CONTRACT 3010 Leasing AgreementLEASE AGREEMENT
by and between
612 TWIN HOLDINGS, LLC
as Landlord
and
THE CITY OF EL SEGUNDO
as Tenant
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TABLE OF CONTENTS
Page No.
ARTICLE1. LEASE ..................... ..... .......................,......, ................... ..........................4
1.1 Demise......................................... ................... ........... M..,..... .,.........................4
1.2 Memorandum of Lease ....................................................... ..............................4
1.3 "AS -IS" Lease .................. ....... ........ ....,.. .............,.... ,.............................4
ARTICLE2. TERM ...................... ......... .................. ......... ........ .... ,..........................5
2.1 Length ................................................................................. ..............................5
2.2 Commencement ................................................................., ..,...,.......................5
2.3 Acknowledgment of Commencement Date...... ................. ..............................5
2.4 Delav in Commencement..,., .................. ................. ...... ..............................6
ARTICLE3. RENT ............. ............................... . ........., ... ..,. ........ ....... ,........................ 6
3.1 Payment .. ............................... ....................... .. .............. ..............................6
3.2 Monthly Rent.... ................... .... ......... ........,...,.... ....... ..............................6
3.3 Direct Payment to Lender . ....... ................. ........ .... ..............................6
ARTICLE 4. OPERATING AND MAINTENANCE COSTS ........... ...... ..............................6
4.1 Landlord's Maintenance .. .................. ...... ......... ....... ..............................6
4.2 Tenant's Payment ............................... ......... ..... .... ...... ..............................7
4.3 Books of Account, Audit ..................................................... ..............................7
ARTICLE 5. USE, WITH LAW .................................... ..............................8
5.1 Use............ .... ..... ................ ...................................... .... ..... ............................8
5.2 Compliance with Laws .............. ....... ................. ........ ...........................8
5.3 Covenant against Liens.... .... - ........ .............. ___ ......... ........................ 8
ARTICLE 6. TAXES AND UTILITIES..,..... ... ........ ....... ............... ............................
6.1 Real Property Taxes ........ ........ .................. ....., ..,...... .......,....................8
6.2 Real Provertv Taxes Pavable in Installments ..... ___ ............ ............................8
6.3 Real Property Tax Increases ................................................ ..............................8
6.4 Real Property Tax Contest .................................................. ..............................9
6.5 Personal Property Taxes ........ .................. ,......................... ...........................9
6.6 Utilities .................... ........ ... „. ................ .............. __. .............................. ....... ..,...9
ARTICLE 7. INDEMNIFICATION .......................... ...... ...... ,, ......... .........................10
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7.1 Landlord's General Indemnity .............. .... ........10
7.2 Tenant's General Indemnity .............................................. .............................10
7.3 Hazardous Materials Indemnity ............. ..... „,. ...... ....... ,,..............10
7.4 Actions Against Indemnified Parties ................................. .................... „........11
7.5 Survival .....................................................................,..,...... .............................II
ARTICLE8. INSURANCE ............................... .......................... .... ,.........,.......,,,........11
8.1 Landlord's Insurance .................... ........................ ......... ,..,.....................11
8.2 Tenant's Insurance .............................................................. .............................12
83 General Requirements, ..... ........ .................. ..........................,12
8.4 Waiver of Subrogation . .. .......... ... ........ ...........,............., ,.,...... ......,,.,,..,.13
ARTICLE 9. ALTERA"1`.IONS ............... ..... ............................... ........ .............................13
9.1 Tenant Alterations .............................................................. .............................13
9.2 Landlord Alterations ........ ........................... .,...., .,.... .............................14
ARTICLE 10. DAMAGE AND DESTRUCTION ................................... .............................14
10.1 Destruction Due to Insured Risk... ......... ........ ....... ,,... .........................14
10.2 Destruction Due to Uninsured Risk............„ .................. ........ ............ ..... .,.,.,,14
10.3 Termination Payment ......................................................... .............................15
10.4 Scope of Repair/Restoration Obligations ................................................. ,.... ...15
10.5 Abatement of Rent .. .....- ........ .......................... ......... ........ ................15
10.6 Tenant's Option ....---- ....................... ......, ..,.,.... .................. ,...............15
ARTICLE 11. CONDEMNATION ........................... .................. ...............16
11.1 Definitions .............. ............................. .......... ..,....., ,.... .............................16
11.2 Total Taking............ ...... ........ ........... ................ .............................16
11.3 Partial Taking,,, ....... ......... ....... ............................... ................. ................16
11.4 Allocation of Award ................... .................. ............ —..., ,.,.... ........,......16
11.5 Restoration ......................................................................... ............................,17
11.6 Scope of Repair/Restoration Obligations ..................................... ..... .. ............ „ 18
11.7 Abatement of Rent ............................................................ ...............................
18
11.8 Effect on Rent.................... ................... .,....... .,......w ...... ......,.,.,..................18
11.9 Settlement .............. ..... ............................... .................n........., .,.,....,.,,..,,18
11.10 Waiver ..................................................... .................. ......... ................18
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ARTICLE 12. ASSIGNMENT AND SUBLETTING .. ...............................
12.1 Consent..... .. .... -- ............. .......... ...... ...............................
12.2 Tenant's Right to Sublease .................... ...............................
12.3 Obligations under Lease .... ............. -- ...... .......................
�,,.,,
......................19
.......................19
.......................19
.......................19
ARTICLE13. DEFAULT ......................................................................... .............................20
13.1 Events of Default ...................... ......... .................. ......... ......... ................20
13.2 Notice to Certain Persons. ..,,...... ................... ................. ........ ................20
13.3 Rights of Landlord ............................................................. .............................20
13.4 Landlord's Right of Re- entry .................................... ............................... .....21
13.5 No Automatic Termination .................................... ........... ....... ,........ ,................ 21
13.6 Personal Property ..... ....................... .................. ,....,, .............. ......... ........ 21
13.7 No Waiver ... ............................... ......... .................. ................. ................21
13.8 Right to Cure ............................. ........................... ......... .......... ...............22
13.9 Landlord Defaults ...................... ....... .......................,.,., ...... ,...... ..,,....,.,,..22
13.10 Notice to Lenders ....................... .......... ....... .. , ....,.- . .,,..,,.....,.22
ARTICLE 14. SURRENDER OF THE PREMISES ................................. .............................22
ARTICLE 15.
TENANT'S OPTION TO PURCHASE PROPERTY, ...... ......... ................23
15.1
Option Price ......................................................................... .............................23
15.2
Exercise of Option ........................ ............................... .... ....... .....................23
15.3
Escrow ............................................................................... .............................23
15.4
Closing ........ ............................... .................. ........ ......24
15.5
Option Consideration/Liquidated Damages ....................... .............................24
15.6
Default .................................................................................. ....................,........24
15.7
"AS-IS"- ..................... ............... .................................... .............................25
15.8
1031 Exchange .... ............................... ......... ............................ ................26
15.9
Lease to Landlord ...........„ ................................................... .............................26
ARTICLE 16. TRANSFERS BY LANDLORD-- ..................... ....... -- ... .... ............. ........27
ARTICLE 17. NOTICES .... ........ ....... .............. ......... .......................... .....,.......................27
ARTICLE 18. SUBORDINATION; ESTOPPEL CERTIFICATES. .... 28
18.1 Subordination ........................... .......,.........., ....,,.......,...., ......,......,..28
18.2 Estoppel Certificates.................................................... .............. ................... ...28
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ARTICLE 19. ENFORCEMENT AND ATTORNEYS' FEES ................ .............................29
ARTICLE20. NO MERGER ..... ............................... ......................... .............................29
ARTICLE 21. TENANT'S CONDITIONS PRECEDENT., ....... ............................... ----29
ARTICLE 22.
GENERAL ........... ............................... ......................... .............................29
22.1
Captions ............................ ................. ...... ...... ,............,..........., ..,..,.........,.29
22.2
Counterparts ......... ............................... ...... ............................... ................29
22.3
Time of Essence ... ............................... ......... ......... ....... .............................29
22.4
Severability .................................... -- ..... .,...... ,.. ....... ,,..., ................... ...............
29
22.5
Interpretation ..................................................................... ..............................3
0
22.6
Successors and Assigns ...................................... ...............................
22.7
Waivers ..... ...... ....... .............. ............... ................ .....,, ........ ......... ,....................
30
22.8
Remedies ............ - .............................. ........................... ............ ,.,,..,..,..,.30
22.9
Good Faith ... ............................. .......................,... .... ...................... ,...,...,..30
22.10
No Partnership ........ ......... —.... .......................... ..... .......,,,.,,..,.............30
22.11
Inte ation ... ............................... ......... ......... ................ .............................30
22.12
Commissions .................................................. ............................... .....—.,. - -.30
22.13
General Covenants. Representations And Warranties Of Landlord ................31
22.14
Survival ................................................................................ .............................31
EXHIBIT "A" - LEGAL DESCRIPTION
EXHIBIT `B" - FORM OF CONSTRUCTION AGREEMENT
EXHIBIT "C" - FORM OF MEMORANDUM OF LEASE
EXHIBIT "D" - LEGAL DESCRIPTION OF SUPERMARKET SPACE
EXHIBIT `B" - FORM OF ACKNOWLEDGEMENT OF COMMENCEMENT OF TERM
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LEASE AGREEMENT
This LEASE AGREEMENT (the "Lease "), dated for reference purposes only as of June
18, 2002 (the "Effective Date "), is made and entered into by and between 612 TWIN
HOLDINGS, LLC, a California limited liability company, ( "Landlord "), and THE CITY OF EL
SEGUNDO, a municipal corporation ( "Tenant'), who agree as follows:
121RCITAT.0
This Lease is made with reference to the following facts and circumstances:.
A. Landlord is currently in escrow to acquire that certain real property consisting of
approximately twenty -eight thousand eight hundred forty (28,840) square feet, located in the
City of El Segundo, and more particularly described on Exhibit "A" attached hereto, together
with all rights and interests, if any, of Landlord in and to the land lying in the streets and roads in
front thereof and adjoining thereto and in and to any easements and other rights appurtenant
thereto (collectively, the "Property ").
B. Landlord proposes to construct improvements on the Property consisting of (i) a
two story, three level parking structure (the "Parking Structure ") containing approximately
fifty -eight thousand five hundred (58,500) square feet and containing one hundred seventy -six
(176) automobile parking spaces, and (ii) certain retail space (the "Retail Space ") containing
approximately an additional seven thousand (7,000) square feet of ground floor area, all to be
constructed by Landlord as more particularly set forth in the Construction Agreement (the
"Construction Agreement") to be entered into by and between Landlord and Tenant in the form
of Exhibit `B" attached hereto.
C. Landlord desires to lease to Tenant and Tenant desires to lease from Landlord a
portion of the Parking Structure consisting of one hundred (100) passenger motor vehicle
parking spaces to be located within the Parking Structure (the "Premises "). The exact
configuration and location of the Premises will be as set forth in the Approved Plans and
Specifications (as defined in the Construction Agreement) and the parties agree that a site plan
showing the configuration and location of the Premises will be attached to this Lease promptly
following final preparation of the Approved Plans and Specifications. The Tenant shall be
assigned ten (10) parking spaces on the ground floor level of the Parking Structure; provided,
however, that so long as a supermarket remains open in the Supermarket Space (as that term is
defined in Section 2.2, below), Tenant shall have no right to use any parking spaces on the
ground floor level of the Parking Structure (except to the extent required by applicable disabled
access codes).
D. Tenant finds this Lease is in the best interest of the community and promotes the
health, welfare and safety of the community by providing parking in an area that is without
adequate parking, by promoting a central business area for the community to gather, and
promoting the goals of the Downtown Specific Plan, and providing residents with necessary
access to a grocery retail outlet.
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DEFINITIONS.
Except as otherwise defined in this Lease, capitalized terms used in this Lease have the
following meanings:
"Affiliate" means any person or entity (including, without limitation, any governmental
entity or agency) (collectively, a "Person ") which (1) directly or indirectly through one or more
intermediaries controls, or is controlled by, or is under common control with, the Tenant or
Landlord or (2) directly or indirectly owns twenty -five percent (25 %) or more of the equity
interest of which is held beneficially or of record by the Tenant or Landlord, as the context may
require. "Control" means the possession, directly or indirectly, of the power to cause the
direction of the management and policies of a Person, whether through the ownership of voting
securities, by contract, family relationship or otherwise.
"Hazardous Materials" means any flammable explosives, radioactive materials,
asbestos, PCB's, hazardous wastes, toxic substances or related materials, including, without
limitation, all substances, wastes, pollutants and contaminants now or hereafter included within
such (or any similar) term under any federal, state or local statute, ordinance, code, rule or
regulation now existing or hereafter enacted or amended.
"Interest Rate" means the rate of interest to be charged under the provisions of this
Lease, which, unless expressly stated otherwise, shall be four percent (4 %) above the annualized
rate of interest publicly announced from time to time by Bank of America National Trust and
Savings Association in San Francisco, California (or its successor), as its "reference rate" and
such interest shall be computed on the basis of monthly compounding with actual days elapsed
compared to a 365 -day year; provided, however, in no event shall the Interest Rate exceed the
maximum lawful rate of interest in the state in which the Property is located.
"Indemnified Parties" means either the Landlord Indemnified Parties or the Tenant
Indemnified Parties, as applicable; an "Indemnified Party" means any individual within either
such group, as applicable.
"Landlord's Estate" means all of Landlord's right, title and interest in its fee estate in
the Property, all right, title and interest in all improvements located thereon, including, without
limitation, the Parking Structure, and all other Rent and benefits due Landlord hereunder.
"Lease Year" means each successive period of twelve (12) calendar months during the
term of this Lease, commencing on the Commencement Date.
"Legal Requirements" means all present and future laws, statutes, requirements,
ordinances, orders, judgments, regulations, administrative or judicial determinations, even if
unforeseen or extraordinary, of every governmental or quasi - governmental authority, court or
agency claiming jurisdiction over the Parking Structure now or hereafter enacted or in effect
(including but not limited to environmental laws and those relating to accessibility to, usability
by, and discrimination against, disabled individuals), and all covenants, restrictions and
conditions now or hereafter of record which may be applicable to all or any portion of the
Parking Structure, or to the use, occupancy, possession, operation, maintenance, alteration, repair
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or restoration of any of the Parking Structure, even if compliance therewith necessitates
structural changes to the Parking Structure or the making of improvements, or results in
interference with the use or enjoyment of any of the Parking Structure.
