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HomeMy WebLinkAboutBOWERS MUSEUM - 2005 GROUND LEASE A-2005-258 ORIGINAL GROUND LEASE between " . CITY OF SANTA ANA, as LESSOR And THE CHARLES W. BOWERS MUSEUM CORPORATION, as LESSEE Dated: September 6, 2005 GROUND LEASE THIS GROUND LEASE (this "Lease") is made and entered into as of September 6, 2005 by and between THE CITY OF SANTA ANA, a charter city and municipal corporation duly organized under the Constitution and laws of the State of California ("Lessor"), and the CHARLES W. BOWERS MUSEUM CORPORATION, a California non-profit public benefit corporation ("Lessee"). RECITALS A. Lessor and Lessee are parties to that certain Amended and Restated Operating Agreement dated June 18, 200 I (the "Original Operating Agreement"), as amended by that certain First Amendment to the Amended and Restated Operating Agreement dated of even date herewith (the "Amendment to Operating Agreement"), both relating to the ownership and operation of the Charles W. Lessee Memorial Museum (the "Museum"). Hereinafter the Original Operating Agreement and the Amendment to Operating Agreement shall be referred to collectively as the "Operating Agreement". B. Lessee desires to construct certain additional museum facilities (the "Additional Facilities" as hereinafter defined) adjacent to the existing Museum on land acquired or to be acquired by Lessor (more completely defined hereinafter as the "Leased Premises"), and thereafter to manage and operate the Additional Facilities as an integrated part of the Museum. Now, therefore, for and in consideration of their mutual and respective covenants, conditions and promises hereinafter set forth, and subject to the terms and conditions of this Agreement, the parties hereto do hereby agree as follows: ARTICLE 1 LEASE TERM AND USE 1.1. Demise of Leased Premises. Subject to the terms, provisions and conditions hereinafter set forth, Lessor hereby leases to Lessee, and Lessee hereby leases from Lessor, those certain Leased Premises more particularly described in Exhibit "A" hereto (the "Leased Premises"), situated in the City of Santa Ana, California, subject to all covenants, conditions, easements, restrictions, encumbrances and matters of record and to be made of record in accordance with the terms of this Lease. 1.2 Lessor Representations. Lessee is familiar with and accepts the existing condition of the land comprising the Leased Premises in its current "AS IS" condition without representation or warranty by Lessor. Lessee acknowledges that it has had the advice of such independent professional consultants and experts as it deems necessary in connection with its investigation and study of the Leased Premises, and has, to the extent 1 it deemed necessary, independently investigated the condition of the Leased Premises, including the soils, hydrology and seismology thereof, and the laws and regulations relating to the construction and operation of Lessee's Improvements on the Leased Premises, and, has not relied upon any statement, representation or warranty of Lessor of any kind or nature in connection with its decision to execute and deliver this Lease and its agreement to perform the obligations of Lessee hereunder. Lessor makes no warranty as to the suitability of the Leased Premises for Lessee's proposed development, construction or use, as permitted by this Lease. Lessor makes no covenants or warranties respecting the condition of the soil, subsoil or any other condition of the Leased Premises. Lessee acknowledges that the soil on the Leased Premises mayor may not be suitable for the purposes intended by Lessee or be of such character and condition so as to require special engineering for construction of Lessee's Improvements, and agrees that Lessor shall be held harmless and free from any additional costs which Lessee may incur in this regard. Lessor shall not be responsible for any land subsidence, slippage, soil instability or damage resulting therefrom. Lessor shall not be required or obligated to make any changes, alterations, additions, improvements or repairs in, on, under or about the Leased Premises. With respect to the foregoing, and by initialing below, Lessee expressly waives the provisions of California Civil Code Section 1542, which provides: A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have materially affected his settlement with the debtor. It is expressly understood and agreed, however, that Lessee is not releasing, nor waiving any of the provisions of California Civil Code Section 1542 with respect to, any representations, warranties and/or covenants made by Lessor in this Lease. Lessee's initials: 1.3 Reserved. 1.4 Term. Unless sooner terminated under the provisions hereof, and subject to execution and delivery by the parties of the Amendment of Operating Agreement, this Lease shall be and continue in full force and effect commencing on the date hereof (the "Commencement Date") and expiring on the first day of the first full calendar month following issuance of a Certificate of Occupancy for the Additional Facilities (the "Lease Term"). 1.5 Construction of Improvements. Lessee shall, at its sole cost and expense, design and construct, or cause to be designed and constructed, the Additional Facilities to be constructed by Lessee upon the Leased Premises pursuant to this Lease, in accordance with this Section 1.5. 2 1.5.1. Commencement, Prosecution and Completion of Construction. (a) Lessee shall commence construction of the Additional Facilities on or before October I, 2005, and shall thereafter diligently prosecute the work and cause the completion of construction of the Additional Facilities to occur on or before December I, 2006. (b) The date by which Lessee is required to complete construction of any Lessee's Improvement shall be extended day for day (I) during the continuance of any Force Majeure Event (as defined below),. (c) For purposes of this Lease, (i) Lessee shall be deemed to have "commenced construction" of any Improvement when the first required building permits required in connection therewith have been duly issued, the Contractor (as defined below) for such Improvement has been given notice to proceed with the construction of such Improvement by Lessee, and such Contractor has commenced construction activities; (ii) a "stoppage of construction" shall be deemed to occur at any time during which Lessee is not diligently and continuously prosecuting