HomeMy WebLinkAboutVF Outdoor, Inc. - Vans - 2011-09-19 Council/Agency Meeting Held:
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Council Meeting Date: September 19, 2011 Department ID Number: ED 11-044
CITY OF HUNTINGTON BEACH
REQUEST FOR CITY COUNCIL ACTION
SUBMITTED TO: Honorable Mayor and City Council Members
SUBMITTED BY: Fred A. Wilson, City Manager
PREPARED BY: Stanley Smalewitz, Director of Economic Development
SUBJECT: Approve and authorize execution of an Exclusive Negotiation
Agreement with VF Outdoor, Inc. (Vans) for the potential development
of a Skate Park on a 2.7 acre City owned property located on Center
Avenue near Gothard Street; and, appropriate $60,000 towards the
cost of an Environmental Impact Report (EIR)
Statement of Issue: The City is asked to approve an Exclusive Negotiation Agreement with
VF Outdoor, Inc. (Vans) for the potential development of a skate park on a 2.7 acre City-
owned property located on Center Avenue near Gothard Street.
Financial Impact: Up to $60,000 contribution toward environmental review of the
proposed Vans skate park project. Funds are available in the Park Acquisition and
Development Fund (20945101).
Recommended Action: Motion to:
A) Approve an "Exclusive Negotiation Agreement" with VF Outdoor, Inc. a California
Corporation (Vans) for the development of a skate park on a 2.7 acre City owned property
located on Center Avenue, near Gothard Street; and,
B) Appropriate $60,000 from the Park Acquisition and Development Fund (20945101)
toward the environmental review cost for the proposed skate park project; and,
C) Authorize the City Manager and City Clerk to sign all necessary documents to execute
the Agreement.
Alternative Action(s):
Do not approve the Agreement and direct staff accordingly.
HB -135- Item 7. - I
REQUEST FOR COUNCIL ACTION
MEETING DATE: 9/19/2011 DEPARTMENT ID NUMBER: ED 11-44
Analysis:
In January 2011, the Redevelopment Agency approved an Exclusive Negotiation Agreement
(ENA) with Vans. The ENA allowed the Agency and Vans, nine (9) months to negotiate the
terms and conditions of a Draft Ground Lease and Improvement Agreement (GLIA) for a 2.7
acre Agency owned property located on Center Avenue. Vans proposes to develop a world
class skate park on the property. The Agency/Vans ENA is due to expire September 23,
2011.
After the environmental checklist and studies have been reviewed, an Environmental Impact
Report (EIR) is necessary to complete the environmental review for the proposed skate park
project. The EIR completion is anticipated by March 2012. State law requires that prior to
entering into the Ground Lease with Vans, the environmental review must be completed.
Therefore, a supplemental ENA between the City and Vans has been prepared to extend the
negotiation period through March 31, 2012, with an option to extend the period an additional
120 days (Attachment 1). The Agency is no longer a party to the ENA, due to the Agency
transferring its property ownership rights to the City in March 2011.
In addition, the City has offered to contribute up to $60,000 towards the completion of the
environmental review. The source of payment will be from the Memorandum of
Understanding between the City of Huntington Beach and the Huntington Beach Union High
School District, dated September 7, 2010, (Attachment 2). In that MOU, the School District
provided $75,000 for the future development of a skate park.
On August 17, 2011, the Economic Development Committee reviewed the status of the Vans
Skate Park and recommended that the City contribute the funds toward the environmental
review. If the EIR is adopted and Vans does not build the Skate Park, Vans would be
required to pay the $60,000 back to the City.
Environmental Status: The Planning and Building Department is preparing an
Environmental Impact Report for the proposed project.
Strategic Plan Goal: Enhance Economic Development
Attachment(s):
® ® - o
1. Exclusive Negotiation Agreement with VF Outdoor, Inc. a California Corporation
Vans
2. Memorandum of Understanding Between the City of Huntington Beach and the
Huntington Beach Union High School District
Item 7. - 2 HB -136-
ATTACHMENT # 1
EXCLUSIVE NEGOTIATION AGREEMENT
THIS EXCLUSIVE NEGOTIATION AGREEMENT ("ENA") is entered into this Z9-7
day of S,��2011 ("Effective Date") by and between THE CITY OF HUNTINGTON
BEACH, a municipal corporation ("City" or "Landlord"), and VF OUTDOOR,_INC., a Delaware
corporation doing business as "Vans" ("Developer"), under the terms and provisions set forth
below. City and Developer may be referenced individually as "Party" or collectively as "Parties."
All references to "days" shall mean calendar days. This ENA shall supersede in its entirely that
certain Exclusive Negotiating Agreement entered into on January 18, 2011, by and between the
City of Huntington Beach Redevelopment Agency and Developer ("Agency ENA").
IT IS HEREBY MUTUALLY AGREED AS FOLLOWS:
1. Negotiation
A. Good Faith Negotiations
The City and the Developer have entered into negotiations pertaining to the Developer's
proposed leasing and development of City property as a skate park ("the Project"), as set forth in
the attached Ground Lease and Improvement Agreement ("GLIA"), substantially in the form
attached hereto as Exhibit "A", except that Developer and City shall constitute the parties to the
GLIA instead of Developer and Agency. During the Exclusive Negotiating Period set forth in
Section B, below, City and Developer mutually agree to negotiate exclusively with each other,
based upon the terms and conditions set forth in the GLIA.
B. Period of Negotiations
1. The Parties agree to exclusively negotiate with each other until March 31, 2012,
beginning from the Effective Date of this ENA (`ENA Period"), which period may be extended by
the written consent of the parties for one additional period of one hundred and twenty (120) days
("Extension Period"). The Deputy City Administrator, or his designee, may grant such extension
of the ENA Period for and on behalf of the City in his sole and absolute discretion.
2. If, by 5:00 p.m., Pacific Standard Time, on March 31, 2012, the Developer has not
signed and submitted a GLIA to the City, then this ENA shall automatically terminate unless the
ENA Period has been mutually extended in writing by the City and the Developer for the
Extension Period. If a GLIA is so signed and submitted by the Developer within the ENA Period
or the Extension Period, if applicable, then this ENA shall be extended for 30 days ("City Action
Period") to allow the City to obtain the required approvals and execute the GLIA, if said approvals
have been granted.
3. If the City has not signed the GLIA by the end of the City Action Period, then this
ENA shall automatically terminate unless the City Action Period has been mutually extended in
writing by the City and the Developer.
II. CE A
Execution of the GLIA shall be conditioned upon completion of all environmental review
required by California Environmental Quality Act ("CEQA")(Public Resources Code sections
21000 — 21177, which review shall be completed at Developer's sole cost; provided that City shall
contribute up to SIXTY-THOUSAND DOLLARS ($60,000.00) as the City's contribution towards
completion of the environmental review required by CEQA ("Payment") (which Payment City in
good faith believes and has represented to Developer should cover all remaining costs of review),
subject to the following two (2) conditions precedent:
(i) The source of the Payment shall be from the Huntington Beach Union High School
District pursuant to that certain Memorandum of Understanding between the City of
Huntington Beach and the Huntington Beach Union High School District, dated
September 7, 2010, a copy of which is on file in the Office of the City Clerk.
(ii) The Payment shall be made by City to PCR Services Corp. ("PCR"), Developer's
environmental consultant, in consideration for environmental services provided by
PCR for the Project; provided, however, that in the event that Developer does not
proceed with the Project for any reason reasonably within its control and other than
the City's denial of Developer's application for a Conditional Use Permit to host
major events on the Project site, Developer shall reimburse City for its Payment to
PCR within ten (10) days of City's written demand for reimbursement.
III. City Council Public Hearing
The GLIA shall become effective only after and if the agreement has been considered and
approved by the City Council after public hearing.
IV. Real Estate Commissions
The City shall not be liable for any real estate commission or brokerage fees which may
arise herefrom. The City represents that it has engaged no broker, agent, or finder in connection
with this transaction, and the Developer agrees to hold the City harmless from any claim by any
broker, agent, or finder retained by the Developer.
V. Need for GLIA
A. Intent of the Parties
The Parties do not intend to be bound to a GLIA until a final written GLIA is executed by
both Parties. In the event the final, written GLIA is not executed by both Parties within the time
provided in Section 1.13, this ENA shall automatically terminate, and be of no further force or
effect, unless extended by action of the City and the Developer.
B. City's Acknowledgement
The City's acknowledgment of this ENA is merely an agreement to enter into a period of
negotiations according to the concepts presented herein, reserving final discretion and approval by
the City of Huntington Beach as to any actions required of them, if any.
VI. Defaults and Remedies
A. Defaults—General
Failure by either Party to perform any covenant of this ENA constitutes a default under this
ENA, in which case the following shall apply:
1. The injured Party shall give written notice of default to the Party in default
specifying the default complained of by the injured Party. Failure or delay in giving such notice
shall not constitute a waiver of any default, nor shall it change the time of default. Except as
otherwise expressly provided in this ENA, any failures or delays by either Party in asserting any of
its rights and remedies as to any default shall not operate as a waiver of any default or of any such
rights or remedies.
2. If any event of default occurs, prior to exercising any remedies hereunder, the
injured party shall give the Party in default written notice of such default. The Party in default
shall have a period of thirty (30) calendar days after such notice is received or deemed received
within which to cure the default prior to exercise of remedies by the injured Party.
B. Termination
Subject to the notice and cure provisions of Section VLA of this ENA, each Party shall
have, as its sole and exclusive remedy, the right to terminate this Agreement, by providing written
notice to the other Party, in the event of any uncured default; provided, however, that Developer
shall have the right to terminate this ENA for convenience, in the event that Developer determines
that the Project is not financially feasible.
XII. Miscellaneous Provisions
A. Time of Essence
Time is expressly declared to be of the essence in this ENA and of every provision hereof
in which time is an element.
B. Notices
Any notice to be given or other document to be delivered by any Party to the other or Party
hereunder, may be delivered in person to an officer of any Party, or may be deposited in the United
States mail, duly certified or registered, return receipt requested, with postage prepaid, or by
Federal Express or other similar overnight delivery service, or by facsimile machine if
concurrently delivered by another permissible method set forth in this Section, and addressed to
the Party for whom intended, as follows:
To City:
City of Huntington Beach
2000 Main Street
Huntington Beach, California 92648
Attention: Bob Hall,
Deputy City Manager
Tel: (714) 526-5582
Fax: (71.4) 375-5087
With a copy to: Kane, Ballmer & Berkman
515 S. Figueroa Street, Suite 1850
Los Angeles, California 90071
Attn: Susan Y. Cola
Tel: 213-617-0480
Fax: 213-625-0931
and, if to Developer: VF Outdoor, Inc., a Delaware Corporation dba Vans
6550 Katella Avenue
Cypress, CA 90363-5102
Attn: Doug Palladini
Tel: (714) 889-6702
With a copies to: Robert Frisbee, Esq.
Connolly, Finkel &Gosselin LLP
601 S. Figueroa Street, Suite 2610
Los Angeles, CA 90017-5704
Main Line: (213) 452-6500
Any Party hereto may from time to time, by written notice to the other, designate a different
address which shall be substituted for the one above specified. Unless otherwise specifically
provided for herein, all notices, payments, demands or other communications given hereunder
shall be in writing and shall be deemed to have been duly given and received (a) upon personal
delivery, or (b) as of the third business day after mailing by United States registered or certified
mail, return receipt requested, postage prepaid, addressed as set forth above, (c) the immediately
succeeding business day after deposited with Federal Express or other similar overnight delivery
system, or (d) upon confirmation of receipt (printed by the transmitting facsimile machine) if
delivered by facsimile machine.
C. Entire Agreement; Counterparts
This ENA constitutes the entire, final and integrated agreement between the Parties hereto
pertaining to the subject matter hereof, fully supersedes any and all prior understandings,
representations, warranties and agreements between the Parties hereto, or any of them, pertaining
to the subject matter hereof, and may be modified only by written agreement signed by all of the
Parties hereto. This ENA may be executed in counterparts, each of which shall be an original, but
all of which shall constitute one and the same instrument.
D. Binding_ Effect
This ENA shall be binding on and inure to the benefit of the Parties to this ENA and their
heirs, personal representatives, successors, and assigns, except as otherwise provided in this ENA.
E. Governing Law
This Agreement has been negotiated and entered in the State of California, and shall be
governed by, construed and enforced in accordance with the internal laws of the State of
California, applied to contracts made in California by California domiciliaries to be wholly
performed in California.
F. Titles and Captions
Titles or captions contained herein are inserted as a matter of convenience and for
reference, and in no way define, limit, extend or describe the scope of this ENA or any provision
hereof. All references to Sections herein shall mean Sections of this ENA unless otherwise
specified.
G. Interpretation
No provision in this ENA is to be interpreted for or against either Party because that Party
or his legal representatives drafted such provision.
H. Waiver; Amendments
No breach of any provision hereof may be waived unless in writing. Waiver of any one
breach of any provision hereof shall not be deemed to be a waiver of any other breach of the same
or any other provision hereof. This ENA may be amended only by a written agreement executed
by the Parties in interest at the time of the modification.
I. Supersession by GLIA
Following mutual execution by the City and the Developer of a GLIA, this ENA shall be of
no further force or effect. In the event of any conflict between the provisions of this ENA and any
GLIA approved by the City and the Developer, the provisions of the GLIA shall for all purposes
prevail.
IN WITNESS WHEREOF, the Parties hereto have executed this ENA as of the date set
opposite their signatures.
SIGNATURES ON NEXT PAGE
DEVELOPER:
VF OUTDOOR INC., A DELAWARE
CORPORATION, DBA "VANS"
Date: By:
- 411d Wk�w'
Do g Palladini, Vice President of Marketing
CITY:
THE CITY H NTINGTON BEACH (City)
Date: By:
Vdl*/Ison, City Manager
ATTEST:
City 6erk
COUNTERPART
REVIEWED AND
APPROVED AS TO FORM:
City Attorney
Y.
Jennif McGrath
REVIEWED AND
APPROVED AS TO FORM:
KANE, BALLMER & BERKMAN
By:
Special Counsel
Susan Y. Cola
DEVELOPER:
VF OUTDOOR INC., A DELAWARE
CORPORATION, DBA"VANS"
Date: By:
Doug Palladini, Vice President of Marketing
CITY:
THE CITY OF HUNTINGTON BEACH (City)
Date: By:
Fred Wilson, City Manager
ATTEST:
City Clerk
REVIEWED AND COUNTS" T
APPROVED AS TO FORM:
City Attorney
By:
Jennifer McGrath
REVIEWED AND
APPROVED AS TO FORM:
KANE, BALL ER& BERKMAN
By:
Spezia Co sel
Susan Y. 061a
(EXHIBIT "A"
FORM OF GLIA
[behind this page]
GROUND LEASE 'AND IMPROVEMENT AGREEMENT("GLIA")
(Skate Park)
by and between
CITY OF HUNTINGTON BEACH REDEVELOPMENT AGENCY,
AGENCY
and
VF OUTDOOR INC., a Delaware corporation,doing business as"Vans",
DEVELOPER
TABLE OF CONTENTS
Page
PART 1. SUBJECT OF AGREEMENT.................................................................................I
SECTION 101 Purpose of the Agreement............................................................................1
SECTION102 Definitions....................................................................................................1
SECTION 103 The Redevelopment Plan.............................................................................4
SECTION 104 The Property.................................................................................................4
SECTION105 Agency.........................................................................................................5
SECTION106 Lessee...........................................................................................................5
SECTION 107 Assignments and Transfers..........................................................................6
PART 2. DISPOSITION OF LEASEHOLD..........................................................................7
SECTION 201 Agency's Lease of the Property to Lessee...................................................7
SECTION 202 Conditions Precedent Agency's Conveyance of Leasehold to Lessee........7
SECTION203 Escrow..........................................................................................................9
SECTION 204 Recordation of Documents........................................................................11
SECTION 205 Possession of Leasehold Upon Close of Escrow.......................................11
SECTION 206 Condition of Title.......................................................................................I I
SECTION 207 Title Insurance...........................................................................................I I
SECTION 207.1 Leasehold Title Policy......................................................................I I
SECTION 208 Notice of Possessory Interest;Payment of Taxes and
Assessments on Value of Entire Property..................................................11
SECTION 209 Contests......................................................................................................12
SECTION 210 Condition of the Property...........................................................................13
SECTION 210.1 Hazardous Substances.......................................................................13
SECTION 210.2 Suitability of the Property.................................................................13
SECTION 211 Method of Financing..................................................................................14
SECTION 212 Evidence of Financing...............................................................................14
SECTION 213 Designation as Point of Sale......................................................................15
PART 3. DEVELOPMENT OF THE PROPERTY..............................................................15
SECTION 301 Land Use Approvals..................................................................................15
SECTION 302 Scope of Development...............................................................................15
SECTION 303 Basic Concept Drawings............................................................................15
SECTION 304 Landscaping and Grading Plans.................................................................16
SECTION 305 Construction Drawings and Related Documents.......................................16
SECTION 306 Agency Approval of Plans.........................................................................16
SECTION 307 Cost of Construction..................................................................................17
SECTION 308 Schedule of Performance...........................................................................17
SECTION 309 Indemnification and Insurance...................................................................18
SECTION 310 Nondiscrimination......................................................................................21
SECTION 311 Local, State and Federal Laws...................................................................21
SECTION 312 Notice of Non-Responsibility....................................................................22
SECTION313 Permits.......................................................................................................22
i
SECTION 314 Rights of Access........................................................................................22
SECTION 315 Disclaimer of Responsibility by Agency...................................................22
SECTION 316 Taxes,Assessments,Encumbrances and Liens.........................................23
SECTION 317 Prohibition against Transfer.......................................................................23
SECTION 318 No Encumbrances Except Permitted Mortgages.......................................23
SECTION 319 Lender Not Obligated to Construct Improvements....................................24
SECTION 320 Notice of Default to Lenders;Right of Lender to Cure Defaults ..............24
SECTION 321 Failure of Lender to Complete Improvements...........................................25
SECTION 322 Right of the Agency to Cure Defaults........................................................25
SECTION 323 Right of the Agency to Satisfy Other Liens on the Property.....................25
SECTION 324 Release of Construction Covenants...........................................................25
PART 4. USE OF THE PROPERTY....................................................................................26
SECTION 401 Uses............................................................................................................26
SECTION 402 Maintenance...............................................................................................27
SECTION 403 Obligation to Refrain from Discrimination................................................27
SECTION 404 Form of Nondiscrimination and Nonsegregation Clauses.........................27
SECTION 405 Effect and Duration of Covenants..............................................................28
PART 5. DEFAULTS AND REMEDIES ............................................................................28
SECTION 501 Defaults-General......................................................................................28
SECTION 502 Institution of Legal Actions.......................................................................29
SECTION 503 Applicable Law..........................................................................................29
SECTION 504 Acceptance of Service of Process..............................................................29
SECTION 505 Rights and Remedies Are Cumulative.......................................................29
SECTION506 Damages.....................................................................................................30
SECTION 507 Specific Performance.................................................................................30
SECTION508 Reserved.....................................................................................................30
SECTION 509 Termination by Lessee...............................................................................30
SECTION 510 Termination by Agency.............................................................................30
PART 6. GENERAL PROVISIONS ....................................................................................31
SECTION601 Notices.......................................................................................................31
SECTION 602 Enforced Delay: Extension of Time of Performance.................................31
SECTION 603 Conflict of Interest.....................................................................................32
SECTION 604 Nonliability of Agency Officials and Employees......................................32
SECTION 605 Inspection of Books and Records ..............................................................32
SECTION 606 Approvals...................................................................................................32
SECTION 607 Real Estate Commissions; Finder's Fee ....................................................33
SECTION 608 Construction and Interpretation of Agreement..........................................33
SECTION 609 Time of Essence.........................................................................................34
SECTION 610 No Partnership...........................................................................................34
SECTION 611 Compliance with Law................................................................................34
SECTION612 Binding Effect............................................................................................34
SECTION 613 No Third Party Beneficiaries.....................................................................34
SECTION614 Authority to Sign........................................................................................34
ii
SECTION 615 Incorporation by Reference........................................................................34
SECTION 616 Counterparts...............................................................................................35
PART 7. ENTIRE AGREEMENT, WAIVERS AND AMENDMENTS.............................35
PART 8. TIME FOR ACCEPTANCE OF AGREEMENT BY AGENCY..........................35
ATTACHMENTS
ATTACHMENT NO. 1 - SITE MAP
ATTACHMENT NO.2 - LEGAL DESCRIPTION
ATTACHMENT NO. 3 - METHOD OF FINANCING
ATTACHMENT NO. 3A - PROJECT BUDGET
ATTACHMENT NO. 4 - SCOPE OF DEVELOPMENT
ATTACHMENT NO. 5 - SCHEDULE OF PERFORMANCE
ATTACHMENT NO. 6 - ENVIRONMENTAL INDEMNITY
ATTACHMENT NO. 7 - GROUND LEASE
ATTACHMENT NO. 7A - MEMORANDUM OF GROUND LEASE
ATTACHMENT NO. 8 - RELEASE OF CONSTRUCTION COVENANTS
iii
GROUND LEASE AND IMPROVEMENT AGREEMENT
THIS GROUND LEASE AND IMPROVEMENT AGREEMENT (the "Agreement" or
"GLIA") is entered into by and between the CITY OF HUNTINGTON BEACH
REDEVELOPMENT AGENCY (the "Agency") and VF Outdoor, Inc., a Delaware corporation,
(the"Lessee")as of , 2010. Agency and Lessee agree as follows:
PART 1. SUBJECT OF AGREEMENT
SECTION 101 Purpose of the Agreement
The Agency is the owner of an approximately 50,000 square foot site located at 7541
Center Avenue, in the City of Huntington Beach, California, 92647 ("Property"). The purpose of
this Agreement is to effectuate the Redevelopment Plan for the Huntington Beach
Redevelopment Project Area by providing for the Agency's leasing of the Property to Lessee in
accordance with the Ground Lease in consideration for the Lessee's construction of a public
skate park with ancillary uses, including retail skate shop, snack shop, restrooms, and seating
areas ("the Project"), in accordance with this Agreement. The development and use of the
Property pursuant to this Agreement, and the fulfillment generally of this Agreement, are in the
vital and best interests of the City of Huntington Beach and the health, safety, and welfare of its
residents, and in accord with the public purposes and provisions of applicable federal, state, and
local laws and requirements.
SECTION 102 Definitions
For purposes of this Agreement, the following capitalized terms shall have the following
meanings:
"Acquisition and Development Costs" means the total cost of acquiring the leasehold
interest in the Property and developing and constructing the Improvements thereon.
"Affiliate"means(1) any Person directly or indirectly controlling, controlled by or under
common control with another Person; (2) any Person owning or controlling ten percent(10%) or
more of the outstanding voting securities of such other Person; or (3) if that other Person is an
officer, director, member or partner, any company for which such Person acts in any such
capacity. The term"control" as used in the immediately preceding sentence, means the power to
direct the management or the power to control election of the board of directors. It shall be a
presumption that control with respect to a corporation or limited liability company is the right to
exercise or control, directly or indirectly, more than fifty percent (50%) of the voting rights
attributable to the controlled corporation or limited liability company, and, with respect to any
individual, partnership, trust, other entity or association, control is the possession, indirectly or
directly, of the power to direct or cause the direction of the management or policies of the
controlled entity.
"City"means the City of Huntington Beach,California.
1
"Closing" means the point in time when all conditions precedent to close of escrow for
Agency's conveyance of the Leasehold to Lessee have been satisfied, and all Recorded
Documents, as set forth in Section 206,have been recorded.
"Closing Date"means the date on which the Closing has occurred.
"Completion"means the point in time when all of the following shall have occurred: (1)
issuance of a certificate of occupancy by the City; (2) recordation of a Notice of Completion by
Lessee or its contractor; (3) certification or equivalent by the project architect that construction
of the Improvements (with the exception of minor "punchlist" items) has been completed in a
good and workmanlike manner and substantially in accordance with the approved plans and
specifications; (4) payment, settlement or other extinguishment, discharge, release, waiver,
bonding or insuring against any mechanic's liens that have been recorded or stop notices that
have been delivered; and (5) the Property has been developed in accordance with this
Agreement, the Scope of Development and plans approved by the Agency pursuant to this
Agreement. ..
"Construction Lender" means the maker of any Construction Loan or beneficiary of any
Construction Loan deed of trust.
"Construction Loan" means, collectively, the Source of Financing in the form of a loan
made to the Lessee at the time of the Closing for construction of the Improvements, secured
against the Leasehold by the Construction Loan Deed of Trust.
"Construction Loan Deed of Trust" means the deed of trust securing the Construction
Loan.
"Conversion" means the date upon which the Construction Loan is converted to the
Permanent Loan.
"Effective Date"means the date when this Agreement has been executed by the Agency.
"Environmental Indemnity" means an instrument substantially in the form attached to
this Agreement as Attachment No. 6.
"Escrow Agent"means an escrow agent mutually acceptable to Agency and Lessee.
"Executive Director" refers to the Executive Director of the City of Huntington Beach
Redevelopment Agency or designee.
"Ground Lease" means the ground lease to be executed by Agency and Lessee
substantially in the form as attached to this Agreement as Attachment No. 7.
"Hazardous Substances" shall have the meaning set forth in Section 212.1 and the
Environmental Indemnity.
"Improvements" means the improvements more particularly described in the Scope of
Development.
2
"Leasehold" or "Leased Premises" means that leasehold estate in the Property created by
the execution of the Ground Lease.
"Leasehold Permitted Exceptions" refers to those permitted exceptions to title as agreed
to by Lessee and Agency for the Leasehold.
"Legal Description" means the legal description of the Property attached to this
Agreement as Attachment No. 2.
"Memorandum of Ground Lease" means that document substantially in form attached
hereto as Attachment 7A.
"Method of Financing"means Attachment No. 3 to this Agreement.
"Notice of Completion" shall have the same definition as set forth in California Civil
Code section 3093.
"Official Records" means the Official Records of the Office of the County Recorder for
Orange County, California.
"Permanent Lender" means the maker of any Permanent Loan or beneficiary of any
Permanent Loan deed of trust.
"Permanent Loan" means the Source of Financing in the form of a permanent loan to be
made to the Lessee at Conversion, secured against the Leasehold by the Permanent Loan Deed of
Trust.
"Permanent Loan Deed of Trust"means the deed of trust securing the Permanent Loan.
"Permitted Mortgage" means a mortgage approved by the Agency as a Source of
Financing for the Project.
"Permitted Mortgagee" means the holder of a Permitted Mortgage, including the
Construction Lender or Permanent Lender.
"Permitted Transfer"means any of the following:
A conveyance of a security interest in the Leasehold in connection with any Permitted
Mortgage and any transfer of title by foreclosure, deed or other conveyance in lieu of foreclosure
in connection therewith;
A conveyance of the Leasehold to any Affiliate of Lessee; or
Subleasing or operation of the any skate shop or snack shop operated on the Leased
Premises by a third party operator approved by Lessee.
Any transfer described above shall be subject to the reasonable approval of
documentation by the Executive Director for conformance with this Agreement.
3
"Permitted Transferee"means the transferee of a Permitted Transfer.
"Person" means an individual, partnership, limited partnership, trust, estate, association,
corporation, limited liability company,or other entity,domestic or foreign.
"Project"refers to the construction of the Improvements on the Property.
"Project Budget" means the schedule of sources and uses attached to this Agreement as
Attachment No. 3A.
"Property"means the real property described in Section 104 of this Agreement.
"Release of Construction Covenants" means the certificate, substantially in form attached
hereto as Attachment No. 8, to be to be issued by the Agency upon Completion in accordance
with Section 324 of this Agreement.
"Schedule of Performance" means the document attached to this Agreement as
Attachment No. 5.
"Scope of Development" means the document attached to this Agreement as Attachment
No.4.
"Site Map" means the document which is attached to this Agreement as Attachment
No. 1.
"Source of Financing" means a source of financing the Project which has been approved
by the Agency, as more specifically described in the Method of Financing.
"Title Company" means Lawyers Title Company or another title insurance company
mutually acceptable to Agency and Lessee.
"Title Insurance Policy" means and includes any of the following, as appropriate: (i) a
leasehold policy of title insurance in favor of Lessee with respect to the Leasehold in an amount
as reasonably requested by Lessee(the"Leasehold Title Policy").
SECTION 103 The Redevelopment Plan
This Agreement is authorized by and made in furtherance of the Redevelopment Plan,
which was approved and adopted by the City Council of the City of Huntington Beach on
December 16, 1996, by Ordinance No. 3343, and lawfully amended thereafter.
SECTION 104 The Property
The "Property" is located at 7541 Center Avenue, in the City of Huntington Beach,
California. The Property is depicted on the Site Map attached hereto as Attachment No. 1. The
legal description of the Property is set forth in the Legal Description attached hereto as
Attachment No. 2. In the event that Lessee subdivides the Property into a vertical subdivision,
each parcel within the vertical subdivision shall be subject to the rights and obligations under this
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Agreement, and the Legal Description referenced herein for the Property shall be modified to
reflect the legal descriptions associated with each vertical parcel.
SECTION 105 Agency
a. Agency is a public body, corporate and politic, exercising governmental functions
and powers, and organized and existing under Chapter 2 of the Community Redevelopment Law
of the State of California.
b. The address of the Agency for purposes of receiving notices pursuant to this
Agreement shall be:
City of Huntington Beach Redevelopment Agency
2000 Main Street
Huntington Beach, California 92648
Attention: Stanley Smalewitz,Economic Development Director
Tel: (714) 526-5582
Fax: (714) 375-5087
With a copy to: Kane, Ballmer&Berkman
515 S.Figueroa Street, Suite 1850
Los Angeles,California 90071
Attn: Susan Y.Cola
Tel: 213-617-0480
Fax: 213-625-0931
C. "Agency" as used in this Agreement includes the City of Huntington Beach
Redevelopment Agency and any assignee or successor to its rights,powers and responsibilities.
