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HomeMy WebLinkAboutRobert L. Mayer Financial - Waterfront Hotel, LLC - PCH Beach Resort, LLC - Grand Resort, LLC - Mayer Financial, LTD - RLM Management, Inc. - Waterfront Development, Inc. - Mayer Financial, LP - Stephen K. Bone - 1998-09-14 MEMORANDUM OF AMENDMENT OF THIRD AMENDED AND RESTATED LEASE Recording Requested By and ) N When Recorded Mail To: } Recorded in Official Records,County of Orange .g .� Gary Granville,Clerk-Recorder REDEVELOPMENT AGENCY OF THE I�ll.;l"l'�ll;;ll ill'lll°1' 1;' 11;1';�Ill:"l,l No Fee CITY OF HUNTINGTON BEACH } 2000017941610:33am 04107100 ro 2000 Main Street 119 49 M11 11 ) o.oa o.00 o.oa ao.00 o.00 o.00 a.00 10 Huntington Beach, Californiaalifo 92648 } Attention: r_g f j Qg�_ _ ) r4 ,00z C N NO This MEMORANDUM OF AMENDMENT OF THIRD AMENDED AND RESTATED LEASE (this "Memorandum") is made as of the 14th day of September, 1998, by and c between THE REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH, ro I a public body corporate and politic ("Agency")and MAYER FINANCIAL, LTD., a California limited partnership ("Lessee"). N co N ", � RECITAL co N A. Agency as lessor and Robert L. Mayer, as Trustee of the Robert L. Mayer Trust of 1982 dated June 22, 1982, as amended ("Mayer Trust") as lessee have entered into that certain Third Amended and Restated Lease dated as of April 28, 1989, as amended on or about November 16, 1992 by a First Amendment to Third Amended and '° k Restated Lease (collectively the "Third Amended and Restated Lease"), with respect to T 8 rg that certain real property in the City of Huntington Beach, County of Orange, State of California, described on Exhibit A hereto (the "Leased Premises"). Z 49 B. Lessee has succeeded to all of the right,title and interest of Mayer Trust in w the Leased Premises pursuant to a Lease Assignment and Assumption Agreement by and 10 between Mayer Trust and Lessee dated as of July 3, 1997. 11 6 rg C. Agency and Lessee have entered into that certain Amended and Restated Disposition and Development Agreement (the "Agreement") of even date with this x� 4 Memorandum, with respect to the Leased Premises and certain other real property. N D. The Agreement provides for the termination of the Third Amended and Restate7d'Lease,,the execution of new leases between Agency as lessor and Lessee as iessee as to"Parcel A"and "Parcel C"and the conveyance by Agency to Lessee of fee title to "Parcel B," all as defined in the Agreement. Tax-Exempt-Government Aim. CITY OF HUNTINGTON BEACH This�°ocUmer�t!9 noiely for ow Officitll business or ttjo City By�. of Huntington Brunch,�:cor 9at.. Cf1..Clf Pfateci uncle:Qavemme:.t Cade SOO. 6103 end shOL:!d be rzczlded Deputy city clerk tMa Cr, Charge. D. Pursuant to Section 104.1(f) of the Agreement, Agency and Lessee desire to record this Memorandum, MEMORANDUM 1. Agency and Lessee hereby amend the Third Amended and Restated Lease on the terms and conditions set forth in the Agreement,which is incorporated herein by this reference as though set forth in full. This Memorandum Is only intended to provide notice of the existence of the Agreement and shall not be deemed to modify or amend any of the provisions of the Agreement. The Agreement is a public record and a true and correct copy of the Agreement Is available for public review and inspection in the office of the City Clerk of the City of Huntington Beach, whose address is 2000 Main Street, Huntington Beach, California 92648. 2. Pursuant to Section 104.1(a) of the Agreement, the Third Amended and Restated Lease shall remain in effect in accordance with its terms until the termination dates specified in paragraphs 3, 4 and 5 of this Memorandum, or until expiration or termination in accordance with its terms in the event the Agreement is validly terminated by Developer pursuant to Section 505.1(b). In the event of such Developer termination, the Interim Short-Term Lease referred to in paragraph 5 below and the Parking Easement Agreement provided for by said Interim Short-Term Lease shall remain in effect as to Parcel C In accordance with their terms. 3. Pursuant to Section 104.1(b) of the Agreement, the Third Amended and Restated Lease shall terminate with respect to the portion of Parcel A that is currently subject to the Third Amended and Restated Lease upon the earliest to occur of(a)the date on which a leasehold interest in that portion of the Leased Premises defined in the Agreement as Parcel A and in Exhibit B attached hereto is conveyed to Lessee pursuant to the Agreement; or (b) the Parcel A Conveyance Date as defined in the Agreement. depicted 6SZ2� 4. Pursuant to Section 104.1(c) of the Agreement, the Third Amended and Restated Lease shall terminate with respect to the portion of Parcel B that is currently subject to the Third Amended and Restated Lease upon the earliest to occur of(a)the date on which fee title to that portion of the Leased Premises defined in the Agreement as Parcel B and desedked in Exhibit C hereto is conveyed to Lessee; or (b) the Parcel A Conveyance Date a defined Alnegreement. depicted 5. Pursuant to SecA(d) of the Agreement, the Third Amended and Restated Lease shall terminate with respect to Parcel C upon the effective date of the Agreement and shall concurrently therewith be superceded by the Short Term Interim Lease in accordance with said Section 104.1(d) only with respect to that portion of the MEMORANDUM OF AMENDMENT OF THIRD AMENDED AND RESTATED LEASE 2 depicted Leased Premises described in the Agreement as Parcel C and d"Ahed in Exhibit D attached hereto. Upon the effective date of the Short Term Interim Lease the rent payabte under the Third Amended and Restated Lease shall be prorated in accordance with Section 104.1(e)of the Agreement. IN WITNESS WHEREOF, the parties to this Memorandum have caused this instrument to be duly executed as of the date first above written. REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH (Agency) Date: SO o D By: 6 • �...1. �EYEC�lTiVE �illC►.�C� APPROVED AS TO FORM AND LEGALITY: Agency Counsel LIQBy: R; �� rti MAYER FINANCIAL, LTD., a California limited partnership /49e.*z ul SPaj -r 400We— By: RLM Management Inc., a California corporation, its General Partner Date: r 1 I�� �� By: Robert L. Mayer Chief Executive icer ATTEST: By: Z4r �-Z2� Connie Brockway, Agency lerk MEMORANDUM OF AMENDMENT OF THIRD AMENDED AND RESTATED LEASE 3 1 - CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT State of County of On 1)m4 �"� k k �4,�Z; 2P._P� before me,�1 , pate Narna nd TnN or Oflrcer{e p.• Jana RAec J personally appeared f sma(s)of Sgnegs) -personally known to me IP prove to be the personas}whose name(g) are ubscribed to the within instrument and acknowladgZd to me that hvL /ihe executed the same in /their uthorized capaci , and that by his/her/their signatureaon the instrument the person,or the entity upon behalf of which the persodw ELrZA3:St1 ENR;trG acted, executed the instrument. Commission#1150021 l4otay Put r)c-Cartomta WITNESS m hand and official seal. Orange County • QAAyCorffLEtpilres"29,Z01 Sgnadra d wiry Pupr,C OPTIONAL Though the Information below 1s not required by law,it may prove valuable to persons relying on the document and could prevent haudutent removal and reattachment of this fora)to another document. Description of Attached Document �19ery,orr ,7ozed �nT� Title or Type of Document: Q _r _ Document Date:,��P_? _ Number of Pages:__ a Signer(s)Other Than Named Above: Capacity(ies) Claimed by Signer(s) Signer's Name: L?ti+ Signer's Name. ❑ Individual ❑ Individual J Corporate fficer ❑ Corporate O 'cer TrtIeX Trtle(e): ❑ Partner—❑ Limited ❑General ❑ Partner— Limited ❑G eral ❑ Attorney-in-Fact ❑ Attomey-in•Fact ❑ Trustee ❑ Trustee ❑ Guardian or Conservator ❑ Guardian or Conservator ❑ Other. Top of thumb here ❑ Other Top W thumb here Signer Is Representing: Signer Is Representing: &-a'" 0 1996 National Notary Association-BM Ramnel Ala.,P.O.Boa 7164-Canoga Park.CA 91309.71 Ba Prod.No.5907 Reorder.Cal ToEFres 1400"76-SW EXHIBIT "As THE LEASED PREMISES E'LY LINE SEC 14. } T. 6 S.. R. 11 W.. M.M. 51/14 I I I SW COR. N'LY LINE S 1/2, l E 1/2, NW 1/4, NE 1\4, SEC 14 NE 1/4 SEC. 14 N35'2225 E (R) N89'42'581E 1985.70' I P.O.S. Z I L 14` 1596.82' NE COR. J � L 1 O +— r 983.81, L�J S 1/2, NE 114, SEC. r4 i/ l�e°T �9 L.r2 r.P o.e. I .� �l �. 46 Mo R.O.W. PER ADC. N 50.00 s 95-0384749 O.R. -' I LEASED PREMISES j 'LY LINE F� \ 38.9 +/- AC. I / II C4 Al Mp tY b28/4b / / ��' � W' LINE � 6168/667 O.R. I W C NNE'LY LINE a9s� tis�o�+ 4551400 O.R. I I U �9 Q tiicy k —I co F I NUMBER DIRECTION DISTANCE I L l 5 89'42'58" W 111.89, I L2 S 02'27'33' W 593.44' l I t3 IS 24'30'04" W 386.94' L5 I 1 L4 S 12'46'46" E 771.48' I I L5 S 77'08'56" W 82.77' J L6 N 36'54'20" E 360.46' L7 S 48'4321" E 25.00' L8 N 41'l6'39" E 97.00' L9 N 48'43'21" W 38.85' L 10 N 89'4258" E 413.0 I' o L 1 l S 00'17'02" E 150.00' L 12 N 89'4258' E 200.00' u L 13 N 00'17'02" W 155.00' L 14 N 89'4258" E 276.99' NUMBER DELTA I RADIUS I LENGTH Cr 05-54.16 12452.00 1252.68 PACE 1 of 3 • EXHIBIT W THE LEASED PREMISES LEGAL DESCRIPTION ALL THAT CERTAIN LAND IN THE CITY OF HUNTINGTON BEACH. COUNTY OF ORANGE. STATE OF CALIFORNIA, DESCRIBED AS FOLLOWS: THAT PORTION OF SECTION 14, TOWNSHIP 6 SOUTH, RANGE 11 WEST, SAN BERNARDINO BASE AND MERIDIAN, IN THE RANCHO LOS BOLSAS, AS PER U%P FILED IN BOOK 51. PACE 14 OF MISCELLANEOUS MAPS IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, DESCRIBED AS FOLLOWS: BEGINNING AT THE NORTHEAST CORNER OF THE SOUTH ONE—HALF OF THE NORTHEAST QUARTER OF SAIO SECTION; THENCE SOUTH 89' 42' 58" WEST 111.89 FEET ALONG THE NORTH LINE OF SAID SOUTH ONE-HALF OF SAID SECTION TO A POINT ON THE WESTERLY LINE OF THE LAND DESCRIBED IN DEED TO THE STATE OF CALIFORNIA IN A DOCUMENT RECORDED JULY 6, 196Z BOOK 6168. PAGE 667 OF OFFICIAL RECORDS IN THE OFFICE OF THE RECORDER OF SAID COUNTY, SAID POINT BEING THE TRUE POINT OF BEGINNING; THENCE ALONG SA,'0 WESTERLY LINE SOUTH 02' 27' 33' WEST 593.44 FEET, THENCE SOUTH 24- 30' 04- WEST 386.94 FEET; THENCE SOUTH 12' 46' 46" EAST 771.48 FEET; THENCE SOUTH 77 08' 560 W 82.77 FEET TO THE NORTHEASTERLY RIGHT OF WAY LINE OF PACIFIC COAST HIGHWAY, AS DESCRIBED IN BOOK 455, PAGE 400 OF SAID OFFICIAL RECORDS; THENCE NORTH 53' 05' 49" WEST 1966.76 FEET ALONG SAID NORTHEAST LINE TO THE MOST SOUTHERLY CORNER OF LOT 1 TRACT No. 13045, RECORDED MARCH 21. 1989 IN BOOK 628. PACE 46 OF MISCELLANEOUS MAPS, RECORDS OF SAID COUNTY; THENCE NORTH 36' 54' 20' EAST 360.46 FEET ALONG THE SOUTHEASTERLY LINE OF SAID LOT 1 TO THE MOST EASTERLY CORNER OF SAID LOT. SAID CORNER BEING ON THE SOUTHWESTERLY RIGHT OF WAY OF PACIFIC VIEW AVENUE, AS GRANTED IN DEED RECORDED SEPTEMBER 1, 1995 AS DOCUMENT No. 95-0384749 OF OF SAID OFFICIAL RECORDS; THENCE ALONG SAID SOUTHWESTERLY RIGHT OF WAY SOUTH 48' 43' 21' EAST 25.00 FEET TO THE SOUTHERLY MOST CORNER OF SAID RIGHT OF WAY; THENCE NORTH 41' 16' 39" EAST 97.00 FEET ALONG THE SOUTHEASTERLY LINE OF SAID RIGHT OF WAY DEDICATION TO THE NORTHEASTERLY LINE Or SAID RIGHT OF WAY; THENCE ALONG SAID NORTHEASTERLY RIGHT OF WAY NORTH 48' 43' 2I' WEST 38.85 FEET TO THE 8COXMING OF A CURVE CONCAVE SOUTHWESTERLY. HAVING A RADIUS OF 2452.00 FEET; THENCE NORTHWESTERLY 252.68 FEET ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 05' 54' 160 TO A POINT ON THE NORTH LINE OF THE SOUTH ONE-HALF OF THE NORTHEAST ONE-QUARTER OF SAID SECTION 14. A LINE RADIAL TO SAID POINT BEARS NORTH 35' 22' 25" EAST; THENCE NORTH 89' 42' 58" EAST 1596.82 FEET ALONG SAID NORTH LINE TO THE TRUE POINT OF BEGINNING. EXCEPTING THAT PORTION THEREOF DESCRIBED AS FOLLOWS. BEGINNING AT A POINT ON THE NORTH LINE OF SAID LAND, NORTH 89' 42' 580 EAST 690.00 FEET FROM THE SOUTHWEST CORNER OF THE EAST ONE-HALF OF-THE NORTHWEST ONE-QUARTER OF THE NORTHEAST ONE-QUARTER OF SAID SECTION 14; SAID CORNER ALSO LYING ON THE PAGE 2 OF 3 EXHIBIT'A' THE LEASED PREMISES LEGAL DESCRIPTION CENTER LINE OF HUNTINGTON AVENUE. 60.00 FEET IN WIDTH AS SHOWN ON RECORD OF SURVEY 81-1151. FILED IN BOOK 103 PACE 28 OF RECORDS OF SURVEYS IN THE OFFICE OF SAID COUNTY RECORDER; THENCE NORTH 89- 42' 58- EAST 200.00 FEET; THENCE SOUTH 00- 17' 02- EAST 150.00 FEET; THENCE SOUTH 89' 42' 58' WEST 200.00 FEET; THENCE NORTH 00' 17' 020 WEST 150.00 FEET TO THE POINT OF BEGINNING. AS SHOWN ON PACE 1 OF 1 OF THIS EXHIBIT A AND BY THIS REFERENCE MADE A PART HEREOF. DA TED THIS !G DAY OF A 0 VVCt^ .1998 LAM EM 12/31/99 sf f is 534" F OF �`1Ep� r U.. L . C. . 4 NS EXPIRES 12/31/99 PAGE 3 OF 3 EXHIBIT 'B' PARCEL A if III I ` l � - - - - - - - - - -- - - - - - - - -- - CIO '9ST PARCEL A = ti, ca Cy '.Qr m 15.3 +/--AC. NET a n EXHIBIT V PARCEL B it li Il I � J PARCEL B T.M. NQ.15549 O 22.7 AC. NET &/ \�9F� o \ m m \ U w m OIN 'Q'ST L f � j o 0 a q ■ ~ a 400* � I a n 0 n I /&b/ I n Im i m Af I L - - -_ - - - - - - - BEACH BOULEVARD ACKNOWLEDGMENT State of California County of Orange On 11/16/98 before me, .Tan Smi th . personally appeared Rober_t_L. Mayer , personally known to me _ )to be the personN whose namek islw&subscdbed to the within instrument and acknowledged to me that helsheAhe executed the same in hislherheir authorized capacity(fea} and that by hiss signature}on the instrument the person(V, or the entity upon behalf of which the person(V acted, executed the instrument. WITNESS my hand and official seal. r.�. im s MrrH commission 0 1 1813,0 notary Puouc-cartamid (SEAL) Orange CmInty ota s Signature . LI �i C O Tl F 0 R tCS with Ocopy Y9 a4 ��� - ------- t,;ot Come=�'• — Recording Requested by and Recorded in Official Records.County of Orange When Recorded Mail To: Gary Granville.Clerk-Recorder No Fee Connie Brockway, City Clerk 200001794151013am 04107100 Office of the City Clerk 119 49 Al2 8 City of Huntington Beach 0.00 0.00 0.00 0.00 21.00 0.00 0.00 0.00 2000 Main Street Hentington Beach, CA 92649 OFFICIAL BUSINESS. Document entitled to free recording per Government Code Section 6103. MEMORANDUM OF INJEF, PA SHOF1T-TERM.LEA$E � AND PARKING EqM1„T ACIREEMENT C' This MEMORANDUM OF INTERIM SHORT-TERM LEASE AND PARKING EASEMENT AGREEMENT (this "Memorandum") is made as of the 16th day of March, 1999, by and between THE REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH, a public body corporate and politic ("Agency"), and THE WATERFRONT HOTEL, LLC, a California limited liability company ("Lessee"). REQIT6LS A. Agency and Mayer Financial, Ltd. have entered into that certain Amended and Restated Disposition and Development Agreement dated as of September 14, 1998 (the "Agreement"). B. Pursuant to the Agreement, Agency and Lessee have entered into that certain Interim Short-Term Lease (the "Lease") of even date with this Memorandum with respect to that certain real property in the City of Huntingfori Beach, County of Orange, State of California more particularly described on Exhibit A hereto (the "Site"). C. Pursuant to the Agreement and the Lease, Agency and Lessee have approved the form of a Parking Easement Agreement, which Is attached to the lease as Exhibit C (the "Parking Easement Agreement"). In the event that the Lease expires or terminates for certain reasons described in the Lease, the Parking Easement Agreement shall become operative and shall burden the Site, as the servient tenement, in favor and for the benefit of certain real property in the City of Huntington Beach, County of Orange, State of California, adjacent to the Site which Is more particularly described on Exhibit B hereto (the "Waterfront Hilton Parcel"). D. Agency and Lessee desire to record this Memorandum to memorialize the existence and terms of the Lease and the Parking Easement Agreement. Tax•Exerr Pt-Go:,c.-n; .ent Agee. CITY OF HI;;TiNGTVN SEgCH T`-I^ document is soieiy for the G _t business Of*L mn Cluj �� (�/J �'= �':[::.��.^:+Y+n1'. ��•.7t'.�;, �S COnt01r1- BY'Y,. .• -- - tact Ga4�wnment Code Deputy City Cl sec. 6103 and should be recorded trae of charge. MEMORANDUM I. Agency hereby leases to Lessee and Lessee hereby leases from Agency the Site on the terms and conditions set forth in the Lease, which is Incorporated herein by this reference as though set forth in full. The Lease is a public record and a true and correct copy of the Lease is available for public review and Inspection in the office of the City Clerk-.of the City of Huntington Beach, whose address is 2000 Main Street, Huntington Beach, California 92648. 2. Pursuant to Section 202 of the Lease, the term of the Lease shall commence on the date of execution and delivery of the Lease (the "Effective Date of Lease") and shall terminate concurrently with the earliest to occur of (i) the close of escrow for the Parcel C Lease, as defined in Section 202 of the Agreement; or (ii) December 31, 2009, subject to such extensions as may be granted in accordance with Section 203.12(a) to (c), inclusive, of the Agreement. 3. Pursuant to Section 203 of the Lease, the Parking Easement Agreement shall become operative concurrently with the expiration or sooner termination of the Lease pursuant to clause (10 of Section 202(a) of the Lease. The Parking Easement Agreement shall not become operative If the Lease terminates pursuant to clause (i) of Section 202 of the Lease or if the Lease is terminated pursuant to Section 1211 thereof due to a failure by Lessee to pay to Agency when due any applicable rents, taxes, assessments, impositions, or other amounts required to be paid under the Lease... 4. Pursuant to Section 1311 of the Lease, Lessee has a first right of refusal to purchase Agency's reversionary fee interest in the Site, as more particularly set forth therein. 5. This Memorandum is Intended only to provide notice of the existence of the Lease and the Parking Easement Agreement and shall not be deemed to modify or amend any of the provisions set forth therein. MEMORANDUM OF INTERIM SHORT-TERM LEASE AND PARKING EASEMENT AGREEMENT 2 112M17029-000313249819.2 a03122199 IN WITNESS WHEREOF, the parties to this Memorandum have caused this instrument to be dbly executed to be effective as of the date first above written. REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH (Agency) I� 1 g� Date: By: APPROVED AS TO FORM AND LEGALITY: Agency Counsel By: ��a & 4 G'ca THE WATERFRONT HOTEL, LLC (Lessee) By: Waterfront Development, Inc., a California corporation, Manager Date: 3 I/`1 qq By: obert ayer Chairman Date. ,3 //�1�d 9 By: 1a-----L Step en K. Bone President and Secretary MEMORANDUM OF INTERIM SHORT-TERM LEASE AND PARKING EASEMENT AGREEMENT 3 1121017029.000313249819.2 @03/22199 EXHIBIT ",a MAP OF SITE F'f'�fFAIORfWQUM OF INT MRIM SHORT MWU MtSE \ o \9S 8� � s f LOT 1 TR. No. 13045 O AIMS 626 PG 46 Fo.o NUMBER DIRECTION DISTANCE L 1 S 4 Q'43 21" E 25.00' L2 N 41'1639" E 9.13' L3 S 07 51 41" E 31.85' P.O.B. L4 S 61'1721" N/ 42.88' i L5 N 53'05'40" W 86.78' L 6 N 58 06'24" W 40.53' NUMBER DELTA R4DIUS LENGTH \ C1 03'11-c3" 1140.00' 63.63' ��• C2 05'00 4 4" 60.00' 5.2$' ci 05'00 44" 60.00' 5.25' 0 LOT 2 OF TENATNF MAP C3 �% Na. 75535 �0 t_4 / 1" = 100' . AfA PROJECTS\252\064/LOT2-E1 EXHIBIT "k LEGAL DESCRIPTION OF SITE MEMORANDUM OF INTLMY SHORT-TERM LEASE ALL THAT CERTAIN LAND IN THE CITY OF HUNTIN37ON BEACH, COUNTY OF ORANGE, STATE OF CALIFORNIA, DESCRIBED AS FOLLOWS: THAT PD TION OF SECTION 14, TOWNSH,'P 6 SOUTH, RANCE 11 I EST SAN BERNARDINO BASE AND MERIDIAN, IN THE RANCHO LOS BOLSAS. AS PER MAP FILED IN BOOK 51. PAGE 14 OF MISCELLANEOUS MAPS IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, DESCRIBED AS FOLLOWS: BEGINNING AT THE MOST SOUTHERLY CORNER OF LOT 1, TRACT NO. 13045, PER AMP RECORDED MARCH 21, 1989. IN MISCELLANEOUS MAP BOOK 628, PAGES 46 AND 47, IN THE OFFICE OF THE RECORDER OF SAID COUNTY,• SAID Paw BEING ON THE NORTHEASTERLY RIGHT OF WAY OF PACIFIC COAST HIGHWAY, AS SHOWN ON SAID MAP; THENCE ALONG THE SOUTHEASTERLY LINE OF SAID LOT I NORTH 36'54'20" EAST 360.46 FEET TO THE MOST EASTERLY CORNER OF SAID LOT 1, SAID POINT ALSO BEING ON THE SOUTHWESTERLY RIGHT OF WAY DEDICATED PER DOCUMENT RECORDED SEPTEMBER 1. 1995, AS INSTRUMENT NO. 95-0384749 OF OFf7C1AL RECORDS OF S41D COUNTY,• THENCE ALONG SAID SOUTHWESTERLY RAT OF WAY SOUTH 48' 43' 21- EAST 25.00 FEET TO THE MOST SOUTHERLY CORNER OF SAID RIGHT OF WAY THENCE ALONG THE SOUTHEASTERLY LINE OF SAID RIGHT OF WAY NORTH 41' 16' 39" EAST 9.13 FEET TO A POINT ON A NON-TANGENT CURVE, CONCAVE NORTHEASTERLY, HAVNG A RADIUS OF 1140.00 FEET, A LINE RADGAL TO SAID POINT BEARS • , SOUTH ,T6' 04' 08" REST; THENCE ALONG SAID CURVE 63.63 FEET THROUGH A CENTRAL ANGLE OF 03' 11' 53: THENCE TANGENT TO SAID CURVE SOUTH 57' 07' 45" EAST 299.52 FEET; THENCE SOUTH 07' 51' 41 0' EAST 31.85 FEET; THENCE SOUTH 36" 54' 410 WEST 334.17 FEET; THENCE SOUTH 81' 17' 21" NJEST 42-88 FEET,• THENCE NORTH 53' 05' 40" WFST 85.78 FEET TO THE BEGINNING OF A CURVE, CONCAVE SOUTHWESTERLY, HAVING A RADIUS OF 60.00 FEET; THENCE ALONG SAID CURVE 5.25 FEET THROUGH A CENTRAL ANGLE OF 05' 00' 44 THENCE TANGENT TO SAID CURVE NORTH 58' 06' 24 ' WEST 40.53 FEET TO THE BEGINNING OF A CURVE, CONCAVE NORTHEASTERLY, HAVING A RADIUS OF 60.00 FEET; THENCE ALONG SAID CURVE 5.25 FEET THROUGH A CENTRAL ANGLE OF 05' 00' 44" TO A POINT ON SAID NORTHEASTERLY RIGHT OF WAY OF PACIFIC COAST HIGHWAY; THENCE ALONG SAID AORTHEASTERLY RIGHT OF WAY NORTH 53' 05' 40" WEST 242.73 FEET TO THE POINT OF BEGINNING. AS SHOWN ON EXH18.'T A` ATTACHED HERETO .AND BY THIS REFERENCE MADE A PART HEREOF. THE DESCRIBED LAND CONSISTS OF LOT 2 OF TENTATNE TRACT MAP No. 15535. . DATED THIS dDAY OF 1999 �� t.AND SO MICHAEL S1MON P.L.S. 6034 * tS Na.IL ell. 6034 LICENSE EXPIRES 061JO101 Exp. 6-3a—OA S�R� OF cA��e- EXHIBIT B Legal Description of the Waterfront Hilton Parcel ALL THOSE CERTAIN LANDS IN THE CITY OF HUNTINGTON BEACH, COUNTY OF ORANGE, STATE OF CALIFORNIA, DESCRIBED AS FOLLOWS: PARCEL 1: LOT 1 OF TRACT NO. 13045 AS PER MAP FILED IN BOOK 628, PAGES 46 AND 47 OF MISCELLANEOUS MAPS IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY. PARCEL 2: THAT PORTION OF THE NORTH HALF OF THE NORTHEAST QUARTER OF SECTION -14, TOWNSHIP 6 SOUTH, RANGE 11 WEST, IN THE RANCHO LAS BOLSAS, AS PER MAP FILED IN BOOK 51, PAGE 14 OF MISCELLANEOUS MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, DESCRIBED AS FOLLOWS: BEGINNING AT A POINT IN THE SOUTH LINE OF SAID NORTH HALF THAT IS DISTANT THEREON NORTH 890 43' 07" EAST 103.28 FEET FROM CENTER LINE OF HUNTINGTON STREET, AS SHOWN ON RECORD OF SURVEY NO. 81-1151, FILED IN BOOK 103, PAGES 28 AND 29 OF RECORDS OF SURVEY IN THE OFFICE OF SAID COUNTY RECORDER, SAID POINT BEING ON A NON TANGENT 2355.00 FOOT RADIUS CURVE THAT IS CONCAVE SOUTHWESTERLY, A RADIAL TO SAID POINT BEARS NORTH 31 o 56' 15" EAST; THENCE NORTHWESTERLY- 5.94 FEET ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF Oo 08' 40" TO THE BEGINNING OF A 32.00 FOOT RADIUS CURVE THAT IS CONCAVE SOUTHERLY; THENCE WESTERLY 41.11 FEET ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 73o 36' 25" TO SAID SOUTH LINE;THENCE NORTH 890 43' 07" EAST 43.24 FEET ALONG SAID SOUTH LINE TO THE POINT OF BEGINNING. ALL AS SHOWN ON THE ATTACHED PAGE 2 OF THIS EXHIBIT B ATTACHED HERETO AND MADE A PART HEREOF. EXHIBIT B Page 1 of 2 1121017029.000113249919.2 *03122199 CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT y State of California County of Orange_ On March 16, 1999 before me, Jan Smith, Notary Public . Data Naw and TIM d O1<ter(a 0..'lano Do@.Notary Pudicj personally appeared Robert L. Mayer and Stephen K. Bone Na(fece)d Sq*r(e) CB personally known to me ❑proved to me on the basis of satisfactory evidence to be the person(s)whose name(s)krare subscribed to the within instrument and acknowledged to me that-Weh /they executed the same in 1494�efttheir authorized capacity(ies), and that byr«�their signature(s) on the instrument the person(s),or the entity upon behalf of which the person(s) acted, executed the instrument. JAN SMTH _ Commission#1181340 WITNESS my hand and offic• seal. -: Nofory Pui:siic-Cori Orm)ge County MY COTM FxpireS Apr 26.2= S un at Notary Puoac OPT10UA — vThough the Information below Is not required bylaw,!t may pprove persons rely.'ng on the document and could prevent fraudulent removal and reattachment of this form to another document Description of Attached Document Title or Type of Document:Memorandum of Interim Short—Term Lease and Parking asement Agreement Document Date: )larch 16, 1999 Number of Pages: 5 Signer(s) Other Than Named Above: Capacity(ies) Claimed by Signer(s) Signer's Name: Robert L. Mayer Signer's Name: Stephen K. Bone ❑ Individual ❑ Individual n Corporate Officer S Corporate Officer Ttle(s): Chairman Title(s):,Presiden_t and_Secretary ❑ Partner—❑ Limited ❑General ❑ Partner—❑ Limited ❑General ❑ Attomey-in-Fact ❑ Attomey-in-Fact ❑ Trustee ❑ Trustee ❑ Guardian or Conservator i . . ❑ Guardian or Conservator . ❑ Other. Top of Numb here ❑ Other, Top a 4tumb he-e Signer is Representing: Signer is Representing: Q 1990 Nation!Notary A&warian.Sm Hemme l Ave..P.O.8oa 7t84•Canoga Pak CA 013064181 Pend.No.5907 Powder.Gal Tc4-Fm*I40047E-SW STATE OF CALIFOI MA } ss. COUNTY OF 0'r&A54- ) On before me, .� ���,r. personally appeared 'lYc- - —�--• personally known to met ( - to be the person(-&) whose name(-a) 0f awe ubscribed to the within instrume t and acknowledged to me that &Jerekt-trey executed a same in 69J uthorized capacity ties , and that by(Ki , ___ h r signature( ) on the instrument the person m or the Mity upon behalf of which the personfs) acted, executed the instrument. Witness my hand and official seal. at ry Public [SEAL] vullIlk.N�°N carY*n,T�o^i 1066263 lcotm Pups CoCoa'� �a •i. 5 CorK4 E OM 23•19M r 1 !jj City of Huntington Beach P.O.Box 190-2000 Main Sired Huntington Bca:h,California 92648 HUNTINGTON BEACH From the dcsk of: Connie Brockway City Clerk Telephone: (714)536-5404 Fax: (714)374-1557 4$100 �I,r-cam� .►�/..�;,� �-�� h_k yy5, r Ifr of hnlil'� IlAtl FROM THE DESK OF David C. Biggs Director of Economic Development (714)536-5909 Zy A� V Orb zs R 7•� ti /ll�ll/'� - ��r ��i��/ .rY✓'��rh� �J /111�',�lT/� ��� �,.1. . '}� r7c.- CITY OF HUNTINGTON BEACH aLsN°• `I -2k REQUEST FOR LEGAL SERVICES Assn To Gail Hutton, City Attorney Date z Date: Request made by: Telephone: Department: 11/24/98 David Biggs 5909 Economic Development INSTRUCTIONS: File request in the City Attorney's Office. Outline reasons for this request and state facts necessary for City Attorney to respond. Please attach all pertinent information and exhibits. TYPE OF LEGAL SERVICES REQUESTED: [] Ordinance ❑ Opinion ❑ Stop Notice ❑ Resolution ❑ Lease ❑ Bond ❑ Meeting ❑ Contract,'Agreement ❑ Deed ❑ Court Appearance ❑ Insurance ® Other: Approve as to Form Is Request for Preparation of Contract form attached? ❑ Yes ❑ No . Are exhibits attached? ® Yes ❑ No Unless otherwise specified herein, 1 If not for Council action, consent to the disclosure of the If for City Council action, desired completion date: Information contained In this RL5 to all members of t e City Council. Agenda Deadline Council Meeting tiutrse Sig ure epartment Head COMMENTS Please have Deputy City Attomey Scott Field review the a'.tached 'Memorandum of Amendment of Third Amended and Restated Lease between the Redevelopment Agency and Mager Financial, Ltd. Scott has been the at.orney assigned to this prcject. If you have any questions, please feel free to contact me at 5909. Thank you for your assistance with this significant prcject. 9a-782 Routing: ❑ GCH 1 ❑ PDA ❑ LB ❑ SL 113 WSA ❑ ADL I ❑ SF I ❑ JM ❑ This Request for Legal Services has been assigned to attorney 5 COTT FIELD 11/2 4/9 8 extension 5662 Hislher secretary is Sara-t a n c , extension 5-58!. . Notes: File Name: Date Completed: WP No.: ❑ Shaded areas for City Attorney's Office use only. .3 f ti. -- Document2 - - -- - - - - ------ ----- - - - - - �11124196 9:09 Al TICe Notes Office of the City Clerk Hunt " ton Beach, California "U. CITY OF I NTINGTON BEACH ', -i J DEPARTMENT DATE O For your approval, O Per your request. r i [] For your signature. 19 For your information. 4 Take appropriate action. O Prepare reply for my signature. . Q Return with more details. Q Answer. Q Investigate and report. O Note and return to me. ' a Note and see me about this C Note and file. Q r.: Please ce. TELEPHONE Miss TtFCALLED DATE CA-LED TELEPHONE o. ;3 0 lvtaz t 1 .&70 MESSAGE •�„�� � �� � .,obi.fir%�cr. - _'_`. UTTWm. TRANSMITTA n 4UPHONE SLIP o?/' 7 •yam k'. Sent by: KAW=, BALLNrR 8 B=R UA4 213 625 0931 ; 03/24/00 12.550M;jetE#x 0444;Page 212 KANE, BALLMER& BERKNiAN A uM C0vj*Unav Sl S 50U1'N FICt=0A snux'T,SL7U JS50 WS&MLES,=FOR?P.A 90071 MEPti0M a13)6174W WURUY 0.MN2 TAX t:13)W-031 'GUNNF.W n&M r f+ LEGISLATIVE zAsuaMoNs = INTENT SERVICE wyct> &IMS U •�� (800) 666-1917 17b"A.mrt R-SCHER 61! DUNE L A:ISM /RZ?-CIPM3 Varch 24, 2000 Scott Field, Esq. Assistant City Attorney GCetr t-7 City of Huntington Beach /P.O. Box 190 r_i,k Huntington Beach, California, 92646 Re: Recordation of Documents Waterfront DDA Dear Scott: In response to your recent inquiry on this matter, please be advised that both the Memorandum, cf Interim Short-Term Lease and the Memorandum of Third Amended and Restated Lease should be recorded, but that the Parking Easement should not be recorded. The Parking Easement would only ay-ply in the future under certain circumstances and therefore should not be recorded. The other two documents (Memorandum of Interim Short-Term Lease and the Memorandum of Third Amended and Restated Lease) are in effect and, now that the subdivision is finalized, should be recorded. Sincerely, / O . Aft"' -.r_ . M. RRAY 0. KAV 4 rx v SG077-'— 1 Z Cquah7` -f h rs in -#1E. I'rkauel It asnl j vS t J'e Arm.e P!c k ten, w44 '•r7 lick y. ha T' ,n. /r4,)e Cl,,,, MR-24-=a 12:57 213 625 0931 - -- 9E -' P.02 Senty: KAN6, BALLVER 8 SERK6MN 213 625 0931; 031241p0 12:55PM;)rLUaL_0aa4;Page 112 s KANE,BALLMER &BERMAN A taw Corporation 515 South Figueroa Street,Suite 1850 Los Angeles,California 90071-3301 W h Telephone:(213)617-GI80 M Telecopier:(213)625-Ml C)3 C-i N -4-4 TRANSNflTTAL SHEET Iv l!1 TO: Scott Fields,Esg_ FAX NO.: (714)374-1590 FRONT:Mrarray Kane RE:Recordation of Documents DATE:Marth 24,2000 FILE NO.:4911 NO.OF PAGES 2 (Ineladnmgmistleer) MESSAGE: r a Y:•• t � Vo IN CASE OF ANY PROBLEMS PLEASE CALL US INSIEDIATEL'Y. CALL:Maria Alvarado at(213)452-0127 {"AR-24-20C© 12 a 57 213 625 0931 96% `"� P.01 1 � . J Cit ' of Huntin ton Beach Y g f 2000 MAIN STREET CALIFORNIA 92648 DEPARTMENT OF ECONOMIC DEVELOPMENT April 14, 1999 Director 714/536-5582 Redevelopment 7141536-5582 Stephen Bone,President FAX 7141375-5087 Housing 714/536-5542 The Robert Mayer Corporation 660 Newport Center Drive,Suite 1050 Newport Beach,CA 92660 Dear Steve: Transmitted herewith are two of the four fully executed copies of the following documents: 1. Interim Short Term Lease 2. Memorandum of Interim Short Term Lease 3. Landlord's Certificate. I have retained the other two copies for our files—one for the City Clerk/Agency Secretary and one for our office. Please note that while the Interim Short Term Lease was signed by the Agency as of today's date,the effective date for the Interim Short Term Lease was September 14, 1998. The Landlord's Certificate has been executed subject to the receipt of the Interim Short-Term Lease payment due through the 2,d quarter of 1999 in the amount of$77,570.85. Finally,you are not authorized to record the Memorandum of Interim Short Term Lease until Agency Special Counsel Murray Kane has approved the final form of the Decd of Trust for your lender. While I , know that Lori Smith has been working with Murray on this,as of the writing of this letter, I have not been able to verify that Murray has accepted a final fom. Please let me know if I can be of any other assistance. Sincerely yours, J$ David C. Biggs Director of Economic Develop /nt xc: Ray Silver,City Administrator i Connie Brockway,City Clerk/Agency Secretary, ,; [w/attachments(one set of executed dccuments)l; Melanie Fallon,Assistant City Administrator Murray Kane,Agency Special Counsel Gus Duran,Housing and Redevelopment Manager Stephen Kohler,Project Manager (projects:wlf:transdoc.doc) Ja CI37Y OF HUNTINGTON 'BEACH Inter-Departnicnt Communication TO: David Biggs Connie Brockway FROM: Scott Field DATE: December 10, 1999 SUBJECT: Mayer Financial Ltd. I am in receipt of the attached memo dated September 17, 1999 from Connie Brockway. I am unsure what is being requested of our office. If further work is requested on this matter,I would suggest that either David or Connie set up a meeting as soon as possible so that we can finalize this matter. Attachment of NY- crt:czt- t-1 fe, 7� cAZ�-Z( SF-99N7emos-143yer Financial Ltd.1210 12/10/99 #1 LNTEROFFICE MEMORANDUM tn.WMG ON tifAC11 TO: David Biggs, Economic Development Director Gail Hutton, City Attorney Lr' Scott Field, Deputy City Attorney FROM: Connie Brockway Ob . City Clerk• � DATE: September 17, 1999 U z cz SUBIECT: Mayer Financial Ltd., -cr7 c` 1. Memorandum of Amendment of Third Amended and Restaae�Leas 2. Interim Short Term Lease z o_c 3. Memorandum of Interim Short Term Lease 4. Landlord's Certificate �� a z v The City Clerk's Office has been advised by the attached Economic Development- memorandum and several telephone calls between our offices to withold recordation of the Memorandum of Amendment of Third Amended and Restate ease. Please see the attached RLS 98-72 from David Biggs, Economic Development Director to Scott Field, Deputy City Attorney regarding the above referenced.item No. 1. Also, see the letter dated April 14, 1999 from David Biggs, Economic Development Director to Stephen Bone,President of the Robert Mayer Corporation. Please update this office as to the Iength of time these documents remain pending. Regarding the Memorandum of Short Term Lease I question the portion of your letter which anticipates that Stephen Bone is authorized to record the Short Term Lease and to have the city's original document retumed to the Waterfront Hotel, rather than the City Clerk's Office. The document must be transmitted to the County Recorder by the City Clerk's Office. It appears that the Mayer Corporation may have prepared the Memorandum of Interim Short Term Lease as the document is prepared so that it will return to their company. The placement of Government Code Section 6143 on this document entitles their company to free recording which only the city may request of the Recorder's Office. CC: Honorable Mayor and City Council—Status Update i . RESOLUTION NO. 98-72 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF HUNTINGTON BEACH APPROVING AN AMENDED AND RESTATED DISPOSITION AND DEVELOPMENT AGREEMENT WITH MAYER FINANCIAL,LTD.,FOR THE SALE AND LEASE OF LAND AND THE CONSTRUCTION THEREON OF IMPROVEMENTS FOR HOTEL AND RESIDENTIAL USES WHEREAS,the Redevelopment Agency of the City of Huntington Beach(the"Agency') is engaged in activities necessary to carry out and implement the Redevelopment Plans for the Merged Redevelopment Project Areas of the City of Huntington Beach(collectively the "Redevelopment Plan");and In order to carry out and implement the Redevelopment Plan,the Agency proposes to enter into an Amended and Restated Disposition and Development Agreement(the "Agreement")with MAYER FINANCIAL,LTD.,(the"Developer"),which establishes terms and conditions(1) for the Agency to sell to Developer certain real property referred to in the Agreement and hereinafter as"Parcel B"and for Developer to construct thereon improvements for residential uses as specified in the Agreement; and(2)for the Agency to lease to Developer certain real property referred to in the Agreement and hereinafter as"Prarcel A"and"Parcel C" and for Developer to construct thereon improvements for hotel and residential uses as specified in the Agreement;and The Developer has submitted to the Agency and the City Council copies of said proposed Agreement in a form desired by Developer;and Pursuant to the California Community Redevelopment Law(California Health and Safety Code,Section 33000 et seq.)the Agency and the City Council held a joint public hearing on the Agreement,having duly published notice of such public hearing and having made copies of the proposed Agreement and other reports and documents(including the summary referred to in Section 33433)available for public inspection and comment;and The City Council has duly considered all terms and conditions of the proposed transaction, and believes that it is in the best interests of the Project area and the City and the health,safety,morals and welfare of its residents,and in accord with the public purposes and provisions of applicable State and local law and requirements; NOW,THEREFORE,BE IT RESOLVED by the City Council of the City of Huntington Beach as follows: I. The City Council has received and heard all oral and,.4Titten objections to the proposed Agreement and to this transaction,and all such oral and written objections are hereby overruled. I SF-98 Re olutiontityDDA RLS 48-585 J' \ 1 ' �I I it 2. The City Council hereby finds and determines that the consideration to be paid by Developer for the purchase of Parcel B and the lease of Parcel A and Parcel C is not less than the fair reuse value at the uses and with the covenants and conditions and development costs authorized by the sale and leases. 3. The City Council hereby finds and determines that the sale of Parcel B and the lease of Parcel A and Parcel C pursuant to the Agreement will assist in the elimination of blight. 4. The City Council hereby finds and determines that the sale of Parcel B and the lease of Parcel A and Parcel C pursuant to the Agreement is consistent with the implementation plan adopted pursuant to Section 33490. 5. The City Council hereby consents to the Agency's use of its authority under Section 33421 in carrying out the provisions of the Agreement and finds and determines that such use by the Agency of its authority under Section 33421 is necessary to effectuate the purposes of the Redevelopment Plan. 6. The proposed Agreement is hereby approved in substantially the form presented 1 at this meeting or with such changes as may be approved by the Executive Director of the Agency. 7. The Chairman of the Agency and the Executive Director of the Agency are hereby authorized to execute the Agreement on behalf of the Agency, in substantially the form presented to this meeting,or with such changes as may be approved by the Executive Director of the Agency. Execution by the Executive Director shall constitute conclusive evidence of the Executive Director's approval of such changes. 8. The City Council hereby authorizes the City Clerk to deliver a copy of this Resolution to the Executive Director and members of the Agency. A copy of the Agreement when executed by the Agency shall be placed on file in the office of the City Clerk as Document No. MA 600-30. 2 SF-98 Resolution:CityDDA R1S 98-585 0911 ll98-N 1 PASSED AND ADOPTED by the City Council of the City of Huntington Beach at a regular meeting thereof held on the 14th day of Septembgr , 1998. 14� &a*j Mayor ATTEST: APPROVED AS TO FORM City Clerk VY ttorne 3C d. / tA � Kane,Ballmer& Berkman Special Counsel REVIEWED AND APPROVED: INITIATED AND APPROVED: City Adm' strator Director of Economic Development 3 SF-98 Resolntion:CityDDA RLS 98-585 09111/98.01 Res.No.98-72 STATE OF CALIFORNIA ) COUNTY OF ORANGE } ss: CITY OF HUNTINGTON BEACH ) I,CONNIE BROCKWAY,the duly elected,qualified City Clerk of the City of Huntington Beach,and ex-off cio Clerk of the City Council of said City, do hereby certify that the whole number of members of the City Council of the City of Huntington Beach is seven;that the foregoing resolution was passed and adopted by the affirmative vote of at least a majority of all the members of said City Council at a regular meeting thereof held on the 14th day of October,1998 by the following vote: AYES: Harman,Green,Dettloff,Bauer NOES: None ABSENT: Julien, Sullivan,Garofalo City Clerk and ex-of;icio C rk of the City Council of the City of Huntington Beach,California INTERIM SHORT-TERM LEASE By and Between REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH, AGENCY, and THE WATERFRONT HOTEL, LLC, LESSEE. 11-5-98 TABLE OF CONTENTS 1. [§ 1001 SUBJECT OF GROUND LEASE . . . . . . . . . . . . . . . . . . . . . . . . . 1 A. [§ 1011 Euma� se of the L!e�Sa . . . . . . . . . . . . . . . . . . . . . . . 1 B. [§ 1021 The Redevelopment Ageeement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 C. [§ 1031 The Redevelopment Psolect Area . . . . . . . . . . . . . . 2 D. [§ 1041 the Site . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 E. [§ 1051 Tho Improyements . . . . . . . . . . . . . . . . . . . . . . . . . 3 F. [§ 106] Condition of thp, Site . . . . . .. . . . . . . . . . . . . . . . . . . 3 [§ 106.11 Hazardous,Substances . . . . . . . . . . 4 G. [§ 107] Parties iQ theasa . . . . . . . . . . . . . . . . . . . . . . . . 8 1. [§ 1081 Agency . . . . . . . . . . . . . . . . . . . . . . . . 8 2. [§ 109] Lessee . . . . . . . . . . . . . . . . . . . . . . . . 8 11. [§ 2001 LEASE OF THE SITE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 A. [§ 2011 Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 B.- [§ 2021 Term i2f the Lease . . . . . . . . . . . . . . . . . . . . . . . . . . 9 C. [§203] Parking EaceMent A reament . . . . . . . . . . . . . . . . 9 Ill. [§ 3001 RENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 [§ 302] Die Date . . . . . . . . ... . . . . . . . . . . . . . . . . . . . . . . 10 [§ 303] Intentionally 0mitted . . . . . . . . . . . . . . . . . . . . . . . 10 [§ 3041 Intentionalfy Omiffpd . . . . . . . . . . . . . . . . . . . . . . . 10 [§ 3051 Triple Net I e.IM . . . . . . . . . . . . . . . . . . . . . . . . . . 10 [§ 306] Han-Subordination c)fRent or Other Sums . . . . . . 11 [§ 3071 Delinquency 1n ;ntal P men - Co1 Ilertion of . . . 11 [§ 308] Rigbt to lnsoection and Audit of Records . . . . . . . 11 IV. [§400] DEVELQPMENT OF THE SITE . . . . . . . . . . . . . . . . . . . . . . . 12 [§4011 Scope of Development. Plans. Drawings and sins . . . . . . . . . . . . . . . . . . ... . . . . . . . . 12 [§ 4021 NL Constriction Before Notice . . . . . . . . . . . . . . . 12 [§ 403] Notice-of Nan-Res onsibility . . . . . . . . . . . . . . . . . 13 [§4041 Mechanic'sMate6lman's_ Contracto is or Subcontractors liens . . . . . . . . . . . . . . . . . . . . . . 13 [§ 4051 Rights of Access . . . . . . . . . . . . . . . . . . . . . . : . . . 14 [§ 4061 Local. State and Federal Laws . . . . . . . . . . . . . . . 14 [§ 407] Nondisc imination Dudng Construction . . . . . . . . . 14 V. [§ 5001 USE OF THE SITE AND IMPROVEMENTS . . . . . . . . . . . . . . . 15 INTERIM SHORT-TERM LEASE (November 5, 1998) -i- [§ 5011 Use of the Site and Improvements . . . . . . . . . . , , 15 [§ 502] Management of 1he Site and IJ-pnfityPme its . , , 16 [§ 5031 QbfiCjition to Refrain fmmT)isc6mination . . . . . . . 18 [§ 5041 Form of Nondiscrimination and Nonsegcea_ ao tion Clauses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 I§ 505] Quiet F*yment . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Vl. [§ 600] TAXES, ASSESSMENTS AND OTHER CHARGES . . . . . . . . . 19 [§ 601] Ljtifities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 [§ 602] Impositions llncluding Taxas_and ASsess� . 20 [§ 6031 P_ayrIlerlt G nerally ... . . . . . . . . . . . . . . . . . . . . . . 20 [§ 604] . . . . . . . . 21 [§ 6051 Aaenccy Riaoht to Cure . . . . . . . . . . . . . . . . . . . . . . 21 [§ 6061 Tam Rec2bts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 [§ 6071 limits of Tax Lfabifity . . . . . . . . . . . . . . . . . . . . . . . 22 [§ 608] Contests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 [§ 609] Assessments an Value of-Entire Property . . . . . . . 23 [§ 6101 Qther-Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 VII. [§ 7001 OWNERSHIP OF AND RESPONSIBILITY FOR IMPROVEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 A. [§ 701] Ownership During Term and at Termination . . . . . 24 B. [§ 7021 Removal of Fees and Eumishings at Jarminatio 4 C. [§ 7031 MaintenarlCe and Repalr!Df Improvements . . . . . . 25 D. [§ 7041 Waste . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 E. [§ 7051 Alter tin of Improvements . . . . . . . . . . . . . . . . . . 25 F. [§ 7061 mag two or Destruction Df ImpmypMents . . . . . 26 1. [§ 707] Lessee to Give Nplice . . . . . . . . . . . 26 2. [§ 708] Restoration . . . . . . . . . . . . . . . . . . . 26 3. [§ 7091 Application of Insurance Proceeds . 27 G. [§ 7101 Damage or Destruction During Final Years oflaun . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 H. [§ 711] Faithful Pedu[mance and Labor and Material (Pymnt)Bonds- Indemnification-, No�r „s onsibility Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 Vill. [§ 800] ASSIGNMENT, SUBLETTING, TRANSFER . . . . . . . . . . . . . . . 30 [§ 801] Warranty&ajast Speculation . . . . . . . . . . . . . . . . 30 [§ 802] Prohibition aainst Transfer . . . . . . . . . . . . . . . . . 30 INTERIM SHORT-TERM LEASE (November 5. 1998) a ' Eage [§ 803] . . . . 33 IX. [§ 900] MORTGAGES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 [§ 901] Leasehold '' Igaaes . . . . . . . . . . . . . . . . . . . . . . 35 [§ 902] lRights_an bliga�tions of Leasehold Mortgagees 37 [§ 9031 Aaen s Fo[bearance, and Right-to-Cure befaultS on LeaSphold Mortgages . . . . . . . . . . . . . . . . . . . . . 40 [§ 9041 Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . ... . . . . 40 [§ 9051 Fnrbearance_bX AQ�encry . . . . . . . . . . . . . . . . . . . . 40 [§ 905.11 Conditions Precedence Mortgagee Rights and Auency sF rbaarame . . . 42 [§ 9061 eerformance 2n Behalf of Lessee . . . . . . . . . . . . . 42 [§ 907] Nonmerger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 [§ 9081 Agency Cooperation . . . . . . . . . . . . . . . . . . . . . . . 43 [§ 909] Enforceability . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 [§ 910] No Subordination f Agency's Interests . . . . . . . . 43 [§ 911] Certificates to Lenders . . . . . . . . . . . . . . . . . . . . . 44 [§ 912] I e sew Fstate . . . . . . . . . . . . . . . . . . . . . . . . . 44 ` X. [§ 1000] INDEMNIFICATION AND INSURANCE . . . . . . . . . . . . . . . . . . . 44 A. [§ 1001] IndeMaificatian . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 B. [§ 1002] Required In"urance . . . . . . . . . . . . . . . . . . . . . . . . 45 C. [§ 10031 Qefin•tt_inntf"Full Insurable Value" . . , . , . . . . . . . 47 D. [§ 10041 General lasurance Provisions . . . . . . . . . . . . . . . . 47 E. [§ 1005] Failure to Maintain Insurance . . . . . . . . . . . . . . . . 48 F. [§ 10061 Disposition of lnsuranca PraceedS ReS lting from Loss or Damage to improvements . . . . . . . . . . . . 48 X1. 1100] EMINENT DOMAIN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 A. [§ 1101] Lessee to Give Notice . . . . . . . . . . . . . . . . . . . . . . 49 B. [§ 11021 It01 T� . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 C. [§ 11031 eartial Taking . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 D. [§ 1104] Application of Awards and Other Payments . . . . . 50 X11. [§ 12001 DEFAULTS, REMEDIES AND TERMINATION . . . . . . . . . . . . . . . . . . . 51 A. [§ 12011 Defaults-General . . . . . . . . . . . . . . . . . . . . . . . . . 51 B. [§ 12021 Lpaai Actions . . . . . . . . . . . . . . . . . . . . . . * * ' * ' * 52 1. [§ 1203] . . . . . . . 52 2. [§ 12041 Apnlicablelaw . . . . . . . . . . . . . . . . 52 INTERIM SHORT-TERM LEASE (November 5, 'I 998) 3. [§ 12051 AcceptancefaSeoLice of Process . . 52 4. (§ 12061 Attomeys�Fees and Court Costs . . . 52 C. [§ 1207] Rights and Eemedies-are_Cumulative , . . , . . . . . . 52 D. [§ 1208] Damagas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 E. [§ 1209] Specific Performance . . . . . . . . . . . . . . . . . . . . . . 53 F. [§ 1210] Additional Remedies of-Agency . . . . . . . . . . . . . . 53 G. [§ 1211] Remedies and Rights of Termination . . . . , . . . . , 54 H. [§ 1212] No Qms.s Defaults . . . . . . . . . . . . . . . . . .. . . . . . . . 56 XI11. [§'1300] GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 A. [§ 13011 Notices Demands, and Communications between the Parties . . . . . . . . . . . . . . . . . . . . . . . 56 B. [§ 13021 Time of Essence . . . . . . . . . . . . . . . . . . . . . . . . . . 57 C. [§ 13031 Conflict of Interests 57 D. [§ 1304) r onliabilily of Ag�;y ffici is an Emnloyees . . 57 E. [§ 13051 lnspectior of Books RadRecords . . . . . . . . . . . . . 57 F. [§ 1306] No Partners . . . . . . . . . . . . . . . . . . . . . . . . . . . 58 G. [§ 13071 Complianna with Law . . . . . . . . . . . . . . . . . . . . . . 58 H. [§ 13081 Surrender of Per ege . . . . . . . . . . . . . . . . . . . . . . 58 1. [§ 1309] Severabifity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58 J. [§ 1310] Binding_Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59 K. [§ 1311] Assignment or Sublease to City .% . . . . . . . . . . . . 59 L. [§ 1312] Cations . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . 60 M. 1313] No Recording of this Lease . . . . . . . . . . . . . . . . . . 60 N. [§ 1314] Enforced Oelayin Performance for,Causes Beyorid Coptm fL� Pady . . . . . . . . . . . . . . . . . . . . . . . . . . . 60 0. [§ 1315] Entire Agreemint.Miyers and Amendments . . . 61 P. [§ 1316] Off-!-.qeLstatsme , Attomment and subordination 61 INTERIM SHORT-TERM LEASE (November 5.1998) -iv- Eage EXHIBITS EXHIBIT A - MAP OF SITE EXHIBIT B - LEGAL DESCRIPTION OF SITE EXHIBIT C - PARCEL C PARKING EASEMENT AGREEMENT INTERIM SHORT-TERM LEASE (November 5, 1998) -v- GROUND LEASE This Ground Lease (this"Lease")is made by and between the REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH ("Agency")and THE WATERFRONT HOTEL, LLC ("Lessee"). 1. 1§ 100] SUBJECT OF GROUND LEASE A. (§ 101] Purpose of the Lease The purpose of this Lease is to effectuate the Redevelopment Plan for the Huntington Beach Redevelopment Project by providing for the lease of the hereinafter defined Site from Agency to Lessee and the construction and operation on the Site by Lessee of certain temporary improvements (including but not limited to up to one hundred fifty(150)surface parking spaces and the existing tent pavilion). The lease of the Site and the development and operation of such improvements pursuant to this Lease, and the fulfillment generally of this Lease, are in the vital and best interests of the City of Huntington Beach and the health, safety, morals, and welfare of its residents, and in accord with the public purposes and provisions of applicable federal, state and local laws and requirements. B. (§ 102] The Redevelopment Plan and Development Agreement This Lease is made in accordance with and subject to (a)the Redevelopment Plan for the Main-Pier Redevelopment Project,which was approved and adopted by Ordinance No. 2578 of the City Council of the City of Huntington Beach (the "City"), amended by Ordinance No. 2634, and merged with certain other redevelopment projects in the City by the adoption of Ordinance No. 3343 on December 16, 1996 to form the Huntington Beach Redevelopment Project(the"Merged Redevelopment Project"); and (b)the Amended and Restated Disposition and Development Agreement entered into by and between Agency and Mayer Financial, Ltd. dated as of September 14, 1998 and any amendments thereto (the"Agreement"). Any amendments hereafter to the Redevelopment Plan (as so approved and amended)which change the uses or development permitted on the Site as provided in this Lease, or otherwise change the restrictions or controls that apply to the Site, or affect or impair any of the rights or obligations of Lessee or the holder or beneficiary of any Mortgage obtained in accordance with Section 901 of this Lease (the "Mortgagee"), shall not apply to Lessee or the Site without the prior written consent of Lessee and the Mortgagee,which consent Lessee and the Mortgagee may withhold in its or their sole and absolute discretion. No other amendments to the Redevelopment Plan shall require the consent of Lessee or the Mortgagee. INTERIM SHORT-TERM LEASE (November 5, 1998) -1- Mayer Financial,Ltd. has also entered into an Amended and Restated Development Agreement with the City approved September 21, 1998 (the"Development Agreement"), which, among other things, authorizes the development of the Site, consistent with the provisions of this Lease. C. [§ 103] The RedevelopmentProiect Area The Huntington Beach Redevelopment Project area is located in the City of Huntington Beach, California (the "City"). The exact boundaries of such Project Area are specifically and legally described In the Redevelopment Plan for the Merged Redevelopment Project. D. [§ 1041 The Site The"Site" is that certain real property within the Huntington Beach Redevelopment Project Area illustrated and designated as such on the"Map of the Site"(which is attached hereto and incorporated herein as Exhibit A) and having the legal description set forth in the "Description of the Site" (which is attached hereto and Incorporated herein as Exhibit B). The Site shall include all appurtenant rights and easements which are reasonably necessary to the proper enjoyment of the tenancy created by this Lease, provided, however,that Agency reserves to itself, its successors and assigns,together with the right to grant and transfer all or a portion of the same, the following: (a) Any and all oil, oil rights, petroleum, minerals, mineral rights, natural gas rights, and other hydrocarbon substances by whatsoever name known, geothermal resources, and all products derived from any of the foregoing, that may be within or under the land, together with the perpetual right of drilling, mining, exploring, prospecting and operating therefor and storing in and removing the same from the Site or any other land, including the right to whipstock or directionally drill and mine from lands other than those leased hereby, oil or gas wells, tunnels and shafts into, through or across the subsurface of the Site, and to bottom such whipstocked or directionally drilled wells, tunnels and shafts under and beneath or beyond the exterior limits thereof, and to redrill, retunnel, equip, maintain, repair, deepen and operate any such wells or mines; without, however, the right to enter, drill, mine, store, explore or operate on or through the surface or the upper 500 feet of the subsurface of the Site; and (b) Any and all water, water rights or interests therein, no matter how acquired by Agency,together with the right and power to explore, drill, redrill, remove and store the same from the Site or to divert or otherwise utilize such water, water rights or interests on any other property owned or leased by Agency, INTERIM SHORT-TERM LEASE (November 5. 1998) -2- whether such water rights shall be riparian, overlying, appropriative, -percolating, littoral, prescriptive, adjudicated, statutory or contractual; but without, however, any right to enter upon the surface of the Site in the exercise of such rights and, provided further, that the exercise of any such rights by Agency shall not result in any damage or injury to the improvements constructed on the Site by Lessee, including without limitation any subsidence of all or any part of such improvements. E. [§ 105] Ihe Improvements The term"Improvements" as used in this Lease means any and all improvements to the Site, whether previously existing or constructed on the Site by Lessee pursuant to this Lease, and including any and all amendments, modifications, additions, substitutions and replacements thereof. F. [§ 106] Condition of the Site (a) All portions of the Site, and any improvements thereon, which are leased to Lessee by Agency shall be leased in an "as is" condition, with no warranty, express or implied,by the Agency as to the condition of the soil, its geology,or the presence of known or unknown faults or the presence of any Hazardous Substances, and it shall be the sole responsibility of Lessee, at Lessee's expense, to investigate and determine the soil conditions of the Site and the suitability of the Site for the development to be constructed by Lessee. If the soil conditions of the Site, or any part thereof, are not in all respects entirely suitable for the use or uses to which the Site will be put, then it is the sole responsibility and obligation of Lessee to take such action as may be necessary to place the Site and the soil conditions thereof in all respects in a condition entirely suitable for the development of the Site as described in the Agreement, which may include demolition, clearing, or moving buildings, structures, or other improvements, and removal of Hazardous Substances, as defined in Section 106.1 below, provided, however, that nothing in this Lease shall limit or modify in any way the Agency's obligations to perform certain work and/or make certain payments for work to be performed by Mayer Financial, Ltd. or others in accordance with the Agreement and the Amended and Restated Mobilehome Acquisition and Relocation Agreement(the "Driftwood Agreement") referred to therein. (b) Lessee acknowledges that Agency has heretofore provided Lessee, without charge, copies of the following reports, studies, surveys, and other data and information on the physical condition of the Site: June 5, 1990, letter from Donald W. Kiser to Doug Snyder,with attachments; April 1, 1987, certification from Kenneth K. Hekimian to Don Kiser,with exhibits; INTERIM SHORT-TERM LEASE (November 5, 1 998) -3- February 25, 1987, letter from Hekimian to Kiser; February 9, 1987, Report from Hekimian to County of Orange, with exhibits; January 30, 1987, letter from County to Kiser January 26, 1987, letter from Hekimian to Kiser,with attachments; November 17, 1986, letter from Kiser to Regional Water Quality Control Board; October 3, 1986, letter from Hekimian to Kiser with exhibits; September 12, 1986, letter from County to Kiser with exhibits; July 2, 1987, letter from Kiser to Orange County Health Care Agency; and June 30. 1986, test results from Tait 8 Associates to Kiser, with attachments. (c) Lessee hereby releases Agency and City and their respective officers, employees and consultants from any and all claims, liabilities, losses, damages, judgments, costs or expenses arising from or connected to any and all matters or states of fact affecting the Site concerning or related to the physical condition of the Site, subject to the performance of work and payment of funds by the Agency referred to in Section 106(a) above. t§ 106.11 Hazardous,Substances (a) "Hazardous Substance,"as used in this Lease means any substance, material or waste which is or becomes regulated by the United States government, the State of California, or any local or other governmental-authority, including, without limitation, any material, substance or waste which is (i)defined as a "hazardous waste," "acutely hazardous waste," "restricted hazardous waste,"or"extremely hazardous waste" under Sections 25115, 25117 or 25122.7. or listed pursuant to Section 25140, of the California Health and Safety Code; (ii)defined as a "hazardous substance" under Section 25316 of the California Health and Safety Code; (iii) defined as a "hazardous material," "hazardous substance,"or"hazardous waste"under Section 25501 of the California Health and Safety Code; (iv) defined as a "hazardous substance" under Section 25281 of the California Health and Safety Code; (v) petroleum; (vi) asbestos; (0) a polychlorinated biphenyl; (viii) listed under Article 9 or defined as "hazardous"or"extremely hazardous" pursuant to Article 11 of Title 22 of the California Code of Regulations, Chapter 20; (ix) designated as a "hazardous substance" pursuant to Section 311 of the Clean Water Act (33 U.S.C. Section 1317); (x)defined as a"hazardous waste" pursuant to Section 1004 of the Resource Conservation and Recovery Act(42 U.S.C. Section 6903); (xi) defined as a "hazardous substance" pursuant to Section 101 of the Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C. Section 9601); or (xii) any other substance,whether in the form of a solid, liquid, gas or any other form whatsoever,which by any governmental requirements either requires special handling in its use, transportation, generation, collection, storage, treatment or disposal, or is defined as "hazardous"or is harmful to the environment or capable of posing a risk of injury to public health and safety. INTERIM SHORT-TERM LEASE (November 5,1998) -4- (b) . For good and valuable consideration pursuant to the Lease, Lessee covenants each and all of the following: (t) Lessee shall remove all Hazardous Substances from the Site in the manner prescribed by law. (2) The Site shall be free and near of any Hazardous Substances to the extent required by applicable law. (3) The development, construction and uses of the Site permitted under this Lease do not require the presence of any Hazardous Substance on the Site, except for those customarily used in the ordinary course of business for such development, construction and use. Nothing herein shall relieve or release the Agency from its duty to perform any of its obligations set forth in Section 106 of this Lease and in the Agreement and the Driftwood Agreement. (c) If at any time during the term of this Lease, any Hazardous Substance is present on, in or under the Site (including, without limitation, the soil and groundwater) in violation of applicable law, Lessee shall at no expense to Agency, at the earliest practicable date, remove such Hazardous Substances from the Site (including without limitation any Hazardous Substances in the soil or groundwater) and any surrounding areas to which such Hazardous Substances may have migrated in dccordance with and to the extent required by any and all applicable legal requirements. The parties intend to require Lessee to remove all Hazardous Substances from the Site and surrounding areas to which such Hazardous Substances may have migrated to the extent required by applicable law, if such Hazardous Substances are present at levels of concentration which require removal under applicable law. If, at any time during the term of this Lease,Agency has reasonable cause to believe one or more Hazardous Substances may be present on, in or under the Site in violation of applicable law, Agency may by written notice inform Lessee of the basis for Agencyrs concern and require Lessee to cause the Site to be tested for such Hazardous Substance(s) at Lessee's sole expense In accordance with a testing plan and schedule first approved in writing by Agency. Lessee shall exercise reasonable diligence to submit a testing plan to Agency within 30 days after the date of the Agency's notice, endeavor to obtain Agency's approval of the testing plan as soon as practicable thereafter. and cause the testing to begin within 30 days Agency's approval of the testing plan. (d) Lessee shall not bring or allow to be brought onto the Site or use or store on the Site any Hazardous Substances without the prior express written consent of the Agency, except for those Hazardous Substances (including without limitation fuel stored INTERIM SHORT-TERM LEASE (November 5, 1998) -5- in motor vehicles) customarily used in the ordinary course of business in the use and operation of the Site and the Improvements. (e) The following covenants pertain to Lessee's occupancy and use of the Site and Improvements except for those Hazardous Substances customarily used in the ordinary course of business: 1. No underground storage tanks for Hazardous Substances shall be installed without the prior written approval of the Agency's Executive Director. 2. Agency, or its officers, employees, contractors or agents shall at all times have the right to go upon and inspect the Site and Improvements and the operations conducted thereon to assure compliance with the requirements herein stated. The Agency shall provide reasonable prior notice to Lessee of such entry, and shall seek to minimize interference with Lessee's use of the Site and improvements as much as is reasonably feasible. Such entry shall be in compliance wish all applicable safety rules and regulations. This inspection may include taking samples for testing of substances and materials present andlor testing soils on the Site and Improvements. Agency shall indemnify, defend, and hold harmless Lessee From and against any claims, liabilities, losses, and damage caused by Agency during any such inspections, and shall be responsible for the prompt repair and/or restoration of any such damage caused by Agency during any such inspection. 3. Lessee shall be responsible for posting on the Site and Improvements any signs required by Section 25249.6 of the California Health and Safety Code and regulations promulgated pursuant thereto. Lessee shall also complete and file any business response plans or inventories required by Chapter 6.95 of the California Health and Safety Code and regulations promulgated pursuant thereto. Lessee shall concurrently file a copy of any such business response plan or inventory with Agency. 4. Lessee shall immediately notify Agency in writing of the release of any Hazardous Substance on the Site and Improvements in violation of applicable law. 5. Lessee shall to the extent required by applicable law immediately remove any Hazardous Substances located on the Site and Improvements and shall dispose of such Hazardous Substances in a safe and legal manner. Lessee shall immediately disclose to Agency its disposal of any Hazardous Substance located on the Site and Improvements and upon Agency's written request shall provide written documentation of its safe and legal disposal. (f) Lessee shall be responsible for and bear the entire cost of removal and disposal of Hazardous Substances, except for any portion thereof that may be the responsibility of the Agency under express provisions of this Lease or the Agreement. INTERIM SHORT-TERM LEASE (November 5. 1998) -6- Agency may also pass through to Lessee any and all clean-up costs incurred by the Agency as a result of Lessee's activities on the Site and Improvements or the presence of any Hazardous Substance(s)on, in or under the Site and Improvements. Notwithstanding the foregoing, the Lessee shall not be responsible for any clean-up and decontamination on or off the Site and Improvements necessitated by the presence of such Hazardous Substances. Upon termination of this Lease, Lessee is required, in accordance with all applicable laws,to remove from the Site and Improvements any equipment or improvement to the property that is contaminated by Hazardous Substances. (g) By this Lease, Lessee provides to the Agency, effective upon the date of this Lease, an indemnification of the Agency and the City and their respective members, officers, employees, agents, contractors and consultants relating to the environmental condition of the Site and the presence of Hazardous Substances thereon. Therefore, Lessee hereby agrees to indemnify, defend and hold harmless Agency and City and their respective members, officers, agents, employees, contractors and consultants, from any claims, actions,'suits, legal and administrative proceedings, liability, injury, deficiency, damages, fines, penalties, punitive damages, costs and expenses (including, without limitation, the cost of any cleanup, remediation, removal, mitigation, monitoring or testing of Hazardous Substances, and reasonable attomeys'fees) resulting from, arising out of, or based upon (i) the presence, release, use, generation, discharge, storage or disposal of any Hazardous Substances on, under, in or about, or the transportation of any Hazardous Substances to or from,the Site, or(ii)the violation, or alleged violation, of any statute, ordinance, order, rule, regulation, permit,judgment or license relating to the use, generation, release, discharge, storage, disposal or transportation or Hazardous Substances on, under, in or about, to or from, the Site. (h) From the date of this Lease, Lessee hereby waives, releases and discharges the Agency, the City and their respective members, officers, employees, agents, contractors and consultants, from any and all present and future claims, demands, suits, legal and administrative proceedings, and from all liability for damages, losses, costs, liabilities, fees and expenses (including, without limitation, attomeys' fees) arising out of or in any way connected with the Agency's or Lessee's use, maintenance, ownership or operation of the Site, any Hazardous Substances on the Site, or the existence of Hazardous Substances contamination in any state on the Site, however the Hazardous Substances came to be placed there, except that arising out of the intentional misconduct of the Agency or its employees, officers or agents. Lessee acknowledges that it is aware of and familiar with the provisions of Section 1542 of the California Civil Code which provides as follows: 'A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, INTERIM SHORT-TERM LEASE (November 5,1998) -7- which if known by him must have materially affected his settlement with the debtor-." As such relates to Section 106 and this Section 106.1, Lessee hereby waives and relinquishes all rights and benefits which they may have under Section 1542 of the California Civil Code. G. [§ 107] Parties to the lease 1. [§ 1081 0Senc Agency is the Redevelopment Agency of the City of Huntington Beach, a public body, corporate and politic, exercising governmental functions and powers and organized and existing under Chapter 2 of the Community Redevelopment Law of the State of California. The principal office of Agency is located at 2000 Main Street, Huntington Beach, California 92648. "Agency" as used in this Lease, includes the Redevelopment Agency of the City of Huntington Beach, and any assignee of or successor to its rights, powers and responsibilities. 2. [ 109] Lip Lessee is The Waterfront Hotel, LLC, a California limited liability company. The principal office of Lessee is located at 660 Newport Center Drive, Suite 1050, Newport Beach, California 92660. Wherever the term "Lessee" is used herein, such term shall also include any permitted nominee or assignee of The Waterfront Hotel, LLC, as herein provided. INTERIM SHORT-TERM LEASE (November 5. 1998) -6- 11. (§ 2001 LEASE OF THE SITE A. I§ 2011 Lease For and in consideration of the rents, conditions, covenants and agreements set forth herein, Agency hereby leases and demises the Site to Lessee and Lessee does hereby take and lease the Site from Agency. B. 1§ 2021 Term of the Lease (a) The term of this Lease shall commence on the date of the execution and delivery of this Lease (the "Effective Date of Lease") and shall, notwithstanding anything to the contrary in the Agreement, terminate concurrently with the earliest to occur of (i) the close of escrow for the Parcel C. Lease, as defined in Section 202 of the Agreement; iii) the Parcel A Conveyance Date (as defined in Section 104.1(b) of the Agreement) only if the conveyance of Parcel A to Developer has not occurred on or before the Parcel A Conveyance Date; or (iii) December 31, 2009, subject to such extensions as may be granted in accordance with Section 203.12(a) to (c), inclusive, of the Agreement. (b) At the expiration or earlier termination of this Lease pursuant to Section 121 1 of this Lease arising out of a failure by Lessee to pay to Agency when due the applicable rents, taxes, assessments. impositions, or other amounts required to be paid under this Lease, Lessee shall execute, acknowledge and deliver to Agency,within thirty (30) days after written demand by Agency,a valid and recordable quitclaim deed covering the Site and the improvements, free and clear of all liens and encumbrances. C. (§2031 Parking Easement Agreement The Parking Easement Agreement attached hereto and labeled "Exhibit C" shall become effective concurrently with the expiration or earlier termination of this Lease, pursuant to clause (ii) or clause (iii) of paragraph (a) of Section 202 of this Lease. The Parking Easement Agreement shall not become effective if either(a)this Lease terminates pursuant to clause (i) of paragraph (a) of Section 202 of this Lease; or W this Lease is terminated pursuant to Section 1211 due to a failure by Lessee to pay to Agency when due any applicable rents, taxes, assessments, impositions, or other amounts required to be paid under this Lease. If the Parking Easement Agreement is to become oparative, Agency and Lessee shall cooperate by signing the Parking Easement Agreement in recordable form and causing the Parking Easement Agreement to be recorded In the Official Records of Orange County no later than concurrently with the expiration or earlier termination of this Lease. Subject to the provisions of Section 1316 of this Lease, Agency and Lessee intend that to the extent permitted by law, the rights of the holder of the Parking Easement Agreement shall be senior to and shall have a priority over any liens or encumbrances recorded against the Site or any portion thereof after the date of this Lease. INTERIM SHORT-TERM LEASE 223101 S00-000313244043 2 4410 M -9- - Ill. [§ 3001 RENT [§ 301] AmountioiRent From the Effective Date of Lease unt;l the termination date set forth in Section 202(a)above, the annual rent payable under this Lease shall be an amount equal to the annual rent payable under that certain Lease dated as of April 28, 1989, between Agency as Lessor and Waterfront Construction No. 1, a California limited partnership as lessee, a memorandum of which was recorded in the Official Records of Orange County on April 28, 1989 as Instrument No. 89-225546, which lease was subsequently assigned by Waterfront Construction No. 1 to Lessee, pursuant to that certain Assignment and Assumption Agreement by and between Robert L. Mayer as Trustee of the Mayer Family Trust of 1982, Waterfront Construction No. 1, and Lessee (collectively the N1laterfront Hilton Lease"), as such rent amount is adjusted from time to time in accordance with the provisions of the Waterfront Hilton Lease. The rent payable by Lessee under this Lease is sometimes referred to herein as "Ground Rent." "Lease Year," as used herein, means any of the following: (a) any calendar year occurring entirely within the term of this Lease; (b)the period commencing on the Effective Date of Lease and ending on the first December 31 thereafter, and (c) the period which commences on the January 1 immediately prior to the date of termination of this Lease and ends on the date of termination of this Lease. Rent for any Lease Year less than a full calendar year shall be prorated by multiplying the annual rent then in effect by a fraction in which the numerator equals the number of days in such Lease Year and the denominator equals 365. [§ 302] DU(-Date Rent shall be payable in quarterly installments equal to one-fourth (114) of such annual rent beginning on the Effective Date of Lease. Each installment shall be payable in advance without demand upon the first day of the first month of each calendar quarter during the term of this Lease (except that the first installment shall be payable on the Effective Date of Lease)without deduction or offset(except as expressly permitted under this Lease) in lawful money of the United States at the address specified in the notice provisions of this Lease. [§ 303] lntentionallX Omitted [§3041 Intentionally Omitted INTERIM SHORT-TERM LEASE (November 5, 1998) -10- [§ 305] Tble rlat Lease This is an absolute net lease and Agency shall not be required to provide any services or do any act or thing with respect to the Site and Improvements or the appurtenances thereto, except as may be specifically and expressly provided herein and in the Agreement and the Driftwood Agreement, and Lessee shall make all payments required by this Lease, including but not limited to the payment of rent to Agency,without any claim on the part of Lessee for diminution, setoff or abatement, and nothing shall suspend,abate or reduce any rent to be paid hereunder, except as otherwise specifically provided in this Lease; provided, however,that Lessee shall have the right to withhold the payment of rent in an amount equal to payments which the Agency fails to make to Mayer Financial, Ltd. in breach of the Agreement from Available Site-Generated Property Tax Increment and Available Site-Generated Transient Occupancy Tax (as defined in the Agreement). Lessee agrees that in the event of any such set-off,the Agency shall receive a credit equal to Q) the dollar amount of such set-off against amounts otherwise required to be paid by Agency under the Agreement of Available Site-Generated Property Tax Increment and Available Site-Generated Transient Occupancy Tax less (ii) the interest accrual on the amount of the set-off from the date payment was due from Agency to Mayer Financial, Ltd. pursuant to the Agreement to the date the set-off occurs hereunder at a rate equal to the "Developer's Cost of Funds," as defined in paragraph (k) of Attachment No. . 8 to the Agreement. (§ 306] blot]-Subordination.of.Rent or Other Sums Lessee hereby covenants and agrees that rent and all other sums of whatever kind and nature payable to Agency from Lessee under the provisions of this Lease shall be paid from Gross Revenue, hereinafter defined,and,to the extent consistent with applicable law, all other expenses shall be subordinate to the payments to Agency as required under this Lease. It is expressly understood and agreed that there shall be no subordination or encumbrance of any kind under this Lease or otherwise of (i) the Agency's fee title ownership of the Site,, (ii)the Agency's interest in this Lease; and (iii)the Agency's right to receive rent under this Lease. `Gross Revenue,'as used herein,means all revenue of any }rind or nature, determined on an accrual basis, paid to Lessee or Lessee's agents for or in connection with the use by any person of the Site or any portion thereof or any of the Improvements. [§ 307] Delinquency In Rental Payment- Collection of Rents The failure of Lessee to pay Ground Rent by the due date shall constitute a default. In the event Lessee fails to pay the applicable rents on or before the due date, in addition to any other remedy provided by this Lease, Lessee shall pay Agency the delinquent rent and interest on the total delinquent rent at the rate of three percent (3%) over the prime INTERIM SHORT-TERM LEASE (November 5, 1998) -11- rate of the largest bank operating in the State of California on the due date, from the date of each delinquency. Said interest shall accrue from the due date of the rent to the date the rent is received by Agency. It is the intent of this provision that Agency shall be compensated by such additional sums for loss resulting from rental delinquency including costs to Agency for servicing the delinquent account. Agency, at its option, may waive any such delinquency compensation required herein, upon written application of Lessee. j§ 308] [intentionally Omitted] 1V. [§ 400] DEVELOP_MENLOE_THE SLT_ [§ 401] Scope of Development fans, Drawings and Specifications Lessee shall have the right to construct certain improvements (the'Improvements") upon the Site in accordance with the Development Agreement and the plans, drawings and specifications approved by City pursuant thereto. I§ 402] No work of any kind shall be commenced on the Site and no building or other materials shall be delivered to the Site for construction of any improvements, nor shall any other building or land development work be commenced on or building materials be delivered to the Site at any time during the term of this Lease,which work and/or materials exceed in the aggregate Two Hundred Fifty Thousand Dollars ($250,000), until at least ten (10) days following notice by Lessee to Agency of the intended commencement of such work or the delivery of such materials. [§403] Notice of,Non-RespQnsibility Agency shall, at any and all times during the term of this Lease, have the right to post and maintain on the Site and to record as required by law any notice or notices of non-responsibility provided for by the mechanics' lien laws of the State of California. The work for which said ten (10) days written notice is required shall include, in addition to actual construction work, any site preparation work, installation of utilities, street construction or improvement, or any grading or filling of the Site. [§ 404] blechanic''s- Materialman's—Cantractor's or�Subcontractots Liens Subject to Lessee's right to contest as hereinafter provided, at all times during the term of this Lease, Lessee shall keep the Site, including all buildings and improvements now or hereafter located on the Site,free and clear of all liens and claims of liens for labor, INTERIM SHORT-TERM LEASE (November 5.1998) -12- services, materials, supplies, or equipment performed on or fumished to the Site. Lessee shall promptly(i)'pay and discharge, or cause the Site to be released from, any such lien or claim of lien. or(H) contest such lien and furnish Agency such bond as may be required by law to free the Site from the effect of such lien and to secure Agency against payment of such lien and against any and all loss or damage whatsoever in any way arising from Lessee's failure to pay or discharge such lien. In the event Lessee provides a bond in lieu of paying or discharging a lien as set forth herein, and Agency is unable despite reasonably diligent effort to obtain an endorsement to any existing title policy in favor of Agency insuring Agency's interest in the Site free and clear of any such liens that have not been paid or discharged, Lessee shall, at Lessee's sole cost and expense, within thirty (30)days of Agency's written request therefor, provide the Agency with such endorsement. Should Lessee fail to pay and discharge, or cause the Site to be released from, any such lien or claim of lien or to provide a bond as permitted hereunder within thirty(30)days after service on Lessee by Agency of a written request to do so, Agency may pay, adjust, compromise and discharge any such lien or claim of lien on such terms and in such manner as Agency may reasonably deem appropriate. In such event, Lessee shall, on or before the first day of the next calendar month following any such payment by Agency, reimburse Agency for the full amount so paid by Agency, including any actual and reasonable attorneys' fees or other costs expended by Agency, together with interest thereon at the annual rate of interest equal to three percent(3%)over the prime rate of the - largest bank operating in the State of California as of the close of business on the date of payment by the Agency, or the highest lawful rate, whichever is less. from the date of payment by Agency to the date of Lessee's reimbursement of Agency. On substantial completion of any work of improvement during the term of this Lease. Lessee shall record or cause to be recorded in the Official Records of Orange County a notice of completion. Lessee hereby appoints Agency as Lessee's attomey-in-fact to record the notice of completion,which appointment shall only become effective on ten (t 0) days' notice upon Lessee's failure to record such a notice of completion after the work of improvement has been substantially completed; provided, that Agency shall not be obligated to record such a notice of completion and the failure of Agency to record said notice shall not excuse the failure of Lessee to discharge its obligation to record said notice of completion. 405J Rights of Acce$$ Representatives of Agency and City sha'1 have the reasonable right of access to the Site without charges or fees,at normal construction hours during the period of construction for the purposes of this Lease, Including,but not limited to,the inspection of the work being performed in constructing the improvements. Such representatives of Agency or City shall be those who are so identified in writing by the Executive Director of Agency. The Agency INTERIM SHORT-TERM LEASE (November 5, 1998) -13- shall provide reasonable prior notice to Lessee of such entry, and shall seek to minimize interference with Lessee's use of the Site and Improvements as much as is reasonably feasible. Such entry shall be in compliance with all applicable safety rules and regulations. Agency shall indemnify, defend, and hold harmless Lessee from and against any claim, liability,losses and damages caused by Agency during any such inspections, and shall be responsible for the prompt repair and/or restoration of any such damage caused by Agency during any such inspection. ' [§406] LornI. State and Federal�Laws Lessee shall carry out the construction of the improvements on the Site in conformity with all applicable laws, including all applicable federal and state labor standards and requirements. �§407] Nandiscdminatiori Duhng Constcuction Lessee for itself and its successors and assigns agrees that in the construction of the improvements on the Site provided for in this Lease, Lessee will not discriminate against any employee or applicant for employment because of sex, marital status, race, color, creed, religion, national origin, or ancestry. [§4091 Archaeological Provision Agency shall comply with any procedures or reviews relating to archaeological resources and take any remedial action which may be required by applicable state and federal laws with respect to development of the Site as contemplated by this Lease. In connection therewith, Agency shall perform, at its expense, any necessary studies, tests or surveys which may be required to comply with such procedures or reviews, or to undertake any required remedial action for such clearances or certifications. Lessee shall comply with all reasonable requests from Agency, including but not limited to requests for access to the Site, to facilitate Agency`s compliance with such procedures or reviews and obtainment of such clearances or certifications. V. 500] USE OF THE SITE AND IMPROVEMENTS �§ 509] Use df the Site and Improvements Lessee covenants and agrees for itself, its successors, its assigns and every successor in interest to the Site and Improvements or any portion thereof, that during construction and thereafter through the remainder of the term of this Lease. Lessee, such successors and such assignees shall: INTERIM SHORT-TERM LEASE (November 5, 1998) -14- 1. At Lessee's option, constructor cause to be constructed up to one hundred fifty (150) surface parking spaces and related improvements in accordance with the Development Agreement and this Lease, and plans and permits approved by the City, as the same may be amended from time to time. 2. Devote the Site, or cause the Site to be devoted solely to use in accordance with this Lease, and plans and permits approved by the City, as the same may be amended from time to time. 3. (a) Maintain, repair and operate the Site and all improvements constructed or to be constructed thereon (including landscaping, lighting and signage), or cause the Site and all such improvements to be maintained, in a first quality condition,free of debris,waste and graffiti, and in compliance with the terms of the Redevelopment Plan, the City of Huntington Beach Municipal Code, and the following: (1) All improvements on the Site shall be maintained in good condition and in conformance and compliance with all plans, drawings and related documents approved by the Agency pursuant to this Lease, all conditions of approval of land use entitlements adopted by the City or the Planning Commission, including painting and cleaning of all exterior surfaces of all private improvements and public improvements to the curbline. (2) Landscape maintenance shall include, without limitation, wateringfirrigation;fertilization; mowing; edging; trimming of grass; tree and shrub pruning, trimming and shaping of trees and shrubs to maintain a natural and healthy appearance, road visibility, and irrigation coverage; replacement, as needed, of all plant materials; control of weeds in all planters, shrubs, lawns, ground covers, or other planted areas; and staking for support of trees. (3) Clean-up maintenance shall include, without limitation, maintenance of all sidewalks, paths and other paved areas in a clean and weed-free condition; maintenance of all such areas clear of dirt, mud, trash, debris or other matter which is unsafe or unsightly; removal of all trash, litter and other debris from improvements and landscaping; clearance and cleaning of all areas maintained prior to the end of each day on which maintenance operations are performed to ensure that all cuttings, weeds, leaves and other debris are properly disposed of by maintenance workers. (b) If the Agency gives written notice to Lessee that the maintenance or condition of the Site or any portion thereof or any improvements thereon does not comply with this Lease and such notice describes the deficiencies, Lessee shall correct, remedy or cure the deficiency within thirty(30)days following the submission of such notice, unless the notice states that the deficiency is an urgent matter relating to public health and safety INTERIM SHORT-TERM LEASE (November 5, 1998) -Is- in which case Lessee shall cure the deficiency with all due diligence and shall complete the cure at the earliest possible time but in no even more than forty-eight (48) hours following the submission of the notice. In the event Lessee fails to maintain the Site or any portion thereof or any improvements thereon in accordance with this Lease and fails to cure any deficiencies within the applicable period described above, the Agency shall have, in addition to any other rights and remedies hereunder, the right to maintain the Site and the improvements thereon, or portion thereof, or to contract for the correction of any deficiencies, and Lessee shall be responsible for payment of all such costs actually and reasonably incurred by the Agency. 4. Pay when due all real estate taxes and assessments assessed and levied on the Site or any portion thereof or any improvements thereon or any interest therein and, subject to the provisions of Section 608 of this Lease. 5. Not discriminate upon the basis of race, color, creed, religion, sex, age, marital status, national origin, or ancestry in the sale, lease, sublease, transfer, use, occupancy,tenure or enjoyment of the Site,or any improvements erected or to be erected thereon, or any part thereof. [§ 502] 14anagement of the Site andlm prove ments At all times during the term of this Lease, the Site and Improvements shall be managed or caused to be managed by Lessee in a prudent and businesslike manner as necessary to maintain the Site and Improvements In a first-class condition. Lessee shall assume responsibility, subject to the provisions of this Lease,for the operation and maintenance (including repair, restoration and reconstruction) of all of the improvements constructed on the Site and the costs thereof, and Agency and the City shall have no liability for costs of such operation and maintenance by Lessee or for any claims arising from the operation and maintenance (including repair, restoration and reconstruction) of such improvements. Without limiting the generality of the foregoing, Lessee. In the maintenance of the improvements, shall observe the following standards: 1. Maintain the surface of all automobile and pedestrian areas level, smooth and evenly covered with the type of surfacing materials originally installed thereon or such substitute thereof as shall be in all respects equal thereto or better in quality, appearance and durability. 2. Remove all papers, debris, fifth and refuse, and sweep, wash down and/or clean all hard surfaces, including brick, metal, concrete. glass, wood and other permanent poles, walls or structural members as required. INTERIM SHORT-TERM LEASE (November 5, 1998). -1 - 3. Maintain such appropriate entrance,exit and directional signs, markers and lights as shall be reasonably required and in accordance with the practices prevailing In the operation of similar developments. 4. Clean lighting fixtures and relamp and/or reballast as needed. 5. Repaint striping, markers, directional signs, etc., as necessary to maintain in first-class condition. 6. Maintain landscaping as necessary to keep it in a first-class, thriving condition. 7. Maintain signs, including relamping and/or reballasting and/or repairing as required. 8. Provide security personnel and security measures to the extent reasonably necessary. Lessee shall seek the advice of the police department in planning appropriate security measures. 9. Maintain and keep in good condition and repair all benches, shelters, planters, mall coverings, banners, kiosks and other furniture,trash containers, sculptures, - play areas, platforms and stages. 10. Maintain and keep in a sanitary condition public festrooms and other common-use facilities. 11. Clean, repair and maintain all common utility systems to the extent that the same are not cleaned, repaired and maintained by public utilities. 12. Maintain all fountains and associated structures, drinking fountains, pumps and associated plumbing. 13. Maintain all lights, light fixtures and associated wiring systems. 14. Maintain public right-of-way items between the property and the street, including sidewalks, curbs, gutters, driveways, signs and poles, curb painting and markings. 15. Maintain all surface and storm lateral drainage systems. 16. Maintain all sanitary sewer lateral connections. INTERIM SHORT-TERM LEASE (November 5, 1998) -1?- [§ 543] Obligation to Refrain from Disdmination There shall be no discrimination against or segregation of any person. or group of persons, on account of sex, marital status, race, color, creed, religion, national origin or ancestry in the sale, lease, sublease,transfer, use,occupancy.tenure or enjoyment of the Site and Improvements, and Lessee itself or any person claiming under or through it shall not establish or permit any such practice or practices of discrimination. or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees, or vendees of the Site and Improvements. [ 504] Form of-Nondiscrimination and Nonsea Lessee shaft refrain from restricting the rental, sale or lease of the Site and Improvements,or any portion thereof,on the basis of sex, marital status, race,color,creed, religion, ancestry or national origin of any person. All such deeds, leases or contracts pertaining to the foregoing matters shall contain or be subject to substantially the following nondiscrimination or nonsegregation clauses: i I. In deeds: "The grantee herein covenants by and for itself, its heirs, executors,administrators and assigns,and all personas claiming under or through it, that there shall be no discrimination .against or segregation of, any person or group of persons on account of sex, marital status, race, color, creed, religion, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy. tenure or enjoyment of the land herein conveyed, nor shall the grantee itself or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants. sublessees or vendees in the land herein conveyed. The foregoing covenants shall run with the land." 2. In leases: "The lessee covenants by and for itself. its heirs. executors,administrators and.assigns,and all persons claiming under or through it, and this lease is made and accepted upon and subject to the following conditions: "That there shall be no discrimination against or segregation of any person or group of persons on account of sex, marital status, race, color, creed, religion, national origin or ancestry, in the leasing, subleasing, transferring, use, or enjoyment of the land herein leased nor shall the lessee itself, or any person claiming under or through it, establish or permit any such practice or practices of discrimination or INTERIM SHORT-TERM LEASE (November 5. 1998) -le- segregation with reference to the selection, location, number, use or occupancy, of tenants, lessees, sublessees, subtenants or vendees in the land herein leased." 3. In contracts: "There shall be no discrimination against or segregation of, any person or group of persons on account of sex, marital status, race, color, creed, religion, national origin, or ancestry In the sale, lease, sublease,transfer, use, occupancy,tenure or enjoyment of the land, nor shall the transferee itself or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy, of tenants, lessees, sublessees, subtenants, or vendees in the land." [§ 5051Quiet-E ioyment The parties hereto mutually covenant and agree that Lessee by keeping and performing the covenants herein contained, shall at all times during the term of this Lease, peaceably and quietly have, hold and enjoy the Site and Improvements. Vl. j§ 600] TAKES, ASSESSMENTS AND OTHER CHARGES I§ 601] I tilities Lessee agrees to pay or cause to be paid, as and when they become due and payable, all charges for water, gas, light, heat, telephone, electricity and other utility and communication services rendered or used on or about the Site and Improvements at all times during the term of this Lease. [§ 602] Impositions-(Including Tzxes nnd Assessments] [§ 603] eayMent !Generally Subject to the provisions of Section 608 of this Lease, Lessee agrees to pay or cause to be paid, as and when they become due and payable, and before any fine, penalty, interest or cost may be added thereto,or become due or be imposed by operation of law for the nonpayment thereof,all taxes,assessments, franchises, excises, license and permit fees,and other governmental levies and charges,general and special,ordinary and extraordinary, unforeseen and foreseen, of any kind and nature whatsoever which at any time during the term of this Lease may be assessed, levied, confirmed, imposed upon, or grow or become due and payable out of or In respect of, or become a lien on: (1)the Site and Improvements or any part thereof or any appurtenance thereto; (2) the rent and INTERIM SHORT-TERM LEASE (November 5. 1998) -19- income received by Lessee from subtenants, guests or others for the use or occupation of the Site and the Improvements thereon; or(3)this transaction or any document to which Lessee is a party, creating or transferring an interest or estate in the Site and Improvements. All such taxes, franchises, excises, license and permit fees, and other governmental levies and charges shall hereinafter be referred to as"impositions", and any of the same shall hereinafter be referred to as an "Imposition". Any Imposition relating to a fiscal period of the taxing authority, a part of which period is Included within the term of this Lease and a part of which is Included In a period of time after the expiration of the term of this Lease, shall (whether or not such Imposition shall be assessed, levied, confirmed, imposed upon, become a lien upon the Site and Improvements, or shall become payable, during the term of this Lease)be adjusted between Agency and Lessee as of the expiration of the term of this Lease, so that Lessee shall pay that portion of such Imposition which that part of such fiscal period included in the period of time before the expiration of the term of this Lease bears to such fiscal period, and Agency shall pay the remainder thereof; Lessee shall not be entitled to receive any apportionment, if Lessee shall be in default in the performance of any of Lessee's covenants and agreements as provided in this Lease. The failure of Lessee to pay an Imposition that cannot under any circumstances give rise to a lien against the Site and Improvement,shall not be a breach of the first paragraph of this Section 603. Lessee hereby agrees to defend,indemnify and hold harmless Agency and City and their respective officers, employees and consultants from and against all claims,liability.loss,damage,costs,or expenses(including reasonable attorneys fees and court costs) arising from or as a result of Lessee's failure to pay any Imposition to the extent that such Imposition relates to a fiscal period included within the term of this Lease. Nothing in this Section 603 shall alter. modify or limit in any way the rights and obligations of lessee to contest property tax assessments as set forth and as limited in Section 501.6 of this Lease. [§ 604] Pav_,menj of Impositions in Installments If, by law, any Imposition may at the option of the payer be paid in installments (whether or not interest shall accrue on the unpaid balance of such Imposition), Lessee may exercise the option to pay the same (and any accrued Interest on the unpaid balance of such Imposition) in installments and, in such event. shall pay such Installments as may become due during the term of this Lease as the same respectively become due and before any fine, penalty.further interest or cost may be added thereto; provided, however, that the amount of all Installments of any such Imposition which will be the responsibility of Lessee pursuant to Section 603 of this Lease, and which are to become due and payable after the expiration of the term of this Lease, shall be deposited with Agency for such payment on the date which shall be one(1)year immediately prior to the date of such expiration. INTERIM SHORT-TERM LEASE (November 5, 1998) -2 0- j§ 6051 Ags Right to Cure If Lessee, in violation of the provisions of this Lease. shall fail to pay and to discharge any Imposition.Agency may(but shall not be obligated to) pay or discharge it, and the amount paid by Agency and the amount of all costs, expenses, interest and penalties connected therewith, including attorney fees,together with interest at the rate of three percent (3%) over the prime rate of the largest bank operating in the State of California on the date payment is made by Agency, shall be deemed to be and shall be payable by Lessee as additional rent and shall be reimbursed to Agency by Lessee on demand,provided that Lessee and the holder cf any Mortgage obtained in accordance with Section 901 of this Lease that has registered its name and address in writing with Agency shall have failed to pay such Imposition within ten (10) business days after written notice from Agency to Lessee and such holder of Agency's intention to pay. j§ 6061 Tax Receipla Lessee shall furnish to Agency, within forty-five (45)days after the date when any real property taxes, assessments or any other Imposition which could have any effect on Agency's title would become delinquent,official receipts of the appropriate taxing authority or other evidence satisfactory to Agency evidencing payment thereof. j§ 6071 Limits of Tax Liability The provisions of this Lease shall not be deemed to require Lessee to pay municipal, county, state or federal income or gross receipts or excess profits taxes assessed against Agency, or municipal, county, state or federal capital levy, estate, succession, inheritance, gift, or transfer taxes of Agency, or corporation franchise taxes imposed upon any corporate owner of the fee of the Site; except, however, that Lessee shall pay all taxes assessed by any governmental authority by virtue of any operation by Lessee conducted on or out of the Site and Improvements. It is agreed that in the event the State of California or any taxing authority thereunder changes or modifies the system of taxing real estate so as to tax the rental income from real estate in lieu of or in substitution (in whole or in part) for the real estate taxes and so as to impose a liability upon Agency for the amount of such tax, then Lessee shall be liable under this Lease for the payment of the taxes so Imposed during the term of this Lease,or any renewal thereof, to the same extent as though the alternative tax was a tax upon the value of the Site and Improvements. In order to determine the amount of such alternative tax for which Lessee shall be liable, the Site and Improvements shall be considered as if it was the only asset of Agency, and the rent paid hereunder shall be considered as If it were the only income of Agency, INTERIM SHORT-TERM LEASE (November 5. 