2025-03-03 Debtors 2nd Motion Deadline ExtensionCase 24-11647-MFW Doc 369 Filed 03/03/25 Page 1 of 13
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
Chapter 11
Case No. 24-11647 (MFW)
Jointly Administered
In re:
SilverRock Development Company, et al.,
Debtors.'
Objection Deadline: March 24, 2025 @ 4:00 p.m. ET
Hearing Date: April 15, 2025 at 10:30 a.m. ET
DEBTORS' SECOND MOTION FOR ENTRY OF AN ORDER EXTENDING THE
DEADLINE PURSUANT TO SECTION 365(D)(4) OF THE BANKRUPTCY
CODE TO ASSUME OR REJECT UNEXPIRED LEASES OF
NONRESDIENTIAL REAL PROPERTY
The above -captioned debtors and debtors in possession (each, a "Debtor" and, collectively,
the "Debtors") hereby move (the "Motion"), pursuant to section 365(d)(4)(B) of title 11 of the
United States Code (the "Bankruptcy Code"), for entry of an order, substantially in the form
attached hereto as Exhibit A (the "Proposed Order"), further extending the deadline to assume or
reject certain unexpired leases of nonresidential real property to the earlier of (a) June 2, 2025 and
(b) the confirmation date of any chapter 11 plan of the Debtor. In support of the Motion, the
Debtors respectfully represent as follows:
JURISDICTION
1. This Court has jurisdiction to consider this Motion pursuant to 28 U.S.C. §§ 157
and 1334, and the Amended Standing Order of Reference from the United States District Court
for the District of Delaware dated as of February 29, 2012. This is a core proceeding under 28
The Debtors in these chapter 11 cases, along with the last four digits of each Debtor's federal tax identification
number, as applicable, are: SilverRock Development Company, LLC (5730), RGC PA 789, LLC (5996), SilverRock
Lifestyle Residences, LLC (0721), SilverRock Lodging, LLC (4493), SilverRock Luxury Residences, LLC (6598)
and SilverRock Phase I, LLC (2247). The location of the Debtors' principal place of business and the Debtors' mailing
address is 343 Fourth Avenue, San Diego, CA 92101.
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U.S.C. § 157(b). Venue of these cases and the Motion is proper before this Court pursuant to 28
U.S.C. §§ 1408 and 1409.
2. The Debtors consent pursuant to Local Rule 9013-1(f) to the entry of a final order
by the Court in connection with this Motion to the extent that it is later determined that the Court,
absent consent of the parties, cannot enter final orders or judgments in connection herewith
consistent with Article III of the United States Constitution.
3. The statutory and legal predicate for the relief requested herein is section 365(d)(4)
of the Bankruptcy Code.
BACKGROUND
4. On August 5, 2024 (the "Petition Date"), the Debtors each commenced with the
Court a voluntary case (the "Chapter 11 Cases") under the Bankruptcy Code. The Debtors are
authorized to operate their business and manage their properties as debtors in possession pursuant
to sections 1107 and 1108 of the Bankruptcy Code.
5. Debtor SilverRock Luxury Residences, LLC ("Luxury") is the tenant on a ground
lease covering property where Debtors intend to build Montage -branded residences. Debtors
SilverRock Lifestyle Residences, LLC ("Lifestyle") and SilverRock Lodging, LLC ("Lodging") are
tenants on separate ground leases covering property where Debtors intend to build Pendry-branded
residences. Debtor SilverRock Development Company, LLC ("SRDC") is the landlord on each of
these ground leases (the "Ground Leases"), which are attached to this Motion as Exhibit B.
6. The Ground Leases are the only non-residential real property leases to which any
Debtor is a party.
7. On December 23, 2024, this Court entered the Order Extending the Deadline
Pursuant to Section 365(D)(4) of the Bankruptcy Code to Assume or Reject Unexpired Leases ofNon-
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Residential Real Property (the "Extension Order") [D.I. 260]. The Extension Order extended the
time within which the Debtor may assume or reject the Ground Leases to the earlier of: (a) March 3,
2025, and (b) the confirmation date of any chapter 11 plan of the Debtor (the "Current
Assumption/Rejection Deadline"). The Extension Order was without prejudice to the rights of the
Debtors to request further extensions of time to assume or reject the Ground Leases as provided in
section 364(d)(4) of the Bankruptcy Code.
8. As of the date of this Motion, the Office of the United States Trustee for the District
of Delaware (the "U.S. Trustee") has not appointed an official committee of unsecured creditors,
and no trustee or examiner has been appointed in the Chapter 11 Cases.
9. The factual background regarding the Debtors, including their business operations,
capital and debt structure and the events leading to the filing of these Chapter 11 Cases, is set forth
in more detail in the Declaration of Robert S. Green, Jr. in Support of the Debtors' Chapter 11
Petitions and First Day Pleadings [Docket No. 13] (the "First Day Declaration"). As set forth in
the First Day Declaration, the Debtors' business operations center around the real estate development
of a 525-acre master planned community in the City of La Quinta, California (the "Project"), now
known as "Talus." To date, the Debtors currently own approximately 140 acres of land in the Project.
The Ground Leases are key components of the Project.
RELEIF REQUESTED
10. By this Motion, pursuant to Section 365(d)(4)((B)(ii) of the Bankruptcy Code
extending the Debtors' deadline to assume or reject the Ground Leases by an additional 90 from
the current deadline of March 3, 2025 to June 2, 2025,2 be without prejudice to the rights of the
2 90 days from March 3, 2025 is June 1, 2025, which is a Sunday.
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Debtors to seek further extensions of the time to assume or reject Ground Leases as provided in
section 365(d)(4) of the Bankruptcy Code.
BASIS FOR RELIEF REQUESTED
11. Section 365(d)(4) of the Bankruptcy Code provides:
(A) Subject to subparagraph (B), an unexpired lease of nonresidential real
property under which the debtor is the lessee shall be deemed rejected, and
the trustee shall immediately surrender that nonresidential real property to the
lessor, if the trustee does not assume or reject the unexpired lease by the earlier
of—
(B)
(a) the date that is 120 days after the date of the order for relief; or
(b) the date of the entry of an order confirming a plan.
(a) The court may extend the period determined under subparagraph (A),
prior to the expiration of the 120-day period, for 90 days on the motion
of the trustee or lessor for cause.
(b) If the court grants an extension under clause (i), the court may grant
a subsequent extension only upon prior written consent of the lessor in
each instance. 11 U.S.C. § 365(d)(4)(A), (B). Thus, upon a showing of
cause, a court has the discretion to grant an extension of 90 days after the
conclusion of the initial 120 days allotted to debtors to assume or reject
nonresidential real -property leases.
10. The lessor for each of the Ground Leases is Debtor SDRC, which has consented in
writing to a further 90 day extension from the Current Assumption/Rejection Deadline for the
Debtors to assume or reject the Ground Leases.
11. Courts have considered the particular needs of the debtor in considering whether to
grant an extension. See, e.g., In re Channel Home Ctrs., Inc., 989 F.2d 682, 689 (3d Cir. 1993)
("Nothing prevents a bankruptcy court from granting an extension because a particular debtor
needs additional time to determine whether the assumption or rejection of particular leases is called
for by the plan of reorganization that it is attempting to develop.").
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12. Courts have articulated certain, non -exhaustive factors that indicate whether there
is "cause" for the approval of an extension. These factors include:
(a) whether the debtor is paying for the use of the property;
(b) whether the debtor's continued occupation could damage the lessor beyond the
compensation available under the Bankruptcy Code;
(c) whether the lease is the debtor's primary asset;
(d) whether the debtor has had sufficient time to formulate a plan of
reorganization;
(e) the complexity of the case facing the debtor;
(f) the number of leases the debtor must evaluate; and
(g) the need for a judicial determination of whether a lease exists.
In re Burger Boys, Inc. , 94 F.3d 755, 760-61 (2d Cir. 1996).
12. Pending the Debtors' decision to assume or reject the Ground Leases, the Debtors
intend to perform all of their undisputed obligations (if any) arising from and after the Petition Date
in a timely fashion to the extent required by section 365(d)(3) of the Bankruptcy Code. As such, the
Debtors' requested extension of time to assume or reject the Ground Leases will not prejudice or
otherwise affect the substantive rights of the only lessor under the Ground Leases, SRDC. See, e.g.,
In re Am. Healthcare Mgt., Inc., 900 F.2d 827, 832 (5th Cir. 1990)("[A]n order extending the time
for a debtor to assume or reject a lease merely preserves the status quo .... ") (quoting In re Victoria
Station Inc., 875 F.2d 1380, 1386 (9th Cir. 1989)).
13. The Debtors have retained Jones Lang LaSalle Americas, Inc. as Real Estate Broker
and Advisor with respect to the sale of the development opportunity related to the Project [D.1. 312].
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14. The Ground Leases may be necessary to the Debtors' business and to any potential
party interested in acquiring the Debtors' business. As such, the Ground Leases may be critical to a
going -concern sale process.
15. The Debtors are working in good faith to sell the opportunity presented by the Project
to well -qualified bidders. However, the Debtors will require additional time based on the complexity
of the Debtors' assets and the structure of the transaction to complete the sale process. In the event
that the Debtors are unable for whatever reason to consummate the going -concern sale contemplated,
the Debtors may alternatively need to reject the Ground Leases.
16. The 90-day extension requested will enable the Debtors to make a fully informed
decision regarding the Ground Leases and the sale process. Ultimately, the extension, if granted,
the Debtors' estates will benefit from additional time to consider whether to assume or rejection
some or all of the Ground Leases.
17. Based on the foregoing, the Debtors respectfully submit that cause exists to extend
the Initial Assumption/Rejection Period as requested herein.
RESERVATION OF RIGHTS
18. Nothing contained in this Motion or any actions taken by the Debtors pursuant to
relief granted in the Proposed Order is intended or should be construed as (a) an assumption or
rejection of any of the Ground Leases under section 365(a) of the Bankruptcy Code or (b) an
admission by the Debtors that a particular instrument is or is not a true lease. If the Court grants
the relief sought herein, any and all of the Debtors' rights, claims, and defenses with respect to the
characterization of the Ground Leases pursuant to sections 365(d)(3) and 365(d)(4) of the
Bankruptcy Code or otherwise are expressly reserved.
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AUTOMATIC EXTENSION UNDER LOCAL RULE 9006-2
19. Pursuant to Local Rule 9006-2, the Current Assumption/Rejection Period shall
automatically be extended until the Court acts on this Motion, without the necessity for entry of a
bridge order.
NOTICE
20. Notice of this Motion will be provided to: (a) the Office of the United
States Trustee for the District of Delaware; (b) the Debtors' twenty (20) largest unsecured creditors
(excluding insiders); (c) counsel to the DIP Lender; and (d) any party that has requested notice
pursuant to Bankruptcy Rule 2002. The Debtors respectfully submit that no further notice of this
Motion is required under the circumstances.
CONCLUSION
WHEREFORE, the Debtors respectfully request that the Court enter an order substantially
in the form of the Proposed Order attached as Exhibit A and grant such other relief as is just and
proper under the circumstances.
Dated: March 3, 2025 ARMSTRONG TEASDALE, LLP
Wilmington, Delaware
/s/Jonathan M. Stemerman
Jonathan M. Stemerman (No. 4510)
Eric M. Sutty (No. 4007)
Denisse Guevara (No. 7206)
1007 North Market Street, Third Floor
Wilmington, Delaware 19801
Telephone: (302) 416-9670
jstemerman@atllp.com
esutty@atllp.com
dguevara@atllp.com
-and-
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Victor A. Vilaplana (Pro Hac Vice)
823 La Jolla Rancho Rd
La Jolla, CA 92037
Telephone: (619) 840-4130
vavilaplana@gmail.com
-and-
Benjamin M. Carson (Pro Hac Vice)
5965 Village Way STE E105
San Diego, CA 92130
Telephone: (858) 255-4529
ben@benjamincarson.com
Counsel to the Debtors
and Debtors in Possession
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Case 24-11647-MFW Doc 369 Filed 03/03/25 Page 9 of 13
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
Chapter 11
Case No. 24-11647 (MFW)
Jointly Administered
In re:
SilverRock Development Company, et al.,
Debtors.'
Objection Deadline: March 24, 2025 at 4:00
p.m. ET
Hearing Date: April 15, 2025 at 10:30 a.m. ET
NOTICE OF MOTION
PLEASE TAKE NOTICE that, on March 3 2025, the above -captioned debtors and
debtors in possession (collectively, the "Debtors") filed the Debtors' Second Motion to Extend
Time Deadline Pursuant to Section 365(D)(4) of the Bankruptcy Code to Assume or Reject
Unexpired Leases of Non -Residential Real Property (the "Motion") with the United States
Bankruptcy Court for the District of Delaware (the "Court").
PLEASE TAKE FURTHER NOTICE that any objections to the Motion must be filed
on or before MARCH 24, 2025 at 4:00 p.m. (ET) (the "Objection Deadline") with the United
States Bankruptcy Court for the District of Delaware, 824 North Market Street, 3rd Floor,
Wilmington, Delaware 19801. At the same time, you must serve a copy of the objection upon
the undersigned counsel to the Debtors so as to be received on or before the Objection Deadline.
PLEASE TAKE FURTHER NOTICE THAT A HEARING TO CONSIDER THE
MOTION WILL BE HELD ON APRIL 15, 2025 at 10:30 A,M. (ET) BEFORE THE
HONORABLE MARY F. WALRATH, UNITED STATES BANKRUPTCY COURT JUDGE
FOR THE DISTRICT OF DELAWARE, 824 N. MARKET STREET, 5TH FLOOR,
COURTROOM NO. 4, WILMINGTON, DELAWARE 19801.
PLEASE TAKE FURTHER NOTICE THAT, IF YOU FAIL TO RESPOND IN
ACCORDANCE WITH THIS NOTICE, THE COURT MAY GRANT THE RELIEF
REQUESTED IN THE MOTION WITHOUT FURTHER NOTICE OR A HEARING.
The Debtors in these chapter 11 cases, along with the last four digits of each Debtor's federal tax identification
number, as applicable, are: SilverRock Development Company, LLC (5730), RGC PA 789, LLC (5996), SilverRock
Lifestyle Residences, LLC (0721), SilverRock Lodging, LLC (4493), SilverRock Luxury Residences, LLC (6598)
and SilverRock Phase I, LLC (2247). The location of the Debtors' principal place of business and the Debtors'
mailing address is 343 Fourth Avenue, San Diego, CA 92101.
9
Case 24-11647-MFW Doc 369 Filed 03/03/25 Page 10 of 13
Dated: March 3, 2025 ARMSTRONG TEASDALE LLP
Wilmington, Delaware
Jonathan M. Stemerman (No. 4510)
Eric M. Sutty (No. 4007)
Denisse Guevara (No. 7206)
1007 North Market Street, Third Floor
Wilmington, Delaware 19801
Tel: (302) 416-9670
jstemerman@atllp.com
esutty@atllp.com
dguevara@atllp.com
- and-
Victor A. Vilaplana (Pro Hac Vice)
823 La Jolla Rancho Rd.
La Jolla, CA 92037
Tel: (619) 840-4130
vavilaplana@gmail.com
- and-
Benjamin M. Carson (Pro Hac Vice)
5965 Village Way, Ste. E105
San Diego, California 92130
Tel: (858) 255-4529
ben@benjamincarson.com
Counsel to the Debtors and Debtors in
Possession
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Exhibit A
Proposed Order
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IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
Chapter 11
Case No. 24-11647 (MFW)
Jointly Administered
Re: Docket No.
In re:
SilverRock Development Company, et al.,
Debtors.'
ORDER FURTHER EXTENDING THE DEADLINE PURSUANT TO
SECTION 365(D)(4) OF THE BANKRUPTCY CODE TO
ASSUME OR REJECT UNEXPIRED LEASES OF
NONRESIDENTIAL REAL PROPERTY
Upon consideration of the motion (the "Motion")2 of the above -captioned debtors and
debtors in possession (collectively, the "Debtors"), pursuant to section 365(d)(4) of the Bankruptcy
Code, further extending the deadline to assume or reject the Ground Leases; and due and sufficient
notice of the Motion having been given under the circumstances; and it appearing that no other or
further notice need be provided under the circumstances; and it appearing that the relief requested
by this Motion is in the best interest of the Debtor, its estate, and its creditors and other parties in
interest; and after due deliberation and sufficient cause appearing therefore;
IT IS HEREBY ORDERED THAT:
1. The Motion is GRANTED as set forth herein.
2. The time within which the Debtor may assume or reject the Ground
Leases is extended to the earlier of (a) June 2, 2025 and (b) the confirmation date of any chapter
11 plan of the Debtor.
The Debtors in these chapter 11 cases, along with the last four digits of each Debtor's federal tax identification
number, as applicable, are: SilverRock Development Company, LLC (5730), RGC PA 789, LLC (5996),
SilverRock Lifestyle Residences, LLC (0721), SilverRock Lodging, LLC (4493), SilverRock Luxury Residences,
LLC (6598) and SilverRock Phase I, LLC (2247). The location of the Debtors' principal place of business and the
Debtors' mailing address is 343 Fourth Avenue, San Diego, CA 92101.
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Case 24-11647-MFW Doc 369 Filed 03/03/25 Page 13 of 13
3. Nothing contained in this Order shall be construed as (a) an assumption or
rejection of any of the Ground Leases under section 365(a) of the Bankruptcy Code or (b) an
admission by the Debtors that a particular instrument is or is not a true lease. Any and all of the
Debtors' rights, claims and defenses with respect to the characterization of the Ground Leases
pursuant to sections 365(d)(3) and 365(d)(4) of the Bankruptcy Code or otherwise are expressly
reserved.
4. The entry of this Order shall be without prejudice to the rights of the Debtors to
request further extension of time to assume or reject Ground Leases as provided in section
364(d)(4) of the Bankruptcy Code.
5. Notwithstanding the possible applicability of Bankruptcy Rules 6004(h), this
Order shall be immediately effective and enforceable upon its entry.
6. This Court shall retain jurisdiction to hear and determine all matters arising from
or related to the implementation, interpretation and/or enforcement of this Order.
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Exhibit A
Proposed Order
1
Case 24-11647-MFW Doc 369-1 Filed 03/03/25 Page 2 of 3
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
Chapter 11
Case No. 24-11647 (MFW)
Jointly Administered
Re: Docket No.
In re:
SilverRock Development Company, et al.,
Debtors.1
ORDER FURTHER EXTENDING THE DEADLINE PURSUANT TO
SECTION 365(D)(4) OF THE BANKRUPTCY CODE TO
ASSUME OR REJECT UNEXPIRED LEASES OF
NONRESIDENTIAL REAL PROPERTY
Upon consideration of the motion (the "Motion")2 of the above -captioned debtors and
debtors in possession (collectively, the "Debtors"), pursuant to section 365(d)(4) of the Bankruptcy
Code, further extending the deadline to assume or reject the Ground Leases; and due and sufficient
notice of the Motion having been given under the circumstances; and it appearing that no other or
further notice need be provided under the circumstances; and it appearing that the relief requested
by this Motion is in the best interest of the Debtor, its estate, and its creditors and other parties in
interest; and after due deliberation and sufficient cause appearing therefore;
IT IS HEREBY ORDERED THAT:
1. The Motion is GRANTED as set forth herein.
2. The time within which the Debtor may assume or reject the Ground
Leases is extended to the earlier of (a) June 2, 2025 and (b) the confirmation date of any chapter
11 plan of the Debtor.
The Debtors in these chapter 11 cases, along with the last four digits of each Debtor's federal tax identification
number, as applicable, are: SilverRock Development Company, LLC (5730), RGC PA 789, LLC (5996),
SilverRock Lifestyle Residences, LLC (0721), SilverRock Lodging, LLC (4493), SilverRock Luxury Residences,
LLC (6598) and SilverRock Phase I, LLC (2247). The location of the Debtors' principal place of business and the
Debtors' mailing address is 343 Fourth Avenue, San Diego, CA 92101.
2
Case 24-11647-MFW Doc 369-1 Filed 03/03/25 Page 3 of 3
3. Nothing contained in this Order shall be construed as (a) an assumption or
rejection of any of the Ground Leases under section 365(a) of the Bankruptcy Code or (b) an
admission by the Debtors that a particular instrument is or is not a true lease. Any and all of the
Debtors' rights, claims and defenses with respect to the characterization of the Ground Leases
pursuant to sections 365(d)(3) and 365(d)(4) of the Bankruptcy Code or otherwise are expressly
reserved.
4. The entry of this Order shall be without prejudice to the rights of the Debtors to
request further extension of time to assume or reject Ground Leases as provided in section
364(d)(4) of the Bankruptcy Code.
5. Notwithstanding the possible applicability of Bankruptcy Rules 6004(h), this
Order shall be immediately effective and enforceable upon its entry.
6. This Court shall retain jurisdiction to hear and determine all matters arising from
or related to the implementation, interpretation and/or enforcement of this Order.
3
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Exhibit B
Case 24-11647-MFW Doc 369-2 Filed 03/03/25 Page 2 of 107
TRIPLE -NET GROUND LEASE
(SilverRock Luxury Residences, LLC)
This TRIPLE -NET GROUND LEASE (this "Lease") is made as of October 22, 2021
(the "Commencement Date"), between SilverRock Development Company, LLC, a Delaware
limited liability company ("Landlord"), and SilverRock Luxury Residences, LLC, a Delaware
limited liability company ("Tenant"). Landlord and Tenant may sometimes be individually
referred to as a "party" and collectively referred to as the "parties." Based upon the mutual
promises contained herein and for good and valuable consideration, the receipt of which is
acknowledged by each party, the parties, intending to be legally bound, agree as follows:
1. Principal Lease Provisions.
As of the Commencement Date, Landlord leases the Premises to Tenant and
grants Tenant exclusive rights of possession of the Premises until the expiration of the Term.
Tenant accepts the Premises in its as -is condition, without any representation whatsoever from
Landlord as to the Premises. Tenant's interest in the Premises and the rights granted to Tenant
under this Lease shall be referred to herein as the "Leasehold Estate." The rights of Landlord in
the Premises after giving effect to the Leasehold Estate shall be referred to herein as the
"Reversionary Estate." The Reversionary Estate includes all of Landlord's rights pursuant to
this Lease, including Landlord's reversionary interest in the Improvements, but expressly
excluding any interest in the Released Parcels (as hereafter defined) and any and all
Improvements located thereon.
The following are the "Principal Lease Provisions" of, and certain definitions applicable
to, this Lease. Other portions of this Lease explain and define the Principal Lease Provisions in
more detail and should be read in conjunction with this Section.
(i) "Affiliate" means with respect to a party (i) a parent or a wholly -owned
subsidiary of such party, (ii) any Person that controls, is controlled by or under the common
control with such party, (iii) any Person that purchases all or substantially all of the assets of
such party, or (iv) any Person into which such party is merged or consolidated.
(ii) "Approved Institution" means a savings bank, a savings or building and
loan association, a commercial bank or trust company (whether acting individually or in any
fiduciary capacity), an insurance company, an educational institution or an institutional pension
or retirement fund or system, a charitable or other eleemosynary institution, a real estate
investment trust or any other Person with assets (capital and surplus) in excess of One Hundred
Million Dollars ($100,000,000), whose businesses include interim, construction or permanent
lending secured by real estate
(iii) "Constant Dollars" means the present value of the dollars to which such
phase refers. An adjustment shall be made on each anniversary of the Commencement Date.
Constant Dollars shall be determined by multiplying the dollar amount to be adjusted by a
fraction, the numerator of which is the Current Index Number and the denominator of which is
4838-7563-7503.1 10/27/2021
Case 24-11647-MFW Doc 369-2 Filed 03/03/25 Page 3 of 107
the Base Index Number. The "Base Index Number" shall be the level of the Index for the
calendar month in which the Commencement Date occurs; the "Current Index Number" shall
be the level of the Index for the calendar month in which the adjustment is to take place; and the
"Index" shall be the Consumer Price Index — "All Items" for All Urban Consumers in the Los
Angeles — Riverside — Orange County area (1982-84=100) or any successor index thereto as
hereinafter provided. If publication of the Index is discontinued, or if the basis of calculating the
Index is materially changed, then the parties shall substitute for the Index comparable statistics
as computed by an agency of the United States Government or, if none, by a substantial and
responsible periodical or publication of recognized authority closely approximating the result
which would have been achieved by the Index.
(iv) "Default Rate" means an annual rate of interest equal to the lesser of
(i) five percent (5.00%) above the rate of interest announced from time to time by the Bank of
America, Downtown Los Angeles, Main Branch, as the prime or reference rate (or, in the event
said bank ceases to announce a prime or reference rate or is acquired or ceases operations and
there is no successor bank, the largest established and financially secure commercial bank,
having a headquarters in California, selected by Landlord), or (ii) the highest rate permitted by
Law, if any.
(v) "Expiration Date" means the last day of the 99th Lease Year.
(vi) "Improvements" mean all current and future improvements on and
modifications to the Premises (to the extent existing before expiration of the Term).
(vii) "Lease Year" means each calendar year during the Term; however, if the
first Lease Year shall commence on the Commencement Date and end on the first December 31
following the Commencement Date.
(viii) "Lender" means any Approved Institution which is the holder of debt
from Tenant secured by an interest in the Leasehold Estate or any Improvements, fixtures or
equipment on the Premises. Tenant acknowledges that Landlord's Reversionary Estate is not,
and will not be, subordinate to the security interest of any Lender.
(ix) "Notice and Payment Addresses" for the parties is as follows:
For Landlord, to:
For Tenant, to:
SilverRock Development Company, LLC
c/o The Robert Green Company
343 Fourth Avenue
San Diego, CA 92101
Attn: Mr. Robert S. Green, Jr., President
SilverRock Luxury Residences, LLC
c/o The Robert Green Company
343 Fourth Avenue
San Diego, CA 92101
Attn: Mr. Robert S. Green, Jr., President
4838-7563-7503.1
-2-
Case 24-11647-MFW Doc 369-2 Filed 03/03/25 Page 4 of 107
(x) "Permitted Use" means the uses permitted under the PSDA, subject to
all applicable Laws. After the expiration of the PSDA, the Permitted Use shall be the use in
effect immediately prior to the expiration of the PSDA or any other use that is reasonably
acceptable to Landlord. Notwithstanding anything above to the contrary, Tenant shall not use all
or any part of the Premises, or any improvements thereon, (i) for any unlawful or illegal
business, use or purpose, (ii) for any purpose or in any way in violation of any Laws, including
but not limited to legal requirements respecting Hazardous Substances or (iii) in violation of the
PSDA.
"Premises"):
and
(xi) "Premises" means the following real property (collectively, the
(1) the land described in Exhibit "A" attached hereto (the "Land");
(2) all tenements, hereditaments, appurtenances, easements,
development rights, mineral rights owned by Landlord, water rights, air rights and all other rights
and privileges appertaining to the Land and all rights of ingress and egress at all times from and
to the public streets.
Portions of the Premises are to be improved with residential dwelling units. In
connection with the foregoing, from time to time upon the sale of the subject residential units to
third party buyers and the release of such portion of the Premises from any deed of trust
encumbering the Leasehold Estate or fee title to the Premises (individually and collectively, the
"Deed of Trust"), the residential unit legal lot which is the subject of such sale (the "Released
Parcel") shall be released from the Deed of Trust and this Lease, and Landlord and Tenant shall
promptly enter into an amendment to this Lease and the Memorandum of Lease to reflect such
removal and exclusion of such Released Parcel from the Premises.
(xii) "Project" means the project contemplated under the PSDA.
(xiii) "PSDA" means that certain Purchase, Sale, and Development Agreement
between Landlord and the City of La Quinta dated November 19, 2014, as amended from time to
time.
(xiv) "Rent" means the Minimum Annual Rent in an amount equal to $1.00
for each Lease Year during the Term:
(xv) "Tenant's Work" means the initial Improvements to be constructed by
Tenant on the Premises.
(xvi) "Term" means the period beginning on the Commencement Date; and
ending on the Expiration Date, as accelerated in accordance with this Lease.
2. Payment of Rent.
(a) Minimum Annual Rent. Landlord acknowledges that Tenant has paid
Landlord, as of the Commencement Date, the Minimum Annual Rent for the entire Term.
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(b) General. Except as otherwise provided herein, Rent shall be payable
without notice or demand and without any deduction, offset, or abatement in Lawful money of
the United States of America to Landlord at the address stated herein or to such other Persons or
at such other places as Landlord may designate in writing. The parties acknowledge that this
Lease essentially is a financing device rather than a traditional operating lease and that therefore
all rent is payable under this Lease on a "triple -net" basis, such that Tenant is responsible for all
of the risks, costs and expenses associated with Tenant's Work and the Premises (including,
without limitation, all Impositions, as defined below), except as otherwise provided herein.
3. Late Charge. Tenant hereby acknowledges that late payment by Tenant to
Landlord of any amount due hereunder will cause Landlord to incur costs not contemplated by
this Lease, the exact amount of which will be extremely difficult to ascertain. Accordingly, if:
(a) any Rent is not received by Landlord within five (5) days after it is due; or (b) any other
amount due by Tenant to Landlord hereunder is not paid within ten (10) days after Landlord's
notice to Tenant that the payment is delinquent; then Tenant shall pay to Landlord a late charge
equal to 4% of such overdue amount. The parties hereby agree that such late charge represents a
fair and reasonable estimate of the administrative costs and foregone interest and other income
Landlord will incur and/or suffer by reason of the late payment by Tenant. Acceptance of such
late charge by Landlord shall in no event constitute a waiver of Tenant's default with respect to
such overdue amount, nor prevent Landlord from exercising any of the other rights and remedies
granted hereunder.
4. Use of Premises. Tenant may use the Premises for the Permitted Use and for no
other use without Landlord's written consent, which consent Landlord may not unreasonably
withhold. Tenant covenants throughout the term of this Lease, at Tenant's sole cost and expense,
promptly to comply with all laws and ordinances and the orders, rules, regulations and
requirements of all federal, state and municipal governments and appropriate departments,
commissions, boards and officers thereof, as well as the requirements of the PSDA (collectively,
"Laws"), which may be applicable to the Premises and the Improvements. Tenant shall likewise
observe and comply with the requirements of all policies of public liability, fire, and all other
policies of insurance at any time in force with respect to the Improvements. Tenant shall comply
with all Laws concerning the Premises or Tenant's use of the Premises, including the obligation
at Tenant's sole cost to alter, maintain, and restore the Premises in compliance with all
applicable Laws, even if the Laws are enacted after the date of this Lease, even if compliance
entails costs to Tenant of a substantial nature, and even if compliance requires structural
alterations.
5. Impositions.
(a) Impositions. Tenant covenants and agrees to pay, before any fine, penalty,
interest or cost may be added thereto for the non-payment thereof, all property taxes,
assessments, water and sewer rates and charges, and other governmental charges, general and
special, ordinary and extraordinary, unforeseen as well as foreseen, of any kind and nature
whatsoever (all of which taxes, assessments, water and sewer rates or charges, and other
governmental charges are hereinafter referred to as "Imposition"), which are assessed, levied,
imposed or become a lien upon the Premises and/or the Improvements (as defined below), or
become payable, during the Term of this Lease; provided, however, that if, by Law, any such
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Imposition may at the option of the taxpayer be paid in installments (whether or not interest shall
accrue on the unpaid balance of such Imposition), Tenant may exercise the option to pay the
same (and any accrued interest on the unpaid balance of such Imposition) in installments and
shall pay only such installments as may become due during the Term of this Lease as the same
respectively become due and before any fine, penalty, interest or cost may be added thereto, for
the non-payment of any such installment and interest; and provided, further, that any Imposition
relating to a fiscal period of the taxing authority, a part of which period is included within the
Term of this Lease and a part of which is included in a period of time before the Commencement
Date or after the termination of this Lease, other than a termination of this Lease pursuant to
Section 21 below, shall (whether or not such Imposition shall be assessed, levied, imposed or
become a lien upon the Premises and/or the Improvements, or shall become payable, during the
Term of this Lease) be adjusted between Landlord and Tenant as of the Commencement Date or
the termination of this Lease, as applicable, so that Landlord shall pay that portion of such
Imposition (or receive any tax refund or tax credit) which relates to that part of the fiscal period
before the Commencement Date or after the termination of this Lease, as applicable, and Tenant
shall pay that portion of such Imposition (or receive any tax refund or tax credit) which relates to
the period during the Term of this Lease. Notwithstanding the foregoing, the following shall not
be considered Impositions, and Landlord shall be responsible for the payment the same: (i) any
franchise, corporate, estate, inheritance, succession, capital levy, stamp tax or transfer tax of
Landlord, (ii) any income, excess profits or revenue tax or any other tax, assessment, charge or
levy upon the Rent payable by Tenant under this Lease or (iii) assessments attributable to the C-
Pace loan.
(b) Payment of Impositions. Except when applicable Law requires otherwise,
Tenant shall pay the Impositions for the period commencing with the Commencement Date to
the applicable authority, before delinquency. Tenant covenants, upon request of Landlord, to
furnish to Landlord for inspection, official receipts of the appropriate taxing authority, or other
evidence satisfactory to Landlord, evidencing the payment of any Imposition.