"Operating and Maintenance Costs" means all reason -able, out -of- pocket costs and
expenses paid or incurred by Landlord in operating, lighting, providing utility services to,
insuring, repairing and maintaining the Parking Structure; provided, that Operating and
Maintenance costs shall not exceed the cost of operating, lighting, providing utility services to,
insuring, repairing and maintaining similar parking structures within Los Angeles County,
California. Opera -ting and Maintenance Costs shall include, but shall not be limited to, the
following, without duplication: water, sewer, electri-city and refuse removal; salaries and wages
(including employment taxes) of those persons performing services, and the cost of maintenance
contracts, exclusively pertaining to the operation, servicing, repair and maintenance of the
Parking Structure; premiums for liability, property damage and workers' compensation insurance
(without duplication of any insurance premiums charged under Article 8), including any
deductible amounts paid by Landlord under such insurance policies; costs and expenses of
planting, replanting and maintaining landscaped areas; repainting, restriping, repairing and
resurfacing parking areas; the cost of permits required for operation of the Common Areas, or
any part thereof; costs of providing security, if appropriate; rental costs of equipment used
exclusively in connection with the operation, servicing, repair and maintenance of the Common
Areas; and an administrative fee of not to exceed ten percent (10 %) of Operating and
Maintenance Costs (exclusive of Real Property Taxes and insurance premiums), whether such
administration is performed by Landlord or a third party employee or management company.
All Operating and Maintenance Costs of a capital nature shall be amortized, on a straight -line
basis, over their full useful life in accordance with generally accepted accounting principles.
Notwithstanding anything in this Lease to the contrary, Operating and Maintenance Costs shall
not include: costs and expenses incurred in connection with the original construction of the
Parking Structure or in correcting defects in the original construction of the Parking Structure;
costs and expenses for which any other tenant or occupant of the Parking Structure is not
charged; and, to the extent not covered by insurance, costs and expenses incurred in repairing or
replacing any portion of the Parking Structure damaged as a result of the negligence or willful
misconduct of Landlord or any other tenant or occupant of the Property or its or their respective
agents, employees, contractors or representatives, except that the amount of insurance
deductibles paid by Landlord, if any, in connection with the repairing or replacing of any portion
of the Parking Structure damaged as a result thereof shall be included in Operating and
Maintenance Costs.
"Real Property Taxes" means all real property taxes and assessments (whether general
or special) levied or assessed on the Parking Structure and the land underlying the Parking
Structure for each fiscal tax year or portion thereof during the term of this Lease and includes
taxes imposed on Landlord against or measured by rents or rental income payable pursuant to
this Lease levied or assessed in lieu of or as a direct substitute for real property taxes and
assessments levied or assessed on the Property and/or any improvement located thereon, but
excludes any net income tax, inheritance tax or estate tax of Landlord.
"Rent" means the Monthly Rent and all other sums due and payable to Landlord by
Tenant hereunder.
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"Sublease" means any sublease of any of the automobile parking spaces located in the
Premises (but not the Premises itself), entered into in accordance with Article 12 below, and any
modification, extension or termination of any of the foregoing entered into in accordance with
Article 12 below.
"Subtenant" means any person or entity entitled to the use of any of the parking spaces
located in the Premises under any Sublease.
"Tenant's Contribution" has the meaning assigned to that term in the Construction
Agreement.
"Tenant's Estate" means all of Tenant's right, title and interest in its leasehold estate in
the Premises and its interest under this Lease.
"Tenant's Pro Rata Share" means a fraction, the numerator of which is 100 and the
denominator of which 176.
"Termination Payment" means the amount determined by multiplying the Tenant's
Contribution times a fraction, the numerator of which is the number of full and partial calendar
quarters which remain during the term of the Lease at the date of calculation and the
denominator of which is the total number of full and partial calendar quarters during the term of
the Lease.
ARTICLE 1. LEASE.
1.1 Demise. On and subject to the terms and provisions of this Lease, Landlord
hereby leases to Tenant and Tenant leases from Landlord the Premises, together with all
easements, rights of access, ingress and egress and all other rights appurtenant thereto.
1.2 Memorandum of Lease. This Lease shall not be recorded; however, to establish
the status of Tenant's title and to establish the priority of this Lease as a condition of title,
Landlord and Tenant agree that, promptly following Landlord's acquisition of fee title to the
Property as contemplated by Section 22.13, they will execute and acknowledge a short form
Memorandum of this Lease, in the form attached hereto as Exhibit "C ", which shall be recorded
in the Official Records of Los Angeles County, California.
1.3 "AS -IS" Lease. Except as otherwise provided in this Lease and in the
Construction Agreement, Tenant acknowledges that as of the Commencement Date it shall have
made such inspections as deemed necessary by Tenant, and Tenant shall accept possession of the
Premises in its "AS -IS" "WHERE -IS" condition existing as of the Commencement Date.
Notwithstanding the foregoing to the contrary, Landlord warrants and covenants that:
(a) It has full right and authority to enter into this Lease and that prior to the
commencement of construction of the Parking Structure, Landlord shall have good and
marketable title to the Property.
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(b) As of the Commencement Date (as defined in Section 2.2), Landlord will
deliver the Premises to Tenant free from all claims to possession, use or occupancy thereof by all
persons, other than Tenant and persons claiming by, under or through Tenant.
(c) At the Commencement Date of the term of this Lease, there will be no
Hazardous Materials located in, on, under or about the Premises.
(d) Provided that no Event of Default (as that term is defined in Section 13.1,
below) has occurred under the terms of this Lease and has continued beyond all applicable cure
periods as set forth in this Lease, Tenant shall quietly have, hold and enjoy the Premises
throughout the entire term of this Lease without interruption or disturbance by Landlord and
those claiming under or through Landlord.
ARTICLE 2. TERM.
2.1 Length. Unless sooner terminated as provided in this Lease, the term of this
Lease shall be thirty -four (34) years. Unless otherwise expressly indicated, whenever reference
is made in this Lease to the term of this Lease, such reference shall include any extensions of the
term of this Lease.
2.2 Commencement. Subject to the provisions of Article 21, the term of this Lease
shall commence on the date (the "Commencement Date ") which is the last to occur of: (i) the
date on which the final Certificate of Occupancy for the Parking Structure (including the
Premises) has been issued by the City of El Segundo (the "City "), and (ii) the date on which the
Approved Supermarket Operator (as hereafter defined) first opens for business to the general
public in the Supermarket Space (as hereafter defined). The term "Approved Supermarket
Operator" means a lessee which has been approved in writing by Tenant and which is leasing
the Supermarket Space from Landlord pursuant to a lease having an initial term of at least ten
(10) years and under which the lessee is obligated to open a first - class, full- service grocery
supermarket in the Supermarket Space. (In this connection, it is agreed by Tenant that Gibson &
Cooke, operator of Cooke's Family Market of Malibu, California, is deemed to be an Approved
Supermarket Operator if the lease between Landlord and Gibson & Cooke otherwise meets the
requirements specified in the immediately preceding sentence and if Mr. Jerry Preston has
irrevocably guaranteed all of the payment and performance obligations of Gibson & Cooke
under that lease). The term "Supermarket Space" means the supermarket building located on
the land which is adjacent to the Property and which is more particularly described in Exhibit
"D" attached hereto. Landlord agrees that, if at any time during the ten (10) year period
beginning on the Commencement Date, the lease to the Approved Supermarket Operator of the
Supermarket Space has been surrendered, cancelled or otherwise terminated, Landlord will use
its best efforts to re -lease the Supermarket Space for use as a grocery supermarket and on terms
substantially similar to those which were contained in the lease to the Approved Supermarket
Operator.
2.3 Acknowledgment of Commencement Date. On the Commencement Date, or
within a reason -able time thereafter, Landlord and Tenant shall execute two copies of a written
"Acknowledgment of Commencement of Term" in the form attached hereto as Exhibit `B" for
the purpose of acknowledging and confirming the Commencement Date.
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2.4 Delay in Commencement. This Lease shall automatically terminate if (i)
construction of the Parking Structure has not commenced within six (6) months following the
date (the "Permit Date ") on which all necessary governmental approvals and building permits
for such construction have been issued, or (ii) Substantial Completion (as defined in the
Construction Agreement) of the Parking Structure has not occurred within two (2) years
following the Permit Date, or (iii) the Approved Supermarket Operator has not opened for
business to the general public in the Supermarket Space within two (2) years following the
Permit Date; provided, however, that each of the foregoing time periods shall be extended due to
Force Majeure Events (as defined in Section 22.3). Upon any such termination, the parties shall
be released from all liabilities and obligations under this Lease, except for liabilities and
obligations which have accrued prior to the date of termination or which by the express terms of
this Lease survive termination of this Lease.
ARTICLE 3. RENT.
3.1 Payment. All Rent payable to Landlord hereunder shall be paid without demand
or offset to Landlord in lawful money of the United States of America, in immediately available
funds, at Landlord's address set forth herein or at such other place as Landlord may designate in
writing from time to time. If any Rent payment date (including the Commencement Date) falls
on a day of the month other than the first day of such month or if any payment of Rent is for a
period which is shorter than one month, the Rent for any fractional month shall accrue on a daily
basis for the period from the date such payment is due to the end of such calendar month or to
the end of the Term at a rate per day which is equal to 1/365 of the applicable annual Rent. All
other payments or adjustments required to be made under the terms of this Lease that require
proration on a time basis shall be prorated on the same basis.
3.2 Monthly Rent. Landlord is entitled to payment of monthly rent (the "Monthly
Rent ") from Tenant during the entire term of this Lease, in advance on or before the first day of
each and every calendar month during the term, in an amount equal to Sixteen Thousand One
Hundred Sixty -Six and 67/100 Dollars ($16,166.67) per calendar month.
3.3 Direct Payment to Lender. Landlord and Tenant acknowledge that following the
execution of this Lease, Landlord will encumber its fee interest in the Property with a loan (the
"Fee Loan ") from a third party lender (the "Fee Lender "). Landlord and Tenant hereby agree
that upon notice to Tenant from the Fee Lender, Tenant shall have the right, without notice to or
the consent of Landlord, to pay to the Fee Lender all or such portion of the Monthly Rent due
under this Lease as is necessary to satisfy Landlord's monthly payment obligations under the
promissory note and deed of trust which evidence the Fee Loan. Upon payment of such amounts
to the Fee Lender by Tenant, such amounts shall be credited against the Monthly Rent payable
by Tenant under this Lease for such calendar month.
ARTICLE 4. OPERATING AND MAINTENANCE COSTS.
4.1 Landlord's Maintenance. Landlord, as a part of Operating and Maintenance
Costs, shall keep and maintain the Parking Structure and every part thereof, including the
Premises, in first -class order, condition and repair (including the making of necessary
replacements). The obligations of Landlord under this Section 4.1 includes, without limitation,
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the making of all necessary structural and nonstructural repairs and replacements to the Parking
Structure and every part thereof, including the Premises; provided, however, that to the extent
such repairs or replacements to the Parking Structure are caused by the acts or omissions of
Tenant or the Tenant Parties (as that term is defined in Section 7.2, below) and are not covered
by insurance (including any deductible amounts), then Tenant shall pay to Landlord, within
fifteen (15) days of demand therefor, the cost of such repairs or replacements and such cost shall
not be included in Operating and Maintenance Costs. Tenant hereby waives any and all rights
under the benefits of subsection 1 of Section 1932 and Sections 1941 and 1942 of the California
Civil Code or under any similar law, statute, ordinance, now or hereafter in effect.
4.2 Tenant's Payment. Commencing on the Commencement Date and continuing on
the first day of each month thereafter during the term, Tenant shall pay Landlord, as additional
Rent, monthly an Operating and Maintenance Charge (the "Operating and Maintenance
Charge ") in an amount reasonably estimated by Landlord to be one - twelfth (1/12) of Tenant's
Pro Rata Share of the Operating and Maintenance Costs for the then current calendar year
(January 1 - December 31). Landlord may adjust the monthly Operating and Maintenance
Charge at the end of each calendar year on the basis of Landlord's reasonably anticipated costs
for the following calendar year. Within ninety (90) days after the end of each calendar year,
Landlord shall furnish to Tenant a statement of such Operating and Maintenance Costs (the
"Statement of Costs "), and the total of the Operating and Maintenance Charges paid by Tenant
to Landlord for such calendar year. The Statement of Costs shall be certified by an authorized
officer, partner or agent of Landlord as being correct. If Tenant's Pro Rata Share of the
Operating and Maintenance Costs for any calendar year exceeds the Operating and Maintenance
Charges paid by Tenant for such calendar year, Tenant shall pay Landlord the deficiency within
fifteen (15) days after the receipt of the Statement of Costs. If Tenant's Pro Rata Share of the
Operating and Maintenance Costs for any calendar year is less than the Operating and
Maintenance Charges paid by Tenant for such calendar year, Tenant may deduct the amount of
the excess from the Operating and Maintenance Charges next due to Landlord, unless it is the
end of the term in which case Landlord shall reimburse such excess to Tenant at the time the
Statement of Costs is delivered to Tenant. Tenant's obligation to reimburse Landlord and
Landlord's obligation to reimburse Tenant, as applicable, shall survive the expiration or earlier
termination of this Lease.
