ADDENDUM NO. 1
TO
STANDARD INDUSTRIAL/COMMERCIAL SINGLE-TENANT LEASE - NET This Addendum No. 1 ("Addendum"), dated as of December 19, 2006, is attached to and made a part of that certain Standard Industrial/Commercial Single-Tenant Lease - Net dated as of Decenber 19, 2006 (as amended by this Addendum, the "Lease"), between WASHINGION MUTUAL BANK, a federal association ("Lessee"), and VIRGINIA TEGNER
SPURGIN INVESIMENI COMPANY, LLC
undivided forty-three and one-third percent (43- Cal) undivide de nahit i company interest KARL E. SCHOBER, an individual, as to an undivided thirty-three and one-third percent (33- 1/3%) undivided tenancy in common interest, BOYS' AND GIRLS' CLUB OF SANTA MONICA, INC., a California nonprofit public benefit corporation, as to an undivided ten percent (10%) undivided tenancy in common interest, SHRINERS HOSPITALS FOR CHILDREN, f/k/a Shriners Hospitals for Crippled Children, a Colorado nonprofit corporation, as to an undivided ten percent (10%) undivided tenancy in common interest, SANTA MONICA YOUNG MEN'S CHRISTIAN ASSOCIATION, a California nonprofit public benefit corporation, as to an undivided one and two-thirds percent (1-2/3%) undivided tenancy in common interest, and YWCA SANTA MONICA/WESTSIDE, a California nonprofit public benefit corporation, as to an undivided one and two-thirds percent (1-2/3%) undivided tenancy in common interest (collectively, "Lessor").
51. Definitions; Conflict. Capitalized terms used in this Addendum and not specifically defined herein shall have the meanings ascribed to such terms in the Lease. In the event of any conflict or inconsistency between the terms of the Lease and the terms of this Addendum, the terms of this Addendum shall govern.
52. Parking. Lessor will make available for the exclusive use of Lessee, and its employees and invitees, thirty-four (34) automobile parking spaces (the "Parking Spaces"), twenty-four (24) hours per day, seven (7) days per week. All of the Parking Spaces and the use thereof will be subject to Applicable Requirements (including but not limited to all applicable codes, ordinances and laws) and such reasonable rules and regulations as Lessor may from time to time institute. The Parking Spaces shall be located on (i) Lot S ("Lot S") of Block 145 of the Township of Santa Monica ("Block 145") and (ii) the southeasterly thirty-five (35) feet of Lot T of such Block 145 ("Lot T"). Lessee, at its sole cost and expense, shall maintain the area comprising the Parking Spaces in good and "first class" order, condition and repair.
Notwithstanding the foregoing, the number of Parking Spaces which shall be available for use by Lessee, and its employees and invitees, shall be (both prior to and following any exercise of the relocation of any such spaces pursuant to Section 53 below) subject to reduction to the extent necessary to comply with the Applicable Requirements (including, but not limited to, requirements for providing handicapped parking and handicapped access ways). Any such reduction in the number of Parking Spaces shall be without any reduction in Base Rent.
ACA_778002.6
Redevelopment of Parking Lots. Lessor shall have the right to redevelop at its sole cost and expense all or a portion of the area comprising the Parking Spaces, commencing at any time subsequent to April 30, 2012. Lessor will use its best efforts to assist Lessee in locating temporary parking during the term of any such redevelopment in a location as close as reasonably possible to the Premises. Lessor shall provide written notice to Lessee of its intent to commence such redevelopment at least thirty (30) days prior to submitting any project approval application related thereto to the City of Santa Monica ("Lessor's Notice"). Lessor's Notice shall include (i) the proposed conceptual drawings (the "Drawings") in sufficient detail so as to allow Lessee to reasonably determine if the proposed development would have a material and detrimental impact on Lessee's business operations at the Premises (an "Adverse Impact") and (il) the proposed development plan (the "Development Plan") which describes in reasonable detail construction procedures, temporary parking arrangements for Lessee's customers and invitees, and a projected entitlement and construction schedule.
Within thirty (30) days of receipt of Lessor's Notice, Lessee shall provide written (10) days after Lessee's receipt of written notice thereof from Lessor, then Lessee shall be deemed to have concluded that the proposed development will not have an Adverse Impact. If Lessee's Notice states that Lessee believes that the proposed development will have an Adverse Impact, Lessee's Notice shall also include a description in reasonable detail of Lessee's objections to the specific portions of the Drawings and/or the Development Plan which Lessee believes will cause such Adverse Impact. Lessor shall have thirty (30) days from receipt of Lessee's Notice to cure such objections to Lessee's reasonable satisfaction, or to elect to abandon its Drawings and/or Development Plan. This process shall be repeated as necessary until the Drawings and/or the Development Plan have been approved by Lessee. In the event Lessor fails to make appropriate changes to the Drawings and/or the Development Plan to address the objections set forth in Lessee's Notice and to deliver such revised plans to Lessee within thirty (30) days of Lessor's receipt of Lessee's Notice, then Lessee may elect to terminate this Lease by delivering written termination notice to Lessor. Notwithstanding any provision herein to the contrary, this Lease shall automatically terminate upon the date set forth in Lessee's termination notice, provided in no event shall such date occur on a date which is less than one hundred twenty (120) days from the date of such termination notice.
Assuming the Drawings and the Development Plan are approved by Lessee, then Lessee, at Lessor's cost, shall reasonably cooperate with Lessor in Lessor's efforts to obtain entitlements for and to construct the redevelopment substantially in accordance with the approved Drawings and the Development Plan. Lessor shall indemnify and hold Lessee are caused by the acts or omissions of Lessee or Lessee's contractors, agents, employees, invitees, clients and other Persons transacting business with Lessee. Lessor shall cause its contractor to name Lessee as an additional insured under its general liability policy. Lessor shall use commercially reasonable efforts to minimize any interference with the operations of Lessee's business caused by the redevelopment of the Parking Spaces, provided, however, that in all 2 ACA_778002.6
circumstances the entrances to the Premises shall not be blocked. Lessee shall have the right to post signs in the Parking Spaces informing customers of forthcoming construction activity and, after construction commences, of the temporary parking.