(c) Contest of Taxes and/or Assessed Valuation of Property. Landlord and
Tenant shall each fully cooperate with the other in good faith and use diligent, reasonable efforts
to minimize Impositions. Tenant shall have the right to contest the amount and/or validity, or to
seek a refund, in whole or in part, of any Imposition by appropriate proceedings, and
notwithstanding the provisions of Section 6(a) above, this shall not be deemed or construed in
any way as relieving, modifying or extending Tenant's covenants to pay any such Imposition at
the time and in the manner as provided in this Section 6 unless Tenant shall have deposited with
Landlord or a bank or trust company designated by Landlord, as security for the payment of such
Imposition, money or a corporate surety bond or other security acceptable to Landlord in the
amount so contested and unpaid together with the estimated amount of all interest and penalties
in connection therewith and all charges that may or might be assessed against or become a
charge on the Premises and/or Improvements or any part thereof in said proceedings, whereupon
Tenant may postpone or defer payment of such Imposition. Upon the termination of such
proceedings, Tenant shall pay the amount of such Imposition or part thereof as finally
determined in such proceedings, the payment of which may have been deferred during the
prosecution of such proceedings, together with any costs, fees, interest, penalties or other
liabilities in connection therewith, and upon such payment Landlord shall return, or cause such
bank or trust company to return, the amount above referred to without interest. If, at any time
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during the continuance of such proceedings, Landlord shall deem the amount deposited with it
insufficient, Tenant shall, upon demand, deposit with Landlord or such bank or trust company
such additional sum as Landlord may reasonably request, and upon failure of Tenant to do so, the
amount theretofore deposited may be applied by Landlord or such bank or trust company to the
payment, removal and discharge of such Imposition and the interest and penalties in connection
therewith and any costs, fees or other liability accruing in any such proceedings, and the balance,
if any, shall be returned to Tenant. Landlord agrees not to unreasonably withhold its consent to
joining in any such proceedings or permitting the same to be brought in its name. Landlord shall
not ultimately be subjected to any liability for the payment of any costs or expenses in
connection with any such proceeding, and Tenant covenants to indemnify, save and hold
harmless Landlord from any such costs or expenses. Tenant shall be entitled promptly to any
refund of any such Imposition and penalties or interest thereon, which have been paid by Tenant,
or which have been paid by Landlord and for which Landlord has been fully reimbursed. The
certificate, advice or bill of the appropriate official designated by Law to make or issue the same
or to receive payment of any Imposition, of non-payment thereof, shall be prima facie evidence
that such Imposition is due and unpaid at the time of the making or issuance of such certificate,
advice or bill.
6. Maintenance, Repairs and Replacements. Tenant, at its sole expense, shall keep
the Improvements and the Premises clean and in good condition free of accumulations of
rubbish, and shall make all repairs (including structural repairs) and replacements necessary to
maintain the Improvements during the entire Term as a first-class Project. Landlord shall not be
required to furnish any services or facilities or to make any repairs or alterations to the Premises
or the Improvements and Tenant hereby assumes the full and sole responsibility for the
condition, operation, repair, replacement, maintenance and management of the Premises and the
Improvements. Upon the Commencement Date and throughout the Tenn, Tenant shall, at its
own cost, maintain, repair, and replace the Improvements to the extent required by applicable
Law or regulations and as required by any Lender.
7. Utilities. Tenant is responsible, at its own cost, for supplying utilities to the -
remises, including the payment of hookup fees, deposits and similar charges. Tenant will pay
directly to the appropriate utility company or governmental agency, when due, all bills for gas,
water, sanitary sewer, electricity, telephone and other public or private utilities used by Tenant or
provided to the Premises upon Commencement and throughout the Term.
8. Liens. Tenant shall not suffer or permit any mechanic's, vendor's, laborer's, or
materialman's statutory or similar liens (collectively "mechanic's liens") to be filed against the
Premises or the Improvements, nor against Tenant's leasehold interest in the Premises, by reason
of work, labor, services or materials supplied or claimed to have been supplied to Tenant or
anyone holding any interest in the Premises and/or the Improvements or any part thereof through
or under Tenant. If any such mechanic's lien shall be filed, Tenant shall, within ninety (90) days
after written notice of the filing thereof (but in any event prior to the entry of a judgment for
foreclosure), cause the same to be discharged of record by payment, deposit, bond, order of a
court of competent jurisdiction or otherwise; provided, however, that Tenant shall have the right
to contest, with due diligence, the validity or amount of any such lien or claimed lien, if Tenant
shall give to Landlord security in an amount equal to one and one-half (1 V2) times the amount of
such lien or claimed lien. Subject to the foregoing provisions, if Tenant shall fail to cause such
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lien to be discharged within the required time period, then, in addition to any other right or
remedy of Landlord, Landlord may, but shall not be obligated to, and following written notice to
Tenant of its election to do so, discharge the same either by paying the amount claimed to be due
or by procuring the discharge of such lien by deposit or by bonding proceedings, in which event
Tenant shall reimburse Landlord for all costs incurred thereby immediately following demand
therefor. Nothing contained in this Lease shall be deemed or construed in any way as
constituting the consent or request of Landlord, express or implied by inference or otherwise, to
any contractor, subcontractor, laborer or materialman for the performance of any labor or the
furnishing of any materials for any specific improvements, alteration to or repair of the Premises
or the Improvements or any part thereof.
9. Insurance.
(a) Tenant shall at Tenant's expense, obtain and keep in force during the
Term of this Lease, a policy or policies of Commercial General Liability Insurance that includes
Combined Single Limit Bodily Injury and Property Damage Insurance, including Personal and
Advertising Injury, Blanket Contractual Liability, Liquor Legal Liability, Garage Liability,
Garagekeepers Legal Liability, and Non -Owned Auto Liability in an amount not less than
$10,000,000.00 for injury, damages, or death resulting from any one accident or occurrence.
Such policy or policies (i) may provide for a deductible not in excess of $50,000.00 (in Constant
Dollars) for each accident or occurrence, provided that Tenant shall maintain a self-insurance
fund sufficient to satisfy the deductible, and (ii) shall insure Tenant and Landlord against liability
arising out of the use, occupancy, or maintenance of the Premises including all improvements
now or hereafter located thereon and all areas appurtenant thereto. The policy or policies shall
be stated to be primary and non-contributing with any insurance which may be carried by
Landlord, and shall insure performance by Tenant of the indemnity provisions of Section 11 to
the extent such indemnities are within the scope of coverage under such policies. Landlord and
Landlord's lender, if any, shall be named as "Additional Insured" on all of the above policies.
(b) Tenant shall, at its sole cost and expense, at all times during the Term,
maintain in force a policy of (i) Workers Compensation and Employers' Liability insurance
providing workers compensation benefits as required by the Law (with a waiver of subrogation
in favor or Landlord) and Employers' Liability coverage with limits of not less than
$1,000,000.00 and (ii) Automobile Liability insurance with a limit of liability of not less than
$1,000,000.00 for each accident and providing coverage for all "owned", "hired" and "non -
owned" vehicles.
(c) Tenant shall during the Term, at its sole cost and expense, obtain and
maintain a policy or policies of property insurance covering loss or damage to the Premises and
Improvements providing protection against all perils included within the standard insurance
industry coverage classifications of Causes of Loss Special Form, and with earthquake coverage
if available at commercially reasonable rates. The above policy or policies shall include a full
replacement cost endorsement, debris removal endorsement (or equivalent coverage in the event
of uninsured catastrophic loss), a building code upgrade or ordinance and Law endorsement, and
insure all Improvements, changes thereto or replacements thereof, and trade fixtures on the
Premises, as well as all personal property located on or used in operation of the Premises for one
hundred percent (100%) of the then current replacement cost, including any required building
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code upgrades. The policy or policies shall include the Landlord and Landlord's lender, if any,
as loss payee as to the proceeds from the debris removal endorsement and each loss shall be
subject to a commercially reasonable deductible reasonably acceptable to Landlord.
(d) Tenant shall, at its sole cost and expense, at all times during the Term,
maintain in force a policy of rental loss or business interruption insurance in an amount at least
sufficient to pay, for a period of twenty-four (24) months following any applicable loss, the sum
of the following:
(i) the Impositions provided for in Section 5; and
(ii) the insurance premiums provided for in Section 9.
(e) The liability coverage limits in Sections 9(a) and (b) above must be
covered by excess liability coverage having a limit of not less than $7,000,000.00, which policy
shall be in "following form" and shall provide that if the underlying aggregate is exhausted, the
excess coverage will drop down as primary insurance. Such excess liability policy shall include
coverage for the additional insureds.
(f) The purpose and intent of the parties is that Tenant shall have during the
Term such amount of liability insurance as will be sufficient to protect Landlord from any
liability with respect to the Premises. If at any time during the Term, Landlord shall reasonably
determine that the limits of the liability insurance under Section 6(a) or (b) above are insufficient
(e.g., inflation; the risk incident to use of the Premises; the nature and amount of the awards for
liabilities then being given), then Landlord may increase the limits of the such liability insurance
to then -appropriate amounts by giving Tenant at least sixty (60) days' prior written notice
thereof.
(g) The insurance required to be carried under this Section 9 shall be placed
with responsible insurance companies admitted to do business in California and having an A.M.
Best rating of at least A- and an A.M. Best Financial Size Category rating of not less than
Class VII as shall be selected by Tenant. Tenant shall deliver to Landlord certificates of said
insurance and of renewals thereof from time to time during the Term hereof promptly following
request therefor from Landlord, and shall obtain the written commitment of each such insurer to
provide each additional insured with thirty (30) days written notice of any cancellation thereof,
or amendments with respect to reductions in policy limits or coverages. Any insurance required
to be maintained by Tenant may be maintained under a so-called "blanket policy" insuring other
parties and other locations so long as the amount of insurance required to be provided hereunder
for the Premises is not thereby diminished.
(h) Unless this Lease is terminated pursuant to Section 12, all policies of
insurance described in Section 9(c) shall provide for payment of loss in excess of $1,000,000.00
(in Constant Dollars) to the Lender holding the first Leasehold Mortgage (unless there is not one,
in which case payment of loss shall be to a mutually acceptable escrow holder) to be held in trust
and applied to the repair and restoration of the Premises, subject to the conditions set forth in the
Leasehold Mortgage and Section 12. When the Premises have been fully repaired and restored,
any excess shall be paid to Tenant.
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(i) Landlord and Tenant each hereby release and relieve the other, and waive
their entire right of recovery against the other for loss or damage arising out of or incident to
perils insured against by the insurance described in Section 9(c), which perils occur in, on, or
about the Premises whether due to the negligence of Landlord or Tenant or their agents,
employees, contractors, and/or invitees. Tenant and Landlord shall, upon obtaining the policies
of insurance required hereunder, give notice to the insurance carrier or carriers that the foregoing
mutual waiver of subrogation is contained in this Lease.
10. Indemnity.
(a) Indemnity. Tenant shall indemnify, defend and hold Landlord harmless
from all claims, costs, liability, damage or expense, including attorneys' fees, arising from
(a) any death, damage or injury to Persons or property occurring on the Premises during the
Term or resulting from Tenant's or its guests' or subtenants' use thereof or actions thereon,
(b) Tenant's construction or demolition or modification of Improvements on the Premises,
(c) any and all claims by or on behalf of any Person arising from the conduct or management of
or from any work or thing whatsoever done in and on the Premises and/or Improvements during
the Term, and will further indemnify and save Landlord harmless against and from any and all
claims arising during the term of this Lease from any condition of the Improvements, or
passageways or space therein or appurtenant thereto, or arising from any breach or default on the
part of Tenant in the performance of any covenant or agreement on the part of Tenant to be
performed pursuant to this Lease or arising from a violation by Tenant of the requirements under
the PSDA, or arising from any act or negligence of Tenant or any subtenant or occupant of the
Improvements or any part thereof, or of its or their agents, contractors, servants, employees or
licensees, or arising from any accident, injury or damage whatsoever caused to any Person or
property occurring during the Term of this Lease in or about the Premises and/or Improvements,
and from and against all judgments, costs, expenses and liabilities incurred in or about any such
claim or action or proceeding brought therein. The foregoing shall not apply to any matters
arising out of the negligence or willful misconduct of Landlord, its agents or employees.
(b) Notification of Claim. Landlord shall notify Tenant promptly of any
claim, action or proceeding and cooperate fully in the defense. Upon receipt of such notification,
Tenant shall assume the defense of the claim, action, or proceeding, including the employment of
counsel acceptable to Landlord and the prompt payment of the attorneys' fees and costs of such
counsel. If Landlord at any time reasonably deteiinines that having common counsel would
present such counsel with a conflict of interest, or if Tenant fails to promptly assume the defense
of the claim, action, or proceeding or to promptly employ counsel acceptable to Landlord, then
Landlord may, in its sole discretion, employ separate counsel to represent or defend Landlord,
and Tenant shall pay the reasonable attorneys' fees and costs of such separate counsel within
thirty (30) days of receiving an itemized billing therefor. At its sole discretion, Landlord may
participate at its own expense in the defense of any claim, action or proceeding, but such
participation shall not relieve Tenant of any obligation imposed by this Lease. Failure to
promptly defend or indemnify Landlord is a material breach which shall entitle Landlord to all
remedies available under Law, including but not limited to specific performance and claims for
damages.
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(c) Survivability. Tenant's obligations to release, hold harmless, indemnify,
and defend Landlord shall survive the expiration of the Term; or, earlier termination of this
Lease; or abandonment of the Premises by Tenant.
11. Improvements. Tenant may construct Improvements on and make alterations,
repairs, demolitions, and modifications to the Premises as Tenant may deem desirable for its
Permitted Use of the Premises, subject only to compliance with Laws and this Lease, including
the PSDA. Tenant shall pay for the design and cost of the Improvements, which Improvements
shall be made in all cases subject to the following conditions which Tenant covenants to observe
and perform:
(a) No Improvements shall be undertaken until Tenant shall have procured
and paid for, so far as the same may be required, from time to time, all municipal and other
governmental permits and authorizations of the various municipal departments and governmental
subdivisions having jurisdiction and Landlord agrees, at no cost or liability to Landlord, to join
in the application for such permits or authorizations whenever such action is necessary;
(b) Any structural Improvement shall be conducted under the supervision of
an architect or engineer licensed as such in the State of California (who may be an employee of
Tenant) selected by Tenant and plans therefor shall be submitted to Landlord, in order to give
Landlord an opportunity to determine that such Improvements will comply with the provisions of
this Section;
(c) All Improvements shall be of such a character that, when completed, the
value and utility of the Improvements shall be not substantially less than the value and utility of
the Improvements immediately before any such additional Improvements; except that in the case
of any Improvements following the completion of Tenant's Work involving demolition or the
construction of any of the structural components of the Improvements or the exterior facade of
the Improvements and which have a value in excess of Two Hundred Fifty Thousand Dollars
($250,000.00) (in Constant Dollars), Tenant shall, prior to the commencement of demolition or
construction submit to Landlord preliminary drawings and outline specifications to be approved
by Landlord which approval shall not be unreasonably withheld and which shall have reference
only to establishing that such new Improvements will be of a value not substantially less than the
value of the Improvements to be demolished and that such new Improvements, when completed,
will constitute all or a part of a completed Project consistent with the Permitted Use and capable
of producing a fair and reasonable net annual income, after payment of all operating expenses.
For purposes of this Section 11(c), "operating expenses" shall include all expenses of operation
of the Improvements, the Rent, additional rent and other charges reserved under this Lease and
the cost of performance of all covenants and agreements of Tenant provided to be performed by
Tenant under this Lease, and shall be deemed to exclude depreciation, income taxes and
franchise taxes of Tenant.
(d) All work done in connection with any Improvements shall be done in a
good and workmanlike manner and in compliance with all applicable Laws, ordinances, orders
and requirements of all federal, state and municipal governments and their appropriate
departments, commissions, boards and officers. The Improvements shall at all times be free of
liens for labor and materials supplied or claimed to have been supplied. The work of any
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Improvements shall be prosecuted with reasonable dispatch. Worker's compensation insurance
covering all Persons employed in connection with the work and with respect to whom death or
bodily injury claims could be asserted against Landlord, Tenant or the Premises or the
Improvements, and general liability and property damage insurance (which may be effected by
endorsement, if obtainable, on the insurance required to be carried pursuant to Section 9 above)
for the mutual benefit of Tenant and Landlord with limits of not less than those required to be
carried pursuant to Section 9, above, shall be maintained by Tenant at Tenant's sole cost and
expense at all times when any work is in process in connection with any Improvements.
(e) Subsequent to completion of the Tenant's Work, no Improvements
involving an expenditure in excess of Two Hundred Fifty Thousand Dollars ($250,000) (in
Constant Dollars) shall commence until Tenant shall have given Landlord ten (10) days prior
written notice of such work in order that Landlord may post and/or file notices of non -
responsibility or notices of a similar nature.
(f) If the estimated cost of any Improvements shall be in excess of One
Million Dollars ($1,000,000.00) (in Constant Dollars), Tenant shall, prior to the commencement
of any such Improvements, deliver to Landlord evidence that Tenant has sufficient funds
available to pay for the anticipated costs of such Improvements, which evidence may include,
without limitation, a construction loan from an Approved Lender.
(g) Tenant covenants that in performing any work or repairs to, or restoration,
replacement or rebuilding of, any of the Improvements required to be performed by Tenant
pursuant to the provisions of Sections 12 and 13, it will observe and perform, insofar as the
nature of such repairs, restoration, replacement or rebuilding make such observation and
performance appropriate, the conditions relating to Improvements set forth in this Section 11.
At any time before, or within thirty (30) days after, termination of this Lease, Tenant may
remove from the Premises any Personalty (as defined in Section 16 below) on or at the Premises,
provided Tenant repairs all damage to the Premises caused by such removal.
12. Damage by Fire or Other Casualty.
(a) Restoration. In the event of a fire, earthquake or other casualty, Tenant
shall promptly, at Tenant's sole cost and expense, restore, repair, replace or rebuild the
Improvements as nearly as possible to the condition, quality and class it was in immediately prior
to such damage or destruction, or with such changes or alterations as Tenant shall elect to make
in conformity with Section 11 above. Such restoration, repairs, replacement or rebuilding shall
be commenced promptly and prosecuted with reasonable diligence.
(b) No Abatement of Rent. Tenant's obligations to pay Rent and all other
charges under this Lease will continue notwithstanding the damage or casualty and neither Rent
nor any other charges under this Lease will be abated, and Tenant hereby waives the provisions
of Sections 1932(2) and 1933(4) of the California Civil Code and of any other statute or Law
now or hereafter in effect contrary to such obligations of the Tenant as set forth in this Lease, or
which relieves Tenant from such obligation.
13. Condemnation.
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(a) Definition of Taking and Substantial Taking. For the purpose of this
Lease, a "Taking" means any condemnation or exercise of the power of eminent domain by any
authority vested with such power or any other taking for public use, including a private purchase
in lieu of condemnation by an authority vested with the power of eminent domain; the "Date of
Taking" means the earlier of the date on which title to the Premises or any portion thereof so
taken is vested in the condemning authority or the date on which possession of the Premises or
any portion thereof is taken by the condemning authority; and "Substantially All of the
Premises" means so much of the Premises or Improvements as, when taken, leaves the un-taken
portion unsuitable for the continued feasible and economic operation of the Premises by Tenant
for the same purposes as immediately before the Taking.
(b) Tenant's Rights Upon Taking or Substantial Taking. In the event of a
Taking of Substantially All of the Premises, Tenant may, by thirty (30) days' prior written notice
to Landlord, given no later than ninety (90) days following the Date of Taking, terminate this
Lease. All Rent shall be apportioned and paid through and including the Date of Taking.
(c) Tenant's Rights Upon Less Than Substantial Taking. In the event of a
partial Taking, Tenant, at its sole cost and expense, shall proceed with due diligence to restore,
repair, replace or rebuild the remaining part of the Improvements to substantially its former
condition or with such changes or alterations as Tenant may elect to make in conformity with
Section 11 above so as to constitute a complete project. In the event of a partial Taking, this
Lease shall terminate as to the portion of the Premises so taken and the Rent payable for the
balance of the Term of this Lease shall be reduced in the same ratio that the value of Tenant's
interest in the Premises and Improvements immediately prior to the Taking is reduced, such
reduction to be effective as of the Date of Taking. Until the amount of the reduction of the Rent
shall have been determined, Tenant shall continue to pay to Landlord the Rent provided for in
Section 1 above, at which time Landlord shall refund any excess Rent paid based upon such
reduction being effective as of the Date of Taking.
(d) Rights Upon Temporary Taking. If, at any time during the Term, the
whole or any part of the Premises, or of Tenant's leasehold estate under this Lease, or of the
Improvements shall be taken in condemnation proceedings or by any right of eminent domain for
temporary use or occupancy not exceeding one (1) year (a "Temporary Taking") the foregoing
provisions of this Section shall not apply and Tenant shall continue to pay, in the manner at the
times specified in this Lease, the full amounts of the Rent and all additional rent and other
charges payable by Tenant under this Lease, and, except only to the extent that Tenant may be
prevented from so doing pursuant to the terms of the order of the condemning authority Tenant
shall perform and observe all of the other terms, covenants, conditions and obligations of this
Lease upon the part of Tenant to be performed and observed, as though such Temporary Taking
had not occurred. In the event of any such Temporary Taking, Tenant shall be entitled to receive
the entire amount of the Condemnation Proceeds (as defined below) made for such Temporary
Taking, whether paid by way of damages, rent or otherwise unless such period of temporary use
or occupancy shall extend beyond the termination of this Lease, in which case the Condemnation
Proceeds shall be apportioned between Landlord and Tenant as of the date of termination of this
Lease. Tenant covenants that, upon the expiration of any such period of temporary use or
occupancy during the Term, it will, at its sole cost and expense, restore the Improvements, as
nearly as may be reasonably possible, to the condition in which the same was immediately prior
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to such Temporary Taking, wear and tear during such temporary use or occupancy excepted. To
the extent that Landlord receives any portion of the Condemnation Proceeds as compensation for
the cost of restoration or repair of the Improvements, Landlord shall make such Condemnation
Proceeds available to Tenant for payment of the cost of restoration of the Improvements by
Tenant pursuant to customary construction draw procedures. Any portion of the Condemnation
Proceeds received by Tenant as compensation for the cost of restoration of the Improvements
shall, if such period of temporary use or occupancy shall extend beyond the term of this Lease,
be paid to Landlord on the date of termination of this Lease.
(e) Condemnation Proceeds. In the event of a Taking of Substantially All of
the Premises and the termination of this Lease, the award or awards for such Taking, less the
costs of the determination and collection of the amount of the award or awards ("Condemnation
Proceeds"), shall be distributed as follows:
(i) Landlord shall first be entitled to receive and retain as its own property,
and Tenant hereby assigns to Landlord, such portion of the Condemnation Proceeds as shall equal the
fair market value of the Land and Landlord's reversionary interest in the Improvements;
(ii) Tenant shall then be entitled to receive, and Landlord hereby assigns to
Tenant, the balance of the Condemnation Proceeds, if any.
(f) In the event of a Taking which is not Substantially All of the Premises (a
"Partial Taking"), this Lease shall not terminate or be affected in any way, except as provided
in Section 13(c) above, and Landlord shall first be entitled to receive and retain as its own
property, that portion of the Condemnation Proceeds as shall equal the fair market value of the
Land and Landlord's reversionary interest in the Improvements so taken ("Landlord's
Proceeds"). Tenant shall then be entitled to receive the balance of the Condemnation proceeds
("Tenant's Proceeds") and the same shall be payable, and Landlord hereby so assigns the same,
if One Million Dollars ($1,000,000) or less (in Constant Dollars), in trust to Tenant for
application by Tenant to the cost of restoring, repairing, replacing or rebuilding the
Improvements, but if in excess of One Million Dollars ($1,000,000) (in Constant Dollars), then
to the Lender holding the first Leasehold Mortgage (or if no Lender, then to an escrow holder
mutually acceptable to Landlord and Tenant) for disbursement to Tenant for payment of the cost
of restoring, repairing, replacing or rebuilding the Improvements, with any excess being
disbursed to Tenant.
14. Assignment and Subletting. This Lease and the interest of Tenant under this
Lease may not be assigned, nor may all or any portion of the Premises be sublet, without the
prior consent of Landlord, which consent shall not be unreasonably withheld, provided that: (1)
with respect to an assignment: (a) no such assignment shall be effective for any purpose unless
and until (i) the assignor's interest in the Improvements shall be transferred to the assignee of
this Lease and (ii) there shall be delivered to Landlord (A) a duplicate original of the instrument
or instruments of transfer of this Lease and of the assignor's interest in the Improvements in
recordable form, containing the name and address of the transferee and (B) an instrument of
assumption by the transferee of all of Tenant's obligations under this Lease arising from and
after the effective date of the transfer; and (b) no such assignment and assumption shall operate
or be deemed to operate as a release of Tenant and/or the duties, obligations and liabilities of
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Tenant under this Lease; and (2) with a respect to a subletting, there shall have been delivered to
Landlord (y) a duplicate original of the instrument or instruments of subletting in recordable
form, containing the name and address of the sublessee and (z) an instrument of assumption by
the sublessee of all of Tenant's obligations under this Lease arising during the term of the
Sublease as the same pertain to the portion of the Premises subject to the sublease.
Each sublease shall be subject and subordinate to this Lease and the rights of Landlord
hereunder, and any violation of any provision of this Lease, whether by act or omission, by any
subtenant shall be deemed a violation of such provision by Tenant, with respect to which Tenant
shall be responsible for Landlord's damages caused thereby, it being the intention and meaning
of the parties that Tenant shall assume and be liable to Landlord in damages for any and all acts
and omissions of any and all subtenants with respect to this Lease.
15. Tenant's Financing. Notwithstanding any other provisions of this Lease, Tenant
may, without Landlord's consent, from time to time, secure financing or general credit lines and
obtain franchise or license rights and grant the Lenders thereof: (i) a security interest in Tenant's
interest in the Improvement (including movable temporary structures located at the Premises,
whether nailed, screwed or otherwise fastened to the Premises), (ii) a security interest in Tenant's
trade fixtures, furnishings, inventory, equipment, and machinery and all other items of personal
property installed by Tenant or its subtenant at its own expense or in which it or any subtenant
has any interest (collectively, "Personalty"), (iii) the right to enter the Premises to realize upon
any Personalty so pledged provided that the Premises are repaired, and (iv) a collateral
assignment of or leasehold encumbrance in the Leasehold Estate, with rights of reassignment;
provided, however, such Lenders will be required to acknowledge in writing that such grant of
security interest or collateral is limited to the Leasehold Estate and does not constitute a lien
against the Reversionary Estate. If Tenant grants any of the rights described in this paragraph to
a Lender, the provisions of Exhibit "B" will apply.
16. Tenant's Property and Ownership at Termination. All of the Improvements shall
be and remain the property of Tenant during the Term and shall become the property of Landlord
upon expiration of the Term. Personalty and trade fixtures shall be and remain the personal
property of Tenant at all times. At the expiration of the Term or earlier termination of this Lease,
Tenant shall surrender the Premises and Improvements to Landlord in good condition and repair
as a first-class Project, subject to Sections 12 and 13. In addition, Landlord may, at Landlord's
election, demand the removal from the Premises of any and/or Improvements and fixtures made
to or placed on the Premises in violation of this Lease by Tenant or any other Person at the
direction of Tenant or with Tenant's consent. A written demand to that effect at the scheduled
expiration of the Term shall be effected by written notice from Landlord to Tenant given at any
time within six (6) months before the scheduled expiration of the Term. A demand to take effect
on any other termination of this Lease shall be effected by notice given in or concurrently with
notice of such termination or within five (5) business days after such termination. The demand
shall specify which items are to be removed. Tenant shall comply with the notice before the
expiration of the Term for normal termination, and within sixty (60) days after the notice for
other terminations. On the expiration of the Term or earlier termination of this Lease, and to the
extent they have not been removed pursuant to this Lease (or required to be removed pursuant to
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this Lease), any and/or all Improvements and fixtures made to or placed on the Premises by
Tenant or any other Person at the direction of Tenant or with Tenant's consent shall become the
property of Landlord and remain on and/or affixed to the Premises without cost or charge to
Landlord. Notwithstanding the foregoing, Tenant and each of its subtenants shall be permitted,
at the option of each, to remove its Personalty from the Premises; provided, however, that in any
case all resulting damage and injuries to the Premises and remaining Improvements are
completely remedied and Tenant complies with Landlord's reasonable requirements respecting
the resultant appearance.
17. Memorandum of Lease. This Lease is not to be recorded, but Landlord and
Tenant shall execute a Quitclaim Deed & Memorandum of Lease "Memorandum of Lease")
and shall cause it to be recorded in the Official Records, immediately after the mutual execution
of this Lease. The provisions of this Lease shall control, however, with regard to any omissions
from, or provisions hereof which may be in conflict with, the Memorandum of Lease. Tenant
shall be responsible for any documentary transfer taxes imposed in connection with recordation
of the Memorandum of Lease.
18. Expiration of Term. If, after expiration of the Term, Tenant fails to remove any
or all of its Personalty within thirty (30) days after receiving written notice from Landlord,
Landlord may dispose of such Personalty as Landlord deems appropriate. Tenant agrees that at
the expiration of this Lease, it will deliver to Landlord peaceable possession of the Premises
(expressly excluding the Released Parcels).
19. Force Majeure. Except as otherwise specifically contemplated in this Lease, in
the event that Landlord or Tenant shall be delayed or hindered in, or prevented from, the
performance of any act required hereunder (other than the payment of money) by reason of delay
by the other party, riots, insurrection, war or other reason not the fault of such party or not within
its control, then performance of such act shall be excused for the period of delay, and the period
for the performance of any such act shall be extended for a period equivalent to the period of
such delay; provided, the party so delayed, hindered or prevented shall use its commercially
reasonable efforts to deliver written notice to the other party as soon as reasonably practicable
following the commencement thereof, which written notice shall specify the nature of the delay,
the date of commencement of delay and the expected period of delay.
20. Events of Tenant's Default. Any of the following occurrences, conditions, or acts
by Tenant constitutes an "Event of Default" under this Lease:
(a) Tenant's failure to make any payment of money to Landlord required by
this Lease, which, failure is not cured within five (5) business days following Tenant's receipt of
written notice thereof from Landlord ("Monetary Default").
(b) Tenant's failure to observe or perform any other material provision of this
Lease within thirty (30) days after receipt of written notice from Landlord to Tenant specifying
such default and demanding that the same be cured; provided that, if such default cannot with
due diligence be wholly cured within such 30-day period, Tenant shall have such longer period
as is reasonably necessary to cure the default, so long as Tenant proceeds promptly to commence
the cure of same within such 30-day period and diligently prosecutes the cure to completion.
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(c) The abandonment or vacation of, or discontinuance of business operations
at the Premises, or any substantial portion thereof, for reasons not caused by Force Majeure or
due to temporary closures for renovations or repairs required or permitted to be made under this
Lease, which is not cured within ninety (90) days following written notice thereof from Landlord
to Tenant ("Abandonment Default").
(d) The failure of Tenant to comply with any and all aspects of PSDA, which
failure is not cured within twenty (20) days after written notice of default is given to Tenant or, if
the default is such that it is not reasonably capable of being cured within twenty (20) days, and
Tenant initiates corrective action within said period and diligently, continually and in good faith
works to effect a cure as soon as possible, then Tenant shall have such additional time as is
reasonably necessary to cure the default("PSDA Default").
21. Landlord's Remedies.
(a) After the occurrence of an Event of Default, Landlord is entitled to all
remedies available at Law and/or in equity, including the right to:
(i) Continue this Lease in effect by not terminating Tenant's right to
possession of the Premises, in which event Landlord shall be entitled to enforce all Landlord's
rights and remedies under this Lease and/or at Law, including the right to recover the Rent
specified in this Lease as it becomes due;
(ii) In the event of a Monetary Default, a PSDA Default or an
Abandonment Default, terminate this Lease and bring an action to recover from the Tenant the
amounts set forth in Section 21(b) below;
(iii) Exercise any right or remedy allowed at Law or in equity; and/or
(iv) Landlord may cure the Event of Default, in which event Tenant
shall reimburse Landlord for all costs incurred thereby immediately upon demand therefor.
Notwithstanding the provisions of Section 21(a)(ii), if, within ten (10) days following
Tenant's receipt of the default notice pursuant to Section 20 above, Tenant notifies Landlord in
writing that Tenant disputes the claimed Event of Default, and if Tenant commences legal action
to contest the same within ten (10) days thereafter, then Landlord may not exercise its right to
terminate this Lease on account of such Event of Default unless the court shall have ruled (which
ruling is no longer subject to appeal) that the Event of Default exists and Tenant shall have failed
to pay the sums due within ten (10) days following such ruling or otherwise cured a PSDA
Default or an Abandonment Default promptly thereafter, as applicable.
Landlord may terminate this only in the event of a Monetary Default, an Abandonment
Default or a PSDA Default.
(b) Should Landlord elect to terminate this Lease under the provisions of
Sections 21(a)(ii), above, Landlord may recover from Tenant as damages:
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(i) the worth at the time of award of any unpaid rent which had been
earned at the time of such termination; plus
(ii) the worth at the time of award of the amount by which the unpaid
rent which would have been earned after termination until the time of award exceeds the amount
of such rental loss Tenant proves could have been reasonably avoided; plus
(iii) the worth at the time of award of the amount by which the unpaid
rent for the balance of the Term after the time of award exceeds the amount of such rental loss
that Tenant proves could be reasonably avoided; plus
(iv) any other amount necessary to compensate Landlord for all the
detriment proximately caused by Tenant's failure to perform its obligations under this Lease or
which in the ordinary course of things would be likely to result therefrom; plus
(v) at Landlord's election, such other amounts in addition to or in lieu
of the foregoing as may be permitted from time to time by the Laws of the State of California.
As used in clauses (i) and (ii) above, the "worth at the time of award" is computed by
allowing interest at the Default Rate. As used clause (iii) above, the "worth at the time of award"
is computed by discounting such amount at the discount rate of the San Francisco Federal
Reserve Bank, at the time of award, plus one percent (1%).
For all purposes of this Lease, "rent" shall be deemed to be the Minimum Annual Rent
and all other sums required to be paid by Tenant pursuant to the terms of this Lease.
