HomeMy WebLinkAboutIDS FINANCIAL SERVICES, INC./ABDELMUTI DEVELOPMENT COMPANY - 1994-11-21I
REQUEST FOR RDEVELOPAIENT
CI[`: CLEO%
4'7r 0` APPROVED BY CITY COUNCIL
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Submitted to:
Submitted by:
Prepared by:
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AGENt'Y ACTION
ED 94-49
Novgmbgr 21, 1994
Honorable Chairman and Redevelopment Agency Members
Michael T. Uberuaga, Executive Director•R"
Barbara A. Kaiser, Redevelopment Director
Subject: Approval of Lease Between IDS Financial Services Inc., and
Abdelmuti Development Company for Office Space In Oceanview
Promenade (Main -Pier Redevelopment Project Area)
Consistent with Council Policy? [x] Yes - [ ] New Policy or Exception
Statement of Issue, Recommendation, Analysis, Funding Source, Alternative Actions, Attachments:
STATENIENT QF ISSUE:
The Owner Participation Agreement with the Abdelmuti Development Company requires the
Agency to subsidize the difference, if any, between the Guaranteed Rental Rate and what is
achieved for the office space of the second floor and one half of the third floor of the
Oceanview Promenade Iocated at Main Street and Pacific Coast Highway. Agency written
approval is required for all leases.
E N, MTENDED A EN Y TI N:
1. Approve the lease between IDS Financial Services Inc. and Abdelmuti Development
Company as summarized in the Basic Lease Provisions (Attachment No. 1). This approval
is as to the fact of the Lease only.
2. Appropriate $15,191 to meet Agency's lease obligations.
ANALYSTS:
On May 28, 1991, the Redevelopment Agency entered into an Owner Participation Agreement
(OPA) with Abdelmuti Development Company (Participant) for the development of a three
story 42,000 square foot mixed use development. On November 4, 1991, the Agency approved
the First Amendment (Amichment No. 2) to the original OPA calling for the addition of a 6,000
square foot fourth story as well as providing for a Guaranteed Rental Rate for a portion of the
office space.
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Background:
On December 11, 1990, the city's Community Development Department determined that
the existing building at 101 Main Street was "unsafe to occupy" due to the loosening and
falling of
bricks from the facade, and was therefore, vacated and closed. At that time, the property
owner revived old plans that called for the rehabilitation of the existing two-story structure.
Allowing the property owner to proceed with rehabilitation would prevent the City/Agency
from receiving the street and plaza dedications and setbacks as already provided across the
street on the Pierside Pavilion project. Further, the owner would be permitted to retain the
existing non -conforming second story apartment uses. Therefore, the Agency directed staff
to negotiate an agreement with the property owner that would provide for construction of a
new building, eliminate the residential use on the upper floors, provide ground floor retail
uses, and yet be an economically viable plan for the Participant to develop.
The Council/Agency and staffs first preference was to have commercial on at least the
second story. Many were hopeful that one or more Ocean view restaurants could be lured
to this prime location. However, the Participant's beliefs would not allow an establishment
that would serve alcohol. Having ruled out residential and commercial uses on the upper
stories, the City Council settled upon office as a compromise use.
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The development of office space in the downtown is critical to redevelopment's long term
goals of creating a balance of uses that will complement each other and prove to be
economically viable on a year around basis.
The development of visitor -serving commercial (e.g., shops, dining, entertainment,
theaters, hotels) has been the primary goal of downtown redevelopment. If Huntington
Beach's climate were warm and summer like all twelve months of the year, these uses
would likely survive on their own just by rr.eans of the city's great beaches drawing
millions of people year round.
In reality, six to nine months of the year the weather is less than ideal and many of the
businesses that thrive in the summer months find it difficult to survive in the off season
months. Developing a mix of complimentary uses such as office and multi -family
residential provides a population base to patronize these commercial uses on a year round
basis. The office population that will patronize the restaurants and shops at lunch time
during the week is key to the economical survival for many businesses in the off season.
The residential base provides a year round population that will primarily patronize the
downtown in the evenings and on the weekends. In the case of the subject lease IDS
Financial Services Inc., will be employing approximately twenty people, with more to be
hired, all bound to patronize the downtown at lunch and after work.
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Office marketing studies in 1991 and to somewhat of a lesser extent today, conclude that
Orange County, in general, has simply been over saturated with office space (especially in
the vicinity of the airport). Most studies, prior and current, concluded that downtown
Huntington Beach is not a convenient location for office uses due to its distance from the
freeway. The Robert Charles Lessor Company has been contracted to prepare a current
office market analysis for the downtown area and more specifically for Oceanview
Promenade. The report will be completed by the end of October. However, we are hoping
to be a draw for those business owners that live in, or near, Huntington Beach or prefer our
coastal village environment. With the ever increasing advances in technology (computers
and facsimile machines connected by modem through the telephone lines), many businesses
do not rely on personally calling on clients on a day to day basis. Huntington Beach could
serve this niche in the market.
Should we prove to be wrong on all accounts there is an escape clause in the OPA which
allows the Agency to convert the office space to residential after which time the Agency
would no longer be required to subsidize the office space. In that case, the Agency is
required to pay those additional construction costs needed to convert the second and third
floors to a residential use.
Qjiaranteed ReniallR •
In exchange for developing office instead of residential the following financial assistance
was negotiated:
Section 201(8) of the OPA reads as follows:
Differential Rent Payment In the event City or Agency requires upper -floor commercial
use, the Agency will pay the difference, if any, between the rent that Participant is entitled
to achieve based on the approved rental agreements for the second floor and one-half of the
third floor commercial units and the "Guaranteed Rental Rate", defined on a triple net basis
as One Dollar and Fifty-five Cents ($1.55) per square foot as adjusted on an annual basis by
the Consumer Price Index or "CPI". The triple net charges are the prorated costs for
property taxes, insurance and maintenance.
The Agency is therefore obligated to guarantee a minimum lease rate of $1.55 for all of the
square footage on the second floor and one half of the third floor:
2nd floor 14,519 SF
112 of 3rd floor UU-5E
Total 20,60D SF
Agency staff is currently in active negotiations to amend Agency obligations. It is
anticipated that an amendment to the OPA will be before the Agency in November, and
may include Agency payment of the office subsidy starting in January, 1995.
The IDS lease is for 2,669 square feet located on the second floor facing Main Street at
$1 58 per square foot, for a total of $4,217 02 monthly The lease is not guaranteed by the
corporation The Agency will not have to subsidize the base rent because it exceeds the
guaranteed rent of $1 55 The Agency may be liable for the triple net charges in the
amount of 25 cents per square foot or in this case 22 cents ($1 58-$1 55 = 03 surplus 25-
03 = 22) for a total of $587 monthly, $7,046 annually or $35,230 over the first 5 year
term of the lease
IDS has an option for an additional 5 year extension at the conclusion of the first term
The Agency's obligations include paying a leasing incentive of $7,600 to IDS and $7,591 in
broker's fees IDS was not willing to sign a lease without the leasing incentive and
payment of the broker's fees by the landlord Since many landlords are currently giving
incentives such as these and others including free rent, staff believes it is reasonable to pay
these costs to encourage IDS to lease in the building The building owner will be paying
broker's fees to his own agent as part of this transaction The Agency is also obligated to
provide 9 annual parking passes to IDS for use by its employees at a cost of $1 00 per pass
during the initial term of the lease (5 years) The Agency and IDS recognize the City
Council will need to concur on this rate for IDS parking passes
City/Agency Benefits
The City and Redevelopment Agency in return have collected fees for building permits,
traffic impact fees and parking in -lieu fees in excess of $117,000 (plus $13,000 in school
fees) Once the parcel has been totally reassessed it is anticipated the value will have
increased by more than 3 million dollars creating an increase of the Agency's tax increment
by $44,000 per year
The total construction cost for the project was approximately 4 3 million dollars The
participant paid the first 1 3 million dollars with the Agency loaning the balance of 3 0
million at an interest rate of 7 % fully amortized over 15 years In addition to repayment of
the principal loan of $3 million, the Agency will be paid $1 85 million in interest payments
Additionally, the Oceanview Promenade project with its award winning traditional
Mediterranean design, wide sidewalks and plaza areas complements the Pierside Pavilion
project, while completing the gateway to the downtown
FUNDING SOURCE
Main -Pier Account # ED-TM-888-7-75-00
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ALTERNAT WE ACTION:
Deny approval of the IDS Financial Services Irc. lease and direct Abdelmuti Development
Company to seek another tenant.
ATTAC1miEM:
1) Buse Lease Provisions
2) First Amendment to OPA Dated November 4, 1991
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OFFICE SPACE LEASE
BASIC LEASE PROVISIONS
The foregoing Basic Lease Provisions are presented here and
represent the agreement of the parties hereto, subject to further
definition and elaboration in the Additional Lease Provisions and
elsewhere in this Lease. In the event of any conflict between any
Basic Lease Provision and the balance of this Lease, the latter
shall control.
1. Tenant's Name: IDS FIN7-21CIAL SERVICES INC., a Delaware
corporation
2. Premises, including Floor, Suite No. and Rentable Area:
Second Floor, Suite B2, 2,669 rentable square feet.
3. Estimated Commencement Date: January 9, 1995.
4. Lease Term: Five (5) years and one five (5) year option.
S. Basic Annual Rent: $50,604.24 payable at $4,217.02 per month.
6. A. Base Year Operating Expense: 1995.
B. Tenant's Proportionate Share: 5.55t .
7. Space Plan Approval Date: Execution Date of Lease.
S. Security Deposit: None.
9. Prepaid Rent: $4,217.02 for the first month of the te=;
payable on execution of Lease.
10. Broker(s): Lawrence Commercial Real Estate --Landlord
CE Commercial Real Estate Group --Tenant
11. Address for Payments and Notices:
To Landlord: Abdelmuti Development Company
c/o Jack's Surf & Sport
101 Main Street
Huntington Beach, California 92648
Attn: Mike Abdelmuti
Tel.: (714) 536-6567
To Tenant: IDS Financial Services Inc.
• P.O. Box 534
Minneapolis, Minnesota 55440
Attn: Field Real Estate (Unit 404)
Tel.: (612) 671-6918
12. Minimum Coverage for Comprehensive General Liability Policy:
$2,000,000.00 combined single limit,
13. Addendum: An Addendum consisting of None _(if no Addendum
is attached- insert the word- none) numbered paragraphs is
attached to and for a part of this Lease.
REQUEST F" -)R CITY COUNCIL/
REDEVELOPMENT AGENCY ACTION RH91-75
November 4 1991
Date
,muted to Honorable Mayor/Chairman & City Council/Redevelopment Agency Members
,miffed by Michael T-Liberuaga, City Administrator/Chief Executive Officer-K7-�—�
pared by Barbara A Kaiser, Deputy City Administrator/Economic Development
Fast Amendment to the Owner Participation Agreement between Abdelmuti
eject Development Company and the Redevelopment Agency of the City of
Huntington Beach/Mam-Pier Redevelopment Project Area )2,d
nsistent with Council Pohcy7 DQ Yes [ ] New Policy or Exception o?_!
Statement of issue Recommendation Analysis Funding Source, Alters o LTVCIL 1
STATEMENT OF ISSUE i
Transmitted for City Council/Redevelopment Agency cons�d ion is tfie"`` )�ir=SG�
Amendment to the Owner Participation Agreement with Abdelmuti Development Company
previously approved on May 28, 1991 The original Agreement provides for the Agency to
assist Abdelmuti Development Company in the development of a new three-story building,
consisting of approximately 18,000 square feet of new commercial/retail on the ground
floor, and a total of approximately 24,000 square feet of office use on the second and third
floors The proposed Amendment calls for the development of a four-story building
consisting of 17,140 square feet of new commercial/retail on the ground floor, and a total
of 30,920 square feet of office use on the second, third, and fourth floors - for a total of
48,060 square feet
RECON0 ENDATION
Staff recommends the following actions be taken
1) Conduct a joint public hearing on the First Amendment to the Owner Participation
Agreement, and
2) Adopt City Council Resolution No L 3l9 and Agency Resolution No of / r , --
authorizing the execution and implementation of the First Amendment to the Owner
Participation Agreement between the Redevelopment Agency and Abdelmuti
Development Company
ANALYSIS
On May 28 1991 the Redevelopment Agency entered into an Owner Participation
Agreement (OPA) with Abdelmuti Development Company ("Participant") for the
development of a new three-story building, consisting of approximately 18 000 sf of new
commercial/retail on the ground floor and a total of approximately 24 000 sf of office use
on the second and third floors
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'0:1 July 12. 1991. the Participant submitted plans illustrating a proposed four-story
building, totaling 49.433 sf. Staff and Agency members expressed concerns about the
'following items:
* The addition of a fourth floor and the resulting height;
The size and Tvfztion of the plaza at the corner of Main Street and Pacific Coast
Highway;
} • ' The use of the 10' dedications at either side of the building.
* Responsibility for providing required parking in excess of 42.000 sf-. and
* The layout of access corridors for the upper stories.
IUuring a Redevelopment study session on September.30. 1991, the Agency gave staff
informal direction as to the issues outlined above. Staff and the Agency Special Counsel
Lave drafted the attached First Amendment to the OPA, incorporating language that
zcctn ately reflects the agreed upon design changes.
Under California Redevelopment Law, the Redevelopment Agency is authorized to provide
certain types of assistance directed at supportin; and promoting private sector
investments in Redevelopment Project Areas. The salient points of the Agreement are
outlined in the attached 33433 Report prepared by the Agency's economic consultant,
Keyser tiarston Associates, Inc. A summary of the changes incorporated into the First
Amendment to the OPA are listed below:
0 The Participant agrees to construct ground floor retail space of approximately
17.140 sf. and second, third & fourth floor office space totaling approxdmately
30,920 sf, fora total building area of approximately 48,060 square feet.
b) The:Participant will remove all (5) proposed parking spaces onsite and provide upgraded
site.improvements from the back of the building to the property line.
c) Participant shall pay 50% of the offsite parking in -lieu fee of Twelve Thousand
($12,000) per space for all square footage in excess of 42,000 sf per code. As proposed,
the Participant will be required to pay in -lieu fees for the additional 6.000 sf of office
being constructed at a rate of four spaces per 1,000 sf. equaling 24 spaces at $6,000
per space, totaling $144,000.
d) Participant shall not provide any parking onsite for the project.
e) Participant shall construct a plaza at the corner of Main Street and Pacific Coast
Highway of no less than 1,000 sf in size.
f) Participant shall not encroach into 10' dedication on Pacific Coast Highway for the
purpose of constructing pedestrian or upper story access, but rather to be preserved for
future development, therefore, any stairways in this vicinity will need to be
internalized.
On Odtober 24. 1991. the Design Review Board (DRB) reviewed Abdelmuti's site plans.
elevations, colors. materials. 'and a scaled -down model of the proposed project. The
DRB stated that the roof line. as illustrated in the submitted plans. encroached into
the 10' dedication and would need to be either eliminated or redesigned so there would
be no encroachment into the 10' dedication.
g) Participant shall provide internal corridor circulation for upper story office uses.
On. October 10. .1991, the- Redevelopment Committee reviewed and supported these
ch-mges to the First Amendment to the OPA as outlined above.
119MING =RCE:
There is no significant fiscal impact as a result of the recommended action.
1) Continue action on the OPA and related resolutions to allow for additional review time.
21 Direct staff to further negotiate specific points of the agreement with the developer.
1) Health & Safety Code Report 33433
2) First Amendment to OPA
3) Redevelopment Agency Resolutions
4) Staff Report dated May 2% 1991
5) City Council Resolutions
6) Site Map
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FIRST AMENDMENT TO
OWNER PARTICIPATION AGREEMENT
BY AND BETWEEN
THE REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON. BEACH
AND AHDELMUT1 DEVELOPMENT COMPANY
THIS FIRST AMENDMENT ("First Amendment") is entered into
this _ day of , 1991, by and between•THE
REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH (the
"Agency") and ABDELMUTI DEVELOPMENT COMPANY (the "Participant").
RE�c11A L R
WHEREAS, the Agency and the participant entered into an
Owner Participation Agreement, dated May 28, 1991 (the "OPA"),
a copy of which is on file as a public record with the City
Clerk of the City of Huntington Beach and which is incorporated
herein by reference; and
WHEREAS, the Agency and the Participant agree that it is in.
their mutual best interest that the proposed project be
expanded;
NOW, THEREFORE, the Agency and the Participant do hereby
agree to amend the OPA as follows:
Sectinn 1. Amend Section 201(3),, Project Design; Design
and Construction Costs, to read as follows:
3. prgjnc�' emignDes igr end-ConatrItat inn Cnst4.
Participant shall at his cost design and construct the
Project pursuant to the Scope of Development
(Attachment No. 4) as a four-story building totaling a
maximum of 48,437 square feet with an approximately
18,000 square foot Commercial/refail ground floor area
and with high quality office/commercial on the second,
third and fourth stories. Agency, at its sole -
discretion, may determine to change the use of all or
a portion of the second, third and fourth stories from
office/commercial to residential, or in the event of a
transfer of the Participantls interest to an
individual or entity that is no closer in familial.
relationship then that of the third degree as that
term would be defined under the California Probate ,
Code, to a restaurant commercial use (provided that in
the event such a change occurs, the access to the
second and third stories shall remain at the back of
the building). In the event Agency later determines
to require a change from office/commercial use, the
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Agency will pay those additional construction costs
needed to convert the second, third 'oar fourth floors
to a residential or restaurant use.
Veetion•2. Amend Section 201(6), Excess parking Costs and
Provision of parking Spaces, to read as follows:
6. EnesE_Parking Coots and P,rovigion of Parking" SpacgZ.
There shall be no on --site parking for the Project.