1998) -21- (§ 6081 Contests (a) Lessee agrees that any proceedings appealing, challenging or contesting in any manner the validity or amount of any tax,assessment,encumbrance or lien on the Site shall be begun without undue delay after any contested item is imposed and shall be prosecuted to final adjudication with reasonable dispatch. Lessee shall give Agency prompt notice in writing of any such contest at least ten (10)days before any delinquency occurs. Lessee may only exercise its right to contest an Imposition hereunder if the subject legal proceedings shall operate to prevent the collection of the Imposition so contested, or the sale of the Site and Improvements, or any part thereof, to satisfy the same, and only if Lessee shall, prior to the date such Imposition is due and payable, have given such reasonable security as may be required by Agency from time to time in order to insure the payment of such Imposition to prevent any sale, foreclosure or forfeiture of the Site and Improvements or any part thereof, by reason of such nonpayment. In the event of any such contest and the final determination thereof adversely to Lessee, Lessee shall, before any fine, interest, penalty or cost may be added thereto for nonpayment thereof, pay fully and discharge the amounts involved in or affected by such contest, together with any penalties, fines, interest, costs and expenses that may have accrued thereon or that may result from any such contest by Lessee and, after such payment and discharge by Lessee, Agency will promptly return to Lessee such security as Agency shall have received in connection with such contest. (b) Agency shall cooperate reasonably in any such contest permitted by this Section 608, and shall execute any documents or pleadings reasonably required for such purpose. Any such proceedings to contest the validity or amount of Imposition or to recover back any Imposition paid by Lessee shall be prosecuted by Lessee at Lessee's sole cost and expense;and Lessee shall indemnify and save harmless Agency against any and all loss, cost or expense of any kind, including, but not limited to, reasonable attorneys' fees and expenses, which may be imposed upon or incurred by Agency in connection therewith. j§ 609] Naticeof Possessery_Intere ; Payment of Taxes aad Assessments an Value of Entire Prope 1n accordance with California Revenue and Taxation Code Section 107.6(a),Agency states that by entering into this Lease,a possessory Interest subject to property taxes shall be created. Lessee or other party in whom the possessory interest is vested shall be subject to the payment of property taxes levied on such interest. Lessee acknowledges and agrees that the Site and/or the Improvements thereon, and any possessory interest therein, shall at all times after the commencement of this Lease, be subject to ad valorem taxes levied,assessed or imposed on such property, and INTERIM SHORT-TERM LEASE (November 5, 1 998) -2 - that Lessee shall pay taxes upon the assessed value of the entire property, and not merely upon the assessed value of its leasehold interest; provided that if permitted by law, Lessee shall be required to pay ad valorem taxes only upon the assessed value of its leasehold interest. If for any reason the taxes levied on such property in any year during the term of this Lease are less than the taxes which would have been levied if the entire property had been assessed and taxed In the same manner as privately owned property.'Lessee shall - pay such difference to Agency within thirty(30)days after the taxes for such year become payable and in no event later than the delinquency date of such taxes established by law. [§ 610] Other Liens Lessee shall not, directly or indirectly, create or permit to be created or to remain, and will promptly discharge, at its expense, any mortgage, lien, encumbrance or charge on or pledge of the Site or the Improvements, or fixtures and furnishings, or any part thereof, or Lessee's interest therein, or the rent or other sums payable by Lessee under this Lease, other than (i) such Mortgages as are permitted pursuant to Section 901, and (ii) as necessary in connection with the financing of furniture, fixtures and equipment for the Improvements. Lessee shall notify Agency promptly of any lien or encumbrance which has been created on or attached to the Site and Improvements, or to Lessee's leasehold estate therein,whether by act of Lessee or otherwise. The existence of any mechanic's, laborer's, materialmen's, suppliers or vendoes lien,or any right in respect thereof, shall not constitute a violation of this Section if payment is not yet due upon the contract or for the goods or services in respect of which any such lien has arisen, or if such lien has been discharged by the posting of bonds or other lien-release security as'is provided for such discharge by law. VII. j§ 700] OWNERSHIP OF AND RESPONSIBILITY FOR IMPROVEMENTS A. [§ 701] Ownership During Term and at Termination All Improvements on the Site constructed or installed by Lessee as permitted or required by this Lease. shall,during the term of this Lease. be and remain the property of Lessee. All Improvements located on the Site, whether existing thereon at the commencement of the term of this Lease, or constructed or installed thereon by Lessee as permitted or required by this Lease, shall, at the expiration or sooner termination of the term of this Lease, be and remain the property of Agency (subject to the rights of the lessee under the Parcel C Lease In the event this Lease terminates pursuant to clause (i) of paragraph (a)of Section 202 of this Lease). Subject to Lessee's rights and obligations set forth in this Lease relating to alterations and additions, Lessee shall have no right at any time to waste, destroy, demolish or remove any of the Improvements. Lessee's rights and powers with respect to the Improvements are subject to the terms and limitations of INTERIM SHORT-TERM LEASE (November 5, 1998) -23- this Lease. Agency and Lessee covenant for themselves and all persons claiming under or through them that the Improvements are real property. B. [§ 7021 Removal of Fixtures and FUmishings at Termination At the expiration or sooner termination of the term of this Lease (except for an expiration or termination which occurs concurrently with the closing of the Parcel C Lease), Agency may, at Agency's election,demand the removal from the Site and Improvements, at Lessee's sole cost and expense, of all fixtures and furnishings, or of certain fixtures and/or furnishings, as specified in the notice provided for below. A demand to take effect at the normal expiration of the term shall be effected by notice given not less than sixty(60) days prior to the expiration date. A demand to take effect on any other termination of the Lease shall be effectuated by notice given in or concurrently with notice of such termination or within ten (10)days after such termination. At the expiration or sooner termination of the term of this Lease, Lessee may, at Lessee's sole cost and expense, remove from the Site and Improvements any and all fixtures and furnishings. Any fixtures and/or furnishings not removed by Lessee within thirty (30) days of the termination of the Lease shall be deemed to be abandoned by Lessee and shall, without compensation to Lessee, then become Agency's property, free and clear of all claims to or against them by Lessee or any third person, subject to security interests therein to the extent permitted by this Lease. Lessee shall defend, indemnify and hold harmless Agency against all liability and loss arising from any such claims or from Agency's exercise of the rights conferred by this Section 702. C. [§ 703] Maintenance and_RepaiL2f Improvements Lessee agrees to assume full responsibility for the operation and maintenance of the Site and the Improvements and all fixtures and furnishings thereon or therein, and all sidewalks and to the extent required by the Development Agreement, landscaping within the public right of way adjacent to the Site, throughout the term hereof without expense to Agency unless otherwise specified herein, aid to perform all repairs and replacements necessary to maintain and preserve said Site and the Improvements and fixtures and furnishings and sidewalks and landscaping in a decent, safe and sanitary condition in a manner satisfactory to Agency and in compliance with all applicable laws. Lessee agrees that Agency shall not be required to perform any maintenance, repairs, or services or to assume any expense not specifically assumed herein in connection with the Site and the Improvements, fixtures and furnishings, and sidewalks and landscaping. INTERIM SHORT-TERM LEASE (November 5, 1998) -2 4- The condition of the Improvements required to be maintained hereunder upon completion of the work of maintenance or repair shall be equal in value, quality and use to the condition of such Improvements before the event giving rise to the work. D. (§ 704] Waste Lessee shall not commit or suffer to be committed any waste or impairment of the Site or the Improvements, or any part thereof. Lessee agrees to keep the Site and the Improvements clean and clear of refuse and obstructions, and to lawfully dispose of all garbage, trash and rubbish. E. [§ 705] Alteration of Imaroyements Lessee shall not make or permit to be made any alteration of, addition to or change in the Improvements, other than (a) routine maintenance, repairs, interior decoration and minor interior alterations or (b) alterations, additions or changes not open to public view which cost in the aggregate less than an amount equal to Two Hundred Fifty Thousand Dollars ($250,000)escalated from the date of this Lease in accordance with the applicable Consumer Price Index, hereinafter defined, nor demolish all or any part of the Improvements, without the prior written consent of Agency's Executive Director. In ` requesting such consent, Lessee shall submit to Agency detailed plans and specifications of the proposed work and an explanation of the need and reasons thereof. "Consumer Price Index„as used herein means the Consumer Price Index-All Urban Consumers, [Los Angeles-Long Beach-Anaheim], published by the Bureau of Labor Statistics or, if such index ceases to be published, the most closely analogous substitute index. Notwithstanding the prohibition in this Section 705, Lessee may make such changes, repairs, alterations, improvements, renewals or replacements to the Improvements as are required by reason of any law, ordinance, regulation or order of a competent government authority. F. [§ 7061 Damage to or Destruction of Improvements 9. [§ 707] Lessee to Give Nntice In case of any damage to or destruction of the Improvements, or any part thereof, in excess of an amount equal to Two Hundred and Fifty Thousand Dollars ($250,000) escalated from the date of this Lease in accordance with the applicable Consumer Price Index, Lessee shall within ten (10)days after Lessee becomes aware of such damage or destruction give written notice thereof to Agency generally describing the nature and extent of such damage or destruction. INTERIM SHORT-TERM LEASE (November 5, 1998) -25- 2. [§ 7081 Restoration __or Demolition and Clearance of • improvements (a) Lessee shall be responsible for the restoration, or demolition and clearance, of the Improvements in accordance with the damage and destruction clauses of this Lease.- (b) In case of any damage to or destruction of the Improvements, or any part thereof, Lessee shall either(i)commence the restoration, replacement or rebuilding of the Improvements with such alterations and additions as may be approved by the Agency (such restoration, replacement, rebuilding alterations and additions, together with any temporary repairs and property protection pending completion of the work being herein called "Restoration") within thirty (30) days of such damage or destruction, and shall complete such Restoration within a reasonable period of time thereafter, or(ii) commence the demolition and clearance from the Site of the damaged Improvements within thirty(30) days of such damage or destruction, and complete such demolition and clearance, and restore the Site to a safe and neat condition,Wthin a reasonable period of time thereafter. (c) As used herein, the term "Net Insurance Proceeds" means the gross insurance proceeds paid by an insurer to Lessee for loss or damage to the Improvements on the Site and Improvements, less any and all costs and expenses (including, but not limited to reasonable attomeys' fees) incurred to recover said proceeds. Unless Lessee timely commences and completes the demolition and clearance of the improvements pursuant to clause (ii) of paragraph (b) of this Section 708, Lessee shall promptly commence and prosecute to completion the settlement of insurance proceeds with respect to any event of damage or destruction of the Improvements on the Site. (d) Lessee agrees that, notwithstanding any other provision of this Lease, upon any event of damage or destruction to the Improvements, Lessee shall at its sole cost and . expense immediately take or cause to be taken such actions and under and complete such work as is necessary to assure the safe condition of the damaged Improvements pending the ultimate disposition of the Improvements. 3. [g 7091 Application of InsUranCe Pimceeds Unless Lessee timely commences and completes the demolition and clearance of the Improvements pursuant to clause (ii) of paragraph (b) of Section 708 of this Lease, insurance proceeds carried under Article X which are received on account of any damage to or destruction of the Site or the Improvements thereon, or any portion thereof(less the costs, fees and expenses incurred in the collection thereof, including without limitation attorney's fees and expenses), shall be applied as follows: INTERIM SHORT-TERM LEASE (November 5, 1998) -2 5- (1) Within a reasonable time and in any event within 180 days after the damage to or destruction of the Improvements, Lessee shall furnish, or cause to be furnished to Agency and any Mortgagee evidence satisfactory to Agency and the Mortgagee(a)of the total cost of Restoration of the damaged or destroyed Improvements pursuant to Section 708 and (b)that the total amount of money available will,when added to the insurance proceeds received and available to pay for the Restoration pursuant to the terms of this Section 709, be sufficient to pay the cost of such Restoration. (2) Net insurance proceeds received on account of any damage to or destruction of the Improvements,or any part thereof, shall be paid to Lessee or as Lessee may direct (except that, during the term of any Mortgage, such net insurance proceeds shall be paid to the Mortgagee which holds the highest priority Mortgage, if required by such Mortgagee)from time to time as Restoration progresses, solely to pay (or reimburse Lessee for) the cost of Restoration. Upon receipt by Agency and any Mortgagee of evidence that Restoration has been completed and the cost thereof paid in full or has been adequately provided for, and that there are no mechanic's or similar liens for labor or materials supplied in connection therewith which have not been adequately provided for, the balance, if any, of such proceeds shall be paid to Lessee. (3) Any insurance proceeds held by the recipient on any termination of this Lease and not required to be paid to Agency pursuant to the provisions of this Lease shalt be paid first to the expenses of clearing the Site of any rubble, and next to the Mortgagee as its interests may appear, and next to Lessee. G. [§ 7101 [Intentionally Omitted] H. [§ 711] Indemnification: Ncnres onsihility Notices (a) Lessee agrees to hold harmless Agency and City, and to indemnify Agency and City against all claims, liabilities, costs and expenses, for labor and materials in connection with all construction, repairs or alterations on the Site and Improvements and the Improvements, and the cost of defending against such claims, including reasonable attorney's fees. (b) The provisions of paragraph (a) of this Section shall be applicable to construction, repairs or alterations to the Site and Improvements and the Improvements at all times during the term of this Lease. (c) Agency shall have the right to post and maintain on the Site and the Improvements any notices of nonresponsibility provided for under applicable law. INTERIM SHORT-TERM LEASE (November 5, '1998) -27- Vlll. I§ 8001 ASSIGNMENT, SUBLETTING, TRANSFER j§ 801] Y(arranty Against Specula (a) Lessee hereby represents and warrants that this Lease, the construction of the buildings, and its other undertakings pursuant hereto, are, and will be used for the purpose of redevelopment of the Site and not for speculation in land holding. Lessee further recognizes that: 1. The importance of the redevelopment of the Site to the general welfare of the community; and 2. The substantial financing and other public aids that have been made available by law and by the Agency for the purpose of making such redevelopment possible; and 3. The fact that a change in ownership or control of Lessee or of a part thereof, or any other act or transaction involving or resulting in a change in ownership or with respect to the identity of the parties in control of Lessee or the degrees thereof, is for practical purposes a transfer or disposition of the Site and Improvements; and 4. The Site is not to be acquired or used for speculation, but only for development by Lessee In accordance with this Lease. (b) The qualifications and identity of Lessee, and its principals, are of particular concern to the community and Agency. Lessee further recognizes that it is because of such qualifications and identity that Agency is entering into this Lease with Lessee. �§ 8021 Prohibition Against Transfe (a) Lessee shall not, except as permitted by this Lease, make any Transfer, hereinafter defined, to any person or entity (a 'Transferee"), without the prior written consent of the Agency and any permitted Mortgagee. Any purported Transfer not permitted by this Article Vlll or Article IX shall be i=fa=null and void, and no voluntary or involuntary successor to any interest of Lessee under such a Transfer shall acquire any rights pursuant to this Lease. These restrictions shall be binding on any successors, heirs or permitted Transferee of Lessee. 'Transfer,"as used herein,shall mean any assignment or attempt to assign this Lease or any right herein, any total or partial transfer, sale, assignment, lease, sublease, license, franchise, gift, hypothecation, mortgage, pledge, encumbrance or the like, excluding, however, each of the following: (a)the foreclosure of a permitted Mortgage or the acceptance of a deed in lieu of foreclosure by a permitted INTERIM SHORT-TERM LEASE (November 5,1998) -2 8- Mortgagee; (b)the subsequent Transfer by a permitted Mortgagee of an interest acquired pursuant to (a); and (c)the acquisition at a foreclosure sale In connection with a permitted Mortgage by any third party. Persons or entities who are permitted Transferees under the immediately preceding sub-paragraphs (a)through (c), inclusive, shall enjoy the rights of a Transferee only on the condition that they accept and agree in writing approved by the Agency to be bound by all of the provisions of this Lease, including but not limited to all obligations of Lessee hereunder. (b) This prohibition shall not be deemed to prevent(i)the granting of easements or permit for the development of the Site as reasonably approved by Agency, or (ii) the assignment of this Lease to any affiliate of Lessee or joint venture, provided Lessee submits evidence satisfactory to Agency that the principals who own and control Lessee will maintain a majority controlling interest after consummation of such transaction and will have the ability to maintain a majority controlling interest throughout the term of this Lease. (c) Such approval shall be given by Agency if. (1) At the time of such assignment, this Lease shall be in full force and effect and either no default then exists or no default will exist upon consummation of the Transfer, (2) The Agreement remains in full force and effect as to Parcel C; and (3) The proposed Transferee is the approved or a permitted Transferee under the agreement and the Agreement as to Parcel C is Transferred to such approved or permitted Transferee. (d) No voluntary or involuntary successor in interest of Lessee shall acquire any rights or powers under this Lease except as expressly permitted under this Lease. This Lease may not be assigned, nor may a transfer of interest take place without the express, prior written consent of Agency and, to the extent required by the applicable loan documents, the holder of any Mortgage obtained In accordance with Section 901 of this Lease. (e) During the existence of this Lease. Lessee shall promptly notify Agency of any and all changes whatsoever in the identity of the parties in control of Lessee, or a change in the degree thereof, of which it or any of its officers have been notified or otherwise have knowledge or information. (f) In the absence of specific express written provision to the contrary by Agency, a Transfer of the Site and Improvements, or portion thereof, or approval thereof by Agency, shall be deemed to relieve the Lessee or any other party from any obligations INTERIM SHORT-TERM LEASE (November5, 1998) -29- under this Lease arising on or after the effective date of the Transfer; provided, however, that a Mortgagee shall be deemed to be released from and after the date of a Transfer from such Mortgagee. (g) Lessee shall only Transfer the Site and Improvements and Lessee's rights therein as a whole and is not permitted to subdivide the Site and Improvements and its rights for the duration of the Lease without the prior written approval of Agency. (h) No provision hereof authorizing encumbrance of Lessee's interest herein shall be construed to authorize encumbrance of Agency's fee title to the Site or Agency's interest under this Lease, and Lessee shall not by any act or deed cloud Agency's fee title or Agency's interest under this Lease. Notwithstanding any other provision of this Lease or a transfer otherwise permitted pursuant to the following subsections (ii), (iii) or (vi) to the contrary, Agency approval of a Transfer of this Lease of any interest herein shall not be required in connection with any of the following: (i) Any Transfer to any entity or entities in which either Lessee or Robert L. Mayer and Stephen K. Bone, retain, directly or indirectly, a minimum of fifty- one percent (51 %) of the ownership or beneficial interest and retain management control. (ii) Transfers resulting from the death or mental or physical incapacity of an individual. (iii) Transfers or assignments in trust for the benefits of spouse, children, grandchildren, or other family members. (iv) The conveyance or dedication of any portion of Lessee`s interest in the Site to the City or other appropriate governmental agency, or the granting of easements or permits in accordance with the Lease where required to facilitate the development or operation of the Site or the development or operation of any of the other portions of the "Site" as defined in the Agreement. (v) The leasing of any part or parts of a building or structure for occupancy, or entering into of any concession agreements, licenses, or other contracts in the normal course of owning and operating the Improvements on the Site, provided that all applicable requirements of this Lease have been met. NO A Transfer of stock in a publicly held corporation or the transfer of the beneficial interest in any publicly held partnership or real estate investment trust. INTERIM SHORT-TERM LEASE 223M5800.000313244043.2 803115M -30- [§ 803) Investigation of Proposed dTransferea; osts (a) In the event that Lessee requests Agency's written consent to a proposed Transfer pursuant to Article Vlll or Article IX of this Lease, Lessee agrees to provide Agency with such information, including financial statements as Agency may reasonably require in order to evaluate the solvency, financial responsibility and relevant business acumen and experience of any proposed Transferee. Such information shall include, without limitation, a balance sheet of the proposed Transferee as of a date within ninety (90)days of the request for Agency's consent and statements of income or profit and loss of the proposed subtenant or assignee for the two-year period preceding the request for Agency's consent, if the same be available (or such other similar information as shall be available at the time the request for approval of the Transfer is made), and a written statement in reasonable detail as to the business and experience of the proposed Transferee during the five (5)years preceding the request for Agency's consent. Within thirty(30)days after the receipt of Lessee's written notice requesting Agency approval of an Transfer,Agency shall respond in writing by stating what further information, if any, Agency reasonably requires in order to determine whether or not to approve the requested Transfer. Upon receipt of such a timely response, Lessee shall promptly furnish to Agency such further information as may be reasonably requested. Lessee's request for approval of a Transfer and delivery of necessary information for financing purposes shall be deemed complete twenty (20) days after Agency's receipt thereof and Lessee's request for approval of a Transfer and delivery of necessary information for all other types of Transfer shall be deemed complete thirty(30)days after Agency's' receipt thereof if Agency does not deny approval or if no timely response requesting further information regarding the proposed assignee is delivered to Lessee, or, if such a timely response requesting further information is received, on the date which is fifteen (15)days after the date that Lessee delivers such additional information to Agency. None of the foregoing shall restrict Agency's rights to deny approval of any Transfer not found acceptable by Agency pursuant to this Lease. Any Transfer requiring Agency's consent shall only be effective upon Agency's written consent to such Transfer. Agency shall approve or disapprove any requested Transfer for financing purposes requiring Agency approval within thirty (30) days after Lessee's request therefor is accepted as complete or is deemed complete, and Agency shall approve or disapprove any other type of requested Transfer requiring Agency approval within forty-five (45)days after Lessee's request therefor is accepted as complete or is deemed complete. Any disapproval shall be in writing an shall specify the reasons for the disapproval and, if applicable, the conditions required to be satisfied by Lessee in order to obtain approval. If Lessee's initial notice requesting approval of an Transfer for financing purposes (but not any other type of Transfer) states that the Transfer will be deemed approved unless INTERIM SHORT-TERM LEASE (November 5, 1998) -31- rejected within the time required in this Lease,.Agency's failure to timely disapprove the Transfer shall be conclusively deemed to constitute an approval. (b) If Agency consents to any Transfer pursuant to Article Vill or Article IX, such consent shall not be effective unless and until Lessee gives Agency notice of the Transfer and a copy of any documents effecting and/or evidencing such Transfer, and unless and until any such Transferee (other than a sublessee) assumes all of the obligations and liabilities of Lessee under this Lease. (c) Bankruptcy. It is acknowledged and agreed that this Lease is a lease of real property within the meaning of Subsection 365(b) (3)of the Bankruptcy Code, 11, U.S.C. To the extent not prohibited by provisions of the Bankruptcy Code, i 1 U.S.C. Section 101 et seq., including Section 365(f)(1) thereof, Lessee on behalf of itself, creditors, administrators and assigns waives the applicability of Sections 541(c) and 365(e) of the Bankruptcy Code of 1978 unless the proposed assignee of the Trustee for the estate of the bankrupt meets Agency's standards for consent. Agency has entered into this Lease with Lessee in order to obtain for the benefit of the Site the unique types of facilities, businesses, services and goods which Lessee can bring to the Site; the foregoing prohibition on Transfer or subletting is expressly agreed to by Lessee in consideration of such fact. Any person or entity to which this Lease is assigned pursuant to the provisions of the Bankruptcy Code shall be deemed without further act or deem to have assumed all of the obligations arising under this Lease on and after the date of such Transfer. Any such assignee shall upon demand execute and deliver to Agency an instrument confirming such assumption. (d) Aaencj� Fee. Lessee agrees to reimburse Agency for Agency's reasonable costs and attorneys' fees incurred in connection with the processing and documentation of any requested Transfer, subletting, transfer, change of ownership or hypothecation of this Lease or Lessee's Interest in and at the Site, or any party thereof, which required Agency's approval hereunder. in an amount not to exceed Two Thousand Five Hundred Dollars ($2,500.00)for each such Transfer(which amount shall be adjusted each year by the Consumer Price Index). (e) No Waivar. The acceptance byAgency of any payment due hereunder from any other person shall not be deemed to be a waiver by Agency of any provision of this Lease or to be a consent to any Transfer or subletting. Consent by Agency to one or more Transfers of this Lease or to one or more sublets of the Site shall not operate as a waiver or estoppel to the future enforcement by Agency of its rights pursuant to the provisions of this Lease. INTERIM SHORT-TERM LEASE (November 5. '1998) -3 2- IX. I§ 9001 MORTGAGES (§ 901I Leasehold Mortcages (a) From time to time during the term of this Lease, Lessee shall have the right to mortgage, pledge, deed in trust, assign rents, issues and profits (for purposes of security if required by any lender), enter into capitalized leases or other financing mechanisms in connection with the acquisition of furniture, fixtures 'and equipment, or otherwise encumber the interest of Lessee under this Lease, in whole or in part, and any interests or rights appurtenant to this Lease, and to assign or pledge the same as security for any debt (the holder of any such mortgage, pledge or other encumbrance, an the beneficiary of any such deed of trust being hereafter referred to as "Mortgagee" and the mortgage, pledge, deed of trust or other instrument hereafter referred to as "Mortgage"), upon and subject to each and all of the following terms and conditions: 1. Lessee shall not make or enter into an agreement to make any Mortgage without the prior written approval of Agency. Upon Lessee's request for approval of a proposed Mortgage and Lessee's submission to Agency of such information concerning the proposed Mortgage as Agency may reasonably request, Agency shall not unreasonably delay its approval or disapproval of the proposed Mortgage and, in any event, shall approve or disapprove the proposed Mortgage within thirty (30) days. The Agency's Executive Director shall be authorized to approve minor.changes to this Lease as reasonably requested by a proposed Mortgagee. 2. The Mortgage shall cover no interest in any real property other than Lessee's interest in the Site, the Improvements or some portion thereof, the leasehold estate of Lessee under this Lease, and/or Lessee's leasehold estate in the Waterfront Hilton Lease. The Mortgage shall state on its face that it does not encumber in any way Agency's fee interest in the Site and Agency's interest under this Lease. 3. Mortgages may be made only for the purposes of (i) refinancing any loan encumbering the Waterfront Hilton Lease; and/or (ii) financing necessary and appropriate to pay Project Costs. "Project Costs" as used herein means the following actual costs and expenses of the development work to be performed by or on behalf of Lessee for or in connection with the development of the Improvements required under this Lease otherwise contemplated by the Agreement: INTERIM SHORT-TERM LEASE 2231015800-000313244043.2 s03/15/99 -33- a. Land development work. b. Construction of the Improvements and installation of the required fixtures,furniture, machinery and equipment. C. Building permits and entitlement fees not paid for or reimbursed by Agency. d. Premiums for fire, public liability and property damage insurance during construction and on bonds securing work against liens for labor and materials. e. Real estate taxes and assessments upon the Site and Improvements or the Improvements during the period of construction. f. Interest on construction loans prior to the opening of the Improvements. g. Fees for architects, engineers, accountants and attorneys. h. Purchasing fees paid to third parties not affiliated with Lessee in connection with the purchase of furniture,fixtures and equipment. L Development fees paid to government agencies. j. Charges and premiums for searching and insuring title. k. Out-of-pocket costs incurred by Lessee in connection with construction financing, including, without limitation, commhment fees, mortgage broker fees, standby fees and fees of a like nature, printing and duplicating expenses,documentary transfer tax stamps, mortgage taxes, recording charges. I. Customary and reasonable pre-opening expenses for the Improvements. M. Costs of required studies, reports and inspections. n. Fee for management and construction services comparable to the amount included in project pro forma previously provided Agency by Lessee o. Expenditures by Lessee required to satisfy any other obligation of Lessee under the Agreement. INTERIM SHORT-TERM LEASE (November 5, 1998) -3 4- 4. The amount of any loan secured by a Mortgage shall not exceed Project Costs unless such loan is also secured by Lessee's interest in the Waterfront Hilton Lease. 5. Any Mortgage is to be given only to a responsible bona fide institutional lender. For the purposes hereof the term "institutional lender" shall mean any bank, savings and loan association, thrift and loan association, savings bank, pension fund, insurance company, real estate investment trust or any other comparable or similar entity authorized to make loans in the State of California. 6. All rights acquired by said Mortgagee under said Mortgage shall be subject -to each and all of the covenants, conditions and restrictions set forth in this Lease, and to all rights of Agency thereunder, none of which covenants, conditions and restrictions is or shall be waived by Agency by reason of the giving of such Mortgage, except as expressly provided in this Section 900. Notwithstanding any foreclosure of any such Mortgage, Lessee shall remain liable for the payment of the accrued but unpaid rent reserved in this Lease while Lessee remains in possession of the Site and Improvements. 7. Promptly upon the recording of a Mortgage, Lessee shall, at its own expense, cause to be recorded in the Official Records of Orange County a written request executed and acknowledged by Agency for a copy of all notices of default and all notices of sale under the Mortgage as provided by applicable law. Inclusion of a request for notice having the effect described above in the body of the recorded Mortgage shall constitute compliance with this provision. (b) If Lessee encumbers its leasehold estate by way of a Mortgage in accordance with this Section 900, and if such Mortgagee has registered its name and address in writing with the Agency, then this Lease shall not be terminated or canceled on account of any default by Lessee in the performance of the terms, covenants or conditions hereof until Agency shall have complied with the provisions of Sections 902 through 905 as to the Mortgagee's rights to cure and to obtain a new lease. (§ 9021 Rights and Obligations of_Leasehold Mortgagees If Lessee, or Lessee's successors or assigns, shall mortgage the leasehold interest herein demised, then, as long as any such Mortgage shall remain unsatisfied of record, the following provisions shall apply: 1. If the holder of any Mortgage on the leasehold interest herein demised shall register with Agency its name and address in writing, no notice of default by Agency to Lessee shall be deemed to have been duly given unless and until a copy thereof has been mailed to the Mortgagee by registered or certified mail at the address registered with Agency. INTERIM SHORT-TERM LEASE 2231015800-0003/3244043.2 a03/15/99 -35- 2. In the event Lessee shall be in default hereunder,the Mortgagee shall, . at any time prior to the termination of this Lease (which termination can occur only after notice to Mortgagee and an opportunity to cure in accordance with this Article IX) and without payment of any penalty, have the right, but not the obligation, to pay all of the rents due hereunder,to effect any insurance, to pay any taxes and assessments (subject to Agency's right to cure under Section 605 of this Lease), to make any repairs and improvements, to do any other act or thing required or permitted of Lessee hereunder, and, to do any other thing which may be necessary and proper to be done in the performance and observation of the agreements, covenants and conditions hereof to prevent termination of this Lease. All payments so made and all things so done and performed by such Mortgagee shall be accepted by Agency and shall be effective to prevent a termination of this Lease as the same would have been if made, done and performed by Lessee instead of such Mortgagee. Lessee hereby constitutes and appoints the Mortgagee as Lessee's agent and attorney in fact with full power coupled with an interest, in Lessee's name, place and stead, and at Lessee's cost and expense, to enter upon the Site and the Improvements, and perform all acts required to be performed herein. No Mortgagee shall have the right to take or perform any action hereunder, under its leasehold Mortgage or otherwise which might result in any detriment to the rights of a prior leasehold Mortgagee with respect to the same lease or leasehold Site. 3. While any such Mortgage remains unsatisfied of record, and an event or events shall occur which shall entitle Agency to terminate this Lease, Agency shall forbear from terminating this Lease if and to the extent that such forbearance is required under Section 905 of this Lease. 4. If the holder of a Mortgage obtained in accordance with Section 901 of this Lease acquires the leasehold estate created hereunder or otherwise acquires. possession of the Site and Improvements pursuant to available legal remedies, Agency will look to such holder to perform the obligations of Lessee only from and after the date of foreclosure or possession and will not hold such holder responsible for the past actions or inactions of the prior Lessee. Notwithstanding the foregoing, (A) on and after the date of such foreclosure or possession, such holder shall be required to perform and abide by each and all of the obligations of Lessee under this Lease and (B) on and after the date of such foreclosure or possession, Agency shall have the right to enforce each and all of the provisions of this Lease against such holder. 5. The foreclosure of a Mortgage obtained in accordance with Section 901 of this Lease, or any sale thereunder, whether by judicial proceedings or by virtue of any power of sale contained in such Mortgage, or any conveyance of the leasehold estate created hereby from Lessee to the holder of any such Mortgage through, or in lieu of, foreclosure or other appropriate proceedings in the nature'thereof shall not require the INTERIM SHORT-TERM LEASE 2231015800-0003/3244043.2 a03,15/99 -36- consent or approval of Agency or constitute a default under this Lease, and upon such foreclosure, sale or conveyance Agency shall recognize the Mortgagee, or any other foreclosure sale purchaser, as the new Lessee hereunder. In the event that such Mortgagee becomes the Lessee hereunder, or in the event that the leasehold estate created hereunder is purchased by any other party at a foreclosure sale or by any other lawful means, such Mortgagee, or such other foreclosure sale purchaser, shall be responsible for the performance of the obligations of Lessee under this Lease only for the period of time that the Mortgagee or such other foreclosure sale purchaser remains Lessee hereunder, and such Mortgagee or foreclosure sale purchaser shall thereafter have the right to assign this Lease without need to obtain the approval of Agency. Notwithstanding anything to the contrary herein: (A)as a precondition to any Mortgagee,foreclosure sale purchaser or other person obtaining the rights of Lessee hereunder, such person shall first be required to expressly assume each and all of the obligations of Lessee under this Lease pursuant to a written document in form and substance satisfactory to Agency;(B)such new Lessee shall have no right to construct any Improvements on the Site unless and until such new Lessee has submitted evidence satisfactory to Agency that such new Lessee has the financial capability and overall competence to perform the obligations of Lessee hereunder, provided that this clause (B) shall not require submission of such evidence if such new Lessee is the holder of a Mortgage obtained in accordance with Section 901 of this Lease but shall require submission of such evidence if such new Lessee is the successor of such a holder, and (C)Agency shall have the right of prior written approval over any prospective operator or manager (including but not limited to such new Lessee) of the uses on the Site and Improvements in accordance with Section 502 of this Lease. 6. In the event that the holder of any Mortgage obtained in accordance with Section 901 of this Lease remedies or causes to be remedied, within the times specified in Section 905 of this Lease, all monetary defaults of Lessee and all non- monetary defaults of Lessee which by their nature are capable of being remedied by such Mortgagee, such Mortgagee shall have the right within thirty (30) days after all such defaults are remedied to request that Agency promptly execute and deliver to such Mortgagee, a new lease of the Site (naming such Mortgagee as Lessee)for the remainder of the term of this Lease with the same agreements, covenants and conditions (except for any requirements which have been fulfilled prior to execution of the Lease) as are contained herein and with priority equal to that hereof, along with a Quitclaim Deed first approved in writing by the Agency as to form and substance; provided, however, that if more than one Mortgagee requests such a new lease, the Mortgagee holding the most senior Mortgage shall prevail; and provided,further,that Agency shall not be required to execute such new lease earlier than concurrently with the execution of such new lease by such Mortgagee. Agency shall prepare such new lease at the expense of such Mortgagee, and all costs incurred by Agency in preparing such new lease (including attorneys'fees) shall be paid to Agency by such Mortgagee prior to the execution by Agency of such new lease. The execution of a new lease by Agency pursuant to this paragraph 6 shall INTERIM SHORT-TERM LEASE (November 5. 1998) -3 7- automatically and immediately terminate this Lease. Although not necessary to effect the termination of this Lease, the former Lessee shall, upon Agency's execution of such new lease, execute any documents and perform any acts which may be reasonably necessary to evidence the termination of this Lease. Upon Agency's execution and delivery of such new lease, Agency, at the expense of the new Lessee, shall take such action as shall be necessary to remove the former Lessee from the Site and Improvements. Notwithstanding any provision herein.Agency shall not be required to forbear from terminating this Lease except to the extent required by Section 905 hereof and Agency shall not be required to execute a new lease after the termination of this Lease in accordance with the provisions hereof. 7. Anything herein contained to the contrary notwithstanding, the provisions of this Section 902 shall inure only to the benefit of the holders of Mortgages and, with respect to paragraph 5. only, other persons that acquire the leasehold interest created hereunder pursuant to a foreclosure, sale or conveyance of the type described in paragraph 5. [§ 903] Ag Mortgaaas [§ 904] Natice - In the event that Lessee's interest under this Lease is subject to any Mortgage, Agency will simultaneously give to Mortgagee at such address as. is specified by the Mortgagee in accordance with Section 902 hereof, a copy of each notice of default from Agency to Lessee hereunder at the time of giving such notice or communication to Lessee. Agency will not exercise any right, power or remedy with respect to any default hereunder, and no notice to Lessee of any such default and no termination of this Lease in connection therewith shall be effective, unless Agency has given to Mortgagee written notice or a copy of its notice to Lessee of such default or any such termination, as the case may be. [§ 905] Forbearance by Age= During the continuance of any Mortgage obtained in accordance with Section 901 of this Lease and until such time as the lien of such Mortgage has been extinguished: (A) Agency shall not agree to any mutual termination nor accept any surrender of this Lease, nor shall Agency consent to any amendment or modification of this Lease, without the prior written consent of the Mortgagee. (B) Notwithstanding any default by Lessee In the performance or observance of any agreement, covenant or condition of this Lease on the part of Lessee to be performed INTERIM SHORT-TERM LEASE (November 5, 1998) -3 8- or observed,Agency shalt have no right to terminate this Lease unless an event of default shall have occurred and be continuing, Agency shall have given such Mortgagee written notice of such event of default, and such Mortgagee shall have failed to remedy such default,or caused such default to be deemed remedied,within the times specified in(i)and (ii) below. (i) Should any event of default under this Lease occur, any Mortgagee shall have ninety (90) days after receipt of written notice from Agency setting forth the nature of such event of default, and, if the default is such that possession of the Site is reasonably necessary to remedy the default, a reasonable time after the expiration of such ninety(90)day period,within which to remedy such default; provided,however that Agency shall not be required to forbear beyond such initial ninety (90)day period unless (a) the Mortgagee shall have fully cured any default in the payment of any monetary obligations of Lessee under this Lease within such ninety (90) day period and shall continue to pay currently such monetary obligations as and when-the same are due, and .(b) such Mortgagee shall have acquired Lessee's leasehold estate created hereby or commenced foreclosure or other appropriate proceedings in the nature thereof within such ninety (90) day period, or prior thereto, and shall be d1igently prosecuting any such proceeding. Agency agrees that all payments so made and all things so done and performed by such Mortgagee shall be accepted by Agency and shall be effective to prevent a termination of this Lease as the same would have been if made, done and performed by Lessee instead of such Mortgagee. (ii) Any event of default under this Lease which in the nature thereof cannot be remedied by a Mortgagee shall be deemed to be remedied if the Mortgagee does all of the following: (a) within ninety (90) days after receiving written notice from Agency setting forth the nature of an event of default, or prior thereto,the Mortgagee shall have acquired Lessee's leasehold estate created hereby or shall have commenced foreclosure or other appropriate proceedings, (b)Mortgagee shall diligently prosecute any such proceedings to completion, (c) within the ninety (90) day period referred to in (a) above, Mortgagee shall have fully cured any default in the payment of all monetary obligations of Lessee hereunder and any non-monetary obligations which do not require possession of the Site and Improvements, and (d) after gaining possession of the Site, Mortgagee shall perform and abide by each and all of the obligations of Lessee under this Lease as and when the same are due; provided, however, that Mortgagee shall not be required to cure any default which occurs prior to the date on which Mortgagee obtains possession of the Site and which by its nature cannot be cured by such Mortgagee. (C) In the event that Mortgagee is prohibited by any process or injunction issued by any court of competent jurisdiction or by reason of any action by any court having jurisdiction of any bankruptcy or insolvency proceeding involving Lessee from commencing or prosecuting foreclosure or other appropriate proceedings in the nature thereof,the times INTERIM SHORT-TERM LEASE (November 5, 1998) -3 9- specified in paragraph (B) of this Section 905 for commencing and prosecuting such foreclosure or other proceedings shall be extended for the period of such prohibition. Notwithstanding anything to the contrary herein, Agency shall in no event be required to forbear hereunder unless Mortgagee shall within ninety(90)days after the giving of notice by Agency pay all moneys due and in respect of which there exists a monetary event of default. [§ 905.11 Conditions Precedent to Mortgagee RigbLs and AgQnc y Agency shall not be required to comply with Sections 902 through 905 of this Lease With respect to any Mortgage, unless and until a true copy of the original thereof bearing the date and book and page of recordation thereof, and a certified copy of the original note secured by such Mortgage has been delivered to Agency together with written notice of the address of the Mortgagee to which notices may be sent;and in the event of an assignment of such Mortgage, such assignment shall not be binding upon Agency unless and until a certified copy thereof bearing the date and book and page of recordation together with written notice of the address of the assignee thereof to which notices may be sent, have been delivered to Agency. [§ 906) Performance on Behalf of Lessee In the event that Lessee shall fail to make any payment or perform any act required hereunder to be made or performed by Lessee,then Agency or Mortgagee may, but shall be under no obligation to, after such notice to Lessee, if any, as may be reasonable under the circumstances, make such payment or perform such act with the same effect as if made or performed by Lessee. Nothing herein shall limit the right of Mortgagee to take action or make a payment if permitted under its Mortgage. Entry by Agency or Mortgagee upon the Site and Improvements for such purpose shall not waive or release Lessee from any obligation or default hereunder(except in the case of any obligation or default which shall have been fully performed or cured by Mortgagee). Lessee shall reimburse Agency (with interest at the Interest Rate)or Mortgagee (with interest as provided in the Mortgage) for all sums so paid by Agency or Mortgagee and all costs and expenses incurred by Agency and Mortgagee in connection with the performance of any such act. [§ 907] Nonmer= There shall be no merger of this Lease,or of the leasehold estate created thereby, with the fee estate in and to the Lease Site and Improvements by reason of the fact that this Lease, or the leasehold estate created thereby, or any interest in either thereof, may be held directly or indirectly by or for the account of any person who shall own the fee estate in and to the Lease Site and Improvements, or any portion thereof, and no such INTERIM SHORT-TERM LEASE (November 5. 1998) -4 0- merger shall occur unless and until all persons at the time having any interest in this Lease or the leasehold estate, including the leasehold mortgagee and the holder of any mortgage upon the fee estate in and to the Lease Site and Improvements shall join in a written instrument effecting such merger. I§ 9081Agency Cooperation Agency covenants and agrees that it will act and cooperate with Lessee in connection with Lessee's right to grant leasehold mortgages as herein above provided. At the request of Lessee or any proposed or existing leasehold mortgagee, Agency shall within a reasonable time execute and deliver(i) any documents or instruments reasonably requested to evidence, acknowledge and/or perfect the rights of leasehold mortgagees as herein provided; and (ii) an estoppel certificate certifying the status of this Lease and Lessee's interest herein and such matters as are reasonably requested by Lessee or such leasehold mortgagees. Such estoppel certificate shall include, but not be limited to, certification if true by Agency that (a)this Lease is unmodified and in full force and effect (or, if modified. state the nature of such modification and certify that this Lease, as so modified, is in full force and effect), (b)all rents currently due under the Lease have been paid, (c)there are not, to Agency's knowledge, any uncured defaults on the part of Lessee under the Lease or facts, acts or omissions which with the giving of notice or passing of time,or both,would constitute a default. Any such estoppel certificate may be conclusively relied upon by any leasehold mortgagee or assignee of Lessee's interest in this Lease. j§ 909] Enforceability The rights granted herein to a leasehold mortgagee shall be enforceable only by such leasehold mortgagee. In the event any action or proceeding is brought to enforce or interpret the provisions hereof or to seek damages or performance or declare the rights of the parties hereto or such leasehold mortgagee, the prevailing party including such leasehold mortgagee, if prevailing, shall be entitled to attomeys'fees,costs and expenses. 1§ 9101 Wo_SUbnrdination of AgencVs Interests Agency's interest in the Site under this Lease is a vested landlord's reversionary interest and not just a contractual obligation of Lessee. Notwithstanding anything which is or appears to be to the contrary in this Lease, Lessee shall not encumber Agency's interest under this Lease or Agency's fee interest in the Site by any mortgage, deed of trust, lien, security instrument or financing conveyance of any kind whatsoever. INTERIM SHORT-TERM LEASE (November 5. 1 998) -41- [§ 9111 Certificates to Lenders Lessee and Agency, as the case may be, shall execute. acknowledge and deliver to any lender, promptly upon request, its certificate certifying (a) that this Lease is unmodified and in full force and effect(or, if there have been modifications,that this Lease is in full force and effect, as modified, and stating the modifications), (b)the dates, if any, to which all rent due hereunder has been paid, (c) whether there are then existing any charges, offsets, or defenses against the enforcement by Agency of any agreement, covenant or condition hereof on the part of Lessee to be performed and observed (and, if so, specifying the same), and (d)whether there are then existing any defaults by Lessee in the performance or observance by Lessee of any agreement, covenant or condition hereof on the part of Lessee to be performed or observed and whether any notice has been given to Lessee of any default which has not been cured (and, if so, specifying the same). Any such certificate may be relied upon by a prospective purchaser, mortgagee, trustee or beneficiary under a deed of trust which encumbers this Lease. [§ 912] O ligations-of Mortgagee Upon Acquisition of-Leasehold Estate If the holder of a Mortgage obtained in accordance with Section 901 of this Lease acquires the leasehold estate created hereunder or otherwise acquires possession of the Site and Improvements pursuant to available legal remedies, Agency will took to such holder to perform the obligations of Lessee hereunder only from and after the date of foreclosure or possession and will not hold such holder responsible for the past actions or inactions of the prior Lessee. Notwithstanding the foregoing, (A)on and after the date of such foreclosure or possession, such holder shall be required to perform and abide by each and all of the obligations of Lessee under this Lease and (B)on and after the date of such foreclosure or possession, Agency shall have the right to enforce each and all of the provisions of this Lease against such holder. Nothing herein is intended or shall be construed to limit or restrict Agency's rights and remedies against any prior Lessee, provided that Agency's pursuit of such remedies shall not affect the rights of the holder of any{Mortgage obtained in accordance with Section 901 of this Lease to the use,enjoyment or operation of the Site and Improvements. X. [§ 1000] INDEMNIFICATION AND INSURANCE A. [§ 10011 Indemnification Throughout the term of this Lease, Lessee agrees to and shall defend, indemnify and hold harmless Agency,the City and their officers, employees, agents, contractors and consultants from and against all claims, liability, loss, damage, costs or expenses (including reasonable attorneys' fees and court costs) arising from or as a result of the death of any person or any accident, injury, loss or damage whatsoever caused to any INTERIM SHORT-TERM LEASE (November 5,1998) -42- person or to the property of any person which shall occur on or adjacent to the Site and which shall be directly or indirectly caused by or based on the Agency's ownership of or interest in the Site or any portion thereof or any improvements thereon or the condition of the Site or any portion thereof or any improvements thereon or Lessee's rehabilitation, development, construction, use or operation of the Site or any portion thereof or any improvements thereon or any of Lessee's activities under this Lease,whether such actions or inactions thereof be by Lessee or anyone directly or indirectly employed or contracted with by Lessee and whether such damage or injury shall accrue or be discovered before or after the termination of this Lease. Lessee shall not be responsible for (and such indemnity shall not apply to)property damage or bodily injury caused by entry onto the Site and Improvements by Agency pursuant to various provisions of this Lease, and/or to the extent caused by the wilful misconduct or active negligence of the Agency or its designated employees or agents. B. [§ 1002] Required Insurance During the term of this Lease, Lessee at its sole cost and expense shall: 1. Keep or cause to be kept a policy or policies of insurance against loss or damage to the Improvements on the Site, resulting from fire, earthquake (to the extent commercially available at commercially reasonable rates), windstorm, hail, lightning, vandalism, malicious mischief, riot and civil commotion, and such other perils ordinarily included In extended coverage fire insurance policies. Such insurance shall be maintained in an amount not less than one hundred percent (100%) of the full insurable value of the Improvements as defined herein in Section 1003 (such value to include amounts spent for construction of the improvements, architectural and engineering fees, and inspection and supervision). 2. Maintain or cause to be maintained public liability insurance, to protect against loss from liability imposed by law for damages on account of personal injury, Including death therefrom, suffered or alleged to be suffered by any person or persons whomsoever, resulting directly or indirectly from any act or activities of Lessee or under Lessee's control or direction, and also to protect against loss from liability imposed by law for damages to any property of any person caused directly or indirectly by or from the acts or activities in connection with the Site and Improvements of Lessee or Its invitees and sublessees, or any person acting for Lessee, or under its control or direction. Any such property damage and personal injury insurance maintained by Lessee at any time during the term of this INTERIM SHORT-TERM LEASE (November 5,1998) -43- Lease shall name Agency, City, and their respective officers, employees and consultants, as additional insureds and shall also provide for and protect Agency and City against incurring any legal cost in defending claims for alleged loss. Such personal injury and property damage insurance shall be maintained in full force and effect during the entire term of this Lease in an amount not less than Ten Million Dollars ($10,000,000)combined single limit as of the Effective Date of Lease,which minimum amount of coverage shall escalate on the fifth anniversary of the Effective Date of Lease and once every five years thereafter in proportion to the escalation, if any,during such period in the Consumer Price Index. Lessee agrees that provisions of this paragraph 2. as to maintenance of insurance shall not be construed as limiting in any way the extent to which Lessee may be held responsible for the payment of damages to persons or property resulting from Lessee's activities, or activities of its invitees and sublessees or the activities of any other person or persons for which Lessee is otherwise responsible. 3. Maintain or cause to be maintained workers compensation insurance issued by a responsible carrier authorized under the laws of the State of California to insure employers against liability for compensation under the Worker's Compensation Insurance and Safety Act now in force in California, or any act hereafter enacted as an amendment or supplement thereto or in lieu thereof. Such worker's compensation Insurance shall coverall persons employed by Lessee in connection with the Site and Improvements, and shall cover full liability for compensation under any such act aforesaid, based upon death or bodily injury claims made by,for or on behalf of any person incurring or suffering injury or death in connection with the Site and Improvements, or the operation thereof by Lessee. 4. In the event that the holder of a Mortgage obtained in accordance with Section 901 of this Lease which has registered its name and address with Agency acquires the leasehold Interest created by this Lease, such Mortgagee shall have the right to self-insure with respect to the risks specified in this Section 1002 if such Mortgagee is an institutional lender. C. [§ 10031 Definition of"Full Insurable Value" The term "full insurable value" as used in Section 1002 shall mean the actual replacement cost {excluding the cost of excavation, foundation and footings below the INTERIM SHORT-TERM LEASE (November 5, 1998) -4 4- ground level and without deduction for depreciation) of the Improvements, including the cost of construction of the Improvements, architectural and engineering fees, and inspection and supervision. To ascertain the amount of coverage required, Lessee shall cause the full insurable value to be determined from time to time by the insurer or by a qualified expert mutually acceptable to Agency and Lessee, not less often than once every three years. D. i§ 10041 General Insurance;provisions All insurance provided under Section 1002 of this Lease shall be primary insurance for the benefit of Lessee,Agency, and City. Said insurance shall also be for the benefit of the leasehold mortgagee. if any. All insurance provided under Section 1002 shall be periodically reviewed by the parties for the purpose of mutually increasing or decreasing the minimum limits of such insurance, from time to time, to amounts which may be reasonable and customary for similar facilities of like size and operation. The insurance to be provided by Lessee may provide for a deductible or self-insured retention of not more than One Hundred Thousand Dollars ($100,000.00), with such amount to increase at such times,as Agency may require increases in the policy limits as set forth above; provided that the percentage increase in the deductible or self-insured retention shall not exceed the percentage Increase in the Consumer Price Index since the last requested adjustment; and further provided that Lessee may maintain such higher deductibles or self-insured retention as may be approved in writing by the Executive Director of Agency or his designee. In the event such insurance does provide for deductibles or self-insured retention, Lessee agrees that it will fully protect Agency, its boards,officers, and employees in the same manner as these interests would have been protected had the policy or policies not contained the deductible or retention provisions. All insurance herein provided for under Section 1002 shall be effected under policies Issued by insurers of recognized responsibility licensed or permitted to do business in the State of California, subject to the reasonable approval of the Agency's Executive Director. Any insurance required to be maintained by Lessee pursuant to Section 1002 may be taken out under a blanket insurance policy or policies covering other premises or properties,and other insureds in addition to the parties hereto; provided, however,that any such policy or policies of blanket insurance shall specify therein, or supplemental written certification from the insurers under such policies shall specify, the amount of insurance irrevocably allocated to the coverage to be provided under Section 1002 and provided further, that in all other respects, any such blanket policy shall comply with the other provisions of Section 1002. INTERIM SHORT-TERM LEASE (November 5. 1998) -4 5- All policies or certificates of insurance sha'.I provide that such policies or certificates shall not be cancefed or materially changed without at least thirty (30) days prior written notice to Agency. Copies of such policies, or certificates thereof subject to the reasonable approval of Agency legal counsel, shall be deposited with Agency together with appropriate evidence of payment of the premiums therefor, and, at least thirty (30) days prior to expiration of any such policy, copies of renewal policies shall be so deposited. E. [§ 1005] FaHure to Maintain Insurance If Lessee fails or refuses to procure or maintain insurance as required by this Lease, Agency shall have the right, at Agency's election, and without notice, to procure and maintain such insurance. The premiums paid by Agency shall be treated as additional rent due from Lessee,to be paid on the first day of the month following the date on which the premiums were paid. Agency shall give prompt notice of the payment of such premiums, stating the amounts pa'd and the name of the insured(s). F. [§ 10061 - Disposition-Of-Insurance_Ploceeds Ra e�ng,, m Logs or Damage to provements Unless Lessee timely commences and prosecutes to completion the demolition and clearance from the Site of the Improvements pursuant to clause (ii) of paragraph (b) of Section 708 of this Agreement, the provisions of paragraphs (a), (b), (c) and (d) of this Section 1006 shall apply: (a) Subject to the provisions of paragraph (b)below, proceeds of insurance with respect to loss or damage to the Improvements to be maintained and repaired by Lessee during the term of this Lease shall be payable, under the provisions of the policy of insurance,to Lessee,or,if such loss or damage involves the need for Lessee to obtain any govemmental approvals or permits,jointly to Lessee and Agency, and said proceeds shall constitute a trust fund to be used for the repair, restoration or reconstruction of the Improvements in accordance with plans and specifications approved in writing by Agency. (b) Notwithstanding the foregoing paragraph,within the period during which there is an outstanding Mortgage obtained in accordance with Section 901 of this Lease on all or part of the Site and Improvements, said proceeds shall be made payable as set forth in Sections 708 and 709 of this Lease. (c) In the event this Lease is terminated by mutual agreement of Agency and Lessee, and the Improvements are not repaired, restored or reconstructed, the insurance proceeds shall be applied first to any payments due under this Lease from Lessee to the INTERIM SHORT-TERM LEASE (November 5. 1998) -4 6- Agency, second to restore the Site to a neat and clean condition, and finally any excess shall be paid to Lessee. Provided, however, that within any period when there is an outstanding mortgage or deed of trust upon the Improvements, such proceeds shall be applied first to discharge the debt secured by the mortgage and then for the purposes and in the order set forth above in this paragraph. (d) Lessee hereby waives any claim against Agency and City for any loss covered by insurance of the type specified in Section 1002; and Lessee, shall obtain from its insurance company or companies a waiver of any right of subrogation that it may have against Agency and City. Xl. [§ 11001 EMINENT DOMAIN A. [§ 11011 Lessee to Give Notice In case of a Taking of all or any part of the Site and Improvements, or the commencement of any proceedings or negotiations which might result in such Taking, Lessee shall promptly give written notice thereof to Agency generally describing the nature and extent of such Taking or the nature of such proceedings or negotiations and the nature and extent of the Taking which might result therefrom, as the case may be. B. [§ 1102] Total Taking In case of a Taking of the fee of the entire Site and Improvements, or in case of the taking of only a part of the Site and Improvements, leaving the remainder of the Site and Improvements In such location, or in such form, shape or reduced size as to render the same not effectively and practicably usable for the conduct thereon of the uses permitted hereunder,this Lease shall terminate as of the date title vests in the condemning authority or the date the condemning authority is entitled to possession, whichever first occurs (the 'Date of Taking"). Any Taking of the Site and Improvements of the character referred to in this Section 1102 which results In the termination of this Lease is referred to herein as a "Total Taking." C. [§ 11031 Partial Taking In case of a Taking of the Lease Site and Improvements other than a Total Taking (a "Partial Taking"),this Lease shall remain in full force and effect as to the portion of the Site and Improvements remaining immediately after such Taking, without any abatement or reduction of Ground Rent or any other sum payable hereunder. INTERIM SHORT-TERM LEASE (November5, 1998) -47- D. [§ 1104] Applicationpf Awards and Other.Payments Awards and other payments on account of a Taking, less costs,fees and expenses incurred in the collection thereof("Net Awards and Payments")shall be applied as follows: (a) Net Awards and Payments received on account of a Taking other than a Total Taking or a Taking for temporary use shall be paid to Lessee and Agency as their respective interests may appear in the Site and the Improvements. (b) Net Awards and Payments received on account of a Taking for temporary use shall be received by Lessee. X11. (§ 1200] DEFAULTS, REMEDIES AND TERMINATION A. [§ 1201] Defaults - General (a) Subject to the extensions of time set forth In Section 1314 of this Lease, failure or delay by either party to perform any term or provision of this Lease constitutes a default under this Lease. The party who so fails or delays must immediately commence to cure,correct, or remedy such failure or delay, and shall complete such cure, correction or remedy with reasonable diligence and, in any event, for monetary defaults within thirty (30)days of such failure or delay,and for non-monetary defaults within the time reasonably required for cure with reasonable diligence, not to exceed one hundred and eighty(180) days plus any period or periods of enforced delay required by Section 1314 of this Lease (the "Cure Period"). (b) The injured party shall give written notice of default to the party in default, specifying the default complained of by the injured party. Except as required to protect against further damages, and except as otherwise expressly provided in Sections 1207 and 1208 of this Lease, the injured party may not institute-proceedings against the party in default until the expiration of the applicable Cure Period. Agency's exercise of its remedies under this Article XI1 shall be subject to the provisions of Article IX of this Lease. Failure or delay in giving such notice shall not constitute a waiver of any default, nor shall it change the time of default. (c) Except as otherwise expressly provided in this Lease, any failure or delay by either party in asserting any of its remedies or rights as to any default shall not operate as a waiver of any default or of any such rights or remedies or deprive either such party of its right to institute and maintain any actions or proceedings which it may deem necessary to protect, assert or enforce any such rights or remedies. INTERIM SHORT-TERM LEASE (November 5, 1998) -4 8- B. [§ 12021 Legal Actions 1. [§ 12031 Institution of Legal Actions In addition to any other rights or remedies, either party may institute legal action to cure,correct,or remedy any default,to recover damages for any default, or to obtain any other remedy consistent with the purpose of this Lease. Such legal actions must be instituted in the Superior Court of the County of Orange, State of California, in any other appropriate court in that county, or in the Federal District Court in the Central District of California. 2. [§ 1204] Applicable Law The laws of the State of California shall govern the interpretation and enforcement of this Lease. 3. [§ 1205] Acceptanre of Service of Process In the event that any legal action is commenced by Lessee against Agency, service of process on Agency shall be made by personal service upon the Chairman or Executive Director of Agency, or in such other manner as may be provided by law. In the event that any legal action is commenced by Agency against Lessee, service of process on Lessee shall be made by personal service upon an officer of the general partner of Lessee and shall be valid whether made within or without the State of California, or in such manner as may be provided by law. 4. [§ 1206] Attomeys'_Fees andLourt Costs In the event that either Agency or Lessee shall bring or commence an action to enforce the terms and conditions of this Lease or to obtain damages against the other party arising from any default under or violation of this Lease, then each party shall bear and pay the cost of its own costs and attorneys fees. C. [§ 1207] Rights and Remedies are Cumulative Except with respect to rights and remedies expressly declared to be exclusive in this Lease, the rights and remedies of the parties are cumulative, and the exercise by either party of one or more of such rights or remedies shall not preclude the exercise by it, at the same or different times, of any other rights or remedies for the same default or any other default by the other party. INTERIM SHORT-TERM LEASE (November 5, 1998) -4 9- D. [§ 1208] Damages If either party defaults with regard to any of the provisions of this Lease, the nondefaulting party shall serve written notice of such default upon the defaulting party. If the default is not commenced to be cured within thirty(30)days after service of the notice of default and is not cured prior to the expiration of the applicable Cure Period, the defaulting party shall be liable to the nondefaulting party for any damages caused by such default, and the nondefaulting party may thereafter(but not before) commence an action for damages against the defaulting party with respect to such default. E. j§ 1209] Specific Performance If either party defaults with regard to any of the provisions of this Lease, the nondefaulting party shall serve written notice of such default upon the defaulting party. If the default is not commenced to be cured within thirty(30)days after service of the notice of default and is not cured prior to the expiration of the applicable Cure Period, the nondefaulting party, at its option, may thereafter(but not before) commence an action for specific performance of the terms of this Lease pertaining to such default. F. [§ 12101 Additional Remed es of Agency (a) If Lessee defaults with regard to any of the provisions of this Lease, Agency shall serve written notice of such default upon Lessee. Subject to the provisions of Article IX of this Lease running in favor of Mortgagee, if the default is not commenced to be cured promptly after service of the notice of default and/or if the cure Is not prosecuted to completion with all due diligence and in any event prior to the expiration of the applicable Cure Period, Agency, at its option, may thereafter(but not before): I. Correct or cause to be corrected said default and charge the costs therefor to the account of Lessee; 2. Correct or.cause to be corrected said default and pay the costs thereof from the proceeds of any insurance; 3. Continue this Lease and Lessee's right to possession in effect and enforce its rights and remedies under the Lease, including the right to recover rent as it becomes due, as provided in Section 1951.4 of the California Civil Code. 4. Have a receiver appointed to take possession of Lessee's interest in the Site and Improvements,with power in said receiver to administer Lessee's interest therein, to collect all funds available to Lessee in INTERIM SHORT-TERM LEASE (November 5,1998) -5 0- connection with its operation and maintenance thereof;and to perform • all other acts consistent with Lessee's obligations under this Lease as the court deems proper; 5. Maintain and operate the Site and Improvements without terminating this Lease. 6. Terminate this Lease pursuant to Section 1211 hereof, by written notice to Lessee of its intention to do so. (b) Agency reserves and shall have the right at all reasonable times to enter the Site and the Improvements for the purpose of viewing and ascertaining the condition of the same, or to protect its interests in the Site and the Improvements or to inspect the operations conducted thereon, subject to the limitations and requirements forAgency rights of access set forth in Section 405 of this Lease. Any such entry shall be made only after reasonable notice to Lessee. In the event that such entry or inspection by Agency discloses that the Site or the Improvements are not in a decent, safe, and sanitary condition, are damaged, or in disrepair, Agency shall have the right, after thirty(30)days written notice to Lessee and Lessee's failure to cure the problem within the Cure Period, to have any necessary maintenance or repair work done for and at the expense of Lessee and Lessee hereby agrees to pay promptly any and all costs incurred by Agency in having such necessary maintenance or repair work done in order to keep the Site and the Improvements in a decent, safe and sanitary condition. (c) The rights reserved in this Section 1210 shall not create any obligations on Agency or increase obligations Imposed on Agency elsewhere in this Lease, and shall not defeat, render invalid or limit the rights or interests expressly provided in this Lease for the protection of leasehold mortgagees. G. [§ 1211] Rernedip5 and Rights of Termination (a) In the event that at any time during the term of this Lease, and In violation of this Lease, Lessee shall: 1. Use the Site and Improvements for any purpose other than those provided for in this Lease or fail to use and maintain the Site and Improvements in accordance with Section 501 of this Lease; 2. Fail or refuse to pay to Agency when due the applicable rents and other sums required by this Lease to be paid by Lessee, including but not limited to payments required under Sections 300 et seq. of this Lease; INTERIM SHORT-TERM LEASE (November 5.1998) -51- 3. Fail or refuse to pay when due any taxes, assessments or other • Impositions as required by this Lease; 4. Make or suffer to be made any voluntary or involuntary conveyance, assignment,sublease or other Transfer of the leasehold interest in the Site and Improvements, or any part thereof,or of the rights of Lessee under this Lease; 5. Commit or suffer to be committed any waste or impairment of the Site or the Improvements, or any part thereof; 6. filter the Improvements In any manner except as expressly permitted by this Lease; 7. Fail to maintain insurance as required by this Lease; 8. Fail to comply with the provisions of Section 708 of this Agreement in the event of damage or destruction; 9. Engage in any financing except as permitted by the terms of this Lease, or any other transaction creating any mortgage on the Site , or placing or suffering to be placed thereon any lien or other encumbrance, or suffering any levy or attachment to be made thereon; 10. Voluntarily file or have filed against it any petition under any bankruptcy or insolvency act or law, or be adjudicated a bankrupt, or make a general assignment for the benefit of creditors; 11. Fail to pay when due any payment or charge or otherwise default on any loan secured by a leasehold mortgage permitted by this Lease; 12. Abandon or surrender possession of the Site , or Lessee's interest therein; 13. Fail to perform any of Lessee's Hazardous Substances covenants; or 14. Fail to perform or comply with any other material term or provision hereof, and any such failure or violation shall not be cured or remedied within the applicable Cure Period;then, in such event, subject to the provisions of Article IX of this Lease running in INTERIM SHORT-TERM LEASE (November 5, 1998) -52- r favor of any Mortgagee, Agency may, at its option and in addition to any other remedy provided for in this Lease, terminate the Lease and revest in Agency the leasehold interest theretofore transferred to Lessee, by written notice to Lessee of its intention to do so. (b) Upon termination of this Lease pursuant to this Section 1211 it shall be lawful for Agency to re-enter and repossess the Site without process of law, and Lessee, in such event, does hereby waive any demand for possession thereof, and agrees to surrender and deliver peaceably to Agency immediately upon such termination in good order, condition and repair, except for reasonable wear and tear, subject to paragraph (f) below. Upon such termination title to all Improvements on the Site specified in this Lease to remain in Agency, shall remain in Agency. (c) No ejectment, re-entry or other act by or on behalf of Agency shall constitute a termination unless Agency gives Lessee notice of termination in writing. Such termination shall not relieve or release Lessee from any obligation incurred pursuant to this Lease prior to the date of such termination. (d) Termination of this Lease under this Section 1211 shall not relieve Lessee from the obligation to pay any sum due to Agency or from any claim for damages against . Lessee. Damages which Agency may recover in the event of default under this Lease shall include, but are not limited to, the worth at the time of award of the amount by which the unpaid rent for the balance of the Lease term remaining after the time of award exceeds the amount of such rental loss that Lessee proves could be reasonably avoided. (e) The right of termination provided by this Section 1211 is not exclusive and shall be cumulative to all other rights and remedies possessed by Agency, and nothing contained herein shall be construed so as to defeat any other rights or remedies to which Agency may be entitled. (f) Upon a termination pursuant to this Section 1211, the Parking Easement Agreement shall be recorded and become effective pursuant to Section 203 of this Lease Unless the termination arises out of a monetary default as provided in Section 203.. H. N 12121 No Cross Defaults (a) Except as otherwise specifically set forth in this Lease or the Agreement, a breach or default by the Agency or Mayer Financial, Ltd. under the Agreement as to a parcel of property other than the Site of this Lease shall not constitute a breach or default hereunder,and, except as otherwise specifca'ly set forth in this Lease or the Agreement, a termination, in whole or part,of the Agreement as to a parcel of property other than the Site of this Lease shall not terminate or modify Agency's or Lessee's rights or obligations hereunder. INTERIM SHORT-TERM LEASE (November 5. 1 998) -5 3- (b) A breach or default by the Agency or Lessee under the Waterfront Hilton Lease shall not constitute a breach or default hereunder, and, a breach or default by the Agency or Lessee hereunder shall not constitute a breach or default under the Waterfront Hilton Lease. X111. [§ 1300] GENERAL PROVISIONS A. [§ 13011 Notices, 12amands and Communications between the eddies Formal notices,-demands and communications between Agency and Lessee shall be sufficiently given if dispatched by registered or certified mail, postage prepaid, return receipt requested, to the principal offices of the Agency and of Lessee as designated in Section 108 and Section 109 hereof. Such written notices, demands and communications may be sent in the same manner to such other addresses as either party may from time to time designate by mail as provided In this Section. Sufficient notice may also be given by personal delivery or reputable overnight delivery service in lieu of mail if reasonably adequate records are maintained of such service in the ordinary course of business by the person or entity effecting such service. B. [§ 1302] Time of_Essence Time is of the essence with respect to the performance of each of the covenants and agreements contained in this Lease. C. [§ 13031 Conflict of Interests (a) To the extent prohibited by law, no member, official or employee of Agency shall have any personal interest, direct or indirect, in this Lease, nor shall any such member,official or employee participate in any decision relating to the Lease which affects his personal interests or the Interests of any corporation, partnership or association in which he is directly or indirectly interested. (b) Lessee warrants that it has not paid or given, and will not pay or give, any officer or employee of Agency or City any money or other consideration for obtaining this Lease. D. [§ 1304] Nonliability aLUPncy Officials and Employees No member, official or employee of Agency shall be personafly iiabfe to Lessee, or any successor in Interest, in the event of any default or breach by Agency or any for any amount which may become due to Lessee or successor or on any obligations under the terms of this Lease. INTERIM SHORT-TERM LEASE . (November 5, 1998) -5 4- E. [§ 13051 InspeCtion of FlookS and Records (a) Agency has the right at all reasonable times to inspect the books and records of Lessee pertaining to the Site and Improvements as pertinent to the purposes of this Lease. Lessee also has the right at all reasonable times to Inspect the books and records of Agency pertaining to the Site and Improvements as pertinent to the purposes of this Lease. (b) In the event that the holder of a Mortgage obtained in accordance with Section 901 of this Lease acquires the leasehold estate created by this Lease, then, in such an event, Agency acknowledges and agrees that Agency shall not be entitled to examine and/or audit all of the books and records of said Mortgagee, but shall only be entitled to examine such books, records and tax returns of the Mortgagee or portions thereof solely to the extent that they relate to the Site and Improvements and the Mortgagee's operation thereof. F. [§ 13061 No Partnership Neither anything in this Lease contained, nor any acts of Agency or Lessee shall be deemed or construed by any person to create the relationship of principal and agent, or of partnership, or of joint venture, or of any association between Agency and Lessee. G. j§ 1307] Corm Ip iance with .mow Except as otherwise expressly provided In the Development Agreement and/or the Agreement,Lessee agrees,at its sole cost and expense,to comply and secure compliance with all the applicable and valid requirements now In force, or which may hereafter be in force, of all municipal, county, State and federal authorities, pertaining to the Site and Improvements, as well as operations conducted thereon, and to faithfully observe and secure compliance with,in the use of the Site and Improvements,all applicable county and municipal ordinances and state and federal statutes now in force or which may hereafter be in force, including all laws prohibiting discrimination or segregation In the use, sale, lease or occupancy of the property. H. [§ 1308] SurrenderofpmZEAy Except as otherwise expressly provided in this Lease, upon the expiration or termination of this Lease pursuant to the terms hereof, it shall be lawful for Agency to reenter and repossess the Site and Improvements without process of law, and Lessee, in such event, does hereby waive any demand for possession thereof, and agrees to surrender and deliver the Site and Improvements peaceably to Agency immediately upon INTERIM SHORT-TERM LEASE (November 5, 1998) -5 5- such expiration or termination In good order, condition and repair, except for reasonable wear and tear. 1. [§ 1309] Severalty If any provision of this Lease shall be adjudged invalid or unenforceable by a court of competent jurisdiction, the remaining provisions of this Lease shall not be affected thereby and shall be valid and enforceable to the fullest extent permitted by law. J. [§ 1310] Binding Effect This Lease, and the terms, provisions, promises, covenants and conditions hereof, shall be binding upon and shall inure to the benefit of the parties hereto and their respective heirs, legal representatives, successors and assigns. K. [§ 1311) Assignment Sublease-to City; Right of First Refusal 1. Agency shall stall times have the right to assign and/or convey all or a portion of its interest in the Site and/or in the Lease to the City or, subject to Lessee's right of first refusal set forth in Section 1311.2 of this Lease,to any other person or entity. In the event of any assignment of all or a part of Agency's Interest in either the Site or the Lease to the City or other person or entity, Lessee shall attom to the City or such other person or entity and recognize City or such other person or entity as the landlord under this Lease, and the City or such other person or entity shall not disturb Lessee's right to possess the Site and Improvements subject to the provisions of this Lease. In the event that any lease of the Site between Agency and City or other person or entity Is terminated,wherein Lessee is the sublessee pursuant to this Lease, Lessee shall attom to the Agency provided that Agency shall acquire and accept the Site subject to this Lease. 2. Between the Effective Date of the Lease and the expiration or termination of this Lease, and so long as Lessee Is not in default hereunder, Agency shall not sell, convey.transfer. or otherwise dispose of all or any portion of or any interest•in the Site to any third person or entity other than the City (other than a pledge of any of its income under this Lease or other financing transaction)until it shall first have offered such portion or interest to Lessee in the manner specified below: (a) Agency shall deliver a notice (the "Notice")to Lessee of(i)Agency's bona fide intention to sell, transfer or otherwise dispose of all or any portion of or any interest in the Site. (ii) the portion or interest proposed to be sold,transferred or otherwise disposed of(the"Offered Interest"), and (iii)the offering price and all other material terms for which Agency proposes to sell, transfer, cr otherwise dispose of the Offered Interest. INTERIM SHORT-TERM LEASE (November 5, 1998) -5 6- (b) Within sixty (60) days after receipt of the Notice, Lessee or its permitted assignee may accept Agency's offer by delivering to Agency a writing agreeing to purchase the Offered Interest on the terms offered by Agency. Any such acceptance of Agency's offer shall be accompanied by a deposit equal to ten percent (10%) of the purchase price which deposit shall be retained by Agency as liquidated damages in the event that the purchase is not completed due to a default by Lessee. If Lessee accepts Agency's offer to sell the Offered Interest the parties shall consummate such purchase promptly in accordance therewith. (c) (i) If Lessee and Agency do not enter into an agreement to purchaselsell the Offered Interest as set forth in subparagraph (b)above, or(ii) if Lessee and Agency enter into such an agreement but Lessee fails to complete the purchase as set forth in subparagraph (b) above, Agency may sell the Offered Interest to any person at any price and upon any terms, as Agency shall determine, provided that the purchase price for the Offered Interest, and the terms of the sale, shall be no more favorable to the purchaser than the terms of the Notice. For purposes of comparing whether an offer by Lessee is more or less favorable than an offer by a third party, any financed portion of the offered purchase price shall be discounted to present cash value using the prime lending rate of Wells Fargo Bank or comparable financial institution. If such sale is not consummated within two (2) years from the date of the Notice, Agency shall again be obligated to first offer to sell the Offered Interest to Lessee as set forth in this Section. L. [§ 1312] Captions The captions contained In this Lease are merely a reference and are not to be used to construe or limit the text. M. j§ 1313] No-Recording of this Lanse This Lease shall not be recorded. Pursuant to the Agreement, a memorandum of this Lease will be recorded in the Official Records of Orange County. N. [§ 1314] Enforced Delay to Eerfo mance,for,0auses eyond Control of Early In addition to specific provisions of this Lease, performance by either party hereunder shall not be deemed to be in default where delays or defaults are due to causes beyond the control and without the fault of the party claiming an extension of time to perform, including vrar, insurrection; strikes; lockouts; riots; floods; earthquakes; fires; casualties;acts of God;acts of the public enemy;epidemics;quarantine restrictions;freight embargoes;lack of transportation;governmental restrictions or priority;litigation; unusually severe weather, inability to secure necessary labor, materials or tools; delays of any INTERIM SHORT-TERM LEASE (November 5, 1998) -57- contractor or supplier, acts or failure to act of the City or any other public or governmental agency or entity (other than any act or failure to act of Agency, which shall not excuse performance by Agency). An extension of time for any such cause shall be for the period of the enforced delay and shall commence to nun from the time of the commencement of the cause. If, however, notice by the party claiming such extension is sent to the other party more than thirty (30) days after the commencement of the cause, the period shall commence to run only thirty (30) days prior to the giving of such notice. Times of performance under this Lease may also be extended in writing by Agency and Lessee. 0. j§ 1315] Entire greement_ Waivers and Amendments (a) This Lease is executed in five (5) duplicate originals, each of which is deemed to be an original. This Lease includes sixty-two (62)pages and three (3)exhibits. (b) All waivers of the provisions of this Lease must be in writing and signed by the appropriate authorities of Agency or Lessee and all amendments hereto must be in writing and signed by the appropriate authorities of the Agency and Lessee. During the term of any Mortgage obtained in accordance with Section 901 of this Lease, any amendment to this Lease shall require the written approval of the Mortgagee, which approval shall not unreasonably be withheld. P. j§ 1316] Off-set statement_ Attomment and subordination 1 Of-Set Statement. The parties shall, at anytime and from time to time upon not less than ten (10)days' prior written notice from the other party, execute, acknowledge and deliver to such requesting party a statement in writing (a) certifying that his Lease is unmodified and in full force and effect, or, if modified, stating the nature of such modification and certifying that this Lease, as so modified, is in full force and effect)and the dates to which the rent and other charges are paid in advance, if any. without any offset or defense thereto (if such be the case) and (b) acknowledging that there are not, to such certifying party's knowledge, any uncured defaults on the part of the requesting party hereunder. or specifying the defaults if any are claimed. Any such statement may be relied upon by any prospective purchaser or encumbrancer of the improvements, the Site or of all or any portion of the real property of which the Site are a part. Lessee shall bear all costs with respect to any statements requested of Agency. 2. AttQmment. In the event any proceedings are brought for the foreclosure of, or in the event of the conveyance by deed in lieu of foreclosure, or in the event of exercise of the power of sale under, any mortgage and/or deed of trust made by Agency covering the Site, or. subject to Section 1311.2 of this Lease, in the event Agency sells, conveys or otherwise transfers its interest in the Site, Lessee hereby attoms to, and covenants and agrees to execute an instrument in writing reasonably satisfactory to the new owner INTERIM SHORT-TERM LEASE (November 5.1998) -5 a- whereby Lessee attoms to the successor in interest and recognizes the successor as the Agency under this Lease. 3. Subordination. Lessee agrees that this Lease and the Parking Easement Agreement shall, at the request of the Agency, be subordinate to any mortgages or deeds of trust that may hereafter be placed upon the fee of the Site by Agency and to any and all advances to be made thereunder, and to the interest thereon, and all renewals, replacements and extensions thereof, provided the mortgagees or beneficiaries named in said mortgages or trust deeds shall agree to recognize the interest of Lessee Under this Lease and the Parking Easement Agreement In the event of foreclosure, in accordance with the terms of this Lease and the Parking Easement Agreement. Lessee also agrees that in the event Agency and any mortgagee or beneficiary elect to have this Lease or the Parking Easement Agreement prior to such mortgage or deed of trust, and upon notification by Agency or such mortgagee or beneficiary to Lessee to that effect, this Lease or the Parking Easement Agreement, as applicable, shall be deemed prior in lien to such mortgage or deed of trust,whether this Lease is dated prior to or subsequent to the date of said mortgage or deed of trust. Lessee agrees that upon the request of Agency, or any mortgagee or beneficiary, Lessee shall execute whatever instruments may be required to carry out the intent of this section. Q. 1§ 1317] Approvals Except as expressly provided otherwise in this Lease,approvals required of Agency or Developer shall not be unreasonably withheld, conditioned or delayed. REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH (Agency) Date: i q By: _ C:Q L—� 'rye five Drumm- APPROVED AS TO FORM AND LEGALITY: Agency General Counsel By. INTERIM SHORT-TERM LEASE (November 5. 1998) -5 9- THE WATERFRONT HOTEL, LLC (Lessee) By: Waterfront Development, Inc.,a California corporation, Manager Date: , S-1 6 -q9 By: Ro ert L. Mayer Chairman Date: ��t.x `. 1I By: Stephen one President and Secretary k:1cg1,hb1wNntednA INTERIM SHORT-TERM LEASE (November S, 1998) EXHIBIT JA " MAP OF SITE \ \ N40 INTERIM smiu TFRM Lmr ' IN, �9 LOT 1 v TR. No. I J045 or LC� O'Ppo s 0 MMB 628 PC 46 c� y .�° NUMBER DIRECTION DISTANCE L 1 S 48'43 2 f" E 25.00' h L2 N 4 f'16'J9" E 9.13' LJ S 077S1'41" E 31.85' P.O.B. L4 S 81'1721" W 42.88' �+ L5 N 53'05'40" W 86.78' L6 N 58'06'24" W 40.5J' \ NUMBER DELTA RADIUS LENGTH \ Cl 03"11'53" f 140.00' 63 63' C2 05'00'44" 60.00' 5.25' j `rsp C3 05'00'44" 60.00' 5.25' ��� ooQ� LOT 2 OF h \ .o TEMTAC MAP hh % No. 15535 5 kQ \ �1- L4 / 1" = 100' M.`PROJECTS\252\064kLOT2-EX EXHIBIT "B" LEGAL DESCRIPTION OF SITE INTERIM SNORT-TERM LEASE ALL THAT CERTAIN LAND IN THE CITY OF HUNTINGTON BEACH, COUNTY OF ORANGE, STATE OF CALIFORAM, DESCRIBED AS FOLLOWS. THAT PORTION OF SECTION 14, TOWNSHIP 6 SOUTH, RANGE 11 WEST, SAN BERNARDINO 64SE AND MERIDLAN, IN THE RANCHO LOS BOLSAS, AS PER MAP FILED IN BOOK 51, PAGE 14 OF MISCELLANEOUS MAPS IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, DESCRIBED AS FOLLOWS: BEGINNING AT THE MOST SOUTHERLY CORNER OF LOT 1, TRACT NO. 13045, PER MAP RECORDED MARCH 21, 1969, IN MISCELLANEOUS MAP BOOK 628, PAGES 46 AND 47, IN THE OFFICE OF THE RECORDER OF SAID COUNTY; SAID POINT BEING ON THE NORTHEASTERLY RIGHT OF WAY OF PACIFIC COAST HIGHWAY, AS SHOWN ON SAID MAP; THENCE ALONG THE SOUTHEASTERLY LINE OF S41D LOT 1 NORTH 36'54 20' EAST 360.46 FEET TO THE MOST EASTERLY CORNER OF S41D LOT 1, SAID POINT ALSO BEING ON THE SOUTHWESTERLY RIGHT OF WAY DEDICATED PER DOCUMENT RECORDED SEPTEMBER 1, 1995, AS INSTRUMENT NO. 95-0384749 OF OFFICIAL RECORDS OF S410 COUNTY; THENCE ALONG SAID SOUTHWESTERLY RIGHT OF RAY SOUTH 45' 43' 210 EAST 25.00 FEET TO THE MOST SOUTHERLY CORNER OF SAID RIGHT OF WAY; THENCE ALONG THE SOUTHEASTERLY LINE OF SAID RIGHT OF WAY NORTH 41' 16' 39' EAST 9.13 FEET TO A POINT ON A NON-TANGENT CURVE, CONCAVE NORTHEASTERLY, HAVING A RADIUS OF 1140.00 FEET, A LINE RADIAL TO SAID POINT BEARS SOUTH 36' 04' 08" WEST, THENCE ALONG SAID CURVE 63.63 FEET THROUGH A CENTRAL ANGLE OF 03' 11' 53; THENCE TANGENT TO SAID CURVE' SOUTH 57' 07' 45" EAST 299.52 FEET; THENCE SOUTH 07' 51' 41"' EAST 31.85 FEET; THENCE SOUTH 36- 64' 41" K'EST 334.17 FEET; THENCE SOUTH 81' 17' 21" WEST 42.88 FEET. THENCE NORTH 53' 05' 40" WEST 86.78 FEET TO THE BEGINNING OF A CURVE, CONCAVE SOUTHWESTERLY, HAVING A RADIUS OF 60.00 FEET; THENCE ALONG SAID CURVE 5.25 FEET THROUGH A CENTRAL ANGLE OF 05' 00' 44 THENCE TANGENT TO SNO CURVE NORTH 58' 06' 24 ' WEST 40.53 FEET TO THE BEGINNING OF A CURVE. CONCAVE NORTHEASTERLY. HAVING A RADIUS OF 60.00 FEET; THENCE ALONG SAID CURVE 5.25 FEET THROUGH A CENTRAL ANGLE OF 05' 00' 440 TO A POINT ON SAID NORTHEASTERLY RIGHT OF WAY OF PACIFIC COAST HIGHWAY; THENCE ALONG SAID NORTHEASTERLY RIGHT OF WAY NORTH 53' 05' 40" WEST 242.73 FEET TO THE POINT OF BEGINNING. AS SHOWN ON EXHIBIT 'A" ATTACHED HERETO AND BY THIS REFERENCE MADE A PART HEREOF. THE DESCRIBED LAND CONSISTS OF LOT 2 OF TENTATIVE TRACT MAP No. 15535. DATED THIS,eG,1 d DAY OF „ /_ �_. 1999 %.AND SCi MICHAEL SIMON P.L.S. 6034 * LS No. 60 34 LICENSE EXPIRES 0613%1 Exp. 6-30-01 s� s F OF CAVE RECORDING REQUESTED BY: NWIEN RECORDED MAIL TO: RUTAN & TUCKER P.O. Box 1950 Costa Mesa, CA 92628-1950 Attn: Jeffrey M. Oderman, Esq. Space above this line for Recorder's use only PARKING EASEME\"T AGREEMENT ATTACHMENT NO. C THIS PARKING EASEMENT AGREEMENT (this "Agreement") is made as of this day of by and between THE REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH,a public body,corporate and politic("Agency"),THE WATERFRONT HOTEL, LLC, a California limited liability company ("Waterfront Hotel"), and MAYER FINANCIAL, LTD., a California limited partnership ("Mayer Financial") (collectively, the "Parties"). RECITALS A. Agency is the fee owner of certain real property located in the County of Orange, State of California, a portion of which is more particularly described on Exhibit "A" attached hereto (the "Parcel C Property") and that certain real property located in the County of Orange, State of California, more particularly described on Exhibit "B" attached hereto (the "Waterfront Hotel Property"). The Parcel C Property and the Waterfront Hotel Property are sometimes collectively referred to herein as the "Subject Property". B. Waterfront Hotel holds a leasehold estate in the Waterfront Hotel Property created by that certain Lease dated April 28, 1989, between the Agency and the Waterfront Hotel's predecessor-in-interest, Waterfront Construction fit, as amended, a memorandum of which was recorded on April 28, 1989, as Instrument No. 89-225546 in the Official Records of the Orange County Recorder ("Waterfront Hotel Lease"). The Waterfront Hotel Lease expires by its terms on December 31, 2086. The term "Waterfront Hotel Lease" as used herein shall include any modification of the Waterfront Hotel Lease hereafter entered into. C. Agency and Mayer Financial have entered into an Amended and Restated Disposition and Development Agreement, dated September 14, 1998, for the disposition of the Site described therein by Agency to Mayer Financial (the "Amended and Restated DDA") and an Interim Short-Term Lease dated September 14, 1998, for the Parcel C Property. The parties intend that this Agreement shall be recorded and shall become effective upon termination or expiration of the Interim Short-Term Lease and only if the long-term leasehold interest to the PARKING EASEMENT AGREEMENT ATTACHMENT NO. C 2n/011&0 W3r3Zs4N9.z 43/091" PAGE I Parcel C Property is not conveyed by Agency to Mayer Financial in accordance with Sections 201, 202, 203.3, and 204-212 of said Amended and Restated DDA. D. Robert L. Mayer, as Trustee of the Robert L. Mayer Trust of 1982, dated June 22, 1982,as amended, the predecessor-in-interest to Mayer Financial,and Waterfront Hotel previously entered into that certain Parking and Ancillary Use Easement dated as of August 30, 1995 and recorded September 1, 1995 as Instrument No. 95-0384751 ("Mayer Financial Parking Easement"). The Agency was not a parry to the Mayer Financial Parking Easement, Mayer Financial and Waterfront Hotel agree that the Mayer Financial Parking Easement shall terminate and shall be of no further force or effect upon the effective date of this Agreement. E. The Parties desire to enter into this Agreement so that in the absence of a long- term lease of Parcel C by Agency to Mayer Financial pursuant to Sections 201, 202, 203.3, and 204-212 of the Amended and Restated DDA, the easements described herein shall be provided for until the expiration or earlier termination of the Waterfront Hotel Lease. NOW, THEREFORE, incorporating the foregoing recitals and in consideration of the mutual covenants and conditions contained herein and for other good and valuable consideration, receipt of which is hereby acknowledged, Agency, Waterfront Hotel and Mayer Financial covenant and declare that their respective interests in the Subject Property shall be held and conveyed subject to the covenants, conditions and easements set forth below, which covenants, conditions and easements are hereby declared to be for the benefit of the Parties' respective interests in the Subject Property and the interests of the Parties' respective successors and assigns, and the Parties further agree as follows: I. Consideration. A portion of the consideration being given to the Agency for the grant of the Parking Easement granted pursuant to Paragraph 5 hereof is comprised of the obligations assumed by Mayer Financial under the Amended and Restated DDA. 2. Term of Easement. This Agreement shah be effective immediately; however, the term of the Parking Easement granted herein shall not commence until the termination of the Interim Short Term Lease dated September 14, 1998, as to Parcel C without a long-term lease of Parcel C from Agency to Mayer Financial occurring pursuant to Sections 201,202, 203.3 and 204-212 of the Amended and Restated DDA ("Commencement Date") and this Agreement shall expire upon the expiration or earlier termination of the Waterfront Hotel Lease (the "Parking Easement Term"), unless earlier terminated pursuant to the terms of this Agreement. Mayer Financial agrees not to encumber the Parcel C Property prior to the Commencement Date of the Parking Easement Term in such manner as would prevent the exercise by Waterfront Hotel of its rights to use the Parking Easement in the manner set forth herein. 