HomeMy WebLinkAbout2014-83 - Approving and Authorizing the Mayor and City Clerk to Execute a Ground Lease with R.D. Olson Development to Construct a 130-Room Hotel at the Former City Hall Property Located at 3300 Newport BoulevardRESOLUTION NO. 2014 -83
A RESOLUTION OF THE CITY COUNCIL OF THE CITY
OF NEWPORT BEACH APPROVING AND
AUTHORIZING THE MAYOR AND CITY CLERK TO
EXECUTE A GROUND LEASE WITH R.D. OLSON
DEVELOPMENT TO CONSTRUCT A 130 -ROOM HOTEL
AT THE FORMER CITY HALL PROPERTY LOCATED
AT 3300 NEWPORT BOULEVARD
WHEREAS, in April 2013, the City relocated City Hall from the former City Hall
site located at 3300 Newport Boulevard to the new Civic Center located in Newport
Center; and
WHEREAS, the former City Hall site has been vacant since the relocation and is
unnecessary for city purposes; and
WHEREAS, pursuant to Section 54222 of the California Government Code, the
City issued a notice of its intent to sell or lease the former City Hall site; and
WHEREAS, in 2012, the City Council issued a request for qualifications for the
development of the former City Hall site and, following extensive public comment, the
City Council selected R.D. Olson Real Estate Group, Inc., dba R. D. Olson
Development ( "R.D. Olson "), as the development team to pursue the construction
operation of a 130 -room boutique hotel project on the former City Hall site; and
WHEREAS, pursuant to an exclusive negotiation agreement approved by the
City Council, an ad hoc negotiating committee began diligently negotiating the terms of
a ground lease of the City Hall site to R.D. Olson; and
WHEREAS, negotiations of the terms of the lease are complete, and provide for
a lease with R.D. Olson for an initial term of 55 years with an additional option term of
30 years; and
WHEREAS, the lease was presented to the City Council on September 9, 2014,
at which time public comment was received and considered by the City Council.
NOW, THEREFORE, the City Council of the City of Newport Beach resolves as
follows:
Section 1: The lease with R.D. Olson is for a term of 55 years with an
additional option term of 30 years.
Section 2: The terms of the lease between R.D. Olson and the City are
subject to periodic review by the City taking into consideration the then
market conditions. In particular, the base rent will be adjusted to an amount
equal to the fair rental value of the leased premises if the option to extend the
term beyond the 55`h anniversary of the lease commencement date is
exercised.
Section 3: In addition, the base rent will be automatically adjusted in
accordance with then market conditions every 5 years during the term
commencing at the beginning of the 8th operating year, and the percentage
rent will take into account then current market conditions over the entire term
of the lease by basing the total rent payable on the amount of gross revenues
generated by the hotel over time.
Section 4: The lease contains a number of provisions authorizing the City
to periodically review and approve the maintenance, operation, repair and
replacement of the hotel, including without limitation, the following:
(1) City approval of the initial hotel manager and the agreement
between lessee and the hotel manager, as well as changes thereto;
(2) City approval of the initial hotel franchisor and the agreement
between lessee and the hotel franchisor, as well as changes
thereto;
(3) City approval of changes to the hotel's trade name;
(4) City approval of changes to the AAA 4 Diamond "Required Hotel
Standard" for the hotel;
(5) City approval of capital expenditures paid for out of lessee's capital
replacement reserve and major alterations, additions, and changes
to the hotel;
(6) City approval of changes in the ownership and identity of the
lessee;
(7) City approval of leasehold mortgagees lending funds secured by
lessee's leasehold interest in the hotel; and
(8) Adjustment of insurance limits that lessee is required to maintain
over time based on CPI increases.
Section 5: The City Council hereby finds that the leased premises are not
required for City purposes other than the purposes provided for in the lease.
Section 6: That a notice of its intent to sell or lease the former City Hall site
was issued by the City pursuant to Section 54222 of the California
Government Code
Section 7: The lease is hereby approved, the Mayor is hereby authorized
to execute the Lease on the City's behalf, and the City Manager is hereby
authorized to take all actions that are necessary and appropriate to implement
the Lease.
Section 8: The City has complied with the California Environmental Quality
Act ( "CEQA ") and the CEQA Guidelines in that lease allows for the
construction and operation of a 130 -room hotel that is consistent with
proposed hotel project analyzed in the Lido House Hotel EIR No. ER2014 -003
(SCH No. 2013111022), the approved Site Development Review No. SD2014-
001, and other related development entitlements, and therefore, no further
environmental analysis is required or necessary
Section 9: This resolution shall take effect immediately upon its adoption
by the City Council, and the City Clerk shall certify the vote adopting the
resolution.
ADOPTED this 9th day of September, 2014.
ATTEST:
I yo, -
Leilani I. Brown,
City Clerk
Rush N. Hill, I
Mayor
GROUND LEASE
(FORMER CITY HALL PREMISES LOCATED AT 3300 NEWPORT
BOULEVARD, NEWPORT BEACH, CALIFORNIA)
9
By and Between
THE CITY OF NEWPORT BEACH,
LESSOR,
and
OLSON REAL ESTATE GROUP, INC., dba R. D. Olson Development,
LESSEE
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TABLE OF CONTENTS
Page
ARTICLE 1
PURPOSE OF LEASE ............ ............ .. ... ..... ......... . ................ I............................ l
1.1
Purpose .................................................................................... ..............................1
ARTICLE2
DEFINITIONS ........................................................................ ..............................1
2.1
Defined Terms ........................................................................ ..............................1
ARTICLE 3 TASKS TO BE PERFORMED PRIOR TO LEASE
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COMMENCEMENT DATE ................................................. .............................12
3.1
Lessee Tasks .......................................................................... .............................12
3.2
Lessor Tasks ........................................................................... .............................15
3.3
Satisfaction (or Waiver) of Conditions to Commencement of Lease... ..............
17
3.4
Cooperation; Execution and Recordation of Memorandum of Lease;
Commencement Date ............................................................. .............................19
3.5
Miscellaneous Acknowledgements, Agreements, and Covenants ......................
20
ARTICLE 4
LEASE OF PREMISES; POSSESSION; CONDITION OF
LEASEHOLD TITLE; PHYSICAL AND ENVIRONMENTAL
CONDITION OF PREMISES; LEASE TERM .................... .............................21
4.1
Grant/Acceptance of Leasehold Interest in Premises ............ .............................21
4.2
Possession .............................................................................. .............................22
4.3
Condition of Leasehold Title; Reserved Rights of Lessor.. ................................
22
4.4
Lease Term ............................................................................. .............................22
4.5
Option to Extend Initial Term ................................................ .............................23
4.6
Liens and Encumbrances Created by Lessee ......................... .............................23
4.7
Lessee's Surrender of Premises and Execution of Quitclaim Upon
Expiration or Termination ...................................................... .............................24
4.8
Holdover Tenancy .................................................................. .............................24
4.9
No Right To Relocation Expenses ......................................... .............................24
ARTICLE5
RENT ..................................................................................... .............................25
5.1
Base Rent During Initial Term... ....................................................... .................
25
5.2
Percentage Rent ..................................................................... .............................25
5.3
Adjustments to Base Rent and Base Rent CPI Adjustment During
OptionTerm ........................................................................... .............................27
5.4
Place of Payment .................................................................... .............................29
5.5
Triple Net Lease; No Abatement or Set -Off of Rent ............. .............................30
5.6
Non - Subordination of Rent or Other Sums ........................... .............................30
5.7
Delinquency In Rental Payment; Collection of Rents ........... .............................30
5.8
Lessee's Maintenance of Books and Records Relating to Calculation of
Ground Rent; Lessor's Right to Inspect and Audit Records .. .............................30
5.9
Acceptance Not Waiver ......................................................... .............................31
ARTICLE 6
DEVELOPMENT OF THE HOTEL AND RELATED
IMPROVEMENTS ON AND ABOUT THE PREMISES... ... ....................
31
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6.1
6.2
6.3
6.4
6.5
6.6
6.7
6.8
Page
Commencement and Completion of Hotel . ............................... ......................... 31
No Construction Before Notice; Notice(s) of Non - Responsibility .....................31
Mechanic's, Materialmen's, Contractor's and Subcontractor's Liens. ............... 32
Lessor's Rights of Access... ............. .................................................................. 32
Local, State and Federal Laws .......................
As -Built Drawings .................................................. ...............................
Costs of Construction .............................................. ...............................
Lessor Responsibility for Coastal Commission Lower Cost Overnight
Accommodations Mitigation Fee ............................ ...............................
ARTICLE 7 USE AND OPERATION OF HOTEL; CHANGES IN HOTEL
MANAGEMENT COMPANY/HOTEL MANAGEMENT
AGREEMENT AND /OR HOTEL FRANCHISOR/HOTEL
FRANCHISE AGREEMENT ....................... ...............................
7.1
7.2
7.3
7.4.
General . ...............................
33
33
33
33
34
34
Management by Approved Hotel Management Company; Changes in
Hotel Management Company and New or Amended Hotel
Management Agreement; Removal/Replacement of Hotel Management .......... 36
Hotel Franchisor and Hotel Franchise Agreement ............... ............................... 38
Prohibition on Lessee's, Hotel Management Company's, and
Subcontractors' Employment or Retention of Certain Persons; Lessor's
Right to Require Removal ..................................................... .............................40
7.5 Name of Hotel; Promotions and Advertising ......................... .............................41
ARTICLE 8 MAINTENANCE AND REPAIRS ....................................... .............................41
8.1 Maintenance and Repairs; General ......................:................. .............................41
8.2 Waste ...................................................................................... .............................43
8.3 Hazardous Substances ............................................................ .............................43
8.4 Lessor Not Responsible for Maintenance or Repairs ............ .............................45
8.5 Capital Replacement Reserve Fund ....................................... .............................45
8.6 Lessor's Rights /Remedies for Deficient Maintenance and Repairs ...................46
ARTICLE 9 TAXES, ASSESSMENTS, UTILITIES, AND OTHER CHARGES ................47
9.1 Lessee's Obligation to Pay Impositions.. ............................................................ 47
9.2 Contesting Impositions .......................................................... .............................48
9.3 Utilities... ........................ ........................ ........................................................... 49
9.4 Lessor's Right to Cure ........................................................... .............................49
9.5 Limits of Tax Liability ......................................................... ............................... 50
ARTICLE 10 OWNERSHIP OF AND RESPONSIBILITY FOR IMPROVEMENTS... ........ 50
10.1
Ownership of Improvements During Lease Term ................ .............................50
10.2
Reversion of Improvements; Duty to Remove Personal Property ......................
50
10.3
Alteration of Improvements ................................................. ...............................
51
10.4
Damage to or Destruction of Hotel and Improvements ....... ...............................
51
10.5
Application of Insurance Proceeds ...................................... ...............................
52
10.6
Damage or Destruction During Final Years of Lease Term .. .............................53
10.7
Faithful Performance and Labor and Material (Payment) Bonds .......................53
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Page
ARTICLE 11
ASSIGNMENT, SUBLETTING, TRANSFER ..................... .............................54
72
11.1
Restrictions on Lessee's Right to Transfer ............................ .............................54
66
11.2
Notification to Lessor of Changes in Ownership and Control of Lessee ...........57
11.3
Release of Transferor Upon Transfer .................................... .............................57
11.4
No Encumbrance of Lessor's Leased Fee Interest ................. .............................57
11.5
Investigation of Proposed Transferee; Costs ......................... .............................57
11.6
Transfer by Lessor; Attornment by Lessee .......................... ...............................
58
11.7
Right of First Opportunity ..................................................... .............................58
65
ARTICLE 12
MORTGAGES ....................................................................... .............................59
72
12.1
Leasehold Mortgages ............................................................. .............................59
66
12.2
Rights and Obligations of Leasehold Mortgagees ................. .............................61
12.3
Notice ..................................................................................... .............................63
12.4
Forbearance by Lessor ........................................................... .............................63
12.5
Conditions Precedent to Mortgagee Rights and Lessor Forbearance .................65
12.6
Performance on Behalf of Lessee .......................................... .............................65
12.7
Non-Merger. .................................................................................. .....................
65
12.8
Lessor's Cooperation; Estoppels ............................................ .............................65
72
12.9
Enforceability ......................................................................... .............................66
12.10
Equipment Financing ........................................................... ...............................
66
ARTICLE 13
INDEMNIFICATION AND INSURANCE .......................... .............................66
72
13.1
Indemnification .................................................................... ...............................
66
132
Indemnification From Third Party Challenges to Lease and/or
14.3
Development Entitlements ..................................................... .............................67
13.3
Required Insurance ................................................................ .............................68
13.4
General Insurance Provisions and Requirements .................. .............................70
13.5
Failure to Maintain Insurance ................................................ .............................72
13.6
Disposition of Insurance Proceeds Resulting from Loss or Damage to
hnprovements...................................................................... ...............................
72
ARTICLE 14
EMINENT DOMAIN .......................................................... ...............................
72
14.1
Lessee to Give Notice ............................................................ .............................72
14.2
Total Taking ........................................................................... .............................73
14.3
Partial Taking ......................................................................... .............................73
14.4
Application of Awards and Other Payments ......................... .............................73
14.5
Taking Prior to Commencement Date ................................... .............................74
ARTICLE 15 DEFAULTS, REMEDIES, AND TERMINATION .............. .............................74
15.1 Defaults - General ............................................................... ............................... 74
15.2 Legal Actions ....................................................................... ............................... 75
153 Attorneys' Fees and Court Costs ........................................... .............................75
15.4 Rights and Remedies are Cumulative .................................... .............................75
15.5 Additional Remedies of Lessor.. ............ ................................... .......... ............. 76
15.6 Lessee's Waiver of Right to Specific Performance Prior to
Commencement Date ........................................................... ............................... 76
15.7 Remedies and Rights of Termination .................................. ............................... 76
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Page
ARTICLE 16
GENERAL PROVISIONS... ........................................................... .......
.......... 78
16.1
Notices, Demands, and Communications between the Parties ...........................78
SCHEDULE OF PERFORMANCE
16.2
Time of Essence ..................................................................... .............................78
EXHIBIT "D"
16.3
Conflict of Interests ................................................................ .............................79
16.4
Non - liability of Lessor Officials and Employees .................. .............................79
16.5
Inspection of Books and Records .......................................... .............................79
16.6
No Partnership ....................................................................... .............................79
16.7
Compliance with Law .......................................................... ...............................
79
16.8
Obligation to Refrain from Discrimination .......................... ...............................