Participant shall pay fifty percent'(50%) of the
offsite parking in -lieu fee of Twelve Thousand Dollars
($12,000) Or Six Thousand Dollars ($6,000) per space
necessary due to the increase in size of the proposed
Project from 42,000 square feet to 48,000 square
feet. The additional 6,000 square feet of office'
space requires four (4) parking spaces per 1,000
square feet, pursuant to the Huntington Beach
Municipal Code, for a total of twenty -.four (24) spaces
at six Thousand Dollars ($6,000) per space which
equals One Hundred Forty -Four Thousand Dollars
($144,000) to be paid on or before issuance of a
certificate of occupancy. In exchange.foi this, the
Participant will provide upgraded site improvements
f rom back of the building to the property line at the
some quality as the plaza area located at the corner
of Main Street and Pacific Coast Highway (i.e., pavers
rather than asphalt). Agency shall pay any additional
costs necessary to provide offsite parking for the
Project ("Excess Parking Costs"). The determination
of the necessity for and location of additional
offsite parking for any commercial, uses on the Site
shell be at the sole discretion of the Agency and the
City. in the event, however, that Agency authorizes
upper -story residential uses on the Site, Agency shall
be responsible for providing full code -required
parking for all residential units on the Site, with
the parking spaces to be located off of the site and
within the block bounded by Main Street, Pacific Coast
Highway, Fifth Street, and Walnut Avenue. Such
parking spaces shall. be reserved for the free and
exclusive use of the occupants of the residential
units on the Site. Such obligation shall run in
perpetuity and shall be evidenced by a recorded
covenant or other document reasonably. satisfactory to
Participant which runs with the land and benefits the
Site and burdens the parcel(s) on which the parking. is
to be located. Such covenant or other similar
document may provide for Participant and the 'Site to
bear the cost of maintaining and repairing the
reserved parking for the Site after the initial
completion of construction, provided that the cost to
7766u/2460/009 -2-
Participant shall not exceed the reasonable cost of
maintaining and repairing at -grade surface parking
spaces.
Eectinn •3. Amend Section 201(8) , Differential Rent
Payment, to read -as follows:
8.
. In the event City or
Agency requires upper -floor commercial use, the Agency
will pay the difference, if any, between the rent that
Participant is entitled to achieve based on the
approved rental agreements for the second floor and
one-half of the third floor commercial units and the
"Guaranteed Rental Rate", defined on a triple net
basis as one Dollar and Fifty-five Cents ($1.55) per
square foot as adjusted on an annual basis by the ._
Consumer Price Index or "CPI" as defined herein (the
"Differential Rent,Payment"). In determining the
third floor.Differential Rent Payment pursuant to the
approved rental -agreement for the third floor, all
rents shall belaver= n the enc 1 pay the
Differential en me hARPA un thg amount
aces ry Ea insure the - avers e
per square -foot amount is brought to th uarantee
CPI s all mean the United States
Department of Labor, Bureau of Labor Statistics,
Consumer Price Index for Urban Wage Earners -and
clerical Workors, Los Angeles-Anahaim- Riverside
Average, Sub -Group, "All Items" (1982/84wloo). As an
alternative to the.CPI adjustment, at the sole
discretion of the Agency, the Agency may require that
the Guaranteed Rental Rate be determined utilizing the
appraisal method set out in Attachment No. 12 attached
hereto and incorporated herein by this reference. In
no event shall the Guaranteed Rental Rate be decreased
below the Guaranteed Rental Rate than in effect as -a
result of the appraisal Or appraisals conducte4
pursuant to Attachment No. 12. In the event that the
Guaranteed Rental Rate is established by an appraisal.
or appraisals conducted pursuant to Attachment No. 12,
such Guaranteed Rental Rate shall remain in effect for
a period of three (3) year period, and the Guaranteed
Rental Rate shall be adjusted on an annual basis by
the CPI, or by the appraisal method set forth in
Attachment No. 12 if so elected by Agency, in the
manner set forth in this Section 201r paragraph 8.
The Differential Rent-Paymont term shall commence with
the issuance of the Certificate of Occupancy for the
second and third floor specs and terminate on
January 1, 2017. The City/Agency shall have the
option of leasing any vacant second or third floor
office space at the Guaranteed Rental Rate. subject
to the Agency•s right to change the use pursuant to
subparagraph 3 above, Participant shall lease the
7788u/2480/009 -3-
fourth floor office space for an amount equal to the
Guaranteed Rental.Rate. Any business affiliated with
the Participant (including, but not limited to,
Abdelmuti Development Company and/or Jack's Surf &
Sport) must pay a.minfmum of $1.55 per square foot.
Agency shall have the right to approve all leases of
second and third story'space. Failure to obtain
Agency written approval, of a lease for the second or
third floor shall )result* in a logs of the right to
obtain the Differential Rent Payment as described in
this Paragraph 8 of Section 201.
section 4. Amend section II of Attachment too. 4 (Scope of
Devel.-opment), Participant•a Responsibilities, to rehd as
follows: '
WOWIJ.T*W': ► `*
:The Participant shall develop the Site with a
four-story building totaling approximately 48,437
square feet. The ground floor shall eonsiet of
approximately 16,000 square feet of commercial/retail
and approximately 30,000 total square feet of office
on the second, third and fourth floors.
The Participant shall be responsible for all on -site
improvements relating to: the development of the Site
in accordance with the terns and schedules as set
forth in thin Agreement as the game may be amended
from time to time.
Section 5. This First Amendment and the provisions of the
OPA which remain in effect collectively constitute the "Amended
OPA." The Amended OPA'integrates'all of the terms and
conditions of agreement between the parties, and supersedes all
negotiations or previous agreements between the parties with
respect to the subject matter hereof.
Section fi. Each of the Parties hereto -warrants and
represents to the other that it has the full power and
authority to enter into and execute this First Amendment-, that
all authorizations and approvals required to make this First
Amendment binding upon such party have been obtained, and that
the person or persons executing this First Amendment on behalf
of such parties has been fully authorized to do so.
7788u/2460/009 -4-
The effective date of this First Amendment shall be the
date of execution by the Agency,
19— REDEVELOPMENT AGENCY OF THE CITY
OF HUNTINGTON BEACH
• a
ATTEST:
Secretary
APPROVED AS TO FORM:
By:
Chairman
Stradling, Yocca, Carlson & Rauth,
Special Counsel to the Agency
Agency Counsel
ABDEL.MUTI DEVELOPMENT COMPANY, a
California general partnership
BY:
Ahmed Abdelmuti, General
Partner
"Participant"
7788u/2460/009
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OFFICE SPACE LEASE
between
a California general partnership
AS LANDLORD
and
IDS FINANCIAL SERVICES INC.,
a Delaware corporation
AS TENANT
OCEANVIEW PROMENADE
HU-M-GTON BEACH, CALIFORNIA
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Lis A
ARTICLEI. PRmaSE5 • . . . . . . . ... . .. . . . . . .
3
SECTION 1.1
LEASED PREMISES . . . . . . . . . . .
3
SECTION 1.2
ACCEPTANCE OF PRE,51SES . . . . . . . . . .
3
SECTION 1.3
USE RESERVATIONS . . . . . . . . . . . . .
3
SECTION 1.4
BUILDING K;lMZ AND ADDRESS . . . . . . . . .
3
ARTICLEII. TERM
. . . . . . . . . . . . . . . . . .
3
SECTION 2.1
GENERAL .. . . . .
3
SECTION 2.2
TEN*D3R OF POSSESSION BY LANDLORD . . . . .
4
SECTION 2.3
OPTION TO EXTEND TERM . . . . . . . . . . .
4
SECTION 2.4
RIGH•: OF FIRST OFFER . . . . . . . . . . .
4
ARTICLE III. RENT AND SECURITY DEPOSIT . . . . . . . .
5
SECTION 3.1
BASIC AN`,rJAL RENT . . . . . . . . . . . . .
5
SECTION 3.2
RESERVED . . . . . . . . . . . .
5
SECTION 3.3
OPERATING EXPENSES . . . . . . . . . . . .
6
ARTICLE IV. USES
. . . . . . . . . . . . . . . . . . . . ...
9.
SECTION 4.1
'USE . . . . ...
9
SECTION 4.2
PROHIBITION AGAINST SOLICITATION AND0THER
ACTIVITIES WITHOUT THE PERMISSION OF
LANDLORD . . . . . . .
9
SECTION 4.3
EXCLUSIVE CONTROL OVER COAMN AREA . . . .
10
SECTION 4.4
SIGHS . . . . . . . . . . . . . . . . . . .
10
ARTICLE V. SERVICES
10
SECTION 5.1
UTILITIES AND SERVICES
IO
SECTION 5.2
OPERATION AIM VAINTENANCE CF C0: 0N
FACILITIES . . . . . . . . . . . . . .
11
SECTION 5.3
USE OF COMMON FACILITIES . . . . . . . . .
11
SECTION 5.4
PARKIN.'G . . . . . . . . . . . . . . . . . .
12
ARTICLE VI. MAINTENANCE OF THE PREZUSES . .
12
SECTION 6.1
TE 7AN.'T' S MAINTENANCE AND RSPAIR
12
SECTION 6.2
LANDLORD'S YMN=,WCE AND R3PAIR . . . . .
12
SECTION 6.3
ALTERATIONS BY LANDLORD . . . . . . . . . .
13
.SECTTION.6.4
TENAYT'S ALTERATIONS . . . . . . . . . . .
13
SECTI0N 6.5
MECHANIC'S LIENS . . . . . . . . . . .
14
SECTION 6.6
ENTRY AND INSPECTION . . . . . . . . -. . .
14
SECTION 6.7"
Intentionally omitted . . . . . . . . . . .
15
ARTICLE VIZ. TAXES AHD ASSESSyffih'TS ON TENANT'S PROPERTY . .
15
SECTIOti 7.1
TAXES ON TENANT'S PROPERTY . . . . . . . .
15
ARTICLE VIII. ASSICNMENT AND SUBLETTING . . . . . . . . . .
15
SECTION 8.-1
PROHIBITION AND CONSENT . . . . . . . . . .
16
SECTION 8.2
NO RELEASE OF TENANT . . . . . . . . . . .
17
SECTION b.3
TRANSFZR FES . . . . . . . . . . . . . . .
17
ARTICLE IX. INSURANCE AND ZNDEM:.'NITY . . . . . . . . . . . .
17
SECTION 9.1
TENANT'S INSURANCE . . . . . . . . . .
17
SECTION 9.2
TENAIT'S INDE2KNITY . . . . . . . . . . . .
18
J=ICLE X. DAMAGE OR DESTRUCTION . . . . . . . . . . . . .
19
SECTION 10.1
RESTORATION . . . . . . . . . . . . .
19
SECTION 10.2
LANDLORD'S IiON•LIABILITY . . . . . . . . .
20
SECTION 10.3
TENANT'S WAIVER . . . . . . . . . . . . .
21
ARTICLE XI. DaN= DOMAIN . . . . . . . . . . . . . . . . .
21
ARTICLE XII. SUBORDINATION; ESTOPPEL CERTIFICATE . . .
21
SECTION 12.1
SUBORDINATION . . . . . . . . .
21
SECTION 12.2
ESTOPPEL CERTIFICATE . . . . . . . . . . .
22
ARTICLE XIII. DEFAULTS AND REMEDIES . . •. . . . . . . . . . 22
SECTION 13.1 TENANT'S DEFAULTS . . . . . . . . . . . . . 22 ."-
SECTION 13.2 LANDLORD'S RDIES . . . . . . . . . . . . 23 !
SECTION 13.3
INTEREST Oh• TENAti'T'S OBLIGATIONS; LATE
PAYMENTS •. . . . . .
. 24
SECTION 13.4
RIGHT OF LANDLORD TO VZR70PY. . . . . . .
. 25
SECTION 13.5
DEFAULT BY LANDLORD . . . . . . . .
. 25
SECTION 13.6
EXPENSES AND LEGAL FEES . . . . . . . .
. 26
ARTICLE XIV. END OF TERM . . . . . . . . . . . . . .
. 26
SECTION 14.1
HOLDING OVER .
26
SECTION 14.2
SUP -RENDER OF PREMISES; REv0VAL OF,
PROPERTY . . . . . . . . . . . .
. 26
SECTION 14.3
AFFIXED PROPERTY . . . . . . . . . . . .
. 26
ARTICLE XV. NOTICES . . . . . . . . . . . . . . . . . . .
. 27
ARTICLE XVI. RULES AND REGULATIONS . . . . . . . . . . . .
. 27
ARTICLE XVII. BROKER'S COMISSION . . . . . . . . . . . .
. 27
ARTICLE, XVIII . TRANSFER OF LANDLORD'S Ih"IER EST . . . . . .
. 27
ARTICLE XIX. INTERPRETATION . . . . . .
28
SECTION 19.1
GENDER A'1TD NUMBER . . . . . . . . . . .
. 2$
SECTION 19.2
HEADINGS . . . . . . . . . . . . . . . .
. 28
ARTICLE XX. EXECUTION AND RECORDING . ., . . . . . . .
. 28
SECTION 20;1
CORPORATE AUTHORITY . . . . . . . . . .
. 28
SECTION 20.2
RECORDING . . . . . . . . . . . . . . .
. 28
SECTION 20.3
AMEN--?M,TTS . . . . . . . . . . . . . . .
. 28
ARTICLE XXI. MISCELLAN30US . . . . . . . . . . . . . . . .
. 28
SECTION 21.2
RESERVED
28
SECTION 21.2
FURNISHING OF*FINANCI STAT NTS . .
28
SECTION 21.3
RESERVED . .
29
SECTION 21.4
GOVERN''M=`TAL REQUIRE*V=,*S
29
SECTION 21.5
COVMM=S AND CONDITIONS . . . . . . . .
. 29
SECTION 21.6
WORK LETTER . . . . . . . . . .
. 29
SECTION 21.7
JOINT P= SEVERAL LIABILITY . . . . . .
. 29
SECTION 21.8
SUCCESSORS . . . . . . . . .
29
SECTION 21.9
TINE OF ESSENCE . . . . . . . . . .
29
SECTION 21.10
CONTROLLING LAW . . . . . . . . . . . .
. 29
SECTION 21.11
SEVERABILITY .. . . . . . . . . . .
. 29
SECTION 21.12
RELATIONSHIP OF PARTIES . . . . . . . .
. 29
SECTION 21.23
INABILITY TO PERFORM . . . . . . . .•. .
. 30
SECTION 21.14
QUIET ENSOY.%S= . . . . . . . . .
. 30
SECTION 21.15
HAZARDOUS WASTE AND MATERIALS . . . . . .
. 30
SECTION 21.26
AFTER-HOURS ACCESS . . . . . S . . . .
. 31
SECTION 21.17
AMERICANS WITH DISABILITIES ACT . . . .
. 31
SECTION 21.18
ENTIRE AGREEMENT . . . . . . . . . . . .
. 31
FS:A26Ml4r*0,=lglWJA5.& IIM91%
OFFICE SPACE LEASE
BASIC LEASE PROVISIONS
The foregoing Basic Lease Provisions are presented here and
represent the agreement of the parties hereto, subject to further
definition and elaboration in the Additional Lease Provisions and
elsewhere in this Lease. In the event of any conflict between any
Basic Lease Provision and the balance of this Lease, the latter
shall control.
1. Tenant's Name: IDS FINANCIAL SERVICES INC., a Delaware
corporation
2. Premises, including Floor, Suite No. and Rentable Area:
Second Floor, Suite B2, 2,669 rentable scriare feet.
3. Estimated Co,?rteacement Date: January 9, 1995.
4. Lease Term: Five (5) years and one five (5) year option.
5. Basic Annual Rent: $50,604.24 payable at $4,217.02 per month.
6. A. Base Year Operating Expense: 1995.
B. Tenant's Proportionate Share: 5.55V
7. Space Plan Approval Date: Execution bate of Lease,
8. Security Deposit: None.
9. Prepaid Rent: $4,217.02 for the first month Of the term;
payable on execution of Lease,
10. Broker(s): Lawrence Con nercial Real Estate --Landlord
CB Connerciai Real Estate Group --Tenant
11, Address for Payments and Notices:
To Landlord: Abdelmti Development Company
c/o Jack's Surf: & Sport
101 Main Street
Huntington Beach, California 92648
Attn: Mike Abdelmuti
Tel.: (714) S36-GS67
To Tenant: IDS Financial Services Inc.
P.O. Box 534
Minneapolis, Minnesota. SS440
Attn: Field Real Estate (Unit 404)
Tel.: (912) 671-6918
t2. Minimum Coverage for Comprehensive General Liability Policy:
$2,000,000.00 combined single limit.
13. Addendum: An Addendum consisting of � Nnne (if no Addendum
is attached,_ insert the word- none) numbered paragraphs is
attached to and forms a part of this Lease.
' FS:1:6TOIg240o0]\7lOOUt.111l091�!
14. Lease Execution: In witness whereof the parties hereto have
executed this Lease, consisting of the foregoing provisions
and of - the Additional Lease Provisions and Exhibits which
follow, as of November 10 , 1994.
THIS LEASE SHALL NOT
BECOM EFFECTIVE UNTIL
EXE=ED BY LX4MLORD AND
DELSVERED TO TENANT AND
THE SUBMISSION OF THIS
FORM OF LEASE BY M7D-
LORD, OR LANDLORD'S
AGENT, DOES NOT CONSTI-
TUTE AN OFFER TO LEASE.
NO EMPLOYEE OR AGENT OF
LA.ti'DLORD OR ANY PERSON
WITH WHOM. T=VJ1T MAY HAVE
NEGOTIATED THIS LEASE HAS
A'qY AUTHORITY TO MODIFY
THE TERMS HEREOF OR TO
MAKE ANY AGREM%MN'TS,
REPRESENTATIONS OR
PROMISES tM72SS THE SAME
ARS Coll-, INED HEREIN OR
ADDED HERETO IN 1%=TIR'G .
ABDELMUTI DEVELOPMENT COMPANY,
a C
By:
IDS FINANCIAL SERVICES INC.,
a Delaware corporation
David-G. TeT&FI—�"
I Pnl�=i��!
Assistsnjt�Sacratary
By: r. e t1 e
Its: Assistant Secretary
"Tenant"
. NEV-0 MUM OF ACT= COMM3NCEME2r'T AND EXPIRATION DATES
Co=ence-meat Dater Expiration Date: _,-
rr.�a:w�.r:a000�usm�a� u+o+rK -2-
' ��ITIQN� LEASE PRQVISYC�
ARTICLE I. PREMISES
SECTION 1.1 LEASR•D PRE'ISES. Landlord hereby leaves to
Tenant and Tenant hereby hires from Landlord, subject to all the
terms and conditions hereinafter set forth, those certain premises
identified in Item 2 of the Basic Lease Provisions and shown in the
drawing attached hereto as Exhibit "A-10 (the "Premises") . The
Premises are located on the designated floor(s) of that certain
office and retail structure constructed on the real property
legally described in Exhibit "A-2" attached hereto. Said office
and retail structure is hereinafter called the "Building". Said
real property, the Building, and other related improvements and
such additional buildings, and other related improvements as from
tine to time may be constructed upon said real property are
hereinafter referred to as the "Project".