SECTION 106 Lessee
a. Lessee is VF Outdoor Inc., a Delaware corporation, doing business as "Vans".
The address of Lessee for purposes of receiving notices pursuant to this Agreement is as follows:
VF Outdoor, Inc., a Delaware Corporation dba Vans
6550 Katella Avenue
Cypress, CA 90363-5102
Attn: Doug Palladini
Tel: (714) 889-6702
Fax: (714)
With a copy to:: Robert Frisbee,Esq.
Connolly, Finkel&Gosselin LLP
601 S.Figueroa Street, Suite 2610
Los Angeles, CA 90017-5704
Main Line: (213)452-6500
Direct Dial: (213)452-6506
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Facsimile: (213) 622-2171
b. Whenever the term "Lessee" is used herein, such term means and include the
Lessee as of the date hereof, and any assignee of or successor to its rights, powers and
responsibilities permitted by this Agreement.
SECTION 107 Assignments and Transfers
a. Lessee represents and agrees that its undertakings pursuant to this Agreement are
for the purpose of redeveloping the Property as a public skate park,with ancillary uses,including
a retail skate shop, restrooms, and seating areas, and not for speculation in land holding. Lessee
further recognizes that the qualifications and identity of Lessee are of particular concern to the
City and the Agency, in light of the following: (1) the importance of the development of the
Property to the general welfare of the community; (2) the public assistance that has been made
available by law and by the government for the purpose of making such redevelopment possible;
and (3) the fact that a change in ownership or control of Lessee or any other act or transaction
involving or resulting in a significant change in ownership or control of Lessee, is for practical
purposes a transfer or disposition of the property then owned by Lessee. Lessee further
recognizes that it is because of such qualifications and identity that the Agency is entering into
the Agreement with Lessee. Therefore, no voluntary or involuntary successor in interest of
Lessee shall acquire any rights or powers under this Agreement except as expressly permitted
herein.
b. Prior to Completion, Lessee shall not assign all or any part of this Agreement, or
any interest herein, without the prior written approval of the Agency. Subject to review of
documentation effectuating any such proposed assignment or transfer, the Agency agrees to
reasonably give such approval if the assignment is a Permitted Transfer.
C. For the reasons cited above, Lessee represents and agrees for itself and any
successor in interest that prior to Completion, without the prior written approval of the Agency,
there shall be no significant change in the ownership of Lessee or in the relative proportions
thereof, or with respect to the identity of the parties in control of Lessee or the degree thereof, by
any method or means, except Permitted Transfers.
d. Any assignment or transfer of this Agreement or any interest herein or significant
change in ownership of Lessee, other than certain Permitted Transfers, shall require the approval
of the Agency, which shall not be unreasonably withheld. To the extent Agency approval of an
assignment or transfer is required by this Agreement, in granting or withholding its approval,
Agency shall base its decision upon the relevant experience, financial capability and reputation
of the proposed assignee or transferee and the effect, if any, of such proposed transfer on the
public purposes of this Agreement. In addition, Agency shall not approve any assignment or
transfer of this Agreement or any interest herein or significant change in ownership of Lessee
that results in payment of consideration to any Person prior to the issuance of the Release of
Construction Covenants and that is not conditioned upon the issuance of the Release of
Construction Covenants.
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e. Lessee shall promptly notify the Agency of any and all changes whatsoever in the
identity of the parties in control of Lessee or the degree thereof, of which it or any of its officers
have been notified or otherwise have knowledge or information. Except for Permitted Transfers,
this Agreement may be terminated by the Agency if there is any significant change (voluntary or
involuntary) in membership, management or control, of Lessee (other than such changes
occasioned by the death or incapacity of any individual)prior to Completion.
f. Permitted Transfers and any other assignments or transfers approved by the
Agency in conformance with this Agreement shall be evidenced by the Lessee's, assignee's, and
Agency's execution of an Assignment and Assumption Agreement.
g. The restrictions of this Section 107 shall terminate upon Completion.
PART 2. DISPOSITION OF LEASEHOLD
SECTION 201 Agency's Lease of the Property to Lessee
Subject to the conditions precedent set forth in Section 202, herein, Agency shall convey
the Leasehold to Lessee in consideration for and on such terms and conditions as are contained in
the Ground Lease. Lessee understands, acknowledges and agrees that nothing herein authorizes
the Lessee, Permitted Mortgagee, or any Person, to pledge the Agency's fee interest as security
for any purpose whatsoever.
SECTION 202 Conditions Precedent Agency's Conveyance of Leasehold to
Lessee
For the benefit of the Agency, the Agency's conveyance of the Leasehold is conditioned
upon the occurrence of each of the following conditions on or prior to the scheduled Closing
Date as set forth in the Schedule of Performance:
a. Final Construction Drawings. Lessee shall have submitted and Agency shall have
approved Final Construction Drawings, in accordance with Section 305,herein.
b. Project Budget. Lessee shall have delivered to the Agency final revisions to the
Project Budget, which have been approved by the Executive Director and certified by Lessee's
Construction Lender, demonstrating to the satisfaction of the Agency the availability of
sufficient funds to pay all Acquisition and Development Costs ("Final Project Budget").
C. Construction Contract. Lessee shall have delivered to the Agency a general
construction contract between the Lessee and a licensed general contractor, covering all
construction required by this Agreement and the approved Final Construction Drawings, in an
amount that is consistent with the Final Project Budget, together with a construction schedule
showing a detailed trade-by trade breakdown of the estimated periods of commencement and
completion of construction and complete fixturization of the Project, and demonstrating that
construction will be completed within the time provided in the Schedule of Performance.
d. Evidence of Financing. Lessee shall have submitted and the Executive Director
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shall have approved evidence relating to all Sources of Financing, and all documents required to
be executed in connection with such financing shall have been duly executed, acknowledged and
delivered. Such evidence shall include:
(1) a copy of all loan documents relating to the Construction Loan, certified
by Lessee to be a true and correct copy or copies thereof;
(2) a copy of loan commitments evidencing that Permanent Loan(s) will be
available at Project completion, certified by Lessee to be a true and correct copy or copies
thereof;
(3) a copy of any other financing commitments evidencing that Lessee has
obtained the financing necessary for the acquisition and development of the Property in
accordance with this Agreement, certified by Lessee to be a true and correct copy or copies
thereof.
e. Insurance. Lessee shall have submitted to the Agency evidence of the insurance
policies required by Section 309,herein.
f Permits. Lessee shall have delivered to the Agency a list of all permits required
for the construction of the Improvements.
g. Lessee's Formation Documents. Lessee shall have delivered documentation
relating to the corporate, partnership, limited liability or other similar status of Lessee and its
general partner(s), including, without limitation and as applicable: limited partnership
agreements and any amendments thereto; articles of incorporation; Limited Liability Company
Articles of Incorporation (LLC-1); Statement of Information and Operating Agreement
(including any amendments thereto); copies of all resolutions or other necessary actions taken by
such entity to authorize the execution of this Agreement and related documents; a certificate of
status issued by the California Secretary of State; and a copy of any Fictitious Business Name
Statement, if any, as published and filed with the Clerk of Orange County.
h. Recording Instructions. Escrow Agent shall have approved such supplemental
recording instructions as may have been prepared on behalf of the Agency.
i. Documents. Agency, Lessee and/or other parties, as appropriate, shall have
executed, and filed or recorded as appropriate,the following documents:
(1) Ground Lease (Attachment No. 7) and Memorandum of Ground Lease
(Attachment No. 7A),to be signed and acknowledged by Agency and Lessee;
(2) Environmental Indemnity(Attachment No. 6),to be signed by Lessee;
j. Closing Certificate. When all conditions precedent have been satisfied to the
satisfaction of the Executive Director, the Executive Director shall execute and submit to the
Escrow Agent a certificate stating that all conditions precedent to recording of the documents
have been satisfied or waived, if such be the case.
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k. No default. Lessee shall not be in default of this Agreement.
SECTION 203 Escrow
Agency agrees to open an escrow in the County of Orange for the Agency's conveyance
of the Leasehold to Lessee with Title Company or such other escrow company, escrow
department of a bank, or escrow department of a title insurance company first approved by
Agency and Lessee (the "Escrow Agent"), no later than the applicable dates established in the
Schedule of Performance.
Sections 201 through 209 (inclusive) of this Agreement shall constitute the joint escrow
instructions of Agency and Lessee with respect to the Agency's conveyance of the Leasehold to
Lessee, and a duplicate original of this Agreement shall be delivered to the Escrow Agent upon
the opening of the escrow.
Agency and Lessee shall provide such additional escrow instructions as shall be
necessary to close the escrow with respect to the purchase of the Property and conveyance of the
Leasehold, consistent with this Agreement. The Escrow Agent hereby is empowered to act
under such instructions, and upon indicating its acceptance thereof in writing, delivered to
Agency and to Lessee within five (5) days after the opening of the escrow, shall carry out its
duties as Escrow Agent hereunder.
Upon receipt by the Escrow Agent of all executed and acknowledged documents, as
required by Section 204,herein,the Escrow Agent shall record all documents in accordance with
Section 206 of this Agreement when the fee interest of the Property can be vested in the Agency
and the Leasehold can be vested in Lessee in accordance with the terms and provisions of this
Agreement. The Escrow Agent shall buy, affix and cancel any transfer stamps required by law.
Any insurance policies governing the Property or any portion thereof are not to be transferred.
Lessee shall pay in escrow to the Escrow Agent the following fees, charges and costs
promptly after the Escrow Agent has notified Lessee of the amount of such fees, charges and
costs,but not earlier than three(3)days prior to the Closing Date:
a. Escrow fee;
b. Recording fees;
C. Notary fees;
d. Premiums for the Title Insurance ordered by Lessee as set forth in Section 209 of
this Agreement.
e. Costs necessary to place the title in the condition required by the provisions of
this Agreement;
g. Ad valorem taxes and any other taxes, assessments or impositions of any kind, if
any, attributable to the Property prior to conveyance of the Leasehold.
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h. State, county, city or other documentary stamps and transfer taxes, if any.
The Escrow Agent is authorized to:
1. Pay, and charge Agency and Lessee, respectively, for any fees, charges and costs
payable under this Section 205. Before such payments are made, the Escrow
Agent shall notify Lessee of such fees, charges and costs;
2. Disburse funds and deliver all documents to the parties entitled thereto when the
conditions of the escrow have been fulfilled by Agency and Lessee; and
3. Record any instruments delivered through the escrow if necessary or proper to
vest the applicable interests in Lessee and Agency in accordance with the terms
and provisions of this Agreement.
All funds received in the escrow shall be deposited by the Escrow Agent in an interest
bearing account for the benefit of the depositing parry as directed by the depositing party.
If any escrow is not in condition to close on or before the Closing Date, either parry who
then shall have fully performed the acts to be performed before the Closing Date may, in writing,
demand the return of its money, papers or documents. No demand for return shall be recognized
until ten (10) days after the Escrow Agent shall have mailed copies of such demand to the other
party at the address of its principal place of business. Objections, if any, shall be raised by
written notice to the Escrow Agent and to the other party within the ten- (10) day period. If any
objections are raised within the ten- (10) day period, the Escrow Agent is authorized to hold the
money, paper and documents until instructed by mutual agreement of the parties or, upon failure
thereof, by a court of competent jurisdiction. Notwithstanding the foregoing, the termination
rights of Agency and Lessee and other rights and remedies on default are governed by Sections
501 through 510, inclusive, of this Agreement, and no demand for such return shall affect such
rights or remedies. If no such demands are made,the escrow shall be closed as soon as possible.
The Escrow Agent shall not be obligated to return any such money, papers or documents
except upon the written instructions of both Agency and Lessee affected thereby, or until the
party entitled thereto has been determined by a final decision of a court of competent
jurisdiction.
Any amendments to these escrow instructions shall be in writing and signed by both
Agency and Lessee. At the time of any amendment the Escrow Agent shall agree to carry out its
duties as escrow agent under such amendment.
All communications from the Escrow Agent to Agency or Lessee shall be directed to the
addresses and in the manner established in Section 601 of this Agreement for notices, demands
and communications between Agency and Lessee.
The liability of the Escrow Agent under this Agreement is limited to performance of the
obligations imposed upon it under Sections 201 through 209, inclusive of this Agreement.
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SECTION 204 Recordation of Documents
Agency and Lessee, respectively, agree to perform all acts necessary to achieve
recordation and delivery of documents in sufficient time for escrow to be closed in accordance
with the foregoing provisions.
a. The following documents shall be recorded in the following order ("Recorded
Documents"):
ORDER OF DOCUMENT NAME
RECORDATION
1 Memorandum of Ground Lease(Attachment No. 7A)
2 Construction Loan Security Instruments
b. All documents to be recorded shall be recorded in the Official Records.
SECTION 205 Possession of Leasehold Upon Close of Escrow
Possession of the Leasehold shall be delivered to Lessee concurrently with Close of
Escrow.
SECTION 206 Condition of Title
The Leasehold shall be conveyed free of any possession or right of possession except that
of Lessee,unless waived in writing by Lessee.
SECTION 207 Title Insurance
SECTION 207.1 Leasehold Title Policy
Concurrently with the recordation of the Memorandum of Ground Lease, Title Company
shall provide and deliver to Lessee a Title Insurance Policy, issued by Title Company, insuring
that the Leasehold is vested in Lessee in the condition required by Section 208 of this
Agreement, together with any endorsements as the Lessee may reasonably require ("Leasehold
Title Policy"). The Title Company shall provide Agency and Lessee with a copy of the
Leasehold Title Policy. If Title Company is unable or unwilling to deliver the Leasehold Title
Policy consistent with the provisions of this Agreement, then in addition to any other rights or
remedies of Lessee, Lessee may terminate this Agreement pursuant to Section 509.
SECTION 208 Notice of Possessory Interest; Payment of Taxes and Assessments
on Value of Entire Property
In accordance with California Revenue and Taxation Code section 107.6(a) and
California Health and Safety Code section 33673, Agency states that by entering into the Ground
Lease, a possessory interest subject to property taxes shall be created. Lessee and/or its
successors or other party(ies) in whom the possessory interest is vested shall be subject to the
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payment of property taxes, liens or encumbrances levied on such interest, unless an exemption is
otherwise available.
Lessee acknowledges and agrees that the Leasehold and/or the Improvements thereon,
and any possessory interest therein, shall at all times after the commencement of the Ground
Lease, be subject to ad valorem taxes levied, assessed or imposed on such property, and that
Lessee shall pay taxes upon the assessed value of the entire property unless exempt, and not
merely upon the assessed value of its leasehold interest.
SECTION 209 Contests
a. Lessee shall refrain from appealing, challenging or contesting in any manner the
validity or amount of any tax assessment, encumbrance or lien on the Property; provided,
however, that such prohibition shall not apply to an appeal, challenge or contesting of the
erroneous initial assessment for property tax purposes of the Property in the fiscal year of the
completion of the Improvements to be constructed pursuant to the Agreement, and further
provided that in the absence of transfer of ownership or new construction Lessee shall not be
prohibited from appealing, challenging or contesting any increases in assessment of the Property
for property tax purposes over and above the current 2%per annum permitted amount.
b. Lessee agrees that any such permitted proceedings shall be begun without undue
delay after any contested item is imposed and shall be prosecuted to final adjudication with
reasonable dispatch. Lessee shall give Agency prompt notice in writing of any such contest at
least ten (10) days before filing any contests. Lessee may only exercise its right to contest an
imposition hereunder if the subject legal proceedings shall operate to prevent the collection of
the imposition so contested, or the sale of the Property, or any part thereof, to satisfy the same,
and only if Lessee shall, prior to the date such imposition is due and payable, have given such
reasonable security as may be required by Agency from time to time in order to insure the
payment of such imposition to prevent any sale, foreclosure or forfeiture of the Property, or any
part thereof, by reason of such nonpayment. In the event of any such contest and the final
determination thereof adversely to Lessee, Lessee shall, before any fine, interest, penalty or cost
may be added thereto for nonpayment thereof, pay fully and discharge the amounts involved in
or affected by such contest, together with any penalties, fines, interest, costs and expenses that
may have accrued thereon or that may result from any such contest by Lessee and, after such
payment and discharge by Lessee, Agency will promptly return to Lessee such security as
Agency shall have received in connection with such contest.
C. Agency shall cooperate reasonably in any such contest permitted by this
Section 211, and shall execute any documents or pleadings reasonably required for such purpose.
Any such proceedings to contest the validity or amount of Imposition or to recover back any
Imposition paid by Lessee shall be prosecuted by Lessee at Lessee's sole cost and expense; and
Lessee shall indemnify and save harmless Agency against any and all loss, cost or expense of
any kind, including, but not limited to, reasonable attorneys' fees and expenses, which may be
imposed upon or incurred by Agency in connection therewith.
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SECTION 210 Condition of the Property
SECTION 210.1 Hazardous Substances
a. "Hazardous Substance,"as used in this Agreement means any substance, material
or waste which is or becomes regulated by the United States government,the State of California,
or any local or other governmental authority, including, without limitation, any material,
substance or waste which is (i) defined as a "hazardous waste," "acutely hazardous waste,"
"restricted hazardous waste," or "extremely hazardous waste" under Sections 25115, 25117 or
25122.7, or listed pursuant to Section 25140, of the California Health and Safety Code; (ii)
defined as a "hazardous substance" under Section 25316 of the California Health and Safety
Code; (iii) defined as a "hazardous material," "hazardous substance," or "hazardous waste"
under Section 25501 of the California Health and Safety Code; (iv) defined as a "hazardous
substance" under Section 25281 of the California Health and Safety Code; (v) petroleum; (vi)
asbestos; (vii) a polychlorinated biphenyl; (viii) listed under Article 9 or defined as "hazardous"
or "extremely hazardous" pursuant to Article 11 of Title 22 of the California Code of
Regulations, Chapter 20; (ix) designated as a "hazardous substance" pursuant to Section 311 of
the Clean Water Act (33 U.S.C. Section 1317); (x) defined as a "hazardous waste" pursuant to
Section 1004 of the Resource Conservation and Recovery Act (42 U.S.C. Section 6903); (xi)
defined as a "hazardous substance" pursuant to Section 101 of the Comprehensive
Environmental Response, Compensation and Liability Act(42 U.S.C. Section 9601);or(xii) any
other substance, whether in the form of a solid, liquid, gas or any other form whatsoever, which
by any governmental requirements either requires special handling in its use, transportation,
generation, collection, storage, treatment or disposal, or is defined as "hazardous" or is harmful
to the environment or capable of posing a risk of injury to public health and safety. "Hazardous
Substances" do not include materials customarily used in the construction, development,
operation or maintenance of real estate, provided such substances are used in accordance with all
laws.
b. Lessee hereby represents and warrants that the development, construction and
uses of the Leasehold permitted under this Agreement (i) will comply with all applicable
environmental laws; and (ii) do not require the presence of any Hazardous Substance on the
Property.
C. Within five (5) days of request by Agency, Lessee shall deliver to Agency, if not
previously delivered, all documents relevant to the condition of the Property within the Lessee's
possession or control, including, without limitation, a preliminary title report with underlying
exceptions, environmental reports, studies, surveys, and all other relevant documents within the
Agency's possession or control(collectively referenced as"Documents").
SECTION 210.2 Suitability of the Property
a. The Leasehold shall be delivered to Lessee in an "as is" physical condition, with
no warranty, express or implied by Agency as to the presence of Hazardous Substances, or the
condition of the soil, its geology or the presence of known or unknown faults. If the condition of
the Leasehold is not in all respects entirely suitable for the use or uses to which such Leasehold
will be put, then it is the sole responsibility and obligation of Lessee to place the Leasehold in all
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respects in a condition entirely suitable for the development thereof, solely at Lessee's expense.
b. Effective upon Closing, Lessee agrees to indemnify, defend and hold harmless
Agency and City and their respective members, officers, agents, employees, contractors and
consultants, in accordance with the Environmental Indemnity.
C. On and after the Effective Date of this Agreement,Lessee hereby waives, releases
and discharges the Agency, the City and their respective members, officers, employees, agents,
contractors and consultants, from any and all present and future claims,demands, suits, legal and
administrative proceedings, and from all liability for damages, losses, costs, liabilities, fees and
expenses (including, without limitation, attorneys' fees) arising out of or in any way connected
with the use, maintenance, ownership or operation of the Property or any portion thereof, any
Hazardous Substances on the Property, or the existence of Hazardous Substances contamination
in any state on the Property, however the Hazardous Substances came to be placed there, except
that arising out of the active negligence or willful misconduct of the Agency or its employees,
officers or agents. Lessee acknowledges that it is aware of and familiar with the provisions of
Section 1542 of the California Civil Code which provides as follows:
"A general release does not extend to claims which the creditor does not know or suspect
to exist in his or her favor at the time of executing the release, which if known by him or her
must have materially affected his or her settlement with the debtor."
To the extent of the release set forth in this Section 212.2,Lessee hereby waives and relinquishes
all rights and benefits which it may have under Section 1542 of the California Civil Code.
SECTION 211 Method of Financing
The Acquisition and Development Costs shall be financed with a combination of Sources
of Financing as provided in the Method of Financing.
SECTION 212 Evidence of Financing
a. Not later than fifteen (15) days prior to the scheduled Closing Date and in no
event later than as provided in the Schedule of Performance, Lessee shall submit to the Agency
evidence satisfactory to the Executive Director that Lessee has obtained the financing necessary
for the acquisition and development of the Property in accordance with this Agreement. Such
evidence of financing shall include all items referenced under subsections (a) through (k) of
Section 204.1,herein.
b. The Executive Director shall approve or disapprove such evidence of financing
within the time established in the Schedule of Performance (Attachment No. 5). Such approval
shall not be unreasonably withheld. If the Agency shall disapprove any such evidence of
financing, the Agency shall do so by written notice to Lessee stating the reasons for such
disapproval.
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SECTION 213 Designation as Point of Sale
Lessee and its successors and assigns shall maintain such licenses and permits as may be
required by any governmental agency to conduct taxable sales arising from any project on the
Property and, to the extent permitted by law, shall designate City as the "point of sale" for all
taxable sales and lease transactions occurring from any project on the Property in all reports to
the California State Board of Equalization in accordance with the Bradley-Burns Uniform Sales
and Use Tax Law (Revenue and Taxation Code 72000 et seq.), as it may be amended or
substituted from time to time, and on sales tax returns to the State of California for all taxable
sales occurring at any project on the Property.
PART 3. DEVELOPMENT OF THE PROPERTY
SECTION 301 Land Use Approvals
It is the responsibility of Lessee, without cost to Agency, to ensure that zoning of the
Property and all applicable City land use requirements will permit development of the Property
and construction of the Improvements and the use, operation and maintenance of such
Improvements in accordance with the provisions of this Agreement. The following shall be
conditions of the Closing and shall be accomplished by the date set forth in the Schedule of
Performance: (A) Lessee shall submit and Executive Director shall approve complete Final
Construction Drawings; (B) Lessee shall obtain all entitlements, approvals, variances and
permits necessary for the construction of the Improvements and (C) Lessee shall satisfy all other
conditions precedent to the Closing as set forth in the Method of Financing. Nothing contained
herein shall be deemed to entitle Lessee to any City permit or other City approval necessary for
the development of the Property, or waive any applicable City requirements relating thereto.This
Agreement does not (a) grant any land use entitlement to Lessee, (b) supersede, nullify or amend
any condition which may be imposed by the City in connection with approval of the
development described herein, (c) guarantee to Lessee or any other party any profits from the
development of the Property, or (d) amend any City laws, codes or rules. This is not a
Development Agreement as provided in Government Code Section 65864.
SECTION 302 Scope of Development
The Property shall be developed in accordance with and within the parameters
established in the Scope of Development.
SECTION 303 Basic Concept Drawings
a. Lessee shall prepare and submit basic concept and schematic drawings and related
documents for the development of the Property to the Agency for review and written approval
within the time established in the Schedule of Performance. Basic concept and schematic
drawings shall include a site plan, elevations and sections of the Improvements as they are to be
developed and constructed on the Property. Lessee shall consult with and seek the
recommendations of property management and community service providers with experience
relating to similar developments before submission of the basic concept and schematic drawings
to the Agency.
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b. The Property shall be developed as established in the basic concept and schematic
drawings and related documents except as changes may be mutually agreed upon between
Lessee and the Executive Director. Any such changes shall be within the limitations of the Scope
of Development.
SECTION 304 Landscaping and Grading Plans
a. Lessee shall prepare and submit to the Agency for its approval preliminary and
final landscaping and preliminary and finish grading plans for the Property. These plans shall be
prepared and submitted within the times established in the Schedule of Performance.
b. The landscaping plans shall be prepared by a professional landscape architect and
the grading plans.shall be prepared by a licensed civil engineer. Such landscape architect and/or
civil engineer may be the same firm as Lessee's architect. Within the times established in the
Schedule of Performance, Lessee shall submit to the Agency for approval the name and
qualifications of its architect, landscape architect and civil engineer.
SECTION 305 Construction Drawings and Related Documents
a. Lessee shall prepare and submit construction drawings and related documents
(collectively called the "Plans") to the Agency for review (including but not limited to
architectural review), and written approval in the times established in the Schedule of
Performance. Such construction drawings and related documents shall be submitted as 50% and
Final Construction Drawings. Final Construction Drawings are hereby defined as those in
sufficient detail to obtain a building permit.
b. Approval of progressively more detailed Plans will be promptly granted by the
Executive Director if developed as a logical evolution of Plans theretofore approved. Any items
so submitted and approved by the Executive Director shall not be subject to subsequent
disapproval.
C. During the preparation of all Plans, the Executive Director and Lessee shall hold
regular progress meetings to coordinate the preparation of, submission to, and review of Plans
and related documents by the Executive Director. The Executive Director and Lessee shall
communicate and consult informally as frequently as is necessary to insure that the formal
submittal of any documents to the Agency can receive prompt and speedy consideration.
d. If any revisions or corrections of Plans approved by the Agency shall be required
by any government official, agency, department, or bureau having jurisdiction over the
development of the Property, Lessee and the Executive Director shall cooperate in efforts to
obtain waiver of such requirements or to develop a mutually acceptable alternative.
SECTION 306 Agency Approval of Plans
a. Subject to the terms of this Agreement, the Agency shall have the right to review
(including without limitation architectural review) and approve or disapprove all Plans and
16
submissions, including any proposed substantial changes to any such Plans or submissions
approved by Agency. Upon receipt of any disapproval, Lessee shall revise the Plans, and shall
resubmit to the Executive Director as soon as possible after receipt of the notice of disapproval.
The Agency shall reasonably approve or disapprove the Plans referred to in Sections 303, 304
and 305 of this Agreement within the times established in the Schedule of Performance. Any
disapproval shall state in writing the reasons for disapproval and the changes which the
Executive Director requests to be made. Such reasons and such changes must be consistent with
the Scope of Development and any items previously approved hereunder.Lessee,upon receipt of
a disapproval based upon powers reserved by the Agency hereunder shall revise the Plans, and
shall resubmit to the Executive Director as soon as possible after receipt of the notice of
disapproval.
b. If Lessee desires to make any substantial change in the Final Construction
Drawings after their approval, such proposed change shall be submitted to the Executive Director
for approval. For purposes of this Section, "Substantial" shall mean any material change in
building materials or equipment, specifications, or the structural or architectural design or
appearance of the Project. Nothing herein shall be interpreted as altering, modifying, waiving,
amending, or reducing any requirements of any governmental permit required by any local, state
or federal permitting authority for the development contemplated herein.
SECTION 307 Cost of Construction
The cost of demolishing any improvements on the Property and developing the Property
and constructing the Improvements, including any offsite or onsite improvements required by the
City in connection therewith, shall be the responsibility of Lessee,without any cost to Agency.
SECTION 308 Schedule of Performance
a. Each party to this Agreement shall perform the obligations to be performed by
such party pursuant to this Agreement within the respective times provided in the Schedule of
Performance, and if no such time is provided, within a reasonable time consistent with the
Schedule of Performance. The Schedule of Performance shall be subject to amendment from
time to time upon the mutual agreement of the Agency and Lessee.
b. , After the Closing, Lessee shall promptly begin and thereafter diligently prosecute
to completion the construction of the Improvements as provided herein and in the Scope of
Development.
C. During periods of construction,Lessee shall submit to the Agency a written report
of the progress of construction when and as reasonably requested by the Agency, but not more
frequently than once every quarter. The report shall be in such form and detail as may be
reasonably required by the Agency and shall include a reasonable number of construction
photographs (if requested)taken since the last report by Lessee. If Agency utilizes the services of
a construction monitor, Lessee shall reasonably cooperate with the Agency's monitor to
coordinate inspections.
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SECTION 309 Indemnification and Insurance
a. Lessee's Indemnity. To the maximum extent permitted by law, and in addition to
any other provisions of this Agreement independently requiring Lessee to defend, indemnify, and
hold harmless the Agency, the City, and their respective officers, employees, contractors and
agents, including, without limitation, the Environmental Indemnity and the Ground Lease,
Lessee agrees to and shall defend, indemnify and hold harmless Agency, the City, and their
respective officers, employees, contractors and agents from and against all claims, liability, loss,
damage, costs or expenses (including reasonable attorneys' fees and court costs) arising from or
as a result of the death of any person or any accident, injury, loss or damage whatsoever caused
to any person or the property of any person resulting or arising from or in any way connected
with the following, provided Lessee shall not be responsible for (and such indemnity shall not
apply to) any active negligence or willful misconduct of the Agency, City, or their respective
officers, employees, contractors or agents:
1. The existence, release, presence or disposal on, in, or under the Property of any
Hazardous Substances resulting from the acts or omissions of Lessee, its
contractors, subcontractors, agents or other persons acting on Lessee's behalf
(individually,"Indemnifying Party,"and collectively, "Indemnifying Parties");
2. The development, construction, marketing, use, operation or condition of the
Property and the Improvements by any Indemnifying Party;
3. Any accident, personal injury or casualty on the Property or the Improvements
resulting from the acts or omissions of any Indemnifying Party;
4. Any plans or designs for Improvements (collectively, "Plans") prepared by or on
behalf of any Indemnifying Party, including without limitation any errors or
omissions with respect to such plans or designs, except in the event that (i) none
of the Indemnifying Parties develops the Property pursuant to this Agreement, and
(ii) upon assignment of the Plans to Agency, Agency uses the Plans or causes
such Plans to be used to develop the Property;
5. Any loss or damage to Agency resulting from any inaccuracy in or breach of any
representation or warranty of Lessee, or resulting from any breach or default by
Lessee,under this Agreement; and
6. Any and all actions, claims, damages, injuries, challenges and/or costs or
liabilities arising from the approval of any and all entitlements or permits for the
Improvements by the City or the Agency.
