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HomeMy WebLinkAboutRobert L. Mayer Corp. - 1989-04-28 Gol�/1 d REQUEST F91VLDEVELOPL MENT AGENCY ACTION ED 92-56 Date: November 16.1992 Submitted to: Honorable Chairman & Redevelopment Agency Members Submitted by: Michael T. Uberuaga, Chief Executive Officei-� Prepared by: Barbara A. Kaiser, Deputy City Administrator/Economic Development AD OTTE,b Subject: FIRST AMENDMENT TO THE THIRD AMENDED AND . /�116 RESTATED LEASE-DRIFTWOOD MOBILE HOME PARK/ ��� MAIN-PIER REDEVELOPMENT PROJECT AREA /&,,J Consistent with Council Policy? D4 Yes [ ]New Policy or Exception Q /10 _ a3 Co Statement of Issue,Recommendation, Analysis,Funding Source, Alternative Actions, Attachments STATEMENT OF ISSUE The Robert L. Mayer Corporation (RLM) desires to encumber the revenue from its leasehold interest on the Driftwood Mobile Home Park. The attached First Amendment to the Third Amended and Restated Lease will permit this borrowing. AGENCY RECOMMENDATION Approve Agency Resolution No. .23 4 and City Council Resolution No. �- y-7 and authorize the appropriate Agency officials to execute the attached First Amendment to Third Amended and Restated Lease (the Driftwood Beach Club). ANALYSIS There is currently a leasehold interest by RLM (Robert L. Mayer, Trustee of the Robert L. Mayer Trust of 1982 as amended) for the land upon which the Driftwood Beach Club is located. Articles XVI and XVH of this lease require that RLM provide information to the City/Agency if it should desire to encumber this leasehold interest. Recently the Robert L. Mayer Corporation has concluded negotiations with a loan broker (Four Seasons Mortgage Service) to encumber this leasehold in the amount of$1.8 million. This loan will be funded and the encumbrance will be assigned to an entity which is unknown at this time. The attached amendment to the lease provides the following major points: The City waives it's right to approve the lender to which the encumbrance is assigned. 1 � ' RAA ED 92-56 November 16, 1992 Page two + If the holder of the encumbrance receives the leasehold interest through foreclosure or other means, the bolder then takes responsibility for Robert L. Mayer's obligations under the Mobile Home Acquisition and Relocation Agreement with the Driftwood tenants as approved by the Agency in 1988. • The above two provisions expire one year after the effective date of the amendment and does Pit transfer any of Robert L. Mayer's obligations under the Disposition and Development Agreement with the Agency. The Agency has the right to cure any future default by the Robert L. Mayer Corporation. • The Agency agrees not to remove more than ten mobile homes from the Driftwood Beach Club per year as provided in the Driftwood Relocation Agreement (this limitation expires if no new loan is recorded within one year after execution of this amendment to the lease or if any future loan is paid in full). • Robert L. Mayer is required to increase rents at Driftwood Beach Club at six per cent per year. • The Agency agrees to provide all information it may have about the current status of RLM's leasehold interest and to cooperate with Robert L. Mayer and any future lender in execution of all necessary documents to affect the loan. A summary of the major business points of the loan negotiated with Four Seasons Mortgagers Services follows: • The loan amount is $1,800,000. Net revenue to Robert L. Mayer is unknown. • The term is for two years with an automatic extension for an additional seven years. • Interest rate is Bank of America prime rate plus 5.5% adjusted monthly. If the loan should be in effect in the third year, the interest rate will float to a maximum of20%. • Payments will be made on a monthly basis of interest only during the first year with an addition of$20,000 per month principal reduction payments commencing in the second year. At the beginning of the third year, all Driftwood revenues will be collected by Four Seasons Mortgage Services (FSMS) and applied against principal and interest. • A Ioan fee of six per cent and a loan brokerage fee of one per cent will be charged. RAA ED 92-56 November 16, 1992 Page three A commitment fee of$18,000 will be assessed as will be attorney's fees and a variety of smaller fees. • The loan may be pre-paid by RLM with a penalty of 15 bays interest. • Personal guarantees will be provided by Robert L. Mayer. • The loan is also subject to a variety of conditions precedent to closing (these and more specific conditions are detailed in a letter of September 30, 1992, from Bruce Hasiford, Chief Financial Officer of The Waterfront to Executive Director, Michael T. Uberuaga and it's attachment of a September 22, 1992 letter from Four Seasons Mortgage Services to Robert L. Mayer included herein as Attachment No. 2. A Profit and Loss Statement for Driftwood Mobile Home Park from 1986 through 1990 is included herein as Attachment No. 3. In summary, the Robert L. Mayer Corporation proposes through the attached amended lease to encumber it's leasehold interest in the Iand beneath the Driftwood Beach Club in the amount of$1.8 million. This loan will be secured by the rent revenue generated by the mobile home park and further secured by personal guarantees from Robert L. Mayer. The Agency would retain the right to cure any default by Robert L. Mayer to prevent a lender from assuming Robert L. Mayer's position as lessee. Loan proceeds will be used for operating capital for the RLM Corporation. F�'VD,� INN SOURCE Funding source is Driftwood Beach Club rent revenues and Robert L. Mayer's personal guarantees. ,4.,LTr,RNAT1VES 1. Do not approve the First Amendment to the Third Amended and Restated Lease for Driftwood Mobile Beach Club. This will prevent Robert L. Mayer Corporation from encumbering this leasehold interest. 2. Require RLM to identify the lender to which the encumbrance is assigned. RAA ED 92-56 November 16, 1992 Page four ATTACHMENTS 1. Agency and City Council Resolutions 2. First Amendment to the Third Amended and Restated Lease 3. The Waterfront Letter of September 30, 1992 4. Driftwood Mobile Home Park Profit and Loss Statement NITU/BAK/SVK:jar 151j RESOLUTION NO. 113 Co A RESOLUTION OF THE REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH APPROVING THE FIRST AMENDMENT TO THIRD AMENDED AND RESTATED LEASE BETWEEN THE REDEVELOPMENT AGENCY AND ROBERT L. MAYER WHEREAS, the Redevelopment Agency of the City of Huntington Beach "Lessor") and R. L. Mayer as trustee of the Robert L. Mayer Trust of 1982 dated June 22, 1982 ("Lessee") are parties to that certain Third Amended and Restated Lease dated as of April 28, 1989 (the "Lease") , relating to the real property located within the City of Huntington Beach, California, more particularly described in Attachment 1 to Exhibit "A" thereto (the "Premises") ; and Articles XVI and XVII of the Lease require Lessee to obtain Lessor ' s consent prior to Lessee' s transfer to a "Lender" of a "Leasehold Mortgage" of Lessee 's interest in the Premises (as those terms are defined in the Lease) . In this regard, Lessee is required to furnish to Lessor certain information regarding the identity and qualifications of the prospective Lender; and Lessee has been negotiating with Four Seasons Mortgage Services ("Four Seasons") , as agent for a Lender to be designated at a later date, to transfer to such prospective Lender a Leasehold Mortgage of Lessee' s interest in the Premises. Since the identity of the prospective Lender is unknown at this time, however, Lessee is unable to provide to Lessor the information regarding such prospective Lender required under the Lease to obtain Lessor ' s consent. - 1 - 1 Accordingly, Lessee has requested that Lessor agree to amend the provisions of the Lease and waive its right of approval with respect to the identity and qualifications of the prospective Lender, as provided herein; and Lessor is willing to enter into this First Amendment and waive its right to approve the identity and qualifications of the prospective Lender to be designated by Four Seasons, subject to the terms and conditions set forth therein. NOW, THEREFORE, the Redevelopment Agency of the City of Huntington Beach hereby resolves to approve the First Amendment to Third Amended and Restated Lease and authorize the chairman to execute the same. PASSED AND ADOPTED by the Redevelopment Agency of the City of Huntington Beach at a regular meeting thereof held on the day of 1992. Chairman ATTEST: APPROVED AS TO FORM: Agency Clerk Agency Attorney REVIEWED AND APPROVED: INITIATED AND APPROVED: Executive Director Deputy City Administrator Director, Economic Development 2 - RESOLUTION NO. 6 I y 7 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF HUNTINGTON BEACH APPROVING THE FIRST AMENDMENT TO THIRD AMENDED AND RESTATED LEASE BETWEEN THE REDEVELOPMENT AGENCY AND ROBERT L. MAYER WHEREAS, the Redevelopment Agency of the City of Huntington Beach "Lessor" ) and R. L. Mayer as trustee of the Robert L. Mayer Trust of 1982 dated June 22, 1982 ("Lessee") are parties to that certain Third Amended and Restated Lease dated as of April 28, 1989 (the "Lease") , relating to the real property located within the City of Huntington Beach, California, more particularly described in Attachment 1 to Exhibit "A" thereto (the "Premises") ; and Articles XVI and XVII of the Lease require Lessee to obtain Lessor ' s consent prior to Lessee' s transfer to a "Lender" of a "Leasehold Mortgage" of Lessee' s interest in the Premises (as those terms are defined in the Lease) . In this regard, Lessee is required to furnish to Lessor certain information regarding the identity and qualifications of the prospective Lender; and Lessee has been negotiating with Four Seasons Mortgage Services ("Four Seasons") , as agent for a Lender to be designated at a later date, to transfer to such prospective Lender a Leasehold Mortgage of Lessee' s interest in the Premises . Since the identity of the prospective Lender is unknown at this time, however, Lessee is unable to provide to Lessor the information regarding such prospective Lender required under the Lease to obtain Lessor' s consent. - 1 - Accordingly, Lessee has requested that Lessor agree to amend the provisions of the Lease and waive its right of approval with respect to the identity and qualifications of the prospective Lender, as provided herein; and Lessor is willing to enter into this First Amendment and waive its right to approve the identity and qualifications of the prospective Lender to be designated by Four Seasons, subject to the terms and conditions set forth therein. NOW, THEREFORE, the City Council of the City of Huntington Beach hereby resolves to approve the First Amendment to Third Amended and Restated Lease. PASSED AND ADOPTED by the City Council of the City of Huntington Beach at a regular meeting thereof held on the day of 1992 . Mayor ATTEST: APPROVYDS TO FORM: �-1 City Clerk .City Attorney REVIEWED AND APPROVED: INITIATED AND APPROVED: City Administrator Deputy City Administrator Director, Economic Development A 2 - 1 \ 57At,16tfN_jA 92-8I8329 Recorded at the request of ���• Recording Requested By and ) FlRSTAPERVN TIT1.F INS. CO. pin, When Recorded Mail To: ) 4:00 u.n Nt $ ' -- — -- - ) P.M. Nov 3 01992 Connie Brockway, City Clerk ) Official Records ns i Office of the City Clerk ) } range County,California Othcr City of Huntington Beach ) . a• CReCCrder 1,°�'c.p+ 2000 Main Street ) Huntington Beach, CA 92648 ) pc r. QFIRST AMENDMENT TO MEMORANDUM QF ,LEASE This -FIRST 'AMENDMENT -TO"-MEMORANDUM-OF -LEASE-Is -made --as of NOvember 16 , 199M, by and between the REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH, a public agency ("Lessor") , and �} ROBERT L. MAYER, as Trustee of the Robert L. Mayer Trust of 1982, dated June 22, 1982, as amended ("Lessee") . A. Lessor and Lessee are parties to that certain Third Amended and Restated Lease dated as of April 28, 1989 (the "Lease") , relating to the real property located within the City of Huntington Beach, California, more particularly described in Exhibit "A" hereto (the "Premises") . B. The Lease is memorialized in that certain Memorandum of Lease recorded as Instrument No. $ -292554 in the Official Records of the Orange County Recorder's Office on May 18 1989 (the "Memorandum of Lease") . C. On or about November 16 , 1992, Lessor and Lessee entered into that certain First Amendment to Third Amended and Restated Lease relating to the Premises (the "First Amendment") . D. Pursuant to Section 26 .23 of the Lease, as amended by the First Amendment, Lessor, as owner of the Premises, and Lessee, as tenant, desire to execute and record this First Amendment to Memorandum of Lease. This docemant is solely ror :::d official brsiness of the City of 11'=tington boa cb. as contom— plated under Gov•.,rr=cnt Code Sea. 6103 and ahculd be rocorded 'free of ebarro. Tax-Exz;rpt-Gweri1me1t A;Qncy Page 1 of 5 CITY Or HUNTi;,:GTO�i 10W,H Ccnnia Srozkway, Cl.7C BY' of. WtY City Clerk MEMQRANTDMJM . This First Amendment to Memorandum of Lease is intended to provide notice of the existence of the First Amendment and shall not be deemed to modify or amend any of the provisions of the Lease or the First Amendment. The Lease, as amended by the First Amendment, is a public record and a true and correct copy of the same is available for public review and inspection in the office of the City Clerk of the City of Huntington Beach, whose address is 2000 Main Street, Huntington Beach, California, 92648. IN WITNESS WHEREOF, the undersigned have entered into this instrument to be duly executed as of the date first above written. "LESSOR" "LESSEE" THE REDEVELOPMENT AGENCY OF THE THE ROBERT MAYER TRUST OF 1982, CITY OF HUNTINGTON BEACH By: By� � airman Robert L. MayOYJ Trustee ATTEST: APPROVED AS TO FORM: Age �f Special Counsel Page 2 of 5 STATE OF CALIFORNIA ) ) Ss. COUNTY OF ORANGE } On this day of A&WInk.0 19-24-, before me, the undersigned a Notary Public in and for said State, personally appeared known to me for—proved-to-me cn—the--b is—of—satisfact-ory—evidence-} to be the person who executed this instrument as the Chairman of THE REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH, the public entity therein named, and acknowledged to me that such entity executed the within instrument. WITNESS my hand and official SigpAture of Notary Public (SEAL) - OFFICIAL SEAL MAYBRICE L ETCHESON a ; NOTArY PUBLIC -CALIFORNIA • H^ DIVAGE COUIM STATE OF CALIFORNIA ) VY Comm. Wires VAY 11, I993 ) ss. COUNTY OF ORANGE } On this day of - �- 19 q.-;L, before me, the undersigned, a Notary Public in and for said State, personally appeared 1?0PFA T X. Af,4&E , known to me (or proved to me on the basis of satisfactory evidence) to be the person who executed this instrument as the Trustee of THE ROBERT L. MAYER TRUST OF 1982, dated June 22, 1982, as amended, the entity therein named, and acknowledged to me that he executed the within instrument. WITNESS my hand and official seal. . - OFFICIAL NOTARY SEAL +a a LANA JEAN HALL 1Y1/ ORANGE COUN'TYMa Signature of N ary Pub is ` M. :Omm EroKns July09.1995 +F)s+tu.:•,Mx :r sno0.Newpon 0aam.GA 9iw.0 (SEAL) Page 3 of 5 Acknowledgement State of California, County of Orange. On '72&"kv a 1 J9 92 , before me, a notary public of the State of California, personally appeared & �' personally known to me evidenee}- to be the person((). whose name(&)_ is/af* _subscribed to the within instrument and acknowledged to me that #Wshehhey executed the same in hi-94herAheir authorized capacity(ies), and that by hisJherlhek signatureW on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. WITNESS my hand and official seal. Signature . OFFICIAL SEA]1933 C.C.P. §1189. L MAYBIZ. 1 ETGNE .\f ry; FJOTAIZY PUBLIC-CALIFO z:l ORi.IG-DOUDI 11f MY Comm. eXP:M3 MAY I ATTACHMENT NO. 1 THAT P RTI N OF SECTION 14, TO MSHM 6 90UII4, PANGS 11 WEST, IN THE PAN= US DWAS, IN M C17Y OF KNMMON MCM, Cl=M OF MAN=, MM OF CIA, AS PER MAP FMMMD IN BOOK 51, PAGE 14 OF MAPS XN THE OFFICE OF 7HE COUMY MOCKER OF SAID OOEIIIY, DESMEED AS FOIZAWS: 10=MC AT THE 9OLMMUST CO WM OF THE NORAST QUktMR OF UM !FAST QCMKIIR OF SAID SECTICN; ONCE WE TMX 111.91 Fg.T AIGNG THE NORTH L OF THE SOUTH MF OF THE NCFM AST QUM= OF SAID SD TICN TO A POINT ON WE 1=MY LIME OF THE IAND DESCRnM IN THE DEED TO THE STATE OF CALIMM 1N NOOK 6168, PAGE 667 OF OFFICIAL RFAMM, SAID POINT BE= THE TRUE POINT OF BD;I OME; TWXE 9OM 3' 291 43" MW 593.12 FEET; TWKZ SO= 25' 321 24" WEST 386.94 FEET; THM C£ SOUTH 11' 44' 36" EAST 771.48 FEET; THEWM SOUTH 78' 15' 24". -WEST 82.75 FM TO THE MUHMSWU RIGHT OF M LI2dE OF PACIFIC COAST HIGftM, A5 DESCR= IN BOOK 4551-PAG£ -400 OF OFFICIAL REOWDS OF SAID CPANGE ... OOCINIY; 'I4i NM Ali= SAID NOMMIERLY RIGHT OF HAY LTNE, NOM 52' 05' 09" TA T 24 09.77 FEET TO THE SCUnFASTERLY RICE OF WAY IE OF AVE2 T, 60.00 FEAT IN WMM AS NOW LAID OUT; THENCE AL C G SAID RIOT OF M LY1QE, NOM 37' 54' 51" FAST 299.35 FEET TO AN ANGLE POINT; THENCE NOM 0' 17' 36" FAST 20.44 FEET ADOW ME FAST RIMW OF WAY LIME OF HMMCION AVENUE, 60.00 FEET IN WMTH AS NOW MM DUT, TO THE NMM LIM OF THE SOUTH tQLF OF THE ?JMi£AST QAW R OF SAYE SECTION; THENCE FASI'FREy 1844.00 FEET A=M SAID NMM MM TO THE TRUE POINT OF BWnO LNG. EXCEPT THAT FOMCN Ti3PMF CESCRIBED AS FUI. CM: WGIWING AT A FAINT CN THE MM MM OF SAYE IAND, NOM 89' 43' PAST 690.00 FEET FROM THE CENIIR LUM OF SAID t1JNITNGICN AVENUE; TtM4CE NOM 89' 430 FAST 200.00 FEET; THENCE SOXTIH 0' 171 FAST 150.00 FEET; TKWCE SMYM 89' 431 WEST 200.00 FEET; THE24M NCETH 0' 17' WEST 150.00 FEET TO THE POINT OF BWDeT=. AISO EXCEPT THAT PORTION INC UMM WMUM TRACT NO. 13045 AS PER MAP F M IN BOOK , PASS AND OF SAID MMEURMUS MAPS. ATTACHMENT NO, 1 Page 4 of 5 IG-232 134.1204 3/1/89 r • C� N•LY LINE S 1/2 NC 1/4 SEC 14 �d -- --T-S S. -R 11 -U. -M.M._51/4 -__ to to f . • o I 3 a oc 10 yl 104 a ATTACHMENT NO. 1 5 of 5 Pa e SCALE r 1' 300' 9 FIRST AMENDMENT T4 THIRD AMENDED AND RESTATED LEASE This First Amendment to Third Amended and Restated Lease (the "First Amendment") is entered into as of the &tj day of November, 1992 (the "Effective Date") , by and among the Redevelopment Agency of the City of Huntington Beach, a public agency ("Lessor") , and Robert L. Mayer, as Trustee of the Robert L. Mzyer Trust of 1982, dated June 22, 1982, as amended ("Lessee") , with reference to the following: A. Lessor and Lessee are parties to that certain Third Amended and Restated Lease dated as of April 28, 1989 (the "Lease") , relating to the real property located within the City of Huntington Beach, California, more particularly described in Attachment 1 to Exhibit "A" hereto (the "Premises") . B. Articles XVI and XVII of the Lease require Lessee to obtain Lessor's consent prior to Lessee's transfer to a "Lender" of a "Leasehold Mortgage" of Lessee's interest in the Premises (as those terms are defined in the Lease) . In this regard, Lessee is required to furnish to Lessor certain information regarding the identity and qualifications of the prospective Lender. C. Lessee has been negotiating with Four Seasons Mortgage Services ( "Four Seasons') , as agent for a Lender to be designated at a later date, to transfer to such prospective Lender a Leasehold Mortgage of Lessee's interest in the Premises. Since the identity of the prospective Lender is unknown at this time, however, Lessee is Unable to provide to Lessor the information regarding such prospective Lender required under the Lease to obtain Lessor's consent. Accordingly, Lessee has requested that Lessor agree to amend the provisions of the Lease and waive its right of approval with respect to the identity and qualifications of the prospective Lender, as provided herein. D. Lessor is willing to enter into this First Amendment and waive its right to approve the identity and qualifications of the prospective Lender to be designated by Four Seasons, subject to the terms and conditions set forth herein. FS.111M55 M0001U017411.7 1MM' r } J ✓ NOW, THEREFORE, in consideration of the foregoing Recitals and the covenants and acknowledgments set forth herein, Lessor and Lessee agree as follows: 1. Notwithstanding any other provision in the Lease to the contrary, including without limitation any provision in Articles XVI and XVII thereof, Lessee shall have the right to transfer a Leasehold Mortgage of Lessee' s interest in the Premises to a Lender to be designated at a later date by Four Seasons, provided that the total principal amount of the obligations secured by the Leasehold Mortgage (excluding interest, late payment charges, and collection costs and attorney' s fees) does not exceed the sum of One Million Eight Hundred Thousand Dollars ($1, 800, 000 .00) . In this regard, Lessor hereby irrevocably waives its right under the Lease to approve the identity and qualifications of such Lender. Subject to the provisions of Paragraphs 2 and 3 of this First Amendment, upon the recordation of the Leasehold Mortgage, such Lender shall be entitled to all of the rights (and subject to all of the obligations) of a "Lender" as that term is defined in Section 17.2 of the Lease. Not by way of limitation of the foregoing, if the Lender or any third party claiming under or through Lender (the "Holder" of the Leasehold Mortgage) succeeds to Lessee's leasehold interest in the Premises (whether through foreclosure, deed in lieu of foreclosure, or otherwise) , said Holder shall be subject to all of Lessee' s executory obligations and all of the limitations on Lessee' s rights set forth in that certain Mobile Home Acquisition and Relocation Agreement entered into by and among Lessor, RLM Properties, Ltd. , a California limited partnership (Lessee's predecessor-in-interest to the Premises) , Driftwood Beach Club Mobile Homeowners Association, Inc. , a California non-profit corporation, and individual tenants of the Driftwood Beach Club Mobile Home Park dated as of September 26, 1988 (the "Relocation Agreement" ) . The provisions of this Paragraph 1 of the First Amendment shall automatically expire and be of no further force or effect if for any reason the Leasehold Mortgage referred to herein is not created within one (1) year after the Effective Date of this First Amendment. 2. This First Amendment is not intended to approve or authorize a transfer or assignment by Lessee to Lender or the Holder of any of Lessee' s rights or obligations under the Disposition and Development Agreement entered into by and between Lessor and Lessee dated August 15, 1988, as amended by the First Amendment to Disposition and Development Agreement dated June 17, 1991, the Second Amendment to Disposition and Development Agreement dated August 1, 1991, and the Third Amendment to Disposition and FS2\112\065580-0001\2017411.7 11/06/92 -2- Development Agreement dated March 16, 1992 (collectively, the "DDA") . In addition, this First Amendment is not intended to approve or authorize a transfer by Lessee to Lender or Holder of Lessee's rights or obligations under the Development Agreement entered into by and between the City of Huntington Beach and Lessee dated as of August 15, 1988 (the "Development Agreement") . If for any reason Lender or Holder succeeds to Lessee's leasehold interest in the Premises (whether through foreclosure, deed in lieu of foreclosure, or otherwise) , said Lender and/or Holder shall acquire no rights or obligations whatsoever under the DDA or Development Agreement. 3 . In the event that Lessee transfers to Lender a Leasehold Mortgage as contemplated in Paragraph 1 herein, Lender, at the time it delivers to Lessee any notice of default pursuant to the terms of the Leasehold Mortgage or any underlying promissory note and/or loan agreement, shall deliver a copy of said notice to Lessor at Lessor's address set forth in the Lease. Thereafter, and after Lessee has had a reasonable time to challenge, cure, or satisfy such default, Lessor shall have the right to cure such default, provided that nothing in this Paragraph 3 of the First Amendment is intended or shall be construed to limit or restrict Lender's exercise of its rights or remedies against Lessee. In the event Lessor does cure such a default by Lessee, Lessor shall be entitled to reimbursement from Lessee of all costs and expenses incurred by Lessor in curing such default as additional rent pursuant to the Lease. In addition to the foregoing, if the Lender contemplated under Paragraph 1 of this First Amendment or any Holder succeeds to Lessee's leasehold interest in the Premises (whether through foreclosure, deed in lieu of foreclosure, or otherwise) , Lessor, if it so desires, and at any time within two (2) years after Lender or Holder first succeeds to Lessee's leasehold interest (but in no event later than two (2) years after the expiration of the term of the Lease set forth in Sections 1.4 or 1.5 thereof, as applicable) , shall have the option to acquire from Lender or such Holder its leasehold interest in the Premises free of all liens and encumbrances held or claimed by Lender or Holder, for an amount equal to the sum of the following: (i) the unpaid mortgage or deed of trust debt at the time leasehold title became vested in the Holder (less all appropriate credits, including those resulting from collection and application of rentals and other income received during foreclosure proceedings) ; (ii) all out-of-pocket expenses actually incurred by the Holder with respect to foreclosure, including reasonable attorney's fees; (iii) the net out-of-pocket expense, if any (exclusive of general overhead) , incurred by the Holder as a direct result of the subsequent management of the Premises or part thereof; (iv) the actual out-of- pocket cost of any improvements made by such Holder to the Premises; and (v) an amount equal to the interest that would have PS2'�112;06338}0001►2017411.E 11106M -3- accrued on the aggregate of the amounts described in clauses (i) through (iv) had all such amounts become part of the mortgage or deed of trust debt and such debt had continued in existence to the date of payment by Lessor. There shall be deducted from such amount all sums owing and unpaid by the Lessee pursuant to the Lease. In the event Lessor desires to exercise its option under this Paragraph 3 of the First Amendment, Lessor shall do so by delivery of written notice to Holder. Within fifteen (15) business days thereafter, Holder shall notify Lessor in writing of the amount required to be paid to obtain a conveyance of Holder's interest, as set forth hereinabove together with reasonable substantiation thereof. Thereafter, Lessor shall tender the undisputed portion of the amount required within thirty (30) days, or Lessor's rights under this Paragraph 3 to purchase Holder's interest in the Premises shall automatically terminate. Any disputes between Lessor and Holder regarding the amount of the payment required to be made by Lessor to purchase the Holder's interest in the Premises shall be resolved by binding arbitration in accordance with the procedures set forth in Article XXVII of the Lease, or as otherwise may be agreed to by and between Lessor and Holder. It is expressly understood and agreed that Lessor's rights pursuant to this Paragraph 3 shall survive any foreclosure or other conveyance to Lender or Holder of Lessee interest in the Lease. The parties shall take such further actions and execute such further documents as is necessary to carry out the intent of this Paragraph 3. In no event shall Lessor's exercise of any of its rights under this Paragraph 3 of the First Amendment be deemed to waive any rights or claims Lessor may have against Lessee. 4. Lessor covenants not to take any action and not to participate in taking any action for the purpose or with the effect of removing or relocating mobilehome subtenants from the Premises in a number exceeding the ten (10) relocations per year contemplated under Article XI, Section A.1 of the Relocation Agreement. The provisions of this Paragraph 3 of the First Amendment shall automatically expire and be of no further force or effect upon the later of the following dates: (i) upon the earlier of (A) expiration of the one-year time period provided for in Paragraph 1 of this First Amendment for recordation of the Leasehold Mortgage contemplated herein (assuming the Leasehold Mortgage is not recorded) , or (B) payment in full of the loan secured by the Leasehold Mortgage and the reconveyance or termination of Lender's interest in the Premises; and (2) upon the earlier of (A) Lessee's notification to Lessor, in writing, of Lessee's intention to begin construction of any "Post Conversion Phase A development, " as contemplated in Article II, Section B of the Relocation Agreement, or (B) termination of Lessee's development rights with respect to all of the Premises under the DDA and the Development Agreement. F521I 12NOd53E400011201?411.a 1110 M -4- S. Lessee acknowledges that Article V, Section B.4 (b) (i) of the Relocation Agreement provides as follows: (i) Restricted Rents: Effective on the date of this Agreement, the Tenant shall pay to (Lessee] , or its designee, monthly space rent equal to the rental rate paid by the Tenant of that space on January 1, 1988 (the Initial Rent) . This rate shall be increased annually from the date of this Agreement by six percent (0) . Upon commencement of any Proposed Conversion Phase A construction, the rent will be reduced to seventy-five percent (75V) of the rent paid by Tenant just prior to the construction and this new rate shall be increased by six percent (6%) per annum. Lessee covenants, as additional consideration for Lessor's entering into and performing its obligations under this First Amendment, not to increase rents above the applicable limits in the Relocation Agreement quoted above. 6. Upon the written request of Lessee and/or Lender, and from time to time, Lessor agrees to complete, execute, and return to Lessee and/or Lender, as applicable, an estoppel certificate or certificates in a form prepared by Lessee or Lender certifying as to Lessor' s best knowledge and belief regarding the status of the Lease (as amended by this First Amendment) , the existence of any additional modifications or amendments thereto, and whether or not to Lessor's knowledge there are any pending defaults thereunder (or any events which, with the passage of time or the giving of notice, would constitute defaults) . In addition, Lessor agrees to cooperate with Lessee and Lender and to execute such other documents as may be reasonably requested by Lessee and/or Lender consistent with the terms of this First Amendment. 7. Lessor and Lessee shall cooperate in recording against the Premises the First Amendment to Memorandum of Lease in the form attached hereto as Exhibit "A. " 8. Except as expressly set forth in this First Amendment, all of the terms and conditions of the Lease shall remain in full force and effect. Fsrt i2Mssao-ODO1%2o1uu.t t11OW__ 1 IN WITNESS WHEREOF, the undersigned have entered into this First Amendment to Third Amended and Restated Lease as of the Effective Date first above written. Robert L. Mayer, Trustee of The Robert Mayer Trust of 1982, Dated June 22, 1982, as amended By: Robert L. May Redevelopment Agency of the City of Huntington Beach By: ohyirman ATTEST Agency e tr a i- C I er -' APPROVED TO FO APPROVED AS TO CONTENT: li Agency Special-Counsel Deputy City Administrator REVIEWED AND APPROVED APPROVED: AS TO FORM: City At orfiey-7 City inistrator Agency Attorney Executive Director 11- it 9v FS21112\065580-=112017411.7 11/06/92 -6- FIRST AMENDMENT TO THIRD AMENDED AND RESTATED LEASE This First Amendment to Third Amended and R stated Lease (the "First Amendment") is entered into as of the day of November, 1992 (the "Effective Date") , by and among the Redevelopment Agency of the City of Huntington Beach, a public agency ("Lessor") , and Robert L. Mayer, as Trustee of the Robert L. Mayer Trust of 1982, dated June 22, 1982, as amended ("Lessee") , with reference to the following: R R .Q J T h L S : A. Lessor and Lessee are parties to that certain Third Amended and Restated Lease dated as of April 28, 1989 (the "Lease") , relating to the real property located within the City of Huntington Beach, California, more particularly described in Attachment i to Exhibit "A" hereto (the "Premises") . B. Articles XVI and XVII of the Lease require Lessee to obtain Lessor's consent prior to Lessee' s transfer to a "Lender" of a "Leasehold Mortgage" of Lessee's interest in the Premises (as those terms are defined in the Lease) . In this regard, Lessee is required to furnish to Lessor certain information regarding the identity and qualifications of the prospective Lender. C. Lessee has been negotiating with Four Seasons Mortgage Services ("Four Seasons") , as agent for a Lender to be designated at a later date, to transfer to such prospective Lender a Leasehold Mortgage of Lessee' s interest in the Premises. Since the identity of the prospective Lender is unknown at this time, however, Lessee is unable to provide to Lessor the information regarding such prospective Lender required under the Lease to obtain Lessor's consent. Accordingly, Lessee has requested that Lessor agree to amend the provisions of the Lease and waive its right of approval with respect to the identity and qualifications of the prospective Lender, as provided herein. D. Lessor is willing to enter into this First Amendment and waive its right to approve the identity and qualifications of the prospective Lender to be designated by Four Seasons, subject to the terms and conditions set forth herein. F52%112N0655 00012U17411.711►1o6n2 NOW, THEREFORE, in consideration of the foregoing Recitals and the covenants and acknowledgments set forth herein, Lessor and Lessee agree as follows: 1. Notwithstanding any other provision in the Lease to the contrary, including without limitation any provision in Articles XVI and XVII thereof, Lessee shall have the right to transfer a Leasehold Mortgage of Lessee's interest in the Premises to a Lender to be designated at a later date by Four Seasons, provided that the total principal amount of the obligations secured by the Leasehold Mortgage (excluding interest, late payment charges, and collection costs and attorney's fees) does not exceed the sum of One Million Eight Hundred Thousand Dollars ($1, 800, 000.00) . In this regard, Lessor hereby irrevocably waives its right under the Lease to approve the identity and qualifications of such Lender. Subject to the provisions of Paragraphs 2 and 3 of this First Amendment, upon the recordation of the Leasehold Mortgage, such Lender shall be entitled to all of the rights (and subject to all of the obligations) of a "Lender" as that term is defined in Section 17.2 of the Lease. Not by way of limitation of the foregoing, if the Lender or any third party claiming under or through Lender (the "Holder" of the Leasehold Mortgage) succeeds to Lessee's leasehold interest in the Premises (whether through foreclosure, deed in lieu of foreclosure, or otherwise) , said Holder shall be subject to all of Lessee's executory obligations and all of the limitations on Lessee's rights set forth in that certain Mobile Home Acquisition and Relocation Agreement entered into by and among Lessor, RLM Properties, Ltd. , a California limited partnership (Lessee's predecessor-in-interest to the Premises) , Driftwood Beach Club Mobile Homeowners Association, Inc. , a California non-profit corporation, and individual tenants of the Driftwood Beach Club Mobile Home Park dated as of September 26, 1988 (the "Relocation Agreement") . The provisions of this Paragraph 1 of the First Amendment shall automatically expire and be of no further force or effect if for any reason the Leasehold Mortgage referred to herein is not created within one (1) year after the Effective Date of this First Amendment. 