PASSED, APPROVED, and ADOPTED by the City Council of the City of Paramount this 8th day of September 2026.
Brenda Olmos, Mayor
ATTEST:
Heidi Luce, City Clerk
APPROVED AS TO FORM:
City Attorney
I HEREBY CERTIFY that the foregoing is a true and correct copy of Resolution No. 26:036 passed and adopted by the City Council of the City of Paramount at a regular meeting held on the 8th day of September 2026.
Heidi Luce, City Clerk
To: Honorable City Council
From: John Moreno, City Manager
By: Heidi Luce, City Clerk
Date: September 8, 2026
SUBJECT: UPDATE ON RANCHO LOS CERRITOS HISTORICAL SITE
Rancho Los Cerritos (RLC) is a historic home and gardens, located in the Bixby Knolls neighborhood of Long Beach. This region has been the home of the Gabrielino-Tongva people for over 5,000 years. Beginning in the mid-19th century, this unique two-story adobe house served as the headquarters for a cattle ranch and a sheep ranch, an apartment building, and a private family residence. The site is now recognized as a Local, State, and National Historic Landmark. Today, RLC is a nonprofit museum that provides educational programming, engaging exhibitions, community events, and historic interpretation.
At tonight’s meeting, Pat West, Vice Chair of the Board and Renee Salvador, Director of Development will provide an update on the exciting things happening at Rancho Los Cerritos.
To: Honorable City Council
From: John Moreno, City Manager
By: Grissel Chavez, Assistant City Manager
John King, Planning and Building Director
Date: September 8, 2026
SUBJECT: LEASE AGREEMENT WITH PARAMOUNT CITY INVESTORS, LLC FOR
COMMUNITY ROOM/MUSEUM SPACE WITHIN THE HAY TREE PUBLIC
MARKET PROJECT
BACKGROUND
In June 2023, the City Council approved a Disposition and Development Agreement (“DDA”) with Paramount City Investors, LLC (“PCI”) for the redevelopment of certain property owned by PCI, and commonly known as the Saw Building property. Under the terms of the DDA, the City made a monetary investment supporting construction of the Hay Tree Public Market project located on the Saw Building property. In exchange, the City received the right to use a designated space within the completed project.
The DDA contemplated the City using the designated space as a City museum, community meeting room, and general public space, supporting the broader revitalization of the Paramount Boulevard corridor and the area surrounding the City’s historic Hay Tree Landmark.
The attached Lease Agreement (“Lease”) formalizes the terms for the City’s long-term occupancy of the designated museum /community room space within the project.
DISCUSSION
Leased Premises
Under the Lease, the City, as Lessee, will lease from PCI, as Lessor, approximately 4,000 rentable square feet of space within the 12,000 square-foot Hay Tree Public Market (“Market”), along with exclusive use of an exterior west side patio area.
The City will use its space to serve as:
• A City museum displaying items of historic or cultural significance. • A community meeting room for City staff, public meetings, and community activities.
• A space for other uses compatible with the Market’s commercial/retail environment.
Agenda Report September 8, 2026
LEASE AGREEMENT FOR CITY MUSEUM/COMMUNITY ROOM Page 2
Term
The initial term of the Lease will be twenty (20) years, with two additional options to extend the term for a period of five (5) years each.
Rent and Financial Terms
• Base Rent:
The City will not pay any base rent for the entire Lease term or any optional extension periods, allowing the City to occupy the space at no cost for up to 30 years. This rent-free structure is provided in consideration of:
o The City Contribution under the DDA; and
o The City’s conveyance of an easement to PCI for construction and maintenance of a patio and deck area servicing the commercial and restaurant purposes of the Market.
• Taxes and Operating Costs:
Pursuant to the DDA, the City will not pay any share of taxes or operating expenses until the first Option Period. Beginning at year 21 of the Lease, the City will pay
33.33% of such costs, aligned with its share of total square footage within the Market.
Use of West Side Patio and Common Areas
The City will have:
• Exclusive use of a west side patio area, as defined in the Lease, for programming and public events.
• Non-exclusive use of common areas pursuant to the terms of the Lease.
Parking
Both the DDA and the Lease govern obligations for parking located on City property. PCI will pay its proportional share of costs to maintain City-owned parking lots as specified in the Lease.
Long-term Benefit
The Lease fulfills the commitments outlined in the June 2023 DDA and provides the City:
• A longer term, rent-free space for public use;
• A new location for a community museum supporting civic identity and heritage; • A meeting room available for City and community use; and • A strategic presence within a major redevelopment project that supports economic revitalization.
Agenda Report September 8, 2026
LEASE AGREEMENT FOR CITY MUSEUM/COMMUNITY ROOM Page 3
The long-term lease structure also protects the City's investment in the Project and ensures predictable access to community-serving facilities.
Approval of the Lease enables the City to advance a key community objective, establishing a public museum and community meeting room, while securing long-term, rent-free use of a significant civic space within a major redevelopment project.
Construction Schedule
Based on the construction schedule coordinated between City and Lessor, it is anticipated that the City’s contractor may begin its tenant improvements by October 2026, with an opening of the Museum/Community room in early 2027.
Staff accordingly recommends approval of the Lease with PCI and authorization to the City Manager to make non-monetary edits to the Lease, subject to approval by the City Attorney.
FISCAL IMPACT
The City will not have any rent obligation for the initial 20-year term or optional extension periods, covering a total 30-year period. The City will incur costs for its own interior improvements and operational expenses but will not be responsible for taxes or shared maintenance/operating expenses of the premises until the first Option Period at year 21 of the Lease. Funding for the museum/community room tenant improvements and operational expenses are included in the FY 2026-27 budget.
VISION, MISSION, VALUES, AND STRATEGIC OUTCOMES
The City’s Vision, Mission, and Values set the standard for the organization, establish priorities, uniformity and guidelines; and provide the framework for policy decision making. The Strategic Outcomes were implemented to provide a pathway to achieving the City’s Vision. This item aligns with Strategic Outcome No 3: Economic Health - Support a healthy, sustainable economy reflecting community values.
RECOMMENDED ACTION
1) Approve the Lease Agreement between the City of Paramount (“Lessee”) and Paramount City Investors, LLC (“Lessor”) for the City’s use of approximately 4,000 square feet within the Hay Tree Public Market (Saw property), including the exclusive West Side Patio Area; 2) Authorize the City Manager to make non-monetary changes to the Lease with City Attorney approval; and 3) Authorize the City Manager to execute the Lease Agreement and any related documents.
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HAY TREE PUBLIC MARKET
BASIC LEASE INFORMATION
EFFECTIVE DATE: _________2026
LESSOR: Paramount City Investors, LLC, a California limited liability company
LESSOR’S ADDRESS: 1201 N. Magnolia Avenue
Anaheim, CA 92801
Attn: Paul Mittman
Phone: (714) 687-7055
Email: [email protected]
LESSEE: City of Paramount,
a California municipal corporation
LESSEE’S ADDRESS: 16400 Colorado Avenue
Paramount, CA 90723
Attn: John Moreno, City Manager
Phone: (562) 220-2222
Email: [email protected]
PREMISES:
BUILDING:
Approximately Four Thousand (4,000) rentable square
feet of space of the Building, as more particularly
shown on Exhibit A-1, attached hereto, along with
exclusive use of an exterior patio area on the west side of the Building (“Patio Area”) immediately adjacent to
the Premises, as more particularly shown on Exhibit
A-3.
That certain building located at 16493 Paramount
Boulevard, Paramount, California consisting of
approximately Twelve Thousand (12,000) rentable
square feet of space, commonly referred to as the Hay
Tree Public Market, as more particularly shown on
Exhibit A-2.
PROJECT: That certain real property situated in the City of Paramount, County of Los Angeles, State of California,
more particularly described in the legal description
attached as Exhibit A-4, including the land, the
Building in which the Premises are located, and any
other buildings, structures, improvements, and
facilities currently existing or hereafter constructed on the land.
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TERM: The initial Term shall be Twenty (20) years from the Commencement Date, as may be extended by Lessee’s
exercise of an Option (See Section 3).
Lessee will have Two (2) options to extend the Term
(each an “Option”). Each Option, if exercised, shall be a Five (5) year extension of the Term (each, an “Option Period”).
a. Commencement Date See Section 3.3.1
b. Estimated Delivery Date September 14, 2026
BASE RENT:
a. Initial Monthly Base Rent None.
b. Advanced Base Rent
(Paid Upon Lease Execution) None.
c. Monthly Base Rent Adjustments: Option Years 1-5: None.
Option Years 6-10: None.
LESSEE’S PERCENTAGE SHARE: Thirty-Three and 33/100 percent (33.33%) (i.e. the rentable square footage of the Premises divided by the
rentable square footage of the Project)
TAXES AND OPERATING EXPENSES: Commencing as of the first Option Period and continuing through the remainder of the Term, as may
be extended, Lessee shall pay for Lessee’s Percentage
Share of Taxes and Operating Expenses.
SECURITY DEPOSIT: None.
PERMITTED USE: The operation of a community and City meeting room, for conferences and for use by City staff and invitees.
The Premises may also be used for display of items of
significance to the City and its residents and any other use that is consistent with the overall
commercial/retail/restaurant use of the Project.
TRADE NAME: City of Paramount.
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EXHIBITS AND ADDENDUM
Exhibit A-1: Diagram of Premises
Exhibit A-2: Diagram of Project
Exhibit A-3 Depiction of West Patio
Area
Exhibit A-4: Legal Description of
Project
Exhibit A-5: Designated Parking Spaces
Exhibit B: Work Letter Agreement
Exhibit C: Commencement Date
Memorandum
Exhibit D: Rules and Regulations
Exhibit E: Form Estoppel Certificate
Exhibit F: Form SNDA
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HAY TREE PUBLIC MARKET
LEASE
THIS HAY TREE PUBLIC MARKET LEASE (this "Lease") dated as of ____________________, 2026 is entered into by and between Paramount City Investors, LLC a California limited liability company ("Lessor"), and The City of Paramount, a California Municipal Corporation ("Lessee").
1. Definitions.
The following terms shall have the meanings set forth below:
1.1 Building.
The term "Building" shall have the meaning set forth in the Basic Lease Information.
1.2. Building Common Areas.
The term "Building Common Areas" shall mean the areas and facilities within the Building provided and designated by Lessor for the general use, convenience or benefit of Lessee and other lessees and occupants of the Building and their customers and employees (e.g., common seating areas, outside seating areas, common hallways and walkways, restrooms, janitorial, telephone and electrical closets, pipes, ducts, conduits, wires and appurtenant fixtures servicing the Building).
1.3. Commencement Date.
The term "Commencement Date" shall have the meaning set forth in the Basic Lease Information.
1.4. Common Areas.
The term "Common Areas" shall mean the Building Common Areas and the Project Common Areas.
1.5. Premises.
The term "Premises" shall have the meaning set forth in the Basic Lease Information.
1.6. Project.
The term "Project" shall have the meaning set forth in the Basic Lease Information.
1.7. Project Common Areas.
The term "Project Common Areas" shall mean the areas and facilities within the Project provided for the general use, convenience or benefit of Lessee and other Lessees and occupants of the Project.
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1.8. Lessee’s Percentage Share.
The term "Lessee’s Percentage Share" shall mean the percentage specified in the Basic Lease Information. If the rentable square footage of the Premises or the Project is changed, then Lessee’s Percentage Share shall be adjusted to a percentage equal to the rentable square footage of the Premises divided by the rentable square footage of the Project, as reasonably determined by Lessor.
1.9. Term.
The term "Term" shall have the meaning set forth in the Basic Lease Information.
1.10. Trade Name.
The term "Trade Name" shall have the meaning set forth in the Basic Lease Information.
2. Premises.
2.1. Demise. Lessor hereby leases to Lessee, and Lessee hereby leases from Lessor, for the Term, at the rent and upon the conditions set forth below, the Premises, together with the right in common to use the Common Areas. Lessor and Lessee agree that for all purposes under this Lease, the rentable square footage of the Premises and the Project shall be deemed to be the number of rentable square feet identified in the Basic Lease Information. If the rentable square footage of the Project is changed, then the new rentable square footage of the Project shall be reasonably determined by Lessor.
2.2. Condition upon Delivery. The Premises will be delivered to Lessee with Lessor’s obligations under the Work Letter Agreement (Exhibit B attached) substantially completed.
2.3. Reserved Rights. Except as specifically set forth herein, Lessor reserves the right to do the following from time to time:
(a) Changes. To install, use, maintain, repair, replace and relocate pipes, ducts, shafts, conduits, wires, appurtenant meters and mechanical, electrical and plumbing equipment and appurtenant facilities for service to other parts of the Building or Project above the ceiling surfaces, below the floor surfaces and within the walls of the Premises and in the central core areas of the Building and in the Common Areas, and to install, use, maintain, repair, replace and relocate any pipes, ducts, shafts, conduits, wires, appurtenant meters and mechanical, electrical and plumbing equipment and appurtenant facilities servicing the Premises, which are located either in the Premises or elsewhere outside of the Premises provided that no such changes shall materially or adversely affect Lessee’s operations or use of the Premises; (b) Boundary Changes. To change the boundary lines of the Project, excluding the Premises;
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(c) Facility Changes. To alter, relocate, or increase or decrease the Common Areas or any facility within the Project, excluding the Premises (e.g., utility systems, signage, and shared amenities);
(d) Parking. To designate and/or redesignate specific parking spaces in the Project for the non-exclusive use of Lessees in the Project and to designate and/or redesignate specific parking spaces where employees of Lessees are required to park; (e) Services. To install, use, maintain, repair, replace, restore or relocate public or private facilities for communications and utilities on or under the Building and/or Project; and
(f) Other. To perform such other acts and make such other changes in, to or with respect to the Common Areas, Building and/or Project (excluding the Premises) as Lessor may reasonably deem appropriate. Lessor will work in good faith with Lessee regarding any acts or changes that may implicate Lessee’s exercise of its rights under the Lease. (g) Lessee Protections. Notwithstanding anything to the contrary contained herein, Lessor shall not construct any improvements in, nor make any changes to the Common Areas which changes would materially and adversely affect access to the Premises.
2.4. Work Letter Agreement. Lessor and Lessee shall each perform the work required to be performed by it as described in the Work Letter Agreement attached hereto as Exhibit B. Lessor and Lessee shall each perform such work in accordance with the terms and conditions contained therein.
3. Term and Termination.
3.1. Commencement Date.
The Term shall be for the period of time specified in the Basic Lease Information unless sooner terminated as hereinafter provided. The Term shall commence on the date that actual possession of the Premises is delivered to the Lessee with the Premises in "substantially completed" condition (the "Commencement Date"), and shall continue thereafter in full force and effect for the period specified as the Term or until this Lease is terminated as otherwise provided herein.
3.2. Delay in Delivery.
Lessor anticipates that it will complete all of Lessor’s Work (as described in Exhibit B) and deliver actual and exclusive possession of the Premises to Lessee by September 14, 2026 (the “Estimated Delivery Date”).
3.3. Commencement Date Memorandum.
Following the date on which Lessor delivers possession of the Premises to Lessee and the date Lessee opens for business to the public in the Premises, Lessor may prepare and deliver to Lessee a commencement date memorandum (the "Commencement Date Memorandum") in the 4 13162-0005\3292112v4.doc
form of Exhibit C, attached hereto, subject to such changes in the form as may be required to insure the accuracy thereof. The Commencement Date Memorandum shall certify the date on which Lessor delivered possession of the Premises to Lessee and the dates upon which the Term commences and expires. Lessee’s failure to execute and deliver to Lessor the Commencement Date Memorandum within ten (10) days after Lessee’s receipt of the Commencement Date Memorandum shall be conclusive upon Lessee as to the matters set forth in the Commencement Date Memorandum.
3.4. Options to Extend.
Provided Lessee is not in default under this Lease beyond applicable notice and cure periods, either at the time it exercises an Option or the date the applicable Extended Term (as defined below) would commence, Lessee shall have the right to extend the Term, under the same terms, conditions and covenants herein contained for two (2) additional successive terms of five (5) years each. Each Option Period shall begin at the expiration of the preceding term. Should Lessee elect to exercise any of the aforesaid options, it shall do so by giving written notice to Lessor at least three hundred sixty (360) days prior, but not more than seven hundred twenty (720) days prior, to the then effective expiration of the Term. Upon the expiration of an Option, all succeeding Options shall also automatically expire.
3.5 Termination.
The parties may terminate this Lease pursuant to an Event of Default or any other termination rights granted under this Lease. Lessee may terminate this Lease for convenience during the initial Term or either Option Period by providing Lessor prior written notice one hundred twenty (120) days in advance of the desired termination date.
3.6 Return of City Contribution; Termination within Initial Term.
If the Lease is terminated by Lessee for convenience under Section 3.5 during the Initial Term, Lessor shall return to Lessee a pro rata portion of the City Contribution under the DDA, calculated by multiplying the City Contribution by a fraction, the numerator of which is the number of years remaining in the Initial Term as of the termination date and the denominator of which is twenty (20). Lessor shall deliver the pro rata share of the City Contribution within thirty (30) calendar days following the termination date. If termination occurs within the first ten (10) years of the Initial Term, Lessor may request an extension of time not to exceed five (5) years for repayment of the City Contribution. Lessor shall notify Lessee of its intent to exercise this extension of time no later than fifteen (15) calendar days following the date of termination. If Lessor requests an extension of time for repayment, the pro rata share of the City Contribution shall be subject to interest at a rate of six percent (6%) per annum from the date when payment should have been made.
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4. Rent.
4.1 City Contribution; Base Rent.
In consideration of (1) the City Contribution, as defined in that certain Disposition and Development Agreement between Lessor and Lessee, dated June 19, 2023 and recorded on July 19, 2023 as Document No. 20230475682, in the Official Records of the County of Los Angeles (“DDA”); and (2) the City’s conveyance of that certain easement to Lessor identified in Document No. _______________, in the Official Records of the County of Los Angeles (“Easement”), Lessor will not charge the City a Base Rent for the duration of the Lease Term, or any extension term thereafter. For purposes of this Lease, the term "Rent" shall mean the Base Rent, Advanced Base Rent, all additional rent, and all of the other monetary obligations of Lessee under this Lease.
4.2 Adjustments to Base Rent.
The Base Rent shall be adjusted as set forth in the Basic Lease Information.
4.3 Additional Rent.
Lessee shall pay, as additional rent, all amounts of money that Lessee is required to pay to Lessor under this Lease in addition to monthly Base Rent, whether or not the same is designated "additional rent." Lessee shall pay to Lessor all additional rent on a monthly basis in conjunction with Base Rent.
4.4 Late Payment.
Lessee acknowledges that late payment of Rent to Lessor will cause Lessor to incur costs not contemplated by this Lease, the exact amount of which is extremely difficult to ascertain. Such costs include, but are not limited to, processing and accounting charges, and late charges which may be imposed on Lessor by the terms of any trust deed covering the Premises. Accordingly, if any installment of Rent or any other sums due from Lessee shall not be received by Lessor within seven (7) calendar days of when due, Lessee shall pay to Lessor a late charge in an amount equal to five percent (5%) of such overdue amount. The parties agree that such late charge represents a fair and reasonable estimate of the costs Lessor will incur by reason of late payment by Lessee.
Acceptance of such late charge by Lessor shall not constitute a waiver of Lessee’s default with respect to such overdue amount, nor prevent Lessor from exercising any of the other rights and remedies granted hereunder.