The foregoing indemnity obligations shall continue to remain in effect after the
Completion. Lessee understands, acknowledges and agrees that nothing in this Section shall be
deemed or interpreted as a limitation, modification or waiver of any other provisions of this
Agreement independently requiring Lessee to defend, indemnify, and hold harmless the Agency,
the City, and their respective officers, employees, contractors and agents, except as to the active
negligence or willful misconduct of their respective officers, employees, contractors and agents.
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b. Insurance Policies.
1. Commencing upon the Closing or Lessee's possession of the Property,
whichever occurs first, and at all times prior to the issuance of the Release of Construction
Covenants ("the Term"), Lessee shall maintain in effect and deliver to Agency duplicate
originals or appropriate certificates of the following insurance policies (the "Insurance
Policies"):
(a) All-Risk Policies: Lessee shall maintain or cause to be maintained
coverage for builder's risk insurance for the completed value. Such insurance shall insure against
direct physical loss or damage by fire, lightning, wind, storm, explosion, collapse, flood,
vandalism, malicious mischief, glass breakage and such other causes as are covered by such form
of insurance, excluding earthquake(s). Such policy shall include (1) coverage for demolition
costs and debris removal, (2) Replacement cost coverage in amount sufficient to prevent Lessee
from becoming a co-insurer under the terms of the policy, but in any event in an amount not less
than 100% of the then full replacement cost. The replacement cost coverage shall be for work
performed and equipment, supplies and materials furnished to the Property, or property stored in,
or located in any bonded warehouse pending incorporation into the work, without deduction for
physical depreciation;
(b) Liability Insurance: Lessee shall maintain or cause to be
maintained general liability insurance or an equivalent owner contractors protective policy, to
protect against loss from liability imposed by law for damages on account of personal injury,
including death therefrom, suffered or alleged to be suffered by any person or persons
whomsoever on or about the Property and the business of Lessee on the Property, or in
connection with the operation thereof, resulting directly or indirectly from any acts or activities
of Lessee, or any person acting for Lessee, or under its respective control or direction, and also to
protect against loss from liability imposed by law for damages to any property of any person
occurring on or about the Property, or in connection with the operation thereof, caused directly
or indirectly by or from acts or activities of Lessee or its tenants, or any person acting for Lessee,
or under its control or direction. Such property damage and personal injury insurance shall also
provide for and protect Agency against incurring any legal cost in defending claims for alleged
loss. Such personal injury and property damage insurance shall be maintained in full force and
effect during the Term in the following amounts: commercial general liability in a general
aggregate amount of not less than Four Million Dollars ($4,000,000), Four Million Dollars
($4,000,000) Products and Completed Operations Aggregate, and Two Million Dollars
($2,000,000) each Occurrence. Lessee shall deliver to Agency a Certificate of Insurance
evidencing such insurance coverage prior to the occurrence of the Closing. Lessee agrees that
provisions of this paragraph as to maintenance of insurance shall not be construed as limiting in
any way the extent to which Lessee may be held responsible for the indemnification of Agency
or the payment of damages to persons or property resulting from Lessee's activities, activities of
its tenants or the activities of any other person or persons for which Lessee is otherwise
responsible. To the extent that Lessee maintains increased or additional insurance coverage
during the Term, in excess of the minimum coverage requirements prescribed by paragraphs
(b)(1)(b) and (b)(1)(c) of this Section 309, Lessee shall ensure that the additional insureds
specified in paragraph (b)(3) of this Section 309 derive the benefit of such increased or
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additional insurance coverage.
(c) Automobile Insurance: Lessee shall maintain or cause to be
maintained automobile insurance on any automobiles owned by Lessee, maintained in full force
and effect in an amount of not less than Two Million Dollars($2,000,000)per accident.
(d) Workers' Compensation Insurance: Lessee shall maintain or cause
to be maintained workers' compensation insurance, if required, for any employees of Lessee,
issued by a responsible carrier authorized under the laws of the State of California to insure
employers against liability for compensation under the workers' compensation laws now in force
in California, or any laws hereafter enacted as an amendment or supplement thereto or in lieu
thereof. Such workers' compensation insurance shall cover all persons employed by Lessee in
connection with the Property and shall cover liability within statutory limits for compensation
under any such act aforesaid, based upon death or bodily injury claims made by, for or on behalf
of any person incurring or suffering injury or death in connection with the Property or the
operation thereof by Lessee. Notwithstanding the foregoing, Lessee may, in compliance with the
laws of the State of California and in lieu of maintaining such insurance, self-insure for workers'
compensation in which event Lessee shall deliver to Agency evidence that such self-insurance
has been approved by the appropriate State authorities.
2. All policies or certificates of insurance shall provide that such policies
shall not be canceled,reduced in coverage or limited in any manner without at least ten(10)days
prior written notice to Agency. All fire and liability insurance policies (not automobile and
Workers' Compensation) may name the Agency and Lessee as insureds, additional insureds,
and/or loss payable parties as their interests may appear.
3. The Insurance Policies shall name as additional insureds the following:
"The City of Huntington Beach, the City of Huntington Beach Redevelopment Agency,
and their respective officers, employees, contractors, agents and attorneys."
Lessee agrees to timely pay all premiums for such insurance and, at its sole cost and expense, to
comply and secure compliance with all insurance requirements necessary for the maintenance of
such insurance. Lessee agrees to submit binders or certificates evidencing such insurance to
Agency prior to the Closing. Within thirty (30) days, if practicable, but in any event prior to
expiration of any such policy, copies of renewal policies, or certificates evidencing the existence
thereof, shall be submitted to Agency. All insurance herein provided for under this Section shall
be provided by insurers licensed to do business in the State of California and rated A-VII or
better.
4. If Lessee fails or refuses to procure or maintain insurance as required by
this Agreement, Agency shall have the right, but not the obligation, at Agency's election, and
upon ten(10) days prior notice to Lessee,to procure and maintain such insurance. The premiums
paid by Agency shall be treated as a loan, due from Lessee, to be paid on the first day of the
month following the date on which the premiums were paid. Agency shall give prompt notice of
the payment of such premiums, stating the amounts paid and the name of the insured(s).
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SECTION 310 Nondiscrimination
Lessee shall not discriminate on the basis of race, gender, religion, national origin,
ethnicity, sexual orientation, age or disability in the solicitation, selection, hiring or treatment of
any contractors or consultants, to participate in subcontracting/subconsulting opportunities.
Lessee understands and agrees that violation of this clause shall be considered a material breach
of this Agreement and may result in termination, debarment or other sanctions. After the
Effective Date, this language shall be incorporated into all contracts between Lessee and any
contractor, consultant, subcontractor, subconsultants,vendors and suppliers.
SECTION 311 Local, State and Federal Laws
The Lessee shall carry out development and construction (as defined by applicable law)
of the Improvements on the Property, including,without limitation, any and all public works, (as
defined by applicable law), if any, in conformity with all applicable local, state and federal laws,
including, without limitation, all applicable federal and state labor laws (including, without
limitation, any applicable requirement to pay state prevailing wages). Lessee hereby agrees that
Lessee shall have the obligation to provide any and all disclosures, representations, statements,
rebidding, and/or identifications which may be required by Labor Code Sections 1726 and 1781,
as the same may be enacted, adopted or amended from time to time, or any other provision of
law. Lessee hereby agrees that Lessee shall have the obligation to provide and maintain any and
all bonds to secure the payment of contractors (including the payment of wages to workers
performing any public work) which may be required by the Civil Code, Labor Code Section
1781, as the same may be enacted, adopted or amended from time to time, or any other provision
of law. Lessee shall indemnify, protect, defend and hold harmless the Agency, City, and their
respective officers, employees, contractors and agents, with counsel reasonably acceptable to
Agency and City, from and against any and all loss, liability, damage, claim, cost, expense,
and/or "increased costs" (including labor costs, penalties, reasonable attorneys fees, court and
litigation costs, and fees of expert witnesses) which, in connection with the development and/or
construction (as defined by applicable law) of the Improvements, including, without limitation,
any and all public works (if any) (as defined by applicable law), results or arises in any way from
any of the following: (1) the noncompliance by Lessee of any applicable local, state and/or
federal law, including, without limitation, any applicable federal and/or state labor laws
(including, without limitation, if applicable, the requirement to pay state prevailing wages); (2)
the implementation of Chapter 804, Statutes of 2003; (3) the implementation of Sections 1726
and 1781 of the Labor Code, as the same may be enacted,adopted or amended from time to time,
or any other similar law; (4) failure by Lessee to provide any required disclosure representation,
statement, rebidding and/or identification which may be required by Labor Code Sections 1726
and 1781, as the same may be enacted, adopted or amended from time to time, or any other
provision of law; and/or (5) failure by Lessee to provide and maintain any and all bonds to
secure the payment of contractors (including the payment of wages to workers performing any
public work) which may be required by the Civil Code, Labor Code Section 1781, as the same
may be enacted, adopted or amended from time to time, or any other provision of law. Lessee
hereby expressly acknowledges and agrees that neither City nor Agency has ever previously
affirmatively represented to the Lessee or its contractor(s) for the Improvements in writing or
otherwise,that the work to be covered by the bid or contract is not a"public work," as defined in
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Section 1720 of the Labor Code. It is agreed by the parties that, in connection with the
development and construction (as defined by applicable law) of the Improvements, including,
without limitation, any public work (as defined by applicable law), if any, Lessee shall bear all
risks of payment or non-payment of state prevailing wages and/or the implementation of Chapter
804, Statutes of 2003 and/or Labor Code Sections 1726 and 1781, as the same may be enacted,
adopted or amended from time to time, and/or any other provision of law. "Increased costs" as
used in this Section shall have the meaning ascribed to it in Labor Code Section 1781, as the
same may be enacted, adopted or amended from time to time. The foregoing indemnity shall
survive termination of this Agreement and shall continue after Completion and the recordation of
the Release of Construction Covenants.
SECTION 312 Notice of Non-Responsibility
Agency shall, at any and all times during the term of this Agreement, have the right to
post and maintain on the Property, and record against the Property, as required by law, any
notice or notices of non-responsibility provided for by the mechanics' lien laws of the State of
California; provided, however, that Lessee shall, on behalf of the Agency, as advised thereby,
post and maintain on the Property, and record against the Property, all notices of non-
responsibility provided for by the mechanics' lien laws of the State of California.
SECTION 313 Permits
Before commencement of demolition, construction or development of any buildings,
structures or other work of improvement upon any portion of the Property, Lessee shall, at its
own expense, secure or cause to be secured, any and all permits which may be required by the
City or any other governmental agency with oversight for, or affected by, such construction,
development or work.
SECTION 314 Rights of Access
Commencing upon the Closing, representatives of the Agency and the City shall have the
reasonable right of access to the Property, upon 24 hours' written notice to Lessee (except in the
case of an emergency, in which case Agency shall provide such notice as may be practical under
the circumstances), without charges or fees, at normal construction hours during the period of
construction for the purposes of this Agreement, including, but not limited to, the inspection of
the work being performed in constructing the Improvements. Such representatives of the Agency
or the City shall be those who are so identified in writing by the Executive Director of the
Agency.
The Lessee has the right to designate representatives to accompany the Agency or City
representatives on such inspections. The Agency agrees to coordinate with Lessee to schedule
such inspections so that Lessee's representative may attend the inspections, in the discretion of
Lessee.
SECTION 315 Disclaimer of Responsibility by Agency
The Agency neither undertakes nor assumes nor will have any responsibility or duty to
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Lessee or to any third parry to review, inspect, supervise, pass judgment upon or inform Lessee
or any third party of any matter in connection with the development or construction of the
Improvements, whether regarding the quality, adequacy or suitability of the plans, any labor,
service, equipment or material furnished to the Property, any person furnishing the same, or
otherwise. Lessee and all third parties shall rely upon its or their own judgment regarding such
matters, and any review, inspection, supervision, exercise of judgment or information supplied to
Lessee or to any third party by the Agency in connection with such matter is for the public
purpose of redeveloping the Property, and neither Lessee(except for the purposes set forth in this
Agreement) nor any third party is entitled to rely thereon. The Agency shall not be responsible
for any of the work of construction, improvement or development of the Property.
SECTION 316 Taxes,Assessments,Encumbrances and Liens
Commencing upon the Closing, Lessee shall pay when due all real estate taxes and
assessments assessed and levied on or against the Property or any portion thereof. Lessee shall
not place, or allow to be placed, against the Property or any portion thereof, any mortgage, trust
deed, encumbrance or lien not authorized by this Agreement.In addition,Lessee shall remove, or
shall have removed, any levy or attachment made on title to the Leasehold and/or Property (or
any portion thereof), or shall assure the satisfaction thereof within a reasonable time but in any
event prior to a sale thereunder. Under no circumstances whatsoever shall the Lessee allow any
security instruments to be recorded against the Agency's fee interest in the Property.
SECTION 317 Prohibition against Transfer
a. Prior to Completion, Lessee shall not, except as permitted by this Agreement,
including without limitation Sections 102 (definition of"Permitted Transfer") and 107, assign or
attempt to assign this Agreement or any right herein, nor make any total or partial sale, transfer,
conveyance or assignment of the whole or any part of the Lessee's interest in the Leasehold or
the Improvements thereon, without prior written approval of the Agency. This prohibition shall
not be deemed to prevent the granting of easements or permits to facilitate the development of
the Property,nor shall it prohibit Permitted Transfers.
b. Except as permitted by paragraph a., in the event Lessee does assign this
Agreement or any of the rights herein, or does sell, transfer, convey or assign the Lessee's
interest in the Leasehold(or any portion thereof) prior to Completion without the approval of the
Agency, subject to the notice and cure provisions of Section 501,the Agency shall have the right
to terminate this Agreement.
C. Prior to Completion, in the absence of a specific written agreement by the
Agency, and except as otherwise provided in this Agreement, no such sale, transfer, conveyance
or assignment of this Agreement or Lessee's interest in the Leasehold(or any portion thereof), or
approval by the Agency of any such sale,transfer, conveyance or assignment, shall be deemed to
relieve Lessee or any other party from any obligations under this Agreement.
SECTION 318 No Encumbrances Except Permitted Mortgages
a. Notwithstanding Section 317, upon and after the Closing, Lessee shall have the
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right to encumber the Leasehold with a Permitted Mortgage, but only for the purpose of securing
loans of funds to be used for financing and refinancing the Acquisition and Development Costs
and other expenditures necessary and appropriate to develop the Property under this Agreement,
consistent with the amounts to be financed by Lessee per the Method of Financing ("Permitted
Financing Purposes"). Lessee has no authority to encumber the Agency's fee interest in the
Property at any time and for any purpose, whatsoever. Prior to Completion: (1) Lessee shall not
have any authority to encumber the Leasehold for any purpose other than for Construction
Loans; (2) Lessee shall notify the Agency in advance of any proposed financing; and (3) Lessee
shall not enter into any agreements requiring a conveyance of security interests in the Property
without the prior written approval of the Agency. The maker of any loan approved by the
Agency pursuant to this Section 318 shall not be bound by any amendment, implementation
agreement or modification to this Agreement subsequent to its approval without such lender
giving its prior written consent.
b. In any event, Lessee shall promptly notify the Agency of any security interest
created or attached to the Leasehold or Property whether by voluntary act of Lessee or otherwise.
C. The words "security interest" and "deed of trust" as used herein include all other
appropriate modes of financing real estate acquisition, construction and land development.
d. Except for the provision that Lessee has no authority to encumber the Agency's
fee interest in the Property at any time and for any purpose, whatsoever, the requirements of this
Section 318 shall not apply following Completion.
SECTION 319 Lender Not Obligated to Construct Improvements
No lender shall be obligated by the provisions of this Agreement to construct or complete
the Improvements or to guarantee such construction or completion. Nothing in this Agreement
shall be deemed or construed to permit, or authorize any such lender to devote the Property to
any uses, or to construct any improvements thereon, other than those uses or improvements
provided for or authorized by this Agreement and the Ground Lease.
SECTION 320 Notice of Default to Lenders;Right of Lender to Cure Defaults
Whenever the Agency shall deliver any notice or demand to Lessee with respect to any
breach or default by Lessee in completion of construction of the Improvements,the Agency shall
at the same time deliver the notice or demand to each Permitted Mortgagee that requests such
notice or demand, in writing, from the Agency and provides its contact information for the notice
or demand. Each such Permitted Mortgagee shall (insofar as the rights of the Agency are
concerned) have the right at its option within ninety (90) days after the receipt of the notice, to
cure or remedy, or commence to cure or remedy, any such default and to add the cost thereof to
the security interest debt and the lien of its security interest. If such default shall be a default
which can only be remedied or cured by such Permitted Mortgagee upon obtaining possession of
the Leasehold, such Permitted Mortgagee shall seek to obtain possession with diligence and
continuity through a receiver or otherwise, and shall remedy or cure such default within ninety
(90) days after obtaining possession; provided that in the case of a default which cannot with
diligence be remedied or cured, or the remedy or cure of which cannot be commenced within
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such ninety- (90) day period, such Permitted Mortgagee shall have such additional time as
reasonably necessary to remedy or cure such default with diligence and continuity not to exceed
ninety (90) days; and provided further that such Permitted Mortgagee shall not be required to
remedy or cure any non-curable default of Lessee. Any Permitted Mortgagee who forecloses on
its Permitted Mortgage, or is assigned or otherwise succeeds to Lessee's rights under this
Agreement, shall have the right to undertake or continue the construction or completion of the
Improvements upon execution of a written agreement with the Agency by which such Permitted
Mortgagee expressly assumes Lessee's rights and obligations under this Agreement, approval of
which agreement shall not be unreasonably withheld by Agency. Any such Permitted Mortgagee
properly completing such improvements shall be entitled, upon written request made to the
Agency,to a Release of Construction Covenants from the Agency.
SECTION 321 Failure of Lender to Complete Improvements
In any case where, six (6) months after default by Lessee, the holder of any mortgage,
deed of trust or other security interest creating a lien or encumbrance upon the Leasehold (or
portion thereof) has not elected to complete construction of the Improvements, or, if it has
elected to complete the Improvements, it has not proceeded diligently with construction, the
Agency may purchase the mortgage, deed of trust or other security interest by payment to the
holder of the full amount of the unpaid principal debt, plus any accrued and unpaid interest and
other charges secured by the mortgage instrument approved by the Agency.
SECTION 322 Right of the Agency to Cure Defaults
In the event of a default or breach by Lessee of a Permitted Mortgage prior to Completion
and prior to completion of a foreclosure by a Permitted Mortgagee, and the Permitted Mortgagee
has not commenced to complete the development, the Agency may cure the default at any time
prior to completion by a Permitted Mortgagee of any foreclosure under its security. In such
event, the Agency shall be entitled to reimbursement from Lessee of all reasonable costs and
expenses incurred by the Agency in curing the default.The Agency shall also be entitled to a lien
upon the Leasehold to the extent of such costs and disbursements.
SECTION 323 Right of the Agency to Satisfy Other Liens on the Property
Prior to Completion and after Lessee has had a reasonable time to challenge, cure or satisfy any
liens or encumbrances on its interest in the Property, the Agency shall have the right, without
obligation,to satisfy any such liens or encumbrances. In such event, the Agency shall be entitled
to reimbursement from Lessee of all reasonable costs and.expenses incurred by the Agency in
satisfying any such liens or encumbrances. The Agency shall also be entitled to a lien upon the
Leasehold to the extent of such costs and expenses.
SECTION 324 Release of Construction Covenants
a. Promptly after Completion of the Improvements as required by this Agreement,
Agency shall deliver to Lessee a Release of Construction Covenants, upon written request
therefor by Lessee. Agency shall not unreasonably withhold any such Release of Construction
Covenants. Such Release of Construction Covenants shall be, and shall so state, conclusive
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determination of satisfactory completion of the Scope of Development required by this
Agreement.
b. The Release of Construction Covenants shall be substantially in the form attached
hereto as Attachment No. 8 so as to permit it to be recorded in the Official Records.
C. If Agency fails to deliver the Release of Construction Covenants within ten (10)
days after written request from Lessee, Agency shall provide Lessee with a written statement of
its reasons (the"Statement of Reasons")within that ten (10)-day period. The statement shall also
set forth the steps Lessee must take to obtain the Release of Construction Covenants. If the
reasons are confined to the immediate unavailability of specific items or materials for
landscaping, or to so-called "punch list" items identified by Agency, Agency will issue the
Release of Construction Covenants upon the posting of a bond by Lessee with Agency in an
amount representing Agency's estimate of the cost to complete the work.
Such Release of Construction Covenants shall not constitute evidence of compliance with
or satisfaction of any obligation of Lessee to any Senior Lender, or any insurer of a mortgage
securing money loaned to finance the Improvements, nor any part thereof. Such Release of
Construction Covenants is not a Notice of Completion as referred to in Section 3093 of the
California Civil Code.
PART 4. USE OF THE PROPERTY
SECTION 401 Uses
a. Lessee covenants and agrees for itself, its successors, its assigns and every
successor in interest to the Property or any part thereof, that Lessee, such successors and such
assignees shall use the Property only for the uses specified in the Redevelopment Plan. No
change in the use of the Property shall be permitted without the prior written approval of
Agency.
b. Notwithstanding the generality of subsection (a), above, Lessee, its successors
and assigns, shall use the Leased Premises and/or Improvements only for the following uses:
operation and maintenance of a public skate park and associated ancillary uses including a retail
skate shop, snack shop, restrooms, and seating areas (collectively, "Skate Park"). Skate Park
shall be free and open to the public from 10 a.m. to 10 p.m., Mondays through Sundays, except
for special events occurring no more than twenty (20) calendar days per year, collectively, and
agreed to, in writing, by Lessee and Agency. Nothing herein shall be deemed to supersede,
waive, or modify any restrictions or prohibitions imposed by the City, in accordance with its
zoning code.
C. Subject to notice and cure rights herein, Lessee's failure to operate Skate Park in
accordance with this Agreement for thirty(30) consecutive days shall be deemed a default of this
Lease.
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SECTION 402 Maintenance
Lessee shall maintain the Property in accordance with the requirements of the Ground
Lease.
SECTION 403 Obligation to Refrain from Discrimination
Lessee covenants and agrees for itself, its successors and its assigns in interest to the
Property or any part thereof, that there shall be no discrimination against or segregation of any
person or group of persons, on account of any basis listed in subdivision (a) or (d) of Section
12955 of the Government Code, as those bases are defined in Sections 12926, 12926.1,
subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of
the Government Code, in the sale, lease, sublease,transfer, use, occupancy, tenure, or enjoyment
of the land, nor shall the transferee itself 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 tenants, lessees, sublessees, subtenants,
or vendees of the land.
SECTION 404 Form of Nondiscrimination and Nonsegregation Clauses
Lessee shall refrain from restricting the rental, sale or lease of the Property and/or
Leasehold on the basis of sex, sexual orientation, marital status, race, color, creed, religion,
ancestry or national origin of any person. All deeds, leases or contracts shall contain or be
subject to substantially the following nondiscrimination or nonsegregation clauses:
a. In deeds: "The grantee herein covenants by and for himself or herself, his or her
heirs, executors, administrators, and assigns, and all persons claiming under or through them,
that there shall be no discrimination against or segregation of, any person or group of persons on
account of any basis listed in subdivision(a)or(d)of Section 12955 of the Government Code, as
those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of
subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, in the sale,
lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the premises herein conveyed,
nor shall the grantee or any person claiming under or through him or her,establish or permit any
practice or practices of discrimination or segregation with reference to the selection, location,
number, use or occupancy of tenants, lessees, subtenants, sublessees, or vendees in the premises
herein conveyed. The foregoing covenants shall run with the land."
b. 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, and this lease is made and accepted upon and subject to the following conditions:
That there shall be no discrimination against or segregation of any person or group of
persons, on account of any basis listed in subdivision (a) or (d) of Section 12955 of the
Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and
paragraph(1) of subdivision(p)of Section 12955,and Section 12955.2 of the Government Code,
in the leasing, 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
27
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 tenants, lessees, sublessees,
subtenants,or veridees in the premises herein leased."
C. In contracts: "There shall be no discrimination against or segregation of any
person or group of persons, on account of any basis listed in subdivision (a) or (d) of Section
12955 of the Government Code, as those bases are defined in Sections 12926, 12926.1,
subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of
the Government Code, in the sale, lease, sublease, transfer, use, occupancy,tenure, or enjoyment
of the land, nor shall the transferee itself 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 tenants, lessees, sublessees, subtenants,
or vendees of the land."
SECTION 405 Effect and Duration of Covenants
The covenants established in this Agreement shall run with the land, without regard to
technical classification and designation, and shall be for the benefit and in favor of and
enforceable against the original Lessee and successors in interest by the Agency or the City.
Unless set forth otherwise, the covenants described in this Part 4 shall commence upon the
Closing and shall be set forth in the Ground Lease.
PART 5. DEFAULTS AND REMEDIES
SECTION 501 Defaults-General
a. Subject to the extensions of time set forth in Section 602, failure or delay by
either party to perform any term or provision of this Agreement constitutes a default under this
Agreement.The party who fails or delays must commence to cure,correct or remedy such failure
or delay and shall complete such cure, correction or remedy with reasonable diligence.
b. The injured party shall give written notice of default to the party in default,
specifying the default complained of by the injured party. Failure or delay in giving such notice
shall not constitute a waiver of any default, nor shall it change the time of default. Except as
otherwise expressly provided in this Agreement, any failures or delays by either party in
asserting any of its rights and remedies as to any default shall not operate as a waiver of any
default or of any such rights or remedies.Delays by either party in asserting any of its rights and
remedies shall not deprive either party of its right to institute and maintain any actions or
proceedings which it may deem necessary to protect, assert or enforce any such rights or
remedies.
C. If a monetary event of default occurs, prior to exercising any remedies hereunder,
the injured party shall give the party in default written notice of such default.The party in default
shall have a period of thirty (30) calendar days after such notice is received or deemed received
within which to cure the default prior to exercise of remedies by the injured party.
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d. If a non-monetary event of default occurs, prior to exercising any remedies
hereunder, the injured party shall give the party in default notice of such default. If the default is
reasonably capable of being cured within thirty (30) calendar days after such notice is received
or deemed received, the party in default shall have such period to effect a cure prior to exercise
of remedies by the injured parry. If the default is such that it is not reasonably capable of being
cured within thirty (30) days after such notice is received, and the party in default (1) initiates
corrective action within said period, and (2) diligently, continually, and in good faith works to
effect a cure as soon as possible, then the party in default shall have such additional time as is
reasonably necessary to cure the default prior to exercise of any remedies by the injured parry,
but in any event no more than one hundred and eighty (180) days of receipt of such notice of
default from the injured party.
SECTION 502 Institution of Legal Actions
In addition to any other rights or remedies (and except as otherwise provided in this
Agreement), either party may institute legal action to cure, correct or remedy any default, to
recover damages for any default, or to obtain any other remedy consistent with the purpose of
this Agreement. Such legal actions must be instituted in the Superior Court of the County of San
Diego, State of California, in any other appropriate court of that county, or in the United States
District Court for the Southern District of California.
SECTION 503 Applicable Law
The laws of the State of California shall govern the interpretation and enforcement of this
Agreement.
SECTION 504 Acceptance of Service of Process
a. In the event that any legal action is commenced by Lessee against the Agency,
service of process on the Agency shall be made by personal service upon the Executive Director,
or in such other manner as may be provided by law.
b. In the event that any legal action is commenced by the Agency against Lessee,
service of process on Lessee shall be made by personal service upon Lessee (or upon the General
Partner or General Partner's managing member, as applicable, or any officer of the General
Partner or General Partner's managing member, as applicable) and shall be valid whether made
within or without the State of California, or in such manner as may be provided by law.
SECTION 505 Rights and Remedies Are Cumulative
Except with respect to rights and remedies expressly declared to be exclusive in this
Agreement,the rights and remedies of the parties are cumulative, and the exercise by either party
of one or more of such rights or remedies shall not preclude the exercise by it, at the same or
different times, of any other rights or remedies for the same default or any other default by the
other party.
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SECTION 506 Damages
Subject to the notice and cure provisions of Section 501, if either party defaults with
regard to any of the provisions of this Agreement, the non-defaulting party shall serve written
notice of such default upon the defaulting party. If the default is not cured within the time
provided in Section 501, the defaulting party shall be liable to the non-defaulting party for any
damages caused by such default, and the non-defaulting parry may thereafter (but not before)
commence an action for damages against the defaulting parry with respect to such default.
Neither Lessee nor Agency shall be entitled to, and hereby waives, any right to seek special or
consequential damages of any kind or nature arising out of or in connection with this Agreement.
SECTION 507 Specific Performance
Subject to the notice and cure provisions of Section 501, if either party defaults with
regard to any of the provisions of this Agreement, the non-defaulting party shall serve written
notice of such default upon the defaulting party. If the default is not cured within the time
provided in Section 501, the non-defaulting party, at its option, may thereafter (but not before)
commence an action for specific performance of the terms of this Agreement pertaining to such
default.
SECTION 508 Reserved.