SECTION 1.2 ACCEPTANCE OF PREMISES. Tenant acknowledges that
neither Landlord nor any agent. of Landlord has made any
representation or warranty with respect to the Premises, the
Building and/or the Project, or the suitability or fitness thereof
for the conduct of Tenant's business or for any other purpose,
except as set forth in this Lease. The taking of possession or use
of the Premises by Tenant for any purpose other than construction
shall conclusively establish that the Premises, the Building and
the Project were at such. time in satisfactory condition and in con-
formity with the provisions of this Lease in all respects, except
as to any items . as to which Tenant shall give Landlord written
notice, which items shall be limited to any items required to be
accorplished by Landlord pursuant to its standard build out or
under that certain Work Letter, if any, being executed and
delivered by Landlord and Tenant concurrently with this Lease and
attached hereto as Exhibit PB* (the "Work Letter"). Such written
notice shall be given within sixty (60) days after the term of this
Lease commences as provided in Article II below. Pailure to submit
such written notice in the time provided shall constitute a waiver
thereof. Landlord shall promptly take such action as may be
reasonably required to remedy any actual defects and/or to complete
any work of which it is notified as provided above.
SECTION 1.3 ❑SE RESERVATTQNS. Tenant acknowledges that the
exterior demising walls of the Premises and the area between the
finished ceiling of the premises and the slab of the Building floor
or roof thereabove and between the finished floor of the Premises
and the foundation or finished ceiling of the portion of the
Building therebelow have not been leased to Tenant. Landlord
reserves the use thereof, together with the right to locate or
relocate (both- vertically and horizontally), install, maintain,
use, repair and replace pipesutility lines, ducts, conduits,
flues, re!rigerant lines, drains, sprinkler mains and valves,
access panels, wires atd appurtenant meters or equipment, and
structural elements leading through, under or above the Premises in
locations which will not materially interfere with Tenant's use of
the Premises.
SECTION 1.4 D.UILDINIG tTAME' = _ADDRESS. Landlord may adopt
any name it may select for the Building and/or the Project, and
Landlord reserves the right to change the name and/or address of
the Building and/or the Project at any time. Tenant shall not use
the name of the Building, the Project or such development for any
purpose other than as the address of the business to be conducted
by Tenant in the Premises, and Tenant shall not acquire any
property right .in or to any name which contains said word
combination as a part thereof.
ARTICLE II. TERM
SECTION 2.1 The term, of this Lease shall be for the $ L'- '
period shown in Item 4 of the Basic Lease Provisions, cor ..�encing on
fS:'�6Tk1��:0000112�Q3141.i IIf07A1 -3 - .
the esti6ted conr.sencement dace as shown in Item 3 of the Ba y
Lease Provisions, or such later date as the Premises shall be
tendered to Tenant ready for occupancy or upon such earlier date as
Tenant takes possession or commences use of the Premises for any
purpose other than construction (the 'Commencement Date'). Within
five (S) days following the Commencement Date, the parties shall
execute a supplement in the form attached hereto as Exhibit 'A-3*,
stating the Commencement Date and the expiration date of the tern;
of 'this Tease. The term 'ready for occupancy* shall mean when
Landlord (a) has put in operation all Building services essential
for the use of the Premises by Tenant; (b) has provided reasonable
access to the Premises for Tenant, its agents, erTloyees, licensees
and invitees so that the same may be used without unnecessary
interference; and (c) subject to the provisions of the Work Letter,
if any, has "substantially completed• (as defined in the work
Letter) the work required to be done by Landlord within the
Premises pursuant to the Work Letter.
SECTION 2.2 T. MER OF POSSESSION BY LA MORn. If Landlord,
for any reason whatsoever, cannot deliver possession of the -
Premises to Tenant on or before the estimated commencement date,
this Lease shall not be void or voidable ncr shall Landlord by
liable to Tenant for any loss or damage resulting therefrom;
provided, however, if Landlord does not deliver the premises within =
ninety (90) days of the estimated commencement date (excluding
delays due to events of force majeure or delays caused or
materially contributed to by Tenant), then Tenant shall have the
right to terminate the Lease at any time thereafter until Landlord
delivers possession of the Premises to Tenant.
SECTION 2.3 OPT1011 TO EXTEND TERM. Tenant shall have one (1)
option to extend the term of this Lease for a period of five (5)
years ("Extension Term.'), provided that at the time of such
election and at the expiration of such existing term Tenant is not
then in default under any of the terms or provisions of this Lease.
Tenant may only exercise the option by giving written notice of
Tenant's intent to exercise the option to Landlord at least ninety
(90) days prior to the expiration of the existing term hereof.
During the Extension Term, the basic annual rent shall be equal to
the then fair market renal value of the Premises. If Landlord and
Tenant cannot agree upon the fair trarket rental value of the
Premises within sixty (60) days after Landlord's receipt of
Tenant's Notice exercising the option contained herein, -Landlord
and Tenant shall each appoint a 'Qualified Arbitrator" (as defined
below) within seven (7) days after the expiration of the
aforementioned sixty (60) day period. Such arbitrator shall confer
and select a third Qualified Arbitrator (the 'Neutral Arbitrator•),
who alone shall determine the fair market rental value of the
Premises. Should the two (2) arbitrators fail to select a third
Qualified Arbitrator to act as the Neutral Arbitrator within seven
(7) days, the. -Neutral Arbitrator shall be designated pursuant to
California Code of Civil Procedure Section 1281.6, as that section
ray be amended or redesignated from time 'to time; provided,
however, that the Neutral Arbitrator so appointed must be a
*Qualified Arbitrator.• The determination of the Neutral
Arbitrator shall be binding upon Landlord and Tenant. Landlord and
Tenant shall bear the cost of the arbitrator appointed by such
party and shall equally bear the cost of the Neutral Arbitrator.
AS used herein, the term "Qualified Arbitrator* shall mean a person
Who is a real estate broker with not less than five (5) years'
experience in commercial office leasing in the Huntington Beach
area. Notwithstanding anything in this section to the contrary,
the basic annual rental for the Utension Term shall not be reduced
below the basic annual reatal in effect immediately preceding the
arbitrator's decision.
SECTIO.i 2.4 $ICaHl ,OF FPS' QFFER. Provided Tenant is not in '
default under the Lease, Tenant shall have the right of first offer
to lease any contiguous space becoming available on the second
floor of the Building. As and when such space becomes available to
lease; Landlord shall, by written notice (•Notice of Offer"), offer
such space to Tenant at the prevailing market rental rate and such
FS-1i6750t4t:a0000=3141A 1 V0 1% - 4 -
other prevailing term« and ckM)ditions. Tenant shall have the ri t
to lease said space by delivering written notice to Landlord
accepting Landlord's offer within three (3) days of receipt of the
Notice of Offer. Tenant shall not have the right to lease only a
portion of the space in the Notice of offer, but must accept the
entire space indicated in such Notice of Offer. If Tenant elects
to lease such- space, Landlord and Tenant shall enter into an
amend. -gent of this Lease incorporating such space into the Premises
upon the terms and conditions set forth in the Notice of Offer and
to the extent such space is unimproved, Landlord shall improve the
space at Landlords expense to the same quality and quantity as the
improvements initially constructed for the Premises. If Tenant
does not accept such offer within the aforementioned three (3) day
period, Landlord shall be free to lease such space and Tenant shall
have no further right With regard to such space unless and until
said space again becomes available after being leased.
.
ARTICLE III. RENT AND SECURITY DEPOSIT
SECTION 3.2 BASIC ANNUAL RENT.
(a) Tenant shall pay the basic annual rent for the Premises
in the total amount, but payable in the equal nDnthly installments,
shown in Item 5 of the Basic Lease Provisions, due and payable on
the first day of each month in advance, commencing on the
Com=encement Date and continuing throughout the term of this Lease,
except that if the Commencement Date occurs on a day other than the
first day of a month, then the rent payable hereunder shall be
prorated on a daily basis and the rent for the partial month
following the Comencement Date shall be payable on the first day
of the term of this Lease. No demand, notice or invoice shall be
required. Tenant shall receive a credit against the first
installment or installments of minimum rental payable under this
Section 3.1 in an amo=t equal to the prepaid rent specified in
Item 9 of the Basic Lease Provisions. All rents and other sums
payable by Tenant to Landlord under this Lease shall be paid to
Landlord, without offset or deduction, in ltwful money of the
United States of America at the address for Landlord shown in Item
11 of the Basic Lease Provisions, or to such other person or at
such other place as Landlord may from time to time designate in
writing.
(b) As used herein "Lease Year* shall be a period of twelve
(12) consecutive months commencing on the first full calendar month
during the lease term; provided that the first Lease Year shall
also include any partial calendar month following the Commencement.
Date.
(c) Intentionally omitted.
(d) The'basic annual rent is calculated on the basis of the
Froduct of the rentable square feet of the.Premises shown in Item .
2 of the Basic Lease provisions, multiplied by EIGHTEEN AND
96/100THS DOLLARS ($18.96).
(e) In the event that at any time during the term of this
Lease, any governmental law, rule or regulation prohibits or
postpones in whole or in part any increase in the rent or in the
payment of other saws payable by Tenant hereunder to be made
pursuant to this Lease, then, and in either of such events, such
ircrease or payment shall be made to the maximum extent permissible
by law at the time provided in this Lease, and/or at any time or
times thereafter such increase or payment, or any portion thereof,
may lawfully be made and any such increase in rent, or any portion
thereof, or other slims payable hereunder, or portions thereof, the
payment of which has been so prohibited or postponed, shall
thereafter become due and payable to the maxima«: extent and at the :
earliest titre or times permitted.by law.
SECTION 3.2 RE9RPV=-
TrmSTD1i=?d000MIMMA MOM • 5•
SECTION 3.3 OPERAT � E PEvSES.
(a) In addition to paying basic annual rent, Tenant shall pay
to Landlord in installments, as provided in (b) below, the amount
by which Tenant's proportionate share of all •operating Expenses•
(as hereafter defined) incurred by Landlord in the operation of the
Building, (including the Building's percentage of Operating
Expenses for the Project) exceeds Tenant's proportionate share of
the operating Expenses incurred during the Base Year specified in
Item 6A of the Basic Lease Provisions (•Increase operating Costs').
In no event, however, shall Tenant's proportionate share of
Increase Operating Costs increase by more than ten percent (lot)
per year over the previous year's proportionate share of Increase
operating Costs. Such payments shall be deemed additional rent.
Tenant's obligation to pay its proportionate share of Increased
Operating Costs shall commence as of the beginning of the first
full calendar year following the Base Year. Tenant's proportionate
share specified in Item 6B of the Basic Lease Provisions is
computed by dividing the *rentable area" of the Premises identified
in Item 2 of the Basic Lease Provisions by the total •rentable
area" of the Building which is Forty -Eight Thousand Sixteen
(48,026) square feet. The term "rentable area* as used herein with
respect to the Premises, the Building and any ether building within
the Project (exclusive of parking structures) shall be computed by
measuring from the inside surface of the permanent outer building
walls. As long as the Building shall be comprised of retail and _
office uses, Landlord ray in its reasonable discretion, segregate
the retail rentable area from the office rentable area and Tenant
shall pay its proportionate share on such rentable area as
segregated.
Specifically included within the definition of rentable area
shall be all area within the outside walls, air conditioning shafts
and dacts where a central air conditioning system eliminates floor
fan rooms, private stairs, private elevators, toilets, air
conditioning rooms, fan roars, air ducts, janitor's closets, slop
sinks, electrical closets, telephone closets, and all enclosing
walls for the above items, all of which exclusively serve the floor
in which they are located, and columns and projections necessary to
the Building. The area of air conditioning aal fan rooms located
on a rental floor serving more than the one floor in which located,
together with their enclosing walls, shall be apportioned and
included as rentable area of the floors which they serve.
Except as provided above, there shall be excluded from
rentable area building stairs, fire towers, elevator shafts, flues,
vents, stacks, pipe shafts and vertical ducts, with their enclosing
walls serving'more than one floor, lobby, public vestibules, public
telephone boots, ramps, loading docks and other public areas on the
first• floor of .the building. Rentable area for divided floors shall
include a proportionate share of public corridors, public toilets,
air conditioning rooms, fan rooms, air ducts, janitor's closets,
electrical closets, telephone equipment closets and their enclosing
balls.
Prior to the Corn:encement Date, and from time to time
thereafter, at Landlord's option, Landlord's architect shall
determine and certify in writing to Tenant and Landlord the actual
rentable area of the Building and other buildings in the Project,
which determination and certification shall be binding upon Tenant.
(b) Prior to the start of each calendar year of the lease
term following the Base Year, Landlord shall furnish to Tenant a
written estimate of the operating Expenses and Tenant's
proportionate share of the Increased operating Costs for the next
calendar year or portion thereof. In addition to Tenant's basic
annual rent payments, Tenant shall pay to Landlord the amount by
which its- proportionate share of operating Expenses exceeds
Tenant's proportionate share of the operating Expenses incurred '
during the Base Year identified in Item 6A -of the Basic Lease
Provisions in equal monthly installments, in advance, together with
the monthly installments of basic annual rent.
within one hundred City (120) days after the end of each
calendar year, including the calendar year daring which the lease
term commences, Landlord shall furnish to Tenant a statement
showing in reasonable detail the actual Operating Expenses incurred
by ,Landlord. during the previous year and Tenant's proportionate
share thereof. The parties shall adjust Tenant's estimated
payment, if any, to Tenant's actual proportionate share as shown by
such annual statement: Any a.Tount due Tenant shall be refunded, and
any deficiency shall be paid by Tenant in the next such
installment. Tenant agrees to accept as final and determinative
the amounts shown in such statement and hereby waives all claims
arising from such statement, except those for which a claim is made
by Tenant within twenty-four (24) months after Landlord has
furnished such statement to Tenant. Should there be any dispute
with respect to either the Landlord's written estimate of Tenant's
share of Operating. Expenses or the year end statement showing
actual operating Expenses, Tenant shall nevertheless pay its
proportionate share of such expenses but may contest the accuracy
thereof and shall receive a refund, It appropriate. Any failure by
Tenant to so pay shall constitute a default by Tenant under this
Lease. Tenant shall have the reasonable right, upon twenty (20)
days' prior written notice once per calendar year, to examine
Landlord's books and records in connection with verifying the
Operating Expenses for the Building.
(c) Even though the Lease term has expired and Tenant has
vacated the Premises, when the final determination is made of
Tenant's Increased Operating Costs for the year in which the Lease
terminates, Tenant shall immediately pay to Landlord the amount by
which such Increased Operating Costs exceeds the estimated payments
made by Tenant under (b) above. Any overpayment trade toward
Tenant's Increased Operating Costs shall be promptly rebated by
Landlord to Tenant. Tenant's payment of Increased Operating Costs
shall be prorated for any partial calendar year on a per diem basis
in any reasonable manner selected by Landlord.
(d) Landlord may from time to time during any calendar year "
re -estimate operating Expenses and/or tenant's proportionate share
thereof to reflect changes in circumstances. In such event,
Landlord shall notify Tenant of the change and of the effect of
such change on the amount of the monthly installments to be paid by
Tenant pursuant to (b) above. Commencing on the date specified in
such notice from Landlord, the monthly installment payable by
Tenant under (b) above shall be adjusted as specified in such
notice,
(e) The term "Operating Expenses• as used herein shall
include all costs of operation, maintenance, maragement and repair
in a manner deemed reasonable and appropriate by Landlord, and
shall include the following costs by way of illustration but not
limitation; property taxes, including any taxes described in
paragraph (f) next below; installments of general or special
assessments; costs and expenses in contesting the amount or
validity of any property tax by appropriate proceedings; cost of
casualty, liability and other insurance and Landlord's personal
property used in connection therewith, including rental loss,
earthquake and/or other endorsements from time to time deemed
appropriate by Landlord; costs of all accounting and professional
fees; water and sewer charges; insurance premiums; license, permit,
and inspection fees, heat; steam; trash pick up, janitorial and
security services (provided Landlord shall. not be required to
provide any particular type of security or liable -for any failure
of security); supplies, materials; equipment; tools; cost of
repayment of equipment and all maintenance, service and warranty
agreements on equipment, including alarm service, building
mechanical equipment, window cleaning and elevator maintenance
(provided that Landlord may elect to depreciate the cost of
personal property used in the maintenance, operation, and/or repair
of the Building on a straight line basis and treat such
depreciation. as an operating expense, in which event replacement
ccst shall be reduced by the accumulated depreciation of the item.`
-
replaced); amortization of capital investments (such costs to be
►s:,mnour:o amra+m+q.� t+ab� - 7 -
amortized over such reasonable period as Landlord may determine
With a return on capital of ten percent MOt) per annum on the
unamort12ed balance or at such rate as may have been paid by
Landlord on funds borrowed for the purpose of constructing such
capital improvements) required after the Coxmencement Date by
governmental authority or that produced a reduction in operating
costs or which result in energy conservation; labor, wages and
salaries, fringe benefits and payroll taxes for administrative and
other personnel; a management fee not to exceed current market
rates, which may be payable to Landlord; and any expense incurred
pursuant to Sections 5.1, 5.2 and 6.2 below. The term •property
taxes* as used herein shall include all real estate taxes or
personal property taxes and other taxes, charges and assessments
used in connection with the operation of the Building and/car the
Project and the land upon which they are situated, and any tax,
surcharge or assessment which shall be levied in addition to or in
lieu of real estate o4 personal property taxes, other than taxes
covered by Article Vir. The Operating Expense shall be
extrapolated, if necessary, to reflect a completed Building at full
assessment with at least ninety-five percent (95t) occupancy of the '
rentable area thereof, a full year of operating and a full year of
occupancy by Tenant. ,
(f) Should the United States of America,' the State of
California or any political subdivision thereof, or any
governmental authority having jurisdiction (by way of substitution
for all or any part of the • taxes • otherwise required to be paid in
whole or in part by Tenant pursuant to this Section 3.3 or Section
7.1, or in addition thereto) impose a capital levy or a tax,
assessment and/or surcharge of any kind or nature upon, against, in
connection with, measured by, or with respect to the rentals or
other charges payable to Landlord by Tenant or other tenants in or `.
occupants of the Building and/or the Project or en the income of
Landlord derived from the Building and/or the Project or on
Building and/or Project revenues, on Landlord's ownership of the
Building and/or the Project, or any portion thereof or interest
therein, or otherwise, other than on the value of real and personal
property comprising the Building and/or the Project, but expressly
excluding any general net income, franchise, or inheritance tax
levied upon or payable by Landlord, then, in such case, such tax,
assessment andor surcharge shall be deemed to constitute a tax
and/or assessment against the Building and/or the project and shall
be included in Operating Expenses.
