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GROUND LEASE TEMPLATE FOR
REAL PROPERTY DEVELOPMENT PARTNERSHIP PROJECTS
THIS GROUND LEASE (the “ Lease ”) is made and entered into as of ________________, 201_ (the “ Effective Date ”) by and between the Board of Trustees of the California State University, on behalf of California State University, [ campus ] (“ Landlord ”), and ______________ , a ______________ (“ Tenant ”).
RECITALS
WHEREAS , Landlord is the owner of certain unimproved real property in the County of __________, State of California, consisting of approximately ______________ (___) acres and legally described in Exhibit A hereto (the “ Premises ”);
WHEREAS , Tenant desires to lease the Premises (together with certain appurtenant rights and easements) from Landlord for the purpose of constructing thereon and thereafter owning and operating a __ [insert use] ____________________________ and other appurtenant facilities as more particularly described on Exhibit B hereto (the “ Improvements ”); and
WHEREAS , use of the Premises must be for purposes consistent with the mission of the California State University and California State University, [ campu s ] ;
WHEREAS , Tenant has agreed to use the Premises in a manner which is consistent with such mission;
NOW, THEREFORE, in consideration of the mutual covenants herein contained and incorporating by this reference the foregoing Recitals, the parties hereto hereby agree as follows:
ARTICLE I DEFINITIONS
For purposes of this Lease, the following definitions shall apply:
“ Accelerated Trial ” shall mean a trial which complies with the dispute resolution procedures set forth in Section 17.3.
“ Acquisition Notice ” shall have the meaning ascribed to it in Section 12.7.
“ Additional Deposit ” shall have the meaning set forth in Section 2.9.
“ Affiliate ” shall mean any person controlling, controlled by or under common control with the person in question. As used in the foregoing, “control” and its related words means the ability to effectively direct the management decisions of the person in question.
“ Alterations ” shall have the meaning ascribed to it in Section 9.1.
“ Annual Base Rent ” shall mean the initial amount of ___________Thousand Dollars ($________) and thereafter such amount as shall be determined in accordance with Section 4.3.
“ Assessments ” shall mean any and all special assessments or levies or charges made by
any municipal or political subdivision for local improvements.
“ Award ” shall have the meaning ascribed to such term in Section 11.8.
“ BOT ” shall mean the Board of Trustees of the California State University.
“ Building Tenant Lease ” shall mean any agreement between Tenant and any person setting forth the terms and conditions of occupancy of a portion of the Improvements by such person. Building Tenant Leases are subject to the restrictions on subleases set forth in Article XII below.
“ Business Day ” shall mean a day other than a Saturday, Sunday, scheduled federal or state holiday or any other day on which commercial banks in the County are authorized or required by applicable Laws to close.
“ Capital Improvement Fund ” shall have the meaning set forth in Section 6.8.1.
“ Capital Improvement Plan ” shall have the meaning set forth in Section 6.8.4.
“ CEQA ” means the California Environmental Quality Act.
“ City ” shall mean the City of [ campus location ], California.
“ Commencement of Construction ” shall mean the date on which Tenant has Commenced Construction.
“ Commenced Construction ” shall have the meaning set forth in Section 3.3.4.
“ Comparable Improvements ” shall mean improvements similar in kind and nature to the Improvements which are maintained in a first class manner and operated as a [ permitted use ].
“ Completion of Construction ” shall have the meaning set forth in Section 3.3.4.
“ Construction Commencement Date ” shall mean __________, which date is ____ months after the Effective Date.
“ Construction Period ” shall mean the number of days required for construction of the Improvements as set forth in a construction schedule included and approved by the BOT as part of the Schematic Design Package submitted to Landlord and the BOT by Tenant during the Due Diligence Option Period. The Construction Period shall commence on the date on which Tenant has Commenced Construction, and end on the last day for Completion of Construction as shown in such construction schedule, extended only as permitted in (a), (b) and (c) of Section 3.3.2.
“ Construction Period Rent ” shall mean the rent payable during Construction Period, and shall be an amount equal to [ 50% ] of Annual Base Rent.
“ Construction Requirements ” shall mean all applicable Laws, Landlord’s construction requirements, a copy of which are attached hereto as Exhibit C and incorporated herein, the Design Guidelines, the Final Plans approved by the University and/or the BOT for the Improvements, and the requirements of this Lease applicable to the construction of the
Commencement Date falls on the first day of a calendar month, and (b) the first calendar day of the first calendar month following the month in which the Rent Commencement Date occurs if the Rent Commencement Date occurs on a date other than the first calendar day of a calendar month.
“ Force Majeure ” shall mean a strike, act of God, inability to obtain labor or materials, governmental restriction, enemy action, civil commotion, fire, or similar cause, provided such similar cause is beyond the reasonable control of either Landlord or Tenant.
