1 FF&E Financing. It is Contemplated that during the
Term of this Lease, Lessee shall place or cause the placement
fror. time to time of furniture, fixtures and equipment
w
(collectively "FF&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
�r
such proposed FF&E Financing at least 60 days prior to the
ir. 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
i..
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 FF&E; (III) the purchase price,
:. terms of payment and conditions of any purchase or loan in
connection with purchasing of FF6E; 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 together with all of the Information
required above, Lessor may approve or disapprove such FF&E
08/01/88
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i.�
i.. Financing by written notice to Lessee. Lessor' s approval of
any such FF&E Financing shall not be unreasonably withheld. In
the event Lessor reasonably objects to all or a portion of such
FF&E Financing, Lessor shall within said 30-day period give
�r
Lessee written notice of its objection, detailing the reasons
S
�.. therefor. In such event, Lessee shall be prohibited from
entering into such £F&E Financing but Lessee may submit to
Lessor such response to Lessor' s objections and/or revisions to
the terms and conditions of the FF&E Financing in order to
satisfy Lessor' s objections thereto. Any such nearly submitted
y, 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
FF&E Financing for which proper notice has been given by Lessee
to Lessor shall constitute approval of the particular FF&E
Financing in question and no further approval by Lessor for
such FF&E Financing shall be required. Lessor' s rights
hereunder shall not be construed as requiring Lessor to
participate in any way in any such FF&E Financing nor shall
approval by Lessor of any such FF&E 'Financing obligate Lessor
in any manner.
IAU
ARTICLE XXIV. TRANSFER OF LESSOR' S INTEREST
16` 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
08/01/88
L 0642n/2460/12 -100-
L
Lshall, upon written notice to Lessee, be 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 Beach shall remain
responsible for performance of its obligations under Article
lr.. VIII above restricting the use of the City Beach Property. The
transferee shall be deemed, without further act or agreement,
La to have assumed and agreed to carry out any and all of the
covenants and obligations of 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
w
Redevelopment Agency, would automatically assume all of the
w.. Redevelopment Agency' s obligations hereunder and be entitled to
all of the Redevelopment Agency' s rights and benefits
6A hereunder. Notwithstanding the foregoing, no such transfer of
Lessor' s interest in the Premises shall relieve the City of
64
Huntington Beach of its obligations under the Development
64 Agreement or the Huntington Beach Redevelopment Agency of its
obligations under the DDA.
08/01/88
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r
W
ARTICLE XXV. ' FORCE MAJEURE
W 25.1 Force Majeure. In the event the performance by either
party of any of its obligations hereunder is delayed by reason
W
of the act or neglect of the other party, act of God, stormy or
r�
inclement weather, strike, labor dispute, boycott, lockout or
other like defensive action by such party, inability to obtain
i
+� labor or materials, governmental restrictions, riot,
insurrection, war, catastrophe, casualty, 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.
r.,
ARTICLE XXVI . MISCELLANEOUS
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.
6j
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L
26.2 Notices. All notices, demands or other writings to be
made, given or sent hereunder, or which may be so given or made
1.,
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 mailed on the third (3rd) day after being deposited in the
�►� United States mail, certified or registered, postage prepaid,
and addressed to the respect-:ve parties at their addresses set
forth below:
If to Lessor: The City of Huntington Beach
2000 Main Street
' Huntington Beach, CA 92648
�.. Attention: City Administrator
With a copy to: Gail C. Hutton
w City Attorney
City of Huntington Beach
2000 Main Street
Huntington Beach, CA 92648
If to Lessee: RLM Properties, Ltd.
660 Newport Center Drive, Suite 2050
j„ P. O. Box 8680
Newport Beach, CA 92658-8680
Attention: Robert L. Mayer
With a copy to: Jeffrey M. Oderman, Esq.
Rutan & Tucker
611 Anton Boulevard, Suite 1400
,.+ 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 the method
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L
L
of computation of rent, nor any other provision contained
L 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.
rr
26.4 Broker' s Commission. Lessor and Lessee each warrants
L to the other that it has had no dealings with any real estate
broker or agent in connection with the negotiation of this
L Lease. Lessor and Lessee each agree (as "Indemmnitor" ) to
i indemnify and defend the other party and hold the other party
L harmless from all liabilities arising from any claim' by any
broker or finder allegedly representing the Indemnitor,
including, without limitation, the cost of 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
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 withcut prejudice to Lessor' s
r.
right to recover the balance of such rent or other charges or
�. pursue any other remedy in this Lease provided.
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26. 6 Time of Essence. Time is hereby expressly declared to
be of the essence of this Lease and of each and every 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
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
i
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, 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
this Lease or the application thereof to any person or
circumstances shall, to any extent, be invalid or
I
unenforceable, the remainder of this Lease, or the application
of its terms and provisions to persons and circumstances other
than those to which it has been held invalid or unenforceable
shall not be affected thereby, and each term and provision of
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this Lease shall be valid and enforceable to the fullest extent
permitted by law. No acquisition by Lessor of all or any of
the interest of Lessee in or to the Premises or the
Improvements, and no acquisition 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. -
r26. 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.
r.
26.11 Consents. Except as expressly provided in this Lease,
y.. 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.
25. 12 Entire Agreement. This Lease and the exhibits hereto
contain the entire agreement of Lessor and Lessee with respect
to the matters covered hereby, and no other agreement,
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t
L statement of promise made by either Lessor or Lessee which is
not contained herein, shall be valid or binding. No prior
L agreement, understanding or representation pertaining to any
Lsuch matter shall be effective for any purpose. No provision
of this Lease may be amended or added to except by an agreement
I .
L 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 any
act, such act shall be deemed performed by Lessor if it causes
r.
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
a..
and deliver to Lessor, within five (5) days after written
demand from Lessor to Lessee, any quitclaim deed or other
rr
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.
hod
26. 15 Number and Gender. Whenever the singular or plural is
used in this Lease and when required by the context, the same
w shall include the plural, and the singular, respectively, and
the masculine gender shall include the feminine and neuter
�• genders, and the word "person" stall include corporation, firm,
partnership or association.
bat
08/01/88
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6
26. 16 Interest on Past-Due Obligations. Any amount due from
Lessee to Lessor hereunder which is not paid when due
the
(including, Without limitation, amounts due as reimbursement to
�. Lessor for costs incurred by Lessor in performing 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 Feceral Reserve Bank 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
w+ cure any default by Lessee under this Lease.