79
16.9
Lessor's Reservation of Police Power Authority ................... .............................79
16.10
Applicable Law ...................................................................... .............................80
16.11
Severability ............................................................................ .............................80
16.12
Binding Effect ........................................................................ .............................80
16.13
No Third Party Beneficiaries ................................................. .............................80
16.14
Captions and Section Headings ............................................. .............................80
16.15
No Recording of this Lease .................................................... .............................80
16.16
Events of Force Majeure; Extensions of Times of Performance ........................
80
16.17
Entire Agreement, Waivers, and Amendments ...................... .............................81
16.18
Attomment ............................................................................. .............................81
16.19
Subordination ......................................................................... .............................81
16.20
Approvals ............................................................................... .............................82
16.21
Lessee's Representations and Warranties .............................. .............................83
16.22
Lessor's Representations and Warranties .............................. .............................83
16.23
No Liability for Broker's Commissions or Finder's Fees ..... .............................83
16.24
Counterparts ........................................................................... .............................84
16.25
Estoppel Certificates .............................................................. .............................84
EXHIBIT "A -I"
LEGAL DESCRIPTION
EXHIBIT "A -2"
DEPICTION OF PREMISES
EXHIBIT `B"
SCHEDULE OF PERFORMANCE
EXHIBIT "C"
FORM OF MEMORANDUM OF LEASE
EXHIBIT "D"
AAA DIAMOND RATINGS CRITERIA
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GROUND LEASE
This Ground Lease ( "Lease ") is dated for reference purposes only as of the _ day of
201_ (the "Agreement Date ") and is being made and entered into by and between
the CITY OF NEWPORT BEACH, a California charter city ( "Lessor "), and OLSON REAL
ESTATE GROUP, INC., a California corporation doing business as R.D. Olson Development
( "Lessee "). Lessor and Lessee are sometimes hereinafter referred to individually as a "Party"
and collectively as the "Parties."
ARTICLE 1
PURPOSE OF LEASE
1.1 Pumps e. The purpose of this Lease is to provide for the lease by Lessor to Lessee
of the former Newport Beach City Hall premises located at 3300 Newport Boulevard in the City
of Newport Beach, County of Orange, State of California (as more specifically defined herein,
the "Premises ") and the .construction and operation by Lessee on the Premises of a boutique
hotel (the "Hotel ") with approximately one hundred thirty (130) guest rooms and related
facilities. The lease of the Premises and the development and operation of the Hotel thereon
pursuant to this Lease, and the fulfillment generally of this Lease, are in the vital and best
interests of the City of Newport Beach and the health, safety, morals, and welfare of its residents,
and in accord with the public purposes and provisions of applicable federal, state, and local laws
and requirements.
ARTICLE 2
2.1 Defined Terms. In addition to any terms that are defined elsewhere in this Lease,
the following terms used in this Lease shall have the meanings ascribed below:
"Affiliate" means any individual, corporation, partner, partnership, limited liability
company, trust, or other entity which directly or indirectly controls, is directly or indirectly
controlled by, or is under common control, whether it be direct or indirect, with the specified
entity.
"Agreement Date" shall mean the date first written above.
"Approved Title Condition" shall mean that, as of the Commencement Date, Lessor's fee
title to the Premises is free and clear of the following: (i) all monetary liens and encumbrances
excepting only (A) the lien of any non - delinquent property taxes and assessments, including
without limitation supplemental taxes, that accrue from and after the Commencement Date, (B)
the lien of any Mortgage placed on Lessee's leasehold interest in the Premises (but not Lessor's
leased fee interest, which shall be senior in priority and not subordinated to this Lease) that
satisfies the requirements set forth in Sections 3.1.3, 3.2.3, and 3.2.4 of this Lease and is
approved by Lessor, as provided therein; and (C) such other monetary liens that are caused by or
placed on Lessee's leasehold interest by the acts or omissions of Lessee; and (ii) all non -
monetary excepting only (A) those encumbrances that are listed as exceptions to title in the
Preliminary Report, (B) the Notice of Lis Pendens recorded by Lido Partners, a California
limited partnership, against the Premises in the Lido Partners Litigation and any and all easement
and license claims arising therefrom (provided, however, that nothing herein is intended or shall
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be interpreted as an acknowledgment by either Party to this Lease that said Notice of Lis
Pendens or any of the claims arising therefrom are valid), (C) any easement, license, access, or
similar right that is reserved by Lessor or dedicated, granted, or conveyed to Lessor or any other
governmental agency or utility company consistent with the Development Entitlements for the
Hotel, and (D) such other non - monetary liens that are caused by or placed on Lessee's leasehold
interest by the acts or omissions of Lessee.
"Base Rent" shall have the meaning ascribed to that term in Section 5.1 of this Lease.
"Capital Replacement Reserve" and "Capital Replacement Reserve Fund" shall have the
meanings ascribed to those terms in Section 8.5 of this Lease.
"Commencement Date" shall mean the date the Lease Term commences, which date shall
be the date the Memorandum of Lease is recorded in the Official Records of the Orange County
Recorder's office pursuant to Section 3.4 of this Lease.
"Construction Period" shall mean the period commencing with the Commencement Date
and ending on the first day of the First Operating Year.
"Consumer Price Index" shall mean the Consumer Price Index - -All Urban Consumers--
All Items (Los Angeles- Riverside- Orange County), published by the United States Bureau of
Labor Statistics or, if such index ceases to be published, the most closely analogous substitute
index.
"Control," "Controlled By," or "Controlling" shall mean the possession, direct or
indirect, of the power to direct or cause the direction of the management and policies of an
entity, whether through ownership of an interest therein, through ownership of voting securities,
by contract, or otherwise.
Lease.
"Cure Period" shall have the meaning ascribed to that term in Section 15.1 of this Lease.
"Date of Taking" shall have the meaning ascribed to that term in Section 14.2 of this
"Default" shall have the meaning ascribed to that term in Section 15.1 of this Lease.
"Demolition and Removal Report" shall have the meaning ascribed to that term in
Section 10.2.2 of this Lease.
"Demolition Security" shall have the meaning ascribed to that term in Section 10.2.2 of
this Lease.
"Development Entitlements" shall mean all of the land use entitlements required for
development and operation of the Hotel on the Premises, including without limitation all of the
following (each, individually, a "Development Entitlement" and, collectively, the "Development
Entitlements "): (i) a General Plan Amendment (GP2012 -002), including text and map change, to
replace the Public Facilities (PF) designation for the Premises with a new mixed -use land use
category (MU -H5) and establish density and intensity limits within Table LU -2 of the Land Use
Element by establishing a new anomaly location; (ii) a Coastal Land Use Plan Amendment
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(LC2012 -001), including a text and map change to replace the existing Public Facilities (PF)
designation for the Premises with a new mixed -use land use category (MU) and establish density
and intensity limits within Table 2.1.1 -1 and an amendment to Policy 4.4.2 -1 to establish the
policy basis for higher building height limits; (iii) a Zoning Code Amendment (ZCA No.
CA2012 -003), including a text and map change to replace the Public Facilities (PF) zoning
designation for the Premises with a new zone MU -LV designation (Mixed - Use —Lido Village)
to establish density and intensity limits consistent with the proposed General Plan Amendment;
(iv) a Site Development Review for demolition and clearance of all existing on -site structures,
provision of necessary utility connections to serve the proposed Hotel, modification of existing
street improvements within the abutting public rights -of -way, and site plan, floor plans, and
elevations for the proposed Hotel submitted by Lessee; (v) a Conditional Use Permit (CUP) for
the proposed Hotel which authorizes operation of the Hotel and its ancillary uses (restaurant and
bar, rooftop lounge, spa including massage, meeting rooms, retail use including the sale and
consumption of alcoholic beverages, and a parking management plan that includes controlled
parking access and valet parking when necessary); (vi) a project -level Environmental Impact
Report for the Hotel, including the associated Mitigation Monitoring and Reporting Program;
(vii) an amendment to City's certified Local Coastal Land Use Plan ( "LUP ") consistent with the
Development Entitlements listed in clauses (i) -(vi), inclusive; and (viii) a Coastal Development
Permit ( "CDP ") consistent with the Development Entitlements listed in clauses (i)- (vii),
inclusive. Notwithstanding the foregoing, none of the following shall constitute a "Development
Entitlement" within the meaning of this Lease: (i) any State permit required for the sale,
distribution, or consumption of alcoholic beverages on the Premises; (ii) any permit required for
conducting live entertainment on the Premises; (iii) any permit required for the erection or
display of temporary signs or banners on or from the Premises; (iv) any permit required for the
amplification of sound outside an enclosed building on the Premises; (v) any permit required to
conduct a special event on the Premises that is not a permitted part of the operation of the Hotel;
(vi) the issuance of a business license or licenses for any business operating on or from the
Premises; and (vii) any ministerial grading, excavation, demolition, shoring, foundation, or
building permit; or (viii) any encroachment or similar permit required for construction or
installation of public improvements within any of the public rights -of -way in or about the
Premises; or (ix) any utility permit required from any publicly regulated utility company that is
to provide service to the Hotel.
"ENR Index" shall mean the Engineering News Record (ENR) Construction Cost Index
for the Los Angeles Area, or such substitute index upon which the Parties may reasonably agree
if such index is no longer published or otherwise available.
"Estimated Demolition and Removal Costs" shall have the meaning ascribed to that term
in Section 10.2.2 of this Lease.
"Event of Force Majeure" shall have the meaning ascribed to that term in Section 16.16
of this Lease.
"Evidence of Financial Capability" shall have the meaning ascribed to that term in
Section 3.1.3 of this Lease.
"Final Building Construction Plans" shall mean the plans and specifications and related
documents that are required to be approved by Lessor and any other governmental agency with
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jurisdiction over the Hotel and the Premises for any grading, excavation, demolition, shoring,
foundation, and building permit(s) that are or may be required, as the same may be revised from
time to time. Not by way of limitation of the foregoing, the Final Building Plans shall include
the plans and specifications for any public improvements or facilities that are to be constructed
and installed within public rights -of -way pursuant to the Development Entitlements. The Final
Building Plans shall be consistent with the Development Entitlements and shall comply with all
applicable Governmental Requirements.
"First Operating Year" shall mean the period that begins on the Operating
Commencement Date and ends on the first (0) anniversary of the Operating Commencement
Date.
"Governmental Requirements" shall mean all laws, rules, and regulations of all federal,
state, and local governmental agencies with jurisdiction over the Premises and the Improvements
at any time from the Lease Effective Date through the expiration or termination of the Lease
Term, including without limitation all applicable federal and state labor standards and
requirements.
"Gross Non -Room Revenues" as used herein means all Gross Revenues derived by any
of the Lessee Parties from the operation of the Hotel, excluding Gross Room Revenues. Gross
Non -Room Revenues include, without limitation, revenue received from the following
operations on the Premises during the Lease Term: rental of meeting rooms, revenue from
banquet sales /events in the Hotel, cover charges, service charges, and miscellaneous banquet
revenues, revenues from food and beverage services, whether provided on or off the Premises,
revenues generated from mini -bar, health club, spa, hair and beauty salon, parking, and
telephone, cable or video television, and telecommunications services or operations charged
separately or in addition to room rates, vending machine revenues, rentals for equipment not
customarily provided guests of similar hotels, revenues generated from sales from gift, sundries,
and other shops, all rentals or other payments from sublessees, licensees, or concessionaires who
are not Affiliates of Lessee, the portion of any Net Awards and Payments that is fairly allocated
to any of the foregoing categories of Gross Non -Room Revenues, and the portion of Net
Insurance Proceeds from the proceeds of business interruption or rental loss insurance that is
fairly allocated to any of the foregoing categories of Gross Non -Room Revenues. hi the event
that Lessee provides food and beverage service to persons or groups using a meeting room or
rooms in the Hotel, Lessee shall fairly allocate the portion of the total charges /revenues between
Gross Room Revenues and Gross Non -Room Revenues in accordance with industry custom and
practice for hotels that are not subject to ground leases with differing percentage rental rates
applicable to use of the meeting room(s) (part of Gross Room Revenues hereunder) and
sale /consumption of food and beverages (part of Gross Non -Room Revenues hereunder). In
addition, in the event that a group occupying the Hotel arranges a banquet or similar group
cocktail party or meal(s), Lessee shall fairly allocate the portion of the total charges /revenues
between Gross Room Revenues and Gross Non -Room Revenues in accordance with industry
custom and practice for hotels that are not subject to ground leases with differing percentage
rental rates applicable to use /occupancy of hotel rooms (part of Gross Room Revenues
hereunder) and sale /consumption of food and beverages (part of Gross Non -Room Revenues
hereunder).
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"Gross Room Revenues" as used herein means all Gross Revenues derived by any of the
Lessee Parties from the operation of the Hotel for the rental of Hotel guest rooms. Gross Room
Revenues include, without limitation: (i) all guest room rental payments, room deposits forfeited,
and room cancellation fees; (ii) proceeds of business interruption and similar insurance payable
as a result of loss of room revenues; (iii) so- called "resort fees" (by whatever name called) and
any fees for use of any facilities which are customarily included by comparable hotels in the
guest room rental rate, excluding, however, food, beverage, mini -bar, health club, parking,
telephone, and rentals for equipment not customarily provided guests of similar hotels; (iv) the
portion of any Net Awards and Payments that is fairly allocated to any of the foregoing
categories of Gross Room Revenues; and (v) the portion of Net Insurance Proceeds from the
proceeds of business interruption or rental loss insurance that is fairly allocated to any of the
foregoing categories of Gross Non -Room Revenues. In the event that Lessee provides food and
beverage service to persons or groups using a meeting room or rooms in the Hotel, Lessee shall
fairly allocate the portion of the total charges /revenues between Gross Room Revenues and
Gross Non -Room Revenues in accordance with industry custom and practice for hotels that are
not subject to ground leases with differing percentage rental rates applicable to use of the
meeting room(s) (part of Gross Room Revenues hereunder) and sale /consumption of food and
beverages (part of Gross Non -Room Revenues hereunder). In addition, in the event that a group
occupying the Hotel arranges a banquet or similar group cocktail party or meal(s), Lessee shall
fairly allocate the portion of the total charges /revenues between Gross Room Revenues and
Gross Non -Room Revenues in accordance with industry custom and practice for hotels that are
not subject to ground leases with differing percentage rental rates applicable to use /occupancy of
hotel rooms (part of Gross Room Revenues hereunder) and sale /consumption of food and
beverages (part of Gross Non -Room Revenues hereunder).
