HomeMy WebLinkAboutMARTIN MENICHIELLO dba MARTIN ASSOCIATES & ABDELMUTI DEVELOPMENT CO. - 2002-11-18Council/Agency Meeting Held: 11 /SF--oz—
Deferred/Continued to:
Approved ❑ Conditionally Approved ❑ Denied City Clerk's Signatudd
Council Meeting Date.. November 18, 2002 Department ID Number: ED 02-37
CITY OF HUNTINGTON BEACH
REQUEST FOR REDEVELOPMENT AGENCY ACTION `
SUBMITTED TO: HONORABLE CHAIRMAN AND REDEVELOPMENT AGENCY
MEMBERS
SUBMITTED BY: RAY SILVER, Executive Director
PREPARED BY: DAV[D C. BIGGS, Deputy Executive Director
SUBJECT:
Receive and File Lease between Abdelmuti Development Company
and Martin Menichiello (Oceanview Promenade)
E
ment of Issue, Funding Source, Recommended Action, Alternative Action(s), Analysis, Environmental Status, Attachment(s)
Statement of Issue: The Owner Participation Agreement (OPA) entered into in 1991
between the Agency and Abdelmuti Development Company requires the Agency to pay the
difference between the "Guaranteed Rental Rate" and the actual amount of the rent collected
from a specified portion of the office space in the Oceanview Promenade. The Agreement
also requires the Agency's approval as to form on all leases within fifteen (15) days of
submission to the Agency. The attached lease is above the guaranteed rent amount. Only
a Receive and File action is needed.
Funding Source: Redevelopment Tax Increment.
Recommended Action: Motion to:
Receive and file attached lease between Abdelmuti Development Company and Martin
Menichiello for Suite 360 renewing the lease for three (3) years commencing January 1, 2003
at the rental rate of $2.25 per square foot per month.
Alternative Action(s): Do not approve the lease as to form.
Analysis: In May of 1991, the Agency approved an Owner Participation Agreement with the
Abdelmuti Development Company for the development of a 42,000 square foot retail and
office building known as Oceanview Promenade. The provisions of the Agreement (and its
subsequent amendments) require the Agengy to make "Rent Differential Payments" on a
monthly basis for an amount equal to the difference between the "Guaranteed Rent" (as
defined in the Agreement) and the "Contract Rent" (the rent actually collected from tenants).
REQUESAOR REDEVELOPMENT AGE%Y ACTION
MEETING DATE: 11-18-02
DEPARTMENT ID NUMBER: ED 02-37
The rent in the attached lease for Suite 360 (1,156 square feet) is consistent with the per
square foot fair rental value of $1.95 established for this space by the appraisal done in April,
2002. It is for a term of three (3) years. Therefore, staff recommends that this lease be
received and filed.
Environmental Status: NA
Attachment(s):
RCA Author: Gus Duran @ ext. 1529
G:1GuslAbdelmutlMenichietloRAA-ED02-37_doc -2- 11/8/2002 11:39 AM
0 .
Lease Between Abdelmuti Development
And Martin Menichiello
ATTACHMENT #1
0
RUTAN
&TUCKER5
ATTORNEYS AT LAW
APART NERS I S I IN( l (,UL.,C. I•ROL; SSIU.\'AI CORPORATIONS
611 ANTON BOULEVARD 1IOURTi1NTH HOOK
COSTA MrSA. CAUFORNIA 92626-M l
DIRECT ALL MAIL TO PC)ST OLHO 3Ox
COSTA rAESA. CAI IFORNIA 92626.19SO
TELEPHONE 7TJ-63: $100 FACSImIIE :14.5+6.90)5
INTERNE T ADORES% — r-Ilan ca.-
Direct Dial (714) 641-3442
E-mail- avolkenCrutan com
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November 4, 2002
Mr. Gus Duran
Redevelopment Agency of the
City of Huntington Beach
2000 Main Street
Huntington Beach, California 92648
Re: Martin Menichiello Office Lease, Suite 360
Oceanview Promenade, California
Dear Gus:
Rv-1RIV
NOV - 6 2002
DE1-k -_'AE 'T OF
EGG-f"O'Alc U�',1rzLCF'TiaEltlT
Enclosed please find a copy of the Second Amendment for the above -captioned lease. As
you will see, the lease extension was for three years at $2.25 per rentable square foot and as the
rental rate was well in excess of the Guaranteed Rental Rate, no approval by the Redevelopment
Agency was required.
Should you have any questions regarding the foregoing, please do not hesitate to contact
me:
Very trsly yours,
RUTAN & TUCKER, LLP
Adam N. Volkert
ANV
Enclosure
cc: Mr. Jamal Abdelmut] (w/o encl }
267101I820.000S
342719.01 ■IL104102
SECOND AMENDMENT TO OFFICE SPACE LEASE
This Second Amendment to Office Space Lease ("Second Amendment"), dated for
reference purposes as of October 3(,n , 2002, is made by and between ABDELMUTI
DEVELOPMENT COMPANY, a California partnership ("Landlord"), and MARTIN
MENICHIELLO ("Tenant").
RECITALS
A. Landlord and Tenant have previously entered into that certain Office Space Lease
dated October 12, 1994, as modified by that certain First Amendment to Office Space Lease
dated December 3, 1999 (collectively, the "Lease"), demising to Tenant approximately One
Thousand One Hundred Fifty -Six (1,156) rentable square feet of space commonly known as 101
Main Street, Suite 360 (formerly known as Suite 313) (the "Premises") in the building known as
Oceanview Promenade (the "Building").
B. Landlord and Tenant now desire to amend the Lease to provide, among other
things, for a three (3) year extension of the term of the Lease, all pursuant to the provisions set
forth herein.
C. All terms not defined herein shall have the meanings ascribed to them in the
Lease.
NOW, THEREFORE, for fair and valuable consideration, the receipt and adequacy of
which is hereby acknowledged, Landlord and Tenant hereby agree as follows:
1. Extension of Lease Term. The term of the Lease which was otherwise set to
expire on December 31, 2002 shall be extended to December 31, 2005.
2. Basic Annual Rent. The "Basic Annual Rent" under the Lease is currently
Twenty -Four Thousand Nine Hundred Sixty -Nine and 60/100ths Dollars ($24,969.60) payable
Two Thousand Eighty and 80/100ths Dollars ($2,080.80) per month. The Basic Annual Rent
schedule set forth in Item 5 of the Basic Lease Provisions shall be supplemented as follows:
Lease Term Basic Annual Rent
Jan. 1, 2003 — Dec. 31, 2005 $31,212.00 per year - payable at $2,601.00 per month
3. Parking. The last sentence of Section 5.4(a) of the Lease is deleted and replaced
with the following:
"All parking charges shall be at Tenant's expense and Tenant
acknowledges that the availability of parking and the rate charged
for parking is subject to change and not within Landlord's control.
Not by way of limitation of the foregoing, Landlord hereby advises
Tenant that on June 7, 1999, the Agency and the City of
267ro I.a2o-W5
319472-02 a10I23R12
Huntington Beach (the "City") approved and the Agency entered
into a Disposition and Development Agreement (the "DDA") with
CIM Group, LLC ("CIM"), which provides for the development of
a large mixed -use retail, office, and hotel project within most of
the remaining portions of the two -block area bounded by Pacific
Coast Highway, Main Street, Walnut Avenue, and Sixth Street
excluding the Building. According to the information available to
Landlord, the proposed CIM project has not received all of the
required City discretionary development approvals and the exact
location, size, configuration, and mix of uses has not been
finalized. As currently planned, however, the CIM project would
eliminate virtually all of the surface parking that is currently
available to the public on the proposed CIM project site. The
current plan calls for the development of a subterranean public
parking structure to serve both CIM's proposed uses and other
existing and future public uses, but the amount of subterranean
parking to be provided has not been finally determined and may be
significantly less than the amount needed to accommodate CIM's
own needs, without taking into account existing uses in the area.
Landlord cannot predict if or when the CIM project will commence
construction, but Landlord is aware that the City/Agency has made
statements indicating that construction may commence as early as
2002. If construction does proceed. in all likelihood the existing
surface parking will be eliminated for a substantial period of time
before the subterranean parking is completed and available.
Landlord makes no warranties or representations with regard to the
CIM project. Tenant may obtain further information regarding the
CIM project from David Biggs, the City/Agency's Economic
Development Director, at (949) 536-5909, or from other
appropriate City/Agency officials and employees."
4. Security Deposit. As of January 1, 2003, the Security Deposit shall increase from
$1,791.00 to $2,717.00 and Tenant shall pay to Landlord the stun of $926.00 (the resulting
difference) on or before such date.
5. Conflict. In the event of a conflict between this Second Amendment and the
Lease, the terms of this Second Amendment shall govern and control.
[Remainder of page intentionally left blank.]
267,0 i 4 920-"5
319472 02 p.10123R2 -2-
•
6. Full Force and Effect. Except as specifically set forth herein, the Lease remains
unmodified and in full force and effect.
iN WITNESS WHEREOF, the parties hereto have executed this Second Amendment as
of the date first written above.
ABDELMUTI DEVELOPMENT COMPANY,
a California partnership
By:
neral Partner
"Landlord"
M RTIN MENICH ELLO
"Tenant"
267A i.a20-OW5
30,02.02 alOr23r02 -3-
Council/Agency Meeting
7Aprred/Continued to:
p-roveo- 0 Condit
Council Meeting Date:
N
Approved ❑ Den
December 20, 1999
's Si
Department ID Number:
CITY OF HUNTINGTON BEACH
REQUEST FOR REDEVELOPMENT AGENCY ACTION
re
ED 99-61
SUBMITTED TO: HONORABLE CHAIRMAN AND REDEVELOPMENT AGENCY
MEMBERS
SUBMITTED BY: RAY SILVER, Executive Director?
PREPARED BY: DAVID C. BIGGS, Director of Economic Development
SUBJECT: Approval as to Form: Lease between Abdelmuti Development
Company and Martin & Associates (Oceanview Promenade)
Statement of Issue, Funding Source, Recommended Action, Alternative Action(s), Analysis, Environmental Status, Attachment(s)
Statement of Issue: The Owner Participation Agreement (OPA) between the Agency and
Abdelmuti Development Company requires the Agency to pay the difference between the
"Guaranteed Rental Rate" and the actual amount of the rent collected from a specified
portion of the office space in the Oceanview Promenade. The Agreement also requires the
Agency's approval as to form on all leases within fifteen (15) days of submission to the
Agency.
Funding Source: Redevelopment Tax Increment (FY 1999-2000 Appropriation: $135,000)
Recommended Action: MOTION TO:
Approve as to Form the attached lease between Abdelmuti Development Company and
Martin and Associates for Suite 3B renewing the lease for three (3) years commencing
January 1, 2000 at the rental rates of $1.70 per square foot per month for the first year, $1.75
for the second year and $1.80 for the third year.
Alternative Action(s): Do not approve the lease as to form.
REQUEST%R REDEVELOPMENT AGEMY ACTION
MEETING DATE:
DEPARTMENT ID NUMBER: ED 99-61
Analysis: In May of 1991, the Agency approved an Owner Participation Agreement with the
Abdelmuti Development Company for the development of a 42,000 square foot retail and
office building known as Oceanview Promenade. The provisions of the Agreement (and its
subsequent amendments) require the Agency to make "Rent Differential Payments" on a
monthly basis for an amount equal to the difference between the "Guaranteed Rent" (as
defined in the Agreement) and the "Contract Rent" (the rent actually collected from tenants).
In March of this year, in an effort to better identify current market rents for office space, staff
contracted with an appraiser to perform a rental value appraisal of all the office sace in
Oceanview Promenade. The results of this work showed that current rents in the building
lagged the market. The results of the appraisal were shared with the building owner with the
request that, as leases came due for renewal, the appraisal be used as a guide in negotiating
future rents.