2. This First Amendment is not intended to approve or authorize a transfer or assignment by Lessee to Lender or the Holder of any of Lessee's rights or obligations under the Disposition and Development Agreement entered into by and between Lessor and Lessee dated August 15, 1988, as amended by the First Amendment to Disposition and Development Agreement dated June 17, 1991, the Second Amendment to Disposition and Development Agreement dated August 1, 1991, and the Third Amendment to Disposition and MN112N06S530-MIU017411.7 11MU92 -2- Development Agreement dated March 16, 1992 (collectively, the "DDA") . In addition, this First Amendment is not intended to approve or authorize a transfer by Lessee to Lender or Holder of Lessee' s rights or obligations under the Development Agreement entered into by and between the City of Huntington Beach and Lessee dated as of August 15, 1988 (the "Development Agreement") . If for any reason Lender or Holder succeeds to Lessee's leasehold interest in the Premises (whether through foreclosure, deed in lieu of foreclosure, or otherwise) , said Lender and/or Holder shall acquire no rights or obligations whatsoever under the DDA or Development Agreement. 3 . In the event that Lessee transfers to Lender a Leasehold Mortgage as contemplated in Paragraph 1 herein, Lender, at the time it delivers to Lessee any notice of default pursuant to the terms of the Leasehold Mortgage or any underlying promissory note and/or loan agreement, shall deliver a copy of said notice to Lessor at Lessor' s address set forth in the Lease. Thereafter, and after Lessee has had a reasonable time to challenge, cure, or satisfy such default, Lessor shall have the right to cure such default, provided that nothing in this Paragraph 3 of the First Amendment is intended or shall be construed to limit or restrict Lender's exercise of its rights or remedies against Lessee. In the event Lessor does cure such a default by Lessee, Lessor shall be entitled to reimbursement from Lessee of all costs and expenses incurred by Lessor in curing ouch default as additional rent pursuant to the Lease. In addition to the foregoing, if the Lender contemplated under Paragraph 1 of this First Amendment or any Holder succeeds to Lessee' s leasehold interest in the Premises (whether through foreclosure, deed in lieu of foreclosure, or otherwise) , Lessor, if it so desires, and at any time within two (2) years after Lender or Holder first succeeds to Lessee's leasehold interest (but in no event later than two (2) years after the expiration of the term of the Lease set forth in Sections 1.4 or 1.5 thereof, as applicable) , shall have the option to acquire from Lender or such Holder its leasehold interest in the Premises free of all liens and encumbrances held or claimed by Lender or Holder, for an amount equal to the sum of the following: (i) the unpaid mortgage or deed of trust debt at the time leasehold title became vested in the Holder (less all appropriate credits, including those resulting from collection and application of rentals and other income received during foreclosure proceedings) ; (ii) all out-of-pocket expenses actually incurred by the Holder with respect to foreclosure, including reasonable attorney's fees; (iii) the net out-of-pocket expense, if any (exclusive of general overhead) , incurred by the Holder as a direct result of the subsequent management of the Premises or part thereof; (iv) the actual out-of- pocket cost of any improvements made by such Holder to the Premises; and (v) an amount equal to the interest that would have Fs2\1121 553O-OW112017411-$ 111OU92 -3- accrued on the aggregate of the amounts described in clauses (i) through (iv) had all such amounts become part of the mortgage or deed of trust debt and such debt had continued in existence to the date of payment by Lessor. There shall be deducted from such amount all sums owing and unpaid by the Lessee pursuant to the Lease. In the event Lessor desires to exercise its option under this Paragraph 3 of the First Amendment, Lessor shall do so by delivery of written notice to Holder. Within fifteen (15) business days thereafter, Holder shall notify Lessor in writing of the amount required to be paid to obtain a conveyance of Holder's interest, as set forth hereinabove together with reasonable substantiation thereof. Thereafter, Lessor shall tender the undisputed portion of the amount required within thirty (30) days, or Lessor' s rights under this Paragraph 3 to purchase Holder's interest in the Premises shall automatically terminate. Any disputes between Lessor and Holder regarding the amount of the payment required to be made by Lessor to purchase the Holder's interest in the Premises shall be resolved by binding arbitration in accordance with the procedures set forth in Article XXVII of the Lease, or as otherwise may be agreed to by and between Lessor and Holder. It is expressly understood and agreed that Lessor's rights pursuant to this Paragraph 3 shall survive any foreclosure or other conveyance to Lender or Holder of Lessee interest in the Lease. The parties shall take such further actions and execute such further documents as is necessary to carry out the intent of this Paragraph 3. In no event shall Lessor's exercise of any of its rights under this Paragraph 3 of the First Amendment be deemed to waive any rights or claims Lessor may have against Lessee. 4 . Lessor covenants not to take any action and not to participate in taking any action for the purpose or with the effect of removing or relocating mobilehome subtenants from the Premises in a number exceeding the ten (10) relocations per year contemplated under Article XI, Section A.1 of the Relocation Agreement. The provisions of this Paragraph 3 of the First Amendment shall automatically expire and be of no further force or effect upon the later of the following dates: (i) upon the earlier of (A) expiration of the one-year time period provided for in Paragraph 1 of this First Amendment for recordation of the Leasehold Mortgage contemplated herein (assuming the Leasehold Mortgage is not recorded) , or (B) payment in full of the loan secured by the Leasehold Mortgage and the reconveyance or termination of Lender's interest in the Premises; and (2) upon the earlier of (A) Lessee's notification to Lessor, in writing, of Lessee's intention to begin construction of any "Post Conversion Phase A development, " as contemplated in Article II, Section B of the Relocation Agreement, or (B) termination of Lessee's development rights with respect to all of the Premises under the DDA and the Development Agreement. FS?1ll2\D655MOOO112017411.9 1IM6192 -4- 5. Lessee acknowledges that Article V, Section B.4 (b) (i) of the Relocation Agreement provides as follows: (i) Restricted Rents: Effective on the date of this Agreement, the Tenant shall pay to (Lessee] , or its designee, monthly space rent equal to the rental rate paid by the Tenant of that space on January 1, 1988 (the Initial Rent) . This rate shall be increased annually from the date of this Agreement by six percent (61) . Upon commencement of any Proposed Conversion Phase A construction, the rent will be reduced to seventy-five percent (75%) of the rent paid by Tenant just prior to the construction and this new rate shall be increased by six percent (0) per annum. Lessee covenants, as additional consideration for Lessor's entering into and performing its obligations under this First Amendment, not to increase rents above the applicable limits in the Relocation Agreement quoted above. 6. Upon the written request of Lessee and/or Lender, and from time to time, Lessor agrees to complete, execute, and return to Lessee and/or Lender, as applicable, an estoppel certificate or certificates in a form prepared by Lessee or Lender certifying as to Lessor's best knowledge and belief regarding the status of the Lease (as amended by this First Amendment) , the existence of any additional modifications or amendments thereto, and whether or not to Lessor's knowledge there are any pending defaults thereunder (or any events which, with the passage of time or the giving of notice, would constitute defaults) . In addition, Lessor agrees to cooperate with Lessee and Lender and to execute such other documents as may be reasonably requested by Lessee and/or Lender consistent with the terms of this First Amendment. 7. Lessor and Lessee shall cooperate in recording against the Premises the First Amendment to Memorandum of Lease in the form attached hereto as Exhibit "A. " 8. Except as expressly set forth in this First Amendment, all of the terms and conditions of the Lease shall remain in full force and effect. FS21u21 5580-000112o174tt.t 1 irosro: -5- IN WITNESS WHEREOF, the undersigned have entered into this First Amendment to Third Amended and Restated Lease as of the Effective Date first above written. Robert L. Mayer, Trustee of The Robert Mayer Trust of 1982, Dated June 22, 1982, as amended By: Robert L. Mayer Redevelopment Agency of the City of Huntington Beach By: Ch an ATTEST: Agency PPRO T APPROVED AS TO CONTENT: Agency Special Cou el Deputy City Administrator REVIEWED AND APPROVED APPROVED: AS TO FORM: Q�P1L{AOTDN �y City Attorney/ _ V Admini a or Agency Attorney ` Executive Director C�c /1-71-9z FS2\112\065580-0001\2017411.7 1110&92 -6- 92-8 18329 Recorded at the request of Recording Requested By and ) FIRST AMERICara TITI FINS CO_ when Recorded Mail To: j PM. NOV 3 01992 u4n H� s Connie Brockway, City Clerk ) Official Records n5 i Office of the City Clerk ange Cou�litornia 01he? City of Huntington Beach ) o a• Recorder rM•'f;r= 2000 Main Street �• Huntington Beach, CA 92645 ,) f c,ut• r FIRST AMENDMENT„TO_MRLFQRANDUM_OF LEASE This FIRST AMENDMENT TO MEMORANDUM OF LEASE is made as of November 16 , 199_n, by and between the REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH, a public agency ("Lessor") , and LD ROBEkT L. MAYER, as Trustee of the Robert L. Mayer Trust of 1982, dated June 22, 1982, as amended ("Lessee") . Q $ E I T A S ; A. Lessor and Lessee are parties to that certain Third Amended and Restated Lease dated as of April 28, 1989 (the "Lease") , relating to the real property located within the City of Huntington Beach, California, more particularly described in Exhibit "A" hereto (the "Premises") . B. The Lease is memorialized in that certain Memorandum of Lease recorded as Instrument No. 8 -2_g 25541 in the Official Records of the Orange County Recorder's Office on May 18 1989 (the "Memorandum of Lease") . C. On or about November 16 , 1992, Lessor and Lessee entered into that certain First Amendment to Third Amended and Restated Lease relating to the Premises (the "First Amendment") . D. Pursuant to Section 26.23 of the Lease, as amended by the First Amendment, Lessor, as owner of the Premises, and Lessee, as tenant, desire to execute and record this First Amendment to Memorandum of Lease. This document is solely for x::u official buntna;;s of the City of lituntington So..h. Rw conto-7- plated ualdor Goy arrz;ent Cede Sea. 6103 and should bo rocorded free of eharre. Tax-Exe;rpt•Goverl,r:If:�I l:;�ncy Page 1 of 5 CITY 0; HUN T Ii;GTW1 •'GBH Ccnr,1.2 Hro•:kti,jy, CF.. r1:7 Clerk l7 Puty City Clerk `� This First Amendment to Memorandum of Lease is intended to provide notice of the existence of the First Amendment and shall not be deemed to modify or amend any of the provisions of the Lease or the First Amendment. The Lease, as amended by the First Amendment, is a public record and a true and correct copy of the same is available for public review and inspection in the office of the City Clerk of the City of Huntington Beach, whose address is 2000 Main Street, Huntington Beach, California, 92648. IN WITNESS WHEREOF, the undersigned have entered into this instrument to be duly executed as of the date first above written. .%LESSOR" "LESSEE" THE REDEVELOPMENT 7,GENCY OF THE THE ROBERT MAYER TRUST OF 19828 CITY OF HUNTINGTON BEACH By: By �1`Zq airman Robert L. MayQ Trustee ATTES 1': e7 oe C—e C lg r K 2— APPROVED AS TO FORM: t- c Special Counsel Page 2 of 5 STATE OF CALIFORNIA ) ) ss. COUNTY OF ORANGE ) On this aY 7�. day of 19j.Z, before me, the undersi ned, a Notary Public in and for said State, personally appeared [ ,,c, ,:fir-, known to me for-proved-to me en—the----b is---46f--sat-isfaetory—evidence+ to be the person who executed this instrument as the Chairman of THE REDEVELOPIviENT AGENCY OF THE CITY OF HUNTINGTON BEACH, the public entity therein named, and acknowledged to me that such entity executed the within instrument. . WITNESS my hand and official seal . Si Lure of Notary Public (SEAL) E OFFICIAL SEALMAYBRICE Z ETCHESONNOTARY FUGLIC -CALIFORNIA ORANGE Doulm STATE OF CALIFORNIA ) '!+x COMM. expl,es MAT 11, Z993 ) ss. COUNTY OF ORANGE ) On this _ day off='Zl`1 �� , 19q,1, before me, the undersigned, a Notary Public in and for said State, personally appeared "?hP'rK-r Z. known to me for proved to me on the basis of satisfactory evidence) to be the person who executed this instrument as the Trustee of THE ROBERT L. MAYER TRUST OF 1982, dated June 22, 1982, as amended, the entity therein named, and acknowledged to me that he executed the within instrument. WITNESS my hand and official seal. J'' [ OFFICIAL FIOTARY SEALLANAJEAN HALL �( {� � I �' :t• }, tioluy Purer:--CaDkX da Si nature of N a Pub ]c / ��' ORANnE COUNTY g rY w. ;MWD em"In' _1495 1+ >n�rl µ.c�..Mn; r.ig6 Nuwwn L1.i7�.GA yLt,k.J (SEAL) Page 3 of 5 Acknowledgement State of California, County of Orange. On �a1' v .19��_ , before me, a notary public of the State of California, personally appeared 6MICEL, personally known to me (error 4 a—( r tof—satisfactary evidence)- to be the person(s) whose name(s.) ishKa subscribed to the within instrument and acknowledged to me that 4Wshekhey executed the same in h-i3Oher[their authorized capacity(k*, and that by hi-,Aer4hek signature(s) on the instrument the person(s), or the entity upon behalf of which the person(.&) acted, executed the instrument. WITNESS my hand and official seal. Signature o� OFF]CIAL SEAL L MAYCRICE t ETWESON C.C.P. §1 I S9. ! NOIr,r,Y PUBLIC-CALIFORI]IA s' ii�t% DIVXGE co" My comm. expires MAY 11, 1933 ATTACHMENT NO. 1 THAT PO{LTICN OF S=7CH 24 MUMM 6 BONA;, RV= 21 WEST, IN THE MKM US ICCAS, 3N MM CITY OF ILNrTsMW WAM, 0=?I'Y OF CRA MI STATE OF OUXF% 1IA, AS PM MAP RWaMM IN BOOK $1, PAGE 14 OF MLSCUIAMMM MAPS IN THE OFFICE OF 3M COLMY P203MM OF SAID CCUNIY, DESCMED AS MIAS: I'EGIMlING AT TtM SMMEAST OWiER OF THE NO�LST Q[WUM OF THE NORZIiF'AST (.,mJ M OF SAID SDCTICN; MUNCE WES"IUU 111.91 FEET ALCM WE NOMH IMM OF WE SOUTH HALF OF THE HORTM= Q[AIM OF SAID SECT104 TO A P07Nr CN THE tM7MZLY LINE of THE LAND EESCRU D V THE MM TO VE SWE of CALUMU IN UOOK 6168, PNZ 667 OF OFFICIAL FMOOPM, SAID POINT BEING WE MRUE POINT OF LOMM7G; T1ENCE SC1[ 1 3' 29' 43" WEST 593.12 FEET; 71OXE SO= 25' 32' 14" MW 386.94 FIST; 7104= SOUTH 11' 44' 36" FAST 771.48 FEET; 7HDKE SRO= 78 15' 2 4" WFST 82.75 FEET TO TIE NOM ASTERL Y RICNr OF WAY DINE OF PACIFIC OWSr K[QMY, AS NEED IN BOOK 455, PAGE 400 OF OFFICIAL MOMM OF MM M= COUNTY; MOM ALCHG :AID N0FMMkS7UUY R (21r OF WAY LUX, NOMi 520 05 t 09" WM 2409.77 fEITT TO THE SO[1nM STE= RIQlr OF 1XY LUM OF HUMMICN AVENUE, 60.00 FE£T IN WIM AS NOW LAID CUF; 7IUNM ALONG SAID SOM92STERLY RUM OF MY I=t IUMH 370 54' 51" EAST 299.35 FEET TO AN AN= POWr; MtEtKF? NOM 0' 17' 36" EAST 20.44 FlMr AUM VIE EAST RIMT OF NAY Lx2E OF }11N M C M AVEMM, 60.00 IN WIDJ AS NOW LAID CUr, TO THE NOM ICE OF 3HE MM HALF OF 2NE NoRniFAST QLZR2R OF SAID SEOTICN; MUNC'E FAM RLY 1844.00 FEET ALCM SAID NOM LINE Tn VIE ME FOINT OF LifJGMlUfG. EXCM TIMT FCRTIC H THEREOF DESCRIM AS FOU01 S: WGINNING AT A POINT CN WE Nam IIIE OF SAID IANU, NORTH 89' 43' EAST 690.00 FEET FRaH THE CENTER UNE OF SAID }XMMCICN AVENUE; 71OKE NCM 89' 43' FAST 200.00 FEET; TMKE SC LMi 0' 17' FAST 150.00 FEET; MENCE SCUM 896 430 Rr 2 00.00 FEET; Tm4m NC H w 17' WEST 150.00 FEET TO THE 11017T,I` OF BWIMMU. ALSO EXCEPT nM PORTICN INCELUM WIMUN 'nWr NO. 13045 AS PER MAP FILED IN BOOK , PAGES AND OF SAID MLSCEUMMOUS MPS. ATTACHMENT NO. 1 Page 4 of 5 7fir232 134.1204 3/1/89 • S rat �( N'LY LINE S 1/2 NE 1/4 SEC 14 d T 5 S. R 11 V. 11.H. 51/4 to ,35O �•'� • dr �sr�. -j o ac r C od `c sryl 0R o ca ATTACHMENT NO. 1 PAarn 5 of 5 /34. Iao� + - THB.WATERFRONT September 30, 1992 Mr. Michael Uberuaga City Administrator Mr. Robert Franz Deputy City Administrator City of Huntington Beach 2000 Main Street Huntington Beach, CA 92648 Dear Michael: During our lengthy discussions over the First California and the J.P. Morgan's bond underwritings, we discussed the future intent of the Robert L. Mayer Trust of 1982, to encumber the Third Amended and Restated Lease. After substantial negotiation with Dai- Ichi Kangyo Bank,we agreed to not encumber this leasehold above a$4,000,000 threshold to accommodate the securing of working capital for our organization. - - As you may also remember,we informed you that this form of security was used for borrowing when the original Waterfront was being readied for development. Tbese borrowings reached a maximum of $5,000,000 in 1987 and were subsequently paid in full. Accordingly,we have identified a Lender for a Leasehold Mortgage of$1,800,000 to be secured with a Mortgage against the leasehold. Our Lender wishes the Redevelopment Agency to provide a letter to the Lender which provides the Lender with the necessary comfort that this transaction represents a permitted transaction under the existing agreements between us and the Redevelopment Agency shall provide necessary estoppel certificates as reasonably required by the Lender. We request the letter take the following form: .'Me Redevelopment Agency of the City of Huntington Beach has reviewed the Third Amended and Restated Lease and accordingly accepts the lessee's right to encumber this leasehold ARTICLES 16& 17 of the Third Amended and Restated Lease specifically provide for the encumbrance of this leasehold and the terms and conditions outlined in your Loan Commitment Letter are not inconsistent with these provisions of the Iease. The Robert Mayer Corporation 660 Newport Center Drive, Suite 1050,P.O.Box MM,Newport Beach, CA 92658-8680•Telephone(714)759-8091 + The Redevelopment Agency of the City of Huntington Beach will provide estoppel certificates or furnish other documents as reasonably requested by the Lender in a form and content acceptable to the Agency." Uwe can be of further assistance in this matter, please do not hesitate to call upon us at anytime. Yours truly, . Bruce Hanford Chief Financial fficer BH:dp nr-t.GI U L.. SEP 2 3 199 FOUR SEASONS MORTGAGE SERVICES 8880 Rio San Diego Drive • Suite 625 San Diegq California 92JOS FAX (619) 692-9133 (619) I99-6890 LOAN COMMITMENT September 22, 1992 Mr. Robert L. Mayer The Robert Mayer Corporation 660 Newport Center Dr. , Suite 1050 Newport Beach, CA 92660 Re: DRIFTWOOD MOBILEHOME PARK AND 9 HOLE GOLF COURSE 21462 Pacific Coast Highway, Huntington Beach, CA $1,800,000 gross First Trust Deed Financing on Leasehold Estate Dear Mr. Mayer: Four Seasons Mortgage Services, (hereinafter FSMS) as agent for Lender, is pleased to advise you that it is willing to commit to make a loan (hereinafter Loan) to Robert L. Mayer, as Trustee of the Robert L. Mayer Trust of 1982, dated June 22, 1982, as amended, (hereinafter Borrower) . Said Loan shall be made in accordance with the following terms and conditions: 1. Purpose The Loan proceeds will be utilized by the Borrower for working capital and business purposes and to pay the Loan Fee and Closing Costs. The loan proceeds will also provide a ground lease payment reserve, described in Paragraph 14 . 2. Collateral A Note and First Deed of Trust with Assignment of Rents secured by a leasehold interest of approximately 44 acres improved with 165 occupied mobilehome spaces and a 9 hole executive golf course with a pro shop and snack bar, located on the east side of Pacific Coast Highway, bounded on the south by Beach Blvd. and known as 21462 Pacific Coast Highway, Buntington Beach, CA. September 22, 1992 Robert L. Mayer Page Two 3. Loan amount $1,800,000 gross first trust deed with assignment of rents secured by a leasehold interest in the subject property. 4. Loan term Twenty-four (24) months from the close of escrow, plus automatic extension. 5. Automatic extension Should Loan not be repaid in full by the end of the first .twenty-four months, it shall be automatically extended ✓ for an additional seven years. 6. Interest rate Bank of America Prime Rate plus 5.5%, adjusted monthly, during the first twenty-four months. The start rate will also be the floor rate for the first two years only. The ceiling rate will be 3.0% above the floor rate during the first two years only. Beginning at the start of the third loan year, the interest rate will be the higher of Bank of America Prime Rate plus 5.5% or 20.0%. The interest rate will be ✓ adjusted monthly. 7. Interest charged rQ. ior to recordation After all of the Conditions in Paragraph 37 have been satisfied and the Loan Documents have been 'fully executed, FSMS shall begin funding the Loan. Interest will be charged to Borrower's account, from the date of deposit of Loan Funds into FSMS' escrow trust account, at the rate of Bank of America Prime Rate plus 5.5%, adjusted monthly. All interest accrued on deposited funds shall be deducted from Loan proceeds upon Loan recordation. The maximum that shall be charged to Borrower's account for interest accrued prior to Loan recordation shall be $17,250.00. Borrower shall be provided an accounting of interest accrued upon Loan recordation. 8. Loan payments Monthly, interest only payments during the first loan September 22, 1992 Robert L. Mayer Page Three year only. The second year of the loan will require monthly payments including interest plus a $20,000 per month principal reduction. 9. Assignment of rents Immediately at the beginning of the third loan year FSMS will exercise the assignment of rents and will install a ✓ property manager of FSMS' choice to directly collect all rents, pay expenses and remit 100% of the remaining cash flow to Four Seasons. The remaining cash flow will be used to pay the ground lease payments, property management fees and loan interest, with 100% of the remaining balance to be applied towards principal reduction. 10 . Loan fee Six percent (6.0%) of the gross loan amount to FSMS. There will be no additional loan fee for the automatic seven year extension. 11 . Loan brokerage fees ✓ One percent (1.0%) of the gross loan amount to Presidio Capital Corporation plus one percent (1.0%) of the gross loan amount to Tom Burke or appropriate licensed real estate broker. 12. Commitment fee Borrower shall pay Four Seasons Mortgage Services a non- refundable Commitment 'Fee of $18,000.00 immediately upon acceptance of this Loan Commitment, which shall be credited toward the Loan Fee. If the Borrower satisfies all of the conditions in Paragraph 37 and the Loan is not funded, the Commitment Fee shall be returned to the Borrower, less any actual credit report costs. 13. Loan closing costs Borrower agrees to pay all costs incidental in this transaction, including without limitation, the in-house escrow fee of $2,950.00, a Loan disclosure fee of $12.00, a Loan document fee of $125.00, credit report fees, title insurance, FSMS attorneys' fees which shall be less than September 22, 1992 Robert L. Mayer Page Four $7,500.00, revenue stamps, recording fees and mortgage tax, if any, and accrued interest charges described in Paragraph 7. 14. Ground lease impound account From the Loan proceeds, two quarterly ground lease payments will be impounded by FSMS. In addition to the scheduled interest and principal payments, the Borrower shall pay to FSMS, each month, one third of the quarterly ground lease payments. FSMS will pay the ground lease payments, beginning January 1, 1993, to the lessor direct. 15. Assignment of _Rents The Deed of Trust shall include an Assignment of all Rents and income being received now and in the future on the subject property, which shall be in effect until the Loan is repaid in full. 16. Borrower Robert L. Mayer, as Trustee of the Robert L. Mayer Trust of 1982, dated June 22, 1982, as amended. 17. Lender/Beneficiary FSMS is acting as a real estate broker in this transaction and will disclose to the Borrower the client(s) whose funds shall be utilized for the loan prior to the loan closing. 18. Loan Documentation and Security The Loan will be evidenced by a Promissory Note (hereinafter Note) which shall be secured by a First Deed of Trust and Assignment of Rent liens on the leasehold interest in the Property. All Loan documents will be in form and substance satisfactory to Lender with such provisions as Lender may require to protect its interest. Title to the Property, the legal description of the Property, and all documents and other matters relating in any way to the Loan or to the Property must be to the satisfaction of Lender. 19. Late payment fees If any installment due under the terms of the Loan is delinquent by ten (10) or more days, Borrower shall pay September 22, 1992 Robert L. Mayer Page Five the sum of ten percent ( 10.0%) of such installment as an additional interest charge for such delinquency. Such additional interest charge shall be due at the option of the Lender, either at the time of delinquency or at the maturity of the Loan. Should the final balloon payment of interest and principal not be paid when due (at end of the ninth loan year) , Borrower shall pay, in addition to the interest stated in the Note, an additional interest charge of two percent (2.0%) per month on' the unpaid / balance, not to exceed a total of twelve percent (12.0%) v of the principal. 20. Prepayment If this Note is prepaid in whole or in part, for any reason, Borrower agrees to pay to Lender, as consideration for the acceptance of such payment, fifteen (15) days additional interest on that part of the principal of this Note being prepaid. 21. Title Insurance At Borrower's expense, Borrower is to furnish Lender with an ALTA policy of title insurance issued by an insurance company acceptable to FSMS for 120% of the gross loan amount, together ,with such endorsements thereto as Lender may require, containing no exceptions other than those Lender approves, all in substance and form acceptable to Lender. 22. Hazard and liability insurance Lender shall be named as a first loss payee on a current, in force and paid for insurance policy insuring the subject leasehold improvements for at least the amount of the subject Deed of Trust. Said policy to include Liability Insurance coverage to Lender in the minimum amount of $1,000,000. Borrower shall maintain described policy during the life of the subject loan. . 23. Taxes/assessments All taxes, assessments and governmental liens for the subject property shall be current at the time of close of escrow or shall be paid from the loan proceeds. September 22, 1992 Robert L. Mayer Page Six 24 . Acceleration The documents evidencing and securing the loan will provide that Lender may declare the Loan immediately due and payable upon default, or if Borrower sells, assigns, or otherwise alienates the Property or any interest therein. 25. Secondary financing The documents evidencing and securing the loan will provide that Lender may declare the Loan immediately due and payable if the Borrower encumbers the property with secondary financing. 26. Personal guarantees ✓ Required from Robert L. Mayer. 27. Not Transferable This Commitment is not transferable or assignable by the Borrower. 28. Deadline for closing Loan shall be funded within 60 days of FSMS receiving proof of the City of Huntington Beach's approval of the subject Loan provided all conditions in Paragraph 37 have been satisfied. 29. Acceptance This Commitment will not be binding upon Lender unless on or before, Thursday, September 24, 1992 at 5:00 P.M. , Borrower accepts this Commitment and agrees to be bound by the terms hereof by signing a copy in the space provided below and delivering such executed copy and the Commitment Fee of $18,000.00 to Four Seasons Mortgage Services at 8880 Rio San Diego Drive #625, San Diego, Ca. 92108 by described deadline. 30. Right to Terminate Commitment This Commitment will be void at Lender's sole option, upon occurrence of any of the following events% a. Borrower commits an act of bankruptcy or a proceeding is commenced by or against Borrower under bankruptcy or insolvency laws. September 22, 1992 Robert L. Mayer Page Seven b. There occurs any material adverse change in the financial condition of Borrower prior to closing of the Loan. c. Borrower assigns, encumbers or otherwise transfers this Commitment. d. Borrower has not satisfied Lender under all of the conditions required under Paragraph 37 hereof. 31. Waivers Lender reserves the right at its sole option to waive non-compliance by Borrower of any of the conditions or covenants to be performed by Borrower under this Commitment. 32. Credit Information and Investigation Borrower agrees to furnish such credit and financial information as Lender may reasonably request from time to time and hereby authorizes Lender to obtain such information from third parties as it may deem necessary. All such financial statements and credit information shall be in form and substance acceptable to Lender. 33. Right to Participate or Assign Loan Lender all retain the right at all times, with or without Borrower's consent, to grant participations in or to assign all of the Loan or any portion hereof, to any other person or financial institution acceptable to Lender, and Borrower acknowledges that Lender shall have the right to share any and all information concerning Borrower with any prospective Loan participant(s) or assignee(s) . 34. Effect of Commitment This Commitment supersedes all other prior dealings between Borrower and Lender with regard to the Loan to the extent of any inconsistency. Prior receipt of any document will not constitute approval of the document unless expressly stated. 35. Agency Relationshi FSMS is acting -as an agent of Lender and not as a principal in this Loan transaction. FSMS has the authority, among other powers pursuant to written September 22, 1992 Robert L. Mayer Page Eight agreements executed between. Lender and FSMS, to execute this Commitment on behalf of Lender, to negotiate, close or deliver any Loan documents and to service and administer the Loan, including the disbursements of Loan proceeds. Those persons signing this Commitment on behalf of FSMS have the capacity to execute this Commitment on behalf of Lender. Borrower acknowledges and agrees that FSMS acts as agent for Lender and not as principal with regard to all aspects of this Loan transaction and that no contractual relationship between Borrower and FSMS with regard to financing the Property is intended. Borrower agrees to resort solely to Lender for the performance of any of Lender's obligations under this Commitment and the Loan documents . 36. Time of the Essence Time is of the essence and all conditions and obligations hereunder shall be fully performed on or before the date on which performance herein is specified. 37. Conditions Precedent to _Closing Prior to and as conditions precedent to the funding of this loan, FSMS will require the following: a. FSMS's attorney's satisfactory review and approval of the Ground Lease and the Development and Disposition Agreement affecting the subject property together will any and all amendments or modifications. . b. FSMS to review and find satisfactory a current preliminary report of title for the subject property, which shall include no mechanics liens that will not be paid in full from subject Loan proceeds. c. FSMS to review and find satisfactory the current financial statements, credit reports, tax returns and such other financial information as required by FSMS, for Robert L. Mayer and The Robert Mayer Corporation. d. Title insurance company's receipt and acceptance of the proper Trust to papers and other Trust documents the title company deems necessary. September 22, 1992 Robert L. Mayer Page Nine f. A site inspection 14 days prior to recordation of the subject loan by and acceptable to FSMS. g. FSMS'a satisfactory review of the current hazard and liability insurance for the subject property. h. FSMS'n satisfactory review of the last two years and current year to date income/expense statements for the golf course, pro shop and snack bar operations. i. FSMS'a review of the current Hilton operating statements if available to Borrower and the occupancy figures. j. FSMS's satisfactory review of the mobilehome park's May through September, 1992 income/expense statements. k. FSMS's satisfactory review and receipt of a fully completed and executed Estoppel Agreement in a form approved by FSMS from the ground lease lessor and Robert L. Mayer, Trustee. 