3. Relationship,to Mayer Financial Parking Easement. The Agency is not a party to the Mayer Financial Parking Easement and shall not be bound by the Mayer Financial Parking Easement. The Mayer Financial Parking Easement shall continue to govern the rights and obligations of Waterfront Hotel and Mayer Financial prior to the Commencement Date subject to and in accordance with its terms. Following the Commencement Date, this Agreement shall PARKING EASEMENT AGREEMENT ATTACHMENT NO. C 22MISMO- /3244Pt9.2 •oar /" PAGE 2 govern and control and the Mayer Financial Parking Easement shall be of no Amher force and effect. .4. elation to Fire I_a a Access - sP ent. The "Fire Lane Access Fasemenr- is that certain Reciprocal Fire Lane Access Easement Agreement dated as of August 30, 1995 and recorded September 1, 1995 as Instrument No. 95-0384750,executed by the Agency, Mayer Financial and Waterfront Hotel. Waterfront Hotel, the Agency and Mayer Financial agree that the rights and obligations created under this Agreement are independent of the rights and obligations created under the Fire Lane Access Fasement and the Fire Lane Access Easement shall continue in full force and effect subject to and in accordance with its terms and shall not be affected or diminished in any respect by reason of this Agreement. 5. Granr of Parking and Ancillaly Us6 Easement. (a) Agency, for itself and its respective successors and assigns, hereby grants to Waterfront Hotel, its tenants, subtenants, successors, assigns, agents, licensees and invitees (including employees and guests), for the benefit of the Waterfront Hotel Property, a nonexclusive easement appurtenant to'the Waterfront Hotel Property and right-of-way in, upon, over, and µrider the Parcel C Property (and all improvements located thereon) for the purpose of providing motor vehicle parking(-Parking Use"')in accordance with and subject to terms and conditions of this Agreemenr. The casement for the Parking Uses and the Ancillary Uses shall be referred to herein as the -Parking Easement." (b) The term "Minimum Spaces' as used herein shall mean one hundred fifty (150) parking spaces or such Iesser number as requested by the Waterfront Hotel and approved by the Waterfront Mortgagee (which number shall not be less than the minimum number of spaces required by the City for parking for the Waterfront Hotel Property). As a matter not w concern Agency, Waterfront Hotel intends and believes that the Parcel C Property is sufficient to accommodate parking for one hundred fifty (150) automobiles in addition to the uses to be implemented in connection with the redevelopment of Parcel C. The Parking Easement is being granted by Agency AS-IS and all cost, risk and expense to create parking sufficien: for the Minimum Spaces on the Parcel C Propeny shall be borne by Waterfront Hotel. Waterfront Hotel and Mayer Financial agree that the Agency has not made, and the Agency hereby expressly disclaims, all representations and warranties regarding the Parcel CProperly, including, without limitation, disclaimer of all representations and warranties rrgardir.g i) the condition of the Parcel C Property; (ii) the adequacy of Parcel C Property for the intended use; and (iii) tfie sufficiency of the availability of parking spaces to accommodate the Minimum Spaces willtin the Parcel C Property. (c) In no event shall the use of the Parking Easement interfere with the use of the Fire lane Access Easement and no barriers shall be erected within the portion of the Parking Easement on which the Firs Lane Access Easement is located. (d) The Parking Easement is granted together with, and the term 'Parking Easement"is deemed to include: (0 the right to enter upon and to pass and repass over and along the Parcel C Property for vehicular and pedestrian ingress and egress hereto; (ii) de rights, subject to Waterfront Hotel securing cecessary permit from the City, to construct, PARKING EASBIENT AGREEMENT ATTACHMENT NO. C nsrouuuwm� u•oa9.x ,o,rl�sv PAGE 3 maintain and repair parking improvements on the Parcel C Property including, but not limited to, paving, striping, curbs, sidewalks, walls, fences, landscaping, lighting and parking control equipment. No use other than those provided for in this Paragraph 5 shaIl be made of the Parcel C Property by Waterfront Hotel. (e) Waterfront Hotel understands and agrees that notwithstanding the grant by the Agency of the Parking Easement over the Parcel C Property, Waterfront Hotel shall be required to obtain all necessary permits and approvals from the City for the Improvement of the Parcel C Property for puking purposes prior to the time any such use commences and the use of the Parking Area shall be subject to such rules and regulations as may be imposed by the City on similar such uses, and that the construction of the parking facility shall be scheduled so as not to interfere with the timely construction of Parcel C improvements by the Future Developer. The Agency agrees to cooperate with Waterfront Hotel in obtaining such permits and approvals, at no cost and expense to the Agency. (1) Waterfront Hotel shall have the right within the Parcel C Property, subject to Waterfront Hotel securing necessary permits from the City, to install and maintain electric, telephone, water, drainage facilities and other utilities as reasonably necessary to serve the parking facilities and Ancillary Uses to be located on the Parking Easement, together with the incidental right of access to same and the right to grant same to public utilities and other parties providing such services, provided that any such use shall not unreasonably interfere with the use of the Fire Lane Access Easement. The foregoing grant and reservation of utility easements shall include the right of each party and the utility companies or other parties providing such services to enter upon the Waterfront Hotel Property and the Parcel C Property to the extent necessary to repair, replace and generally maintain the connections, Iines or facilities located within the Parking Easement, provided that each such entering party shall not unreasonably interfere with the use and enjoyment of such property and shall diligently and promptly repair any damage caused by such entry, maintenance andlor repair as promptly as possible following completion of such work. b. Compensation for Parking Easement Commencing on the Commencement Date and continuing for the duration of the Parking Easement Term, Waterfront Hotel shall pay to the Agency compensation for the use of the Parking Easement in an amount equal to the rental per square foot then being paid by Waterfront Iiotel under the Waterfront Hotel Lease, multiplied by the square footage within the Parcel C Property ("Parking Easement Compensation"), which Parking Easement Compensation shall be payable at the same time and in the same manner, and subject to adjustment in the same manner, as the base rental payable under the Waterfront Hotel Lease. 7. Insurance. At all times following the Commencement Date, Waterfront Hotel shall maintain and provide to the Agency, the City and, if applicable, the Future Developer (as defined below), evidence of public liability insurance naming the Agency, the City, the Future Developer(if applicable) and Waterfront Hotel as co-insureds (and, if requested, the Waterfront Mortgagee and the Future Developer Mortgagee as additional insureds), covering the Parcel C PARKING EASEMENT AGREEMENT ATTACHMENT NO. C W1015MOOQ3r324(99.2 03059 PAGE: 4 Property, subject to the same requirements for insurance coverage as provided under the Waterfront Hotel Lease. 8. Maintenance of Parcel C Property; Compliance with Law. From and after the Commencement Date, Waterfront Hotel shall, at Waterfront Hotel's sole cost and expense, (i) maintain and repair the Parcel C Property,and all improvements and facilities thereon, in a good and orderly condition, including such trash pickup, sweeping, cleaning, restriping, repaving and other work as necessary in order to make use of the Parking Easement; and (ii) comply with all laws, regulations, rules, ordinances, conditions and recorded restrictions, and procure and maintain all permits and approvals applicable to the Parcel C Property, and the use and operation thereof. 9. Utilities Servicing_Parcel C Property. Subject to the provisions hereof regarding the Future Parking Facility (as defined below), Waterfront Hotel shall pay all utility costs associated with Waterfront Hotel's use of the Parcel C Property. 10. Indemnity. Waterfront Hotel hereby agrees to indemnify, defend, and hold the Agency, the City, and (if applicable) the Future Developer free and harmless from and against any and all losses, claims, demands, liens, causes of action, defenses, damages, costs and expenses of any kind or nature, including, without limitation, attorneys' fees and costs, relating to or arising out of the use of the Parking Easement and/or the Parcel C Property by Waterfront Hotel, its tenants, employees, guests, invitees, licensees or agents, and third parties contracting with and/or otherwise claiming under or through Waterfront Hotel, excluding, however, any such losses, claims, demands, liens, causes of action, defenses, damages, costs or expenses arising out of or relating to the negligence or willful acts or omissions of the Agency, the City, and (if applicable) the Future Developer or their respective agents or employees and third parties contracting with and/or otherwise claiming under or through the Agency, the City, and/or (if applicable) Future Developer. 11. Construction of Parking Facility. In the event that, following the Commencement Date, the Agency and/or the developer, if any, of the Parcel C Property following expiration or earlier termination of the Interim Short-Term tease as to Parcel C without a long-term lease of Parcel C by Agency to Mayer Financial pursuant to the Amended and Restated DDA (the "Future Developer") determine that either wishes to develop or cause to be developed the Parcel C Property in a manner inconsistent with the use thereof as a Parking Easement for the benefit of Waterfront Hotel ("Future Development"), then, subject to the remaining provisions of this Paragraph 11, Agency and/or the Future Developer shall, at Waterfront Hotel's sole cost and expense, cause the Minimum Spaces to be included for the benefit of Waterfront Hotel within a parking facility constructed as part of such Future Development (the "Future Parking Facility"). It is contemplated that the Future Parking Facility will be a part of one or more of the buildings within the Future Development. (a) The Agency, Future Developer (if any) and Waterfront Hotel shall have the right to approve the location and configuration of the Future Parking Facility. Waterfront Hotel's approval shall not be unreasonably withheld and shall be limited to confirming that: (i) PARKING EASEMENT AGREEMENT ATTACHMENT NO. C 423 015No-CM3/3244N9.z NUM" PAGE 5 the location of the Future Parking Facility and access thereto from the Waterfront Hotel Property is such that it would not be unreasonable to expect that non-handicapped pedestrians would walk safely and not be unduly inconvenienced by walking from the Future Parking Facility to and from the hotel on the Waterfront Hotel Property for parking purposes; and (ii) the Minimum Spaces to be provided within the Future Parking Facility for the benefit of Waterfront Hotel shall be grouped together within the Future Parking Facility to the extent reasonably feasible within the framework of the future development of Parcel C as approved by Agency and City. (b) The total number of parking spaces Iocated within the Future Parking Facility shall not be less than the Minimum Spaces for the benefit of the Waterfront Hotel in addition to such number of parking spaces as is necessary for the uses included in the Future Development. Reasonable means of access for Waterfront Hotel to the Future Parking Facility and the Minimum Spaces to be provided hereunder for the benefit of Waterfront Hotel shall be provided in the design of the Future Development and the Future Parking Facility (including incidental rights of ingress and egress over such portions of the Parcel C Property as are designated for such purposes), which means of access shall be subject to the approval of the Agency, the Future Developer and Waterfront Hotel. Waterfront Hotel's approval shall not be unreasonably withheld (subject to the parameters provided for in Paragraph II(b) above), and such means of access shall be deemed to be part of the Parking Easement granted hereunder. (c) As of the date the Future Parking Facility is competed and made available for use by and for Waterfront Hotel, its customers and invitees ("Parking Facility Commencement Date"), the Parking Easement (excluding the Ancillary Uses, which shall have been terminated pursuant to Paragraph I I(a)) shall be deemed located on and within the Future Parking Facility, together with the reasonable incidental rights of ingress and egress for access thereto as described in the foregoing Paragraph 11(b). (d) At least thirty (30) days prior to the recordation of construction financing against Parcel C for the construction of the Parking Facility, Waterfront Hotel shall deposit with the Agency pursuant to escrow instructions to be entered into by and between the parties consistent with this Agreement, an amount reasonably determined by the Agency as the estimated cost of constructing the extra number of Minimum Spaces for the benefit of Waterfront Hotel, including accessways and other necessary appurtenances, and all planning, design, engineering and permitting costs and expenses therefor. Upon the completion of the Parking Facility, Waterfront Hotel shall be provided with an itemized cost statement of such costs and expenses, and shall within thirty (30)days of receipt thereof pay to Agency the amount by which the finally itemized costs and expenses exceeds Waterfront Hotel's said deposit, or receive from Agency the amount by which Waterfront Hotel's deposit exceeds such finally itemized costs and expenses. Commencing on a date selected by Agency not later than one year prior to the estimated date for commencement of construction of the Parking Facility, Agency and Waterfront Hotel shall meet and attempt to agree on the Parking Facility costs. (e) In addition to the Parking Easement Compensation, commencing as of the Parking Facility Commencement Date and continuing for the remainder of the Parking Easement Term, Waterfront Hotel shall contribute on an annual basis an amount (the "Parking PARKING EASEMENT AGREEMENT ATTACHMENT NO. C 2231015300-=313244W9.2 aW/M/W PAGE 6 Maintenance Share") to the Agency or (as directed by the Agency) the Future Developer, for the purpose of defraying a fair share of the expenses for utilities, lighting and ventilation, sweeping and cleaning of the Future Parking Facility, and repairs to the Parking Facility and parking control equipment for the parking spaces within the Future Parking Facility, including reasonable reserves for capital expenses and repairs associated with the Future Parking Facility, and the property insurance and liability insurance attributable to the Future Parking Facility, and other reasonable operating and maintenance and repair costs and expenses("Parking Maintenance Expenses"). The Parking Maintenance Share payable during each calendar year shall be equal to the amount determined by dividing the number of Minimum Spaces actually included in the Future Parking Facility at the request of and for the benefit of Waterfront Hotel) by the total number of parking spaces included in the Future Parking Facility, and multiplying that quotient by the actual Parking Maintenance expenses incurred during the preceding calendar year. The Parking Maintenance Share payable during each calendar year shall be paid within thirty (30) days following receipt of a statement setting forth the amount of the Parking Maintenance Expenses incurred for the preceding calendar year, together with reasonable documentation supporting the amount of said Parking Maintenan--e Expenses. Following the Parking Facility Commencement Date, Waterfront Hotel's obligations under Paragraphs 7, 8 and 9 of thil Agreement shall be satisfied by contribution of the Parking Maintenance Share. The Agency and/or the Future Developer shall have the right to require Waterfront hotel to pay quarterly installments of its Parking Maintenance Share in advance based on reasonably estimated Parking Maintenance Expenses, with annual adjustments to the actual Parking Maintenance Expenses incurred. (f) The Future Developer's obligation to operate, repair and maintain the Minimum Spaces to be provided hereunder for the benefit of Waterfront Hotel within the Future Parking Facility and Waterfront Hotel's rights and obligations with respect thereto shall be embodied in a form of Declaration of Easement and Maintenance Agreement in form customary in Southern California for properties of similar shared usage and otherwise satisfactory to Waterfront Hotel, the Agency, the Future Developer, the Waterfront Mortgagee and the Future Developer Mortgagee (the "Parking Declaration"). The Parking Declaration shall include (i) a grant to Waterfront Hotel of the easement rights created pursuant to this Agreement with respect to the Future Parking Facility; (ii) reasonable safeguards regarding the nature of the Parking Maintenance Expenses and the right of Waterfront Hotel to audit same; (iii) contribution to insurance for the Parking Facility as a part of the Parking Maintenance Expenses and other insurance, reconstruction and condemnation provisions as would be customarily included in such documents; (iv) default, notice and cure rights, and remedies therefor, with respect to the obligations and rights of both parties to the Parking Declaration which are substantially similar to the default, notice, cure rights and remedies provided for under this Agreement; (v)lien rights in the event of breach by either party to the Parking Declaration not cured within the time periods permitted therein(provided that any such Iien rights shall be subordinate to the interests and lien of the Future Developer Mortgagee and the Waterfront Mortgagee); (vi) provisions reasonably acceptable to Waterfront Hotel and the Waterfront Mortgagee regarding their protections in the event of damage to, destruction of or condemnation of all or any portion of the Future Parking Facility; (vii) mortgagee protection provisions contained in Paragraph 17 of this Agreement for the benefit of the Future Developer Mortgagee and the Waterfront PARKING EASEMENT AGREEMENT ATTACHMENT NO. C. 2131015 a000313z4-fNM .03/W/S4 PAGE: 7 Mortgagee; (viii)reciprocal indemnity provisions similar in substance and effect to the indemnity provisions set forth in Paragraph 10 of this Agreement; (ix) rules and regulations respecting the Future Parking Facility and the manner of use thereof; and (x) such other provisions as are customarily found in similar such documents providing for similar shared use of a parking facility. (g) As a condition to Waterfront Hotel and the Agency and/or Future Developer entering into the Parking Declaration, (i) the Waterfront Mortgage shall be permitted to encumber Waterfront Hotel's interest in and to the Parking Declaration and the easements created thereunder and shall subordinate the lien of the Waterfront Deed of Trust thereto; and (ii) any lender with a deed of trust recorded against the Future Developer's interest in and to the portion of the Parcel C Property on which the Parking Easement and Future Parking Facility is located ("Future Developer Mortgagee") shall be permitted to encumber the Future Developer's interest in and to the'Parking Declaration and the easements created thereunder and shall subordinate the lien of its deed of trust thereto. (h) Following the date that all of the following has occurred, this Agreement shall terminate and be of no further force and effect: (i) the Parking Facility Commencement Date has occurred; (ii) the Parking Declaration has been recorded; and (iii) the protections and subordinations contemplated in Paragraph 11(g) above have been completed. 12. Further Cooperation. Each party hereto agrees to execute, have notarized if appropriate, and deliver to the other party promptly upon request of the other party any instrument requested by such other party in order to implement the terms of this Agreement. Without limiting the generality of the foregoing, in the event that prior to the Commencement Date, a parking facility is constructed (with all necessary approvals by the Agency and the City) which provides not less than the Minimum Spaces for the benefit of the Waterfront Hotel Property and is approved by Waterfront Hotel, the Waterfront Mortgagee and the Agency, then Agency and Waterfront Hotel agree to cooperate, subject to the approval of the Waterfront Mortgagee, executing such documents as necessary to terminate and replace this Agreement with an agreement granting an easement in favor of Waterfront Hotel over such parking facility for the then remaining Parking Easement Term, such replacement parking easement and agreement to contain substantially the same terms and conditions as provided for herein and as contemplated to be provided in the Parking Declaration for the Future Parking Facility under Paragraph I I(f) above. 13. Waterfront Hotel's Rieht to Terminate Parkin Ea�ent. Waterfront Hotel may, at any time upon written notice given to the Agency and (if applicable) the Future Developer, terminate the Parking Easement; provided, however, that (i) any such termination shall be subject to the prior written consent of the Waterfront Mortgagee; (ii) any notice of termination shall be given not later than the date which is thirty (30)days following the determination of the payment required to be made by Waterfront Hotel for its portion of the cost of the Future Parking Facility pursuant to Paragraph 11(d) above; and (iii) as a condition to any such termination, Waterfront Hotel shall reimburse the Agency for any engineering, design and construction costs incurred by Agency in connection with accommodating the Minimum Spaces PARKING EASEMENT AGREEMENT ATTACHMENT NO. C 22310158W-MY3244049.2 AVOW" PAGE 8 for the benefit of Waterfront Hotel within the Future Parking Facility as contemplated hereby. Any such termination shall be effective thirty (30) days after receipt of such written notice by the Agency and (if applicable) the Future Developer. 14. No Reimbursement to Waterfront Hotel. Notwithstanding anything to the contrary in this Agreement, Waterfront Hotel shall not be entitled to any reimbursement from the Agency or any Future Developer for any costs incurred by Waterfront Hotel in connection with (i) the use and improvement of the Parcel C Property and the Parking Easement granted hereby; (ii) the Future Parking Facility as contemplated in Paragraph 11 of this Agreement; or (iii) the termination of this Agreement by Waterfront Hotel as provided in Paragraph 13 above. 15. Binding Covenants. Successors. (a) Subject to Paragraph 15(c)hereof,Waterfront Hotel and the Agency intend that the grants, covenants, conditions, and restrictions contained herein shall run with the Parcel C Property and the leasehold estate created under the Waterfront Hotel Lease for the benefit of the owners, occupants and tenants of the Waterfront Hotel Property, and shall bind and inure to the benefit of Waterfront Hotel and Agency and their respective tenants, subtenants, heirs, personal representatives, successors, assigns and any and all successive leasehold owners of the Waterfront Hotel Property and all successive owners of the Parcel C Property. (b) This Agreement shall be recorded in the Office of the Recorder of the County of Orange and shall serve as notice to all successive owners that the Parcel C Property and the Waterfront Property shall be benefitted and/or restricted in the manner herein described. The Parking Easement granted pursuant to the provisions hereof is expressly for the benefit of the Waterfront Hotel Property, and the Waterfront Hotel Property shall be the dominant estate and the Parcel C Property shall be the servient estate. (c) Notwithstanding anything to the contrary in Paragraphs I5(a) and 15(b), if Waterfront Hotel sells or assigns its leasehold interest in any portion of the Waterfront Hotel Property, Waterfront Notel shall be automatically freed and relieved, and its transferee shall be automatically burdened, from and after the date of such sale or assignment, with respect to all liabilities regarding the performance of any agreements of obligations on the part of Waterfront Hotel contained in this Agreement thereafter to be performed with respect to the Waterfront Hotel Property, it being intended hereby that the agreement and obligations contained in this instrument on the part of Waterfront Hotel shall be binding on Waterfront Hotel only during its ownership of the leasehold interest in the Waterfront Hotel Property, but that Waterfront Hotel shall remain liable for any obligations incurred prior to the effective date of such sale or assignment. 16. Defaults. Except as provided in this Paragraph 16, it is expressly agreed that no breach of this Agreement shall entitle any party to cancel, rescind or otherwise terminate this Agreement or the Parking Easement granted hereunder. A breach, default or "Event of Default," as used in this Agreement, shall mean and include (i) the failure by Waterfront Hotel to timely make any payment required to be made by Waterfront Hotel hereunder, as and when PARKING EASEMENT AGREEMENT ATTACHMENT NO. C n3/01580UW3►3:4 049.z OWN" PACE 9 f due, and the continuance of such failure for a period of fifteen (15) days after the Agency shall have given Waterfront Hotel written notice specifying same; or (ii) the failure of Waterfront Hotel to perform any term, condition, covenant or agreement required to be performed by Waterfront Hotel under this Agreement, except as covered in the foregoing (i), and the continuation of such failure for a period of thirty (30) days after the Agency shall have given Waterfront Hotel written notice specifying the failure to perform; or (iii) in case of a situation in which a default covered in the foregoing (ii)that cannot reasonably be cured within thirty (30) days, the failure of Waterfront Hotel to promptly, within thirty (30) days after receipt of such notice, commence to remedy the situation by a means that can reasonably be expected to remedy the situation within a reasonable period of time, and diligently pursue the same to completion. Subject to Paragraph 17 below, in the Event of Default by Waterfront Hotel, the Agency shall have the right to terminate this Agreement and the Parking Easement granted hereby. Nothing in the foregoing shall affect or limit, in any manner, any other right or remedies which either party may have hereunder, or at law or in equity by reason of any breach of this Agreement, including, but not limited to, damages and/or injunctive relief. 17. Mortgage Protection. (a) Agency and Waterfront Hotel agree to provide for reasonable mortgagee protection provisions of the kind typically entered into in connection with development of a comparable nature to the Waterfront Hotel and the Parcel C development. Such provision shall be agreed to in consultation with the Future Developer with due regard for the need of Agency and Future Developer to obtain financing for the future redevelopment of Parcel C. Waterfront Hotel agrees to not unreasonably withhold approval of amendments to the provisions of this Agreement as may be necessary for such purposes. (b) Subject to prompt compliance by the Waterfront Mortgagee with all obligations imposed on the Waterfront Mortgagee by this Agreement and the Waterfront Hotel Lease, during the continuance of any Leasehold Mortgage and until such time as the lien of any Leasehold Mortgage has been extinguished: (i) The Waterfront Mortgagee shall have the right, but not the obligations, at any time prior to termination of this Agreement and the Parking Easement granted hereby, to make all of the payments required to be made by Waterfront Hotel hereunder or under the Parking Declaration, as applicable, to effect any insurance, to pay any taxes and assessments, to make any repairs and improvements, and to do any act or thing which may be necessary and proper to be done in the performance and observance of the agreements, covenants, and conditions hereof to prevent termination of this Agreement and the Parking Easement granted hereby. All payments so made and all things so done and performance by the Waterfront Mortgagee shall be as effective to prevent a termination of this Agreement and the Parking Easement granted hereby as the same would have been if made, done and performed by the Waterfront Hotel instead of by the Waterfront Mortgagee. PARKING EASEMENT AGREEMENT ATTACHMENT NO. C rnm,sMunu Wr 9.2 JM)19 PAGE 10 f f (ii) Should any Event of Default under this Agreement occur, Waterfront Mortgage shall have sixty (60) days after receipt of written notice from the Agency setting forth the nature of;such Event of Default, and, if the Event of Default is such that possession of the Waterfront Hotel Property and/or the Parcel C Property may be reasonably necessary to remedy any such Event of Default, a reasonable time after the expiration of such sixty (60) days period within which to remedy such Event of Default, provided that (A) Waterfront Mortgagee shall have fully cured any default in the payment of any monetary obligations of Waterfront Hotel under this Agreement within such sixty (60) day period and shall have continued to pay currently such monetary obligations as and when same are due; and (B) Waterfront Mortgagee shall have acquired Waterfront Hotel's interest in the Parking Easement granted hereby or commenced foreclosure or other appropriate proceedings in the nature thereof within such period, or prior thereto, and is diligently prosecuting any such proceedings. All rights of the Agency to terminate this Agreement and the Parking Easement granted hereby as the result of the occurrence of any such Event of Default shall be subject to, and conditioned upon, the Agency first giving Waterfront Mortgagee written notice of such event of default as aforesaid and Waterfront Mortgagee having failed to remedy such Event of Default or acquire Waterfront Hotel's interest in the Packing Easement granted hereby or commence foreclosure or other appropriate proceedings in the nature thereof, and diligently conclude such proceedings, as set forth in and within the time specified by this subparagraph (ii). (iii) Any Event of Default under this Agreement which by virtue of the nature thereof cannot be remedied by Waterfront Mortgagee shall be deemed to be remedied if(A) within sixty (60) days after receiving written notice from the Agency setting forth the nature of such Event of Default, or prior thereto, Waterfront Mortgagee shall have acquired Waterfront Hotel's interest in the Parking Easement granted hereby or shall have commenced foreclosure or other appropriate proceedings in the nature thereof; (B) Waterfront Mortgagee shall diligently prosecute any such proceedings to completion; (C) Waterfront Mortgagee shall have fully cured any default in the payment of any monetary obligations of Waterfront Hotel under this Agreement which do not require possession of the Waterfront Hotel Property or the Parcel C Property within such sixty (60) day period and shall thereafter continue to faithfully perform all such monetary obligations which do not require possession of the Waterfront Hotel Property or the Parcel C Property; and (D) after gaining possession of the Waterfront Hotel Property or the Parcel C Property pursuant to the terms and conditions of this Agreement, Waterfront Mortgagee performs all other obligations of Waterfront Hotel under this Agreement as and when the same are due, including without limitation, curing said Event of Default. (iv) In addition to the rights set forth in subparagraph (iii) above, Waterfront Mortgagee shall have the option, to be exercised by written notice to PARKING EASEMENT AGREEMENT ATTACHMENT NO. C M.015800-oo 1324aoa9.s .03,Wl" PAGE 11 1 the Agency given within the aforesaid sixty (60) day period, to obtain a new Parking Easement ("Replacement Parking Easement") upon the following terms and conditions: (A) such Replacement Parking Easement shall be effective as of the date of termination of the Parking Easement granted hereby and shall be for the remainder of the term of the Parking Easement granted hereby, and shall provide for the same payments required to be made by Waterfront Hotel hereunder or under the Parking Declaration, as applicable, and with the same terms, covenants and conditions as are set forth in this Agreement, and Waterfront Mortgagee shall assume and be responsible for all obligations of the grantee of such Replacement Parkkig Easement to the same extent, and subject to the same terms and conditions, as Waterfront Hotel is responsible under this Agreement; and (B) in addition to paying all current amounts payable by Waterfront Hotel hereunder or under the Parking Declaration, as applicable, Waterfront Mortgage shall pay all unpaid amounts required to be paid by Waterfront Hotel hereunder or under the Parking Declaration, as applicable, and Waterfront Mortgagee shall cure all other defaults under this Agreement that reasonably can be cured by Waterfront Mortgagee. In lieu of executing a Replacement Parking Easement in its own name, Waterfront Mortgagee shall have the right to designate a nominee which shall become the grantee under the Replacement Parking Easement, provided that the Agency shall have the same right to approve (or disapprove) Waterfront Mortgagee's nominee as set forth in Article XVI of the Waterfront Hotel Lease for the Agency's approval (or disapproval) of a proposed assignee of Waterfront Hotel's leasehold interest in the Waterfront Hotel Lease and all other conditions in this subparagraph (iv)are met. (v) If Waterfront Mortgagee is prohibited by any process or injunction issued by any court or by reason of any action by any court having jurisdiction of any bankruptcy or insolvency proceeding involving Waterfront Hotel from commencing or prosecuting foreclosure or other appropriate proceedings in the nature thereof, the times specified in subparagraphs (ii), (iii) and 0v), for commencing or prosecuting such foreclosure or other proceedings shall be extended for the period of such prohibition plus an additional period of sixty (60) days thereafter, provided that Waterfront Mortgagee shall have fully cured anv default in the payment of any monetary obligations of Waterfront Hotel under this Agreement and shall continue to pay currently such monetary obligations as and when the same fall due. (vi) Foreclosure of a Leasehold Mortgage, or any grant or conveyance of Waterfront Hotel's interest in the Parking Easement granted hereby, through, or in lieu of, foreclosure or other appropriate proceedings in the nature thereof, shall not require the Agency's consent or constitute a breach of any provisions or default under this Agreement, and upon such foreclosure, sale or conveyance, the Agency shall recognize Waterfront Mortgagee as the grantee of the Parking Easement granted hereby. In the event Waterfront Mortgagee becomes the grantee of the Parking Easement granted hereby, Waterfront PARKING EASEMENT AGREEMENT ATTACHMENT NO. C =10158oa0oo 3244as9.2 803109199 PAGE I2 f Mortgagee shall assume the obligations of Waterfront Hotel under this Agreement or under any Replacement Parking Easement only for the period of time that Waterfront Mortgagee remains the grantee of the easement thereunder. (c) No breach by any party of any of the terms, conditions, covenants or restrictions of this Agreement shall defeat or render invalid the lien of any deed of trust made in good faith and for value encumbering all or any portion of the Parking Easement granted hereby, but such terms,'conditions, covenants or restrictions shall be binding upon and effective against any person who acquires Waterfront Hotel's interest in the Parking Easement granted hereby by foreclosure, trustee's sale, deed in lieu of foreclosure or otherwise; provided, however, that such party shall only be obligated for obligations accruing during the period of ownership of Waterfront Hotel's interest in the Parking Easement granted hereby. (d) Agency and the Future Developer shall give any Waterfront Mortgagee which has delivered written notice to Agency and Future Developer of its existence and address or addresses, such written notices as Agency andlo.the Future Developer are required to deliver to Waterfront Hotel hereunder, including, without limitation, written notice of breach by Waterfront Hotel under this Agreement. Without limiting the generality of the foregoing, Agency and Future Developer shall mail or deliver to Waterfront Mortgagee a duplicate copy of any and all notices of default which Agency and/or Future Developer may from time to time give to or serve upon Waterfront Hotel pursuant to the provisions of this Agreement, and such copy shall be mailed or delivered to Waterfront Mortgagee simultaneously with the mailing or delivery of the same to Waterfront Hotel. The Agency shall use its best efforts to comply with this subparagraph (d)but any failure to so comply shall not create any liability on the part of the Agency. Notwithstanding that the Agency shall not be liable for failure or delay in sending any such notice, no notice of default by the Agency to Waterfront Hotel hereunder shall be deemed to have been given insofar as Waterfront Mortgagee's rights under this Paragraph 17 are concerned unless and until a copy thereof shall have been mailed or delivered to Waterfront Mortgagee as herein set forth. (e) Waterfront hotel agrees not to unreasonably withhold its consent to modifications to this Agreement, or following the recordation of same, the Parking Declaration, as may be reasonably requested by the Future Developer or the Future Developer Mortgagee, so long as such changes do not materially alter the rights and obligations of the parties under this Agreement or the Parking Declaration, and provided that any such changes shall be subject to the approval of the Waterfront Mortgagee, as to which Waterfront Hotel will exercise its reasonable diligent efforts to obtain. (f) Agency acknowledges and agrees that General Motors Acceptance Company, a corporation ("GMAC"), is a Waterfront Mortgagee as of the date hereof and notices shall be given to GMAC as follows: PARKING EASEMENT AGREEMENT ATTACHMENT NO. C 2n/015=0 OOM/3.2"N9.2 aMIW191 PAGE 13 1 GMAC 18. Damage or Destruction. In the event of any damage or destruction of the improvements on the Parcel C Property (prior to commencement of construction of the Future Parking Facility), Waterfront Hotel shall repair and restore all such damages. In such event Agency agrees to make available for disbursement to Waterfront Hotel any proceeds of insurance carried by Waterfront Hotel with respect to such improvements. 10. Non-Dedication. Nothing contained in this Agreement shall be deemed to be a gift or dedication of any portion of the Subject Property to the general public or for any public use or purpose whatsoever, it being the intention of the parties hereto and their successors and assigns that nothing in this Agreement, expressed or implied, shall confer upon any person, other than the parties hereto and their successors and assigns, any rights or remedies under or by reason of this Agreement. 20. Governing, Laws. This Agreement shall be construed in accordance with the laws of the State of California. 21. Severability. If any term, provision of condition contained in this Agreement shall, to any extent, be invalid or unenforceable, the remainder of-this Agreement (or the application of such term, provision or condition to persons or circumstances other than those in respect of which it is invalid or unenforceable), except those terms, provisions or conditions which are made subject to or conditions upon such invalid or unenforceable terms, provisions or conditions, shall not be affected thereby, and each term, provision and condition of this Agreement shall be valid and enforceable to the fullest extent permitted by law. 22. Modifications. This Agreement and the easements granted hereunder may not be amended or otherwise modified, except by an agreement in writing signed by the parties hereto. No such amendments or modifications shall have any force or effect whatsoever unless and until they are written and executed in such a manner. If required by the terms of the Waterfront Deed of Trust and any Future Developer Deed of Trust, any amendment to this Agreement shall require the prior written approval of the Waterfront Mortgagee and/or the Future Developer Mortgagee. [THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK.] PARKING EASEMENT AGREEMENT ATTACHMENT NO. C =3•'01580400031U43049.2 203MI99 PAGE 14 i f 23. Exhibits. Exhibits'"A" and "B" are attached hereto and incorporated herein by reference. MAYER FINANCIAL, LTD. By: RLM Management, Inc., a California corporation, General Partner By: Robert L. Mayer, Chief Executive Officer By: Robert L. Mayer, Jr., Secretary THE WATERFRONT HOTEL, LLC, a California limited liability company By: Waterfront Development, Inc., a California corporation, Manager By: Robert L. Mayer, Chairman By: Stephen K. Bone, President and Secretary THE REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH (Agency) By: PARKING EASEMENT AGREEMENT ATTACHMENT NO. C =101580400031324-UM9.2 103109/99 PAGE 15 EXHIBIT 'A " MAP OF SITE No P�RKIIVGEASrWNT AGRHUENT PAGE 1 OF 2 o \ O� LOr 1 TR. No. 13045 :!?Pl S O MMB 628 PG 4E Fo.a y NUMBER DIRECTION DISTANCE L 1 S 48'd3 21" E 25.00' ? L2 N 41'16'39" E 9.13' L3 S 07*51'41" E 31.85' A0.S L4 S 81*17210 W 42.88' �+ L5 N 53'05'40" W 86.78' L6 N 58.06'24" W 40.53' NUMBER DELTA RADIUS LENGTH \ C1 03'1153" 1140.00' 63.63' 1 `SSo C2 05'00'4 4" 60.00' 5.25' j `T gyp, C3 05'00 4 4" 60.00' 5.25' LOT 2 OF ,,j yi \ 15535 6 5 p9•S� \ C? C �OQO L4 / 1" = 100' M.\PR0JECTS`252\06A\LOT2-EX EXHIBIT "A " LEGAL DESCRIPTION OF SITE PARKING EASEMENT AGREEMENT PAGE 2 OF 2 ALL THAT CERTAIN LAND IN THE CITY OF HUNTINGTON BEACH, COUNTY OF ORANGE: STATE OF CALIFORAIM, DESCRIBED AS FOLLOWS- THAT' PORTION OF SECTION 14, TOWNSHIP 6 SOUTH, RANGE 11 WEST, SAN BERNARDINO BASE AND MERIDIAN, IN THE RANCHO LOS BOLSAS, AS PER MAP FILED IN BOOK 51, PAGE 14 OF MISCELLANEOUS MAPS IN THE OMCE OF THE COUNTY RECORDER OF SAID COUNTY, DESCRIBED AS FOLLOWS. BEGINNING AT THE MOST SOUTHERLY CORNER CF LOT 1, TRACT NO 13045, PER MAP RECORDED hIARCH 21, 1989, IN MISCELLANEOUS AfAP BOOK 628, PAGES 46 AND 47, 1N THE OFFICE OF THE RECORDER OF SAID COUNTY,• SAID POINT BEING ON THE NORTHEASTERLY RIGHT OF WAY OF PACIFIC COAST HIGHWAY, AS SHOWN ON SAID MAP; THENCE ALONG THE SOUTHEASTERLY LINE OF SAID LOT 1 NORTH 36'54'20" EAST 360.46 FEET TO THE MOST EASTERLY CORNER OF SAID LOT 1, SAID POINT ALSO BEING ON THE SOUTHWESTERLY RIGHT OF WAY DEDICATED PER DOCUMENT RECORDED SEPTEMBER 1, 1995, AS INSTRUMENT NO. 95-OJ84749 OF OFFICIAL RECORDS OF S41D COUNTY,• THENCE ALONG SAID SOUTHWESTERLY RIGHT OF WAY SOUTH 48' 43' 21" EAST 25.00 FEET TO THE MOST SOUTHERLY CORNER OF SAID RIGHT OF WAY; THENCE ALONG THE SOUTHEASTERLY LINE OF SAID RIGHT OF WAY NORTH 41' 16' 39" EAST 9.13 FEET TO A POINT ON A NON-TANGENT CURVE, CONCAVE NORTHEASTERLY. HAVING A RADIUS OF 1140.00 FEET, A LINE RADWL TO SAID POINT BEARS SOUTH 36' 04' 08" WEST; THENCE ALONG .SAID CURVE 63.63 FEET THROUGH A CENTRAL ANGLE OF 03' 11' 53, THENCE TANGENT TO SAID CURVE SOUTH 57' 07' 45" EAST 299.52 FEET; THENCE SOUTH 07' 51' 41" EAST 31.85 FEET, THENCE SOUTH 36" 54' 410 WEST 334.17 FEET,• THENCE SOUTH 81' 17' 21" WEST 42.88 FEET,• THENCE NORTH 53' 05' 40" WEST 66.78 FEET TO THE BEGINNING OF A CURVE, CONCAVE SOUTHWESTERLY, HAVING A RADIUS OF 60.00 FEET.• THENCE ALONG SAID CURVE 5.25 FEET THROUGH A CENTRAL ANGLE OF 05' 00' 44 THENCE TANGENT TO SAID CURVE' NORTH 56' 06' 24 ' WEST 40.53 FEET TO THE BEGINNING OF A CURVE, CONCAVE NORTHEASTERLY, HAVING A RADIUS OF 60.00 FEET; THENCE ALONG SA1D CURVE 5.25 FEET THROUGH A CENTRAL ANGLE OF 05' 00' 44" TO A POINT ON SAID NORTHEASTERLY RIGHT OF WAY OF PACIFIC COAST HIGHWAY; THENCE ALONG SAID NORTHEASTERLY RIGHT OF RAY NORTH 53' 05' 40" WEST 242.73 FEET TO THE POINT OF BEGINNING. AS SHOWN ON PAGE 1 OF 2 OF THIS EXHIBIT A" ATTACHED HERETO AND BY THIS REFERENCE MADE A PART HEREOF. THE DESCRIBED LAND CONSISTS OF LOT 2 OF TENTATIVE TRACT MAP No. 15535. DATED THIS 945d DAY OF JN4T_ l __, 1999 LAND L MICHAEL SIMON P.L.S. 6034 * No. 60 34 LICENSE EXPIRES 061JO101 Exx p. 6-30-0� EXHIBIT "B" PARKING EASEUVO AGREEMENT' SHEET 1 OF 2 PARCEL 2 N 31'47'35` E_4 _ PCC S'LY LINEN 1/2, NE 1/4 SEC 14 2 i T. 6 S, R. 11 W., M.M. 5V 14 -- f P_0.B_ - - -� - - -- 1 0• �2 � dk J PARCEL 1 TRACT NO 13045 LOT J M.M. 628/46 & 47 � A A-00'08'40" R=2355.00' f L=5.94' O 0=73'3624' R=32.00' 1" = 100' L=41.11' Q N 89'43'07` E 43.24' 1 EXHIBIT "B" PARKING FASUENT ACREFMEM SHEET 2 OF 2 ALL THOSE CERTAIN LANDS IN THE CITY OF HUNPNGTON BEACH, COUNTY OF ORANGE, STATE OF CALIFORNIA DESCRIBED AS FOLLOWS: PARCEL 1: LOT 1 OF TRACT No. 13045 AS PER MAP FILED IN BOOK 626 PAGES 46 AND 47 OF MISCELLANEOUS MAPS IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY. PARCEL 2: THAT PORTION OF THE NORTH HALF OF THE NOP,THEAST QUARTER OF SECTION 14, TOWNSHIP 6 SOUTH, RANGE 1 f WEST. IN THE RANCHO LAS 6CLSAS, AS PER MAP FILED IN BOOK 51, PAGE 14 OF MISCELLANEOUS MAPS IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY. DESCRIBED AS FOLLOWS: BEGINNING AT A POINT IN THE SOUTH LINE OF SAID NORTH HALF THAT IS DISTANT THEREON NORTH 89" 43' 07" EAST 103.28 FEET FROM THE CENTER LINE OF HUNTINGTON STREET, AS SHOWN ON RECORD OF SURVEY No. 61-1151, FILED IN BOOK 103, PAGES 28 AND 29 OF RECORDS OF SURVEY IN THE OFFICE OF SAID COUNTY RECORDER, SAID POINT BEING ON A NON-TANGENT CURVE, CONCAVE SOUTHWESTERLY, HAVING A RADIUS OF 2355.00 FEET, A RADIAL LINE TO SAID POINT BEARS NORTH 3 f' 56' 15" EAST, THENCE NORTHWESTERLY ALONG SAID CURVE 5.94 FEET, THROUGH A CENTRAL. ANGLE OF 00' 08' 4C TO A POINT OF COMPOUND CURVATURE, SAID CURVE BEING CONCAVE SOUTHr4LY, HAVING A RADIUS OF 32.00 FEET, A RAD14L LINE TO SAID POINT BEARS NORTH 3 f' 41"' J5 w EAST, THENCE WESTERLY ALONG SAID CURVE 4 1.1 f FEET, THROUGH A CENTRAL ANGLE OF 73' 36' 24" TO SAID SOUTH LINE, THENCE NORTH 69' 43' 07" EAST 43.24 FEET ALONG S410 SOUTH LINE TO THE POINT OF BEGINNING. ALL AS SHOWN ON PAGE 1 OF THIS EXHIBIT B" ATTACHED HERETO AND BY THIS REFERENCE WADE A PART-HEREOF DATED THIS .f_E:L. I DAY OF . Q�� 1999 LAND SCE A6aZ ; � � MICHAEL SIMON P.L.S. 6034 �tr ES No. 8034 LICENSE EXPIRES 061JO101 Exp. 6-30—Ot s �ql� OF CA�� (13) May 15, 2000-CouncillAgency Agenda-Page 13 Of 1 E-9. [City Council Approve Reimbursement Agreement with Shea Homes Limited Partnership for Professional Planning Services in Connection with the Annexation of Shea PropeV to the City of Huntington Beach-(Unincorporated Area of Bolsa Chica) Approve Appropriation of Funds (600.10)—1. Approve the Reimbursement Agreement BetNeen the City of Huntington Beach and Shea Homes, L.P., for Professional Planning Services as prepared by the City Attorney, subject to mutual agreement by the City and Shea Homes Limited Partnersh p, and authorize the Mayor and City Clerk to sign; and 2. Appropriate funds, in the amount of$22,375 in connection with the Reimbursement Agreement Between the City and Shea Homes Limited Partnership. Submitted by the Planning Director. Funding Source: This agreement requires the developer to help defray professional planning costs incurred by the City in connection with developer's project. Developer will deposit$22,375 with the City within ten days following Council approval of this agreement. (See Agenda Item E-8) (Approved 7-0] E-10. (Redevelopment Agency} Approve the First Implementation Agreement to Amended and Restated Disposition and Development Agreement (DDA)with Mayer Financial, LP. (Waterfront Site Expansion_Hilton Grand Coast Resort (600.30)—Approve the First Implementation Agreement to Amended and Restated Disposition and Development Agreement with Mayer Financial, LP. (Waterfront—Grand Coast Resort)—First Implementation Agreement to Amended and Restated Disposition and Development Agreement between the Redevelopment Agency and Mayer Financial, LP, and authorize execution by the Agency Chairperson and Agency Clerk. Submitted by the Economic Development Director. Funding Source: Not Applicable. [Approved 7-0] E-11. (City Council/Redevelopment Agency) A-pprove With inclusion of Pages Submitted by HUD Two Housing and Urban,Development (HUD) Section 108 Loans (1) Grand Coast Resort and(2) City Gym and Pool and Approve Brownfield Economic Development Initiative Grant (Waterfront Hilton Grand Coast Resort)- Adopt Resolution No. 2000-49—Authorize Expenditure of Funds (600.15)—City Council Actions: 1. Adopt Resolution No. 2000-49—A Resolution of the City Council of the City of Huntington Beach Approving a Housing&-Urban Development Section 108 Loan to Assist in Renovating the City Gym and Pool and Authorizing the Mayor to Execute the Note and All Other Documents in Connection Therewith; and 2. Approve and authorize execution by Mayor and City Clerk of Contract and Note with the Department of Housing and Urban Development(HUD) for a $2.57 million Section 108 Loan for renovation of the City Gym and Pool project; and 3. Authorize expenditure not to exceed$25,000 from Community Deve'opment Block Grant Administration Fund for closing costs associated with the City Gym and Pool; and 4. Approve and authorize execution by Mayor and City Clerk,jointly with the Redevelopment Agency, of Contract With the Department of Housing and Urban Development(HUD) for a $6 million Section 108 Loan for expansion of the existing Waterfront Hilton (Grand Coast Resort); and 5. Approve and authorize execution by Mayor and City Clerk of Grant Agreement with the Department of Housing and Urban Development(HUD) for a$2 million Brownfield Economic Development Initiative Grant for the Waterfront Hilton (Grand Coast Resort). Redevelopment Agency Actions: 1. Approve and authorize execution by Chairman and Agency Clerk,jointly with City Council, of Contract with the Department of Housing and Urban Development(HUD) for a $6 million Section 108 Loan for expansion of the existing Waterfront Hilton (Grand Coast Resort); and 2. Approve and authorize execution by Chairman and Agency Clerk of Note with the Department of Housing and Urban Development(HUD) for a $6 million Section 108 Loan for expansion of the --�51� lNl +i1�� �'j°° �'c� C- �� COPYFOR YOUR RECORD; GROUND LEASE By and Between REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH, AGENCY, and PCH BEACH RESORT,LLC, a Califomia limited liability company LESSEE TABLE OF CONTENTS 1. [§ 1001 SUBJECT OF GROUND LEASE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 A. [§ 101] Purpose of the Lease . . . . . . . . . . .. . . . . . . . . . . . . . . . . . 1 B. [§ 1021 The Redevelapment Plan . . . . . . . . . . . . . . . . . . . . . . . . . . 1 C. [§ 103] The Redevelopment Project Area . . . . . . . . . . . . . . . . . . .2 D. [§ 104] The Site . . . . . . . . . . . . . . . . . . . . .. . . . . . .. . . . . . . . . . . . 2 E. ' [§ 1051 The Improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 F. [§ 1061 Condition of the Site . . . . . . . . . . .. . . . . . . . . . . . . . . . . . 3 G. [§ 106.1] Hazardous Substances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4 H. [§ 1073 Parties to the Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 1. [§ 1081 Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 2. [§ 109] Lessee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 II. [§ 200] LEASE OF THE SITE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 A. [§ 201] Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 B. [§ 202] Term of the Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 III. - [§ 3001 RENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 A. [§ 301] Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 B. [§ 302] Ground Rent ... . .... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 C. [§ 303] Base Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 D. [§ 304] Participation Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 E. f§ 305] 'Triple Net Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I 1 F. [§ 306] Non-Subordination of rent or Other Sums . . . . . . . . . . . . . . . . . . 12 G. .[§ 307] Delinquency In Rental Payment;Collection of Rents . . . . . . . . . 12 H. [§ 30S] Right to Inspection and Audit of Records . . . . . . . . . . . . . . . . . . 12 IV. [§ 4001 DEVELOPMENT OF THE SITE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 A. [§ 401] Scope of Development,Plans,Drawings and Specifications . . . 13 B. [§ 4021 No Construction Before Notice . . . . . . . . .. . . . . . . . . . . . . . . . . 13 C. [§ 403] Notice of Non-Responsibility . . . . . 13 D. [§ 40-1] Mechanic's,Materialman's,Contractor's or Subcontractor's Liens . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 E. [§405] Rights of Access . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I4 F. [§406] Local,State and Federal Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 G. [§ 407] Non-discrimination During Construction . . . . . . . . . . . . . . . . . . 15 H. [§ 409] Archaeological Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 V. [§ 500] USE OF THE SITE AND IMPROVEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . 15 A. [§ 501] Use of the Site and Improvements . . . . . . . . . . . . . . . . . . . . . . . . 15 B. [§ 502] Management of the Site and Improvements . . . . . . . . . . . . . . . . 19 -i- 0 C. [§ 503] [INTENTIONALLY OMITTED) . . . . . . . . . . . . . . . . . . . . . . . . 20 D. [§ 504] Obligation to Refrain from Discrimination . . . . . . . . . . . . . . . . .21 E. [§ 505] Form of Nondiscrimination and Nonsegregation Clauses . . . . . . 21 F. [§ 506] Quiet Enjoyment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 G. [§ 507] Payments to Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 VI. [§ 600] TAXES,ASSESSMENTS AND OTHER CHARGES . . . . . . . . . . . . . . . . . . . 23 A. [§ 601] Utilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . 23 . B. [§ 602) Impositions(including Taxes and Assessments) . . . . . . . . . . . . . 23 C. [§ 603] Payment Generally . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 D. [§ 604] Payment of Impositions in Installments . . . . . . . . . . . . . . . . . . . . 24 E. [§ 605] Agency Right to Cure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 F. [§ 606] Tax Receipts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 G. [§ 607] Limits of Tax Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 H. [§ 608] Contests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25 I. [§ 609] Notice of Possessory Interest; Payment of Taxes and Assessments on Value of Entire Property . . . . . . . . . . . . . . . . . .26 J. [§ 610] Other Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 VII. [§ 7001 OWNERSHIP OF AND RESPONSIBILITY FOR IMPROVEMENTS . . . . .27 A. [§ 701] Ownership During Term and at Termination . . . . . . . . . . . . . . . . 27 B. [§ 702] Removal of Fixtures and Furnishings at Termination . . . . . . . . . 27 C. [§ 703] Maintenance and Repair of Improvements . . . . . . . . . . . . . . . . .27 D. [§ 704] Waste . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 E. J§ 7051 Alteration of Improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 F. [§ 706] Damage to or Destruction of Hotel and Improvements . . . . . . . .28 1. .[§ 707] Lessee to Give Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 2. [§ 708] Restoration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 3. [§ 709] Application of Insurance Proceeds . . . . . . . . . . . . . . . . . . . . . . . 29 G. [§ 710] Damage or Destruction During Final Years of term . . . . . . . . . . 30 if. [§ 711] Faithful Performance and Labor and Material(Payment) Bonds;Indemnification;Nonresponsibility Notices . . . . . . . . . . 31 VIII. [§ 800] ASSIGNMENT,SUBLETTING,TRANSFER . . . . . . . . . . . . . . . . . . . . . ... . . 32 A. [§ 801] Warranty Against Speculation . . . . . . . . . . . . . . . . . . .. . . . .. . . 32 B. [§ 802] Prohibition Against Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 C. [§ 803) Investigation of Propcsed Transferee; Costs . . . . . . . . . . . . . . . . 35 D. [§ 8041 Release of Construction Covenants . . . . . . . . . . . . . . . . . . . . . . . 37 IX. [§ 900] MORTGAGES . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 A. [§ 9011 Leasehold Mortgages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 B. [§ 902] Rights and Obligations of Leasehold Mortgagees . . . . . . . . . . . .40 -ii- C. [§ 9031 Agency's Forbearance and Right to Cure Defaults on Leasehold Mortgages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 D. [§ 904] Notice . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .42 E. [§ 905] Forbearance by Agency . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . 42 F. [§ 905.11 Conditions Precedent to Mortgagee Rights and Agency Forbearance . . . . . . . . . . . : . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 G. [§ 906] Performance on Behalf of Lessee . . . . . . . . . . . . . . . . . . . . . . . . 44 H. [§ 907] Nonmerger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .44 11. [§100] SUBJECT OF GROUND LEASE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1. [§ 101] Purpose of the Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I J. [§ 102] The Redevelopment Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 K. [§ 103] The Redevelopment Project Area . . . . . . . . . . . . . . . . . . . . . . . . .2 L. [§ 104] The Site . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 M. [§ I051 The Improvements . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . 3 N. [§ 106] Condition of the Site . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 O. [§ 106.1] Hazardous Substances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4 P. [§ 107] Parties to the Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 1. [§ 108] Agency . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 2. [§.109] Lessee . . .. .. ... . . . .... . . .. . .. . . .. . . .. . . . . . . . . . .. . .. . .7 II. [§ 200] LEASE OF THE SITE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8 A. [§201] Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 B. [§ 202] Tenn of the Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 I11. [§ 300] RENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 A. .[§ 301] Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 B. [§ 302] Ground Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 C. [§ 303] Base Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 D. [§ 304] Participation Rent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 E. [§ 305] Triple Net Lease ... . . . .. . . . . . .. . . .. . . . . . . . . . . . . . . . . . . . I 1 F. [§ 3061 Non-Subordination of rent or Other Sums . . . . . . . . . . . . . . . . . . 12 G. [§ 307] Delinquency In Rental Payment;Collection of Rents . . . . . . . . . 12 11. [§ 308] Right to Inspection and Audit of Records . . . . . . . . . . . :...... . . . 12 IV. [§ 400] DEVELOPMENT OF THE SITE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 A. [§ 401] Scope of Development,Plans,Drawings and Specifications , . 13 B. [§402] No Construction Before Notice . . . . . . . . . . . . . . . . . . . . . . . . . . 13 C. [§ 403] Notice of Non-Responsibility . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 D. [§ 404] Mechanic's,Materia?man's,Contractor's or Subcontractor's Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 E. [§405] ' Rights of Access . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . 14 F. [§ 406] Local, State and Federal Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 -iii- • G. [§ 407] Non-discrimination During Construction . . . . . . . . . . . . . . . . . . 15 H. [§409] Archaeological Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 V. [§ 5001 USE OF THE SITE AND IMPROVEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . 15 A. [§ 501] Use of the Site and Improvements . . . . . . . . . . . . . . . . ... . . . . . . 15 B. [§ 502] Management of the Site and Improvements . . . . . . . . . . . . . . . . 19 C. [§ 5031 [INTENTIONALLY OMITTED) . . . . . . . . . . . . . . . . . . . . . . . . 20 D. [§ 504) Obligation to Refrain from Discrimination . . . . . . . . . . . . . . . . . 21 E. [§ 5051 Form of Nondiscrimination and Nonsegregation Clauses . . . . . .21 F. [§ 5061 Quiet Enjoyment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 G. [§ 50.7) Payments to Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 VI. [§ 600] TAXES,ASSESSMENTS AND OTHER CHARGES . . . . . . . . . . . . . . . . . . . 23 A. [§ 6011 Utilities . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 B. [§ 602] Impositions(including Taxes and Assessments) . . . . . . . . . . . . . 23 C. [§ 603] Payment Generally . . . . . . . . . . . :. . . . . . . . . . . . . . . . . . . . . . . . 23 D. [§ 604] Payment of Impositions in installments . . . . . . . . . . . . . . . . . . . . 24 E. [§ 605] Agency Right to Cure . . . . . . . . . . . . . . . . . . I. . . . . . . . . . . . . . . 24 F. [§ 606] Tax Receipts . . . .. ... . . .. .. . . .. . .. . . . . . . . . . . . . . . . . . . . .24 G. [§ 607] Limits of Tax Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 H. [§ 603] Contests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 I. [§ 609] Notice of Possessory Interest; Payment of Taxes and Assessments on Valut of Entire Property . . . . . . . . . . . . . . . . . .26 J. [§ 610] Other Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 VII. [§ 700] OWNERSHIP OF AND RESPONSIBILITY FOR IMPROVEMENTS . . . . . 27 A. [§ 701] Ownership During Term and at Termination . . . . . . . . . . . . . . . . 27 B. [§702) Removal of Fixtures and Furnishings at Termination . . . . . . . . . 27 C. [§ 7031 Maintenance and Repair of Improvements . . . . . . . . . . . . . . . . .27 D. [§ 704] Waste . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28 E. [§ 705] Alteration of Improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 F. [§ 7061 Damage to or Destruction of Hotel and improvements . . . . . . . .28 1. [§ 707] Lessee to Give Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 2. [§ 7081 Restoration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . :. .. . . . . 29 3. [§ 709] Application of Insurance Proceeds . . . . . . . . . . . . . . . . . . . . . . .29 G. [§ 710] Damage or Destruction During Final Years of term . . . . . . . . . . 30 H. [§ 7111 Faithful Performance and Labor and Material (Payment) Bonds; Indemnification;Nonresponsibility Notices . . . . . . . . . . 31 Vill. [§ 8001 ASSIGNMENT,SUBLETTING,TRANSFER . . . . . . . . . . . . . . . . . . . . . . . . . 32 A. [§ 801) Warranty Against Speculation . . . . . . . . . . .. . . . . . . . . . . . . . . . 32 B. [§ 802] Prohibition Against Transfer . . . . . . . . . . . . .. . . . . . . . . . . . . . . 32 C. [§ 803] Investigation of Proposed Transferee; Costs . . . . . . . . . . . . . . . .•35 -iv- 4 D. [§ 804] Release of Construction Covenants . . . . . . . . . . . . . . . . . . . . . . . 37 E. [§ 908] Agency Cooperatioii . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44- F. [§ 909] Enforceability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 G. [§ 910] No Subordination of Agency's Interests . . . . . . . . . . . . . . . . . . . 45 H. [§ 911] Certificates to Lenders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 I. [§ 912] Obligations of Mortgagee Upon Acquisition of Leasehold Estate . . . . .. . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 X. [§ 1000] INDEMNIFICATION AND INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . .46 A. [§ 1001] Indemnification :. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 B. [§ 1002] Required Insurance .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 C. [§ 10031 Definition of"Full Insurable Value" . . . . . . . . . . . . . . . . . . . . . . 48 D. [§ 1004] General Insurance Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 E. [§ 1005] Failure to Maintain Insurance . . . . . . . . . . .. . . . . . . . . . . . . . . .49 F. [§ 1006] Disposition of Insurance Proceeds Resulting From Loss or Damage to Improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .49 X1. [§ 1100] EMINENT DOMAIN .. . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . 50 A. [§ 1101] Lessee to Give Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 B. [§ 11021 Total Taking ... . . . . ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .50 C. [§ 1103] Partial Taking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 D. [§ 1104] Application of Awards and Other Payments . . . . . . . . . . . . . . . . 50 XII. DEFAULTS, REMEDIES AND TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 A. [§ 12011 Defaults-General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ... . . 51 B. [§ 1202] Legal Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52 1. j§ 1203] Institution of Legal Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52 2. {§ 1204] Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52 3. [§ 1205] Acceptance of Service of Process . . . . . . . . . . . . . . . . . . . . . . . . 52 4. [§ 1206] Attorneys' Fees and Court Costs ... .. .. . ... . . . . . .. . . . .. . .52 C. [§ 1207] Rights and Remedies are Cumulative . . . . . . . . . . . . . . . . . . . . . 52 D. [§ 1208] Damages . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 E. [§ 1209] Specific Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 F. [§ 1210] Additional Remedies of Agency . . . . . . . . . . . . . . . . . . ....... . . . 53 G. [§ I211] Remedies and Rights of Termination . . . . .. . . . . . . . . . . . . . . . 54 H. [§ 1212] No Cross Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 X11I. [§ 13001 GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . 56 A. [§ 13011 Notices,Demands and Communications Between the Parties . . 56 B. [§ 1302] Time of Essence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 C. [§ 1303] Conflict of Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 D. [§ 1304] Nonliability of Agency Officials and Employees . . . . . . . . . . . . 57 E. [§ 13051 Inspection of Books and Records . . . . . . . .. . . . . . . . . . . . . . . . 57 -v- • F. [§ 1306] No Partnership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57 G. [§ 13071 Compliance with Lzw . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57 ii. [§ 1308] Surrender of Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57 1. [§ 1309] Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58 L [§ 13101 Binding Effect . ....... . . . . . . .. . . . . .. . . . . . . . . . . . . . . . . .58 K. [§ 1311] Assignment or Sublease to City;Right of First Refusal . . . . . . . 58 L. [§ 1312] Captions . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59 Ni. [§ 1313] No Recording of this Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59 N. [§ 1314] Enforced Delay in Performance for Causes Beyond Control of Party . . ... ....... . . .. .... .. . ... . . . . . . . . . . . . . . . . . . . . . . 59 O. [§ 1315] Entire Agreement,Waivers and Amendments . . . . . . . . . . . . . . . 59 P. [§ 1316] Off-set Statement,Attotnrnent and Subordination . . . . . . . . . . . 60 Q• [§ 1317] Approvals . .. . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61 R. [§ 1318] Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61 -vi- J, ZOF EXHIBITS EXHIBIT"A" MAP OF THE SITE EXHIBIT"B" LEGAL DESCRIPTION OF THE SITE EXHIBIT"C" ARTICLE VIII OF THE THIRD AMENDED AND RESTATED LEASE -Vll- s GROUND LEASE This Ground Lease (this "Lease") is made by and between the REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH ("Agency") and PCH BEACH RESORT, LLC,a California limited Iiability company("Lessee"). I. [§ 1001 SUBJECT OF GROUND LEASE A. [§ 101] Piz pose of the L=se The purpose of this Lease is to effectuate the Redevelopment Plan for the Huntington Beach Redevelopment Project by providing for the lease of the hereinafter defined Site from Agency to Lessee and the construction and operation on the Site by Lessee of a high-quality, fast-class hotel (the "Hotel") with approximately five hundred nineteen (519) guest rooms, a conference center and relater]facilities. The lease of.the Site and the development and operation of such hotel pursuant to this Lease, and the fulfillment generally of this Lease, are in the vital and best interests of the City of Huntington Beach and the health, safety, morals, and welfare of its residents, and in accord with the public purposes and provisions of applicable federal, state and local laws and requirements. B. [§ 102] The Rdevelopment Plan This Lease is made in accordance with and subject to (a) the Redevelopment. Plan for the Main-Pier Redevelopment Project,which was approved and adopted by Ordinance No. 2578 of the City Council of the City of Huntington Beach (the "City'), amended by Ordinance No. 2634, and merged with certain other redevelopment projects in the City by the adoption of Ordinance No. 3343'on December I6, 1996 to form the Huntington Beach Redevelopment Project (the "Merged Redevelopment Project"); (b) the Amended and Restated Disposition and Development Agreement entered into by and between Agency and Mayer Financial, L.P. ("Mayer) on September 14, 1998, as amended by the First Implementation Agreement to Amended and Restated Disposition and Development Agreement (the "First Implementation Agreement") that was entered into on or about May 15, 2000, the Second Implementation Agreement to Amended and Restated Disposition and Development Agreement (the "Second Implementation Agreement") that was entered into on or about February 5, 2001, and .any additional amendments thereto (collectively, the "Agreement"); and (c) the Assignment and Assumption Agreement and Consent to Assignment (the "Assignment") dated , 2001, by and between Mayer and Lessee whereby Mayer assigned and Lessee assumed all of Mayer's rights and obligations set forth in the Agreement that relate to the leasing'and development of the Site (referred to therein as "Parcel X). From and after the issuance by the Agency of a Release of Construction Covenants for the development of the Site under the Agreement, there shall no longer be any operative requirements of the Agreement applicable to Lessee or the Site which have not been set forth or referred to in this Lease. Any amendments hereafter to the Redevelopment Phan (as so approved and amended) which change the uses or development permitted on the Site as provided in this Lease, or otherwise change the restrictions or controls that apply to the Site, or affect or impair any�of the rights or obligations of Lessee or the holder or beneficiary of any Mortgage obtained in accordance with Section 901 of this Lease (the "Mortgagee), shall not apply to Lessee or the Site without the prior written consent of Lessee and the Mortgagee, which consent Lessee and the Mortgagee may withhold in its or their sole and absolute discretion. No other amendments to the Redevelopment Plan shall require the consent of Lessee or the Mortgagee. Mayer also entered into an Amended and Restated Development Agreement with the City dated September 21, 1998 (the"Development Agreement"). Pursuant to the Assignment, Mayer assigned to Lessee and Lessee assumed all of Mayer's rights and obligations set forth in the Development Agreement that relate to the leasing; and development of the Site (referred to therein as"Parcel A"). The Development Agreement,as assigned to Lessee,among;other things, provides for the development of the Site by Lessee in conformity with the City's General Plan and applicable Specific Plans, and provides for certain limitations and noticed procedures relating to uses and activities on certain beach property therein defined owned by the City in the vicinity of the Site. The development of the Site in accordance with the Development Agreement conforms to the Redevelopment Plan. Nothing in this Lease shall modify or limit the rights of either the City or Lessee under the provisions of the Development Agreement. C. R 1031 The_Redevelopment-Pip.itz rea The Huntington Beach Redevelopment Project area is located in the City of Huntington Beach, Califonaia (the "City"). The exact boundaries of such Project Area are specifically and legally described in the Redevelopment Plan for the Merged Redevelopment Project. D. i§ 104] Ue—Sit The ,site, is that certain real property within the Huntington Beach Redevelopment Project Area illustrated and designated as such on the"Map of the Site"(which is attached hereto and incorporated herein as Exhibit A) and having the legal description set forth in the "Description of the Site" (which is attached hereto and incorporated herein as Exhibit B). The Site shall include all appurtenant rights and easements which are reasonably necessary to the proper enjoyment of the tenancy created by this Lease,provided, however, that Agency reserves to itself, its successors and assigns,together with the right to grant and transfer all or a portion of the same,the following: (a) Any and all oil, oil rights, petroleum, minerals, mineral rights, natural gas rights, and other hydrocarbon substances by whatsoever name known, geothermal resources, and all products derived from any of the foregoing, that may be within or under the land, together with the perpetual right of drilling, mining, exploring, prospecting and operating therefor and storing in and removing the same from the Site or any other land, including the right to whipstock or directionally drill and mine from lands other than those leased hereby, oil or gas wells, tunnels and shafts into, through or across the subsurface of the Site, and to bottom such whipstocked or directionally drilled wells, tunnels and shafts under and beneath or beyond the exterior limits thereof, and to redrill, returinel, equip, maintain, repair, deepen and operate any such wells or mines; without, however, the right to enter, drill, mine, store, explore or operate on or through the surface or the upper 500 feet of the subsurface of the Site;and -2- (b) Any and all water, water rights or interests therein, no matter how acquired by Agency, together with the right and power to explore, drill, redrill, remove and store the same from the Site or to divert or otherwise utilize such water, water rights or interests on any other property owned or leased by Agency, whether such water rights shall be riparian, overlying, appropriative,percolating,littoral,prescriptive,adjudicated,statutory or contractual; but without, however, any right to enter upon the surface of the Site in the exercise of such rights and, provided further,that the exercise of any such rights by Agency shall not result in any damage or injury to the improvements constructed on the Site by Lessee, including without limitation any subsidence of all or any past of such improvements. E. [§ 1053 The Impmverettts The term"Improvements" as used in this Lease means any and all improvements to the Site,whether previously existing or constructed on the Site by Lessee pursuant to this Lease,and including any and all amendments, modifications, additions, substitutions and replacements thereof. F. [§ 106] Condition of the Site_ (a) All portions of the Site, and any in. provements thereon, which are leased to Lessee by Agency shall be leased in an"as is"condition, with no warranty, express or implied, by the Agency as to the condition of the soil,its geology,or the presence of known or unknown faults or the presence of any Hazardous Substances, and it shall be the sole responsibility of Lessee,at Lessee's expense, to investigate and determine the soil conditions of the Site and the suitability of the Site for the development to be constructed by Lessee. If the soil conditions of the Site, or any part thereof, are not in all respects entirely suitable for the use or uses to which the Site will be put,then it is the sole responsibility and obligation of Lessee to take such action as may be necessary.to place the Site and the soil conditions thereof in all respects in a condition entirely suitable for the development of the Site as described in the Agreement, which may include demolition, clearing, or moving buildings, structures, or other improvements, and removal of Hazardous Substances, as defined in Section 106.1 below, provided, however, that nothing in this Lease shall limit or modify in any way the Agency's obligations to perform . .- ;certain work and/or make certain payments for work to be performed by Lessee or others in accordance with the Agreement and the Amended and Restated Mobilehome Acquisition and Relocation Agreement(the"Driftwood Agreement")referred to therein. (b) Lessee acknowledges that Agency has heretofore provided Lessee, without charge, copies of the following reports, studies, surveys, and other data and information on the physical condition of the properties being conveyed under the Agreement: June 5, 1990,letter from Donald W. Kiser to Doug Snyder,with attachments; April 1, 1997,certification from Kenneth K. flekimian to Don Kiser,with exhibits; February 25, 1997,letter from Hekimian to Kiser, February 9, 1987,Report from Hekimian to County of Orange,with exhibits; January 30, 1987,letter from County to Kiser; January 26, 1987,letter from Hekimian to Kiser,with attachments; November 17, 1986,letter from Kiser to Regional Water Quality Control Board; -3- October 3, 1986, letter from Hekimian to Kiser with exhibits; September 12, 1986,letter from County to Fiser with exhibits ; July 2, 1987, letter from Kiser to Orange County health Care Agency;and .tune 30, I986,test results from Tait&Associates to Kiser,with attachments. (c) Lessee hereby releases Agency and City and their respective officers, employees and consultants from any and all claims, liabilities, losses, damages, judgments, costs or expenses arising from or connected to any and all matters or states of fact affecting the Site concerning or related to the physical condition of the Site, subject to the performance of work and payment of funds by the Agency referred to in Section 106(a)above. [§ I06.I1 HazaWous Substances (a) "flazardotrs Substance," as used in this Lease means any substance, material or waste which is or becomes regulated by the United States govemment,the State of California,or any local or other governmental authority, including, without limitation, any material, substance or waste which is (i)defined as a "hazardous waste," "acutely hazardous waste," "restricted hazardous waste," or"extremely hazardous waste" under Sections 25115, 25117 or 25122.7, or listed pursuant to Section 25140, of the Califonia Health and Safety Code; (ii) defined as a "hazardous substance" under Section 25316 of the California Health and Safety Code; (iii)defined as a "hazardous material," "hazardows substance," or "hazardous waste" Wider Section 25501 of the California Health and Safety Code; (iv) defused as a "hazardous substance" under Section 25281 of the California Health and Safety Code; (v) petroleum; (vi) asbestos; (vii)a polychlorinated biphenyl; (viii) listed under Article 9 or defined as "hazardous" or `extremely hazardous' pursuant to Article 11 of Title 22 of the California Code of Regulations, Chapter 20; (ix) designated as a "hazardous substance" pursuant to Section 311 of the Clean Water Act (33 U.S.C. Section 1317); (x) defined as a "hazardous waste" pursuant to Section 1004 of the Resource Conservation and Recovery Act(42 U.S.C. Section 6903); ( xi)defined as a "hazardous substance" pursuant to Section 101 of the Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C. Section 9501); or(xii) any other substance, whether in the form of a solid, liquid, gas or any other form whatsoever, which by any governmental requirements either requires special handling in its use, transportation, generation, collection, storage, treatment or disposal, or is defined as "hazardous" or is harmful to the environment or capable of posing a risk of injury to public health,and safety. (b) For good and valuable consideration pursuant to the Lease, Lessee covenants each and all of the following: (1) Lessee shall remove all Hazardous Substances from the Site in the manner prescribed by law. (2) The Site shall be free and clear of any Hazardous Substances to the extent required by applicable law. (3) The development, construction and uses of the Site permitted under tlus Lease do not require the presence of any Hazardous Substance on the Site, except for those customarily used in the ordinary course of business for such development,construction and use. -4- e Nothing herein shall relieve or release the Agency from its duty to perform any of its obligations set forth in Section 106 of this Lease and in the Agreement and the Driftwood Agreement. (c) If at any time during the term of this Lease, any Hazardous Substance is present on, in or under the Site (including, without limitation, the soil and groundwater) in violation of applicable law, Lessee shall at no expense to Agency, at the earliest practicable date, remove such Hazardous Substances from the Site (including without limitation any Hazardous Substances in the soil or groundwater) and any surrounding areas to which such Hazardous Substances may have migrated in accordance with and to the extent required by any and all applicable legal requirements. The parties intend to require Lessee to remove all Hazardous Substances from the Site and surrounding areas to which such Hazardous Substances may have migrated to the extent required by applicable law, if such Hazardous Substances are present at levels of concentration which require removal under applicable law. If, at any time during the term of this Lease, Agency has reasonable cause to believe one or more Hazardous Substances may be present on, in or under the Site in violation of applicable law, Agency may by written notice inform Lessee of the basis for Agency's concern and require Lessee to cause the Site to be tested for such Hazardous Substance(s) at Lessee's sole expense in accordance with a testing plan and schedule first approved in writing by Agency. Lessee shall exercise reasonable diligence to submit a testing plan to Agency within 30 days after the date of the Agency's notice, endeavor to obtain Agency's approval of the testing plan as soon as practicable thereafter, and cause the testing to begin within 30 days Agency's approval of the testing plan. (d) Lessee shall not bring or allow to be brought onto the Site or use or store on the Site any Hazardous Substances without the prior exfress written consent of the Agency, except for those Hazardous Substances (including without limitation fuel stored in motor vehicles) customarily used in the ordinary course of business in the use and operation of the Site and the Improvements. (e) The following covenants pertain to Lessee's occupancy and use of the Site and Improvements except for those Hazardous Substances customarily used in the ordinary course of business: 1. No underground storage tanks for Hazardous Substances shall be installed without the prior written approval of the Agency's Executive Director. 2. Agency, or its of icers, employees, contractors or agents shall at all times have the right to go upon and inspect the Site and Improvements and the operations conducted thereon to assure compliance with the requirements herein stated. The Agency shall provide reasonable prior notice to Lessee of such entry, and shall seek to naimize interference with Lessee's use of the Site and Improvements as much as is reasonably feasible. Such entry shall be in compliance with all applicable safety rules and regulations. This inspection may include taking samples for testing:of substances and materials present and/or testing soils on the Site and Improvements. Agency shall indemnify,defend, and hold harmless Lessee from and against any claims, liabilities, losses, and damage caused by Agency during any such inspections, and shall be responsible for the prompt repair and/or restoration of any such damage caused by Agency during any such inspection. -5- 3. Lessee shall be responsible for posting on the Site and Improvements any signs required by Section 25249.6 of the California Health and Safety Code and regulations promulgated pursuant thereto. Lessee shall also complete and file any business response plans or inventories required by Chapter 6.95. of the California Health and Safety Code and regulations promulgated pursuant thereto, Lessee shall concurrently file a copy of any such business response plan or inventory with Agency. 4. Lessee shall immediately notify Agency in writing of the release of any Hazardous Substance on the Site and Improvements in violation of applicable law. 5. Lessee shall to the extent required by applicable law immediately remove any Hazardous Substances located on the Site and Improvements and shall dispose of such Hazardous Substances in a safe and legal manner. Lessee shall immediately disclose to Agency its disposal of any Hazardous Substance located on the Site and Improvements and upon Agency's written request shall provide written documentation of its safe and legal disposal. (t) Lessee shall be responsible for and bear the entire cost of removal and disposal of Hazardous Substances, except for any portion thereof that may be the responsibility of the Agency under express provisions of this Lease or the Agreement. Agency may also pass through to Lessee any and all clean-up costs incurred by&e Agency as a result of Lessee's activities on the Site and Improvements or the presence of any Hazardous Substance(s) on, in or under the Site and Improvements. Notwithstanding the foregoing, the Lessee shall not be responsible for any clean-up and decontamination on or off the Site and Improvements necessitated by the presence of such Hazardous Substances. Upon termination of this Lease, Lessee is required, in accordance with all applicable laws,to remove from the Site and Improvements any equipment or improvement to the property that is contaminated by Hazardous Substances. (g) By this Lease, Lessee provides to the Agency, effective upon the date of this Lease, an indemnification of the Agency and the City and their respective members, officers, employees,agents,contractors and consultants relating to the environmental condition of the Site and the presence of Hazardous Substances thereon. Therefore, Lessee hereby agrees to indemnify, defend and hold harmless Agency and City and their respective members, officers, agents, employees, contractors and consultants, from any claims, actions, suits, legal and administrative proceedings, liability, injury, deficiency, damages, fines, penalties, punitive damages,costs and expenses (including, without limitation, the cost of any cleanup, remediation, removal, mitigation, monitoring or testing of Hazardous Substances, and reasonable attorneys' fees) resulting from, arising out of, or based upon (i) the presence, release, use, generation, discharge, storage or disposal of any Hazardous Substances on, under, in or about, or the transportation of any Hazardous Substances to or from, the Site; or (is) the violation, or alleged violation,of any statute,ordinance,order,rule,regulation,permit,judgment or license relating to the use, generation, release, discharge, storage, disposal or transportation or Hazardous Substances on,under, in or about,to or from,the Site. (h) From the date of this Lease, Lessee hereby waives, releases and discharges the Agency, the City and their respective members, officers, employees, agents, contractors and consultants, from any and all present and future claims, demands, suits, legal and administrative proceedings, and from all liability for damages, losses, costs, liabilities, fees and expenses .6- (including, without limitation, attorneys' fees) arising out of or in any way connected with the Agency's or Lessee's use, maintenance, ownership or operation of the Site, any Hazardous Substances on the Site, or the existence of Hazardous Substances contamination in any state on the Site, however the Hazardous Substances came to be placed there, except that arising out of the intentional misconduct of the Agency or its employees, officers or agents. Lessee acknowledges that it is aware of and familiar with the provisions of Section 1542 of the Califona Civil Code which provides as follows: "A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have materially affected his settlement with the debtor." As such relates to Section 106 and this Section 106.1, Lessee hereby waives and relinquishes all rights and benefits which they may have under Section 1542 of the California Civil Code. G. [§ 1071 Parties-to-the. Lease I. N 1083 Amu Agency is the Redevelopment Agency of the City of Huntington Beach, a public body, corporate and politic, exercising governmental functions and powers and organized and existing under Chapter 2 of the Community Redevelopment Law of the State of California. The principal office of Agency is Iocated at 2000 Main Street, Huntington Beach, California 92648. "Agency" as used in this Lease, includes the Redevelopment Agency of the City of Huntington Beach,and any assignee of or successor to its rights,powers and responsibilities. 2. [§109] Lessee Lessee is PCH BEACH RESORT, LLC, a California limited liability company, whose managing member is GRAND RESORT,LLC, a California limited liability company. The principal office of Lessee is located at 660 Newport Center Drive, Suite 1050, Newport Beach, California 92660. Wherever the term "Lessee" is used herein, such term shall also include any permitted nominee or assignee of PCH BEACH RESORT, LLC, a California limited liability company, as herein provided 7- I1. [§ 200] LASE Oh=THE SITE A. [§ 2011 L= For and in consideration of the rents, conditions, covenants and agreements set forth herein, Agency hereby leases and demises the Site to Lessee and Lessee does hereby take and lease the Site from Agency. B. [§ 202] Term of the Lease (a) The tern of this Lease shall be ninety-nine(99)years,commencing on the date of the execution and delivery of ibis Lease (the "Effective Date of Lease") and terminating on the ninety-ninth (99th) anniversary of the Effective Date of Lease, unless sooner terminated as provided for herein. (b) At the-expiration or earlier termination of this Lease, Lessee shall execute, acknowledge and deliver to Agency, within thirty (30) days after written demand by Agency, a valid and recordable quitclaim deed covering the Site and the Improvements,free and clear of all liens and encumbrances. Ill. [§ 300] $E A. [§ 301] j2gfmitjons For the purposes of this Lease, the following terms shall have the following respective meanings: (1) "Operating Commencement Date' means the earlier to occur of (a) the date on which the Hotel open, for business; or (b) the date on which a Certificate of Occupancy for the Motel is first available hi accordance with the normal procedures of the city. (2) "Operating Year" as used herein means (a) the First Operating Year, and (b)cacti calendar year which follows the end of the First Operating Year and which ends prior to the Last Partial Operating Year, and (c) the Last Partial Operating Year. (3) "First Operating Year"as used herein means the period that begins on the Operating Commencement Date and ends on either (i)the fast December 31 which follows the Operating Commencement Date, in the . event the Operating Commencement Date occurs during the period commencing on January I and ending on August 31 of die calendar year in which the Operating Commencement Date occurs; or (ii) the second December 3I which follows the Operating Commencement Date, in the event the Operating Commencement Date occurs during the period commencing on September I and Ending on December 31 of the calendar year in which the Operating Commencement Date occurs. -8- (4) "Second Operating Year" as used herein means the calendar year which follows the end of the First Operating Year. (5) "?bird Operating Year" as used herein means the calendar year which follows the end of the Second Operating Year. (6) "Last Partial Operating Year"as used herein means the period of less than twelve(12) months that begins on an anniversary of the commencement of the Second Operating Year and ends on the last day of the term of this Lease. (7) "Gross Room Revenue" as used herein means all revenue of any kind or nature, determined on an accrual basis, paid to Lessee or Lessee's agents for the rental of the Hotel guest rooms and suites (but excluding meeting and banquet rooms and similar areas in the Hotel) rented, licensed or 'otherwise provided whether on cash basis or credit by Lessee to third parties, excluding refunds and uncollectible accounts (bad debts), including,without limitation, (a) all room rental payments, room deposits forfeited, room cancellation fees; and (b) proceeds of business interruption and similar insurance payable as a result of loss of room revenues;and (c) fees for use of any facilities which are customarily included by comparable first quality hotels in the guest room rental rate, excluding,however,food,beverage,mini-bar,health club,parking, telephone, and rentals for equipment not customarily provided guests of first class resort hotels. (8) "Adjusted Room Revenue'as used herein means the amount by which (a) Gross Room Revenue for each Operating Year exceeds (b) a threshold revenue base which shall initially be twenty-five million dollars (S25,000,000) for each Operating Year and shall be increased on the first day of each Operating Year which begins after the Third Operating Year in proportion to the escalation, if any, of the Consumer Price Index during the immediately preceding calendar year, provided, however, that such increase in the threshold revenue base shall not in any single year exceed five percent (5%)of the preceding year's threshold revenue base and shall not in any five-year period exceed twenty percent (20%) of the revenue threshold base at the commencement of the five-year period. (9) "Consumer Price Index"as used herein means the Consumer Price Index - All Urban Consumers, [Los Angeles-Long Beach-Anaheim],published by the Bureau of Labor Statistics or, if such index ceases to be published, the most closely analogous substitute index. R -9- B. [§ 3021 Sround Rent "Ground Rent," as used herein, shall mean rent paid by Lessee to Agency for the Site. Ground Rent consists of Base Rent (as described in Section 303) and Participation Rent (as described in Section 304). C. [§ 303] Basg Rent (I) For the First Operating Year, Lessee shall pay to Agency as Base Rent the amount of twenty-five thousand dollars ($25,000) multiplied by a fraction, the numerator of which is the number of days in the First Operating Year and the denominator of which is three hundred sixty-five(365). (2) For the Second Operating Year, Lessee shall pay to Agency as Base Rent the amount of seventy-five thousand dollars($75,000). (3) For the 'Third Operating Year, Lessee shall pay to Agency as Base Rent the amount of one hundred fifty thousand dollars (S150,000). (4) For each Operating Year beginning with the Fourth Operating Year, Lessee shall pay to Agency as Base Rent the amount of one hundred fifty thousand dollars (SI50,000) as increased on the first day of each such Operating Year(i.e., each Operating Year after the Third Operating Year) in proportion to the escalation, if any, of the Consumer Price Index between the fifteenth (15th) month and the third (3rd) month prior to the fast day of such Operating Year,provided, however, that such escalation shall not in any single year exceed five percent (5%)of the preceding Operating Year's Base Rent and shall not over any period of five consecutive Operating Year's exceed twenty percent (20%) of the Base Rent at the commencement of such five Operating Year period; and provided, further, that for the Last Partial Operating Year,such amount shall be multiplied by a fraction, the numerator of which is the number of days in the Last Partial Operating Year and the denominator of which is three hundred sixty-five(365). (5) The Base Rent specified in paragraphs (a) through (d) above shall be payable by Lessee to Agency in installments on the first(1st)day of each calendar month of each Operating Year. The amount of each such monthly payment shall be one-twelfth (1/12) of the Base Rent for the then current Operating Year, except as provided hereafter with respect to the Last Partial Operating Year. Each monthly payment of Base Rent in the Last Partial Operating Year shall be the Base Rent for the Last Partial Operating Year multiplied by a fraction, the numerator of which is one and the denominator of Khich is the number of first days of calendar months in the Last Partial Operating Year. D. [§ 304] Participation Rent (1) For each Operating Year beginning with the first day of the 'third Operating Year, Lessee shall pay to Agency as Participation Rent an amount equal to three percent (3%)of Adjusted Room Revenue, which shall be payable as specified in paragraph (c) below. -10- (2) Within one hundred twenty (120) days after the close of each Operating Year (except the First Operating Year and the Second Operating Yeas), Lessee shall submit to ,Agency, for Agency's review and written approval, a statement (the "Certified Annual Statement") containing an itemization and a reasonable explanation of the composition of Gross Room Revenue and Adjusted Room Revenue for the applicable Operating Year, together with a certificate of an independent certified public accountant reasonably acceptable to Agency (the "Accountant"). The Accountant's certificate shall be addressed to Agency, and shall state that the Accountant is familiar with the dermition of each of the terms defined in Section 301 of this Lease and attest to the accuracy of Gross Room Revenue and Adjusted Room Revenue. At Lessee's election,the Accountant may be any of the following national accounting firms: i) Arthur Andersen&Co.,LLP; ii) Dcloitte&Touche,LLP; iii) Ernst&Young,LLP; iv) Coopers and Lybrand,LLP; v) KNIPG Peat Marwick,LLP; vi) Price Waterhouse,LLP; vii) Any national accounting firm having at the time of delivery of the Certified Annual Statement reputation and stature in the accounting community comparable to the foregoing firms as of the Effective Date of Lease, if first approved by Agency. (3) No later than concurrently with Lessee's submission to Agency of the Certified Annual Statement,and in any event within one hundred twenty(120)days after the end of the applicable Operating Year,Lessee shall pay to Agency the amount of Participation Rent as determined on the basis of such Certified Annual Statement. if Participation Rent is not paid within thirty (30) days after the Certified Annual Statement is submitted to Agency or one hundred twenty (120) days alter the termination of the applicable Operating Year, whichever first occurs,the amount of Participation Rent shall bear interest at the annual rate of three percent (3%)over the prime rate of the largest bank operating in the State of California until paid. E. 305) Triple Net Lease This is an absolute net Iease and Agency shall not be required to provide any services or do any act or thing with respect to the Site and Improvements or the appurtenances thereto, except as may be specifically and expressly provided herein and in the Agreement and the Driftwood Agreement, and Lessee shall make all payments required by this Lease, including but not limited to the payment of rent to Agency, without any claim on the part of Lessee for diminution, set-off or abatement, and nothing shall suspend, abate or reduce any rent to be paid hereunder, except as otherwise specifically provided in this Lease; provided, however, that Lessee shall have the right to withhold the payment of rent in an amount equal to payments which the Agency fails to make to Lessee in breach of the Agreement from Available Site- Generated Property Tar Increment and Available Site-Generated Transient Occupancy Tax (as defined in the Agreement). Lessee agrees that in the event of any such set-off, the Agency shall receive a credit equal to(i) the dollar amount of such set-off against amounts otherwise required to be paid by Agency under the Agreement of Available Site-Generated Property Tax Increment and Available Site-Generated Transient Occupancy Taxless (ii) the interest accrual on the amount of the set-off from the date payment was due from Agency to Lessee pursuant to the -11- Agreement to the date the set-off occurs hereunder at a rate equal to the "Developer's Cost of Funds,"as defined in paragraph(k)of Attachment No. 8 to the Agreement. F. [§ 306] Non-Subordination of Rent or Other Sums Lessee hereby covenants and agrees that rent and all other sums of whatever kind and nature payable to Agency from Lessee under the provisions of this Lease shall be paid from Gross Revenue and, to the extent consistent with applicable law, all other expenses shall be subordinate to the payments to Agency as required under this Lease. It is expressly understood and agreed that there shall be no subordination or encumbrance of any kind under this Lease-or otherwise of(i)the Agency's fee title ownership of the Site; (ii) the Agency's interest in this Lease;and(iii) the Agency's right to receive Ground Rent under this Lease. G. [§ 307] Delinquency In Rental Payment;Collection of Rents The failure of Lessee to pay Ground Rent by the due date shall constitute a default. In the event Lessee fails to pay the applicable rents on or before the due date, in addition to any other remedy provided by this Lease,Lessee shall pay Agency the delinquent rent and interest on the total delinquent rent at the rate of three percent (31/o) over the prime rate of the largest bank operating in the State of California on the due date, from the date of each delinquency. Said interest shall accrue from the due date of the rent to the date the rent is received by Agency. It is the intent of this provision that Agency shall be compensated by such additional sums for loss resulting from rental delinquency including costs to agency for servicing the delinquent account. Agency, at its option, may waive any such delinquency compensation required herein, upon written application of Lessee. H. [§ 308] Right to Inspection and Audit of Records Lessee shall keep full and accurate books and accounts, records, cash receipts, and other pertinent data showing its financial operations. Such books of account, records, cash receipts, and other pertinent data shall be kept for a period of five(5)years after the end of the Lease Year to which such items pertain. Agency shall be entitled during such five (5) years to inspect, examine and to copy at Agency's expense Lessee's books of account,records,cash receipts, and other pertinent data as necessary or appropriate for the purpose of this Lease. Lessee shall cooperate fully with Agency in making the inspection. Books and records shall remain confidential and not public except as necessary to protect Agency's interests under this Lease. Agency shall also be entitled at Agency's expense, once during each calendar year and once after expiration or termination of this Lease, to an independent audit of Lessee's books of account, records, cash receipts, and other pertinent data, by a certified public accountant to be designated.by Agency, as necessary or appropriate to the purposes and provisions of this Lease. Any suchh audit shall be conducted after reasonable prior written notice by Agency to Lessee and during Lessee's usual business hours. If the audit shows that there is a deficiency in the payment of Ground Rent, the deficiency and interest thereon at the rate specified in Section 305 of this Lease shall become immediately due and payable to Agency. If such deficiency exceeds the amount of the greater of Five Thousand Dollars ($5,000.00), or two percent (2°l0) of the actual Ground Rent due in any Lease Year in which there is a deficiency, Lessee shall reimburse -12- Agency for the cost of Agency's audit. If Agency has not audited Lessee hereunder with respect to a particular Lease Year within the permitted five year period, or has not advised Lessee in writing of any exceptions based on said audit within said five year period, then Agency shall be deemed to have waived its right to redetennine Ground Rent for such Lease Year. IV. [§ 400] DEVELOPMENT OF THE SITE A. [§ 40I) ape ofDevelopment, E ans_Drawings and Specifications Lessee shall construct the Improvements upon the Site in accordance with the Agreement, including without limitation the Scope of Development appended to the Agreement as Attachment No. 4, the Development Agreement, and plans, drawings and specifications approved by City, and within the time and in accordance with the other terms, covenants and conditions of the Agreement, the Development Agreement and the plans, drawings and specifications approved by City pursuant thereto, at the times provided in the Schedule of Performance (appended to the Agreement as Atta-.hment No. 3 and incorporated herein by this reference). B. [§ 402] No Construction Before Jjotigc From and after issuance of the Release of Construction Covenants by the Agency pursuant to the Agreement, no work of any kind shall be commenced on the Site and no building or other materials shall be delivered to the Site for construction of any improvements,nor shall any other building or land development work be commenced on or building materials be delivered to the Site at any time during the term of the Lease, which work and/or materials exceed in the aggregate Two Hundred and Fifty Thousand Dol:ars ($250,000), until at least ten (10) days following notice by Lessee to Agency of the intended commencement of such work or the delivery of such materials. C. [§ 4031 Notice of Non-R spDns1bfl1M Agency shall,at any and all times during the term of this Lease,have the right to post and .maintain on the Site and to record as required by law any notice or notices of non-responsibility provided for by the mechanics' lien laws of the State of California. The work for which said ten (10)days written notice is required shall include,in addition to actual construction work, any site preparation work, installation of utilities, street construction or improvement, or any grading or filling of the Site. D. [§404] Mechanic's_MatedalMan's-Contractor's or Subcontractor's Liens Subject to Lessee's right to contest as hereinafter provided,at all times during the term of the Lease, Lessee shall keep the Site, including all buildings and improvements now or hereafter -, located on the Site, free and clear of all liens and claims of liens for labor, services, materials, supplies, or equipment performed on or furnished to the Site. Lessee shall promptly ( i) pay and discharge,or cause the Site to be released from,any such lien or claim of lien,or(ii) contest such lien and furnish Agency such bond as may be required by law to free the Site from the effect of such lien and to secure Agency against payment of such lien and against any and all loss or damage whatsoever in any way arising from Lessee's failure to pay or discharge such 9ien. In -13- the event Lessee provides a bond in lieu of paying or discharging a lien as set forth herein, and Agency is unable despite reasonably diligent effort to obtain an endorsement to any existing title policy in favor of Agency inswing Agency's interest in the Site free and clear of any such liens that have not been paid or discharged, Lessee shall, at Lessee's sole cost and expense, within thirty (30) days of Agency's written request therefor, provide the Agency with such endorsement. . Should Lessee fail to pay and discharge, or cause the Site to be released from, any such lien or claim of lien or to provide a bond as permitted hereunder within thirty (30) days after service on Lessee by A€ency of a written request to do so, Agency may pay,adjust, compromise and discharge any such Iien or claim of lien on such terms and in such manner as Agency may reasonably deem appropriate. In such event, Lessee shall, on or before the first day of the next calendar month following any such payment by Agency, reimburse Agency for the full amount so paid by Agency, including any actual and reasonable attorneys' fees or other costs expended by Agency, together with interest thereon at the annual rate of interest equal to three percent (3%)over the prime rate of the largest bank operating in the State of California as of the close of business on the date of payment by the Agency, or the highest lawful rate, whichever is less, from the date of payment by Agency to the date of Lessee's reimbursement of Agency. On substantial completion of any work of improvement during the term of the Lease, Lessee shall record or cause to be recorded in the Official Records of Orange County a notice of completion. Lessee hereby appoints Agency as Lessee's attorney-in•fact to record the notice of completion, which appointment shall only become effective on ten (10) days' notice upon Lessee's failure to record such a notice of completion after the work of improvement has been substantially completed; provided, that Agency shall' not be obligated to record such a notice of completion and the failure of Agency to record said notice shall not excuse the failure of Lessee to discharge its obligation to record said notice of completion. E. [§ 405] Rights of Access Representatives of Agency and City shall have the reasonable right of access to the Site without charges or fees, nt normal construction hours during the period of construction for the purposes of this Lease, including,but not limited to, the inspection of the work being performed in constructing the improvements. Such representatives of Agency or City shall be those who are so identified in writing by the Executive Director of Agency. The Agency shall provide reasonable prior notice to Lessee of such entry, and shall seek to minimize interference with Lessee's use of the Site and improvements as much as is reasonably feasible. Such entry shall be in compliance with all applicable safety rules and regulations. Agency shall indemnify, defend, and hold harmless Lessee from and against any claim, liability, losses and damages caused by Agency during any such inspections, and shall be responsible for the prompt repair and/or restoration of any such damage caused by Agency during any such inspection. F. [§406] Lmal, State and federal La a Lessee shall carry out the construction of the improvements on the Site in conformity with all applicable laws, including all applicable federal and state labor standards and requirements. -14- G. [§ 407] Non-discrimination QLftingSonstruction Lessee for itself and its successors and assigns agrees that in the construction of the improvements on the Site provided for in this Lease, Lessee will not discriminate against any employee or applicant for employment because of sex, marital status, race, color,creed, religion, national origin,or ancestry. H. [§409] AtchacQIggical PrQvisiQJJJ Agency shall comply withiany procedures or reviews relating to archaeological resources and take any remedial action which may be required by applicable state and federal laws with respect to development of the Site as contemplated by this Lease. In connection therewith, Agency shall perform, at its expense, any necessary studies, tests or surveys which may be required to comply with such procedures or reviews, or to undertake any required remedial action for such clearances or certifications. Lessee shall comply with all reasonable requests from Agency, including but not limited to request-3 for access to the Site, to facilitate Agency's compliance with such procedures or reviews and obtainment"of such clearances or certifications. V. [§ 500] USE OF THE SITE AND IMPROVEMENTS A. [§ 501] Use of die_Si moovements Lessee covenants and agrees for itself, its successors, its assigns and every successor in interest to the Site and Improvements or any Ix)rtion thereof, that during construction and thereafter through the remainder of the term of this Lease, Lessee, such successors and such assignees shall: I. Construct or cause to be constructed all fast class resort hotel and conference center improvements described in the Scope of Development in accordance therewith and subject to the limitations thereof, including without limitation the standards of quality set forth in the Scope of Development (Attachment No. 4 of the Agreement),with an overall standard of quality consistent with a first class resort hotel equal to or better than a resort rated four-diamonds by the Automobile Association of America (AAA), such as the Hotel del Coronado in San Diego, California, or the Biltmore Hotel in Santa Barbara, California. It is recognized that not all services and facilities available in one first-class resort hotel will necessarily be provided by all first-class resort hotels, but that the composite of service and facilities provided by each first- class resort hotel comparable to the hotels referred to above will cause the same to be deemed to constitute a first-class resort hotel. Uses normally incidental to a hotel use, including without Iimitation a restaurant, cocktail lounge, cleaning and laundry service, banquet and catering facilities, meeting rooms, gift shop, spa, resort retail, magazine stand, barber or beauty shop, travel agency, airline ticket office, automobile rental operation, and recreational facilities, shall also be permitted. 