the construction and completion of the applicable Lessee's Improvement pursuant to plans approved by the Lessor in accordance with Section 1.5.2, below, (the "Final Plans"); (iii) "completion of construction" shall be deemed to occur when all buildings or other improvements comprising the applicable Lessee's Improvement have been substantially completed (that is, completed except for minor punch list work), and Lessor has received from the Architect and Contractor (each as defined below), in form reasonably satisfactory to Lessor, written certification, or other evidence reasonably acceptable to Lessor, that (I) the completed buildings or other improvements have been substantially completed in compliance with the Final Plans, (II) the completed buildings or other improvements have been inspected and finally approved by all appropriate governmental authorities, and all certificates of occupancy or similar permits or approvals required as a condition to the occupancy or use of such buildings or other improvements have been duly issued, and (III) all costs and liens relating to the completed buildings or other improvements have been paid or discharged, as applicable; and (iv) a "Force Majeure Event" shall mean the occurrence of an event, not reasonably foreseeable by or beyond the reasonable control of Lessee, that unavoidably causes a delay in the completion of construction, such as a labor strike, epidemic, quarantine restriction, freight embargo, adverse weather condition, war, earthquake or act of God. 1.5.2 Approved Plans and Specifications;. The Additional Facilities shall conform in all respects to the plans and specifications on file with the City's Executive Director of Planning & Building (the "Executive Director") dated July 13, 2005. Any changes approved by the Executive Director in conjunction with issuance of permits pursuant to entitlement or permits to be issued by the City of Santa Ana shali be deemed approved for purposes of this Agreement, and shall become part of the Approved Plans for purposes of this section 1.5.2. 3 1.5.3 Lessee's Contractor. The Additional Facilities and other Lessee's Improvements (as hereinafter defined) shall be originally constructed by, and any subsequent material repairs, alterations, additions or improvements thereto shall be made by, a general contractor or contractor and subcontractors, each qualified and duly licensed in the State of California, as designated by Lessee (the "Contractor"). Lessee shall promptly pay all contractors and materialmen in accordance with its contract(s) for construction of the Additional Facilities and related improvements with respect to work performed by or for Lessee or materials purchased by or for Lessee so as to reduce the possibility of a lien attaching to the Leased Premises. 1.5.4 Compliance with Laws. Lessee shall construct the Additional Facilities and all other Lessee's Improvements in accordance with all applicable grant agreements providing financing for construction of the Additional Improvements, including the payment prevailing wages for all covered work, all applicable building codes, SD-78 of the City of Santa Ana governing the land use regulations for the Leased Premises. Lessee shall furnish Lessor with a set of "as built" drawings and specifications for all construction and subsequent improvements which accurately reflect the nature and extent of all Improvements constructed on the Leased Premises. 1.6 Permitted Use of Leased Premises; Compliance with Laws. Lessee shall have the right to use the Leased Premises for the types of uses permitted under the Operating Agreement. Lessee's use and occupancy of the Leased Premises shall at all times be in compliance with all applicable laws, regulations and ordinances, and all private, rules, regulations and restrictions applicable thereto. ARTICLE 2 OWNERSHIP OF FACILITIES; ALTERATIONS 2.1 Ownership of Improvements; Rights Upon Termination. Lessee shall not create any liens or claims of lien against any of Lessor's land, buildings or improvements. During the term of this Lease, Lessee shall, subject to the terms hereof, own any fixtures or improvements constructed, installed or placed on the Leased Premises by Lessee during the Lease Term ("Lessee's Improvements") in accordance with the terms of this Lease; provided, however, upon the expiration or earlier termination of this Lease, including any expiration or termination contemplated under the Amendment of Operating Agreement, Lessee's Improvements (but excluding all of Lessee's removable trade fixtures, equipment, inventory, furniture, furnishings, (other than those fixtures or equipment affected by the Operating Agreement) and other items of personal property located on the Leased Premises [collectively, "Lessee's Equipment"] which are and shall remain the property of Lessee and which Lessee shall have the right to remove) shall, without compensation to Lessee, be and become the property of Lessor (without the necessity of a deed, bill of sale, conveyance or other act or agreement of Lessee) and remain with the Leased Premises as part of the real property, free and clear of any interests or encumbrances arising by, under or through Lessee. Notwithstanding the foregoing, 4 however, if upon the expiration or earlier termination of this Lease an event of default under this Lease then exists on the part of Lessee, (i) Lessee shall have the right to remove only those items of Lessee's Equipment that are capable of being removed without causing damage to, or otherwise requiring repair of, the buildings, and (ii) all other items of Lessee's Equipment shall, subject to the rights of third party lessors, lenders or other persons holding a security interest therein, without compensation to Lessee, be and become the property of Lessor (without the necessity of a deed, bill of sale, conveyance or other act or agreement of Lessee) and remain with the Leased Premises as part of the real property. Notwithstanding anything to the contrary contained herein, Lessee shall have no right to remove, at the expiration or earlier termination of this Lease, any item that would constitute a "fixture," and thus be a part of the real property under California law, unless (i) such fixture is of a nature that it may be removed without damaging or otherwise requiring repairs to any building, or (ii) a default does not then exist under the terms of this Lease on the part of Lessee and Lessee repairs the damage to any building caused by the removal of such fixture. Under no circumstances, however, shall Lessee have the right to remove any fixture that would adversely affect the ability of a building on the Leased Premises to be used for its normal and intended purpose. 