26.17 Execution of Lease; No Option. The submission of this
Lease to Lessee shall be for examination purposes only, and
does not and shall not constitute a reservation of or option
r„ for Lessee to lease, or otherwise create any interest by Lessee
in the Premises. Execution of this Lease by Lessee and return
to Lessor shall not be binding upon Lessor notwithstanding any
time interval, until Lessor has in fact executed and delivered
this Lease to Lessee.
26. 18 Corporate Auth_orit Each individual executing this
+� Lease on behalf of a corporation, partnership or other entity
or organization, represents and warrants that he is duly
Ld
authorized to execute and deliver this Lease on behalf of said
L corporation, partnership, entity or organization and that this
08/01/88
0642n/2460/12 -108-
L
1 '
L Lease is binding upon same in accordance with its terms.
Lessee shall, at Lessor' s request, deliver a certified copy of
a partnership resolution or certificate authorizing or
evidencing such execution.
s«
ir. 26.19 [Reserved)
26.20 Controlling Law. This Lease shall be governed by and
construed in accordance with the laws of the State of
w.
California.
ohs
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.
4M6 26.22 Survival of Indemnities and Warranties. The
obligations of the indemnifying party under each and every
Y..
indemnification and hold harmless provision contained in this
Lease shall survive the expiration or earlier termination of
this Lease to and until the last to occur of (a) the last date
61 permitted by law for the bringing of any claim or action with
respect to which indemnification may be claimed by the
And indemnified party against the indemnifying party under such
provision or (b) the date on which any claim or action for
w
08/01/88
0642n/2460/12 -109-
lei
e
w
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 full by the
L. indemnifying party and the indemnified party is reimbursed by
the indemnifying party for any amounts paid by the indemnified
ir.
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 contained herein shall survive the
termination of this Lease without regard to any investigation
made by the parties.
r..
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.
w
ARTICLE XXVII . ARBITRATION
L, 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,
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
v
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�. 0642n/2460/12 -110-
FA
involved in a dispute subject to resolution by arbitration, a
party who in good faith maintains such dispute shall not be
L deemed to be in default under this Lease until the final
' arbitration decision is rendered, as provided in this Article
L
XXVII and, in the event such party is the losing party, such
Lparty fails to cure any default within the times specifically
set forth herein or, if no such time is specified within a
L reasonable time. A party desiring to initiate a permitted
�qq arbitration under this Lease shall give notice to the other
jr
party specifying (i ) the matter to be arbitrated, (ii) the
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section of this Lease permitting the arbitration, and (iii) the
name and address of the person designated to act as arbitrator,
►.+ which person shall be qualified to act as arbitrator in
accordance with the provisions of Section 27.3. Within fifteen
i
(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 . •1f the second
party fails to give notice to the first party of the
appointment of the second party' s arbitrator within the
Y
required period, the appointment of the second arbitrator shall
r..
be made by application to the court in the same nanner 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
`µ of the third arbitrator.
a.,
08/01/88
0642n/2460/12 -111-
M.
� 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 appointed, they shall then
6, 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
4
(25) day period, Lessor and Lessee shall then have an
W.
additional fifteen (15) days to select together the third
arbitrator. If Lessor and Lessee are unable to agree upon the
60 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)
r..
arbitrators shall decide the dispute (if it has not previously
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been resolved) by following the procedure set forth in Section
27.6.
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08/01/88
0642n/2460/12 -112-
V,
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27.3 Qualifications. The arbitrators shall be chosen from
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a class of disinterested experts qualified by training and
experience to resolve the particular issue in dispute in an
informed and efficient manner.
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27.4 Binding Decision. In the event of the failure,
r, _ _
refusal or inability of any -arbitrator to act, he shall appoint
r•. 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 (25) days
Ir•
after the appointment of the third arbitrator. A decision in
r., which any two arbitrators concur shall in all cases be binding
and conclusive upon the parties. Each party shall pay the fees
wr and expenses of its arbitrator and both shall share the fees
and expenses of the third arbitrator, if any. Each party shall
pay the fees and expenses of its attorneys and any witnesses it
� may call.
27.5 Expert Testimony. The arbitrators shall have the
right to consult experts and competent authorities skilled in
the matters under arbitration, but any such consultation shall
�l be made in the presence of both parties with full right to
cross-examine. The arbitrators shall give a counterpart copy
W, of their written decision to each party. The arbitrators shall
have no power to modify the provisions of this Lease (although
6,
60
08/02/88
0642n/2460/12 -113-
6A
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 the
arbitrators is limited accordingly.
hi
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 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
rd each party and each of the other arbitrators, with the third
arbitrator arranging for a simultaneous exchange of these
60 proposed resolutions. The third arbitrator shall select which
of the two proposed resolutions nost closely approximates his
determination of the issue. The third arbitrator shall have no
Y, right to propose a middle ground or any modification of either
of the two proposed resolutions. The resolution which the
6" third arbitrator selects shall constitute the decision of the
arbitrators and shall be final and binding upon the parties.
160
27.7 Enforcement. The judgment or the award rendered in
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 the
08/01/88
0642n/2460/12 -114-
Nam
...
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
4W commercial arbitration rules of the American Arbitration
Association or its successor except to the extent suw-h rules
+.- are modified as set forth in thiE Article XXVII .
ARTICLE XXVIII . REPRESENTATIONS BY LESSEE
i
26.1 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 representation
to its financial condition including, without limitation, all
� of its assets, liabilities, income: and sources of income, have
been prepared, certified and submitted to Lessor as an
inducement and consideration to 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
L accurately and fully reflect Lessee' s true financial condition
as of the date of execution of this Lease by Lessee.
v
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os/ol/es_ .
�► 0642n/2460/12 -115-
IN WITNESS WHEREOF, the parties hereto have executed this
Lease as of the day and year first above written.
"LESSOR" "LESSEE"
THE CITY OF HUNTINGTON BEACH THE ROBERT L. MAYER TRUST OF
1982
By. ? �/' By. zd::�&4
M or Robert L. yer, True, ee
At
City Clerk
Approved As to Form.
