EXHIBIT 10.8
LONG BEACH MUNICIPAL AIRPORT
LEASE AGREEMENT
PARCELS 1 & 0
XXXXXX XXXX XXXXX ASSOCIATES
a California Limited Partnership
"DEVELOPER"
CITY OF LONG BEACH
"LANDLORD"
TABLE OF CONTENTS
Page
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1. SUBJECT OF LEASE.......................................................... 2
1.1 Purpose of Lease ................................................. 2
1.2 Lease of Premises ................................................ 3
1.3 The Project Area ................................................. 3
1.4 The Premises ..................................................... 3
1.4.1 Adjacent Properties ..................................... 3
1.5 Parties to the Lease Agreement ................................... 4
1.5.1 Landlord ................................................ 4
1.5.2 Developer ............................................... 4
1.5.3 Association by Developer ................................ 4
2. TERM ..................................................................... 5
2.l Basic Term ....................................................... 5
2.2 Options for Extensions ........................................... 5
3. RENT ..................................................................... 6
3.1 Minimum Ground Rent .............................................. 6
3.1.1 Amount of Ground Rent ................................... 6
3.1.2 Allocation of Ground Rent ............................... 6
3.1.3 Payment of Ground Rent .................................. 7
3.1.4 Initial Ground Rent ..................................... 7
3.1.5 Inapplicable Provision .................................. 7
3.1.6 Inapplicable Provision .................................. 7
3.1.7 Due Dates and Place of Payment .......................... 8
3.2 Ground Rent Adjustments .......................................... 8
3.2.1 Adjustment Dates ........................................ 8
3.2.2 Ground Rent Adjustments by
Appraisal ............................................. 9
3.2.2.1 Adjustment for Predevelopment
and Infrastructure Costs ......................... 9
3.2.3 Appraisal .............................................. 10
3.2.4 Maximum Rent Increase .................................. 12
3.2.4.1 Allocation to Parcels ............................. 12
3.2.4.2 Base Sublease Rental .............................. 12
3.2.4.3 Sublease RentalPercentage
Change .......................................... 12
3.2.4.4 Adjusted Ground Rent .............................. 13
3.2.4.5 Sale or Assignment of Lease
hold Interest ................................... 14
3.3 Ground Rent Adjustments Following Recon-
struction ..................................................... l4
3.3.1 Ground Rent Adjustments ................................ 14
3.3.1.1 Adjustment Date ................................... 15
3.3.1.2 Alternate Adjustment Date ......................... 15
3.3.2 No Adjustment At Next Scheduled
Adjustment Date ...................................... 15
3.3.3 Maximum Ground Rent Adjustment ......................... 15
3.4 Adjustments to Ground Rent During Option Term ................... 16
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TABLE OF CONTENTS
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(continued)
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3.5 Maximum Ground Rent Increase ....................................16
3.6 Definition of Predevelopment and Infra-
structure Costs................................................16
3.7 Approval of Improvement Plans ...................................17
3.8 Determination of Predevelopment and
Infrastructure Costs ..........................................17
3.9 Inapplicable Provision ..........................................18
3.10 Inapplicable Provision ..........................................18
3.11 Inapplicable Provision ..........................................18
4. LEASEHOLD MORTGAGES .....................................................18
4.1 Leasehold Mortgage Authorized ...................................18
4.2 Notice to Landlord ..............................................18
4.2.1 Leasehold Mortgage Requirements ........................18
4.2.2 Assignment of Leasehold Mortgage .......................19
4.2.3 Landlord's Acknowledgement of
Notice ...............................................19
4.2.4 Developer to Provide Copies ............................19
4.3 Definitions .....................................................20
4.3.1 Institutional Lender ...................................20
4.3.2 Leasehold Mortgage .....................................20
4.3.3 Leasehold Mortgagee ....................................21
4.4 Consent of Leasehold Mortgagee Required .........................21
4.5 Default Notice ..................................................21
4.6 Notice to Leasehold Mortgagee....................................22
4.6.l Landlord's Termination Notice ..........................22
4.6.1.2 ...................................................23
4.6.l.2 ...................................................23
4.6.l.3 ...................................................23
4.6.2 Proper Address of Leasehold
Mortgagee ............................................23
4.7 Procedure on Default .............................................24
4.7.1 Extension of Termination Notice
Period ...............................................24
4.7.1.1 Payment of Monetary
Obligations ......................................24
4.7.1.2 Foreclosure of Leasehold
Mortgage .........................................24
4.7.2 Cure of Default ........................................24
4.7.3 Compliance of Leasehold Mortgagee ......................25
4.7.4 Leasehold Mortgage Not an
Assignment ...........................................26
4.7.5 Obligation of Leasehold Mortgagee
to Repair or Reconstruct .............................27
4.7.6 Leasehold Mortgagee's Right to
Transfer .............................................27
4.7.7 Leasehold Mortgagee Transfer a
Permitted Sale .......................................28
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TABLE OF CONTENTS
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(continued)
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4.8 New Lease .......................................................28
4.8.1 Terms of New Lease .....................................28
4.8.1.1 Written Request to Landlord........................29
4.8.1.2 Payment of Obligations ............................29
4.8.1.3 Remedy of Developer's Defaults ....................30
4.8.1.4 New Lease to Have First
Priority ........................................30
4.8.1.5 Developer's Obligations Under
New Lease ......................................31
4.9 New Lease Priorities ............................................31
4.10 Eminent Domain ..................................................31
4.11 Notice of Arbitration ...........................................31
4.12 Amendment to Facilitate Leasehold Financing .....................32
4.13 Security Deposit ................................................32
4.14 Estoppel Certificate ............................................32
4.l5 Notices .........................................................33
4.16 Erroneous Payments ..............................................33
4.17 Request for Notice for Benefit of Landlord ......................34
4.18 Release or Forebearance..........................................34
4.19 Notice ..........................................................35
4.20 No Merger .......................................................35
4.21 No Payment by Landlord...........................................35
4.22 Self Liquidating Mortgage .......................................35
4.23 Leasehold Mortgagee Need Not Cure Specified
Defaults ......................................................35
4.24 Casualty Loss ...................................................36
5. ASSIGNMENT AND SUBLETTING ...............................................36
5.1 Prohibition Against Change in Ownership,
Management and Control ........................................36
5.1.1 Name and Address for Notices ...........................37
5.1.2 Type of Entity .........................................37
5.1.3 Other Transfers ........................................37
5.1.4 Buildings or Land ......................................37
5.2 Assignments Not Subject to Approval .............................38
5.2.1 Death or Incapacity ...................................38
5.2.2 Family Transfer ........................................38
5.2.3 Affiliated Corporation .................................38
5.2.4 IRS Transfer ...........................................38
5.2.5 Public Entity ..........................................39
5.2.6 Partner ................................................39
5.2.7 Comprising Entity ......................................39
5.3 Assignment Invalid ..............................................39
5.4 Approval of Assignments .........................................39
5.4.l Name ...................................................40
5.4.2 Description ............................................40
5.4.3 Nature of Business .....................................40
5.4.4 Financial Information ..................................40
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5.4.5 Officers ...............................................40
5.4.6 Additional Information .................................41
5.4.6.l ....................................................4l
5.4.6.2 ....................................................4l
5.4.6.3 ....................................................4l
5.4.7 Informational Purposes .................................41
5.4.7.l ....................................................4l
5.4.7.2 ....................................................4l
5.4.7.3 ....................................................4l
5.4.8 Confidentiality ........................................41
5.4.9 Disapproval by Landlord ................................42
5.5 No Release ......................................................42
5.6 Unauthorized Change .............................................43
5.7 Subletting ......................................................43
5.7.1 Minor Subleases ........................................46
5.7.2 Consent to Sublease ....................................46
5.7.2.1 Description .......................................46
5.7.2.2 Name ..............................................46
5.7.2.3 Nature of Business ................................46
5.7.2.4 Financial Information .............................46
5.7.2.5 Officers ..........................................47
5.7.2.6 Additional Information.............................47
5.7.2.6.l ...............................................47
5.7.2.6.2 ...............................................47
5.7.2.6.3 ...............................................47
5.7.2.7 Informational Purposes ............................47
5.7.2.7.l ...............................................47
5.7.2.7.2 ...............................................47
5.7.2.7.3 ...............................................48
5.7.2.7.4 ...............................................48
5.7.3 Confidentiality ........................................48
5.7.4 Disapproval by Landlord ................................48
5.8 Sale of Buildings ...............................................49
6. INDEMNITY, INSURANCE, CASUALTY DAMAGE ...................................49
6.1 Indemnification and Hold Harmless ...............................49
6.2 Insurance .......................................................50
6.2.1 Liability Insurance ....................................50
6.2.2 Fire and Extended Coverage .............................51
6.2.3 Aviation Facilities ....................................54
6.2.4 Miscellaneous ..........................................55
6.2.5 Blanket Policies .......................................56
6.2.6 Self-Insurance .........................................56
6.2.7 Insurance Adjustments ..................................57
6.3 Damage or Destruction ...........................................57
6.3.1 Restoration of Premises ................................57
6.3.2 Right to Terminate .....................................58
6.3.3 No Reduction in Rent ...................................59
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(continued)
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7. DEVELOPMENT OF THE PROJECT ..............................................59
7.1 Scope of Development ............................................59
7.2 Developer's Obligation to Develop Premises.......................60
7.2.1 Best Efforts to Sublease ...............................60
7.3 Architectural Approval ..........................................61
7.3.1 Restriction ............................................61
7.3.2 Basic Concept Documents ................................61
7.3.3 Landscaping ............................................61
7.3.4 Exterior Elevations ....................................62
7.3.5 Security and Security Plans ............................63
7.3.6 Amendments .............................................63
7.3.7 Landlord Approval ......................................64
7.3.8 Communication and Consultation .........................65
7.3.9 Requirements of Institutional Lender or Major
Occupant .............................................66
7.3.10 Interior Improvements ..................................67
7.3.11 Modification of Plans ..................................67
7.4 Performance and Payment Bonds ...................................67
7.4.1 Agreement to Provide ...................................67
7.4.2 Term of the Bond .......................................68
7.4.3 Penal Sum ..............................................69
7.4.4 Alternative Performance ................................69
7.5 Construction ....................................................69
7.5.1 Costs of Construction ..................................69
7.5.2 Right to Improve .......................................70
7.5.3 Governmental Permits ...................................71
7.5.4 Rights of Access .......................................71
7.5.5 Local, State and Federal Laws ..........................72
7.5.6 Antidiscrimination During Construction .................72
7.5.7 Responsibilities of Landlord ...........................72
7.5.7.1 Governmental Approvals ............................72
7.5.7.2 Easements .........................................73
7.5.7.3 Off-Site Improvements .............................73
7.5.7.4 Bond Financing ....................................74
7.5.8 Responsibilities of Developer ..........................74
7.5.9 Maintenance ............................................75
7.5.10 Acceptance of Premises .................................75
7.6 Subdivided Leases ...............................................76
7.6.1 Same Parties ...........................................76
7.6.2 Obligations of Subdivided Leases .......................76
7.6.3 Terms, Covenants .......................................77
7.6.3.1 Ground Rent .......................................77
7.6.3.2 Improvements ......................................78
7.6.3.3 Easements and CC & R's ............................78
7.6.3.4 Description of Property ...........................78
7.6.3.5 Excluded Matters ..................................78
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TABLE OF CONTENTS
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7.7 Combining Leases ................................................79
7.7.1 Ground Rent ............................................79
7.7.2 Easements and CC & R's .................................79
8. USE .....................................................................79
8.1 Permitted Development ...........................................79
8.2 Aviation Related Uses ...........................................80
8.3 Inapplicable Provision ..........................................80
8.4 Vehicle Parking .................................................80
8.5 Federal Aviation Administration .................................80
8.6 Inspection ......................................................81
9. LIENS ...................................................................8l
9.1 Developer's Responsibility ......................................81
9.2 Notice of Work ..................................................82
9.3 Discharge of Liens ..............................................82
9.4 Landlord's Right to Pay .........................................82
9.5 Reimbursement of Landlord .......................................83
10. CONDEMNATION ............................................................83
10.1 Definition of Terms .............................................83
10.1.1 Total Taking ..........................................83
10.1.2 Partial Taking ........................................84
10.1.3 Voluntary Conveyance ..................................84
10.1.4 Date of Taking ........................................84
10.1.5 Leased Land ...........................................84
10.2 Effect of Taking ................................................85
10.3 Allocation of Award .............................................85
10.4 Reduction of Ground Rent on Partial Taking ......................85
10.5 Temporary Taking ................................................86
11. ALTERATIONS BY DEVELOPER ................................................86
12. TAXES AND ASSESSMENTS ...................................................87
12.1 Payment by Developer ............................................87
12.2 Installment Payments ............................................87
12.3 Proration .......................................................88
12.4 Right to Contest ................................................88
13. CERTIFICATES BY DEVELOPER AND LANDLORD ..................................89
13.1 Developer to Provide ............................................89
13.2 Landlord to Provide .............................................91
14. QUIET ENJOYMENT .......................................................90
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TABLE OF CONTENTS
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(continued)
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l5. TERMINATION AND FURTHER LEASING......................................... 91
15.1 Termination ................................................... 91
15.2 Termination by Developer ...................................... 91
15.3 Termination by Landlord ....................................... 91
16. SECURITY DEPOSIT........................................................ 92
16.1 Good Faith Deposit............................................. 92
16.1.1 Receipt by Landlord ................................ 92
16.1.2 Form of Deposit .................................... 92
16.1.3 Interest ........................................... 93
16.1.4 If Bond is Posted .................................. 94
16.2 Construction Security Deposits................................. 94
16.2.1 Form of Construction Deposit ....................... 95
16.2.2 Interest ........................................... 95
16.2.3 Incorporation by Reference ......................... 96
16.2.4 Return of Deposit .................................. 96
16.2.5 Retention of Deposit by Landlord ................... 96
17. GENERAL PROVISIONS ..................................................... 97
17.1 Notices, Demands and Communication between
the Parties.............................................. 97
17.2 Conflict of Interest......................................... 98
17.3 Enforced Delay: Extension of Time of Performance............ 98
17.4 Inspection of Books and Records.............................. 99
17.5 Defaults and Remedies........................................ 99
17.5.1 Defaults - General................................. 99
17.5.2 Institution of Legal Actions....................... 99
17.5.3 Applicable Law..................................... 100
17.5.4 Service of Process................................. 100
17.5.5 Rights and Remedies Are Cumulative................. 100
17.5.6 Inaction Not a Waiver of Default................... 101
17.5.7 Remedies........................................... 101
17.5.8 Developer's Rights................................. 102
17.5.9 Lease Termination.................................. 102
17.5.10 Landlord's Exercise of Remedies.................... 103
17.5.11 Payment to Developer............................... 103
17.5.11.1 Reimbursement to Landlord ..................... 104
17.5.11.2 Reimbursement to
Developer.................................... 105
17.5.11.3 Ground Rent ................................... 105
17.5.11.4 Remaining Balance ............................. 106
17.5.12 Delivery of Plans.................................. 106
17.6 Right to Contest Laws...................................... 106
17.7 Trade Fixtures............................................. 107
17.8 Continued Possession of Developer.......................... 108
17.9 Utilities.................................................. 108
17.10 Surrender.................................................. 108
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(continued)
Page
17.11 Partial Invalidity ............................... 109
17.12 Section Headings ................................. 109
17.13 Short Form Lease ................................. 109
17.14 Exhibits Incorporated ............................ 109
17.15 Entire Agreement, Waivers and Amendments ......... 109
17.16 Waivers .......................................... 110
17.17 Approvals ........................................ 110
17.18 Successors in Interest ........................... 110
17.19 "And/Or" ......................................... 110
17.20 "Including" Defined .............................. 111
17.21 Right of First Refusal to Purchase ............... 111
17.22 If Developer is a Trustee ........................ 112
17.23 Limitation of Liability of Partners .............. 112
17.24 Approvals ........................................ 113
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LIST OF EXHIBITS
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First Appearing at
Ltr. Description Paragraph Page
---- ----------- --------- ----
A Legal Description of Premises 1.2 3
B Site Map of Project Area and 1.4 3
Adjacent Properties
C Parcel Map 1.4 3
D Categories of Predevelopment 3.6 16
and Infrastructure Costs
E Form of Nondisturbance 5.7 44
Agreement
F Off-Site Improvements 7.5.7.3 74
G Landscaping Plans 7.3.3 62
H Exterior Elevations 7.3.4 63
I Form of Performance Bond and 7.4.1 68
Labor and Material Bond
K Master FBO Lease 8.2 80
L FAA Conditions 8.5 81
M Form of Short Form Lease 17.13 109
ix
DEFINED WORDS
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Defined Word Paragraph Page
------------ --------- ----
"Adjacent Properties" 1.4.1 3
"Adjusted Fair Market Land Value" 3.2.2.1 9
"Adjusted Ground Rent" 3.2.4.4 13
"adjustment dates" 3.2.1 8
"Affiliated Corporation" 5.2.3 38
"Agreement Establishing Developer" 1.5.2 4
"and/or" 17.19 110
"as-is 7.5.10 75
"Basic Concept Documents" 7.3.2 61
"Completion Date" 5.5 43
"date of taking" 10.1.4 84
"Developer" Intro(Paragraph) l
"Developer's Long Beach Airport 7.1 59
Center Submittal"
"FAA" 8.5 81
"Ground Rent" 3.1 6
"Ground Sublease" 5.7 45
"include" 17.20 111
"including" 17.20 111
"Institutional Lender" 4.3.1 20
"Landlord" Intro(Paragraph) l
"Lease" Intro(Paragraph) l
"leased land" 10.1.5 84
"Leasehold Mortgage" 4.3.2 20
"Leasehold Mortgagee" 4.3.3 21
"manage" 1.5.3 5
x
DEFINED WORDS
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(continued)
Defined Word Paragraph Page
------------ --------- ----
"Master FBO Lease" 8.2 80
"Net Square Footage" 3.1.2 7
"New Lease" 4.8.1 29
"nondisturbance agreement" 5.7 44
"partial taking" 10.1.2 84
"Predevelopment and Infrastructure 3.2.2.1 10
Costs"
"Premises" 1.2 3
"Project" 1.1 2
"Single Lease" 7.7 79
"Subdivided Lease" 7.6 76
"sublease" 5.7 45
"sublessee" 5.7 45
"Supplement to Xxxxxx Industries 7.1 59
December 7, 1983, Proposal"
"Termination Notice" 4.6.1 22
"Termination Notice Period" 4.6.1 22
"total taking" 10.1.1 87
xi
LEASE AGREEMENT
---------------
THIS LEASE AGREEMENT (the "Lease") is made this 24th day 1989 of January,
1989, by and between XXXXXX LONG BEACH ASSOCIATES, a California Limited
Partnership, hereinafter referred to as "Developer", and the CITY OF LONG BEACH,
a municipal corporation, hereinafter referred to as "Landlord".
This Lease is made with reference to the following facts:
A. On or about July 18, 1985, Landlord and Tenant entered into a lease
("All-Inclusive Lease") of certain real property described in Exhibit "A" to the
All-Inclusive Lease ("All-Inclusive Lease Real Property"). The All-Inclusve
Lease Real Property to be developed pursuant to the All Inclusive Lease is
therein and herein referred to as the "Project". A short form of the All-
Inclusive Lease, dated July 17, 1985, was recorded on November 14, 1986 as
Instrument No. 00-0000000 in Official Records in the Office of the County
Recorder of Los Angeles County, California ("Recorded Short Form All Inclusive
Lease").
B. A Parcel Map has been filed with the County of Los Angeles on July 22,
1988, as Parcel Map No. 16960, in Book 208, pages 92 through 100, of Parcel Maps
in the Office of the County Recorder of said County ("Parcel Map"). This Parcel
Map includes the real property demised by the All-Inclusive Lease, and other
real property.