"Gross Revenues" shall mean all gross receipts of every kind and nature, whether for
cash, credit, or barter, from any business, use, or occupation, or any combination thereof,
transacted, arranged, or performed, in whole or in part, on, from, or for services from the
Premises, whether operated by Lessee or by a sublessee, licensee, or concessionaire if such
sublessee, licensee, or concessionaire is an Affiliate of Lessee, for Gross Room Revenues or
Gross Non -Room Revenues. In the computation of Gross Revenues there shall be excluded the
following amounts: (i) rebates, refunds, and discounts (exclusive of credit card discounts or
commissions paid to a credit card system) to customers given in the ordinary course of obtaining
such revenues; (ii) transient occupancy, excise, sales, and use taxes collected directly from
patrons or guests or as a part of the sales price of any goods or services, such as gross receipts,
admission, cabaret, or similar taxes, which are accounted for by Lessee to any governmental
agency; (iii) income or interest derived from cash, securities, and other property acquired and
held for investment by Lessee (including income or interest earned on any amounts held in
operating or replacement reserves for the Hotel); (iv) proceeds of insurance other than business
interruption or rental loss insurance; (v) up to five percent (5 %) of Lessee's advertising,
promotional, or charitable billings not actually charged or paid; (vi) security deposits paid by a
sublessee, licensee, or concessionaire of Lessee as security for such third party's obligations
under its sublease, license, or concession agreement, except to the extent Lessee allocates or
applies any portion of such security deposit to unpaid rent or other amounts owed by such third
party, in which event the sum so allocated or applied shall be included in Gross Revenues as of
the date of such allocation or application; (vii) bad or uneolleetible debts; (viii) goods returned to
suppliers or which are delivered for resale (as distinguished from delivery) to another retail
location or to a warehouse or to any retailers without profit to Lessee, where such returns or
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deliveries are made solely for the convenient operation of the business of Lessee or a sublessee,
licensee, or concessionaire operating from the Premises and not for the purpose of consummating
a sale made in, about, or from the Premises; (ix) the value of gratis meals furnished to Lessee's
employees as an incident of their employment; (x) gratuities paid to employees; and (xi) the
value of meals provided in connection with charitable events when no Lessee Parties receive
payment therefor other than by reason of a charitable contribution. Sales upon credit shall be
considered cash sales and shall be included in the gross receipts for the period during which the
goods or services are delivered or performed. All Gross Revenues shall be computed without
deduction or allowance for costs, charges, or expenses for the purchase, sale, transportation, or
delivery of merchandise or services, or for labor and materials in connection with the rendering
of services or the sale of goods. Subsequent collection of bad or uncollectible debts previously
not reported as Gross Receipts shall be included in Gross Receipts at the time they are collected.
Interest, service fees, and late charges collected in conjunction with a transaction, sale, or activity
of Lessee and any sublessee, licensee, or concessionaire of Lessee shall be reported in the same
percentage category (either "Gross Room Revenues" or "Gross Non -Room Revenues ") as the
transaction, sale, or activity is reported.
"Ground Rent" shall mean rent paid by Lessee to Lessor for the Premises. Ground Rent
consists of the greater of Base Rent or Percentage Rent for the applicable period, plus all other
payments, fees, and charges that Lessee is required to make to or on behalf of Lessor, as
provided herein.
"Hazardous Substance," shall mean any substance, material, or waste which is or
becomes regulated by the United States government, the State of California, or any local or other
governmental authority, including, without limitation, any material, substance, or waste which is
(i) defined as a "hazardous waste," "acutely hazardous waste," "restricted hazardous waste," or
"extremely hazardous waste" under Sections 25115, 25117 or 25122.7, or listed pursuant to
Section 25140, of the California Health and Safety Code; (ii) defined as a "hazardous substance"
under Section 25316 of the California Health and Safety Code; (iii) defined as a "hazardous
material," "hazardous substance," or "hazardous waste" under Section 25501 of the California
Health and Safety Code; (iv) defined as a "hazardous substance" under Section 25281 of the
California Health and Safety Code; (v) petroleum; (vi) asbestos; (vii) a polychlorinated biphenyl;
(viii) listed under Article 9 or defined as "hazardous" or `extremely hazardous' pursuant to
Article 11 of Title 22 of the California Code of Regulations, Chapter 20; (ix) designated as a
"hazardous substance" pursuant to Section 311 of the Clean Water Act (33 U.S.C. Section 1317);
(x) defined as a "hazardous waste" pursuant to Section 1004 of the Resource Conservation and
Recovery Act (42 U.S.C. Section 6903); (xi) defined as a "hazardous substance" pursuant to
Section 101 of the Comprehensive Environmental Response, Compensation and Liability Act
(42 U.S.C. Section 9601); or (xii) any other substance, whether in the form of a solid, liquid, gas,
or any other form whatsoever, which by any governmental requirements either requires special
handling in its use, transportation, generation, collection, storage, treatment, or disposal, or is
defined as "hazardous" or is harmful to the environment or capable of posing a risk of injury to
public health and safety.
"Hotel" shall mean the proposed hotel and related facilities to be constructed and
operated by Lessee on the Premises pursuant to this Lease.
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"Hotel Franchise Agreement" shall have the meaning ascribed to that term in Sections
3.1.5, 3.2.6, and 7.3 of this Lease.
"Hotel Franchisor" shall have the meaning ascribed to that term in Sections 3.1.5, 3.2.6,
and 7.3 of this Lease.
"Hotel Management Agreement" shall have the meaning ascribed to that term in Sections
3.1.4, 3.2.5, and 7.2 of this Lease.
"Hotel Management Company" shall have the meaning ascribed to that term in Sections
3.1.4, 3.2.5, and 7.2 of this Lease.
"Imposition" shall have the meaning ascribed to that term in Section 9.1 of this Lease.
"Improvements" shall mean any and all improvements to the Premises, whether
previously existing or constructed on the Premises by Lessee pursuant to this Lease, and
including any and all amendments, modifications, additions, substitutions, and replacements
thereof.
"Initial Term" shall have the meaning ascribed to that term in Section 4.4 of this Lease.
"Institutional Lender" shall mean any bank, savings and loan association, thrift and loan
association, savings bank, pension fund, insurance company, real estate investment trust, or any
other comparable or similar entity authorized to make loans in the State of California that has a
net worth at the time the loan is made of at least Five Hundred Million Dollars
($500,000,000.00).
"Last Partial Operating Year" shall mean the period of less than twelve (12) months that
begins on an anniversary of the commencement of the Second Operating Year and ends on the
last day of the Lease Term.
"Lease" shall mean this Ground Lease, as the same may be amended from time to time in
accordance with the terms and conditions set forth herein.
"Lease Term" shall mean the term of this Lease, as set forth in Article 4 of this Lease.
The Lease Term consists of the Initial Term and, if applicable, the Option Term.
"Lessee" shall mean Olson Real Estate Group, Inc., doing business as R. D. Olson
Development, and each of its lawful and permitted successors and assignees to the leasehold
interest in the Premises described in this Lease.
"Lessee Parties" shall mean Lessee and any and all of its Affiliates.
"Lessee's Conditions to Commencement of Lease" shall have the meaning ascribed to
that term in Section 3.3.2 of this Lease.
"Lessor" shall mean the City of Newport Beach, a California charter city, and each
successor and assignee to the City of Newport Beach's leased fee interest in and to the Premises.
This Lease uses the defined term "Lessor" when referring to the City of Newport Beach in both
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its proprietary capacity, as owner /lessor of the Premises, and in its regulatory capacity, when
acting as a governmental agency adopting, amending, administering, and enforcing
Governmental Requirements within the jurisdiction of the City of Newport Beach. Except to the
extent expressly set forth in the first paragraph of Section 3.2.1 of this Lease, when the context in
which the term "Lessor" is used in this Lease refers to the City of Newport Beach acting in its
regulatory capacity, nothing in this Lease is intended to limit or restrict Lessor's police power
authority, to constitute a contractual commitment to exercise its police power authority in any
particular manner, or to subject Lessor to liability for breach of contract or other contract- related
remedies for exercising or failing to exercise its police power authority in any particular manner.
"Lessor Removal Notice" shall have the meaning ascribed to that term in Section 10.2.2
of this Lease.
"Lessor's Conditions to Commencement of Lease" shall have the meaning ascribed to
that term in Section 3.3.1 of this Lease.
"Lido Partners Litigation" shall mean City of Newport Beach v. Lido Partners, Orange
County Superior Court Case No. 30- 2014 - 00715029- CU- OR -CJC, including any cross - actions,
appeal and other judicial or administrative proceeding related thereto.
"Memorandum of Lease" shall mean the document memorializing the existence of this
Lease that is being recorded in the Official Records of the Orange County Recorder's Office on
the Commencement Date, as provided in Section 3.4 of this Lease. The form of the
Memorandum of Lease shall be substantially as set forth in Exhibit "C" hereto.
"Mortgage" shall have the meaning ascribed to that term in Section 12. 1.1 of this Lease.
"Mortgagee" shall have the meaning ascribed to that term in Section 12. 1.1 of this Lease.
"Net Awards and Payments" shall have the meaning ascribed to that term in Section 14.4
of this Lease.
"Net Insurance Proceeds" shall have the meaning ascribed to that term in Section 10.4.2
of this Lease.
"Operating Commencement Date" means the earliest of the following dates, as
applicable: (i) if the Hotel opens for business to the general public in the first month and one -half
of a calendar quarter (i.e., between January 1- February 15, between April 1 -May 15, between
July 1- August 15, or between October 1- November 15), the first day in that same calendar
quarter (i.e. and as applicable, on January 1, April 1, July 1, or October 1) and if the Hotel opens
for business to the general public in the last month and one -half of a calendar quarter (i.e. and as
applicable, between February 16 -March 31, between May 16 -June 30, between August 16-
September 30, or between November 16- December 31), the first day in the next succeeding
calendar quarter (i.e. and as applicable April 1, July 1, October 1, or January 1); (ii) if City issues
the Certificate of Occupancy (including, if applicable a Temporary Certificate of Occupancy)
authorizing the Hotel to open for business to the general public in the first month and one -half of
a calendar quarter (i.e., between January 1- February 15, between April 1 -May 15, between July
I- August 15, or between October 1- November 15), the first day in that same calendar quarter
(i.e. and as applicable, on January 1, April 1, July 1, or October 1) and if City issues the
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Certificate of Occupancy (including, if applicable a Temporary Certificate of Occupancy)
authorizing the Hotel to open for business to the general public in the last month and one -half of
a calendar quarter (i.e. and as applicable, between February 16 -March 31, between May 16 -June
30, between August 16- September 30, or between November 16- December 31), the first day in
the next succeeding calendar quarter (i.e. and as applicable April 1, July 1, October 1, or January
1); or (iii) the first day of the first calendar quarter date that commences at least eighteen (18)
months after the Commencement Date, provided, however, that the date calculated pursuant to
this clause (iii) shall be extended by one (1) day for each day that completion of construction of
the Hotel and opening of the Hotel for business to the general public is delayed by an Event of
Force Majeure.
"Operating Year" means (i) the First Operating Year; (ii) each calendar year which
follows the end of the First Operating Year and which ends prior to the Last Partial Operating
Year; and (iii) the Last Partial Operating Year.
"Option Term" shall have the meaning ascribed to that term in Section 4.5 of this Lease.
"Outside Commencement Date" shall mean, subject to the next sentence hereinbelow, the
date that is three (3) years after the Agreement Date or such later date as may be approved in
writing by Lessor and Lessee, each in its sole and absolute discretion; provided that if Lessee
submits evidence reasonably satisfactory to Lessor that Lessee has acted with commercially
reasonable diligence to satisfy all of the Lessor's Conditions to Commencement of Lease and
Lessee's Conditions to Commencement of Lease within said three (3) year period but one or
more of said conditions has not been timely satisfied based upon an Event of Force Majeure, the
Outside Commencement Date shall be extended for the period that the Event of Force Majeure
remains in effect up to a maximum of two (2) additional years (i.e., to the date that is five (5)
years after the Agreement Date). Notwithstanding the foregoing, the maximum two (2) year
extension set forth in the preceding sentence for an Event or Events of Force Majeure shall be
extended for up to an additional three (3) years (for a maximum extension based upon an Event
of Force Majeure of up to five (5) years) if, despite Lessee's exercise of commercially reasonable
diligence, Lessee has been unable to timely satisfy all of the Lessee's Conditions to
Commencement of Lease set forth in Section 3.3.2 of this Lease and a substantial contributing
proximate cause of Lessee's inability to do so is either or both of the following: (i) delays
(beyond the time lines set forth in the Schedule of Performance) in obtaining final California
Coastal Commission approval of all of the Development Entitlements for the Hotel over which
the California Coastal Commission has jurisdiction; or (ii) delays in obtaining final approval of
all Development Entitlements and/or Final Building Construction Plans for the Hotel due to the
lack of finality in the Lido Partners Litigation. Any extension of the Outside Commencement
Date due to an Event or Events of Force Majeure shall be subject to the provisions of Section
16.16 and shall be limited to the period of the enforced delay. Notwithstanding any other
provision set forth in this Lease, in no event shall the Outside Commencement Date be extended
(including by an Event or Events of Force Majeure) beyond the date that is eight (8) years after
the Agreement Date or such later date as may be approved in writing by Lessor and Lessee, each
in its sole and absolute discretion.
"Partial Taking" shall have the meaning ascribed to that term in Section 15.3 of this
Lease.
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"Party" and "Parties" shall mean Lessor and /or Lessee, as the context so provides.
"Percentage Rent" shall have the meaning ascribed to that term in Section 5.2 of this
Lease
"Portion Subject to Demolition" shall have the meaning ascribed to that term in Section
10.2.2 of this Lease.
"Post Term Removal Period" shall have the meaning ascribed to that term in Section
10.2.2 of this Lease.
"Preliminary Report" shall mean that certain preliminary title report (V2) issued by
Commonwealth Land Title Company for the Premises on August 21, 2014, order number
08012422.