1. City of Huntington Beach's approval of the subject loan commitment terms and conditions and of FSMS and Lender. This constitutes the terms and conditions under which FSMS shall be prepared to fund the above described loan. Please execute the acceptance portion of this commitment below and return it to our office in the manner described above. We appreciate this opportunity to help you with your financi -xequest. V Truly Your, Four Seas s r Services, Inc. f rfciW D ey, Pres dent EE BORROWER ACCEPTANCE ON PAGE TEN September 22, 1992 Robert L. Mayer Page Ten BORROWER ACCEPTANCE: ACCEPTED AND APPROVED ON THIS I k DAY OF , 1992. Robert L. Mayer, as Trustee of the Robert L. Mayer Trust of 1982, dated June 22, 1982 By• •Rob rt L. Mayer Trustee Robert L. Mayer PD/jm FOUR SEASONS }' INAN' CIA1. SLIt1' IC2. S (FRD kin f m, 04-go rif IV, • Suite Q5 I lwgo, C-41f l nil 42 lOk I_AX (61Q) (,gZ.n111 FACSIMILE TRA??SNISEiAo T0: COMPANY: � 996 jay 10 Yp 0rgllbv) ATTENTI ON t DATEx ��,�• � j _w, FAX 1 t(7f 42�LD `1 d 17 )n"ER OF PAGES (INCLUDINO THIS PAGE) : FROHt RAHFt �kl A( W, FAX it (619) 692 .9133 RE t4 M �yhfli EGG, PLkA v . { ' c q•- 6 0 OPERATORt FOUR - SEASONS MORTGAGE SERVICES Wto Rio Sai. Virgv Uiire • tiuhe 625 Siu bwcu, CJLr%.'1ui3 921C* FAX (619) WNW (1,19) 299-m AMENDMENT TO LOIN COMMITMENT DATED SEPTEM.BER 221 1992 September 24, 1992 Mr. Robert L. Mayor The Robert Mayor Corporation 660 Newport Center Dr. , Suite 1050 Newport Beach, CA 92660 Rot DRIFTWOOD NOBIL£HOME PARK AND 9 HOLE GOLF COURSE 21462 Pacific Coast Highway, Huntington Beach, CA $1,600,000 gross First Trust Deed Financing on Leasehold Estate Dear Mr. Mayert Four Seasons Mortgage Services, (hereinafter FSMS) as agent for Lender, hereby agrees to substitute the following language for Paragraph 12 of the Commitment Latter issued by FSMS dated September 22, 1992 : 12. ©Commitment Bfee Borrower shall pay Four Seasons Mortgage Services a non- refundable commitment fee of $18#000. 00 payable in two Installments. The first installment of $9,000.00 is due immediately upon acceptance of said Loan Commitment and this Amendment to Loan Commitment. The second installment of $9,000.00 is due upon satisfaction of the conditions in Paragraph 37 of said Loan Commitment. If the Borrower satisfies all of the conditions in Paragraph 37 of the Loan Commitment and the Loan is not funded, the second installment of the Commitment Fee shall be returned to tho Borrower in full . The Borrower and FSMS understand and agree and FSMS will immediately begin working on the Paragraph 37 condition items upon receipt. of the first installment of the Loan Commitment. September 24, 1992 Robert L. Mayer Page Two Condition 37f shall be changed to read: "A site inspection prior to recordation of the subject loan by and acceptable to FSMS A condition of these changes in the Loan Commitment is that the Loan Commitment and this Amendment to Loan Commitment be signed and accepted by Mr. Mayer today and the $9,000.00 first installment of the Loan Commitment be handed to Tom Burke today before 5: 00 P.M. We look forward to a successful loan closing. Si Vre , as Chief Executive officer BORROWER ACCEPTANCES ACCEPTED AND APPROVED ON THIS AV y- DAY OF .&L�t:.liv , 1992 . Robert L. Mayer, as Trustee of the Robert L. Mayer Trust of 1982, dated June 22, 1982 By: Robert L. Mayer, rustee Robert L. Mayer 67 Cis/i% continue to comply with Lessee ' s obligations under this Lease, except to the extent compliance shall be rendered impossible or impracticable by reason of this temporary y taking. ( f) Taking During Final Years of Term. If there is a { total or partial taking of the Improvements during the final l ten ( 10) years of the Term, then Lessee may terminate this Lease by written notice of election to Lessor delivered within ' thirty (30) days after the taking of possession by the condemnor, and after the termination date Lessee shall have no further obligation to pay rent that would otherwise accrue i after said date . 15. 3 Lessor' s and Lessee ' s Damages. All damages awarded d for such taking under the power of eminent domain or proceeds from the sale under threat or in lieu of such a taking, whether for the whole or a part of the Premises, shall be divided among Lessor, Lessee , Lender (as defined in Article XVII ) , and any other party holding an encumbrance on the Premises in p accordance with the value of their respective estates. ARTICLE XVI . ASSIGNtVIENT AND SUBLETTING 16. 1 Assignment. The qualifications and identity of Lessee are of particular concern to Lessor. It is because of those qualifications and identity that Lessor has entered into this Lease with Lessee. Accordingly, Lessee shall not, except as 08/01/88 0635n/2460/12 -73- - permitted in this Article XVI , assign all of any part of this Lease or any of Lessee ' s rights hereunder without the prior written approval of Lessor. No purported assignment in violation of this Lease shall be valid or effective. Lessor agrees that it will not unreasonably withhold or condition such . approval provided that Lessee is not in default hereunder. In this regard, Lessor further agrees that in the event of a request by Lessee to assign Lessee' s interest in the Lease or the Premises, Lessor shall grant such approval provided (i) such assignment is made to a responsible third party who will undertake Lessee ' s .responsibilities under this -Lease to use and develop the Premises, or portion thereof, in accordance with this Lease; (ii ) if the assignment occurs prior to the issuance of a Certificate of Completion pursuant to Section 425 of the DDA that such third party shall demonstrate qualifications and experience with respect to the type of development proposed herein and in the DDA to assure the development and operation of the Improvements, or portion thereof, equal to or greater than the qualifications and experience of Robert L. Mayer, as Trustee of the Robert L. Mayer Trust of 1982, dated June 22, 1982, as amended or successor Lessee; and (iii ) such third party shall demonstrate sufficient financial resources or commitments to assure H operation (and, if the assignment occurs prior to the issuance of a Certificate of Completion pursuant to Section 415 of the DDA, development) of the Premises, or portion thereof, in 08/01/88 0635n/2460/12 -74- I i accordance with this Lease . For purposes of clause (ii ) above, j Lessor shall approve the proposed assignee if the assignee 1 demonstrates to Lessor reasonable satisfaction that it j 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 I requirements in Lessor' s sole discretion. For the proposed assignment to be effective, the J grantee, assignee or transferee nust furnish Lessor with a written and fully executed and acknowledged assignment and 3 assumption agreement, pursuant to which the grantee, assignee or transferee agrees to comply with and perform all the ' obligations of Lessee under this Lease. All of the foregoing documents shall be in form and substance acceptable to Lessor and its attorneys. The approval by Lessor of one assignment, whether by operation of law or ctherwise, 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 r� any interest herein shall not be required in connection with any of the following: 08/01/88 0635n/2460/12 -75- i f ' (a) Any transfer to any entity or entities in which ` either Lessee or Robert L. Mayer retains a minimum of fifty-one I percent (51%) of the ownership or beneficial interest and j retains management control . (b) Transfers resulting from the death or mental or physical incapacity of an individual. (c) Transfers or assignments in trust for the benefit of a spouse, children, grandchildren, or other family members. (d) A transfer of Lessee ' s interest in the Premises to a Lender approved by Lessor in accordance with this Article XVI , including a transfer at foreclosure (or- a conveyance thereof in lieu of a foreclosure) pursuant to a foreclosure thereof by a Lender. (e) The conveyance or dedication of any portion of Lessee' s interest in the Premises to the City or other appropriate governmental agency, or the granting of easements or permits in accordance with this Lease to facilitate the development or operation of the Premises or the development 'or operation of any of the other Separate Development Parcels" within the "Commercial Portion of the "Site" (as those terms are defined in the DDA) . (f) The leasing of any part or parts of a building or structure for occupancy, or entering into of any concession agreements, licenses, or other contracts in the normal course of owning and operating the Improvements on the Premises. t 08/01/88 0642n/2460/12. -76- r (g) A transfer of stock in a publicly held corporation or the transfer of the beneficial interest in any publicly held partnership or real estate investment trust. (h) The subdivision and conveyance of individual hotel units on the Premises solely for purposes of financing the development, maintenance, and/or operation of a hotel thereon, in accordance with- the DDA, provided that: (i ) the Isubdivision of the Premises or portion thereof into commercial Icondominium units shall not allow the occupancy of hotel rooms for any use other than as individual transient occupancy hotel rooms; and (ii) commercial condominium units shall not be i 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 Professicns Code Section 11003 .5, as the same now exists or may hereafter be amended time-shares y � . 1 and time-sharing arrangements being strictly prohibited hereby; provided, however, that it is understood and agreed that any method of financing allowing the owner of a condominium hotel unit to occupy such unit for a period or periods not to exceed the greater of two (2) weeks per year or ten percent (10%) of the number of days per year that the unit is occupied by hotel guests shall not be deemed to be a time-share arrangement. Lessee shall deliver written notice to Lessor requesting approval of any assignment requiring Lessor approval { hereunder. Such notice shall be accompanied by sufficient evidence regarding the proposed assignee' s development 08/01/88 0642n/2460/12 -77- qualifications and experience and its financial commitments and resources to enable Lessor to evaluate the proposed assignee pursuant to the criteria set forth in the first paragraph of this Article XVI . Such information shall include, without limitation, a balance sheet of the proposed subtenant or assignee as of a date within ninety (90) days of the request for Lessor' s consent and statements of income or profit and loss of the proposed subtenant or assignee for the two-year period preceding the request for Lessor' s consent, if the same be available (or such other similar information as shall be available at the time the request for approval of the assignment is made) , and a written statement in reasonable detail as to the business .and experience of the proposed subtenant or assignee during the five (5) years preceding the I request for Lessor' s consent. Within thirty ( 30) days after the receipt of Lessee' s written notice requesting Lessor approval of an assignment, j 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 J furnish to Lessor such further information as may be reasonably �J requested. Lessee' s request for approval of an assignment and delivery 5 of necessary information for financing purposes shall be deemed complete twenty (20) days after Lessor' s receipt thereof and 08/01/88 1� 0642n/2460/12 -78- Lessee' s request for approval of an assignment and delivery of necessary information for all other types of assignment shall be deemed complete thirty (30) days after Lessor' s receipt thereof if Lessor does not deny approval or if no timely response requesting further information regarding the proposed assignee is delivered to Lessee, or, if Such a timely response requesting further information is received, on the date which is fifteen (15) days after the date that Lessee delivers such additional information to Lessor. Once Lessee' s request for approval of an assignment has been accepted as complete or is deemed complete, Lessor shall not be entitled to demand fadditional information or to disapprove the assignment on the 3 basis that Lessee has not furnished adequate or complete information. hone of the foregoing shall restrict Lessor' s rights to deny approval of any assignment not found acceptable _ by Lessor pursuant to this Lease. Any assignment requiring Lessor' s consent shall only be effective upon Lessor' s written consent to such assignment. Lessor shall approve or disapprove any requested assignment for financing purposes requiring Lessor approval within thirty (30) days after Lessee' s request therefor is accepted as complete or Is deemed complete, and Lessor shall approve or disapprove any other type of requested assignment requiring Lessor approval within forty-five (45) days after Lessee' s request therefor is accepted as complete or is deemed complete. Any disapproval shall be in writing and shall specify the reasons for the disapproval and, if applicable, the x -7 08/01/88_ 0642n/2460/12 -79- conditions required to be satisfied by Lessee in order to obtain approval . if Lessee' s initial notice requesting approval of an assignment for financing purposes (but not any other type of assignment) states that the assignment will be deemed approved unless rejected Within the time required in this Lease, Lessor' s failure to timely disapprove the assignment shall be conclusively deemed to constitute an approval . INo 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 fora reasonably ` satisfactory to Lessor' s attorney assuming the obligations of Lessee which have been assigned. Thereafter, the assignor shall remain responsible to Lessor for performance of the j obligations assumed by the assignee unless (i ) Lessor releases the assignor in writing or (ii ) all of the applicable requirements set forth in this Section 16. 1 are fully satisfied ( and the assignor is not then in default under this Lease, in f 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. 08/01/88 0642n/2460/12 -SO- i No consent or approval by Lessor of any assignment requiring Lessor' s approval shall constitute a further waiver ' of the provisions of this Article . 16.2 Bankruptcy. It is acknowledged and agreed that this i Lease is a lease 'of real property within the meaning of Subsection 365(b) (3 ) of the Bankruptcy Code, 11, U.S.C. To the extent -not prohibited by provisions of the Bankruptcy Code, 11 1 U.S.C. Section 101 et seq. , including Section 365(f) (1) thereof, Lessee on behalf of itself, creditors, administrators and assigns waives the applicability of Sections 541(c) and 365(e) of the Bankruptcy Code of 1978 unless the proposed assignee of the Trustee for the estate of the bankrupt meets Lessor' s standards for consent. Lessor has entered into this Lease with Lessee in order to obtain for the benefit of the Premises the unique types of 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. J 08/01/88 0642n/2460/12 -Bl- 16.3 Lessor' s Fee. Lessee agrees to reimburse Lessor for Lessor' s reasonable costs and attorneys ' fees incurred in connection with the processing and documentation of any Y requested assignment, subletting, ' transfer, change of ownership r 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 index rating for the most proximate location or an equivalent standard measure of general inflation) . • 16. 4 No Waiver. The acceptance by Lessor of any payment due hereunder f rom 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. ARTICLE XVII . LEASEHOLD FINANCING: RIGHTS OF LEASEHOLD LENDER :! 17.1- Mortgage of Lease. Lessee may only encumber the leasehold estate created hereby in accordance with the Fy� i requirements of this Article and Article XVI . 08/01/88 ;`3 0642n/2460/12 -82- 27.2 Definitions. As used in this Lease, "Leasehold Mortgage" shall mean any mortgage, deed of trust, or other security instrument, including, without limitation, an assignment by Lessee of the rents, issues and profits from the .Premises, which constitutes a lien. on the estate created by this Lease, and which has been approved or is deemed approved by Lessor, and "Lender" shall mean the owner and holder of the Leasehold Mortgage . 17.3 Rights of Lender. Subject to prompt compliance by Lender with all obligations imposed on Lender by this Lease, during the continuance of any Leasehold Mortgage and until such time as the lien of any Leasehold Mortgage has been extinguished: (a) Lessor shall not agree to any mutual termination nor accept any surrender of this Lease, nor shall Lessor consent to any amendment or modification of this Lease which would have a material adverse effect on Lender, without the prior written consent of Lender. (b) Notwithstanding any default by Lessee in the performance or observance of any agreement, covenant or 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 08/01/86 0542n/2460/12 -83- J f ' ' hereby or commence foreclosure or other appropriate proceedings in the nature thereof promptly and remedy such default • promptly, all as set forth in, and within the time specified by, this Section 17 . 3 . i (c) Lender shall have the right, but not the obligation, • at any time prior to termination of this Lease to i pay all of the rents due hereunder, to effect any insurance, to f pay any taxes and assessments, to make any repairs and improvements, to do any other act or thing required of Lessee f hereunder, and to do any act or thing which may be necessary and proper to be done in the performance and observance of the agreements, covenants, and conditions hereof to prevent termination of this Lease . All payments so made and all things so done and performed by Lender shall be as effective to prevent a termination of this Lease as the same would have been if made, done, and performed by Lessee instead of by Lender. (d) Should any event of default under this Lease occur, Lender shall have sixty (60) days after receipt of notice from Lessor setting forth the nature of such event of 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 period within which to remedy such default, provided that (A) Lender shall have fully cured any, default in the payment of any monetary obligations of Lessee under this Lease, including interest and late fees, within such sixty (60) day period and 08/01/88 :� 0642n/2460/12 -84- 1 , shall continue to pay currently such monetary obligations as _. and when the sane 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 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 s,:ch 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) . (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 ;I =� have fully cured any default in the payment of any monetary obligations of Lessee hereunder, including interest and late r 08/01/68 0642n/24E0/12 -8s- 1 fees, which do not require possession of the Premises within such sixty (60) day period and shall thereafter continue to 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, 1 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) Such new lease shall be effective as of the date of the termination of this Lease and shall be for the remainder of the Term of this Lease at the same rental and with the same terms, covenants and conditions as are set forth herein, and Lender shall assume and be responsible 1� 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 i can be cured by Lender.. L 23 08/01/88 0642n/2460/12 -86- �ti �. 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 'r disapproval)' of a proposed assignee of Lessee ' s interest hereunder and all other conditions contained in (i ) and (ii ) above are met. 1 (f) Subject to Section 16.2, if Lender is prohibited by any process or injunction issued by any court or by reason of any action by any court having jurisdiction of any 1 bankruptcy or insolvency proceeding involving Lessee from commencing or prosecuting foreclosure or other appropriate � .S proceedings in the nature thereof, the times specified in subparagraphs (d) and (e) above for commencing or prosecuting such foreclosure or other proceedings shall be extended for the period of such prohibition plus an additional period of sixty J (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 whey. the same fall due. (g) Lessor shall mail or deliver to Lender a 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 1` the provisions of this Lease, and such copy shall be mailed or delivered to Lender simultaneously with the mailing or delivery J 08/01/88 '( 0642n/2460/12 -B7- J w r of the same to Lessee. No notice of default by Lessor to i r Lessee hereunder shall be deemed to have been given insofar as 1 Lender' s rights under this Article XVII are concerned unless 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. (h) Subject to Section 16. 1 (f) foreclosure of a J 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 y nature thereof, shall not require the consent or Lessor or 1 constitute a breach of any provision of or a default under this f Lease, and upon such foreclosure, sale or conveyance Lessor shall recognize Lender as lessee hereunder. In the event Lender becomes lessee under this Lease, Lender shall assume the obligations of Lessee under this Lease or such new lease only for the period cf time that Lender remains lessee thereunder. 17.4 Consent of Lessor. In the - event Lender requires any modification to the provisions of this Lease in order to secure its loan, Lessor agrees not to unreasonably withhold consent to such modification so long as such modification does not have an adverse impact on any interest, right or remedy of Lessor hereunder. t 0$/O1/88 0642n/2460/12 _88- ATTACHMENT NO. 3 DECA.WK1 21-Sep-92 DRIF-iWOOD MOBILE HOME PARK PROFIT& LOSS STATEMENT FOUR YEAR COMPARISON 1986 THROUGH 1990 TWELVE "CS. TWELVE MOS. TWELVE MOS. TWELVE MOS. 'TWELVE MOS. ENDED ENDED ENDED ENDED ENDED 12/31/86 12131187 12131/88 12131/89 12J31190 REVENUE: Rental Income 922.068 1,019.005 1.104.847 989.164 • 982.026 OPERATING EXPENSES: Salaries. Wages&Benefits: 65,804 77,586 86,701 80.613 96,408 Ground Lease� Rent 65,000 65,000 65.000 65.000 65,000 Utilities 78.488 48,413 56,903 59.676 $4.450 Repairs& Maintenance 23,019 17,582 15.311 19,306 4.164 Landscaping 686 1,045 1,605 1.865 3,667 Material, Supplies &Other 3,327 5,779 9,114 10.440 3.468 Taxes-- Business & Property 21,826 20,537 16,494 18,357 20,992 Prolessional Fees 625 360 0 1,013 132 General &Administrative 18.127 12,823 13,144 7,110 662 Bad Debt Expense IO 42 31 • 0 0 Miscellaneous 0 424 1,906 2,335 0 TOTAL OPERATING EXPENSES 276,902 249.591 266.208 • 265,715 248,943 NET OPERATING INCOME 645,166 769,414 838.639 723.449 733,083 a DBCA.WK1 21-Sep-92 DR1FI-WOOD -MOBILE HOME PARK ESTIMATED PROFIT& LOSS STATEMENT 1991 THROUGH 1995 ESTIMATED ESTIMATED ESTIMATED TL"IELVE MOS. TWELVE MOS. TWELVE MOS. TWELVE MOS. TWELVE MOS. ENDED ENDED ENDED ENDED ENDED 4/30191 4130192 4130/93 4130194 4130195 REVENUE, Rental Income 1.037,412 843.000 863,000 856,000 845.000 1 OPERATING EXPENSES: Salaries. Wages & Benefits: 93.000 96.000 100,800 105,840 103.132 Ground Lease -IRent 65.000 165,000 165,000 165.000 173,000 Utilities 55.000 56.100 57.222 58,366 59,534 Repairs& Maintenance_ 10.000 32.500 31.625 31,206 23,767 Landscaping 1,750 1,838 1,929 2.026 2,127 Material,Supplies&Other 6,500 6,825 7,166 7,525 7,901 Taxes- Business& Property 21,412 21,840 22,277 22,722 23,177 Professional Fees 1,000 1.050 . 1,103 1,158 1,216 General &. Administrative 2,509 2,625 2,756 2,894 3,039 Bad Debt Expense 0 0 0 0 0 Miscellaneous 1,000 1,050 1,103 1,158 1,216 TOTAL OPERATING EXPENSES 257.162 384.828 390.981 397.895 398.167 NET OPERATING INCOME 780.250 458.172 472.019 458,10S 446.893 x DSCA.WK1 21-Sep-92 DRIFTWOOD MOBILE HOME PARK ESTIMATED PROFIT& LOSS STATEMENT 1996 THROUGH 2O00 ESTIMATED ESTIMATED ESTIMATED ESTIMATED ESTIMATED TWELVE MOS. TWELVE MOS. TWELVE MOS. TWELVE MOS. TWELVE MOS. ENDED ENDED ENDED ENDED ENDED 4130196 4/30197 4130198 4130199 4130/2000 REVENUE: Rental Income 830.000 805.000 752,000 723,000 699,000 OPERATING EXPENSES: Salaries. Wages& Benefits: 103,320 94,000 90,000 96,000 103,000 Ground Lease - Rent 182,000 191,000 200,000 210,000 221,000 Utilities 60,724 54,000 52.000 53.040 54,101 Repairs & Maintenance 14,955 24,000 22,000 24,100 24,305 Landscaping 2,233 2,345 2,462 2,586 2.715 Material, Supplies&Other 8.296 8,711 9.146 9,603 10,084 Taxes- Business& Property 23.640 24,113 24,596 25,087 25,589 Professional Fees 1,276 1,340 1,407 1.477 1.551 General &Administrative 3.191 f 3,350 31518 3,694 3.878 Bad Debt Expense 0 0 0 0 0 Miscellaneous 1.276 1.340 1,407 1,477 1,551 TOTAL OPERATING EXPENSES 400.912 404.1.99 406,536 427,065 447,774 NET OPERATING INCOME 429.088 400,801 345,464 295.935 251,226 DRIFTWOOD MOBILE HOME PARK CH SPA' "` .J�J'•, '< MO YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR .~§ TENANT. REF RENT 1992 1993 1994 1995 1996 1997 1 1998 .1999 2000 1 1 Corbari C 464 5,569 2,951 0 0 0 0 0 0 0 2 2 Pinkham C 392 4,706 2,494 0 0 0 0 0 0 0 3 3 Wlnthers C 302 4,706 2,494 0 0 0 0 0 0 0 4 4 Olivier C 423 5,075 2,690 0 0 0 0 0 0 0 5 5 Keeney C 392 4.706 2,494 0 0 0 0 0 0 0 6 6 Cosby C 375 4,503 2,387 0 0 0 0 0 0 0 7 8 Flores C 429 5,151 2,730 0 0 0 0 0 0 0 8 9 Watson C 392 4,706 2,494 0 0 0 0 0 0 0 9 10 Fountain C 392 4,706 2,494 0 0 0 0 0 0 0 10 11 Earl C 392 4,706 2,494 0 0 0 0 0 0 0 11 12 Fggins D 392 4,706 4,988 2.644 0 0 0 0 0 0 12 15 �ehar D 398 4,773 5.060 2,682 0 0 0 0 0 0 13 16 Shatto D 444 5,326 5,646 2,992 0 0 0 0 0 0 14 17 Gordon D 375 4,503 4,774 2,530 0 0 0 0 0 0 15 18 8 429 0 0 0 0 0 0 0 0 0 16 19 8 483 0 0 0 0 0 0 0 0 0 17 21 DiCrisci D 429 5,151 5,460 2,894 0 0 0 0 0 0 18 23 Bell D 464 5,569 5,903 3,128 0 0 0 0 0 0 19 24 Markley D 361 4,328 4,588 2,432 0 0 0 0 0 0 2D 25 Mullen D 460 5,515 5,646 3,098 0 0 0 0 0 0 21 26 Werb D 361 4,328 4,588 2,432 0 0 0 0 0 0 22 27 Anderson D 392 4,706 4,988 2,644 0 0 0 0 0 0 23 28 Waters A 800 9,600 10,176 10,787 11,434 12,120 12,847 13,618 14,435 15,301 24 29 Crommetl E 392 4,706 4,988 5,287 2,802 0 0 0 0 0 25 30 Bradbury E 361 4,328 4,588 4,863 2.577 0 0 0 0 0 26 31 Dolan E 471 5,649 5,988 6,348 3,364 0 0 0 0 0 27 32 Howard E 429 5,151 5,460 5,787 3,067 0 0 0 0 0 28 34 1 Steinmet5 E A 361 1 4,328] 4,588 1 4,863 1 2.577 0 0 1 0 01 0 DRIFRVOOD MOBILE HOME PARK CH.. SP MO YEAR YEAR YEAR YEAR YEAR YEAR. YEAR YEAR YEAR # # .; -.TENANT REP RENT 1992 1993 1994 1995 1996 1997 1998 1999 2000 29 35 McCabe E 412 4,948 5,245 5,560 2,947 0 0 0 0 0 30 36 Beatty E 361 4,328 4,588 4,863 2,577 0 0 0 0 0 31 37 Wallace E 464 5,569 5,903 6.257 3,316 0 0 0 0 0 32 38 Snider E 361 4,328 4,588 4,663 2,577 0 0 0 0 0 33 39 Berkner E 392 4,706 4,988 5,287 2,802 0 0 0 0 0 34 40 Meirs F 361 4,328 4,588 4,863 5,155 2,732 0 0 0 0 35 43 Essick F 460 5,515 5,846 6,196 6,568 3,481 0 0 0 0 36 42 Whittemo e F 361 4,328 4,588 4,863 5,155 2.732 0 0 0 0 37 43 Wadleigh F 434 5,205 5,517 5,848 6,199 3,265 0 0 0 0 38 44 B 462 0 0 0 0 0 0 0 0 0 39 45 Hall F 464 5,569 5,903 6.257 6,632 3,515 0 0 0 0 40 46 Dowell F 384 4,611 4,888 5,181 5,492 2,911 0 0 0 0 41 47 �rawford F 392 4,706 4,988 5,287 5.605 2,970 0 0 0 0 42 50 ascon F 429 5,151 5,460 5,787 6,134 3,251 0 0 0 0 43 51 A 418 5,016 5,317 5.636 5,974 6,332 6,712 7,115 7,542 7,994 44 52 Perry F 458 5,501 5,831 6,181 6,552 3,473 0 0 0 0 45 53 Howell B 444 5,326 5,326 5,326 5,326 5,326 0 0 0 0 46 54 White F 361 4,328 4,588 4,863 5,155 2,732 0 0 0 0 47 55 Stoddard G 361 4,328 4,588 4,863 5,155 5,464 2,896 0 0 0 48 56 Fuller G 422 5,070 5,374 5,696 6,038 6,400 3,392 0 0 0 49 57 Stephens G 464 5,569 5,903 6.257 6,632 7,030 3,726 0 0 0 50 58 Davis G 361 4,328 4,588 4.863 5,155 5,464 2,896 0 0 0 51 59 Bridges G 392 4,706 4,988 5,287 5,605 5,941 3,149 0 0 0 52 60 Provow G 361 4,328 4,588 4.863 5,155 5,464 2,896 0 0 0 53 61 Jones G 392 4,706 4,988 5,287 5,665 5,941 3,149 0 0 0 54 62 Pearce A 464 5,569 5,903 6,257 6,632 7,030 7,452 7,899 8,373 8.876 55 63 Bailey G 460 5,615 5,846 6,196 6,568 6,962 3,690 0 0 0 56 64 Oxford B 470 5,636 5,636 5.636 5,636 5,636 5,636 0 0 0 571 65 1 McFaddeT G 1 526 1 6,314 1 6,689 1 7.090 1 7,516 1 7,966 1 4,222 1 0 1 0 1 0 DRIFTWOOD MOBILE HOME PARK ' s „ MO YEAR IYEARv YEAR YEAR YEAR YEAR YEARY NEAR 'YEAR f~NANT: RfF 'RENT: 1992 1993 1994 1995 1996 1997 1998:' T999 2000 58 66 Walker G 361 4.328 4,588 4,863 5,155 5,464 2.896 0 0 0 59 67 Miller H 392 4.706 4.988 5.287 5,605 5.941 6,297 3,338 0 0 60 68 Barker H 422 5,070 5.374 5.696 6,038 6,400 6,784 3.596 0 0 61 69 Shea H 412 4,948 5,245 5,560 5,894 6,247 6,622 3,Si0 0 0 62 71 Carter H 392 4.706 4,988 5.287 5,605 5.941 6,297 3,338 0 0 63 72 Mason H 361 4.328 4.588 4.863 5,155 5,464 5,792 3,070 0 0 64 73 Madden A 800 9.600 10,176 10,787 11.434 12.120 12,847 13,618 14,435 15,301 65 74 Harrison B 361 4,328 4,328 4,328 4.328 4.328 4,328 0 0 0 66 75 Petersen H 392 4,706 4,988 5,287 5,605 5.941 6,297 3,338 0 0 67 77 Fowler H 392 4,706 4,988 5,287 5,605 5,941 6,297 3,338 0 0 68 79 Yates H 392 4,706 4,988 5.287 5,605 5,941 6,297 3,338 0 0 ' 69 80 Stover H 417 5.002 5.302 5.621 5,958 6,315 6,694 3,548 0 0 70 81 �eenpy H 392 4.706 4.038 5.287 5,605 5.941 6,297 3,338 0 0 71 82 Radovich 1 361 4,328 4,588 4.863 5,155 5.464 5,792 6,140 3,254 0 72 83 McClain 1 392 4,706 4.988 5,287 5,605 5,941 6,297 6,675 3,538 0 73 84 Mascorro 1 397 4,760 5,045 5,348 5,669 6,009 6,369 6,752 3,578 0 74 85 Stratton 1 361 4,328 4.588 4.863 5,155 5,464 5,792 6,140 3,254 0 75 86 Larnbers 1 444 5,326 5,646 5,984 6,343 6,724 7,127 7,555 4,004 0 76 87 Mitchell 1 375 4,503 4,774 5.060 5,364 5.686 6,027 6,388 3.386 0 77 88 Bashiorth 1 375 4,503 4,774 5,060 5.364 5.686 6,027 6,388 3.386 0 78 89 Perry 1 403 4,841 5,1131 5,439 5,765 6,111 6,478 6.866 3.639 0 79 90 Shenema 1 444 5.326 5.646 5.984 6.343 6.724 7,127 7,555 4.004 0 80 91 Hood 1 392 4.706 4,988 5,287 5,605 5,941 6,297 6,675 3.538 0 81 92 Pulliam. C e J 418 5.016 5,317 5.636 5,974 6.332 6,712 7,115 7.542 3.997 82 93 Johnson J 361 4.328 4.328 4,328 4,328 4,328 4,328 4,328 4,328 2,164 83 94 Hall J 460 5,515 5,515 5,515 5.515 5,515 5,515 5,515 5,515 2.757 84 96 Roll J 464 5.569 5.569 5,569 5,569 5,569 5,569 5,559 5.569 2.784 85 97 Chamberd J 429 5,151 5,151 5.151 5,151 5,151 5,151 5,151 5.151 2.575 86 98 St�eroski B 448 5,380 5,380 5,380 5,380 5.380 5,380 0 0 Q DRIFTWOOD MOBILE HOME PARK CHI; MO YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR .i<;--tENANT REF RENT 1992 1993 1994 1995 1996 1997 1998 1999 2000 87 99 White A 750 9,000 9,540 10,112 10,719 11,362 12,044 12,767 13,533 14,345 88 100 Conger J 392 4,706 4,706 4,706 4,706 4.706 4,706 4,706 4,706 2,353 89 101 Bioodhart J 392 4,706 4,706 4.706 4,706 4,706 4,706 4,706 4,706 2,353 90 102 Bauman S 392 4,706 4,706 4,706 4,706 4,706 4,706 4,706 4,706 2,353 91 103 Martin A 700 8,400 8,904 9,438 10,005 10,605 11,241 11,916 12,630 13,388 92 104 Ray 1 418 5,016 5,016 5.016 5,016 5,016 5.016 5,016 5,016 2,508 93 105 Leahy J 460 5,515 5,515 5,515 5,515 5,515 5,515 5;515 5.515 2,757 94 106 Curry 392 4,706 4,988 5,287 5,605 5,941 6,297 6,675 7,076 7,500 95 109 Painter 392 4,706 4,988 5,287 5,605 5,941 6,297 6,675 7,076 7,500 96 111 Kreps 412 4,948 5,245 5,560 5,894 6,247 6,622 7,019 7,441 7,887 97 112 McNeil 392 4,706 4,988 5,287 5,605 5,941 6,297 6,675 7,076 7,500 98 113 ,roszkru er 392 4,706 4,988 .5,287 5,605 5,941 6,297 G,675 7.076 7,500 09 114ammon 392 4,706 4,988 5,287 5,605 5.941 6,297 6,675 7,076 7,500 100 115 Hall 429 5.151 5,460 5,787 6,134 6.503 6,893 7,306 7.745 8,209 101 116 Sweeney 520 6,243 6,617 7,014 7,435 7,881 8,354 8,855 9,387 9,950 102 118 Hann B 464 5,569 5,569 5,569 5,569 5,569 5,569 0 0 0 103 120 Petty 392 4,706 4,988 5,287 5,605 5,941 6,297 6,675 7,076 7,500 104 200 Heck 429 5,151 5,460 5,787 6,134 6,503 6,893 7,306 7,745 8,209 105 202 Comer 361 4,328 4,588 4,863 5,155 5,464 5,792 6,140 6,508 6,898 106 206 CiCi 361 4,328 4,588 4,863 5,155 5,464 5,792 6,140 6,508 $,898 107 208 Luce 361 4,328 4,988 4,863 5,155 5,464 5,792 6,140 6,508 6,898 108 210 Pickett 361 4,328 4,588 4,863 5,155 5,464 5,792 6,140 6,508 6,898 109 212 McCabe 465 5.582 5,917 6,272 6,648 7,047 7,470 7,918 8,393 8,897 110 214 Welsch 361 4,328 4,588 4,863 5,155 5,464 5,792 6,140 6,508 6,898 111 216 Earle 434 5,205 5,517 5,848 6,199 6,571 6,965 7,383 7,826 8,295 112 218 Stadiman 361 4,328 4,588 4,863 5.155 5,464 5,792 6.140 6,508 6,898 113 220 Kent 429 5,151 5,460 5,787 6,134 6,503 6,893 7,306 7,745 8,209 114 222 Schoenth 1 361 4,328 4,588 4,863 5,155 5,464 5,792 6,140 6,508 6,898 115 1224 1 Schoeph 1 428 1 5,137 1 5,445 1 5,772 1 6,118 1 6,486 1 6.8751 7,287 1 7,724 1 8,188 } , i DRIFTWOOD MOBILE HOME PARK CJH " Sp.. Y v MO YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR - TENANT ' REF RENT 1992 1993 - 1998 .. 1999 2000# # t 116 226 502 0 0 0 0 0 0 0 0 0 117 228 Teete 361 4.328 4,588 4,863 5.155 5.464 5,792 6,140 6.508 6,898 118 232 Gentry 361 4,328 4,588 4,863 5,155 5.464 5.792 6,140 6.508 6,898 119 -$4 Stamp 390 4.679 4.959 5.257 5,572 5,907 6,261 6,637 7,035 7,457 120 236 406 0 0 0 0 0 0 0 0 0 121 238 Tarr 361 4,328 4,588 4,863 5,155 5,464 5,792 6,140 6,508 6,898 122 240 Macory 444 5,326 5,646 5.984 6,343 6.724 7,127 7,555 8,008 8.489 123 242 Levan 433 5,191 5.503 5,833 6,183 6.554 6.947 7,364 7,805 8,274 124 244 Lee 361 4,328 4,588 4,863 5,155 5,464 5,792 6,140 6.508 6,898 125 246 Brockme r 361 4,328 4,588 4,863 5,155 5,464 5,792 6,140 6,508 6.898 126 248 Brilhart 429 5,151 5,460 5,787 6.134 6,503 6,893 7,306 7,745 8,209 127 250 Stutler 361 4,328 4.588 4,863 5.155 5,464 5,792 6,140 6,508 6,898 128 254 taldwin 428 5,137 5,445 5,772 G,118 6,466 6,875 7,287 7,724 8,188 129 260 Richardsc n 361 4,328 4,588 4.863 5,155 5,464 5,792 6,140 6,508 6,898 130 262 Johnson 361 4,328 4,588 4,863 5,155 5,464 5,792 6,140 6,508 6,898 131 266 Cuccia 438 5.253 5.569 5,903 6,257 6,632 7.030 7,452 7,899 8,373 132 270 Teiles 382 4,588 4,863 5,155 5,464 5,792 6,140 6,508 6,898 7,312 133 272 Norris 361 4,328 4,588 4,863 5,155 5,464 5,792 6,140 6,508 6,898 134 274 Duke 433 5,191 5.503 5.833 6,183 6,554 6.947 7,364 7,805 8,274 135 276 452 0 0 0 0 0 0 0 0 0 136 278 Sotier 361 4.328 4,t88 4,863 5,155 5,464 5.792 6,140 6,508 6,898 137 280 Alexande 433 5,191 5,503 5.833 6,183 6,554 6,947 7,364 7,805 8.274 138 282 Stone 429 5,151 5,460 5,788 6,135 6,503 6,893 7,307 7,745 8,210 139 284 Neill 340 4,083 4,328 4,588 4,863 5,155 5,464 5,792 6,140 6,508 140 286 434 0 0 0 0 0 0 0 0 0 141 288 Sween 361 4,328 4,588 4,863 5,155 5,464 5,792 6,140 6,508 6,898 142 290 Mendonc 406 4,867 5,159 5,469 5,797 6,145 6,514 6,905 7,319 7,758 143 320 Humphrie 392 4,706 4,988 5,287 5,605 5,941 6,297 6,675 7,076 7,500 144 402 Singer 497 1 5,960 1 6,317 1 6,696 1 7,098 1 7,524 1 7,975 1 8.454 1 8,961 1 9,499 DRIFTWOOD MOBILE HOME PARK CH ` SP A „ Y'.Yy : MO.. YEAR YEAR YEAR. YEAR YEAR YEARN YEAR; YEAR YEAR Y•n .TENANT REF RENT. 1992' 1993 1994 1995 1996 1997.:` :199$" :�1999 2040 145 403 Zauzau 392 4,706 4,988 5,287 5,605 5,941 6,297 6,675 7.076 7,500 146 404 Combs 478 5,730 6.074 6,439 6,825 7,234 7,669 8,129 8,616 9,133 147 405 Russell 429 5,151 5,460 5,787 6,134 6,503 6,893 7,306 7,745 8,209 148 406 Bcrti 392 4,706 4.988 5,287 5.605 5,941 6,297 6,675 7,076 7,500 149 407 Biough 392 4,706 4,988 5.287 5,605 5,941 6.297 6,675 7,076 7,500 150 408 Felder 392 4,706 4,988 5,287 5.605 5,941 6,297 6,675 7,076 7,500 151 409 Frishholz 392 ' 4,706 4,988 5.287 5,605 5.941 6,297 6,675 7,076 7,500 152 410 Anderson 392 4,706 4,988 5,287 5.605 5.941 6,297 6,675 7,076 7.500 153 411 Ferguson 465 5.582 5,917 6,272 6,648 7.047 7.470 7,918 8,393 8,897 154 412 Fogel 392 4,706 4,988 5,287 5.605 5,941 6,297 6,675 7,076 7,50g 155 413 Otting 392 4.706 4,988 5,287 5,605 5.941 6,297 6,675 7,076 7,50 156 414 Webb 392 4,706 4,988 5,287 5.605 5.941 6,297 6,675 7,076 7,500 157 415 Thompsoi 392 4,706 4,9R8 5,287 5.605 5,941 6,207 6,675 7,076 7,500 158 417 Pearce 392 4,706 4,988 5,287 5.605 5.941 6,297 6,675 7,076 7,500 159 418 Radic 392 4,706 4,988 5,287 5,605 5,941 6,297 6,675 7,076 7,500 160 419 Dodge 392 4,706 4,988 5,287 5,605 5,941 6,297 6,675 7,076 7,500 161 421 Bluel 412 4,948 5,245 5.560 5.894 6,247 6,622 7,019 7,441 7,887 162 422 Clement 392 4,706 4,988 5,287 5,605 5,941 6,297 6.675 7,076 7,500 163 423 Thompsoi 392 4,706 4.988 5,287 5,605 5,941 6,297 6.675 7,076 7,500 164 425 Feeger 491 5.892 6,246 6,621 7,018 7,439 7,88S 8,358 8,860 9.391 165 426 392 0 [ 0 0 0 0 0 0 0 0 166 427 Stowell 392 4,706 4,988 5,287 5,605 5,941 6,297 6.675 7,076 7.500 167 428 Turreli 392 4.706 4,988 5,287 5,605 5,941 6,297 6.675 7.076 7,500 168 429 Vanatta 392 4,706 4,988 5,287 5,605 5.941 6,297 6,675 7,076 7,500 169 431 Junginger 392 4.706 4,988 5.287 5,605 5.941 6,297 6,675 7,076 7,500 170 433 Lynch 392 4,706 4,988 5,287 5,605 5,941 6,297 6,675 7.076 7,500 171 434 Tennies 392 4.706 4,988 5,287 5,605 5.941 6,297 6,675 7.076 7.500 172 435 Gorman 392 4,706 4,988 5,287 5.605 5.941 6,297 6.675 7,076 7,500 173 436 Elms 392 4,706 4.988 5,287 1 5,605 5.941 1. 