4.5 Interest.
In addition to the imposition of a late payment charge pursuant to Section 4.4 above, any Rent that is not paid within seven (7) calendar days of when due shall bear interest from the date due until paid at the rate that is the lesser of twelve percent (12%) per annum (the "Interest Rate") or the maximum rate permitted by law. Payment of interest shall not excuse or cure any default hereunder by Lessee.
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4.6 Payment.
All payments due from Lessee to Lessor hereunder shall be made to Lessor in advance without deduction or offset except as specifically set forth in this Lease, in lawful money of the United States of America at Lessor’s address for notices hereunder, or to such other person or at such other place as Lessor may from time to time designate in writing to Lessee. Unless otherwise indicated in this Lease, any payments from Lessee to Lessor shall be due on the first of each calendar month. Payments shall be made in a form mutually agreeable to Lessor and Lessee.
5. Taxes.
5.1 Lessees Obligations.
Beginning on the commencement of the first Option Period and continuing during the remaining Term, as may be extended, Lessee shall pay to Lessor, as additional rent, Lessee’s Percentage Share of Taxes for the Project. Prior to the first Option Period, Lessee shall have no obligation to pay any Taxes for the Project. Sections 5.3 through 5.6 are inapplicable to the period of the Term prior to the first Option Period.
5.2 Definition of Taxes. The term "Taxes" shall include all real estate taxes, including any supplemental real estate taxes attributable to any period during the Term; all taxes which may be levied in lieu of real estate taxes; and all assessments, assessment bonds, levies, fees, penalties (if a result of Lessee’s delinquency) and other governmental charges; and all amounts necessary to be expended because of governmental orders, whether general or special, ordinary or extraordinary, unforeseen as well as foreseen, of any kind and nature for public improvements, services, benefits or any other purpose, which are assessed, based upon the use or occupancy of the Premises, Building and/or Project, or levied, confirmed, imposed, or become payable during the Term, and which are attributable to any period within the Term.
5.3 Limitation.
Nothing contained in this Lease shall require Lessee to pay any franchise, estate, inheritance, succession or transfer tax of Lessor, or any income, profits or revenue tax or charge upon the net income of Lessor from all sources, any special assessments levied for improvements made by or at the request of Lessor regardless when levied or any special assessments levied for improvements benefiting the Project that were levied before completion thereof; any taxes or special assessments attributable to any undeveloped portion to the Project (or any land adjacent to the Project); any charges in the nature of impact fees attributable to Lessor’s development of the Project (or of a project which is adjacent to the Project); or the amount by which any tax or assessment exceeds the amount Lessor would pay if the Project were Lessor’s sole asset and the rents therefrom its sole income; provided, however, that if at any time during the Term under the laws of the United States Government or the State of California, or any political subdivision thereof, a tax or excise on rent, or any other tax however described, is levied or assessed by any such political body against Lessor on account of Rent, or any portion thereof, one hundred percent (100%) of any said tax or excise shall be included in the definition of Taxes and Lessee shall pay its proportionate share as additional rent.
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5.4 Installment Election.
In the case of any Taxes which may be evidenced by improvement or other bonds or which may be paid in annual or other periodic installments, Lessor shall elect to cause such bonds to be issued or such assessment to be paid in installments over the maximum period permitted by law.
Lessor agrees to use reasonable efforts to minimize Real Estate Taxes. “Reasonable efforts” shall include the obligation to seek a reduction in Real Estate Taxes from the taxing authority if the value of the Project assessed by the taxing authority would be considered by Lessor in its reasonable judgement, excessive as compared to similar property in the county where the Project is located.
5.5 Estimate of Lessee’s Share of Taxes.
Prior to the commencement of each calendar year during the applicable Option Period, or as soon thereafter as reasonably practicable, Lessor shall notify Lessee in writing of Lessor’s estimate of the amount of Taxes which will be payable by Lessee for the ensuing calendar year.
Lessor shall provide Lessee with documentation to reflect the basis of the estimate for the amount of Taxes to be paid by Lessee. On or before the first day of each month during the ensuing calendar year, Lessee shall pay to Lessor in advance, together with Base Rent, one-twelfth (1/12th) of the estimated amount; provided, however, if Lessor fails to notify Lessee of the estimated amount of Lessee’s share of Taxes for the ensuing calendar year prior to the end of the current calendar year, Lessee shall be required to continue to pay to Lessor each month in advance Lessee’s estimated share of Taxes on the basis of the amount due for the immediately prior month until fifteen (15) days after Lessor notifies Lessee of the estimated amount of Lessee’s share of Taxes for the ensuing calendar year. If at any time it appears to Lessor that Lessee’s share of Taxes payable for the current calendar year will vary from Lessor’s estimate, Lessor may give notice to Lessee of Lessor’s revised estimate for the year, and subsequent payments by Lessee for the year shall be based on the revised estimate. Lessee may, within fourteen (14) days of receipt of the estimate of Taxes (stated in this Section) or the statement of actual Taxes (stated in Section 5.6), send a notice to Lessor disputing the amount of Taxes to be paid to Lessor. Lessor and Lessee shall work in good faith to resolve any disputed amounts indicated by Lessee pursuant to such notice.
5.6 Annual Adjustment.
Within one hundred twenty (120) days after the close of each calendar year during the Term, or as soon after the one hundred twenty (120) day period as reasonably practicable, Lessor shall deliver to Lessee a statement of the adjustment to the Taxes for the prior calendar year.
Lessor's failure to provide such statement to Lessee within the 120-day time period shall not act as a waiver and shall not excuse Lessee from its obligation to pay any additional Taxes. If, on the basis of the statement, Lessee owes an amount that is less than the estimated payments for the prior calendar year previously made by Lessee, Lessor shall apply the excess to the next payment of Taxes due. If, on the basis of the statement, Lessee owes an amount that is more than the amount of the estimated payments made by Lessee for the prior calendar year, Lessee shall pay the deficiency to Lessor within thirty (30) days after delivery of the statement. The year-end statement shall be binding upon Lessee unless Lessee notifies Lessor in writing of any objection thereto within sixty (60) days after Lessee’s receipt of the year-end statement. In addition, if, after the end of any calendar year or any annual adjustment of Taxes for a calendar year, any Taxes are assessed or levied against the Premises, Building or Project that are attributable to any period 8 13162-0005\3292112v4.doc
within the Term (e.g., supplemental taxes or escaped taxes), Lessor shall notify Lessee of its share of such additional Taxes and Lessee shall pay such amount to Lessor within ten (10) days after Lessor’s written request therefor. The obligations of Lessor and Lessee under this Section with respect to the reconciliation between the estimated and actual amounts of Taxes payable by Lessee for the last year of the Term shall survive the termination of this Lease.
5.7 Personal Property Taxes.
Lessee shall pay or cause to be paid, prior to delinquency, any and all taxes and assessments levied upon all of Lessee’s trade fixtures, inventories and other personal property in, on or about the Premises. When possible, Lessee shall cause Lessee’s personal property to be assessed and billed separately from the real or personal property of Lessor.
6. Operating Expenses.
6.1 Obligation to Pay Operating Expenses.
Beginning on the commencement of the first Option Period and continuing during the remaining Term, as may be extended, Lessee shall pay to Lessor Lessee’s Percentage Share of all Operating Expenses attributable to the ownership, operation, management, repair and maintenance of the Project. Prior to the first Option Period, Lessee shall have no obligation to pay any Operating Expenses for the Project. Sections 6.3 and 6.4 are inapplicable to the period of the Term prior to the first Option Period.
6.2 Definition of Operating Expenses.
The term "Operating Expenses" shall include all expenses and costs of every kind and nature which Lessor shall pay or become obligated to pay because of or in connection with the ownership, operation, repair and/or maintenance of the Building, Common Areas and Project, the surrounding property, and the supporting facilities, including, without limitation: (A) all maintenance, janitorial and security costs, (B) costs for all materials, supplies and equipment, (C) all costs of water, heat, gas power, electricity, refuse collection, parking lot sweeping, landscaping, and other utilities and services relating or allocated to the Building or the Common Areas, (D) an administrative fee equal to Ten Percent (10%) of all Operating Expenses (the “Admin Fee”), (E) premiums for insurance maintained by Lessor pursuant to this Lease or with respect to the Building and the Project, (F) costs for repairs, replacements, uninsured damage or insurance deductibles and general maintenance of the Building, Common Areas and Project, but excluding any repairs or replacements paid for out of insurance proceeds or by other parties, and (G) all costs of maintaining machinery, equipment and directional signage or other markers. The following are specifically excluded from Operating Expenses: any costs associated with advertising or promotion of the Project or its Lessees (including, without limitation, the cost of membership in or amounts payable to any merchants association or advertising or promotional fund or the cost of advertising, promotions, or public relations services or personnel); any capital expenditures (defined as those expenditures which, in accordance with generally accepted accounting principles, are not fully chargeable as a current expense in the year the expenditure is incurred), except that Lessor may include in Operating Expenses the annual amortization over its useful life; any reserves; rentals and other costs in leasing equipment ordinarily considered to be of a capital nature; costs relating to any vacant space; legal, accounting or other professional fees; 9 13162-0005\3292112v4.doc
costs of utilities solely for use by other Lessees in the Project; amounts paid to affiliates of Lessor for services to the Project or for supplies or other materials to the extent in excess of the competitive costs of such services, supplies or materials; principal or interest payments on any loans; depreciation or amortization; the cost of any service provided to a lessee or paid for a lessee of the Project that is not provided to Lessee (except as may be allocated pursuant to a cost pool among lessees at the Project); costs and expenses incurred in connection with leasing space in the Project (including, without limitation, leasing commissions, advertising and promotional expenses, legal fees, rents payable with respect to any leasing office, court costs and legal fees incurred to enforce the obligations of Lessees under leases of the Project); any management or administration fees or costs (other than the permitted Admin Fee); any costs or expenses in connection with any expansion, remodeling or redevelopment of the Project; costs of repairs or other work needed because of fire, windstorm, or other casualty (except to the extent of a commercially reasonable deductible) or as a result of any condemnation or other taking; costs incurred to remediate or otherwise deal with Hazardous Materials (defined in Section 7.8.1); costs recoverable by Lessor pursuant to its insurance policies or which would have been recoverable had Lessor carried the insurance required to be carried hereunder; costs resulting from defects in design, construction or workmanship of the Project; costs due to Lessor’s default under this Lease or any other lease or agreement specifically for the Project; costs due to the negligence of Lessor, its employees, agents, contractors and assigns; any costs or expenses associated with any kiosk, childcare center, postal or packaging services facility or governmental offices located on the Project; any costs or expenses associated with the development of any undeveloped portion of the Project; any costs or expenses associated with the operation of any valet parking service; and any other cost that is not borne pro rata by all Lessees in the Project.
6.3 Estimates of Operating Expenses.
Beginning in the first Option Period, if exercised, Lessee shall pay to Lessor each month onetwelfth (1/12th) of Lessor’s estimate of the amount of Operating Expenses to be incurred by Lessor for the then-current calendar year. Lessor shall provide Lessee with documentation to reflect the basis of the estimate for the amount of Operating Expenses to be paid by Lessee. If at any time it appears to Lessor that Lessee’s share of Operating Expenses payable for the current calendar year will vary from Lessor’s estimate, Lessor may give notice to Lessee of Lessor’s revised estimate for the calendar year, along with the corresponding documentation to reflect this revised estimate, and subsequent payments by Lessee for the calendar year shall be based on the revised estimate.
Within one hundred twenty (120) days after the close of each calendar year, or as soon after such 120-day period as practicable, Lessor shall deliver to Lessee a statement in reasonable detail of the actual amount of Operating Expenses payable by Lessee for such calendar year. Lessor’s failure to provide such statement to Lessee within the 120-day period shall not act as a waiver and shall not excuse Lessee or Lessor from making the adjustments to reflect actual costs as provided herein.
If on the basis of such statement Lessee owes an amount that is less than the estimated payments for such calendar year previously made by Lessee, Lessor shall credit such excess against the next payment of Operating Expenses due. If on the basis of such statement Lessee owes an amount that is more than the estimated payments for such calendar year previously made by Lessee, Lessee shall pay the deficiency to Lessor within fifteen (15) days after delivery of the statement. In addition, if, after the end of any calendar year or any annual adjustment of Operating Expenses for a calendar year, Operating Expenses are incurred or billed to Lessor that are attributable to any period within the Term, Lessor shall notify Lessee of its share of such additional Operating Expenses, provide any corresponding documentation, and Lessee shall pay such amount to Lessor 10 13162-0005\3292112v4.doc
within fifteen (15) days after Lessor’s written request therefor. Lessee may, within fourteen (14) days of receipt of the estimate of Operating Expenses (as stated in this Section) or the statement of actual Operating Expenses (as stated in section 6.4), dispute the amount of Operating Expenses to be paid to Lessor. Lessor and Lessee shall work in good faith to resolve any disputed amounts indicated by Lessee pursuant to such notice. The obligations of Lessor and Lessee under this Section with respect to the reconciliation between the estimated and actual amounts of Operating Expenses payable by Lessee shall survive the termination of this Lease.
6.4 Audit Rights.
Lessor shall maintain books and records of Operating Expenses for a period of two (2) years following the end of each calendar year. Provided Lessee is not in default under this Lease, upon ten (10) days’ prior written notice, Lessee or Lessee’s accountant (who shall be a Certified Public Accountant working on a non-contingency fee basis) shall have the right to audit Lessor's books and records relating to any prior year’s Operating Expenses (for the previous two (2) years) during Lessor’s normal business hours at Lessor's local office (or property manager’s office), if one exists, or if none exists, at Lessor’s main offices. Any year of Operating Expenses may only be audited once. If the audit discloses that the total amount invoiced to Lessee after year-end reconciliation for such year exceeds the actual Operating Expenses, Lessor, at Lessee’s option, shall either credit the amount of overpayment towards Lessee’s next due payment of rent or any other amounts due under this Lease, or refund the same to Lessee within ten (10) days after written demand therefor. In addition, if such audit discloses that Lessee has been overcharged by five percent (5%) or more of Lessee’s share of Operating Expenses, then Lessor shall reimburse Lessee for the cost of the audit within ten (10) days after written demand therefor. If such audit discloses that the total amount invoiced to Lessee after year-end reconciliation for such year is less than Lessee’s share of Operating Expenses, Lessee shall promptly pay the difference to Lessor.
Lessor’s and Lessee’s obligations under this paragraph shall survive the expiration or sooner termination of this Lease. If property taxes and insurance premiums are otherwise payable by Lessee hereunder, but not included in Operating Expenses, then Lessee’s audit rights pursuant to this paragraph shall extend to such charges as well.
7. Permitted Use.
7.1 General.
The Premises shall be used and occupied by Lessee solely for the Permitted Use set forth in the Basic Lease Information. Lessee shall, at Lessee’s expense, comply promptly with all applicable federal, state and local laws, regulations, ordinances and requirements in effect during the Term relating to the condition, use or occupancy of the Premises. Lessee shall not use or permit the use of the Premises in any manner that will tend to create waste or a nuisance, or that unreasonably disturbs other Lessees of the Building or Project, nor shall Lessee place or maintain any signs, antennas, awnings, lighting or plumbing fixtures, exterior decoration or similar devises on the Building or the Project or visible from the exterior of the Premises without Lessor’s prior written consent, which consent shall not be unreasonably withheld. Lessee shall not use any corridors, sidewalks, stairs, elevators or other areas outside of the Premises for storage. Lessee shall not (i) use, keep or permit to be used or kept on the Premises any foul or noxious gas or substance, (ii) permit any unreasonable odors, smoke, dust, gas, substances, noise or vibrations to 11 13162-0005\3292112v4.doc
emanate from the Premises, or (iii) do or permit to be done anything in and about the Premises, either in connection with activities hereunder expressly permitted or otherwise, which would cause an increase in premiums for or a cancellation of any policy of insurance (including fire insurance) maintained by Lessor in connection with the Premises, Building or Project or which would violate the terms of any covenants, conditions or restrictions, the design guidelines, the sign guidelines affecting the Building or the land on which it is located, or the Rules (as the term is defined under Section 7.7.2 below).
7.2 Trade Name.
Lessee shall identify itself to the public in connection with the Permitted Use under Lessee’s Trade Name specified in the Basic Lease Information.
7.3 Operating Covenant.
While in operation, Lessee shall operate its business in an efficient, high class and reputable manner. While Lessee shall have the right to cease operations at the Premises, Lessee will continue (regardless of whether or not it is operating) to fulfill its obligations under this Lease, including the payment of Rent and the performance of Lessee’s maintenance obligations. If Lessee ceases use of the Premises for a period of ninety (90) days after receipt of written notice from Lessor, without the intent to resume use, then Lessor may elect, with thirty (30) days prior written notice, to terminate this Lease.
7.4 Storage, Office Space, Auction Sales.
Lessee shall warehouse, store and/or stock in the Premises only such inventory as Lessee intends to use in its operations at the Premises. No auction, liquidation, going-out-of-business, fire or bankruptcy sales may be conducted on the Premises, and no signs advertising such sales shall be posted on the Premises.
7.5 Care of Premises.
Lessee, at Lessee’s expense, shall at all times keep the Premises orderly, neat, safe, clean and free from rubbish and dirt, and vermin, and shall store all trash, garbage and other solid waste within the Premises.
7.6 Signs.
Lessee shall not attach, install or place any sign to or on any part of the outside of the Premises, the Building or the Project, or in the Common Areas without Lessor’s prior written consent, which consent shall not be unreasonably withheld. All signs and graphics of every kind visible in or from public view or corridors, the Common Areas or the exterior of the Premises, whether located inside or outside the Premises, shall be subject to Lessor’s prior written approval, which approval shall not be unreasonably withheld. Any signage so permitted shall be subject to prior approval of and conformance with the requirements of the applicable government authority, and shall be installed at the sole cost and expense of Lessee. For purposes hereof, the term "signs and graphics" includes, without limitation, all signs, designs, monuments, logos, banners, 12 13162-0005\3292112v4.doc
projected images, pennants, decals, advertisements, pictures, notices, lettering, graphics and decorations. At Lessee’s expense, Lessee shall (i) maintain all permitted signage in good condition and repair, and (ii) upon expiration or earlier termination of this Lease, remove such signage and return the Building and Project to their condition existing immediately prior to the placement or erection of said sign or signs. If Lessee fails to do so, Lessor may maintain, repair and/or remove such signage and restore the Building and or Project to its original condition without notice to Lessee and at Lessee’s expense, the cost of which shall be payable by Lessee as additional rent.
Notwithstanding anything to the contrary herein, Lessee shall be allowed signage for the Premises subject to Lessor’s signage criteria. In addition, if a monument sign is approved by the applicable governmental authorities, Lessee shall have the right to place its signage on such monument in a size and location determined by Lessor. The exterior visibility of Lessee’s signs shall not be blocked or inhibited by Lessor or any sponsor, Lessee or other occupant of the Project in any way.
Lessor shall have no right of approval over Lessee’s interior signage and graphics.
7.7 Use of Common Areas.
7.7.1 Right to Use Common Areas.
Lessor gives Lessee and its authorized employees, agents, customers, representatives and invitees the nonexclusive right to use the Common Areas with others who are entitled to use the Common Areas, subject to Lessor’s rights as set forth in this Section.