(g) Notwithstanding the foregoing, Operating Expenses shall
not include expenses for which the Landlord is reimbursed (either
by an insurer, condemnor, tenant or otherwise); expenses incurred
in leasing or procuring tenants (including, without limitation,
lease commissions, advertising expenses, legal expenses, and
expenses of renovating space for tenants); legal expenses arising
out of disputes with tenants or the enforcement of the provisions
of any lease -of space in the Building; interest or aznort12&t10n
payments on any mortgage or mortgages; wages, salaries or other
compensation paid to any executive employees above the grade of
building manager; or the cost of any work or service performed for
or facilities furnished to a tenant at the tenant'e costs; and
charges metered separately to other premises within tha Building.
:o the extent that any of the expenses described in the preceding
paragraph are partially excluded from Operaticg Expenses due to
reimbursement or payment of a portion thereof by a tenant of the
Building, or by tenants of other floors of the Building, Tenant's
proportionate share of the balance of such expense shall be
appropriately adjusted by excluding the rentable area leased to ,
such tenant or tenants for purposes of the cocputation required by
Section 3.3.
(h) In the event that Tenant's obligations for the payment of
basic, annual rent is abated, in whole or in part, under Article X
or Article XI below, Tenant's 'share of the Increased Operating
Costs shall be reduced in proportion to the reduction in basic. y
annual rent during -any applicable cilendar year and Landlord shall,
►s;��enaus:a000�uimuta 1t+os»+ -B- ! f�� .
make an appropriate ad uatmeV to the estimated payment requited by
(b) above for the period of any such rent abatement.
ARTICLE Iv. USES
SECTION 4.1 M. Tenant shall use and occupy the Premises
for general office purposes (including training and sales for
insurance, tax and financial services) only and for no other use or
purpose without the prior written consent of Landlord, which
Consent Landlord may withhold in its sole and absolute discretion.
Tenant shall not use or occupy the Premises in violation or in
conflict with any "Governmental Requirement' (defined below) but
shall, at Tenant's expense, promptly comply with all present and
future laws, ordinances, statutes, including without limitation the
Americans with Disabilities Act, orders. rules, restrictions,
regulations and requirements of all governmental authorities having
jurisdiction over the Premises whether or not the same is substan-
tial, foreseen or unforeseen, ordinary or extraordinary, or whether
the same shall necessitate Tenant snaking structural changes or
improvements to the Premises or interfere with the use and
enjoyment of the Premises (herein collectively, "Governmental,
Requirements'). Tenant shall not do or permit anything to be done
in or about the Premises which will in any material way obstruct or
interfere with the rights of other tenants or occupants of the
Project or of property adjacent to the Project, or injure or annoy
them, or use or allow the Premises to be used for any improper,
i=oral, unlawful or objectionable purpose, nor shall Tenant cause,
maintain or permit any nuisance or commit any waste in, on or about
the Premises or the Project. Without limiting the generality of
the foregoing, Tenant shall not (i) obstruct or store anything in
the common areas (including service or exit corridors), (ii) place
a load upon any floor of the Premises which exceeds the floor load
per square foot which such floor was designed to carry, or (iii)
permit any objectionable sound or odors to carry outside the
Premises. In particular, Tenant agrees that business machines and
mechanical equipment used by Tenant which cause vibration or noise
that.may be transmitted to any other portion of the Building, to
such a degree as to be reasonably objectionable to Landlord or to
any occupant, shall be placed and maintained by Tenant at its
expense in setting of cork, rubber or spring -type vibration
isolators sufficient to eliminate such vibrations or noise. Tenant
shall not do or permit to be done anything which will invalidate or
increase the cost of any insurance policy(ies) covering the
Building, the Premises, the Project and/or property located therein
and shall comply with all applicable insurance underwriters rules,
orders, regulations and requirements of the Pacific Fire Rating
Bureau or other applicable organization performing a similar
function. Tenant shall promptly upon demand reitrburee Landlord for
any additional -premiun charged for such policy(ies) by reason of
Tenant's failure to comply with the provisions cf this Section, but
Bach reimbursement shall not be construed as curing Tenant's
default for failing to comply with the provisions of this Section.
Tenant shall not, under any circumstances, allow alcoholic
beverages to be served or consumed within any portion of the
Premises.
SECTION 4.2 PROHIBITION AGAINST SOLICI' 19N AND OTHER
Q Tenant hereby
delegates to Landlord full power, authority and control to
regulate, in accordance with the rules and regulations attached
hereto as Exhibit "C" and/or from time to time adopted pursuant to
Article XVI and/or to prohibit the entrance to the Premises, the
Building and/or the Project of all vendors, suppliers, surveyors,
petitioners and others reasonably deemed objectionable by Landlord.
In the event said persons are guests or invitees of Tenant, Tenant
shall notify Landlord of this fact. No such person shall be
permitted to enter upon the Project, the Building and/or the
Premises unless and until such person shall have executed
Landlord's standard entry permit and Landlord shall havef
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determined, in its sole and absolute discretion and judgment, that
such person's activities will not disturb other tenants, their
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customers or invitees or A react from the use of the Buildingr�
and/or the Premises for their intended purposes. Tenant agrees
that Landlord may prohibit and exclude, in whole or in part,
vendors of sandwiches and other food items from the Building, as
Landlord may elect, in Landlord's sole and absolute discretion.
SECTION 4.3 EXCTUSSM _CONTROL ME ,Comm? AREA. It is
expressly agreed and understood that control over all uses of the
'Common Facilities• (defined in Section 5.2 below) shall reside
with and be solely exercisable by Landlord in its sole and absolute
discretion. Said areas shall not be available for use by Tenant,
its employees, agents, licensees, vendors, and suppliers except as
herein expressly provided, nor by other vendors, surveyors,
petitioners and others without the express written consent of
Landlord, which Landlord may withhold in its sole and absolute
discretion. Notwithstanding the foregoing, Tenant shall have the
exclusive right to use the small deck facing Pacific Coast Highway
and depicted on Exhibit •A-11.
SECTION 4.4 SIGN. Tenant may not affix a sign to the
exterior surface of the suite front or any other part of the
exterior or interior surface of the Building. Except with the
prior written approval of Landlord, which approval may be withheld
in Landlord's reasonable discretion, Tenant shall not place or
allow to be placed, erected or maintained any sign, decal, placard,
name, insignia, trade name, decoration, flashing, moving or hanging
lights, lettering, or any other descriptive wards or advertising
matter of any kind or description (herein collectively, "sign" or
•signs•) on any exterior door, wall, window, surface or roof of the
Premises or of the Building or on the glans of any window or door
of the Building, or in any deck or balcony area included within the
Premises or on any sidewalk or other location outside the Building,
or within any entrance to the premises. If Tenant places or causes
to be placed or maintained any of the foregoing without Landlord's
prior approval, the same may be removed by Landlord at Tenant's
expense without notice and without such removal constituting a
breach of this Lease cr entitling Tenant tc claim damages on
account thereof. Notwithstanding the foregoing, Tenant may affix
a sign to the exterior surface of the Building if permitted by the
City of Huntington Beach ("City") and reasonably approved in
advance by Landlord. If Tenant places or causes to be placed or
maintained any of the foregoing with Landlord's prior approval,
Tenant shall maintain the same in good condition and repair at
Tenant's sole cost and expense. Landlord shall also install, at
Landlord's expense, building standard suite entry identity for the
Premises. In the event Tenant changes its trade name, Tenant shall
have the right to install new signage to replace the above -
referenced signage, at Tenant's sole cost and expense, provided
such signage complies with all governmental requirements and is
approved in advance by Landlord, such approval not to be
unreasonably withheld,
ARTICLE V. SERVICES
SECTION 5 . I =LITIM &M _ SERVICES. Subject to the
provisions set forth below, Landlord shall furnish to the premises
electricity through a separate meter billed directly to Tenant.
Tenant shall pay for replacement of all fluorescent fixtures and
bulbs as required.
Landlord shall furnish water for drinking, cleaning and
lavatory purposes only, but if Tenant requires, uses or consumes
water for any purpose in addition to ordinary drinking, cleaning
and lavatory purposes, of which fact Tenant constitutes Landlord to
be the sole judge, Landlord may install a water meter and thereby
measure Tenant's water consumption for all purposes. Tenant shall
pay Landlord for the cost of the meter and the cost of the
installation thereof, and for consumption throughout the duration
of Tenant's occupancy. Tenant shall keep said meter and installed
equipment in good working order and repair at Tenant's own cost and
fs. tenouraaooi�2rm�a.� s»c+n+ • 10 • ��
expense, in default of whichZ,andlord may cause such meter to be
replaced, repaired and collect the cost thereof from Tenant.
To the extent any utility service to the Premises is
separately metered or billed to Tenant, Tenant shall pay all
charges for such utility service to the Premises. If any such
charges are not paid when due, Landlord may pay the same, and any
amount so paid by Landlord shall thereupon become due to Landlord
from Tenant as additional rent. If Landlord shall elect to furnish
any utility services to the Premises, Tenant shall purchase its
requirements thereof from Landlord so long as the rates charged
therefor by Landlord do not exceed those which Tenant would be
required to pay if such services were furnished it directly by a
public utility.
Landlord shall not be liable for any failure to furnish any of
the services or utilities described in this Section 5.1 when such
failure is caused by accidents, breakage, repairs, strikes,
lockouts, other labor troubles or disputes, governmental water,
energy or other conservation programs or any other governmental
requirements, action or inaction, moratorium or other cause beyond
Landlord's reasonable control. Landlord =y take into
consideration the availability of energy resources and prudent -
energy conservation practices, including participation in any
energy conservation association or other arrangerrents for voluntary
cut -back, load shedding and the like. No failure to furnish any of
such service or utilities shall entitle Tenant to any damages,
relieve Tenant of the obligation to pay the full rent reserved
herein or constitute or be construed as a constructive or other
eviction of Tenant. Tenant shall comply with all rules and
regulations which Landlord may reasonably establish for the proper
functioning and protection of the air conditioning, heating,
elevator, plumbing and electrical systems. Landlord shall at all
reasonable times have free access to all mechanical installations
of Landlord, including, but not limited to, the air conditioning
equipment and vents, fans, ventilating and machine rooms and
electrical closets. If there is any failure, stoppage or
interruption in said utilities and/or services, Landlord shall use
reasonable diligence to correct the same, repairs and/or
corrections that, are the responsibility of a public or private
utility conpany, excepted.
SECTION 5.2 OPERA' OI N Ah'jZ MAINTENANCE OF COON FACILITIES.
Landlord shall operate and maintain during the term of this Lease
all comron facilities within the Building and the Project. The
term 'Common Facilities" shall mean all areas within the Project
which are not held, or designated by Landlord to be held, for
exclusive use•by persons entitled to occupy space in the Project.
The Corcnon Facilities shall include, without limiting the
generality of. the foregoing, driveways, truckways, delivery
passages, loading docks, sidewalks, ramps, landscaped and planted
areas, exterior stairways and balconies, hallways and interior
stairwells not located within the premises of any tenant, common
entrances and lobbies, mezzanines, elevators, bus stops, retaining
walls, restroorrs not located within the premises of any tenant,
lighting fixtures; Building and/or'Project identification signs,
irrigation systems and controllers, drains and sewers.
SECTION 5.3 USE_OF_COMMM FACILITIES. The use and occupancy
by Tenant of the Premises shall include the use of the Common
Facilities in common with Landlord and with all others for whose
convenience and use the Common Facilities have been or may
hereafter be provided by Landlord, subject, however, to rules and
regulations for the use thereof as prescribed from time to time by
Landlord pursuant to Article XVI below. Landlord shall operate,
manage, equip, light, repair, clean and maintain the Cor=.on
Facilities in such manner as Landlord may in its sole discretion
determine to be appropriate. Landlord shall at all times during
the term of this Lease have the -sole and exclusive control of all
Common Facilities, and may at any time and from time to time during
the term hereof restrain any use or occupancy thereof, except as
authorized by such rules and regulations, as may be changed from
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time to time. Tenant shall k said Common Facilities free and
clear of any obstructions related to Tenant's operations. If
unauthorized persons are using any of said Common Facilities by
reason of the presence of Tenant in the Building, Tenant, upon
demand of landlord, shall restrain such unauthorized use by
appropriate proceedings. nothing herein shall affect the right of
Landlord at any time to remove any such unauthorized persons or
obstructions. Landlord may temporarily close any Cannon Facility
for repairs or alterations as provided in Section 6.2 below, to
prevent a dedication thereof or the accrual of prescriptive rights
therein, or for any other reason deemed sufficient by Landlord.
SECTION 5.4 PARKI?'G.
(a) Tenant acknowledges that no parking areas are provided at
the Project and that Tenant riay use the parking structure provided
by the City located near the Project. Landlord agrees to use all
reasonable efforts to have the City provide parking validation for
Tenant's employees and invitees at the rate provided by the City to
Jack's Surf & Sport, but Tenant acknowledges that the availability
of parking and such validation rate is subject to change and not
within Landlord's control. In addition, the City has agreed witil
Tenant to provide nine (9) . parking passes in the City's parking
structure at the annual fee of One Dollar ($1.O0) per pass for the
use by Tenant and its employees during the initial term of the
Lease. Tenant acknowledges and agrees that the aforementioned
parking passes are provided by the City and that Landlord shall
have no liability or obligation to obtain such passes for Tenant.
(b) In the event that any parking surcharge or regulatory
fee, however designated, should be imposed upon or levied or
assessed against the Project. or any portion .thereof, by any
governmental agency or authority pursuant to the •Clean Air Act",
or any plan implemented pursuant to such Act or any enactment
amendatory or in substitution thereof, or pursuant to any other
governmental• act or decree, Landlord may recover such fees as
operating Expenses. The foregoing parking provisions are subject
to any governmental regulations which limit parking or otherwise
seek to encourage, the' use of carpools, public transit or other
alternative transportation forms.
ARTICLE VI. MAIMENAWCE OF THE PREMISES
SECTION 6.1 '
(a) Tenant at its sole cost and expense shall crake all
repairs necessary to keep the Premises in good crder and repair and
in a safe, clean, sanitary, orderly and attractive condition. All
repairs shall -be at least equal in quality to the original work,
shall be made only by a licensed, bonded contractor approved in
advance by Landlord and shall be made only at such time or times as
shall be reasonably approved by Landlord. Landlord may impose
reasonable restrictions and requirements with respect to such
repairs including, without limitation, those applicable to Tenant's
alterations as set forth in Section 6.4.
(b) Tenant, at its sole cost and expense, shall install and
raintain fire extinguishers within the Premises and other fire
protective devices as tray be required from time to time by any
agency having jurisdicticn and/or by the insurance underwriters
insuring the Premises.
SECTION 6.2 N .
(a) Landlord shall keep and maintain in good repair the roof
(including the structural integrity thereo=), foundations,
fcotings, the exterior surfaces of the exterior walls , the HVAC
system for the Premises and any utility facilities, and the
electrical and mechanical systems in the Building, except to the
extent such repair is Tenant's responsibility under Section 6.1
M.:6no14rm4W1%21 n+1.s warn+ -12 -
above or the responsibility ofYpublic or private utility company .
and except that Tenant at its expense shall make any such repairs
relating to the act or negligence of Tenant, its agents, employees,
invitees, licensees or contractors. Landlord shall not be liable
for any failure to make any repairs or to perform any maintenance
unless such failure shall persist for an unreasonable time after
written notice of the need for such repairs or maintenance is given
to Landlord by Tenant.
(b) Except as provided in Section 10.1 and Article XI below,
there shall be no abatement of rent and no liability of Landlord by
reason of any injury to or interference with Tenant's business
arising from the making of any repairs, alterations or improvements
in or to any portion of the Project or the Building, including the
Premises, or in or to the fixtures, appurtenances and equipment
therein; provided, however, that in making such repairs, -
alterations or improvements, Landlord shall interfere as little as
reasonably practicable with the conduct of Tenant's business in the
Premises. 5'
SECTION 6.3�AL3MR TIONS BY LAM=.
(a) Landlord reserves the right at any time, and from time to
time, to make changes in or to the Building and the fixtures and
equipment thereof, to make alterations or additions to any building
within the Project, to construct other buildings (including free
standing buildings) and improvements within the Project, to enlarge
or reduce the Project and to make alterations therein or additions
thereto, or to any part thereof, to build additional stories on any
building or buildings within the Project, to construct decks,
subterranean or elevated parking facilities, and to sell or lease
any part of the land comprising the Project for the construction
thereon of buildings, which may or may not be part of the Project.
Landlord reserves the right at any time to change the size, con-
figuration, shape, number and extent of the Common Facilities, or
any of them, all as Landlord may deem necessary or desirable in its
sole discretion. No such change described in this Section 6.3(a)
shall entitle Tenant to any abatement of rent or other claim
against Landlord; provided, however, such changes or alterations
shall not deprive Tenant of reasonable access to or use of the
Premises,
(b) As a material inducement to Landlord's entering into this
Lease, Tenant expressly waives and releases any rights it may have
whether granted by statute or otherwise, to make repairs at
Landlord's expense, including, but not limited to, its rights as
contained in Sections 1941, 1941.1 and 1942 of the California Civil
Code.
