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GROUND LEASE
by and between
CITY OF ANAHEIM,
a California municipal corporation and charter city,
“Landlord”
and
39 COMMONS PARTNERS, LLC,
a Delaware limited liability company
“Tenant”
Dated as of December , 2022
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ARTICLE 1. LEASE OF THE PROPERTY. ........................................................................ 1
1.1 Implementation of the DDA; Memorandum of Ground Lease. ............................. 1
1.2 Lease of the Property; Ownership of Improvements ............................................. 2
1.3 Purpose of this Lease ............................................................................................. 2
1.4 Recorded Encumbrances ........................................................................................ 2
1.5 Memorandum of Ground Lease ............................................................................. 2 ARTICLE 2. DEFINITIONS. ................................................................................................ 2 ARTICLE 3. TERM. ........................................................................................................... 13
3.1 Term ..................................................................................................................... 13
3.2 Certain Time Extensions ...................................................................................... 13
3.3 Early Termination of Lease ................................................................................. 14 ARTICLE 4. RENT. ............................................................................................................ 15
4.1 Rent. ..................................................................................................................... 15
4.2 Payment of Rent ................................................................................................... 15
4.3 Audit. ................................................................................................................... 16
4.4 Utility Services..................................................................................................... 16
4.5 Taxes and Assessments. ....................................................................................... 17
4.6 Overdue Interest ................................................................................................... 18 ARTICLE 5. POSSESSION OF PROPERTY. ................................................................... 18
5.1 Acceptance of Property ........................................................................................ 18
5.2 Construction of Improvements ............................................................................ 18
5.3 Ownership of Improvements................................................................................ 18
5.4 Surrender of Property. .......................................................................................... 18
5.5 Abandonment ....................................................................................................... 20 ARTICLE 6. REPRESENTATIONS AND WARRANTIES; MATERIAL
ADVERSE CHANGE. .................................................................................. 20
6.1 Landlord’s Representations ................................................................................. 20
6.2 Tenant’s Representations ..................................................................................... 21
6.3 Tenant Obligation to Notify re Material Adverse Change ................................... 23 ARTICLE 7. CONSTRUCTION OF THE IMPROVEMENTS. ........................................ 23
7.1 Construction of Improvements ............................................................................ 23
7.2 Alterations ............................................................................................................ 24
7.3 Construction Cost................................................................................................. 24
7.4 Diligent Prosecution to Completion..................................................................... 24
7.5 Right of Access .................................................................................................... 24
7.6 Governmental Approvals ..................................................................................... 25
7.7 Landlord’s Right to Discharge Lien .................................................................... 25
7.8 Notice of Non-Responsibility .............................................................................. 25
7.9 Release of Construction Covenants ..................................................................... 25 ARTICLE 8. USE OF THE PROPERTY. ........................................................................... 26
8.1 Covenants Regarding Use .................................................................................... 26
8.2 Covenant Regarding Specific Uses ...................................................................... 26
8.3 Approval of Subtenants........................................................................................ 26 082161\16361704v6
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8.4 Management of the Project. ................................................................................. 26 ARTICLE 9. INSURANCE AND INDEMNIFICATION. ................................................. 27
9.1 Landlord Not Liable ............................................................................................. 27
9.2 Indemnification .................................................................................................... 27
9.3 Insurance. ............................................................................................................. 28
9.4 Contractors ........................................................................................................... 30
9.5 Waiver of Subrogation ......................................................................................... 30 ARTICLE 10. MAINTENANCE OF THE PROPERTY. ..................................................... 30
10.1 General Maintenance by Tenant .......................................................................... 30
10.2 Inspections of the Property .................................................................................. 31 ARTICLE 11. OWNERSHIP OF AND RESPONSIBILITY FOR
IMPROVEMENTS. ....................................................................................... 31
11.1 Ownership During Term. ..................................................................................... 31
11.2 Ownership at Expiration or Termination. ............................................................ 32
11.3 Waste.................................................................................................................... 33
11.4 Compliance with Laws ........................................................................................ 33 ARTICLE 12. SIGNS AND MARKETING. ........................................................................ 33
12.1 Project Signage .................................................................................................... 33
12.2 Focal Public Art Piece ......................................................................................... 33 ARTICLE 13. CASUALTY. ................................................................................................. 33
13.1 Damage or Destruction Due to Cause Required to be Covered by Insurance Covered by Insurance .......................................................................... 33
13.2 Damage or Destruction Due to Cause Not Required to be Covered by Insurance .............................................................................................................. 34 ARTICLE 14. TENANT COVENANTS. ............................................................................. 34
14.1 Restrictive Covenants .......................................................................................... 34
14.2 Nondiscrimination Covenants .............................................................................. 35
14.3 Jobs Creation ........................................................................................................ 36
14.4 Project Jobs Description on the Property ............................................................. 36
14.5 Project Jobs Available to Low and Moderate Income Persons............................ 36
14.6 Project Leases ...................................................................................................... 37
14.7 HUD Action ......................................................................................................... 37 ARTICLE 15. EMINENT DOMAIN. ................................................................................... 38
15.1 Notice ................................................................................................................... 38
15.2 Representation in Proceedings or Negotiations ................................................... 38
15.3 Total Taking. ........................................................................................................ 38
15.4 Substantial Taking. .............................................................................................. 38
15.5 Tenant’s Right to Revoke Notice of Termination................................................ 39
15.6 Partial Taking. ...................................................................................................... 39
15.7 Obligation to Repair on Partial Taking ................................................................ 39
15.8 Temporary Taking. .............................................................................................. 39
15.9 Mortgagee Protection ........................................................................................... 40 ARTICLE 16. ENVIRONMENTAL. .................................................................................... 40 082161\16361704v6
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16.1 Environmental Condition and Mitigation/Remediation....................................... 40
16.2 Mitigation/Remediation of the Property .............................................................. 41
16.3 Polanco Redevelopment Act ................................................................................ 42
16.4 No Warranties As To Property; Release of Landlord, Anaheim, and/ or Successor Agency ................................................................................................ 42
16.5 Tenant Release ..................................................................................................... 43
16.6 Contractor’s Pollution Liability Insurance........................................................... 43
16.7 Environmental Insurance ..................................................................................... 43
16.8 Landlord Obligations After Closing .................................................................... 44
16.9 Tenant Obligations After Closing ........................................................................ 44
16.10 Tenant and Landlord Indemnities ........................................................................ 44
16.11 Notice and Remediation by Tenant...................................................................... 45
16.12 Obligation of the Landlord and Landlord Remediation Component ................... 45 ARTICLE 17. ASSIGNMENT. ............................................................................................. 45
17.1 Prohibition Against Transfer: No Sale or Assignment During Term ................. 45 ARTICLE 18. ENCUMBRANCES. ...................................................................................... 48
18.1 Leasehold Mortgage............................................................................................. 48
18.2 Cure by Mortgagee; Notices to Mortgagee. ......................................................... 49
18.3 No Subordination ................................................................................................. 50
18.4 New Lease on Termination of this Lease ............................................................ 51
18.5 Consent of Mortgagee .......................................................................................... 51
18.6 Rights Under Bankruptcy Code ........................................................................... 52
18.7 Estoppel Certificate .............................................................................................. 52
18.8 Cost of Loans to be Paid by Tenant ..................................................................... 52
18.9 Lender Liability ................................................................................................... 52
18.10 Additional Mortgagee Provisions ........................................................................ 52
18.11 Landlord Financing .............................................................................................. 53 ARTICLE 19. NON-DISTURBANCE AGREEMENTS. ..................................................... 53
19.1 Nondisturbance Agreements ................................................................................ 53 ARTICLE 20. PERFORMANCE OF TENANT’S COVENANTS. ..................................... 53
20.1 Right of Performance. .......................................................................................... 53
20.2 Reimbursement and Damages.............................................................................. 54 ARTICLE 21. BREACH, DEFAULT; REMEDIES. ............................................................ 54
21.1 Breach .................................................................................................................. 54
21.2 Default.................................................................................................................. 55
21.3 Termination and Other Remedies of Landlord in Event of Default. ................... 55
21.4 Specific Performance ........................................................................................... 56
21.5 Intentionally Omitted. .......................................................................................... 56
21.6 Receipt of Rent, No Waiver of Default ............................................................... 56
21.7 Effect on Indemnification .................................................................................... 57
21.8 Landlord Default .................................................................................................. 57 ARTICLE 22. PERMITTED CONTESTS. ........................................................................... 57 ARTICLE 23. FORCE MAJEURE. ...................................................................................... 58 082161\16361704v6
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23.1 Delay of Performance .......................................................................................... 58
23.2 Notice and Cure Requirements ............................................................................ 58
23.3 Landlord Unable to Perform ................................................................................ 58 ARTICLE 24. OPTION TO PURCHASE. ............................................................................ 59 ARTICLE 25. CITY PARTICIPATION. .............................................................................. 59
25.1 Participation Payment .......................................................................................... 59
25.2 Termination .......................................................................................................... 59 ARTICLE 26. GENERAL PROVISIONS. ........................................................................... 59
26.1 Notices ................................................................................................................. 59
26.2 No Merger of Title ............................................................................................... 61
26.3 Quiet Enjoyment .................................................................................................. 61
26.4 No Claims Against Landlord ............................................................................... 61
26.5 No Waiver by Landlord ....................................................................................... 61
26.6 Holding Over ....................................................................................................... 61
26.7 No Partnership ..................................................................................................... 62
26.8 Remedies Cumulative .......................................................................................... 62
26.9 Attorneys’ Fees .................................................................................................... 62
26.10 Time Is of the Essence ......................................................................................... 62
26.11 Construction of Lease .......................................................................................... 62
26.12 Severability .......................................................................................................... 62
26.13 Entire Agreement; Modification .......................................................................... 62
26.14 Binding Effect and Benefits ................................................................................. 62
26.15 Further Assurances............................................................................................... 62
26.16 Counterparts ......................................................................................................... 63
26.17 Request for Approval ........................................................................................... 63
26.18 Quiet Possession .................................................................................................. 63
26.19 No Third Party Beneficiaries ............................................................................... 63
EXHIBITS:
EXHIBIT A-1: SITE MAP
EXHIBIT A-2: LANDFILL MAP
EXHIBIT B-1: PROPERTY LEGAL DESCRIPTION
EXHIBIT C-1: MEMORANDUM OF GROUND LEASE
EXHIBIT D: RELEASE OF CONSTRUCTION COVENANTS
EXHIBIT E: INTENTIONALLY OMITTED
EXHIBIT F: LICENSE (OM&M)
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GROUND LEASE
This GROUND LEASE (“Lease”) dated as of December __________, 2022 (“Effective Date”) is entered into by and between CITY OF ANAHEIM , a California municipal co rporation and charter city (“Landlord”), and 39 COMMONS PARTNERS, LLC , a Delaware limited liability company (“Tenant”).
R E C I T A L S
A. Landlord owns certain real property consisting of approximately 8.168 acres situated at the northeast corner of Beach Boulevard and Lincoln Avenue in the City of Anaheim, County of Orange, State of California, as shown on the Site Map attached hereto as Exhibit A (the “Property”).
B. Landlord desires to lease the Property to Tenant, and Tenant desires to lease the Property from Landlord, pursuant to the terms and conditions of this Lease.
C. The Property is unimproved and includes a portion of the Landfills and the Davis Mud Pit.
D. Under this Lease, Tenant shall develop various improvements consistent with this Lease and Governmental Requirements.
E. This Lease is in the vital and best interests of Anaheim, and in accordance with applicable state and local laws and requirements.
F. The foregoing Recitals constitute a substantive part of this Lease.
NOW, THEREFORE, for and in consideration of the mutual promises, covenants, and conditions herein contained, Landlord and Tenant agree as follows:
ARTICLE 1. LEASE OF THE PROPERTY.
1.1 Implementation of the DDA; Memorandum of Ground Lease.
1.1.1 Implementation of DDA ; Lease Subordinate to Residential Parking Easement and Retail Parking and Access Easement . The parties hereto entered into an Amended and Restated Disposition and Development Agreement dated September 29, 2020 (the “DDA”) pursuant to which among other things, there were to be two closings. The “First Closing” included the fee simple conveyance of certain land referred to in the DDA as the “Residential Component Property” and the “Retail Component Property” and the leasehold conveyance of the certain land referred to therein as the “Mixed Use Commercial Component Property.” The “Second Closing” contemplates the leasehold conveyance of the Property. The Property is referred to in the DDA as the “Grocery Store Component Property.”
1.1.2 Implementation of the First Closing . The First Closing occurred on March 12, 2021.
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1.1.3 Implementation of Second Closing . A Memorandum of Ground Lease referring to this Lease shall be executed by Landlord and Tenant and recorded in the Official Records concurrently with the Second Closing pursuant to the DDA.
1.2 Lease of the Property; Ownership of Improvements . Landlord hereby leases the Property to Tenant, and Tenant hereby leases the Property from Landlord, on the terms and conditions set forth in this Lease. Subject to the provisions of Section 5.3 hereo f, Tenant shall concurrent with the Effective Date of this Lease and thereafter during the Term hereof, be the owner of all Improvements, and shall continue to own such Improvements during such Term.
Landlord hereby covenants that Tenant may take possessi on of the Property under this Lease at any time after the Commencement Date.
1.3 Purpose of this Lease . The purpose of this Lease is to provide for the development, maintenance, management, and operation of the Project (defined below). Tenant shall not occu py or use the Property, nor permit the Property to be occupied or used, nor do or permit anything to be done in or on the Property, in whole or in part, for any other purpose other than the Project during the Term of this Lease pursuant to the terms and provisions of this Lease.
1.4 Recorded Encumbrances . This Lease, the interests of Landlord and Tenant hereunder, and the Property, are in all respects subject to and bound by all of the covenants, conditions, restrictions, reservations, rights, rights-of-way and easements of record.
1.5 Memorandum of Ground Lease . A short form Memorandum of Ground Lease referring to this Lease, substantially in the form attached hereto as Exhibit B and incorporated herein by reference, shall be executed by Landlord and Tenant concurrently herewith and recorded in the Official Records concurrently with the Second Closing pursuant to the DDA.
ARTICLE 2. DEFINITIONS.
Capitalized terms used herein are defined where first used in this Lease and/or as set forth in this Article 2. Capitalized term s not defined herein shall have the definition set forth in the DDA.
“Additional Rent” means the additional rent which may be required to be paid by Tenant to Landlord pursuant to Section 4.1.3.
“Affiliate” means any person or entity directly or indirectly , through one or more intermediaries, controlling, controlled by or under common control with Tenant, which shall include each of the managing members of Tenant’s limited liability company. The term “control,” as used in the immediately preceding sentence , means, with respect to a person that is a corporation, the right to exercise, directly or indirectly, at least 50% of the voting rights attributable to the shares of the controlled corporation, and, with respect to a person that is not a corporation, the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of the controlled person.
“Agency” means the former Anaheim Redevelopment Agency, which was a public body, corporate and politic, exercising go vernmental functions and powers and organized and existing 082161\16361704v6
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under Chapter 2 of the Community Redevelopment Law of the State of California, Health and Safety Code, Section 33000, et seq., which has been succeeded by the Successor Agency. “Anaheim” means the City of Anaheim acting in its governmental capacity. “Anderson Landfill” means that certain property consisting of approximately 3.4 acres in the location generally depicted on the Landfill Map.
“Approved RAP” is defined in Section 16.1.3.
“Award” means an y compensation or payment made or paid for the Total, Partial or Temporary Taking of all or any part of or interest in the Property and/or the Improvements, whether pursuant to judgment, agreement or otherwise.
“Base Rent” is defined in Section 4.1.1, and was paid concurrently herewith. “Breach” is defined in Article 21.
“Building Permits” means the building permits issued for each Improvement. “City” means City of Anaheim, acting in its governmental capacity. “Close of Escrow” is defined in the DDA.
“Commencement” as it related to the construction of Improvements shall be deemed to occur when physical construction commences on the particular Development Parcel pursuant to validly issued building permits.
“Commencement Date” shall occur on the Delivery Date.
“Complete,” “ Completes,” “ Completion” or “ Completed,” with reference to each Improvement, means the date on which Tenant is eligible to receive a Release of Construction Covenants.
“Completion Deadline” is defined in Section 3.3 hereof. “Contractor’s Pollution Liability Insurance ” means insurance regarding the Environmental Condition of the Property during the course of construction. “CPI” means the United States Department of Labor, Bureau of Labor Statistics, Consumer Price Index for Urban Wage Earners and Clerical Workers, Subgroup “All Items,” for the Los Angeles-Riverside-Orange County area, 1982 – 84 = 100, or successor or equivalent index in case such index is no longer published. CPI adjustments under this Lease shall commence in the year following the Rent Commencement Date.
“County” means the County of Orange, California.
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“Davis Mud Pit” means that certain property consisting of approximately 2.8 acres in the location generally depicted on the Landfill Map. The Property is located on a portion of the Davis Mud Pit.
“DDA” means the amended and restated disposition and development agreement between the parties hereto approved by the City Council on September 29, 2020, pursuant to Resolution No. 2020-115.
“Default” has the meaning set forth in Article 21.
“Delivery Date ” means that date that Landlord delivers possession of the Premises to Tenant with Landlord’s Work complete.
“Development Parcel” means each parcel leased to by Tenant on which an Improvement is proposed to be constructed, and separately leased to a subtenant. “Director” means the Director of the Economic Development Department of the City of Anaheim or his designee who shall represent the Landlord in all matters pertaining to this Lease.
Whenever a reference is made herein to an a ction or approval to be undertaken by the Landlord, the Director is authorized to act unless this Lease specifically provides otherwise or the context should otherwise require.
“Effective Gross Income ” means the total gross income received by Tenant from t he Project, including, without limitation, from the rental of the Improvements, parking income, and other fees such as security deposit forfeits to the extent applied to rents, late fees and application fees determined on a cash basis. At the time Tenant pays the Percentage Rent, Tenant shall deliver to Landlord an income statement itemizing the Effective Gross Income in reasonable detail for the previous Fiscal Quarter, which shall be certified as being true and correct by Tenant. Without expanding the foregoing definition of “Effective Gross Income”, Effective Gross Income shall not include amounts paid to Tenant as (i) reimbursements for a non-sufficient fund charges by banks on subtenants’ checks, (ii) security and/or other deposits paid by subtenants until applied in payment of rents, (iii) water and other utility reimbursements to the extent of utility charges actually paid by Landlord or paid by subtenants to utility providers; (iv) operating expense, taxes, insurance expense, and capital expenditure reimbursements collected from tenants to the extent of operating expenses, taxes, insurance expense, and capital expenditures actually paid or incurred by Tenant, (v) condemnation proceeds, (vi) financing proceeds, (vii) proceeds from (A) the sale (but no t rental) of personal property, including without limitation, furniture and/or appliances, (B) any assignment of the leasehold estate under this Lease, or (C) any sale of the Property, (viii) any “bonus” or “advance” payments made by any service contract v endor, (ix) settlements or payments in satisfaction of claims for damage to property (but rental loss insurance proceeds actually received by Tenant shall be included in Effective Gross Income), injury or death to persons, faulty construction or maintenanc e and, in the case of security, cleaning and/or similar deposits, the retention of same to pay for expenses incurred due to a subtenant’s failure to surrender its premises in the condition required by its sublease, (x) real and/or personal property tax refunds and other vendor rebates or adjustments, (xi) any payment to, or reimbursement of, Tenant for any attorneys’ fees and/or collection costs, (xii) any insurance proceeds or settlements (but rental loss insurance proceeds actually received by Tenant shal l be included in Effective Gross Income), or 082161\16361704v6
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(xiii) reimbursements or payments from subtenants in connection with Tenant’s self-insurance (or similar) plan.
“Entitlements” means Beach Boulevard Specific Plan, including the EIR No. 350 (SCH No. 20170411042), and MMRF No. 342.
“Environmental Condition” is defined in Section 16.1.1 hereof. “Environmental Insurance” is defined in Section 16.7.
“Environmental Laws” means all laws, ordinances and regulations relating to Hazardous Materials, including, without limitation: the Clean Air Act, as amended, 42 U.S.C. Section 7401, et seq.; the Federal Water Pollution Control Act, as amended, 33 U.S.C. Section 1251 et seq.; the Resource Conservation and Recovery Act of 1976, as amended, 42 U.S.C. Section 6901, et seq.; the Comprehensive Environment Response, Compensation and Liability Act of 1980, as amended (including the Superfund Amendments and Reauthorization Act of 1986, “CERCLA”), 42 U.S.C.
Section 9601, et seq.; the Toxic Substances Control Act, as amended, 15 U.S .C. Section 2601 et seq.; the Occupational Safety and Health Act, as amended, 29 U.S.C. Section 651, the Emergency Planning and Community Right to Know Act of 1986, 42 U.S.C. Section 11001 et seq.; the Mine Safety and Health Act of 1977, as amended, 30 U.S .C. Section 801 et seq.; the Safe Drinking Water Act, as amended, 42 U.S.C. Section 300f et seq.; all comparable state and local laws, laws of other jurisdictions or orders and regulations; and all laws, ordinances, statutes, codes, rules, regulations, orders and decrees of the United States, the State, the County, the Local Entitlement Entity, or any other political subdivision in which the Property is located, and of any other political subdivision, agency or instrumentality exercising jurisdiction over L andlord, Tenant, or the Property.
“Environmental Liabilities” is defined in Section 16.10. “Equipment Lease” is defined in Section 11.1.3.
“Equipment Lessor” is defined in Section 11.1.3.
“Exercise Notice” is defined in Article 24.
“Extended Deadline” is defined in Section 3.2(b).
“Extension Payment(s)” has the meaning set forth therefor in Section 3.2(b). “First Closing” is defined in the DDA.
“Fiscal Quarter” means each three (3) calendar month period ending March 31, June 30, September 30 or December 31.
“Focal Public Art Piece ” means the Sun Icon contributed to Anaheim by Disney to be installed by the Tenant and included as part of the Improvements. “GLA” mean gross leasable area.
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“Governmental Requirements” means all applicable laws, ordinances, statute s, codes, rules, regulations, orders, and decrees of the United States, the State of California, the County, Anaheim, or any other political subdivision in which the Property is located, and of any other political subdivision, agency, or instrumentality ex ercising jurisdiction over the Landlord, the Tenant or the Property, as may be amended from time to time, including all applicable state and federal labor standards, all applicable Local Codes, all applicable Environmental Laws, all applicable Uniform Codes including, building, plumbing, mechanical and electrical codes, and all other applicable disabled and handicapped access requirements, and further including without limitation, all applicable governmental requirements, including without limitation, to th e extent applicable, the payment of prevailing wages in compliance with Labor Code Section 1770, et seq., keeping of all records required pursuant to Labor Code Section 1776, complying with the maximum hours requirements of Labor Code Sections 1810 through 1815, and complying with all regulations and statutory requirements pertaining thereto, the Americans With Disabilities Act, 42 U.S.C. Section 12101, et seq., Government Code Section 4450, et seq., Government Code Section 11135, et seq., and the Unruh Civil Rights Act, Civil Code Sections 51, et seq. “Greenlaw” means Greenlaw Partners LLC, a California limited liability company for which Wilbur H. Smith III is the sole managing member.
“Grocery Store Component” or “Grocery Store” means the construction and operation of a retail grocer pursuant to a Grocery Store Component Lease of not less than 15,000 sq. ft. gross leasable area acceptable to the Director in his sole and absolute discretion. “Grocery Store Component Property ” means the Property, as shown on the Site Map and includes the Loan Pham Lease.
“Grocery Store Lease” means the lease with the operator of the Grocery Store for a term of not less than ten (10) years.
“Grocery Store Lease Execution Deadline” is defined in Section 3.3 hereof. “Greenlaw Ventures” is Greenlaw 39 Commons, LLC, a California limited liability company, for which Greenlaw is the sole manager and Greenlaw Developer LLC, a California limited liability company, is the sole member.