C. The All-Inclusive Lease provides in Paragraph 7.6 thereof that the said
All-Inclusive Lease may be subdivided into separate new leases upon notice from
Developer to Landlord. Developer gave written notice to Landlord on August 22,
1988,
1
requesting that the All-Inclusive Lease be subdivided into three (3) separate
leases covering the All-Inclusive Lease Real Property as follows:
1. Parcels l and 2 of the Parcel Map ("Parcel l and 2 Lease").
2. Parcels 5 and 6 of the Parcel Map ("Parcel 5 and 6 Lease").
3. The All-Inclusive Lease would be reduced in scope and coverage
to include all of the remainder of the All-Inclusive Lease Real
Property consisting of Parcels 3 and 4, and an additional Parcel
8 of the Parcel Map.
D. This Lease is intended to be the subdivided lease hereinabove described
as the Parcel l and 2 Lease, and it shall hereinafter be referred to as the
"Lease".
NOW THEREFORE, Landlord and Developer hereby agree as follows:
1. SUBJECT OF LEASE:
----------------
1.1 Purpose of Lease. The purpose of this Lease is to provide
for the lease and improvement of certain Premises, hereinafter described, as a
part of the Project. This Lease is entered into pursuant to the provisions of
Section 7.6 of the All-Inclusive Lease and in order to develop Parcels and l and
2 of the Project and not for speculation in land holding. The development of
Parcels l and 2 of the Project pursuant to and as contemplated by this Lease is
in the best interests of Landlord and in accord with the public purposes and
provisions of applicable State and local laws and requirements under which the
Project is to be undertaken.
2
1.2 Lease of Premises. Subject to the terms, covenants and
-----------------
conditions of this Lease, Landlord hereby leases to Developer and Developer
hereby takes and hires from Landlord that certain real property (the "Premises")
legally described on Exhibit "A" attached hereto and made a part hereof, upon
the terms and conditions hereinafter set forth.
1.3 The Project Area. The area within which the Project is
----------------
located in the City of Long Beach is the area generally described as the area
bounded by Spring Street on the northwest, Taxiway D on the northeast, the San
Diego Freeway on the south and southeast, and the National Guard facility on the
west.
1.4 The Premises. The Premises are included in the Project area
------------
illustrated and designated on the site map attached hereto as Exhibit "B" and
the revised Parcel Map No. 16960 attached hereto as Exhibit "C", and forming a
part of this Lease and are legally described in the attached Exhibit "A".
1.4.1 Adjacent Properties. Developer has entered into a
-------------------
separate Lease, dated April 21, 1988, with the Board of Water
Commissioners of the City of Long Beach ("Water Department
Lease"), for the development of certain adjacent properties
("Adjacent Properties") identified in Exhibit "B", into the
Project for creation of an integrated development. The fair
market value and fair market Ground Rent and periodic
adjustments thereof of said Adjacent Properties shall be as
mutually agreed by said Board of Water Commissioners and
Developer, and by Landlord, as to that portion under
jurisdiction of Landlord.
3
Development of the Adjacent Properties shall be governed by
the Water Department Lease (and Landlord, as to its property).
1.5 Parties to the Lease Agreement.
------------------------------
1.5.1 Landlord. Landlord is a municipal corporation organized
--------
and existing under the laws of the State of California acting in its proprietary
capacity. The principal office of Landlord is located at City Hall, 000 Xxxx
Xxxxx Xxxxxxxxx, Xxxx Xxxxx, Xxxxxxxxxx 00000. The term "Landlord" as used in
this Lease includes the City of Long Beach, California, and any assignee of or
successor to its rights, powers and responsibilities.
1.5.2 Developer. Developer is a California limited partnership
---------
having a principal place of business at 0000 Xxxx Xxxxxxxx Xxxxxxx, Xxxxx 0000,
Xx Xxxxxxx, Xxxxxxxxxx 00000. A written agreement has been executed creating
Developer ("Agreement Establishing Developer") an executed copy of which has
been delivered to Landlord. Developer agrees, upon request of Landlord, to
provide Landlord with any amendments to the Agreement Establishing Developer, so
long as Xxxxxx Long Beach Associates, a California Limited Partnership, is the
party acting as Developer under this Lease. The provisions of the foregoing
sentence shall apply to any entity becoming a successor to Developer under this
Lease or any other lease which may be established pursuant hereto covering the
Premises or one or more of the Adjacent Properties.
1.5.3 Association by Developer. Notwithstand-
------------------------
4
ing any other provisions hereof, Developer reserves the right,
at its discretion, to join and associate with other entities
in joint ventures, partnerships or otherwise for the purpose
of leasing and developing the Premises and the Adjacent
Properties, and Developer may assign this Lease to any such
entity, provided that Developer, or any partner of Developer
having a controlling interest in Developer, continues to
manage and retain policy control over the development and
operation of the Premises, until such time as Developer's
interests under this Lease are assigned as permitted under
subsection 5.1, below. As used herein, "manage" shall mean to
direct or supervise the operation and execution of the
development of the Premises and to have authority to act for
and bind the entity in all dealings with Landlord under this
Lease. This definition shall be deemed to require Developer to
retain policymaking authority.
2. TERM:
2.1 Basic Term. The term of this Lease shall commence on
----------
the date of execution of this Lease and shall continue thereafter for a period
of approximately forty-six (46) years, expiring on July 17, 2035.
2.2 Options for Extensions. Subject to approval by the
----------------------
Long Beach City Council and subject to the review by Landlord of Lease
provisions pursuant to Section 37380(b)(1) of the Government Code, Developer
shall have an option for four (4)
5
Lease extensions of ten (10) years each and a final Lease extension of nine (9)
years, so that the total possible duration of this Lease will be ninety-nine
(99) years. Developer may request at any time after six (6) months following the
effective date of this Lease that Landlord formally consider the granting of
such Lease extensions, and Landlord shall act upon such request within ninety
(90) days after receipt thereof.
3. RENT:
----
3.1 Minimum Ground Rent. From commencement of the term of this Lease, the
-------------------
Ground Rent ("Ground Rent") payments shall be as follows:
3.1.1 Amount of Ground Rent. Developer shall
---------------------
pay as initial Ground Rent, the sum of Three Hundred Thirty-Seven
Thousand Five Hundred Eighty-Three and 38/100 Dollars ($337,583.38) per
year, which is stated by the parties to be ten percent (10%) of the
initial stated value of the land included in the Premises, which, in
turn is agreed by the parties to be Three Million Three Hundred
Seventy-Five Thousand Eight Hundred Thirty Three and 80/100 Dollars
($3,375,833.80).
3.1.2 Allocation of Ground Rent. Developer has
-------------------------
developed the Premises as two (2) distinct parcels, which are
designated as Parcel l and Parcel 2 of Parcel Map No. 16960 attached
hereto and marked Exhibit "C" for reference, with one or more buildings
per parcel. The initial Ground Rent obligation described in this
6
subsection 3.1.1. shall be allocated between Parcel l and Parcel 2 in
the proportion that the net square footage of land contained in each
parcel bears to the net square footage of the land in the entire
Premises. "Net square footage" of land means that portion of the land
not subject to dedication for public streets and sidewalks.
3.1.3 Payment of Ground Rent. The obligation to pay Initial
----------------------
Ground Rent is acknow1edged to have commenced on Parcel l on June 20,
1986 and on Parcel 2 on May 6, 1986, pursuant to the provisions of the
All-Inclusive Lease. Such Initial Ground Rent for Parcel l and Parcel 2
shall be prorated and paid under the All-Inclusive Lease until the date
of this Lease, and thereafter shall be paid pursuant to the provisions
of this Lease.
3.1.4 Initial Ground Rent. The initial Ground Rent due for
-------------------
each parcel shall be a sum equal to fifty percent (50%) of the Ground
Rent attributable to such parcel. Payment of Ground Rent shall continue
at that rate until either six (6) months after issuance of an Initial
Temporary Certificate of Occupancy on the building shell or
commencement of subtenant rent, whichever occurs earlier, at which time
the full Ground Rent attributable to that parcel shall become payable.
3.1.5 Inapplicable Provision.
-----------------------
3.1.6 Inapplicable Provision.
-----------------------
7
3.1.7 Due Dates and Place of Payment. Ground Rents described herein
------------------------------
shall be payable in installments due the first day of each month. Payment shall
be made to the City of Long Beach at the office of the Airport Manager, 0000
Xxxxxx Xxxxxxx Xxxxx, Xxxx Xxxxx, Xxxxxxxxxx 00000. Ground Rent installments
will be deemed late on the tenth (10th) day of the month and shall bear interest
until the installment is paid at the rate received by the City of Long Beach on
its investment portfolio during the preceding quarter, provided said interest
rate shall not exceed twenty percent (20%) per year.
3.2 Ground Rent Adjustments.
-----------------------
3.2.1 Adjustment Dates. In order to adjust the annual Ground Rent for
----------------
each parcel the fair market land value of each parcel and the prevailing rate of
return shall be determined in the tenth (10th) year after commencement of
payment of the full Ground Rent for such parcel, and adjusted Ground Rent
payments shall take effect on the first (1st) day of the eleventh (11th) year.
The fair market land value and prevailing rate of return for each parcel shall
be determined in the year 2000, with respect to Ground Rent payable commencing
January 1, 2001, and every five (5) years thereafter, and the Ground Rent shall
be adjusted accordingly on the first (1st) day of each sixth (6th) year. Said
dates of adjustment of Ground Rent shall be referred to for convenience as
"adjustment dates".
8
3.2.2 Ground Rent Adjustments by Appraisal. With respect to each
------------------------------------
Ground Rent adjustment date, the fair market land value and prevailing rate of
return shall be determined by agreement between Landlord and Developer, but
should they not be able to agree at least two hundred ten (210) days prior to an
adjustment date, then such fair market land value and prevailing rate of return
shall be determined by appraisal by an analysis of comparable land transactions
committed to the same usage and either zoned for or improved with facilities of
similar density and height considerations, and/or such other appraisal method(s)
recognized by the appraisal profession as are appropriate for fair market land
value appraisals and mutually agreed to by the appraisers at time of
reevaluation as being appropriate, recognizing market conditions that prevail as
of the date of value.
3.2.2.1 Adjustment for Predevelopment and Infrastructure Costs.
------------------------------------------------------
The fair market land value of the Premises (as agreed upon by Landlord and
Developer or as determined by appraisal) shall be adjusted ("Adjusted Fair
Market Land Value") in the proportion that Three Million Three Hundred
Seventy-Five Thousand Eight Hundred Thirty Three and 80/100 ($3,375,833.80)
bears to the original stated land value of the Premises of Three Million
Three Hundred Seventy-Five Thousand Eight Hundred Thirty Three and 80/100
Dollars ($3,375,833.80),
9
plus the pro rata portion of the actual on-site and off-site "Predevelopment
and Infrastructure Costs", applicable to the Premises, determined according
to subsection 3.8. The Adjusted Fair Market Land Value shall be converted
into an annual Ground Rent obligation based on the prevailing rate of return
as determined pursuant to subsection 3.2.2.
3.2.3 Appraisal. In the event the parties are unable to agree upon
---------
the fair market rental value or the prevailing rate of return or the method of
appraisal of the Premises at any adjustment date, the fair rental value of the
subject land and/or the prevailing rate of return shall be determined by
appraisals prepared by two appraisers, one appointed by the Landlord at its
expense and one appointed by the Developer at its expense, both of whom shall be
MAI members of the American Institute of Real Estate Appraisers or a successor
organization in the event the American Institute of Real Estate Appraisers
ceases to exist. Said appraisers shall be appointed not more than six (6)
months prior to the commencement of the rental adjustment period but, in any
event, within thirty (30) days after either party has given notice in writing of
inability to agree. Both appraisals must be completed and submitted to the
Landlord and Developer respectively within sixty (60) days after the appointment
of the appraisers. The two appraisals shall be averaged un-
10
less the higher of the two appraisals exceeds the lesser by ten percent (10%) or
more, in which case the two appraisers shall appoint a third appraiser, also an
MAI member of the American Institute. In order to select such third appraiser,
if the two appraisers do not agree, the appraisers shall obtain a list of five
appraisers from the President of the American Institute of Real Estate
Appraisers and shall alternately strike names from such list until one remains
to become the third appraiser. The third appraiser shall be appointed by the
first two appraisers within fourteen (14) days after notice from either of the
parties to this Lease that the appointment of a third appraiser is necessary.
The cost of such third appraiser shall be shared equally by the parties to this
Lease. The third appraiser shall complete and submit the required appraisal to
both parties within sixty (60) days after appointment. All appraisals shall be
in the form of written reports supported by facts and analysis. The two of the
three appraisers arriving at values closest to each other shall attempt to
concur on a value. If they are unable to do so within thirty (30) days, the two
closest appraisals shall be averaged and that value shall be the fair market
value of the land or the prevailing rate of return, as appropriate. The total
appraised value of both parcels shall not exceed the appraised value of the
Premises. The Adjusted Fair Market Land Value shall be converted into an annual
Ground Rent
11
obligation based on the prevailing rate of return on similar ground leases then
current in the market. Disagreements between the two appraisers as to the
method of appraisal shall be resolved by a third appraiser, appointed in the
manner described in this subsection.
3.2.4 Maximum Rent Increase. The increase if any, in Ground Rent at
---------------------
the time of any adjustment date shall be limited for parcels upon which one or
more buildings have been constructed by the increase in subtenant rents as
described in this section:
3.2.4.1 Allocation to Parcels. At the time of execution of the
---------------------
Lease, the Ground Rent shall be allocated between the parcels within the
Premises in the manner set out in subsection 3.1.2. The percentage of rent
attributable to each parcel shall remain in effect during the term of the
Lease unless parcel areas change.
3.2.4.2. Base Sublease Rental. The base sublease rental for each
--------------------
parcel shall be the total annualized rent, stabilized to exclude free rent,
reduced rent or excess tenant improvement amortization or other similar
concessions or considerations measured in the first year in which more than
eighty percent (80%) of the rentable space on a given parcel is rented,
prorated to full occupancy.
3.2.4.3 Sublease Rental Percentage Change. The sublease rental
---------------------------------
percentage change shall be determined by calculating the percentage changes
12
in sublease rental between the base sublease rental for a parcel described in
subsection 3.2.4.2 above and the actual sublease rental due to Developer for the
same parcel in the full year preceding a Ground Rent Adjustment date, stabilized
to exclude any free rent, reduced rent or excess tenant improvement amortization
or other similar concessions or considerations.
3.2.4.4 Adjusted Ground Rent. The "Adjusted Ground Rent" for each
--------------------
parcel at any given adjustment period shall be the lesser of the Adjusted Fair
Market Rental Value for such parcel as determined in subsection 3.2.2 above or
the initial Ground Rent for such parcel plus the product of the Sublease Rental
Percentage Change determined in 3.2.4.3 above times the initial Ground Rent for
such parcel. To the extent that the Adjusted Fair Market Rental Value is
greater than the Adjusted Ground Rent, the difference may be carried forward
into the next five (5) year adjusted rental period but not into any subsequent
five (5) year adjusted rental periods, and thereby recovered by Landlord. The
amount of Ground Rent during a five (5) year adjusted rental period where there
has been such a carry forward shall not exceed one hundred ten percent (110%) of
the fair market Ground Rent as determined for that period.
13
3.2.4.5 Sale or Assignment of Leasehold Interest.
----------------------------------------
Should Developer sell, assign or otherwise transfer its leasehold
interest to an owner-user such that sublease rental is not paid to
Developer, the fair market sublease rental for such building,
using the criteria and methods set out in subsection 3.2.2, shall
become the basis for calculating the maximum rental adjustment
using the process described in 3.2.4.3 above.
3.3 Ground Rent Adjustments Following Reconstruction. Developer
------------------------------------------------
contemplates, pursuant to Section 11 hereof, that during the term of this Lease,
any or all of the buildings developed on the Premises may be demolished and new
buildings constructed in their place in order to meet the then current market
demand, subject to Landlord approval pursuant to Section 7. In the event of
such demolition and new construction on a particular parcel, the provisions of
subsection 3.2 shall be modified with respect to such parcel as set forth below
in subsections 3.3.1 and 3.3.2. This subsection 3.3 shall not apply to
demolition and new construction which is due to damage or destruction, as
described in subsection 6.3, where said new construction is limited to one for
one replacement of useable or rentable floor area in the same general building
configuration as that which previously existed.
3.3.1 Ground Rent Adjustments. Ground Rent for such parcel
-----------------------
shall be adjusted according to the process set out in subsections
3.2.2 and 3.2.3 but the limitations in subsection 3.2.4 shall not
apply to such
14
adjustment.
3.3.1.1 Adjustment Date. The adjustment shall be effective
---------------
either six (6) months after issuance of an Initial Temporary Certificate of
Occupancy of the building shell or commencement of subtenant rent, whichever
occurs earlier; or
3.3.1.2 Alternate Adjustment Date. In the event a regular five
-------------------------
(5) year Ground Rent adjustment date for the parcel, as established in
subsection 3.2.1, occurs after commencement of demolition of a building on
said parcel and prior to completion of construction of a new building in its
place, said adjustment shall take place on schedule and shall be based upon
the assumption that construction of the planned new building has been
completed.
3.3.2 No Adjustment At Next Scheduled Adjustment Date. There shall be
-----------------------------------------------
no Ground Rent adjustment for such parcel at the next scheduled adjustment date,
but all subsequent Ground Rent adjustments shall occur on the schedule set out
in subsection 3.2.1.
3.3.3 Maximum Ground Rent Adjustment. For purposes of determining the
------------------------------
maximum Ground Rent increase under subsection 3.2.4 at the time of the next
Ground Rent adjustment and thereafter, the base sublease rental described in
subsection 3.2.4 shall be established with respect to the new building or
buildings constructed on the parcel.
15
3.4 Adjustments to Ground Rent During Option Term. At the commencement
---------------------------------------------
of each option term, and at the end of each five (5) years of each option term,
the Ground Rent shall be determined as provided in subsection 3.2.2, but with no
adjustment thereto as is provided in said subsection 3.2.2.1. The fair market
land value shall be converted into an annual Ground Rent obligation based on the
rate of return then current in the market for parcels which are currently and
fairly appraised.
3.5 Maximum Ground Rent Increase. However, the increase in Ground
----------------------------
Rent at the end of five (5) years of each option term shall be subject to the
provisions of subsection 3.2.4, with the first year of the option term as the
base period for determining sublease rental and the fifth (5th) year of the
option term being the adjustment year for determining actual rental received,
both to be stabilized to exclude any free rent, reduced rent, excess tenant
improvement amortization or other similar concessions or considerations. The
Ground Rent commencing the sixth (6th) year of any option term cannot increase
at a percentage rate greater than the percentage increase in sublease rentals
from the base year to the adjustment year.
3.6 Definition of Predevelopment and Infrastructure Costs. For
-----------------------------------------------------
purposes of this Lease, Predevelopment and Infrastructure Costs shall include
the pro rata portion applicable to the Premises of all costs actually incurred
by Developer for those items identified in Exhibit "D", subject to the
limitations of this subsection, which costs are necessary to initially render
the Premises suitable for development according to Developer Basic Concept
Documents as described in Section 7. Predevelopment
16
and Infrastructure Costs shall include all offsite and on-site improvements
required to create six (6) buildable parcels, but shall not include any costs
directly associated with the construction of buildings or parking upon such
parcels. It is understood and agreed by Landlord that certain improvements
particularly landscaping, may exceed the standards normally used by the City of
Long Beach, and that such improvements shall be included in Predevelopment and
Infrastructure Costs to the extent they are consistent with Developer's Basic
Concept Documents and landscape plans described in Section 7.
3.7 Approval of Improvement Plans. Prior to commencement of any
-----------------------------
construction on the Premises, Developer submitted to Landlord engineering plans
and costs estimates for those items identified in Exhibit "D" which are included
in Predevelopment and Infrastructure Costs. Specifications for all improvements
shall meet or, at Developer's election, exceed the standard specifications of
the City of Long Beach for such improvements. Landlord reviewed said plans for
conformity with the Basic Concept Documents and approved them as to such
conformity in accordance with the procedures and criteria set out in subsection
7.3.7.