SECTION 509 Termination by Lessee
Prior to issuance of a Conditional Use Permit ("CUP") for the Lessee's operation of
Skate Park on the Leased Premises, Lessee shall have the right to terminate this Agreement for
convenience. After issuance of the CUP for the Lessee's operation of Skate Park on the Leased
Premises and prior to Closing, subject to the notice and cure provisions of Section 501, Lessee
shall have the right to terminate this Agreement, by providing written notice to the Agency, in
the event of a default by Agency pursuant to this Agreement.
SECTION 510 Termination by Agency
a. Prior to the Closing, subject to the notice and cure provisions of Section 501,
Agency shall have the right to terminate this Agreement, by providing written notice to the
Lessee, in the event of a default by Lessee pursuant to this Agreement.
b. After the Closing, but before Completion, and subject to the notice and cure
provisions of Section 501, Agency shall have the additional right to terminate this Agreement in
the event any of the following defaults shall occur:
1. Lessee fails to commence construction of the Improvements as required by
this Agreement and such breach is not cured within the time provided in Section 501 of this
Agreement,provided that Lessee shall not have obtained an extension or postponement to which
Lessee may be entitled pursuant to Section 602 hereof; or
2. Lessee abandons or substantially suspends construction of the
30
Improvements and such breach is not cured within the time provided in Section 501 of this
Agreement, provided Lessee has not obtained an extension or postponement to which Lessee
may be entitled to pursuant to Section 602 hereof; or
3. Lessee assigns or attempts to assign this Agreement, or any rights herein,
or transfer, or suffer any involuntary transfer of the Property, or any part thereof, in violation of
this Agreement, and such breach is not cured within the time provided in Section 501 of this
Agreement; or
4. Lessee otherwise materially breaches this Agreement, and such breach is
not cured within the time provided in Section 501 of this Agreement.
PART 6. GENERAL PROVISIONS
SECTION 601 Notices
Formal notices, demands and communications between Agency and Lessee shall be
deemed sufficiently given if dispatched by first class mail, registered or certified mail, postage
prepaid,return receipt requested, or by electronic facsimile transmission followed by delivery of
a "hard" copy, or by personal delivery (including by means of professional messenger service,
courier service such as United Parcel Service or Federal Express, or by U.S. Postal Service), to
the addresses of Agency and Lessee as set forth in Sections 105 and 106 hereof. Such written
notices, demands and communications may be sent in the same manner to such other addresses
as either party may from time to time designate by mail. Any notice that is transmitted by
electronic facsimile transmission followed by delivery of a "hard" copy, shall be deemed
delivered upon its transmission; any notice that is personally delivered (including by means of
professional messenger service,courier service such as United Parcel Service or Federal Express,
or by U.S. Postal Service), shall be deemed received on the documented date of receipt; and any
notice that is sent by registered or certified mail,postage prepaid, return receipt required shall be
deemed received on the date of receipt thereof.
SECTION 602 Enforced Delay:Extension of Time of Performance
a. Performance by either party hereunder shall not be deemed to be in default where
delays or defaults are due to war, insurrection, strikes, lock-outs, riots, floods, earthquakes, fires,
casualties, acts of God, acts of the public enemy, epidemics, quarantine restrictions, freight
embargoes, lack of transportation, governmental restrictions or priority, litigation, unusually
severe weather, inability to secure necessary labor, material or tools, delays of any contractor,
sub-contractor or supplier, acts of the other party, acts or failure to act of the City or any other
public or governmental agency or entity (except that acts or failure to act of Agency shall not
excuse performance of Agency), or any causes beyond the control or without the fault of the
party claiming an extension of time to perform.
b. An extension of time for any such cause (a "Force Majeure Delay") shall be for
the period of the enforced delay and shall commence to run from the time of the commencement
of the cause, if notice by the party claiming such extension is sent to the other party within thirty
(30) days of knowledge of the commencement of the cause.Notwithstanding the foregoing, none
31
of the foregoing events shall constitute a Force Majeure Delay unless and until the party
claiming such delay and interference delivers to the other parry written notice describing the
event, its cause, when and how such party obtained knowledge, the date and the event
commenced, and the estimated delay resulting therefrom. Any party claiming a Force Majeure
Delay shall deliver such written notice within thirty (30) days after it obtains actual knowledge
of the event. Times of performance under this Agreement may also be extended in writing by the
Agency and Lessee.
SECTION 603 Conflict of Interest
a. No member, official, or employee of Agency shall have any personal interest,
direct or indirect, in this Agreement, nor shall any such member, official, or employee participate
in any decision relating to the Agreement which affects his or her personal interests or the
interests of any corporation, partnership, or association in which he or she is, directly or
indirectly, interested.
b. Lessee warrants that it has not paid or given, and will not pay or give, any third
person any money or other consideration for obtaining this Agreement.
SECTION 604 Nonliability of Agency Officials and Employees
No member, official, agent, legal counsel or employee of Agency shall be personally
liable to Lessee, or any successor in interest in the event of any default or breach by Agency or
for any amount which may become due to Lessee or successor or on any obligation under the
terms of this Agreement.
SECTION 605 Inspection of Books and Records
Agency shall have the right at all reasonable times to inspect and copy the books and
records of Lessee pertaining to the Property as pertinent to the purposes of this Agreement.
Subject to any litigation arising between the Lessee and Lessor due to rights or obligations
accorded under this Agreement and any obligations of the Agency under the California Public
Records Act,Agency shall maintain as confidential any such materials inspected.
SECTION 606 Approvals
a. Except as otherwise expressly provided in this Agreement, approvals required of
Agency or Lessee in this Agreement, including the attachments hereto, shall not be unreasonably
withheld or delayed. All approvals shall be in writing.Failure by either party to approve a matter
within the time provided for approval of the matter shall not be deemed a disapproval, and
failure by either party to disapprove a matter within the time provided for approval of the matter
shall not be deemed an approval.
b. Except as otherwise expressly provided in this Agreement, approvals required of
the Agency shall be deemed granted by the written approval of the Executive Director. Agency
agrees to provide notice to Lessee of the name of the Executive Director's designee on a timely
basis, and to provide updates from time to time. Notwithstanding the foregoing, the Executive
32
Director may, in his or her sole discretion, refer to the governing body of the Agency any item
requiring Agency approval; otherwise, "Agency approval" means and refers to approval by the
Executive Director.
SECTION 607 Real Estate Commissions; Finder's Fee
The Agency shall not be liable for any real estate commissions,brokerage fees or finder's
fees which may arise from this Agreement. The Agency and Lessee each represent that neither
has engaged any broker, agent or finder in connection with this transaction.
SECTION 608 Construction and Interpretation of Agreement
a. The language in all parts of this Agreement shall in all cases be construed simply,
as a whole and in accordance with its fair meaning and not strictly for or against any party. The
parties hereto acknowledge and agree that this Agreement has been prepared jointly by the
parties and has been the subject of arm's length and careful negotiation over a considerable
period of time, that each party has been given the opportunity to independently review this
Agreement with legal counsel, and that each party has the requisite experience and sophistication
to understand, interpret, and agree to the particular language of the provisions hereof.
Accordingly, in the event of an ambiguity in or dispute regarding the interpretation of this
Agreement, this Agreement shall not be interpreted or construed against the party preparing it,
and instead other rules of interpretation and construction shall be utilized.
b. If any term or provision of this Agreement, the deletion of which would not
adversely affect the receipt of any material benefit by any party hereunder, shall be held by a
court of competent jurisdiction to be invalid or unenforceable, the remainder of this Agreement
shall not be affected thereby and each other term and provision of this Agreement shall be valid
and enforceable to the fullest extent permitted by law. It is the intention of the parties hereto that
in lieu of each clause or provision of this Agreement that is illegal, invalid, or unenforceable,
there be added as a part of this Agreement an enforceable clause or provision as similar in terms
to such illegal, invalid, or unenforceable clause or provision as may be possible.
C. The captions of the articles, sections and subsections herein are inserted solely for
convenience and under no circumstances are they or any of them to be treated or construed as
part of this instrument.
d. References in this instrument to this "Agreement"mean, refer to and include this
instrument as well as any riders, exhibits, addenda and attachments hereto (which are hereby
incorporated herein by this reference) or other documents expressly incorporated by reference in
this instrument. Any references to any covenant, condition, obligation, and/or undertaking
"herein," "hereunder," or "pursuant hereto" (or language of like import) means, refer to, and
include the covenants, obligations, and undertakings existing pursuant to this instrument and any
riders, exhibits, addenda, and attachments or other documents affixed to or expressly
incorporated by reference in this instrument.
e. As used in this Agreement, and as the context may require, the singular includes
the plural and vice versa,and the masculine gender includes the feminine and vice versa.
33
SECTION 609 Time of Essence
Time is of the essence with respect to the performance of each of the covenants and
agreements contained in this Agreement.
SECTION 610 No Partnership
Nothing contained in this Agreement shall be deemed or construed to create a
partnership, joint venture, or any other similar relationship between the parties hereto or cause
Agency to be responsible in any way for the debts or obligations of Lessee or any other Person.
SECTION 611 Compliance with Law
Lessee agrees to comply with all the requirements now in force, or which may hereafter
be in force, of all municipal, county, state and federal authorities, pertaining to the development
and use of the Property and the Improvements, as well as operations conducted thereon. The
judgment of any court of competent jurisdiction, or the admission of Lessee or any lessee or
permittee in any action or proceeding against them, or any of them, whether Agency be a party
thereto or not, that Lessee, lessee or permittee has violated any such ordinance or statute in the
development and use of the Property shall be conclusive of that fact as between Agency and
Lessee.
SECTION 612 Binding Effect
This Agreement, and the terms, provisions, promises, covenants and conditions hereof,
shall be binding upon and shall inure to the benefit of the parties hereto and their respective
heirs, legal representatives, successors and assigns.
SECTION 613 No Third Party Beneficiaries
The parties to this Agreement acknowledge and agree that the provisions of this
Agreement are for the sole benefit of Agency and Lessee, and not for the benefit, directly or
indirectly, of any other person or entity, except for the City, the Senior Lenders and the Tax
Credit Equity Investor, and as otherwise expressly provided herein.
SECTION 614 Authority to Sign
Lessee hereby represents that the persons executing this Agreement on behalf of Lessee
have full authority to do so and to bind Lessee to perform pursuant to the terms and conditions of
this Agreement.
SECTION 615 Incorporation by Reference
Each of the attachments and exhibits attached hereto is incorporated herein by this
reference.
34
SECTION 616 Counterparts
This Agreement may be executed by each party on a separate signature page, and when
the executed signature pages are combined, shall constitute one single instrument.
PART 7. ENTIRE AGREEMENT, WAIVERS AND AMENDMENTS
a. This Agreement is executed in three (3) duplicate originals, each of which is
deemed to be an original. This Agreement, including all of the Attachments appended hereto,
constitutes the entire understanding and agreement of the parties.
b. This Agreement integrates all of the terms and conditions mentioned herein or
incidental hereto, and supersedes all negotiations or previous agreements between the parties
with respect to all or any part of the subject matter hereof.
C. All waivers of the provisions of this Agreement must be in writing and signed by
the appropriate authorities of Agency or Lessee, and all amendments hereto must be in writing
and signed by the appropriate authorities of Agency and Lessee.
PART 8. TIME FOR ACCEPTANCE OF AGREEMENT BY AGENCY
This Agreement, when executed by Lessee and delivered to Agency, must be authorized,
executed and delivered by Agency within sixty (60)days after date of signature by Lessee or this
Agreement may be terminated by Lessee upon written notice to Agency.
IN WITNESS WHEREOF, Agency and Owner have signed this Agreement as of the
dates set opposite their signatures.
SIGNATURES ON NEXT PAGE
35
VF OUTDOOR INC.,A DELAWARE
CORPORATION, DBA"VANS"
Date: By:
Doug Palladini,Vice President of Marketing
THE CITY OF HUNTINGTON BEACH
REDEVELOPMENT AGENCY(AGENCY)
Date: By:
Chairman
ATTEST:
Agency Secretary
REVIEWED AND
APPROVED AS TO FORM:
Agency General Counsel
By:
Jennifer McGrath
REVIEWED AND
APPROVED AS TO FORM:
KANE, BALLMER&BERKMAN
By:
Agency Special Counsel
Susan Y. Cola
36
ATTACHMENT NO. 1
SITE MAP
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ATTACHMENT NO.2
LEGAL DESCRIPTION
[behind this page]
LEGAL DESCRIPTION
A parcel of land situated in Section 14, Township 5 South, Range 11 West, Rancho La
Bolsa Chica, partly in the City of Westminster and partly in the City of Huntington Beach,
County of Orange, State of California, as per map recorded in Book 51, page 13 of
Miscellaneous Maps, in the Office of the County Recorder of said County and more particularly
described as follows:
The West 100.00 feet of the East 115.00 feet of the West Half of said Section 14.
EXCEPT that portion thereof lying southerly of a line that is parallel with and distant
northerly 5.00 feet, measured radially from the center line of Center Street, as said center line is
shown on Parcel Map No. 81-571, in the City of Huntington Beach, County of Orange, State of
California, filed In Book 169, pages 45 and 46 of Parcel Maps, in the office of said county
recorder.
ALSO EXCEPT that portion thereof lying northerly of that certain line described in that
Corporate Grant Deed recorded April 10, 1968, in Book 8568, page 143 of Official Records, in
the office of said county recorder,described as follows:
Commencing at the southeast corner of the Northwest Quarter of said Section 14; thence
along the East line of said Northwest Quarter, North 0° 16' 03" East, 527.65 feet to the TRUE
POINT OF BEGINNING for this exception; thence North 44' 01' 46" West, 28.63 feet; thence
North 89°43' 57" West, 95 feet to the westerly line of said East 115.00 feet of said Northwest
Quarter.
Reserving unto Grantor an easement for railroad, transportation, communication and
pipeline purposes over, along and across that portion of the hereinabove described parcel of land
lying easterly of a line parallel with and distant 15 feet westerly, measured at right angles, from
the existing center line of Southern Pacific Transportation Company's main track (Stanton
Branch).
APN: 142-073-03
ATTACHMENT NO. 3
METHOD OF FINANCING
[behind this page]
ATTACHMENT NO.3
METHOD OF FINANCING
This is the Method of Financing attached to the Ground Lease and Improvement
Agreement ("GLIA") by and between the CITY OF HUNTINGTON BEACH
REDEVELOPMENT AGENCY (the "Agency") and VF OUTDOOR, INC., a Delaware
Corporation, doing business as "Vans" (the "Developer") as of , 2010,
pertaining to the development of a public skate park with ancillary uses, including retail skate
shop, snack shop, restrooms, and seating areas ("the Project"). Any capitalized term not
otherwise defined herein shall have the meaning ascribed to such term in the GLIA.
1. Total Development Cost. The parties estimate that the cost of the development
and construction of the Project will be approximately$[insert amount], to be provided as follows
in Section 2 of this Method of Financing.
2. Sources of Financing. The parties anticipate that the costs of the development
and construction of the Project (the "Development Costs") shall be financed with a combination
of loans and Developer's equity, as set forth in the following chart:
Source of Funds Construction
Construction Loan $
Equity $
TOTAL FINANCING $
3. Project Budget. The parties anticipate that all estimated Development Costs for
the Project shall be as set forth in the Project Budget ("Development Costs") attached to the
GLIA as Attachment No. 3A (the"Project Budget"), incorporated herein by this reference. Any
Material Change as hereinafter defined shall require the approval of the Executive Director or
designee.For the purposes herein, a"Material Change"means any change that would(i) increase
or decrease the total Project Budget or (ii) increase or decrease a line item by more than 10%.
Except as provided in the previous sentence, the Executive Director or designee shall not
unreasonably withhold approval of any requested Material Change if, within fifteen (15) working
days after receipt of the request,Agency receives such explanation and/or back-up information in
connection with its approval of the Material Change, and if the following conditions are
satisfied:
a. to the extent the Material Change is limited to a reallocation of budgeted
funds among Project Budget line items without any increase in the total
Project Budget, (i) the funds in the line item(s) to be reduced remain
Attachment No. 3
Page 1 of 2
sufficient for completion of the Project, and(ii)the requested increase in
one or more line item(s) is to be used to pay approved costs; and
b. to the extent the Material Change involves an increase in the total Project
Budget, (i) additional funds in an amount equal to the increase in the total
Project Budget will be provided by Developer or other Permitted
Mortgagee and (ii) the requested increase in the Project Budget is to be
used to pay approved costs.
Upon approval of any Material Change, the Project Budget shall be replaced by the approved
revised Project Budget.
4. Evidence of Financing. The sum of the sources of construction financing
described in Section 2.1, above, shall be sufficient at all times to pay all Development Costs as set
forth in the most recently approved Project Budget. Within the time provided therefor in the
Schedule of Performance, Developer shall submit, for approval by the Executive Director or
designee, evidence of construction financing. The Executive Director or designee shall not
unreasonably withhold his or her approval. Developer shall provide written certification to the
Agency that such construction financing documents are correct copies of the actual documents to
be executed by Developer on or before the Closing Date. To the extent that the sum of the sources
of funds described in Section 2.1, above, is insufficient to pay all Development Costs, Developer
shall demonstrate the availability prior to the Closing of increased sources at least equal to the
shortfall.
5. Subordination. Any deed of trust recorded to secure construction and/or
permanent financing for the Project shall be subordinate to the Ground Lease.
Attachment No. 3
Page 2 of 2
ATTACHMENT NO. 3A
PROJECT BUDGET
TO BE DETERMINED
ATTACHMENT NO.4
SCOPE OF DEVELOPMENT
[behind this page]
ATTACE[AHNT NO.4
SCOPE OF DEVELOPMENT
I. GENERAL DESCRIPTION
This is the Scope of Development attached to the Ground Lease and Improvement Agreement
("GLIA")by and between the CITY OF HUNTINGTON BEACH REDEVELOPMENT AGENCY
(the"Agency")and VF OUTDOOR,INC.,a Delaware corporation(the"Lessee")as of ,
2010 pertaining to development of the Property.Any capitalized term not otherwise defined herein
shall have the meaning ascribed to such term in the GLIA.
II. IMPROVEMENTS
At a minimum the Project shall include 12,000 square feet of skate park plaza area, 15,000
square feet of skate bowl area with two(2)public restrooms and drinking fountain,a 4,000 square
foot skate shop/concession building with employee only restroom, 15,000 square feet of turf/walking
area and 70 paved parking stalls (collectively, "Skate Park").The Project shall also include shade
areas throughout the Project at prime viewing areas and restrooms which shall be accessible to the
public.The skate park shall meet and comply with all ADA standards.
The Project construction quality and design shall resemble that of other skate parks
developed by other local municipalities.Design and construction details shall meet all state,county
and local building codes.
III. SIGNAGE
Lessee may install signage on the Leased Premises to brand Skate Park using Lessee's name,
logo and trademarks,including,without limitation, street facing signage(collectively,"Signage");
provided,however that the Signage corms to the City's codes and ordinances. Furthermore,nothing
herein shall be interpreted as authorization to waive Lessee's obligations to apply for and obtain
required permits before installing any Signage.
Attachment No.4
Page 1 of 1
ATTACHMENT NO. 5
SCHEDULE OF PERFORMANCE
[behind this page]
ATTACHMENT NO.5
SCHEDULE OF PERFORMANCE
I. DEVELOPMENT
1. Submission-Schematic/Design Development Within fifteen (15) days after execution of
Drawings. Developer shall prepare and this GLIA by the Agency and in any event
submit to Agency the schematic/design prior to Close of Escrow.
development drawings for the Project.
2. Approval - Schematic Drawings. Agency Within fifteen(5)business days after receipt
shall approve or disapprove the by Agency.
schematic/design development drawings for
the Project.
3. Submission - Preliminary Construction Within eight (8) months of Agency's
Drawings,.and Preliminary Landscaping and approval of the Schematic Drawings and in
Grading Plans. Developer shall prepare and any event prior to Close of Escrow.
submit to Agency preliminary construction
drawings and preliminary landscaping and
grading plans for the Property.
4. Approval — Preliminary Construction Within fifteen(15)business days after receipt
Drawings, and Preliminary Landscaping and by Agency.
Grading Plans. Agency shall approve or
disapprove the preliminary construction
drawings and preliminary landscaping and
grading plans for the Property.
5. Submission - Final Construction Drawings Within forty-five (45) days after Agency
and Landscaping and Finish Grading Plans. approval of the preliminary construction
Developer shall prepare and submit the final drawings and in any event prior to Close of
construction drawings and the final Escrow.
landscaping and finish grading plans for the
Property.
6. Approval -Final Construction Drawings and Within fifteen(15)business days after receipt
Landscaping and Finish Grading Plans. by Agency.
Agency shall approve or disapprove the final
construction drawings and the final
landscaping and finish grading plans for the
Property.
7. Developer's Satisfaction to Conditions At least thirty(30)days prior to the Close of
Attachment No. 5
Page 1 of 2
Precedent to Close of Financing. Developer Escrow.
shall have satisfied all conditions required in
accordance with Section 204.1 of the GLIA.
8. Close of Escrow. Close of Escrow shall No later than one hundred and twenty (120)
occur. days from the Agency's execution of the
GLIA.
9. Commencement of Construction. Developer Within thirty(30)days of Close of Escrow.
shall commence construction of the
Improvements, in accordance with the GLIA
and Scope of Development.
10. Completion of Construction. Developer shall On or before twenty-four (24) months after
complete construction of the Improvements in commencement of construction.
accordance with the GLIA and Scope of
Development
Attachment No. 5
Page 2 of 2
ATTACHMENT NO. 6
ENVIRONMENTAL INDEMNITY
[behind this page]
ATTACHMENT NO. 6
ENVIRONMENTAL INDEMNITY
THIS ENVIRONMENTAL INDEMNITY(this "Indemnity"), dated as of ,
2010, is made by VF Outdoor Inc., a Delaware a corporation, doing business as "Vans" (the
"Lessee"), whose address for purposes of giving notices is 6550 Katella Avenue, Cypress, CA
90363-5102,in favor of the CITY OF HUNTINGTON BEACH REDEVELOPMENT AGENCY,a
public body, corporate and politic ("Agency") and the CITY OF HUNTNGTON BEACH,whose
address for purposes of giving notices is 2000 Main Street,Huntington Beach,CA 92648.
WITNESSETH
WHEREAS, Agency and Lessee entered into that certain Ground Lease and Improvement
Agreement, dated , 2010 (the "GLIA"), pursuant to which Lessee agreed to
construct a full service hotel on the Property (the "Project") in accordance with the terms and
conditions of the GLIA;and
WHEREAS,in furtherance of the GLIA,the Agency leased Property to Lessee,subject to the
terms and conditions of that certain Ground Lease entered into by and between Agency and Lessee,
dated , 2010 ("Ground Lease"); and
WHEREAS,Lessee has agreed to execute and deliver to the Agency this Indemnity to induce
the Agency to enter into each Ground Lease and the GLIA; and
NOW,THEREFORE, in consideration of the foregoing and in consideration of the mutual
agreements hereinafter set forth, Lessee hereby agrees with the Agency as follows:
SECTION 1. DEFINITIONS
All capitalized terms used in this Indemnity shall have the meanings ascribed to them in the
GLIA with the same force and effect as if set forth in full below.
SECTION 2. COVENANTS AND INDEMNITY
The following covenants and indemnities are hereby given and made by Lessee:
2.1 Covenants.
(a) Lessee covenants that it shall (i) comply with any and all laws, regulations,
and/or orders which may be promulgated, from time to time,with respect to the discharge and/or
removal of Hazardous Materials, (ii)pay immediately when due the costs of the removal of,or any
other action required by law with respect to, any such Hazardous Materials, and (iii) keep the
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Property free of any lien imposed pursuant to any such laws,regulations, or orders.
(b) Lessee covenants that the Property will not be used for any activities
involving, directly or indirectly,the use, generation,treatment, storage,release,or disposal of any
Hazardous Materials,except for de minimis quantities used at the Property in compliance with all
applicable environmental laws and required in connection with the routine operation and
maintenance of the Property(the"De Minimis Exception").
(c) Lessee further agrees that,except with respect to the De Minimis Exception,
Lessee shall not release or dispose of any Hazardous Materials on the Property without the express
written approval of the Agency and that any such release or disposal shall be effected in strict
compliance with all applicable laws and all conditions, if any,established by the Agency.
(d) The Agency shall have the right, at any time,to conduct an environmental
audit ("Agency Audit"), at the Agency's expense, unless Hazardous Materials (other than in
connection with the De Minimis Exception)are found,then at Lessee's sole cost and expense,and
Lessee shall cooperate in the conduct of any such environmental audit but in no event shall such
audit be conducted unless the Agency reasonably believes that such audit is warranted.Other than in
an emergency, such audit shall be conducted only after prior notice has been given to Lessee and
only in the presence of a representative of Lessee. The Agency Audit shall not interfere with
occupancy or ongoing work. Agency shall obtain Lessee's prior approval of any work plan that
involves invasive or destructive testing or work, with Lessee's approval to not be unreasonably
withheld. Agency shall at its sole expense promptly repair and restore any damage to the Property
caused by the Agency's entry. If Agency believes it has found evidence of Hazardous Materials,
Agency shall cooperate with the Lessee by providing the Lessee with complete information,
including any inspection logs,reports, etc.
(e) Lessee shall not install, or permit to be installed, on the Property friable
asbestos or any substance containing asbestos and deemed hazardous by federal or state regulations
respecting such material and with respect to such material Lessee shall remove or cause to be
removed any such material.If Lessee shall fail to comply with this subsection within the cure period
permitted under applicable law,regulation, or order,the Agency may do whatever is necessary to
eliminate said substances from the premises or to otherwise comply with the applicable law,
regulation,or order,and the reasonable costs thereof shall be added to the Obligations(as hereinafter
defined)of Lessee under this Section 2.
(f) Lessee shall immediately advise the Agency in writing of any of the
following: (i)any pending or threatened environmental claim against Lessee or the Property or(ii)
any condition or occurrence on the Property that(A)results in noncompliance by Lessee with any
applicable environmental law,(B)could reasonably be anticipated to cause the Property to be subject
to any restrictions on the ownership, occupancy, use or transferability of the Property under any
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any environmental law,or(C)could reasonably be anticipated to form the basis of an environmental
claim against the Property or Lessee.
2.2 Indemnity. Except as to the active negligence or willful misconduct of the Agency or
its employees, officers or agents, Lessee shall indemnify, protect, and hold the Agency and City
harmless from and against any and all damages, losses, liabilities, obligations, penalties, claims,
litigation, demands, defenses, judgments, suits, proceedings, costs, disbursements, or expenses
(including,without limitation,attorneys'and experts'fees and disbursements)of any kind or of any
nature whatsoever (collectively, the "Obligations") which may at any time be imposed upon,
incurred by or asserted or awarded against the Agency and arising from or out of.
(a) The presence of any Hazardous Materials on,in,under,or affecting all or any
portion of the Property or any surrounding areas;
(b) The enforcement by the Agency of any of the provisions ofthis Section 2.2 or
the assertion by Lessee of any defense to its obligations hereunder.
SECTION 3. LESSEE'S UNCONDITIONAL OBLIGATIONS
3.1 Unconditional Obligations. Lessee hereby agrees that the Obligations will be paid
and performed strictly in accordance with the terms of this Indemnity, regardless of any law,
regulation,or order now or hereafter in effect in any jurisdiction affecting the GLIA or affecting any
of the rights of the Agency with respect thereto. The obligations of Lessee hereunder shall be
absolute and unconditional irrespective of:
(a) The validity,regularity,or enforceability ofthe GLIA or any other instrument
or document executed or delivered in connection therewith(collectively,the
"GLIA Documents");
(b) Any alteration, amendment, modification, release, termination, or
cancellation of any of the GLIA Documents, or any change in the time,
manner,or place of payment of, or in any other term in respect of,all or any
of the obligations of Lessee contained in any of the GLIA Documents;
(c) Any waiver of,or consent to any departure from,any provision contained in
the GLIA Documents;
(d) Any exchange,addition,subordination,or release of,or non-perfection of any
lien on or security interest in, any collateral for the GLIA Documents.
(e) The insolvency or bankruptcy of Lessee, or of any indemnitor or guarantor
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under any other indemnity or guarantee given in respect of the GLIA
Documents;or
(f) Any other circumstance that might otherwise constitute a defense available
to,or a discharge of,Lessee or any other indemnitor or guarantor with respect
to the GLIA Documents, or any or all of the Obligations.
3.2 Continuation. This Indemnity(a)is a continuing indemnity and shall remain in full
force and effect.until the satisfaction in full of all of the Obligations.
SECTION 4. WAIVER
Lessee hereby waives the following:
(a) Promptness and diligence;
(b) Notice of acceptance and notice of the incurrence of any obligation by Lessee;
(c) Notice of any action taken by the Agency or any other interested party under this
Indemnity and/or the GLIA Documents(but only to the extent it affects rights under this Indemnity),
or under any other agreement or instrument relating thereto;
(d) All other notices, demands, and protests, and all other formalities of every kind, in
connection with the enforcement of the Obligations,the omission of or delay in which,but for the
provisions of this Section 4, might constitute grounds for relieving Lessee of its Obligations
hereunder;
(e) Any requirement that the Agency protect, secure, perfect, or insure any security
interest or lien in or on any property subject thereto;
(f) Any requirement that the Agency exhaust any right or take any action against Lessee
or any other person or collateral; and
(g) Any defense that may arise by reason of:
(1) The incapacity,lack of authority,death or disability of,or revocation hereof
by, any person or persons; or
(2) The failure of the Agency to file or enforce any claim against the estate(in
probate,bankruptcy, or any other proceedings)of any person or persons.