“Hazardous Material” or “ Hazardous Materials” means and includes any substance, material, or waste which is or becomes regulated by any local governmental authority, including the County, the Regional Water Quality Control Board, the State of California, or the United States Government, including, but no t limited to, any material or substance which is: (i) defined as a “hazardous waste,” “acutely hazardous waste,” “restricted hazardous waste,” or “extremely hazardous waste” under Sections 25115, 25117 or 25122.7, or listed pursuant to Section 25140, of the California Health and Safety Code, Division 20, Chapter 6.5 (Hazardous Waste Control Law); (ii) defined as a “hazardous substance” under Section 25316 of the California Health and Safety Code, Division 20, Chapter 6.8 (Carpenter Presley Tanner Hazardous Substance Account Act); (iii) defined as a “hazardous material,” “hazardous substance,” or “hazardous waste” under Section 25501 of the California Health and Safety Code, Division 20, Chapter 6.95 (Hazardous Materials Release Response Plans and Inventory) ; (iv) defined as a “hazardous substance” under Section 082161\16361704v6
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25281 of the California Health and Safety Code, Division 20, Chapter 6.7 (Underground Storage of Hazardous Substances); (v) petroleum; (vi) asbestos and/or asbestos containing materials; (vii) lead ba sed paint or any lead based or lead products; (viii) polychlorinated biphenyls; (ix) designated as a “hazardous substance” pursuant to Section 311 of the Clean Water Act (33 U.S.C. Section 1317); (x) defined as a “hazardous waste” pursuant to Section 1004 of the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq . (42 U.S.C. Section 6903); (xi) methyl tert-butyl ether; (xii) defined as “hazardous substances” pursuant to Section 101 of the Comprehensive Environmental Response, Compensation , and Liability Act, 42 U.S.C. Section 9601, et seq. (42 U.S.C. Section 9601); (xiii) any other substance, whether in the form of a solid, liquid, gas or any other form whatsoever, which by any Governmental Requirements either requires special handling in its use, transportation, generation, collection, storage, handling, treatment or disposal, or is defined as “hazardous” or harmful to the environment; and/or (xiv) lead based paint pursuant to and defined in the Lead Based Paint Poisoning Prevention Act, Title X of the 1992 Housing and Community Development Act, 42 U.S.C. § 4800, et seq., specifically §§ 4821–4846, and the implementing regulations thereto. Notwithstanding the foregoing, “Hazardous Materials” shall not include such products in quantities be low attainment levels identified in one or more of the enactments identified above as Governmental Requirements, including those products and amounts as are customarily used in the construction, maintenance, rehabilitation, management, operation and occupa ncy of commercial buildings and grounds, or typically used in commercial activities in a manner typical of other comparable commercial developments (e.g., common cleaning solvents, liquid paper), or substances commonly ingested by a significant population living within the Improvements, including without limitation alcohol, aspirin, tobacco and saccharine.
“HUD” means the United States Department of Housing and Urban Renewal. “HUD Job Creation National Objective” is defined in Section 14.3 hereof. “Immunity Letter” means the issuance by the RWQCB which provides (i) that the remedial work has been completed in accordance with the Approved RAP, and (ii) that the immunity available under Health and Safety Code Section 33459.3 applies. “Improvements” means each building constructed on the Property, including all onsite and offsite improvements associated with the improvements, as described in the Building Permits. “Indemnitees” means the Landlord, Anaheim, and the Successor Agency, as well as the elected officials, officers, employees, lawyers, agents, representatives, and consultants of each. “Indemnity” or “Indemnify” is defined in Section 16.10. “Insurance Requirements ” means all terms of any insurance policy covering or applicable to the Property or the Improv ements, or any part thereof, all requirements imposed by the issuer of any such policy, and all orders, rules, regulations and other requirements of the National Board of Fire Underwriters (or any other body exercising similar functions) applicable to or affecting the Property or the Improvements, or any part thereof, or any use or condition of the Property or the Improvements, or any part thereof.
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“Interim Immunity Letter” means the letter to the Agency from RWQCB dated April 27, 2007.
“Landfill Gas ” means gaseous emissions produced as a by -product of organic waste during decomposition which may contain various chemical components in widely fluctuating quantities including without limitation, methane, carbon dioxide, hydrogen sulfide, carbon monoxide, benzene, ethyl-benzene, toluene, vinyl chloride, dichloromethane, trichloroethylene, 1,2, dichloroethylene, tetrachloroethylene and ammonia. “Landfill Map” means the Landfill Map attached hereto as Exhibit A -2 and incorporated herein by reference.
“Landfills” m eans collectively the Sparks Landfill, Rains Landfill and the Anderson Landfill, as shown on the Landfill Map.
“Landlord Delay ” shall mean any delay in Commencement or Completion of the Improvements due to (i) Landlord’s failure to comply with any provisio n of this Lease; (ii) Landlord’s failure to comply with the deadlines set forth in this Lease including without limitation the Schedule; (iii) Landlord’s request for materials, finishes or installations in the Improvements which require a longer delivery t ime or construction period than the construction schedule allows; (iv) Landlord’s changes and requested changes to the Tenant’s construction plans; or (v) any other delays by the Landlord or any other governmental agency including, without limitation, delays in processing Tenant’s permit applications, and reviewing Tenant’s construction plan.
“Landlord Remediation Component” means the ongoing implementation of the OM&M Plan.
“Landlord’s Actual Knowledge” means the actual knowledge of Sergio M. Ramirez, with no duty of investigation or inquiry of any kind or nature whatsoever and there shall be no personal liability arising out of the representation or warranties made herein. “Landlord’s Work” is defined in Section 16.2 hereof.
“Lease” means this Ground Lease.
“Leasehold Mortgage Default” is defined in Section 5.4.1. “Legal Description ” means the description of the Property to be provided by the Developer prior to and as a condition to the Second Closing. “Liability Immunity” is defined in Section 16.3 hereof. “License Agreement (OM&M)” means an agreement, in substantially the form attached hereto as Exhibit F and incorporated herein by reference, granting a license to the Landlord to enter the Property for the purpose of implementing the OM&M Plan. 082161\16361704v6
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“List of En vironmental Condition Documents ” means the List of Environmental Condition Documents attached as Attachment No. 8 to the DDA. “Lloyd’s” is defined in Section 16.7.
“Maintenance Standards” are defined in Section 10.1.
“Material Adverse Change” means any event the occurrence of which is reasonably likely to have a material adverse effect on Tenant’s ability to fulfill its obligations under this Lease, including without limitation:
(a) a voluntary or involuntary bankruptcy of Tenant (which is not dismissed wit hin ninety (90) days of institution);
(b) a court order placing Tenant under receivership;
(c) a sale of all or substantially all of the assets held by Tenant other than an assignment of Tenant’s leasehold interest under this Lease;
(d) receipt by Tenant o f written notice of any failure by Tenant to comply with Governmental Requirements of whatever kind or nature related to the Project, which violation is likely to have a material adverse effect on the ability of Tenant to perform its duties and obligations under this Lease; and/or
(e) Tenant receives actual notice that Tenant has incurred one or more liabilities, contingent or otherwise, or pending or threatened litigation or any asserted or unasserted claim exists against Tenant with respect to the Project, which would have a material adverse effect on its ability to perform its duties and obligations under this Lease. “Memorandum of Ground Lease ” refers to the Memorandum of Ground Lease to be recorded against the Property in the Official Records, as descri bed in Section 1.1.3, in the form attached hereto as Exhibit C-1 and incorporated herein by reference. “Mixed Use Lease” shall mean that certain Ground Lease dated March 12, 2021, between Landlord and Tenant for the Mixed Use Commercial Component Property. “Mortgage” means a mortgage or deed of trust encumbering this Lease or a New Lease. “Mortgagee” has the meaning set forth in Section 18.1 of this Lease. “New Lease” is defined in Section 18.4.
“Notice of Intended Taking ” means any notice or notification o n which a reasonably prudent person would rely and which said person would interpret as expressing an existing intention of Taking as distinguished from a mere preliminary inquiry or proposal. It includes, without limitation, the service of a condemnation summons and complaint on a party to this Lease.
The notice is considered to have been received when a party to this Lease receives from the 082161\16361704v6
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condemning agency or entity a notice of intent to take, in writing, containing a description or map of the taking which reasonably defines the extent of the taking. “OCHCA” means the Orange County Health Care Agency.
“Official Records” means the Official Records of Orange County, California. “Operations, Maintenance and Monitoring Plan ” or “ OM&M Plan” means the plan, approved by OCHCA on June 12, 2009 (Noticed Doc #75), which describes, among other things, the obligation to conduct ongoing monitoring of the landfill gas extraction system, the groundwater and the landfill cap.
“Option” is defined in Article 24.
“Partial Taking” means any taking of the fee title of the Property and/or the Improvements that is not either a Total, Substantial or Temporary Taking. “Participating Employers” is defined in Section 14.5(a) hereof. “Permitted Transfer(s)” is defined in Section 17.1.1.
“Personalty” means Tenant’s or its subtenants’ trade fixtures, furniture, equipment, appliances, machinery, movable partitions, signs, inventory and other personal property located in or on the Property.
“Plans” means the Remedial Action Plan and O perations, Maintenance and Monitoring Plan.
“Polanco Redevelopment Act ” means the provisions of California Health and Safety Code Sections 33459 – 33459.8, as same may be amended from time to time. “Potential Default” means any Breach, condition, or event which, with the lapse of time or the giving of notice, or both, would constitute a Default. “Project” means the development, maintenance, management and operation of the Improvements, as such improvements may be modified from time to time in accordance with this Lease.
“Property” means that certain real property located in the City of Anaheim, County of Orange, as more particularly described in the Legal Description and depicted on the Site Map. “Proposed Transfer Audit Notice” is defined in Section 4.3.1. “Proposed Transferee” is defined in Section 17.1.3.
“Purchase Price” is defined in Article 24 hereof.
“Qualified Professional ” means an engineer, geologist or other consultant qualified in accordance with requirements of law to prepare the Operations, Maintenance and Monitoring Plan. 082161\16361704v6
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“Rains Landfill” means that certain property consisting of approximately 6.72 acres in the location generally depicted on the Landfill Map.
“Real Property Taxes” is defined in Section 4.5.4.
“Refinance” or “ Refinancing” means the refinance or refinancing of the any Mortgage that encumbers Tenant’s leasehold interest.
“Release of Construction Covenants ” means the document which evidences Tenant’s satisfactory completion of Improvements on each Development Parcel, substantially in the form of Exhibit D and incorporated herein by reference.
“Remedial Action Plan” or “RAP” means that certain plan for the assessment, evaluation, investigation, removal, correction, cleanup, abatement and/or mitigation of Hazardous Materials and Landfill Gas including methane in, on, under (including in the groundwater), or migrating from the Landfills initially prepared by Shaw Environmental, Inc., dated December 30, 2004, as it may be amended, modified or addended, from time to time, including any n ew, addended, or amended RAP which addresses Remediation required in connection with specific development proposals.
“Remedial Improvements” means those certain improvements which have been or will be designed and constructed on the Property in implementat ion of the Remedial Action Plan, including Tenant Remediation Component.
“Remediation” or “ Remediate” means the removal, remediation, response action, correction, cleanup, abatement and/or mitigation of Hazardous Materials and Landfill Gas in, on, under (including underground water) or migrating from the Property in accordance with the RAP. “Remediation” or “Remediate” does not include the operations, maintenance, and monitoring to be performed pursuant to the OM&M Plan.
“Rent” means the Base Rent payable pursuant to Section 4.1.1, the Percentage Rent payable pursuant to Section 4.1.2, and Additional Rent provided for in Section 4.1. “Rent Commencement Date” shall be negotiated once the Tenant identifies the Grocery Store and submits a Grocery Store Lease to the Landlord. “Responsible Agency” or “Responsible Agencies” means individually or collectively, as applicable, the RWQCB, the Orange County Health Care Agency-Environmental Health Division (Local Enforcement Agency or LEA), the California Integrated Was te Management Board, the South Coast Air Quality Management District, and Anaheim. “Retailers/Users” is defined in Section 8.3.
“RWQCB” means the California Regional Water Quality Control Board, Santa Ana Region or such other entity asserting jurisdiction over the Remediation of the Property. “Sale” means a Transfer (other than a Permitted Transfer) of the Property or any portion thereof.
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“Sale Proceeds” means the net proceeds, after payment of closing costs, in excess of the Purchase Price as established by Article 24.
“Second Closing” is defined in the DDA.
“Site Map” means the site map of the Property, attached as Exhibit A-1 to this Lease, and incorporated herein by reference.
“Sparks Landfill” means that certain property consisting of approximately 10.68 acres in the location generally depicted on the Landfill Map. The Property is located on a portion of the Sparks Landfill.
“Substantial Damage” is defined in Section 13.2.
“Substantial Taking ” means the taking of so much of the Property and/or the Improvements that the portion of the Property and/or the Improvements not taken cannot be repaired or reconstructed, taking into consideration the amount of the award available for repair or reconstruction, so as to constitute a complete, rentable structure, ca pable of producing a proportionately fair and reasonable net annual income after payment of all operating expenses, and all other charges payable under this Lease, and after performance of all covenants and conditions required by Tenant by law and under this Lease.
“Successor Agency ” means the Successor Agency to the Anaheim Redevelopment Agency pursuant to Health & Safety Code §34170 et seq. Wherever the Successor Agency has an obligation hereunder the Landlord will use its best efforts to either perform such obligation or cause the Successor Agency to perform such obligation.
“Sun Icon Easement” is defined in Section 12.2.
“Taking” means a taking or damaging, including severance damage, by eminent domain or by inverse condemnation or for any public or qua si-public use under any statute. The taking may occur as a result of a transfer pursuant to the recording of a final order in condemnation, a voluntary transfer or conveyance to the taking authority under threat of condemnation, or a transfer while condem nation proceedings are pending. Unless otherwise provided, the taking shall be deemed to occur as of the earlier of (a) the date actual physical possession is taken by the condemnor, or (b) the date on which the right to compensation and damages accrues under the law applicable to the Property and/or the Improvements. “Taking,” as used in this Lease does not include the voluntary dedication by Tenant of any portion of the Property necessary to obtain building permits or to comply with any other applicable governmental rule, regulation or statute. “Temporary Taking ” means a taking of all or any part of the Property and/or the Improvements for a term certain which term is specified at the time of taking. Temporary Taking does not include a taking which is to last for an indefinite period or a taking which will terminate only upon the happening of a specified event unless it can be determined at the time of the taking substantially when such event will occur. If a taking for an indefinite term should take pl ace, it shall be treated as a Total, Substantial or Partial Taking in accordance with the definitions set forth herein.
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“Tenant” means 39 Commons Partners, LLC, a Delaware limited liability company, of which Zelman and Greenlaw Ventures are its sole members, and its permitted successors and assigns, as Tenant under this Lease.
“Tenant Remediation Component” means that portion of the Remedial Improvements, which is the responsibility of the Tenant with respect to the Improvements . The Tenant Remediation Component shall include the preparation of, submittal to, and approval from Responsible Agencies and implementation of the following: the Schedule of Activities, workplan and other Remediation work necessary in connection with co nstruction of buildings, pile support system, if any, reconstruction and/or repair as required for components of the remedial improvements previously installed including, Construction Quality Assurance Plan and Requirements, design and construction of the underground utility trench, Vegetative Maintenance Plan and Smart Irrigation Plan, Closure Plan, Financial Assurance Plans, and Deed Restrictions, each as defined in the RAP. The Tenant Remediation Component also includes the Final Cover/Asphalt Cap, as c onditionally approved in Noticed Environmental Doc #86, dated February 10, 2010 and such additional obligations as may be imposed by RWQCB in connection with a revised RAP admission special development proposal. “Tenant’s Actual Knowledge ” means the actual knowledge of Brett Foy and Rob Mitchell, with no duty of investigation or inquiry of any kind or nature whatsoever, and there shall be no personal liability on the part of Brett Foy or Rob Mitchell arising out of any representations or warranties made herein.
“Term”, unless the context otherwise requires, has the meaning set forth in Article 3 of this Lease.
“Title 27” means Title 27 of the California Code of Regulations, Division 2. “Total Taking” means the taking of the fee title to all of the Property. “Transfer” is defined in Section 17.1.
“Transferee Criteria and Qualifications” is defined in Section 17.1.3. “Zelman” means Zelman Anaheim, LLC, a Delaware limited liability company for which Brett Foy and Paul Casey are its sole members.
ARTICLE 3. TERM.
3.1 Term. Th e term of this Lease (“Term”) shall be fifty -five (55) years and shall commence on the Commencement Date and shall end at 11:59 p.m. on the day immediately preceding the fifty-fifth (55th) anniversary of the Commencement Date, unless earlier terminated pursuant to this Lease.
3.2 Certain Time Extensions . Tenant may, at its option, extend the Grocery Store Lease Execution Deadline and the related Completion Deadline for up to one additional one -year period, as follows:
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(a) Tenant shall notify Landlord in writing n ot fewer than sixty (60) days prior to the Grocery Store Lease Execution Deadline that Tenant elects to extend the Grocery Store Lease Execution Deadline and related Completion Deadline. Within twenty (20) days after receipt of such notification from Tena nt, Landlord shall notify Tenant as to whether Tenant is in Breach or Default of this Lease and whether or not the Director is satisfied, in his/her sole and absolute discretion, that significant progress is being made toward leasing and construction. No extensions shall be allowed in the event Tenant is in Breach or Default of this Lease or the Director is not satisfied with the progress of the Tenant toward leasing and construction; provided, however, if Tenant cures such Breach or Default within the applicable cure period under Article 21, then the extension shall be allowed.
(b) If Landlord notifies Tenant that Tenant is not in Breach or Default under this Lease, or if Landlord fails to notify Tenant by the time set forth above, or if Tenant cures such Breach or Default, then Tenant may extend the Grocery Store Lease Execution Deadline and related Completion Deadline for two (2) periods of six (6) months each (the “Extended Deadline(s)”) by remittance to Landlord, not less than thirty (30) days prior to the Grocery Store Lease Execution Deadline or the Extended Deadline, as applicable, of One Hundred Thousand Dollars ($100,000.00) (the “Extension Payments”) for each six (6) month extension, provided that Tenant has executed a letter of intent with a lessee/op erator of the Grocery Store approved by Landlord, and Tenant is in good faith negotiating a lease with such lessee/operator of the Grocery Store .
(c) If Tenant makes the Extension Payment(s) to Landlord in accordance Section 3.2(b), such Extension Payment(s) shall constitute Rent hereunder. If Tenant fails to timely complete the Improvements within the Extended Deadline, the Extension Payment(s) shall be retained by the Landlord without offering a deduction provided, however, in the event that Tenant timely C ompletes the Improvements within the Extended Deadline, the Extension Payment shall be returned to Tenant without interest.
3.3 Early Termination of Lease. Tenant shall use its commercially reasonable efforts to execute a Grocery Store Lease on or before Dec ember 31, 2023 (the “Grocery Store Lease Execution Deadline”). The identity of the lessee/operator of the Grocery Store Component shall be subject to approval by the Landlord in Landlord’s sole and absolute discretion. Landlord hereby approves Sprouts as a lessee/operator of the Grocery Store Component. If Tenant fails to deliver an executed Grocery Store Lease with a lessee/operator approved by Landlord on or before the December 31, 2025, or complete construction of the Grocery Store and cause it to open for business to the general public on or before the second anniversary date of the date of the Grocery Store Lease (“Completion Deadline”) (as it may be extended pursuant to Section 3.2), then Landlord shall have the right to terminate this Lease upon written notice to Tenant prior to the date that the Grocery Store Lease is executed or that date that Tenant has caused completion of construction of the Grocery Store and it to open for business to the general public, as applicable. If the Landlord terminates the Lease pursuant to this Section 3.3, then then City shall retain the Liquidated Damages re Second Closing described in Section 201.6 of the DDA. In the event that the Tenant completes its obligation under this Section 3.3, the Liquidated Damages re Second Closing shall be returned to the Tenant following the opening for business of the Grocery Store to the general public. The Grocery Store Lease Execution Deadline and Completion Deadline may be extended only pursuant to Section 3.2(b) above, or as a result of Landlord Delays and the Completion 082161\16361704v6
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Deadline shall be subject to extensions as a result of force majeure pursuant to Section 23.1; provided, however, the Completion Deadlines shall be extended so long as Tenant has Commenced and is diligently prosecuting construction to Completion. Further, any cure by a Mortgagee of a failure to Complete the Improvements prior to the Completion Deadline shall be subject to the additional cure period afforded to Mortgagees pursuant to Section 18.2.1. In the even t Landlord terminates this Lease pursuant to this Section 3.3, then (i) Landlord shall keep any and all Extension Payments received by Landlord pursuant to this Lease (ii) Tenant shall be responsible, at Tenant’s sole cost and expense, for delivering the Property to Landlord with title in the condition required by Section 5.4.1, and (iii) the parties shall have no further obligations to each other.
ARTICLE 4. RENT.
4.1 Rent.
4.1.1 Base Rent. Pursuant to Section 201.2 of the DDA, the base rent (“Base Rent”) payable by Tenant for the lease of the Property and the Rent Commencement Date shall be negotiated by Landlord and Tenant once the Developer identifies the Grocery Store and submits a Grocery Store Lease to the Landlord. The parties shall execute an amendment to this Lease to set forth the Base Rent payable by Tenant. Tenant shall commence payment of Base Rent on the Rent Commencement Date.
4.1.2 Percentage Rent . In addition to Base Rent, commencing on the Rent Commencement Date, Tenant shall pay to Landlord, percentage rent in amounts to be negotiated once the Developer identifies the Grocery Store and submits a Grocery Store Lease to Landlord.
4.1.3 Additional Rent . In addition to the Base Rent and Percentage Rent required by Section 4.1.1 and 4.1.2 above, respectively, Tenant shall also pay to Landlord as “Additional Rent” under this Lease any amounts required to be paid by Tenant to Landlord pursuant to Section 20.2 and Extension Payments paid under Section 3.2(b).
It is the intent of the parties hereto that the rent provided herein shall be absolutely net to Landlord and that Tenant shall pay all costs, taxes, charges, and expenses of every kind and nature against the Property or the Improvements thereon which may arise or become due during the Term, and which, except for execution hereof, would or could have been payable by Landlord. The Base Rent, Percentage Rent, the Additional Rent, and, except as set forth in Section 3.2 the Extension Payment(s) (if any), shall be retained by Landlord as its property without regard to whether t his Lease remains in effect for the full Term.
4.2 Payment of Rent. All Base Rent, Percentage Rent, Additional Rent and Extension Payments (referred to collectively as “Rent”) that become due and payable pursuant to this Lease shall be paid to Landlord at the address listed in Section 26.1.1 or such other place as Landl ord may from time to time designate by written notice to Tenant without notice or demand, and without setoff, counterclaim, abatement, deferment, suspension or deduction. Except as provided in Article 16 with respect to the implementation of the OM&M, und er no circumstances or conditions, whether now existing or hereafter arising, or whether beyond the present contemplation of the parties, shall Landlord be expected or required to make any payment of any kind whatsoever 082161\16361704v6
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or to perform any act or obligation whatsoever or be under any obligation or liability hereunder or with respect to the Property, except as expressly set forth in this Lease.
4.3 Audit.
4.3.1 Right to Audit . Tenant shall keep full and accurate books of account, records and other pertinent data with r espect to Tenant’s calculation of Effective Gross Income and/or Sales Proceeds. Such books of account, records, and other pertinent data shall be kept for a period of three (3) years after the end of each calendar year, and shall be made available for review or audit by the Landlord or its designees upon providing ten (10) day’ written notification to Tenant. Landlord shall be entitled within three (3) years after the end of each Tenant fiscal year to inspect and examine all of Tenant’s books of account, records, and other pertinent data with respect to Tenant’s calculation of Effective Gross Income. Tenant shall cooperate fully with Landlord in making the inspection. Landlord shall also be entitled, also within three (3) years after the end of each calendar year, at Landlord’s cost and expense, to an independent audit of Tenant’s books of account, records, and other pertinent data with respect to Tenant’s calculation of Effective Gross Income. In the event a Transfer is proposed by Tenant, Tenant may re quest in writing that Landlord conduct an audit pursuant to this Section, provided that Tenant shall pay Landlord’s reasonable costs and expenses, including staff time, incurred in conducting such audit. Landlord shall determine whether to conduct such au dit in its sole and absolute discretion and shall notify Tenant of Landlord’s decision within thirty (30) days following receipt of Tenant’s written request (“Proposed Transfer Audit Notice”). If Landlord elects to conduct an audit under this Section, Landlord shall have ninety (90) days to complete the audit; provided that such time period shall not commence until Tenant provides Landlord with all materials and information necessary to properly conduct the audit. Following the earlier to occur of (a) Landlord’s failure to notify Tenant in writing of Landlord’s election to conduct such audit within thirty (30) days of Landlord’s receipt of the Proposed Transfer Audit Notice, (b) the expiration of ninety (90) days following Landlord’s receipt of the Propose d Transfer Audit Notice, as such period shall be extended until Tenant provides Landlord with all materials and information necessary to properly conduct the audit, or (c) Landlord’s notification to Tenant within thirty (30) days of Landlord’s receipt of the Proposed Transfer Audit Notice that Landlord waives its right to conduct the audit, Landlord shall not have the right to request books of account, records and other pertinent data under this Section for periods (i) prior to the date of the audit, if con ducted by Landlord, and if no audit is performed, then (ii) prior to the effective date of the approved Transfer. Following the date of the audit or the effective date of the approved Transfer, as applicable, Landlord shall have full audit rights under this Section with respect to the then -current Tenant entity’s books of account, records and other pertinent data with respect to Tenant’s calculation of Effective Gross Income.
