Amended and Restated SUBLEASE
THIS Amended and Restated SUBLEASE (the “Lease”) is made and entered into as of ________________, 2024 (the “Effective Date”) by and between THE CITY OF FULLERTON, CALIFORNIA (“Landlord”), and SKY HARBOR FULLERTON, LLC, a Delaware limited liability company (“Tenant”).
RECITALS
A. Landlord (as successor-in-interest to the Redevelopment Agency of the City of Fullerton, California) and THE BOARD OF TRUSTEES OF THE CALIFORNIA STATE UNIVERSITY, which is the State of California acting in its higher education capacity, on behalf of the California State University, Fullerton, one of twenty-three (23) universities in the California State University system (“Master Landlord”), were formerly parties to that certain First Amended Lease dated May 22, 1987 (as amended, the “Superseded Lease”), which Superseded Lease has been amended and restated in its entirety by that certain Amendment to Ground Lease dated __________________, 2024 (the “Ground Lease”), for the ground lease of certain real property located in the City of Fullerton, County of Orange, State of California, legally described in Exhibit A hereto (the “Premises”).
B. Landlord and Tenant are parties to that certain Sublease dated March 19, 1987, as amended by that certain First Amendment to Sublease dated May 27, 1987, that certain First Amendment to Sublease dated September 29, 1988, and that certain Third Amendment to Sublease, and Amended to Memorandum of Sublease, First Amended Lease, and Nondisturbance and Recognition Agreement dated January 31, 1990 (collectively, as amended, the “Existing Sublease”), relating to the operation of the Project.
C. Tenant desires to continue subleasing the Premises from Landlord for the continued ownership, operation, and management of a six (6) story hotel with approximately two hundred twenty-four (224) guest rooms (the “Project”). This Lease shall be coterminous with the Ground Lease and shall only remain in effect while the Ground Lease remains in effect.
D. The use of the Premises must be for purposes consistent with the educational mission of the Master Landlord, and Landlord and Tenant have agreed to use the Premises in such manner, consistent with and subject to the terms of this Lease.
E. California Education Code section 66606 vests Master Landlord with “full power and responsibility in the construction and development of any state university campus, and any buildings or other facilities or improvements connected with the California State University.” Master Landlord is the State of California acting in its higher education capacity, and is generally exempt from local and regional ordinances, regulations, policies, and rules, including, without limitation, zoning and land use regulations, when its development, construction, facilities, and uses are in furtherance of its governmental purpose, unless applicable law specifically says otherwise.
F. Landlord and Tenant desire to amend and restate the Existing Sublease on the terms and conditions hereinafter set forth subject to and in accordance with the terms and conditions set forth in this Lease. This Lease shall amend, restate, and supersede the Existing Sublease in its entirety.
NOW, THEREFORE, in consideration of the mutual covenants herein contained, and for good and other consideration, the receipt and sufficiency of which is hereby acknowledged, and incorporating by this reference the foregoing Recitals, the parties hereto hereby agree as follows:
AGREEMENT
DEFINITIONS
In addition to any terms which are defined elsewhere in this Lease, for purposes of this Lease, the following definitions shall apply:
“Additional Rent”
shall mean all amounts payable by Tenant to Landlord under this Lease other than Percentage Rent. “Affiliate”
shall mean any Person controlling, controlled by or under common control with the Person in question. As used in the foregoing and where appropriate elsewhere in this Lease, “control” and its related words means the ability to effectively direct the management decisions of the Person in question. “BOT”
shall mean the Board of Trustees of the California State University, acting in its capacity as the governing body of Master Landlord. “Business Day”
shall mean any day in which the Master Landlord’s administrative offices are operating and open for general business activities. “Campus”
shall mean the California State University, Fullerton. For the sake of clarification, the Campus is one of the twenty-three (23) universities of Master Landlord and is not a separate legal entity. “CEQA”
means the California Environmental Quality Act of 1970, Public Resources Code Section 21000, et seq., as amended and modified from time to time. “City”
shall mean the City of Fullerton, California.
“Claim(s)”
shall mean claims, demands, liabilities, damages, judgments, orders, decrees, actions, proceedings, fines, penalties, losses, costs and expenses, including without limitation, court costs and reasonable attorneys’ fees. “Commenced Construction”
shall mean, with respect to the construction of any Improvements, that: (i) all permits, licenses and approvals required in connection therewith have been duly issued, (ii) the Contractor for such Improvements has been given notice by Tenant to proceed with the construction of such Improvements, and (iii) such Contractor has actually commenced preconstruction activities on the Premises. “Commencement of Construction”
shall mean the date on which Tenant has Commenced Construction of any Improvements. “Comparable Projects”
shall mean improvements and projects similar in kind and nature and in Orange County, California, which are maintained in a firstclass manner and operated for the same or substantially similar purpose as the Permitted Use. “Completion of Construction”
of any Improvements shall be deemed to occur when (i) the applicable Improvements have been substantially completed (that is, completed except for minor punch list work), and (ii) with respect to Major Improvements, Landlord has received from the Design Professional and the Contractor for such Improvements, in form reasonably satisfactory to Landlord, written certification, or other evidence reasonably acceptable to Landlord, that (a) such completed Improvements have been substantially completed in compliance with the Construction Requirements, and (b) such completed Improvements have been inspected and approved by all appropriate governmental authorities and applicable Landlord Parties, and all certificates of occupancy or similar permits or approvals required as a condition to the occupancy or use of the Improvements for the Permitted Use have been duly issued. “Construction Requirements”
shall mean all applicable Laws, Master Landlord’s construction guidelines and policies, as they may be updated by Master Landlord from time to time during the Term, which are applicable to the Project and/or the particular Improvements, the Final Plans reasonably approved by the Landlord if applicable, applicable University Policies, and the requirements of this Lease applicable to the construction of Improvements. “Construction Schedule”
shall mean, with respect to any Major Improvements, the construction schedule approved by Landlord with respect thereto. “County”
shall mean the County of Orange, State of California.
“CPI Index” shall mean the Consumer Price Index All Urban Consumers (base year 1982-84 = 100) for Los Angeles-Riverside-Orange County, CA, as published by the United States Department of Labor, Bureau of Labor Statistics. If the CPI Index is changed so that the base is changed from 1982-84 = 100, the CPI Index shall be converted in accordance with the conversion factor published by the United States Department of Labor, Bureau of Labor Statistics. If the CPI Index is discontinued or revised during the Term, such other governmental index or computation with which it is replaced shall be used in order to obtain substantially the same result as would be obtained if the CPI Index had not been discontinued or revised. If there is no such replacement, then Landlord and Tenant shall select another price index which is satisfactory to both. “Design Professional”
shall mean a qualified professional architect or engineer, licensed in the State of California and in good standing, who may perform architectural or engineering services, including analysis of project requirements, creation and development of the project design, preparation of drawings, and specifications and bidding requirements. “Development Financial Plan”
shall mean a financial plan prepared by Tenant with respect to any proposed Major Improvements which shall include a detailed budget and contain sufficient information and materials to allow the Landlord to validate the viability of the construction and operation of the proposed Major Improvements and the Tenant’s ability to make (or continue to make, as applicable) Rent payments as contemplated in this Lease, in such form and containing such information as required under University Policies and/or otherwise reasonably requested by Landlord. “Environmental Agency”
means (a) the United States Environmental Protection Agency; (b) the California Environmental Protection Agency and all of its sub-entities having jurisdiction over the Premises; (c) any Fire Department or Health Department with jurisdiction over the Premises; and (d) any other federal, state or local governmental authority that has or asserts jurisdiction over Releases or the presence, use, storage, transfer, manufacture, licensing, reporting, permitting, analysis, disposal or treatment of Hazardous Substances. “Final Plans”
shall mean the Major Improvement Plans for any Major Improvements which are (or have been) approved by Landlord in accordance with the terms and conditions of this Lease. “Force Majeure”
shall mean any cause or occurrence outside the reasonable control of the party claiming an inability to perform and which by the exercise of due diligence could not be reasonably prevented or overcome, to the extent the same is not caused by the fault of the party claiming relief, which may include, without limitation, an act of God, fire, riot, civil commotion, terrorist act, terrorist threat, communicable disease outbreak, epidemic, pandemic, hostilities or war, or a labor dispute which results in a strike or work stoppage affecting the Premises or Project. The term “Force Majeure” shall expressly exclude financial inability or difficulty, financial hardship, changes in financial markets or financial market instability, and any other event or circumstances whatsoever relating thereto, and without limiting the foregoing under no circumstances whatsoever shall Force Majeure in any way excuse, limit, or otherwise modify Tenant’s financial obligations under this Lease, including without limitation the obligation to pay the Rent and other charges due hereunder as and when required. For a party to avail itself of the benefit of Force Majeure the Force Majeure event must directly cause a material delay in performance of an obligation or duty hereunder, or an inability to complete the performance of any such obligation or duty. The party claiming the benefit of Force Majeure must give detailed written notice to the other party within five (5) Business Days after obtaining actual knowledge of the Force Majeure event, and failure to provide such notice within such time period shall not void the benefit of Force Majeure but shall instead decrease the duration of the excused performance resulting from such Force Majeure event on a per diem basis for each day of delay in delivering such notice. “Hazardous Substance”
shall mean any material or substance (a) defined as a “hazardous waste,” “extremely hazardous waste” or “restricted 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); (b) defined as a “hazardous substance” under section 26316 of the California Health and Safety Code, division 20, chapter 6.8 (Carpenter-Presley-Tanner Hazardous Substance Account Act); (c) 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 Substance” under section 25281 of the California Health and Safety Code, division 20, chapter 6.7 (Underground Storage of Hazardous Substances); (d) petroleum; (e) asbestos; (f) polychlorinated biphenyls; (g) listed under Article 9 or defined as “hazardous” or “extremely hazardous” pursuant to Article 11 of Title 22 of the California Administrative Code, division 4, chapter 20; (h) designated as a “hazardous substance” pursuant to section 311 of the Clean Water Act (33 U.S.C. § 1251 et seq., 33 U.S.C. § 1321, or listed pursuant to section 307 of the Clean Water Act (33 U.S.C. § 6903); (i) defined as a “hazardous substance” pursuant to section 101 of the Comprehensive Environmental Response, Compensation, and Liability Act (42 U.S.C. § 6901 et seq.); or (k) found to be a pollutant, contaminant, toxic or hazardous waste or toxic or hazardous substance in any reported decision of a federal or California state court, or which gives rise to liability under any Federal or California common law theory based on strict liability. “Hazardous Substance Activities”
the use, storage, maintenance, generation, manufacture, handling, removal, disposal, release, treatment or discharge of any Hazardous Substances upon or about the Premises or Project. “Improvements”
shall mean all improvements on the Premises constructed as of the Effective Date and any new construction, replacements, reconstruction, modification, alteration or restorations thereof during the Term, including without limitation all restoration work relating to any casualty. “Institutional Lender”
shall mean any of the following entities acting on its own or in a fiduciary capacity, so long as such entity (together with any entity directly or indirectly owning or controlling such entity or directly or indirectly owned, controlled by or under common control with such entity) has an aggregate combined net worth of at least $500 million (provided that the foregoing net worth restriction shall not apply to lenders described in clauses (i) or (j) below): (a) a bank, savings and loan association, savings institution, trust company or national banking association, (b) a charitable foundation, (c) an insurance or annuity company, (d) a pension, retirement or profit-sharing trust or fund, (e) an investment company or business development company, as defined in the Investment Company Act of 1940, as amended, (f) a broker or dealer registered under the Securities Exchange Act of 1934, as amended, or any investment advisor registered under the Investment Advisers Act of 1940, as amended, (g) a government, public employees’ pension or retirement system or any other government agency supervising the investment of public funds, (h) any small business investment company licensed under the Small Business Investment Act of 1958, as amended, (i) a real estate mortgage investment conduit or securitization trust, (j) a trustee or issuer of collateralized mortgage obligations or similar investment entity, (k) a real estate investment trust, (l) a private debt fund, or (m) any entity directly or indirectly owning or controlling any of the foregoing or directly or indirectly owned, controlled by or under common control with any of the foregoing. “Landlord”
is defined in the Preamble above.
“Landlord’s Interest” shall mean Landlord’s interest in (a) the Premises, (b) the Improvements, (c) the Project, and (d) this Lease. “Landlord Party”
shall collectively mean Landlord and its officers, agents, volunteers, employees, and independent contractors; provided that, with respect to any natural person covered by the foregoing, such persons shall only be deemed a Landlord Party to the extent acting within official capacity as a trustee, officer, agent, volunteer, employee or contractor, as applicable. “Laws”
shall collectively mean (i) all applicable local, state, and/or federal statutes, ordinances, rules, codes, requirements, orders, directives, permits, regulations, and other laws, (ii) the terms of all reciprocal easement agreements and/or covenants, conditions and restrictions affecting the Premises, and (iii) the requirements of any board of fire insurance underwriters or equivalent, in each such instance whether now in effect or which may hereafter come into effect. “Lender Recognition Agreement”
shall mean an agreement in form and substance reasonably satisfactory to the Landlord, and otherwise consistent with the terms of this Lease, between the Landlord, Tenant, and a Subleasehold Mortgagee, pursuant to which the Landlord undertakes in favor of the Subleasehold Mortgagee that in the event of a default by Tenant the Landlord will recognize the Subleasehold Mortgagee as a direct lessee of the Landlord under the terms set forth in this Lease upon completion of a foreclosure or assignment in lieu of foreclosure under the applicable Trust Deed, on the condition that said Subleasehold Mortgagee cures in all material respects all defaults by Tenant under this Lease. “Major Improvements”
shall mean all Improvements that: (i) are reasonably likely to materially adversely affect public health and safety or the health and safety of the Occupants or other Persons, in aggregate, using or occupying any portion of the Project; (ii) materially changes or otherwise impacts the design, style, or character of the interior (unless such change or impact to the design, style, or character of the interior is made in connection with a brand required PIP or cycle renovation and work related thereto) or exterior of the Improvements, including but not limited to changes or impacts to utilities facilities; (iii) costs more than, in the aggregate for any particular Improvement project, an amount greater than five million dollars ($5,000,000), increased as of each anniversary of the Effective Date by the annual change in the CPI Index pursuant to the most recently published CPI Index (unless such Improvement is a brand required PIP or cycle renovation and work related thereto, in which case such Improvements shall not be deemed a Major Improvement solely because the cost exceeds the value set forth in this Section 1.31(iii)); (iv) are not consistent with the Permitted Uses; (v) are not constructed, installed, maintained, repaired, or replaced from, or are not contained entirely within the building footprint of then-existing Improvements; or (vi) materially affect the structure of the Improvements. “Master Landlord”
is defined in the Preamble above.
“Master Landlord Party”
shall collectively mean Master Landlord, the BOT, the Campus, any Master Landlord or Campus auxiliaries, and their respective trustees, officers, agents, volunteers, employees, and independent contractors; provided that, with respect to any natural person covered by the foregoing, such persons shall only be deemed a Master Landlord Party to the extent acting within official capacity as a trustee, officer, agent, volunteer, employee or contractor, as applicable. “Occupant” shall mean any lessee or tenant under any Space Lease. “Official Records”
shall mean the official records of the County recorder’s office. “Partial Taking”
shall mean any Taking which does not constitute a Total Taking. “Percentage Rent”
shall have the meaning set forth in Schedule 4.
“Permitted Uses”
shall mean the use of the Premises and the Project solely for the following purposes, which are in furtherance of the educational mission of Landlord: a six (6) story “upper-upscale” (as defined in the STR Chain Scale) or better hotel (provided that a repositioning of the hotel to “upscale” (as defined in the STR Chain Scale) may be permitted with Landlord’s consent) with two hundred twenty-four (224) guest rooms and ancillary uses reasonably related thereto, and no other purposes whatsoever without Landlord’s prior written consent in its sole and absolute discretion. “Person”
shall mean any natural person, a partnership, a corporation, an association, a joint stock company, a limited liability company, a trust, a joint venture, an unincorporated organization and other entity. “PIP” shall mean a brand required property improvement plan, renovation plan, brand required cycle renovation, soft goods refresh or similar capital expenditure, renovation or improvement plan related to the improvement, enhancement or renovation of the Improvements in connection with brand standard purposes or otherwise, in each case pursuant to the franchise agreement at the Project. “Prohibited Uses” shall mean those uses set forth in Schedule 1.41. “Qualified Lender” shall mean any Institutional Lender or its Affiliate that has (together with any entity that directly or indirectly owns or controls such Institutional Lender or is directly or indirectly owned, controlled by or under common control with such Institutional Lender) an aggregate combined net worth of at least $500,000,000 (such amount to be increased as of the fifth (5th) anniversary of the Effective Date and every five (5) years thereafter during the Term by the change in the CPI Index during each such 5-year period pursuant to the most recently published CPI Index) and which is qualified to make a loan or extend financing to Tenant under applicable Laws. If a loan or financing is provided by or pursuant to a co-lending, participation or other multiple lender arrangement, then such loan shall be deemed to be made by a “Qualified Lender” if the party (i) who is responsible for the day-to-day control and decision making in respect of such loan or financing (whether or not the co-lenders, participants or other lenders have customary approval rights of certain major decisions), (ii) who is the lead lender, (iii) who is the lead servicer, or (iv) who is the administrative agent for such loan or financing, is a Qualified Lender. “Qualified Franchisor” shall mean a Person that meets all of the following qualifications (unless any is waived by Master Landlord in its sole discretion): (i) at the time of the proposed new franchise agreement, is not (a) in material default under any material lease or franchise agreement beyond any applicable notice and cure period with Master Landlord or any of its auxiliaries, or the State of California, (b) involved (whether directly or through any Affiliate) in any adversarial litigation with Master Landlord or any of its auxiliaries, and/or (c) a Person that has been found liable in a civil proceeding for fraud, embezzlement, bribery, forgery, money laundering, extortion, racketeering, corruption, Ponzi schemes, conversion, espionage, or terrorist actions, or that has been convicted in a criminal proceeding for a felony or any crime involving fraud, embezzlement, bribery, forgery, money laundering, extortion, racketeering, corruption, Ponzi schemes, conversion, espionage, or terrorist actions, or that is an organized crime figure or is reputed (based upon reputable media reports) to have substantial business or other affiliations with an organized crime figure, or which directly or indirectly controls, is controlled by, or is under common control with a Person that has been convicted in a criminal proceeding for a felony or any crime involving fraud, embezzlement, bribery, forgery, money laundering, extortion, racketeering, corruption, Ponzi schemes, conversion, espionage, or terrorist actions, or which is an organized crime figure or is reputed (based upon reputable media reports) to have substantial business or other affiliations with an organized crime figure; (ii) would not cause or permit a change in the Permitted Use; (iii) is not subject to any of the issues described in subclauses (III)(y) (OFAC) or (III)(z) (Bankruptcy) of Section 12.1.1 below; (iv) is qualified to do business in the State of California as of the effective date of the new franchise agreement, and (v) will license or franchise a brand, flag, chain name or mark to the Project which is “upper-upscale” (as defined in the STR Chain Scale). “Release”
means any releasing, spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, migrating, disposing, or dumping of Hazardous Substances onto or from the Premises or the Project. “Remediate” or “Remediation”
means any response or remedial action as defined under 42 U.S.C.§9601(24) of CERCLA, and similar actions with respect to Hazardous Substances as defined under comparable state and local Laws, and any other clean-up, removal, containment, abatement, monitoring, treatment, disposal, closure, restoration or other mitigation or remediation of Hazardous Substances or Releases required by any governmental entity. “Rent”
shall collectively mean Percentage Rent, Additional Rent, and all other amounts to be paid by Tenant hereunder. “Rent Commencement Date”
shall mean the Effective Date.
“Scheduled Completion Date”
shall mean the date on which Completion of Construction of any Major Improvements is scheduled to occur as set forth in the Construction Schedule approved by the Landlord for such Improvements. “Schematic Design Package”
shall collectively mean the documents and materials submitted by Tenant to Landlord with respect to any Major Improvements including, as applicable, market analyses, financing arrangements, project budgets and schedules, and pro formas, and including the proposed Development Financial Plan and Construction Schedule for the proposed Major Improvements. “Space Lease”
shall mean any agreement between Tenant and any Person setting forth the terms and conditions of occupancy of certain space within the Project by such Person, other than ordinary course transient room or space rentals (including, without limitation, event space rentals) in connection with the operation of the Project for the Permitted Use. “Stoppage of Construction”
shall be deemed to occur at any time during which Tenant or its Contractor is not diligently and continuously prosecuting the construction and completion of any Improvements pursuant to the Construction Requirements. “Taking”
shall mean any acquisition of or damage to all or any portion of the Premises or Improvements, or any interest therein or right accruing thereto, pursuant to or in anticipation of the exercise of the power of condemnation or eminent domain, or by reason of the temporary requisition of the use or occupancy of the Premises or Improvements, or any part thereof, by any governmental or quasigovernmental authority, civil or military, or any other agency empowered by law to take property in the State of California under the power of eminent domain. “Taxes”
shall mean all taxes, assessments, fees, rates, charges, license fees, municipal liens, levies, excises or imposts, and other similar governmental charges, whether general or special, or ordinary or extraordinary, of every name, nature and kind whatsoever (including without limitation real estate taxes, taxes upon or measured by rents, personal property taxes, privilege taxes, gross receipts taxes, excise taxes, parking taxes, business and occupation taxes, gross sales taxes, transient occupancy taxes, possessory interest taxes, occupational license taxes, water charges, sewer charges, or environmental taxes or assessments), which may at any time be levied, assessed, charged or imposed by any public agency, or other authority or entity, or which may become a lien or charge upon all or any part of the Premises, Improvements, or Project; the Rent; the Landlord’s Interest; the Tenant’s Interest; the use or occupancy of the Premises, Improvements or Project (including without limitation the operation of any business or other activities on or about the Premises or Project and/or the rents or other revenues generated by such business or activities); and any personal property located upon the Premises, Improvements or Project at any time during the Term. “Taxes” also include without limitation the payment of any bonds or charges imposed or required by any public agency, or other authority or entity, by reason of the proposed or Hazardous Substance Activities on or from the Premises or Project by Tenant or any Tenant Party. Master Landlord, as entity of the State of California, is generally exempt from the taxes, fees, assessments, and other charges described above, and nothing in this Lease shall be in any way construed as a waiver of Master Landlord’s sovereign immunity. “Tenant”
shall have the meaning ascribed to it in the preamble of this Lease and shall include any assignee of the original Tenant approved by Landlord in accordance with the terms of this Lease. “Tenant Party”
shall collectively mean Tenant and its Affiliates, and their respective partners, owners, members, managers, directors, officers, shareholders, employees, agents, guests, invitees, contractors, subcontractors, and representatives. “Tenant’s Interest” shall mean Tenant’s interest in (a) the Premises, (b) the Improvements, (c) the Project, (d) this Lease, and (e) the Space Leases. “Total Taking”
shall mean either (a) a Taking of all of the Premises or Improvements other than for temporary purposes or (b) a Taking of so much of the Premises or Improvements as to render, in Landlord’s or Tenant’s reasonable judgment, the balance of the Project unsuitable for the Permitted Use. “University Policies”
shall collectively mean all applicable Master Landlord policies, guidelines, rules and regulations which relate to (i) this Lease, (ii) the Premises, Improvements, and/or Project, (iii) the Campus, and/or (iv) the Permitted Use and the use and occupancy of the Premises, Improvements, and/or Project by any Landlord Party or Tenant Party, in each case as the same may change from time to time during the Term.