"Premises" shall mean that certain real property within the City of Newport Beach,
County of Orange, State of California, with the common street addresses of 3300 Newport
Boulevard and 475 32nd Street, Newport Beach, California, and more particularly described in
the Legal Description of the Premises set forth as Exhibit A -1 hereto and depicted in the Map of
the Premises set forth as Exhibit A -2 hereto. The Premises shall include all appurtenant rights
and easements which are reasonably necessary to the proper enjoyment of the tenancy created by
this Lease, provided, however, that Lessor reserves to itself and its successors and assignees,
together with the right to grant and transfer all or a portion of the same, all of the following:
(i) any and all oil, oil rights, petroleum, minerals, mineral rights, natural gas
rights, and other hydrocarbon substances, by whatsoever name known, geothermal resources,
and all products derived from any of the foregoing, that may be within or under the land,
together with the perpetual right of drilling, mining, exploring, prospecting, and operating
therefor and storing in and removing the same from the Premises or any other land, including the
right to whipstock or directionally drill and mine from lands other than those leased hereby, oil
or gas wells, tunnels, and shafts into, through, or across the subsurface of the Premises, and to
bottom such whipstocked or directionally drilled wells, tunnels, and shafts under and beneath or
beyond the exterior limits thereof, and to redrill, retunnel, equip, maintain, repair, deepen, and
operate any such wells or mines, without, however, the right to enter, drill, mine, store, explore,
or operate on or through the surface or the upper 500 feet of the subsurface of the Premises;
provided, however, that the exercise of any such rights by Lessor shall not result in any damage
or injury to the improvements constructed on the Premises by Lessee, including without
limitation any subsidence of all or any part of such improvements; and
(ii) any and all water, water rights, or interests therein, no matter bow
acquired by Lessor, together with the right and power to explore, drill, redrill, remove, and store
the same from the Premises or to divert or otherwise utilize such water, water rights, or interests
on any other property owned or leased by Lessor, whether such water rights shall be riparian,
overlying, appropriative, percolating, littoral, prescriptive, adjudicated, statutory, or contractual;
but without, however, any right to enter upon the surface of the Premises in the exercise of such
rights and, provided further, that the exercise of any such rights by Lessor shall not result in any
damage or injury to the improvements constructed on the Premises by Lessee, including without
limitation any subsidence of all or any part of such improvements.
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"Project Budget" shall have the meaning ascribed to that term in Section 3.1.3 of this
Lease.
"Project Construction Contract" shall have the meaning ascribed to that term in Section
3.1.3 of this Lease.
"Project Costs" shall mean all of Lessee's actual costs realized beginning from the initial
request for qualifications and request for proposal process up to the Commencement Date and
Lessee's anticipated and reasonably estimated costs and expenses to be incurred after the
Commencement Date (including, if applicable, any such costs and expenses incurred prior to the
Commencement Date that have not been funded and paid in cash or out of Lessee's equity as of
that date) to plan, design, engineer, finance, and construct the Hotel on the Premises through the
date of the initial opening of the Hotel for business to the general public, including without
limitation all such costs and expenses incurred with respect to any of the following: (i)
demolition and clearance of existing improvements situated on the Premises; (ii) land
development work, including excavation, grading, compacting and re- compacting of soils, and
removal /remediation of any Hazardous Substances; (iii) construction of all improvements
comprising the Hotel and any public improvements, utilities, or other improvements in the public
rights -of -way on or adjacent to the Premises; (iv) installation of all fixtures, equipment,
furnishings, and personal property in, on, or about the Hotel and Premises that are needed upon
the initial opening of the Hotel and for the full operation thereof; (v) all permit, entitlement, and
inspection fees required to be paid to Lessor and other governmental agencies with jurisdiction
over the Hotel and the Premises, as applicable; (vi) premiums for fire, public liability, and
property damage insurance during construction and on bonds securing work against liens for
labor and materials; (vii) real estate taxes (including possessory interest taxes) and assessments
upon the Premises and improvements during the period of construction; (viii) interest on
construction loans prior to the opening of the Hotel; (ix) fees for architects, engineers,
accountants, attorneys, and similar professionals; (x) purchasing fees paid to third parties not
affiliated with Lessee in connection with the purchase of furniture, fixtures, and equipment; (xi)
costs incurred by Lessee in connection with construction financing, including, without limitation,
commitment fees, mortgage broker fees, standby fees and fees of a like nature, printing and
duplicating expenses, documentary transfer tax stamps, mortgage taxes, and recording charges;
(xii) customary and reasonable pre - opening expenses for the Hotel; (xiii) costs of any required
studies, reports, and inspections; (xiv) reasonable fees for management and construction services
through opening of the Hotel; (xv) any other anticipated costs to be incurred by Lessee to satisfy
its obligations set forth in this Lease; and (xvi) a reasonable contingency for the categories of
costs identified above.
"Project Security Instruments" shall have the meaning ascribed to that term in Section
3.1.3 of this Lease.
"Quarterly Report" shall have the meaning ascribed to that term in Section 5.2.4 of this
Lease.
"Required Hotel Standard" shall mean, as of the Agreement Date, a standard of hotel
operation that meets all criteria (including without limitation operational, amenities, services,
improvements, furniture, fixtures and equipment, and appearance) for a minimum "four
diamond" hotel rating under the AAA Diamond Rating Guidelines hotel rating system of the
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American Automobile Association (or its successor) ( "AAA "). Notwithstanding the foregoing,
it is understood and agreed that the AAA Rating Guidelines may not remain in effect for the
entire Term of this Lease, that the AAA Diamond Rating Guidelines in particular and hotel
standards in general change from time to time, and that market conditions may require deviations
from the hotel standards specified herein and, accordingly, that the afore - described Required
Hotel Standard is subject to modification as set forth in Section 7.1(i) of this Lease.
"Restoration" shall have the meaning ascribed to that term in Section 10.4.2 of this
Lease
"Schedule of Performance" shall mean that certain schedule attached hereto as Exhibit
"B" to this Lease, as the same may be revised from time to time and as the same may be
extended due to Events of Force Majeure.
"Second Operating Year" shall mean the calendar year which follows the end of the First
Operating Year.
"Taking" shall mean any acquisition of or damage to all or any portion of the Premises,
or any interest therein or right accruing thereto, pursuant to or in anticipation of the exercise of
the power of condemnation or eminent domain, or by reason of the temporary requisition of the
use or occupancy of the Premises, or any part thereof, by any governmental or quasi -
governmental authority, civil or military, or any other agency empowered by law to take property
in the State of California under the power of eminent domain.
"Timeshares" shall mean any development in which the purchaser receives the right in
perpetuity, for life, or for a term of years, to the recurrent, exclusive use or occupancy of a lot,
parcel, unit, room(s), or segment of real property, annually or on some other seasonal or periodic
basis, for a period of time that has been or will be allotted from the use or occupancy periods into
which the project has been divided and included, but is not limited to timeshare estate, interval
ownership, vacation license, vacation lease, club membership, timeshare use,
condominium/hotel, or uses of a similar nature.
"Title Company" shall mean Lawyers Title Company.
"Total Taking" shall have the meaning ascribed to that term in Section 15.2 of this Lease.
"Transfer" shall have the meaning ascribed to that term in Section 11.1.2 of this Lease.
"Transferee" shall have the meaning ascribed to that term in Section 11. 1.2 of this Lease.
ARTICLE 3
TASKS TO BE PERFORMED PRIOR TO LEASE COMMENCEMENT DATE
3.1 Lessee Tasks.
3. 1.1 Development Entitlements. Within the time set forth in the Schedule of
Performance, Lessee shall submit complete application(s) to City for issuance of the
Development Entitlements listed in clauses (i) -(vi) of the first sentence of the definition of that
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term in Article 2 of this Lease and thereafter Lessee shall exercise commercially reasonable
diligence in an effort to obtain final administrative City approval of same.
Within the time set forth in the Schedule of Performance, Lessee shall submit a
complete application to the California Coastal Commission for issuance of the Development
Entitlement fisted in clause (viii) of the first sentence of the definition of that term in Article 2 of
this Lease and thereafter Lessee shall exercise commercially reasonable diligence in an effort to
obtain final administrative Coastal Commission approval of same.
3.1.2 Final Buildings Plans and Satisfaction of All Prerequisites to Issuance of
Building Permit(s). Within the time(s) set forth in the Schedule of Performance, Lessee shall
submit complete application(s), plans, and specifications to Lessor for issuance of all of the Final
Building Plans and thereafter Lessee shall (i) exercise commercially reasonable diligence in an
effort to obtain final Lessor approval of same (with the understanding that Lessor will not issue
permits prior to the Commencement Date), (ii) pay or deposit with Lessor all applicable fees and
charges owing to Lessor prior to issuance of permits, (iii) deliver to Lessor any security
instrument that is required by Lessor for construction of the Hotel pursuant to applicable
Governmental Requirements, and (iv) satisfy any other applicable Governmental Requirements
that may be a condition to Lessee's right to obtain required permits and commence construction
of the Hotel (other than the occurrence of the Commencement Date).
3.1.3 Evidence of Financial Capability; Construction Loan Documents. Within
the time set forth in the Schedule of Performance, Lessee shall submit to the City Manager or his
or her designee evidence that Lessee has the financial capability necessary to develop the Hotel
(herein, "Evidence of Financial Capability "). Such Evidence of Financial Capability shall
include without limitation each of the following. (i) a detailed budget showing Lessee's
estimated Project Costs (the "Project Budget"); (ii) a financial statement and /or other
documentation reasonably satisfactory to Lessor sufficient to demonstrate that Lessee has
adequate funds committed to cover the costs set forth in the Project Budget and that such funds
will be in Lessee's account as of the Commencement Date (with the understandings that some or
all of Lessee's equity finds may not be in Lessee's account as of the date that Lessee submits its
Evidence of Financial Capability and loan funds may be held by the Institutional Lender or other
Lessor - approved Mortgagee or held in a construction escrow account and disbursed pursuant to a
construction loan disbursement agreement as development of the Hotel proceeds); (iii) if the total
costs set forth in the Project Budget exceed the amount of equity funds that will be available to
Lessee pursuant to clause (ii), a copy of the term sheet obtained by Lessee from an Institutional
Lender (or such other Mortgagee as may be approved by Lessor in its commercially reasonable
discretion) to cover such difference, with such term sheet certified by Lessee to be a true and
correct copy thereof, and such term sheet in form and content reasonably acceptable to Lessor,
with only those conditions which are standard or typical for the lender involved for similar
projects; (iv) draft construction loan documents evidencing that the Mortgage securing the
Institutional Lender's or other Lessor - approved Mortgagee's loan (A) will cover no interest in
any real property other than Lessee's leasehold interest in the Premises, (B) will be fully
subordinate to Lessor's fee title in and to the Premises and will state on its face that it does not in
any way encumber Lessor's fee interest in the Premises or Lessor's rights set forth in this Lease
(except as expressly stated herein), and (C) will not exceed seventy -five percent (75 %) of the
estimated Project Costs (with said 75% cap increased to 85% in the event Lessee uses EB -5
financing as part of its source of funds); (v) a copy of the lump sum construction contract or
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contracts between Lessee and its general contractor(s) for the Hotel, certified by Lessee to be a
true and correct copy thereof, covering all of the excavation, grading, demolition, and
construction work comprising the Hotel, including without limitation all related utility and off-
site work (the "Project Construction Contract "); and (vi) a corporate surety bond or bonds or
other security instrument, approved as to form, content, and company by the City Engineer and
City Attorney with Lessee's contractor or contractors as principal(s), in a penal sum not less than
one hundred percent (100 %) of the estimated cost of constructing improvements in the public
rights -of -way in connection with the construction of the Hotel guaranteeing completion of
construction and the payment of wages for services engaged and bills contracted for materials,
supplies, and equipment used in the performance of the work, and protecting Lessee and Lessor
from any liability, losses, or damages arising therefrom (the "Project Security Instruments "),
provided, however, that the City Manager or his or her designee shall have the discretion on
behalf of Lessor to accept alternate security in his or her sole and absolute discretion.
If the City Manager or his or her designee disapproves Lessee's Evidence of
Financial Capability, within the time set forth in the Schedule of Performance Lessee shall
resubmit its Evidence of Financial Capability to provide the information or assurances required
to satisfy Lessor's requirements.
As soon as possible after Lessor approves Lessee's Evidence of Financial
Capability and in no event later than five (5) business days prior to the Commencement Date,
Lessee shall deliver to Lessor complete final executed copies of all of the documents that
memorialize Lessee's construction loan for the Hotel with the approved Mortgagee, including
without limitation the construction loan agreement, deed of trust, and UCC -1 (collectively, the
"Construction Loan Documents "). The Construction Loan Documents shall be consistent with
the foregoing Evidence of Financial Capability and other applicable provisions of this Lease.
3.1.4 Hotel Management Company and Hotel Management Agreement. Within
the time set forth in the Schedule of Performance, Lessee shall submit to the City Manager or his
or her designee for his or her review and approval the identity of the entity Lessee desires to have
manage the Hotel on the Premises ( "Hotel Management Company ") and the form of the hotel
management agreement that Lessee proposes to enter into with the Hotel Management Company
( "Hotel Management Agreement "), in accordance with the criteria and procedures set forth in
Section 7.2 of this Lease.
If Lessor disapproves Lessee's proposed Hotel Management Company and/or its
proposed Hotel Management Agreement, within the time set forth in the Schedule of
Performance Lessee shall resubmit a new Hotel Management Company and/or new or revised
Hotel Management Agreement to address and satisfy Lessor's requirements.
As soon as possible after Lessor approves the initial Hotel Management Company
and Hotel Management Agreement and in no event later than five (5) business days prior to the
Commencement Date, Lessee shall deliver to Lessor complete final executed copies of the Hotel
Management Agreement consistent with Lessor's approval; provided, that Lessee shall have the
right to redact from the Hotel Management Agreement submitted to Lessor the amount of the
fees or charges payable by Lessee to the Hotel Management Company as business trade
information that is not a matter of public record.
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3.1.5 Hotel Franchisor and Hotel Franchise Agreement. Within the time set
forth in the Schedule of Performance, Lessee shall submit to the City Manager or his or her
designee for his or her review and approval the identity of the hotel chain Lessee desires to have
franchise the Hotel on the Premises ( "Hotel Franchisor ") and the form of the franchise
agreement that Lessee proposes to enter into with the Hotel Franchisor ("Hotel Franchise
Agreement "), in accordance with the criteria and procedures set forth in Section 7.3 of this
Lease.
If Lessor disapproves Lessee's proposed Hotel Franchisor and/or its proposed
Hotel Franchise Agreement, within the time set forth in the Schedule of Performance Lessee
shall resubmit a new Hotel Franchisor and/or new or revised Hotel Franchise Agreement to
address and satisfy Lessor's requirements.
As soon as possible after Lessor approves the initial Hotel Franchisor and Hotel
Franchise Agreement and in no event later than five (5) business days prior to the Lease
Commencement Date, Lessee shall deliver to Lessor complete final executed copies of the Hotel
Franchise Agreement consistent with Lessor's approval; provided, that Lessee shall have the
right to redact from the Hotel Franchise Agreement submitted to Lessor the amount of the fees or
charges payable by Lessee to the Hotel Franchisor as business trade information that is not a
matter of public record.
