GROUND LEASE
By and Between CITY OF ORANGE,
"Landlord"
and
KATELLA TERRACE, L.P.,
"Tenant"
Dated as of ____________, 2022
2 GROUND LEASE
THIS GROUND LEASE (the "Lease"), dated, for identification purposes only, as of ____________, 2022 is entered into by and between the City of Orange, a municipal corporation ("Landlord"), and Katella Terrace, L.P., a California limited partnership ("Tenant").
RECITALS
A. WHEREAS, Tenant is controlled by an experienced owner, developer and manager of affordable housing for lower income seniors; and
B. WHEREAS, Landlord is the owner of certain real property situated in the City of Orange, County of Orange, State of California, and legally described in Exhibit "A" attached hereto and incorporated herein by this reference (the "Property").
NOW, THEREFORE, for and in consideration of the mutual promises, covenants, and conditions herein contained, Landlord and Tenant agree as follows:
ARTICLE 1. LEASE OF THE PROPERTY
1.1 Lease of the Property. Landlord leases to Tenant, and Tenant leases from Landlord, the Property on the terms and conditions as set forth in this Lease. The lease of the Property to Tenant pursuant to this Ground Lease is subject to (i) that certain Density Bonus Housing Agreement concerning the Property dated January 20, 2020 and recorded in the Official Records, Orange County Clerk -Recorder, on March 2, 2020 as Document No . 2020000090418 (the “Density Bonus Agreement”); (ii) that certain Dispos ition and Development Agreement entered into by and between Landlord and Tenant dated _________ , 2022 (the “DDA”); and (iii) the Regulatory Agreement dated _________, 20__ entered into by and between Landlord and Tenant dated of even date herewith and recorded in the Official Records, Orange Count y Clerk- Recorder, on _____ as Document No. _________ (the “Regulatory Agreement”). Tenant for itself and its successors and assigns to the leasehold interest conveyed by this Ground Lease or any portion thereof or any interest therein covenants and agrees to be bound by the provisions of this Ground Lease, the Density Bonus Agreement, the DDA and the Regulatory Agreement.
1.2 Purpose of Lease. The purpose of this Lease is to provide for the construction, development, maintenance, management and operation of a 74-unit senior housing project and associated uses in accordance with (i ) the Density Bonus Agreement ; and (ii) the DDA; and (iii) the Regulatory Agreement. Tenant will not occupy or use the Property, nor permit the Property to be occupied or used, nor do or permit anything to be done in or on the Property, in whole or in part, for any other purpose, and the use and occupancy of the Property shall at all times be consistent with the requirements of the Density Bonus Agreement, the DDA and the Regulatory Agreement set forth in Exhibit “E” attached hereto and incorporated herein by this reference..
1.3 Recorded Encumbrances. This Lease, the interests of Landlord and Tenant hereunder, and the Property, are in all respects subject to and bound by all of the covenants, conditions, restrictions, reservations, rights, rights-of-way and easements of record.
3 1.4 Memorandum of Lease. A short form Memorandum of Lease referring to this Lease is being executed by Landlord and Tenant concurrently herewith, and recorded in the Official Records of the County of Orange, California.
ARTICLE 2. DEFINITIONS
All capitalized terms used herein may be defined where first used in this Lease and/or as set forth in this Article 2.
"Award" means any compensation or payment made or paid for the Total, Partial or Temporary Taking of all of any part of or interest in the Property and/or the Improvements, whether pursuant to judgment, agreement or otherwise.
"Capital Improvements" means all work and improvements with respect to the Property for which costs and expenses may be capitalized in accordance with generally accepted accounting principles.
"City" means the City of Orange, a California municipal corporation. "Commencement Date" has the meaning set forth in Article 3.
“Civil Code” means the California Civil Code.
"Event of Default" has the meaning set forth in Article 19.
“Government Code” means the California Government Code.
"Hazardous Materials" means any chemical, substance, object, condition, material, waste, or controlled substance which is or may be hazardous to human health or safety or to the environment, due to its radioactivity, ignitability, corrosiveness, explosivity, flammability, reactivity, toxicity, infectiousness, or other harmful or potentially harmful properties or effects, including, without limitation, all chemicals, substances, materials, or wastes that are now or hereafter may be listed, defined, or regulated in any manner by any federal, state, or local government agency or entity, or under any federal, state, or local law, regulation, ordinance, rule, policy or procedure due to such properties or effects. Notwithstanding the foregoing, "Hazardous Materials" shall not include any substances typically used in the construction, rehabilitation, operation, maintenance or repair of an apartment complex provided that such substances are used in accordance with all applicable laws.
"Impositions" means all taxes (including, without limitation, sales and use taxes); assessments (including, without limitation, all assessments for public improvements or benefits whether or not commenced or completed prior to the Commencement Date and whether or not to be completed within the Term); water, sewer or other rents, rates and charges; excises; levies; license fees; permit fees; inspection fees and other authorization fees and other charges; in each case whether general or special, ordinary or extraordinary, foreseen or unforeseen, of every character (including all interests and penalties thereon), which are attributable or applicable to any portion of the Term and may be assessed, levied, confirmed or imposed on or in respect of, or be
4 a lien upon (a) the Property or the Improvements, or any part thereof, or any estate, right or interest therein, (b) any occupancy, use or possession of or activity conducted on the Property or the Improvements, or any part thereof, or (c) this Lease. The term "Impositions" shall also include any and all increases in the foregoing, whether foreseen or unforeseen, ordinary or extraordinary, including, without limitation, any increase in real property taxes resulting from a sale of the Property by Landlord.
"Improvements" means all buildings, structures and other improvements, including the building fixtures thereon, now located on the Property or hereafter constructed on the Property; all landscaping, fencing, walls, paving, curbing, drainage facilities, lighting, parking areas, roadways and similar site improvements now located or hereafter placed upon the Property.
"Insurance Requirements" means all terms of any insurance policy covering or applicable to the Property or the Improvements, or any part thereof, all requirements imposed by the issuer of any such policy, and all orders, rules, regulations and other requirements of the National Board of Fire Underwriters (or any other body exercising similar functions) applicable to or affecting the Property or the Improvements, or any part thereof, or any use or condition of the Property or the Improvements, or any part thereof.
"Legal Requirements" means all laws, statutes, codes, acts, ordinances, orders, judgments, decrees, injunctions, rules, regulations, permits, licenses, authorizations, directions and requirements of and agreements with all governments, departments, commissions, boards, courts, authorities, agents, officials and officers, foreseen or unforeseen, ordinary or extraordinary, which now or at any time hereafter may be applicable to the Property or the Improvements, or any part thereof, or to any of the adjoining sidewalks, streets or ways, or to any use or condition of the Property or the Improvements, or any part thereof.
"Memorandum of Lease" refers to the memorandum of lease which has been recorded as described in Section 1.4.
"Mortgage" has the meaning set forth in Section 16.1.1.
"Mortgagee" has the meaning set forth in Section 16.1.1.
"Notice of Intended Taking" means any notice or notification on which a reasonably prudent person would rely and which said person would interpret as expressing an existing intention of Taking as distinguished from a mere preliminary inquiry or proposal. It includes, without limitation, the service of a condemnation summons and complaint on a party to this Lease.
The notice is considered to have been received when a party to this Lease receives from the condemning agency or entity a notice of intent to take, in writing, containing a description or map of the taking which reasonably defines the extent of the taking.
"Partial Taking" means any taking of the fee title of the Property and/or the Improvements that is not either a Total, Substantial or Temporary Taking.
5 "Potential Default" means any condition or event which, with the lapse of time or the giving of notice, or both, would constitute an Event of Default.
"Project" refers to the Property and the Improvements constructed and maintained thereon.
"Property" has the meaning set forth in Recital "B," above.
“Substantial Taking" means the Taking of so much of the Property and/or the Improvements that the portion of the Property and/or the Improvements not taken cannot be repaired or reconstructed, taking into consideration the amount of the Award available for repair or reconstruction, so as to constitute a complete, rentable structure, capable of producing a proportionately fair and reasonable net annual income, and all other charges payable under this Lease, and after performance of all covenants and conditions required by Tenant by law and under this Lease.
"Taking" means a taking or damaging, including severance damage, by eminent domain or by inverse condemnation or for any public or quasi-public use under any statute. The taking may occur as a result of a transfer pursuant to the recording of a final order in condemnation, a voluntary transfer or conveyance to the taking authority under threat of condemnation, or a transfer while condemnation proceedings are pending. Unless otherwise provided, the taking shall be deemed to occur as of the earlier of (a) the date actual physical possession is taken by the condemner, or (b) the date on which the right to compensation and damages accrues under the law applicable to the Property and/or the Improvements. A taking as used in this Lease does not include the voluntary dedication of any portion of the Property necessary to obtain building permits or to comply with any other applicable governmental rule, regulation or statute; nor does it include the enactment of any law, ordinance or regulation which may affect the use or value of the Property but which does not involve an actual taking of any portion thereof. Eminent domain actions filed by Landlord against owners of portions of the Property and pending as of the Commencement Date shall not be deemed, construed or interpreted as a Taking under this Lease.
"Temporary Taking" means a Taking of all or any part of the Property and/or the Improvements for a term certain which term is specified at the time of Taking. Temporary Taking does not include a taking which is to last for an indefinite period or a taking which will terminate only upon the happening of a specified event unless it can be determined at the time of the taking substantially when such event will occur. If a Taking for an indefinite term should take place, it shall be treated as a Total, Substantial or Partial Taking in accordance with the definitions set forth herein.
"Term" has the meaning set forth in Article 3.
"Total Taking" means the taking of the fee title to all of the Property.
6 ARTICLE 3. TERM
The Term of this Lease shall commence on the date first written above , herein referred to as the "Commencement Date". The Landlord shall record the Memorandum of Lease upon the Commencement Date, and Tenant shall be entitled to possession of the Property upon recordation of the Memorandum of Lease. The Term of this Lease shall commence upon the Commencement Date and shall end 60 years from that date (the "Term").
ARTICLE 4. RENTAL
4.1 Rent. Tenant shall pay to Landlord, an Annual Administrative Fee of Five Thousand Dollars ($5,000.00). In addition to the Annual Administrative Fee, t he specific terms of Rent will be negotiated in the DDA, based upon the fair market appraised value of the ground lease, payable in a form consistent with the financial feasibility of the Project.
4.2 Utilities. Tenant shall be responsible for the payment of all water, gas, electricity and other utilities used in connection with the Project and the Property throughout the Term of this Lease.
4.3 Taxes and Assessments.
4.3.1 Payment of Taxes. Subject to any applicable exemptions, Tenant shall pay real property taxes applicable to the Property during the Term of this Lease. All such payments shall be made prior to the delinquency date of such payment. If any such taxes paid by Tenant shall cover any period of time prior to or after the expiration of the Term, Tenant's share of such taxes shall be equitably prorated to cover only the period of time within the tax fiscal year during which this Lease shall be in effect, and Landlord shall reimburse Tenant to the extent required.
4.3.2 Personal Property. Tenant shall pay prior to delinquency all taxes assessed against and levied upon trade fixtures, furnishings, equipment and all other personal property of Tenant contained in the Property or elsewhere. When possible, Tenant shall cause said trade fixtures, furnishings, equipment and all other personal property to be assessed and billed separately from the real property of Landlord.