6,297 1 6.675 1 7.076 1 7,500 • Ji � s. • r , DRIFTWOOD MOBILE HOME PARK CH . SP . MO YEAR YEAR YEAR YEAR YEAR YEAR YEAR, ..YEAR YEAR # # TENANT REF RENT 1992 1993 1994 1995 1996 1997 1998 1999 2000 174 439 Rederer 392 4.706 4,988 5,287 5,605 5,941 6.297 6.675 7.076 7,504 175 441 Hoffman 431 5.178 5,488 5,818 6,167 6.537 6,929 7.345 7,785 8,252 176 442 Guy B .454 5.447 5,774 6.121 6,488 6,877 7,290 0 0 0 177 443 Gnagy 392 4,706 4,988 5,287 5,605 5.941 6,207 6,675 7.076 7,500 178 t444 I Busta 1 1 464 1 5.515 1 5,846 1 6,1961 6.568 1 6,962 1 7,380 7,8231 8,2921 8.790 SUMMARY 000's GROSS RECEIPTS 74 843 863 856 845.1 830 805 7521 723 6991 OPERATING EXPENSE (220) (227) (233) (226) (220) (213) (&07) (217) (228) GROUND LEASE (165) (165) (165) (173) (182) (191) (200) (210) (221) PROJECTED CASH FLOW 458 472 458 446 429 401 345 296 251 t+r f i ORIGINAL THE WATERFRONT THIRD AMENDED AND RESTATED LEASE w r- r- THIRD AMENDED AND RESTATED LEASE r- by and between THE REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH, a public entity "Lessor" and ROBERT L. MAYER, as Trustee of the Robert L. Mayer Trust of 19821 dated June 22, 1982, as amended "Lessee's dated as of , 198_ r` 03/02/89 J + • TABLE OF CONTENTS • Page ARTICLE I. PREMISES AND TERM 3 1.1 Premises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 1.2 Reservation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 1.3 Exceptions to Leasehold Estate 5 1.4 Term of Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 1.5 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 1.6 Possession of the Premises 6 1.7 Date of Lease and Legal Effect . . . . . . . . . . . . . . . . 7 1.8 Rent Commencement Date 7 ., 1.9 Commencement Date for All Other Obligations . . . 7 1.10 Ownership of Improvements and Furnishings, Fixtures, Equipment and Personal Property; Lessee's Duty to Surrender 7 1.11 The City-Agency Agreement and the DDA: Modification. of Lease at Time of Disposition Transfers 10 60 2.22 Quiet Enjoyment 11 4 ARTICLE II. RENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 2.1 Initial Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 2.2 Rent Increases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 2.3 Additional Payments 15 2.4 Place of Payment; Late Payments . . . . . . . . . . . . . . . 15 ' 2.5 Lessor's Right to Audit 17 r., 2.6 No Abatement of Rent 18 2 .7 Rent Freeze . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 v ARTICLE III. LESSEE'S RIGHT OF FIRST REFUSAL TO PURCHASE PREMISES .. . . . . . . . . . . . . . . . . . . . . . 20 3.1 Lessee's Right of First Refusal to Purchase Promises 20 ARTICLE IV. [RESERVED] . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 ARTICLE V. TAXES AND ASSESSMENTS . . . . . . . . . . . . . . . . . . . . . 23 5.1 Lessee's Obligation for Taxes and Assessments . , . . . , , . . . . . . . . . . . . . . . . . . . . . . 23 L t i? L ARTICLE VI. [RESERVED] 32 ARTICLE VII. USE AND COMPLIANCE WITH LAW 32 7 .1 Use of Premises 32 7.2 Grant of Uses; Easements . . . . . . . . . . . . . . . . . . . . . . 33 7.3 Non-Discrimination 34 P. ARTICLE VIII. LESSOR COVENANT TO RESTRICT USE OF CITY BEACH PROPERTY 35 8.1 Recitals. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 8.2 Restrictions on Development on City Beach Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 8.3 Payments. . . . . . . . . . . . . . . . . . . . . . . . 40 6.4 Property to be Benefited by City's Covenant. . . . 41 6.5 Covenants Run With The Land; Recordation of Memorandum of Lease. . . . . . . . . . . . . . . . . . . . . . . . . 42 ARTICLE IX. MAINTENANCE OF LEASED PREMISES . . . . . . . . . . . 43 9.1 Lessee's Obligations for Maintenance . . . . . . . . . . 43 ARTICLE X. INSURANCE AND INDEMNITY 50 10.1 Lessee's Insurance 50 10.2 Covenant to Indemnify and Hold Harmless 57 10.3 Exemption of Lessor . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59 �. 10.4 Waiver of Subrogation 60 ARTICLE XI. UTILITY CHARGES 62 11.1 Utility Charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61 ARTICLE XII. OFF-SET STATEMENT, ATTORNMENT AND SUBORDINATION 61 12.1 Off-Set Statement 61 . 12.2 Atto rnment . . . . • . • . • . . . . . . . . . . . • . . . . . . . . . . . • . . . 62 12.3 Subordination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63 12.4 No Subordination of Fee 63 �• (ii) ARTICLE XIII. ALTERATIONS AND ADDITIONS . . . . . . . . . . . . . . 64 ` 13.1 Alterations and Additions . . . . . . . . . . . . . . . . . . . . . . 64 ARTICLE XIV. CASUALTY LASS AND RESTORATION . . . . . . . . . . . 65 14.1 Non-Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65 14 .2 Repair of Damage 66 14 .3 Continued Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . 67 14.4 Deferral of Rent 68 14 .5 Damage or Destruction in Last Years or Due Cause Not Required to be Covered by Insurance. 69 14 .6 Limitation on Lessee's Obligation to Restore and Right to Terminate Lease 70 ARTICLE XV. EMINENT DOMAIN 71 15.1 Condemnation of Premises . . . . . . . . . . . . . . . . . . . . . . . 71 15.2 Partial Condemnation . . . . . . . . . . . . . . . . . . . . . . . . . . . 71 15.3 Lessor's and Lessee's Damages 74 W ARTICLE XVI. ASSIGNMENT AND SUBLETTING 75 16.1 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75 16.2 Bankruptcy . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . 82 16.3 Lessor's Fee 83 w+ 16.4 No Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83 w ARTICLE XVII. LEASEHOLD FINANCING: RIGHTS OF LEASEHOLD LENDER 84 17.1 Mortgage of Lease 84 boo 17.2 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84 17.3 Rights of Lender 84 27.4 Consent of Lessor 90 ARTICLE XVIII. DEFAULT 90 Mai 18.1 Events of Default 90 18.2 Remedies . . . . . . . . . . . . . : . . . . . . . . . . . . . . . . . . . . . . . . . 92 18.3 Default by Lessor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97 18.4 Legal Expenses and Collection Costs . . . . . . . . . . . . 97 boo w 4 i.. ARTICLE XIX. HOLDING OVER 98 19 .1 Holding Over . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 ARTICLE XX. [RESERVED] 99 ARTICLE XXI. [RESERVED] 99 ARTICLE XXII. ACCESS BY LANDLORD . . . . . . . . . . . . . . . . . . . . . 99 22.1 Right of Entry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99 ARTICLE XXIII. FURNITURE, FIXTURE AND EQUIPMENT FINANCING 101 23.1 FFiE Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101 •► ARTICLE XXIV. TRANSFER OF LESSOR'S INTEREST 103 24 .1 Transfer of Lessor's Interest 103 60 ARTICLE XXV. FORCE MAJEURE . . . . . . . . . . . . . . . . . . . . . . . . . . . 104 b.0 25.1 Force Majeure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104 �. ARTICLE XXVI. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . 104 26.1 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104 26.2 Notices . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . 105 ~` 26.3 Relationship of Parties 105 26.4 Broker's Commission 106 26.5 Accord and Satisfaction 106 26.6 Time of Essence . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . 106 26.7 Remedies Cumulative 107 26.8 Construction , . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . :. 107 26.9 Effect of Invalidity 107 26.10 Successors and Assigns . . . :.. . . . . . . . . . . . ... .. . . . . 108 26.11 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . 108 26.12 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108 +�+ 26.13 Performance of Lessor's Obligations 109 26.14 Quitclaim Deed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109 26.15 Number and Gender 109 26.16 Interest on Past-Due Obligations 109 26.17 Execution of Lease; No Option 110 26.18 Corporate Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . 110 26.19 [Reserved] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110 26.20 Controlling Law 210 tiv) . V 26.21 Specific Performance . . . . . . . . . . . . . . . . . . . . . . . . . . 111 .. 26.22 Survival of Indemnities and Warranties . . . . . . . . 111 26.23 Memorandum of Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . 112 w ARTICLE XXVII. ARBITRATION 112 27.1 Commencement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112 27.2 Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113 27.3 Qualifications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114 27.4 Binding Decision 114 27.5 Expert Testimony . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115 27.6 Decision Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115 27.7 Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116 V ARTICLE XXVIII. REPRESENTATIONS BY LESSEE . . . . . . . . . . . . 116 28.1 Representations by Lessee . . . . . . . . . . . . . . . . . . . . . 116 EXHIBIT A - Legal Description of Premises EXHIBIT B - Revisions to be Made to Lease at Time of Disposition Transfer EXHIBIT C - Legal Description of City Beach Property i ir.► �'` (v) THIRD AMENDED AND RESTATED LEASE THIS THIR❑ AMENDED AND RESTATED LEASE (the "Lease") is executed as of the day of , 198_ (the "Effective Date") , by and between THE REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH, a public entity ("Lessor") , and ROBERT L. MAYER, as Trustee of the Robert L. Mayer Trust of 1982, dated June 22, 1982, as amended ("Lessee") W (collectively, the "Parties") , with reference to the following: be A. Lessor owns that certain real property located generally on the north side of Pacific Coast Highway, between Huntington Street and Beach Boulevard, in the city of Huntington Beach, County of orange, State of California, and boo more particularly described on Exhibit "A" attached hereto and by this reference made a part hereof (the "Premises") . B. The Premises and certain adjacent real property (Lot 1 of Tract 13045) have previously been leased by Lessee and Lessee's predecessors-in-interest pursuant ' to the w following described instruments: 1. Lease dated March 28, 1960, as recorded in the Official Records of Orange County on January 9, 1961, in Book 5582 at Page 203; 2. Option dated January 2, 1962, as recorded in ,�. the Official Records of Orange County on January 17, 1962, in Book 5978 at Page 905; -1- r 3. Amendment to Lease dated January 3, 1962, as recorded in the Official Records of Orange County on January 17, 1962, in Book 5978 at Page 910; 4 . Amendment to Lease dated January 22, 1963, as 6+ recorded in the Official Records of Orange County on February 1, 1963, in Book 6416 at Page 719; 5. Lease dated February 7, 1967, as recorded in the Official Records of Orange County on February 10, W 2967, in Book 8174 at Page 346; .. 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- .r 574611; and 7. Second Amended and Restated Lease dated August *• 15, 1988, as referenced in the Memorandum of Lease recorded in the Official Records of Orange County on ■d February 24, 1989, as Instrument No. 89-098171. C. Lessee now holds the leasehold interest in the Premises under the Second Amended and Restated Lease I� referenced in paragraph B.7 above. D. Lessor and Lessee now desire to restate the Second Amended and Restated Lease and amend it in certain respects. w -2- 7 a.. in consideration of the payments to be made hereunder " and the covenants and agreements contained herein, Lessor hereby agrees to lease to Lessee and Lessee hereby agrees to Mr lease from Lessor the real property hereinafter defined as w the Premises upon the following terms and conditions. WO ARTICLE I. PREMISES AND TERM w. 1.1 Premises. Lessor hereby lenses the Premises more 6w particularly described in Exhibit "A" to Lessee, and Lessee hereby hires the Premises from Lessor. Any and all buildings, structures, and fixtures (other than trade fixtures, as defined in this Lease) attached to the Premises, 60 and any utilities and related improvements (other than dedicated public improvements) made to the Premises, and any and all alterations, additions, and improvements thereto r.. shall be deemed to be real property and shall hereafter be referred to as the "Improvements." 1.2 Reservation. Lessor reserves to itself, its successors and assigns, together with the right to grant and transfer all or a portion of the same, the following: (a) The non-exclusive .right to enter upon the Premises in accordance with any rights of Lessor set forth in this Lease; (b) Any and all oil, oil rights, petroleum, minerals, mineral rights, natural gas rights, and other F -3- E L+ - L hydrocarbon substances by whatsoever name known, geothermal resources (as defined in California Public Resources Code, Section 5903) , and all products derived from any of the Yr 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 from the Premises or any other land, including the right to whipstock or directionally drill and u mine from lands other than those conveyed hereby, oil or gas wells, tunnels and shafts into, through or across the subsurface of the Premises, and to bottom such whipstocked or 6' directionally drilled wells, tunnels and shafts under and beneath or beyond the exterior limits thereof, and to redrill, retunnel, equip, maintain, repair, deepen and operate any such wells or mines; without, however, the right to enter, drill, mine, store, explore or operate an or k+ 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 w right and power to explore, drill, redrill, remove and store the same from the Premises or to divert or otherwise .utilize such water, water rights or interests on any other property owned or leased by Lessor, whether such water rights shall be riparian, overlying, appropriative, percolating, littoral, L prescriptive, adjudicated, statutory or contractual; but -4- without, however, any right to enter upon the surface of the Premises in the exercise of such rights and, provided further, that the exercise of any such rights by Lessor shall not result in any damage or injury to the Improvements, including without limitation any subsidence of all or any part of the Improvements. '•� 1.3 Exce tions to Leasehold Estate. This Lease is made subject to: (a.) General and special taxes and assessments for the current fiscal tax year and all unpaid Yr bonds and/or assessments; provided, however, W 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 and all other matters of record or apparent 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 be , 198, (the "Term Commencement Date") , and shall terminate on January 31, 2013, unless sooner terminated or extended as herein provided. For purposes of this Lease, the term "Lease Year" shall mean a calendar year; except in the event when the Term commences on a date other than January 1, r�r k 1 V the first Lease Year shall be the period from such commencement date to the next succeeding December 31 and, further, if this Lease terminates on a date other than December 31, the last Lease Year shall be the period po beginning on the January 1 following the last full Lease Year and ending on such termination date. 1.5 Termination. Notwithstanding Section 1.4, the Term of 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 Y.1 to a "Disposition Transfer", as set forth in Section 301 of ,. the "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 Lessor ` ' under the DDA or due to circumstances entitling Lessee to an ti. . extension of time 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 one that has not been so conveyed to Lessee shall be extended for the period of the delay (but in no event beyond January 32, 2013) . Nothing in this Lease is intended or shall be w interpreted to limit or affect Lessee's or Lessor's respective rights to specific performance under the DDA. 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 -6- v v 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 terms, 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") shall commence on the Term Commencement Date. 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, Eauipment and Personal _Property; Lessee Duty To Surrender. During the entire Term of this Lease, all w. Improvements and all furnishings, fixtures, equipment, and personal property that are made or placed in or on the `+ Premises by Lessee, and all changes, alterations, improvements, and additions thereto, shall be owned by and considered as the property of Lessee and not Lessor. 161 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, broom-clean, and in a clean, sanitary,, and safe condition, quality, and repair, and in accordance with this Lease. At E -7- W such time, all of the Improvements (which term is intended to • exclude ME (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 v removal shall be completed within thirty (30) days after the expiration or earlier termination of the Term, provided that with respect to trade fixtures, at Lessors election, (i) 6w each trade fixture which is not subject to an encumbrance in connection with financing the acquisition thereof shall become the property of Lessor for the purchase price set ` forth below and shall not be removed by Lessee, and (ii) each trade fixture which is subject to any encumbrance(s) in connection with financing the acquisition thereof may be purchased by Lessor as provided below. err 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 a.aw V V r 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 Y fixture to Lessor free and clear of all liens and encumbrances of any kind whatsoever. For purposes of this Lease, trade fixtures shall include 60 all machinery, partitions, furniture, furnishings, doors, bins, racks, floor coverings, lighting fixtures, gasoline pumps, water pumps, exterior and interior signs, and other F equipment and personal property installed or placed in or on the Premises whether or not permanently attached to the real property, but shall not include elevators, radiators, boilers,. or air conditioning equipment unless those items can be removed without injury to the Improvements or to the Premises. Elevators, radiators, boilers and air conditioning equipment which cannot be removed without injury to the improvements or to the Premises shall be considered part of the Improvements for purposes of this Lease. Lessee shall repair any damage to the Improvements caused by the removal of any of Lessee's property from the Premises permitted hereunder. In the event that Lessee -9- r 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 demolish the Improvements and clear them from the Premises, a in such event the Term shall continue until such work is completed. All property that Lessee is required to surrender shall become Lessor's property at termination or expiration of this Lease. All property that Lessee is not required to surrender but that Lessee does abandon shall, at Lessor's election, become Lessor's property thirty (30) days after termination or expiration. 1.11 The DDA; Modification of Lease at Time of Disposition Transfers. On August 15, 2988, the Agency and Lessee entered into a Disposition and Development Agreement ("DDA") with respect to the "Site" described therein, of two which the Premises are a part. The DDA is a public record on file in the office of the City Clerk of the City of `r Huntington Beach, 2000 Main Street, Huntington Beach, CA 92648, and reference is made to such agreements for further 6W particulars. In general, the DDA contemplates the sale by L Lessor to Lessee of "Separate . Development Parcels" (as defined in the DDA) within the "Residential Portion" (as �+ defined in the DDA) of the "Site", and the leasing by Lessor to Lessee of "Separate Development Parcels" within the "Commercial Portion" (as defined in the DDA) of the "Site", -10- pursuant to "Disposition Transfers" (as defined in the DDA) which Will occur at the times, for the consideration, and based on the terms and conditions set forth in the DDA. At the time of each "Disposition Transfer" of a "Separate Development Parcel" within the "Site" pursuant to the DDA, this Lease shall be modified as set forth in Exhibit "B" . hereto. Lessor and Lessee each agrees to cooperate and execute modified lease documents in accordance with Exhibit "B" and to execute all documents requested by the other to remove any prior and conflicting leases of record. It is kW 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 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. 5 L+ 1.12 Quiet Enjoyment. Subject to Sections 1.2 and 1.3 above, upon payment by Lessee of the rents provided herein, y 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. -11- r ARTICLE II. RENT r 2.1 Initial Rent. (a) Initial Rent. From the Rent Commencement Date until the date set forth in (b) below, Lessee shall pay to Lessor an annual rent of One Hundred Sixty-Four Thousand One V Hundred Eleven Dollars ($164,111.00) per Lease Year. Rent for any Lease Year less than a 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 denominator equals 365. The rent shall be payable in quarterly installments equal to one-fourth (1/4th) of such annual rent beginning on the Rent 66 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 L. a ninety (90) day calendar quarter. (b) Adjustment of Initial Rent. Subject to Section 2.7 below, the initial rent shall be adjusted to an amount equal to Four Hundred Ten Thousand Two Hundred Seventy-Seven Dollars ($410,277.00) per Lease Year on the earliest of the following dates: (i) June 30, 1999, or v -12- v 4 (ii) The date on which Lessee defaults under the DD;, by failing to timely complete construction of the "Developer Improvements" (as defined in the DDA) on r.. 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 6A occurred, Lessee shall be entitled to the benefits of Sections 601 and 703 of the DDA; and further provided fia that this subparagraph (ii) shall not apply to the L extent that such default is committed by any person or entity other than Lessee hereunder. 1- 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 L forth in this Section 2.2. The Annual Rent required pursuant to Section 2.1 shall L be adjusted upward on July 1, 1994, and each January 1st thereafter as provided herein (the "Adjustment Dates") . The L 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 - 200) (the "Index") . The Index published and in effect ninety (90) days prior to July 1, 1994, shall be considered the "Base Year Index". At each Adjustment Date, it the rent otherwise due shall be adjusted by the percentage L -13- L h Increase, if any, between the Base Year Index and the Index published and in effect ninety (90) days preceding the Adjustment Date. In no event shall the rent following an Adjustment Date be less than the rent in effect during the Lease Year immediately preceding such Adjustment Date notwithstanding the fact that the Index may, as of some Adjustment Date, be less than the Index as of the previous Adjustment Date or the Base Year Index. In addition, the increase in rent pursuant to this Section 2.2 in any given L five (5) Lease Year period shall not exceed twenty-five percent (25%) and the increase in rent from one Lease Year to �- the next shall not exceed ten percent (104) . When the adjusted rent is determined, Lessor shall give Lessee written notice of same 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 Labor Statistics, or successor or similar governmental agency, as may then be in existence and which is most nearly equivalent to the Index. Should Lessor and Lessee be unable to mutually agree as to any such substitute index prior to the date such agreement i$ required in order to properly and timely comply with this paragraph, b" determination of the proper substitute index shall be by arbitration in accordance with Article XXVII. iw L. L+ i r 2 .3 Additional Payments. Except as otherwise provided in this Lease, all sums of money or charges whatsoever required to be paid by Lessee to Lessor under this Lease other than rent shall be due and payable ten (10) days after demand, without any deductions or offset whatsoever. Lessee's failure to pay any such amounts or charges when due shall carry with it the same consequences as Lessee's failure to pay rent and shall be 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 it is due. 2.4 Place of Payment; Late Payments. Lessee agrees to pay the rental and other charges herein reserved to Lessor at the address specified in the notice provisions of this Lease payable to the Redevelopment Agency of the City of Huntington 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 three (3) percentage points above the discount rate of the Federal Reserve Bank of San Francisco (not to exceed the maximum legal rate permitted by law) from the day which is ten (10) days after the due date until the day the rent is paid. In addition, with respect to any delinquent payment of rent or other sum due to Lessor (but to no other person or entity) hereunder not paid -15- within the latter of five (5) days after written notice from -+ Lessor to Lessee and ten (10) days after the due date, Lessee shall pay to Lessor as a late charge an additional payment equal to five percent (51) of such delinquent payment. Following each second consecutive late payment of gent and/or W additional charges after the latter of five (5) days after �+ written notice from Lessor to Lessee and ten (10) days after the due date, Lessor shall have the option to require that 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 require L annual installments of rent and additional charges in advance Land thereafter Lessee is not delinquent in the making of any such annual installments for a period of five (5) years, V after the fifth such consecutive annual installment is timely made, thereafter rent will again be payable quarterly in advance until such time as two consecutive late payments after the latter of five (5) days after written notice from Lessor to Lessee or ten (10) days after the due date again I LA occur at which time Lessor shall again have the option to require annual installments as aforesaid. - All payments shall L be made in lawful money of the United States. all payments requiring proration shall be prorated on the basis of a thirty (30) day month and a ninety (90) day quarter. L -I6- f L r 2.5 Lessor's Right to Audit. Lessor shall have the right at any time and from time to time upon reasonable notice to Lessee, and at Lessor's expense, to review and examine at the Premises the information contained in Lessee's books, records, and federal and state income tax returns relating to the gross income and revenues derived from sales, -+ rental of hotel rooms, and services provided on the Premises (but not information 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 concessionaires conducting business on the Premises have properly reported and paid taxes all or a portion of which are collected by or paid, directly or indirectly, to Lessor or the Agency (including without limitation sales taxes and transient occupancy taxes) w relative to the conduct of such business(es) . In addition, 6" 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 w public accountants selected by Lessor at Lessor's expense. Lessee shall, for a period of at least seven (7) years l from the end of each Lease Year, keep safe and intact within r the Premises or . at Lessee's offices located no more than fifty (50) miles from the Premises all of the books, records, tax return information and other data which are subject to -17- L . Lessor's review under this Section 2.5. and regularly kept by Lessee in the ordinary course of its business. All information obtained by Lessor in accordance with its rights under this Section 2.5 shall be treated as confidential by w Lessor and its agents and accountants and shall not be disclosed except as required by law or as reasonably necessary to protect Lessor or to enforce Lessor's rights and remedies and/or Lessee's duties and obligations hereunder. 2.6 No Abatement of Rent. Except as expressly provided in Sections 14.4 and 15.2 of this Lease, Lessee shall not be entitled to any abatement, diminution, reduction, setoff or 6w postponement of rent as a consequence of any inconvenience , I 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 25.2 (unless same `, results from the 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 material 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 shall not be adjusted pursuant to Sections 2.1(b) or 2.2 in the event that Lessee does not complete a Disposition Tansfer of a Separate Development Parcel pursuant to the DDA for any. of the following reasons: L -18- L L (a) Lessor has committed a material default under the DDA; or (b) Lessor has failed or refused to timely acquire and terminate all of the property interests/ occupancies in w the Site or that portion of the Pacific Mobilehome Park 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 r� (c) Lessor or the city of Huntington Beach have 4, failed or refused to timely approve any of the plans f (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, M provided said plans are in full conformity with the DDA and Lessee has exercised best efforts to obtain such approvals; or (d) Lessor has unreasonably failed or refused to 6W timely approve Lessee's evidence of financing commitments for the development of said Separate Development Parcel which too 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 (a) Lessor has unreasonably failed or refused to timely approve a hotel operator or hotel franchisor as to any ►r -19- u V Separate Development Parcel on which Lessee is otherwise required to construct a hotel, which approvals are required pursuant to Section 2050 206, and 301 of the DDA as a condition to the close of escrow for such Separate w Development Parcel, and Lessee has exercised best efforts to obtain such approvals.. Nothing in this Section 2.7 is intended to limit or affect LesseePs right to specific performance under the DDA. w ARTICLE III. LESSEE'S RIGHT OF FIRST REFUSAL TO PURCHASE PREMISES 3.1 LesseeOs . Right of First _Refusal , to Purchase Premises. Between the Term Commencement Date and the expiration or termination of this Lease, and so long as Lessee is not in default hereunder (or is in the process of curing such a default) , Lessor shall not sell, convey, transfer, or otherwise dispose of all or any portion of or '~ any interest in the Premises (other than a pledge of any of its income under this Lease) until it shall first have offered such portion or interest to Lessee in the manner specified below: (a) Lessor shall deliver a notice (the "Notice") F. 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 L . -20- be i �w r ' proposed to be sold, transferred or otherwise disposed of (the "offered Interest") , and (iii) the offering price and all other material terms for Which Lessor proposes to sell, transfer, or otherwise dispose of the offered Interest. w (b) Within sixty (60) days after receipt of the 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 acceptance of Lessor's offer shall be accompanied by a deposit equal to ten percent (10%) of the purchase price which deposit shall be retained by Lessor as liquidated damages in the event that the purchase is not completed due to a - default by Lessee. In the alternative, Lessee 'may within such period deliver a counteroffer to Lessor. Such w counteroffer shall be binding on Lessee and shall remain effective and may be accepted by Lessor for a period of one I (1) year from the date of delivery of the counteroffer to Lessor. In such event, Lessor shall accept or reject Lessee's counteroffer within said one (1) year period. During such one . (1) year period, Lessor nay entertain offers and counteroffers of third parties to purchase the Offered ., Interest. No such action shall be deemed to be a rejection 1 ' of Lessee's counteroffer. At any time during said one (1) year period, Lessor may accept offers of third parties so 4 long as the purchase price for the Offered Interest is in excess of the price offered in Lessee's counteroffer and/or -21- V r the terms of the third party offer are more favorable to Lessor than the terms of Lessee's counteroffer. Acceptance by Lessor in writing of an offer or counteroffer of a third party to purchase the Offered Interest shall constitute a ., rejection of Lessee's counteroffer. If Lessee accepts Lessor's offer to sell the Offered Interest, or if Lessor accepts Lessees counteroffer to purchase, the parties shall consummate such purchase promptly in accordance therewith. w (c) (i) If Lessee and Lessor do not enter into an wa agreement to purchase/sell the Offered Interest as set forth in subparagraph (b) above, or (ii) if Lessee and Lessor enter into such an agreement but Lessee fails to complete the purchase as set forth in subparagraph (b) above, Lessor may sell the Offered Interest to any person at any price and upon any terms, as Lessor shall determine, provided that such sale is consummated within one (1) year of the date of the initial �,. Notice to Lessee and provided further that in the event of (i) above, the purchase price for the Offered Interest, and `' the terms of the sale, shall be no less, or more favorable to the purchaser, respectively, than the terms of any counteroffer by Lessee. For purposes of comparing whether an offer by Lessee is more or less favorable than an offer by a third party, any financed portion of the offered purchase 4 price shall be discounted to present cash value using the prime lending rate of Wells Fargo Bank or comparable w financial institution. If such sale is not consummated -22- I L r �- 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; provided, however, that Lessee's rights under this Article III shall terminate and be of no further force or 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 w area of the Premises and such sale is not consummated due 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 interest in the Premises, such person or entity shall take title to such portion or interest subject to all of the terms and conditions of this Lease. ARTICLE IV. [RESERVED] ARTICLE V. TAXES AND ASSESSMENTS 5.1 Lessee's Obligation for Taxes and Assessments. (a) Governmental Charges. In addition to the rents and other payments required to be paid under this Lease from the Term Commencement Date through the expiration or termination of this Lease, Lessee shall be responsible for, and agrees to pay, prior to delinquency, any and all taxes, -23- assessments, installments of taxes, levies, fees and other governmental charges of every kind or nature (hereinafter w collectively called "taxes") levied or assessed by municipal, county, state, federal or other taxing or assessing authorities or governmental agencies or entities upon, against or with respect to (i) the Improvements, or any portion thereof, (ii) the Premises, or any portion thereof, including without limitation, Lessor's fee interest in the Premises, (iii) all fixtures, equipment and any other �* property of any kind owned by Lessee or placed, installed or located within, upon or about the Premises for which Lessor might be assessed or which might become a lien on the ` Premises if not paid by Lessee, (iv) all alterations, additions and improvements of whatsoever kind or nature, if 4 u any, made to the Premises or the Improvements, (v) rentals or r 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 Laase) , irrespective of whether any of the items described in clauses (i) through (vi) above are assessed as real or personal property, and irrespective of whether any of such items are assessed to or against Lessor or Lessee, or any other person. The foregoing obligations of Lessee shall not constitute a waiver of Lessee's rights to s contest taxes, etc. , as set forth in subparagraph (d) below. 