Upon the completion of any such redevelopment, in lieu of the use of the Parking Spaces contemplated by Section 52 hereof, Lessor shall provide surface parking for Lessee's exclusive use or parking in the New Parking Facility, as described below, which shall be shared in common with others, in either case, immediately adjacent to the Premises in such quantity that in Lessee's reasonable judgment will accommodate the reasonable needs of Lessee's customers and invitees, including use by Lessee's ATM customers twenty-four (24) hours per day, seven (7) days per week. Lessor reserves the right at any time to institute a system of validated and/or charged parking at hourly, daily, weekly or monthly rates, or such other rate system as reasonably determined by Lessor from time to time.
A pro rata portion of all costs of operation, maintenance and repair of any such new parking area (whether surface parking or parking in the New Parking Facility) in excess of the amount charged by Lessor in accordance with the immediately preceding paragraph, if any, shall be borne and paid by Lessee; as reasonably determined by Lessor.
If, however, the redevelopment of the Parking Spaces involves a new parking facility ("New Parking Facility") for tenants of the development and Lessee, then after completion of the redevelopment, Lessee shall be entitled to the following with respect to the New Parking Facility:
(A) Four non-exclusive parking spaces in a location in the New Parking Facility which is as close as reasonably possible to Lessee's exterior ATMs, which spaces shall be marked "ATM Parking Only." Lessor, at its sole expense, will make commercially reasonable efforts to enforce such parking upon written notice from Lessee to Lessor. (B) Thirty minutes free parking for all of Lessee's customers entering the New Parking Facility during Lessee's business hours. Lessor shall use its best efforts to make parking spaces available to Lessee's customers in the New Parking Facility at all times during Lessee's business hours. Lessor and Lessee shall implement such thirty minute free parking by allowing Lessee's customers to avoid paying any charge for thirty minutes (or less) parking by presenting a stamp or pass that Lessee shall distribute from the Premises or through some other means agreed by Lessee and Lessor. Lessor and Lessee agree that Lessee shall not be required to use the discounted validations provided in subsection (C) below to implement such thirty minute free parking. Lessee's customers shall use unreserved parking spaces within the New Parking Facility in common with other users thereof. Lessor shall not grant reserved or exclusive parking spaces within the New Parking Facility to any party (other than the exclusive ATM parking spaces granted to Bank of America or its successors).
(C) To purchase validations to be used in the New Parking Facility at the same rate paid by Bank of America or its successors (which rate is currently stated as a twenty percent (20%) discount off the rate paid by other tenants and users of the project). Lessor and Lessee agree that Lessee will not be required to use such validations to provide the thirty minute free parking provided in subsection (B) above.
3 LACA_778002.6
54. Adjustments to Base Rent. Monthly Base Rent payable during each month of the Original Term shall be as follows:
Months of Original Term Monthly Base Rent
1-12 $44,666.67
13-24 $46,006.67
25-36 $47,386.87
37-48 $48,808.48
49-60 $50,272.73
Monthly Base Rent, and all other sums payable to Lessor by Lessee under this Lease, shall be paid through separate checks made payable to each party comprising Lessor, and delivered to the addresses set forth on the signature pages hereto. Such payments shall be made pro rata to each party comprising Lessor in accordance with the percentage of the Premises owned by each such party as of the date of the applicable payment. As of the date hereof, each such party's ownership percentage is as follows:
Name of Party Ownership Percentage
Virginia Tegner Spurgin Investment Company, LLC Forty Three and 1/3 Percent (43 1/3%) Karl E. Schober Thirty Three and 1/3 Percent (33 1/3%)
Boys' and Girls' Club of Santa Monica, Inc. Ten Percent (1.0%) Shriner's Hospitals for Children Ten Percent (10%)
Santa Monica Young Men's Christian Association One and 2/3 Percent (1 2/3%) YWCA Santa Monica/Westside One and 2/3 Percent (1 2/3%) Upon any change to the foregoing ownership percentages, Lessor shall advise Lessee in writing of such change, and shall provide Lessee with an updated list of the ownership percentage of each party comprising Lessor. Until and unless there is any change in the foregoing ownership percentages, payments of Monthly Base Rent shall be according to the schedule set forth on Exhibit "A" hereto.
Lessor and Lessee acknowledge that the City of Santa Monica has discussed the possibility of acquiring the Premises through use of its eminent domain power and, therefore, the Base Rent and the provisions of this Lease have been negotiated recognizing the threat of condemnation. As a result, the Base Rent was established on a discounted basis and does not reflect the level of fair market value rent which would be appropriate in the absence of such a threat.
4 LACA_778002.6
55. Condition of Premises. Lessee acknowledges that it has been in sole possession of the Premises since December 1, 1983 pursuant to the Prior Lease (as defined in Section 73) and is accepting the Premises on an "as-is" basis and that neither Lessor nor anyone acting on Lessor's behalf has made any representations or given any warranties regarding the condition of the Premises or the compliance thereof with any applicable law, ordinance, regulation or directive of any governmental agency or the requirements of any insurer. Lessor hereby disclaims any warranty regarding the condition of the Building (as defined in Section 56) or any other part of the Premises, the compliance thereof with any applicable law, ordinance, regulation or directive of any governmental agency, the presence on or under the Premises or in the Building of any Hazardous Substances, or the fitness of the Building or any other part of the Premises for Lessee's business or any permitted use.