“Franchisor” shall have the meaning set forth in Section 2.14. [ for hotel leases only ]
“Franchisor Agreement Date” shall have the meaning set forth in Section 2.14.1. [for hotel leases only]
“Gross Sales” shall have the meaning set forth in Section 4.11.2. [if applicable because the Improvements are to be used for retailor hotel purposes]
“ Gross Revenues ” shall mean the gross receipts of Tenant derived from all sources pertaining to the rental and operation of the Premises and from the Improvements, or any part thereof, including, without limitation, gross rents (including all amounts received from any tenants, whether denominated as room rents, gross percentage rents, parking revenues, mini-bar sales, meeting room rent, and rent for the use of space of any kind, fees and charges, sales of merchandise, food, beverages, services, gift or merchandise certificates, and all other receipts of all business conducted at, in, about, from or on the Premises, including (i) mail, telephone, and internet orders received or filled at or from the Premises; (ii) all deposits not refunded to customers; (iii) all orders taken in or from the Premises, whether or not the orders are filled elsewhere; (iv) receipts of sales through any mechanical or vending machines or other coin or token operated device; (v) sales by any sublessee, concessionaire, or licensee or otherwise at, on, in, from, or about the Premises; (vi) sales receipts occurring or arising as a result of deliveries or solicitations off the Premises conducted by persons operating from or reporting to, or under the supervision of any employee of Tenant; (vii) forfeited room reservation deposits and other forfeited deposits; (viii) revenues from memberships of any kind, including without limitation health club memberships; and (x) income from e-commerce and internet access, sales and services from the Premises, payments from the proceeds of rent insurance or business interruption insurance, insurance proceeds to the extent such insurance proceeds exceed the actual amount expended on demolition, repair and restoration, interest on all tenant deposits and on reimbursements from tenants, if any, net receipts (but not less than zero) for services or transactions performed for tenants, and all other consideration. Gross revenues shall not include refundable deposits made by tenants, except to the extent such deposits are retained by Tenant; the principal balance of any construction or subsequent financing other than proceeds in excess of the actual costs of constructing and operating the Improvements; gratuities that were collected by Tenant for the benefit of employees of Tenant, to the extent the gratuities are actually remitted to such employees, and any taxes payable thereon, room and sales taxes and bad debt charges. [ if applicable because the Improvements are to be used for retail or hotel purposes]
“ Ground Lease Non-Disturbance Agreement ” means that certain Subordination, Non- Disturbance and Attornment Agreement of even date herewith by and between the Landlord and Tenant to be entered into concurrently with the execution of this Lease, and any Subordination, Non-Disturbance and Attornment Agreements entered into with Tenant or any permitted successor Tenant in the future.
“ Guaranty ” shall have the meaning set forth in Section 2.8.
“ Hazardous Substance ” shall mean any material or substance (a) defined as a “hazardous waste,” “extremely hazardous waste” or “restricted hazardous waste” under sections 25115, 25117 or 25122.7, or listed pursuant to section 25140, of the California Health and Safety Code, division 20, chapter 6.5 (Hazardous Waste Control law); (b) defined as a “hazardous substance” under section 26316 of the California Health and Safety Code, division 20, chapter 6.8 (Carpenter-Presley-Tanner Hazardous Substance Account Act); (c) defined as a “hazardous material,” “hazardous substance” or “hazardous waste” under section 25501 of the California Health and Safety Code, division 20, chapter 6.95, “Hazardous Substance” under section 25281 of the California Health and Safety Code, division 20, chapter 6.7 (Underground Storage of Hazardous Substances); (d) petroleum; (e) asbestos (f) polychlorinated biphenyls; (g) listed under Article 9 or defined as “hazardous” or “extremely hazardous” pursuant to Article 11 of Title 22 of the California Administrative Code, division 4, chapter 20; (h) designated as a “hazardous substance” pursuant to section 311 of the Clean Water Act (33 U.S.C. § 1251 et seq., 33 U.S.C. § 1321, or listed pursuant to section 307 of the Clean Water Act (33 U.S.C. § 6903); (i) defined as a “hazardous substance” pursuant to section 101 of the Comprehensive Environmental Response, Compensation, and Liability Act (42 U.S.C. § 6901 et seq.); or (k) found to be a pollutant, contaminant, toxic or hazardous waste or toxic or hazardous substance in any reported decision of a federal or California state court, or which may give rise to liability under any federal or California common law theory based on nuisance or strict liability.
“ Improvements ” shall mean all improvements on the Premises to be constructed under the terms of this Lease and any replacements, reconstruction or restorations thereof during the Term.
“ Indemnified Parties ” means, with respect to Landlord, California State University [ campus] , the State of California, the Board of Trustees of the California State University, and each of their officers, employees, representatives, agents, and volunteers. Indemnified Parties means, with respect to Tenant, the Tenant and each of its partners, officers, members, employees, representatives, and agents.