The rent in the attached lease for Suite 313 (1,156 square feet) is consistent with the $1.70
per square foot rental value established for this space by the appraisal. It is for a term of
three years and includes an annual escalation of $.05 per square foot per month (consistent
with the other lease renewals approved by the Agency earlier this year). Therefore, staff
recommends approval as to form of this lease.
Environmental Status: NA
Attac_hment(s):
RCA Author: kohler @ 5457
Document5 -2- 11/22/99 3:50 PM
Lease Between Abdelmuti Development
And Martin & Associates
ATTACHMENT #1
FIRST AMENDMENT TO OFFICE SPACE LEASE
This First Amendment to Office Space Lease (this "Amendment"), dated for reference
purposes as of December 3, 1999, is made by and between ABDELMU 1 DEVELOPMENT
COMPANY, a California partnership ("Landlord"), and MARTIN MENICHIELLO ("Tenant").
RECITALS:
A. Landlord and Tenant have previously executed that certain Office Space Lease dated
October 12, 1994 (the "Lease"), demising to Tenant One Thousand One Hundred Fifty -Six (1,156)
rentable square feet of space designated as Suite 3B (the "Premises") in the building known as
Oceanview Promenade (the "Building").
B. Tenant desires to extend the term of the Lease for an additional three (3) years on
the same terms and conditions set forth in the Lease, except as otherwise set forth herein.
C. The parties now desire to amend the Lease, pursuant to Section 20.3 thereof, as
more particularly set forth below.
NOW, THEREFORE, for fair and valuable consideration, the receipt and adequacy of
which is hereby acknowledged, Landlord and Tenant agree as follows:
1. Extension of Lease Term. The term of the Lease which was otherwise set to expire
on December 31, 1999 shall be extended to December 31, 2002.
2. Effective Date. This Amendment shall be effective on the date (the "Effective
Date") this Amendment is approved by the Redevelopment Agency of the City of Huntington
Beach (the "Agency"). In the event the Agency does not approve the Amendment, it shall become
null and void.
3. Right to Extend. The right of Tenant to extend the term of the Lease set forth in
Section 2.3 of the Lease has lapsed and is of no further force or effect. Tenant has no further right
to extend the term of the Lease beyond the date set forth in Paragraph 1 above.
4. Basic Annual Rent. The Basic Annual Rent under the Lease is currently Twenty
One Thousand Five Hundred One and 601100 Dollars ($21,501.60) payable One Thousand Seven
Hundred Ninety One and 801100 Dollars ($1,791.80) per month. As of the Effective Date, the
A R-M'x AS TO M.RM:
.d; ci.i-Y At:torae$�
2611014820-0001l33090841 a1:107199
•
Basic Annual Rent schedule set forth in Item 5 of the Basic Lease Provisions shall be supplemented
with the following:
Lease Term
January 1, 2000 -
December 31, 2000
January 1, 2001 -
December 31, 2001
January 1, 2002 -
December 31, 2002
Basic Annual Rent
S23,582.40 - payable $1,965.20 per month
$24,276.00 - payable $2,023.00 per month
$24,969.60 - payable $2,080.80 per month
5. Operating Expenses. As of January 1, 2000, Section 3.3 OPERATING EXPENSES
shall be deleted and replaced with the following:
"SECTION 3.3 OPERATING EXPENSES. Tenant is not obligated to pay
any additional sums with respect to common area maintenance expense, building
maintenance expense or any other expense except as may be specifically set forth in
this Lease."
6. Conflict. In the event of a conflict between this Amendment and the Lease, the
terms of this Amendment shall control.
7. Full Force and Effect. Except as specifically modified herein, the Lease remains in
full force and effect.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the date first
written above.
ABDELMUTI DEVELOPMENT COMPANY,
a California general partnership
,General Partner
MARTTN MENICHIELLO
"LANDLORD"
"TENANT"'
-2-
0 0
RCA ROUTING SHEET
INITIATING DEPARTMENT:
Economic Development
SUBJECT:
Approval as to Form: Lease Between Abdelmuti
Development Company and Martin & Associates
Oceanview Promenade
COUNCIL MEETING DATE:
December 20, 1999
RCA ATTACHMENTS
STATUS
Ordinance (w/exhibits & legislative draft if applicable)
Not Applicable
Resolution (w/exhibits & legislative draft if applicable)
Not Applicable
Tract Map, Location Map and/or other Exhibits
Not Applicable
Contract/Agreement (w/exhibits if applicable)
(Signed in full by the City Attome
Not Applicable
Subleases, Third Party Agreements, etc.
A roved as to form by City A tto m pyj
Attached
Certificates of Insurance (Approved by the City Attome
Not Applicable
Financial Impact Statement Unbud et, over $5,000
Not Applicable
Bonds If applicable)
Not Applicable
Staff Report If applicable)
Not Applicable
Commission, Board or Committee Re ort If applicable)
Not Applicable
Find in s/Conditions for Approval and/or Denial
Not Applicable
EXPLANATION FOR MISSING ATTACHMENTS
REVIEWED
RETURNED FORWARDED
Administrative Staff l p
Assistant City Administrator Initial
City Administrator Initial
City Clerk
EXPLANATION FOR RETURN OF ITEM:
RCA Author: kohler @ 5457
411&
REQUEST FOR REDEVELOPMENT AGENCY ACTION
APPROVED BY CITY COUNCIL
19
ED 94-51
tl -7 �.
'mp Date: November 7. 1994
Submitted to: Honorable Chairman and Redevelopment Agency Members
Submitted by: Michael T. Uberuaga, Executive Dirac i ��
Prepared by: Barbara A. Kaiser, Redevelopment Director
Subject: Approval of Lease Between Martin Menichiello and Abdelmuti
Development Company for Office Space in Oceanview Promenade
(Main -Fier Redevelopment Project Area)
Consistent with Council Policy? [x] Yes [ ] New Policy or Exception
Statement of Issue, Recommendation, Analysis, Funding Source, Alternative Actions,
STATEMENT OF 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 located at Main Street and Pacific Coast Highway. Agency written
approval is required for all leases.
1. Approve the lease between Martin Menichiello 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, Authorize encumberances of sufficient funds to meet Agency contractual obligations over the
term of the Martin Menichiello Lease.
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 three
story 42,000 square foot mixed use development. On November 4, 1991, the Agency approved
the First Amendment (Attachment 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.
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 staff's 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.
Downtown Office Use Analysis:
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 means 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.
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.
In exchange for developing office instead of residential the following financial assistance was
negotiated:
Section 201(8) of the OPA reads as follows:
DlMrential 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 14,518 SF
1/2 of 3rd floor 6,082 SF
Total 20,600 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 late November, and may include
Agency payment of the office subsidy starting in January, 1995.
The Menichiello lease is for 1,156 square feet located on the third floor facing Main Street (Site
Plan Atttached) at $1.55 per square foot, for a total of $1,792 monthly. The Agency will not
have to subsidize the base rent because it equals 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 for a total of $289
monthly, $3,468 annually or $17,340 over the first 5 year term of the lease. Menichiello has an
option for an additional 5 year extension at the conclusion of the first term.
UWAnney Benefitse 0
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 area complements the Pierside Pavilion
project, while completing the gateway to the downtown.
Main -Pier Account # ED-TM-888-7-75-00.
Deny approval of the Martin Menichiello lease and direct Abdelmuti Development Company to
seek another tenant.
1) Base Lease Provisions
2) Site Plan
3) First Amendment to OPA Dated November 4, 1991
MTUIBAKIKBB: jw
=94".doc
. ATTACHMENT 1
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 }nd
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: MARTIN MENICHIELLO.
2. Premises, including Floor, Suite No. and Rentable Area: Third
Floor, Suite B3, 1156 rentable square feet.
3. Estimated Commencement Date: November 4, 1994
4. Lease Term: Five (5) years and one five (5) year option.
5. Basic Annual Rent: $21,501.60 payable at $1,791.80 per month.
6. Base Year Operating Expense: 1995.
7. Space Plan Approval Date: October 4, 1994.
8. Security Deposit: $1,791.80; payable on execution of Lease.
9. Prepaid Rent: $1,791.80; payable on execution of Lease.
10. Broker(s): None.
11. Address for Payments and Notices:
To Landlord: Abdelmuti Devel-bpment Company
c/o Jack's Surf & Sport
113 Main Street
Huntington Beach, CA 92648
Attn: Mike Abdelmuti
Tel.: (714) 536-6567 `
To Tenant: Martin Menichiello
c/o Martin Associates
6591 Horseshoe Lane
Huntington Beach, CA 92648
Tel.: (714) 841-4272
12. Minimum Coverage for Comprehensive.General Liability Policy:
$2,000,000.00 combined single limit.
13. AddendumiAn Addendum consisting of None (if no Addendum is
attached, insert the word none) numbered paragraphs is
attached to and forms a part of this Lease.
14. Lease Execution: In witness whereof the parties hereto have
executed this Lease, consisting of the foregoing provisions
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MAID STREET
THIRD FLOOR -PLAN north
TENANT IMPROVEMENT FOR
MARTIN ASSOCIATES
Suite B-3
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•
OCEANVIEW PROMENADE
REQUES& FOR CITY COUNC
REDEVELOPMENT AGENCY ACT N RH91--75
November 4. 1991
Date
►miffed to: Honorable Mayor/Chairman & City Council/Redevelopment Agency Members
,miffed by. Michael T�.Iberuaga. City Administrator/Chief Executive Officer�`�
pared by:. Barbara A. Kaiser, Deputy City Administrator/Economic Deve opm ent.
Fast Amendment to the Owner Participation Agreement between Abdelmuti
bject- Development Company and the Redevelopment Agency of the City of
Huntington Beach/Main-Pier Redevelopment Project Area
nsistent with Council Policy? DQ Yes [) New Policy or Exception
� $
!J iS/y-t J
Statement of Issue, Recommendation, Analysis, Funding Source, Alterrf yq, 'vtiGtL I
. A?CLT
Transmitted for City Council/Redevelopment Agen)nqiAArntJnn is
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.
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. 411!2 and Agency Resolution No. _ ZZ _ -
authorizing the execution and implementation of the First Amendment to the Owner
Participation Agreement between the Redevelopment Agency and Abdelmuti
Development Company.
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_
On July 12, 1991
building, totaling
following items:
the Participant submitted plans illustrating a proposed fQur-sto
48,433 sf. Staff and Agency members expressed concerns about the
* The addition of a fourth floor and the resulting height;
* The size and T ation 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.
During 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
have drafted the attached First Amendment to the OPA, incorporating language that
accurately reflects the agreed upon design changes.
Under California Redevelopment Law, the Redevelopment Agency is authorized to provide
certain types of assistance directed at supporting 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 Marston Associates, Inc. A summary of the changes incorporated into the First
Amendment to the OPA are listed below:
a) The Participant agrees to construct ground floor retail space of approximately
17,140 sf, and second, third & fourth floor office space totaling approximately
30,920 sf, for a 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.
• r
•
•
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
changes to the First Amendment to the OPA as outlined above.
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 28, 1991
5) City Council Resolutions
6) Site Map
13Itoriff;`1463 33W
977lr
FIRST AMENDMENT TO
OWNER PARTICIPATION AGREEMENT
BY AND BETWEEN
THE REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH
AND A191)ELMUTX DEVELOPMENT COMPANY
THIS FIRST AMENDMENT ("First Amendment") is entered into
this - day of , 19911 by and between THE
REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH (the
"Agency") and ABDELMUTI DEVELOPMENT COMPANY (the "Participant").