2. Devote the Site, or cause the Site to be devoted solely to use in accordance with this Lease,the standards of quality set forth in Section 50 1.1 of this Lease,and plans and permits approved by the City,as the same may be amended from time to time. -15- 3. Subject to Sections 705 710, 1100-1104, and 1314 of this Lease, operate in substantially complete fashion or cause the hotel and all other improvements to be constructed on the Site to be operated in substantially complete fashion and continuously open for business to the general pubic in accordance with the standard:, set forth in this Lease; provided however that the requirements of this sub-paragraph for continuous operation shall not apply temporarily for the period required for bona fide hotel wide major remodeling. 4. Operate, or cause to be operated, the conference center in substantial accordance with conference center operating requirements first reasonably approved by. the Agency's Executive Director, which shall provide for priority use of the conference center at Lessee's cost for five (5) days per year(other than prime vacation and holiday periods) non-cumulatively by the City for its own purposes,or by a community,charitable or other not-for-profit group,subject to an advance reservation of not more than thirty (30) days prior to each such use,provided that Lessee shall not be required to cancel a reservation already accepted from any third party. S. (a) maintain, repair and operate the Site and all improvements constructed or to be constructed thereon(including landscaping, lighting and signage), or cause the Site and all such improvements to be maintained, in a first quality condition, free of debris, waste and graffiti, and in compliance with the terms of the Redevelopment Plan, the City of Huntington Beach Municipal Code,and the following: (1) All improvements on the Site shall be maintained in good condition in accordance with the custom and practice generally applicable to comparable fast quality hotels in Orange County, and in conformance and compliance with all plans, drawings and related documents approved by the Agency pursuant to this Lease,all conditions of approval of land use entitlements adopted by the City or the Planning Commission, including painting and cleaning of all exterior surfaces of all private improvements and public improvements to the curbline. (2) .. Landscape maintenance shall include, without limitation, watering/irrigation; fertilization; mowing; edging; trimming of grass; tree and shrub pnming, trimming and shaping of trees and shrubs to maintain a natural and healthy appearance, road visibility, and irrigation coverage; replacement, as needed, of all plant materials; control of weeds in all planters, shrubs, lawns, ground covers, or other planted areas; and staking for support of trees. (3) Clean-up maintenance shall include,without limitation,maintenance of All sidewalks, paths and other paved areas in a clean and weed-free condition; maintenance of all such areas clear of dirt,mud,trash, debris or other matter which is unsafe or unsightly; removal of all trash,litter and other debris from improvements and landscaping;clearance and cleaning of all areas maintained prior to the end of each day on which maintenance operations are performed to ensure that all cuttings, weeds, leaves and other debris are properly disposed of by maintenance workers. (b) If the Agency gives written notice to Lessee that the maintenance or condition of the Site or any portion thereof or any improvements thereon does not comply with this Lease and such notice describes the deficiencies, Lessee shall correct,.remedy or cure the deficiency within thirty (30) days following the submission of such notice, unless the notice states that the -16- deficiency is an urgent matter relating to public health and safety in which case Lessee shall cure the deficiency with all due diligence and shall complete the cure at the earliest possible time but in no even more than forty-eight (48) hours following the submission of the notice. In the event Lessee fails to maintain the Site or any portion thereof or any improvements thereon in accordance with this Lease and fails to cure any deficiencies within the applicable period described above, the Agency shall have, in addition to any other rights and remedies hereunder, the right to maintain the Site and the improvements thereon, or portion thereof,or to contract for the correction of any deficiencies, and Lessee shall be responsible for payment of all such costs actually and reasonably incurred by the Agency. 6. (a) Pay when due all real estate taxes and assessments assessed and levied on the Site or any portion thereof or any improvements thereon or any interest therein; provided however that nothing herein shall limit or affect any right Lessee may have under applicable law to contest the validity or amount of any property tax assessment so long as Lessee ( i) is not in default in payment of any Annual Property Tax Guarantee to the Agency required by this paragraph, and (ii) refrains from appealing, challenging or contesting in any manner any assessment of the Site and Improvements equal to or less than the Minimum Assessed Valuation, and (iii) complies with the requirements set forth in Section 501.6(b) of this Lease; and, in addition thereto, pay to the Agency on September 1 of each year for each prior fiscal year of the Agency, commencing on the first September I to occur after the issuance of the Release of Construction Covenants for the Site by the Agency pursuant to the Agreement (but excluding any period of time prior to such issuance of the Release of Construction Covenants), the Annual Property Tax Guarantee, if any, due for each such prior fiscal year. For purposes of this Agreement,"Annual Property Tax Guarantee" for each Agency fiscal year (July 1 - dune 30) in which said guarantee remains in effect hereunder shall mean an amount equal to ( i) the Net Property Tax increment Revenues that would have been allocated to and received by the Agency in said fiscal year with respect to the Site and Improvements if the Site and Improvements had been assessed at the Minimum Assessed Valuation for said year, less (ii) the amount of Net Property Tax Increment Revenues actually allocated and paid to the Agency in said fiscal year with respect to the Site and Improvements. The "Net Property Tax Increment Revenues shall include one hundred percent (100%) of the property tax increment revenues payable to the Agency pursuant to Section 33670(b) of the California Health and Safety Code (as said statute may be amended from time to time), including without limitation the twenty percent (20°0) of said revenues that Agency is required to set aside for affordable housing purposes in the Redevelopment Project Area as a whole pursuant to California Health and Safety Code Section 33334.2,less the portion of said tax increment revenues equal to the sum of( i) the percentage of such revenues in the Main-Pier portion of the Merged Redevelopment Project Area that the Agency is required to pay to other affected taxing entities pursuant to tax sharing/pass-through agreements entered into prior to the date of this Agreement, (ii) the percentage of such revenues in the Merged Redevelopment Project Area as a whole which the Agency may be required to pay to any and all governmental entities pursuant to any provision of law, including for example,and without Limiting the generality of the foregoing, any statutory pass-through payments which are required to be made to atlected taxing entities pursuant to California Health and Safety Code Sections 33607.5 and 33607.7, California Health and Safety Code Section 33681 et seq., as applicable,and(iii) the percentage of such revenues in the Merged Redevelopment Project Area as a whole which the Agency is required to pay to the County of Orange or which the County is entitled to retain as an administrative fee. "Minimum Assessed Valuation" shall mean an -17. amount calculated for each fiscal year equal to one hundred million dollars ($100,000,000)plus a compound annual escalation of such dollar amount from and after the 2000-2001 fiscal year to and including the 2032-33 fiscal year of two percent (2%) per annum; provided, however, that the Minimum Assessed Valuation shall not be so escalated when and to the extent the assessed valuation of the Site increases at less than two percent (2%) per annum, remains the same, or decreases by reason of an action initiated by the County and not by an assessment appeal, challenge or contest of Lessee. The obligations of Lessee under this paragraph 501.6 shall terminate at such time as Agency is no longer legally entitled to receive such ad valorem properly tax increment revenues from the Site and Improvements pursuant to applicable provisions of law. (b) The following requirements shall apply to any appeal,objection or contest to any tax or assessment permitted to be made by Lessee under this Lease: the contest, opposition, or objection must be filed before the tax, assessment, or other charge at which it is directed becomes delinquent and written notice of the contest, opposition, or objection must be given to Agency before the date the tax or assessment, or other charge becomes delinquent. No such contest, opposition, or objection shall be continued or maintained after the date the tax, assessment,or other charge at which it is directed becomes delinquent unless Lessee has met one of the following conditions: (i) Paid such tax, assessment, or other charge under protest prior to its becoming delinquent;or (ii) Obtained and maintained a stay of all proceedings for enforcement and collection of the tax, assessment, or other charge by posting such bond or other matter required by law for such a stay;or (iii) Delivered to Agency a good and sufficient undertaking in a form reasonably acceptable to Agency's Executive Director, in an amount equal to one hundred twenty-five percent (125%) of the amount in controversy (inclusive of fines, interests, penalties, costs, and other expenses that may have accrued or been imposed thereon) and issued by a surety company authorized to issue undertakings in California,conditioned on the payment by Lessee of the tax, assessment, or charge together with any fines, interest, penalties, costs, and expenses that may have accrued or been imposed thereon within thirty (30) days after final determination of Lessee's contest, opposition,or objection to such tax, assessment,or other charge. Agency shall not be required to join in any proceedings or contest brought by Lessee unless the provisions of any law requires that the proceeding or contest be brought by or in the name of Agency or any owner of the Site. In that case, Agency shall join in the proceeding or contest or permit it to be brought in Agency's name Init such action shall be without cost or other liability to Agency and Lessee agrees to pay to Agency all costs incurred by Agency in connection therewith. 3. Not discriminate upon the basis of race, color, creed, religion, sex, age, marital status,national origin, or ancestry in the sale, lease, sublease, transfer,use, occupancy, tenure or enjoyment of the Site,or any improvements erected or to be erected thereon,or any part thereof. -18- B. j§ 5021 Management-of the-Site and Improvgments Prior to the date of this Lease, Lessee has entered into a hotel management agreement which has been approved in writing by the Agency for consistency with the Agreement and this Lease, it being understood and agreed that Lessee may redact from such agreement when submitted to Agency for approval any confidential business information not relevant to the purposes of this Lease (the "Original Management Agreement"). Prior to the expiration or termination of the Original Management Agreement (and any successor hotel management agreement(s) throughout the term of this Lease), Lessee shall obtain the Agency's written approval of a new hotel management agreement which shall become effective concurrently with the expiration or sooner termination of the hotel management agreement which it replaces. Each such hotel management agreement shall be with a manager determined by the Agency to have not less than eight (8) years of experience in the successful operation of first quality hotels comparable to the hotel to be constructed on the Site. Approvals required of the Agency under this Section 502 shall follow and be limited by the following procedures: Within thirty (30) days after receipt of Lessee's request for approval, Agency shall respond in writing by stating what further information, if any, Agency reasonably requires in order to determine whether or not to approve the agreement. Lessee shall promptly furnish to Agency such further information as may be reasonably requested. Lessee's request for approval shall be deemed complete thirty (30) days after Agency's receipt thereof, if no timely response requesting further information is delivered to Lessee, or, if such a timely response requesting further information is received, on the date that Lessee delivers such additional information to Agency, provided that Lessee's additional information is responsive to Agency's request. Agency shall approve or disapprove the matter within forty-five (45) days after Lessee's request for such approval is accepted as complete or is deemed complete. Approval will not be unreasonably withheld if Lessee demonstrates that the proposed management agreement will provide capable, competent and experienced operation of resort hotels sinular in quality, size and type as required to be maintained on the Site and Improvements pursuant to this Lease. If Agency shall disapprove a hotel operator,Agency shall do so by written notice to Lessee stating the reasons for such disapproval. Waterfront Resorts, Inc, a California corporation, is hereby pre-approved by Agency as an operator of the resort hotel on the Site and Improvements,so long -as there is no material change in the ability of the same to provide capable, competent and experienced quality operation of the Site and Improvements from that evident upon the execution of this Lease. At all times during the term of this Lease,the Site and Improvements shall be managed or caused to be managed by Lessee in a prudent and business-Iike manner as necessary to maintain the Site and Improvements in a first-class condition. Lessee shall assume responsibility, subject to the provisions of this Lease, for the operation and maintenance (including repair, restoration and reconstruction) of all of the improvements constructed on the Site and the costs thereof, and Agency and the City shall have no liability for costs of such operation and maintenance by Lessee or for any claims arising from the operation and maintenance (including repair, restoration and reconstruction) of such improvements. Without limiting the generality of the foregoing, Lessee, in the maintenance of the improvements,shall observe the following standards: -19- 1. Maintain the surface of all automobile and pedestrian areas level, smooth and evenly covered with the type of surfacing materials originally installed thereon or such substitute thereof as shall be in all respects equal thereto or better in quality,appearance and durability. 2. Remove all papers, debris, filth and refuse, and sweep, wash down and/or clean all hard surfaces, including brick, metal,concrete, glass, wood and other permanent poles,walls or structural members as required. 3. Maintain such appropriate entranze, exit and directional signs, markers and lights as shall be reasonably required and in accordance with the practices prevailing in the operation of similar developments. 4. Clean lighting fixtures and relamp and/or reballast as needed. S. Repaint striping,markers,directional signs, etc., as necessary to maintain in first- class condition. 6. Maintain landscaping as necessary to keep it in a first-class,thriving condition. 7. Maintain signs, including relamping and/or reballasting and/or repairing as required. 8. Provide security personnel and security measures to the extent reasonably [necessary. Lessee shall seek the advice of the police department in planning appropriate security measures. 9. Maintain and keep in good condition and repair all benches, shelters, planters, mall coverings, banners, kiosks and other furniture, trash containers, sculptures, play areas, platforms and stages. 10. Maintain and keep in a sanitary condition public restrooms and other common use facilities. 11. Clean, repair and maintain all common utility systems to the extent that the same are not cleaned,repaired and maintained by public utilities, 12. Maintain all fountains and associated structures, drinking fountains, pumps and associated plumbing. I3. Maintain all lights, Ight fixtures and associated wiring systems. 14. Maintain public right-of way items between the property and the street, including sidewalks,curbs,gutters,driveways,signs and poles,curb painting and markings. I5. Maintain all surface and storm lateral drainage systems. 16. Maintain all sanitary sewer lateral connections. -20- C. [§ 5031 [INTENTIONALLY OMITTED] D. [§ 504] Obligation-to.Refrain-from Discrimination There shall be no discrimination against or segregation of any person, or group of persons,on account of sex,marital status,race,color,creed,religion,national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Site and Improvements, and Lessee itself or any person claiming under or through it shall not establish or permit any such practice or practices of discrimination, or segregation with reference to the selection, location, number, use'or occupancy of tenants, lessees, subtenants, sublessees, or vendees of the Site and Improvements. E. [§ 505] Form of Nondiscriminatign and Non5megation Clauses Lessee shall refrain from restricting the rental,sale or lease of the Site and Improvements, or any portion thereof, on the basis of sex, marital status, race, color, creed, religion, ancestry or national origin of any person. All such deeds, leases or contracts pertaining to the foregoing matters shall contain or be subject to substantially the following nondiscrimination or nonsegregation clauses: 1. 'hi deeds: `"Ibe grantee herein covenants by and for itself, its heirs, executors, administrators and assigns, and all persons claiming under or through it, that there shall be no discrimination against or segregation of, any person or group of persons on account of sex, marital status, race, color, creed, religion, national origin or ancestry in the sale, lease, 'sublease, transfer, use, occupancy, tenure or enjoyment of the land herein conveyed, nor shall the grantee itself or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to'the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees in the land herein conveyed. The foregoing covenants shall run with the land." 2. In leases: "The lessee covenants by and for itself, its heirs, executors, administrators and assigns, and all persons claiming under or through it, and this lease is made and accepted upon and subject to the following conditions: That there shall be no discrimination against or segregation of any person or group of persons on account of sex, marital status, race, color, creed, religion, national origin or ancestry, in the leasing, subleasing, transferring, use, or enjoyment of the land herein leased nor shall the _ lessee itself, or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy, of tenants, lessees,sublessees,subtenants or vendees in the land herein leased." -21- 3. In contracts: "There shall be no discrimination against or segregation of, any person or getup of persons on account of sex, marital status, race, color, creed, religion, national origin, or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the land, not shall the transferee itself or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy, of tenants, lessees, sublessees, subtenants, or vendees in the land." F. H 506) guietERjoymemt The parties hereto mutually covenant and agree that Lessee by keeping and performing the covenants herein contained, shall at all times during the term of this Lease, peaceably and quietly have,hold and enjoy the Site and Improvements. G. [§ 507] Payments to Agency In consideration of the agreement to restrict development on certain propert y as set forth in Article V1Ii of that certain Third Amended and Restated Lease between the Agency (as lessor) and Robert L. Mayer, as Trustee of the Robert L. Mayer Trust of 1982 dated June 22, 1982 (as lessee), dated as of April 28, 1989, as amended on or about November 16, 1992 by a Fast Amendment to Third Amended and Restated Lease (collectively, the "Third Amended and Restated Lease"), Lessee shall pay to Agency the amounts set forth below for the benefit of the city: I. For each Lease Year from 2001 through 2013, inclusive, or earlier termination of this Lease, the sum of Eight Thousand Three Hundred Thirty Three Dollars and Thirty-Four Cents ($8,333.34)per Lease Year, payable in advance on the first day of each such year. 2. For each Lease Year from 2014 to 2099, inclusive, or the earlier termination of this Lease, the sum of Eight Thousand Three Hundred Thirty-Three Dollars and Thirty-Four Cents ($8,333.34) per Lease Year adjusted upward as of January 1, 2014, and each January 1' thereafter as provided herein ("Adjustment Dates"), with such sum payable in advance on the first day of each such year. The arrival adjustment shall be calculated upon the basis of the United States Department of Labor, Bureau of Labor Statistics Consumer Price Index of Urban Wage Earners and Clerical Workers, Los Angeles — Long Beach — Anaheim Average, All Items (1967=100) (the "Index"). The Index published and in effect ninety (90) days prior to the Effective Date of Lease shall be considered the "Base Year Index". At each Adjustment Date, the consideration due shall be adjusted to equal the product obtained by multiplying(i) $8,333.34 and(ii)a fraction,the numerator of which is the Index published and in effect ninety(90)days preceding the Adjustment Date,and the denominator of which is the Base Year Index. In no event shall the consideration payable on any Adjustment Date be less than the consideration required to be paid during the year immediately preceding such Adjustment Date notwithstanding the fact that the Index may, as of some Adjustment Date, be less than the Index of the previous Adjustment Date or the Base Year Index. When the amount of the adjusted -22- consideration is deternuned, and at least thirty (30) days prior to the date payment for the next year is due, Agency shall give Lessee written notice of the amount of the adjusted consideration indicating how the new figure was computed. If at any Adjustment Date the Index shall not exist in the same format as recited herein, Agency and Lessee shall agree to substitute any official index published by the Bureau of Labor Statistics, or successor or similar governmental agency, as may then be in existence and which is most nearly equivalent to the Index. Should Agency and Lessee be unable to mutually agree as to any such substitute index prior to the date such agreement is required in order to properly and timely comply with this Section,determination of the proper substitute index shall be by arbitration conducted in accordance with the then- prevailing commercial arbitration rules of the American Arbitration Association or its successor. The terms and provisions of Article Vill of the Third Amended and Restated Lease ("Article ViII"), as attached hereto as Exhibit 'IC', are hereby incorporated by reference, except that the payment provisions of this Section 507 shall replace and supersede Section 9.3 of Article VIII in its entirety. Article V1I1 shall survive any termination of the Third Amended and Restated Lease. VI. (§ 600] TAXES,ASSESSMENTS AND OTHER CHARGES A. {§ 601] Utilities Lessee agrees to pay or cause to be paid, as and when they become due and payable, all charges for water, gas, light, heat, telephone, electricity and other utility and communication services rendered or used on or about the Site and Improvements at all times during the term of this Lease. B. [§ 6021 ImMsitions (CncludingTaxes andAssessmentsl C. [§ 6031 Payment Generally Subject to the provisions of Section 501.6 of this Lease, Lessee agrees to pay or cause to be paid,as and when they become due and payable,and before any fine,penalty,interest or cost may be added thereto, or become due or be imposed by operation of law for the nonpayment thereof, all taxes, assessments, franchises, excises, license and permit fees, and other governmental levies and charges, general and special, ordinary and extraordinary, unforeseen and foreseen,of any kind and nature whatsoever which at any time during the term of this Lease may be assessed, levied, confirmed, imposed upon,or grow or become due and payable out of or in respect of, or become a lien on: (1) the Site and Improvements or any part thereof or any appurtenance thereto; (2) the rent and income received by Lessee from subtenants, guests or others for the use or occupation of the Site and the Improvements thereon; or(3) this transaction or any document to which Lessee is a party, creating or transferring an interest or estate in the Site and Improvements. All such taxes, franchises, excises, license and permit fees, and other governmental levies and charges shall hereinafter be referred to as "Impositions", and any of the same shall hereinafter be referred to as an""Imposition". Any Imposition relating to a fiscal period of the taxing authority, a part of which period is included within the term of this Lease and a part of which is included in a period of time after the expiration of the term of this Lease, shall (whether or not such Imposition shall be assessed, levied, confirmed, imposed upon, -23- become a lien upon the Site and Improvements, or shall become payable, during the term of this Lease) be adjusted between Agency and Lessee as of the expiration of the term of this Lease, so that Lessee shall pay that portion of such Imposition which that part of such fiscal period included in the period of time before the expiration of the term of this Lease bears to such fiscal period, and Agency shall pay the remainder thereof; Lessee shall not be entitled to receive any apportionment, if Lessee shall be in default in the performance of any of Lessee's covenants and agreements as provided in this Lease. The failure of Lessee to pay an Imposition that cannot under any circumstances give rise to a lien against the Site and Improvements shall not be a breach of the first paragraph of this Section 603. Lessee hereby agrees to defend, indemnify and hold harmless Agency and City and their respective officers, employees and consultants from and against all claims, liability, loss, damage,costs, or expenses (including reasonable attorney's fees and court costs) arising from or as a result of Lessee's failure to pay any Imposition to the extent that such Imposition relates to a fiscal period included within the term of this Lease. Nothing in this Section 603 shall alter, modify or limit in any way the rights and obligations of Lessee to contest property tax assessments as set forth and as limited in Section 501.6 of this Lease. D. [§ 604] Payment of Impositions in Installments If, by law, any Imposition may at the option of the payer be paid in installments (whether or not interest shall accrue on the unpaid balance of such Imposition), Lessee may exercise the option to pay the same (and any accrued interest on the unpaid balance of such Imposition) in installments and, in such event, shall pay such installments as may become due during the term of this Lease as the same respectively become due and before any fine, penalty, further interest or cost may be added thereto; provided, however, that the amount of all installments of any such Imposition which.will be the responsibility of Lessee pursuant to Section 603 herein above, and which are to become due and payable after the expiration of the term of this Lease, shall be deposited with Agency for such payment on the date which shall be one (1) year immediately prior to the date of such expiration. E. [§ 605] Agency Right to Cure If Lessee, in violation of the provisions of this Lease, shall fail to pay and to discharge any Imposition, Agency may (but shall not be obligated to) pay or discharge it, and the amount paid by Agency and the amount of all costs, expenses, interest and penalties connected therewith, including attorney fees, together with interest at the rate of three percent(3%)over the prime rate of the largest bank operating in the State of California on the date payment is made by Agency, shall be deemed to be and shall be payable by Lessee as additional rent and shall be reimbursed to Agency by Lessee on demand, provided that Lessee and the holder of any Mortgage obtained in accordance with Section 901 of this Lease that has registered its name and address in writing with Agency shall have failed to pay such Imposition within ten (10) business days after written notice from Agency to Lessee and such holder of Agency's intention to pay. r. -24- F. [§ 6061 Tax ReceUs. Lessee shall furnish to Agency, within forty-five (45) days aver the date when any real property taxes, assessments or any other Imposition which could have any effect on Agency's title would become delinquent, official receipts of the appropriate taxing authority or other evidence,satisfactory to Agency evidencing payment thereof. G. [§ 607] Limits ofTaxLiability The provisions of this Lease shall not be deemed to require Lessee to pay municipal, county,state or federal income or gross receipts or excess profits taxes assessed against Agency, or municipal, county, state or federal capital levy, estate, succession, inheritance,gift, or transfer tares of Agency,or corporation franchise taxes unposed upon any corporate owner of the fee of the Site; except,however, that Lessee shall pay all taxes assessed by any governmental authority by virtue of any operation by Lessee conducted on or out of the Site and Improvements. It is agreed that in the event the State of California or any taxing authority'thereunder changes or modifies the system of taxing real estate so as to tax the rental income from real estate in lieu of or in substitution(in whole or in part) for the real estate taxes and so as to impose a liability upon Agency for the amount of such tax,then Lessee shall be liable under this Lease for the payment of the taxes so imposed during the term of this Lease, or any renewal thereof,to the same extent as though the alternative tax was a tax upon the value of the Site and Improvements. In order to determine the amount of such alternative tax for which Lessee shall be liable, the Site and Improvements shall be considered as if it was the only asset of Agency, and the rent paid hereunder shall be considered as if it were the only income of Agency. 11. [§ 6081 Contests (a) Except as expressly permitted under Section 501.6 herein above, Lessee shall refrain from appealing,challenging or contesting in any manner the validity or amount of any tax assessment, encumbrance or lien on the Site; provided, however, that such prohibition shall not apply to an appeal, challenge or contesting of the erroneous initial assessment for property tax purposes of the Site in the fiscal year of the completion of the improvements to be constructed ,pursuant to this Lease, and further provided that in the absence of transfer or ownership or new construction Lessee shall not be prohibited from appealing, challenging or contesting any increases in assessment of the Site for property tar purposes over and above the current 2%per annum permitted amount. (b) Lessee agrees that any such permitted proceedings shall be begun without undue delay after any contested item is imposed and shrill be prosecuted to final adjudication.with reasonable dispatch. Lessee shall give Agency prompt notice in writing of any such contest at least ten (10) days before any delinquency occurs. Lessee may only exercise its right to contest an Imposition hereunder if the subject legal proceedings shall operate to prevent the collection of the Imposition so contested, or the sale of the Site and Improvements, or any part thereof, to satisfy the same, and only if Lessee shall, prior to the date such imposition is due and payable, have given such reasonable security as may be required by Agency from time to time in order to insure the payment of such Imposition to prevent any sale, foreclosure or forfeiture of the Site and Improvements or any part thereof,by reason of such nonpayment. In the event of any such -25- contest and the final determination thereof adversely to Lessee, Lessee shall, before any fine, interest, penalty or cost may be added thereto for nonpayment thereof, pay fully and discharge the amounts involved in or affected by such contest, together with any penalties, fines, interest, costs and expenses that may have accrued thereon or that may result from any such contest by Lessee and,after such payment and discharge by Lessee, Agency will promptly return to Lessee such security as Agency shall have received in connection with such contest. (c) Agency shall cooperate reasonably in any such contest permitted by this Section 609, and shall execute any documents or pleadings reasonably required for such purpose. Any such proceedings to contest the validity or amount of Imposition or to recover back any Imposition paid by Lessee shall be prosecuted by Lessee at Lessee's sole cost and expense; and Lessee shall indemnify and save harmless Agency against any and all loss, cost or expense of any kind, including, but not limited to, reasonable attorneys' fees and expenses, which may be imposed upon or incurred by Agency in connection therewith. I. [§ 609] Notice-of Possess=-ILterest:Tayment of-Taxes-and Assessrngnt$ on Value:Qf Entire Pro e�rty In accordance with California Revenue and Taxation Code Section 107.6(a), Agency states that by entering into this Lease, a possessory interest subject to property taxes shall be created. Lessee or other party in whom the possessory interest is vested shall be subject to the payment of property taxes levied on such interest. Lessee acknowledges and agrees that the Site and/or the Improvements thereon, and any possessory interest therein,shall at all times after the commencement of this Lease,be subject to ad valorem taxes levied, assessed or imposed on such property, and that Lessee shall pay taxes upon the assessed value of the entire property, and not merely upon the assessed value of its leasehold interest; provided that if permitted by law, Lessee shall be required to pay ad valorem taxes only upon the assessed value of its leasehold interest if for any reason the taxes levied on such property in any year during the term of this Lease are less than the taxes which would have been levied if the entire property had been assessed and taxed in the same manner as priN ately owned property, Lessee shall pay such difference to Agency within thirty (30) days after the taxes for such year become payable and in no event later than the delinquency date of such taxes established by law. J. [§ 610] Other Liens Lessee shall not, directly or indirectly, creato or permit to be created or to remain, and will promptly discharge, at its expense,any mortgage, lien, encumbrance or charge on or pledge of the Site or the Improvements, or fixtures and furnishings, or any part thereof, or Lessee's interest therein, or the rent, additional rent or other sums payable by Lessee under this Lease, other than (i) such Mortgages as are permitted pursuant to Section 901, and (ii) as necessary in connection with the financing of furniture, fixtures and equipment for the Improvements. Lessee shall notify Agency promptly of any lien or encumbrance which has been created on or attached to the Site and improvements,or to Lessee's leasehold estate therein,whether by act of Lessee or otherwise. The existence of any mechanic's, laborer's, materialmen's, supplier's or vendor's lien, or any right in respect thereof, shall not constitute a violation of this Section if payment is -26- not yet due upon the contract or for the goods or services in respect of which any such lien has arisen, or if such lien has been discharged by the posting of bonds or other lien-release security as is provided for such discharge by law. VII. [§ 700] ONVNERSHIP OF AND RESPONSIBILITY FOR IMPROVEMENTS A. . [§ 701] Ownership DudngTerm and at Termination All Improvements on the Site constructed or installed by Lessee as permitted or required by this Lease, shall, during the term of this Lease, be and remain the property of Lessee. All Improvements located on the Site, whether existing thereon at the commencement of the term of this Tease, or constructed or installed thereon by Lessee as permitted or required by this Lease, shall, at the expiration or sooner termination of the term of this Lease, be and remain the property of Agency. Subject to Lessee's rights and obligations set forth in this Lease relating to alterations and additions, Lessee shall have no right at any time to waste, destroy, demolish or remove any of the Improvements. Lessee's rights and powers with respect to the Improvements are subject to the terms and limitations of this Lease. Agency and Lessee covenant for themselves and all persons claiming under or through them that the Improvements are real property. B. H 7021 ReemQv_ al ofFixt s W E4 rnishings at Termination At the expiration or sooner termination of the term of this Lease, Agency may, at Agency's election, demand the removal from the Site and Improvements, at Lessee's sole cost and expense,of all fixtures and furnishings,or of certain fixtures and/or furnishings,as specified in the notice provided for below. A demand to take effect at the normal expiration of the term shall be effected by notice given not less than sixty (60) days prior to the expiration date. A demand to take effect on any other termination of the Lease shall be effectuated by notice given in or concurrently with notice of such termination or within ten(I0)days after such termination. At the expiration or sooner termination of the term of this Lease, Lessee may, at Lessee's sole cost and expense, remove from the Site and Improvements any and all fixtures and furnishings. Any fixtures and/or furnishings not removed by Lessee within thirty (30) days of the termination of the Lease shall be deemed to be abandoned by Lessee and shall, without compensation to Lessee, then become Agency's property, free and clear of all claims to or against them by Lessee or any third person, subject to security interests therein to the extent permitted by this Lease. Lessee shall defend, indemnify and hold harmless Agency against all liability and loss arising from any such claims or from Agency's exercise of the rights conferred by ibis Section 702. C. [§ 703] Maintenance and Renair Of Improvemett ' Lessee agrees to assume full responsibility for the operation and maintenance of the Site and the Improvements and all fixtures and furnishings thereon or therein, and all sidewalks and to the extent required by the Development Agreement, landscaping within the public right of way adjacent to the Site, Oroughout the term hereof without expense to Agency unless otherwise -27- specified herein, and to perform all repairs and replacements necessary to maintain and preserve said Site And the Improvements and fixtures and furnishings and sidewalks and landscaping in a decent,safe and sanitary condition in a manner satisfactory to Agency and in compliance with all applicable laws. Lessee agrees that Agency shall not be required to perform any maintenance, repairs, or services or to assume any expense not specifically assumed herein in connection with the Site and the Improvements,fixtures and furnishings,and sidewalks and landscaping. The condition of the Improvements required to be maintained hereunder upon completion of the work of maintenance or repair shall be equal in value, quality and use to the condition of such Improvements before the event giving rise to the work. D. [§ 7041 3,mk Lessee shall not commit or suffer to be committed any waste or impairment of the Site or the Improvements,or any part thereof. Lessee agrees to keep the Site and the Improvements clean and clear of refuse and obstructions,and to lawfully dispose of all garbage,trash and rubbish. E. [§ 705] Alterationof Improvemmts Lessee shall not make or permit to be made any alteration of,addition to or change in the Improvements,other than (a) routine maintenance, repairs, interior decoration and minor interior alterations or (b) alienations, additions or changes not open to public view which cost in the aggregate less than an amount equal to Two Hundred and Fifty Thousand Dollars (S250,000) escalated from the date of this Lease in accordance with the applicable Consumer Price Index, nor demolish all or any part of the Improvements, without the prior written consent of Agency's Executive Director. In requesting such consent, Lessee shall submit to Agency detailed plans and specifications of the proposed work and an explanation of the need and reasons thereof. Notwithstanding the prohibition in this Section 705, Lessee may make such changes, repairs,alterations,improvements,renewals or replacements to the Improvements as are required by reason of any law,ordinance,regulation or order of a competent government authority. F. [§ 706] Mma a to or pg_structiQu of HQt_el and Improvements, I. [§ 7071 Lessee to Give NZiee In case of any damage to or destruction of the hotel or the Improvements, or any part thereof, in excess of an amount equal to Two Hundred and Fifty Thousand Dollars (S250,000) escalated from the date of this Lease in accordance with the applicable Consumer Price Index, Lessee shall within ten(10)days after Lessee becomes aware of such damage or destruction give written notice thereof to Agency generally describing the nature and extent of such damage or destruction. -28- 2. [§ 708] Restoration (a) Lessee shall be responsible for the restoration of the Hotel or other Improvements in accordance with the damage and destruction clauses of this Lease. (b) In case of any damage to or destruction of the Hotel or other Improvement s, or any part thereof, Lessee shall commence the restoration, replacement or rebuilding of the Improvements with such alterations and additions as may be approved by the Agency (such restoration, replacement, rebuilding alterations and additions, together with any temporary repairs and property protection pending completion of the work being herein called "Restoration") within thirty(30)days of such damage or destruction,plus any additional period reasonably required to obtain any Net Insurance Proceeds to be used to pay all or a portion of the cost of such Restoration,and shall complete such Restoration within a reasonable period of time thereafter. (c) As used herein, the term "Net Insurance Proceeds" means the gross insurance proceeds paid by an insurer to Lessee for loss or damage to the Improvements on the Site and Improvements, less any and all costs and expenses (including, but not limited to reasonable attorneys' fees) incurred to recover said proceeds. Lessee agrees to promptly commence and prosecute to completion the settlement of insurance proceeds with respect to any event of damage or destruction of the Improvements on the Site. (d) Lessee agrees that, notwithstanding any other provision of this Lease, upon any event of damage or destruction to the Improvements, Lessee shall at its sole cost and expense (whether or not Lessee terminates or intends to terminate this Lease pursuant to Section 710 below)immediately take or cause to be taken such actions and under and complete such work as is necessary to assure the safe condition of the damaged Improvements pending the ultimate disposition of the lfnprovements. In any instance where Lessee may elect to terminate this Lease rather than restore the Improvements pursuant to Section 710 below,if Lessee does not terminate Us Lease,Lessee shall restore the Improvements. 3. l§ 7091 Application ofln.1 w nce Proceeds Insurance proceeds carried under Article X which are received on account of any damage to or destruction of the Site or the Improvements thereon, or any portion thereof, (less the costs, fees and expenses incurred in the collection thereof, including without limitation attorney's fees and expenses) and if Lessee shall not make the election permitted in Section 710 below,shall be applied as follows: (1) Within a reasonable time and in any event within 180 days after the damage to or destruction of the Hotel or other Improvements, Lessee shall furnish,or cause to be furnished to Agency and any Mortgagee evidence satisfactory to Agency and the Mortgagee (a) of the total cost of Restoration of the damaged or destroyed Improvements pursuant to Section 708 and (b) that the total amount of money available will, when added to the insurance proceeds received and available to pay for the Restoration pursuant to the terms of this Section 709, be sufficient to pay the cost of such Restoration. -29- (2) Net insurance proceeds received on account of any damage to or destruction of the Improvements, or any part thereof, shall be paid to Lessee or as Lessee may direct(except that,during the term of any Mortgage,such net insurance proceeds shall be paid to the Mortgagee which holds the highest priority Itortgage, if required by such Mortgagee) from time to time as Restoration progresses, solely to pay (or reimburse Lessee for) the cost of, Restoration. Upon receipt by Agency and any Mortgagee of evidence that Restoration has been completed and the cost thereof paid in full or has been adequately provided for,and that there are no mechanic's or similar liens for labor or materials supplied in connection therewith which have not been adequately provided for,the balance,if any,of such proceeds shall be paid to Lessee. (3) Any insurance proceeds held by the recipient on any termination of this Lease and not required to be paid to Agency pursu<7rt to the provisions of this Lease shall be paid first to the expenses of clearing the Site of any rubble, and next to the Mortgagee as its interests may appear,and next to Lessee. G. J§ 710] Notwithstanding Sections 708 and 709 to the contrary, in the event of major damage or destruction to the Improvements on the Site during the last ten years of the term of this Lease, Agency shall not unreasonably withhold its approval if Lessee requests that this Lease be terminated on thirty (30) days' notice, provided Lessee first complies with all of the following conditions: 1. Lessee shall give Agency notice of the damage or destruction within ten (10)days after the event causing such damage and destruction. 2. Lessee shall give Agency nctice requesting that this Lease be terminated as a result of such damage o:destruction within forty-five (45) days after settlement of insurance proceeds, but in any event within one hundred eighty(180)days alter the event causing such damage or destruction. 3. Lessee shall pay to Agency all applicable rents to the date of such termination. 4. Lessee shall clear and remove all debris from the Site,restore the Site to a safe and neat condition,deliver possession of the Site to Agency,.and shalt quitclaim all right,title and interest in the Site to Agency. 5. Lessee shall transfer to Agency all insurance proceeds resulting from the casualty to be retained by Agency without limitation as to use. Major damage or destruction to the Improvements as used in this Section means such damage or destruction that the cost of restoration will exceed fifty percent (501/1o) of the cost to ` replace the Improvements on the Site in their entirety. -30- H. [§ 7111 Enithful Perbn=t and labQr-and Material (PaYmot) Bonds: Indemnification:Nor pQnsibilitvNatices (a) Lessee agrees to hold harmless Agency and City, and to indemnify Agency and City against all claims, liabilities,costs and expenses, for labor and materials in connection with all construction, repairs or alterations on the Site and Improvements and the Improvements, and the cost of defending against such claims, including reasonable attorney's fees. (b) Lessee agrees to procure, or cause the procurement of, contractor's bonds covering labor, materials and faithful performance for construction on the Site and Improvements and the improvements in accordance with the following requirements: I. As to the initial construction of the Improv ements required by the Agreement and this Lease,such bonds shall be in an amount equal to one hundred percent (100%) of the total sum of the construction prices to be paid to each sub-contractor whose sub-contract has a contract price in excess of$100,000, and shall be accompanied by the corporate guarantee of the general contractor in an amount equal to one hundred percent (100%)of the sum of the construction price iri the contract entered into by Lessee and its general contractor. 2. As to subsequent work involving repair or alteration of the Improvements in an aggregate amount exceeding $250,000 plus escalations to such amount after the date of &.i.3 Lease in accordance with the applicable Consumer Price Index, such bonds shall be in the amount equal to one hundred percent (100%) of the construction price in the contract entered into by Lessee and its gene-ral contractor. Subsequent work in an aggregate amount of$250,000 (plus escalations to such amount after the date of this Lease in accordance with the applicable Consumer Price Index)or less shall not be subject to bonding requirements. Said bonds and the construction contract must first be approved'in writing as to content and form by Agency. Lessee shall, prior to commencement of construction,deliver to Agency a certificate or certificates from the bonding company or comp.uiies-issuing the aforesaid bonds, naming Agency and City as additional insureds under said bonds. (c) The provisions of paragraphs (a) and (b) of this Section shall be applicable t o construction, repairs or alterations to the Site and Improvements and the Improvements at all times during the Lease Term. (d) Agency shall have the right to post and maintain on the Site and the Improvements any notices of non-responsibility provided for under applicable law. -31- V1Il. [§ 800] ASSIGNMENT, SUBLETTING,TRANSFER A. [§ 801] 4Wan=" i - - (a) Lessee hereby represents and warrants that this Lease, the construction of the buildings, and its other undertakings pursuant hereto, are, and will be used for the purpose of redevelopment of the Site and not for speculation in latid holding. Lessee further recognizes that: 1. The importance of the redevelopment of the Site to the general welfare of the community;and 2. The substantial financing and other public aids that have been made available by law and by the Agency for the purpose of making such redevelopment possible;and 3. The fact that a change in ownership or control of Lessee or of a part thereof, or any other act or transaction involving or resulting in a change in ownership or with respect to the identity of the parties in control of Lessee" or the degrees thereof, is for practical purposes a transfer or disposition of the Site and Improvements; and 4. The Site is not to be acquired or u sed for speculation, but only for development by Lessee in accordance with this Lease. (b) The qualifications and identity of Lessee, and its principals, are of particular concern to the community and Agency. Lessea further recognizes that it is because of such qualifications and identity that Agency is entering into this Lease with Lessee. B. [§ 802] PrWbitiQn Azainst Transfa (a) Lessee shall comply with Section 316 of the Agreement until the recordation of a Release of Construction Covenants pursuant to Section $04 of this Lease. Upon the recordation of a Release of Construction Covenants,the provisions of Section 316 of the Agreement shall no longer apply to Lessee or this Lease and the provisions of Sections 800 to 803, inclusive, shall become effective. (b) Lessee shall not, except as permitted by this Lease, make any Transfer, hereinafter dcrined,to any person or entity(a` Transferee%without the prior written consent of the Agency and any permitted Mortgagee. Any purported Transfer not permitted by this Article VI11 or Article IX shall be jM fadg null and void, and no voluntary or involuntary successor to any interest of Lessee under such a Transfer shall acquire any rights pursuant to this Lease. These restrictions shall be binding on any successors, heirs or permitted Transferee of Lessee. "Transfer,"as used herein,shall mean any assignment or attempt to assign this Lease or any right herein, any total or partial transfer, sale, assigrnmcnt, lease, sublease, license, franchise, gift, hypothecation, mortgage, pledge, encumbrance or the like, excluding, however, each of the following: (a) the foreclosure of a permitted Mortgage or the acceptance of a deed in lieu of foreclosure by a permitted Mortgagee; (b) the subsequent Transfer by a permitted Mortgagee of -32- an interest acquired pursuant to (a); (c) the acquisition at a foreclosure sale in connection with a permitted Mortgage by any third party; and (d) the execution of a hotel franchise and'or management agreement first approved in writing by Agency pursuant to Sections 502 or 5D3 of this Lease. Persons or entities who are permitted Transferees under the immediately preceding sub-paragraphs (a) through (c), inclusive, shall enjoy the rights of a Transferee only on the condition that,except for approved hotel franchisers and approved hotel management companies, they accept and agree in writing approved by the Agency to be bound by all of the provisions of this Lease,including but not limited to all obligations of Lessee hereunder. (c) This prohibition shall not be deemed to prevent (i)the granting of easements or permits for the development of the Site as reasonably approved by Agency, (ii) the renting or subleasing or licensing of space for occupancy consistent with the customary uses and practices of a hotel and related facilities,(iii) granting any security interests expressly permitted under this Lease in accordance with the provisions of this Lease,or(iv) the assignment of this Lease to any affiliate of Lessee or joint venture,provided Lessee submits evidence satisfactory to Agency that the principals who own and control Lessee will maintain a majority controlling interest after consummation of such transaction and will have the ability to'maintain a majority controlling interest throughout the term of this Lease. (d) Lessee may Transfer the whole o: any part of the Site and Improvements after recordation of a Release of Construction Covenants pursuant to Section 804 with the prior written consent of the Agency subject to the right; of any Mortgagee under Article IX of this Lease, which consent shall not be unreasonably withheld in the event that all conditions of this Section $02 are met, and provided that Lessee is not in default hereunder. Lessee shall only Transfer the Site and Improvements and Lessee's rights therein as a whole and is not permitted to subdivide the Site and Improvements and its rights for the duration of the Lease without the prior written approval of the Agency. (e) Such approval shall be given by Agency if• (1) At the time of such assignment, this Lease shall be in full force and effect and either no default then exists or no default will exist upon consummation of the Transfer; (2) Agency determines in its sole discretion that the following Transfer requirements are met:. (i)such assignment is made to a responsible third party who will undertake Lessee's responsibilities under this Lease to use and develop the Site in accordance with this Lease; (ii) if the assignment occurs prior to the issuance of a Release of Construction Covenants pursuant to Section 804 of the Lease that such third party shall demonstrate qualifications and experience with respect to the type of development proposed herein and in the Agreement to assure the development and operation of the Improvements equal to or greater than the qualifications and experience of Lessee; and(i ii) such third party shall demonstrate sufficient financial resources or commitments to assure operation (and, if the assignment occurs prior to the issuance of a Release of Construction Covenants pursuant to Section 804 of the Lease, development)of the Site in accordance with this Lease; -33- (3) The Transferee shall have executed an express assumption, in form and substance first approved in writing by Agency, of the obligations and liabilities of Lessee under . this Lease arising on and after the effective date of the Transfer; (4) The Transferee shall have a Net Worth equal to at least Fifty Million Dollars (S50,000,000), subject to increase on the fifth (5th) anniversary of the Effective Date of Lease and every five(5)years thereafter in accordance with the escalation of the Consumer Price Index during each such five (5) year period, or, for any Transfer proposed after the issuance by Agency of a Release of Construction Covenants for the Site, such other evidence as may be reasonably satisfactory- to Agency documenting the financial wherewithal of the Transferee to successfully operate the Improvements and the Site;and (5) The Transferee shall have experience in the operation and management of a hotel of the type and character located on the Site and Improvements, or shall agree and covenant as an additional obligation under this Lease to at all times cause the Hotel to be operated and managed by a person, first approved in writing by Agency's Executive Director, who has substantial experience in managing and operating a hotel of similar type and character. (f) No voluntary or involuntary successor in interest of Lessee shall acquire any rights or powers under this Lease except as expressly permitted under this Lease. This Lease may not be assigned,nor may a transfer of interest take glace without the express,prior written consent of Agency and, to the extent required by the applicable loan documents, the holder of any Mortgage obtained in accordance with Section 901 of this Lease. (g) During the existence of this Lease, Lessee shall promptly notify Agency of any and all changes whatsoever in the identity of the parties in control of Lessee,or a change in the degree thereof,of Which it or any of its officers have been notified or otherwise have knowledge or information. (h) In the absence of specific express written provision to the contrary by Agency, a Transfer of the Site and Improvements, or portion thereof, or approval thereof by Agency, shall be deemed to relieve the Lessee or any other party from any obligations under this Lease arising on or after the effective date of the Transfer, provided, however, that a Mortgagee shall be deemed to be released from and after the date of a Transfer from such Mortgagee. (i) Lessee shall only Transfer the Site and Improvements and Lessee's rights therein as a whole and is not permitted to subdivide the Site and Improvements and its rights for the duration of the Lease without the prior written approval of Agency. 6) No provision hereof authorizing encumbrance of Lessee's interest herein shall be construed to authorize encumbrance of Agency's fee title to the Site or Agency's interest under this Lease, and Lessee shall not by any act or deed cloud Agency's fee title or Agency's interest under this Lease. Notwithstanding any other provision of this Lease to the contrary, Agency approval of a Transfer of this Lease or of any interest herein shall not be required in connection with any of the following: • -34- (i) Any Transfer to any entity or entities in which either Lessee or Robert L. Mayer and Stephen K. Bone retain a minimum of fifty-one percent (51%) of the ownership or beneficial interest and retain manag:ment control. (ii) Transfers resulting from the death or mental or physical incapacity of an individual. (iii) Transfers or assignments in trust for the benefits of spouse, children,grandchildren,or other family members. (iv) The conveyance or dedication of any portion of Lessee's interest in the Site to the City or other appropriate goverrumental agency, or the granting of easements or permits in accordance with the Lease where required to facilitate the development or operation of the Site or the development or operation of any of the other portions of the "Site" as defined in the Agreement. (v) The leasing of any part or parts of a building or structure. for occupancy, or entering, into of any concession agreements, licenses, or other contracts in the normal course of owning and operating the Improvements on the Site, provided that all applicable requirements of this Lease have been that. (vi) A Transfer of stock in a publicly held corporation or the transfer of the beneficial interest in any publicly held partnerslup or real estate investment rust. C. j§ 803] InvestigatiQu of Propgssed-Tmnsferee;Costs (a) In the event that Lessee requests Agency's written consent to a proposed Transfer pursuant to Article.VIII or Article Ix of this Lease, Lessee agrees to provide Agency with such information, including fmancial statements as Agency may reasonably require in order to evaluate the solvency, financial responsibility and relevant business acumen and experience of any proposed Transferee. Such information shall include, without limitation, a balance sheet of the proposed Transferee as of a date within ninety(90)days of the request for Agency's consent and statements of income or profit and loss of the proposed subtenant or assignee for the two- year period preceding the request for Agency's consent, if the same be available (or such other similar information as shall be available at the time the request for approval of the Transfer is made), and a written statement in reasonable detail as to the business. and experience.of the proposed Transferee during the five(5)years preceding the request for Agency's consent. Within thirty (30) days after the receipt of Lessee's written notice requesting Agency approval of an Transfer, Agency shall respond in writing by stating what further information, if any, Agency reasonably requires in order to determine whether or not to approve the requested Transfer. Upon receipt of such a timely response, Lessee shall promptly furnish to Agency such further information as may be reasonably requested. Lessee's request for approval of a Transfer and delivery of necessary information for financing purposes shall be'deemed complete twenty (20) days after Agency's receipt thereof and Lessee's request for approval of a Transfer and delivery of necessary information for all other types of Transfer shall be deemed complete thirty (30) days after Agency's receipt thereof -35- if Agency does not deny approval or if no timely response requesting further information regarding the proposed assignee is delivered to Lessee, or, if such a timely response requesting further information is received, on the date which is fifteen (15) days after the date that Lessee delivers such additional information to Agency. None of the foregoing shall restrict Agency's rights to deny approval of any Transfer not found acceptable by Agency pursuant to this Lease. Any Transfer requiring Agency's consent shall only be effective upon Agency's written consent to such Transfer. Agency shall approve or disapprove any requested Transfer for financing purposes requiring Agency approval within thirty (30) days after Lessee's request therefor is accepted as complete or is deemed complete, and Agency shall approve or disapprove any other type of requested Transfer requiring Agency approval within forty-five (45) days after Lessee's request therefor is accepted as complete or is deemed complete. Any disapproval shall be in writing an shall specify the reasons for the disapproval and, if applicable, the conditions required to be satisfied by Lessee in order to obtain approval. If Lessee's initial notice requesting approval of an Transfer for financing purposes (but not any other type of Transfer) states that-the Transfer will be deemed approved unless rejected within the time required in this Lease,Agency's failure to timely disapprove the Transfer shall be conclusively deemed to constitute an approval. (b) If Agency consents to any Transfer pursuant to Article Vill or Article IX, such consent shall not be effective unless and until Lessee gives Agency notice of the Transfer and a copy of any documents effecting and/or evidencing such Transfer,and unless and until any such Transferee (other than a sublessee) assumes all of the obligations and liabilities of Lessee under this Lease. (c) Bmk=QX. It is acknowledged and agreed that this Lease is a lease of real property within the meaning of Subsection 365(b) (3)of the Bankruptcy Code, 11, U.S.C.To the extent not prohibi(ed by provisions of the Bankruptcy Code, 11 U.S.C. Section 101 et seq., including Section..365(f)(1) thereof, Lessee on behalf of itself, creditors, administrators and assigns waives the applicability of Sections 541 (c) and 365(e) of the Bankruptcy Code of 1978 unless the proposed assignee of the Trustee for the estate of the bankrupt meets Agency's standards for consent. Agency has entered into this Lease with Lessee in order to obtain for the benefit of the Site the unique types of facilities,businesses, services and goods which Lessee can bring to the Site; the foregoing prohibition on Transfer or subletting is expressly agreed to by Lessee in consideration of such fact. Any person or entity to which this Lease is assigned pursuant to the provisions of the Bankruptcy Code shall be deemed without further act or deers to have assumed all of the obligations arising under this Lease on and after the date of such Transfer. Any such assignee shall upon demand execute and deliver to Agency an instrument confirming such assumption. (d) Agmcy's Fee. Lessec agrees to reimburse Agency for Agency's reasonable costs and attorneys' fees incurred in connection with.the processing and documentation of any requested Transfer, subletting, transfer, change of ownership or hypothecation of this Lease or Lessee's interest in and at the Site, or any party thereof, which required Agency's approval hereunder,in an amount not to exceed Two Thousand Five Hundred Dollars (S2,500.00) for each such Transfer(which amount shall be adjusted each year by the Consumer Price Index). -36- 4 (e) ND-1Vziver. The acceptance by Agency of any payment due hereunder from any other person shall not be deemed to be a waiver by Agency of any provision of this Lease or to be a consent to any Transfer or subletting. Consent by Agency to one or more Transfers of this Lease or to one or more sublets of the Site shall not operate as a waiver or estoppel to the future enforcement by Agency of its rights pursuant to the provisions of this Lease. D. [§ 804] Release of!Constmaion CQvennnt5 (a) Within thirty(30)days aver completion of all construction and development to be completed by Lessee upon the Site under the Agreement and this Lease, Agency shall furnish Lessee with a Release of Construction Covenants, in such form as to permit it to be recorded in the Office of the County Recorder of Orange County, upon written request therefor by Lessee. Agency shall not unreasonably withhold such Release of Construction Covenants. Such Release of Construction Covenants shall constitute evidence of satisfactory completion of the construction required under the Agreement, this Lease, and the Release of Construction Covenants shall so state. (b) If Agency refuses or fails to furnish a Release of Construction Covenants for the Site after written request from Lessee, Agency shall, within thirty (30) calendar days of the written request, provido Lessee with a written statement of the reasons Agency refused or failed to furnish the Release of Construction Covenants for the Site. The statement shall also contain Agency's opinion of the action Lessee must take to obtain a Release of Construction Covenants for the Site, but it need not contain technical information or instructions. If the reason for such refusal is confined to the immediate availability of specific items of landscaping or other minor items or the failure to complete "punch Iist" items, Agency shall issue the Release of Construction Covenants upon the posting of a bond or other security instrument in form and content acceptable to Agency and in an amount representing the fair value of the work not yet completed, which Bond or other security instrument shall secure Lessee's obligation to complete all outstanding items of construction and development within sixty (60) days following the issuance of the Release of Construction Covenants. (c) Such Release of Construction Covenants shall not constitute evidence of compliance with or satisfaction of any obligation of Lessee to any holder of a mortgage, or any insurer of a mortgage securing money loaned to finance the improvements on the Site or any part thereof. Such Release of Construction Covenants is not notice of completion as referred to in Section 3093 of the California Civil Code. IX. [§ 9001 MORTGAGES A. [§ 90I1 Leasehold-N!Wgnes (a) From time to time during the term of this Lease, Lessee shall have the right to mortgage, pledge, deed in trust, assign rents, issues and profits (for purposes of security if required by any lender), enter into capitalized leases or other financing mechanisms in connection with the acquisition of furniture, Fixtures and equipment for the Hotel, or otherwise encumber the interest of Lessee under this Lease, in whole or in part, and any interests or rights appurtenant to this Lease,and to assign or pledge the same as security for any debt(the holder of -37- any such mortgage, pledge or other encumbrance, and the beneficiary of any such deed of trust being hereafter referred to as "Mortgagee" and the mortgage, pledge, deed of trust or other instrument hereafter referred to as"Mortgage'), upon and subject to each and all of the following terms and conditions: I. Lessee shall not make or enter into an agreement to make any Mortgage without the prior written approval of Agency. Upon Lessee's request for approval of a proposed Mortgage and Lessee's submission to Agency of such information conceming the proposed Mortgage as Agency hiay reasonably request, Agency shall not unreasonably delay its approval or disapproval of the proposed Mortgage and, in any event, shall approve or disapprove the proposed Mortgage within thirty (30) days. The Agency's Executive Director shall be authorized to approve minor changes to this Lease as reasonably requested by a proposed Mortgagee. 2. The Mortgage shall cover no interest in any real property other than Lessee's interest in the Site,the Hotel and other Improvements or some portion thereof,and the leaseliold estate of Lessee under this Lease. The Mortgage shall state on its face that it does not encumber in any way Agency's fee interest in the Site and Agency's interest under this Lease. 3. Prior to the issuance of the Release of Construction Covenants, Mortgages may be made only for the purposes of financing necessary and appropriate to pay Project Costs. "Project Costs"as used herein means the following actual costs and expenses of the development wort;to be performed by or on behalf of Lessee for or in connection with the development of the Hotel and other Improvements required under this Lease, to the extent that such costs and expenses are incurred and paid for by Lessee and'or a Mortgagee in connection with the initial construction: - a. Land development work b. Construction of the Improvements and installation of the required fixtures,furniture,machinery and equipment. C. Building permits and entitlement fees not paid for or reimbursed by Agency. d. Premiums for fire, public liability and property damage insurance during construction and on bonds securing work against liens for labor and materials. C. Real estate taxes and assessments upon the Site and Improvements or the Improvements during the period of construction. L Interest on construction loans prior to the opening of the Hotel. g. Fees for architects,er gineers,accountants and attorneys. h. Purchasing fees paid to third parties not affiliated with Lessee in connection with die purchase of furniture, fixtures and equipment. dr -38- i. Development fees paid to government agencies. j. Charges and premiums for searching and insuring title. L Out-of-pocket costs incurred by Lessee in connection with construction financing, including, without limitation, commitment fees, mortgage broker fees, standby fees and fees of alike nature, printing and duplicating expenses, documentary transfer tax stamps,mortgage taxes,recording charges. 1. Customary and reasonable pre-opening expenses for the Hotel. M. Costs of required studies,reports and inspections. . n. Fee for management and construction services comparable to the amount included in project pro forma previously provided Agency by Lessee. o. Expenditures by Lessee required to satisfy any other obligation of Lessee under the Agreement. 4. The amount of any loan secured by a Mortgage prior to the issuance of a Release of Construction Covenants shall not exceed Project Costs. S. Lessee may refinance the property after the issuance of a Release of Construction Covenants by Agency, provided that Lessee submits evidence satisfactory to the Agency demonstrating that the loan as refinanced is fully subordinate to the Agency's fee title and all of the Agency's rights under this Lease and obtains the prior written consent of Agency to the refinancing, which consent shall be granted provided that the Mortgage is given to a responsible bona fide institutional lender. 6. Any Mortgage is to be given only to a responsible bona fide institutional lender. For the purposes hereof the term"institutional lender"shall mean any bank, savings and loan association,thrift and loan association,savings bank,pension fund, insurance company,real estate investment trust or any other comparable or similar entity authorized to make loans in the State of California. 7. All ruts acquired by said Mortgagee under said Mortgage, shall be subject to each and all of the covenants, conditions and restrictions set forth in this Lease,and to all rights of Agency thereunder, none of which covenants, conditions and restrictions is or shall be waived by Agency by reason of the giving of such Mortgage, except as expressly provided in this Section 900. Notwithstanding any foreclosure of any such Mortgage, Lessee shall remain liable for the payment of the accrued but unpaid rent reserved in this Lease while Lessee remains in possession of the Site and Improvements. 8. Promptly upon the recording of a Mortgage, Lessee shall, at its own expense, cause to be recorded in the Official Records of Orange County a written request executed and acknowledged by Agency for a copy of all notices of default and all notices of sale under the Mortgage as provided by applicable law. Inclusion of a request for notice]raving the -39- effect described above in the body of the recorded Mortgage shall constitute compliance with this provision. (b) If Lessee encumbers its leasehold estate by way of a Mortgage in accordance with this Section 900, and if such Mortgagee has registered its name and address in writing with the Agency, then this Lease shall not be terminated or canceled on account of any default by Lessee in the performance of the terms, covenants or conditions hereof until Agency shall have complied with the provisions of Sections 902 through 905 as to the Mortgagee's rights to cure and to obtain a new lease. B. [§ 902] Rights and Obligations pf Losehold, QdgaQees If Lessee, or Lessee's successors or assigns, shall mortgage the leasehold interest herein demised, then, as long as any such Mortgage shall remain unsatisfied of record, the following provisions shall apply: 1. If the holder of any Mortgage on the leasehold interest her ein demised shall register with Agency its name and address in writing, no notice of default by Agency to Lessee shall be deemed to have been duly given unless and until a copy thereof has been mailed to the Mortgagee by registered or certified mail at the address registered with Agency. 2. In the event Lessee shall be in default hereunder, the Mortgagee shall, at any time prior to the termination of this Lease(wMch termination can occur only after notice to Mortgagee and an opportunity to cure in accordance with this Article IX) and without payment of any penalty, have the right, but not the obligation, to pay all of the rents due hereunder, to effect any insurance, to pay any taxes and assessments (subject to Agency's right to cure under Section 605 of this Lease), to make any repairs and improvements, to do any other act or thing required or permitted of Lessee hereunder, and to do any other thing which may be necessary and proper to be done in the performance and observation of the agreements, covenants and conditions hereof to prevent termination of this Lease. All payments so made and all things so done and performed by such Mortgagee shall be accepted by Agency and shall be effective to prevent a termination of this Lease as the same would have been if made,done and performed by Lessee instead of such Mortgagee. Lessee hereby constitutes and appoints the Mortgagee as Lessee's agent and attorney in fact with full power coupled with an interest, in Lessee's name, place and stead, and at Lessee's cost and expense,to enter upon the Site and Improvements and the improvements, and perform all acts required to be performed herein. No Mortgagee shall have the right to take or perform any action hereunder,under its leasehold Mortgage or otherwise which might result in any detriment to the rights of a prior leasehold Mortgagee with respect to the same lease or leasehold Site. 3. While any such Mortgage remains unsatisfied of record, and an event or events shall occur which shall entitle Agency to tenninate this Lease,Agency shall forbear from terminating this Lease if and to the extent that such forbearance is required under Section 905 of this Lease. 4. If the holder of a Mortgage obtained in accordance with Section 901 of this Lease acquires the leasehold estate created hereunder or otherwise acquires possession of the -40- Site and Improvements pursuant to available legal remedies, Agency will look to such holder to perform the obligations of Lessee only from and after the date of foreclosure or possession and will not hold such holder responsible for the past actions or inactions of the prior Lessee. Notwithstanding the foregoing, (A) on and after tre date of such foreclosure or possession, such holder shall be required to perform and abide by each and all of the obligations of Lessee under this Lease and (B)on and alter the date of such foreclosure or possession,Agency shall have the right to enforce each and all of the provisions of this Lease against such holder. 5. The foreclosure of a Mortgage obtained i n accordance with Section 901 of Ws Lease, or any sale thereunder, whether by judicial proceedings or by virtue of any power of sale contained in such Mortgage, or any conveyance of the leasehold estate created hereby from Lessee to the holder of any such Mortgage through,or in lieu of,foreclosure or other appropriate proceedings in the nature thereof shall not require the consent or approval of Agency or constitute a default under this Lease, and upon such foreclosure, sale or conveyance Agency shall recognize the Mortgagee, or any other foreclosure sale.purchaser, as the new Lessee hereunder. In the event that such Mortgagee becomes the Lessee hereunder, or in the event that the leasehold estate created hereunder is purchased by any other party at a foreclosure sale or by any other lawful means, such Mortgagee, or such other foreclosure sale purchaser, shall be responsible for the performance of the obligations of Lessee under this Lease only for the period of time that the Mortgagee or such other foreclosure sale purchaser remains Lessee hereunder, and such Mortgagee or foreclosure sale purchaser shall thereafter have the right to assign this Lease without need to obtain the approval of Agency. Notwithstanding anything to the contrary herein: (A) as a precondition to any Mortgagee, foreclosure sale purchaser or other person obtaining the rights of Lessee hereunder, such person shall first be required to expressly assume each and all of the obligations of Lessee under this Lease pursuant to a written document in form and substance satisfactory to Agency; (B) such new Lessee shall have no right to construct any Improvements on the Site unless and until such new Lessee has submitted evidence satisfactory to Agency that such new Lessee has the financial capability and overall competence to perform the obligations of Lessee hereunder,provided that this clause(B) shall not require submission of such evidence if such new Lessee is the holder of a Mortgage obtained in accordance with Section 901 of this Lease but shall require submission of such evidence if such new Lessee is the successor of such a holder; and (C) Agency shall.have the right of prior written approval over any prospective operator or manager(including but not limited to such new Lessee)of the Hotel uses on the Site and Improvements in accordance with Section 502 of this Lease. 6. In the event that the holder of any Mortgage obtained in accordance with Section 901 of this Lease remedies or causes to be remedied, within the times specified in Section 905 of this Lease, all monetary defaults of Lessee and all nonmonetary defaults of Lessee which by their nature are capable of being remedied by such Mortgagee,such Mortgagee shall have the right within thirty (30) days after all such defaults are remedied to request that Agency promptly execute and deliver to such Mortgagee, a new lease of the Site (naming such Mortgagee as Lessee) for the remainder of the term of this Lease with the same agreements, covenants and conditions (except for any 'requirements which have been fulfilled prior to execution of the Lease) as are contained herein and with priority equal to that hereof, along with a Quitclaim Deed first approved in writing by the Agency as to form and substance; provided, however,that if more than one Mortgagee requests such a new lease, the Mortgagee holding the most senior Mortgage shall prevail; and provided, further, that Agency shall not be required to 4 l- execute such new lease earlier than concurrently with the execution of such new lease by such Mortgagee. Agency shall prepare such new lease at the expense of such Mortgagee,and all costs incurred by Agency in preparing such new lease (including attorneys' fees) shall be paid to Agency by such Mortgagee prior to the execution by Agency of such new lease. The execution of a new lease by Agency pursuant to this paragraph 6 shall automatically and immediately terminate this Lease. Although not necessary to effect the termination of this Lease, the former Lessee shall, upon Agency's execution of such new lease, execute any documents and perform any acts which may be reasonably necessary to evidence the termination of this Lease. Upon Agency's execution and delivery of such new lease, Agency, at the expense of the new Lessee, shall take such action as shall be necessary to remove the former Lessee from the Site and Improvements. Notwithstanding any provision herein, Agency shall not be required to forbear from terminating this Lease except to the extent required by Section 905 hereof and Agency shall not be required to execute a new lease alter the termination of this Lease in accordance with the provisions hereof. 7. Anything herein contained to the contrary notwithstanding, the provisions of Us Section 902 shall inure Only to the benefit of the holders of Mortgages and,with respect to paragraph 5. only,other persons that acquire the leasehold interest created hereunder pursuant to a foreclosure,sale or conveyance of the type described in paragraph 5. C. [§ 903] Alice '5 Forbgamnge hold Mortgagz D. R 9041 Notice In the event that Lessee's interest under this Lease is subject to any Mortgage, Agency will simultaneously give to Mortgagee at such address as is specified by the Mortgagee in accordance with Section 902 hereof, a copy of each notice of default from Agency to Lessee hereunder at the time of giving such notice or communication to Lessee. Agency will not exercise any right, power or remedy with respect to any default hereunder, and no notice to Lessee of any such default and no termination of this Lease in connection therewith shall be effective,unless Agency has given to Mortgagee written notice or a copy of its notice to Lessee of such default or any such termination,as the case may be. E. [§ 905] Forbearance byAe=y During the continuance of any Mortgage obtained in accordance with Section 901 of this Lease and until such time as the lien of such Mortgage has been extinguished: (A) Agency shall not agree to any mutual termination nor accept an y surrender of this Lease, nor shall Agency consent to any amendment or modification of this Lease, without the prior written consent of the Mortgagee. (B) Notwithstanding any default by Lessee in the performance or observance of any agreement, covenant or condition of this Lease on the part of Lessee to be performed or observed,Agency shall have no right to terminate tYs Lease unless an event of default shall have occurred and be continuing, Agency shall have given such Mortgagee written notice of such -42- event of default, and such Mortgagee shall have failed to remedy such default, or caused such default to be deemed remedied,within the times specified in(i)and(ii)below. (i) Should any event of default under this Lease occur, any Mortgagee shall have ninety (90)days after receipt of written notice from Agency setting forth the nature of such event of default, and, if the default is such that possession of the Site is reasonably necessary to remedy the default, a reasonable time after the expiration of such ninety (90) day period, within which to remedy such default; provided, however that Agency shall not be required to forbear beyond such initial ninety (90) day period unless (a) the Mortgagee shall have fully cured any default in the payment of any monetary obligations of Lessee under this Lease within such ninety (90) day period and shall continue to pay currently such monetary obligations as and when the same are due, and (b) such Mortgagee shall have acquired Lessee's leasehold estate created hereby or commenced foreclosure or other appropriate proceedings in the nature thereof within such ninety (90) day period, or prior thereto, and shall be diligently prosecuting any such proceeding. Agency agrees that all payments so Wade and all things so done and performed by such Mortgagee shall be accepted by Agency and shall be effective to prevent a termination of this Lease as the same would have been if made, done and performed by Lessee instead of such Mortgagee. (ii) Any event of default under this Lease which in the nature thereof cannot be remedied by a Mortgagee shall be deemed to be remedied if the Mortgagee does all of the following: (a) within ninety (90) days after receiving written Notice from Agency setting forth the nature of an event of default, or prior thereto, the Mortgagee shall have acquired Lessee's leasehold estate created hereby or shall have commenced foreclosure or other appropriate proceedings, (b) Mortgagee shall diligently prosecute any such proceedings to completion, (c) within the ninety(90) day period referred to in (a) above, Mortgagee shall have fully cured any default in the payment of all monetary obligations of Lessee hereunder and any non-monetary obligations which do not require possession of the Site and Improvements, and (d) alter gaining possession of the Site, Mortgagee shall perform and abide by each and all of the obligations of Lessee under this Lease as and when the same are due; provided, however, that Mortgagee shall not be required to cure any default which occurs prior to the date on which Mortgagee obtains possession of the Site and which by its nature cannot be cured by such Mortgagee. (C) In the event that Mortgagee is prohibited by any process or injunction issued by any court of competent jurisdiction or by reason of any action by any court having jurisdiction of any bankruptcy or insolvency proceeding involving Lessee from commencing or prosecuting foreclosure or other appropriate proceedings in the nature thereof, the times specified in paragraph (B) of this Section 905 for commencing; and prosecuting such foreclosure or other proceedings shall be.extended for the period of such prohibition. Notwithstanding anything to the contrary herein,Agency shall in no event be required to forbear hereunder unless Mortgagee shall within ninety (90) days after the giving of notice by Agency pay all moneys due and in respect of which there exists a monetary event of default. i§ 905.1] Codiligns Precedent to-Mortgagee Rigbts and Agmcy Forbearance_ Agency shall not be required to comply with Sections 902 through 905 of this Lease with respect to any Mortgage, unless and until a true copy of the original thereof bearing the date and -43- book and page of recordation thereof, and a certified copy of the original note secured by such Mortgage has been delivered to Agency together with written notice of the address of the Mortgagee to which notices may be sent; and in the event of an assignment of such Mortgage, such assignment shall not be binding upon Agency unless and until a certified copy thereof bearing the date and book and page of recordation together with written notice of the address of the assignee thereof to which notices may be sent,have been delivered to Agency. F. R 906] Performance on Behalf ofLessee In the event that Lessee shall fail to make any payment or perform any act required hereunder to be made or performed by Lessee, teen Agency or Mortgagee may, but shall be under no obligation to, after such notice to Lessee, if any, as may be reasonable under the circumstances, make such payment or perform such act with the same effect as if made or performed by Lessee. Nothing herein shall limit&e right of Mortgagee to take action or make a payment if permitted under its Mortgage. Entry by Agency or Mortgagee.upon the Site and Improvements for such purpose shall not waive or release Lessee from any obligation or default hereunder(except in the case of any obligation or default which shall have been fully performed or cured by Mortgagee). Lessee shall reimburse Agency (with interest at the Interest Rate) or Mortgagee (with interest as provided in the Mortgage) for all sums so paid by Agency or i Mortgagee and all costs and expenses incurred by Agency and Mortgagee in connection with the performance of any such act. G. [§ 907] Nonmerger There shall be no merger of this Lease,or of the leasehold estate created thereby,with the fee estate in and to the Lease Site and Improvements by reason of the fact that this Lease, or the leasehold estate created thereby, or any interest in either thereof, may be held directly or indirectly by or for the account of any person who shall own the fee estate in and to the Lease Site and Improvements, or any portion thereof, and no such merger shall occur unless and until all persons at the time having any interest in this Lease or the leasehold estate, including the leasehold mortgagee and the holder of any mortgage upon the fee estate in and to the Lease Site and Improvements shall join in a written instrument effecting such merger. it. [§ 9081 - A9=Y Coo tion Agency covenants and agrees that it will act and cooperate with Lessee in connection with Lessee's right to grant leasehold mortgages as herein above provided. At the request of Lessee or any proposed or existing leasehold mortgagee,Agency shall within a reasonable time execute and deliver (i)any documents or instruments reasonably requested to evidence, acknowledge and/or perfect the rights of leasehold mortgagees as herein provided; and (ii) an estoppel certificate certifying the status of this Lease and Lessee's interest herein and such matters as are reasonably requested by Lessee or such leasehold mortgagees. Such estoppel certificate shall include,but not be limited to,certification if true by Agency that(a) this Lease is unmodified and in full force and effect(or,if modified, state the nature of such modification and certify that this Lease,as so modified, is in full force and effect), (b) all rents currently due under the Lease have been paid, (c) there are not, to Agency's knowledge, any uncured defaults on the part of Lessee under the Lease or facts, acts or omissions which with the giving of notice or -44- passing of time, or both, would constitute a default. Any such estoppel certificate may be conclusively relied upon by any leasehold mortgagee or assignee of Lessee's interest in this Lease. I. [§ 909] Enforceability The rights granted herein to a leasehold mortgagee shall be enforceable only by such leasehold mortgagee. In the event any action or proceeding is brought to enforce or interpret the provisions hereof or to seek damages or performance or declare the rights of the parties hereto or such leasehold mortgagee,the prevailing party including such leasehold mortgagee,if prevailing, shall be entitled to attorneys' fees,costs and expenses. J. [§ 9101 No Subordinatign of AgenQ +L's�l, tereSts Agency's interest in the Site under this Lease is a vested landlord's reversionary interest and not just a contractu31 obligation of Lessee. Notwithstanding anything which is or appears to be to the contrary in this Lease, Lessee shall not cucumber Agency's interest under this Lease or Agency's fee interest in the Site by any mortgage, deed of trust, lien, security instrument or financing conveyance of any kind whatsoever. K. [§ 911] Certificates to Lenders Lessee and Agency, as the case may be, shall execute, acknowledge and deliver to any lender, promptly upon request, its certificate certifying (a) that this Lease is unmodified and in full force and effect (or, if there have been modifications, that this Lease is in full force and effect, as modified, and stating the modifications), (b) the dates, if any, to which all rent due hereunder has been paid, (c) whether there are then existing any charges, offsets, or defens es against the enforcement by Agency of any agreement,covenant or condition hereof on the part of Lessee to be performed and observed (and, if so, specifying the same),and (d) whether there are then existing any'-defaults by Lessee in the performance or observance by Lessee of any agreement, covenant or condition hereof on the part of Lessee to be performed or observed and whether any notice has been given to Lessee of any default which has not been coved(and, if so, specifying the same). Any such certificate may be relied upon by a prospective purchaser, mortgagee,trustee or beneficiary under a deed of trust which encumbers this Lease. L. [§ 9121 Obligations of Morigag=U=n-Acauisitior of Leasehold Estate_ If the holder of a Mortgage obtained in accordance with Section 901 of this Lease acquires the leasehold estate created hereunder or otherwise acquires possession of the Site and Improvements pursuant to available legal remedies, Agency will look to such holder to perform the obligations of Lessee hereunder only from and aver the date of foreclosure or possession and will not hold such holder responsible for the past actions or inactions of the prior Lessee. Notwithstanding the foregoing, (A) on and after Oie date of such foreclosure or possession, such holder shall be required to perform and abide by ea:h and all of the obligations of Lessee under this Lease and(B) on and after the date of such foreclosure or possession,Agency shall have the right to enforce each and all of the provisions of this Lease against such holder. Nothing herein is intended or shall be construed to Iimit or restrict Agency's rights and remedies against any prior Lessee, provided that Agency's pursuit of such remedies shall not affect the rights of the -45- holder of any Mortgage obtained in accordance with Section 901 of this Lease to the use, enjoyment or operation of the Site and Improvements. X. [§ I0001 INVEMNIFICABON AND INSURANCE A. [§ 1001] Indemnification Throughout the term of this Lease, Lessee agrees to and shall defend,indemnify and hold harmless Agency, the City and their officers, employees, agents, contractors and consultants from and against all claims, liability, loss, damage, costs or expenses (including reasonable attorneys' fees and court costs) arising from or a, a result of the death of any person or any accident, injury, loss or damage whatsoever caused to any person or to the property of any person which shall occur on or adjacent to the Site and which shall be directly or indirectly caused by or based on the Agency's ownership of or interest in the Site or any portion thereof or any improvements thereon or the condition of the Site or any portion thereof or any improvements thereon or Lessee's rehabilitation, development, construction, use or operation of the Site or any portion thereof or any imprvvemenis thereon or any of Lessee's activities under this Lease, whether such actions or inactions thereof be by Lessee or anyone directly or indirectly employed or contracted with by Lessee and whether such damage or injury shall accrue or be discovered before or after the term.nation of this Lease. Lessee shall not be responsible for(and such indemnity shall not apply to) property damage or bodily injury caused by entry onto the Site and Improvements by Agency pursuant to various provisions of this Lease, andlor to the extent caused by the wilful misconduct or active negligence of the Agency or its designated employees or agents. B. [§ 1002] RRNuired Insurance During the tbn,n of this Lease,Lessee at its sole cost and expense shall: 1. _. Keep or cause to be kept a policy or policies of insurance against loss or damage to the Improvements on the Site, resulting from fire, earthquake (to the extent commercially available at commercially reasonable rates), windstorm, hail, lightning, vandalism, malicious mischief, riot and civil commotion,and such other perils ordinarily included in extended coverage fire insurance policies. Such insurance shall be maintained in an amount not less than one hundred percent (I00%)of the full insurable value of the Improvements as defined herein in Section 1003 (such value to include amounts spent for construction of the improvements, architectural and engineering fees,and inspection and supervision). 