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SECTION 5. NOTICES
Any notice, demand, statement,request,or consent made hereunder shall be in writing and
shall be personally served, mailed by first-class registered mail, return receipt requested, to the
address set forth in the first paragraph of this Indemnity, above, or given by telecopier to the
telecopier numbers stated below, with confirmations mailed by first class registered mail,return
receipt requested to the address set forth above,of the parry to whom such notice is to be given(or to
such other address as the parties hereto, shall designate in writing):
To Agency: City of Huntington Beach Redevelopment Agency
2000 Main Street
Huntington Beach,California 92648
Attention: Stanley Smalewitz,Economic Development Director
Phone: (714) 526-5582
Fax: (714) 375-5087
With a copy to: Kane,Ballmer&Berkman
515 S.Figueroa Street, Suite 1850
Los Angeles, California 90071
Attn: Susan Y. Cola
Tel: 213-617-0480
Fax: 213-625-0931
To Lessee: VF Outdoor,Inc., a Delaware Corporation dba Vans
6550 Katella Avenue
Cypress, CA 90363-5102
Attn: Doug Palladini
Tel: (714) 889-6702
Fax: (714)
With a copy to: Robert Frisbee,Esq.
Connolly, Finkel&Gosselin LLP
601 S. Figueroa Street, Suite 2610
Los Angeles, Ca 90017-5704
Main Line: (213)452-6500
Direct Dial: (213)452-6506
Facsimile: (213) 622-2171
Attachment No. 6
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Any notice that is transmitted by electronic facsimile transmission followed by delivery of a"hard"
copy, shall be deemed delivered upon its transmission; any notice that is personally delivered
(including by means ofprofessional messenger service,courier service such as United Parcel Service
or Federal Express,or by U.S.Postal Service),shall be deemed received on the documented date of
receipt; and any notice that is sent by registered or certified mail, postage prepaid, return receipt
required shall be deemed received on the date of receipt thereof.
SECTION 6. MISCELLANEOUS
6.1 Lessee shall make any payment required to be made hereunder in lawful money of the
United States of America, and in same day funds,to the Agency at its address specified in the first
paragraph hereof.
6.2 No amendment of any provision of this Indemnity shall be effective unless it is in
writing and signed by Lessee and the Agency,and no waiver of any provision of this Indemnity,and
no consent to any departure by Lessee from any provision of this Indemnity,shall be effective unless
it is in writing and signed by the Agency,and then such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given.
6.3 No failure on the part of the Agency to exercise,and no delay in exercising,any right
hereunder or under the GLIA Documents(as it relates to rights under this Indemnity)shall operate as
a waiver thereof, nor shall any single or partial exercise of any right preclude any other or further
exercise thereof or the exercise of any other right.The rights and remedies of the Agency provided
herein and in the GLIA Documents are cumulative and are in addition to,and not exclusive of,any
rights or remedies provided by law.
6.4 Any provision ofthis Indemnity that is prohibited or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability
without invalidating the remaining portions hereof and without affecting the validity or
enforceability of such provision in any other jurisdiction.
6.5 This Indemnity shall be binding upon Lessee and Lessee's successors and assigns;
provided, however, that from and after the effective date of a Transfer, the transferor shall be
released from all obligations and shall release any rights it may have from the Agency under this
Agreement. This Indemnity shall inure, together with all rights and remedies of the Agency
hereunder,to the benefit of the Agency,its respective directors,officers,employees,and agents,any
successors to the Agency's interest in the Property,any other person who acquires any portion of the
Property at a foreclosure sale or otherwise through the exercise of the Agency's rights and remedies
under the GLIA Documents, any successors to any such person, and all directors, officers,
employees, and agents of all of the aforementioned parties.
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6.6 Lessee hereby(a)irrevocably submits to the jurisdiction of any California or federal
court sitting,in each instance,in Orange County in any action or proceeding arising out of or relating
to this Indemnity, (b)waives any defense based on doctrines of venue or forum non convenient or
similar rules or doctrines, and(c)irrevocably agrees that all claims in respect of any such action or
proceeding may be heard and determined in such California or federal court. Lessee irrevocably
consents to the service of any and all process which may be required or permitted in any such action
or proceeding to the address specified in the first paragraph of this Indemnity,above.Lessee agrees
that a final judgment in any such action or proceeding shall be
inclusive and may be enforced in any other jurisdiction by suit on the judgment or in any other
manner provided by law.
6.7 The title of this document and the captions used herein are inserted only as a matter of
convenience and for reference and shall in no way define,limit,or describe the scope or the intent of
this Indemnity or any of the provisions hereof.
6.8 This Indemnity shall be governed by, and construed and interpreted in accordance
with, the laws of the State of California applicable to contracts made and to be performed therein,
except to the extent that the laws of the United States preempt the laws of the State of California.
6.9 This Indemnity may be executed in any number of counterparts,each of which shall
constitute an original and all of which together shall constitute one agreement.
IN WITNESS WHEREOF,Lessee has duly executed this Indemnity as of the date first
set forth above.
THE CITY OF HUNTINGTON BEACH
REDEVELOPMENT AGENCY(Agency)
Date: By:
Chairman
ATTEST:
Agency Secretary
REVIEWED AND
Attachment No. 6
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APPROVED AS TO FORM:
Agency General Counsel
By:
Jennifer McGrath
APPROVED AS TO FORM:
KANE,BALLMER&BERKMAN
By:
Agency Special Counsel
Susan Y. Cola
VF OUTDOOR INC.,A DELAWARE
CORPORATION,
Date: By:
Doug Palladini,Vice President of
Marketing
Attachment No. 6
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ATTACHMENT NO.7
GROUND LEASE
[behind this page]
ATTACHMENT NO. 7
DRAFT
GROUND LEASE
by and between
THE CITY OF HUNTINGTON BEACH REDEVELOPMENT AGENCY,
"Landlord"
and
VF OUTDOOR,INC.,a Delaware corporation doing business as"Vans"
"Tenant"
TABLE OF CONTENTS
Page
ARTICLE 1 DEFINITIONS........................................................................................................ 1
1.1 Additional Rent....................................................................................................... 1
1.2 Agreed Rate. ........................................................................................................... 1
1.3 Commencement Date..............................................................................................2
1.4 Covenant Period......................................................................................................2
1.5 Defauh(s)................................................................................................................2
1.6 Environmental Laws...............................................................................................2
1.7 Force Majeure Events.............................................................................................2
1.8 Governmental Restrictions. ....................................................................................2
1.9 Improvements. ........................................................................................................2
1.10 Leased Premises......................................................................................................2
1.11 Leasehold Mortgage. ..............................................................................................2
1.12 Lease Year. .............................................................................................................2
1.13 Lender.....................................................................................................................3
1.14 Losses and Liabilities..............................................................................................3
1.15 Mortgage................................................................................................................. 3
1.16 Parry or Parties........................................................................................................3
1.17 Permitted Exceptions..............................................................................................3
1.18 Rent.........................................................................................................................3
1.19 Representatives.......................................................................................................3
1.20 Term........................................................................................................................3
1.21 Title Insurer.............................................................................................................3
1.22 Title Policy..............................................................................................................3
1.23 Transfer Documents................................................................................................4
1.24 Transfer/Transferee.................................................................................................4
1.25 Uncured Default(s). ................................................................................................4
ARTICLE 2 LEASED PREMISES.............................................................................................4
2.1 Leased Premises......................................................................................................4
2.2 Leased Premises; Condition of Premises;Zoning..................................................4
2.3 Designation as Point of Sale...................................................................................5
ARTICLE3 TERM......................................................................................................................6
3.1 Term........................................................................................................................6
3.2 Reserved..................................................................................................................6
3.3 Possession; Covenant of Quiet Enjoyment.............................................................6
ARTICLE 4 RENT PAYMENTS................................................................................................7
4.1 Rent.........................................................................................................................7
4.2 Base Rent Amounts.................................................................................................7
i
4.3 Additional Rent.......................................................................................................7
4.4 Miscellaneous. ........................................................................................................7
4.5 Triple Net Lease;No Counterclaim,Abatement, etc..............................................7
ARTICLE 5 USE OF THE LEASED PREMISES, MAINTENANCE AND HAZARDOUS
SUBSTANCES....................................................................................................... 8
5.1 Use of the Leased Premises. ................................................................................... 8
5.2 No use of Hazardous Substances on the Leased Premises. ....................................9
5.3 Notice and Remediation by Tenant. .......................................................................9
5.4 Environmental Indemnity. ......................................................................................9
5.5 Termination; Subtenants.........................................................................................9
ARTICLE 6 OWNERSHIP OF IMPROVEMENTS...................................................................9
ARTICLE 7 REPAIRS AND MAINTENANCE...................................................................... 10
7.1 Landlord's Nonresponsibility............................................................................... 10
7.2 Tenant's Duty to Maintain Premises. ................................................................... 10
7.3 Damage or Destruction......................................................................................... 10
ARTICLE 8 LEASEHOLD FINANCING................................................................................ 12
8.1 Conditions To Obtaining Leasehold Mortgage. ................................................... 12
8.2 Lender's Rights..................................................................................................... 12
8.3 Lender Cure Rights............................................................................................... 13
8.4 Obligations of Lender and Purchaser.................................................................... 14
8.5 New Lease............................................................................................................. 15
8.6 New Lease Priority. .............................................................................................. 15
8.7 Liability of New Tenant........................................................................................ 16
8.8 Reserved................................................................................................................ 16
8.9 Legal Proceedings................................................................................................. 16
8.10 Notices.................................................................................................................. 16
8.11 Encumbrance of Landlord's Fee Estate................................................................ 16
8.12 Landlord Right to Cure......................................................................................... 16
ARTICLE 9 ASSIGNMENT AND TRANSFER...................................................................... 17
9.1 Transfer of the Lease,the Leased Premises or the Improvements Thereon......... 17
9.2 Transfer of Tenant's Interest in Lease and Tenant's Ownership.......................... 18
ARTICLE 10 TAXES AND IMPOSITIONS.............................................................................. 18
10.1 Tenant To Pay Impositions................................................................................... 18
10.2 Proration of Impositions. ...................................................................................... 19
10.3 Payment Before Delinquency............................................................................... 19
10.4 Contest of Imposition............................................................................................20
10.5 Tax Returns And Statements. ...............................................................................20
10.6 Possessory Interest Taxes. ....................................................................................21
ii
ARTICLE 11 UTILITY SERVICES...........................................................................................21
11.1 Tenant's Responsibility. .......................................................................................21
11.2 Landlord Has No Responsibility...........................................................................21
ARTICLE12 INSURANCE........................................................................................................21
12.1 Fire and Extended Coverage Insurance................................................................21
12.2 Commercial General Liability Insurance..............................................................22
12.3 Worker's Compensation Insurance.......................................................................22
12.4 Course of Construction Insurance.........................................................................22
12.5 Business Automobile Liability Insurance.............................................................23
12.6 Policy Form, Content And Insurer........................................................................23
12.7 Waiver of Subrogation..........................................................................................24
12.8 Indemnification.....................................................................................................24
ARTICLE 13 CONDEMNATION..............................................................................................25
13.1 General..................................................................................................................25
13.2 Award....................................................................................................................25
13.3 Taking for Temporary Use....................................................................................26
ARTICLE14 DEFAULT............................................................................................................26
14.1 Default...................................................................................................................26
14.2 Notice of Default;Tenant's Right to Cure............................................................27
14.3 Landlord's Right to Cure Tenant's Defaults.........................................................27
14.4 Notice of Landlord's Default;Tenant Waiver......................................................28
14.5 Landlord's Remedies............................................................................................28
14.6 Tenant Remedies;Remedies Cumulative.............................................................30
14.7 No Waiver.............................................................................................................30
14.8 Delays in Performance..........................................................................................30
ARTICLE 15 EXPIRATION;TERMINATION.........................................................................31
ARTICLE 16 NO DISCRIMINATION.......................................................................................31
ARTICLE 17 MISCELLANEOUS .............................................................................................33
17.1 Landlord's Representations and Warranties.........................................................33
17.2 Tenant's Representations and Warranties.............................................................33
17.3 Survival of Representations, Warranties and Covenants......................................34
17.4 Further Assurances...............................................................................................34
17.5 Estoppel Certificate...............................................................................................34
17.6 Notices. .................................................................................................................34
17.7 Attorneys' Fees.....................................................................................................35
17.8 Headings. ..............................................................................................................36
17.9 Rights of Successors.............................................................................................36
17.10 Amendments in Writing........................................................................................36
17.11 No Brokers............................................................................................................36
iii
17.12 Negation of Partnership........................................................................................36
17.13 Time of Essence....................................................................................................37
17.14 Interpretation.........................................................................................................37
17.15 Applicable Law; Severability...............................................................................37
17.16 Exhibits.................................................................................................................37
17.17 Short Form of Lease..............................................................................................37
17.18 Landlord's Rights of Inspection. ..........................................................................37
17.19 Nonmerger of Fee and Leasehold Estates.............................................................38
17.20 Counterparts..........................................................................................................38
17.21 Interest On Past Due Obligations.......................................................................... 38
17.22 Holding Over. .......................................................................................................38
EXHIBITS
EXHIBIT A - LEGAL DESCRIPTION
EXHIBIT B - SITE MAP
EXHIBIT C - MEMORANDUM OF LEASE
EXHIBIT D - ESTOPPEL CERTIFICATE
iv
GROUND LEASE
This Ground Lease("Lease")is dated for reference purposes as of the_day of ,
2011,and is entered into by and between the following(collectively,the"Parties"): THE CITY OF
HUNTINGTON BEACH REDEVELOPMENT AGENCY, a public body corporate and politic
("Agency" or"Landlord"), and VF OUTDOOR, INC., a Delaware corporation doing business as
"Vans" ("Tenant").
RECITALS
A. The subject property (the "Property") is located in the Huntington Beach
Redevelopment Project Area, within the City of Huntington Beach, California, on certain real
property located at[address].
B. This Ground Lease is entered into pursuant to that certain Ground Lease and
Improvement Agreement by and between Landlord (as "Agency") and Tenant (as "Developer")
dated as of ,2010(the"GLIA")for the purpose of providing part of the financing for the
redevelopment of the Property with a public skate park with ancillary uses, including retail skate
shop,restrooms,and seating areas("the Project"),which shall be operated to meet certain criteria,as
more specifically described herein and in the GLIA.GLIA as used herein shall mean,refer to and
include the GLIA,as well as any riders,exhibits,addenda,implementation agreements,amendments
and attachments thereto(which are hereby incorporated herein by this reference)or other documents
expressly incorporated by reference in the GLIA.Any capitalized term not otherwise defined herein
shall have the meaning ascribed to such term in the GLIA.
NOW, THEREFORE, in consideration of the payments to be made hereunder and the
covenants and agreements contained herein, Landlord hereby leases to Tenant and Tenant hereby
leases from Landlord the real property hereinafter defined as the "Leased Premises" upon the
following terms and conditions.
ARTICLE 1
DEFINITIONS
1.1 Additional Rent. The term"Additional Rent"means all sums of money required to be
paid pursuant to the terms of this Lease other than Rent,including,but not limited to,unpaid utilities,
unpaid maintenance,unpaid Impositions, or unpaid liens or encumbrances.
1.2 Agreed Rate. The term"Agreed Rate" as used herein shall mean an annual rate of
interest equal to the lesser of(i)two percent(2%)above the rate of interest announced from time to
time by the Bank of America,Downtown Huntington Beach,Main Branch,as the prime or reference
rate(or,in the event said bank ceases to announce a prime or reference rate or is acquired or ceases
Attachment No.7
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operations and there is no successor bank, another established and financially secure commercial
bank,having a headquarters in California,selected by Landlord),or(ii)the highest rate permitted by
law, if any.
1.3 Commencement Date. The Commencement Date is the date that the Memorandum of
Ground Lease (Attachment No. 7A to the GLIA) is fully executed by Landlord and Tenant and
recorded in the official records of Orange County, signifying the commencement of this Lease.
1.4 Covenant Period. The term"Covenant Period"means Term of this Lease.
1.5 Default(s). The term"Default(s)"as used herein shall have the meaning described in
Section 14.L
1.6 Environmental Laws. The term"Environmental Laws"means any federal,state or
local environmental,health and/or safety-related law,rule,regulation,requirement,order,ordinance,
directive,guideline,permit or permit condition,currently existing and as amended,enacted,issued
or adopted in the future. The term Environmental Laws includes, but is not limited to, the
Comprehensive Environmental Response,Compensation and Liability Act of 1980,as amended,and
similar state or local laws.
1.7 Force Majeure Events. The term "Force Majeure Events" shall have the meaning
described in Section 14.8.
1.8 Governmental Restrictions. The term"Governmental Restrictions" as used herein
shall mean and include any and all laws,statutes,official policies,ordinances,codes,formal decrees,
rulings,regulations,writs,injunctions,orders,rules,conditions of approval or authorizations of any
governmental entity, agency or political subdivision, now in force or hereafter adopted,which are
applicable to the Leased Premises or the use thereof as of the date such term is being applied.
1.9 Improvements. The term "Improvements" shall mean and include all buildings,
structures, fixtures, excavation, parking areas, walkways, drives, landscape areas, underground
installations and all other improvements of whatsoever character constructed on, around,under or
over the Leased Premises.
1.10 Leased Premises. The term"Leased Premises"as used herein shall have the meaning
described in Article 2 below.
1.11 Leasehold Mortgage. The term "Leasehold Mortgage" shall mean any mortgage,
deed of trust, or other established method of securing real property financing, all of which shall be
subject to the conditions and obligations in Articles 8,herein.
1.12 Lease Year. The term "Lease Year" as used herein shall mean each of the
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consecutive twelve(12)calendar month periods beginning on the first day ofthe first calendar month
following the Commencement Date unless the Commencement Date falls on the first day of a
calendar month,in which event the Lease Year shall commence on the Commencement Date. As an
example,"Lease Year 20"means the Lease Year commencing after the nineteenth(19th)anniversary
of the Commencement Date.
1.13 Lender. The term "Lender" shall mean the owner and holder of any Mortgage or
Leasehold Mortgage permitted by this Lease.
1.14 Losses and Liabilities. The term"Losses and Liabilities"as used herein shall mean
all liabilities, claims, losses, causes of action, charges, penalties, damages, costs and expenses
(including reasonable attorneys' fees and costs),of whatsoever character,nature and kind,whether to
property or person, whether by direct or derivative action, and whether known or unknown,
suspected or unsuspected, latent or patent.
1.15 Mortgage. The term "Mortgage" as used herein shall mean and include any
mortgage,deed oftrust,monetary lien,financing conveyance or other voluntary monetary lien of any
kind and all appropriate modes of financing real estate ownership,which encumbers Landlord's fee
estate.
1.16 Party or Parties. The term"Parry"shall refer to one of Landlord or Tenant;the term
"Parties"shall refer to both Landlord and Tenant.
1.1.7 Permitted Exceptions. The term"Permitted Exceptions"shall have the same meaning
as set forth in Section 208 of the GLIA.
1.18 Rent. The term"Rent"as used herein shall have the meaning described in Section
4.1.
1.19 Representatives. The term"Representatives"as used herein shall mean the agents,
contractors, employees (to the extent acting on behalf of such entity and within the scope of its
employment or contract).
1.20 Term. The term"Term"as used herein shall mean the term of this Lease as described
in Section 3.1 below.
1.21 Title Insurer. The term"Title Insurer"as used herein shall mean the Lawyers Title
Insurance Company.
1.22 Title Policy. The term"Title Policy"as used herein shall mean and include the most
current form of ALTA owner's policy of title insurance, dated as of the Commencement Date,and
with liability in the amount of the value of the land and completed improvements,insuring Tenant as
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the owner of the leasehold estate under the Lease.
1.23 Transfer Documents. The term"Transfer Documents"as used herein shall have the
meaning described in Section 9.1.
1.24 Transfer/Transferee. The term"Transfer"as used herein shall mean and include any
conveyance, transfer, sale, assignment, lease, license, concession, franchise, gift, hypothecation,
Mortgage,pledge, encumbrance, or the like,to any person or entity("Transferee"), excluding any
Leasehold Mortgage which encumbers Tenant's leasehold estate created by this Lease.
1.25 Uncured Default(s). The term "Uncured Default(s)" as used herein shall have the
meaning described in Section 14.2.4.
ARTICLE 2
LEASED PREMISES
2.1 Leased Premises.
The premises demised and leased hereunder("Leased Premises")consist of the real property
located in the City of Huntington Beach("City"),County of Orange,State of California, and more
particularly described in the Legal Description for that property attached hereto as Exhibit A, and
depicted on the Site Map attached hereto as Exhibit B,together with all right, title and interest of
Landlord in and to all rights of way or use,servitudes,licenses,easements,tenements,hereditaments
and appurtenances now or hereafter belonging or pertaining to the use of such real property during
the Term. The parties agree that Tenant alone shall be entitled to all federal tax attributes of
ownership of the Improvements.
2.2 Leased Premises; Condition of Premises;Zoning.
Prior to the Commencement Date,Tenant,at Tenant's sole expense,shall have investigated
and approved the physical condition of, and the condition of title with respect to, the Leased
Premises and the Improvements. Tenant acknowledges and agrees that Landlord makes no
representation or warranty, express or implied,written or oral,with respect to the condition of the
Leased Premises or the Improvements,or their fitness or availability for any particular use. Landlord
shall provide the Title Policy(Landlord shall only pay for the CLTA portion of the Title Policy),
insuring Tenant as the owner of the leasehold estate under the Lease, subject only to the Permitted
Exceptions.
2.2.1 Landlord makes no representations, express or implied, with respect to the
legality,fitness,or desirability ofthe Leased Premises for Tenant's intended use.If Tenant desires to
do so,Tenant shall have the right to conduct its own investigation,to its satisfaction,with respect to
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any matters affecting Tenant's ability to use the Leased Premises for Tenant's intended use.
2.2.2 The Leased Premises shall be delivered from Landlord to Tenant in an"as is"
physical condition, with no warranty, express or implied by Landlord as to the presence of
Hazardous Substances,or the condition ofthe soil,its geology or the presence ofknown or unknown
faults. If the condition of the Leased Premises is not in all respects entirely suitable for the use or
uses to which such Leased Premises will be put,then it is the sole responsibility and obligation of
Tenant to place the Leased Premises in all respects in a condition entirely suitable for the
development thereof, solely at Tenant's expense.
2.2.3 Effective on the Commencement Date,Tenant agrees to indemnify, defend
and hold harmless Landlord and City of Huntington Beach("City"),and their respective members,
officers, agents, employees, contractors and consultants, in accordance with the Environmental
Indemnity(Attachment No. 6 to the GLIA).
2.2.4 Effective on the Commencement Date,Tenant waives,releases and discharges
the Landlord,the City and their respective members, officers, employees, agents, contractors and
consultants, from any and all present and future claims, demands, suits, legal and administrative
proceedings, and from all liability for damages, losses, costs, liabilities, fees and expenses
(including, without limitation, attorneys' fees) arising out of or in any way connected with the
Landlord's or Tenant's use, maintenance, ownership or operation of the Leased Premises, any
Hazardous Substances on the Leased Premises, or the existence of Hazardous Substances
contamination in any state on the Leased Premises,however the Hazardous Substances came to be
placed there,except that arising out ofthe active negligence or willful misconduct ofthe Landlord or
its employees, officers or agents. Tenant acknowledges that it is aware of and familiar with the
provisions of Section 1542 of the California Civil Code which provides as follows:
"A general release does not extend to claims which the creditor does not know or
suspect to exist in his or her favor at the time of executing the release, which if
known by him or her must have materially affected his or her settlement with the
debtor."
To the extent of the release set forth in this Section 2.2.4, Tenant hereby waives and
relinquishes all rights and benefits which it may have under Section 1542 of the California Civil
Code.
2.3 Designation as Point of Sale
Tenant and its successors and assigns shall maintain such licenses and permits as may be
required by any governmental agency to conduct taxable sales arising from any project on the
Property and,to the extent permitted by law,shall designate City of Huntington Beach as the"point
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of sale"for all taxable sales and lease transactions occurring from any project on the Property in all
reports to the California State Board of Equalization in accordance with the Bradley-Burns Uniform
Sales and Use Tax Law (Revenue and Taxation Code 72000 et seq.), as it may be amended or
substituted from time to time,and on sales tax returns to the State of California for all taxable sales
occurring at any project on the Property.
ARTICLE 3
TERM
3.1 Term
The Term of this Lease shall be that period of time beginning on the Commencement Date
and ending at midnight on the twentieth(20th)anniversary of the Commencement Date,unless the
Term of this Lease is sooner terminated as provided for herein. Landlord and Tenant agree that
during the period commencing from one year prior to the termination of the Term of this Lease and
ending no later than sixty(60)days prior to the termination of the Term of this Lease,Tenant shall
have an option to extend the Lease Term by ten(10)years, subject to the following conditions:
(i) no default of this Agreement existing at the time of exercise of this Option;
(ii) Agency's written consent,which may be conditioned upon or withheld in Agency's
reasonable discretion, pending Tenant's completion of upgrades or deferred maintenance to the
Improvements.
3.2 Reserved.
3.3 Possession; Covenant of Quiet Enjoyment.
3.3.1 Sole possession of the Leased Premises shall be delivered to Tenant on the
Commencement Date free and clear of any other tenancies or rights of occupancy or use,and Tenant
shall take possession as of that date.
3.3.2 Landlord covenants that,subject to the limitations expressly set forth herein,
Tenant, upon Tenant's timely payment of the Rent and performance of Tenant's covenants and
obligations under this Lease,may quietly have,hold,and enjoy the Leased Premises during the Term
of this Lease, without hindrance or interruption by Landlord or anyone claiming by or through
Landlord, subject to Landlord's right to enter upon the Leased Premises as expressly provided
herein.
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ARTICLE 4
RENT PAYMENTS
4.1 Rent.
The Base Rent for the entire Term shall be payable in advance upon Agency's execution of
this Lease.
4.2 Base Rent Amounts.
The Base Rent shall be ONE DOLLAR AND NO CENTS($1.00)per Lease Year.
4.3 Additional Rent.
Tenant shall pay any as Additional Rent any expenses incurred by the Landlord resulting
from Tenant's failure to pay or cause to be paid any amounts owed to the Landlord under this Lease
or any person or entity, including, but not limited to, unpaid utilities, unpaid maintenance, unpaid
Impositions, or unpaid liens or encumbrances.
4.4 Miscellaneous.
All payments of Rent shall be made to Landlord as they become due in lawful money of the
United States of America in cash or by corporate check drawn on sufficient available funds,at such
place as is designated herein by Landlord for the receipt of notices or such other place as shall be
designated to Tenant by Landlord in writing from time to time.
4.5 Triple Net Lease;No Counterclaim,Abatement, etc.
All Rent shall be paid absolutely net to Landlord,so that this Lease shall yield to Landlord
the full amount of the installments of all Rent throughout the Term,and(unless otherwise expressly
provided herein) shall be paid without assertion of any counterclaim, setoff, deduction or defense
and, except as otherwise expressly provided herein, without abatement, suspension, deferment,
diminution or reduction. Under no circumstances or conditions,whether now existing or hereafter
arising, or whether beyond the present contemplation of the parties, shall Landlord be expected or
required to make any payment of any kind whatsoever,including without limitation,any regular or
special assessments levied against the Property, or be under any obligation or liability hereunder,
except as herein expressly set forth. Landlord shall have no responsibility for any costs of repair,
maintenance or replacement whatsoever. Except as otherwise expressly provided herein,this Lease
shall continue in full force and effect,and the obligations of Tenant hereunder shall not be released,
discharged or otherwise affected, by reason of. (a) any damage to or destruction of the Leased
Premises or Improvements or any part thereof or any Taking of the Leased Premises or the
Improvements or any part thereof;(b)any restriction or prevention of or interference with any use of
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the Leased Premises or the Improvements or any part thereof which materially interferes with
Tenant's possession or use of the Leased Premises(other than a breach of Landlord's covenant of
quiet enjoyment set forth at Section 3.3); (c) any bankruptcy, insolvency, reorganization,
composition, adjustment, dissolution, liquidation or other proceeding relating to Landlord, or any
action taken with respect to this Lease by any trustee or receiver of Landlord with respect to this
Lease by any trustee or receiver ofLandlord,or by any court,in any proceeding;(d)any claim which
Tenant has or might have against Landlord;or(e)any failure on the part of Landlord to perform or
comply with any of the terms hereof or of any other agreement with Tenant. Except as expressly
provided in this Lease, the obligations of Tenant shall be separate and independent covenants and
agreements.
ARTICLE 5
USE OF THE LEASED PREMISES,
MAINTENANCE AND HAZARDOUS SUBSTANCES
5.1 Use of the Leased Premises.
5.1.1 Tenant covenants and agrees for itself, its successors, its assigns and every
successor in interest to the Property or any part thereof, that Tenant, such successors and such
assignees shall use the Property only for the uses specified in the Redevelopment Plan. No change in
the use of the Property shall be permitted without the prior written approval of Agency.
5.1.2 Notwithstanding the generality of Section 5.1.1,Tenant, its successors and
assigns, shall use the Leased Premises and/or Improvements only for the following uses:operation
and maintenance of a public skate park and associated ancillary uses including a retail skate shop,
restrooms, and seating areas (collectively, "Skate Park"). Notwithstanding the generality of
subsection (a), above, Tenant, its successors and assigns, shall use the Leased Premises and/or
Improvements only for the following uses: operation and maintenance of a public skate park and
associated ancillary uses including a retail skate shop, snack shop,restrooms, and seating areas
(collectively,"Skate Park"). Skate Park shall be free and open to the public from 10 a.m.to 10 p.m.,
Mondays through Sundays, except for special events occurring no more than twenty(20)calendar
days per year,collectively,and agreed to,in writing,by Tenant and Agency.Nothing herein shall be
deemed to supersede, waive, or modify any restrictions or prohibitions imposed by the City, in
accordance with its zoning code.
5.1.3 Subject to notice and cure rights herein, Tenant's failure to operate Skate Park in
accordance with this Agreement for thirty (30) consecutive days shall be deemed a default of this
Lease.
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5.2 No use of Hazardous Substances on the Leased Premises.