R E C I I A L a
WHEREAS, the Agency and the participant entered into an
Owner Participation Agreement, dated May 26, 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:
Section 1. Amend Section 201(3), Project Design; Design
and Construction Costs, to read as follows:
3 `
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 46,437 square feet with an approximately
18,000 square foot Commercial/retail ground door 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 Participant's interest to -"an
individual or entity that is no closer in familial
relationship than 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 atories shall remain at the back of
the building). In the event Agency later determines
to require a change from office/commercial use, the
•
0
Agency will pay those additional construction costs
needed to convert the second, third or fourth floors
to a residential or restaurant use.
finatiLon'2. Amend Section 201(6), Excess Parking Costs and
Provision of parking Spaces, to read as follows:
6
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
from back of the building to the property line at the
same 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
coats necessary to provide offeite 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
shall 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 coder -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 Mein 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 1benefits 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
7788u/2460/009 -2-
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Participant shall not exceed the reasonable Cost of
maintaining and repairing at -grade surface parking
spaces.
Section 3. Amend Section 201(8), Differential Rent
Payment, to read as follows:
8.
DiffergUtial Rent Payment. In the event City or
Agency requires tapper -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 ggreement for the third floor, all
rents shall be an the Agency _shall _PaY the
Differ en a en e t h;ignd on the eim6unt
cessary to insure Ina
r square toot amount is
very e
antes
CPI shall mean the United States
Department of Labor, Bureau of Labor Statistics,
Consumer Price Index for Urban Wage Earners -and
clerical Workers, Los Angeles -Anaheim- Riverside .�
Average, Sub -Group, "All Items" (1982/84.100). As an
alternative to the CP1 adjustment, at the sole
discretion of the Agency, the Agency may require that
the Guaranteed Rental hate 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 then in effect as a
result of the appraisal or appraisals conducted
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 201, paragraph 8.
The Differential Rent Payment term shall commence with
the issuance of the Certificate of Occupancy for the
second and third floor space and terminate on
January 1, 2017. The City/Agency sh611 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/2460/009 -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 Sur£ &
Sport) must pay a minimum of $1.55 per square foot.
Agency shall have the right to approve all leases of
second and third story'spaee. Failure to obtain
Agency written approval of a lease for the second or
third floor shall result in a lose of the right to
obtain the Differential Rent Payment as described in
this Paragraph 8 of Section 201.
motion A. Amend Section 11 of Attachment No. 4 (Scope of
Devel_opment), Participant's Responsibilities, to read as
follows:
WNW 0 A&M :' '•Z
The Participant shall develop the Site with a
four --story building totaling approximately 48,437
square feet. The ground floor shell consist of
approximately 18,000 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 terms and schedules as stet
forth in this Agreement as the same may be amended
from time to time.
Section S. This First Amendment and the provisions of the
OPA which remain in effect collectively constitute the "Amended
OPA." The Amended QPA-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.
Rectin fi. Each of the parties heretd 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-
0
•
The effective date of this First Amendment shall be the
date of execution by the Agency.
19T REDEVELOPMENT AGENCY OF THE CITY
OF HUNTINGTON BEACH
By
Chairman
ATTEST:
Secretary
APPROVED AS TO FORM:
Stradling, Yocca, Carlson & Rauth,
Special Counsel to the Agency
Agency Counsel
ABDELMUTI DEVELOPMENT COMPANY, a
California general partnership
By:
Ahmad Abdelmuti, General
Partner
"Participant"
7788u/2460/009 -5-
include a proportionate share of public corridors; public toilets,
air conditioning rooms, fan rooms, air ducts, janitor , 9 closets,
electrigil closets, telephone equipment closets and their enclosing
walla. , due-ftif of the eoevA-fieer
Y
retit
Prior to the Cot= neement 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 calendar year during which this Lease is
executed, 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 6 of the Basic Lease Provisions in equal monthly installments,
in advance, together with the monthly installments of basic annual
rent.
Within one hundred twenty (120) days after the and of each
calendar year, including the calendar year during which the lease
tern 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 amount due Tenant shall be credited
against installments next coming due under this Section 3.3, 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 ouch statement, except those for which a claim is made
by Tenant within six (6) 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 in
accordance with the terms set forth above, and any failure to eo
pay shall constitute a default by Tenant under this Lease.
(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 made 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. Cammencing 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.
R�.�� seal Pag e
EF- 6
OFFICE SPACE LEASE
between
ABDBLMUTI DEVELOPMENT COMPANY,
a California general partnership
AS LANDLORD
and
MARTIN MENICHIELLO
dba Martin Associates
AS TENANT
OCEANVIFW PROMENADE
WJNTINGTON BEACH, CALIFORNIA
FSZt26MI482MMIUI16623.1 MUM i
• TABLES t ENTS
page
ARTICLE I. PREMISES .. . . . . . . . . . . . . .
3
SECTION
1.1
LEASEDPRM41SES . . . . . . . . . . .
3
SECTION
1.2
ACCEPTANCE OF PREMISES . . . . . . . . . .
3
SECTION
1.3
USE RESERVATIONS . . . . . . . . . . . .
3
SECTION
1.4
BUILDING NAME AND ADDRESS . . . . . . . . .
3
ARTICLE II.
'TERM
. . . . . . . . . . . . . . . . . .
4
SECTION
2.1
GENERAL
4
SECTION
2.2
TENDER OF POSSESSION BY LANDLORD . . . . .
4
SECTION
2.3
OPTION TO EXTEND TERM . . . . . . . . . . .
4
ARTICLE III.
RENT AND SECURITY DEPOSIT . . . . . . . . . . .
5
SECTION
3.1
BASIC ANNUAL RENT . . . . . . . . . . . . .
5
SECTION
3.2
SECURITY DEPOSIT . . . . . . . . . . . .
5
SECTION
3.3
OPERATING EXPENSES . . . . . . . . . . . .
6
ARTICLE IV.
USES
. . . . . . . . . . . . . .
9
SECTION
4.1
USE . . . . . . . .
9
SECTION
4.2
PROHIBITION AGAINST -SOLICITATION AND OTHER
_
ACTIVITIES WITHOUT THE PERMISSION OF
LANDLORD . . . . . . . . . . . . .
10
SECTION
4.3
EXCLUSIVE CONTROL OVER COMMON AREA . . . .
10
SECTION
4.4
SIGNS . . . . . . . . . . . . . . . . . . .
10
ARTICLE V. SERVICES
10
SECTION
5.1
UTILITIES AND SERVICES
10
SECTION
5.2
OPERATION AND MAINTENANCE OF. COMMON
FACILITIES . . . . . . . . . . . . . . . .
12
SECTION
5.3
USE OF COMMON FACILITIES . . . . ,
12
SECTION
5.4
PARKING . . . . . . . . . . . . . . . . .
13
ARTICLE VI_
MAINTENANCE OF THE PREMISES . . . . . ..
13
SECTION
6.1
TENANT'S MAINTENANCE ANP REPAIR . . . . . .
13
9E CT'ION•
6:2 -
LANDLORD'S MAINTENANCE.'AND REPAIR
13
SECTION
6.3
ALTERATIONS BY LANDLORD . . . . . . . . . .
14
SECTION
6.4
TENANT'S ALTERATIONS . . . . . . . . . . .
14
SECTION
6.5
MECHANIC'S LIENS . . . . . . . . . . . .
15
SECTION
6.6
ENTRY AND INSPECTION . . . . . .
15
SECTION
6.7
SPACE PLANNING AND SUBSTITUTION . . . . . .
16
ARTICLE VII.
TAXES AND ASSESSMENTS ON TENANT'S PROPERTY
16
SECTION
').1
TAXES ON TENANT'S PROPERTY . . . . . . . .
16
ARTICLE VIII.
ASSIGNMENT AND SUBLETTING . . . . . . . . . .
16
SECTION
8.1
PROHIBITION AND CONSENT . . . . . . . . . .
16
SECTION
8.2
NO RELEASE OF TENANT . . . . . . . . . . .
18
SECTION
8.3
TRANSFER FEE . . . . . . . . . . . . . . .
18
ARTICLE IX.
INSURANCE AND INDEMNITY . . . . . . . . . .
18
SECTION
9.1
TENANT'S INSURANCE . . . . . . . . . . . .
18
SECTION
9.2
TENANT'S INDEMNITY . . . . . . . . . . . .
19
ARTICLE X. DAMAGE OR DESTRUCTION . . . . . . . . . . . . . .
20
SECTION
10.1
RESTORATION . . . . . . . . . .
20
SECTION
10.2
LANDLORD'S NON -LIABILITY . . . . . . . . .
21
SECTION
10.3
TENANT'S WAIVER . . . . . . . . . . .
21
ARTICLE XI.
EMINENT DOMAIN . . . . . . . . . . . . . . . . .
22
ARTICLE XII.
SUBORDINATION; ESTOPPEL CERTIFICATE . . . . . .
22
SECTION
12.1
SUBORDINATION . . . . . . . . .
22
SECTION
12.2
ESTOPPEL CERTIFICATE . . . . ... . . . . .
22
ARTICLE XIII.
DEFAULTS AND REMEDIES . . . . . . . . . . . .
23
SECTION
13.1
TENANT'S DEFAULTS • . . . . . . . . . . .
23
SECTION
13.2
LANDLORD'S REMEDIES . . . . . . .
23
SECTION
13.3
INTEREST ON TENANT'S OBLIGATIONS; LATE
PAYMENTS . . . . . . . . . . . . . . . . .
25
FSj%l6MS4i100001L1116627.1 10*V% '
•
SECTION
13.4
RIGHT OF LAND• TO PERFORM . . . .
. .. 26
SECTION
13.5
DEFAULT BY LANDLORD . . . . . . .
. . 26
SECTION
13.6
S
EXPENSES AND LEGAL FEE . . . . . . .
. . 27
ARTICLE XIV.
=- OF TERM •. . . . . . . . . . . . .
. . 27
SECTION
14.1
HOLDING OVER . .
. . .27. .
SECTION
14.2
SURRENDER OF PREMISES; REMOVAL OF
PROPERTY . . . . . . . . . . . .
. . 27
SECTION
14.3
AFFIXED PROPERTY . . . . . . . . . . .
. . 27
ARTICLE XV .
NOTICES . . . . . . . . . . . . . . . . . .
. . 26
ARTICLE XVI.
RULES
AND REGULATIONS . . . . . . . . . . .
. . 28
ARTICLE XVII.
BROKER'S COMMISSION . . . . . . . . .
. . 28
ARTICLE XVIII.
TRANSFER OF LANDLORD'S INTEREST . . . . .
. . 28
ARTICLE..XIX._
INTERPRETATION . . . . . . . . . .
. 29
SECTION
19.1
GENDER AND NUMBER . . . . . . . . . .
. . 29
SECTION
19.2
HEADINGS . . . . . . . . . . . . . . .
. . 29
ARTICLE XX.
EXECUTION AND RECORDING •. . . . . . . . .
. . 29
,SECTION-20..1
-CORPORATE
AUTHORITY.. . . . . . . . .
. . 29
SECTION
20.2
RECORDING . . . . . . . . . . . . . .
. . 29
SECTION
20.3
AMENDMENTS . . . . . . . . . . . . . .
. . 29
ARTICLE XXI.
MISCELLANEOUS.. • . . . . . . . . . .
. . 29
SECTION
21.1
NONDISCLOSUREOF LEASE TERMS . . .
. . 29
SECTION
21.2
FURNISHING OF FINANCIAL STATEMENTS . .
. . 30
SECTION
21.3
CHANGES REQUESTED BY LENDER . . . . .
. . 30
SECTION
21.4
GOVERNMENTAL REQUIREMENTS . . . . . .
. . 30
SECTION
21.5
COVENANTS AND CONDITIONS . . . . . . .