2.2 Lien Free Completion. Any alterations or construction of improvements shall be made in a lien tree and good and workmanlike manner, in accordance with Plans and Specifications approved pursuant to the terms of this Lease, and in compliance with all applicable laws, ordinances, permits and authorizations, and in accordance with such reasonable requirements and conditions as Lessor may impose. 2.3 Cooperation. Each party hereby covenants and agrees to cooperate and assist the other party from and after the date of this Lease and throughout the term of this Lease in obtaining all approvals and permits that are necessary or desirable in order to develop and construct the Additional Facilities and any other permitted alterations or improvements, including, without limitation, joining in applications, filings and submittals for use, building, grading, and construction permits, and participation in and support of the other party's position in hearings, proceedings and meetings relating to any such permits or other governmental applications, submittals or approvals; provided, however, that the party that is not performing such construction shall not be obligated to incur any expenses or liabilities in cooperating with the other party's permitted construction activities. ARTICLE 3 RENTAL 3.1 Amount and Commencement of Rent Payments. In consideration for Lessee .bearing all costs and expenses associated with construction of the Additional Facilities and conveying such Additional Facilities to Lessor in accordance with this Lease, Lessee shall pay to Lessor, without offset, demand, or abatement monthly rental ("Rental") in the 5 amount of One Dollar ($1.00) per year, payable in advance on the first day of the first full calendar month following commencement of construction of the Additional Facilities. ARTICLE 4 IMPOSITIONS AND UTILITIES 4.1 Definition of Impositions. The term "Impositions" shall mean all real estate taxes, water and sewer charges and assessments, charges and assessments for public utilities, local improvement or special benefit district assessments pertaining to the Leased Premises and/or any improvements thereon, and license and permit fees which shall or may during the Lease Term be assessed, levied. charged, confirmed or imposed by any public authority upon or accrue or become due or payable out of or on account of or become a lien on the Leased Premises or any part thereof, or any other buildings or improvements now or hereafter located upon or comprising a part of the Leased Premises. The term "Impositions" shall not include any income tax, estate, succession, inheritance or transfer tax, gross receipts tax, business and occupation tax, withholding, profit or revenue tax or charge levied upon the rents payable to Lessor under the terms or this Lease (except to the extent such tax is imposed in lieu of real property ad valorem taxes on the Leased Premises), any corporate franchise tax or corporate license fee which may be levied upon or against Lessor or any successor corporate landlord or any similar obligations assessed against or imposed on Lessor by any governmental body. 4.2 Lessee's Payment of Impositions. During the Lease Term, to the extent Lessee and/or the Leased Premises and any buildings or improvements now or hereafter located upon or comprising a part of the Leased Premises are not exempt due to Lessee's not-for-profit status, Lessee shall pay when due, subject to the further provisions hereof, all Impositions. If Lessor receives any tax statement(s) for Impositions from any taxing authority, Lessor will timely provide Lessee with a copy thereof. Lessee shall pay Impositions directly to the taxing authority; however, Lessor may elect, by notice to Lessee, to pay any Imposition(s) directly to the taxing authority, in which case, Lessee shall reimburse Lessor for such payments within ten (10) days after Lessee's receipt of an invoice from Lessor indicating payment has been made by Lessor for such Imposition. Notwithstanding the foregoing provisions of this Section 4.2: (a) All Impositions that are payable by Lessee pursuant hereto for the fiscal year or tax year in which the Lease Term commences or expires shall be prorated so that Lessee and Lessor each shall pay their respective proportionate share of such Impositions that are payable in the year in which the Lease Term commences or expires; and (b) Where any Imposition that Lessee is obligated to pay in whole or in part is permitted by law to be paid in installments, Lessee may pay such Imposition in installments as and when such installments become due, and Lessee shall only be obligated to pay those installments to the extent due and payable during the Lease Term or, for any installment payment where an installment period overlaps the commencement 6 or expiration date of this Lease, the pro rated portion of the installment payment applicable to the overlapping portion of the Lease Term. 4.3 Tax Contests. Either Lessee or Lessor may contest the validity or amount (including the assessed valuation upon the Leased Premises) of any Imposition for which either is responsible in whole or in part, and which such party in good faith believes is excessive, improper or invalid. If in such event Lessee or Lessor desires to contest the validity or amount of any Imposition, it shall give written notice to the other party of its intent to contest such Imposition, and the parties shall cooperate with one another in good faith in connection with any such tax contest, but the party who gives notice that it intends to initiate such tax contest shall diligently prosecute such contest at its sole cost and expense; provided, however, if Lessor initiates the tax contest, and as a result of the successful outcome thereof, the amount of such Imposition Lessee is required to pay hereunder is reduced, Lessee shall promptly upon such determination reimburse Lessor for Lessor's costs and expenses incurred in such tax contest up to the total amount of reductions to Lessee in the amount of its Imposition obligation. In the event of a tax contest, Lessee shall continue to pay such Imposition without deferral or interruption, but shall do so under