“ Initial Period ” shall mean the period commencing on the Effective Date and ending on the day before the date on which the Commencement of Construction occurs.
“ Initial Period Rent ” shall mean the rent payable during the Initial Period and shall be the sum of [ 25% ] of Annual Base Rent.
“ Institutional Lender ” shall mean any of the following entities acting on its own or in a fiduciary capacity, so long as such entity (together with any entity directly or indirectly owning or controlling such entity or directly or indirectly owned, controlled by or under common control with such entity) has an aggregate combined net worth of at least $500 million: (a) a bank, savings and loan association, savings institution, trust company or national banking association,
and incidental and ancillary uses] [senior living facility] [any use permitted by applicable law] [office or commercial or industrial use] [ insert use ].
“ Person ” shall mean any natural person, a partnership, a corporation, an association, a joint stock company, a limited liability company, a trust, a joint venture, an unincorporated organization and other entity.
“ Premises ” shall mean real property described in the first recital of this Lease.
“ Quarterly Statement ” shall have the meaning set forth in Section 4.12.2. [if applicable because the Improvements include retail or hotel uses ]
“ Refusal Offer ” shall have the meaning ascribed to it in Section 12.7.
“ Rent ” means Annual Base Rent, [ Percentage Rent if applicable ] , and all other amounts to be paid by Tenant hereunder.
“ Rent Adjustment Date ” shall mean the [ fifth (5th )] anniversary of the First Rent Payment Date, and each date which falls on each [ four (4) ] year anniversary thereof.
“ Rent Commencement Date ” shall mean the Effective Date.
“ Reserve Account ” shall have the meaning ascribed to it in Section 6.7. [for hotel leases]
“ Right of First Refusal ” shall have the meaning ascribed to it in Section 12.7.
“ Scheduled Completion Date ” shall mean the date on which Completion of Construction is scheduled to occur as set forth in the construction schedule included and approved by the BOT as part of the Schematic Design Package.
“ Schematic Design Package ” shall mean the materials required to be submitted to the BOT for approval pursuant to Section 3.2 hereof.
“ Security Deposit ” shall have the meaning set forth in Section 2.9.
“ Subtenant ” shall mean any lessee or tenant of any space in the Improvements pursuant to an executed Building Tenant Lease.
“ Stoppage of Construction ” shall have the meaning set forth in Section 3.3.4.
“ Subtenant Improvements ” shall mean tenant improvements installed in any portion of the Improvements pursuant to the provision of an executed Building Tenant Lease.
“ Taking ” shall have the meaning ascribed to it in Section 11.2.
“ Taxes ” shall mean property taxes, fees, assessments and charges, water and sewer rates and charges and other similar governmental charges, whether general or special, ordinary or extraordinary, which may be levied, assessed, charged or imposed, or may become a lien or charge upon the Premises or any part or parts thereof, or upon Tenant’s estate created by this Lease, including, without limitation, taxes on land, any buildings, any parking facilities or any
other improvements now or hereafter at any time during the Term located at or on the Premises.
“ Tenant ” shall have the meaning ascribed to it in the preamble of this Lease and shall include any permitted assignee of the original Tenant.
“ Tenant’s Interest ” shall mean Tenant’s entire interest in (a) the Premises, (b) the Improvements, and (c) this Lease.
“ Term ” shall mean the term of this Lease as set forth in Section 2.4 of this Lease.
“ Third Party Delay ” shall mean any unanticipated delay not caused by either of the parties and which prevents either party from achieving conditions set forth in this Lease at no fault of their own, and shall include a delay caused by the occurrence of a Force Majeure Event. Upon to the occurrence of any such delay, the parties shall promptly notify the other party in writing of such delay and shall meet to agree upon the appropriate extension of any deadlines set forth under this Lease as a result of such Delay.
“ Total Taking ” shall have the meaning ascribed to it in Section 11.3.
“ Trust Deed ” shall have the meaning ascribed to it in Section 14.2.
“ University ” shall mean California State University, [ campus ].
“ University Delay ” shall mean delay caused by a University Entity (other than delays consistent with the established time frames for such University Entity to conduct reviews and/or grant or deny discretionary approvals). In no event shall a University Entity’s rejection of an application submitted by Tenant due to Tenant’s failure to comply with any requirement of such University Entity’s approval process be considered University Delay.
“ University Entity ” shall mean the BOT, the University, and any applicable office, department, body or agency of any of the foregoing.