ARTICLE 5. POSSESSION OF PROPERTY
5.1 Acceptance of Premises. Tenant hereby accepts the Property.
5.2 Ownership of Improvements. During the term of this Lease, (a) fee title to the Property is and shall be vested in Landlord; and (b) fee title to all Improvements, now existing or later made, on the Property are and shall be vested in Tenant.
5.3 Surrender of Property.
5.3.1 Upon Expiration or Termination. Tenant agrees that on expiration or earlier termination of the Term, which in the case of an early termination due to the occurrence of an Event of Default is not timely cured by Tenant in accordance with the provisions of this Lease,
7 the leasehold estate hereby granted to Tenant shall be terminated and shall revert to Landlord, and all Improvements on the Property shall become the property of Landlord free and clear from any liens or claims whatsoever (other than non-monetary liens previously approved or otherwise accepted in writing by Landlord), in good condition, reasonable wear and tear excepted without any further compensation therefor from Landlord to Tenant or any other person.
5.3.2 Condition. On expiration or termination of the Term, Tenant shall peaceably and quietly leave and surrender the Property and the Improvements to Landlord in good order, condition and repair, reasonable wear and tear and obsolescence excepted. Tenant shall leave in place and in good order, condition and repair, all fixtures and machinery; except (if Tenant is not then in default under this Lease) Tenant shall have the right to remove only Tenant-owned appliances, other unattached equipment, furniture and merchandise that Tenant shall have installed, which removal must be done without material damage to the Property or Improvements.
Landlord shall have the right to have the Property and the Improvements inspected at Tenant's cost to determine whether the Property and the Improvements have been property maintained, repaired and restored in accordance with the terms of this Lease. That notwithstanding, and subject to the exception of the environmental indemnities that shall survive any termination in perpetuity, Tenant shall not be responsible for the interior physical condition of individual occupied apartments on the termination or expiration of this Lease.
5.3.3 Delivery of Documents. Contemporaneous with the expiration or termination of the Term, upon request of Landlord Tenant shall deliver to Landlord the following:
(a) Such documents, instruments and conveyances as Landlord may reasonably request to enable Landlord's ownership of the Property and the Improvements to be reflected of record, including, without limitation, a quitclaim deed in recordable form to the Property and the Improvements.
(b) All construction plans, surveys, permits, existing contracts for services, maintenance, operation, and other documents relating to use, operation, management, and maintenance of the Improvements as may be in effect and in the possession of Tenant at the time.
(c) All documents and instruments required to be delivered by Tenant to Landlord pursuant to this Section shall be complete, legible, originals or true copies, and shall otherwise be in a form reasonably satisfactory to Landlord.
ARTICLE 6. REPRESENTATIONS AND WARRANTIES
6.1 Landlord's Representations. Landlord represents and warrants to Tenant that it owns the Property in fee simple, free and clear of all monetary encumbrances and has the power and authority to enter into this Lease and perform all obligations and agreements incidental or pertinent to this Lease. Landlord covenants not to voluntarily encumber its fee interest with any monetary encumbrances without the prior written consent of Tenant.
8 6.2 Tenant’s Representations.
6.2.1 Tenant represents and warrants to Landlord that it has examined the Property and acknowledges that it hereby accepts possession of the Property in its "AS IS" condition, with all faults and defects, including, without limitation, infestation of or damage to the Property caused by wood-destroying pests or organisms.
6.2.2 Tenant is not in default under any law or regulation or under any order of any federal, state or local court, board, commission or agency whatsoever, and there are no claims, actions, suits or proceedings pending or, to the knowledge of Tenant, threatened against or affecting Tenant or the Property, at law or in equity, before or by any federal, state or local court, board, commission or agency whatsoever that might, if determined adversely to Tenant, materially affect Tenant's ability to perform its obligations hereunder.
6.2.3 All information provided by Tenant to the California Debt Limit Allocation Committee ("CDLAC") and the California Tax Credit Allocation Committee (“TCAC”) shall be true and correct in all material respects as of the date of the applications are submitted. Tenant acknowledges it has an obligation to provide CDLAC, TCAC and Landlord updated information as pertinent.
6.2.4 All documents, materials and information provided by Tenant to Landlord relating to Tenant's qualifications, financial strength, and ability to perform its obligations under this Lease are true, correct and complete in all material respects as of their respective dates, and no material adverse change has occurred, or is reasonably likely to occur, that would make any such documents, materials or information incorrect, incomplete, or misleading in any material respect.
ARTICLE 7. DEVELOPMENT OF THE PROPERTY
7.1 Construction. All Improvements on the Property shall be constructed in a good and workmanlike manner, and shall comply with the Scope of Development attached hereto as Exhibit D and with all applicable governmental permits, laws, ordinances and regulations. Tenant shall comply with the Schedule of Performance attached hereto as Exhibit C. Tenant will construct or cause to be constructed on the Property the Improvement s in accordance with this Lease and the DDA, including the Scope of Development . Tenant will carry out the development, construction (as defined by applicable law) and operation of the Project on the Property, including, without limitation, any and all p ublic works (as defined by applicable law), if any, in conformity with all applicable local, state and federal laws, including, without limitation, all applicable federal and state labor laws (including, without limitation, any applicable requirement to pa y prevailing wages).
7.2 Site Conditions. All portions of the Property, and any improvements thereon, which are leased to Tenant by Landlord will be leased in an “as is” condition, with no warranty, express or implied, by Landlord as to the condition of the soil, its geology, or the presence of known or unknown faults or the presence of any Hazardous Materials, and it will be the sole responsibility of Tenant, at Tenant’s expense, to investigate and determine the soil conditions of
9 the Property and the suitab ility of the Property for the development of the Project. If the soil conditions of the Property, or any part thereof, are not in all respects entirely suitable for the use or uses to which the Property will be put, then it is the sole responsibility and obligation of Tenant to take such action as may be necessary to place the Property and the soil conditions thereof in all respects in a condition entirely suitable for the development of the Property as described in the DDA and the Scope of Development, whi ch may include demolition, clearing, or moving buildings, structures, or other improvements, and removal of Hazardous Materials. Tenant hereby releases Landlord and its respective officers, employees, agents and consultants from any and all claims, liabilities, losses, damages, judgments, costs or expenses arising from or connected to any and all matters or statements of fact affecting the Property concerning or related to the physical condition of the Property.
7.3 Governmental Approvals. If requested by Landlord in writing, Tenant covenants and agrees to deliver to Landlord conformed copies of all governmental approvals and permits obtained by Tenant for the construction, alteration or reconstruction of any Improvements upon the Property. In no event shall Tenant commence construction of any Improvements pursuant to the provisions of this Article 7 until Tenant shall have obtained all necessary governmental approvals and permits to so construct such Improvements.
7.4 Notice of Non-Responsibility. Landlord shall have the right to record and post appropriate notices of non-responsibility on the Property as may be provided by applicable law.
7.5 Notice of Completion. On completion of construction of the Improvements, Tenant shall file or cause to be filed a notice of completion.
7.6 Subsequent Alterations. Tenant may from time to time, at its sole expense, make improvements and other alterations to the Property which Tenant reasonably determines to be beneficial. Tenant shall timely pay any obligation incurred by Tenant with respect to any such alterations or improvements that could become a lien against the Property.
7.7 Indemnification. Tenant hereby agrees, to the fullest extent of the law, to defend, indemnify and hold harmless Landlord and its members, officers, agents, employees and consultants (hereinafter collectively referred to as “ Indemnitees”) from and against any and all loss, damage, cost, expense, liability, claims, demands, suits, reasonable attorneys’ fees and judgments arising directly or indirectly from or in any manner connected to Tenant’s possession, occupancy or use of the Property or arising from or in any manner connected to Tenant’s construction of the Improvements, business, activities, operations, services or work conducted in, on or about the Property regardless of any active or passive negligence by any or all Indemnitees, except as otherwise stated herein.
Tenant further agrees to indemnify, defend and hold harmless Indemnitees from and against all loss, damage, costs, expense, liability, claims, demands, suits, reasonable attorneys’ fees and judgments arising from or in any manner connected to the furnishing or supplying of any work, services, materials, equipment or supplies to Tenant or on Tenant’s behalf by any persons, firms, corporations or other entities in, on or about the Property.
10 Indemnitees will be entitled to recovery of attorneys’ fees incurred as a result of Tenant’s failure to provide the defense and indemnity required by this Section 7.7. This Section will survive the expiration or termination of this Lease.
ARTICLE 8. USE OF THE PROPERTY, HAZARDOUS MATERIALS, AND
NONDISCRIMINATION
8.1 No Use of Hazardous Materials on the Property. Tenant covenants and agrees that it shall not use, store, dispose, release, handle or otherwise manage Hazardous Materials on the Property except in connection with any construction, rehabilitation, operation, maintenance or repair of the Improvements or in the ordinary course of its business, and that such conduct shall be done in compliance with all applicable federal, state and local laws.
8.2 Notice and Remediation by Tenant. Tenant shall promptly give the Landlord written notice of any release of any Hazardous Materials, and/or any notices, demands, claims or orders received by Tenant from any governmental agency pertaining to Hazardous Materials which may affect the Property.
8.3 Sub-Tenants. No action by any Sub-Tenant in violation of its sublease shall constitute a cause to terminate this Lease provided that Tenant pursues its available remed ies against such Sub-Tenant.
8.4 Nondiscrimination. Tenant covenants by and for itself, its successors and assigns, and all persons claiming under or through them, that there shall be no discrimination against or segregation of any person or group of persons, on account of any basis listed in Government Code Section 12955(a) and (d), as those bases are defined in Sections 12926, 12926.1, 12955(m) and (p)(1), and 12955.2, in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Property, nor shall Tenant, or any person claiming under or through Tenant, establish or permit any practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of Tenants, Sub-Tenants, or vendees in the Property. Notwithstanding the foregoing, with respect to familial status, the foregoing shall not be construed to apply to housing for older persons, as defined in Government Code Section 12955.9. With respect to familial status, nothing herein shall be construed to affect Civil Code Sections 51.2, 51.3, 51.4,
51.10, 51.11 and 799.5, relating to housing for senior citizens. Civil Code Section 51(d) and 1360, and Government Code Section 12955 (n), (o) and (p) shall apply to this Section 8.4.
8.5 Form of Nondiscrimination and Nonsegregation Clauses. All leases and contracts made or entered into by Tenant, its successors or assigns, as to any portion of the Property shall contain the following language:
8.5.1 In leases: “(1) Tenant herein covenants by and for itself, its successors and assigns, and all persons claiming under or through them that there shall be no discrimination against or segregation of, any person or group of persons on account of any basis listed in Government Code Section 12955(a) and (d), as those bases are defined in Sections 12926, 12926.1, 12955(m) and (p)(1), and 12955.2, in the leasing, subleasing, transferring, use, occupancy, tenure or enjoyment of the premises herein leased nor shall the Tenant or any person claiming under or
11 through the Tenant, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of Tenants, Sub- Tenants, or vendees in the premises herein leased. (2) Notwithstanding paragraph (1), with respect to familial status, paragraph (1) shall not be construed to apply to housing for older persons, as defined in Government Code Section 12955.9. With respect to familial status, nothing in paragraph (1) shall be construed to affect Civil Code Sections 51.2, 51.3, 51.4, 51.10, 51.11, and 799.5, relating to housing for senior citizens. Civil Code Section 51(d) and 1360, and Government Code Section 12955(n), (o), and (p) shall apply to paragraph (1).”