. . 30
SECTION
21.6
WORK LETTER . . . . . . .
. . 30
SECTION
21.7
JOINT AND SEVERAL LIABILITY . . . . .
. . 30
SECTION
21.8
SUCCESSORS . . . . . . . . . . . . . .
. . 30
SECTION
21.9
TIME OF ESSENCE . . . . . . . .
. . 31
SECTION
21.10
CONTROLLING LAW . . . . . . . . . . .
. . 31
SECTION
21.11
SEVERABILITY . . . . . . . . . . . . .
. . 31
SECTION
21.12
RELATIONSHIP OF PARTIES . . . . . . .
. . 31
SECTION
21.13
INABILITY TO PERFORM . . . . . . . . .
. . 31
SECTION
21.14
QUIET ENJOYMENT . . . . .
. . 31
SECTION
21.15
HAZARDOUS WASTE ANDMATERIALS . . . .
. . 31
SECTION
21.16
ENTIRE AGREEMENT . . . . . . . . . . .
. . 32
F51�6TOI�i9p(g0111[[b61S.1 ld�Du9� �
OFFICE SPACE LEASE
BASIC LEASE PROVISIONS r
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 is 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: MARTIN MBNICHIELLO.
2. Premises, including Floor, Suite No. and Rentable Area: Third
Floor, Suite B3, 1156 rentable square feet.
3. Estimated Commencement Date: November 4, 1994
4. Lease Term: Five (5) years and one five (5) year option.
S. Basic Annual Rent: $21,501.60 payable at $1,791.80 per month.
6. Base Year Operating Expense: 1995.
7. Space Plan Approval Date: October 4, 1994.
8. Security Deposit: $1,791.80; payable on execution of Lease.
9. Prepaid Rent: $1,791.80; payable on execution of Lease.
10. Broker(s): None.
li. Address for Payments and Notices:
To Landlord: Abdelmuti Devehbpment Company
c/o Jack's Surf & Sport
113 Main Street
Huntington Beach, CA 92648
Attn: Mike Abdelmuti
Tel.: (714) 536-6567
To Tenant: Martin Menichiello
c/o Martin Associates
6591 Horseshoe Lane
Huntington Beach, CA 92648
Tel.: (714) 841-4272
12. Minimum Coverage for Comprehensive General Liability Policy:
$2,000,000.00 combined single limit.
13. Adilenclulni ' 'An Addendum consisting of none (if no Addendum is
attached, insert the Word none) numbered paragraphs is
attached to and forms a part of this Lease.
14. Lease Execution: In witness whereof the parties hereto have
executed this Lease, consisting of the foregoing provisions
iS h 1e T0141 M4W 111116625 -1 l ORlA�
and of the Additional
LeapProviaione and -Exhibits which
follow, as of
199�
THIS . LEASE -SHALL, NOT
ABDELMUTI DEVELOP ANY
BECOME EFFECTIVE UNTIL
a Californ a r the ip
EXECUTED BY LANDLORD AND
DELIVERED TO TENANT AND
THE SUBMISSION OF THIS
By:
FORM OF LEASE BY LAND-
v ,
LORD, OR LANDLORD'S
general p tner
AGENT, DOES NOT CONSTI-
TUTE AN OFFER TO LEASE.
"Landlord"
NO EMPLOYEE OR AGENT OF
LANDLORD OR ANY PERSON
WITH WHOM TENANT MAY HAVE
NEGOTIATED THIS LEASE HAS
ANY AUTHORITY TO MODIFY
IT tin Menichiello
THE TERMS HEREOF OR TO
MAKE ANY AGREEMENTS,
"Tenant"
REPRESENTATIONS OR
PROMISES UNLESS THE SAME
ARE CONTAINED HEREIN OR
ADDED HERETO IN WRITING.
MEMORANDUM OF ACTUAL COMMENCEMENT AND EXPIRATION DATES
Commencement Date: Expiration Date:
FSS�767501aiZG10p1u116617.1 ]OIDaKa -2-
ARTICLE I. PREMISES
SECTION 1.1 LEASED _P8=SES. Landlord hereby leases 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-1' (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, t'he Building, and other related improvements and
such additional buildings, and other related improvements as fron
time to time may be constructed upon said real property are
hereinafter referred to as the "Project".
SECTION 1.2 ACCSPTANCE_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 in reasonable detail, which items shall be limited to any
items required to be accomplished 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 'B" (the "Work Letter"}.
Such written notice shall be given within thirty (30) days after
the term of this Lease commences as provided in Article II below.
Failure 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 USE RESERVATIONS. 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 pipes, utility lines, ducts, conduits,
flues,. refrigerant- lines, drains, sprinkler mains and valves,
access panels, wires and 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 STJILDING NAMEAM-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_.ri.ght in or to any name which contains said word
combination as'a part thereof.
F5W07%014&70 M1 %211667l.1 1 Q*M+ - 3 -
ARTICLE V TERM
SECTION 2.1 rrNE BL. The term of this Lease shall be for the
period shown in Item 4 of the Basic Lease Provisions, commencing on
the estimated commencement date as shown in Item 3 of the Basic
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 (5) days following the Commencement Date, the parties shall
execute a supplement in the form attached hereto as Exhibit "A-311,
stating the Commencement Date and the expiration date of the term
of this Lease. 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, employees, 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.
SfiCTION 2.2 TENDER OF POSSESSION-By,_pf$g. Landlord may
tender the Premises to Tenant prior to, on or after the estimated
commencement date specified in Item 3 of the Basic Lease Provisions
upon not less than five (5) days' written notice stating that the
Premises will be ready for occupancy on the date specified in such
notice. 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 nor
shall Landlord by liable to Tenant for any loss or damage resulting
therefrom.
SECTION 2.3 OPTION TO EXTEND TERM. Tenant shall have one (1)
option to extend the term of this Lease for a period of five (5)
years (•T-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 shall exercise the option by giving written notice of
Tenant's intent to exercise the option to Landlord at least one
hundred eighty (180) 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 rental value of the
Premises. If Landlord and Tenant cannot agree upon the fair market
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 may 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 Extension Term shall not be reduced below the basic annual
rental in effect immediately preceding the arbitrator's decision.
F5M1AD14r10-=112116625-1 100M - 4 -
ARTICLE III. RENT AND SECURITY DEPOSIT
SECTION 3.1 DASIC ANNUAL RENT.
(a) Tenant shall pay the basic annual rent for the Premises
in the total amount, but payable in the equal monthly installments,
shown in Item 5 of the Basic Lease Provisions, subject to the
adjustment as provided in Sections 3.1(c)•and/or 3-.1(d) hereof, due
and payable on the first day of each month in advance,- commencing
on the Commencement 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 Commencement 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 amount 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 lawful 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 for the first Lease Year is
calculated on the basis of the product of the rentable square feet
of the Premises shown in Item 2 of the. -Basic Lease Provisions,
multiplied by ONE AND 55/100 DOLLARS ($1.55). Following delivery
of possession of the premises to Tenant and from time to time
thereafter, at Landlord's option, Landlord shall cause Landlord's
architect to determine the actual rentable square feet of the
Premises, which determination shall be binding upon Tenant. Tenant
shall immediately pay to Landlord the amount of any deficiencies in
basic annual rent and all other additional rent determined by the
rentable square feet of the Premises if the actual rentable square
feet is greater than set forth in Item 2 of the Basic Lease
Provisions. Landlord shall credit basic annual rent and additional
rent next payable by Tenant if the actual rentable square feet is
less than set forth in Item 2 of the Basic Lease provisions. The
foregoing adjustments shall be effective as of the Commencement
Date.
te) 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 sums payable by Tenant hereunder to be made
pursuant to this Lease, then, and in either of such events, such
increase 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 sums payable hereunder, or portions thereof, the
payment of which has been so prohibited or postponed, shall
thereafter become due and payable to the maximum extent and at the
earliest time or times permitted by law.
SECTION 3.2 SECURITY DEPOSIT. Tenant has deposited with
Landlord the sum stated in Item 8 of the Basic Lease Provisions, to
be held by Landlord as security for the full and faithful
performance of every Lease provision to be performed by Tenant. If
Tenant defaults with respect to any provision of this Lease,
including, but not limited to, the provisions relating to the
F52u67o14120-M01%2116627.1 ,"/% - 5 -
Opayment'of rent, Landlord may (b9shall not be required to) use,
apply or retain all or any part of this security deposit for the
payment of any rent or other sum in default, or for the payment of
any other amount which Landlord may spend or become obligated to
spend by reason of Tenant's default or to compensate Landlord for
any other loss or damage which Landlord may suffer by reason of
Tenant's default to the full extent permitted by law. If any
portion of said deposit is so used or applied, Tenant shall, within
five (5) days after written demand therefor, deposit cash with
Landlord in an amount sufficient to restore the security deposit to
its original amount. Landlord shall not be required to keep this
security deposit separate from its general funds, and Tenant shalt.
not be entitled to interest on such deposit. If Tenant shall per-
form every provision of this Lease to be performed by it, the
security deposit or any balance thereof shall be returned to Tenant
(or, at Landlord's option, to the last assignee of Tenant's
interest hereunder) within thirty (30) days after the expiration of
the Lease term, provided that Landlord may retain the security
deposit until such time as any amount due from Tenant in accordance
with any provision hereof has been determined and paid in full.
Each time the basic annual rent is increased under Sections 3.1(c)
and/or 3.1(d) above, Tenant shall deposit additional funds with
Landlord sufficient to increase the security deposit to an amount
which bears the same relationship to the adjusted basic annual rent
as the initial security deposit bore to the initial basic annual
rent.
SECTION 3.3 OPERATING EXPENSES.
(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 Qf
the Operating 8xpenses incurred during the Base Year specified in
Item 6 of the Basic Lease Provisions ("Increase Operating Costs").
Such payments shall be deemed additional rent. Zenant's obligation
Co Day.is prono a sharef. J,ncreased Opera s shall
commence as o the be finning of the first full calendar year
Eoliovine-M-wiepxoport ona share shall be
computed y dividing the°rentable area' of the Premises identified
in Item 2 of the Basic Lease Provisions by the total "rentable
area" of the Building. The term "rentable area' as used herein
with respect to the Premises, the Building and any other 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 may 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 ducts where a central air conditioning system eliminates floor
fan rooms, private stairs, private elevators, toilets,- air
conditioning rooms, fan rooms, 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 and 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
Fsrii67L014rX6 01171166U.1 -1"tM - 6 -
•
• include a proportionate share of public corridors, -public toilets,
air conditioning rooms, fan rooms, air ducts, janitors closets,
electri 1 closets, telephone equipment closets and their enclosing
walls. ,
Y
Prior to the Commencement 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 calendar year during which this Lease is
executed, 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 6 of the Basic Lease Provisions in equal monthly installments,
in advance, together with the monthly installments of basic annual
rent.
within one hundred twenty (120) days after the end of each
calendar year, including the calendar year during 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 amount due Tenant shall be credited
against installments next coming due under this Section 3.3, 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 six (6) 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 in
accordance with the terms set forth above, and any failure to 0o
pay shall constitute a default by Tenant under this Lease.
(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 made toward
Tenants 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 8xpenses 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 ib) 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.
F3MMJ4r,04M1U11662$.1 MOM M - %'
W The term "Operating Bxpenses` as used herein shall
include all costs of operation, maintenance, management 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; 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 ocher
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; light; power; 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);
air conditioning; 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
cost shall be reduced by the accumulated depreciation of the item
replaced); amortization of capital investments (such costs to be
amortized over such reasonable period as Landlord may determine
with a return on capital of ten percent (10) per an um on the
unamortized balance or at such higher rate as may have been paid by
Landlord on funds borrowed for .the purpose of constructing such
capital improvements) required 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 taxers" 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/or 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 of
personal property taxes, other than taxes covered -by Article ViI.