Special Counsel
� l
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08/01/88
0642n/2460/12 -116-
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EXHIBIT"A"
DESCRIPTION OF PREMISES
The land referred to in this lease is situated in the State
of California, County of Orange, City of Huntington Beach,
�. and is described as follows:
L THAT PORTION OF SECTION 14 , TOWNSHIP 6 SOUTH, RANGE 11 WEST, IN THE
RANCHO LAS BOLSAS, AS PER MAP RECORDED IN BOOK 51, PAGE 14 OF
MISCELLANEOUS MAPS IN THE OFFICE OF THE COUNTY RECORDER OF SAID
COUNTY, DESCRIBED AS FOLLOWS:
BEGINNING AT THE SOUTHEAST CORNER OF THE NORTHEAST QUARTER OF THE
NORTHEAST QUARTER OF SAID SECTION; THENCE WESTERLY 111.91 FEET AL40NG
THE NORTH LINE OF THE SOUTH HALF OF THE NORTHEAST QUARTER OF SAID
SECTION TO A POINT ON THE WESTERLY LINE OF THE LAND DESCRIBED IN THE
DEED TO THE STATE OF CALIFORNIA IN BOOK 6168, PAGE 667 OF OFFICIAL
RECORDS, SAID POINT BEING THE TRUE POINT OF BEGINNING; THENCE SOUTH-3
DEGREES 29 ' 43" WEST 593.12 FEET; THENCE SOUTH 25 DEG. 321 14" WEST
386.94 FEET; THENCE SOUTH 11 DEG. 44 ' 36" EAST 771.48 FEET; THENCE
SOUTH 78 DEG. 15' 24" WEST 82.75 FEET TO THE NORTHWESTERLY RIGHT OF
L WAY LINE OF'PACIFIC COAST HIGHWAY, AS DESCRIBED IN BOOK 455, PAGE 400
OF OFFICIAL RECORDS OF SAID ORANGE COUNTY; THENCE ALONG SAID NORTH-
EASTERLY RIGHT OF WAY LINE, NORTH S2 DEG. 050 09" WEST 2409.77 FEET
TO THE SOUTHEASTERLY RIGHT OF WAY LINE OF HUNTINGTON AVENUE, 60.00
Am FEET IN WIDTH AS NOW LAID OUT; THENCE ALONG SAID SOUTHEASTERLY RIGHT
OF WAY LINE, NORTH 37 DEG. 54 ' 51" EAST 299.35 FEET TO AN ANGLE
POINT; THENCE NORTH 0 DEG. 17 ' 36" EAST 20.44 FEET ALONG THE EAST
jh, RIGHT OF WAY LINE OF HUNTINGTON AVENUE, 60.00 FEET IN WIDTH AS NOW
LAID OUT, TO THE NORTH LINE OF THE SOUTH HALF OF THE NORTHEAST
QUARTER OF SAID SECTION; THENCE EASTERLY 1844.00 FEET ALONG SAID
NORTH LINE TO THE TRUE POINT OF BEGINNING.
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EXCEPT THAT PORTION THEREOF DESCRIBED AS FOLLOWS: BEGINNING AT A
POINT ON THE NORTH LINE OF SAID IJVID, NORTH 89 DEG. 43' EAST 690.00
�.. FEET FROM THE CENTER LINE OF SAID HUNTINGTON AVENUE; THENCE NORTH 89
DEG. 430 EAST 200.00 FEET; THENCE SOUTH 0 DEG. 171 EAST 150.00 FEET;
THENCE SOUTH 89 DEG. 439 WEST 200.00 FEET; THENCE NORTH 0 DEG. 17 '
6j WEST 150.00 FEET TO THE POINT OF BEGIIr`NING.
PARCEL 2:
THAT PORTION OF SECTION 14, TOWNSHIP 6 SOUTH, RANGE 11 WEST, IN THE
RANCHO LAS BOLSAS, DESCRIBED AS FOLLOWS:
`0a BEGINNING AT THE EASTERLY TERMINUS OF THAT CERTAIN COURSE SHOWN AS
HAVING A DISTANCE OF 92.98 FEET ON THE STATE HIGHWAY MAP
(ABANDONMENT) FILED JUNE 251 1966 IN STATE HIGHWAY MAP BOOK
4, PAGES 29 AND 30, IN THE OFFICE OF THE COUNTY RECORDER OF SAID
COUNTY; THENCE NORTH 59 DEG. 151 30" WEST 72.30 FEET ALONG SAID
++ EXHIBIT "All
Page 1 of 3
COURSE TO THE BEGINNING OF A CURVE CONCAVE EASTERLY, HAVING A RADIUS
OF 27.00 FEET; THENCE NORTHWESTERLY AND NORTHEASTERLY 45.79 FEET
ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 97 DEG. 10' 21" TO A LINE
PARALLEL WITH AND SOUTHEASTERLY 47. 00 FEET FROM THE CENTER LINE OF
HUNTINGTON AVENUE; THENCE NORTH 3' DEG. 54 ' 51" EAST 150. 01 FEET
., ALONG SAID PARALLEL LINE; THENCE SOUTH 52 DEG. 05' 09" EAST 133.00
FEET; THENCE SOUTH 37 DEG. 54 ' 51" WEST 139.28 FEET; THENCE SOUTH 2
DEG. 46 ' 13" EAST 30.54 TO A POINT ON A NON-TANGENT CURVE CONCAVE
SOUTHWESTERLY, HAVING RADIUS OF 1250.00 FEET; THENCE NORTHWESTERLY
51.09 FEET ALONG SAID CURVE, THROUGH A CENTRAL ANGLE OF 2. DEG. 20'
30" TO THE POINT OF BEGINNING. '
�+ EXCEPT THAT PORTION THEREOF INCLUDED WITHIN PARCEL 1.
M�
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4
EXHIBIT "A"
Page 2 of 3
2� -2w
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14 B -02 148-01 I'= 400
114 - 15
(NAMPSHIRE) OWL EVARDif@73
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NorE ASSESSOR'S BLOCK S ASSESSOR'S MAP
PARCEL NUMBERS BOOK 24 PAGE P5
SHOWN IN CIRCLES COUNTY Or ORANCE
EXHIBIT "All
Tags 3 of 3
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REVISIONS TO BE MADE TO LEASE AT TIME
"r OF DISPOSITION TRANSFERS
r..