56. Alterations.
a. Right to Make Alterations. Lessor's consent is not required for any alterations or improvements made by Lessee to the Premises which do not affect the systems of the building situated on the Premises (the "Building"), the exterior appearance of the Building, or the structure of the Building. Without limiting the foregoing, Lessor's consent is also not required for attachment within and about the Premises of telephone equipment and communications devices and equipment and fixtures typically used by banks in the ordinary course of their business. Lessor's consent, which will not be unreasonably withheld or delayed; is required for any alterations or improvements to the Premises which affect Building systems, the exterior appearance of the Building, or the structure of the Building. Lessor will be deemed to have given such consent if Lessor fails to disapprove such alterations or improvements and Lessee's contractors within ten (10) business days after Lessee submits construction drawings, cost estimates, construction schedule and contractor information to Lessor with a request for such consent. If necessary, Lessor will cooperate with Lessee at Lessee's cost to obtain any governmental permits or licenses necessary to make any such alterations, additions or improvements and Lessee shall provide copies thereof to Lessor. In all events, Lessee will give Lessor at least ten (10) days prior written notice before commencing any alterations or improvements hereunder and shall allow Lessor access to the Premises to post reasonable notices of non-responsibility.
b. Construction of Alterations. All alterations, additions and improvements made by Lessee to the Premises will be made in accordance with all applicable laws, ordinances, building codes, regulations and other government requirements at Lessee's sole cost and expense. All work relating to any Alterations shall be done in a good and workmanlike manner, using new materials of good and sufficient quality. All work shall be diligently prosecuted to completion.
Ownership of Alterations; Removable Items. With the exception of personal property and trade fixtures, all alterations, additions and improvements, including carpeting and interior walls, made in or upon the Premises, either by Lessee or Lessor, immediately will become Lessor's property and, at the termination or expiration of this Lease, will remain on the Premises without compensation to Lessee. Notwithstanding anything to the contrary in the Lease, (a) Lessee will not be responsible for the removal of any improvements installed in the Premises as of the date hereof and (b) upon the termination of this Lease, Lessee 5 LACA_778002.6
shall remove, at Lessor's option but at Lessee's sole cost and expense, removable items, including any safes, shelving, trade fixtures, appliances or equipment, and Lessee will repair any damage to the Premises caused thereby.
57. Indemnity; Defense of Claims. Subject to Section 8.6 of the Lease, Lessee shall indemnify, protect, defend and hold harmless the Premises, Lessor and its agents, members, shareholders, directors, officers, partners and Lenders (collectively, "Lessor Parties"), from and against any and all claims, causes of action, losses, obligations, liabilities, damages, costs and expenses (including all taxes, interest, penalties, court costs, costs of preparation and investigation, and reasonable attorneys', ', accountants' and other professional advisors' and experts' fees and expenses) actually incurred of any nature whatsoever arising out of, involving, or in connection with (a) the use and/or occupancy of the Premises by Lessee; (b) any breach or default by Lessee in the performance of any of Lessee's covenants or agreements in this Lease, (c) any act, omission, negligence or misconduct of Lessee, and (d) any accident, injury, occurrence or damage in, about or to the Premises. If any action or proceeding is brought against ant of the same ar Paties by le son and my per the yours oles choosing upon e not have first paid any such claim in order to be so defended or indemnified.
58. Insuring Party. Lessee shall be the "Insuring Party", as such term is used in this Lease.
59. Options to Extend Term.
a. Options. Subject to the provisions of Section 39 of the Lease and this Addendum, Lessee shall have Options ("Extension Options") to extend the Original Term for two (2) periods of five (5) years each (each such period, an "Option Term"). Lessee shall exercise each Extension Option by giving written notice of exercise (an "Exercise Notice") to Lessor not less than one (1) year, and not more than eighteen (18) months, prior to the expiration of the Original Term or the first Option Term, as the case may be. b. Terms and Conditions. Should Lessee (subject to the provisions of Section 39 of the Lease and this Addendum) properly and timely exercise any Option to extend the term of this Lease granted hereunder, Lessee's use and occupation of the Premises shall, during each Option Term, be upon the same terms, covenants and conditions as provided for in the Lease and herein during the Original Term, except that monthly Base Rent payable during each Option Term shall be established as set forth in Sections 60 and 61 below.
60. Rent During First Year of Option Terms.
Within thirty (30) days of receipt by Lessor of an Exercise Notice, Lessor shall propose to Lessee its determination of the monthly Base Rent to be payable under this Lease during the first twelve (12) months of the upcoming Option Term, based upon the then prevailing fair market rental rate for the Premises. If Lessee agrees with such determination by Lessor, said agreement shall be evidenced by a writing executed by Lessor and Lessee, and monthly Base Rent during the first twelve (12) months of such Option Term shall be as agreed to in such writing.
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b. If Lessee does not agree with such determination by Lessor, then Lessor and Lessee shall negotiate in good faith and attempt to reach an agreement on the monthly Base Rent to be payable under this Lease during the first twelve (12) months of the upcoming Option Term, based upon the then prevailing fair market rental rate for the Premises. If Lessor and Lessee reach such an agreement, said agreement shall be evidenced by a writing executed by Lessor and Lessee, and monthly Base Rent during the first twelve (12) months of such Option Term shall be as agreed to in such writing.
C. If Lessee and Lessor, after negotiating in good faith, are unable to reach an agreement regarding the monthly Base Rent to be payable during the first twelve (12) months of the applicable Option Term by the date which is sixty (60) days after receipt by Lessor of Lessee's Extension Notice, then the monthly Base Rent payable during such first twelve (12) months shall be established in accordance with the procedures set forth below. Lessor and Lessee shall, at least five (5) months prior to the commencement of the applicable Option Term, mutually agree upon and appoint a "Member Appraisal Institute" (MAI) designated member of the Appraisal Institute with at least ten (10) years' experience in appraising commercial real estate within a 15 mile radius of the Premises to serve as arbiter (the "Arbiter"). Lessor and Lessee shall each appoint a representative (which may be a real estate broker or appraiser) to present to the Arbiter such party's calculation of the "monthly fair market rental rate" for the Premises for the first twelve (12) months of the applicable Option Term (each such presentation, an "Appraisal Presentation"). Such Appraisal Presentations shall be made to the Arbiter not later than four (4) months prior to the commencement of the applicable Option Term. The term "monthly fair market rental rate" as used herein shall mean the monthly amount projected during the relevant period that a willing, comparable lessee would pay, and a willing lessor of a comparable commercial building used for retail purposes located in Santa Monica, California would accept, in an arm's length transaction, for space of comparable size and quality as the Premises taking into account the creditworthiness of the lessee, availability of free surface parking for customers, either in the Parking Spaces or in an adjacent parking garage, Lessee's use of the Parking Spaces and right to parking in the event Lessor exercises its right to develop the Parking Spaces under Section 53 above, the age, quality and layout of the existing improvements in the Premises, all benefits provided by Lessor to Lessee, and all other items that professional commercial real estate appraisers customarily consider, including, but not limited to, rental rates, space availability, Lessee size, the property tax basis of the Premises, and any other lease considerations, if any, then being charged or granted by the lessors of such similar buildings. The monthly fair market rental rate shall take into account the condition and type of the improvements in the Premises, and the amenities in the Premises. Within fifteen (15) days of the completion of the last Appraisal Presentation, the Arbiter, using the criteria set forth above, shall determine whether Lessor's or Lessee's calculation of the monthly fair market rental rate is closer to the actual monthly fair market rental rate. The calculation of the monthly fair market rental rate which is determined by the Arbiter to be closest to the actual monthly fair market rental rate shall be conclusively established as the monthly Base Rent payable during the first twelve (12) months of the applicable Option Term.