4.3.1.1 After Foreclosure . After the foreclosure of a Mortgage, acceptance by a Mortga gee of an assignment or deed in lieu of foreclosure, or appointment of a receiver at the request or demand of a Mortgagee, the Mortgagee shall have no obligation to produce Tenant’s books and records for the periods prior to the foreclosure or appointment of the receiver.
4.4 Utility Services. From and after the Delivery Date, Tenant shall pay or cause to be paid all charges for all public utility services rendered to or in connection with the Property or the Improvements, or any part thereof, and shall comply with all contracts executed by Tenant relating 082161\16361704v6
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to any such utility services, and will do all other things required for the maintenance and continuance of all such services throughout the Term of this Lease.
4.5 Taxes and Assessments.
4.5.1 Covenant to Pay Taxes an d Assessments . From and after the Commencement Date, Tenant shall pay prior to delinquency all Real Property Taxes (as defined in Section 4.5.4) levied against Tenant’s ground lease interest in the Property during the Term of this Lease, subject to Tenant ’s right to contest same in good faith and/or seek any property tax exemptions, except as provided in Section 4.5.3. Tenant shall promptly furnish Landlord with satisfactory evidence that such taxes have been paid or that an exemption from such taxes has been obtained. If Tenant shall fail to pay any such taxes, Landlord shall have the right to pay the same, in which case Tenant shall repay such amount to Landlord within ten (10) days after demand from Landlord together with interest at the rate set forth in Section 4.6, as Additional Rent.
4.5.2 Notice of Possessory Interest; Payment of Taxes and Assessments on Value of Property. In accordance with California Revenue and Taxation Code Section 107.6(a), Landlord hereby notifies Tenant that by entering into this L ease, a possessory interest subject to assessment and collection of real property taxes may be created. Tenant or other party in whom the possessory interest is vested may be subject to the payment of real property taxes levied on such interest. If possessory interest taxes are assessed, Tenant agrees it is responsible for payment thereof and Landlord has no obligation or liability of any kind or nature relating to payment of property taxes. Tenant acknowledges that Landlord is a tax-exempt public entity and no property taxes will be or are legally assessable against its interest in the Property.
4.5.3 No Exemption from Possessory Interest Tax . Tenant shall not seek exemption from, or contest the payment of, assessments and the collection of property taxes pursuant to Revenue and Taxation Code Section 214, or any successor statute.
4.5.4 Definition of Real Property Tax(es) . As used herein, the term “Real Property Tax(es)” shall include any form of real estate tax or assessment (including, without limitation, on possessory interests), general, special, ordinary or extraordinary, and any license fee (except Landlord’s business license fee), commercial rental tax, improvement bond or bonds, levy or tax (other than inheritance, personal income, or estate taxes) imposed o n the Property or any interest (including, without limitation, possessory interests) therein by any authority having the direct or indirect power to tax, including any city, state or federal government, or any school, agricultural, sanitary, fire, street, drainage or other improvement district thereof, as against any legal or equitable interest of Landlord or Tenant in the Property or in the real property of which the Property is a part, as against Landlord’s right to rent or other income therefrom, and as against Landlord’s business of leasing the Property. The term “Real Property Tax(es)” shall also include any tax, fee, levy, assessment or charge (i) in substitution of, partially or totally, any tax, fee, levy, assessment or charge hereinabove included w ithin the definition of “Real Property Tax(es),” or (ii) the nature of which was hereinbefore included within the definition of “Real Property Tax(es),” or (iii) which is imposed as a result of a transfer, either partial or total, of Landlord’s interest in the Property or which is added to a tax or charge hereinbefore included within the definition of real property tax by reason of such transfer, or (iv) which is imposed by reason of this lease transaction, any modifications or changes hereto, or any transf ers hereof. Notwithstanding the 082161\16361704v6
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foregoing, if the Landlord sells or otherwise transfers the Property to a person or entity that is not a tax-exempt public entity, then Real Property Tax(es) shall not include Landlord’s income taxes, profit taxes, business taxes, gross receipts taxes, business licenses fees and taxes, capital levy taxes, inheritance taxes, estate taxes, succession taxes, transfer taxes, recordation taxes, gift taxes, franchise taxes, corporation taxes, documentary stamp taxes, mortgage lien taxes, transfer gains taxes, or recording fees.
4.5.5 Personal Property . Tenant shall pay prior to delinquency all taxes assessed against and levied upon all Personalty of Tenant contained in the Property. When possible, Tenant shall cause said trade fixtures , furnishings, equipment and all other personal property to be assessed and billed separately from the real property of Landlord.
4.5.6 Apportionment. If any of Tenant’s said personal property shall be assessed with Landlord’s real property (other than the Prop erty), first Tenant shall advise the County of Orange Tax Assessor and Tax Collector of the same in writing, and Tenant shall pay Landlord the taxes attributable to Tenant not later than the later of (a) ten (10) days after receipt of a written statement setting forth the taxes applicable to Tenant’s property or (b) fifteen (15) days prior to the date said taxes are due and payable.
4.6 Overdue Interest. Any amount due to Landlord, if not paid when due and on or before expiration of the period for cure as set forth herein, after Landlord’s delivery of notice thereof to Tenant, shall bear interest from the date due until paid at the lower of: (a) the reference or prime rate of Bank of America, N.A., in effect from time to time plus three percent (3%); or (b) the highest rate of interest allowed under applicable usury law.
ARTICLE 5. POSSESSION OF PROPERTY.
5.1 Acceptance of Property . Subject to Landlord’s performance of the Landlord’s Work, Tenant hereby accepts the Property in its “as -is” condition. Tenant acknowledges and agrees that Tenant has had sufficient opportunity to inspect the Property and has inspected the Property prior to the Commencement Date.
5.2 Construction of Improvements. Subject to force majeure and Landlord Delays, Tenant shall use commercially reasona ble efforts to Complete construction of the Improvements as provided in Article 7.
5.3 Ownership of Improvements. Unless otherwise provided herein, during the Term of this Lease title to all Improvements, now existing, to be constructed, or later made, on th e Property are and shall be vested in Tenant as set forth in Article 11 hereof.
5.4 Surrender of Property.
5.4.1 Expiration or Termination. Tenant agrees that on the expiration or earlier termination of the Term, whether by reason of Default or otherwise, the lease hold estate hereby granted to Tenant shall be terminated and forfeited and shall revert to Landlord, its successors and assigns, and all Improvements on the Property shall become the property of Landlord, its successors and assigns, free and clear from any liens or claims whatsoever (other than non - 082161\16361704v6
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monetary liens previously approved or otherwise accepted in writing by Landlord), in their “AS IS” condition, without further compensation therefor from Landlord to Tenant or any other person.
Following any such expiration or termination, Tenant shall execute, acknowledge and deliver to Landlord a quitclaim deed, or other document required by a reputable title company, conveying all Tenant’s right, title, and interest in and to the Property and Improvements to La ndlord. In the event Tenant receives a written default notice relating to or arising from any mortgage, deed of trust or security instrument secured by the leasehold interest granted hereunder or Tenant’s interest in the Improvements (a “Leasehold Mortgage Default”), then Tenant shall provide written notice of such alleged default to the Landlord within five (5) days of receipt thereof. In the event of a Leasehold Mortgage Default and during the continuance thereof, and upon the earlier expiration or termination of the Term, Tenant hereby irrevocably appoints Landlord as Tenant’s agent and attorney-in-fact (such agency being coupled with an interest), and as such agent and attorney -in- fact Landlord may, without the obligation to do so, in Tenant’s name, or in the name of Landlord, prepare, execute and file or record such statements, applications and other documents necessary to create, perfect or preserve any of Landlord’s interests and rights in or to the Property and any of the Improvements, and, upon the earlier expiration or termination of the Term (including termination due to an Event of Default hereunder after expiration of the applicable cure periods as set forth in Article 21 hereof) take any other action required by Tenant hereunder.
5.4.2 Condition. On expiration or earlier termination of the Term and in furtherance of the provisions relating to surrender of the Property set forth in Section 5.4.1 above, Tenant shall peaceably and quietly leave and surrender the Property and the Improvements to Landlord in their “AS IS” condition and repair. Tenant shall leave in place and in their “AS IS” condition and repair, all fixtures and machinery; except Tenant shall have the right to remove any Personalty and other Personalty that Tenant shall have installed in accordance with Section 11.1.2, in which case Tenant shall repair any damage to the Property or Improvements caused by such removal.
5.4.3 Delivery of Documents. Contemporaneously with the expiration or earlier termination of the Term and subject to the provis ions of Sections 5.4.1 and 5.4.2 hereof, Tenant shall immediately deliver to Landlord the following:
(a) Such documents, instruments and conveyances as Landlord may reasonably request to enable Landlord’s ownership of the Property and the Improvements to be reflected of record, including, without limitation, a quitclaim deed in recordable form to the Property and the Improvements.
(b) Tenant shall certify in writing to Landlord that no liens or other encumbrances affect title to the Property which have been creat ed by Tenant’s acts or omissions, created by any third party claiming under or through Tenant, or created by the performance of any labor or the furnishing of any materials, supplies, or equipment by or for Tenant, except as may have been (i) in existence as of the Commencement Date or (ii) caused or expressly permitted in writing by Landlord or (iii) governmental liens not caused or expressly permitted by Tenant. (c) All construction plans, as-builts, surveys, permits, existing contracts for services, maintena nce, operation, and any other documents relating to use, operation, 082161\16361704v6
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management, and maintenance of the Improvements as may be in effect and in the possession of Tenant at the time and from time to time thereafter.
(d) All documents and instruments required to be delivered by Tenant to Landlord pursuant to this Section shall be complete, legible, originals or true copies, and shall otherwise be in a form reasonably satisfactory to Landlord.
5.5 Abandonment. Tenant shall not abandon or vacate the Property or the Improvements at any time during the Term. If Tenant shall abandon, vacate or otherwise surrender the Property or the Improvements, or be dispossessed (other than dispossession as the result of a Substantial Taking or a Taking) thereof by process of law or o therwise, in addition to any other remedy available on the part of Landlord, any of Tenant’s property left in, upon or about the Property or the Improvements (except for underground storage tanks, if any) shall, at Landlord’s option, be deemed to be abandoned and shall become the property of Landlord. The appointment of a receiver pursuant to a Mortgagee’s exercise of its rights under a Mortgage, or the foreclosure of a Mortgage, shall not be a Breach under this Section.
ARTICLE 6. REPRESENTATIONS AND WARRANTIES; MAT ERIAL ADVERSE CHANGE.
6.1 Landlord’s Representations. Landlord represents and warrants to Tenant, as of the Commencement Date, as follows:
6.1.1 Quiet Enjoyment. Tenant shall at all times during the Term of this Lease have the right to peacefully and quietly have, hold, occupy and enjoy the Property, subject only to the terms of this Lease, without hindrance or molestation from Landlord or any other person claiming by, through or under Landlord or any predecessor in title. Except as disclosed to Tenant, there are no agreements, restrictions, covenants, encumbrances or easements affecting the Property which will diminish any of Tenant’s rights or increase any of Tenant’s obligations under this Lease.
6.1.2 Conflict with Other Obligations . To Landlord’s Actual Knowledge, neither the execution of this Lease nor the performance of the obligations herein will conflict with, or breach any of the provisions of any law, bond, note, evidence of indebtedness, contract, lease, covenants, conditions and restrictions, or other agreement or instrument to which Landlord or the Property may be bound.
6.1.3 Authority. This Lease has been duly approved by the governing board of the Landlord and the individuals executing this Lease on behalf of the Landlord have been duly authorized to do so.
6.1.4 Bankruptcy. Landlord is not the subject of a bankruptcy proceeding, and permission of a bankruptcy court is not necessary for Landlord to be able to transfer an interest in the Property.
6.1.5 Litigation. Except as described in Article 16, to Landlord’s Actual Knowledge there is no litigation, arbitration or other legal or administrative suit, action, proceeding or investigation of any kind pending or threatened in writing against or involving Landlord relating 082161\16361704v6
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to the Property or any part thereof, including, but not limited to, any condemnation action relating to the Property or any part thereof.
6.1.6 Governmental Compliance. Except as described in Article 16, Landlord has not received any notice from any governmental agency or authority alleging that any portion of the Property is currently in violation of any law, ordinance, rule, regulation or requirement applicable to its use and operation and to Landlord’s Actual Knowledge, the Property is currently in compliance with all Governmental Requirements applicable to t he use and operation of the Property. Landlord has not received written notice from any applicable governmental authority of any, and to Landlord’s Actual Knowledge there is no, pending or threatened condemnation action with respect to the Property.
6.1.7 Right to Possession. No person, firm, partnership or corporation has or will have the right to possess the interest of Tenant in the Property, or any portion of it, as of the Commencement Date.
6.1.8 No Commitments. Except as described in Article 16, Landlord has n ot made any commitments to any governmental authority, utility company, school board, church or other religious body, or any homeowners’ association or any other organization, group or individual, relating to the Property that would impose an obligation up on Tenant to make any contribution or dedication of money or land or to construct, install or maintain any improvements of a public or private nature on or off of the Property which, as of the Commencement Date, will not have been satisfied in full or terminated.
6.1.9 Outstanding Agreements. To Landlord’s actual knowledge, there are no outstanding agreements (written or oral) pursuant to which Landlord has agreed to sell or has granted an option or right of first refusal or first or last offer to lease the Prop erty or any interest therein.
6.1.10 Survival of Certain Representations. The representations and warranties set forth in this Section 6.1 shall survive the Commencement Date. During the entire Term of the Lease, within ten (10) business days following a written request from Tenant, Landlord shall either re-affirm in writing the material truth and accuracy of the representations and warranties set forth in this Section 6.1 or identify any material inaccuracies of such representations and warranties.
The fact that a representation or warranty contained in this Section 6.1 has become inaccurate or misleading shall not, in and of itself, constitute a Breach under this Lease by Landlord, however, (a) failure to notify Tenant of material inaccuracies in these representations and warranties within ten (10) business days of Tenant’s request for such information, subject to delivery of notice and expiration of the cure period provided hereunder, and (b) any overt material misrepresentation by Landlord relating to such re presentations and warranties (without notice or opportunity to cure having been provided by Tenant) shall each constitute a Landlord Default hereunder.
6.2 Tenant’s Representations. Tenant represents and warrants to Landlord, as of the Commencement Date, as follows:
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6.2.1 Tenant is a limited liability company duly organized, validly existing, and formed under the laws of Delaware, and in good standing under the laws of the State of California that has the power and authority to own property and carry on business as is now being conducted.
6.2.2 Tenant has full power and authority to execute and deliver this Lease, the Memorandum of Ground Lease and all other documents or instruments executed and delivered, or to be executed and delivered, pursuant to this Lease, and to pe rform and observe the terms and provisions of all of the above.
6.2.3 This Lease and any other documents or instruments which have been executed and delivered pursuant to or in connection with this Lease constitute or, if not yet executed or delivered, will when so executed and delivered constitute, legal, valid and binding obligations of Tenant enforceable against it in accordance with their respective terms, subject to application of laws relating to bankruptcy, insolvency, or other laws affecting the enforceme nt generally of creditors’ rights and remedies.
6.2.4 To Tenant’s Actual Knowledge, Tenant is not in default under any law or regulation or under any order of any federal, state, or local court, board, commission or agency whatsoever, and there are no claims, actions, suits or proceedings pending or, to the knowledge of Tenant, threatened against or affecting Tenant or the Property, at law or in equity, before or by any federal, state, or local court, board, commission or agency whatsoever which might, if determined adversely to Tenant, materially affect Tenant’s ability to perform its obligations hereunder.
6.2.5 Tenant has examined the Property and acknowledges that, subject to completion of Landlord’s Work, it hereby accepts possession of the Property in its “AS IS” condition, with all faults and defects, including, without limitation, any physical condition or environmental condition of the Property.
6.2.6 All documents, materials and information provided by Tenant to Landlord relating to Tenant’s qualifications, financial strength, and ability to perform its obligations hereunder are true, correct and complete in all material respects as of their respective dates and no Material Adverse Change has occurred or, to Tenant’s Actual Knowledge, is reasonably likely to occur that would make any such documents, materials or information incorrect, incomplete, or misleading in any material respect.
6.2.7 Survival of Certain Representations. The representations and warranties set forth in this Section 6.2 shall survive the Commencement Date. During the entire Term of the Lease, within ten (10) business days following a written request from Landlord, Tenant shall either re-affirm in writing the material truth and accuracy of the representations and warranties set forth in this Section 6.2 or identify any material inaccuracies of such representations and warranties.
The fact that a representation or warranty contained in this Section 6.2 has become inaccurate or misleading shall not, in and of itself, constitute a Breach under this Lease; h owever, (a) failure to notify Landlord of material inaccuracies in these representations and warranties within ten (10) business days of Landlord’s request for such information, subject to delivery of notice and expiration of the cure period provided hereunder, and (b) any overt material misrepresentation by Tenant relating to such representations and warranties (without notice or opportunity to cure having been provided by Landlord) shall each constitute a Default hereunder. The provisions of 082161\16361704v6
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this paragraph shall be of no further force or effect upon transfer of title pursuant to a foreclosure, assignment in lieu of foreclosure, or execution of a New Lease.
6.3 Tenant Obligation to Notify re Material Adverse Change . During the entire Term hereof, Tenant shall have the ongoing obligation to promptly (but in no event later than ten (10) business days following Tenant’s Actual Knowledge of a Material Adverse Change) inform Landlord (in writing) of the occurrence of any Material Adverse Change. The provisions of this Section 6.3 shall be of no further force or effect upon a foreclosure, deed in lieu of foreclosure, or execution of a New Lease.
ARTICLE 7. CONSTRUCTION OF THE IMPROVEMENTS.
7.1 Construction of Improvements. Tenant shall use commercially reasonable efforts to Commence and Complete construction of the Improvements on or before the Completion Date, as such date may be extended pursuant to the terms of this Lease, and in accordance with all Governmental Requirements, the Entitlements and the Building Permits.
Tenant shall carry out the design, construction and operation of the Improvements in conformity with all applicable Governmental Requirements, including all applicable state labor standards and federal prevailing wage laws (including without limitation, if applicable, provisions for payment of prevailing wages in connection with all construction of the Improvements, the Local Code and any other zoning and development standards, building, plumbing, mechanical and electrical codes that are applicable, and all other provisions of the Local Code, and the Fair Housing Act, 42 U.S.C. Section 3601 et seq . (and 24 C.F.R. Part 100), the Americans With Disabilities Act, 42 U.S.C. Section 12101, et seq ., Government Code Section 4450, et seq ., Government Code Section 11135, et seq., the Unruh Civil Rights Act, Civil Code Section 51, et seq., and the California Building Standards Code, Health and Safety Code Section 18900, et seq.
Tenant, including but not limited to its contractors and subcontractors, shall, if applicable, comply with Labor Code Section 1720, et seq., and its implementing regulations, regarding the payment of prevailing wages (the “State Prevailing Wage Law”) and, if applicable, federal prevailing wage law (“Federal Prevailing Wage Law” and, together with State Prevailing Wage Law, “Prevailing Wage Laws”) with regard to the construction of the Improvements, if and to the extent such sections are applicable to the development of the Improvements. Tenant shall be solely responsible for determining and effectuatin g compliance with the Prevailing Wage Laws. Tenant hereby releases from liability, and agrees to indemnify, defend, assume all responsibility for and hold Landlord and its officers, employees, agents and representatives, harmless from any and all claims, demands, actions, suits, proceedings, fines, penalties, damages, expenses resulting from, arising out of, or based upon Tenant’s acts or omissions pertaining to the compliance with the Prevailing Wage Laws for the Improvements.
Without limitation as to Section 9.2 of this Lease, Tenant shall indemnify, protect, defend and hold harmless Landlord and its officers, employees, contractors and agents, with counsel reasonably acceptable to Landlord, from and against any and all loss, liability, damage, claim, cost, expense and/or “increased costs” (including reasonable attorneys’ fees, court and litigation costs, and fees of expert witnesses) which, in connection with the development, construction, and/or operation of the Improvements, including, without limitation, any and all public works (as defined by applicable law), results or arises in any way from any of the following: (1) the noncompliance 082161\16361704v6
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by Tenant of any applicable local, state and/or federal law, including, without limitation, any applicable federal an d/or state labor laws (including, without limitation, if applicable, the requirement to pay state prevailing wages and/or federal prevailing wages); (2) the implementation of Section 1781 of the Labor Code, as the same may be amended from time to time, or any other similar law; and/or (3) failure by Tenant to provide any required disclosure or identification as required by Labor Code Section 1781, as the same may be amended from time to time, or any other similar law. It is agreed by the parties that, in c onnection with the development of the Improvements, including, without limitation, any and all public works (as defined by applicable law), Tenant shall bear all risks of payment or non-payment of prevailing wages under California law and/or the implementa tion of Labor Code Section 1781, as the same may be amended from time to time, and/or any other similar law. “Increased costs,” as used in this Section 7.1, shall have the meaning ascribed to it in Labor Code Section 1781, as the same may be amended from time to time. The foregoing indemnity shall survive termination of this Lease and shall continue after completion of the construction and development of the Improvements by Tenant.
7.2 Alterations. Subject to approval by Anaheim, if required by applicable law, Tenant may from time to time, at its sole expense, demolish, replace, rebuild and make any improvements, additions and other alterations to the Property (collectively, “Alterations”) which Tenant determines to be necessary, desirable or beneficial in Tenant’s sole discretion, including without limitation, constructing any buildings or other improvements on the Premises, and razing or destroying any building and any other improvements presently or in the future located on the Premises. Tenant shall tim ely pay any obligation incurred by Tenant with respect to any such Alterations that could become a lien against the Property and shall defend, indemnify and hold Landlord harmless in connection therewith.
7.3 Construction Cost. Tenant shall bear the entire a nd sole cost of constructing the Alterations, including all fees and mitigation measures.
7.4 Diligent Prosecution to Completion. Once the work is begun, Tenant shall, with reasonable diligence, prosecute the Alterations to completion. All Alterations shall be constructed and completed in a good and workmanlike manner, shall conform to the general design standards of the Ground Lease and shall comply with all applicable Governmental Requirements.
7.5 Right of Access . During normal construction hours and subjec t to the rights of subtenants of the Property, upon at least three (3) business days’ prior written notice to Tenant, representatives of Landlord shall have the reasonable right of access to the Property without charges or fees for the purpose of inspecting the work of the Alterations; provided, however, that such representatives shall present and identify themselves at Tenant’s construction office, be accompanied by a representative of Tenant while on the Property and obey Tenant’s, or its contractor’s, safety rules and regulations. Landlord shall deliver written notice of the identity of its representatives to Tenant before such representatives enter the Property. Landlord hereby indemnifies and holds Tenant, and its contractors, subcontractors, agents, representatives and employees, and the Property, harmless from and against any loss, cost, damage or liability, including, without limitation, attorneys’ fees, which results from the exercise by Landlord, or any party acting under Landlord’s authority, of the rights granted by this Section 7.5. 082161\16361704v6
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7.6 Governmental Approvals. If requested by Landlord in writing, Tenant covenants and agrees to deliver to Landlord conformed copies (and certified copies of all recorded instruments) of all governmental approvals and permits obtained by Tenant for the construction, alteration or reconstruction of any Alterations upon the Property, including required permits and approvals issued by the planning, building and permitting divisions of Anaheim. In no event shall Tenant commence construction of any Alterations pursuant to the provisions of this Article 7 until such time as Tenant shall have obtained all necessary governmental approvals and permits to so construct such Alterations, including required permits and approvals iss ued by the planning, building and permitting divisions of Anaheim.