protest to the applicable taxing authority. In no event shall payment of any Imposition be deferred due to such tax contest unless Lessor consents thereto in writing, in its sole discretion, and then only on such conditions as Lessor may require. Each party agrees to join at the other's request in any such contest to the extent such joinder is prerequisite to such prosecution under statute, regulation or administrative practice. In connection with a judicial or administrative challenge to any assessment, Lessee may not take advantage of any stay in collection available under statute, regulation, or court or administrative order or rules unless Lessor consents thereto in writing, in its sole discretion. If Lessor does grant such consent, however, (i) Lessee shall not allow such items to remain unpaid beyond the period of any stay in collection permitted by applicable law or administrative order or rule nor for such length of time as shall permit the Leased Premises, or any part thereof or any improvements thereon, to be subjected to a lien for delinquent taxes or a levy for sale by any governmental authority for the nonpayment of the same, and (ii) Lessee shall pay the amount of all deferred Imposition payments, together with the penalties, interest and expenses associated with such contest, on the earlier of (x) the date payment is required under item (i) above, (y) the date this Lease terminates, or (z) the date thirty (30) days after such tax contest is finally determined. 4.4 Utilities. Lessee shall payor cause to be paid when due all charges for gas, electricity, light, heat or power, water and sewer, telephone and other communication services and utilities used, rendered or supplied upon or in connection with the Leased Premises, levied or charged against the Leased Premises during the Lease Term. 4.5 Other Taxes. To the extent that Lessee is not exempt due to its not-for-profit or federal instrumentality status, Lessee shall also pay when due all license fees, taxes and governmental impositions of whatever kind or nature imposed with respect to Lessee's business conducted on the Leased Premises or with respect to any and all of Lessee's 7 equipment, furniture, fixtures, signs, and any other personal property located on or used in connection with Leased Premises ("Other Taxes"). 4.6 Lessor's Rigbt to Pay. If Lessee fails to pay when due any Impositions, utility charges or Other Taxes as required in this Article 4, Lessor shall have the right, without the same being deemed to waive or cure such default by Lessee, to pay the same, in which case Lessee shall promptly, on demand, reimburse all such amounts to Lessor, together with interest thereon at the rate of ten percent (10%) per annum from the date paid by Lessor until reimbursed by Lessee. ARTICLE 5 INSURANCE 5.1 Building Insurance. During the Lease Term, Lessee shall at its sole cost and expense maintain on all buildings, facilities and improvements on the Leased Premises or any replacements or substitutions therefore a policy or policies of Property Insurance issued by a "Commercial Insurer" (as hereinafter defined in Section 5.2), which provides standard Fire and "Extended Coverage" or "All Risk" coverage and, during construction periods, Builders Risk (it being understood and agreed that such policy or policies may exclude the perils of flood and/or earthquake) as per ISO standard forms, or the substantial equivalent of such standard forms, to the extent of the full replacement value of such Leased Premises Facilities. Without limitation of the foregoing, it is specifically understood and agreed that the insurance required pursuant to this Section 5.1 shall be maintained during the initial construction of the Leased Premises Facilities and during any material improvement work to the Leased Premises Facilities thereafter made by or on behalf of Lessee, including any damage or loss to Lessor's adjoining property. The insurance policy or policies required pursuant to this Section 5.1 shall have a deductible and/or retention amount not greater than $100,000 per occurrence 5.2 Commercial Insurer. As used herein, the term "Commercial Insurer" shall mean, unless Lessor and Lessee mutually agree otherwise, an insurer licensed by and admitted to do business in the State of California and having an A.M. Best rating of at least A-:VII (or the substantial equivalent of such A.M. Best rating by another similarly reputable property and casualty insurance company rating firm, should A.M. Best no longer be in existence or perform property and casualty insurance company ratings). 5.3 Liability Insurance. During the Lease Term, Lessee shall at its sole cost and expense maintain a policy or policies issued by a Commercial Insurer (the "Liability Insurance Coverage") which provides commercial general liability and property damage insurance and commercial truck/automobile insurance as per ISO standard forms, or the substantial equivalent of such standard forms, with limits of not less than (i) $2,000,000 per person and $5,000,000 per occurrence as respects bodily injury or death and (ii) $2,000,000 per occurrence as respects property damage. 8 5.4 Contractors and Subcontractors. Any person who either (i) is a construction contractor of Lessee doing construction work on the Leased Premises, or (ii) does other work at the Leased Premises pursuant to the terms of a contract providing for payments of at least $500,000 per year (the "Required Insurance Contract Amount"), shall likewise maintain such insurance coverage. Said insurance policy(ies) shall include Lessor as an additional insured. 5.5 Reserved. 5.6 Reserved. 5.7 Requirements Related to Insurance Policies. 5.7.1 All insurance policies as required pursuant to this Article 5 shall be primary and non-contributory. Each such policy may be issued on either an occurrence or a claims-made basis. In the event of a cancellation, termination or non-renewal of any such policy that is written on a claims-made basis, Lessee shall, no later than thirty (30) days from the effective date of the same (the "Coverage Termination Date"), provide to Lessor either (i) evidence reasonably acceptable to Lessor that Lessee has acquired extended reporting period ("tail") coverage, (ii) evidence reasonably acceptable to Lessor that Lessee has obtained a new insurance policy issued by a Commercial Insurer (which policy shall comply with the requirements of this Article 5) with a retroactive effective date that is at least five (5) years prior to the Coverage Termination Date. 5.7.2 Lessee shall provide Lessor with copies of (i) the certificate(s) of insurance evidencing such policies, and (ii) endorsements including Lessor and/or Named Lessor Affiliates as additional insureds to the extent required pursuant to this Article 5. Lessee hereby represents and warrants that each broker issuing any certificate of coverage provided to Lessor shall have authority to bind the insurance coverage on behalf of Lessee as set forth in such certificate. 