7.7.2 Rules.
All Common Areas shall be subject to the exclusive control and management of Lessor and Lessor shall have the right to establish, modify, amend and enforce reasonable rules and regulations with respect to the Common Areas. Lessee acknowledges receipt of a copy of the current rules and regulations (the "Rules") attached hereto as Exhibit D, and agrees that they may, from time to time, be modified or amended by Lessor in a commercially reasonable manner.
Lessee agrees to abide by and conform to the Rules; to cause its concessionaires and its and their employees and agents to abide by the Rules; and to use its best reasonable efforts to cause its customers, invitees and licensees to abide by the Rules while in the Premises. All such Rules shall be reasonable, and shall be enforced in a uniform manner. In the event of any conflict between any such Rules and this Lease, the provisions of this Lease shall govern.
7.7.3 Use.
Lessor shall have the right to close temporarily any portion of the Common Areas for the purpose of discouraging use by parties who are not Lessees or customers of Lessees; to use portions of the Common Areas while engaged in making additional improvements or repairs or alterations to the Building or the Project; to use or permit the use of the Common Areas by other Lessees and occupants of the Project; and subject to the terms of this Lease to do and perform such acts in, to, and with respect to, the Common Areas as in the use of good business judgment Lessor shall determine to be appropriate for the Project. Lessor shall notify Lessee within a reasonable time of any temporary closures which may affect Lessee’s exercise of its rights under this Lease. 13 13162-0005\3292112v4.doc
7.7.4 Recycling.
Lessee shall cooperate with Lessor and other Lessees in the Project in recycling waste paper, cardboard or such other materials identified under any trash recycling program that may be established in order to reduce trash collection costs.
7.7.5 Occasional Exclusive Use of Common Patio Area.
Lessee’s right to the exclusive use of the Common Area patio that is adjacent to the North side of the Building (“Common Patio”) is governed by and subject to the terms and conditions of that certain Easement Agreement, dated _________, between the City of Paramount and Paramount City Investors, LLC (“Easement Agreement”). In the event of any conflict in terms between this Lease and the Easement Agreement regarding Lessee’s use of the Common Patio, the Easement Agreement shall control.
7.8 Environmental Matters.
7.8.1 Hazardous Materials.
The term "Hazardous Materials" as used herein means any petroleum products, asbestos, polychlorinated biphenyls, P.C.B.’s, or chemicals, compounds, materials, mixtures or substances that are now or hereafter defined or listed in, or otherwise classified as a "hazardous substance", "hazardous material", "hazardous waste", "extremely hazardous waste", "infectious waste", "toxic substance", "toxic pollutant" or any other formulation intended to define, list or classify substances by reason of deleterious properties such as ignitability, corrosivity, reactivity, carcinogenicity or toxicity pursuant to any federal, state or local environmental law, regulation, ordinance, resolution, order or decree relating to industrial hygiene, environmental protection or the use, analysis, generation, manufacture, storage, release, disposal or transportation of the same ("Hazardous Materials Laws").
7.8.2 Lessee’s Covenants.
Except for ordinary office supplies and janitorial cleaning materials which in common business practice are customarily and lawfully used, stored and disposed of in small quantities, Lessee shall not use, manufacture, store, release, dispose or transport any Hazardous Materials in, on, under or about the Premises, the Building or the Project without giving prior written notice to Lessor and obtaining Lessor’s prior written consent, which consent Lessor may withhold in its sole discretion. Lessee shall at its own expense procure, maintain in effect, and comply with all conditions of any and all permits, licenses, and other governmental and regulatory approvals required in connection with Lessee’s generation, use, storage, disposal and transportation of Hazardous Materials. Except as discharged into the sanitary sewer in strict accordance and conformity with all applicable Hazardous Materials Laws, Lessee shall cause any and all Hazardous Materials removed from the Premises to be removed and transported solely by duly licensed haulers to duly licensed facilities for final disposal of such materials and wastes. If the Premises become contaminated in any manner as a result of any material breach of the foregoing covenant or any act or omission of Lessee or any of its agents, employees or contractors, Lessee shall indemnify, defend and hold harmless Lessor from any and all claims, demands, actions, damages, fines, judgments, penalties, costs (including attorneys’, consultants’, and experts’ fees), 14 13162-0005\3292112v4.doc
liabilities, losses and expenses arising during or after the term of this Lease and arising as a result of such contamination. This indemnification includes any and all costs incurred due to any investigation of the site or any cleanup, removal, or restoration mandated by a federal, state, or local agency or political subdivision. Without limitation of the foregoing, if Lessee causes or permits the presence of any Hazardous Materials on, in, or about the Premises that results in contamination, Lessee, at its sole expense, shall complete all required clean up, removal and remediation. Lessee shall first obtain Lessor’s approval for any such remedial action.
Notwithstanding the foregoing, this indemnification shall only apply to contamination by Hazardous Materials resulting from Lessee’s use and operation of the Premises. Nothing herein contained shall be held to indemnify Lessor from liability or to create any liability on Lessee for Hazardous Materials contamination resulting from Lessor’s ownership, use or operation, or the use or operation by any third party in, on or under the Premises or for any other area of the Project.
Lessee shall not be liable under this Section for any amounts in excess of Lessee’s insurance program; provided, however, this limitation shall not apply to any claim or portion thereof for which Lessee's insurance program does not provide coverage or for which coverage is denied, and Lessee shall bear the burden of demonstrating that its insurance program provides coverage for any claim for which Lessee seeks to invoke this limitation. Lessee shall provide supporting documentation to Lessor regarding the limits of its insurance program.
7.8.3 Notice.
Lessee shall immediately notify Lessor in writing of: (a) any enforcement, cleanup, removal or other governmental or regulatory action instituted, completed or threatened pursuant to any Hazardous Materials Law; (b) any claim made or threatened by any person or entity against Lessee or the Premises relating to damage, contribution, cost, recovery, compensation, loss or injury resulting from or claimed to result from any Hazardous Materials; and (c) any reports, information, inquiries or demands made, ordered, or received by or on behalf of Lessee which arise out of or in connection with the existence or potential existence of any Hazardous Materials in, on, under or about the Premises, the Building or the Project, including, without limitation, any complaints, notices, warnings, asserted violations, or mandatory or voluntary informational filings with any governmental agency in connection therewith, and immediately supply Lessor with copies thereof.
7.8.4 Indemnity.
Lessor represents and warrants that to the best of its actual knowledge, that the soil, groundwater, soil vapor on or under the Premises and Project is below levels of Hazardous Materials which would require remediation as of the Effective Date. Lessor agrees to provide to Lessee a copy of all environmental audits and reports with respect to the Project within its possession or available to it within five (5) days of the Effective Date. Lessee shall not be held liable for any pre-existing conditions existing on the Project, including, but not limited to, the conditions disclosed by Lessor pursuant to the environmental audits and reports provided by Lessor. Lessee shall not be responsible for any conditions caused by third-party use of the Project or other tenants. Lessor shall indemnify, defend, protect and hold harmless Lessee, and each of Lessee’s officers, directors, partners, employees, affiliates, owners, shareholders, principals, successors and assigns, from and against any and all claims, liabilities, damages, fines, penalties, forfeitures, losses, cleanup and remediation costs or expenses (including attorneys’ fees) arising 15 13162-0005\3292112v4.doc
from or caused in whole or in part, by Lessor’s introduction of Hazardous Materials on or under the Project and as a result of Lessor’s negligent or wrongful acts or omissions.
7.8.5 Lessor’s Rights.
Lessor shall have the right to enter the Premises at all times upon reasonable prior notice for the purposes of ascertaining material non-compliance by Lessee with all applicable Hazardous Materials Laws which result from Lessee’s use of the Premises; provided, however, that in the instance of an emergency no notice shall be required. Lessor shall have the option to declare a default of this Lease for the release or discharge of Hazardous Materials by Lessee or Lessee’s employees, agents, contractors, or invitees on the Premises, Building or Project as a result of material non-compliance arising from Lessee’s use of the Premises and in violation of law or in deviation from prescribed procedures in Lessee’s use or storage of Hazardous Materials. Lessor shall have the option to declare default only after providing Lessee thirty (30) days to cure the violation or, if the violation cannot be cured within thirty (30) days, Lessor shall provide Lessee the opportunity to cure and diligently pursue the cure until completion.
7.9 Parking.
Lessor shall make available to Lessee, its employees, agents, and invitees, on a nonexclusive basis, those certain parking spaces designated on the Exhibit A-5 (“Designated Parking Spaces”). Lessee's right to use the Designated Parking Spaces shall be without additional charge during the Term and any Option Period(s). The Designated Parking Spaces are located on property owned by the City of Paramount adjacent to or near the Project (“City Parking Lot”) and are made available on a non-exclusive basis. The parties acknowledge that the terms governing the use and maintenance of such parking areas are more fully set forth in the DDA, and that in the event of any conflict between this Section and the DDA, the DDA shall control. Beginning on the commencement of the first Option Period and continuing during the remaining Term, as may be extended, Lessor shall pay to Lessee Lessor’s Percentage Share of all maintenance, utilities, and improvements for the City owned property arising out of Lessor’s use of the Designated Parking Spaces. Lessor’s Percentage Share, for purposes of this Section, shall be calculated by dividing the total number of Designated Parking Spaces by the total number of parking spaces within the City Lot.
7.10 West Side Patio Area.
Lessee shall have the exclusive right to use the exterior Patio Area on the west side of the Building designed on Exhibit A-3 as the “Patio Area”, subject to the terms of this Lease and all applicable laws. Lessee shall be allowed to place professional-grade tables, chairs, umbrellas, and heaters within the outdoor Patio Area consistent with the aesthetic of the Building, provided no permanent fixtures or floor bolting may be installed without Lessor’s prior written consent. Lessee will comply with the following in its use of the Patio Area: (i) Lessee shall be responsible to secure all permits and approvals of all governmental authorities required for the use of the Patio Area; (ii) Lessee’s liability insurance provided for in Section 11 will cover occurrences within the Patio Area; and (iii) Lessee shall maintain the Patio Area in a clean, sanitary, safe, and attractive condition, free of debris, trash, and pests, and shall immediately repair any damage to the Patio Area caused by its use.
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8. Services.
8.1 Utilities.
Lessee shall pay for all consumption costs for water, sewer, gas, electricity, heat, cooling, telephone, refuse collection and other utility-type services. Lessor represents and warrants that Lessee will not be obligated to pay any concurrence, impact, or development fees or charges, including but not limited to tap fees, site development fees and traffic impact fees, or any special assessments levied in connection with the development and construction of the Project or Lessee’s use. To the extent any of the foregoing utility services are provided by Lessor, Lessee shall reimburse Lessor for all costs incurred by Lessor in connection with the provision of such services based on Lessor’s reasonable estimate of the level of Lessee’s use or consumption of such services.
Whenever possible, Lessor will provide separate meters or submeters.
8.2 No Liability.
Lessor shall not be in default hereunder or be liable for any damages or personal injuries to any person directly or indirectly resulting from, nor shall there be any Rent abatement by reason of, any interruption or curtailment whatsoever in utility services, unless any interruption or failure in utilities services lasts for a period of more than 48 hours and is a direct result of the negligence, negligent failure to act or misconduct of Lessor or its agents, employees or contractors, in which case Rent shall be abated until such time as said interruption or failure is cured.
9. Maintenance and Repairs.
9.1 Lessee’s Repairs and Maintenance.
Lessee shall, at Lessee’s expense, maintain the Premises in good order, condition and repair, including without limitation, (i) all interior surfaces, ceilings, walls, door frames, window frames, floors, carpets, draperies, window coverings and fixtures, (ii) all interior doors, interior locks and closing devices, interior entrances, plate glass, and signs, (iii) all plumbing and sewage pipes, fixtures and fittings inside the Premises or exclusively serving the Premises, (iv) all phone lines, electrical wiring, equipment, switches, outlets and light bulbs, (v) any fire detection, fire sprinkler or extinguisher equipment or exclusively serving the Premises, (vi) all of Lessee’s personal property, improvements and alterations, and (vii) all other fixtures and special items installed by or for the benefit of, or at the expense of Lessee. Lessee shall immediately replace all broken glass in the Premises, excluding exterior glass and exterior glass doors, with glass equal to or in excess of the specification and quality of the original glass. Lessee, at its expense, shall maintain in good operating condition and repair, all heating, ventilating, and air conditioning equipment exclusively serving the Premises. If requested by Lessor, Lessee shall keep in force a preventive maintenance contract with a qualified maintenance company acceptable to Lessor covering all heating, ventilating and air conditioning equipment and shall annually provide Lessor with a copy of this contract. Lessee shall not enter onto the roof area of the Building, except for the purpose of maintaining the heating, ventilating, and air conditioning equipment to the extent Lessee is required to do so under the terms of this Lease. Lessee shall repair any damage to the roof area caused by its entry. Lessee shall be responsible for its own janitorial service. Lessee 17 13162-0005\3292112v4.doc
shall be responsible for all ADA compliance associated with the Lessee’s Work described in Exhibit B, to the extent applicable.
9.2 Lessor’s Repairs and Maintenance.
In addition to its obligations regarding Common Areas, and any maintenance and repair obligations of Lessor within the DDA or the Easement, Lessor shall keep in good condition and repair the foundation, roof structure, exterior walls and other structural parts of the Premises and the Building. Lessor shall be responsible for all ADA compliance associated with Lessor’s work and the exterior portions of the Project.
9.3 Failure to Repair or Maintain.
If Lessor fails to make any required maintenance, repair or replacement to the Building, Premises or the Common Areas as required under this Lease and such work is not a Lessee obligation under this Lease, then, if Lessor has not begun to undertake such work (or has not submitted an application for a permit for the work in the event it is required) within ten (10) days from Lessor’s actual receipt of written notice from Lessee detailing the requested maintenance, repair or replacement (in an emergency, reasonable notice shall suffice), then Lessee shall have the right (but not the obligation) to make the repair or replacement for Lessor, and Lessor shall reimburse Lessee for its actual, reasonable, out of pocket costs incurred therein within fifteen (15) days after Lessor’s actual receipt of demand therefor. Any payment demand from Lessee must include full written details of the work performed along with pictures (if possible), contact information for the firm(s) performing the work, final lien releases for all labor and materials supplied, and evidence of payment by Lessee. If Lessor fails to reimburse Lessee for such costs within said fifteen (15) days period, Lessee may deduct such amount from its rent payments due hereunder.
9.4 Surrender of Premises.
Upon the expiration or earlier termination of this Lease, Lessee shall surrender the Premises to Lessor in good condition and repair, ordinary wear and tear excepted. Items not considered reasonable wear and tear hereunder include the following for which Lessee shall bear the obligation for repair and restoration (except to the extent caused by the gross negligence or willful misconduct of Lessor or its employees or agents) (i) damage, including holes in building surfaces (e.g., doors, walls, ceilings and floors) caused by the removal of any of Lessee’s trade fixtures, furnishings, decorations, equipment, alterations, utility installations, security systems, communications systems (including cabling, wiring and conduits), displays and signs and; (ii) any damage to the Building or Project caused by Lessee or its agents, contractors or employees and not fully recovered by Lessor from insurance. Lessee, at its sole cost and expense, agrees to repair any damages to the Premises caused by or in connection with the removal of any articles of personal property, business or trade fixtures, signs, machinery, equipment, cabinetwork, furniture, moveable partitions, including without limitation thereto, patching and painting the walls where required by Lessor to Lessor’s reasonable satisfaction. Lessee shall indemnify Lessor against any loss or liability resulting from delay by Lessee in so surrendering the Premises, including without limitation, any claims made by any succeeding Lessee resulting from such delay. 18 13162-0005\3292112v4.doc
10. Alterations.
10.1 Consent Required.
After completion of Lessee’s Work detailed in Exhibit B, Lessee shall not construct, nor allow to be constructed, any alterations, improvements or physical additions ("Alterations") in, about or to the Premises without obtaining the prior written consent of Lessor, which consent shall be conditioned upon Lessee’s compliance with Lessor’s requirements regarding construction of Alterations and, in the case of interior nonstructural Alterations that do not affect the Building systems, and in such case, such consent shall not be unreasonably withheld. Except where Lessor’s approval is not required, Lessee shall submit plans and specifications to Lessor with Lessee’s request for approval to construct Alterations in the Premises. In addition, except where Lessor’s approval is not required, at Lessor’s request, Lessee shall submit to Lessor for Lessor’s review and approval working drawings of the proposed Alterations, based upon plans and specifications previously approved by Lessor. All Alterations shall be done at Lessee’s expense, in compliance with all applicable laws. Lessee shall file a notice of completion after completion of such work and provide Lessor with a copy thereof. Lessee shall provide Lessor with a set of "as-built" drawings for any such work if applicable. Notwithstanding the foregoing, Lessee shall not be required to obtain Lessor’s prior approval or consent for any interior, non-structural Alteration which costs less than $50,000.
10.2 Conditions.
10.2.1 Notice.
Before commencing any work relating to Alterations requiring Lessor’s approval, Lessee shall notify Lessor of the expected date of commencement thereof and of the anticipated cost thereof. Lessor shall then have the right at any time and from time to time to post and maintain on the Premises such notices as Lessor reasonably deems necessary to protect the Premises and Lessor from mechanics’ liens or any other liens.
10.2.2 Liens.
Lessee shall pay when due all claims for labor or materials furnished to Lessee for use in the Premises. Lessee shall not permit any mechanics’ liens or any other liens to be levied against the Premises for any labor or materials furnished to Lessee in connection with work performed on the Premises by or at the direction of Lessee. Lessee shall indemnify, hold harmless and defend Lessor (by counsel reasonably satisfactory to Lessor) from any liens and encumbrances arising out of any work performed or materials furnished by or at the direction of Lessee. In the event that Lessee shall not, within ten (10) days following Lessee’s notice of the imposition of any such lien, cause such lien to be released of record by payment or posting of a proper bond, Lessor shall have, in addition to all other remedies provided herein or by law, the right, but not the obligation, to cause the same to be released by such means as it shall deem proper, including payment of the claim giving rise to such lien. All such sums paid by Lessor and all expenses incurred by it in connection therewith, including attorneys’ fees and costs, shall be payable to Lessor by Lessee on demand with interest at the Interest Rate.
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10.2.3 Compliance with Laws.
All Alterations in or about the Premises performed by or on behalf of Lessee shall be done in a first-class, workmanlike manner, shall not unreasonably lessen the value of leasehold improvements in the Premises, and shall be completed in compliance with all applicable laws, ordinances, regulations and orders of any governmental authority having jurisdiction thereover, as well as the requirements of insurers of the Premises and the Building.
10.2.4 Labor Disputes.
Upon Lessor’s request, Lessee shall remove any contractor, subcontractor or material supplier from the Premises and the Building if the work or presence of such person or entity results in labor disputes in or about the Building or Project or damage to the Premises, Building or Project.
Lessor represents that it has no knowledge of any requirement to use union labor for any aspect of construction at the Project.
11. Insurance and Indemnity.
11.1 Insurance. Lessee shall obtain and maintain during the Term the following insurance to address claims arising from Lessee’s operations on the Premises:
11.1.1 Commercial General Liability Insurance.
Commercial general liability insurance (occurrence form) having a combined single limit of not less than $2,000,000 per occurrence and $2,000,000 aggregate per location, if Lessee has multiple locations, providing coverage for, among other things, blanket contractual liability, premises, product/completed operations and personal injury coverage (with a commercially reasonable deductible amount).