SECTION 6:4 ZW- ,* _S_ALTER TAiONS. Tenant shall not make
alterations, additions or improvements to the Premises nor any
repairs, replacements or restorations to the Premises in excess of
T'w'0 THOUSAND FIVE HUNDRED DOLLARS ($2,500.00) without the prior
written consent of Landlord. Landlord may impose, as a condition
to such consent, such requirements as Landlord may deem reasonable,
including, but not limited to, requirements as to the manner, time
and contractor or contractors as to or by which such work shall be
;
done. Notwithstanding the foregoing, no improvements may be made
that would diminish the value of the Premises and, in addition, no
improvements may be made to any mechanical or utility system, the
exterior walls or the roof of the Premises, nor may any
improvements of a structural nature be made without Landlord's
approval, which approval may be withheld in Landlord's sole and
absolute discretion. In no event shall Tenant make or cause to be
made any penetration through the roof or the floor of the Premises
without the prior written approval of Landlord, which approval may
be withheld in Landlord's sole and absolute discretion. Any
requirements of the Work Letter applicable to any initial
construction work performed by or under Tenant shall also be
applicable to any such alterations, additions and/or improvements.
! • •-..:
All alterations made by Tenant shall be in accordance with all
i _• 1
.Goverr-mental Requirements and to the extent Tenant's alterations
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trigger or require alterations or other modifications within the
Building or Project, such alterations or other modifications shall
be performed by Landlord at the expense of Tenant. Any request for
Landlord's consent to such work shall be made in writing and shall
contain three (3) sets -of architectural plans and specifications
(with square footages) describing such work in detail reasonably
satisfactory to Landlord. 14o such plans and specifications or any
material change thereto shall be submitted for approval to any
federal, state, county or local government or other governmental
,agency or association prior to Landlord's review and approval o!
same. Failure of Landlord to respond to such request within twenty
(20) days shall be deemed a denial of such request. Plans and
specifications and governmental applications shall become the
property -of•Landlord upon the termination or expiration of this
Lease and shall be turned over to Landlord by Tenant upon
Landlord's request therefor. Unless Landlord otherwise agrees in
writing, all such alterations, additions or improvements affixed or
built into the Premises (but excluding moveable trade fixtures and
furniture) shall become the property of Landlord as provided in
Section 14.3 below, and shall be surrendered with the Premises, as
a part thereof, at the end of the Lease term, except that Landlord
may, by written notice to Tenant given at the time of approval of,
such alterations, require Tenant to remove all or any portion of
any alterations, decorations, additions, improvements and the like
installed by Tenant, and to repair any damaage to the Premises
arising from such removal. Tenant shall be permitted to install a
satellite dish and related equipment and components ('Satellite
Equipment') on the roof of the Building, provided that (i) Tenant
secures any permits required by governmental authority for
installation; Ui) the satellite dish is in keeping with the
aesthetics of the Building; (iii) it does not impair the structural
integrity of the roof; (iv) Tenant coordinates such installation
with Landlord's roofing contractor to avoid violations of any
roofing warranties; (v) the Satellite Equipment shall be screened
from visibility from any other part of the Building, in a manner
reasonably satisfactory to Landlord; and (vi) the location of the
same on such roof shall be subject to Landlord's approval, it being
understood that Landlord shall reserve locations for such equipment
on such roof for other occupants of the Building. Tenant agrees
that its Satellite Equipment shall not interfere with any satellite
or electronic transmissions to or from the Building. Tenant shall
at all times own and insure the Satellite Equipment and upon
expiration or termination of the Lease, shall remove the Satellite
Equipment and repair all damage arising from such removal.
SECTION 6.5 MLnOMIC' S LIEHS. Tenant shall keep the Premises
free from any liens arising out of any work performed, materials
furnished, or obligations incurred or alleged to have been incurred
by, for or under Tenant. In the event that Tenant shall not,
within twenty (20) days following the imposition of any such lien
(but is any event before an action is filed to foreclose such
lien), cause the same to be released of record by payment or
posting of a proper bond, Landlord shall have, in addition to all
other remedies provided herein and by law, the right (but not the
obligation) to cause the same to be released by such means as it
shall deem proper, including payment of or defense against the
claim giving rise to such lien. All sums paid by Landlord and all
expenses incurred by it in connection therewith shall create
automatically an obligation of Tenant to pay an equivalent amount,
together with interest thereon at the rate provided in Section 13.3
below, from the date paid by Landlord as additional rent, which
additional rent shall be payable by Tenant on Landlord's demand.
Tenant shall give Landlord no less than twenty (20) days' prior
notice in writing before commencing the construction of any
building, structure or other improvement on the Premises or of any
substantial repairs, alterations, additions, replacements or
restorations in and about the Premises so that Landlord may post
and maintain such notices of non -responsibility or other notices on
the Premises as Landlord deems necessary for protection from such
liens.
M"
F UTm+t: OM11430261.4 11MM4 -14 -
SECTION 6..6 Landlord shall at al
reasonable times upon reasonable notice (except in an emergency),
have the right to enter the Premises to inspect the same, to post
notices of non -responsibility, to alter, improve or repair the
Premises or any other portion of the Building, as otherwise
permitted hereunder, all without being deemed to have evicted
Tenant and without abatement of rent and may for that purpose
erect scaffolding and other necessary structures and store
materials, supplies and tools Where reasonably required by the
character of the work to be performed, provided that the business
of Tenant shall be interfered with as little as is reasonably
practicable. Tenant hereby waives any claim for damages or
abatement of rent for any injury, inconvenience to or interference
with Tenant's business, lose of occupancy or quiet enjoyment of the
Premises, and any other loss occasioned thereby; provided, however,
this provision shall not excuse. Landlord for its own gross
negligence or willful misconduct. As used in this Lease, the term
"gross negligence• shall mean the failure to perform a manifest
duty in reckless disregard of the consequences as affecting the
life or property of another. Landlord shall have the right to use
any and all means which Landlord may deem proper to open said doors
in an emergency in order to obtain entry to the Premises, and any,
entry to the Premises obtained by Landlord by any of said mesas
shall not under any circumstances be construed or deemed to be a
forcible or unlawful entry into, or a detainer of, the Premises, or
any eviction of 'Tenant from the Premises or any portion thereof.
During the last one hundred eighty (180) days of the lease term,
Landlord may, at all reasonable times, enter the Premises for the
purpose of displaying the Premises to prospective tenants.
SECTION 6.7 Intentionally omitted.
ARTICLE VII. TAXES AND ASSESSYMTS ON TEMAh'T'S PROPERTY
SECTION 7.1
(a) Tenant shall be liable for and shall pay at least forty
(40) days before delinquency, all taxes and assessments levied
against all fixtures, furnishings, equipment and other personal
property of Tenant located in or about the Premises, and when
possible, Tenant shall cause said fixtures, furnishings, equipment
and other personal property to be assessed and billed separately
frcm the real property of which the Premises form a part. If any
such taxes on Tenant's personal property or trade fixtures are
levied against Landlord or Landlord's property and if Landlord pays
the same (which Landlord shall have the right to do regardless of
the validity of such levy), or if the assessed value of Landlord's
property is increased by the inclusion therein of a value placed
upon such personal property or trade fixtures of Tenant and if
Landlord pays. the taxes based upon such increased assessment,
Tenant shall pay to Landlord the taxes so levied against Landlord
or the proportion of such taxes resulting from mach increase in the
assessment.
(b) If the tenant improvements. in the Premises, whether
installed and/or paid for by Landlord or Tenant and whether or not
affixed to the real property so as to become a part thereof, are
assessed for real property tax purposes at a valuation higher than
the valuation at which tenant improvements conforming to Landlord's
building standards in other space in the Building are assessed,
then the real property taxes and assessments levied against
Landlord or Landlord's property by reason of such excess assessed
valuation may, at landlord's option, be deemed to be taxes levied
against personal property of Tenant and shall, under such
circumstances, be governed by the Provisions of Section 7.1(a)
above,
(e) within thirty (30) days after wwitten request by
Landlord, Tenant agrees to provide receipts, cancelled checks or
other documents reasonably requested by Landlord to confirm Y;
rMUM :a0001uta1u.4 HMM 45 - �� �
Tenant's payment of any taxes and/or assessments payable by Tenant
directly to the taxing authority under this Lease.
ARTICLE VIII. ASSIGN..%= AND SUBLETTING
������-�E� SZ��ii=�i�►�ii3�i ��1�Z+T�35
(a) Tenant shall not, either voluntarily or involuntarily, by
operation of law or otherwise, assign, sublet, sell, encumber,
pledge or otherwise transfer all or any part of the Premises or
Tenant's leasehold estate hereunder, or permit the premises to be
occupied by anyone other than Tenant or Tenant's employees, without
Landlord's prior written consent in each instance. Any assignment
or subletting which is not in compliance with this Article VIII
shall be void and, at the option of Landlord, shall constitute a
default by Tenant under this Lease. Consent by Landlord to one or
more assignments of this Lease or to one or more sublettings of the
Premises shall not operate to waive Landlord's rights under this
Article VIII. The voluntary or involuntary surrender of this Lease
by Tenant or a mutual cancellation hereof shall not work a merger,
and shall, at the option of Landlord, terminate all or any existing
subleases or eubtenancies or shall operate as an assignment to
Landlord of such subleases or subtenancies, If Tenant is a
corporation which, under the then current guidelines published by
the Cc=issioner of Corporations of the State cf California, is not
deemed a public corporation, or is an unincorporated association or
partnership, the transfer, assignment or hypothecation of any stock
or interest in such corporation, association or partnership in the
aggregate in excess of fifty percent (Sol) shall be deemed an
assignment within the meaning and provisions of this Section.
Notwithstanding anything to the contrary contained in this Article
VIII'or elsewhere in the Lease, Tenant shall be permitted to sublet
not more than six hundred (600) rentable square feet in the
Premises to not more than two (2).of Tenant's financial planners
without the prior written consent of Landlord,
(b) If Tenant desires at any time to assign this Lease or to
sublet the Premises or any portion thereof, it shall first notify
Landlord of its desire to do so and.shail submit in writing to
Landlord (i) the name of the proposed subtenant or assignee; (ii)
the nature of the proposed subtenant's or assignee's business to be
carried on in the Premises; liii) the terms and provisions of the
proposed sublease or assignment; (iv) such financial information as
Landlord tray request concerning the proposed subtenant or assignee;
and (v) such information as Landlord my reasonably request
regarding the business experience concerning the proposed subtenant
or assignee. '
(c) At any time within twenty (20) working days after
Landlord's receipt of the information specified in subparagraph (b)
above, Landlord may, by written notice to Tenant, elect to (i)
consent to the subletting or assignment upon the terms and to the
subtenant or assignee proposed, subject to any conditions deemed
appropriate by Landlord, as determined in its reasonable
discretion, including, but not limited to, the condition that
Tenant pay to Landlord upon receipt any and all amounts (a) by
which the basic rent and additional rent paid by such subtenant
exceeds the sum of the rent and additional rent to be paid by
Tenant to Landlord for' such space under this Lease, or (b) of
profit received by Tenant from such assignee; (ii) refuse to give
its consent, or (iii) terminate this Lease as to the portion
(including all) of the Premises no proposed to be subleased or
assigned with a proportionate abatement in the rent payable
hereunder, effective as of the date of the proposed sublease or
assignment. If the Lease is partially terminated as to the portion
of the Premises proposed to be assigned or subleased, a ;
proportionate abatement will be made in the rent payable hereunder
effective upon the last to occur of: (a) the date Tenant installs
a partition wall satisfying Landlord's reasonable requirements, _
separating such portion of the Premises from ti:e balance of the
Premises, which partition wall shall be completed by Tenant at
tsais�ot�raaootutmue.� woo,iw -16-
Tenant's sole cost and expense within sixty (60) days of such '
election by Landlord, or (b) the effective date of the partial
termination of this Lease. If Landlord consents to'such assignment
or subletting, Tenant may within ninety (90) days after the date of
Landlord's consent, enter into a valid assignment or sublease of
the Premises or portion thereof upon the terms and conditions
described in the information required to be furnished by Tenant to
Landlord pursuant to Section 8.1(b) above, or upon other terms not
more favorable to Tenant; provided, however, that any material
change in such terms shall be subject to Landlord's consent as
provided in this Section 8.1. Failure of Landlord to exercise any
option set forth in clauses (i) through (iii) above within the
twenty (20) day period for Landlord's notice shall be deemed
refusal of Landlord to consent to the proposed subletting or
assignment.
SECTION 8.2 MZ-RELEASE _OF TENA*rr. No subletting or
assignment, even with the consent of Landlord, shall relieve Tenant -
of its obligation to pay the rent/and to perform all of the other
obligations to be performed by Tenant hereunder. Each assignee or
transferee, other than Landlord, shall assume, as provided above,
all obligations of Tenant under this Lease and shall be and remain
liable jointly and severally with Tenant for the payment of the
rent, and for the due performance of all the terms, covenants,
conditions and agreements herein contained on Tenant's part to be
performed for the term of this Lease. No assignment shall be
binding on Landlord unless such assignee or Tenant shall deliver to
Landlord a counterpart of such assignment which contains a covenant
of assumption by the assignee satisfactory in substance and form to
Landlord, consistent with the requirements of this Article VIII,
but the failure or refusal of the assignee to execute such
instrument of assumption shall not release or discharge the
assignee from its liability as set forth above. The acceptance of
any payment due hereunder by Landlord from any other person shall
not be deemed to be a waiver by Landlord of any provision of this
Lease or to be a consent to any assignment or subletting.
SECTION 8.3 MMSFER FEZ. If Landlord consents to an
assignment, sublease or any other transfer by Tenant of all or a
portion of Tenant's interest under this Lease, Tenant shall pay, or
cause to be paid, in each case a transfer fee of FIVE HUNDRED
DOLLARS ($500.00) in connection with the processing, documentation
and other administrative costs thereof. rctwithstanding the
foregoing, Tenant shall not be required to pay the aforementioned
transfer fee in connection with (a) an assignment or subletting of
the Premises to an affiliate of Tenant or entity which owns a
controlling interest in Tenant or in which Tenant owns a
controlling interest or (b) a sublease to Tenant's financial
planner(s) pursuant to Section 8.1(a).
ARTICLE IX. INSURANCE AND INDE"- ITY
SECTION 9.1 TENMIS TNSUR.ANCE.
(a) Tenant hereby agrees to maintain in full force and effect
at all times during the term of this Lease, at its own expense, for
the protection of Tenant, Landlord and such other parties as
Landlord may from time to time designate, as their interests may
appear, policies of insurance issued by a carrier rated as A VIII,
or better, in the latest edition of Best's•Insurance Guide (or a
comparable rating in a comparable guide selected by Landlord, if
Beat's Insurance Guide is no longer published) which afford the
;
following coverages-
(i) Worker's Compensation -- Statutory
.'
(including broad form all states)
FVn2Mt4r0aW1121M141.4 1110 M -17- '
(ii) Comprehensive b.rferal �i
Liability Insurance, -- Not less than
including Blanket amount stated
Contractual Liability, in Itert 12 of
Broad Form Property Basic Lease
Damage, Personal Provisions.
Injury, Completed
Operations, Products
Liability, Fire
Legal Liability
(iii) So-called "All -Risk Insurance, including without
limitation Fire and Extended Coverage, Vandalism
and Malicious Mischief, and Sprinkler Leakage
Insurance, in an amount sufficient to cover the
full cost of replacement of all improvements and
betterments to the Premises made by or on behalf of
Tenant (except to the extent installed by Landlord,
at Landlord's expense, pursuant to the Work Letter)
and all of Tenant's fixtures and other personal
property.
(b) Tenant shall deliver to Landlord and to such other'
additional insureds designated by Landlord at least thirty (30)
days prior to the time such insurance is first required to be
carried by Tenant, and thereafter upon written request,
certificates of insurance evidencing the above coverage with limits
not less than those specified above. Such certificates, with
respect to insurance under clause (ii) above, shall name Landlord
and such other parties as Landlord may reasonably designate as
additional insureds and shall expressly provide that the interest
of same therein shall not be affected by any breach by Tenant of
any policy provision for which such certificates evidence coverage.
Further, all certificates shall expressly provide that 1) no less
than thirty (30) days prior written notice shall be given Landlord
and such other named insureds in the event of material alteration
to or cancellation of the coverages evidenced by such certificates
and 2) such coverage evidenced by the certificate is primary and
that any coverage carried by Landlord and such other named insureds
shall be excess and non-contributory with respect to any policies
carried by Tenant.
(c) Upon demand, Tenant shall provide Landlord, at Tenant's
expense, with such increased amount of existing insurance, and such
other insurance in such limits, as Landlord may reasonably require
and such other hazard insurance as the nature and condition of the
Premises may require in the sole judgment of Landlord, to afford
Landlord and additional insureds designated by Landlord adequate
protection for said risks.
(d) Landlord makes no representation that the limits of
liability specified to be carried by 'Tenant uncle_ this Article IX,
are adequate to protect Tenant against Tenant's undertaking under
this Lease, and in the event Tenant believes that any such
insurance coverage called for under this Lease is insufficient,
Tenant shall provide at its own expense, such additional insurance
as Tenant deers adequate.
(e) Landlord and Tenant hereby release the other from any and
all liability from or to the other party of every kind and nature
which may result from the perils of fire, lighsning or extended
coverage perils which cause damage on or to the Premises, the
Building and/or property within the Building owned by it, such
waiver to include situations where the negligence of one of the
parties hereto or his agent, servant or representative causes or
contributes to the occurrence or the result of damage.
M Insurance carried by Landlord and Tenant against loss or
damage by fire or other casualty shall contain a clause whereby the
insurer waives its right of subrogation against the other party.
Tenant shall also obtain and furnish evidence to Landlord of the
Fs:16gN 4VM4W11a sui.4 t MA4 -Is-
waiver by Tenant's worker's Zrompensation carrier of any right at
subrogation against Landlord.
(g) The policy of insurance required to be maintained by
Tenant pursuant to Section 9.1(a)(ii) shall include coverage of
Tenant's indemnity in favor of Landlord as provided in Section 9.2
below.