At the time of each "Disposition Transfer" of a
"Separate Development Parcel" within the "Site" pursuant to
Section 301 of the Disposition and Development Agreement
entered into between the Redevelopment Agency of the City of
Huntington Beach ("Agency") and Lessee on or about August 15,
19881 as the same may be amended from time to time
(hereinafter the "DDA") , this Lease shall be modified as set
forth in this Exhibit "B". The modifications listed below
under the heading "Original Lease" shall apply to the revised
+. Lease document covering the balance of the "Developer Parcel"
that has not been the subject of a Disposition Transfer. The
modifications listed below under the heading "New Lease"
shall apply to the new Lease to be executed by Lessor and
Lessee covering each Separate Development Parcel within the
"Commercial Portion" of the Site which is the subject of a
Disposition Transfer. Lessor and Lessee agree to cooperate
and execute modified and new leases in accordance with
Section 1.11 of this Lease and this Exhibit "B, " and to
execute all documents required to remove any prior and
conflicting leases of record. The amendments to the provi-
sions of the Original Lease and New Lease(s) are set forth
below. The provisions not specifically discussed below shall
be retained in the original Lease and incorporated verbatim
into the New Lease(s) .
1. Title Page, Introductory Paragraph, and Signature Block.
A. Original-Lease. Unchanged.
B. New Lease. Name of Lessor to be changed from "City
of Huntington Beach" to Redevelopment Agency of the
City of Huntington Beach," and signature lines for
Mayor and City Clerk to be changed to "Chairman"
and "Secretary, " respectively. Date on title page
and "Effective Date" in introductory paragraph to
be the date of the Disposition Transfer for the
Separate Development Parcel in question, from
Section 1. 11 of this Lease.
2. Section 1.1.
,. A. Original Lease. Description of "Premises" in
Exhibit "A" to be modified to delete that portion
of the Developer Parcel that has been the subject
` of a Disposition Transfer to Developer.
EXHIBIT 11B"
�+ Page S of 24
08/15/88 FINAL
B. New Lease. Description of the "Premises" in
Exhibit "A" to include the Separate Development
Parcel in question.
3 . Section 1.3.
' A. original Lease. Unchanged.
B. New Lease. Revise section 1.3 to read as follows:
w
1.3 Exceptions to Leasehold Estate.
This Lease s made subject to:
lea
(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 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 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.
F..
4. Section 1.4.
A. Original Lease. Unchanged.
B. New Lease. Term Commencement Date 'to be the date
.w of the Disposition Transfer for the Separate
Development Parcel in question. Termination Date
to be December 31, 2086. Delete the words "or
extended" in the first sentence.
5. Section 1.5.
a+
A. Original Lease. Unchanged.
B. New Lease. Delete.
�•• EXHIBIT NIB"
Page 2 of 24
08/15/88 FINAL
.0
46 6. Section 1.6.
A. Original Lease. Unchanged.
B. New Lease. Put a comma after the words "condition
of the Premises and" and add the following clause:
"except as provided in Section 312 of the DDA and
the Scope of Development (Attachment No. 3)
thereto, " .
7. Section 1.10.
A. Original Lease. Unchanged.
B. New Lease. In each New Lease for a Separate
Development Parcel on which a hotel is to be
constructed and operated, change the phrase "in
good order" in the first sentence of Section 1.10
to read as follows: "In first-class condition and
� good order. " In addition, add the following
paragraph at the end of Section 1.10:
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 the
Improvenents, 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 theca from 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
+M during such period the public liability
insurance and indemnity provisions of Article
x of this Lease (but no other provisions,
.. including without limitation Article 11) shall
remain in full force and effect.
S. Section 1.11.
A. original Lease. Unchanged.
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B. New Lease. Delete.
9. Section 2.1.
A. origina Lease. The $200,000 rental figure in
Section 2.1 (a) and the $500, 000 rental figure in
EXHIBIT "B"
Page 3 of 24
08/15/88 FINAL
V
I
L
I Section 2.1 (b) shall be adjusted by multiplying
each said figure by a fraction in which the
numerator equals the total square footage of the
surface of the land in the "Commercial Portion" of
the site (as that tern is defined in the DDA, and
net of land dedicated or reserved for public
rights-of-way and excluding the Separate
Development Parcel being conveyed at such tire)
that has not been conveyed to the Developer
pursuant to a Disposition Transfer and in which the
L denominator equals the total square footage of the
surface of the land in the Commercial Portion of
the Site (net -of land dedicated or reserved for
public rights-of-way) , The numbers to be used in
L the formula set forth above shall be determined by
a survey conducted by a licensed land surveyor
• retained by Lessee, subject to Lessor's prior
}� written approval, which approval shall not be
unreasonably withheld. Lessee shall exercise
reasonable diligence to cause the survey to be
completed no later than thirty (30) days prior to
"r the Term Commencement Date. Lessor and Lessee
shall each pay fifty percent (50%) of the cost of
the survey.
Irr
B. New Lease. The $200,000 rental figure in Section
2.1(a) and the $500,000 rental figure in Section
2.1 (b) shall be adjusted by multiplying each said
"' figure by a fraction in which the numerator equals
the total square footage of the surface of the land
in the Premises (net of land dedicated or reserved
�.. for public rights-of-way) and in which the
denominator equals the total square footage of the
surface of the land in the Commercial Portion of
the Site (net of land dedicated or reserved for
public rights-of-way) . In addition, in the second
to last sentence of section 2.1(a) , the following
words shall be inserted after the words "deduction
Lai or offset": " (except as permitted pursuant to
Attachment No. 5 of the DDA) ". In addition, in
Section 2.1(b) , the. word "earlier" shall be
61 replaced with the word "earliest", subparagraph
(ii) shall be deleted, and the following
subparagraphs shall be added:
(ii) The date on which the City of
Huntington Beach issues its Certificate of
Occupancy for the business(es) to be conducted
r� on the Premises, or
(iii) The date which is three (3) years
�1 after the Rent Commencement Date.
EXHIBIT "B"
Page 4 of 24
08/15/88 FINAL
10. Section 2.2 (a) .
A. Original Lease. Unchanged.
B. New Lease. Revise the first sentence to read as
follows:
The Annual Rent required pursuant to
Section 2.1 above and 2.2 (b) below shall be
adjusted upward each January 1st through the
Term of this Lease (the "Adjustment Dates") as
provided herein.