ARTICLE II GRANT AND TERM
2.1 Lease. In consideration of the covenants and agreements to be observed and performed by Tenant, Landlord hereby leases to Tenant, and Tenant hereby leases from Landlord, the Premises, subject to: (i) all liens, encumbrances, easements, rights-of-way, covenants, conditions, restrictions, obligations and liabilities as may appear of record as of the Effective Date or as are made of record hereafter in accordance with the terms of this Lease, (ii) all matters which would be revealed or disclosed in an accurate survey or physical inspection of the Premises; (iii) the effect of all current building restrictions and regulations, current and future applicable Laws; (iv) the condition and state of repair of the Premises on the Effective Date; and (v) all taxes, duties, assessments, special assessments, water charges and sewer rents, and any other impositions, accrued or unaccrued, fixed or not fixed, as provided below. Landlord reserves unto itself a nonexclusive easement in, on, over, under and upon the Premises for the purpose, as appropriate, of vehicular and pedestrian access, planting and landscaping, design, construction and installation of infrastructure, and other uses consistent with the development and operation of the Improvements in a manner consistent with this Lease. Landlord grants to Tenant and to any Subtenants and to their respective agents, employees, licensees, and invitees a
2.7.1 Commencement of Construction of the Improvements shall not have occurred by the Construction Commencement Date; or
2.7.2 Completion of the Improvements shall not have occurred within one hundred twenty (120) calendar days of the Scheduled Completion Date (subject to extension for Force Majeure or a University Delay); provided, however, that the period for Completion of the Improvements may be extended for up to, but no more than, six (6) months provided that:
2.7.2.1 Tenant provides Landlord notice of such extension no later than four (4) months prior to the Scheduled Completion Date;
2.7.2.2 Landlord is reasonably satisfied that the Work can be completed before the expiration of such extension; and
2.7.2.3 Tenant pays to Landlord the sum of $___________ concurrently with the delivery of the notice referred to in Section 2.7.2.1. Such payment shall be in addition to Annual Base Rent and in addition to the Option Payment, shall not be applied to any other amounts due hereunder, and shall not be refundable under any circumstances.
2.8 Guaranty. It is a condition precedent to Landlord’s obligations under this Lease that __________________ duly execute and deliver to Landlord a guaranty (“ Guaranty ”) in the form of Exhibit E hereto of Tenant’s obligations under this Lease for Completion of the Improvements. [ guarantor should be a credit worthy entity with good liquidity ]
2.9 Security Deposit. Upon the Effective Date, Tenant shall provide to Landlord, as security for the faithful performance by Tenant of all of its obligations under this Lease, including, without limitation, the timely Completion of Construction, the sum of [________________ Thousand Dollars ($__0,000)] (the “ Security Deposit ), which sum shall be increased by the additional amount of [__________________ Thousand Dollars ($__0,000)] (the “ Additional Deposit ”) at least three (3) Business Days prior to the Commencement of Construction. Provided that upon Completion of Construction no Event of Default has occurred and is continuing, the Additional Deposit shall be refunded to Tenant within fifteen (15) Business Days after Completion of Construction. If an Event of Default occurs pursuant to this Lease, then upon notice to Tenant, Landlord may, but shall not be required to, apply all or any part of the Security Deposit for the payment of any Annual Base Rent or other amount payable by Tenant hereunder or to remedy any other default and Tenant shall, upon demand therefor, restore the Security Deposit to its original amount. Any unapplied portion of the Security Deposit shall be returned to Tenant or the last assignee of Tenant’s interest hereunder within thirty (30) days following the expiration of the Term. Tenant shall not be entitled to any interest on the Security Deposit. Tenant hereby irrevocably waives and relinquishes any and all rights, benefits or protections, if any, Tenant now has, or in the future may have, under Section 1950. of the California Civil Code, any successor statute, and all other provisions of law, now or hereafter in effect, including, but not limited to, any provision of law which (1) establishes the time frame by which a landlord must refund a security deposit under a lease, or (2) provides that a landlord may claim from a security deposit only those sums reasonably necessary to remedy defaults in the payment of rent, to repair damage caused by a tenant, or to clean the subject premises. Tenant acknowledges and agrees that any statutory time frames for the return of a security deposit are superseded by the express period identified in this Article above, and that
notwithstanding the provisions of Section 1950.7 of the California Civil Code, any successor statute or any other provision of law, now or hereafter in effect to the contrary, Landlord may claim from the Security Deposit (x) any and all sums expressly identified in this Section above, and (y) any additional sums reasonably necessary to compensate Landlord for and all losses or damages caused by Tenant’s default under this Lease, including, but not limited to, all damages or rent due upon termination of this Lease pursuant to Section 1951.2 of the California Civil Code.
2.10 Quiet Enjoyment. So long as Tenant is not in default under this Lease past any applicable notice and cure period, and except for Landlord’s actions in the case of an emergency for the purposes of protecting public health or safety, Tenant shall lawfully, peacefully and quietly hold, occupy and enjoy the Premises without disturbance, interruption or hindrance by Landlord, or any person or entity claiming by or through Landlord. Landlord shall in no event be liable in damages or otherwise, nor shall Tenant be released from any obligation hereunder, because of the interruption of any service, or a termination, interruption or disturbance attributable to an event of Force Majeure, or any cause due to any act or neglect of Tenant or its servants, agents, employees, licensees, business invitees, or any person claiming by or through Tenant.