11.1.2 Automobile Liability Insurance.
Comprehensive automobile liability insurance having a combined single limit of not less than One Million Dollars ($1,000,000) per occurrence, and insuring Lessee against liability for claims arising out of ownership, maintenance or use of any owned, hired, borrowed or non-owned automobiles;
11.1.3 Workers’ Compensation and Employer’s Liability Insurance.
Workers’ compensation insurance having limits not less than those required by state statute and federal statute, if applicable, and covering all persons employed by Lessee in the conduct of its operations on the Premises (including the all-states endorsement and, if applicable, the volunteers endorsement);
11.1.4 Property Insurance.
“Special Form” property insurance (or its equivalent if "Special Form" property insurance is not available), including vandalism and malicious mischief, boiler and machinery 20 13162-0005\3292112v4.doc
comprehensive form, if applicable, each covering damage to or loss of Lessee’s personal property, fixtures and equipment, including electronic data processing equipment ("EDP Equipment"), media and extra expense, and all alterations, additions and improvements made by or at the request of Lessee to the Premises other than those Lessee improvements owned by Lessor (and coverage for the full replacement cost thereof).
11.1.5 Business Income/Extra Expense Insurance.
Intentionally Deleted; and
11.1.6 Additional Insurance.
Intentionally Deleted.
11.2 General.
The insurance carrier shall be authorized to do business in the State of California, with a policyholders and financial rating of at least A: VIII Class status as rated in the most recent edition of Best’s Key-Rating guide. Lessee’s commercial general liability insurance policy shall be endorsed to provide that (i) it may not be canceled without ten (10) days’ prior written notice to Lessor, (ii) Lessor is designated as an additional insured, and (iii) such insurance is primary with respect to Lessor and that any other insurance maintained by Lessor is excess and noncontributing with such insurance. Prior to the commencement of the Lessee’s work, Lessee shall deliver to Lessor a duplicate of such policy or a certificate thereof to Lessor for retention by it with endorsements. At least ten (10) days prior to the expiration of such policy or any renewal or modification thereof, Lessee shall deliver to Lessor a replacement or renewal binder, followed by a duplicate policy or certificate within a reasonable time thereafter. If Lessee fails to obtain such insurance or to furnish Lessor any such duplicate policy or certificate as herein required, Lessor may, at its election, procure and maintain such coverage and Lessee shall reimburse Lessor on demand as additional rent for any premium so paid by Lessor. Prior to procuring such coverage, Lessor shall provide reasonable advanced notice to Lessee of Lessor’s intent to do so and shall provide Lessee an opportunity to procure such coverage.
11.3 Waiver of Claims.
Lessor waives all claims against Lessee and Lessee’s officers, directors, partners, employees, agents and representatives for loss or damage to the extent that such loss or damage is insured against under any valid and collectable insurance policy insuring Lessor or would have been insured against but for any deductible amount under any such policy. Lessee waives all claims against Lessor and Lessor’s officers, directors, partners, employees, affiliates, joint venturers, members, trustees, owners, shareholders, principals, agents, representatives, successors and assigns, for loss or damage to the extent such loss or damage is insured against under any valid and collectable insurance policy insuring Lessee or required to be maintained by Lessee under this Lease, or would have been insured against but for any deductible amount under any such policy.
The insuring party shall, upon obtaining the policies of insurance required under this Lease, give notice to the insurance carrier or carriers that the foregoing mutual waiver of subrogation is contained in this Lease. Lessee agrees that in the event of a sale, assignment or transfer of the 21 13162-0005\3292112v4.doc
Premises by Lessor, this waiver of subrogation shall continue in favor of the original Lessor and any subsequent Lessor.
11.4 Lessor’s Insurance.
During the Term, Lessor shall carry commercial general liability insurance in amounts not less than coverage to be carried by Lessee hereunder. In addition, Lessor shall keep the Building insured against loss or damage by fire, with extended coverage and vandalism, malicious mischief and special extended perils (all risk) endorsements or their equivalents, in amounts not less than one hundred percent (100%) of the replacement cost of the Building and structures insured. Lessor may maintain rent insurance, for the benefit of Lessor, equal to at least one year’s Base Rent hereunder. If this Lease is terminated as a result of damage by fire, casualty or earthquake, all insurance proceeds shall be paid to and retained by Lessor, subject to the rights of any authorized encumbrancer of Lessor.
11.5 Earthquake; Flood.
Lessee acknowledges that Lessor does not, at the time of the signing of this Lease, insure the Building for earthquake damage. Lessor may, when Lessor deems the premiums to be reasonable, insure the Building fully or partially for earthquake damage and/or obtain flood insurance for the Building or the Project. At such time, the premium for earthquake and/or flood insurance will be added to the Operating Expenses for purposes of determining additional rent.
Lessor shall provide reasonable notice to Lessee regarding its option to acquire such insurance and shall provide Lessee with supporting documentation of the costs for such insurance upon Lessee’s request.
11.6 Indemnity.
Lessee shall indemnify, hold harmless and defend Lessor from and against any and all suits, claims, actions, damages, liabilities and expenses, including reasonable attorneys’ fees (collectively, “Claims and Damages”) arising out of (i) any loss of life, personal injury and/or damage to property occurring within the Premises resulting from Lessee’s use of the Premises and the wrongful or negligent acts or omissions of Lessee, its officers, contractors, agents or employees (acting within the scope of their office, contract, agency or employment), (ii) Lessee’s breach of any representation or warranty of Lessee under this Lease, (iii) Lessee’s failure to maintain the Premises in accordance with applicable laws to the extent within its obligations under this Lease, (iv) Lessee’s gross negligence or willful misconduct, except to the extent the Claims and Damages are caused by the sole negligence of Lessor. Lessor shall indemnify, hold harmless and defend Lessee from and against any and all Claims and Damages arising out of (i) any loss of life, personal injury and/or damage to property occurring within the Common Areas or resulting from the negligence of Lessor, its officers, contractors, agents or employees (acting within the scope of their office, contract, agency or employment); (ii) Lessor’s breach of any representation or warranty of Lessor under this Lease; or (iii) Lessor’s failure to maintain the Project in accordance with applicable laws to the extent within its obligations under this Lease, except to the extent the Claims and Damages are caused by the gross negligence or willful misconduct of Lessee. Lessee shall not be liable for any amounts in excess of the City’s insurance coverage program, provided that Lessee maintains its insurance program in full force and effect throughout the Term. Upon 22 13162-0005\3292112v4.doc
Lessor's request, Lessee shall provide documentation evidencing the limits, scope of coverage, and current status of Lessee's insurance program.
11.7 Self-Insurance.
Lessee shall have the right to self-insure for any or all of the insurance coverages and limits required in this Section 11. If Lessee elects to self-insure, Lessee’s self-insurance shall provide Lessor with the same protection, coverage, and defense as if Lessee had maintained the third-party insurance policies required by this Lease and shall respect all waivers of subrogation contained in Section 11.3. Upon Lessor’s request, Lessee shall provide a formal letter of self-insurance confirming Lessee’s self-insurance fund is solvent and covers the specific liability limits required under this Lease.
12. Damage or Destruction.
12.1 Lessor’s Obligation to Rebuild.
Subject to the provisions of Sections 0, 0 and 0 below, if, during the Term, the Premises are totally or partially destroyed from any insured casualty, Lessor shall, within ninety (90) days after the destruction, commence to restore the Premises to substantially the same condition as they were in immediately before the destruction and prosecute the same diligently to completion. Such destruction shall not terminate this Lease. Lessor’s obligation shall not include repair or replacement of Lessee’s alterations or Lessee’s equipment, furnishings, fixtures and personal property. If the existing laws do not permit the Premises to be restored to substantially the same condition as they were in immediately before destruction, and Lessor is unable to get a variance to such laws to permit the commencement of restoration of the Premises within the 90-day period, then either party may terminate this Lease by giving written notice to the other party within thirty (30) days after expiration of the 90-day period.
12.2 Right to Terminate.
Lessor shall have the option to terminate this Lease if the Premises or the Building is destroyed or damaged by fire or other casualty, regardless of whether the casualty is insured against under this Lease, if Lessor reasonably determines that (i) there are insufficient insurance proceeds payable (pursuant to Insurance required to be carried by Lessor hereunder) to pay all of the costs of the repair or restoration and Lessee does not elect to pay the short fall or (ii) if during the last two (2) Lease years, if the repair or restoration of the Premises or the Building cannot be completed within one hundred eighty (180) days after the date of the casualty. If Lessor elects to exercise the right to terminate this Lease as a result of a casualty, Lessor shall exercise the right by giving Lessee written notice of its election to terminate this Lease within forty-five (45) days after the date of the casualty, in which event this Lease shall terminate fifteen (15) days after the date of the notice. If Lessor does not exercise its right to terminate this Lease, Lessor shall promptly commence the process of obtaining all of the necessary permits and approvals for the repair or restoration of the Premises or the Building as soon as practicable and thereafter prosecute the repair or restoration of the Premises or the Building diligently to completion and this Lease shall continue in full force and effect. It shall be a condition precedent to any right of Lessor to terminate this Lease as a result of a casualty that Lessor also terminates the leases of all other Lessees of the Building in which the Premises is located. Notwithstanding the foregoing, in the event of a 23 13162-0005\3292112v4.doc
termination exercised by Lessor pursuant to this Article 12 of an insured casualty where only the Premises is affected, Lessee shall have the right to void such termination by electing to exercise an Option Period to extent the Lease. Upon such election, this Lease shall continue and the parties shall complete such restoration as otherwise required herein. In the event this Lease is terminated as a result of a casualty or as a result of Lessor’s failure to commence or timely complete restoration, then Lessee shall be entitled to the insurance proceeds from Lessee’s policy. If the Lease is terminated as a result of an insured casualty within the Initial Term, the prorated amount of the City Contribution under the DDA shall be returned to the City.
12.3 Last Year of Term.
In addition to Lessor’s right to terminate this Lease under Section 0, Lessor and Lessee shall have the right to terminate this Lease upon thirty (30) days’ prior written notice to the other party if the Premises or Building is substantially destroyed or damaged during the last twelve (12) months of the Term. Lessor or Lessee shall notify the other party in writing of its election to terminate this Lease under this Section, if at all, within thirty (30) days after the determination that the Premises or Building has been substantially destroyed. If Lessor and Lessee do not elect to terminate this Lease, the repair of the Premises or Building shall be governed by Sections 0, 0 and
0. 12.4 Uninsured Casualty.
If the Premises are damaged from any uninsured casualty to any extent whatsoever, Lessor may within ninety (90) days following the date of such damage: (i) commence to restore the Premises to substantially the same condition as they were in immediately before the destruction and prosecute the same diligently to completion, in which event this Lease shall continue in full force and effect; or (ii) within the 90-day period Lessor may elect not to so restore the Premises, in which event this Lease shall cease and terminate. In either such event, Lessor shall give Lessee written notice of its intention within the 90-day period.
12.5 Abatement of Rent.
In the event of destruction or damage to the Premises which materially interferes with Lessee’s use of the Premises, if this Lease is not terminated as above provided, there shall be an abatement or reduction of Base Rent between the date of destruction and the date Lessor substantially completes its reconstruction obligations, based upon the extent to which the destruction materially interferes with Lessee’s use of the Premises. All other obligations of Lessee under this Lease shall remain in full force and effect. Except for abatement of Base Rent, or any other rights granted pursuant to this Lease, Lessee shall have no claim against Lessor for any loss suffered by Lessee due to damage or destruction of the Premises or any work of repair undertaken as herein provided.
13. Eminent Domain.
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13.1 Condemnation.
If all or any part of the Premises shall be taken as a result of the exercise of the power of eminent domain or sold in lieu of condemnation ("Condemned"), this Lease shall terminate as to the part so taken as of the date of title vesting in such proceeding. In the case of a partial condemnation of greater than fifty percent (50%) of the Premises, either Lessor or Lessee shall have the right to terminate this Lease as to the balance of the Premises by notice to the other within thirty (30) days after the date of title vesting in such proceeding. In addition, If a portion of the Premises or the Common Areas (including access to the Common Areas) is condemned or taken in any manner or degree that, in any material respect, adversely impacts Lessee’s business or business operations (as determined by Lessee in its reasonable business judgment, not, however, to be arbitrarily exercised), then Lessee may elect to terminate this Lease as of the date of the vesting of title in the condemning authority, by written notice to Lessor given within sixty (60) days of the condemnation or taking. In the event of a partial condemnation of the Premises that does not result in a termination of this Lease, the monthly Base Rent thereafter to be paid shall be equitably reduced on a square footage basis. If the continued occupancy of Lessee is materially interfered with for any time during the partial taking, notwithstanding the partial taking does not terminate this Lease as to the part not so taken, the Base Rent shall proportionately abate so long as Lessee is not able to continuously occupy the part remaining and not so taken.
13.2 Award.
If the Premises are wholly or partially Condemned, Lessor shall be entitled to the entire award paid in connection with such condemnation, and Lessee waives any right or claim to any part thereof from Lessor or the condemning authority. Lessee shall have the right to claim and recover from the condemning authority, but not from Lessor, such compensation as may be separately awarded or recoverable by Lessee in Lessee’s own right on account of any and all costs which Lessee might incur in moving Lessee’s merchandise, furniture, fixtures, leasehold improvements and equipment to a new location.
14. Assignment and Subletting; Option to Purchase.
14.1 Assignment and Subletting; Prohibition.
Lessee shall not assign, mortgage, pledge or otherwise transfer this Lease, in whole or in part (each hereinafter referred to as an "assignment"), nor sublet or permit occupancy by any party other than Lessee of all or any part of the Premises (each hereinafter referred to as a "sublet" or "subletting"), without the prior written consent of Lessor in each instance, which consent will not be unreasonably withheld, conditioned or delayed. It will be considered reasonable for Lessor to evaluate the financial strength, operating history, resume and other factors of a proposed assignee or subtenant, including that the original Lessee is a governmental entity. Any purported assignment or subletting contrary to the provisions of this Lease without Lessor’s prior written consent shall be void and constitute an event of default hereunder. The consent by Lessor to any assignment or subletting shall not constitute a waiver of the necessity for obtaining Lessor’s consent to any subsequent assignment or subletting.
14.2 Information to be Furnished.
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If Lessee desires at any time to assign its interest in this Lease or sublet the Premises, Lessee shall first notify Lessor of its desire to do so and shall submit in writing to Lessor: (i) the name of the proposed assignee or subtenant; (ii) the operating experience and a full resume of the proposed assignee or subtenant; (iii) the terms and provisions of the proposed assignment or sublease, including the date upon which the assignment shall be effective or the commencement date of the sublease (hereinafter referred to as the "Transfer Effective Date") and a copy of the proposed form of assignment or sublease; and (iv) such financial information, including financial statements, and other information as Lessor may reasonably request concerning the proposed assignee or subtenant.
14.3 Lessor’s Election.
At any time within thirty (30) days after Lessor’s receipt of the information specified in Section 0, Lessor may, by written notice to Lessee, elect to (i) consent to the proposed assignment or subletting by Lessee; (ii) withhold its consent to the proposed assignment or subletting by Lessee; or (iii) exercise its Recapture Right under Section 14.4.
14.4 Recapture Right.
14.4.1 In lieu of consenting to or withholding consent to a proposed assignment of this Lease or subletting of all or substantially all of the Premises, Lessor shall have the right (“Recapture Right”) to terminate this Lease (or, in the case of a proposed subletting of a portion of the Premises, to terminate this Lease as to such portion) effective as of the Transfer Effective Date specified in Lessee's notice delivered pursuant to Section 14.2.
14.4.2 Lessor shall exercise the Recapture Right, if at all, by delivering written notice to Lessee within the thirty (30) day period set forth in Section 14.3.
14.4.3 If Lessor exercises the Recapture Right with respect to the entire Premises, this Lease shall terminate on the Transfer Effective Date as if such date were the expiration date of the Term, and all Rent and other charges shall be paid through and apportioned as of the Transfer Effective Date. Lessee shall surrender the Premises to Lessor on or before the Transfer Effective Date in the condition required by Section 9.4 of this Lease. If Lessor exercises the Recapture Right with respect to only a portion of the Premises (in the case of a proposed subletting of less than all of the Premises), this Lease shall be amended to remove the recaptured portion from the Premises effective as of the Transfer Effective Date, and Base Rent (if and when applicable), Lessee's Percentage Share, and all other charges based on the rentable square footage of the Premises shall be equitably adjusted to reflect the reduction in the size of the Premises.
Lessor and Lessee shall promptly execute an amendment to this Lease confirming the revised Premises, Lessee's Percentage Share, and any corresponding adjustments to Rent and other charges.
14.5 Bonus Rental.
If, in connection with any assignment or sublease, Lessee receives rent or other consideration, either initially or over the term of the assignment or sublease, in excess of the Rent called for hereunder, or in case of the sublease of a portion of the Premises, in excess of such Rent fairly allocable to such portion, (any such excess to exclude the reasonable cost paid by such 26 13162-0005\3292112v4.doc
transferee for Lessee’s leasehold improvements), personal property, including but not limited to furniture, fixtures and equipment within the Premises, and reasonable out-of-pocket expenses incurred by Lessee in connection with transfer, including but not limited to attorney fees, brokerage fees and costs of preparing the Premises for occupancy by the transferee), Lessee shall pay to Lessor, as additional rent hereunder, one hundred percent (100%) of the excess of each such payment of Rent or other consideration received by Lessee promptly after Lessee’s receipt of such Rent or other consideration. The requirements of this Section shall not apply to licenses or subleases for a term not to exceed thirty (30) days.
14.6 Lessor Management; Option to Purchase.
The parties acknowledge and incorporate Lessor’s limitation upon change in ownership, management, and control of Lessor, and Lessee’s option to purchase, as more fully set forth in Section 5 of the DDA, and that in the event of any conflict between this Section of the Lease and the DDA, the DDA shall control.
14.7 Scope.
The prohibition against assigning or subletting contained in this Section shall be construed to include a prohibition against any assignment or subletting by operation of law except as set forth herein.
14.8 Executed Counterparts.
No sublease or assignment shall be valid, nor shall any subtenant or assignee take possession of the Premises, until a fully executed counterpart of the sublease or assignment has been delivered to Lessor and Lessor, Lessee and the applicable assignee or subtenant have entered into a consent to assignment or sublease in a form acceptable to Lessor.
14.9 Release of Lessee.
Upon any assignment of this Lease as may be permitted under this Lease, Lessee shall not be released from its obligations under this Lease without the express written release from Lessor, which Lessor shall provide within a reasonable time from execution of the assignment.
15. Default by Lessee.
15.1 Events of Default.
The occurrence of any of the following events shall constitute an event of default on the part of Lessee under this Lease:
15.1.1 Payment. A failure by Lessee to pay Rent within ten (10) days after written notice that such payment is due, and the applicable late payment grace period has been exhausted;
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15.1.2 Bankruptcy. The bankruptcy or insolvency of Lessee, any transfer by Lessee to defraud creditors, any assignment by Lessee for the benefit of creditors, or the commencement of any proceedings of any kind by or against Lessee under any provision of the Federal Bankruptcy Act or under any other insolvency, bankruptcy or reorganization act unless, in the event any such proceedings are involuntary, Lessee is discharged from the same within sixty (60) days thereafter; the appointment of a receiver for a substantial part of the assets of Lessee; or the levy upon this Lease or any estate of Lessee hereunder by any attachment or execution;
15.1.3 Performance of Lease Terms. Lessee’s failure to perform any of the terms, covenants, agreements or conditions of this Lease to be observed or performed by Lessee, which default has not been cured within thirty (30) days after written notice thereof by Lessor to Lessee; provided, however, that if the nature of the default is such that the same cannot reasonably be cured within the 30-day period, Lessee shall not be deemed to be in default if within such period Lessee shall commence such cure and thereafter diligently prosecute the same to completion;
15.2 Remedies. In the event of any default or breach by Lessee, Lessor may at any time thereafter, without limiting Lessor in the exercise of any right or remedy at law or in equity which Lessor may have by reason of such default or breach:
15.2.1 Continue Lease. Lessor may continue this Lease in full force and effect after Lessee’s breach and recover the Rent and any other monetary charges as they become due, without terminating Lessee’s right to sublet or assign this Lease, subject only to reasonable limitations as herein provided. During the period Lessee is in default, Lessor shall have the right to do all acts necessary to preserve and maintain the Premises as Lessor deems reasonable and necessary, including removal of all persons and property from the Premises, and Lessor can enter the Premises and relet them, or any part of them, to third parties for Lessee’s account.