Tenant covenants and agrees that it shall not, and that any Lease shall provide that the
subtenant shall not, treat, use, store, dispose, release, handle or otherwise manage Hazardous
Substances on the Leased Premises except in connection with any construction, operation,
maintenance or repair of the Improvements or in the ordinary course of its business, and that such
conduct shall be done in compliance with all applicable federal, state and local laws, including all
Environmental Laws. Tenant's violation of the foregoing prohibition shall constitute a breach
hereunder and Tenant shall indemnify,hold harmless and defend the Landlord for such violation as
provided below.
5.3 Notice and Remediation by Tenant.
Tenant shall promptly give the Landlord written notice of any reportable release of any
Hazardous Substances,and/or any notices,demands,claims or orders received by Tenant from any
governmental agency pertaining to Hazardous Substances which may affect the Leased Premises.
5.4 Environmental Indemnity.
Tenant agrees to indemnify,defend and hold harmless Agency and City,and their respective
members, officers, agents, employees, contractors and consultants, in accordance with the
Environmental Indemnity(Attachment No. 6 to the GLIA).The indemnity provided in this Section
shall survive the Termination of the Lease.
5.5 Termination; Subtenants.
The agreements and obligations of Tenant under this Article 5 with regard to indemnification
of Landlord shall survive the scheduled termination or sooner expiration ofthe Term for any reason,
for five(5)years and all claims relating thereto must be delivered in writing to Tenant within such
period. No action by any subtenant in violation of its Lease shall constitute a cause to terminate this
Lease provided that Tenant diligently pursues its available remedies against such subtenant.
ARTICLE 6
OWNERSHIP OF IMPROVEMENTS
Notwithstanding anything that is or appears to be to the contrary herein, any and all
Improvements erected on the Leased Premises as permitted by this Lease, as well as any and all
alterations or additions thereto or any other Improvements or fixtures on the Leased Premises,shall
be owned by Tenant until the expiration of the Term or sooner termination of this Lease in
accordance with the terms hereunder. Upon the expiration or sooner termination of this Lease in
accordance with the terms hereunder, all Improvements and all alterations, additions or
improvements thereto that are made to or placed on the Leased Premises by Tenant or any other
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person shall be considered part of the real property of the Leased Premises and shall remain on the
Leased Premises and become the property of Landlord;provided that Tenant shall retain ownership
of and shall be required to remove furniture, equipment,machinery, trade fixtures and removable
personal property except as may be left on the Leased Premises with Landlord's prior written
approval. Except as otherwise expressly provided in this Lease, any non-disturbance agreement
approved by Landlord,any easement approved by Landlord,or any written instrument executed by
Landlord which expressly states that Landlord is waiving its rights under this Article 6 to receive
such Improvements free and clear of all other claims, said Improvements shall become Landlord's
property free and clear of any and all rights to possession and all claims to or against them by Tenant
or any third person or entity.
ARTICLE 7
REPAIRS AND MAINTENANCE
7.1 Landlord's Nonresponsibility.
During the Term of this Lease, Landlord shall not be required to maintain or make any
repairs or replacements of any nature or description whatsoever to the Leased Premises or the
Improvements thereon, except as expressly provided elsewhere herein.
7.2 Tenant's Duty to Maintain Premises.
Except as expressly otherwise provided for herein,throughout the Term ofthis Lease,Tenant
shall,at Tenant's sole cost and expense,maintain or cause to be maintained the Leased Premises and
the Improvements now or hereafter located on the Leased Premises in good and clean condition and
repair,free of debris,and in compliance with(i)all Governmental Restrictions and(ii)all applicable
rules, orders, and regulations of any insurance company insuring all or any part of the Leased
Premises or the Improvements thereon or both,and Tenant shall make or cause to be made whatever
repairs and replacements are required by such enactments or provisions or future enactments or
provisions.
7.3 Damage or Destruction.
7.3.1 In the event any of the Improvements are damaged by an insured casualty,
Tenant promptly shall remove the debris resulting from such event, and within a reasonable time
thereafter shall apply insurance proceeds to the repair or restoration of the Improvements so
damaged to their condition immediately prior to such casualty, such repair or restoration to be
performed in accordance with all provisions of this Lease.
7.3.2 In the event any of the Improvements are damaged by an uninsured casualty,
or the insurance proceeds are insufficient to repair or restore the Improvements to their condition
prior to the casualty,Tenant promptly shall remove the debris resulting from such event,and within
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a reasonable time thereafter shall either(i) repair or restore the Improvements so damaged to the
extent economically feasible, such repair or restoration to be performed in accordance with all
provisions of this Lease,or(ii)erect other Improvements in such location,provided all provisions of
this Lease are complied with to the extent economically feasible, or(iii)if the damage occurs after
the end of the Covenant Period, demolish the damaged portion of such Improvements,restore any
remaining Improvements to an architectural whole,remove all rubbish,and pave or plant grass and
otherwise restore the area to a neat,orderly,sanitary and attractive condition. Landlord shall have
the option to choose among the aforesaid alternatives,subject to rights of permitted Lenders secured
by the Lease,but Tenant shall be obligated to perform one of such alternatives,provided that nothing
herein obligates Tenant to obtain financing exceeding the insurance proceeds, if any. Tenant shall
give notice to Landlord within a reasonable time of which alternative it elects. Nothing contained in
subsections 7.3.1 or 7.3.2 shall be construed as permitting the abatement or reduction of Rent,or the
termination of this Lease.
7.3.3 Notwithstanding anything to the contrary contained in this Lease,if(i)there is
damage to or destruction of the Improvements on the Leased Premises during the last five(5)years
of the Term and the cost of repairing said damage or destruction exceeds the cost of demolishing and
removing the remaining Improvements on the Leased Premises, or (ii) there is damage to or
destruction of the Improvements on the Leased Premises which(1)arises from a cause which is not
required to be insured against under any provision of this Lease,or(2)arises from a cause which is
in fact insured against in compliance with the terms of this Lease, but for which the recoverable
proceeds of such insurance are less than 90%ofthe cost to repair said damage or destruction,and(3)
the cost to Tenant (which is not covered by insurance proceeds) of repairing said damage or
destruction exceeds the cost of demolishing and removing the remaining Improvements on the
Leased Premises, or (iii) there is damage to or destruction of the Improvements on the Leased
Premises and the Governmental Restrictions then in effect with respect to the Leased Premises
prohibit the construction of economically viable replacement Improvements with respect to a use
which Tenant either has the right to engage in under this Lease or which Tenant desires to engage in
and Landlord will permit to be engaged in,then Tenant shall have the option to terminate this Lease,
subject to Tenant's satisfaction of all of the following requirements: (A)Tenant shall,within ninety
(90) days after the event giving rise to such right to terminate, give Landlord written notice of its
election to terminate ("Notice of Election to Terminate"); and (B)Tenant shall, at the election of
Landlord(which election shall be communicated in writing to Tenant("Demolition Notice")within
thirty(30)days of Landlord's receipt of the Notice of Election to Terminate),raze and remove the
damaged or destroyed Improvements and any other Improvements on the Leased Premises that
Landlord may designate in the Demolition Notice,and shall complete said demolition and removal
and shall vacate the Improvements on the Leased Premises within ninety(90) days of Landlord's
delivery of the Demolition Notice(which vacation date shall fix the termination date of this Lease);
and (C) Tenant shall comply with all provisions of Article 15 of this Lease consistent with this
Section 7.3 prior to or concurrent with Tenant's vacation of the Improvements on the Leased
Premises. If Tenant fails to satisfy the requirements set forth in(B)or(C)above,the failure to meet
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such conditions shall not invalidate the termination of this Lease, although, in that event and
notwithstanding anything else in this Lease that may be or appear to be to the contrary,Tenant shall
remain liable to Landlord in damages for such breach. Any and all property damage insurance
proceeds (exclusive of any proceeds applicable to Tenant's trade fixtures, equipment or personal
property that would be retained by Tenant at the end of the Term)paid to Tenant as a result of the
damage or destruction giving rise to the termination, shall be distributed to the Parties, and any
Lender, as their interest are determined.
7.3.4 Except as expressly provided in this Lease, no deprivation, impairment, or
limitation of use resulting from any damage or destruction or event or work contemplated by this
Section shall entitle Tenant to any offset,abatement,or reduction in Rent,nor to any termination or
extension of the Term hereof.
ARTICLE 8
LEASEHOLD FINANCING
8.1 Conditions To Obtaining Leasehold Mortgage.
8.1.1 Tenant shall not encumber the estate created by this Lease,except as expressly
provided in this Article 8.
8.1.2 Tenant shall have the right, with Landlord's prior written consent, to
encumber Tenant's estate created by this Lease with any Leasehold Mortgage;provided,that such
Leasehold Mortgage shall meet each of the following terms,conditions and requirements:
(i) The Leasehold Mortgage shall contain provisions requiring that copies of all
notices of default under said Leasehold Mortgage must be sent to Landlord;
(ii) The Leasehold Mortgage shall not permit or authorize, or be construed to
permit or authorize, any Lender to devote the Leased Premises to any uses, or to construct any
Improvements thereon,other than those uses and Improvements provided for and authorized by this
Lease.
Notwithstanding anything to the contrary set forth herein, Agency's consent shall not be
required for any Leasehold Mortgage following a foreclosure so long as (i) it is made by an
institutional lender, (ii)any loan secured thereby is fully amortized by the end of the Term of this
Lease,and(iii)the loan to value,determined taking into consideration any applicable covenants,for
any such loan shall not exceed seventy percent(70%).
8.2 Lender's Rights.
So long as any Leasehold Mortgage permitted by this Lease exists, or any Lender (or its
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nominee)owns all or any portion of the leasehold estate created hereunder,and until such time as the
lien(or estate)of any Leasehold Mortgage(or its holder)has been extinguished(which provisions
shall be for the benefit of the Leasehold Mortgagee):
8.2.1 Following Lender's acquisition of Tenant's interest in this Lease pursuant to a
foreclosure or an assignment in lieu of foreclosure,the Lender shall be entitled to assign its interest
in this Lease without Landlord's prior consent,subject to compliance with the terms and conditions
of this Article 8. All subsequent Transfers by the Transferee of Lender shall comply with the
provisions of this Lease, including all restrictions on Transfer set forth in Article 9 hereof; and
8.2.2 If, in connection with securing by Tenant of any Leasehold Mortgage, the
affected Lender requests an amendment with respect to the Lender protection rights set forth in this
Article 8, Landlord agrees not to unreasonably withhold its consent to any such amendment;
provided, that Landlord shall not be required to consent to such an amendment if it would, in
Landlord's reasonable determination, materially impair any of Landlord's rights or materially
increase any of Landlord's obligations under this Lease.
8.2.3 Default Notice. Landlord, upon providing Tenant with any "Notice of
Default"(as defined below)under this Lease, shall,at the same time,provide a copy of such notice
to every Lender who has given written notice to Landlord of its interest in the leasehold estate.From
and after such notice has been given to a Lender, such Lender shall have the same period for
remedying the Default complained of as the cure period provided to Tenant pursuant to Section 14.2,
plus the additional period provided to such Lender as specified below. Landlord shall accept
performance by or at the instigation of such Lender as if the same had been done by Tenant.
8.3 Lender Cure Rights.
Notwithstanding anything to the contrary contained in this Lease, Landlord shall have no
right to terminate this Lease on account of an Uncured Default of Tenant unless, following
expiration of Tenant's applicable cure period,Landlord first provides each Lender not less than sixty
(60)days notice of its intent to terminate,if Tenant's Default can be cured by the payment of money
(a "Monetary Default"), and not less than ninety (90) days notice of its intent to terminate, if
Tenant's Default is of any other type(a"Non-monetary Default'),and each Lender fails to cure such
Monetary Default within sixty(60)days after receipt of such notice or each Lender fails to cure or,
in good faith and with reasonable diligence and continuity,commence to cure such Non-monetary
Default within said ninety (90) day period. If such Non-monetary Default cannot reasonably be
cured by such Lender within said ninety(90) day period(or is such that possession of the Leased
Premises is necessary for Lender to obtain possession and to remedy the Default), the date for
termination shall be extended for such period of time as may be reasonably required to remedy such
Default,if(a)Lender shall have fully cured any default in the payment of any monetary obligations
of Tenant under this Lease within sixty(60) days after its receipt of notice of Landlord's intent to
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terminate,and shall continue to pay currently such monetary obligations as and when the same are
due,and(b)Lender continues its good faith and diligent efforts to remedy such nonmonetary Default
(including its acquisition of possession of the Leased Premises if necessary to the cure of such
Default);provided,however,that in no event shall the Agency be precluded from exercising remedies
if its rights become or are about to become materially jeopardized by any failure to cure a default or the
default is not cured within one hundred eighty(180)days after the Lender's first notice of default is
given.
Nothing in this Section 8.3 shall be construed to require a Lender to continue any foreclosure
proceeding it may have commenced against Tenant after all Defaults have been cured by Lender or
Tenant, and if such Defaults shall be cured and the Lender shall discontinue such foreclosure
proceedings,this Lease shall continue in full force and effect as if Tenant had not defaulted under
this Lease.
8.4 Obligations of Lender and Purchaser.
8.4.1 No Lender, acting in such capacity, shall be deemed to be an assignee or
transferee ofthis Lease or ofthe leasehold estate hereby created so as to require such Lender,in that
capacity,to assume the performance of any of the terms,covenants or conditions on the part of the
Tenant to be performed hereunder, unless and until it acquires the interest of Tenant hereunder.
Upon acquiring Tenant's leasehold,a Lender may,without the consent of Landlord,sell and assign
the leasehold estate on such terms and to such persons and entities as are acceptable to such Lender
and thereafter be relieved of all obligations on the part of Tenant first arising under this Lease after
the date of such sale or assignment;provided,that such assignee of the Lender shall have delivered
to Landlord an assumption agreement as provided by Section 9.1.1(iv) of this Lease. Any such
assignee of Lender or any other assignee of this Lease or of the leasehold estate created hereby by a
conveyance in lieu of foreclosure or any purchaser at any foreclosure sale of this Lease or of the
leasehold estate hereby created (other than, in any case, the Lender), shall be deemed to be a
Transferee of this Lease,and shall be deemed to have agreed to perform all of the terms,covenants
and conditions on the part of the Tenant to be performed hereunder from and after the date of such
purchase and assignment and,from and after such date,shall be subject to all the terms of this Lease,
including all restrictions on further Transfer set forth in Article 9.
8.4.2 Notwithstanding any other provision of this Lease,any bona fide sale of this
Lease and of the leasehold estate hereby created in any proceedings for the foreclosure of any
Leasehold Mortgage or a bona fide assignment or transfer of this Lease and of the leasehold estate
hereby created in lieu of foreclosure of a Leasehold Mortgage(collectively,"Proceedings")shall be
deemed to be a permitted sale,transfer or assignment of this Lease and of the leasehold estate hereby
created so long as Agency is given timely notice of any default of Tenant and of any such Proceeding
and is afforded the cure periods specified in Section 8.3 and so long as any such deed in lieu of
foreclosure has not been undertaken for the purpose or with the intent of circumventing any
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otherwise applicable restrictions upon Transfers of Tenant's interest under this Lease.
Notwithstanding the foregoing,any transfer by foreclosure or deed in lieu of foreclosure to Tenant or
any Affiliate of Tenant shall not be deemed a permitted sale,transfer or assignment of this Lease and
the leasehold estate created hereby.
8.5 New Lease.
Except as expressly provided in the last sentence of this Section,in the event of a termination
of this Lease for any reason including,without limitation,by reason of any Default or the rejection or
disaffirmance of this Lease pursuant to bankruptcy law or other law affecting creditors rights,
Landlord shall give prompt notice thereof to any Lenders who have requested notice from Landlord
in writing and furnished their names and addresses to Landlord. Landlord shall,on written request
of any such Lender, made at any time within ninety (90) days after the giving of such notice by
Landlord,enter into a new lease of the Leased Premises with such Lender within twenty(20)days
after the receipt of such request,which new lease shall be effective as of the date of such termination
of this Lease and shall be for the remainder of the Term ofthis Lease,at the rent provided for herein,
and upon the same terms,covenants, conditions and agreements as are herein contained; provided
that such Lender shall:(i)pay to Landlord at the time of the execution and delivery of said new lease
any and all sums for Rent payable by Tenant hereunder to and including the date thereof,less the net
amount(i.e.,net of all reasonable expenses)of all sums received by Landlord from any subtenants in
occupancy of any part or parts of the Leased Premises and/or Improvements up to the date of
commencement of such new lease; (ii)pay all reasonable costs resulting from the preparation and
execution of such new lease; and(iii) on or prior to the execution and delivery of said new lease,
agree in writing that promptly following the delivery of such new lease,such Lender will perform or
cause to be performed all ofthe other covenants and agreements herein contained on Tenant's part to
be performed to the extent that Tenant shall have failed to perform the same to the date of delivery of
such new lease. Nothing herein contained shall be deemed to impose any obligation on the part of
Landlord to deliver physical possession of the Leased Premises to such Lender unless Landlord at
the time of the execution and delivery of such new lease shall have obtained physical possession
thereof. Notwithstanding anything contained in this Section 8.6 to the contrary,Lender's leasehold
interest in the Leased Premises pursuant to the new lease shall be subject to any claims by Tenant
that it has a right to possession of the Leased Premises.
8.6 New Lease Priority.
8.6.1 It is the intent of the Parties that any new lease made pursuant to Section 8.5
shall have the same priority with respect to any lien,charge or encumbrance on the fee of the Leased
Premises as did this Lease and that the Tenant under such new lease shall have the same right,title
and interest in and to the Leased Premises as Tenant had under this Lease.
8.6.2 The provisions of this Section 8.6 and Sections 8.4 and 8.5 shall survive the
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termination, rejection or disaffirmance of this Lease and shall continue in full force and effect
thereafter to the same extent as if Sections 8.4, 8.5 and this Section 8.6 were a separate and
independent contract made by Landlord,Tenant and such Lender.
8.7 Liability of New Tenant.
The Lender which becomes the tenant under any such new lease made pursuant to Sections
8.4 or 8.5 shall be liable to perform the obligations imposed on the tenant by such new lease as well
as those arising under Sections 8.4 or 8.5 to the same extent as a Lender which acquires Tenant's
estate under this Lease by the foreclosure thereof.
8.8 Reserved.
8.9 Legal Proceedings.
Landlord shall give each Lender who has given written notice of its interest in the leasehold
estate to Landlord prompt notice of any legal proceedings between Landlord and Tenant involving
obligations under this Lease. Each said Lender shall have the right to intervene in any such
proceeding to protect its interest and be made a party thereto, and the parties hereto do hereby
consent to such intervention. In the event that any such Lender shall not elect to intervene or become
a party to any such proceedings,Landlord shall give such Lender notice of,and a copy of,any award
or decision made in any such proceedings,which shall be binding on all Lenders not intervening
after receipt of notice of the legal proceeding.
8.10 Notices.
Notices from Landlord to any Lender shall be mailed to the address of the Lender set forth in
the Leasehold Mortgage furnished to Landlord or at such other address as may have been furnished
to Landlord by such Lender. All notices from the Lender to Landlord shall be mailed to the address
designated pursuant to the provisions of Section 17.6 or such other address as Landlord may
designate in writing from time to time. All notices to a Lender or to Landlord shall be given in the
manner described in Section 17.6 and shall in all respects be governed by the provisions of such
Section.
8.11 Encumbrance of Landlord's Fee Estate.
Neither Tenant nor any Lender or Leasehold Mortgagee has any rights to encumber or any
interest in Landlord's fee estate in the Property.
8.12 Landlord Right to Cure.
Notwithstanding anything to the contrary contained in this Lease,Lender shall have no right
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to complete a foreclosure on account of an uncured default of Tenant("Uncured Loan Default")
unless Lender, following expiration of Tenant's applicable cure period under the Leasehold
Mortgage,first provides Landlord not less than sixty (60) days notice of its intent to foreclose, if
Tenant's Uncured Loan Default can be cured by the payment of money ("Tenant Monetary
Default"), and not less than ninety(90)days notice of its intent to terminate, if Tenant's Uncured
Loan Default is of any other type("Tenant Non-monetary Default"),and Landlord fails to cure such
Tenant Monetary Default within sixty(60)days after receipt of such notice or Landlord fails to cure
such Tenant Non-monetary Default within a period of ninety days (90)days. If all Uncured Loan
Defaults have been cured by Landlord in accordance with this Section,the Leasehold Mortgage shall
be reinstated in accordance with California Civil Code Section 2924c. Nothing herein shall be
construed or deemed as an obligation by Landlord to cure any Uncured Loan Default.
ARTICLE 9
ASSIGNMENT AND TRANSFER
9.1 Transfer of the Lease,the Leased Premises or the Improvements Thereon.
(i) Transfer(s)occurring prior to Completion shall be made in accordance with Section
107 of the GLIA. Transfer(s)occurring after Completion shall be subject to the prior written consent
of Landlord,which consent will not be unreasonably withheld or delayed;provided,however,that
notwithstanding anything to the contrary herein, Tenant may Transfer its interest in the Lease to
Permitted Transferees under the same terms and conditions as set forth under Section 107 of the
GLIA.
(ii) For Transfers to a Person other than a Permitted Transferee,Landlord shall have the
right to consider the following factors(among others Landlord reasonably determines are necessary
to consider in evaluating the proposed Transferee)in determining whether or not to consent to any
proposed Transfer of Tenant's rights under or interest in this Lease, the Leased Premises, or the
Improvements constructed thereon: (1)The financial condition of the proposed Transferee and its
ability to perform all of the financial and other obligations of Tenant under this Lease, (2)the
Transferee's business reputation, and (3) the Transferee's ability to demonstrate its capability to
manage or provide for the management of the Improvements located on the Leased Premises.
(iii) Upon any approved or Permitted Transfer ofthis Lease or the Leased Premises(other
than for security purposes), said Transferee shall expressly assume in writing liability for all of
Tenant's obligations accruing under this Lease after the date of such Transfer. Except as to any
Permitted Transferee(as defined in the GLIA),Tenant shall not be released of its obligations under
this Lease unless either (A) pursuant to the process described in subparagraph (ii) immediately
above,Tenant has demonstrated to Landlord's reasonable satisfaction that Transferee's net worth at
the time of the Transfer is equal to or greater than the net worth of Tenant as of the Commencement
Date(adjusted to correspond to any changes in the CPI since the Commencement Date), or(B)an
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individual(s)or an entity(ies)with substantially equal or greater net worth than that of Tenant,has
guaranteed Tenant's obligations under this Lease. If Transferee's net worth satisfies the foregoing
test,then Tenant(as well as former Tenants still liable hereunder) shall be released of all liability
under this Lease accruing after the date of such Transfer.
(iv) At any time Tenant desires to effect a Transfer which requires Landlord's consent
pursuant to clause(ii)or(iii)above,Tenant shall request consent from Landlord in writing and shall
submit to Landlord in connection with such request all proposed agreements and documents
(collectively, the "Transfer Documents") memorializing, facilitating and/or evidencing such
proposed Transfer, as well as all other information Tenant reasonably.believes is necessary for
Landlord to properly evaluate the proposed Transferee pursuant to the criteria set forth in Section
9.1.1(a)(ii) and, if applicable, Section 9.1.1(a)(iii) above. Landlord agrees to advise Tenant in
writing of its decision on Tenant's request for consent to such Transfer,as promptly as possible,and,
in any event,not later than thirty(30)days after Landlord receives all of the items required by the
preceding sentence. If such request is denied,Landlord shall state the reasons for such denial in its
notice of denial of Tenant's request. If Landlord fails to respond to Tenant's request within thirty
(30) days after its receipt of all of the items required above, Tenant's request shall be deemed
disapproved.Upon a deemed disapproval,Tenant may deliver a notice to Landlord which states that
there has been a deemed disapproval, requesting that Landlord consent to the proposed Transfer,
stating that Landlord must consent to or deny the proposed Transfer within thirty (30) days after
Landlord's receipt of this notice, and that failure by Landlord to either consent to or deny such
Transfer within such 30 day period will result in deemed consent.If Landlord fails to consent to or
deny the proposed Transfer within such second thirty (30) day period, the Transfer shall then be
deemed approved by Landlord.
9.2 Transfer of Tenant's Interest in Lease and Tenant's Ownership.
The restrictions on Transfer contained in this Article 9 shall be binding on any successors,
heirs or permitted Transferees of Tenant. The provisions of this Article 9 shall apply to each
successive Transfer and Transferee in the same manner as initially applicable to Tenant under the
terms set forth herein.
ARTICLE 10
TAXES AND IMPOSITIONS
10.1 Tenant To Pay Impositions.
10.1.1 In addition to the Rent and other payments required to be paid under this
Lease,Tenant shall pay or cause to be paid any and all taxes(including possessory interest taxes)
and assessments(collectively,"Impositions")levied or assessed from the Commencement Date until
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the termination of this Lease by any governmental agency or entity on or against the Leased
Premises or any portion thereof,or on or against any interest in the Leased Premises(including the
leasehold interest created by this Lease),or any Improvements or other property in or on the Leased
Premises. The timely payment of the Impositions is a material term of this Lease,and,to the extent
the above-referenced items are payable to Landlord or its successors or assigns,they shall constitute
Additional Rent hereunder.
10.1.2 If,by law,any such Imposition is payable,or may,at the option of Tenant be
paid, in installments, Tenant may pay the same, together with any accrued interest on the unpaid
balance of such Imposition,in such installments as those installments respectively become due and
before any fine, penalty, interest, or cost may be added thereto for the nonpayment of any such
installment and interest.
10.2 Proration of Impositions.
All Impositions levied or assessed on or against the Leased Premises shall be prorated,based
on a 365-day year,between Landlord and Tenant as ofthe Commencement Date of this Lease,and as
of the expiration or earlier termination of this Lease. On service of written request by Landlord,
Tenant shall promptly pay to Landlord Tenant's share of such Impositions paid by Landlord on
Tenant's behalf and,on service of written request by Tenant,Landlord shall promptly pay to Tenant
Landlord's share of such Impositions paid by Tenant on Landlord's behalf.
10.3 Payment Before Delinquency.
Subject to Section 10.4,any and all Impositions and installments of Impositions required to
be paid by Tenant under this Lease shall be paid by Tenant prior to delinquency, and, upon
Landlord's written request, copies of the official and original receipt for the payment of each such
Imposition or installment thereof or other reasonably satisfactory evidence of payment shall
promptly be given to Landlord.
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10.4 Contest of Imposition.
Tenant shall refrain from appealing,challenging or contesting in any manner the validity or
amount of any tax assessment,encumbrance or lien on the Leased Premises;provided,however,that
such prohibition shall not apply to an appeal, challenge or contesting of the erroneous initial
assessment for property tax purposes of the Leased Premises in the fiscal year of the completion of
the Improvements to be constructed pursuant to the Agreement, and further provided that in the
absence of transfer of ownership or new construction Tenant shall not be prohibited from appealing,
challenging or contesting any increases in assessment of the Leased Premises for property tax
purposes over and above the current 2%per annum permitted amount.
Tenant agrees that any such permitted proceedings shall be begun without undue delay after
any contested item is imposed and shall be prosecuted to final adjudication with reasonable dispatch.
Tenant shall give Agency prompt notice in writing of any such contest at least ten(10)days before
filing any contests,except for related to the welfare exemption.Tenant may only exercise its right to
contest an imposition hereunder if the subject legal proceedings shall operate to prevent the
collection of the imposition so contested,or the sale of the Leasehold and/or Improvements,or any
part thereof,to satisfy the same,and only if Tenant shall,prior to the date such imposition is due and
payable, have given such reasonable security as may be required by Agency from time to time in
order to insure the payment of such imposition to prevent any sale, foreclosure or forfeiture of the
Leased Premises, or any part thereof, by reason of such nonpayment. In the event of any such
contest and the final determination thereof adversely to Tenant, Tenant shall, before any fine,
interest, penalty or cost may be added thereto for nonpayment thereof,pay fully and discharge the
amounts involved in or affected by such contest,together with any penalties,fines,interest,costs and
expenses that may have accrued thereon or that may result from any such contest by Tenant and,
after such payment and discharge by Tenant,Agency will promptly return to Tenant such security as
Agency shall have received in connection with such contest.
Agency shall cooperate reasonably in any such contest permitted by this Section 10.4,and
shall execute any documents or pleadings reasonably required for such purpose. Any such
proceedings to contest the validity or amount of Imposition or to recover back any Imposition paid
by Tenant shall be prosecuted by Tenant at Tenant's sole cost and expense; and Tenant shall
indemnify and save harmless Agency against any and all loss,cost or expense of any kind,including,
but not limited to,reasonable attorneys' fees and expenses,which may be imposed upon or incurred
by Agency in connection therewith.
10.5 Tax Returns And Statements.
Tenant shall, as between Landlord and Tenant, have the duty of attending to, preparing,
making,and filing any statement,return,report,or other instrument required or permitted by law in
connection with the determination, equalization,reduction,or payment of any Imposition that is or
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may be levied on or assessed against the Leased Premises, or any portion thereof, or any interest
therein, or any Improvements or other property on the Leased Premises.
10.6 Possessory Interest Taxes.
Landlord is a public entity,and as such,Landlord's underlying fee in the Leased Premises is,
or may be, exempt from property tax assessments. In accordance with California Revenue and
Taxation Code Section 107.6(a), Landlord states that by entering into this Lease, a Possessory
interest in Tenant subject to property taxes will be created. Tenant or any other party in whom the
Possessory interest is vested may be subject to the payment of property taxes levied on such interest.
In addition, pursuant to Health and Safety Code Section 33673, the Leased Premises shall be
assessed and taxed in the same manner as privately owned property,and Tenant shall pay taxes upon
the assessed value of the entire Leased Premises and not merely the assessed value of its leasehold
interest;provided however,that Landlord recognizes that Tenant will apply for and may receive a
welfare exemption for all or a portion of the Improvements.