GRANT AND TERM
Lease
. In consideration of the covenants and agreements to be observed and performed by Tenant, Landlord hereby leases to Tenant, and Tenant hereby leases from Landlord, the Premises, subject to: (i) all liens, encumbrances, easements, rights-of-way, covenants, conditions, restrictions, obligations and liabilities, whether or not of record; (ii) all matters which would be revealed or disclosed in an accurate survey or physical inspection of the Premises; (iii) the effect of all current and future building restrictions and regulations and, current and future applicable Laws and University Policies; (iv) the condition and state of repair of the Premises on the Effective Date; and (v) all taxes, duties, assessments, special assessments, water charges and sewer rents, and any other impositions, accrued or unaccrued, fixed or not fixed, as provided below. Landlord reserves unto itself a non exclusive easement in, on, over, under and upon the Premises for the purpose, as appropriate, of vehicular and pedestrian access, provided that in each case Landlord shall not unreasonably interfere with Tenant’s use or occupancy of the Project. Landlord grants to Tenant and Tenant’s agents, employees, licensees, and invitees a non exclusive easement in, on, and over those streets, roads, and other pathways owned by Landlord and intended for pedestrian or vehicular travel immediately adjacent to the Premises, for the purposes of accessing the Premises and the Project.
Use of the Premises
. Tenant shall use the Premises for the Permitted Uses and no other use throughout the Term, other than during the construction of any permitted Improvements. Use of the Premises for other than the Permitted Uses without Landlord’s consent (as required pursuant to the terms hereof) shall constitute an Event of Default as hereinafter provided.
Reservation of Oil, Gas and Mineral Rights
. Landlord and Tenant acknowledge that Master Landlord reserves to itself the sole and exclusive right to prospect for, drill for, produce, and take any oil, gas, or other hydrocarbon or mineral substances and accompanying fluids, including all geothermal resources from the Premises from below the depth of five hundred (500) feet from the surface of the Premises, including the rights to slant drill, maintain subsurface pressures, and utilize subsurface storage space for natural substances. This reservation does not include the right of entry or access from or over the surface of the Premises, nor any other right not herein expressly reserved.
Term. The “Term”
of this Lease shall commence on the Effective Date and shall expire, without notice or other action by either party, upon the earlier of (i) the expiration or earlier termination of the Ground Lease; and (ii) 11:59 p.m. Pacific Time on December 31, 2088, unless this Lease is sooner terminated pursuant to the terms set forth herein.
Holding Over
. This Lease shall expire without further notice at the expiration of the Term, and no holding over after the termination or expiration of this Lease shall be permitted. Any holding over by Tenant after expiration or earlier termination shall not constitute a renewal or extension of this Lease, nor shall it give Tenant any rights in or to the Premises, Project, or any part thereof. If Tenant continues to occupy any portion of the Premises after the expiration of the Term or any earlier termination of this Lease, such holding over (i) shall be deemed to have created a month to month tenancy only, which shall be terminable with at least thirty (30) days’ prior written notice by either party, (ii) shall not constitute a renewal or an extension hereof, and (iii) shall be subject to all of the terms and conditions of this Lease, including without limitation the obligation to pay Rent; provided Rent during any holdover period shall be one hundred twenty-five percent (125%) of the Rent payable in the month immediately preceding the holdover period. A holdover shall be deemed to include Tenant’s failure to surrender the Premises to Landlord in the condition required by this Lease. Notwithstanding any provision to the contrary contained herein, (I) Landlord expressly reserves the right to require Tenant to immediately surrender possession of the Premises upon the expiration of the Term or the date of any earlier termination of this Lease, the right to re-enter the Premises, and the right to assert any remedy at law or in equity to evict Tenant and collect damages in connection with any such holding over, and (II) Tenant shall indemnify, defend and hold the Landlord Parties and Master Landlord Parties harmless from and against any and all Claims incurred or suffered by a Landlord Party or Master Landlord Party by reason of Tenant's failure to timely surrender the Premises in accordance with the provisions of this Lease, including, without limiting the generality of the foregoing, all Claims incurred by Landlord or Master Landlord due to Landlord’s or Master Landlord’s failure or inability to deliver the Premises to a successor tenant/occupant, and any lost profits to Landlord or Master Landlord resulting therefrom. The provisions of this paragraph shall not be deemed to limit or constitute a waiver of any other rights or remedies of Landlord or Master Landlord provided herein or under applicable Laws.
Termination of Franchise Agreement
. Notwithstanding anything in this Lease to the contrary, Tenant shall not terminate its existing franchise agreement with Marriott Corporation or enter into any new franchise agreement without Landlord’s prior written approval, which consent shall not be unreasonably withheld, conditioned or delayed; provided, however, that in no event shall Landlord’s approval be required if Tenant replaces its franchise agreement with a Qualified Franchisor, provided that such successor franchisor shall operate the Project in accordance with the Permitted Use and provided further that Tenant shall deliver prior written notice of the same to Landlord and Master Landlord.
Intentionally Deleted
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Intentionally Deleted
.
Condition of Premises
. Tenant has accepted possession of the Premises in an “AS-IS” condition without any representation or warranty of Landlord or Master Landlord. By the execution of this Lease, Tenant acknowledges that it has completed any and all due diligence that it deems necessary in order to enter into this Lease. Tenant acknowledges that it has had the advice of such independent professional consultants and experts as it deems necessary in connection with its investigation and study of the Premises, and has, to the extent it deemed necessary, independently investigated the condition of the Premises, including the soils, hydrology and seismology thereof, and the Laws and University Policies relating to the construction and operation of the Improvements and Project, including environmental, zoning and other land use entitlement requirements and procedures, height restrictions, floor area coverage limitations and similar matters, and has not relied upon any statement, representation or warranty of Master Landlord, Landlord or any other Landlord Party of any kind or nature in connection with its decision to execute and deliver this Lease and its agreement to perform the obligations of Tenant hereunder. Neither Master Landlord nor Landlord makes any warranty as to the suitability of the Premises for Tenant’s proposed development, construction or use, as permitted by this Lease. Neither Master Landlord nor Landlord makes any covenants or warranties respecting the condition of the soil, subsoil or any other condition of the Premises. Tenant acknowledges that the soil on the Premises may or may not be suitable for the purposes intended by Tenant or be of such character and condition so as to require special engineering for construction of the Improvements. Neither Master Landlord nor Landlord shall be responsible for any land subsidence, slippage, soil instability or damage resulting therefrom. Neither Master Landlord nor Landlord shall be required or obligated to make any changes, alterations, additions, improvements or repairs in, on, under or about the Premises. In addition, neither Master Landlord nor Landlord has made any representation or warranty that it will develop any of its other property, whether or not adjoining the Premises or elsewhere on or near the Campus, for any specific use. Without limiting the foregoing, Tenant acknowledges it has been informed, pursuant to the provisions of the California Health & Safety Code § 25359.7, that Hazardous Substances may be located in, on, under or around the Premises, and that it has also been notified, pursuant to the Safe Drinking Water and Toxic Enforcement Act of 1986, California Health and Safety Code §§ 25249.5 et seq., that detectable amounts of chemicals known to the State of California to cause cancer, birth defects or other reproductive harm may be found in, on, under, or around the Premises. With respect to the foregoing provisions of this paragraph, and by initialing below, Tenant expressly waives the provisions of California Civil Code Section 1542, as may be amended or modified, which currently provides:
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.
Tenant hereby acknowledges and agrees that the foregoing release is material consideration to Landlord and Master Landlord under this Lease, and but for such release by Tenant the Landlord would not enter into this Lease and Master Landlord would not consent to this Lease.
Tenant’s initials: ______________
Ownership and Removal of Improvements.
Ownership of Improvements. The parties acknowledge and agree that Tenant is the owner of all Improvements and all furnishings, fixtures and personal property located thereon. Upon expiration of the Term or any earlier termination of this Lease, all such Improvements and property shall, except as provided herein, automatically vest in, revert to, and become the property of Landlord without compensation to, or requirement of consent or other act of, Landlord or Tenant and without the necessity of deed, bill of sale, conveyance or other act or agreement of Landlord or Tenant, and without any payment of any kind or nature by Landlord to Tenant or to any other Person, including any Subleasehold Mortgagee who has a lien against all or any portion of Landlord’s Interest or Tenant’s Interest. Tenant shall thereafter have no further rights thereto or interest therein. Except as permitted by this Lease, Tenant shall not, and shall not allow Occupants, to remove any Improvements from the Premises, nor waste nor destroy any Improvements (or allow the same to occur). Upon or at any time after the date of the expiration of the Term or any earlier termination of this Lease, if requested by Landlord, Tenant shall, without charge to Landlord, promptly execute, acknowledge and deliver to Landlord a quitclaim deed, bill of sale, and/or other instrument reasonably requested by Landlord which (a) conveys all of Tenant’s right, title and interest in and to the Premises, Improvements, and Project; (b) assigns, without representation or warranty and to the extent assignable by the terms of such contracts, all contracts designated by Landlord, relating to the operation, management or maintenance of the Premises, Project, or any part thereof; and (c) conveys, without representation or warranty all plans, records, registers, permits, and all other papers and documents which may be necessary or appropriate for the proper operation and management of the Project. In order to effectuate the terms of this section, Tenant shall use commercially reasonable efforts to procure that Tenant’s contracts in excess of one hundred thousand dollars ($100,000) with vendors relating to the operation, management or maintenance of the Premises, Project, or any part thereof, executed after the Effective Date shall include provisions permitting the assignment of said contracts to Landlord upon expiration of the Term or any earlier termination of this Lease. Tenant’s obligations above shall survive the expiration of the Term or earlier termination of this Lease.
Removal of Realty Fixtures Not Permitted. Except as expressly provided in this Lease, Tenant shall not have the right to remove any permanently affixed fixtures unless such fixtures have become obsolete, are no longer used in connection with the Premises or are replaced with fixtures of comparable or greater quality and value, and such fixtures shall automatically become the property of Landlord without payment of any kind to Tenant upon the expiration of the Term or any earlier termination of this Lease.
Tenant’s Right to Remove Personal Property. At the expiration of the Term or earlier termination of this Lease, Tenant shall remove any or all of Tenant’s personal property and trade fixtures from the Project, and shall cause all Occupants to do the same, so long as (a) such personal property and trade fixtures can be removed without material damage, (b) such personal property and trade fixtures are removed within sixty (60) days following the date of the expiration of the Term or earlier termination of this Lease, and (c) all resultant damage is promptly and substantially remedied and Tenant takes reasonable steps necessary to preserve the appearance of the Premises, Improvements, and Project, with such obligation to survive the expiration of the Term or earlier termination of this Lease; provided that notwithstanding the foregoing, Tenant shall be required to remove any and all of Tenant’s personal property and trade fixtures from the Project upon Landlord’s request upon the expiration of the Term or earlier termination of this Lease. Notwithstanding the foregoing, at Landlord’s election, any personal property and/or trade fixtures remaining on the Premises after said sixty (60) day period may be deemed abandoned by Tenant, and title thereto shall automatically vest and become the sole property of Landlord without any payment by Landlord and without any further action or agreement required in connection therewith, including the necessity of bill of sale, deed, conveyance or other act or agreement of Tenant, and without payment of any kind or nature by Landlord to Tenant or to any other Person.
Reserved
Space Leases. Tenant shall cause the obligations under this Section 2.10 to be binding on any Occupants.
Surrender of Premises.
Surrender of Lien Free Title. Unless otherwise provided herein, upon the expiration of the Term or earlier termination of this Lease, Tenant shall deliver possession of the Premises, Improvements, and Project to Landlord, cure all defaults and shall grant and convey all right, title, and interest in the Improvements and Project, and every part thereof, in good and broom clean condition subject to ordinary wear and tear, free and clear of all liens and encumbrances other than (a) those existing at the Effective Date, (b) those created by Landlord, (c) Space Leases still in effect as permitted under the terms of this Lease, and (d) those liens and encumbrances approved in writing by Landlord with the express written agreement of Landlord that such may survive the expiration of the Term or earlier termination of this Lease. This obligation includes the obligation to discharge all liens and encumbrances which may exist upon early termination of this Lease.
Surrender of Fixtures. Tenant’s obligations under this Section 2.11 include the obligation to deliver lien free possession and title to all fixtures attached to the Improvements, as provided above.
Failure to Surrender. If Tenant fails to surrender the Premises, Improvements and Project, or any part thereof, as required hereunder, at the expiration of the Term or earlier termination of this Lease, then Tenant’s indemnity obligations under Section 19.4 shall apply to all Claims resulting from the delay or failure to surrender, including, without limitation, claims made by any succeeding tenant, founded on or resulting from Tenant’s failure to surrender, and any direct damages which the Landlord Parties or Master Landlord Parties may incur.
Survival. Tenant’s obligations under this Section 2.11 shall survive the expiration of the Term or any earlier date of termination of this Lease to the extent any such obligations are not fully performed by the expiration of the Term or any earlier date of termination.
IMPROVEMENTS
General
. Tenant shall design and construct any Improvements upon the Premises in accordance with this Article 3. Without limiting the foregoing, Tenant shall be solely responsible for paying any traffic mitigation, school or park fees, or other assessments or charges which are incurred as a result of the construction of any Improvements.
Schematic Design Package; Financial Plan; Construction Schedule.
To the extent required under any University Policies, prior to the commencement on any Major Improvements, Tenant shall also submit to Landlord, for its review and potential approval which approval shall not be unreasonably withheld, conditioned or delayed, a Schematic Design Package for such Major Improvements which shall (i) comply with all Laws and University Policies, (ii) include a survey of the Premises prepared by a licensed surveyor at Tenant’s sole cost which clearly delineates the location of the proposed Improvements, and (iii) include all other Landlord requirements and all information necessary, if applicable, for preparation and public notice of an agenda item seeking approval of the Schematic Design Package at a duly noticed meeting of the BOT.
Without limiting the foregoing or any other requirements set forth in this Lease, all Improvements shall be designed in such a manner as to be compatible with the Campus, including without limitation the architectural style and overall design features of the Campus.
Landlord shall endeavor to approve or disapprove a Schematic Design Package for Major Improvements (including the related Development Financial Plan and proposed Construction Schedule) within thirty (30) days of receipt thereof. If such Schematic Design Package is disapproved, Tenant may revise and resubmit it until approved by Landlord.
Material changes or modifications to any Landlord approved Schematic Design Package for Major Improvements (including the approved Development Financial Plan and/or Construction Schedule) are subject to Landlord’s prior written consent which consent shall not be unreasonably withheld, conditioned or delayed. Reasonable changes or modifications to the Construction Schedule may be made with notice to Landlord, but without Landlord’s prior written consent; provided that the overall target date for completion does not increase by more than one hundred twenty (120) days.
Notwithstanding anything herein to the contrary, submission of Schematic Design Package or Major Improvement Plans (as hereinafter defined), and Landlords’ review and approval thereof or consent to the commencement or completion thereto, shall not be required in connection with any Improvements which are not Major Improvements; provided, however, that Tenant shall deliver prior written notice to Landlord prior to commencing any Improvements with a total cost of more than $2,500,000, increased as of each anniversary of the Effective Date by the annual change in the CPI Index pursuant to the most recently published CPI Index, which Tenant deems to not be Major Improvements, which notice shall include a description of the proposed Improvements and a basis for Tenant’s determination that such Improvements are not Major Improvements, and which notice shall be delivered at least fifteen (15) calendar days prior to the date upon which Tenant intends to have Commenced Construction with respect thereto.
Timing and Parameters of Landlord Plan Review.
To the extent required under any University Policies, prior to the commencement of any Major Improvements, Tenant shall submit to Landlord, for its review and potential approval which approval shall not be unreasonably withheld, conditioned or delayed, plans for such Major Improvements in a form reasonably determined by Landlord (each, “Major Improvement Plans”). Landlord shall approve or disapprove each set of Major Improvement Plans on or before the date (the “Plan Review Completion Date”) that is thirty (30) days following Landlord’s receipt of such Major Improvement Plans from Tenant. If approved by Landlord, such approval shall be endorsed on the Major Improvement Plans and one (1) set of such documents bearing Landlord’s approval shall be returned to Tenant by the Plan Review Completion Date. If Landlord disapproves any such Major Improvement Plans, Landlord shall use commercially reasonable efforts to notify Tenant prior to the Plan Review Completion Date of Landlord’s reasons for not approving such Major Improvement Plans, whereupon Tenant shall within thirty (30) days after receiving Landlord’s notice of disapproval, cooperate with Landlord to revise and resubmit modified Major Improvement Plans for Landlord’s approval addressing Landlord’s reasons for its prior failure to approve.
Material changes or modifications to any Major Improvement Plans or Final Plans approved by Landlord are subject to Landlord’s prior written consent which consent shall not be unreasonably withheld, conditioned or delayed.
The approval by Landlord of any Major Improvement Plans, shall only be deemed an approval as to their conformity with the requirements of this Lease and shall not be deemed a representation or warranty by Landlord as to the adequacy or sufficiency thereof for any use or purpose. By its approval, Landlord makes no representation that any Major Improvement Plans will satisfy the requirements of any Laws and/or applicable Construction Requirements, and Landlord assumes no liability or responsibility therefor or for any defect in any work performed pursuant thereto.
Permits and Approvals
. Master Landlord acts as the building official and coordinates its building official authority with both the State of California’s Office of the State Fire Marshal (“SFM”) and the Division of the State Architect (“DSA”), as applicable, and coordinates plan review. Tenant is responsible for the costs of all plan review and permitting for all Improvements. Tenant shall be solely responsible for obtaining, at its sole cost and expense, all permits and approvals required for the development, finance, leasing, operation, maintenance, or repair of any Improvements from all requisite governmental authorities (including Master Landlord), and for any issuance or re-issuance of all certificates of occupancy or equivalent permits required by applicable Laws and/or University Policies for the continued use and occupancy of the Premises and Project. Without limiting the foregoing, no work with respect to any Improvements shall be undertaken until Tenant has procured, at its sole cost and expense, all permits and authorizations required by all applicable Construction Requirements for such commencement. Notwithstanding the foregoing, Tenant shall not apply or provide information to any governmental authority for a variance or amendment to any Construction Requirements except with the prior written approval of Landlord which approval shall not be unreasonably withheld, conditioned or delayed, and Tenant shall not submit any environmental impact report or other consultant’s report containing information regarding Master Landlord, the Campus, the Premises, or Master Landlord’s other tenants to any governmental authority without Master Landlord’s prior written approval, which approval shall not be unreasonably withheld, conditioned or delayed. Landlord shall not be obligated to sign (unless required by the Construction Requirements), support or assume any liability under any application or other agreement relating to any permit, license or the like unless otherwise agreed by Landlord and upon terms and conditions reasonably acceptable to Landlord.
Commencement, Prosecution and Completion of Construction.
Intentionally Deleted.
Intentionally Deleted.
Commencement and Completion of Major Improvements. Tenant shall use commercially reasonable efforts to (i) Commence Construction of any Major Improvements by the date set forth in the Landlord approved Construction Schedule for such Major Improvements, (ii) perform such Major Improvements in accordance with such approved Construction Schedule, and (iii) cause the Completion of Construction of such Major Improvements to occur by the Scheduled Completion Date set forth in the Landlord approved Construction Schedule for such subsequent Major Improvements, in each case subject to delays resulting from Force Majeure events, provided that no such extension for any single Force Majeure event shall exceed ninety (90) days, nor shall the aggregate extension for all Force Majeure events exceed one-hundred eighty (180) days. Additionally, Landlord may require Tenant to provide Landlord with a guaranty for any subsequent Major Improvements involving new structures or additional floors to existing Major Improvements prior to the Commencement of Construction thereof.
Conduct of Construction. After Tenant has Commenced Construction of any Improvements, such construction shall be diligently prosecuted so that the affected portion of the Premises shall not remain in a partly finished condition any longer than is reasonably necessary. In no event shall there be a Stoppage of Construction with respect to Major Improvements for a continuous period in excess of ninety (90) days, except to the extent caused by Force Majeure.
Approvals; Cooperation by Landlord. Tenant acknowledges that many of the approvals or consents to be given by Landlord under the Construction Requirements are to be given by, or are subject to approval by, other Landlord Parties. Landlord makes no representation as to whether any required approval or consent may be granted or that any consent or approval granted by Landlord shall indicate that the attendant approval or consent from any other Landlord Party is forthcoming. Landlord shall not be in breach of any obligation under this Lease requiring the consent, approval or other action of another Landlord Party if such consent, approval or other action has not been given or completed within the applicable period set forth herein or in the other Construction Requirements.
Committed Loan Funds & Construction Budget. Tenant shall provide Landlord, prior to Commencement of Construction of any Major Improvements, a final construction budget for the construction of such Major Improvements which includes all anticipated hard and soft costs to be incurred in connection with such construction, together with evidence of funding acceptable to Landlord. If Tenant obtains construction financing from an Institutional Lender for Major Improvements, Tenant shall deliver to Landlord a written commitment to the Landlord from an Institutional Lender stating it holds or will hold loan funds to be disbursed for the payment of the full and complete anticipated cost of the construction of the subject Major Improvements in accordance with the final construction budget. In the alternative, Tenant may provide other evidence of funding reasonably acceptable to Landlord (which acceptable evidence may include, without limitation, copies of the note and security instrument executed in connection with such financing).
Tenant’s Contractor
. All Improvements shall be constructed by a competent general contractor or contractor and subcontractors each duly licensed by the State of California as designated by Tenant and, with respect to Major Improvements, as reasonably approved in writing by Landlord with respect to the general contractor or contractor and subcontractors performing any portion of the work budgeted to cost in excess of five hundred thousand dollars ($500,000) increased as of each anniversary of the Effective Date by the annual change in the CPI Index pursuant to the most recently published CPI Index (each, a “Contractor”). Tenant shall promptly pay the Contractor and all subcontractors and materialmen so as to prevent the initiation of a stop payment notice or a lien from attaching to the Premises or Tenant’s Interest.
Compliance with Construction Requirements
. Tenant shall construct all Improvements in accordance with all Construction Requirements. Upon request of Master Landlord or Landlord, Tenant shall furnish Landlord with copies of all certificates and approvals required by any governmental authority, or reasonably requested by any of Master Landlord’s or Landlord’s underwriters or insurers, in connection with the construction of any Improvements, which copies Tenant shall certify as true, correct and complete. Upon Completion of Construction of Major Improvements, Tenant shall furnish Landlord with a set of “as built” drawings and specifications for such Major Improvements which accurately reflect the nature and extent of such Major Improvements, in form and substance as may be reasonably required by Landlord and at a minimum sufficient to demonstrate that such Major Improvements were constructed in accordance with the approval Final Plans therefor. Tenant shall reimburse Landlord and Master Landlord, respectively, for reasonable costs incurred thereby for inspection services by an inspector designated by Landlord or Master Landlord, as applicable, provided during the course of construction of (i) any Major Improvements, or (ii) any Improvements which are not Major Improvements performed while there is a default by Tenant under this Lease that is continuing or if either Landlord or Master Landlord, as applicable, have a good faith reasonable belief that such Improvements are not in compliance with applicable Laws or the terms of this Lease. Such reimbursement and/or fees shall be payable by Tenant within thirty (30) days after Tenant’s receipt of an invoice therefor.