5.7.3 The certificate of insurance for each policy of insurance required under this Article 5 that is issued by a Commercial Insurer and written on a controlled (or regulated) policy form (each a "Commercial Policy") shall provide that Lessor will be given at least thirty (30) days prior written notice by either the insurance carrier or a broker with authority to bind coverage on behalf of Lessee with the insurance carrier, of any cancellation, termination or non-renewal. 5.8 Reserved. 5.9 Indemnity. Lessee agrees to defend, hold harmless, and indemnifY Lessor from any legal liability, including reasonable attorneys' fees, in respect to bodily injury, death, and/or property damage arising from the negligent acts or omissions of Lessee, and its governors, officers, directors, employees, agents and volunteers in the performance of Lessee's obligations as Lessee under the terms and conditions of, and during the term of, this Lease. However, in no event shall Lessee be obligated to defend, indemnifY and hold harmless Lessor to the extent any such bodily injury, death and/or property damage is 9 caused by the act or omission, negligent or otherwise, of Lessor, or its directors, officers, employees and agents and Lessor's contractors and their directors, officers, agents and employees. Lessor agrees to defend, hold harmless, and indemnify Lessee from any legal liability, including reasonable attorneys' fees, in respect to bodily injury, death, and/or property damage arising from the negligent acts or omissions of Lessor, and its governors, officers, directors, employees, agents and volunteers in the performance of Lessor's obligations as Lessor under the terms and conditions of, and during the term of, this Lease. However, in no event shall Lessor be obligated to defend, indemnify and hold harmless Lessee to the extent any such bodily injury, death and/or property damage is caused by the act or omission, negligent or otherwise, of Lessee, or its directors, officers, employees and agents and Lessee's contractors and their directors, officers, agents and employees. ARTICLE 6 DESTRUCTION OF BUILDING OR IMPROVEMENTS 6.1 Lessee's Obligation to Restore; Termination Rigbts. If any building(s) or improvements on the Leased Premises or any part thereof should be destroyed or damaged by fire or other casualty, Lessee shall be required to repair and rebuild from insurance proceeds, or otherwise. ARTICLE 7 USE, REPAIRS AND ALTERATIONS 7.1 Use of and Repairs to Leased Premises. Throughout the Lease Term, Lessee shall keep all buildings and other improvements now or hereafter situated upon the Leased Premises in good and safe condition and in good order and repair, and Lessee shall conform to and comply with all permits, restrictions, ordinances, regulations or laws affecting the Leased Premises. 7.2 No Authority to Bind Lessor's Interest. Neither Lessee nor any of Lessee's agents, employees, representatives, contractors or subcontractors shall have any power or authority to do any act or thing or to make any contract or agreement which shall result in the creation of any materialmens', mechanic's or other statutory lien or claim upon or against Lessor or Lessor's interest in the Leased Premises, shall include notice to all contractors and subcontractors to such effect in all contract documents, and shall post notices thereof conspicuously on the Leased Premises. In addition, Lessee shall keep the Leased Premises and all improvements thereto free and clear from any materialmens', mechanic's and statutory lien or claim arising from or through Lessee. Lessor shall have 10 no responsibility to Lessee or to any contractor, subcontractor, materialman, or workman who shall engage in or participate in the construction of Lessee's Improvements or any other improvements to the Leased Premises or alterations thereto made by Lessee. Lessee shall give Lessor advance notice of any work to be performed on the Leased Premises, and Lessor is hereby authorized to enter the Leased Premises to post notices of non-responsibility in connection therewith. ARTICLE 8 PROHIBITION ON ASSIGNMENT AND SUBLETTING 8.1 Lessee's Right to Assign, Sublet and Mortgage. Because of the unique semi-public nature of Lessee's operating and duties of Lessee under the Operating Agreement, Lessee shall not assign any of its rights or interest in this Lease, or sublet all or any portion of the Leased Premises, including mortgages. 8.2 Estoppel Certificates. Lessor and Lessee from time to time shall execute and deliver to each other or to any person whom the requesting party may reasonably designate, an estoppel certificate consisting of statements, if true, that (or if false, the manner in which false): (a) this Lease is in full force and effect, with Rental paid through the date of the certificate; (b) this Lease has not been modified or amended (or setting forth all modifications and amendments); (c) to the best of such party's knowledge and belief, the other party is not then in default; and (d) such other matters as the requesting party may reasonably request. Such estoppel certificates shall be executed and returned within thirty (30) days after receipt of a written request therefore. ARTICLE 9 DEFAULT 9.1 Events of Lessee Default. Each of the following shall be deemed an event of default by Lessee and a material breach of this Lease: 9.1.1 Failure by Lessee to pay any installment of Rental and such failure shall continue for a period of five (5) business day after the date when due, or the failure to pay Impositions (to the extent Lessee is obligated to pay same), utilities, other taxes or other sums of money herein stipulated to be paid by Lessee if such failure shall continue for a period of ten (10) business days after the date when due (provided, however, that an event of default and material breach of this Lease shall not be deemed to have occurred the first time within any