22. Events of Landlord's Default; Tenant's Remedies. Landlord shall not be deemed
to be in default in the performance of any obligation required to be performed by it under this
Lease until it has failed to perform such obligation within thirty (30) days after written notice by
Tenant to Landlord specifying the nature of Landlord's default; provided, however, that if the
nature of Landlord's obligation is such that more than thirty (30) days are required for its
performance, then Landlord shall not be deemed to be in default if it shall commence such
performance within such thirty (30) day period and thereafter diligently prosecute the same to
completion. If Landlord is in default under this Lease, Tenant shall have all rights and remedies
available at Law or in equity.
23. Exculpation of Landlord. Notwithstanding anything in this Lease to the contrary,
it is expressly understood and agreed that any judgment against Landlord resulting from any
default or other claim under this Lease shall be satisfied only out of the net rents, issues, profits
and other income actually received from or in connection with Landlord's interest in the
Premises as well as Landlord's equity in the Premises, and Tenant shall, except as otherwise
expressly permitted pursuant to this paragraph, have no claim against Landlord, its trustee or
beneficiary, or any of their respective personal assets, for satisfaction of any judgment with
respect to this Lease.
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24. Hazardous Substances.
(a) Tenant shall comply fully with all Laws pertaining to the use, generation,
storage, transportation, treatment, disposal or other handling of Hazardous Substances at the
Premises, including those Hazardous Substances that are present at the Premises prior to the
Commencement Date, but excluding those caused by Landlord or its employees or agents
following the Commencement Date. Tenant shall not use, generate, store, transport, treat,
dispose or otherwise handle any Hazardous Substances upon the Premises, except in accordance
with all applicable Laws. The term "Hazardous Substances" shall mean and include, but is not
limited to, all hazardous substances, materials and wastes listed by the U.S. Environmental
Protection Agency, the State of California, the County of San Diego or the City of San Diego,
under the Comprehensive Environmental Response, Compensation and Liability Act
(CERCLA), the Resource Conservation and Recovery Act (RCRA), the Toxic Substances
Control Act (TSCA), and the Federal Water Pollution Control Act (FWPCA), and any other
statute, ordinance or rule promulgated by a government entity or agency thereof.
(b) Tenant agrees unconditionally and absolutely to defend, indemnify, and
hold harmless Landlord, Landlord's directors, officers, employees, agents, and attorneys from
and against any and all damages, diminution in value, penalties, fines, losses, liabilities, causes
of action, suits, claims, demands, costs, and expenses (including all out-of-pocket litigation costs
and the reasonable fees and expenses of counsel) of any nature, directly or indirectly, arising out
of or in connection with:
(i) The existence, use, generation, migration, storage, release,
threatened release, or disposal of Hazardous Materials on, onto, from, or under the Premises,
except to the extent caused by Landlord or its employees or agents; and
(ii) Any failure by Tenant to comply with the terms of any order of
any federal, state, or municipal authority having regulatory authority over environmental matters
which is applicable under this Lease to the Premises excepting those that pertain to Hazardous
Substances that were caused by Landlord or its employees or agents. Tenant's obligations under
this Section 24 shall survive the termination of this Lease.
If any claim is made or brought against Landlord which is subject to the indemnifications
set forth in this Section 24, Tenant shall defend the same by attorneys reasonably approved by
Landlord.
25. Brokers. Landlord and Tenant each represents, warrant, and covenant that it has
not dealt with any real estate broker or finder with respect to this Lease, and each party shall hold
the other party harmless from all damages, claims, liabilities or expenses, including reasonable
and actual attorneys' fees (through all levels of proceedings), resulting from any claims that may
be asserted against the other party by any real estate broker or finder with whom the
indemnifying party either has or is purported to have dealt.
26. Work Product. Upon the early termination of this Lease, all developed plans and
specifications and other intellectual property related to the Improvements, including but not
limited to all plans, specifications and other renderings, constructions budgets, constructions bids
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and other intellectual property otherwise related thereto (the "Work Product") shall become the
property of Landlord, with no representation or warranty from Tenant as to such Work Product.
Tenant shall, at no cost to Landlord, deliver all electronic and hard copies of all such Work
Product to Landlord within three (3) business days of the termination of this Lease.
27. Intentionally Omitted
28. Miscellaneous.
(a) Governing Law, Venue and Jurisdiction. This Lease is governed by and
construed in accordance with the Laws of the State of California, irrespective of California's
choice -of -Law principles. All actions and proceedings arising in connection with this Lease
must be tried and litigated exclusively in the State or Federal courts located in the County of
Riverside, State of California, which courts have personal jurisdiction and venue over each of the
parties to this Lease for the purpose of adjudicating all matters arising out of or related to this
Lease.
(b) Further Assurances and Estoppels. Each party to this Lease shall execute
and deliver all instruments and documents and take all actions as may be reasonably required or
appropriate to carry out the purposes of this Lease (but the foregoing does not imply an
obligation to modify any of the provisions of this Lease). Landlord shall ensure that Tenant's
quiet enjoyment of the Premises throughout the Term is not interrupted by Landlord or anyone
lawfully or equitably claiming by, through or under Landlord, subject to Tenant fulfilling its
obligations hereunder, Landlord's rights and remedies under this Lease and the rights of any
third parties with interests of record as of the Commencement Date. Landlord and Tenant shall
each promptly forward to the other any notice or other communication affecting the Premises
received by it from any owner of property adjoining, adjacent or nearby to the Premises or from
any municipal or governmental authority, in connection with any hearing or other administrative
procedure relating to the use or occupancy of the Premises or any neighboring property. Within
ten (10) days after notice from the other party to this Lease, Landlord or Tenant, as applicable,
shall execute and deliver to other party's designee, in recordable form, a certificate stating
(i) that this Lease is unmodified and in full force and effect, or in full force and effect as
modified, and stating all modifications, (ii) the then current Rent, (iii) the dates to which Rent
has been paid in advance, (iv) the amount of any prepaid rent or other payment constituting rent
which has been paid, (v) whether or not, to the best knowledge of the certifying party, Tenant or
Landlord is in default under this Lease (and the nature of any such default) and whether there
currently exist any defenses or rights of offset under the Lease, and (vi) such other matters as the
requesting party reasonably requests. Tenant's or Landlord's failure to deliver such certificate
within such ten (10) day period shall be conclusive upon such party for the benefit of the
requesting -party and the requesting -parry's designee (including any lender, franchisor, subtenant,
assignee, etc.) that, except as may be represented by the requesting -party, this Lease is
unmodified and in full force and effect, no rent has been paid more than thirty (30) days in
advance, and neither Tenant nor Landlord is in default under this Lease.
(c) Prior Understandings. This Lease: (a) contains the entire and final
agreement of the parties to this Lease with respect to the subject matter of this Lease, and
(b) supersedes all negotiations, stipulations, understandings, agreements, representations and
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warranties, if any, with respect to such subject matter, which precede or accompany the
execution of this Lease.
(d) Waivers and Consents. No delay or omission in the exercise of any right
or remedy of Landlord or Tenant in the event of any default by the other shall impair such right
or remedy or be construed as a waiver. The receipt and acceptance by Landlord of delinquent
rent does not constitute a waiver of any default other than the particular rent payment accepted.
Landlord's receipt and acceptance from Tenant, on any date (the "Receipt Date"), of an amount
less than the amount due on such Receipt Date, or to become due at a later date but applicable to
a period before the Receipt Date, does not release Tenant of its obligation (i) to pay the full
amount due on such Receipt Date or (ii) to pay when due the full amount to become due at a later
date but applicable to a period before such Receipt Date. No act or conduct of Landlord,
including the acceptance of the keys to the Premises, constitutes an acceptance by Landlord of
the surrender of the Premises by Tenant before the Expiration Date. Only a written notice from
Landlord to Tenant stating Landlord's election to terminate Tenant's right to possession of the
Premises constitutes acceptance of the surrender of the Premises and accomplishes a termination
of this Lease. Landlord's consent to or approval of any act by Tenant requiring Landlord's
consent or approval may not be deemed to waive or render unnecessary Landlord's consent to or
approval of any other or subsequent act by Tenant.
(e) Notices. Any notice permitted or required to be given pursuant to this
Lease shall be in writing and shall be deemed to have been given on the date of actual delivery,
or refusal, if sent by certified mail, postage prepaid, return receipt requested, or by Federal
Express or other comparable overnight express courier service (with proof of receipt available),
addressed to the parties as set forth in Section 1, or to such other address as a party may, from
time to time, give notice to the other party in accordance with this paragraph.
(f) Interpretation. Whenever the context so requires in this Lease, all words
used in the singular may include the plural (and vice versa) and the word "Person" includes a
natural person, a corporation, a firm, a partnership, a joint venture, a trust, an estate or any other
entity. The terms "includes" and "including" do not imply any limitation. Except as otherwise
expressly provided herein, no remedy or election under this Lease is exclusive, but rather, to the
extent permitted by applicable Law, each such remedy and election is cumulative with all other
remedies at Law or in equity. The paragraph headings in this Lease: (i) are included only for
convenience, (ii) do not in any manner modify or limit any of the provisions of this Lease, and
(iii) may not be used in the interpretation of this Lease.
(g) Partial Invalidity. Each provision of this Lease is valid and enforceable to
the fullest extent permitted by Law. If any provision of this Lease (or the application of such
provision to any person or circumstance) is or becomes invalid or unenforceable, the remainder
of this Lease, and the application of such provision to persons or circumstances other than those
as to which it is held invalid or unenforceable, are not affected by such invalidity or
unenforceability.
(h) Successors -in -Interest and Assigns. This Lease is binding on and inures to
the benefit of the successors -in -interest and assigns of each party to this Lease.
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(i) Drafting Ambiguities. Each party to this Lease and its legal counsel have
negotiated, reviewed, and revised this Lease. The rule of construction that ambiguities are to be
resolved against the drafting party or in favor of the party receiving a particular benefit under an
agreement may not be employed in the interpretation of this Lease or any amendment to this
Lease.
(j) Usury. In the event Landlord receives any sums under this Lease which
constitute interest in an amount in excess of that permitted by any applicable Law, then, all such
sums constituting interest in excess of that permitted to be paid under applicable Law shall, at
Landlord's option, either be credited to the payment of Rent owing hereunder or returned to the
Tenant.
(k) No Merger. There shall be no merger of the Lease or any interest in the
Lease or of the Leasehold Estate created by the Lease with the Reversionary Estate in the
Premises by reason of the fact that the Lease or such interest therein, or such Leasehold Estate
may be directly or indirectly held by or for the account of any person who holds title to the
Reversionary Estate in the Premises or any interest in such Reversionary Estate, nor shall there
be any such merger by reason of the fact that all or any part of the Leasehold Estate created by
this Lease may be conveyed or mortgaged in a Leasehold Mortgage or deed of trust to a
mortgagee or beneficiary who holds title to the Reversionary Estate or any interest of Landlord
under the Lease.
(1) Tenant Representations. Landlord hereby disclaims any warranty,
guaranty or representation of the nature and condition of the Premises, including (but not by way
of limitation) the soil and geology and suitability thereof for any and all activities and uses which
Tenant may elect to conduct thereon at any time during the Term, the manner of construction and
the conditions and state of repair or lack of repair of all improvements located thereon, and the
nature and extent of the rights of others with respect to the Premises, whether by way of
easement, right of way, lease, possession, lien, encumbrance, license, reservation, condition or
otherwise.
(i) Tenant acknowledges that neither Landlord nor any agent of
Landlord has made any representation or warranty as to the suitability of the Premises for the
erection of the Tenant's Work or for the conduct of Tenant's business, and that Tenant accepts
them in their present condition, "as is," and without any warranty whatsoever, and with no
recourse whatsoever to Landlord.
(ii) Tenant acknowledges that Tenant has made its own independent
investigation as to the usability and suitability of the Premises for the Permitted Use; the types of
governmental permits that may be required; the nature and extent of applicable Laws,
ordinances, regulations, plans, covenants, conditions, and restrictions, that Tenant may be
required to comply with in order to complete and operate the Premises for the Permitted Use; the
soils, geologic, and seismic conditions existing on the Premises; the presence of any
contaminants, hazardous wastes, or toxic substances in, upon, or about the soil or groundwater
in, upon, under, or about the Premises and the potential for migration of the same from adjacent
lands; the condition of existing footings, foundations, and columns for their use and
incorporation into the Tenant's Work, which Tenant acknowledges were not designed or
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constructed by Landlord; the availability and cost of all services that are necessary or desirable to
serve the Premises, including, but not limited to, electricity, natural gas, water, sewer, streets,
telephone, television cable, fire protection, and police protection; and the usability of the same
by Tenant as the Tenant and occupant of the Premises; all other physical facts, legal issues, and
potential governmental regulations or actions including, but not limited to, regulatory building
moratoriums by one or more of the governmental agencies having jurisdiction of the Premises;
all other matters deemed by Tenant to be material to Tenant or of concern to Tenant with respect
to Tenant entering into this Lease and undertaking the erection and construction of the Tenant's
Work; and Tenant agrees that Landlord has made no warranties or representations whatsoever
with respect to any of the foregoing and has, indeed, encouraged Tenant to undertake a complete
and thorough "due diligence investigation" of the Premises and the Tenant's Work and the plans,
specifications, and permits pertaining thereto, and Tenant acknowledges, covenants, and agrees
that Landlord has no obligations or responsibilities whatsoever with respect to any of the
foregoing matters (except an express representation or warranty) or with respect to solving any
problems that Tenant may encounter in connection with any of said matters (except to cooperate
reasonably with Tenant in solving such problems, or as otherwise expressly provided in this
Lease) and Tenant further covenants, warrants, and represents to waive and release any claims
against Landlord with respect to the foregoing matters.
In connection with the foregoing release, Tenant hereby waives the application and benefits of
California Civil Code § 1542 and hereby verifies that it has read and understands the following
provision of California Civil Code § 1542:
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS THAT THE CREDITOR OR
RELEASING PARTY DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER
FAVOR AT THE TIME OF EXECUTING THE RELEASE AND THAT, IF KNOWN BY HIM
OR HER WOULD HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH
THE DEBTOR OR RELEASED PARTY."
(m) Attorney's Fees. The prevailing party(ies) in any litigation, reference,
arbitration, bankruptcy, insolvency or other proceeding ("Proceeding") relating to the
enforcement or interpretation of this Lease may recover from the unsuccessful party(ies) all
costs, expenses, and actual attorney's fees (including expert witness and other consultants' fees
and costs) relating to or arising out of (i) the Proceeding, and (ii) any post judgment or post -
award proceeding including, without limitation, one to enforce or collect any judgment or award
resulting from the Proceeding. All such judgments and awards shall contain a specific provision
for the recovery of all such subsequently incurred costs, expenses, and actual attorney's fees.
(n) Approval. Unless provision is made for a different standard or specific
time period, approval or consent required pursuant to this Lease shall not be unreasonably
withheld and response to a request for an approval or consent shall be given by the party to
whom directed within thirty (30) days of receipt.
(o) Inspection and Access Rights. Landlord shall have the right to enter the
Premises and inspect the Premises at reasonable times and upon reasonable prior notice to
Tenant (except in the case of an entry in connection with Landlord exercising its rights hereunder
following an Event of Default).
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29. Limitation on Landlord's Liability. The term "Landlord" as used in this Lease so
far as covenants or obligations on the part of Landlord are concerned shall be limited to mean
and include only the owner or owners at the time in question of the Reversionary Estate and in
the event of any transfer or transfers of the title to such Reversionary Estate, Landlord herein
named (and in case of any subsequent transfers or conveyances the then grantor) shall be
automatically freed and relieved from and after the date of such transfer or conveyance from all
obligations on the part of Landlord contained in this Lease to be performed thereafter, provided
that any prepaid rent or trust funds in the hands of such Landlord or the then grantor at the time
of such transfer, shall be transferred to the grantee or transferee, who shall expressly assume,
subject to the limitations of this Section 29, all of the terms, covenants and conditions in this
Lease contained on the part of Landlord thereafter to be performed, it being intended by this
Section 29 that the covenants and obligations contained in this Lease on the part of Landlord
shall, subject to the provisions of this Section 29, be binding on Landlord, its successors and
assigns, only during and in respect of their respective successive periods of ownership.
30. Further Assurances. Each party to this Lease agrees to execute, acknowledge, and
deliver such further instruments, documents, agreements, applications and estoppels as may be
necessary or desirable to accomplish the intents and purposes of this Lease.
31. Covenants Running with the Land. Subject to the provisions of Section 14 with
respect to assignments, all of the provisions, rights, powers, covenants, agreements, obligations,
conditions and restrictions set forth in this Lease shall be binding upon the parties and their heirs,
successors (by merger, consolidation or otherwise), assigns, devisees, administrators, personal
representatives, occupants, users and all other persons or entities acquiring the Leasehold Estate
or any interest therein or any portion thereof, whether by operation of Law or in any manner
whatsoever, and shall inure to the benefit of and be enforceable by the parties and their
respective permitted heirs, successors (by merger, consolidation or otherwise) assigns,
administrators or personal representatives. All of the provisions of this Lease shall, from and
after the Commencement Date and until the Expiration Date or the earlier termination of this
Lease, be covenants running with the land pursuant to applicable Law, including, but not limited
to, Sections 1469 and 1470 of the Civil Code of the State of California. Each covenant to do or
refrain from doing some act on the Premises hereunder (a) is for the benefit of and a burden on
the Premises, (b) runs with the Premises and the Improvements, and (c) shall benefit or be
binding upon each successive owner during its ownership of the Premises and/or the
Improvements or any portion thereof, and each Person having an interest therein derived in any
manner through any such owner.
32. Counterparts and Signature Pages. For convenience, Landlord and Tenant may
execute this Lease on separate counterpart pages, which when attached to this Lease shall
constitute one fully -executed complete original Lease.
33. Non -Discrimination. Tenant herein covenants by and for itself, its successors and
assigns, and all Persons claiming under or through them, and this Lease is made and accepted
upon and subject to the following conditions:
That there shall be no discrimination against or segregation of any person or group of
persons, on account of any basis listed in subdivision (a) or (d) of Section 12955 of the
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Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and
paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code,
in the leasing, subleasing, transferring, use, occupancy, tenure, or enjoyment of the Premises
leased nor shall Tenant, or any Person claiming under or through Tenant, establish or permit any
such practice or practices of discrimination or segregation with reference to the selection,
location, number, use, or occupancy, of tenants, lessees, sublessees, subtenants, or vendees in the
Premises.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date
first written above.
LANDLORD:
TENANT:
SilverRock Development Company, LLC,
a Delaware limited liability company
By: THE ROBERT GREEN COMPANY,
a California corporation
Its: Manager
\,__ ?--
By:
Name: Robert S. Green, Jr.
Title: President
SilverRock Luxury Residences, LLC,
a Delaware limited liability company
By: THE ROBERT GREEN COMPANY,
a California corporation
Its: Manager
By:
Name: Robert S. Green, Jr.
Title: President
4838-7563-7503.I
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EXHIBIT "A"
LEGAL DESCRIPTION OF LAND
THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE CITY THE COUNTY OF
RIVERSIDE, STATE OF CALIFORNIA, AND IS DESCRIBED AS FOLLOWS:
PARCEL A:
LOTS 1 THROUGH 29 AND LOTS A THROUGH L OF TRACT NO. 37730, IN THE CITY OF LA QUINTA,
COUNTY OF RIVERSIDE, STATE OF CALIFORNIA, FILED IN BOOK 479, PAGES 27 THROUGH 33 OF
MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY.
EXCEPT ALL OIL, GAS, HYDROCARBON SUBSTANCES, AND MINERALS OF EVERY KIND AND
CHARACTER LYING MORE THAN FIVE HUNDRED (500) FEET BELOW THE SURFACE, TOGETHER
WITH THE RIGHT TO DRILL INTO, THROUGH, AND TO USE AND OCCUPY ALL PARTS OF THE
PHASE 1 A PROPERTY LYING MORE THAN FIVE HUNDRED (500) FEET BELOW THE SURFACE
THEREOF FOR ANY AND ALL PURPOSES INCIDENTAL TO THE EXPLORATION FOR AND
PRODUCTION OF OIL, GAS, HYDROCARBON SUBSTANCES OR MINERALS FROM SAID PHASE 1A
PROPERTY OR OTHER LANDS, BUT WITHOUT, HOWEVER, ANY RIGHT TO USE EITHER THE
SURFACE FROM SAID PHASE 1A PROPERTY OR ANY PORTION THEREOF WITHIN FIVE HUNDRED
(500) FEET OF THE SURFACE FOR ANY PURPOSE OR PURPOSES WHATSOEVER, OR TO USE THE
PHASE 1 A PROPERTY IN SUCH A MANNER AS TO CREATE A DISTURBANCE TO THE USE OR
ENJOYMENT OF THE PHASE 1A PROPERTY, AS RESERVED BY THE CITY OF LA QUINTA, A
CALIFORNIA MUNICIPAL CORPORATION AND CHARTER CITY, IN THE GRANT DEED RECORDED
NOVEMBER 6, 2017, AS INSTRUMENT NO. 2017-0463950 OF OFFICIAL RECORDS.
APN 770-260-037, APN 776-150-029, APN 777-490-050, APN 776-150-028, APN 777-490-038
EXHIBIT "A"
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EXHIBIT "B"
LENDER'S RIGHTS UNDER THE LEASE
Landlord and Tenant acknowledge and agree that a Lender (including a franchisor or
licensor) shall have, in addition to all rights and remedies provided for in the Lease, all of the
following rights:
1. Abandonment of Property. Notwithstanding any provision in the Lease to the
contrary, Landlord acknowledges and agrees that if Tenant defaults on its obligations to a Lender
and the Lender undertakes to enforce its security interest in the Lease, the Improvements, or any
collateral constituting personal property and/or trade fixtures, then such property shall not be
deemed abandoned.
2. Lender's Entry onto Property. For the purpose of curing any default by Tenant
under the Lease or under any instruments executed in favor of a Lender (the "Loan
Documents"), Landlord and Tenant authorize Lender to enter upon the Premises and to exercise
any of the rights and powers granted to Lender under the Lease or the Loan Documents,
provided the latter powers would, if exercised by Tenant, not breach the Lease.
3. Lender's Rights to Notice. Landlord agrees that any notice of default, termination
of the Lease or termination of Tenant's right to possession delivered to Tenant shall not be valid
or of any force or effect unless a duplicate copy thereof shall be delivered to the Lender
concurrently therewith, but only if Tenant or the Lender previously gave written notice to
Landlord of the name and address of the Lender.
4. Removal of Personal Property. Notwithstanding any provision to the contrary
contained in the Lease, in the event of Tenant's default under the Lease, Lender shall not be
required to remove from the Premises any of Tenant's personal property unless and until Lender
has acquired possession of the Premises or title to the Leasehold Estate.
5. Cure of Defaults by Lender.
(a) In the event of any default by Tenant under the provisions of this Lease,
any Lender will have the same periods as are given Tenant for remedying such default or causing
it to be remedied, plus, in each case, an additional period of thirty (30) days after the expiration
of the initial period or after Landlord has served a notice or a copy of a notice of such default
upon the Lender, whichever is later.
(b) In the event that Tenant shall default under any of the provisions of this
Lease, any Lender, without prejudice to its rights against Tenant, shall have the right to cure such
default within the applicable grace periods provided for in the preceding Section 5(a), above,
whether the same consists of the failure to pay rent or the failure to perform any other matter or
thing which Tenant is hereby required to do or perform, and Landlord shall accept such
performance on the part of such Lender as though the same had been done or performed by
Tenant. For such purpose, Landlord and Tenant hereby authorize such Lender to enter upon the
EXHIBIT "B"
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Premises and to exercise any of its rights and powers under this Lease and subject to the
provisions of this Lease.
(c) In the event of any default by Tenant, and if prior to the expiration of the
applicable grace period specified in Section 5(a), above, a Lender shall give Landlord written
notice that it intends to undertake the curing of such default, or to cause the same to be cured, or
to exercise its rights to acquire the leasehold interest of Tenant by foreclosure or otherwise, and
shall immediately commence and then proceed with all due diligence to do so, whether by
performance on behalf of Tenant of its obligations under this Lease, or by entry on the Premises
and/or the Improvements by foreclosure or otherwise, then Landlord will not terminate or take
any action to effect a termination of the Lease or re -renter, take possession of or relet the
Premises or the Improvements or similarly enforce performance of this Lease in a mode provided
by Law so long as such Lender is with all due diligence and in good faith engaged in the curing
of such default, or effecting such foreclosure; provided, however, that the Lender shall not be
required to continue such possession or continue such foreclosure proceedings if such default
shall be cured.
6. Termination of Lease. In the event of a termination of the Lease as to Tenant by
reason of the bankruptcy of Tenant and rejection of the Lease by the trustee in bankruptcy or by
Tenant as debtor in possession, or by operation of Law or for any other reason, Landlord agrees
that the Lease shall not terminate as to Lender and that the Lease shall, without any further act or
action, automatically continue upon the same terms in favor of Lender as the lessee under the
Lease provided that Lender immediately then cures or engages in good faith to cure any then
existing default of Tenant under the Lease which is reasonably susceptible of cure by Lender;
and Lender in its own name or the name of Landlord, may take all appropriate steps necessary to
remove Tenant from the Premises. Without limiting the foregoing, the parties agree to execute
such additional documents as may be desirable from time to time to confirm or carry out the
intent of this Section, including entering into a new ground lease if Lender so elects upon the
terms described below.
7. New Ground Lease. In the event that Tenant's interest under this Lease shall be
terminated by a sale, assignment or transfer pursuant to the exercise of any remedy of a Lender,
or pursuant to judicial proceedings, and if (i) no rent or other charges shall then be due and
payable by Tenant under this Lease, or (ii) the Lender shall have arranged to the reasonable
satisfaction of Landlord for the payment of all rent and other charges (less a credit for any
income received by Landlord during such period) due and payable by Tenant under this Lease as
of the date of such termination, together with the rent and other charges which but for such
termination would have become so due and payable from the date of such termination through
the sixtieth (60th) day thereafter, and upon payment of all expenses, including attorneys' fees,
incident thereto, Landlord will execute and deliver to such Lender or its nominee a new lease of
the Premises. Such new lease shall be for a term equal to the remainder of the term of this Lease
before giving effect to such termination and shall contain the same covenants, agreements, terms,
provisions and limitations as this Lease, and shall be subject only to the encumbrances and other
matters recited in this Lease and matters done or suffered by Tenant. Upon the execution and
delivery of such new lease, the new tenant, in its own name or in the name of Landlord, may take
all appropriate steps as shall be necessary to remove Tenant from the Premises and the
Improvements, but Landlord shall not be subject to any liability for the payments of fees,
EXHIBIT "B"
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including reasonable attorneys' fees, costs or expenses in connection with such removal; and
such new tenant shall pay all such fees, including attorneys' fees costs and expenses or, on
demand make reimbursements therefor to Landlord.
8. Surrender and Subordination. Landlord agrees, for the benefit of Lender, not to
accept a voluntary surrender of the Lease at any time while the Loan Documents remain in force.
9. Removal of Trademarks/Trade Dress. Any Lender who is a franchisor or licensor
of trademarks or trade dress to Tenant may, in accordance with the Loan Documents, enter onto
the Premises at any time before the sixtieth (60th) day following termination of this Lease to
remove or destroy all remnants, if any, of its trademarks, trade dress, or other proprietary
materials, provided such Lender repairs all damage to the Premises caused by removal.
10. Modifications. Landlord acknowledges that a proposed Lender may review the
provisions of this Exhibit `B" and based upon such review may request changes to or
clarifications of such provisions. Landlord agrees to make such changes or clarifications
requested by Lender as a condition to its financing provided the Lender's requested changes are
commercially reasonable and consistent with the customary leasehold financing practices of
Approved Institutions and do not decrease or adversely affect Landlord's rights and remedies
hereunder in any material respect. Tenant shall reimburse Landlord for Landlord's reasonable
attorneys' fees incurred in connection with reviewing, negotiating or documenting any such
amendment.
11. Conflict. If there is any conflict between the provisions of the Lease and the
provisions of this Exhibit "B", the provisions of this Exhibit "B" shall control.
EXHIBIT `B"
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TRIPLE -NET GROUND LEASE
between
SilverRock Development Company, LLC,
a Delaware limited liability company
("Landlord"),
and
SilverRock Luxury Residences, LLC,
a Delaware limited liability company
("Tenant")
October 22, 2021
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Case 24-11647-MFW Doc 369-2 Filed 03/03/25 Page 32 of 107
TABLE OF CONTENTS
Page
1. Principal Lease Provisions 1
2. Payment of Rent 9
3. Late Charge 10
4. Use of Premises 11
5. Impositions 11
6. Maintenance, Repairs and Replacements 13
7. Utilities 13
8. Liens 13
9. Insurance 14
10. Indemnity 16
11. Improvements 17
12. Damage by Fire or Other Casualty 19
13. Condemnation 20
14. Assignment and Subletting 22
15. Tenant's Financing 23
16. Tenant's Property and Ownership at Termination 24
17. Memorandum of Lease 24
18. Expiration of Term 25
19. Force Majeure 25
20. Events of Tenant's Default 25
21. Landlord's Remedies 26
22. Events of Landlord's Default 28
23. Exculpation of Landlord 28
(i)
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Page
24. Hazardous Substances 28
25. Brokers 29
26. Work Product 31
27. Intentionally Omitted 32
28. Miscellaneous 32
29. Limitation on Landlord's Liability 36
30. Further Assurances 37
31. Covenants Running with the Land 37
32. Counterparts and Signature Pages 37
33. Non -Discrimination 37
Exhibits
Exhibit "A" Legal Description of Land
Exhibit "B" Lenders' Rights Under the Lease
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INDEX
Page(s)
Abandonment Default 25
Affiliate 1
Approved Institution 1
Base Index Number 2
Commencement Date 1
Condemnation Proceeds 21
Constant Dollars 2
Current Index Number 2
Date of Taking 20
Default Rate 3
Event of Default 25
Expiration Date 3
Hazardous Substances 28
Imposition 11
Improvements 4
Index 2
Land 6
Landlord 1
Landlord's Proceeds 22
Laws 11
Lease 1
Lease Year 4
Leasehold Estate. 1
Lender 4
Loan Documents Exhibit B
mechanic's liens 13
Monetary Default 25
Notice and Payment Addresses 4
operating expenses 18
Partial Taking 21
parties. 1
per' 1
Permitted Use 5
Personalty 24
Person 34
Premises 5
Principal Lease Provisions 1
Proceeding 36
Project 6
PSDA 6
PSDA Default 26
Receipt Date 33
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Page(s)
rent 28
Rent 6
Reversionary Estate. 1
Substantially All of the Premises 20
Taking 20
Temporary Taking 21
Tenant 1
Tenant's Proceeds 22
Tenant's Work 7
Term 7
Work Product 31
(iv)
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TRIPLE -NET GROUND LEASE
(SilverRock Lodging, LLC)
This TRIPLE -NET GROUND LEASE (this "Lease") is made as of October 22, 2021
(the "Commencement Date"), between SilverRock Development Company, LLC, a Delaware
limited liability company ("Landlord"), and SilverRock Lodging, LLC, a Delaware limited
liability company ("Tenant"). Landlord and Tenant may sometimes be individually referred to
as a "party" and collectively referred to as the "parties." Based upon the mutual promises
contained herein and for good and valuable consideration, the receipt of which is acknowledged
by each party, the parties, intending to be legally bound, agree as follows:
1. Principal Lease Provisions.
As of the Commencement Date, Landlord leases the Premises to Tenant and
grants Tenant exclusive rights of possession of the Premises until the expiration of the Term.
Tenant accepts the Premises in its as -is condition, without any representation whatsoever from
Landlord as to the Premises. Tenant's interest in the Premises and the rights granted to Tenant
under this Lease shall be referred to herein as the "Leasehold Estate." The rights of Landlord in
the Premises after giving effect to the Leasehold Estate shall be referred to herein as the
"Reversionary Estate." The Reversionary Estate includes all of Landlord's rights pursuant to
this Lease, including Landlord's reversionary interest in the Improvements.
The following are the "Principal Lease Provisions" of, and certain definitions applicable
to, this Lease. Other portions of this Lease explain and define the Principal Lease Provisions in
more detail and should be read in conjunction with this Section.
(i) "Affiliate" means with respect to a party (i) a parent or a wholly -owned
subsidiary of such party, (ii) any Person that controls, is controlled by or under the common
control with such party, (iii) any Person that purchases all or substantially all of the assets of
such party, or (iv) any Person into which such party is merged or consolidated.
(ii) "Approved Institution" means a savings bank, a savings or building and
loan association, a commercial bank or trust company (whether acting individually or in any
fiduciary capacity), an insurance company, an educational institution or an institutional pension
or retirement fund or system, a charitable or other eleemosynary institution, a real estate
investment trust or any other Person with assets (capital and surplus) in excess of One Hundred
Million Dollars ($100,000,000), whose businesses include interim, construction or permanent
lending secured by real estate
(iii) "Constant Dollars" means the present value of the dollars to which such
phase refers. An adjustment shall be made on each anniversary of the Commencement Date.
Constant Dollars shall be determined by multiplying the dollar amount to be adjusted by a
fraction, the numerator of which is the Current Index Number and the denominator of which is
the Base Index Number. The "Base Index Number" shall be the level of the Index for the
calendar month in which the Commencement Date occurs; the "Current Index Number" shall
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be the level of the Index for the calendar month in which the adjustment is to take place; and the
"Index" shall be the Consumer Price Index — "All Items" for All Urban Consumers in the Los
Angeles — Riverside — Orange County area (1982-84=100) or any successor index thereto as
hereinafter provided. If publication of the Index is discontinued, or if the basis of calculating the
Index is materially changed, then the parties shall substitute for the Index comparable statistics
as computed by an agency of the United States Government or, if none, by a substantial and
responsible periodical or publication of recognized authority closely approximating the result
which would have been achieved by the Index.