Design Professionals
. All Improvements (including landscaping portions thereof) which by their nature require engagement of an architect or engineer shall be designed by qualified and duly licensed Design Professionals designated by Tenant and, with respect to Major Improvements, pre-approved in writing by Landlord, which approval shall not be unreasonably withheld.
Encumbrance of Estate
. The Landlord shall not be required to subordinate or subject its leasehold, or any other interest in the Premises for any reason. The Master Landlord shall not be required to subordinate or subject its fee, leasehold, or any other interest in the Premises for any reason. Notwithstanding the foregoing, neither Master Landlord nor Landlord may encumber the Premises or Project with a mortgage or any other financing-related encumbrance; provided, however, that nothing herein shall impair or limit Master Landlord’s right to obtain financing not secured by the Premises or Project, including but not limited to a revenue bond pledge.
Costs of Construction
. Tenant shall bear all costs and expenses associated with construction of all Improvements, which costs and expenses include without limitation: (a) all design, engineering, entitlement, financing and construction costs and expenses (i.e., all “hard” and “soft” costs of construction); (b) all costs, fees and expenses incurred in processing and obtaining all building and other permits and approvals; (c) all school district taxes and development or building fees or assessments; and (d) all impact fees and the cost of mitigation measures resulting from a mitigated negative declaration, environmental impact report, or other CEQA environmental review and certification.
Reserved
.
Reports
. Upon Landlord’s request, commencing from the date of Commencement of Construction of any Major Improvements, Tenant shall provide Landlord with written construction status reports in the form of AIA No. G702 or such other form as may be reasonably required by Landlord, augmented by oral reports when reasonably requested by Landlord.
Insurance
. Tenant shall deliver to Landlord, prior to Commencement of Construction of any Major Improvements (and upon Landlord’s commercially reasonable request, any Improvements which are not Major Improvements), certificates of insurance and copies of endorsements (as applicable) evidencing that Tenant or the applicable Occupant (as applicable) and their respective Contractor have obtained the coverages required under this Lease. Tenant shall maintain, keep in force and pay all premiums required to maintain and keep in force all required insurance at all times during which construction work is in progress.
No Responsibility
. Any approvals by Landlord with respect to any Improvements shall not make Landlord responsible for the Improvements with respect to which approval is given, or the construction thereof.
Notice of Non-Responsibility
. At least ten (10) days prior to Commencement of Construction of any Improvements with a total cost of more than $2,500,000, increased as of each anniversary of the Effective Date by the annual change in the CPI Index pursuant to the most recently published CPI Index, Tenant shall deliver written notice of non-responsibility to Landlord. Landlord may, from time to time, cause to be recorded and posted on the Premises, a notice of non-responsibility in compliance with applicable Laws. Landlord shall not be liable for any mechanics lien or other encumbrances placed on the Premises due to the construction or development thereon. During the course of any construction, Tenant shall obtain customary mechanics’ lien waivers and releases. Upon Completion of Construction of any Major Improvements, Tenant shall record a notice of completion in accordance with applicable Laws.
Liens; Stop Notice.
Tenant hereby acknowledges and agrees that mechanics liens are prohibited from being recorded on the Premises under applicable Laws, and hereby agrees to provide notice thereof to all Contractors, subcontractors, suppliers, and other Persons who provide work or materials to the Premises or the Project. At least ten (10) days prior to the commencement of any “work of improvement” (as defined in California Civil Code Section 8050) on the Premises, Tenant shall provide Landlord with written notice of the intention to commence such “work of improvement” and Landlord shall have the right to enter the Premises in order to post a notice of non-responsibility in accordance with California Civil Code Section 8444. If it is not practicable to provide such notice before commencing work, such written notice shall be immediately given upon commencement. Tenant shall pay or cause to be paid the total cost and expense of all “work of improvement” on the Improvements. No such payment shall be construed as Rent under this Lease.
Tenant shall not permit any mechanic’s, materialmen’s, contractor’s, subcontractor’s or other lien, arising out of Tenant’s use or occupancy of the Premises, Improvements, Project, or any part thereof, to stand against the Premises, Improvements, Project, or any part thereof. If any such lien shall be filed, Tenant shall cause the same to be discharged within thirty (30) Business Days after actual notice of such filing, by payment, deposit or bond. Notwithstanding the prior sentence, if Tenant seeks to extend the pendency of such lien in order to negotiate with the holder thereof, then Tenant is authorized to conduct such negotiations for a period not to exceed onehundred eighty (180) days from the date of the filing of such lien, if Tenant shall have given Landlord prior written notice of its intention to negotiate. Within the thirty (30) Business Day period referred to above, and provided that Tenant shall furnish the release bond required by California Civil Code Section 8424, or any comparable statute hereafter enacted providing a bond freeing the Premises and every part thereof, or take such other action as shall be reasonably acceptable to Landlord to protect the Premises from the effect of such lien. The satisfaction and discharge of any such lien shall not, in any case, be delayed to the date execution is had upon any judgment, rendered thereon, and such delay shall be a default of Tenant hereunder.
With respect to all Improvements, copies of duly executed conditional and final waivers of mechanics’ lien rights shall be provided to Landlord on a monthly basis on the last day of each month for releases executed during such month; provided that with respect to any Improvements which are not Major Improvements, such waivers shall only be provided upon Landlord’s request.
If Tenant (or any Contractor or subcontractor, as applicable) does not cause to be recorded the bond described in California Civil Code Section 8424 (or any successor statute), or otherwise protect the Premises and Project under any alternative or successor statute, and a final judgment has been rendered against Tenant by a court of competent jurisdiction for the foreclosure of a mechanic’s, materialman’s, contractor’s or subcontractor’s lien claim, and if Tenant fails to stay the execution of 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. Upon any such payment by Landlord, Tenant shall immediately, upon receipt of written request therefor made by Landlord, and as Additional Rent, reimburse Landlord for all sums paid by Landlord under this paragraph, together with all Landlord’s reasonable attorneys’ fees and costs, plus interest at the lesser of ten percent (10%) per annum and the maximum allowable legal rate then in effect in California, from the date of payment until the date of reimbursement.
In accordance with Section 19.4, Tenant shall at all times indemnify, defend, and hold the Landlord Parties and Master Landlord Parties harmless and indemnify the Landlord Parties and Master Landlord Parties against all Claims for labor or materials in connection with all construction work, operations, Improvements, alterations, or repairs on or to the Premises.
Assignment
. Tenant shall obtain the written agreement of its Contractors that, in the event that Tenant fails to perform its contract(s) with such Contractor, the Landlord, at Landlord’s election, will be allowed to assume such contract and Contractor will recognize Landlord as the assignee of such contract(s). The form and substance of such agreement shall be subject to Landlord’s reasonable approval.
Standard of Work
. Without limiting any other requirements set forth in this Lease, all of the work with respect to the Improvements shall be designed, constructed and performed in a good, first class and workmanlike manner.
Indemnification
. All contracts and subcontracts relating to Improvements shall provide an indemnity consistent with the specific terms and conditions of Section 19.4 from the Contractor(s) and subcontractors for the benefit of Landlord, the other Landlord Parties, Master Landlord, and the other Master Landlord Parties, with respect to all Claims arising from personal injury, death or property damage resulting from the acts, errors, or omissions of the Contractor(s) and subcontractors.
Prevailing Wages
. With respect to all development and construction activities undertaken by Tenant on the Premises pursuant to this Lease, Tenant represents and warrants that it is aware of the requirements of Labor Code Section 1770 et seq., concerning the payment of prevailing wages. Tenant acknowledges that Tenant shall be independently responsible for reviewing and understanding the applicable Laws with respect to the payment of prevailing wages and, if applicable, complying therewith. Tenant’s indemnity obligations under Section 19.4 shall include any Claims, whether asserted, levied, or claimed by any governmental entity or by a private party, arising from, or which are in any way related to, the failure of any Tenant Party, including without limitation its Contractors or subcontractors, to pay, if applicable, prevailing wages in accordance with applicable Laws.
Space Leases. Tenant shall cause the obligations under this Article 3 to be binding on any Occupants.
LEASE CONSIDERATION
Intentionally Deleted
.
Rent
. Rent shall commence to accrue hereunder on the Rent Commencement Date. Rent for any partial month period shall be prorated and paid with the first monthly payment based on the actual days elapsed. No invoice shall be provided nor shall any invoice be required from Landlord in order for Tenant to be obligated to pay Rent under this Lease.
Place of Payment of Rental
. All Rent payments shall be made in lawful money of the United States of America and shall be paid to Landlord at Landlord’s address as set forth in this Lease or to such other parties and/or to such other address as Landlord may from time to time designate in writing to Tenant.
Net Lease; No Rent Abatement or Reduction
. The Rent set forth in this Lease is established on the assumption that this Lease is and shall constitute an absolutely “NET, NET, NET” lease and that Landlord will not have to pay any expense or incur any liabilities of any kind in any way relating to, or in connection with, the Premises, Improvements, or Project during or attributable to the Term. Accordingly, Tenant will promptly pay all costs of every kind and description relating to or arising out of the Premises, Improvements, and Project, and/or the use thereof during the Term, including, without limitation, all Taxes, utility costs, costs of insurance, repair and maintenance costs, and improvement and replacement costs. Tenant shall not be entitled to any abatement, set off or reduction in Rent due under this Lease.
Other Payments
. Tenant agrees to pay, as Additional Rent, within thirty (30) days after Landlord’s demand therefor, all other amounts and sums which Tenant is obligated to pay or reimburse to Landlord under the provisions of this Lease in addition to Percentage Rent, including those items set forth on Schedule 4.
Interest
. Any Percentage Rent, Additional Rent or other amount payable by Tenant to Landlord under this Lease which is not paid when due shall bear interest at the rate which is the lesser of ten percent (10%) per annum and the maximum rate allowed under applicable Laws until paid.
Late Charges
. Tenant acknowledges that the late payment of any Rent will cause Landlord to lose the use of such money and incur costs and expenses not contemplated under this Lease, including, without limitation, administrative and collection costs and processing and accounting expenses, the exact amount of which is extremely difficult to ascertain. Therefore, if any installment of Rent is not paid within ten (10) calendar days after the due date for such Rent payment, then Tenant shall thereafter pay to Landlord on demand a late charge equal to three and one-half percent (3.5%) of the amount of any installment of Rent not paid on the due date plus interest as provided in this Lease. Landlord and Tenant agree that this late charge represents a reasonable estimate of such costs and expenses and is fair compensation to Landlord for the loss suffered from such nonpayment by Tenant.
Rates and Benefits. Tenant shall at all times ensure, and shall cause all Occupants to ensure, that all fees and other charges charged to Master Landlord and the Master Landlord Parties at the Premises (provided that Master Landlord and/or the Master Landlord Parties, as applicable, identify themselves as such to the property manager of the Premises), including but not limited to hotel and parking rates, are the lowest then-offered fees and charges charged to governmental entities, subject to hotel’s availability. For the avoidance of doubt, the benefits described in this Section 4.8 shall only apply to individuals and groups functioning in their official capacity as employees or officers of Master Landlord, the BOT, the Campus, any Master Landlord or Campus auxiliaries, and shall not apply to students, contractors or any other party who would not generally be considered a governmental employee or entity.
USE
Use of Premises
. Tenant shall use the Premises, and shall cause all Persons using or occupying any part of the Premises to use the Premises, solely for the Permitted Use and for no other use whatsoever without the prior written consent of Landlord in its sole and absolute discretion. Tenant shall ensure that the Improvements and Project shall at all times be constructed, maintained and operated only in a manner consistent with the Construction Requirements. To the extent it is commercially reasonable to do so, Tenant shall consider providing internships for students of the Campus, shall consider participating in Campus career day presentations, and shall consider other forms of collaboration with the Campus community.
Changed Use
. If Tenant uses or permits the use of any portion of the Premises or Project for any purpose other than the Permitted Uses, or if the use of all or any portion of the Premises or Project materially changes at any time during the Term of this Lease in a manner which is inconsistent with the requirements set forth in this Lease, and should such change not be approved in writing by Landlord, such change in use shall constitute an Event of Default hereunder and, subject to the applicable terms of this Lease, Landlord may terminate this Lease if such use is not terminated within thirty (30) days following written notice from Landlord, upon delivery of written notice to Tenant following the expiration of such thirty (30) day period and exercise all other rights and remedies hereunder. Upon delivery of such notice, all right, title and interest to the Premises, including the Improvements, shall vest solely in Landlord, without further cost or expense to Landlord, subject only to rights of any Subleasehold Mortgagee as provided in Article 14.
Waste; Nuisance
. Tenant shall not use or permit any other Person to use the Premises, Project, or any part thereof, nor allow any Person access for any use, which constitutes a waste or nuisance. Tenant further agrees at all times during the Term, at its sole cost and expense, to do all things necessary to maintain the Premises and Project in good, clean and sanitary condition and repair.
General Environmental Requirements
. Tenant shall not use, nor permit the use by any other Person of any Hazardous Substance in the construction, use, operation or renovation of the Premises, Improvements, or Project in violation of any applicable Law or in quantities requiring reporting or notice to any Environmental Agency, including, without limitation, any use, storage, handling, maintenance, release, emission, discharge, disposal, generation, abatement, disposition or transportation of any Hazardous Substance from, on or otherwise relating to the Premises, Improvements, or Project in violation of any applicable Law, or in quantities requiring reporting or notice to any Environmental Agency. Tenant shall, at its own cost and expense, comply, and direct and use commercially reasonable efforts to cause all other Tenant Parties, the Occupants, and its licensees and/or concessionaires to comply with all applicable Laws and University Policies relating to any Hazardous Substance, including, without limitation, obtaining and filing all applicable notices, permits, licenses and similar authorizations. Should Tenant use or permit the use by any other Person of any Hazardous Substance in quantities requiring reporting or notice to any Environmental Agency, Tenant shall provide, and direct and use commercially reasonable efforts to cause such other Person to provide, any required notice to the appropriate Environmental Agency and simultaneously send a copy of such notice to Landlord. Tenant shall establish and maintain a policy to assure and monitor continued compliance by Tenant and all others occupying space in the Project with all such Laws and the terms and conditions of this Lease relating to Hazardous Substances. Tenant shall not use, nor shall Tenant permit any other Person (including, without limitation, any Occupants) to use, the Premises, Project, or any part thereof, for or in a manner which results in any Release, emission, disposal, use or storage of any Hazardous Substance in violation of, or in excess of reportable quantities pursuant to, applicable Laws.
Environmental Remediation and Indemnification.
Hazardous Substances. Tenant shall, at its sole cost and expense, promptly take all actions necessary to investigate any actual, threatened or suspected presence of Hazardous Substances on the Premises and/or any Release, and shall, to the extent necessary to comply with applicable Laws and University Policies, Remediate any actionable level of Hazardous Substances discovered or Released and all portions of the Premises affected by such Hazardous Substances and all other property affected by such Hazardous Substances (whether such property is part of the Premises or not if such Hazardous Substances are emanating from the Premises), in compliance with all applicable Laws, and shall take all reasonable action necessary to stop any threatened or suspected Releases from becoming actual Releases. It shall be the responsibility of Tenant to Remediate all Hazardous Substance conditions on the Premises, at Tenant’s sole cost and expense. Any Hazardous Substance investigation and/or Remediation required under this Lease shall be completed to the satisfaction of any Environmental Agency asserting jurisdiction or acting as lead agency with respect to that Release or those Hazardous Substances giving rise to such investigation and/or Remediation, which satisfaction may be evidenced by a “no further action” letter, certificate of completion or their legal equivalent, issued by such Environmental Agency asserting jurisdiction or acting as lead agency. Tenant, when undertaking any Remediation, shall provide any bonds or financial assurances reasonably required by Landlord to assure completion of such Remediation, and shall perform all Remediation in compliance with applicable Laws, University Policies, the directives and requirements of all applicable Environmental Agencies, and the reasonable requirements of Landlord. Tenant shall promptly provide Landlord with copies of all notices and other correspondence to or from any Environmental Agency with respect to Hazardous Substances at the Premises or Project, and shall also, promptly upon receipt by Tenant, provide Landlord with copies of (a) all results (including all technical data and laboratory reports) of any sampling and any analytical tests completed as part of any investigation of Hazardous Substances or Remediation, (b) all evaluations, technical data and analyses, reports, copies of manifests, and weigh tickets from a landfill, or other repository for any removed contaminated soil or other Hazardous Substances, and recommendations of Tenant, its agents or contractors relating to environmental conditions in, on, or under the Premises, and (c) all plans, permits, registrations, approvals, orders, notices (including notices of violation and notices to comply), inquiries, directives, guidelines, standards, reports (routine and non-routine), and other correspondence submitted to or received from, any Environmental Agency regarding the Premises, and investigation of Hazardous Substances, or Remediation.
Tenant Indemnification. Without limiting Tenant’s obligations above in this Section 5.5, and in addition to any other indemnities in favor of Landlord, any other Landlord Parties, Master Landlord, or any other Master Landlord Parties set forth in this Lease, Tenant shall indemnify, defend, protect and hold the Landlord Parties and the Master Landlord Parties harmless from and against any and all Claims arising directly or indirectly from any breach of Section 5.4 or Section 5.5 by Tenant, including any Hazardous Substance conditions on the Premises or any Release which occurs during the Term, except to the extent caused by or arising out of the gross negligence or willful misconduct of Landlord, any Landlord Parties, Master Landlord, or any Master Landlord Parties. The foregoing indemnity includes, without limitation, Remediation of any kind as a result of Hazardous Substance conditions on the Premises or any Release from the Premises which occurs during the Term (including disposal of any Hazardous Substance), and any Master Landlord Party’s or Landlord Party’s reasonable consultants’ fees and charges, attorneys’ fees (but excluding fees and charges for any in-house counsel) and charges, investigation costs and expenses and other similar costs and expenses reasonably incurred by any Landlord Party or Master Landlord Party.
Survival. The obligations of Tenant under this Section 5.5 shall survive the expiration of the Term or earlier termination of this Lease.
Compliance with Government Regulations
. Tenant shall, at its sole cost and expense, at all times during the Term, conform to, and direct all Persons using or occupying any part of the Premises or Project to comply with all Laws and University Policies from time to time applicable thereto, including, without limitation, all Laws and University Policies relating or applicable to the Premises, Project, or the use and ownership thereof. Tenant hereby agrees that its indemnity obligations under Section 19.4 shall include all Claims imposed and/or incurred by any Landlord Party as a result of any violation of Laws or and University Policies by Tenant or any other Tenant Party.
Evidence of Compliance
. Tenant shall provide to Landlord, upon Landlord’s request, but in no event more than one (1) time per calendar quarter, and at Tenant’s expense, copies of documents and such other evidences as are normally and customarily issued by governmental authorities with jurisdiction over the Premises and Project to demonstrate proof of compliance with all Laws and University Policies pertaining to permits and authorizations relating to the Premises generally and to the Improvements and Project specifically.
Landlord’s Rules and Regulations
. Tenant agrees to be bound by and comply in all material respects with all policies, procedures and regulations promulgated by Landlord from time to time and relating to the Premises and/or Project, provided that (i) the same do not unreasonably interfere with Tenant’s use of the Premises for the Permitted Uses; and (ii) Landlord shall not enforce such policies, procedures, or regulations in a discriminatory manner.
Advertising and Signs
. Tenant shall not place or allow to be placed any sign on any portion of the Premises and/or Project that does not conform to the approved signage and graphic program set forth in the Construction Requirements. Tenant shall not place, construct or maintain on the glass panes or supports of the windows of the Improvements, the doors, or the exterior walls or roofs thereof or any interior portions thereof that may be visible from the exterior of the Improvements, any signs, advertisements, names, insignia, trademarks, descriptive material, or any other similar item, except for such items which have been authorized, either specifically or generally in writing by Landlord, subject to and in accordance with all applicable Laws, University Policies, and the applicable terms and conditions of this Lease, including without limitation the Naming Rights Restrictions. Landlord, at Tenant’s cost (to be reimbursed as Additional Rent), may remove any item placed, constructed, or maintained that does not comply with the provisions of this Section 5.9. Tenant shall not under any circumstances place, construct or maintain, or allow to be placed, constructed or maintained, on the Premises and/or Project any advertising media, including, without limitation, searchlights, flashing lights, loudspeakers, phonographs, or other similar visual or audio media. Tenant shall not otherwise solicit business in, on, or about the exterior of the Improvements unless directly related to the Permitted Use. This paragraph is subject in all events to the Naming Rights Restrictions set forth below. Notwithstanding the foregoing, any use of advertising or signage by Tenant in connection with the ordinary course of operation of the Project is permitted without Landlord consent, but subject to the Naming Rights Restrictions set forth below.
University Name
. In addition to the Naming Rights Restrictions set forth below, the Tenant shall not have or acquire any property right or interest in the name of the Master Landlord, Landlord or to “California State University, Fullerton,” “Titans” or “CSUF,” or any related name or any permutation thereof that may imply any connection of Tenant or the Project with the Master Landlord, Landlord and/or Campus.
Tenant/Landlord Program Collaboration
. Tenant recognizes and agrees that it is important to Master Landlord and Landlord that Tenant reasonably endeavor to find mutually acceptable forms of collaboration with the Campus community. Tenant agrees to meet and confer with Landlord and Master Landlord regarding potential opportunities for collaboration with the Campus community.
Liquor Sales, Permits and Licenses
. If and to the extent the Permitted Use allows Tenant or any Tenant Party to sell alcoholic beverages at the Project, then in addition to all of Tenant’s other obligations under this Lease, and without limiting such obligations, Tenant shall strictly comply with the limitations set forth in this Lease or otherwise reasonably imposed by Landlord thereon, and shall comply with all applicable Laws and University Policies relating thereto, at Tenant’s sole cost and expense, including without limitation obtaining one or more licenses from the Department of Alcoholic Beverage Control of the State of California to serve beer, wine and spirits at the Project and all permits and licenses required by Master Landlord. Landlord shall use commercially reasonable efforts to support Tenant's application for such license; provided, however, the scope and content of such license shall be subject to the reasonable approval of Landlord and all University Policies which approval shall not be unreasonably withheld, conditioned or delayed. Without limiting the foregoing, Tenant shall not interfere with or oppose in any way efforts by Landlord, or other tenants, lessees, or licensees of Landlord, to obtain alcoholic licenses for service of alcoholic beverages at venues located at the Campus.
OPERATION AND MAINTENANCE
Standards of Operation
. Tenant shall continuously (except for reasonable interruptions during repairs, maintenance, renovations, due to casualty or condemnation and/or due to events of Force Majeure) and diligently during the Term operate, or cause the Project to be operated for the Permitted Use, in a first class manner, and as otherwise required by this Lease.
Maintenance and Repair
. At all times during the Term, Tenant shall, at its sole cost and expense, keep and maintain, or cause to be kept and maintained, all parts of the Premises and Project in a condition of Comparable Projects, subject to ordinary wear and tear. Such obligations shall include, without limitation, the obligation to maintain all Improvements in a clean, sanitary, neat, tidy, orderly and attractive condition. All maintenance and repair work, including replacements, betterments, upgrades, installations, and improvements of any kind, shall comply in all material respects with all applicable Construction Requirements.