2.11 Condition of Premises. Tenant has accepted possession of the Premises in an “AS-IS” condition without any representation or warranty of Landlord. By the execution of this Lease, Tenant acknowledges that it has completed any and all due diligence that it deems necessary in order to enter into this Lease. Tenant 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 Premises, and has, to the extent it deemed necessary, independently investigated the condition of the Premises, including the soils, hydrology and seismology thereof, and the Laws relating to the construction and operation of the Improvements, including environmental, zoning and other land use entitlement requirements and procedures, height restrictions, floor area coverage limitations and similar matters, and has not relied upon any statement, representation or warranty of Landlord of any kind or nature in connection with its decision to execute and deliver the Lease and its agreement to perform the obligations of Tenant hereunder except as expressly set forth in this Lease. Landlord makes no warranty as to the suitability of the Premises for Tenant’s proposed development, construction or use, as permitted by this Lease. Landlord makes no covenants or warranties respecting the condition of the soil, subsoil or any other condition of the Premises. Tenant acknowledges that the soil on the Premises may or may not be suitable for the purposes intended by Tenant or be of such character and condition so as to require special engineering for construction of the Improvements. Landlord shall not be responsible for any land subsidence, slippage, soil instability or damage resulting therefrom. Landlord shall not be required or obligated to make any changes, alterations, additions, improvements or repairs in, on, under or about the Premises. In addition, Landlord has made no representation or warranty that it will develop any of its other property, whether or not adjoining the Premises, for any specific use. With respect to the foregoing, and by initialing below, Tenant 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 OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE,
2.12.2 Removal of Realty Fixtures Not Permitted. Except as provided in Section 2.12.3, Tenant shall not have the right to remove fixtures, and such fixtures shall automatically become the property of Landlord without payment of any kind to Tenant. However, Tenant shall remove fixtures along with the Improvements if required to remove the Improvements pursuant to Section 2.12.1 above.
2.12.3 Tenant’s Right to Remove Personal Property. At the expiration or earlier termination of this Lease, provided Tenant is not then in default under this Lease, Tenant may remove any or all of Tenant’s personal property and trade fixtures from the Premises and Improvements, so long as (a) such personal property and trade fixtures can be removed without material damage to the Improvements, (b) such personal property and trade fixtures are removed within thirty (30) days following such expiration or earlier termination of this Lease, and (c) all resultant injuries to the Premises and the Improvements are promptly and substantially remedied and Tenant takes reasonable steps necessary to preserve the appearance of the Premises and the Improvements. Upon request of Landlord, Tenant shall remove any and all of Tenant’s personal property from the Premises and Improvements upon expiration or earlier termination of this Lease. Any personal property and trade fixtures remaining on the Premises after said thirty (30) day period shall automatically vest and become the sole property of Landlord without any payment by Landlord and without any further action or agreement required in connection therewith, including the necessity of bill of sale, deed, conveyance or other act or agreement of Tenant, and without payment of any kind or nature by Landlord to Tenant or to any other person.
2.12.4 Demolition Account.
(a) At least five (5) years prior to the expiration of this Lease, Landlord shall notify Tenant if the Improvements are to remain at the expiration of the Lease or be demolished by Tenant upon Lease expiration as set forth in Section 2.12.1. If Landlord notifies Tenant that the Improvements are to be demolished, then the Demolition Account shall be established by Tenant and used to pay for Tenant’s obligations to demolish the improvements upon expiration or earlier termination of this Lease. Tenant shall maintain the Improvements until they are demolished in accordance with the requirements of this Lease.
(b) Within thirty (30) days after delivery of notice that the Improvements are to be demolished at the expiration of the Lease, Tenant shall secure bids from three (3) licensed contractors for the demolition of the Improvements. Tenant shall, on the first day of the second month after the month in which Landlord gives Tenant notice of its election to have the Improvements demolished at the end of the Term, commence making annual payments equal to one fifth (1/5th) of the average of the three (3) bids for the demolition, to cover the cost of Tenant’s demolition obligations. Such payments shall be placed in an independent and interest-bearing trust account with an Institutional Lender. Interest earned on the account shall be applied toward the cost of demolition. Tenant shall apply the proceeds in such trust account toward Tenant’s demolition obligations, except to the extent insurance proceeds are to be applied to such costs in accordance with the provisions of Section 9.2.2 hereof. The actual amount of money in such trust account shall not limit Tenant’s
obligation to demolish the Improvements, nor Tenant’s obligation to pay for the entire cost of such demolition. Upon expiration of the Lease and completion of demolition of the Improvements, and restoration of the Premises to a level, unimproved state with all debris removed and all excavations filled in, vacant and free of liens and claims, all amounts in such demolition trust account not expended for such demolition shall be the property of Tenant.