3.8 Determination of Predevelopment and Infrastructure Costs.
--------------------------------------------------------
Predevelopment and Infrastructure Costs for the entire Project shall be
determined in the manner described in Sections 3.6 through 3.11, inclusive, of
the All-Inclusive Lease as if the All-Inclusive Lease had not been subdivided.
At such time as such Predevelopment and Infrastructure Costs have been so
determined pursuant to the All-Inclusive Lease, a portion of such Predevelopment
and Infrastructure Costs shall be allocated
17
to this Lease in the ratio as the square footage of the area of the Premises
included in this Lease bears to the entire square footage of the area of the
All-Inclusive Lease prior to the subdivision of the All-Inclusive Lease,
excluding for such purposes any of the areas included in Parcel 8 of the Parcel
Map, as said Parcel 8 has a different rental calculation procedure from the
balance of the real property included within the Project.
3.9 Inapplicable Provision.
----------------------
3.10 Inapplicable Provision.
----------------------
3.11 Inapplicable Provision.
----------------------
4. LEASEHOLD MORTGAGES:
-------------------
4.1 Leasehold Mortgage Authorized. On one or more occasions
-----------------------------
Developer may take back a Purchase Money Leasehold Mortgage upon a sale and
assignment of the Leasehold Estate created by this Lease or may mortgage or
otherwise encumber Developer's Leasehold Estate to an Institutional Lender (as
hereinafter defined), under one or more Leasehold Mortgages and assign this
Lease as security for such Mortgage or Mortgages.
4.2 Notice to Landlord.
------------------
4.2.1 Leasehold Mortgage Requirements. If Developer shall,
-------------------------------
on one or more occasions, take back a Purchase Money Leasehold
Mortgage upon a sale and assignment of the Leasehold Estate or shall
mortgage Developer's Leasehold Estate to an Institutional Lender, and
if the Holder of such Leasehold Mortgage shall provide Landlord with
notice of such Leasehold Mortgage together with a true copy of such
Leasehold Mortgage and
18
the name and address of the Mortgagee, Landlord and Developer agree that,
following receipt of such notice by Landlord, the provisions of this Section 4
shall apply in respect to each such Leasehold Mortgage.
4.2.2 Assignment of Leasehold Mortgage. In the event of any
--------------------------------
assignment of a Leasehold Mortgage or in the event of a change of address of a
Leasehold Mortgagee or of an assignee of such Mortgage, notice of the new name
and address shall be provided to Landlord within ten (10) days after completion
of such assignment.
4.2.3 Landlord's Acknowledgement of Notice. Landlord shall promptly
------------------------------------
upon receipt of a communication purporting to constitute the notice provided for
by subsections 4.2.1 or 4.2.2, above, acknowledge by an instrument in recordable
form receipt of such communication as constituting the notice provided for by
subsections 4.2.1 or 4.2.2, or, in the alternative, notify Developer and the
Leasehold Mortgagee of the rejection of such communication as not conforming
with the provisions of subsections 4.2.1 or 4.2.2, and specify the specific
basis of such rejection.
4.2.4 Developer to Provide Copies. After Landlord has received the
---------------------------
notice provided for by subsections 4.2.1 or 4.2.2 above, Developer, upon being
requested to do so by Landlord, shall within ten (10) days provide Landlord with
copies of the note or other obligation secured by such Leasehold Mortgage and of
any other documents pertinent to the Leasehold Mortgage
19
as specified by Landlord. If requested to do so by Landlord, Developer shall
thereafter also provide Landlord from time to time with a copy of each amendment
or other modification or supplement to such instruments. All recorded documents
shall be accompanied by the appropriate certification of the Custodian of the
Recording Office as to their authenticity as true and correct copies of the
official records and all non-recorded documents shall be accompanied by a
certification by Developer that such documents are true and correct copies of
the originals. From time to time upon being requested to do so by Landlord,
Developer shall also notify Landlord of the date and place of recording and
other pertinent recording data with respect to such instruments as have been
recorded.
4.3 Definitions.
-----------
4.3.1 Institutional Lender. The term "Institutional Lender" as used
--------------------
in this Section 4 shall refer to a savings bank, savings and loan association,
commercial bank, trust company, credit union, insurance company, college,
university, real estate investment trust or pension fund. The term
"Institutional Lender" shall also include other lenders of substance which have
assets in excess of Fifty Million and No/l00 Dollars ($50,000,000.00) at the
time the Leasehold Mortgage is made.
4.3.2 Leasehold Mortgage. The term "Leasehold Mortgage" as used in
------------------
this Section 4 shall include
20
a mortgage, a deed of trust, a deed to secure debt, or other security
instrument by which Developer's Leasehold Estate is mortgaged,
conveyed, assigned or otherwise transferred, to secure a debt or other
obligation.
4.3.3 Leasehold Mortgagee. The term "Leasehold Mortgagee"
-------------------
as used in this Section 4 shall refer to a holder of a Leasehold
Mortgage in respect to which the notice provided for by subsection 4.2
has been given and received and as to which the provisions of this
Section 4 are applicable.
4.4 Consent of Leasehold Mortgagee Required. No cancellation,
---------------------------------------
surrender or modification of this Lease shall be effective as to any Leasehold
Mortgagee unless consented to in writing by such Leasehold Mortgagee.
4.5 Default Notice. Landlord upon providing Developer any notice
--------------
of: (i) default under this Lease, (ii) a termination of this Lease, or (iii) a
matter of which Landlord may predicate or claim a default, shall at the same
time provide a copy of such notice to every Leasehold Mortgagee. No such notice
by Landlord to Developer shall be deemed to have been duly given unless and
until a copy thereof has been so provided to every Leasehold Mortgagee having a
lien upon the Premises. From and after the date such notice has been given to a
Leasehold Mortgagee, such Leasehold Mortgagee shall have the same period, after
giving of such notice upon it, for remedying any default or acts or omissions
which are the subject matter of such notice or causing the same to be remedied,
as is given Developer after the giving of such notice to Developer, plus in each
instance,
21
the additional periods of time specified in subsections 4.6 and 4.7 to remedy,
commence remedying or cause to be remedied the defaults or acts or omissions
which are the subject matter of such notice specified in any such notice.
Landlord shall accept such performance by or at the instigation of such
Leasehold Mortgagee as if the same had been done by Developer. Developer
authorizes each Leasehold Mortgagee to take any such action at such Leasehold
Mortgagee's option and does hereby authorize entry upon the Premises by the
Leasehold Mortgagee for such purpose.
4.6 Notice to Leasehold Mortgagee.
-----------------------------
4.6.1 Landlord's Termination Notice. Anything contained in
-----------------------------
this Lease to the contrary notwithstanding, if any default shall occur
which entitles Landlord to terminate this Lease, Landlord shall have
no right to terminate this Lease unless, following the expiration of
the period of time given Developer to cure such default or the act or
omission which gave rise to such default, Landlord shall notify every
Leasehold Mortgagee of Landlord's intent to so terminate ("Termination
Notice") at least thirty (30) days in advance of the proposed
effective date of such termination if such default is capable of being
cured by the payment of money ("Termination Notice Period"), and at
least sixty (60) days in advance of the proposed effective date of
such termination if such default is not capable of being cured by the
payment of money (also a "Termination Notice Period"). The provisions
of subsection 4.7,
22
shall apply if, during such thirty (30) or sixty (60) day Termination Notice
Period, any Leasehold Mortgagee shall:
4.6.1.1 Notify Landlord of such Leasehold Mortgagee's desire to
nullify such notice; and
4.6.1.2 Pay or cause to be paid all Ground Rent, additional rent
and other payments then due and in arrears as specified in the Termination
Notice to such Leasehold Mortgagee and which may become due during such
thirty (30) or sixty (60) day Termination Notice Period; and
4.6.1.3 Comply or in good faith, with reasonable diligence and
continuity, commence to comply with all nonmonetary requirements of this
Lease then in default and reasonably susceptible of being complied with by
such Leasehold Mortgagee; provided however, that such Leasehold Mortgagee
shall not be required during such sixty (60) day Termination Notice Period
to cure or commence to cure any default consisting of Developer's failure to
satisfy and discharge any lien, charge or encumbrance against the
Developer's interest in this Lease or the Premises junior in priority to the
lien of the mortgage held by such Leasehold Mortgagee.
4.6.2 Proper Address of Leasehold Mortgagee. Any notice to be given by
-------------------------------------
Landlord to a Leasehold Mortgagee pursuant to any provision of this Section 4
shall be deemed properly addressed if sent to the
23
Leasehold Mortgagee who served the notice referred to in subsection 4.2.1 unless
notice of a change of Mortgage ownership has been given to Landlord pursuant to
subsection 4.2.2.
4.7 Procedure on Default.
--------------------
4.7.1 Extension of Termination Notice Period. If Landlord shall elect
--------------------------------------
to terminate this Lease by reason of any default of Developer, and a Leasehold
Mortgagee shall have proceeded in the manner provided for by subsection 4.6, the
specified date for the termination of this Lease as fixed by Landlord in its
Termination Notice shall be extended for a period of six (6) months, provided
that such Leasehold Mortgagee shall during such six (6) month period:
4.7.1.1 Payment of Monetary Obligations. Pay or cause to be paid the
-------------------------------
Ground Rent, additional rent and other monetary obligations of Developer under
this Lease as the same become due, and continue its good faith efforts to
perform all of Developer's other obligations under this Lease.
4.7.1.2 Foreclosure of Leasehold Mortgage. If not enjoined or stayed,
---------------------------------
take steps to acquire or sell Developer's interest in this Lease by foreclosure
of the Leasehold Mortgage or other appropriate means and prosecute the same to
completion with due diligence.
4.7.2 Cure of Default. If at the end of such six (6) month period
---------------
such Leasehold Mortgagee is com-
24
plying with subsections 4.7.1.1 and 4.7.1.2, this Lease shall not then
terminate, and the time for completion by Leasehold Mortgagee of its proceedings
shall continue so long as such Leasehold Mortgagee is enjoined or stayed and
thereafter for so long as such Leasehold Mortgagee proceeds to complete steps to
acquire or sell Developer's interest in this Lease by foreclosure of the
Leasehold Mortgage or by other appropriate means with reasonable diligence and
continuity. Nothing in this subsection 4.7, however, shall be construed to
extend this Lease beyond the original term thereof as extended by any options to
extend the term of this Lease properly exercised by Developer or a Leasehold
Mortgagee in accordance with subsection 2.1, nor to require a Leasehold
Mortgagee to continue such foreclosure proceedings after the default has been
cured. If the default shall be cured and the Leasehold Mortgagee shall
discontinue such foreclosure proceedings, this Lease shall continue in full
force and effect as if Developer had not defaulted under this Lease.
4.7.3 Compliance of Leasehold Mortgagee. If a Leasehold Mortgagee is
---------------------------------
complying with subsection 4.7.1 upon the acquisition of Developer's Leasehold
Estate herein by such Leasehold Mortgagee or its designee or any other purchaser
at a foreclosure sale or otherwise this Lease shall continue in full force and
effect as if Developer had not defaulted under this Lease.
//
25
4.7.4 Leasehold Mortgage Not an Assignment. For the purposes of this
------------------------------------
Section 4, the making of a Leasehold Mortgage issued by an institutional lender
shall not be deemed to constitute an assignment or transfer of this Lease or of
the Leasehold Estate hereby created, nor shall any Leasehold Mortgagee, as such,
be deemed to be an assignee or transferee of this Lease or of the Leasehold
Estate hereby created so as to require such Leasehold Mortgagee, as such, to
assume the performance of any of the terms, covenants or conditions on the part
of Developer to be performed hereunder, but the purchaser at any sale of this
Lease and of the Leasehold Estate hereby created in any proceedings for the
foreclosure of any Leasehold Mortgage, or the assignee or transferee of this
Lease and of the Leasehold Estate hereby created under any instrument of
assignment or transfer in lieu of the foreclosure of any Leasehold Mortgage
shall be deemed to be an assignee or transferee within the meaning of this
Section 4, and shall be deemed to have agreed to perform all of the terms,
covenants and conditions on the part of Developer to be performed hereunder from
and after the date of such purchase and assignment, but only for so long as such
purchaser or assignee is the owner of the Leasehold Estate. Provided, however,
that Developer shall, as to such Leasehold Mortgagee, provide to Landlord the
same information which Developer must supply pursuant to this Lease as assignee.
26
4.7.5 Obligation of Leasehold Mortgagee to Repair or Reconstruct. If
----------------------------------------------------------
the Leasehold Mortgagee or its designee shall become holder of the Leasehold
Estate, and if the buildings and improvements on the Premises shall have been or
become materially damaged on, before or after the date of such purchase and
assignment, the Leasehold Mortgagee or its designee shall be obligated to
repair, replace or reconstruct the building or other improvements only to the
extent of the net insurance proceeds received by the Leasehold Mortgagee or its
designee by reason of such damage. However, should such net insurance proceeds
be insufficient to repair, replace or reconstruct the building or other
improvements to the extent required by subsection 6.3, and should the Leasehold
Mortgagee or its designee choose not to fully reconstruct the building or other
improvements to the extent required by subsection 6.3, such failure shall
constitute an event of default under this Lease which shall entitle Landlord to
commence proceedings to terminate the Lease.
4.7.6 Leasehold Mortgagee's Right to Transfer. Any Leasehold
---------------------------------------
Mortgagee or other acquirer of the Leasehold Estate of Developer pursuant to
foreclosure, assignment in lieu of foreclosure or other proceedings may, upon
acquiring Developer's Leasehold Estate, without further consent of Landlord,
assign the Leasehold Estate one time on such terms and to such persons and
organizations as are acceptable to such Mortgagee or
27
acquirer and thereafter be relieved of all obligations under this Lease;
provided that such assignee has delivered to Landlord its written agreement to
be bound by all of the provisions of this Lease. Any further attempts by the
Leasehold Mortgagee to assign shall comply with the provisions of this Lease
relating to Assignment.
4.7.7 Leasehold Mortgagee Transfer a Permitted Sale. Notwithstanding
---------------------------------------------
any other provisions of this Lease, any sale of this Lease and of the Leasehold
Estate hereby created in any proceedings for the foreclosure of any Leasehold
Mortgage, or the assignment or transfer of this Lease and of the Leasehold
Estate hereby created in lieu of the foreclosure of any Leasehold Mortgage
shall be deemed to be a permitted sale, transfer or assignment of this Lease and
of the Leasehold Estate hereby created.
4.8 New Lease.
---------
4.8.1 Terms of New Lease. In the event of the termination of this
------------------
Lease as a result of Developer's default Landlord shall, in addition to
providing the notices of default and termination as required by subsections 4.5
and 4.6, provide each Leasehold Mortgagee with written notice that the Lease has
been terminated, together with a statement of all sums which would at that time
be due under this Lease but for such termination, and of all other defaults, if
any, then known to Landlord. Landlord agrees to enter into a new lease
28
("New Lease") of the Premises with such Leasehold Mortgagee, or its designee for
the remainder of the term of this Lease, effective as of the date of
termination, at the Ground Rent and additional rent, and upon the terms,
covenants and conditions, including all first rights of refusal and options to
renew or purchase, but excluding requirements which are not applicable or which
have already been fulfilled of this Lease, provided:
4.8.1.1 Written Request to Landlord. Such Leasehold Mortgagee
---------------------------
shall make written request upon Landlord for such New Lease within thirty
(30) days after the date such Leasehold Mortgagee receives Landlord's Notice
of Termination of this Lease given pursuant to this subsection 4.8.
4.8.1.2 Payment of Obligations. Such Leasehold Mortgagee or its
----------------------
designee shall pay or cause to be paid to Landlord at the time of execution
and delivery of such New Lease, any and all sums which would at the time of
execution and delivery thereof be due pursuant to this Lease but for such
termination and, in addition thereto, all reasonable expenses, including
reasonable attorney's fees, which Landlord shall have incurred by reason of
such termination and the execution and delivery of the New Lease and which
would not otherwise have been received by Landlord from Developer or other
party in interest under Developer. In the event of a controversy as to
29
the amount to be paid to Landlord pursuant to this subsection 4.8.1.2, the
payment obligation shall be satisfied if Landlord shall be paid the amount not
in controversy, and the Leasehold Mortgagee or its designee shall agree to pay
any additional sum ultimately determined to be due plus interest at the rate set
forth in subsection 3.1.6, and such obligation shall be adequately secured.
4.8.1.3 Remedy of Developer's Defaults. Such Leasehold Mortgagee or
------------------------------
its designee shall agree to remedy any of Developer's defaults of which said
Leasehold Mortgagee is or may be notified by Landlord's Notice of Termination
and which are reasonably susceptible of being so cured by Leasehold Mortgagee or
its designee.
4.8.1.4 New Lease to Have First Priority. Any New Lease made pursuant
--------------------------------
to this subsection 4.8 and any Subdivided Lease entered into pursuant to
subsection 7.6 and any Single Lease entered into pursuant to subsection 7.7,
shall be prior to any mortgage or other lien, charge or encumbrance on the fee
of the Premises and the Developer under such New Lease, Single Lease or
Subdivided Lease, as the case may be, shall have the same right, title and
interest in and to the Premises and the buildings and improvements thereon as
Developer had under this Lease.
30
4.8.1.5 Developer's Obligations Under New Lease. The
---------------------------------------
Developer under any such New Lease, Single Lease or Subdivided
Lease shall be liable to perform the obligations imposed on the
Developer by such New Lease, Single Lease or Subdivided Lease only
during the period such person or entity has ownership of such
Leasehold Estate.
4.9 New Lease Priorities. If more than one Leasehold Mortgagee shall
--------------------
request a New Lease pursuant to subsection 4.8.1, Landlord shall enter into such
New Lease with the Leasehold Mortgagee whose mortgage is prior in lien or with
the designee of such Leasehold Mortgagee. Landlord, without liability to
Developer or any Leasehold Mortgagee with an adverse claim, may rely upon a
mortgagee title insurance policy issued by a responsible title insurance company
doing business within the State of California as the basis for determining the
appropriate Leasehold Mortgagee who is entitled to such New Lease.
4.10 Eminent Domain. Developer's share, as provided by subsection
--------------
10.3, of the proceeds arising from an exercise of the power of Eminent Domain
shall, subject to the provisions of such subsection 10.3, be disposed of as
provided for by any Leasehold Mortgagee.
4.11 Notice of Arbitration. Landlord shall give each Leasehold
---------------------
Mortgagee prompt notice of any appraisal, arbitration or legal proceedings
between Landlord and Developer involving obligations under this Lease. Landlord
shall give the Leasehold Mortgagee notice of, and a copy of any award or
decision made in any such proceedings, which shall be binding on all Leasehold
31
Mortgagees.
4.12 Amendment to Facilitate Leasehold Financing. Landlord hereby
-------------------------------------------
agrees that if any Institutional Lender to whom Developer proposes to make a
Leasehold Mortgage on Developer's Leasehold Estate shall require as a condition
to making any loan secured by such mortgage that Landlord agree to modifications
of this Lease, then Landlord agrees that it will enter into an agreement with
Developer in recordable form making the modifications that are requested by such
lender, provided that such changes do not adversely affect any right of Landlord
under this Lease.
4.13 Security Deposit. If any Leasehold Mortgagee, its designee or
----------------
other purchaser has acquired the Leasehold Estate of Developer pursuant to
foreclosure, conveyance in lieu of foreclosure or other proceedings, or has
entered into a New Lease with Landlord in accordance with subsection 4.8, such
Leasehold Mortgagee, its designee or other purchaser shall succeed to the rights
of Developer, if any, in and to the security deposits paid by Developer to
Landlord pursuant to subsections 16.1 and 16.2. In such event, Developer shall
no longer have any rights to such security deposits, and Landlord shall hold
such security deposits for and on behalf of such Leasehold Mortgagee, its
designee or other purchaser.