2. Maintain or cause to be maintained use and occupancy or business interruption or rental income insurance against the perils of fire, windstorm, hail, lightning, vandalism and malicious mischief, riot and civil commotion, and such other perils ordinarily included in extended coverage fire insurance policies, in an amount equal to not less than two times the sum of the highest Participation Rent paid to Agency in any year under this Lease and twelve (12) months fixed operating expenses of 46- Lessee, except to the ext.-nt such insurance is not commercially available at commercially reasonable rates due to reasons other than the wrongful Acts or omissions or dangerous or hazardous activities of Lessee. 3. Maintain or cause to be maintained public liability insurance, to protect against loss from liability imposed by law for damages on account of personal injury, including death therefrom, suffered or alleged to be suffered by any person or persons whomsoever, resulting directly or indirectly from any act or activities of Lessee or urider Lessee's control or direction,and also to protect against loss from liability imposed by law for damages to any property of any person caused directly or indirectly by or from the acts or activities in connection with the Site and improvements of � Lessee or its invitees and sublessees, or any person acting for Lessee, or under its control or direction. Any such property damage and personal injury insurance maintained by Lessee at any time during the term of this Lease shall name Agency, City, and their respective officers,.employees and consultants, as additional insureds and shall also provide for and protect Agency and City against incurring any legal cost in defending claims for alleged loss. Such personal injury and property damage insurance shall be maintained in full force and effect during the entire term of this Lease in an amount not less than Ten Million Dollars ($10,000,000) combined single limit as of the Effective Date of Lease, which minimum amount of coverage shall escalate on the fifth anniversary of the Effective Date of Lease and once every five years thereafter in proportion to the escalation, if any,during such period in the Consumer Price Index. Lessee agrees that provisions of this paragraph 3. as to maintenance of insurance • shall not be construed as limiting in any way the extent to which Lessee may be held responsible for the payment of damages to persons or property resulting from Lessee's activities, or activities of its invitees and sublessees or the activities of any other person or persons for which Lessee is otherwise responsible. 4. Maintain or cause to be maintained worker's compensation insurance issued by a responsible carrier authorized tinder the laws of the State of California to insure employers against liability for compensation under the Worker's Compensation Insurance and Safety Act now in force in California, or any act hereafter enacted as an amendment or supplement thereto or in lieu thereof. Such worker's compensation insurance shall cover all persons employed by Lessee in connection with the Site and Improvements, and shall cover full liability for compensation under any such act aforesaid,based Upon death or bodily injury claims made by, for - or on behalf of any person incurring or suffering injury or death in connection with the Site and Improvements, or the operation thereof by Lessee. 5. In the event that the holder of a Mortgage obtained in accordance with Section 901 of this Lease which has registered its name and address with -47- Agency acquires the leasehold interest created by this Lease, such Mortgagee shall have the right to self-insure with respect to the risks specified in this Section 1002 if such Mortgagee is an institutional lender. C. [§ 1003] 12efinition of-�Full Insgrable Value" The term"full insurable value"as used in Section 1002 shall mean the actual replacement cost (excluding the cost of excavation, foundation and footings below the ground level and without deduction for depreciation) of the Improvements, including the cost of construction of the Improvements, architectural and engineering fees, and inspection and supervision. To ascertain the amount of coverage required, Lessee shall cause the full insurable value to be dctcrmined from time to time by the insurer or by a qualified expert mutually acceptable to Agency and Lessee,not less often than once every three years. D. [§ 1004] Gencp] Insurance P visigns All insurance provided under Section 1002 of this Lease shall be primary insurance for the benefit of Lessee, Agency, and City. Said insurance shall also be for the benefit of the leasehold mortgagee, if any. All insurance provided under Section 1002 shall be periodically reviewed by the parties for the purpose of mutually increasing or decreasing the minimum limits of such insurance, from time to time, to amounts which may be reasonable and customary for similar facilities of like size and operation. The insurance to be provided by Lessee may provide for a deductible or self-insured retention of not more than Crie Hundred Thousand Dollars ($100,000.00), with such amount to increase at such times as Agency may require increases in the policy limits as set forth above; provided that the percentage increase in the deductible or self-insured retention shall not exceed the percentage increase in the Consumer Price Lnaex since the last requested adjustment; and further provided that Lessee may maintain such higher deductibles or self-insured retention as may be approved in writing by the Executive Director of Agency or his designee. In the event such insurance does provide for deductibles or self-insured retention, Lessee agrees that it will fully protect Agency, its boards, officers, and employees in the same manner as these interests would have been protected had the policy or policies not contained the deductible or retention provisions. All insurance herein provided for under Section 1002 shall be effected under policies issued by insurers of recognized responsibility licensed or permitted to do business in the State of California,subject to the reasonable approval of the Agency's Executive Director. Any insurance required to be maintained by Lessee pursuant to Section 1002 may be _ taken out under a blanket insurance policy or policies covering other premises or properties,and other insureds in addition to the parties hereto; provided, however, that any such policy or policies of blanket insurance shall specify therein, or supplemental written certification from the insurers under such policies shall specify, the amount of insurance irrevocably allocated to the coverage to be provided under Section 1002 and provided further, that in all other respects, any such blanket policy shall comply with the other provisions of Section 1002. -48- All policies or certificates of insurance shall provide that such policies or certificates shall not be canceled or materially changed without at least thirty (30) days prior written notice to Agency. Copies of such policies, or certificates thereof subject to the reasonable approval of Agency legal counsel, shall be deposited with Agency together with appropriate evidence of payment of the premiums therefor; and, at least thirty (30) days prior to expiration of any such policy,copies of renewal policies shall be so deposited. E. [§ 1005) Failure to Maintain Ias uance If Lessee fails or refuses to procure or maintain insurance as required by this Lease, Agency shall have the right, at Agency's election, and without notice, to procure and maintain such insurance. The premiums paid by Agency shall be treated as additional rent due from Lessee, to be paid on the first day of the month following the date on which the premiums were paid. Agency shall give prompt notice of the payment of such premiums, stating the amounts paid and the name of the insured(s). F. [§ 1006) M jgsition of. nsura gc Emeerds Resuliine from Loss or Damage_to Improvements (a) Subject to the provisions of paragTaph (b) below, proceeds of insurance with respect to loss or damage to the Improvements to be maintained and repaired by Lessee during the term of this Lease shall be payable,under the provisions of the policy of insurance,to Lessee, or, if such loss or damage involves the need for Lessee to obtain any governmental approvals or permits,jointly to Lessee and Agency,and said proceeds shall constitute a trot fund to be used for the repair, restoration or reconstruction of the Improvements in accordance with plans and specifications approved in writing by Agency. (b) Notwithstanding the foregoing paragraph,within the period during which there is an outstanding Mortgags obtained in accordance with Section 901 of this Lease on all or part of the Site and Improvements,said proceeds shall be made payable as set forth in Sections 709 and 709 of this Lease. (c) In the event this Lease is terminated by mutual agreement of Agency and Lessee, and the Improvements are not repaired,restored or reconstructed,the insurance proceeds shall be applied fast to any payments due under this Lease from Lessee to the Agency, second to restore the Site to a neat and clean conditions and finally any excess shall be paid to Lessee. Provided, however, that within any period when there is an outstanding mortgage or deed of trust upon the Improvements,such proceeds shall be applied first to discharge the debt secured by the mortgage and then for the purposes and in the order set forth above in this paragraph. (d) Lessee hereby waives any claim against Agency and City for any loss covered by insurance of the type specified in Section 1002; and Lessee, shall obtain from its insurance company or companies a waiver of any right of subrogation that it may have against Agency and City. 49- X1. [§ 11001 EMINENT DOMAIN A. [§ i 101] wee to_ iveNoliC� In case of a Taking of all or any part of the Site and Improvements, or the commencement of any proceedings or negotiations which might result in such Taking, Lessee shall promptly give written notice thereof to Agency generally describing the nature and extent of such Taking or the nature of such proceedings or negotiations and the nature and extent of the Taking which might result therefrom,as the case may be. B. [§ 1102) Total k,�k- g In case of a Taking of the fee of the entire Site and Improvements,or in case of the taking of only a part of the Site and Improvements, leaving the remainder of the Site and Improvements in such location, or in such form, shape or reduced size as to render the same not effectively and practicably usable for the conduct thereon of the uses permitted hereunder, this Lease shall terminate as of the daft title vests in the condemning authority or the date the condemning authority is entitled to possession, whichever first occurs (the"Date of Taking"). Any Taking of the Site and Improvements of the character referred to in this Section 1102 which results in the termination of this Lease is referred to herein as a"Total Taking." C. [§ 1103] Partial Taking In case of a Taking of the Lease Site and Improvements other than a Total Taking (a "Partial Taking"), (i)this Lease shall remain in full force and effect as to the portion of the Site and Improvements remaining immediately after such Taking, without any abatement or reduction of Ground Rent or any other sum payable hereunder,and (ii) Lessee,to the extent the awards or payments, if any, oft account of such Taking shall be sufficient for the purpose, at its expense, but first subject to Section 1104(a), shall within a reasonable period of time commence and complete, or cause to be commenced and completed, Restoration of the Site and Improvements as nearly as possible to its value,condition,and character immediately prior to such Taking,with such alterations and additions as may be made at Lessee's election pursuant to and subject to the terms of Section 705,except for any reduction in area caused thereby; provided,however,that in case of a Taking for temporary Use Lessee shall not be required to effect Restoration until such Taking is terminated. D. [§ 1104] Appligation of Awards ands Other P ymcnts Awards and other payments on account of a Taking:, less costs, fees and expenses incurred in the collection thereof("Net Awards and Payments")shall be applied as follows: (a) In case of a taking other than a Total Taking or a Taking for temporary use, ` Lessee shall furnish to Agency and any Mortgagee evidence satisfactory to Agency and the Mortgagee of the total cost of the Restoration required by Section 1103. (b) Net Awards and Payments received on account of a Taking other than a Total Taking or a Taking for temporary use shall be held and applied as provided with respect to -50- proceeds of insurance in Section 1006. The bal?nce, if any,shall be paid to Lessee and Agency as their respective interests may appear in the S ite and the Improvements. (c) Net Awards and Payments received on account of a Taking for temporary use shall initially be received by Lessee; provided, however, that the amount of such award shall be added to Gross Room Revenue for the purpose of calculating Ground Rent under this Lease, not to exceed however the average Gross Room Revenue of the three (3) years prior to the Taking, as adjusted for the period of the Taking. (d) Net Awards and Payments received on account of a Total Taking shall be allocated as follows: Erg: There shall be paid to each Mortgagee an amount equal to the sum of any unpaid principal amount of the indebtedness secured by the Mortgage, if any, and any interest accrued thereon, all as of the date on which such payment is made; provided, however, that each such Mortgagee shall only be paid to the extent of its security in the applicable portion which is the subject of the taking. Second: To the Lessee and the Agency as their respective interests may appear in the Site and the Improvements; provided, that any payment to a Mortgagee or pursuant to the preceding paragraph shall be charged against Lessee's interest. XII. [§ 1200) M A. [§ 12011 De ults-GCeral (a) Subject to the extensions of time set forth in Section 1314 of this Lease, failure or delay by either party to perform any term or provision of this Lease and failure or delay by Lessee to perform any of its obligations that are set forth in that certain"License Agreement to Provide Landscaping and Other Improvements in the Public Right-of-Way" entered into by and among the City, The Waterfront Hotel, LLC, and Mayer on or about February 20, 200I (the "License Agreement"), constitutes a default under this Lease. The party who so fails or delays must immediately commence to cure, correct, or remedy such failure or delay, and shall complete such cure, correction or remedy with reasonable diligence and, in any event, for monetary defaults within thirty (30) days of such failure or delay,and for non-monetary defaults within the time reasonably required for cure with reasonable diligence, not to exceed one hundred and eighty (180) days plus any period or periods of enforced delay required by Section I314 of this Lease(the"Cure Period"). (b) The injured party shall give written notice of default to the party in default, specifying the default complained of by the injured party. Except as required to protect against further damages, and except as otherwise expressly provided in Sections 1207 and 1208 of this Lease, the injured party may not institute proceedings against the party in default until the expiration of the applicable Cure Period. Agency's exercise of its remedies cinder this Article XII I shall be subject to the provisions of Article IX of this Lease. Failure or delay in giving such notice shall not constitute a waiver of any default,nor•shall it change the time of default. -51- (c) Except as otherwise expressly provided in this Lease, any failure or delay by either party in asserting any of its remedies or rights as to any default shall not operate as a . waiver of any default or of any such rights or remedies or deprive either such party of its right to institute and maintain any actions or proceedings which it may deem necessary to protect, assert or enforce any such rights or remedies. B. [§ 1202] Legal Actions 1. [ 12033 Institution of Legal Actions In addition to any other rights or remedies, either party may institute legal action to cure, correct,or remedy any default,to recover damages for any default,or to obtain any other remedy consistent with the purpose of this Lease. Such legal actions must be instituted in the Superior Court of the County of Orange, State of California, in any other appropriate court in that county, or in the Federal District Court in the Central District of California. 2. [§ 1204] Applicable Law The laws of the State of California shall govern the interpretation and enforcement of this Lease. 3. [§ 1205] Agcotame of Service of Process In the event that any legal action is commenced by Lessee against Agency, service of process on Agency shall be made by personal service upon the Chairman or Executive Director of Agency,or in such other mariner as may be provided by law. In the event that any legal action is commenced by Agency against Lessee, service of process on Lessee shall be made by personal service upon an officer of the general partner of Lessee and shall be valid whether made within or without the State of California, or in such manner as may be provided by law. 4. [§ 1206) AttomM'-Fees&ind Court Cost In the event that either Agency or Lessee shall bring or commence an action to enforce the terms and conditions of this Lease or to obtain damages against the other party arising from any default under or violation of this Lease,then each party shall bear and pay the cost of its own costs and attorneys fees. C. [§ 1207] Rights and Remedies are Cumulative Except with respect to rights and remedies expressly declared to be exclusive in this Cease, the rights and remedies of the parties are cumulative, and the exercise by either party of one or more of such rights or remedies shall not preclude the exercise by it, at the same or different times, of any other rights or remedies for the same default or any other default by the other party. -52- D. [§ 1209] Damages If either party defaults with regard to any of the provisions of this Lease, the non- defaulting party shall serve written notice of such default upon the defaulting party. If the default is not commenced to be cured within thirty(30)days after service of the notice of default and is not cured prior to the expiration of the applicable Cure Period,the defaulting party shall be liable to the non-defaulting party for any damages caused by such default,and the non-defaulting party may thereafter (but not before) commence an action for damages against die defaulting party with respect to such default. E. [§ 1209) Specific Performance If either party defaults with regard to any of the provisions of this Lease, the non- defaulting party shall serve written notice of such default upon the defaulting party. if the default is not commenced to be cured within thirty(30)days after service of the notice of default and is not cured prior to the expiration of the applicable Cure Period, the non-defaulting party,at its option, may thereafter (but not before) commence an action for specific performance of the terms of this Lease pertaining to such default. F. (§ 1210] Additional Remedies of Agtncv (a) if Lessee defaults with regard to any of the provisions of this Lease,Agency shall serve written notice of such default upon Lessee. Subject to the provisions of Article IX of this Lease running in favor of Mortgagee,if the default is not commenced to be cured promptly after service of the notice of default and/or if the cure is not prosecuted to completion with all due diligence and in any event prior to the expiration of the applicable Cure Period, Agency, at its option,may thereafter(but not before): 1. Correct or cause to be corrected said default and charge the costs therefor to the account of Lessee; 2. Correct or cause to be corrected said default and pay the costs thereof from the proceeds of any insurance; 3. Continue this Lease and Lessee's right to possession in effect and enforce its rights and remedies under the Lease, including the right to recover rent as it becomes due, as provided in Section 1951A of the California Civil Code. 4. Have a receiver appointed to take possession of Lessee's interest in the Site and Improvements,with power in said receiver to administer Lessee's interest therein, to collect all funds available to Lessee in connection with its operation and maintenance thereof, and to perform all other acts consistent with Lessee's obligations under this Lease as the court deems proper, 5. Maintain and operate the Site and Improvements without terminating this Lease. , -53- 6. Terminate this Lease pursuant to Section 1211 hereof, by written notice to Lessee of its intention to do so. (b) Agency reserves and shall have the right at all reasonable times to enter the Site and the Improvements for the purpose of viewing and ascertaining the condition of the same, or to protect its interests in the Site and the Improvements or to inspect the operations conducted thereon, subject to the limitations and requirements for Agency rights of access set forth in Section 405 of this Lease. Any such entry shall be made only after reasonable notice to Lessee. In the event that such entry or inspection by Agency discloses that the Site or the:Improvements are not in a decent, safe, and sanitary condition, are damaged, or in disrepair,Agency shall have the right, after thirty (30) days written notice to Lessee and Lessee's failure to cure the problem within the Cure Period, to have any necessary maintenance or repair work done for and at the expense of Lessee and Lessee hereby agrees to pay promptly any and all costs incurred by Agency in having such necessary maintenance or repair work done in order to keep the Site and the Improvements in a decent,safe and sanitary condition. (c) The rights reserved in this Section 1210 shall not create any obligations on Ag-.ncy or increase obligations imposed on Agency elsewhere in this Lease,and shall not defeat, render invalid or limit the rights or interests expressly provided in this Lease for the protection of leasehold mortgagees. G. [§ 12111 Remedies and Rights 2LTermination, (a) In the event that at any time during the term of this Lease,and in violation of this Lease,Lessee shall: 1. Fail to'commence and/or complete the construction of the Improvements as required by this Lease or within the time required by this Lease; 2. Abandon or substantially suspend construction of the Improvements as required by this Lease prier to the completion thereof and issuance of a Release of Construction Covenants therefor by Agency ; 3. Use the Site and Improvements for any purpose other than those provided for in this Lease or fail to use and maintain the Site and Improvements in accordance with Section 501 of this Lease; 4. Fail or refuse to pay to Agency when due the applicable rents and other sums required by this Lease to be paid by Lessee,including but not limited to payments required under Sections 300 et seq. of this Lease; 5. Fail or refuse to pay when due any taxes,assessments or other Impositions as required by this Lease; 6. Make or suffer to be made any voluntary or involuntary conveyance, assignment, sublease or other Transfer of the leasehold interest in the Site and Improvements, or any part thereof, or of the rights of Lessee under this Lease; -54- 7. Commit or suffer to be committed any waste or i mpairment of the Site or the Improvements,or any part thereof; 8. Alter the Improvements in any manner except as expressly permitted by this Lease; 9. Fail to maintain insurance a3 required by this [ease; 10. Fail to make full repair and restoration of the Improvements in the event of damage or destruction; 11. Engage in any financing except as permitted by the terms of this Lease,or any other transaction creating any mortgage on the Site, or placing or suffering to be placed thereon any lien or other encumbrance, or suffering any levy or attachment to be made thereon; 12. Voluntarily file or have filed against it any petition under any bankruptcy or insolvency act or law,or be adjudicated a bankrupt, or make a general assignment for the benefit of creditors; 13. Fail to pay when due any payment or charge or otherwise default on any loan secured by a leasehold mortgage permitted by this Lease; 14. Abandon or surrender possession of the Site,or Lessee's interest therein; 15. Fail to performm any of Lessee's Hazardous Substances covenants; 16. • Fail to perform any obligation of Lessee set forth in the License Agreement referred to in Section 1201(a)hereof;or 17. Fail to perform or comply with any other material term or provision hereof, and any such failure or violation shall not be cured or remedied within the applicable Cure Period; then, in such event, subject to the provisions of Article IX of this Lease mmning in favor of any Mortgagee,Agency may,at its option and Ln addition to any other remedy provided.for in this Lease,terminate the Lease and revest in Agency the leasehold interest theretofore transferred to Lessee,by written notice to Lessee of its intention to do so. (b) Upon termination of this Lease pursuant to this Section 1211 it shall be lawful for Agency to re-enter and repossess the Site without process of law,and Lessee, in such event,does hereby waive any demand for possession thereof, and agrees to surrender and deliver peaceably to Agency immediately upon such termination in good order, condition and repair, except for reasonable wear and tear. Upon such termination title to all Improvements on the Site specified in this Lease to remain in Agency,shall remain in Agency. (c) No ejectment, re-entry or other act by or on behalf of Agency shall constitute a termination unless Agency gives Lessee notice of termination in writing. Such termination shall -55- not relieve or release Lessee from any obligation incurred pursuant to this Lease prior to the date of such termination. (d) Termination of this Lease under this Section 1211 shall not relieve Lessee from the obligation to pay any sum due to Agency or from any claim for damages against Lessee. Damages which Agency may recover in the event of default under this Lease shall include, but are not limited to,the worth at the time of award of the amount by which the unpaid rent for the balance of the Lease term remaining after the time of award exceeds the amount of such rental loss that Lessee proves could be reasonably avoided. (e) The right of termination provided by this Section 1211 is not exclusive and shall be cumulative to all other rights and remedies possessed by Agency, and nothing contained herein shall be construed so as to defeat any other rights or remedies to which Agency may be entitled. H. [§ 1212] No CrQss Defaults Except as otherwise specifically set forth in this Lease or the Agreement, a breach or default by either party under the Agreement as to a parcel of property other than the Site of this Lease shall not constitute a breach or default hereunder, and, except as otherwise specifically set forth in this Lease or the Agreement, a termination, in whole or part, of the Agreement as to a parcel of property other than the Site of this Lease shall not terminate or modify Agency's or Lessee's rights or obligations hereunder. X1I1. [§ 1300] GENERAL PROVISIONS A. [§ 1301] Notices. Demands and-Communications btween the.Parties Formal notices, demands and communications between Agency and Lessee shall be sufficiently given-if dispatched by registered or certified mail, postage prepaid, return receipt requested, to the principal offices of the Agency and of Lessee as designated in Section 103 and Section 109 hereof. Such written notices,demands and communications may be sent in the same manner to such other addresses as either party may from time to time designate by mail as provided in this Section. Sufficient notice may also be given by personal delivery or reputable overnight delivery service in lieu of mail if reasonably adequate records are maintained of such service in the ordinary course of business by the person or entity effecting such service. . . B. [§ 1302] lime of Essence Time is of the essence with respect to the perfonnance of each of the covenants and agreements contained in this Lease. C. [§ 13031 Conflict 'Interests ` (a) No member, official or employee of Agency shall have any personal interest, direct or indirect, in this Lease, nor shall any such member, official or employee participate in any decision relating to the Lease which affects his personal interests or the interests of any corporation,partnership or association in which he is directly or indirectly interested. -56. (b) Lessee warrants that it has not paid or given,and will not pay or give, any officer or employee of Agency or City any money or other consideration for obtaining this Lease. D. [§ 1304] v OfficiII5 No member, official or employee of Agency shall be personally liable to Lessee, or any successor in interest, Ln the event of any default or breach by Agency or any for any amount which may become due to Lessee or successor or on any obligations under the terms of this Lease. E. [§ 1305) Inspection of Books it Rg&ords (a) Agency has the right at all reasonable times to inspect the books and records of Lessee pertaining to the Site and Improvements as pertinent to the purposes of this Lease. Lessee also has the right at all reasonable times to inspect the books and records of Agency pertaining to the Site and Improvements as pertinent to the purposes of this Lease. (b) In the event that the holder of a Mortgage obtained in accordance with Section 901 of this Lease acquires the leasehold estate created by this Lease, then, in such an event, Agency acknowledges and agrees that Agency shall not be entitled to examine and/or audit all of the books and records of said Mortgagee, but shill only be entitled to examine such books, records and tax returns of the Mortgagee or portions thereof solely to the extent that they relate to the Site and Improvements and the Mortgagee's operation thereof. F. [§ 1306] No PArtne[ hip Neither anything in this Lease contained, nor any acts of Agency or Lessee shall be deemed or construed by any person to create the relationship of principal and agent, or of partnership,or of joint venture,or of any association between Agency and Lessee. G. [§ 1307] Compliance with Law Except as otherwise expressly provided in the Development Agreement and/or the Agreement,Lessee agrees,at its sole cost and expense,to comply and secure compliance with all the applicable and valid requirements now in force, or which may hereafter be in force, of all municipal, county, State and federal authorities,pertaining to the Site and Improvements,as well as operations conducted thereon,and to faithfully observe and secure compliance with, in the use of the Site and Improvements, all applicable county and municipal ordinances and state and federal statutes now in force or which may hereafter be in force, including all laws prohibiting discrimination or segregation in the use,sale,lease er occupancy of the property. H. [§ 1308) ,Surrender of PmDaty- Except as otherwise expressly provided in this Lease, upon the expiration or termination of this Lease pursuant to the terms hereof, it shall be lawful for Agency to reenter and repossess the Site and Improvements without process of law,and Lessee, in such event,does hereby waive any demand for possession thereof, and agrees to surrender and deliver the Site and -57- Improvements peaceably to Agency immediately upon such expiration or termination in good order, condition and repair,except for reasonable wear and tear. L [§ 1309] Sevembility If any provision of this Lease shall be adjudged invalid or unenforceable by a court of competent jurisdiction, the remaining provisions of this Lease shall not be affected thereby and shall be valid and enforceable to the fullest extent permitted by law. J. [§ 1310) BindingE�ffec_t This Lease, and the terms, provisions, promises, covenants and conditions hereof, shall be binding upon and shall inure to the benefit of the parties hereto and their respective heirs, legal representatives,successors and assigns. K. [§ 1311] Assi mentor Sublease to City--Right-of First-Refusal 1. Agency shall at all times have the right to assign and/or convey all or a portion of its interest in the Site and/or in the Lease to the City or, subject to Lessee's right of first refusal set forth in Section 1311.2 of this Lease, to any other person or entity. In the event of any assignment of all or a part of Agency's interest in either the Site or the Lease to the City or other person or entity, Lessee shall attom to the City or such other person or entity and recognize City or such other person or entity as the landlord under this Lease,and the City or such other person or entity shall not disturb Lessee's right to possess the Site and Improvements subject to the provisions of this Lease. 2. Between the Effective Date of the Lease and the expiration or termination of this Lease, and so long as Lessee is not in default hereunder, Agency shall not sell,convey, transfer, or otherwise dispose of all or any portion of or any interest in the Site to any third person or entity other than the City (other than a pledge of any of its income under this Lease or other financing transaction) until it shall first have offered such portion or interest to Lessee in the manner specified below: (a) Agency shall deliver a notice (the "Notice") to Lessee of (i) Agency's bona fide intention to sell, transfer or otherwise dispose of all or any portion of or any interest in the Site, (ii) the portion or interest proposed to be sold, transferred or otherwise disposed of(the "Offered Interest), and (iii) the offering price and all other material terms for which Agency proposes to sell,transfer,or otherwise dispose of the Offered Interest. (b) Within sixty (60) days after receipt of the Notice, Lessee or its permitted assignee may accept Agency's offer by delivering to Agency a writing agreeing to purchase the Offered Interest on the terms offered by Agency. Any such acceptance of Agency's offer shall be accompanied by a deposit equal to ten percent(1090)of the purchase price which deposit shall be retained by Agency as liquidated damages in the event that the purchase is not completed due to a default by Lessee. If Lessee accepts Agency's offer to sell the Offered Interest the parties shall consummate such purchase promptly in accordance therewith. -58- (c) If Lessee and Agency do not enter into an agreement to pur chaselsell the Offered Interest as set forth in subparagraph (b) above, or (ii) if Lessee and Agency enter into such an agreement but Lessee fails to complete the purchase as set forth in subparagraph (b) above, Agency may sell the Offered Interest to any person at any price and upon any terms, as Agency shall determine, provided that the purchase price for the Offered Interest, and the terns of the sale, shall be no more favorable to the purchaser than the terms of the Notice. For purposes of comparing whether an offer by Lessee is more or less favorable than an offer by a third party,any financed portion of the offered purchase price shall be discounted to present cash value using the prime lending rate of Wells Fargo Bank or comparable financial institution. If such sale is not consummated within two (2) years from the date of the Notice, Agency shall again be obligated to first offer to sell the Offered Interest to Lessee as set forth in this Section. L. [§ 13121 The captions contained in this Lease are merely a reference and are not to be used to construe or limit the text. M. [§ 1313] No Recording otUs-Le&sg This Lease shall not be recorded. Pursuant to the Agreement, a memorandum of this Lease will be recorded in the Official Records of Orange County. N. [§ 1314] Enfo ed Dglay in RgrL®3ncgLrCauSes,Beypj]d Control of Party In addition to specific provisions of this Lease, performance by either party hereunder shall not be deemed to be in default where delays or defaults are due to causes beyond the control and without the fault of the party claiming; an extension of time to perform, including war, insurrection; strikes; lockouts; riots; floods; earthquakes; fires; casualties; acts of God; acts of the public enemy; epidemics; quarantine restrictions; freight embargoes; lack of transportation; governmental restrictions or priority; litigation; unusually severe weather; inability to secure necessary labor,materials or tools;delays of any contractor or supplier,acts or failure to act of the City or any other public or governmental agency or entity(other than any act or failure to act of Agency, which shall not excuse performance by Agency). An extension of time for any such cause shall be for the period of the enforced delay and shall commence to run from the time of the commencement of the cause. If,however,notice by the party claiming such extension is sent to the other party more than thirty (30) days after the commencement-of the cause, the period shall commence to run only thirty (30) days prior to the giving of such notice. Times of performance under this Lease may also be extended in writing by Agency and Lessee. O. [§ I315] Eatia Agromml. W ' • (a) This Lease is executed in two (2) duplicate originals, each of which is deemed to be an original. This Lease includes sixty-three(63)pages and three(3)exhibits. (b) All waivers of the provisions of this Lease must be in writing and signed by the appropriate authorities of Agency or Lessee and all amendments hereto must be in writing and signed by the appropriate authorities of the Agency and Lessee. During the term of any Mortgage obtained in accordance with Section 901 of this Lease, any amendment to this Lease -S 9- shall require the written approval of the Mortgagee, which approval shall not unreasonably be withheld. P. [§ 13161 Off--setstatement.Attomment an&subordinatiosr 1. Off-set Statement. The parties shall, at any time and from time to time upon not Iess than ten (10) days' prior written notice from the other party, execute, acknowledge and deliver to such requesting pasty a statement in writing (a) certifying that his Lease is unmodified and in full force and effect,or,if modified,stating the nature of such modification and certifying that this Lease, as so modified, is in full force and effect) and the dates to which the rent and other charges are paid in advance, if any, without any offset or defense thereto (if such be the case) and (b) acknowledging that there are not, to such certifying party's knowl edge, any uncured defaults on the part of the requesting pasty hereunder, or specifying the defaults if any are claimed. Any such statement may be relied upon by any prospective purchaser or encumbrancer of the Improvements,the Site or ofalI or any portion of the real property of which the Site are a part. Lessee shall bear all costs with respect to any statements requested of Agency. ?. Bt Ze J. In the event any proceedings are brought for the foreclosure of,or in the event of the conveyance by deed in lieu of foreclosure, or in the event of exercise of the power of sale under, any mortgage anda'or deed of trust made by Agency covering the Site, or, subject to Section 1311.2 of this Lease,in the event Agency sells,conveys or otherwise transfers its interest in the Site, Lessee hereby attorns to, and covenants and agrees to execute an instrument in writing reasonably satisfactory to the new owner whereby Lessee attoms to the successor in interest and recognizes the successor as the Agency under this Lease. 3. S&rdzn gion. Lessee agrees that this Lease shall, at the request of the Agency, be subordinate to any mortgages or deeds of trust that may hereafter be placed upon the fee of the Site by Agency and to any and all advances to be made thereunder, and to the interest thereon, and all renewals, replacements and extensions thereof, provided that the mortgagees or beneficiaries named in said mortgages or trust deeds shall execute and deliver a written non- disturbance and attomn:ent agreement by and among Lessee, Lessor and such mortgagees or beneficiaries, in form reasonably satisfactory to Lessee and its counsel and the holder of any Mortgage and their counsel, which shall provide the following assurances for the benefit of Lessee and its permitted assignees, sublessees,successors and assigns: (i) the leasehold estate granted by this Lease shall not be affected in any manner by any foreclosure action., trustee's sale or other action taken or proceeding commenced under or in connection with any mortgages or deeds of trust placed upon the fee of the Site by Agency, or by any taking of possession of the Site pursuant thereto, or by the exercise of any rights or remedies in connection therewith; (ii) if the interest of Lessor under this Lease is transferred in connection with any foreclosure action, trustee's sate or other proceedings brought under any mortgages or deeds of trust placed upon the fee of the Site by Agency (including, without limitation, any transfer by deed in lieu of foreclosure), then, so long as Lessee is not in default in the performance of the terms, covenants and conditions of this Lease beyond all applicable notice, grace and Cure -60. • Periods,the transferee of any such interest of Lessor(including, without limitation, the holder of any such mortgage or deed of trust), together with its successors and assigns (collectively, "Lessor's Transferee"), shall not terminate this Lease or interfere with or disturb Lessee in its possession, use, occupancy or quiet enjoyment of the Site under this Lease, for the remaining term of this Lease (as the same may be earlier terminated pursuant to any other Article of this Lease),subject to all of the terms,covenants and conditions of this Lease; (iii) Lessee shall not be named or joined in any foreclosure action,trustee's sale or other proceeding to enforce any mortgages or deeds of trust placed upon the fee of the Site by Agency;and (iv) any Lessor's Transferee will accept the attonunent of Lessee And will assume and perform all of Lessor's obligations under the Lease for the benefit of Lessee and its successors and assigns. The foregoing written assurances shall, at Lessee's request, also be provided to any permitted assignee or sublessee of Lessee under the Lease. Lessee also agrees that in the event Agency and any mortgagee or beneficiary elect to have this Lease prior to such mortgage or deed of trust, and upon notification by Agency or such mortgagee or benefieiary'to Lessee to that effect, this Lease shall be deemed prior in lien to such mortgage or deed of trust, whether this Lease is dated prior to or subsequent to the date of said mortgage or deed of trust. Lessee agrees that upon the request of Agency,or any mortgagee or beneficiary, Lessee shall execute whatever instruments may be required to carry out the intent of this section. [§ 13171 Approvals Except as expressly provided otherwise in this Lease, approvals required of Agency or Developer shall not be unreasonably withheld,conditioned or delayed. (1318] Counterparts This Lease may be executed in counterparts and when so executed, each such counterpart will constitute an original document and such counterparts will constitute one and the same agreement. [The remainder of this page has been intentionally leR blank. Signatures on next page.) -61- "AGENCY" REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH, a public body, corporate and politic Dated: 4al 2001 By: 64 ffLce,��, Chairman ATTEST: APPROVED AS TO FORM: Agency Clerk Agency General Counsel REVIEWED AND APPROVED: INITIATED AND APPROVED: Ild 6 if' Ray Sil- r,Executive Director Director of Economic Development e4 d ��1� CXCGGlfu�'�IrCGJ��'Y APPROVED AS TO FORM: Kane,Ballmer K Berkman Agency Special Counsel -62- "LESSEE" PCl l BEACH RESORT,LLC,a California limited liability company By: GRAND RESORT,LLC,a California limited liability company, Managing Member By: RLM Management, Inc.,a California corporation,Manager BY: x 6 1 abert L-Mayer,Chaonan Hh1Wf+ClosingPame1A-81Lease3 -63- EXHIBIT"A" MAP OF THE SITE [SEE ATTACHED] EXHIBIT"A" TO GROUND LEASE .MAP OF THE SITE E'LY LINE SEC 14. T. 6 S., R. 11 W.. M.M. 51/14 I I N'LY LINE S 1/2, NE 1/4 SEC 14.M M. 51/14.5.. R.11.W., f N35'22'25 E (R) IP.O.B. N89.42-W= 1656.7 ' L-05'54'16" R-2452.00' L-252.68' 1A, r N48'43.21"w 38.85' y A PTO THE SITE 45.56 AC. SR. 'gip S004`�? 0 H 00 V 00 ST �sG N 4 NC(744'22"W 12.63' ` • N53'05'49"w 172.33' S74.34'12"W 45.01' �t ' At EXHIBIT"131 LEGAL DESCRIPTION OF THE SITE That certain real land located in the City of Huntington Beach, County of Orange, State of California,described as follows: LOT I OF TRACT NO. 15535,AS SHOWN ON A MAP FILED IN BOOK 790 PAGES 44 TO 50 INCLUSIVE, OF MISCELLANEOUS MAPS, RECORDS OF ORANGE COUNTY, CALIFORNIA. EXHIBIT"C" ARTICLE VIII OF THE THIRD AMENDED AND RESTATED LEASE [See attached] erlt a11: KANtr UALLM M 6 D=MMMAN dij DeD UU01i U01Llful U.UUCM, 'I Ova era ARTICLE V111 I SSOR COVENANT W RESTRICT usE of clTy BEACH AROPERTY 8.1 �teaitels. (a) The city Of Runtiington Saa,ch is one of the owners in fee of "at certain real property located in this City of •Huntington Beach, California, and bounded on the north by the right-of-way line for Pacific Coast Highway, on. the cast by Huntington Beach State rnrk, on the south by the mean high tide line of the Pacific ocean, and on the west by an imaginary lisle extending couthvard from the westerly side of the intersection of Pacific Coast Highway and Tiuntington Street (hereinafter referred to as the *city beach Property") . The City $arch Property im inars particularly deaGribed in Exhibit PCs attached hereto and incorporated herein by thle reference. (b) Lcaeee will be Constructing, operating, atria maintaining on the premises ocean-oriented, viaitar-serving commercial faciiitiem which are designed • to take full M`W To GROUD1L'E�SE DAt'lA 7 .' f A Received War-21-01 06:05pm From-213 6251931 To-RATAN Pace .02 s4116 uy. "11r-a oaL.L..nQn a QQ11M +O. 41a uu uV018 u.71411u, u.vu1-.njjV3Jj&-1f"4Fr0y0 .ifs - advantage of the existing ocean views across pacific Coast Highway, Lessee desires to obtain assurances from Lessor that such views will not be obstructed during the tPrr. of , this Lease. (c) pursuant to the California Coastal Act of 2.976, As !Trended (Public Recources Code Section 30000, • et the City of Huntington Beach has prepar#d and the California COa8ta1 Commission has certified a Local Coastal Flan (hereinafter the OLCPO) for that portion of the City of Huntington Beach that is located within the Coastal Zone, including the City Beach rroperty. On January 19, 1951, the City Council of the City adopted Resolution No. 4954 adopting the LCP in the form of the Coastal Element or the City•a General Plata the Ler has subsequently been amended through the City Council*z adoption or Resolution No. 5147 on August Z. 1902, Resolution No. 5267 on May 16, 1983, and Resolutions No. 5341 on January 3, 1984. The LCIP is a public record, a copy of which is available for inspection at the office of the City clerk at the City of Kuntington Beach, 2000 Main Street, Huntington Beacb, California 92648. The LCP requirrs MPreservation or as 3nuch reacts sand area an possible in order to accommodates futurs,levelr of beach attendance." (LCP. Section 2.3.) The LCP -further establishes ae a policy the "increased numbars of hotel/!Hotel rooms and restaurants in the Coastal zone. " (Id., at Section 3.3.) The LCP designates the entire City B4aacli property for EXH�_BT "C" 'TO GROUND LEA$£ t7,..•.� ? n F R - Reeiired Mar-21-01 OE:05pm from-213 Ei5 0931 to-RUTAX Page 03 Cn[ Cy: r%Atic, cHLLraCh a acnrohwi, Lla V47 V15019 V.]1LIIV, u.u#rwFjc cn&_wv% cPrayc +!� recreational utsa in which the "principal permitted uses are limited to open Band areas, beach related recreational activities, and under certain conditions, parking lots, concessions and camping." (Id. , at Figure 9.11 and section 9.2.5.) The LCP further "prohibit(&) development of paarmanent above-ground siructures *on the )baalch sand areal" on the City ]Beach Property vith the exception or liteguara towers and . other public safety racil.ities, public restroomm and beach concession stands When located Immediately adjacent to paved parking or access areas, fire rings, volleyball nets, bike trails, bike support facilities, and handicapped access. rinally, the LCP "prehibit(c) expansion of parking facilities that would result in . the loss of recreational sand area ." (xd. , at Section 9.5.1.) (d) on October 10, 1983, the city council of the City Adopted Resolution Nc. $308 a,b and c, approving and adopting the Downtown Specific Plan {hereinafter the "Specific Tian`) for the implementation of the LCP. The cntire City Bench Property is located 1n District Eleven of tho Specific Plan, which Is designated for beach-related open ' ,apace and recreational used. District Eleven `I& Intended to preaerve and protect the sandy beach area vitnin t1ka [Downtflwnl Specific Plan boundaries while allowing • parking and auxiliary convenience uses.' (specific plan. Section 4.13.) pursuant to the Specific plan, the only uses and Structures permitted on the City Heads Prnp�rty Brae access EXHIBIT "C" TO GROUND LEASE Pants I of R Re:etred �lar�2l-01 OE:09am FrIM-M 925 0931 Ta-RUTAN Page 04 *OIL ♦ Y. of LL.011% ril. GIN U44 Wool, UJ1eIIVI u.Lit �resWc J17 a facilities, basketball courts, beach concession stands at Intervals no closer than one thousand (1,000) feet and limited to tuo thousand five hundred (Z,Safl) square feet per building, bicycle and jogging trails and support facilities, fire rings, lifeguard toweria and othar structures necessary for health or safety, paddleboard courts, surface parking Iota or public transit facilities that will not result in the loess of recreational sand areas, provided that any tiered parking shall be designed no that the top of the structures including Walls, etc. , are located a minimum of one foot below the =aximum height of the adjacent bluff, park offices, playground equipment, public restrooms, public dressing rooms or showers, shoreline construction' that may' alter natural shoreline process (such as groins, cliff retaining walls, pipelines, and outlalls that are designed to eliminate adverse impaetB on local shoreline sand supply) , and volleyball net supports. (c) Lessor and U-s-see desire to ensure the long- term maintenance of the city Beach Property for beach-related uses c0n1qi,st8nt with the LCP and Specific Flan, to promote the davelartaent and aperation of high-quality visitor-aervinq commercial uses on the Pranises, and to provide a long-terse source of revenue to the City to enhancer the city'• implazontation of the LCP and S&cif ie plan or for other public purposes as determined by the City in its sale discretion. EXMtH1T ^C" TO CROUNo LEAST Pnvl� Q nF a Received Mar-II-01 08 4 5aat From-I13 ON C931 To-RUTM Pefe 05 bill UY. oMLLl[Cn a Cr-llf%n%11 COO wKJ U044, U.21 a If vl U.vrr/wi1rlr ifA raver oVc {JJa . - 9.2 Rectrictions On Development, an_Cit„X Beach Property. Lessor covenantu not to construct or maintain 'or permit to be constructed or maintained any improvements or structures on the City beach Property excepting only the following:* access facilities, basketball courts, beach concession stands at intervals no closer than one thousand (i3OOO) feet and limited to txra thoUgand five hundred (Z,SOO) square feat per building, bicycle and jogging trails and support facilities, fire rings, lifeguard towers and other structures naccssary for baalxh or safety, paddieboard courts, parking lots and public transit facilities that will not result in the lose of recreational sand area and that will not extend above the existing grade of the •adjacent ctratch of Pacific coast Highway, spark offices, playground equipment. public rectrooms, public dressing rooms or shcwars, shoreline construction that may alter natural shoreline process (such ac groins, cliff retaining valls, pipelines, and outtalls that ore designed to aliiainate adverse impacts on basal shoreline nand supply) , volleyball net supports, and pedestrian overcrossing(s) of pacific coast a3igbway. �bo roal�r en . ei- The nck'i+ y EXHIBIT "C" To U o t:u MS2 Paves S of R ' RaWyed MSS-ZI-41 04:0592 FfOR-tt! 615 0231 To-RUTAN Page 05 w•.. wr/. •w.•.w/ rM�w«•r • .� rrrr...•.++.• ti. / rLr V.aYI/ VV/S//V V.V/1 /./����1/OVR/1 OyC //O 46yn a - ` _y.ii pia&iYe, - 8.4 Pro ert tc be benefited bX cit •s Covenant. The covenants set forth in Sections 8.2 and 0 .3 are Intended to burden and benefit the City beach Property and the premises. mLt such time that there is a Disposition Transfer of a Separate Development Parcel within rho 3mesidential Portion of the Site, pursuant to the DDA, the benefit and burden of this . Agreement shall be removed from such Separate Development Parcel only. At such time that there is a Disposition Transfer of a Separate Development Parcel vithin the corn arciii Portion of the Site, pursuant to the . Dnh# the benefit and burden of this agreement shred continue in effect With respect to such Separate Development parcel. • At such time that the DDA is terminated, the benefit and burden of Sections 8.2 and 8,3 shall.be removed from any portion-ot "a Premises that has not been the subject of a Disposition Transfer. Accordingly, after all of the Disposition Transfers contemplated in the DD,A have occurred, the benefit and burclan of this Agreement shall apply to all of the EXHIBIT /'C" TO GROUND LEASE Pace 6 of 8 ltecelved 1'�r-t1-Oi To-RlTA."I Page 9T 06:asaa Ftce-Z13 Us C8I1 ent oy: n►,,vep OHLLfflCn a DCnnMrjn tea uea ubaI u.71 it 1/uI u.uui M,J5UArw_WVV&Pboyc up s • Separate Development Parcels~ within the commercial portion of the Site which .have been the subject of Disposition Trmnsfera (with the understanding that if for any reason a Separate Development Parcel within the commercial portion of the Site Is not the subject of a Disposition Traneferr the benefits accruing to znt remaining Separate Development Parcels within the commercial Portion of the Site which have been the subject of Disposition Transtera shall not be adversely affected) , and the benefit and burden of thin Agreement Shall not apply to any of the Separate Development •Pareeis within the Recidential Portion of the Site or any other portion of the site. Lester and Lessee agree to cooperate and execute all documents that may be reasonably required in order to effectuate this provision. B•S Covenants Run Kith The Lard; Recordation of Memorandum of Lease. The parties - intend that the covenants set forth in this ' Article VIIX be enforceable as equitable carvitudes and constitute covenants the burden of which shall run with the land and bind. successive ovnero of the City Beach rroperty and benefit ansignees MLnd subleacees of LennezIa interest its the Pranisee and the Separate Development Parcels within the commercial Portion of the Site, all within the contemplation and for the purpcs'ea pet fortis in Section 1470 of the California Civil Code. Itnnediotely following the Effective Date of this Lease, Lessor shall cause a Hemoraneum of Lease which specifically EXHXSIT "C" TO GROUND LEASE Pace 7 of 8 Raceired Mar•31-01 06:05pa From-213 625 0031 To-RUTAN Pale 08 �ent oy:'KAM=, bALLMGn cL ornmNkAm eea vca uaoID uo1e1IuI a.vormpjlr'UAA—VFOWL'§ oya o,o . references tha reimriotive covenant contained Within this Article VIII to be recorded against the City Beach Prpparty. 4 r f w P H I T "C" TD GROUND LEASE Page 6 of B Re:eive9 Mar-ll-01 0S:05om From-M US 0831 TO-RUTAX P=Qe 08 This Document was electronically recorded by FIRST AMERICAN TITLE INSURANCE COMPANY First American Title Recorded in Official Records,County of Orange Gary L Granville,Clerk-Recorder Recording Requested By and 1M1311MmIMEM111134.00 When Recorded Mail To: 20410232757 41:45pm 44!'1 B!0'1 eta ae roc 15 0.00 0.00 0.00 0.00 28.00 0.00 0.00 0.00 RUI'AN&TUCKER,LLP 611 Anton Boulevard,Suite 1400 Costa Mesa,CA 92626 Attu: Lori Samer.Smith,Esq. ' ( l� LEASES 1 This TERMINATION OF LEASES (this `Termination") is made as of the tNday of Q Merek 200I, by and between THE REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH, a public body corporate and politic ("Agency"), MAYER FINANCIAL, L.P., a California limited partnership C MF"), ROBERT L MAYER, an individual ("Maya"), and Robert L Mayer,as Trustee of the ROBERT L MAYER TRUST OF 1982("Mayer Trust"). l" RECITALS A. Agency owns that certain real property located in the City of Huntington Beach, County of Orange, State of California, generally depicted an ExhNt "A-1" as 11be Site"and as more particularly described on Emb "A",attachtd hereto and incorporated herein by reference (the"Agency Property"). B. Agency has previously demised a leasehold interest to MF,or its predecessors-in- . interest, over that certain real property generally depicted on Exhibit"A-1" as Parcel "A,""B" and "C", and as more particularly desenibed on F..xhibiz M&" = and = respcctiveZy (collectively,the "Leased Premises"),pursuant to the following unrecorded leases (collectively, the "Previous Leases"): 1. Amended and Restated Lease dated November 29, 1983, as may have been amended from time to time(the "1983 Lease"),by and between Agency,as lessor, and Mayer, as successor-in-interest to RLM Properties, Ltd; •a California limited partnership, as lesser, as referenced in that certain. Memorandum of Lease recorded in the Official Records of the County of Orange (the "Official Records")on December 14, 1983,-as Instrument Nos. 83-567991 and 83-567982 and that certain Memorandum of Lease recorded in the Official Records on December 19, 1983, as Instrument No. 83- 574611;and 2. Third Amended and Restated Lease dated April 28, 1989,as may have been amended from time to time(the"1989 Lease"),by and between Agency, as 615b197W�063 1692�1.02 p:�t . s lessor, and MF, as successor-in-interest to the Mayer Trust, as lessee, as referenced in that certain Memorandum of Lease recorded in the Official Records on April 28, 1989, as Ininrment No. 89-225547 and that certain Memorandum of Amendment of 'Third Amended and Restated Lease, recorded in the Official Records on April 7, 2000, as Instrument No. • 20000179416. C. With respect to the Agency Property, Agency and MF have entered into that certain Amended and Restated Disposition and Development Agreement(the "Original DDA") dated September I4, 1998, as amended by that certain First Implementation Agreement to Amended and Restated Disposition and Development Agreement (the "First Implementation Agreement') dated May 15, 2000, and that certain Second Implementation Agreement to Amended and Restated Disposition and Development Agreement(the"Second Implementation Agreement) dated February 5, 2DD1. The Original DDA, as modified by the First Implementation Agreement and Second Implementation Agreement, is referred to herein as the "DDA." D. With respect to Parcel A. pars imt to Section I04.I(b) of the DDA, the 1989 Lease shall terminate upon the date on which a Ieasehold interest in Parcel A is demised to NIF, or its designee. Substantially concurrently herewith,Agency,as lessor,is demising a leasehold interest in Parcel A to PCH Beach Resort,LLC,a Califomia limited liability company("PCH"), MFs successor-in-interest pursuant to that certain Assignment and Assumption Agreement and Consent to Assignment dated of even date herewith,as lessee,pursuant to that certain Ground Lease of even date herewith(the"Parcel A Lease"),which Parcel A Lease will be evidenced by that certain Memorandum of Lease and Tight of First Refuse] to be recorded substantially concurrently herewith. Accordingly,the parties desire to terminate the 1989 Lease with respect to Parcel A. E. With respect to Parcel B, pursuant to Section 104.1(c) of the DDA, the 1989 Lease shall terminate upon the date on which fee title to Parcel B is conveyed to MF, or its designee. Substantially concurrently herewith,pursuant to that certain Grant Deal of even date herewrith, Agency is granting to MF fee title to Parcel B. Accordingly, the parties desire to terminate the 1989 Lease with respect to Parcel B. F. With respect to Parcel C. pursuant to Section I04.1(a) of the DDA, the 1989. Lease terminated upon the effective date of the DDA and, concurrently therewith, was stiperceded by that certain Interim Short Term Lease and Parking Easement Agreement dated March 6,2000(the "Parcel C Lease"),by and between Agency,as lessor,and Waterfront Hotel, LLC, a California limited liability company ( Waterfront"), as lessee, as referenced in that certain Memorandum of Interim Short-Term Lease and Parking Easement Agreement recorded in the Official Records on April 7,2000,as Instrument No.20000179415. G. With respect to all of the Leased Premises,the 1983 Lease was intended to have been terminated upon the execution of the 1989 Lease. H. The parties desire to record this Termination in order to(i)clarify the state of title regarding the Leased Premises and, in particular,to confirm that the 1983 Lease was fully and 615419740-mi . 16r.41 M r.+oi -2- t fully terminated with respect to the Leased Premises upon the execution of the 1989 Lease and to confirm that the 1989 Lease was fully and finally terminated upon the execution of the Parcel C Lease with respect to Parcel C; and (H) terminate the 1989 Lease with respect to Parcels A and B. TER.*IINATION I. Termination of the I989 Lease. The 1999 Lease is hereby fully terminated with respect to Parcel A and Parcel B,and is of no further force or effect whatsoever with respect to Parccl A and Parcel B. 2. Con 5 mation of'Termination of Previous Leases. The parties hereby confirm that, upon the recordation of this Terminatioc, the Previous Leases will have been fully and finally terminated with respect to Parcel A and Parcel B, and are of no further force or effect whatsoever with respect to Parcel A and Parcel B. IN WITNESS WHEREOF,the parties to this Termination have caused this instrument to be duly executed as of the date first above written. "AGENCY" THE REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH Exec "ve Director APPROVED AS TO FORM: • /A�g� General Counsel APPROVED AS TO FORM: Kane,Ballmer&Berkman Agency Special Counsel [TIE REMAINDER OF -THIS PAGE INTENTIONALLY LEFT BLANK SIGNATURES FOLLOW.] t r MAYER FINANCIAL, L.P.,a California limited putnership By: RLM Management,Inc.,a California corporation,General Partner Robert L Mayer,President ROBERT L MA "MAYER TRUST" f Robert L.Mayer ee of the ROBERT L. MAYER TRUST-OF 1982 aisA�9��o-0ao� 16924192 MMI "4- STATE OF CALIFORNIA } ss. COUNTY OF ORANGE ) On Aril 3 2001, before me, Jan Smith , Notary Public, personally appeared ROBERT L. MAYER personally known to me to be the person*whose narne(e)isle subscribed to the within instrument and acknowledged to me that ham.+ executed the same-in his/ t: 'the authorized capacity), and that by his4w;Uai; signature s) on the instrument the person{) or the entity upon behalf of which the person(c) acted,executed the instrument. Witness my hand and official seal. l ` : r JAN sMMi Ccmmasion* 11813I� Notary Iic Notory Pudic-Catania cronge County %MyC0MrrLExp�mApr24.=i [SEAL] STATE OF CALIFORNIA } Ss. COUNTY OF O Ra t*& ) On *9 2001, before me, _7CR` t[_x• kl V&- , Notary Public, personally appeared _N AV S![.Z2 _ personally known to me ) to be the person(&)whose narre(s)is/are subscribed to the within instrument and acknowledged tome that he/shdthey executed the same in hislff4hsir-authorized capacity(ies), and that by bisAwAheir signature(s) on the instrument the personH or the entity upon behalf of which the person(s) acted,executed the instrument Witness my hand and official seal. Notary Public TMril L KING [SEAL] C.amnhsion#►1237SIS K tay f'ueric-Coffario _ OWCOMbO a-r IZ= STATE OF CALIFORNIA ) 6I5ro197404 003 scr-4t M nnr .' -S- f , t GOVERNMENT CODE 27361. 7 certify under the penalty of perjury that the notary seal on the document io which this statement is attached reads as follows: Name of Notary: Teryll L. King Date Commission Expires: Oct 12, 2003 Commission Number: #1237815 Vendor Number: NNA1 County where bond is filed: Orange Place of Execution: Santa Ana, California Date: April 17, 2001 G ' By: . R GER 1. REIMER First American Title Insurance Company • r GOVERNMENT CODE 27361. 7 I certify under the penalty of perjury that the notary seal on the document to which this statement is attached reads as follows: Name of Notary: Jan Smith Date Commission Expires: Apr 26, 2002. Commission Number: #1161340 Vendor Number: NNA1 County where bond is filed: Orange Place of Execution: Santa Ana, California Date: April 17, 2001 By. 1� RO ER C. fEINTER First American Title Insurance Company LIST OF EXHIMM EXHIBIT"A" - LEGAL DESCRIPTION. OF THE AGENCY PROPERTY(AKA"THE SITE") EXHIBIT"A-I" - MAP OF THE AGENCY PROPERTY(AKA "THE SITE")AND PARCELS A,B AND C EXHIBIT"B" - LEGAL DESCRIPTION OF PARCEL A EXHIBIT"C" • LEGAL DESCRIPTION OF PARCEL B EXHIBIT"D" - LEGAL DESCRIPTION OF PARCEL C 6134197404M3 269241.02"VI - 4 EXHIBIT"A" LEGAL RESriUMON OF THE AGENCY PROPER'F�' All that certain land in the City of Huntington Beach, Cotmty of Orange, State of California,described as follows: THAT PORTION. OF SECTION 14, TOWNSHIP 6 SOUTH, RANGE 11 WEST, IN THE RANCHO LOS BOLSAS,� AS PER MAP FILED IN BOOK 51, PAGE 14 OF MISCELLANEOUS MAPS IN THE OFFICE- OF THE COUNTY RECORDER OF SAID COUNTY,DESCRIBED AS FOLLOWS: BEGINNING AT THE INTERSECTION OF A LINE THAT IS PARALLEL WITH AND 50.00 FEET WEST OF THE EAST LINE OF SAID SECTION 14, WITH THE NORTH LINE OF THE SOUTH HALF OF THE NORTHEAST QUARTER OF SAID SECTION; THENCE SOUTH 0004422" EAST 1820.36 FEET ALONG SAID PARALLEL LINE TO THE NORTH LINE OF THE LAND DESCRIBED IN BOOT;2351, PAGE 5 OF OFFICIAL RECORDS OF SAID COUNTY; THENCE SOUTH 74°34'12" WEST 45.01 FEET ALONG SAID NORTH LINE TO THE NORTHEAST LINE OF THE LAND DESCRIBED AS PARCEL 2 IN BOOK 826, PAGE 379, SAID OFFICIAL RECORDS; THENCE NORTH 53°05'49" WEST 172.33 FEET ALONG SAID NORTHEAST LINE TO THE WEST LINE OF THE LAND DESCRIBED IN BOOK 261, PAGE 41 OF DEEDS, RECORDS OF SAID COUNTY; THENCE NORTH 0004422" WEST 12.63 FEET ALONG SAID WEST LINE TO THE NORTHEASTERLY RIGHT OF WAY LINE OF PACIFIC COAST HIGHWAY AS DESCRIBED IN BOOK 455,PAGE 400 OF SAID OFFICIAL RECORDS; THENCE NORTH 53°05'49" WEST 1966.76 FEET ALONG SAID NORTHEAST LINE TO THE EASTERLY LINE OF LOT I,TRACT NO. 13045 AS SHOWN ON INSTRUMENT NO. 89-145536, BOOK 628, PAGES 46 AT'D 47 OF MISCELLANEOUS MAPS, RECORDS OF SAID COUNTY, THENCE NORTH 36°54'20"EAST 360.46 FEET ALONG SAID EASTERLY LINE TO THE NORTH LINE OF SAID LOT 1; THENCE SOUTH 48°432I" EAST 25.00 FEET, THENCE NORTH 41016'39" EAST 97.00 FEET; THENCE N 48°43'21" WEST 38.85 FEET TO THE BEGINNING OF A 2452.00 FOOT RADIUS CURVE THAT IS CONCAVE SOUTHWESTERLY, THENCE NORTHWESTERLY 252.68 FEET ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF OS°54'126"TO A POINT ON THE NORTH LINE OF THE SOUTH HALF OF THE NORTHEAST QUARTER OF SAID SECTION 14, A LINE RADIAL TO SAID POINT BEARS NORTH 35°22'25" EAST; THENCE NORTH 89042'58" EAST 16S8.70 FEET ALONG SAID NORTH LINE TO THE POINT OF BEGINNING. EXHIBIT"A" df ; .; ; TO TERMINATION OF LEASES EXHIBIT"A-I" MAP OF THE AGENCY ZROPERTY_UKA "THE SITE")AbM PARCELS A.B AtM- C (SEE ATTACHED] EXHIBIT"A-I" ,19 ; TO TERMINATION OF LEASES .MAP OF THE SITE E'LY LINE SEC 14, i T. 6 S.. R. 11 W., M.M. 51/14 ' I WILY LINE S 1/2. NE 1/4 SEC M.M. 51/1 a.5.. R.11.W.. N3522925"E (R) -R.O.B. N8T42'5r 165 .7 ' 6-05*54'16* R=2452.00' L`252.68' �� ` N48'43'21"W 38.85' ��" "�� THE SITE :�i\ 4 5.5 6 AC. s. / D \ o C° 0o qST �s qti W Lin . icy S�'s• rt N00'44'22"W 12.63' a N53'05'4VW 172.33' S74'34'1YW 45.01' a r Ja�l1LIZ�L�_ THE LAND IS SITUATED IN THE STATE OF CALIFORNIA, COUNTY OF ORANGE, CITY OF HUNTINGTON BEACH,AND IS DESCRIBED AS FOLLOWS: LOT 1 OF TRACT NO. 15535,AS SHOWN ON A MAP FILED LEI BOOK 790,PAGES 44 TO 50 INCLUSIVE OF MISCELLANEOUS MAPS, RECORDS OF ORANGE COUNTY, CALIFORNIA. IM41.MPW; TO TERMINATION i07F LEASES LEGAL DESCRIIMON OF_PARCEL B THE LAND IS SITUATED IN THE STATE OF CALIFORNIA, COUNTY OF ORANGE, CITY OF HU14MGTON BEACH,AND IS DESCRIBED AS FOLLOWS: THE LAND DESCRIBED HEREIN IS SITUATED IN THE CITY OF. HUNTINGTON BEACH, COUNTY OF ORANGE, STATE OF CALIFORNIA; BEING A PORTION OF SECTION 14,TOWNSHIP 6 SOUTH,RANGE I 1 WEST OF THE RANCHO LAS BOLSAS, AS PER MAP RECORDED IN BOOK 51, PAGE 14 OF MISCELLANEOUS MAPS, RECORDS OF THE COUNTY OF ORANGE, CALIFORNIA. MORE PARTICULARLY DESCRIBED AS FOLLOWS: A PORTION OF THAT LAND SHOWN AS THE DESIGNATED REMAINDER ON MAP THEREOF OF TRACT NO. 15535 RECORDED IN BOOK 790, PAGES 44 THROUGH 50, INCLUSIVE, OF MISCELLANEOUS MAPS, RECORDS OF THE COUNTY OF ORANGE, CALIFORNIA. MORE PARTICULARLY DESCRIBED AS FOLLOWS: BEGINNING AT THE NORTHEAST CORNER OF THE SOUTH ONE-HALF OF THE NORTHEAST ONE-QUARTER OF SAID SECTION 14, PER SAID TRACT NO. 15535; THENCE ALONG THE NORTHERLY LINE OF SAID SOUTH ONE-HALF NORTH W15'39" WEST 50.00 FEET TO A POINT ON THE WESTERLY RIGHT OF WAY OF BEACH BOULEVARD AS SHOWN ON SAID TRACT NO. 15535, SAID POINT BEING THE TRUE POINT OF BEGINNING THENCE ALONG SAID WESTERLY RIGHT OF WAY. SOUTH 0(r 17'01" WEST 1052.24 FEET TO A POINT ON THE GENERAL NORTHEASTERLY RIGHT OF WAY OF PACIFIC VIEW AVENUE, DEDICATED PER . SAID TRACT'NO. 15535; THENCE ALONG SAID GENERAL NORTHEASTERLY RIGHT OF WAY, THROUGH THE FOLLOWING TWENTY-TWO (22) COURSES: SOUTH 60057'59" WEST 30.03 FEET; SOUTH 88°48'52"WEST 15.08 FEET TO THE BEGINNING OF A -CURVE, CONCAVE NORTHERLY, HAVING A RADIUS OF 94.00 FEET, WESTERLY ALONG SAID CURVE 2738 FEET THROUGH A CENTRAL ANGLE OF 160'41'10" TO THE BEGINNING OF A COMPOUND CURVE, CONCAVE NORTHEASTERLY, HAVING A RADIUS OF 1065.00 FEET, A LINE RADIAL TO SAID POINT BEARS SOUTH 15°30'02" WEST; NORTHWESTERLY ALONG SAID.CURVE 401.46 FEET THROUGH A CENTRAL ANGLE OF 21035154" NORTH 5r54'04" WEST 170.18 FEET TO THE BEGINNING OF A CURVE, CONCAVE SOUTHWESTERLY, HAVING A RADIUS OF 1135.00 FEET; NORTHWESTERLY ALONG SAID CURVE 76.00 FEET THROUGH A CENTRAL ANGLE OF 03050'11" NORTH 56044'15" WEST 126.00 FEET TO THE BEGINNING OF A CURVE, CONCAVE NORTHEASTERLY, HAVING A RADIUS OF 1065.00 FEET, NORTHWESTERLY ALONG SAID CURVE 105.98 FEET THROUGH A CENTRAL ANGLE OF 05042'06"NORTH 51002'W'WEST 122.87 FEET TO THE BEGINNING OF A NON TANGENT CURVE, CONCAVE SOUTHWESTERLY, HAVING A RADIUS OF 1135.00 FEET,A RADIAL LINE TO SAID POINT BEARS NORTH E)CM IT"C" bu' r-P 4tJ I TO TERMINATION OF LEASES 39°26'56" EAST; NORTHWESTERLY ALONG SAID CURVE 110.03 FEET THROUGH A CENTRAL ANGLE OF 05°33'16"NORTH 56*06*20"WEST 45.02 FEET,NORTH 11030*02" WEST 20.77 FEET,NORTH 37°56'06" EAST 15.58 FEET, NORTH 52-03.54" WEST 34.00 FEET, SOUTH 37°56'06" WEST 16.76 FEET, NORTH 52003'54" WEST 18.00 FEET, NORTH 37°56'06" EAST 7-78 FEET, NORTH 52°03'54" WEST 34.00 FEET. SOUTH 37°56'06" WEST 14.96 FEET; SOUTH 82°53'34" WEST 16.47 FEET, NORTH 56°06'20" WEST 315.97 FEET TO THE BEGINNING OF A CURVE,CONCAVE NORTHEASTERLY, HAVING A RADIUS OF.1060 FEET, AND NORTHWESTERLY ALONG SAID CURVE 51.87 FEET THROUGH A CENTRAL ANGLE OF 02°48'13" TO A POINT ON THE GENERAL NORTHEASTERLY RIGHT OF WAY OF PACIFIC VIEW AVENUE, DEDICATED PER DOCUMENT RECORDED SEPTEMBER 1, 1995, AS INSTRUMENT NUMBER 95-0384748, OFFICIAL RECORDS OF THE COUNTY OF ORANGE, CALIFORNIA, A LINE RADIAL TO SAID POINT BEARS SOUTH 36°41'53" WEST; THENCE LEAVING SAID NORTHEASTERLY RIGHT OF WAY PER SAID TRACT NO. 15535 AND CONTINUING ALONG SAID GENERAL NORTHEASTERLY RIGHT OF WAY PER SAID DOCUMENT, THROUGH THE FOLLOWING THREE (3) COURSES: NORTH 42*18'11" EAST 7.52 FEET, NORTH 47°41'18" WEST 38.85 FEET TO THE BEGINNING OF A CURVE, CONCAVE SOUTHWESTERLY, 'HAVING A RADIUS OF 2452.00 FEET, AND NORTHWESTERLY ALONG SAID CURVE 252.70 FEET THROUGH A CENTRAL ANGLE OF 05054'1T'TO A POINT ON SAID NORTH LINE OF THE SOUTH ONE-HALF OF THE NORTHEAST ONE-QUARTER OF SAID SECTION 14,A LINE RADIAL TO SAID POINT BEARS NORTH 36°24125" EAST; THENCE LEAVING SAID GENERAL NORTHEASTERLY RIGHT OF WAY, NON TANGENT TO SAID CURVE ALONG SAID NORTH LINE SOUTH 89015'39" EAST 1658.76 FEET TO THE TRUE POINT OF BEGINNING. 61 SX19M 4=3 169241 X Pol -2' EMEBT "D DESCRIPTION OF PARCEL C THE LAND IS SITUATED IN THE STATE OF CALIFORNIA, COUNTY OF ORANGE, CITY OF HUNTINGTON BEACH,AND IS DESCRIBED AS FOLLOWS: LOT 2 OF TRACT NO. 15535,AS SHOWN ON A MAP FILED IN BOOK 790,PAGES 44 TO 50 INCLUSIVE OF MISCELLANEOUS MAPS, RECORDS OF ORANGE COUNTY, CA HORNIA. atsrotv�•a moj •EXHIBIT"D" t6924t Az FMI TO TERMINATION OF LEASES PLEDGE AND SECURITY AGREEMENT THIS PLEDGE AND SECURITY AGREEMENT ("Agreement') made and entered into this 11771 day of April, 2001, by and between PCH BEACH RESORT, LLC, a California limited liability company ("Borrower"), and MILLER & SCHROEDER INVESTMENTS CORPORATION,a Minnesota corporation("Lender"). PRELIMINARY STATEMENT OF FACTS: A. The Redevelopment Agency of 6e City of Huntington Beach ("Agency") and Mayer Financial, Ltd., as developer ("Developer') have entered into an Amended and Restated Disposition and Development Agreement dated as of September 14, 1998 ("Original Agreement'), as amended by that certain First Implementation Agreement to Amended and Restated Disposition and Development Agreement dated as of May 15,• 2000 ("First Implementation Agreement") and as further amended by Second Implementation Agreement to Amended and Restated Disposition and Development Agreement dated as of February 5, 2001 ("Second Implementation Agreement') (the Original Agreement as amended by the First Implementation Agreement and Second Implementation Agreement being herein referred to as the"DDA). B. The DDA affects certain real property situate in the City of Huntington Beach, County of Orange, State of California more fully described in Exhibit "A" attached hereto ("Redevelopment Property'). C. The Redevelopment Property consists of three distinct parcels of real estate to wit: Parcel A which is to be ]eased to the Developer and developed with an approximately 517 keyed guest room resort hotel with conference center and other amenities. Parcel R which is to be conveyed to the Developer and to be developed with residential housing. Parcel C which is to be leased to the Developer and developed with a new hotel,or an addition to the existing Waterfront Beach Hotel. D. Pursuant to that certain Assignment and Assumption and Consent to Assignment of even date herewith ("Assumption Agreement') the Borrower has acquired the interest of Developer in the DDA insofar as the DDA relates to and affects Parcel A and is substituted in the place of the Developer with respect to the development of Parcel A. The Agency has consented to such acquisition and acknowledged and agreed that for purposes of the development of the Development Property the Borrower shall be the"Developer"of Parcel A and is entitled to all of the benefits of the"Developer"under the DDA insofar as it affects or relates to Parcel A. E. In furtherance of the DDA and in order to construct the required improvements on Parcel A the Agency, as landlord, and the Borrower, as lessee,have executed and delivered that 7592'68 r i certain Ground Lease of even date herewith, a M-emorandum of which has been recorded in the Office of the County Recorder, Orange County, California, pursuant to which the Agency has leased Parcel A to Borrower("Ground Lease") F. Pursuant to the terms of the Ground Lease the Borrower has agreed to construct on Parcel A and operate either itself or through a hotel manager a resort hotel of approximately 519 keyed guest rooms,a conference center and other amenities("Resort Hotel Project'). G. The.Borrower has made application to and the Lender has agreed to loan to the - Borrower the sum of up to Eighty-Five Millicn and no/100 Dollars ($85,000,000.00) (the "Loan") to defray the costs of constructing th-. Resort Hotel Project on Parcel A and in furtherance thereof, Borrower and Lender have entered into or will be entering into certain Construction Loan Documents ("Loan Documents') wherein Lender will disburse the Loan, or portions thereof,to Borrower under the conditions contained therein. H. To evidence the Loan the Borrower has or will be executing and delivering to the Lender its Promissory Note in the amount of the Loan(herein the"Note'). I. As security for the repayment of the Note, the Borrower has or will be executing and delivering to First American Title Insurance Company, as trustee, for the benefit of Lender its Leasehold Deed of Trust,Absolute Assignment of Rents and Security Agreement and Fixture Financing Statement of even date herewith (herein the "Deed of Trust") conveying Parcel A in trust to First American Title Insurance Company,zs trustee,for the benefit of the Lender. J. Pursuant to Attachment No. 8 of the DDA Schedule of Feasibility Gap Payments, the Agency has agreed to pay or reimburse the Developer for certain"Eligible Costs"as defined therein ("Schedule') and pursuant to the Assumption Agreement the Developer has assigned to the Borrower with the consent of the Agency all of the Developer's rights to the"Feasibility Gap Payments"(as defined below)payable under the Schedule. K. As further security for the Loan and to assure that $16,500,000.00 of the pa}lnents due the Borrower under the Schedule ("Feasibility Gap Payments" will be made available to the Borrower for payment to costs incurred in the construction of the Resort Hotel Project ("Project Costs") and as a condition to its disbursement of the proceeds of the Loan, the Lender has required that the Borrower pledge and assign to the Lender all of the Borrower's Tights under the DDA including the Feasibility Gap Payments. NOW THEREFORE,in consideration of the sum of One Dollar($1.00) and other good and valuable consideration receipt and sufficiency of which is hereby acknowledged and in order to induce the Lender to disburse the Loan and to secure the Loan,it is agreed: I. Pledge and Assignment. The Borrower pledges and assigns to Lender and grants to Lender a security interest in and to all of the following("Collateral'): (a) All of its right,title and interest in the DDA. (b) All of its right, title and interest in and to the Feasibility Gap Payments. -2- S P (c) The due and punctual payment of all amounts due and payable to Borrower pursuant to the DDA. (d) Any and all proceeds of the foregoing. 2. Representations, Warrants and Covenants. The Borrower represents, warrants and agrees as follows: (a) The Borrower is, and at all times during the term of the pledge made hereunder will be, the registered owner of the Collateral free and clear of any lien, security interest, option or other charge or encumbrance, except for the security interest created by this Agreement, and the Borrower will warrant and defend the title thereto, and the security interest created by this Agreement thereon, against all claims of all persons,and will maintain and preserve such security interest. (b) The Borrower has the unrestricted right, power and authority to execute this Agreement, to perform the Borrower's obligations hereunder and to pledge and create a security interest in the Collateral in the manner and for the purpose contemplated hereby. (c) The pledge and assignment of the Collateral pursuant to this Agreement create a valid and perfected first priority security interest in the Collateral in favor of the Lender. . (d) the Borrower shall defend the Collateral against all claims and demands of all or any other persons at any time claiming the same or any interest therein adverse to Lender. (e) there are no actions at law, suits in equity, or proceedings before any governmcntaI agency, commission, bureau or tribunal or any arbitration proceedings that if adversely determined would adversely affect the present condition, financial or otherwise, of the Collateral or would adversely affect the right of the Borrower to pledge an3 assign all or any part of the Collateral or rights and security afforded Lender hereunder. (f) the Borrower shall keep the Collateral free and clear from any and all liens, security interests, attachments, encumbrances, or other rights, title or interest of any other person, firm or corporation. (g) the Borrower does business solely under its own name. (h) the chief office of the Borrower is in California and is located at its address set forth above and all of Borrower's records relating to its business or the Collateral are kept at that location. Borrower will not change its name or the location of its place of business without prior notice to Lender and without filing an amendment to all financing statements as filed. -3- (i) each right to payment is the valid, genuine, and legally enforceable obligation, subject to no defense, set-off or counterclaim, of the account debtor or other obligor named therein or as shown in Borrower's records pertaining thereto as being obligated to pay such obligation. Borrower will not modify, amend, subordinate, cancel or terminate the DDA or the obligations of the Agency under the DDA insofar as it affects the Premises. (j) Borrower will pay or reimburse Lender on demand for all costs of collection of any of the Loan and all out-of-pocket expenses, including reasonable attorneys' fees and legal expenses incurred by Lender in connection with the creation, perfection, protection, satisfaction, foreclosure or enforcement of the Collateral, the security interest created herein and the enforcement of this Agreement. 3. Events of Default. The occurrence of any one or more of the following events shall constitute a default hereunder(each an"Event of Default'): (a) the Borrower's default in the performance of any of the terms, agreements or covenants of this Agreement and such default shall remain uncured for a period of ten (10) days after notice thereof to Borrower,or if such default does not create a material risk to the Collateral or the Lender's security interest therein and requires the expenditure of time to cure then if such default shall continue for the period of time necessary to cure but not to exceed thirty (30) days from the date of notice thereof;or (b) the Agency shall declare the Borrower in default under the DDA and such default remains uncured or uncorrected through any period permitted to cure;or (c) the DDA shall be terminated;or (d) the obligation of the Agency to make the Feasibility Gap Payments shall terminate;or (e) a Default or Event of Default as specifically defined in the Loan Documents;or. (fj any representation or warranty made by the Borrower in this Agreement or in the Loan Documents, or any other representation or warranty made or furnished to the Lender by or on behalf of the Borrower, proves to have been incorrect in any material respect when made and remains material and uncured at the time in question;provided if such representation or warranty, such default does not create a material risk to the Collateral or the Lender's security interest therein and requires the expenditure of time to cure then if such default shall continue for the period of time necessary to cure but not to exceed thirty(30)days from the date of notice thereof;or (g) the making of any levy, seizure or attachment of or on the Collateral or.any portion thereof, or the issuance of any'injunction with respect to the use or ownership of the Collateral or any portion thereof; provided if such injunction, such default does not create a material risk to the Collateral or the Lender's -4- 1 security interest therein and requires the expenditure of time to cure then if such default shall continue for the period of time necessary to cure but not to exceed thirty(30)days from the date of notice thereof 4. The Lender's Remedies Upon Default. (a) If any Event of Default shall have occurred and be continuing after any applicable grace period, the Lender may do any one or more of the following in such order as it may elect: i) cause the Collateral to be transferred into its name or that of its nominee and notify the Agency of such transfer without thereby effecting a foreclosure of the pledge evidenced hereby or relieving itself of its rights under Part 5 of Article 9 of the Uniform Commercial Code ("Code'), the Borrower hereby irrevocably constituting and appointing the Lender and any nominee of the Lender the attorney-in-fact of the Borrower for such purpose,with full power of substitution; ii) receive all principal, interest and other payments paid with respect to the Collateral including the Feasibility Gap Payments; iii) sell, assign and deliver, at uy time the Collateral, at any private or public sale, for cash, for credit or for other property, for immediate or future delivery, and for such price or prices and on such terms as the Lender, in its sole discretion, may determine, the Borrower hereby waiving and releasing any and all rights or equity of redemption which it otherwise might have either before or after sale hereunder. Any notification required by law to be given in connection with any sale shall conclusively be deemed reasonable if given not less than ten (10) days prior to the time of any public sale or the time after which any private sale is to be made. The Lender, if permitted by law, may bid for and purchase all or any part of the Collateral so sold free from any such right or equity of redemption. For the purpose hereof, any agreement to sell all or any part of the Collateral shall be treated as a sale thereof, the Lender shall be free to carry out such sale pursuant to such agreement and the Borrower shall not be entitled to the return of any of the Collateral subject thereto, notwithstanding that, subsequent to the Lender's entering into such an agreement,the Borrower may have cured all Events of Default; iv) to exercise all of the rights and remedies of the Borrower under the Collateral; v) to exercise all rights available to it as a secured party under the Uniform Commercial Code of the State of California("Code'). (b) Until all Loan owed to the Lender have been paid in full, any and all proceeds ever received by the Lender from any sale or other disposition of the Collateral,or any part thereof, or the exercise of any other remedy pursuant to this Agreement, shall be applied by the Lender as follows: First, to the payment of the costs and expenses of such sale or enforcement, including reasonable compensation to the Lender's agents and counsel, and all expenses,liabilities and advances made or incurred by or on behalf of the Lender in connection therewith; Second,to the payment of any other amounts due(other than principal and interest)under the Loan Documents; Third, to the payment of late charges incurred and unpaid on the Loan Documents; Fourth, to the payment of-interest accrued and unpaid on the Loan Documents; Fifth, to the payment of the outstanding principal balance of the Loan Documents; and Finally the payment to the Borrower, or to its successors or assigns, or as a court of competent jurisdiction may direct, of any surplus then remaining from such proceeds. If the proceeds of any such sale are insufficient to cover the costs and expenses of such sale, as aforesaid, and the payment in full of the Note and all other amounts due hereunder,the Borrower shall remain liable for any deficiency. (c) The parties agree that the transfer of the Collateral hereunder to the Lender shall not, in and of itself, satisfy the indebtedness evidenced by the Note. (d) The Borrower agrees to (i) pay all reasonable out-of-pocket expenses, including, without limitation, any recording or filing fees, incurred by the Lender in connection with the administration of this Agreement (whether or not the transactions hereby contemplated shall be consummated),the enforcement of the rights of the Lender in connection with this Agreement and including, without limitation, the reasonable fees and all disbursements of counsel for the Lender, and (ii)indemnify and hold harmless the Lender for all liabilities with respect to any action (except any.action brought by or on behalf of the Borrower) which may be instituted by any person against the Lender in respect of any of the foregoing or as a result of any transaction contemplated by this Agreement or action or nonaction arising from the foregoing, except to the extent that such indemnification is held to be contrary to applicable law (including principles of equity). (e) The Borrower, for itself and all who may claim under the Borrower, as far as the Borrower now or hereafter lawfully may,also waives any right to have all or any portion of the Collateral marshalled upon any foreclosure hereof and agrees that -6. any court having jurisdiction over this Agreement may order the sale of all or any portion of the Collateral as an entirety. Any sale of, or the grant of options to purchase (for the option period thereof or after exercise thereof), or any other realization upon, all or any portion of the Collateral shall operate to divest all right,title, interest,claim and demand, either at law or in equity, of the Borrower in and to the Collateral so sold,optioned or realized upon,and shall be a perpetual bar both at law and in equity against the Borrower and against any and all persons claiming or attempting to claim the Collateral so sold, optioned or realized upon or any part thereof, from, through and under the Borrower. No delay on the part of the Lender in exercising any power of sale,lien,option or other right hereunder and no notice or demand which may be given to or made upon the Borrower with respect to any power of sale,lien, option, or other right hereunder shall constitute a waiver thereof, or limit or impair the right of the Lender to take any action or to exercise any power of sale,lien,option or any other right under this Agreement or the Deed of Trust or any other security, or otherwise, nor shall-any single or partial exercise thereof, or the exercise of any power, lien, option or other right under this Agreement or otherwise, all without notice or demand (except as otherwise provided by the terms of this Agreement), prejudice its rights against the Borrower in any respect. Each and every remedy given the Lender shall, to the extent permitted by Iaw, be cumulative and shall be in addition to any other remedy given hereunder or now or hereafter existing at law or in equity or by statute. (f) Nothing herein contained shall relieve the Borrower from performing any covenant, agreement or obligation on the part of the Borrower to be performed under or in respect to the Collateral or form any liability to any party or parties having an interest therein or impose any liability on the Lender for the acts or omissions of the Borrower in connection with any of the same. The Lender shall not assurne or become liable for, nor shall it be deemed or construed to have assumed or become liable for, any obligation of the Borrower by reason of the pledge to it of the Collateral. (g) Borrower agrees to execute such financing statements as may be required under the Code to perfect the pledge and security interest hereunder and shall from time to time at its expense execute and d-liver such assignments and endorsements and file such additional financing statements as may be required to create and continue to perfect the pledge and security interest intended to be created herein. 5. Rights Under Collateral. Unless and until the earlier of(i)the Loan is paid in full or (ii) the Feasibility Gap Payments are made and paid into the Project in accordance with the Construction Loan Agreement,Borrower irrevocably assigns and transfers to the Lender all of its rights under the Collateral and other documents given as Collateral for the Collateral, including but not limited to the right to accept payments on the Collateral, the right to exercise any rights of the holder of the Collateral,the right to declare an Event of Default under the Collateral and/or to exercise any remedies available to the holder thereunder, provided, that unless and until an Event of Default shall occur the Borrower may receive (but not anticipate) scheduled payments on the Collateral for payment to the Project Costs (as defined in the Construction Loan -7- Agreement). Upon the occurrence of an Event of Default and written notice thereof to Borrower and Agency, the Lender shall be entitled to receive all payments made on the Collateral. Any payments received by Borrower after an Event of Default shall be received and held in trust for the Lender and shall be immediately remitted to the Lender. 6. Other Riphts and Remedies. The rights and remedies afforded to the Lender hereunder shall be cumulative and in addition to and not in limitation of any rights and remedies which the Lender may have under applicable law, including the Code. The exercise or partial. exercise of any right or remedy of the Lender hereunder or under applicable law shall not - preclude or prejudice the further exercise of that right or remedy or the exercise of any other right or remedy of the Lender. 7. Waiver. No delay or omission on the part of the Lender in exercising any right hereunder shall operate as a waiver of such right or any other right hereunder or under any instrument or agreement evidencing or relating to any of the obligations secured hereby. A waiver on any one occasion shall not be construed as a bar or waiver of any right or remedy on any future occasion. 8. Return of Collateral. Promptly following the receipt by the Lender of payment in full of the Note in accordance with its terms and payment of any other amounts due from the Borrower to the Lender hereunder and under the Deed of Trust, the Lender will, upon written demand by the Borrower,redeliver and reassign to the Borrower the Collateral,any bond powers related thereto and any other collateral held pursuant to this Agreement,without recourse to the Lender. 9. Reasonable Care. The Lender shall be deemed to have exercised reasonable care in the custody and preservation of the Collateral in its possession if the Collateral is accorded treatment substantially the same as that which the Lender accords its own property. I0. Notices. Any notices and other communications permitted or required by the provisions of this Agreement (except for telephonic notices expressly permitted) shall be in writing and shall be deemed to have been properly given or served by depositing the same with the United States Postal Service, or any official successor thereto, designated as Certified Mail, Return Receipt Requested,bearing adequate postage,or deposited with reputable private courier or overnight delivery service, and addressed as hereinafter provided. Each such notice shall be effective upon being deposited as aforesaid. The time period within which a response to any such notice must be given,however,shall commence to run from the date of receipt of the notice by the addressee thereof. Rejection or other refusal to accept or the inability to deliver because of changed address of which no notice was given shall be deemed to be receipt of the notice sent. By giving to the other party hereto at least ten (10) days' notice thereof, either party hereto shall have the right from time to time to change its address and shall have the right to specify as its address any other address within the United States of America. -8- If to the Borrower. PCH Beach Resort,LLC c/o The Robert Mayer Corporation Suite 1050 660 Newport Center Drive Newport Beach,California 92660 Attn: Robert L.Mayer and Stephen Bone with copy to: Coast Beach,LLC clo Hyatt Development Corporation 200 West Madison Avenue Chicago,Illinois 6060 Attn: Dale Moulton If to the Lender: Miller&Schroeder Investm:nts Corporation Suite 3000 150 South Fifth Street Minneapolis;Minnesota 55402 Attn: Vice President-Mortgage Loans 11. Expense . To the extent permitted by law, the Borrower will upon demand pay to the Lender the amount of any and all reasonable expenses, including the reasonable fees and expenses of its counsel and of any experts and agents, whether or not involving a case or proceeding before any federal or state court,that the Lender may incur in connection with(a)the administration of this Agreement, (b) the custody or preservation of, or the sale of, collection from or other realization upon, any of the Collateral, (c) the exercise or enforcement of any of the rights of the Lender hereunder, or(d) the failu-e by the Borrower to perform or observe any of the provisions hereof. 12. Indemnification.• Neither the Lender, nor any director, officer, agent or employee of the Lender, shall be Iiable for any action taken or omitted to be taken by it or them hereunder or in connection herewith, except for its or their own gross negligence or willful misconduct. The Borrower hereby agrees to indemnify and hold harmless the Lender and its officer,directors, employees, agents, representatives, successors and assigns from and against any and all liability incurred by any of them hereunder or in connection herewith,unless such liability shall be due to its or their own gross negligence or willful misconduct. 13. Binding. This Agreement and all of the provisions hereof shall be binding upon and shall inure to the benefit of the parties hereto and their respective legal representatives, successors and assigns and may be amended only by a written instrument signed by each of the parties hereto. -9- 14. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original and altogether but one instrument. 15. Governing Law. This Agreement shall be governed by and construed and interpreted in accordance with the laws of the State of California including the Uniform Commercial Code as in effect in the State of California. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year first above written- PCH BEACH RESORT,LLC,a California limited liability company By: GRAND RESORT,LLC,a California limited liability company,Managing Member By: RLM MANAGEMENT,INC.,a California corporation,Manager By. &=A r 2� obert L.Mayer, &dent MILLS • SCHROED R INVESTMENTS CORPORA ON, Mi esota corporation By: ,% Its: U-i.L _ CONSENT AND ACKNOWLEDGMENT The Redevelopment Agency for the City or Huntington Beach, a public body, corporate and politic,acknowledges and consents to the foregoing Pledge and Security Agreement. REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH,a pu is b corporate and politic A / By: Its: Awe--Cstive Director APPROVED AS TO FORM: ,Qnnr& /;;—g Agency General Counsel OF - /5N APPROVED AS TO FORM Kane,Ballmer&Berkman Agency Special Counsel • 11 • . Sent by: KANE, UALLAIER & @_FKMAN 213 625 0931 ; 04/U5/01 2:56NM;Jef&x NB/; Page 212 CONSENT AND ACKNOWLEDGMENT The Redevelopment Agency for the Ciry of Huntington Beach, a public body, corporate and politic,acknowledges and consents to the foregoing Pledge and Security Agreement, REDEVEL0PMfiNT AGENCY OF THE C TY OF HUNT N. GTON BEACH,a ublic bod , corporate and o ON Y� Its: Exicutivb Director APPROVED AS TO FORM: Y:44 Agency General Counsel APPROVED AS TO FORM 'ane,B l�er �Berkni�an Agency Special Counsel - 11- APP--9:-2(r,1 14::a 213 625 0931 '?5% P.©2 CONSENT AND ACKNOWLEDGMENT The Redevelopment Agency for the City of Huntington Beach, a public body, corporate and politic,acknowledges and consents to the foregoing Pledge and Security Agreement. REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH,a public body, corporate and politic By: Its: Executive Director APPROVED AS TO FORM: Agency General Counsel APPROVED AS TO FORM ane, B l er&Berkman Agency Special Counsel -11- CONSENT AND ACKTI WLEDGkEN The Redevelopment Agency for the City of Huntington Beach. a public body, corporate and politic,acknowledges and consents to the foregoing Pledge end Scc=ity Agreement. REDEVELOPMENT AGENCY OF THE C OF Hllh'TI;VGTOh'BEACH,a ublic bo . corporate end - � j Its: Ex nicv Director APPROVED AS TO FORM: Agency General Counsel APPROVED AS TO FORM �ane.BiQlker&Berkman Agency Special Counsel -11- PPR-U-Ml 14:SR Recelved Apr•05-01 03:47Fa Fro2-714 375 5087 To-RUTO a TOCIR ILP. Page U e EXHIBIT"A" Legal Description All that certain land situated in the State of California, County of Orange, City of Huntington Beach,and is described as follows: arcel A: Lot 1 of Tract No. 15535, as shown on a map filed in Book 790, pages 44 to 50 inclusive of Miscellaneous Maps,Records of Orange County, California Parcel B• A non-exclusive revocable license to utilize that certain area defined as "Grand Coast Resort Improvement Area" in that certain "License Agreement to Provide Landscaping and Other Improvements in the Public Right-Of-Way" ("Agreement') recorded April 18, 2001 as Instrument No. 20010232765 of Official Records of Orange County, California, and delineated on Exhibit "F" attached thereto, for the installation, maintenance, repair and replacement of landscaping and other improvements,as said license is set forth in paragraph 2 of the Agreement. Parcel C: A non-exclusive revocable license to utilize that certain area defined as "Overcrossing Improvement Area" in that certain "License Agreement to Provide Landscaping and Other Improvements in the Public Right-Of-Way" ("Agreement') recorded April 18, 2001 as Instrument No. 20010232765 of Official Records of Orange County, California, and delineated on Exhibit "G" attached thereto, for the installation, maintenance, repair and replacement of overcrossing and other improvements, as said license is set forth in paragraph 2 of the Agreement. This Document was electronically recorded by { FIRST AMERICAN TITLE INSURANCE COMPANY First American Title Recorded In Official Records,County of Orange Gary L Granville,Clark-Recorder Recording Requested by. 111911MIMIMEMEMQ 56.00 and When Recorded Return to: 20010232774 01:05pm 04118/01 118 48 G0216 RUTAN&TUCKER,LLP 0.00 0.00 0.00 20.00 30.00 0.00 0.00 0.00 . 