4.3 Books of Account; Audit. Landlord shall keep and maintain or cause to be kept
and maintained true and complete books of account, containing a record of all Operating and
Maintenance Costs for each calendar year for a period of at least thirty -six (36) months after the
end of such calendar year. Upon at least ten (10) days' prior written notice to Landlord, given
within thirty -six (36) months after the close of a given calendar year, such books of account for
such calendar year shall be made available to Tenant and its employees and accountants for
examination; provided, that no more than one (1) such examination shall be made respecting any
given calendar year. Tenant's failure to give such written notice of request within thirty -six (36)
months after the close of a given calendar year shall be deemed to be Tenant's final and
conclusive acceptance of and agreement with the amount of Operating and Maintenance Costs
paid by Tenant for such calendar year. If an examination determines that a previously submitted
Statement of Costs was inaccurate and that a portion Operating and Maintenance Costs were
therefore erroneously paid or unpaid, then there shall be an adjustment so that the correct amount
of Operating and Maintenance Costs will have been paid. Each party agrees to pay to the other,
LA #92363 v10 -7-
on demand, such amount as may be necessary to effectuate any such adjustment. If an
examination determines that a previously submitted Statement of Costs was overstated by five
percent (5 %) or more of the actual Operating and Maintenance Costs for a given calendar year,
then Landlord shall reimburse Tenant for Tenant's reasonable costs and expenses (including,
without limitation, outside auditor's fees) in conducting the examination.
ARTICLE 5. USE; COMPLIANCE WITH LAW.
5.1 Use. The Premises may be used for the parking of one hundred (100) passenger
motor vehicles and for no other purpose.
5.2 Compliance with Laws. Landlord, as a part of Operating and Maintenance Costs,
shall comply with all Legal Requirements respecting the design, layout, materials, structure, use,
occupation, control and enjoyment of the Parking Structure and in the prosecution and conduct
of its business thereon. Landlord shall have the right to contest or review by appropriate legal or
administrative proceeding the validity or legality of any such Legal Requirement so long as such
contest or review has the effect of staying the enforcement of, or of tolling Landlord's obligation
to comply with, such Legal Requirement during the pendency of such contest or review.
5.3 Covenant against Liens. Tenant has no authority or power to cause or permit any
lien or encumbrance of any kind whatsoever, whether created by act of Tenant, operation of law
or otherwise, to attach to or be placed upon the Property or Parking Structure and any and all
liens and encumbrances created by Tenant shall attach to Tenant's Estate only and in no way
shall encumber Landlord's Estate.
ARTICLE 6. TAXES AND UTILITIES.
6.1 Real Property Taxes. Throughout the term of this Lease, Landlord shall pay, prior
to delinquency, all Real Property Taxes and Tenant shall pay to Landlord its Pro Rata Share of
the amount thereof. Landlord shall furnish to Tenant a copy of the Real Property Tax bill(s).
Tenant shall make payment, as additional Rent, to Landlord of its Pro Rata Share of the Real
Property Taxes within thirty (30) days after receipt by Tenant of such copy of the Real Property
Tax bill(s) or ten (10) days prior to delinquency, whichever is later. Real Property Taxes shall
not be included as a part of Maintenance and Operating Costs.
6.2 Real Property Taxes Payable in Installments. If any Real Property Taxes required
to be paid by Tenant under this Lease shall be permitted to be paid in installments, then whether
or not Landlord elects to pay such Real Property Taxes in installments, Tenant shall only be
obligated to pay the portion of such Real Property Taxes which would have been payable by
Tenant under this Lease had Landlord elected to pay such Real Property Taxes in installments.
6.3 Real Property Tax Increases. Notwithstanding any provision of this Lease to the
contrary, except as set forth in this Section 6.3, below, Tenant shall not be liable for any increase
in Real Property Taxes which results from the sale, transfer or other disposition of the Property
or any part thereof or any interest of Landlord therein which constitutes a change in ownership
which would require or allow the reassessment of the Property or any part thereof by any tax
authorities (a "Change in Ownership Reassessment "). In such case, Tenant shall remain liable
only for the increases in Real Property Taxes which would normally occur annually had there not
LA #92363 v10 -8-
� U ,
been a Change in Ownership Reassessment (the "Normal Increases "). For purposes of this
Lease, the amount of each annual Normal Increase is defined as a Real Property Tax increase of
two percent (2 %) per year, or, to the extent that Proposition 13 is repealed or modified, the
amount of the annual Normal Increase as permitted pursuant to such successor statute or
proposition (collectively, the "Successor Statute "). After any Change in Ownership
Reassessment, the sum thereafter payable by Tenant for Real Property Taxes under this Lease
shall not exceed for any year the sum that would have been due for that year if Real Property
Taxes had increased at the rate of two percent (2 %) compounded annually, or, if applicable, the
annual Normal Increase permitted under the Successor Statute, from the tax fiscal year
immediately preceding the tax fiscal year for which a Change in Ownership Reassessment is
effective. Notwithstanding the foregoing, at the option of Landlord, upon written notice to
Tenant given within thirty (30) days following Landlord's receipt of a tax bill reflecting a
Change in Ownership Reassessment, the provisions of this Section 6.3 shall not apply to, and
Tenant shall be responsible for the increase in Real Property Taxes attributable to, such Change
in Ownership Reassessment; provided, that Landlord may only exercise such option (i) with
respect to one (1), and no more than one (1), Change in Ownership Reassessment during the
initial fifteen (15) Lease Years of the term of this Lease and (ii) with respect to one (1), and no
more than one (1), Change in Ownership Reassessment attributable to the last nineteen (19)
Lease Years of the term of this Lease.
6.4 Real Property Tax Contest. Landlord shall have the right to contest the amount or
validity of any Real Property Tax. In the event Landlord contests the amount or validity of any
Real Property Tax and obtains a refund, Landlord shall reimburse to Tenant Tenant's Pro Rata
Share of such refund following deduction by Landlord of expenses incurred in prosecuting such
contest of the Real Property Tax. It being acknowledged that Tenant is a public entity, Tenant
shall have the right, at Tenant's sole cost and expense, to apply for a waiver of the obligation to
make a portion of the Real Property Tax payments due to the use of a portion of the Parking
Structure by Tenant and, if required by Tenant, Landlord shall, at Tenant's sole cost and
expense, cooperate with Tenant in applying for such a waiver. If Tenant is successful in
obtaining such waiver of a portion of the Real Property Taxes as a result of the use of a portion
of the Parking Structure by Tenant, then Landlord shall grant Tenant the benefit of such waiver
of Real Property Taxes and Tenant shall be entitled to retain any Real Property Taxes refunded
in connection with the obtaining of such waiver, provided that until such time as Tenant is able
to obtain such waiver, Tenant's obligation to pay Tenant's Pro Rata Share of Real Property
Taxes due under this Lease shall remain in full force and effect.
6.5 Personal Property Taxes. Tenant shall pay before delinquency all taxes and
assessments levied or assessed on the trade fixtures, equipment and all other personal property of
Tenant, if any, situated on or installed in the Premises.
6.6 Utilities. Landlord, as a part of Operating and Maintenance Costs, shall pay all
charges for water, gas, electricity, sewer service, refuse removal and all other utilities and
services supplied to the Parking Structure during the term of this Lease, together with any taxes
thereon.
LA #92363 v10 -9-
1��A
ARTICLE 7. INDEMNIFICATION.
7.1 Landlord's General Indemnity. Landlord, at its sole cost and expense and not as a
part of Operating and Maintenance Costs, shall protect, indemnify, defend (by counsel
reasonably acceptable to Tenant) and hold harmless the Tenant, Tenant's Affiliates and its and
their respective partners, members, shareholders, trustees, beneficiaries, officials, officers,
directors, employees, agents, heirs, representatives, successors and assigns (collectively, the
"Tenant Indemnified Parties ") from and against all claims, liabilities, penalties, fines,
judgments, forfeitures, losses, costs, or expenses (including reasonable attorneys', consultants'
and expert fees) (collectively, "Claims ") arising from, relating to, or in connection with (i) the
breach of its obligations under this Lease, and (ii) the negligence or willful misconduct of
Landlord (whether or not such misconduct constitutes a violation of applicable Legal
Requirements or of this Lease) or its members, officers, agents, employees, servants, contractors
or representatives; except to the extent such injury, loss, claims or damage is caused by the
negligence or willful misconduct of Tenant or the Tenant Indemnified Parties.
7.2 Tenant's General Indemnity. Tenant shall protect, indemnify, defend (by counsel
reasonably acceptable to Landlord) and hold harmless the Landlord, Landlord's Affiliates and its
and their respective partners, members, shareholders, trustees, beneficiaries, officers, directors,
employees, agents, heirs, representatives, successors and assigns (collectively, the "Landlord
Indemnified Parties ") from and against all Claims arising from, related to, or in connection with
(i) the breach of its obligations under this Lease, and (ii) the negligence or willful misconduct of
Tenant (whether or not such misconduct constitutes a violation of applicable Legal Requirements
or of this Lease) or its Subtenants or their respective members, officers, agents, employees,
servants, contractors, representatives, guests, invitees or permittees; except to the extent such
injury, loss, claims or damage is caused by the negligence or willful misconduct of Landlord or
the Landlord Indemnified Parties.
7.3 Hazardous Materials Indemnity. Landlord, at its sole cost and expense and not as
a part of Operating and Maintenance Costs, shall protect, indemnify, defend (by counsel
reasonably acceptable to Tenant) and hold harmless the Tenant Indemnified Parties, and each of
them, from and against all Claims arising from, relating to, or in connection with (a) the use,
generation, storage, disposal, release or threatened release of Hazardous Materials in, on, under
or about the Property due to the acts or omissions of Landlord, its members, officers, agents,
employees, servants, contractors or representatives, and (b) any required or necessary repair,
cleanup or detoxification and the preparation of any closure or other required plans, whether
such action is required or necessary prior to or following the Commencement Date of the term of
this Lease, to the full extent that such action is attributable, directly or indirectly, to the presence,
use, generation, storage, disposal, release or threatened release of Hazardous Materials in, on,
under or about the Property due to the acts or omissions of Landlord, its members, officers,
agents, employees, servants, contractors or representatives. Tenant shall protect, indemnify,
defend (by counsel reasonably acceptable to Landlord) and hold harmless the Landlord
Indemnified Parties, and each of them, from and against all Claims arising from, relating to, or in
connection with (a) the use, generation, storage, disposal, release or threatened release of
Hazardous Materials in, on, under or about the Property due to the acts or omissions of Tenant or
its Subtenants or their respective members, officers, agents, employees, servants, contractors,
representatives, guests, invitees or permittees, and (b) any required or necessary repair, cleanup
LA #92363 v 10 -10-
m
or detoxification and the preparation of any closure or other required plans, whether such action
is required or necessary prior to or following the Commencement Date of the term of this Lease,
to the full extent that such action is attributable, directly or indirectly, to the presence, use,
generation, storage, disposal, release or threatened release of Hazardous Materials in, on, under
or about the Property due to the acts or omissions of Tenant or its Subtenants or their respective
members, officers, agents, employees, servants, contractors, representatives, guests, invitees or
permittees.
7.4 Actions Against Indemnified Parties. In the event that any action or proceeding is
brought against any of the Indemnified Parties by reason of any or all of the foregoing liabilities,
the indemnifying party, upon written notice from any Indemnified Party, will, at the
indemnifying party's sole cost and expense, resist or defend such action or proceeding with
counsel selected by such indemnifying party, subject to the Indemnified Party's prior approval,
or if the indemnifying party shall fail to do so, fund or reimburse such Indemnified Party for the
reasonable cost for such Indemnified Party to do so. Each of Landlord and Tenant, as the case
may be, shall, promptly after receipt of written notice thereof, give the other party written notice
of any claims, actions or proceedings brought against any of the Indemnified Parties to which
such party believes the indemnifying party's indemnification obligations apply.
7.5 Survival. Each party's indemnity obligations under this Article 7 and elsewhere
in this Lease arising prior to the expiration, termination or assignment of this Lease shall survive
such expiration, termination or assignment.
ARTICLE 8. INSURANCE.
8.1 Landlord's Insurance. Throughout the term of this Lease, Landlord shall maintain
in full force the insurance coverages required by this Section 8.1 and Tenant shall reimburse
Landlord for the premiums for such insurance as provided in this Section 8.1.
(a) Landlord shall maintain on the Parking Structure, the Retail Space and all
other improvements from time to time located on the Property (collectively, the
"Improvements ") a policy or policies of casualty insurance providing protection against any
peril included within the classification "All Risks," including, without limitation, fire and
extended coverage, vandalism coverage and malicious mischief, coverage for sprinkler and flood
damage, to the extent of at least one hundred percent (100 %) of the full replacement value
thereof, without deduction for depreciation, but excluding the replacement value of underground
utilities, foundations and subsurface footings. The foregoing policy(ies) shall also include
coverage for earthquake and acts of terrorism if required by any lender holding a first priority
mortgage or deed of trust on the Property, in which event the premium attributable to such
coverage shall be included in Operating and Maintenance Costs; otherwise, the foregoing
policy(ies) shall only include coverage for earthquake and acts of terrorism if required by
Tenant, in which event 100% of the premium attributable to such coverage shall be paid for by
Tenant, without proration for other tenants. Such policy or policies may be subject to a total
deductible of not to exceed Ten Thousand Dollars ($10,000). Any and all proceeds of such
insurance shall be used for the repair and restoration of the Improvements as provided by Article
10 hereof. From time to time during the term of this Lease, Landlord or Tenant may request that
the company or companies issuing the insurance policy(ies) required to be maintained under this
LA #92363 00 -11-
-7"
® • •
Section 8.1 redetermine the full replacement value of the Improvements on the Property, and the
insurance policy(ies) shall be adjusted according to such redetermination.
(b) Landlord shall maintain commercial general liability insurance for bodily
injury, death, personal injury and property damage (including completed operations and broad
form contractual liability coverage) with coverage limits of not less than Five Million Dollars
($5,000,000) combined single limit, per occurrence and in the aggregate, and subject to a total
deductible of not to exceed Ten Thousand Dollars ($10,000), insuring Landlord and Tenant
against any and all liability of the insured with respect to the Property or arising out of the
maintenance, use or occupancy thereof. All such personal injury liability insurance and property
damage liability insurance shall specifically insure the performance by Landlord of its indemnity
obligations under Section 7.1, but the limits of such insurance shall not limit Landlord's
obligations under Section 7.1. Not more often than each five (5) years, at the request of Tenant,
the amount of such insurance shall be adjusted to the amount commonly prevailing in Los
Angeles County, California for similar coverages respecting similar properties and uses, all as
Landlord and Tenant shall mutually agree, which agreement shall not be unreasonably withheld.