15.2.2 Perform. Pay or perform such obligation due (but shall not be obligated to do so), if Lessee fails to pay or perform any obligations when due under this Lease within the time permitted for their payment or performance. In such case, the costs incurred by Lessor in connection with the performance of any such obligation will be additional rent due under this Lease and will become due and payable on demand by Lessor.
15.2.3 Terminate. Terminate Lessee’s rights to possession by any lawful means, in which case this Lease shall terminate and Lessee shall immediately surrender possession of the Premises to Lessor. In such event Lessor shall be entitled to recover from Lessee all damages incurred by Lessor by reason of Lessee’s default, including, without limitation, any amounts permitted by Civil Code section 1951.2, as may be amended from time to time. In addition, Lessor shall be entitled to recover from Lessee the unamortized portion of any Lessee improvement allowance, free rent or other allowance provided by Lessor to Lessee and any brokerage commission or finder’s fee paid or incurred by Lessor in connection with this Lease (amortized with interest at the Interest Rate on a straight line-basis over the original term of this Lease). Upon any such termination of Lessee’s possessory interest in and to the Premises, Lessee (and at Lessor’s sole election, Lessee’s sublessees and subtenants) shall no longer have any interest in the Premises, and Lessor shall have the right to make any reasonable repairs, alterations or modifications to the Premises which Lessor in its sole discretion deems reasonable and necessary. 28 13162-0005\3292112v4.doc
15.2.4 Additional Remedies. Pursue any other legal or equitable remedy available to Lessor.
15.3 Waiver of Right of Redemption.
In the event Lessee is evicted or Lessor takes possession of the Premises by reason of any uncured default by Lessee hereunder, Lessee hereby waives any right of redemption or relief from forfeiture as provided by law.
15.4 Continue.
Even though Lessee has breached this Lease and abandoned the Premises, this Lease shall continue in effect for so long as Lessor does not terminate Lessee’s right to possession, and Lessor may enforce all its rights and remedies under this Lease, including the right to recover Rent as it becomes due under this Lease. Acts of maintenance or preservation, efforts to relet the Premises, or the appointment of a receiver upon initiative of Lessor to protect Lessor’s interest under this Lease, shall not constitute a termination of Lessee’s right to possession. Lessor shall use commercially reasonable efforts to mitigate its damages as required by law.
15.5 Lessee’s Exercise Rights.
In the event Lessee is in default under any provision of this Lease, and applicable cure periods have been exhausted, then, at Lessor’s sole election: (i) Lessee shall not have the right to exercise any available right, option or election under this Lease ("Lessee’s Exercise Rights"), and (ii) Lessor shall not be obligated to give Lessee any required notices or information relating to the exercise of any of Lessee’s Exercise Rights hereunder.
16. Default by Lessor.
Lessor shall not be in default under this Lease unless Lessor, or the holder of any mortgage, deed of trust or ground lease covering the Premises, fails to perform obligations required of Lessor within a reasonable time, but in no event later than thirty (30) days after written notice by Lessee to Lessor and to the holder of any first mortgage, deed of trust or ground lease covering the Premises whose name and address shall have been furnished to Lessee in writing, specifying wherein Lessor has failed to perform such obligations; provided, however, that if the nature of Lessor's obligation is such that more than thirty (30) days are required for performance, then Lessor shall not be in default if Lessor or the holder of any such mortgage, deed of trust or ground lease commences performance within such 30-day period and thereafter diligently prosecutes the same to completion.
17. Estoppel Certificate.
17.1 Obligation to Execute Estoppel.
Lessee shall within thirty (30) days after notice from Lessor, execute, acknowledge and deliver to Lessor an Estoppel Certificate substantially in the form attached hereto as Exhibit E 29 13162-0005\3292112v4.doc
certifying (i) that this Lease is unmodified and in full force and effect (or, if modified, stating the nature of such modification and certifying that this Lease, as so modified, is in full force and effect), (ii) the amount of the Rent and the Security Deposit, (iii) the date to which the Rent has been paid, (iv) acknowledging that there are not, to Lessee’s knowledge, any uncured defaults on the part of Lessor hereunder, or specifying such defaults, if any are claimed, and (v) such other matters as may reasonably be requested by Lessor. Any such statement may be conclusively relied upon by Lessor and any prospective purchaser or encumbrancer of the Building.
18. Subordination.
This Lease, at Lessor’s sole option, shall be subordinate to any mortgage, deed of trust, or any other hypothecation for security now or hereafter placed upon the Building and to any and all advances made on the security thereof and to all renewals, modifications, consolidations, replacements, refinancings and extensions thereof. Notwithstanding such subordination, Lessee’s right to quiet possession of the Premises shall not be disturbed if Lessee is not in default and so long as Lessee shall pay the Rent and observe and perform all of the provisions of this Lease, unless this Lease is otherwise terminated pursuant to its terms. If any mortgagee or trustee shall elect to have this Lease prior to the lien of its mortgage or deed of trust, and shall give notice thereof to Lessee, this Lease shall be deemed prior to such mortgage, deed of trust, or ground lease, whether this Lease is dated prior to or subsequent to the date of said mortgage, deed of trust or ground lease or the date of recording thereof. If any mortgage or deed of trust to which this Lease is subordinate is foreclosed or a deed in lieu of foreclosure is given to the mortgagee or beneficiary, Lessee shall attorn to the purchaser at the foreclosure sale or to the grantee under the deed in lieu of foreclosure; if any ground lease to which this Lease is subordinate is terminated, Lessee shall attorn to the ground Lessor. Lessee agrees to execute any documents required to effectuate such subordination or to make this Lease prior to the lien of any mortgage, deed of trust or ground lease, as the case may be, or to evidence such attornment. Any such document of attornment shall also provide that the successor shall not disturb Lessee in its use of the Premises in accordance with this Lease. Lessor agrees to obtain a Subordination, Non-Disturbance, and Attornment Agreement (“SNDA”) in the form attached hereto as Exhibit F from the holder of any existing mortgage, deed to secure debt or deed of trust encumbering the Project (or any part thereof), if any, and deliver the same to Lessee within twenty (20) days from the Effective Date (the “SNDA Delivery Date”).
Lessee agrees to subordinate its interest in this Lease to any future first mortgage, deed to secure debt or deed of trust (a “Mortgage”) encumbering the Premises by the execution of an SNDA in the form attached hereto as Exhibit F, which SNDA shall also be executed by such future mortgagee and Lessor. Lessee’s interest in this Lease shall not be subordinate to any future Mortgage except as expressly provided in such fully executed SNDA.
19. Attorneys’ Fees.
In any action or proceeding which Lessor or Lessee brings against the other party in order to enforce its respective rights hereunder or by reason of the other party failing to comply with all of its obligations hereunder, whether for declaratory or other relief, the unsuccessful party therein agrees to pay all costs incurred by the prevailing party therein, including reasonable attorneys’ fees, to be fixed by the court, and said costs and attorneys’ fees shall be made a part of the judgment in said action; provided, however, that each party’s maximum liability for attorneys’ fees under this Section shall not exceed One Hundred Thousand Dollars ($100,000). A party shall be deemed to have prevailed in any action (without limiting the definition of prevailing party) if such action 30 13162-0005\3292112v4.doc
is dismissed upon the payment by the other party of the amounts allegedly due or the performance of obligations which were allegedly not performed, or if such party obtains substantially the relief sought by such party in the action, regardless of whether such action is prosecuted to judgment.
20. Notices.
All notices, consents, demands, and other communications from one party to the other given pursuant to the terms of this Lease shall be in writing and shall be personally delivered, delivered by courier service, delivered by national overnight delivery service (e.g., Federal Express, Airborne Express and UPS), or deposited in the United States mail, certified or registered, postage prepaid, and addressed as follows: To Lessee at the address specified in the Basic Lease Information or to such other place as Lessee may from time to time designate in a notice to Lessor; to Lessor at the address specified in the Basic Lease Information, or to such other place and to such other parties as Lessor may from time to time designate in a notice to Lessee.
All notices shall be effective upon delivery or refusal of delivery. The parties acknowledge that copies of any notice sent by e-mail are for convenience only, and shall not be deemed to be proper notice required hereunder. Any notice delivered by a party’s legal counsel shall be deemed valid and effective as if such notice were delivered directly by the party itself.
21. General Provisions.
21.1 Applicable Law.
This Lease shall be governed by and construed in accordance with the internal laws of the State of California, notwithstanding any choice of law statutes, regulations, provisions or requirements to the contrary.
21.2 Severability.
The invalidity of any provision of this Lease, as determined by a court of competent jurisdiction, shall in no way affect the validity of any other provision hereof.
21.3 Waiver.
No waiver of any provision hereof by either party shall be deemed by the other party to be a waiver of any other provision, or of any subsequent breach of the same provision. Lessor’s or Lessee’s consent to, or approval of, any act shall not be deemed to render unnecessary the obtaining of Lessor’s or Lessee’s consent to, or approval of, any subsequent act by the other party.
21.4 Holdover.
Should Lessee, or any of its successors in interest, hold over in the Premises, or any part thereof, after the expiration of the Term unless otherwise agreed to in writing, such holding over shall constitute and be construed as tenancy from month-to-month only, at a monthly rent equal to twice the fair market rental value for the Premises during the final year of the Term (as determined by Lessor in its sole discretion), as the same may have been extended, together with the additional rent due under this Lease. The inclusion of the preceding sentence shall not be construed as 31 13162-0005\3292112v4.doc
Lessor’s permission for Lessee to hold over. In addition, Lessee shall indemnify, protect, defend and hold harmless Lessor for all losses, expenses and damages, including any consequential damages incurred by Lessor, as a result of Lessee failing to surrender the Premises to Lessor and vacate the Premises by the end of the Term.
21.5 Successors and Assigns.
Subject to the provisions of this Lease restricting assignment or subletting by Lessee, this Lease shall bind the parties, their personal representatives, successors and assigns.
21.6 Entry.
Upon reasonable prior notice to Lessee (which notice shall not be required in the event of an emergency), Lessor and Lessor’s representatives and agents shall have the right to enter the Premises during regular business hours (but at such times so as to avoid unreasonable disruptions of Lessee’s business operations, except in the event of an emergency) for the purpose of inspecting the same, showing the same to prospective purchasers or lenders, and making such alterations, repairs, improvements, or additions to the Premises, the Building or the Common Areas as Lessor may deem necessary or desirable. Lessor may at any time during the last nine (9) months of the Term place on or about the Premises any ordinary "For Lease" sign. Lessor may at any time place on or about the Premises any ordinary "For Sale" sign.
21.7 Subleases.
The voluntary or other surrender of this Lease by Lessee, the mutual cancellation thereof or the termination of this Lease by Lessor as a result of Lessee’s default shall, at the option of Lessor, terminate all or any existing subtenancies or may, at the option of Lessor, operate as an assignment to Lessor of any or all of such subtenancies.
21.8 Limitation of Liability.
In the event that Lessor or any successor owner of the Building sells or conveys the Building, then all liabilities and obligations of Lessor or the successor owner under this Lease accruing after the sale or conveyance shall terminate and become binding on the new owner, and Lessee shall release Lessor from all liability under this Lease, except for acts or omissions of Lessor occurring prior to such sale or conveyance. Lessee expressly agrees that (i) the obligations of Lessor shall not constitute personal obligations of the officers, directors, partners, employees, affiliates, joint venturers, members, trustees, owners, shareholders, or other principals, agents or representatives of Lessor (each, a "Member of Lessor"), and (ii) Lessee shall have recourse only to Lessor’s interest in the Building (including the rents, and insurance, condemnation and other proceeds from the Building) of which the Premises are a part for the satisfaction of such obligations and not against the other assets of Lessor. In this regard, Lessee agrees that in the event of any actual or alleged failure, breach or default by Lessor of its obligations under this Lease, that (i) no Member of Lessor shall be sued or named as a party in any suit or action (except as may be necessary to secure jurisdiction of Lessor), (ii) no judgment will be taken against any Member of Lessor, and any judgment taken against any Member of Lessor may be vacated and set aside at any time without hearing, (iii) no writ of execution will ever be levied against the 32 13162-0005\3292112v4.doc
assets of any Member of Lessor, and (iv) these agreements by Lessee are enforceable both by Lessor and by any Member of Lessor.
21.9 Authority.
Lessee represents and warrants to Lessor that: (i) the execution and delivery of this Lease has been duly authorized by all necessary official action, including, but not limited to a duly adopted resolution or ordinance of the Paramount City Council; (ii) the person(s) executing this Lease on behalf of Lessee or authorized to do so pursuant to the City of Paramount’s Municipal Code; and (iii) this Lease constitutes a valid and legally binding obligation of Lessee, enforceable in accordance with its terms. Lessor represents and warrants to Lessee that (i) Lessor is a duly authorized and validly existing California limited liability company qualified to do business in the State in which the Premises are located; (ii) Lessor has the full right and authority to enter into this Lease; (iii) each of the persons executing this Lease on behalf of Lessor is authorized to do so; and (iv) this Lease constitutes a valid and legally binding obligation of Lessor, enforceable in accordance with its terms.
21.10 Time.
Time is expressly declared to be of the essence of this Lease and of each and every covenant, term, condition, and provision hereof.
21.11 Construction.
The language in all parts of this Lease shall be in all cases construed as a whole according to its fair meaning and not strictly for nor against either Lessor or Lessee.
21.12 Definitions.
As used in this Lease and whenever required by the context thereof, each number, both singular and plural, shall include all numbers and in each gender shall include all genders. Lessor and Lessee, as used in this Lease or in any other instrument referred to in or made a part of this Lease, shall likewise include both the singular and the plural, a corporation, limited liability company, partnership, individual or person acting in any fiduciary capacity as executor, administrator, trustee or in any other representative capacity.
21.13 Exhibits.
The Basic Lease Information and Exhibits attached to this Lease are incorporated herein by reference.
21.14 Force Majeure.
Any prevention, delay or stoppage due to strikes, lockouts, labor disputes, acts of God, inability to obtain labor or materials or reasonable substitutes therefor, governmental restrictions, governmental regulations, governmental controls, judicial orders, enemy or hostile governmental action, civil commotion, fire or other casualty, and other causes (except financial) beyond the reasonable control of the party obligated to perform, shall excuse the performance by that party 33 13162-0005\3292112v4.doc
for a period equal to the prevention, delay or stoppage; however, this Article shall not be applied to delay the payment by Tenant of payments required of Tenant under this Lease.
21.15 Brokers' Fees.
Each party represents that, aside from any broker or finder referenced in the Basic Lease Information, it has not had dealings with any real estate broker, finder or other person, with respect to this Lease in any manner. Each party shall hold harmless the other party from all damages resulting from any claim that may be asserted against the other party by any broker, finder, or other person with whom the other party has or purportedly has dealt. Lessor shall pay any commissions or fees that are payable to the broker or finder specified in the Basic Lease Information, with respect to this Lease in accordance with the provisions of a separate commission contract.
21.16 Use of Name.
Lessee acknowledges and agrees that the name of the Project and all variations thereof, are proprietary to Lessor.
21.17 Non-Discrimination.
Lessee covenants by and for itself and its successors and assigns, and all persons claiming under or through it, and this Lease is made and accepted upon and subject to the conditions that there shall be no discrimination against or segregation of any person or of a group of persons on account of race, color, religion, creed, sex, marital status, ancestry or national origin in the leasing, subleasing, transferring, use, occupancy, tenure or enjoyment of the property herein leased nor shall Lessee or any person claiming under or through it establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of Lessees, sublessees, or vendees in the property herein leased.
21.18 Entire Agreement.
This Lease, including attached Exhibits, Addendum, and Basic Lease Information, contains all agreements and understandings of the parties and supersedes and cancels any and all prior or contemporaneous written or oral agreements, instruments, understandings, and communications of the parties with respect to the subject matter herein (except for that certain Disposition and Development Agreement with Operating Covenants between the City of Paramount and Paramount City Investors, LLC, recorded on July 19, 2023, in the Official Records of Los Angeles County as Document No. 20230475682, and that certain Easement Agreement between the City of Paramount and Paramount City Investors, LLC, recorded on __________, in the Official Records of Los Angeles County as Document No. ____________). This Lease, including the attached Exhibits, Addendum, and Basic Lease Information, may be modified only in a writing signed by each of the parties. The Exhibits, Addendum and Basic Lease Information attached to this Lease are incorporated herein by reference.
21.19 Quiet Enjoyment.
34 13162-0005\3292112v4.doc
On and subject to the terms, covenants and conditions of this Lease, Lessor warrants and covenants that Lessee has the right to peacefully and quietly have, hold and enjoy the Premises for the entire Term of this Lease.
21.20 Patriot Act.
Lessee represents and warrants to Lessor, that Lessee is not restricted from entering into this Lease or otherwise dealing with Lessor under Executive Order No. 13224 on Terrorist Financing (the “Executive Order”) or the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (the “Patriot Act”) or any other law, regulation or order restricting certain dealings with parties known or suspected to engage in or support terrorism (collectively, “Terrorism Laws”). Lessor represents and warrants to Lessee, that Lessor is not restricted from entering into this Lease or otherwise dealing with Lessee under Terrorism Laws. A party shall be in default under this Lease if its acts, omissions or status would cause the other to be in violation of any Terrorism Laws.
21.21 CASp.
In accordance with California Civil Code 1938, Lessor states: A Certified Access Specialist (CASp) can inspect the subject premises and determine whether the subject premises comply with all of the applicable construction-related accessibility standards under state law. Although state law does not require a CASp inspection of the subject premises, the commercial property owner or lessor may not prohibit the lessee or tenant from obtaining a CASp inspection of the subject premises for the occupancy or potential occupancy of the lessee or tenant, if requested by the lessee or tenant. The parties shall mutually agree on the arrangements for the time and manner of the CASp inspection, the payment of the fee for the CASp inspection, and the cost of making any repairs necessary to correct violations of construction-related accessibility standards within the premises.
21.22 Large Item Removal.
Lessor agrees to cooperate with Lessee regarding removal of large items from the Premises.
Lessee shall bear the cost of large item removal from the Premises. Lessee shall provide reasonable notice to Lessor in advance of the removal of any large item from the Premises. [Signature Page Follows]
34 13162-0005\3292112v4.doc
Lease – Hay Tree Public Market
IN WITNESS WHEREOF, the parties have executed this Lease to be effective on the date first mentioned above.