4.14 Estoppel Certificate. Landlord shall at any time and from time
--------------------
to time hereafter, but not more frequently than twice in any one-year period (or
more frequently if such request is made in connection with any sale or
mortgaging of Developer's Leasehold Interest or permitted subletting by
32
Developer), within ten (10) days after written request of Developer to do so,
certify by written instrument duly executed and acknowledged to any Mortgagee or
purchaser, or proposed Mortgagee or proposed purchaser, or any other person,
firm or corporation specified in such request: (i) as to whether this Lease
has been supplemented or amended, and if so, the substance and manner of such
supplement or amendment; (ii) as to the validity and force and effect of this
Lease, in accordance with its tenor; (iii) as to the existence of any default
hereunder; (iv) as to the existence of any offsets, counter claims or defenses
hereto on the part of Developer; (v) as to the commencement and expiration
dates of the term of this Lease; and (vi) as to any other matters as may be
reasonably so requested. Any such certificate may be relied upon by Developer
and any other person, firm or corporation to whom the same may be exhibited or
delivered, and the contents of such certificate shall be binding on Landlord.
Any party requesting such estoppel certificate shall reimburse Landlord for its
costs and expenses incurred in issuing such certificate .
4.15 Notices. Notices from Landlord to the Leasehold Mortgagee shall
-------
be mailed to the address furnished Landlord pursuant to subsection 4.2 , and
those from the Leasehold Mortgagee to Landlord shall be mailed to the address
designated pursuant to the provisions of subsection 1.5.1 hereof, attention the
General Manager. Such notices, demands and requests shall be given in the manner
described in subsection 17.1 and shall in all respects be governed by the
provisions of that subsection.
4.16 Erroneous Payments. No payment made to Land-
------------------
33
lord by a Leasehold Mortgagee shall constitute agreement that such payment was,
in fact, due under the terms of this Lease; and a Leasehold Mortgagee having
made any payment to Landlord pursuant to Landlord's wrongful, improper or
mistaken notice or demand shall be entitled to the return of any such payment or
portion thereof provided such Leasehold Mortgagee shall have made demand
therefor not later than ninety (90) days after the date of its payment.
4.17 Request for Notice for Benefit of Landlord. Immediately after
------------------------------------------
recording any Leasehold Mortgage encumbering Developer's Leasehold Estate,
Developer, at Developer's expense, shall cause to be recorded in the Office of
the Recorder of Los Angeles County, California, a written request of notice
under Section 2924(b) of the California Civil Code providing that a copy of any
notice of default and a copy of any notice of sale under such Leasehold Mortgage
shall be delivered to Landlord as provided for under said Section 2924(b) of the
California Civil Code. Such request shall be executed by Landlord. Concurrently,
with Developer's forwarding such notice for recordation, Developer shall furnish
to Landlord a complete copy of the Leasehold Mortgage and the note secured
thereby, together with the name and address of the holder thereof. Said note and
mortgage are to be kept by Landlord on a confidential basis to the extent
permitted by law.
4.18 Release or Forebearance. If any such lender shall fail or
-----------------------
refuse to comply with any and all of the conditions of this section, then and
thereupon Landlord shall be released from its covenant of forebearance with such
lender herein con-
34
tained.
4.19 Notice. Landlord's obligation to observe its covenants of
------
forebearance in this section for the benefit of any lender on the security of
the Leasehold Estate, except as may be otherwise provided by law, shall be
conditioned upon there having been first delivered to the Airport Manager of the
City of Long Beach, a written notice of such encumbrance which shall state the
name and address of such lender for the purpose of enabling notices to be given
under subsection 4.2 above.
4.20 No Merger. No merger of Developer's Leasehold Estate into
---------
Landlord's fee title shall result by reason of the ownership of Landlord's or
Developer's estates by the same party or by reason of any other circumstances,
without the prior consent of any and all lenders on the security of the
Leasehold Estate.
4.21 No Payment by Landlord. Landlord shall not be required to
----------------------
execute any instrument which would obligate Landlord to the payment of any loan
or any part thereof.
4.22 Self Liquidating Mortgage. The Leasehold Mortgage shall be a
-------------------------
self liquidating mortgage, to be paid over a period not longer than elapses up
to three (3) years prior to the end of the term of this Lease, or any option
term if such option has been exercised.
4.23 Leasehold Mortgagee Need Not Cure Specified Defaults. Nothing
----------------------------------------------------
herein contained shall require any Leasehold Mortgagee or its designee as a
condition to its exercise of right hereunder to cure any default of Developer
which cannot be cured by such Leasehold Mortgagee or its designee, in order to
comply with the provisions of subsections 4.6 or 4.7 or as a condition
35
of entering into the New Lease provided for by subsection 4.8.
4.24 Casualty Loss. A Standard Mortgagee Clause naming each
-------------
Leasehold Mortgagee may be added to any and all insurance policies required to
be carried by Developer hereunder on condition that the insurance proceeds are
to be applied in the manner specified in this Lease and the Leasehold Mortgage
shall so provide, except that the Leasehold Mortgage may provide a manner for
the disposition of such proceeds, if any, otherwise payable directly to
Developer.
5. ASSIGNMENT AND SUBLETTING:
-------------------------
5.1 Prohibition Against Change in Ownership, Management and
-------------------------------------------------------
Control. The qualifications and identities of Developer are of particular
-------
concern to Landlord. It is because of those qualifications and identities that
Landlord has entered into this Lease with Developer. No voluntary or involuntary
successor in interest shall acquire any rights or powers under this Lease except
as expressly provided for in this Lease.
Except as otherwise permitted by this Section 5 and subsection
1.5.3, Developer shall not permit any significant change (voluntary or
involuntary) in the ownership, management or control of Developer to occur
unless such change is approved by Landlord, subject to the requirements of this
section and reasonable conditions imposed by Landlord.
Except as otherwise permitted by this Section 5 and subsection
1.5.3, Developer may not assign this Lease or any interest herein without first
obtaining the written consent of Landlord, pursuant to subsection 5.4 of this
Lease. Any assignee
36
shall assume and agree to perform the obligations of Developer under this Lease.
Promptly following any permitted assignment, Developer shall deliver to Landlord
a copy of such assignment, together with a statement setting forth the following
information:
5.1.1 Name and Address for Notices. The name and address of
----------------------------
the assignee for the purpose of enabling notices to be given.
5.1.2 Type of Entity. Whether the assignee is an
--------------
individual, a corporation, a partnership or a joint venture, and if
such assignee is a corporation, the names of such corporation's
principal officers and of its directors and State of incorporation,
and if such assignee is a partnership or joint venture, the names and
addresses of the general partners of such partnership or venture.
5.1.3 Other Transfers. In the event that Developer is a
---------------
partnership, joint venture or corporation, any assignment of twenty-
five percent (25%) or more of the partnership or joint venture
interest or outstanding capital stock of such an entity shall
constitute an assignment by Developer of this Lease for the purposes
of this Section 5 and shall not be permitted to occur without first
obtaining the written consent of Landlord, which consent shall not
unreasonably be withheld, delayed or conditioned.
5.1.4 Buildings or Land. In addition to all other
-----------------
assignments, which must be approved in advance by Landlord, any
assignment of 50,000 square feet of land
37
or office space must be approved in advance by Landlord.
5.2 Assignments Not Subject to Approval. The provisions of this
-----------------------------------
Section 5 shall not be applicable to the following types of assignments and
transfers, which shall be permitted without the prior consent of Landlord.
5.2.1 Death or Incapacity. Assignments resulting from the
-------------------
death or mental or physical incapacity of an individual, provided,
however, that any person replacing an individual who departs because
of physical or mental disability shall have education and experience
comparable to that of the person replaced.
5.2.2 Family Transfer. A transfer or assignment for the
---------------
benefit of a spouse, children, grandchildren or other family members.
5.2.3 Affiliated Corporation. A transfer to an
----------------------
"Affiliated Corporation" as hereinafter defined. An "Affiliated
Corporation" shall be (i) any corporation which owns fifty-one percent
(51%) or more of the outstanding capital stock of the assigning
corporation; or (ii) any corporation, fifty-one percent (51%) or more
of the outstanding capital stock of which is owned by the assigning
corporation; or (iii) any corporation, fifty-one percent (51%) or more
of the outstanding capital stock of which is owned by a shareholder or
group of shareholders who also owns at least fifty-one percent (51%)
of the outstanding capital stock of the assigning corporation.
5.2.4 IRS Transfer. A transfer of stock
------------
38
resulting from or in connection with a reorganization as contemplated
by the provisions of the Internal Revenue Code of 1954, as amended, or
otherwise, in which the ownership interests of a corporation are
assigned directly or by operation of law to a person or persons, firm
or corporation which acquires the control of the voting capital stock
of such corporation or all or substantially all of the assets of such
corporation.
5.2.5 Public Entity. A transfer of stock in a publicly held
-------------
corporation or of the beneficial interest in any publicly held
partnership or real estate investment trust.
5.2.6 Partner. A transfer by a limited partner or joint
-------
venturer to a partnership or joint venture in which the assignor is a
partner or venturer.
5.2.7 Comprising Entity. A transfer or assignment from one
-----------------
partner or joint venturer comprising Developer to another; or if
Developer is a corporation, from one shareholder to another.
5.3 Assignment Invalid. Any transfer or assignment to which
------------------
Landlord's consent is required by subsection 5.1 shall be void and shall confer
no right to occupancy upon the assignee unless and until such consent of
Landlord is obtained. Such approval may be conditioned or refused in response
to the matters specified herein.
5.4 Approval of Assignments. Landlord agrees that it shall
-----------------------
consent to an assignment to a subtenant and to an
39
which, at the time of such assignment, is of such financial standing and
responsibility as to give reasonable assurance that the payment of all Ground
Rent and other amounts reserved in this Lease will be made in compliance with
all the terms, covenants, provisions and conditions of this Lease. In
requesting an approval by Landlord of assignment pursuant to subsection 5.1,
Developer shall provide the following information to Landlord with respect to
proposed assignments of 50,000 square feet of rentable building area or land
area, or more, of sublease space, with respect to any Ground Sublease and with
respect to assignments of a parcel or an interest in this Ground Lease.
5.4.1 Name. Name and address of the assignee.
----
5.4.2 Description. Description of the Premises to be
-----------
assigned.
5.4.3 Nature of Business. The nature of the business
------------------
conducted by assignee on the Premises to be assigned.
5.4.4 Financial Information. Financial strength of the
---------------------
subtenant or assignee (if the subtenant is a publicly held company, a
copy of its most recent annual report; if the subtenant or assignee
will not disclose financial information, a report from recognized
credit rating agency, such as Dun & Bradstreet).
5.4.5 Officers. The identity, background and experience of
--------
all officers and directors of assignee, at executive vice president
level and above and senior operational officer relating to the
Premises, if a corporation or general partners of a partnership or
40
sole proprietor of a proprietorship (Principals).
5.4.6 Additional Information. To the extent known by Developer, the
----------------------
following information:
5.4.6.1 Criminal record of the subtenant, assignee or any of the
Principals.
5.4.6.2 Nature and extent of litigation to which the subtenant,
assignee or any Principal is a party.
5.4.6.3 Any course of conduct which a prudent person would deem
materially detrimental to the Project or to the intended use of the Premises
by the subtenant or assignee.
5.4.7 Informational Purposes. For informational purposes only:
----------------------
5.4.7.1 Number of anticipated employees of the assignee.
5.4.7.2 At the time of submission of the request, the terms and
conditions of the assignment.
5.4.7.3 With respect to all assignments a copy thereof after
execution by all parties thereto.
5.4.8 Confidentiality. If requested by Developer at the time of
---------------
submission of the information described above, Landlord shall keep such
information and the identity of the proposed sublessee or assignee confidential
and Landlord shall execute a confidentiality statement so providing to the
extent Landlord is
41
permitted by law to do so.
5.4.9 Disapproval by Landlord. Landlord reserves the right
-----------------------
to reject any proposed assignee where the matters specified in 5.4.3,
5.4.4, 5.4.5 or 5.4.6 above indicate that the presence of assignee
would not be in the public interest or would adversely affect the
financial viability of the Project. Landlord shall either approve or
disapprove any proposed assignee within fifteen (15) days after
receipt by Landlord of a request to do so. Failure of Landlord to act
within said fifteen (15) days shall constitute approval. If Landlord
does not approve any proposed assignee, Landlord shall state in
writing the reasons for such disapproval. Developer shall have the
right to challenge the validity of such disapproval. No damages shall
be payable to Developer in any action arising from such disapproval
unless Landlord shall have acted unreasonably or in bad faith or with
actual malice.
5.5 No Release. Notwithstanding any assignment by Developer permitted
----------
by subsection 5.1 with Landlord's consent, and notwithstanding any assignment by
a partner or joint venturer of Developer permitted by subsection 5.1.3 with
Landlord's consent or made without Landlord's consent pursuant to subsection
5.2, the assigning party shall remain fully liable for the performance of all of
the covenants to be performed by Developer under this Lease prior to the
effective date of such assignment or the "Completion Date", as defined below,
whichever last occurs, but shall be released from liability with respect to the
performance
42
of such covenants to be performed after the last to occur of such dates,
Landlord's approval of or consent to any such assignment or transfer shall not
be a waiver of any right to object to further or future assignments, and
Landlord's consent to each such successive assignment must be first obtained in
writing from Landlord unless otherwise permitted by this Lease without
Landlord's prior consent. The term "Completion Date", as used herein, shall
mean the date that Developer completes the construction of the initial building
described in subsection 7.2 and a certificate of occupancy with respect to such
building has been obtained.
5.6 Unauthorized Change. This Lease may be terminated by the Landlord
-------------------
if there is any significant change (voluntary or involuntary) other than those
authorized in Section 5 or subsection 1.5.3 hereof, or not requiring Landlord's
approval of ownership, management or control of the Developer prior to the
completion of the development of the site, unless such changes have been
approved by the Landlord.
5.7 Subletting. Developer shall be entitled, with the prior written
----------
consent of Landlord, to sublet the whole or any portion of the Premises or the
improvements constructed thereon by or under Developer and, without limiting the
foregoing, may establish a leasehold condominium regime on the Premises, or
portions thereof, in accordance with the provisions of California law, including
California Civil Code Sections 783 and 1350-1360. Developer shall, at all times,
remain liable for the performance of all of the covenants on its part to be so
performed, notwithstanding any subletting. Each sublease shall be subject and
43
subordinate not only to this Lease, but also to any New Lease made by Landlord
as provided in Section 4.8 above. If the term of this Lease shall end while any
such sublease is in effect, Landlord may, at its option, for a period of ninety
(90) days thereafter, either terminate the said sublease or succeed to all of
the rights of Developer thereunder. Where any sublease which is consistent with
this Lease is approved, Landlord may grant to the subtenant, under such an
approved sublease entered into in good faith and for reasonable consideration, a
right of quiet enjoyment in recordable from (a "nondisturbance agreement")
during the term of the sublease, notwithstanding the expiration, termination or
cancellation of this Lease; provided that (i) the term of the sublease, plus
extension or renewal options, does not extend beyond the term of this Lease,
plus extension options; (ii) such subtenant agrees that in the event this Lease
expires, terminates or is canceled during the term of the sublease, the sublease
shall be deemed a direct lease between Landlord and such subtenant and the
subtenant shall attorn to Landlord. In the event that Landlord objects to any
proposed nondisturbance agreement or sublease, Landlord agrees to notify
Developer in writing of such objection and of its reasons for such objection
within twenty (20) days of its receipt of the proposed nondisturbance agreement
and sublease. Subject to the foregoing provisions of this subsection 5.7,
Landlord hereby approves generally of the form of nondisturbance agreement
attached hereto as Exhibit "E". Any approvals or grants of quiet enjoyment given
or made by Landlord pursuant to this subsection 5.7 shall be binding upon
Landlord, its successors or assigns, including without limitation any
44
person or entity succeeding to the interest of Landlord by way of judicial
foreclosure or trustee sale proceedings pursuant to any mortgage or deed of
trust, the lien or charge of which is subject and subordinate to this Lease.
Any sublease, with respect to which Landlord agrees to execute a
nondisturbance agreement pursuant to this subsection 5.7, may be a sublease
pursuant to which the subtenant is responsible for the construction of the
building improvements upon the subleased premises (a "Ground Sublease" herein).
Any Ground Sublease may contain a hypothecation provision similar to Section 4
of this Lease for the benefit of the holder of any mortgage or deed of trust
constituting a lien on the subleasehold estate created by virtue of the Ground
Sublease. Any nondisturbance agreement executed and delivered by Landlord for
the benefit of the sublessee under a Ground Sublease shall specifically recite
that it is for the benefit of any such holder of a deed of trust or mortgage
constituting a lien on the subleasehold estate created by such Ground Sublease;
that the term "sublease" as used in the nondisturbance agreement shall be deemed
to include any new sublease executed and delivered to any such holder of a first
deed of trust or first mortgage following a termination of the sublease pursuant
to a provision in the sublease similar to subsection 4.8 of this Lease, and
that the term "sublessee" under the nondisturbance agreement shall be deemed to
include any encumbrance or other party succeeding to the sublessee under the
Ground Sublease by virtue of judicial or private power of sale foreclosure
proceedings or by delivery of an assignment in lieu of foreclosure, or
otherwise. Where Landlord agrees to execute
45
a nondisturbance agreement for the benefit of the sublessee under any Ground
Sublease, such agreement shall be subject to the obligations of the sublessee
thereunder being no less than the obligations of the Developer hereunder with
respect to the subleased premises.
5.7.x. Xxxxx Subleases. Consent of Landlord shall not be
---------------
required to a sublease of any unit of space smaller than 50,000
square feet, not including parking areas; however, notice of any such
sublease shall be sent to Landlord's Airport Manager within ten (10)
days of the execution of the sublease.
5.7.2 Consent to Sublease. Prior to review of any proposed
-------------------
sublease, the following information and assurances shall be provided
to Landlord as part of the request for consent to proposed subleases
of 50,000 square feet of rentable building area, or more, of sublease
space, with respect to any Ground Sublease:
5.7.2.1 Description. Description of the sublease
-----------
Premises.
5.7.2.2 Name. The name and address of the sublessee
----
for the purpose of enabling notices to be given under subsection
17.1 hereof.
5.7.2.3 Nature of Business. The nature of the business
------------------
conducted on the sublease Premises.
5.7.2.4 Financial Information. Financial strength of
---------------------
the subtenant or assignee (if the subtenant is a publicly held
company, a copy of its most recent annual report; if the subtenant
or
46
assignee will not disclose financial information, a report from a recognized
credit rating agency, such as Dun & Bradstreet).
5.7.2.5 Officers. The identity, background and experience of all
--------
officers and directors of sublessee, at executive vice president level and above
and senior operational officer relating to the Premises, if sublessee is a
corporation, general partners of a partnership or sole proprietor of a
proprietorship (Principals).
5.7.2.6 Additional Information. To the extent known by Developer,
----------------------
the following information:
5.7.2.6.1 Criminal record of the subtenant, assignee or any of the
Principals.
5.7.2.6.2 Nature and extent of litigation to which the subtenant,
assignee or any Principal is a party.
5.7.2.6.3 Any course of conduct which a prudent person would deem
materially detrimental to the Project or to the intended use of the
Premises by the subtenant or assignee.
5.7.2.7 Informational Purposes. For informational purposes only:
----------------------
5.7.2.7.1 Number of anticipated employees of the subtenant or
assignee.
5.7.2.7.2 At the time of submission of the request, the terms and
conditions of the
47
sublease or assignment.
5.7.2.7.3 With respect to all subleases and assignments a copy
thereof after execution by all parties thereto.
5.7.2.7.4 Any proposed nondisturbance or attornment agreements.
5.7.3 Confidentiality. If requested by Developer at the time of
---------------
submission of the information described above, Landlord shall keep such
information and the identity of the proposed subleases or assignee
confidential and Landlord shall execute a confidentiality statement so
providing, to the extent Landlord is permitted by law to do so.
5.7.4 Disapproval by Landlord. Landlord reserves the right to reject
-----------------------
any proposed sublessee where the matters specified in 5.7.2.3, 5.7.2.4,
5.7.2.5 or 5.7.2.6 above indicate that the presence of sublessee would not
be in the public interest or would adversely affect the financial viability
of the Project. Landlord shall either approve or disapprove any proposed
sublessee within fifteen (15) days after receipt by Landlord of a request
to do so. Failure of Landlord to act within said fifteen (15) days shall
constitute approval. If Landlord does not approve any proposed sublessee,
it shall state in writing the reasons for such disapproval. Developer shall
have the right to contest such disapproval. No damages shall be payable to
Developer in any action challenging such disapproval
48
unless Landlord shall have acted unreasonably, in bad faith or with
actual malice.