6s If at any time during the Term any of such taxes are not i ewl ` —24— levied or assessed separately and directly to Lessee (for " example, if the same are levied or assessed to Lessor as part of a larder tax parcel) , Lessee shall pay Lessee's r proportionate share as determined below in (b) . Any and all .� taxes and assessments and installments of taxes and assessments required to be paid by Lessee under this Lease shall be paid by Lessee before each such tax, assessment, or installment of tax or assessment becomes delinquent and a copy certified by Lessee under penalty of perjury of the official and original receipt for the payment of such tax, assessment, or installment shall promptly be given to Lessor. (b) Lessee's Allocation. Lessee's proportionate +. share of all taxes levied or assessed against or with respect Iwo to the Premises or other matters described in Section 5.1(a) above, excluding the Improvements, which are not separately assessed shall be that portion thereof which the number of r.. square feet of the land area of the Premises bears to the total number of square feet of land area from time to time ,levied or assessed with the Premises or any other fair and equitable manner as mutually determined by Lessor and Lessee. Lessee's share of taxes levied or assessed against or with respect to the Improvements which are levied or assessed with other improvements levied or assessed with the Premises shall 1 be determined by Lessor and Lessee in a fair and equitable i ' manner. Should Lessor and Lessee be unable to agree as described in this subparagraph (b) prior to the date such 4 � 6 - r��r 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 W pursuant to this subsection (b) and subsection (a) which are levied or assessed for the fiscal tax year in which the Term " commences and for the fiscal tax year in which the Term of this Lease ands, shall be prorated on the basis of a 30 day month and a 350 day year. Lessor agrees to cooperate with Lessee, at no cost to Lessor, to cause the Premises to be separately assessed by the County of orange if at any time '-� the Premises are not so separately assessed. (c) Substitute Taxes. Should the United States of America, State of California or any political subdivision thereof (other than the City of Huntington Beach) or any governmental authority having jurisdiction (by way of substitution for all or any part of the "taxes" otherwise required to be paid in whole or in part by Lessee pursuant to this Section 5.1 or elsewhere in this Lease, or in addition w thereto) either (i) impose a capital levy or a tax, assessment and/or surcharge of any kind or nature upon, I ` 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 v nature upon, against or with respect to the parking areas or 4 -2 V- 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. (d) contesting Taxes. Lessee shall have the right to contest, oppose, or object to the amount or validity of any tax, assessment, or other charge levied on or assessed against the Premises or any portion thereof; provided, however, that the contest, opposition, or objection must be filed before the tax, assessment, or other charge at which it 'w 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 4hW becomes delinquent. No 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 + delinquents (ii) Obtained and maintained a stay of all w proceedings for enforcement and collection of the tax, assessment, or other charge by posting such ti -x7- 4 bond or other matter required by law for such a " stay; or (iii) Delivered to Lessor a good and sufficient undertaking in a form reasonably .d acceptable to Lessors Executive Director, in an amount equal to one hundred twenty-five percent " (1251) of the amount in controversy (inclusive of fines, interests, penalties, costs, and other expenses that may have accrued or been imposed thereon) and issued by a surety company authorized to issue undertakings in California, conditioned on bw the payment by Lessee of the tax, assessment, or charge together with any fines, ' interest, penalties, costs, and expenses that may have r accrued or been imposed thereon within thirty (30) days after final determination of Lessee's contest, 1 �.. opposition, or objection to such tax, assessment, or other charge. ~ Lessor shall not be required to join in any ` proceeding or contest brought by Lessee unless the provisions of any law rtquires that the proceeding or contest be brought by or in the name of Lessor or any owner of the Premises. in y 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 L, -26- agrees to pay to Lessor all costs incurred by Lessor in connection therewith. (e) Payment. Subject to Lessee's rights under subparagraph (c) , RR2ra, following each second consecutive delinquent payment of taxes required to be paid by Lessee under this Section 5.1, Lessor shall have the right to elect w to bill Lessee for any amount payable by Lessee under this u Section 5.1 in periodic installments, in advance, from time to time, but not more often than quarterly, and thereafter fir. Lessee's failure to pay such amount to Lessor shall carry with it the same consequences as Lessee's failure to pay rent 6w and shall be: deemed to be additional rent. In such event, Lessor may so bill Lessee prior to Lessor s receipt of r assessment notices and/or tax statements or bills covering 1 w any or all of the taxes payable by Lessee hereunder. In the event the amount of the taxes described in this section 5.1 i for any fiscal tax year has not been made known to Lessor by l the tax collector at the time of billing, Lessor shall have the right to estimate reasonably the amount thereof and to t base its billing to Lessee upon said estimated amount, and in such event Lessor agrees to adjust such billing when the actual amount of such taxes is made known to Lessor by the l tax collector. In the event Lessor exercises such option to `+ require Lessee to pay taxes to Lessor in advance (instead of ti directly to the taxing authority) and thereafter Lessee is >V not delinquent in the making of any such installment payments 4 -Z9- I i.t for a period of five (5) years, after the fifth year Lessee V shall again be entitled to rake its tax payments directly to the taxing authority until such time as two consecutive delinquent payments again occur at which time Lessor shall W again have the option to require periodic installment payments of taxes to Lessor as aforesaid. In the event Lessor collects tax payments from Lessee pursuant to this Section 5.1. Lessor shall promptly pay such taxes prior to 6j delinquency. (f) Tax Returns And Statements. Lessee shall, as between Lessor and Lessee, have the duty of attending to, preparing, making, and filing any statement, return, report, or other instrument required or permitted by law in w connection with the determination, equalization, reduction, 6M or payment of any taxes, assessments, or other charges that t are or may be levied on or assessed against the Premises, or any portion thereof, or any interest therein, or the Improvements or other property on the Premises. Lessor shall cooperate With Lessee, at no cost to Lessor, as reasonably necessary for Lessee to comply With this subparagraph (f) , including providing information and documents in Lessor's possession to Lessee and executing necessary documents. (g) Indemnification. Lessee shall indemnify, defend and hold Lessor, the Premises, Lessor's interest in i the Premises, and any Improvements located on the Premises, free and harmless from any liability, claim, loss, cost, 1 6d i -30- w a expense or damage resulting from any taxes, assessments, or " other charges required by this Article to be paid by Lessee, any loss, cost, expense or damage, including without limitation attorneys' fees and court costs, incurred by Lessor or Lessee in connection with any such contest, and from all interests, penalties, and other sums imposed thereon and from any sales or other proceedings to enforce collection of any such taxes, assessments, or other charges. (h) Payment By Lessor. Subject to Lessee's rights under subsection (d) , ss9pra. should Lessee fail to pay within i the time specified in this Article any taxes, assessments, or +w other charges required by this Article to be paid by Lessee, 1 Lessor nay- pay, discharge, or adjust such tax, assessment, or other charge for the benefit of Lessee, but Lessor shall have no obligation so to do. In such event, Lessee shall promptly reimburse Lessor for the full amount incurred by Lessor in so paying, discharging, or adjusting such tax, assessment, or 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 i.r received by Lessor from Lessee. w i V •-3i- S 6& ARTICLE V1. [RESERVED] M ARTICLE VII. USE AND COMPLIANCE WITH LAW w 7 .1 Use of Premises. Subject to Lessee's rights under the DDA and under the Development Agreement entered into between Lessee and the City of Huntington Beach on or about August 25, 1988 (the w "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 Ir. or Improvements or the cleanliness, safety, occupancy and use of the same, whether or not any such law, ordinance, order, rule, regulation or requirement is substantial, or foreseen or unforeseen, or ordinary or extraordinary or shall necessitate structural changes of the Improvements or interfere with the use and enjoyment of the Premises; provided, that nothing in this Section 7.1 is intended to constitute a waiver by Lessee of its vested rights, if any, its rights, if any, to maintain a legal nonconforming use, or its rights under the DDA and the Development Agreement. If any governmental license or permit shall be required for the proper and lawful conduct of Lessee's business or other W activities carried on in the Premises, then Lessee, at its 4 -32- w I ►w sole expense, shall duly procure and thereafter maintain such license or permit, or cause such procurement and maintenance, and submit the same for inspection by Lessor. Lessor will w cooperate with Lessee, at no cost to Lessor, as may 6A reasonably be necessary in order to assist Lessee in , complying with this paragraph, including making appearances w at hearings and executing documents. In addition, Lessee shall not commit or suffer to be committed any waste upon the Premises or any nuisance or other act or thing which disturbs the quiet enjoyment of owners or occupants of property adjacent to the Premises; provided, however, that so long as the Improvements as constructed and maintained are in full compliance with the 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. 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 -33- such other Separate Development Parcel(s) . Such restrictions and easements shall not adversely affect the determination of the market value of the fee of the Premises or the market rental value of the Premises as set forth in Article II, and shall not be inconsistent with any of the covenants, conditions, or restrictions on Lessee's use of the Premises as set forth herein. Lessee must obtain Lessor's prior written consent to any restrictions on the Premises, its use w or its alienation, inconsistent with the foregoing. In addition, Lessee must also obtain Lessor's prior written consent to certain assignments of Lessee's interests in the Premises and this Lease, as more particularly set forth in Article XVI below. ~' 7.3 Non-Discrimination. Lessee covenants 'for itself, its heirs, executors, administrators, and assigns, and all persons claiming under or through it, that this Lease is made and accepted upon and subject to the following conditions That there shall be no discrimination against or segregation of any person or group of persons on account of race, color, creed, religion, sex; martial status, age, national origin or ancestry in the subleasing of the Premises herein leased, nor shall the Lessee establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of sublessees of the Premises. In the event Lessee enters into w contracts, leases, subleases, or assignments With respect to -34- w w 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, 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 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 selection, location, number, use or occupancy of lessees of the premises." (b) In contracts and assignments: "There shall be no discrimination against or segregation of any person or group of persons on account of race, color, creed, religion, sex, marital status, age, national origin or ancestry in the subleasing, transfer, use, occupancy, tenure or enjoyment of the premises, nor shall the transferee (or assignee) himself or herself, or any -35- person claiming under or through him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of the premises." ARTICLE VIII. LESSOR COVENANT TO RESTRICT USE OF CITY BEACH PROPERTY w. 8.1 Recitals. (a) The City of Huntington Beach is one of the owners in fee of that certain real property located in the City of Huntington Beach, California, and bounded on the L 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 L 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 k" described in Exhibit "C" attached hereto and incorporated herein by this reference. 60 (b) Lessee will be constructing, operating, and maintaining on the Premises ocean-oriented, visitor-serving 60 commercial facilities which are designed to take full -36- LA advantage of the existing ocean views across Pacific Coast Highway. Lessee desires to obtain assurances from Lessor that such views will not be obstructed during the term of this Lease. (c) Pursuant to the California Coastal Act of 1976, as amended (Public Resources Code Section 30000, et seg.) , the City of Huntington Beach has prepared and the L California Coastal Commission has certified a Local Coastal Plan (hereinafter the "LCP") for that portion of the City of Huntington Beach that is located within the Coastal Zone, Including the City Beach Property. On January 29, 1981, the City Council of the City adopted Resolution 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 20 1982, Resolution No. 5267 on May 16, 1983, and Resolution No. 5341 on January 3, 1984. The LCP is a public record, a copy of which is available for inspection at the office of the City Clerk at the City of Huntington Beach, 2000 Main Street, Huntington Beach, California. 92648. The LCP requires "Preservation of as much beach sand area as possible in ardor to accommodate future levels of beach attendance." (LCP, Section 2.3.) The LCP further establishes as a policy the "increased numbers of hotel/motel 4 rooms and restaurants in the Coastal Zone." (Id., at Section 3.3.) The LCP designates the entire City Beach Property for -37- rx recreational use in which the "principal permitted uses . are limited to open sand areas, beach related recreational activities, and under certain conditions, parking lots, concessions and camping." (Id. , 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 I.. parking or access areas, fire rings, volleyball nets, bike trails, bike support facilities, and handicapped access. 'y Finally, the LCP "prohibit(s) expansion of parking facilities that would result in the loss of recreational sand area w . ." (Id. , at Section 9.5.1. ) (d) On October 10, 1983, the City Council of the City 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 6W 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 Ire preserve and protect the sandy beach area within the IDowntown] Specific Plan boundaries while allowing parking L and auxiliary convenience uses." (Specific Plan, Section 4.13. ) Pursuant to the Specific Plan, the only uses and structures permitted on the City Beach Property are access - 38- M 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, 6W fire rings, lifeguard towers and other structures necessary for health or safety, paddleboard courts, surface parking lots or public transit facilities that will not result in the w loss of recreational sand areas, provided that any tiered parking shall be designed so that the top of the structures I�.. 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 may' alter natural ti.• 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 (e) Lessor and Lessee desire to ensure the long- 6* term maintenance of the City Beach Property for beach-related uses consistent with the LCP and Specific Plan, to promote the development and operation of high-quality visitor-serving L commercial uses on the Premises, and to provide a long-term source of revenue to the City to enhance the City's Lr implementation of the LCP And Specific Plan or for other public purposes as determined by the City in its sole discretion. 6o -39- L z L 8.2 Restrictions on Development on City Beach Property. Lessor covenants not to construct or 'maintain or permit to be constructed or maintained any improvements or structures on the City Beach Property excepting only the following: access .A facilities, basketball courts, beach concession stands at intervals no closer than one thousand (18000) feet and " limited to two thousand five hundred (2,500) square feet per building, bicycle and jogging trails and support facilities, 61 fire rings, lifeguard towers and other structures necessary for health or safety, paddleboard courts, parking lots and public transit facilities that will not result in the loss of �- recreational sand area and that will not extend above the 1 existing grade of the -adjacent stretch of Pacific Coast «r Highway, park offices, playground equipment, public ' restrooms, public dressing rooms or showers, shoreline construction that may alter natural shoreline process (such i,,.. as groins, cliff retaining walls, pipelines, and outfalls that are designed to eliminate adverse impacts on local shoreline sand supply) ,, pp y) , volleyball net supports, and pedestrian overcrossing(s) of Pacific Coast Highway. u 8.3 Payments. In consideration of Lessor's agreement to restrict development on the City aeach Property as set forth herein,. Lessee shall pay to Lessor the amounts set forth below: L (a) For each Lease Year from 1989 through 2000, inclusive, the sum of Four Thousand One Hundred Sixty- -40- L L Six Dollars and Sixty-Seven Cents ($4,166.67) per Lease Year, payable in advance on the first day of each such year. (b) For each Lease Year from 2001 through 2013, w inclusive, or the earlier termination of this Lease, the sum of Eight Thousand Three Hundred Thirty-Three Dollars and Thirty-Four Cents ($8,333.34) 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 W covenants set forth in Sections 8.2 and 8.3 are intended to F burden and benefit the City Beach Property and the Premises. At such time that there is a Disposition Transfer of a Separate Development Parcel within the Residential Portion of i 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 Development Parcel within the Commercial Portion of the Site, pursuant to the . DDA, the benefit and burden of this Agreement shall continue in effect with respect to such separate Development Parcel. At such time that the DDA is terminated, the benefit and burden of W Sections 8.2 and 8.3 shall be removed from any portion of the Premises that has not been the subject of a Disposition `r Transfer. Accordingly, after all of the Disposition Transfers contemplated in the DDA have occurred, the benefit bw and burden of this Agreement shall apply to all of the W -41- W 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 Separate Development Parcel within the Commercial Portion of the Site -+ is not the subject of a Disposition Transfer, the 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 not apply to any of the Separate Development Parcels within the Residential Portion of the Site or any other portion of the Site. Lessor and Lessee agree to cooperate and execute all documents that may be reasonably required in order to effectuate this provision. 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 Lessees interest in the Premises and the Separate �w 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, L. Lessor shall cause a Memorandum of Lease which specifically -42- references the restrictive covenant contained within this Article VIII to be recorded against the City Beach Property. ., ARTICLE IX. MAINTENANCE OF LEASED PREMISES 9.1 Lessee's Obligations for maintenance. r.+ (a) Lessee's • Obligations. Subject to the application of Articles XIV and XV in the event of casualty or condemnation, Lessee, at Lessee's expense without cost to Lessor, shall keep and maintain in good order, condition, quality, and repair -(including replacement of parts and w0 equipment and FF&E (as defined in this Lease) , and u refurbishing of hotel guest rooms, if necessary) the Improvements and every part thereof and any and all 4 L. 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, lobbies, signs, all plumbing and privately-maintained sewage and other utility facilities serving the Premises, including free flow up to the main sewer line, fixtures, ventilation, heating and air conditioning and electrical systems (whether or not located in the Improvements) , sprinkler systems, floors and ceilings, and all other work performed by or on behalf of 1 -43- x ' Lessee, and all other repairs, replacements, renewals and restorations, interior and exterior, structural and nonstructural, ordinary and extraordinary, foreseen and unforeseen. When used in this Article, the term "repairs" �► shall include modifications, improvements, additions, deletions, alterations, replacements or renewals when ~ necessary, and all such repairs made by Lessee shall be at least equal in quality and class to the original work. W Lessee shall keep and maintain all portions of the Premises and Improvements and the sidewalks adjoining the same in a clean and orderly condition free of accumulation of dirt and rubbish. If Lessee wishes to make any repairs to the Improvements which result in a change in use of the Improvements permitted by this Lease, or materially adversely affect the value of the Premises or Improvements or ..• materially change the external structure or appearance of the Improvements, then Lessee shall submit to Lessor for its approval documentation which describes the desired repairs, including floor plans, building sections, building materials and components, samples of proposed exterior building materials, and the like, to the extent relevant to the particular repair. Lessorfs approval shall be given within a 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 6-r -44- E �i i+.1 unreasonably withheld provided that the proposed repair shall not, in Lessors 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. In addition to the foregoing, throughout the Term of this Lease and any extension hereof, Lessee shall keep, boo 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 directions, rules and regulations of health officers, fire marshals, building inspectors and other proper officials of hod the governmental agencies having jurisdiction, and insurance underwriters, and Lessee shall comply With all requirements of - laws, ordinances, rules and regulations and otherwise +r affecting the Premises and the Improvements, all at the sole cost and expense of Lessee; provided that nothing in this Section 9.1 is intended to constitute a waiver by Lessee of its vested rights, if any, to maintain a legal nonconforming use, or its rights under the DDT► 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, 6a demolish and clear any of the Improvements on the Premises as I -•49- i 1.+ a.a 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 MO to Lessee0s Maintenance of the Premises. If at any time Lessee shall fail to comply with the requirements in Section W 9.1(a) , but not more frequently than once every twenty-four (24) months, Lessor shall be entitled to deliver written notice to Lessee (herein a "Notice of Deficiency") stating that the Improvements and/or Premises are or are not in such condition and setting forth, in detail, the repairs and w replacements, if any, necessary to put the Improvements and/or the Premises in such condition as described above and/or stating that the operation of the Improvements is or is not satisfactory and setting forth, in detail, the changes in operations, if any, necessary to put the operations into the manner described above. If Lessee disputes the need for any repairs, replacements or changes in operation referenced in Lessons Notice of Deficiency, Lessee shall deliver written notice to Lessor of such dispute within thirty (30) days after delivery of Lessorl's notice and promptly after delivery thereof the dispute shall be submitted to arbitration as set forth in Article XXVII of this Lease. If ►r the determination of the arbitrators requires any of the repairs, replacements or changes in operations set forth in Lessons notice, or if Lessee shall not have disputed the i -46- two w requirements set forth in Lessor's notice, Lessee shall make r 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 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. �• (c) Liens. Subject to the last sentence of this f 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 1 Premises or Improvements, and agrees to cause to be discharged of record any mechanic's or materialmen's lien S 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 I w file and post notices of non-responsibility for Lessee's work. If Lessee fails to timely remove or bond for a lien as u -47- w r 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 twenty five percent (125%) of any such lien issued by an underwriter reasonably acceptable to Lessor securing payment of such lien in the event Lessee's contest thereof is unsuccessful or• Lessee otherwise fails to r have the lien removed of record timely. (d) Lessor Substitute Performance. In the event Lessee fails, refuses or neglects to commence and complete r any required repairs or maintenance within the times set forth in Section 9. 1(a) or (b) , to remove or bond for any r- lien within the times set forth in Section 9.1(c) , to pay any cost or expense relating to such matters, or otherwise to r 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 -48- M costs and expenses which shall be deemed to be additional rent and subject to the same 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 such notice, w 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 +W to any and all other rights and remedies provided under this Lease or at law. (e) Ownership of .Improvements. The Improvements, and any ME not covered by the definition of "Improvements", shall be owned by Lessee and, to the extent applicable, by Lessee's vendors and permitted sublessees and concessionaires, until expiration of the Lease Term, or the sooner termination of this Lease. However, Lessee shall not remove any of the Improvements from the Premises, nor waste, destroy or modify any Improvements of the Premises, except as permitted by this Lease. Upon expiration or sooner termination of this Lease, all of the Improvements (which �+ term is intended to exclude FF&E, personal property, and any signs containing a business name, trademark, symbol, logo, or design) that are made or placed in or on the Premises by Lessee shall be considered part of the real property of the Premises and shall remain on the Premises and become the :1 k - 49- t ' s.e property of Lessor** Lessee shall have the right to remove all other property which is not the property of Lessor, provided that such removal shall be completed within thirty (30) days after the expiration or earlier termination of the Term. ARTICLE X. INSURANCE AND INDEMNITY �v i 10.1 Lessee's Insurance. r. (a) Types. 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 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 the Southern California area: (i) comprehensive general liability insurance with respect to the Premises and the operations of or on behalf of Lessee and all lessees, tenants, licensees, operators and concessionaires in, on or about the Premises in an amount not less than Five Million Dollars ($5,000,000) per occurrence combined single limit bodily injury, personal injury, death and property damage liability per occurrence, subject to such increases in i , 4 a 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 more than one Hundred Thousand Dollars ($100,000.00) , with such amount to increase at such times as Lessor may require increases in the policy limits as set forth above; provided that the percentage increase in the deductible 6W or self-insured retention shall not exceed the ; . percentage increase in the Index since the last requested adjustment; and further provided that Lessee 4 may maintain such higher deductibles or self-insured retention as shall be acceptable to the Executive +� Director of Lessor or his designee. In the event such insurance does provide for deductibles or self-insured retention, Lessee agrees that it will fully protect Lessor, its boards, officers, and employees in the same manner as these interests would have been protected had ti+ the policy or policies not contained the deductible or retention provisions. Coverage shall include but not be limited to, to the extent applicable to the type of I business(es) and operations on the Premises, personal w injury liability (with standard exclusions for liability l 1 I ` 1r� 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 noncontributing with such policy or policies, and (2) that Lessor shall be an additional named insured under such policy or policies, and (3) containing cross liability and severability of interest clauses providing that the insurance applies separately to each insured except with respect to the limits of t %. liability; (ii) worker's compensation coverage as required by law; ' (iii) with respect to improvements, w. alterations and the like required or permitted to be �., made by Lessee hereunder and under the DDAI contingent liability and builder's risk (course of construction) Insurance; (iv) with respect to the Improvements, and merchandise, stock, trade fixtures, furnishings, -52- 4 • equipment and other items of personal property located on or in the Premises, insurance against fire, peril of �• flood, extended coverage, vandalism and malicious mischief, and such other additional perils, hazards and risks as now are or may be included in standard "all risk" forms in general use in Orange County, California, w with the standard form fire insurance coverage in an amount equal to not less than the full current actual replacement cost thereof, and the additional coverage biw provided by the "all risk" coverage in an amount not less that twenty-five percent (25%) of the full current actual replacement cost thereof. Lessor shall be an t additional insured under such policy or policies and such insurance shall contain a replacement cost f ti.. endorsement; (v) boiler and machinery insurance coverage for all objects, including but not limited to boilers, pressure vessels, pressure piping and other major components or any centralized heating, air conditioning and cooling systems; and (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. u -53- 1.r Subject to the next sentence below, Lessee shall further require its licensees, concessionaires and subtenants to r►aintain insurance at their own expense as follows: (i) liability insurance in substantially the same form 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 form as required of Lessee by this Section 10.1 of this Lease; (iii) both policies of insurance required by (i) and (ii) above shall have the following endorsements, copies of which shall be provided to Lessee and to Lessor, if Lessor so requests; w (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 liabilityi and (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 w.. requirement by providing such insurance -54- 4 coverage for its licensees, concessionaires, MW and/or subtenants under the insurance policies it is required to maintain hereunder. (b) Standard. All policies of insurance required F to 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 I kw required of Lessee hereunder may be furnished by Lessee under any blanket policy carried by it or under a separate policy 4hW therefor. A copy of each paid-up policy evidencing such insurance (appropriately authenticated by the insurer) or a certificate of the insurer, certifying that such policy has been issued, providing the coverage required by this section and containing provisions specified herein, shall be delivered to Lessor prior to the date Lessee is given the right of possession of the Premises or as Lessor may l " otherwise require, and upon renewals, not less than thirty (30) days prior to the expiration of such coverage. Lessor may, at any time, and from time to time, inspect and/or copy any and all insurance policies required to be procured by Lessee hereunder. In no event shall the limits of any policy ti+ be considered as limiting the liability of Lessee under this Lease. W (c) Specific_ Provisions in 'Policy. Each policy evidencing insurance required to be carried by Lessee w► r.