3.1.6 Insurance. Within the time set forth in the Schedule of Performance,
Lessee shall have submit evidence reasonably satisfactory to Lessor's Risk Manager that Lessee
has obtained all insurance required pursuant to Sections 13.3 and 13.4 of this Lease.
3.2 Lessor Tasks.
3.2.1 Development Entitlements. Within the time set forth in the Schedule of
Performance, Lessor shall review Lessee's application(s) for those Development Entitlements
that are required to be submitted to Lessor, as set forth in clauses (i) -(vi), inclusive, of the
definition of that term in Article 2 of this Lease, and any proposed amendments or changes
thereto. Once Lessor has taken final action to approve or conditionally approve a Development
Entitlement, Lessor shall not thereafter rescind, revoke, or amend such Development Entitlement
without Lessee's prior written consent, which consent Lessee may withhold in its sole and
absolute discretion, and to the maximum extent permitted by law Lessor shall act reasonably in
extending the term of any such Development Entitlement as long as Lessee is timely performing
its obligations set forth in this Lease. In addition, if Lessee applies to Lessor for an amendment
or change to a previously approved Development Entitlement and Lessor takes final action to
approve or conditionally approve the same, Lessor shall not thereafter rescind, revoke, or amend
such Development Entitlement as so amended or changed without Lessee's prior written consent,
which consent Lessee may withhold in its sole and absolute discretion, and to the maximum
extent permitted by law Lessor shall act reasonably in extending the term of any such
Development Entitlement as so amended or changed as long as Lessee is timely performing its
obligations set forth in this Lease. Subject to the limitations set forth in the preceding two
sentences, Lessor reserves its full police power authority with respect to the consideration of all
of the Development Entitlements and any proposed amendments or changes thereto and nothing
in this Lease is intended or shall be interpreted as a limitation on Lessor's regulatory land use
authority or as a pre - commitment or prejudgment of any of the matters as to which Lessor retains
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discretion to approve, conditionally approve, or disapprove. Not by way of limitation of the
foregoing, this Lease does not constitute a statutory development agreement (California
Government Code Section 65864 et seq.). If Lessee disputes Lessor's exercise of its police
power authority with respect to any of the Development Entitlements, including any proposed
amendments or changes thereto, nothing in this Lease is intended or shall be interpreted to grant
to Lessee a right to sue Lessor or any official, officer, employee, or agent of Lessor for breach of
contract or any other contractual right or remedy and Lessee's rights and remedies shall be
limited to only those rights and remedies which Lessee would have as a private property owner
in the absence of this Lease.
In addition, within the time set forth in the Schedule of Performance, Lessor shall
submit a complete application to the California Coastal Commission for approval of the
Development Entitlement referred to in clause (vii) of the definition of that term in Article 2 of
this Lease (i.e., the required amendment to City's certified Local Coastal Land Use Plan
( "LUP ")), consistent with the Development Entitlements referred to in clauses (i) -(vi), inclusive,
of the definition of that term and thereafter Lessor shall exercise commercially reasonable
diligence in an effort to obtain final California Coastal Commission approval of same.
3.2.2 Review and Approval of Final Building Construction Plans. Within the
time set forth in the Schedule of Performance, Lessor shall review Lessee's application(s) for
approval of the Final Building Plans for the Hotel and all security instruments and other
documents submitted by Lessee in conjunction therewith, including any proposed amendments
or changes thereto. Lessor shall not unreasonably withhold, condition, or delay its approval of
any of the same and Lessor shall not disapprove any such submittal on grounds that are
inconsistent with (i) the approved Development Entitlements for the Hotel, (ii) applicable
Governmental Requirements, or (ii) Lessor's standard policies and procedures.
3.2.3 Review and Approval of Lessee's Evidence of Financial Capability.
Within the time set forth in the Schedule of Performance, the City Manager or his or her
designee shall complete his or her review of and approve or disapprove Lessee's Evidence of
Financial Capability. The City Manager or his or her designee shall not unreasonably withhold,
condition, or delay its approval of Lessee's Evidence of Financial Capability. If the City
Manager or his or her designee disapproves Lessee's Evidence of Financial Capability, he or she
shall do so by written notice to Lessee stating the reasons for such disapproval.
3.2.4 Review and Approval of Construction Loan Documents. Within the time
set forth in the Schedule of Performance, the City Manager or his or her designee shall complete
his or her review of and approve or disapprove Lessee's Construction Loan Documents, The
City Manager or his or her designee shall not unreasonably withhold, condition, or delay
Lessor's approval of Lessee's Construction Loan Documents. If the City Manager or his or her
designee disapproves Lessee's Construction Loan Documents, he or she shall do so by written
notice to Lessee stating the reasons for such disapproval.
3.2.5 Review and Approval of Hotel Management Company and Hotel
Management Agreement. Within the time set forth in the Schedule of Performance, the City
Manager or his or her designee shall approve or disapprove the Hotel Management Company and
the terms of the Hotel Management Agreement, in accordance with the criteria and procedures
set forth in Section 7.2 of this Lease.
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3.2.6 Review and Approval of Hotel Franchisor and Hotel Franchise
Agreement. Within the time set forth in the Schedule of Performance, the City Manager or his or
her designee shall approve or disapprove the Hotel Franchisor and the terms of the Hotel
Franchise Agreement, in accordance with the criteria and procedures set forth in Sections 7.3 of
this Lease.
3.3 Satisfaction (or Waiver) of Conditions to Commencement of Lease.
3.3.1 Lessor's Conditions to Commencement of Lease. Lessor's obligation to
execute and deliver the Memorandum of Lease and the Commencement Date of this Lease shall
all be conditional and contingent upon the satisfaction (or written waiver by Lessor) of each and
all of the following conditions (collectively, the "Lessor's Conditions to Commencement of
Lease "):
3.3.1.1 Finality of Development Entitlements for Hotel. All
Development Entitlements for the Hotel shall be final, unappealable, and in full force and effect.
A Development Entitlement shall be deemed to be "final, unappealable, and in full force and
effect" within the meaning of this Lease upon the last to occur of the following, as applicable: (i)
on the ninety -first (91s) day following the day the governmental agency with jurisdiction to issue
such Development Entitlement takes final administrative action to approve the same; (ii) if
litigation challenging the validity or enforceability of any such Development
Entitlement/approval that is a legislative act subject to referendum is filed prior to expiration of
the deadline referred to in clause (i), on the day that said lawsuit is finally resolved in a manner
that upholds the validity and enforceability of such Development Entitlement, whether such final
resolution is by means of a final and non - appealable judgment, a voluntary or involuntary
dismissal, or a binding written settlement agreement; (iii) if a referendum petition suspending the
validity and enforceability of such Development Entitlement is timely qualified for submittal to
the City's voters as to a Development Entitlement/approval that is a legislative act subject to
referendum, on the earlier of the date that is ten (10) days after the date of the general or special
election at which the City's voters uphold the final City Council action approving such
Development Entitlement or the date that any litigation involving said referendum is finally
resolved (by means of a final and non - appealable judgment, voluntary or involuntary dismissal,
or binding written settlement agreement) in a manner that upholds the final City Council action
approving such Development Entitlement.
3.3.1.2 Approval of Final Building Construction Plans and Satisfaction
of All Prerequisites to Issuance of Construction Permit(s). Lessee shall have obtained final
Lessor approval of all of its Final Building Construction Plans required for construction of the
Hotel, Lessee shall have paid or deposited with Lessor all applicable fees and charges owing to
Lessor prior to issuance of the building and other construction permits for the Hotel, and Lessee
shall have delivered to Lessor any security instrument that is required by Lessor for construction
of the Hotel pursuant to applicable Governmental Requirements, and Lessee shall have satisfied
any other applicable Governmental Requirements that may be a condition to its right to obtain a
building and other construction permits and commence construction of the Hotel.
3.3.1.3 Approval of Evidence of Financial Capability and Submittal of
Construction Loan Documents. Lessor shall have approved Lessee's Evidence of Financial
Capability, Lessee's financing with its Institutional Lender shall be ready to close concurrently
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with the Commencement Date, and Lessee shall have delivered to Lessor complete copies of the
executed Construction Loan Documents consistent with Lessor's approval of same.
3.11.4 Hotel Management Company and Hotel Management
Agreement. Lessor shall have approved (or be deemed to have approved, as applicable) the
Hotel Management Company and Hotel Management Agreement and Lessee shall have
delivered to Lessor a complete copy of the executed Hotel Management Agreement consistent
with Lessor's approval of same.
3.3.1.5 Hotel Franchise Agreement. Lessor shall have approved (or be
deemed to have approved, as applicable) the Hotel Franchisor and Hotel Franchise Agreement
and Lessee shall have delivered to Lessor a complete copy of the executed Hotel Franchise
Agreement consistent with Lessor's approval of same.
3.3.1.6 Insurance. Lessee shall have submitted evidence reasonably
satisfactory to Lessor's Risk Manager that Lessee has obtained all insurance required pursuant to
Sections 13.3 and 13.4 of this Lease.
3.3.1.7 Lessee's Representations and Warranties. All of Lessee's
representations and warranties set forth in Section 16.21 of this Lease shall be true and correct as
of the Commencement Date.
3.3.1.8 No Default. Lessee shall not be in Default of any of its
obligations set forth in this Lease as of the Commencement Date and no event shall have
occurred that, with the passage of time or the giving of notice, or both, would constitute a
Default by Lessee hereunder.
3.3.1.9 Memorandum of Lease. Lessee shall have executed in
recordable form the Memorandum of Lease and the same shall be ready to be recorded in the
Official Records of the Orange County Recorder's office.
3.3.2 Lessee's Conditions to Commencement of Lease. Lessee's obligation to
execute and deliver the Memorandum of Lease and the Commencement Date of this Lease shall
all be conditional and contingent upon the satisfaction (or written waiver by Lessee) of each and
all of the following conditions (collectively, the "Lessee's Conditions to Commencement of
Lease "):
3.3.2.1 Finality of Development Entitlements for Hotel. All
Development Entitlements for the Hotel shall be final, unappealable, and in full force and effect,
as the phrase "final, unappealable, and in full force and effect" is defined in Section 3.3.1.1 of
this Lease.
3.3.2.2 Lessor's Approval of Final Building Plans and Other
Prerequisites to Issuance of Construction Permit(s). Lessor shall have issued its final approval of
all Final Building Plans required for construction of the Hotel and the form of any security
instrument required by Lessor for construction of the Hotel pursuant to applicable Governmental
Requirements, provided that Lessee shall be obligated to exercise commercially reasonable
diligence and to comply with all applicable Governmental Requirements to obtain said approvals
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and nothing in this Section 3.3.2.2 is intended to excuse Lessee's failure to timely comply with
such obligations.
3.3.2.3 Title. The Title Company shall be prepared to issue its
standard CLTA leasehold policy of title insurance, with Lessee as the insured party, which title
policy shows Lessor as holder of fee title and Lessee as lessee of the Premises, and with Lessee's
leasehold title in the Approved Title Condition and the coverage amount of said policy being not
less than the Project Budget amount approved by Lessor as part of Lessee's Evidence of
Financial Capability. Lessee shall be responsible for paying the entire premium for said
leasehold policy of title insurance, any additional costs required to obtain upgraded coverage or
non - standard endorsements, and for any survey that may be desired or requested by Lessee or its
prospective Mortgagee in conjunction therewith; provided, however, that Lessee's ability to
obtain such upgraded coverage, non - standard endorsements, and survey and the timing and cost
thereof shall not be one of (or a part of) Lessee's Conditions to Commencement of Lease.
3.3.2.4 Physical/Environmental Condition of the Premises. Lessor
shall not be in Default of its obligations set forth in Section 3.5.2 of this Lease with respect to the
physical /environmental condition of the Premises.
3.3.2.5 Lessor's Representations and Warranties. All of Lessor's
representations and warranties set forth in Section 16.21 of this Lease shall be true and correct as
of the Commencement Date.
3.3.2.6 No Default. Lessor shall not be in Default of any of its
obligations set forth in this Lease as of the Commencement Date and no event shall have
occurred that, with the passage of time or the giving of notice, or both, would constitute a
Default by Lessor hereunder.
3.3.2.7 Memorandum of Lease. Lessor shall have executed in
recordable form the Memorandum of Lease and the same shall be ready to be recorded in the
Official Records of the Orange County Recorder's office.
3.4 Cooperation; Execution and Recordation of Memorandum of Lease;
Commencement Date. Each Party shall perform all of its obligations that are required to be
performed in order to satisfy the Lessor's Conditions to Commencement of Lease and the
Lessee's Conditions to Commencement of Lease, as applicable, and each Party shall cooperate in
good faith with the other Party in an effort to cause the Lessor's Conditions to Commencement
of Lease and Lessee's Conditions to Commencement of Lease to be satisfied as soon as possible
and within the times set forth in the Schedule of Performance; provided, however, that (i) neither
Party shall have any obligation to perform or cooperate in such regard if such Party is not in
Default hereunder and; after and despite its performance of its obligations set forth in this Lease
that it is required to perform (and subject to any excuses for its failure to perform) any of the
Conditions to Commencement to Lease for its benefit are not satisfied prior to the Outside
Commencement Date (as the same may have been extended as provided herein) and (ii) nothing
in this Section 3.4 is intended or shall be interpreted as a covenant by either Party to (A)
compromise any of its rights or remedies set forth herein, including without limitation the right
to demand strict and timely performance from the other Party, or (B) agree to any modifications,
waivers, or extensions hereunder. Upon the satisfaction (or written waiver by the benefited
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Party) of all of the Conditions to Commencement of Lease, and within the time set forth in the
Schedule of Performance, the Parties shall each (i) execute in recordable form and deliver the
Memorandum of Lease and (ii) cooperate in causing the Memorandum of Lease to be recorded
in the Official Records of the Orange County Recorder's office. The date the Memorandum of
Lease is recorded shall be the Commencement Date of the Lease.