twelve (12) month period that any installment of Rental is not paid within five (5) business days after the date when due if such installment of Rental is in fact paid to Lessor within five (5) days of Lessee's receipt of notification from Lessor of such failure); or 11 9.1.2 Failure by Lessee to perform or observe any other terms, covenants, conditions, agreements and provisions of this Lease if such failure shall continue for a period of thirty (30) days after written notice thereof has been delivered to Lessee; provided, if any such failure cannot reasonably be cured within such thirty (30) day period and Lessee has promptly commenced to cure such failure, then Lessor shall not have the right to terminate this Lease or Lessee's right to possession pursuant to Section 10.2.1 and/or 10.2.2 for so long as Lessee pursues in good faith and with due diligence the cure of such failure as soon as reasonably possible, but in no event later than one hundred and twenty (120) days after the date of Lessor's notice; or 9.1.3 If Lessee assigns all or any portion of this Lease or sublets the Leased Premises or any portion thereof in violation of any of the requirements or provisions of this Lease; or 9.1.4 If Lessee creates or permits a lien or claim of lien to be filed or recorded against the Leased Premises. 9.1.5 If Lessee fails to maintain any insurance required to be maintained hereunder, and such failure continues for longer than the "Insurance Cure Period" (as hereinafter defined). As used herein, the "Insurance Cure Period" shall mean the later of (i) thirty (30) days after written notice from Lessor, or (ii) sixty (60) days after written notice from Lessor if, at the time of such notice or within twenty (20) days thereafter, Lessee shall have presented evidence reasonably acceptable to Lessor that Lessee's overall financial health is at least as favorable as upon the Commencement Date, all factors considered. Such evidence shall be in the form of either Lessee's audited financial statements or Lessee's IRS Form 990 (or the substantial equivalent or successor to such form), in either case for a period ended not later than twelve (12) months prior to the date of such written notice from Lessor. 9.1.6 If Lessee becomes insolvent or the subject of any bankruptcy or other voluntary or involuntary proceeding, in or out of court, for the adjustment of debtor-creditor relationships, provided that, in the case of any such involuntary proceeding, such involuntary proceeding is not fully dismissed by the earlier of (i) entry of any order or decree granting any relief sought, or (ii) sixty (60) days after the filing of such involuntary petition. 9.2 Lessor Remedies for Lessee Default. If any event of default occurs hereunder, Lessor may, at any time thereafter prior to the curing thereof and without waiving any other rights hereunder, do one or more of the following: 9.2.1 Terminate this Lease by written notice thereof, in which event this Lease and the leasehold estate created hereby and all interest of Lessee and all parties claiming by, through or under Lessee shall automatically terminate upon the effective date of such notice, and Lessor, its agents or representatives, shall have the right, 12 without further demand or notice, to reenter and take possession of the Leased Premises, reserving Lessor's right to seek damages. 9.2.2 Terminate Lessee's right to possession of the Leased Premises and enjoyment of the rents, issues and profits therefrom, without terminating this Lease or the leasehold estate created hereby, reenter and take possession of the Leased Premises and remove all persons and property therefrom, with or without process of law, without being deemed guilty of any manner of trespass and without prejudice to any remedies for any breaches of covenants (including the payment of rent), then existing or thereafter occurring, and lease, manage and operate the Leased Premises and collect the rents, issues and profits therefrom, all for the account of Lessor for application against and credit to the satisfaction of Lessee's obligations hereunder the net rental thus received (after deducting therefrom all reasonable costs and expenses of repossessing, leasing, managing and operating the Leased Premises, including completion of construction, reasonable alterations and leasing commissions). If the net rental so received by Lessor exceeds the amounts necessary to satisfY all of Lessee's obligations under this Lease and all costs of Lessor incurred in connection therewith, Lessee shall be entitled to such excess. Lessor shall use reasonable good faith efforts and due diligence to mitigate, limit and reduce the injury, loss or damages accruing from any such default of Lessee. 9.2.3 Maintain Lessee's right to possession, in which case this Lease shall continue in effect whether or not Lessee shall have abandoned the Leased Premises; or 9.2.4 Pursue any other remedy now or hereafter available to Lessor under the laws or judicial decisions of the State of California or otherwise provided in this Lease. 9.2.5 No termination or repossession provided for herein shall relieve Lessee of its liabilities and obligations under this Lease, all of which shall survive termination or repossession. At any time after any such termination or repossession, whether or not Lessor has collected any current damages, Lessor shall be entitled to recover from Lessee, and Lessee shall pay to Lessor, on demand, as liquidated final damages, a sum equal to (i) the worth at the time of award of the unpaid Rental which had been earned at the time of termination; (ii) the worth at the time of award of the amount by which the unpaid Rental which would have been earned after termination until the time of award exceeds the amount of such Rental loss that Lessee proves could have been reasonably avoided; (iii) the worth at the time of award of the amount by which the unpaid Rental for the balance of the Term after the time of award exceeds the amount of such Rental loss that Lessee proves could be reasonably avoided; (iv) any other amount necessary to compensate Lessor for all the detriment proximately caused by Lessee's failure to perform its obligations under this Lease or which in the ordinary course of things would be likely to result therefrom; and (v) interest at the rate of ten percent (10%) per annum on the amounts described in clauses (i) - (iv) from the date of such demand until paid. The "worth at the time of award" of the amounts referred to in this subparagraph shall be computed by present value discounting using (A) 13 in the case of clauses (i) and (ii) of this subparagraph, a discount rate equal to the yield on 3D-year U.S. Treasury bonds at such time (but subject to a floor of 6% per annum and a cap of 10% per annum), and (B) in the case of clause (iii) of this subparagraph, a discount rate equal to the discount rate of the Federal Reserve Bank of San Francisco at the time of award plus I percent. 