d. In the event that either Lessor or Lessee fails to cause a representative to make an Appraisal Presentation to the Arbiter within the time period prescribed hereinabove for any reason whatsoever, then the representative appointed by the other such party shall have the sole power to determine the amount of the monthly fair market rental rate for the Premises for 7 .ACA_778002.6
the first twelve (12) months of the applicable Option Term, and such determination shall conclusively be deemed to constitute the amount of monthly Base Rent which shall be payable by Lessee during the first twelve (12) months of the Option Term. Lessor shall pay all fees and expenses relating to its representative, Lessee shall pay all fees and expenses relating to its representative, and the fees and expenses of the Arbiter shall be divided equally between Lessor and Lessee.
e. Notwithstanding the provisions of this Section 60, in the event that the monthly fair market rental rate for the Premises, as determined in accordance with the procedures set forth in this Section 60, is less than the monthly Base Rent payable in the month immediately preceding the commencement of the applicable Option Term, then the monthly Base Rent payable during the first twelve (12) months of the applicable Option Term shall be an amount equal to the amount of Base Rent payable in the month immediately preceding the commencement of such Option Term.
61. Adjustments to Option Term Rent. The date on which any Option Term commences is referred to herein as an "Option Term Commencement Date". On each anniversary of each Option Term Commencement Date (each an "Adjustment Date"), the monthly Base Rent payable under this Lease shall be increased by multiplying the monthly Base Rent payable immediately preceding such Adjustment Date by 1.03.
62. Condemnation.
a. Effect of Condemnation. If all or any part of the Premises are taken as a result of the exercise of the power of eminent domain or any agreement in lieu thereof, this Lease Will terminate as to the part so taken as of the date of taking and, in the case of a partial taking, Lessee may terminate this Lease as to the balance of the Premises by giving written notice to Lessor within 60 days after the date of the taking if that portion of the Premises taken is of such extent and nature in Lessee's commercially reasonable judgment as to materially handicap, impede or impair Lessee's use of the balance of the Premises. If this Lease is so terminated, any prepaid rent or other prepaid items must be refunded, pro-rata, to Lessee.
The proceeds of any condemnation award or any sale in lieu thereof with respect to the Premises, including, without limitation, any severance damages to any remaining portion of the Premises, will belong to and be paid to Lessor; provided, however, that Lessee shall be entitled to seek compensation from the condemning authority and not from Lessor for damages unique to it, such as relocation expenses, loss of goodwill or loss of any of Lessee's personal property, so long as such compensation does not reduce the amount of the award otherwise payable to Lessor. In no event shall Lessee be entitled to receive any award based on the "bonus value" of this Lease to the extent that such award relates to the Parking Spaces or the Premises (exclusive of any improvements thereon).
b. Partial Taking of Premises. In the case of a partial taking of the Premises which does not result in a termination of this Lease, (a) this Lease shall remain in full force and effect with respect to all remaining portions of the Premises, (b) Lessor shall have no obligation to restore the Premises, and (c) monthly Base Rent shall be reduced to an amount determined by (i) multiplying Eight Thousand Dollars ($8,000) (adjusted by an increase of 3% annually 8 LACA_778002.6
beginning in the second year of the Lease term) by a fraction, the numerator of which is the number of Parking Spaces remaining after the taking and the denominator of which is the number of Parking Spaces immediately prior to the taking, (ii) multiplying the balance of monthly Base Rent by a fraction, the numerator of which is the number of square feet of the Premises remaining after the taking and the denominator of which is the number of square feet of the Premises immediately prior to the taking and (iii) adding the products obtained under (i) and (ii) above. As set forth above, there are thirty-four (34) Parking Spaces on the date hereof. c. Condemnation During Last Year of Term. Notwithstanding anything in this Section 62, if the Premises, or any portion thereof, are taken within the last year of the Original Term or any Option Term, then Lessee will have the right to terminate this Lease by notice to Lessor within thirty (30) days after the effective date of the taking. Termination will be effective on the date specified in Lessee's notice to Lessor, but in no event later than the end of the thirty (30) - day period.
63. Payment of Real Property Taxes. All Real Property Taxes levied against the Premises, and, to the extent Lessee's parking rights are not altered pursuant to Section 53, all Real Property Taxes attributable to Lot S and 5,250 square feet of Lot T (as the area of such Parking Spaces is reduced in accordance with Section 52 above), shall be paid directly by Lessee to the appropriate taxing authorities at least thirty (30) days prior to the delinquency date of the applicable installment. Lessee shall provide written evidence to Lessor of payment of each such instaliment promptly after payment thereof. If any such installment shall cover any period of time after the expiration or termination of this Lease, Lessor shall reimburse Lessee for any portion of such installment which relates to the period following such expiration or termination within ten (10) days after Lessee's demand therefor.