(iv) "Default Rate" means an annual rate of interest equal to the lesser of
(i) five percent (5.00%) above the rate of interest announced from time to time by the Bank of
America, Downtown Los Angeles, Main Branch, as the prime or reference rate (or, in the event
said bank ceases to announce a prime or reference rate or is acquired or ceases operations and
there is no successor bank, the largest established and financially secure commercial bank,
having a headquarters in California, selected by Landlord), or (ii) the highest rate permitted by
Law, if any.
(v) "Expiration Date" means the last day of the 99th Lease Year.
(vi) "Gross Revenues" shall mean all revenues and receipts of every kind
derived from operating the Project, including, but not limited to: income (from both cash and
credit transactions) from the rental of guest rooms; payments received under any la carte Project
services; telephone charges; rentals from residential subleases or any other form of rental
arrangement; revenues and receipts from licensees, concessionaires and subleases; income from
vending machines; income from parking; health club membership fees; food and beverage sales;
wholesale and retail sales of merchandise; service charges; golf revenues of any kind (including
,without limitation, membership programs and greens fees); amenity access fees; and proceeds, if
any, from business interruption or other loss of income insurance; provided, however, that Gross
Revenues shall not include the following: (1) proceeds from the sale of finished residential
units; (2) gratuities to employees of the Project; (3) federal, state or municipal excise, sales or
use taxes or any other taxes collected directly from patrons, guests, licensees, sublicensees and
concessionaires or included as part of the sales price of any goods or services; (4) any refunds,
rebates, discounts and credits of a similar nature, given, paid or returned in the course of
obtaining Gross Revenues or components thereof; (5) insurance proceeds (other than proceeds
from business interruption or other loss of income insurance); (6) condemnation proceeds (other
than for a temporary taking); (7) any proceeds from any financing of the Project or refinancing of
any debt encumbering the Project; (8) any security or other like deposits of residential sublessees
unless and until they are actually applied to rental owed; (9) rental received by Tenant from its
licensees, concessionaires and non-residential sublessees (as the revenues and receipts from them
are included in Gross Revenues); (10) late charges and interest payable by sublessees and interest
accruing on the investment of funds received by Tenant; (11) settlements or awards for damages,
costs of collection or suit, and attorneys' fees recovered by Tenant for breach of any sublease;
provided, however, that there shall be included in Gross Revenues the portion of any such
settlement or award which is attributable to damages for nonpayment of rent or other amounts
that, if paid to Tenant under the sublease, would have constituted Gross Revenues; (12) real
estate taxes and assessments refunded by governmental agencies; and (13) bonafide payments by
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sublessees toward tenant improvements installed at the commencement of the sublease term if
and to the extent that such payments are separately designated as such in the subleases.
(vii) "Improvements" mean all current and future improvements on and
modifications to the Premises (to the extent existing before expiration of the Term).
(viii) "Lease Year" means each calendar year during the Term; however, if the
first Lease Year shall commence on the Commencement Date and end on the first December 31
following the Commencement Date.
(ix) "Lender" means any Approved Institution which is the holder of debt
from Tenant secured by an interest in the Leasehold Estate or any Improvements, fixtures or
equipment on the Premises. Tenant acknowledges that Landlord's Reversionary Estate is not,
and will not be, subordinate to the security interest of any Lender.
(x) "Notice and Payment Addresses" for the parties is as follows:
For Landlord, to:
For Tenant, to:
SilverRock Development Company, LLC
c/o The Robert Green Company
343 Fourth Avenue
San Diego, CA 92101
Attn: Mr. Robert S. Green, Jr., President
SilverRock Lodging, LLC
c/o The Robert Green Company
343 Fourth Avenue
San Diego, CA 92101
Attn: Mr. Robert S. Green, Jr., President
(xi) "Permitted Use" means the uses permitted under the PSDA, subject to all
applicable Laws. After the expiration of the PSDA, the Permitted Use shall be the use in effect
immediately prior to the expiration of the PSDA or any other use that is reasonably acceptable to
Landlord. Notwithstanding anything above to the contrary, Tenant shall not use all or any part of
the Premises, or any improvements thereon, (i) for any unlawful or illegal business, use or
purpose, (ii) for any purpose or in any way in violation of any Laws, including but not limited to
legal requirements respecting Hazardous Substances or (iii) in violation of the PSDA.
(xii) "Premises" means the following real property (collectively, the
"Premises"):
(1) the land described in Exhibit "A" attached hereto. (the "Land");
and
(2) all tenements, hereditaments, appurtenances, easements,
development rights, mineral rights owned by Landlord, water rights, air rights and all other rights
and privileges appertaining to the Land and all rights of ingress and egress at all times from and
to the public streets.
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Pursuant to the PSDA, Landlord has the right to acquire the land referred to therein as the
Ahmanson Ranch House and the Golf Course. At such time as Landlord acquires such land, or
any portion thereof, the same shall be added to the Premises and Land hereunder, and Landlord
and Tenant shall promptly enter into an amendment to this Lease and the Memorandum of Lease
to reflect such addition.
(xiii) "Project" means the project contemplated under the PSDA.
(xiv) "PSDA" means that certain Purchase, Sale, and Development Agreement
between Landlord and the City of La Quinta dated November 19, 2014, as amended from time to
time.
(xv) "Rent" means the Minimum Annual Rent and Percentage Rent
corresponding to the applicable Lease Year as follows:
Lease Year Minimum Annual Rent
Percentage Rent
Rate
1 - 2 $2,000,000.00 3%
3 — 5 $3,000,000.00 3%
6 -20 $5,500,000.00 5%
21 —99 * 5%
* The Minimum Annual Rent shall be adjusted upon the commencement of the
21st Lease Year„ and every 10 years thereafter, to an amount equal to the greater
of (i) eighty-five percent (85%) of the average of the total Rent (Minimum
Annual Rent and Percentage Rent) for the five (5) Lease Years immediately
preceding the applicable adjustment date or (ii) the sum of the Minimum Annual
Rent in effect immediately preceding the applicable adjustment plus $500,000.00
(in Constant Dollars).
(xvi) "Tenant's Work" means the initial Improvements to be
constructed by Tenant on the Premises.
(xvii) "Term" means the period beginning on the Commencement Date;
and ending on the Expiration Date, as accelerated in accordance with this Lease.
2. Payment of Rent.
(a) Minimum Annual Rent. Beginning on the Commencement Date, and
throughout the Term, Tenant shall pay Landlord monthly one -twelfth (1/12) of the Minimum
Annual Rent, in advance, on the first (1st) day of each calendar month. If the Date does not
occur on the first (1st) day of a calendar month, then the first monthly installment shall be
prorated based on a fraction, the numerator of which is the number of days in such calendar
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month that fall within the Term, and the denominator of which is the total number of days in
such calendar month.
(b) Percentage Rent. In addition to the Minimum Annual Rent and payment
of all other charges which are to be paid by Tenant under this Lease, Tenant shall pay to
Landlord as percentage rent ("Percentage Rent") an amount equal to the amount, if any, by
which (a) the product of Percentage Rent Rate times Gross Revenue for the applicable Lease
Year, exceeds (b) the Minimum Annual Rent payable by Tenant for the applicable Lease Year.
Percentage Rent shall be payable annually as provided in Section 3(c) below.
(c) Report and Payment of Percentage Rent. Within thirty (30) days after the
end of the first three (3) calendar quarters of each Lease Year, and within forty-five (45) days
following the end of each Lease Year, Tenant shall deliver to Landlord a written statement
certifying Gross Revenue during said calendar quarter or Lease Year, as applicable. At the same
time of Tenant's delivery of the statement for a Lease Year, Tenant shall pay to Landlord the
Percentage Rent for such Lease Year. The statement shall be certified to be correct by Tenant or
by an officer, partner or managing member of Tenant; nevertheless, Landlord's acceptance of
any payment of Percentage Rent shall not constitute (i) an acceptance or admission by Landlord
with respect to the accuracy of any written statement of Tenant certifying Gross Revenue,
whether such statement is for a calendar quarter or a Lease Year; or (ii) an acceptance or
admission by Landlord with respect to the sufficiency or adequacy of the amount of the payment
of Percentage Rent; or (iii) a waiver or relinquishment of Landlord's right to audit pursuant to
Section 2(d) below.
(d) Audit. Landlord shall be entitled to have an audit made of the amount
received by Tenant from business transacted in the Premises, whether or not included in Gross
Revenue, for a prior Lease Year provided Landlord gives Tenant written notice thereof within
nine (9) months following the end of such Lease Year. Tenant shall, upon the written request of
Landlord or its agents, produce and make the records and other documents reasonably requested
by Landlord available to Landlord or its agents for the purpose of such audit. If the audit
discloses any statements for the period audited are inaccurate, adjustments shall be made as
within thirty (30) days of Landlord's delivery of the conclusion of the audit to Tenant. If the
audit discloses that Tenant has understated Percentage Rent by three percent (3%) or more,
Tenant shall immediately pay the cost of the audit. Notwithstanding the foregoing, if Tenant
gives Landlord written notice that Tenant disputes the results of Landlord's audit within thirty
(30) days following Tenant's receipt thereof, then Landlord and Tenant shall attempt to resolve
the dispute, and pending the resolution of the dispute, the foregoing adjustments and payment of
costs shall be suspended. If Landlord and Tenant are unable to resolve the dispute within thirty
(30) days following the date Tenant delivered its dispute notice to Landlord, the parties shall
retain an independent certified public accountant to resolve the dispute, whose determination
shall be conclusive. The fees of such accountant shall be paid by Tenant if the accountant
determines that Landlord's audit was correct, and such fees shall be paid by Landlord if the
accountant determines that Landlord's audit was incorrect.
(e) General. Except as otherwise provided herein, Rent shall be payable
without notice or demand and without any deduction, offset, or abatement in Lawful money of
the United States of America to Landlord at the address stated herein or to such other Persons or
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at such other places as Landlord may designate in writing. The parties acknowledge that this
Lease essentially is a financing device rather than a traditional operating lease and that therefore
all rent is payable under this Lease on a "triple -net" basis, such that Tenant is responsible for all
of the risks, costs and expenses associated with Tenant's Work and the Premises (including,
without limitation, all Impositions, as defined below), except as otherwise provided herein.
3. Late Charge. Tenant hereby acknowledges that late payment by Tenant to
Landlord of any amount due hereunder will cause Landlord to incur costs not contemplated by
this Lease, the exact amount of which will be extremely difficult to ascertain. Accordingly, if:
(a) any Rent is not received by Landlord within five (5) days after it is due; or (b) any other
amount due by Tenant to Landlord hereunder is not paid within ten (10) days after Landlord's
notice to Tenant that the payment is delinquent; then Tenant shall pay to Landlord a late charge
equal to 4% of such overdue amount. The parties hereby agree that such late charge represents a
fair and reasonable estimate of the administrative costs and foregone interest and other income
Landlord will incur and/or suffer by reason of the late payment by Tenant. Acceptance of such
late charge by Landlord shall in no event constitute a waiver of Tenant's default with respect to
such overdue amount, nor prevent Landlord from exercising any of the other rights and remedies
granted hereunder.
4. Use of Premises. Tenant may use the Premises for the Permitted Use and for no
other use without Landlord's written consent, which consent Landlord may not unreasonably
withhold. Tenant covenants throughout the term of this Lease, at Tenant's sole cost and expense,
promptly to comply with all laws and ordinances and the orders, rules, regulations and
requirements of all federal, state and municipal governments and appropriate departments,
commissions, boards and officers thereof, as well as the requirements of the PSDA (collectively,
"Laws"), which may be applicable to the Premises and the Improvements. Tenant shall likewise
observe and comply with the requirements of all policies of public liability, fire, and all other
policies of insurance at any time in force with respect to the Improvements. Tenant shall comply
with all Laws concerning the Premises or Tenant's use of the Premises, including the obligation
at Tenant's sole cost to alter, maintain, and restore the Premises in compliance with all
applicable Laws, even if the Laws are enacted after the date of this Lease, even if compliance
entails costs to Tenant of a substantial nature, and even if compliance requires structural
alterations.
5. Impositions.
(a) Impositions. Tenant covenants and agrees to pay, before any fine, penalty,
interest or cost may be added thereto for the non-payment thereof, all property taxes,
assessments, water and sewer rates and charges, and other governmental charges, general and
special, ordinary and extraordinary, unforeseen as well as foreseen, of any kind and nature
whatsoever (all of which taxes, assessments, water and sewer rates or charges, and other
governmental charges are hereinafter referred to as "Imposition"), which are assessed, levied,
imposed or become a lien upon the Premises and/or the Improvements (as defined below), or
become payable, during the Term of this Lease; provided, however, that if, by Law, any such
Imposition may at the option of the taxpayer be paid in installments (whether or not interest shall
accrue on the unpaid balance of such Imposition), Tenant may exercise the option to pay the
same (and any accrued interest on the unpaid balance of such Imposition) in installments and
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shall pay only such installments as may become due during the Term of this Lease as the same
respectively become due and before any fine, penalty, interest or cost may be added thereto, for
the non-payment of any such installment and interest; and provided, further, that any Imposition
relating to a fiscal period of the taxing authority, a part of which period is included within the
Term of this Lease and a part of which is included in a period of time before the Commencement
Date or after the termination of this Lease, other than a termination of this Lease pursuant to
Section 21 below, shall (whether or not such Imposition shall be assessed, levied, imposed or
become a lien upon the Premises and/or the Improvements, or shall become payable, during the
Term of this Lease) be adjusted between Landlord and Tenant as of the Commencement Date or
the termination of this Lease, as applicable, so that Landlord shall pay that portion of such
Imposition (or receive any tax refund or tax credit) which relates to that part of the fiscal period
before the Commencement Date or after the termination of this Lease, as applicable, and Tenant
shall pay that portion of such Imposition (or receive any tax refund or tax credit) which relates to
the period during the Term of this Lease. Notwithstanding the foregoing, the following shall not
be considered Impositions, and Landlord shall be responsible for the payment the same: (i) any
franchise, corporate, estate, inheritance, succession, capital levy, stamp tax or transfer tax of
Landlord, (ii) any income, excess profits or revenue tax or any other tax, assessment, charge or
levy upon the Rent payable by Tenant under this Lease or (iii) assessments attributable to the C-
Pace loan.
(b) Payment of Impositions. Except when applicable Law requires otherwise,
Tenant shall pay the Impositions for the period commencing with the Commencement Date to
the applicable authority, before delinquency. Tenant covenants, upon request of Landlord, to
furnish to Landlord for inspection, official receipts of the appropriate taxing authority, or other
evidence satisfactory to Landlord, evidencing the payment of any Imposition.
(c) Contest of Taxes and/or Assessed Valuation of Property. Landlord and
Tenant shall each fully cooperate with the other in good faith and use diligent, reasonable efforts
to minimize Impositions. Tenant shall have the right to contest the amount and/or validity, or to
seek a refund, in whole or in part, of any Imposition by appropriate proceedings, and
notwithstanding the provisions of Section 6(a) above, this shall not be deemed or construed in
any way as relieving, modifying or extending Tenant's covenants to pay any such Imposition at
the time and in the manner as provided in this Section 6 unless Tenant shall have deposited with
Landlord or a bank or trust company designated by Landlord, as security for the payment of such
Imposition, money or a corporate surety bond or other security acceptable to Landlord in the
amount so contested and unpaid together with the estimated amount of all interest and penalties
in connection therewith and all charges that may or might be assessed against or become a
charge on the Premises and/or Improvements or any part thereof in said proceedings, whereupon
Tenant may postpone or defer payment of such Imposition. Upon the termination of such
proceedings, Tenant shall pay the amount of such Imposition or part thereof as finally
determined in such proceedings, the payment of which may have been deferred during the
prosecution of such proceedings, together with any costs, fees, interest, penalties or other
liabilities in connection therewith, and upon such payment Landlord shall return, or cause such
bank or trust company to return, the amount above referred to without interest. If, at any time
during the continuance of such proceedings, Landlord shall deem the amount deposited with it
insufficient, Tenant shall, upon demand, deposit with Landlord or such bank or trust company
such additional sum as Landlord may reasonably request, and upon failure of Tenant to do so, the
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amount theretofore deposited may be applied by Landlord or such bank or trust company to the
payment, removal and discharge of such Imposition and the interest and penalties in connection
therewith and any costs, fees or other liability accruing in any such proceedings, and the balance,
if any, shall be returned to Tenant. Landlord agrees not to unreasonably withhold its consent to
joining in any such proceedings or permitting the same to be brought in its name. Landlord shall
not ultimately be subjected to any liability for the payment of any costs or expenses in
connection with any such proceeding, and Tenant covenants to indemnify, save and hold
harmless Landlord from any such costs or expenses. Tenant shall be entitled promptly to any
refund of any such Imposition and penalties or interest thereon, which have been paid by Tenant,
or which have been paid by Landlord and for which Landlord has been fully reimbursed. The
certificate, advice or bill of the appropriate official designated by Law to make or issue the same
or to receive payment of any Imposition, of non-payment thereof, shall be prima facie evidence
that such Imposition is due and unpaid at the time of the making or issuance of such certificate,
advice or bill.
6. Maintenance, Repairs and Replacements. Tenant, at its sole expense, shall keep
the Improvements and the Premises clean and in good condition free of accumulations of
rubbish, and shall make all repairs (including structural repairs) and replacements necessary to
maintain the Improvements during the entire Term as a first-class Project. Landlord shall not be
required to furnish any services or facilities or to make any repairs or alterations to the Premises
or the Improvements and Tenant hereby assumes the full and sole responsibility for the
condition, operation, repair, replacement, maintenance and management of the Premises and the
Improvements. Upon the Commencement Date and throughout the Term, Tenant shall, at its
own cost, maintain, repair, and replace the Improvements to the extent required by applicable
Law or regulations and as required by any Lender.
7. Utilities. Tenant is responsible, at its own cost, for supplying utilities to the
Premises, including the payment of hookup fees, deposits and similar charges. Tenant will pay
directly to the appropriate utility company or governmental agency, when due, all bills for gas,
water, sanitary sewer, electricity, telephone and other public or private utilities used by Tenant or
provided to the Premises upon Commencement and throughout the Term.
8. Liens. Tenant shall not suffer or permit any mechanic's, vendor's, laborer's, or
materialman's statutory or similar liens (collectively "mechanic's liens") to be filed against the
Premises or the Improvements, nor against Tenant's leasehold interest in the Premises, by reason
of work, labor, services or materials supplied or claimed to have been supplied to Tenant or
anyone holding any interest in the Premises and/or the Improvements or any part thereof through
or under Tenant. If any such mechanic's lien shall be filed, Tenant shall, within ninety (90) days
after written notice of the filing thereof (but in any event prior to the entry of a judgment for
foreclosure), cause the same to be discharged of record by payment, deposit, bond, order of a
court of competent jurisdiction or otherwise; provided, however, that Tenant shall have the right
to contest, with due diligence, the validity or amount of any such lien or claimed lien, if Tenant
shall give to Landlord security in an amount equal to one and one-half (1 Y2) times the amount of
such lien or claimed lien. Subject to the foregoing provisions, if Tenant shall fail to cause such
lien to be discharged within the required time period, then, in addition to any other right or
remedy of Landlord, Landlord may, but shall not be obligated to, and following written notice to
Tenant of its election to do so, discharge the same either by paying the amount claimed to be due
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or by procuring the discharge of such lien by deposit or by bonding proceedings, in which event
Tenant shall reimburse Landlord for all costs incurred thereby immediately following demand
therefor. Nothing contained in this Lease shall be deemed or construed in any way as
constituting the consent or request of Landlord, express or implied by inference or otherwise, to
any contractor, subcontractor, laborer or materialman for the performance of any labor or the
furnishing of any materials for any specific improvements, alteration to or repair of the Premises
or the Improvements or any part thereof.
9. Insurance.
(a) Tenant shall at Tenant's expense, obtain and keep in force during the
Term of this Lease, a policy or policies of Commercial General Liability Insurance that includes
Combined Single Limit Bodily Injury and Property Damage Insurance, including Personal and
Advertising Injury, Blanket Contractual Liability, Liquor Legal Liability, Garage Liability,
Garagekeepers Legal Liability, and Non -Owned Auto Liability in an amount not less than
$10,000,000.00 for injury, damages, or death resulting from any one accident or occurrence.
Such policy or policies (i) may provide for a deductible not in excess of $50,000.00 (in Constant
Dollars) for each accident or occurrence, provided that Tenant shall maintain a self-insurance
fund sufficient to satisfy the deductible, and (ii) shall insure Tenant and Landlord against liability
arising out of the use, occupancy, or maintenance of the Premises including all improvements
now or hereafter located thereon and all areas appurtenant thereto. The policy or policies shall
be stated to be primary and non-contributing with any insurance which may be carried by
Landlord, and shall insure performance by Tenant of the indemnity provisions of Section 11 to
the extent such indemnities are within the scope of coverage under such policies. Landlord and
Landlord's lender, if any, shall be named as "Additional Insured" on all of the above policies.
(b) Tenant shall, at its sole cost and expense, at all times during the Term,
maintain in force a policy of (i) Workers Compensation and Employers' Liability insurance
providing workers compensation benefits as required by the Law (with a waiver of subrogation
in favor or Landlord) and Employers' Liability coverage with limits of not less than
$1,000,000.00 and (ii) Automobile Liability insurance with a limit of liability of not less than
$1,000,000.00 for each accident and providing coverage for all "owned", "hired" and "non -
owned" vehicles.
(c) Tenant shall during the Term, at its sole cost and expense, obtain and
maintain a policy or policies of property insurance covering loss or damage to the Premises and
Improvements providing protection against all perils included within the standard insurance
industry coverage classifications of Causes of Loss Special Form, and with earthquake coverage
if available at commercially reasonable rates. The above policy or policies shall include a full
replacement cost endorsement, debris removal endorsement (or equivalent coverage in the event
of uninsured catastrophic loss), a building code upgrade or ordinance and Law endorsement, and
insure all Improvements, changes thereto or replacements thereof, and trade fixtures on the
Premises, as well as all personal property located on or used in operation of the Premises for one
hundred percent (100%) of the then current replacement cost, including any required building
code upgrades. The policy or policies shall include the Landlord and Landlord's lender, if any,
as loss payee as to the proceeds from the debris removal endorsement and each loss shall be
subject to a commercially reasonable deductible reasonably acceptable to Landlord.
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(d) Tenant shall, at its sole cost and expense, at all times during the Term,
maintain in force a policy of rental loss or business interruption insurance in an amount at least
sufficient to pay, for a period of twenty-four (24) months following any applicable loss, the sum
of the following:
(i)
Minimum Annual Rent;
twenty-four (24) months' rent at the then applicable
(ii) the Impositions provided for in Section 5; and
(iii) the insurance premiums provided for in Section 9.
(e) The liability coverage limits in Sections 9(a) and (b) above must be
covered by excess liability coverage having a limit of not less than $7,000,000.00, which policy
shall be in "following form" and shall provide that if the underlying aggregate is exhausted, the
excess coverage will drop down as primary insurance. Such excess liability policy shall include
coverage for the additional insureds.
(f) The purpose and intent of the parties is that Tenant shall have during the
Term such amount of liability insurance as will be sufficient to protect Landlord from any
liability with respect to the Premises. If at any time during the Term, Landlord shall reasonably
determine that the limits of the liability insurance under Section 6(a) or (b) above are insufficient
(e.g., inflation; the risk incident to use of the Premises; the nature and amount of the awards for
liabilities then being given), then Landlord may increase the limits of the such liability insurance
to then -appropriate amounts by giving Tenant at least sixty (60) days' prior written notice
thereof.
(g) The insurance required to be carried under this Section 9 shall be placed
with responsible insurance companies admitted to do business in California and having an A.M.
Best rating of at least A- and an A.M. Best Financial Size Category rating of not less than
Class VII as shall be selected by Tenant. Tenant shall deliver to Landlord certificates of said
insurance and of renewals thereof from time to time during the Term hereof promptly following
request therefor from Landlord, and shall obtain the written commitment of each such insurer to
provide each additional insured with thirty (30) days written notice of any cancellation thereof,
or amendments with respect to reductions in policy limits or coverages. Any insurance required
to be maintained by Tenant may be maintained under a so-called "blanket policy" insuring other
parties and other locations so long as the amount of insurance required to be provided hereunder
for the Premises is not thereby diminished.
(h) Unless this Lease is terminated pursuant to Section 12, all policies of
insurance described in Section 9(c) shall provide for payment of loss in excess of $1,000,000.00
(in Constant Dollars) to the Lender holding the first Leasehold Mortgage (unless there is not one,
in which case payment of loss shall be to a mutually acceptable escrow holder) to be held in trust
and applied to the repair and restoration of the Premises, subject to the conditions set forth in the
Leasehold Mortgage and Section 12. When the Premises have been fully repaired and restored,
any excess shall be paid to Tenant.
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(i) Landlord and Tenant each hereby release and relieve the other, and waive
their entire right of recovery against the other for loss or damage arising out of or incident to
perils insured against by the insurance described in Section 9(c), which perils occur in, on, or
about the Premises whether due to the negligence of Landlord or Tenant or their agents,
employees, contractors, and/or invitees. Tenant and Landlord shall, upon obtaining the policies
of insurance required hereunder, give notice to the insurance carrier or carriers that the foregoing
mutual waiver of subrogation is contained in this Lease.
10. Indemnity.
(a) Indemnity. Tenant shall indemnify, defend and hold Landlord harmless
from all claims, costs, liability, damage or expense, including attorneys' fees, arising from
(a) any death, damage or injury to Persons or property occurring on the Premises during the
Term or resulting from Tenant's or its guests' or subtenants' use thereof or actions thereon,
(b) Tenant's construction or demolition or modification of Improvements on the Premises,
(c) any and all claims by or on behalf of any Person arising from the conduct or management of
or from any work or thing whatsoever done in and on the Premises and/or Improvements during
the Term, and will further indemnify and save Landlord harmless against and from any and all
claims arising during the term of this Lease from any condition of the Improvements, or
passageways or space therein or appurtenant thereto, or arising from any breach or default on the
part of Tenant in the performance of any covenant or agreement on the part of Tenant to be
performed pursuant to this Lease or arising from a violation by Tenant of the requirements under
the PSDA, or arising from any act or negligence of Tenant or any subtenant or occupant of the
Improvements or any part thereof, or of its or their agents, contractors, servants, employees or
licensees, or arising from any accident, injury or damage whatsoever caused to any Person or
property occurring during the Term of this Lease in or about the Premises and/or Improvements,
and from and against all judgments, costs, expenses and liabilities incurred in or about any such
claim or action or proceeding brought therein. The foregoing shall not apply to any matters
arising out of the negligence or willful misconduct of Landlord, its agents or employees.
(b) Notification of Claim. Landlord shall notify Tenant promptly of any
claim, action or proceeding and cooperate fully in the defense. Upon receipt of such notification,
Tenant shall assume the defense of the claim, action, or proceeding, including the employment of
counsel acceptable to Landlord and the prompt payment of the attorneys' fees and costs of such
counsel. If Landlord at any time reasonably determines that having common counsel would
present such counsel with a conflict of interest, or if Tenant fails to promptly assume the defense
of the claim, action, or proceeding or to promptly employ counsel acceptable to Landlord, then
Landlord may, in its sole discretion, employ separate counsel to represent or defend Landlord,
and Tenant shall pay the reasonable attorneys' fees and costs of such separate counsel within
thirty (30) days of receiving an itemized billing therefor. At its sole discretion, Landlord may
participate at its own expense in the defense of any claim, action or proceeding, but such
participation shall not relieve Tenant of any obligation imposed by this Lease. Failure to
promptly defend or indemnify Landlord is a material breach which shall entitle Landlord to all
remedies available under Law, including but not limited to specific performance and claims for
damages.
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(c) Survivability. Tenant's obligations to release, hold harmless, indemnify,
and defend Landlord shall survive the expiration of the Term; or, earlier termination of this
Lease; or abandonment of the Premises by Tenant.
11. Improvements. Tenant may construct Improvements on and make alterations,
repairs, demolitions, and modifications to the Premises as Tenant may deem desirable for its
Permitted Use of the Premises, subject only to compliance with Laws and this Lease, including
the PSDA. Tenant shall pay for the design and cost of the Improvements, which Improvements
shall be made in all cases subject to the following conditions which Tenant covenants to observe
and perform:
(a) No Improvements shall be undertaken until Tenant shall have procured
and paid for, so far as the same may be required, from time to time, all municipal and other
governmental permits and authorizations of the various municipal departments and governmental
subdivisions having jurisdiction and Landlord agrees, at no cost or liability to Landlord, to join
in the application for such permits or authorizations whenever such action is necessary;
(b) Any structural Improvement shall be conducted under the supervision of
an architect or engineer licensed as such in the State of California (who may be an employee of
Tenant) selected by Tenant and plans therefor shall be submitted to Landlord, in order to give
Landlord an opportunity to determine that such Improvements will comply with the provisions of
this Section;
(c) All Improvements shall be of such a character that, when completed, the
value and utility of the Improvements shall be not substantially less than the value and utility of
the Improvements immediately before any such additional Improvements; except that in the case
of any Improvements following the completion of Tenant's Work involving demolition or the
construction of any of the structural components of the Improvements or the exterior facade of
the Improvements and which have a value in excess of Two Hundred Fifty Thousand Dollars
($250,000.00) (in Constant Dollars), Tenant shall, prior to the commencement of demolition or
construction submit to Landlord preliminary drawings and outline specifications to be approved
by Landlord which approval shall not be unreasonably withheld and which shall have reference
only to establishing that such new Improvements will be of a value not substantially less than the
value of the Improvements to be demolished and that such new Improvements, when completed,
will constitute all or a part of a completed Project consistent with the Permitted Use and capable
of producing a fair and reasonable net annual income, after payment of all operating expenses.
For purposes of this Section 11(c), "operating expenses" shall include all expenses of operation
of the Improvements, the Rent, additional rent and other charges reserved under this Lease and
the cost of performance of all covenants and agreements of Tenant provided to be performed by
Tenant under this Lease, and shall be deemed to exclude depreciation, income taxes and
franchise taxes of Tenant.
(d) All work done in connection with any Improvements shall be done in a
good and workmanlike manner and in compliance with all applicable Laws, ordinances, orders
and requirements of all federal, state and municipal governments and their appropriate
departments, commissions, boards and officers. The Improvements shall at all times be free of
liens for labor and materials supplied or claimed to have been supplied. The work of any
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Improvements shall be prosecuted with reasonable dispatch. Worker's compensation insurance
covering all Persons employed in connection with the work and with respect to whom death or
bodily injury claims could be asserted against Landlord, Tenant or the Premises or the
Improvements, and general liability and property damage insurance (which may be effected by
endorsement, if obtainable, on the insurance required to be carried pursuant to Section 9 above)
for the mutual benefit of Tenant and Landlord with limits of not less than those required to be
carried pursuant to Section 9, above, shall be maintained by Tenant at Tenant's sole cost and
expense at all times when any work is in process in connection with any Improvements.
(e) Subsequent to completion of the Tenant's Work, no Improvements
involving an expenditure in excess of Two Hundred Fifty Thousand Dollars ($250,000) (in
Constant Dollars) shall commence until Tenant shall have given Landlord ten (10) days prior
written notice of such work in order that Landlord may post and/or file notices of non -
responsibility or notices of a similar nature.
(f) If the estimated cost of any Improvements shall be in excess of One
Million Dollars ($1,000,000.00) (in Constant Dollars), Tenant shall, prior to the commencement
of any such Improvements, deliver to Landlord evidence that Tenant has sufficient funds
available to pay for the anticipated costs of such Improvements, which evidence may include,
without limitation, a construction loan from an Approved Lender.
(g) Tenant covenants that in performing any work or repairs to, or restoration,
replacement or rebuilding of, any of the Improvements required to be performed by Tenant
pursuant to the provisions of Sections 12 and 13, it will observe and perform, insofar as the
nature of such repairs, restoration, replacement or rebuilding make such observation and
performance appropriate, the conditions relating to Improvements set forth in this Section 11.
At any time before, or within thirty (30) days after, termination of this Lease, Tenant may
remove from the Premises any Personalty (as defined in Section 16 below) on or at the Premises,
provided Tenant repairs all damage to the Premises caused by such removal.
12. Damage by Fire or Other Casualty.
(a) Restoration. In the event of a fire, earthquake or other casualty, Tenant
shall promptly, at Tenant's sole cost and expense, restore, repair, replace or rebuild the
Improvements as nearly as possible to the condition, quality and class it was in immediately prior
to such damage or destruction, or with such changes or alterations as Tenant shall elect to make
in conformity with Section 11 above. Such restoration, repairs, replacement or rebuilding shall
be commenced promptly and prosecuted with reasonable diligence.
(b) No Abatement of Rent. Tenant's obligations to pay Rent and all other
charges under this Lease will continue notwithstanding the damage or casualty and neither Rent
nor any other charges under this Lease will be abated, and Tenant hereby waives the provisions
of Sections 1932(2) and 1933(4) of the California Civil Code and of any other statute or Law
now or hereafter in effect contrary to such obligations of the Tenant as set forth in this Lease, or
which relieves Tenant from such obligation.
13. Condemnation.
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(a) Definition of Taking and Substantial Taking. For the purpose of this
Lease, a "Taking" means any condemnation or exercise of the power of eminent domain by any
authority vested with such power or any other taking for public use, including a private purchase
in lieu of condemnation by an authority vested with the power of eminent domain; the "Date of
Taking" means the earlier of the date on which title to the Premises or any portion thereof so
taken is vested in the condemning authority or the date on which possession of the Premises or
any portion thereof is taken by the condemning authority; and "Substantially All of the
Premises" means so much of the Premises or Improvements as, when taken, leaves the un-taken
portion unsuitable for the continued feasible and economic operation of the Premises by Tenant
for the same purposes as immediately before the Taking.