"Lessor"
PARAMOUNT CITY INVESTORS, LLC,
a California limited liability company
By: Arroyo Seco Development Group, LLC,
a California limited liability company,
its Managing Member
By: ________________________________
Steven A. Boss, Manager
"Lessee"
CITY OF PARAMOUNT,
a California municipal corporation
By:
Name:
Its:
APPROVED AS TO FORM:
CITY ATTORNEY
By: ______________________________
Name: ____________________________
A-1-1
EXHIBIT A-1
DIAGRAM OF PREMISES
A-2-1
EXHIBIT A-2
DIAGRAM OF PROJECT
A-3-1
EXHIBIT_A-3
DEPICTION OF WEST SIDE PATIO
A-3-1
A-4-1
EXHIBIT A-4
LEGAL DESCRIPTION OF PROJECT
A-4-1
A-5-1
EXHIBIT A-5
DESIGNATED PARKING SPACES
A-5-1
B-1
EXHIBIT B
WORK LETTER AGREEMENT
Lessor’s Work
Lessor, at its sole cost and expense, shall provide the following:
1. Front Door: Entry door to Premises.
2. Demising Wall: With clear pane glass as shown on Lessor’s plans.
3. Demising Wall: Dry walled, insulated, taped, sanded, and ready for paint with insulation and separation between lessees.
4. Perimeter Walls: Clean and ready for use by Lessee.
5. Concrete Floor: Level, clean, in good condition, ready to receive floor finishes without significant additional preparation, and structurally sound. Lessee shall be permitted to saw cut existing slab to place its underground utilities at all locations required by Lessee inside of premises.
6. HVAC: New roof top units with distribution capable of supplying a total of 1 ton per 300 square feet.
Units shall be sleeved into premises and delivered to Lessee in operational condition. Lessee will be responsible for distribution ducting per Lessee’s improvement plans.
7. Electrical: 200-amp service, 120/208V, 3-phase, 4 wire service.
8. Water: Minimum ½” domestic cold-water line and all associated metering and backflow prevention (including all tap fees, meter fees, and capacity fees) valved and capped inside of demising line of the premises.
9. Sewer: Minimum 4” sewer line stubbed into Premises in sufficient size and depth for Lessee’s use, with sewer connection and capacity fees paid for Lessee’s use. Any roof penetration(s) for venting must be done by Lessor’s roofing contractor.
10. Gas: Natural gas service stubbed to Lessee’s space.
11. Restrooms: One unisex restroom with tile flooring, F.R.P. wall finish, overhead light, exhaust fan, light switch, grab bars, soap dispenser, paper towel dispenser, toilet paper dispenser and mirror.
12. Water Heater: None.
13. Fire Alarm: 1” minimum conduit and wire stubbed into the premises from base building fire alarm system terminating at a junction box within the Premises. Base building fire alarm system to have enough capacity to ensure that Lessee’s fire alarm system will meet all applicable laws.
14. Fire Sprinklers: If applicable, sprinkler coverage (drops and heads) distributed throughout the Premises and zoned properly per code for the shell building requirements. Lessee to modify sprinkler system in the Premises as required for Lessee’s plans.
B-2
15. Trash: Dumpster enclosure per applicable code.
16. Phone: One (1) 2” conduit run from telephone backboard and stubbed to the Premises.
17. Common Area: Lessor shall complete all of the Common Area work and obtain final shell inspection approval for the building containing the Premises and all other licenses, permits, signoffs and approvals required for Lessee to apply for and obtain its certificate of occupancy Any actual delay in the substantial completion of Lessor’s Work to the extent caused by the following shall be a “Lessee Delay”: (i) Lessee’s failure to submit or approve plans, specifications, or finish selections within the timeframes set forth in Lessee’s Work below; (ii) any change order requested by Lessee after the final approval of construction drawings; or (iii) the performance of work in the Premises by Lessee or its agents/ contractors.
Lessee’s Work
Lessee, at its sole cost and expense, shall provide the following:
1. Lessee to pursue to completion all additional build-out in order to complete Lessee’s tenant improvements as shown on Lessee’s Plans.
2. Lessee shall prepare and submit preliminary plans and specifications (“Lessee’s Plans”) to Lessor within sixty (60) days from the later of the Effective Date or Lessee’s receipt of Lessor’s construction plans for the Project. Lessor shall have ten (10) days from receipt thereof to disapprove of such plans and specifications. Any disapproval shall contain the specific changes desired by Lessor to obtain its approval. Lessor shall have five (5) days from receipt thereof to disapprove any revised plans and specifications; provided that if the changes requested by Lessor have been made, Lessor's approval shall be deemed given.
C-1
EXHIBIT C
COMMENCEMENT DATE MEMORANDUM
With respect to that certain lease ("Lease") dated ___________________, ____, between _________________________________________, a _____________________ ("Lessee"), and _______________________, a ____________________ ("Lessor"), pursuant to which Lessor leased to Lessee and Lessee leased from Lessor approximately _________ rentable square feet of space ("Premises") in the building located at ______________________________, Lessee hereby acknowledges and certifies to Lessor as follows:
(1) The Commencement Date is __________, 20____;
(2) Lessee Opened for business to the public in the Premises on ___________, 20____; (3) The Premises contains approximately 3,000 rentable square feet of space and exclusive patio space of approximately 1,000 square feet; and
(4) Lessee has accepted and is currently in possession of the Premises and the Premises are acceptable for Lessee’s use.
IN WITNESS WHEREOF, this Commencement Date Memorandum is executed this ______ day of ______________, 20___.
"Lessee"
,
a
By:
Name:
Its:
D-1
EXHIBIT D
RULES AND REGULATIONS
It is further agreed that the following rules and regulations (these "Rules") shall be and are hereby made a part of this Lease, and Lessee agrees that Lessee’s employees and agents, or any others permitted by Lessee to occupy or enter the Premises, will at all times abide by these Rules, unless otherwise specified or provided for in the Lease, to wit:
1. All loading and unloading of goods shall be done only at such times, in the areas, and through the entrances designated for such purposes.
2. The delivery or shipping of merchandise, supplies and fixtures to and from the Premises shall be subject to such rules and regulations as are necessary, in the judgment of Lessor, for the proper operation of the Premises or the Project.
3. No devices of any kind shall be erected on the roof or exterior walls of the Premises or on the grounds without, in each instance, the written consent of Lessor.
4. Except as specifically set forth in this Lease, no loud speakers, televisions, phonographs, radios or other devices shall be used in a manner so as to be heard or seen outside of the Premises without the prior written consent of Lessor. In addition, Lessee shall conduct its business in a quiet and orderly manner so as not to create unreasonable noise.
5. Except as specifically set forth in this Lease, the outside areas immediately adjoining the Premises shall be kept clean and free from dirt and rubbish by the Lessee to the satisfaction of Lessor and Lessee shall not place or permit any obstruction or merchandise in such areas. No exterior storage shall be allowed without permission in writing from Lessor.
6. The plumbing facilities shall not be used for any purpose other than that for which they are constructed, and no foreign substances of any kind shall be thrown therein. The expense of any breakage, stoppage, or damage resulting from a violation of this provision shall be borne by the Lessee whose employees, agents or invitees shall have caused it.
7. Lessee shall use at Lessee’s cost a pest extermination contractor as reasonably required to keep the Premises free from pests.
8. Except as specifically set forth in this Lease, Lessee shall not cause or permit any obnoxious or foul odors that disturb the public or other Lessees.
9. Lessee shall be responsible for repair of any damage occasioned by the moving of freight, furniture or other objects into, within, or out of the Premises or the Project.
10. Waste and excessive or unusual use of water shall not be allowed.
11. Lessor reserves the right from time to time to amend or supplement the foregoing rules and regulations applicable to the Premises and shall notify Lessee of such changes. All such rules and regulations shall be reasonable, enforced in a uniform manner, and in the event of a conflict between any such rule or regulation and the provisions of the Lease, the provisions of the Lease shall control.
D-1
E-1
EXHIBIT E
FORM OF ESTOPPEL CERTIFICATE
THIS IS TO CERTIFY THAT:
1. The undersigned is the Lessee under that certain Hay Tree Public Market Lease dated ____________________, _____, (“Lease”) by and between PARAMOUNT CITY INVESTORS, LLC, a California Limited Liability Company as (“Lessor”) and THE CITY OF PARAMOUNT, a California Municipal Corporation as Lessee (“Lessee”), covering certain premises consisting of approximately 4,000 square feet within the building located at 16493 Paramount Boulevard, Paramount, California (“Premises”).
2. The Lease has not been modified, changed, altered, assigned, supplemented or amended in any respect except as indicated below (if none, state “None”). The Lease is valid and in full force and effect on the date hereof. The Lease, as modified by the amendments or assignments listed below, if any, represent the entire agreement between Lessor and Lessee with respect to the Premises:
___________________________________________________________________.
3. Lessee is not entitled to, and had made no agreement with Lessor, or its agents or employees, concerning free rent, partial rent, rebate of rent payments, credits or offsets or reduction in rent, or any other type of rental concession including, without limitation, lease, support payments or lease buyouts, except as indicated below, (if none, state “None”):
___________________________________________________________________.
4. The current general terms and conditions of the Lease are summarized as follows:
a) Commencement Date: _____________________________
b) Lease Expiration Date: _____________________________ c) Base Rent: $______________
d) Current Estimated Monthly Common Area
Maintenance, Taxes & Insurance: $______________
5. Lessee has not paid any amount due under the Lease more than one (1) month in advance of its due date, except as indicated below, (if none, state “None”). ___________________________________________________________________.
6. There is no security deposit required from Lessee under the Lease, and Lessee has not paid Lessor any security deposit.
7. No money has been paid to Lessor in excess of the rent and related charges set forth in the Lease and Lessee waives any right to dispute any past rental and related charges.
8. No event has occurred and no condition exists which with the giving of notice or the lapse of time or both will constitute a default by Lessee or, to Lessee’s actual knowledge, by Lessor, under the Lease. To the actual knowledge of Lessee, Lessee has no existing defenses or offsets against the enforcement of the Lease by Lessor.
9. There are no contributions by Lessor to Lessee on account of Lessee’s improvements in the Premises that are required to be paid to Lessee in accordance with the terms of the Lease or otherwise.
E-2
10. Except as set forth in the Lease and that certain Development and Disposition Agreement With Operating Covenants (“DDA”) recorded on July 19, 2023 as Document Number 20230475682 of Official Records of the County of Los Angeles, Lessee has no outstanding options, rights of first refusal or rights of first offer to purchase the Premises or any part thereof or all or any part of the real property of which the Premises are a part.
11. Lessee has not sublet the Premises or any part thereof and has not assigned any of its rights under the Lease, except as indicated below (if none, state “None”) and no one except Lessee and its employees occupies the Premises.
__________________________________________________________________.
12. The address for notice to be sent to Lessee is as set forth in the Lease. (If different, indicate correct address: __________________________________________________
13. The Premises have not been used by Lessee and Lessee does not plan to use the Premises for any activities which, directly or indirectly, involve the use, generation, treatment, storage, transportation or disposal of any petroleum product or any toxic or hazardous chemical, material, substance, pollutant or waste in violation of any applicable law.
14. Lessee has not received any written notice from any governmental authority of violation of any federal, state, county or local statutes, laws, rules, regulations or governmental authorities relating to environmental, health or safety matters and, to Lessee’s actual knowledge, there are no writs, injunctions, decrees, or judgments, outstanding lawsuits, claims, proceedings or investigations pending or threatened, relating to Lessee’s use, maintenance or operation of the Premises.
15. The undersigned is authorized to execute this Lessee Estoppel Certificate on behalf of the Lessee.
LESSEE:
CITY OF PARAMOUNT,
a California municipal corporation
By:
Name:
Its:
APPROVED AS TO FORM:
CITY ATTORNEY
By: ______________________________
Name: ____________________________
E-2
F-1
EXHIBIT F
FORM OF SNDA
This Subordination, Nondisturbance and Attornment Agreement (“Agreement”) is made as of _______________, by and among _____________________________ (“Lender”), Paramount City Investors, LLC, a California limited liability company (“Borrower” and “Lessor”), and City of Paramount, a California municipal corporation (“Lessee”).
A. Borrower is the owner of certain real property located in the City of Paramount, County of Los Angeles, State of California (“Property”) and more particularly described in Exhibit “A” attached hereto and incorporated herein. Borrower and Lessee have entered into that certain Hay Tree Public Market Lease, dated ____________________, 2026 (as may be amended, the “Lease”) covering a portion of the Property and commonly known as 16493 Paramount Boulevard, Paramount, California (such portion, the “Premises”).
B. Borrower is indebted to Lender pursuant to a loan (“Loan”) made by Lender. The obligations of Borrower to Lender under the Loan are secured pursuant to one or more deeds of trust encumbering, among other things, the Premises (collectively, the “Deed of Trust”). “Loan” shall also include all modifications, renewals, extensions, and replacements relating to the Loan.
C. As a condition to making, maintaining, or modifying the Loan, Lender requires that Lessee subordinate its interest under the Lease in all real or personal property which now or hereafter secures any of Borrower’s present or future obligations to Lender under the Deed of Trust, including but not limited to the Premises, and that Borrower and Lessee agree to the other terms and conditions set forth in this Agreement. As a condition to subordinating its interest under the Lease, Lessee requires assurances that Lender will not disturb Lessee’s possession of the Premises.
Therefore, the parties hereto agree as follows:
1. Subordination. Subject to the terms and conditions of this Agreement, Lessee hereby subordinates the priority of all of Lessee’s present or future estate, right, title, and interest in and to any real or personal property, under the Lease, which now or hereafter secures any present or future obligations of Borrower to Lender, including but not limited to the Premises, in favor of Lender’s present or future estate, right, title, and interest in and to any such real or personal property under the Deed of Trust.
2. Payment to Lender; Attornment. Upon demand by Lender, Lessee agrees to pay to Lender all rent, impounds, taxes, and other amounts due under the Lease, including all sums accrued but unpaid at the time of demand and accruing thereafter. Lessee shall have no responsibility to ascertain whether such demand is permitted under the Deed of Trust or any other document. All sums received by Lender or Successor (defined below) shall be credited against Lessee’s rental and other obligations under the Lease. Lessee agrees not to assert against Lender any claims, defenses, or setoffs it may have against Borrower, unless such claims, defenses, or setoffs accrued to Lessee pursuant to an express provision in the Lease or as a result of a default by Borrower which default continues after Lender or Successor succeeds to the interest of Borrower under the Lease. Lessee agrees that Lender shall have no duties, liabilities, or obligations as a landlord under the Lease unless and until (a) Lender has acquired the Premises and recorded its deed evidencing the same, or (b) Lender has assumed such duty, liability, or obligation. Subject to the terms and conditions of this Agreement, from and after Lender’s acquisition of the Premises, Lessee shall attorn to Lender as landlord under the Lease. Lessee shall also attorn to any person who purchases Lender’s interest in the Premises at a foreclosure sale.
F-2
3. Non-Disturbance. Provided that Lessee is not in default under the Lease beyond any applicable notice and cure period, (a) Lessee’s possession and use of the Premises, and Lessee’s rights and privileges under the Lease, shall not be diminished or interfered with by Lender, or by any party who acquires the Premises from Lender as a result of the exercise by Lender of any rights at law, in equity, or under the Deed of Trust, or other documents evidencing the Loan from Lender (including, without limitation, judicial foreclosure, non-judicial foreclosure, trustee’s sale, or acceptance of a deed-in-lieu of foreclosure) (“Successor”) during the term of the Lease; and (b) Lender will not join Lessee as a defendant in any action or proceeding foreclosing the Deed of Trust unless such joinder is necessary to foreclose the Deed of Trust, and then only to the extent necessary for such purpose, and not for the purpose of terminating the Lease.
4. Waivers by Lessee. Lessee waives notice of and gives its advance consent to the following: (a) The consummation and funding of the Loan or modifications thereto; (b) The occurrence of any event of default under the Loan; (c) The release, discharge, or incapacity of any party to the Loan; (d) The release, substitution, or abandonment of any collateral securing the Loan; (e) The advance of additional funds or the making of additional loans to Borrower even though such additional obligations may be secured by senior liens in favor of Lender on the Premises, or other real or personal property; (f) Any modification, renewal, extension, or replacement relating to the Loan; and (g) Any material adverse change in the financial or business condition of Borrower or any other party to the Loan.
5. Use of Proceeds. Lessee agrees that Lender shall not be responsible to Lessee for the use of the proceeds of the Loan. Lender is not responsible to Lessee for ensuring that any or all of the Loan proceeds are used to benefit or improve the Premises.
6. Effect on Lease. Nothing contained in this Agreement shall be deemed to affect the rights and obligations as between Borrower and Lessee, provided that if Lender acquires title to the Premises, this Agreement shall supersede any conflicting provisions in the Lease or any other agreement between Borrower and Lessee concerning the Premises.
7. Representations and Warranties. Borrower and Lessee represent, warrant, and agree as follows:
(a) The Lease is in full force and effect; (b) No default or event of default exists under the Lease; (c) The Lease is the complete and entire agreement between Borrower and Lessee and has not been modified in any way, except as may be disclosed in writing to Lender. There are no other written or oral agreements between Borrower and Lessee respecting the Premises or the Lease, except as may be disclosed in writing to Lender; and (d) Unless expressly provided otherwise in the Lease, Lessee shall not pay and Borrower shall not accept any additional advance rent or security deposit without the prior written consent of Lender.
8. Notices. All notices or demands shall be in writing and shall be served personally, by overnight delivery, or by certified mail with return receipt requested. Service shall be deemed conclusively made at the time of service if personally served, one (1) business day after timely deposit thereof with an overnight delivery service if served by overnight delivery, and as stated on return receipt if served by certified mail with return receipt requested.
Any notice or demand to Lender shall be given to:
_______________________________
_______________________________
_______________________________
Attn: ___________________________
Any notice or demand to Borrower shall be given to:
Paramount City Investors, LLC
1201 N. Magnolia Avenue
Anaheim, CA 92801
F-3
Attn: Paul Mittmann
Any notice or demand to Lessee shall be given to:
City of Paramount
16400 Colorado Avenue
Paramount, CA 90723
Attn: City Manager
Any party may, by virtue of written notice in compliance with this paragraph, alter or change the address or the identity of the person to whom any notice or copy thereof is to be sent.
10. Further Assurances. Each party shall execute and deliver all such further instruments, documents and papers, and shall perform any and all acts necessary to give full force and effect to all of the terms and provisions of this Agreement.
11. Severability. If any provision of this Agreement, as applied to any party or to any circumstance, shall be found by a court to be void, invalid or unenforceable, the same shall in no way affect any other provision of this Agreement, the application of any such provision in any other circumstance, or the validity or enforceability of this Agreement.
12. Attorneys’ Fees. In the event of any litigation or arbitration between the parties hereto respecting or arising out of this Agreement, the prevailing party in such action and any appeals therefrom shall be entitled to recover reasonable legal fees, whether or not such litigation or arbitration proceeds to final judgment or determination. Any litigation or arbitration between the parties shall occur exclusively in the County of Los Angeles, California.
13. Successors and Assigns. This Agreement shall be binding on and shall inure to the benefit of the successors, personal representatives, heirs, and assignees of the parties hereto.
14. No Waiver. No delay or omission on the part of any party to this Agreement in exercising any of its rights or remedies shall operate as a waiver, estoppel or other preclusion against the exercise of such rights or remedies at any time. A waiver of any rights or remedies on any one occasion shall not serve as a waiver for any subsequent or prior occasions.