11. Section 2.2 (b) .
A. Original Lease. Not applicable.
i0.
B. New Lease. Add a new subparagraph (b) to read as
follows:
" (b) Market Value _Rent _Adjustments. The
Annual Rent payable pursuant to Sections 2.1
and 2.2 shall be adjusted on the January 1st
M. following the end of the 24th, 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" of the Premises, as determined
r
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.
b" 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
i.. Fee Interest in the land constituting the
Premises (and not the rental value therefor)
under the actual facts and circumstances
existing as of the 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
,M required by this Lease and without assuming
EXHIBIT 11B11
Page 5 of 24
08/15/88 FINAL
bo
M
led 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 rianner
required in Section 9.1(a) below; all
encumbrances affecting the Premises, including
but not limited to, the DDA and all then-
existing taxers, assessments, covenants,
conditions, restrictions, rights-of-way,
M- liens, and easements; and the encumbrance of
the Premises by this Lease and all covenants,
conditions, limitations, -and restrictions
w� 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; provided,
however, that if Lessee has expended in excess
of fifty percent (50%) of the then-current
full replacement value of the Improvements on
the Premises (exclusive of 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
(6%) nor more than fifteen percent (151) . The
determination of the "Market Rental. Value" of
the Premises shall also take into
consideration all of the factors required to
be taken into consideration in determining the
r. "Market Value of the Fee" of the Premises as
of the applicable Revaluation Date, in
accordance with the preceding paragraph.
EXHIBIT 11B11
�+ Page 6 of 24
08/15/88 FINAL
6+
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Notwithstanding any other provision in
this Section 2.2(b) to the contrary, the
Annual Rent derived under this Section 2 .2 (b)
shall not result in a rent less than the rent
w payable immediately prior to the applicable
Revaluation Date (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,
deferral, or reduction; this exception shall
not, however, cause any cessation of an
r. abaterent, 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 Terra 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 to agree
upon the "Fair Rental Value" of the Premises
on or before ninety (90) days prior to a
Revaluation Date, then such Fair Rental Value
�.. shall be determined by arbitration conducted
within the times, and in the manner, set forth
below:
(i) On or before seventy-five (75)
days prior to the applicable Revaluation
Date, Lessor and Lessee shall Jointly
.r attempt to agree on the 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 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 estate appraiser having appropriate
rk qualifications to appraise commercial
real estate set forth immediately below) ,
with at least ten (10) years professional
4 experience in Southern California in
EXHIBIT 11B11
b- Page 7 of 24
08/15/88 FINAL
w
appraising land and inprovements sinilar
to the Premises. All appraisers selected
pursuant to the provisions hereof shall
be impartial and unrelated, directly or
indirectly, so far as e:.ployment of
services is concerned, to any of the
parties hereto, or their successors. The
L6 cost of the 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
N■ said appraiser has been selected.
(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 they concur on the Market Value of
the Fee of the Premises and the Market
Rental Value of the Premises in the
manner hereinabove specified, the Fair
Rental Value determined by theca 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 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.
4 The two appraisers shall render their
respective appraisals within sixty (60)
days after they have been selected. If
the difference between the two
determinations exceeds 'the amount
EXHIBIT 11B11
Page a of 24
08/15/88 FINAL
v
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 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
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
w for either party. within fifteen (15)
days from the date of the selection of
the third appraiser, all three appraisers
w, 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 shall
review all such findings, data, and
w. 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
tow this Lease. The third appraiser shall
not be permitted to make any other
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 r:ost reasonable
'p` determinations shall be the Market Value
of the Fee of the Premises and the Market
Rental Value of the Premises for purposes
r. of determining the adjustment in rent
pursuant to the formula set forth above.
The third appraiser's conclusion 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.
1 (iii) The Fair Rental Value
established under this Section 2.2 (b)
EXHIBIT f1B"
Page 9 of 24
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w
shall be binding and conclusive on the
i parties for purposes of determining the
adjustment in rent pursuant to the
formula set forth above. If for any
a reason a Fair Rental Value is not
established under this Section 2 .2 (b) , no
party nay avail itself of a Fair Rental
d 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
w properties used as comparisons, that he
or she has no past, present or
contemplated future interest in the
Premises, the Improvements or the "Site"
` (as defined in the DDA) , 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 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
6• appraisal nor his or her compensation
therefor is contingent upon reporting a
predetermined value or values, or a value
60d 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
`M and improvements similar to the Premises,
that he or she is a member of the
American Institute of Real Estate
6" Appraisers or the Society of Real Estate
Appraisers or respective successors
thereto and that his or her appraisal was
prepared in conformity with the standards
of professional practice of the Institute
or Society or successor thereto.
4.
w
EXHIBIT I'D"
Page 10 of 24
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w
12. Section 2 . 3 .
led
A. Original Lease. Unchanged.
r.. B. New Lease. Replace the period at the end of the
first Sentence with a comma followed by the
following words: " (except as permitted pursuant to
W Attachrent No. 5 of the DDA) . "
13 . Section 2.4 .
w+
A. Original Lease. Unchanged.
,.� B. New Lease. In the first sentence, replace the
Phrase "City of Huntington Beach" with "Huntington
Beach Redevelopment Agency. "
r�
14 . Section 2 .5.
A. Original Lease. Unchanged.
B. New Lease. Add the following at the end of the
first paragraph in Section 2.5:
In addition, Lessor shall have the right, for
a period not tc exceed five (5) Lease Years
i• prior to each of the Revaluation Dates
specified in Section 2.2 (b) above, upon
reasonable notice to Lessee., and at Lessons
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 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
VFA limited period to have such portion of
Lessee's books, records, and tax returns
audited by a disinterested, reputable firm of
certified public accountants selected by
Lessor at Lessor's expense.
i
k..
EXHIBIT "Bit
L+ Page 11 of 24
08/15/88 FINAL
15. Section 2 .7.
W
A. Original Lease. Unchanged.
B. New Lease. Delete.
16. Section 3 .1.
A. Original Lease. Unchanged.
B. New Lease. Revise the third sentence in paragraph
(c) of Section 3.1 to read in its entirety as
follows:
r.