SECTION 9.2 TENANT'S IND= Tenant shall defend,
indemnify and hold harmless Landlord, its agents, and any and all
affiliates of Landlord, including, without limitation, any
corporation or other entities controlling, controlled by or under
cannon control with Landlord, from and against any and all claitra
or liabilities arising from Tenant's use or occupancy of the
Premises, the Building, the Project or the Common Facilities or the
conduct of its business or from any activity, work, or thing done,
permitted or suffered by Tenant in or about the Premises, the
Building, the Project and the Common Areas, and shall further
defend, indemnify and hold harmless Landlord, its agents and
affiliates against and from any and all claims or liabilities
arising from any breach or default in the performance of any
obligation on Tenant's part to be performed hereunder, or arising
from any act or negligence of Tenant, or of its agents, employees,
visitors, patrons, guests, invitees or licensees, including
vendors, servicing Tenant at its request, and from and against all
costa, attorneys' fees, expenses and liabilities incurred in or
about any such claims or liabilities or any actions or proceedings
brought thereon. Notwithstanding the foregoing, Tenant shall not
be liable for damage or injury occasioned by the gross negligence
or willful misconduct of Landlord or its designated agents,
servants or employees, unless covered by insurance Tenant is
required to provide. This obligation to indemnity shall include
Tenant's payment of reasonable attorneys' fees and investigation
costs and all other reasonable costs, expenses and liabilities
incurred or suffered by Landlord from Landlord's receipt of the
first notice that any claim or demand is to be made or may be made.
Landlord ray, at its option, require Tenant to assume Landlord's
defense in any action covered by this Section 9.2 through counsel
satisfactory to Landlord.
SECTION 9.3 LANDLORD'S IN5!URANCE . Landlord shall maintain
fire and casualty insurance on the Building and such other
insurance as Landlord may deem reasonable or as required by
Landlord's lender for comparable buildings in the Huntington Beach
area.
ARTICLE X. DAMAGE OR DESTRUCTION
SECTION 10.1 RESTORATION.
(a) In the event the Building is damaged by fire or other
perils covered by extended coverage insurance to an extent not
exceeding twenty-five percent (2S%) of the full insurable value
thereof and if the damage thereto is such that the Building may be
repaired, reconstructed or restored within a period of ninety (90)
days from the date of the happening of such casualty and Landlord
will receive insurance proceeds sufficient to cover the cost of
such repairs, Landlord shall ca=ence and proceed diligently with
the work of repair, reconstruction and restoration and the Lease
shall continue in full force and effect. If such work of repair,
reconstruction and restoration is such as to require a period
longer than ninety (90) days or exceeds twenty-five percent (25t)
of the full insurable value thereof or if said insurance proceeds
will not be sufficient to cover the cost of such repairs, Landlord
may either elect to so repair, reconstruct or restore and this
Lease shall continue in full force and effect, or Landlord may
elect not to repair, reconstruct or restore and the Lease shall in
such event terminate. Under any of said conditions, Landlord shall
----�
give written notice to Tenant of its intention within sixty (60)
,_•_.;
days of the occurrence of such damage. In the event Landlord
:
,elects not to restore the Building, this Lease shall terminate on
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the date thirty (30) days following the date Tenant receives '
Landlord's written notice indicating Landlords election to
terminate.
(b) In the event the Premises or the Building is damaged or
destroyed to the extent of more than ten percent (10%) of its
replacement cost by a casualty not covered by a standard fire and
extended coverage policy of fire insurance, Landlord may within
sixty (60) days of the casualty elect to terminate this Lease on
the date thirty (30) days following Tenant's receipt of Landlord's
written notice of Landlord's election to terminate this Lease. If
such damage or destruction is not to such extent, or if Landlord
does not elect to terminate this Lease following such damage,
Landlord shall commence and proceed diligently with the work of
repair, reconstruction and restoration and this Lease shall
continue in full force and effect.
(c) In the event of any casualty damage, the rental provided
to be paid under this Lease shall be abated proportionately in the
ratio which the Premises are rendered unusable from the date of
destruction through the period of ouch repair, reconstruction or
restoration unless (i) the Premises were unusable for a period at
three (3) business days or less, or (ii) the damage is due to the
willful misconduct of Tenant, its agents or employees. Tenant
shall not be released from any of its obligations under this Lease
except to the extent and upon the conditions expressly stated in
this Section 10.1.
(d) .If.the then existing laws do not permit the restoration
described in this Section 10.1, Landlord may terminate this Lease
by giving written notice to Tenant, in which event this Lease shall
terminate thirty MY days following Tenant's receipt of such
notice.
(e) Notwithstanding anything to the contrary contained in
this Article, Landlord shall not have any obligation whatsoever to
repair, reconstruct or restore the Premises or any portion of the
Building when the damage occurs during the last twelve (12) months
of the term of this Lease or any extension thereof.
(f) No damages, compensation or claim shall be payable by
Landlord by reason of any injury to or interference with Tenant's
business or property arising from any damage or destruction or the
staking of any repairs, alterations or improvements in or to any
portion of the Building or the Premises or in or to fixtures,
appurtenances and equipment therein.
(g) Landlord's obligation to repair, reconstruct or restore
Tenant's leasehold improvements in the Premises shall be limited to
those leasehold improvements originally installed at Landlord's
expense; the. repair and restoration of any other leasehold
improvements shall be promptly performed by Tenant, at Tenant's
sole cost and expense, subject to the requirements of Section 6.4
applicable to Tenant's alterations to the Premises.
SECTION 10.2 LANDLORD'S NON -LIABILITY. Landlord shall not be
liable to Tenant, and Tenant hereby waives all claims against
Landlord for any injury or damage to any person or property in or
about the Premises, the Building or the Project from any cause
whatsoever, except to the extent caused by the gross negligence or
willful misconduct by Landlord, its agents or employees.
Specifically, Landlord or its agents or employees shall not be
liable for any damage to property entrusted to Landlord's employees
in the Building, nor for loss of or damage to any property by theft
or otherwise, nor for any injury or damage to persons or property
by loss or interruption of business or loss of income resulting
from the following causes, except to the extent caused by the gross
negligence or willful misconduct of Landlord, its agents, servants
or employees; fire, explosion, falling plaster, steam, gas,
electricity, water or rain which may leak or flow from or into any
part of the Premises or from the breakage, leakage, obstruction or
other. defects of the pipes, sprinklers, wires, appliances or
s>sn:a nouizo-aoc►uzmut + ttro4n9t - 2 0 -
1 1
plumbing or air-conditionink electrical works therein, whether
such damage or injury results from conditions arising in the
Premises or in other portions of the Building, or from other
sources. Neither Landlord nor its agents shall be liable for
interference with the light or other incorporeal hereditaments, nor
shall Landlord be liable for damages from any latent defect in the
Premises, the Building'or the Project. Tenant shall give prompt
notice to Landlord in case of fire or accidents in the Premises or
in the Building and of defects therein or in the fixtures or
equipment.
Tenant understands that Landlord will not carry insurance of
any kind on Tenant's furniture or. furnishings, fixtures or
equipment, and that Landlord shall not be obligated to repair any
darrage thereto or replace the same.
SECTION 10.3 TENANT'S WAIVER. With respect to any damage
which Landlord is obligated to repair or elects to repair, Tenant,
as a material inducement to Landlord entering into this Lease,
irrevocably waives and releases its rights under the provisions of
Section 1932(2) and 193314) of the California Civil Code and all
comparable statutes or rules of law now or hereafter in effect.
ARTICLE XI. 0IINENT DOM=
If the whole of the Premises, or so much thereof as to render
the balance unsuitable for Tenant's needs, shall be taken under
power of eminent domain or if so much of the Building or of the
Common Facilities is/are taken under power of eminent domain as, in
Landlord's reasonable judgment, prevents or substantially impairs
the use of the Building for the uses and purpcses then being made
or proposed to be made by Landlord of the Building, this Lease
shall automatically terminate as of the date of such condemnation,
or as of the date possession is taken by the ccnderrning authority,
whichever is earlier. No award for any partial or entire taking
shall be apportioned, and Tenant hereby assigns to Landlord any
award which may be made in any taking or condemnation affecting the
Premises or any portion of the Project, together with any and all
rights of Tenant now or hereafter arising in or to the same or any
part thereof, provided, however, that nothing contained herein
shall be deemed to give Landlord any interest in or to require
Tenant to assign to Landlord any award made to Tenant for the
taking of personal property and trade fixtures belonging to Tenant
and/or for the interruption of or damage to Tenant's business.
In the event of a partial taking of any portion of the
Premises which does not result in a termination of this Lease,
Landlord shall make reasonable repairs to the Premises to the
extent of severance damages received by Landlord, the basic annual
rent shall be reduced in proportion to the part of the Premises ^
taken, and Tenant's proportionate share of operating Expenses shall
be appropriately adjusted.
No temporary taking of the Premises and/or of Tenant's rights
therein or under this Lease shall terminate this Lease or give
Tenant any right to any abatement of rent hereunder. Any award
made by reason of any such temporary taking shall belong entirely
to Landlord and shall be applied by Landlord against the rent and
the other obligations of Tenant hereunder when such rent and other
obligations first accrue.
Except as provided above, any award or damages payable in
connection with a taking of the Building and/or the project, or any
portion thereof, under the power of eminent domain shall belong
entirely to Landlord and Tenant shall have no right or interest
therein.
i
rsAUIV14r.20- IN21MI41.4 urovn4 -21-
ARTICLE XII. SUBORDINATION; ESTOPPEL CERTIFICATE
SECTION 12.1 SUBORDINATION. On request of Landlord, Tenant
will in writing subordinate its rights hereunder to the lien of any
first mortgage or first deed of trust now or hereafter in force
against the Premises and to all advances made or hereafter to be ;
made upon the security thereof, and such holder shall agree not to
disturb Tenant provided Tenant is not in default hereunder, in the
form required by the holder of such mortgage or deed of trust. In
the event any proceedings are brought for foreclosure, or in the
evert of the exercise of any power of sale under any mortgage or
deed of trust Trade by Landlord covering the Premises, Tenant shall
attorn to the purchaser upon any such foreclosure or sale and
recognize such purchaser as the Landlord under this Lease.
SECTION 12.2 $STOR PEL CEgZFTATE. Tenant shall, at any time
and from time to time, within ten (10) days' after written notice
from Landlord, execute, acknowledge and deliver to Landlord a
statement in writing (i) certifying that this Lease is unmodified
and in full force and effect (or, if modified, stating the nature
of such modification and certifying that this Lease, as so
modified, is in full force and effect) and the dates to which basic
annual rental, additional rent and other charges have been paid in
advance, if any, (ii) acknowledging that, to Tenant's knowledge,
there are no uncured defaults on the part of Landlord hereunder, or
specifying such defaults if any are claimed, (iii) certifying that
Tenant has no existing offsets and no right of offset against
Landlord (or stating such), and (iv) certifying that Tenant has
accepted possession of the Premises. Any such statement may be
relied upon by any prospective purchaser or encumbrancer of all or
any portion of the Premises, Building and/or Project.
ARTICLE XII1. DEFAULTS A33D REMIES
SECTI0.3 13.1 TENVITIS DEFAULTS, The occurrence of any one or
more of the following events shall constitute a default hereunder
by Tenant:
(a) The abandonment of the Premises by Tenant.
(b) The failure by Tenant to make any payment of basic annual
rent or additional rent required to be made by Tenant hereunder, as
and when due, where such failure shall continue for a period of
three (3) days after written notice thereof from Landlord to
Tenant; provided, however, that any such notice shall be in lieu
ef, and not in addition to, any notice required under California
Code of Civil Procedure Section 1161 et =. For purposes of these "
default and remedies provisions, the term *additional rent* shall
be deemed to include all amounts of any type whatsoever other than
basic annual rent to be paid by Tenant pursuant to the te=.gs of
this Lease.
(c) use of the Premises for .any purpose other than as
authorized in this Lease.
(d) Assignment or sublease of this Lease or of any interest
therein by Tenant, either voluntarily or by operation of law
(including transfer by testacy or intestacy), whether by judgment,
execution, or other means, without the prior written consent of
Landlord, except as otherwise expressly permitted herein.
(e) The failure or inability by Tenant as may be determined
by Landlord to observe or perform any of the express or implied
covenants or provisions of this Lease to be observed or performed
by Tenant, other than these specified in (a) through (d) above,
where such failure shall continue for a period of fifteen (15) days
after written notice thereof from Landlord to Tenant, unless such
default cannot be cured within said fifteen (15) days in which case
Tenant shall co.-nence the cure within said fifteen (15) day period
and thereafter diligently prosecute such cure to completion;
provided, however, that any such notice shall be in lieu of, and
fill`
rsz rA01mo.M112Jc214JA 111"p" -22.
not in addition to, any notiC� required under California Code of
Civil Procedure Section 1161 eleg.
(f) (i) The making by Tenant of any general assignment for
the benefit of creditors; (ii) a case is commenced by or against
Tenant under Chapters 7, 11 or 13 of the Bankruptcy Code, Title 11
of the United States Code as now in force or hereafter amended and
if so commenced against Tenant, the same is not dismissed within
sixty (60) days; (iii) the appointment of a trustee or receiver to
take possession of substantially all of Tenant's assets located at
the Premises or of Tenant's interest in this Lease, where
possession is not restored to Tenant within thirty (30) days; (iv)
the attachment, execution or other judicial seizure of substan.
tially all of Tenant's assets located at the Premises or of
Tenant's interest in this Lease, where such seizure is not
discharged within thirty (30) days; or (v) Terant's convening of a
meeting of its creditors or any class thereof for the purpose of
effecting a moratorium upon or composition of its debts.
SECTION 13.2 LANDLORDS REM—vDTES.
(a) In the event os any default by Tenant, then, in addition
to any other remedies available to Landlord at law or in equity,
Landlord may exercise the following remedies:
(i) Landlord rsay terminate this Lease 'and all rights of
Tenant hereunder by giving written notice of such termination to
Tenant. in the event that Landlord shall so elect to terminate the
Lease, then Landlord may recover from Tenant:
The worth at the time of award of the unpaid rent,
charges, and additional rent which had been earned as of the date
of the termination hereof; The worth at the time of award of the amount by
which the unpaid rent and additional rent which would have been
earned after the date of the termination hereof until the time of
award exceeds the amount of such rental loss that Tenant proves
could have been reasonably avoided;
The worth at the time of award of the amount by
which the unpaid rent, charges, and additional rent for the balance
of the term hereof after the time of award exceeds the amount of
such rental loss that Tenant proves could be reasonably avoided;
Any other amount necessary to compensate Landlord
for all the detriment proximately caused by Tenant's failure to ;
perform its obligations under this Lease or which in the ordinary
course of things would be likely to result therefrom, including,
but not limited to, the cost of recovering possession of the
Premises, expenses of reletting, including brokerage commissions,
necessary repair, renovation and alteration of the Premises,
reasonable attorneys' fees, expert witness costs, and any other
reasonable costs; and
Any other amount which Landlord may by law hereafter
be permitted to recover from Tenant to compensate Landlord for the
detriment caused by Tenant's default. As used in subparagraphs (i)
and (ii) above, the "worth at the time of award, shall be computed
by allowing interest at the maximum rate permitted by law.
As used in subparagraph (iii) above, the "worth at the time of
award* shall be computed by discounting such amount at the discount
rate of the Federal Reserve Bank of San Francisco at the time of
award plus one percent (W .
(ii) Pursue the remedy described in California Civil Code
Section 1951.4 and continue this Lease in effect without
terminating Tenant's right to possession even though Tenant has t
breached this Lease and abandoned the Premises and to enforce all
of Landlord's rights and remedies under this Lease, at.law or in
equity, including the right to recover the rent as it becomes due
gsr:6tiouuaoocti�x�miu.a t+++� -23-
under this Lease; provided, however, that Landlord may at any time
thereafter elect to terminate this Lease for such previous breach
by notifying Tenant in writing that Tenant's right to possession of
the Premises has been terminated.
(iii) Nothing in this Article XIII shall be deemed to
affect Tenant's indemnity of Landlord, for liability or. liabilities
based upon occurrences prior to the termination of this Lease for
personal injuries or property damage under the indemnification
clause or clauses contained in this Lease. Such covenants of
indemnification shall survive the termination of this Lease.
(iv) In the event of default by reason of any of the
events stated in subparagraph (f) of Section 13.1 above, this Lease
or any interest in and to the Premises shall not become an asset in
any of such proceedings and, in any such event and in additicn to
any and all rights or remedies of the Landlord hereunder or by law
provided, it shall be lawful for the Landlord to declare the term
hereof ended and to re-enter the Premises and take possession
thereof and remove all persons therefrom, and Tenant and its
creditors (other than Landlord) shall have no further claim thereon
or hereunder.
(b) Landlord shall be under no obligation to observe or
perform any covenant of this Lease on its part to be observed or
performed which accrues after the date of any default (and
expiration of any applicable notice or cure period) by Tenant
hereunder. -In any action for unlawful detainer commenced by
Landlord against Tenant by reason of any default hereunder, the
reasonable rental value of the Premises for the period of the
unlawful detainer shall be deemed to be the amount of the basic
annual rent and additional rent reserved in this Lease for such
period, unless Landlord or Tenant shall prove to the contrary by
competent evidence. The various rights, pourers and remedies
reserved to Landlord herein, and those rights, powers and remedies
of Landlord under any other agreement now or hereafter in force
between Landlord and Tenant, including those not specifically
described herein, shall be cumulative, and, except as otherwise
provided by California statutory law in e!=ect at the time,
Landlord may pursue any or all of such rights and remedies, at the
same time, or otherwise.
(c) No delay or omission of Landlord to exercise any right or
remedy shall be construed as a waiver of any such right or remedy
or of any default by Tenant hereunder. The acceptance by Landlord
of rent or any additional rent hereunder shall not be (i) a waiver
of any preceding breach or default by Tenant of any provision
thereof, other than the failure of Tenant to pay the particular
rent or any additional rent accepted, regardless of Landlord's
knowledge of such preceding breach or default at the time of
acceptance of- such rent or additional rent, or (ii) a waiver of
Landlord's right to exercise any remedy available to Landlord by
virtue of such breach or default. No payment by Tenant or receipt
by Landlord of a lesser amount than the rent herein stipulated
shall be deemed to be other than on account o; the earliest due
stipulated rent, nor shall any endorsement or statement on any
check or any letter accompanying any check or payment as rent be
deemed an accord and satisfaction, and Landlord shall accept such
check or payment without prejudice to Landlord's right to recover
the balance of such rent or pursue any other remedy in this Lease
provided. Tenant hereby waives any right of redemption or relief
from forfeiture under California Code of Civil Procedure Sections
1174 or 1179, or under any other present or future law, in the
event Tenant is evicted or Landlord takes. possession of the
Premises by reason of any default by Tenant hereunder. No act or
thing done by Landlord or Landlord's agents during the term of this
Lease shall be deemed an acceptance of a surrender of the Premises,
and no agreement to accept a surrender shall be valid unless in
writing and signed by Landlord. No employee of Landlord or of
Landlord's agents shall have any power to accept the keys to the
Premises prior to the termination of this Lease, and the delivery
vs srniaraaon�utc�tat.a %1MM4 - 24 -
of the keys to any such employee shall not operate a termination of
this Lease or a surrender of the Premises.