9.3 No Release of Indemnification. Nothing in Section 9.2 shall affect the right of Lessor to indemnification for liability arising prior to the termination of this Lease for personal injury or property damage as provided elsewhere in this Lease. 9.4 Liquidated Damages for Uncured Breach of Insurance Provisions. Solely in the case of an event of default described in Section 9.1.5 hereof (an "Insurance-Related Event of Default"), (i) Lessor shall have the right, but not the obligation, to cure the applicable default by acquiring any insurance coverage that Lessee was required to, but shall have failed, to obtain, in which case Lessee shall be responsible for reimbursing the full amount of the applicable premium(s) of such policy or policies upon presentation of appropriate invoices from Lessor (with any failure of Lessee to make such reimbursement being deemed a failure to pay a monetary sum when due as described in Section 9.1.1 hereof. 9.5 Lessor's Default. Lessor shall be in material default of this Lease if Lessor fails to perform or observe any term, covenant, condition, agreement or provision of this Lease if such failure shall continue for a period of thirty (30) days after written notice thereof has been delivered to Lessor; provided, if any such failure cannot reasonably be cured within such thirty (30) day period and Lessor has promptly commenced to cure such failure, then Lessor shall not be deemed to be in default of this Lease for so long as Lessor pursues in good faith and with due diligence the cure of such failure as soon as reasonably possible. 9.6 Cumulative Remedies; No Waiver of Default. No remedy herein or otherwise conferred upon or reserved to either party shall be considered exclusive of any other remedy, but the same shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing at law or in equity or by statute; and every power and remedy given by this Lease to either party may be exercised from time to time and as often as occasion may arise which may be deemed expedient by such party. No delay or omission by Lessor or Lessee to exercise any right or power arising from any default under this Lease shall impair any such right or power. No waiver of any breach of any covenant or provision of this Lease shall be construed to be a waiver of any other or subsequent breach of the same or of any other covenant or provision. 14 ARTICLE 10 RESERVED ARTICLE 11 WARRANTY OF PEACEFUL POSSESSION Lessor covenants and warrants that Lessee shall and may, subject to Lessor's construction activities during construction of the common infrastructure improvements and subject to the other terms and provisions of this Lease, peaceably and quietly have, hold, occupy, use, and enjoy, and shall have the full, exclusive and unrestricted use and enjoyment of, all of the Leased Premises during the entire Lease Term, and may exercise all of its rights hereunder, subject only to the provisions of this Lease.. Lessor agrees to warrant and forever defend Lessee's right to such occupancy, use, and enjoyment and the title to the Leased Premises against the claims of any and all persons whomsoever lawfully claiming or to claim the same, or any part thereof in violation ofthis provision. ARTICLE 12 NOTICE Any notice, consent, communication or reply (herein for convenience called "notice") in this instrument provided or permitted to be given, made or accepted by either party to any other party must be in writing and shall, unless otherwise in this instrument expressly provided, be given or be served by depositing the same in the United States mail, postage paid and registered or certified and addressed to the party to be notified, with return receipt requested, or by delivering the same in person to such party. Notice shall be effective, unless otherwise stated in this Lease, upon delivery or receipt. For purposes of notice, the addresses of the parties shall, until changed as hereinafter provided, be as follows: If to Lessor, to: City of Santa Ana Attention: Clerk of the Council 20 Civic Center Plaza Santa Ana, CA 92701 With copy to: Office of the City Attorney 20 Civic Center Plaza Santa Ana, CA 92701 15 If to Lessee, to: Bowers Museum 2002 N. Main Street Santa Ana, California 92706 Attention: President The parties shall have the right from time to time at any time to change their respective addresses, by providing written notice to the other party, although notice may always be given to Lessee at the Leased Premises. ARTICLE 13 ENTIRE CONTRACT AND NON-WAIVER No variations, modifications, or changes herein shall be binding upon any party hereto unless executed by it or by a duly authorized officer or a duly authorized agent of the particular party. No waiver or waivers of any breach or default of any breaches or defaults by either party of any term, condition, or liability of or performance by the other party of any duty or obligation hereunder including, without limitation, the acceptance by Lessor or payment by Lessee of any Rental at any time or in any manner other than as herein provided shall be deemed a waiver thereof, nor shall any such waiver or waivers be deemed or construed to be a waiver or waivers of subsequent breaches or defaults of any kind, character, or description under any circumstance. ARTICLE 14 BINDING AGREEMENT This Lease shall be binding upon and shall inure to the benefit of Lessor and Lessee and their respective heirs, successors, assigns and legal representatives. ARTICLE 15 MISCELLANEOUS 15.1 Applicable Law. This Lease shall be construed and enforced in accordance with the laws of the State of California applicable to contracts made, and to be wholly performed, within the State of California. 15.2 Construction. The parties acknowledge that this Lease has been jointly drafted by Lessor and Lessee, following negotiations between them. 15.3 Pronouns. Pronouns, wherever used herein, and of whatever gender, shall include natural persons and partnerships, corporations and associations of every kind and character, and 16 the singular shall include the plural and the plural the singular of all nouns and pronouns herein wherever applicable. 