Management and Operation of the Premises and Project
. Tenant shall be responsible for overall management and control of the Premises and Project as a first-class property. Tenant shall perform its obligations under this Section 6.3, or cause them to be performed, in a manner which demonstrates managerial skill, knowledge, judgment and practice which is standard for the management of Comparable Projects. Tenant acknowledges Landlord’s concern that, because the Improvements are located on real property owned and/or leased by Landlord or another Landlord Party, they must be operated, maintained and managed in first-class condition, and that Landlord, in agreeing to the terms of this Lease, is relying on the expertise, experience and reputation of Tenant, and its constituent partners, officers and directors, to cause the Project to be operated, maintained, and managed in said first class condition. Tenant shall perform or cause to be performed, at its expense, first class management services for the Project, at a minimum consistent with Comparable Projects, and in all events including, without limitation, the following:
use of best efforts to manage, operate and maintain the Premises and Project in a first-class condition; to the extent employed by or under the control of Tenant, supervision, hiring and discharge of all personnel employed at the Premises and Project, including use of reasonable care in the selection of such employees; procurement and maintenance of adequate workers’ compensation insurance covering all of the aforesaid employees, preparation, maintenance, and filing of all legally required statements and reports pertaining to labor employed in or about the Premises and Project, and provision of all bookkeeping and clerical services with respect to all personnel employed at the Premises and/or Project; payment of all Taxes and other charges applicable to the use of the Premises and/or Project; arrangement of contracts for electricity, gas, water, steam, telephone, cleaning, window cleaning, vermin extermination, elevator, escalator and boiler maintenance, air conditioning maintenance, security and any other services as are customarily provided in Comparable Projects, and arrangement for purchase of all materials and supplies necessary to maintain and operate the Premises and/or Project in accordance with the requirements of this Lease; arrangement for the provision of services and facilities of any maintenance engineering department that Tenant or its Affiliates may have in connection with the operation of all mechanical installations; rendering of customary financial statements on a quarterly and yearly basis, and in connection therewith maintenance of customary industry reporting systems; and if Tenant should hire a property manager for the Project (whether an Affiliate or third party (including, without limitation, a hotel franchisor acting as property manager)), Tenant shall cause such property manager to have appropriate experience in the operation and management of Comparable Projects and, without Landlord’s consent, such property manager (i) shall not have been found liable in a civil proceeding for fraud, embezzlement, bribery, forgery, money laundering, extortion, racketeering, corruption, Ponzi schemes, conversion, espionage, or terrorist actions, (ii) shall not have been convicted in a criminal proceeding for a felony or any crime involving fraud, embezzlement, bribery, forgery, money laundering, extortion, racketeering, corruption, Ponzi schemes, conversion, espionage, or terrorist actions, (iii) shall not be an organized crime figure or reputed (based upon reputable media reports) to have substantial business or other affiliations with an organized crime figure, or (iv) shall not directly or indirectly control, be controlled by, or be under common control with a Person that has been convicted in a criminal proceeding for a felony or any crime involving fraud, embezzlement, bribery, forgery, money laundering, extortion, racketeering, corruption, Ponzi schemes, conversion, espionage, or terrorist actions, or a Person that is an organized crime figure or is reputed (based upon reputable media reports) to have substantial business or other affiliations with an organized crime figure during the five (5) year period immediately prior to the proposed hiring date. No such agreement with a property manager to provide the services described in this Section 6.3 shall release Tenant from any obligation under this Lease.
If, in Landlord’s reasonable determination, the Project is not being managed in a manner consistent with the requirements of this Lease, then Landlord shall provide Tenant with written notice identifying the applicable management deficiencies (the “Property Management Notice”). After receipt of a Property Management Notice the parties shall meet and confer in good faith to address the issues or deficiencies set forth in such Property Management Notice. Tenant shall promptly and with commercially reasonable diligence proceed to remedy and cure the violations identified in the Property Management Notice.
Specific Tenant Obligations
. Without limiting the provisions of Section 6.3 above, Tenant shall:
assure that any Contractor performing work on the Premises maintains insurance in accordance with the requirements of this Lease; supervise, or caused to be supervised by its manager, all matters coming within terms of this Article 6, including, without limitation, direct observation, inspection and supervision of all repairs, decorations, alterations and Improvements during the progress thereof; and obtain the necessary receipts, releases, waivers, discharges and assurances to keep the Premises and Project free from mechanics’ and materialmen’s liens and other claims.
Requirements of Government Agencies
. At all times during the Term, Tenant at its own cost and expense, shall:
make (subject to Article 3, Article 9, and all other applicable terms and provisions of this Lease) all Improvements to the Premises and every part thereof, required by applicable Laws and/or University Policies now or hereafter in effect; and indemnify Landlord and Master Landlord, pursuant to the terms and conditions of Section 19.4, for any and all Claims resulting from Tenant’s failure to comply with and perform the requirements of this Article 6.
Meetings to Discuss Upkeep of Improvements. At least annually, a senior member of the facilities management personnel of both parties will endeavor to meet to discuss plans for the long-term maintenance, repair, and replacement of the Improvements and all other components of the Project, and each party will consider in good faith the suggestions of the other party with respect to ongoing maintenance, repair, and additional Improvements.
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Tenant’s Books and Records
. Tenant shall keep or cause to be kept at its place of business or at the Premises all documents, books and records related to (i) the construction of all Improvements, (ii) the operation, maintenance, and repair of the Improvements, and (iii) the operation of the Project and all rents and other revenues generated therefrom, including, without limitation, all accounting books and record. The books and records of Tenant shall reflect all Tenant’s material transactions related to the Premises and Project, shall be appropriate and adequate in all material respects for the business operated on the Premises and shall be kept according to good, sound, customary, conventional, and generally accepted accounting business practices and principles. The books and records of Tenant shall also include all state and local tax returns of Tenant relating to Tenant's ownership and/or operation of the Project. All of said books and records shall be retained by Tenant for not less than five (5) years after the expiration of the calendar year to which such books and records relate. Tenant’s documents, books and records (including, without limitation, copies of Tenant’s state, and local income tax or information returns and reports, if any, for the three most recent taxable years) shall be open to inspection, copying and audit by Landlord or its representatives during business hours and upon five (5) Business Days advance written notice. Without limiting any of other Landlord’s rights under this Lease or under applicable Laws, Landlord and Tenant acknowledge and agree that Landlord may exercise its rights pursuant to this paragraph to review and inspect Tenant’s documents, books and records related to the construction, operation and maintenance of the Improvements for the purpose of verifying the accuracy and validity of certain payments that may be due to Landlord under this Lease, including, without limitation, any Additional Rent payments required under Schedule 4.
Entry of Premises by Landlord
. A representative of Landlord may enter the Premises and Project, including the Improvements, during normal business hours upon reasonable prior written notice of at least forty-eight (48) hours for the purpose of inspection, subject to Tenant’s reasonable requirements as to security. Landlord shall give Tenant prior written notice of such entry except in the case of an emergency, and at Tenant’s election, unless an emergency, Landlord shall be accompanied by a representative of Tenant.
Space Leases. Tenant shall cause the obligations under this Article 6 to be binding on any Occupants.
TAXES
Payment of Taxes
. Tenant will pay all Taxes prior to the delinquency date thereof. Tenant’s obligation to pay Taxes includes, without limitation, the obligation to pay all Taxes of any kind and nature whatsoever, levied by the State of California, the government of the United States, or any agency or subdivision thereof, or any other governmental body or assessment district, during or with respect to the Term, whether or not now customary or within the contemplation of the parties hereto and regardless of whether the same shall be foreseen or unforeseen, similar or dissimilar to any of the foregoing. Landlord specifically calls to Tenant’s attention the fact that this Lease may create a possessory interest subject to property taxation, and Tenant may be subject to Taxes levied on such interest pursuant to applicable Laws. If the right is given to pay any of the Taxes which Tenant is herein obligated to pay either in one sum or in installments, Tenant may elect either mode of payment. Nothing in this Lease, including without limitation the definition of Taxes, the provisions herein obligating Tenant to pay Taxes, and/or the provisions which allow Landlord to pay Taxes on Tenant’s behalf should Tenant fail to do so as and when required under this Lease, shall be construed in any way as waiving or otherwise limiting Master Landlord’s sovereign immunity and/or any applicable exemption from any and all such Taxes.
Landlord Indemnified and Held Harmless
. Tenant agrees that its indemnity obligations under Section 19.4 includes any Claims related to the payment of Taxes. Subject to the provisions of this Article 7, Tenant will prevent any Taxes from becoming a delinquency lien upon the Premises, Project, or any part thereof. Landlord shall in no way be obligated to pay such delinquent Taxes, but Tenant authorizes Landlord to make such payment unless the same are being contested in accordance with Section 7.3, and, if Landlord makes such payment, it will become Additional Rent that is immediately due and payable to Landlord by Tenant and shall bear interest and late charges at the rates provided for in Article 4.
Tenant’s Right to Contest
. Tenant shall have the right, at its own cost and expense, to contest the amount or validity of any Taxes by appropriate proceedings diligently conducted in good faith. As a condition precedent to Tenant’s contesting any Taxes, Tenant shall (a) comply with all Laws respecting such contest, and (b) give Landlord prior notice of Tenant’s intent to so contest said amount or validity. Following such contest, Tenant covenants to promptly pay all due Taxes and related penalties, and further covenants to reimburse Landlord and Master Landlord for any out of pocket costs or expenses incurred by Landlord and Master Landlord, respectively, as a result of such contest. Tenant shall bear any and all costs, liability or damage, including attorneys’ fees and costs arising out of such contest. Landlord shall, at no cost to Tenant, provide to Tenant any and all information in Landlord’s possession regarding the Premises that Tenant may consider necessary or helpful in contesting the validity or amount of any Taxes. Nothing in this section relieves, modifies or extends Tenant’s covenant to pay any such Taxes at the time and in the manner provided in this Article 7.
Prorations
. Taxes shall be prorated at the beginning and end of the Term to reflect periods during tax fiscal years at the commencement and expiration (or sooner termination) of this Lease for which said Taxes are paid during which this Lease is not in effect.
Personal Property Taxes
. Tenant shall pay, or cause to be paid, before delinquency, all Taxes levied against, or on account of, all fixtures, equipment and personal property located in or upon the Premises or Project.
Separate Assessment
. Landlord and Tenant shall cooperate to the extent necessary to obtain a separate assessment and tax bill for the Premises and Project.
Change in Method of Taxation
. If at any time during the Term the basis of taxation prevailing at the commencement of the Term shall be altered so that any Taxes become levied, assessed or imposed on rents, a license fee measured by rents, a so-called “value added tax,” or any other tax in lieu of or fee resulting from a revision of present Laws relating to Taxes, then the same shall be included within the meaning of “Taxes” and shall be the responsibility of Tenant hereunder.
UTILITIES
Cost of Utilities
. Tenant will pay before delinquency all charges for any and all utilities furnished to the Premises, including, but not limited to, water, electricity, gas, telephone and other transmissions and sewage disposal. Landlord will not be liable for any failure of or interruption in any utility servicing the Premises and no such failure or interruption will excuse Tenant from the payment of rental or other amounts payable by Tenant or the performance of any of Tenant’s obligations under this Lease.
Utility Easements
. Landlord has the right to grant to others (or itself) nonexclusive utility easements over, under, through, across, or on the Premises in locations that will not unreasonably interfere with Tenant’s use of the Premises for the Permitted Use.
DAMAGE OR DESTRUCTION
Damage or Destruction of Improvements.
Reconstruction After Casualty. If, during the Term, the Improvements are wholly or partially damaged or destroyed (whether or not such casualty is covered by insurance, or required to be covered by insurance under the terms of this Lease), and such damage or destruction is reasonably expected to exceed $1,000,000 (such amount to be increased as of each anniversary of the Effective Date by the annual change in the CPI Index pursuant to the most recently published CPI Index) to repair or restore, Tenant shall promptly give written notice of such damage or destruction to Landlord. Except as provided in Sections 9.1.2, such damage or destruction shall not terminate this Lease, and Tenant shall promptly repair and restore the Improvements to substantially the same floor area, size, type, quality and nature as existed immediately prior to such damage or destruction unless Landlord gives its prior written approval to do otherwise. Tenant shall utilize any available insurance proceeds to fund the costs of such repair and restoration and to the extent insurance proceeds do not cover such costs, all further costs shall be at Tenant’s sole cost and expense. Such repair and restoration shall be commenced promptly and prosecuted with due diligence, in accordance with all applicable terms and conditions of this Lease relating to the permitting and construction of Improvements, including the terms and conditions of Article 3. If the Improvements are not repaired and restored and if this Lease is terminated, each with the consent of Landlord or as provided in Sections 9.1.2, then any insurance proceeds shall be applied as follows and in the following order of priorities:
First, insurance proceeds shall be applied towards demolition and removal expenses which may be incurred by Tenant, or, upon Tenant’s failure, Landlord.
Second, insurance proceeds shall be applied to payment of the principal amount, and accrued interest then owing to a Subleasehold Mortgagee, to the extent that such principal or accrued interest is not in default as of the date this Lease is terminated.
Third, all remaining insurance proceeds shall be allocated between Landlord and Tenant as follows:
the Tenant shall be allocated a portion of such remaining insurance proceeds equal to a fraction thereof, where the numerator of such fraction is the number of complete months remaining under the Term of the Lease and whose denominator is the total number of complete months in the Term; and the Landlord shall be allocated all remaining insurance proceeds not allocated to the Tenant pursuant to subparagraph (1) above.
Damage or Destruction in Last Five Years of the Term. During the last five (5) years of the Term, Tenant may elect not to repair or restore the Improvements as otherwise required by this Article 9 and terminate this Lease (x) if such damage or destruction materially impacts more than thirty percent (30%) of the rentable square footage of all Improvements or (y) the cost to repair such damage or destruction would exceed thirty percent (30%) of the fair market value of the Improvements immediately prior to such damage or destruction. If Tenant makes such an election not to repair or restore the Improvements and terminate this Lease, Tenant shall automatically and unconditionally pay all insurance proceeds to Landlord, which shall be applied as set forth in Section 9.1.1 above. Landlord may, following such termination, elect to direct Tenant to use the insurance proceeds plus, as necessary, any portion of the balance to be paid by Tenant to Landlord to demolish the Improvements, remove all debris and grade and clean the Premises in which case Landlord shall retain all remaining insurance proceeds, if any, plus the remaining portion of Tenant’s contribution of the balance not covered by insurance proceeds.
Restoration Work
. All construction and other work relating to repairing any damage or destruction to any Improvements shall be undertaken in a lien-free and good and workmanlike manner, in strict conformity with all applicable Construction Requirements, including without limitation the requirements of Article 3.
Statutory Waiver
. The provisions of this Lease, including this Article 9 and the applicable provisions of Article 10, constitute an express agreement between Landlord and Tenant with respect to any casualty which damages all or any part of the Premises, Improvements or any other portion of the Project, and no statute or regulation, including Sections 1932(2) and 1933(4) of the California Civil Code and any other statute or regulation, now or hereafter in effect, which purports to set forth the parties’ rights and/or obligations with respect to casualty damage or destruction in the absence of an express agreement, shall have no application to this Lease.
INSURANCE
Insurance Requirements
. Tenant agrees, at its sole cost and expense, to obtain the insurance coverages in the manner and amounts as set forth in Schedule 10, attached hereto, and shall provide to the Landlord promptly following the Effective Date a certificate or certificates of insurance and endorsements evidencing such coverage in accordance with Schedule 10. Tenant shall maintain such insurance coverages at all times during the Term, and will not make any material modification or change from the specifications of this Lease without the prior written approval of the Landlord which approval shall not be unreasonably withheld, conditioned or delayed. The obligation to provide the required insurance coverages is a nondelegable duty of Tenant under this Lease.
Escrow of Casualty Insurance Proceeds
. All proceeds (other than proceeds pursuant to business interruption policies) paid under insurance policies in excess of $1,000,000.00 maintained with respect to a casualty affecting the Premises or Improvements shall be paid to an account maintained by a third party escrow company to be disbursed (a) in the course of completion of the repairs and/or reconstruction to the damaged Improvements, pursuant to funds requests executed by both Landlord and Tenant to pay for goods and/or services provided in connection with such repairs and/or reconstruction, including, if applicable, Rent payments to Landlord (it being understood and agreed that Tenant’s requests for funds, and Landlord’s prompt execution of such funds requests, shall not unreasonably be submitted or denied), and (b) thereafter, outright to Tenant as Tenant’s property. The requirements in the loan documents of any Subleasehold Mortgage regarding use of such insurance proceeds shall prevail over this Section 10.2 provided such proceeds are to be used for repair and/or reconstruction to the damaged Improvements. Nothing in this Section 10.2 shall require use of insurance proceeds to repair or replace damaged Improvements where only demolition or removal is required pursuant to Article 9 above.
Tenant Not Relieved
. It is expressly understood that the coverage required under this Lease, and acceptance of any certificates of insurance by Landlord, shall not in any way limit the liability of Tenant or any Contractor under this Lease. Any deductible under any policy of insurance required hereunder shall be Tenant’s liability.
Additional Insureds
. Coverages referred to in this Article 10 (except Worker’s Compensation) shall name Master Landlord, Landlord, the State of California, the BOT, Campus auxiliaries, any other parties reasonably designated by Landlord or Master Landlord (including without limitation those Persons listed on Schedule 10), and each of their respective officers, employees, representatives, agents, and volunteers as additional insureds and shall not exclude such additional insureds from coverage with respect to the negligent acts or omissions of Tenant, any other Tenant Party, or their respective officers, agents, employees, contractors, subcontractors, or representatives. Such additional insureds shall not by reason of their inclusion as additional insureds incur liability to the insurance carriers for payment of premiums for such insurance.
Proceeds
. The proceeds from any insurance covering damage to property shall be applied as set forth in Section 9.1 and Section 10.2 above.
Waiver of Subrogation Rights
. Each policy of insurance procured pursuant to this Article 10 shall contain either (a) a waiver by the insurer of the right of subrogation against either party hereto for negligence of such party, or (b) 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 described in the insurance policy. Tenant hereby waives any and all rights of recovery against Landlord, the other Landlord Parties, Master Landlord, the other Master Landlord Parties, and all employees, faculty and students, for loss or damage to Tenant or its property or the property of others arising from any cause insured against under the policies required to be carried by this Article 10. In consideration of Tenant’s property insurer’s waiver of all rights of subrogation against Landlord and the other Landlord Parties and Master Landlord and the other Master Landlord Parties, Landlord agrees likewise to waive, or arrange for its property insurers to waive, any right of subrogation against Tenant by reason of loss of or damage to real or personal property of either Landlord or Tenant.
Compliance with Requirements of Carriers
. Tenant shall at all times observe and comply in all material respects with the requirements of all policies of insurance in force with respect to the Premises and Project, or any party thereof, and Tenant shall so perform and satisfy the requirements of the companies writing such policies so that, at all times, companies of good standing reasonably satisfactory to Landlord shall be willing to write or to continue such insurance. Tenant shall, in the event of any violation or attempted violation, of the provisions of this paragraph by any Occupant, licensee or other user of any portion of the Premises take steps immediately upon knowledge of such violation or attempted violation to remedy or prevent the same.
Non Contributing
. All insurance required to be carried by this Article 10 shall be primary to, in excess of, and noncontributing with any insurance carried by any of the named or additional insureds under said policies.
Termination Notice/Form of Policies
. In no event will such insurance be terminated or otherwise allowed to lapse prior to termination of this Lease, or such longer period as may be specified herein. Tenant may provide the insurance required by this Article 10 in whole or in part through a policy or policies covering other liabilities and properties of Tenant, provided that any such policy or policies shall allocate to the Premises and Improvements the full amount of insurance required hereunder. Tenant’s policies shall (x) provide that the issuers thereof shall give written notice to Landlord if the issuers thereof elect not to renew such policy thirty (30) days prior to its expiration and (y) not be cancelled without at least thirty (30) days’ written notice (ten (10) days for termination due to nonpayment) to Landlord and any other party named therein as an insured. Tenant shall upon Landlord’s written request provide Landlord with sufficient proof of renewal or replacement coverage meeting the requirements of this Lease.
Evidence of Insurance; Tenant Failure
. Upon Landlord’s written request, Tenant shall provide Landlord with certificates or other evidence of insurance satisfactory to Landlord evidencing the maintenance of insurance required to be carried by this Article 10. Should any policy of insurance expire or be canceled and Tenant fails immediately to procure replacement insurance as required by Article 10, or if Tenant does not otherwise comply with the insurance requirements of this Lease, then in addition to all other rights and remedies of Landlord, the Landlord shall have the right, but not the obligation, to procure the required insurance and to receive payment from Tenant for the full cost thereof as Additional Rent hereunder. In addition, such failure shall be an Event of Default by Tenant under this Lease if such failure is not cured within thirty (30) days following the lapse of such insurance coverage.
Settlement of Claims
. Provided no Event of Default exists under this Lease, if any portion of the Improvements shall be damaged or destroyed by an insured peril or otherwise, Tenant shall have the right to settle, adjust or compromise any claim; provided if as a result of a casualty the Tenant has the right to terminate this Lease under Article 9, then no settlement of claims shall be made without Landlord’s prior written approval.
Review of Insurance Requirements
. Landlord shall have the right to review the insurance requirements set forth in this Article 10 and in Schedule 10 on the date that is seven (7) years after the Effective Date, and every seven (7) years thereafter during the Term, and with written notice to Tenant may make any necessary adjustments, in Landlord’s reasonable discretion, to ensure Tenant’s insurance coverage is consistent with industry standards for Comparable Projects; provided in all events the Tenant shall maintain insurance in full compliance with all applicable University Policies, as the same may change from time to time during the Term. Such rights shall include, without limitation the right to add additional coverages/policies and to increase the minimum amount of such policies as long as such adjustments are consistent with industry standards for Comparable Projects. If Landlord exercises such rights the parties will execute a simple amendment to this Lease to modify and/or replace this Article 10 and/or Schedule 10 as applicable.
CONDEMNATION
Notice; Lease Governs
. Upon any party receiving notice of or becoming aware of any eminent domain or condemnation proceedings, or possibility thereof, such party shall promptly give written notice to the other party in the manner specified in this Lease. In the event of any Taking during the Term, the rights and obligations of the parties with respect to such appropriation and any Award in connection therewith shall be provided in this Article 11, and Tenant hereby waives any and all rights it might otherwise have pursuant to Section 1265.130 of The California Code of Civil Procedure.
Termination of Lease
. In the event of a Total Taking, this Lease shall terminate effective on the date of surrender of possession of the Premises or Improvements, or so much thereof or interest therein as has been taken, to the condemning authority. Tenant shall continue to pay all Rent due hereunder and, in all respects, keep, observe and perform all of the terms, covenants, agreements and conditions of this Lease to be kept, observed and performed by Tenant until the date of such termination.
Partial Taking
. In the event of a Partial Taking, this Lease shall remain in full force and effect with respect to that portion of the Premises or Improvements not so taken; provided that, if in connection with the Partial Taking either (x) Tenant reasonably determines that such Partial Taking would unreasonably interfere with the conduct of Tenant’s business at the Project for a period in excess of one hundred eighty (180) days, or (y) costs thirty percent (30%) or more of the fair market value of the Improvements immediately prior to such Partial Taking to repair or restore, then Tenant shall have the right to terminate this Lease on written notice to Landlord given no later than sixty (60) days after the date of such Partial Taking. In the event of a Partial Taking in which Tenant does not (or is not permitted to) elect to terminate this Lease, Tenant shall, at its sole cost and expense, promptly commence and proceed with due diligence (subject to actual delay caused by Force Majeure) to effect restoration of the Improvements on the remaining portion of the Premises as nearly as possible to their value, condition and character immediately prior to such Taking, in accordance with the provisions of Article 9 which shall apply to restoration.