If such sale is not consummated within said
one (1) year period, Lessor shall again be
obligated to first offer to sell the Offered
Interest to Lessee as set forth in this
Section 3.1.
L.
17 . Article VI.
A. original Lease. Unchanged.
B. New Lease. Add a new Article VI, entitled
"CONSTRUCTION OF IMPROVEMENTS; EFFECT AND DURATION
OF COVENANTS IN DDA" to read as follows:
Lessor and Lessee shall each construct or
,. cause to be constructed those improvements on
and adjacent to the Premises which are
required to be constructed by each of them in
accordance with, within the times, and subject
to the terms and conditions set forth in the
DDA (including, without iinitation, Article IV
thereof (commencing with section 400) , the
.w "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 the aforesaid
provisions of the DDA.
4
EXHIBIT 11B11
�+ Page 12 of 24
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4
18. Section 7.1.
N
A. Ori inal Lease. Unchanged.
B. New Lease. In each New Lease for a Separate
Development Parcel on which a hotel is to be
constructed and operated, add the following as a
w new first paragraph ;n Section 7. 1:
During the term of this Lease, Lessee
shall not use or suffer to be used the
w 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 rooms, gift shop,
�. magazine stand, barber or beauty shop, travel
agency, airline! ticket office, automobile
rental operation, and recreational facilities,
shall also be permitted.
In addition, in each New Lease for a Separate
Development Parcel on which retail commercial and
L& office uses are to be developed, add the following
as a new first paragraph in Section 7.1:
During the terra of this Lease, Lessee
shall not use or suffer to be used the
Premises other than for commercial retail and
office uses in accordance with the applicable
zoning regulations of the City of Huntington
Beach in effect as of the Effective Date of
the DDA, or such additional uses as ray be
permitted from tire to time by changes in such
zoning regulations. Any other use of the
Premises shall require Lessor's prior written
consent.
In addition, in the New Lease for the Separate
Development Parcel on which the recreation/tennis/
health and fitness facility is to be operated, add
the following as a new first paragraph in Section
L During the term of this Lease, Lessee
shall not use or suffer to be used the
Premises other than for commercial
L recreational uses, including without
limitation a tennis club or facilities, health
and fitness facilities, a swimming pool or
Ld pools, exercise/weight training rooms, sauna,
EXHIBIT O'B"
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64
w. spa, and sinilar facilities. The Premises
shall not be used for other uses without
Lessor's prior written consent.
In addition to the foregoing, in the event that any
of the Separate Development Parcels include a
combination of the uses identified above, the new
w first paragraph in Section 7.1 shall be revised
appropriately to reference all of the permitted
uses.
�r In addition, add the following as a new second
paragraph in Section 7.1:
Lessee agrees during the entire Term to
operate the Improvements and to conduct its
business at all times in a first class and
L reputable manner and to cause all subtenants,
operators, concessionaires, and other
occupants of the Improvements 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.
In addition, in each New Lease for a Separate
Development Parcel on which a hotel is to be
constructed and operated, add the following
language to the end of the second paragraph in
l'" Section 7.1:
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 terra "First-Class Hotel"
shall mean that, subject to any limitations
imposed by the physical structure and
configuration of the Improvements 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
maintained from time to time by any of the
following hotel companies: Hilton, Sheraton,
Marriott, Radisson, Hyatt, Guest Quarters,
Ramada, or any subsidiaries thereof, in the
Southern California area. The designation
"first-class" is intended to reflect the
L highest standard of hotel operation other than
EXHIBIT ItStt
LA Page 14 of 24
08/15/88 FINAL
W
r
deluxe, luxury 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
w, reasonable approval of the other party;
provided, however, in no event shall there be
fewer than five (5) hotel companies on such
boblist at any one time.
19. Section 7 .6.
♦r
A. original Lease. Unchanged.
B. New Lease. Add a new Section 7.6 to one of the New
Leases for a hotel project, with the specific lease
to be selected by Developer, to read in its
entirety as follows:
J..
7.6 Concession at City Beach. During
the term of this Lease, not less than ninety
�.. (9D) days prior to the expiration, renewal, or
extension of the lease/concession agreement
between the City and the lessee/concessionaire
for the concession located at the City beach
bed across Pacific Coast Highway from the
Premises, Lessor shall notify Lessee and
provide the opportunity for Lessee to submit a
w, proposal to the City for the continued
operation of said concession. Nothing in this
Section 7.6 shall be deemed as a prejudgment
w, by the City or Lessor of the merits of any
proposal that Lessee might elect to submit.
it is understood that any such proposal would
be required to preserve or enhance the
existing type and quality of services now
available to the general public as well as to
serve hotel guests.
20. Section 8.2,
A. Original Lease. Unchanged.
j B. New Lease. Revise paragraph (b) to read as
�+ follows:
u EXHIBIT I'B"
Page 15 of 24
08/15/88 FINAL
V
Lessee will be constructing, operating,
and maintaining on the Premises ocean-
oriented, visitor-serving con.n. ercial
facilities which are designed to take full
advantage of the existing ocean views across
Pacific Coast Highway. Lessee desires to
obtain assurances from Lessor that such views
Ing will not be obstructed during the term of this
Lease.
21. Section 8.3 .
A. original_ Lease. At the time of each Disposition
w Transfer of a Separate Development Parcel in the
commercial Portion, the $5, 000.00 figure in Section
8.3 (a) shall be reduced by one-sixth ($833 .33) and
the $10,000.00 figure in Section 8.3(b) shall be
reduced by one.-sixth ($1,666.66) , such that after
the final (i.e. , the sixth) Disposition Transfer of
a Separate Development Parcel in the Corm-aercial
w� Portion, the entire payment obligation has been
transferred to and allocated among such Separate
Development Parcels in accordance with Paragraph B
below.
B. New Lease. The $5,000.00 figure in Section 8.3 (a)
shall be changed to "Eight Hundred Thirty-Three
+� Dollars and Thirty-Three Cents ($833.33) " and the
$10,000.00 figure in Section 8.3 (b) shall be
changed to "One Thousand Six Hundred Sixty-Six
Dollars and Sixty-Six Cents ($1, 666.66) . " In
addition, add a new Section 8.3 (c) to read in its
i entirety as follows:
w' (c) For each Lease Year fron 2014 to 2086,
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 year adjusted upward as of
January 1, 2014, and each January 1st
thereafter as 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-Long Beach-Anaheim
Average, All Items (1967 - 100) (the "Index") .