7.7 Landlord’s Right to Discharge Lien. If Tenant does not cause to be recorded the bond described in California Civil Code Section 8424 or otherwise protect the Property under any alternative or successor statute, and a final judgment has been entered against Tenant by a court of competent jurisdiction for the foreclosure of a mechanic’s, materialmen’s, contractor’s, or subcontractor’s lien claim, and if Tenant fails to stay the execution of the judgment by lawful means or to pay the judgment, Landlord shall have the right, but not the duty, to pay or otherwise discharge, stay, or prevent the execution of any such judgment or lien or both. Tenant shall reimburse Landlord for all sums paid by Landlord under this Section, together with all Landlord’s reasonable attorneys’ fees and costs, plus interest on those sums, fees, and costs from the date of payment until the date of reimbursement at the rate set forth in Section 4.6.
7.8 Notice of Non-Responsibility. Tenant shall provide Landlord with prior written notice of not less than fifteen (15) days before commencing construction of any structural alteration of the Alterations, or any non -structural alteration which will cost more than Fifty Thousand Dollars ($50,000.00), and shall permit Landlord to record and post appropriate notices of non-responsibility on the Property. The foregoing dollar amount limitation shall be increased each calendar year by the corresponding percentage increase in CPI.
7.9 Release of Construction Covenants. Promptly after Completion of Improvements with respect to each Development Parcel in conformity with this Lease, the Landlord shall deliver to the Tenant a Release of Construction Covenants, executed and acknowledged by Landlord. The Landlord shall not unreasonably withhold such Release of Construction Covenants. The Release of Construction Covenants shall be a conclusive determination of satisfactory completion of the Improvements with respect to each Development Parcel , and the Release of Construction Covenants shall so state. Following the issuance of a Release of Construction Covenants as to the Improvements with respect to each Development Parcel, any party then or thereafter owning, purchasing, leasing or otherwise acquiring any interest in the applicable Development Parcel shall not (because of such ownership, purchase, lease or acquisition) incur any obligation or liability under this Lease as to the applicable Development Parcel to which the Release of Constructi on Covenants has been issued except for those continuing covenants described this Lease.
If the Landlord refuses or fails to furnish a Release of Construction Covenants in accordance with the preceding paragraph, and after written request from the Tenant, the Landlord shall, within fifteen (15) days after receipt of such written request therefor, provide the Tenant with a written statement of the reasons the Landlord refused or failed to furnish the Release of Construction Covenants. The statement shall al so contain the Landlord’s opinion of the actions the Tenant must take to obtain the Release of Construction Covenants. Even if the Landlord shall 082161\16361704v6
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have failed to provide such written statement within such fifteen (15) day period, the Tenant shall not be de emed entitled to the Release of Construction Covenants unless the Tenant, upon expiration of such fifteen (15) day period provides Landlord with a written demand that the Landlord furnish such Release of Construction Covenants as to Improvements with respect to each Development Parcel, or provide a written statement as to the basis for denial thereof (a “Tenant Notice”), which Tenant Notice sets forth the terms of this Section 7.9 in full, and the Landlord fails to either furnish such Release of Construction Covenants or provide a written explanation of the denial thereof, within fifteen (15) days following Landlord’s receipt of the Tenant Notice, in which case the Tenant shall be entitled to a Release of Construction Covenants which is the subject of the Te nant Notice. The Release of Construction Covenants shall not constitute evidence of compliance with or satisfaction of any obligation of the Tenant to any holder of any mortgage, or any insurer of a mortgage securing money loaned to finance the Improvemen ts with respect to each Development Parcel. The Release of Construction Covenants is not a notice of completion as referred to in California Civil Code Section 8182.
ARTICLE 8. USE OF THE PROPERTY.
8.1 Covenants Regarding Use. Tenant covenants and agrees for itself, its successors, assigns, and every successor in interest to Tenant’s interest in the Property or any part thereof, that Tenant shall devote the Property to the uses specified in this Lease until the expiration or earlier termination of the Term hereof. All uses conducted on the Property, including, without limitation, all activities undertaken by Tenant pursuant to this Lease, shall conform to all Governmental Requirements. The foregoing covenants shall run with the land.
8.2 Covenant Regarding Specific Uses . Tenant covenants and agrees for itself, its successors, assigns, and every successor in interest to Tenant’s interest in the Property or any part thereof, that Tenant shall use the Property to operate the Project until the expiration of the Term.
8.3 Approval of Subtenants. If Tenant subleases all or any portion of the Property to one or more retailers or users (“Retailers/Users”) other than the lessee/operator of the Grocery Store, then such Retailers/Users shall be the type of retailers or users comparable to other first rate, commercial retail and/or mixed use centers in Orange County. The identity of Retailers/Users during the initial lease -up occupying more than 5,000 square feet of gross leasable area shall be approved by the Director acting in his/h er reasonable discretion, consistent with the immediately preceding sentence; provided, however, a car wash shall be subject to the approval of the Director acting in his/her sole and absolu te discretion. Landlord hereby approves Lowe’s Home Improvement as a Retail er/User. If Tenant subleases all or any portion of the Property for any other commercial use, then the subtenants of such portion of the Property shall be comparable to other similar first rate, commercial projects. The identity of such subtena nts during the initial lease-up occupying more than 5,000 square feet of gross leasable area shall be approved by the Director acting in his/her reasonable discretion, consistent with the immediately preceding sentence. Subject to the above, Tenant shall have the right at any time, without Landlord’s consent to sublet all or any part of the Property, and the subtenant may use the Property for any lawful purpose.
8.4 Management of the Project.
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8.4.1 Property Manager . Tenant shall manage or cause the Project, and all appurtenances thereto that are a part of the Project, to be managed in a prudent and business -like manner, consistent with good property management standards for other comparable high quality, well-managed projects in the County. Tenant may contract with a property management company or property manager, to operate and maintain the Project.
ARTICLE 9. INSURANCE AND INDEMNIFICATION.
9.1 Landlord Not Liable . Except as the result of any grossly negligent or willful/intentional acts or omissions by Landlord or its representatives, employees or agents, or as otherwise expressly set forth herein, Landlord, in its capacity as landlord under this Lease only, shall not be liable for injury to Tenant’s business or any loss of income therefrom or for any damage or liability of an y kind or for any injury to or death of persons or damage to property of Tenant, or to Tenant’s sublessees of each and all of the Improvements, or to Tenant’s agents, employees, servants, contractors, subtenants, licensees, concessionaires, customers or bu siness invitees or any other person which occurs on the Property during the Term.
9.2 Indemnification. Tenant shall defend, indemnify, pay for, assume all responsibility for, and hold the Indemnitees, harmless from all claims, demands, damages, defense costs or liability of any kind or nature relating to performance by Tenant or Tenant’s employees, agents, contractors, and/or consultants under this Lease, including without limitation compliance with all applicable Governmental Requirements, and any damages to property or injuries to persons, including accidental death (including attorneys’ fees and costs), which may be caused by any acts or omissions of Tenant under this Lease, whether such activities or performance thereof be by Tenant or by anyone directly o r indirectly employed or contracted with by Tenant and whether such damage shall accrue or be discovered before or after termination of this Lease and arising prior to the expiration or earlier termination of the Term of this Lease. However, notwithstanding the foregoing, Tenant shall not be liable for property damage or bodily injury to the extent occasioned by the gross negligence or willful misconduct of the Indemnitees, or their agents or employees. Tenant shall have the obligation to defend any such action; provided, however, that this obligation to defend shall not be effective if and to the extent that Tenant determines in its reasonable discretion that such action is meritorious or that the interests of the parties justify a compromise or a settlement of such action, in which case Tenant shall compromise or settle such action in a way that fully protects Indemnitees from any liability or obligation. In this regard, Tenant’s obligation and right to defend shall include the right to hire (subject to written reasonable approval by Landlord) attorneys and experts necessary to defend, the right to process and settle reasonable claims, the right to enter into reasonable settlement agreements and pay amounts as required by the terms of such settlement, and the right to pay any judgments assessed against Indemnitees. If Tenant defends any such action, as set forth above, (i) Tenant shall indemnify and hold harmless Indemnitees from and against any claims, losses, liabilities, or damages assessed or awarded against either of them by way of judgment, settlement, or stipulation and (ii) Landlord shall be entitled to settle any such claim only with the written consent of Tenant and any settlement without Tenant’s consent shall release Tenant’s obligations under this Section
9.2 with respect to such settled claim. This Section notwithstanding, indemnification with respect to Prevailing Wage Laws shall be governed by Section 7.1 and indemnification with respect to Hazardous Materials shall be governed by Section 16.3 hereof. 082161\16361704v6
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9.3 Insurance.
9.3.1 Tenant’s Insurance. Commencing as of the Effective Date and continuing for so long as this Lease remains in effect, Tenant shall maintain at Tenant’s sole expense, or cause to be maintained, the following policies of insurance in form and substance reasonably satisfactory to Landlord:
(a) workers’ compensation as required by law and employer’s liability insurance with a limit of not less than $1,000,000 per accident; (b) prior to commencement of construction of the Improvements and at all times prior to completion of the Improvements, builder’s risk-all risk insurance covering 100% of the replacement cost of all Improvements (including all materials, whether stored on or offsite) during the course of construction in the event of fire, lightni ng, windstorm, vandalism, malicious mischief and all other risks normally covered by “all risk” coverage policies in the area where the Property is located (including loss by flood if the Property is in an area designated as subject to the danger of flood);
(c) following completion of the Improvements, fire and hazard “all risk” (currently called “special form – causes of losses) insurance covering 100% of the replacement cost of the Improvements (excluding foundations, footings, excavations and other uninsurable improvements) in the event of fire, lightning, windstorm, vandalism, malicious mischief and all other risks normally covered by “all risk” coverage policies in the area where the Property is located (including loss by flood if the Property is in an area designated as subject to the danger of flood). Tenant shall have the right, but not the obligation, to maintain or caused to be maintained earthquake insurance; and
(d) a Commercial General Liability (“CGL”) policy combined single limit policy for both perso nal injury and property damage in the amount of $5,000,000, rising to $10,000,000 July 1, 2030, $15,000,000 July 1, 2040, $20,000,000 July 1, 2050, $25,000,000 July 1, 2060, and $30,000,000 July 1, 2070. These limits may be satisfied through a combination of primary, excess, and/or umbrella policies and which will be considered equivalent to the required minimum limits.
9.3.2 Insurance Requirements. All insurance required under Section 9.3.1 may be satisfied by blanket insurance policies. Certificates of insurance for the above policies (and/or original policies, if required by Landlord) shall be delivered to Landlord from time to time within 10 days after demand therefor. All policies insuring against damage to the Improvements shall contain an agreed value clause sufficient to eliminate any risk of co-insurance. No less than thirty (30) days prior to the expiration of each policy, Tenant shall deliver to Landlord evidence of renewal or replacement of such policy reasonably satisfactory to the City Attorney. Coverage provided hereunder by Tenant shall be primary insurance and not be contributing with any insurance maintained by Landlord, and the policy shall contain such an endorsement. The above- described policies shall have a commercially reasonable deduct ible or self -insured retention amount. All policies shall be written by good and solvent insurers qualified to do business in California and shall have a policyholder’s rating of A:VI or better in the most recent edition of 082161\16361704v6
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“Best’s Key Rating Guide -- Property and Casualty.” The required certificate shall be furnished by Tenant at the time set forth herein.
9.3.3 Minimum Coverage/Endorsements . Notwithstanding any inconsistent statement in the policy or any subsequent endorsement attached hereto, the protection afforded by these policies shall be written on an occurrence basis in which Landlord and its respective elected and appointed officials, officers, employees, agents and representatives (together, “Additional Insureds”) are named as additional insureds on all coverage, except for (i) Workers’ Compensation coverage, but including Employers Liability coverage, and (ii) the policies required under Section
9.3(b) and (c), and shall:
(a) Name the Additional Insureds (from above) as additional insureds on the CGL policy;
(b) Include an endorsement to the CGL policy naming the Additional Insureds as additional insureds, and said endorsement shall be delivered to the Landlord prior to and as a Condition Precedent to the Closing (and maintained as required herein); provided, however, that an individual endorsement specifically naming the Additional Insureds shall not be required if Tenant provides documentation which demonstrates that the Additional Insureds are otherwise automatically covered under some sort of blanket polic y language that clearly establishes the Additional Insureds’ status as additional insureds under the policy, without the need for a separate endorsement in favor of the Additional Insureds; (c) Tenant shall also file with Landlord the following signed certification:
“I am aware of, and will comply with, Section 3700 of the Labor Code, requiring every employer to be insured against liability of Workers’ Compensation or to undertake self-insurance before commencing any of the work.” (d) All Additional Insureds shall not be responsible for any claims in law or equity occasioned by the failure of Tenant to comply with this Section 9.3.3. Landlord shall have the right, but not the obligation, to pay a premium on behalf of Tenant and be reimbursed by Tenant as Additional Rent.
(e) For all insurance required under this Section 9.3, Landlord shall have the right, at every five (5) year period of this Lease, to review the types and limits of insurance coverage required herein and to make reasonable adjustments, provided that (i) such types and limits shall not exceed that typically carried by the owner and operator of comparable projects, of approximately the same size, in Orange County, California, based on reasonable research and investigation by Landlord, and (ii) the limits of the CGL policy shall not exceed the limits set forth in Section 9.3.1(d).
(f) Notwithstanding any other provision of this Lease, any policy of property insurance procured pursuant to this Section 9.3 of this Lease may contain a mortgage loss payable clauses and any proceeds of a claim thereunder shall be paid over to Mortgagee (and if there is more than one Mortgagee, in the order of priority of their liens), to be applied against the 082161\16361704v6
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indebtedness which Mortgagee’s security instruments on the interest of Tena nt in the Property secures. Furthermore, Mortgagee shall have the right to participate in the adjustment of any losses with respect to insurance proceeds, subject to the applicable provisions of the Mortgage and other documents that govern the loan secured by the Mortgage.
9.3.4 Reduction in Requirements . Landlord’s Risk Manager is hereby authorized to reduce the requirements set forth herein, on a temporary or permanent basis, in the event he determines, in his sole discretion, that such reduction is in Landlord’s best interest.
9.4 Contractors. All contractors employed by Tenant with contracts of Fifty Thousand Dollars ($50,000.00) or more shall be required to furnish evidence of Commercial General Liability insurance subject to all the requirements stated herein with limits of not less than Two Million Dollars ($2,000,000.00) combined single limit each occurrence. The foregoing dollar amount limitation shall be increased each calendar year by the corresponding percentage increase in CPI. The Indemnitees shall have the right to receive evidence of compliance with the foregoing by contractors at any time upon written request therefor.
9.5 Waiver of Subrogation. Each policy of property insurance procured pursuant to Article 9 shall contain, if obtainable upon commer cially reasonable terms, either (i) a waiver by the insurer of the right of subrogation against either party hereto for negligence of such party, or (ii) a statement that the insurance shall not be invalidated should any insured waive in writing prior to a loss any or all right of recovery against any party for loss accruing to the property described in the insurance policy. Each of the parties hereto waives any and all rights of recovery against the other, or against the officers, employees, agents and re presentatives of such other party, for loss or damage to such waiving party or its property or the property of others under its control, arising from any cause insured against under the form of insurance policies required to be carried pursuant to Article 9 of this Lease or under any other policy of insurance carried by such waiving party.
ARTICLE 10. MAINTENANCE OF THE PROPERTY.
10.1 General Maintenance by Tenant . With the exception of the implementation of the OM&M Plan for which Landlord is responsible pursuant to Arti cle 16, Tenant shall maintain or cause to be maintained, in accordance with the Maintenance Standards set forth below, the Property and all Improvements thereon in good condition, free of debris, waste and graffiti, and in compliance with all applicable la nd use requirements and Governmental Requirements. Such Maintenance Standards shall apply to all Improvements at the Property with the exception of the implementation of the OM&M Plan by Landlord pursuant to Article 16. To accomplish the maintenance, Tenant shall either staff or contract with and hire licensed and qualified personnel to perform the maintenance work, including the provision of labor, equipment, materials, support facilities, and any and all other items necessary to comply with the requirem ents of this Lease; provided, however, Tenant shall have the right to permit any subtenant of the Property to maintain or cause to be maintained any and all Improvements constructed by such subtenant or located on such subtenants’ premises. If required by Tenant’s lender, Tenant shall maintain reasonable reserves for capital improvements and/or replacements as required by Tenant’s lender. 082161\16361704v6
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Tenant and its maintenance staff, contractors or subcontractors shall comply with the following standards as to the Project (collectively, “Maintenance Standards”):
(a) The Property and Improvements shall be maintained in conformance and in compliance with reasonable maintenance standards which comply with the industry standard for comparable first quality, projects in the County, including but not limited to painting and cleaning of all exterior surfaces and other exterior facades comprising all private improvements and public improvements to the curbline.
(b) Clean-up maintenance shall include, but not be limited to:
maintenance of all sidewalks, paths and other paved areas in clean and weed -free condition; maintenance of all such areas clear of dirt, mud, trash, debris or other matter which is unsafe or unsightly; removal of all trash, litter and other debris from improvements and landscaping prior to mowing; clearance and cleaning of all areas maintained prior to the end of the day on which the maintenance operations are performed to ensure that all debris is properly disposed of by maintenance workers.
Landlord agrees to notify Tenant in writing if the condition of the Property does not meet with the Maintenance Standards and to specify the deficiencies and the actions required to be taken by Tenant to cure the deficiencies. Upon notification of any maintenance deficiency, Tenant shall have thirty (30) days within which to correct, remedy or cure the deficiency. If the written notification states the problem is urgent relating to the public health and safety, then Tenant shall have forty-eight (48) hours to rectify the problem. In the event Tenant does not maintain the Property in the manner set forth herein and in accordance with the Maintenance Standards, Landlord shall have, in addition to any other rights and remedies hereunder, the right to contract for the correction of s uch deficiencies, after written notice to Tenant and the applicable cure periods set forth herein, and Tenant shall be responsible for the payment of all such costs incurred by Landlord within thirty (30) days after Tenant’s receipt of copies of contractor ’s invoices or other written evidence of the costs incurred by Landlord).
10.2 Inspections of the Property. Landlord shall have the right (but not the obligation) to conduct annual inspections of the Property to confirm Tenant’s compliance with Section 10.2.
Landlord shall provide at least forty-eight hours’ written notice prior to entering onto the Property to conduct such inspection and/or evaluation, subject to the rights of the subtenants of the Property.
ARTICLE 11. OWNERSHIP OF AND RESPONSIBILITY FOR IMPROVEMENTS.
11.1 Ownership During Term.
11.1.1 Improvements. Subject to the provisions of Sections 5.4.1 and 5.4.2 hereof, all Improvements on the Property as permitted or required by this Lease shall, during the Term, be and remain the property of Tenant, and Landlord shall not have title thereto.
11.1.2 Personal Property. All Personalty, which are not so affixed to the Property or the buildings thereon as to require substantial damage to the buildings upon removal thereof (unless Tenant repairs such damage) shall constitute Personalt y including, but not limited to:
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furnishings, fixtures and equipment of the nature or type deemed by law as permanently resting upon or attached to the building s or land by any means, including, without limitation, cement, plaster, nails, bolts or screws, or essential to the ordinary and convenient use of the Property and the Improvements. Any time during the Term and at termination thereof, Tenant shall have th e right to remove any and all personal property, furnishings, fixtures and equipment that was originally delivered to or installed at the Property by Tenant after the Commencement Date; provided that Tenant shall repair any damage to the Property or the Improvements caused by such removal. In the event that Tenant has not removed its Personalty by the expiration of the Term, Landlord may, at its option, after thirty (30) days written notice to Tenant, remove, store, retain or dispose of the same in any manner that Landlord may see fit.
11.1.3 Lien Waivers. Landlord acknowledges and agrees that Tenant’s and its subtenants’ Personalty may be leased from an equipment lessor or encumbered by Tenant’s or its subtenants’ lender(s) (“Equipment Lessor”) and that Tenant o r its subtenant(s) may execute and enter into an equipment lease or security agreement with respect to such Personalty (“Equipment Lease”). If and to the extent required by any Equipment Lease or Equipment Lessor, Landlord shall execute and deliver to the Equipment Lessor a written consent or acknowledgment, in recordable form and in scope and substance reasonably satisfactory to both Landlord and such Equipment Lessor in which Landlord (a) acknowledges and agrees that the Personalty which is the subject o f the Equipment Lease constitutes the personal property of Tenant, and shall not be considered to be part of the Property, regardless of whether or by what means they become attached thereto, (b) agrees that it shall not claim any interest in such Personal ty, and (c) agrees that Equipment Lessor may enter the Property during the Term and during a period of thirty (30) days thereafter for the purpose of exercising any right it may have under the provisions of the Equipment Lease, including the right to remove such Personalty, provided that such Equipment Lessor agrees to repair any damage resulting from such removal. Such consent or acknowledgment documents shall also contain such other provisions as may be common in the equipment leasing or lending industry.
11.1.4 Basic Building Systems. For purposes of this Lease, the personal property, furnishings, fixtures and equipment described in this Section 11.1 shall not include those major building components or fixtures necessary for operation of the basic building systems such as, but not limited to, the elevators, plumbing, sanitary fixtures, heating and central air-cooling system.
11.2 Ownership at Expiration or Termination.
11.2.1 Property of Landlord . In accordance with provisions of Sections 5.3.1 and 5.3.2 hereof, and except as provided in Section 11.2.2, all Improvements which constitute or are a part of the Property shall become (without the payment of any compensation whatsoever to Tenant or to others) the property of Landlord free and clear of all liens, claims and encumbrances on such Improvements by Tenant, and anyone claiming under or through Tenant, except for such title exceptions permitted or required during the Term with Landlord’s prior written consent.
11.2.2 Removal by Tenant . Subject to the provisions of Section 5.3. 2 hereof, within thirty (30) days following the expiration or earlier termination of the Term, Tenant may remove all personal property, furniture, equipment, and other Personalty. 082161\16361704v6
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11.2.3 Unremoved Property. Any personal property, furnishings or equipment which is owned by Tenant and not removed by Tenant pursuant to Section 11.2.2 hereof, shall, without compensation to Tenant, become Landlord’s property, free and clear of all claims to or against them by Tenant or any third person, firm or entity arising by, through or under Tenant.
11.3 Waste. Subject to the alteration rights of Tenant and damage and destruction or condemnation of the Property or any part thereof, Tenant shall not commit or suffer to be committed any waste of the Property or the Improvements, or any part thereof.
11.4 Compliance with Laws . Tenant shall carry out the construction, operation, and management of the Project in conformity with all applicable federal, state and local laws, including, without limitation, all applicable state labor standards, zoning and development standards, building, plumbing, mechanical and electrical codes, and all other provisions of any governmental agencies having jurisdiction over development of the Property, and all applicable Governmental Requirements.
ARTICLE 12. SIGNS AND MARKETING.
12.1 Project Signage. Subject to applicable Governmental Requirements, Tenant shall have the right to place or caused to be placed on the Property or upon the roof or any exterior door or wall or on the exterior or interior of any window of the Improvements, any sign, awning, canopy, marquee, advertising matter, decoration, lettering or other thing of any kind.
12.2 Focal Public Art Piece. The Landlord owns the Focal Public Art Piece formerly located in Sunshine Plaza in the Disney California Adventure Them e Park known as “Sun Icon.” The parties may, upon mutual written agreement, locate the Sun Icon within the Sun Icon Easement, as hereinafter defined, in the location generally depicted on the Site Map attached hereto as Exhibit A. Landlord hereby reserve s an easement within the Property in its favor for the placement and maintenance of the Sun Icon (“Sun Icon Easement”), provided that the Landlord shall not remove the Sun Icon without Tenant’s prior written consent. The Director shall have the right, in his/her reasonable discretion, to approve the design of the Sun Icon and adjacent area. In the event the parties agree to locate the Sun Icon within the Sun Icon Easement, the Landlord shall pay for the costs to transport the Sun Icon to the Property and to reassemble the Sun Icon, and the Tenant shall, at its cost and expense, construct the proper foundation for and cause the installation of the Sun Icon within the Sun Icon Easement and maintain same in a manner reasonably satisfactory to the Landlord, as long as such portion of the Project is operational, all in accordance with the Maintenance Standards. If the Tenant consents to the Landlord’s removal of the Sun Icon from the Sun Icon Easement, then the Landlord shall reimburse the Tenant for the cost to remove the Sun Icon from the Sun Icon Easement within thirty (30) days after receipt of copies of contractor’s invoices or other written evidence of the costs incurred by Tenant.
ARTICLE 13. CASUALTY.