SECTION 13.3 INTE&M Q%,l TENANTS OBLIGATIONS: LATE_
PAYMENTS .
(a) Any installment of rent due under this Lease or any other
sum not paid to Landlord when due (other than interest) shall bear
interest at the maxim= rate allowed by law from the date such
payment is due until paid, provided, however, that the payment of
such interest shall not excuse or cure the de -atilt.
(b) Tenant hereby acknowledges that the late payment by
Tenant to Landlord of rent and other sums due hereunder will cause
Landlord to incur costs not contemplated by this Lease, the exact
anount of which will be extremely difficult to ascertain. Such
costs may include, but are not limited to, administrative,
processing and accounting charges, and late charges which may be
irrposed on Landlord by the terms of any mortgage or trust deed
covering the premises. Accordingly, if any installment of rent or
any other sum due from Tenant shall not be received by Landlord or
Landlord's designee within five (5) days after the date due, then
Tenant shall pay to Landlord, in addition to the interest provided
above, a late charge in the amount of five percent (5t) of the
delinquent installment of rent. The parties agree that such late
charge represents a fair and reasonable estimate of the cost
Landlord will incur by reason of late payment by Tenant.
Acceptance of such late charge by 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.
(c) Reserved.
SECTION 13.4 BIG= OF LANDLORD M PERFORM. All covenants and
agreements to be performed by Tenant under any cf the terms of this
Lease shall be performed by Tenant at Tenant's sole Cost and
expense and without any abatement of rent. If Tenant shall fail to
pay any sum of money, other than rent, required to be paid by it
hereunder or shall fail to perform any other ac: on its part to be
performed hereunder, or to provide any insurance or evidence of
insurance to be provided by Tenant, and such failure shall continue
beyond any applicable grace period set forth in Section 13.1, then
in addition to any other remedies provided herein, Landlord may,
but shall not be obligated so to do, and without waiving or
releasing -Tenant from any obligations of Tenant, make any such
payment or perform any such act on Tenant's part to be made or
performed as provided in this Lease or to provide such insurance.
Any payment or performance of any act or the prcvision of any such
insurance by Landlord on Tenant's behalf shall not give rise to any
responsibility of Landlord to continue making the same or similar
payments or performing the same or similar acts. All costs,
expenses and other sums incurred or paid by Landlord in connection
therewith, together with interest at the maximum rate permitted by
law from the date incurred or paid by Landlord shall be deemed to
be additional rent hereunder and shall -be paid by Tenant with and
at the same time as the next monthly installment of basic annual
rent hereunder, and any default therein shall constitute a breach
of the covenants and conditions of this Lease.
SECTION 13.5 DE,E= nx-LANDLOM. Landlord shall not be
deemed to be in default in the performance of any obligation
required to be performed by it under this Lease unless and until it
has failed to perform such obligation within thirty (30) days after
written notice by Tenant to Landlord, specifying in reasonable
detail the nature and extent of any such failure; provided,
however, that if the nature of Landlord's obligation is such that
more than thirty (30) days are required for its performance, then
Landlord shall not be deemed to be in default if it commences such
performance within such thirty (30) day period and thereafter ,,.....-
diligently prosecutes the same to completion. If, after notice toy
Landlord of default, Landlord fails to cure such default as:
provided herein, then Tenant shall have the right to cure such
default at Landlord's. expense. Tenant shall not have the right to
terminate this Lease or to withhold, reduce or offset any amount
against any payments of basic annual rent or any other charges due
and payable hereunder as a result of Landlord's default, and
Tenant's remedy shall to limited to damages and/or an injunction.
It is expressly understood and agreed to that any stoney judgment
resulting from any detwalt or other claim arising under this Lease
shall be satisfied only out of the rents, issues, profits or other
income ("Income•) attually received from the operation of the
Building and no other real, personal or mixed property of Landlord
(the term 'Landlord" for purposes of this Section only shall mean
any and all partners, both general and/or limited, if any, which
comprise Landlord), wherever situated, shall be subject to levy on
any such judgment obtained against Landlord and whether or not such
Income is sufficient for the payment of such judgment, Tenant will
not institute any further action, suit, claim or demand, in law or
In equity, against Landlord for or on the account of such
deficiency. Tenant hereby waives, to the extent waivable under
law, any right to satisfy said money judgment against Landlord
except from Income received by Landlord for the operation of the
Building.
SECTION 13.6 EXPLUSS-M LtML FEES. If Tenant or Landlord
shall bring any action for any relief against the other,
declaratory or otherwise, arising out of or under this Lease,
including any suit by Landlord for the recovery of rent or
possession of the Premises, the prevailing party shall be entitled
to recover its attorney's fees and costs, including without
limitation, expert witness fees, photocopying, facsimile, messenger
and postage costs, in connection with such suit, and such
attorney's fees and costs shall be deemed to have accrued on the
commencement of such action and shall be paid whether or not such
action is prosecuted to judgment.
ARTICLE XIV. EN17 OF TERM
SECTION 14.1 EOLDIM MR. This Lease shall terminate and
become null and void without further notice upon the expiration of
the term herein specified, and any holding over by Tenant after
such expiration shall not constitute a renewal or extension hereof
or give Tenant any rights under this Lease, except when in writing
signed by both parties hereto or as otherwise herein provided. If
Tenant shall hold over for any period after the expiration of the
Lease term, Landlord may, at its option, treat Tenant as a tenant
at sufferance only commencing on the f irst (1st) day following the
expiration of this Lease and subject to all of the terms and
conditions herein contained, except that the basic annual rent, and
monthly installments thereof, shall be one hundred fifty percent
(150%) of that payable at the date of expiration.
SECTION 24.2 SUPUMMER OF PRSMISES . RE*S M QF TRUEM .
Upon the expiration of the term of this Lease, or upon any earlier
termination of this Lease, Tenant shall quit and surrender
possession o, the Premises to Landlord.in as good order, condition
and repair as when received or as hereafter Bray be improved by
Landlord or Tenant, reasonable wear and tear, casualty damage and
repairs which are Landlord's obligation excepted, and shall,
without expense to Landlord, remove or cause to be removed from the
Premises all debris and rubbish, all furniture, equipment, and
trade fixtures, tree -standing cabinet work and other articles of
any other persons claiming under Tenant unless Landlord exercises
its option to have any subleases or subtenancies assigned to it.
Tenant shall repair all damage to the Premises resulting from such
removal, which repair shall include the patching and filling of
holes and repair of structural damage, except that in connection
With Tenant's removal of wall bins, small holes or discoloration
shall be deemed normal wear and tear. In the event that Tenant
shall fail to comply with the provisions of this Section 14.2,
Landlord may make such repairs and the cost thereof shall be addi-
tional rent payable by Tenant upon demand. If requested by
j c►
FSM5T J4r0-=1U1M141A 111o+1% .26-
Landlord, Tenant shall execute, acknowledge and deliver to Landlord
an instrument in writing releasing and quitclaiming to Landlord all
right, title and interest of Tenant in and to the Premises by
reason of this Lease or otherwise.
SECTION 14.3 AFFIXE2 RRQPERTY. All fixtures, equipment,
alterations, additions, improvements and/or appurtenances attached
to or built into the Premises prior to or during the term hereof,
whether by Landlord at its expense or at the expense of Tenant or
both, shall be and remain part of the Premises and shall belong to
Landlord unless otherwise expressly provided for in this Lease or
unless such removal is required by Landlord pursuant to the pro-
visions of Section 6.4 hereof. Such fixtures, equipment,
alterations, additions, improvements and/or appurtenances shall
include, without limitation, floor coverings, drapes, paneling,
molding, built-in cabinets, doors, vaults, Sexclusive of vault
doors), plumbing, electrical communications and lighting systems,
silencing equipment, all fixtures and outlets for the systems
mentioned above and, for all telephone, radio, telegraph and
television purposes, and any special flooring or ceiling
installations.
ARTICLE XV. NOTICES
Any notice, election, demand, consent, approval or other
communication to be given or other document to be delivered by
either party to the other hereunder shall be deposited in the
United States mail, duly registered or certified, postage prepaid,
return receipt requested, and addressed to the other party at the
address set forth in Item 12 of the Basic Lease Provisions hereof.
Either party may from time to time, by written notice to the other,
served in the manner herein provided, designate a different
address. It any notice or other documents is sent by mail as
aforesaid, the saire shall be deemed served or delivered twenty-four
(24) hours after the mailing thereof. If more than one Tenant is
named under this Lease, service of any notice upon any one of said -
Tenants shall be deemed as service upon all of them.
ARTICLE X7l. RULES AM REGULATIONS
The Rules and Regulations attached hereto as Exhibit "C" by
this reference are hereby incorporated herein and made a part
hereof. Tenant agrees to observe faithfully and comply strictly
with such Rules and Regulations, and any reasonable amendments,
modifications and/or additions thereto as may hereafter be adopted
and published, by written notice to tenants by Landlord for the
safety, care, security (including restrictions on hours and manner
of access to the Building) good order, cleanliness of the Premises,
Building and/or the Project, or portions thereof. Landlord shall
not be liable to Tenant for any violation of such Rules and
Regulations or the breach of any covenant or condition in any lease
by any other tenant. One or more waivers by Landlord of any breach
of such Rules and Regulations by Tenant or by any other tenant($)
shall not be a waiver of any subsequent.breach of that rule or any
other. In the case of any conflict between such Rules and Regu-
lations and this Lease, this Lease shall control.
ARTICLE XVII. BROKER'S COM14ISSION
The parties recognize as the broker(s) who procured this Lease
the firm(s), 'if any, stated in Item 10 of the Basic Lease
Provisions, and agree that the Redevelopment Agency of the City of
Huntington Beach.. ("Redevelopment, Agency") • shall be solely
responsible for the paynent of brokerage commissions to said
broker(s), and that Landlord and Tenant shall have no responsi-
bility therefor unless otherwise provided in this Lease. Tenant
warrants'that it has had no dealings with any other real estate '
broker or agent in connection with the negotiation of this Lease,
and agrees to indemnify, defend and hold Landlord harmless from any ji
cost, expense or liability (including reasonable attorneys' fees in
connection therewith) for any compensation, co=issions or charges
claimed by any other real estate broker or agent employed by Tenant
in connection with the negotiation of this Lease. The foregoing
agreement shall survive the termination of this Lease. The parties
further agree that the Redevelopment Agency has agreed to pay
Tenant a cash signing bonus in the amount of SEVEN THCUSA'CD SIX
M,MRED DOLLARS ($7,600.00) upon the execution of the Lease, and
that Landlord shall have no responsibility therefor.
ARTICLE XVIII. TRANSFER OF LANDLORL'S Ih"rERRST
In the event of any transfer or transfers of Landlord s
interest in the Premises, including a so-called sale -leaseback, the
transferor shall be autocratically relieved of any and all
obligations on the part of Landlord accruing under this Lease from
and after the date of such transfer. It is intended hereby that
the covenants and obligations contained in this Lease on the part
of Landlord shall, subject to the foregoing, be binding on
Landlord, its successors and assigns, only during and in respect of
their respective periods of ownership. Tenant acknowledges and
agrees that in connection with a rent guarantee agreement between
Landlord and the Redevelopment Agency, this Lease may be converted
into a sublease if and when Landlord enters into a master lease
("Master Lease') with the Redevelopment Agency for the second and
third floors of the Building. Upon notice of such conversion by
Landlord, this Lease shall become a sublease and be subject to the
terms and conditions of the Vaster Lease. Tenant shall thereafter
attorn to the Redevelopment Agency as the landlord hereunder and
make all payments of basic annual rent and additional rent to the
Redevelopment Agency. Provided Tenant is not in default hereunder,
Landlord agrees that in the event of a termination of the Master
Lease prior to the expiration or termination of this Lease,
Tenant's possession of the Premises and this Lease shall not be
disturbed notwithstanding the termination of the Master Lease. In
the event of any conflics between the Master Lease and this Lease
as a sublease, this Lease shall control.
ARTICLE XIX. INTERPRETATION
SECTION 19.1 G=,,$_Ah'D 1¢[1MBER. Whenever the context of this
Lease requires, the words "Landlord" and 'Tenant", as used herein,
shall include the plural as well as the singular and words used in
neuter, masculine or feminine genders shall include the others.
SECTION '19.2 READINGS. The captions, headings, titles,
turbering and indexing of the Articles and Sections of this Lease
are for convenience only, are not a part of this Lease and shall
have no effect upon the construction or interpretation of any part
hereof.
ARTICLE XX. EXECUTION AND RECORDING
SECTION 20.1 COU!!ZZ= A[rmogITY. If Tenant is a
corporation, each individual executing this Lease on behalf of said
corporation represents and warrants that he is duly authorized to
execute and deliver this Lease on behalf of said corporation in
accordance with said corporation's by-laws or a duly adopted
resolution of its board of directors, and that this Lease is
binding upon said corporation in accordance with its terms. Tenant
stall, at Landlord's request, deliver reasonable evidence
authorizing or ratifying such execution.
SECTION 20.2 R_EORDING. Tenant shall not record this Lease
without the prior written consent of Landlord. Tenant, upon the
request of Landlord, shall execute and acknowledge a 'short form'
memorandum of this Lease for recording purposes.
P",20w1400-oo IUM1u.. lu gift -28-
SECTION 20.3 &m=E2=. No amend -neat, addition, revocation
or ratification of this Lease shall be effective unless in writing
signed by the parties hereto. No actions, policies, oral or
informal arrangements, business dealings or other course of conduct
by or between the parties shall be deemed to amend this Lease or
revise this Lease in any respect.
ARTICLE XXI. VISCELLANEOUS
SE;.TICN 21.1
SECTION 21.2 ELMNISHING OF FINANCIAL ST&TE•"=. Landlord
has reviewed financial statements if so requested at the Tenant and
has relied upon the truth and accuracy thereof with Tenant's
knowledge and representations of the truth and accuracy of same and
that said statements accurately and fairly depict the financial
condition of Tenant. Said statements are an inducing factor and
consideration for the Tenant. Tenant and/or guarantors shall
promptly furnish Landlord, upon request, with annual financial
statements reflecting the then current financial condition of
Tenant and/or guarantors throughout the term o_ this Lease.
SECTIOU 21.3
SECTION 21.4 GOVERM2'NTAL REOUIREMNTS. Tenant covenants at
all times during the term of this Lease to comply with the
requirements of the Occupational Safety and Health Act of 1970, 29
U.S.C., Section 651 et seq., and any analogous legislation in
California (collectively, the "Act"), to the extent that the Act
applies to the Premises and any activities therein, and to comply
with all other Governmental Requirements, including, but not
limited to, all laws prohibiting discrimination against any person
or group of persons on account of race, color, creed, sex, national
origin or ancestry and all laws described in Section 4.1 above.
Without limiting the generality of the foregoing, Tenant Covenants
to maintain all working areas, all machinery, equipment,
appliances, structures, electrical facilities and the like upon the
Premises in a condition that full complies with the requirements of
the Act, including such requirements as would be applicable with
respect to agents, employees or contractors of Landlord who may
Isom time to time be present upon the Premises.
SECTION 21.5 COVENANTS M CQNDTTTQM. All of the provisions
of this Lease shall be construed to be "conditions" as well as
"covenants* as though the words specifically expressing or
i=Tarting covenants and conditions were used in each separate
provision.
SECTION 21.6 WOg$ LETTER. Landlord and Tenant each agree to
fully perform.their obligations under the Work Letter, if any. nay
default by either party in the performance of its obligations under
the Work Letter shall constitute a default by such party under this
Lease.
SECTION 21.7 90INT-AU SEVERAL LIABILITY. If there be more
than one Tenant, the obligations hereunder imposed upon Tenant
shall be joint and several and the act of or notice from, or notice
or refund to, or the signature of, any one or more of such persons,
with respect to the tenancy of this Lease, shall be binding upon
each and all of the persona executing this Lease as Tenant with the :
same force and effect as if each and all of them had so acted or so
given or received such notice or refund or so signed.
SECTION 21.8 SUCCgSSORS. Subject to Articles VIII and XVIII .
above, all rights and liabilities herein given to, or imposed upon,
the respective parties hereto shall extend to and bind the several
respective heirs, executors, administrators, successors, and
assigns of the parties. nothing contained herein is intended, or ....__
shall be construed, to confer upon or grant to any person other i
than Landlord and Tenant any rights or remedies under this Lease.
:si�eTo�ai2o-000tri�aia.a 1U041l+ -29.
SECTION 21.9 XTME OF f.;SSMCRCE. Time is of the essence with '
respect to the performance of every provision o; this Lease in
which time of performance is a factor.
SECTION 21.20 CQYMOLLTM This Lease shall be governed
by and interpreted in accordance with the laws of the State of
California.
SECTION 21.11 SEyERARTLTIX. If any term or provision of this
Lease shall be held invalid or unenforceable to any extent, the
remainder of this Lease shall not be affected thereby and each term
and provision of this Lease shall be valid are- enforceable to the
fullest extent permitted by law.
SECTION 21.12 RE=IONSHIP OF PARTIES. Nothing contained
herein shall be deemed or construed by the parties hereto, or by
any third party, as creating the relationship of principal and
agent or of partnership or joint venture between the parties
hereto, it being understood and agreed that neither the method of
computation of rent, nor any other provision contained herein, nor
any acts of the parties herein, shall be deemed to create any
relationship between the parties hereto other than the relationship
of Tenant and Landlord.