8.5.2 In contracts: “(1) There shall be no discrimination against or segregation of, any person or group of persons on account of any basis listed in Government Code Section 12955(a) and (d), as those bases are defined in Sections 12926, 12926.1, 12955(m) and (p)(1), and 12955.2, in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Property nor shall the transferee, or any person claiming under or through the transferee, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of Tenants, Sub-Tenants, or vendees in the premises herein leased. (2) Notwithstanding paragraph (1), with respect to familial status, paragraph (1) shall not be construed to apply to housing for older persons, as defined in Government Code Section 12955.9. With respect to familial status, nothing in paragraph (1) shall be construed to affect Civil Code Sections 51.2, 51.3, 51.4, 51.10, 51.11, and 799.5, relating to housing for senior citizens.
Civil Code Section 51(d) and 1360, and Government Code Section 12955 (n), (o), and (p) shall apply to paragraph (1).”
8.6 Effect and Duration of Covenants. The covenants established in this Article shall, without regard to technical classification and designation, be binding on Tenant and any successor in interest to the Property, or Tenant's leasehold interest therein, or any part thereof, for the benefit and in favor of the Landlord, until the expiration of the Term, except to the extent said covenant expressly provides that it shall survive the expiration of the Term.
8.7 Use of the Property. Tenant will use the Property solely for the construction of the Project, in accordance with this Lease and the DDA, including the Scope of Development, and for the maintenance and operation of the Project in accordance with this Lease, the Density Bonus Agreement and the Regulatory Agreement. Accordingly, the rental, use, occupancy, eligibility of tenants, affordable rent, and allocation of units shall all be in accordance with the Density Bonus Agreement and the Regulatory Agreement.
ARTICLE 9. INSURANCE
9.1 Tenant's Insurance. Without limiting Landlord's right to indemnification, Tenant shall secure and maintain insurance coverage as set forth in this Article.
9.2 Commercial General and Automobile Liability Worker's Compensation.
Commencing on the Commencement Date and continuing throughout the Term of this Lease, Tenant shall procure and maintain, at its sole cost and expense, in a form and content satisfactory to the Landlord and City, the following policies of insurance:
12 9.2.1 Commercial General Liability Insurance covering bodily injury, property damage, personal injury, and advertising injury written on a per occurrence and not a claims-made basis containing the following minimum limits: (i) general aggregate limit of Ten Million Dollars ($10,000,000); (ii) products-completed operations aggregate limit of Three Million Dollars ($3,000,000); (iii) personal and advertising injury limit of One Million Dollars ($1,000,000); and (iv) each occurrence limit of One Million Dollars ($1,000,000). Said policy shall include the following coverages: (I) blanket contractual liability (specifically covering the indemnification clause contained in Section 9.8, below); (II) products and completed operations; (III) independent contractors; (IV) Owner's broad form property damage; (V) severability of interest; (VI) cross liability; and (VII) property damage liability arising out of the so-called "XCU" hazards (explosion, collapse and underground hazards). The policy shall be endorsed to have the general aggregate apply to this Project only.
9.2.2 A policy of worker's compensation insurance in such amount as will fully comply with the laws of the State of California and which shall indemnify, insure, and provide legal defense for Landlord and Tenant against any loss, claim, or damage arising from any injuries or occupational diseases occurring to any worker employed by or any persons retained by Tenant in the course of carrying out the work or services contemplated in this Lease, and Employers Liability Insurance in an amount not less than One Million Dollars ($1,000,000) combined single limit for all damages arising from each accident or occupational disease.
9.2.3 A policy of comprehensive automobile liability insurance written on a per occurrence basis in an amount not less than Two Million Dollars ($2,000,000) combined single limit covering all owned, non-owned, leased and hired vehicles used in connection with the Work.
9.3 Property; Business Interruption; Boiler and Machinery Insurance.
Commencing on the date Landlord issues a Release of Construction Covenants for the Project and continuing throughout the term of this Lease, Tenant shall procure and maintain, at its sole cost and expense, in a form and content satisfactory to the City, the following insurance:
9.3.1 Insurance against fire, extended coverage, vandalism, and malicious mischief, and such other additional perils, hazards, and risks as now are or may be included in the standard "all risk" form in general use in Orange County, California, with the standard form fire insurance coverage in an amount equal to full actual replacement cost thereof, as the same may change from time to time. The above insurance policy or policies shall include coverage for earthquakes to the extent generally and commercially available at commercially reasonable rates, if such insurance is generally obtained for affordable Projects in the counties of Orange and Los Angeles. Landlord shall be a loss payee under such policy or policies and such insurance shall contain a replacement cost endorsement.
9.3.2 Business interruption and extra expense insurance to protect Tenant and Landlord covering loss of revenues and/or extra expense incurred by reason of the total or partial suspension or delay of, or interruption in, the operation of the Project caused by loss or damage to, or destruction of, any part of the insurable real property structures or equipment as a result of the perils insured against under the all-risk physical damage insurance, covering a period of suspension, delay, or interruption of at least twelve (12) months, in an amount not less than the amount required to cover such business interruption and/or extra expense loss during such period.
13 9.3.3 Boiler and machinery insurance in the aggregate amount of the full replacement value of the equipment typically covered by such insurance.
9.4 Contractor Insurance Requirements. Tenant shall cause any general contractor with whom it has contracted for the performance of work on the Property to secure, prior to commencing any activities hereunder, and maintain insurance that satisfies all of the requirements of this Article.
9.5 Additional Requirements. The following additional requirements shall apply to all of the above policies of insurance:
9.5.1 All of the above policies of insurance shall be primary insurance and, except the Worker's Compensation, Employer Liability insurance, and automobile liability insurance, shall name Landlord, City and their respective officers, officials, members, employees, agents, and representatives (collectively, "Landlord and City and Landlord and City Personnel") as additional insureds on an ISO Form CG 20:10 (current version) or substantially similar form and not an ISO Form CG 20:09.The insurer shall waive all rights of subrogation and contribution it may have against Landlord and City and Landlord and City Personnel and their respective insurers. All of said policies of insurance shall provide that said insurance may not be amended or cancelled without providing thirty (30) days' prior written notice to Landlord. In the event any of said policies of insurance are cancelled, Tenant shall, prior to the cancellation date, submit new evidence of insurance in conformance with this Section to the Landlord. Not later than the Commencement Date, Tenant shall provide the Landlord and City with Certificates of Insurance or appropriate insurance binders evidencing the above insurance coverages and said Certificates of Insurance or binders shall be subject to the reasonable approval of the Landlord and City.
9.5.2 The policies of insurance required by this Lease shall be satisfactory only if issued by companies of recognized good standing authorized to do business in California, rated "A-" or better in the most recent edition of Best Rating Guide, The Key Rating Guide or in the Federal Register, and only if they are of a financial category Class VII or better, unless such requirements are waived by the Landlord and City due to unique circumstances.
9.5.3 Tenant agrees that the provisions of this Section shall not be construed as limiting in any way Landlord's right to indemnification or the extent to which Tenant may be held responsible for the payment of damages to any persons or property resulting from Tenant's activities or the activities of any person or persons for which Tenant is otherwise responsible.
9.6 Remedies for Defaults Regarding Insurance. In addition to any other remedies Landlord may have if Tenant fails to provide or maintain any insurance policies or policy endorsements to the extent and within the time herein required, Landlord may, at its sole option, after thirty (30) days’ Notice to Tenant:
9.6.1 Obtain such insurance and charge Tenant the amount of the premium for such insurance, in which event Tenant shall promptly remit such sum to Landlord;
9.6.2 Withhold any payment(s) which become due to Tenant hereunder until Tenant demonstrates compliance with the requirements hereof; and
14 9.6.3 Declare Tenant in Default and exercise its rights and remedies under this Lease.
Exercise of any of the above remedies, however, is an alternative to other remedies Landlord may have and is not the exclusive remedy for Tenant's failure to maintain insurance or secure appropriate endorsements.
Nothing herein contained shall be construed as limiting in any way the extent to which Tenant may be held responsible for payment of damages to persons or property resulting from Tenant's contractors or any subcontractor's performance under this Lease.
ARTICLE 10. MAINTENANCE; REPAIRS; ALTERATIONS; RECONSTRUCTION
Throughout the Term, Tenant shall, at Tenant's sole cost and expense, maintain the Property and the Improvements in good condition and repair, ordinary wear and tear excepted, and in accordance with all applicable federal, state and local laws, ordinances and regulations of governmental agencies having jurisdiction.
ARTICLE 11. OWNERSHIP OF AND RESPONSIBILITY FOR IMPROVEMENTS
11.1 Ownership During Term.
11.1.1 Improvements. All Improvements on the Property as permitted or required by this Lease shall, during the Term, be and remain the property of Tenant in fee title, and Landlord shall not have title thereto.
11.1.2 Personal Property. All personal property, furnishings, fixtures and equipment, including, without limitation, Tenant-owned appliances, which are not so affixed to the Property or the buildings thereon as to require substantial damage to the buildings upon removal thereof shall constitute personal property including, but not limited to: (a) functional items related to the everyday operations of the Property; (b) personal property furnishings, fixtures and equipment of the nature or type deemed by law as permanently resting upon or attached to the buildings or land by any means, including, without limitation, cement, plaster, nails, bolts or screws, or essential to the ordinary and convenient use of the Property and the Improvements. At any time during the Term and at termination thereof, Tenant shall have the right to remove any and all such personal property, furnishings, fixtures and equipment; provided that Tenant repairs any damage to the Property or the Improvements caused by such removal.
11.1.3 Basic Building Systems. For purposes of this Lease, the personal property, furnishings, fixtures and equipment described in this Section 11.1 shall not include those major building components or fixtures necessary for operation of the basic building systems such as, but not limited to, the elevators, plumbing, sanitary fixtures, heating and central air-cooling system.
11.2 Ownership at Expiration or Termination.
15 11.2.1 Property of Landlord. At the expiration or earlier termination of the Term, except as provided in Section 11.2.2, all Improvements which constitute or are a part of the Property shall become the property of Landlord.
11.2.2 Removal by Tenant. Tenant shall not be required or permitted to remove the Improvements, or any of them, at the expiration or sooner termination of the Term; provided, however, that subject to the provisions of Section 5.3.2, within thirty (30) days following the expiration or earlier termination of the Term, Tenant may remove all personal property, furniture and equipment.
11.2.3 Unremoved Property. Any personal property, furnishings or equipment not removed by Tenant within thirty (30) days after the expiration or sooner termination of the Term, shall, without compensation to Tenant, become Landlord's property, free and clear of all claims to or against them by Tenant or any third person, firm or entity arising by, through or under Tenant.