13.1 Damage or Destruction Due to Cause Required to be Covered by Insu rance Covered by Insurance. Notwithstanding anything contained in this Lease to the contrary, Tenant shall have no obligation to restore any Improvements after a fire or other casualty. If Tenant elects not to restore all or any portion of the Improveme nts, then Tenant shall promptly raze such 082161\16361704v6
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damaged Improvements and maintain such portion of the Premises in a safe manner reasonably free of weeds and rubbish. Subject to Section 13.2 below, if the Project shall be totally or partially destroyed or rendered wholly or partly uninhabitable by fire or other casualty required to be insured against by Tenant, and if Tenant elects to repair or reconstruct the Improvements, Tenant shall promptly proceed to obtain insurance proceeds and take all steps necessary to begin reconstruction and, immediately upon receipt of insurance proceeds, to promptly and diligently commence the repair or replacement of the Project to substantially the same condition as the Project is required to be constructed pursuant to this Lease, if and to the extent the insurance proceeds are sufficient to cover the actual cost of repair, replacement, or restoration, and Tenant shall complete the same as soon as possible thereafter so that the Project can be occupied in accordance with this Lease .
Following the completion of any such repair, replacement, or restoration (subject to the applicable provisions of the Mortgage and other documents that govern the loan secured by the Mortgage), any additional or excess insurance proceeds received by Ten ant shall be the property of Tenant.
Landlord shall cooperate with Tenant, at no expense to Landlord, in obtaining any governmental permits required for the repair, replacement, or restoration. If, however, the then existing laws of any other governmenta l agencies with jurisdiction over the Property do not permit the repair, replacement, or restoration, Tenant may elect not to repair, replace, or restore the Project by giving notice to Landlord (in which event Tenant will be entitled to all insurance proc eeds but Tenant shall be required to remove all debris from the applicable portion of the Property and this Lease shall automatically terminate) or Tenant may reconstruct such other improvements on the Property as are consistent with applicable Governmenta l Requirements and approved by Landlord. In the event the Improvements are destroyed within the last five (5) years of the Term, Tenant shall have the option to terminate this Lease upon written notice to Landlord. In such event, Tenant shall immediately tender possession of the Property to Landlord. Tenant shall have no obligation to pay any insurance proceeds to the Landlord.
13.2 Damage or Destruction Due to Cause Not Required to be Covered by Insurance. If the Project is completely destroyed or suffers Substantial Damage (as hereinafter defined) caused by a casualty for which Tenant is not required to (and has not) insured against, or if insurance proceeds are insufficient to rebuild then Tenant may, at its option, terminate this Lease upon written notic e to Landlord, such termination to be effective on the date specified in such notice, which date shall be no sooner than the date of the casualty nor later than one hundred eighty (180) days after the date of such notice. In such event, Tenant shall immediately tender possession of the Property to Landlord. As used in this Section 13.2, “Substantial Damage” caused by a casualty not required to be (and not) covered by insurance means damage or destruction which is fifteen percent (15%) or more of the replacement cost of the improvements comprising the Project.
ARTICLE 14. TENANT COVENANTS.
14.1 Restrictive Covenants. During the Term, Tenant shall not permit any business to relocate within the Property exceeding 20,000 square feet in size from any other location within the Property and within 5 miles of the Property without the prior approval of the Landlord; provided further that no store of greater than 75,000 square feet of buildable area shall be permitted to relocate to the Property from a county or Landlord within the same market area as the Property as proscribed by Health & Safety Code Section 33426.7, Government Code Section 53084, and Government Code Section 53084.5.
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14.2 Nondiscrimination Covenants. The Tenant covenants by and for itself and any successors in interes t to all or any portion of the Property that there shall be no discrimination against or segregation of any person or group of persons on account of race, color, creed, religion, sex, marital status, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Property, nor shall the Tenant itself or any person claiming under or through it establish or permit any such practice or practices of discrimination or segregation with reference to the selection, loc ation, number, use or occupancy of tenants, lessees, subtenants, subleases or vendees of the Property. The foregoing covenants shall run with the land.
The Tenant shall refrain from restricting the rental, sale or lease of the Property any portion thereof on the basis of race, color, religion, sex, marital status, ancestry or national origin of any person. All such deeds, leases or contracts shall contain or be subject to substantially the following nondiscrimination or nonsegregation clauses:
(a) In deeds : “The grantee herein covenants by and for himself or herself, his or her heirs, executors, administrators and assigns, and all persons claiming under or through them, that there shall be no discrimination against or segregation of, any person or group of persons on account of race, color, creed, religion, sex, marital status, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the land herein conveyed, nor shall the grantee or any person claiming under o r through him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees in the land herein conveyed. The foregoing covenants shall run with the land.” (b) In leases : “The lessee herein covenants by and for himself or herself, his or her heirs, executors, administrators, and assigns, and all persons claiming under or through him or her, and this lease is m ade and accepted upon and subject to the following conditions:
“There shall be no discrimination against or segregation of any person or group of persons, on account of race, color, creed, religion, sex, marital status, national origin, or ancestry in the leasing, subleasing, transferring, use, occupancy, tenure, or enjoyment of the premises herein leased nor shall the lessee himself or herself, or any person claiming under or through him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use, or occupancy of tenants, lessees, sublessees, subtenants, or vendees in the premises herein leased.”
(c) In contracts : “There shall be no discrimination against or segregation of, any person, or group of persons on account of race, color, creed, religion, sex, marital status, national origin, or ancestry, in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the premises, nor shall the transferee himself or herself or any person claiming under or through him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees of the premises.” 082161\16361704v6
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14.3 Jobs Creation. The Parties acknowledge that (i) the Landlord has entered into that certain Funding Approval/Agreement (B-02-MC-06-0501) with HUD pursuant to which HUD has provided Ten Million Dollars ($10,000,000) to the Landlord to pay for certain costs associated with the Project (the “Section 108 Loan for the Project”), (ii) the City has also entered into that certain Brownfield Economic Development (BEDI) Grant Agreement (“BEDI Grant Agreement”) with HUD pursuant to wh ich HUD granted the City Six Hundred Fifty Thousand Dollars ($650,000) to be used for the purpose of paying interest on the Section 108 Loan, (iii) pursuant to that certain Second Amended and Restated Cooperation Agreement (Lincoln/Beach Section 108 Loan) dated as of July 1, 2004 between the Landlord and Anaheim Redevelopment Agency (the “Landlord/Agency Cooperation Agreement”), the Anaheim Redevelopment Agency utilized the proceeds of the Section 108 Loan for the Project, and (iv) in consideration for making the Section 108 Loan for the Project entering into the BEDI Grant Agreement, HUD requires, among other things, that the Landlord provide that at least fifty -one percent (51%) of the jobs created by the operation of the Project (the “Project Jobs”) be he ld by, or be made available to, persons of low and moderate income (the “HUD Jobs Creation National Objective”). Accordingly, the Parties intend to satisfy the HUD Jobs Creation National Objective as set forth in this Section 14.3. For the purposes of th is Section 14.3, the term “Project” shall include all activities that qualify as “Project Jobs.”
14.4 Project Jobs Description on the Property. Prior to commencing construction of the Project with respect to any Retailer/User, Tenant shall provide Landlord a description, in a form reasonably acceptable to Landlord, of all of the Project Jobs, indicating which of the Project Jobs are full time equivalent positions (the “Project Jobs Description”); the Project Jobs Description shall denote which of the Project Jobs have job qualifications requiring no more than a high school education and/or one (1) year of training or work experience (“Qualifying Project Jobs”). Tenant shall update the Project Jobs Description promptly upon a substantial change in such jobs and/or job qualifications, but in no event less than annually.
14.5 Project Jobs Available to Low and Moderate Income Persons . Tenant shall provide that at least fifty -one percent (51%) of the Project Jobs are made available to low and moderate income persons. Accordingly, Tenant shall do the following:
(a) Concurrently with Tenant’s delivery of the Project Jobs Description, Tenant shall submit to Landlord for Landlord review and approval a list of which employers within the Project shall provide “First Consideration” to “Qualifying Job Applicants” in accordance with (b), below. The list shall include employers of not less than 75% of the jobs available within the Project. (The employers included on the list are hereinafter referred to as the “Participating Employers.”) Landlord shall approve such list provided that the Project Jobs Description demonstrates that the Participating Employers will provide Qualifying Project Jobs greater than or equal to fifty-one percent (51%) of the aggregate Project Jobs. (b) Tenant shall require that Participating Employers enter into a First Source Agreement with the Workforce Development Division of the Landlord of Anaheim (“WDD”) containing the following terms:
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(1) WDD will conduct community outreach designed to
assemble a pool of potential low to moderate income job applicants for the Qualifying Project Jobs (“Potential Qualifying Job Applicants”).
(2) WDD will prescreen and verify which of the Potential Qualifying Job Applicants are persons of low to moderate income (“Qualifying Job Applicants”). (3) Participating Employers will notify WDD of openings for Qualifying Project Jobs.
(4) With respect to initial hires, WDD will direct Qualifying Job Applicants to Participating Employers; with respect to subsequent hires, WDD will create and update quarterly a list of Qualifying Job Applicants who are interested in seeking employment with Participating Employers (“Employment Interest List”). (5) Prior to opening, Participating Employers will meet with the Manager of the WDD to establish protocol specific to the tenant that address the following:
(A) Priority status for qualifying job applicants;
(B) Status of qualified job applicants considered by the participating employer, and;
(C) Appropriate documentation of qualified job
applicants vitae for audit purposes for Federal Funding Program(s). (6) WDD will provide HUD with the documentation required under the HUD Jobs Creation National Objective.
(7) The requirements of this Section 404.2 shall not apply to construction or remodeling of improvements on property owned or leased by Pa rticipating Employers within the Project.
(8) Nothing in this Section 404.2 shall prohibit a Participating Employer from transferring an existing employee to a job located within the Project without complying with the requirements of Section 404.2(b)(v). (9) Nothing in this Section 404.2 shall require a Participating Employer to hire individuals who are not qualified for the intended position, and Participating Employers shall have the right to determine the most appropriate person to be hired.
14.6 Project Leases. Tenant will provide Landlord with executed copies of all Leases (with gross building area in excess of 5,000 square feet) with Participating Employers to insure compliance with this Section.
14.7 HUD Action . In the event that HUD provides written verification t o the City indicating, in effect, that the City need not comply with the provisions of Sections 14.3-14.6 then, in that event, the Director and the Developer, subject to approval by the City Attorney, shall have 082161\16361704v6
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the right to amend this Agreement by deletin g Sections 14.3 -14.6, or so much thereof as HUD determines is inapplicable.
ARTICLE 15. EMINENT DOMAIN.
15.1 Notice. The party receiving any notice of the kind specified in this Section 15.1 shall promptly give the other party notice of the receipt, contents and date of the notice received.
For purposes of this Article 15, the term “Notice” shall include:
(a) Notice of Intended Taking;
(b) Service of any legal process relating to condemnation of the Property or the Improvements;
(c) Notice in connection with any proceedings or negot iations with respect to such condemnation; or
(d) Notice of intent or willingness to make or negotiate a private purchase, sale or transfer in lieu of condemnation.
15.2 Representation in Proceedings or Negotiations . Landlord and Tenant (and if applicable, Mortga gee) shall each have the right to represent their respective interests in each proceeding or negotiation with respect to a Taking or intended Taking and to make full proof of their claims. Landlord and Tenant each agree to execute and deliver to the other any instruments which may be required to effectuate or facilitate the provisions of this Lease relating to condemnation. Tenant hereby waives any and all rights it might otherwise have pursuant to Section 1265.130 of The California Code of Civil Procedure.
15.3 Total Taking.
15.3.1 In the event of a Total Taking, this Lease shall terminate as of the date of the Taking.
15.3.2 If this Lease is terminated pursuant to this Section 15.3, the Award for such Taking shall be apportioned and distributed as follows:
(a) First, to the Mortgagee, if any, to the extent of the Mortgage; (b) All remaining damages awarded for any taking under the power of eminent domain, whether for the whole or part of the Property, including but not limited to loss of fee interest, interference with use, relocation, loss of business and goodwill, value of improvements and severance, shall belong to and be the property of Landlord and Tenant as their respective interests may appear.
15.4 Substantial Taking.
15.4.1 In the event of a Taking which, in Tenant’s and Landlord’s m utually agreeable judgment is substantial, Tenant may, subject to the rights of the Mortgagee, if any, 082161\16361704v6
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terminate this Lease. If Tenant elects to terminate this Lease under this provision, Tenant shall give written notice of its election to do so to Landlo rd within forty-five (45) days after receipt of a copy of a Notice of Intended Taking. In the event Landlord disputes the right of Tenant to terminate this Lease under this provision, Landlord shall give Tenant notice of this fact within forty-five (45) days after receiving the notice of Tenant’s election to terminate. In the event it is determined that Tenant does not have the right to terminate this Lease, the apportionment of the Award for such Taking and the obligations of Tenant to restore shall be governed by the terms of Section 15.6 or Section 15.8, whichever is applicable.
15.4.2 In the event it is determined that Tenant has the right to terminate this Lease, or in the event Landlord does not dispute Tenant’s right to terminate this Lease, such terminati on shall be as of the time when the Taking entity takes possession of the portion of the Property and the Improvements taken. In such event, the Award for such Substantial Taking (including any award for severance, consequential or other damages which wil l accrue to the portion of the Property and/or the Improvements not taken) shall be apportioned and distributed as follows:
(a) First, to the Mortgagee (or an independent trustee acceptable to Mortgagee), if any, to the extent of the Mortgage;
(b) Second, to Landlord and Tenant as provided in Section 15.3.2(b).
15.5 Tenant’s Right to Revoke Notice of Termination . Notwithstanding anything to the contrary contained in Section 15.4, if Tenant has elected to terminate this Lease, and the taking authority abandons or revis es the Taking, Tenant shall have forty -five (45) days from receipt of written notice of such abandonment or revision to revoke its notice of termination of this Lease.
15.6 Partial Taking.
15.6.1 In the event of a Partial Taking, this Lease shall continue in full forc e and effect and there shall be an equitable abatement in or reduction of any of Tenant’s obligations hereunder.
15.6.2 The Award for such Partial Taking shall be apportioned and distributed first to the Mortgagee, if any, to the extent of the Mortgage, then to Landlord and Tenant in proportion to their respective interests in the Property and Improvements, as such interests existed immediately prior to such Partial Taking.
15.7 Obligation to Repair on Partial Taking . Promptly after any Partial Taking and regardless of the amount of the Award for such Taking, Tenant shall, to the extent of the Award received by Tenant and in the manner specified in the provisions of this Lease, repair, alter, modify or reconstruct the Improvements and/or other improvements on the Prop erty so as to make them usable for the purposes set forth in this Lease and capable of producing a fair and reasonable net income.
15.8 Temporary Taking.
15.8.1 In the event of a Temporary Taking of the whole or any part of the Property and/or Improvements, the Term s hall not be reduced or affected in any way and Tenant shall 082161\16361704v6
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continue to pay in full any sum or sums of money and charges herein reserved and provided to be paid by Tenant, and, subject to the other provisions of this Section 15.8, Tenant shall be entitled to any Award or payment for the temporary use of the Property and/or Improvements prior to the termination of this Lease, and Landlord shall be entitled to any Award or payment for such use after the termination of this Lease.
15.8.2 If, after the occurrence of a temporary taking, possession of the Property and/or Improvements shall revert to Tenant prior to the expiration of the Term, Tenant shall, to the extent of the amount of any award or payment, restore the Property and/or Improvements so that the Property and/or Improvements in every respect shall upon completion of such restoration be in the same condition as they were prior to the taking thereof.
15.8.3 Any Award or payment for damages or cost of restoration made on or after the termination of this Lease shall be paid first to the Mortgagee (or an independent trustee acceptable to Mortgagee), if any, to the extent of the Mortgage, then to Landlord absolutely, together with the remaining balance of any other funds paid to Tenant for such damages or cost of restoration and Tenant shall thereupon be excused from any obligation to restore the Property and/or Improvements upon the termination of such Temporary Taking except that any obligation that may have accrued for Tenant to restore the Property and/or Improvements prior to the commencement of said Temporary Taking shall continue to be the obligation of Tenant.
15.9 Mortgagee Protection. Notwithstanding anything contained in this Lease to the contrary, any and all condemnation proceeds shall be paid first to the Mortgagee (or an independent trustee acceptable to Mortgagee), if any, to be applied in accordance with the Mortgage and other documents that govern the loan secured by the Mortgage to reduce the Mortgage if required by the Mortgage documents.
ARTICLE 16. ENVIRONMENTAL.
16.1 Environmental Condition and Mitigation/Remediation.
16.1.1 Environmental Disclosure . California Health & Safety Code Section 5359.7 requires owners of nonresidential real property who know, or have reasonable cause to believe, that any release of Hazardous Materials has come to be located on or beneath the real property to provide written notice of same to the buyer of real property. Landlord hereby discloses that (i) the Property, or portions of the Property were used as Landfills or as the Davis Mud Pit containing municipal solid waste, construction debris, oil well drilling, mud and fluid and other liquid wastes and Landfill Gases which Landfills and the Landfill Gases may contain Hazardous Materials, and (ii) elevated levels of methane gas were detected in May 20 22 in one of the gas monitoring wells located on the Davis Mud Pit (the “Environmental Condition”). To the extent Landlord has copies of investigation reports, it will provide copies to Tenant upon request; but the Parties acknowledge that Landlord will not be conducting a public records search of the RWQCB’s (or any other Responsible City) files – although Landlord urges Tenant to do so to satisfy itself regarding the Environmental Condition of the Property. By execution of this Lease, Tenant (i) acknowledges its receipt of the foregoing notice given pursuant to California Health & Safety Code Section 25359.7; (ii) acknowledges that it has conducted its own independent review and investigation of the Property prior to the Close of Escrow; (iii) agrees to rely solely on its own 082161\16361704v6
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experts in assessing the Environmental Condition of the Site and its sufficiency for its intended use; and (iv) waives any and all rights Tenant may have to assert that Landlord has not complied with the requirements of Health & Safety Code Section 25359.7.
16.1.2 Environmental Condition of the Property . Based on the disclosure of Landlord as described in (a) above, and the Tenant’s investigation of the Property, it is acknowledged by the parties that the List of Environmental Condition Doc uments disclose that:
(i) the Anderson Landfill was formerly used for disposal of primarily construction debris and demolition wastes, (ii) the Sparks Landfill was formerly used for the disposal of primarily solid waste, (iii) the Davis Mud Pit was formerly used for the disposal of oil well drilling fluid and other liquid wastes, (iv) Landfill Gases, including methane, associated with the Anderson Landfill and the Sparks Landfill are presently being mitigated using Landfill Gas collection systems, and (v) portions of the Davis Mud Pit contain elevated levels of methane gas. Subject to the satisfaction of the conditions set forth in Section 205.2(g) of the DDA and completion of Landlord’s Work, Tenant shall be deemed to have approved the Environmental Condition of the Property.
16.1.3 Preparation, Submittal and Processing of the Plans . Landlord and Tenant are aware that the environmental impacts to the air, soil and groundwater arising from the Landfills and the remediation of Hazardous Materials and Landfill Gases is required. The Agency (now Successor Agency) commenced proceedings pursuant to the Polanco Redevelopment Act and in connection therewith has submitted and RWQCB has conditionally approved the Remedial Action Plan pursuant to the letter from RWQCB date d April 27, 2007 (“Approved RAP”). The parties intend to seek further direction and approvals regarding the implementation of the Approved RAP.
16.2 Mitigation/Remediation of the Property. The Tenant will satisfy the conditions of the Entitlements. Notwith standing the foreg oing or anything contained in this Lease to the contrary, as a result of the elevated level of methane gas detected on the Davis Mud Pit described in Section 16.1, the applicable governmental regulators will not permit the development or use of any portion of the Davis Mud Pit (including, without limitation, the Property) until the Davis Mud Pit has been remediated and a clean closure (“Clean Closure”) of the Davis Mud Pit has been completed and approved by applicable governmental regulator s. Landlord shall prepare and submit a Clean Closure Plan (“CCP”) to applicable governmental regulators for approval covering the entire Davis Mud Pit. The CCP will be prepared in accordance with California Code of Regulations, Title 27 §21090(f) and §218 10. The Clean Closure activities to be performed by Landlord pursuant to the CCP will include the following: (i) temporary modification of the Sparks, Anderson, Rains Pit Landfill Gas system to ensure operation during the Davis Mud Pit Clean Closure activities; (ii) stripping of the clean cover soil from the top of the waste and stockpiling for future use at the site; (iii) excavation of the underlying concrete debris and crushing of that material for future beneficial use at the site; (iv) excavation of t he underlying drilling muds and transporting them to a designated off -site disposal facility; (v) collection and analysis of confirmation samples from beneath the mud to verify that all impacted materials have been removed; (vi) import clean fill material as necessary to restore site grades; and re-establishment of the Sparks, Anderson, Rains Pit Landfill gas system (collectively, the “ Landlord’s Work ”).
Landlord hereby advises Tenant that Landlord intends to complete Landlord’s Work and obtain all regulat ory approvals and closure letters by June 30, 2023 (the “Remediation Completion Deadline”). Landlord acknowledges that Tenant will be unable to develop the Property until the 082161\16361704v6
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Landlord completes the Landlord’s Work and all applicable governmental authorities approve the Landlord’s Work and provide all regulatory approvals and closure letters (“ Remediation Approval”). Notwithstanding anything contained in this Lease to the contrary, if (i) the Landlord fails to complete Landlord’s Work or obtain Remediation Approval on or before the Remediation Completion Deadline, then such delay shall be deemed to be a Landlord Delay in which event the Grocery Store Lease Execution Deadline and Completion Deadline shall be extended on a day - for-day basis for each day follo wing the Remediation Comple tion Deadline until Landlord completes Landlord’s Work and obtains Remediation Approval. If, despite Landlord’s good faith efforts, Landlord is unable to complete Landlord’s Work and obtain Remediation Approval within two (2) ye ars following the Remediation Completion Deadline, then either party shall have the right to terminate the Lease upon written notice to the other party at any time period to the date that Landlord completes Landlord’s Work and obtains Remediation Approval. If the Lease is terminated pursuant to this Section 16.2, then the parties shall have no further obligations to each other except for each party’s indemnity obligations that survive the termination of the Lease, and the Liquidated Damages re Second Closi ng described in Section 201.6 of the DDA and any Extension Payments paid by Tenant shall be promptly refunded by Landlord to Tenant.
16.3 Polanco Redevelopment Act . The Agency (now Successor Agency) has heretofore submitted its application to RWQCB for approv al under the Polanco Redevelopment Act with the intention that the Remedial Action Plan be undertaken in accordance with the Polanco Redevelopment Act so as to effectuate reuse of the Landfills in accordance with the Merged Redevelopment Plan and to provide the Agency (now Successor Agency), the Tenant, subsequent purchasers of any portion of the Property and the lenders of the Tenant and any subsequent purchasers with the immunity from any release or releases of hazardous substances identified in the Remed ial Action Plan pursuant to Section 33459.3 of the Polanco Redevelopment Act (“Liability Immunity”). Provided neither party has elected to terminate this Lease as permitted herein, the parties agree to implement the Remedial Action Plan in compliance with the Approved RAP. The Tenant acknowledges that the final construction drawings for the Remedial Improvements and the contents of the Approved RAP are intended to provide the basis for RWQCB to acknowledge in writing that, following completion of the Approved RAP, the Liability Immunity will apply under Section 33459.3(b) of the Polanco Redevelopment Act. The Tenant acknowledges that completion of the Approved RAP will be the basis for the issuance of the Immunity Letter at which time the Liability Immunity will attach to the Successor Agency and the Tenant. The parties further agree that the Tenant will not have a cause of action against the Landlord, Anaheim, and/ or Successor Agency if the Liability Immunity under the Polanco Redevelopment Act is limit ed or denied in any way by any decision or opinion of any court, administrative body or any action of the Responsible Agencies.
16.4 No Warranties As To Property; Release of Landlord, Anaheim, and/ or Successor Agency . Except for completion of Landlord’s Work and as otherwise expressly provided herein, the physical condition of the Property is and shall be delivered from Landlord to Tenant in an “as -is” condition, with no warranty expressed or implied by Landlord and/ or Successor Agency, including without lim itation, the presence of Hazardous Materials, Landfill Gases, the existence of refuse, or the condition of the soil, its geology, the presence of known or unknown seismic faults, or the suitability of the Property for the development purposes intended hereunder. To the extent authorized by contract or law, the Landlord and Successor Agency shall assign to the Tenant all warranties, indemnities, guaranties, claims and causes of action with 082161\16361704v6
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respect to the Environmental Condition of the Property, if any, that the Landlord and/ or Successor Agency has received from or has against prior owners or operators of the Property, except that Tenant’s rights to pursue such parties shall be subject to the terms of the Settlement Agreement defined in the DDA.