(c) Tenant’s demolition of the Improvements shall be performed in a good and workmanlike manner and in compliance with all Laws.
2.13 Surrender of Premises.
2.13.1 Surrender of Lien Free Title. Unless otherwise provided herein, upon the expiration or earlier termination of this Lease, Tenant shall deliver possession of the Premises, and every part thereof, to Landlord, cure all defaults and shall grant and convey all right, title, and interest in the Improvements (unless demolished), and every part thereof, in good and broom clean condition subject to ordinary wear and tear, free and clear of all liens and encumbrances other than (a) those existing at the Effective Date, (b) those created by Landlord, (c) Building Tenant Leases permitted under the terms of this Lease, and (d) those liens and encumbrances approved in writing by Landlord with the express agreement of Landlord that such may survive the expiration or earlier termination of this Lease. This obligation includes the obligation to discharge all liens and encumbrances which may exist upon early termination of this Lease. Landlord may require that Tenant perform an ASTM Phase II study to assess the property condition upon the expiration or termination of the lease.
2.13.2 Surrender of Fixtures. Tenant’s obligation under this Section 2. includes the obligation to deliver lien free possession and title to all fixtures attached to the Improvements, as provided in Section 2.12.2.
2.13.3 Failure to Surrender. If Tenant fails to surrender the Premises, or any part thereof, as required hereunder, at the expiration or sooner termination of this Lease, Tenant shall indemnify, defend and hold the Indemnified Parties harmless from all liability and expense resulting from the delay or failure to surrender, including, without limitation, claims made by any succeeding tenant, founded on or resulting from Tenant’s failure to surrender, and any direct damages which the Indemnified Parties may incur.
2.14 Tenant Right to Terminate. [for hotel leases only] In the event that Tenant does not reach an agreement with a national franchisor of [limited service/full service] hotels such as [Marriot Courtyard, Hilton Garden Inn] or a similar national chain (any such party, a “ Franchisor ”), on terms and conditions, and in a form, acceptable to Tenant and reasonably acceptable to Landlord, on or before the expiration of [eight (8) months] from the Effective Date (the actual date on which such agreement is reached (which must be on or before the expiration of [eight (8)] months from the Effective Date) is herein called the “ Franchisor Agreement Date ”), then either Landlord or Tenant shall have the right to terminate this Lease, in which event Tenant shall reimburse Landlord for (i) all out of pocket costs incurred by Landlord in the negotiation, enforcement, operation and documentation of this Lease, plus (ii) the sum of [One Hundred Thousand Dollars ($100,000.00)]. Upon Landlord’s or Tenant’s delivering a notice of termination to the other party, this Lease shall terminate and the parties hereto shall have no
In the event that Tenant fails to submit the information required by this Section 3.2 in the required format and within the time frame required, then Landlord shall provide notice to Tenant of such failure, and Tenant shall have thirty (30) days from the date of such notice to provide the required information in the required format. If Tenant does not provide the required information within such thirty (30) day period, then Landlord shall have the right to terminate this Lease upon ten (10) days’ prior written notice at any time before the submittal of such information.
3.3 Commencement, Prosecution and Completion of Construction.
3.3.1 Commencement. Tenant shall commence construction of the Improvements on or before the Construction Commencement Date. No work shall be undertaken until Tenant shall have procured with due diligence and paid for, so far as the same may be required, from time to time, all permits and authorizations required by the Laws as well as the approvals required by Landlord for construction on University property. In addition, prior to the Commencement of Construction, Tenant shall have provided to Landlord a duly executed “will-serve” letter from the [ applicable water supply agency ] and the [ City or County ] , indicating that they will, respectively, provide water and sewer service to the Property, and a receipt from the [ applicable school districts ] showing payment in full of all school facilities fees owed on account of the development of the Property and construction of the Improvements. The parties shall execute a memorandum confirming the Construction Commencement Date; however, failure to execute such memorandum shall not extend the period in which Tenant is required to commence construction. The date by which Tenant is required to commence construction of the Improvements shall be extended day for day (a) during the continuance of any Force Majeure event, provided that no such extension for any single Force Majeure event shall exceed sixty (60) days, nor shall the aggregate extension for all Force Majeure events exceed one hundred eighty (180) days, (b) for each day that Commencement of Construction of the Improvements is delayed due to University Delay, and (c) for the period agreed upon by the parties during the time Commencement of Construction is delayed due to Third Party Delay. No construction shall be commenced until Tenant shall have obtained all permits and authorizations, if any, required from parties other than Landlord for the construction of the Improvements and all permits and approvals required from landlord.