+ -55- i 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 w+ 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 6' agents, employees or representatives. (d) Landlord's substitute' Performande. 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. (e) Commercial _ Availability. Notwithstanding any other provision in this Lease to the contrary, Lessee's 6.0 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, terms, and conditions, at reasonable �+ commercial rates; provided, however, that the foregoing condition of commercial availability shall be inapplicable if the particular insurance coverage is not commercially available due to the wrongful acts or omissions of Lessee, dangerous or hazardous activities of Lessee, or activities not contemplated by this Lease. If at any time during the term any of the insurance otherwise required pursuant to this Section 10.1 is not so available, Lessee shall promptly so notify Lessor, and Lessor and, Lessee shall agree upon such 5 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 insurance requirements, the matter shall be resolved by arbitration in accordance with the procedures set forth in Article XXVII below. 10.2 Covenant to Indemnify _and Hold Harmless. Lessee covenants to defend and indemnify Lessor, its officers, directors, partners, representatives, agents and employees, and successors and assigns, and save it and them harmless l -57- t from and against any and all claims, actions, losses, damages, liability, costs and expenses, including attorneys' fees, in connection with the loss of life, bodily injury and/or damage to property arising from or out of or in ., connection with any occurrence in, upon or at the Premises or improvements, or the occupancy or use by Lessee or any other person of the Premises or Improvements or any part thereof, or arising from or out of Lessee's failure to comply with any Bog provision of this Lease or otherwise occasioned wholly or in part by any act or omission of Lessee, its agents, representatives, contractors, employees, servants, customers, invitees, trespassers, guests, tenants, lessees, concessionaires, operators or- licensees, or their customers or invitees, excepting only that the foregoing indemnification and hold harmless agreement shall not apply in the event of any uninsured willful or actively negligent s misconduct cn 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 inr under this Lease. In case Lessor shall be made a party to any litigation commenced by or against Lessee, then Lessee shall protect, defend and hold Lessor harmless and shall pay all costs, expenses and reasonable attorneys' fees incurred or paid by Lessor in connection with such litigation. Lessor may, at its option, require Lessee to assume Lessor's defense ■. -58- ti Ir.+ F 1 V k in any action covered by this Section through counsel ftJ selected by Lessee and reasonably satisfactory to Lessor. ka Lessee, as a material part of the consideration to Lessor, hereby assumes all risk of damage to property or injury to ka persons in, upon or about the Premises and Improvements from any cause whatsoever, and Lessee hereby waives all its claims w 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, w trespasser, operator, concessionaire or other person in or about the Premises or Improvements caused by or resulting V from any cause whatsoever, including, but not limited to, two of others, theft, fire, steam, flood, electricity, gas, or water or rain, which may leak or flow from or into any ti•+ part of the Premises, or Improvements, or from the breakage, leakage, obstruction or other defects of the pipes, sprinklers, wires, appliances, plumbing, air conditioning or lighting fixtures of the Improvements, whether the injury, loss or damage or loss of business results from conditions -59- arising upon the Premises or from other sources, except that the foregoing exemption of liability shall not apply (i) to Lessor in its capacity as a governmental agency (as distinguished from its capacity as the fee owner of the .+ Premises) , to the extent that such liability would otherwise exist in accordance with existing law, (ii) to the extent any injury, loss, or damage arises out of the uninsured willful or actively negligent misconduct of Lessor or any of its agents, representatives, or employees, or (iii) to the extent 6w any inJury, loss, or damage arises out of a breach by Lessor of its obligations under this Lease. Lessee shall give prompt notice to Lessor in case of any casualty losses in excess of -five percent (5%) of the combined value of the Improvements, FF&E, and personal property on the Premises, i 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) . Lessor shall not be liable for any damages arising from any act or neglect of any other tenant, lessee, concessionaire, licenses, invitee, quest, trespasser, operator or customer of the Premises or Improvements. 10.4 Waiver, of Subrogation. Each party hereto does hereby waive, remise, release and discharge the other party hereto and any officer, director, shareholder, beneficiary, partner, agent, employee or representative of such other w party, of and from any liability whatsoever hereafter arising -60- from loss or damage for which insurance containing a waiver of subrogation is carried by the injured party under such 6„ insurance. Lessee shall, upon obtaining the policies of insurance required hereunder, give notice to the insurance 4" carrier or carriers that the foregoing mutual waiver of subrogation is contained in this Lease. ARTICLE XI. UTILITY CHARGES +-� 21.1 Utility_ Charges. Lessee shall pay all charges for 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 60 utilities as set forth in Attachment Nog. 3 and 5 to the DDA. b ARTICLE XII. OFF-SET STATEMENT, 1-- ATTORNPKEXT AND SUBORDINATION 12.1 Off-Set Statement. The parties shall, at any time and from time to time upon not less than ten (10) dayst prior written notice from the other party, execute, acknowledge and Iw -61- deliver to such requesting party a statement in writing (a) certifying that this Lease is unmodified and in full force w and effect (or, if modified, stating the nature of such modification and certifying that this Lease, as so modified, is in full force and effect) and the dates to which the rent 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. 12.2 Attornment. In the event any proceedings are brought 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 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. -62- w. 12.3 Subordination. Lessee agrees that this Lease shall, at the request of the Lessor, be subordinate to any ., mortgages 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 thereunder, and to the interest thereon, and all renewals, replacements and extensions thereof, provided the V mortgagees or beneficiaries named in said mortgages or trust b" deeds shall agree to recognize the interest of Lessee under this Lease in the event of foreclosure, in accordance with 6M the terms of this 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 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 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. 12.4 No Subordination of Fee. Lessor shall have no obligation to encumber or otherwise subordinate its fee ` interest in the Premises. -63-- LW 68 M ARTICLE XIII. ALTERATIONS AND ADDITIONS w W 13.1 Alterations and Additions. Without Lessor's prior written consent, which consent may be withheld or granted in bw Lessor's sole discretion, and except as permitted in the DDA, including any of the development plans and approvals obtained by Lessee thereunder, and further except as set forth in section 9.1 of this Lease, Lessee shall not have the right to w make changes or alterations in the Improvements or the �.. Premises, except on the following conditions: (a) Lessee shall not make any alterations, whether structural or non-structural, which, when completed, will materially decrease the value of the Premises or the two Inprovements, or convert any building into a structure which is not a complete, self-contained operating unit; (b) Before the commencement of any work, Lessee �► shall pay the amount of any increased premiums on insurance policies provided for hereunder; (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 the realty and to have become the property of Lessor upon V -`4- 66 hi the expiration of the Term or upon sooner termination of this MA Lease, to the same extent as with the original Improvements. 6d Lessee shall not remove any of such Improvements, as changed or altered, With the understanding that trade fixtures, furnishings, and personal property installed by Lessee or its tenants or lessees shall not be classified as "Improvements" as that term, is used herein and may be removed, provided that Lessee shall promptly repair any damage caused by such removal. subject to the senior and prior rights of the *- owner(s) and persons or entities having a security interest in any of the trade fixtures, furnishings, and personal w.. property (if other than Lessee) , in no event, whether during ` the Term of this Lease or upon the expiration of this Lease, k shall Lessee be entitled to remove any trade fixtures, 5 w, furnishings, or personal property if Lessee is in default hereunder, except that during the Term of this Lease Lessee may remove trade fixtures, furnishings and items of personal property if the same are immediately replaced by trade fixtures, furnishings and items of personal property of like quality and value. ARTICLE xIV, CASUALTY LOSS AND RESTORATION 14.1 Non-Termination. Except as provided herein, no destruction or damage to the Improvements or the Premises by t -fi5- L fire, windstorm or other casualty whether insured or uninsured shall entitle Lessee to terminate this Lease. 24.2 Repair of Damage. (a) Obligation to Re air Damage Due to Casualty .• Covered by Insurance. Subject to Section 14 .5 below, if the Improvements shall be totally or partially destroyed or .w rendered wholly untenantable by fire or other casualty required to be insured against by Lessee, Lessee shall we promptly proceed to obtain insurance proceeds and take all steps necessary to begin reconstruction and, immediately upon receipt of insurance. proceeds, promptly and diligently commence the repair or replacement of the Improvements to substantially the same condition as they are' required to be L. maintained in under this Lease, whether or not the insurance 4 proceeds are sufficient to cover the actual cost of .restoration, and shall complete the same as soon as possible �+ so that Lessee may continue in occupancy. Subject to Section 25. I1 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 I Premises do not permit the restoration, Lessee may elect to terminate this Lease by giving notice to Lessor (in which Lr event Lessee will be entitled to all insurance proceeds) or 4 V L 4 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. (b) Application of Insurance Proceeds. All insurance moneys recovered on account of damage or destruction, less the cost, if any, of such recovery, shall be applied to the payment of the cost of repairing and replacing the Improvements. Except as otherwise provided herein, if net available insurance monies shall be insufficient to pay the entire cost of such work, or if the damage or destruction shall be the result of a cause not required to be insured against, then Lessee shall bear the cost thereof in excess of the net available insurance monies. .. 14.3 Continued operations. During any period of repair, Lessee shall continue, or cause the continuation of, the two operation of the businesses on the Premises to the extent reasonably practicable from the standpoint of prudent . 6W business management. However, irrespective of the continued twd — operation of ' businesses during such period of repair, the rent payable hereunder shall not be deferred (except as provided under Section 14.4) and shall not be abated. Upon completion of such repair and restoration Lessee shall promptly ref ixture and restock the Improvements, if L necessary, substantially to the condition prior to the casualty, or as otherwise required by this Lease, whichever 60 -67- S r is greater, and shall reopen for business, if closed by the casualty. Lessee shall cause all operators, lessees, tenants and other occupants to do likewise. 14 .4 Deferral of Rent. There shall be no abatement or �. deferral of rent in connection with any damage or destruction to the Improvements unless the casualty loss exceeds twenty- five percent (25%) of the gross usable area of the Premises. In such event, and only in such event, if Lessee suffers such a casualty loss due to circumstances that are not due to wLessee's intentional or negligent acts or omissions, the rent otherwise chargeable pursuant to Article II above shall be Flo- 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 Y casualty loss and the denominator of Which is the total gross r. r 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) the date on which Lessee receives any payment of business interruption insurance proceeds, or (ii) the date which is two (2) years subsequent to the date of the casualty loss. On the earlier of such. date,' the amount of the deferred rent shall be paid to Lessor, together With interest w` from the date of the casualty to the date of payment at a rate equal to three (3) percentage points over the discount 1 -68- L w rate of the Federal Reserve bank of San Francisco (not to exceed the maximum legal rate permitted by law) . 14.5 Damage or Destruction in Last Years or Due to Cause Not Required to Be Covered By Insurance. If either (i) the b, Improvements are destroyed or substantially damaged by fire or casualty when ten- (10) or fewer years remain in the Term, w' or (ii) the Improvements are destroyed or substantially damaged by a casualty which Lessee is not required to (and has not) insured against, then Lessee may cancel this Lease by written notice of election to Lessor within ninety (90) days after such substantial damage or destruction and the +- rents and other charges payable by Lessee hereunder shall be payable through the termination date plus any additional time required for Lessee to comply with the requirements to remove the Improvements and restore the Premises as required by this W Lease, In such event all suns received by or due to Lessee �.. on account of insurance covering the Improvements shall be i paid to Lessor except that the Premises shall be re-delivered to. Lessor after removal of the Improvements and debris, if requested by Lessor within thirty (30) days after Lessee delivers to Lessor its notice of termination, and the expense therefor shall 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" i within the last ten (10) years of the Term shall mean damage or destruction, the reasonably estimated cost of repair of 6 - 'g9- 1 60 L which is twenty-five percent (25%) or more of the rent payable during the remainder of the Term. As used herein, "substantial damage" caused by a casualty not required to be (and not) covered by insurance shall mean damage or destruction which is twenty-five percent (25%) or more of the replacement cost of the Improvements. In the event Lessee does not timely elect to cancel this Lease as set forth in the first sentence of this Section 14.5, Lessee shall promptly commence and complete the repair, rebuilding and refurnishing of the damaged or destroyed Improvements in accordance with Section 14.2. 14.6 Limitation on Lessee's Obligation to Restore and Right to Terminate Lease. Notwithstanding any other provision of this Lease to the contrary, prior to a ti Disposition Transfer, Lessee shall have no obligation under this Article XIV to seek or obtain insurance proceeds, to restore or repair the Improvements, or to continue the operation of the businesses on the Premises, and Lessee shall have no right to terminate this Lease because of any casualty loss; provided, however, that if Lessee elects alter a casualty loss not to repair or restore the Improvements, 9w Lessee shall notify Lessor in writing of such 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 remaining 4 damaged portion of the Improvements from the Premises. In low —70— k Irr such event, all insurance proceeds (less insurance proceeds spent to demolish and clear such remaining damaged portion of r.. the Improvements) shall be paid to Lessee. 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 4 authority under threat or in lieu of such a taking, except for a taking for a temporary use, then the Term of this Lease I�. shall cease as of the day possession shall be taken by such public authority, and the rent and other charges shall be t paid up to that day with a proportionate refund by Lessor of such rent and other charges as may have been paid in advance for a period subsequent to the date of the taking. 15.2 Partial Condemnation. (a) More Than 25% of Improvements. If more than twenty-five percent (25%) but less than all of Lessee's interest in the Improvements shall be taken under eminent domain, or sold to public authority under threat or in lieu 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 w -71- 6 thirty (30) day 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 NP in effect, except that as of the day possession is taken by public authority, the rent shall be reduced in proportion to the amount of the Improvements taken. Thereafter, Lessee shall, at its own cost and expense, make all the necessary repairs or alterations to the Improvements, so as to 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. • (b) 25% or Less of -improvements. Except for a w taking for a temporary use (subparagraph (e) below) and a 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 Term shall cease, only on the part so taken, as of the `r day possession shall be taken by such public authority, and Lessee shall pay rent up to that day, with appropriate refund by Lessor of Ouch 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 the rent shall be reduced in proportion to the amount of the subject Improvements taken. Lessee shall, at its expense, kr make all necessary repairs or alterations to the u -72- w r-- 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 r fixtures, furnishings and equipment. (c) Partial taking of the Premises exclusive of r Improvements. In the* event of a taking of less than all of Lessee's interest in that portion of the Premises exclusive of the Improvements, this Lease shall remain in full force r- 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 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 conducted in accordance with Article XXVII and with the qualifications of the appraisers/arbitrators and the determination of value to be generally as set forth in r- Section 2.2 (a) . (d) Sale by Lessor. A sale by Lessor of its interest in the Premises to any authority having the power of ,- eminent domain, either under threat of condemnation or while condemnation proceedings are pending, shall be deemed a r` taking under the power of eminent domain for purposes of the allocation of damages under Section 15.3 but not for purposes of this Section 15.2. -73- (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 continue to comply with Lessee's obligations under this Lease, except to the extent compliance shall be rendered impossible or impracticable by reason of this temporary taking. (f) Taking During Final Years of Term. If there is a total or partial taking of the Improvements during the final ten (10) years of the Term, then Lessee may terminate this Lease by written notice of election to Lessor delivered within thirty (30) days after the taking of possession by the condemnor, and after the termination date Lessee shall have no further obligation to pay rent that would otherwise accrue after said date. 15.3 Lessor's and Lessee's Damages. All damages awarded for such taking under the power of eminent domain or proceeds from the sale under threat or in lieu of such a taking, whether for the whole or a part of the Premises, shall be divided among Lessor, Lessee, 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. -74- ` ARTICLE XVI. ASSIGNMENT AND SUBLETTING 16.1 Assignment. The qualifications and identity of Lessee are of particular concern to Lessor. It is because of those qualifications and identity that Lessor has entered into this Lease with Lessee. Accordingly, Lessee shall not, except as permitted in this Article XVI, assign all of any part of this Lease or any of Lessee's rights hereunder without the prior written approval of Lessor. No purported assignment in violation of this Lease shall be valid or effective. Lessor agrees that it will not unreasonably withhold or condition such approval provided that Lessee is not in default hereunder. 'In this regard, Lessor further agrees that in the event of a request by Lessee to assign r 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 r responsibilities under this -Lease to use and develop the Premises, or portion thereof, in accordance with this Lease; (ii) if the assignment occurs prior to the issuance of a Certificate of Completion pursuant to Section 415 of the DDA that such third party shall demonstrate qualifications and experience with respect to the type of development proposed herein and in the DDA to assure the development and operation of the Improvements, or portion thereof, equal to or greater than the qualifications and experience of Robert L. Mayer, as r- -75- Trustee of the Robert L. Mayer Trust of 1982, dated June 22, 1982, as amended, or successor Lessee; and (iii) such third party shall demonstrate sufficient financial resources or commitments to assure operation (and, if the assignment occurs prior to the issuance of a Certificate of Completion pursuant to Section 415 of the DDA, development) of the Premises, or portion thereof, in accordance with this Lease. For purposes of clause (ii) above, Lessor shall approve the proposed assignee if the assignee demonstrates to Lessor reasonable satisfaction that it possesses the financial resources and abilities equivalent to or greater than Robert L. Mayer as of the date of this Lease, provided that the r foregoing shall not be construed to imply that a proposed r- assignee with a net worth less than the net worth of Robert L. Mayer as of 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 assumption agreement, pursuant to which the grantee, assignee or transferee agrees to comply with and perform all the obligations of Lessee under this Lease. All of the foregoing r- documents shall be in form and substance acceptable to Lessor r- and its .attorneys. The approval by Lessor of one assignment, r -76- r-- 1 whether by operation of law or otherwise, shall not be deemed r to be an approval by Lessor of any subsequent assignment. Notwithstanding any other provision of this Lease to the contrary, Lessor approval of an assignment of this Lease of .. any interest herein shall not be required in connection with any of the following: (a) Any transfer to any entity or entities in which `. either Lessee or Robert L. Mayer retains a minimum of fifty- one percent (51%) of the ownership or beneficial interest and Irr retains management control. (b) Transfers resulting from the death or mental or 4 �.i physical incapacity of an individual. (c) Transfers or assignments in trust for the w benefit of a spouse, children, grandchildren, or other family k members. (d) A transfer of Lessee's interest in the Premises to a Lender approved by Lessor in accordance with this Article XVI, including a transfer at foreclosure (or a conveyance thereof in lieu of a foreclosure) pursuant to a f foreclosure thereof by a Lender. (e) The conveyance or dedication of any portion of �+ Lessee's interest in the Premises to the City or other appropriate governmental agency, or the granting of easements Aug 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 w77- 1 ' U i 4 r- Parcels" within the "Commercial Portion of the "Site" (as those terms are defined in the DDA) . (f) The leasing of any part or parts of a building or structure for occupancy, or entering into of any concession agreements, licenses, or other contracts in the normal course of owning and operating the Improvements on the Premises. (g) A transfer of stock in a publicly held corporation or the transfer of the beneficial interest in any publicly held partnership or real estate investment trust. •-- (h) The subdivision and conveyance of individual hotel units on the Premises solely for purposes of financing -the development, maintenance, and/or operation of a hotel thereon, in accordance with the DDA, provided that (i) the subdivision of the Premises or portion thereof into r-- commercial condominium units shall not allow the occupancy of hotel rooms for any use other than as individual transient occupancy hotel rooms; and (ii) commercial condominium units shall not be subdivided or conveyed as a time-share, or time-share interest in an individual hotel unit (as those r terms are defined in California Business and Professions Code Section 11003.5. as the same now exists or may hereafter be r- amended) , time-shares and time-sharing arrangements being strictly prohibited hereby; provided, however, that it is understood and agreed that any method of financing allowing the owner of a condominium hotel unit to occupy such unit for r- -78- 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 guests shall not be deemed to be a time-share arrangement. i �- Lessee shall deliver written notice to Lessor requesting approval of any assignrent requiring Lessor approval 1AW hereunder. Such notice shall be accompanied by sufficient evidence regarding the proposed assignee's development qualifications and experience and its financial commitments and resources to enable Lessor to evaluate the proposed assignee pursuant to the criteria set forth in the first F paragraph of this Article XVI. Such information shall include, without limitation, a balance sheet of the proposed v subtenant or assignee as of a date within ninety (90) days of F the request for Lessors consent and statements of income or profit and loss of the proposed subtenant or assignee for the two-year period preceding the request for Lessorfs consent, r if the same be available (or such other similar information as shall be available at the time the request for approval of the assignment is made) , and a written statement in reasonable detail as to the business and experience of the 160 proposed subtenant or assignee during the five (5) years preceding the request for Lessors 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 -T9- w L r information, if any, Lessor reasonably requires in order to r 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 `w delivery of necessary information for financing purposes shall be deemed complete twenty (20) days after Lessor's w. receipt thereof and Lessee's request for approval of an i 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 i deny approval or if no timely response requesting further information regarding the proposed assignee is delivered to t 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 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. Kane 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 tow -s0- consent shall only be effective upon Lessor's written consent to such assignment. Lessor shall approve or disapprove any requested assignment for financing purposes requiring Lessor approval bw within thirty (30) days after Lessee's request therefor is accepted as complete or is deemed complete, and Lessor shall approve or disapprove any other type of requested assignment requiring Lessor approval within forty-five (45) days after Lessee's request therefor is accepted as complete or is f �.. deemed complete. Any disapproval shall be in writing and shall specify the reasons for the disapproval and, if applicable, the conditions required to be satisfied by Lessee -in order to obtain approval. If Lessee's initial notice requesting approval of an assignment for financing purposes 1 (but not any other type of assignment) states that the assignment will be deemed approved unless rejected within the 9 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 W therefor (but specifically excluding those types of assignments identified in subparagraphs (d) , (e) , and (f) , 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 Irr ' attorney assuming the obligations of Lessee which have been assigned. Thereafter, the assignor shall remain responsible to Lessor for performance of the obligations assumed by the assignee unless (i) Lessor releases the assignor in writing �. or (ii) all of the applicable requirements set forth in this Section 16.1 are fully satisfied and the assignor is not then ` in default under this Lease, in which event, assignor shall remain responsible to Lessor for performance of the obligations arising prior to the effective date of the ;, assignment, and shall be released from any obligation or liability arising subsequent to the effective date of the assignment. • No consent or approval by Lessor of any assignment requiring Lessor's approval shall constitute a further waiver i of the provisions of this Article. 26.2 Bankruptcy. It is acknowledged and agreed that i+ this Lease in a lease of real property within the meaning of Subsection 365(b) (3) of the Bankruptcy Code, 11, V.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, j� administrators and assigns waives the * applicability of Sections 541(c) and 365(e) of the Bankruptcy Code of 1978 unless the proposed assignee of the Trustee for the estate of i the bankrupt meets Lessor's standards for consent. Lessor w has entered into this Lease with Lessee in order to obtain 6W -82- V . . 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 w Bankruptcy Code shall be deemed without further act or deem to have assumed all of the obligations arising under this r. Leas on and after the date of such assignment. Any such 4., assignee shall upon demand execute and deliver to Lessor an instrument confirming such assumption. 16.3 Lessor's Fee. Lessee agrees to reimburse Lessor for Lessor's reasonable costs and attorneys' fees incurred in connection with the processing and documentation of any requested assignment, subletting, transfer, change of ownership or hypothecation of this Lease or Lessee's interest in and to the Premises, or any part thereof, which requires Lessor's approval hereunder, in an amount not to exceed Two Thousand Five Hundred Dollars ($2,500.00. ) for each such assignment (which amount shall be adjusted each year by the consumer price index rating for the most prokimate location or an equivalent standard measure of general inflation) . 16.4 No waiver. The acceptance by Lessor of any payment due hereunder from any other person shall not be deemed to be a waiver by Lessor of any provision of this Lease or to be a 6 consent to any assignment or subletting. Consent by Lessor -83- r 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. ARTICLE XVII. LEASEHOLD FINANCING: RIGHTS OF LEASEHOLD LENDER 17.1 Mortgage of Lease. Lessee may only encumber the b, leasehold estate created hereby in accordance with the F requirements of this Article and Article XVI. 17.2 Definitions. As used in this Lease, "Leasehold Mortgage" shall mean any mortgage, deed of trust, or other V security instrument, including, without limitation, an assignment by Lessee of the rents, issues and profits from the Premises, which constitutes a lien on the estate created w. by this Lease, and which has been approved or is deemed approved by Lessor, and "Lender" shall mean the owner and holder of the Leasehold Mortgage. 17.3 Rights of Lender. Subject to prompt compliance by w 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 � -84- . Lessor consent to any amendment or modification of this Lease MA which would have a material adverse effect on Lender, without the prior written consent of Lender. V (b) Notwithstanding any default by Lessee in the w 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 hereby or commence foreclosure or other appropriate ` proceedings in the nature thereof promptly and remedy such low default promptly, all as set forth in, and within the time specified by, this Section 17.3 . (c) Lender shall have the right, but not the 7 w 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 tuxes and assessments, to make any repairs and improvements, to do any other act or thing required of Lessee w — hereunder, and to do any act or thing which may be necessary and proper to be done in the performance and observance of the agreements, covenants,, and conditions hereof to prevent termination of this Lease. All payments so made and all things so done and performed by Lender shall be as effective to prevent a termination of this Lease as the same would have -85- V L bee if made, done, and performed by Lessee instead of by r Lender. (d) Should any event of default under this Lease occur, Lender shall have sixty (60) days after receipt of notice from Lessor setting forth the nature of such event of default, and, if the default is such that possession of the Premises may be reasonably necessary to remedy the default, a w. reasonable time after the expiration of such sixty (60) day period within which to remedy such default, provided that (A) +.. Lender shall have fully cured any default in the payment of any monetary obligations of Lessee under this Lease, including interest and late fees, within such sixty (60) day period and shall continue to pay currently such monetary obligations as and when the same are due and (B) Lender shall r.. have acquired Lessee's estate in the Premises created hereby ' or commenced foreclosure or other appropriate proceedings in the nature thereof within such period, or prior thereto, and is diligently prosecuting any such proceedings. All rights of Lessor to terminate this Lease as the result of the occurrence of any such event of default shall be subject to, and conditioned upon, Lessor having first given Lender 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 -B6- forth in and within the time specified by this subparagraph (d) . (e) Any event of default under this Lease which by virtue of the nature thereof cannot be remedied by Lender shall be deemed to be remedied if (A) within sixty (60) days 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 fees, which do not require possession of the Premises within such sixty' (60) day period and shall thereafter continue to faithfully perform all such ranetary 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 &PA 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: -8 7- (i) Such new lease shall be effective as of the date of the termination of this Lease and shall be for the remainder of the Term of this Lease at the same M rental and with the same terms, covenants and conditions as are set forth herein, and Lender shall assume and be responsible for all obligations as lessee thereunder to the same extent, and subject to the same terms and conditions, as Lessee is responsible hereunder; and (ii) In addition to paying all current rent under the new lease, Lender shall pay all unpaid rental (net of any income Lessor may have received from the " Premises during such period) due pursuant to Article II of this Lease and any other outstanding charges and Lender shall cure all other defaults under this Lease �. that reasonably can be cured by Lender. - 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 .r . Lessor shall have the same right to approves (or disapprove) w. Lender's nominee as set forth in Article XVI for Lessor's approval (or disapproval) of a proposed assignee of Lessee's w interest hereunder and all other conditions contained in (i) and (ii) above are met. u (f) Subject to Section 16.2, if Lender is prohibited by any process or injunction issued by any court or by reason of any action by any court having jurisdiction w -88- r. of any bankruptcy or insolvency proceeding involving Lessee ` from commencing or prosecuting foreclosure or other appropriate proceedings in the nature thereof, the times specified in subparagraphs (d) and (e) above for commencing or prosecuting such foreclosure or other proceedings shall be extended for the period of such prohibition plus an additional period of sixty (60) days thereafter; provided that bender 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. 