16.5 Tenant Release. As of the Close of Escrow, Tenant agrees, with respect to the Property, to release the Successor Agency, Landlord, and Anaheim from and against any Environmental Liabilities except as to (i) the County Dispute (defined in the DDA) which has been dealt with in the Settlement Agreement, (ii) the OCHCA Notice and Order (defined in the DDA), (iii) liabilities arising out of the negligence or willful misconduct of the Successor Agency and/or Landlord occurring after the Close of Escrow or occurring prior t o the Close of Escrow but discovered after the Close of Escrow, (iv) the Landlord’s Work, and/or (v) Landlord. The Tenant shall establish, by the preponderance of the evidence, the date that the Environmental Liability occurred. At the request of the Tenant, the Landlord shall cooperate with and assist the Tenant in its defense of any such claim, action, suit, proceeding, loss, cost, damage, liability, deficiency, fine, penalty, punitive damage, or expense; provided that the Landlord shall not be obligate d to incur any expense in connection with such cooperation or assistance. This release shall survive the termination, expiration, invalidation or performance in full or in part of this Lease.
The Tenant acknowledges that it is aware of and familiar with t he provisions of Section 1542 of the California Civil Code which provides as follows:
“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS THAT THE
CREDITOR OR RELEASING PARTY DOES NOT KNOW OR SUSPECT TO
EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE
RELEASE AND THAT, IF KNOWN BY HIM OR HER, WOULD HAVE
MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE
DEBTOR OR RELEASED PARTY.”
As such relates to this Section 207.6, effective as of the Closing, the Tenant waives and relinquishes all rights and benefits whi ch it may have under Section 1542 of the California Civil Code.
16.6 Contractor’s Pollution Liability Insurance. The Successor Agency has obtained, at its cost and expense, a Contractor’s Pollution Liability Insurance naming the Named Insured and expiring on July 18, 2020. Concurrently with the Closing, Landlord will request that the Successor Agency cause the Tenant and/or its assignee to be added as a named insured. Once the Contractor’s Pollution Liability Insurance expires, Tenant will cause the replacem ent thereof on terms and conditions at least agreement to the current policy.
16.7 Environmental Insurance. The Successor Agency has obtained, at its cost and expense, a Pollution Legal Liability Insurance issued by Lloyd’s Syndicates (“Lloyd’s”), Policy Number W24F05180101 (“Environmental Insurance”) naming the Named Insured, which expires on October 31, 2028. During the term of the policy, Landlord shall timely provide to the Successor Agency, County, Tenant, and Zelman copies of all notices from Lloyd’s and/or notify the County and Tenant of any notices or other communications from Lloyd’s pertaining to the Environmental Insurance. Upon Tenant’s written request, Landlord shall cause Tenant and such other persons or 082161\16361704v6
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entities with an insurable interest, as r easonably requested by Tenant, to be added as Named Insureds under the Environmental Insurance policy. Landlord shall continue to provide ongoing Environmental Insurance naming the Named Insured so long as the Successor Agency is being reimbursed for the costs of such Environmental Insurance. If and when the reimbursement of the Successor Agency ceases, Tenant shall be responsible for providing and paying for such insurance, which insurance shall be on terms and conditions at least equal to the current terms and conditions.
16.8 Landlord Obligations After Closing . Upon and after the Closing, the Landlord shall implement the Operations, Maintenance and Monitoring Plan and complete Landlord’s Work. In the event that the Tenant acquires a fees simple interest in the Property or the Successor Agency is prohibited from continuing to pay for the implementation of the Operations, Maintenance and Monitoring Plan, Tenant shall be responsible, at its sole cost and expense, for the implementation of the Operations, Maintenance, and Monitoring Plan.
16.9 Tenant Obligations After Closing. Upon and after the Closing, the Tenant shall exercise all reasonable precautions in an effort to prevent the release into the environment of any Hazardous Materials and/or Landfill Gases in violation of applicable environmental Governmental Requirements. Such precautions shall include compliance with the Environmental Deed Restrictions and the Governmental Requirements. Tenant further agrees to comply with all Governmental Requirements in connection with the disclosure, storage, use, removal and disposal of any Hazardous Materials or Landfill Gases.
16.10 Tenant and Landlord Indemnities . As of the Close of Escrow, Tenant agrees, with respect to the Property, to indemnify, defend and hold Indemnitees harmless from and against (“Indemnity” or “Indemnify”) any claim, action, suit, proceeding, loss, cost, damage, liability, deficiency, fine, penalty, punitive damage, or expense (including, without limitation, reasonable attorneys’ fees) by third parties but expressly excluding the County Dispute, the Landlord’s Work and the Landlord’s and Landlord’s performance with respect to the Landlord Remediation Component, Landlord, for bodily injury or property damage, resulting from, arising out of, or based u pon (i) the presence, release, use, generation, discharge, storage or disposal of any Hazardous Materials and Landfill Gases including methane on, under, in, about, or from or the transportation of any such Hazardous Materials and Landfill Gases including methane to or from, the Property, and (ii) the violation, or alleged violation, of any statute, ordinance, order, rule, regulation, permit, judgment or license relating to the use, generation, release, discharge, storage, disposal or transportation of Hazardous Materials and Landfill Gases including methane on, under, in or about, to or from the Property; and (iii) damage to person or property arising out of or related to the Tenant’s investigations of the Property (collectively “Environmental Liabilities”) except the Environmental Liabilities arising out of the negligence or willful misconduct of the Successor Agency or the Landlord occurring after the Close of Escrow or occurring prior to the Close of Escrow but discovered after the Close of Escrow. The T enant shall establish with substantial evidence the date that the Environmental Liability occurred. This Indemnity shall include, without limitation, any damage, liability, fine, penalty, parallel indemnity arising from or out of any claim, action, suit o r proceeding for personal injury (including sickness, disease or death), tangible or intangible property damage, compensation for lost wages, business income, profits or other economic loss, damage to the natural resource or the environment, nuisance, contamination, leak, spill, release or other adverse effect on the environment by any third party other than the County Dispute. At the request of the Tenant, the Landlord shall cooperate with and assist the Tenant in 082161\16361704v6
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its defense of any such Environmental Liability; provided that the Landlord shall not be obligated to incur any expense in connection with such cooperation or assistance. Landlord agrees to indemnify, defend and hold Tenant harmless from and against any claim, action, suit, proceeding, loss, cos t, damage, liability, deficiency, fine, penalty, punitive damage, or expense (including, without limitation, reasonable attorneys’ fees) resulting from, arising out of, or based upon the County Dispute. The foregoing Indemnities shall survive the termination, expiration, invalidation, or performance in full or in part of this Lease, and, without limiting the foregoing, shall survive the Closing.
16.11 Notice and Remediation by Tenant . Tenant shall promptly give Landlord, and Landlord shall give Tenant, written notice of any notices, demands, claims or orders received by Tenant from any governmental agency pertaining to Hazardous Materials which may affect the Property.
16.12 Obligation of the Landlord and Landlord Remediation Component. Upon and after the Commencem ent Date, Landlord shall be responsible for the implementation of the Landlord Remediation Component. To this end, Tenant hereby grants Landlord a License Agreement (OM&M).
ARTICLE 17. ASSIGNMENT.
Because of the importance that Landlord places on Tenant’s qualification, expertise and identity, and the reliance Landlord makes upon Tenant’s ability to operate the Project, during the Term of this Lease, Tenant shall not assign or attempt to assign this Lease or any right herein, except to such transferees as approved or permitted pursuant to this Article 17.
17.1 Prohibition Against Transfer: No Sale or Assignment During Term . The identities and qualifications of Tenant, as an experienced and successful developer and operator of first quality, “Class A” retail pr oject, are of particular concern to Landlord. It is because of this identity and these qualifications that Landlord has entered into this Lease with Tenant. Except as expressly set forth in Sections 17.1.1 and 17.1.2, no voluntary or involuntary successor in interest of Tenant shall acquire any rights or powers under this Lease by assignment, assumption or otherwise, nor shall Tenant make any total or partial transfer, conveyance, encumbrance to secure financing or refinancing, assignment or sublease of the whole or any part of the leasehold interest in the Property (collectively, a “Transfer”), without the prior written approval of the Landlord pursuant to Section 17.1.4 below, which approval shall not be unreasonably withheld or delayed.
Any Transfer or Permitted Transfer (except for Permitted Transfers described in Section 17.1.1, subdivisions (a) and (b) below) shall be of the Tenant’s entire interest in the Property under this Lease, and not portions thereof, unless expressly permitted in this Lease or as expressly approved by Landlord in writing, which approval shall be in Landlord’s sole and absolute discretion.
17.1.1 Permitted Transfer(s). Notwithstanding other provisions of this Lease to the contrary, Landlord approval of an assignment or transfer of th is Lease or conveyance of Tenant’s leasehold interest in the Property, or any part thereof, shall not be required in connection with any of the following (each a “Permitted Transfer”):
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(a) Any Transfer of the Property to an entity or entities in which (i) Tenant, (ii) Zelman or Zelman Development Co. a California corporation, (iii) Brett Foy and Paul Casey, and/or (iv) Greenlaw or Greenlaw Partners, LLC, a California limited liability company, directly or indirectly, retains ownership or beneficial interest and retains management and control of the Transferee entity or entities.
(b) The conveyance or dedication of any portion of the Property to the Landlord or other appropriate governmental agency, or the granting of easements or permits to facilitate construction or operation of the Project.
(c) Any requested assignment for financing purposes permitted pursuant to this Lease, including the grant of a mortgage or deed of trust or sale-leaseback to secure the funds necessary for construction and permanent financing with r espect to each Development Parcel and, excepting therefrom any Transfer to any entity to which any interest is held by the Tenant, or the principals of Tenant, the following in connection with such financing as shall have theretofore been approved by the L andlord: (i) any Transfer to any person or entity pursuant to foreclosure or deed-in lieu of foreclosure of any such mortgage or deed of trust; (ii) any Transfer of the reversionary interest and estate of the lessor in any sale -leaseback; and (iii) any le ase termination by the lessor under the lease in a sale-leaseback due to default of the lessee thereunder. (d) Transfers of a Development Parcel for which the Landlord has issued a Release of Construction Covenants.
(e) The sale or leasing of parcels, buildings or portions thereof to retail and/or commercial tenants or occupants as permitted under this Lease. (f) A transfer of the Property to Zelman or an entity or entities in which (i) Zelman or Zelman Development Co. a California corporation, and/or (ii) Brett Foy an d Paul Casey, directly or indirectly, retains an ownership or beneficial interest and retains management and control of the transferee entity or entities.
(g) A transfer of the Property to an entity in which Greenlaw or the Greenlaw Venture, retains an ownership or beneficial interest and retains management and control of the transferee entity or entities.
In the event of a Permitted Transfer by Tenant pursuant to this Section 17.1.1 not requiring Landlord’s prior approval, Tenant nevertheless agrees that withi n thirty (30) days following such pre-approved assignment or transfer it shall give written notice to Landlord of such assignment or transfer along with a true and complete copy of the proposed assignment or transfer document conforming to the requirements of this Lease.
17.1.2 Conditions. In addition to the provisions of Section 17.1.1, Tenant’s right to make an assignment shall be subject to compliance with the following further conditions:
(a) No Default. At the time of such assignment, this Lease shall be in full force and effect and either no Default (as defined in Section 21.1) then exists or no Default will exist upon consummation of the assignment.
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(b) Completion of Improvements. Excepting with respect to Permitted Transfers as provided under Section 17.1.1, as of the time of such assignment, Developer shall have completed the Improvements in conformity with the Lease. (c) Payment of Certain Amounts. Excepting with respect to Permitted Transfers as provided under Section 17.1.2, Tenant shall have paid to Landlord all Rent, including Extension Payment(s), if applicable, which have become due or which otherwise would become due and payable for the extension of times. Any such amounts so received by Landlord shall be retained by Landlord as its sole property.
(d) Assumption and Release . The assignee shall have executed an express assumption of the obligations and liabilities of Tenant under this Lease from and after the date of delivery and recording of the assignment and there shall have been delivered to Landlord at the time of the request for such assignment a conformed copy of such assumption, Tenant shall have no liability for obligations arising on or after the date of such assignment; provided that Landlord has approved the assignment or the assignment is permitted pursuant to Section 17.1.1. (e) Hold Property Interests Together . Tenant shall hold the Property, both its leasehold interest under this Lease and the Improvements held hereunder together, and shall not separately sell, lease, assign or transfer all or any part of its leasehold interest in the Property or its fee interest in the Improvements.
17.1.3 Landlord Consideration of Requested Transfer. Landlord agrees that it will not unreasonably withhold, condition or delay approval of a request for an assignment of this Lease pursuant to this Section 17.1, provided (a) Tenant delivers written notice to Landlord requesting such approval, (b) the proposed assignee or transferee (each, a “Proposed Transferee”) satisfies the Transferee Criteria and Qualifications, (c) such assignment or transfer will not negatively affect the consideration to be paid to Landlord pursuant to this Lease, and (d) the assignee(s) or transferee(s) completely and fully assume(s) the obligations of Tenant under this Lease pursuant to an assignment and assumption agreement(s) in a form which is reasonably acceptable to Landlord and its legal counsel(s). Such notice shall be accompanied by evidence regarding the proposed assignee’s or purchaser’s qualifications and experience and its financial commitments and resources sufficient to enable Landlord to evaluate the proposed assignee or purchaser pursuant to the Transferee Criteria and Qualifications set forth in this Section 17.1.3, as described in the Transferee Criteria and Qualifications, and such other criteria as may reasonably be requested by Landlord. Landlord shall approve or disapprove the request within sixty (60) days of its receipt of Tenant’s notice and submittal of complete information and materials required herein. Landlord approval sha ll not be required for transfers or assignments for foreclosure of a Mortgage authorized by this Lease or deed in lieu of foreclosure in favor of a Mortgagee or any subsequent transfer or assignment by or on behalf of a Mortgagee. In no event, however, sh all Landlord be obligated to approve the assignment or transfer of this Lease requiring Landlord’s approval, pursuant to this Section 17.1.3, except to an approved transferee or assignee of Tenant’s rights in and to the Property and the Project, based on L andlord’s reasonable determination that such transferee or assignee has the experience, financial strength, knowledge, and overall capability to own, operate and manage the Project in accordance with the terms, conditions, and restrictions contained in thi s Lease (the “Transferee Criteria and Qualifications”). In addition, Landlord shall not be required to grant its approval of any proposed transfer or assignment unless 082161\16361704v6
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all information reasonably requested by Landlord relating to the Proposed Transferee or assignee entity and all general partners and/or managers of such entity, plus current certified financial statements of the entity and financial statements relating to other projects developed and/or operated by such entity(ies) and reporting and complian ce documentation for such projects submitted for public entities providing funding to such projects, etc., as applicable. Tenant shall pay Landlord’s reasonable costs and expenses, including staff time, incurred in connection with Tenant’s consideration, analysis, evaluation and approval (or disapproval) of each proposed Transfer (or confirmation of any Permitted Transfer) pursuant to Section 17.1. In no event shall Landlord provide any incentive to any assignee of Landlord, whether to facilitate a sale or transfer to a substitute developer or assignee or for any other reason.
17.1.4 Assignment Agreement. No assignment of any interest under this Lease made with Landlord’s consent or as herein otherwise permitted shall be effective unless and until there shall have been delivered to Landlord an executed counterpart of such assignment or other transfer document containing an agreement, in recordable form, executed by the assignor and the proposed assignee, wherein and whereby such assignee assumes due performance o f the obligations on the assignor’s part to be performed under this Lease from the effective date of the assignment to the end of this Lease.
17.1.5 Further Assignments. The consent by Landlord to an assignment shall not in any way be construed to relieve Tenant from obtaining the express consent in writing of Landlord to any further assignment if required by the terms of this Lease.
17.1.6 Other Rights of Mortgagees. Landlord agrees that none of the restrictions or limitations on assignment or transfer by Tenant set forth in this Article 17 shall be construed to limit or abrogate the rights of a Mortgagee to (a) seek the appointment of a receiver, or (b) delegate or assign its rights under this Lease to any third party in connection with the exercise of said Mortgagee’s rights and remedies under its Mortgage.
ARTICLE 18. ENCUMBRANCES.
18.1 Leasehold Mortgage. Landlord agrees and consents that Tenant (and Tenant’s successors and assigns) may mortgage, encumber and hypothecate all right, title and interest of Tenant in the leasehold estate created by this Lease (and assign any such interest in this Lease and the leasehold estate in the Property created hereby, as collateral security for such mortgage, encumbrance or hypothecation or assign its interest in the same in connection with an assignment and leaseback transaction) to any lender with net assets in excess of Five Hundred Million and No/100 Dollars ($500,000,000.00) (“Mortgagee”), which term means a commercial or savings bank, savings or building and loan association, life or casual ty insurance company, public or private employee pension trust, investment bank, mortgage conduit lender, mortgage banker, opportunity fund (including loan service correspondent companies designated by any of the foregoing institutions), or other institutional lender imposing a first and/or second lien on Tenant’s leasehold interest in the Property. Tenant shall give Landlord notice of any such mortgage, encumbrance or hypothecation (and/or assignment of its interest in the same), and shall accompany the notice with a true copy of the note and mortgage (and/or assignment, if applicable), together with the recording date and instrument number of the recorded mortgage (and/or assignment, if applicable), within ten (10) days after recordation thereof. 082161\16361704v6
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18.1.1 Except a s hereinafter otherwise expressly provided, said mortgage, encumbrance or hypothecation and all rights thereunder, shall be subject to each and every of the covenants, conditions and restrictions of this Lease, and the same shall be subject to all rights and interests of Landlord hereunder. Upon the request of Landlord, any Mortgagee shall expressly agree, in a writing satisfactory to Landlord, that upon foreclosure of or a trustee’s sale under a mortgage or deed of trust or a deed in lieu thereof, the pur chaser at the foreclosure sale or the grantee of the deed lieu of foreclosure, as the case may be, shall be bound by and subject to each and every of the covenants, conditions and restrictions of this Lease first arising or accruing from and after the date of such foreclosure sale or deed in lieu of foreclosure (as applicable) as to themselves and their respective successors and assigns. In the event of any conflict between the provisions of this Lease and the provisions of any mortgage, encumbrance or hyp othecation, the terms of this Lease shall prevail.
18.1.2 Mortgagee may transfer all or any part of its interest in said mortgage to another person or entity, and in addition, or in the alternative, may collaterally assign its interest in Tenant’s leasehold interest in the Property and in said mortgage to another person or entity and such other person or entity shall be deemed a Mortgagee, and such person or entity shall be entitled to the benefits afforded to a Mortgagee hereunder; provided however, each such per son or entity described in this paragraph shall meet the qualifications of a Mortgagee set forth in the first paragraph of Section 18.1 above.
18.2 Cure by Mortgagee; Notices to Mortgagee.
18.2.1 Any Mortgagee shall have the right, at any time during the Term, while this Lease is in full force and effect:
(a) to do any act required by Tenant hereunder, and all such acts done or performed shall be effective as to prevent a forfeiture of Tenant’s rights hereunder as if the same had been done or performed by Tenant;
(b) to rely o n the security afforded by the leasehold estate, and to acquire and to succeed to the interest of Tenant hereunder by foreclosure, whether by judicial sale, by power of sale contained in any security instrument, or by assignment given in lieu of foreclosure. If the Mortgagee or Tenant shall have furnished, in writing, to Landlord a request for notice, then: (i) Landlord shall send to Mortgagee, concurrently with any notice it sends to Tenant, a duplicate copy of such written notice (excluding periodic billing or rental notices), and (ii) in the event of any Default hereunder on the part of Tenant, then Landlord will not terminate this Lease by reason of such Default (or exercise any other remedies with respect to any such Default) if the Mortgagee shall, within sixty (60) days after the expiration of the applicable cure periods set forth in Section 21.1 hereof and service on Mortgagee of written notice from Landlord of Landlord’s intention to terminate this Lease (A) cure such Default if the same can be cured by the payment of money and (B) comply or in good faith, with reasonable diligence and continuity, commence to comply with all non -monetary covenants of this Lease capable of performance by Mortgagee.
Mortgagee shall be deemed to have cured such non-monetary Default if Mortgagee proceeds in a timely and diligent manner to accomplish said cure; provided, however, that if in order to accomplish such cure, Mortgagee must foreclose on its security interest or obtain leave of the court as in the case of bankr uptcy proceedings, such Default shall be deemed cured, nevertheless, if 082161\16361704v6
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Mortgagee shall have made every reasonable effort to obtain such leave in a timely and diligent manner or shall have commenced foreclosure proceedings and diligently pursues to completion all appropriate steps and proceedings for judicial foreclosure, the exercise of the power of sale under and pursuant to a trust deed in the manner provided by law, or the obtaining from Tenant of an assignment of this Lease in lieu of foreclosure (coll ectively “foreclosure remedies”). Provided that Mortgagee cures any additional defaults in the manner and within the time herein specified, the inability of Mortgagee to cure a Default based upon Tenant’s bankruptcy or insolvency or other non-curable Default shall not permit Landlord to terminate this Lease on account of such Default.
Further, this section shall not be deemed to obligate Mortgagee to undertake to cure any Default based upon Tenant’s bankruptcy or insolvency, or other non-curable Default. No notice of Breach by Landlord to Tenant under this Lease shall be effective as to the Mortgagee unless and until a copy thereof shall have been mailed or delivered to Mortgagee in accordance with Section 26.1 below, addressed to Mortgagee at the address previously provided to Landlord. Notwithstanding anything to the contrary set forth in this Lease, including this Section 18.2.1, any cure by a Mortgagee of a failure to Complete the Improvements by the Commencement and Completion or an Extended Deadline pursuant to Section 3.2 and Section 7.1 hereof must occur and cause such cure to be completed on or before the applicable Commencement and Completion or Extended Deadline set forth in Section 3.2; such deadlines are absolute and shall not be extended for any reason, including any failure of a Mortgagee to receive notice of Breach or notice of failure to Complete the Improvements by the applicable Commencement and Completion or Extended Deadline.
18.2.2 Any provisions contained in this Lease to the contrary notwithstanding, any Mortgagee of the Property or its assignee or nominee, may enforce such mortgage and acquire title to the leasehold estate in any lawful manner; and, pending foreclosure of any such mortgage, may take possession of the Property, provided following such foreclosure the transferee of the leasehold shall thereupon and thereby assume the performance of and be bound by each and all of the covenants, conditions, obligations restrictions and provision herein provided to be kept and performed by Tenant, and Landlord shall recognize such Mortgagee or its assignee or nominee as the Tenant under this Lease and shall not disturb its use and enjoyment of the Tenant’s leasehold interest in the Property, and such mortgagee, or its assignee or nominee, as the Tenant under this Lease shall perform all of the obligations of Tenant set forth in this Lease which accrue thereafter.
Mortgagee and its assignee or nominee shall not be liable for any obligations as tenant under this Lease (including, without limitation , any unpaid amounts owing under this Lease as of the date Mortgage or its assignee or nominee takes title to Tenant’s interest in this Lease) except for those acts or omissions that occur during the period in which Mortgagee has title to Tenant’s interest in this Lease. During such time as a mortgage encumbers the leasehold estate, if Landlord or Tenant shall acquire the interest of the other in the demised premises or any portion thereof (except for any acquisition by Landlord following a Default by Tena nt hereunder), there shall be no merger of the leasehold estate into (a) the fee simple estate in the Property, (b) the subreversion interest held by Landlord or (c) any leasehold estate superior to that of Tenant. The obligation of Mortgagee for the performance of the terms of this Lease shall terminate upon the sale, transfer or assignment of the right, title and interest of Mortgagee in the leasehold estate to any other person, firm or corporation in accordance with the provisions of this Article 18.
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the single estate of Landlord, nor shall the foregoing provisions in any event be construed as resulting in a subordination in whole or in part of the single estate of Landlord or to any indebtedness of Tenant.