The Operating Expense shall be extrapolated, if necessary, to
reflect a completed Building with at least ninety percent (90*)
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 jurigdiction (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 on 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 expreeely'
excluding any general net income, franchise, or inheritance tax
levied upon or payable by Landlord, then, in such case, such tax,
assessment and/or 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
Ks2zan014ri0-0 IUII6VJ-I I&DUM -8-
Wn leasing or procuring tenants (including, without limitation,
lease commissions, advertisingexpenses, 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 amortization
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's costs; and
charges metered separately to other premises within the Building.
To the extent that any of the expenses described in the preceding
paragraph are partially excluded from Operating Expenses due.to
reimbursement or payment of a portion thereof by a tenant of the
Building, or by tenants of other..fioors 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 computation required by
Section 3.3.
Ih) "'-M 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
annual rent during any applicable calendar year and Landlord may
make an appropriate adjustment to the estimated payment required by
(b) above for the period of any such rent abatement.
ARTICLE IV. USES
SECTION 4.1 jF, Tenant shall use and occupy the Premises
for general office purposes 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 substantial, foreseen
or unforeseen, ordinary or extraordinary, or whether the same shall
necessitate Tenant making 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 way obstruct or interfere with the rights of other ten-
ants 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, immoral, 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 reimburse Landlord for any additional premium charged
rsn26noiu204MU116625.1 Wa04194 -9.
Of or such„poliCy(ies) by reason Penant.'s failure to comply with
the provisions of this Section, but such reimbursement shall not be
construed,ae 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, -S 1 IL CJMJI91a AND 9TH1;R
ACTIVITIES WITHOUT THE _PE&UaSIQN OF LANDLORD.- 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.,_XVZ 4,nd/or to prohibit the entrance to the Premises, the
Building and/or the Project of all vendors, suppliers, surveyors,
petitioners and others 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 have determined, in its sole and absolute
discretion and judgment, that such person's activities will not
disturb other tenants, their customers or invitees or distract from
the use of the Building and/or the Premises for their intended
purposes. Tenant agrees that Landlord may prohibit and exclude, ir
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 EXCLUSIVE CONTROL_OVES C0MMON 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,
except as herein expressly provided, nor by vendors, surveyors,
petitioners and others without the express written consent of
Landlord, which Landlord may withhold in its sole and absolute
discretion.
SECTION 4.4 SIGUS . 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 sole but 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 words 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 glass 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 or entitling
Tenant to claim damages on account thereof. 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.
ARTICLE V. SERVICES
SECTION 5.1 UTILITIES am SNAYICES. 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.
DsMM1492o"1121I662l-1 10MU% -10 -
•Tenant will not without the prior written consent of Landlord
use any apparatus or device in the Premises, including without
limitation electronic data processing machines, punch card machines
and machines using current in excess of 110 volts which will in any
way increase the amount of electricity, or water usually furnished
or supplied for use of the Premises as general office space; nor
connect any apparatus, machine or device with water pipes or
electric current (except through existing. electrical outlets in the
Premises), for the purpose of using electric current or water.
Landlord may impose a reasonable charge plus any surcharges
charged for excess use for any utilities or services, including,
without limitation, electric current, required to be provided by
Landlord by reason of any substantial recurrent use of the Premises
at any time other than generally recognized business hours of
generally recognized business days. If Tenant shall require
electric current in excess of that which Landlord'is obligated to
furnish under this Section 5.1,--Tenant shall first obtain the
consent of Landlord, which Landlord may refuse, to the use thereof
and Landlord may cause an electric current meter to be installed in
the Premises to measure the amount of electric current consumed for
any such other use. The cost of any such meter and of
installation, maintenance and repair thereof shall be paid for by
Tenant and Tenant shall reimburse Landlord promptly upon demand by
Landlord for all such electric current consumed for any such other
use as shown by said meter, at the rates charged for such services
by the local public utility furnishing the same, plus any
additional expense incurred in keeping account of the electric
current so consumed.
If any lights, machines or equipment (including without
limitation electronic data processing machines) are used by Tenant
in the Premises which materially affect the temperature otherwise
maintained .._by .the air conditioning- system, or generate
substantially more heat in the Premises than would be generated by
the Building Standard lights and usual fractional horsepower office
equipment, Landlord shall have the right (but shall not be
obligated) to install any machinery and.'equipment which Landlord
reasonably deems necessary to restore temperature balance,
including without limitation, modifications to the standard air
conditioning equipment, and the cost thereof, including the cost of
installation and any additional cost of operation and maintenance
occasioned thereby, shall be paid by Tenant to Landlord upon demand
by Landlord.
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
expense, in default of which Landlord may cause such meter to be
replaced, repaired and collect the cost thereof from Tenant.
In the event that any such 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.
FS]ubTO��gP0001U11662f.1 IOIpNp� - 1 �'
Landlord shall not be liable for an failure to furnish an of
Y Y
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 may take into
consideration the availability of energy resources and prudent
energy conservation practices, including participation in any
energy conservation association or other arrangements 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 company, excepted.
SECTION 5.2 OREMIDS AND 1ZIULNANQE OF COMMON FACILITIES.
Landlord shall operate and maintain during the term of this Lease
all common 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 Common 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, restrooms 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 The use and occupancy
try 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 Common
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
time to time. Tenant shall keep said Common Facilities free and
clear of any obstructions related to Tenant's operations. If, in
the opinion of Landlord, 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 Common 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.
FsZ26MI4tX)-=I11116625.1 IOl0 M - 12 -
SECTION 5.4 PARKIN.
(a) Tenant acknowledges that no parking areas are provided at
the Project and that Tenant may use the parking structure provided
by the City of Huntington Beach located near the Project. Landlord
agrees to use all reasonable efforts to have the City of Huntington
Beach provide parking validation for Tenant's employees and
invitees, but Tenant acknowledges that the availability of parking
and such validation rate is subject to change and not within
Landlord's control.
(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 forma.
ARTICLE VI. MAINTENANCE OF THE PREMISES
Wov
(a) Tenant at its sole cost and expense shall make all
repairs necessary to keep the Premises in good order_ and repair and
in a•safe,"clean, sanitary, orderly and attractive condition. Ail
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 approved by Landlord. Landlord may impose reasonable
restrictions and reguirements with respect to such repairs
including, without limitation, those applicable to -Tenant's alter-
ations as set forth in Section 6.4.
(b) Tenant, at its sole cost and expense, shall install and
maintain fire extinguishers within the •Premises and other fire
protective devices as may be required from time to time by
Landlord, by any agency having jurisdiction and/or by the insurance
underwriters insuring the Premises.
SECTION 6.2 LANDLORD;S _]A1=NANCE AND REPAIR.
(a) -..Landlord shall keep and maintain in good repair the roof
(including the structural integrity thereof), foundations,
footings, 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, reasonable wear
and tear excepted, except to the extent such repair is Tenant's
responsibility under Section 6.1 above or the responsibility of a
public 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.
FnA26T014rzo 0112116623.1 1DUM - 13
0 - 0
(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 UEMU'S_ALIZRATIONS. Tenant shall not make
alterations, additions or improvements to the Premises nor any
repairs, replacements or restorations to the Premises in excess of
TWO 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, in its sole
discretion, may deem reasonable or desirable, including, but not
limited to, a requirement that all work be covered by a surety bond
in favor of Landlord, guaranteeing the completion of such work free
and clear of all subcontractors', mechanical and materialmen'a
liens (which bond shall be satisfactory to Landlord) and
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 Governmental Requirements and to the extent
Tenant's alterations trigger 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. No 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 of same. Failure of Landlord to
respond to such request within thirty (30) 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
FS2%26M142204W1U116621.1 10*u% - 14 -
0
SLandlord 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 g�ypn . at least thirty (30) days} prior to the end of the
Lease term, require Tenant to remove all or any portion of any
alterations, decorations, additions, improvements and the like
installed by Tenant, and to repair, or at Landlord's option, to pay
all costs relating to any damage to the Premises arising from such
removal.
SECTION 6.5 MECHMIC'S LIFNa. 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 in 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 necessaryfor protection from such
liens.
SECTION 6.6 EN=_WM 114.SPC110N. Landlord shall at all
times 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. If during the last month of the term hereof, Tenant
shall have removed substantially all of Tenant's property and
personnel from the Premises, Landlord may enter the Premises and
repair, alter and redecorate the same, without abatement of rent
and without liability to Tenant, and such acts shall have no effect
on this Lease. Tenant hereby waives any claim for damages or
abatement of rent for any injury, inconvenience to or interference
with Tenant's business, loss 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 tecklegs 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 mean:
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, or
when an uncured default on the part of Tenant exists hereunder,
F52U67W ia1120-0001 %2116617.1 1 WOLM4 -is-
standlord- may, at all reasonable times, enter the Premises for the
purpose of displaying the Premises to prospective tenants.
SECTION 6.7 SPACE PLANNING AM jMSTITUTION. Landlord shall
have the right, upon providing Tenant thirty (30) days' written
notice, to move Tenant to other space in the Building. Such new
space shall be approximately the same size as the Premises, and be
provided with comparable improvements (upgrading only to the level
of Tenant's prior space). Landlord shall pay the expenses
reasonably incurred by Tenant in connection with such substitution
of Premises, including but not limited to, costs of moving, door
lettering, telephone relocation and reasonable quantities of new
stationery. In the event of such relocation, this Lease shall
remain in full force and effect and be deemed applicable to the new
space except that Exhibit "A-1" and Item 2 of the Basic Lease
Provisions shall be amended to include and state all correct data
as to the new space..
ARTICLE VII. TAXES AND
ASSESSMENTS ON TENANT'S PROPERTY
SECTION 7.1 TAXES ON TENANT'S PROPEL.
(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
from 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 such 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 t-a 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.
(c) Upon request, Tenant -agrees to provide receipts,
cancelled checks or other documents reasonably requested by
Landlord to confirm Tenant's payment of any taxes and/or
assessments payable by Tenant directly to the taxing authority
under `this' Lease.
ARTICLE VIII. ASSIGNMENT AND SUBLETTING
• : • ,W-PW ILOR NO 0O • h�Y
(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
F52LUNIOX-00014 I NA2S.1 101041% - 16 -
�r subletting which is not in cooliance with this Article VIII
shall be void and, at the option of Landlord, shall constitute a
default by Tenant under this Lease and entitle Landlord to
terminate 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 subtenancies 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 Commissioner o! Corporations of the State of 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 twenty-five percent (25t) shall be deemed an
assignment within the meaning and provisions of this Section.
(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 shall 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; (iii) the terms and provisions of the
proposed sublease or assignment; (iv) such financial information as
Landlord may request concerning the proposed subtenant or assignee;
and (v) such information as Landlord may request regarding the
business experience concerning the proposed subtenant or assignee
during the preceding five (5) years.
(c) At any time within thirty (30) 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, (iii) sublease the Premises or the portion thereof so
proposed to be subleased by Tenant or take an assignment of
Tenant's leasehold estate hereunder or such part thereof as shall
be specified in said notice upon the same terms (excluding terms
relating to purchase of personal property, the use of Tenant's name
or the continuation of Tenant's business) as those offered to the
proposed subtenant or assignee, as the case may be; or (iv)
terminate this Lease as to the portion (including all) of the
Premises so 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 the balance of the Premises, which partition wall shall be
completed by Tenant at 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 (iv) above
rs2%2sU14n0- o 1Wif U.l MUM -I?-
• 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
costs, 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 indemnify 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 trade.
Landlord may, at its option, require Tenant to assume Landlord's
defense in any action covered by this Section 9.2 through counsel
satisfactory to Landlord. 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.