5.8 Sale of Buildings. Developer shall have the right to sell
-----------------
buildings constructed pursuant to the terms of this Lease, provided, however,
that such buildings shall be and remain subject to the terms and conditions of
this Lease. No sale of such buildings shall be valid unless this requirement is
expressly included in the deed as a covenant running with the land.
6. INDEMNITY, INSURANCE, CASUALTY DAMAGE:
-------------------------------------
6.1 Indemnification and Hold Harmless. Developer expressly
---------------------------------
agrees to defend, protect, indemnify and hold harmless the Landlord, its
officers, agents and employees free and harmless from and against any and all
claims, demands, damages, expenses, losses or liability of any kind or nature
whatsoever which Landlord, its officers, agents or employees may sustain or
incur or which may be imposed upon them or any of them for injury to or death of
persons or damage to property arising out of or resulting from the alleged acts
or omissions of Developer, its officers, agents or employees or in any manner
connected with this Lease or with the occupancy, use or misuse of the Premises
by Developer, its officers, agents, employees, subtenants, licensees, patrons or
visitors. Developer also agrees to defend at its own cost, expense and risk all
claims or legal actions that may be instituted against Developer or Landlord
with respect to the Premises, and the design and construction of off-site
improvements except traffic signals, and Developer agrees to pay settlements and
to satisfy any judgment that may be rendered against
49
either Developer or Landlord as a result of any injuries or damages which are
alleged to have resulted from or be connected with this Lease or the occupancy
or use of the Premises by Developer or its officers, agents, employees,
subtenants, licensees, patrons or visitors. Nothing herein shall be deemed to
require Developer to indemnify Landlord for liability determined by a court of
law to have arisen from negligence of Landlord, provided, however, that as
between the parties to this Lease, in any matter in which the doctrine of joint
and several liability applies, Landlord shall not be required to pay any larger
share of such judgment than its actual contribution as determined by the Court.
6.2 Insurance.
---------
6.2.1 Liability Insurance. At all times during the term of
-------------------
this Lease, Developer shall obtain and maintain or cause to be
obtained and maintained bodily injury and property damage insurance by
a combined single limit policy in an amount of at least Ten Million
Dollars and No/100 ($10,000,000.00) naming the Landlord and its
officers, agents and employees as co-insureds with Developer and
others designated by Developer. Developer shall also maintain
workers' compensation insurance in the amount required by statute.
Prior to entry upon the Premises, and upon each insurance
renewal, Developer shall deliver the policies of insurance required by
this subsection 6.2, or certified photostatic copies thereof, to the
City of Long Beach Airport Manager for approval as to sufficiency and
for approval as to form by the City Attorney.
50
When said policies of insurance have been so approved, Developer shall
substitute a certificate of insurance issued by the insurance company
or companies issuing such policies certifying that said insurance
coverage is in full force and effect and upon the filing of said
certificate, the policies will be returned by Landlord to Developer,
if Developer has deposited the original policies with Landlord. Said
liability and property damage insurance policy shall contain a
provision or endorsement substantially as follows:
"The inclusion hereof of any person or entity as an insured shall
not affect any right such person or entity would have as a claimant
hereunder if not so included. This insurance shall be primary and
not contributing with any other insurance maintained by Landlord."
Nothwithstanding any other provision to the contrary contained
in this Lease, Developer shall not have the right to enter upon the
Premises for any purpose whatsoever until such certificate has been
filed with Landlord.
6.2.2 Fire and Extended Coverage. Developer shall, at no cost
--------------------------
or expense to Landlord, keep insured for the benefit of Developer and
Landlord, and such other parties, having an insurable interest, as
Developer may designate, the improvements constructed by or under
Developer upon the Premises against loss or damage by fire and
lightning and risks customarily covered by
51
extended coverage endorsement, in amounts not less than one hundred
percent (100%) of the actual replacement cost of said improvements,
except that Developer, at Developer's option may exclude the cost of
excavations, foundations and footings. Landlord shall be named as an
insured under any such policy. Such fire and extended coverage's shall
also be required to be furnished by Developer during the construction
of improvements on the Premises as contemplated by Section 7 below.
Any loss payable under such insurance shall be payable to Developer,
Landlord and such other parties having an insurable interest in the
property as Developer may designate and may be endorsed with a
standard mortgagee's loss payable endorsement in favor of the holder
of any Leasehold Mortgagee holding a Leasehold Mortgage. Landlord will
release the entire sum of the proceeds to Developer or to a lender for
purposes of reconstruction, replacement or repair of any damaged
improvement. The proceeds of such insurance shall be paid to Developer
to the extent the amount of the recovery is for damages to interior,
non-structural or subtenant improvements, equipment, fixtures,
personal property or for rental value insurance to the extent such
recoveries are separate identifiable items. If Developer shall within
five (5) years after such damage or destruction commence construction
of the damaged or destroyed building, or a new building in accordance
with Section 7 hereof, the proceeds of any insurance
52
payable by reason of such damage or destruction shall be paid to
Developer. If Developer shall fail to commence such construction
within such five (5) year period Landlord reserves the right to
receive such portion of the insurance proceeds so that Landlord may,
if appropriate, carry out such reconstruction of the destroyed
building, with all excess amounts to Developer. If at any time during
the last five (5) years of the term of the Lease whether the original
term or any extension thereof, a building then on the Premises shall
be so damaged by fire or other casualty that the cost of restoration
shall exceed fifty percent (50%) of the replacement value thereof,
exclusive of foundations, immediately prior to such damage, either
party hereto may, within sixty (60) days of such damage, give notice
of its election to terminate this Lease with respect to the parcel
upon which the building is located and, subject to further provisions
of this subsection this Lease shall cease and come to an end on the
date of the expiration of ten (10) days from the delivery of such
notice with the same force and effect as if such date were the date
herein fixed for the expiration of the term hereof, and the Ground
Rent shall be apportioned and paid to the date of such termination. In
such event Developer shall remove all debris and level the land, and
Developer shall have no obligation to repair or rebuild or restore.
The insurance proceeds shall then be divided as follows:
53
If five (5) years remain before the end of the Lease or any
extension thereof, Developer shall receive seventy-five percent (75%)
of the proceeds, and Landlord shall receive twenty-five percent (25%);
if four (4) years remain before the end of the Lease, Developer shall
receive fifty percent (50%) of the proceeds, and Landlord shall
receive fifty percent (50%); if three (3) years remain before the end
of the Lease, Developer shall receive twenty-five percent (25%) of
the proceeds, and Landlord shall receive seventy-five percent (75%);
if two (2) years remain before the end of the Lease, Developer shall
receive ten percent (10%) of the proceeds, and Landlord shall receive
ninety percent (90%); if one (1) year remains before the end of the
Lease, Landlord shall receive the entire proceeds.
6.2.3 Aviation Facilities. Insurance for any aviation
-------------------
facility developed pursuant to this Lease shall include all of the
types and amounts specified herein to the extent such coverages are
applicable to operations performed. Depending upon the nature of the
physical improvements made upon and the use of the Premises, aviation
insurance coverages shall be maintained, to the extent such coverages
are applicable, as follows: Hangar Liability, Hangar Keeper's Legal
Liability; Airport Legal Liability, Hangar Material Damage Coverage.
To the extent any of the above liability coverages are required, said
policies shall be maintained with a combined single limit in the
amount
54
of at least Ten Million and No/100 Dollars ($10,000,000.00).
6.2.4 Miscellaneous. The insurance policies to be secured by
-------------
Developer pursuant to this subsection 6.2 shall be obtained from
insurers having a rating in Best's Insurance Guide of A-10, or better
(or a comparable rating in any similar Guide, if Best's Guide is no
longer published or if Best's rating system changes), and shall
require that the insurer give Landlord notice of any modification,
termination or cancellation of any policy of insurance no less than
thirty (30) days prior to the effective date of such modification,
termination or cancellation. In addition, Developer shall notify
Landlord of any modification, termination or cancellation of any
policy of insurance secured by Developer pursuant to this subsection
6.2 as soon as Developer learns of any such modification, termination
or cancellation. The policy of public liability and property damage
insurance to be obtained under subsection 6.2.1 above shall stipulate
that said policy provides primary coverage and is not subordinate to
nor contributing with any other insurance coverage held or maintained
by Landlord. The procuring of any such policy of insurance shall not
be construed to be a limitation upon Developer's liability or its full
performance on Developer's part of the indemnification and hold
harmless provisions of this Lease; and Developer understands and
agrees that notwithstanding any
55
such policy of insurance, Developer's obligation to protect, indemnify and hold
harmless Landlord under this Lease is for the full and total amount of any
damage, injuries, loss, expense, costs or liabilities caused by or in any manner
connected with or attributed to the acts or omission of Developer, its
officers, agents, employees, licensees, patrons or visitors, or the operations
conducted by Developer, or Developer's use or misuse of the Premises, except
to the extent resulting from the negligent or willful acts of Landlord or any
such indemnitee.
6.2.5 Blanket Policies. Nothing contained in this section
----------------
shall prevent Developer from requiring its subtenants, or any of them,
or any other third party, to provide the insurance required by this
Section 6, nor prevent Developer, or any of its subtenants, or any
such third party from taking out insurance of the kind provided for
under this section under a blanket insurance policy or policies which
cover other personal and real property owned or operated by Developer
or any subtenant provided that the protection afforded Landlord and
Developer under any policy of blanket insurance hereunder shall be no
less than that which would have been afforded under a separate policy
or policies relating only to the Premises.
6.2.6 Self-Insurance. If a subtenant is self-insured as a
--------------
matter of such subtenant's usual and customary business policy and
such self-insurance is
56
accepted by institutional lenders, Developer may request Landlord to
waive the insurance requirement and to consent and permit such
subtenant to self-insure. Such request shall be accompanied by
information deemed necessary by Landlord to review the request.
Consent to self-insure shall not be unreasonably withheld if the
conditions specified in this section have been met.
6.2.7 Insurance Adjustments. The amounts of insurance
---------------------
specified in subsections 6.2.1 and 6.2.3 may be adjusted in the year
2000 and not more often then every third year thereafter for the
duration of the Lease to take into account circumstances at the time
of such adjustments.
6.3 Damage or Destruction.
---------------------
6.3.1 Restoration of Premises. If any building or
-----------------------
improvement on the Premises is totally or partially destroyed or
damaged as a result of any casualty, Developer shall promptly repair,
replace or rebuild such building or other improvement at least to the
extent of its value immediately prior to such occurrence, subject,
however, to delays resulting from force majeure, the cancellation of
existing leases due to such casualty, settling with insurers and/or
negotiating new financing if necessary. If less than twenty (20) years
remain of the term of this Lease or any extension thereof, Developer
may remove all damaged or destroyed improvements and place the
portions of the Premises from which improvements are removed in a
clean
57
and level condition following which all insurance proceeds
attributable to such destruction or damage shall be the property of
Developer. After the commencement of such repair, replacement or
rebuilding, Developer shall continue such work with reasonable
diligence until completion. Developer may cause any such work to be
performed by or under its subtenants. In no event shall Landlord be
liable to Developer for any damages resulting to Developer from the
happening of any such fire or other casualty or from the repair or
reconstruction of the Premises or from the termination of this Lease
as provided in subsection 6.3.2 below.
6.3.2 Right to Terminate. Notwithstanding the provisions of
------------------
subsection 6.3.1 above, if the buildings and improvements on the
Premises shall be damaged or destroyed as a result of a hazard against
which Developer is not required to carry insurance to an extent in
excess of fifty percent (50%), or more, of their then insurable value,
or if such damage or destruction shall occur during the last ten (10)
years of the term of this Lease or during the last ten (10) years of
any extended term of this Lease, then Developer shall have the right
to elect not to repair, replace or rebuild such casualty damage and to
cancel this Lease by giving written notice thereof to Landlord within
three hundred sixty-five (365) days after the date of any such damage
or destruction. Upon such termination, it will be the obligation of
Developer to
58
remove all damaged or destroyed improvements and to place the portions
of the Premises from which improvements are removed in a clean and
level condition.
6.3.3. No Reduction in Rent. In case of destruction, there
--------------------
shall be no abatement or reduction of rent.
7. DEVELOPMENT OF THE PROJECT:
--------------------------
7.1 Scope of Development. The Project will be a aviation oriented
--------------------
business, office, research and development and industrial park. It is agreed by
the parties that the Project will be built to include when fully developed, at
least 665,500 square feet of building area in one (1) or more buildings per
parcel, no one of which shall exceed the height limits established by Federal
Aviation Regulations (FAR). However, it is recognized that the scope of
development may be changed, enlarged or redistributed to meet a subtenant's or
user's needs or changed conditions. The facade treatment, landscaping and
character of the development will be substantially as proposed in the Long Beach
Airport Center submittal of December 7, 1983, as supplemented by a spiral bound
document entitled "Supplement to Xxxxxx Industries' December 7, 1983, Proposal",
and included therein is a transmittal letter from Xxxxxx Industries to the City
of Long Beach, dated January 12, 1984, ("Developer's Long Beach Airport Center
Submittal") on file in the offices of Landlord's Director of Community
Development, or the equivalent of the submitted proposal if approved by Landlord
pursuant to subsection 7.3 hereof.
Pursuant to the provisions of Section 7.1 of the All-
59
Inclusive Lease, three (3) acres within the entire Project must be made
available for aircraft use if a reasonable demand for same is expressed by the
subtenants of the site. The three (3) acre allocation need not be restricted to
any designated section of the Project and can change in configuration and
location depending on the needs of the remainder of the parcel and changes in
subtenant requirements. Also pursuant to the provisions of Section 7.1 of the
All-Inclusive Lease, the three (3) acres at any time designated for aircraft use
may be used for other purposes consistent with the Lease and the PD-2 zoning,
such as motor vehicle parking and trucking, as approved by Landlord's Airport
Manager, prior to any actual demand from tenants of the site for aircraft
storage. The precise amount up to three (3) acres, configuration and location
of improvements shall be based on and consistent with the PD-2 zoning ordinance
to be adopted, and any amendment or replacement thereof.
7.2 Developer's Obligation to Develop Premises. Developer has
------------------------------------------
completed the construction of improvements upon both Parcel 1 and Parcel 2 of
the Premises, consisting of a 128,981 square foot 3-story building on Parcel 1,
and a 98,243 square foot 2-story building on Parcel 2, as a part of the
development contemplated in the Basic Concept Documents or its alternative as
approved by Landlord pursuant to subsection 7.3.7.
7.2.1 Best Efforts to Sublease. Developer shall at all
------------------------
times use its best efforts to expedite to the fullest extent
consistent with the exercise of sound business the making and entering
into of subleases with subtenants upon terms and conditions
60
satisfactory to subtenants and not inconsistent with any of the
requirements of this Lease.
7.3 Architectural Approval.
----------------------
7.3.1 Restriction. The buildings or other improvements,
-----------
including without limitation, grading, street, landscaping and parking
area improvements have been constructed and shall be maintained upon
the Premises in conformance with and consistent with the zoning for
the site, building code requirements and other adopted construction
standards for public improvements of the City of Long Beach and the
scope of the Project, as defined in subsection 7.1 above, and were
approved by Landlord as provided in subsection 7.3.7 below.
7.3.2 Basic Concept Documents. Landlord has heretofore
-----------------------
approved certain documents, including a site development plan, which
documents are more particularly described in subsection 7.1. Said
documents, as the same may from time to time be modified and/or
supplemented with the approval of Landlord pursuant to subsection
7.3.7 below are herein referred to as the "Basic Concept Documents".
To the extent that said documents refer to land included in the
Adjacent Properties shown on Exhibit "B", additional approval is
required as provided in subsection 1.4.1.
7.3.3 Landscaping. Prior to the construction of any
-----------
landscaping upon the Premises, Developer shall prepare and submit to
Landlord for Landlord's approval
61
pursuant to subsection 7.3.7 below preliminary landscape plans for
such work. Following Landlord's approval of Developer's preliminary
landscape plans for such work and prior to the commencement of such
work, Developer shall prepare and submit to Landlord for Landlord's
approval pursuant to subsection 7.3.7 below final landscape plans for
such work. Said landscape plans need not include landscaping between
building walls and adjacent curbs and/or parking areas, it being
understood that preliminary and final plans for such landscaping may
be submitted separately by Developer to Landlord for Landlord's
approval under subsection 7.3.7 below when the requirements of
building occupants have been ascertained. Said landscape plans shall
be consistent with the Basic Concept Documents and/or modifications or
amendments thereto from time to time approved by Landlord. The
existing landscaping now installed and the landscaping plans, if any,
itemized on the attached Exhibit "G" have been approved in concept by
Landlord for purposes of this Lease and for no other purposes. In
general, Developer shall be permitted freedom of selection of
landscaping plants, trees and other materials consistent with the
Basic Concept Documents and the provisions of subsection 3.6.
7.3.4 Exterior Elevations. Prior to the construction of any
-------------------
building improvements upon the Premise, Developer shall prepare and
submit to Landlord for Landlord's approval pursuant to subsection
7.3.7 below
62
exterior elevations for such building improvements. Such exterior
elevations need not include exterior building signs. The existing
improvements now constructed have been approved and the exterior
elevations, if any, itemized on the attached Exhibit "H" have been
approved in concept by Landlord for purposes of this Lease and for no
other purposes.
7.3.5 Security and Security Plans. Prior to taking
---------------------------
possession of the Premises, Developer shall submit to the Landlord for
approval a site security plan, both for the construction period and
for the Project as partially and fully developed which shall comply
with applicable Federal Aviation Regulations and the requirements of
the Airport Manager. During construction, Developer shall maintain in
place at all times a site security fence. Developer shall comply with
FAR Part 107 regarding Airport security and FAR Part 77 regarding
height limitations. It is particularly important that Developer notify
the Airport Manager and such other persons as he may direct twenty-
four (24) hours in advance of erecting cranes on the Premises for any
purpose. Developer complied with the provisions of this subsection
7.3.5 at the time of construction of the existing improvements.
Developer shall pay any fine or penalty imposed on Landlord as a
result of security violations on the Premises. Developer shall have
the right to contest such fine or penalty.
7.3.6 Amendments. Developer may from time to
----------
63
time submit to Landlord for Landlord's approval pursuant to subsection
7.3.7 below modifications and/or amendments to any of the items
described in subsections 7.3.3 through 7.3.5 above theretofore
approved by Landlord.
7.3.7 Landlord Approval. Developer shall submit all plans
-----------------
required by subsections 7.3 and 3.7 to Landlord, attention Director of
Community Development, who shall coordinate the review and approval of
such plans with the Airport Manager. Landlord shall either approve or
disapprove of any item submitted for approval to Landlord by Developer
pursuant to subsections 7.7.3 through 7.3.6 above and subsection 3.7
within fifteen (15) days of Landlord's receipt thereof by giving
written notice of such approval or disapproval to Developer. Any such
disapproval shall state in writing the reasons for disapproval.
Failure by Landlord to expressly so disapprove of any such item within
such fifteen (15) day period, shall constitute Landlord's approval of
such item.
The criteria to be used by Landlord in approving or
disapproving any such item shall be (i) compliance with the Basic
Concept Documents and PD-2 zoning, (ii) exterior aesthetics, (iii)
consistency with prior improvement on the Premises, (iv) relationship
of improvements to adjacent land, including public rights-of-way, (v)
the general function of the spaces within the Project between building
areas and adjacent public
64
rights-of-way, consistent with overall project design. In general,
Developer shall be permitted freedom of design of all exteriors.
In the event Landlord disapproves of any such item, Developer
may cause such item to be appropriately revised and resubmit the same
to Landlord for approval pursuant to this subsection 7.3.7. Landlord
and Developer agree to cooperate reasonably each with the other in
resolving any objections of the other to such item and/or requested
modifications by the other party.