3.5 Miscellaneous Acknowledgements Agreements, and Covenants.
3.5.1 Lessee's Investigation of Title; Lessor Covenant to Not Further Encumber
Title. Lessee acknowledges that prior to the Agreement Date it has had a full and adequate
opportunity to review the Preliminary Report, to prepare an ALTA survey with respect to the
Premises, and to conduct any investigations and inspections Lessee may have deemed
appropriate with respect thereto and the condition of title to the Premises. Lessor makes no
representation or warranty to Lessee regarding the accuracy or completeness of the Preliminary
Report, whether there are any unrecorded non - monetary liens or encumbrances that are not
identified or reflected in the Preliminary Report, or whether the owner of property adjacent to the
Premises (Via Lido Partners) has a valid claim to an easement, license, access, or other similar
rights over and across the Premises. Lessor covenants, however, that from the Agreement Date
through the Commencement Date Lessor shall not take any affirmative action that will cause title
to the Premises to become inconsistent with the Approved Title Condition as of the Agreement
Date.
Prior to the Agreement Date Lessor initiated the Lido Partners Litigation. Lessor
makes no representation, warranty, or covenant to Lessee that Lessor will prosecute the Lido
Partners Litigation to a final and non - appealable judgment, that Lessor will prevail in the Lido
Partners Litigation, or that the Lido Partners Litigation will be finally resolved (whether by final
and non - appealable judgment, settlement, dismissal, or otherwise) within any particular time
period. Lessor reserves the right, in its sole and absolute discretion, to settle, dismiss, or
otherwise abandon the Lido Partners Litigation on such terms and conditions as may be
acceptable to Lessor; provided, that (i) without Lessee's prior written consent, which consent
Lessee may withhold in its sole and absolute discretion, Lessor shall not consent or agree to any
settlement of the Lido Partners Litigation that would result in an expansion or relocation of the
easement claimed by Lido Partners onto any other portion of the Premises or any expansion or
change in the use of the easement claimed by Lido Partners, and (ii) to the extent not covered by
Lessor's covenant under clause (i), in no event shall Lessor take any voluntary action or fail to
take any action in or with respect to the Lido Partners Litigation that will cause title to the
Premises to become inconsistent with the Approved Title Condition as of the Agreement Date.
Lessor shall provide Lessee with five (5) business days' prior notice as to any settlement,
dismissal, abandonment, or other resolution by Lessor of the Lido Partners Litigation consistent
with the foregoing.
3.5.2 Physical/Environmemal Condition of the Premises; Lessor Covenant to
Not Alter Existing Physical/Environmental Condition of the Premises. Lessee acknowledges
that prior to the Agreement Date it has had a full and adequate opportunity to review the physical
and environmental condition of the Premises and to conduct any investigations and inspections
Lessee may have deemed appropriate with respect thereto. All portions of the Premises, and any
improvements thereon, which are leased by Lessor to Lessee shall be leased in an "as is"
physical and environmental condition, with no warranty, express or implied, by Lessor as to the
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condition of the soil, its geology, the presence of known or unknown earthquake faults, the
presence of any Hazardous Substances, the water table and/or groundwater conditions, or any
other similar matters and it shall be the sole responsibility of Lessee, at its sole cost and expense,
to investigate and determine the physical/envirornnental conditions of the Premises, its geology,
susceptibility to seismic events, the presence of any Hazardous Substances, the water table
and/or groundwater conditions, and the physical and environmental suitability of the Premises
for development, operation, and maintenance of the Hotel and, if the physical or environmental
conditions of the Premises, or any part thereof, are not in all respects entirely suitable for the use
or uses to which the Premises will be put, then it will be the sole responsibility and obligation of
Lessee, after the Commencement Date, to take such actions as may be necessary to place the
Premises in all respects in a condition entirely suitable for development, operation, and
maintenance of the Hotel, which may include demolition and clearance of above - ground and
below - ground structures or other improvements, removal of Hazardous Substances, compaction
or re- compaction of soils, de- watering of soils, replacement of unsuitable soils, extraordinary
foundation systems, and the like. Not by way of limitation of the foregoing, Lessee
acknowledges that the existing improvements on the Premises may deteriorate prior to the
Commencement Date and Lessor shall have no liability or responsibility therefor.
Notwithstanding the foregoing, however, Lessor shall retain the responsibility and obligation to
remove and/or remediate any Hazardous Substances that are placed, deposited, transported, or
migrate onto, in, or under the Premises, due to whatever cause or source, between the Agreement
Date and the Commencement Date to the extent that such Hazardous Substances violate
applicable federal, state, or local laws, rules, or regulations or interfere with Lessee's proposed
development or use of the Premises. In addition, Lessor shall retain the responsibility and
obligation to remove and/or remediate any Hazardous Substances that are placed, deposited,
transported, or migrate onto, in, or under the Premises at any time prior to the Commencement
Date if all of the following conditions are satisfied: (i) such Hazardous Substances exist on, in, or
under the Premises as of the Agreement Date; (ii) as of the Agreement Date the City Manager,
Public Works Director, City Engineer, or City Attorney have actual subjective knowledge of the
existence of such Hazardous Substances on, in, or under the Premises (with the understanding
that "actual subjective knowledge" does not place any of such officers /employees of Lessor on a
duty of investigation or inquiry); (iii) as of the Agreement Date the management level
officers /employees of Lessee who have participated in the negotiation of this Lease have no
actual subjective knowledge of the existence of such Hazardous Substances on, in, or under the
Premises; and (iv) such Hazardous Substances violate applicable federal, state, or local laws,
rules, or regulations or interfere with Lessee's proposed development or use of the Premises.
ARTICLE 4
LEASE OF PREMISES; POSSESSION• CONDITION OF LEASEHOLD TITLE;
PHYSICAL AND ENVIRONMENTAL CONDITION OF PREMISES, TERM
4.1 Grant/Accentance of Leasehold Interest in Premises. Conditional upon the
satisfaction (or waiver by the benefited Party) of each of the Lessor's Conditions to
Commencement of Lease Term set forth in Section 3.3.1 of this Lease and each of the Lessee's
Conditions to Commencement of Lease Term set forth in Section 3.3.2 of this Lease, Lessor
agrees to lease the Premises to Lessee and Lessee agrees to lease the Premises from Lessor, for
the Lease Term and subject to all of the terms and conditions set forth herein.
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4.2 Possession. Lessor shall deliver possession of the Premises to Lessee on the
Commencement Date. Subject to the limitations on the condition of title as referred to in Section
4.3 of this Lease, the Parties hereto mutually covenant and agree that from and after the
Commencement Date and during the remainder of the Lease Term Lessee, by keeping and
performing the covenants contained in this Lease, shall at all times peaceably and quietly have,
hold, and enjoy the Premises.
4.3 Condition of Leasehold Title Reserved Rights of Lessor. Lessor shall convey
leasehold title to Lessee subject to following limitations, exceptions, and reservations:
(i) Lessee shall accept leasehold title subject to the limitations and exceptions
that are consistent with the Approved Title Condition.
(ii) Lessor reserves all oil, oils rights, gas, minerals, mineral rights, natural gas
rights, and other hydrocarbon substances in and under the Premises and the right to grant and
transfer the same, together with all necessary and convenient rights to explore for, develop,
produce, and extract, and take the same, subject to the express limitation that any and all
operations for the exploration, development, production, extraction, and taking of any such
substance shalt be carried on at levels below the depth of five hundred feet (500') from the
surface of the land by means of wells, derricks, and other equipment from surface locations on
adjoining or neighboring land so long as such activities do not interfere with or impair the
operation, business, or aesthetics of the Hotel, and provided that the exercise of any such rights
by Lessor shall not result in any damage or injury to the improvements constructed on the
Premises by Lessee, including without limitation any subsidence of all or any part of such
improvements; and subject further to all restrictions and regulations concerning the drilling for,
and production of, oil, gas, minerals, petroleum, and other hydrocarbon substances specified in
the Newport Beach City Charter and the Newport Beach Municipal Code.
(iii) Lessor reserves and shall have the right to enter the Premises during
periods of construction, as set forth in Section 6.4 of this Lease.
(iv) Lessor reserve's and shall have the right at all reasonable times during the
entire Lease Term to enter the Premises for the purpose of viewing and ascertaining the
condition of the same, to protect its interests in the Premises, and to inspect the operations
conducted thereon. Except in the case of emergency, any such entry into areas not generally
open to the public shall be made only after reasonable notice to Lessee. Nothing in this Lease is
intended or shall be interpreted to limit any right that Lessor, as a municipal corporation, has to
enter onto private property when acting in its governmental capacity in lieu of its proprietary
capacity of the owner and landlord of real property.
(v) Lessor further reserves and shall have the right to enter the Premises in
order to cure or correct a Default by Lessee as provided in Sections 8.6 and 15.6 of this Lease.
(vi) Nothing in this Lease is intended or shall be interpreted as a waiver by
Lessor of its power of eminent domain.
4.4 Lease Term. The initial term of this Lease (the "Initial Term ") shall commence
at 12:01 AM on the Commencement Date and, unless sooner terminated in accordance with the
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provisions set forth herein, shall terminate and expire at 11:59 PM on the fifty -fifth (55a'
anniversary of the Commencement Date.
4.5 Option to Extend Initial Term. Lessee shall have the option to extend the Initial
Term for one (1) period of thirty (30) years (the "Option Term "), thereby creating a maximum
total Lease Term of eighty -five (85) years), on the same terms and conditions then in effect,
except as expressly otherwise provided herein. In order for Lessee to exercise its option to so
extend the Initial Term, Lessee shall satisfy each of the following requirements and conditions:
(i) Lessee shall deliver written notice to Lessor of the exercise of Lessee's
option to extend the Initial Term no earlier than five (5) years and no later than twelve (12)
months prior to the expiration of the Initial Term.
(ii) Lessee shall not be in Default of any of its obligations set forth in this
Lease as of the date it delivers written notice to Lessor of the exercise of Lessee's option to
extend the Initial Term, nor shall any event have occurred as of that date that, with the passage of
time or the giving of notice, or both, would constitute a Default by Lessee hereunder.
(iii) Lessee shall not be in Default of any of its obligations set forth in this
Lease as of the expiration of the Initial; Term (i.e., the fifty -fifth anniversary of the
Commencement Date), nor shall any event have occurred as of that date that, with the passage of
time or the giving of notice, or both, would constitute a Default by Lessee hereunder.
(iv) From the Operating Commencement Date through the date Lessee delivers
its written notice to Lessor of the exercise of Lessee's option to extend the Initial Term, as
provided for in clause (i) above, and continuing from that date to the first day of the Option
Term, Lessee shall have deposited into the Capital Replacement Reserve Fund the minimum
amounts required pursuant to Section 8.5 of this Lease and Lessee shall have expended or
committed to expend the amounts in such fund, together with an additional amount equal to one-
half percent (0.5 %) of Gross Room Revenues and Gross Non -Room Revenues for Operating
Year 3 through the last year of the Initial Term, only for eligible capital expenditures, as
provided therein.
4.6 Liens and Encumbrances Created by Lessee. Lessee shall not, directly or
indirectly, create or permit to be created or to remain, and Lessee shall promptly discharge, at its
expense, any mortgage, lien, encumbrance, or charge on or pledge of the Premises or the
Improvements, or fixtures and furnishings, or any part thereof, or Lessee's interest therein, or the
Ground Rent or other sums payable by Lessee under this Lease, other than (i) such Mortgages as
are permitted pursuant to Article 12, and (ii) as necessary in connection with the financing of
furniture, fixtures and equipment for the Improvements. Lessee shall notify Lessor promptly of
any lien or encumbrance which has been created on or attached to the Premises and
Improvements, or to Lessee's leasehold estate therein, whether by act of Lessee or otherwise.
The existence of any mechanic's, laborer's, materialmen's, supplier's, or vendor's lien, or any
right in respect thereof, shall not constitute a violation of this Lease if payment is not yet due
upon the contract or for the goods or services in respect of which any such lien has arisen, or if
such lien is being discharged by the posting of bonds or other lien - release security as is provided
for such discharge by law.
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4.7 Lessee's Surrender of Premises and Execution of Quitclaim Upon Expiration or
Termination. Upon the expiration or earlier termination of the Lease Term pursuant to the terms
hereof, it shall be lawful for Lessor to reenter and repossess the Premises and Improvements
without process of law and Lessee, in such event, does hereby waive any demand for possession
thereof, and agrees to surrender and deliver the Premises and Improvements peaceably to Lessor
immediately upon such expiration or termination in the physical condition required hereunder
and otherwise in good order, condition, and repair, except for reasonable wear and tear. At such
time, all fixtures to the Premises that cannot be removed without causing damage to the Hotel
shall automatically revert to and become the property of Lessor without compensation or
payment to, or requirement of consent or act of, Lessee, and Lessee shall thereafter have no
further rights thereto or interest therein, including any rights to depreciation deductions or tax
credits. Following the expiration or earlier termination of the Lease Term, Lessee shall retain its
ownership in all items of personal property located on the Premises; provided, however, if
Lessee fails to remove the same within ninety (90) calendar days following the expiration or
earlier termination of this Lease, any such property remaining on the Premises after that date
shall become the sole property of Lessor without compensation or payment to Lessee, or any
requirement of consent or act of Lessee, and Lessee shall thereafter have no further rights thereto
or therein. At the expiration or earlier termination of this Lease, and upon Lessor's written
request, Lessee shall promptly execute, acknowledge, and deliver to Lessor a valid and
recordable quitclaim deed covering the Premises and the Improvements, free and clear of all
liens and encumbrances. In addition, upon the expiration or earlier termination of this Lease for
any reason, Lessee shall surrender to Lessor all keys to any and all Improvements and fixtures on
the Premises and shall inform Lessor of all combinations of locks, safes, and vaults, if any, on
the Premises. Lessee's obligations and Lessor's rights set forth in this Section 4.7 shall survive
the expiration or earlier termination of this Lease.
4.8 Holdover Tenancy. In the event that for any reason Lessee remains in possession
of the Premises after the expiration or earlier termination of the Lease Term, Lessee shall be
deemed to be a holdover tenant and this Lease shall be deemed to have been renewed on a
month -to -month basis only. In such event, Lessee shall be required to comply with all of the
terms and conditions set forth herein, including without limitation with respect to the obligation
to pay Ground Rent, to the same extent that Lessee was so obligated to comply with such
provisions during the Lease Term. Nothing in this Section 4.8 shall be deemed to constitute a
waiver of Lessor's rights to evict Lessee or as a limitation or restriction on Lessor's rights and
remedies in the event of Lessee's wrongful holding over.