64. Damage and Destruction.
a. Obligation to Repair. If the Premises are damaged by any cause whatsoever, including any casualty, fire, acts of God, or the clements, the damage will be diligently repaired by and at the expense of Lessee to the condition as existed immediately prior to such damage or destruction unless such damage or destruction gives. Lessee the right to terminate this Lease under Section 64(b) below and Lessee does so terminate in accordance with that Section. If all or a portion of the Premises are damaged by any cause whatsoever as described in this Section and Lessee is not able to use the Premises, Lessee shall be entitled to construct and use temporary facilities on any portion of the Premises until such time as Lessee has completed repairs of the Premises as required herein. In any event, within sixty (60) days after the occurrence of an event which damaged the Premises, Lessee shall give Lessor written notice (the "Damage Notice") that the Premises have been damaged, describing such damage and stating the length of time Lessee estimates that repair of the Premises shall require. b. Lease Termination Rights. Lessee shall be entitled to terminate the Lease under this Section 64(b) for one of the reasons set forth below:
(i) The damage to the Building cannot, in Lessee's reasonable opinion, be repaired within 270 days after the date of the Damage Notice; or 9 ACA_778002.6
(ii) There is a shortage of insurance proceeds available for the repairs Lessee is required to make hereunder, even though the Lessee acquired and maintained the insurance policy required by Section 8.3(a) of this Lease (or the Lessee elected to self-insure under Section 8.5 of this Lease and the damages exceed the insurance proceeds which would have been payable had Lessee acquired and maintained the insurance policy required by Section 8.3(a) of this Lease, or the damage or destruction was caused by a risk not insured under the insurance policy which Lessee is required to maintain under Section 8.3(a) of this Lease), and the damage to the Building (1) cannot, in Lessee's reasonable opinion, be repaired within 180 days after the date of the Damage Notice and (2) exceeds thirty percent (30%) of the then replacement cost of the Building; provided, however, that Lessor may avoid termination of this Lease by delivery to Lessee, within ten (10) days after receipt of Lessee's Termination Notice described below, of written notice of Lessor's commitment to pay for the repair of such damage without reimbursement from Lessee (other than delivery to Lessor of any insurance proceeds payable by reason of the damage); or
(111) Then-existing laws or ordinances do not permit such restoration.
If Lessee has the right to terminate this Lease under this Section 64(b) and elects to do so by giving written notice thereof to Lessor (such notice, the "Termination Notice"), such termination shall not be effective until the later of (i) seven (7) days following delivery of the Termination Notice to Lessor or (ii) the Condition Date, as defined below:
(1) If Lessee has acquired and is maintaining the insurance policy described in Section 8.3(a) of the Lease, and if the damage arises from an event covered by such policy, the "Condition Date" shall be the date on which the proceeds payable under such policy as a result of such damage have been paid to Lessor and Lessee has paid to Lessor any deductible amount applicable to such policy;
(2) If Lessee has elected to self-insure under Section 8.5 of the Lease and if the damage arises from an event which would be covered by a policy of the type described in Section 8.3(a) of the Lease, the "Condition Date" shall be the date on which Lessee pays to Lessor the amount which would have been paid as a result of such damage if such insurance had been in place and did not have a deductible amount; and (3) If the damage arises from an event which is not covered by a policy of the type described in Section 8.3(a) of the Lease, the "Condition Date" shall be the date Lessee has demolished any remaining improvements on the Premises and removed all debris in a manner satisfactory to the City of Santa Monica and any other applicable governmental authority; provided, however; Lessee shall have no obligation to remove any debris from the Premises if such debris is from the redevelopment of the area comprising the Parking Spaces performed by the Lessor pursuant to Section 53 hereof.
C. Damage During Last Year of Term. Notwithstanding anything contained in this Section 64, if the Premises, or any portion thereof is damaged or destroyed by casualty within the last year of the Original Term or any Option Term (or within the last two (2) years of the Original Term or any Option Term if there is a shortage of insurance proceeds available for the repairs Lessee is required to make hereunder, even though the Lessee acquired and 10 LACA_778002.6
maintained the insurance policy required by Section 8.3(a) of this Lease (or the Lessee elected to self-insure under Section 8.5 of this Lease and the damages exceed the insurance proceeds which would have been payable had Lessee acquired and maintained the insurance policy required by Section 8.3(a) of this Lease, or the damage or destruction was caused by a risk not insured under the insurance policy which Lessee is required to maintain under Section 8.3(a) of this Lease)), such that Lessee cannot conduct business from the Premises, in Lessee's commercially reasonable determination, then Lessee may terminate this Lease by written notice to Lessor within sixty (60) days after the date of the casualty. Termination will be effective on the date specified in such notice.
d Abatement. In the event of any damage or destruction of the Premises, provided Lessee is diligently complying with the terms of this Section 64, the Rent payable by Lessee for the period during which such damage; repair or restoration continues shall be abated in proportion to the degree to which Lessee's use of the Premises is impaired, but not to exceed the proceeds received from the Rental Value Insurance obtained by Lessor or, if greater, the proceeds Lessor would have received if it obtained the amount of such insurance required under Section 8:3(b) of the Lease. All other obligations of Lessee hereunder shall be performed by Lessee and Lessor shall have no liability for any such damage, destruction, repair or restoration except as provided herein.
65. • Waiver of Civil Code. Lessee waives Section 1932(2) and 1933(4) of the California Civil Code.
66. Applicable Requirements. The phrase "Applicable Requirements", as used in this Lease, shall mean all building codes, applicable laws, covenants or restrictions of record, regulations and ordinances.
67. Brokers. Lessor and Lessee each represent and warrant to the other that no broker, agent, or finder has procured or was involved in the negotiation of this Lease and no broker, agent or finder is or may be entitled to a commission or compensation in connection with this Lease. Lessor and Lessee will each indemnify, defend, protect and hold the other harmless from and against any and all liability, loss, damages, claims, costs or expenses (including reasonable attorneys' fees) resulting from claims that may be asserted against the indemnified party in breach of the foregoing warranty and representation.