11.2.4 Maintenance and Repair of Improvements. Subject to the provisions of this Lease concerning condemnation, alterations and damage and destruction, Tenant agrees to assume full responsibility for the operation and maintenance of the Property and the Improvements and all fixtures and furnishings thereon or therein throughout the Term of the Lease without expense to Landlord, and to maintain and preserve the Property and Improvements in a decent, safe and sanitary condition consistent with all applicable laws. Tenant agrees that Landlord shall not be required to perform any maintenance, repairs or services, or to assume any expense not specifically assumed herein in connection with the Property and Improvements unless specifically required under the terms of this Lease.
11.3 Waste. Subject to the alteration rights of Tenant and damage and destruction or condemnation of the Property or any part thereof, Tenant shall not commit or suffer to be committed any waste of the Property or the Improvements, or any part thereof. Tenant agrees to keep the Property and the Improvements clean and clear of refuse and obstructions, and to dispose properly of all garbage, trash and rubbish.
ARTICLE 12. DAMAGE OR DESTRUCTION OF PROPERTY OR IMPROVEMENTS
12.1 Tenant's Repair Obligation.
12.1.1 In case of damage to or destruction of the Property or the Improvements, or any part thereof, by fire or other cause at any time during the Term of this Lease, Tenant, if and to the extent sufficient insurance proceeds and reserves are available to restore the Property and each Mortgagee approves the application of such proceeds to payment of costs of restoration of the Property to the extent such approval is required under such Mortgagee's loan documents, shall restore the same as nearly as possible to condition and character immediately prior to such damage or destruction. Such restoration shall be commenced with due diligence and in good faith, and prosecuted with due diligence and in good faith, unavoidable delays excepted. If, in case of damage to or destruction of the Property or the Improvements and with consent and approval of each Mortgagee, Tenant elects to terminate this Lease, Tenant shall provide Landlord with written notice of such election within ninety (90) days of the date such damage or destruction occurs,
16 Tenant shall clear the Property of the damaged Improvements and any debris, and this Lease shall immediately terminate concurrently with Landlord's receipt of such election.
12.2 Tenant's Restoration of Premises.
12.2.1 If, during the Term, the Improvements are damaged or destroyed, Tenant shall make the loss adjustment with the insurance company insuring the loss. The proceeds shall be paid directly to the Mortgagee, if any, whose Mortgage is first in priority of lien for application in accordance with the provisions of such Mortgage (notwithstanding anything else in this Lease to the contrary), and if there is not a Mortgagee, to Tenant for the purpose of making the restoration of the Improvements in accordance with this Article.
12.2.2 Both parties shall promptly execute all documents and perform all acts reasonably required by the Insurance Trustee to perform its obligations under this Section 12.2.
12.3 Procedure for Restoring Improvements.
12.3.1 The restoration shall be accomplished as follows:
(a) Tenant shall complete the restoration within twenty-four (24) months after final plans and specifications and working drawings have been approved by the appropriate government bodies and all required permits have been obtained.
(b) Tenant shall retain a licensed contractor that is bendable. During the construction period, the contractor shall be required to carry public liability and property damage insurance, builders risk insurance, standard fire and extended coverage insurance, with vandalism and malicious mischief endorsements in accordance with Article 9.
(c) Tenant shall notify Landlord of the date of commencement of the restoration not later than ten (10) days prior to commencement of restoration to enable Landlord to post and record notices of non-responsibility.
(d) Tenant shall accomplish the restoration in a manner that will cause the least inconvenience, annoyance, and disruption to the Property and the Improvements.
(e) On completion of the restoration, Tenant shall immediately record a notice of completion.
12.4 Mortgagee Protection. The following provisions are for the protection of a Mortgagee and shall, notwithstanding anything contained in this Lease to the contrary, control; provided, however, in the event of any conflict between the terms of this Section and the terms of any Mortgage, the terms of such Mortgage shall prevail:
12.4.1 Insurance. Any insurance proceeds payable from any policy of insurance (other than liability insurance) required by this Lease shall be paid to the Mortgagee, if any, to the extent required by the Mortgage. The Mortgagee, if any, shall have the right to participate in all adjustments, settlements, negotiations or actions with the insurance company regarding the amount
17 and allocation of any such insurance proceeds. Any insurance policies permitted or required by this Lease shall name the Mortgagee, if any, as an additional insured or loss payee, as appropriate, if required by such Mortgage.
12.4.2 Restoration. Tenant shall have no obligation to restore or repair the Improvements following the occurrence of any casualty for which insurance is not required under this Lease. Tenant shall have no obligation to restore or repair damage to the Improvements that cost in excess of available insurance proceeds. In addition, Tenant shall have no obligation to restore or repair damage to the Improvements if the casualty occurs during the last five (5) years of this Lease term. In the event such a loss occurs in the last five years, then, at the election of Tenant, with the prior written consent of the Mortgagee, if any, insurance proceeds shall be used, first, to reduce or pay in full the Mortgage, and, second, to clear the Property of the damaged Improvements and any debris, with any excess being payable as provided in this Lease.
ARTICLE 13. EMINENT DOMAIN
13.1 Notice. The party receiving any notice of the kind specified in this Section 13.1 shall promptly give the other party and each Mortgagee, if any, notice of the receipt, contents and date of the notice received. For purposes of this Article, the term "Notice" shall include:
13.1.1 Notice of Intended Taking;
13.1.2 Service of any legal process relating to condemnation of the Property or the Improvements;
13.1.3 Notice in connection with any proceedings or negotiations with respect to such condemnation; or
13.1.4 Notice of intent or willingness to make or negotiate a private purchase, sale or transfer in lieu of condemnation.
13.2 Representation in Proceedings or Negotiations. Landlord and Tenant shall each have the right to represent their respective interests in each proceeding or negotiation with respect to a Taking or intended Taking and to make full proof of their claims. No agreements or settlement with or sale or transfer to the condemning authority shall be made without the consent of Tenant.
Landlord and Tenant each agree to execute and deliver to the other any instruments which may be required to effectuate or facilitate the provisions of this Lease relating to condemnation.
13.3 Total Taking.
13.3.1 In the event of a Total Taking, this Lease shall terminate as of the date of the Taking.
13.3.2 If this Lease is terminated pursuant to this Section 13.3, the Award for such Taking shall be apportioned and distributed as follows:
18 (a) First, to the Mortgagee, if any, whose Mortgage is first in priority of lien to the extent of such Mortgage and then to other Mortgagees in the order of priority of lien of their respective Mortgages;
(b) Second, to Landlord, a sum equal to the fair market value of Landlord's fee interest in the Property (subject to the remaining Term and the rent reserved) on the date immediately preceding the Taking or threat of condemnation, as determined by the appraisal method set forth in Article 14;
(c) Third, to Tenant, a sum equal to the fair market value of the Improvements made by Tenant on the date immediately preceding the Taking as determined by the appraisal method set forth in Article 14 and determined as if there were no Taking, nor threat of condemnation; plus the residual value of the Term, subject to the rent reserved; plus any part of the Award attributable to the Tax Credits; and
(d) Fourth, to Landlord, the remainder, if any.
13.4 Substantial Taking.
13.4.1 In the event of a Taking which, in Tenant's and Landlord's mutually agreeable judgment is substantial, Tenant may, with the consent and subject to the rights of each Mortgagee, if any, terminate this Lease. For purposes hereof, a Taking shall be deemed "substantial" if it renders the Property economically infeasible for Tenant's intended purpose. If Tenant elects to terminate this Lease under this provision, Tenant shall give written notice of its election to do so to Landlord within forty-five (45) days after receipt of a copy of a Notice of Intended Taking. In the event Landlord disputes the right of Tenant to terminate this Lease under this provision, Landlord shall give Tenant notice of this fact within forty-five (45 days) after receiving the notice of Tenant's election to terminate, and the parties shall either raise this issue in the eminent domain proceeding, if any, as an issue with respect to the apportionment of the Award between Landlord and Tenant or, if there is no eminent domain proceeding, pursue other remedies a permitted by Section 19.2. In the event it is determined that Tenant does not have the right to terminate this Lease, the apportionment of the Award for such Taking and the obligations of Tenant to restore shall be governed by the terms of Section 13.6 or Section 13.7, whichever is applicable.
13.4.2 In the event Tenant terminates this Lease in accordance with this Section
13.4, such termination shall be as of the time when the Taking entity takes possession of the portion of the Property and the Improvements taken. In such event, the Award for such Substantial Taking (including any award for severance, consequential or other damages which will accrue to the portion of the Property and/or the Improvements not taken) shall be apportioned and distributed as follows:
(a) First, to the Mortgagee, if any, whose Mortgage is first in priority of lien to the extent of such Mortgage and then to other Mortgagees in the order of priority of lien of their respective Mortgages to the extent of such Mortgages;
19 (b) Second, to Landlord, a sum equal to the fair market value of Landlord's fee interest in the Property taken (subject to the remaining Term and Rent reserved) on the date immediately preceding the Taking as determined by the appraisal process provided for in Section 14.9 commenced as provided in Section 13.3.2;
(c) Third, to Landlord, a sum equal to the portion of the Award for severance, consequential or other damages which accrued to the portion of Landlord's fee interest in the Property not taken;
(d) Fourth, to Tenant a sum equal to the fair market value of the Improvements made by Tenant taken preceding the date of the Taking as determined by the appraisal process provided for in Article 14, commenced as provided in Section 13.3.2, and as modified by Section 13.6.3; plus the residual value of the Term, subject to the rent reserved; plus any part of the Award attributable to the Tax Credits; and
(e) Fifth, to Landlord, the remainder, if any.
13.5 Tenant's Right to Revoke Notice of Termination. Notwithstanding anything to the contrary contained in Section 13.4, if Tenant has elected to terminate this Lease, and the taking authority abandons or revises the Taking, Tenant shall have forty-five (45) days from receipt of written notice of such abandonment or revision to revoke its notice of termination of this Lease.
13.6 Partial Taking.
13.6.1 In the event of a Partial Taking, this Lease shall continue in full force and effect and there shall be no abatement in or reduction of any of Tenant's obligations hereunder.
13.6.2 The Award for such Partial Taking shall be apportioned and distributed first to the Mortgagee, if any, whose Mortgage is first in priority of lien to the extent of such Mortgage and then to other Mortgagees in the order of priority of lien of their respective Mortgages to the extent of such Mortgages, then to Landlord and Tenant in proportion to the fair market value of their respective interests in the Property and Improvements, as such interests existed immediately prior to such Partial Taking. Notwithstanding anything contained herein to the contrary, any part of the Award attributable to the Low Income Housing Tax Credit shall belong to Tenant.
13.6.3 The fair market value of the parties' respective interests in the Property and the Improvements shall be determined by the appraisal process provided in Article 14, except that the assumptions listed in such Article shall not apply. Rather, the appraisal shall be based on the value of the Property as improved and encumbered by this Lease and on the value of the Improvements as they stand, but without regard to any Taking or threat of condemnation.
13.6.4 Any Award for severance, consequential or other damages which accrues by reason of the Partial Taking to the portion of the Property or the Improvements not taken shall be distributed first to the Mortgagee, if any, to the extent of the Mortgage, then shall be apportioned between Landlord and Tenant in accordance with the diminution in value of their respective interests.
20 13.7 Obligation to Repair on Partial Taking: Promptly after any Partial Taking, and regardless of the amount of the Award for such Taking, Tenant shall, to the extent of the Award received by Tenant, and in the manner specified in the provisions of this Lease, repair, alter, modify or reconstruct the Improvements and/or other improvements on the Property so as to make them usable for the designated purpose and capable of producing a fair and reasonable net income.