4.9 No Right To Relocation Expenses. Lessee acknowledges that it is (or will
become) a "post- acquisition tenant" within the meaning of Title 25, California Code of
Regulations, Sections 6008(t)(3)(13) and 6034(b), that it is not (and will not become) a "displaced
person" within the meaning of Title 25, California Code of Regulations, Section 6008(f), and
that in no event will Lessee be entitled to any relocation benefits or assistance as a result of its
having to move from or vacate the Premises pursuant to otherwise applicable Governmental
Requirements, including without limitation California Government Code Sections 7260 et seq.
and Title 25, California Code of Regulations, Sections 6000 et seq. Not by way of limitation of
the foregoing, Lessee voluntarily waives and releases any claim it might otherwise have to any
such relocation benefits or assistance.
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ARTICLE 5
RENT
5.1 Base Rent During Initial Term. Regardless of the amount of Gross Room
Revenues and Gross Non -Room Revenues generated by the operation of the Hotel from time to
time, Lessee shall pay a minimum annual rent to Lessor in the amounts set forth in this Section
5.1 (the "Base Rent").
5.1.1 Construction Period. During the Construction Period Lessee shall have no
obligation to pay Base Rent to Lessor.
5.1.2 Base Rent in First Operating Year. Lessee shall pay annual Base Rent to
Lessor for the first Operating Year of the Lease Term in the total sum of Seventy -Five Thousand
Dollars ($75,000.00) ($18,750.00 per quarter).
5.1.3 Base Rent in Second Operating Year. Lessee shall pay annual Base Rent
to Lessor for the second Operating Year of the Lease Term in the total sum of One Hundred Fifty
Thousand Dollars ($150,000.00) ($37,500.00 per quarter).
5.1.4 Base Rent Commencing in Third Operating Year. Commencing in the
third Operating Year of the Lease Term and continuing thereafter through the end of the Initial
Term, Lessee shall pay annual Base Rent to Lessor in the total sum of Two Hundred Fifty
Thousand Dollars ($250,000.00) ($62,500.00yer �uarter), with said amount increased every five
(5) years (i.e., at the commencement of the 8 , 13 , 18', 23`d, 28th, 33'd, 38', 43`d, 48', and 53`d
Operating Years), each referred to as the "Base Rent Adjustment Date," to an amount
determined by multiplying the Base Rent in effect immediately prior to the applicable Base Rent
Adjustment Date by a fraction in which the numerator equals the Consumer Price Index in effect
three (3) months prior to the Base Rent Adjustment Date and in which the denominator equals
the Consumer Price Index in effect sixty -three (63) months prior to the Base Rent Adjustment
Date; provided, however, that in no event shall the applicability of said adjustment to the Base
Rent result in an increase in the Base Rent of more than fifteen percent (15 %) for any applicable
5 -year period.
5.1.5 Time /Amount of Payment of Base Rent. Payments of Base Rent shall be
made monthly in advance, no later than the first day of each calendar month during each
Operating Year during the Initial Term of the Lease, provided that (i) the first monthly payment
of Base Rent shall be due and payable on the first day of the First Operating Year and the
amount thereof shall be prorated based on a fraction in which the numerator equals the number
of days remaining in the calendar month in which the first day of the First Operating Year occurs
and in which the denominator equals thirty (30).
5.2 Percentage Rent. Lessee shall pay rent to Lessor based upon the amount of Gross
Room Revenues and Gross Non -Room Revenues generated by the operation of the Hotel from
time to time in the amounts set forth in this Section 5.2 (the "Percentage Rent ").
5.2.1 Operating Years 1 -3. Commencing in Operating Year 1 and continuing
thereafter through Operating Year 3, Lessee shall have no obligation to pay Percentage Rent to
Lessor.
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5.2.2 Operating Years 4 -14. Commencing in Operating Year 4 and continuing
thereafter through Operating Year 14, Lessee shall pay Percentage Rent to Lessor in the sum of
(i) four percent (4 %) of Gross Room Revenues, plus (ii) two percent (2 %) of Gross Non -Room
Revenues, less (iii) the Base Rent paid with respect to said Operating Year.
5.2.3 Operating Years 15 -19. Commencing in Operating Year 15 and
continuing thereafter through Operating Year 19, Lessee shall pay Percentage Rent to Lessor in
the sum of (i) four and one -half percent (4 -1/2 %) of Gross Room Revenues, plus (ii) two percent
(2 %) of Gross Non -Room Revenues, less (iii) the Base Rent paid with respect to said Operating
Year.
5.2.4 Operating Years 20 -End of Lease Term. Commencing in Operating Year
20 and continuing thereafter through the end of the Lease Term, Lessee shall pay Percentage
Rent to Lessor in the sum of (i) five percent (5 %) of Gross Room Revenues, plus (ii) two percent
(2 %) of Gross Non -Room Revenues, less (iii) the Base Rent paid with respect to said Operating
Year.
5.2.5 Accounting For Percentage Rent. Within thirty (30) days after the close of
each calendar quarter of each Operating Year during the Lease Term, Lessee shall submit to
Lessor a report itemizing its Gross Room Revenues and Gross Non -Room Revenues received in
such calendar quarter (each, a "Quarterly Report "). Within the category of Gross Non -Room
Revenues, each such Quarterly Report shall separately itemize the Gross Non -Room Revenues
attributable to (i) food and beverage sales, (ii) banquet sales, (iii) parking receipts, (iv) meeting
room receipts, (v) health elub /spa facility receipts, (vi) retail sales, (vii) all amounts received by
Lessee from its sublessees, licensees, and concessionaires, including a separate specification of
all amounts paid as deposits, fees, rents, common area charges, monetary equivalents, pass
through rents, or other considerations with a monetary equivalent, (viii) such other subcategories
of revenues that Lessee may elect to separately report, and (ix) miscellaneous Gross Non -Room
Revenues not fitting into any of the categories listed in clauses (i)- (viii), inclusive. In addition,
each Quarterly Report shall separately identify, if applicable, the amount of Gross Receipts
attributable to Net Insurance Proceeds and Net Awards and Payments, the portions of such
receipts that Lessee has allocated to Gross Room Revenues and Gross Non -Room Revenues, and
the methodology used by Lessee in making such allocation.
Within one hundred twenty (120) days after the close of each Operating Year
during the Lease Term, Lessee shall submit to Lessor, for Lessor's review and written approval,
a statement (the "Certified Annual Statement ") containing an itemization and a reasonable
explanation of the composition of Gross Room Revenues and Gross Non -Room Revenues as
specified in the preceding paragraph for the entire applicable Operating Year and reconciling the
four (4) Quarterly Reports for each said Operating Year, certified by Lessee as true and correct.
Copies of all Form 1099's showing payments to Lessee which are reportable as Gross Room
Revenues and/or Gross Non -Room Revenues shall be attached to the Certified Annual
Statement.
5.2.6 Time of Payment of Percentage Rent. No later than concurrently with
Lessee's submission to Lessor of each Quarterly Report and in any event within thirty (30) days
after the end of the each calendar quarter of each Operating Year during the Lease Term, Lessee
shall pay to Lessor the amount of Percentage Rent that is owing, if any, as determined based
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upon such Quarterly Report (after taking into consideration the Base Rent previously paid by
Lessee for said Operating Year pursuant to Section 5.1.5). If Percentage Rent is not timely paid,
the amount of Percentage Rent shall bear interest at the lesser of the legal rate or that annual rate
of three percent (3 %) over the prime rate of the largest bank operating in the State of California
until paid; provided, however, that Lessee's obligation to pay interest on delinquent rent shall in
no event excuse a Default by Lessee hereunder, extend Lessee's time for performance, or prevent
or prohibit Lessor from exercising any of its rights or remedies for Lessee's Default.
If Lessee's Certified Annual Statement shows that Lessee has overpaid or
underpaid Ground Rent for the applicable Operating Year, an adjustment shall be made. If
Lessee has overpaid Ground Rent for the applicable Operating Year, Lessee shall be entitled to
reduce its next Ground Rent payment by the amount of such overpayment. If Lessee has
underpaid Ground Rent for the applicable Operating Year, it shall pay the additional amount
owing, plus interest, concurrently with its delivery of the Certified Annual Statement.
5.3 Adjustments to Base Rent and Base Rent CPI Adjustment During Option Term.
If Lessee exercises its option to extend the Initial Term of this Lease, as provided in Section 4.5,
the Base Rent (but not the Percentage Rent) during the Option Term shall be adjusted to an
amount equal to the "Fair Rental Value of the Premises" as of the first day of the Option
Period, as the same is determined and subject to the terms and conditions set forth in this Section
5.3; provided, however, that (i) in no event shall either the Base Rent in effect immediately prior
to the first day of the Option Period be reduced, (ii) in the event the determination of the Fair
Rental Value of the Premises would result in the Base Rent then in effect being reduced then no
adjustment shall be made to the Base Rent figure /amount then in effect and the Base Rent shall
continue to be adjusted at 5 -year intervals during the Option Term in the manner and subject to
the limitations set forth in Section 4.1.4 (i.e., at the commencement of the 58th, 63 t, 686, 73`t
78th, and 83d Operating Year), and (iii) the Percentage Rent shall not be increased or decreased
during the Option Period.
The Fair Rental Value of the Premises shall be determined based upon the following
being assumed to be true as of the first day of the Option Term (or as of the date prior to the first
day of the Option Term when the elements comprising the Fair Rental Value of the Premises are
agreed upon or determined as provided herein): (i) that the Improvements exist in the physical
condition required by this Lease, the Hotel is open for business, the Premises are in all respects
in the physical and environmental condition required pursuant to this Lease, and the Premises are
available for lease on the open market to the highest bidder; (ii) that the hypothetical new lessee
would be entitled to assume Lessee's obligations and succeed to its rights under the Hotel
Management Agreement and Hotel Franchise Agreement then in effect; (iii) that the terms of the
Lease that would apply are the terms set forth in this Lease, including the Percentage Rent that is
payable, with the exception of the Base Rent amount which is to be adjusted and the
understanding that the assumed remaining Lease Term is thirty (30) years; and (iv) that the
highest and best use of the Premises is the actual use required and permitted pursuant to this
Lease. The Fair Rental Value of the Premises shall be expressed in terms of a new proposed
Annual Base Rent, and a new proposed method for adjusting the Annual Base Rent based on
changes in the Consumer Price Index (not more often than every five (5) years, as provided
herein), both of which are to apply to the Option Term,
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For a period of ninety (90) days after Lessee delivers written notice to Lessor of the
exercise of Lessee's option to extend the Initial Term in accordance with Section 4.2(i) of this
Lease, the Parties shall meet and endeavor to agree upon the Fair Rental Value of the Premises
consistent with the foregoing. If for any reason the Parties fail to agree upon the Fair Rental
Value of the Premises within said ninety (90) day period, then the Fair Rental Value of the
Premises shall be determined by arbitration conducted within the times, and in the manner, set
forth below:
(i) For a period of thirty (30) additional days (i.e., until the date that is one
hundred twenty (120) days after Lessee delivers written notice to Lessor of the exercise of
Lessee's option to extend the Initial Term of this Lease), the Parties shall jointly attempt to agree
on the appointment of a single arbitrator to determine the Fair Rental Value of the Premises
consistent with the foregoing. The single arbitrator jointly appointed by the Parties shall
determine the Fair Rental Value of the Premises within sixty (60) days after his/her appointment
or as soon thereafter as possible and shall be instructed to notify the Parties in writing of his /her
determination. The Parties shall each pay fifty percent (50 %) of the single arbitrator's costs.
(ii) If the Parties fail to timely agree on the appointment of a single arbitrator
to determine the Fair Rental Value of the Premises, as set forth in subparagraph (i) above, each
Party, within an additional fifteen (15) days (i.e., by the date that is one hundred thirty -five (13 5)
days after Lessee delivers written notice to Lessor of the exercise of Lessee's option to extend
the Initial Term of this Lease), shall separately designate its own arbitrator to determine the Fair
Rental Value of the Premises consistent with the foregoing within sixty (60) days after each such
arbitrator's appointment or as soon thereafter as possible and, upon both arbitrators'
determination of the Fair Rental Value of the Premises, the Parties shall concurrently exchange
such determinations. If the difference between either of the two elements of the respective
arbitrators' determinations (Base Rent and the new proposed method /formula for adjusting the
Annual Base Rent based on changes in the Consumer Price Index) is an amount less than ten
percent (10 %) of the higher determination, the mean average of the two determinations shall be
used in making the adjustment(s). If the difference between either of the two elements of the
respective arbitrators' determinations is ten percent (10 %) or more of the higher determination,
the two arbitrators shall jointly select a third arbitrator who shall review the data, analysis,
findings, and conclusions of the Parties' respective arbitrators and such third arbitrator shall
determine which of the two arbitrators' determinations is /are the most reasonable under the
criteria set forth above, which determination shall be used in making the adjustment(s) used to
determine the Fair Rental Value of the Premises during the Option Tenn. The third arbitrator
shall not be permitted to make an independent determination of any of the still- disputed elements
of the Fair Rental Value of the Premises.
(iii) Each arbitrator selected to make a determination with respect to the Fair
Rental Value of the Premises (or either of the elements comprising the Fair Rental Value of the
Premises) shall be a licensed real estate appraiser in the State of California and a member of the
Appraisal Institute or successor appraisal society or organization (or, in the event real estate
appraisers are not licensed or the Appraisal Institute or successor appraisal society or
organization does not exist at the time the Fair Rental Value of the Premises is determined, each
such arbitrator shall have equivalent qualifications). Each such arbitrator shall also have a
minimum of ten (10) years professional experience in Southern California appraising
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commercial hotel properties. Each arbitrator selected shall be impartial and unrelated, directly or
indirectly, so far as employment of services is concerned, to either of the Parties.
(iv) Each Party shall be responsible for payment of its selected arbitrator and,
if a third arbitrator is selected to determine any matters, the Parties shall each pay fifty percent
(50 %) of said third arbitrator's costs.
(v) In the event either Party Defaults hereunder by failing to timely select an
arbitrator pursuant to clause (ii) above, the Fair Rental Value of the Premises shall be determined
by the arbitrator selected by the other Party. In the event that the arbitrators selected by the
Parties pursuant to clause (ii) do not finally determine the Fair Rental Value of the Premises and
they fail to timely appoint a third arbitrator to hear and determine the dispute, either Party not in
Default shall have the right to apply to the Orange County Superior Court to appoint the third
arbitrator.
(vi) In the event that for any reason the Fair Rental Value of the Premises has
not been finally determined as of the first day of the Option Term Lessee shall continue to pay
Ground Rent in the amounts and at the times that were in effect immediately prior to the Option
Term, a retroactive adjustment shall be made (effective as of the first date of the Option Term)
when the new Base Rent figure has been established and, within fifteen (15) days after such date
Lessee shall make any additional payment of Ground Rent that may be owing to Lessor as a
result of said determination.