(b) Tenant's Rights Upon Taking or Substantial Taking. In the event of a
Taking of Substantially All of the Premises, Tenant may, by thirty (30) days' prior written notice
to Landlord, given no later than ninety (90) days following the Date of Taking, terminate this
Lease. All Rent shall be apportioned and paid through and including the Date of Taking.
(c) Tenant's Rights Upon Less Than Substantial Taking. In the event of a
partial Taking, Tenant, at its sole cost and expense, shall proceed with due diligence to restore,
repair, replace or rebuild the remaining part of the Improvements to substantially its former
condition or with such changes or alterations as Tenant may elect to make in conformity with
Section 11 above so as to constitute a complete project. In the event of a partial Taking, this
Lease shall terminate as to the portion of the Premises so taken and the Rent payable for the
balance of the Term of this Lease shall be reduced in the same ratio that the value of Tenant's
interest in the Premises and Improvements immediately prior to the Taking is reduced, such
reduction to be effective as of the Date of Taking. Until the amount of the reduction of the Rent
shall have been determined, Tenant shall continue to pay to Landlord the Rent provided for in
Section 1 above, at which time Landlord shall refund any excess Rent paid based upon such
reduction being effective as of the Date of Taking.
(d) Rights Upon Temporary Taking. If, at any time during the Term, the
whole or any part of the Premises, or of Tenant's leasehold estate under this Lease, or of the
Improvements shall be taken in condemnation proceedings or by any right of eminent domain for
temporary use or occupancy not exceeding one (1) year (a "Temporary Taking") the foregoing
provisions of this Section shall not apply and Tenant shall continue to pay, in the manner at the
times specified in this Lease, the full amounts of the Rent and all additional rent and other
charges payable by Tenant under this Lease, and, except only to the extent that Tenant may be
prevented from so doing pursuant to the terms of the order of the condemning authority Tenant
shall perform and observe all of the other terms, covenants, conditions and obligations of this
Lease upon the part of Tenant to be performed and observed, as though such Temporary Taking
had not occurred. In the event of any such Temporary Taking, Tenant shall be entitled to receive
the entire amount of the Condemnation Proceeds (as defined below) made for such Temporary
Taking, whether paid by way of damages, rent or otherwise unless such period of temporary use
or occupancy shall extend beyond the termination of this Lease, in which case the Condemnation
Proceeds shall be apportioned between Landlord and Tenant as of the date of termination of this
Lease. Tenant covenants that, upon the expiration of any such period of temporary use or
occupancy during the Term, it will, at its sole cost and expense, restore the Improvements, as
nearly as may be reasonably possible, to the condition in which the same was immediately prior
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to such Temporary Taking, wear and tear during such temporary use or occupancy excepted. To
the extent that Landlord receives any portion of the Condemnation Proceeds as compensation for
the cost of restoration or repair of the Improvements, Landlord shall make such Condemnation
Proceeds available to Tenant for payment of the cost of restoration of the Improvements by
Tenant pursuant to customary construction draw procedures. Any portion of the Condemnation
Proceeds received by Tenant as compensation for the cost of restoration of the Improvements
shall, if such period of temporary use or occupancy shall extend beyond the term of this Lease,
be paid to Landlord on the date of termination of this Lease.
(e) Condemnation Proceeds. In the event of a Taking of Substantially All of
the Premises and the termination of this Lease, the award or awards for such Taking, less the
costs of the determination and collection of the amount of the award or awards ("Condemnation
Proceeds"), shall be distributed as follows:
(i) Landlord shall first be entitled to receive and retain as
its own property, and Tenant hereby assigns to Landlord, such portion of the
Condemnation Proceeds as shall equal the fair market value of the Land and
Landlord's reversionary interest in the Improvements;
(ii) Tenant shall then be entitled to receive, and Landlord
hereby assigns to Tenant, the balance of the Condemnation Proceeds, if any.
(f) In the event of a Taking which is not Substantially All of the Premises (a
"Partial Taking"), this Lease shall not terminate or be affected in any way, except as provided
in Section 13(c) above, and Landlord shall first be entitled to receive and retain as its own
property, that portion of the Condemnation Proceeds as shall equal the fair market value of the
Land and Landlord's reversionary interest in the Improvements so taken ("Landlord's
Proceeds"). Tenant shall then be entitled to receive the balance of the Condemnation proceeds
("Tenant's Proceeds") and the same shall be payable, and Landlord hereby so assigns the same,
if One Million Dollars ($1,000,000) or less (in Constant Dollars), in trust to Tenant for
application by Tenant to the cost of restoring, repairing, replacing or rebuilding the
Improvements, but if in excess of One Million Dollars ($1,000,000) (in Constant Dollars), then
to the Lender holding the first Leasehold Mortgage (or if no Lender, then to an escrow holder
mutually acceptable to Landlord and Tenant) for disbursement to Tenant for payment of the cost
of restoring, repairing, replacing or rebuilding the Improvements, with any excess being
disbursed to Tenant.
14. Assignment and Subletting. This Lease and the interest of Tenant under this
Lease may not be assigned, nor may all or substantially all of the Premises be sublet, without the
prior consent of Landlord, which consent shall not be unreasonably withheld, provided that: (1)
with respect to an assignment: (a) no such assignment shall be effective for any purpose unless
and until (i) the assignor's interest in the Improvements shall be transferred to the assignee of
this Lease and (ii) there shall be delivered to Landlord (A) a duplicate original of the instrument
or instruments of transfer of this Lease and of the assignor's interest in the Improvements in
recordable form, containing the name and address of the transferee and (B) an instrument of
assumption by the transferee of all of Tenant's obligations under this Lease arising from and
after the effective date of the transfer; and (b) no such assignment and assumption shall operate
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or be deemed to operate as a release of Tenant and/or the duties, obligations and liabilities of
Tenant under this Lease, unless the transferee is a Qualified Transferee, in which event Tenant
shall be released from all liability first accruing after the effective date of the transfer (except that
Tenant shall not be released from liability for the indemnification obligations under this Lease
with respect to occurrences prior to the assignment); and (2) with a respect to a subletting, there
shall have been delivered to Landlord (y) a duplicate original of the instrument or instruments of
subletting in recordable form, containing the name and address of the sublessee and (z) an
instrument of assumption by the sublessee of all of Tenant's obligations under this Lease arising
during the term of the Sublease as the same pertain to the portion of the Premises subject to the
sublease.
Notwithstanding the foregoing, Tenant may assign this Lease or sublease all or
substantially all of the Premises to an Affiliate of Tenant or a Qualified Transferee without
Landlord's consent, but such assignment or subletting shall otherwise be subject to the
provisions of the preceding paragraph. A "Qualified Transferee" means any Person with a net
worth in excess of One Hundred Million Dollars ($1000,000,000) (in Constant Dollars), and who
owns or manages at least four (4) hotels that are of comparable quality to or better than the hotels
operated at the Premises (the "Hotel Operator Standard"); however, if a Person satisfying such
net worth requirement does not satisfy the Hotel Operator Standard, such Person shall be deemed
to satisfy the Hotel Operator Standard if such Person contracts for the management of the hotel
with a company that satisfies the Hotel Operator Standard with an industry standard, long-term
management contract.
Except as otherwise provided above with respect to a subletting of all or substantially all
of the Premises, Tenant may sublease the Premises without Landlord's prior written consent.
Each sublease shall be subject and subordinate to this Lease and the rights of Landlord
hereunder, and any violation of any provision of this Lease, whether by act or omission, by any
subtenant shall be deemed a violation of such provision by Tenant, with respect to which Tenant
shall be responsible for Landlord's damages caused thereby, it being the intention and meaning
of the parties that Tenant shall assume and be liable to Landlord in damages for any and all acts
and omissions of any and all subtenants with respect to this Lease.
15. Tenant's Financing. Notwithstanding any other provisions of this Lease, Tenant
may, without Landlord's consent, from time to time, secure financing or general credit lines and
obtain franchise or license rights and grant the Lenders thereof: (i) a security interest in Tenant' s
interest in the Improvement (including movable temporary structures located at the Premises,
whether nailed, screwed or otherwise fastened to the Premises), (ii) a security interest in Tenant's
trade fixtures, furnishings, inventory, equipment, and machinery and all other items of personal
property installed by Tenant or its subtenant at its own expense or in which it or any subtenant
has any interest (collectively, "Personalty"), (iii) the right to enter the Premises to realize upon
any Personalty so pledged provided that the Premises are repaired, and (iv) a collateral
assignment of or leasehold encumbrance in the Leasehold Estate, with rights of reassignment;
provided, however, such Lenders will be required to acknowledge in writing that such grant of
security interest or collateral is limited to the Leasehold Estate and does not constitute a lien
against the Reversionary Estate. If Tenant grants any of the rights described in this paragraph to
a Lender, the provisions of Exhibit "B" will apply.
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16. Tenant's Property and Ownership at Termination. All of the Improvements shall
be and remain the property of Tenant during the Term and shall become the property of Landlord
upon expiration of the Term. Personalty and trade fixtures shall be and remain the personal
property of Tenant at all times. At the expiration of the Term or earlier termination of this Lease,
Tenant shall surrender the Premises and Improvements to Landlord in good condition and repair
as a first-class Project, subject to Sections 12 and 13. In addition, Landlord may, at Landlord's
election, demand the removal from the Premises of any and/or Improvements and fixtures made
to or placed on the Premises in violation of this Lease by Tenant or any other Person at the
direction of Tenant or with Tenant's consent. A written demand to that effect at the scheduled
expiration of the Term shall be effected by written notice from Landlord to Tenant given at any
time within six (6) months before the scheduled expiration of the Term. A demand to take effect
on any other termination of this Lease shall be effected by notice given in or concurrently with
notice of such termination or within five (5) business days after such termination. The demand
shall specify which items are to be removed. Tenant shall comply with the notice before the
expiration of the Term for normal termination, and within sixty (60) days after the notice for
other terminations. On the expiration of the Term or earlier termination of this Lease, and to the
extent they have not been removed pursuant to this Lease (or required to be removed pursuant to
this Lease), any and/or all Improvements and fixtures made to or placed on the Premises by
Tenant or any other Person at the direction of Tenant or with Tenant' s consent shall become the
property of Landlord and remain on and/or affixed to the Premises without cost or charge to
Landlord. Notwithstanding the foregoing, Tenant and each of its subtenants shall be permitted,
at the option of each, to remove its Personalty from the Premises; provided, however, that in any
case all resulting damage and injuries to the Premises and remaining Improvements are
completely remedied and Tenant complies with Landlord's reasonable requirements respecting
the resultant appearance.
17. Memorandum of Lease. This Lease is not to be recorded, but Landlord and
Tenant shall execute a Quitclaim Deed & Memorandum of Lease "Memorandum of Lease")
and shall cause it to be recorded in the Official Records, immediately after the mutual execution
of this Lease. The provisions of this Lease shall control, however, with regard to any omissions
from, or provisions hereof which may be in conflict with, the Memorandum of Lease. Tenant
shall be responsible for any documentary transfer taxes imposed in connection with recordation
of the Memorandum of Lease.
18. Expiration of Term. If, after expiration of the Term, Tenant fails to remove any
or all of its Personalty within thirty (30) days after receiving written notice from Landlord,
Landlord may dispose of such Personalty as Landlord deems appropriate. Tenant agrees that at
the expiration of this Lease, it will deliver to Landlord peaceable possession of the Premises.
19. Force Majeure. Except as otherwise specifically contemplated in this Lease, in
the event that Landlord or Tenant shall be delayed or hindered in, or prevented from, the
performance of any act required hereunder (other than the payment of money) by reason of delay
by the other party, riots, insurrection, war or other reason not the fault of such party or not within
its control, then performance of such act shall be excused for the period of delay, and the period
for the performance of any such act shall be extended for a period equivalent to the period of
such delay; provided, the party so delayed, hindered or prevented shall use its commercially
reasonable efforts to deliver written notice to the other party as soon as reasonably practicable
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following the commencement thereof, which written notice shall specify the nature of the delay,
the date of commencement of delay and the expected period of delay.
20. Events of Tenant's Default. Any of the following occurrences, conditions, or acts
by Tenant constitutes an "Event of Default" under this Lease:
(a) Tenant's failure to make any payment of money to Landlord required by
this Lease (including without limitation Minimum Annual Rent or Percentage Rent), which,
failure is not cured within five (5) business days following Tenant's receipt of written notice
thereof from Landlord ("Monetary Default").
(b) Tenant's failure to observe or perform any other material provision of this
Lease within thirty (30) days after receipt of written notice from Landlord to Tenant specifying
such default and demanding that the same be cured; provided that, if such default cannot with
due diligence be wholly cured within such 30-day period, Tenant shall have such longer period
as is reasonably necessary to cure the default, so long as Tenant proceeds promptly to commence
the cure of same within such 30-day period and diligently prosecutes the cure to completion.
(c) The abandonment or vacation of, or discontinuance of business operations
at the Premises, or any substantial portion thereof, for reasons not caused by Force Majeure or
due to temporary closures for renovations or repairs required or permitted to be made under this
Lease, which is not cured within ninety (90) days following written notice thereof from Landlord
to Tenant ("Abandonment Default").
(d) The failure of Tenant to comply with any and all aspects of PSDA, which
failure is not cured within twenty (20) days after written notice of default is given to Tenant or, if
the default is such that it is not reasonably capable of being cured within twenty (20) days, and
Tenant initiates corrective action within said period and diligently, continually and in good faith
works to effect a cure as soon as possible, then Tenant shall have such additional time as is
reasonably necessary to cure the default("PSDA Default").
21. Landlord's Remedies.
(a) After the occurrence of an Event of Default, Landlord is entitled to all
remedies available at Law and/or in equity, including the right to:
(i) Continue this Lease in effect by not terminating Tenant's right to
possession of the Premises, in which event Landlord shall be entitled to enforce all Landlord's
rights and remedies under this Lease and/or at Law, including the right to recover the Rent
specified in this Lease as it becomes due;
(ii) In the event of a Monetary Default, a PSDA Default or an
Abandonment Default, terminate this Lease and bring an action to recover from the Tenant the
amounts set forth in Section 21(b) below;
(iii) Exercise any right or remedy allowed at Law or in equity; and/or
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(iv) Landlord may cure the Event of Default, in which event Tenant
shall reimburse Landlord for all costs incurred thereby immediately upon demand therefor.
Notwithstanding the provisions of Section 21(a)(ii), if, within ten (10) days following
Tenant's receipt of the default notice pursuant to Section 20 above, Tenant notifies Landlord in
writing that Tenant disputes the claimed Event of Default, and if Tenant commences legal action
to contest the same within ten (10) days thereafter, then Landlord may not exercise its right to
terminate this Lease on account of such Event of Default unless the court shall have ruled (which
ruling is no longer subject to appeal) that the Event of Default exists and Tenant shall have failed
to pay the sums due within ten (10) days following such ruling or otherwise cured a PSDA
Default or an Abandonment Default promptly thereafter, as applicable.
Landlord may terminate this only in the event of a Monetary Default, an Abandonment
Default or a PSDA Default.
(b) Should Landlord elect to terminate this Lease under the provisions of
Sections 21(a)(ii), above, Landlord may recover from Tenant as damages:
(i) the worth at the time of award of any unpaid rent which had been
earned at the time of such termination; plus
(ii) the worth at the time of award of the amount by which the unpaid
rent which would have been earned after termination until the time of award exceeds the amount
of such rental loss Tenant proves could have been reasonably avoided; plus
(iii) the worth at the time of award of the amount by which the unpaid
rent for the balance of the Term after the time of award exceeds the amount of such rental loss
that Tenant proves could be reasonably avoided; plus
(iv) any other amount necessary to compensate Landlord for all the
detriment proximately caused by Tenant's failure to perform its obligations under this Lease or
which in the ordinary course of things would be likely to result therefrom; plus
(v) at Landlord's election, such other amounts in addition to or in lieu
of the foregoing as may be permitted from time to time by the Laws of the State of California.
As used in clauses (i) and (ii) above, the "worth at the time of award" is computed by
allowing interest at the Default Rate. As used clause (iii) above, the "worth at the time of award"
is computed by discounting such amount at the discount rate of the San Francisco Federal
Reserve Bank, at the time of award, plus one percent (1%).
For all purposes of this Lease, ("rent" shall be deemed to be the Minimum Annual Rent
and all other sums required to be paid by Tenant pursuant to the terms of this Lease.
22. Events of Landlord's Default; Tenant's Remedies. Landlord shall not be deemed
to be in default in the performance of any obligation required to be performed by it under this
Lease until it has failed to perform such obligation within thirty (30) days after written notice by
Tenant to Landlord specifying the nature of Landlord's default; provided, however, that if the
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nature of Landlord's obligation is such that more than thirty (30) days are required for its
performance, then Landlord shall not be deemed to be in default if it shall commence such
performance within such thirty (30) day period and thereafter diligently prosecute the same to
completion. If Landlord is in default under this Lease, Tenant shall have all rights and remedies
available at Law or in equity.
23. Exculpation of Landlord. Notwithstanding anything in this Lease to the contrary,
it is expressly understood and agreed that any judgment against Landlord resulting from any
default or other claim under this Lease shall be satisfied only out of the net rents, issues, profits
and other income actually received from or in connection with Landlord's interest in the
Premises as well as Landlord's equity in the Premises, and Tenant shall, except as otherwise
expressly permitted pursuant to this paragraph, have no claim against Landlord, its trustee or
beneficiary, or any of their respective personal assets, for satisfaction of any judgment with
respect to this Lease.
24. Hazardous Substances.
(a) Tenant shall comply fully with all Laws pertaining to the use, generation,
storage, transportation, treatment, disposal or other handling of Hazardous Substances at the
Premises, including those Hazardous Substances that are present at the Premises prior to the
Commencement Date, but excluding those caused by Landlord or its employees or agents
following the Commencement Date. Tenant shall not use, generate, store, transport, treat,
dispose or otherwise handle any Hazardous Substances upon the Premises, except in accordance
with all applicable Laws. The term "Hazardous Substances" shall mean and include, but is not
limited to, all hazardous substances, materials and wastes listed by the U.S. Environmental
Protection Agency, the State of California, the County of San Diego or the City of San Diego,
under the Comprehensive Environmental Response, Compensation and Liability Act
(CERCLA), the Resource Conservation and Recovery Act (RCRA), the Toxic Substances
Control Act (TSCA), and the Federal Water Pollution Control Act (FWPCA), and any other
statute, ordinance or rule promulgated by a government entity or agency thereof.
(b) Tenant agrees unconditionally and absolutely to defend, indemnify, and
hold harmless Landlord, Landlord's directors, officers, employees, agents, and attorneys from
and against any and all damages, diminution in value, penalties, fines, losses, liabilities, causes
of action, suits, claims, demands, costs, and expenses (including all out-of-pocket litigation costs
and the reasonable fees and expenses of counsel) of any nature, directly or indirectly, arising out
of or in connection with:
(i) The existence, use, generation, migration, storage, release,
threatened release, or disposal of Hazardous Materials on, onto, from, or under the Premises,
except to the extent caused by Landlord or its employees or agents; and
(ii) Any failure by Tenant to comply with the terms of any order of
any federal, state, or municipal authority having regulatory authority over environmental matters
which is applicable under this Lease to the Premises excepting those that pertain to Hazardous
Substances that were caused by Landlord or its employees or agents. Tenant's obligations under
this Section 24 shall survive the termination of this Lease.
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If any claim is made or brought against Landlord which is subject to the indemnifications
set forth in this Section 24, Tenant shall defend the same by attorneys reasonably approved by
Landlord.
25. Brokers. Landlord and Tenant each represents, warrant, and covenant that it has
not dealt with any real estate broker or finder with respect to this Lease, and each party shall hold
the other party harmless from all damages, claims, liabilities or expenses, including reasonable
and actual attorneys' fees (through all levels of proceedings), resulting from any claims that may
be asserted against the other party by any real estate broker or finder with whom the
indemnifying party either has or is purported to have dealt.
26. Work Product. Upon the early termination of this Lease, all developed plans and
specifications and other intellectual property related to the Improvements, including but not
limited to all plans, specifications and other renderings, constructions budgets, constructions bids
and other intellectual property otherwise related thereto (the "Work Product") shall become the
property of Landlord, with no representation or warranty from Tenant as to such Work Product.
Tenant shall, at no cost to Landlord, deliver all electronic and hard copies of all such Work
Product to Landlord within three (3) business days of the termination of this Lease.
27. Intentionally Omitted
28. Miscellaneous.
(a) Governing Law, Venue and Jurisdiction. This Lease is governed by and
construed in accordance with the Laws of the State of California, irrespective of California's
choice -of -Law principles. All actions and proceedings arising in connection with this Lease
must be tried and litigated exclusively in the State or Federal courts located in the County of
Riverside, State of California, which courts have personal jurisdiction and venue over each of the
parties to this Lease for the purpose of adjudicating all matters arising out of or related to this
Lease.
(b) Further Assurances and Estoppels. Each party to this Lease shall execute
and deliver all instruments and documents and take all actions as may be reasonably required or
appropriate to carry out the purposes of this Lease (but the foregoing does not imply an
obligation to modify any of the provisions of this Lease). Landlord shall ensure that Tenant's
quiet enjoyment of the Premises throughout the Term is not interrupted by Landlord or anyone
lawfully or equitably claiming by, through or under Landlord, subject to Tenant fulfilling its
obligations hereunder, Landlord's rights and remedies under this Lease and the rights of any
third parties with interests of record as of the Commencement Date. Landlord and Tenant shall
each promptly forward to the other any notice or other communication affecting the Premises
received by it from any owner of property adjoining, adjacent or nearby to the Premises or from
any municipal or governmental authority, in connection with any hearing or other administrative
procedure relating to the use or occupancy of the Premises or any neighboring property. Within
ten (10) days after notice from the other party to this Lease, Landlord or Tenant, as applicable,
shall execute and deliver to other party's designee, in recordable form, a certificate stating
(i) that this Lease is unmodified and in full force and effect, or in full force and effect as
modified, and stating all modifications, (ii) the then current Rent, (iii) the dates to which Rent
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has been paid in advance, (iv) the amount of any prepaid rent or other payment constituting rent
which has been paid, (v) whether or not, to the best knowledge of the certifying party, Tenant or
Landlord is in default under this Lease (and the nature of any such default) and whether there
currently exist any defenses or rights of offset under the Lease, and (vi) such other matters as the
requesting party reasonably requests. Tenant's or Landlord's failure to deliver such certificate
within such ten (10) day period shall be conclusive upon such party for the benefit of the
requesting -party and the requesting -party' s designee (including any lender, franchisor, subtenant,
assignee, etc.) that, except as may be represented by the requesting -party, this Lease is
unmodified and in full force and effect, no rent has been paid more than thirty (30) days in
advance, and neither Tenant nor Landlord is in default under this Lease.
(c) Prior Understandings. This Lease: (a) contains the entire and final
agreement of the parties to this Lease with respect to the subject matter of this Lease, and
(b) supersedes all negotiations, stipulations, understandings, agreements, representations and
warranties, if any, with respect to such subject matter, which precede or accompany the
execution of this Lease.
(d) Waivers and Consents. No delay or omission in the exercise of any right
or remedy of Landlord or Tenant in the event of any default by the other shall impair such right
or remedy or be construed as a waiver. The receipt and acceptance by Landlord of delinquent
rent does not constitute a waiver of any default other than the particular rent payment accepted.
Landlord's receipt and acceptance from Tenant, on any date (the "Receipt Date"), of an amount
less than the amount due on such Receipt Date, or to become due at a later date but applicable to
a period before the Receipt Date, does not release Tenant of its obligation (i) to pay the full
amount due on such Receipt Date or (ii) to pay when due the full amount to become due at a later
date but applicable to a period before such Receipt Date. No act or conduct of Landlord,
including the acceptance of the keys to the Premises, constitutes an acceptance by Landlord of
the surrender of the Premises by Tenant before the Expiration Date. Only a written notice from
Landlord to Tenant stating Landlord's election to terminate Tenant's right to possession of the
Premises constitutes acceptance of the surrender of the Premises and accomplishes a termination
of this Lease. Landlord's consent to or approval of any act by Tenant requiring Landlord's
consent or approval may not be deemed to waive or render unnecessary Landlord's consent to or
approval of any other or subsequent act by Tenant.
(e) Notices. Any notice permitted or required to be given pursuant to this
Lease shall be in writing and shall be deemed to have been given on the date of actual delivery,
or refusal, if sent by certified mail, postage prepaid, return receipt requested, or by Federal
Express or other comparable overnight express courier service (with proof of receipt available),
addressed to the parties as set forth in Section 1, or to such other address as a party may, from
time to time, give notice to the other party in accordance with this paragraph.
(f) Interpretation. Whenever the context so requires in this Lease, all words
used in the singular may include the plural (and vice versa) and the word "Person" includes a
natural person, a corporation, a firm, a partnership, a joint venture, a trust, an estate or any other
entity. The terms "includes" and "including" do not imply any limitation. Except as otherwise
expressly provided herein, no remedy or election under this Lease is exclusive, but rather, to the
extent permitted by applicable Law, each such remedy and election is cumulative with all other
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remedies at Law or in equity. The paragraph headings in this Lease: (i) are included only for
convenience, (ii) do not in any manner modify or limit any of the provisions of this Lease, and
(iii) may not be used in the interpretation of this Lease.
(g) Partial Invalidity. Each provision of this Lease is valid and enforceable to
the fullest extent permitted by Law. If any provision of this Lease (or the application of such
provision to any person or circumstance) is or becomes invalid or unenforceable, the remainder
of this Lease, and the application of such provision to persons or circumstances other than those
as to which it is held invalid or unenforceable, are not affected by such invalidity or
unenforceability.
(h) Successors -in -Interest and Assigns. This Lease is binding on and inures to
the benefit of the successors -in -interest and assigns of each party to this Lease.
(i) Drafting Ambiguities. Each party to this Lease and its legal counsel have
negotiated, reviewed, and revised this Lease. The rule of construction that ambiguities are to be
resolved against the drafting party or in favor of the party receiving a particular benefit under an
agreement may not be employed in the interpretation of this Lease or any amendment to this
Lease.
(j) Usury. In the event Landlord receives any sums under this Lease which
constitute interest in an amount in excess of that permitted by any applicable Law, then, all such
sums constituting interest in excess of that permitted to be paid under applicable Law shall, at
Landlord's option, either be credited to the payment of Rent owing hereunder or returned to the
Tenant.
(k) No Merger. There shall be no merger of the Lease or any interest in the
Lease or of the Leasehold Estate created by the Lease with the Reversionary Estate in the
Premises by reason of the fact that the Lease or such interest therein, or such Leasehold Estate
may be directly or indirectly held by or for the account of any person who holds title to the
Reversionary Estate in the Premises or any interest in such Reversionary Estate, nor shall there
be any such merger by reason of the fact that all or any part of the Leasehold Estate created by
this Lease may be conveyed or mortgaged in a Leasehold Mortgage or deed of trust to a
mortgagee or beneficiary who holds title to the Reversionary Estate or any interest of Landlord
under the Lease.
(1) Tenant Representations. Landlord hereby disclaims any warranty,
guaranty or representation of the nature and condition of the Premises, including (but not by way
of limitation) the soil and geology and suitability thereof for any and all activities and uses which
Tenant may elect to conduct thereon at any time during the Term, the manner of construction and
the conditions and state of repair or lack of repair of all improvements located thereon, and the
nature and extent of the rights of others with respect to the Premises, whether by way of
easement, right of way, lease, possession, lien, encumbrance, license, reservation, condition or
otherwise.
(i) Tenant acknowledges that neither Landlord nor any agent of
Landlord has made any representation or warranty as to the suitability of the Premises for the
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erection of the Tenant's Work or for the conduct of Tenant's business, and that Tenant accepts
them in their present condition, "as is," and without any warranty whatsoever, and with no
recourse whatsoever to Landlord.
(ii) Tenant acknowledges that Tenant has made its own independent
investigation as to the usability and suitability of the Premises for the Permitted Use; the types of
governmental permits that may be required; the nature and extent of applicable Laws,
ordinances, regulations, plans, covenants, conditions, and restrictions, that Tenant may be
required to comply with in order to complete and operate the Premises for the Permitted Use; the
soils, geologic, and seismic conditions existing on the Premises; the presence of any
contaminants, hazardous wastes, or toxic substances in, upon, or about the soil or groundwater
in, upon, under, or about the Premises and the potential for migration of the same from adjacent
lands; the condition of existing footings, foundations, and columns for their use and
incorporation into the Tenant's Work, which Tenant acknowledges were not designed or
constructed by Landlord; the availability and cost of all services that are necessary or desirable to
serve the Premises, including, but not limited to, electricity, natural gas, water, sewer, streets,
telephone, television cable, fire protection, and police protection; and the usability of the same
by Tenant as the Tenant and occupant of the Premises; all other physical facts, legal issues, and
potential governmental regulations or actions including, but not limited to, regulatory building
moratoriums by one or more of the governmental agencies having jurisdiction of the Premises;
all other matters deemed by Tenant to be material to Tenant or of concern to Tenant with respect
to Tenant entering into this Lease and undertaking the erection and construction of the Tenant's
Work; and Tenant agrees that Landlord has made no warranties or representations whatsoever
with respect to any of the foregoing and has, indeed, encouraged Tenant to undertake a complete
and thorough "due diligence investigation" of the Premises and the Tenant's Work and the plans,
specifications, and permits pertaining thereto, and Tenant acknowledges, covenants, and agrees
that Landlord has no obligations or responsibilities whatsoever with respect to any of the
foregoing matters (except an express representation or warranty) or with respect to solving any
problems that Tenant may encounter in connection with any of said matters (except to cooperate
reasonably with Tenant in solving such problems, or as otherwise expressly provided in this
Lease) and Tenant further covenants, warrants, and represents to waive and release any claims
against Landlord with respect to the foregoing matters.
In connection with the foregoing release, Tenant hereby waives the application and benefits of
California Civil Code § 1542 and hereby verifies that it has read and understands the following
provision of California Civil Code § 1542:
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS THAT THE CREDITOR OR
RELEASING PARTY DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER
FAVOR AT THE TIME OF EXECUTING THE RELEASE AND THAT, IF KNOWN BY HIM
OR HER WOULD HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH
THE DEBTOR OR RELEASED PARTY."
(m) Attorney's Fees. The prevailing party(ies) in any litigation, reference,
arbitration, bankruptcy, insolvency or other proceeding ("Proceeding") relating to the
enforcement or interpretation of this Lease may recover from the unsuccessful party(ies) all
costs, expenses, and actual attorney's fees (including expert witness and other consultants' fees
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and costs) relating to or arising out of (i) the Proceeding, and (ii) any post judgment or post -
award proceeding including, without limitation, one to enforce or collect any judgment or award
resulting from the Proceeding. All such judgments and awards shall contain a specific provision
for the recovery of all such subsequently incurred costs, expenses, and actual attorney's fees.
(n) Approval. Unless provision is made for a different standard or specific
time period, approval or consent required pursuant to this Lease shall not be unreasonably
withheld and response to a request for an approval or consent shall be given by the party to
whom directed within thirty (30) days of receipt.
(o) Inspection and Access Rights. Landlord shall have the right to enter the
Premises and inspect the Premises at reasonable times and upon reasonable prior notice to
Tenant (except in the case of an entry in connection with Landlord exercising its rights hereunder
following an Event of Default).
29. Limitation on Landlord's Liability. The term "Landlord" as used in this Lease so
far as covenants or obligations on the part of Landlord are concerned shall be limited to mean
and include only the owner or owners at the time in question of the Reversionary Estate and in
the event of any transfer or transfers of the title to such Reversionary Estate, Landlord herein
named (and in case of any subsequent transfers or conveyances the then grantor) shall be
automatically freed and relieved from and after the date of such transfer or conveyance from all
obligations on the part of Landlord contained in this Lease to be performed thereafter, provided
that any prepaid rent or trust funds in the hands of such Landlord or the then grantor at the time
of such transfer, shall be transferred to the grantee or transferee, who shall expressly assume,
subject to the limitations of this Section 29, all of the terms, covenants and conditions in this
Lease contained on the part of Landlord thereafter to be performed, it being intended by this
Section 29 that the covenants and obligations contained in this Lease on the part of Landlord
shall, subject to the provisions of this Section 29, be binding on Landlord, its successors and
assigns, only during and in respect of their respective successive periods of ownership.
30. Further Assurances. Each party to this Lease agrees to execute, acknowledge, and
deliver such further instruments, documents, agreements, applications and estoppels as may be
necessary or desirable to accomplish the intents and purposes of this Lease.
31. Covenants Running with the Land. Subject to the provisions of Section 14 with
respect to assignments, all of the provisions, rights, powers, covenants, agreements, obligations,
conditions and restrictions set forth in this Lease shall be binding upon the parties and their heirs,
successors (by merger, consolidation or otherwise), assigns, devisees, administrators, personal
representatives, occupants, users and all other persons or entities acquiring the Leasehold Estate
or any interest therein or any portion thereof, whether by operation of Law or in any manner
whatsoever, and shall inure to the benefit of and be enforceable by the parties and their
respective permitted heirs, successors (by merger, consolidation or otherwise) assigns,
administrators or personal representatives. All of the provisions of this Lease shall, from and
after the Commencement Date and until the Expiration Date or the earlier termination of this
Lease, be covenants running with the land pursuant to applicable Law, including, but not limited
to, Sections 1469 and 1470 of the Civil Code of the State of California. Each covenant to do or
refrain from doing some act on the Premises hereunder (a) is for the benefit of and a burden on
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the Premises, (b) runs with the Premises and the Improvements, and (c) shall benefit or be
binding upon each successive owner during its ownership of the Premises and/or the
Improvements or any portion thereof, and each Person having an interest therein derived in any
manner through any such owner.