13.8 Temporary Taking.
13.8.1 In the event of a Temporary Taking of the whole or any part of the Property and/or Improvements, the Term shall not be reduced or affected in any way and Tenant shall continue to pay in full any sum or sums of money and charges herein reserved and provided to be paid by Tenant, and, subject to the other provisions of this Section, Tenant shall be entitled to any Award or payment for the temporary use of the Property and/or Improvements prior to the termination of this Lease, and Landlord shall be entitled to any Award or payment for such use after the termination of this Lease.
13.8.2 If, after the occurrence of a Temporary Taking, possession of the Property and/or Improvements shall revert to Tenant prior to the expiration of the Term of the Lease, Tenant shall, to the extent of the amount of any award or payment, unless at such time there remains less than five (5) years in the Term, restore the Property and/or Improvements, and in all other respects indemnify and hold Landlord harmless from the effects of such Taking so that the Property and/or Improvements in every respect shall upon completion of such restoration be in the same condition as they were prior to the Taking thereof.
13.8.3 Any Award or payment for damages or cost of restoration made on or after the termination of this Lease shall be paid first to the Mortgagee, if any, to the extent of the Mortgage, then to Landlord absolutely, together with the remaining balance of any other funds paid to Tenant for such damages or cost of restoration. Tenant shall thereupon be excused from any obligation to restore the Property and/or Improvements upon the termination of such Taking except that any obligation that may have accrued for Tenant to restore the Property and/or Improvements prior to the commencement of said Taking shall continue to be the obligation of Tenant.
ARTICLE 14. APPRAISAL
Whenever an appraisal of the Property is called for under the terms of this Lease, the parties shall use the following procedure:
14.1 Appointment of Appraiser. Within ten (10) days after notice from Landlord to Tenant or Tenant to Landlord, as the case may be, and in each case with a copy to each Mortgagee, if any, Landlord and Tenant shall each appoint an MAI appraiser to participate in the appraisal process provided for in this Article and shall give written notice thereof to the other party and each Mortgagee, if any. Upon the failure of either party so to appoint, the nondefaulting party shall have the right to apply to the Superior Court of Orange County, California, to appoint an appraiser to represent the defaulting party. Within ten (10) days of the parties' appointment, the two (2)
21 appraisers shall jointly appoint a third MAI appraiser and give written notice thereof to Landlord and Tenant, with a copy to each Mortgagee, if any, or if within ten (10) days of the appointment of said appraisers the two (2) appraisers shall fail to appoint a third, then either party hereto shall have the right to make application to said Superior Court to appoint such third appraiser.
14.2 Determination of Fair Market Value.
14.2.1 Within thirty (30) days after the appointment of the third appraiser, the appraisers shall determine the fair market value of the Property and the Improvements in accordance with the provisions hereof, and shall execute and acknowledge their determination of fair market value in writing and cause a copy thereof to be delivered to each of the parties hereto.
14.2.2 The appraisers shall determine the fair market value of the Property and the Improvements as of the date of Landlord's notice referred to in Section 14.1, based on sales of comparable property in the area in which the Property is located. If, however, in the judgment of a majority of the appraisers, no such comparable sales are available, then the appraisal shall be based on the following assumptions: (i) that the Property is free and clear of this Lease, and all easements and encumbrances; and (ii) that the Property is available for immediate sale and development for the purposes and at the density and intensity of development permitted under the zoning, subdivision and land use planning ordinances and regulations applicable to the Property in effect on the Commencement Date of this Lease, and any changes or amendments thereto or modification or variance from the provisions thereof or conditional use permits which could reasonably be anticipated to have been granted or approved as of the date of this Lease.
Notwithstanding anything contained herein to the contrary, if the appraisal, for the particular purposes for which it is being done, should reasonably reflect the rent restrictions imposed on the Property pursuant to the Regulatory Agreement attached hereto as Exhibit E and/or the Tax Credit Program, then such rent restrictions shall be taken into consideration by the appraisers.
14.2.3 If a majority of the appraisers are unable to agree on fair market value within thirty (30) days of the appointment of the third appraiser, the three (3) appraisals shall be added together and their total divided by three (3). The resulting quotient shall be the fair market value of the Property and the Improvements. If, however, the low appraisal and/or high appraisal is or are more than ten percent (10%) lower and/or higher than the middle appraisal, the low and/or high appraisal shall be rounded up/down to ten percent (10%) lower or higher than the middle appraisal and the three appraisals shall thereafter be divided by three (3).
14.3 Payment of Fees. Each of the parties hereto shall (a) pay for the services of its appointee, (b) pay one-half (1/2) of the fee charged by the appraiser selected by their appointees, and (c) pay one-half (1/2) of all other proper costs of the appraisal.
ARTICLE 15. ASSIGNMENT
15.1 Prohibition Against Transfer During the Term. Because of the importance that Landlord places on Tenant's qualification, expertise and identity, and the reliance Landlord makes upon Tenant's ability to construct and operate the Project, during the Term except for Permitted Transfers and otherwise as provided pursuant to Article 16, Tenant shall not assign or attempt to
22 assign this Lease or any right herein. For purposes hereof, the following transfers shall be deemed to be "Permitted Transfers" for purposes of the Lease:
15.1.1 A conveyance of a secur ity interest in Tenant's leasehold estate in the Property in connection with any Mortgage and any subsequent transfer of title to such leasehold estate by foreclosure, deed or other conveyance in lieu of foreclosure in connection therewith to a Mortgagee or an affiliate of a Mortgagee, and thereafter the first transfer to an unaffiliated person;
15.1.2 The removal of the one or more of the general partners of the Tenant for cause in accordance with Tenant's partnership agreement and replacement of said within 90 days from the date the general partner is removed, which replacement shall be subject to the prior written consent of the Landlord, which consent shall not be unreasonably withheld, delayed, or conditioned;
15.1.3 The sale and/or assignment of the Tenant's limited partner, the "Equity Partner's" limited partnership interest in Tenant;
15.1.4 Subject to the restrictions imposed by the Regulatory Agreement attached hereto as Exhibit E, the rental or lease for occupancy of each of the apartment units in the Project to income qualified households at the defined affordable rents;
15.1.5 The granting of easements or permits to facilitate development of the Property in accordance with this Agreement;
15.1.6 In addition, the withdrawal, removal and/or replacement of any managing member of Tenant's limited liability company or general partner of Tenant's partnership, as the case may be, pursuant to the terms of the Tenant's partnership agreement, as the case may be, shall not constitute a default hereunder, provided that any required substitute member or general partner, as the case may be, is reasonably acceptable to Landlord and is selected with reasonable promptness;
15.1.7 Any transfer approved in writing by the Landlord; and
15.1.8 The transfer by Tenant of the leasehold estate in the Property to a limited liability company or limited partnership established for the purpose of owning, developing and operating the Property, in which Tenant is a general partner or member and the Equity Partner is the investor limited partner or investor member.
15.2 Other Rights of Mortgagees. Landlord agrees that nothing in this Lease shall be construed to limit or abrogate the rights of a Mortgagee to (a) seek the appointment of a receiver, or (b) delegate or assign its rights under this Lease to any third party in connection with the exercise of said Mortgagee's rights and remedies under its Mortgage.
ARTICLE 16. MORTGAGES
16.1 Leasehold Mortgages.
23 16.1.1 General Provisions. At all times during the Term, Tenant shall have the right to mortgage, pledge, deed in trust, assign rents, issues and profits and/or collaterally (or absolutely for purposes of security if required by any Mortgagee) assign its interest in this Lease (but in no event Landlord's fee interest in the Property), or otherwise encumber this Lease, and/or the interest of Tenant hereunder, in whole or in part, and any interests or rights appurtenant to this Lease, and to assign or pledge the same as security for any debt (the holder of any such mortgage, pledge or other encumbrance, and the beneficiary of any such deed of trust being hereafter referred to as "Mortgagee" and the mortgage, pledge, deed of trust or other instrument hereafter referred to as "Mortgage"), upon and subject to each and all of the following terms and conditions:
(a) Any permitted Mortgages entered into by Tenant are to be originated only by lenders approved in writing by Landlord, which approval will not be unreasonably withheld. Landlord shall state the reasons for any such disapproval. Notwithstanding the forgoing, Landlord shall be deemed to have automatically approved (i) a commercial or savings bank, a trust company, an insurance company, a savings and loan association, a building and loan association, an educational institution, or a pension, retirement or welfare fund; or (ii) any governmental agency or quasi-governmental agency, including, without limitation, the City of Orange, the County of Orange, or the State of California. Tenant may change the existing financing on this Property, by paying off any existing permitted Mortgage with the proceeds of a new Mortgage or adding one or more mortgages to the existing Mortgage without the consent of Landlord. Notwithstanding the foregoing, if at any time after the Commencement Date, Tenant wishes to refinance the Project using the proceeds generated by the sale of Low Income Housing Tax Credits, Landlord reserves the right to approve the terms of any such refinancing.
(b) All rights acquired by said Mortgagee shall be subject to each and all of the covenants, conditions and restrictions set forth in this Lease, and to all rights of Landlord thereunder, none of which covenants, conditions and restrictions is or shall be waived by Landlord by reason of the giving of such Mortgage.
(c) If Tenant encumbers its leasehold estate by way of a Mortgage as permitted herein, and if Landlord is advised in writing of the name and address of the Mortgagee, then this Lease shall not be terminated or canceled on account of any Event of Default by Tenant in the performance of the terms, covenants or conditions hereof, nor shall Landlord be entitled to exercise any other remedies under Section 19.2, until Landlord shall have complied with the provisions of Section 16.2 as to the Mortgagee's rights to cure and to obtain a New Lease.
16.1.2 Consent of Mortgagee Required. No cancellation, surrender, termination, or modification of this Lease shall be effective without the written consent of the holder of any Mortgage.
16.2 Rights and Obligations of Leasehold Mortgagees. If Tenant or Tenant's successors or assigns shall mortgage the leasehold interest herein demised, then, as long as any such Mortgage shall remain unsatisfied of record, the following provisions shall apply:
24 16.2.1 No Cancellation. Landlord will not cancel, accept a surrender of, terminate or modify this Lease without the prior consent in writing of the Mortgagee.
16.2.2 Notice of Defaults. Landlord agrees to give Mortgagee immediate notice of all defaults by Tenant under this Lease, and to simultaneously give to Mortgagee a written copy of all notices and demands that Landlord gives to Tenant. No notice or demand under this Lease shall be effective until after notice is received by Mortgagee. Any notices of default given by Landlord under this Lease shall describe the default(s) with reasonable detail. Mortgagee shall have the right to cure any breach or default within the time periods given below.