The provisions of this section with respect to notice, time for
and method of approval shall apply to any such revised item
resubmitted to Landlord for approval. Upon the approval of any such
item, Landlord shall execute and return a copy of such item to
Developer marked approved by Landlord with the date of such approval.
Any item to be approved or disapproved by Landlord shall be
deemed to have been submitted to and received by Landlord on the date
such item is delivered to or received at the office of the Director of
Community Development of Landlord.
7.3.8 Communication and Consultation. Landlord and
------------------------------
Developer agree to communicate and consult informally as frequently as
is necessary to insure that the formal submittal of any item pursuant
to this section can receive prompt and speedy consideration. In
addition, during the period that Developer is preparing
65
drawings and specifications for buildings and other improvements to
the Premises, Landlord agrees, upon request of Developer, to schedule
and hold regular progress meetings in order to coordinate the
compliance of such drawings and specifications with the construction
requirements of this Lease.
7.3.9 Requirements of Institutional Lender or Major Occupant.
------------------------------------------------------
If any revisions or corrections of drawings and specifications,
landscape and grading plans and/or site plans consistent with the
items heretofore approved by Landlord or approved by Landlord pursuant
to this section are required by any institutional lender providing or
proposing to provide financing to Developer or major occupant or
proposed major occupant for a building, Developer and Landlord shall
cooperate with each other in efforts to obtain the waiver of such
requirements or to develop a mutually acceptable alternative. A major
occupant shall be deemed a person or entity occupying or proposed to
occupy all of a freestanding building or in excess of 50,000 square
feet of building floor area upon initial occupancy. If no such waiver
is obtained and no such alternative is developed, Landlord shall amend
the items so approved by Landlord pursuant to this section as may
reasonably be required for consistency with such revisions or
corrections. Any amendment of items approved by the Landlord does not
constitute a waiver of other legal, governmental approvals.
66
7.3.10 Interior Improvements. During the term
---------------------
hereof, Developer shall have the right to make, at no expense to Landlord,
interior improvements to any building; and thereafter to make changes,
alterations, further improvements and additions in and to the interior of any
building as Developer may desire, subject to all applicable codes, ordinances
and statutes.
7.3.11 Modification of Plans. Developer may make changes and
---------------------
modifications to plans and specifications for buildings which are not material
or to resolve an inconsistency or ambiguity without obtaining Landlord's prior
approval. Landlord agrees that Developer may cause the plans for any building
to be modified to the extent required to adapt the same to soil or other
conditions found on the Premises and to the extent modification thereof is
required by any governmental agencies or authorities having jurisdiction to
approve such plans, all without resubmitting the same to Landlord for Landlord's
reapproval.
7.4 Performance and Payment Bonds.
-----------------------------
7.4.1 Agreement to Provide. On or before the date of commencement of
--------------------
construction of any building, structure or other improvements on the Premises
having an estimated cost of One Million and No/100 Dollars ($1,000,000.00) or
greater, Developer shall file or cause to be filed with Landlord a performance
bond and labor and material payment bond executed by Developer or Developer's
contractor or subtenant, as principal,
67
and by a surety authorized to do business in the State of California, as surety,
conditioned upon the contractor's performance of its construction contract with
Developer and payment to all claimants for labor and materials used or
reasonably required for use in the performance of such contract, in a form and
with a surety reasonably acceptable to Landlord. Forms of bond which generally
are acceptable hereunder are attached hereto and marked Exhibit "I". Said bond
shall name or be endorsed to name Landlord as a joint obligee with Developer
and/or Developer and Developer's lender. Landlord agrees to either approve or
disapprove of any such proposed bond submitted to Landlord for approval within
ten (10) days of Landlord's receipt thereof. Any notice of disapproval shall
specify the reasons for disapproval and the modifications required to secure
Landlord's approval. Landlord's failure to expressly so disapprove of any such
bond within said ten (10) day period shall constitute Landlord's approval of the
form of such bond and of the surety issuing such bond. Developer provided the
required bond relative to the existing improvements upon the Premises.
7.4.2 Term of the Bond. The term of both bonds shall commence on or
----------------
before the date of filing with Landlord. The Performance Bond shall remain in
effect until the date of completion of the work to the reasonable satisfaction
of Landlord's City Manager or
68
his designee. The Payment Bond shall remain in effect until the expiration of
the period of filing a claim of lien as provided in Title 15 of Part 4 of the
California Civil Code, and as hereafter amended, or if a claim of lien is filed,
the expiration of the period for filing an action to foreclose such lien, or
until the Premises are freed from the effect of such claim of lien and any
action brought to foreclose such lien pursuant to the provisions of said Title
15 of Part 4 or the lien is otherwise discharged.
7.4.3 Penal Sum. The Performance Bond shall be in the amount and
---------
provide a penalty of one hundred percent (100%) of the cost of the improvements
to be constructed as such cost shall be determined by the Developer. The
Payment Bond shall be in the amount and provide a penalty of one hundred percent
(100%) of the valuation of the improvements to be constructed.
7.4.4 Alternative Performance. In lieu of the Performance Bond and
-----------------------
Payment Bond required by this subsection 7.4, Developer may furnish cash,
assignment of account, or a time certificate of deposit or irrevocable letter of
credit conditioned only on the terms of this Lease or such other form of
security as may be agreed upon by the parties.
7.5 Construction.
------------
7.5.1 Costs of Construction. Except as provided in subsections 3.8,
---------------------
3.9, 3.11 and 7.5.10, the entire cost and expense of constructing any and all
69
improvements on the Premises, including without limitation any and all on and
off-site improvements required by applicable governmental authorities under
applicable zoning ordinances or as a condition to parcel of final map approvals,
shall be borne and paid by Developer, or its subtenants, and Developer shall
hold and save Landlord and the Premises harmless from any liability whatsoever
on account thereof.
7.5.2 Right to Improve. Developer shall have the right to construct
----------------
buildings and other improvements upon the Premises and shall have the right to
change the grade of the Premises and to perform all off-site work included
within the scope and intent of the Basic Concept Documents and/or t6 demolish
and remove any and all structures, foliage and trees situated upon the Premises
as of the date of this Lease as may reasonably be required for the purpose of
improving the same incidental to Developer's or a subtenant's use of the
Premises; provided, that such work shall be performed in accordance with the
applicable requirements of this Section 7, and such laws of any governmental
entity as may be applicable thereto and that arrangements for access to adjacent
leaseholds are completed prior to commencement of work on those areas. Any and
all improvements, constructed by or for the Developer, except off-site
improvements, shall be owned by Developer and its successors or assigns during
the term of this Lease and, unless removed by Developer upon the expiration
70
of the term of this Lease as permitted by subsection 17.10 below, shall become
a part of the realty and the absolute property of Landlord upon the expiration
or earlier termination of the term of this Lease.
7.5.3 Governmental Permits. Before commencement of construction or
--------------------
development of any buildings, structures, or other work or improvements upon the
Premises or within the Project area, Developer shall, at its own expense with
the cooperation of Landlord, secure or cause to be secured any and all permits
which may be required by the City of Long Beach or any other governmental agency
having authority over such construction, development or work. Developer shall
provide a copy of each such permit to the Landlord prior to commencing the
subject work or activity.
7.5.4 Rights of Access. For the purposes of assuring compliance
----------------
with this Lease, representatives of Landlord in addition to those conducting
inspections required by Landlord, shall have the right of access to the Premises
without charges or fees, at normal construction hours, during the period of
construction for the purposes of this Lease, including but not limited to the
inspection of the work being performed in constructing the improvements required
by this Lease. Such representatives of Landlord shall be those who are so
identified in writing by the Director of Community Development of Landlord,
except that those employees of the City of Long Beach conducting inspections
required
71
by law need not be so identified.
7.5.5 Local, State and Federal Laws. Developer shall carry out or
-----------------------------
cause to be carried out the construction of any buildings, structures or other
work or improvements upon the Premises in conformity with all applicable laws.
Any buildings, structures or other improvements constructed or placed upon the
Premises by or under Developer, shall be constructed or placed in accordance
with the laws and regulations of the State of California and of the City of Long
Beach applicable to the Premises. Any applicable Federal Aviation Regulation
(FAR) shall also be complied with.
7.5.6 Antidiscrimination During Construction. Developer for itself and
--------------------------------------
its successors and assigns agrees that in the construction of any improvements
provided for in this Lease, that Developer will not discriminate against any
employee, or applicant for employment because of age, sex, marital status, race,
handicaps, color, religion, creed, ancestry or national origin.
7.5.7 Responsibilities of Landlord.
----------------------------
7.5.7.1 Governmental Approvals. Landlord will assist and
----------------------
cooperate with Developer in connection with requests by Developer for lot
line adjustments, tentative or final, parcel, tract or subdivision map
approval, condominium plan approval, variances and any other governmental
approvals necessary for or which will facilitate the develop-
72
ment of the Premises, pursuant to this Lease including, without
limitation, the execution of documents required to dedicate or offer
for dedication or restrict or otherwise encumber or subdivide by
parcel or final maps or condominium plans portions of the Premises as
may be required by applicable governmental authorities.
7.5.7.2 Easements. Landlord agrees to join in granting or
---------
dedicating such public or private utility company easements as may be
required for the development of the Premises, for which no
consideration is given. With the exception of landscaping and
appurtenant structures as provided in subsection 7.5.9, Developer
shall have no responsibility for maintaining public rights-of-way,
sewers, storm drains and other facilities after dedication of same to
Landlord by Developer, and Landlord agrees to accept the same for
maintenance purposes.
7.5.7.3 Off-Site Improvements. Subject to any limitation of
---------------------
law, Landlord shall take all such action as is necessary and prudent
in order to permit Developer to install and construct the off-site
improvements which are necessary to initially make the Premises
suitable for development according to Developer's Basic Concept
Documents. The nature of such actions by Landlord and the nature and
extent of such off-site improvements
73
are defined in the attached Exhibit "F" ("Off-site Improvements"). The
costs of all rights-of-way and improvements described in Exhibit "F"
shall be included in Predevelopment and Infrastructure Costs in the
manner set out in subsections 3.6 through 3.11.
7.5.7.4 Bond Financing. Landlord further agrees to assist
--------------
with Developer's financing of the development of the Premises by
cooperating reasonably with Developer and using reasonable efforts to
sell or to cause any appropriate agency of the City of Long Beach to
sell industrial development bonds as a source for such financing, if
such action is legally permissible; by granting to or for the benefit
of the holders of any special assessment or district bonds
constituting a first lien on Developer's Leasehold Estate, or their
trustee, rights and remedies of a similar nature afforded Leasehold
Mortgagees under Section 4 hereof.
7.5.8 Responsibilities of Developer. Developer, without expense to
-----------------------------
Landlord, shall perform all work specified of Developer in this Lease. In
addition, Developer shall furnish Landlord's Director of Community
Development with semi-annual progress reports demonstrating good faith
compliance with the construction requirements of this Lease on or before
each semiannual period commencing with the sixth month anniver-
74
sary of the date of this Lease, through the occurrence of the completion
date of such construction.
7.5.9 Maintenance. In addition to the responsibilities mentioned
-----------
herein, Developer shall have sole and exclusive responsibility for
maintaining the Premises and all building structures and improvements which
have been or hereafter may be constructed upon the Premises in good
condition and repair, at no cost or expense to Landlord, reasonable wear
and tear excepted. Developer shall also maintain all landscaping and
appurtenant structures installed in accordance with plans approved pursuant
to Section 7. Landlord will consider a request to maintain landscaping in
public rights-of-way.
7.5.10 Acceptance of Premises. Developer accepts the Premises in
----------------------
an "as-is" condition, except for subsurface hazardous materials and
munitions, which are the responsibility of Landlord to remove at Landlords
expense, and also except for subsurface conditions under existing leased
premises demised to Xxxxxx X. Xxxxxxxxxx dba Stripbright Company, and
acknowledges that Developer has not received and Landlord has not made any
warranty, express or implied, as to the condition of the Premises.
Developer agrees to bear all expenses incurred in the development,
operation and maintenance of the Premises, except for improvements and
facilities dedicated for public use to Landlord or other governmental
authority, and except for removal
75
and disposition of subsurface hazardous materials and munitions.
7.6 Subdivided Leases. For the purpose of facilitating the
-----------------
development of the Project and obtaining financing and refinancing of
improvements to be constructed thereon, at any time and from time to time during
the term, within thirty (30) days after notice of demand from Developer,
Landlord shall enter into separate new leases ("Subdivided Lease") so that there
shall be one lease for each developable parcel in the Premises. The Subdivided
Leases described herein shall be for the sole purpose of lease, sale or
financing of the development. In all matters affecting the relationship, rights
or obligations of the parties hereto, or in the case of any inconsistency
between the language of the documents, this Lease as undivided and unmodified
shall govern except that as to the individual subdivided lease parcels, rents,
security deposits, legal descriptions and requirements governing amount and
level of construction may be varied to conform to the specifics of such parcel,
as long as the totals in all such categories for all subdivided leases added
together correspond to the totals expressed in this document. Developer has
heretofore paid to Landlord as a separate charge apart from rents a one time
charge to reimburse Landlord's costs and expenses in separating the leases and
reviewing and administering all the leases as separated in the sum of Five
Thousand Dollars ($5,000.00). Each Subdivided Lease shall:
7.6.1 Same Parties. Have the same parties as the parties to this
------------
Lease.
7.6.2 Obligations of Subdivided Leases. Be
--------------------------------
76
released from the overall obligations expressed in this Lease to pay rent
and to carry out specific levels of construction within specific periods,
provided, however that each such parcel shall be subject to an appropriate
proportionate share of such obligations such that the total of such
obligations divided among separated leases is not less than the total of
such obligations expressed in this Lease. All other obligations imposed by
this Lease shall apply to each such separate parcel as an undivided shared
obligation. As to any conflict between the Subdivided Leases or all of them
and this Lease, the terms of this Lease shall govern.
7.6.3 Terms, Covenants. Contain the same terms, covenants,
----------------
provisions, conditions and agreements as those contained in this Lease
except that:
7.6.3.1 Ground Rent. The Ground Rent and other periodic payments
-----------
to be made by Developer as part of Developer's obligation under this
Lease and the security deposit under subsection 16.1 shall under the
Subdivided Lease, bear substantially the same proportion to amounts
provided in this Lease as the area of the Premises in the Subdivided
Lease bears to the area of the Premises in this Lease. Provided,
however, that if the fair market value of any land included in a
Subdivided Lease is substantially greater or less than the balance of
the land included in this Lease, then the Ground Rent may be
appropriately varied between the Subdivided
77
Lease and this Lease in order to take into account such variance in the
fair market land value.
7.6.3.2 Improvements. Any improvements constructed upon the
------------
Premises demised by a Subdivided Lease shall satisfy Developer's
obligations imposed by this Lease. The right of Developer to make
improvements shall be apportioned around the Subdivided Leases
substantially as is provided in subsection 7.6.3.1.
7.6.3.3 Easements and CC & R's. Each Subdivided Lease shall
----------------------
contain all cross-easements, covenants, conditions, restrictions and
agreements requested by Developer, and approved by Landlord, provided
they reasonably facilitate separating this Lease into individual
Subdivided Leases within the overall intent of this Lease.
7.6.3.4 Description of Property. Each Subdivided Lease shall cover
-----------------------
only that portion of the Premises specified by Developer in Developer's
notice of demand, provided that Developer shall accompany each notice of
demand with an accurate survey and metes and bounds description of the
portion of the Premises to be covered by the Subdivided Lease; or if the
Premises have been divided into separate parcels, with the appropriate
parcel map description of such Premises.
7.6.3.5 Excluded Matters. Obligations under this Lease which have
----------------
been satisfied or which
78
are not applicable shall be excluded from a Subdivided Lease.
7.7 Combining Leases. At any time and from time to time after the
----------------
execution of any such Subdivided Lease, within thirty (30) days after notice of
demand from Developer, Landlord shall enter into a single lease ("Single Lease")
combining any two or more of the Subdivided Leases, covering all the portions of
the Premises covered by the component Subdivided Leases, and containing the same
terms, covenants, provisions, conditions and agreements as those contained in
the component Subdivided Leases, except that:
7.7.1 Ground Rent. The Ground Rent and other periodic
-----------
payments to be made by Developer as part of Developer's obligation under
the Single Lease shall be the sum of the Ground Rent and other periodic
payments payable under the component Subdivided Leases;
7.7.2 Easements and CC & R's. The Single Lease shall contain
----------------------
all cross easements, covenants, conditions, restrictions and agreements
requested by Developer and approved by Landlord provided they reasonably
facilitate combining the component Subdivided Leases and integrating the
operation of the Single Lease with that of any Subdivided Leases still
outstanding within the overall intent of this Lease.
8. USE:
---
8.1 Permitted Development. The Project shall be an aviation oriented
---------------------
business, office, research and development
79
and industrial park, with offices and facilities and space for sublease to
subtenants, including tenant-required aviation and other ancillary and related
uses.
8.2 Aviation Related Uses. Any aviation and/or aircraft related
---------------------
uses shall be subject to the terms and conditions of this Lease and to the terms
and conditions governing Fixed Base Operations on the Long Beach Municipal
Airport, "Master FBO Lease", which terms and conditions are incorporated in the
Master FBO Lease attached hereto, marked Exhibit "K" and made a part hereof and
shall be binding upon Developer, its tenants, subtenants and assigns, provided,
however, as to Developer only in case of any conflict between this Lease and the
Fixed Base Operation Lease, the business terms of this Lease shall prevail, and
the aviation operation requirements of the Fixed Base Operation Lease shall
prevail as to aviation uses. Access to the Airport operating areas shall be made
available for any aircraft based on the Premises. All non-aviation areas shall
be separated from the Airport operating areas by security fencing approved by
the Airport Manager.
8.3 Inapplicable Provision.
----------------------
8.4 Vehicle Parking. No vehicle not related to or used in the
---------------
business of Developer or its subtenants or their respective employees, agents,
guests or invitees shall be parked on the Premises for any period greater than
twenty-four (24) hours.
8.5 Federal Aviation Administration. Use of the Premises shall
-------------------------------
conform to and be limited by applicable zoning regulations, any conditions
lawfully imposed by duly empowered governmental authority having jurisdiction
over the Premises, the
80
terms, covenants, conditions and restrictions imposed by this Lease and such
lawful rules and regulations of the Federal Aviation Administration ("FAA") as
may be applicable from time to time to the Premises. The conditions imposed by
the FAA as of the date of this Lease are attached hereto, marked Exhibit "L" and
made a part hereof. The conditions set out in Exhibit "L" are applicable only
to those portions of the Premises used for aviation or aircraft purposes.
Landlord shall cooperate fully with Developer in obtaining all required FAA
approvals. Landlord understands that FAA has been made aware of the nature of
the development proposed for the Premises and as of the date of this Lease,
Landlord has not received communication from FAA indicating that the type of
development proposed would not be permitted if it complied with all applicable
regulations.
8.6 Inspection. At all times during the term of this Lease,
----------
Landlord shall retain the right of access to and ingress and egress over the
Premises to inspect aviation related operations and to enforce codes or
ordinances and provisions of this Lease, subject to governmental and reasonable
subtenant security requirements.
9. LIENS:
-----
9.1 Developer's Responsibility. Developer shall not permit any
--------------------------
liens to be enforced against Landlord's interests in and to the land comprising
the Premises, nor against Developer's leasehold interest therein by reason of
work, labor, services or materials supplied or claimed to have been supplied to
Developer or anyone holding the Premises, or any part thereof, through or
81
under Developer, and Developer agrees to indemnify Landlord against such liens.
9.2 Notice of Work. Before any buildings, structures or other
--------------
improvements or additions thereto, having a cost in excess of One Hundred Fifty
Thousand and No/100 Dollars ($150,000.00) are constructed or reconstructed upon
the Premises, Developer shall serve written notice upon the Landlord in the
manner specified in this Lease of Developer's intention to perform such work for
the purpose of enabling Landlord to post notices on non-responsibility under the
provisions of Section 3094 of the Civil Code of the State of California, or any
other similar notices which may be required by law.