68. Dispute Resolution.
a. Arbitration. Except to the extent expressly provided below, any claim, dispute or controversy between Lessor and Lessee that arises from or relates to this Lease (including any renewals, extensions or modifications), except provisional or ancillary remedies from a court of competent jurisdiction or the filing of an action for unlawful detainer, the exercise of which shall not waive the right to arbitration (hereinafter collectively referred to as a "Dispute") shall, upon the request of either party, be determined by binding arbitration in accordance with the Federal Arbitration Act, Title 9, United States Code (or if not applicable, the applicable state law) and the "Special Rules" set forth below. In the event of any inconsistency, the Special Rules shall control. The filing of a court action is not intended to constitute a waiver of the right of Lessee or Lessor, including the suing party, thereafter to require submittal of the 11 LACA 778002.6
Dispute to arbitration. Any party to this Agreement may bring an action, including a summary or expedited proceeding, to compel arbitration of any Dispute in any court having jurisdiction over such action. For purposes of this Dispute Resolution Section, the term "party," when applied to Lessor, shall mean any of the individuals or entities which comprise Lessor and when referring to Lessee shall include Washington Mutual Bank, a tederal association and its parent companies, wholly or majority-owned subsidiaries, affiliates, successors and assigns and any of their past or present employees, officers and directors.
Special Rules.
(i) The arbitration shall be conducted in the County of Los Angeles, State of California.
(ii) The arbitration shall be administered by an arbitration organization and an arbitrator mutually agreed upon by Lessor and Lessee. All Disputes shall be determined by one arbitrator; however, if the amount in controversy in a Dispute exceeds Five Million Dollars ($5,000,000), upon the request of any party, the Dispute shall be decided by three arbitrators (for purposes of this Agreement, referred to collectively as the "arbitrator"). (iii) All arbitration hearings will be commenced within ninety (90) days of the demand for arbitration and completed within ninety (90) days from the date of commencement; provided, however, that upon a showing of good cause, the arbitrator shall be permitted to extend the commencement of such hearing for up to an additional sixty (60) days. (iv) The judgment and the award, if any, of the arbitrator shall be issued within thirty (30) days of the close of the hearing. The arbitrator shall provide a concise written statement setting forth the reasons for the judgment and for the award, if any. The arbitration award, if any, may be submitted to any court having jurisdiction to be confirmed and enforced, and such confirmation and enforcement shall not be subject to arbitration. (v) The arbitrator will give effect to statutes of limitation and any waivers thereof in determining the disposition of any Dispute and may dismiss one or more claims in the arbitration on the basis that such claim or claims is or are barred. (vi) Any dispute concerning this arbitration provision, including any such dispute as to the validity or enforceability of this provision, or whether a Dispute is arbitrable, shall be determined by the arbitrator; provided, however, that the arbitrator shall not be permitted to vary the express provisions of these Special Rules or the Reservations of Rights in subsection (C) below.
(vii) The arbitrator shall have the power to award legal fees and costs pursuant to the terms of this Agreement.
(vili) The arbitration will take place on an individual basis without reference to, resort to, or consideration of any form of class or class action. The parties to this Lease acknowledge that this class action waiver is material and essential to the arbitration of any disputes between the parties and is nonseverable from the agreement to arbitrate Disputes. If the class action waiver is limited, voided or found unenforceable, then the parties' agreement to arbitrate (except for this sentence) shall be null and void with respect to such proceeding, subject to the right to appeal the limitation or invalidation of the class action waiver. The Parties acknowledge and agree that under no circumstances will a class action be arbitrated. 12 _ACA_778002.6
Reservations of Rights. Nothing in this Agreement shall be deemed to (i) limit the applicability of any otherwise applicable statutes of limitation and any waivers contained in this Agreement, or (ii) apply to or limit the right of either party (A) to obtain from a court provisional or ancillary remedies such as (but not limited to) injunctive relief, writ of possession, prejudgment attachment, or the appointment of a receiver, or (B) to pursue rights against a party to this Agreement in a third-party proceeding in any action brought against either party in a state, federal or international court, tribunal or hearing body (including actions in specialty courts, such as bankruptcy and patent courts). Either party may exercise the rights set forth in clauses (A) and (B), inclusive, before, during or after the pendency of any arbitration or judicial reference proceeding brought pursuant to this Agreement. The exercise of provisional or ancillary remedies shall not constitute a waiver of the right of any party, including the claimant in any such action, to arbitrate, the merits of the Dispute occasioning resort to such remedies.
Jury Trial Waiver in Arbitration. By agreeing to this Section, the parties itrevocably and voluntarily waive any right they may have to a trial by jury in respect of any Dispute.
e.
6 a prove more or abortion can precin
proceeding will pay to the prevailing party all reasonable costs and expenses, including reasonable attorney's fees (including allocated costs of in-house attorneys), incurred by such prevailing party in such action or proceeding and in any appeal in connection therewith, and if such prevailing party recovers a judgment in any such action, proceeding or appeal, such costs, expenses and attorney's fees will be determined by the court, arbitrator or arbitration panel handling the proceeding and will be included in and as a part of such judgment.
69. Signage. Lessee, at its sole cost, shall have the right to install, maintain and replace the maximum signage permitted by law on the Premises, including, without limitation, on the roof and exterior walls of the Premises, including, without limitation, (a) its standard corporate signage for its retail banking centers; (b) illuminated signs as part of Lessee's ATMs; (c) door decals used in the ordinary course of the banking business; (d) professionally prepared and first class signs in the windows of the Premises; and (e) any other signage Lessee desires, subject to Lessee obtaining all required government approvals and permits. Without limiting the foregoing, Lessee shall have the right to maintain and replace all signage existing at the Premises as of the execution of this Lease, including, without limitation, any pole or pylon signs. The size, design, content and other specifications of all such signage will be subject to approval by the City or County in which the Premises are located and all covenants, conditions and restrictions applicable to the Premises. Lessee has the right to update and modify its signage from time to time in accordance with Lessee's standard corporate signage, logo, and/or image; provided, however that all such updating and modifications will be in accordance with all applicable laws and regulations. All such signage shall be removed by Lessee upon expiration of this Lease and Lessee shall repair any damage to the Building arising from such removal.