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 n=
exceeding twenty-five percent (25V) 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 commence 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 t25t)
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 ninety (90)
days of the occurrence of such damage. In the event Landlord
elects not to restore the Building, this Lease shall terminate on
the date thirty (30) days following the date Tenant receives
Landlord's written notice indicating Landlord's election to
terminate.
(b) In the event the Premises or the Building is damaged or
destroyed to the extent of more than ten percent (10t) cf its
replacement cost by a casualty not covered by a standard fire and
extended coverage policy of fire insurance, Landlord may 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'doee 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 such repair, reconstruction or
restoration unless (i) the Premises were unusable for a period of
three (3) business days or less, or (ii) the damage is due to the
fault or neglect of Tenant, its agents or employees. Tenant shall
not be released from any of its obligations under this Lease except
F57�267�OIIY7p 0001 �21 l861l.1 IArWNc - 2 0 -
Wo the_lextent and upon the congions 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 (30) 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 twenty-four (24)
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
making 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 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
plumbing or air-conditioning or 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
damage thereto or replace the same.
SECTION 10.3 JEM=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 1933(4) of the California Civil Code and all
comparable statutes or rules of law now or hereafter in effect.
FSW6RQ1<t2(LOMI M166251 IMOVO4 .21-
ARTICLE XI. EMINENT DOMAIN
If the whole of the Premises or so much thereof as to render
the balance unusable by Tenant 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 purposes 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 condemning 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, the
basic annual rent shall be reduced in proportion to the part of the
Premises taken, taking into account any restoration and repair by
Landlord.
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.
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, 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 event of the exercise of any
power of sale under any mortgage or deed of trust made 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 EST022EL CERTIFICAa,. Tenant shall, at any time
and from time to time, within ten (10) days' after 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 offsec against Landlord, and
iiv) certifying that Tenant has accepted possession of the
Premises.- Any such statement may be relied upon by any prospective
FSTs67%01442C6 01U11662S.1 IWarr9a -22-
purchaser or encumbrancer of alisr any portion of the Premises,
Building and/or Project.
ARTICLE %III. DEFAULTS AND REMEDIE§
SECTION 13.1 TgN=IS DEE&=S. The occurrence of any one or
more of the following events shall constitute a default hereunder
by Tenant:
(a) The abandonment or vacation 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
of, and not in addition to, any notice required under California
Code of Civil Procedure Section 1161 et Sea. 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 terms of
this Lease.
(c) Use of the Premises for any purpose other than as
authoriaed•inr 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.
(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 those 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; provided,
however, that any such notice shall be in lieu of, and not in
addition to, any notice required under California Code of Civil
Procedure Section 1161 gt ngQ.
(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) Tenant'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 LANDLORD'S RMMIES.
(a) In the event of 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 may 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:
FSM67W14rM 1UJ1aeila 106U a -23-
The worth at th0ime 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 atter 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 (1t), but not in excess of ten percent (10%)
per annum.
(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
breached this Lease and abandoned the Premises and to enforce all
of Laiidldrd's 'rights and remedies under this Lease, at law or in
equity, including the right to recover the rent as it becomes due
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 1S.abilities
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 addition 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 by Tenant
hereunder. In any action for unlawful detainer commenced by
Landlord against Tenant by reason of any default -hereunder, -the
FS7xU7Wi4VJO=1U1 isdu.1 1001 + - 24 -
Weasonable rental value of the9emises 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, powers 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 effect 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 of 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
of the keys to any such employee shall not operate a termination of
this Lease or a surrender of the Premises.
RECTION 13.3 INTEREST ON TENANT'S OBLIQMTONSe LATE
PAYMEMS.
(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 maximum 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 default.
(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
amount 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
imposed 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
rssva�otisuaoaosut�aass.ti �aana - 25 -
40
*overdue amount, nor prevent Landlord from exercising any of the
other rights and remedies granted hereunder.
(c) Following each second consecutive late payment of rent,
Landlord shall have the option (1) to require that beginning with
the first payment of rent next due, rent shall no longer be paid in
monthly installments but shall be payable quarterly three (3)
months in advance and/or (ii) to require that Tenant increase the
amount, if any, of the security deposit required under Section 3.2
as listed in Item 9 of the Basic Lease Provisions by one hundred
percent (100t), which additional security deposit shall be retained
by Landlord, and may be applied by Landlord, in the manner provided
in Section 3.2.
SECTION 13.4 RIGHT OF LANDLORD IQRERFORM. All covenants and
agreements to be performed by Tenant under any of 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 act 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 provision 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 Ahali constitute a breach
of the covenants and conditions of this Lease.
SECTION 13.5 DMULT BY LANDLORD. . Landlord sbali 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, and to any mortgagee or
beneficiary of a deed of trust with an interest in any encumbrance
affecting Landlord's interest in the Premises, 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 430) day period.
and thereafter diligently prosecutes the same to completion: If,
after notice to 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, and Tenants remedy shall be
limited to damages and/or an injunction. It is expressly
understood and agreed to that any money judgment resulting from any
default or other claim arising under this Lease shall be satisfied
only out of the rents, issues, profits or other income ('Income")
actually received from the operation of the Building and no other
real, personal or mixed property of Landlord (the term "Landlords
For purposes of this Section only shall mean any and all partners,
)?oLh 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.
F32U67WJ4rM- 001121J"2l-1 I0FOU71 -26
0
0Tenant -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 EXPENSES AN3] LEGAL 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 cr
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 and
delivery costs, in 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. END OF 'PERM
SECTION 14.1 IJQLQING ME 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 first (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
(150t) of that payable at the date of expiration.
SECTION 14.2 SURRENDEF, OF2REM ,S, REMOVAL OF PROPERTY.
Upon the.. expiration of the term of this Lease, or upon any earlier
termination of this Lease, Tenant shall quit and surrender
possession of the Premises to Landlord in.as good order, condition
and repair as when received or as hereafter may be improved by
Landlord or Tenant, reasonable wear and tear and repairs which are
Landlord -'a -obligation excepted, and shall, without expense to
Landlord, remove or cause to be removed from the Premises all
debris aiid i.ubbish,"all furniture, equipment, and trade fixtures,
free-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. 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 additional rent payable
by Tenant upon demand. If requested by 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 AFFIXED PROPERTY. 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, (exclusive 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.
F&2U6?W14:ao,o 1U11dAu.1 noon+ - 27 -
• •
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 may be delivered in person -to
an officer or duly authorized representative of the other party, or
may 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, or if to Tenant, at such address or, from
and after the Commencement Date, at the Premises (whether or not
Tenant has departed from, abandoned or vacated the Premises).
Either party may from time to time, by written notice to the other,
served in the manner herein provided, designate a different
address. If any notice or other documents is sent by mail as
aforesaid, the same shall be deemed served or delivered twenty-four
(24), holxrs'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 XVI. RULES AND REGULATIONS
The Rules and Regulations attached hereto as Exhibit "Cm 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(s)
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 COMISSION
The parties recognize as the broker(s) who procured this Lease
the firm(a), if any, stated in Item 10 of the Basic Lease
Provisions, and agree that Landlord shall be solely responsible for
the payment of brokerage commissions to said broker(s), and that
Tenant shall have no responsibility 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 cost, expense or liability
(including reasonable attorneys' fees in connection therewith) for
any ccTgpeneation, commissions or charges claimed by any other real
estate broker or agent employed or claiming to represent or to have
been employed by Tenant in connection with the negotiation of this
Lease. The foregoing agreement shall survive the termination of
this Lease.
ARTICLE XVIII. TRANSFER OF LANDLORD'S INTEREST
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 automatically 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
F5M67W141XWWt%21 i*623.1 iWUM - 28 -
their respective periods of ownership. Tenant acknowledges and
agrees -that in connection with a rent guarantee agreement between
Landlord and the Redevelopment Agency of the City of Huntington
Beach ("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 Master 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.
ARTICLE XIX. INTERPRETATION
SECTION 19.1 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 LEADTNGS. The captions, headings, titles,
numbering 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 XK. EXECUTION AND RECORDING
SECTION 20.1 CORPORATE AUTHORITY. 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
shall, at Landlord's request, deliver a certified copy of its board
of directors' resolution authorizing or ratifying such execution.
SECTION 20.2 RECORDING. 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.
SECTION 20.3 No amendment, 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. MISCELLANEOUS
SECTION 21.1 NONDISCLOSURE _OF LEB.- _TERMS. Tenant
acknowledges and agrees that the terms of this Lease are
confidential and constitute proprietary information of Landlord.
Disclosure of the terms hereof could adversely affect the ability
of Landlord to negotiate other leases with respect to the Project.
Tenant agrees that it, and its partners, officers, directors,
employees and attorneys shall not disclose the terms and conditions
of this Lease to any other person without the prior written consent
of Landlord, provided, however, that Tenant may disclose the terms
hereof to the independent accountants who audit its financial
statements. It is understood and agreed that damages would be an
inadequate remedy for the breach of this provision -by Tenant, and
Landlord shall have the right to specific performance of this
Fa. 20'M 4820-COM1166 3.1 IWIM - 2 9 -
•provision and to injunctive relief to prevent its breach or
continued breach.
SECTION 21.2 E T�SHING OF FINANCIAL STATSMBNTR, Landlord
has reviewed financial statements and tax returns if so requested
of the Tenant and has relied upon the truth and accuracy thereof
with Tenants 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 of this
Lease.
SECTION 21.3 CHANGSS SFQUZSTRp PY LENpEg. If, in connection
with obtaining financing for the Building, any lender shall request
reasonable modifications in this Lease as a condition to such
financing, Tenant will not unreasonably withhold, delay or defer
its consent thereto, provided that such modifications do not
materially increase the obligations of Tenant hereunder or
materially and adversely affect the leasehold interest hereby
created.
SECTION 21.4 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
from time to time be present upon the premises.
SECTION 21.5 COVENANTS AND-CQM TIONS. All of the provisions
of this Lease shall be construed to be "conditions" as well as
"covenants' as though the words specifically expressing or
imparting covenants and conditions were used in each separate
provision.
SECTION 21.6 wORK LETTER. Landlord and Tenant each agree to
fully perform their obligations under the work Letter, if any. Any
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 JOINT AND SEVE AL 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 persons 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 SUCCESSORS. Subject to Articles VIII and xvin
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, administrator$, successors, and
hssigns of the parties. Nothing contained herein -is intended; or
shall be construed, to confer upon or grant to any person other
than Landlord and Tenant any rights or remedies under this Lease.
FS246?tiIIllit0.006��3i�6623 1 MOM - 3 0 -
SECTION 21.9 Time is of the essence wit:
respect to the performance of every provision of this Lease in
which time of performance is a factor.
SECTION 21.10 CQ=LLING LAW. This Lease shall be governed
by and interpreted in accordance with the laws of the State of
California.
SECTION 21.11 SMRABILITY. 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 and enforceable to the
fullest extent permitted by law.
SECTION 21.12 RELATIONSHIP 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 IMILITY . In the event that
Landlord shall be delayed or hindered in or prevented from the
performance of any work or in performing any act required 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 grogram 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 of 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 obligations, including payment of
rent, under this Lease.
SECTION 21.14 QUIRT ENJOYMENT. 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-,, -tern and conditions of this Lease on Tenant's part to
be 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 AIM MATERIALS. Tenant shall
not engage in any activity on or about the Premises or the Project
that violates any Environmental Law, and shall 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 Environmental Response,
Compensation and Liability Act of 1980 ("CERCLA"), 42 U.S.C.