32. Counterparts and Signature Pages. For convenience, Landlord and Tenant may
execute this Lease on separate counterpart pages, which when attached to this Lease shall
constitute one fully -executed complete original Lease.
33. Non -Discrimination. Tenant herein covenants by and for itself, its successors and
assigns, and all Persons claiming under or through them, and this Lease is made and accepted
upon and subject to the following conditions:
That there shall be no discrimination against or segregation of any person or group of
persons, on account of any basis listed in subdivision (a) or (d) of Section 12955 of the
Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and
paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code,
in the leasing, subleasing, transferring, use, occupancy, tenure, or enjoyment of the Premises
leased nor shall Tenant, or any Person claiming under or through Tenant, establish or permit any
such practice or practices of discrimination or segregation with reference to the selection,
location, number, use, or occupancy, of tenants, lessees, sublessees, subtenants, or vendees in the
Premises.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date
first written above.
LANDLORD:
TENANT:
SilverRock Development Company, LLC,
a Delaware limited liability company
By: THE ROBERT GREEN COMPANY,
a California corporation
Its: Manager
By:
Name: Robert S. Green, Jr.
Its: President
SilverRock Lodging, LLC,
a Delaware limited liability company
By: THE ROBERT GREEN COMPANY,
a California corporation
Its: Manager
Name: Robert S. Green, Jr.
Its: President
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EXHIBIT "A"
LEGAL DESCRIPTION OF LAND
THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE CITY THE COUNTY OF
RIVERSIDE, STATE OF CALIFORNIA, AND IS DESCRIBED AS FOLLOWS:
PARCEL B:
THAT PORTION OF PARCELS 4 AND 18 OF PARCEL MAP NO. 37207, IN THE CITY OF LA QUINTA,
COUNTY OF RIVERSIDE, STATE OF CALIFORNIA, AS SHOWN BY A MAP FILED IN BOOK 242. PAGES
72 THROUGH 87, INCLUSIVE OF PARCEL MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF
SAID COUNTY, DESCRIBED AS FOLLOWS:
LOT "C" OF LOT LINE ADJUSTMENT NO. 2020-0010, RECORDED JULY 15, 2021 AS INSTRUMENT NO.
2021- 0426711 OF OFFICIAL RECORDS OF RIVERSIDE COUNTY, STATE OF CALIFORNIA, AS
DESCRIBED THEREIN.
PORTION APNS 777-490-041 777-490-036 AND 777-490-051
PARCEL C:
THAT PORTION OF PARCEL 3 OF PARCEL MAP NO. 37207, IN THE CITY OF LA QUINTA, COUNTY OF
RIVERSIDE, STATE OF CALIFORNIA, AS SHOWN BY A MAP FILED IN BOOK 242, PAGES 72
THROUGH 87, INCLUSIVE OF PARCEL MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID
COUNTY, DESCRIBED AS FOLLOWS:
LOT `B" OF LOT LINE ADJUSTMENT NO. 2020-0010, RECORDED JULY 16, 2021 AS INSTRUMENT NO.
2021- 04281.13 OF OFFICIAL RECORDS OF RIVERSIDE COUNTY, STATE OF CALIFORNIA, AS
DESCRIBED THEREIN.
APN 777-490-037, 777-490-039 AND A PORTION OF 777-490-040
PARCEL G:
THAT PORTION OF PARCELS 6 AND 7 OF PARCEL MAP NO. 37207, IN THE CITY OF LA QUINTA,
COUNTY OF RIVERSIDE, STATE OF CALIFORNIA, AS SHOWN BY A MAP FILED IN BOOK 242,
PAGES 72 THROUGH 87, INCLUSIVE OF PARCEL MAPS, IN THE OFFICE OF THE COUNTY
RECORDER OF SAID COUNTY, DESCRIBED AS FOLLOWS:
PARCEL "A" OF LOT LINE ADJUSTMENT NO. 2020-0005, RECORDED SEPTEMBER 2, 2021
AS INSTRUMENT NO. 2021-0527060 OF OFFICIAL RECORDS OF RIVERSIDE COUNTY, STATE OF
CALIFORNIA, AS DESCRIBED THEREIN.
PORTION APNS 777-490-043 AND 777-490-044
PARCEL H:
THAT PORTION OF PARCELS 6, 7 AND 8 OF PARCEL MAP NO. 37207, IN THE CITY OF LA QUINTA,
COUNTY OF RIVERSIDE, STATE OF CALIFORNIA, AS SHOWN BY A MAP FILED IN BOOK 242,
PAGES 72 THROUGH 87, INCLUSIVE OF RECORDER OF SAID COUNTY, DESCRIBED AS FOLLOWS:
EXHIBIT "A"
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EXHIBIT "A"
LEGAL DESCRIPTION OF LAND
THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE CITY THE COUNTY OF
RIVERSIDE, STATE OF CALIFORNIA, AND IS DESCRIBED AS FOLLOWS:
PARCEL B:
THAT PORTION OF PARCELS 4 AND 18 OF PARCEL MAP NO. 37207, IN THE CITY OF LA QUINTA,
COUNTY OF RIVERSIDE, STATE OF CALIFORNIA, AS SHOWN BY A MAP FILED IN BOOK 242. PAGES
72 THROUGH 87, INCLUSIVE OF PARCEL MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF
SAID COUNTY, DESCRIBED AS FOLLOWS:
LOT "C" OF LOT LINE ADJUSTMENT NO. 2020-0010, RECORDED JULY 15, 2021 AS INSTRUMENT NO.
2021- 0426711 OF OFFICIAL RECORDS OF RIVERSIDE COUNTY, STATE OF CALIFORNIA, AS
DESCRIBED THEREIN.
PORTION APNS 777-490-041 777-490-036 AND 777-490-051
PARCEL C:
THAT PORTION OF PARCEL 3 OF PARCEL MAP NO. 37207, IN THE CITY OF LA QUINTA, COUNTY OF
RIVERSIDE, STATE OF CALIFORNIA, AS SHOWN BY A MAP FILED IN BOOK 242, PAGES 72
THROUGH 87, INCLUSIVE OF PARCEL MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID
COUNTY, DESCRIBED AS FOLLOWS:
LOT "B" OF LOT LINE ADJUSTMENT NO. 2020-0010, RECORDED JULY 16, 2021 AS INSTRUMENT NO.
2021- 0428113 OF OFFICIAL RECORDS OF RIVERSIDE COUNTY, STATE OF CALIFORNIA, AS
DESCRIBED THEREIN.
APN 777-490-037, 777-490-039 AND A PORTION OF 777-490-040
PARCEL G:
THAT PORTION OF PARCELS 6 AND 7 OF PARCEL MAP NO. 37207, IN THE CITY OF LA QUINTA,
COUNTY OF RIVERSIDE, STATE OF CALIFORNIA, AS SHOWN BY A MAP FILED IN BOOK 242,
PAGES 72 THROUGH 87, INCLUSIVE OF PARCEL MAPS, IN THE OFFICE OF THE COUNTY
RECORDER OF SAID COUNTY, DESCRIBED AS FOLLOWS:
PARCEL "A" OF LOT LINE ADJUSTMENT NO. 2020-0005, RECORDED SEPTEMBER 2, 2021
AS INSTRUMENT NO. 2021-0527060 OF OFFICIAL RECORDS OF RIVERSIDE COUNTY, STATE OF
CALIFORNIA, AS DESCRIBED THEREIN.
PORTION APNS 777-490-043 AND 777-490-044
PARCEL H:
THAT PORTION OF PARCELS 6, 7 AND 8 OF PARCEL MAP NO. 37207, IN THE CITY OF LA QUINTA,
COUNTY OF RIVERSIDE, STATE OF CALIFORNIA, AS SHOWN BY A MAP FILED IN BOOK 242,
PAGES 72 THROUGH 87, INCLUSIVE OF RECORDER OF SAID COUNTY, DESCRIBED AS FOLLOWS:
EXHIBIT "A"
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PARCEL "B" OF LOT LINE ADJUSTMENT NO. 2020-0005, RECORDED SEPTEMBER 2, 2021 AS
INSTRUMENT NO. 2021-0527060 OF OFFICIAL RECORDS OF RIVERSIDE COUNTY, STATE OF
CALIFORNIA, AS DESCRIBED THEREIN.
PORTION APNS 777-490-043, 777-490-044 AND 777-490-045
PARCEL I:
THAT PORTION OF PARCELS 7 AND 8 OF PARCEL MAP NO. 37207, IN THE CITY OF LA QUINTA,
COUNTY OF RIVERSIDE, STATE OF CALIFORNIA, AS SHOWN BY A MAP FILED IN BOOK 242,
PAGES 72 THROUGH 87, INCLUSIVE OF PARCEL MAPS, IN THE OFFICE OF THE COUNTY
RECORDER OF SAID COUNTY, DESCRIBED AS FOLLOWS:
PARCEL "C" OF LOT LINE ADJUSTMENT NO. 2020-0005, RECORDED SEPTEMBER 2, 2021 AS
INSTRUMENT NO. 2021-0527060 OF OFFICIAL RECORDS OF RIVERSIDE COUNTY, STATE OF
CALIFORNIA, AS DESCRIBED THEREIN.
PORTION APNS 777-490-044 AND 777-490-045
PARCEL J:
PARCEL 5 AND LETTERED PARCELS D, E, F AND G OF PARCEL MAP NO. 37207, AS SHOWN BY A
MAP FILED IN BOOK 242, PAGES 72 THROUGH 87, INCLUSIVE OF PARCEL MAPS, IN THE CITY OF
LA QUINTA, COUNTY OF RIVERSIDE, STATE OF CALIFORNIA, IN THE OFFICE OF THE COUNTY
RECORDER OF SAID COUNTY.
RESERVING THEREFROM PARCEL 5, ALL OIL, GAS, HYDROCARBON SUBSTANCES, AND
MINERALS OF EVERY KIND AND CHARACTER LYING MORE THAN FIVE HUNDRED (500) FEET
BELOW THE SURFACE, TOGETHER WITH THE RIGHT TO DRILL INTO, THROUGH, AND TO USE
AND OCCUPY ALL PARTS OF THE PHASE 1A AND 1B PROPERTY LYING MORE THAN FIVE
HUNDRED (500) FEET BELOW THE SURFACE THEREOF FOR ANY AND ALL PURPOSES
INCIDENTAL TO THE EXPLORATION FOR AND PRODUCTION OF OIL, GAS, HYDROCARBON
SUBSTANCES OR MINERALS FROM SAID PHASE 1A AND 1B PROPERTY OR OTHER LANDS, BUT
WITHOUT, HOWEVER, ANY RIGHT TO USE EITHER THE SURFACE FROM SAID PHASE 1A AND 1B
PROPERTY OR ANY PORTION THEREOF WITHIN FIVE HUNDRED (500) FEET OF THE SURFACE FOR
ANY PURPOSE OR PURPOSES WHATSOEVER, OR TO USE THE PHASE IA AND 1B PROPERTY IN
SUCH A MANNER AS TO CREATE A DISTURBANCE TO THE USE OR ENJOYMENT OF THE PHASE 1 A
AND 1B PROPERTY, AS RESERVED BY THE CITY OF LA QUINTA, A CALIFORNIA MUNICIPAL
CORPORATION AND CHARTER CITY, IN THE GRANT DEED RECORDED NOVEMBER 28, 2018, AS
INSTRUMENT NO. 2018- 0464674 AND RECORDED NOVEMBER 6, 2017, AS INSTRUMENT NO. 2017-
0463950, BOTH OF OFFICIAL RECORDS.
APN 777-490-042, APN 777-490-053, APN 777-490-054, APN 777-490-055
EXHIBIT "A"
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EXHIBIT "B"
LENDER'S RIGHTS UNDER THE LEASE
Landlord and Tenant acknowledge and agree that a Lender (including a franchisor or
licensor) shall have, in addition to all rights and remedies provided for in the Lease, all of the
following rights:
1. Abandonment of Property. Notwithstanding any provision in the Lease to the
contrary, Landlord acknowledges and agrees that if Tenant defaults on its obligations to a Lender
and the Lender undertakes to enforce its security interest in the Lease, the Improvements, or any
collateral constituting personal property and/or trade fixtures, then such property shall not be
deemed abandoned.
2. Lender's Entry onto Property. For the purpose of curing any default by Tenant
under the Lease or under any instruments executed in favor of a Lender (the "Loan
Documents"), Landlord and Tenant authorize Lender to enter upon the Premises and to exercise
any of the rights and powers granted to Lender under the Lease or the Loan Documents,
provided the latter powers would, if exercised by Tenant, not breach the Lease.
3. Lender's Rights to Notice. Landlord agrees that any notice of default, termination
of the Lease or termination of Tenant's right to possession delivered to Tenant shall not be valid
or of any force or effect unless a duplicate copy thereof shall be delivered to the Lender
concurrently therewith, but only if Tenant or the Lender previously gave written notice to
Landlord of the name and address of the Lender.
4. Removal of Personal Property. Notwithstanding any provision to the contrary
contained in the Lease, in the event of Tenant's default under the Lease, Lender shall not be
required to remove from the Premises any of Tenant's personal property unless and until Lender
has acquired possession of the Premises or title to the Leasehold Estate.
5. Cure of Defaults by Lender.
(a) In the event of any default by Tenant under the provisions of this Lease,
any Lender will have the same periods as are given Tenant for remedying such default or causing
it to be remedied, plus, in each case, an additional period of thirty (30) days after the expiration
of the initial period or after Landlord has served a notice or a copy of a notice of such default
upon the Lender, whichever is later.
(b) In the event that Tenant shall default under any of the provisions of this
Lease, any Lender, without prejudice to its rights against Tenant, shall have the right to cure such
default within the applicable grace periods provided for in the preceding Section 5(a), above,
whether the same consists of the failure to pay rent or the failure to perform any other matter or
thing which Tenant is hereby required to do or perform, and Landlord shall accept such
performance on the part of such Lender as though the same had been done or performed by
Tenant. For such purpose, Landlord and Tenant hereby authorize such Lender to enter upon the
EXHIBIT "B"
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Premises and to exercise any of its rights and powers under this Lease and subject to the
provisions of this Lease.
(c) In the event of any default by Tenant, and if prior to the expiration of the
applicable grace period specified in Section 5(a), above, a Lender shall give Landlord written
notice that it intends to undertake the curing of such default, or to cause the same to be cured, or
to exercise its rights to acquire the leasehold interest of Tenant by foreclosure or otherwise, and
shall immediately commence and then proceed with all due diligence to do so, whether by
performance on behalf of Tenant of its obligations under this Lease, or by entry on the Premises
and/or the Improvements by foreclosure or otherwise, then Landlord will not terminate or take
any action to effect a termination of the Lease or re -renter, take possession of or relet the
Premises or the Improvements or similarly enforce performance of this Lease in a mode provided
by Law so long as such Lender is with all due diligence and in good faith engaged in the curing
of such default, or effecting such foreclosure; provided, however, that the Lender shall not be
required to continue such possession or continue such foreclosure proceedings if such default
shall be cured.
6. Termination of Lease. In the event of a termination of the Lease as to Tenant by
reason of the bankruptcy of Tenant and rejection of the Lease by the trustee in bankruptcy or by
Tenant as debtor in possession, or by operation of Law or for any other reason, Landlord agrees
that the Lease shall not terminate as to Lender and that the Lease shall, without any further act or
action, automatically continue upon the same terms in favor of Lender as the lessee under the
Lease provided that Lender immediately then cures or engages in good faith to cure any then
existing default of Tenant under the Lease which is reasonably susceptible of cure by Lender;
and Lender in its own name or the name of Landlord, may take all appropriate steps necessary to
remove Tenant from the Premises. Without limiting the foregoing, the parties agree to execute
such additional documents as may be desirable from time to time to confirm or carry out the
intent of this Section, including entering into a new ground lease if Lender so elects upon the
terms described below.
7. New Ground Lease. In the event that Tenant's interest under this Lease shall be
terminated by a sale, assignment or transfer pursuant to the exercise of any remedy of a Lender,
or pursuant to judicial proceedings, and if (i) no rent or other charges shall then be due and
payable by Tenant under this Lease, or (ii) the Lender shall have arranged to the reasonable
satisfaction of Landlord for the payment of all rent and other charges (less a credit for any
income received by Landlord during such period) due and payable by Tenant under this Lease as
of the date of such termination, together with the rent and other charges which but for such
termination would have become so due and payable from the date of such termination through
the sixtieth (60th) day thereafter, and upon payment of all expenses, including attorneys' fees,
incident thereto, Landlord will execute and deliver to such Lender or its nominee a new lease of
the Premises. Such new lease shall be for a term equal to the remainder of the term of this Lease
before giving effect to such termination and shall contain the same covenants, agreements, terms,
provisions and limitations as this Lease, and shall be subject only to the encumbrances and other
matters recited in this Lease and matters done or suffered by Tenant. Upon the execution and
delivery of such new lease, the new tenant, in its own name or in the name of Landlord, may take
all appropriate steps as shall be necessary to remove Tenant from the Premises and the
Improvements, but Landlord shall not be subject to any liability for the payments of fees,
EXHIBIT "B"
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including reasonable attorneys' fees, costs or expenses in connection with such removal; and
such new tenant shall pay all such fees, including attorneys' fees costs and expenses or, on
demand make reimbursements therefor to Landlord.
8. Surrender and Subordination. Landlord agrees, for the benefit of Lender, not to
accept a voluntary surrender of the Lease at any time while the Loan Documents remain in force.
9. Removal of Trademarks/Trade Dress. Any Lender who is a franchisor or licensor
of trademarks or trade dress to Tenant may, in accordance with the Loan Documents, enter onto
the Premises at any time before the sixtieth (60th) day following termination of this Lease to
remove or destroy all remnants, if any, of its trademarks, trade dress, or other proprietary
materials, provided such Lender repairs all damage to the Premises caused by removal.
10. Modifications. Landlord acknowledges that a proposed Lender may review the
provisions of this Exhibit `B" and based upon such review may request changes to or
clarifications of such provisions. Landlord agrees to make such changes or clarifications
requested by Lender as a condition to its financing provided the Lender's requested changes are
commercially reasonable and consistent with the customary leasehold financing practices of
Approved Institutions and do not decrease or adversely affect Landlord's rights and remedies
hereunder in any material respect. Tenant shall reimburse Landlord for Landlord's reasonable
attorneys' fees incurred in connection with reviewing, negotiating or documenting any such
amendment.
11. Conflict. If there is any conflict between the provisions of the Lease and the
provisions of this Exhibit `B", the provisions of this Exhibit `B" shall control.
EXHIBIT "B"
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TRIPLE -NET GROUND LEASE
between
SilverRock Development Company, LLC,
a Delaware limited liability company
("Landlord"),
and
SilverRock Lodging, LLC,
a Delaware limited liability company
("Tenant")
October 22, 2021
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TABLE OF CONTENTS
Page
1. Principal Lease Provisions 1
2. Payment of Rent 9
3. Late Charge 10
4. Use of Premises 11
5. Impositions 11
6. Maintenance, Repairs and Replacements 13
7. Utilities 13
8. Liens 13
9. Insurance 14
10. Indemnity 16
11. Improvements 17
12. Damage by Fire or Other Casualty 19
13. Condemnation 20
14. Assignment and Subletting 22
15. Tenant's Financing 23
16. Tenant's Property and Ownership at Termination 24
17. Memorandum of Lease 24
18. Expiration of Term 25
19. Force Majeure 25
20. Events of Tenant's Default 25
21. Landlord's Remedies 26
22. Events of Landlord's Default 28
23. Exculpation of Landlord 28
(i)
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Page
24. Hazardous Substances 28
25. Brokers 29
26. Work Product 31
27. Intentionally Omitted 32
28. Miscellaneous 32
29. Limitation on Landlord's Liability 36
30. Further Assurances 37
31. Covenants Running with the Land 37
32. Counterparts and Signature Pages 37
33. Non -Discrimination 37
Exhibits
Exhibit "A" Legal Description of Land
Exhibit "B" Lenders' Rights Under the Lease
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INDEX
Page(s)
Abandonment Default 25
Affiliate 1
Approved Institution 1
Base Index Number 2
Commencement Date 1
Condemnation Proceeds 21
Constant Dollars 2
Current Index Number 2
Date of Taking 20
Default Rate 3
Event of Default 25
Expiration Date 3
Gross Revenues 3
Hazardous Substances 28
Hotel Operator Standard 22
Imposition 11
Improvements 4
Index 2
Land 6
Landlord 1
Landlord's Proceeds 22
Laws 11
Lease 1
Lease Year 4
Leasehold Estate. 1
Lender 4
Loan Documents Exhibit B
mechanic's liens 13
Monetary Default 25
Notice and Payment Addresses 4
operating expenses 18
Partial Taking 21
parties. 1
party 1
Percentage Rent 9
Permitted Use 5
Personalty 24
Person 34
Premises 5
Principal Lease Provisions 1
Proceeding 36
Project 6
PSDA 6
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Page(s)
PSDA Default 26
Qualified Transferee 22
Receipt Date 33
rent 28
Rent 6
Reversionary Estate. 1
Substantially All of the Premises 20
Taking 20
Temporary Taking 21
Tenant 1
Tenant's Proceeds 22
Tenant's Work 7
Term 7
Work Product 31
(iv)
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TRIPLE -NET GROUND LEASE
(SilverRock Lifestyle Residences, LLC)
This TRIPLE -NET GROUND LEASE (this "Lease") is made as of October 22, 2021
(the "Commencement Date"), between SilverRock Development Company, LLC, a Delaware
limited liability company ("Landlord"), and SilverRock Lifestyle Residences, LLC, a Delaware
limited liability company ("Tenant"). Landlord and Tenant may sometimes be individually
referred to as a "party" and collectively referred to as the "parties." Based upon the mutual
promises contained herein and for good and valuable consideration, the receipt of which is
acknowledged by each party, the parties, intending to be legally bound, agree as follows:
1. Principal Lease Provisions.
As of the Commencement Date, Landlord leases the Premises to Tenant and
grants Tenant exclusive rights of possession of the Premises until the expiration of the Term.
Tenant accepts the Premises in its as -is condition, without any representation whatsoever from
Landlord as to the Premises. Tenant's interest in the Premises and the rights granted to Tenant
under this Lease shall be referred to herein as the "Leasehold Estate." The rights of Landlord in
the Premises after giving effect to the Leasehold Estate shall be referred to herein as the
"Reversionary Estate." The Reversionary Estate includes all of Landlord's rights pursuant to
this Lease, including Landlord's reversionary interest in the Improvements, but expressly
excluding any interest in the Released Parcels (as hereafter defined) and any and all
Improvements located thereon.
The following are the "Principal Lease Provisions" of, and certain definitions applicable
to, this Lease. Other portions of this Lease explain and define the Principal Lease Provisions in
more detail and should be read in conjunction with this Section.
(i) "Affiliate" means with respect to a party (i) a parent or a wholly -owned
subsidiary of such party, (ii) any Person that controls, is controlled by or under the common
control with such party, (iii) any Person that purchases all or substantially all of the assets of
such party, or (iv) any Person into which such party is merged or consolidated.
(ii) "Approved Institution" means a savings bank, a savings or building and
loan association, a commercial bank or trust company (whether acting individually or in any
fiduciary capacity), an insurance company, an educational institution or an institutional pension
or retirement fund or system, a charitable or other eleemosynary institution, a real estate
investment trust or any other Person with assets (capital and surplus) in excess of One Hundred
Million Dollars ($100,000,000), whose businesses include interim, construction or permanent
lending secured by real estate
(iii) "Constant Dollars" means the present value of the dollars to which such
phase refers. An adjustment shall be made on each anniversary of the Commencement Date.
Constant Dollars shall be determined by multiplying the dollar amount to be adjusted by a
fraction, the numerator of which is the Current Index Number and the denominator of which is
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the Base Index Number. The "Base Index Number" shall be the level of the Index for the
calendar month in which the Commencement Date occurs; the "Current Index Number" shall
be the level of the Index for the calendar month in which the adjustment is to take place; and the
"Index" shall be the Consumer Price Index — "All Items" for All Urban Consumers in the Los
Angeles — Riverside — Orange County area (1982-84=100) or any successor index thereto as
hereinafter provided. If publication of the Index is discontinued, or if the basis of calculating the
Index is materially changed, then the parties shall substitute for the Index comparable statistics
as computed by an agency of the United States Government or, if none, by a substantial and
responsible periodical or publication of recognized authority closely approximating the result
which would have been achieved by the Index.
(iv) "Default Rate" means an annual rate of interest equal to the lesser of
(i) five percent (5.00%) above the rate of interest announced from time to time by the Bank of
America, Downtown Los Angeles, Main Branch, as the prime or reference rate (or, in the event
said bank ceases to announce a prime or reference rate or is acquired or ceases operations and
there is no successor bank, the largest established and financially secure commercial bank,
having a headquarters in California, selected by Landlord), or (ii) the highest rate permitted by
Law, if any.
(v) "Expiration Date" means the last day of the 99th Lease Year.
(vi) "Improvements" mean all current and future improvements on and
modifications to the Premises (to the extent existing before expiration of the Term).
(vii) "Lease Year" means each calendar year during the Term; however, if the
first Lease Year shall commence on the Commencement Date and end on the first December 31
following the Commencement Date.
(viii) "Lender" means any Approved Institution which is the holder of debt
from Tenant secured by an interest in the Leasehold Estate or any Improvements, fixtures or
equipment on the Premises. Tenant acknowledges that Landlord's Reversionary Estate is not,
and will not be, subordinate to the security interest of any Lender.
(ix) "Notice and Payment Addresses" for the parties is as follows:
For Landlord, to:
For Tenant, to:
SilverRock Development Company, LLC
c/o The Robert Green Company
343 Fourth Avenue
San Diego, CA 92101
Attn: Mr. Robert S. Green, Jr., President
SilverRock Lifestyle Residences, LLC
c/o The Robert Green Company
343 Fourth Avenue
San Diego, CA 92101
Attn: Mr. Robert S. Green, Jr., President
4838-7563-7503.1
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(x) "Permitted Use" means the uses permitted under the PSDA, subject to
all applicable Laws. After the expiration of the PSDA, the Permitted Use shall be the use in
effect immediately prior to the expiration of the PSDA or any other use that is reasonably
acceptable to Landlord. Notwithstanding anything above to the contrary, Tenant shall not use all
or any part of the Premises, or any improvements thereon, (i) for any unlawful or illegal
business, use or purpose, (ii) for any purpose or in any way in violation of any Laws, including
but not limited to legal requirements respecting Hazardous Substances or (iii) in violation of the
PSDA.
"Premises"):
and
(xi) "Premises" means the following real property (collectively, the
(1) the land described in Exhibit "A" attached hereto (the "Land");
(2) all tenements, hereditaments, appurtenances, easements,
development rights, mineral rights owned by Landlord, water rights, air rights and all other rights
and privileges appertaining to the Land and all rights of ingress and egress at all times from and
to the public streets.
Portions of the Premises are to be improved with residential dwelling units. In
connection with the foregoing, from time to time upon the sale of the subject residential units to
third party buyers and the release of such portion of the Premises from any deed of trust
encumbering the Leasehold Estate or fee title to the Premises (individually and collectively, the
"Deed of Trust"), the residential unit legal lot which is the subject of such sale (the "Released
Parcel") shall be released from the Deed of Trust and this Lease, and Landlord and Tenant shall
promptly enter into an amendment to this Lease and the Memorandum of Lease to reflect such
removal and exclusion of such Released Parcel from the Premises.
(xii) "Project" means the project contemplated under the PSDA.
(xiii) "PSDA" means that certain Purchase, Sale, and Development Agreement
between Landlord and the City of La Quinta dated November 19, 2014, as amended from time to
time.
(xiv) "Rent" means the Minimum Annual Rent in an amount equal to $1.00
for each Lease Year during the Term:
(xv) "Tenant's Work" means the initial Improvements to be constructed by
Tenant on the Premises.
(xvi) "Term" means the period beginning on the Commencement Date; and
ending on the Expiration Date, as accelerated in accordance with this Lease.
2. Payment of Rent.
(a) Minimum Annual Rent. Landlord acknowledges that Tenant has paid
Landlord, as of the Commencement Date, the Minimum Annual Rent for the entire Term.
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(b) General. Except as otherwise provided herein, Rent shall be payable
without notice or demand and without any deduction, offset, or abatement in Lawful money of
the United States of America to Landlord at the address stated herein or to such other Persons or
at such other places as Landlord may designate in writing. The parties acknowledge that this
Lease essentially is a financing device rather than a traditional operating lease and that therefore
all rent is payable under this Lease on a "triple -net" basis, such that Tenant is responsible for all
of the risks, costs and expenses associated with Tenant's Work and the Premises (including,
without limitation, all Impositions, as defined below), except as otherwise provided herein.
3. Late Charge. Tenant hereby acknowledges that late payment by Tenant to
Landlord of any amount due hereunder will cause Landlord to incur costs not contemplated by
this Lease, the exact amount of which will be extremely difficult to ascertain. Accordingly, if:
(a) any Rent is not received by Landlord within five (5) days after it is due; or (b) any other
amount due by Tenant to Landlord hereunder is not paid within ten (10) days after Landlord's
notice to Tenant that the payment is delinquent; then Tenant shall pay to Landlord a late charge
equal to 4% of such overdue amount. The parties hereby agree that such late charge represents a
fair and reasonable estimate of the administrative costs and foregone interest and other income
Landlord will incur and/or suffer by reason of the late payment by Tenant. Acceptance of such
late charge by Landlord shall in no event constitute a waiver of Tenant's default with respect to
such overdue amount, nor prevent Landlord from exercising any of the other rights and remedies
granted hereunder.
4. Use of Premises. Tenant may use the Premises for the Permitted Use and for no
other use without Landlord's written consent, which consent Landlord may not unreasonably
withhold. Tenant covenants throughout the term of this Lease, at Tenant's sole cost and expense,
promptly to comply with all laws and ordinances and the orders, rules, regulations and
requirements of all federal, state and municipal governments and appropriate departments,
commissions, boards and officers thereof, as well as the requirements of the PSDA (collectively,
"Laws"), which may be applicable to the Premises and the Improvements. Tenant shall likewise
observe and comply with the requirements of all policies of public liability, fire, and all other
policies of insurance at any time in force with respect to the Improvements. Tenant shall comply
with all Laws concerning the Premises or Tenant's use of the Premises, including the obligation
at Tenant's sole cost to alter, maintain, and restore the Premises in compliance with all
applicable Laws, even if the Laws are enacted after the date of this Lease, even if compliance
entails costs to Tenant of a substantial nature, and even if compliance requires structural
alterations.
5. Impositions.
(a) Impositions. Tenant covenants and agrees to pay, before any fine, penalty,
interest or cost may be added thereto for the non-payment thereof, all property taxes,
assessments, water and sewer rates and charges, and other governmental charges, general and
special, ordinary and extraordinary, unforeseen as well as foreseen, of any kind and nature
whatsoever (all of which taxes, assessments, water and sewer rates or charges, and other
governmental charges are hereinafter referred to as "Imposition"), which are assessed, levied,
imposed or become a lien upon the Premises and/or the Improvements (as defined below), or
become payable, during the Term of this Lease; provided, however, that if, by Law, any such
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Imposition may at the option of the taxpayer be paid in installments (whether or not interest shall
accrue on the unpaid balance of such Imposition), Tenant may exercise the option to pay the
same (and any accrued interest on the unpaid balance of such Imposition) in installments and
shall pay only such installments as may become due during the Term of this Lease as the same
respectively become due and before any fine, penalty, interest or cost may be added thereto, for
the non-payment of any such installment and interest; and provided, further, that any Imposition
relating to a fiscal period of the taxing authority, a part of which period is included within the
Term of this Lease and a part of which is included in a period of time before the Commencement
Date or after the termination of this Lease, other than a termination of this Lease pursuant to
Section 21 below, shall (whether or not such Imposition shall be assessed, levied, imposed or
become a lien upon the Premises and/or the Improvements, or shall become payable, during the
Term of this Lease) be adjusted between Landlord and Tenant as of the Commencement Date or
the termination of this Lease, as applicable, so that Landlord shall pay that portion of such
Imposition (or receive any tax refund or tax credit) which relates to that part of the fiscal period
before the Commencement Date or after the termination of this Lease, as applicable, and Tenant
shall pay that portion of such Imposition (or receive any tax refund or tax credit) which relates to
the period during the Term of this Lease. Notwithstanding the foregoing, the following shall not
be considered Impositions, and Landlord shall be responsible for the payment the same: (i) any
franchise, corporate, estate, inheritance, succession, capital levy, stamp tax or transfer tax of
Landlord, (ii) any income, excess profits or revenue tax or any other tax, assessment, charge or
levy upon the Rent payable by Tenant under this Lease or (iii) assessments attributable to the C-
Pace loan.
(b) Payment of Impositions. Except when applicable Law requires otherwise,
Tenant shall pay the Impositions for the period commencing with the Commencement Date to
the applicable authority, before delinquency. Tenant covenants, upon request of Landlord, to
furnish to Landlord for inspection, official receipts of the appropriate taxing authority, or other
evidence satisfactory to Landlord, evidencing the payment of any Imposition.