16.2.3 Mortgagee's Cure Rights.
(a) Notice and Cure. After receipt by Tenant of a notice of default under this Lease and the expiration of any applicable period of cure given to Tenant under this Lease, Landlord shall deliver an additional notice ("Mortgagee's Notice") to Mortgagee specifying the default and stating that Tenant's period of cure has expired. Mortgagee shall thereupon have the additional periods of time to cure any uncured default, as set forth below, without payment of default charges, fees, late charges or interest that might otherwise be payable by Tenant. Landlord shall not terminate this Lease or exercise its other remedies under this Lease if:
(i) Within 90 days after Mortgagee's receipt of the Mortgagee's Notice, Mortgagee (i) cures the default, or (ii) if the default reasonably requires more than 90 days to cure, commences to cure said default and diligently prosecutes the same to completion, but in no event later than 180 days after Mortgagee’s receipt of the Mortgagee’s Notice; or
(ii) Where the default cannot be cured by payment or
expenditure of money or without possession of the Property or otherwise, Mortgagee initiates foreclosure or other appropriate proceedings within 90 days after receipt of the Mortgagee's Notice, cures all other defaults, complies with all other covenants and conditions of this Lease, and continues to pay all rents, real property taxes and assessments, and insurance premiums to be paid by Tenant under this Lease. Mortgagee shall then have 120 days following the later to occur of (i) the date of execution and delivery of a new lease of the Property pursuant to Section 16.2.4 (a "New Lease"), or (ii) the date on which Mortgagee or its nominee is able to occupy the Property following eviction of or vacating by Tenant under this Lease, to cure such default; provided, however, that if any such default, by its nature, is such that it cannot practicably be cured within 120 days, then Mortgagee shall have such time as shall be reasonably necessary to cure the default provided that Mortgagee commences such cure within such 120-day period and thereafter diligently prosecutes the cure to completion, but in no event later than one (1) year following such occupancy.
(b) Landlord agrees to accept performance by Mortgagee of all cures, conditions and covenants as though performed by Tenant, and agrees to permit Mortgagee access to the Property to take all such actions as may be necessary or useful to perform any condition or covenants of this Lease or to cure any default of Tenant.
(c) If Mortgagee elects any of the above-mentioned options, then upon Mortgagee's acquisition of this Lease by foreclosure, whether by power of sale or otherwise or by deed or assignment in lieu of foreclosure, or if a receiver be appointed, this Lease shall continue
25 in full force and effect, provided that, if Mortgagee elects the option provided in Section
16.2.3(a)(ii), then upon Mortgagee's acquisition of this Lease, Mortgagee shall cure all prior defaults of Tenant under this Lease within the time set forth in said Section, and Landlord shall treat Mortgagee as Tenant under this Lease. If Mortgagee commences an action as set forth in Section 16.2.3(a)(ii), and thereafter Tenant cures such defaults (which cure Landlord shall be obligated to accept) and Mortgagee then terminates all proceedings under the option in said Section, then this Lease shall remain in full force and effect between Landlord and Tenant.
16.2.4 New Lease. In the event this Lease is terminated for any reason prior to the end of this Lease Term, Landlord shall enter into a new lease ("New Lease") with Mortgagee or Mortgagee's nominee covering the Property, provided that Mortgagee (a) requests such New Lease by written notice to Landlord within ninety (90) days after written notice by Landlord of termination of this Lease, and (b) cures all prior defaults of Tenant that are reasonably capable of being cured by Mortgagee. The New Lease shall be for the remainder of this Lease Term, effective at the date of such termination, and shall include all the rents and all the covenants, agreements, conditions, provisions, restrictions and limitations contained in this Lease. In connection with a New Lease, Landlord shall assign to Mortgagee or its nominee all of Landlord's interest in all existing subleases of all or any part of the Property and all attornment given by the Sub-Tenants.
Landlord shall not terminate or agree to terminate any sublease or enter into any new lease or sublease for all or any portion of the Property without Mortgagee's prior written consent, unless Mortgagee fails to timely deliver its request for a New Lease under this Section. In connection with any such New Lease, Landlord shall, by grant deed, convey to Mortgagee or its nominee title to the Improvements, if any, which become vested in Landlord as a result of termination of this Lease. Landlord shall allow to the Tenant under the New Lease a credit against rent equal to the net income derived by Landlord from the Property during the period from the date of termination of this Lease until the date of execution of the New Lease under this Section.
16.2.5 Security Deposits. Mortgagee or any other purchaser at a foreclosure sale of the Mortgage (or Mortgagee or its nominee if one of them enters into a New Lease with Landlord) shall succeed to all the interest of Tenant in any security or other deposits or other impound payments paid by Tenant to Landlord.
16.2.6 Permitted Delays. So long as Mortgagee is prevented by any process or injunction issued by any court or by any statutory stay, or by reason of any action by any court having jurisdiction of any bankruptcy or insolvency proceeding involving Tenan t, from commencing or prosecuting foreclosure or other appropriate proceedings in the nature thereof, Mortgagee shall not be deemed for that reason to have failed to commence such proceedings or to have failed to diligently prosecute such proceedings, provided that Mortgagee uses reasonable efforts to contest and appeal the issuance or continuance of any such process, stay or injunction.
16.2.7 Defaults Deemed Cured. On transfer of this Lease at any foreclosure sale under the Mortgage or by deed or assignment in lieu of foreclosure, or upon creation of a New Lease, any or all of the following defaults relating to the prior owner of this Lease shall be deemed cured:
(a) Attachment, execution or other judicial levy upon this Lease;
26 (b) Assignment of this Lease for the direct or indirect benefit of creditors of the prior Tenant;
(c) Judicial appointment of a receiver or similar officer to take possession of this Lease;
(d) Filing any petition by, for or against Tenant under any chapter of the federal Bankruptcy Act or any federal or state debtor relief statute, as amended;
(e) Any failure by Tenant to make a disclosure of a hazardous substance release as required by the California Health and Safety Code, this Lease or otherwise; and
(f) Any other defaults personal to Tenant and/or not otherwise reasonably curable by Mortgagee.
16.2.8 Anything herein contained to the contrary notwithstanding, the provisions of this Section shall inure only to the benefit of the holders of Mortgages. If the holders of more than one such Mortgage shall make written requests upon Landlord in accordance with this Lease, the new lease (as provided for in Section 16.2.4) shall be entered into pursuant to the request of the holder whose Mortgage shall be prior in lien thereto and thereupon the written requests for a new lease of each holder of a Mortgage junior in lien shall be and be deemed to be void and of no force or effect.
16.3 Landlord's Forbearance and Right to Cure Defaults on Leasehold Mortgages.
16.3.1 Notice. Landlord will give to any Mortgagee, at such address as is specified by the Mortgagee in accordance with Section 23.1, a copy of each notice or other communication with respect to any claim that a default exists or is about to exist from Landlord to Tenant hereunder at the time of giving such notice or communication to Tenant, and Landlord will give to the Mortgagee a copy of each notice of any rejection of this Lease by any trustee in bankruptcy of Tenant; provided, however, that a failure by Landlord to provide any such notice to Mortgagee shall not excuse a default by Tenant or extend Tenant's time to perform its obligations hereunder or effectuate a cure of said default. Each such notice to a Mortgagee shall be given by U.S. certified mail, postage prepaid, return receipt requested, and shall be effective upon receipt.
16.3.2 Mortgagee's Transferees, Etc. In the event the leasehold estate hereunder shall be acquired by foreclosure, trustee's sale or deed or assignment in lieu of foreclosure of a Mortgage, the purchaser at such sale or the transferee by such assignment and its successors as holders of the leasehold estate hereunder shall not be liable for any rent, if any, or other obligations accruing after its or their subsequent sale or transfer of such leasehold estate and such purchaser or transferee and its successors shall be entitled to transfer such estate or interest without consent or approval of Landlord; provided that, the purchaser or transferee or successor as holder of the leasehold estate hereunder shall be liable for the payment of all rent, if any, becoming due with respect to the period during which such purchaser, transferee or other successor is the holder of the leasehold estate hereunder. This Section shall also apply to the rights of a Mortgagee in
27 connection with the entry into a New Lease under Section 16.2.4 and to the appointment of a receiver on behalf of a Mortgagee.
16.4 No Liability of Mortgagee for Prior Indemnified Acts. A Mortgagee shall not be obligated to assume the liability of Tenant for any indemnities arising for a period prior to Mortgagee's acquiring the right to possession of the Property under this Lease.
16.5 Landlord Cooperation. Landlord covenants and agrees that it will act and fully cooperate with Tenant in connection with Tenant's right to grant leasehold mortgages as hereinabove provided. At the request of Tenant or any proposed or existing Mortgagee, Landlord shall promptly execute and deliver (i) any documents or instruments reasonably requested to evidence, acknowledge and/or perfect the rights of Mortgagees as herein provided; and (ii) an estoppel certificate certifying the status of this Lease and Tenant's interest herein and such matters as are reasonably requested by Tenant or such Mortgagees. Such estoppel certificate shall include, but not be limited to, certification by Landlord that (a) this Lease is unmodified and in full force and effect (or, if modified, state the nature of such modification and certify that this Lease, as so modified, is in full force and effect), (b) all rents currently due under this Lease have been paid, (c) there are not, to Landlord's knowledge, any uncured Events of Default on the part of Tenant under this Lease or facts, acts or omissions which with the giving of notice or passing of time, or both, would constitute an Event of Default. Any such estoppel certificate may be conclusively relied upon by any proposed or existing leasehold Mortgagee or assignee of Tenant's interest in this Lease.
16.6 Landlord Mortgages. Landlord's fee interest in the Property shall be senior to, and not be subordinated to, any financing obtained by Tenant in connection with the Property.
Landlord shall not encumber, pledge or otherwise convey as security its fee estate in the Property unless all holders of any such encumbrance, pledge or other security expressly agree to be subject to and bound by the terms of this Lease and that no foreclosure or other enforcement of such encumbrance, pledge or other security will disturb or effect this Lease or the rights of any Mortgagee hereunder.
16.7 Claims. Landlord and Tenant shall deliver to Mortgagee notice of any litigation or arbitration proceedings between the parties or involving the Property or this Lease. Mortgagee shall have the right, at its option, to intervene and become a party to any such proceedings. If Mortgagee elects not to intervene or become a party, Landlord shall deliver to Mortgagee prompt notice of and a copy of any award, decision or settlement agreement made in connection with any such proceeding.
16.8 Further Amendments. Landlord shall, subject to the covenant s, terms and conditions of this Lease and its attachments, reasonably consider including in this Lease by suitable amendment from time to time any provision which may be reasonably requested by any proposed Mortgagee for the purpose of implementing the mortgagee protection provisions contained in this Lease and allowing that Mortgagee reasonable means to protect or preserve the lien of its Mortgage upon the occurrence of a default under the terms of this Lease. Landlord and Tenant each agree to execute and deliver (and to acknowledge for recording purposes, if necessary) any agreement required to effect any such amendment.
28 16.9 Bankruptcy of Landlord. In the event that Landlord shall become subject to any bankruptcy or insolvency proceeding, any rights, elections, or actions available to Tenant therein shall be subject to the rights of each Mortgagee, if any, under the Mortgage to consent to, or to exercise on behalf of Tenant, such rights, elections, or actions. Without limiting the foregoing, no consent or acquiescence by Tenant to any rejection of this Lease by Landlord or any successor or trustee in such proceeding shall be binding or effective without the prior, written consent thereto by each Mortgagee, if any, and the rights, liens, and claims of each Mortgagee shall extend to, encumber, and include all rights to damages for any such rejection and all rights to continued possession of the Property.