Sections 9601 " aaq.; (ii) the Resource Conservation and Recovery
Act of 1976 ("RCRA"), 42 U.S.C. Sections 6901 at sea.; (iii)
F32067AD14MOMM116623-i iaa,w - 31 -
California Health and Safety Code Sections 25100 et sea.; (iv) the
Safe Drinking Water and Toxic Enforcement Act of 1986, California
Health and Safety Code Section 25249.5 Ar� 9=.; (v) the Federal
water Pollution Control Act, 33 U.S.C. Sections 1317 " §=.; (vi)
California Water Code Section 1300 gJ M.; and (vii) California
Civil code Section 3479 ft M., 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 gt a=.
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 Lawn received by Tenant.
Tenant's obligations pursuant .to this Section 21.15 shall 'be
referred to in this Lease as `Environmental Compliance".
SECTION 21.16 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 from Landlord to make
any represeritatione or promises on behalf of Landlord, 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.
• FS 00 0 48204 01i2116623-1 ,OM4/% - 32 -
•
THIRD FLOOR PLAN
north
FSj
a
d
a
TENANT IMPROVEMENT FOR �
MARTIN ASSOCIATES
Suite 8-3
N OCEANVIEW PROMENADE I
EXHIBIT "A-2"
Legal. I?escrintion of the Project
That certain real property located in the City of Huntington
Beach, 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 Maps, Records of Orange County,
California.
EXHIBIT "A-2"
TO OFFICE SPACE LEASE
�uarwu�m.000iw��au.t �arouva
EXHiBT�"A- 3 "
The undersigned as the Landlord and Tenant under that certain
Office Space Lease dated , for space within the
, Huntington Beach, California,
hereby confirm that the term of said Lease has commenced
, and that the expiration date of the term of said
Lease is
ABDELMUTI DEVELOPMENT COMPANY, a
California general partnership
By:
Ahmad H. Abdelmuti,
general partner
"Landlord"
By:
Its:
By:
Its:
"Tenant"
TO OFFICE SPACE LEASE
FS]526h01�114000112116623.! IG'O1141
t
i •
EXHIBIT 'B"
In addition to the mutual 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) Tenant agrees to cooperate with Landlord's
architects and engineers, who shall prepare detailed space
plans and specifications for the Premises which shall include,
but not be limited to, locations of doors, partitioning,
reflected ceiling, electrical fixtures, outlets and switches,
telephone outlets, plumbing fixtures, extraordinary floor
loads, and the other special requirements, and Tenant shall
approve such space plans in writing on or before the Space
Plan Approval Date set forth in the Schedule of Approvals
below. Tenant may have its own architect prepare space plans
and specifications at its expense and shall furnish a copy to
Landlord at least ten (10) days prior to the Space Plan
Approval Date. If Tenant does so, Landlord shall have the
right to approve same on or before the Space Plan Approval
Date, and Landlord shall be entitled in all respects to rely
upon all plans, drawings, and information so supplied by
Tenant. All working drawings shall be prepared at Landlord's
expense by Landlord's architect or engineer. The working
drawings shall include architectural, mechanical, electrical
and structural engineering drawings for Building Standard Work
as described in Paragraph 2 hereof.
(b) Tenant may require work (hereinafter referred to as
"Non -Building Standard stork") different from or in addition to
Building Standard Work as described in Paragraph 2 hereof. In
such event, any architectural, mechanical, electrical and
structural 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 Saint, or coverings, fixtures and carpeting other than
Landlord's Building Standard, 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 Building Standard
shall be provided by Tenant at Tenant's sole cost and expense.
(d) All plans, specifications and drawings referred to
hereinabove in subparagraphs (a) and (b) of this Paragraph 1
are subject to Landlord's approval, which approval shall not
be unreasonably withheld.
(e) Tenant's plans and specifications shall not be in
conflict with the building codes for the City of Costa Mesa 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. _
(f) Whether and to the extent which any of Tenant's
requirements constitute Non -Building Standard Work or
otherwise exceed Building Standard shall be determined by
bandiord'a architect or engineer, which determination shall be
conclusive.
EZHIB
TO OFFICE SPACE LEASE
Fs�ueno�.�maooiu�issu-i �aous. Page 1
• 2. BUILDING STANDARD WORK LANDLORD'S COST AND EXPENSE
ta) Landlord agrees, at its sole cost"and expense, to
furnish and install all the following Building Standard Work,
but only in the quantities specified by Landlord, as indicated
on Tenant's final approved plans and specifications:
(i) Partitions
The interior partitions will be 3-3/4^ nominal
thickness, consisting of two (2) 5/80 thick
gypsum boards, one each attached to each side
of 2-1/20 metal studs and resilient base. One
(1) linear toot of interior partition will be
provided per twelve (12) square feet_ of
"Occupied Areal (ag hereinafter defined). In
addition to interior partitions, Landlord will
provide one (1) demising partition per suite.
Doors, Door Frames and Hardware
Solid core oak doors with painted aluminum
frames. One (1) door and frame per three
hundred fifty (350) square feet of Occupied
Area. One (1) entry door .per Premises .if
Premises is less than three thousand (3,000)
square feet of Occupied Area. Two (2) entry
doors per Premises for Premises greater than
three thousand (3,000) square feet of Occupied
Area. Two (2) pairs of butt hinges and
Building Standard latchset included with each
door, except entrance door, which has lockset.
(iii) Painting
All wall surfaces except doors finished with
two (2) coats latex. flat paint in one (1)
color to be selected by Tenant from Building
Standard selection.
(iv) ceilings
Suspended 2'x 2' regular acoustical ceiling
grid with fissured tiles throughout- the
Premises, except in passenger and service
elevator lobby areas, and public restroo-ms,
where Landlord may choose to specify other
types of materials.
(v) Lighting Fixtures
2' x 4' three (3) tube 40-watt recessed
fluorescent return air lighting fixtures with
multi -cell parabolic lenses. One (1) fixture
per one hundred (100) square feet of Occupied
Area, including one (1) electrical wall light
switch per three hundred (300) square feet of
Occupied Area.
(vi) Electrical System
Electrical service usage shall not exceed
three (3) watts per square foot of Occupied
Area, of which two (2) watts per square foot
shall be for fluorescent lighting requirements
at 277 volts and one (1) watt per square foot
for receptacles of 110 volts.
EXHIBIT •S"
TO OFFICE SPACE LEASE
F32U67W14120-M01U1166".1 10*91% Page 2
• (vii) Duplex Electrical Outlets V
One (1) duplex electrical wall convenience
outlet per one hundred fifty.(150) square feet
of Occupied Area.
(viii) Telephone outlets
One (1) telephone wall outlet per two hundred
(200) square feet of Occupied Area.
(ix) 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.
(x) Window Coverings
Horizontal one inch (10) mind -blinds on all
exterior office windows in color and type
selected by Landlord.
(xi)Heating, Ventilating and Air Conditioning
The HVAC system is a variable volume system.
Landlord will install one (1) control zone per
eight hundred (800) square feet of Occupied
Area and one (1) thermostat per zone.
(xiil Life/Safety Speakers
One M life/safety speaker per three thousand
(3,000) square feet of Occupied Area will be
provided or at least one (1) speaker per
Premises where Premises is less than three
thousand (3,000) square feet of Occupied Area.
(xiii) Fire Sprinklers
One (1) recessed type head with white enamel
finish per one hundred fifty (150) square feet
of Occupied Area.
(xiv) Exit Signs
Minimum of one (1) exit sign per Premises.
Additional exit signs shall be provided in
accordance with building codes.
(b) The term 'Occupied Area, shall mean the Rentable
Area of the Premises, less the area of elevator lobbies,
public corridors, public restrooms, mechanical rooms,
electrical rooms, telephone closets and other common areas of
the Building and vertical penetrations not constructed or
provided for the special use of Tenant. Landlord's architect
shall determine and certify the Occupied Area of the Premises.
3. NON -BUILDING STANDARD WORK AT TENANT'S COST AND EXPENSE
(a) Provided Tenant's plans and specifications are
approved not later than the time provided -hereinabove in
Paragraph 1, Landlord shall cause Tenant's Non -Building
Standard Work to be installed by Landlord's contractor, but at
Tenant's sole cost and expense. Prior to commencing any such
Non -Building Standard Work, Landlord shall submit to Tenant a
written estimate of the cost thereof. If Tenant approves such
MIBIx-"AM
TO OFFICE SPACE LEASE
F3M61a148204M1%21t6623., lao.na Page 3
estimate, it shall notify LaVord 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 or the
Building Standard Work affected thereby. It is understood
that Tenant shall thereupon be liable for the delay and
increased cost, if any, in completing the affected Building
Standard 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 Non -Building Standard Work. Such cost
shall include Landlord's contractor's charges. In addition,
Tenant shall pay Landlord fifteen percent (15k) of such cost
for Landlord's overhead and coordination of the work.
4. SUBSTITUTIONS AND CREDITS
(a) Provided Tenant's plans and specifications are
approved not later than the time provided hereinabove in
Paragraph 1, except for exterior window draperies, Tenant may
select different materials (hereinafter "substituted
materials") in place of Building Standard materials which
would otherwise be initially furnished and installed by
.Landlord in the interior of the Premises under the provisions
of this work Letter, provided such selection is indicated on
Tenant's complete 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 Building Standard materials thereby replaced, Tenant shall
gay-,_fiq. Aandlord, 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 (15%) 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 Building Standard 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 or with the
Building Standard Work affected thereby. Tenant shall
thereupon also be liable for the delay and increased cost, if
any, in completing the affected Building Standard 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 Landlord's 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 such 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
omission of materials where no replacement in kind is made.
There shall be credits only for substitutions in kind, e.g.,
EXHIBIT "B"
TO OFFICE SPACE LEASE
Fsz%2a1%or4M0 111ll662$.1 lot" Page- 4
a lighting fixture credit may be applied only against the cost
of another type of lighting fixture.
5. COMPLE:'ION AND RENTAL ddKMENCEMENT DATE
The Commencement Date of the Lease as set forth in Article 1
of the Lease 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 Building
Standard, or
(c) Tenant's changes in itsspace plans and
specifications after the approval or submission thereof to
Landlord, or
(d) Other changes in the Non -Building Standard Work or
substitutions for the Building Standard materials made after
the deadlines for notification thereof as set forth in the
Schedule of Approvals below, or
(e) A delay in performance of Building Standard Work as
a result of Tenant's failure to approve written estimates of
the costa of Hon -Building Standard Work or substituted
materials in accordance with Paragraphs 3 and 4 hereof.
6. CHANGES IN THE WORK
Once the space plans and specifications are approved, Tenant
shall have the right to request of Landlord that changes be made to
the work, but only as provided in this Section 6. Landlord agrees
not to withhold its approval to any such changes. Tenant shall be
responsible for the cost of any such changes together with
Landlord's 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 though 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
fee. 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 matters listed in the "Event" column
below by the corresponding time specified in the 'Time" column as
follows.
RXHIEIT "B"
TO OFFICE SPACE LEASE
- - FMOW144204MM116627.1 1N0 M page 5
Event
. Time
a.
Space Plan Approval Date.
As specified in Item 12
-
(See Paragraph 1(a).)
of the Basic Lease Pro-
visions.
b.
Deadline for notifying
Twenty (20)_days after
Landlord of Tenant's
Space -Plan Approval Date.
selection of Non -Building
Standard materials, (See
Paragraph 1(c).}
C.
Deadline for Tenant's
Seven (7) days after
approval of Landlord's
Tenant's -receipt of cost
cost estimate for Non-
estimate from Landlord.
Building Standard Work
and payment for same.
(See Paragraph 3(a).)
d.
Deadline for notifying
Twenty (20) days after
Landlord of Tenant's
Space Plan Approval Date.
request for substitution
for the Building Standard
materials. (See Paragraph
4(a).)
e.