611 Anton Boulevard, Suite 14DO Costa Mesa,CA 92626 Attn: Lori Sarver Smith,Esq. . GRANT DEED FOR VALUABLE CONSIDERATION, receipt of which is hereby acknowledged, the J REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH, herein called "Grantor,"hereby grants to MAYER FINANCLAL,L.P.,a California limited partnership,herein (Y -called"Grantee," that certain real property located in the City of Huntington Beach, County of Orange,State of California(the "Property"),mcre particularly descnlxd in the legal description LOattached hereto as Exhibit A and incorporated herein by this reference, in accordance with and * subject to the covenants,conditions and restrictions set forth in this Grant Deed The Property is subject to the Redevelopment Plan for the Main-Pier Redevelopment Project,which was approved and adopted by Ordinance No. 2578 of the City Council of th a City of Huntington Beach, amended by Ordinance No. 2634, and merged with certain other redevelopment projects in the City by the adoption of Ordinance No. 3343 on December 16, 1996 to form the Huntington Beach Redevelopment Project (the "Merged Redevelopment Project"). This Grant Deed is made pursuant to that certain Amended and Restated Disposition and Development Agreement by and between Grantor and Grantee dated September 14, 1998, as amended by that certain First Implementation Agreement to the DDA dated May 15,2000, and that certain Second Implementation Agreement to the DDA dated >rebruary 5, 2001, (together, the "DDA"), which is a public record on file Et the offices of Grantor, located at 2000 Main Street, Huntington Beach, California 92648,and which is incorporated herein by this reference. The Property is referred to in the DDA as"Parcel B r All capitalized terms in this Grant Deed shall have the meanings ascribed to them in the DDA unless indicated to the contrary herein. Grantor and Grantee agree as follows: 1, Grantee hereby covenants and agrees on behalf of itself and any successors and assigns in the Property or any portion thereof or any improvements thereon or any interest therein that Grantee,such successors and assigns shall: a. Develop and construct improvements on the Property solely in accordance with the Redevelopment Plan, this Grant Deed, the DDA (including but not limited to the Scope of Development, DDA Attachment No. 4), and Page 1 of 1 f plans approved by the City of Huntington Beach (the "City") with an . approximate range of one hundred twenty (I20) residences and two hundred thirty (230) residences, depending on the number and mix of up to three different housing types to be developed: duplexes,cluster homes, and/or detached patio homes,with the number and mix of housing types to be approved by the City. b. Devote the Property, or cause the Property to be devoted, solely to use in accordance with the Redevelopment Plan,this Grant Deed, the DDA, and plans approved by City with an approximate range of one hundred twenty (120) residences and two hundred thirty (230) residences, depending on the number and mix of up to three housing types to be developed: duplexes, cluster homes, and/or detached patio homes with the number and mix of housing types to be approved by the City. C. Maintain the Property, or cause the Property to be maintained, in accordance with Section 2 of this Grant Dead. d. Not discriminate upon the basis of race, color, tread, religion, sex, age, marital status, national origin, or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Property, or any improvements erected or to be erected thereon,or any part thereof. C. Refrain from commencing the construction of the residential improvements regmrod by this Grant Deed until substantial commencement has occurred of the improvements required by the DDA for Parcel A,as the terms"Parcel A"and"substantial commencement"are defined in the DDA;pro%ided however that the lack of occurrence of such substantial commencement by the time required in the DDA for the commencement of construction of the initial phase of residential improvements on the Property shall not be an excuse for delay in performance or non-performance of the obligation of Grantee under the DDA and this Grant Deed to timely commence the construction of residential improvements on the Property. f. Refrain from encumbering the Property with any security interest other than (i) a Mortgage approved by Grantor under the DDA for site improvements and infrastructure and general development work other than the construction of residential improvements in the maximum initial amount of Twelve Million Dollars ($12,000,000), the dollar amount of such encumbrance to be reduced by Grantee by $60,000 for each residential dwelling unit commenced to be constructed on the Property;or (ii)upon Grantee obtaining a building permit for all improvements for any phase of residential development for the Property, a Mortgage approved by Grantor under the DDA in an amount necessary to find such phase of residential development The covenant set forth in this paragraph I(f) Page 2 of 2 T T shall be released upon the recordation of a Mortgage satisfying the requirements of paragraph 1(f)(ii). g. Pay the additional consideration to the Grantor for the conveyance of the Property as and when required by the terms of Section 702 of the DDA. Agency agrees to release this covenant through the execution of an appropriate document as to any residential lot on which a completed dwelling unit is constructed and for which a Certificate of Occupancy is issued by the City,so Iong as all amounts due to be paid to Agency under • said Section 702 at the time of the requested release, if any, have been paid. This covenant shall be subordinate to any Mortgage satisfying the requirements of paragraph 1(f)(H)above. 2. (a) Grantee heieby covenants and agrees on behalf of itself and any successors and assigns in the Property or any portion thereof or any improvements thereon or any interest therein that Grantee and such successors and assigns shall, solely at Grantee's expense, maintain and repair or cause to be maintained and repaired the Property and all improvements thereon(including but not limited to landscaping, lighting and signage), in a first quality condition, free of debris, waste and graffiti,and in compliance with the terms of the Redevelopment Plan,the City of Huntington Beach Municipal Code,and the following- (1) All improvements on the Property shall be maintained in good condition in accordance with the custom and practice generally applicable to comparable first quality residential areas, as applicable, in Orange County, and in conformance and compliance with all plans, drawings and related documents approved by the City or Grantor pursuant to the DDA, all conditions of approval of land use ertitlements adopted by the City or the Planning Commission,including painting and cleaning of all exterior surfaces of all private improvements and public improvements to the curbline. (2) Landscape maintenance shall include, without limitation, watering!irrigation; fertilization; mowing; edging; trimming of grass; tree and shrub priming, trimming and shaping of trees and shrubs to rmintain a natural and healthy appearance, road visibility, and irrigation coverage; replacement, as needed, of all plant materials; contmI of weeds in all planters, shrubs, lawms, ground covers, or other planted areas; and staking for support of trees. (3Y Clean-up maintenance shall include, without limitation, maintenance of all sidewalks, paths and other paved areas in a clean and weed-fire condition; maintenance of all such areas clear of dirt,mud,trash, debris or other matter which is unsafe or unsightly; removal of all trash, litter and other debris from improvements and landscaping; clearance and cleaning of all areas maintained prior to the end of each day on which maintenance operations are performed to ensure that all cuttings, weeds,leaves and other debris are properly disposed of by maintenance workers. (b) If Grantor gives written notice to Grantee that the maintenance or condition of the Property or any portion thereof or any improvements thereon does not comply with this Grant Deed and such notice describes the deficiencies, Grantee shall correct,remedy or Page 3 of 3 cure the deficiency within thirty (30) days following the submission of such notice, unless the notice states that the deficiency is an urgent matter relating to public health and safety in which case Grantee shall cure the deficiency with all due diligence and shall complete the cure at the earliest possible time but in no even more than forty-eight (48)hours following the submission of the notice. In the event Grantee fails to maintain the Property or any portion thereof or any improvements thereon in accordance with this Grant Deed and fails to cure any deficiencies within the applicable period described above, Gzaptor shall have, in addition to any other rights and remedies hereunder, the right to maintain the Property and the improvements thereon, or portion thereof, or to contract for the correction of any deficiencies, and Grantee shall be responsible for payment of all such costs incurml by Grantor. 3. Grantee covenants and agrees for itselfy its successors, its assigns and every successor in interest to the Property or any part thercoly there shall be no discrimination against or segregation of any person,•or group of pawns,on account of sex,marital status,race,color, creed, religion, age, national origin or ancestry in the sale, Iease, sublease, transfer, use, occupancy,tenure or enjoyment of the Property nor shall Grantee itself or any person claiming under or through it establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees,subtenants,sublessee,or vendees of the Property. 4. Grantee shall refrain from restricting the rental, sale or lease of the Property on the basis of sex,marital status,race,color,creed,religion,age,ancestry or national origin of any person. All deeds, leases or contracts shall contain or be subject to substantially the following nondiscrimination or non-segregation clauses: a. In deeds: "The grantee herein covenants by and for itself, its successors and assigns, and all persons claiming under or through them, that there shall be no discrimination against or segregation of, any person or group of persons on account of sex, marital status, race, color, creed, religion,' age, national origin or of in the sale, lease, sublease, transfer, use, occupancy,tenure or enjoyment of the land herein conveyed,nor shall the ' grantee itself or any person claiming under'or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, Iocation, number, use or occupancy of tenants, lessees, subtenants, sublessee, or vendees in the land herein' conveyed. The foregoing covenants shall rum with the land." b. In leases: 'Ile lessee herein covenants by and for itself, its successors and assigns,and all persons claiming under or through them,and this lease is made and accepted upon and subject to the following conditions: That there shall be no discrimination against or segregation of any person or group of persons, on account of sex, marital status, race, color, creed, religion,age,national origin or ancestry in the leasing,subleasing,renting, transferring, use,-occupancy, tenure or enjoyment of the land herein leased, nor shall lessee itself?or any person claiming under or through it, establish or permit such practice or practices of discrimination or segregation with reference to the selection, location, number, use or Page 4 of 4 f , occupancy of tenants,lessees,sublessee,subtenants,or vendees in the land herein leased" C. In contracts: "there shall be no discrimination against or segregation of any person or group of persons on account of sex, marital status, race, color, religion, age, tread, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the land, nor shall the transferee itself or any .person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessee, or vendees of the land" 3. Prior to the date that Agency issues a Release of Construction Covenants for a separate residential lot or common area lot within the Property, Grantee shad! not sell, convey, assign, lease or otherwise transfer in any way any interest in said lot or any portion thereof or any improvements thereon, or permit any change to occur in the ownership of Grantee or its successors or assigns (collectively "Transfers"), except as expressly.permitted by terms of the DDA. 6. $gbt of Reverter (a) Grantor shall have the right,at its option, to reenter and take possession of the Property or such portion thereof as to which one of the four (4) enumerated events set forth below has occurred(the"Defaulted Portion of the Property')with all improvements thereon,and to re-vest in Grantor the estate theretofore conveyed to Grantee, if after conveyance of title and prior to the recordation of the Release of Construction Covenants to be issued by Grantor with respect to the residential lots within the Defaulted Portion of the Property, Grantee or its successors or assigns,in violation of this Agreement: I. Subject to the provisions of Section 604 of the DDA, fails to proceed with the construction of the improvements on the Defaulted Portion of the Property as required by the DDA for a period of ninety(90)days after written notice thereof from the Grantor,or 2. Subject to the provisions of Section 604 of the DDA, abandons or substantially suspends construction of the improvements on the Defaulted Portion of the Property of any Phase (as defined in the Scope of Development of the DDA) for a period of ninety (90) days . after written notice thereof from Grantor,or 3. Makes or purports to make any Transfer pertaining to the Defaulted Portion of the Property, or any interest therein, or any of the improvements to be constructed thereon, in violation of the DDA;or 4. Fails to timely pay to the Grantor the residential participation amounts required to be paid to Grantor pursuant to Section 702 of the DDA. Page 5 of 5 (b) Such right to reenter and repossess shall be subject to and limited by and shall not defeat,render invalid or limit: L Any bona fide mortgage,deed of trust or othe r security instrument of sale and leaseback or other conveyance for financing, provided that such mortgage, deed of trust, security instrument,sale and leaseback or conveyance for financing is permitted by the DDA; ii. Any rights or interest provided in the DDA for the protection of the holder of such bona fide, permitted mortgages, deeds of trust or other security instruments, the lessor under such sale and leaseback,or the grantee under such other conveyance for financing; (c) Upon the re-vesting in Grantor of title to the Defaulted Portion of the Property as provided in this Section 6, Grantor shall, pursuant to its responsibilities tmder the California Community Redevelopment Law (Health and Safety Code Sections 33000 et seq.), use its reasonable best efforts to resell the Defaulted PcTtion of the Property as soon as possible and in such manner as Grantor shall find feasible and consistent with the objectives of the law and of the Redevelopment Plan, to a qualified and responsible party or parties (as determined by Grantor), who will assume the obligation of making or completing the improvements, or such other improvements in their stead, as shall be reasonably satisfactory to Grantor and in accordance with the uses specified for the Defaulted Portion of the Property in the Redevelopment Plan. Upon such resale of the Defaulted Portion of the Property, the proceeds thereof shall be applied as follows: i. First, to reimburse the holder of any Mortgage approved or permitted by the DDA the amount owing to such holder,and I Second, to reimburse Grantor on its own behalf and/or on behalf of the City of Huntington Beach, for all costs and expenses of Grantor incident to such sale and/or conveyance,for all costs and expenses incurred by Grantor(including,but not limited to,salaries to personnel in connection with the recapture, management and resale of the Property, or any portion thereof, but less any income derived by Grantor therefrom in connection with such management); all tames, assessments and water and sewer charges with respect thereto; any payments made, or necessary to be made, by Grantor or City to discharge or prevent from attaching or being trade any subsequent encumbrances or liens due to obligations, defaults or acts of Grantee, its successors or transferees; any expenditt= made or obligations incurred by Grantor or City with respect to the making or completion of the improvements or any part thereof the Defaulted Portion of the Property; any unpaid residential participation payments owed to Grantor, and any amounts otherwise owing to Grantor by Grantee or its successors or transferees;and iii. Third, to the extent aMtional proceeds arc available, to reimburse Grantee,its successors or transferees up to the amount equal to costs incurred by Grantee for the _ development of the Defaulted Portion of the Property(including without limitation funds paid by Grantee pursuant to Sections 108(c) and 701 of the DDA and the Driftwood Agreement and other costs incurred for site remediation and preparation), and for the improvements existing thereon at the time of reentry and repossession; less the sum of(A) gains or income withdrawn Page 6 of 6 f or made by Grantee, its successors or assigns therefrom or from the improvements thereon, and (B)the amounts paid or reimbursed pursuant to clause(i)above. iv. - Any balance remaining after such reimbursements shall be retained by . Grantor as its property. (d) The rights established in this Section 6 are to be interpreted in light of the fact that the purpose of the DDA is the redevelopment of the Site and not land speculation. 7. (a) All obligations of"Grantee"under this Grant Deed (and all of the terms, covenants and conditions of this Grant Deed) shall be binding upon Grantee, its successors and assigns and every successor in interest of the Property or any portion thereof or any interest therein, for the benefit and in favor of the Grantor, its successors and assigns, and the City, for the terms set forth herein. (b) The.provisions of the DDA and the provisions set forth in Sections 1(a), 1(e), 1(f),S and 6 of this Grant Deed shall terminate and shall be of no force or effect as to any residential lot or common area lot located within the Property upon the date on which Grantor issues its Release of Construction Covenants for the improvements located on that lot. The covenants against discrimination set forth in Sections 1(d), 3 and 4 of this Grant Deed shall remain in effect in perpetuity. The covenants set forth in paragraphs 1(b), 1(c) and 2 of this Grant Deed shall remain in effect for so long as the Redevelopment Plan is effective under applicable law. All remaining covenants shall -remain in effect unless and until they are discharged or expire in accordance with the acpress terms thereof. (c) All rights of"Grantee"taider this Grant Deed shall inure to the benefit of Grantee and its permitted successors and assigns. 8. This Grant Deed shall not merge with or into any other agreement between Grantor and Grantee. 9. Breach of any of the covenants, conditions,restric tiods,or reservations contained in this Grant Deed shall not defeat or render invalid the lien of any mortgage or deed of trust made in good faith and for value as to the Property, or any portion thereof, whether or not said mortgage or deed of trust is subordinated to this Grant Deed, but unless otherwise herein provided,the terms,conditions,covenants,restrictions and reservations of this Grant Deed shall be binding and effective against the holder of such mortgage or deed of trust and any owner of the Property,or any part thereof,whose title thereto is acquired by foreclosure,trustee's sale,or otherwise. Page 7 of 7 IN WITNESS WHEREOF, the Grantor and Grantee have caused this instrument to be executed on their behalf by their respective officers thereunto duly authorized,this Vn day of �r! 2001. REDEVELOPMENT AGENCY OF THE CITY OF HUNTTNGTON BEACH, a public body,corporate and politic .. f� Dated: y 2001 By./ . Chairman ATTEST. APPROVED AS TO FORM: 4"'e� 4-42 Agency Clerk A T Gcl Counsel sro� REVIEWED AND APPROVED: INITIATED AND APPROVED: Ray Sit ,Executive Director Director of Economic Development emd APPROVED AS TO FORM: �� �,Y�ccrfw� Q/rtcr5,i Kane,Ballmer&Berkman Agency Special Counsel Page 8 of 8 GRANTEE hereby accepts and approves each of the conditions, covenants and restrictions set forth in this Grant Deed Executed this 3rd day of April _,2001. MAYER FINANCIAL,L.P., a California limited partnership By: RLM Management,Inc., a California corporation, Its General Partner 7 , Date: April 3 ,200I By: '� -+- Robert L Mayer HbX%'fC1M1n9r=d+.ra«"13 Page 9 of 9 STATE OF CALIFORNIA } )ss. COUNTY OF ORANGE ) - On April 3 2001 before me,Jan Smith, Notary Public, personally appeared ROBERT 'L. MAYER ,personally known to me to be the person(c) whose name(e) is/a;a subscnbcd to the within instrument and acknowledged to me that helsh*4W ► executed the same in hiss authorized capacity(4os), and that by his4mw4haiF si8Mft (.G) on the instrument the person(-),or the entity upon behalf of which the person(4 acted,executed the instrument. WTI'NESSrpy d and official seal. —- TH Urnmialcn# 1181340 r�ot�rr�,orc-cairt �orr Siguaturtr WW2&=� STATE OF CALIFORNIA ) )ss. COUNTY OF (1X.4�16 F ) On ARIL y, ,2001 before me, , 7Eti'yl L �jpTAeykSUC1 personally appeared P hl TOW t< NU O L N ,personally known to me (or proved to me on the basis of satisfactory evidence)to be the person(s) whose name(t) islwe- subsm''bed to the within instrument and acknowledged to me that4wlshe/they executed the same . in higher/their authorized capacity(ie,), and that by his/her/their signature(s) on the instrument the person(),or the entity upon behalf of which the persons}acted,executed the instrument. WTTNES S my hand and official seal. Signature GC d� P't"A se cow:sson rpYLL �1s Notary PMGc-cailarao orange County WC0rnm.l ocllz2DM GOVERNMENT CODE 27361. 7 I certify under the penalty of perjury that the notary seal on the document to which this statement is attached reads as follows: Name of Notary: Teryll L. King Date Commission Expires: Oct 12, 2003 Commission Number: #1237815 Vendor Number: NNA1 County where bond is filed: Orange Place of Execution: Santa Ana, California Date: April 17, 2001 a By: ' RO ER REIMER First American Title Insurance Company - y GOVERNMENT CODE 2 736 1. 7 I certify under the penalty of perjury that the notary seal on the document to which this statement is attached reads as follows: Name of Notary: Jan Smith Date Commission Expires: Apr 26, 2002 Commission Number: #1181340 Vendor Number: NNA1 County where bond is filed: Orange Place of Execution: Santa Ana, California Date: April 17, 2001 • By: Z161 ROGER U. REIMER First American Title Insurance Company i EXHIBIT A LEGAL DESCR=QN OF PROPERU. THE LAND REFERRED TO HEREIN IS SITUATED IN THE STATE OF CALIFORNIA, COUNTY OF ORANGE, CITY OF HUNTINGTON BEACH, AND 1S DESCRIBED AS FOLLOWS: THE LAND DESCRIBED HEREIN IS SITUATED IN THE CITY OF HUNTINGTON BEACH, COUNTY OF ORANGE, STATE OF CALIFORNIA; BEING A PORTION OF SECTION 14,TOWNSHIP 6 SOUTH,RANGE I 1 WEST OF THE RANCHO LAS BOLSAS, AS PER MAP RECORDED IN BOOK 51, PAGE 14 OF MISCELLANEOUS MAPS, RECORDS OF THE COUNTY 'OF ORANGE, CALIFORNIA. MORE PARTICULARLY DESCRIBED AS FOLLOWS: A PORTION OF THAT LAND SHOWN AS THE DESIGNATED REMAINDER ON MAP THEREOF OF TRACT NO. 15535 RECORDED IN BOOK 790, PAGES 44 THROUGH 50, INCLUSIVE, OF MISCELLANEOUS MAPS, RECORDS OF THE COUNTY OF ORANGE, CALIFORNIA. MORE PARTICULARLY DESCRIBED AS FOLLOWS: BEGINNING AT THE NORTHEAST CORNER OF THE SOUTH ONE-HALF OF THE NORTHEAST ONE-QUARTER OF SAID SECTION 14, PER SAID TRACT NO. 15535; THENCE ALONG THE NORTHERLY LINE OF SAID SOUTH ONE-HALF NORTH 89015'39" WEST 50.00 FEET TO A POINT ON THE WESTERLY RIGHT OF WAY OF BEACH BOULEVARD AS SHOWN ON SAID TRACT NO. 15535, SAID POINT BEING THE TRUE POINT OF BEGINNING THENCE ALONG SAID WESTERLY RIGHT OF WAY SOUTH 00017'01" WEST I052.24 FEET TO A POINT ON THE GENERAL NORTHEASTERLY RIGHT OF WAY OF PACIFIC VIEW AVENUE, DEDICATED PER SAID TRACT NO. 15535; THENCE ALONG SAID GENERAL NORTHEASTERLY RIGHT OF WAY, THROUGH THE FOLLOWING TWENTY-TWO (22) COURSES: SOUTH 60057'59" WEST 30.03 FEET; SOUTH 88°48'52"WEST 15.08 FEET TO THE BEGINNING OF A CURVE, CONCAVE NORTHERLY, HAVING A RADIUS OF 94.00 FEET, WESTERLY ALONG SAID CURVE 27.38 FEET THROUGH A CENTRAL ANGLE OF 16041110" TO THE BEGINNING OF A COMPOUND CURVE, ' CONCAVE NORTHEASTERLY, HAVING A RADIUS OF 1065.00 FEET, A LINE RADIAL TO SAID POINT BEARS SOUTH 15°30'02" WEST; NORTHWESTERLY ALONG SAID CURVE 401.46 FEET THROUGH A CENTRAL ANGLE OF 21*35154" NORTH 52054'04".WEST I70.18 FEET TO THE BEGINNING OF A CURVE, CONCAVE SOUTHWESTERLY, HAVING A RADIUS OF 1135.00 FEET;NORTHWESTERLY ALONG SAID CURVE 76.00 FEEL' THROUGH A CENTRAL ANGLE OF 03050'I1" NORTH 56044*15" WEST I26.00 FEET TO THE BEGINNING OF A CURVE, CONCAVE NORTHEASTERLY, HAVING A RADIUS OF 1065.00 FEET, NORTHWESTERLY ALONG SAID CURVE 105.98 FEET THROUGH A CENTRAL ANGLE OF 05°42'06"NORTH 51002109"WEST 122.87 FEET TO THE BEGINNING OF A NON TANGENT CURVE, CONCAVE SOMIWESTERLY, HAVING A RADIUS OF 1135.00 FEET,A RADIAL LINE TO SAID POINT BEARS NORTH E=.IT.A TO GRANT DEED Page l of 1 39°26'56" EAST; NORTHWESTERLY ALONG SAID CURVE 110.03 FEET THROUGH A CENTRAL ANGLE OF 05033116"NORTH 56e06120"WEST 45.02 FEET, NORTH 11030102" 'WEST 20.77 FEET, NORTH 37°56'06" EAST 15.58 FEET, NORTH 52003'54" WEST 34.00 FEET, SOUTH 37056'06" WEST 16.76 .FEET, NORTH 52003'54" WEST 18.00 FEET, NORTH 37056'06" EAST 7.28 FEET, NORTH 52003'54" WEST 34.00 FEET, SOUTH 37056106" WEST 14.96 FEET; SOUTH 82°53'34" WEST 16A7 FEET, NORTH 56°06'20" WEST 315.97 FEET TO THE BEGINNING OF A CURVE, CONCAVE NORTHEASTERLY, HAVING A RADIUS OF 1060 FEET, AND NORTHWESTERLY ALONG SAID CURVE 51.87 FEET THROUGH A CENTRAL ANGLE OF 02°48'13" TO A POINT ON THE GENERAL NORTHEASTERLY RIGHT OF WAY OF. PACIFIC VIEW AVENUE, DEDICATED PER DOCUMENT RECORDED SEPTEMBER 1, 1995, AS INSTRUMENT NUMBER 95-0384748, •OFFICIAL RECORDS OF THE COUNTY OF ORANGE, CALIFORNIA, A LINE RADIAL TO SAID POINT BEARS SOUTH 36°41'53" WEST; THENCE LEAVING SAID NORTHEASTERLY RIGHT OF WAY PER SAID TRACT NO. 15535 AND CONTINUING ALONG SAID GENERAL NORTHEASTERLY RIGHT OF WAY PER SAID DOCMIENT, THROUGH THE FOLLOWING THREE (3) COURSES: NORTH 42"18'11" EAST 7.52 FEET, NORTH 47*41'IS" WEST 38.85 FEET TO THE BEGINNING OF A CURVE, CONCAVE SOUTHWESTERLY, HAVING A RADIUS OF 2452.00 FEET, AND NORTHWESTERLY ALONG SAID CURVE 252.70 FEET THROUGH A CENTRAL ANGLE OF 05054'1T'TO A POINT ON SAID NORTH LINE OF THE SOUTH ONE-HALF OF THE NORTHEAST ONE-QUARTER OF SAID SECTION 14,A LINE RADIAL TO SAID POINT BEARS NORTH 3602425" EAST; THENCE LEAVING SAID GENERAL NORTHEASTERLY RIGHT OF WAY, NON TANGENT TO SAID CURVE ALONG SAID NORTH LINE SOUTH 89°15'39" EAST 1658.76 FEET TO THE TRUE POINT OF BEGINNING. EXCEPTING AND RESERVING THEREFROM, any and all oil, oil rights, petroleum, minerals, mineral rights, natural gas rights, and other hydrocarbon substances by whatsoever name known,geothermal resources,and all prodacts derived from any of the foregoing,that may be within or under the land, together with the perpetual right of drilling, mining, exploring, prospecting and operating therefor and storing in and removing the same from the Site or any other land,including the right to whipstock or directionally drill and mine from lands other than those leased hereby,oil or gas wells,tunnels and shafts into,through or across the subsurface of the Site, and to bottom such whipstocked or directionally drilled wells,tunnels and shafts under and beneath or beyond the exterior limits thereof,and to redrill,retunneI,equip,maintain,rcpair, deepen and operate any such wells or mines; without, however, the right to enter, drill, mine, . store, explore or operate on or through the surface or the upper 500 feet of the subsurface of the Site;and FURTHER EXCEPTING AND RESERVING THEREFROM,any and all water,water rights or interests therein, no matter how acquired by Agency, together with the right and power to explore, drill, redrill, remove and store the same from the Site or to divert or otherwise utilize' such water,water rights or interests on any other property owned or leased by Agency,whether such water rights shall be riparian, overlying, appropriative, percolating, littoral, prescriptive, adjudicated,statutory or contractual; but without,however,any right to enter upon the surface of the Site in the exercise of such rights and,pro-vided further,that the exercise of any such rights EXMrr TO GRANT DEED Page 2 of 2 by Agency shall not result in any damage or injury to the improvements constructed on the Site by Lessee,including without limitation any subsidence of all or any part of such improvements. FURTHER EXCEFTING AND' RESERVING THEREFROM, a perpetual non-exclusive casement in favor of Grantor on,over and across a portion of the Property consisting of degraded wetlands ("Easement") which area is more particularly descnW on Exhibit "A-l" attached hereto ("Degraded Wetland Area"), solely for the purposes set forth in that certain Open Space/Wetland Preservation and Restoration Deed Restriction recorded against the Degraded Wetland Area on December 19, 2000 as Instrument No. 20000689468 in the Orange County Recorder's Office•("Deed Restriction"). The Easement reserved heretmder by Grantor shall constitute a "conservation easement" in favor of Grantor purswnt to California Civil Code Section 815.1. Until the Degraded Wetland Area is conveyed from Grantee back to Grantor, all maintenance within the Degraded Wetland Area shall be at.Grantee's sole cost and expense. The Easement reserved hereunder shall in no way amend, modify, reduce, or limit the rights, mtrictions, terms, covenants, conditions or obligations of Grantor and Grantee under (i) the Deed Restriction; er (i.i) that certain Second Implementation Agreement to Amended and Restated Disposition and Development Agreement dated February 5, 2001, including writhout limitation, Grantee's obligation to convey the Degraded Wetland Area to Grantor. Grantor shall be entitled to all available legal and equitable remedies in order to enforce the Easement reserved by Grantor hereunder,including without limitation,the remedies provided for in California Civil Code Section 815.7. EXHI31T A TO GRANT DEED Page 3 of 3 EXHMIT A-I LEGAL 12ESCRIP_TION QE DEGRADED WETLAND AREA THE LAND DESCRIBED HEREIN IS SITUATED IN THE CITY OF HUNTINGTON BEACH, COUNT7' OF ORANGE, STATE OF CALIFORNIA, BEING A PORTION OF SECTION 14,TOWNSHIP 6 SOUTH, RANGE I 1 WEST OF THE RANCHO LOS BOLSAS, AS PER MAP RECORDED IN BOOK 51, PAGE 14, RECORDS OF THE COUNTY OF ORANGE,MORE PARTICULARLY DESCRIBED AS FOLLOWS: THOSE PORTIONS OF THAT LAND DESIGNATED AS REMAINDER ON MAP THEREOF OF TRACT NO. 15535 RECORDED SEPTEMBER 14, 1999 IN BOOK 790, PAGES 44 THROUGH 50,INCLUSIVE,OF MISCELLANEOUS MAPS, RECORDS OF THE COUNTY OF ORANGE. MORE PARTICULARLY DESCRIBED AS FOLLOWS: BEGINNING AT THE NORTHEAST CORNER OF THE SOUTH ONE-HALF OF THE NORTHEAST ONE-QUARTER OF SAID SECTION 14, PER SAID TRACT NO. 15535; THENCE ALONG THE NORTHERLY LINE OF SAID SOUTH ONE-HALF, NORTH 89015139" WEST 50.00 FEET TO THE WESTERLY RIGHT OF WAY OF BEACH BOULEVARD AS SHOWN ON SAID TRACT NO. 15535; THENCE ALONG SAID WESTERLY RIGHT OF WAY, SOUTH 00017'01" WEST 681.85 FEET TO THE TRi�F POINT OF BEGINNING; THENCE, CONTINUING ALONG SAID WESTERLY RIGHT OF WAY, SOUTH 00017110" WEST 257.55 FEET; THENCE, LEAVING SAID WESTERLY RIGHT OF WAY, NORTH 87033137".WEST 14.00 FEET; THENCE NORTH 01008'12" EAST 8.59 FEET; THENCE NORTH 45*11'30" WEST 65.40 FEET; THENCE NORTH 85°23'00" WEST 35.27 FEET; THENCE SOUTH 24-55-48" WEST 2131 FEET; THENCE NORTH 87°17'23" WEST 48.09 FEET; THENCE SOUTH 4r23'51" WEST 104.14 FEET; THENCE SOUTH 84°57'19" WEST 7.30 FEET; THENCE NORTH 35°26'46" WEST 3633 FEET;THENCE NORTH 25°58'40"EAST 262.04 FEET;THENCE NORTH 22°27'35"WEST 4.50 FEET; THENCE NORTH 46037'29" EAST 23.07 FEET; THENCE NORTH 24021,300, EAST 120.69 FEET; THENCE NORTH 83°27'33" EAST 1732 FEET, THENCE SOUTH 02055'3T' WEST 92.82 FEET; THENCE SOUTH 52°05'49" WEST 3738 FEET, THENCE SOUTH 25°20'52" EAST'21.31 FEET; THENCE NORTH 60"23'1T' EAST 33.54 FEET; THENCE SOUTH 4802943" EAST 37.00 FEET; THENCE SOUTH 13°5724" WEST 77.40 FEET;THENCE SOUTH 44°05'07"WEST 34.49 FEET,THENCE NORTH 56031'38"WEST 21.74 FEET; THENCE SOUTH 29°01'58" EAST 26.68 FEET; THENCE SOUTH 78010137" EAST 18.00 FEET; THENCE NORTH 33*19*31" EAST 99.79 FEET; THENCE NORTH 000 14'09" EAST 65.86 FEET; THENCE NORTH 89042'50" EAST 6.00 FEET; TO SAID WESTERLY RIGHT OF WAY AND THE TRL!E PORff QEBEGINNING. CONTAINS 43,651 SQUARE FEET OR 1.002 ACRES OF LAND,MORE LESS OR LESS. EX IT TO GRANT DEED Page I of I 1 ' f STATEMENT OF DOCUNIE%7ARY TRANSFER TAX DUE In accordance with the provisions of Section 11932 of the Revenue and taxation Code,I,the undersigned,request that the Declaration of Documentary Transfer Tax be made on this form which will not be made a part of the permanent record and%till be affixed to and returned with the conveying document after the permanent record is made. ASSESSOR'S PARCEL NO.: NAME OF ONE GRANTOR: AND NAME OF ONE GRANTEE The undersigned declares that the documentary ransfcr tax is S 13,750.00 and is Computed on the full value of the interest or property conveyed,or is Computed on the full value less the value of liens or encumbrances remaining thereon at the time of sale The land,tenements or realty is located in an unincorporated area in the coLnty.or the City of I ' '�v�vi (Signature o eclarant or signature of declarant's agent) This Document was electronically recorded by FIRST AMERICAN TITLE 114SURANCE COMPANY First American Title RECORDING REQUESTED BY Recordod In official Rocords,County of Orange Q Gary L Granville,Cleric-Recorder AND WHEN RECORDED MAIL TO: • 20.00 RUTAN&TACKER,LLP 20010232769 01:05pm 04/18/01 611 Anton Boulevard,Suite 1400 118 48 M11 a Costa Mesa,CA 92626 0.00 0.00 0.00 0.00 14.00 0.00 0.00 0.00 Att a: Lori Sarver Smith,Esq. (Space Above For Recorder's Use) M, Memorandum of Lease and Right of First Refusal is recorded at the repw and for the benefit of the Redwelopment Agency of the City of Huntington Beach and is exempt from the payment of a recording fee pursuant to Government Code§6103. REDEVELOPMENT AGENCY OF THE CIIY OF HLRTMGTON BEACH By. �—.�. Its: r, �[ Dated NIMORMMUM OF LEASE AND RIGHT OE=REFUSAL (� This MEMORANDUM OF LEASE AND RIGHT OF FIRST REFUSAL (this "Memorandum') is made as of the -hLPI- day of _Aef-11 . SOO/ -, by and . between THE REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH, a public body corporate and politic ("Agency's, and PCH BEACH RESORT, LLC, a California 1� limited liability company("Lessee"). 1� RKEEAT.S •A. Agency and Mayer Financial, L.P., a California limited partnership ("Mayer'), have entered into that certain Amended and Restated Disposition and Development Agreement dated as of September 14, 1998 (the"Original Agreement"). On or about May 15,2000 Agency and Mayer entered into that certain First Implementation Agreement to Amended and Restated Disposition and Development Agreement (the"First Implementation Agreement"). On or about February 5, 2001, Agency and Mayer entered into that certain Second Implementation Agreement to Amended and Restated Disposition and Development Agreement (the "Second Implementation Agreement'). The Original Agreement as modified by the First Implementation Agreement and Second Implcm on Agreement may be referred to herein together as the "Agreement". On or about 91L 4 ,ZW1 , pursuant to that certain Assignment and Assumption Agreement and Consent to Assignment,Mayer assigned to Lessec its rights and obligations under the Agreement relating to the leasing and the development of Parcel A (as defined therein). B. Pursuant to the Agreement, Agency and Lessee have wered into a ground leas (the"Lease")of even date with this Memorandum with respect to that certain real property in the City of Huntington Beach,County of Orange, State of California,more particularly described on Exhibit "A"hereto(the"Site"). C. Pursuant to Section 204 of the Original Agreement,Agency and Lessee desire to record this Memorandurm MEMMAIMUM 1. Agency hereby leases to Lessee and Lessee hereby leases from Agency the Site on the terms and conditions set forth in the Lease,which is incorporated herein by this reference as though set forth in full. This Memorandum is preparod and executed for the purpose of recordation and in no way modifies the terms and provisions of the Lease. In the event of any inconsistency between the terms of the Lease and the terms of this Memorandum, the terms of the Lease shall prevail. The Lease is a public record and a true and correct copy of the Lease is available for public review and inspection in the office of the City Clerk of the City of Huntington Beach,whose address is 2000 Main Street,Huntington Beach,California 92648. 2. Pursuant to Section 202 of the Lease, the term of the Lease shall be ninety-nine (99)years,commencing on the date of execution and delivery of.the Lease (the"Effective Dam of Lease")and terminating on the ninety-ninth(99th)anniversary of the Effective Date of Lease, unless sooner terminated as provided for in the Lease. Agency and Lessee acknowledge and agree that the Lease was executed and delivered on the date first above written. 3. Pursuant to Section 1311 of the Lease,Agency hereby grants to Lessee a right of first refusal to purchase Agency's reversionary fee interest in the Site subject to the terms and ' conditions set forth in the Lease. 4. Pursuant to Section 1316 (3) of the Lease, Lessee agrees that the Lease shall, at the request of the Agency,be subordinate to any mortgages or deeds of trust that may hereafter be placed upon the fee of the Site by Agency and to any and all advances to be made thereunder, and to the interest thereon,and all renewals,replacements and extensions thereof,provided that the mortgagees or beneficiaries named in said mortgages or trust deeds shall execute and deliver ' a written non-disturbance and attotnment agreement by and among Lessee, Agency and such mortgagees or beneficiaries,with the approvals and providing the assurances as set forth in such Section 1316(3). [The remainder of this page has been intentionally left blank. Signatures on next page.] -2- IN WTPNESS WHEREOF,the parties to this Memorandum of Lease and Right of First Refusal have caused this instrument to be duly executed as of the date first above written. "AGENCY" REDEVELOPMENT AGENCY OF THE CITY OF HUNTLNGTON BEACH, a public body,corporate and politic Dated: Alt, 2001 1B)..7a771 ATTEST: APPROVED AS TO FORM: Agency Clerk Agency GcnV Counsel y-Vic! REVIEWED AND APPROVED: RgMTED AND APPROVED: Ray Mer,Executive Director Director of Economic Development a4vf APPROVED AS TO FORM: Kane,Ballmer&13erkman Agency Special Counsel -3- 4 "LESSEE" PCH BEACH RESORT,L.LC,a California limited liability company By: GRAND RESORT,LLC,a California limited liability company,Managing Member By: RL.M Management,Inc.,a California corporation,Manager By. Robert L. Mayer, -4-- s ' STATE OF CALIFORNIA ) ss. COUNTY OF'nRANCE _ } On April 3 _ _ ,2001 beforeme.jan Smith Notary Public, personally appeared ROBERT L. MAYER ,personalty known to me (e?Vmved to me on the basis of&Wafamero e*Wee.")to be the pc:son(i) whose narnCH isle-e subscribed to the within instrument and acknowledged to me that hcloho4he*,L executed the same in hislizerkheit authorized capacityE-k*, and that by his;AwWkh@k signature} on the instrument the person(;),or the entity upon behalf of which the person(e)acted,executed the instrument. WITNESS my band and official seal_ ,JAN SMf7H n _ Commltsionw 1181u) WMyCorrvr%bvLeSApr26.= Notary Puorc-Cofiforriiq S]gE]at121eOranoe County STATE OF CALIFORNIA ) )Ss' COUNTY OF 4Q2AA16-& ) On APP-11, L1 ,2001 before me, :rR 1. eld& , penonally appeared a_ ZrVyCR 140 UC kEN_ ,personally known to me (or proved to me on the basis of Satisfactory evidence)to be the persons whose named is/are subscribed to the within instrument and acknowledged to me that he-shclthey executed the same in his/ber/thin authorized capacity(46), and that by his/her/their signature(e) on the instrument the person(e),or ibz entity upon behalf of which the person(s)azted,executed the instrument. WITNESS my hand and official seal. Signature f^ [ca TtRML10 r Comrnts1on#1237e13 . Notary Public-CaR T*3 orange Canty MyCanm.6�es Od 12�3 GOVERNMENT CODE 27361. 7 certify under the penalty of perjury that the notary seal on the-document to which this statement is attached reads as follows: Name of Notary: Jan Smith Date Commission Expires: Apr 26, 2002 Commission Number: #1181340 Vendor Number: NNA1 County where bond is filed: Orange Place of Execution: Santa Ana, California Date: April 17, 2001 By: ROG R C.WEIER First American Title Insurance Company GO VERNMENT CODE 27361. 7 I certify under the penalty of perjury that the notary seal on the document to which this statement is attached reads as follows: Name of Notary: Teryll L. King Date Commission Expires: Oct 12, 2003 Commission Number: #1237815 Vendor Number: NNA1 County where bond is filed: Orange Place of Execution: Santa Ana, California Date: April 17, 2001 Byr ROGER 0. R11MER First American Title-Insurance Company EXH]BIT"A" LEGAL DESCRIPTION QUARCFL A That certain real land located in the City of Huntington Beach, County of Orange. State of California,described as follows: LOT 1 OF TRACT NO. 15535,AS SHOWN ON A MAP FILED IN BOOK 790 PAGES 44 TO 50 INCLUSIVE, OF MISCELLANEOUS MAPS, RECORDS OF ORANGE COUNTY, CALIFORNIA. E *A TO MEMORANDUM OF LEASE AND RIGHT OF FIRST REFUSAL 11A: This Document was electronically recorded by FIRST AMERICAN TITLE INSURANCE CQh10"U'lY First American Title Recorded In Official Records,County of Orange RECORDING REQUESTED BY Gary t_Granville,Clerk-Recorder AND WHEN RECORDED MAIL TO: 54.00 RUTAN$TUCKER,LLP 20010232768 01:05pm 04118/01 611 Anton Boulevard,Suite 1400 _ 0.0 48.A30 A38 Cis 19 o o.00 0.00 0.00 36.00 0.00 0.00 0.00 Costa Mesa, California 92626 Attn.: Lori Sarner Smith,Esq. (Space Above For Recorder's Use) This Assignment and Assumption Agreement and Consent to Assignment is recorded at the request and for the benefit of the Redevelopment Agency of the City of Huntington Beach and is exenspt from the payment of a recording fee pursuant to J Government Code§6103. REDEVEI.OPNOWr AGENCY OF THE CITY OF I TIVGTON BEACH By: �+ Its: n Datei GL,s..% A00 i i� ASSIGNMEIN"r AND ASSUMPTION AGREEMENT A'D CONSENT TO ASSIGNMENT V This ASSIGNMENT AND ASSUMPTION AGREEMENT AND CONSENT TO ASSIGNMENT (the "Assignment') is made and entered into as of this 3rJ -day of N01 . 2001 (the"Effective Date"), by and between MAYER FINANCIAL, L.P., a California limited partnership ("MF'), as assignor, and PCH BEACH RESORT, LLC, a California limited liability company ("PCH"), as assignee, and is consented to by the LL Redevelopment Agency of the City of Huntington Beach ("Agency"), the City of Huntington Beach ("City'), and the Orange County Sanitation District, a public agency of the State of California("Sanitation District"). . A. On or about September 14, 1998, Agency and MF entered into that certain Amended and Restated Disposition and Development Agreement (the "'Original.DDA") which generally sets forth the various rights and obligations of the.parties in connection %ith the development of that certain real property located in the City of Huntington Beach, more particularly described in Section 104 of the Original DDA as the"Site:' On or about May 15, 2000,Agency and MF entered into that certain First Implementation Agreement to Amended and Restated Disposition and Development Agreement(the"First Implementation Agreement"). On or about February 5, 2001, Agency and MF en.-cred into that certain Second Implementation Agreement to Amended and Restated Disposition and Development Agreement (the "Second Implementation Agreement"). The Original DDA, as modified by the First Implementation Agreement and Second Implementation Agreement,is referred to herein as the"DDA" B. The DDA, among other things, provides for Agency to lease to 14IF•and hIF to lease from Agency that certain real property more particularly described in Section 104 of the DDA'as "Parcel A" (hereinafter, the "the Hotel Parcel"). The Hotel Parcel is depicted on Exhibit" " and is more particularly described on Exhibit 'J'% as each are attached hereto and incorporated herein. The DDA further provides for W to develop the Hotel Parcel with a hotel in accordance with the provisions of the DDA and sets forth W's rights and obligations in connection therewith. C. On or about September 21, 1998, City, W, and the Waterfront Hotel, LLC, a California limited liability company ("Waterfront"), entered into that certain Amended and Restated Development Agreement (the "Development Agreement'), recorded on December 7, 1998, with the Orange County Recorder as Instrument No. 19980838602, which, among other things, provides that hT shall develop the Site in conformity with the City's General Plan and applicable Specific Plan, and further sets forth NIT's rights and obligations in connection therewith. D. City, Waterfront, and W, enterd into that certain License Agreement to Provide 'Landscaping and Other Improvements in the Public Right-of-Way dated February 5, 2001 (the "License Agreement"), to be recorded substantially concurrently herewith, which, among other things, sets forth certain rights and obligations of W relating to the installation, maintenance, repair, demolition, removal and/or replacement of certain improvements located within an area defined therein as the "Grand Coast Resort Improvement Area" (which Grand Coast Resort Improvement Area encompasses the entire Hotel Parcel) and for all improvements within the area defined therein as the"Overcrossing Improvement Area." E. .City, the Orange County Sanitation District, a public agency of the State of. California ("Sanitation District"), and AIF, entered into that certain Agreement Involving the Installation of a Pedestrian Overcrossing dated February 20,200I (the"Pedestrian Overcrossing Agreement"),to be recorded substantially concurrently herewith,which,among other things,sets forth the Sanitation District's affirmation of MFs right to construct, install, maintain, repair, reconstruct, and/or replace a pedestrian overerossing landing within a portion of the Sanitation District's thirty(30) foot-wide non-exclusive easement area,as described therein. F. The DDA, the Development Agreement, the License Agreement.. and the Pedestrian Overcrossing Agreement may be i.-tdividually referred to herein as an "Agreement" and collectively as the"Agreements". G. W desires to assign to PCH all of W's rights and obligations set forth in the Agreements, as each Agreement relates to the leasing and the development of the Hotel Parcel and PCH desires to accept such assignment and to assume the obligations of W set forth in the Agreements, as each Agreement relates to the leasing and the development of the Hotel Parcel, _ all upon the terns and conditions as more particularly set forth herein. -2- _ - t H. Section 316 of the DDA provides that MF may assign its rights and obligations set forth in the DDA without the prior written consent of Agency as long as the assignment is made to an entity in which either MF or Robert L.Mayer and Stephen K.Bone retain a minimum of fifty-one percent (51%)of the ownership or beneficial interest and retain management control. Section 316(c) of the DDA further provides that any prospective assignee of NT's right and obligations set forth in the DDA shall be reTEred, as a condition precedent to the effectiveness of the assignment,to assume said rights and obligations by a writing first approved by Agency as to form and content, which approval shall not be unreasonably withheld, and shall be in a form recordable among the land records of Orange County, which consent will be considered in accordance with Section 316(b)of the DDA. I. Section 3.1.5 of the Development Agreement provides that NSF may assign its rights and obligations set forth in the Development Agreement,provided that such assignment is in accordance with the transfer provisions of the DDA. Section 3.1.5.3 of the Development Agreement further provides that, upon Agency's approval of MF's assignment of the DDA (or any portion thereol), the City Administrator shall approve an assignment of the Development Agreement. Section 3.1.5.2 of the Development Agreement further provides that, concurrently with submission of the notice of proposed transfer or assignment under the DDA, MF shall submit to City. (a)a request for concurrent assignment of the Development Agreement, (b)a fully executed instrument, in form and content reasonably acceptable to City,pursuant to which the transferee expressly assumes and agrees for the benefit of City to perform the obligations of MF set forth in the Development Agreement applicable to the Site or portion thereof being conveyed, and (c)in acknowledgement, in form and content reasonably approved by City and executed by the Assignee, pursuant to which the Assignee acknowledges that it has read and understands the Development Agreement and all of the provisions thereof. J. Paragraph 15 of the License Agreement provides that MF may assign its rights and obligations under the License Agreement, provided that the proposed transferee has fast -been approved in writing by the Agency, as the ground lessor of the Hotel Parcel. Paragraph IS of the Lieense•Agrecment further provides that,concurrently with submission of the notice of the proposed transfer or assignment of the Hote? Parcel by MF, MF shall submit to City. (a)a request for concurrent assignment of the License Agreement, (b)a fully'executed instrument, in form and content reasonably approved by City, pursuant to which the transferee expressly assumes and agrees for the benefit of City to perform the liabilities, obligations and responsibilities of MF set forth in the License Agreement applicable to the site or portion thereof being conveyed, (c)an acknowledgement, in form and content reasonably approved by City, executed by the transferee, pursuant to which the transferee acknowledges that it has read and understands the License Agreement and all of the provisions thereof, and (d) security in compliance with the requirements of Paragraph I4 of the License Agreement, securing the obligations of such transferee under the License Agreement. K. Paragraph 9 of the Pedestrian Overcrossing Agreement provides that MF may assign its rights and obligations under the Pedestrian Overcrossing Agreement,provided that the proposed assignee has first been approved in writing by the Agency, as the ground lessor of the Hotel Parcel, and provided that MFs rights and obligations under the License Agreement have properly been assigned to the same assignee. Paragraph 9 of the Pedestrian Overc, ssing Agreement further provides that, concurrently with submission of the notice of the proposed • r transfer of the Hotel Parcel by MF, MF shall submit to City and the Sanitation District: (i)a request for concurrent assignment of the Pedestrian Oven, ssing Agreement to the same assignee of the License Agreement, (ii)a fully executed instrument, in form and content• reasonably approved by City and Sanitation District, pursuant to which the assignee expressly assumes and agrees for the benefit of City and Sanitation District to perform, and assume all liabilities, obligations and responsibilities of MF set forth in the Pedestrian Overcrossing Agreement, and(iii)an acknowledgement,in form and content reasonably approved by City and Sanitation District,executed by the assignee,p•.ursuant to which the assignee acknowledges that it has read and understands the Pedestrian Oveturossing Agreement aid all of the provisions thereof. L. IvlF• has submitted a request to Agency, City, and Sanitation District for concurrent assignment by and from MF to PCH of all of MF's rights and obligations set forth,as applicable,in the DDA,the Development Agreement,the License Agreement, and the Pedestrian Oven, ssing Agreement,as each of Agreements relates to the Hotel Parcel. M. Agency has determined that the assignment and assumption contemplated hereby satisfies the requirements set forth in Section 316(f) of the DDA. City has determined that the assignment and assumption contemplated hereby satisfies (i) the requirements set forth in Sections 3.1.5.1,3.1.5.2,and 3.1.5.3 of the Development Agreement and(ii)the requirements set forth in Paragraph 15 of the License Agreement. City and Sanitation District have determined that the assignment and assumption contemplated hereby satisfies the requirements set forth in Paragraph 9 of the Pedestrian Overcrossing Agreement. - Accordingly, Agency, City, and Sanitation District desire to consent to the terms and provisions of this Assignment. N. All capitalized terms not dcfincd in this Assignment shall have the meanings ascribed to them in the DDA. UYENANIa Based upon the foregoing Recitals and for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged,MF and PCH hereby agree as follows: 1. Assismmen . Effective upon the Effective Date,MF hereby assigns,transfers,and conveys to PCH,subject to the provisions set forth in the subsequent sentence,all of MF's rights and obligations as set forth in the Agreements,as such rights and obligations relate to the leasing and the development of the Hotel Parcel. With respect to the DDA, MF, PCH, and Agency hereby acknowledge that the foregoing assignment specifically includes each and every right and obligation of MF and Agency pursuant to the Schedule of Feasibility Gap Payments as set forth on Attachment No. 8, as set forth in its entirety in the Second Implementation Agreement. Notwithstanding the foregoing,MF shall remain fully responsible and liable for the performance of all of the Subdivider's obligations under that certain Subdivision Agreement by and between the City and Mayer Financial, Ltd. for Tract No. 15535 dated August 2, 1999 ("Subdivision Agreement'); provided, however, that as to the Hotel Parcel,MF shall no longer be responsible and liable for the performance of the Subdivider's obligations under the Subdivision Agreement as to the Hotel Parcel if and when such Subdivision Agreement is assigned to PCH pursuant to -4- an assignment formally approved by the City Council of the City or a new Subdivision • Agreement is entered into between City and PCH with respect to the Hotel Parcel and approved by the City Council of the City. 2. Assumption. Effective upon the Effective Date, PCH hereby accepts the assignment from MF of those portions of the Agreements that relate to the leasing and the development of the Hotel Parcel and expressly agrees to assume,keep,perform,and fulfill all the terms,conditions,covenants,and obligations required to be kept,performed,and fulfilled by MF as set forth in the Agreements; as such Agreements relate to the leasing and the development of the Hotel Parcel. Pursuant to Section 3.1.5.2 of the Development Agreement, PCH hereby . acknowledges that PCH has read the Development Agreement and understands the provisions thereof. Pursuant to Paragraph 15 of the License Agreement, PCH hereby acknowledges that PCH has read the License Agreement and understands the provisions thereof. Pursuant to Paragraph 9 of the Pedestrian Overcrossing Agreement,PCH hereby acknowledges that PCH has read the Pedestrian Overcrossing Agreement and understands the provisions thereof. 3. Mutual Indemnification. MF shall indemnify, defend, and hold harmless PCH from all claims arising out of any failure of MF to keep, perform, and discharge any of the obligations set forth in the Agreements relating to the leasing or the development of the Hotel Parcel that may accrue prior to the Effective Date. PCH shall indemnify, defend, and hold harmless MY from all claims arising out of any failure of PCH to keep,perform, and discharge any of its obligations set forth in the Agreements relating to the leasing or the development of the Hotel Parcel that may accrue from and after the Effective Date. 4. Miscellaneous. 4.1 6ttomzvs' Fees. If any party to this Assignment commences an action against any another party to this Assignment arising out of or in connection with thii Assignment,the prevailing party shall be entitled to recover reasonable attorneys' fees and costs -of suit from the Iosing party. MF and PCH hereby acknowledge that Agency and City are not' parties to this Assignment, and by consenting to this Assignment do not become parties to this Assignment. 4.2 Binding Covenants: Successors. This Assignment shall be binding upon the parties hereto and their respective heirs,representatives,transferees,successors,•and assigns. 4.3 Entire AssiMMent. Waivers. and Amendments. This Assignment ' incorporates all of the terms and conditions mentioned herein, or incidental hereto, and supersedes all negotiations and previous Assignments between the parties with respect to all or part of the subject matter hereof. All waivers of the provisions of this Assignment must be in writing and signed by the appropriate authorities of the party to be charged. Any amendment or modification to this Assignment must be in wrung and executed by UT and PCH. 4A Interpretation: Governing_Law. This Assignment shall be construed according to its fair meaning and as if prepared by all of the parties hereto. This Assignment shall be construed in accordance with the laws of the State of California in effect at the time of the execution of this Assignment. -5- 4.5 everabili If any pro%ision in this Assignment is held by a court of competent jurisdiction to be invalid, void, or unenforceable, the remaining provisions will nevertheless continue in full force without being impaired or invalidated in any way. 4.6 Execution inCounteroart. This Assignment may be executed in several counterparts, and all so executed shall constitute one agreement binding on all parties hereto, notwithstanding that all parties are not signatories to the original or the same counterpart. -6- • IN WETNESS WHEREOF, the parties hereto have executed this Assignment and Assumption Agreement and Consent to Assignment as of the Effective Date. Date: Apr i 1 3, 2001 MAYER FINANCIAL,LP.,a California limited partnership By: RLM Management,Inc.,a California corporation,General Partner By. Ila 61 .. Ro rt L.Mayer,Prrsi ent Date: Apr i 1_3_, 2001 PCH BEACH RESORT,LLC,a California limited liability company By: Grand Resort,LLC,a California limited liability company,Managing Member By: RLM Management,Inc.,a California corporation,Manager By; j Robert L.Mayer,President "Mr, [Consents continued on following pages] -7- CONSEa AM RELFA (Agency) In consideration of PCH's assumption of the obligations of MF set forth in the DDA relating to the leasing and development of the Hotel Parcel, Agency hereby consents to MF's assignment to PCH of MF's rights and obligations set forth in the DDA relating to the leasing and the development of the Hotel Parcel. Additionally.w ith respect to the DDA.Ageacy hereby acknowledges that the foregoing assignment specifically includes each and every right and obligation of MF and Agency pursuant to the Schedule of Feasibility Gap Payments as set forth on Attachment No. 8, as set forth in its entirety in the Second Implementation Agrccment. Agency hereby releases MF from any obligation or liability set forth in the DDA which relates to the Ieasing or the development of the Hotel Parcel and which may arise subsequent to the Effective Date of the assignment and shall look solely to PCH for performance of those certain obligations relating to the leasing and the development of the Hotel Parcel. REDEVELOPMENT AGENCY OF THECFIY • OF HUNTINGTON BEACH Execuftve Director APPROVED AS TO FORM: Agency General Counsel 1';�aj y--{-or APPROVED AS TO FORM: o Kane,Ballmcr&13crkman Agency Special Counsel CONSENT AND-RELEASE • (City) In consideration of PCH's assumption of the obligations of MF set forth in the Development Agreement, the License Agreement, and the Pedestrian Overcrossing Agreement relating to the development of the Hotel Parcel, City hereby consents to MF's assignment to PCH of MF's righs and obligations set forth in the Development Agreement, the License Agreement,and the Pedestrian Ovem ossing Agreement relating to the development of the Hotel Parcel. City hereby releases MF from any obligation or liability set forth in the Development Agreement,the License Agreement,and the Pedestrian Overcrossing Agreement which relates to the development of the Hotel Parcel which m3y arise subsequent to the Effective Date of the assignment and shall look solely to PCH for performance of those certain obligations relating to the development of the Hotel Panel. THE CITY OF HUNTINGTON BEACH By: ' City AdEinistrator APPROVED AS TO FORM: City Attorney APPROVED AS TO FORM: Kane,Ballmer&Berkman City Special Counsel -9- CONSEaAND RELEASE (Sanitation District) In consideration of PCITs assumption of the obligations of MF set forth in the Pedestrian Overcrossing Agreement relating to the development of the Hotel Parcel, the Sanitation District hereby consents to N[F's assignment to PCH of MF's rights and obligations set forth in the Pedestrian Overcrossing Agreement relating to the development of the Hotel Parcel. The Sanitation District hereby releases MT from any obligation or liability set forth in the Pedestrian Overcz ssing Agreement which relates to the dwelopment of the Hotel Parcel which may arise subsequent to the Effective Date of the assignment and shall look solely to PCH for performance of those certain obligations relating to the development of the Hotel Parcel. ORANGE COUNTY SANITATION DISTRICT,a ublic agency of the State of Calif= Z t N Its: ' , of Directors Print NamP » Its: Secretary,Board of Directors By. t Name: t REYIE a . By: - Print Name: City Administrator -la- f STATE OF CALIFORNIA } [MF] ss. COU TY OF ORANGE ) On rApril 3, 2001 , before me, Jan Smith , Notary Public, personally appeared ROBERT L. MAYER , personally known to me to be the personH whose name(o) is/are subscribed to the within instrument and acknowledged to me that hehhek"executed the same in hisAmMhek aulhorized capacity6c,*, and that by hiss signature(* on the instrument the person*or the entity upon behalf of which the person(i) acted, executed the iwt =cnt Witness my band and official seal. JAN sMTM • Communion*118130 Notary li ,w Notary Pudic-Coajr rnic orange County 1N1+Corrxn��^es Apr2b.2;XI2 ' [SEAL] STATE OF CALIFORNIA ) PCH1. COUNTY OF ORANGE ) On April_3, 2001 , before me, .Tan smith , Notary Public, personally appeared _ ROAF.R'Z i , MAYF.R _ , personally known to me ) to be the person(-)whose mmc*is/am subscribed to the within instrument and acknowledged to me that he " executed the same in his4wm4lek rithorized capacityf iee), and that by his/her signaturo f s) on the instrument the personH or the entity upon behalf of which the person} acted, executed the instrument. Witness my-hand and official seal. JAN sMrM Notary is Commission, 11813a0 Notoy Puoric-Cditorrja Orange County vMYC0M'M&aVSAPr2&2=j [SEAL1 -1 I- STATE OF CALIFORNIA } [AGENCY] ss. COUNTY OF d 4,4 hlCs 6 ) On f}f'21L y ; _4e¢01 before me, %S/CC 2LIN6 , Notary Public, personally appeared KX Y IC I�E4 personally known to me (er- -w me--ea4e basis-a€ a ' ' ence) to be the person(s)whose name(q) is/aPe subscribed to the within instnrment and acknowledged to me that helchehhey executed the same in hWhes%eir rAborized capacity(ies), and that-by his/herAhw signatures) on the instrument the person(e) or the entity upon behalf of which the person(s) acted,executed the instrument. Witness my hand and official seal. Gl Notary Pub 'c lER1fLL L qNG [SEAL] , Co nminion#1237815 ._ omnge County MyCanrmEx*+sOd1220M STATE OF CALIFORNIA ) [AGENCY] COUNTY OF O,Cn NCr F ) On A rR it V 01 , before , Notary Public, personally appeared personally (mown to me (or proved to a on the basis of satisfactory evidence) to be the person(s)whose names)is/are subscn to the within instrument and acknowledged to me that he/shehhey executed the same in ' erhheir authorized capacity(ies), and that by hWher/their signaturc(s) on the instrument the on(s) or the entity upon behalf of which the person(s) acted,executed the instrument. Witness my hind and o icial seal. Notary Public [SEAL] -12 f STATE OF CALIFORNIA ) [AGENCY] ss. , COUNTY OF ) ' On be me, , Notary Public, personally appeared , • personally known to me (or proved o me on the basis of satisfactory evidence) to be the person(s)whose name(s)is/are su fed to the within instrument and acknowledged to me that he/shelthey executed the same in er/their authorized capacity(ies),and that by his/her/their signature(s) on the instrument person(s) or the entity upon behalf of which the person(s) acted,executed the instrument. Witness my hand an official seal. . Notary Public (SEAL] STATE OF CALIFORNIA ) iCITIr�] ss. COUNTY OF ORA q6e ) On A PP It U , 4 ao 1 . before me, 7�cVI i [. KlAle, . Notary Public, personally appeared —LRA V 5/1 V E*P— . personally ]mown to me ( to be the penon(s) whose names)is/we-subscribed to the within insu=ent and acknowledged to me that he/cl:mtheyexecuted the same in his/ authorized capacity(ies),and that by hisirenVteir signature(s) on the instrument the person(s) or the entity upon behalf of which the person(s) acted, executed the instrument. Witness my hand and official seal. L Notary P61ic 1'ERYLL L ICING (SEAL) Com mmLWon•1237s1s �.. . . I.brary Pubic.colllomla omnge Cou" - WCzrrrn.r Oct 1Z2LII3 -13- STATE OF CALIFORNIA ) ISANTTA-nON DISTRICT] } ss. COUNTY OF Q r*%H%-e-- ) On _.(� PT; -e W i , before me, LAJ Notary Public, personally appeared W Q r ,,ALL - ..._F— 1�--q 0 personally known to me ( e) to be the person whose named subscribed to the within instrument and acknowledged to me that (BYshaAhcy executed the same idj /12erheir a%dborized capacity), and that b #eir signatureW on the instrummt the persmV cr the entity upon behalf of which the person acted,executed the instrument. Witness my band and official seal. 012 02 Notary Public [SEAL] CORINA CMUDHRY Commission#11WM N0?MY Pubft-Cal forma _ STATE OF CALIFORNIA j51!IITATIaN DIS FRIC'i') . �J � } ss. COUNTY OF r�`N�� ) On k k v-, 7=, . before me, , Notary Public, . personally appeared personally known to me ( to be the person.W whose nam--(KW=subscn'bed to the within instrument and acknowledged to rue that -heJoi dw.y-executed the same in-hisACer/the r authorized capacity, and that by h<s rhhek . signature on the iluhument the persona or the entity upon behalf of which the person14) acted,executed the instrument. Witness my band and official seal. Notuy Public CORINA CMUDHRY Commhslon N 1182T73 . (SEAL] Notc ry Public-Cal,for yip Omnge co:,ny My Canrn.�. �� -15- GO VERNMENT.CODE 27361. 7 1 certify under the penalty of perjury that the notary seal on the document to which this statement is attached reads as follows: Name of Notary: Carina Chaudhry Date Commission Expires: May 8, 2002 Commission Number: #1 182773 Vendor Number: NNA7 County where bond is filed: Orange Place of Execution: Santa Ana, California Date: April 17, 2001 By: RCGER IF REIMER First American Title Insurance Company GOVERNMENT CODE 27361. 7 certify cinder the penalty of perjury that the notary seal on the document to which this statement is attached reads as follows: Name of Notary: TerylI L. King Date Commission Expires: Oct 12, 2003 . Commission Number: #1237815 Vendor Number: NNA1 County where bond is filed: Orange Place of Execution: Santa Ana, California Date: April 17, 2001 Sr• -Let ROGER C EIMER First American Title Insurance Company EXMIT"A" DEPICTION OF'i'I IE HOTEL PARCEL [SEE ATTACHED] Exhibit"A" To Assignment and Assumption Agreement and Consent to Assignment • . r .MAP OF THE SITE MY UNE SEC 14. Y. 6 S., R. 11 W.. M.M. 51/14 yNTY UNE S 1/2. NE 1/4 lr ISiRC!E 4. T. •S., R.11.W., N35.22150E {R} P.O.S. ��--7-� N8742'Sr 15 .7 ' i G=05'S4'16' RR245200' L1252.68' N4843'21*W 38.E5' H` c x THE SITEZ . sue' ` `\ f \ 45.S6 AC. O n A ` N. N OD ti _ co � I CIO y/cy say" "HOTEL PARCEL" N00'4412YW 12.63' c N53'05'4VW 172.33' S74'34'1YW 45.01' q EMw n LEGAL DESCREMON QF THE HOTEL PARCEL That certain real praperty located in the City of Huntington Beach, County of Orange, State of California,as described as follows: LOT I OF-TRACT NO. 15535, AS SHOWN ON MAP FILED IN BOOK 790, PAGES 44 TO 50 INCLUSIVE OF MISCELLANEOUS MAPS, RECORDS OF ORANGE COUNTY,CALIFORNIA. ExhiibiLM To Assignment and As3umption Agreement ent and Consent to Assignment ' COPY FOR YOUR RECORD THIS DOCUMENT WAS DRAFTED BY AND WHEN RECORDED RETURN TO: Donald P.Norwich,Esq. OPPENHEIMER WOLFF &.DONNELLY LLP Plaza VII, Suite 3400 45 South Seventh Street Minneapolis,MN 55402 ANDL RD'S REgDaNI110S AGREEMENT THIS LANDLORD'S RECOGNITION AGREEMENT ("Agreement"} is made and entered into'as of the )1A day of April, 2001, by and between the REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH, a public body, corporate and'politic (herein the "Agency"}; PCH BEACH RESORT, LLC,,a California limited liability company ("Developer"); MILLER & SCHROEDER INVESTMENTS CORPORATION, a Minnesota corporation("Lender"). PRELIMINARY RE I_� TALS: A. The Agency and Mayer Financial, L.P., as developer("Mayer")have entered into an Amended and Restated Disposition and Development Agreement dated as of September 14, 1998 ("Original Agreement"), as amended by that certain First Implementation Agreement to Amended and Restated Disposition and Development Agreement dated as of May 15, 2000 ("First Implementation Agreement") and as further amended by Second Implementation Agreement to Amended and Restated Disposition and Development Agreement dated as of February 5, 2001 ("Second Implementation Agreement") (the Original Agreement as amended by the First Implementation Agreement and Second Implementation Agreement being herein referred to as the"DDA")pursuant to which the Agency has acquired the Development Property as described in Exhibit"A"attached hereto ("Development Property"). B. The Developer has acquired the interest of Mayer in the DDA insofar as the DDA relates to and affects the Development Property pursuant to that certain Assignment and Assumption Agreement and Consent to Assignment of even date herewith. The Agency has consented to such acquisition and acknowledged and agreed that for purposes of the 6151019740-0001 114933.0210uowl development of the Development Property the Developer shall be the"developer"of the same as set forth in the DDA and is entitled to all of the benefits of the "developer" under the DDA insofar as it affects or relates to the Development Property. C. In furtherance of the DDA and in order to construct the required improvements on the Development Property the Agency, as landlord, and the Developer, as lessee, have executed and delivered that certain Ground Lease dated April, 2001, a Memorandum of which is being recorded concurrently herewith in the Office of the County Recorder, Orange County, California, pursuant to which the Agency has Ieased the Development Property to Developer ("Ground Lease") D. Pursuant to the terms of the Ground Lease the Developer has agreed to construct on the Development Property and operate either itself or through a hotel manager a resort hotel of approximately 519 keyed guest rooms, a conference center and other amenities ("Resort Hotel Project"). E. The Developer has made application to and the Lender has agreed io loan to the Developer the sum of up to Eighty-Five Million and no/100 Dollars ($85,000,000.00) (the "Loan") to defray the costs of constructing the Resort Hotel Project on the Development Property and in furtherance thereof, Developer and Lender have entered into or will be entering into certain Construction Loan Documents ("Construction Loan Documents') wherein Lender will disburse the Loan,or portions thereof,to Developer under the conditions contained therein. F. To evidence the Loan the Developer has or will be executing and delivering to the Lender its Promissory Note in the amount of the Loan(herein the"Note'). G. As security for the repayment of the Note, the Developer has or will be executing and delivering to First American Title Insurance Company, as trustee, for the benefit of Lender its Leasehold Deed of Trust,Absolute Assignment of Rents and Security Agreement and Fixture Financing Statement of even date herewith (herein the "Deed of Trust') conveying the Development Property in trust to First American Title Insurance Company, as trustee, for the benefit of the Lender. H. The parties are executing this Agreement for the purpose of setting forth certain understandings with respect to the mortgaging of the leasehold estate created under the Ground Lease. NOW THEREFORE, in consideration of the making of the Loan it is agreed as follows: 1. The aforesaid Recitals are incorporated herein. 2. A true and correct copy of the Ground Lease is attached as Exhibit"B". 3. The Ground Lease remains in full force and effect in accordance with its terms and together with the DDA constitutes the entire agreement between the Agency and Developer with respect to the leasing of the Development Property and: 413'019740-OW4 374933.02 404103r01 -2- (a) The Ground Lease has not been modified, supplemented or amended in any respect. (b) Except for the Ground Lease and the DDA, there are no other agreements or understandings, whether written or oral, between Borrower and Agency with respect to the Ground Lease or the Development Property. (c) Neither Agency nor, to the best of Agency's knowledge, Borrower, has assigned the Ground Lease or sublet the Development Property. (d) As of the date hereof there are no defaults under the Ground Lease by Agency. (e) The rent and all other payments due to Agency under the Ground Lease are current in all respects. (t) Agency has not received written notice of any pending eminent domain proceedings or other governmental actions or judicial actions against either Agency's or Borrower's interest in the Development Property, including, without Iimitation, actions relating to violations of any environmental laws, and Agency has no reason to believe that there are grounds for any claim of any such action. 4. The Agency is the current holder of the landlord's interest in the Ground Lease and has not assigned or transferred its interest in the Ground Lease to any other person or entity nor has it mortgaged, encumbered or otherwise subjected its interest in the Ground Lease to the lien of any security instrument which has priority over the rights of the Developer under the Ground Lease. 5. The Agency acknowledges that Developer is executing and delivering to Lender the aforesaid Deed of Trust encumbering and conveying the Developer's interest in the Ground Lease as security for the aforesaid Loan and, to the extent the consent of the Agency is required for such act on the part of the Developer, the Agency consents to the same including the mortgaging and conveying of the Developer's leasehold estate in the Ground Lease, the leasehold improvements and related security and collateral agreements to and for the benefit of Lender,all subject to Section 900 of the Ground Lease.. 6. The Agency further acknowledges that Developer has obtained a commitment to refinance the Loan from GMAC Commercial Mortgage Corporation ("GMAC') and in connection therewith the Borrower will execute and deliver to GMAC its deed of trust encumbering and conveying the Developer's interest in the Ground Lease as security for the GMAC Loan and to the extent the consent of the Agency is required for such act on the part of the Developer the Agency consents to the same including the mortgaging and conveying of the Developer's leasehold estate in the Ground Lease, the leasehold improvements and related security and collateral agreements to and for the benefit of GMAC, all subject to Section 900 of the Ground Lease. 611,014740.0001 174933.02 MID3101 -3- r J 7. In accordance with Section 501 of the Ground Lease the Agency has approved the construction of the Resort Hotel Project in accordance with the Permits as provided to the Agency (a listing of which is attached as Exhibit "C") and such Resort Hotel Project shall meet the requirements of an "all first class hotel and conference center' as required in the "Scope of Development"incorporated into the DDA. 8. In accordance with Section 502 of the Ground Lease the Agency has approved the Hotel Management Agreement dated April 1�_, 2001 between the Developer, as owner, and Hyatt Corporation, as manager, and has approved Hyatt Corporation as the manager. 9. The Agency acknowledges that the requirement of Section 503 of the Ground Lease that the Agency approve an "Original Franchise Agreement" is satisfied by the execution and delivery of the Hotel Management Agreement with Hyatt Corporation and that there will be no separate Franchise Agreement with respect to the Resort Hotel Project. 10. The Agency acknowledges that in accordance witli Section 901 of the Ground Lease the Lender is approved as a "responsible bonafide institutional lender" and as a leasehold mortgagee under the Ground Lease and approves the making of the Loan by the Lender and the execution and delivery of the Deed of Trust on the leasehold estate. 11. In accordance with Section 902 of the Ground Lease the Agency agrees that the Lender is an approved "Mortgagee" within the terms and conditions of Section 900 of the Ground Lease and shall be entitled to all the rights of a "Mortgagee" under the Ground Lease including those contained in Section 902 and upon a trustee's sale or foreclosure of the Deed of Trust or deed in lieu thereof shall recognize Lender as tenant in accordance with Section 902 of the Ground Lease and shall provide in accordance with Section 902 the services of landlord for the benefit of Lender, its successors and assigns. 12. Pursuant to Section 131 G(3)of the Ground Lease the Agency acknowledges that: (a) foreclosure of a mortgage or deed of-trust encumbering Agency's fee interest in the Development Property shall not terminate or disturb the rights of the tenant under the Ground Lease, or the rights of any leasehold mortgagee, including. Lender, so long as tenant or such leasehold mortgagee is not then in default (alter applicable notice and cure periods) under the Ground Lease; and (b) Agency shall cause a copy of any written default notices sent by a fee mortgagee to Agency to be sent to the tenant under the Ground Lease and such leasehold mortgagee, including Lender. 13. The Agency shall provide Lender with any notices that it is required to provide to Lender, as mortgagee, under the Ground Lease, including, without limitation, those notices to be provided under Section 904 of the Ground Lease. 14. Agency acknowledges the assignment to the Developer by Mayer of all its right, title and interest in and to the DDA (as it relates to the Development Property) and the Ground Lease and the execution and delivery by the Developer of the Ground Lease, is expressly 615,019740.0004 174933.02 a0410301 -4- permitted by Section 316(f) of the DDA and does not require the consent of the Agency. In addition, the Agency hereby expressly approves and consents to any subsequent transfer, whether voluntary or involuntary, of membership interests in PCH between Grand Resort, LLC ("GR") and Coast Beach, LLC ("CB"), hvo of Vic three original members of the Developer, so long as such transfer is pursuant to either CB or GR exercising its rights under Section 4.3(e), 4.11, 7.1 or 9.6 of the Developer's Limited Liability Company Agreement, together with (i) any subsequent change in the share of capital or profits held by OR or CB in the Developer from time to time, so long as such transfer is pursuant to either CB or OR exercising its rights under Section 4.3(e), 4.11, 7.1 or 9.6 of the Developer's Limited Liability Company Agreement, (ii) any subsequent change in interests, capital or profits that results in CB becoming the managing member of the Developer, so long as such transfer is pursuant to either CB or GR exercising its rights under Section 4.3(e), 4.11, 7.1 or 9.6 of the Developer's Limited Liability Company Agreement, and (iii) any subsequent change in the ownership of shares in SPE PCH Beach Resort,Inc.("SPE"),the third member of the Developer,which results from any of the foregoing permitted transfers so long as SPE's membership interest in the Developer does not increase as a result thereof. No such transfers shall require any notice to the Agency or the taking of any act by the Developer or its members as a condition to the effectiveness thereof, and Sections 316(a)- (c)and 316.1 of the DDA and Sections 802 and 803 of the Ground Lease shall be inapplicable to such transfers. 15. The Agency approves the Project Budget attached as Exhibit "D" and the costs identified therein as"Project Costs"within the meaning of Section 901 of the Ground Lease. 16. For purposes of Section 1004 of the Ground Lease the Agency acknowledges that the amount of deductible as to any required earthquake insurance will take into account such earthquake insurance as is available at commercially reasonable rates. 17. As a permitted Mortgagee, Lender shall be entitled to all the rights, benefits and privileges afforded to a Mortgagee under Sections 902 through 912 of the Ground Lease. 18. Any notices and other communications permitted or required by the provisions of this Agreement (except for telephonic notices expressly permitted) shall be in writing and shall be deemed to have been properly given or served by depositing the same with the United States Postal Service, or any official successor thereto, designated as Certified Mail, Return Receipt Requested, bearing adequate postage, or deposited with reputable private courier or overnight delivery service,and addressed as hereinafter provided. Each such notice shall be effective upon being deposited or delivered as aforesaid. The time period within which a response to any such notice must be given, however, shall commence to run from the date of receipt of the notice by the addressee thereof. Rejection or other refusal to accept or the inability to deliver because of changed address of which no notice was given shall be deemed to be receipt of the notice sent. By giving to the other party hereto at least ten (10) days' notice thereof, either party hereto shall have the right from time to time to change its address and shall have the right to specify as its address any other address within the United States of America. Each notice shall be addressed as follows: d 1s.+c 19740-000< 174933.02.04103/01 -5- ti To the Lender: Miller& Schroeder Investments Corporation Suite 3000 I50 South Fifth Street Minneapolis,Minnesota 55402 Attn: Vice President—Mortgage Loans To the Agency: Redevelopment Agency of the City of Huntington Beach City Hall • 2000 Main Street Huntington Beach,California 92684 Attn: David Biggs,Director of Economic Development To the Developer: PCH Beach Resort,LLC c/o The Robert Mayer Corporation Suite 1050 660 Newport Center Drive Newport Beach, California 92660 Attn: Robert L.Mayer and Stephen Bone with copy to: Coast Beach,LLC cfo Hyatt Development Corporation 200 West Madison Avenue Chicago, Illinois 6060 Attn: Dale Moulton 19. The Agency acknowledges that pursuant to the terms of the documents governing the Loan, the Developer has conveyed, granted and assigned to Lender all of the Developer's right to amend, cancel, modify, alter, terminate or surrender the Ground Lease and the Agency shall abide by the restri.-tions on amendment, cancellation, modification, alteration, termination or surrender contained in Section 905 of the Ground Lease. 20. The Agency acknowledges that it has been provided for its inspection and review a copy of the Deed of'Trust and the Promissory Note evidencing the debt secured thereby and approves the same. 21. The Agency shall provide to the Lender estoppel certificates in conformity with Section 90S of the Ground Lease from time to time upon reasonable request and without charge certifying such correct information as the Lender may reasonably request. 63SM19740-M 1749]).02 9OM3101 -6- S 22. The Agency agrees that it shall execute and deliver to GMAC a Landlord's Recognition Agreement in substantially the same form and content as this Agreement but also conforming to the GMAC Additions set forth in Exhibit"E"to this Agreement. 23. Notwithstanding the place of execution of this instrument, the parties to this instrument have contracted for California law to govern this instrument and it is controllingly agreed that this instrument is made pursuant to a.'td shall be construed and governed by the laws of the State of California without regard to the principles of conflicts of law. 24. This Agreement and each and every covenant, agreement and other provision hereof shall be binding upon and shall inure to the benefit of the Lender, the Developer, the Agency and their respective successors and assigns. 25. The unenforceability or invalidity of any provisions hereof shall not render any other provision or provisions herein contained unenforceable or invalid. 26. This Agreement may be executed in any number of counterparts which together shall constitute one and the same instrument. [THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK. SIGNATURE PAGE FOLLOWS.1 61 sro 19740-0004 174433.02 s0u0�r01 -7. IN FURTHERANCE, this Agreement is executed as of the date first above-written. PCH BEACH RESORT,LLC, a California limited liability company By: GRAND RESORT,LLC, a California limited liability company,Managing Member By: RLM MANAGEMENT, INC.,a California corporation,Manager By: obert L.Mayer, re i ent STATE OF CALIFORNIA ) )ss. COUNTY OF ORANGE ) On April , , 2001, before me, the undersigned, a Notary Public in and for said County and State, personally appeared Robert L. Mayer ette-Pzmi&-nt-Lef.EUAI--Mat-gtx"ctt=, cI .3- Stlernia� etivn;thy'-�fanagerzof�" 'l' zited-li-abif y c p rj+;t� artagYs h? n ear~d es�ri;r .L-fir-a-�alil'v�it 4iabffity . gcyrpersonally known to me (or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his authorized capacity, and that by his signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument. WITNESS my hand and official seal. (RgD�. Sig ature(Notary) My Commission Expires: (SEAL) VNDA S. MORRISOh! comm.j 11686�8 �q vl w NOTARY PURIC•CALIFORNIA �! r My comm.Flotill Jin, 615 b19740-" 174933.02104-03.101 '$' REDEVELOPMENT AGENCY OF THE CITY OF HUNTLNGTON BEACH, a public body, corporate and politic By: Its: Executive Director Approved as to Form: 2�Lz- � r� Agencyy General Counsel �-r.�o Approved as to Form , Ti�� 0 Kane Ballmer&Berkman, City Special Counsel STATE OF CALIFOILNIA ) )Ss. COUNTY OF ORANGE - ) On April I/ 2001,before me, 7►z�tCL . X►NU ,personally appeared \A Y 51/-yF_a , the Executive Director of the Redevelopment Agency of the City of Huntington Beach, a public body corporate and politic, personally known to me (or provcd4o="n4bo-ba.si"fsatisfactag-ccvidenee) to be the person whose name is subscribed to the within instrument and acknowledged to me that he executed the same in the authorized capacity, and that by his signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument. WITNESS my hand and official seal. Signature( otary) My Commission Expires: 10-1;i•03 (SEAL) TFRIRL L KING +:r Commissslon N 1237815 Notary Public-Carroa is _ ' Orange County My Ccrnm.[xairr s Oc11Z 2 M 61 5/0 19 740-0004 174933 02 a"M3/01 -91 MILLER&:SCHROEDER INVESTMENTS CORPORATION, a Minnesota corporation ' n B Its: +u- STATE OF CALIFORNIA ) )Ss. COUNTY OF ORANGE ) On April L2--, 2001, before me, the undersigned, a Notary Public in and for said County and State, personally appeared John Greisen;4fO-Yiu.PivAdett.-a l{Ar - cal �dw �r�estntl-�rpara�inntyaatiotr, personally known to me (or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed'to the within instrument and acknowledged to me that he/she executed the same in his/her authorized capacity, and that by his/her signature on the instrument the person,or the entity upon behalf of which the person acted, executed the instrument. WITNESS my hand and official seal. Nota.-y Public (SEAL) LINDA S. MoRRISO111 r" Comm.11168569 N VOTARY PUBLIC•CALIFORWA N ' Ounpe County r My Comm.[*el Jen,iJ.tCA: 613.1019740.0004 i 74933.02 sOL103101 -10- EXHIBIT"A" Legal Descn�tion All that certain land situated in the State of California, County of Orange, City of Huntington Beach,and is described as follows: Parcel A: Lot 1 of Tract No. 15535, as shown on a map filed in Book 790, pages 44 to 50 inclusive of Miscellaneous Maps,Records of Orange County,California Parcel B: A non-exclusive revocable license to utilize that certain area defined as "Grand Coast Resort Improvement Area" in that certain "License Agreement to Provide Landscaping and Other Improvements in the Public Right-Of-Way" ("Agreement') recorded April 18, 2001 as Instrument No. 20010232765 of Official Records of Orange County, California, and delineated on Exhibit "F" attached thereto, for the installation, maintenance, repair and replacement of landscaping and other improvements,as said license is set forth in paragraph 2 of the Agreement. Parcel C: A non-exclusive revocable license to utilize that certain area defined as "Overcrossing Improvement Area" in that certain "License Agreement to Provide Landscaping and Other Improvements in the Public Right-Of-Way" ("Agreement') recorded April 18, 2001 as Instrument No. 20010232765 of Official Records of Orange County, California, and delineated on Exhibit "G" attached thereto, for the installation, maintenance, repair and replacement of overcrossing and other improvements, as said license is set forth in paragraph 2 of the Agreement. EXHIBIT"B" Ground Lease (See At:zched.) • GI Sro i 9740-0004 174933.02 SM3101 f GROUND LEASE By and Betwesn REDEVELOPN=AGENCY OF THE CITY OF HUNTINGTON BEACH, AGENCY, ar d. PCH BEACH RESORT,LLC, a California Iimited liability company LESSEE alit by: KANt, BALLMtH & UthKMAN Ala t7Yb UW;J1; U41Ub/U1 *:WJrM;j0JtA&_4aJ; rape J/y TABLE OF CONTENTS 1. (§ 1001 SUBJECT OF GROUND LEASH . . . . . . ... . . .. . . . .. . . . . . . . . . . . . . . . 1 A. [§ 101] Purpose oftha Lease . . .... . .. . . . .. . . . . . . . . . . . .. . . 1 B. [§ 102) The Redevelopment plan .... .. . .. . . .. . . . . . . . . . . . . . I C. [§ 1031 The Redevelopment Project Area . . . . .. . . .. . . . . ... . .2 D. (§ 104) The Site ... . . .. .... . . .. . . . . . . . . . .. . . .. . . . . . . . . ..2 E. [§ 1051 The Improvcments . .. . . .. . . .. . . . . . . . . ... . . . . . .. . . 3 F. [§ 106] Condition of the Site . . . .... .. . . . . . . . . . .. . . .. . . . . . 3 G. [§ I06.1] Hazardous Substances .. .. ... . .. . . .. . . . . . .. . . ... . . . . . . . .4 H. [§ 107] Parties to the Lease .. .... . . ... . . .. . . . . .. . . . . . . . . . 7 i. § 11)8] Agcncy ..... ... . . ... . .... . . . . . ... . . . . . . . . . . .. . . 7 2. [§ 109] Lessee .. .... ... .. .. . . . .. . . . . . . . . .. . . ... . . . . . .. . 7 11. (§ 2D0] LEASE OF THE SITE ... . .. ..... .. . ... . .... . . . . . . 6 . . . . . ... . . . . .. . . 8 A. [§ 20I1 Lease . . ... . . . .. ... .. .. . . . ... . . . . . . . . . . . . . .. . . . . . . .. . 8 B. [§202] Term of the Lease . . . . . .. .. . .... . .. . . .. . . . . . . . . . .6 . . . . . 8 111. [§ 300] RENT . . . . . ... .. . . . . . . .. . . .... .. .. ....... . .. . . . .. .. . . . . . . . . .. . . . 8 A. [§ 3011 Definitions . ... ..... .. .. . ...... . . .. . . .. .. . . .. . . .... . . . 8 B. [§302] Ground Rcnt ... ... . . .... ....... . . .. . . . . .. . . .. . . . . . .. . 10 C. [§3031 Base Rent . . .. . .... . . . .. ...... . . .. . . ; .. . . . . ... . .. . . .. 10 D. [§3041 Participation Rent. . . . . .. .. . .... . . ... . . . . . . . . ... . .. . . . . 10 F. [§ 30S] Triple Net Lease ..... .. . . ....... . . . .. . . .. . . . . . . . ... . . . I I F. [§ 306) Non-Subordination of rent or Other Sows . . . ... . . .. . . .. . . . . 12 G. [§ 307] Delinquency In Rental Payment;Collection of Rents . . .. . . . .. 12 H. [§ 308] Right to Inspection and Audit of Records . . . . .. . . .. . .. . . . . . 12 IV. [§400] DEVELOPMENT OF THE SITE . .... .. .. ... . . ... . ... . .. . . .. . . .. . . . . 13 A. [§ 401] Scope of Developmrrlt,Plans,Drawings and Specifications . . . 13 B. [§ 402] No Construction Before Notice '. .. . . .. .. . . . .. . . .. . . . . . . .. 13 C. [§403] Notice ofNon-Respomibility .. . .. . . . . . . . . . . . . .. . . . .. . .. 13 D. [§ 404] Mechanic's,Materialman's,Contractor's or Subcontractor's Liens ..... .. ..... ..... ... .... . .. . ... . .. . . .. .. .. .. . . 13 E. [§405] Rights of Access .. . ... . . .. . . ... . . . . ... . .. . . 6. .. . . . . .. 1+4 F. [§ 406] Local,Stale and Federal Laws . .... . .. . . . . . .. . . .. . . .. . .... 14 G. [§407] Non-discrimination During Construction . .. . . . . . .. . . . . .. . . 15 H. [§ 409] Archaeological Provisions . . . . ... . . . . . . .. . . . . . ... . . . .. . . 15 V. [§ 500) USE OF THE SITE AND MI ROVEMENTS ... . . . . . . . . .. . . .. . . . . .. . . 15 A. [§ 501] Use of the Site and Improvements .. . . . . .. . . .. . . .. . . . . .. . . 15 B. (§ 502) Management of the Site vmd Improvements . . . . . . .. . . . . . . . . 19 4- tm uy. r%mmr-, om-Lmcn a or-nMAMI &so u4j unal s V4/u7/ul ��LarMjJ ;,(, ,pa,>i rlsQC 4/b C. 5031 [INTENTIONALLY OMITTED] .. . .... . .. . . . . ... . .. . . . .20 D. [§ 504) Obligation to Refrain fh n Discrimination ... . . . . .. . ... . . . .21 E. [§ 505) Form of Nondiscrimination and Nonsegregarion Clauses . . . . . . 21 F. (§ 5061 Quiet Enjoyment .. . ..... . .., .. . . . ... .. . . . . . . .. . . . . . . . .22 G. [§ 5071 Payments to Agency ....... . . .. . . .. . . . . . . . . . .. . . . .. .. . 22 VI. [§ 6001 TAXES.ASSESSMENTS AND OTHER CHARGES . .. .. . . .... . . . . . . .. 23 A. [§ 6011 Utilities ................ .. .. .... ... . ... .. .. ... .. . . . . . 23 B. [§'602] Impositions(Including Taxes and Assessments) . .. .. . . . . . . . .23 C. [§ 6031 Payment Generally . .. ...... . . .. .. . . .. .. . .. . . .. . .. . . . ..23 D. [§ 604] Payment of Impositions in Installments . . .. . . . . .. ... . . . . . . .24 E. [§ 605] Agency Right to Cur= .. . . ... ... . . .. . .... . . .. .. . . . . . . . .24 F. [§ 606] Tax Receipts .. . . .. ..... .. . . . ... . .. . .. .. .. .. .. . . .. . . . .24 G. [§ 607] Limits of Tax Liability ... .... . .. . . .. . .. .. .. .. .. . . . . . . ..25 if. [§ 608] Contests ........ . ...... ..a ... . . . . . . .. . . . .. ... .. . . . . . 25 I. [§ 609) Notice of Possessory Interest:Payment of Taxes and Assessments on Value of Entire Property . .. . .. . . ... . . . . . . . 26 J. [§ 610] Other Liens ... . ... . .... . ... . ..... . a . .... . . . . ... . a .•. . . .26 VII. [§ 7001 OWNERSHIP OF AND RESPONSIBILITY FOR IMPROVEMENTS .. . .. 27 A. [§ 701) Ownership During Term and at Termination. . .. ..... .. .. . . .27 $. [§ 702] Rcmoval of Fixtures and Furnishings at Termination . . . .. . . . .27 C. (§ 703] Maintenance and Repair of Improvements ... . . . . .. . .. . . ...27 D. [§ 7041 Waste . . ..... ......... . . . . . ... . . . . .. . . .. . .. . . .. . . . .28 E. [§ 705] Alteration of Improvements .................. ...........26 F. [§ 706] Damage to or Destruction of Hotel and Improvements . . . . .. . . 28 1. [§ 7071 Lessee to Givi:Notice ..... .. . ... . . . . .. . . .. . . . . . . .. .. . . 2S 2. (§ 708] Restoration . .. ..... . .... . .. . . . .. . . . .. .... . . ... . . . ... .. 29 3. [§ 709] Application ofInstr:ance Proceeds ... . . .. .... . . .. . . . . . . .. 29 G. [§ 710] Damage or Destruction During Final Years of term .. .. ... . . . 30 H. [§ 711] Faithful Performance and Labor and Material(Payment) Bonds;Indemnification;Nonresponslbility Notices ... .. . . . .. 31 Vill. [§ 800] ASSIGNMENT, SUBLETTING.TRANSFER .. . . .. ... .. ... . .. . . .. . . . . 32 A. [§ 801] Warranty Against Speculation . . . . .. . . ... .. .. .... . .... . ..32 B. [§ B02) Prohibition Against Transfer . . . . . . . .. . . . ... . . .. . ... . . .. 32 C. [§ 8031 Investigation of Proposed Transre=; Costs . . . . . . .. . ... . . .. 35 D. [§ Sao] Release of Construction Covenants .. . . . ... . ... . . . . .. . . , . 37 IX. [§ 50o] MORTGAGES ....... .. .... ... .. ... ... . .. . .. ...... .. .. ...... .. . . 37 A. (§ 901] Leasehold Mortgages . ...... . . ... .. . . .. . . .... .. . . . . . . . . 37 B. {§ 9021 Rights and Obligations of Leasehold Mortgagees . . ... . . . . . . # 40 -ii- • !nt ay: KANt, tIALLMtM GthKMAN eij vem uwai; u"JualUI 7:carni;j�iru R7a; rays Din C. (§ 903] Agency's Forbearance and Right to Cure Dcfavlta on Leasehold Mortgages ... . . . .. . .. .. .. . ... . . . . . .. . . . . . . .. 42 D. [$9D41 Notice . ........ .. . ... . . ... ....... ... .. ... . .. . . . . . . ..42 E. [§ 905] Forbearance by Agency ..a.. .. ...... . .. .. . . . .. . . . .. . . . .42 F. [§905.1) Conditions Precedent to Mortgagee Rights and Agency Forbearance .. .. ... ..... . . . .... . .. . .. . . .. . . . . . . .. . . . .43 G. [§ 906] Performance on Behalf of Lessee . . . .. . .. . . .. . .. . . . .. . . ..44 IL [§ 9071 Nonrnerger . ....... .. . . . . . . . .... . . . . . . . . . . . .. . . . . . . . .44 II. [§100] SUB?ECT OF GROUND LEASE . ...... .. ...... . . . . . . .. . . . . . . . . .. .. . 1 1. (§ 101) Purpose of the Lease .... .. . . . ... .. . . . . .. .. .. . . . . . . . . .. . I J. [§ 102] The Redevelopment Nan . . . ........ . . . ... .. . . . . . . . . . . . . . I IL (§ 103] The Redevelopment Prflject Area ... .. . . . . . .. . . . . . . . . . . .. .2 L. [§ 104] The Site ....... ... . .... . . . . .... .. . . . . . .. . . . . . . . . . . ...2 M. [§ 105] The Improvements . . .... . . .. . ... . . . . .. . . . . . . .. . . . . . . .. .3 N. [§ 106] Condition of the Site .... . . .... .. ... . .. .. .. . . .. . . . . . . .. .3 O. [§ 106.1] Hazardous Substances ... . ...... . ... . .. . . .. .. . . . . . . .. . . .4 P. [§ 107] Parties to the Lease . ... . . ... .... . . . .. . .. .. . . . . . . . . . . . . . 7 1. (§ 108] Agency ... ........ ... . . ... ..... ... .. .. . . . . .. . . . . . . . . . 7 2. [51091 Lessee . ... . ....... ..:. . . .. ... . . . . . . . . . 7 II. [§ 200] LEASE OF THE SITE . .. .. .. .. .... . . ...... ...... ... . . . . . .. . . . . . . .. . 8 A. [§201] Lease ... .. .. ...... .. . ... .... .. .. . .. :... .. .. . . . . . . . . . 8 H. [§202] Term of the Lease .. ... . . .. .. .. .. .. . .. . . ... . .. . . . . . . .. . 8 III. (§ 300] RENT . . . .. . .. .. . . .. . . . . .. .. . . . . ..... . . . ... . . . . . . . . .. . . . . . . . .. . . t3 A. [§ 301] Definitions . ....... .. . . ... .. . . .. . . . .. . . . . .. .. . . . . . . .. . 8 B. (§3021 Ground Rent :. .... .. . .. . .... ... .. . . .. . . .. . . .. . . . . . . . . 10 C. [§ 3031 Base Rent .. .. ...... . .. .... . ...... . .. . . .. .. .. . . .. . . . . 10 D. [§ 304] Participation Rent..... . . . ... . ..... .. ... . .... ... . . . . . .. 10 E. [§ 305] Triple Net Lease . .. . . .... .... ..... . . .. . . . . .. .. . . . . . . .. 11 F. [§ 3061 Non-Subordination of rent or Other Sums . . . . .. . . . . . . .. . . .. 12 G. [§ 3071 Delinquency In Rental Payment;Collection of Rents . . . .. . . . . 12 H. [§ 308] Right to Inspection and Audit of Records . . . . .. . . .. . . . . .. . . 12 IV. [§400] DEVELOPMENT OF THE SITE .. .. . . .. . . .. .... . . . . . . . . . . . . . . . .. . . 13 A. [§4011 Scope of Development,Plans,Drawings and Specifications . . . 13 B. [§4021 No Construction Before Notice ... . .. . . .. . . .. . . . . . . . . . . . . 13 C. [§403] Notice of Non-Rwponsibility . 13 D. [§4041 Mechanic's,Materialrnan's,Contractor's or Subcontractor's Liens . .. . . ... . .. . . ... . . . .. . .. . . . . . . . .. . . . . . . . . .. . . 13 E. 405] Rights of Access ...... .. . . ... . . .. . . . . . . .. . . . . . . . . . . . . 14 F. [§406] Local, State and Federal Laws ... . ... . . . . . . .. . . . . . . .. . . . . 14 -iii- 311L uy, mule, onLLMcn a Denmmom1 coo u[ta uval, u41U.7/u1 .7.eMrM,JK&rJ NSa; rage 0121 G. [§407] Non-discrimination DMng Construction . .. . . . . . .. . . . . . . . . 15 H. [§409] Archaeological ProNisions . .. . . .. . . . . . . ... . . . . .. . . .. . . . . is V. [§ 500) USE OF THE 6rrE AND IMPROVEMENTS .. . . .. . . .. . . . . .. . . . . . .. . . 15 A. (§ 501) Use of the Site and Improvements . . . ... . . . . . . .. .. . . .... . . 15 B. [§5021 Management of the Site and Improvements . . . . . ... . . .. .. . . 19 C. [¢5031 [INTENTIONALLY OMITTED] . . . ... . .. . . . . ... . . .. .. . .20 D. [§ 504] Obligation to Refrain from Discrimination . . .. . . . . .. . .. .. . .21 E. [§ 5051 Form of Nondiscrimination and Nonscgrcgation Clauscs ... . . .21 ' F. [§ 506] Quiet Enjoyment . .. . .. . . ...... . . ....... . . . ... . . ... . . .22 G. [§ 507] Payments to Agency . ... . .... .. . . ... . ... . . . .. . . . .. . . . .22 VI. [§ 600] TAXES.ASSESSMENTS AND OTHER CHARGES ...... . . . . . . . . .. . . . . 23 A. [§ 6011 Utilities. ...... ..... .. . .... .. . . . ....... . . . . . . . . .. . . . . 23 B, [§ 602] Impositions (Including Taxes and Assessments) . . . . . .. .. . . . .23 C. (§ 603] Payment Generally . .. .... ... .. . . . .. ..... . . . . . . . . .. . . . . 23 D. [§ 604) Payment of Impositions in Installments . .... . . . . . . . . . .. . . . . 24 E. [§ 605] Agency Right to Cure .. . .. . . . . 24 F. [§606) Tax Receipts ... .. . . . . . .. ... .. .. . . .. . . . . . . . . . . . . .. . . . . 24 G- (§ 607] Limits of Tax Liability . ... ..... . . . . .. . . . . . . . . .. . . .. :. ..25 H. [§ 608] Contests .......... . .. ....... . . . . . . . . . . . .. ... . . .. . . . . 25 I. [§ 609] Notice of Possessory Interest;Payment of Taxes and Assessments on Value of Entire Property . ... . . . ... . . .. . . ..26 1. [§ 610) Other Liens . . .. .. . . . .. . . ... . . . . . .. . . .. . . . . . . . . . .. . . . .26 V1I. [§ 700] OWNERSHIP OF AND RESPONSIBILITY FOR IMPROVEMENTS . . . . .27 A. [§ 701] Ownership During Term and at Termination . . .. .. . . .. .. . . . .27 B. [§ 702] Removal of Fixtures and Furnishings at Termination . .. .. . . . .27 C. [§ 703] • Maintenance and Repair of Improvements . . . .. .. .. .. .. . . . .27 D. [§704] Waste . . .. . ... a... . .. .. ... . . . . . .. . . . .. . . . ... .. . . . . . . 28 E. [§ 705] Alteration ofImprovcments .... . . . . .. . .. . . . . . . .. . . . . . . . . 28 F. [§ 706] Damage to or Destruction of Hotel and Improvements . ... . . . . 28 1. [§7071 Lessee to dive Notice .. ....... . .. .. . . . . . . . . . . . . ... . . . .28 2. [§708] Restoration . ... ... . . .. . . . .. ... . . .... .. ... . . .. . ... . . . .29 3. [§709) Application of Insurance Proceeds . . ..... . . .. . . . . . . .. . . . . 29 0. 710] Damage or Destruction During Final Years of term . . . . . . . . . . 30 H. [§71 I] Faithful Performance and Labor and Material (Payment) Bondr.;Indemnification;Nonresponsibility Notices .. . .. . . . . . 31 VIII. [§ 300] ASSIGNMENT.SUBLETTING,TF.ANSM . . . . . . .. .. . .. . . .. . . . .. . . . 32 A. (§ 801] Warranty Against Speculation .. . . . . .. . . .. . .. . . ... . ... . . . 32 B. [§ 802] Prohibition Against Transfer .. . .. . . . . . . . . . . . . . ... . ... . . . 32 C. [§ 8031 Investigation of Proposed Transferee;Costs . . . . . . . . . . . . . . . . 35 4v- W IL uy: "14C, oMLLMcn a ocrnnNwrr did dez UWj1; V"IwIlue n:dwrM;JcuXi_Naa; rage Ild D. (§ 804] Rcicasc of Construction Covenants . .. . . . .. . . . . . . . . . . . . . . . 37 E. [§ 908] Agency Cooperation ... . . ... .. ... .. . . . . . .. . . .. . . .. .. . . 44 F. j§ 909] Enforceability .. ... .... . .. . ... .. . .. . . . . .. . . . .. . . . . .. . .4S G. [§ 9101 No Subordination of Agency's Interests . . . ... . . . . . . . . . . . . . 45 H. (§911] Certificates to Lenders .. . . .. .... . ... . . . .. . . . . .. . . .. . . . . 45 I. (§ 912] Obligations of Mortgage Upon Acquisition of Leasehold Estate ... . . .. .... . . .. .. .... .. . .. . . . . . . . . . . . . . ... . . . .45 X. (§ 10001 INDEMNIFICATION AND INSURANCE . . .. . . . . . . . .. . . .. . .. . ... .46 A. [§ 1001] IndemnifIcation ... . . . . . ..... .. . ... . . . . . . . . . . . . . . . .. ..46 B. [§ 1002] Required Insurance .. ...... . . .. . . . . . . . . . .. . . . . . ... . . . .46 C. [§ 1003] Definition of"Full Insurable Value. . . .. . . . . .. . . . . . . . . . . . .48 D. [§ 1004] General Insurance Provisions . .... . . . . . . . .. . . . . . . . . .. ... .48 E. [§ 1005] Failure to Maintain Insurance ..... .. . . . . . . .. . . .. . .... ... 49 F. [§ 1006] Disposition of Insurance Proceeds Resulting From Loss or Damage to lmprovcments ... .. . . .. . . . .. .. . . . . . . . . . . . . . .49 ?�• [§ 1100] EMINENT DOMAIN ... . . .. . . .. . . ... . ... . . . . . . . . .. . . .. . . .. . . . . 50 A. (§ 1101] Lessee to Give Notice ... . ... . ... . . . . . . . . .. . . . . . . . . . . . . 