SECTION 21.13 TMB7rLITY =_PERFORM. In the event that
Landlord shall be delayed or hindered in or prevented from the
performance of any work or in performing any act req•ired hereunder
by reason of: strikes; lockouts; labor troubles; inability to
procure materials, labor or energy; failure of power; disruption,
reduction, interruption, curtailment or failure of utility, solid
waste disposal or other services; restrictive Governmental Require-
ments; voluntary or involuntary participation, at the request of a
governmental agency or otherwise, in any plan or program involving
allocations, priorities, limitations or restraints regarding water,
fuel or other energy, or otherwise; other governmental action or
inaction; riots, insurrection; war, fires; floods; earthquakes;
storms; droughts, other Acts of God; or any other reason of a
similar or dissimilar nature not the fault o; Landlord in
perforating work or doing acts required under the terms of this
Lease, then the performance of such work or the doing of such act
shall be excused for the period of the delay, and the period for
the performance of any work or the doing of such act shall be
extended for a period equivalent to the period of such delay. The
occurrence of any event constituting a cause for excusable delay
shall not relieve Tenant from any monetary obligations under this
Lease.
SECTION 21.14 flUIEJ ENJOYI NT. Upon payment by Tenant of the
basic annual rent, additional rent and all the charges herein
provided, and - upon the observance and performance of all the
covenants, terms and conditions of this Lease on Tenant's part to
re observed and performed, Tenant shall peaceably and quietly hold
and enjoy the Premises for the term hereby demised without
hindrance or interruption by Landlord or any other person or
persons lawfully or equitably claiming by, through or under
Landlord.
SECTION 21.15 HAZARDOUS WASTE AVD MATERI&LS. Tenant shall
not engage in any activity on or about the Premises or the Project
that violates any Environmental Law, and sY:all promptly, at
Tenant's sole cost and expense, take all investigatory and/or
remedial action required or ordered by any governmental agency or
Environmental Law for clean-up and removal of any contamination
involving any Hazardous Material created or caused directly or
indirectly by Tenant. The term "Environmental Law, shall mean any
federal, state or local law, statute, ordinance or regulation
pertaining to health, industrial hygiene or the environmental
conditions on, under or about the Premises, including, without
limitation, (i) the Comprehensive Enviro mental Response,
Compensation and Liability Act of 1980 (`CERCLA'), 42 U.S.C.
Sections 9601 gt.; (ii) the Resource Conservation and Recovery
Act of 1976 (•RCRA'), 42 U.S.C. Sections 6901 tt,.; (111)
t321267434 :WM21c3i41.4 11M/U - 30 -
V
California Health and Safety Code Sections 25100 = &=.; (iv) the
Safe Drinking Water and Toxic Enforcement Act of 1986, California
Health and Safety Code Section 25249.5 It j=.; (v) the Federal
water Pollution Control Act, 33 U.S.C. Sections 1317 g; A= .; (vi)
California Water Code Section 1300 gt R=.; and (vii) California
Civil Code Section 3479 = =., as such laws are amended and the
regulations and administrative codes applicable thereto. The term
"Hazardous Material• includes, without limitation, any material or
substance which is.(i) defined or listed as a "hazardous waste
"extremely hazardous waste", "restrictive hazardous waste" or
"hazardous substance" or considered a waste, condition of pollution
or nuisance under the Environmental Laws; (ii) petroleum or a
petroleum product or fraction thereof; (iii) asbestos; and/or (iv)
substances known by the State of California to cause cancer and/or
reproductive toxicity. It is the intent of the parties hereto to
construe the term *Hazardous Materials* and *Environmental Laws" in
its broadest sense. Tenant shall provide all notices required
pursuant to the Safe Drinking Water and Toxic Enforcement Act of
1986, California Health and Safety Code Section 25249.5 = =.
Tenant shall provide prompt written notice to Landlord of the
existence.of Hazardous Substances on the Premises and all notices
of violation of the Environmental Laws received by Tenant.,
Tenant's obligations pursuant to this Section 21.15 shall be
referred to in this Lease as "Environmental Compliance". Landlord
represents that to Landlord's knowledge, the Premises and Building
do not contain any asbestos or Hazardous Materials in excess of
levels permitted by law. As used in this Lease, "Landlord's
knowledge* shall mean the actual knowledge of Ahr.,ad H. Abdelmuti
with no duty to investigate. Landlord agrees not to dispose of any
Hazardous Materials nor to violate any Environmental Law within the
Premises.
SECTION 21.16 AFTER-HOURS ACCESS. Tenant shall have twenty-
four (24) hour access to the Premises and Landlord shall provide
Tenant's clients with access to the Building and Premises 700 a.m.
through 6:00 p.m. Monday through Friday and 9:00 a.m. through 1:00
p.m. Saturday.
SECTION 21.17 A*+SRTCANS WITH,DISABILTTIES A^T. As of the
date hereof, Landlord represents that to Landlord's knowledge, the
com:^on areas of the Building are in compliance with the Amercians
with Disabilities Act.
SECTION 21.18 E=1R? AGRE£Y—rNT. This Lease and the Exhibits
and other attachments hereto cover in full each and every agreement
of every kind or nature whatsoever between the parties hereto
concerning the Premises and the Building or Project, and all
preliminary negotiations, oral agreements, understandings and/or
practices of whatsoever kind with respect to the Premises or the
Building or Project, except those contained herein or therein, are
superseded and of no further force or effect; no person, firm or
corporation has at any time had an authority fron Landlord to make
any representations or promises on behalf of Latdlord, and Tenant
agrees that if any such representations or promises have been made
by Landlord or others, Tenant hereby waives all right to rely
thereon. No verbal agreement or implied covenant shall be held to
vary the provisions hereof, any statute, law, or custom to the
contrary notwithstanding.
rrn:eroiu:oaooiutm�u.� JrM*n+ -31.
t+ l =
M
M
SECOND FLOOR PLAN
north
TENANT IMPROVEMENT FOR
_IDS FINANCIAL SERVICES_ y
Suite B2
OCEANVIEW PROMENADE �I
EXHIBIT •A-20
p Proigqr.
That certain zeal property located in the City of Huntington
peach, County of Orange, State of California, more particularly
described as follows:
Lots 1, 2, 3, 4, 5, 6, 11, 13 and 15 in Block 104 of
Huntington Beach in the City of Huntington Beach, County of
orange, State of California as shown on a map recorded in Book
3, Page 36 of Miscellaneous gaps, Records of Orange County,
California.
• • S
EXHIBIT *A-2v
r
kii1AL f .
TO OFFICE SPACE LEASE
T32Y 6TotarlPCoolulo]tat.� tvmM
MMIBIT "A-3"
R •
The undersigned as the Landlord and Tenant under that certain
office Space Lease dated for space :within the
Huntington Beach, California, •l:
hereby confirm that the term of said Lease has commenced
and that the expiration date of the term of said
Lease is
ABDEU-MTS DEVELOPlah'T COMM, a .
California general partnership
By: ;
Ahmad H. Abdelmuc , ,
general partner
"Landlord
IDS FINANCIAL SERVICES INC.,
a Delaware corporation
Its:
By:
Its:
"Tenant"
EXHIBIT- "h-311
To OFFICE SPACE LEASE _
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83�LT • 8 • �r .WORK LEMR
In addition to the rutual covenants contained in the Lease to
which this Work Letter is attached, Landlord and Tenant further
mutually agree as follows:
1. PLANS AND SPECIFICATIONS FOR THE PREMISES
(a) As of the date of this Lease, Landlord and Tenant :
have approved the Architectural Space Plan dated September 20,
2994 attached hereto as EMjbit na-ai (•Space Plan,) and the
construction drawings and plans for the construction of the
improvements in the Premises as attached hereto as EZShibit, "_3-L"8-V
(■Tenant's Final Plans').
(b) Tenant may require work thereinafter referred to as ,
•Non -Building Standard Work•) different from or in addition to
that set forth in the Tenant's Final Plans. In such event,
any architectural, mechanical, electrical and structural ,ry,•
engineering drawings, plans and specifications required shall
be prepared by Landlord's architect or engineer at Tenant's
expense and shall be subject to the approval of Landlord.
(c) If Tenant selects interior finish items, such as
wall paint, or coverings, fixtures and carpeting other than
that set forth in the Tenant's Final Plans, Tenant shall
notify Landlord of all such selections in writing by the date
specified in the Schedule of Approvals below. All interior
decorating items and services selected by Tenant in excess of
that set forth in the Tenant's Final Plans shall be provided ;
by Tenant at Tenant's sole cost and expense.
(d) Tenant's Final Plans shall not be in conflict with
the building codes for the City or with insurance regulations
for a fire resistive Class A building. All plans and
specifications shall be in a form satisfactory to appropriate
governmental authorities responsible for issuing permits and
licenses required for construction,
(e) whether and to the -extent which any of Tenant's ,
requirements constitute work in excess of the work get forth
in Tenant's Final Plans shall be determined by Landlord's
architect or engineer, which determination shall be `
conclusive.
2. BUILDING STANDARD WORK AT LANDLORD'S COST ANM EXPENSE :
Landlord agrees, at its sole cost and expense, to furnish
and install all the following Building Standard Work, but only
in the q.:antities specified by Landlord, as indicated on
Tenant's Final Plans:
(a) Partitions
The interior partitions will be 3-3/4• nominal
thickness, consisting of two (2) 5/811 thick gypsum
boards, one each attached to each side of 2-1/20
metal studs and resilient base, as depicted on the
Approved Layout.
(b) Doors, Door Frames and Hardware
interior doors shall be hollow core paint grade
birch veneer, and exterior doors (excluding glass ,
door to deck) shall be solid core birch, in the
locations indicated on the Approved Layout. Two
(2) pairs cf butt hinges and Building Standard
TO OFFICE SPACE LEASE
F=64POW2204MUTM141.4 JIA" Page I
latchset included with each door, except entrance
door, which has lockset.
(c) Painting
All wall surfaces except doers finished with two
(2) coats latex flat paint in one (1) color to be
selected by Tenant from Building Standard
selection.
(d) Ceilings
Suspended 2'x 4' regular acoustical ceiling grid
with fissured tiles throughout the Premises, except
in passenger and service elevator lobby areas, and
public restrooms, where Landlord may choose to
specify other types of materials.
(e) Lighting Fixtures,
2' x 4' three (3) tube 40-watt recessed fluorescent
return .air lighting fixtures with multi -cell`
parabolic lenses. One (1) fixtare per one hundred
(100) square feet of Rentable Area.
(f) Electrical System
120/208 volt 3 phase, 4 wire two hundred (200) amp
service.
(g) Duplex Electrical Outlets
Electrical wall outlets provided as per code.
(h) Telephone Outlets
One (1) telephone wall outlet per two hundred (200)
square feet of Rentable Area.
(i) Carpeting
Carpeting in elevator lobbies and common corridors
on all multiple -tenancy office floors in color and
type as selected by Landlord; carpeting within
office space as required and selected by Tenant
from Building Standard selection.
(j) Beating, ventilating and Air Conditioning
-The BVAC system is a constant volume split eystem
• heat pump. Landlord will install one (1) control
zone per nine hundred (900) square feet of Rentable
Area.
(k) Fire Sprinklers
One (1) recessed type head with white enamel finish
per one hundred fifty (150) square feet of Rentable
Area.
(1) Exit Signs
Minimum of one (1) exit sign per Premises.
Additional exit signs shall be provided in
accordance with building codes.
3. WORK AT TENANT'S COST AND EXPENSE
(a) Landlord shall cause Tenant's work in excess of the
work set forth in Teaant'e Final Plans to be installed by
Landlord's contractor, but at Tenant's sole cost and expense.
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MTBTT 'B'
TO OFFICE SPACE LEASE
Page 2
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Prior to commencing any yuch work, Landlord shall submit to
Tenant'a written ,estimate of the cost thereof. If Tenant
approves such estimate, it shall notify Landlord in writing
within the -time limit specified on the -Schedule of Approvals
below and, at the same time, pay Landlord in full the amount
of such estimate and Landlord's contractor shall proceed with
such work. If Tenant shall fail to approve any such estimate
in writing within the time limit specified on the Schedule of
Approvals below, such failure shall be deemed a disapproval '
thereof, and Landlord's contractor shall not proceed with such
work affected thereby. It is understood that Tenant shall
thereupon be liable for the delay and increased cost, if any,
in completing the affected work. Tenant shall also be
responsible for the design, function and maintenance of such
special improvements, whether or not installed by Landlord at ;
Tenant's request.
(b) Tenant agrees to pay Landlord, as set forth above,
the cost of all such work. Such cost shall include Landlord's
contractor's charges. In addition, Tenant shall pay Landlord
fifteen percent (I5%) of such cost for Landlord's overhead and
coordination of the work.
4. SUBSTITUTIONS AND CREDITS
(a) Tenant may select different materials (hereinafter
*substituted materials*) in place of materials which would
otherwise be initially furnished and installed by Landlord in
the interior of the Premises under the provisions of this Work
Letter and the Tenant's Final Plans, provided such selection
is indicated on plans and specifications as approved by
Landlord. If Tenant shall make any such selection and if the
cost of the substituted materials shall exceed Landlord's cost
of materials thereby replaced, Tenant shall pay to Landlord,
as hereinafter provided, the difference between the cost of
the substituted materials and the credit given by Landlord for
the materials thereby replaced, plus a fee of fifteen percent
(15t) of such difference, for Landlord's additional costs
resulting from such substitution.
(b) No substituted materials shall be furnished and
installed in replacement for any of the Tenant's Final Plans
materials until Landlord has submitted to Tenant a written
estimate of the increased cost thereof, and Landlord and
Tenant have agreed in writing on the increased cost of the
substituted materials, including the cost of installation. If
Tenant approves such estimate, it shall notify Landlord in
writing within the time limit specified in the Schedule of
Approvals below and, at the same time, pay Landlord in full,
the amount of such estimate and Landlord's contractor shall
proceed with such work. If Tenant shall fail to approve such
estimate within said time limit, such failure is to be deemed
a disapproval thereof and Landlord's contractor shall not
proceed with the proposed substituted work affected thereby.
Tenant shall thereupon also be liable for the delay and
increased cost, if any, in completing the affected work.
(c) All amounts payable by Tenant to Landlord pursuant
to this Paragraph 4 shall be paid by Tenant as set forth above
or, at Landlords option, promptly after the rendering of
bills therefor by Landlord or its contractor to Tenant, it
being understood that such bills may be rendered during the
progress of the performance of the work and/or the furnishing
and installation of the materials to which ouch bills relate.
Any substituted materials shall be surrendered by Tenant to
Landlord at the end of the initial or other expiration of the '
term of the Lease. No credit shall be granted for the
o-dssion of materials where no replacement in kind is made.
There shall -be credits only for substitutions in kind, e.g.,. -
a lighting fixture credit may be applied only against the cost
of another .type of lighting fixture. :.�: '
EXHIBIT •-BW
TO OFFICE SPACE LEASE
M46AO140UMIUIM141A Page 3
5. • COMPLETION AND REA, COI-ENC , DATE �I
The Commencement Date of the Lease as set forth in Item 3 of
the Basic Lease Provisions shall not be delayed by any of the
following and the following shall be deemed delays caused by Tenant
for purposes of Section 3.2 of the Lease:
(a) Tenant's failure to approve or furnish its space
plans and specifications by the time specified in the Schedule
of Approvals, below, or
(b) Delays of any nature, whether or not within Tenant's
control, resulting from Tenant's decision to use any
materials, finishes, or installations other than as set forth
in Tenant's Final Plans, or
(c) Tenant's changes in the Space Plan and Tenant's
Final Plans after the approval or submission thereof to
Landlord, or
(d) Other changes in the work or substitutions for the
materials specified in the Tenant's Final Plans made after thq
deadlines for notification thereof as set forth in the
Schedule of Approvals below, or
(e) A delay in performance of work specified in the
Tenant's Final Plans as a direct result of Tenant's failure to
approve written estimates of the costs of other work or
substituted materials in accordance with Paragraphs 3 and 4
hereof.
6. CHANGES IN THE WORK
Tenant shall have the right to request of Landlord that
changes be made to the work, but only as provided in this Section
G. .Landlord agrees not to withhold its approval to any such
changes. Tenant shall be responsible for the cost of any such
changes together with Landlords fee of fifteen percent (15t) as
provided in Paragraph 3(b). Prior,to commencing any such changes,
Landlord shall submit to Tenant a written estimate of the cost
thereof. If Tenant approves such estimate, it shall notify
Landlord in writing within three (3) business days following the
date Landlord submits the written cost estimate to Tenant and, at
the same time, pay Landlord in full the amount of such estimate,
and Landlord's contractor shall proceed with such work. If Tenant
shall fail to approve any such estimate in writing within the three
(3) business day period, such failure shall be deemed a disapproval
thereof, and Landlord's contractor shall not proceed with any such
changes but shall continue with the work as thoagh the changes had
not been requested. Tenant may at its election waive the
requirement that Landlord provide the cost estimate. If Tenant
shall request any change without notifying Landlord or if Tenant
waives the requirement that Landlord provide the cost estimate,
Tenant shall pay for the actual cost of the changes together with
Landlord's tee. Nothing herein shall be deemed to excuse Tenant
from the consequences of its default in failing to notify Landlord
of the requested changes.
7. SCHEDULE OF APPROVALS "
Tenant shall approve the ratters listed in the •Event• column
below by the corresponding time specified in the 'Time" column as
follows.
Event Time
a. Space Plan Approval Date. Lease Execution Date.
(See Paragraph 1(a).)
b. Deadline for notifying Ten (10) days after
Landlord of Tenant's Space Plan Approval Date, r_
TO OFFICE SPACE LEASE
rsnious:aaoo��s�aaui/ �uo4s. Page 4
selection of
materials other than
as specified in
Tenant's Final Plans.
(See Paragraph l(c).)
C. Deadline for Tenant's
approval of Landlord's
cost estimate for
work in excess of
Tenant's Final Plans
and payment for same.
(See Paragraph 3(a).)
d. Deadline for notifying
Landlord of Tenant's
request for substitution
for the materials
specified in the Tenant's
Final Plans. (See paragraph
.4(a):)
e. Deadline for Tenant's
approval of Landlord's
estimate of increased
cost of substituted
materials and payment
for sane. (See Paragraph
4(b).)
Three (3) days after
Tenant's receipt of cost
estimate frcm Landlord.
Ten (10) days after
Space Plan Approval Date.
r Three (3).days after
Tenant's receipt of cost
estimate from Landlord.
EXHIBIT •B"_
TO OFFICE SPACE LEASE
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