16.10 Transfer Rights. Foreclosure of any permitted Mortgage, or any sale thereunder, whether by judicial proceedings or by virtue of any power contained in the Mortgage, or any conveyance of the leasehold estate hereunder from Tenant to any Mortgagee or an affiliate of Mortgagee or entity controlled by Mortgagee, through, or in lieu of, foreclosure or other appropriate proceedings in the nature thereof, shall not require the consent of Landlord or constitute a breach of any provision of or a default under this Lease, and upon such foreclosure, sale or conveyance, Landlord shall recognize the purchaser or other transferee in connection therewith as Tenant hereunder. Any further assignments shall require the approval of Landlord, which shall not unreasonably be withheld, conditioned, or delayed.
ARTICLE 17. SUBLEASING
17.1 Subleasing of Property. All subleases ("Subleases") made by Tenant shall be subject to the following provisions and restrictions:
17.1.1 Tenant may sublease individual apartment units to any tenant or household who qualifies, and any commercial or office space to a Sub-Tenant, without the consent of Landlord.
17.1.2 On any termination of this Lease prior to the expiration of the Term, all of Tenant's interest as Sub-Landlord under any and all existing valid and enforceable Subleases shall be deemed automatically assigned, transferred and conveyed to Landlord. Landlord shall thereafter be bound on such Subleases to the same extent Tenant, as Sub-Landlord, was bound thereunder for all liabilities arising from and after the date of such assignment and Landlord shall have all the rights under such Subleases that Tenant, as Sub-Landlord, had under such Subleases.
17.1.3 Any Sub-Tenant qualifying shall, upon written request, receive a non- disturbance agreement from Landlord.
17.2 Nondisturbance Agreements. Upon request, Landlord shall execute nondisturbance agreements with any Sub-Tenant, which nondisturbance agreement shall provide that so long as such Sub-Tenant has not defaulted under the terms of the Sublease, such Sub- Tenant's rights will not be terminated by Landlord on Landlord's exercise of Landlord's right to terminate this Lease for Tenant's breach.
29 ARTICLE 18. PERFORMANCE OF TENANT'S COVENANTS
18.1 Right of Performance. If Tenant shall at any time fail to pay any Imposition or other charge in accordance with Article 4 within the time period therein permitted, then Landlord, after thirty (30) days' written notice to Tenant and without waiving or releasing Tenant from any obligation of Tenant hereunder, may (but shall not be required to) pay such Imposition or other charge payable by Tenant pursuant to the provisions of Article 4.
18.2 Reimbursement and Damages. All sums so paid by Landlord shall constitute additional rent payable by Tenant under this Lease and shall be paid by Tenant to Landlord on demand.
ARTICLE 19. EVENTS OF DEFAULT; REMEDIES
19.1 Events of Default. Any one or all of the following events shall constitute an Event of Default hereunder:
19.1.1 If Tenant shall default in the payment of any Rent or other liquidated sums payable hereunder when and as the same becomes due and payable and such default shall continue for more than ten (10) days after Landlord shall have given written notice thereof to Tenant; or
19.1.2 The abandonment or vacation of the Property by Tenant for a period of thirty (30) consecutive days; or
19.1.3 The entry of any decree or order for relief by any court with respect to Tenant, or any assignee or transferee of Tenant (hereinafter "Assignee"), in any involuntary case under the Federal Bankruptcy Code or any other applicable federal or state insolvency law; or the appointment of or taking possession by any receiver, liquidator, assignee, trustee, sequestrator or other similar official of Tenant or any Assignee (unless such appointment is in connection with a Mortgagee's exercise of its remedies under its Mortgage), or of any substantial part of the property of Tenant or such Assignee, or the ordering or winding up or liquidating of the affairs of Tenant or any Assignee and the continuance of such decree or order unstayed and in effect for a period of ninety (90) days or more; or the commencement by Tenant or any such Assignee of a voluntary proceeding under the Federal Bankruptcy Code or any other applicable state or federal law or consent by Tenant or any such Assignee to the entry of any order for relief in an involuntary case under any such law, or consent by Tenant or any such Assignee to the appointment of or taking of possession by a receiver, liquidator, assignee, trustee, sequestrator or other similar official of Tenant or any such Assignee, or of any substantial property of any of the foregoing, or the making by Tenant or any such Assignee of any general assignment for the benefit of creditors; or Tenant or any such Assignee takes any other voluntary action related to the business of Tenant or any such Assignee or the winding up of the affairs of any of the foregoing.
19.1.4 If Tenant shall default in the performance of or compliance with any other term, covenant or condition of this Lease (other than as set forth in Section 19.1.1) and such default shall continue for more than thirty (30) days after Landlord shall have given written notice thereof to Tenant, provided, however, if cure of such default reasonably requires more than thirty (30)
30 days, then, provided that Tenant commences to cure within such thirty (30) day period and thereafter diligently and continuously prosecutes the cure to completion (within no more than one hundred eighty (180) days following Landlord's written notice to Tenant), Tenant shall not be in default.
19.1.5 Notwithstanding anything to the contrary contained in this Lease, prior to declaring any default or taking any remedy permitted under this Lease or applicable law based upon an alleged default, Landlord shall give written notice of such default to the Equity Partner.
19.2 Remedies.
19.2.1 If an Event of Default shall occur and continue as aforesaid, Landlord shall have cumulatively, or in the alternative, all rights and remedies available at law or in equity and, in addition, Landlord shall have the immediate option to terminate this Lease (subject to Section
19.2.7), bring suit against Tenant, pursue the remedy described in this Section and/or recover as an award in such suit or arbitration proceeding the following:
(a) The worth at the time of award of the unpaid rent and all other sums due hereunder which had been earned at the time of termination;
(b) The worth at the time of award of the amount by which the unpaid rent and all other sums due hereunder 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;
(c) The worth at the time of award of the amount by which the unpaid rent and all other sums due hereunder 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;
(d) Any other amount necessary to compensate Landlord for all the detriment proximately caused by the Tenant's failure to perform its obligations under this Lease or which in the ordinary course of things could be likely to result therefrom ; and
(e) Such amounts in addition to or in lieu of the foregoing as may be permitted from time to time by applicable California law.
19.2.2 The "worth at the time of award" of the amount referred to in subparagraph
19.2.1(c) above shall be 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%).
19.2.3 Without terminating this Lease, so long as Landlord does not deprive Tenant of legal possession of the Property and allows Tenant to assign or sublet, Landlord may continue this Lease in effect and bring suit from time to time for any sums due, and for any subsequent Event of Default of the same or other covenants and agreements herein.
31 19.2.4 If an Event of Default occurs, Landlord shall also have the right, with or without terminating this Lease, but subject to any nondisturbance agreements entered into with Sub-Tenants, to reenter the Property and remove all persons and property from the Property; such property may be removed and stored in a public warehouse or elsewhere at the cost of and for the account of Tenant.
19.2.5 If an Event of Default occurs, Landlord shall also have the right, with or without terminating this Lease, to relet the Property. If Landlord so elects to exercise its right to relet the Property but without terminating this Lease, then rentals received by Landlord from such reletting shall be applied: first, to the payment of any indebtedness other than Rent due hereunder from Tenant to Landlord; second, to the payment of any cost of such reletting; third, to the payment of the cost of any alterations and repairs to the Property; fourth, to the payment of rent due and unpaid hereunder; and fifth, the residue, if any, shall be held by Landlord and applied in payment of future rent as the same may become due and payable hereunder. Should the amount of rental received from such reletting during any month which is applied to the payment of rent hereunder be less than that agreed to be paid during that month by Tenant hereunder, then Tenant shall pay such deficiency to Landlord immediately upon demand therefor by Landlord. Such deficiency shall be calculated and paid monthly. Tenant shall also pay to Landlord, as soon as ascertained, any costs and expenses incurred by Landlord in such reletting or in making alterations and repairs not covered by the rentals received from such reletting.
19.2.6 No reentry or taking possession of the Property by Landlord pursuant to Paragraphs 19.2.3 or 19.2.4 shall be construed as an election to terminate this Lease unless a written notice of such intention is given to Tenant or unless the termination thereof is decreed by a court of competent jurisdiction.
19.2.7 Notwithstanding anything to the contrary in this Lease (except for Section
13.3.1), in no event shall Landlord have the right to terminate this Lease as a result of the occurrence and continuance of an Event of Default or otherwise until the expiration of the initial fifteen (15) year tax credit compliance period as described in Section 42(i)(1) of the Internal Revenue Code of 1986, as amended.
19.3 No Waiver of Default. No acceptance by Landlord of a lesser sum than the rents or any other charges then due shall be deemed to be other than on account of the earliest installment of the rents or other charges due, nor shall any endorsement or statement on any check or any letter accompanying any check or payment of rent or charges due be deemed an accord and satisfaction, and Landlord may accept such check or payment without prejudice to Landlord's right to recover the balance of such installment or pursue any other remedy provided in this Lease. The receipt by Landlord of any rent or any other sum of money or any other consideration paid by Tenant after the termination of this Lease, or after giving by Landlord of any notice hereunder to effect such termination, shall not, except as otherwise expressly set forth in this Lease, reinstate, continue, or extend the term of this Lease, or destroy, or in any manner impair the efficacy of any such notice of termination as may have been given hereunder by Landlord to Tenant prior to the receipt of any such sum of money or other consideration, unless so agreed to in writing and signed by Landlord.
32 ARTICLE 20. PERMITTED CONTESTS
Tenant, at no cost or expense to Landlord, may contest (after prior written notice to Landlord) by appropriate legal proceedings conducted with due diligence, the amount or validity or application, in whole or in part, of any Imposition or lien or any Legal Requirement or Insurance Requirement, provided that (a) in the case of liens of mechanics, materialmen, suppliers or vendors, or Impositions or liens therefor, such proceedings shall suspend the collection thereof from Landlord, and shall suspend a foreclosure against the Property and/or the Improvements, or any interest therein, or any rent, if any, (b) neither the Property or the Improvements, nor any part thereof or interest therein, or the rent, if any, or any portion thereof, would be in any danger of being sold, forfeited or lost by reason of such proceedings, (c) in the case of a Legal Requirement, Landlord would not be in any danger of any criminal liability or, unless Tenant shall have furnished a bond or other security therefor satisfactory to Landlord, any additio nal civil liability for failure to comply therewith and the Property and the Improvements would not be subject to the imposition of any lien as a result of such failure, and (d) Tenant shall have furnished to Landlord, if requested, a bond or other security, satisfactory to Landlord. If Tenant shall fail to contest any such matters, or to give Landlord security as hereinabove provided, Landlord may, but shall not be obligated to, contest the matter or settle or compromise the same without inquiring into th e validity or the reasonableness thereof. Landlord, at the sole cost and expense of Tenant, will cooperate with Tenant and execute any documents or pleadings legally required for any such contest.
ARTICLE 21. [INTENTIONALLY DELETED]
ARTICLE 22. FORCE MAJEURE
22.1 Subject to Paragraph 22.2 below, any prevention, delay, nonperformance or stoppage by Tenant due to any of the following causes shall be excused: any regulation, order, act, restriction or requirement or limitation imposed by any federal, state, municipal or foreign government or any department or agency thereof, or civil or military authority; acts of God; acts or omissions of Landlord or its agents or employees; fire, explosion or floods; strikes, walkouts or inability to obtain materials; war, riots, sabotage or civil insurrection; or any other causes beyond the reasonable control of Tenant.