50 B. [§ 11021 Total Taking .. ...... . . . . . . . .... . . . . . .. . . . . . .. . . . . . . . . 50 C. [§ 1103] Partial Taking ....... . . . . . .. . . . .. .. . . ... .. . . .. . . . . . . . .50 D. j§ 1104] Application of Awards and Other Payments .. .... .... .... ..50 >31. DEFAULTS,REv1EDIES AND TERMINATION ... ... . . . . . . . . . . . .. . . . . .. .. .. 51 A (§ 12011 Defaults-General . .. . ... ... ... . . . . . . . .. .. . . . . . . ... .. . . 51 B. (§ 1202] Legal Actions .. ... .. . . . . . .. .. . . . . . . .. .. . . . . .. . . .. . . . . 52 1. [§ 12031 Institution of Legal Actions ... .... . . . . . . . .. . . . . .. . . .. .. . . 52 2. [§ 1204] Applicable Law . ..:. .. . . .. . . .. . . . . . . .. . .. . . . . . . .... . . 52 3. [§ 1205] Acceptance of Service of Process . . . . . . . . . . .. . . . . . . .. . . . . 52 4. ;§ 1206] Attorneys' Fees and Court Com .... . . . . . .. .. . . . . . . .. . . . . 52 C. [§ 1207] Rights and Remedies are Cumulative . . . .. .. .. . . . . . . .. .. . . 52 D. j§ 1203] Damages . . . ...... .. .. .. .. . .... .L. . . 0 . . . .. . . . . . . .. .. . . 53 E. (§ 1209] Specific Performance . ....... . .. . . . . . . . . . .. . . . . . a . . .. . . 53 F. [§ 1210] Additional Remedies of Agency ... . . . . . . . ... . . . . . . . . . . . . 53 G. [§ 12113 Rcmcdics and Rights of Termination .. . . .. . .. . . . . . . .. . . .. 54 H. (§ 12121 No Cross Defaults ... .. . . ....... . . . . . .. . .. . . .. . . . . . . . . 56 XI11. [§ 13001 GENERAL PROVISIONS ........ . ... ... . . .. . .... .... . . . . ... . . . Ste A. [§ 1301] Notices,Demands and Communications Detween the Parties . .56 B. [§ 1302] Time of Essence . .. .. . . .. .... .. .. . . . .... .. . . . . . . .. .. . . 56 C. [§ 1303] Conflict of Interests . .. . . ..... .. . . .. . .. .... . . . . . . .. . . . . 56 D. 1304] Nonliability of Agency Officials and Employees . . . . . . .. .. . . 57 b. (§ 1305] Inspection of Books and Records .. . . . . . . .... . . . . . . .. .. . . 57 .V. 31 L UY: ""C DHLLMCII 4 CCIInMMIv CIJ D[a UMJI j U%JUnlUI o:cyr1M;]urax 11wJ; rayr CJ!! F. [§ 1306] No Partnership . ... ...... . . . . .... .. . . . . . . . . . . . . . . . . . . . 57 G. [§ 1307] Compliance with Law .. . . . . . . ... . .. . . . . . .. . . . . . . . . . . . 57 H. [§ 1308] Surz=der of Property... . . . . . . ... . .. . . . . . .. . . . . . . . . . . . . 57 1. [§ I309] Severability . . . . . . . . . . .. . . . . . . . 58 ]. [§ 1310] Binding Effect ..... ... . . .. . . .. .. . . . .. . . .. . . . . . . . . . . . . 58 K. [§ 1311] Assignment or SubI=e to City;Right of First Refusal . .. . . . . 58 L. N 13121 Captions . . . . . . . .. . ... . . . . . . ... . .. . . . . . .. . .. . . . . . . . . . 59 M. [§ 13I 3] No Recording of this Lease .. . . .... . . . . . . . . . . .. . . .. . . . . . 59 N. [§ 1314] Enforced Dclay in Pcrfaffn=ce for Causss Beyond Control of Party .. .. . . . . . ... . ... . . .. . . .. ... .. .. . . .. . . . . . .. . . . . . 59 O. [§ 13151 Entire Agreement,Waivers and Amendments . .. . . . . . . . . . . .. 59 P. 13161 Off-:et 5t2tement,Attornment and Subordination ... . . . . . . . . . 60 Q. [§ I317] Approvals .. .. . ... ...... .. . . ... . .. ... .. .. . . . . . ... . . . . 61 IL [§ 13181 Counterparts . .. ......... ... . .... . :. . .. .. . . .. .. . . . . . . . . 61 _V1. !fL Cal: NANC, bNLLMCM d ocnmmAI\ 910 040 U`J01� VrlU71U1 P•ayr�nffelrrx fIriJ1 roye nin ,1 T F UNIMIT"A" MAP OF THE SITE MU11BIT"B" LEGAL DESCRIPTION OF THE SITE EXHIBIT 14C" ARTICLE VIII OF THE THMD AMENDED AND RESTATED LEASE GROUND LEASE This Ground Lease (this "Lease) is made by and between the REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH ("Agency') and PCH BEACH RESORT,LLC,a California limited liability company("Lessee'). 1. [§ 100J SUBJECT OF GROUND LEASE A. [§ 10I] Eprvose of The Lease The purpose of this Lease is to effectuate the Redevelopment PIan for the Huntington Beach Redevelopment Project by providing for the lease of the hereinafter defined Site from Agency to Lessee and the construction and operation on the Site by Lessee of a high-quality, first-class hotel (the "Hotel') with approxima*ely five hundred nineteen (519) guest rooms, a conference center and related facilities. The lease of the Site and the development and operation of such hotel pursuant to this Lease, and the fulfillment generally of this Lease, are in the 'vital and best interests of the City of Huntington Beach and the health,safety,morals, and welfare of its residents, and in accord with the public purposes and provisions of applicable federal, state and local laws and requirements. B. [§ 1021 a Redevelopment Plan This Lease is made in accordance wi6 and subject to (a)the Redevelopment. Plan for • the Main-Pier Redevelopment Project,which was approved and adopted by Ordinance No.2578 of the City Council of the City of Huntington Beach (the "City"), amended by Ordinance No. 2634, and merged with certain other redeve:cpment proje-as in the City by the adoption of Ordinance No. 3343 on December 16, 1996 to form the Huntington Beach Redevelopment Project (the "Merged Redevelopment Project'); (b)the Amended and Restated Disposition and Development Agreement entered into by and between Agency and Mayer Financial, L.P. ("Mayer') on September 14, 1998, as amended by the-First Implementation ,Agreement to Amended and Restated Disposition and Development Agreement (the "First Implementation Agreement') that was entered into on or about May 15, 2000, the Second Implementation Agreement to Amended and Restated Disposition and Development Agreement (the "Second Implementation Agreement') that was entered into on or about February 5, 2001, and any ' additional amendments thereto (collectively, the "Agreement'); and (c)the Assiguacnt and Assumption Agreement and Consent to Assignment (the"Assignment') dated .2001. by and between Mayer and Lessee whereby Mayer assigned and Lessee assumed all of Mayer's rights and obligations set forth in the Agreement that relate to the leasing and development of the Site (referred to therein as 'Parcel A'). From and after the issuance by the Agency of a Release of Construction Covenants for the development of the Site under the Agreement, there shall no longer be any operative requirements of the Agreement applicable to' Lessee or the Site which have not been set forth or referred to in this Lease. Any amendments hereafter to the Redevelopment Plan (as so approved and amended) which change the uses or development permitted on.the Site as provided in this Lease, or otherwise change the restrictions or controls that apply to the Site, or affect or impair any of the rights or obligations of Lessee or the holder or beneficiary of any Mortgage obtained in accordance with Section 901 of this Lease (the "Mortgagee'), shall not apply to Lessee or the Site without the prior written consent of Lessee and the Mortgagee, which consent Lessee and the Mortgagee may withhold in its or their sole and absolute discretion. No other amendments to the RedeveIopment Plan shall require the consent of Lessee or the Mortgagee. Mayer also entered into an Amended and Restated Development Agreement with the City dated September 21, I998 (the"Development Agreement'). Pursuant to the Assignment,Mayer assigned to Lessee and Lessee assumed all of Mayer's rights and obligations set forth in the Development Agreement that relate to the Irasing and development of the Site (ref:rred to therein as"Parcel A'J. The Development Agreement,as assigned to Lessee,among other things, provides for.the development of the Site by Lessee in conformity with the City's General Plan and applicable Specific Plans, and provides for certain limitations and noticed procedures relating to uses and activities on certain beach Froperty therein defined owned by the City in the vicinity of the Site. The development of the Site in accordance With the Development Agreement conforms to the Redevelopment Plan. Nothing in this Lease shall modify or Iimit the rights of either the City or Lessee under the provisions of the Development Agreement. C. [§ 103] the Redevelopment Project Area . The Huntington Beach Redevelopment Project area is located in the City of Huntington Beach, California (the "City'). The exact boundaries of such Project Area are specifically and legally described in the RedeveIopment Plan for the Merged Redevelopment Project. D. [§ 104] ne Site The "Site" is that certain real property within the Huntington Beach Redevelopment Project Area illustrated and designated as such on the`Map of the Site"(which is attached heretb and incorporated herein as Exhibit A) and having the legal description s:t forth in the "Description of the Site" (which is attached hereto and incorporated herein as Exhibit B). The Site shall include all appurtenant rights and easements which are reasonably necessary to the proper enjoyment ofthe tenancy created by.this Lease,provided,however,that Agency reserves to itself,its successors and assigns,together with the right to grant and transfer all or a portion of the same,the follov,-ing: (a) Any and all oil, oil rights, petroleum, minerals, mineral rights, natural gas rights, and other hydrocarbon substances by whatsoever name known, geothermal resources, and all products derived from any of the foregoing, that may be within or under the land, together with the perpetual right of drilling,mining, exploring,prospecting and operating therefor and storing in and removing the same from the Site or any other land, including the right to whipstock or directionally drill and mine from lands other than those leased hereby, oil or gas wells, tunnels and shafts into, through or across the subsurface of the Site, and to bottom such wWpstocked or. directionally drilled wells, tunnels and shafts under and beneath or beyond the exterior limits thereof, and to redrill, retunnel, equip, maintaie, repair, deepen and operate any such wells or mines; without, however, the right to enter, drill, mine, store, explore or operate on or through the surface or the upper 500 feet of the subsurface of the Site; and -2- .(b) Any and all water, water rights or interests therein, no matter how acquired by Agency, together with the right and power to explore, drill, redrill, remove and store the same from the Site or to divert or otherwise utilize such water, water rights or interests on any other property owned or leased by Agency, whether such water rights shall be riparian, overlying, appropriative,percolating,littoral,prescriptive,adjudicated,statutory or contractual;but without, however, any right to enter upon the surfaca of the Site in the exercise of such rights and, provided further,that the exercise of any such rights by Agency shall not result in any damage or injury to the improvements constructed on Lye Site by Lessee, including without limitation any subsidence of all or any part of such improve:rents. E. [§.105J lbelmyrovenients The term "Improvements"as used in this Lease means any and all improvements tb the Site,whether previously existing or constructed on the Site by Lessee pursuant to this Lease, and including any and all amendments, modifications, additions, substitutions and replacements thereof. F. [§ 106] Conditign ofthe3ite (a) All portions of the Site, and any improvements thereon, which are leased to Lessee by Agency shall be leased in an "as is"condition, with no warranty, express or implied, by the Agency as to the condition of the soil, its geology,or the presence of known or unknown faults or the presence of any Hazardous Substances, and it shall be the sole responsibility of Lessee, at Lessee's expense, to investigate and determine the soil conditions of the Site and the suitability of the Site for the development to be constructed by Lessee. If the soil conditions of the Site, or any part thereof, are not in all respects entirely suitable for the use or uses to which the Site will be put,then it is the sole responsibility and obligation of Lessee to take such action as may be necessary to place the Site and the soil conditions thereof in all respects in a condition tntirely suitable for the development of the Site as described in the Agreement, which may include demolition, clearing, or moving buildings, structures, or other improvements, and removal of Hazardous Substances, as defined in Section 106.1 below, provided, however, that nothing in this Lease shall limit or modify i.-t any way the Agency's obligations to perform certain work and/or make certain payments for work to be performed by Lessee or others in accordance with Oe Agreement and the Amended and Restated Mobilehome Acquisition and Relocation Agreement(the'Driflwood Agreement')referred to therein. (b) Lessee acknowledges that Agency has heretofore provided Lessee, without charge, copies of the following reports, studies, surveys, and other data and information on the physical condition of the properties being conveyed under the Agreement: June 5, 1990, letter from Donald W.laser to Doug Snyder,with attachments; April 1, 1987.certification from Kenneth K.Hekimian to Don Kiser,with exhibits; February 25, 1987,letter from Hekimiu:to Kiser, February 9, 1987,Report from Hekimian to County of Orange,with exhibits; January 30, 1987,letter from County to Kiser, January 26, 1987,letter from Hekimian to Kiser,with attachments; November 17, 1986,letter from Kiser to Regional Water Quality Control Board; -3- October 3, 1986,letter from Hekimian to Kiser with exhibits; September 12, 1986,letter from County to Kiser with exhibits; July 2, 1997,letter from Kiser to Orange County Health Care Agency;and June 30, 1986,test results from Tait&Associates to Kiser,with attachments. (c) Lessee hereby releases Agency and City and their respective officers, cmployces and consultants from any and all claims, liabilities, Iosses, damages, judgments, costs or expenses arising from or connected to any and all matters or states of fact affecting the Site concerning or related to the physical condition of the Site, subject to the performance of work and payment of finds by the Agency referred to in Section 106(a)above. E§ I06.1] ljaiardous Eubstangs (a) "Hazardous Substance," as used in this Lease means any substance, material or waste which is or becomes regulated by the Urdted States government,the State of California,or any local or other governmental authority, including,without limitation, any material, substance or waste which is (i)defined as a "hazardous waste," "acutely hazardous waste," `restricted hazardous waste," or"extremely hazardous waste'• under Sections 25115, 25117 or 25122.7. or listed pursuant to Section 25140, of the California Health and Safety Code; (ii)defined as a "hazardous substance" under Section 25316 of the California Health and Safety Code; (ii0 defined as a "hazardous material;' "hazardous substance; or "hazardous waste" under Section 25501 of the California Health and Safety Code; (iv)defined as a"hazardous substance" under Section 25281 of the California Health and Safety Code; (v)petroleum; (vi)asbestos; (vii)a polychlorinated biphenyl; (viii)listed under Article 9 or defined as "hazardous" or 'extremely hazardous' pursuant to Article I of Title 22 of the California Code of Regulations, Chapter 20; (ix)designated as a "hazardous substance" pursuant to Section 311 of the Clean Water Act (33 U.S.C. Section 1317); (x)defined as a "hazardous waste" pursuant to Section 1004 of the Resource Conservation and Recovery Act(42 U.S.C.Section 6903);(xi)defined as a "hazardous substance"pursuant to Section 101 of the Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C. Section 9601); or(xii)any other substance, whether in the form of a solid, liquid, gas or any other form whatsoever, which by any governmental requirements either requires special handling in its use, transportation, generation, collection, storage, treatment or disposal, or is defined as "hazardous"or is harmful to the environment or capable of posing a risk of injury to public health and safety. (b) For good and valuable consideration pursuant to the Lease,Lessee covenants each and all of the following: (1) Lessee shall remove all Hazardous Substances from the Site in the manner prescribed by law. (2) The Site shall be free and clear of any Hazardous Substances to the extent. required by applicable law. (3) The development, construction and uses of the Site permitted under this Lease do not require the presence of any Hazardous Substance on the Site, except for those customarily used in the ordinary course of business for such development,construction and use. -4- Nothing herein shall relieve or release the Agency from its-duty to perform any of its obligations set forth in Section 106 of this Lease and in the Agreement and the Driftwood Agreement. (c) If at any time during the-term of this Lease, any Hazardous Substance is present on, in or under the Site (including,without limitation, the soil and groundwater) in violation of applicable law, Lessee shall at no expense to Agency, at the earliest practicable date, remove such Hazardous Substances from the Site (including without limitation any Hazardous Substances in the soil or groundwater) and Lny surrounding areas to which such Hazardous Substances may have migrated in accordance with and to the extent required by any and all applicable legal requirements. The parties intend to require Lessee to remove all Hazardous Substances from tl:e Site and surrounding areas to which such Hazardous Substances may have migrated to the extent required by applicable law, if such Hazardous Substances are present at levels of concentration which require removal under applicable law. If, at any time during the term of this Lease, Agency has reasonable cause to believe one or more Hazardous Substances may be present on, in or under the Site in violation of applicable law, Agency may by written notice inform Lessee of the basis for Agency's concern and require Lessee to cause the Site to be tested for such Hazardous Substance(s) at Lessee's sole expense in accordance with a testing plan and schedule first approved in writing by Agency. Lessee shall exercise reasonable diligence to submit a testing plan to Agency wit.'tiri 30 days after the date of the Agency's notice, endeavor to obtain Agency's approval of the testing plan as soon as practicable thereafter, and cause the testing to begin within 30 days Agency's approval of the testing plan. (d) Lessee shall not bring or allow to be brought onto the Site or use or store on the Site any Hazardous Substances without the prier express written consent of the Agency, except for those Hazardous Substances (including without limitation fuel stored in motor vehicles) customarily used in the ordinary course of business in the use and operation of the Site and the Improvements. (e) The following covenants pertain to Lessee's occupancy and use of the Site and Improvements except for those Hazardous Substances customarily used in the ordinary course of business: 1. No underground storage tanks for Hazardous Substances shall be installed without the prior written approval of the Agency's Executive Director. 2. Agency, or its officers, employees, contractors or agents shall at all times have the right to go upon and inspect the Site and Improvements and the operations conducted thereon to assure compliance with the requirements herein stated. The Agency shall provide reasonable prior notice to Lessee of such entry, and shall seek to minimize interference with Lessee's use of the Site and Improvements as much as is reasonably feasible. Such entry shall be in compliance with all applicable safety rules and regulations. This inspection may include. taking samples for t.-sting of substances and materials present and/or testing soils on the Site and Improvements. Agency shall indemnify;defend,and hold harmless Lessee from and against any claims, liabilities, losses, and damage caused by Agency during any such inspections, and shall be responsible for tare prompt repair and/or restoration of any such damage caused by Agency during any such inspection. . 3. Lessee shall be responsible for posting on the Site and Improvements any signs required by Section 25249.6 of the California Health and Safety Code and regulations promulgated pursuant thereto. Lessee shall alsa complete and file any business response plans or inventories required by Chapter 6.95. of the California Health and Safety Code and regulations promulgated pursuant thereto. Lessee shall concurrently file a copy of any such business response plan or inventory with Agency. 4. Lessee shall immediately notify Agency in writing of the release of any Hazardous Substance on the Site and Improvements in violation of applicable law. 5. Lessee shall to the extent required by applicable law immediately remove any Hazardous Substances located on the Site and Improvements and shall dispose of such Hazardous Substances in a safe and legal manner. Lessee shall immediately disclose to Agency its disposal of any Hazardous Substance located on the Site and Improvements and upon Agency's written request shall provide written documentation of its safe and legal disposal. {f) Lessee shall be responsible for and bear the entire cost of removal and disposal of Hazardous Substances, except for any portion thereof that may be the responsibility of the Agency under express provisions of this Lease or the Agreement. Agency may also pass through to Lessee any and all clean-up costs incurred by the Agency as a result of Lessee's actiAties on • ' the Site and Improvcments or the presence of any Hazardous Substance(s) on, in or under the Site and Improvements. Notwithstanding the foregoing, the Lessee shall not be responsible for any clean-up and decontamination on or off the Site and Improvements necessitated by the presence of such Hazardous Substances. Upon termination of this Lease, Lessee is required, in accordance with al: applicable laws, to remove from the Site and Improvements any equipment or improvement to the property that is contaminated by Hazardous Substances. (g) By this Lease, Lessee provides to the Agency, effective upon the date of ibis Lease, an indemnification of the Agency and the City and their respective members, officers, employees,agents,contractors and consultants relating to the environmental condition of the Site and the presence of Hazardous Substances thereon. Therefore, Lessee hereby agrees to indemnify, defend and hold harmless Agency tnd City and their respective members, officers, agents, employees, contractors and consultants, from any claims, actions, suits, legal and administrative proceedings, liability, injury, deficiency, damages, fines, penalties, punitive damages,costs and expenses(including,without limitation,the cost of any cleanup,remediation, removal, mitigation, monitoring or testing of Hazardous Substances, and reasonable attorneys' fees) resulting from, arising out of, or based upon (i)the presence, release, use, generation, discharge; storage or disposal of any Hazardous Substances on, under, in or about, or the transportation of any Hazardous Substances to or from, the Site; or (ii)the violation, or alleged violation,of any statute,ordinance,order,rule,regulation,permit,judgment or license relating to the use, generation, release, discharge, storage, disposal or transportation or Hazardous Substances on,under, in or about,to or from,the Site. (h) From the date of this Lease, Lessee hereby waives, releases and discharges the Agency, the City aid their respective members, officers, employees, agents, contractors and consultants, from any and all present and future claims, demands, suits, legal and administrative proceedings, and from all liability for damages, Iosses, costs, liabilities, fees and expenses (including, without Iimitation, attorneys' fees) arising out of or in any way connected with the Agency's or Lessee's use, maintenance, ownership or operation of the Site, any'Hazardous Substances on the Site, or the existence of Hazardous Substances contamination in any state on the Site,however the Hazardous Substances came to be placed there, except that arising out of the intentional misconduct of the Agency or its employees, officers or agents. Lessee acknowledges that it is aware of and familiar with the provisions of Section I542 of the California Civil Code which provides as follows, -"A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release,which if known by 11m must have materially affected his settlement with the debtor." As such relates to Section 106 and this Section 106.1. Lessee hereby waives and relinquishes all rights and benefits which they may have tinder Section 1542 of the California Civil Code. G. [§ 107] Parties to the Lease I. U 1081 enc Agency is the Redevelopment Agency of the City of Huntington Beach, a public body, corporate and politic, exercising governmental finctions and powers and organized and existing under Chapter 2 of the Community Redevelopment Law of the State of California. The principal office of Agency is located at 2000 Main Street, Huntington Beach, California 92648. "Agency" as used in this Lease, includes the Redevelopment Agency of the City of Huntington Beach,znd any assignee of or successor to its rights,powers and responsibilities. 2. [§1091 essee Lessee is PCH BEACH RESORT, LLC, a California limited liability company, whose managing member is GRAND RESORT,LLC.a California limited liability company. The principal office of Lessee is located at 660 Newport*Center Drive, Suite 1050, Newport Beach,California 92660. Wherever the term "Lessee" is used herein, such term shall also include any permitted nominee or assignee of PCH BEACH RESORT, LLC;a California limited liability company,as herein provided.- -7- II. [§2001 EASE SM A. (§20I1 Lease For and in consideration of-the rents, conditions, covenants and agreements set forth herein, Agency hereby leases and demises the Site to Lessee and Lessee does hereby take and lease the Site from Agency. B. [§202] Term of the Lease. (a) The term of this Lease shall be ninety-nine(99)years,commencing on the date of the execution and delivery of this Lease (the"Effective Date of Lease") and terminating on the ninety-ninth (99th) anniversary of the Effective Date of Lease, unless sooner terminated as provided for herein. (b) µ At 6c expiration or earlier termination of this Lease, Lessee shall execute, acknowledge and d:liver to Agency,within thiry (30) days after written demand by Agency, a valid and recordable quitclaim deed covering the Site and the Improvements,free and clear of all liens and enctunbranccs. M. [§3001 RM A. [§3011 cfinition For the purposes of this Lease, the following teams shall have the following respective meanings: (1) "Operating Commencement Date" means the earlier to occur of(a)the date on which the Hotel opens for business; or (b)the date on which a Certificate of Occupancy for the Hotel is fist available in accordance with the normal procedures of the city. (2) "Operating Year"as used herein means (a)the First Operating Year, and (b)each calendar'year which follows the end of the First Operating Year and which ends prior to the Last Partial Operating Year and (c)the Last Partial Operating Year. (3) "First Operating Year"as used herein means the period that begins on the Operating Commencement Date and ends on either (i)the first December 31 which follows the Operating Commencement Date, in the event the Operating Ceramencement Date occurs during the period commencing on January I and ending on August 31 of the calendar year in which the Operating Commencement Date occurs; or (ii)the second•-• December 31 which follows the Operating Commencement Date, in the' event the Operating Commencement Date occurs during the period commencing on September 1 and ending on December 31 of the calendar year in which the Operating Commencement Date occurs. -8- (4) "Second Operating Year" as used herein mans the calendar year which follows the end of the First Operating Year. (S) "Third Operating Yearn' as used herein means the calendar year which follows the end of the S ccond Operating Year. (6) "Last Partial Operating Year"as used herein means the period of less than twelve(12)months that tegins on an anniversary of the commencement of the Second Operating Year and ends on the last day of the term of this Lease. (7) "Gross Room Revenue" as used herein means all revenue of any kind or nature, determined on as accrual basis,paid to Lessee or Lessee's agents for the rental of the Hotel guest rooms and suites (but excluding meeting and banquet rooms and similar areas in the Hotel) rented, licensed or otherwise provided whether on cash•basis or credit by Lessee to third parties, excluding refunds and uncollectible accounts (bad debts), including,without limitation, (a) all room rental payments, room deposits forfeited, room cancellation fees;rnd (b) proceeds of business interruption and similar insurance payable as a result of loss of riom revenues;and (c) fees for use of any facilities which are customarily included by comparable first quality hotels in the guest room rental rate, excluding,however,food,beverage,mini-bar,health club,parking, telephone, and rentals for equipment not customarily provided guests of first class resort hotels. (8) "Adjusted Room Revenue"as used herein means the amount by which(a) Gross Room Revenue for each Operating Year exceeds (b) a threshold revenue base which shall 'initially be twenty-five million dollars (S25,000,000) for each Operating Year and shall be increased on the first day of each Operating Year which begins after the Third Operating Year in proportion to the escalation,if any,of the Consumer Price Index during the immediately preceding calendar year; provided, however, that such increase in the threshold revenue base shall not in'any single year exceed five percent (5%) of the preceding year's threshold revenue base and shall not in any five-year period exceed twenty percent (20%) of the revenue threshold base at the commencement of the five-year period. . (9) "Consumer Price Index"as used herein means the Consumer Price Index- All Urban Consumers, [Los Angeles-Long Beach-Ariaheim],published by the Bureau of Labor Statistics or,if such index ceases to be published,the most closely analogous substitute index. -g- B. [§ 302] round ent "Ground Rent," as used herein, shall mean rent paid by Lessee to Agency for the Site. Ground Rent consists of Base Rent (as described in Section 303) and Participation Rent (as described in Section 304). C. (§ 303J Base Rent (1) For the First Operating Year,Lessee shall pay to Agency as Base Rent the amount of twenty-five thousand dollars (S25,000) multiplied by a fraction, the numerator of which is the number of days in the First Operating Year and the denominator of which is three hundred sixty-five(365). (2) For the Second Operating Year, Lessee shall pay to Agency as Base Rent the amount of seventy-five thousand dollars(S75,000). (3) For the Third Operating Year, Lessee shall pay to Agency as Base Rent the amount of one hundred fifty thousand dollars($150,000). (4) For each Operating Year beginning with the Fourth Operating Year, Lessee shall pay to Agency as Base Rent the amount of one hundred fifty thousand dollars (S150,000) as increased on the first day of each such Operating Year(i.e., each Operating Year after the Third Operating Year) in proportion to the escalation, if any, of the Consumer Price Index between the fifteenth (1Sth)month and the third (3rd)month prior to the first day of such Operating Year,provided,however,that such escalation shall not in any single year exceed five percent (5%) of the preceding Operating Year's Base Rent and shall not over any period of five consecutive Operating Year's exceed twenty percent (20%) of the Base Rent at the commencement of such five Operating Year period; and provided, further, that for the Last Partial Operating Year, such amount shall be multiplied by a fraction,the numerator of which is the number of days in the Last Partial Operating Year and the denominator of which is three hundred sixty-five(365). (5) The Base Rent specified in paragraphs (a) through (d) above shall be payable by Lessee to Agency in installments on the first(1st)day of each calendar month of each Operating Year. The amount of each such monthly payment shall be one-twelfth (1/12) of the Base Rent for the then current Operating Year, except as provided hereafter with respect to the Last Partial Operating Year. Each monthly payment of Base Rent iri the Last Partial Operating Year shall be the (lase Rent for the Last Partial Operating Year multiplied by a fraction, the numerator of which is one and the denominator of which is the number of first days of calendar months in the Last Partial Operating Year. D. [§304] Participation Rent (1) For each Operating Year beginning with the first day of the Third Operating Year, Lessee shall pay to Agency as Participation Rent an amount equal to three percent (3%) of Adjusted Room Revenue, which shall be payable as specified in paragraph (c) below. . -10• . (2) Within one hundred twenty (120) days after the close of each Operating Year (except the First Operating Year and tht Second Operating Year), Lessee shall submit to Agency, for Agency's review and written approval, a statement (the "Certified Annual Statement') containing an itemization and a reasonable explanation of the composition of Gross Room Revenue and Adjusted Room Revenue for the applicable Operating Year,together with a certificate of an independent certified public accountant reasonably acceptable to Agency (the "Accountant'). The Accountant's certificate shall be addressed to Agency, and shall state that the Accountant is familiar with the definition of each of the terms defined in Section 301 of this Lease and attest to the accuracy of Gross Rcom Revenue and Adjusted Room Revenue. At Lessee's election,the Accountant may be any of the following national accounting firms: i) Arthur Andersen&Co.,-LLP; ii) Deloitte&Touche,LLP; iii) Ernst&Young,LLP;" iv) Coopers and Lybrand,LLP; ' v) KMPG Peat Marwick,LLP; vi) Price Waterhouse,LLP; vii) Any national accounting fnrm having at the time of delivery of the Certified Annual Statement reputation and starure in the accounting community comparable to the foregoing firms as of the Effective Date of Lease,if first approved by Agency. (3) No later than concurrently with Lessee's submission to Agency of the Certified Annual Statement,and in any event within one hundred twenty(120)days after the end of the applicable Operating Year,Lessee shall pay to Agency the amount of Participation Rent as determined on the basis of such Certified Annual Statement. If Participation Rent is not paid within thirty (30) days after the Certified Arz-tual Statement is submitted to Agency or one hundred twenty (I20) days after the termination of the applicable Operating Year, whichever first occurs,the amount of Participation Rent shall bear interest at the annual rate of three percent (3%)over the prime rate of the largest bank operating in the State of California until paid. E. H 3051 Triple Net Lease This is an absolute net lease and Agency shall not be required to provide any services or do any act or thing with respect to the Site and Improvements or the appurtenances thereto, except as may be specifically and expressly provided herein and in the Agreement and the Driftwood Agreement, and Lessee shall make all payments required by this Lease,including but not limited to the payment of rent to Agency, without any claim on the part of Lessee for diminution, set-off or abatement, and nothing shall suspend, abate or reduce any rent to be paid hereunder, except as otherwise specifically provided in this Lease; provided, however, that Lessee shall have the right to withhold the payment of rent in an arnount equal to payments which the Agency fails to make to Lessee in breach of the Agreement.from Available Site- Generated Property Tax Increment and Available Site-Generated Transient Occupancy Tax (as..' defined in the Agreement). Lessee agrees that ir.the event of any such set-off,the Agency shall receive a credit equal to (i)the dollar arriount of such set-off against amounts otherwise required to be paid by Agency under the Agreement of Available Site-Generated Property Tax Increment and Available Site-Generated Transient Occupancy Tax less (ii) the interest accrual on the amount of the set-off from the date payment was due from Agency to Lessee pursuant-to the -I1- r Agreement to the date the set-off occurs hereunder at a rate equal to the "Developer's Cost of Funds,"as defined in paragraph(k)of-Attachment No.8 to the Agreement. F. [§305] Non-Subordination of Rent or Other Sums Lessee hereby covenants and agrees t}.at rent and all other sums of whatever kind and nature payable to Agency-from Lessee under the provisions of this Lease shall be paid from Gross Revenue and, to the extent consistent with applicable law, all other expenses shall be subordinate to the payments to Agency as required under this Lease. It is expressly understood and agreed that there shall be no subordination or encumbrance of any kind under this Lease or otherwise of(i)the Agency's fee title ownership of the Site; (ii)the Agency's interest in this Lease;and(iii)the Agency's right to receive Ground Rent under this Lease. G. [§307]• Delinquency In Rental Payment;Collection of Rents The failure of Lessee to pay Ground Rent by the due date shall constitute a default. In the event Lessee fails to pay the applicable rents on or before the due date, in addition to any other remedy provided by this Lease,Lessee shall pay Agency the delinquent rent and interest on the total delinquent rent at the rate of three percent(3%)over the prime rate of the largest bank operating in the State of California on the due date, from the date of each delinquency. Said interest shall accrue from the due date of the rent to the date the rent is received by Agency. It is the intent of this provision that Agency shall be compensated by such additional sums for loss resulting from rental delinquency including costs to Agency for servicing the delinquent account. Agency, at its option, may waive any such delinquency compensation required herein, upon written application of Lessee. H. [§ 308] Right to Inspection and Audit of Records Lessee shall keep full and accurate books and accounts,records, cash receipts, and other pertinent data showing its financial operations. Such books of account, records, cash receipts, and other pertinent data shall be kept for a period of five(5)years after the end of the Lease Year to which such items pertain. Agency shall be entitled during such five (5) years to inspect, examine and to copy at Agency's expense Lessee's books of account,records,cash receipts, and other pertinent data as necessary or appropriate for the purpose of this Lease. Lessee shall cooperate fully with Agency in making the inspection. Books and records shall remain confidential and not public except as necessary to protect Agency's interests under this Lease. Agency shall also be entitled at Agency's expense, once during each calendar year and once after expiration or termination of this Lease, to an independent audit of Lessee's books of account, records, cash receipts, and other pertinent data, by a certified public accountant to be designated by Agency, as necessary or appropriate to the purposes and provisions of this Lease. Any such audit shall be conducted after reasonable prior written notice by Agency to Lessee and-- during Lessee's usual business hours. If the audit shows that there is a deficiency in the payment of Ground Rent, the deficiency and interest thereon at the rate specified in Section 305 of this Lease shall become immediately due and payable to Agency. If such deficiency exceeds the amount of the greaser of Five Thousand Dollars (55,000.00), or two percent (2%) of the actual Ground Rent due in any Lease Year in which there'is a deficiency, Lessee shall reimburse -12- Agency for the cost of Agency's audit. If Agency has not audited Lessee hereunder with respect to a particular Lease Year within the permitted five year period, or has not advised Lsss:e in writing of any exceptions based on said audit within said five year period, then Agency shall be deemed to have waived its right to redetermine Ground Rent for such Lease Year. IV. [§400] DEVELOPMENT OF THE SITE A. j§401] Scope of Development.Plans.Drawings and Specifications Lessee shall construct the Improvements upon the Site in accordance with the Agreement, including without limitation the Scope of Development appended to the Agreement as Attachment No. 4, the Development Agreement, and plans, drawings and specifications approved by City, and within the time and in accordance with the other terms, covenants-and conditions of the Agreement, the Development Agreement and the plans, drawings and specifications approved by City pursuant th_reto, at the times provided in the Schedule of Performance (appended to the Agreement as Attachment No. 3 and incorporated herein by this reference). B. [§402] No Construction Before Notice From and after issuance of the Release of Construction Covenants by the Agency pursuant to the Agreement, no work of any kind shall be commenced on'the Site and no building or other materials shall be delivered to the Site for construction of any improvements,not shall any other building or land development work be commenced on or building materials be delivered to the Site at any time during the tern of the Lease, which work and/or materials exceed in the aggregate Two Hundred and Fifty Thousand Dollars (S250,000), until at least ten (10) days following notice by Lessee to Agency of th; intended commencement of such work or the delivery of such materials. C. [§403] otice o on- es onsi ' i Agency shall,at any and all times during the term of this Lease,have the right to post and maintain on the Site and to record as required by law any notice or notices of non-responsibility provided for by the mechanics' lien laws of the State of California. The work for which said ten (10)days written notice is required shall include,in addition to actual construction work,any site preparation work, installation of utilities, street construction or improvement, or any grading or filling of the Site. D. [§404] Nf echanie's.Materialr-ian's.Contractor's or Subcontractor's Liens Subject to Lessee's right to contest as hereinafter provided,at all times during the icrm.of the Lease,Lessee shall keep the Site, including all buildings and improvements now or hereafter . located on the Site, free and clear of all liens and claims of liens for labor, services, materials; supplies, or equipment performed on or furnished to the Site. Lessee shall promptly(i)pay and discharge,or cause the Site to be released from,any such lien or claim of lien,or(ii)contest such Iien and furnish Agency such bond as may be required by law to free the Site from the effect of such lien and to secure Agency against paynitnt of such lien and against any and all loss or damage whatsoever in any way arising from Lessee'sTailure to pay or discharge such lien. In -13- the event Lessee provides a bond in lieu of paying or discharging a lien as set forth herein, and Agency is unable despite reasonably diligent effort to obtain an endorsement to any existing title policy in favor of Agency insuring Agency's interest in the Site free and clear of any such liens that have not been paid or discharged, Lessee shall, at Lessee's sole cost and expense, within thirty (30) days of Agency's written request therefor, provide the Agency with such endorsement. Should Lessee fail to pay and discharge, or cause the Site to be released from, any such lien or claim of lien or to provide a bond as permitted hereunder within thirty (30) days after service on Lessee by Agency of a written request to do so,Agency may pay,adjust,compromise and discharge any such lien or claim of lien cn such terms and in such marmer as Agency may reasonably deem appropriate. In such event, Lessee shall, on or before the first day of the next calendar month following any such payment by Agency,reimburse Agency for the full amount so paid by Agency, including any actual and reasonable attorneys' fees-or other costs expended by Agency, together with interest thereon at the annual rate of interest equal to three percent (3%)over the prime rate of the largest bank operating in the State of California as of the close of business on the date of payment by the Agency, or the highest IawfW rate, whichever is less, from the date of payment by Agency to the date of Lessee's reimbursement of Agency. On substantial completion of any work of improvement during the term of the Lease, Lessee shall record or cause to be recorded in the Official Records of Orange County a notice of completion. Lessee hereby appoints Agency as Lessee's attorney-in-fact to record the notice of completion, which appointment shall only become effective on ten (10) days' notice upon Lessee's failure to record such a notice of completion after the work of improvement has been substantially completed;provided, that Agency'shall not be obligated to record such a notice of completion and the failure of Agency to record said notice shall not excuse the failure of Lessee to discharge its obligation to record said notice ofeompletion. E. [§405] Fights of Access Representatives of Agency and City shr.il have the reasonable right of access to the Site without charges or fees, at normal construction hours during the period of construction for the purposes of this Lease, including,but not limited to,the inspection of the work being performed in constructing the improvements. Such representatives of Agency or City shall be those who we so identified'in writing by the Executive Director of Agency. The Agency shall provide reasonable prior notice to Lessee of such entry, and shall seek to minimize interference with Lessee's use of the Site and Improvements as r:tach as is reasonably feasible. Such entry shall be in compliance with all applicable safety rules and regulations. Agency shall indemnify, defend, and hold harmless Lessee from and against any claim, liability, losses and damages caused by Agency during any such inspections, and shall be responsible for the prompt repair and/or restoration of any such damage caused by Agency during any such inspection. F. [§406] J:.ocal.State and Federal Laws Lessee shall carry out the construction of the improvements on the Site in conformity with all applicable laws, including all applicable federal and state labor standards and requirements. .1 e.- 0. [§ 407] on-discriminatio uring Construction Lessee for itself and its successors and assigns agrees that in the construction of the improvements on the Site provided for in this Lease, Lessee will not discriminate against any employee or applicant for employment because of sex,marital status,race,color,creed,religion, national origin,or ancestry. H. [§409) Archaeological Provisions Agency shall comply with any procedures or reviews relating to archaeological resources and take any remedial action which may be required by applicable state and federal laws with respect to development of the Site as contemplated by this Lease. In connection therewith, Agency shall perform, at its expense, any necessary studies, tests or surveys which may be required to comply with such procedures.cr reviews, or-to undertake any required remedial action for such clearances or certifications. Lessee shall comply with all reasonable requests from Agency, including but not limited to requests for access to the Site, to facilitate Agency's compliance with such procedures or reviews and obtainment of such clearances or certifications. V. [§5001 USE OF THE SITE AND VaROVEMENTS A. [§ 50I] Use of the Site and Improvements Lessee covenants and agrees for itself; its successors, its assigns and every successor in interest to the Site and Improvements or arty portion thereof, that during construction and thereafter through the remainder of the term of this Lease, Lessee, such successors and such assignees shall: 1. Construct or cause to be constructed all first class resort hotel and conference center improvements described in the Scope of Development in accordance therewith and subject to the limitations thereof, including without limitation the standards of quality set forth in the Scope of Development(Attachment No.4 of the Agreement),i&ith an overall standard of quality consistent with a first class resort hotel equal to or better than a resort rated four4amonds by the Automobile Asso.-iation of America (AAA), such as the Hotel del Coronado in San Diego, California, or the Biltmore Hotel in Santa Barbara, California. It is recognized that not all services and facilities available in one first-class resort hotel will necessarily be provided by all first-class resort hotels, but that the composite of service and facilities provided by each fir3t- class resort hotel comparable to the hotels referred to above will cause the same to be deemed to constitute a first-class resort hotel. Uses normally incidental to a hotel use, including without limitation a restaurant, cocktail lounge, cleating and-laundry service, banquet and catering facilities, meeting rooms, gift shop, spa, resort retail, magazine stand, barber or beauty shop, travel agency, airline ticket office, automobile rental operation, and recreational facilities, shall also be permitted. 2. Devote the Site, or cause the Site to be devoted solely to use in accordance with this Lease,the standards of quality set forth in Section 501.1 of this Lease,and plans and permits approved by the City,as the same may be amended from time to time. -15- 3. Subject to Sections 706-710, 1100-1104, and 1314 of this Lease, operate in substantially complete fashion or cause the hotel and all other improvements to be consncted on. the Site to be operated in substantially complete fashion and continuously open for business to the general pubic in accordance with the standards set forth in this Lease;provided however that the requirements of this sub-paragraph for continuous operation shall not apply temporarily for the period required for bona fide hotel wide major remodeling. 4. Qperatc, or cause to be operated, the conference center in substantial accordance with conference center operating requirements fast reasonably approved by the Agency's Executive Director,which shall provide for priority use of the conference center at Lessee's cost for five (S) days per year(other than prime vacation and holiday periods) non-cumulatively by the City for its own purposes,or by a community,charitable or other not-for-profit group,subject to an advance reservation of not more than thirty (30)days prior to each such use,provided that -Lessee shall not be required to cancel a reservation already accepted from any Hurd party. S. (a) Maintain, repair and operate the Site and all improvements constructed or to be constructed thereon(including landscaping, lighting and signage), or cause the Site and all such improvements to be maintained, in a fast quality condition, free of debris, waste and grafliti, and in compliance with the terms of the Redevelopment Plan, the City of Huntington Beach Municipal Code,and the following: (1) All improvements on the Site shall be maintained in good condition in accordance with the custom and practice gererally applicable to comparable first quality hotels in Orange County, and in conformance and compliance with aII plans, drawings and related documents approved by the Agency pursuant to this Lease,all conditions of approval of land use entitlements adopted by the City or the Planting Commission,including painting and cleaning of all exterior surfaces of all private improvements and public improvements to the curbline. (2) Landscape maintenance shall include, without limitation, wateringlrrigation; fertilization; mowing; edging; trimming of grass; tree and shrub pruning, trimming and shaping of trees and shrubs to maintain a natural and healthy appearance, road visibility, and irrigation coverage; replacemeit, as needed, of all plant materials; control of weeds in all planters, shrubs, lawns, ground covers, or other planted areas; and staking for support of trees. (3) Clean-up maintenance shall include,without limitation,maintenance of all sidewalks, paths and other paved areas in a clean and weed-free condition; maintenance of aII such areas clear of dirt,mud, trash, debris or other matter which is unsafe or unsightly;removal of all trash,litter aad other debris from improvements and landscaping;clearance and cleaning of all areas maintained prior to the end of each day on which maintenance operations are performed to ensure that all cuttings, weeds, leaves and other debris are properly disposed of by maintenance workers. , (b) If the Agency gives written notice to Lessee that the maintenance or condition of the Site or any portion thereof or any improvements thereon does not comply with this Lease and such notice describes the deficiencies, Lessee shall correct,remedy or cure the deficiency within thirty (30) days fallowing the submission of such notice, unless the notice states that the -16- deficiency is an urgent matter relating to public health and safety in wWch•case Lessee shall cure the deficiency with all due diligence and shall complete the cure at the earliest possibic time but in no even more than forty-eight(48)hours fol'.om ing the submission of the notice. In the event Lessee fails to maintain the Site or any portion thereof or any improvements thereon in accordance with this Lease and'fails to eu:c any deficiencies within the applicable period described above, the Agency shall have, in addition to any other rights and remedies hereunder, the right to maintain the Site and the improvements thereon,or portion thereof,or to contract for the correction of any deficiencies, and Lessee shall be responsible for payment of all such costs actually and reasonably incurred by the Agency. 6. (a) Pay when due all real estate taxes and assessments assessed and levied on the Site or any portion thereof or any improvements thereon or any interest therein; provided however that nothing herein shall Iimit or affect any right Lessee may have under applicable law to contest the validity or amount of any property tax assessment so long as Lessee (i)is not in default in payment of any Annual Property Tax Guarantee to the Agency required by this paragraph, and (ii)refrains from appealing, challenging or contesting in any manner any assessment of the Site and Improvements equal to or less than the Minimum Assessed Valuation, and (iii) complies with the requirements -set farth in Section 50I.6(b) of this Lease; and, in addition thereto,pay to the Agency on September I of each year for each prior fiscal year of the Agency, commencing on the first September I to occur after the issuance of the Release of Construction Covenants for the Site by the Agency pursuant to the Agreement (but excluding any period of time prior to such issuance of the Release of Construction Covenants), the Annual Property Tax Guarantee, if any, due for each such prior fiscal year. For purposes of this Agreement, "Annual Property Tax Guarantee"for each Agency fiscal year(July 1 -June 30) in which said guarantee remains in effect hereunder shall mean an amount equal*to (i)the Net Property Tax Increricrnt Revenues that would have been allocated to and received by the Agency in said fiscal year with respect to the Site and Improvements if the Site and Improvements had been assessed at the Minimum Assessed Valuation for said year, less (ii)the amount of Net Property Tax Increment Revenues actually allocated and paid to the Agency in said fiscal year with respect to the Site and Improvements. The 'Net Property Tax Increment Revenues shall include one hundred percent (100%) of the property tax increment revenues payable to the Agency pursuant to Section 33670(b) of the California Health and Safety Code (as said statute may be amended from time to time), including without limitation the twenty percent (20%) of said revenues that Agency is required to set aside for affordable housing purposes in the Redevelopment Project Area as a whole pursuant to California Health and Safety Code Section 33334.2, less the portion of said tax increment revenues equal to the sum of(J)the percentage of such revenues in the Main-Pier portion of the Merged Redevelopment Project Area that the Agency is required to pay to other affected taxing entities pursuant to tax sharing/pass-through agreements entered into prior to the date of this Agreement,(ii)the percentage of such revenues in the Merged Redevelopment Project Area as a whole which the Agency may be required to pay to any and all governmental entities pursuant to any provision of law,including for example,and without limiting the generality of the foregoing, any statutory pass-through payments which are'' required to be made to affected taxing entities pursuant to California Health and Safety Code Sections 33607.5 and 33607.7, California Health and Safety Code Section 33681 et seq., as applicable, and (iii)the percentage of such reveries in the Merged Redevelopment Project Area as a whole which the Agency is required to pay to the County of Orange or which the County is entitled to retain as an administrative fee. "Minimum Assessed Valuation" shall mean an -17- amount calculated for each fiscal year equal to one hundred million dollars(S 100,000,000)plus a compound annual escalation of such dollar amount from and after the 2000-2001 fiscal year to and including the 2032-33 fiscal year of two percent (2%) per annum; provided, however, that the Minimum Assessed Valuation shall not be so escalated when and to the extent the assessed valuation of the Site increases at Iess than two percent (2;0) per annum, remains the same, or decreases by reason of an action initiated by the County and not by an assessment appeal, challenge or contest of Lessee. The obligations of Lessee under this paragraph 501.6 shall terminate at such time as Agency is no longer legally entitled to receive such ad valorem property tax increment revenues from the Site and Improvements pursuant to applicable provisions of law. (b) The following requirements shall apply to any appeal, objection or contest to any tax or assessment permitted to be made by Lessee under this Lease: the contest, opposition, or objection must be filed before the tax, assessment, or other charge at which it is directed becomes delinquent and written notice of the contest, opposition, or objection must be given to Agency before the date the tax or assessment, or other charge becomes delinquent. No such contest, opposition, or objection shall be continued or maintained after the date the tax, assessment,or other charge at which it is directed becomes delinquent unless Lessee has met one of the following conditions- (i) Paid such tax, assessment, or other charge under protest prior to its becoming delinquent;or (ii) Obtained and maintained a stay of all proceedings for enforcement and collection of the tax, assessment,or other charge by posting such bond or other matter required by law for such a stay;or (iii) Delivered to Agency a good and sufficient undertaking in a form reasonably acceptable to Agency's Executive Director,in an amount equal to one hundred twenty-five percent (125°!0) of the amount in controversy (inclusive of fines, interests,penalties, costs, and other expenses that may have accrued or been imposed thereon) and issued by a surety company authorized to issue undertakings in California,conditioned on the payment by Lessee of the tax, assessment, or charge together with any fines, interest, penalties, costs, and expenses that may have accrued or been imposed thereon within thirty (30) days after final determination of Lessee's contest,opposition, or objection to such tax, assessment,or other charge. Agencyshall not be required to join b any proceedings or contest brought by Lessee unless the provisions of any law requires that &.e proceeding or contest be brought by or in the name of Agency or any owner of the Site. In that case, Agency shall join in the proceeding or contest or permit it to be brought in Agency's name but such action shall be without cost or other liability to Agency and Lessee agrees to pay to Agency all costs incurred by Agency in.-' connection therewith. 7. Not discriminate upon the basis of race, color, creed, religion, sex, age, marital status,national origin, or ancestry in the sale,lease,sublease,transfer,use,occupancy,tenure or enjoyment of the Site,or any improvements erected or to be erected thereon,or any part thereof. B. j§502] Managment of the Siit and Improvements prior to the date of this Lease, Lessee has entered into a hotel management agreement which has been approved in writing by the Agency for consistency with the Agreement and this Lease, it being understood and agreed that Lessee may redact from such agreement when submitted to Agency for approval any confidential business information not relevant to the purposes of this Lease (the "Original Maragement Agreement'). Prior to the expiration or termination of the Original Management Agreement (and any successor hotel management agreement(s)-throughout the term of this Lease), Lessee shall obtain the Agency's written : approval of a new hotel management agreement which shall become effective concurrently with the expiration or sooner termination of the hotel management agreement which it replaces. Each such hotel management agreement shall be Aith a manager determined by the Agency to have not less than tight (8) years of experience'in the successful operation of first quality hotels comparable to the hotel to be constructed on the Site. Approvals required of the Agency under Us Section 502 shall follow and be limited by the foIIowing procedures: Within thirty (30) days after receipt of Lessee's request for approval, Agency shall respond in writing by stating what further information, if any, Agency reasonably requires in order to determine whether or not to approve the agreement. Lessee shall promptly furnish to Agency such further information as may be r=onably requested. Lessee's request for approval shall be deemed complete thirty (30) days after Agency's receipt thereo& if no timely response requesting further information is delivered to Lessee, or, if such a timely response requesting further information is received, on the date that Lessee delivers such additional information to Agency, provided that Lessee's additional information is responsive to Agency's request. Agency shall approve or disapprove the matter within forty-five(45)days after Lessee's request for such approval is accepted as complete or is deemed complete. Approval will not be • unreasonably withheld if Lessee demonstrates that the proposed management agreement will provide capable,competent and experienced operation of resort hotels similar in quality,size and type as required to be maintained on the Site and Improvements pursuant to this Lease. If Agency shall disapprove a hotel operator,Agency shall do so by written notice to Lessee Stating the reasons for such disapproval. Waterfront Resorts, Inc,,a California corporation, is hereby pre-approved by Agency as an operator of the resort hotel on the Site and Improvements,so long as there is no material change in the ability of the same to provide capable, competent and experienced quality operation of the Site and Improvements from that.evident upon the execution of this Lease. At all times during the term of this Lease,the Site and Improvements shall be managed or caused to be managed by Lessee in a prudent and business-like manner as necessary to maintain the Site and Improvements in a first-class condition. Lessee shall assume responsibility, subject to the provisions of this Lease, for the operation and maintenance (including repair, restoration and reconstruction) of all of the. improvements constructed on the Site and the costs thereof, and Agency and the City shall have no liability for costs of such operation and maintenance by Lessee or for any claims arising from the operation and maintenance (including repair, restoration and reconstruction) of such improvements. Without limiting the generality of the foregoing, Lessee, in the maintenance of the improvements,shall observe the following standards: -19- 1. Maintain the surface of all automobile and pedestrian areas level, smooth and evenly covered with the type of surfacing materials originally installed thereon or such substitute thereof as shall be in all respects equal thereto or better in quality,appearance and durability. 2. Remove all papers, debris, filth and refuse, and sweep, wash down and/or clean all hard surfaces, including brick, metal,concrete,glass,wood and other permanent poles,walls or structural members as required. 3. Maintain such appropriate entrance, exit and directional signs, markers and lights as shall be reasonably required and in accordance with the practices prevailing in the operation of similar developments. 4. Clean lighting fixtures and relamp and/or reballast as needed. _. S.,• _ Repaint striping,markers,directional signs, etc.,as necessary to maintain in first- class condition. - 6. Maintain landscaping as necessary to keep it in a first-class,thriving condition. 7. Maintain signs, including relamping and/or reballasting and/or repairing as required. S. Provide security personnel and security measures to the extent reasonably necessary. Lessee shall seek the advice of the police department in planning appropriate security measures. . 4. Maintain and keep in good condition and repair all benches, shelters, planters, mall coverings, banners, kiosks and other fumiture, trash containers, sculptures, play areas, platforms and stages. 10. Maintain and keep in a,sanitary condition public restrooms and other common use' facilities. 11. Clean, repair and maintain all ccmmon utility systems to the extent that the same are not cleaned,repaired and maintained by public utilities. 12. Maintain all fountains and associated structures, drinking fountains, pumps and associated plumbing. 13. Maintain all lights,light fixtures and associated wiring systems. 14. Maintain public right-of-way items between the property and the street,including sidewalks,curbs,gutters,driveways,signs and poles,curb painting and markings. . 15. Maintain all surface and storm lateral drainage systems. 16. Maintain all sanitary sewer lateral connections. -2D- C. (§5031 (INTENTIONALLY OINMTED) D. (§ 504] Obligation to Refrain from Disc it urination There shall be no discrimination against or segregation of any person, or group of persons, on account of sex,marital status,race,color,creed,religion,national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenor or enjoyment of the Site and Improvements, and Lessee itself or any person claiming under or through it shall not establish or permit any such practice or practices of discrimination, or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees, or vendees of the Site and Improvements. F_ (§505] Form of Nondiscrimination and onse cation Clauses Lessee shall refrain from restricting'tl:e rental,sale or lease of the Site and Improvements, or any portion thereof,on the basis of sex,marital status,race,color,creed,religion, ancestry or national origin of any person. All such deeds, leases or contracts pertaining to the foregoing matters shall contain or be subject to substantially the following nondiscrimination or nonsegregation clauses: 1. In deeds: "The grantee herein covenants by and for its.If. its heirs, executors, administrators and assigns, and all persons claiming under or through it, that there shall be no discrimination against or segregation of, any person or group of persons on account of sex, marital status, race, color, creed, religion, national origin or ancestry in the sale, lease, sublease, transfer,use, occupancy, tenure or enjoyment of the land herein conveyed, nor shall the grantee itself or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees in the land herein conveyed. The foregoing covenants shall run with the land." ' 2. In leases: "The lessee covenants by and for itself, its hews, executors, administrators and assigns, and all persons claiming under or through it, and this lease is made and accepted upon and subject to the following conditions: That there shall be no discrimination against or segregation of any person or group of persons on account of sex, marital status, race, color, creed, religion, national origin or ancestry, in the leasing, subleasing, transferring, use, or enjoyment of the land herein leased nor shall the lessee itself, or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection', location, number,use or occupancy, of tenants, lessees,sublessees,subtenants or vendees in the land herein leased." -21- 3. In contracts: "There sl:all be no discrimination against or segregation of, any person or group of persons on account of sex, marital status, race,. color, creed, religion, national origin, or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the land, nor shall the transferee itself or any person claiming tinder or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy, of tenants, lessees, sublessees, subtenants, or venders in the land." F. [§506] Quiet Enioyment The parties hereto mutually covenant End agree that Lessee by keeping and performing the covenants herein contained, shall at all times during the term of this Lease, peaceably and quietly have,hold and enjoy the Site and Improvements. G. (§ 5071 Payments to ,gency In consideration of the agreement to restrict development on certain property as set forth in Article VIII of that certain Third Amended a.•td Restated Lease between the Agency(as lessor) and Robert L. Mayer, as Trustee of the Robert L. Mayer Trust of 1982 dated June 22, 1982 (as lessee), dated as of April 28, 1989, as amended on or about November 16, 1992 by a First Amendment to Third Amended and Restated Lease (collectively, the `Tldrd Amended and Restated Lease), Lessee shall pay to Agency the amounts set forth below for the benefit of the City: 1. For each Lease Year from 2001 through 2013, inclusive, or earlier termination of this Lease, the sum of Eight Thousand Three Hundred Thirty Three Dollars and Thirty-Four Cents ($8,333.34)per Lease Year, payable in advance on the first day of each such year. 2. For each Lease Year from 2014, to 2099, inclusive, or the earlier termination of this Lease, the sum of Eight Thousand Three Hundred Thirty-Three Dollars and Thirty-Four Cents ($8,333.34)per Lease Year adjusted upward as of January 1, 2014, and each January 1a thereafter as provided herein ("Adjustment Dates"), with such sum payable in advance on the first day of each such year. The annual adjustment shall be calculated upon the basis of the United States Department of Labor, Bureau of Labor Statistics Consumer Price Index of Urban `'Wage Earners and Clerical Workers, Los Angeles — Long Beach — Anaheim Average, All Items (1967-100) (the "Index"). The Index published and in effect ninety (90) days prior to the Effective Date of Lease shall be considered the "Base Year Index". At each Adjustment Date, the consideration due shall be adjusted to equal the product obtained by multiplying(i)$8,333.34 and(ii)a fraction,the numerator of which is the Index published and in..' effect ninety(90)days preceding the Adjustment Date, and the denominator of which is the Base Year Index. In no event shall the consideration payable on any Adjustment Date be less than the consideration required to be paid during the year immediately preceding such Adjustment Date notwithstanding the fact that the Index may, as of some Adjustment Date,be less than the Index of the previous Adjustment Date or the Base Year Index. When the amount of the adjusted -22- consideration is determined, and at least thirty (30) days prior to the date payment for the next year is due, Agency shall give Lessee written notice of the amount of the adjusted consideration indicating how the new figure was computed. If at any Adjustment Date the Index shall not exist in the same format as recited herein, Agency and Lessee shall agree to substitute any official index published.by the Bureau of Labor Statistics,or successor or similar governmental agency, as may then be in existence and which is most nearly equivalent to the Index. Should Agency and Lessee be unable to mutually agree as to any such substitute index prior to the date such agreement is required in order to properly and timely comply with this Section,determination of the proper substitute index shall be by arbitration conducted in accordance with the then- prevailirig comme:cial arbitration rules of the American Arbitration Association or its successor. The terms and provisions of Article VIII of the Third Amended and Restated Lease ("Article VIW), as attached hereto as xhib't " are hereby incorporated by reference, except that the payment provisions of this Section 507 shall replace and supersede Section 83 of Article VIII in its entirety. Article VIII shall survive any termination of the Third Amended and Restated Lease. VI. [§ 6001 TAXES,ASSESSMENTS AND OTHER CHARGES A. [§ 601] Utilities Lessee agrees to pay or cause to be paid, as and when they become due and payable, all charges for water, gas, light, heat, telephone, electricity and other utility and communication services rendered or used on or about the Site znd Improvements at all times during the term of - this Lease. B. [§ 6021 Impositions(Tncluding_ axes and Assessments) C. [§ 603] Pa Went Generally Subject to the provisions of Section 501.6 of this Lease,Lessee agrees to pay or cause to be paid, as and when they become due and payzblc,and before any fine,penalty,interest or cost may be added thereto, or become due or be imposed by operation of law for the nonpayment thereof, all taxes, assessments, franchises, excises, license and permit fees, and other governmental levies and charges, general and special, ordinary and extraordinary', unforeseen and foreseen, of any kind and nature whatsoever which at any time during the term of this Lease may be assessed, levied,confirmed,imposed upon,or grow or become due and payable out of or . in respect of, or become a lien on: (1)the Site and Improvements or any part thereof or any appurtenance thereto; (2)the rent and income received by Lessee from subtenants, guests or others for the use or occupation of the Site and the Improvements thereon;or(3)this transaction or any document to which Lessee is a party, creating or transferring an interest or estate in the Site and Improvements. All such taxes, franchises, excises, license and permit fees, and other.. governmental levies and charges shall hereinafter be referred to as"Impositions",and any of the same shall hereinafter be referred to as an "Imposition': Any Imposition relating to a fiscal period of the taxing authority, a part of which period is included within the term of this Lease and a part of which is included in a period of time after the expiration of the term of this Lease, shall (whether or not such Imposition shall be assessed, levied, confirmed, imposed. upon, -23- become a lien upon the Site and Improvements, or shall become payable,during the tern of this Lease)be adjusted between Agency and Lessee as of the expiration of the term of this Lease,so that Lessee shall pay that portion of such Imposition which that part of such fiscal period included in the period of time before the expiration of the term of this Lease bears to such fiscal period, and Agency shall pay the remainder thereof; Lessee shall not be entitled to receive any apportionment, if Lessee shall be in default in the performance of any of Lessee's covenants and agreements as provided in this Lease. The failure of Lessee to pay an Imposition that cannot under any circumstances give rise to a lien against the Site and Improvements shall not be a breach of the fast paragraph of this Section 603. Lessee hereby agrees to defend,indemnify and hold harmless Agency and City and their respective officers, employees and consultants from and against all claims, liability, loss, damage, costs, o:expenses (including reasonzble attorney's fees and court costs) arising from or _as a result of Lessee's failure to pay any Imposition to.the extent that such Imposition relates to It fiscal period included within the term of this Lease. -_...___... Nothing in this Section 603 shall alter, modify or limit in any way the rights and obligations of Lessee to contest property tax assessments as set forth and as limited bi Section 501.6 of this Lease. D. [§604] Payment oflmpositionsin Installments If,by law,any Imposition may at the option of the payer be paid in installments(whether or not interest shall accrue on the unpaid balznce of such Imposition),Lessee may exercise the option to pay the same (and any accrued interest on the unpaid balance of such Imposition) in installments and, in such event, shall pay such installments as may become due during the term of this Lease as the same respectively become due and before any fine, penalty, further interest or cost may be added thereto;provided,however,that the amount of all installments of any such Imposition which will be the responsibility of Lessee pursuant to Section 603 herein above, and which are to become due and payable after the expiration of the term of this Lease, shall be deposited with Agency for such payment on the date which shall be one (1) year immediately prior to the date of such expiration. E. 06051 Agency Right to Cure If Lessee, in violation of the provisions of this Lease, shall fail to pay and to discharge • any Imposition, Agency may(but shall not be obligated to)pay or discharge it, and the amount paid by Agency and the amount of all costs,expenses,interest and penalties connected therewith, including attorney fees,together with interest at the rate of three percent(3%)over the prime rate of the largest basil; operating in the State of California on the date payment is made by Agency, shall be deemed to be and shall be payable by Lessee as additional rent and shall be reimbursed to Agency by Lessee on demand,provided that Lessee and the holder of any Mortgage obtained• in accordance with Section 901 of this Lease that has registered its name and address in writirig with Agency shall have failed to pay such Imposition within ten (10)business days after written notice from Agency to Lessee and such holder of Agency's intention to pay. • .«4- F. [§606] Tax Receipts Lessee shall furnish to Agency, wiUr. forty-five (45) days after the date when any real property taxes, assessments or any other Imposition which could have any effect on Agency's title would become delinquent, official receipts of the appropriate taxing authority or other evidence,satisfactory to Agency evidencing payment thereof. G. [§ 607) Limits of Tax Liability The provisions of this Lease shall not be deemed to require Lessee to pay municipal, county,state or federal income or gross receipts or excess profits taxes assessed against Agency, or municipal, county,state or federal capital levy,estate,succession, inheritance,gift,or transfer taxes of Agency, or corporation franchise taxes imposed upon any corporate owner of the fee of the Site; except,however,that Lessee shall pay all.taxes assessed by any governmental authority by virtue of any operation by Lessee conduct:d on or out of the Site and Improvements. It is agreed that in the event the State of California or any taxing authority thereunder changes or modifies the system of taxing real estate so as to tax the rental income from real estate in Iieu of or in substitution(in whole or in part)for the teas estate taxes and so as to impose a liability upon Agency for the amount of such tax, then Lessee shall be liable under this Lease for the payment of the taxes so imposed during the term of this Lease, or any renewal thereof,to the same extent as though the alternative tax was a tax upon the value of the Site and Improvements. In order to determine the amount of such alternative tax for which Lessee shall be liable, the Site and Improvements shall be considered as if it was the only asset of Agency, and the rent paid hereunder shall be considered as if it were the only income of Agency. H. [§ 608] Contests (a) Except as expressly permitted under Section 501.6 herein above, Lessee shall refrain from appealing,challenging or contesting in any manner the validity or amount of any tax assessment, encumbrance or lien on the Site; provided, however,that such prohibition shall not apply to an appeal, challenge or contesting of the erroneous initial assessment for property tax purposes of the Site in the fiscal year of the completion of the improvements to be constructed pursuant to this Lease, and further provided that in the absence of transfer-of ownership or new construction Lessee shall not be prohibited from appealing, challenging or contesting any increases in assessment of the Site for property tax purposes over and above the current 2%per annum permitted amount. (b) Lessee agrees that any such permitted proceedings shall be begun without undue -delay after any contested item is imposed and shall be prosecuted to final adjudication with reasonable dispatch. Lessee shall give Agency prompt notice in writing of any such contest at least ten (10) days before any delinquency occurs. Lessee may only exercise its right to contest an Imposition hereunder if the subject legal proceedings shall operate to prevent the collection of. the Imposition so contested; or the sale of the Site and•Improvements, or any part thereof, to satisfy the same, and only if Lessee shall, prior to the date such Imposition is due and payable, have given such reasonable security as may be required by Agency from time to time in order to insure the payment of such Imposition to prevent any sale, foreclosure or forfeiture of the Site and Improvements or any part thereof,by reason of such nonpayment. In the event of any such -25- . contest and the final determination thereof adversely to Lessee, Lessee shall, before any fine, interest, penalty cr cost may be added thereto for nonpayment thereof, pay fully and discharge the amounts involved in or affected by such contest, together vtith any penalties, fines, interest, costs and expenses that may have accrued thereon or that may result from any such contest by Lessee and, after such payment and discharge by Lessee,Agency will promptly return to Lessee such security as Agency shall have received in connection with such contest. (c) Agency shall cooperate reasonably in any such contest permitted by this Section 608, and shall execute any documents or pleadings reasonably required for such purpose. Any such proceedings to contest the validity or amount of Imposition or to recover back any Imposition paid by Lessee shall be prosecuted by Lessee at Lessee's sole cost and expense; and • Lessee shall indemnify and save harmless Agency against any and all loss, cost or expense of any kind, including, but not limited to, reasonable attorneys' fees and expenses, which may be -imposed upon or incurred by Agency in connection therewith. I. - j§ 609] Notice of Possessory Interest:Payment of Taxes and Assessments on . Value of Entire Proper� • In accordance with California Revenue and Taxation-Code Section 107.6(a), Agency states that by entering into this Lease, a possessory interest subject to property taxes shall be created. Lessee or other party in whom the possessory interest is vested shall be subject to the payment of property taxes levied on such interest. Lessee acknowledges and agrees that the Site and/or the Improvements thereon, and any possessory interest therein, shall at all times after the commencement of this Lease,be subject to ad valorem taxes levied, assessed or imposed cn such property, and that Lessee shall pay taxes upon the assessed value of the entire property, and not merely upon the assessed value of its leasehold interest; provided that if permitted by law,Lessee shall be required to pay ad valorem taxes only upon the assessed value of its leasehold interest. If for any reason the taxes Ievied on such property in any year during the term of this Lease are less than the taxes which would have- been levied if the entire property had been assessed and taxed in the same manner as privately owned property, Lessee shall pay such difference to Agency within thirty (30) days after the taxes for such year become payable and in no event later than the delinquency date of such taxes established by law. J. [§ 610] Other Liens Lessee shall not, directly or indirectly, create or permit to be created or to rerirain, and will promptly discharge, at its expense,any mortgage, lien,encumbrance or charge on or pledge of the Site or the Improvements, or fixtures wid furnishings, or any part thereof, or Lessee's interest therein, or the rent, additional rent or other sums payable by Lessee under this Lease, other than (i) such Mortgages as are permitted pursuant to Section 901, and (ii) as necessary in • connection with the financing of furniture, fixtures and equipment for the Improvements. Lessee• shall notify Agency promptly of any lien or encumbrance which has been created on or attached to the Site and Improvements,or to Lessee's leasehold estate therein,whether by act of Lessee or otherwise. The existence of any mechanic's, laborer's, mate ialmen's, supplier's or vendor's lien, or any right in respect thereof, shall not ecnstitute a violation of this Section if payment is -26- not yet due upon the contract or for the goods or services in respect of which any such lien has arisen, or if such lien has been discharged by the posting of bonds or other lien-release security as is provided for such discharge by law. VII. 1§7001 OWNERSHIP OF AND RESPONSIBILITY FOR M PROVEMENTS A. [§701J Qmership Duringand at ermina& All Improvements on the Site constructed or installed by Lessee as permitted or required by this Lease, shall, during the term of this Lease, be and remain the property of Lessee. All Improvements located on the Site,whether existing thereon at the commencement of the term of this Lease, or constructed or installed thereon by Lessee as permitted or required by this Lease, shall, at the expiration or sooner termination of the term of this Lease, be and remain the property.of Agency. Subject to Lessee's rights and obligations set forth in this Lease relating to alterations and additions, Lessee shall have no right at any time to waste, destroy, demolish or remove any of the Improvements. Lessee's rights and powers with respect to the Improvements are subject to tl:e terms and Iimitations of this Lease. Agency and Lessee covenant for themselves and all persons claiming under or through them that the Improvements are 'real property. B. [§ 702] Re—moval_gfEixtunstndFumishingsat-Tertnination At the expiration or sooner termination of the term of this Lease, Agency may, at Agency's election, demand the removal from the Site and Improvements, at Lessee's sole cost and expense,of all fixtures and furnishings,or of certain fixtures and/or furnishings,as specified in the notice provided for below. A demand to take effect at the normal expiration of the term shall be effected by notice given not less than sixty (60) days prior to the expiration date. A demand to take effect on any other termination of the Lease shall be effectuated by notice given in or concurrently with notice of such termination or within ten(10)days after such termination. At the expiration or sooner termination of the tern of this Lease,Lessee may, at Lessee's sole cost and expense, remove from the Site and Improvements any and all fixtures and furnishings. Any fixtures and/or furnishings rot removed by Lessee within thirty (30) days of the termination of the Lease shall be deemed to be abandoned by Lessee and shall, without compensation to Lessee, then become Agency's property, free and clear of all claims to or against them by Lessee or any third person, subject to security interests therein to the extent permitted by this Lease. Lessee shall defend, indemnify and hold harmless Agency against all liability and loss arising from any such claims or from Agency's exercise of the rights conferred by this Section 702. C. [§ 7031 Maintenance and Repair of Improvements Lessee agrees to assume full responsibility for the operation and maintenance of the Site and the Improvements and all fixtures and furnishings thereon or therein, and all sidewalks and to the extent required by the Development A17eement, landscaping within the public right of way adjacent to the Site,throughout the term hereof without expense to Agency unless otherwise -"s7- specified herein, and to perform all repairs and replacements necessary to maintain and preserve said Site and the Improvements and fixtures and furnishings and sidewalks and landscaping in a. decent,safe and sanitary condition in a manner satisfactory to Agency and in compliance with all applicable laws. Lessee agrees that Agency shall not be required to perform any maintenance, repairs, or services or to assume any expense not specifically assumed herein in connection with the Site and the Improvements,fixtures and fu-nishings,-and sidewalks and landscaping. The condition of the Improvements required to be maintained hereunder upon completion of the work of maintenance or repair shall be equal in value, quality and use to the condition of such Improvements before the event giving rise to the work. ' D. [§ 704] waste Lessee shall.not commit or suffer to be.committed any waste or impairment of the Site or the Improvements,or any part thereof. Lessee agrees to keep the Site and the Improvements clean and clear of refuse and obstructions,and to lawfully dispose of all garbage,trash and rubbish. E. [§ 705] Alteration of Irmr pro cWents Lessee shall not make or permit to be made any alteration of,addition to or change in the Improvements,other than(a)routine maintenance,repairs,interior decoration and minor interior alterations or (b)alterations, additions or changes not open to public view which cost in the aggregate less than an amount equal to Two Hundred and Fifty Thousand Dollars (S250,000) . escalated from the date of this Lease in accordance with the applicable Consumer Price Index, nor demolish all or any part of the Improvements,without the prior written consent of Agency's Executive Director. In requesting such consent, Lessee shall submit to Agency detailed plans and specifications of the proposed work and an explanation of the need and reasons thereof. Notwithstanding the prohibition in this Section 705, Lessee may make such changes, repairs,alterations, improvements,renewals or replacements to the Improvements as are required by reason of any law,ordinance,regulation or crder of a competent government authority. F. [§ 706] Damage to or Destruction orljotel and Im rovements 1. r§ 707] Lessee to Give Notice In case of any damage to or destruction of the hotel or the Improvements, or any part thereof, in excess of an amount equal to Two Hundred and Fifty Thousand Dollars (S250,000) escalated from the date of this Lease in accordance with the applicable Consumer Price Index, Lessee shall within ten(10)days after Lessee becomes aware of such damage or destruction give . written notice thereof to Agency generally describing the nature and extent of such damage or'" destruction. -28- 2. [§708] Restoration (a) Lessee shall be responsible for the restoration of the Hole] or other Improvements in accordance with the damage and destruction clauses of this Lease. (b) In case of any damage to or destruction of the Hotel or other Improvements, or any part thereof, Lessee shall commence the restoration, replacement or rebuilding of the Improvements with such alterations and additions as may be approved by the Agency (such restoration, replacement, rebuilding alterations and additions, together with any temporary repairs and property protection pending completion of the work being herein called "Restoration')vdihin thirty(30) days of such damage or destruction,plus any additional period reasonably required to obtain any Net Insurance proceeds to be used to pay all or a portion of the cost of such Restoration,and shall complete such Restoration within a reasonable period of time thereafter. (c) As used herein; the term 'Net Insurance Proceeds" means the gross insurance proceeds paid by an insurer to Lessee for loss or damage to the Improvements on the Site and Improvements, less any and all costs and expenses (including, but not limited to reasonable attorneys' fees) i=urrcd to recover said proceeds. Lessee agrees to promptly commence and prosecute to completion the settlement of insurance proceeds with respect to any event of damage or destruction of the Improvements on the Site. (d) Lessee agrees that, notwithstanding any other provision of this Lease, upon any event of damage or destruction to the Improvements, Lessee shall at its sole cost and expense (whether or not Lessee terminates or intends to terminate this Lease pursuant to Section 7I0 below)immediately take or cause to be taken such actions and under and complete such work as is necessary to assure the safe condition of ere damaged Improvements pending the ultimate disposition of the Improvements. In any instance where Lessee may elect to terminate this Lease -rather than restore the Improvements pursuant to Section 710 below,if Lessee does not terminate this Lease,Lessee shall restore the Improvements. 3. [§709] &prication of Insurance Proceeds Insurance proceeds carried under Article X which are received on account of any damage to or destruction of the Site or the improvements thereon,or any portion thereof,(less the costs, fees and expenses incurred in the collection thereof,including without limitation attorney's fees and expenses)and if Lessee shall not make the election permitted in Section 710 below,shall be . applied as follows: . (1) Within a reasonable time and in any event within 180 days after the damage to or destruction of the Hotel or other Improvements,Lessee shall furnish,or cause to be furnished to Agency and any Mortgagee evidence satisfactory to Agency and the Mortgagee (a). of the total cost of Restoration of the damaged or destroyed Improvements pursuant to Section 708 and (b) that the total amount of money available will,when added to the insurance proceeds received and available to pay for the Restoration pursuant to the terms of this Section 709,be sufficient to pay the cost of such Restoration. -29- (2) Net insurance proceeds received on account of any damage 'to or destruction of the Improvements, or any part thereof, shall be paid to Lessee or as Lessee may direct(except that,during the term of any Mortgage,such net insurance proceeds shall be paid to the Mortgagee which holds the highest priority Mortgage, if required by such Mortgagee) from time to time as Restoration progresses, solely to pay (or reimburse Lessee for) the cost of, Restoration. Upon receipt by Agency and any Mortgagee of evidence that Restoration has been completed and the cost thereof paid in full or has been adequately provided for, and that there are no mechanic's or similar liens for labor or materials supplied in connection therewith which have not been adequately provided for,the balance,if any,of such proceeds shall be paid to Lessee. (3) Any insurance proceeds held by the recipient on any termination of this Lease and not required to be paid to Agency pursuant to the provisions of this Lease shall be paid first to the expenses of clearing the Site of any rubble,and next to the Mortgagee as its interests may appear,and next to Lessee. G. [§ 710] Damage or Destruction During Final Years of Tenn Notwithstanding Sections 708 and 709 to the contrary, in the event of major damage or destruction to the Improvements on the Site during the last ten years of the tern of this Lease, Agency shall not unreasonably withhold its approval if Lessee requests that this Lease be terminated on thirty (30) days' notice, provided Lessee first complies with all of the following conditions: 1. Lessee shall give Agency notice of the damage or destruction within ten (10)days after the event causing such damage and destruction. 2. Lessee shall give Agency notice requesting that this Lease be terminated as a result of such damage or destruction within forty-five (45) days after settlement of insurance proceeds, but in any event within one hundred eighty(180)days after the event causing such damage or destruction. 3. Lessee shall pay to Agency all applicable rents to the date of such termination. 4. Lessee shall clear and remove all debris from the Site,restore the Site to a safe and neat condition,deliver possession of the Site to Agency,and shall quitclaim all right,title and interest in the Site to Agency. S. Lessee shall transfer to Agency all insurance proceeds resulting from the casualty to be retained by Agency without limitation as to use. Major damage or destruction to the Improvements as used in this Section means such damage or destruction that the cost of restoration will exceed fifty percent (50%) of the cost to' r:plact the Improvements on the Site in their entirety. -30- H. �§ 7111 Faithful Performance and Labor and L12terial a ent onds- Ind emniGcation;.Nonresnonsibility Notices (a) Lessee agrees to hold harmless Agency and City, and to indemnify Agency and City against all claims, liabilities,costs and expenses,for labor acid materials in connection with all construction,repairs or alterations on tht Site and Improvements and the Improvements, and the cost of defending against such clairns,including reasonable attorney's fees. (b) - Lessee agrees to procure, cr cause the procurement of, contractor's bonds covering labor, materials and faithful performance for construction on the Site end Improvements and the Improvements in accordance with the following requirements: 1. As to the initial cons7uction of the improvements required by the Agreement and this Lease,such bonds shall be in an amount equal to one .hundred percent (100%) of the total sum of the construction prices to be paid to each sub-contra.-tor whose sub-contract has a contract price in excess of S100,000, and shall be accompanied by the corporate guarantee of the general contractor in an amount 'equal to one hundred percent • (1000/*)of the sum oftt:e construction price in the contract entered into by Lessee and its general contractor. 2. As to subsequent work involving repair or alteration of the Improvements in an aggregate amount exceeding $250,000 plus escalations to such amount after the date of this Lease in accordance with the applicable Consumer Price Index, such bonds shall be in the amount equal to one hundred percent (100io) of the construction price in the contract entered into by Lessee and its general contractor. Subsequent work in an aggregate amount of S230,000 (plus escalations to such amount after the date of this Lease in zccordance with the applicable Consumer Price Index)or less shall not be subject to bonding requirements. Said bonds and the construction contract must first be approved in writing as to content and form by Agency. Lessee shall,prior to commencement of construction,deliver to Agency a etrtifieate or certificates from the bonding company or eompaiues issuing the aforesaid bonds, naming Agency and City as additional insureds under said bonds. ' (c) The provisions of paragraphs (a) and (b) of this Section shall be applicable to construction, repairs or alterations to the Site imd Improvements and the Improvements at all times during the Lease Term. (d) Agency shall have the right to post and maintain on the Site and the Improvements any notices of non-responsibility provided for under applicable law. -31- Vm. (§ 8001 ASSIGNMENT,SUBLET-nNG,TRANSFER A. [§ 8011 Warran!y-Against Speculation ' (a) Lessee hereby represents and warrants that this Lease, the construction of the buildings, and its other undertakings pursuant hereto, are, and will be used for the purpose of redevelopment of the Site and not for speculation in Iand holding. Lessee further recognizes that: 1. The importance of the redevelopment of the Site to the general welfare of the community;and 2. The substantial financing and other public aids that have been made _ available by law and by the Agency for the purpose of making such —- redevelopment possible;and 3. The fact that a change in owncmHp or control of Lessee or of a part thereof, or any other act or transaction involving or resulting in a change in ownership or with respect to the identity of the parties in control of Lessee or the degrees thereof, is for practical purposes a transfer or disposition of the Site and Improvements;and 4. The Site is not to be acquired or used for speculation, but only for development by Lessee in accordance with this Lease. (b) The qualifications and identity of Lessee, and its principals, are of particular concern to the community and Agency. Lessee further recognizes that it is because of such qualifications and identity that Agency is entering into this Lease with Lessee. B. j§ 802] rohib'tion ainst tmsfer (a) Lessee shall comply with Section.316 of the Agreement until the recordation of a Release of Construction Covenants pursuant to Section 804 of this Lease. Upon the recordation of a Release of Construction Covenants,'the provisions of Section 316 of the Agreement shall no longer apply to Lessee or this Lease and the provisions of Sections 800 to 803, inclusive, shall became effective. (b) Lessee shall not, except as permitted by this Lease, make any Transfer, hereinafter defined,to any person or entity(a"Transferee),without the prior written Consent of the Agency and any permitted Mortgagee. Any purported Transfer not permitted by this Article VM or Article IX stall be jpso fahct2 null and'void,and no voluntary or involuntary successor to any interest of Lessee under such a Transfer shall acquire any rights pursuant to this Lease. These restrictions shall be binding on any successors, heirs or permitted Transferee of Lessee. 