(c) Landlord shall maintain rental interruption insurance equal to an amount
equal to twelve (12) months Monthly Rent, Operating and Maintenance Costs and Real Property
Taxes.
(d) Tenant shall make payment, as additional Rent, to Landlord of its Pro Rata
Share of the premiums required to be paid by Landlord for maintaining the insurance required by
this Section 8.1 within thirty (30) days after Tenant receives from Landlord a copy of the
premium notice.
8.2 Tenant's Insurance. Throughout the term of this Lease, at Tenant's expense,
Tenant shall maintain in full force the insurance coverages required by this Section 8.2.
(a) Tenant shall maintain a policy or policies of fire and extended coverage
insurance, with vandalism and malicious endorsements, to the extent of at least one hundred
percent (100 %) of the full replacement value of all leasehold improvements and personal
property, if any, installed or kept by Tenant in the Premises.
8.3 General Requirements. All policies of insurance provided for herein shall be
issued by insurance companies with a general policyholder's rating of not less than A and a
financial rating of not less than "VIII" as rated in the most current available `Best's" Insurance
Reports, qualified to do business in the state of California; provided, that the insurance required
to be maintained by Tenant may be maintained through Tenant's membership in a California
joint powers authority organized for the purpose of providing insurance protections to it
members. The policies of insurance under Section 8.1(a) shall each contain a cross - liability
endorsement and, at Landlord's election, shall name Landlord and Landlord's mortgagees or
trust deed beneficiaries as "additional insureds." Executed copies of all policies of insurance
required hereunder or certificates thereof shall be delivered by each party to the other
concurrently with the execution of this Lease, and thereafter executed copies of renewal policies
or certificates thereof shall be delivered by each party to the other within thirty (30) days prior to
the expiration of the term of each such policy. As often as any policy shall expire or terminate,
LA #92363 v10 -12-
0 10
renewal or additional policies shall be procured and maintained by the parties in like manner and
to like extent. All policies of insurance delivered hereunder must contain a provision that the
company writing said policy will give to the recipient (and any other additional insureds) thirty
(30) days' advance written notice of any cancellation, lapse, reduction or other adverse change
respecting such insurance. All public liability, property damage or other casualty policies
required to be maintained by Landlord shall be written as primary policies, not contributing with
or secondary to coverage which Tenant may carry. The obligations of the each party to carry the
insurance provided for in this Article 8 may be satisfied by means of a so- called blanket policy
or policies of insurance carried and maintained by such party; provided, however, that that the
coverage afforded and required by this Article 8 will not be reduced or diminished by reason of
the use of such blanket policies of insurance; and provided further that the requirements set forth
in this Article 8 are otherwise satisfied. Each party agrees to permit the other at all reasonable
times to inspect any policies of insurance which such party has not delivered to the other party.
8.4 Waiver of Subro ag tion. Landlord and Tenant each hereby waive any rights they
may have against the other and their respective sublessees, partners, members, directors, officers,
employees, agents, successors and assigns on account of any loss or damaged occasioned to
Landlord or Tenant, as the case may be, from any risk which is covered by the insurance policies
required to be maintained under this Article 8, provided that nothing set forth herein shall limit
the liability of Landlord or Tenant to the other party hereto for any liability assumed under this
Lease to the extent that the same is not covered in full by the insurance maintained by the
applicable party to this Lease. Landlord and Tenant also agree that the insurance policies
required to be obtained by them pursuant to this Article 8 shall contain endorsements waiving
any right of subrogation which the insurer may acquire against them and their respective
sublessees, partners, directors, officers, employees, agents, successors and assigns.
ARTICLE 9. ALTERATIONS.
9.1 Tenant Alterations. Tenant shall not make any alterations, additions or
improvements to the Premises without Landlord's prior written consent, which consent Landlord
agrees will not be unreasonably withheld.
(a) General Requirements. All alterations, additions and improvements made
by Tenant to the Premises shall be done in a good and workmanlike manner and in compliance
with all applicable laws, ordinances, rules and regulations of all governmental authorities having
jurisdiction. Tenant shall pay all costs and expenses in connection with any such alterations,
additions or improvements and shall keep the Premises and the Property free and clear of all
liens of mechanics and materialmen providing labor and material in connection therewith.
Tenant shall have the right to contest, in the name of Landlord or Tenant, at Tenant's expense,
the validity or the amount of any mechanics' or materialmen's liens by such judicial or other
proceedings as may be appropriate in the jurisdiction, and may pay the same under protest or
take such other steps as Tenant may deem appropriate. Tenant may withhold or defer payment
of such mechanics' or materialmen's liens, provided, that Tenant shall protect Landlord and the
Premises and the Property from any such lien by adequate surety bond or other appropriate
security and shall not allow any foreclosure proceedings against the Premises or the Property to
be commenced because of such withholding or deferral of payment. In connection with any such
alterations, additions or improvements, Landlord shall have the right to go upon the Premises to
LA #92363 v 10 -13-
post and keep posted thereon notices of nonresponsibility, or such other notices which Landlord
may deem to be proper for the protection of Landlord's interest in the Premises and the Property.
9.2 Landlord Alterations. Landlord acknowledges that Tenant will be making the
Tenant Contribution and that Tenant is being granted the Purchase Option pursuant to Article 15
of this Lease. Landlord further acknowledges, therefore, that Tenant has a material interest in
the Property and its utility, condition and value. As such, Landlord agrees to the following
provisions respecting the making by Landlord of any alterations, additions or improvements to
the Property:
(a) Tenant Consent. Except in the event of an emergency which poses an
imminent threat of injury to any Person or property, Landlord shall not make any structural
alterations, additions or improvements (the "Landlord Alterations ") to the Property without
Tenant's prior written consent, which consent Tenant agrees will not be unreasonably withheld.
In determining whether to grant its consent to the making of any Landlord Alterations, and
without limiting any other reasonable bases on which Tenant may withhold its consent, it shall
be reasonable for Tenant to consider whether the proposed Landlord Alterations will
unreasonably interfere with Tenant's use of the Premises, will diminish or adversely affect the
suitability of the Parking Structure as an automobile parking garage, or will result in a
diminution in the value of the Property over its value immediately before the making of the
Landlord Alterations.
ARTICLE 10. DAMAGE AND DESTRUCTION.
10.1 Destruction Due to Insured Risk. If, during the term of this Lease, the Property is
totally or partially damaged or destroyed from any risk covered by the insurance maintained or
required to be maintained by Landlord under Section 8.1, Landlord shall, subject to the
provisions of this Article 10, at its cost and expense, forthwith repair and restore the same to
substantially the same condition existing immediately prior to said damage or destruction with
all reasonable dispatch and diligence. Provided that the insurance required to be maintained by
Landlord under Section 8.1 has been maintained in full force, if the cost of repair and restoration
exceeds the amount of the proceeds received from such insurance, Landlord may elect to
terminate this Lease by giving notice to Tenant within thirty (30) days after determining that the
cost of repair and restoration will exceed the amount of insurance proceeds. If Landlord so
elects to terminate this Lease, Tenant, within thirty (30) days after receiving Landlord's notice to
terminate, can elect to contribute the difference between the amount of insurance proceeds and
the cost of the repair and restoration, in which case Landlord shall repair and restore the Property
as herein required. Landlord shall give Tenant satisfactory evidence that all sums contributed by
Tenant as provided in this Section 10.1 have been expended by Landlord in paying the cost of
repair and restoration. If Landlord elects to terminate this Lease and Tenant does not elect to
contribute toward the cost of repair and restoration as provided in this Section 10.1, this Lease
shall terminate and Landlord and Tenant shall be released from all liabilities and obligations
under this Lease, except for such as have accrued prior to the date of termination.
10.2 Destruction Due to Uninsured Risk. If, during the term of this Lease, the Property
is totally or partially damaged or destroyed from a risk not covered by the insurance maintained
or required to be maintained by Landlord under Section 8.1, Landlord shall, subject to the
LA #92363 v 10 -14-
11"a
provisions of this Article 10, at its cost and expense, forthwith repair and restore the same to
substantially the same condition existing immediately prior to said damage or destruction with
all reasonable dispatch and diligence. If the cost of repair and restoration exceeds ten percent
(10 %) of the then replacement value of the Property, Landlord can elect to terminate this Lease
by giving notice to Tenant within thirty (30) days after determining the cost of repair and
restoration and the then replacement value. If Landlord elects to terminate this Lease, Tenant,
within thirty (30) days after receiving Landlord's notice to terminate, can elect to contribute the
difference between ten percent (10 %) of the then replacement value of the Property and the cost
of repair and restoration, in which case Landlord shall repair and restore the Property as herein
required. Landlord shall give Tenant satisfactory evidence that all sums contributed by Tenant as
provided in this Section 10.2 have been expended by Landlord in paying the cost of repair and
restoration. If Landlord elects to terminate this Lease and Tenant does not elect to contribute
toward the cost of repair and restoration as provided in this Section 10.2, this Lease shall
terminate and Landlord and Tenant shall be released from all liabilities and obligations under this
Lease, except for such have accrued prior to the date of termination.
10.3 Termination Payment. If this Lease is terminated as provided in this Article 10, at
the time of such termination, Landlord shall pay to Tenant an amount equal to the Termination
Payment calculated as of the date of termination of this Lease.
10.4 Scope of Repair/Restoration Obligations. All repairs and restorations required to
be performed under this Article 10 shall be made in compliance with all applicable laws,
ordinances, rules and regulations of all governmental authorities having jurisdiction and
performed by qualified contractors selected by Landlord. All such repairs and restorations shall
be performed diligently and in a good and workmanlike manner, using materials as nearly like
original materials in kind and quality as may then be reasonably procured.
10.5 Abatement of Rent. If, during the term of this Lease, the Property or any part
thereof is damaged or destroyed from any cause (whether insured or not) and this Lease is not
terminated as provided in this Article 10, Monthly Rent shall be equitably abated (according to
the nature, extent and duration of any of the required repair and restoration and its effect upon
the suitability of the Premises for Tenant's use) between the date of the damage or destruction
and the date of completion of the repairs and restorations.
10.6 Tenant's Option, Notwithstanding anything in this Article 10 or elsewhere in this
Lease to the contrary, if Landlord elects to terminate this Lease as provided in Section 10.1 or
10.2 at any time prior to the commencement of the Option Period (as defined in Section 15.2),
Tenant shall be entitled, at its option, to exercise its Purchase Option granted pursuant to Article
15 by giving an Exercise Notice within thirty (30) days after receiving Landlord's notice to
terminate. If Tenant so gives its Exercise Notice, the parties shall proceed with the purchase and
sale of the Property in accordance with Article 15, except that (a) Tenant shall purchase the
Property in its damaged or destroyed condition, (b) Landlord shall assign to Tenant all of its
rights, if any, to any insurance proceeds available as a result of the damage or destruction, and
(c) the Option Purchase Price (as defined in Section 15.1) shall be increased by an amount equal
to the present value of the future Monthly Rent remaining unpaid under this Lease on the closing
date (as defined in Section 15.4) calculated using a discount rate equal to the annualized rate of
LA #92363 v10 -15-
interest publicly announced from time to time by Bank of America National Trust and Savings
Association in San Francisco, California (or its successor), as its "reference rate ".
10.7 Tenant hereby waives any rights now or hereafter conferred upon it by statute or
other law to surrender this Lease or to quit or surrender the Property or any part thereof, or to
receive any suspension, diminution, abatement or reduction of the rent or other sums and charges
payable by Tenant hereunder on account of any such destruction or damage other than as
expressly provided in this Article 10. Tenant hereby waives the provisions of Section 1932,
Subdivision 2, and Section 1933, Subdivision 4, of the California Civil Code, and the provisions
of any similar law hereinafter enacted.
ARTICLE 11. CONDEMNATION.
11.1 Definitions. Whenever used in this Article 11, the following words shall have the
following respective meanings:
(a) "Condemnation" or "Condemnation Proceedings" shall mean any
action or proceeding brought by competent authority, including, without limitation, the City, for
the purpose of any taking of the Property or any part thereof as a result of the exercise of the
power of eminent domain, including a voluntary sale to such authority either under threat of or in
lieu of condemnation or while such action or proceeding is pending.
(b) "Taking" shall mean the event of vesting of title to the Property or any
part thereof in such competent authority pursuant to Condemnation or the date upon which an
order for immediate possession is entered in the Condemnation Proceedings, whichever is
sooner.
(c) "Vesting Date" shall mean the date of the Taking.
11.2 Total Taking. In case of a Taking of all of the Property, this Lease shall terminate
as of the Vesting Date and the Rent under this Lease shall abate as of, and be apportioned to the
date of termination.
11.3 Partial Taking. In case of a Taking of less than all of the Property (other than for
a temporary use), Landlord and Tenant shall mutually determine, within sixty (60) days after the
Vesting Date, whether the remaining portion of the Property after Restoration (as hereinafter
defined) can economically and feasibly be used by Tenant. If it is determined that the remaining
portion of the Property cannot be economically and feasibly used by Tenant, either Landlord or
Tenant may, at its option, terminate this Lease by delivery of written notice to the other within
thirty (30) days after such determination. Upon any such termination, the Rent shall be
apportioned to the date of termination, which date, for purposes of apportioning rental, shall be
determined by mutual agreement of the parties. If neither party elects to terminate this Lease
within the period aforementioned, this Lease shall continue in full force and effect as to the
remaining portion of the Property subject to a reduction in the Rent proportionately with the
degree to which Tenant's use of the Property is impaired.
11.4 Allocation of Award.
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(a) Taking by a Third Party. In the event of a Total or Partial Taking by a
party other than Tenant or an Affiliate thereof, Landlord shall be entitled to all damages and
compensation awarded in the Condemnation Proceedings; provided, that Tenant shall have the
right to file for any separate claim available to Tenant for (i) the taking of Tenant's personal
property and fixtures belonging to Tenant and removable by Tenant upon the expiration of the
term of this Lease pursuant to the terms of this Lease, (ii) moving expenses and (iii) one hundred
percent (100 %) of the "bonus value" of the leasehold estate in connection therewith, which
bonus value shall be equal to the difference between the sum established by the condemning
authority as the award for such leasehold compensation and the Monthly Rent payable under this
Lease (Landlord being entitled to the portion of the award allocable to the leasehold estate which
is not considered "bonus value" and also any amount allocable to Landlord's leasehold interests
pursuant to Section 15.9, below); and, further provided, that if this Lease is terminated pursuant
to the provisions of this Article 11, Landlord shall also pay to Tenant the Termination Payment
calculated as of the Vesting Date.