4 (g) Lessor shall mail or deliver to Lender a duplicate copy of any and all notices of default which Lessor 6W may from time to time give to or serve upon Lessee pursuant to the provisions of this Lease, and such copy shall be mailed or delivered to Lender simultaneously with the mailing �- or delivery of the same to Lessee. No notice of default by Lessor to Lessee hereunder shall be deemed to have been given insofar as Lender's rights under this Article XVII are concerned unless 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. (h) Subject to Section 16.1(f) foreclosure of a V Leasehold Mortgage, or any sale thereunder, whether by r89. Yri . 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 r in lieu of, foreclosure or other appropriate proceedings in the nature thereof, shall not require the consent of Lessor or constitute a breach of any provision of or a default under this Lease, and upon such foreclosure, sale or conveyance Lessor shall recognize Lender as lessee hereunder. In the event Lender becomes lessee under this Lease, Lender shall W assume the obligations of Lessee under this Lease or such new lease only for the period of time that Lender remains lessee hd thereunder. 17.4 Consent of Lessor. In the event Lender requires any modification to the provisions of this Lease in order to secure its loan, Lessor agrees not -to unreasonably withhold consent to such modification so long as such modification bw does not have an adverse impact on any interest, right or remedy of Lessor hereunder. .r ARTICLE XVIII. DEFAULT �► 18.1 Events of Default. The word "default," as used in this Section 18, shall mean and include any one or more of the following events or occurrences: (a) The failure by Lessee to make any payment of rent, or other payment required to be made by Lessee v -90- L 1 ' • 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; (b) The failure of Lessee to perform any term, condition, covenant or agreement of this Lease, excluding the payment of rent, and the continuation of such failure for a period of thirty (30) days after Lessor shall have given Lessee written notice specifying the same, or in the case of a situation in which the default cannot reasonably be cured within thirty (30) days, if Lessee shall not promptly, within thirty (30) days after receipt of such notice, commence to remedy the situation by a means that can reasonably be expected to remedy the situation within a reasonable period km of time, and diligently pursue the same to completion; (c) The abandonment by Lessee of the Premises or a substantial portion thereof; (d) Lessee-*s (i) application for, consent to, or suffering of, the appointment of a receiver, trustee or liquidator for all or for a substantial portion of its assets; (ii) making a general assignment for the benefit of creditors; (iii) being adjudged a bankrupt; (iv) fixing a voluntary petition or suffering an involuntary petition under any bankruptcy, arrangement, reorganization or insolvency law (unless in the case of an involuntary petition, the same is dismissed within thirty (30) days of such filing) ; or (v) suffering or permitting to continue unstayed and in effect -91- for ten (10) consecutive days any attachment, levy, execution or seizure of all or a substantial portion of Lessee's assets or of Lessee's - interest in this Lease; r (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 w 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 W recover from Lessee: (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 6, the amount by which the unpaid rent which would have been earned after termination until the time of award exceeds the amount of such loss that Lessee proves could have been reasonably avoided; -92- . (cc) The worth at the time of award of the amount by which the unpaid rent for the w balance of the Term after the time of award exceeds the amount of such loss that Lessee •- proves could be reasonably avoided; and (dd) Any other amount deemed necessary and/or allowable by applicable statute or decision to compensate Lessor for all the M detriment proximately caused by Lessee's 6W 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 possession of the Premises, .,. expenses of reletting, expenses of restoring the Premises to the condition required low hereunder (if applicable) , reasonable attorneys* fees, and any other reasonable costs. .r The "worth at the time of award" of the amounts referred to in subparagraphs (aa) and (bb) above shall be computed by allowing interest at the rate equal to the then 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 -93- w amounts. accrued to Lessor until the date of payment by Lessee. The north at the time of award of the amount referred to in subparagraph (cc) above shall be computed by discounting such amount at two (2) percentage points above the discount rate of the Federal Reserve Bank of San Francisco at the time of award. (ii) Lessor may terminate this Lease by express written notice to Lessee of its election to do so. Such termination shall not relieve Lessee of any obligation hereunder which has accrued prior to the date of such termination. In the event of such termination, Lessor shall be entitled to recover from Lessee the amounts determined pursuant to paragraph (i) above. (b) Reasonable Rental Value. In any action for unlawful detainer commenced by Lessor against Lessee by reason of any default hereunder, the reasonable rental value of the Premises for the period of the unlawful detainer shall be deemed to be the amount of rent and other charges reserved .r in this Lease for such period, unless Lessor or Lessee shall prove to the contrary by competent evidence. (c) Cumulative Remedies. Except as may be w 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 r �.r —94— bd w. 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 r 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 w 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 r. such preceding breach or default at the time of acceptance of w 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 Promises upon the occurrence of any of the events of default specified in Section 18.1 above, including the ,.. expiration of any applicable cure period. (f) Lessee's Breach. Even though Lessee has breached this Lease and abandoned the Premises, subject to Lessor's obligation to act reasonably to mitigate its damages boo and to deduct from any amounts otherwise owing by Lessee to -9e- i�r r 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 Lessor may enforce all of its rights and remedies under this Lease, including the right to recover the r rent as it becomes due. For purposes of Article XVIII, the •• following do not constitute a termination of Lessee's right to possession: Wd (i) acts of maintenance or preservation or efforts to relet the Premises; Do (ii) The appointment of a receiver on the 60 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 `r delivery of notice by Lessor, then in addition to the other remedies herein granted to Lessor, Lessor mayO 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 Lease. all sums paid by Lessor and all necessary incidental costs, together with interest thereon.at the rate of three (3) percentage points above the ..96_ discount rate of the Federal Reserve Bank of San Francisco (not to exceed the maximum legal rate permitted by law) , from the date of the payment by Lessor shall be payable by Lessee to Lessor on demand. The sums shall be deemed to be additional rent and subject to the same consequences as herein provided for failure to pay rent. MW 18.3 Default by Lessor. Lessor shall not be deemed to be in default in the performance of any obligation required W to be performed by it hereunder unless and until it has W failed to perform such obligation within thirty (30) days after written notice by Lessee to Lessor specifying in reasonable detail the nature and extent of any such failure; provided, however, that if the nature of Lessor's obligation is such that more than thirty (30) days are required for its performance, .then Lessor shall not be deemed to be in default if it shall commence such performance within such thirty (30) day period and thereafter diligently prosecutes the same to completion. 18.4 Legal Expenses and Collection Costs. If either _ party incurs any expense, including actual costs of collection, reasonable attorneys' fees, expenses of discovery, preparation for litigation, expert witness fees and litigation expenses and costs, in connection with any action or proceeding instituted by either party by reason of any default or alleged default of the other party hereunder, the party prevailing in such action or proceeding shall be -97- 60 6 a 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 party if (a) judgment is entered in favor of Lessor or (b) prior to trial or judgment Lessee shall pay the rent and charges claimed by Lessor, or eliminate the condition(s) , cease the act(s) or N otherwise cure the omission(s) claimed by Lessor to W constitute a default by Lessee hereunder. " ARTICLE XIX. HOLDING OVER Ynl 19.1 Holding Over. This Lease shall terminate and become null and void without further notice - upon the expiration of the Term herein specified, and any holding over by Lessee after such expiration shall not constitute a renewal or extension hereof or give Lessee any rights under this Lease, except when in writing signed by both parties hereto or as otherwise heroin provided. If Lessee shall hold over for any period after the expiration of the Term, Lessor may, at its option, treat Lessee as a tenant at will commencing on the first (1st) day following the expiration of this Lease and subject to all of the terms and conditions herein contained, except that the annual rental shall be one hundred fifty percent (150%) of the annual rental applicable -98- u 6. .at the date of expiration and the rent shall be payable ` quarterly in advance even though the tenancy is at will. if Lessee fails to surrender the Premises upon the expiration of this Lease, Lessee shall indemnify, defend and hold Lessor harmless from all loss, cost, damage, claim or liability, including without limitation, any claims made by any succeeding tenant founded on or resulting from such failure to surrender. Acceptance by Lessor of rent after such expiration 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 not affect Lessor's right of reentry or any other rights of Lessor hereunder or as otherwise provided W by law. ARTICLE XX. [RESERVED] I.. ARTICLE XXI. (RESERVED) 6. ARTICLE XXIT. ACCESS BY LANDIARD 22.1 Right of Entry. Lessor and those agents, L contractors, servants and employees of Lessor Who are L identified in writing to Lessee shall have the right, after reasonable notice to Lessee, to enter the Premises during L -99- a 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 to Lessor in this Lease; (b) to exhibit the Premises to prospective purchasers, mortgagees or .. lessees of Lessor's interest therein; (c) to make such repairs as Lessor may be entitled to make after a default by Lessee under Article IX above; and (d) to take all materials into and upon the Premises that may be required in connection with such repairs, provided that any such entry shall be 6d 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 .a or actual eviction of Lessee, in whole or in part, and the rent shall not abate while any such repairs are being made. If, during the last month of the Term, Lessee shall have removed all or substantially all of Lessee's property therefrom, Lessor may immediately enter and alter, renovate and redecorate the Premises without elimination or abatement W of rent and without other compensation and such action shall have no effect upon this Lease. Nothing herein contained, however, shall be deemed or construed to impose upon Lessor any obligation, responsibility or liability whatsoever for W the care, supervision or repair of the Premises. W -100- W W r • ARTICLE XXIII. FURNITURE, FIXTURE AND EQUIPMENT FINANCING W 23 .1 FF&E Financing. It is contemplated that during the Term of this'. Lease, Lessee shall place or cause the placement from time to time of furniture, fixtures and equipment (collectively "FF&E") on the Premises which shall be subject �r to lease and/or purchase financing encumbrances (collectively "ME Financing") . Prior to Lessee having the right to place r. any FF&E on the Premises subject to ME Financing, Lessee shall be required to deliver to Lessor written notice of any such proposed FF&E Financing at least 60 days prior to the creation of such FF&E Financing, together with documentation w in reasonable detail so that Lessor may review and approve or disapprove, in Lessor's reasonable discretion, the F'F&E Financing. Such information shall include, but not be limited to, the following: (i) a complete description of the FFa; (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 ME; 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 &. -101- r may approve or disapprove such ME Financing by written P notice to Lessee. Lessor's approval of any such ME Financing shall not be unreasonably withheld. In the event r ' Lessor reasonably objects to all or a portion of such ME Financing, Lessor shall within said 30-day period give Lessee written notice of its objection, detailing the reasons therefor. In such event, Lessee shall be prohibited from entering into such FF&E Financing but Lessee may submit to Lessor such response to Lessor's objections and/or revisions to the terms and conditions of the ME Financing in order to satisfy Lessor's objections thereto. Any such newly submitted information shall again be subject to Lessorfs 30- day right to review and reasonably object thereto. Lessor's failure to timely object within said 30-day period to any such proposed ME Financing for which proper notice has been given by Lessee to Lessor shall constitute approval of the �. particular ME Financing in question and no further approval by Lessor for such ME Financing shall be required. Lessor's rights hereunder shall not be construed an requiring w Lessor to participate in any way in any such ME Financing nor shall approval by Lessor of any such ME Financing +� obligate Lessor in any manner. iNd -102- ARTICLE XXIV. TRANSFER OF LESSOR'S INTEREST Y 24 . 1 Transfer of Lessor's Interest. Subject to Lessee's r rights under Article III above, in the event of any transfer �. or transfers of Lessor's interest in the Premises, the transferor shall, upon written notice to Lessee, be 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 VIII above restricting the use of the City Bench Property. The transferee shall be deemed, without further act or agreement, to have assumed and agreed to carry out any and all of the covenants and obligations of � 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 b _ interest to the Redevelopment Agency, would automatically assume all of the Redevelopment Agency's obligations 60 hereunder and be entitled to all of the . Redevelopment Agency's rights and benefits hereunder. Notwithstanding the 6* foregoing, no such transfer of Lessor's interest in the Premises shall relieve the City of Huntington Beach of its -103- 6W 6d a • obligations under the Development Agreement or the Huntington Beach Redevelopment Agency of its obligations under the DDA. r ARTICLE XXV. FORCE MAJEURE J 25.1 Force Maieure. In the event the performance by either party of any of its obligations hereunder is delayed by reason of the act or neglect of the other party, act of r God, stormy or inclement weather, strike, labor dispute, boycott, lockout or other like defensive action by such party, inability to obtain labor or materials, governmental W 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. ARTICLE XXVI. MISCELLANEOUS 26.1 Waiver. The waiver by either Lessor or Lessee of any breach of any term, condition or covenant contained 60 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. -104- w 26.2 Notices. All notices, demands or other writings to be made, given or sent hereunder, or which may be so given or made or sent by either Lessor or Lessee to the other shall be deemed to have been given when in writing and personally ,. delivered or if mailed on the third (3rd) day after being deposited in the United States mail, certified or registered, postage prepaid, and addressed to the respective parties at their addresses set forth below: If to Lessor: The Redevelopment Agency of the City of Huntington Beach 2000 Main Street Huntington Beach, CA 92648 Attention: Chairman With a copy to: Gail C. Hutton City Attorney .. City of Huntington Beach 2000 Main Street Huntington Beach, CA 92648 If to Lessee: RLM Properties, Ltd. 660 Newport Center Drive, Suite 1050 P. 0. Box 8680 b,W Newport Reach, CA 92658-8680 Attention: Robert L. Mayer %W with a copy to: Jeffrey M. oderman, Esq. Rutan & Tucker 610 Anton Boulevard, Suite 1400 two 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 of computation of rent, nor any other provision -105- contained herein, nor any acts of the parties herein, shall be deemed to create any relationship between the parties here.o other than the relationship of Lessor and Lessee. - 26.4 f rokerFs Commission. Lessor and Lessee each warrants to the other that it has had no dealings with any real estate broker or •agent in connection with the negotiation of this Lease. Lessor and Lessee each agree (as "Indemnitor") to indemnify and defend the other party and hold the other party harmless from all liabilities arising from any claim by any broker or finder allegedly representing the Indemnitor, including, without limitation, the cost of k+ attorneys' fees and costs in connection therewith. Such agreement shall survive the termination of this Lease. v 26.5 Accord and Satisfaction. No payment by Lessee or .a 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 accompanyingan check or y payment as rent or other charges be deemed an accord and satisfaction, and Lessor shall accept such check or payment without prejudice to w. Lessor's right to recover the balance of such rent or other charges or pursue any other remedy in this Lease provided. 26.6 Time of Essence. Time is hereby expressly declared to be of the essence ,of this Lease and of each and every .r rr.� term, covenant and condition hereof which relates to a date or period of time. 26.7 Remedies Cumulative. The remedies herein given to r • 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 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. ba 26.9 Effect of Invalidity. If any term or provision of OMO this Lease or the application thereof to any person or circumstances shall, to any extent, be invalid or 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 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 b in or to the Premises or the Improvements, and no acquisition -107 W r by Lessee of all or any interest of Lessor in or to the Premises shall constitute or work a merger of the respective interest, unless expressly provided for. 26. 10 Successors and Assigns. This Lease and the covenants and conditions contained herein shall be binding N upon and inure to the benefit of and shall apply to the successors and assigns of Lessor and to the permitted successors and assigns of Lessee, and all references in this Lease to "Lessee" or "Lessor" shall be deemed to refer to and include all permitted successors and assigns of such party. 26.11 Consents. Except as expressly provided in this W Lease, where the consent or approval of Lessor or Lessee is required in this Lease, such consent or approval will not be unreasonably withheld, conditioned, or delayed, nor will the party giving such consent require. the ' 'payment of any consideration for the giving thereof, except as expressly provided otherwise in this Lease. 26.12 Entire ]agreement. This Lease and the exhibits '~ hereto contain the entire agreement of Lessor and Lessee with respect to the matters covered hereby, and no other agreement, statement of promise zade by either Lessor or to, Lessee which is not contained herein, shall be valid or binding. No prior agreement, understanding or representation pertaining to any such matter shall be effective for any purpose. No provision of this Lease may be amended or added -108- to except by an agreement in writing signed by Lessor and Lessee. 26. 13 Performance of Lessor's Obligations. Whenever in this Lease it is provided that Lessor is obligated to perform any act, such act shall be deemed performed by Lessor if it causes the due performance thereof by any other party. Id 26.14 qaLtclaim Deed. At the expiration or earlier termination of this Lease, Lessee shall execute, acknowledge and deliver to Lessor, within five (5) days after Written demand from Lessor to Lessee, any quitclaim deed or other document required by Lessor or any reputable title company to remove the cloud of this Lease from the title to the real property which is the subject of this Lease. 26. 15 Number and Gender.- whenever the singular or plural is used in this Lease and when required by the wd context, the same shall include the plural, and the singular, . respectively, and the masculine gender shall include the feminine and neuter genders, and the word "person" shall include corporation, firm, partnership or association. 26.16 Interest _on _Past-Due Obligations. Any amount due from Lessee to Lessor hereunder which is not paid when due t.. (including, Without limitation, amounts due as reimbursement to Lessor for costs incurred by Lessor in perfoiminq obligations of Lessee hereunder upon Lessee's failure to so perform) shall bear interest at the rate of three (3) ONO percentage points above the discount rate of the Federal w. ^109- 60 4 i. 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 cure any default by Lessee under this Lease. Pd 26.17 Execution of Uase; 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 w option 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 tact executed and delivered this Lease to Lessee. 26.18 Corporate Authority. Each individual executing this Lease on behalf of a corporation, partnership or other r. entity or organization, represents and warrants that he is 64 duly authorized to execute and deliver this Lease on behalf of said corporation, partnership, entity or organization and �~ that this Lease is binding upon same in accordance with its 1 terms. Lessee shall, at Lessor's request, deliver a certified copy of a partnership resolution or certificate authorizing or evidencing such execution. 26.19 [Reserved} 26.20 controlling Law. This Lease shall be governed by and construed in accordance with the laws of the State of California. i r V 26.21 Specific Performance. Nothing contained in this Lease shall be construed as or shall have the effect of abridging the right of either Lessor or Lessee to obtain specific performance of any and all of the covenants or obligations of the other party under this Lease. 26.22 Survival of Indemnities and Warranties. The .+ obligations of the indemnifying party under each and every '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 permitted by law for the bringing of any claim or action .� with respect to ' which indemnification may be claimed by the indemnified party against the indemnifying party under such provision or M the date on which any claim or action for which indemnification may be claimed under such provision is fully and finally resolved, and, if applicable, any compromise thereof or judgment or award thereon is paid in full by the indemnifying party and the indemnified party is reimbursed by the indemnifying party for any amounts paid by the indemnified party in compromise thereof or upon judgment ..O 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. too -lxx- 26.23 Memorandum of Lease. Should either Lessor or Lessee require, the parties shall execute a short font Memorandum of Lease for recording purposes setting forth the " Term Commencement Date and the termination date in a form reasonably acceptable to both parties. ARTICLE XXVII. ARBITRATION 27.1 commencement. Disputed issues arising between Lessor and Lessee under this Lease shall be resolved by r 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 involved in a dispute subject to resolution by arbitration, a r. party who in good faith maintains such dispute shall not be deemed to be in default under this Lease until the final arbitration decision is rendered, as provided in this Article l XXVII and, in the event such party is the losing party, such party fails to cure any default within the times specifically set forth herein or, if no such time is specified within a reasonable time. A party desiring to initiate a permitted arbitration under this Lease shall give notice to the other party specifying (i) the matter to be arbitrated, (ii) the Section of this Lease permitting the arbitration, and (iii) the name and address of the person designated to act as �1I2- arbitrator, which person shall be qualified to act as arbitrator in accordance with the provisions of Section 27.3. Within fifteen (15) days after receipt of such notice, the second party shall give notice to the first party specifying the name and address of the person designated to act as arbitrator on the second party's behalf who shall be qualified to act as arbitrator in accordance with the provisions of Section 27.3. If the second party fails to w give notice to the first party of the appointment of the second party's arbitrator within the required period, the appointment of the second arbitrator shall be made by application to the court in the same manner as provided in Section 27.2 for the appointment of a third arbitrator in a NO case where the two arbitrators appointed by the parties, or w. the parties, are unable to agree on the appointment of the third arbitrator. +•� 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 i. appointed, they shall then have fifteen (15) days jointly to appoint a third arbitrator who shall be qualified to act as `~ arbitrator in accordance with the provisions of Section 27.3. ,v if the two arbitrators are unable to agree upon a third arbitrator within such fifteen (15) day period, Lessor and -113- Lessee shall then have an additional fifteen (15) days to select together the third arbitrator. If Lessor and Lessee are unable to agree upon the third arbitrator within the required period, either Lessor or Lessee by giving prior notice to the other party, shall have thirty (30) days to request the Presiding Judge of the Superior Court for the county of Orange, State of California, to appoint as the third arbitrator an impartial person qualified to act as arbitrator in accordance with the provisions of Section 27.3, and the other party shall not raise any question as to the judgets full power . and jurisdiction to entertain the ba application and make the appointment. The three (3) arbitrators shall decide the dispute ' (if ' it has not previously been resolved) by following the procedure . set w. forth in Section 27.6. 27.3 Qualifications. The arbitrators shall be chosen from a class of disinterested experts qualified by training and experience! to resolve the particular issue in dispute in an informed and efficient manner. IM.0 27.4 Binding Decision. In the event of the failure, refusal or inability of any arbitrator to act, he shall appoint his successor; provided, however, that any successor to the third arbitrator shall be appointed in the same manner as the third arbitrator is to be appointed. The arbitrators shall, if possible, render a written decision within fifteen (15) days after the appointment of the third arbitrator. A -114- decision in which any two arbitrators concur shall in all cases be binding and conclusive upon the parties. Each party shall pay the fees and expenses of its arbitrator and both shall share the fees and expenses of the third arbitrator, it 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 r the matters under arbitration, but any such consultation shall be made in the presence of both parties with full right to cross-examine. The arbitrators shall give a counterpart copy of their written decision to each party. The arbitrators shall have no power to modify the provisions of this Lease (although the arbitrators shall not be prohibited from considering Written agreements and other evidence of the intent and purposes of this Lease) , and the jurisdiction of .. the arbitrators is limited accordingly. 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 w arbitrators in accordance with the following procedure. The arbitrator selected by each of the parties shall prepare a `r written proposed resolution of the dispute and the reasons therefor and give counterpart copies to each party and each of the other arbitrators, with the third arbitrator arranging .w -iZS- for a simultaneous exchange of these proposed resolutions. The third arbitrator shall select which of the two proposed resolutions most closely approximates his determination of the issue. The third arbitrator . shall have no right to `J propose a middle ground or any modification of either of the two proposed resolutions. The resolution which the third w' arbitrator selects shall constitute the decision of the arbitrators and shall be final and binding upon the parties. 27.7 Enforcement. The judgment or the award rendered in any arbitration initiated and conducted in accordance with this Article MAVII may be entered as a judgment in any court w' of competent jurisdiction and shall be final and binding upon the parties. The arbitration shall be conducted and determined at any location in the City or in Orange County, upon which the parties agree, in accordance with the then prevailing commercial arbitration rules of the American Arbitration Association or its successor except to the extent such rules are modified as set forth in this Article XXVII. ARTICLE XXVIII. REPRESENTATIONS BY LESSEE 4bw 28.1 Representations by Lessee. The financial statements and tax returns and other information submitted and certified to by Lessee as a true, accurate and up-to-date representation to its financial condition including, without limitation, all of its assets, liabilities, income and w 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 accurately and fully reflect Lessee's true financial condition as of the date of execution of this Lease by Lessee. IN WITNESS WHEREOF, the parties hereto have executed W this Lease as of the day and year first above written. bo "LESSOR" "LESSEE" THE REDEVELOPMENT AGENCY OF THE ROBERT L. MAYER TRUST 6d THE CITY O HUNTINGTON BEACH OF 1982 w, By: d ]Robert L. MayerJ Trustee Chairman b" Attest: Secretary Approved As to Form: ZLZ:Z-Z� --P Spec al counsel ; 'r� , vlt-m,t ae-6? � I Reviewed and Approved as to Form: ' ti. C^ty,Attorney/Agency Attorney 4'� r� 1- U ' 7/112/065580-0001/005 -117- V • EMMIT "A" THAT P=Ct; OF SECTION 14, TO OMW 6 sam, RANGE 11 WEST, IN THE RMKM IAS 80SAS, IN THE CITY OF Hmmmw wAm, ax NN OF aWGEj STA'LE OF CALI UOM, r. AS PER MAP RECORCED IN HOOK 51, PAGE 14 OF MISCEUMMUS M%PS IN THE OFFICE OF != COUNTY REOMMER OF SAID OOUNTY, DESCRIEM AS FOLM S: FiBGLNNIlJG AT THE SC MEAST CORNER OF THE NClRnMAST Q[ATM OF THE NORMAST QLW= OF SAID SECTION; THENCE WESrERIY 2.11.91 FFET AIM THE NORTH L3E OF THE S7M HALF OF THE NOMAST QUAiMM OF SAID S'ECITCN TO A TOM CN THE WESTERLY TINE OF THE LAND GIBED IN THE DEM TO THE STATE OF C ALSF MA. IN HOOK 6168, PAGE 667 OF OFFIC3AL FPS, SAID POINT BEIM THE TRiJE POINT OF iIDGI?aT M; THENCE SOMU 3' 29' 43" KW 593.12 FEEL; TWfCE SCITIH 25' 32' 14" VZEST 386.94 FEET; wmN E sami 11' 444 36" FAST 771.48 =,b TREKS SOUTH 78• EW 15' 24" WEST 82.75 FEE" TO THE NORMHEASTEM RICE OF WAY LINE OF PACIFIC COAST laa*M, AS EEMUM IN BOCK 455, PAGE 400 OF OFFICIAL FM03FW OF SAID ORANGE Cz7[ RN; 'ONCE AU= SAID RICE OF NAY LIIJE, NOM 52' 05' 09" VEST 2409.77 FEET TO 7M SCUMASTEM RIGHT OF MY I OF HWIMR= AVENUE, 60.00 FEET IN WIMH AS NOW LAID OUT; THENCE ALONG SAID SOLTnEkSTERLY RICE OF Jay T , NORTH 37. 54' 51" EAST 299.35 FEET 70 AN ANGLE POINT; TR NC:E NOM 0' 17' 3 6" FAST 20.44 FEET ALONG THE FAST RIGHT OF HAY L OF MMMMU AVENUE, G0.00 FEET IN WIDTH AS NUA LAM O[Tr, TO THE NOM LINE OF THE SWM HALF OF THE IMMMASr QIZMIEFt OF SAID SECTION; TMM EASTERLY 1844.00 FEET AUM SAID ?1OiOIi LTNE TO THE ME POINT OF BEGINNING. EXCEPT THAT FORTIM F DESCRIBED AS FoMXS: BBM224DC AT A POINT ON THE N MNE OF SAID LAND, NOFM 89 0 43' FAST 690.00 FEET FROM THE CERM-LTNE OF rw SAID HUN724GMT AVENUE; THENCE NOM 89' 43' FAST 200.00 FEET; TRENCE SOUM 0' 171 EAST 150.00 FEET; TRENCE SCUM 894 43' WEST 200.00 FEET,• THEME NORM 0' 171 16TST 150.00 FEET TO THE POINT OF HDGINNING. `w ALSO EXCEPT 7HhT PCRTICN nX=MED W17IIN TRACT NO. 13045 AS PER MP FUM IN EMK PAGES 4G AND K7 OF SAID MUS. .L. V V E� 60 EXHIBIT' "A" PAGE 1 OF 2 ICr232 134.1204 3,12/89 w ,r Wi p�{ 1~- C:1 WLY LINE S 1/2 NE 1/4 SEC t4 T b S. R t t W. M.K. 51/4 b n ' O A40 C'CO `}Cf f G R� m 1� r EXHIBIT "A" 3-.2-69 SCALE* 1' ZOO' PAGE 2 OF 2 REVISIONS TO BE MADE TO LEASE AT TIME OF DISPOSITION TRANSFERS 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, 1988, 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 W 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, IntroductoEX Para ra h and Signature Block. A. Original Lease. Unchanged. B. New Lease. Name of Lessor to be changed from "City of Hunt ngton 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 I.I. �. 