15.4 Severability. If any term, covenant, or condition of this Lease (or part thereot) or the application thereof to any person or circumstance is, to any extent, invalid or unenforceable, the remainder of this Lease (and/or the remainder of any such term, covenant or condition), or the applicability of such term, covenant or condition to Persons or circumstances other than those to which it is held invalid or unenforceable, shall not be affected thereby and each term, covenant or condition (or part thereot) of this Lease shall be valid and be enforced to fullest extent permitted by law. 15.5 Relationship of Parties. Nothing contained in this Lease shall be construed to create, nor shall either party represent the existence of, a partnership, a joint venture, an association, a corporation, a trust or other entity, nor to constitute either party the agent of the other. 15.6 Captions. The table of contents, the index and the title or headings to the Articles and Sections of this Lease are not a part hereof and shall have no effect on the construction or interpretation of any term and provisions contained herein. 15.7 Recordation. This Lease shall not be recorded but concurrent with the execution of this Lease the parties hereto may execute a Memorandum of Lease and cause the same to be recorded in the real property records of Orange County, California. 15.8 Commissions. Lessor has not engaged any broker, finder or other person who would be entitled to any commission or fees in respect of the negotiation, execution or delivery of this Lease. Lessor agrees to negotiate payment of any commissions earned as a component of its negotiations of price and terms with Lessee provided any broker, finder or other person who would be entitled to any commission or fees in respect to the negotiation, execution or delivery of this Lease has been identified in writing by both Lessor and Lessee. Notwithstanding the above, Lessee and Lessor shall each indemnity the other against all legal liability for commissions or other compensation claimed by any broker or agent claiming the same by, through, or under the indemnitying party. 15.9 Anthority. Each party hereto warrants that it has the authority to enter into this Lease and to perform its obligations hereunder and that all necessary corporate or partnership action to authorize this transaction has been taken, and the signatories, by executing this Lease, warrant that they have the authority to bind the respective parties. 15.10 Fnrther Documents. Upon request, the parties will execute such further documents as may be necessary in order to carry out the intent of this Lease. 15.11 Time of Essence. Time is expressly declared to be ofthe essence of this Lease. 15.12 Amendments. Any amendments, additions or modifications to this Lease shall be in writing, signed by Lessor and Lessee. Neither Lessee nor Lessor shall be bound by any verbal or implied agreements. 17 15.13 Computation of Time. The word "day" means "calendar day" herein, and the computation of time shall include all Saturdays, Sundays and holidays for purposes of determining time periods specified herein. 15.14 Approvals, Consents. Wherever in this Lease the approval or consent of a party is required, such approval or consent shall not be unreasonably withheld, conditioned or delayed except where expressly stated to the contrary in this Lease. 15.15 Non-waiver. Neither the payment nor acceptance of rent nor the performance of any obligation shall be deemed to be a waiver of any rights hereunder or of the right to recover the amount of any payment or the cost of any performance made or done under protest, provided that such protest shall have been made in writing. Failure by Lessor or Lessee to take action or declare a default as a result of any breach of any term, covenant, or condition herein contained shall not be deemed to be a waiver of that term, covenant or condition, or of any subsequent breach of any term, covenant or condition herein contained. 15.16 Limitation of Waiver. No consent, approval or waiver by a party, express or implied, to or of any act, or to or of any breach of any covenant, condition or duty of the other party on any occasion shall be construed, as a consent, approval or waiver to or of any other act or any other breach of the same covenant, condition or duty on any other occasion or to or of any other act or any breach of any other covenant, condition or duty on the same occasion. 15.17 Entry by Lessor. Lessee shall permit Lessor and its agents to examine the Leased Premises at reasonable times to inspect the Leased Premises and monitor compliance with this Lease. 15.18 Survival of Indemnities. Any indemnity obligation of a party arising under this Lease shall, to the extent such indemnity claim has accrued prior to the termination or expiration of this Lease, survive the termination or expiration of this Lease. 15.19 Non-DiscriminationDuring the term of this Lease, Lessee and its subcontractors shall not deny the benefits of this Lease to any person on the basis of religion, color, ethnic group identification, sex, age, physical or mental disability, nor shall they discriminate unlawfully against any employee or applicant for employment because of race, religion, color, national origin, ancestry, physical handicap, mental disability, medical condition, marital status, age or sex, and shall include the nondiscrimination and compliance provisions consistent therewith in all subcontracts to perform work on the Leased Premises. [Signatures on next page] 18 . . IN WITNESS WHEREOF. this Lease is made as of the day and year first above written. LESSOR: ATTEST c r) ~' BY: (tjJ.zQf-~___ -- C; C'- t::;S--Patricia E. Healy . Clerk of the Council CITY OF S BY: M LESSEE BY: Dr. eter W. Keller President 19 .. EXHIBIT A Legal Description of Leased Premises That certain real property located at 2032-2036 North Main Street, Santa Ana, California, (Orange County Assessor's Parcel Numbers 399-102-08 and 399-102-09) more particularly described as: Lot I of Block A of Cole's North Santa Ana Tract, in the City of Santa Ana, as shown on a map thereof recorded in Book 31, Page 13 of Miscellaneous Records of the County of Los Angeles, California, excepting the northerly 14 feet thereof. 20