Attachment B
Ground Lease Agreement
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the terms and conditions set forth herein, City hereby leases to Tenant and Tenant agrees to lease the Property in an "as is" condition as tendered from City, subject to any representations, warranties and covenants of the City specifically set forth in this Agreement. Tenant agrees that no representations with respect to the condition or improvements of the Property have been made by City except as specifically set forth in this Agreement.
3. TERM
3.1 Term of Agreement. The initial term of this Agreement shall be ten (10) years from the Commencement Date ("Initial Term"), unless terminated sooner as provided in this Agreement, or extended as provided in Section 3.2.
3.2 Option to Extend. Provided Tenant is not then in default under this Agreement beyond applicable notice and cure periods, Tenant may extend the term of this Agreement for two (2) additional successive terms of five (5) years (the "Option Term") commencing on Expiration of the Initial Term or an Option Term, on the same terms and conditions as contained in this Agreement. Tenant must exercise its option by giving City written notice of its intention to extend the Term at least six (6) months prior to Expiration of the Initial Term or an Option Term.
3.3 Purchase Option. Subject to City's obligation to first comply with the Surplus Lands Act (Cal. Govt. Code §§ 54220, et seq.) and provided Tenant is not in default under this Agreement beyond applicable notice and cure periods, , City shall, in good faith and upon the same material terms as would be offered to other private parties, grant Tenant a continuing First Right of Refusal (FROR) to purchase, should City elect to transfer the Property. For purposes of this Agreement, "transfer" and similar terms mean and include, without limitation, a sale or other transfer of all or any part of the Property, or interest therein, either alone, or as part of a larger sale, provided, however, that "transfer" shall not include the granting of an easement or similar right on a portion of the Property that would not materially interfere, disrupt, or frustrate Tenant's contemplated use pursuant to this Agreement.
3.4 Hold Over. Should Tenant, with City's consent, hold over and continue in possession of the Property after Expiration of the Term or any Option Term, Tenant's continued occupancy of the Property shall be considered a month-to-month tenancy subject to all the terms and conditions of this Agreement, except the provisions of Sections 3.1 and 3.2.
3.5 Redevelopment of Property. Should City redevelop the Property for City use during the term of this Agreement, or any extensions thereof, which will materially interfere with Tenant's ability to occupy or use all or a portion of the Property, City shall provide Tenant with at least two (2) years' prior written notice of termination of this Agreement, and in no event shall City commence redevelopment of the Property until at least two (2) years after Tenant's receipt of such written notice.
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4.4 Notwithstanding the Index adjustments described above, if City, in its sole and absolute discretion, believes that notwithstanding such adjustments pursuant to Section 4.2, Rent, as adjusted, does not accurately reflect the fair market rental value of the Property ~the "FMR"), City may elect to adjust Rent at the commencement of the eleventh (111 ) Lease Year to reflect the FMR pursuant to this Section (which adjustment shall be in lieu of the adjustment pursuant to Section 4.2). City shall provide written notice to Tenant if it elects to adjust rent under this Section and such Rent adjustment shall become effective no sooner than nine (9) months after notice. Within thirty (30) calendar days thereafter, City and Tenant will attempt in good faith to agree upon an adjustment in Rent based upon the FMR. If City and Tenant are unable to agree within such thirty (30) calendar day period, the Property will be appraised to determine its fair market rental value in accordance with this Section. City shall, within ten (10) days after the expiration of such thirty (30) day period, submit to Tenant three (3) California licensed appraisers experienced in commercial real estate lease appraisal, and experience in commercial real estate in the Newport Beach, California area; Tenant shall select one (1) appraiser from the three (3) submitted appraisers to appraise the Property. City shall pay all costs associated with the appraiser and the appraisal. The fair market rental value determined by the appraiser will constitute rent for the eleventh (11th) Lease Year and each successive year remaining on the Agreement; provided, however, that in no event will Rent so determined be less than that otherwise payable through the annual Index adjustments described above.
4.5 Payment Location. All payments of rent shall be made in lawful money of the United States of America and shall be paid to City in person or by United States' mail, or overnight mail service, at the Cashier's Office located at 100 Civic Center Drive, P.O. Box 1768, Newport Beach, California, 92658, or to such other address as City may from time to time designate in writing to Tenant. If requested by City, Tenant shall make payments electronically (at www.newportbeachca.gov) or by wire transfer (at Tenant's cost). Tenant assumes all risk of loss and responsibility for late charges and delinquency rates if payments are not timely received by City regardless of the method of transmittal.
4.6 Late Payment. Tenant hereby acknowledges that the late payment of Rent or other sums due hereunder will cause City to incur costs not contemplated by this Agreement, the exact amount of which is extremely difficult to ascertain. Such costs include, but are not limited to, processing and accounting charges. Accordingly, any payment of any sum to be paid by Tenant not paid when due and then within five (5) calendar days of its due date shall be subject to a ten percent (10%) late charge.
City and Tenant agree that this late charge represents a reasonable estimate of such costs and expenses and is fair compensation to City for its loss suffered by such late payment by Tenant.
4.7 Interest on Unpaid Sums. Unpaid sums due to either City or Tenant under this Agreement shall bear interest at the rate of ten percent ( 10%) per annum on the unpaid balance, including but not limited to late payment penalties, from the date due until paid.
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