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. EZHISIT «B1e Page 1 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: 1.3 Excel2tions to Leasehold Estate. This Lease-Ts- made sub ect 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 of 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 64 not be subject to any tax or bond lien or assessment; and 4 (b) All of the "Approved Title Exceptions" applicable to the Premises which are identified in Section 201.1 of the DDA. 4. Section 1.4. 6W A. Original Lease. Unchanged. B. New Lease. Term Co=encement Date 'to be the date 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. L 5. Section I.S. L' A. original Lease. Unchanged. B. New Lease. Delete. v L L EXHIBIT I'D" Page 2 of 24 08/25/88 FINAL L+ 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,". W 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 WO 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 bd 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 Improvements, remove all debris, and leave the Premises in a clean, level condition. In the event Lessee is so obligated to demolish the Improvements and clear them from the Premises, Lessee shall have a reasonable period after the expiration of the Term, not to exceed ninety (90) days, to complete such work, and during such period the public liability insurance and indemnity provisions of Article X of this Lease (but no ether provisions, including without limitation Article I1) shall remain in full force and effect. W S. Section 1.11. A. Original Lease. Unchanged. B. New Lease. Delete. 9. Section 2.1. A. Original Lease. The $200,000 rental figure in Sect on 2.1(a) and the $500,,000 rental figure in EXHIBIT 11B11 V page 3 of 24 08/15/88 FINAL V 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 term 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 time) that has not been conveyed to the Developer pursuant to a Disposition Transfer 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) . The numbers to be used in 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 the Term Commencement Date. Lessor and Lessee shall each pay fifty percent (50%) of the cost of the survey. 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 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 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 on the Premises, or (iii) The date which is three (3) years after the Rent Commencement Date. EXHIBIT "B" Page 4 of 24 08/15/88 FINAL 6M 10, section 2 .2dal. r A. original Lease. Unchanged. B. New Lease. Revise the first sentence to read as M 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) . r A. Original Lease. Not applicable. B. New Lease. Add a new subparagraph (b) to read as follows: bd (b) Market Value Rent Adjustments. The Annual Rent payable pursuant to Sections 2.1 and 2.2 shall be adjusted on the January lot following the end of the 24 th, 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 in accordance with this Section 2.2(b) . L The "Fair Rental Value" of the Premises as of any Revaluation Date shall be equal to the product derived by multiplying the "Market Value of the Fee" of the Premises as of the �• applicable Revaluation Date times the "Market Rental Value" of the Premises as of such date. As used herein, the "Market Value of the Fee" of the Premises on any Revaluation Date shall be the then-current Market Value of the Fee Interest in the land constituting the 6` 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 bw Fee" of the Premises shall be determined in accordance with: the then-current and actual use being made of the Premises as permitted or required by this Lease and without assuming w EXHIBIT "B" Page 8 of 24 08/15/88 FINAL W 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 V Improvements shall be assumed to be in the physical condition and operated in the manner required in Section 9.1(a) below; all encumbrances affecting the Premises, including 6' but not limited to, the DDA and all then- existing taxes, assessments, covenants, conditions, restrictions, rights-of-way, w liens, and easements; and the encumbrance of the Premises by this Lease and all covenants, conditions, limitations, -and restrictions contained herein. The "Market Value of the Fee" of the Premises as of the Revaluation Date occurring at the end of the 64th full Lease Year shall be determined in accordance b• 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 r,. Revaluation pate, 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 W land for land similar to the Premises, which shall in no event be less than six percent (6%) nor more than fifteen percent (15%) . 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 "Market Value of the Fee" of the Premises as of the applicable Revaluation Date, in accordance with the preceding paragraph. BISIBIT 'IS" -+ Page 6 of 24 08/15/88 FINAL bw r . • 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 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 reductions this exception shall not, however, cause any cessation of an abatement, deferral, or reduction then in effect) . The adjusted rent determined as provided in this Section 2.2(b) shall be paid as provided in Section 2.1(a) above. No later than six (6) months prior to w each Revaluation Date during the Term of this Lease, Lessor and . Lessee shall meet and endeavor to agree upon the "Fair Rental Value" of the Premises, in accordance with the provisions set forth herein. If for any reason Lessor and Lessee are unable 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 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 qualifications to appraise commercial 4. real estate set forth immediately below) , with at least ten (10) years professional experience in Southern California in EIBIBIT nB1111 � page 7 of 24 48/15/88 FINAL bw appraising land and improvements similar to the Premises. All appraisers selected pursuant to the provisions hereof shall be impartial and unrelated, directly or Indirectly, so far as employment of services is concerned, to any of the parties hereto, or their successors. The 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 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 w 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 them shall be the Fair Rental Value of the Premises for purposes of determining the adjustment in rent pursuant to the formula set forth above. If the appraisers do not concur, and the difference between the respective higher and lower determinations of Fair Rental Value is an amount less than ten percent (I0%) 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. 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 11B'O � Page a of 24 08/15/88 FINAL 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 vho meets the qualifications set forth in subparagraph (i) above. The third appraiser, however selected, shall be a person who has not acted in any capacity for either party. Within fifteen (15) days from the date of the selection of the third appraiser, all three appraisers shall meet and the first tvo 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 ' 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 Premf—ses are the most reasonable determinations under the criteria set forth above and elsewhere in this Lease. The third appraiser shall r� 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 most reasonable determinations shall be the Market Value of the Fee of the Premises and the Market Rental Value of the Premises for purposes of determining the adjustment in rent pursuant to the formula set forth above. The third appraiser'e 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. W (ifi) The Fair Rental Value established under this Section 2.2 (b) k ZXHIBIT •'Bn Page ! o! 2! . 08/15/8$ FI�'1�L . r. shall be binding and conclusive on the parties for purposes of determining the adjustment in rent pursuant to the formula set forth above. If for any reason a Fair Rental Value is not ' established under this Section 2.2(b) , no party may avail itself of a Fair Rental Value more favorable to such party than the value determined by the appraiser appointed by such party. (iv) Each appraiser shall certify that he or she has personally inspected the Premises and Improvements and all properties used as 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 OW 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 k his or her employment to make the a appraisal nor his or her compensation therefor - in contingent upon reporting a predetermined value or values, or a value F or values within a predetermined range of w values, that he or she has had at least ten (lo) years professional experience in Southern California in appraising land and improvements similar to the Premises, that he or she is a member of the American Institute of Real Estate Appraisers or the Society of Real Estate 6d appraisers or respective successors thereto and that his or her appraisal was prepared in conformity with the standards W of professional practice of the Institute or Society or successor thereto. u w E]CHI81T IM's 64 Page 10 of Zt 08J15/88 FINAL 6+ r 12 . Section 2.3. A. Original Lease. Unchanged. B. ?few Lease. Replace the period at the end of the first sntence with a comma followed by the following words: "(except as permitted pursuant to w Attachment No. 5 of the DDA) ." 13 . Section 2.4. A. original _ Lease. Unchanged. low B. New Lease. In the first sentence, replace the phrase "City of Huntington Beach" with "Huntington Beach Redevelopment Agency." 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 to exceed five (5) Lease Years �+ prior to each of the Revaluation Dates specified in Section 2.2 (b) above, upon reasonable notice to Lessee, and at Lessor's expense, to review and examine at the Premises the information contained in Lessee's books,, records, and federal and state income tax returns relating to income, revenues, and expenses of the Project (but not any information unrelated to the Project) for the sole and limited purpose of determining the ,4. matters referenced in Section 2.2(b) . In addition, and subject to the same limitations, Lessor shall have the right during such limited period to have such portion of Lessee's books, records, and tax returns audited by a disinterested, reputable firm of certified public accountants selected by �+ Lessor at Lessor's expense. B3HIBIT «8" �•• Page 11 of 24 08/15/88 FINAL i . �d 15. Section 2.7. A. Original Lease. Unchanged. MW 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: w if such sale is not consummated within said one (1) year period, Lessor shall again be obligated to first offer to sell the Offered `r Interest to Lessee as set forth in this Section 3.1. 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: i Lessor and Lessee shall each construct or bo 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 limitation, Article IV thereof (commencing with Section 400) , the �. "Scope of Development" (Attachment No. 3) , and the "Schedule of Performance" (Attachment No. 4) ) . Subsequent to Lessee's completion of all improvements which are its responsibility and Lessor's issuance of its Certificate of +� Completion with respect to the Developer Improvements on the Premises, in accordance with Section 415 of the DDA, Lessee shall have no further obligations under the aforesaid provisions of the DDA. v i ZIMIBIT 81B„ u page 22 of 24 08 f 15/88 FINAL I� w 18. Section 7.2. A. on inal Lease. Unchanged. D. 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 new first paragraph in Section 7.1: w During the term of this Lease, Lessee shall not use or suffer to be used the Premises other than as a hotel Without Lessor*e 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 w, 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 office uses are to be developed, add the following as a new first paragraph in Section 7.1: During the term 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 may be permitted from time 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 ,1. During the test of this Lease, Lessee shall not use or suffer to be used the Premises other than for commercial recreational uses, including without �+ limitation a tennis club or facilities, health and fitness facilities, a swimming pool or pools, exercise/weight training rooms, sauna, EXHIBIT ttBIt Page 13 of 24 08/15/88 FIrAL w spa, and similar facilities. The Premises shall not be used for other uses without r 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 first paragraph in Section 7.1 shall be revised appropriately to reference all of the permitted uses. 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 reputable manner and to cause all subtenants, moil 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 wm 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 ` Section 7.1: w Not by way of limitation of the foregoing, the hotel to be operated by Lessee on the Premises shall be operated as a "First-Class Hotel." As used herein, the term "First-Class Hotel" shall mean that, subject to any limitations imposed by the physical structure and configuration of the Improvements 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 highest standard of hotel operation other than USIBIT "all � Page li of 24 08j15/89 FINAL w 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 hotelst but that the composite of service and facilities provided by each first-class hotel will cause the same to be deemed to constitute a first-class hotel. •• Lessor and/or Lessee may request additions or deletions to such list, subject to the reasonable approval of the other party; provided, however, in no event shall there be fewer than five (5) hotel companies on such list at any one time. 3.9 . Section 7.6. 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: �+ 7.6 Concession at City Beach. During the term of this Lease, not less than ninety (90) 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 across Pacific Coast Highway from the k' Premises, Lessor shall notify Lessee and provide the opportunity for Lessee to submit a proposal to the City for the continued operation of said concession. Nothing in this Section 7.6 shall be deemed as a prejudgment 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 i.a available to the general public as well as to serve hotel guests. 20. Section 8.2. E A. Original Lease. Unchanged. B. New Lease. Revise paragraph (b) to read as E ' follows: EXHIBIT IIBII lu Pag• 15 of 24 08/15/88 FINAL t w Lessee will be constructing, operating, . and maintaining on the Premises ocean- oriented, visitor-serving commercial facilities which are designed to take full advantage of the existing ocean views across Pacific Coast Highway. Lessee desires to obtain assurances from Lessor that such views will not be obstructed during the term of this w Lease• .; 21. Section 8.3. A. original Lease. At the time of each Disposition 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 (6833.33) and the $10,000.00 figure in Section 8.3(b) shall be w reduced by one-sixth (61,666.66) , such that after the final (i.e. , the sixth) Disposition Transfer of a Separate Development Parcel in the Commercial 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 ) In addition, add a new Section 8.3(c) to read in its entirety as follows: +r (c) For each Lease Year from 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, 20140 and each January lot 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 w, of the United States Department of Labor, Bureau of Labor Statistics Consumer Price Index of Urban Wage Earners and Clerical 'NOW 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 'OR" LO page 16 of 24 08/15/88 FINAL w . 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 w and the Index published and in effect ninety (90) days preceding the Adjustment Date. In no event shall the consideration payable on w any Adjustment Date be less than the consideration required to be paid during the year immediately preceding such Adjustment Date notwithstanding the fact that the Index may, as of some Adjustment Date, be less than the Index as of the previous Adjustment Date or the Base Year Index. When the amount of the adjusted consideration is determined, and at least thirty (30) days prior to the date payment for the next year is due, Lessor shall �. give Lessee written notice of the amount of the adjusted consideration indicating how the new figure was computed. If at any Adjustment k4 Date the Index shall not exist in the same format as recited herein, Lessor and Lessee shall agree. to substitute any official index published by the Bureau of Labor Statistics, bw 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 commercial .. 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. EXHIBIT 'IS" Page 17 of 24 08/15/88 FINAL 23. Section B.S. A. original Lease. Unchanged. S. 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 Premises and Improvements shall mean that the original Improvements constructed pursuant to the DDA (as referenced in ' Article VI above) , as the same may have been altered or expanded pursuant to this Lease or reconstructed as a result of a casualty or condemnation as permitted by 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 2988 Dollars) .� of the original Improvements as altered, expanded, or reconstructed as described above. 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 u 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. Mr EXHIBIT $'BOO Page 16 of 24 08/15/88 FINAL i 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. 25. Section 10. 1. A. original 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 and of paragraph (vi) and add the 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. '" ` In addition, add a new paragraph (iii) to Section 10.1(c) to read as follows: a ' (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. 26. Section 14.6. A. original Lease. Unchanged. B. New Lease. Delete. EXHIBIT #OB'O � Page it of 24 Q 6 f 15/88 FINAL .i 27. Section 16.1. A. oriSlinal Lease. Unchanged. B. New Lease. In each New Lease for a hotel project, add the following at the end of the first full paragraph: It is understood that Lessee's entering into a management contract or contracts and a franchise agreement or agreements shall not be Psi 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 and 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. B. New Lease. In each New Lease for a hotel project, add the following subparagraph (f) to the end of Section 18.1: (f) Lessee's failure to operate and maintain the Improvements and/or Premises as a "First-Class Hotel, " as that term is defined in Section 7.2 above, after receiving a Notice of Deficiency from Lessor under Section 9.1 and the expiration of any applicable period to correct such deficiency as provided herein. it 29. Section 18.5. A. Original_Lease. Unchanged. 6d B. New Lease. Add a new Section 18.5, entitled "No Cross-Defaults," to read in its entirety as follows: 28.5 No Cross-Defaults. Except as otherwise spec f cally set forth in this EXHIBIT 8@B" � Page 20 of 24 08J15J88 FINAL 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 25, 1988, as the same may have been amended from time to time, 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. �• 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, w entitled "Franchise Agreement," to read in their entirety as follows: 20.1 0 erating Agreement, Prior to the 4 Effective Date of this Lease, Lessor has approved the identity of the proposed operator of the hotel pursuant to Section 205 of the 16,,, DDA. If at any time during the Term of this Lease, Lessee shall desire to have the hotel managed or operated by an entity other than LO the one so approved by Lessor, Lessee shall submit such matter to Lessor for Lessor's approval. Ld Within thirty (30) days after receipt of Lessee's request for approval of a hotel operator, Lessor shall respond in writing by W 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 be deemed complete thirty (3D) 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 2OBs11 Pag• 2L of 24 08/15/88 FINAL received, on the date that Lessee delivers w 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) 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 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 be Lessee from operating and managing the hotel itself. bw 20.2 Franchise A reement. Prior to the Effective to of this Lease, Lessor has approved the identity of the proposed 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 u 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 be EXHIBIT "B" � Page 22 of 24 08J15J88 FINAL ti franchisor. Upon receipt of such a timely response, Lessee shall promptly furnish to Lessor. such further information as may be reasonably requested. " Lessor's request for approval of a hotel franchisor shall be deemed complete thirty (30) days after Lessor's receipt thereof, if no timely response requesting further information is delivered to Lessee, or, if such a timely response requesting further information is received, on the date that Lessee delivers such additional information to Lessor (provided that Lessee's additional information is responsive to Lessor's od 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 bw adequate or complete information. Lessor shall approve or disapprove each such proposed hotel franchisor within forty- No 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, W 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 evdnt Lessee meets the qualifications set forth above for an approved hotel franchisor, w+ nothing in this Lease shall be interpreted to prevent Lessee from operating and managing the hotel itself (without a franchise agreement with some other entity) . yaw EXHIBIT RIB'# 6, Page 23 of 24 08/15/88 FINAL ow 31. Exhibit "B." A. original Lease. Unchanged. 6. S. New Lease. Delete. kw v 6/112/065580-0001/007 , bw 60 r�. 6 6w v bw 6w EXHIBIT 118•I Pag• 24 of 24 08/15/88 FINAL t mw EXHIBIT "C" u bw THAT PORTION OF FRACTIONAL SECTION 141 TOWNSHIP 6 SOUTH, RANGE 11 WEST, SAN BERNARDINO BASE AND MERIDIAN, IN RANCHO LAS BOLSAS, IN THE CITY OF HUNTINGTON BEACH, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 511 PAGE 14 OF MISCELLANEOUS MAPS, IN THE OFFICE OF COUNTY RECORDER OF SAID COUNTY, DESCRIBED AS FOLLOWS: COMMENCING AT THE MOST SOUTHEASTERLY TERMINUS OF THE SOUTHEASTERLY RIGHT—OF—WAY LINE OF HUNTINGTON AVENUE, AS DESCRIBED IN THAT CERTAIN AMENDMENT TO LEASE, RECORDED IN BOOK 59781 PAGE 910, OFFICIAL RECORDS, (SAID RIGHT—OF—WAY LINE CITED IN SAID AMENDMENT TO LEASE AS NORTH 37 DEGREES 54 MINUTES 51 SECONDS EAST 299.35 FEET) ; THENCE SOUTHWESTERLY ALONG A PROLONGATION OF SAID RIGHT—OF— WAY LINE TO THE POINT OF INTERSECTION WITH THE NORTHEASTERLY LINE " OF THAT STRIP OF LAND DESCRIBED IN THAT CERTAIN INDENTURE, RECORDED IN BOOK 139, PAGE 9 OF DEEDS, RECORD OF SAID COUNTY, SAID POINT OF INTERSECTION BEING THE TRUE POINT OF BEGINNING; THENCE �+ CONTINUING SOUTHWESTERLY ALONG SAID PROLONGATION OF SAID RIGHT—OF— WAY LINE TO A POINT OF INTERSECTION WITH THE LINE OF ORDINARY HIGH TIDE OF THE PACIFIC OCEAN; THENCE SOUTHEASTERLY ALONG SAID 64 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 DINE CITED IN SAID DEED AS NORTH 53 DEGREES 06 MINUTES WEST 2579.28 FEET, MORE 6w OR LESS) ; THENCE NORTHWESTERLY ALONG SAID SOUTHWESTERLY LINE TO THE MOST SOUTHERLY SOUTHEASTERLY CORNER OF A PIECE OF PARCEL OF LAND DESCRIBED IN THAT CERTAIN INDENTURE, RECORDED IN BOOK 506, b. PAGE 448 OF OFFICIAL RECORDS; THENCE ALONG THE SOUTHERLY LINE THEREOF NORTH 68 DEGREES 56 MINUTES WEST '193.98 FEET TO THE POINT OF INTERSECTION WITH THE NORTHEASTERLY LINE OF THAT STRIP OF LAND DESCRIBED IN THAT CERTAIN INDENTURE RECORDED IN BOOK 139, PAGE 9 iw OF DEEDS, RECORDS OF SAID COUNTY; THENCE NORTHWESTERLY ALONG SAID NORTHEASTERLY LINE TO THE TRUE POINT OF BEGINNING. 6w EXHIBIT "C" Page 1 of 2 h 175f1� (!A✓ �e„rtdwrvJ H.7b'.78 ��/ ` J ♦.qr I�+•1•.M aw i • 1 I 1 / wo Md • j �f�• r y •ti / ' Subject 46 eo 1� Q � Q i EXHIBIT "Cm Page 2 of 2 } .. : �. -ORIGINAL 89-225547_ RECORDING REQUESTED BY Recording Requested By and } tt E C:E I V E D TICOR TITLE INS. CO. OF CALIF. When Recorded Mail To: RECO THE ROBERT MAYER CORPORATION ) MAY $ gig OF O A4GEtCOUNTY.C LEFORN A P. O. Box 8680 ) 660 Newport Center Drive PM APR 25'89 • Suite 1050 } N7.00 Newport Beach, CA 92658-8680 } .] Attn: Stephen K. Bone ) C2 Re: Third Amended and ) Restated Lease ) MEMORANDUM OF LEASE f G This MEMORANDUM OF LEASE is made as of the 28 day of ry April , 1989 , by and between THE REDEVELOPMENT I AGENCY OF THE CITY OF HUNTIHGTON BEACH, a public agency ("Lessor") , and ROBERT L. MAYER, as Trustee of the Robert L. Mayer Trust of 1982, dated June 22, 1982, as amended ("Lessee") . w •n R E C I T A L S: A. The City of Huntington Beach ("City") and Lessee are parties to that certain Second Amended and Restated Lease ' \ dated as of August 15, 1988 (hereinafter the "Original f Lease") , Made regarding certain real property located in the City of Huntington Beach, County of Orange, State of California (the "Original Leased Premises") . B. Lessor has succeeded to all of the City's fee interest in the Original Leased Premises and all of the City's right, title, and interest in and to the Original Lease. C. On or about April 28 , 1989, Lessor and Lessee entered into that certain Third Amended and Restated Lease (hereinafter the "Lease") with regard to a portion of the Original Leased Premises more particularly described on Exhibit "A" attached hereto and made a part hereof (the "Premises") . The Lease supersedes the Original Lease with respect to the Premises. D. Pursuant to Section 26.23 of the Lease, Lessor, as owner of the Premises, and Lessee, as tenant, desire to execute and record this Memorandurt of Lease. 89-22554T M E M O R A N D U M: 1. Lessor hereby leases to Lessee and Lessee hereby leases from Lessor the Premises more particularly described on Exhibit "A" hereto on the terms and conditions set forth in the Lease, which is incorporated herein by this reference as though set forth in full. This Memorandum of Lease is only intended to provide notice of the existence of the Lease and shall not be deemed to modify or amend any of the provisions of the Lease: The Lease is a public record and a true and correct copy of the Lease is available for public review and inspection in the office of the City Clerk of the City of Huntington Beach, whose address is 2000 Main Street, Huntington Beach, California, 92648. 2 . The Commencement Date of the Lease is April 28, , 1989. 3 . The Lease shall terminate on January 31, 2013, unless sooner terminated or extended as provided in the Lease, including without limitation Sections 1.5, 1. 11, and paragraph 4 of Exhibit "B" thereto. 4. Pursuant to Section 3.1 of the Lease, Lessor hereby grants to Lessee a right of first refusal to purchase the Premises subject to the terms and conditions set forth therein. 5. Pursuant to Article VIII of the Lease, Lessor hereby covenants with Lessee to restrict the development and use of certain property adjacent to the Premises (which adjacent property is defined in the Lease as the "City Beach Property" and is more particularly described in Exhibit "C" thereto) as set forth therein. f F� t -2- STATE OF CALIFORNIA ) COUNTY OF ORANGE ) On g Z� , 19 �, before me, a Notary Public of the State of Calif rnia, personally appeared ■ , `' 4e-7aQ-thy rhai --- n' Connie Brockway, known to me to be the Clerk, of the Redevelopment Agency of the City of Huntington Beach and known to me to be the persoy who executed the within instrument on behalf of said public agency and acknowledged to me that such public agency executed the same. �� N3�11L �' J*k tool 89-22554T IN WITNESS WHEREOF, the parties hereto have caused this instrument to be duly executed as of the day and year first above written. "LESSOR" "LESSEE" THE REDEVELOPMENT AGENCY OF THE ROBERT L. MAYER TRUST THE CITY OF HUNTING N BE OF 1982 By: �`_' -�` By: /tf Chairman Robert L. Mayer, Trustee ATTEST: GPCrctary � $/►l� APPROVED AS TO FORM: A-4-� IL� /,-� Agency Counsel 4 � , g Special Counsel ' 7 7/112/065580-0001/079 r t -3- l STATE OF CALIFORNIA 89-22554T COUNTY OF ORANGE y ss: On this 2-!r day of Qp ri! , 19 , before me, a Notary Public in and for said County and State, personally appeared and 4dwAb& 812DiC0Adf!:y known to me to be the --pity Clerk of the City of Huntington Beach, the municipal corporation that executed the within instrument, known to me to be the persons who executed the within instrument on behalf of said municipal corporation and acknowledged to me that such municipal corporation executed the same. iA=SM NESLSDKN 89-225541. STATE OF CALIFORNIA ) }ss. COUNTY OF ORAZIGE ) On this c��ay of 0 , 198,Z, before me, the undersigned, a N t ryPP lic in .and for said State, personally appeared _ �,e known to me ( to be the person who executed this instrument as the Chairman of THE REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH, the public entity therein named, and acknowledged to me that such entity executed the within instrument. WITNESS ry hand and official seal. OFFICIAL SEAL , UNDA S.PATT1NSON Notary Publl.-C&IROM11 RL) oAN34ECOUNTY � ature of Notary Public CM.tv< J"24.(S A STATE OF CALIFORNIA ) }ss. COUNTY OF ORANGE } On this day of , 198—N, before me, the undersigned, a Notary Public in and for said State, personally appeared Robert L. Mayer, known to me (or proved to rye on the basis of satisfactory evidence) to be the person who executed the within instrument as Trustee of THE ROBERT L. MAYER TRUST 'OF 1982, dated June 22, 1982, as amended, the entity therein named, and acknowledged to me that he executed the within instrument. WITNESS my hand and official seal. Signature of Notary Public (SEAL) OFFiC.,AL SM MARLA D. OnLOFF WARY PUBLIc CALtFORNIA #. PRINCIPAL OFFICE IN ORANGE COUNTY �T Commission Eq.Aprd 12. 1991 -4•- 9 225547 FXHIT "A" • THAT PCNTICN OF SECr'TICN 14, TO4a-iIP 6 SOUTH, RANGE 11 WEST, IN ME RMCH0 IAS BOSAS, IN THE CITY OF KUTING'ICN WAM, COUNTY OF MANGE, STATE OF CA11FURM, AS PER MAP T=MED IN BOOK 51, PAGE 14 OF MLSA=XMMS MAPS IN TIC OFFICE OF THE C OURN REC30M OF SAID COUNTY, DESCRIBED AS FOLMM: BaGMM4G AT THE SOUTHEAST CCNR OF THE NMUHEAST QLW= OF THE NaR=Or QUA= OF SAID SECTICK; TH124CE WESTERLY 111.91 FEET AL= THE NMM LINE OF THE =Mi ME OF ME SST QM= OF SAID SDLTICK 70 A POINT ON THE W EST= LINE OF THE LAND rESCR= IN THE DEED TO THE STATE OF CALIF►CFZNIA IN BOOK 6168, PAGE 667 OF OFFICIAL RDOMMS, SAID POINT BEING THE THE POINT OF EEGI2T+JING; THENCE SO(TTH 3' 29' 43" WFSY' 593.3.2 FEET; THENCE SO[TIH 25' 32' 14" WEST 386.94 FE;T; THENCE SO[TIH 11' 44' 36" EAST 771.48 FEET; THENCE SOUTH 780 15' 24" WEST 82.75 Fl3:T TO THE NOMMASTERLY RIGHT OF WAY L OF PACIFIC COAST HICNtaY, AS DESCUM IN BOOK 4 55, PAGE 400 OF OFFICIAL PDOMM OF SAID MANSE COUNTY; 'THENCE ALONG SAID NaPMEASTERLY RIGHT OF WAY LINE, NC WH 52' 05' 09" WEST 2409.77 FFST TO THE: SCILYTHEASTERLY RIGHT OF WAY L1EIE OF IEWTINGTON AVENUE, 60.00 FEET 3N WMM AS I W LAID OUr; THENCE AL= SAID HEASTERLY RIQU OF WAY LIME, NC M 37' 54' 51" FAST 299.35 FEET 70 AN ANGLE POINT; THENCE NORMI 0' 17' 36" FAST 20.44 FEET AtWG THE EAST RICE OF WAY I OF AVENUE, 60.00 F Er IN WMTH AS NOW LAID OUT, TO THE NCEMI LINE OF THE SOUTH HALF OF 713E NOFMMAST QUAT= OF SAID SECPICN; THEN= FAS ZLY 1844.00 FEET AICNG SAID NCUTH I TO THE THE POINT OF E E)GINNING. EXCEPT THAT F=CN THEREOF DESCRTEED AS FOLEMS: EiE7GINNIM AT A POINT CN THE NCMH LINE OF SAID IMD, NOM 89' 43' F7ST 690.00 FEET FROM 213E CENTER L OF SAID HINTINUICN AVENUE; THENCE NCNIH 89' 43' FAST 200.00 FEET; THWCE SOUM 0' 17' FAST 150.00 FEET; THENCE SOUTH[ 890 431 WEST 200.00 FEET; THENCE N[NIH 0 17' WEST 150.00 FEET TO ME POINT OF BEGUMM. ALSO EXCEPT THAT PORTION INCLtMED W17 IIN TRACT NO. 13045 AS PM MAP T= IN BOOKb28, PAGES 46MM47 OF SAID MISCELIANSM15 BPS. ITT "A" PAGE 1 OF 21. LG-232 134.1204 3J1,j89 89-22554T. W, : to W L7 LINE S 1/E NE 1/4 SEC 14 CS T 6 S. R i t W. M.M. 5t/4 , 6- 0 � r � 0 i W l �co' ctop r kF 4v EXHIBIT "A" SCALE: 1" 300, PAGE 2 OF 2 fir.. TH E WATEFRONT July 19, 1989 A Ms. Connie Brockway �. n �,.•P ��� 4-- Clerk of the City of Huntington Beach 2000 Main Street Huntington Beach,CA 92648 RE: The Waterfront Memorandums of Lease Dear Ms.Brockway: Please find enclosed the following original documents per your request: I. Memorandum of Lease-Phase 1 I ease This memorializes the lease of The Waterfront Hilton site. 2. MCinorandum of Lease- 3rd Amended and Restated Lease This memorializes the 3rd Amended and Restated Lease which covers the balance of The Waterfront site. It is not necessary for you to send us a certified copy of these documents. Lastly, two additional memorandums of lease have recently been forwarded to the County Recorder's Office for re-recordation. The originals of these will be forwarded to you when we receive them. Please call if I can be of any further assistance. a 66------::- ll ern Project Manager SKM/eml encls: Two original Memorandums of Lease The Robert Mayer Corporation &0 Newport Center Drive, Suite 1050, P.O. Bnx 8680, Newport Beach, CA 92658-8630•Te!ephorc(714)759-8041 TH E WATEURONT �-- February 8, 1990 \ Mr. Paul Cook City Administrator City of Huntington Beach 2000 Main Street Huntington Beach, CA 92648 Dear Mr. Cook: The enclosed checks (4) are the 1989 and 1990 payments per Article X1II. Lessor_Covenant to Restrict Use of City fieac _- ronerty in the following two leases: 1. 'Third Amended and Restated Lease dated April 28, 19S9 between The Redevelopment Agency of the City of Huntington Beach (Lessor) and Robert L. Mayer, as Trustee of the Robert L. Mayer Trust of 1982 (Lessee). 2. Lease dated April 28, 1989 between the Redevelopment Agency of the City of Huntington Beach (Lessor) and Waterfront Construction-No. 1 (Lessee). The checks are applied as follows: l�$L 192Q Mayer Companies Check # 1397 $ 4,444.45 Mayer Companies Check # 1371 S 4,166.67 Waterfront Construction No. 1 Check # 1985 555.55 Waterfront Construction No. 1 Check # 1986 833.33 TOTALS $ 5,000.00 S 5,000.00 If you have any questions regarding these payments please call me at the number listed below. Sincerely, i i Brad Younce Controller cc: Susan Hunt Dan Brennan i The Robert Mayer Corporation 660 Newport Center Drive,Suite 1050, PO. Box 8680, Newport Beach, CA 92658-MS0•Telet-whone(714)—59-SM