ARTICLE 11
UTILITY SERVICES
11.1 Tenant's Responsibility.
During the Term of this Lease,Tenant shall pay, or cause to be paid, and shall indemnify,
defend and hold Landlord and the property of Landlord harmless from all charges for water,sewage,
gas,heat,air conditioning,light,power,steam,telephone service and all other services and utilities
used,rendered or supplied to,on or in the Leased Premises during the Term.
11.2 Landlord Has No Responsibility.
Landlord shall not be required to furnish to Tenant or any other occupant of the Leased
Premises during the Term of this Lease,any water,sewage,gas,heat,air conditioning,light,power,
steam, telephone, or any other utilities, equipment, labor, materials or services of any kind
whatsoever.
ARTICLE 12
INSURANCE
12.1 Fire and Extended Coverage Insurance.
Throughout the term of this Lease,Tenant, at no cost or expense to Landlord, shall keep or
cause to be kept,for the mutual benefit of Landlord and Tenant,a policy of standard fire insurance,
with extended coverage and vandalism and malicious mischief endorsements,excluding earthquake
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insurance. The amount of insurance required hereunder shall in no event be less than one hundred
percent(100%)of the full replacement cost of the Improvements on the Leased Premises(exclusive
of foundations and footings), including tenant improvements or betterments. Tenant shall not be
obligated to obtain flood insurance as part of the extended coverage required hereunder. Coverage
shall be"property broad form"and shall include rent interruption insurance,which insurance shall
also cover all real estate taxes and insurance costs for the purposes of continuing rental payments to
the landlord for the duration of the Lease. Coverage shall not include a coinsurance penalty
provision.
12.2 Commercial General Liability Insurance.
Tenant, commencing on the Commencement Date and continuing throughout the Term
hereof, shall maintain or cause to be maintained,at no cost or expense to Landlord,comprehensive
broad form commercial general liability insurance or an equivalent owner contractor protective
policy insuring against claims and liability for personal injury, death, or property damage arising
from the use, occupancy or condition of the Leased Premises, the Improvements thereon, which
insurance shall provide combined single limit protection of at least Four Million Dollars
($4,000,000) for bodily injury or death to one or more persons, and at least Four Million Dollars
($4,000,000)for property damage,which limits shall be increased by Tenant from time to time based
upon Tenant's reasonable assessment of the limits carried by prudent and responsible property
owners of similar property in the geographic area of the Leased Premises.
12.3 Worker's Compensation Insurance.
Tenant shall carry worker's compensation insurance for any employees it has as required by
the State of California, and employer's liability insurance with a liability insurance minimum of
$1,000,000 per accident for bodily injury or disease.
12.4 All-Risk Policies.
Tenant shall maintain or cause to be maintained coverage for builder's risk insurance for the
completed value. Such insurance shall insure against direct physical loss or damage by fire,
lightning,wind,storm,explosion,collapse,flood,vandalism,malicious mischief,glass breakage and
such other causes as are covered by such form of insurance,excluding earthquake(s). Such policy
shall include(1)coverage for demolition costs and debris removal,(2)Replacement cost coverage in
amount sufficient to prevent Tenant from becoming a co-insurer under the terms of the policy,but in
any event in an amount not less than 100%of the then full replacement cost. The replacement cost
coverage shall be for work performed and equipment, supplies and materials furnished to the
Property,or property stored in,or located in any bonded warehouse pending incorporation into the
work, without deduction for physical depreciation. Nothing in this Article, however, shall be
construed to relieve the Tenant of full responsibility for loss of or damage to materials not yet
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incorporated in the work or the Tenant's tools and equipment used to perform the work,whether on
the project site or elsewhere,or to relieve the Tenant of any other responsibility under the Lease. If
the Landlord is damaged by the failure of the Tenant to purchase or maintain such insurance,the
Tenant shall bear all losses attributable thereto and indemnify the Landlord therefrom.
12.5 Business Automobile Liability Insurance.
If not covered by its other insurance policies,Tenant shall carry business liability insurance
on an occurrence form covering owned, hired, leased and non-owned automobiles used by or on
behalf of the Tenant and providing insurance for bodily injury, property damage and contractual
liability.
12.6 Policy Form,Content And Insurer.
12.6.1 All insurance required by the provisions of this Lease shall be carried only
with insurance companies licensed to do business in this state with Best's Financial Rating of A VII
or better or otherwise acceptable to Landlord.
12.6.2 All such policies required by the provisions of this Lease shall be
nonassessable and shall contain language to the effect that (i) the policies are primary and
noncontributing with any insurance that may be carried by Landlord, (ii) the policies cannot be
canceled or materially changed except after thirty (30) days notice by the insurer to Landlord and
(iii)Landlord shall not be liable for any premiums or assessments. The insurer under the policy of
property insurance for the Leased Premises shall also waive its rights of subrogation against
Landlord and Landlord's Representatives.
12.6.3 All deductibles or self-insured retentions shall be commercially reasonable for
companies of similar net worth as Tenant.
12.6.4 Upon Tenant's execution and delivery of this Lease,Tenant shall deliver to
Landlord certificates of insurance evidencing the insurance coverages specified in this Article.
Tenant shall thereafter deliver to Landlord original certificates and amendatory endorsements
evidencing the insurance coverages required by this Article upon renewal of any insurance policy.
Full copies of the policies shall be made available to Landlord upon request. Tenant may provide
any insurance required under this Lease by blanket insurance covering the Leased Premises and any
other location or locations,provided that the specific policy of blanket insurance proposed by Tenant
provides the coverages required by this Lease taking into account the other properties,persons and
risks covered by such blanket policy. All policies shall name Landlord and each Lender as an
additional insured as their interests may appear, and shall contain the following special
endorsements:
"The Huntington Beach Redevelopment Agency,the City of Huntington Beach,and
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their officers, employees and agents, are hereby declared to be additional insureds
under the terms of this policy as to the activities of Landlord, Tenant and its
subtenants, if any.
"This insurance policy will not be canceled without 30 days prior written notice to
the Trustees and the Corporation. The Redevelopment Agency of the City of
Huntington Beach is not liable for the payment of premiums or assessments on this
policy."
12.6.5 For any claims related to this project,the Tenant's insurance coverage shall be
primary insurance as respects the Landlord. Any insurance or self-insurance maintained by the
Landlord shall be excess of the Tenant's insurance and shall not contribute with it.
12.6.6 Tenant shall include all subcontractors as insured under its policies or shall
furnish separate certificates and endorsements for each subcontractor. All coverages for
subcontractors shall be subject to all requirements stated herein.
12.7 Waiver of Subrogation.
Landlord and Tenant hereby release the other and its Representatives from any and all
liability or responsibility to the other or anyone claiming through or under them by way of
subrogation or otherwise for any insured loss or damage to the Leased Premises,any Improvements
thereon, or any of Landlord's or Tenant's property thereon caused by or arising from a fire or any
other event even if such fire or other casualty shall have been caused by the fault or negligence of the
other party, or anyone for whom such party may be responsible.
12.8 Indemnification.
12.8.1 Tenant shall indemnify,defend and hold harmless the Landlord,the City and
their respective members,officers,employees,agents,contractors and consultants,and the property
of Landlord, including the Leased Premises, from and against any and all Losses and Liabilities of
every nature arising out of or in connection with the use, occupancy or enjoyment of the Leased
Premises by Tenant or any person thereon or holding under Tenant arising from any action,inaction,
events or facts occurring during the Term from any cause; provided, that nothing in this Section
12.8.1 or this Lease shall be construed to require Tenant to rebuild the Improvements or to pay
charges to Landlord in connection therewith as a result of damage to or destruction of the
Improvements or any Taking of the Improvements except to the extent expressly provided in the
other Sections ofthis Lease. The above indemnification includes,without limitation,any Losses and
Liabilities arising by reason of:
(1) The death or injury of any person, including Tenant or any person who is an
employee or agent of Tenant,or damage to or destruction of any property,including property owned
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by Tenant or by any person who is an employee or agent of Tenant,from any cause whatever while
such person or property is in or on the Leased Premises;
(2) The death or injury of any person,including Tenant or any person who is an
employee or agent of Tenant,or damage to or destruction of any property,including property owned
by Tenant or any person who is an employee or agent of Tenant,caused or allegedly caused by either
(A)the condition ofthe Leased Premises or some Improvements on said premises,or(B)some act or
omission on the Leased Premises by Tenant or any person in,on,or about the Leased Premises with
the permission and consent of Tenant;
(3) Any work performed on the Leased Premises or materials furnished to said
premises at the insistence or request of Tenant or any person or entity acting for or on behalf of
Tenant; or
(4) Tenant's failure to perform any provision of this Lease or to comply with any
Governmental Restriction.
However, the foregoing indemnification shall not extend to any Loss or Liability to the extent it
arises out of the active negligence or intentional or willful misconduct of Landlord or its
Representatives.
ARTICLE 13
CONDEMNATION
13.1 General.
If any portion of or interest in the Leased Premises shall be condemned(including,without
limitation, inverse condemnation)or taken by any public authority or by any other person or entity
with the power of condemnation,by eminent domain or by purchase in lieu thereof(a"Taking"),and
such Taking renders the Leased Premises unsuitable in the commercially reasonable judgment of
Tenant for Tenant's business operations, Tenant may terminate this Lease by giving notice to
Landlord,such termination to be effective as of the date specified in such notice.If this Lease is not
terminated,Tenant's condemnation award shall be used for the purpose of repairing or restoring the
Improvements in accordance with Section 7.3.
13.2 Award.
Whether or not this Lease is terminated as a result of any Taking,Landlord and Tenant shall
together make one claim for an award for their combined interests in the Leased Premises including
an award for severance damages if less than the whole shall be so taken. The condemnation
proceeds shall be distributed to Landlord and Tenant as their respective interests appear. Both
parties shall have the right to appear in and defend against such action as they deem proper in
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accordance with their own interests at their own expense. To the extent possible,the parties shall
cooperate to maximize the condemnation proceeds payable by reason of the condemnation. Issues
between Landlord and Tenant required to be resolved pursuant to this Article shall be joined in any
such condemnation proceeding to the extent permissible under then applicable procedural rules of
such court of law or equity for the purpose of avoiding multiplicity of actions and minimizing the
expenses of the parties. If this Lease is not terminated pursuant to this Article, it shall continue,
except that commencing with the date on which Tenant is deprived of the use of any portion of the
Leased Premises or of any rights under this Lease,Rent shall be abated or reduced according to the
extent to which Tenant is deprived of the use or benefit of the Leased Premises or of any rights under
this Lease. If the Taking occurs in the last five(5)years of the Term,either Landlord or Tenant,by
written notice to the other,may terminate this Lease,such termination to be effective as of the date
that the condemnor acquires title to all or a portion of the Leased Premises.
13.3 Taking for Temporary Use.
If there is a Taking of the Leased Premises for temporary use for a period equal to or less
than eight (8) months, this Lease shall continue in full force and effect, Tenant shall continue to
comply with Tenant's obligations under this Lease not rendered physically impossible by such
Taking, neither the Term nor the Rent shall be reduced or affected in any way, but the Rent shall
continue at the level of the last Rent paid prior to the Taking(including any subsequent increases in
such Rent provided for under this Lease),and Tenant shall be entitled to any and all Awards for the
use or estate taken. If any such Taking is for a period extending beyond such eight(8)month period,
the Taking shall be treated as a total, substantial or partial taking, as appropriate.
ARTICLE 14
DEFAULT
14.1 Default.
The occurrence of any one or more of the following events shall, after the giving of the
Notice of Default required by Section 14.2 or 14.4 and subject to any applicable cure period,
constitute a default("Default(s)")under this Lease by Tenant or Landlord, as applicable:
14.1.1 any failure by Tenant to pay the Rent or make any other payment required to
be made by Tenant hereunder, on the date the payment is due; or
14.1.2 any breach by Tenant of its obligations under the Specific Plan, 2007
Development Agreement,or GLIA,including,without limitation,failure t o construct the Project in
accordance with the Schedule of Performance or the Scope of Development, and the failure to cure
such default under the terms of such documents; or
14.1.3 any breach by Tenant of its obligations under Section 5.1 of this Lease,
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including,without limitation,the Tenant's failure to continuously operate the Hotel; or
14.1.4 a failure by Tenant or Landlord to observe and perform any other condition,
restriction,covenant,obligation or provision of this Lease to be observed or performed by Tenant or
Landlord,as applicable.
14.2 Notice of Default;Tenant's Right to Cure.
14.2.1 If Tenant has committed or permitted to exist a breach of any provision of this
Lease or has committed or permitted any other breach described above in Section 14.1,Landlord
shall give notice of said breach("Notice of Default")to Tenant.
14.2.2 Tenant shall be in default hereunder from Landlord if Rent for the prior
calendar year is not paid by the twentieth(20th)day of July of each year of the Term or Extended
Term,if applicable(or if the twentieth day falls on a Saturday or Sunday,the first Monday following
the twentieth(20th) day of July).
14.2.3 If the alleged Default is nonpayment of Rent,Additional Rent,Impositions or
other sums to be paid by Tenant as provided in this Lease,Tenant shall have thirty(30)days after the
Notice of Default is given to cure the Default. For any other Default,Tenant shall,after the Notice
of Default,promptly and diligently commence curing the Default and shall have thirty(30)days after
the Notice of Default to complete the cure of said Default;provided,however,that if the nature of
said Default is such that the same cannot reasonably be cured within said thirty (30) day period,
Tenant shall have such additional time as is reasonably necessary to cure such Default,but in any
event no more than one hundred and eighty(180)days of receipt of the Notice of Default.
14.2.4 As used in this Lease,the term"Uncured Default"shall mean any Default by
Tenant which continues uncured, following the giving of a Notice of Default as required by this
Lease, for the entire cure period applicable to that Default under the provisions of this Lease.
14.2.5 Cures offered on behalf of Tenant by the limited partner of Tenant shall be
received by Landlord as if offered by Tenant itself hereunder.
14.3 Landlord's Right to Cure Tenant's Defaults.
After expiration of the applicable time granted to Tenant for curing a particular Default and
upon not less than five (5) business days' notice (unless a longer period of time is otherwise
expressly provided by this Lease, in which case such longer period shall apply),Landlord may,at
Landlord's election, make any payment(other than Rent payable to Landlord) required of Tenant
under this Lease or perform or comply with any covenant or condition imposed on Tenant under this
Lease,and the amount so paid,plus the reasonable cost of any such performance or compliance,plus
interest on such sum at the Agreed Rate,from the date of payment,performance,or compliance until
Attachment No.7
Page 27 of 40
the date of repayment by Tenant, shall be due and payable by Tenant on the first day of the next
calendar month following any such payment,performance or compliance by Landlord as Additional
Rent hereunder. No such act shall constitute a waiver of any Default or of any remedy for Default or
render Landlord liable for any loss or damage resulting from any such act(except to the extent such
loss or damage arises from Landlord's or Landlord's Representatives' active negligence or
intentional or willful misconduct).
14.4 Notice of Landlord's Default;Tenant Waiver.
14.4.1 If Landlord has committed a breach under this Lease,as described in Section
14.1,Tenant shall deliver a Notice of Default to Landlord. Each Notice of Default shall specify the
alleged Default.
14.4.2 Landlord shall, after notice, promptly and diligently commence curing the
Default and shall have sixty (60) days after notice is given to complete the cure of said Default;
provided,however,that if(i)the nature of said Default is such that the same cannot reasonably be
cured within said sixty(60)day period, and(ii)Landlord shall have in good faith commenced and
diligently and continuously pursued such cure,then Landlord shall have such time as is reasonably
necessary to complete the cure of said Default. If it is determined that Landlord is liable to Tenant
for damages pursuant to this Lease Landlord shall pay such damages to Tenant in accordance with
such judgment within 30 days after such determination. Tenant shall have no right to offset any
amount of damages owed by Landlord to Tenant against the Rent owed by Tenant to Landlord under
this Lease. If any amount owed to the Tenant by Landlord is not paid when due,interest shall accrue
on such amount at the Agreed Rate from the date due until the date that such amount is paid. After
expiration of the applicable time for Landlord to cure a particular Default and upon not less than five
(5) business days' notice (unless a longer period of time is otherwise expressly provided by this
Lease, in which case such longer period shall apply),Tenant may, at Tenant's election, make any
payment required of Landlord under this Lease or perform or comply with any covenant or condition
imposed on Landlord under this Lease,and the amount so paid,plus the reasonable cost of any such
performance or compliance,plus interest on such sum at the Agreed Rate,from the date of payment,
performance, or compliance until the date of repayment by Landlord, shall be due and payable by
Landlord on the first day of the next calendar month following any such payment,performance or
compliance by Tenant. No such act shall constitute a waiver of any Default or of any remedy for
Default or render Tenant liable for any loss or damage resulting from any such act(except to the
extent such loss or damage arises from Tenant's or Tenant's Representatives' negligence or
intentional or willful misconduct).
14.5 Landlord's Remedies.
14.5.1 In the event of any Uncured Default,then, subject to the rights of a Lender
expressly set forth in this Lease,Landlord shall have the immediate option to terminate this Lease
Attachment No.7
Page 28 of 40
and all rights of Tenant hereunder by giving written notice of such termination, in which event the
Parties shall have no further obligation to one another under this Lease.
14.5.2 Notwithstanding the provisions of this Article 14 above to the contrary, if,
within twenty-one (21) days of Tenant's receipt of a Notice of Default with respect to a Non-
monetary Default by Tenant,Tenant shall in good faith notify Landlord in writing that it disputes the
existence of such Non-monetary Default and that it requests a determination of the existence or non-
existence of such Non-monetary Default,then Landlord may not exercise its right to terminate this
Lease pursuant to this Article 14 on account of such Non-monetary Default of Tenant until the
expiration of the applicable cure period measured as if such cure period commenced upon the earlier
of(i) the date of the determination that such Non-monetary Default exists, or (ii) the failure by
Tenant to diligently and continuously pursue the legal proceeding.Subject to the rights of Lenders,if
there is no express cure period for the default set forth in the Notice of Default,then the cure periods
shall be the same as those provided in Section 14.2.3 herein. The exercise of Tenant's rights
pursuant to this paragraph shall not impair or delay the ability of Landlord to exercise any rights or
remedies other than to delay Landlord's right to terminate this Lease.
14.5.3 In the event the Uncured Default consists of Tenant's failure to pay Rent to
Landlord,Landlord shall also have the right to pursue all of its legal and equitable remedies against
Tenant for collection of such amounts, including without limitation the remedy described in
California Civil Code Section 1951.4 which provides that a lessor may continue a lease in effect after
Tenant's breach and abandonment and recover rent as it becomes due, if the Tenant has the right to
sublet or assign, subject only to reasonable limitations.
14.5.4 Tenant hereby acknowledges that late payment by Tenant to Landlord ofRent
and other sums due hereunder will cause Landlord to incur costs not contemplated by this Lease,the
exact amount of which will be extremely difficult to ascertain. Such costs include, but are not
limited to,processing and accounting charges and late charges which may be imposed on Landlord
by the terms of any mortgage,deed of trust,or bonded indebtedness. Accordingly,if any installment
of Rent shall not be received by Landlord or its designee within ten(10)days after Rent is due,or if
any Additional Rent or Impositions shall not be received by Landlord within twenty(20)days after
the Notice ofDefault is given,then without any requirement for notice to Tenant,Tenant shall pay to
Landlord a late charge equal to five percent(5%)of such overdue amount. The parties hereby agree
that such late charge represents a fair and reasonable estimate of the costs Landlord will incur by
reason of late payment by Tenant. Acceptance of such late charge to Landlord shall in no event
constitute a waiver of Tenant's default with respect to such overdue amount,nor prevent Landlord
from exercising any of the other rights and remedies granted hereunder.
Attachment No.7
Page 29 of 40
14.6 Tenant Remedies;Remedies Cumulative.
Except as otherwise expressly provided in this Lease, Tenant shall have all rights and
remedies at law or equity upon the occurrence of an Uncured Default by Landlord hereunder
including, but not limited to, the remedies provided under California Civil Code Sections 1951.2
(pursuant to California Civil Code Section 1951.2, the damages Landlord may recover against
Tenant include, but are not limited to, the worth at the time of award of the amount by which the
unpaid Rent for the balance of the Term after the time of award,exceeds the amount of such rental
loss for the same period that the Tenant proves could be reasonably avoided). Each right and remedy
of Landlord and Tenant provided for in this Lease shall be cumulative and shall be in addition to
every other right or remedy provided for in this Lease except as otherwise limited by this Lease,and
the exercise or the beginning of the exercise by Landlord or Tenant of any one or more of the rights
or remedies provided for in this Lease,except as otherwise limited by this Lease,shall not preclude
the simultaneous or later exercise by Landlord or Tenant of any or all other rights or remedies
provided for in this Lease, except as otherwise limited by this Lease.
14.7 No Waiver.
Landlord's or Tenant's failure to enforce any provision of this Lease with respect to a Default
hereunder shall not constitute a waiver of Landlord's or Tenant's right to enforce such provision or
any other provision with respect to any future Default. The acceptance of Rent by Landlord shall not
be deemed a waiver of Landlord's right to enforce any term or provision hereof. The waiver of any
term or condition of this Lease shall not be deemed to be a waiver of any other term or condition
hereof or of any subsequent failure of any term or condition hereof.
14.8 Delays in Performance.
The time within which the Parties hereto shall be required to perform any obligation under
this Lease shall be extended by a period of time equal to the number of days during which
performance of such act is delayed due to an act of God, strikes, lockouts, fire, earthquake, flood,
explosion, war, invasion, insurrection, riot, mob violence, acts of the public enemy, epidemics,
quarantine restrictions, freight embargoes,unusually severe weather,application of governmental
restrictions, regulations or controls not contemplated by this Lease or otherwise reasonably
foreseeable, court order, delays or inaction of independent contractors, remediation of Hazardous
Substances located upon the Leased Premises, litigation brought against the Leased Premises or a
Party without that Party's consent, or other like events which are completely and strictly beyond a
Party's control (the "Force Majeure Events"). The additional grace period or extension of time
provided above shall be equal to the period of delay caused by the above-described event,which
period shall commence to run from the time of the commencement of the cause for delay and shall
terminate upon termination of that cause. A Party wishing to invoke this Section must notify in
writing the other Party to this Lease of that intention within sixty(60)days of the commencement of
Attachment No.7
Page 30 of 40
any such cause for delay and shall,at that time,specify the reasons therefor,the specific provision of
this Lease which will be delayed as a result, and the period of such extension, if known, or if not
known, a reasonable estimate thereof.
ARTICLE 15
EXPIRATION;TERMINATION
At the expiration or earlier termination of this Lease, Tenant shall surrender to Landlord
possession of the Leased Premises free and clear of all liens, encumbrances and Mortgages other
than those,if any,created by Landlord,those which both extend beyond the Term or Extended Term,
if applicable, of this Lease and were expressly approved in writing by Landlord, or those which
encumbered the Leased Premises prior to the Commencement Date of this Lease. Tenant shall leave
the Leased Premises and any other property surrendered in its then existing"as is"condition. As
provided above at Article 6,all property that Tenant is required to surrender shall become Landlord's
property at termination or expiration of this Lease. In addition,Tenant shall surrender to Landlord
all residential leases, and all records related to the residential leases and compliance with the
Agreement Affecting Real Property. All property that Tenant is not required to surrender but that
Tenant does abandon by failure to remove said property within sixty(60)days after the expiration or
earlier termination of this Lease shall, at Landlord's election, become Landlord's property. At
Landlord's request Tenant shall execute and deliver to Landlord assignments of leases and a
quitclaim deed, both in commercially reasonable form and as prepared by Landlord. By the
quitclaim deed Tenant shall quitclaim any right,title or interest which Tenant may have or claim to
have in the Improvements.
ARTICLE 16
NO DISCRIMINATION
16.1 Tenant herein covenants by and for itself, its heirs, executors, administrators and
assigns,and all persons claiming under or through them,and this Lease is made and accepted upon
and subject to the following conditions: There shall be no discrimination against or segregation of
any person or group of persons, on account of any basis listed in subdivision(a) or(d) of Section
12955 of the Government Code,as those bases are defined in Sections 12926, 12926.1,subdivision
(m)and paragraph(1)of subdivision(p)of Section 12955,and Section 12955.2 of the Government
Code,in the sale,lease,sublease,transfer,use,occupancy,tenure,or enjoyment ofthe Property,nor
shall the transferee itself 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 tenants,Tenants, sublessees, subtenants,or vendees of the Property.
16.2 Tenant, its successors and assigns, shall refrain from restricting the rental, sale, or
lease of the Property or any portion thereof, on the basis of race,color, creed, religion, sex, sexual
orientation,marital status,national origin,or ancestry of any person. Every deed,lease,and contract
Attachment No.7
Page 31 of 40
entered into with respect to the Property, or any portion thereof, after the date of this Lease shall
contain or be subject to substantially the following nondiscrimination or nonsegregation clauses:
(1) . In deeds:"The grantee herein covenants by and for himself or herself,his or her heirs,
executors, administrators, and assigns, and all persons claiming under or through them,that there
shall be no discrimination against or segregation of, any person or group of persons on account of
any basis listed in subdivision(a)or(d)of Section 12955 of the Government Code,as those bases
are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of
Section 12955,and Section 12955.2 ofthe Government Code,in the sale, lease,sublease,transfer,
use,occupancy,tenure,or enjoyment of the premises herein conveyed,nor shall the grantee or any
person claiming under or through him or her, establish or permit any practice or practices of
discrimination or segregation with reference to the selection,location,number,use or occupancy of
tenants,Tenants,subtenants,sublessees,or vendees in the premises herein conveyed.The foregoing
covenants shall run with the land."
(2) In leases:"The Tenant 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,and this
lease is made and accepted upon and subject to the following conditions:
That there shall be no discrimination against or segregation of any person or group of
persons,on account of any basis listed in subdivision(a)or(d)of Section 12955 of the Government
Code,as those bases are defined in Sections 12926, 12926.1, subdivision(m)and paragraph(1)of
subdivision (p) of Section 12955, and Section 12955.2 of the Government Code, in the leasing,
subleasing,transferring,use,occupancy,tenure,or enjoyment ofthe premises herein leased nor shall
the Tenant 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 tenants,Tenants, sublessees, subtenants, or vendees in the
premises herein leased."
(3) In contracts:There shall be no discrimination against or segregation of any person or
group of persons, on account of any basis listed in subdivision(a) or(d) of Section 12955 of the
Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and
paragraph(1)of subdivision(p)of Section 12955,and Section 12955.2 ofthe Government Code,in
the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the land, nor shall the
transferee itself 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 tenants,Tenants, sublessees, subtenants,or vendees of the land."
Attachment No.7
Page 32 of 40
ARTICLE 17
MISCELLANEOUS
17.1 Landlord's Representations and Warranties.
Landlord covenants, represents and warrants to Tenant, as of the date of execution of this
Lease, as follows:
17.1.1 Landlord is a public body corporate and politic under the laws of the state of
its incorporation,has full legal right,power, and authority to enter into this Lease and to carry out
and consummate all transactions contemplated by this Lease,and by appropriate corporate action has
duly authorized the execution and delivery of this Lease. Further,Landlord will take those actions
required to remain in good standing under the laws ofthe state of its incorporation during the term of
this Lease.
17.1.2 To Landlord's actual knowledge,the execution,delivery and performance of
this Lease by Landlord does not result in a material violation of, or constitute a material default
under,any provision of any existing agreement,judgment or court order.
17.1.3 Except as revealed in writing by Landlord to Tenant,Landlord has not been
served with any pending, and knows of no threatened,litigation or claims against the Leased
Premises or against Landlord in connection with the Leased Premises which would have an adverse
effect on the transactions contemplated herein.
17.1.4 Copies of all documents heretofore delivered by Landlord to Tenant are true,
correct and complete copies of such documents in all material respects.
17.1.5 Landlord makes no representation or warranty as to the condition of the title to
the Leased Premises except as provided in Section 208 of the GLIA.
17.2 Tenant's Representations and Warranties.
Tenant covenants, represents and warrants to Landlord, as of the date of execution of this
Lease,as follows:
17.2.1 Tenant is a limited partnership or corporation duly formed and in good
standing under the laws of the State of California,has full legal right,power,and authority to enter
into this Lease and to carry out and consummate all transactions contemplated by this Lease,and by
appropriate action has duly authorized the execution and delivery of this Lease. Further,Tenant will
take those actions required to remain in good standing under the laws of the state of California
during the term of this Lease.
Attachment No.7
Page 33 of 40
17.2.2 The representatives of Tenant executing this Lease are fully authorized to
execute the same.
17.2.3 This Lease has been duly authorized,executed,and delivered by Tenant,and
will constitute a legal,valid, and binding agreement of Tenant.
17.2.4 Except as may be revealed in writing by Tenant to Landlord,Tenant has not
been served with any pending,and knows of no threatened,litigation or claims against Tenant which
would have an adverse effect on the transactions contemplated herein.
17.2.5 Copies of all documents heretofore delivered by Tenant to Landlord are true,
correct and complete copies of such documents in all material respects;
17.3 Survival of Representations,Warranties and Covenants.
The respective representations,warranties and covenants contained herein shall survive the
Commencement Date and continue throughout the Term.
17.4 Further Assurances
Each parry hereto will promptly execute and deliver without further consideration such
additional agreement,assignments,endorsements and other documents as the other party hereto may
reasonably request to carry out the purposes of this Lease.
17.5 Estoppel Certificate.
Within thirty(30)days after request by Landlord or Tenant(which request may be from time
to time as often as reasonably required by Landlord or Tenant)Landlord or Tenant shall execute and
deliver to the other,without charge,a statement(the"Estoppel Certificate")in the form of Exhibit D
attached hereto or in such other similar form as Landlord or Tenant may reasonably request. Any
such statement may be conclusively relied upon by any Lender,Sublessees or prospective purchaser
of the Leased Premises.