(b) Taking by Tenant. In the event of a Total or Partial Taking by Tenant or
an Affiliate thereof, Landlord shall be entitled to all damages and compensation awarded in the
Condemnation Proceedings; provided, that Tenant shall have the right to file for any separate
claim available to Tenant for (i) the taking of Tenant's personal property and fixtures belonging
to Tenant and removable by Tenant upon the expiration of the term of this Lease pursuant to the
terms of this Lease, (ii) moving expenses and (iii) one hundred percent (100 %) of the "bonus
value" of the leasehold estate, if any, in connection therewith, which bonus value shall be equal
to the difference between (A) the sum established by the condemning authority as the award for
such leasehold compensation and (B) (1) the discounted present value of the remaining Monthly
Rent due under this Lease as of the Vesting Date (the "Discounted Rental Stream "), which
remaining Monthly Rent shall be discounted at the annualized rate of interest publicly announced
by Bank of America National Trust and Savings Association in San Francisco, California (or its
successor) as its "Reference Rate" as of the Vesting Date, plus (2) any award established by the
condemning authority as allocable to Landlord's leasehold interests pursuant to Section 15.9,
below (the "Leasehold Interest "), Tenant and Landlord agreeing that Landlord shall be entitled to
receive from the condemning authority an amount equal to the Discounted Rental Stream and
Leasehold Interest amount; and, further provided, that if this Lease is terminated pursuant to the
provisions of this Article 11, Landlord shall also pay to Tenant the Termination Payment
calculated as of the Vesting Date.
(c) If this Lease is not terminated as provided in this Article 11 and a
Restoration (as that term is defined in Section 11.5, below) is to be performed, all damages and
compensation awarded to Landlord shall be deposited with the holder of the first mortgage or
first deed of trust on the Property, if either is an institutional lender, or if not or if neither is an
institutional lender, with any bank, trust or title company agreed to by Landlord and Tenant, as
trustee, for the repair and restoration of the Premises as provided in this Article 11. Any
damages and compensation awarded to Landlord which remain following the Restoration shall
be the sole property of Landlord.
11.5 Restoration. If, in the event of a Partial Taking, this Lease is not terminated
pursuant to this Article 11, Landlord shall, subject to the provisions of this Article 11, at its cost
and expense, forthwith repair and restore the Premises to a complete architectural unit or units.
LA #92363 v10 -17-
11
All such repair and restoration work shall be referred to in this Article 11 as "Restoration ". If
the cost of Restoration exceeds the amount of the award to which Landlord is entitled under
Section 11.4, Landlord may elect to terminate this Lease by giving notice to Tenant within
fifteen (15) days after determining that the cost of Restoration will exceed such amount. If
Landlord so elects to terminate this Lease, Tenant, within fifteen (15) days after receiving
Landlord's notice to terminate, can elect to contribute the difference between the amount of such
award and the cost of the Restoration, in which case Landlord complete the Restoration as
required herein. Tenant shall be entitled to receive satisfactory evidence that all sums
contributed by Tenant as provided in this Section 11.5 have been expended in paying the cost of
Restoration. If Landlord elects to terminate this Lease and Tenant does not elect to contribute
toward the cost of Restoration as provided in this Section 11.5, this Lease shall terminate and
Landlord and Tenant shall be released from all liabilities and obligations under this Lease, except
for such as have accrued prior to the date of termination.
11.6 Scope of Repair/Restoration Obligations. All Restorations required to be
performed under this Article 11 shall be made in compliance with all applicable laws,
ordinances, rules and regulations of all governmental authorities having jurisdiction and
performed by qualified contractors selected by Landlord. All such repairs and restorations shall
be performed diligently and in a good and workmanlike manner, using materials as nearly like
original materials in kind and quality as may then be reasonably procured.
11.7 Abatement of Rent. If, in the event of a Partial Taking, this Lease is not
terminated as provided in this Article 11, Monthly Rent shall be equitably abated (according to
the nature, extent and duration of the required Restoration and its effect upon the suitability of
the Premises for use by Tenant, taking into account any loss of access to the Premises) between
the Vesting Date and the date of completion of the Restorations.
11.8 Effect on Rent. If, in the event of a Partial Taking, this Lease is not terminated
pursuant to this Article 11, on the Vesting Date the Monthly Rent shall be reduced (and as so
reduced, abated to the extent provided in Section 11.8) by an amount that bears the same ratio to
Monthly Rent as the total number of motor vehicle parking spaces in the Premises taken bears to
100.
11.9 Settlement. Landlord shall not make any settlement with the condemning
authority (except where such authority is the City) or convey any portion of the Property to such
authority (except where such authority is the City) in lieu of Condemnation or consent to any
Taking without the consent of Tenant, which consent will not be unreasonably withheld.
11.10 Waiver. Except as otherwise expressly set forth herein, Tenant waives any rights
now or hereafter conferred upon it by statute or otherwise to quit or surrender this Lease or the
Property or any suspension, diminution, abatement or reduction of Rent on account of any
Taking. Tenant hereby waives any and all rights it may otherwise have pursuant to Section
1265.130 of the California Code of Civil Procedure. However, it is understood and agreed that
Tenant is in no way waiving its rights as a public agency to exercise powers of eminent domain
or to pursue Condemnation Proceedings.
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ARTICLE 12. ASSIGNMENT AND SUBLETTING.
12.1 Consent. Tenant acknowledges that the economic consideration and rental rates
set forth in this Lease were negotiated by Landlord and Tenant in consideration of, and would
not have been granted by Landlord but for (i) the first class reputation and financial strength of
Tenant (it being acknowledged that Landlord's primary concern is with the quality and
reputation of the parking operations located on the Property and, therefore, the character and
quality of Tenant's operation are of paramount concern to Landlord and have strongly influenced
Landlord's selection of Tenant), and (ii) the specific nature of the leasehold interest granted to
Tenant hereunder, as such interest is limited and defined by various provisions throughout this
Lease, including, but not limited to, the provisions of this Article 12 which define and limit the
transferability of such leasehold interest. Accordingly, based upon the foregoing, Landlord and
Tenant have agreed to the provisions of this Article 12, and have agreed that Tenant shall not
voluntarily or by operation of law assign, transfer, mortgage or otherwise encumber all or any
part of Tenant's interest in this Lease or in the Premises, and shall not sublet or license all or any
part of the Premises (except to the extent provided in Section 12.2 below for Subleases of
parking spaces in the Premises), without the prior written consent of Landlord in its reasonable
discretion, and any attempted assignment, transfer, mortgage, encumbrance, subletting or license
without such consent shall be wholly void. Notwithstanding the foregoing, the Tenant may
assign its interest in this Lease to a public parking authority that the tenant may form provided
the parking authority is wholly owned or controlled by the Tenant.
12.2 Tenant's Right to Sublease. Notwithstanding anything to the contrary contained
in Section 12.1 above, Tenant shall have the right to enter into any Sublease (for parking spaces
only and not for all or any portion of the Premises) with any Subtenants during the term of this
Lease without the written consent of Landlord, subject to the requirements set forth in this
Article 12, and provided that Tenant delivers written notice of such Sublease to Landlord
promptly after the full execution of such Sublease.
(a) Required Sublease Terms. Each Sublease shall contain the following
terms and conditions:
(i) The Sublease shall state that it is subject and subordinate to the
terms, conditions and covenants of this Lease and to any extension, modifications or
amendments of this Lease, unless Landlord specifically requires that such Sublease be prior and
superior to this Lease; and
(ii) That in the event of the cancellation or termination of this Lease
prior to the expiration of the term of this Lease, at Landlord's option, either the Sublease shall be
deemed terminated or the Subtenant under such Sublease shall make full and complete
attomment to Landlord for the balance of the term of such Sublease with the same force and
effect as though said Sublease were originally made directly from Landlord to the Subtenant.
12.3 Obligations under Lease. No Sublease or assignment, even with the consent of
Landlord, shall relieve or release Tenant from its obligation to pay the Rent and to perform all of
the other obligations to be performed by Tenant hereunder. The acceptance of rent by Landlord
from any other person shall not be deemed to be a waiver by Landlord of any provision of this
LA #92363 v10 -19-
7�ryu
Lease or to be a consent to any assignment or other transfer. Consent to one assignment or other
transfer shall not be deemed to constitute to any subsequent assignment or other transfer. The
covenants and conditions contained in this Article 12 shall apply to and bind the heirs,
successors, executors, administrators and assigns of Tenant.
ARTICLE 13. DEFAULT.
13.1 Events of Default. A breach of this Lease by Tenant shall exist if any of the
following events (individually an "Event of Default" and collectively "Events of Default ")
shall occur:
(a) Tenant shall have failed to pay Rent under the terms of this Lease within
ten (10) business days of when due and such failure shall not have been cured within ten (10)
business days after receipt of written notice from Landlord respecting such overdue payment; or
(b) Tenant shall have failed to perform any term, covenant, or condition of
this Lease to be performed by Tenant, except for the payment of Rent, and Tenant shall have
failed to cure same within thirty (30) days after written notice from Landlord, delivered in
accordance with the provisions of this Lease, where such failure could reasonably be cured
within said thirty (30) day period (subject to the occurrence of a Force Majeure Event (as defined
in Section 21.3, below)); provided, however, that where such failure could not reasonably be
cured within said thirty (30) day period, then Tenant shall not be in default unless it has failed to
promptly commence and thereafter be continuing to make diligent and reasonable efforts to cure
such failure as soon as practicable (subject to the occurrence of a Force Majeure Event).
13.2 Notice to Certain Persons. Landlord shall, before pursuing any remedy, give
notice of any Event of Default to Tenant. Each notice of an Event of Default shall specify the
Event of Default and shall describe any damage resulting from any such act.
13.3 Rights of Landlord. Following an Event of Default by Tenant, then in addition to
any other remedies available to Landlord at law or in equity, Landlord shall have the immediate
option to terminate this Lease and all rights of Tenant hereunder by giving written notice to
Tenant of such intention to terminate. Notwithstanding such termination, Tenant shall
nonetheless remain obligated to pay to Landlord all costs, losses or damages, including, without
limitation, all Rent due under this Lease, which amount shall remain due and payable at the same
time and in the same manner as otherwise provided in this Lease as if this Lease had not been
terminated; provided, however, that notwithstanding anything in this Lease to the contrary, there
shall be no right under any circumstances to accelerate the Rent or otherwise declare any
amounts payable by Tenant under this Lease and not then in default to be immediately due and
payable. Tenant's obligations to pay the amounts required pursuant to this Article 13 shall
remain in effect notwithstanding the termination of this Lease whether pursuant to an election by
Landlord or as decreed by a court of competent jurisdiction. In addition, Landlord shall have the
right granted pursuant to Section 1951.4 of the California Civil Code (lessor may continue lease
in effect after lessee's breach and abandonment and recover rent as it becomes due, if lessee has
right to sublet or assign, subject only to reasonable limitations). Accordingly, if Landlord does
not elect to terminate this Lease on account of a default by Tenant, Landlord may, from time to
LA #92363 v10 _20_
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time, without terminating this Lease, enforce all of its rights and remedies under this Lease,
including the right to recover all rent as it becomes due.
13.4 Landlord's Right of Re- entry. Following an Event of Default by Tenant,
Landlord shall also have the right, with or without terminating this Lease, to re -enter the
Premises pursuant to legal proceedings or pursuant to any notice provided by law and eject all
parties in possession therefrom. Without terminating this Lease and with or without re- entering
the Premises, Landlord may, at any time and from time to time following an Event of Default,
either recover all Rent provided for hereunder as it becomes due or re -let the Premises, or any
part or parts thereof, for the account of Tenant, or otherwise, receive and collect the rents
therefor, applying the same first to the payment of such expenses as Landlord may have paid,
assumed or incurred in recovering possession of the Premises, including reasonable costs,
expenses and attorneys' fees, and for placing the same in good order and condition, or preparing
or altering the same for re- letting, and all other expenses, commissions and charges paid,
assumed or incurred by Landlord in or in connection with re- letting the Premises, and then to the
fulfillment of the covenants of Tenant to be performed under this Lease. Regardless of whether
or not Landlord terminates this Lease, any surplus received by Landlord from such re- letting
shall be the absolute property of Landlord and Tenant shall have no right thereto. The parties
specifically acknowledge that the foregoing sentence sets forth their explicit intent
notwithstanding any provision or interpretation of California Civil Code Section 1951.2 to the
contrary.
13.5 No Automatic Termination. No reentry or taking possession of the leased
Premises by Landlord pursuant to Section 13.4 shall be construed as an election to terminate this
Lease or Tenant's liability for the payment of Rent or other charges due or accruing hereunder,
or as an acceptance of Tenant's surrender of the Premises, unless a written notice of such
intention is given to Tenant or unless the termination thereof is decreed by a court of competent
jurisdiction. Notwithstanding any re- letting without termination by Landlord because of any
default by Tenant, Landlord may at any time after such re- letting elect to terminate this Lease for
any such default.
13.6 Personal Property. Upon the occurrence of an Event of Default, all of the
Tenant's equipment and personal property (exclusive of motor vehicles), if any, shall remain on
the Premises and, continuing during the length of said Event of Default, Landlord shall have the
right to take exclusive possession of same and to use the same free of rent or charge until all
defaults have been cured or, at its option, to require Tenant to remove the same forthwith.
13.7 No Waiver. The waiver by Landlord of any breach of any term, covenant or
condition contained in this Lease shall not be deemed a waiver of such term, covenant or
condition of any subsequent breach thereof, or of any other term, covenant or condition
contained in this Lease. Landlord's subsequent acceptance of partial Rent or performance by
Tenant shall not be deemed to be an accord and satisfaction or a waiver of any preceding breach
by Tenant of any term, covenant or condition of this Lease or of any right of Landlord to a
forfeiture of this Lease by reason of such breach, regardless of Landlord's knowledge of such
preceding breach at the time of Landlord's acceptance. No term, covenant or condition of this
Lease shall be deemed to have been waived by Landlord unless such waiver is in writing and
signed by Landlord.