9.3 Discharge of Liens. If any mechanics liens or other liens shall
------------------
be filed by reason of work, labor, services or materials supplied or claimed to
have been supplied to Developer or anyone holding the Premises, or any part
thereof, through or under Developer, Developer shall cause the same to be
discharged of record within sixty (60) days after notice to Developer of the
filing thereof, or otherwise free the Premises from the effect of such claim of
lien and any action brought to foreclose such lien within such sixty (60) day
period, or Developer, within such sixty (60) day period, shall promptly furnish
to Landlord a bond in an amount and issued by a surety company satisfactory to
Landlord securing Developer against payment of such lien and against any and all
loss or damage whatsoever in any way arising from the failure of Developer to
discharge such lien.
9.4 Landlord's Right to Pay. In the event Developer fails to perform
-----------------------
its obligations under subsection 9.3 above
82
with respect to any lien within the sixty (60) day period specified in
subsection 9.3 above, Landlord may, but shall not be obligated to pay the amount
thereof, inclusive of any interest thereon, and any costs assessed against
Developer in said litigation, or may discharge such lien by contesting its
validity or by any other lawful means.
9.5 Reimbursement of Landlord. Any amount paid by Landlord for any of
-------------------------
the expenses described in subsection 9.4 above, and all reasonable legal and
other expense of Landlord, including reasonable counsel fees, and costs of suit,
in defending any such action or in connection with procuring the discharge of
such lien, with all necessary disbursements in connection therewith, together
with interest thereon at the rate provided by law from the date of payment shall
be repaid by Developer to Landlord on demand.
10. CONDEMNATION:
------------
10.1 Definition of Terms. The following definitions shall govern
-------------------
interpretation of this subsection.
10.1.1 Total Taking. The term "total taking" as used in this
------------
Section 10 means the taking of the entire Premises under the power of
eminent domain or the taking of so much thereof as the parties
mutually agree will prevent or substantially impair the use of the
Premises of the uses and purposes than being made or proposed to be
made by Developer of the Premises. If the parties do not agree as to
whether prevention or substantial impairment has occurred, that issue
may
83
be arbitrated as provided in the rules for arbitration published by
the American Arbitration Association. Each party shall pay half of
the cost of such arbitration.
10.1.2 Partial Taking. The term "partial taking" means the
--------------
taking of a portion only of the Premises which does not constitute a
total taking as defined above.
10.1.3 Voluntary Conveyance. Neither party to this Lease
--------------------
will voluntary convey any interest related to this Lease to any
agency, authority or public utility under threat of a taking under the
power of eminent domain in lieu of formal proceedings without first
providing written notice to the other of any request or intention to
do so.
10.1.4 Date of Taking. The term "date of taking" shall be the
--------------
date title to the Premises or portion thereof passes and vests in
the condemnor or the date of entry of an order for immediate
possession with any judicial proceeding in eminent domain or the date
physical possession of the Premises is taken or interfered with,
whichever first occurs.
10.1.5 Leased Land. The term "leased land" means the real
-----------
property demised hereby, but exclusive of any and all improvements
situated upon the Premises at the commencement of the Lease term and
also exclusive of all improvements constructed or placed thereon by or
under Developer and exclusive of any grading and other site work
performed by or under Developer.
84
10.2 Effect of Taking. If during the term hereof there shall be a
----------------
total or partial taking under the power of eminent domain, then the Leasehold
Estate of Developer in and to the Premises, in the event of a total taking, or
the portion thereof taken, in the event of a partial taking, shall cease and
terminate, as of the date of taking thereof. If this Lease is so terminated in
whole or in part, all Ground Rent and other charges payable by Developer to
Landlord hereunder attributable to the Premises, or portion thereof taken, shall
be paid by Developer up to and prorated through the date of taking by the
condemnor. Any portion of the security deposit provided for in subsection 16.1.1
fairly attributable to the terminated portion of the Leasehold Estate shall be
repaid to Developer and the parties shall thereupon be released from all further
liability in relation thereto.
10.3 Allocation of Award. All compensation and damages awarded in
-------------------
connection with any taking, total or partial, of the Premises including any
improvements thereon shall be allocated so that Developer shall receive that
portion of the award attributable to the value determined for improvements then
existing on the Premises, the value of Developer's leasehold interest in the
Premises and severance or other damages to buildings or the Leasehold Estate.
The remainder of the award, including all portions of the award attributable to
the value of the land as affected by the leasehold, and any severance or other
damages to the land, shall be payable to Landlord.
10.4 Reduction of Ground Rent on Partial Taking. In the event of a
------------------------------------------
partial taking, the Ground Rent payable by
85
Developer shall be adjusted from the date of taking to the next adjustment date
(see subsection 3.2.1). Such Ground Rent adjustment caused by the partial
taking shall be made by reducing the Ground Rent payable by Developer based on
the ratio between the fair market value of the leased land at the date of taking
and the fair market value of the leased land remaining immediately thereafter,
valued for the use being made of the leased land by Developer prior to such
taking.
10.5 Temporary Taking. If all or any portion of the Premises shall
----------------
be taken by any competent authority for temporary use or occupancy, this Lease,
at the option of Developer, shall continue in full force and effect without
reduction or abatement of rent, notwithstanding any other provision of this
Lease, statute or rule of law to the contrary, and Developer shall, in such
event, be entitled to the entire award for such taking to the extent that the
same shall be applicable to the period of such temporary use or occupancy
included in the term of this Lease and Landlord shall be entitled to the
remainder thereof.
11. ALTERATIONS BY DEVELOPER:
------------------------
Developer shall have the right at any time and from time to time during
the Lease term to make, at its sole cost and expense, such changes and
alterations, structural or otherwise, in or to the improvements, other than
dedicated public improvements, constructed upon the Premises as Developer shall
deem necessary or desirable, including without limitation, the right to remove
and/or demolish buildings and other improvements pro-
86
vided that other buildings or improvements are constructed in their place if
such demolition occurs when twenty (20) or more years are remaining in the term
of this Lease, including any extensions hereof. The rights granted by this
section shall be limited to and their exercise shall comply with the terms of
Section 7 and subsection 3.3 hereof.
12. TAXES AND ASSESSMENTS:
---------------------
12.1 Payment by Developer. Developer recognizes and understands
--------------------
that this Lease may create a possessory interest subject to property taxation
and that Landlord may be subject to the payment of property taxes on such
interest. Developer shall pay prior to delinquency all real estate taxes and
assessments on the Premises and/or Developer's possessory interests therein
levied during the term of this Lease. Developer shall not place or allow to be
placed on the Premises, or any part thereof, any mortgage, trust deed,
encumbrance or lien unauthorized by this Lease. Developer shall remove or have
removed any levy or attachment made on any of the Premises, or any part thereof,
or assure the satisfaction thereof within a reasonable time, but in any event
prior to a sale thereof. Nothing herein contained shall be deemed to prohibit
Developer from contesting the validity or amounts of any tax, assessment,
encumbrance or lien, nor to limit the remedies available to Developer in respect
thereto.
12.2 Installment Payments. If any real estate, special tax or
--------------------
assessments are at any time during the term of this Lease, levied or assessed
against the Premises or Developer's Leasehold Estate hereunder, which, upon
exercise of any option
87
permitted by the assessing authority, may be paid in installments or converted
to an installment payment basis (irrespective of whether interest shall accrue
on unpaid installments) , Developer may elect to pay such taxes or assessments
in installments with accrued interest thereon. In the event of such election,
Developer shall be liable only for those installments of such taxes or
assessments which become payable during the term of this Lease, and Developer
shall not be required to pay any such installment which becomes due and payable
after the expiration of the term of this Lease. Landlord shall execute whatever
documents may be necessary to convert any such taxes or assessments to such an
installment payment basis if requested so to do by Developer and if such action
is authorized by law then in effect.
12.3 Proration. Any real estate taxes and assessments which are
---------
payable by Developer hereunder shall be prorated between Landlord and Developer
at the commencement and expiration or earlier termination of the term of this
Lease if such real estate taxes and assessments relate to a fiscal period of the
levying authority which arose before the term commenced or extends beyond the
expiration or earlier termination of the term hereof.
12.4 Right to Contest. Developer and any subtenant, with Developer's
----------------
consent, shall have the right to contest the amount or validity of any real
estate taxes and assessments, in whole or in part, by appropriate administrative
and legal proceedings, without any cost or expense to Landlord, and Developer
may postpone payment of any such contested real estate taxes and assessments
pending the prosecution of such proceedings
88
and any appeals so long as such proceedings shall operate to prevent the
collection of such real estate taxes and the sale of the Premises to satisfy any
lien arising out of the nonpayment of the same, provided, however that if at any
time payment of the whole or any part thereof shall become necessary in order to
prevent the termination of the right of redemption of any property affected
thereby, or if there is to be an eviction of Developer because of nonpayment
thereof, Developer shall pay the same in order to prevent such termination of
the right of redemption or such eviction. Landlord shall execute and deliver
to Developer whatever documents may be within Landlord's legal authority
necessary or proper to permit Developer or any subtenants, with Developer's
consent, to so contest any real estate taxes or which may be necessary to obtain
payment of any refund which may result from any such proceedings. Any such
contest shall be at no cost or expense to Landlord. Each refund of any tax or
assessment so contested shall be paid to Developer.
13. CERTIFICATES BY DEVELOPER AND LANDLORD:
--------------------------------------
13.1 Developer to Provide. Developer agrees upon not less than
--------------------
twenty (20) days' notice by Landlord to execute, acknowledge and deliver to
Landlord a statement in writing certifying (i) that this Lease is unmodified and
in full force and effect (or if there have been modifications that the same is
in full force and effect as modified and stating the modifications); (ii)
whether or not to the best knowledge of Developer there are then existing any
offsets or defenses against the enforcement of any of the terms, covenants or
conditions hereof upon the part
89
of Developer to be performed and, if so, specifying the same; and (iii) the
dates to which the Ground Rent and other charges have been paid, it being
intended that any such statement delivered pursuant to this subsection may be
relied upon by any prospective purchaser of the fee of the real property
comprising the Premises.
13.2 Landlord to Provide. Landlord agrees upon not less than
-------------------
twenty (20) days' prior notice by Developer, to execute, acknowledge and deliver
to Developer a statement in writing certifying (i) that this Lease is unmodified
and in full force and effect (or if there have been modifications, that the same
is in full force and effect as modified and stating the modifications); (ii) the
dates to which the Ground Rent and other charges have been paid; (iii) stating
whether or not to the best knowledge of Landlord, Developer is in default in
performance of any covenant, agreement or condition contained in this Lease and,
if so, specifying each such default of which Landlord may have knowledge; and
(iv) whether or not there are to Landlord's best knowledge any offsets or
defenses claimed by and/or available to Developer to the payment or rental, it
being intended that any such statement delivered pursuant to this subsection may
be relied upon by any prospective assignee or subtenant of the whole or any
portion of the Premises, or by any lender extending credit on the security of
Developer's Leasehold Estate.
14. QUIET ENJOYMENT:
---------------
Landlord covenants that Developer, upon the performance of the
covenants and agreements herein contained on Developer's part to be performed,
shall and may at all times, for itself and
90
its subtenants, peaceably and quietly have, hold and enjoy the Premises during
the term of this Lease.
15. TERMINATION AND FURTHER LEASING:
-------------------------------
15.1 Termination. Subject to the provisions of Section 4, this
-----------
Lease may be terminated at any time by mutual agreement of the parties.
15.2 Termination by Developer. Developer may terminate this
------------------------
Lease in the event Developer is unable to secure an extended coverage leasehold
policy of title insurance, within ninety (90) days following execution of this
Lease containing only those exceptions approved by Developer, provided, however,
that Developer shall have first given Landlord sixty (60) days notice of its
intention to terminate during which time Landlord shall have an opportunity to
cure the deficiency.
15.3 Termination by Landlord. Subject to the provision of
-----------------------
Section 4 of this Lease, Landlord may terminate this Lease under the following
circumstances:
15.3.1 Developer fails to pay rent or any other charge
required by this Lease.
15.3.2 Developer assigns this Lease in violation of
subsection 5.1.
15.3.3 Failure of Developer to submit draw-ings or related
documents required by this Lease.
15.3.4 Failure of Developer to provide the good faith
deposit required by this Lease.
15.3.5 Bankruptcy of Developer. Final adjudication or
filing of a voluntary petition for
91
bankruptcy by Developer.
Provided, however, that in all cases, Landlord shall give
Developer sixty (60) days prior written notice of its intention to terminate,
during which time Developer shall have an opportunity to cure the default.
However, if the default is of a nature such that it cannot be cured within sixty
(60) days, Developer shall not be in default if Developer shall commence such
use and diligently prosecute it to completion.
16. SECURITY DEPOSIT:
----------------
16.1 Good Faith Deposit.
------------------
16.1.1 Receipt by Landlord. Developer has, concurrently
-------------------
with the execution and delivery of the All-Inclusive Lease, delivered
to Landlord a good faith deposit in the amount of One Million and
No/l00 Dollars ($1,000,000.00) as security for the performance of the
obligations of Developer to be performed in accordance with the
provisions of the All-Inclusive Lease. The receipt of the deposit is
hereby acknowledged by Landlord. The parties acknowledge that Three
Hundred Thirty-Seven Thousand, Five Hundred Eighty-Three and 38/100
Dollars ($337,583.38) of such good faith deposit have been allocated
to and are now held by Landlord pursuant to this Lease.
16.1.2 Form of Deposit. The good faith deposit, at the
---------------
option of Developer, may be in the form of (i) cash; or (ii) cashier's
or certified check; or (iii) negotiable certificate or certificates of
deposit
92
issued by a federal or state bank or savings and loan association; or
(iv) an irrevocable letter of credit in favor of Landlord issued by an
established bank or other institution satisfactory to Landlord; or
(v) a bond in a form and with a surety reasonably satisfactory to
Landlord providing for payment to Landlord of amounts that may become
payable to Landlord under this Lease from time to time; or (vi) such
other form of security or deposit as may be mutually acceptable.
Developer may change the form of the deposit from time to time, at its
option, to any other of the permitted forms of deposit. The deposit,
if in cash or certified or cashier's check shall be deposited in an
interest bearing account of Landlord in a bank, savings and loan
association or trust company selected by Developer and approved by
Landlord, which approval shall not unreasonably be withheld. Developer
shall have the right to specify the type of account in which such
funds are, from time to time, to be deposited. Provided that no
default has occurred during the term of the Lease which has resulted
in a forfeiture by Developer of all or a part of the good faith or
security deposit, such deposit, or any portion thereof which has not
been forfeited, shall be returned to Developer upon expiration of this
Lease.
16.1.3 Interest. Landlord shall be under no obligation
--------
to pay or earn interest on the deposit, but if interest shall accrue
or be payable thereon such
93
interest, when received by Landlord, shall be promptly paid to
Developer. Landlord agrees, but not more often than quarterly, upon
receipt of a request from Developer, to cause any such interest so
accrued on such deposit to be paid to Developer by the bank, savings
and loan association or trust company with which said sums have been
deposited.
16.1.4 If Bond is Posted. If a bond is posted to satisfy
-----------------
the requirements of this Lease with a fixed term and if such bond
expires prior to the date Developer is entitled to have the security
deposit returned, Developer shall provide Landlord with either (i)
evidence of the renewal of such bond for an additional period, or (ii)
a new security deposit satisfying the requirements of subsection 16.1
in one of the forms authorized by such subsection, including, without
limitation, a new bond, not less than twenty (20) days prior to the
expiration of the bond posted to satisfy the requirements in
subsection 16.1 above.
16.2 Construction Security Deposits. Developer has, prior to the
------------------------------
execution and delivery of this Lease, delivered to Landlord a construction
deposit in the amount of One Million and No/l00 Dollars ($1,000,000.00) as
security for the performance of the obligations of Developer to be performed in
accordance with the provisions of this Lease. The receipt of the deposit is
hereby acknowledged by Landlord. The parties acknowledge that Three Hundred
Thirty-Seven Thousand Five Hundred Eighty-Three and 38/100 Dollars ($337,583.38)
of such construction security deposit*
* shall be allocated to and held by Landlord pursuant to this Lease.
94
16.2.1 Form of Construction Deposit. The construction deposit, at
----------------------------
the option of Developer, may be in the form of (i) cash; or (ii) cashier's or
certified check; or (iii) negotiable certificates of deposit issued by a federal
or state bank or savings and loan association; or (iv) an irrevocable letter of
credit in favor of Landlord isued by an established lending institution approved
by Landlord; or (v) other form of security or deposit as may be mutually
acceptable Developer may change the form of the deposit from time to time, at
its option, to any other of the permitted forms of deposit. The deposit, in
cash or certified or cashier's check shall be deposited in an interest bearing
account of Landlord in a bank, savings and loan association or trust company
selected by Developer and approved by Landlord, which approval shall not
unreasonably be withheld. Developer shall have the right to specify the type of
account in which such funds are, from time to time, to be deposited.
16.2.2 Interest. Landlord shall be under no obligation to pay or
--------
earn interest on the deposit, but if interest shall accrue or be payable
thereon, such interest, when received by Landlord, shall be promptly paid to
Developer. Landlord agrees, but not more often than quarterly upon receipt of a
request from Developer to cause any such interest so accrued on such deposit to
be paid to Landlord by the bank, savings and loan association or trust company
with which said sums have
95
been deposited.
16.2.3 Incorporation by Reference. Any bond obtained by Developer
--------------------------
shall incorporate by reference this Lease and all of its terms and conditions.
For purposes of such bonds, no requirement of this Lease may be deemed waived.
Waiver may be accomplished only by Landlord and only in writing by the City
Manager or his duly authorized representative.
16.2.4 Return of Deposit. Promptly upon Developer's completion of
-----------------
the construction of any building improvements upon the Premises and the issuance
of a Certificate of Occupancy for such improvements, Landlord shall release and
return to Developer a portion of the deposit described in subsection 16.2 based
upon the proportion of the number of square feet of building area (as measured
from the exterior of exterior building walls) within such completed building
improvements and to 227,224 square feet of building area. If Developer is not
in default under this Lease, the balance of such deposit, if any, with accrued
interest shall be returned to Developer upon the occurrence of the Completion
Date as specified in this Lease
16.2.5 Retention of Deposit by Landlord. In the event that this
--------------------------------
Lease is terminated by Developer, in whole or in part, under subsection 17.5
below, or in the event that Developer elects not to permit Landlord to
terminate this Lease by reason of Developer's failure to commence and complete
the construction of
96
building improvements upon the Premises as required by this Lease,
said deposit, less interest accrued thereon through the date of such
termination and also less any portion of such deposit to be returned
to Developer under subsection 16.2.4 above, shall be retained by
Landlord as provided in subsection 17.5 below.
17. GENERAL PROVISIONS:
------------------
17.1 Notices, Demands and Communications between the Parties.
-------------------------------------------------------
Written notices, demands, and communications between Landlord and Developer
shall be in writing and shall be sufficiently given if personally served or if
mailed by registered or certified mail, postage prepaid, return receipt
requested, to the pricipal offices of Landlord or Developer, set forth in
subsection 1.5 of this Lease. Any such notice, demand or communication so given
by mailing to Landlord shall be mailed to the attention of the City Manager.
Copies of any such notice, demand or communication to be given to Developer
pursuant to this Lease shall be given to Xxxxxx Long Beach Associates,
Attention, President, such other entity, person or persons as he may designate,
by personal service or by mailing the same, as required by this subsection, to
such party, at the address set forth in subsection 1.5 above or such other
address as may be designated. Either Landlord or Developer may from time to time
by written notice to the other designate a different address or addresses or
party or parties to whom copies of notices, demands and communications are to be
delivered or to whose attention notices, demands and communications are to be
addressed which shall be substituted for
97
the addresses and/or names above specified. Notices shall be deemed served
effective immediately if personally served and effective as of the date received
and set forth on the return receipt if served by registered or certified mail.
17.2 Conflict of Interest. No member, official or employee of
--------------------
Landlord shall have any personal interest, direct or indirect, in this Lease,
nor shall any such member, official or employee participate in any decision
relating to this Lease which affects his personal interest or the interest of
any corporation, partnership or association in which he is, directly or
indirectly, interested. No member, official or employee of Landlord shall be
personally liable to Developer, or any successor in interest, in the event of
any default or breach by Landlord or for any amount which may become due to
Developer or successor or on any obligations under the terms of this Lease.