Distribution of Award
. All awards and damages received on account of any Taking, whether partial or total (including all amounts in respect to both the Premises, Improvements constructed thereon, and personal property located thereon or thereat), including interest received, if any, whether such award or damages are paid in respect to the Taking of the Master Landlord’s fee interest, or the Landlord’s Interest or Tenant’s Interest, or any portion thereof (hereinafter collectively referred to as the “Award”), shall be paid promptly by the Person(s) receiving the same to an escrow agent mutually acceptable to Landlord and Tenant, to be released as hereinafter provided upon appropriate instruction from the parties hereto. To the extent set forth in any applicable loan documents, any Subleasehold Mortgagee shall be permitted to act as insurance trustee to hold all such proceeds to be distributed in accordance with the terms of this Lease.
Allocation of Award; Partial Taking. Any Award in a Partial Taking shall be distributed by the aforementioned escrow agent in the following order of priority: (a) first to Master Landlord, Landlord, Tenant and any Subleasehold Mortgagees, as herein provided, as reimbursement for all costs and expenses incurred by each of them in the collection of the Award, including fees and expenses incurred in the condemnation proceeding; (b) second, to Tenant, as reimbursement for the cost and expense of restoration of the Improvements, as such costs and expenses are incurred by Tenant; and (c) third, to any Subleasehold Mortgagees, in the order of their respective priorities (but not in payment of any defaulted interest or penalties). The balance of the Award, if any, shall be deposited by the escrow agent into a court of competent jurisdiction to be equitably allocated between Master Landlord, Landlord and Tenant based on the respective interests of Master Landlord, Landlord and Tenant in the balance of said Award as determined by said court after taking into account the interests of Master Landlord, Landlord and Tenant previously compensated in the distributions provided for above.
Allocation of Award; Temporary Taking. In the event of a Taking for temporary use or occupancy, this Lease shall continue in full force and effect without reduction or abatement of any Rent payable hereunder, and Tenant shall be entitled to claim, recover and retain any Award made on account of such temporary Taking; provided, however, that if the period of such temporary Taking extends beyond the Term, such Award shall be apportioned between Landlord and Tenant as of the date of expiration of the Term.
Allocation of Award; Total Taking. Any Award in a Total Taking shall be distributed by the aforementioned escrow agent in the following priority: (a) first, to Master Landlord, Landlord, Tenant and any Subleasehold Mortgagees, as herein provided, as reimbursement for all costs and expenses incurred by each of them in the collection of the Award, including fees and expenses incurred in the condemnation proceeding; (b) second, to any Subleasehold Mortgagees, in the order of their respective priorities, such sum as is necessary to satisfy and discharge the liens thereof; and (c) the balance of the Award, if any, shall be deposited by said escrow agent into a court of competent jurisdiction to be equitably allocated among Master Landlord, Landlord and Tenant based on the respective interests of Master Landlord, Landlord and Tenant in the balance of such Award as determined by the court after taking into account the interests of Master Landlord, Landlord and Tenant previously compensated in the distribution provided for above. The determination of the value of Tenant’s Interest in the Premises shall be made as if the Lease were to continue in full force and effect until the expiration of the then-current Term.
Conduct of Proceedings
. Subject to the rights of Landlord and any Subleasehold Mortgagee to participate therein, Tenant and Landlord shall jointly commence, appear in and prosecute any action or proceeding involving a Taking of the Premises, or any part thereof or interest therein, by condemnation or under the power of eminent domain, or otherwise and shall jointly make any compromise or settlement in connection therewith. If the parties disagree concerning such action or proceeding and there shall exist an Event of Default under this Lease, Landlord shall be entitled at its option to commence, appear in and prosecute on its own and in its own name any such action or proceeding and Landlord shall also be entitled to make on its own any compromise or settlement in connection therewith, subject to the rights of Landlord and any Subleasehold Mortgagees to participate therein.
ASSIGNMENT, SUBLETTING AND
SPACE LEASES
Assignment
.
Reserved.
Tenant may, as provided in Article 14 below with respect to the financing of the construction of the Improvements, and any refinancing thereof, assign all of Tenant’s Interest to a Subleasehold Mortgagee as security for such financing/refinancing. Subject to the terms and conditions of this Article 12 as set forth below, any assignment that is not to a Permitted Subleasehold Mortgagee shall be permitted only with the prior written consent of Landlord, which shall not be unreasonably withheld, conditioned or delayed. Landlord’s approval or denial shall be provided to Tenant within twenty (20) Business Days of Landlord’s receipt of written request, which shall contain the information regarding the assignee delineated in the next paragraph. In no event shall any Occupant have the right to finance or refinance the Improvements or assign its interest in its Space Lease or the Premises to any lenders as security for such financing/refinancing.
Subject to Tenant’s rights to finance or refinance Tenant’s Interest as provided in Article 14 and the rights of any Subleasehold Mortgagee as set forth in Article 14, no purported assignment or other transfer of Tenant’s Interest, or any portion thereof, whether voluntarily, involuntarily or by operation of law, shall be permitted nor shall be valid without the prior written approval of Landlord, which approval shall not be unreasonably withheld, conditioned, or delayed. Without limiting the generality of the foregoing, the parties hereby agree that it shall at all times be reasonable for Landlord to withhold consent in any of the following circumstances: (a) a change in the Permitted Use or a material change in the proportionate distribution of the various Permitted Uses in the Project would be reasonably expected to occur, (b) at the time of the proposed assignment or transfer the proposed transferee or any Affiliate thereof is a Person that is currently in default under any lease or other agreement with Landlord beyond all applicable notice and cure periods or where adversarial litigation is currently ongoing between such Person or their Affiliates and Landlord (regardless of the campus in question), (c) the proposed transferee (or its proposed management company) does not have experience reasonably satisfactory to Landlord with respect to the ownership, operation, or management of Comparable Projects, (d) the existence of any of the issues described in subclauses (III)(y) or (III)(z) below with respect to the proposed assignee/transferee, and/or (e) Tenant and such proposed transferee have been unable to demonstrate, to Landlord’s reasonable satisfaction, that the proposed transferee has the financial capacity to comply with its obligations under this Lease. Landlord shall approve or disapprove a requested assignment/transfer of Tenant’s Interest or any portion thereof within twenty (20) Business Days of a written request to approve the assignment/transfer provided that the written request contains at least the following information: (I) the identity of the proposed assignee/transferee, (II) reasonable and adequate information and documentation regarding the proposed assignee’s/transferee’s (1) financial strength (including, without limitation, current financial statements) and (2) reputation and experience in conducting operations of like-kind to the Permitted Uses and management of Comparable Projects, and (III) representations and warranties from the proposed assignee/transferee that: (y) it and its Affiliates are not included on the List of Specially Designated Nationals and Blocked Persons maintained by OFAC, and that they do not reside in, and are not organized or chartered under the laws of, a jurisdiction that has been designated by the U.S. Secretary of the Treasury under Section 311 or 312 of the Patriot Act as warranting special measures due to money laundering concerns, or any foreign country that has been designated as non-cooperative with international anti-money laundering principles or procedures by an intergovernmental group or organization, such as the Financial Action Task Force on Money Laundering, of which the United States is a member and with which designation the United States representative to the group or organization continues to concur, and/or (z) that it and its Affiliates have not made a general assignment for the benefit of creditors; filed any voluntary petition in bankruptcy, suffered the filing of an involuntary petition by its creditors, suffered the appointment of a receiver to take possession of substantially all of its assets, suffered the attachment or other judicial seizure of substantially all of its assets, admitted its inability to pay its debts as they come due, or made an offer of settlement, extension or composition to its creditors general. All assignments shall be subject to the following conditions:
Subject to the terms hereof, and unless expressly permitted hereunder, any attempt to assign or transfer the Tenant’s Interest, or any portion thereof, without Landlord’s prior written approval shall be voidable by Landlord.
In the event of any assignment of all of Tenant’s Interest, the assignee shall take its assigned interest subject to the terms of the Lease and, as a condition precedent to the validity of such assignment, shall covenant that the Lease shall be faithfully performed by the assignee of the Tenant. No approved assignment of all of Tenant’s Interest shall relieve the assigning Tenant (or its predecessors) from the full and faithful performance of Tenant’s obligations under this Lease arising prior to the effective date of such assignment.
Any assignment of only a portion (but not all) of Tenant’s Interest, even if approved by Landlord or otherwise permitted under the terms of this Lease, shall in no event relieve the assigning Tenant (or its predecessors) from the full and faithful performance of Tenant’s obligations under this Lease.
Tenant shall pay for Landlord’s reasonable out-of-pocket expenses in reviewing any proposed assignment of Tenant’s Interest, including the allocated costs of legal counsel and auditors, in an amount not to exceed $5,000 increased as of each anniversary of the Effective Date by the annual change in the CPI Index pursuant to the most recently published CPI Index.
The consent by Landlord to any transfer, hypothecation, assignment or subleasing shall not constitute a waiver of the necessity for such consent to any subsequent assignment, transfer, hypothecation or subleasing.
Transfers of Interests in Tenant
. The transfer of any controlling interest in Tenant shall be deemed an assignment within the meaning of this Article 12. Subject to Article 14, any transaction by which Tenant or any manager, majority shareholder, or general partner of Tenant undergoes a merger or other reorganization, including, without limitation, a sale of all or substantially all of its assets, wherein the stakeholders of Tenant or of Tenant’s member, majority shareholder, or general partner, as applicable, immediately before the merger or reorganization do not retain control of the surviving corporation, limited partnership, limited liability company, or other entity, shall be deemed a transfer for purposes of this Article 12. Notwithstanding anything to the contrary contained herein, any sale or other transfer of any of the stock of, or other ownership interests in, Tenant shall not be deemed an assignment within the meaning of this Article 12 unless said sale or other transfer results in a change in the Person having control of Tenant. As used in this Section 12.2, the term “control” and related words shall have the meaning set forth in Article 1.
Space Leases. Notwithstanding the foregoing or anything herein to the contrary, to the extent expressly permitted as part of the Permitted Use, and not otherwise, Tenant shall have the right to enter into new Space Leases with any Person with Landlord’s consent, which consent shall not be unreasonably withheld, conditioned, or delayed; provided that the Space Lease complies with the requirements of this Lease, and provided further that Landlord’s consent shall not be required for any Space Lease affecting fewer than 3,000 square feet of the Project. In such event, all such Space Leases shall be required to include, as an addendum or rider thereto, the provisions set forth on Schedule 12.3 (the “Required Space Lease Terms”). So long as any such Space Lease is in full force and effect, any Occupant shall not be made a party to any action or proceeding to enforce any rights of Landlord, nor shall such Occupant’s possession or right of possession be disturbed or in any way interfered with, nor shall the leasehold estate of any such tenant under any Space Lease be terminated by reason of any default by Tenant under this Lease, so long as in all events such Space Lease includes the Required Space Lease Terms and is otherwise in compliance with the terms of this Lease. Tenant shall further have the right enter into ordinary course transient room or space rentals (including, without limitation, event space rentals) in connection with the operation of the Project for the Permitted Use without Landlord’s consent.
Reserved
.
No Option to Purchase
. In no event shall any Space Lease or any other occupancy agreement include an option or other right for an Occupant to acquire all or any part of the Tenant Interest, unless such option or other provision has been approved in writing by Landlord in its sole and absolute discretion. Any approval by Landlord of a Space Lease providing for the purchase of all or a portion of the Tenant Interest shall not constitute a waiver of Landlord’s right to disapprove of the assignment of this Lease pursuant to such option or other right if a material adverse condition in connection with the proposed assignee or use of the Premises has occurred at any time prior to such assignment.
LIENS AND ENCUMBRANCES
Covenant Against Encumbrances
. Except as provided in Article 14, Tenant shall not, and shall have no right to, encumber Landlord’s or Master Landlord’s interest in the Premises, and Tenant covenants to keep the Premises and each and every part thereof at all times free and clear of any and all liens and encumbrances of any kind whatsoever arising out of Tenant’s acts or omissions or those acts or omissions of its agents and Occupants, including, without limitation, those liens and encumbrances created by Tenant’s acts or omissions, and those created by the performance of any work of improvement, alteration, maintenance, replacement or repair, or labor or furnishing of any material, supplies or equipment in connection therewith. Should Tenant fail to discharge or cause to be discharged any claim of lien within sixty (60) days after service on Tenant, then, on written notice from Landlord, Landlord may pay, adjust, compromise and discharge any such lien or claim of lien on such terms and manner as Landlord may deem appropriate. In such event, Tenant shall immediately reimburse Landlord for the full amount paid by Landlord in connection with such lien or claim of lien, including any reasonable attorneys’ fees or costs, or other costs expended by Landlord, together with interest and late charges at the rates provided in Article 4 from the date of payment by Landlord to date of repayment by Tenant.
Hold Harmless
. Tenant agrees that its indemnity obligations under Section 19.4 shall apply to any liens, encumbrances, and/or other Claims, except for the rights of approved Subleasehold Mortgagees as provided in Article 14, arising out of the conduct of activities by Tenant or any other Tenant Parties (including without limitation Occupants).
Non-Subordination
. The Landlord’s reversionary interest in the Premises and Landlord’s interest in this Lease shall be superior and prior in interest to any loans, mortgages, deeds of trust, other leases, liens and encumbrances that may hereafter be placed on the Premises, Improvements, Project, or any part thereof, by, against or as a result of the acts of Tenant or anyone deriving any interest in the Premises, or any part thereof or interest therein, through Tenant. Any loan, mortgage, deed of trust, lease, lien or encumbrance placed by Tenant on the Premises, Improvements, Project, or any part thereof or interest therein, shall not adversely affect Landlord’s interests under this Lease or Landlord’s interests in the Premises. Tenant agrees, without any cost or expense to Landlord, to execute any instrument which is necessary or is reasonably requested by Landlord to further confirm the non-subordination of Landlord’s reversionary interest in the Premises and Landlord’s interest in this Lease. Nothing in the foregoing shall obviate the provisions of Section 14.2 to provide a Lender Recognition Agreement.
HYPOTHECATION
Lease as Security
. This Lease shall be a prior lien against the Improvements, Project and any encumbrance on the Premises with respect to any loans, mortgages, deeds of trust, other leases, liens and encumbrances that may hereafter be permitted to be placed on the Project, Improvements, and/or the Premises under the terms of this Lease or any Space Lease or other occupancy agreement.
Financing
. Tenant may seek to obtain a loan to refinance the Improvements and Project, and/or finance subsequent Improvements from time to time. For such purpose only, Tenant shall have the right, with Landlord’s prior written approval, which shall not be unreasonably withheld, conditioned, or delayed, to assign all or part of Tenant’s Interest (and/or all or part of an interest in Tenant) as security to any Institutional Lender (a “Subleasehold Mortgagee”) which has agreed to advance such funds to Tenant pursuant to appropriate loan documentation, including a deed of trust, mortgage or other security instrument (collectively, the “Trust Deed”); provided, however, that Landlord’s approval shall not be required so long as each of the following conditions are met (any such Subleasehold Mortgagee either approved by Landlord or satisfying all of the criteria immediately below, a “Permitted Subleasehold Mortgagee”): (i) the Subleasehold Mortgagee is a Qualified Lender, (ii) no loan secured by the Tenant’s Interest may be in an amount which exceeds a loan-to-value ratio of seventy-five percent (75%) (as determined by the Subleasehold Mortgagee’s appraisal, and with respect to construction loans, measured as a stabilized value post-completion) at the time the loan is entered into and the Subleasehold Mortgage securing such loan is recorded in the Official Records; (iii) solely in the event of a construction loan, if required by the Subleashold Morgagee, the debt service coverage ratio is underwritten by the Subleasehold Mortgagee to be at least 1.15:1.00 upon stabilization after completion of the construction work, (iv) in the proposed loan documents, the Subleasehold Mortgagee explicitly acknowledges the Lease terms and conditions, (v) no uncured Event of Default by Tenant exists hereunder, and (vi) prior written notice is provided to Landlord at least thirty (30) days prior to the recordation of the Subleasehold Mortgage, which notice shall include the identity of the Subleasehold Mortgagee and evidence that the requirements set forth in clauses (i) through (iv) above are satisfied.
In the event a subleasehold financing proposed by Tenant does not satisfy all the foregoing conditions for a Permitted Subleasehold Mortgage, such leasehold mortgage shall be subject to Landlord’s prior written approval, which shall not be unreasonably withheld, conditioned, or delayed, and Landlord shall endeavor to respond to any written request for approval of a Subleasehold Mortgage within thirty (30) calendar days after Landlord’s receipt of a detailed written request therefor, which request shall contain the information regarding the Subleasehold Mortgagee’s financial strength, reputation and experience delineated in Article 12 with respect to a proposed assignee/transferee. If Landlord does not respond to the request for approval within such time period, it shall not be a default by Landlord hereunder, but the request shall be deemed disapproved. In the event Landlord consents to a Subleasehold Mortgage, and Tenant assigns all or any portion of Tenant’s Interest to secure a loan approved under this Section 14.2, then the following shall apply:
Reserved;
The Landlord shall not be required to sign any Trust Deed, note, or any other documents or instruments relating to the Subleasehold Mortgage, or otherwise become obligated thereunder; No Subleasehold Mortgage or similar lien, charge or encumbrance shall constitute a lien or encumbrance upon the Master Landlord’s fee title in the Premises or its reversionary interest in the Improvements and Project; Subject to Section 14.6 and Section 14.7, any interest in the Premises which the Trust Deed establishes in a trustee, and any lien which it creates, shall be discharged on or before (i) the date of expiration of the Ground Lease; or (ii) the date of any earlier termination of this Lease; The Trust Deed shall impose no financial obligations on the Landlord, contingent or otherwise; The Trust Deed shall neither subordinate nor affect the Master Landlord’s or Landlord’s right to convey, mortgage, encumber or otherwise hypothecate in any way the Master Landlord’s fee title or Landlord’s leasehold title or reversionary interest in the Premises, Improvements, and/or Project; Except as otherwise expressly provided herein, no Subleasehold Mortgagee or anyone claiming by, through or under such Subleasehold Mortgagee shall, by virtue of such claim, acquire any greater rights than Tenant then had under this Lease; The Trust Deed shall be subject to all conditions, covenants and restrictions of this Lease and to all rights of Landlord hereunder; The Trust Deed shall provide that, prior to the institution of any proceedings to foreclose the Trust Deed or of negotiations to accept an assignment in lieu of the foreclosure of the Trust Deed, the holder or beneficiary thereof shall notify Landlord in writing that such proceedings or negotiations are to be commenced, and Landlord shall have the right, but not the obligation, within sixty (60) days after receiving of such notice to purchase the Trust Deed and the indebtedness which it secures at a purchase price equal to the full amount then owing under said Trust Deed, including accrued interest (including default interest if applicable), late fees, administrative charges, reasonable attorneys’ fee for the holder or beneficiary, and applicable statutory costs and allowances if any foreclosure proceedings shall have commenced. All loan agreements in connection with any Improvements, including but not limited to construction loans, long term loans and refinancing permitted by the terms of this Lease shall contain the written agreement of the Subleasehold Mortgagee that Landlord shall be notified by the Subleasehold Mortgagee within thirty (30) days of any default by Tenant on any such loan and shall be given the opportunity to correct the default and assume the loan(s) prior to initiation of foreclosure actions other than the filing of a notice of default pursuant to the California Civil Code Section 2924; Tenant shall give Landlord written notice of any Trust Deed prior to the execution and/or recording of same by Tenant, and shall accompany such notice with a true copy of such Trust Deed and the note, if applicable, secured thereby; and All insurance proceeds arising from damage or destruction of the Improvements shall be available for restoration thereof to the extent Tenant is obligated under the terms of this Lease to restore the Improvements following such damage or destruction, and any Subleasehold Mortgagee shall be permitted to act as insurance trustee to hold all such proceeds to be distributed in accordance with the terms of this Lease.
Transfers by Subleasehold Mortgagees
. Notwithstanding the foregoing or anything herein to the contrary, Subleasehold Mortgagee may effectuate a foreclosure in connection with the Subleasehold Mortgage and, in connection therewith, Subleasehold Mortgagee or its Affiliate may acquire a controlling interest in Tenant or Tenant’s interest in the Premises without Landlord’s or Master Landlord’s consent; provided that any designee, nominee, or third-party purchaser at foreclosure that is not the Subleasehold Mortgagee or its Affiliate shall be subject to the prior written consent of Landlord, which consent shall be at Landlord’s sole and exclusive determination.
Notice of Subleasehold Mortgagee
. Concurrently with the execution of any Trust Deed, Tenant shall furnish to Landlord the name and address of each Subleasehold Mortgagee secured thereby. Landlord shall thereafter provide each such Subleasehold Mortgagee a duplicate copy of any and all notices of default which Landlord may from time to time give or serve upon Tenant under the terms of this Lease. Failure to provide such duplicate notices shall not constitute a default by Landlord hereunder.
Request for Notice of Defaults
. Upon the recording of a Trust Deed, Tenant shall, at Tenant’s expense, cause to be recorded in the Official Records, a written request, executed and acknowledged by Landlord, for a copy of all notices of default and all notices of sale under such Trust Deed, as provided by the laws of the State of California. Tenant shall include in the body of the recorded Trust Deed itself a request for notice having the effect described above.
Notice of Defaults to Subleasehold Mortgagee
. If Landlord has received notice from Tenant of the current names and addresses of one or more Subleasehold Mortgagees secured by a Trust Deed, Landlord shall not terminate the Lease because of any event of default thereunder by Tenant if any such Subleasehold Mortgagee, within the time periods set forth below, cured such event of default:
Thirty (30) days after receipt of notice of such event of default, if the same can be cured by the payment or expenditure of money required to be paid under the terms of this Lease; or Sixty (60) days after receipt of notice of such event of default, if the same cannot be cured by the payment of money but can be affected prior to the Subleasehold Mortgagee obtaining possession of the Premises; provided, however, that if the nature of such default is such that the same cannot reasonably be cured within such sixty (60) day period, such Subleasehold Mortgagee shall within such period commence such cure and thereafter diligently prosecute the same to completion provided further that in no event shall such extension to the 60-day cure period extend such cure period by more than one-hundred eighty (180) days; or Ninety (90) days after receipt of notice of such event of default, if such event of default cannot be cured unless and until the Subleasehold Mortgagee has obtained possession of the Premises; provided in such instance the Subleasehold Mortgagee shall, within thirty (30) days of receipt of Landlord’s notice, institute and thereafter diligently prosecute judicial or non-judicial foreclosure proceedings or otherwise acquire Tenant’s Interest with due diligence, and until such time as Tenant’s Interest is acquired by the Subleasehold Mortgagee, the Subleasehold Mortgagee shall keep and perform all of the covenants and conditions of Tenant under the Lease reasonably capable of being performed by Subleasehold Mortgagee during such period, including those requiring the payment or expenditure of money.