3.3.2 Completion. Tenant shall cause the Completion of Construction to occur within the Construction Period commencing from the date the Tenant has Commenced Construction. The date by which Tenant is required to achieve the Completion of Construction of the Improvements shall be extended day for day only (a) during the continuance of any Force Majeure event, provided that no such extension for any single Force Majeure event shall exceed sixty (60) days, nor shall the aggregate extension for all Force Majeure events exceed one hundred eighty (180) days, (b) for each day that construction of the Improvements is delayed due to University Delay, and (c) for the period agreed upon by the parties during the time commencement is delayed due to Third Party Delay.
3.3.3 Conduct of Construction. After Tenant has Commenced Construction of the Improvements, such construction shall be diligently prosecuted so that the affected portion of the Premises shall not remain in a partly finished condition any longer than is reasonably necessary. In no event shall there be a Stoppage of Construction because of any action of the Tenant for a continuous period in excess of sixty (60) days, which sixty-day period may be extended day for day due to the occurrence of the events described in clauses (a), (b), and (c) of Section 3.3.1 above. In addition, no material excavation shall be made on any portion of the
Premises and no material amount of sand, gravel, soil or other material shall be removed therefrom, other than in connection with the construction or alteration of the Improvements in accordance with the Construction Requirements. It is Tenant’s responsibility to design and construct the Improvements in compliance with federal and state laws, codes, rules, regulations, ordinances, and CSU construction standards. Copies of the CSU construction standards are attached hereto as Exhibit C. Tenant shall promptly notify both Landlord and the California Division of Oil, Gas and Geothermal Resources in the event that in the course of grading and construction Tenant or its Contractor discover any unrecorded, abandoned oil or gas wells, or in the event that any oil or gas wells, whether abandoned or not, are damaged or uncovered during the course of grading and construction. Tenant shall be solely responsible for complying with all applicable requirements of the California Division of Oil, Gas and Geothermal Resources in the event that remediation, recapping or other work is required with respect to any oil wells on the Property, whether abandoned or not. Tenant shall pay to the University a development fee in the amount of two percent (2%) of all hard and soft construction costs (not including financing costs), to reimburse the university for CSU review for compliance with: CSU seismic requirements, construction code requirements, California Building Code requirements (including access requirements), inspection by CSU and the State Fire Marshall for fire code compliance, and CSU coordination.
3.3.4 Certain Definitions. For purposes of this Lease, (a) Lessee shall be deemed to have “ Commenced Construction ” of the Improvements when (i) all permits, licenses and approvals required in connection therewith have been duly issued, (ii) the Contractor for such Improvements has been given notice by Tenant to proceed with the construction of such Improvements, and (iii) such Contractor has actually commenced preconstruction activities on the Premises; (b) a “ Stoppage of Construction ” shall be deemed to occur at any time during which Tenant or its Contractor is not diligently and continuously prosecuting the construction and completion of the Improvements pursuant to the Construction Requirements; (c) “ Completion of Construction ” shall be deemed to occur when (i) the Improvements have been substantially completed (that is, completed except for minor punch list work), and (ii) Landlord has received from the Design Professional and the Contractor, in form reasonably satisfactory to Landlord, written certification, or other evidence reasonably acceptable to Landlord, that (A) the completed building or other improvements have been substantially completed in compliance with the Construction Requirements, and (B) the completed building or other improvements have been inspected and finally approved by all appropriate governmental authorities and University Entities, and all final certificates of occupancy or similar permits or approvals required as a condition to the occupancy or use of the Improvements for the Permitted Use have been duly issued.
3.3.5 Approvals; Cooperation by Landlord. Tenant acknowledges that many of the approvals or consents to be given by Landlord under the Construction Requirements are to be given by, or are subject to approval by, other University Entities. Landlord shall reasonably cooperate with Tenant to obtain any such required approval or consent; provided, however, that Landlord makes no representation as to whether any such approval or consent may be granted or that any consent or approval granted by Landlord shall indicate that the attendant approval or consent from any other University Entity is forthcoming. Landlord shall not be in breach of any obligation under this Lease requiring the consent, approval or other action of another University Entity if such consent, approval or other action has not been given or completed within the applicable period set forth herein or in the other Construction Requirements, provided that
University Administrative Manual (SUAM) Section XII, section 9792, which is incorporated herein by this reference.
3.6 Design Professionals. All proposed Improvements and landscaping constructed or planted on the Premises, and any subsequent major replacements, alterations, additions or improvements to any of the foregoing, shall be approved in writing by Landlord and designed by qualified and duly licensed Design Professionals designated by Tenant and pre-approved in writing by Landlord.