70. Insurance Limits. On each anniversary of the Commencement Date (each an "Insurance Adjustment Date"), the insurance limits set forth in Section 8.2 of this Lease shall be increased by a percentage equal to the percentage of increase shown by the Index published by 13 LACA_778002.6
the Bureau for the month immediately preceding the applicable Insurance Adjustment Date as compared with the Index for the month immediately preceding the month which is one (1) year prior to such anniversary. The amount of each such increase shall be calculated after the Bureau publishes the statistics upon which any increase will be based. If the Index is changed during the Term hereof so that the base year differs from that in effect on the Commencement Date, the Index shall be converted in accordance with the conversion factor published by the Bureau. If the Index is discontinued or revised during the Term of this Lease, the government index or computation with which it is replaced shall be used to obtain substantially the same result as if the Index had not been discontinued or revised. For purposes of this Section, the term "Index" shall mean the Consumer Price Index for All Urban Consumers, All Items (base years 1982-1984 = 100), for Los Angeles-Riverside-Orange County CMSA published by the United States Department of Labor, Bureau of Labor Statistics (the "Bureau").
71. Assignment and Subletting.
a. Consent Required. Lessee may not assign or transfer this Lease (collectively, "assign" or "assignment"), or sublet the Premises, or any part thereof (collectively, "sublease" or "subletting"; the assignee or sublessee under an assignment or sublease referred to as a "Transferee"; and any assignment or sublease collectively referred to as a "Transfer"), without Lessor's prior written consent, which will not be unreasonably withheld, conditioned or delayed.
b. Exempt Transfers. Notwithstanding the foregoing, without Lessor's consent, Lessee may assign this Lease, or sublet, or license or permit the use of, all or any portion of the Premises (the "Transferred Space"), to any Person controlled by or under common control with Washington Mutual Bank, to any subsidiary or parent of Washington Mutual Bank, or to any subsidiary of any parent of Washington Mutual Bank, to any entity which results from the merger ot Washington Mutual Bank with another entity, or to any other Person controlled directly or indirectly by any of the foregoing Persons (collectively, an "Exempt Transfer"). For purposes of this Lease the term "Person" shall mean an individual, partnership, firm, association, corporation, trust, governmental agency, governmental office, administrative body, or any other form of business or legal entity.
C. Requirements of Assignment or Sublease. The assignee in any assignment requiring Lessor's consent must, concurrently with an assignment, assume all obligations of Lessee under this Lease. Each sublease must be made subject to this Lease; and the surrender of this Lease by Lessee, or a mutual cancellation or termination of this Lease, does not work a merger and will, at the option of Lessor, terminate all or any subleases or operate as an assignment to Lessor of any or all subleases. The acceptance of monthly Base Rent by Lessor from any Person is not a waiver by Lessor of this Section 71. Any assignment or subletting made in violation of this Section is void. Lessor's consent to an assignment or subletting is not consent to any subsequent assignment or subletting. No assignment or sublease will release Lessee from its obligations under this Lease, except that Lessee will not have any obligation or liability with respect to any amendment or modification made between Lessor and a Transferee of Lessee other than a Transferee pursuant to an Exempt Transfer. No Transfer other than an assignment constituting an Exempt Transfer shall include the Extension Option granted in Section 59 above and no sublessee, assignee or other transferee, other than an assignee with 14 LACA_778002.6
respect to an Exempt Transfer in the form of an assignment, shall have the right to exercise such option.
Transfer Notice. If Lessee desires to effect a Transfer, then at least 30 days prior to the date when Lessee desires the Transfer to be effective (the "Transfer Date"), Lessee agrees to give Lessor a notice (the "Transfer Notice"), stating the name, address and business of the proposed assignee, sublessee or other transferee (sometimes referred to pereinafter as "Transferee"), reasonable information (including references) concerning the character, ownership, and financial condition of the proposed Transferee, the Transfer Date, any ownership or commercial relationship between Lessee and the proposed Transferee, and the consideration and all other material terms and conditions of the proposed Transfer, all in such detail as Lessor may reasonably require.
e. Lessor's Options. Except with respect to an Exempt Transfer, within 15 days of Lessor's receipt of any Transfer Notice, and any additional information reasonably requested by Lessor concerning the proposed Transferee's financial responsibility, Lessor will notify Lessee of its election to do one of the following: (i) consent to the proposed Transfer subject to such reasonable conditions as Lessor may impose in providing such consent; or (i) refuse such consent, which refusal shall be on reasonable grounds. If the assignment or sublease constitutes an Exempt Transfer, or if Lessor has consented thereto, Lessee shall provide Lessor with copies of all executed documents relating to the assignment or sublease within ten (10) days after the effective date thereof.
f. Lessee's Liability after Assignment. In the event of default by any Transferee or Lessee or any successor of Lessee in the performance of any of the terms hereof, Lessor may proceed directly against Lessee without the necessity of exhausting remedies against such Transferee or successor except that Lessee will not have any obligation or liability with respect to any amendment or modification made between Lessor and a Transferee of Lessee, other than a Transferee pursuant to an Exempt Transfer. g. Sharing of Net Profits from Assignment or Sublease.
1) Lessee shall pay to Lessor fifty percent (50%) of any Transfer Premium, as defined in subsection (ii) below, provided, however, that no Transfer Premium is payable for any Exempt Transfer.
(ii) "Transfer Premium" means all rent (including, without limitation, basic rent, operating expenses, real estate taxes and other payments in the nature of, or defined therein as being, rent) and other consideration actually received by Lessee from any Transferee (including key money and bonus money and any payment in excess of fair market value for services rendered by Lessee to Transferee or assets, fixtures, inventory, equipment, or furniture transferred by Lessee to Transferee) in connection with the Transfer (Transferee Rent"), after deducting:
(1) All rent actually paid by Lessee under this Lease
(excluding the Transfer Premium) for the Transferred Space for the comparable period; 15 LACA_778002.6
(2) Leasing commissions paid by Lessee in connection with the assignment or sublease;
(3) Other out-of-pocket costs paid by Lessee (including attorney fees, advertising costs, and expenses of readying the Transferred Space for occupancy by Transferee); and
(4) Any consideration paid to Transferee or any third party to induce Transferee to consummate the Transfer.