If the Tenant’s event of default cannot be cured unless and until the Subleasehold Mortgagee has obtained possession of the Premises, and provided that Subleasehold Mortgagee has timely cured all events of default which are curable, Landlord shall not cancel or terminate the Lease (nor serve a notice of cancellation or termination thereof) if Subleasehold Mortgagee proceeds with due diligence to exercise the remedies under its Subleasehold Mortgage and thereafter prosecutes and completes the same with due diligence and in those instances in which any Subleasehold Mortgagee is prohibited from commencing or prosecuting foreclosure or other appropriate proceedings in the nature thereof by (a) any process or injunction issued by any court, or (b) any action by any court having jurisdiction of any bankruptcy or insolvency proceeding involving Tenant, then the time herein allowed any Subleasehold Mortgagee to prosecute such foreclosure or other proceeding shall be extended for the period of such prohibition, provided that Subleasehold Mortgagee is using commercially reasonable efforts to seek relief from such prohibition. In the event that any Subleasehold Mortgagee fails or refuses to comply with the conditions of this Section 14.6, then and thereupon, Landlord shall be released from the covenant of forbearance herein contained with respect to such Subleasehold Mortgagee.
New Lease for Subleasehold Mortgagee
. If this Lease shall terminate prior to the expiration of the term thereof at any time a Subleasehold Mortgagee is entitled to cure any event of default by Tenant thereunder, or as a result of rejection of this Lease in a bankruptcy, then for a period of sixty (60) days measured from the date of notice to such Subleasehold Mortgagee of the termination or rejection of this Lease such Subleasehold Mortgagee shall have the right to elect to receive from Tenant a new lease of the Premises, but the term of the new lease shall not extend beyond the original term of this Lease; provided, however, such new lease shall be on the same terms as this Lease and shall have the same priority as this Lease as to all other encumbrances. The Subleasehold Mortgagee’s right to elect to receive said new lease shall be upon the following terms and conditions:
The new lease shall have the same date as the fixed date for the expiration of the original term of the Lease and shall otherwise be on all of the terms and conditions set forth in the Lease, and shall be subject to all existing rights of Occupants.
The Subleasehold Mortgagee shall have cured all outstanding defaults under this Lease to the extent the same are reasonably susceptible of being cured by such Subleasehold Mortgagee and any defaults that are not susceptible of being so cured shall be waived by Landlord.
The new lease may, at the option of Subleasehold Mortgagee, be executed by a nominee of such Subleasehold Mortgagee without the Subleasehold Mortgagee assuming the burdens and obligations of Tenant thereunder beyond the period of the Subleasehold Mortgagee’s occupancy, subject to the prior written consent of Landlord, which consent shall not be unreasonably withheld, conditioned or delayed.
The Subleasehold Mortgagee shall have the right to assign or transfer the new lease to any Person as set forth in Section 14.3 hereof. The liability of the Subleasehold Mortgagee under the new lease shall cease upon an assignment of such new lease (which assignment shall contain an express assumption by any transferee of all Lease obligations).
Notwithstanding anything to the contrary expressed or implied elsewhere in this Lease, any mortgage, deed of trust, or other lien, charge or encumbrance created by any Subleasehold Mortgagee and approved by Landlord (unless a Permitted Subleasehold Mortgagee, in which case no approval is required) shall be subordinate to the new lease.
Reimbursement of Landlord Costs
. Tenant shall reimburse Landlord for all of its actual out-of-pocket costs and expenses, including reasonable fees and expenses outside counsel, and reasonable consultants’ fees and costs, incurred in connection with the review of requests for, and documents, communications and materials related to, any financing of the Improvements or Tenant’s Interest, or any of the other matters set forth above in this Article 14, all of which is in addition to Landlord’s other rights and remedies resulting from a Tenant default.
Intention
ally Deleted.
Termination
. Neither this Lease nor the Ground Lease shall be terminated, amended, altered, subordinated, restated, surrendered, cancelled or otherwise modified, nor shall a surrender of the Premises be accepted by Landlord before the Expiration Date, in each case without prior written notice to Subleasehold Mortgagee.
DEFAULT
Waiver
. A waiver by Landlord of any term, condition, or covenant of this Lease shall not constitute a subsequent waiver of the same or any other term, condition or covenant of this Lease, nor of the strict and prompt performance thereof by Tenant. Landlord’s delay, failure or omission to reenter the Premises, or to exercise any right, power, privilege, option or remedy arising from any default, shall not impair such right, power, privilege, option or remedy which Landlord has, nor be construed as Landlord’s waiver or relinquishment of any such right, power, privilege or option, or its acquiescence to a default. Landlord shall not be required to give notice in order to restore or revive either (a) time as of the essence hereof, nor (b) any other covenant or condition, after Landlord has waived a default in one or more instances. No right, power, privilege, option, or remedy of Landlord shall be construed as being exhausted or discharged by the exercise thereof in one or more instances. Each and all of the rights, powers, privileges, options or remedies given Landlord by this Lease are cumulative and no one of them is exclusive of the other or exclusive of any remedies provided by law, and the exercise of one right, power, privilege, option or remedy by Landlord shall not impair Landlord’s right to any other.
Default by Tenant
. Without intending to limit Landlord’s right to declare a default of this Lease for any other reason, the occurrence of any of the following shall, at Landlord’s election, constitute an “Event of Default” under this Lease:
Subject to the terms of this Lease permitting temporary closures in Section 6.1, the vacation or abandonment of the Premises or the Improvements by Tenant; Tenant’s failure to pay to Landlord any amount due and payable hereunder within ten (10) Business Days of receipt by Tenant of written notice of default given by Landlord; Subject to excused delay due to Force Majeure, Tenant’s failure to diligently perform the construction and completion of any Improvements or, with respect to Major Improvements, in accordance with the approved Construction Schedule for such Major Improvements, and Tenant’s failure to diligently pursue completion of such Major Improvements in conformance with the target dates set forth in the approved Construction Schedule therefor within sixty (60) days after notice from Landlord; A failure by Tenant to observe and perform any other provision of this Lease to be observed or performed by Tenant, when such failure continues for more than thirty (30) days after written notice thereof by Landlord to Tenant; provided, however, that if the nature of such default is such that the same cannot reasonably be cured within such thirty (30) day period, Tenant shall not be deemed to be in default if Tenant shall within such period commence such cure and thereafter diligently prosecute the same to completion within an additional period not to exceed one hundred eighty (180) days; The making by Tenant of any general assignment for the benefit of creditors, or the filing of a petition to have Tenant adjudicated as bankrupt, or the filing of a petition for reorganization or arrangement under any law relating to bankruptcy unless, in the case of a petition filed against Tenant, the same is dismissed within ninety (90) days; or the appointment of a trustee or receiver to take possession of substantially all of Tenant’s Interest, when possession is not restored to Tenant within ninety (90) days; or the attachment, execution or other judicial seizure of substantially all of Tenant’s assets located on the Premises or of Tenant’s Interest, when such seizure is not discharged within ninety (90) days; Tenant’s failure to deliver any estoppel certificates, financial statements or reports, and/or any other deliverable required of Tenant hereunder by the date due where such failure is not cured within ten (10) Business Days after written notice from Landlord; Any use or occupancy of the Premises or Project for any purpose other than the Permitted Use which continues for more than five (5) Business Days after written notice from Landlord; or Any other event or circumstance which, under the express terms of this Lease (including any exhibits and schedules hereto), are deemed to be an Event of Default by Tenant hereunder.
Remedies by Landlord
. Subject to the provisions of this Lease regarding rights of Subleasehold Mortgagee, upon the occurrence of an Event of Default, Landlord may resort, cumulatively or in the alternative, to the remedies set forth in Section 15.4 and Section 15.5, as well as to any one or more other remedies provided by law or in equity.
Non-monetary Remedies.
Termination. Landlord may, upon an Event of Default, at Landlord’s election, terminate this Lease by giving Tenant notice of termination. On the giving of the notice, all of Tenant’s rights in the Premises, Improvements, Project and every part thereof, shall terminate. Landlord shall not be deemed to have terminated this Lease unless Landlord shall have so declared in writing to Tenant, nor shall Landlord be deemed to have accepted or consented to an abandonment by Tenant by performing acts intended to maintain or preserve the Premises or the Improvements, making efforts to relet the Premises or appointing a receiver to protect Landlord’s interest under this Lease. Immediately after notice of termination, Tenant shall surrender and vacate the Premises, Project and all Improvements in a broom clean condition considering ordinary wear and tear, and Landlord may reenter and take possession of the Premises, Project and all Improvements and eject all parties in possession or eject some and not others or eject none; provided that no guests or transient occupants of the Project or Occupants who are in possession of any portion of the Premises pursuant to Space Leases entered into in compliance with this Lease, who are not in default and who agree to attorn to Landlord shall not be ejected. In the event of any termination of this Lease, Tenant’s right, title and interest in development documents related to the Improvements shall automatically and without additional compensation to Tenant become the property and vest in Landlord. Upon any termination of this Lease, Tenant shall execute such documents as Landlord may request to memorialize the termination and to release Landlord, the Premises, Project and Improvements from the terms and conditions of this Lease. Said documents may include, without limitation and at Landlord’s discretion, agreements which assign contracts between Tenant and vendors relating to the operation, management or maintenance of the Premises, or any part thereof, to Landlord. Notwithstanding any such termination set forth above, Tenant shall remain obligated hereunder for those obligations which expressly survive such termination.
Reentry Without Termination. Landlord may at Landlord’s election reenter the Premises and, without terminating this Lease, at any time and from time to time relet the Premises, Project and Improvements, or any part or parts of them, for the account and in the name of Tenant or otherwise. Landlord may, at Landlord’s election, eject all Persons or eject some and not others or eject none; provided that no guests or transient occupants of the Project or Occupants who are in possession of any portion of the Premises pursuant to Space Leases entered into in compliance with this Lease, who are not in default and who agree to attorn to Landlord shall not be ejected. Any reletting may be for the remainder of the Term or for a longer or shorter period. Landlord may execute any leases made under this provision either in Landlord’s name or in Tenant’s name and shall be entitled to all rents from the use, operation, or occupancy of the Premises, Project and Improvements. No act by or on behalf of Landlord under this provision shall constitute a termination of this Lease unless Landlord gives Tenant written notice of termination.
Additionally Landlord shall have the remedy described in California Civil Code Section 1951.4 (lessor may continue lease in effect after lessee’s breach and abandonment and recover rent as it becomes due, if lessee has the right to sublet or assign, subject only to reasonable limitations). Accordingly, if Landlord does not elect to terminate this Lease on account of any default by Tenant, Landlord may, from time to time, without terminating this Lease, enforce all of its rights and remedies under this Lease, including the right to recover all Rent as it becomes due.
Tenant’s Personal Property. Landlord may, at Landlord’s election, use Tenant’s personal property and fixtures or any of such property and fixtures without compensation and without liability for use or damage (except such damage arising from gross negligence, wilfull misconduct or waste), or Landlord may store them for the account and at the cost of Tenant.
Non-Exclusive. The election of one remedy for any one item shall not foreclose an election of any other remedy for another item or for the same item at a later time.
Monetary Remedies for Tenant’s Default.
Termination. Termination due to an Event of Default shall not relieve Tenant from the payment of any sum then due to Landlord.
Reentry Without Termination. Landlord’s reentry without termination under the provisions above shall not relieve Tenant from payment to Landlord on the due dates specified in this Lease the equivalent of all sums required of Tenant under this Lease, plus Landlord’s expenses, less the proceeds of any reletting or assignment.
Recovery of Damage. In addition to any other remedies Landlord may have, it may recover from Tenant all damages it may reasonably incur by reason of Tenant’s Event of Default, including, without limitation, the cost of recovering the Premises and reasonable attorneys’ fees and expenses and all other amounts recoverable pursuant to section 1951.2 of the California Civil Code. The amounts recoverable pursuant to section 1951.2 of the California Civil Code are as follows:
the worth at the time of award of any unpaid rent which had been earned at the time of such termination; plus the worth at the time of award of the amount by which the unpaid rent which would have been earned after termination until the time of award exceeds the amount of such rental loss that Tenant proves could have been reasonably avoided; plus the worth at the time of award of the amount by which the unpaid rent for the balance of the term after the time of award exceeds the amount of such rental loss that Tenant proves could be reasonably avoided; plus any other amount necessary to compensate Landlord for all the detriment proximately caused by Tenant’s failure to perform Tenant’s obligations under this Lease or which in the ordinary course of things would be likely to result therefrom.
As used in clauses (a) and (b) above, the “worth at the time of award” is computed by allowing interest at the rate of ten percent (10%) per annum but in no event in excess of the maximum rate an individual is permitted to charge by law. As used in clause (c) above, the “worth at the time of award” is computed by discounting such amount at the discount rate of the Federal Reserve Bank of San Francisco at the time of award plus one percent (1%).
Landlord May Require Strict Performance
. Landlord may require strict performance of all covenants and obligations herein as the same shall accrue or become due, including, but not limited to, the right to recover rent and charges equivalent to rent without terminating this Lease and have the right of action therefor without awaiting the end of the Term.
Landlord May Obtain Possession
. Nothing contained herein shall affect, change or waive any rights of Landlord to obtain equitable relief when such relief is otherwise appropriate, or to obtain the relief provided by California Code of Civil Procedure sections 1159, et seq., relating to actions for unlawful detainer, forcible entry and forcible detainer. If Landlord obtains possession of the Premises under a judgment pursuant to Section 1174 of the Code of Civil Procedure, or if Landlord by written notice declares this Lease to be terminated because of an Event of Default by Tenant, then Landlord may repossess and enjoy the Premises, together with all Improvements thereon. Any lawful reentry as provided for herein shall be allowed by Tenant without hindrance, and Landlord shall not be liable in damages or guilty of trespass because of any such lawful reentry.
No Waiver
. Landlord’s election to perform any obligation of Tenant on Tenant’s failure or refusal to do so shall not constitute a waiver of any right or remedy for Tenant’s default, and Tenant shall promptly reimburse, defend, indemnify, and hold harmless the Landlord Parties and Master Landlord Parties against all Claims arising therefrom.
Landlord Default; Remedies of Tenant
. Landlord shall not be in default under this Lease unless Landlord fails to perform any obligation of Landlord under this Lease, where such failure continues for more than thirty (30) days after detailed written notice thereof to Landlord by Tenant; provided, however, that if the nature of such default is such that the same cannot reasonably be cured within such thirty (30) day period, Landlord shall not be deemed to be in default if Landlord has, within such period, commenced such cure and thereafter diligently prosecute the same to completion. In the event of a Landlord default (beyond applicable notice and cure periods) Tenant shall have, subject to the restrictions and limitations set forth in this Lease, such remedies as are provided by Law with respect to a breach or alleged default by Landlord; provided, that in the event that Tenant is awarded any monetary damages, recovery of such damages shall be limited to a right of offset against future Percentage Rent owing under this Lease. Notwithstanding any provision of this Lease to the contrary, in no event shall Master Landlord or Landlord be liable under this Lease, and Tenant hereby releases Master Landlord and Landlord from, any consequential, exemplary, special, or punitive damages, or lost profits or lost revenues that may arise or result from this Lease.
Failure of Tenant to Perform Required Acts
. Subject to Tenant’s right to contest as provided elsewhere in this Lease and subject to Subleasehold Mortgagee’s right to cure as set forth herein, if Tenant fails, refuses, or neglects during the Term to do any of the things required to be done by Tenant, Landlord shall have the right, but not the obligation, to do the same, but at the cost of and for the account of Tenant. Unless Landlord believes that its interests may be materially adversely affected by such delay, Landlord shall in no case take such action sooner than thirty (30) days after giving Tenant written notice of such failure, refusal or neglect, or such longer period of time as may be reasonably necessary to cure such failure if Tenant is diligently proceeding to effect such cure. Tenant shall pay to Landlord on demand any sum reasonably expended by Landlord under this section together with interest thereon at the rate provided in Article 4. Nothing contained in this section shall impair the rights or Landlord with regard to defaults or remedies under the remaining portion of this Article 15.
Time for Cure; Waiver
. The times set forth herein for the curing of an Event of Defaults by Tenant are of the essence of this Lease. Tenant hereby irrevocably waives any right otherwise available under any Laws to redeem or reinstate this Lease, including without limitation redemption or relief from forfeiture under California Code of Civil Procedure Sections 1174 and 1179, or under any other pertinent present or future Laws.
CERTAIN COVENANTS AND REPRESENTATIONS OF TENANT
Non Discrimination
. During the Term of this Lease, Tenant, the other Tenant Parties, and their respective agents, Contractors and subcontractors shall not deny the benefits of this Lease to any Person on the basis of religion, color, ethnic group identification, sex, age, physical or mental disability, nor shall they discriminate unlawfully against any employee or applicant for employment because of race, religion, color, national origin, ancestry, physical handicap, mental disability, medical condition, marital status, age (over 40), or sex. Tenant shall insure that the evaluation and treatment of employees and applicants for employment are free of such discrimination. Without limiting the foregoing, Tenant hereby recognizes and agrees that every State contract and subcontract for public works or for goods or services are required to contain a nondiscrimination clause prohibiting discrimination on the bases enumerated above, and Tenant is hereby obligated to give written notice of its obligations under this clause to all parties it contracts with for any purpose relating to the Premises, Improvements, and/or Project, including without limitation all Contractors, subcontractors, labor organizations, and other providers of goods and/or services. These contractual provisions shall be fully and effectively enforced.
Fair Employment and Housing Act
. During the Term of this Lease, Tenant, the other Tenant Parties, and their respective agents, Contractors and subcontractors shall comply with the provisions of the Fair Employment and Housing Act (Government Code Section 12900 et seq.), the regulations promulgated there under (California Code of Regulations, Title 2, Sections 7285.0 et seq.), and the provisions of Article 9.5, Chapter 1, Part 1, Division 3, Title 2 of the Government Code (Government Code Sections 11135-11139.5). Tenant shall permit access by representatives of the Department of Fair Employment and Housing and Master Landlord and Landlord upon reasonable notice at any time during the normal business hours, but in no case less than 24 hours’ notice, to such of its books, records, accounts, other sources of information, and its facilities as said Department, Master Landlord, or Landlord shall require to ascertain compliance with this clause.
Contracts and Subcontracts
. All of Tenant’s contracts with Contractors and subcontractors regarding or involving Tenant’s Interest, the Lease, and all Space Leases shall contain provisions consistent with those contained in Sections 16.1 and 16.2 above.
RELOCATION ASSISTANCE WAIVER
Relocation Assistance Waiver
. Tenant acknowledges that after this Lease has expired or terminated, Master Landlord may develop the Premises for public projects and other public or private uses and programs that may be implemented by Master Landlord or other public or private agencies or entities. Accordingly, as a condition to entering into this Lease, Tenant acknowledges and agrees that: (a) upon the termination or expiration of this Lease, Tenant, and its Affiliates shall not be entitled to receive, and hereby release and waive, (i) any relocation assistance, moving expenses, goodwill or other payments under the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970, as amended, 42 U.S.C. §§ 4601 et seq., 49 CFR 24 and/or the California Relocation Assistance Law, as amended, California Government Code §§ 7260 et seq., or any successor or equivalent statutes, to the extent applicable, and (ii) any compensation under Business and Professions Code Section 5412 regarding signage as a result of such termination and vacation of the Premises (collectively, “Relocation Assistance”) and (b) Tenant shall require each Occupant to which Tenant has granted occupancy rights to any portion of the Premises to release and waive any rights such Occupant, as applicable, might have to Relocation Assistance, to the fullest extent allowed by applicable Law, as a condition of each Space Lease or other agreement granting occupancy rights to any portion of the Premises. Tenant acknowledges that this Lease shall be considered full advance compensation for such release and waiver of the Relocation Assistance. In the event of any assertion or Claim by Tenant or Affiliate that such Tenant or such Affiliate has not waived all Relocation Assistance or is entitled to Relocation Assistance, then Tenant shall indemnify Master Landlord and the other Master Landlord Parties against such Claims in accordance with Section 19.4 hereof, provided such indemnity shall not apply to the extent such Claim arises for an Occupant or other Person to which Tenant has granted occupancy rights to any portion of the Premises and such Claim could not have been validly waived in accordance with applicable Laws at the commencement of such tenancy or occupancy. The terms and indemnities included in this Article 17 shall survive the expiration or termination of this Lease.
Release
. In connection with and to the extent of the Tenant’s release and waiver of any Relocation Assistance, Tenant expressly waives the provisions of California Civil Code Section 1542, as may be amended or modified, which currently provides:
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.
Tenant hereby acknowledges and agrees that the foregoing release is material consideration to Landlord under this Lease, and but for such release by Tenant the Landlord would not enter into this Lease. The release and waiver set forth in this Article 17 shall survive the expiration of the Term and any earlier termination of this Lease.
Tenant’s initials: ______________
QUIET ENJOYMENT
Quiet Enjoyment
. So long as no Event of Default has occurred and is continuing, subject to Landlord’s rights hereunder, and except for Landlord’s actions in the case of an emergency for the purposes of protecting public health or safety or damage to property, Tenant and Occupants shall lawfully, peacefully and quietly hold, occupy and enjoy the Premises during the Term without disturbance, interruption or hindrance by Landlord, any Landlord Party, or any Person claiming by or through them. Landlord shall in no event be liable in damages or otherwise, nor shall Tenant be released from any obligation or liability hereunder, because of the interruption of any utility or service, or a termination, interruption or disturbance attributable to an event of Force Majeure, or any cause due to any act or neglect of Tenant or other Tenant Party, or any Person claiming by or through Tenant or any other Tenant Party.
MISCELLANEOUS
Notices
. All notices, demands, or other communications that either party desires or is required or permitted to give or make to the other party under or pursuant to this Lease (collectively referred to as “notices”) shall be made or given in writing and shall either be (i) personally served, (ii) sent by registered or certified mail, postage prepaid, or (iii) sent by a nationally recognized overnight delivery service or courier. Notices may be sent via electronic mail so long as they are concurrently sent by one of the other methods provided above. All notices shall be addressed to or personally served on the parties as follows:
If to Landlord: City of Fullerton
303 W. Commonwealth Ave.
Fullerton, CA 92832
Attention: City Manager
and to: Jones Mayer
3777 N. Harbor Blvd
Fullerton, CA 92835
Attention: Fullerton City Attorney
If to Tenant: Sky Harbor Fullerton, LLC
c/o Junson Assets Management LLC
140 East 45th Street, 29th Floor
New York, NY 10017
Attention: Asset Management; Legal
Email: [email protected]; [email protected] Any notice that contains a request for Landlord’s consent shall clearly state that consent is being requested in such notice and, if applicable, that failure to respond within the applicable time period (which time period shall be stated in such notice) may be deemed consent. Service of any such notice or demand so made by mail shall be deemed complete as of the date received or the date delivery is refused. The address to which notices and demands shall be delivered or sent may be changed from time to time by notice served as herein provided by either party upon the other party.
Brokerage Commissions
. Each party represents to the other that it has not entered into any agreement or incurred any obligation which might result in the obligation to pay a brokerage commission or finder’s fee with respect to this transaction. Each party agrees to indemnify, defend and hold the other party harmless from and against any real estate brokerage commissions or other such obligations incurred by the indemnified party as the result of any agreement or act of the indemnifying party giving rise to a claim for such commission or other obligation.
Estoppel Certificates
. Tenant or Landlord, as the case may be, will execute, acknowledge and deliver to the other, within fifteen (15) days of receipt of written request, an estoppel certificate in substantially the form attached hereto as Schedule 19.3, with such reasonable additions, modifications and/or alterations thereto as may be reasonably requested by Tenant or any of their respective prospective purchaser, mortgagee, assignee, government agency, or a beneficiary under a Trust Deed, which certificate may be relied upon by any prospective purchaser, mortgagee, assignee, government agency, or a beneficiary under a Trust Deed.