15. Expiration. This Agreement shall automatically expire when Lender (or Successor, if applicable) no longer has a lien on the Premises or if Lessee is asked to execute and deliver a subordination agreement in connection with a loan meant to pay-off or otherwise replace the Loan.
16. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument. [Signatures on following page.]
F-3
F-4
The parties hereto have executed this Agreement on the date first above written.
LESSEE:
CITY OF PARAMOUNT,
a California municipal corporation
By:
Name:
Its:
APPROVED AS TO FORM:
CITY ATTORNEY
By: ______________________________
Name: ____________________________
LESSOR:
PARAMOUNT CITY INVESTORS, LLC,
a California limited liability company
By: ___________________________
Name: _________________________
Its: ____________________________
LENDER:
_______________________________
By: ___________________________
Name: _________________________
Its: ____________________________
To: Honorable City Council
From: John Moreno, City Manager
By: Grissel Chavez, Assistant City Manager
John King, Planning and Building Director
Date: September 8, 2026
SUBJECT: AGREEMENT FOR EASEMENTS, JOINT USE, AND USE RESTRICTION
BETWEEN THE CITY OF PARAMOUNT AND PARAMOUNT CITY
INVESTORS, LLC FOR THE SAW BUILDING PATIO/DECK AREA;
RESCIND COVENANT AND LOT-TIE AGREEMENT APPROVED ON
OCTOBER 28, 2025
BACKGROUND
On October 28, 2025, the City Council approved a Covenant and Lot-Tie Agreement related to the shared property line between the City’s Hay Tree property (the “City Subject Parcel”) and the Saw Building property, owned by Paramount City Investors, LLC (the “Property Owner”). After additional staff review and coordination with the Property Owner, the parties determined that an Agreement for Easements, Joint Use, and Use Restriction (“Agreement”) between the City and Property Owner would be a more appropriate instrument to govern the obligations between the parties. This new Agreement will therefore replace the previously approved Covenant and Lot-Tie Agreement. The proposed Agreement more accurately captures construction of improvements, joint-use requirements, operational controls, and flexibility necessary for both the City’s community and museum space and the commercial/restaurant operations within the Saw Building.
DISCUSSION
The proposed Agreement authorizes the Property Owner to construct, maintain, and operate patio and deck improvements and related utilities on an identified portion of the City Subject Parcel. These improvements, which may include decking, landscaping, lighting, utility installations, and outdoor furnishings, are constructed and maintained entirely at the Property Owner’s expense. The Agreement further authorizes construction of doorway and window openings along the northern wall of the Saw Building to facilitate movement between the interior community and museum space and the newly constructed outdoor patio area.
The proposed Agreement also includes detailed shared-use provisions governing scheduling procedures and permitted uses following construction of the patio and deck improvements.
Agenda Report September 8, 2026
AGREEMENT – EASEMENTS AND JOINT USE SAW BUILDING Page 2 Under the following terms:
• The City will retain designated “City Reserved Dates” each month during which it has exclusive use of the patio/deck area for City public events such as art nights, movie nights, community performances, educational programs, or other public activities. The City will have priority to use the patio/deck improvements in the patio easement area for such City public events provided that said City Reserved Dates do not conflict with a special event prescheduled by the Property Owner. • The Property Owner will use the deck on remaining days of the month, during which the patio/deck may be used to support its restaurant dining operations. • For special City events scheduled when the Property Owner is using the deck, the City may request the Owner to accommodate the event or the City shall request another date not in conflict, as specified in the Agreement. • Except for dates reserved for City events, the proposed Agreement establishes that Owner will have the right to the exclusive use of the patio/deck improvements for their own special events.
• The shared-use framework ensures predictable scheduling, minimizes conflicts, and guarantees public access for the City’s planned community-oriented programs. This enables casual joint activation of the shared space to enhance both the City’s programming and the restaurant’s outdoor dining needs.
This agreement fully replaces the Covenant and Lot-Tie Agreement approved on October 28, 2025 and aligns with operational, legal, and Building Code needs for the project.
Thus, staff recommends that the October 28, 2025 Covenant and Lot-Tie Agreement be rescinded in its entirety.
FISCAL IMPACT
There is no fiscal impact associated with approval of this agreement. The Owner is responsible for all costs associated with construction, utility installation, maintenance, and removal (if required) of the patio and deck improvements and the doorway and window openings.
VISION, MISSION, VALUES, AND STRATEGIC OUTCOMES
The City’s Vision, Mission, and Values set the standard for the organization, establish priorities, uniformity and guidelines; and provide the framework for policy decision making. The Strategic Outcomes were implemented to provide a pathway to achieving the City’s Vision. This item aligns with Strategic Outcome No 3: Economic Health - Support a healthy, sustainable economy reflecting community values.
Agenda Report September 8, 2026
AGREEMENT – EASEMENTS AND JOINT USE SAW BUILDING Page 3
RECOMMENDED ACTION
1) Rescind the Covenant and Lot-Tie Agreement approved by the City Council on October 28, 2025; and 2) Approve the attached Agreement for Easements, Joint Use, and Use Restriction between the City of Paramount and Paramount City Investors, LLC for construction, shared use, and operation of the patio and deck area adjacent to the Saw Building.
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RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
City of Paramount
Attention: City Clerk’s Office
16400 Colorado Avenue
Paramount, California 90723
With a copy to:
Paramount City Investors LLC
1613 Chelsea Road, # 264
San Marino, California 91108-2453
[SPACE ABOVE FOR RECORDER’S USE ONLY]
This document is for the benefit of the City of Paramount and is exempt from Recording Fees (Govt. Code § 27383), Filing Fees (Govt. Code §6103) and Documentary Transfer Tax (Rev & Tax Code § 11922).
Assessor’s Parcel Numbers: Owner Parcel: 7102-027-021;
City Properties: 7102-027-019 and 7102-027-020.
AGREEMENT FOR EASEMENTS, JOINT USE, AND USE
RESTRICTION BETWEEN THE CITY OF PARAMOUNT AND
PARAMOUNT CITY INVESTORS, LLC
This AGREEMENT FOR EASEMENTS, JOINT USE, AND USE RESTRICTION
BETWEEN THE CITY OF PARAMOUNT AND PARAMOUNT CITY INVESTORS, LLC (“Agreement”) is made and entered into by and between the City of Paramount, a municipal corporation (“City”) and Paramount City Investors, LLC, a California limited liability company (“Owner”). This Agreement is effective on the date it is fully executed and recorded in the Official Records of Los Angeles County (“Effective Date”). Owner and City are referred to below individually as a “Party” and collectively as the “Parties”.
RECITALS
Owner and City enter into this Agreement with respect to the following facts and for the following purposes:
A. Owner is the record fee owner of that certain real property located at 16493 Paramount Boulevard in the City of Paramount, California identified as Los Angeles County Tax Assessor’s Parcel Number 7102-027-021 (“Owner Parcel”). The Owner Parcel is described more particularly in EXHIBIT A attached hereto and incorporated herein by this reference.
B. The City is the record fee owner of that certain real property located at 16471 Paramount Boulevard in the City of Paramount, California identified as Los Angeles County Tax Assessor’s Parcel Numbers 7102-027-019 and 7102-027-020 (collectively “City Properties”).
The City Properties are described more particularly in EXHIBIT B attached hereto and -2-
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incorporated herein by this reference. The portion of the City Properties identified as Assessor’s Parcel Number 7102-027-020 is referred to below as the “City Subject Parcel”.
C. The Owner Parcel is approximately 19,204 square feet in size and is currently improved with an approximate 12,000 square foot vacant building known as the Paramount Saw building (“Saw Building”) that has historical significance to the City and its community. The northern wall of the Saw Building (“Northern Wall”) described on EXHIBIT C attached hereto and incorporated herein by this reference is located directly on or about the property line between the Owner Parcel and the City Subject Parcel.
D. The City Subject Parcel is located adjacent to the Owner Parcel.
E. The City and Owner entered into that certain Development and Disposition Agreement With Operating Covenants dated June 19, 2023 (“DDA”). The DDA was recorded on July 19, 2023 as Document Number 20230475682 of Official Records of the County of Los Angeles.
F. Pursuant to the DDA, Owner agreed to rehabilitate and preserve the Saw Building and use approximately two-thirds (2/3) of the Saw Building (approximately 8,000 square foot area) for restaurant/retail/commercial uses (“Commercial Space”). Pursuant to the DDA, Owner agreed to reserve the remaining one-third (1/3) of the Saw Building (approximately 4,000 square feet) for the City to use and occupy as a historical museum and community/event space (“City Community/Museum Space”).
G. The City’s use of the City Community/Museum Space in the Saw Building will require that Owner install wall openings for doorways and/or windows (“Doorway/Window Openings”) on the Northern Wall of the Saw Building located on the property line of the City Subject Parcel so that a Saw Building patio area can be developed on the City Subject Parcel and the City can use said patio area as provided in this Agreement. The approximate location of the Doorway/Window Openings on the Northern Wall is shown on EXHIBIT C. The Doorway/Window Openings are described more particularly in Section 2 below.
H. Pursuant to California Building Code Section 706.1.1, “[a]ny wall located on a lot line between adjacent buildings, which is used or adapted for joint service between the two buildings, shall be constructed as a fire wall in accordance with Section 706. Party walls shall be constructed without openings and shall create separate buildings.” Party walls and fire walls, however, are not required on lot lines dividing a building for ownership purposes in cases where dedicated access easements or contractual agreements that permit the owners of the portions of the buildings located on either side of the lot line access to the other side for purposes of maintaining fire and life safety systems necessary for the operation of the impacted building. Here, the portion of the Saw Building used by the City as the City Community/Museum Space does not abut any building located on the City Subject Parcel.
I. Owner desires to construct Patio/Deck Improvements (defined in Section 3(a)) on an approximate 1,410 square foot portion of the City Subject Parcel to expand the dining space in connection with Owner’s use of the restaurant portions of the Commercial Space. Owner will construct the Patio/Deck Improvements in the Patio Easement Area described in Section 2 below, -3-
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which area consists of a 10 to 20 foot zone in which no construction other than flatwork will occur.
Owner proposes to construct said Patio/Deck Improvements on the portions of the City Subject Parcel described on EXHIBIT D that abut the Commercial Space designated for restaurant purposes.
J. City will use portions of the City Properties to provide outdoor enjoyment and space to complement the City Community/Museum Space and for other public uses and events, including but not limited to art nights, movie nights, performances, and/or other programs administered by the City for the benefit of the public (“City Public Events”). City will jointly use the Patio Easement Area on which the Patio/Deck Improvements are improved for City Public Events, subject to the terms of this Agreement. To facilitate such use and to allow construction and operation of outdoor improvements serving the City Community/Museum Space, City desires to permit Owner to install the Doorway/Window Openings in the areas of the Northern Wall described on EXHIBIT C. Further, City wishes to grant Owner the right to use portions of the City Subject Parcel to construct and use the Patio/Deck Improvements on an approximate 1,410 square foot portion of the City Subject Parcel described on EXHIBIT D in connection with Owner’s proposed restaurant uses on the Commercial Space, subject to the terms and conditions of this Agreement.
K. City and Owner desire to enter into this Agreement to provide the terms and conditions upon which Owner may install the Doorway/Window Openings on the Northern Wall, and construct and use the Patio/Deck Improvements on the City Subject Parcel and the terms and conditions upon which the City can jointly use the portions of the City Subject Parcel improved with the Patio/Deck Improvements for the City Public Events.
L. The City and Owner will enter into a separate Lease Agreement (“Lease Agreement”) to govern the rights and obligations of each party regarding the City Community/Museum Space.
NOW, THEREFORE, for valuable consideration, receipt of which is hereby acknowledged, and in consideration of the above recitals and mutual promises, covenants, and other conditions set forth in this Agreement, the Parties agree as follows:
1. Effect of Recitals. The Parties acknowledge that the Recitals above are true and correct that said Recitals are hereby incorporated into this Agreement.
2. Doorway/Window Openings on Northern Wall. Owner is authorized to construct certain Doorway/Window Openings on the Northern Wall of the Saw Building located directly on or about the property line between the Owner Parcel and the City Subject Parcel and described on EXHIBIT C hereto. The Doorway/Window Openings shall not exceed 45% of the wall area as allowed by Section 705.8 of the California Building Code (2022 edition). a. Responsibility for Doorway/Window Openings on Northern Wall. Owner shall, at its sole cost and expense, install, maintain, repair, replace, modify, and operate Doorway/Window Openings, including associated frames, glazing, hardware, security devices, weather protection, lighting, awnings and canopies, and code required appurtenances in and through the Northern Wall, in locations generally depicted on EXHIBIT C (“Opening Areas”). -4-
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Said Doorway/Window Openings will comply with applicable City permits and approvals. The authorization to construct the Doorway/Window Openings in and through the Northern Wall in the Opening Areas pursuant to this Agreement enables the Owner Parcel and the City Subject Parcel to be treated as one parcel for the purposes of California Building Code Section 706.1.1. b. No Obstruction of Opening Areas. City shall not obstruct, cover, block, or impair the Doorway/Window Openings, and City shall not install or permit any new improvements or utilities within the Opening Areas or within ten (10) feet thereof that would materially interfere with the Doorway/Window Openings or ingress/egress for the Saw Building without Owner’s prior written consent, which consent shall not be unreasonably withheld. Owner shall construct and maintain the Doorway/Window Openings in compliance with applicable laws, including fire/life safety codes, subject to any variances, agreements, or alternative means and methods permitted by the City.
c. Use Restriction and Change to Commercial Space of Saw Building. Prior to any change of use of the Commercial Space from Restaurant/Retail/Commercial, Owner shall seek prior written approval from the City Council as required pursuant to the DDA, which approval shall not be unreasonably withheld, conditioned, or delayed. Should the City Council not approve a proposed change of use, Owner shall not make any change of use without first modifying the Saw Building to comply with the Building Code requirements, including removal of the Doorway/Window Openings and restoration of a firewall on the portion of the Northern Wall of the Saw Building (provided such removal is then required to comply with the Building Code).
This Agreement, and the easement conveyed under Section 3 below, shall terminate if Owner violates the use restriction by changing the use of the Commercial Space from Restaurant/Retail/Commercial without prior written approval from the City Council.
3. Patio Easement Area.
a. Patio Easement. City hereby grants to Owner a perpetual, non-exclusive easement (“Patio Easement”) over, across, under, and upon that certain approximate 1,410 square foot portion of the City Subject Parcel described on EXHIBIT E (“Patio Easement Area”) for the construction, installation, use, operation, maintenance, repair, replacement, alteration, and reconstruction of an outdoor patio and related deck improvements that complement and serve the dining space in connection with restaurant portions of the Commercial Space of the Saw Building (“Patio/Deck Improvements”).
b. Construction of Patio/Deck Improvements. Owner shall, at its sole cost and expense, install, maintain, repair and reconstruct Patio/Deck Improvements described on Exhibit D on the Patio Easement Area to complement and serve the Saw Building uses. The Patio/Deck Improvements may include, without limitation, hardscape, decking, planters and landscaping, railings or perimeter enclosures, lighting, drainage, shade structures (non-permanent), furniture, outdoor service areas, outdoor dining and assembly areas, signage, grease and refuse enclosures, low voltage and security equipment, and other typical patio features. Owner shall submit to City for approval the plans for said Patio/Deck Improvements prior to commencing construction of said improvements. Without limiting the foregoing, Owner shall make and install the Patio/Deck Improvements as a public works project and shall pay prevailing wages in full compliance with all applicable provisions of state, federal and local prevailing wage laws, including Labor Code -5-
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Section 1720 et seq, and all rules and regulations promulgated pursuant thereto. Owner agrees to indemnify, defend and hold City harmless from and against any cost, expense, claim, charge or liability relating to or arising directly or indirectly from any breach or failure of Owner or its contractors or agents to comply with such laws, rules or regulations. The indemnification obligations described in this Section 3(b) shall survive the termination of this Agreement.
1. Utility Easement. City further grants to Owner and Owner’s agents, contractors, invitees, tenants, subtenants, patrons, and licensees a non-exclusive easement within the Patio Easement Area for installation, use, operation, maintenance, and replacement of utility service and distribution lines, meters, and connections to serve the Patio/Deck Improvements, including but not limited to water, sewer, electrical, gas (if applicable), storm drain and drainage facilities, data/low voltage, and irrigation (collectively, “Utility Easement”). Owner is responsible for all costs and permits, if any, relating to any access and improvements made and/or installed in connection with the Utility Easement within the Patio Easement Area.
2. Continuity for Post City Occupancy. The Patio Easement granted in Section 3(a) and Utility Easement granted in Section 4 are appurtenant to and for the benefit of the Owner Parcel and shall be available for the lawful use of the Owner Parcel by Owner and any tenant or other lawful occupant of the portion of the Saw Building adjacent to the City Subject Parcel, whether or not City is a tenant in any portion of the Saw Building, subject to the use restriction provisions of Section 2(c) above.
3. Closure of Doorway/Window Openings and Removal of Patio/Deck Improvements. Upon termination of this Agreement, Owner shall, at its sole cost and expense, close the Doorway/Window Openings and remove the Patio/Deck Improvements and cause any utility improvements constructed under this Agreement to be removed, unless (i) City agrees in writing to allow the Doorway/Window Openings and Patio/Deck Improvements to remain or (ii) the termination is caused by a lot merger under Section 16. Owner shall, at its sole cost and expense, repair any damage to the City Subject Parcel resulting from said closure and removal of said improvements and utilities.
4. Maintenance. Owner will, at Owner’s sole expense, keep and maintain the Doorway/Window Openings, Patio/Deck Improvements, and Patio Easement Area in good order, condition, and repair, in a clean, safe, and neat appearance, and in compliance with applicable laws and regulations, reasonable wear and tear and casualty excepted. This obligation shall include the costs of all security and janitorial services necessary to keep and maintain the Doorway/Window Openings, Patio/Deck Improvements, and Patio Easement Area. Owner shall promptly repair any damage to the City Subject Parcel caused by Owner’s work on the Doorway/Window Openings, Patio/Deck Improvements, and/or Patio Easement Area. City shall have no maintenance obligation with respect to the Doorway/Window Openings, Patio/Deck Improvements, and/or Patio Easement Area under this Agreement.
5. No Rent. In consideration of Owner’s construction of the Doorway/Window Openings, and the Patio/Deck Improvements and utility improvement in the Patio Easement Area, and the City’s right to use the Patio/Deck Improvements for City Public Events under the terms of this Agreement, Owner will pay no monetary rent for the grant and use of the Patio Easement and Utility Easement.
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6. Joint Use of Patio/Deck Improvements in Patio Easement Area. The Parties agree and acknowledge that the City and Owner both have the right to use the Patio/Deck Improvements pursuant to the terms of this Agreement. The City has the right to use the Patio/Deck Improvements for City Public Events and Owner has the right to use the Patio/Deck Improvements as additional dining and related uses of the Commercial Space, subject to the provisions in this Section 9.
a. Exclusive Use by City of Patio/Deck Improvements. City will have the right to use the Patio/Deck Improvements in the Patio Easement Area for City Public Events on the days of each month (“City Reserved Dates”) in which the City provides the Owner written notice a minimum of fourteen (14) calendar days before the planned City Public Events. City will have priority to use the Patio/Deck Improvements in the Patio Easement Area for such City Public Events provided that said City Reserved Dates do not conflict with a special event prescheduled by Owner during such Owner Reserved Dates (described in Section 9(b) below). If the Owner already has a prescheduled event planned for the day in which the City plans a City Public Event day, the City shall request another date not in conflict or the City may request Owner to accommodate the City’s request to change the date, at Owner’s discretion. Following termination of the City’s tenancy under the Lease Agreement, the City shall retain priority use of the Patio/Deck Improvements and Patio Easement Area, subject to this Agreement, as the owner of the City Subject Parcel.
b. Exclusive Use by Owner of Patio/Deck Improvements. Except for the City Reserved Dates on which the City schedules City Public Events in the Patio Easement Area in accordance with the procedure set forth in Section 9(a), Owner will have the right to the exclusive use of the Patio/Deck Improvements in the Patio Easement Area for special events (“Owner Reserved Dates”). By the second calendar day of each month, Owner shall provide to City a schedule of any special events prescheduled by Owner for that month to facilitate the City’s scheduling of and coordination with Owner of City Public Events for that month.