(c) Contest of Taxes and/or Assessed Valuation of Property. Landlord and
Tenant shall each fully cooperate with the other in good faith and use diligent, reasonable efforts
to minimize Impositions. Tenant shall have the right to contest the amount and/or validity, or to
seek a refund, in whole or in part, of any Imposition by appropriate proceedings, and
notwithstanding the provisions of Section 6(a) above, this shall not be deemed or construed in
any way as relieving, modifying or extending Tenant's covenants to pay any such Imposition at
the time and in the manner as provided in this Section 6 unless Tenant shall have deposited with
Landlord or a bank or trust company designated by Landlord, as security for the payment of such
Imposition, money or a corporate surety bond or other security acceptable to Landlord in the
amount so contested and unpaid together with the estimated amount of all interest and penalties
in connection therewith and all charges that may or might be assessed against or become a
charge on the Premises and/or Improvements or any part thereof in said proceedings, whereupon
Tenant may postpone or defer payment of such Imposition. Upon the termination of such
proceedings, Tenant shall pay the amount of such Imposition or part thereof as finally
determined in such proceedings, the payment of which may have been deferred during the
prosecution of such proceedings, together with any costs, fees, interest, penalties or other
liabilities in connection therewith, and upon such payment Landlord shall return, or cause such
bank or trust company to return, the amount above referred to without interest. If, at any time
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during the continuance of such proceedings, Landlord shall deem the amount deposited with it
insufficient, Tenant shall, upon demand, deposit with Landlord or such bank or trust company
such additional sum as Landlord may reasonably request, and upon failure of Tenant to do so, the
amount theretofore deposited may be applied by Landlord or such bank or trust company to the
payment, removal and discharge of such Imposition and the interest and penalties in connection
therewith and any costs, fees or other liability accruing in any such proceedings, and the balance,
if any, shall be returned to Tenant. Landlord agrees not to unreasonably withhold its consent to
joining in any such proceedings or permitting the same to be brought in its name. Landlord shall
not ultimately be subjected to any liability for the payment of any costs or expenses in
connection with any such proceeding, and Tenant covenants to indemnify, save and hold
harmless Landlord from any such costs or expenses. Tenant shall be entitled promptly to any
refund of any such Imposition and penalties or interest thereon, which have been paid by Tenant,
or which have been paid by Landlord and for which Landlord has been fully reimbursed. The
certificate, advice or bill of the appropriate official designated by Law to make or issue the same
or to receive payment of any Imposition, of non-payment thereof, shall be prima facie evidence
that such Imposition is due and unpaid at the time of the making or issuance of such certificate,
advice or bill.
6. Maintenance, Repairs and Replacements. Tenant, at its sole expense, shall keep
the Improvements and the Premises clean and in good condition free of accumulations of
rubbish, and shall make all repairs (including structural repairs) and replacements necessary to
maintain the Improvements during the entire Term as a first-class Project. Landlord shall not be
required to furnish any services or facilities or to make any repairs or alterations to the Premises
or the Improvements and Tenant hereby assumes the full and sole responsibility for the
condition, operation, repair, replacement, maintenance and management of the Premises and the
Improvements. Upon the Commencement Date and throughout the Term, Tenant shall, at its
own cost, maintain, repair, and replace the Improvements to the extent required by applicable
Law or regulations and as required by any Lender.
7. Utilities. Tenant is responsible, at its own cost, for supplying utilities to the -
remises, including the payment of hookup fees, deposits and similar charges. Tenant will pay
directly to the appropriate utility company or governmental agency, when due, all bills for gas,
water, sanitary sewer, electricity, telephone and other public or private utilities used by Tenant or
provided to the Premises upon Commencement and throughout the Term.
8. Liens. Tenant shall not suffer or permit any mechanic's, vendor's, laborer's, or
materialman's statutory or similar liens (collectively "mechanic's liens") to be filed against the
Premises or the Improvements, nor against Tenant's leasehold interest in the Premises, by reason
of work, labor, services or materials supplied or claimed to have been supplied to Tenant or
anyone holding any interest in the Premises and/or the Improvements or any part thereof through
or under Tenant. If any such mechanic's lien shall be filed, Tenant shall, within ninety (90) days
after written notice of the filing thereof (but in any event prior to the entry of a judgment for
foreclosure), cause the same to be discharged of record by payment, deposit, bond, order of a
court of competent jurisdiction or otherwise; provided, however, that Tenant shall have the right
to contest, with due diligence, the validity or amount of any such lien or claimed lien, if Tenant
shall give to Landlord security in an amount equal to one and one-half (1'/2) times the amount of
such lien or claimed lien. Subject to the foregoing provisions, if Tenant shall fail to cause such
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lien to be discharged within the required time period, then, in addition to any other right or
remedy of Landlord, Landlord may, but shall not be obligated to, and following written notice to
Tenant of its election to do so, discharge the same either by paying the amount claimed to be due
or by procuring the discharge of such lien by deposit or by bonding proceedings, in which event
Tenant shall reimburse Landlord for all costs incurred thereby immediately following demand
therefor. Nothing contained in this Lease shall be deemed or construed in any way as
constituting the consent or request of Landlord, express or implied by inference or otherwise, to
any contractor, subcontractor, laborer or materialman for the performance of any labor or the
furnishing of any materials for any specific improvements, alteration to or repair of the Premises
or the Improvements or any part thereof.
9. Insurance.
(a) Tenant shall at Tenant's expense, obtain and keep in force during the
Term of this Lease, a policy or policies of Commercial General Liability Insurance that includes
Combined Single Limit Bodily Injury and Property Damage Insurance, including Personal and
Advertising Injury, Blanket Contractual Liability, Liquor Legal Liability, Garage Liability,
Garagekeepers Legal Liability, and Non -Owned Auto Liability in an amount not less than
$10,000,000.00 for injury, damages, or death resulting from any one accident or occurrence.
Such policy or policies (i) may provide for a deductible not in excess of $50,000.00 (in Constant
Dollars) for each accident or occurrence, provided that Tenant shall maintain a self-insurance
fund sufficient to satisfy the deductible, and (ii) shall insure Tenant and Landlord against liability
arising out of the use, occupancy, or maintenance of the Premises including all improvements
now or hereafter located thereon and all areas appurtenant thereto. The policy or policies shall
be stated to be primary and non-contributing with any insurance which may be carried by
Landlord, and shall insure performance by Tenant of the indemnity provisions of Section 11 to
the extent such indemnities are within the scope of coverage under such policies. Landlord and
Landlord's lender, if any, shall be named as "Additional Insured" on all of the above policies.
(b) Tenant shall, at its sole cost and expense, at all times during the Term,
maintain in force a policy of (i) Workers Compensation and Employers' Liability insurance
providing workers compensation benefits as required by the Law (with a waiver of subrogation
in favor or Landlord) and Employers' Liability coverage with limits of not less than
$1,000,000.00 and (ii) Automobile Liability insurance with a limit of liability of not less than
$1,000,000.00 for each accident and providing coverage for all "owned", "hired" and "non -
owned" vehicles.
(c) Tenant shall during the Term, at its sole cost and expense, obtain and
maintain a policy or policies of property insurance covering loss or damage to the Premises and
Improvements providing protection against all perils included within the standard insurance
industry coverage classifications of Causes of Loss Special Form, and with earthquake coverage
if available at commercially reasonable rates. The above policy or policies shall include a full
replacement cost endorsement, debris removal endorsement (or equivalent coverage in the event
of uninsured catastrophic loss), a building code upgrade or ordinance and Law endorsement, and
insure all Improvements, changes thereto or replacements thereof, and trade fixtures on the
Premises, as well as all personal property located on or used in operation of the Premises for one
hundred percent (100%) of the then current replacement cost, including any required building
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code upgrades. The policy or policies shall include the Landlord and Landlord's lender, if any,
as loss payee as to the proceeds from the debris removal endorsement and each loss shall be
subject to a commercially reasonable deductible reasonably acceptable to Landlord.
(d) Tenant shall, at its sole cost and expense, at all times during the Term,
maintain in force a policy of rental loss or business interruption insurance in an amount at least
sufficient to pay, for a period of twenty-four (24) months following any applicable loss, the sum
of the following:
(i) the Impositions provided for in Section 5; and
(ii) the insurance premiums provided for in Section 9.
(e) The liability coverage limits in Sections 9(a) and (b) above must be
covered by excess liability coverage having a limit of not less than $7,000,000.00, which policy
shall be in "following form" and shall provide that if the underlying aggregate is exhausted, the
excess coverage will drop down as primary insurance. Such excess liability policy shall include
coverage for the additional insureds.
(f) The purpose and intent of the parties is that Tenant shall have during the
Term such amount of liability insurance as will be sufficient to protect Landlord from any
liability with respect to the Premises. If at any time during the Term, Landlord shall reasonably
determine that the limits of the liability insurance under Section 6(a) or (b) above are insufficient
(e.g., inflation; the risk incident to use of the Premises; the nature and amount of the awards for
liabilities then being given), then Landlord may increase the limits of the such liability insurance
to then -appropriate amounts by giving Tenant at least sixty (60) days' prior written notice
thereof.
(g) The insurance required to be carried under this Section 9 shall be placed
with responsible insurance companies admitted to do business in California and having an A.M.
Best rating of at least A- and an A.M. Best Financial Size Category rating of not less than
Class VII as shall be selected by Tenant. Tenant shall deliver to Landlord certificates of said
insurance and of renewals thereof from time to time during the Term hereof promptly following
request therefor from Landlord, and shall obtain the written commitment of each such insurer to
provide each additional insured with thirty (30) days written notice of any cancellation thereof,
or amendments with respect to reductions in policy limits or coverages. Any insurance required
to be maintained by Tenant may be maintained under a so-called "blanket policy" insuring other
parties and other locations so long as the amount of insurance required to be provided hereunder
for the Premises is not thereby diminished.
(h) Unless this Lease is terminated pursuant to Section 12, all policies of
insurance described in Section 9(c) shall provide for payment of loss in excess of $1,000,000.00
(in Constant Dollars) to the Lender holding the first Leasehold Mortgage (unless there is not one,
in which case payment of loss shall be to a mutually acceptable escrow holder) to be held in trust
and applied to the repair and restoration of the Premises, subject to the conditions set forth in the
Leasehold Mortgage and Section 12. When the Premises have been fully repaired and restored,
any excess shall be paid to Tenant.
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(i) Landlord and Tenant each hereby release and relieve the other, and waive
their entire right of recovery against the other for loss or damage arising out of or incident to
perils insured against by the insurance described in Section 9(c), which perils occur in, on, or
about the Premises whether due to the negligence of Landlord or Tenant or their agents,
employees, contractors, and/or invitees. Tenant and Landlord shall, upon obtaining the policies
of insurance required hereunder, give notice to the insurance carrier or carriers that the foregoing
mutual waiver of subrogation is contained in this Lease.
10. Indemnity.
(a) Indemnity. Tenant shall indemnify, defend and hold Landlord harmless
from all claims, costs, liability, damage or expense, including attorneys' fees, arising from
(a) any death, damage or injury to Persons or property occurring on the Premises during the
Term or resulting from Tenant's or its guests' or subtenants' use thereof or actions thereon,
(b) Tenant's construction or demolition or modification of Improvements on the Premises,
(c) any and all claims by or on behalf of any Person arising from the conduct or management of
or from any work or thing whatsoever done in and on the Premises and/or Improvements during
the Term, and will further indemnify and save Landlord harmless against and from any and all
claims arising during the term of this Lease from any condition of the Improvements, or
passageways or space therein or appurtenant thereto, or arising from any breach or default on the
part of Tenant in the performance of any covenant or agreement on the part of Tenant to be
performed pursuant to this Lease or arising from a violation by Tenant of the requirements under
the PSDA, or arising from any act or negligence of Tenant or any subtenant or occupant of the
Improvements or any part thereof, or of its or their agents, contractors, servants, employees or
licensees, or arising from any accident, injury or damage whatsoever caused to any Person or
property occurring during the Term of this Lease in or about the Premises and/or Improvements,
and from and against all judgments, costs, expenses and liabilities incurred in or about any such
claim or action or proceeding brought therein. The foregoing shall not apply to any matters
arising out of the negligence or willful misconduct of Landlord, its agents or employees.
(b) Notification of Claim. Landlord shall notify Tenant promptly of any
claim, action or proceeding and cooperate fully in the defense. Upon receipt of such notification,
Tenant shall assume the defense of the claim, action, or proceeding, including the employment of
counsel acceptable to Landlord and the prompt payment of the attorneys' fees and costs of such
counsel. If Landlord at any time reasonably determines that having common counsel would
present such counsel with a conflict of interest, or if Tenant fails to promptly assume the defense
of the claim, action, or proceeding or to promptly employ counsel acceptable to Landlord, then
Landlord may, in its sole discretion, employ separate counsel to represent or defend Landlord,
and Tenant shall pay the reasonable attorneys' fees and costs of such separate counsel within
thirty (30) days of receiving an itemized billing therefor. At its sole discretion, Landlord may
participate at its own expense in the defense of any claim, action or proceeding, but such
participation shall not relieve Tenant of any obligation imposed by this Lease. Failure to
promptly defend or indemnify Landlord is a material breach which shall entitle Landlord to all
remedies available under Law, including but not limited to specific performance and claims for
damages.
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(c) Survivability. Tenant's obligations to release, hold harmless, indemnify,
and defend Landlord shall survive the expiration of the Term; or, earlier termination of this
Lease; or abandonment of the Premises by Tenant.
11. Improvements. Tenant may construct Improvements on and make alterations,
repairs, demolitions, and modifications to the Premises as Tenant may deem desirable for its
Permitted Use of the Premises, subject only to compliance with Laws and this Lease, including
the PSDA. Tenant shall pay for the design and cost of the Improvements, which Improvements
shall be made in all cases subject to the following conditions which Tenant covenants to observe
and perform:
(a) No Improvements shall be undertaken until Tenant shall have procured
and paid for, so far as the same may be required, from time to time, all municipal and other
governmental permits and authorizations of the various municipal departments and governmental
subdivisions having jurisdiction and Landlord agrees, at no cost or liability to Landlord, to join
in the application for such permits or authorizations whenever such action is necessary;
(b) Any structural Improvement shall be conducted under the supervision of
an architect or engineer licensed as such in the State of California (who may be an employee of
Tenant) selected by Tenant and plans therefor shall be submitted to Landlord, in order to give
Landlord an opportunity to determine that such Improvements will comply with the provisions of
this Section;
(c) All Improvements shall be of such a character that, when completed, the
value and utility of the Improvements shall be not substantially less than the value and utility of
the Improvements immediately before any such additional Improvements; except that in the case
of any Improvements following the completion of Tenant's Work involving demolition or the
construction of any of the structural components of the Improvements or the exterior facade of
the Improvements and which have a value in excess of Two Hundred Fifty Thousand Dollars
($250,000.00) (in Constant Dollars), Tenant shall, prior to the commencement of demolition or
construction submit to Landlord preliminary drawings and outline specifications to be approved
by Landlord which approval shall not be unreasonably withheld and which shall have reference
only to establishing that such new Improvements will be of a value not substantially less than the
value of the Improvements to be demolished and that such new Improvements, when completed,
will constitute all or a part of a completed Project consistent with the Permitted Use and capable
of producing a fair and reasonable net annual income, after payment of all operating expenses.
For purposes of this Section 11(c), "operating expenses" shall include all expenses of operation
of the Improvements, the Rent, additional rent and other charges reserved under this Lease and
the cost of performance of all covenants and agreements of Tenant provided to be performed by
Tenant under this Lease, and shall be deemed to exclude depreciation, income taxes and
franchise taxes of Tenant.
(d) All work done in connection with any Improvements shall be done in a
good and workmanlike manner and in compliance with all applicable Laws, ordinances, orders
and requirements of all federal, state and municipal governments and their appropriate
departments, commissions, boards and officers. The Improvements shall at all times be free of
liens for labor and materials supplied or claimed to have been supplied. The work of any
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Improvements shall be prosecuted with reasonable dispatch. Worker's compensation insurance
covering all Persons employed in connection with the work and with respect to whom death or
bodily injury claims could be asserted against Landlord, Tenant or the Premises or the
Improvements, and general liability and property damage insurance (which may be effected by
endorsement, if obtainable, on the insurance required to be carried pursuant to Section 9 above)
for the mutual benefit of Tenant and Landlord with limits of not less than those required to be
carried pursuant to Section 9, above, shall be maintained by Tenant at Tenant's sole cost and
expense at all times when any work is in process in connection with any Improvements.
(e) Subsequent to completion of the Tenant's Work, no Improvements
involving an expenditure in excess of Two Hundred Fifty Thousand Dollars ($250,000) (in
Constant Dollars) shall commence until Tenant shall have given Landlord ten (10) days prior
written notice of such work in order that Landlord may post and/or file notices of non -
responsibility or notices of a similar nature.
(f) If the estimated cost of any Improvements shall be in excess of One
Million Dollars ($1,000,000.00) (in Constant Dollars), Tenant shall, prior to the commencement
of any such Improvements, deliver to Landlord evidence that Tenant has sufficient funds
available to pay for the anticipated costs of such Improvements, which evidence may include,
without limitation, a construction loan from an Approved Lender.
(g) Tenant covenants that in performing any work or repairs to, or restoration,
replacement or rebuilding of, any of the Improvements required to be performed by Tenant
pursuant to the provisions of Sections 12 and 13, it will observe and perform, insofar as the
nature of such repairs, restoration, replacement or rebuilding make such observation and
performance appropriate, the conditions relating to Improvements set forth in this Section 11.
At any time before, or within thirty (30) days after, termination of this Lease, Tenant may
remove from the Premises any Personalty (as defined in Section 16 below) on or at the Premises,
provided Tenant repairs all damage to the Premises caused by such removal.
12. Damage by Fire or Other Casualty.
(a) Restoration. In the event of a fire, earthquake or other casualty, Tenant
shall promptly, at Tenant's sole cost and expense, restore, repair, replace or rebuild the
Improvements as nearly as possible to the condition, quality and class it was in immediately prior
to such damage or destruction, or with such changes or alterations as Tenant shall elect to make
in conformity with Section 11 above. Such restoration, repairs, replacement or rebuilding shall
be commenced promptly and prosecuted with reasonable diligence.
(b) No Abatement of Rent. Tenant's obligations to pay Rent and all other
charges under this Lease will continue notwithstanding the damage or casualty and neither Rent
nor any other charges under this Lease will be abated, and Tenant hereby waives the provisions
of Sections 1932(2) and 1933(4) of the California Civil Code and of any other statute or Law
now or hereafter in effect contrary to such obligations of the Tenant as set forth in this Lease, or
which relieves Tenant from such obligation.
13. Condemnation.
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(a) Definition of Taking and Substantial Taking. For the purpose of this
Lease, a "Taking" means any condemnation or exercise of the power of eminent domain by any
authority vested with such power or any other taking for public use, including a private purchase
in lieu of condemnation by an authority vested with the power of eminent domain; the "Date of
Taking" means the earlier of the date on which title to the Premises or any portion thereof so
taken is vested in the condemning authority or the date on which possession of the Premises or
any portion thereof is taken by the condemning authority; and "Substantially All of the
Premises" means so much of the Premises or Improvements as, when taken, leaves the un-taken
portion unsuitable for the continued feasible and economic operation of the Premises by Tenant
for the same purposes as immediately before the Taking.
(b) Tenant's Rights Upon Taking or Substantial Taking. In the event of a
Taking of Substantially All of the Premises, Tenant may, by thirty (30) days' prior written notice
to Landlord, given no later than ninety (90) days following the Date of Taking, terminate this
Lease. All Rent shall be apportioned and paid through and including the Date of Taking.
(c) Tenant's Rights Upon Less Than Substantial Taking. In the event of a
partial Taking, Tenant, at its sole cost and expense, shall proceed with due diligence to restore,
repair, replace or rebuild the remaining part of the Improvements to substantially its former
condition or with such changes or alterations as Tenant may elect to make in conformity with
Section 11 above so as to constitute a complete project. In the event of a partial Taking, this
Lease shall terminate as to the portion of the Premises so taken and the Rent payable for the
balance of the Term of this Lease shall be reduced in the same ratio that the value of Tenant's
interest in the Premises and Improvements immediately prior to the Taking is reduced, such
reduction to be effective as of the Date of Taking. Until the amount of the reduction of the Rent
shall have been determined, Tenant shall continue to pay to Landlord the Rent provided for in
Section 1 above, at which time Landlord shall refund any excess Rent paid based upon such
reduction being effective as of the Date of Taking.
(d) Rights Upon Temporary Taking. If, at any time during the Term, the
whole or any part of the Premises, or of Tenant's leasehold estate under this Lease, or of the
Improvements shall be taken in condemnation proceedings or by any right of eminent domain for
temporary use or occupancy not exceeding one (1) year (a "Temporary Taking") the foregoing
provisions of this Section shall not apply and Tenant shall continue to pay, in the manner at the
times specified in this Lease, the full amounts of the Rent and all additional rent and other
charges payable by Tenant under this Lease, and, except only to the extent that Tenant may be
prevented from so doing pursuant to the terms of the order of the condemning authority Tenant
shall perform and observe all of the other terms, covenants, conditions and obligations of this
Lease upon the part of Tenant to be performed and observed, as though such Temporary Taking
had not occurred. In the event of any such Temporary Taking, Tenant shall be entitled to receive
the entire amount of the Condemnation Proceeds (as defined below) made for such Temporary
Taking, whether paid by way of damages, rent or otherwise unless such period of temporary use
or occupancy shall extend beyond the termination of this Lease, in which case the Condemnation
Proceeds shall be apportioned between Landlord and Tenant as of the date of termination of this
Lease. Tenant covenants that, upon the expiration of any such period of temporary use or
occupancy during the Term, it will, at its sole cost and expense, restore the Improvements, as
nearly as may be reasonably possible, to the condition in which the same was immediately prior
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to such Temporary Taking, wear and tear during such temporary use or occupancy excepted. To
the extent that Landlord receives any portion of the Condemnation Proceeds as compensation for
the cost of restoration or repair of the Improvements, Landlord shall make such Condemnation
Proceeds available to Tenant for payment of the cost of restoration of the Improvements by
Tenant pursuant to customary construction draw procedures. Any portion of the Condemnation
Proceeds received by Tenant as compensation for the cost of restoration of the Improvements
shall, if such period of temporary use or occupancy shall extend beyond the term of this Lease,
be paid to Landlord on the date of termination of this Lease.
(e) Condemnation Proceeds. In the event of a Taking of Substantially All of
the Premises and the termination of this Lease, the award or awards for such Taking, less the
costs of the determination and collection of the amount of the award or awards ("Condemnation
Proceeds"), shall be distributed as follows:
(i) Landlord shall first be entitled to receive and retain as its own property,
and Tenant hereby assigns to Landlord, such portion of the Condemnation Proceeds as shall equal the
fair market value of the Land and Landlord's reversionary interest in the Improvements;
(ii) Tenant shall then be entitled to receive, and Landlord hereby assigns to
Tenant, the balance of the Condemnation Proceeds, if any.
(f) In the event of a Taking which is not Substantially All of the Premises (a
"Partial Taking"), this Lease shall not terminate or be affected in any way, except as provided
in Section 13(c) above, and Landlord shall first be entitled to receive and retain as its own
property, that portion of the Condemnation Proceeds as shall equal the fair market value of the
Land and Landlord's reversionary interest in the Improvements so taken ("Landlord's
Proceeds"). Tenant shall then be entitled to receive the balance of the Condemnation proceeds
("Tenant's Proceeds") and the same shall be payable, and Landlord hereby so assigns the same,
if One Million Dollars ($1,000,000) or less (in Constant Dollars), in trust to Tenant for
application by Tenant to the cost of restoring, repairing, replacing or rebuilding the
Improvements, but if in excess of One Million Dollars ($1,000,000) (in Constant Dollars), then
to the Lender holding the first Leasehold Mortgage (or if no Lender, then to an escrow holder
mutually acceptable to Landlord and Tenant) for disbursement to Tenant for payment of the cost
of restoring, repairing, replacing or rebuilding the Improvements, with any excess being
disbursed to Tenant.
14. Assignment and Subletting. This Lease and the interest of Tenant under this
Lease may not be assigned, nor may all or any portion of the Premises be sublet, without the
prior consent of Landlord, which consent shall not be unreasonably withheld, provided that: (1)
with respect to an assignment: (a) no such assignment shall be effective for any purpose unless
and until (i) the assignor's interest in the Improvements shall be transferred to the assignee of
this Lease and (ii) there shall be delivered to Landlord (A) a duplicate original of the instrument
or instruments of transfer of this Lease and of the assignor's interest in the Improvements in
recordable form, containing the name and address of the transferee and (B) an instrument of
assumption by the transferee of all of Tenant's obligations under this Lease arising from and
after the effective date of the transfer; and (b) no such assignment and assumption shall operate
or be deemed to operate as a release of Tenant and/or the duties, obligations and liabilities of
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Tenant under this Lease; and (2) with a respect to a subletting, there shall have been delivered to
Landlord (y) a duplicate original of the instrument or instruments of subletting in recordable
form, containing the name and address of the sublessee and (z) an instrument of assumption by
the sublessee of all of Tenant's obligations under this Lease arising during the term of the
Sublease as the same pertain to the portion of the Premises subject to the sublease.
Each sublease shall be subject and subordinate to this Lease and the rights of Landlord
hereunder, and any violation of any provision of this Lease, whether by act or omission, by any
subtenant shall be deemed a violation of such provision by Tenant, with respect to which Tenant
shall be responsible for Landlord's damages caused thereby, it being the intention and meaning
of the parties that Tenant shall assume and be liable to Landlord in damages for any and all acts
and omissions of any and all subtenants with respect to this Lease.
15. Tenant's Financing. Notwithstanding any other provisions of this Lease, Tenant
may, without Landlord's consent, from time to time, secure financing or general credit lines and
obtain franchise or license rights and grant the Lenders thereof: (i) a security interest in Tenant's
interest in the Improvement (including movable temporary structures located at the Premises,
whether nailed, screwed or otherwise fastened to the Premises), (ii) a security interest in Tenant's
trade fixtures, furnishings, inventory, equipment, and machinery and all other items of personal
property installed by Tenant or its subtenant at its own expense or in which it or any subtenant
has any interest (collectively, "Personalty"), (iii) the right to enter the Premises to realize upon
any Personalty so pledged provided that the Premises are repaired, and (iv) a collateral
assignment of or leasehold encumbrance in the Leasehold Estate, with rights of reassignment;
provided, however, such Lenders will be required to acknowledge in writing that such grant of
security interest or collateral is limited to the Leasehold Estate and does not constitute a lien
against the Reversionary Estate. If Tenant grants any of the rights described in this paragraph to
a Lender, the provisions of Exhibit "B" will apply.
16. Tenant's Property and Ownership at Termination. All of the Improvements shall
be and remain the property of Tenant during the Term and shall become the property of Landlord
upon expiration of the Term. Personalty and trade fixtures shall be and remain the personal
property of Tenant at all times. At the expiration of the Term or earlier termination of this Lease,
Tenant shall surrender the Premises and Improvements to Landlord in good condition and repair
as a first-class Project, subject to Sections 12 and 13. In addition, Landlord may, at Landlord's
election, demand the removal from the Premises of any and/or Improvements and fixtures made
to or placed on the Premises in violation of this Lease by Tenant or any other Person at the
direction of Tenant or with Tenant's consent. A written demand to that effect at the scheduled
expiration of the Term shall be effected by written notice from Landlord to Tenant given at any
time within six (6) months before the scheduled expiration of the Term. A demand to take effect
on any other termination of this Lease shall be effected by notice given in or concurrently with
notice of such termination or within five (5) business days after such termination. The demand
shall specify which items are to be removed. Tenant shall comply with the notice before the
expiration of the Term for normal termination, and within sixty (60) days after the notice for
other terminations. On the expiration of the Term or earlier termination of this Lease, and to the
extent they have not been removed pursuant to this Lease (or required to be removed pursuant to
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this Lease), any and/or all Improvements and fixtures made to or placed on the Premises by
Tenant or any other Person at the direction of Tenant or with Tenant's consent shall become the
property of Landlord and remain on and/or affixed to the Premises without cost or charge to
Landlord. Notwithstanding the foregoing, Tenant and each of its subtenants shall be permitted,
at the option of each, to remove its Personalty from the Premises; provided, however, that in any
case all resulting damage and injuries to the Premises and remaining Improvements are
completely remedied and Tenant complies with Landlord's reasonable requirements respecting
the resultant appearance.
17. Memorandum of Lease. This Lease is not to be recorded, but Landlord and
Tenant shall execute a Quitclaim Deed & Memorandum of Lease "Memorandum of Lease")
and shall cause it to be recorded in the Official Records, immediately after the mutual execution
of this Lease. The provisions of this Lease shall control, however, with regard to any omissions
from, or provisions hereof which may be in conflict with, the Memorandum of Lease. Tenant
shall be responsible for any documentary transfer taxes imposed in connection with recordation
of the Memorandum of Lease.
18. Expiration of Term. If, after expiration of the Term, Tenant fails to remove any
or all of its Personalty within thirty (30) days after receiving written notice from Landlord,
Landlord may dispose of such Personalty as Landlord deems appropriate. Tenant agrees that at
the expiration of this Lease, it will deliver to Landlord peaceable possession of the Premises
(expressly excluding the Released Parcels).
19. Force Majeure. Except as otherwise specifically contemplated in this Lease, in
the event that Landlord or Tenant shall be delayed or hindered in, or prevented from, the
performance of any act required hereunder (other than the payment of money) by reason of delay
by the other party, riots, insurrection, war or other reason not the fault of such party or not within
its control, then performance of such act shall be excused for the period of delay, and the period
for the performance of any such act shall be extended for a period equivalent to the period of
such delay; provided, the party so delayed, hindered or prevented shall use its commercially
reasonable efforts to deliver written notice to the other party as soon as reasonably practicable
following the commencement thereof, which written notice shall specify the nature of the delay,
the date of commencement of delay and the expected period of delay.
20. Events of Tenant's Default. Any of the following occurrences, conditions, or acts
by Tenant constitutes an "Event of Default" under this Lease:
(a) Tenant's failure to make any payment of money to Landlord required by
this Lease, which, failure is not cured within five (5) business days following Tenant's receipt of
written notice thereof from Landlord ("Monetary Default").
(b) Tenant's failure to observe or perform any other material provision of this
Lease within thirty (30) days after receipt of written notice from Landlord to Tenant specifying
such default and demanding that the same be cured; provided that, if such default cannot with
due diligence be wholly cured within such 30-day period, Tenant shall have such longer period
as is reasonably necessary to cure the default, so long as Tenant proceeds promptly to commence
the cure of same within such 30-day period and diligently prosecutes the cure to completion.
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(c) The abandonment or vacation of, or discontinuance of business operations
at the Premises, or any substantial portion thereof, for reasons not caused by Force Majeure or
due to temporary closures for renovations or repairs required or permitted to be made under this
Lease, which is not cured within ninety (90) days following written notice thereof from Landlord
to Tenant ("Abandonment Default").
(d) The failure of Tenant to comply with any and all aspects of PSDA, which
failure is not cured within twenty (20) days after written notice of default is given to Tenant or, if
the default is such that it is not reasonably capable of being cured within twenty (20) days, and
Tenant initiates corrective action within said period and diligently, continually and in good faith
works to effect a cure as soon as possible, then Tenant shall have such additional time as is
reasonably necessary to cure the default("PSDA Default").
21. Landlord's Remedies.
(a) After the occurrence of an Event of Default, Landlord is entitled to all
remedies available at Law and/or in equity, including the right to:
(i) Continue this Lease in effect by not terminating Tenant's right to
possession of the Premises, in which event Landlord shall be entitled to enforce all Landlord's
rights and remedies under this Lease and/or at Law, including the right to recover the Rent
specified in this Lease as it becomes due;
(ii) In the event of a Monetary Default, a PSDA Default or an
Abandonment Default, terminate this Lease and bring an action to recover from the Tenant the
amounts set forth in Section 21(b) below;
(iii) Exercise any right or remedy allowed at Law or in equity; and/or
(iv) Landlord may cure the Event of Default, in which event Tenant
shall reimburse Landlord for all costs incurred thereby immediately upon demand therefor.
Notwithstanding the provisions of Section 21(a)(ii), if, within ten (10) days following
Tenant's receipt of the default notice pursuant to Section 20 above, Tenant notifies Landlord in
writing that Tenant disputes the claimed Event of Default, and if Tenant commences legal action
to contest the same within ten (10) days thereafter, then Landlord may not exercise its right to
terminate this Lease on account of such Event of Default unless the court shall have ruled (which
ruling is no longer subject to appeal) that the Event of Default exists and Tenant shall have failed
to pay the sums due within ten (10) days following such ruling or otherwise cured a PSDA
Default or an Abandonment Default promptly thereafter, as applicable.
Landlord may terminate this only in the event of a Monetary Default, an Abandonment
Default or a PSDA Default.
(b) Should Landlord elect to terminate this Lease under the provisions of
Sections 21(a)(ii), above, Landlord may recover from Tenant as damages:
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(i) the worth at the time of award of any unpaid rent which had been
earned at the time of such termination; plus
(ii) the worth at the time of award of the amount by which the unpaid
rent which would have been earned after termination until the time of award exceeds the amount
of such rental loss Tenant proves could have been reasonably avoided; plus
(iii) the worth at the time of award of the amount by which the unpaid
rent for the balance of the Term after the time of award exceeds the amount of such rental loss
that Tenant proves could be reasonably avoided; plus
(iv) any other amount necessary to compensate Landlord for all the
detriment proximately caused by Tenant's failure to perform its obligations under this Lease or
which in the ordinary course of things would be likely to result therefrom; plus
(v) at Landlord's election, such other amounts in addition to or in lieu
of the foregoing as may be permitted from time to time by the Laws of the State of California.
As used in clauses (i) and (ii) above, the "worth at the time of award" is computed by
allowing interest at the Default Rate. As used clause (iii) above, the "worth at the time of award"
is computed by discounting such amount at the discount rate of the San Francisco Federal
Reserve Bank, at the time of award, plus one percent (1%).
For all purposes of this Lease, "rent" shall be deemed to be the Minimum Annual Rent
and all other sums required to be paid by Tenant pursuant to the terms of this Lease.