Indemnification.
Tenant’s Indemnification. In addition to any other indemnities for the benefit of Master Landlord or Landlord under this Lease, the Tenant shall indemnify, defend and hold harmless the Master Landlord Parties, Landlord Parties, Premises, Project and the leasehold interest from and against any Claims arising out of or in any way connected with (i) the development, financing, construction, improvement, ownership, operation, and/or management of the Premises and Project, (ii) any cause in, on, related to, or in connection with the Premises or Project during the Term, including, without limitation, Claims for loss or damage to any property or for death or injury to any Person or Persons, (iii) any acts, omissions or negligence of Tenant or any other Tenant Party in, on or about the Premises or Project, or in any way related to this Lease, (iv) any violation of the terms and conditions of this Lease by Tenant or any other Tenant Party, and/or failure by Tenant to perform its obligations under this Lease, including without limitation any Event of Default, and/or (v) any Space Lease. The foregoing indemnity shall not apply to any Claims to the extent caused by or arising out of any gross negligence or willful misconduct of any Master Landlord Parties or Landlord Parties. The foregoing indemnity shall survive the expiration or any earlier termination of this Lease.
Indemnification Procedures for Tenant Indemnities.
Landlord shall notify Tenant in writing of the existence of any matters that Landlord believes in good faith constitute matters subject to indemnification, reimbursement, hold harmless or defense for the benefit of Landlord or any other Landlord Party under this Lease (each, an “Indemnified Claim”) promptly after Landlord becomes aware of the existence of such Indemnified Claim.
Landlord shall be entitled to, at Tenant’s cost, defend any Indemnified Claim through counsel of Landlord’s choice (the “Litigation Counsel”). Landlord agrees to give Tenant written notice of Landlord’s Litigation Counsel, as such Litigation Counsel may change from time to time during the defense and/or appear of any Indemnified Claim, and upon receipt of written request from Tenant, Landlord will reasonably update Tenant as to the status of the Indemnified Claim (subject in all events to attorney-client privilege).
Landlord shall determine whether to settle or compromise any Indemnified Claim.
Landlord shall have the sole and exclusive right to determine whether to appeal any judgment of any Indemnified Claim (an “Appellate Action”), with Litigation Counsel of Landlord’s choice and at Tenant’s sole cost and expense.
Without limiting anything else in this section, under no circumstances shall Landlord be required to disclose to Tenant any information or materials in connection with an Indemnified Claim to the extent that Landlord is precluded from disclosing the same due to binding confidentiality restrictions, or such information or materials are protected by attorneyclient privilege, in all events subject to any disclosure requirements imposed on Landlord under applicable law.
Tenant agrees that its obligations under this section include all Indemnified Claims that are actually or potentially within the scope of the Tenant’s indemnity, defense, and hold harmless obligations under this Lease, even if the applicable Indemnified Claim may be groundless, fraudulent or false, and no finding or judgment of negligence, fault, breach, or the like on the part of Tenant shall be required for the foregoing obligations to arise.
Subject to the terms of this section, the parties shall cooperate in defending against any Indemnification Claim. In furtherance of the foregoing, Tenant shall reasonably cooperate with Landlord and the Litigation Counsel in the defense of any Indemnified Claim, including by making documents and/or personnel available to the extent required or deemed reasonably necessary by the Litigation Counsel or by Landlord.
All demands made by Landlord to Tenant for payment and/or reimbursement of Claims under any indemnity in favor or Landlord or any other Landlord Party hereunder shall be in writing, shall include reasonably requested backup information, and shall be paid by Tenant within thirty (30) days after receipt of such written demand.
The provisions of this Section 19.4.2 to the benefit of Landlord and the Landlord Parties shall also benefit Master Landlord and the Master Landlord’s Parties, and may be directly enforced by Master Landlord as if it were Landlord.
Survival. The obligations of the parties contained in this Section 19.4 and under any other indemnification provisions contained in this Agreement shall survive the termination or expiration of this Agreement.
Assumption of Risks; Waiver of Liability
. Without limiting any other releases or waivers by or from Tenant elsewhere in this Lease, Tenant hereby agrees to fully and completely assume all risk of loss by theft, accident, fire, flood, earthquake, or other casualty of any kind, which may in any way affect the Premises, Improvements, and/or Project, the use or operation of the Premises, Improvements, and/or Project, or the exercise of the rights granted herein. Tenant waives all claims against Master Landlord and Landlord and each of the Indemnified Parties for loss or damage caused by, arising out of, or in any way connected with Tenant’s use of the Premises, Improvements, and/or Project, or the exercise of the rights granted herein, except to the to the extent caused by or arising out of any gross negligence or willful misconduct of any Master Landlord Parties or Landlord Parties.
Non-Merger of Fee and Leasehold Estates
. If under any circumstances both Landlord’s and Tenant’s estates in the Premises, or any portions thereof, become vested in the same owner, this Lease nevertheless shall not be extinguished by application of the doctrine of merger except at the express election of the Landlord and with the express written consent of the beneficiary or beneficiaries under all Trust Deeds affecting the Premises and Tenant’s leasehold estate (including, without limitation, any Subleasehold Mortgagee).
Time of the Essence
. Time is of the essence in the performance of each and every obligation and covenant of the parties hereto.
Joint and Several Obligations
. If Tenant consists of more than one Person, the obligations of the Persons constituting Tenant are joint and several.
Captions
. The captions and section headings used herein are for convenience only and are not a part of this Lease and do not in any way limit or amplify the terms and provisions hereof.
Construction
. For purposes of this Lease, words of the masculine gender shall be deemed to include correlative words of the feminine and neuter genders. Unless the context shall otherwise indicate, words importing the singular number shall include the plural number and vice versa and words importing persons shall include corporations and associations, including public bodies and the term “agent” shall refer to a Person’s employees, contractors, and representatives.
Governing Law
. This Lease shall be interpreted in accordance with and governed by the laws of the State of California, without regard for its conflict of laws provisions. Venue for any legal action brought by either party with respect to this Lease shall be the Superior Court of the State of California in the County.
Entire Agreement
. This Lease contains all covenants, terms, provisions and agreements between Landlord and Tenant relating in any manner to the construction, rental, use and occupancy of the Premises and other matters set forth in this Lease. No prior agreement or understanding with respect to the same shall be valid or of any force or effect, and no covenant, term, provision or agreement of this Lease can be altered, changed, modified or added to, except in writing, signed by Landlord and Tenant. No representation, inducement, understanding, or anything of any nature whatsoever made, stated, or represented on behalf of either party hereto, either orally or in writing, has induced the other party to enter into this Lease except as set forth in this Lease.
No Presumption Against Drafter
. This Lease has been negotiated at arm’s length and between Persons sophisticated and knowledgeable in the matters dealt with herein. In addition, each party has been represented by experienced and knowledgeable legal counsel. Accordingly, any rule of law or legal decision that would require interpretation of any ambiguities in this Lease against the party that has drafted it is not applicable and is waived. The provisions of this Lease shall be interpreted in a reasonable manner to effect the purposes of the parties and this Lease.
Right to Request Injunction
. In the event of any violation or threatened violation by either party of any of the terms, covenants, and conditions herein contained, in addition to the other remedies herein provided, each party shall have the right to petition for injunctive relief against such violation or threatened violation in a court of competent jurisdiction.
Severability
. If any clause, sentence or other portions of this Lease shall become invalid, illegal, or unenforceable for any reason, or shall be held by any court of competent jurisdiction to be so, the remaining portions thereof shall remain in full force and effect and such clause, sentence or other portions shall be ineffective only to the extent of such invalidity, illegality, or unenforceability.
Reserved
.
Cooperation in Execution, Delivery and Recordation of Documents . Landlord and Tenant agree to cooperate in the execution, delivery and recordation of such documents, instruments and agreements requested by either party as are reasonably necessary in order to carry out the purposes of this Lease and to execute and deliver all documents, instruments and agreements reasonably necessary to terminate all interests granted herein upon their termination or expiration as provided herein; provided in all events such documents, instruments and agreements must be consistent with the express terms and conditions of this Lease.
Representations and Warranties of Tenant
. As a material inducement to Landlord to enter into this Lease, Tenant represents and warrants the following:
Power and Authority. That it has all necessary power and authority to enter into this Lease and to carry out the transactions contemplated herein; and that the execution and delivery hereof and the performance by Tenant of its obligations hereunder will not violate or constitute a default or breach under the terms and provisions of any agreement, law or court order to which Tenant or any other Tenant Party is a party or by which Tenant is bound the remedy for which default would have a material adverse effect on Tenant’s ability to perform its obligations hereunder.
Authorization; Valid Obligations. That all actions required to be taken by or on behalf of Tenant to authorize it to execute, deliver and perform its obligations under this Lease have been taken, and that this Lease is a valid and binding obligation of Tenant enforceable in accordance with its terms, except as the same may be affected by bankruptcy, insolvency, moratorium or similar laws, or by legal or equitable principles relating to or limiting the rights of contracting parties generally.
Executing Parties. That the Persons executing this Lease on behalf of Tenant have full power and authority to bind Tenant to the terms hereof.
Patriot Act. That Tenant and no other Tenant Party is included on the List of Specially Designated Nationals and Blocked Persons maintained by OFAC, and does not reside in, and is not organized or chartered under the laws of (i) a jurisdiction that has been designated by the U.S. Secretary of the Treasury under Section 311 or 312 of the Patriot Act as warranting special measures due to money laundering concerns, or (ii) any foreign country that has been designated as non-cooperative with international anti-money laundering principles or procedures by an intergovernmental group or organization, such as the Financial Action Task Force on Money Laundering, of which the United States is a member and with which designation the United States representative to the group or organization continues to concur.
No Bankruptcy. Tenant has not made a general assignment for the benefit of creditors; filed any voluntary petition in bankruptcy; suffered the filing of an involuntary petition by its creditors; suffered the appointment of a receiver to take possession of substantially all of its assets; suffered the attachment or other judicial seizure of substantially all of its assets; admitted its inability to pay its debts as they come due; or made an offer of settlement, extension or composition to its creditors general.
Representations and Warranties of Landlord
. As a material inducement to Tenant to enter into this Lease, Landlord represents and warrants the following:
Power and Authority. That it has all necessary power and authority to enter into this Lease and to carry out the transactions contemplated herein.
Authorization; Valid Obligations. That all actions required to be taken by or on behalf of Landlord to authorize it to execute, deliver and perform its obligations under this Lease have been taken, and that this Lease is a valid and binding obligation of Landlord enforceable in accordance with its terms, except as the same may be affected by bankruptcy, insolvency, moratorium or similar laws, or by legal or equitable principles relating to or limiting the rights of contracting parties generally.
Executing Parties. That the Persons executing this Lease on behalf of Landlord have full power and authority to bind Landlord to the terms hereof.
Relationship of Parties
. Nothing contained in this Lease shall be deemed or construed by the parties or by any third person to create the relationship of principal and agent, or of partnership or of joint venture, or of any association between Landlord and Tenant, and none of the provisions contained in this Lease or any acts of the parties shall be deemed to create any relationship other than lessor and lessee between Landlord and Tenant, nor shall this Lease be construed, except as expressly provided, to authorize either to act as agent for the other.
Survival of Covenants
. All covenants which, by their terms, are not to be performed before the expiration or earlier termination of this Lease shall survive the expiration or earlier termination hereof.
Binding Effect
. The provisions of this Lease shall bind or benefit the heirs, executors, administrators, successors and permitted assigns of the original parties to this Lease.
Third Party Beneficiary
. Landlord and Tenant acknowledge and agree that Master Landlord is a third party beneficiary of this Lease, and that Landlord’s rights and remedies under this Lease may be directly enforced by Master Landlord. It is expressly agreed Master Landlord’s consent shall be required in addition to Landlord’s consent with respect to each provision set forth on Schedule 19.23 (the “Master Landlord Consent Items”); provided that, with respect to each Master Landlord Consent Item (x) Master Landlord’s consent shall supersede Landlord’s consent in each instance, (y) the requirements and limitations on Master Landlord’s consent shall be the same as those specified herein for Landlord’s consent, and (z) the time period for Master Landlord’s review and consent shall run simultaneously with the time period specified herein for Landlord’s consent. In addition, in each instance under this Lease where Landlord is entitled to reimbursement from Tenant for Landlord’s actually incurred expenses, Master Landlord shall also be entitled to reimbursement from Tenant for Master Landlord’s actually incurred expenses; provided that, Landlord and Master Landlord shall use commercially reasonable efforts to avoid duplicative expenses. Subject to the foregoing, this Lease shall not, nor be deemed to, confer upon any Person, other than the parties hereto, any right or interest, including without limitation any third-party beneficiary status or any right to enforce any provision of this Lease (other than Master Landlord).
No Rights to Light, Air, or Views
. This Lease does not grant any legal rights to “light and air” outside the Premises nor any view, landscape or cityscape visible from the Premises.
Execution in Counterparts
. This Lease may be executed in counterparts, each of which shall constitute an original of such Lease, but all of which shall constitute one and the same instrument.
Memorandum of Sublease
. Concurrently with the execution of this Lease, the parties shall execute and acknowledge a Memorandum of Lease in the form attached hereto as Schedule 19.26, which Memorandum of Lease shall be filed in the Official Records of the County.
Naming Rights
. The BOT or its delegee, and only the BOT or its delegee, has the authority to name all facilities and all improvements constructed on property owned by Landlord, including the Premises. The Premises shall at all times comply with all University Policies, as amended from time to time, including those regarding the naming of facilities located on property owned by Landlord. Tenant may not adopt, create, or permit to be attached to the Premises or any Improvements thereon, any name except (i) in accordance with all applicable Laws and Landlord’s rules, regulations and policies, and (ii) with the prior written approval of the BOT or its delegee. The limitations and restrictions set forth in this paragraph shall be collectively referred to as the “Naming Rights Restrictions”. Notwithstanding the foregoing, the Tenant’s current use of the name “Fullerton Marriott at California State University” shall be permitted.
Confidentiality; Press Releases
. Tenant shall keep confidential any information regarding the Premises, Improvements and Project that Landlord or Master Landlord so requests in writing, except to the extent any such information was in the public domain or deemed to be a public record as of the date of disclosure. Tenant acknowledges that Master Landlord (i) is required to make disclosures in accordance with applicable Laws, including the California Public Records Act, Government Code § 6250 et seq., the Richard McKee Transparency Act of 2011, Education Code § 92950 et seq., and Master Landlord’s implementing regulations and guidelines, (ii) may be subject to other requirements relating to information in the possession of governmental entities, and (iii) may take all such actions as in connection therewith it deems appropriate or required in order to comply with all applicable Laws. Tenant shall not issue any press release nor general public announcement concerning the transactions described in this Lease or any other matters relating to the proposed Project, except as may be required by applicable Laws, without first obtaining the prior written approval of Landlord and Master Landlord. This paragraph shall survive any expiration of the Term or earlier termination of this Lease.
Landlord Consent and Approval
. Unless expressly set forth otherwise in this Lease, Landlord’s consent or approval to any matter requiring Landlord’s consent or approval and any determination required or permitted of Landlord under this Lease shall be in Landlord’s sole and absolute discretion. Additionally, wherever Landlord’s consent or approval is required under this Lease, and Landlord fails to provide Tenant with written notice of its consent, approval, or disapproval by any deadline set forth herein, it shall not be a default by Landlord, but shall instead be deemed a disapproval thereof by Landlord. Wherever Landlord’s consent or approval is required under this Lease, Landlord’s consent or approval shall be deemed given by the City Manager of the City of Fullerton, and shall not require the further approval of the City Council or any other body or authority of any Landlord Party. Notwithstanding anything to the contrary in this Lease, if Tenant claims that Landlord has unreasonably withheld its consent or approval under this Lease, Tenant hereby waives its rights to terminate this Lease pursuant to the provisions of Section 1995.310 of the California Civil Code, or any successor statute.
Reservation of Rights
. Without limiting any other provision of this Lease, the parties each hereby acknowledge and agree that nothing in this Lease shall in any way be construed as a waiver or limitation of any kind on Master Landlord’s sovereign rights as the State of California acting in its higher education capacity, whether with respect to the Premises, Project, or otherwise, and further the parties hereby agree that other than any express rights granted to Tenant under this Lease, Master Landlord reserves all rights and privileges with respect to the Premises and all appurtenances thereto. [Signatures on Next Page]
IN WITNESS WHEREOF, the parties hereto have executed this Lease on the date indicated next to their signatures below.
LANDLORD:
THE CITY OF FULLERTON, CALIFORNIA
By: _____________________
Name: _____________________
Its: _____________________
Date: _________________, 2024
TENANT:
SKY HARBOR FULLERTON, LLC,
a Delaware limited liability company
By: Junson Assets Management LLC,
a Delaware limited liability company,
its Manager
By: _____________________
Name: _____________________
Its: _____________________
Date: _________________, 2024
TABLE OF CONTENTS
Page
ARTICLE 1 DEFINITIONS 2
1.1 “Additional Rent” 2
1.2 “Affiliate” 2
1.3 “BOT” 2
1.4 “Business Day” 2
1.5 “Campus” 2
1.6 “CEQA” 2
1.7 “City” 2
1.8 “Claim(s)” 2
1.9 “Commenced Construction” 2
1.10 “Commencement of Construction” 3
1.11 “Comparable Projects” 3
1.12 “Completion of Construction” 3
1.13 “Construction Requirements” 3
1.14 “Construction Schedule” 3
1.15 “County” 3
1.16 “CPI Index”. 3
1.17 “Design Professional” 3
1.18 “Development Financial Plan” 3
1.19 “Environmental Agency” 4
1.20 “Final Plans” 4
1.21 “Force Majeure” 4
1.22 “Hazardous Substance” 4
1.23 “Hazardous Substance Activities” 5
1.24 “Improvements” 5
1.25 “Institutional Lender” 5
1.26 “Landlord” 5
1.27 “Landlord’s Interest”. 5
1.28 “Landlord Party” 5
1.29 “Laws” 6
1.30 “Lender Recognition Agreement” 6
1.31 “Major Improvements” 6
1.32 “Master Landlord” 6
1.33 “Master Landlord Party” 6
1.34 “Occupant” 6
1.35 “Official Records” 6
1.36 “Partial Taking” 6
1.37 “Percentage Rent” 7
1.38 “Permitted Uses” 7
1.39 “Person” 7
1.40 “PIP” 7
1.41 “Prohibited Uses” 7
1.42 “Qualified Lender” 7
1.43 “Qualified Franchisor” 7
1.44 “Release” 8
1.45 “Remediate” or “Remediation” 8
1.46 “Rent” 8
1.47 “Rent Commencement Date” 8
1.48 “Scheduled Completion Date” 8
1.49 “Schematic Design Package” 8
1.50 “Space Lease” 8
1.51 “Stoppage of Construction” 8
1.52 “Taking” 8
1.53 “Taxes” 9
1.54 “Tenant” 9
1.55 “Tenant Party” 9
1.56 “Tenant’s Interest” 9
1.57 “Total Taking” 9
1.58 “University Policies” 9
ARTICLE 2 GRANT AND TERM 10
2.1 Lease 10
2.2 Use of the Premises 10
2.3 Reservation of Oil, Gas and Mineral Rights 10
2.4 Term. 10
2.5 Holding Over 10
2.6 Termination of Franchise Agreement 11
2.7 Intentionally Deleted 11
2.8 Intentionally Deleted 11
2.9 Condition of Premises 11
2.10 Ownership and Removal of Improvements. 12
2.11 Surrender of Premises. 13
ARTICLE 3 IMPROVEMENTS 14
3.1 General 14
3.2 Schematic Design Package; Financial Plan; Construction Schedule. 14
3.3 Timing and Parameters of Landlord Plan Review. 15
3.4 Permits and Approvals 16
3.5 Commencement, Prosecution and Completion of Construction. 16
3.6 Tenant’s Contractor 17
3.7 Compliance with Construction Requirements 17
3.8 Design Professionals 18
3.9 Encumbrance of Estate 18
3.10 Costs of Construction 18
3.11 Reserved 18
3.12 Reports 18
3.13 Insurance 19
3.14 No Responsibility 19
3.15 Notice of Non-Responsibility 19
3.16 Liens; Stop Notice. 19
3.17 Assignment 20
3.18 Standard of Work 20
3.19 Indemnification 20
3.20 Prevailing Wages 21
3.21 Space Leases. 21
ARTICLE 4 LEASE CONSIDERATION 21
4.1 Intentionally Deleted 21
4.2 Rent 21
4.3 Place of Payment of Rental 21
4.4 Net Lease; No Rent Abatement or Reduction 21
4.5 Other Payments 21
4.6 Interest 22
4.7 Late Charges 22
4.8 Rates and Benefits. 22
ARTICLE 5 USE 22
5.1 Use of Premises 22
5.2 Changed Use 22
5.3 Waste; Nuisance 23
5.4 General Environmental Requirements 23
5.5 Environmental Remediation and Indemnification. 23
5.6 Compliance with Government Regulations 24
5.7 Evidence of Compliance 25
5.8 Landlord’s Rules and Regulations 25
5.9 Advertising and Signs 25
5.10 University Name 25
5.11 Tenant/Landlord Program Collaboration 25
5.12 Liquor Sales, Permits and Licenses 26
ARTICLE 6 OPERATION AND MAINTENANCE 26
6.1 Standards of Operation 26
6.2 Maintenance and Repair 26
6.3 Management and Operation of the Premises and Project 26
6.4 Specific Tenant Obligations 28
6.5 Requirements of Government Agencies 28
6.6 Meetings to Discuss Upkeep of Improvements. 28
6.7 Intentionally Deleted 28
6.8 Intentionally Deleted. 28
6.9 Intentionally Deleted. 28
6.10 Tenant’s Books and Records 29
6.11 Entry of Premises by Landlord 29
6.12 Space Leases. 29
ARTICLE 7 TAXES 29
7.1 Payment of Taxes 29
7.2 Landlord Indemnified and Held Harmless 30
7.3 Tenant’s Right to Contest 30
7.4 Prorations 30
7.5 Personal Property Taxes 30
7.6 Separate Assessment 30
7.7 Change in Method of Taxation 30
ARTICLE 8 UTILITIES 31
8.1 Cost of Utilities 31
8.2 Utility Easements 31
ARTICLE 9 DAMAGE OR DESTRUCTION 31
9.1 Damage or Destruction of Improvements. 31
9.2 Restoration Work 32
9.3 Statutory Waiver 32
ARTICLE 10 INSURANCE 32
10.1 Insurance Requirements 32
10.2 Escrow of Casualty Insurance Proceeds 33
10.3 Tenant Not Relieved 33
10.4 Additional Insureds 33
10.5 Proceeds 33
10.6 Waiver of Subrogation Rights 33
10.7 Compliance with Requirements of Carriers 34
10.8 Non Contributing 34
10.9 Termination Notice/Form of Policies 34
10.10 Evidence of Insurance; Tenant Failure 34
10.11 Settlement of Claims 34
10.12 Review of Insurance Requirements 34
ARTICLE 11 CONDEMNATION 35
11.1 Notice; Lease Governs 35
11.2 Termination of Lease 35
11.3 Partial Taking 35
11.4 Distribution of Award 35
11.5 Conduct of Proceedings 36
ARTICLE 12 ASSIGNMENT, SUBLETTING AND SPACE LEASES 37
12.1 Assignment 37
12.2 Transfers of Interests in Tenant 39
12.3 Space Leases. 39
12.4 Reserved 39
12.5 No Option to Purchase 39
ARTICLE 13 LIENS AND ENCUMBRANCES 39
13.1 Covenant Against Encumbrances 39
13.2 Hold Harmless 40
13.3 Non-Subordination 40
ARTICLE 14 HYPOTHECATION 40
14.1 Lease as Security 40
14.2 Financing 40
14.3 Transfers by Subleasehold Mortgagees 42
14.4 Notice of Subleasehold Mortgagee 43
14.5 Request for Notice of Defaults 43
14.6 Notice of Defaults to Subleasehold Mortgagee 43
14.7 New Lease for Subleasehold Mortgagee 44
14.8 Reimbursement of Landlord Costs 45
14.9 Intentionally Deleted 45
14.10 Termination 45
ARTICLE 15 DEFAULT 45
15.1 Waiver 45
15.2 Default by Tenant 45
15.3 Remedies by Landlord 46
15.4 Non-monetary Remedies. 46
15.5 Monetary Remedies for Tenant’s Default. 48
15.6 Landlord May Require Strict Performance 48
15.7 Landlord May Obtain Possession 48
15.8 No Waiver 49
15.9 Landlord Default; Remedies of Tenant 49
15.10 Failure of Tenant to Perform Required Acts 49
15.11 Time for Cure; Waiver 49
ARTICLE 16 CERTAIN COVENANTS AND REPRESENTATIONS OF TENANT 49
16.1 Non Discrimination 49
16.2 Fair Employment and Housing Act 50
16.3 Contracts and Subcontracts 50
ARTICLE 17 RELOCATION ASSISTANCE WAIVER 50
17.1 Relocation Assistance Waiver 50
17.2 Release 51
ARTICLE 18 QUIET ENJOYMENT 51
18.1 Quiet Enjoyment 51
ARTICLE 19 MISCELLANEOUS 52
19.1 Notices 52
19.2 Brokerage Commissions 52
19.3 Estoppel Certificates 53
19.4 Indemnification. 53
19.5 Assumption of Risks; Waiver of Liability 54
19.6 Non-Merger of Fee and Leasehold Estates 55
19.7 Time of the Essence 55
19.8 Joint and Several Obligations 55
19.9 Captions 55
19.10 Construction 55
19.11 Governing Law 55
19.12 Entire Agreement 55
19.13 No Presumption Against Drafter 55
19.14 Right to Request Injunction 55
19.15 Severability 56
19.16 Reserved 56
19.17 Cooperation in Execution, Delivery and Recordation of Documents 56
19.18 Representations and Warranties of Tenant 56
19.19 Representations and Warranties of Landlord 57
19.20 Relationship of Parties 57
19.21 Survival of Covenants 57
19.22 Binding Effect 57
19.23 Third Party Beneficiary 57
19.24 No Rights to Light, Air, or Views 58
19.25 Execution in Counterparts 58
19.26 Memorandum of Sublease 58
19.27 Naming Rights 58
19.28 Confidentiality; Press Releases 58
19.29 Landlord Consent and Approval 58
19.30 Reservation of Rights 59
List of Exhibits and Schedules:
Exhibit A Legal Description of Premises
Schedule 1.41 Prohibited Uses
Schedule 4 Rent Terms
Schedule 10 Insurance Requirements
Schedule 12.3 Required Space Lease Terms
Schedule 19.3 Estoppel Certificate Form
Schedule 19.23 Third-Party Beneficiary Provisions
EXHIBIT A
Legal Description of Premises
SCHEDULE 1.41
Prohibited Uses
This Schedule 1.41 is attached to and incorporated fully into the body of that certain Amended and Restated Sublease dated _________________, 2024 (the “Lease”) by and between THE CITY OF FULLERTON, CALIFORNIA, as “Landlord” and SKY HARBOR FULLERTON, LLC, a Delaware limited liability company, as “Tenant”. Capitalized terms not defined in this Schedule 1.41 shall have the meanings given to them elsewhere in the Lease.