Deadline for Tenant's
Seven.(7) days after
approval of Landlord's
Tenant's receipt of cost
estimate of increased
estimate from Landlord.
cost of substituted
materials and payment
for same, (See Paragraph
• TO OFFICE SPACE LEASE
FSnU7W14r310=01u11662i-I 10MCM Page 6
0 EXHIBO"C^
The following Rules and Regulations shall be in effect at the
Project. Landlord reserves the right to adopt reasonable
modifications and additions hereto.
(1) The sidewalks, entrances, passages, courts, elevators,
vestibules, stairways, corridors or halls of the Building shall not
be obstructed by any tenant or used for any purpose other than
ingress and egress from the respective premises. The halls,
passages, entrances, elevators, Stairways, balconies and roof are
not for the use of the general public, and Landlord shall in all
cases -retain the right to control and prevent access thereto of all
pereons..whose presence in the judgment of Landlord shall be preju-
dicial to the safety, character, reputation and interests of the
Building and its tenants, provided that nothing herein contained
shall be construed to prevent such access to persons with whom
Tenant normally deals only for the purpose of conducting its busi-
ness on the Premises (such as clients, customers, office suppliers
and equipment vendors, and the like) unless such persons are
engaged in illegal activities. No tenant and no employees of any
tenant shall go upon the roof of the Building without the written
consent of Landlord.
(2) No awnings or other projection shall be attached to.the.
outside walls of the Building or to balconies without the prior
written consent of Landlord. No hanging planters, television sets
or other objects shall be attached to or suspended from ceilings
without the prior written consent of Landlord. No curtains,
blinds, dnades'or screens shall be attached to or hung in, or used
in connection with, any window or door of the Premises without the
prior written consent of Landlord. All electrical ceiling fixtures
hung in offices or spaces along the perimeter of the Building must
be fluorescent and/or of a quality, type, design and bulb color
approved by Landlord. No awnings, furniture, trees or plants or
other personal property shall be placed upon any balcony or patio,
without Landlord's prior written approval.
(3) No sign, advertisement or notice shall be exhibited,
painted or affixed by any tenant on any part of, or so as to be
seen from the outside of, the Premises or the Building without the
prior'written'consent of Landlord. In the event of the violation
of the foregoing by any tenant, Landlord may remove such sign,
advertisement or notice without any liability and may charge the
expense incurred in such removal to the tenant violating this rule.
Interior signs on doors and director tablet shall be inscribed,
painted or affixed for each tenant by Landlord at the expense of
such tenant, and shall be of a size, color and style acceptable to
Landlord.
(4) The sashes, sash doors, skylights, windows and doors that
reflect or admit light and air into the halls, passageways or other
public places in the Building shall not be covered or obstructed by
any tenant, nor shall any bottles, parcels or other articles be
placed on the windowsills, balcony or patio railings.
(S) The water and wash closets and other plumbing fixtures
shall not be used for any purpose other than those for which they
were constructed, and no foreign substance of any kind shall be
thrown herein. All damages resulting from any misuse of the
fixtures shall be borne by the tenant who, or whose servants,
employees, agents, visitors or licensees shall have caused the
same.
TO OFFICE SPACE LEASE
FS21161nO141=4p00ik2u6625 i Ora»% Page 1 1
0 (6) No tenant shall mark, ot, drill into, or in any way
deface -any part of the Premises or the Building. No boring,
curring or stringing of wires or laying of linoleum or other floor
coverings shall be permitted, except with the prior written consent
of Landlord, and as Landlord may direct. Any tenant permitted by
Landlord to lay linoleum or other similar floor covering shall not
affix the same to the floor of the Premises in any manner except by
a paste, or other material which may easily be removed wich water,
the use of cement or other similar adhesive materials being
expressly prohibited. The method of affixing any such linoleum or
other similar floor covering to the floor, as well as the method of
affixing carpets or rugs to the Premises, shall be subject to
approval by Landlord. The expense of repairing any damage
resulting from a violation of this rule shall be borne by the
tenant by whom, or by those agents, clerks, employees or visitors,
the damage shall have been caused.
(7) If Tenant desires telephone or telegraph connections,
Landlord will direct electricians as to where and how the wires are
to be introduced.
(8) No bicycles, vehicles or animals of any kind shall be
brought into or kept in or about the Premises, and no cooking shall
be done or permitted by any tenant in the Premises, except that the
preparation of coffee, tea, hot chocolate and similar items for
tenants, their employees and visitors shall be ..permitted. - No
tenant shall cause or permit any unusual or objectionable odors cc
be produced in or permeate from or throughout the Premises.
(9) No portion of the Building shall be used for manu-
factu'rin§'ox-for the storage of merchandise except as such storage
may be incidental to the use of the Premises for general office
purposes without Landlord's prior written approval. No tenant
shall, without the prior written consent of the Landlord, occupy or
permit any portion of his premises to be occupied or used for the
manufacture or sale of liquor, narcotics, or tobacco in any form,
as a medical office, chiropractor's office, as a barber or manicure
shop, or as an employment bureau or any business other than that
specifically provided for in the Lease. No tenant shall engage or
pay any employees on its premises except those actually working for
such tenant on its premises nor advertise for laborers giving an
address at its premises. The Building shall not be used for
lodging or sleeping or for any immoral or illegal purposes.
(10) Except with the prior written consent of the Landlord, no
tenant shall sell, or permit the sale at retail, of newspapers,
magazines, periodicals, or cheater tickets, in or from the
Building, nor shall any tenant carry on, or permit or allow any
employee or other person to carry on, the business of stenography,
typewriting or any similar business in or from the Building for .tlle
service or accommodation of occupants of any other portion of the
Building.
(11) Landlord reserves the right to prohibit personal goods
and services vendors (as such term is defined below) from access to
the Building. To the extent that Landlord permits such vendors
access to the Building, such access shall be upon such reasonable
terms and conditions, including but not limited to the payment of
a reasonable fee and provision for insurance coverage, as are
related to the safety, care and cleanliness of the Building, the
preservation of good order thereon, and the relief of any financial
or other burden on Landlord occasioned by the presence of .such
vendors or the sale by them of personal goods or services (as such
term is defined below) to a tenant or its employees. If reaeonably
: necessary for the accomplishment of the aforementioned purposes,
Landlord may exclude a particular vendor entirely or limit the
number of vendors who may be present at any one time in the
Building:" -'The term 'personal goods or'services vendors" means
persons who periodically enter the Building for the purpose of
selling goods or services to a tenant, other than goods or services
which are used by a tenant only for the purpose of conducting its
RXHTRTT _"C"
TO OFFICE SPACE LEASE,
Fs71S6MM20-M1U11662S.1 10w194 Page 2
Osiness'on its premises. 'Persoll Qoods or services' include,
but are not limited to, drinking water and other beverages, food,
barbering services, and shoe shining services.
(12) No tenant shall make, or permit to be made, any unseemly
or disturbing noises or disturb or interfere with occupants of this
or neighboring buildings or premises or those having business with
them by the use of any musical instrument, radio, phonograph or
unusual noise, or in any other way.
(13) No tenant shall throw anything out of doors, windows or
skylights or down the passageways.
(14) No tenant, nor any of a tenant, servants, employees,
agents, visitQrs_or licensees, shall at any time bring, keep or use
on the Building any kerosene, gasoline, or inflammable,
combustible, explosive, or corrosive fluid, or any other
illuminating material, or use any method of heating other than that
supplied by Landlord.
(15) No tenant shall sweep or throw or permit to be swept or
thrown from the Premises any dirt or other substance into any of
the corridors or halls or elevators, or out of the doors, windows,
stairways, patios or balconies of the Building, and Tenant shall
not use, keep or permit to be used or kept any foul or noxious gas
or substance in the Premises, or permit or suffer the Premises to
be occupied or used in a manner offensive or objectionable to
Landlord or other occupants of the Building by reason of noise,
odors and/or vibrations, or interfere in any way with other tenants
or those having business therein, nor shall any animals or birds be
kept in or about the Building. Smoking or carrying lighted cigars,
cigarettes, pipes, or other lighted smoking materials, in the
elevators and all other common and/or public areas of the Building
is prohibited.
(16) No additional locks or bolts or any kind shall be placed
upon any of the doors or windows by any tenant, nor shall any
changes be made in existing locks or the mechanisms thereof unless
Landlord is first notified thereof and gives written approval.
Each tenant must, upon termination of his tenancy, give to Landlord
all keys of stores, offices, or toilets and toilet rooms, either
furnished to, or otherwise procured by, such tenant, and in the
event of the loss of any keys so furnished, such tenant shall pay
Landlord the cost of replacing the same or of changing the lock or
locks opened by such lost key if Landlord shall deem it necessary
to make such change. -
(17 ) All removals, or the carrying in or out of any safes,
freight, furniture, or bulky matter of any description must take
place ,during. the hours which Landlord may determine from time to
time. The moving of safes or other fixtures or bulky matter of any
kind must be made upon previous notice to the manager of the
Building and under his/her supervision, and the persons employed by
any tenant for such work must be acceptable to Landlord. Landlord
reserves the right to inspect all safes, freight or other bulky
articles to be brought into the Building and to exclude from the
Building and all such bulky articles which violate any of the Rules
and Regulations or the Lease of which these Rules and Regulations
are a part. Landlord reserves the right to prescribe the weight
and position of all safes, which must be placed upon supports
approved by Landlord to distribute the weight.
(18) No tenant shall purchase janitorial, maintenance or other
services -from any company or persons not approved by Landlord. Any
: person employed by any tenant to do janitorial work shall, while in
the Building and outside of the Premises, be subject to and under
the control and direction of the office or management of the
Building (but not as an agent or servant of Landlord, and the
tenant shall be responsible for all acts of such persons). Except
with Landlord's prior written approval, no tenant shall permit
EXHIBIT "C'
TO OFFICE SPACE LEASE
F=26? i4820000MH662S.1 M*M Page 3
janitorial services to be performed during the hours of 7:00 a.m.
to 6:00 p.m, Monday through Friday.
(19)- landlord shall have the right to prohibit any advertising
by any tenant which, in Landlord's opinion, tends to impair the
reputation of the Building or its desirability as an office/retail
building and upon written notice from Landlord any tenant shall
refrain from and discontinue such advertising.
(20) On Saturdays from 12:00 p.m. to 8:00 a.m., Sundays, those
legal holidays designated by Landlord, and on other days between
the hours of 6:00 p.m, and 7:00 a.m., access to the Building or to
the halls, corridors, elevators or stairways in the Building, or to
the Premises may be refused unless the person seeking access is
known to the building watchman, if any, in charge and has a pass or
is properly identified. Landlord shall in no case be liable for
damages for the admission to or exclusion from the Building of any
person whom Landlord has the right to exclude. Each tenant shall
be responsible for all persons for whom he requests after hours
access and shall be liable to Landlord for all acts of such
persons. In case of invasion, mob, riot, public excitement, or
other commotion, Landlord reserves the right but shall not be
obligated to prevent access to the Building during the continuance
of the same by closing the doors or otherwise, for the safety of
the tenants and protection of property in the Building.
(21) All doors opening into public corridors shall be kept
closed, except when in use for ingress and egress. Tenants shall
see that the windows, transoms and doors of their premises are
closed and securely locked before leaving the Building.
(22) The requirements of tenants will be attended to only upon
application to the manager of the Building.
(23) Canvassing, soliciting and peddling in the Building are
prohibited and each tenant shall cooperate to prevent the same.
(24) There shall not be used in any.space, or in the public
halls of the Building, either by any tenant or others, any hand
trucks except those equipped with rubber tires and side guards.
(25) No vending or coin operated machines shall be placed by
any tenant within his premises without the prior written consent of
Landlord.
EXHIBIT
TO OFFICE SPACE LEASE
- - PS]570TOIg7p000Hj116623.1 ,00t?" Page 4