7. Insurance Requirements. Owner shall procure and maintain for the duration of the Agreement insurance against claims for injuries to persons or damages to property, which may arise from or in connection with the performance of the work in the Patio Easement Area by the Owner, its agents, representatives, or employees and use of said Patio Easement Area hereunder by the Owner, its agents, representatives, employees, invitees and visitors. Said insurance shall name City as an additional insured for ongoing and completed operations. a. Minimum Limits of Insurance. Owner shall maintain limits no less than:
(i) General Liability: One Million Dollars ($1,000,000) per occurrence for bodily injury, personal injury and property damage. If Commercial General Liability Insurance or other form with a general aggregate limit is used, either the general aggregate limit shall apply separately to this project/location or the general aggregate limit shall be twice the required occurrence limit. The Commercial General Liability coverage shall include premises and operations; products and completed operations; personal and advertising injury; contractual liability; independent contractors; and explosion, collapse, and underground (XCU), if applicable.
Additional insured status shall apply to both ongoing and completed operations. -7-
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(ii) Automobile Liability: One Million Dollars ($1,000,000) per accident for bodily injury and property damage for any auto owned, non-owned, and hired, for deliveries, contractors, employees, and event-related vehicle activity. (iii) Worker’s Compensation as required by the State of California; Employer’s Liability: One Million Dollars ($1,000,000) per accident for bodily injury or disease. (iv) Builder’s Risk (for during construction): Upon commencement of construction and with approval of City, Owner shall obtain and maintain builder’s risk (course of construction) for the entire duration of the Patio/Deck Improvements project (“Project”) until the completion of construction. The builder’s risk insurance shall be obtained in an amount equal to 100% of the completed value of the Patio/Deck Improvements. The builder’s risk coverage shall include the coverages as specified in (v) and (vi) below. (v) The named insureds shall be Owner and the City, including its officers, officials, employees, and agents. All contractors (excluding those solely responsible for design work) of any tier and suppliers shall be included as additional insureds as their interests may appear.
(vi) Policy shall be provided for replacement value on an “all risk” basis for the completed value of the Project. There shall be no coinsurance penalty or provisional limit provision in any such policy. Policy must include: (1) coverage for any ensuing loss from faulty workmanship, nonconforming work, omission or deficiency in design or specifications; (2) coverage against machinery accidents and operational testing; (3) coverage for removal of debris, and insuring the buildings, structures, machinery, equipment, materials, facilities, fixtures and all other properties constituting a part of the Project; (4) ordinance or law coverage for contingent rebuilding, demolition, and increased costs of construction; (5) transit coverage (unless insured by the supplier or receiving contractor), with sub-limits sufficient to insure the full replacement value of any key equipment item; (6) ocean marine cargo coverage insuring any Project materials or supplies, if applicable; (7) coverage with sub-limits sufficient to insure the full replacement value of any property or equipment stored either on or off the Project site or any staging area. Such insurance shall be on a form acceptable to the City to ensure adequacy of terms and sublimits and shall be submitted to the City prior to commencement of construction. (vii) Commercial Property Insurance: Coverage for the Patio Easement Area, fixtures, equipment, building, all property situated in, on, or constituting a part of the Patio Easement Area and any Patio/Deck Improvements. Coverage shall be at least as broad as the Insurance Services Offices broad causes of loss form CP 10 20 and approved of in writing by the City. Coverage shall be sufficient to insure 100% of the replacement value and there shall be no coinsurance provisions. The policy shall include an inflation guard endorsement, 100% rents coverage, contents coverage, coverage for personal property of others, ordinance or law and increased cost of construction coverage. The City shall not be liable for any business income or other consequential loss sustained by Owner that is covered under the commercial property insurance (or would be covered had Owner obtained the coverage required by this Agreement), except to the extent caused by the City’s gross negligence or willful misconduct. The City shall not be liable for any loss of Owner’s personal property even if such loss is caused by negligence of the City, the City’s employees, or agents, provided such loss is covered under the commercial -8-
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property insurance (or would be covered had Owner obtained the coverage required by this Agreement) and is not caused by the City’s gross negligence or willful misconduct. (viii) Liquor Liability: Coverage shall be maintained for full liquor liability insurance in an amount not less than $1,000,000 per occurrence, $2,000,000 general aggregate.
b. Other Insurance Provisions.
(i) Pass Through Clause: Owner agrees to ensure that its contractors involved in the Project (hereinafter, each a “Contractor”), provide the same minimum insurance coverage and endorsements required of Owner in Sections 10(a)(i) through 10(a)(iii) above.
Owner agrees to monitor and review all such coverage and assumes all responsibility for ensuring that such coverage is provided in conformity with the requirements of this Section. However, in the event Owner’s Contractor cannot comply with this requirement, which proof must be submitted to the City, Owner shall be required to ensure that its Contractor provide and maintain insurance coverage and endorsements sufficient to the specific risk of exposure involved with the Contractor’s scope of work and services, with limits less than required of the Owner, but in all other terms consistent with the Owner’s requirements under this Agreement. This provision does not relieve the Owner of its contractual obligations under this Agreement and/or limit its liability to the amount of insurance coverage provided by its Contractors. This provision is intended solely to provide Owner with the ability to utilize a Contractor who may be otherwise qualified to perform the work or services but may not carry the same insurance limits as required of the Owner under this agreement given the limited scope of work or services provided by the Contractor. Owner agrees that upon request, all agreements with Contractors will be submitted to City for review. (ii) Self‑insured retentions: Any self-insured retentions must be declared to and approved by City. City reserves the right to require that self-insured retentions be eliminated, lowered, or replaced by a deductible, or require proof of ability to pay losses and related investigations, claim administration, and defense expenses within the retention through confirmation from the underwriter.
(iii) Primary and Non‑Contributory: Coverage provided by Owner shall be primary and any insurance or self-insurance procured or maintained by City shall not be required to contribute with it. The limits of insurance required herein may be satisfied by a combination of primary and umbrella or excess insurance. Any umbrella or excess insurance shall contain or be endorsed to contain a provision that such coverage shall also apply on a primary and non-contributory basis for the benefit of City before the City’s own insurance or self-insurance shall be called upon to protect it as a named insured.
(iv) Waiver of Subrogation: All insurance coverage maintained or procured pursuant to this Agreement shall be endorsed to waive subrogation against the City, its elected or appointed officers, agents, officials, employees, and volunteers, or shall specifically allow Owner or others providing insurance evidence in compliance with these specifications to waive their right of recovery prior to a loss. Owner and City each hereby waives its own right of recovery against the other Party for any and all loss or damage to property, whether or not caused -9-
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by the negligence of the other Party, regardless of the amount of insurance proceeds received, including any deductibles or self-insured retentions.
(v) Additional Insured Status: To the fullest extent permitted by law, the City, its officers, officials, employees and volunteers are to be covered as insured’s, as respects:
liability arising out of activities performed by or on behalf of the Owner; products and completed operations of the Owner; premises owned, occupied or used by the Owner; or automobiles owned, leased, hired or borrowed by the Owner. The coverage shall contain no special limitations on the scope of protection afforded to the City, its officers, officials, employees or volunteers. General, automobile, and umbrella/excess liability insurance policies must provide, or be endorsed to provide, additional insured status for the City and its officers, officials, employees, agents, and volunteers. Additional insured status must also be provided under other liability policies when available.
(vi) Acceptability of Insurers: All insurance policies shall be issued by an insurance company currently authorized by the Insurance Commissioner to transact business of insurance or is on the List of Approved Surplus Line Insurers in the State of California, with an assigned policyholders’ Rating of A- (or higher) and Financial Size Category Class VII (or larger) in accordance with the latest edition of Best’s Key Rating Guide, unless otherwise approved by the City’s Risk Manager.
(vii) Verification of Coverage: Owner shall furnish the City with original endorsements effecting coverage required by this clause. The endorsements are to be signed by a person authorized by that insurer to bind coverage on its behalf. The endorsements are to be on forms provided by the City. All endorsements are to be received and approved by the City before Owner commences construction/installation of the Doorway/Window Openings, the Patio/Deck Improvements, and the utilities in the Utility Easement Area. As an alternative to the City’s forms, the Owner’s insurer may provide complete, certified copies of all required insurance policies, including endorsements affecting the coverage required by these specifications. (viii) Any failure to comply with reporting or other provisions of the policies including breaches of warranties shall not affect coverage provided to the City of Paramount, its officers, officials, employees or volunteers. (ix) The Owner’s insurance shall apply separately to each insured against whom claim is made or suit is brought, except with respect to the limits of the insurer’s liability.
(x) Each insurance policy required by this Agreement shall be endorsed to state in substantial conformance to the following: If the policy will be canceled before the expiration date the insurer will notify in writing to the City of such cancellation not less than thirty (30) days prior to the cancellation effective date.
(xi) If insurance coverage is canceled or, reduced in coverage or in limits the Owner shall within two (2) business days of notice from insurer phone, fax, and/or notify the City via certified mail, return receipt requested of the changes to or cancellation of the policy. -10-
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8. Indemnification. To the fullest extent permitted by law, Owner agrees to defend, indemnify, protect and hold harmless the City, its officers, officials, volunteers, and employees from and against any and all claims, demands, losses, defense costs or expenses, including attorneys’ fees and expert witness fees, or liability of any kind or nature (collectively, “Claims”) arising out of or in any way related to Owner’s construction of the Doorway/Window Openings, the Patio/Deck Improvements within the Patio Easement Area, and utilities installed in the Patio Easement Area, and/or use or operation by Owner and/or Owner’s contractors, invitees, tenants, subtenants, patrons, and licensees of the Patio Easement Area, except to the extent said Claims, demands, or losses are caused by the City’s gross negligence or willful misconduct. In the event the City indemnitees are made a party to any action, lawsuit, or other adversarial proceeding arising from Owner’s performance of this agreement the Owner shall provide a defense to the City indemnitees or at the City’s option reimburse the City indemnitees their costs of defense, including reasonable attorney’s fees, incurred in defense of such Claims. Notwithstanding anything to the contrary in this Section 11, Owner shall have no obligation to indemnify, defend, protect, or hold harmless the City for any Claims arising during the City’s periods of exclusive use of the Patio Easement Area under Section 9, except to the extent said Claims, demands, or losses are caused by the Owner’s gross negligence or willful misconduct during said periods; and the City shall indemnify, defend, protect, and hold harmless the Owner, its agents, employees, officers, members, and managers from and against all such Claims, except to the extent said Claims relate to the Owner's construction or installation of improvements or utilities in the Patio Easement Area and as provided above or arise in connection with Owner’s gross negligence or willful misconduct during the City’s periods of exclusive use. This Section 11 shall survive the expiration or termination of this Agreement.
9. Post-Recordation Adjustments. The general locations of the Doorway/Window Openings and Patio Easement Area are depicted on EXHIBIT C and EXHIBIT D hereto. The Parties may memorialize field verified metes and bounds legal descriptions for the foregoing areas after recordation of this Agreement, and the Parties shall promptly execute and record any confirmatory instruments reasonably requested by either Party to reflect the as-built locations and to effectuate the intent of this Agreement.
10. Survival; No Merger. The rights granted in this Agreement shall not merge with any lease or other agreement between the Parties and shall survive any termination of City’s occupancy of the Saw Building or ownership of the City Subject Parcel.
11. No Conflicts. City represents and warrants that: (a) City has full right, power, and authority to grant the authorizations and rights set forth in this Agreement, which have been duly authorized by all necessary action of City; and (b) as of the Effective Date, the Patio Easement Area is not subject to any leases, licenses, dedications, reservations, covenants, easements, encroachments, rights of way, or other agreements that would materially conflict with or impair Owner’s use and enjoyment of the Patio Easement Area pursuant to this Agreement.
12. Covenant Running with the Land. The Parties agree this Agreement is a covenant running with the land and shall bind the Parties and all subsequent owners of the Owner Parcel and the City Subject Parcel.
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13. Term and Termination. This Agreement shall be recorded in the Office of the County Recorder for the County of Los Angeles, and shall be effective beginning on the Effective Date and continuing until such time as either (i) the Owner Parcel is merged with either the City Subject Parcel or both City Properties into one legal lot in accordance with the Subdivision Map Act, or (ii) Owner modifies the Saw Building to comply with the Building Code requirements, including removal of the Doorway/Window Openings and restoration of a firewall on the portion of the Saw Building adjacent to the City Subject Parcel; or (iii) Owner violates the use restriction set forth in Section 2(c) above by changing the use of the Commercial Space of the Saw Building from Restaurant/Retail/Commercial without prior written approval from the City Council; or (iv) Owner breaches any provision of this Agreement and does not cure such breach within thirty (30) days after notice of the breach from the City is received by Owner or such other longer period of time approved by City. If this Agreement is terminated, the parties shall cooperate to record a release of this Agreement in the Office of the County Recorder for the County of Los Angeles.
14. Non-Disturbance; Compliance with Laws and Regulations. The parties shall make reasonable efforts to ensure that the Patio Easement Area the Utility Easement Area are not used in any manner that interferes with or disturbs the main uses of the property as a commercial restaurant and retail space. Owner shall ensure that all uses of the Patio Easement Area and Utility Easement Area conform to applicable laws, rules, and regulations of the City. Owner shall not allow the Patio Easement Area and Utility Easement Area to be used in a manner that would constitute a nuisance to the City.
15. Liens. Owner shall not directly or indirectly create or permit to be created or to remain any mortgage, lien, encumbrance, or charge on any portions of the Patio Easement Area.
Owner shall defend, indemnify and hold City harmless from any such monetary encumbrances or charges that may attach to any said portions of City Subject Parcel from construction of and/or use of the Doorway/Window Openings, Patio/Deck Improvements, and the Patio Easement Area.
16. Notices. All notices and demands will be given in writing by certified mail, postage prepaid, and return receipt requested, by personal delivery, or by Federal Express or other overnight carrier. Notices will be considered given upon the earlier of (a) personal delivery, (b) two (2) business days following deposit in the United States mail, postage prepaid, certified or registered, return receipt requested, or (c) one (1) business day following deposit with Federal Express or other overnight carrier. The Parties will address such notices as provided below or as may be amended by written notice:
City: City of Paramount
Attention: City Manager
16400 Colorado Ave.
Paramount, California 90723
Copy to: Richards, Watson & Gershon
Attention: Nicholas Ghirelli, City Attorney
350 South Grand Avenue, 37th Floor
Los Angeles, California 90071
Owner: Paramount City Investors LLC
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1613 Chelsea Road, # 264
San Marino, California 91108-2453
17. Taxes. Owner shall pay any possessory interest taxes, and general and special assessments, if any, which may be levied against the Patio Easement Area as a result of Owner’s use of the Patio Easement Area under the terms of this Agreement. If the City is charged directly for such taxes and assessments, City shall notify Owner of the amount to be paid by Owner and provide Owner with corresponding documentation supporting the amount to be paid by Owner.
Owner shall pay City for any taxes and assessments within thirty (30) days from the date of such notice from the City.
18. Interpretation. Each Party had the full opportunity to participate in the drafting of this Agreement and, therefore, the Agreement shall not be interpreted against any Party on the ground that the Party drafted the Agreement or caused it to be prepared.
19. Entire Agreement. Except for the DDA referenced above, this Agreement is the entire agreement and understanding between the Parties with respect to the use of portions of the City Subject Parcel for the Patio Easement Area. Any amendments or modifications to this Agreement will be effective only if said amendment and/or modification is in writing and signed by the Parties hereto.
20. Authority to Execute Agreement. The person executing this Agreement on behalf of the Parties represent and warrant that they are duly authorized to execute the Agreement on behalf of the respective Party.
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In witness whereof, the Parties hereto have caused this Agreement to be executed on the date set forth below.
PARAMOUNT CITY INVESTORS, LLC,
a California limited liability company
By: Arroyo Seco Development Group, LLC,
a California limited liability company,
its Managing Member
By: _______________________________
Steven A. Boss, Manager
Date:____________________, 2026
CITY OF PARAMOUNT, a municipal
corporation
Date:____________________, 2026
By:______________________________
John Moreno, City Manager
Attest:
By:_______________________________
Heidi Luce, City Clerk
Approved as to form:
Richards, Watson & Gershon
By:_____________________________
Nicholas Ghirelli, City Attorney
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EXHIBIT A
Legal Description of Owner Parcel
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EXHIBIT B
Legal Description of City Properties
THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE CITY OF
PARAMOUNT, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA AND IS DESCRIBED AS FOLLOWS:
LOTS 1 THROUGH 3, INCLUSIVE OF HYNES IMPROVEMENT COMPANY’S TRACT, IN
THE CITY OF PARAMOUNT, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AS SHOWN ON MAP RECORDED IN BOOK 11, PAGE 113 OF MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY.
EXCEPT THE SOUTH 5 FEET OF SAID LOT 3.
TOGETHER WITH THOSE PORTIONS OF THE ALLEY ABUTTING SAID LAND ON THE WEST AS WOULD PASS BY OPERATION OF LAW DESCRIBED IN RESOLUTION 02:015 RECORDED OCTOBER 29, 2002 AS INSTRUMENT NO. 02-2572031 OF OFFICIAL RECORDS.
APN 7102-027-020, APN 7102-027-019
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EXHIBIT C
Description of Northern Wall on Saw Building and Rough Location of Doorway/Window Openings
The project includes installation of a new storefront system on the Northern Wall of the Saw building, providing direct access to the Patio Easement Area from the Saw Building. This improvement is intended to create a functional connection between the indoor dining area and the exterior dining space. 13162-0005\3292358v2.doc
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EXHIBIT D
Rough Depiction of Patio/Deck Improvements
Approximately 1,410 square footage of outdoor patio space with railing, drainage, decorative pavers, accommodating movable dining tables, chairs and umbrellas. 13162-0005\3292358v2.doc
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EXHIBIT E
Description of Patio Easement Area
The Patio Easement Area is approximately 1,410 square feet and designed as a flexible extension of the Saw Building. It features concrete paving with positive drainage away from the Saw Building and integrated metal railings, and is intended to accommodate movable tables, chairs, and umbrellas. The patio visually connects to Hay Tree Park, supporting both dining and passive use within the broader public realm. A public sidewalk runs along the edge of the patio, maintaining park access and pedestrian circulation while defining the boundary between private dining and public movement.
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A Notary Public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.
State of California )
County of Los Angeles )
On _________________________, before me, ,
(insert name and title of the officer)
Notary Public, personally appeared ,
who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature (Seal)
13162-0005\3292358v2.doc
13162-0005\3292358v2.doc
A Notary Public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.
State of California )
County of Los Angeles )
On _________________________, before me, ,
(insert name and title of the officer)
Notary Public, personally appeared ,
who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature (Seal)