3.7 Encumbrance of Estate. The University shall not be required to subordinate or subject its fee or leasehold interest in the Premises to the lien of any person or entity providing financing to Tenant in connection with the design or construction of the Improvements or the maintenance and operation thereof. All such financing shall be the sole responsibility of Tenant; provided, however, University shall enter into a Lender Recognition Agreement as provided in Section 14.2 below.
3.8 Costs of Construction. Tenant shall bear all costs and expenses associated with construction of the Improvements, which costs and expenses include without limitation: (a) all costs of bringing utilities and infrastructure to the Premises and all utility hook up and connection fees and all distribution facilities, conduits, pipelines and cables; (b) all design, engineering, entitlement, financing and construction costs and expenses ( i.e. , all “hard” and “soft” costs of construction); (c) all costs, fees and expenses incurred in processing and obtaining all grading, building and like permits required to construct and operate the Improvements; (d) all school district taxes and development or building fees or assessments, each of which may be charged on the basis of the size and type of the Improvements; and (e) fair share of impact fees and the cost of mitigation measures resultant from a mitigated negative declaration, environmental impact report, or other CEQA environmental review and certification.
3.9 Infrastructure. Tenant acknowledges and agrees that the costs of bringing utilities or infrastructure to the Premises shall be the sole responsibility of Tenant.
3.10 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 Improvements and any other permitted Alterations, 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 other than de minimis expenses such as the cost of postage, photocopying, telephone calls and the like.
3.11 Reports. Not less than quarterly commencing from the date of commencement of construction of the Improvements (and any subsequent material construction or reconstruction on the Premises), Tenant shall provide Landlord with written construction status reports in the form of AIA No. G702, augmented by oral reports when so requested by Landlord.
3.12 Insurance. Tenant shall deliver to Landlord prior to commencement of construction certificates of insurance evidencing coverage for “builder’s risk” as specified in Section 10.2, and evidence of worker’s compensation insurance covering all persons employed in connection with the construction of any Improvements upon the Premises and with respect to whom death or bodily injury claims could be asserted against Landlord, the Premises or the Improvements. Tenant shall maintain, keep in force and pay all premiums required to maintain and keep in force all required insurance at all times during which construction work is in progress.
3.13 No Responsibility. Any approvals by Landlord with respect to any Improvements shall not make Landlord responsible for the Improvements with respect to which approval is given, or the construction thereof. Tenant shall indemnify, protect, defend (with legal counsel reasonably acceptable to Landlord), and hold Landlord harmless from and against all liability and all claims of liability (including, without limitation, reasonable attorneys’ fees and costs) arising during the Term for damage or injury to persons or property or for death of persons arising from, out of, or in connection with such Improvements or construction.
3.14 Notice of Non-Responsibility. At least thirty (30) days prior to commencement of construction of any Improvements, Tenant shall deliver written notice of non-responsibility to Landlord. Landlord may, from time to time, cause to be recorded and posted on the Premises, a notice of non-responsibility in compliance with California Civil Code Section 8444 (or any successor statute). Landlord shall not be liable for any mechanics lien or other encumbrances placed on the Premises due to the construction or development thereon. During the course of construction, Tenant shall obtain customary mechanics’ lien waivers and releases. Upon completion of the construction of any Improvements, Tenant shall record a notice of completion in accordance with applicable law. Promptly after the Improvements have been completed, Tenant shall (or shall cause its general contractor to) record a notice of completion as defined and provided for in California Civil Code Section 8182.
3.15 Liens. Tenant shall at all times hold Landlord free and harmless and indemnify Landlord against all claims for labor or materials in connection with all construction work, operations, Improvements, alterations, or repairs on or to the Premises, and the costs of defending against such claims, including reasonable attorneys’ fees and costs. If any construction work, Improvements, alterations or repairs are made to the Premises by Tenant or by any party other than Landlord, and a lien or notice of lien is filed, Tenant shall within five (5) Business Days of such filing either: (i) take all actions necessary to record a valid release of lien, or (ii) file with Landlord a bond, cash, or other security acceptable to Landlord sufficient to pay in full all claims of all persons seeking relief under the lien. Copies of duly executed conditional and final waivers of mechanics’ lien rights shall be provided to Landlord concurrently with their delivery to the construction lender or, if there is no such lender, then on a monthly basis on the last day of each month for releases executed during such month.
If Tenant (or any contractor or subcontractor, as applicable) does not cause to be recorded the bond described in California Civil Code Section 8424, or otherwise protect the Premises and Improvements under any alternative or successor statute, and a final judgment has been rendered against Tenant by a court of competent jurisdiction for the foreclosure of a mechanic’s, materialman’s, contractor’s or subcontractor’s lien claim, and if Tenant fails to stay the execution of judgment by lawful means or to pay the judgment, Landlord shall have the right, but not the duty, to pay or otherwise discharge, stay or prevent the execution of, any such judgment