The Index published and in effect ninety (90)
days prior to the twenty-fifth (25th)
EXHIBIT 11B$1
�+ Page 16 of 24
•
08/15/88 FINAL
anniversary of the Effective 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 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
■e 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 exist in the sane
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
w.. and Lessee be unable to mutually 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 co=ercial
arbitration rules of the American Arbitration
Association or its successor.
22 . Section 8.4
A. original Lease. Unchanged.
B. New Lease. Delete all but the first sentence.
M
EXHIBIT O'B"
Page i? of 24
08/15/88 FINAL
i
23. Section 8. 5.
A. original Lease. Unchanged.
'r B. New Lease. Delete the phrase "and the Separate
Development Parcels within the Commercial Portion
of the Site. "
24. Section 9. 1.
A. Original Lease. Unchanged.
B. New Lease. In the first sentence of Section
9.1(a) , change the phrase "shall keep and maintain
in good order, condition, quality, and repair" to
"shall keep and maintain in first-class condition
and appearance and in good first-class order,
condition, quality, and repair." In addition,
after the first sentence, add the following
sentence:
As used in this Section 9.1(a) , the phrase
"first-class condition" with respect to the
,i.. Premises and Improvements shall mean that the
original Improver::ents 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 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 1988 Dollars)
of the original Improvements as altered,
expanded, or reconstructed as described above.
4 In addition, add the following sentence after the
first sentence in Section 9.1(b) :
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.
EXHIBIT 11B11
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W
r
In addition, in the last sentence of Section
' 9. 1(b) , change the time period of "twelve (12) "
months to "twenty-four (24) " Months.
M
25. Section 10.1.
A. Ori final Lease. Unchanged.
B. New Lease. In Section 10. 1(a) , delete the word
"and" at the end of paragraph (v) , substitute a
semi-colon for the period at the end of paragraph
(vi) and add tte word "and" after the semi-colon,
and add a new paragraph (vii) to read as follows:
(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 Lessee's
' fixed operating expenses, both for a period of
►• twelve (12) Months from the date of any
insured loss.
In Section 10.1(b) , delete the period after the
word "California" at the end of the first sentence
and add the words: "and having a policyholder's
rating of 'A' (excellent) or better, and a
financial rating of 'X' or better, in *Best's
Insurance Reports -- Fire and Casualty. ""
F
In addition, add a new paragraph (ifi) to Section
10.1(c) to read as follows:
r
(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 rents shall be
... computed and stated separately in any
settlement entered into by the insurer under
the policy.
Bad
26. Section 14.6.
A. Original Lease. Unchanged.
B. New Lease. Delete.
b.
s�
EXHIBIT "B"
�.. Page 19 of 24
08/15/88 FINAL
., 27 . Section 16.1.
A. Original Lease. Unchanged.
B. New Lease. In each New Lease for a hotel project,
add the following at the end of the first full
paragraph:
w
It is understood 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.
,�. in addition, in each New Lease for a hotel project,
substitute a comma for the period at the end of
subparagraph (f) and add the following:
provided that all requirements of Article XX
have been met.
28. Section 18.1.
A. Original Lease. Unchanged.
B. New Lease. In each New Lease for a hotel project,
add the following subparagraph (f) to the end of
�+ Section 28.1:
(f) Lessee's failure to operate and
�., maintain the Improverients and/or Premises as a
"First-Class Hotel, " as that term is defined
in Section 7.2 above, after receiving a Notice
of Deficiency from Lessor under Section 9.1
and the expiration of any applicable period to
correct such deficiency as provided herein.
4.t
29. Section 18.5.
A. Original Lease. Unchanged.
B. New Lease. Add a new Section 18.5, entitled "No
cross-Defaults, " to read in its entirety as
follows:
18.5 No Cross-Defaults. Except as
�. otherwise specifically set forth in this
1 EXHIBIT "Bn
Page 20 of 24
l 08/15/88 FINAL
r
Lease, a breach or default by either party
under the Disposition and Development
Agreement ("DDA") entered into between Lessor
and Lessee on or about August 15, 1988, as the
same may have been amended from time to tire,
shall not constitute a breach or default
hereunder, and a termination, in whole or
part, of the DDA shall not terminate or modify
Lessor's or Lessee's rights or obligations
hereunder, except as may be specifically set
forth in Section 1.5 and Section 2.1, clause
(b) , and elsewhere herein.
30. Article XX.
A. Original Lease. Unchanged.
r.
B. New Lease. Add to each New Lease on which a hotel
s to be constructed a new Section 20.1, entitled
"Operating Agreement, " and a new Section 20.2,
entitled "Franchise Agreement, " to read in their
entirety as follows:
�.. 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 Terns of this
Lease, Lessee shall desire to have the hotel
rianaged 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 such further information as may be
reasonably requested.
Lessee's request for approval of a hotel
operator shall he 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
EXHIBIT "B"
Page 21 of 24
08/15/88 FINAL
4
64
received, on the 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
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)
ika 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 operator is a capable, competent, and
experienced operator of "First-Class Hotels"
similar in quality, size, and type as required _
�.y 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 operating and nanaging the hotel
itself.
20.2 Franchise Agreement. Prior to the
Effective Date of this Lease, Lessor has
approved the identity of the proposed
bm, franchisor of the hotel pursuant to Section
206 Of the DDA. If at any time during the
Term of this Lease, Lessee shall desire to
enter into a franchise agreement with any
'-' entity other than the franchisor so approved
by Lessor, Lessee shall submit such matter to
Lessor for Lessor's approval.
W
Within thirty (30) days after receipt of
Lessee's request for approval of a hotel
franchisor, 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
s EXHIBIT rB"
Page 22 of 24
08/15/88 FINAL
is
w
franchisor. Upon receipt of such a timely
.. response, Lessee shall promptly furnish to
Lessor such further information as ray be
reasonably requested.
Lessor's request for approval of a hotel
franchisor shall be deemed complete thirty
(30) days after Lessor's receipt thereof, if
k. 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 (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 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
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,
bob 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 contrary, in the event
Lessee meets the qualifications set forth
above for an approved hotel franchisor,
bw nothing in this Lease shall be interpreted to
prevent Lessee from operating and managing the
ti hotel itself (without a franchise agreement
with some other entity) .