18.4 New Lease on Termination of this Lease . In the event this Lease is terminated for any reason except for a termination for Def ault or a termination pursuant to Section 3.3 resulting from Tenant’s failure to Complete the Improvements by the Commencement and Completion Deadlines (as it may be extended pursuant to Section 3.2(b)), a Mortgagee shall have the right within sixty (60) days after receipt of notice of such termination to demand that Landlord execute a new lease of the Property with Mortgagee as Tenant hereunder (a “New Lease”), or any designee or nominee which Mortgagee may designate or name. In such event Mortgagee (or such designee or nominee) shall immediately execute a New Lease which shall be for the unexpired term of this Lease and shall otherwise be identical with the terms of this Lease. Such New Lease shall be executed and delivered by the Landlord to the Mortgag ee (or such designee or nominee) within sixty (60) days after receipt by the Landlord of written notice from the Mortgagee of such election to obtain a New Lease and upon payment by the Mortgagee of all sums owing by Tenant under the provisions of this Lea se (less the rent and other income actually collected by Landlord in the meantime from any subtenants or other occupants of the Property) and upon performance by the Mortgagee of all other obligations of Tenant under the provisions of this Lease with respect to which performance is then due and which are susceptible of being cured by Mortgagee. After such termination of this Lease and prior to the expiration of the period within which Mortgagee may elect to obtain such New Lease from the Landlord, Landlord shall refrain from executing any new subleases or amending, canceling or terminating any existing subleases without the prior written consent of Mortgagee. Any such New Lease shall have the same priority of title as this Lease, and Mortgagee (or such designee or nominee) under such New Lease shall have the benefit of all of the right, title, interest, powers and privileges of Tenant hereunder in and to the Property.
Landlord shall execute and return to Mortgagee any and all documents reasonably requested by Mortgagee to secure or evidence such priority of title, and Mortgagee’s title to the improvements on the Property, within twenty (20) days after request therefor. Upon the execution and delivery of the New Lease, title to all Improvements on the Property, shall automatically vest in Mortgagee or the designee until the expiration or earlier termination of the New Lease. By accepting any Mortgage or other security interest with respect to this Lease or the Property, each Mortgagee expressly acknowledges the provisions of Section 3.3 of this Lease, which entitle the Landlord to terminate this Lease and retake the Property, free and clear of all Mortgages and other liens and encumbrances on the Property not in existence prior to the Commencement Date. Lan dlord shall have no obligation to enter into a New Lease as a result of a termination of the Lease pursuant to Section 3.3.
18.5 Consent of Mortgagee . Notwithstanding the provisions of this Lease to the contrary, until such time as the indebtedness of Tenant to Mortgagee shall have been fully paid, this Lease shall not be modified, terminated, cancelled or surrendered, and the Landlord shall not, without the prior written consent of Mortgagee first had and obtained, (i) accept rent that is more than thirty (30) days in advance, (ii) accept any termination, cancellation or surrender of this Lease, or (iii) consent to any modification hereof or consent to the assignment hereof, or of any part or portion of the term created thereby, or of any interest therein. Any exercise or attempted exercise of the foregoing shall be void, at the option of Mortgagee. 082161\16361704v6
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18.6 Rights Under Bankruptcy Code . Landlord and Tenant agree, for the benefit of Mortgagee, that so long as a mortgage shall encumber Tenant’s leasehold interest in the Property, the right of election arising under Section 365(h)(1) of the United States Bankruptcy Code may be exercised solely by Mortgagee and not by Tenant. Any exercise or attempted exercise of such right of election by Tenant shall be void, at the option of Mortgagee.
18.7 Estoppel Certificate . Landlord shall execute, acknowledge and deliver to Mortgagee, Tenant, proposed assignees and subtenants, promptly upon request, and in any event not later than ten (10) business days following receipt of such request, a certificate identifying all documents constituting the Lease, and certifying (a) that this Lease is unmodified and in full force and effect (or, if there have been modifications, that this Lease is in full force and effect, as modified, and describing or referencing the modifications), (b) the dates, if any, to which all rental due thereunder has been paid, (c) whether, to the best of Landlord’s knowledge, there are then existing any charges, offsets or defenses against the enforcement by Landlord of any agreement, covenant or condition hereof on the part of Tenant to be performed or observed (and, if so, specifying the same), (d) whether, to the best of Landlord’s knowledge, there are then existing any Breaches or Defaults by Tenant in the performanc e or observance by Tenant of any agreement, covenant or condition hereof on the part of Tenant to be performed or observed under this Lease and whether any notice has been given to Tenant of any Breach which has not been cured (and, if so, specifying the same), (and further, whether any conditions existing which, but for the passage of time or the giving of notice would result in a Default by Tenant under the Lease, and, if so, specifying the same) and (e) such other matters as Mortgagee shall reasonably request.
18.8 Cost of Loans to be Paid by Tenant . The Tenant affirms that it shall bear all of the costs and expenses in connection with (i) the preparation and securing of the Mortgage loans, (ii) the delivery of any instruments and documents and their filing and recording, if required, (iii) all taxes and charges payable in connection with the Mortgage loans, and (iv) all costs reasonably incurred by Landlord in providing any estoppel certificates and/or in making any amendments of this Lease requested by Tenant or Mortgagees.
18.9 Lender Liability. As long as Mortgagee (including its nominee, designee, or other successor or assign of any such Mortgagee) is acting as a secured lender, the liability of Mortgagee (including any nominee, designee or other successor o r assign of any such Mortgagee) shall not exceed the value of such lender’s interest in the Property and this Lease.
18.10 Additional Mortgagee Provisions . Notwithstanding anything to the contrary in this Lease, in the event of any damage or destruction of the Property or Improvements or any portion thereof or interest therein, upon the request of Mortgagee, the proceeds of Tenant’s insurance shall be deposited with Mortgagee (or an independent trustee acceptable to Mortgagee) and shall be applied in accordance with the applicable provisions of the Mortgage and other documents that govern the loan secured by the Mortgage. Notwithstanding anything in the contrary in this Lease, in the event of condemnation of the Property or Improvements, or any portion thereof or any interest therein, upon the request of Mortgagee, the proceeds of the condemnation award shall be deposited with Mortgagee (or an independent trustee acceptable to Mortgagee), who shall act as the disbursing agent and apply the condemnation proceeds in accordance with the terms of this Lease. Landlord acknowledges that, except as otherwise provided in this Lease, Tenant’s interest in its portion of any condemnation proceeds to which it 082161\16361704v6
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is entitled under this Lease shall be applied in accordance with the applicable provisions of the Mortgage and other documents that govern the loan secured by the Mortgage. Nothing herein shall be construed to effect, in any way, any separate insurance or condemnation proceeds payable to Landlord based upon Landlord’s interest in the Property, or otherwise separate insurance or condemnation proceeds from those proceeds attributable to Tenant’s leasehold estate in the property and interest in the Improvements. Subject to the applicable provisions of the Mortgage and other documents that govern the loan secured by the Mortgage, at the option of Mortgagee, this Lease may not be terminated by Tenant following a casualty or condemnation unless the indebtedness of Tenant to Mortgagee shall have been fully paid.
18.11 Landlord Finan cing. Landlord shall have the right at any time to encumber Landlord’s ground leasehold interest in the Property pursuant to a mortgage or deed of trust (a “Landlord Mortgage”); provided, however, the holder of any such mortgage or deed of trust must agree to recognize this Lease, and otherwise the relative lien priorities with respect to this Lease shall not be required to change. No default, foreclosure or other enforcement of remedies under any such Landlord Mortgage shall extinguish or otherwise affe ct in any manner, and any person who acquires title to the Landlord’s leasehold interest pursuant to any foreclosure, assignment in lieu of foreclosure or other exercise of remedies under any Landlord Mortgage shall take title to the Landlord’s leasehold i nterest subject to, (i) this Lease and all of Tenant’s rights hereunder, (ii) the rights of the subtenants hereunder and (iii) the rights granted to any Mortgagee hereunder.
Upon request of Landlord, any leasehold mortgage lender of Landlord, Tenant and/o r any Mortgagee, or any fee mortgage lender, such parties shall enter and execute a commercially reasonable nondisturbance and attornment agreement(s) between and amongst Tenant, Mortgagee, Landlord, Landlord’s leasehold mortgage lender, and any fee mortga ge lender, as applicable; provided that the parties acknowledge that the mortgage lender is not party to this Lease and not bound hereby. In the event Landlord encumbers its interest pursuant to a Landlord Mortgage, in no event shall Tenant be required to subordinate its leasehold interest and its interests in subleases and subrents to such Landlord Mortgage unless Landlord, any leasehold mortgage lender of Landlord, Tenant and/or any Mortgagee, or any fee mortgage lender shall enter and execute a commercially reasonable subordination, nondisturbance and attornment agreement(s) between and amongst Tenant, Mortgagee, Landlord, Landlord’s leasehold mortgage lender, and any fee mortgage lender, as applicable.
ARTICLE 19. NON-DISTURBANCE AGREEMENTS.
19.1 Nondisturbance Agreements. Landlord shall execute nondisturbance agreements with any subtenant of the Improvements, which nondisturbance agreement shall provide that (a) so long as such subtenant has not defaulted under the terms of its Lease with Tenant, such subtenant’s rights will not be terminated by Landlord on Landlord’s exercise of Landlord’s right to terminate this Lease for Tenant’s breach, and (b) Landlord shall not be bound by prepayments of more than one month’s rent or security deposits in excess of one month’s ren t under such nondisturbance agreement unless such excess prepayment and/or deposit has, in fact, been transferred to Landlord.
ARTICLE 20. PERFORMANCE OF TENANT’S COVENANTS.
20.1 Right of Performance.
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20.1.1 Rights of Landlord . If Tenant shall at any time fail to pay any Real Property Taxes or other charge in accordance with Article 4 hereof, within the time period therein permitted, or shall fail to pay for or maintain any of the insurance policies provided for in Article 9 hereof, within the time therein permitted, or to make any other payment or perform any other act on its part to be made or performed hereunder, within the time permitted by this Lease, then Landlord, after thirty (30) days’ written notice to Tenant (or, in case of an emergency, on such notice, or without notice, as may be reasonable under the circumstances) and without waiving or releasing Tenant from any obligation of Tenant hereunder, may (but shall not be required to):
(a) pay such Real Property Taxes or other charge payable by Tenant pursuant to the provisions of Article 4 hereof, or
(b) pay for and maintain such insurance policies provided for in Article 9 hereof, or
(c) make such other payment or perform such other act on Tenant’s part to be made or performed as in this Lease provided.
20.2 Reimbursement and Damages. All sums so paid by Landlord and all costs and expenses incurred by Landlord in connection with the performance of any such act, together with interest thereon at the rate provided in Section 4.6 from the respective dates of Landlord’s making of each such payment or incurring of each such cost or expense, shall constitute Additional Rent payable by Tenant under this Lease and shall be paid by Tenant to Landlord within thirty (30) days following Tenant’s receipt of Landlord’s written demand (which shall inclu de copies of contractors’ invoices for any work performed by Landlord on Tenant’s behalf). Landlord shall not be limited in the proof of any damages which Landlord may claim against Tenant arising out of or by reason of Tenant’s failure to provide and keep in force insurance as aforesaid, to the amount of the insurance premium or premiums not paid or incurred by Tenant and which would have been payable upon such insurance, but Landlord shall also be entitled to recover as damages for such breach, the uninsured amount of any loss (to the extent of any deficiency in the insurance required by the provisions of this Lease), damages, costs and expenses of suit, including reasonable attorneys’ fees, suffered or incurred by reason of damage to, or destruction of, the Improvements, occurring during any period in which Tenant shall have failed or neglected to provide insurance as aforesaid.
ARTICLE 21. BREACH, DEFAULT; REMEDIES.
21.1 Breach. Any one or all of the following events shall constitute a Breach hereunder:
21.1.1 If Tenant shall fail to make payment of any Rent or Additional Rent when and as the same become due and payable; or
21.1.2 Intentionally deleted.
21.1.3 The entry of any decree or order for relief by any court with respect to Tenant, or any assignee or transferee of Tenant (hereinafte r “Assignee”), in any involuntary case under the Federal Bankruptcy Code or any other applicable federal or state law; or the appointment 082161\16361704v6
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of or taking possession by any receiver, liquidator, assignee, trustee, sequestrator or other similar official of Tena nt or any Assignee, or of any substantial part of the property of Tenant or such Assignee, or the ordering or winding up or liquidating of the affairs of Tenant or any Assignee and the continuance of such decree or order unstayed and in effect for a period of ninety (90) days or more (whether or not consecutive); or the commencement by Tenant or any such Assignee of a voluntary proceeding under the Federal Bankruptcy Code or any other applicable state or federal law or consent by Tenant or any such Assignee to the entry of any order for relief in an involuntary case under any such law, or consent by Tenant or any such Assignee to the appointment of or taking of possession by a receiver, liquidator, assignee, trustee, sequestrator or other similar official of Tenant or any such Assignee, or of any substantial property of any of the foregoing, or the making by Tenant or any such Assignee of any general assignment for the benefit of creditors; or Tenant or any such Assignee takes any other voluntary action related to the business of Tenant or any such Assignee or the winding up of the affairs of any of the foregoing.
21.1.4 If Tenant shall fail to perform or comply with any other term, covenant or condition of this Lease.
21.2 Default. Except as to the Breach described in Section 21.1.3 which Breach will become a Default without notice and an opportunity to cure, if any other Breach shall continue for more than thirty (30) days after Landlord shall have given written notice thereof to Tenant, then Tenant shall be in “Default;” provided, however, if cure of such Breach reasonably requires more than thirty (30) days, then, provided that Tenant commences to cure within such thirty (30) day period and thereafter diligently and continuously prosecutes the cure to completion, Tena nt shall not be in Default during the cure period.
21.3 Termination and Other Remedies of Landlord in Event of Default.
21.3.1 If a Default shall occur, 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 bring suit against Tenant and recover as an award in such suit the following:
(a) termination of this Lease and the return of the Property and Improvements free and clear of all liens and encumbrances; (b) the worth at the time of award of the unpaid Percentage Rent, Additional Rent, Extension Payments, and Additional Special Rent Amounts which had been earned at the time of termination;
(c) the worth at the time of award of the amount by which the unpaid Percentage Rent and Additional Rent has been earned after termination until the time Tenant is no longer in possession of the Property; and
(d) any other amount necessary to compensate Landlord for all the detriment proximately caused by Tenant’s failure to perform its obligations under this Lease or which in the ordinary course of things could be likely to result therefrom. 082161\16361704v6
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21.3.2 The “worth at the time of the award” of the amounts referred to in Sections
21.2.1(a) and 21.2.1(b) above shall be computed by allowing interest at the rate provided in Section
4.6 as of the date of the award (the “Interest Rate”). Notwithstanding the foregoing, in no event shall Landlord recover any Rent or other sums from Tenant which would have been earned after Tenant is no longer in possession of the Property.
21.3.3 If a Default occurs, Landlord shall also have the right, with or without terminating this Lease, but subject to any nondisturbance agreements entered into with subtenants, to reenter the Property by legal process and remove all persons and property from the Property, subject to the rights of Equipment Lessors; such property may be removed and stored in a public warehouse or elsewhere at the cost of and for the account of Tenant.
21.3.4 Intentionally omitted.
21.3.5 No reentry or taking possession of the Property by Landlor d pursuant to Section 21.3.3 shall be construed as an election to terminate this Lease unless a written notice of such intention is given to Tenant or unless the termination thereof is decreed by a court of competent jurisdiction.
21.4 Specific Performance. If a Default occurs, Landlord shall, in addition to any other rights of Landlord under this Lease, have the right to pursue the remedy of specific performance to require Tenant to perform Tenant’s obligations and comply with covenants of Tenant under this Lease.
21.5 Intentionally Omitted.
21.6 Receipt of Rent, No Waiver of Default . The receipt by Landlord of the rents or any other charges due to Landlord, with knowledge of any Breach of this Lease by Tenant or of any Default on the part of Tenant in the observance or performance of any of the conditions or covenants of this Lease, shall not be deemed to be a waiver of any provisions of this Lease. No acceptance by Landlord of a lesser sum than the rents or any other charges then due shall be deemed to be other than on account of the earliest installment of the rents or other charges due, nor shall any endorsement or statement on any check or any letter accompanying any check or payment of rent or charges due be deemed an accord and satisfaction, and Landlord may acc ept such check or payment without prejudice to Landlord’s right to recover the balance of such installment or pursue any other remedy provided in this Lease. The receipt by Landlord of any rent or any other sum of money or any other consideration paid by Tenant after the termination of this Lease, or after giving by Landlord of any notice hereunder to effect such termination, shall not, except as otherwise expressly set forth in this Lease, reinstate, continue, or extend the term of this Lease, or destroy, or in any manner impair the efficacy of any such notice of termination as may have been given hereunder by Landlord to Tenant prior to the receipt of any such sum of money or other consideration, unless so agreed to in writing and signed by Landlord. Nei ther acceptance of the keys nor any other act or thing done by Landlord or by its agents or employees during the Term shall be deemed to be an acceptance of a surrender of the Property or the Improvements, excepting only an agreement in writing signed by Landlord accepting or agreeing to accept such a surrender.
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21.7 Effect on Indemnification. Notwithstanding the foregoing, nothing contained in this Article 21 shall be construed to limit the Indemnitees’ right to indemnification as otherwise provided in this Lease.
21.8 Landlord Default. If Landlord shall violate, neglect or fail to perform or observe any of the representations, covenants, provisions, or conditions contained in this Lease on its part to be performed or observed in any material way, which default c ontinues for a period of more than thirty (30) days after receipt of written notice from Tenant specifying such default, or if such default is of a nature to require more than thirty (30) days for remedy and continues beyond the time reasonably necessary t o cure (provided Landlord must have undertaken procedures to cure the default within such thirty (30) day period and thereafter diligently pursues such efforts to cure to completion), Tenant may, at its option (in addition to all other rights and remedies specifically set forth in this Lease or available to Tenant at law or in equity), either terminate this Lease upon written notice thereof given to Landlord, or, upon further written notice to Landlord of Tenant’s intention to exercise its self -help remedie s hereunder, and after providing Landlord with an additional thirty (30) day cure period thereafter, incur any reasonable expense necessary to perform the obligation of Landlord specified in such notice and bill Landlord for the costs thereof.
Notwithstanding the foregoing, if in Tenant’s reasonable judgment, an emergency shall exist, Tenant may cure such default with only reasonable (under the circumstances) notice to Landlord being required. If Landlord has not reimbursed Tenant within thirty (30) days after receipt of Tenant’s bill, then Tenant may deduct the reasonable cost of such expense from the Rent next becoming due, together with interest thereon at the Interest Rate. The self -help option given in this Section is for the sole protection of Tenan t, and its existence shall not release Landlord from its obligation to perform the terms, provisions, covenants and conditions herein provided to be performed by Landlord or deprive Tenant of any legal rights which it may have by reason of any such default by Landlord.
ARTICLE 22. PERMITTED CONTESTS.
Tenant, at no cost or expense to Landlord, may contest (after prior written notice to Landlord), by appropriate legal proceedings conducted with due diligence, the amount or validity or application, in whole or in part, of any Real Property Taxes or lien or any Governmental Requirements or Insurance Requirements, provided that (a) in the case of liens of mechanics, materialmen, suppliers or vendors, or Real Property Taxes or liens therefor, such proceedings shall suspend the collection thereof from Landlord, and shall suspend a foreclosure against the Property and/or the Improvements, or any interest therein, or any Rent, if any, or Tenant shall have furnished to Landlord, if requested, a bond or other security, satisfactory to Landlord, (b) neither the Property nor the Improvements, nor any part thereof or interest therein, nor the Rent, if any, nor any portion thereof, would be in any danger of being sold, forfeited or lost by reason of such proceedings, and (c) in the case of Governmental Requirements, Landlord would not be in any danger of any criminal liability or, unless Tenant shall have furnished a bond or other security therefor satisfactory to Landlord, any additional civil liability for failure to comply therewith a nd the Property and the Improvements would not be subject to the imposition of any lien as a result of such failure. Tenant further agrees to defend, indemnify and hold harmless Landlord from and against any demands, claims, actions, causes of action, jud gments, awards, damages, fines, penalties, liabilities, obligations, losses, costs and expenses, including without limitation, attorneys’ fees incurred in connection with any Real Property Taxes, lien, Governmental 082161\16361704v6
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Requirements or Insurance Requirements to which Tenant is subject and which is Tenant’s obligation under this Lease, as provided above. If Tenant shall fail to contest any such matters, or to give Landlord security as hereinabove provided, Landlord may, but shall not be obligated to, post a bond, at Tenant’s cost and expense. Landlord, at the sole cost and expense of Tenant, will cooperate with Tenant and execute any documents or pleadings legally required for any such contest.
ARTICLE 23. FORCE MAJEURE.
23.1 Delay of Performance . Subject to Section 23.2 below , any prevention, delay, nonperformance or stoppage by Tenant or Landlord due to any of the following causes shall be excused: any regulation, order, act, restriction or requirement or limitation imposed by any federal, state, municipal or foreign government or any department or agency thereof (except that action or inaction of the Landlord shall not excuse timely performance by Landlord), or civil or military authority; acts of God; acts or omissions of the other party or its agents or employees; fire, explosion or floods; strikes, walkouts or inability to obtain materials; war, terrorism, riots, sabotage or civil insurrection; or any other causes beyond the reasonable control of the party claiming the enforced delay.
23.2 Notice and Cure Requirements . No prevention, delay, or stoppage of performance shall be excused unless:
(a) The party claiming the enforced delay notifies the other party within thirty (30) days of such prevention, delay or stoppage that it is claiming excuse of its obligations under this Article 23; and
(b) The party claiming the enforced delay diligently proceeds within thirty (30) days of the conclusion of such prevention, delay or stoppage to cure the condition causing the prevention, delay or stoppage; and
(c) The party claiming the enforced dela y effects such cure within a reasonable time.
23.3 Landlord Unable to Perform. Landlord shall provide written notice to Tenant if Landlord is prohibited by law from or facing third party challenges to entering into this Lease or performing its obligations und er this Lease (the “Prohibited Obligations”) in which event, either party shall have the right to terminate this Lease upon written notice to the other party within ninety (90) days after Tenant’s receipt of Landlord’s notice; provided, however, Tenant shall have the right to nullify Landlord’s election to terminate the Lease if Tenant, in its sole discretion, elects to perform the Prohibited Obligations upon written notice to Landlord within thirty (30) days following Tenant’s receipt of Landlord’s termina tion notice. If Tenant elects to perform the Prohibited Obligations, then Landlord and Tenant shall negotiate in good faith a modification to the Base Rent and/or Percentage Rent payable by Tenant to compensate Tenant for the cost of performing the Prohibited Obligations. If the Lease is terminated pursuant to this Section 23.3, then the parties shall have no further obligations to each other except for each party’s indemnity obligations that survive the termination of the Lease, and the Liquidated Damage s re Second 082161\16361704v6
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Closing described in Section 201.6 of the DDA and any Extension Payments paid by Tenant shall be promptly refunded by Landlord to Tenant.
ARTICLE 24. OPTION TO PURCHASE.
Landlord hereby grants to Tenant an option to purchase the Property (“Option”), on the terms and conditions set forth in this Article 24; provided that Tenant is not in Breach or Default under this Lease. The Option may be exercised by Tenant’s delivery of a written notice of such exercise (“Exercise Notice”). The Exercise Notice shall in clude the Tenant’s calculation of the Purchase Price, contingencies, if any, to Closing, and a scheduled Closing Date not later than one hundred twenty (120) days after the date of the Exercise Notice. The Option shall not become effective until and the “Purchase Price” shall be negotiated once the Tenant identifies the Grocery Store and submits a Grocery Store Lease to the Landlord.
If Tenant desires to purchase one or more Development Parcels, then Tenant shall provide Landlord with written notice thereof in accordance with the terms of this Article 24. It shall be at the Director’s absolute and sole discretion regarding whether or not to allow the sale of one or more Development Parcel pursuant to this Article 24. If the Director consents to the sale o f one or more Development Parcel pursuant to this Article 24, then (i) the purchase price for such portion of the Property shall be an amount equal to the Purchase Price multiplied by a fraction, the numerator of which is the number of square feet of land that comprises the portion of the Property to be sold, and the denominator of which is the number of square feet of land that comprises the Property.
ARTICLE 25. CITY PARTICIPATION.
25.1 Participation Payment. All Sale Proceeds shall be distributed as follows: (A) five percent (5%) to the Landlord, and (B) ninety-five percent (95%) to the Tenant.
25.2 Termination. The terms of this Article 25 shall terminate upon the Sale of the Property (or, if applicable, each Development Parcel) by the Tenant to a person or entity that i s not affiliated with the Tenant.
ARTICLE 26. GENERAL PROVISIONS.