17.6 Notices.
All notices,requests,demands and other communications under this Lease shall be in writing
and shall be deemed to have been given on(a)the date of service if served personally on the Party to
whom notice is to be given, (b) the date of actual or attempted delivery provided such attempted
delivery is made on a business day, if served by Federal Express, Express Mail or another like
overnight delivery service, (c)the date of actual delivery as shown by the addressee's registry or
Attachment No.7
Page 34 of 40
certification of receipt or the date of addressee's refusal to accept delivery,if mailed to the person to
whom notice is to be given,by first class U.S.mail,registered or certified,postage prepaid,return
receipt requested and properly addressed as follows (or to such other address as either Party may
from time to time direct by written notice given in the manner herein prescribed),or(d)(except for
Permitted Lenders)one day after receipt of a confirmed facsimile transmission provided any such
communication is concurrently given by one of the above methods:
If to Landlord: City of Huntington Beach Redevelopment Agency
2000 Main Street
Huntington Beach,California 92648
Attention: Stanley Smalewitz,
Economic Development Pirector
Tel: (714) 526-5582
Fax: (714)375-5087
With a copy to: Kane,Ballmer&Berkman
515 S.Figueroa Street, Suite 1850
Los Angeles, California 90071
Attn: Susan Y. Cola
Tel: 213-617-0480
Fax:213-625-0931
and, if to Tenant: VF Outdoor,Inc., a Delaware Corporation dba Vans
6550 Katelia Avenue
Cypress,CA 90363-5102
Attn:Doug Palladini
Tel: (714) 889-6702
Fax: (714)
With a copies to: Robert Frisbee,Esq.
Connolly, Finkel&Gosselin LLP
601 S.Figueroa Street,Suite 2610
Los Angeles,Ca 90017-5704
Main Line: (213)452-6500
Direct Dial: (213)452-6506
Facsimile: (213)622-2171
17.7 Attorneys' Fees.
In the event that either Party hereto brings any action or files any proceeding in connection
with the enforcement of its respective rights under this Lease or as a consequence of any breach by
Attachment No.7
Page 35 of 40
the other party of its obligations under this Lease,the prevailing party in such action or proceeding
shall be entitled to have its reasonable attorneys' fees (including allocable costs for any in-house
counsel)and out-of-pocket expenditures paid by the losing Party. The attorneys' fees so recovered
shall include fees for prosecuting or defending any appeal and shall be awarded for any supplemental
proceedings until the final judgment is satisfied in full. In addition to the foregoing award of
attorneys' fees to the prevailing party, the prevailing party in any lawsuit on this Lease shall be
entitled to its attorneys' fees incurred in any post judgment proceedings to collect or enforce the
judgment. This provision is separate and several and shall survive the merger ofthis Lease into any
judgment on this Lease.
17.8 Headings.
The headings used in this Lease are inserted for reference purposes only and do not affect the
interpretation of the terms and conditions hereof.
17.9 Rights of Successors.
All of the rights and obligations of the Parties under this Lease shall bind and inure to the
benefit of their respective heirs, successors and assigns; provided, however, that nothing in this
Section 17.9 shall be construed to limit or waive the provisions concerning restrictions on Transfer
set forth in Article 9 hereof.
17.10 Amendments in Writing.
This Lease cannot be orally amended or modified. Any modification or amendment hereof
must be in writing and signed by the Party to be charged.
17.11 No Brokers.
Each Party shall defend,indemnify,and hold the other harmless from all costs and expenses,
including attorneys' fees, arising out of any and all claims for broker's agent's or finder's fees or
commissions in connection with the negotiation, execution or consummation of this transaction
incurred as a result of any statement, representation or agreement alleged to have been made or
entered into by the indemnifying Parry. Neither Tenant nor Landlord is entitled to receive any
brokerage commission as a consequence of this transaction.
17.12 Negation of Partnership.
Nothing in this Lease shall be construed to render Landlord, a partner,joint venturer, or
associate in any relationship or for any purpose with Tenant,other than that of Landlord and Tenant,
nor shall this Lease be construed to authorize either to act as agent for the other.
Attachment No.7
Page 36 of 40
17.13 Time of Essence.
Time is of the essence of each provision in this Lease,subject to delays caused by any of the
force majeure events set forth in Section 14.8.
17.14 Interpretation.
When the context and construction so require,all words used in the singular herein shall be
deemed to have been used in the plural,and the masculine shall include the feminine and neuter and
vice versa. The term"Person" as used in this Lease means a natural person, corporation, limited
liability company, association, partnership, organization, business, trust, individual, or a
governmental authority, agency, instrumentality or political subdivision, and whenever the word
"day"or"days"is used herein,such shall refer to calendar day or days,unless otherwise specifically
provided herein. Whenever a reference is made herein to a particular Section of this Lease,it shall
mean and include all subsections and subparts thereof. The word "include" or "including" shall
describe examples of the antecedent clause, and shall not be construed to limit the scope of such
clause.
17.15 Applicable Law; Severability.
The interpretation and enforcement of this Lease shall be governed by the laws of the State of
California. Should any part, term,portion or provision of this Lease, or the application thereof to
any person or circumstances be held to be illegal or in conflict with any Governmental Restrictions,
or otherwise be rendered unenforceable or ineffectual, the validity of the remaining parts, terms,
portions or provisions,or the application thereof to other persons or circumstances,shall be deemed
severable and the same shall remain enforceable and valid to the fullest extent permitted by law.
17.16 Exhibits.
All exhibits referred to in this Lease are attached hereto and incorporated herein by reference.
17.17 Short Form of Lease.
Prior to Agency's conveyance of the Leased Premises to Tenant,the Parties shall execute and
thereafter record with the County Recorder of Orange County a Memorandum of Lease, attached
hereto as Exhibit C, giving notice of the existence of this Lease and the Term hereof.
17.18 Landlord's Rights of Inspection.
Landlord and its authorized Representatives shall have the right during business hours,upon
not less than twenty-four(24)hours' oral or written notice to Tenant(except that in the case of an
Attachment No.7
Page 37 of 40
emergency,the existence of which shall be determined by Landlord in its reasonable discretion,no
advance notice shall be required)to enter upon the Leased Premises for purposes of inspecting the
same and exercising its rights under this Lease,provided that such inspections shall not unreasonably
interfere with Tenant's or its subtenant's construction or business activities.Tenant has the right to
designate representatives to accompany the Landlord's representatives on such inspections.Landlord
agrees to coordinate with Tenant to schedule such inspections so that Tenant's representatives may
attend the inspections, in the discretion of such Tenant.
17.19 Nonmerger of Fee and Leasehold Estates.
If both Landlord's and Tenant's estates in the Leased Premises become vested in the same
owner(other than by termination of this Lease following an Uncured Default hereunder,subject to
the rights, if any, of a Lender pursuant to Article 8 above),this Lease shall not be terminated by
application of the doctrine of merger except at the express election of Landlord and with the consent
of each Lender holding a Leasehold Mortgage.
17.20 Counterparts.
This Lease may be executed in any number of counterparts,each of which shall be deemed
an original,but all of which shall constitute one and the same instrument.
17.21 Interest On Past Due Obligations.
Except where another rate of interest is specifically provided for in this Lease,any amount
due from either Party to the other under this Lease which is not paid within ten(10)days after receipt
ofwritten notice that such amount is due(or in the case of Rent,within three(3)days after such Rent
is due), shall bear interest at the Agreed Rate from the date such amount was originally due to and
including the date of payment.
17.22 Holding Over.
Any holding over by Tenant after the expiration of the Term shall be construed as a tenancy
from month to month and shall be subject to all ofthe terms and conditions which are provided for in
this Lease except that the Rent shall be in an amount equal to 150%of the Rent in effect immediately
prior to the expiration of the Term.
IN WITNESS WHEREOF, the parties have executed this Lease as of the date first above
written.
SIGNATURES ON NEXT PAGE
Attachment No.7
Page 38 of 40
TENANT:
VF OUTDOOR INC.,A DELAWARE
CORPORATION,DBA"VANS"
Date: By:
Doug Palladini,Vice President of Marketing
LANDLORD:
THE CITY OF HUNTINGTON BEACH
REDEVELOPMENT AGENCY(Agency)
Date: By:
Chairman
ATTEST:
Agency Secretary
REVIEWED AND
APPROVED AS TO FORM:
Agency General Counsel
By:
Jennifer McGrath
Attachment No.7
Page 39 of 40
REVIEWED AND
APPROVED AS TO FORM:
KANE, BALLMER&BERKMAN
By:
Agency Special Counsel
Susan Y. Cola
Attachment No.7
Page 40 of 40
EXHIBIT A
LEGAL DESCRIPTION OF THE LEASED PREMISES
The land referred to herein is situated in the State of California,County of Orange,and described as
follows:
A parcel of land situated in Section 14,Township 5 South,Range 11 West,Rancho La Bolsa Chica,
partly in the City of Westminster and partly in the City of Huntington Beach, County of Orange,
State of California,as per map recorded in Book 51,page 13 of Miscellaneous Maps,in the Office of
the County Recorder of said County and more particularly described as follows:
The West 100.00 feet of the East 115.00 feet of the West Half of said Section 14.
EXCEPT that portion thereof lying southerly of a line that is parallel with and distant northerly 5.00
feet,measured radially from the center line of Center Street, as said center line is shown on Parcel
Map No. 81-571, in the City of Huntington Beach,County of Orange, State of California, filed In
Book 169,pages 45 and 46 of Parcel Maps, in the office of said county recorder.
ALSO EXCEPT that portion thereof lying northerly of that certain line described in that Corporate
Grant Deed recorded April 10, 1968, in Book 8568, page 143 of Official Records, in the office of
said county recorder,described as follows:
Commencing at the southeast corner of the Northwest Quarter of said Section 14;thence along the
East line of said Northwest Quarter,North 0° 16' 03" East, 527.65 feet to the TRUE POINT OF
BEGINNING for this exception;thence North 44'01'46"West,28.63 feet;thence North 89°43'57"
West, 95 feet to the westerly line of said East 115.00 feet of said Northwest Quarter.
Reserving unto Grantor an easement for railroad, transportation, communication and pipeline
purposes over, along and across that portion of the hereinabove described parcel of land lying
easterly of a line parallel with and distant 15 feet westerly, measured at right angles, from the
existing center line of Southern Pacific Transportation Company's main track(Stanton Branch).
APN: 142-073-03
EXHIBIT B
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EXHIBIT C
MEMORANUM OF LEASE
ATTACHMENT NO. 7A
GOVERNMENT BUSINESS
Free Recording Requested(Govt. Code §6103)
Recording Requested by
and When Recorded Return to:
City of Huntington Beach Redevelopment Agency
2000 Main Street
Huntington Beach, California 92648
Attention: Economic Development Director
SPACE ABOVE LINE FOR RECORDER'S USE
APN: 142-073-03
MEMORANDUM OF LEASE
THIS MEMORANDUM OF LEASE ("Memorandum") is entered into by and between
the CITY OF HUNTINGTON BEACH REDEVELOPMENT AGENCY ("Agency") and VF
OUTDOOR, INC.,a Delaware corporation doing business as"Vans" ("Lessee").
RECITALS
A. Agency and Lessee have entered into that certain Ground Lease dated for
reference purposes , 2011 (the "Lease") pursuant to which Agency leased to
Lessee and Lessee leased from Agency certain real property more particularly described in
Exhibit"A"and incorporated herein by reference(the"Property").
B. Agency and Lessee desire to execute this Memorandum to provide constructive
notice of the Lease to third parties.
OPERATIVE PROVISIONS
1. Lease Commencement/Tenn. Agency leases the Property to Lessee for a term
commencing on , 201 and continuing thereafter for twenty (20) years (with a 10-
year option to renew, as provided therein),unless earlier terminated as provided in the Lease.
2. Lease Terms. The terms and provisions of the Lease are hereby incorporated into
this Memorandum of Lease by this reference.
3. Assignment. Lessee's rights under the Lease shall not be assigned except in
compliance with the terms of the Lease.
Attachment 7A
Page 1 of 2
4. Successors and Assigns. This Memorandum of Lease and the Lease shall bind
and inure to the benefit of the parties and their respective, permitted heirs, successors in interest
and assigns, subject, however, to the terms of the Lease concerning assignment. The provisions
of this Memorandum of Lease are solely for the purpose of providing notice of the Lease and, in
the event of any conflict between the provisions of this Memorandum of Lease and the
provisions of the Lease,the provisions of the Lease shall prevail.
IN WITNESS WHEREOF, the parties have executed this Memorandum of Lease as of
the date below.
TENANT:
VF OUTDOOR INC.,A DELAWARE
CORPORATION,DBA"VANS"
Date: By:
Doug Palladini,Vice President of Marketing
LANDLORD:
THE CITY OF HUNTINGTON BEACH
REDEVELOPMENT AGENCY(Agency)
Date: By:
Chairman
ATTEST:
Agency Secretary
REVIEWED AND
APPROVED AS TO FORM:
Agency General Counsel
Attachment 7A
Page 2 of 2
By:
Jennifer McGrath
Attachment 7A
Page 3 of 2
EXHIBIT A
Legal Description
A parcel of land situated in Section 14, Township 5 South, Range 11 West, Rancho La
Bolsa Chica, partly in the City of Westminster and partly in the City of Huntington Beach,
County of Orange, State of California, as per map recorded in Book 51, page 13 of
Miscellaneous Maps, in the Office of the County Recorder of said County and more particularly
described as follows:
The West 100.00 feet of the East 115.00 feet of the West Half of said Section 14.
EXCEPT that portion thereof lying southerly of a line that is parallel with and distant
northerly 5.00 feet, measured radially from the center line of Center Street, as said center line is
shown on Parcel Map No. 81-571, in the City of Huntington Beach, County of Orange, State of
California, filed In Book 169, pages 45 and 46 of Parcel Maps, in the office of said county
recorder.
ALSO EXCEPT that portion thereof lying northerly of that certain line described in that
Corporate Grant Deed recorded April 10, 1968, in Book 8568, page 143 of Official Records, in
the office of said county recorder, described as follows:
Commencing at the southeast corner of the Northwest Quarter of said Section 14; thence
along the East line of said Northwest Quarter, North 0° 16' 03" East, 527.65 feet to the TRUE
POINT OF BEGINNING for this exception; thence North 44' 01' 46" West, 28.63 feet; thence
North 89°43' 57" West, 95 feet to the westerly line of said East 115.00 feet of said Northwest
Quarter.
Reserving unto Grantor an easement for railroad, transportation, communication and
pipeline purposes over, along and across that portion of the hereinabove described parcel of land
lying easterly of a line parallel with and distant 15 feet westerly, measured at right angles, from
the existing center line of Southern Pacific Transportation Company's main track (Stanton
Branch).
APN: 142-073-03
State of California )
County of )
On before me, (here insert name and title of
the officer), personally appeared ,who proved to me on the
basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within
instrument and acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or
the entity upon behalf of which the person(s)acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the
foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature (Seal)
State of California )
County of )
On before me, (here insert name and title of
the officer),personally appeared , who proved to me on the
basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within
instrument and acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or
the entity upon behalf of which the person(s)acted,executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the
foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature (Seal)
EXHIBIT D
ESTOPPEL CERTIFICATE
EXHIBIT D
ESTOPPEL CERTIFICATE
The undersigned, as Tenant under that lease dated (the
"Lease") made between THE CITY OF HUNTINGTON BEACH REDEVELOPMENT
AGENCY, a public body corporate and politic ("Agency" or "Landlord"), and VF OUTDOOR,
INC., a Delaware corporation doing business as "Vans" ("Tenant"), hereby certifies as follows:
(1) That Tenant has entered into occupancy of the premises described in said lease
(the"Leased Premises");
(2) That the Lease is in full force and effect and has not been assigned, modified,
supplemented or amended in any way, except as
follows:
(3) That the Commencement Date of the Lease is ;
(4) That there is an unexpired term thereunder of years;
(5) That to the knowledge of the undersigned there are no defaults by either Tenant or
Landlord thereunder, except as
follows:
(6) That no rents have been prepaid, other than as provided in the Lease.
EXECUTED THIS day of ,
TENANT:
VF OUTDOOR INC.,A DELAWARE
CORPORATION, DBA"VANS"
Date: By:
Doug Palladini, Vice President of Marketing
SIGNATURES CONTINUED ON NEXT PAGE
AGENCY:
THE CITY OF HUNTINGTON BEACH
REDEVELOPMENT AGENCY(Agency)
Date: By:
Chairman
ATTEST:
Agency Secretary
REVIEWED AND
APPROVED AS TO FORM:
Agency General Counsel
By:
Jennifer McGrath
REVIEWED AND
APPROVED AS TO FORM:
KANE, BALLMER&BERKMAN
By:
Agency Special Counsel
Susan Y. Cola
ATTACHMENT NO. 8
RELEASE OF CONSTRUCTION COVENANTS
[behind this page]
ATTACHMENT NO. 8
OFFICIAL BUSINESS
Document entitled to free recording
per Government Code Section 6103
Recording Requested By and
When Recorded Mail to:
City of Huntington Beach Redevelopment Agency
2000 Main Street
Huntington Beach, California 92648
Attention: Economic Development Director
SPACE ABOVE THIS LINE FOR RECORDER'S USE
RELEASE OF CONSTRUCTION COVENANTS
(APN: 142-073-03)
WHEREAS, VF OUTDOOR, INC., A DELAWARE CORPORATION DOING
BUSINESS AS "VANS" (the "Developer") is the lessee of certain real property situated in the
City of Huntington Beach, California, described in Exhibit "A" which is attached hereto and
made a part hereof(the "Property"), and has agreed to construct certain improvements thereon
(the"Improvements");and
WHEREAS, pursuant to the GROUNDLEASE AND IMPROVEMENT AGREEMENT
("GLIA") entered into by and between the CITY OF HUNTINGTON BEACH
REDEVELOPMENT AGENCY (the "Agency") and VF OUTDOOR, INC., A CALIFORNIA
CORPORATION("Developer"therein) dated , 2010,the Agency has
agreed to furnish the Developer with a Release of Construction Covenants ("Release") upon the
completion of construction and development of the Improvements,and such certificate is to be in
such form as to permit it to be recorded in the Recorder's Office of Orange County; and
WHEREAS, the GLIA states that the Release shall be conclusive determination of
satisfactory completion of the construction and development of the Improvements as required by
the GLIA;and
WHEREAS, the Agency has determined that the construction and development of the
Improvements on the Property as required by the GLIA has been satisfactorily completed.
NOW THEREFORE, it is hereby acknowledged and agreed by the parties hereto that:
Attachment No. 8
Pagel of 3
1. The Agency hereby certifies that the construction and development of the
Improvements on the Property has been fully and satisfactorily performed and completed as
required by the GLIA.
2. Nothing contained in this instrument shall modify any provisions of the GLIA.
IN WITNESS WHEREOF, the Agency has executed this Release this day of
THE CITY OF HUNTINGTON BEACH
REDEVELOPMENT AGENCY(Agency)
Date: By:
Chairman
ATTEST:
Agency Secretary
REVIEWED AND
APPROVED AS TO FORM:
Agency General Counsel
By:
Jennifer McGrath
APPROVED AS TO FORM:
KANE,BALLMER&BERKMAN
By:
Agency Special Counsel
Susan Y. Cola
[SIGNATURE CONTINUED ON NEXT PAGE]
Attachment No. 8
Page 2 of 3
VF OUTDOOR INC.,A DELAWARE
CORPORATION,DBA"VANS"
Date: By:
Doug Palladini,Vice President of
Marketing
Attachment No. 8
Page 3 of 3
EXHIBIT A
LEGAL DESCRIPTION OF THE PROPERTY
EXHIBIT"A"
LEGAL DESCRIPTION
All that certain real property situated in the County of Orange, State of California, as follows:
A parcel of land situated in Section 14,Township 5 South,Range 11 West,Rancho La Bolsa Chica,
partly in the City of Westminster and partly in the City of Huntington Beach, County of Orange,
State of California,as per map recorded in Book 51,page 13 ofMiscellaneous Maps,in the Office of
the County Recorder of said County and more particularly described as follows:
The West 100.00 feet of the East 115.00 feet of the West Half of said Section 14.
EXCEPT that portion thereof lying southerly of a line that is parallel with and distant northerly 5.00
feet, measured radially from the center line of Center Street,as said center line is shown on Parcel
Map No. 81-571, in the City of Huntington Beach,County of Orange, State of California, filed In
Book 169, pages 45 and 46 of Parcel Maps, in the office of said county recorder.
ALSO EXCEPT that portion thereof lying northerly ofthat certain line described in that Corporate
Grant Deed recorded April 10, 1968, in Book 8568,page 143 of Official Records, in the office of
said county recorder,described as follows:
Commencing at the southeast corner of the Northwest Quarter of said Section 14;thence along the
East line of said Northwest Quarter, North 0° 16' 03" East, 527.65 feet to the TRUE POINT OF
BEGINNING for this exception;thence North 44'01'46"West,28.63 feet;thence North 89°43'57"
West, 95 feet to the westerly line of said East 115.00 feet of said Northwest Quarter.
Reserving unto Grantor an easement for railroad, transportation, communication and pipeline
purposes over, along and across that portion of the hereinabove described parcel of land lying
easterly of a line parallel with and distant 15 feet westerly, measured at right angles, from the
existing center line of Southern Pacific Transportation Company's main track(Stanton Branch).
APN: 142-073-03
STATE OF CALIFORNIA )
COUNTY OF )
On before me, (here insert name and
title of the officer), personally appeared , who proved to me
on the basis of satisfactory evidence to be the person(s) whose name(s) is re subscribed to the
within instrument and acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or
the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the
foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature (Seal)
STATE OF CALIFORNIA )
COUNTY OF )
On before me, (here insert name and
title of the officer),personally appeared , who proved to me
on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the
within instrument and acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or
the entity upon behalf of which the person(s)acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the
foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature (Seal)
ATTACHMENT #2
MEMORANDUM OF UNDERSTANDING BETWEEN THE
CITY OF HUNTINGTON BEACH AND THE
HUNTINGTON BEACH UNION HIGH SCHOOL DISTRICT
THIS MEMORANDUM OF UNDERSTANDING ("MOU") is made and entered
into on ��=��c-7Z , 2010, by and between the CITY OF HUNTINGTON
BEACH, a municipal corporation of the State of California (hereinafter referred to as"CITY"), and
THE HUNTINGTON BEACH UNION HIGH SCHOOL DISTRICT, a public school district duly
organized and existing under the laws of the State of California (hereinafter referred to as
"DISTRICT")
RECITALS
WHEREAS, DISTRICT is the owner of real property and improvements thereon located
witlun the legal boundaries of the DISTRICT, and
CITY is the owner of public parks and recreational facilities in the City of Huntington
Beach, and
CITY and DISTRICT desire to provide exemplary recreational facilities for community use,
student use and educational purposes, and
CITY and DISTRICT desire to maintain their own separate facilities at their own expense,
and
This Agreement is entered into pursuant to the provisions of Education Code Section 10900
et seq,
NOW, THEREFORE, for and in consideration of the promises and covenants hereinafter
contained and intending to be legally bound,the parties covenant and agree as follows
10 2603/50503
Item 7. - 142 HB -276-
SECTION 1 TERM
This MOU will become effective on the date it is approved by City Council of CITY
SECTION 2 OBLIGATIONS OF DISTRICT
The obligations of DISTRICT pursuant to this Agreement shall be as follows•
A Within sixty (60) days of the effective date of this Agreement, District shall pay
$75,000 to CITY to full and complete satisfaction of any obligations under any
prior agreement relating to a skateboard park next to Huntington Beach High
School Stadium or removal and demolition of that skateboard park and in
consideration for the CITY's promise not to construct a skateboard park on the
Worthy Park property
B DISTRICT shall consider improvements to the curbs and parking areas on
Yorktown Avenue between Main Street and Goldenwest Street at its sole
expense in the future
SECTION 3 OBLIGATIONS OF CITY
CITY shall not construct a skateboard park on the Worthy Park property
SECTION 4 PRIOR AGREEMENTS
A All previous facilities use and/or maintenance agreements related to recreational
use of each other's properties between the DISTRICT and the CITY are
terminated, notwithstandingtermination or modification provisions of those
agreements, including,but not limited to the following agreements
1 Reciprocal Joint Use Agreement (April 1, 1977), and Amended Joint Use
Community Recreation Program Open-term Agreement (November 7, 1985),
2 Worthy Park Parking Lease.Agreement for Huntington High School (May 3,
1982),
3 Ocean View Tennis Courts Agreement(May 13, 1997),
4 Schools' Field Lighting for Athletics Agreement(June 2, 1997),
S Joint Use Marina Lighting Agreement(August 19,2002),
10-2603/50503 2
HB -277- Item 7. - 143
6 Joint Use Agreement for Ocean View and Huntington Beach High School
Pools Agreement(May 1, 2000),
7. Joint Funding Pool Amendment to May 1, 2000 Pool Joint Use Agreement
(March 5, 2001)
B This Agreement does not affect any other contracts or agreements between the
CITY and the DISTRICT that do not relate to the facilities use and/or
maintenance such as, by way of example and not limitation, developer fees,
emergency response, etc
C Any and all financial and other obligations incorporated in all prior facilities use
and maintenance agreements are hereby null and void Future use and/or
maintenance of one party's facilities by the other, will be accomplished by way
of a separate and new agreement
D City shall no longer coordinate allocation of high school sports fields for local
youth sports groups
SECTION 5 ASSIGNING AS BREACH
Neither party shall encumber, assign, or otherwise transfer this MOU, or any right or interest
in this MOU, without the express written consent of the other party A consent by a party to one
assignment or transfer to another person shall not be deemed to be a consent to any subsequent
assignment or transfer to another person Any encumbrance, assignment or transfer, without the
prior written consent of the other party, whether it is voluntary or involuntary, by operation of law
or otherwise, is void and shall, at the option of the other party, terminate this MOU
SECTION 6. TERMS BINDING ON SUCCESSORS
All the terms, covenants and conditions of this MOU shall inure to the benefit of and be
binding upon the parties and their successors and assigns. The provisions of this Section shall not
be deemed as a waiver of any of the conditions against assignment hereinbefore set forth
10 2603/50503 3
Item 7. - 144 1413 _278_
SECTION 7 CUMULATIVE REMEDIES
The remedies given to the parties in this MOU shall not be exclusive but shall be cumulative
and in addition to all remedies now or hereafter allowed by law or elsewhere provided in this MOU
SECTION 8 WAIVER OF BREACH
The waiver by CITY or DISTRICT of any bleach by CITY or DISTRICT of any of the
provisions of this MOU, irrespective of the length of time for which such failure continues, shall not
constitute a waiver of such breach or a waiver of any subsequent breach by CTIY or DISTRICT,
either of the same or another provision of this MOU
SECTION 9 NOTICE
Any written notice, given under the terms of this MOU, shall be either delivered personally
or mailed, certified mail,postage prepaid, addressed to the party concerned, as follows
If to CITY If to DISTRICT
City of Huntington Beach Huntington Beach Union High School District
Director of Community Services Attn Superintendent
2000 Main Street, P 0 Box 190 5832 Bolsa Avenue
Huntington Beach, CA 92648 Huntington Beach, CA 92648
Phone (714) 536-5291
If a party desires to change the address for notices set forth herein, said party shall provide
30 days advance written notice to the other party of any such change
SECTION 10 ATTORNEY'S FEES
In the event suit is brought by either party to enforce the terms and provisions of this MOU
or to secure the performance hereof, each party shall bear its own attorney's fees The prevailing
party shall not be entitled to recover its attorney's fees from the non-prevailing party
SECTION 11 CONTROLLING LAW AND VENUE
The rights and liabilities of the parties, and the interpretation and construction of this MOU,
shall be determined in accordance with the laws of the State of California Any controversy arising
10-2603/50503 4
HB -279- Item 7. - 145
out of or under this MOU, if litigated, shall be adjudicated an a court of competent jurisdiction in
Orange County,California.
SECTION 12 SECTION TITLES
The section titles in this MOU are inserted only as a matter of convenience and for
reference, and in no way define, limit or descnbe the scope of intent of this MOU or an any way
affect this MOU
SECTION 13 TIME OF ESSENCE
Tame as of the essence with respect to all provisions of this MOU in which a definite time for
performance is specified including, but not limited to,the expiration of this MOU
SECTION 14 MODIFICATIONS IN WRITING
This MOU contains and embraces the entire agreement between the parties hereto and
neither it nor any part of it may be changed, altered, modified, limited or extended orally or by any
other agreement between the parties unless such agreement be expressed in wntang, signed and
acknowledged by CITY and DISTRICT, or their successors in interest
SECTION 15 PARTIAL INVALIDITY
Should any provision of this MOU be held by a court of competent jurisdiction to be either
invalid, void, or unenforceable, the remaining provisions of this MOU shall remain in full force and
their effect unimpaired by the holding, so long as the reasonable expectations of the parties hereto
are not materially impaired
SECTION 15 MOU IN COUNTERPARTS
This MOU may be executed in counterparts, each of which shall be deemed an original, but all
of which taken together shall constitute one and the same document
10-2603/50503 S
Item 7. - 146 IIB -280-
SECTION 16 ENTIRETY
The foregoing sets forth the entire agreement between the parties
IN WITNESS WHEREOF, the parties hereto have caused this MOU to be executed by and
through their authorized officers the day,month and year first above written.
HUNTINGTON BEACH UNION HIGH CITY OF HUNTINGTON BEACH, a
SCHOOL DISTRICT municipal corporation of the State of
California
By
Brian Garland
PRINT NAME
Its President City Clerk
TITLE
By r ----� INITIATED AND APPROVED-
Michael Simons
erector of CommuneServices
PRINT NAME
Its Cleric
zrTLE APP OVED AS TO FORM
:)OT f� 4k
REVIE APPROVED City Attorney U �T_
kW
lit, dministrator
10-2603/50503 6
HB -281- Item 7. - 147