LA #92363 v10 -21-
13.8 Right to Cure. If Tenant fails, refuses or neglects to perform any obligation under
this Lease in the time and manner required herein, Landlord shall have the right, but not the
obligation, to do the same at the expense and for the account of Tenant. The amount of money
so expensed or obligation so incurred by Landlord, together with interest thereon at the Interest
Rate, shall be repaid to Landlord as additional rent within five (5) days of Tenant's receipt of
written notice thereof. Landlord's performance of such obligations shall not waive any default
by Tenant hereunder.
13.9 Landlord Defaults. If Landlord shall neglect or fail to perform or observe any of
the terms, covenants or conditions contained in this Lease on its part to be performed or observed
within thirty (30) days after written notice of default or, when more than thirty (30) days shall be
required because of the nature of the default, if Landlord shall fail to proceed diligently to cure
such default after written notice thereof, then Landlord shall be liable to Tenant for any and all
damages sustained by Tenant as a result of Landlord's breach; provided, however, it is expressly
understood and agreed that (a) any money judgment resulting from any default or other claim
arising under this Lease shall be satisfied only out of Landlord's interest in the Property, (b) no
other real, personal or mixed property of Landlord, wherever located, shall be subject to levy on
any such judgment obtained against Landlord, (c) if Landlord's interest in the Property is
insufficient to satisfy such judgment, Tenant will not institute any further action, suit, claim or
demand, in law or in equity, against Landlord (or any of the partners, officers, directors or
members of Landlord) for or on the account of such deficiency, (d) such neglect or failure shall
not constitute consent by Landlord for Tenant to perform or observe such terms, covenants or
conditions at Landlord's expense and (e) Tenant shall not have the right to terminate this Lease
as a result of any such default. Tenant hereby waives, to the extent permitted by law, any right to
satisfy said money judgment against Landlord except from Landlord's interest in the Property.
13.10 Notice to Lenders. If Landlord's Estate in the Property or any part thereof are at
any time subject to any mortgage or deed of trust and this Lease or the Rent due from Tenant
hereunder are assigned to such mortgagee, trustee or beneficiary (called "Assignee" for purposes
of this Section 13.10 only) and Tenant is given written notice thereof, including the post office
address of such Assignee, then Tenant shall give written notice to such Assignee, specifying the
default in reasonable detail, and affording such Assignee a reasonable opportunity to cure such
default for and on behalf of Landlord. If and when such Assignee has performed on behalf of
Landlord, such default shall be deemed cured.
ARTICLE 14. SURRENDER OF THE PREMISES.
On the expiration of the term of this Lease or earlier termination of this Lease pursuant to
the provisions hereof, Tenant shall quit and surrender the Premises to Landlord and in good
order, condition and repair, ordinary wear and tear (and damage and destruction or condemnation
if this Lease is terminated pursuant to either Articles 10 or 11) excepted. Such surrender of the
Premises shall be accomplished without the necessity for any payment therefor by Landlord.
Notwithstanding anything to the contrary contained in this Article 14, no such surrender shall
cause or be deemed to cause a merger of Landlord's Estate and Tenant's Estate, unless Landlord
expressly so agrees in writing.
LA #92363 v10 -22-
6
ARTICLE 15. TENANT'S OPTION TO PURCHASE PROPERTY.
Landlord hereby grants to Tenant an option to purchase the Property (including
Landlord's Estate) and the interest of Landlord under this Lease ( "Purchase Option ") upon the
following terms and conditions.
15.1 Option Price. The purchase price for the Property ( "Option Purchase Price ")
shall be Two Hundred Thousand and No /100 Dollars ($200,000.00). No portion of any Rent
payment due or paid under this Lease shall be applied to the Option Purchase Price.
15.2 Exercise of Option. The Purchase Option shall be exercised, if at all, by Tenant
giving to Landlord, no earlier than the first day of the thirty -third (33rd) Lease Year and no later
than one hundred twenty (120) days prior to the expiration of the term of this Lease (the "Option
Period "), (i) written notice of Tenant's election to exercise the Purchase Option ( "Exercise
Notice ") and (ii) Twenty -Five Thousand and No /100 Dollars ($25,000.00) in cash, by cashier's
check or by wire transfer of immediately available funds (the "Purchase Option Deposit "). The
Purchase Option Deposit shall be applied to the Option Purchase Price upon the closing date.
Except as provided below in this Section 15.2, Tenant's failure to deliver its Exercise Notice and
the Purchase Option Deposit during the Option Period shall result in an automatic termination of
the Purchase Option without further need of any documentation. In the event Landlord requests
Tenant to execute any documents necessary to evidence the termination of such option, Tenant
agrees to do so promptly. Landlord agrees that, unless Tenant has previously given an Exercise
Notice, Landlord will give Tenant a notice (the "Reminder Notice ") advising Tenant that the
Option Period will expire one hundred twenty (120) days prior to the expiration of the term of
this Lease. The Reminder Notice shall be given no sooner than one (1) year and no later than
one hundred eighty (180) days prior to the expiration of the term of this Lease (the "Reminder
Period "). If Landlord fails to timely give the Reminder Notice to Tenant, the Option Period and
closing date shall be automatically extended on a day- for -day basis (a) for each day after the
expiration of the Reminder Period that Landlord fails to deliver the Reminder Notice to Tenant
until such time as Landlord delivers the Reminder Notice to Tenant, or (b) if Tenant delivers the
Exercise Notice to Landlord prior to Landlord's delivery of the Reminder Notice to Tenant, for
each day after the expiration of the initial Option Period that Tenant does not deliver the Exercise
Notice to Landlord until Tenant delivers the Exercise Notice to Landlord; provided, however, in
the event that Tenant delivers the Exercise Notice to Landlord within the initial Option Period,
neither the Option Period nor the closing date shall be extended.
15.3 Escrow. In the event that the Purchase Option is duly exercised, the parties shall
open an escrow at the offices of First American Title Insurance Company located at the
corporate office in Santa Ana, California or at the offices of such other title or escrow company
as is mutually satisfactory to the parties (the "Escrow Holder ") no later than ninety (90) days
prior to the expiration of the term of this Lease. This Section 15.3 shall constitute Escrow
Holder's instructions. In addition, Escrow Holder shall prepare, and the parties hereby agree to
execute, such reasonable and customary supplemental instructions and instruments, as may be
reasonably required by the parties and Escrow Holder in order to clarify its duties hereunder and
LA #92363 v10 -23-
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facilitate an orderly sale of the Property to Tenant. To the extent of any inconsistency between
the provisions of such supplemental instructions and the provisions of this Purchase Option, the
provisions of this Purchase Option shall control.
15.4 Closing. For purposes of this Purchase Option, the "closing date" shall be
defined as the date the grant deed ( "Deed "), in a form provided by Landlord and acceptable to
Tenant, conveying the Property to Tenant, is recorded in the official records of Los Angeles
County, California. Title to the Property shall be conveyed to Tenant on the closing date subject
to such liens, claims and encumbrances as are then of record against the Property; provided, that
notwithstanding the foregoing or any other provision of this Lease to the contrary, title to the
Property shall be free of the lien of any deed of trust, mortgage, security instrument or other
monetary encumbrance, mechanics' and materialmen's liens, options or rights of first refusal to
purchase, and any leasehold interests or other rights to occupancy by any Person other than as
provided in Section 15.9 below. The closing date shall occur on the date on which the term of
this Lease expires, or such earlier or later date as the parties may mutually agree upon. Tenant's
obligation to pay Rent to Landlord shall terminate on the earlier of the closing date or the
expiration of the term of this Lease. At least one (1) day prior to the closing date, Tenant shall
deposit into escrow by cashier's check or wire transfer of immediately available funds any
remaining amounts due and owing under the Lease and all other amounts for which Tenant is
responsible under this Section 15. Landlord and Tenant shall each pay one -half of Escrow
Holder's fees and costs. All Operating and Maintenance Costs and Real Property Taxes will be
prorated as of the closing date. Any recordation, transfer or sales tax, including without
limitation, tax(es) on the Deed, taxes required to be paid in connection with the recording of the
Deed, documentary transfer or stamp taxes, or intangible taxes, shall be paid by Tenant on the
closing date.
15.5 Option Consideration/Liquidated Damages. IN THE EVENT TENANT
TERMINATES THE ESCROW, DEFAULTS OR OTHERWISE FAILS TO COMPLETE THE
PURCHASE OF THE PROPERTY FOR ANY REASON OTHER THAN LANDLORD'S
BREACH, LANDLORD'S SOLE REMEDY SHALL BE TO RETAIN AS OPTION
CONSIDERATION AND LIQUIDATED DAMAGES, THE PURCHASE OPTION DEPOSIT,
AND TENANT'S PURCHASE OPTION SET FORTH IN THIS ARTICLE 15 SHALL
TERMINATE AND HAVE NO FURTHER FORCE OR EFFECT. BY INITIALING BELOW,
LANDLORD AND TENANT AGREE THAT SUCH AMOUNT CONSTITUTES
REASONABLE OPTION CONSIDERATION AND A FAIR AND REASONABLE
ESTIMATION OF THE DAMAGES WHICH LANDLORD WILL SUSTAIN IN THE EVENT
THAT TENANT DOES NOT CONCLUDE THE PURCHASE OF THE PROPERTY. THIS
SECTION 15.5 SHALL APPLY ONLY TO THE PURCHASE OPTION AND SHALL NOT IN
ANY WAY LIMIT OR RESTRICT LANDLORD'S RIGHTS IN CONNECTION WITH ANY
BREACH OR DEFAULT OF T'EN T O 1. ER OBLIGATIONS UNDER THE LEASE.
Initials:
' `Landlord Tenant
15.6 Default.
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(a) Effect of Default. Tenant shall have no right to exercise this Purchase
Option or to close the transaction contemplated by such Purchase Option at any time after an
Event of Default pursuant to Section 13.1 has occurred. The Option Period shall not be extended
or delayed by reason of Tenant's inability to exercise this Purchase Option as a result of the
provisions of this Section.
(b) Termination_ of Option. This Purchase Option shall be subordinate and
subject to the provisions of this Lease, and if this Lease shall be terminated for any reason
whatsoever, such termination shall concurrently terminate this Purchase Option and this
Purchase Option shall be of no further force or effect.
15.7 "AS -IS ". Tenant acknowledges that it will have been occupying and operating
the Property for thirty -four (34) years prior to the closing date. Except as otherwise expressly
provided in this Article 15, Tenant represents, warrants and agrees that it is acquiring the
Property "AS -IS" "WHERE -IS" without any representation or warranty of Landlord express,
implied or statutory, as to the nature or condition of title to the Property or its fitness for Tenant's
intended use of same. Based on Tenant's rights under the Lease, Tenant, as of the closing date,
will be familiar with the condition of the Property and will have conducted its own independent
inspection, investigation and analysis of the Property as it deems necessary or appropriate in
acquiring the Property, including, without limitation, an analysis of any and all matters
concerning the condition of the Property and its suitability for Tenant's intended purposes, and a
review of all applicable laws, ordinances, rules and governmental regulations (including, but not
limited to, those relative to building, zoning and land use) affecting directly or indirectly the
development, use, occupancy or enjoyment of the Property. Provided that title to the Property is
effectively transferred to Tenant on the closing date in accordance with the terms of this Article
15, and except for Landlord's obligations of indemnity under this Lease (which shall survive the
closing date and shall not be merged into the Deed), Tenant further agrees to release Landlord
and its respective agents, employees, officers, directors, shareholders, joint venturers ' and
partners from, and this agreement shall fully and finally settle, all demands, charges, claims,
accounts or causes of action of any nature, including, without limitation, both known and
unknown claims and causes of action which Tenant had or now has or hereafter can, shall, or
may have against any of the other parties arising out of or in connection with the condition of the
Property. With respect to the releases set forth in this Section 15.7 above, Tenant acknowledges
that it has been advised by legal counsel and is familiar with the provisions of California Civil
Code Section 1542, 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."
THE UNDERSIGNED, BEING AWARE OF SAID CODE SECTION, HEREBY
EXPRESSLY WAIVE ALL RIGHTS THEY MAY HAVE THEREUNDER, AS
WELL AS ANY OTHER STATUTES OR COMMON LAW PRINCIPLES OF
SIMILAR EFFECT PERTAINING TO THE RELEASES SET FORTH HEREIN.
LA #92363 v10 -25-
1 0
Tenant represents and warrants to Landlord that it has executed this Lease with
full knowledge of any and all rights which they may have by reason of any of the matters
described herein. Tenant further assumes the risk of mistake of fact in connection with the true
facts involved in connection with the matters described herein, and with respect to any facts
which are now unknown to them relating thereto. The waiver and release by Tenant set forth in
this Section 15.7 shall survive the closing of the transaction and the recordation of the Deed.
15.8 1031 Exchange. Tenant acknowledges that Landlord may engage in a tax -
deferred exchange ( "Exchange ") pursuant to Section 1031 of the Internal Revenue Code if
Tenant elects to exercise its Purchase Option. To effect this Exchange, Landlord may assign its
rights in, and delegate its duties under, this Article 15, as well as the transfer of its interest in the
Property, to any exchange accommodator which Landlord selected by Landlord. As an
accommodation to Landlord, Tenant agrees to cooperate with Landlord in connection with its
Exchange, including delaying the closing date for a reasonable period of time as requested by
Landlord, including, without limitation, the execution of documents therefor, upon the following
terms and conditions:
(a) Landlord's Duties Not Affected. All representations, warranties,
covenants and obligations of Landlord set forth in this Lease shall not be affected or limited prior
to the closing by Landlord's use of an exchange accommodator.
(b) Accommodator Not Liable. No assignee of Landlord pursuant to the
Exchange or otherwise will be obligated to assume the duties or obligations of Landlord under
this Lease, except for purposes of effectuating the Exchange.