26.1 Notices. Any approval, disapproval, demand, document or other notice (“Notice”) which either party may desire to give to the other party under this Lease must be in writing and may be given either by (i) personal service, (ii) delivery by reputable document delivery service such as Federal Express that provides a receipt showing date and time of delivery, (iii) by facsimile transmission or (iv) mailing in the United States mail, certified mail, postage prepaid, return receipt requested, addressed to the address of the party as set forth below, or at any other address as that party may later designate by Notice. Service shall be deemed conclusively made at the time of service if personally served; upon confirmation of receipt if sent by facsimile transmission; the next business day if sent by overnight courier and receipt is confirmed by the signature of an agent or employee of the party served; the next business day after deposit in the United States ma il, properly addressed and postage prepaid, return receipt requested, if served by express mail; and 082161\16361704v6
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three (3) days after deposit thereof in the United States mail, properly addressed and postage prepaid, return receipt requested, if served by certified mail.
26.1.1 Any notice to Landlord shall be given to and rent shall be paid to:
City of Anaheim
200 South Anaheim Boulevard
Anaheim, California 92805
Attention: Director
Copy to: City Attorney
Attention: Leonie Mulvihill
With Copies To:
Sergio M. Ramirez, Economic Development Director
201 South Anaheim Boulevard, 10th Floor
Anaheim, California 92805
Stradling Yocca Carlson & Rauth
660 Newport Center Drive, Suite 1600
Newport Beach, California 92660
Attention: Thomas P. Clark, Jr.
26.1.2 Any notice to Tenant shall be given to:
39 Commons Partners, LLC
2400 East Katella Avenue, Suite 760
Anaheim, CA 92806
Attention: Brett Foy and Paul Casey
Zelman Development Co.
2400 East Katella Avenue, Suite 760
Anaheim, CA 92806
Attention: Brett M. Foy, Co-President
Greenlaw Partners, LLC
18301 Von Karman Avenue, Suite 250
Irvine, California 92612
Attention: Scott Murray and Rob Mitchell
With a copy to:
Cox, Castle & Nicholson LLP
3121 Michelson Drive, Suite 200
Irvine, California 92612
Attention: Robert J. Sykes
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Cochran Law Group
18301 Von Karman Avenue, Suite 270
Irvine, California 92612
Attention: Thia Cochran, Esq.
Any party may, by virtue of written Notice in compliance with this Section 25.1, alter or change the address or the identity of the person to whom any notice, or copy thereof, is to be sent.
26.2 No Merger of Title. There shall be no merger of this Lease or the leasehold estate created by this Lease with any other estate in the Property or any part thereof by reason of the fact that the same person, firm, corpor ation or other entity may acquire or own or hold, directly or indirectly: (a) this Lease or the leasehold estate created by this Lease or any interest in this Lease or in any such leasehold estate, and (b) any other estate in the Property and the Improvem ents or any part thereof or any interest in such estate, and no such merger shall occur unless and until all persons, corporations, firms and other entities, including any leasehold Mortgagee or leasehold Mortgagees, having any interest (including a securi ty interest) in (i) this Lease or the leasehold estate created by this Lease, and (ii) any other estate in the Property or the Improvements or any part thereof shall join in a written instrument effecting such merger and shall duly record the same.
26.3 Quiet E njoyment. Tenant, upon paying the Rent and other charges herein provided for and upon performing and complying with all covenants, agreements, terms and conditions of this Lease to be performed or complied with by it, shall lawfully and quietly hold, occupy and enjoy the Property during the term of this Lease without hindrance or molestation by Landlord, or any person or persons claiming through Landlord.
26.4 No Claims Against Landlord . Nothing contained in this Lease shall constitute any consent or request by Landlord, express or implied, for the performance of any labor or services or the furnishing of any materials or other property with respect to the Property or any part thereof, nor as giving Tenant any right, power or authority to contract for or perm it the performance of any labor or services or the furnishing of any materials or other property in such fashion as would permit the making of any claim against Landlord or its interest in the Property in respect thereof.
26.5 No Waiver by Landlord. To the extent permitted by applicable law, no failure by Landlord to insist upon the strict performance of any term hereof or to exercise any right, power or remedy consequent upon a default under this Lease, and no acceptance of rent during the continuance of any such default, shall constitute a waiver of any such default or of any such term.
No waiver of any default shall affect or alter this Lease, which shall continue in full force and effect, or the rights of Landlord with respect to any other then existing or subsequent default.
26.6 Holding Over. In the event Tenant shall hold over or remain in possession of the Property or the Improvements with the consent of Landlord after the expiration of the Term, such holding over or continued possession shall create a tenancy for month to month only, upon the same terms and conditions as are herein set forth so far as the same are applicable. 082161\16361704v6
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26.7 No Partnership . Anything contained herein to the contrary notwithstanding, Landlord does not in any way or for any purpose become a partner of Tenant in the conduct of its business, or otherwise, or a joint venturer or member of a joint enterprise with Tenant hereunder.
26.8 Remedies Cumulative . The various rights, options, elections and remedies of Landlord and Tenant, respectively, contained in this Lease shall be cumulative and no one of them shall be construed as exclusive of any other, or of any right, priority or remedy allowed or provided for by law and not expressly waived in this Lease. No party shall have the right to recov er consequential damages.
26.9 Attorneys’ Fees. In the event of a dispute between the parties arising out of or in connection with this Lease, whether or not such dispute results in litigation, the prevailing party (whether resulting from settlement before or after litigation is commenced) shall be entitled to have and recover from the losing party reasonable attorneys’ fees and costs of suit incurred by the prevailing party.
26.10 Time Is of the Essence. Time is of the essence of this Lease and all of the terms, provisions, covenants and conditions hereof.
26.11 Construction of Lease . This Lease shall be construed in accordance with the substantive laws of the State of California, without regard to the choice of law rules thereof. The rule of construction that a docu ment be construed strictly against its drafter shall have no application to this Lease. Whenever the singular number is used in this Lease and required by the context, the same shall include the plural, and the masculine gender shall include the feminine and neuter genders.
26.12 Severability. If one or more of the provisions of this Lease shall be held to be illegal or otherwise void or invalid, the remainder of this Lease shall not be affected thereby and shall remain in full force and effect to the maximum extent permitted under applicable laws and regulations.
26.13 Entire Agreement; Modification . This Lease and the Exhibits attached hereto, each of which is incorporated by this reference, contain the entire agreement of the parties with respect to the matters discussed herein. This Lease may be amended only by an agreement in writing signed by the party against whom enforcement of any waiver, change, modification, extension or discharge is sought.
26.14 Binding Effect and Benefits . This Lease shall inure to the be nefit of and be binding on the parties hereto and their respective successors and assigns. Nothing in this Lease, expressed or implied, is intended to confer on any person other than the parties hereto or their respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Lease.
26.15 Further Assurances. Each party hereto will promptly execute and deliver without further consideration such additional agreement, assignments, endorsements and other documents as the other party hereto may reasonably request to carry out the purposes of this Lease. 082161\16361704v6
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26.16 Counterparts. This Lease may be executed simultaneously in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and th e same Lease.
26.17 Request for Approval. In order for a request for any approval or consent required under the terms of this Lease to be effective, it shall be given by way of a Notice in accordance with Section 26.1 clearly marked “Request for Approval” and state (or be accompanied by a cover letter stating) substantially the following:
(a) the section of this Lease under which the request is made and the action or response required;
(b) if applicable, the period of time as stated in this Lease within which the recipient of the Notice shall respond;
(c) if so provided in this Lease, notice that the failure to refuse consent or approval within the stated time period will constitute a Breach under the Lease; and (d) notice that, other than when consent is in the party’s sole discretion, if the consent or approval requested is denied, the explanation for such denial must be given in writing and the party whose request is denied must be given the opportunity to respond.
If a request for approval states a period of time for approva l which is less than the time period provided for in this Lease for such approval, the time period stated in this Lease shall be the controlling time period.
In no event shall a recipient’s approval of or consent to the subject matter of a Notice be deemed to have been given by its failure to object or respond to such Notice.
In the event that a recipient does not approve all or any portion of a Request for Approval, the recipient shall concurrently deliver Notice describing in reasonable detail the specifi c reason for such disapproval.
26.18 Quiet Possession. Tenant shall have quiet possession of the Property for the entire Term hereof subject to all of the provisions of this Lease and all matters of record against the Property. If Tenant’s quiet possession of Property is disrupted by any final determination that this Lease is not enforceable against Landlord, Landlord shall immediately refund and repay Tenant the portion of the Base Rent paid by Tenant that is allocable to the remaining original scheduled Term of the Lease determined by amortizing the Base Rent payment over the full Lease Term on a straight -line basis; and upon Tenant’s receipt of such refund, this Lease shall automatically terminate.
26.19 No Third Party Beneficiaries. This Lease is made for the purpose of setting forth rights and obligations of Tenant and Landlord. Except for Tenant and Landlord, no other person shall have any rights hereunder or by reason hereof.
[Signatures to Ground Lease appear on following pages]
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IN WITNESS WHEREOF, the undersigned have executed this Lease as of the date first above written.
“TENANT”
39 COMMONS PARTNERS, LLC,
a Delaware limited liability company
By: Zelman Anaheim, LLC, a Delaware limited
liability company
Its: Managing Member
By: Zelman Development Co., a
California corporation
Its: Manager
By:
Brett Foy, Co-President
[Signatures to Ground Lease continue on following page]
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[Signatures to Ground Lease continue from previous page] “LANDLORD”
CITY OF ANAHEIM , a California municipal
corporation and charter city
Dated: __________________, 20___ By:
Sergio M. Ramirez, Economic Development
Director
THERESA BASS, CITY CLERK
City Clerk
APPROVED AS TO FORM:
OFFICE OF THE CITY ATTORNEY
Leonie Mulvihill
Assistant City Attorney
APPROVED AS TO FORM:
Stradling Yocca Carlson & Rauth
Special Counsel
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EXHIBIT A-1
SITE MAP
[ATTACH]
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EXHIBIT A-2
LANDFILL MAP
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EXHIBIT B-1
PROPERTY LEGAL DESCRIPTION
[ATTACH]
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EXHIBIT C-1
MEMORANDUM OF GROUND LEASE
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
City of Anaheim
200 South Anaheim Boulevard
Anaheim, California 92805
Attention: Director
This document is exempt from the payment of a
recording fee pursuant to Government Code §§ 6103
and 27383.
MEMORANDUM OF GROUND LEASE
This MEMORANDUM OF GROUND LEASE (“Memorandum”) is executed as of ___________, 20___ by and between the CITY OF ANAHEIM , a California municipal corporation and charter city (“Landlord”), and 39 COMMONS PARTNERS, LLC, a Delaware limited liability company (“Tenant”).
RECITALS
A. Landlord and Tenant have entered into that certain Ground Lease (“Lease”) dated concurrently herewith pursuant to which Landlord has conveyed a ground subleasehold interest in that certain parcel of real property, which is legally described in Attachment No. 1 attached hereto and incorporated herein by reference (“Property”) to Tenant and Tenant has agreed to operate, manage and maintain a first-quality, mixed use commercial development on separate parcels. In no event shall Landlord’s ground leasehold interest in the Property or any land use entitlements for the Project be subordinated to any deed of trust or other lien or encumbrance for financing.
B. The Lease contains an option to purchase as set forth in Section 23 of the Lease.
C. Copies of the Lease are available for public inspection at Landlord’s office at 200 South Anaheim Boulevard, Anaheim, California 92805.
D. The Rent payable under the Lease includes the Base Rent payable pursuant to Section 4.1.1 of the Lease, the Percentage Rent payable pursuant to Section 4.1.2 of the Lease, and Additional Rent payable pursuant to Section 4.1.3 of the Lease including, if applicable, Extension Payments payable pursuant to Section 3.2(b) of the Lease.
E. The Lease provides that a short form memorandum of the Lease shall be executed and recorded in the Official Records of Orange County, California.
NOW, THEREFORE, the parties hereto certify as follows:
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Pursuant to the Lease, Landlord has conveyed a leasehold interest in the Property to Tenant for a term commencing on the Commencement Date and ending on __________ unless earlier terminated or extended as provided by the Lease. The Lease restricts the Tenant’s right to encumber, assign or transfer Tenant’s leasehold intere st in the Property, as more particularly set forth in the Lease. The Lease further provides Tenant with an option to Purchase, as more particularly specified in the Lease.
This Memorandum is not a complete summary of the Lease, and shall not be used to interpret the provisions of the Lease.
[Signatures to Memorandum of Ground Lease appear on the following pages]
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“LANDLORD”
CITY OF ANAHEIM,
a California municipal corporation and charter city
By:
Director of Community and Economic
Development
A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.
STATE OF CALIFORNIA )
) ss.
COUNTY OF _____________ )
On ____________________ before me, __________________________, personally appeared __________________________ who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature ________________________________
(Seal)
[Signatures to Memorandum of Ground Lease continue on following page]
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[Signatures to Memorandum of Ground Lease continue from previous page] “TENANT”
39 COMMONS PARTNERS, LLC,
a Delaware limited liability company
By: Zelman Anaheim, LLC, a Delaware limited
liability company
Its: Managing Member
By: Zelman Development Co., a
California corporation
Its: Manager
By:
Brett Foy, Co-President
A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.
STATE OF CALIFORNIA )
) ss.
COUNTY OF _____________ )
On ____________________ before me, __________________________, personally appeared __________________________ who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature ________________________________
(Seal)
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ATTACHMENT NO. 1 TO EXHIBIT C
LEGAL DESCRIPTION OF THE PROPERTY
Real property in the City of Anaheim, County of Orange, State of California, described as follows:
[to come]
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EXHIBIT D
RELEASE OF CONSTRUCTION COVENANTS
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
39 COMMONS PARTNERS, LLC
__________________________
__________________________
__________, California ________
ATTN: _________________
This document is exempt from the payment of a
recording fee pursuant to Government Code Section
27383.
RELEASE OF CONSTRUCTION COVENANTS
This RELEASE OF CONSTRUCTION COVENANTS (the “Release”) is made by the CITY OF ANAHEIM, a California municipal corporation and Charter City (the “City”), in favor of 39 COMMONS PARTNERS, LLC, a Delaware limited liability company (the “Developer”), as of the date set forth below.
R E C I T A L S
A. The City and the Developer have entered into that certain ground lease (the “Ground Lease”) dated __________, 2019 concerning the development of certain real property situated in the City of Anaheim, California as more fully described in Exhibit “A” attached hereto and made a part hereof.
B. As referenced in Section ___ of the Ground Lease, the City is required to furnish the Developer or its successors with a Release of Construction Covenants (as defined in Article 2 of the Ground Lease) upon completion of construction of each Development Parcel (as defined in Article 2 of the Ground Lease), which Release is required to be in such form as to permit it to be recorded in the Recorder’s office of Orange County. This Release is conclusive determination of satisfactory completion of the construction and development required by the Ground Lease with respect to each Development Parcel.
C. The City has conclusively determined that such construction and development has been satisfactorily completed.
NOW, THEREFORE, the City hereby certifies as follows:
1. The Improvements to be constructed on the Development Parcel described in Exhibit B attached hereto and incorporated herein by reference, have been fully and satisfactorily completed in conformance with the Ground Lease. Any operating requirements and all use, 082161\16361704v6
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maintenance or nondiscrimination covenants contained in the Ground Lease and other documents executed and recorded pursua nt to the Ground Lease shall remain in effect and enforceable according to their terms.
2. Nothing contained in this instrument shall modify in any other way any other provisions of the Ground Lease.
IN WITNESS WHEREOF, the City has executed this Release t his ____ day of __________________, 201_.
CITY:
CITY OF ANAHEIM, a California municipal
corporation and charter city
By:
Sergio M. Ramirez, Economic Development
Director
THERESA BASS, CITY CLERK
City Clerk
APPROVED AS TO FORM:
ROBERT FABELA, CITY ATTORNEY
By:
Leonie Mulvihill
Assistant City Attorney
APPROVED AS TO FORM:
Stradling Yocca Carlson & Rauth
Special Counsel
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EXHIBIT E
INTENTIONALLY OMITTED
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EXHIBIT F
LICENSE AGREEMENT (OM&M)
This LICENSE AGREEMENT (OM&M) (this “Agreement”), dated for purposes of identification only as of ________________, 2022 (the “Date of Agreement”), is entered by and between the CITY OF ANAHEIM, a charter city and a municipal corporation duly organized and existing under the Constitution and laws of the State of California, on the one hand (the “ City”), and 39 COMMONS PARTNERS, LLC, a Delaware limited liability company (“Owner”).
RECITALS:
A. Owner has acquired, pursuant to that certain amended and restated disposition and development agreement between the City and Owner dated September 29, 2020 (the “DDA”) that certain property containing approximately 30 acres (the “Owner’s Property”) which is composed of, among other property, the Sparks Landfill, Anderson Landfill, a nd Rains Pit Landfill (the “Landfills”). The legal description of Owner’s Property is attached hereto as Exhibit A and incorporated herein by reference. All capitalized terms not defined herein shall have the meaning set forth in the DDA.
B. By letter dated April 27, 2007 (the “Conditional Approval Letter”), the Regional Water Quality Control Board -Santa Ana Region (“ SARWQCB”) conditionally approved a Remedial Action Plan/Closure and Post-Closure Maintenance Plan (“RAP”) for the Landfills.
C. Among the con ditions set forth in the Conditional Approval Letter was the requirement of a post closure maintenance and monitoring program in compliance with California Code of Regulations, Title 27, Subchapter 5, section 21180 requiring continued maintenance of landfill gas systems and ongoing monitoring of landfill gas levels on closed landfills which plan was approved by the Orange County Solid Waste Local Enforcement Agency (the “ OM&M Plan”).
D. The subject of the OM&M Plan are those certain remedial improvements installed on the Landfills in connection with the implementation of the RAP (“Remedial Improvements”) which includes, among other things, a portion of the monitoring system on the Owner’s Property.
E. Pursuant to the DDA, the City is responsible for entering into a contract and paying costs for providing maintenance, operation and monitoring of the Landfill gas control system pursuant to the OM&M Plan, as provided in Section 2.1 of the OM&M Plan, or as provided in any corresponding provision of any amendment, revision or update to the current OM&M Plan.
F. Owner is willing to permit the City to enter the Owner’s property to perform the operation, maintenance and monitoring in accordance with the OM&M Plan by granting a license as provided herein.
NOW, THEREFOR E, in consideration of the mutual promises, covenants and agreements herein contained, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:
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Section 1. Right of Entr y. Owner hereby grants to City and its agents, contractors, subcontractors and their invitees a license to enter the Owner’s Property for the purpose of conducting the Permitted Work (the “License”) and for no other purposes without the prior written approval of Owner. The License shall include such rights of ingress and egress over and through the Owner’s Property as are reasonably necessary to implement the OM&M Plan. This Agreement shall run for a term commencing on the Effective Date and terminating upon termination of the OM&M Plan (the “License Term”).
1.1 Permits. Prior to commencing any activities under this Agreement, City shall secure all permits needed to carry out the actions to be performed on the Owner’s Property pursuant to this Agreement.
Section 2. Liens. With regard to actions performed on the Owner’s Property under this Agreement, City shall not permit to be placed against the Owner’s Property, or any part thereof, any design professional’s, mechanic’s, materialmen’s, contractor’s, or subcontractor’s liens (collectively, “Liens”). City shall indemnify, defend and hold harmless Owner from all liability for any and all liens, claims and demands, together with costs of defense and reasonable attorneys’ fees, arising from any Liens. Owner r eserve the right, at its sole cost and expense, at any time and from time to time, to post and maintain on the Owner’s Property, or any portion thereof, or on the improvements on the Owner’s Property, any notices of non -responsibility or other notice as ma y be desirable to protect Owner against liability. In addition to, and not as a limitation of Owner’s other rights and remedies under this Agreement, should City fail, within ten (10) days of written request from Owner, either to discharge any Lien or to b ond for any Lien, or to defend, indemnify, and hold harmless Owner from and against any loss, damage, injury, liability or claim arising out of a Lien, then Owner, at its option, may elect to pay such Lien, or settle or discharge such Lien and any action o r judgment related thereto and all costs, expenses and attorneys’ fees incurred in doing so shall be paid to Owner by City upon written demand.
Section 3. Compliance With Laws/Permits . City shall, in all activities undertaken pursuant to this Agreement, c omply and cause its contractors, agents and employees to comply with all federal, state and local laws, statutes, orders, ordinances, rules, regulations, plans, policies and decrees. Without limiting the generality of the foregoing, City, at its sole cost and expense, shall obtain any and all permits which may be required by any law for any activities City desires to conduct or have conducted pursuant to this Agreement. Owner shall provide reasonable assistance to City in obtaining such permits.
Section 4. Assignment of License. This License Agreement (OM&M) is assignable to either the Successor Agency or the OM&M Contractor.
Section 5. No Real Property Interest. It is expressly understood that this Agreement does not in any way whatsoever grant or convey any permanent easement, lease, fee or other interest in the Owner’s Property to City.
Section 6. Notices. Any notices, requests or approvals given under this Agreement from one party to another shall be in writing and shall be personally delivered or depo sited with the United States Postal Service for mailing, postage prepaid, by certified mail, return receipt requested, to the addresses of the other party as stated in this Section, and shall be deemed to have 082161\16361704v6
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been received at the time of personal delivery or three (3) days after the date of deposit for mailing.
Notices shall be sent to:
To City: City of Anaheim
200 South Anaheim Boulevard
Anaheim, California 92805
Attention: Director
Copy to: City Attorney
with a copy to: Sergio M. Ramirez, Economic Development Director 201 South Anaheim Boulevard, 10th Floor
Anaheim, California 92805
Tel: 714-765-4301
with a copy to: Stradling Yocca Carlson & Rauth
660 Newport Center Drive, Suite 1600
Newport Beach, California 92660
Attention: Thomas P. Clark, Jr.
Tel: 949-725-4140
To Owner: 39 Commons Partners, LLC
2400 East Katella Avenue, Suite 760
Anaheim, CA 92806
Attention: Brett Foy and Paul Casey
Zelman Anaheim, LLC
515 S. Figueroa St. #1230
Los Angeles, CA. 90071
Attention: Brett M. Foy, Co-President
Greenlaw Partners, LLC
18301 Von Karman Avenue, Suite 250
Irvine, California 92612
Attention: Scott Murray and Rob Mitchell
With copies to: Cox, Castle & Nicholson LLP
3121 Michelson Drive, Suite 200
Irvine, California 92612
Attention: Robert J. Sykes
Cochran Law Group
18301 Von Karman Avenue, Suite 270
Irvine, California 92612
Attention: Thia Cochran, Esq.
Section 7. Governing Law . This Agreement shall be governed by the laws of the State of California. Any legal action brought under this Agreement mu st be instituted in the 082161\16361704v6
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Superior Court of Orange County, State of California, in an appropriate court in that county, or in the Federal District Court in the Central District of California.
Section 8. Interpretation. This Agreement shall be interpreted as a whole and in accordance with its fair meaning and as if each party participated in its drafting. Captions are for reference only and are not to be used in construing meaning.
Section 9. Amendment of Agreement. No modification, rescission, waiver, relea se or amendment of any provision of this Agreement shall be made except by a written agreement executed by Owner and City.
Section 10. Owner’s Representations. Owner represent and warrant that Owner has the authority to enter into this Agreement, but othe rwise make no representations and warranties with respect to the Owner’s Property.
Section 11. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall constitute an original, but all of which, when taken together, shall constitute one and the same instrument.
Section 12. Effective Date of this Agreement . This Agreement shall take effect immediately upon the execution of this Agreement by City (the “Effective Date”). [Signatures appear on following page.]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the respective dates set forth below.
“CITY”
CITY OF ANAHEIM, a California municipal
corporation and charter city
Dated: __________________, 20___ By:
Sergio M. Ramirez, Economic Development
Director
THERESA BASS, CITY CLERK
City Clerk
APPROVED AS TO FORM:
OFFICE OF THE CITY ATTORNEY
By
Leonie Mulvihill
Assistant City Attorney
APPROVED AS TO FORM:
Stradling Yocca Carlson & Rauth
Special Counsel
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OWNER
39 COMMONS PARTNERS, LLC,
a Delaware limited liability company
By: Zelman Anaheim, LLC, a Delaware limited
liability company
Its: Managing Member
By: Zelman Development Co., a
California corporation
Its: Manager
By:
Date:_____________________ Brett Foy, Co-President
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EXHIBIT A
LEGAL DESCRIPTIONS OF OWNER’S PROPERTY
APN: ______________