'Transfer;'as used here4 shall mean any assignment or attempt to assign this Lease or any right herein, any total or partial transfer, sale, assig;imcut, lease, sublease, license, franchise, gift, hypothecation, mortgage, pledge, encumbrance or the Iike, excluding, however, each of the following: (a)the foreclosure of a permitted Mortgage or the acceptance of a deed in lieu of foreclosure by a permitted Mortgagee; (b)the subsequent Transfer by a permitted Mortgagee of -32- an interest acquired pursuant to (a);(c)the acquisition at a foreclosure sale in connection with a permitted Mortgage by any third party; and (d)the execution of a hotel franchise and/or management agreement first approved in writing by Agency pursuant to Sections 502 or 503 of Us Lease. Persons or entities who are permitted Transferees under the immediately preceding sub-paragraphs (a) through (c), inclusive, shall enjoy the rights of a"Transferee only on the condition that,except for approved hotel hanchisers and approved hotel management companies, they accept and agree in writing approved by the Agency to be bound by all of the provisions of Us Lease,including but not limited to all obligations of Lessee hereunder. (c) This prohibition shall not be deemed to prevent (i)the granting of easements or permits for the development of the Site as reasonably approved by Agency, (ii)the renting or subleasing or licensing of space for occupancy consistent with the customary uses and practices of a hotel*and related facilities,(iii)granting any security interests expressly permitted undei this Lease in accordance with the provisions of this Lease,or(iv)the assignment of this Lease to any affiliate of Lessee or joint venture,provided Lessee submits evidence satisfactory to Agency that the principals who own and control Lessee will maintain.a majority controlling interest after consummation of such transaction and will have the ability to maintain a majority controlling interest throughout the term of this Lease. (d) Lessee may Transfer the whole or any part of the Site and Improvements after recordation of a Release of Construction Covenants pursuant to Section 804 with the prior written consent of the Agency subject to the rights of any Mortgagee under Article IX of this Lea sc, which consent shall not be unreasonably withheld in the event that all conditions of this Section 802 are met, and provided that Lesscc is not in default hereunder. Lessee shall only Transfer the Site and Improvements acid Lessee's rights therein as a whole and is not permitted to subdivide the Site and Improvements and its rights for the duration of the Lease without the prior written approval of the Agency. (e) Such approval shall be given by Agency if (1) At the time of such assignment,this Lease shall be in full force and effect and either no default then exists or no default will exist upon consummation of the Transfer, (2) Agency determines in its sole discretion that the following Transfer requirements are met: (i)such assignment is made to a responsible third party who will undertake Lessee's responsibilities under this Lease to use and develop the Site in accordance with this Lease;(ii)if the assignment occurs prior to the issuance of a Release of Construction Covenants pursuant to Section 804 of the Lease that such third party shall demonstrate qualifications and experience with respect to the type of development proposed herein and in the Agreement to assure the development and operation of the Improvements equal to or greater than the qualification and experience of Lessee; and (iii)such third party shall demonstrate sufficient financial resources or commitments to assure operation (and, if the assignment occurs prior to_. the issuance of a Release of Construction Covenants pursuant to Section 804 of the Lease, development)of the Site in accordance with this Lease; -33- i (3) The Transferee shall hFve executed an express assumption, in form and substance first approved in writing by Agency,of the obligations and liabilities of Lessee raider . Us Lease arising on and after the effective date of the Transfer; (4) The Transferee shall have a Net Worth equal to at least Fifty Million Dollars (SS0,000,000),subject to increase on the fifth (5th) anniversary of the Effective Date of Lease and every five(5)years thereafter in accordance with the escalation of the Consumer Price Index during each such five (5)year period, or, for any Transfer proposed after the issuance by Agency of a Release of Construction Covenants for the Site, such other evidence as may be reasonably satisfactory to Agency documenting the financial wherewithal of the Transferee to successfully operate the Improvements and the Site;and (5) The Transferee shall har•c experience in the operation and management of a hotel of the type and character located on the Site and Improvements, or shall agree and covenant as an additional obligation under this Lease to at all times cause the Hotel to be operated and managed by a person, first approved in writing by Agency's Executive Director, who has substantial experience in managing and operating a hotel of similar type and character. (t) No voluntary or involuntary successor in interest of Lessee shall acquire any rights or powers under this Lease except as expressly permitted under this Lease. This Lease may not be assigned, nor may a transfer of interest take place without the express,prior written consent of Agency and, to the extent required by the applicable Ioan documents, the holder of any Mortgage obtained in accordance with Section 901 of this Lease. (g) During the existence of this Lease, Lessee shall promptly notify Agency of any and all changes whatsoever in the identity of the parties in control of Lessee, or a change in the degree thereof, of which it or any of its officers have been notified or otherwise have knowledge or information. (h) In the absence of specific express written provision to the contrary by Agency, a Transfer of the Site and Improvements, or portion thereof,or approval thereof by Agency, shall be deemed to relieve the Lessee or any other party from any obligations under this Lease arising on or after the effective date of the Transfer provided, however, that a Mortgagee shall be deemed to be released from and after the date of a Vartsfer from such Mortgagee. (i) Lessee shall only Transfer the Site and Improvements and Lessee's rights therein as a whole and is not permitted to subdivide the Site and Improvements and its sights for the duration of the Lease without the prior written approval of Agency. 0) No provision hereof authorizing encumbrance of Lessee's interest herein shall be construed to authorize encumbrance of Agency's fee title to the Site or Agency's interest under this Lease, and Lessee shall not by any act or died cloud Agency's fee title or Agency's interest- under this Lease. Notwithstanding any other provision of this Lease to the contrary, Agency approval of a Transfer of this Lease or of any interest herein shall not be required in connection with any of the following; -34- (i) Any Transfer to any entity or entities in which either Lessee or Robert L. Mayer and Stephen K. Bone retain a minimum of fifty-one percent (51%) of the o:wmership or beneficial interest and retain management control. (ii) Transfers resulting from the death or mental or physical inzapacity of an individual. (iii) Transfers or assignments in trust for the benefits of spouse, children,grandchildren,or other family members. (iv) The conveyance or dedication of any portion of Lessee's interest in the Site to the City or other appropriate governmental agency, or the granting of casements or permits in accordance with the Lease where required to facilitate the development or operation of the Site or the development or operation of any of the other portions of the "Site"as defined in the Agreement. (v) The leasing of any part or parts of a building or structure: for occupancy, or entering into of any concession agreements, licenses, or other contracts in the normal course of owning and operating the Improvements on the Site, provided that all applicable requirements of this Lease have been met. (vi) A Transfer of stock in a publicly held corporation or the transfer of the beneficial interest in any publicly held partnership or real estate investment rust. C. SO] Investigation of Provosed Transferee:Costs (a) In the event that Lessee requests Agency's written consent to a proposed Transfer pursuant to Article VIII or Article IX of this Lease, Lessee agrees to provide Agency with such information, including financial statements as Agency may reasonably require in order to evaluate the solvency, financial responsibility and relevant business acumen and experience of any proposed Transferee. Such information shall include,without limitation, a balance sheet of the proposed Transferee as of a date within ninety(90)days of the request for Agency's consent and statements of income or profit and loss of the proposed subtenant or assignee for the two- year period preccding the request for Agency's consent,if the same be available (or such other' similar informatior as shall be available at the time the request for approval of the Transfer is made), and a written statement in reasonable detail as to the business. and experience of the proposed Transfers:during the five(5)years.preceding the request for Agency's consent. Within thirty (30) days after the receipt of Lessee's written notice requesting Agency approval of an Transfer, Agency shall respond in writing by stating what further information, if any, Agency reasonably requires in order to d:termine whether or not to approve the requested Transfer. Upon receipt of such a timely response,Lessee shall promptly furnish to Agency such . further information as may be reasonably requested. Lessee's.request for approval of a Transfer and delivery of necessary information for financing purposes shall be deemed complete twenty (20) days after Agency's receipt thereof and Lessee's request for approval of a Transfer and delivery of necessary information for all other types of Transfer shall be deemed complete thirty(30)days after Agency's receipt thereof -35- if Agency does not deny approval or if no timely response requesting further information regarding the proposed assignee is delivered to Lessee,or, if such a timely response requesting further information is received, on the date which is fifteen(15) days after the date that Lessee delivers such additional information to Agency. None of the foregoing shall restrict Agency's rights to deny approval of any Transfer not found acceptable by Agency pursuant to this Lease. Any Transfer requiring Agency's consent shall only be effective upon Agency's written consent to such Transfer. Agency shall approve or disapprove any requested Transfer for financing purposes requiring Agency approval within thirty(30) days after Lessee's request therefor is accepted as complete or is deemed complete, and Agency shall approve or disapprove any other type of requested Transfer requiring Agency approval within forty-five (45) days after Lessee's request therefor is accepted as complete or is deemed complete. Any disapproval shall be in writing an shall specify the reasons for the-disapproval and,-if applicable, the conditions required to be satisfied by Lessee in order to obtain approval. If Lessee's initial notice requesting approval of an Transfer for financing purposes (but not any other type of Transfer) states that the Transfer will be deemed approved unless rejected within the time required in this Lease,Agency's failure to timely disapprove the Transfer shall be conclusively deemed to constitute an approval. (b) If Agency consents to any Transfer pursuant to Article VM or Article IX, such consent shall not be effective unless and until Lessee gives Agency notice of the Transfer and a copy of any documents effecting andlor evidencing such Transfer, and unless and until any such Transferee (other than a sublessee) assumes all of the obligations and liabilities of Lessen under this Lease. (c) parillcruptc . It is acknowledged and agreed that this Lease is a lease of real property within the meaning of Subsection 365(b)(3)of the Bankruptcy Code, 11,U.S.C.To the extent not prohibited by provisions of the Bankruptcy Code, 11 U.S.C. Section 101 et seq., including Section 365(0(1) thereof, Lessee cr behalf of itself, creditors, administrators and assigns waives the applicability of Sections 541 (c) and 365(e)of the Bankruptcy Code of 1978 unless the proposed assignee of the Trustee for the estate of the bankrupt meets Agency's standards for consent Agency has entered into this Lease with Lessee in order tb obtain for the benefit of the Site the unique types of facilities,businesses,services and goods which Lessee can bring to the Site; the foregoing prohibition on Transfer or subletting is expressly agreed to by Lessee in consideration of such fact Any person or entity to which this Lease is assigned pursuant to the provisions of the Bankruptcy Code shall be deemed without further act or deem to have assumed all of the obligations arising under.this Lease on and after the date of such Transfer. Any such assigner. shall upon demand execute and deliver to Agency an instrument confirming such assumption. (d) ency's Fee. Lessee agrees to reimburse Agency for Agency's reasonable costs and attorneys' fees incurred in connection with the processing and documentation of any..' requested Transfer, subletting, transfer, change of ownership or hypothecation of this Lease or Lessee's interest in and at the Site, or any party thereof, which required Agency's approval hereunder,in an arnount not to exceed Two Thousand Five Hundred Dollars(S2,500.00)for each such Transfer(which amount shall be adjusted each year by the Consumer Price Index). -36- (e) ho Waiver. The acceptance by Agency of any payment due hereunder from any other person shall not be deemed to be•a waive:by Agency of any provision of this Lease or to be a consent to any Transfer or subletting. Consent by Agency to one or more Transfers of this Lease or to one or more sublets of the Site shall not operate as a waiver or estoppel to the future enforcement by Agency of its rights pursuant to the provisions of this Lease. D. [§ 8041 Release of Constructionovenants (a) Within thirty(30)days after completion of all construction and development to be completed by Lessee upon the Site under the Agreement and this Lease, Agency shall furnish Lessee with a Release of Construction Covenants, in such form as to permit it to be recorded in the Office of the County Recorder of Orange County, upon written request therefor by Lessee. Agency shall not unreasonably withhold such Release of Construction Covenants. Such Release of Construction Covenants- shall constitute evidence of satisfactory completion of the construction-required .under the Agreement,- this_Lease,_.and. the .Release-of-Construction Covenants shall so state. (b) If Agency refuses or fails to furnish a Release of Construction Covenants for the Site after written request from Lessee, Agency shall, within thirty (30) calendar days of the written request,provide Lessee with a written statement of the reasons Agency refused or failed to furnish the Release of Construction Covenants for the Site. The statement shall also contain Agency's opinion of the action Lessee must take to obtain a•Release of Construction Covenants for the Site, but it need not contain technical information or instructions. if the reason for such refusal is confined to the immediate availability of specific items of landscaping or other minor items or the failure to complete "punch list" items, Agency shall issue the Release of Construction Covenants upon the posting of a bond or other security instrument in form and content acceptable to Agency and in an amount representing the fair value of the work not yet completed,which bond or other security instrument shall secure Lessee's obligation to complete all outstanding iterr:s of construction and development within sixty (60) days following the issuance of the Release of Construction Covenants. (c) Such Release of Construction' Covenants shall not constitute evidence of compliance with or satisfaction of any obligation of Lessee to any holder of a mortgage,or any insurer of a mortgage securing money loaned to rmance the improvements on the Site or any part ' thereof.. Such Release of Construction Covenants is not notice of completion as referred to in Section 3093 of the California Civil Code. IX. E§ 9001 MORTGAGE A. [§ 90I1 Leasehold Mortgages (a) From time to time during the term of this Lease, Lessee shall have the right to _ mortgage, pledge, deed in trust, assign rents, issues and profits (for purposes of security if required by any lender), enter into capitalized leases or other financing mechanisms in connection with the acquisition of furniture, fixtures and equipment for the Hotel, or otherwise encumber the interest of Lessee tinder this Lease, in whole or in part,and any interests or rights appurtenant to this Lease,and to assign or pledge the same as security for any debt(the holder of -37- any such mortgage, pledge or other encumbrance, and the beneficiary of any such deed of trust being hereafter referred to as "Mortgagee" and the mortgage,-pledge, deed of trust or other instrument hereafter referred to as"Mortgage),upon and subject to'each and all of the following terms and conditions: 1. Lessee shall not make or enter into an agreement to make any Mortgage without the prior written approval of Agency. Upon Lessee's request for approval of a proposed Mortgage and Lessee's submission to Agency of such information concerning the proposed Mortgage as Agency may reasonably request,Agency shall not unreasonably delay its approval or disapproval of the proposed Mortgage and, in any event, shall approve or disapprove the proposed Mortgage within thirty (30) days. The Agency's Executive Director shall be authorized to approve minor changes to this Lease as reasonably requested by a proposed Mortgagee. 2. The Mortgage shaII cover no interest in any real property other than Lessee's in in the Site,the Hotel and other Improvements or some portion thereof,and the leasehold estate of Lessee under this Lease. The Mortgage shall state on its face that it does not encumber in any way Agency's fee interest in the Site and Agency's interest under this Lease. 3. Prior to the issuance of the Release of Construction Covenants,Mortgages may be made only for the purposes of financing necessary and appropriate to pay Project Costs. "Project Costs"as used herein means the following actual costs and expenses of the development work to be performed by or on behalf of Lessee for or in connection with the development of the Hotel and other Improvements required under this Lease, to the extent that such costs and expenses are incurred and paid for by Lessee ar.dlor a Mortgagee in connection with the initial construction: a. Land development work. b. Construction of the Improvements and installation of the required- fixtures,furniture,machinery and equipment. C. Building permits and entitlement fees not paid for or reimbursed by Agency. d. Premiums for fire, public liability and property damage insurance during construction and on bonds securing work against liens for labor and materials. C. Real estate taxes and assessments upon the Site and Improvements or the Improvements during the period of construction. f. Interest on construction loans prior to the opening of the Hotel. g. Fees for architects,engineers,accountants and attorneys. h.' Purchasing fees paid to third parties not affiliated with Lessee in connection with the purchase of furniture,fixtures and equipment. -38- i. Development fees paid to government agencies. j. Charges and premiums for searching and insuring title. k. Out-of-pocket costs incurred by Lessee in connection with construction financing, including, without limitation, commitment fees, mortgage broker fees, standby fees and fees of alike nature, printing and duplicating expenses, documentary transfer tax stamps,mort3age taxes,recording charges. 1. Customary and reasonable pre-opcning expenses for the Hotel. M. Costs of required studies,reports and inspections. n. Fee for management and construction services comparable to the amount included in project pro forma previously provided Agency by Lessee. o. Expenditures by Lessee required to satisfy any other obligation of Lessee under the Agreement. 4. The amount of any loan secured by a Mortgage prior to the issuance of a Release of Construction Covenants shall not exceed Project Costs. S. Lessee may refinance the property after the issuance of a Release of Construction Covenants by Agency, provided that Lessee submits evidence satisfactory to the Agency demonstrating that the loan as refinanced is fully subordinate to the Agency's fee title and all of the Agency's rights under this Lease and obtains the prior written consent of Agency to the refinancing, which consent shall be granted provided that the Mortgage is given to a responsible bona fide institutional lender. 6. Any Mortgage is to be given only to a responsible bona fide institutional lender. For the purposes hereof the term"institudonaI lender'shall mean any bank,savings and loan association,thrift and loan association,savings bank,pension fund,insurance company,real estate investment trust or any other comparable or similar entity authorized to make loans in the State of California_ 7. All rights acquired by said Mortgagee under said Mortgage shall be subject to each and all of the covenants,conditions and restrictions set forth in this Lease,and to all rights of Agency thereunder, none of which covenants, eonditionsand restrictions is or shall be waived by Agency by reason of the giving of such Mortgage, except as expressly provided in this Section 900. Notwithstanding any foreclosure of any such Mortgage, Lessee shall remain liable for the payment of the accrued but unpaid rent reserved in this Lease while Lessee remains in possession of the Site and Improvements. S. Promptly upon the recording of a Mortgage, Lessee shall, at its own expense, cause to be recorded in the Official Records of Orange County a written request executed and acknowledged by Agency for a copy of all notices of default and all notices of sale under the Mortgage as provided by applicable law. Inclusion of a request for notice having the -39- effect described above in the body of the recorded Mortgage shall constitute compliance with this provision. (b) If Lessee encumbers its leasehold estate by way of a Mortgage in accordance with Us Section 900, and if such Mortgagee has registered its name and address in writing with the Agency, then this Lease shall not be terminated or canceled on account of any default by Lessee in the performance of the terms, covenants or conditions hereof until Agency shall have complied with the provisions of Sections 901 through 905 as to the Mortgagee's rights to cure and to obtain a new lease. B. [§ 902] Rights and Obli agbons of Leasehold Mortimees If Lessee, or Lessee's successors or assigns, shall mortgage the leasehold interest herein demised, then, as long as any such Mortgage shall remain unsatisfied of record, the following provisions shall apply: 1. If the holder of any Mortgage on the leasehold interest herein demised shall register with Agency its name and address in writing, no notice of default by Agency to Lessee shall be deemed to have been duly giver,unless and until a copy thereof has been mailed to the Mortgagee by registered or certified mail at the address registered with Agency. 2. In the event Lessee shall be in default hereunder, the Mortgagee shall, at any time prior to chic termination of this Lease(which termination can occur only after notice to Mortgagee and-an opportunity to cure in accordance with this Article VQ and without payment of any penalty, have the right, but not the obligation, to pay all of the rents due hereunder, to effect any insurance, to pay any taxes and assessments(subject to Agency's right to cure under Section 605 of this Lease), to make any repairs and improvements, to do any other act or thing required or permitted of Lessee hereunder, and to do any other thing which may be necessary and proper to be done in the performance an3 observation of the agreements, covenants and conditions hereof to prevent termination of this Lease. All payments so made and all things so done and performed by such Mortgagee shall b: accepted by Agency and shall be effective to. prevent a termination of this Lease as the same would have been if made,done and performed by Lessee instead of such Mortgagee. Lessee hereby constitutes and appoints the Mortgagee as Lessee's agent and attorney in fact with full power coupled with an interest, in Lessee's name, place and stead, and at Lessee's cost and expens:,to enter upon the Site and Improvements and the Improvements, and perform all acts required to be performed herein. No Mortgagee shall have the right to take or perform any action hereunder,under its leasehold Mortgage or otherwise which might result in any detriment to the rights of a prior leasehold Mortgagee with respect to the same lease or leasehold Site. 3. While any such Mortgage remains unsatisfied of record, and an event or events shall occur which shall entitle Agency to terminate this Lease,Agency shall forbear from terminating this Lease if and to the extent that such forbearance is required under Section 905 of this Lease. 4. If the holder of a Mortgage obtained in accordance with Section 901 of this Lease acquires the leasehold estate created hereunder or otherwise acquires possession of the 40- Site and Improvements pursuant to available legal remedies,Agency will look to such holder to perform the obligations of Lessee only from and after the date of foreclosure or possession and will not hold such holder responsible for the past actions or inactions of the prior Lessee. Notwithstanding the foregoing, (A)on and after the date of such foreclosure or possession, such holder shall be required to perform and abide by each and all of the obligations of Lessee under this Lease and(B)on and after the date of such foreclosure or possession,Agency shall have the right io enforce each and all of the provisions of this Lease against such holder. 5. The foreclosure of a Mortgage obtained in accordance with Section 901 of this Lease, or any sale thereunder;whether by judicial proceedings or by virtue of any power of sale contained in such Mortgage, or any conveyance of the Ieasehold estate created hereby from Lessee to the holder of any such Mortgage ai-augh,or in lieu of,foreclosure or other appropriate proceedings in the nature thereof shall not require the consent or approval of Agency or constitute a default under this Lease, and rpon such foreclosure, sale or conveyance Agency shall recognize the Mortgagee, or any other foreclosure sale purchaser, as the new Lessee hereunder. In the event that such Mortgagee becomes the Lessee hereunder, or irr the event that the leasehold estate created hereunder is purchased by any other party at a foreclosure sale or by any other Iawful means, such Mortgagee, or such other foreclosure sale purchaser, shall be responsible for the performance of the obligations of Lessee under this Lease only for the period of time that the Mortgagee or such other foreclosure sale purchaser remains Lessee hereunder, and such Mortgagee or foreclosure sale purchaser shall thereafter have the right to assign this Lease without need to obtain the approval of Agency. Notwithstanding anything to the contrary herein: (A)as a precondition to any Mortgagee, foreclosure sale purchaser or other person obtaining the rights of Lessee hereunder,such person shall Pint be required to expressly assume each and all of the obligations of Lessee under this Lease pursuant to a written document in form and substance satisfactory to Agency-, (B)such new Lessee shall have no right to construct any Improvements on the Site unless and until su:h new Lessee has submitted evidence satisfactory to Agency that such new Lessee has the financial capability and overall competence to perform the obligations of Lessee hereunder,provided fiat this clause(B)shall not require submission of such evidence if such new Lessee is the holder of a Mortgage obtained in accordance with Section 901 of this Lease but shall require submission of such evidence if such new Lessee is the successor of such a holder, and (C)Agency shall have the right of prior written approval over any prospective operator or manager(including but not limited to such new Lessee)of the Hotel uses on the Site and Improvements in accordance with Section 502 of this Lease. • 6. In the event that the holder of any Mortgage obtained in accordance with Section 901 of this Lease remedies or causes to be remedied, within the times specified in Section 905 of this Lease, all monetary defaults of Lessee and all nonmonetary defaults of Lessee which by their nature are capable of being remedied by such Mortgagee, such Mortgagee shall have the right within thirty (30) days after all such defaults are remedied to request that Agency promptly execute and deliver to such Mortgagee, a new lease of the Site (naming such Mortgagee as Lessee) for the remainder of the tern of this Lease with the same agre-men%1- covenants and conditions (except for any requirements which have been fulfilled prior to execution of the Lease) as are contained herein and with priority equal to that hereof,along with a Quitclaim Deed first approved in writing by the Agency as to form and substance; provided, however,that if more than one Mortgagee requests such a new lease,the Mortgagee holding the most senior Mortgage shall prevail; and provided, further, that Agency shall not be required to -41- execute such new lease earlier than concurrently with the execution of such new lease by such Mortgagee: Agency shall prepare such-new Ease at the expense of such Mortgagee,and all costs incurred by Agency in preparing such new lease (including attorneys' fees) shall be paid to Agency by such Mortgagee prior to the execution by Agency of such new lease. The execution of a new lease by Agency pursuant to this paragraph 6 shall automatically and immediately terminate this Lease. Although not necessary to effect the termination of this Lease,the former Lessee shall, upon Agency's execution of such new lease, execute any documents and perform any acts which may be reasonably necessary to evidence the termination of this Lease. Upon Agency's execution and delivery of such new Iease,Agency,at the expense of the new Lessce, shall take such action as shall be necessary to remove the former Lessee from the Site and Improvements. Notwithstanding any provision herein, Agency shall not be required to forbear from terminating this Lease except to the extent required by Section 905 hereof and Agency shall not be required to execute anew lease after the termination of this Lease in accordance with the provisions hereof. 7. Anything herein contained to the contrary notwithstanding, the provisions of this Section 902 shall inure only to the benefit of the holders of Morigiges and,with respect to paragraph 5. only,other persons that acquire the leasehold interest created hereunder pursuant to a foreclosure,sale or conveyance of the type d:scribed in paragraph 5. C. [§503] Agency's Forbearance and Right to_Cure Defaults on Leasehold Mortgage D. [§904] ot'c In the event that Lessee's interest und:r this Lease is subjtct to any Mortgage. Agency will simultaneously give to Mortgagee at such address $s is specified by the Mortgagee in accordance with Section 902 hereof, a copy of each notice of default from Agency to Lessee hereunder at the time of giving such notice cr communication to Lessee. Agency will not exercise any right, power or remedy with respect to any default hereunder, and no notice to Lessee of any such default and no termination of this Lease in connection therewith shall be effective,unless Agency has given-to Mortgagee written notice or a copy of its notice to Lessee of such default or any such termination.as the case may be. E. 1§ 905] -Forbearance by Agency During the continuance of any Mortgag:obtained in accordance with Section 901 of this Lease and until such time as the lien of such Mortgage has been extinguished: (A) Agency shall not agree to any mutual termination nor accept any surrender of this Lease, nor shall Agency consent to any amendment or modification of this Lease, without the prior written consent of the Mortgagee. (B) Notwithstanding any default by Lessee in the performance or observance of any agreement, covenant or condition of this Lease on the part of Lessee to be performtd or observed,Agency shall have no right to terminate this Lease unless an event of default shall have occurred and be continuing, Agency shall have given such Mortgagee written notice of such -42- event of default, and such Mortgagee shall have failed to remedy such default, or caused such default to be deemed remedied,within the times specified in(i)and(ii)below. (i) Should any event of default under this Lease occur, any Mortgagee shall have ninety (90) days after receipt of written notice from Agency setting forth the nature of such event of default, and, if the default is such that possession of the Site is reasonably necessary to remedy the default, a reasonable time after the expiration of such ninety(90) day period, within which to remedy such default; provided, however that Agency shall not be required to forbear beyond such initial ninety (90) day period unless (a) the Mortgagee shall have fully cured any default in the payment of any monetary obligations of Lessee under this Lease within such ninety (90) day period and shall continue to pay currently such monetary obligations as and when the same are due, and (b) such Mortgagee shall have acquired Lessee's leasehold estate created hereby or commenced foreclosure or other appropriate proceedings in the nature thereof within such ninety (90) day period, or prior thereto, and shall be..diligently prosecuting any such proceeding. Agency agrees that all payments so made and all things so done and performed by such Mortgagee shall be accepted by Agency and shall be effective to prevent a termination of this Lease as the same would have been if made, done and performed by Lessee instead of such Mortgagee. (ii) Any event of default under this Lease which in the nature thereof cannot be remedied by a Mortgagee shall be deemed to be remedied if the Mortgagee does all of the following: (a) within ninety (90) days after receiving written notice from Agency setting forth the nature of an event of default, or prior thereto, the Mortgagee shall have acquired Lessee's leasehold estate created hereby or shall have commenced foreclosure or other appropriate proceedings, (b) Mortgagee shall diligently prosecute any such proceedings to completion, (c) within the ninety (90) day period referred to in (a) above, Mortgagee shall have fully cured any default in the payment of all monetary obligations of Lessee hereunder and any non-monetary obligations which do not require possession of the Site and Improvements, and (d) after gaining possession of the Site, Mortgagee shall perform and abide by each and all of the obligations of Lessee under this Lease as and when the same are due;provided,however, that Mortgagee shall not be required to cure any default which occurs prior to the date on which Mortgagee obtains possession of the Site and which by its nature cannot be cured by such Mortgagee. (C) In the event that Mortgagee is prohibited by any process or injunction issued by any court of competent jurisdiction or by reason of any action by any court having jurisdiction of any bankruptcy or insolvency proceeding involving Lessee from commencing or prosecuting foreclosure or other appropriate proceedings in the nature thereof, the times specified in paragraph (B) of this Section 905 for commencing and prosecuting such foreclosure or other proceedings shall be extended for the period of such prohibition. Notwithstanding anything to the contrary herein, Agency shall in no event be required to forbear hereunder unless Mortgagee shall within ninety (90) days after the giving of notice by Agency pay all moneys due and in respect of which there exists a monetary event of default. [§ 905.1] Conditions Precedent to Mortgagee Rights and Agency Forbearance Agency shall not be required to comply with Sections 902 through'905 of this Lease with respect to any Mortgage, unless and until a true copy of the original thereof bearing the date and -43- • book and page of recordation thereof, and a certified copy of the original note secured by such Mortgage has been delivered to Agency together with written notice of the address of the Mortgagee to which notices may be sent; and in the event of an assignment of such Mortgage, such assignment shall not be binding upon Agency unless and until a certified copy thereof bearing the date and book and page of recordation together with written notice of the address of the assignee thereof to which notices may be sent,have been delivered to Agency. F. {§ 9061 Performance on Behalf of Lessee in the event that Lessee shall fail to make any payment or perform any act required hereunder to be made or performed by Lessee, then Agency or Mortgagee may, but shall be under no obligation to, after such notice to Lessee, if any, as may be reasonable under the circumstances, make such payment or perform such act with the same effect as if made or perfonned by Lessee. Nothing herein shall limit the right of Mortgagee to take action or make a payment if permitted under its Mortgage. Entry by Agency or Mortgagee upon the Site and Improvements for such purpose shall not waive or release Lessee from any obligation or default hereunder(except in the case of any obligation or default which shall have been fully performed or cured by Mortgagee). Lessee shall reimburse Agency (with interest at the Interest Rate) or Mortgagee (with interest as provided in the Mortgage) for all sums so paid by Agency or Mortgagee and all costs and expenses incurred by Agency and Mortgagee in connection with the performance of any such act. G. [§907) Nonmerge There shall be no merger of this Lease,or of the Ieasehold estate created thereby,with the fee estate in and to the Lease Site and Improvements by reason of the fact that this Leas:,or the leasehold estate created thereby, or any interest in either thereof, may be held directly or indirectly by or for the account of any person who shall own the fee estate in and to the Lease Site and Improvements, or any portion thereof, and no such merger shall occur unless and until all persons at the time having any interest in this Lease or the leasehold estate, including the- leasehold mortgagee and the holder of any mortgage upon the fee estate in and to the Lease Site and Improvements shall join in a written instrument effecting such merger. H. (§ 90S] Aencv Cooncration Agency covenants and agrees that it will act and cooperate with Lessee in connection with Lessee's right to grant leasehold mortgages as herein above provided. At the request of Lessee or any proposed or existing Ieasehold mortgagee, Agency shall within a reasonable time execute and deliver (i)any documents or instruments reasonably requested to evidence, acknowledge and/or perfect the rights of leasehold mortgagees as herein provided; and (ii)an estoppel certificate certifying the status of this Lease and Lessee's interest herein and such matters as are reasonably requested by Lessee or such Ieasehold mortgagees. Such estoppel. certificate shall include,but not be limited to,certification if true by Agency that(a)this Lease is unmodified and in fill force and effect(or,if modified,state the nature of such modification and certify that this Lease,as so modified,is in fuII force and effect),(b)all rents currently due under the Lease have been paid,(c)there are not, to Agency's knowledge,any uncured defaults on the part of Lessee under the Lease or facts, acts or omissions which with the giving of notice or -44. passing of time, or both, would constitute a default. Any such estoppel certificate may be conclusively relied upon by any leasehold mortgagee or assignee of Lessee's interest in this Lease. 1. [§909] nforceabili The rights granted herein to a leaseh-3ld mortgagee shall be enforceable only by such leasehold mortgagee. In the event any action or proceeding is brought to enforce or interpret the provisions hereof or to seek damages or performance or declare the rights of the parties hereto or such leasehold mortgagee,the prevailing party including such leasehold mortgagee,if prevailing, shall be entitled to attorneys'fees,costs and expenses. J.' [§ 910] No Subordination of Agency's Interests Agency's interest in the Site under this Lease is a vested landlord's reversionary interest and not just a eonL-actual obligation of Lessee. Notwithstanding anything which is or appears to be to the contrary in this Lease,Lessee shall not encumber Agency's interest under this Lease or Agency's fee interest in the Site by any mortgage, deed of trust, lien, security instrument or financing conveyance of any kind whatsoever. K. [§9111 Certificates to Lenders Lessee and Agency, as the case may be, shall execute, acknowledge and deliver to any lender, promptly upon request, its certificate certifying (a)that this Lease is unmodified and in full force and effect (or, if there have been modifications, that this Lease is in full force and effect, as modified, and stating the modifications), (b)the dates, if any, to which all rent due hereunder has been paid, (c)whether there are then existing any charges, offsets, or defenses ' against the enforcement by Agency of any agreement,covenant or condition hereof on the part of Lessee to be Performed and observed (and,if so,specifying the same), and (d)whether there are then existing any defaults by Lessee in the performance or observance by Lessee of any agreement, covenant or condition hereof on the part of Lessee to be performed or observed and whether any notice has been given to Lessee of any default which has not bcen cured(and, if so, specifying the same). Any such certificate may be relied upon l y a prospective purchaser, mortgagee,trustee or beneficiary under a deed of trust which encumbers this Lease. L. [§ 912] Obligations of agree Upon-Acquisition of Leasehold Estate If the holder of a Mortgage obtained in accordance with Section 901 of this Lease acquires the leasehold estate created hereunder or otherwise acquires possession of the Site and Improvements pursuant to available legal remedies,Agency will look to such holder to perform the obligations of Lessee hereunder only from and after the date of foreclosure or possession and will not hold such holder responsible for the past actions or inactions of the prior Lessee. - Notwithstanding the foregoing, (A)on and after the date of such foreclosure or possession,such'' holder shall be required to perform and abide by each and all of the obligations of Lessee under this Lease and (B)on and after the date of such foreclosure or possession.Agency shall have the right to enforce each and all of the provisions of this Lease against such holder. Nothing herein is intended or shall be construed to limit or restrict Agency's rights and remedies against any prior Lessee, provided that Agency's pursuit of such rcmedics shall not affect the rights of the -45- holder of any Mortgage obtained in accordance with Section 901 of this Lease to the use, enjoyment or operation of the Site and improvements. . X. [§ 1000] INDELMJC&DQN AND INSURANCE A. [§ 1001) Indemnifica 'on Throughout the tern of this Lease,Lessee agrees to and shall defend, indemnify and hold harmless Agency, the City and their officers, employees, agents, contractors and consultants from and against all claims, liability, loss, damage, costs or expenses (including reasonable attorneys' fees and court costs) arising from or as a result of the death of any person or any accident, injury, loss.or damage whatsoever caused to any person or to the property of any person which shall occur on or adja:ent to the Site and which shall be directly or indirectly caused by or based on the Agency's ownership of or interest in the Site or any portion thereof or any improvements thereon or the condition of the Site or any portion thereof or any improvements thereon or Lessee's rehabilitation, development, construction, use or operation of the Site or any portion thereof or any improvements thereon or any of Lessee's activities under this Lease, whether such actions or inactions thereof be by Lessee or anyone directly or indirectly employed or contracted with by Lessee and whether such damage or injury shall accrue or be discovered before or after the termination of this Lease. Lessee shall not be responsible for(and such indemnity shall not apply to)property damage or bodily injury caused by entry onto the Site and Improvements by Agency pursuant to various provisions of this Lease, and/or to the extent caused by the wilful misconduct or active negligence of the Agency or its designated employees or agents. B. [§ 1002] Required Insurance During the term of this Lease,Lessee at its sole cost and expense shall: I. Keep or cause to be kept a policy or policies of insurance against loss or damage to the Improvements on the Site, resulting from fire, earthquake (to the extent commercially available at commercially reasonable rates), windstorm, hail, lightning, vandalism, malicious mischief, riot and civil commotion,and such other perils ordinarily'included in extended coverage fire insurance policies. Such insurance shall be maintained in an amount not less than one hundred percent(100%)of the full insurable value of the Improvements as defined herein in Section I003 (such value to include amounts spent for construction of the improvements, architectural and engineering fees,and inspection and supervision). 2. Maintain or cause to be maintained use and occupancy or business interruption or rental income insurance against the perils of fire, - windstorm, hail, lightning, vandalism and malicious mischief, riot and civil commotion, and such other perils ordinarily included in extended coverage fire insurance policies, in an amount equal to not less than two times the sum of the highest Participation Rent paid to Agency in any year tinder this Lease and twelve (12) months fixed operating expenses of -46- Lessee, except to the extent such insurance is not commercially available at commercially reasonable rates due to reasons other than the wrongful acts or omissions or dar:gerous or hazardous activities of Lessee. 3. Maintain or cause to be maintained public liability insurance, to protect against loss from liability imposed by law for damages on account of personal injury, including death thaefrom, suffered or alleged to be suffered by any person or persons whomsoever, resulting directly or indirectly from any act or activities of Lessee or under Lessee's control or direction,and also to protect against loss from liability imposed by law for damages to any property of any person caused directly or indirectly by or from the acts or activities in connection with the Site and Improvements of Lessee or its invitees and sublessees, or any person acting for Lessee, or under its control or direction. Any such property damage and personal injury insurance maintained by Lessee at any time during the term of this Lease shall name Agency, City, and their respective officers, employees and consultants, as additional insureds and shall also provide for and protect Agency and City against incurring any legal cost in defending claims for alleged loss. Such personal injury and property damage insurance shall be maintained in full force and effect during the entire term of this Lease in an amount not less than Ten Million Dollars(SI0,000,000) combined single limit as of the Effective Date of Lease, which minimum amount of coverage shall escalate on the fifth anniversary of the Effective Date of Lease and once every five years thereafter in proportion to the ' escalation,if any,during such period in the Consumer Price Index. Lessee agrees that provisions of this paragraph 3. as to inaintenance of insurance shall not be construed as limiting in any way the extent to which Lessee may be held responsible for the payment of damages to persons or property resulting from Lessee's activities,or activities of its invitees and sublessees or the activities of any other person or persons for which Lessee is otherwise responsible. 4. Maintain or cause to be maintained worker's compensation insurance issued by a responsible carrier authorized under the laws of-the State of California to insure emp!cyers against Iiability for compensation undci the Worker's Compensation Insurance and Safety Act now in force in California, or any act hereafter enacted as an amendment or supplement thereto or in Iieu thereof. Such worker's compensation insurance shall cover all persons employed by Lessee in connection with the Site and Improvements, and shall cover full liability for compensation under any such act aforesaid, based upon death or bodily injury claims made by, for or on behalf of any person incurring or suffering injury or death in-- connection with the Site and Improvements, or the operation thereof by Lessee. S. In the event that the holder of a Mortgage obtained in accordance with Section 901 of this Least which has registered its name and address with -47- Agency acquires the leasehold interest created by this Lease, such Mortgagee shall have the right to self-insure with respect to the risks specified in this Section 1002 if such Mortgagee is an institutional lender. C. {§ 1003] Definition of_'Full Insurable Value" The term"foil insurable value'as used in Section 1002 shall mean the actual replacement cost (excluding the cost of excavation, foundation and footings below the ground level and without deduction for depreciation) of the Improvements, including the cost of construction of the Improvements, architectural and engineering fees, and inspection and supervision, To ascertain the amount of coverage required, Lessee shall cause the full insurable value to be determined from time to time by the insurer or by a.qualified expert mutually acceptable to Agency and Less cc,not less often than once every three years. D. [§ 1004] General Insurance Provisions All insurance provided under Section 1002 of this Lease shall be primary insurance for the benefit of Lessee, Agency, and City. Said insurance shall also be for the benefit of the leasehold mortgagee,if any. All insurance provided raider Section 1002 shall be periodically reviewed by the parties for the purpose of mutually increasing or decreasing the mHmtun fimits of such insurance,from time to time, to a.7munts which may be reasonable and customary for similar facilities of like size and operation. The insurance to be provided by Lessee may provide for a deductible or self-insured retention of not more than One Hundred Thousand Dollars (T100,000.00),with such amount to increase at such times as Agency may require increases in'the policy limits as set-forth above; provided that the percentage increase in the deductible or self-insured retention shall not exceed the percentage increase in the Consumer Price Index since the last requested adjustment; and further provided &.at Lessee may maintain such higher deductibles or self-insured retention as may be approved in writing by the Executive Director of Agency or his designee. In the event such insurance does provide for deductibles or self-insured retention, Lessee agrees that it will fully protect Agency, its boards, oitcers, and employees in the same manna as these interests would have been protected had the policy or policies not contained the deductible or retention provisions. All insurance herein provided for undo. Section 1002 shall be effected under policies issued by insurers of recognized responsibility licensed or permitted to do business in the State of California,subject to the reasonable approval of the Agency's Executive Director. Any insurance required to be maintained by Lessee pursuant to Section 1002 may be taken out under a blanket insurance policy or policies covering other premises or properties,and other insureds in addition to the parties hereto; provided, however, that any such policy or policies of blanket insurance shall specify therein,or supplemental written certification from the insurers under such policies shall specify, the amount of insurance irrevocably allocated to the coverage to be provided under Section 1002 and provided further, that in all other respects, any such blanket policy shall comply with the other provisions of Section 1002. -4F- All policies or certificates 'of insurance shall provide that such policies or certificates shall not be.canceled or materially changed without at least thirty(30) days prior vir inn. notice to Agency. Copies of such policies, or certificates thereof subjeyt to the reasonable approval of Agency legal counsel, shall be deposited with Agency together with appropriate evidence of payment of the premiums therefor; and, at least thirty (30) days prior to expiration of any such policy,copies of renewal policies shall be so deposited. E. [§ 10051 Failure to Maintain insurance If Lessee fails or refuses to procure or maintaini insurance as required by this Lease, Agency shall have the right, at Agency's election, and without notice, to procure and maintain such insurance. The premiums paid by Agency shall be treated as additional rent due from Lessee, to be paid on the first day of the month following the date on which the premiums were paid. Agency shall give prompt notice of the payment of such premiums, stating the amounts paid and the name of the insured(s). F. [§ 1006) Disposition of Insurance Proceeds Resultimr from Loss or Damage to Improvements (a) Subject to the provisions of paragraph (b) below, proceeds of insurance with respect to loss or damage to the Improvements to be maintained and repaired by Lessee during the term of this Lease shall be payable,under the provisions of the policy of insurance,to Lessee, or, if such loss or damage involves the need for Lessee to obtain any governmental approvals or permits,jointly to Lessee and Agency; and said proceeds shall constitute a trust Fund to be used for the repair, restoration or reconstruction of the Improvements in accordance with plans and specifications approved in writing by Agency. (b) • Nom,ithstanding the foregoing paragraph,within the period during which there is an outstanding Mortgage obtained in accordance with Section 901 of this Lease on all or part of the Site and Improvements, said proceeds shall be made payable as set forth in Sections 708 and 709 of this Lease. (c) In the event this Lease is terminated by mutual agreement of Agency and Lessee, and the Improvements are not repaired,restored or reconstructed,the insurance proceeds shall be applied first to any payments due under this Lease from Lessee to the Agency, second to restore the Site to a neat and clean condition, and finally any excess shall be paid to Lessee. Provided, .however, that within any period when there is an outstanding mortgage or deed of trust upon the Improvements,such proceeds shall be applied first to discharge the debt secured by the mortgage and then for the purposes and in the order set forth above in this paragraph. (d) Lessee hereby waives any claim against Agency and City for any loss covered by' insurance of the type specified in Section 1002; and Lessee, shall obtain from its insurance company or companies a waiver of any right of subrogation that it may have against Agency and City. 49. XI. [§ 11001 EMINENT IM AIN A. .[§ 11011 Lessee to Give Notice In case of a Taking of all or any part of the Site and Improvements, or the commencement of any proceedings or negotiations which might result in such Taking, Lessee shall promptly give written notice thereof to Agency generally describing the nature and extent of such Taking or the nature of such proceedings or negotiations and the nature and extent of the Taking which might result therefrom,as the case may be. B. [§ 1102) Total Taking In case of a Taking of the.fee of the entire Site and Improvements,or in case of the taking of only a part of the Site and Improvements,.leaving the remainder of the Site and Lmprovements in such Iocation,or in such form,shape or reduced size as to render the same not effectively and practicably usable for the conduct thereon of the uses permitted hereunder, this Lease shall terminate as of the date title vests in the condemning authority or the date the condemning authority is entitled to possession,whichever first occurs(the"Date of Taking'). Any Taking of the Site and Improvements of the character referred to in tWs Section 1102 which results in the termination of this Lease is referred to herein as a'Total Taking." C. [§ l 103] Partial Taking In cast of a Taking of the Lease Site and Improvements other than a Total Taking (a "Partial Taking'J,(i)this Lease shall remain in full force and effect as to the portion of the Site and Improvements remaining immediately after each Taking,without any abatement or reduction of Ground Rent or any other sum payable hereunder, and (ii)Lessee,to the extent the awards or payments, if any, or. account of such Taking shall be sufficient for the purpose, at its expense; but first subject to Section 1I04(a), shall witl•.i:i a reasonable period of time commence and complete, or cause to be commenced and completed,Restoration of the Site and Improvements. as nearly as possible to its value,condition,and character immediately prior to such Taking,with such alterations and additions as may be made W.Lessee's election pursuant to and subject to the terms of Section 705,except for any reduction in area caused thereby,provided,however,that in case of a Taking for temporary use Lessee shall not be required to effect Restoration until such Taking is terminated D. [§ 11041 Application o[Awardsand DtherPavments Awards and other payments on account of a Taking, less costs, fees and expenses incurred in the collection thereof{'Net Awards and Payments")shall be applied as follows: (a) In case of a taking other than a Total Taking or a Taking for temporary use, Lessee shall furnish to Agency and any Mortgagee evidence satisfactory to Agency and the. Mortgagee of the total cost of the Restoration required by Section 1103. (b) Net Awards and Payments received on account of a Taking other than a Total Taking or a Taking for temporary use shall be held and applied as provided with respect to -50- proceeds of insurance in Section 1006. The balance, if any, shall be paid to Lessee and Agency as their respective interests may appear in the Site and the Improvements. (c) Net Awards and Payments received on account of a Taking for temporary use shall initially be received by Lessee; provided, however, that the amount of such award shall be added to Gross Room Revenue for the purpose of calculating Ground Rent under this Lease, not to exceed however the average Gross Room Revenue of the three (3) years prior to the Taking, as adjusted for the period of the Taking. (d) Net Awards and Payments received on account of a Total Taking shall be allocated as follows: First: There shall be paid to each Mortgagee an amount equal to the sum of any unpaid principal amount of the indebtedness secured by the Mortgage, if any, and any interest accrued thereon, all as of the date on which such payment is made; provided, however, that each such Mortgagee shall only be paid to the extent of its security in the applicable portion which is the subject of the taking. Second: To the Lessee and the Agency as their respective interests may appear in the Site and the Improvements; provided, that any payment to a Mortgagee or pursuant to the preceding paragraph shall be charged against Lessee's interest. XII. [§ 1200) DEFAULTS.REMEDIES AND TERMINATION A. [§ 1201] Defaults-General (a) Subject to the extensions of time set forth in Section 1314 of this Lease,failure or delay by either party to perform any term or provision of this Lease and failure or delay by Lessee to perform any of its obligations that are set forth in that certain "License Agreement to Provide Landscaping and Other Improvements in the Public Right-of-Way" entered into by and among the City, The Waterfront Hotel, LLC, and Mayer on or about February 20, 2001 (the "License Agreement"), constitutes a default under'this Lease. The party-who so fails or delays must immediately commence to cure, correct, or remedy such failure or delay, and shall complete such cure, correction or remedy with reasonable diligence and, in any event, for monetary defaults within thirty(30) days of such failure or delay, and for non-monetary defaults within the time reasonably required for cure with reasonable diligence, not to exceed one hundred and eighty (180) days plus any period or periods of enforced delay required by Section 1314 of this Lease(the"Cure Period'). (b) The injured party shall give written notice of default to the party in default, specifying the default complained of by the injured party. Except as required to protect against further damages, and except as otherwise expressly provided in Sections 1207 and 1208 of this . Lease, the injured party may not institute proceedings against the party in default until'the expiration of the applicable Cure Period. Agency's exercise of its remedies under this Article XII I shall be subject to the provisions of Article IX of this Lease. Failure or delay in giving such notice shall not constitute a waiver of any default,nor shall it change the time of default. -51- (c) Except as otherwise expressly provided in this Lease, any failure or delay by either party in asserting any of its remedies or rights as to any default shall not operate as a. waiver of any default or of any such rights cr remedies or deprive either such party of its right to institute and maintain any actions or proceedings which it may deem necessary to protect, assert or enforce any such rights or remedies. S. [§ 12021 Le gat Actions 1. [§ 12031 Institution of Legal Actions In addition to any other rights or remedies, either party may institute legal action to cure, correct,or remedy any default,to recover darnages for any default,or to obtain any other remedy consistent with the purpose of this Lease. Such legal actions must be instituted in the Superior Court of the County of Orange,State of California,in any other appropriate court in that county, or in the Federal District Court in the Central District of California. . 2. [§ I204] &piicable Law The laws of the State of California shall govern the interpretation and enforcement of this Lease. 3. [§ 12051 Acceptance cf Service ofFrocess In the;vent that any Segal action is commenced by Lessee against Agency, service of process on Agency shall be made by personal service upon the Chairman or Executive Director of Agency,or in such other manner as may be provided by law. In the event that any legal action is commenced by Agency against Lessee, service of process on Lessee shall be made by personal service upon an officer of the general partner of Lessee and shall be valid whether mad-. within or without the State of California, or in such manner as may be provided by law. 4. [§ 12061 Attome,Xs'Fe:s and Court Costs In the event that either Agency or Lessee shall bring or commence an action to enforce the terms and conditions of this Lease or to obtain damages against the other party arising from any default under er violation of this Lease,then each party shall bear and pay the cost of its own costs and attorneys fees. C. [§ 12071 Nghts and Remedies are Cumulative Except with respect to rights and remedies expressly declared to be exclusive in this Lease,the rights and remedies of the parties are cumulative, and the exercise by either party of.. one or more of such rights or remedies shall not preclude the exercise by it, at the same of different times, of any other rights or remedies for the same default or any other default by the other party. D. [ 12081 ama es If either party defaults with regard to any of the provisions of this Lease, the non- defaulting party shall serve written notice of such default upon the defaulting party. If the default is not commenced to be cured within chitty(30)days after service of the notice of default and is not cured prior to the expiration of the applicable Cure Period,the defaulting party shall be liabld to the non-defaulting party for any damages caused by such default,and the non-defaulting party may thereafter (but not before) commence an action for damages against the defaulting party v:ith respect to such default. E. 1209] Specific Performance If either parry defaults with regard to any of the provisions of this Lease, the rion- defaulting party shall serve written-notice of such default upon the defaulting party. If the default is not conunenced to be cured within thirty(30)days after service of the notice of default and is not cured prior to the expiration of the applicable Cure Period,the non-defaulting party,at its option, may thereafter (but not before) commence an action for specific performance of the terms of this Lease pertaining to such default. F. [§ 1210] AdditionalRemediet ofAgencY (a) If Lessee defaults with regard to any of the provisions of this Lease,Agency shall serve written notice of such default upon Lessee. Subject to the provisions of Article IX of this Lease running in favor of Mortgagee,if the default is not commenced to be cured promptly after service of the notice of default and/or if the cure is not prosecuted to completion with all due diligence and in any event prior to the expiration of the applicable Cure Period,Agency, at its option,may thereafter(but not before): 1. Correct or cause to be corrected said default and charge the costs therefor to the account of Lessee; 2. Correct or cause to be corrected said default and pay the costs thereof from the proceeds of any insurance; 3. Continue this Lease and Lessee's right to possession in effect and enforce its rights and remedies under the Lease,including the right to recover rent as it becomes due, as provided in Section 1951A of the California Civil Code. 4. Have a receiver appointed to take possession of Lessee's interest in the Site and Improvements,with power in said receiver to administer Lessee's interest therein,to collect all funds available to Lessee in connection with its operation and maintenance thereof, and to perform all other acts consistent with Lessee's obligations under this Lease as the court deems proper, 5. Maintain and operate the Site and Improvements without terminating this Lease. -53- 6. 'Terminate this Lease p;usuant to Section 1211 hereof, by written notice to Lessee of its intention to do so. (b) Agency reserves and shall have the right at all reasonable times to enter the Site and the Improvements for the purpose of viewing and ascertaining the condition of the same,or to protect its interests in the Site and the Improvements or to inspect the operations conducted thereon, subject xo the limitations and requirements for Agency rights of access set forth in Section 405 of Iris Lease. Any such entry shall be made only after reasonable notice to Lessee. In the event that such entry or inspection by Agency discloses that the Site or the Improvements are not in a decent,safe,and sanitary condition,are damaged,or in disrepair,Agency shall have the right, after thirty (30) days written notice to Lessee and Lessee's failure to cure the problem . within the Cure Period, to have any necessary maintenance or-repair work done for and at the expense of Lessee and Lessee hereby agrees to pay promptly any and all costs incurred by Agency in having such necessary maintenance or repair work don. in order to keep the Site and the Improvements in a decent,safe and sanitary condition. (c) The rights reserved in this Section 12I0 shall not create any obligations on Agency or increase obligations imposed on Agency elsewhere in this Lease,and shall not defeat, render invalid or limit the rights or interests expressly provided in this Lease for the protection of leasehold mortgagees. G. [§ 1211] Remedies and Rights ofTermination (a) In t.9e event that at any time during the tern of this Lease,and in violation of this Lease,Lessee shall; 1. Fail to commence and/or complete the construction of the Improvements as required by this Lease or within the time required by this Lease; 2. Abandon or substantially suspend construction of the Improvements as required by this Lease prior to the completion thereof and issuance of a Release of Construction Covenants therefor by Agency; 3. Use the Site and Improvements for any purpose other than those provided for in this Lease or fail to use and maintain the Site and Improvements in accordance with Section 501 of this Lease; 4. Fail or refuse to pay to Agency when due the applicable rents and other sums required by this Lease to be paid by Lessee,including but not limited to payments required under Sections 300 et Seq.of this Lease; S. Fail or refuse to pay when due any taxes,assessments or other Impositions as required by this Lease; 6. Make or suffer to be made any voluntary or involuntary conveyance, _ assignment,sublease or other Transfer of the Ieasehold interest in the Site and Improvements, or any part thereof, or of the rights of Lessee under this Lease; . -54- 7. Commit or suffer to be committed any waste or impairment of the Site or the Improvements,or Eny part thereof; B. Alter the Irnprovemen's in any manner except as expressly permitted by this Lease; 9. Fail to maintain insurance as required by this Lease; 10. Fail to make full repair and restoration of the Improvements in the event of damage or destruction; 11. Engage in any financing except as permitted by the terms of this Lease,or. any other transaction creating any mortgage on the Site, or placing or suffering to be placed thereon any lien or other encumbrance,or suffering any levy or attachment to be made thereon; 12. Voluntarily file or have Bled against it any petition under any barA=ptcy or insolvency act or law, or be adjudicated a bankrupt, or make a general assignment for the benefit of creditors; 13. Fail to pay when due arty payment or charge or otherwise default on any loan secured by a leasehold mortgage permitted by this Lease; 14. Abandon or surrender possession of the Site,or Lessee's interest therein; 15. Fail to perform any of Lessee's Hazardous Substances covenants; 16. Fail to perform any obligation of Lessee set forth in the License Agreement referred to in Section 1201(a)hereof;or 17. Fait to perform or comply with any other material term or provision hereof, and any such failure or violation shall not be cured or remedied within the applicable Cure Period; then, in such event, subject to the provisions of Article IX of this Lease running in favor of any Mortgagee,Agency may,at its option and in addition to any other remedy provided for in this Lease,terninatc the Lease and revest in Agency the leasehold interest theretofore transferrcd to Lessee,by written notice to Lessee of its intention to do so. (b) Upon termination of this Lease pursuant to this Section 1211 it shall be lawful for Agency to re-enter and repossess the Site without process of law,and Lessee,in such event,does hereby waive any demand for possession thereof, and agrees to surrender and deliver peaceably to Agency immediately upon such termination in good order, condition and repair, except for. reasonable wear and tear. Upon such termination title to all Improvements on the Site specified in this Lease to remain in Agency,shall remain it:Agency. (c) No ejectment, re-entry or other act by or on behalf of Agency shall constitute a termination unless Agency gives Lessee notice of termination in writing. Such termination shall -55- not relieve or release Lessee from any obligation incurred pursuant to this Lease prior to the date of such termination. (d) Termination of this Lease under this Section 1211 shall not relieve Lessee from the obligation to pay any sum due to Agency or from any claim for damages against Lessee. Damages which Agency may recover in the event of default under this Lease shall include, but are not limited to, the worth at the time of award of the amount by which the unpaid rent for the balance of the Lease term remaining after the time of award exceeds the amount of such rental loss that Lessee proves could be reasonably avoided. (e) The right of termination provided by this Section 1211 is not exclusive and shall be cumulative to all other rights and remedies possessed by Agency, and nothing contained herein shall be construed so as to defeat any other rights or remedies to which Agency may be .entitled. . �~ H. j§ 12I21 o Cross Defaults Except as otherwise specifically set forth in this Lease or the Agreement, a breach or default by either party under the Agreement as to a parcel of property other than the Site of this Lease shall not constitute a breach or default hereunder,and, except as otherwise specifically set forth in this Lease or the Agreement, a termination, in whole or part, of the Agreement as to a parcel of property other than the Site of this Lease shall not terminate or modify Agency's or Lessee's rights or obligations hereunder, XM. [§ 13DO) GENERAL PROVISIONS A. [§ 1301J Notices,Demands and Communications between therarties Formal notices, demands and communications between Agency and Lessee shall be sufficiently given if dispatched by registered or certified mail, postage prepaid, return receipt. requested,to the principal offices of the Agency and of Lessee as designated in Section 103 and Section 109 hereof. Such written notices,demzrds and communications may be sent in the same manner to such other addresses as either party may from time to time designate by mail as provided in this Section. Sufficient notice may also be given by personal delivery or reputable overnight delivery service in lieu of mail if reasonably adequate records are maintained of such service in the ordinary course of business by the person or entity effecting such service. B. [§ 1302] :'ime of Essence Time is of 6t. essence with respect to the performance of each of the covenants and agreements contained in this Lease. C. [§ 1303] Conflict of Interests (a) No member, official or employee of Agency shall have any personal interest, direct or indirect, in this Lease, nor shall any such member, official or employee participate in any decision relating to the Lease which affects his personal interests or the interests of any corporation,partnership or association in which he is directly or indirectly interested. .56- (b) Lessee warrants that it has not paid or given,and Kill not pay or give,any ofFicer • or employee of Agency or City any money or other consideration for obtaining this Lease. D. [§ 1304] Nonliabiliry of Agency 9f icials and Employees No member, official or employee of Agency shall be personally liable to Lessee,or any successor in interest, in the event of any default or breach by Agency or any for any amount which may become due to Lessee or successor or on any obligations under the terms of this Lease. E. [§ 1305] Inspectign g(Books and Records (a)• Agency has the tight at all reasonable times to inspect the books and records of Lessee pertaining to the Site and Improvements as pertinent to the purposes of this Lease. Lessee also has the right at all reasonable times to inspect the books and records of Agency pertaining to the Site and Improvements as pertinent to the purposes of this Lease. (b) In the event that the holder of r' Mortgage obtained in accordance with Section 901 of this Lease acquires the leasehold estate created by this Lease, then, in such an event, Agency acknowledges and agrees that Agency shall not be entitled to examine and/or audit all of the books and records of said Mortgagee, but shall only be entitled to examine such books. records and tax returns of the Mortgagee or portions thereof solely to the extent that they relate to the Site and Improvements and the Mortgagee's operation thereof. F. 1306] o attnenhi •Neither anything in this Lease contained, nor any acts of Agency or Lessee shall be deemed or eonstrurd by any person to create the relationship of principal and agent, or of partnership,or of joint venture,or of any association between Agency and Lessee. G. (§ 13071 -Co Rfiance with-Law Except as otherwise expressly provided in the Development Agreement and/or the Agreement,Lessee agrees,at its sole cost and expense,to comply and secure compliance with all the applicable and valid requirements now in force, or which may hcrtafier be in force, of all municipal,county,State and federal authorities,pertaining to the:Site and Improvements,as well as operations conducted thereon,and to faithfully observe and secure compliance with,in the use of the Site and Improvements, all applicable county and municipal ordinances and state and federal statutes now in force or which may hereafter be in force, including all laws prohibiting discrimination or segregation in the use,sale,lease or occupancy of the property. H. [§ 1308] Surrender o C PMpeny . Except as otherwise expressly provided in this Lease, upon the expiration or termination- of this Lease pursuant to the terms hereof, it shall be lawful for Agency to reenter and repossess the Site and Improvements without process of law,and Lessee,in such event,does hereby waive any demand for possession thereof, and agues to surrender and deliver the Site and -57- Improvements peaceably to Agency irnmediately upon such expiration or termination in good order,condition and repair,except for reasonable wear and tear: 1. [§ 13093 Severability If any provision of this Lease shall be adjudged invalid or unenforceable by a court of competent jurisdiction, the remaining provisions of this Lease shall not be affected thereby and shall be valid and enforceable to the fullest extent permitted by law. J. j§ 1310) Binding Effect ' This Lease, and the terms, provisions, promises, covenants and conditions hereof, shall be binding upon and shall inure to the benefit of the parties hereto and their respective heirs, legal representatives,successors and assigns. K. j§ 13I 1J Assig=ent or Sublease to Mr, ' ht of Fist efusal I. Agency shall at all times have the right to assign and/or convey all or a portion of its interest in the Site and/or in the Lease to the City or, subject to Lessee's right of first refusal set forth in Section 1311-7 of this Lease, to any other person or entity. In the event of any assignment of all or a part of Agency's interest in either the Site or the Lease to the City or other person or entity,Lessee shall attom to the City or such other person or entity and recognize City or such other person or entity as the landlord tinder this Lease,and the City or such other person or entity shall not disturb Lessee's right to possess the Site and Improvements subject to the provisions of this Lease. 2. Between the Effective Date of the Lease and the expiration or termination of this Lease, and so long as Lessee is not in default hereunder,Agency shall not sell, convey,transfer, or otherwise dispose of all or any portion of or any interest in the Site to any third person or entity other than the City (other than a pledge. of any of its income under this Lease or other financing transaction) until it shall first have offered such portion or interest to Lessee in the manner specified below: (a) Agency shall deliver a notice (the 'Notice) to Lessee of(i) Agency's bona fide intention to sell,transfer or otherwise dispose of all or any portion of or any interest in the Site, (ii)the portion or interest proposed to be sold,transferred or otherwise disposed of(the "Offered Interest), and (iii) the offering price and all other material terms for which Agency proposes to sell,transfer,or otherwise dispose of the Offered Interest. (b) Within sixty (60) days after receipt of the Notice, Lessee or its permitted assignee may accept Agency's offer by.delivering to Agency a writing agreeing to purchase the Offered Interest on the terms offered by Agency. Any such acceptance of Agency's offer shall . • be accompanied by a deposit equal to ten percent(10%)of the purchase price which deposit shalI' be retained by Agency as liquidated damages i+h the event that the purchase is not completed due to a default by Lessee. If Lessee accepts Agency's offer to sell the Offered Interest the parties shall consummate such purchase promptly in accordance therewith. -5E- • (c) If Lessee and Agency do not enter into an agreement to purchase/sell the Offered Interest as set forth in subparagraph (b) above, or (ii) if Lessee and Agency enter into such an agreement but Lessee fails to complete the purchase as set forth in subparagraph (b) above,Agency nay sell the Offered Interest to any person at any price and upon any terms, as Agency shall determine, provided that the purchase price for the Offered Interest, and the terms of the sale, shall be no more favorable to the purchaser than the terms of the Notice. For purposes of comparing whether an offer by Lessee is more or less favorable than an offer by a third party,any financed portion of the offered purchase price shall be discounted to present cash value using the prime lending rate of Wells Fargo Bank or comparable financial institution. If such sale is not consummated within two (2) years from the date of the Notice, Agency shall again be obligated to first offer to sell the 05t:ed Interest to Lessee as set forth in this Section. L. [§ 13121 Cantions The captions"Containedin {his-Lease are merely a reference and are not to be used to construe or limit the text. M. [§ 1313] No Recording of this Lease This Lease shall not be recorded. Pursuant to the Agreement, a memorandum of this Lease will be recorded in the Official Records cf Orange County. N. [§ 1314] Enforced ptla tag onmance for Causes]Bey nd on t of Party In addition to specific provisions of t.I:s Lease, performance by either party hereunder shall not be deemed to be in default where delays or defaults are due to causes beyond the control and without the fault of the party claming an extension of time to perform, including war, insurrection; strikes; lockouts; riots; floods; earthquakes; fires; casualties; acts of God; acts •of the public enemy; epidemics; quarantine restrictions; freight embargoes; lack of transportation; governmental restrictions or priority; litigation; unusually severe weather, inability to secure necessary labor,materials or tools;delays of any contractor or supplier,acts or failure to act of the City or any other public or governmental agency or entity(other than any act or failure to act of Agetrcy, which shall not excuse performance by Agency). An extension of time for any such cause shall be for the period cf the enforced delay and shall continence to run from the time of the commencement of the cause. If,however,notice by the party claiming-such extension is sent to the other party more than thirty (30) days after the commencement of the cause,the period shall commence to run only t2h:rty(30)days prior to the giving of such notice. Times of performance under this Least may also be extended in writing by Agency and Lessee. O. [§ 13I51 EntireAgrreement,Waiven and AMendments (a) This Lease is executed in two (2) duplicate originals, each of which is deemed to be an original. Ibis Lease includes sixty-three(63)pages and three(3)exhibits. - (b) All waivers of the provisions of tlds Lease must be in writing and signed by the appropriate authorities of Agency or Lessee and all amendments hereto must be in writing and signed by the appropriate authorities of the Agency.and Lessee. During the term of any Mortgage obtained in accordance with Section 901 of this Lease, any amendment to this Lease -59- shall require the written approval of the Mortgagee, which approval Shall not unreasonably be withheld. P. (1 131b] 9 ff set statement.Attornment and subordination 1. OM-set Statement. The parties shall, at any time and from time to time upon not less than ten (10) days' prior written notice from the other party, execute, acknowledge and deliver to such requesting party a statement in writing(a)certifying that his Lease is unmodified and in full force and effect,or,if modified,stating the nature of such modification and certifying that this Lease, as so modified, is in full force and effect) and the dates to which the rent and other charges are paid in advance, if any, without any offset or defense thereto (if such be the ease) and (b)acknowledging that there are not, to such certifying party's knowledge, any uncured defaults on the part of the requesting party hereunder, or specifying the defaults if any .arc__claimcd... Any such statement may be relied upon by any prospective purchaser or encumbrancer of the Improvements,the Site or of all or any portion of the real property of which the Site are a part. Lessee shall bear all costs with respect to any statements,requested of Agency. 2. AttoMMent. In the event any proceedings are brought for the foreclosure of,or in the event of the conveyance by deed in lieu of foreclosure, or in the event of exercise of the power of sale under, any mortgage and/or deed of trust made by Agency covering the Site, or, subject to Section I311.2 of this Lease,in the event Agency sells,conveys or otherwise transfers its interest in the Site, Lessee hereby attoms to, and covenants and agrees to execute an instrument in writing reasonably satisfactory to the new owner whereby Lessee attorns to the successor in interest and recognizes the successor as the Agency under this Lease. 3. , SuboEdination. Lessee agrees that.this Lease shall, at the request of the Agency, be subordinate to any mortgages or deeds of trust that may hereafter be placed upon the fee of the Site by Agency and to any and all advances to be made thereunder. and to the interest thereon,and all renewals,replacements and extensions thereof,provided that the mortgagees or beneficiaries named in said mortgages or trust deeds shall execute and deliver a written non- disturbance and atto:nment agreement by and among Lessee, Lessor and such mortgagees or beneficiaries, in form reasonably satisfactory to Lessee and its counsel and the holder of any Mortgage and their counsel, which shall provide the following assurances for the benefit of Lessee and its permitted assignees,sublessees,successors and assigns: (i) the leasehold estate granted by this Lease shall not be affected in any manner by any foreclosure action,trustee's sale or other action taken or proceeding commenced under or in connection with any mortgages or deeds of trust placed upon the fee of the Site by Agency,or by any taking of possession of the Site pursuant thereto, or by the exercise of any rights or remedies in connection therewith; (ii) if the interest of Lessor under this Lease is transferred in connection with any foreclosure action, trustee's sale or other procee&igs brought under any mortgages or deeds of trust placed upon the fee of the Site by Agency (including, without limitation, any transfer by deed in lieu of foreclosure), then, so long as Less=e is not in default in the performance of the terms, covenants and conditions of this Lease beyond all applicable notice, grace and Cure -60- Periods, the transferee of any such interest of Lessor(including,without limitation;the holder of any such mortgage or deed of trust), together with•its successors and assigns (collectively. "Lessor's Transferee'), shall not terminate this Lease or interfere with or disturb Lessee in its possession, use, occupancy or quiet enjoyment of the Site under this Lease, for the remaining term of this Lease (as the same may be ezrlier terminated pursuant to any other Article of this Lease),subject to all of the terms,covenants and conditions of this Lease; (iii) Lessee shall not be teamed or joined in any foreclosure action,trustee's sale or other proceeding to enforce any mortgages or deeds of t wt placed upon the fee of the Site by Agency;and (iv) any Lessor's Transferee will accept the attornment of Lessee and will assume and perform all of Lessor's obligations under the Lease for the benefit of Lessee and its successors and assigns. The foregoing written assurances shall, at Lessee's request, also be provided to any permitted assignee or sublessee of Lessee under the Lease. Lessee also agrees that in the event Agency and any mortgagee or beneficiary elsct to have this Lease prior to such mortgage or deed of trust, and upon notification by Agency or such mortgagee or beneficiary to Lessm to that effect, this Lease shall be deemed prior in lien to such mortgage or deed of trust, whether this Lease is dated prior to or subsequent to the date of said mortgage or deed of trust. Lessee agrees that upon the request of Agency,or any mortgagee or beneficiary,Lessee shall execute whatever instruments may be required to carry out the intent of this section. (§ 13171 Approvals Except as expressly provided otherwise in this Lease, approvals required of Agency or Developer shall not be unreasonably withheld,conditioned or delayed. . [1318] Counterparts This Lease may be executed in counterparts and when so executed, each such counterpart will constitute an original document and such counterparts will constitute one and the same agreement. (The remainder of this page has been intentionally left blank. Signatures on next page.] -61. "AGENCY" REDEVELOPMENT AGENCY OF THE • CITY OF HUNI'INGTON BEACH, a public body,corporate and politic Dated: Aom. _,2001 I3y: , Chairman ATTEST: APPROVED AS TO FORM: Agency Clerk Agency General Counsel REVIEWED AND APPROVED: INITIATED AND APPROVED: Ray Silr r,Executive Director Dircctor of Economic Development e*woe APPROVED AS TO FORM: qq"—� 0. Kane,Ballmer X Bcrkman Agency Special Counsel -62- "LESSEE" PCH BEACH RESORT,LLC,a California limited liability company By: GRAND RESORT,LLC, a California limited liability company,Managing Member By: RLM Management,Inc.,a California corporation,Manager JBy: GU bent L-Mayer, ..t -63- F)GUBTT"A'• MAP OF THE SITE [SEE ATTACHED] EXHMI TO GROUND LEASE .MAP OF THE'SITE E'LY LIME SEC 14. T. 6 S., R. It W., M.M. 51/14 1 N'LY LINE S 1/2. NE 1/4 SEC I` M.M. 5i/1 U.S.. R.t 1.w.. N8542'58"E 1658.7 ' s' / �� G-05'54'16' R•-2452.00' L-252.68' /vA' N48*43'21'w 33.85' � �� �F" ���• THE SITE 4 5.5 6 AC. l cr c m H , co CD s� cal-ja •I a • '�rTy� '�'fs)s N ! • ,,r . ti�y N N0Cr44.22"W 12.63' a N53.05'4VW 172.33' r S74'34'lZW • 45.01' M 1 LEGAL DESCRIPTION OF THE SITE That certain real land located in the City of Huntington Beach, County of Orange, State of California,described as follows; LOT I OF TRACT NO. 15535,AS SHOWN ON A MAP FR.ED IN BOOK 790 PAGES 44 TO 50 INCLUSIVE, OF MISCELLANEOUS MAPS, RECORDS OF ORANGE COUNTY, CAuFORNIA. E3:HSSIT"C" . ARTICLE VIN OF THE THIRD AMENDED AND RESTATED LEASE •[See attached] ent ay: KANCI HALLMCM O OzMmran1\ too ..ar caul, rwar0r• �.rw r.el.. � -- • tee- - • MT7= vile. XMSSOR COVENANT TC RZrSTTuer USE OF CZTY DrAcH Mtorrmr f 8.1 Aecitals. (a) The city of Runtirgton Beach is one of the owners in fee of that certain real property located in the city of Huntington Beach, California, and bounded on the north by the right-ot-way line for Pacific crust Mighray, on. the east by Runtir►gtcn Beach State park, on the south by the wean high tide line of the pacific ocean, and an the vest by an ivagihary line extending southward trot the westerly side • of t.ho intarsection of Pacific Coast 7119bway arm Huntington Street (hereinafter referred to as the 'city beach Property-) . T" City Saaah r-roperty is score particularly described in Zxhlbit sC* attached hereto and incarporatsd herein by this reference. (b) Leccee will be constructing, operating, and waintaining on the Premises ocean-oriented, visitor-xwrvirg commercial facilities which &re desi"ed to takes mill wCw To GROUND LE SR Rewired Mir-21-01 Maspa Frog"213 125 Ga71 701RUTA.4 rose Z2 rill Yy. wfy\Cf Df.LLfwr-n fb donMwV\ f.ld W&.o WWIy rVI..fV. U•Ww ..f)r.uAW6 wl...f•—rs ....�' -bdvantege of the existing ocean views aerose Pacific coast Highway. Lessee desires to obtain assuraneas from l,es sor that such vieva will not be obstructed during the tern of this Lease. . (c) pursuant to the California coastal Act of 2.976, as amended (Public Resources C040 Section 30000, • at L@ .) , the city of Huntington Beach hoc prepared •and the California, coastal comisslan has certified a Local Coastal plan (hereinafter the *LCF') for that portion of the city of Huntington Desch that is lacated within the coestai tone, • including the City Reach Property. on ,anuary 130 1992, the City Council of the City adcptcd Resolution No. 4934 adopting the LCP in the form of the Coastal Element of the City•a General Flan: the L P has subsequently been amended thraugb the City Councilga adoption. of Resolution No. 5147 on Auquat 2, 1982, Resolution No, 5267 on May 26, 2953, and Ramolutlon No. 5341 on January 3, 1966. The LC? is a public record, a copy of which is avai]able tar inspection at the office of the City Cxerk at the City of Huntingtan lWach, 21DOG !lain Streets ttuntin ton teach, California 9264a. The TAT. reqVirw "Preservation of at >aueb baaslcs %and •rsa as possible in order to acco»fldtaTs tuture javal* of beach attendance.ya (LCP& section 2.3.) The kP further establishes so a policy the "increased numLbars of hotel/aotel rooms and restaurants in the Coastal zone." (xd., at Section 3.3.) The LG! designates the entire city Saarfi Property for EXf1I8T 'C" TO GROUND LAASG flwr.r. 9 of A Ilacalrad Vat-tl'01 01:15PO frow-t13 IH 0131 falg 03 ent Dr: ft^ne, oALLPan a OCnn.M111 cis Uca ub.7e, Vardliv, u.u•r•n,f�,�_wa..a•�aye .�a recreational ute in Which the "principal permitted Uses . . are limited to open sand lereas•, beach related recreational activities, and under certain conditions, parking lots, • concessions and campinq." [Id., at rigure 9.11 and Section 9.2.5.) The LCP tgrther "prohibit(>c) developso-nt of pernarant aboveground structures. on the baaeb sand area• on the city laeaeh Property with the exception of lifeguard towers and other public safety sacilitles, public rostrooms and "sob coneescior stands when located 1%%*diataly ..adjaearit to paved parking or access areas, fire rings, volleyball nets, bike trails, bike support facilities, and hardicappad access. Finally, the LCP 10prohibit(s) expansion of parking facilities that would result in the lots of recreational send arse at Pection 9.501.) (d) On October 10, 19830 the City Council of the city adopteid Resolution No, sloe a,b and c, approving and adeptinq the Downtown 6pecifiC Plata (bereina=ter the •specific Plan") for the implementation of tb■ LCP. The entire city beach Property is located in >District Xlevan of the Spacific Plan, which In designated for beach-related open space ord.reereatienal uses. District Lievan ■it intended to preserve and protect the 'sandy beard area •within tb a [Downtcnen] Specific Plats boundaries wbile •Alloving parking and auxiliary convenience users." (Specific plan, section 4.11.) Pursuant to the $pacific Plan, th■ only uses and structures peraoitted on the city Beach Property ars access EXHIBIT "C" TO GROUND LEASE • Perna Q of p Received N,r*Zl-ol De:osa" Prot-111 IZ3 Doll Tc-RUT1111 rate 04 e..► Try• M V� ' YLr V041, V_/L4/Y1 u.yrrw.,JZALAA�waWS•reye :fit facilities, basketball courts, beach eoneessiarl stbnda at Interval% no closer than one thousand (1,000) feet and limited to two thousand fiv hundred (:,sao) square feet per building, bicycle and joggIng trails and support faeilltlea, fire rings, iifaquard towers and other structures necessary for -health or safety; paddleboard courts, surface parking lots or public transit facilities that will not result .in the lass of recreational sand areas, provided that any tiered parking shall be designed so that the top of the structures -,including . walls, --etce , are located it minuses of. one toot below the savimum height of the adjacent blut%, park orriees, playground equipment, public restroons, public dressinq recut or shovers, shoreline construction- that say' alter ristural shoreline process (such as groins, cliff remaining walls, pipelines, and out=alls that are designed to allmi.nat• adverse Impacts an lor_al shoreline sand supply) , and volleyball net supports. (a) Lessor and Iesswe desire to ensure the lonq- term uaintenanca -of the City Feacn Property =or beach-relented u%as ceneistant with the ICP and "cific plan, to prtmote the developasent and operation of blgb-+quallty vlsitar-aerving commercial uses on the pranises, and to provide a long-tarn coerce of revenue to the City to er&anea the city's !implementation of the LCP and 6pecifie Plan or for other public purposes ar deteranined by the City in its sale disrreticrt. EXHIBIT *cf TO GAC.UND LsnSV pne" 4 of A Ara+ir0d Ma-ZI-01 WISPS FrwZ13 $15 0131 ?o-RUTM tole. 85 ` C\7\ L�• /�W�C Owv ViVll M Y4ll1r+•\ r• . err Y�.J . rr•r•fr• r.r.• �fJ�ur� ••r�r f. r!r r.r• 9.2 Restrictions on pevel ppment or _City►_ Beech _proverrtv. Lessor covenants not to construct or maintain or permit to be constructed or Maintained any 3pprovamentc or structures an the City Beach Property excepting only Ue rollowihq-.* access facilities, basketball caurts, beach concession stands at intervals no closer than one thousand jl,000) feet and limited to two thousand live hundred (2,E00) square fast par building, bicyel■ and jo44inq trails and support facilities, fire rings, lifeguard towers a1nd other structures necessary for health or safety, paddleboard .courts, _..parking Sots and public transit Iacilities that will not result in the loss of recreational sand area and that vial not extand above the vNifitinq gxaee of the -adjacent stretch of Pocitic Coast Highway, park of flees, playground equipment, public rectroops, public dressing rooms or showers, shore-line construction that may alter natural shoreline process (such as groins, cliff retaining walls, pipelines, and outtalk that are designed to elis1inate adverse lmpaeta• an local ahareline sand supply) , volleyball riot supports, Mind pedestrian evercrossing(s) or Paciric Coast Highway. \.t-.•9 na.�st�L..--.�ta�-cosy • dbip —e•004W4 a —39-e—ehall ray, 6M fit got For -eae- One �M%414*44- EXHIBIT "C" TO c O SE Faso 5 nr R Ricttved Mar-11-01 03.03a+ FFW213 915 0131 To-ALUAK face w0E r.M r..••! rrI M��Y. v.Ya....l J'^-V--�w�ra 1. offs ..s . a � ' fie!we=Te r i _ _mil_ ►1 _ _1 L 1 r 7_ 7- - Ir 6.4 Property► to be trnefited by ci.ty,s Covenant. The covenants set fortb in Sections O.Z and 8.3 are intended to burden and benefit the City Se:ach' Property and the rremite`. At such time that there is a Disposition Transfer of a Separates Development Parcel �rithin the Residential portion of tha Site, pursuant to the DDK, the benefit and burden of this Agreement shall be—removed troy such Separate Development parcel only. At such time that mere is a Disposition Transfer of a Separate Developsent , parcel within the Coranercial portion of the Site, pursuant to the; .DDA, the benefit and burden et this Agreement shall continue in effect- vith respect to such Separate Development parcel. . At such time that the DDA is terminated, the benefit and burden Pr • sections 8.2 and 8.9 shall be removed fraa any portion-af the Premis;se that leas not been the subject of a Disposition Transfer. Accordingly, after all of the Disposition I`ransfero eontemplatad in the ODA have occurred, the: benefit and burden at this Agreement sha11 apply to all of the EXHIBIT "CO TD GAOUND LEASE pace 6 of 8 Re:r�red Wr21-Qi 05:O�os rrmr-M IN 0131 1a-R`1fAM rate or ent Gy: N► C. OM-Lop— a Or-"`— u ft-s' YVl�•.�• �...•Y. r.J"` �••��• ��- -. - Separate Deveieptent Parcels within the Carmarcial Portion of the Site which .have been the subject of Diepoeltion Transfers (with the understanding that it for any reason a Separate Development Parcel within -the cossercial Portion of the Site In not the subject of • Disposition Transfer, the benefits accruing to the remaining Separate Development parcels within the Commerclal Portion of the Site which have been the subject of Disposition Transfers shall not be adversely affected) , and the benefit, and. burden of this AgrGemant shall not apply to -any .of the Separate .Development parcels within the Aetidential Portion of the Site or any other portion of the site. Lessor and Lessee agree to cooperate and execute . all documents that may be reasonably required in order to effectuate this provision. 9.6 Covenants- Run With The Land; Reeordati on of Memorandum of Lease. ..The parties . intend Chat the covenants cot fortis in this Article Vill be. enrorceabis as equitable servitudes and constitute covenants the burden of which shall run with the land and bind successive ovners of the City beach Property and • benefit aseighees and sublesaaes of Lessee's interest in the pr•atises and 1tho Separate Development parcels Within the Coamarcial Portion coil the Site, all within the contemplation and for the purposes set forth in Section ia7o . of use ealifornia civil code. Imsediately following the Ffiectfve Date of this Lea■e, Lessor shall cause a Memorandum of Lease which specifically EXf XBIT *CO TO-ZF.OUN�S>r Paoe • 7 of 8 Received Mar-21-01 09:05re From-M 615 0331 Ta-RJIAM page 01 ent Oys &Ant, CALLMcn a ucnp%wmi &64 uAV WN410 u0rs6F... ..•..o�....�-,��—�---• .•y� i retarences the rertrSCLlva covenant centair+ed Within this Articla VIII to be recorded agai>nct the- City Beach Proparty. • EXHIBIT "C" To GROUND LEASE Pave 6 of 6 ��:�1r.a u�r-il-C1 oa:c:as ffes-213 HS 0131 7o-RUTA.1 rags 01 • EXHIBIT"C" List o Permits 1. City of Huntington Beach Conditional Use Permit No.9746(Resort Hotel) 2. City of Huntington Beach Coastal Development Permit No. 97-15 (Resort Hotel) 3. City of Huntington Beach Tentative Tract Map No. I5535 (Resort Hotel) 4. City of Huntington Beach Precise Plan of Street Alignment No. 98-1 (Pacific View Avenue) 5. City of Huntington Beach Rough Grath-ig Permit No.GTR 15535 (Resort Hotel) 6. City of Huntington Beach Precise'Grading Permit No. GTR 15535 (Resort Hotel) 7. City of Huntington Beach General Building Pcraiit B-065242(Resort Hotel) 8. City of Huntington Beach Electrical Permit E-030700(Resort Hotel) 9. City of Huntington Beach Mechanical Permit M-021992(Resort Hotel) 10.City of Huntington Beach Plumbing Permit P-023344(Resort Hotel) 11.City of Huntington Beach Fin Protection System Permit M-021994(Resort Hotel) 61SN197i0-0o0� 17493).02 soLV3/01 EXHIBIT"D„ Project Budget (See Attached.) 6151019740.0004 174933.0I&0UO3/01 SOURCE AND USE OF FUNDS SUAML&RY 1[YATT REGENCY GRAND COAST RESORT fluotingtuo Beach,Caitrorala Total Construction Borrower's Protect Cost Loan Allocation E uiry IRE Direct Construction Cons-Improvements S 103,919,672 S 47.680,483 S 56,239.189 Furniture,Fixtures&Equipment 17.011,980 13.011,102 4,000.978 Communications,Computcri&Signage 2.723,613 1,799,"0 924.173 Direct Construction Costs Subtotal 123.655,265 62,491,025 61,164,240 LAND&1NDIRFE•C!COSTS Land Preparation. 4,185.283 4.185.283 Indirect Costs: Architectural,Engineering&Design 7,594,249 692.642 6.911,607 Operating Supplies 3,586,054 3,586.054 Insurance&Taxes 851,877 400,000 431.877 Perrniti&Fees 1,509,502 80,974 1,428.528 Developer Overhead&Expenses 3,672,438 1,488,868 • 2,183,570 Legal,Title,Financing&Closing Costs 4,995,000 - 4,895.000 Working Capital Reserve S00,000 500.000 - Hyatt Pre-Opening Budget Reserve 3,631,000 3.631.000 - Marketing&.PTe-Opening Costs 509,299 129,393 379,895 Interest Reserve-Construction Period 4,200,000 4,200.000 - GMAC Set Aside 3.000,000 3,000.000 - Interest Rate Cap Purchase 1,400,000 - 1.400,000 Contingency 4,810,O.t4 4,810,044 Indirect Costs Subtotal 40,159,452 22,S08,975 17,650,477 TOTALS S 168,000,000 S 85.000,000 S 93.000.000 Notes: (1) Above amounts and allocations are subject to change. THE ABOVE MFORMATION WAS PREPARED AHD PROVIDED TO M1LLEa A SCHROEDER BY THE BORROWER OR rrS IM SENTATIM AND IS SEGEV ED TO BE RELIABLE MILLER R SCHROEDER MAKES NO REPRESENTATIONS AS TO THE ACCURACY,COMnETENESs,OR RELIABILITY OF THIS WFOIW ATION OR TO THE ASSUMPTIONS INVOLVED IN THEIR PRVARATIOK ANALYSIS.OR PRESENTATION. 1 - - r EXHIBIT"E„ GMAC Additions 1. The Estoppel shall reflect that it is drafted by, and when recorded shall be returned to, Katten Muchin Zavis, 1025 Thomas Jefferson Street, NW, Suite 700 East, Washington, D.C. 20007. 2. All references to Miller& Schroeder Investment Corporation shall be changed to GMAC Commercial Mortgage Corporation, including, without limitation, in the "Notice" section set forth in Paragraph I5. 3. The defined terms "Loan", "Note", "Deed of Trust"and the "Loan Documents"set forth in the Estoppel shall be changed to refer to Bridge Lender's loan and the documents evidenced thereby. 4. Agency should add the following certifications in addition to those set forth in Paragraph 3 of the Estoppel: a. The"Operating Commencement Date"under the Ground Lease is 5. Paragraph 7-shall be deleted. 6. Paragraph 15 shall be deleted. 7. Agency should acknowledge in a new paragraph that it has furnished Borrower and Bridge Lender with a Release of Construction Covenants pursuant to Section 804 of the Ground Lease and Section 317 of the DDA and that the same constitutes evidence of satisfactory completion of all construction and development related to the Development Property and required under the DDA or under the Ground Lease. S. Agency should acknowledge in a new paragraph that the DDA is terminated with respect to the Development Property as of the issuance of the Release of Construction Covenants, except as set forth in Section 404 of the DDA. 9. ' Agency should acknowledge in a new paragraph that Mayer Financial, L.P. and Agency have taken all actions required of each under that certain Amended and Restated Mobilehome Acquisition and Relocation Agreement dated as of October 19, 1998 (which agreement is referred to in the DDA as the"Driftwood Agreement'). 10. Agency should acknowledge in a separate Paragraph the assignment to the Developer by Mayer of all its right, title and interest in and to the DDA (as it relates to the Development Property) and the Ground Lease and the execution and delivery by the Developer of the Ground Lease, is expressly permitted by Section 3I6(0 of the DDA and does not require the consent of the Agency. In addition, the Agency hereby expressly approves and consents to any subsequent transfer, whether voluntary or involuntary, of membership interests in PCH between Grand 61V019740A004 • 174933.02 s04V3ro1 Resort, LLC ("GW) and Coast Beach, LLC C'CB"), two of the three original members of the Developer, so long as such transfer is pursuant to CB exercising its rights under Section 4.3(e), 4.11, 7.1 or 9.6 of the Developer's Limited Liability Company Agreement, together with (i) any subsequent change in the share of capital or profits held by GR or CB in the Developer from time to time,so long as such transfer is pursuant to CB exercising its rights under Section 4.3(e),4.11, 7.1 or 9.6 of the Developer's Limited Liability Company Agreement, (ii) any subsequent change in interests, capital or profits that results in CB becoming the managing member of the Developer, so long as such transfer is pursuant to CB exercising its rights under Section 4.3(e), 4.11, 7.1 or 9.6 of the Developer's Limited Liability Company Agreement, and (iii) any subsequent change in the ownership of shares in SPE PCH Beach Resort, Inc. ("SPE"), the third member of the Developer,which results from any of the foregoing permitted transfers so long as SPE's membership interest in the Developer does not increase as a result thereof No such transfers shall require any notice to the Agency or the taking of any act by the Developer or its members as a condition to the effectiveness thereof, and Sections 316(a)-(e) and 316.1 of the DDA and Sections 802 and$43 of the Ground Lease shall be inapplicable to such transfers. b1510147�3-0061