The costs referred to in subparagraphs (1) - (4) above are referred to as the "Transfer Costs."
(iii) Lessee shall pay the Transfer Premium on a monthly basis, together with its payment of Rent. In calculating the Transfer Premium, Lessee shall first deduct all the Transfer Costs from any Transferee Rent received. (iv) Lessee shall allow Lessor a reasonable opportunity to review and audit Lessee's books and records for the purpose of verifying Lessee's calculation of the Transfer Premium.
72. Notice. All notices, demands, consents, approvals and other communications which may or are required to be given by either Lessor or Lessee to the other under this Lease will be given in writing, addressed to Lessor or Lessee with copies as directed at their respective addresses as indicated on the signature pages hereto, or at such other place as Lessor or Lessee may from time-to-time designate in writing, and (a) personally delivered, (b) deposited with a commercially recognized national courier service, or (c) sent by registered or certified mail, postage prepaid. All notices hereunder will be deemed given upon receipt, if personally delivered, or upon the date shown for delivery or attempted delivery if sent by national courier service or registered/certified mail. Notices given to Lessor shall be given to each individual or entity comprising Lessor so long as such addresses are provided to Lessee.
73. Previous Lease. This Lease is a amendment and restatement of that certain Standard Industrial Lease - Net, dated August 1, 1983, by and among Lessor's predecessor-in- interest (Virginia Tegner Spurgin, Trustee of an Intervivos Trust created by Edla Tegner Swinney, as Trustor, dated February 18, 1980, Thelma Tegner Schober and Frederic M.
McNairy, as Executor of the Estate of Ruth A. Tegner) and Lessee's predecessor-in-interest (Great Western Savings, a Federal Savings and Loan Association), as amended by that certain First Amendment to Standard Industrial Lease dated November 18, 2003 and that certain Second Amendment to Standard Industrial Lease dated May 1, 2004 (as so amended, the "Prior Lease").
The parties acknowledge that Lessee has, pursuant to the Prior Lease, been in possession of and occupying the Premises since December 1, 1983, and that the Prior Lease shall remain in full force and effect until April 30, 2007. Effective as of May 1, 2007, this Lease shall replace and supersede the Prior Lease in its entirety except as may be expressly stated in this Lease.
Counterparts. This Addendum may be executed in counterparts, each of which shall be deemed an original, but all of which, together, shall constitute one and the same instrument.
16 -ACA_778002.6
75. Lease in Full Force and Effect. In all other respects, the Lease shall remain in full force and effect, as modified by this Addendum.
17 LACA_778002.6
IN WITNESS WHEREOF, Lessor and Lessee have executed this Addendum as of the date first written above.
"Lessee"
WASHINGTON MUTUAL BANK,
a federal association
mith Hell
President
Address:
1301 Second Avenue (WMC 1007)
Seattle, WA 98101
Attn: Corporate Property Services Manager
With a copy to:
Lease Administration
CB Richard Ellis
1301 Second Avenue (WMC 1001)
Seattle, WA 98101
Attn: Lease Administrator
and, in the case of notices under Section 53 of the Lease, with copies also to:
Steve Hessick
Washington Mutual Bank
9200 Oakdale Avenue, N110801
Chatsworth, CA 91311
and
Alan Wayte, Esq.
DLA Piper US LLP
550 So. Hope Street, Suite 2300
Los Angeles, CA 90071
[signatures continued on following pagel
18 LACA_778002.6
[signatures continued from previous pagel
"Lessor"
VIRGINIA TEGNER SPURGIN INVESTMENT COMPANY, LLC,
a California limited liability company
sy Wither Sparen
Its: MANAGER
Address:
William Spurgin
Spurgin Development
811 West Seventh Street, Suite 201
Los Angeles, CA 90017-3413
KARL E. SCHOBER, an individual
Karl E. Schober
Address:
BOYS' AND GIRLS' CLUB OF SANTA MONICA, INC.
a California nonprofit mutual benefit corporation
By:_ .. ....
Its:
Address:
[signatures continued on following page]
19 ACA_778002.6
(signatures continued from previous page!
"Lessor"
VIRGINIA TEGNER SPURGIN INVESTMENT COMPANY, LLC,
a California limited liability company
By:_
Its:
Address:
William Spurgin
Spurgin Development
811 West Seventh Street, Suite 201
Los Angeles, CA 90017-3413
KARL E. SCHOBER, an individual
the Selch
Karl E.
Address:
BOYS' AND GIRLS' CLUB OF SANTA MONICA, INC.
a California nonprofit mutual benefit corporation
By: Alley y
Its: PRESIDENT AND CEO
Address:
1238 LINCOLN BLVD.
SANTA MONICA, CA 90401
ATTY: PRESIDENT
(signatures continued on following page/
19 ICA_778002.6
Isignatures continued en following pagel
signatures continued from previous pagel
SHRINERS HOSPITALS FOR CHILDREN,
a Colorado nonprofit corporation f/k/a Shriners
Hospitals for Crippled Childre
Its: President Its: Treasurer
Address:
Shriners Hospitals for Children
P.O. Box 31356
Tampa, FL 33631-3356
Attn: Mr. Tom Guthrie
Federal ID No. 36-2193608
[signatures continued on following page)
(signatures continued from previous page]
SHRINERS HOSPITALS FOR CHILDREN,
a Colorado nonprofit corporation f/k/a Shriners
Hospitals for Crippled Children
By:
Its:_
Address:
Shriners Hospitals for Children
P.O. Box 31356
Tampa, FL 33631-3356
Attn: Mr. Tom Guthrie
SANTA MONICA YOUNG MEN'S CHRISTIAN ASSOCIATION,
a California nonprofit public benefit corporation
Its: GENERAL DIRECTOR AND CEO
Address:
SANTA MONICA YMCA
1332 6TH STREET
SANTA MONICA, CA 90401
ATTAN: CItIEf EXECUTIVE OFFICER
YWCA SANTA MONICA/WESTSIDE,
Address:
2019 14TH STREET
SANTA MONICA, CA 90405
ATTN: EXECUTIVE DIRECTOR
20 LACA_778002.6