17.3 Enforced Delay: Extension of Time of Performance. In addition
-------------- --------------------------------
to other provisions of this Lease, performance by either party hereunder, shall
not be deemed to be in default where delays or defaults are unavoidable or
performance is rendered impracticable, due to war; enemy action; insurrection;
civil disturbance; strikes; lock-outs; riots; floods; earthquakes; fires;
casualties; acts of God; acts of the public enemy; epidemics; quarantine
restrictions; freight embargoes; lack of transportation; governmental
restrictions or moratoria; failure or inability to secure materials or labor by
reason of regulations or order of any governmental entity; litigation including
eminent domain proceedings or related legal proceedings; acts or failure to act
of the other party; acts or failure to
98
act of any public or governmental agency or entity; and the time for such
performance shall be extended for a period equal in length to such delay(s).
17.4 Inspection of Books and Records. Landlord has the right at
-------------------------------
all reasonable times during regular business hours to inspect the books and
records of the Developer pertaining to the Premises as pertinent to the purposes
of this Lease. Developer also has the right at all reasonable times during
regular business hours to inspect the books and records of the Landlord
pertaining to the Premises as pertinent to the purpose of this Lease.
17.5 Defaults and Remedies.
---------------------
17.5.1 Defaults - General. Subject to the extensions of
------------------
time set forth in subsection 17.3 above, failure by either party to
perform any term or provision of this Lease constitutes a default
under this Lease, if not cured within thirty (30) days from the date
of receipt of a written notice from the other party specifying the
claimed default provided that if such default cannot reasonably be
cured within such thirty (30) day period, the party receiving such
notice of default shall not be in default under this Lease if such
party commences the cure of such default within such thirty (30) day
period and thereafter diligently prosecutes the steps to cure such
default to completion.
17.5.2 Institution of Legal Actions. In addition to any
----------------------------
other rights or remedies, either party may institute legal action to
cure, correct, or remedy
99
any default, to recover damages for any default, or to obtain any other remedy
consistent with the purpose of this Lease. Such legal actions must be
instituted in the South Branch of the Superior Court of the County of Los
Angeles, State of California, in an appropriate municipal court in that county,
or in the Federal District Court in the Central District of California. The
prevailing party in any action commenced pursuant to this Lease shall be
entitled to recover reasonable costs, expenses and attorneys' fees.
17.5.3 Applicable Law. The laws of the State of California shall
--------------
govern the interpretation and enforcement of this Lease.
17.5.4 Service of Process. In the event any legal action is
------------------
commenced by Developer against Landlord, service of process on Landlord shall be
made by personal service upon the City Clerk of the Landlord, or in such other
manner as may be provided by law.
In the event that any legal action is commenced by Landlord against
Developer, service of process on Developer shall be made as provided by law and
shall be valid whether made within or without the State of California, or in
such manner as may be provided by law.
17.5.5 Rights and Remedies Are Cumulative. Except as otherwise
----------------------------------
expressly stated in this Lease, the rights and remedies of the parties are
cumulative, and the exercise by either party of one or more of such
100
rights or remedies shall not preclude the exercise by it, at the same or
different times, of any other rights or remedies for the same default or any
other default by the other party.
17.5.6 Inaction Not a Waiver of Default. Any failures or delays by
--------------------------------
either party in asserting any of its rights and remedies as to any default shall
not operate as a waiver of any default or of any such rights or remedies or
deprive either such party of its right to institute and maintain any actions or
proceedings which it may deem necessary to protect, assert or enforce any such
rights or remedies.
17.5.7 Remedies. In the event of a default by Developer, which is not
--------
cured by Developer within the times specified in this Lease, Landlord, without
further notice to Developer, may declare this Lease and/or Developer's right of
possession at an end and may reenter the Premises by process of law, in which
event, Landlord shall have the right to recover from Developer:
17.5.7.1 The worth at the time of award of the unpaid Ground
Rent which has been earned at the time of termination, plus interest;
17.5.7.2 The worth at the time of award of the amount by which
the unpaid Ground Rent which would have been earned after termination until
the time of award exceeds the amount of such rental loss that Developer
proves could have been reasonably
101
avoided, plus interest;
17.5.7.3 The worth at the time of award of the amount by which
the unpaid Ground Rent for the balance of the term after the time of award
exceeds the amount of such rental loss for the same period that Developer
proves could be reasonably avoided, plus interest thereon; and
17.5.7.4 The remedies of Landlord as hereinabove provided are
subject to the other provisions of this Lease, including Section 4 hereof.
17.5.8 Developer's Rights. Developer shall have the right to
------------------
challenge the correctness of any determination of default made by Landlord, and
Landlord shall carefully review and consider Developer's challenge.
17.5.9 Lease Termination. Should governmental action or failure to
-----------------
act preventing construction in accordance with this Lease or rendering it
impossible, occur prior to the time that Developer has constructed any building
upon the Premises, then Developer shall have the right, at its option, with the
prior written approval of any lender which has a security interest in the
Leasehold Estate, to cancel and terminate this Lease by giving written notice of
such termination to Landlord, at any time prior to the construction of a
building upon the Premises. Upon any such termination of this Lease, Developer
and Landlord shall execute and record a quit claim deed sufficient to remove the
cloud
102
of this Lease and the short form of this Lease from record title to the Premises
and the deposits described in subsections 16.1 and 16.2, plus any interest
accrued on such deposits, shall be paid to Developer by Landlord
17.5.10 Landlord's Exercise of Remedies. In the event of an uncured
-------------------------------
default by Developer in the performance of any of its obligations to commence
and complete the construction of the initial building with-in the times required
by Section 7 of this Lease and in the further event that Landlord elects to
exercise its remedy to terminate this Lease by reason of such default by
Developer, Developer may, for a period of thirty (30) days following its receipt
of written notice from Landlord of Landlord's election to terminate this Lease
by reason of such default, elect to prevent such termination from becoming
effective by releasing and paying to Landlord a portion of the good faith
deposit held by Landlord under subsection 16.1, which portion shall be equal to
the lesser of (i) the amount of such deposit so held by Landlord; or (ii) an
amount equal to the product of One and One-half Dollar ($1.50) per square foot
times the number of square feet of building area the failure to commence or
complete the construction of which has caused the subject default or the
adjusted rent per square foot if this provision becomes operative after any
rental adjustment.
17.5.11 Payment to Developer. In the event that this Lease is
--------------------
terminated as a result of an uncured
103
default by Landlord and in the further event that Developer has constructed
streets, utilities and/or other off-site improvements or grading improvements
upon or in relation to the Project prior to such termination of this Lease,
Landlord shall, pursuant to its responsibilities under State law, use its best
efforts to resell or relet the Premises, or any portion thereof, as soon and in
such manner as Landlord shall find feasible and consistent with the objectives
of such law to a qualified and responsible party or parties (as reasonably
determined by Landlord) who will assume the obligation of making or completing
the improvements required of Developer under this Lease, or such other
improvements in their stead as shall be satisfactory to Landlord and in
accordance with the uses specified for the Premises in this Lease. Upon such
resale or reletting of the Premises, or any portion thereof, the proceeds
thereof shall be applied:
17.5.11.1 Reimbursement to Landlord. First, to reimburse
-------------------------
Landlord for all costs and expenses incurred, including, but not limited
to, salaries to personnel in connection with the recapture, management, and
resale or reletting of the Premises, or part thereof (but less any income
derived by Landlord from the Premises, or part thereof, in connection with
such management); all taxes, assessments and water and sewer charges paid
with respect to the Premises, or part thereof; any
104
payments made or which are necessary to be made to discharge any encumbrances or
liens existing on the Premises, or part thereof, at the time or revesting of
title thereto in Landlord or to discharge or prevent from attaching any
subsequent encumbrances or liens due to obligations, defaults or acts of
Developer, its successors or transferees; any expenditures made or obligations
incurred with respect to the making or completion of the improvements or any
part thereof on the Premises, or part thereof; and any amounts otherwise owing
Landlord by Developer and its successor or transferee;
17.5.11.2 Reimbursement to Developer. Second, to reimburse Developer,
--------------------------
its successors or transferees, a sum up to the amount equal to the sum of (i)
the costs incurred for the development of the Project, prorated to the Premises,
if the Premises are less than all of the Project, on a square foot basis, and
for the improvements existing on the Premises at the time of the re-entry and
repossession by Developer, less (ii) any gains or income withdrawn or made by
Developer from the Premises or the improvements thereon; provided however, that
no payment shall be made to Developer if this Lease is terminated as a result of
an uncured default by Developer.
17.5.11.3 Ground Rent. Third, in the case of a reletting, to pay to
-----------
Landlord an amount
105
equal to the Ground Rent and other payments payable to Landlord
hereunder that Landlord would have received if this Lease had not
been terminated;
17.5.11.4 Remaining Balance. Any balance remaining
-----------------
after such reimbursement shall be retained by Landlord as its
property. In the event that such street, utility and/or other off-
site improvements have been constructed by or the costs of such
construction were paid or reimbursed by an improvement or special
assessments district, the provisions of this subsection shall be
applicable to the costs for such improvements if payment of the
bonds issued by such district have been guaranteed by Developer gor
are secured by security, in addition to the Leasehold Estate
created hereby, or paid by Developer, but only to the extent of
such payment by Developer or of payment from the proceeds of such
guarantee or security.
17.5.12 Delivery of Plans. In the event that this Lease is
-----------------
terminated, for any reason whatsoever, Developer shall deliver to
Landlord one set of all plans and data in its possession concerning
the Premises.
17.6 Right to Contest Laws. Developer shall have the right, after
---------------------
notice to Landlord to contest or to permit its subtenants to contest by
appropriate legal proceedings, without costs or expense to Landlord, the
validity of any law, ordinance, order, rule, regulation or requirement to be
complied with by Developer under this Lease and to postpone compliance with the
106
same except such laws as may be adopted by Landlord, provided such contest shall
be promptly and diligently prosecuted at no expense to Landlord and so long as
Landlord shall not thereby suffer any civil penalties, sanction or be subjected
to any criminal penalties or sanctions, and Developer shall protect and save
harmless Landlord against any liability and claims for any such noncompliance or
postponement of compliance.
17.7 Trade Fixtures. All trade fixtures, furnishings, equipment and
--------------
signs installed by or under Developer or subtenants shall be and remain the
property of the person, firm or corporation installing the same and shall be
removable at any time during the term of this Lease. The removal of any such
trade fixtures, furnishings, equipment and signs shall be at the expense of the
person, firm or corporation removing the same, who shall repair any damage or
injury to the Premises and all improvements thereto occasioned by the removal
thereof. In the event that any subtenant acquires any furniture, trade
fixtures, signs and/or equipment to be used in connection with its subleased
premises from an equipment lessor or from an equipment seller under a security
agreement, Landlord agrees to execute such documents as may reasonably be
required by the equipment lessor or creditor in order to assure such party of
its prior rights in and to any such equipment, furniture, signs and/or trade
fixtures and of its right to remove any such equipment, furniture, signs and/or
trade fixtures from the subleased premises for a period of not to exceed forty-
five (45) days from and after notice to such party of the termination or
expiration of the sublease of the subject subtenant-lessee or subtenant-debtor.
107
17.8 Continued Possession of Developer. If Developer shall hold over
---------------------------------
the Premises after the expiration of the term hereof with the consent of
Landlord, either express or implied, such holding over shall be construed to be
only a tenancy from month-to-month, subject to all the covenants, Ground Rent
conditions and obligations hereof and terminable by either party as provided by
law.
17.9 Utilities. Developer shall pay or cause to be paid all charges
---------
for gas, electricity, water and other utilities furnished to the Premises during
the term of this Lease and all sewer use charges or similar charges or
assessments for utilities levied against the Premises for any period included
within the term of this Lease.
17.10 Surrender. Upon the expiration of the term of this Lease, as
---------
provided herein, or sooner termination of this Lease, Developer, subject to
subsection 17.5.11 shall surrender to Landlord, all and singular, the Premises,
including any buildings and all improvements constructed by or under Developer
then situated upon the Premises, and Developer shall execute, acknowledge and
deliver to Landlord within ten (10) days after written request from Landlord to
Developer, a Quitclaim Deed or other document required by any reputable title
company to remove the cloud of this Lease from the Premises. Notwithstanding
the foregoing provisions of this section to the contrary, Developer shall have
the right, at any time not less than six (6) months prior to the expiration of
the term of this Lease and for a period of sixty (60) days following the
expiration of the term to remove all or any portion of the buildings and other
improve-
108
ments constructed by or under Developer upon the Premises, without obligation to
replace the same with new buildings and/or other improvements as required by
subsection 6.3 above.
17.11 Partial Invalidity. If any term or provision of this Lease or
------------------
the application thereof to any party or circumstances shall, to any extent, be
held invalid or unenforceable, the remainder of this Lease, or the application
of such term or provision, to persons or circumstances other than those as to
whom or which it is held invalid or unenforceable, shall not be affected
thereby, and each term and provision of this Lease shall be valid and
enforceable to the fullest extent permitted by law.
17.12 Section Headings. The section and subsection headings of this
----------------
Lease are inserted as a matter of convenience and reference only and in no way
define, limit or describe the scope or intent of this Lease or in any way affect
the terms and provisions hereof.
17.13 Short Form Lease. Concurrently with the execution and delivery
----------------
of this Lease, Landlord and Developer have executed, acknowledged and caused to
be recorded a short form of this Lease in the form attached hereto as Exhibit
"M".
17.14 Exhibits Incorporated. Exhibit "A" is hereby incorporated in
---------------------
this Lease. No other exhibit is incorporated in the Lease and all exhibits,
other than Exhibit "A", may be changed or modified by agreement between Landlord
and Developer at any time and from time to time without amending this Lease.
17.15 Entire Agreement, Waivers and Amendments. This Lease is
----------------------------------------
executed in three (3) triplicate originals, each of
109
which is deemed to be an original. It constitutes the entire understanding and
agreement of the parties. This Lease integrates all the terms and conditions
mentioned herein or incidental hereto, and supersedes all negotiations or
previous agreements between the parties with respect to all or any part of the
subject matter hereof.
17.16 Waivers. All waivers of the provisions of this Lease must be
-------
in writing by the appropriate authorities of Landlord or Developer, and all
amendments hereto must be in writing by the appropriate authorities of Landlord
and Developer.
17.17 Approvals. Except where specific criteria are set forth as a
---------
condition to approving or disapproving or a matter of course of action,
including but not limited to assignment (subsection 5.4) , and subletting
(subsection 5.7.2) , in all circumstances where under this Lease either party is
required to approve or disapprove any matter, such approval shall not be
unreasonably withheld.
17.18 Successors in Interest. The provisions of this Lease shall be
----------------------
binding upon and shall inure to the benefit of the heirs, executors, assigns and
successors in interest of the parties hereto.
17.19 "And/Or". Whenever the words and symbols "and/or" are used in
--------
this Lease, it is intended that this Lease be interpreted and the sentence,
phrase or other part be considered in both its conjunctive and disjunctive
sense, and as having been written twice, once with the word "and" inserted, and
once with the word "or" inserted, in the place of said words and symbol
"and/or".
110
17.20 "Including" Defined. The use of the word "including", or
-------------------
"include", when followed by any general statement, term or matter, will not be
construed to limit such statement, term or matter to the specific items or
matters set forth immediately following such work or to similar items, terms or
matters, but rather will be deemed to refer to all other items, terms or matters
that could reasonably fall within the broadest possible scope of such general
statement, term, item or matter.
17.21 Right of First Refusal to Purchase. If Landlord shall
----------------------------------
determine during the term of this Lease that it is lawful and in the public
interest to sell the Premises, or any portion thereof, Landlord shall, prior to
making the Premises or part thereof available for sale to any other party,
provide Developer with the opportunity to purchase said property at its fair
market value, as determined by an appraisal obtained by Landlord. If Developer
has not entered into an agreement to purchase said property within sixty (60)
days of the date it is first offered for sale to Developer at the price
theretofore determined by Landlord to be the fair market value, Landlord may
offer the property for sale on the open market. Provided, however, that if
Landlord should reduce the fair market value of the Premises or part thereof to
be sold by seven and one-half percent (7.5%) or more, Developer's first refusal
rights shall be reinstated. Developer shall respond to any such re-offer within
five (5) business days, and if Developer fails to respond within that time
period Developer's first refusal rights shall terminate. The determination
whether such property shall be made available for sale is and shall be within
the sole and exclusive discretion
111
of Landlord. Landlord shall determine the legality of such action prior to
making a determination to sell on the basis of the law then in effect.
17.22 If Developer is a Trustee. If Developer is a Trustee, this
-------------------------
Lease is executed by the undersigned Trustee, not personally, but solely as
Trustee, and it is expressly understood and agreed by the parties hereto,
anything contained herein to the contrary notwithstanding, that each and all of
the covenants, undertakings, representations and agreements herein made are
intended, not as personal covenants, undertakings, representations and
agreements of the Trustee, individually, or for the purpose of binding the
Trustee personally, but this Lease is executed and delivered by the Trustee
solely in the exercise of the powers conferred upon the Trustee as such Trustee
under the trust agreement and no personal liability or personal responsibility
is assumed by, nor shall at any time be asserted or enforced against said
Trustee on account hereof, or on account of any covenant, undertaking,
representation, warranty or agreement herein contained, either expressed or
implied, and all such personal liability, if any, being hereby expressly waived
and released by the parties hereto, and by all persons claiming by or under said
parties. The provisions of this subsection 17.22 shall apply to any Trustee
succeeding in whole or in part to the interests of Developer hereunder.
17.23 Limitation of Liability of Partners. From and after the
-----------------------------------
completion of the construction of the improvements described in this Lease, if
Developer at any such time shall be a partnership or joint venture, Landlord
shall look solely to the
112
assets of such partnership or joint venture for the collection or satisfaction
of any money judgment which Landlord may recover against Developer, and Landlord
shall not look for the collection or satisfaction of any such judgment to the
personal assets of any person who shall at any time be a partner, joint venturer
or participant in or under any such partnership or joint venture. The provisions
of the subsection shall be binding upon Landlord and each and every future owner
of Landlord's interest under this Lease and shall insure to the benefit of each
and every such partner, joint venturer and participant.
17.24 Approvals. Except as otherwise specifically provided in this
---------
Lease, all approvals to be done by Landlord may be done by Landlord's City
Manager or his designee.
IN WITNESS WHEREOF, Landlord and Developer have signed this Lease as
of the date opposite their signature.
CITY OF LONG BEACH, a municipal
corporation
January 24, 1989 By: [SIGNATURE APPEARS HERE]
---------- --------------------------------
City Manager
LANDLORD
XXXXXX LONG BEACH ASSOCIATES, a
California limited partnership
By: XXXXXX INDUSTRIES
December 23, 1988 By: /s/ Xxxxxxx X. Xxxxx
----------- ---------------------------
Title: Executive Vice President
-------------------------
DEVELOPER
113
This Lease Agreement is approved as to form this 18th day of
January, 1989.
XXXX X. XXXXXXX, City Attorney
By: [SIGNATURE APPEARS HERE]
Deputy
RPF/rg
12/22/88
D-187 A&B
000
XXXXX XX XXXXXXXXXX )
) ss.
COUNTY OF LOS ANGELES )
On December 23, 1988, before me, the undersigned, a Notary Public in and
for said State, personally appeared Xxxxxxx X. Xxxxx, personally known to me or
proved to me on the basis of satisfactory evidence to be the person who executed
this instrument as Executive Vice President of Xxxxxx Industries, the
corporation that executed this instrument as the general partner of Xxxxxx Long
Beach Associates, a California Limited Partnership, the partnership that
executed the within instrument, and acknowledged to me that such corporation
executed the same as such partner and that said partnership executed the same.
WITNESS my hand and official seal.
[SEAL OF NOTARY PUBLIC APPEARS HERE] /s/ Xxxxxx X. Xxxx
-----------------------------
Notary Public in and for said
County and State