4
EXHIBIT 'BIT
Page 23 of 24
08/15/88 FINAL
u
t
lad 31. Exhibit "B. "
f A. Original Lease. Unchanged.
�r B. New Lease. Delete.
two
6/112/065580-0001/007
r�
�r.
Ibr
lu
Mir
Ire
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b+
ire
EXHIBIT "B"
Page 24 of 24
08/15/88 FINAL
87310 091111E R 002
`4 TICOR TITLE INSURANCE COMPANY OF CALIFORNIA
DE SCR IP7ION:
i
►« THAT PORTION OF FRACTIONAL SECTION 14, TOWNSHIP 6 SOUTH, RANGE 1i WEST, SAN
BERNARDINO EASE AND MERIDIAN, IN RANCHO LAS BOLSAS, IN THE CITY OF HUN-rINGTOO
BEACH, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 51 ,
impPAGE 14 OF MISCELLANEOUS MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID
COUNTY, DESCRIBED AS FOLLOWS:
COMMENCING AT THE MOST SOUTHEASTERLY TERMINUS OF THE SOUTHEASTERLY
it RIGHT-OF-WAY LINE OF HUNTINGTON AVENUE, AS DESCRIBED IN THAT CERTAIN AMENDMEN".
TO LEASE, RECORDED IN KOOK 5978, PAGE 910, OFFICIAL RECORDS, (SAID
RIGHT-OF-WAY LINE CITED IN SAID AMENDMENT TO LEASE AS NORTH 37 DEGREES 54
MINUTES 5t 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 Q9, PAGE 9 OF DEEDS, RECORDS OF SAID COUNTY, SAID POINT OF
INTERSECTION BEING THE TRUE POINT OF BEGINNING; THENCE 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
iwr 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 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 KOOK 506, PAGE
448 OF OFFICIAL RECORDS; THENCE ALONG THE SOUTHERLY LINE THEREOF NORTH 68
r. 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 BOOT; 139, PAGE 9 OF DEEDS, RECORDS OF SAID COUNTY; THENCE
NORTHWESTERLY ALONG SAID NORTHEASTERLY LINE TO THE TRUE POINT OF BEGINNING.
EXCEPTING THEREFROM AN UNDIVIDED ONE-HALF INTEREST IN THE MINERALS AND MINERA,
ORES OF EVERY KIND AND CHARACTER NOW KNOWN TO EXIST OR HEREAFTER DISCOVERED
�} UPON, WITHIN, OR UNDERLYING SAID LAND OR THAT MAY BE PRODUCED THEREFROM,
INCLUDING, WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, ALL PETROLEUM,
OIL, NATURAL GAS AND OTHER HYDROCARBON SUBSTANCES AND PRODUCTS DERIVED
THEREFROM, TOGETHER WITH PERPETUAL RIGHT OF SAID GRANTOR, ITS SUCCESSORS AND
ASSIGNS, OF INGRESS AND EGRESS BENEATH THE SURFACE OF SAID LAND TO EXPLORE
FOR, EXTRACT, MINE AND REMOVE THE SAME, AND 70 MAKE SUCH USE OF SAID LAND
BENEATH THE SURFACE AS IS NECESSARY OR USEFUL IN CONNECTION THEREWITH AND
OTHER USE THEREOF, WHICH USES MAY INCLUDE LATERAL OR SLANT DRILLING, DIGGING,
BORING, OR SINKING OF WELLS, SHAFTS OR TUNNELS TO OTHER LANDS NOT SUBJECT TO
THOSE RESERVATIONS AND EASEMENTS, PROVIDED, HOWEVER, THAT SAID GRANTOR, ITS
SUCCESSORS AND ASSIGNS, SHALL NOT USE THE SURFACE OF SAID LAND IN THE EXERCISE
OF ANY OF SAID RIGHTS AND SHALL NOT DISTURB THE SURFACE OF SAID LAND OR ANY
IMPROVEMENTS THEREON OR REMOVE OR IMPAIR THE LATERAL OF SUBJACENT SUPPORT OF
SAID LAND OR ANY IMPROVEMENTS THEREON, AND SHALL CONDUCT NO OPERATIONS WITHIN
FIVE HUNDRED (500) FEET OF THE SURFACE OF SAID LAND, AS RESERVED IN THE DEED
FROM SOUTHERN PACIFIC COMPANY, A DELAWARE CORPORATION, RECORDED NOVEMBER 7.
1968.
EXHIBIT "C"
Page 1 of 3
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8700 091SlS6 R 042
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TICOR TITLE INSURANCE COMPANY OF CALIFORNIA
SAID DEED PROVIDES: 'IN THE EXERCISE OF SAID RESERVED EASEMENTS, MINERAL
RIGHTS AND RESERVATIONS, SAIL' GRANTOR MAY POOL SAID LANDS WITH OTHER LANDS.
THE: FIGHTS OF GRANTOR SHALL INCLUDE, BUT SHALL IN NO WAY BE LIMITED TO, ALL
SUITERRANEAN FIGHTS NECESSARY, INCIDENTAL, OR CONVENIENT TO THE FULL EXERCISE
+� OF' THE RIGHT'S RESERVED BY GRANTOR BE:LOU FIVE HUNDRED (500) FEET OF THE SURFACE
OF SAID LAND AND SHALL INCLUDE THE RIGHT TO DRILL AND MAINTAIN WELL HOLES
THROUGH THE SAID LAND BELOW FIVE HUNDRED (500) FEET FROM THE: SURFACE: THEREOF'
FOR THE PURPOSE OF REMOVING OIL, GAS, AND OTHER HYDROCARBON SUBSTANCES FROM
01HER: LANDS WHETHER SUCH OTHER LANDS BE: ADJACENT, CONTIGUOUS OR DISTANT" FROM
SAID LANDS.
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EXHIBIT "C"
t Page 2 of 3
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,SUAl�L E/LIENTAL I� O N9 S 1.-
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This is nut a survey of the land, but is compiled for lnformatlon only, nor Is ix 21 pert of frk fapor! \ \
or polity to whfth it may be attached. There wfll be no Wilily assumed as for the accuracy of
the acreage if shown. \