22.2 No prevention, delay, or stoppage of performance shall be excused unless:
22.2.1 Tenant notifies Landlord within thirty (30) days of such prevention, delay or stoppage that it is claiming excuse of its obligations under this Article; and
22.2.2 Tenant diligently proceeds within thirty (30) days of the conclusion of such prevention, delay or stoppage to cure the condition causing the prevention, delay or stoppage; and
22.2.3 Tenant effects such cure within a reasonable time.
ARTICLE 23. GENERAL PROVISIONS
23.1 Notices. All notices or demands shall be in writing and shall be served personally, by overnight courier, or by express or certified mail. Service shall be deemed conclusively made
33 at the time of service if personally served; the next business day if sent by overnight courier and receipt is confirmed by the signature of an agent or employee of the party served; the next business day after deposit in the United States mail, properly addressed and postage prepaid, return receipt requested, if served by express mail; and three (3) days after deposit thereof in the United States mail, properly addressed and postage prepaid, return receipt requested, if served by certified mail.
23.1.1 Any notice to Landlord shall be given to:
City of Orange
300 East Chapman Avenue
P.O. Box 449 Orange, CA 92866
Attention: City Attorney
Telephone: (714) 744-5580
23.1.2 Any notice to Tenant shall be given to:
Katella Terrace, L.P.
Attention:
Telephone: ( ) ___-____
with copies to:
____________________, Esq.
Telephone: (___) ___-____
Fax: (213) 239-0410
Orange Senior Housing, Inc.
555 S. Shaffer Street
Orange, CA 92866
Attention: President
Telephone: 714-633-7344
Any party may, by virtue of written notice in compliance with this Section, alter or change the address or the identity of the person to whom any notice, or copy thereof, is to be sent.
23.2 Certificates. Landlord or Tenant, as the case may be, shall execute, acknowledge and deliver to the other, promptly upon request, a certificate of Landlord or Tenant, as the case may be, certifying (a) that this Lease is unmodified and in full force and effect (or, if there have been modifications, that this Lease is in full force and effect, as modified, and stating the date of each instrument so modifying this Lease), (b) the date, if any, through which the rent, if any, has been paid, (c) whether there are then existing any offsets or defenses against the enforcement of any term hereof on the part of Tenant to be performed or complied with (and, if so, specifying the same), and (d) whether any default exists hereunder and, if any such default exists, specifying the nature and period of existence thereof and what action Landlord or Tenant, as the case may be, is taking or proposes to take with respect thereto and whether notice thereof has been given to the party in default. Any certificate may be relied upon by any prospective purchaser, transferee, mortgagee or trustee under a deed of trust of the fee or leasehold estate in the Property or any part thereof or of Landlord's or Tenant's interest under this Lease. Tenant will also deliver to Landlord,
34 promptly upon request, such information with respect to the Property or any part thereof as from time to time may reasonably be requested.
23.3 No Merger of Title. There shall be no merger of this Lease or the leasehold estate created by this Lease with any other estate in the Property or any part thereof by reason of the fact that the same person, firm, corporation or other entity may acquire or own or hold, directly or indirectly: (a) this Lease or the leasehold estate created by this Lease or any interest in this Lease or in any such leasehold estate, and (b) any other estate in the Property and the Improvements or any part thereof or any interest in such estate, and no such merger shall occur unless and until all persons, corporations, firms and other entities, including any leasehold Mortgagee or leasehold Mortgagees, having any interest (including a security interest) in (i) this Lease or the leasehold estate created by this Lease, and (ii) any other estate in the Property or the Improvements or any part thereof shall join in a written instrument effecting such merger and shall duly record the same.
23.4 Quiet Enjoyment. Tenant, upon paying the rent and any other charges herein provided for and upon performing and complying with all covenants, agreements, terms and conditions of this Lease to be permed or complied with by it, shall lawfully and quietly hold, occupy and enjoy the Property during the term of this Lease without hindrance or molestation by Landlord, or any person or persons claiming through Landlord.
23.5 No Claims Against Landlord. Nothing contained in this Lease shall constitute any consent or request by Landlord, express or implied, for the performance of any labor or services or the furnishing of any materials or other property with respect to the Property or any part thereof, nor as giving Tenant any right, power or authority to contract for or permit the performance of any labor or services or the furnishing of any materials or other property in such fashion as would permit the making any claim against Landlord or its interest in the Property in respect thereof.
23.6 Inspection. Landlord and its authorized representatives may enter the Property or any part thereof at all reasonable times for the purpose of inspecting, servicing or posting notices, protecting the Property or the Improvements, or for any other lawful purposes. Notwithstanding the immediately preceding sentence, except in the event of an emergency, Landlord may only enter the apartment units after giving the Tenant three (3) days’ written notice.
23.7 No Waiver by Landlord. To the extent permitted by applicable law, no failure by Landlord to insist upon the strict performance of any term hereof or to exercise any right, power or remedy consequent upon a default under this Lease, and no acceptance or rent during the continuance of such default, shall constitute a waiver of any such default or of any such term. No waiver of any default shall affect or alter this Lease, which shall continue in full force and effect, or the rights of Landlord with respect to any other then existing or subsequent default.
23.8 Holding Over. In the event Tenant shall hold over or remain in possession of the Property or the Improvements with the consent of Landlord after the expiration of the Term, such holding over or continued possession shall create a tenancy for month to month only, upon the same terms and conditions as are herein set forth so far as the same are applicable.
35 23.9 Attorneys’ Fees. In the event of a dispute between the parties arising out of or in connection with this Lease, which results in arbitration or litigation, the prevailing party shall be entitled to have and recover from the losing party reasonable attorneys' fees and costs of suit incurred by the prevailing party.
23.10 No Partnership. Anything contained herein to the contrary notwithstanding, Landlord does not in any way or for any purpose become a partner of Tenant in the conduct of its business, or otherwise, or a joint venturer or member of a joint enterprise with Tenant hereunder.
23.11 Remedies Cumulative. The various rights, options, elections and remedies of Landlord and Tenant, respectively, contained in this Lease shall be cumulative and no one of them shall be construed as exclusive of any other, or of any right, priority or remedy allowed or provided by law and not expressly waived in this Lease.
23.12 Time is of the Essence. Time is of the essence of this Lease and all of the terms, provisions, covenants and conditions hereof.
23.13 Survival of Representations, Warranties and Covenants. The respective representations, warranties and covenants contained herein shall remain in place throughout the Term of the Lease.
23.14 Construction of Agreement. This Lease shall be construed in accordance with the substantive laws of the State of California, without regard to the choice of law rules thereof. The rule of construction that a document be construed strictly against its drafter shall have no application to this Lease.
23.15 Severability. If one or more of the provisions of this Lease shall be held to be illegal or otherwise void or invalid, the remainder of this Lease shall not be affected thereby and shall remain in full force and effect to the maximum extent permitted under applicable laws and regulations.
23.16 Entire Agreement; Modification. This Lease contains the entire agreement of the parties with respect to the matters discussed herein. This Lease may be amended only by an agreement in writing signed by both parties, with the prior written consent of each Mortgagee, if any. Any amendment to this Lease made without the prior written consent of a Mortgagee may be void at the option of such Mortgagee.
23.17 Binding Effect and Benefits. This Lease shall inure to the benefit of and be binding on the parties hereto and their respective successors and assigns. Except as otherwise set forth herein, nothing in this Lease, expressed or implied, is intended to confer on any person other than the parties hereto or their respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Lease.
23.18 Further Assurances. Each party hereto will promptly execute and deliver without further consideration such additional agreement, assignments, endorsements and other documents as the other party hereto may reasonably request to carry out the purposes of this Lease.
36 23.19 Counterparts. This Lease may be executed simultaneously in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same Lease.
23.20 Number and Gender. Whenever the singular number is used in this Lease and required by the context, the same shall include the plural, and the masculine gender shall include the feminine and neuter genders.
23.21 Incorporation by Reference. Every Exhibit attached to this Lease and referred to herein is hereby incorporated by reference.
Exhibit A: Legal Description Exhibit B: Memorandum of Lease Exhibit C: Schedule of Performance Exhibit D: Scope of Development Exhibit E: Regulatory Agreement
[Remainder of page intentionally left blank; signatures on next page]
37 IN WITNESS WHEREOF, the undersigned have executed this Lease as of the date first above written.
"Tenant"
Katella Terrace, L.P., a California limited partnership
By:______________________, a _______________________, its _____________
APPROVED BY:
_____________________, a ___________________________, as administrative limited partner of Tenant
By:________________________
Manager
"Landlord"
City of Orange, a municipal corporation
By:_______________________
Mark A. Murphy, Mayor
APPROVED AS TO FORM:
By:_______________________
Gary A. Sheatz, City Attorney
ATTEST:
By:_______________________
Pamela A. Coleman, City Clerk
EXHIBIT "A"
LEGAL DESCRIPTION OF THE PROPERTY
THAT CERTAIN LAND SITUATED IN THE CITY OF ORANGE, COUNTY OF ORANGE, STATE OF CALIFORNIA, DESCRIBED AS FOLLOWS:
APN:
B-1
EXHIBIT B
Exempt From Recording Fee Pursuant to Government Code Sections 6103 and 27383
MEMORANDUM OF UNRECORDED LEASE
This MEMORANDUM OF UNRECORDED LEASE ("Memorandum") is hereby entered into as of by and between City of Orange, a municipal corporation ("Landlord"), and Katella Terrace, L.P., a California limited partnership (''Tenant").
RECITALS
A. Landlord and Tenant have entered into a "Lease" dated concurrently herewith for that certain real property owned by Landlord (the "Property"), which provides for the construction, maintenance, management and operation of a 74-unit affordable senior apartment project, to be made available long term at an affordable housing cost (the "Project").The Property is legally described in Exhibit "A," which is attached hereto and incorporated herein by this reference. A copy of the Lease is available for public inspection at the office of the Landlord.
8. The term of the Lease commences on the date of recordation of this Memorandum of Unrecorded Lease in the Official Records of Orange County (the "Commencement Date") and, subject to the provisions set forth in the Lease and applicable law that may result in an earlier termination of the Lease, continues until the sixtieth (60th) anniversary of the Commencement Date.
C. The Lease provides that a short form Memorandum of Lease shall be executed and recorded in the Official Records of Orange County, California.
NOW, THEREFORE, the parties hereto certify as follows:
Landlord, pursuant to the Lease, hereby leases the Property to Tenant upon the terms and conditions provided for therein. This Memorandum is not a complete summary of the Lease, and shall not be used to interpret the provisions of the Lease.
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
B-2
"Tenant"
Katella Terrace, LP., a California limited partnership
By:
APPROVED BY:
By:
Manager
"Landlord"
City of Orange, a municipal corporation
By:
Mark A. Murphy, Mayor
APPROVED AS TO FORM:
By:
Gary A. Sheatz, City Attorney
ATTEST:
By:
Pamela A. Coleman, City Clerk
EXHIBIT C
Schedule of Performance
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EXHIBIT D
Scope of Development
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EXHIBIT E
Form of Regulatory Agreement
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