(c) No Additional Costs to Tenant. Tenant shall in no way be obligated to
pay any additional escrow costs, brokerage commissions, title costs, survey costs or other
recording costs incurred with respect to any exchange property and/or the Exchange.
15.9 Lease to Landlord. As a condition precedent to Tenant's exercise of the Purchase
Option and the closing thereof, and in consideration of Landlord's granting of the Purchase
Option to Tenant, Landlord, as tenant, and Tenant, as landlord, shall enter into a lease (the
"Retail Lease ") pursuant to which Landlord, as tenant, shall lease the Retail Space for a term of
ninety nine (99) years, on a triple net basis, at a base rental rate of One and No /100 Dollar
($1.00) per year for each of the ninety nine (99) years of the lease term. As part of the Retail
Lease, Tenant, as landlord, shall record against the Property a covenant to lease Landlord or any
tenants of Landlord under subleases of the Retail Lease, twenty three (23) parking stalls in the
Parking Structure for a period equivalent to the term of the Retail Lease, subject to an additional
payment of One and No /100 Dollar ($1.00) per year for the use of such twenty three (23) parking
stalls. In addition, a perpetual easement (the "Parking Easement ") shall be recorded against the
Property in favor of Landlord, as owner of the Supermarket Space, and any tenants of the
Supermarket Space, for the use of fifty (50) parking stalls in the Parking Structure. Landlord, as
tenant of the Retail Lease and owner of the Supermarket Space, shall be and remain obligated to
pay its pro rata share of Operating and Maintenance Costs and Real Property Taxes for the
Parking Structure in connection with its use of the parking stalls in the Parking Structure. If
Landlord defaults in its obligation to pay its pro rata share of such Operating and Maintenance
Costs and Real Property Taxes, the Parking Easement shall automatically be terminated and
LA #92363 v10 -26-
5�1
released; provided, that at the request and expense of Tenant, Landlord shall promptly execute,
acknowledge and deliver to Tenant such documents and instruments as are necessary to
terminate and release the Parking Easement.
ARTICLE 16. TRANSFERS BY LANDLORD.
Subject to Tenant's option to purchase as set forth in Article 15, above, Landlord may
sell, assign, convey, or otherwise transfer all or any portion of Landlord's Estate at any time.
Landlord shall be released from any ongoing obligations hereunder from and after the date of
any such transfer of Landlord's Estate provided the party to which Landlord has assigned
Landlord's Estate assumes in writing all obligations of Landlord hereunder arising after the date
of such transfer.
ARTICLE 17. NOTICES.
Any notice, approval, demand or other communication required or desired to be given
pursuant to this Lease shall be in writing and shall be personally served (including by means of
professional messenger service or air express service using receipts) or in lieu of personal
service, deposited in the United States mail, postage prepaid, certified or registered mail, return
receipt requested, and, if personally served, shall be deemed received upon delivery, and unless
sooner received, each mailed notice shall be deemed received seventy -two (72) hours after same
shall have been so deposited in the United States mail addressed as set forth below:
If to Landlord: c/o 612 Twin Holdings, LLC
1141 Highland Avenue, Suite 203
Manhattan Beach, California 90266 -5326
Attention: Mr. Mark A. Neumann
with a copy to: Allen Matkins Leek Gamble & Mallory LLP
1901 Avenue of the Stars, Suite 1800
Los Angeles, California 90067
Attention: John M. Tipton, Esq.
If to Tenant City of El Segundo
350 Main Street
El Segundo, California 90245 -3895
Attention: City Manager
with a copy to: Burke, Williams & Sorensen, LLP
611 West Sixth Street, Suite 2500
Los Angeles, California 90017
Attention: Mark D. Hensley, Esq.
Either Landlord or Tenant may change its respective address by giving written notice to the other
in accordance with the provisions of this Section.
LA #92363 v10 -27-
ARTICLE 18. SUBORDINATION; ESTOPPEL CERTIFICATES.
18.1 Subordination. Upon the prior request of Landlord, Tenant will execute such
reasonable instruments providing for the subordination of this Lease to the lien of any mortgage
or deed of trust, or the lien resulting from any other similar method of financing or refinancing,
in force against the Property (as used in this Article 18, collectively, "Lien "), and providing for
the attornment by Tenant to the holder of such Lien as landlord under this Lease, if any such
instrument of subordination and attornment shall contain the agreement of the holder of such
Lien to the following, which agreement may be conditioned upon this Lease being in full force
and effect and Tenant not being in default under this Lease:
(a) No foreclosure of, deed given in lieu of foreclosure, or sale under such
Lien, and no steps or procedures taken under such Lien shall disturb Tenant's right to possession
of the Premises or affect any of Tenant's rights and options under this Lease, and any resulting
purchaser or other transferee of the Property shall be subject to this Lease and shall recognize
Tenant's rights and options under this Lease.
(b) This Lease may be amended with the prior written consent of the holder of
such Lien, which consent shall not be unreasonably withheld or withheld for the purpose of
effectuating a change in the terms of the Lien or this Lease.
(c) Tenant shall not be named in any foreclosure action or other proceeding
related to the Lien.
18.2 Estoppel Certificates. Tenant agrees promptly following request by Landlord or
the holder of any deed of trust, mortgage or other encumbrance on Landlord's Estate to execute
and deliver an Estoppel Certificate to whichever of them has requested the same. Landlord
agrees promptly following request by Tenant or any proposed Subtenant to execute and deliver
an Estoppel Certificate to whichever of them has requested the same. The term "Estoppel
Certificate" shall mean an estoppel certificate, certifying (a) that this Lease is unmodified and in
full force and effect, or, if modified, stating the nature of such modification and certifying that
this Lease, as so modified, is in full force and effect and the date to which the Rent and other
charges are paid in advance, if any, (b) that, to the knowledge of the responding party, there are
no uncured defaults on the part of Landlord and Tenant hereunder, or if there exist any uncured
defaults on the part of Landlord and/or Tenant hereunder stating the nature of such uncured
defaults on the part of Landlord and/or Tenant, and (c) the correctness of such other information
respecting the status of this Lease as may be reasonably required by the party hereto requesting
execution of such Estoppel Certificate. A party's failure to so execute and deliver an Estoppel
Certificate within ten (10) business days following written request as required above, shall be
conclusive upon such party that as of the date of said request for the same (a) that this Lease is in
full force and effect, without modification except as may be represented by the party hereto
requesting execution of such Estoppel Certificate, (b) that there are no uncured Events of Default
in Landlord's or Tenant's obligations under this Lease except as may be represented by the party
hereto requesting execution of such Estoppel Certificate, and (c) that no Rent has been paid in
advance except as may be represented by the party hereto requesting execution of such Estoppel
Certificate.
LA #92363 v10 _28_
'
ARTICLE 19. ENFORCEMENT AND ATTORNEYS' FEES.
In any proceeding or controversy associated with or arising out of this Lease or a claimed
or actual breach hereof, the prevailing party shall be entitled to recover from the other party as a
part of the prevailing party's costs, such party's actual attorneys', appraiser's and other
professionals' fees and court costs. The award for legal expenses shall not be computed in
accordance with any court schedule, but shall be as necessary to fully reimburse all attorneys'
and other professionals' fees and other expenses actually incurred in good faith, regardless of the
size of the judgment, it being the intention of the parties to fully compensate the prevailing party
for all the attorneys' and other professionals' fees and other expenses paid in good faith.
ARTICLE 20. NO MERGER.
The voluntary or other surrender of this Lease by Tenant, or a mutual cancellation
thereof, shall not work a merger and shall, at the option of Landlord, operate as an assignment to
Landlord of any or all Subleases of Subtenants.
ARTICLE 21. TENANT'S CONDITIONS PRECEDENT.
Until June 21, 2002 (the "Investigation Period "), Tenant shall have the right, at its sole
cost and expense, to conduct such examinations, inquiries, investigations, tests and studies
respecting the environmental condition of the Property and the condition of the title to the
Property (collectively, the "Investigations ") as Tenant deems necessary or appropriate in its sole
judgment. If as a result of the Investigations, Tenant is dissatisfied with any aspect of the
environmental condition of the Property or the condition of the title to the Property, Tenant may
terminate this Lease by giving written notice of termination to Landlord on or before the
expiration of the Investigation Period.
ARTICLE 22. GENERAL.
22.1 Captions. The captions used in this Lease are for the purpose of convenience only
and shall not be construed to limit or extend the meaning of any part of this Lease.
22.2 Counterparts. Any executed copy of this Lease shall be deemed an original for all
purposes. This Lease may be executed in one or more counterparts, each of which shall be an
original, and all of which together shall constitute a single instrument.
22.3 Time of Essence. Time is of the essence for the performance of each covenant
and term of this Lease. Notwithstanding the foregoing, any non - monetary obligation of Tenant
or Landlord which cannot be satisfied due to war, strikes, acts of God or other events, whether
similar or dissimilar to the foregoing, which are beyond the reasonable control of Tenant or
Landlord, as the case may be (each, a "Force Majeure Event "), shall be excused until the
cessation of such Force Majeure Event.
22.4 Severability. If any one or more of the provisions contained herein shall for any
reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision of this Lease, but this Lease shall be
construed as if such invalid, illegal or unenforceable provision had not been contained herein.
LA #92363 v10 -29-
70 T
V ® c
22.5 Interpretation. This Lease shall be construed and enforced in accordance with the
laws of the State of California. The language in all parts of this Lease shall in all cases be
construed as a whole according to its fair meaning, and not strictly for or against either Landlord
or Tenant. When the context of this Lease requires, the neuter gender includes the masculine,
the feminine, a partnership or corporation or joint venture or other entity, and the singular
includes the plural.
22.6 Successors and Assigns. The covenants and agreements contained in this Lease
shall be binding upon and shall inure to the benefit of the parties hereto and their respective
permitted heirs, successors, and assigns.
22.7 Waivers. The waiver of any breach of any term, covenant or condition herein
contained shall not be deemed to be a waiver of such term, covenant or condition or any
subsequent breach of the same or any other term, covenant or condition herein contained.
22.8 Remedies. All remedies herein conferred shall be deemed cumulative and no one
remedy shall be exclusive of any other remedy herein conferred or created by law.
22.9 Good Faith. Except where a party hereto is specifically permitted to act in its sole
and absolute discretion, each party hereto agrees to act reasonably and in good faith with respect
to the performance and fulfillment of the terms of each and every covenant and condition
contained in this Lease.
22.10 No Partnership. The parties hereto agree that nothing contained in this Lease
shall be deemed or construed as creating a partnership, joint venture, or association between
Landlord and Tenant, or cause the other party to be responsible in any way for the debts or
obligations of the other party, and neither the method of computing rent nor any other provision
contained in this Lease nor any acts of the parties hereto shall be deemed to create any
relationship between Landlord and Tenant other than the relationship of landlord and tenant.
22.11 Inte agr tion. This Lease and the Exhibits attached hereto (each of which Exhibits
is a part hereof and is incorporated herein by this reference) constitute the entire agreement
between the parties, and there are no agreements or representations between the parties except as
expressed herein. All prior negotiations and agreements between Landlord and Tenant with
respect to the subject matter hereof are superseded by this Lease. Except as otherwise provided
herein, no subsequent change or addition to this Lease shall be binding unless in writing and
signed by the parties hereto.
22.12 Commissions. Landlord and Tenant each represent and warrant to the other that
they have employed no broker, finder or other person in connection with the transactions
contemplated under this Lease which might result in the other party being held liable for all or
any portion of a commission hereunder. Tenant acknowledges, however, that Landlord has been
represented by Mark A. Neumann (the, "Broker ") in connection with the negotiation of this
Lease; provided, that Landlord shall be solely responsible for the payment of any commission
due such Broker in connection therewith. Landlord and Tenant each hereby agree to indemnify
and hold the other free and harmless from and against all claims and liability arising by reason of
LA #92363 vl0 _30_
5��
the incorrectness of the representations and warranties made by such party in this Section,
including, without limitation, reasonable attorneys' fees and litigation costs.
22.13 General Covenants, Representations And Warranties Of Landlord. Landlord
hereby represents and warrants that Landlord has due authority to enter into this Lease and that
the individuals signing this Lease on behalf of Landlord are authorized to execute this Lease and
that, upon such execution, this Lease shall be legally binding upon Landlord; that prior to the
commencement of construction of the Parking Structure, Landlord shall hold fee title to the
Property free and clear of any restrictions that would prevent Landlord from entering into this
Lease or prevent Tenant from operating the Premises, once constructed, in the manner
contemplated by this Lease. In the event Landlord does not acquire title to the Property on or
before October 15, 2002, Landlord shall have the option to deliver to Tenant notice so stating,
and upon delivery of such notice to Tenant, this Lease shall terminate, be of no further force or
effect and the parties hereunder shall be relieved of all of their respective duties and obligations
to one another.
22.14 Survival. Notwithstanding anything to the contrary contained in this Lease, the
provisions (including, without limitation, covenants, agreements, representations, warranties,
obligations and liabilities described therein) of this Lease which from their sense and context are
intended to survive the expiration or earlier termination of this Lease (whether or not such
provision expressly provides as such) shall survive such expiration or earlier termination of this
Lease and continue to be binding upon the applicable party.
IN WITNESS WHEREOF, the parties hereto have executed this Lease as of the Effective
Date.
"LANDLORD"
612 TWIN 1401 GS, a ifornia
limited liiril" mp
A
By:
Name: r1 w 2,, A. C ,l -�7- ,j `i-
Title: JA 6, " A e- i ►-, L 1`1 el H a
LA #92363 v10 -31-
"TENANT"
CITY OF EL SEGN li O,
a municipal corporati
By:
Name: Mike Gordon
Title: Mayor - City of El Segundo
LA #92363 v10 -32-
1
LEGAL DESCRIPTION
That certain real property located in the State of California, County of Los Angeles more
particularly described as:
THE SOUTHERLY 6 FEET OF LOT 16 AND LOTS 17 THROUGH 24 IN BLOCK 43
OF EL SEGUNDO, IN THE CITY OF EL SEGUNDO, COUNTY OF LOS ANGELES, STATE
OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 20, PAGES 22 AND 23 OF MAPS,
IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY.