The following operations and uses, are expressly prohibited on the Premises, including within any Improvement and within the Project:
Tattoos or body piercing.
Any business establishment having a significant focus of its operation on the: (i) sale or distribution of adult magazines, books, video, and other items or media, or (ii) display of adult entertainment.
Bars and/or nightclub only establishments.
Drug paraphernalia and cannabis sales.
Flea market or swap meet.
Auto supply, sales or repair/maintenance.
Gas station and fueling stations, excluding electric vehicle charging stations.
Animal rendering.
Heavy manufacturing, storage, warehousing or distribution centers.
Sales of textbooks to be used as study material by students attending higher education classes of universities or colleges located within one-half mile of the Property (collectively, ''Higher Education Textbooks"); provided, however, in no event shall such restriction be construed to prohibit a national or regional book store such as Barnes & Noble so long as such national or regional book store does not sell Higher Education Textbooks.
Sales of alcoholic beverages for off-site consumption, except: any grocery store, supermarket or drug store that is engaged primarily in the sale of goods, wares and merchandise or services to the general public and conducts such offsite alcoholic beverage sales as a part of its primary business; or the operation of a high-quality wine bar or microbrewery or other similar quality business selling wine and beer products customarily found in comparable projects.
Gaming establishment or card room.
SCHEDULE 4
Rental Terms
This Schedule 4 is attached to and incorporated fully into the body of that certain Amended and Restated Sublease dated _________________, 2024 (the “Lease”) by and between THE CITY OF FULLERTON, CALIFORNIA, as “Landlord” and SKY HARBOR FULLERTON, LLC, a Delaware limited liability company, as “Tenant”. Capitalized terms not defined in this Schedule 4 shall have the meanings given to them elsewhere in the Lease.
In addition to any other Additional Rent payable hereunder, Tenant shall pay to Landlord an amount equal to 5.5% of Annual Gross Room Sales (as defined below) (“Percentage Rent”). Percentage Rent shall be computed and payable monthly to Landlord. Within forty-five (45) days after the end of each month, Tenant shall deliver to Landlord (i) a statement certified by Tenant’s Chief Financial Officer, Treasurer, or other officer of Tenant or its manager reasonably acceptable to Landlord in its sole discretion, as being true, correct and complete, setting forth its Annual Gross Room Sales for such quarter (each, a “Percentage Rent Report”), and (ii) the applicable Percentage Rent payable hereunder for such month. The receipt by Landlord of a Percentage Rent Report shall not constitute an admission by Landlord of its correctness. For the purpose of computing Percentage Rent, Annual Gross Room Sales for any period during which Tenant does not continuously and uninterruptedly conduct its business shall be deemed to be Annual Gross Room Sales for the corresponding period during the last calendar year in which Tenant operated continuously and uninterruptedly. Landlord’s audit rights set forth in the Lease shall include, without limitation, the right to audit all of Tenant’s books and records relating to Annual Gross Room Sales, and Tenant shall deliver to Landlord any information related to the same. Notwithstanding anything in this Lease to the contrary, if Percentage Rent attributable to any Lease Year (as hereinafter defined) is less than $200,000 (the “Minimum Rent”), then Tenant shall pay to Landlord an amount equal to the difference between the Minimum Rent and the Percentage Rent attributable to such Lease Year in question, which difference shall be payable to Landlord within forty-five (45) days after the end of such Lease Year and shall be deemed to be “Percentage Rent” for all purposes under this Lease; provided, however, that if the Premises is closed to the public due to an event of Force Majeure, Master Landlord, Landlord, and Tenant shall meet and confer regarding an equitable reduction to the Minimum Rent for the Lease Year affected by such closure. For purposes of this Lease, the term “Lease Year” shall mean the calendar year.
Tenant shall record and track all Annual Gross Room Sales and the components thereof in accordance with generally accepted accounting practices (showing the Annual Gross Room Sales relating to the Premises, Improvements, and/or Project separately from all other locations) and shall maintain sufficient original records which accurately summarize all transactions which relate in any way to Annual Gross Room Sales. Original records shall include, but not be limited to, sales documents, sequentially numbered tapes and readout totals of cash registers or point of sale devices, sales returns and allowance detail, cash receipts, payroll journals, accounts receivable, disbursement journals, bank statements, deposit slips, inventory records, leases, licenses, rent rolls, bank deposits, purchase orders, receiving records, reservation records, sales journals and reports, orders accepted by means of electronic, telephonic, video, computer or another electronic or other technology based system, state sales and use tax returns (and all documentation used to prepare the returns), and a complete general ledger. Tenant shall preserve its records (properly totaled) at the Project and shall make such records available to Landlord at the Project, upon demand, for a period of at least five (5) years after the year in which the actions and items relating to such Annual Gross Room Sales occurred (provided, however, that if any audit is begun by Landlord or if there is a dispute regarding Annual Gross Room Sales, Tenant’s records shall be retained by Tenant until a final resolution of the audit or dispute). If the Annual Gross Room Sales are understated by five percent (5%) or more, Tenant shall pay Landlord’s cost of inspection and audit, and if Annual Gross Room Sales are understated from those reported by five percent (5%) or more for any two (2) out of any four (4) years, then it shall be an Event of Default by Tenant and in addition to Landlord’s other rights and remedies, the Landlord shall have the right at its sole option, to terminate this Lease with written notice to Tenant. Tenant’s obligations and Landlord’s rights under this paragraph shall survive expiration of the Term or earlier termination of this Lease.
As used herein, the term “Annual Gross Room Sales” shall mean (except as provided below) the annual gross receipts, including credit charges (minus credit charges written off as bad debts, plus bad debts written off and subsequently recovered), received by or for the benefit of Tenant, during Tenant’s fiscal year (and portion thereof), from the rental of hotel guest rooms upon the Premises. Annual Gross Room Sales shall not include (i) receipts from telephone, laundry, gift shops, room service, parking or valet services, recreation facilities, vending machines, rental of space (including meeting rooms, ballrooms and banquet facilities) other than hotel guest rooms intended for overnight accommodations, receipts from food and beverage sales or any other receipts received by Tenant other than receipts from the rental of guest rooms, (ii) gratuities to employees, (iii) any federal, state and municipal sales, excise, use or similar taxes collected from patrons combined or guests, or (iv) any credits or refunds made to customers, guests or patrons, any correction of overcharges, and any other items of the nature of those items set forth herein. To the extent that Tenant charges a rate for room rentals and other items not included in the definition of Annual Gross Room Sales, the Annual Gross Room Sales shall include the amount allocated to the room rental after deducting from such combined rate an amount equal to the cost of any food and beverage operation and other costs for items not included in the definition of Annual Gross Room Sales, such allocated room amount not to exceed the fair market rental of the guest room.
SCHEDULE 10
Insurance Requirements
This Schedule 10 is attached to and incorporated fully into the body of that certain Amended and Restated Sublease dated _________________, 2024 (the “Lease”) by and between THE CITY OF FULLERTON, CALIFORNIA, as “Landlord” and SKY HARBOR FULLERTON, LLC, a Delaware limited liability company, as “Tenant”. Capitalized terms not defined in this Schedule 10 shall have the meanings given to them elsewhere in the Lease. (1) Required Policies and Coverage.
(a) Comprehensive or Commercial Form General Liability Insurance on an occurrence basis, covering any construction work or Improvements done or to be done by or on behalf of Tenant or any Contactor and providing insurance for bodily injury, personal injury, property damage, and contractual liability. The aggregate limit shall apply separately to the Premises. (b) Business Automobile Liability Insurance on an occurrence basis, covering owned, hired, and nonowned automobiles used by or on behalf of Tenant or any Contractor and providing insurance for bodily injury, property damage, and contractual liability. Such insurance shall include coverage for uninsured and underinsured motorists. (c) Property Insurance covering Builder’s Risks during the period of construction of any Improvements, and Special Form property coverage for existing Improvements, in each case, covering all risks of loss. Earthquake and Flood coverage shall be purchased at Tenant’s discretion. (d) Worker’s Compensation including Employers Liability Insurance as required by law. (e) Environmental Impairment Liability Insurance if the Improvements involve any Hazardous Substance. (f) Other Insurance as may be required in accordance with the Lease. (2) Minimum Amounts of Insurance.
(a) Comprehensive or Commercial Form General Liability Insurance: $50,000,000. (b) Business Automobile Liability Insurance: $2,000,000 (Each Accident–combined single limit of bodily injury and property damage to include uninsured and underinsured motorist coverage). (c) Property Insurance: No less than the replacement cost valuation (and during the period of construction of any Improvements, including all insurable soft costs and delay). (d) Workers’ Compensation: As required by law.
(f) If required for Improvements involving any Hazardous Substance:
(i) Environmental Impairment (pollution) Liability Insurance: $5,000,000. (ii) In addition to the required Business Automobile Liability Insurance, Tenant shall obtain for hazardous material transporter services:
(A) MCS-90 endorsement
(B) Sudden & Accidental Pollution endorsement — Limits of Liability* $2,000,000 Each Occurrence;
$2,000,000 General Aggregate
* These requirements and limits are the same for all size contracts. A higher limit on the MCS-90 endorsement required by law must be matched by the Sudden & Accidental Pollution Insurance.
Upon Landlord’s prior written consent, Tenant may delegate the responsibility to provide this additional coverage to its hazardous materials subcontractor and shall provide satisfactory evidence to Landlord confirming the same. (3) Acceptability of Insurers. Insurers shall be licensed by the State of California to transact insurance and shall hold a current A.M. Best’s rating of A:VII or better, or shall be a carrier otherwise acceptable to Landlord. (4) Contractors’ and Subcontractors’ Insurance. Tenant shall ensure that any Contractors or subcontractors on this Lease are covered by insurance of the types required hereunder, and that the amount of insurance for each subcontractor is appropriate for that subcontractor’s obligations. Tenant shall not allow any Contractor or subcontractor to commence performance until the required insurance has been obtained.
SCHEDULE 12.3
Required Space Lease Terms
This Schedule 12.3 is attached to and incorporated fully into the body of that certain Amended and Restated Sublease dated _________________, 2024 (the “Lease”) by and between THE CITY OF FULLERTON, CALIFORNIA, as “Landlord” and SKY HARBOR FULLERTON, LLC, a Delaware limited liability company, as “Tenant”. Capitalized terms not defined in this Schedule 12.3 shall have the meanings given to them elsewhere in the Lease.
Every Space Lease shall be required to include the following provisions of this Schedule 12.3:
The Space Lease shall be expressly subject and subordinate to the Lease and all terms and conditions thereof, including without limitation a use that is consistent with, and limited to, the Permitted Use, and an express agreement from the Occupant to at all times comply with and not violate the terms of the Lease, all applicable Laws and University Policies.
The term of the Space Lease shall not extend beyond the then applicable expiration date of the Term of the Lease, and the Occupant shall acknowledge and agree that the Space Lease shall be subject to termination, at Landlord’s election in its sole discretion, upon any termination of the Lease.
Notwithstanding the foregoing, if elected by Landlord, the Occupant will be required to agree to attorn to Landlord, at Landlord’s election, if the Lease is terminated early due to an Event of Default by Tenant that is not caused by any act or omission of the Occupant or its Affiliates.
The Occupant shall agree to pay its rent under the Space Lease directly to Landlord upon receipt of written notice from Landlord that an Event of Default by Tenant then exists, subject to any rights of any Subleasehold Mortgagee permitted pursuant to the terms of the Lease.
The Occupant shall agree to carry all insurance required to be carried by the Tenant under the Lease except as expressly agreed otherwise by Landlord in writing.
The Space Lease shall include an indemnity from the Occupant for the benefit of Master Landlord and Landlord, in form and substance as the indemnity from Tenant to Master Landlord and Landlord set forth in Section 19.4 of the Lease.
The Occupant shall agree that all Improvements are required to be designed and constructed in accordance with the Construction Requirements, including without limitation the requirements of Article 3 of the Lease.
The Occupant will expressly agree to comply with the provisions of Article 16 regarding non-discrimination and fair housing.
An express agreement from the Occupant waiving and releasing all rights in and to any Relocation Assistance in accordance with Article 17 of the Lease, including without limitation a full release of Claims by the Occupant for the benefit of Landlord consistent with the release and waiver of Claims provided by Tenant to Master Landlord and Landlord under Article 17.
An acknowledgement and agreement by the Occupant with respect to the provisions of the Lease regarding the Naming Rights Restriction and PRA.
SCHEDULE 19.3
Estoppel Certificate Form
To: _________________________
_________________________
_________________________
Re: That certain Amended and Restated Sublease dated ______________, 202___ (the “Lease”), by and between that certain Amended and Restated Sublease dated _________________, 2024 (the “Lease”) by and between THE CITY OF FULLERTON, CALIFORNIA (“Landlord”), and SKY HARBOR FULLERTON, LLC, a Delaware limited liability company (“Tenant”) All capitalized terms used but not defined herein shall have the meaning ascribed to them in the Lease. [Use the following if Tenant is providing the Estoppel Certificate: Tenant is the present owner and holder of the Tenant’s Interest under the Lease.] [Use the following if Landlord is providing the Estoppel Certificate: Landlord is the present owner and holder of the lessor’s interest under the Lease and the fee interest in and to the Premises.] [Use the following if Tenant is providing the Estoppel Certificate: Tenant holds title to the Improvements currently located on the Premises. [Use the following if Landlord is providing the Estoppel Certificate: Other than reversionary and future rights expressly set forth in the Lease, the Landlord does not hold any interest in the Improvements currently located on the Premises.] The attached Exhibit B includes a true and complete copy of the Lease and all modifications, amendments, supplements, side letters, addenda, assignments, and riders of and to the Lease.
The Term of the Lease commenced on ____________, 202____ and will expire on _________________, 20__ unless sooner terminated in accordance with the provisions thereof.
Except for the Additional Rent expressly set forth and/or described in Article 4 or Schedule 4 to the Lease, no additional rent is payable to Landlord under the Lease.
Except as set forth in the Lease, Landlord and Tenant have made no agreement concerning free Rent, partial Rent, rebate of rental payments or any other similar Rent concession.
Landlord currently holds no Security Deposit with respect to the Lease.
The Lease has not been modified, changed altered or amended, except as indicated on Exhibit B attached hereto. Except for the Lease and _____________________, there are no agreements between Landlord and Tenant, written or oral, that affect Tenant’s occupancy of the Premises.
To the actual current knowledge of the undersigned, no party is currently in default under the Lease, and no event has occurred that, with the giving of notice or passage of time, or both, would constitute a default under the Lease by either party. Any individual signing this Estoppel Certificate shall have no personal liability hereunder. [If Tenant is providing Estoppel Certificate: Tenant has accepted the Premises, subject to the terms and conditions set forth in the Lease.] [INSERT OTHER STATEMENTS AS APPROPRIATE.]
The undersigned [Landlord]/[Tenant] hereby acknowledges the right of [Landlord]/[Tenant], its present and future lenders, its successor and assigns and any other parties in interest to rely upon the statements and representations contained in this Estoppel Certificate. [Landlord OR Tenant]
________________________
By: ___________________
Name: ___________________
Its: ___________________
SCHEDULE 19.23
Third-Party Beneficiary Provisions
This Schedule 19.23 is attached to and incorporated fully into the body of that Amended and Restated Sublease dated _________________, 2024 (the “Lease”) by and between THE CITY OF FULLERTON, CALIFORNIA, as “Landlord” and SKY HARBOR FULLERTON, LLC, a Delaware limited liability company, as “Tenant”. Capitalized terms not defined in this Schedule 19.23 shall have the meanings given to them elsewhere in the Lease.
The rights of Landlord described in the following provisions shall run to the benefit of Master Landlord, such that in each instance, as applicable, wherever Landlord’s consent is required, Master Landlord’s consent shall also be required.
Section 1.38 (Permitted Uses)
Section 2.2 (Use of the Premises)
Section 2.6 (Termination of Franchise Agreement)
Section 2.11.1 (Surrender of Lien Free Title)
Article 3 (Improvements)
Section 5.1 (Use of Premises)
Section 5.9 (Advertising and Signs)
Section 6.3 (Management and Operation of the Premises and Project) Article 9 (Damage or Destruction)
Section 12.1 (Assignment)
Section 12.3 (Space Leases)
Article 14 (Hypothecation)
Section 19.4.2 (Indemnification Procedures for Tenant Indemnities) SCHEDULE 19.26
Memorandum of Lease Form
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
________________________________
________________________________
________________________________
Attn: ___________________________
THIS SPACE ABOVE FOR RECORDER’S USE
APN NO: __________________
MEMORANDUM OF LEASE
THIS MEMORANDUM OF LEASE (this “Memorandum”), dated _____________, 202___ (“Effective Date”), is entered into by and between THE CITY OF FULLERTON, CALIFORNIA (“Landlord”), and SKY HARBOR FULLERTON, LLC, a Delaware limited liability company (“Tenant”).
1. Lease; Property. Landlord and Tenant have entered into an unrecorded Amended and Restated Sublease dated ___________________, 2024 (the “Sublease”), with respect to that certain property commonly known as __________________, _______________, California, as more particularly described on Schedule 1, attached hereto and made a part hereof (the “Premises”), which Sublease replaces and supersedes that certain Sublease dated March 19, 1987, as amended by that certain First Amendment to Sublease dated May 27, 1987, that certain First Amendment to Sublease dated September 29, 1988, and that certain Third Amendment to Sublease, and Amended to Memorandum of Sublease, First Amended Lease, and Nondisturbance and Recognition Agreement dated January 31, 1990 (collectively, as amended, the “Existing Sublease”).
2. Term. The term of the Sublease (the “Term”) shall be from _________________, 202___ until ________________, 20____, unless earlier terminated in accordance with the terms of the Sublease.
3. Incorporation of Lease. This Memorandum is a memorandum of the Sublease. The purpose of this Memorandum is to give notice of the Sublease, and all of the terms and conditions of the Sublease are incorporated herein by reference as if they were fully set forth herein. In the event of any inconsistency between the terms of this Memorandum and the terms of the Sublease, the terms of the Sublease shall prevail.
Remainder of page intentionally left blank.
Signatures on following page.
IN WITNESS WHEREOF, Landlord and Tenant have caused this Memorandum to be duly executed as of the date first above written.
LANDLORD:
THE CITY OF FULLERTON, CALIFORNIA
By: _____________________
Name: _____________________
Its: _____________________
Date: _________________, 2024
TENANT:
SKY HARBOR FULLERTON, LLC,
a Delaware limited liability company
By: _____________________
Name: _____________________
Its: _____________________
Date: _________________, 2024
Schedule 1
Legal Description
SMRH:4853-5072-7012.20
Schedule 4
060624
49HX-369327
Schedule 4
SMRH:4853-5072-7012.20
Schedule 10, page 1
060624
49HX-369327
SMRH:4853-5072-7012.20
Schedule 12.3
060624
49HX-369327
SMRH:4853-5072-7012.20
Schedule 19.3
060624
49HX-369327
SMRH:4853-5072-7012.20
Schedule 19.23
060624
49HX-369327
SMRH:4853-5072-7012.20
Schedule 19.26
060624
49HX-369327
SMRH:4853-5072-7012.20
-1-
060624
49HX-369327
312355360.5
SMRH:4853-5072-7012.20
Signature Page
060624
49HX-369327
SMRH:4853-5072-7012.20
(1)
060624
49HX-369327
SMRH:4853-5072-7012.20
Exhibit A
060624
49HX-369327
Exhibit B
SMRH:4853-5072-7012.20
Schedule 1.41
060624
49HX-369327
Schedule 3.2