22. Events of Landlord's Default; Tenant's Remedies. Landlord shall not be deemed
to be in default in the performance of any obligation required to be performed by it under this
Lease until it has failed to perform such obligation within thirty (30) days after written notice by
Tenant to Landlord specifying the nature of Landlord's default; provided, however, that if the
nature of Landlord's obligation is such that more than thirty (30) days are required for its
performance, then Landlord shall not be deemed to be in default if it shall commence such
performance within such thirty (30) day period and thereafter diligently prosecute the same to
completion. If Landlord is in default under this Lease, Tenant shall have all rights and remedies
available at Law or in equity.
23. Exculpation of Landlord. Notwithstanding anything in this Lease to the contrary,
it is expressly understood and agreed that any judgment against Landlord resulting from any
default or other claim under this Lease shall be satisfied only out of the net rents, issues, profits
and other income actually received from or in connection with Landlord's interest in the
Premises as well as Landlord's equity in the Premises, and Tenant shall, except as otherwise
expressly permitted pursuant to this paragraph, have no claim against Landlord, its trustee or
beneficiary, or any of their respective personal assets, for satisfaction of any judgment with
respect to this Lease.
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24. Hazardous Substances.
(a) Tenant shall comply fully with all Laws pertaining to the use, generation,
storage, transportation, treatment, disposal or other handling of Hazardous Substances at the
Premises, including those Hazardous Substances that are present at the Premises prior to the
Commencement Date, but excluding those caused by Landlord or its employees or agents
following the Commencement Date. Tenant shall not use, generate, store, transport, treat,
dispose or otherwise handle any Hazardous Substances upon the Premises, except in accordance
with all applicable Laws. The term "Hazardous Substances" shall mean and include, but is not
limited to, all hazardous substances, materials and wastes listed by the U.S. Environmental
Protection Agency, the State of California, the County of San Diego or the City of San Diego,
under the Comprehensive Environmental Response, Compensation and Liability Act
(CERCLA), the Resource Conservation and Recovery Act (RCRA), the Toxic Substances
Control Act (TSCA), and the Federal Water Pollution Control Act (FWPCA), and any other
statute, ordinance or rule promulgated by a government entity or agency thereof.
(b) Tenant agrees unconditionally and absolutely to defend, indemnify, and
hold harmless Landlord, Landlord's directors, officers, employees, agents, and attorneys from
and against any and all damages, diminution in value, penalties, fines, losses, liabilities, causes
of action, suits, claims, demands, costs, and expenses (including all out-of-pocket litigation costs
and the reasonable fees and expenses of counsel) of any nature, directly or indirectly, arising out
of or in connection with:
(i) The existence, use, generation, migration, storage, release,
threatened release, or disposal of Hazardous Materials on, onto, from, or under the Premises,
except to the extent caused by Landlord or its employees or agents; and
(ii) Any failure by Tenant to comply with the terms of any order of
any federal, state, or municipal authority having regulatory authority over environmental matters
which is applicable under this Lease to the Premises excepting those that pertain to Hazardous
Substances that were caused by Landlord or its employees or agents. Tenant's obligations under
this Section 24 shall survive the termination of this Lease.
If any claim is made or brought against Landlord which is subject to the indemnifications
set forth in this Section 24, Tenant shall defend the same by attorneys reasonably approved by
Landlord.
25. Brokers. Landlord and Tenant each represents, warrant, and covenant that it has
not dealt with any real estate broker or finder with respect to this Lease, and each party shall hold
the other party harmless from all damages, claims, liabilities or expenses, including reasonable
and actual attorneys' fees (through all levels of proceedings), resulting from any claims that may
be asserted against the other party by any real estate broker or finder with whom the
indemnifying party either has or is purported to have dealt.
26. Work Product. Upon the early termination of this Lease, all developed plans and
specifications and other intellectual property related to the Improvements, including but not
limited to all plans, specifications and other renderings, constructions budgets, constructions bids
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and other intellectual property otherwise related thereto (the "Work Product") shall become the
property of Landlord, with no representation or warranty from Tenant as to such Work Product.
Tenant shall, at no cost to Landlord, deliver all electronic and hard copies of all such Work
Product to Landlord within three (3) business days of the termination of this Lease.
27. Intentionally Omitted
28. Miscellaneous.
(a) Governing Law, Venue and Jurisdiction. This Lease is governed by and
construed in accordance with the Laws of the State of California, irrespective of California's
choice -of -Law principles. All actions and proceedings arising in connection with this Lease
must be tried and litigated exclusively in the State or Federal courts located in the County of
Riverside, State of California, which courts have personal jurisdiction and venue over each of the
parties to this Lease for the purpose of adjudicating all matters arising out of or related to this
Lease.
(b) Further Assurances and Estoppels. Each party to this Lease shall execute
and deliver all instruments and documents and take all actions as may be reasonably required or
appropriate to carry out the purposes of this Lease (but the foregoing does not imply an
obligation to modify any of the provisions of this Lease). Landlord shall ensure that Tenant's
quiet enjoyment of the Premises throughout the Term is not interrupted by Landlord or anyone
lawfully or equitably claiming by, through or under Landlord, subject to Tenant fulfilling its
obligations hereunder, Landlord's rights and remedies under this Lease and the rights of any
third parties with interests of record as of the Commencement Date. Landlord and Tenant shall
each promptly forward to the other any notice or other communication affecting the Premises
received by it from any owner of property adjoining, adjacent or nearby to the Premises or from
any municipal or governmental authority, in connection with any hearing or other administrative
procedure relating to the use or occupancy of the Premises or any neighboring property. Within
ten (10) days after notice from the other party to this Lease, Landlord or Tenant, as applicable,
shall execute and deliver to other party's designee, in recordable form, a certificate stating
(i) that this Lease is unmodified and in full force and effect, or in full force and effect as
modified, and stating all modifications, (ii) the then current Rent, (iii) the dates to which Rent
has been paid in advance, (iv) the amount of any prepaid rent or other payment constituting rent
which has been paid, (v) whether or not, to the best knowledge of the certifying party, Tenant or
Landlord is in default under this Lease (and the nature of any such default) and whether there
currently exist any defenses or rights of offset under the Lease, and (vi) such other matters as the
requesting party reasonably requests. Tenant's or Landlord's failure to deliver such certificate
within such ten (10) day period shall be conclusive upon such party for the benefit of the
requesting -party and the requesting -parry's designee (including any lender, franchisor, subtenant,
assignee, etc.) that, except as may be represented by the requesting -party, this Lease is
unmodified and in full force and effect, no rent has been paid more than thirty (30) days in
advance, and neither Tenant nor Landlord is in default under this Lease.
(c) Prior Understandings. This Lease: (a) contains the entire and final
agreement of the parties to this Lease with respect to the subject matter of this Lease, and
(b) supersedes all negotiations, stipulations, understandings, agreements, representations and
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warranties, if any, with respect to such subject matter, which precede or accompany the
execution of this Lease.
(d) Waivers and Consents. No delay or omission in the exercise of any right
or remedy of Landlord or Tenant in the event of any default by the other shall impair such right
or remedy or be construed as a waiver. The receipt and acceptance by Landlord of delinquent
rent does not constitute a waiver of any default other than the particular rent payment accepted.
Landlord's receipt and acceptance from Tenant, on any date (the "Receipt Date"), of an amount
less than the amount due on such Receipt Date, or to become due at a later date but applicable to
a period before the Receipt Date, does not release Tenant of its obligation (i) to pay the full
amount due on such Receipt Date or (ii) to pay when due the full amount to become due at a later
date but applicable to a period before such Receipt Date. No act or conduct of Landlord,
including the acceptance of the keys to the Premises, constitutes an acceptance by Landlord of
the surrender of the Premises by Tenant before the Expiration Date. Only a written notice from
Landlord to Tenant stating Landlord's election to terminate Tenant's right to possession of the
Premises constitutes acceptance of the surrender of the Premises and accomplishes a termination
of this Lease. Landlord's consent to or approval of any act by Tenant requiring Landlord's
consent or approval may not be deemed to waive or render unnecessary Landlord's consent to or
approval of any other or subsequent act by Tenant.
(e) Notices. Any notice permitted or required to be given pursuant to this
Lease shall be in writing and shall be deemed to have been given on the date of actual delivery,
or refusal, if sent by certified mail, postage prepaid, return receipt requested, or by Federal
Express or other comparable overnight express courier service (with proof of receipt available),
addressed to the parties as set forth in Section 1, or to such other address as a party may, from
time to time, give notice to the other party in accordance with this paragraph.
(f) Interpretation. Whenever the context so requires in this Lease, all words
used in the singular may include the plural (and vice versa) and the word "Person" includes a
natural person, a corporation, a firm, a partnership, a joint venture, a trust, an estate or any other
entity. The terms "includes" and "including" do not imply any limitation. Except as otherwise
expressly provided herein, no remedy or election under this Lease is exclusive, but rather, to the
extent permitted by applicable Law, each such remedy and election is cumulative with all other
remedies at Law or in equity. The paragraph headings in this Lease: (i) are included only for
convenience, (ii) do not in any manner modify or limit any of the provisions of this Lease, and
(iii) may not be used in the interpretation of this Lease.
(g) Partial Invalidity. Each provision of this Lease is valid and enforceable to
the fullest extent permitted by Law. If any provision of this Lease (or the application of such
provision to any person or circumstance) is or becomes invalid or unenforceable, the remainder
of this Lease, and the application of such provision to persons or circumstances other than those
as to which it is held invalid or unenforceable, are not affected by such invalidity or
unenforceability.
(h) Successors -in -Interest and Assigns. This Lease is binding on and inures to
the benefit of the successors -in -interest and assigns of each party to this Lease.
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(i) Drafting Ambiguities. Each party to this Lease and its legal counsel have
negotiated, reviewed, and revised this Lease. The rule of construction that ambiguities are to be
resolved against the drafting party or in favor of the party receiving a particular benefit under an
agreement may not be employed in the interpretation of this Lease or any amendment to this
Lease.
(j) Usury. In the event Landlord receives any sums under this Lease which
constitute interest in an amount in excess of that permitted by any applicable Law, then, all such
sums constituting interest in excess of that permitted to be paid under applicable Law shall, at
Landlord's option, either be credited to the payment of Rent owing hereunder or returned to the
Tenant.
(k) No Merger. There shall be no merger of the Lease or any interest in the
Lease or of the Leasehold Estate created by the Lease with the Reversionary Estate in the
Premises by reason of the fact that the Lease or such interest therein, or such Leasehold Estate
may be directly or indirectly held by or for the account of any person who holds title to the
Reversionary Estate in the Premises or any interest in such Reversionary Estate, nor shall there
be any such merger by reason of the fact that all or any part of the Leasehold Estate created by
this Lease may be conveyed or mortgaged in a Leasehold Mortgage or deed of trust to a
mortgagee or beneficiary who holds title to the Reversionary Estate or any interest of Landlord
under the Lease.
(1) Tenant Representations. Landlord hereby disclaims any warranty,
guaranty or representation of the nature and condition of the Premises, including (but not by way
of limitation) the soil and geology and suitability thereof for any and all activities and uses which
Tenant may elect to conduct thereon at any time during the Term, the manner of construction and
the conditions and state of repair or lack of repair of all improvements located thereon, and the
nature and extent of the rights of others with respect to the Premises, whether by way of
easement, right of way, lease, possession, lien, encumbrance, license, reservation, condition or
otherwise.
(i) Tenant acknowledges that neither Landlord nor any agent of
Landlord has made any representation or warranty as to the suitability of the Premises for the
erection of the Tenant's Work or for the conduct of Tenant's business, and that Tenant accepts
them in their present condition, "as is," and without any warranty whatsoever, and with no
recourse whatsoever to Landlord.
(ii) Tenant acknowledges that Tenant has made its own independent
investigation as to the usability and suitability of the Premises for the Permitted Use; the types of
governmental permits that may be required; the nature and extent of applicable Laws,
ordinances, regulations, plans, covenants, conditions, and restrictions, that Tenant may be
required to comply with in order to complete and operate the Premises for the Permitted Use; the
soils, geologic, and seismic conditions existing on the Premises; the presence of any
contaminants, hazardous wastes, or toxic substances in, upon, or about the soil or groundwater
in, upon, under, or about the Premises and the potential for migration of the same from adjacent
lands; the condition of existing footings, foundations, and columns for their use and
incorporation into the Tenant's Work, which Tenant acknowledges were not designed or
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constructed by Landlord; the availability and cost of all services that are necessary or desirable to
serve the Premises, including, but not limited to, electricity, natural gas, water, sewer, streets,
telephone, television cable, fire protection, and police protection; and the usability of the same
by Tenant as the Tenant and occupant of the Premises; all other physical facts, legal issues, and
potential governmental regulations or actions including, but not limited to, regulatory building
moratoriums by one or more of the governmental agencies having jurisdiction of the Premises;
all other matters deemed by Tenant to be material to Tenant or of concern to Tenant with respect
to Tenant entering into this Lease and undertaking the erection and construction of the Tenant's
Work; and Tenant agrees that Landlord has made no warranties or representations whatsoever
with respect to any of the foregoing and has, indeed, encouraged Tenant to undertake a complete
and thorough "due diligence investigation" of the Premises and the Tenant's Work and the plans,
specifications, and permits pertaining thereto, and Tenant acknowledges, covenants, and agrees
that Landlord has no obligations or responsibilities whatsoever with respect to any of the
foregoing matters (except an express representation or warranty) or with respect to solving any
problems that Tenant may encounter in connection with any of said matters (except to cooperate
reasonably with Tenant in solving such problems, or as otherwise expressly provided in this
Lease) and Tenant further covenants, warrants, and represents to waive and release any claims
against Landlord with respect to the foregoing matters.
In connection with the foregoing release, Tenant hereby waives the application and benefits of
California Civil Code § 1542 and hereby verifies that it has read and understands the following
provision of California Civil Code § 1542:
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS THAT THE CREDITOR OR
RELEASING PARTY DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER
FAVOR AT THE TIME OF EXECUTING THE RELEASE AND THAT, IF KNOWN BY HIM
OR HER WOULD HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH
THE DEBTOR OR RELEASED PARTY."
(m) Attorney's Fees. The prevailing party(ies) in any litigation, reference,
arbitration, bankruptcy, insolvency or other proceeding ("Proceeding") relating to the
enforcement or interpretation of this Lease may recover from the unsuccessful party(ies) all
costs, expenses, and actual attorney's fees (including expert witness and other consultants' fees
and costs) relating to or arising out of (i) the Proceeding, and (ii) any post judgment or post -
award proceeding including, without limitation, one to enforce or collect any judgment or award
resulting from the Proceeding. All such judgments and awards shall contain a specific provision
for the recovery of all such subsequently incurred costs, expenses, and actual attorney's fees.
(n) Approval. Unless provision is made for a different standard or specific
time period, approval or consent required pursuant to this Lease shall not be unreasonably
withheld and response to a request for an approval or consent shall be given by the party to
whom directed within thirty (30) days of receipt.
(o) Inspection and Access Rights. Landlord shall have the right to enter the
Premises and inspect the Premises at reasonable times and upon reasonable prior notice to
Tenant (except in the case of an entry in connection with Landlord exercising its rights hereunder
following an Event of Default).
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29. Limitation on Landlord's Liability. The term "Landlord" as used in this Lease so
far as covenants or obligations on the part of Landlord are concerned shall be limited to mean
and include only the owner or owners at the time in question of the Reversionary Estate and in
the event of any transfer or transfers of the title to such Reversionary Estate, Landlord herein
named (and in case of any subsequent transfers or conveyances the then grantor) shall be
automatically freed and relieved from and after the date of such transfer or conveyance from all
obligations on the part of Landlord contained in this Lease to be performed thereafter, provided
that any prepaid rent or trust funds in the hands of such Landlord or the then grantor at the time
of such transfer, shall be transferred to the grantee or transferee, who shall expressly assume,
subject to the limitations of this Section 29, all of the terms, covenants and conditions in this
Lease contained on the part of Landlord thereafter to be performed, it being intended by this
Section 29 that the covenants and obligations contained in this Lease on the part of Landlord
shall, subject to the provisions of this Section 29, be binding on Landlord, its successors and
assigns, only during and in respect of their respective successive periods of ownership.
30. Further Assurances. Each party to this Lease agrees to execute, acknowledge, and
deliver such further instruments, documents, agreements, applications and estoppels as may be
necessary or desirable to accomplish the intents and purposes of this Lease.
31. Covenants Running with the Land. Subject to the provisions of Section 14 with
respect to assignments, all of the provisions, rights, powers, covenants, agreements, obligations,
conditions and restrictions set forth in this Lease shall be binding upon the parties and their heirs,
successors (by merger, consolidation or otherwise), assigns, devisees, administrators, personal
representatives, occupants, users and all other persons or entities acquiring the Leasehold Estate
or any interest therein or any portion thereof, whether by operation of Law or in any manner
whatsoever, and shall inure to the benefit of and be enforceable by the parties and their
respective permitted heirs, successors (by merger, consolidation or otherwise) assigns,
administrators or personal representatives. All of the provisions of this Lease shall, from and
after the Commencement Date and until the Expiration Date or the earlier termination of this
Lease, be covenants running with the land pursuant to applicable Law, including, but not limited
to, Sections 1469 and 1470 of the Civil Code of the State of California. Each covenant to do or
refrain from doing some act on the Premises hereunder (a) is for the benefit of and a burden on
the Premises, (b) runs with the Premises and the Improvements, and (c) shall benefit or be
binding upon each successive owner during its ownership of the Premises and/or the
Improvements or any portion thereof, and each Person having an interest therein derived in any
manner through any such owner.
32. Counterparts and Signature Pages. For convenience, Landlord and Tenant may
execute this Lease on separate counterpart pages, which when attached to this Lease shall
constitute one fully -executed complete original Lease.
33. Non -Discrimination. Tenant herein covenants by and for itself, its successors and
assigns, and all Persons claiming under or through them, and this Lease is made and accepted
upon and subject to the following conditions:
That there shall be no discrimination against or segregation of any person or group of
persons, on account of any basis listed in subdivision (a) or (d) of Section 12955 of the
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Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and
paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the Government Code,
in the leasing, subleasing, transferring, use, occupancy, tenure, or enjoyment of the Premises
leased nor shall Tenant, or any Person claiming under or through Tenant, establish or permit any
such practice or practices of discrimination or segregation with reference to the selection,
location, number, use, or occupancy, of tenants, lessees, sublessees, subtenants, or vendees in the
Premises.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date
first written above.
LANDLORD:
TENANT:
SilverRock Development Company, LLC,
a Delaware limited liability company
By: THE ROBERT GREEN COMPANY,
a California corporation
Its: Manager
By:
Name: Robert S. Green, Jr.
Title: President
SilverRock Lifestyle Residences, LLC,
a Delaware limited liability company
By: THE ROBERT GREEN COMPANY,
a California corporation
Its: Manager
By: /
Name: Robert S. Green, Jr.
Title: President
4838-7563-7503.1
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EXHIBIT "A"
LEGAL DESCRIPTION OF LAND
THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE CITY THE COUNTY OF
RIVERSIDE, STATE OF CALIFORNIA, AND IS DESCRIBED AS FOLLOWS:
PARCEL F:
THAT PORTION OF PARCELS 9,10,11 AND 19 OF PARCEL MAP NO. 37207, IN THE CITY OF LA
QUINTA, COUNTY OF RIVERSIDE, STATE OF CALIFORNIA, AS SHOWN BY A MAP FILED IN BOOK
242, PAGES 72 THROUGH 87, INCLUSIVE OF PARCEL MAPS, IN THE OFFICE OF THE COUNTY
RECORDER OF SAID COUNTY, DESCRIBED AS FOLLOWS:
PARCEL "A" OF LOT LINE ADJUSTMENT NO. 2020-0007, RECORDED AUGUST 20, 2021
AS INSTRUMENT NO. 2021-0500015 OF OFFICIAL RECORDS OF RIVERSIDE COUNTY, STATE OF
CALIFORNIA, AS DESCRIBED THEREIN.
APN 777-490-046, AND PORTIONS OF APNS 777-490-052, 777-060-076, 777-060-077 AND 777-060-080
EXHIBIT "A"
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EXHIBIT "B"
LENDER'S RIGHTS UNDER THE LEASE
Landlord and Tenant acknowledge and agree that a Lender (including a franchisor or
licensor) shall have, in addition to all rights and remedies provided for in the Lease, all of the
following rights:
1. Abandonment of Property. Notwithstanding any provision in the Lease to the
contrary, Landlord acknowledges and agrees that if Tenant defaults on its obligations to a Lender
and the Lender undertakes to enforce its security interest in the Lease, the Improvements, or any
collateral constituting personal property and/or trade fixtures, then such property shall not be
deemed abandoned.
2. Lender's Entry onto Property. For the purpose of curing any default by Tenant
under the Lease or under any instruments executed in favor of a Lender (the "Loan
Documents"), Landlord and Tenant authorize Lender to enter upon the Premises and to exercise
any of the rights and powers granted to Lender under the Lease or the Loan Documents,
provided the latter powers would, if exercised by Tenant, not breach the Lease.
3. Lender's Rights to Notice. Landlord agrees that any notice of default, termination
of the Lease or termination of Tenant's right to possession delivered to Tenant shall not be valid
or of any force or effect unless a duplicate copy thereof shall be delivered to the Lender
concurrently therewith, but only if Tenant or the Lender previously gave written notice to
Landlord of the name and address of the Lender.
4. Removal of Personal Property. Notwithstanding any provision to the contrary
contained in the Lease, in the event of Tenant's default under the Lease, Lender shall not be
required to remove from the Premises any of Tenant's personal property unless and until Lender
has acquired possession of the Premises or title to the Leasehold Estate.
5. Cure of Defaults by Lender.
(a) In the event of any default by Tenant under the provisions of this Lease,
any Lender will have the same periods as are given Tenant for remedying such default or causing
it to be remedied, plus, in each case, an additional period of thirty (30) days after the expiration
of the initial period or after Landlord has served a notice or a copy of a notice of such default
upon the Lender, whichever is later.
(b) In the event that Tenant shall default under any of the provisions of this
Lease, any Lender, without prejudice to its rights against Tenant, shall have the right to cure such
default within the applicable grace periods provided for in the preceding Section 5(a), above,
whether the same consists of the failure to pay rent or the failure to perform any other matter or
thing which Tenant is hereby required to do or perform, and Landlord shall accept such
performance on the part of such Lender as though the same had been done or performed by
Tenant. For such purpose, Landlord and Tenant hereby authorize such Lender to enter upon the
EXHIBIT `B"
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Premises and to exercise any of its rights and powers under this Lease and subject to the
provisions of this Lease.
(c) In the event of any default by Tenant, and if prior to the expiration of the
applicable grace period specified in Section 5(a), above, a Lender shall give Landlord written
notice that it intends to undertake the curing of such default, or to cause the same to be cured, or
to exercise its rights to acquire the leasehold interest of Tenant by foreclosure or otherwise, and
shall immediately commence and then proceed with all due diligence to do so, whether by
performance on behalf of Tenant of its obligations under this Lease, or by entry on the Premises
and/or the Improvements by foreclosure or otherwise, then Landlord will not terminate or take
any action to effect a termination of the Lease or re -renter, take possession of or relet the
Premises or the Improvements or similarly enforce performance of this Lease in a mode provided
by Law so long as such Lender is with all due diligence and in good faith engaged in the curing
of such default, or effecting such foreclosure; provided, however, that the Lender shall not be
required to continue such possession or continue such foreclosure proceedings if such default
shall be cured.
6. Termination of Lease. In the event of a termination of the Lease as to Tenant by
reason of the bankruptcy of Tenant and rejection of the Lease by the trustee in bankruptcy or by
Tenant as debtor in possession, or by operation of Law or for any other reason, Landlord agrees
that the Lease shall not terminate as to Lender and that the Lease shall, without any further act or
action, automatically continue upon the same terms in favor of Lender as the lessee under the
Lease provided that Lender immediately then cures or engages in good faith to cure any then
existing default of Tenant under the Lease which is reasonably susceptible of cure by Lender;
and Lender in its own name or the name of Landlord, may take all appropriate steps necessary to
remove Tenant from the Premises. Without limiting the foregoing, the parties agree to execute
such additional documents as may be desirable from time to time to confirm or carry out the
intent of this Section, including entering into a new ground lease if Lender so elects upon the
terms described below.
7. New Ground Lease. In the event that Tenant's interest under this Lease shall be
terminated by a sale, assignment or transfer pursuant to the exercise of any remedy of a Lender,
or pursuant to judicial proceedings, and if (i) no rent or other charges shall then be due and
payable by Tenant under this Lease, or (ii) the Lender shall have arranged to the reasonable
satisfaction of Landlord for the payment of all rent and other charges (less a credit for any
income received by Landlord during such period) due and payable by Tenant under this Lease as
of the date of such termination, together with the rent and other charges which but for such
termination would have become so due and payable from the date of such termination through
the sixtieth (60th) day thereafter, and upon payment of all expenses, including attorneys' fees,
incident thereto, Landlord will execute and deliver to such Lender or its nominee a new lease of
the Premises. Such new lease shall be for a term equal to the remainder of the term of this Lease
before giving effect to such termination and shall contain the same covenants, agreements, terms,
provisions and limitations as this Lease, and shall be subject only to the encumbrances and other
matters recited in this Lease and matters done or suffered by Tenant. Upon the execution and
delivery of such new lease, the new tenant, in its own name or in the name of Landlord, may take
all appropriate steps as shall be necessary to remove Tenant from the Premises and the
Improvements, but Landlord shall not be subject to any liability for the payments of fees,
EXHIBIT "B"
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including reasonable attorneys' fees, costs or expenses in connection with such removal; and
such new tenant shall pay all such fees, including attorneys' fees costs and expenses or, on
demand make reimbursements therefor to Landlord.
8. Surrender and Subordination. Landlord agrees, for the benefit of Lender, not to
accept a voluntary surrender of the Lease at any time while the Loan Documents remain in force.
9. Removal of Trademarks/Trade Dress. Any Lender who is a franchisor or licensor
of trademarks or trade dress to Tenant may, in accordance with the Loan Documents, enter onto
the Premises at any time before the sixtieth (60th) day following termination of this Lease to
remove or destroy all remnants, if any, of its trademarks, trade dress, or other proprietary
materials, provided such Lender repairs all damage to the Premises caused by removal.
10. Modifications. Landlord acknowledges that a proposed Lender may review the
provisions of this Exhibit `B" and based upon such review may request changes to or
clarifications of such provisions. Landlord agrees to make such changes or clarifications
requested by Lender as a condition to its financing provided the Lender's requested changes are
commercially reasonable and consistent with the customary leasehold financing practices of
Approved Institutions and do not decrease or adversely affect Landlord's rights and remedies
hereunder in any material respect. Tenant shall reimburse Landlord for Landlord's reasonable
attorneys' fees incurred in connection with reviewing, negotiating or documenting any such
amendment.
11. Conflict. If there is any conflict between the provisions of the Lease and the
provisions of this Exhibit `B", the provisions of this Exhibit "B" shall control.
EXHIBIT `B"
-3-
4838-7563-7503.1 10/27/2021
Case 24-11647-MFW Doc 369-2 Filed 03/03/25 Page 103 of 107
TRIPLE -NET GROUND LEASE
between
SilverRock Development Company, LLC,
a Delaware limited liability company
("Landlord"),
and
SilverRock Lifestyle Residences, LLC,
a Delaware limited liability company
("Tenant")
October 22, 2021
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Case 24-11647-MFW Doc 369-2 Filed 03/03/25 Page 104 of 107
TABLE OF CONTENTS
Page
1. Principal Lease Provisions 1
2. Payment of Rent 9
3. Late Charge 10
4. Use of Premises 11
5. Impositions 11
6. Maintenance, Repairs and Replacements 13
7. Utilities 13
8. Liens 13
9. Insurance 14
10. Indemnity 16
11. Improvements 17
12. Damage by Fire or Other Casualty 19
13. Condemnation 20
14. Assignment and Subletting 22
15. Tenant's Financing 23
16. Tenant's Property and Ownership at Termination 24
17. Memorandum of Lease 24
18. Expiration of Term 25
19. Force Majeure 25
20. Events of Tenant's Default 25
21. Landlord's Remedies 26
22. Events of Landlord's Default 28
23. Exculpation of Landlord 28
(i)
4838-7563-7503.1 10/27%2021
Case 24-11647-MFW Doc 369-2 Filed 03/03/25 Page 105 of 107
Page
24. Hazardous Substances 28
25. Brokers 29
26. Work Product 31
27. Intentionally Omitted 32
28. Miscellaneous 32
29. Limitation on Landlord's Liability 36
30. Further Assurances 37
31. Covenants Running with the Land 37
32. Counterparts and Signature Pages 37
33. Non -Discrimination 37
Exhibits
Exhibit "A" Legal Description of Land
Exhibit "B" Lenders' Rights Under the Lease
4838-7563-7503.1 10,2712021
Case 24-11647-MFW Doc 369-2 Filed 03/03/25 Page 106 of 107
INDEX
Page(s)
Abandonment Default 25
Affiliate 1
Approved Institution 1
Base Index Number 2
Commencement Date 1
Condemnation Proceeds 21
Constant Dollars 2
Current Index Number 2
Date of Taking 20
Default Rate 3
Event of Default 25
Expiration Date 3
Hazardous Substances 28
Imposition 11
Improvements 4
Index 2
Land 6
Landlord 1
Landlord's Proceeds 22
Laws 11
Lease 1
Lease Year 4
Leasehold Estate. 1
Lender 4
Loan Documents Exhibit B
mechanic's liens 13
Monetary Default 25
Notice and Payment Addresses 4
operating expenses 18
Partial Taking 21
parties 1
party 1
Permitted Use 5
Personalty 24
Person 34
Premises 5
Principal Lease Provisions 1
Proceeding 36
Project 6
PSDA 6
PSDA Default 26
Receipt Date 33
rent 28
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Case 24-11647-MFW Doc 369-2 Filed 03/03/25 Page 107 of 107
Page(s)
Rent 6
Reversionary Estate. 1
Substantially All of the Premises 20
Taking 20
Temporary Taking 21
Tenant 1
Tenant's Proceeds 22
Tenant's Work 7
Term 7
Work Product 31
(iv)
[3:29 PM] DRAFT
4838-7563-7503.1 10,27,2021
Case 24-11647-MFW Doc 369-3 Filed 03/03/25 Page 1 of 2
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
In re:
SilverRock Development Company, et al.,
Debtors.'
Chapter 11
Case No. 24-11647 (MFW)
Jointly Administered
Objection Deadline: March 24, 2025 at 4:00 p.m. ET
Hearing Date: April 15, 2025 at 10:30 a.m. ET
NOTICE OF MOTION
PLEASE TAKE NOTICE that, on March 3 2025, the above -captioned debtors and
debtors in possession (collectively, the "Debtors") filed the Debtors ' Second Motion to Extend
Time Deadline Pursuant to Section 365(D)(4) of the Bankruptcy Code to Assume or Reject
Unexpired Leases of Non -Residential Real Property (the "Motion") with the United States
Bankruptcy Court for the District of Delaware (the "Court").
PLEASE TAKE FURTHER NOTICE that any objections to the Motion must be filed
on or before MARCH 24, 2025 at 4:00 p.m. (ET) (the "Objection Deadline") with the United
States Bankruptcy Court for the District of Delaware, 824 North Market Street, 3rd Floor,
Wilmington, Delaware 19801. At the same time, you must serve a copy of the objection upon
the undersigned counsel to the Debtors so as to be received on or before the Objection Deadline.
PLEASE TAKE FURTHER NOTICE THAT A HEARING TO CONSIDER THE
MOTION WILL BE HELD ON APRIL 15, 2025 at 10:30 A,M. (ET) BEFORE THE
HONORABLE MARY F. WALRATH, UNITED STATES BANKRUPTCY COURT JUDGE
FOR THE DISTRICT OF DELAWARE, 824 N. MARKET STREET, 5TH FLOOR,
COURTROOM NO. 4, WILMINGTON, DELAWARE 19801.
1 The Debtors in these chapter 11 cases, along with the last four digits of each Debtor's federal
tax identification number, as applicable, are: SilverRock Development Company, LLC
(5730), RGC PA 789, LLC (5996), SilverRock Lifestyle Residences, LLC (0721),
SilverRock Lodging, LLC (4493), SilverRock Luxury Residences, LLC (6598) and
SilverRock Phase I, LLC (2247). The location of the Debtors' principal place of business
and the Debtors' mailing address is 343 Fourth Avenue, San Diego, CA 92101.
1
Case 24-11647-MFW Doc 369-3 Filed 03/03/25 Page 2 of 2
PLEASE TAKE FURTHER NOTICE THAT, IF YOU FAIL TO RESPOND IN
ACCORDANCE WITH THIS NOTICE, THE COURT MAY GRANT THE RELIEF
REQUESTED IN THE MOTION WITHOUT FURTHER NOTICE OR A HEARING.
Dated: March 3, 2025 ARMSTRONG TEASDALE LLP
Wilmington, Delaware
/s/Jonathan M. Stemerman
Jonathan M. Stemerman (No. 4510)
Eric M. Sutty (No. 4007)
Denisse Guevara (No. 7206)
1007 North Market Street, Third Floor
Wilmington, Delaware 19801
Tel: (302) 416-9670
jstemerman@atllp.com
esutty@atllp.com
dguevara@atllp.com
-and-
Victor A. Vilaplana (Pro Hac Vice)
823 La Jolla Rancho Rd.
La Jolla, CA 92037
Tel: (619) 840-4130
vavilaplana@gmail.com
-and-
Benjamin M. Carson (Pro Hac Vice)
5965 Village Way, Ste. E105
San Diego, California 92130
Tel: (858) 255-4529
ben@benjamincarson.com
Counsel to the Debtors and Debtors in
Possession