CONSTRUCTION AGREEMENT
This Construction Agreement ( "Agreement ") is entered as of June 18, 2002, by and
between 612 TWIN HOLDINGS, LLC, a California limited liability company ( "Landlord "), and
THE CITY OF EL SEGUNDO, a municipal corporation ( "Tenant "), which Agreement sets forth
the terms and conditions relating to the construction of the Parking Structure on the Property (as
those terms are defined in the Lease Agreement between Landlord and Tenant, dated as of June
18, 2002 ( "Lease ")).
1. Approved Plans and Specifications. Tenant has reviewed those certain concept
drawings relating to the Parking Structure prepared by International Parking Design, Inc.
( "Landlord's Architect "), dated May 2, 2002, Job No. 02 -310 (the "Concept Drawings ").
Following the full execution and delivery of the Lease and Tenant's waiver of its condition
precedent in Section 21 of the Lease, Landlord shall exercise due diligence in causing
Landlord's Architect to prepare proposed final design drawings for the construction of the
Parking Structure, provided that such proposed final drawings shall be materially consistent with
the size of the Parking Structure represented in the Concept Drawings. The proposed final
design drawings shall include all details normally required by the City in final design drawings,
including without limitation, details respecting the building materials to be used on the exterior
portion of the Parking Structure, as well as proposed landscaping details. Tenant, in its capacity
as a City, shall review the final design drawings on the same basis it would review other
construction projects within the City, including but not limited to, performing design review and
code compliance review with respect to the Tenant's Municipal Code and applicable building
and safety codes. The City shall exercise due diligence in performing such review. "Approved
Plans and Specifications" shall refer to the final design drawing for the Parking Structure that
have been approved by Tenant. Landlord shall cause the Parking Structure to be constructed in
accordance with the Approved Plans and Specifications and the terms set forth herein.
2. Contractor and Subcontractors. Landlord shall select a contractor ( "Contractor ")
to construct the Parking Structure, provided that, in doing so, Landlord shall either (i)
competitively bid the construction of the Parking Structure to a minimum of two (2) qualified
contractors, and select the lowest bid (after adjusting the bids for any inconsistent assumptions),
or (ii) select a Contractor based on such Contractor's agreed upon general conditions and fees,
competitively bid each trade of work in connection with the construction of the Parking Structure
to a minimum of two (2) qualified subcontractors, and select the lowest subcontractor bid for
each trade of work (after adjusting the bids for any inconsistent assumptions). Landlord shall
cause the contractors and subcontractors constructing the Parking Structure to pay prevailing
wage with respect to such construction activities.
3. Development Budget; Tenant's Payment. Prior to the commencement of
construction of the Parking Structure, Landlord shall submit to Tenant a detailed development
budget ( "Budget ") setting forth the budgeted costs for the construction of the Parking Structure.
Tenant shall not have any approval rights in connection with the Budget and shall pay to
Landlord Tenant's Payment (defined below) in accordance with the terms of Section 6 below.
LA94146.1 I
"Tenant's Payment" shall mean all costs incurred by Landlord for the design and construction of
the Parking Structure (excluding costs for any land value), multiplied by 0.5682 (i.e., the ratio
that the 100 parking spaces allotted to Tenant under the terms of the Lease bears to the 176 total
parking spaces in the Parking Structure); provided however, in no event shall Tenant's Payment
exceed One Million One Hundred Thousand and No /100 Dollars ($1,100,000.00) (the "Cap ").
In the event Tenant's allocated share of the actual costs for the design and construction of the
Parking Structure would exceed the Cap (the "Excess "), Landlord may elect, at its sole option,
(A) to pay such Excess (in which event the Lease shall continue in full force and effect), or (B)
to not pay such Excess. If Landlord elects option (B), above, then Landlord shall deliver notice
to Tenant (the "Excess Notice ") so stating, in which event Tenant may elect, at its sole option,
within thirty (30) days following receipt from Landlord of the Excess Notice (i) to pay Tenant's
allocated portion of such Excess or (ii) terminate the Lease.
4. Permits. Landlord shall exercise due diligence in obtaining from the City of El
Segundo all applicable building permits necessary to allow the Contractor to commence and
fully complete the construction of the Parking Structure (the "Permits ").
5. Construction. Landlord shall diligently pursue the construction of the Parking
Structure to completion. It is anticipated that construction of the Parking Structure will be
completed within ten (10) months following the initial commencement of construction, subject to
delay for any Force Maj cure Events.
6. Completion of Construction. "Substantial Completion" of the Parking Structure
shall occur on the later of (i) the substantial completion of construction of the Parking Structure,
as evidenced by the receipt of a certificate of occupancy, temporary certificate of occupancy, or a
legal equivalent thereof issued by the applicable agency allowing legal occupancy of the Parking
Structure and (ii) the opening for business by the tenant in the Supermarket Space (as that term is
defined in the Lease). Upon Substantial Completion of the Parking Structure, Landlord shall so
notify Tenant and Tenant shall deliver to Landlord, within fifteen (15) days thereafter, Tenant's
Payment (including any Excess which Tenant agreed to pay pursuant to the terms of Section 3,
above).
Landlord: Tenant:
1 Iw 1 I
(Print Name)
�v�b- �•ryo.�a� Mir -nA��L
(Print Title)
LA94146.1 2
CITY OF EL SEGUNDO
a municipal corpo tin
By
Mike Gordon
(Print Name)
Mayor - City of El Segundo
(Print Title)
t) ) i. �.r�"9, ",
FXNTRTT "R"
FORM OF CONSTRUCTION AGREEMENT
This Construction Agreement ( "Agreement ") is entered as of 2002, by
and between 612 TWIN HOLDINGS, LLC, a California limited liability company ( "Landlord "),
and THE CITY OF EL SEGUNDO, a municipal corporation ( "Tenant "), which Agreement sets
forth the terms and conditions relating to the construction of the Parking Structure on the
Property (as those terms are defined in the Lease Agreement between Landlord and Tenant,
dated as of 2002 (`Lease ")).
1. Approved Plans and Specifications. Tenant has reviewed those certain concept
drawings relating to the Parking Structure prepared by International Parking Design, Inc.
(`Landlord's Architect "), dated May 2, 2002, Job No. 02 -310 (the "Concept Drawings ").
Following the full execution and delivery of the Lease and Tenant's waiver of its condition
precedent in Section 21 of the Lease, Landlord shall exercise due diligence in causing
Landlord's Architect to prepare proposed final design drawings for the construction of the
Parking Structure, provided that such proposed final drawings shall be materially consistent with
the size of the Parking Structure represented in the Concept Drawings. The proposed final
design drawings shall include all details normally required by the City in final design drawings,
including without limitation, details respecting the building materials to be used on the exterior
portion of the Parking Structure, as well as proposed landscaping details. Tenant, in its capacity
as a City, shall review the final design drawings on the same basis it would review other
construction projects within the City, including but not limited to, performing design review and
code compliance review with respect to the Tenant's Municipal Code and applicable building
and safety codes. The City shall exercise due diligence in performing such review. "Approved
Plans and Specifications" shall refer to the final design drawing for the Parking Structure that
have been approved by Tenant. Landlord shall cause the Parking Structure to be constructed in
accordance with the Approved Plans and Specifications and the terms set forth herein.
2. Contractor and Subcontractors. Landlord shall select a contractor ( "Contractor ")
to construct the Parking Structure, provided that, in doing so, Landlord shall either (i)
competitively bid the construction of the Parking Structure to a minimum of two (2) qualified
contractors, and select the lowest bid (after adjusting the bids for any inconsistent assumptions),
or (ii) select a Contractor based on such Contractor's agreed upon general conditions and fees,
competitively bid each trade of work in connection with the construction of the Parking Structure
to a minimum of two (2) qualified subcontractors, and select the lowest subcontractor bid for
each trade of work (after adjusting the bids for any inconsistent assumptions). Landlord shall
cause the contractors and subcontractors constructing the Parking Structure to pay prevailing
wage with respect to such construction activities.
3. Development Budget; Tenant's Payment. Prior to the commencement of
construction of the Parking Structure, Landlord shall submit to Tenant a detailed development
budget ( "Budget ") setting forth the budgeted costs for the construction of the Parking Structure.
Tenant shall not have any approval rights in connection with the Budget and shall pay to
Landlord Tenant's Payment (defined below) in accordance with the terms of Section 6 below.
LA #92363 v10 _ 1,-
0 J
"Tenant's Payment" shall mean all costs incurred by Landlord for the design and construction of
the Parking Structure (excluding costs for any land value), multiplied by 0.5682 (i.e., the ratio
that the 100 parking spaces allotted to Tenant under the terms of the Lease bears to the 176 total
parking spaces in the Parking Structure); provided however, in no event shall Tenant's Payment
exceed One Million One Hundred Thousand and No /100 Dollars ($1,100,000.00) (the "Cap ").
In the event Tenant's allocated share of the actual costs for the design and construction of the
Parking Structure would exceed the Cap (the "Excess "), Landlord may elect, at its sole option,
(A) to pay such Excess (in which event the Lease shall continue in full force and effect), or (B)
to not pay such Excess. If Landlord elects option (B), above, then Landlord shall deliver notice
to Tenant (the "Excess Notice ") so stating, in which event Tenant may elect, at its sole option,
within thirty (30) days following receipt from Landlord of the Excess Notice (i) to pay Tenant's
allocated portion of such Excess or (ii) terminate the Lease.
4. Permits. Landlord shall exercise due diligence in obtaining from the City of El
Segundo all applicable building permits necessary to allow the Contractor to commence and
fully complete the construction of the Parking Structure (the "Permits ").
5. Construction. Landlord shall diligently pursue the construction of the Parking
Structure to completion. It is anticipated that construction of the Parking Structure will be
completed within ten (10) months following the initial commencement of construction, subject to
delay for any Force Majeure Events.
6. Completion of Construction. "Substantial Completion" of the Parking Structure
shall occur on the later of (i) the substantial completion of construction of the Parking Structure,
as evidenced by the receipt of a certificate of occupancy, temporary certificate of occupancy, or a
legal equivalent thereof issued by the applicable agency allowing legal occupancy of the Parking
Structure and (ii) the opening for business by the tenant in the Supermarket Space (as that term is
defined in the Lease). Upon Substantial Completion of the Parking Structure, Landlord shall so
notify Tenant and Tenant shall deliver to Landlord, within fifteen (15) days thereafter, Tenant's
Payment (including any Excess which Tenant agreed to pay pursuant to the terms of Section 3,
above).
Landlord:
612 TWIN HOLDINGS, LLC
a California limited liability company
(Print Name)
(Print Title)
LA #92363 v10 _2_
Tenant:
CITY OF EL SEGUNDO
a municipal corporation
(Print Name)
(Print Title)
µ A
EXHIBIT "C"
FORM OF MEMORANDUM OF LEASE
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
City Clerk
CITY OF EL SEGUNDO
350 Main Street
El Segundo, California 90245 -3895
MEMORANDUM OF LEASE
THIS MEMORANDUM OF LEASE ( "Memorandum ") is made as of this day of
' 2002 by and among 612 TWIN HOLDINGS, LLC, a California limited
liability company ( "Landlord "), and THE CITY OF EL SEGUNDO, a municipal corporation
( "Tenant ").
1. Landlord and Tenant have entered into that certain Lease Agreement dated
2002 (the "Lease ") pursuant to which Landlord has leased to Tenant and
Tenant has leased from Landlord a portion of that certain parking structure to be constructed by
Landlord on that certain real property located in the City of El Segundo, County of Los Angeles,
State of California, and more particularly described on Exhibit "1" attached hereto (the
"Property "), for a term of thirty -four (34) years, commencing as provided in the Lease, for the
rental and subject to the terms and covenants set forth in the Lease.
2. The Lease further provides that Tenant shall have an option to purchase the
Property pursuant to terms further set forth in the Lease.
3. The purpose of this Memorandum is to give notice of the existence of the Lease
and of the option referred to in paragraph 2 above. To the extent that any provision of this
Memorandum conflicts with any provision of the Lease, the Lease shall control.
4. This Memorandum may be executed in counterparts, each of which shall be
deemed an original, but all of which, together shall constitute one and the same instrument.
[SIGNATURES ARE ON THE NEXT PAGE]
LA #92363 v10 _,I-
7010
a
IN WITNESS WHEREOF, the parties hereto have executed this Memorandum as of the
day and year first above written. -
"'LANDLORD": 612 TWIN HOLDINGS, LLC,
a California limited liability company
"TENANT"
LA #92363 v 10 -2-
ma
Name:
Title:
CITY OF EL SE, :GNU DO,
a municipal corporation
0
Name:
FEW
m m m
LEGAL DESCRIPTION OF SUPERMARKET SPACE
That certain real property located in the State of California, County of Los Angeles more
particularly described as:
THE NORTHERLY 19 FEET OF LOT 16 AND LOTS 10 THROUGH 15 IN BLOCK 43 OF
EL SEGUNDO, IN THE CITY OF EL SEGUNDO, COUNTY OF LOS ANGELES, STATE OF
CALIFORNIA, AS PER MAP RECORDED IN BOOK 20, PAGES 22 AND 23 OF MAPS, IN
THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY.
LA #92363 v1 0 -1-
3 1 0 , ® ® ®j
EXHIBIT "E"
FORM OF ACKNOWLEDGEMENT OF COMMENCEMENT OF TERM
Reference is made to that certain Ground Lease Agreement ( "Lease "), dated as of
„ 2002, by and between 612 TWIN HOLDINGS, LLC ( "Landlord ") and THE
CITY OF EL SEGUNDO ( "Tenant "), respecting the leasing by Landlord to Tenant of certain
premises located in the City of El Segundo, County of Los Angeles, State of California.
Landlord and Tenant hereby acknowledge and agree that the Commencement Date of the Lease,
as provided in Section 2.3 of the Lease, is , 200_,
Landlord:
612 TWIN HOLDINGS, LLC
a California limited liability company
(Print Name)
(Print Title)
LA #92363 v10 _1
Tenant:
CITY OF EL SEGUNDO
a municipal corporation
(Print Name)
(Print Title)