Lessor's Initials
Lessee's Initials
Subject to the provisions set forth above that the Base Rent, the Percentage Rent based on
Gross Room Revenues, and the Percentage Rent based on Gross Non -Room Revenues shall not
be reduced during the Option Term, the determination of the Fair Rental Value of the Premises
determined in accordance with this Section 5.3 shall be final, binding, and conclusive on both
Parties during the Option Term. Upon the written request of either Party or any existing or
prospective Mortgagee, the Parties shall cooperate in executing an addendum to this Lease
memorializing any adjustments to the Ground Rent provisions set forth herein that will apply
during the Option Term.
5.4 Place of Payment. All Ground Rent payments shall be made to City at 100 Civic
Center Drive, Newport Beach, CA 92660, Attention: Real Property Administrator, or to such
address and person/title that Lessor may hereafter provide to Lessee. Lessee shall identify the
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purpose of each payment of Ground Rent (on the check or accompanying documentation) so that
proper credit can be provided to Lessee.
5.5 Triple Net Lease; No Abatement or Set -Off of Rent. This is an absolute net lease
and Lessor shall not be required to provide any services or do any act or thing with respect to the
Premises and Improvements or the appurtenances thereto, except as may be specifically and
expressly provided herein, and Lessee shall make all payments required by this Lease, including
but not limited to the payment of Ground Rent to Lessor, without any claim on the part of Lessee
for diminution, set -off, or abatement, and nothing shall suspend, abate, or reduce any rent to be
paid hereunder, except as otherwise specifically provided in this Lease.
5.6 Non - Subordination of Rent or Other Sums. It is expressly understood and agreed
that there shall be no subordination or encumbrance of any kind under this Lease or otherwise of
(i) Lessor's fee title ownership of the Premises; (ii) Lessor's interest in this Lease; and (iii)
Lessor's right to receive Ground Rent under this Lease.
5.7 Delinquency hi Rental Payment; Collection of Rents. Lessee's failure to pay any
installment of Ground Rent by the due date shall constitute a Default. In the event Lessee fails to
pay the applicable installment of Ground Rent within ten (10) days following the due date, in
addition to any other remedy provided by this Lease, Lessee shall pay to Lessor a late payment
charge equal to five percent (5 %) of the delinquent payment, which shall be added to the amount
due, plus an interest charge on the delinquent payment (not including the late payment charge)
equal to three percent (3 %) over the prime rate of the largest bank operating in the State of
California on the due date, from the date of each delinquency until the amount owing is paid, or
the maximum interest rate permitted by law, whichever is less. It is the intent of this provision
that Lessor shall be compensated by such additional sums for loss resulting from rental
delinquency, including costs to Lessor for servicing the delinquent account. Lessor, in its sole
and absolute discretion, may waive any such delinquency compensation required herein, upon
written application of Lessee.
5.8 Lessee's Maintenance of Books and Records Relating to Calculation of Ground
Rent; Lessor's Right to Inspect and Audit Records. Lessee shall keep full and accurate books
and accounts, records, cash receipts, and other pertinent data showing its financial operations
pertaining to this Lease, the Premises, and the Hotel at a location in Orange County, California.
Such books and records shall be organized in a manner that separately itemizes each of the
separate components of Gross Room Revenues and Gross Non -Room Revenues identified in the
definitions of those terms and in Section 5.2.4 above. All retail sales and charges shall be
recorded by means of cash registers, point -of -sale computers, or other comparable devices which
display to the Hotel guest or customer the amount of the transaction and automatically issue a
sales receipt. Such devices shall be equipped with technology that customarily lock in sales
totals and other transaction records, or with counters that cannot be reset and that record
transaction numbers and sales details. Totals registered shall be read and recorded at least once
per day. Back -up copies of all such data, records, and reports must be made at least weekly in a
computer - readable medium and stored off -site. Lessee shall retain such books of account,
records, cash receipts, and other pertinent data for a minimum period of five (5) years after the
end of the Operating Year to which such items pertain. Lessor shall be entitled during such five
(5) years to inspect, examine, and copy at Lessor's expense Lessee's books of account, records,
cash receipts, and other pertinent data as necessary or appropriate for the purpose of this Lease.
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Lessee shall cooperate fully with Lessor in making the inspection. Except in the event of
litigation or arbitration between the Parties arising out of a dispute and otherwise except as
required by applicable law, including without limitation the California Public Records Act
(Government Code Sections 6250 et seq.), Lessee's books and records shall remain confidential
and not public.
In addition to the foregoing, Lessor shall be entitled at Lessor's expense, once during
each Operating Year and once after expiration or termination of the Lease Term, to an
independent audit of Lessee's books of account, records, cash receipts, and other pertinent data,
by a certified public accountant to be designated by Lessor, as necessary or appropriate to the
purposes and provisions of this Lease. Any such audit shall be conducted after reasonable prior
written notice by Lessor to Lessee and during Lessee's usual business hours. If the audit shows
that there is a deficiency in the payment of Ground Rent, the deficiency and interest thereon at
the rate specified in Section 5.7 of this Lease shall become immediately due and payable to
Lessor. In addition, if such deficiency exceeds the amount of the greater of Ten Thousand
Dollars ($10,000.00) in any Operating Year, or three percent (3 %) of the actual amount of
Ground Rent due in any Operating Year in which there is a deficiency, Lessee shall reimburse
Lessor for the cost of Lessor's audit. If Lessor has not audited Lessee hereunder with respect to
a particular Operating Year within the permitted five year period, or has not advised Lessee in
writing of any exceptions based on said audit within said five year period, then Lessor shall be
deemed to have waived its right to re- determine Ground Rent for such Operating Year.
5.9 Acceptance Not Waiver. Lessor's acceptance of any money paid by Lessee under
this Lease, whether shown by any Certified Annual Statement or otherwise, shall not constitute
an admission by Lessor of the accuracy or sufficiency of the amount of such payment.
ARTICLE 6
DEVELOPMENT OF THE HOTEL AND RELATED IMPROVEMENTS ON AND
ABOUT THE PREMISES
6.1 Commencement and Completion of Hotel. Within the times set forth in the
Schedule of Performance, Lessee shall commence and complete construction of the Hotel and
related Improvements on and about the Premises in accordance with the Development
Entitlements, the Final Building Plans, and all applicable Governmental Requirements and
Lessee shall cause the Hotel to be opened to the general public. Not by way of limitation of the
foregoing, prior to commencing work in any public rights -of -way Lessee shall obtain any
required encroachment permit(s) and deliver any required security instrument(s) in accordance
with Lessor's normal practices. Once construction is commenced it shall be diligently pursued
to completion and, subject to Events of Force Majeure, shall not be interrupted, halted, or
abandoned for more than twenty (20) consecutive days.
6.2 No Construction Before Notice; Notice(s) of Non - Responsibility. At no time
during the Lease Term shall Lessee commence or allow to be commenced any excavation,
grading, Premises preparation, utility relocation/installation, street or other public improvement
work in the right(s) -of -way adjacent to the Premises, or any construction work of any kind on the
Premises, nor shall Lessee deliver or allow to be delivered any equipment or materials to the
Premises for any of such purposes, until Lessee has first provided at least twenty (20) days prior
written notice to Lessor of the intended commencement of such work or the delivery of such
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equipment or materials. At any and all times during the Lease Term Lessor shall have the right
to post and maintain on the Premises and to record as required by law any notice or notices of
non - responsibility provided for by the mechanics' lien laws of the State of California.
6.3 Mechanic's Materialmen's Contractor's and Subcontractor's Liens. Subject to
Lessee's right to contest as hereinafter provided, at all times during the Lease Term, Lessee shall
keep the Premises, including all buildings and improvements now or hereafter located on the
Premises, free and clear of all liens and claims of liens for labor, services, materials, supplies, or
equipment performed on or furnished to the Premises. Lessee shall notify Lessor in writing of
any and all liens and claims of lien made or filed against the Premises within thirty (30) calendar
days after Lessee becomes aware of the filing thereof Thereafter, Lessee shall promptly (i) pay
and discharge, or cause the Premises to be released from, any such lien or claim of lien, or (ii)
contest such lien and furnish Lessor such bond as may be required by law to free the Premises
from the effect of such lien and to secure Lessor against payment of such lien and against any
and all loss or damage whatsoever in any way arising from Lessee's failure to pay or discharge
such lien. In the event Lessee provides a bond in lieu of paying or discharging a lien as set forth
herein, and Lessor is unable despite reasonably diligent effort to obtain an endorsement to any
existing title policy in favor of Lessor insuring Lessor's interest in the Premises free and clear of
any such liens that have not been paid or discharged, Lessee shall, at Lessee's sole cost and
expense, within thirty (30) days of Lessor's written request therefor, provide the Lessor with
such endorsement.
Should Lessee fail to pay and discharge, or cause the Premises to be released from, any
such lien or claim of lien or to provide a bond as permitted hereunder within thirty (30) days
after service on Lessee by Lessor of a written request to do so, Lessor may pay, adjust,
compromise, and discharge any such lien or claim of lien on such terms and in such manner as
Lessor may reasonably deem appropriate. In such event, Lessee shall, on or before the first day
of the next calendar month following any such payment by Lessor, reimburse Lessor for the full
amount so paid by Lessor, including any actual and reasonable attorneys' fees or other costs
expended by Lessor, together with interest thereon at the annual rate of interest equal to three
percent (3 %) over the prime rate of the largest bank operating in the State of California as of the
close of business on the date of payment by the Lessor, or the highest lawful rate, whichever is
less, from the date of payment by Lessor to the date of Lessee's reimbursement of Lessor.
Promptly after substantial completion of any work of improvement during the Lease
Tenn, Lessee shall record or cause to be recorded in the Official Records of Orange County a
notice of completion. Lessee hereby appoints Lessor as Lessee's attorney -in -fact to record the
notice of completion, which appointment shall only become effective on ten (10) days' notice
upon Lessee's failure to record such a notice of completion after the work of improvement has
been substantially completed; provided, that Lessor shall not be obligated to record such a notice
of completion and the failure of Lessor to record said notice shall not excuse the failure of
Lessee to discharge its obligation to record said notice of completion.
6.4 Lessor's Rights of Access. Representatives of Lessor shall have the reasonable
right of access to the Premises without charges or fees, at normal construction hours during all
periods of construction for the purposes of this Lease, including, but not limited to, the
inspection of the work being performed in constructing, reconstructing, repairing, and replacing
all or any portion of the Hotel and related Improvements. Such representatives of Lessor shall be
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those who are so identified in writing by the City Manager or Public Works Director of Lessor or
their authorized designee(s). Lessor shall provide reasonable prior notice to Lessee of any such
entry, and shall use its best efforts to minimize interference with Lessee's use of the Premises,
Hotel, and Improvements as much as is reasonably feasible. Such entry shall be in compliance
with all applicable safety rules and regulations provided by Lessee (or its general contractor) to
Lessor's representative(s) at the time of entry. Lessor shall indemnify, defend, and hold
harmless Lessee from and against any claim, liability, losses, and damages caused by Lessor
during any such inspections, excluding any such claims, liabilities, losses, and damages arising
out of Lessor's discovery of unsafe or substandard conditions not caused by the acts of Lessor
and any such claims, liabilities, losses, and damages for which Lessor would not otherwise be
liable in the absence of this Lease, and Lessor shall be responsible for the prompt repair and/or
restoration of any such damage caused by Lessor or its representative(s) during any such
inspection.
6.5 Local, State and Federal Laws. Lessee shall carry out the construction and
installation of the Improvements on and about the Premises in conformity with all applicable
Governmental Requirements. hi this regard, the Parties agree that Lessor is a charter city exempt
from the obligation to comply with California's prevailing wage laws, that the Hotel will be a
privately owned facility, that the rent to be paid by Lessee to Lessor pursuant to this Lease is not
less than the fair market rent for the Premises, that the Hotel is not being "paid for in whole or in
part out of public funds" within the meaning of California Labor Code Section 1720(a)(1) and
(b), and that any Lessor contribution to the Hotel project is "de minimis in the context of the
project" within the meaning of Labor Code Section 1720(c)(3), such that Lessee's construction
and installation of the Improvements and its performance of other related
development/construction activities pursuant to this Lease does not constitute construction or
installation of a "public work" for which prevailing wages must be paid or for which Lessee is
required to comply with any other Governmental Requirements applicable to "public works."
Notwithstanding such agreement, however, Lessor makes no covenant, representation, or
warranty to Lessee in that regard, Lessee bears the full risk with respect thereto, and nothing in
this Lease, including this Section 6.5, shall release Lessee from the obligation to comply with all
applicable Governmental Requirements, including, if later found to be applicable, Governmental
Requirements applicable to "public works."
6.6 As -Built Drawings. Upon completion of any construction work on the Premises,
Lessee shall as soon as practicable furnish Lessor with a set of drawings and specifications for all
completed construction which accurately reflects the nature and extent of all work done on or to
the Premises and marked to show such construction "as built."
6.7 Costs of Construction. Except as expressly set forth in Section 6.8 of this Lease,
Lessee shall bear all costs and expenses associated with the planning, design, construction,
maintenance, furnishing, equipping, and supplying of the Hotel and the Improvements, which
costs and expenses include without limitation: (i) utility hook -up and connection fees and all
distribution facilities, conduits, pipelines, and cables required in connection with construction of
the Hotel; (ii) all design, engineering, financing, and construction costs; and (iii) all necessary
permit fees, charges, assessments, taxes, and exactions.
6.8 Lessor Responsibility for Coastal Commission Lower Cost Overnight
Accommodations Mitigation Fee. The Parties acknowledge that prior to the Agreement Date the
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California Coastal Commission has instituted a program requiring developers of hotels in the
Coastal Zone to pay a "Lower Cost Overnight Accommodations Mitigation Fee" as a condition
to the Commission's approval of a coastal development permit. In the event the California
Coastal Commission so conditions its issuance of a coastal development permit for the Hotel and
such fee is required to be paid, Lessor hereby covenants and agrees to pay said fee on behalf of
Lessee in an amount not to exceed the lesser of (i) Seven Thousand Five Hundred Dollars
($7,500.00) per room in the Hotel or (ii) Nine Hundred Seventy -Five Thousand Dollars
($975,000) (130 rooms X $7,500/room) at or before the time said fee becomes due and in any
event within a time period that will not cause a delay in construction of the Hotel or issuance of
those Development Entitlements provided by the California Coastal Commission. In the event
the California Coastal Commission does not impose an affordable hotel room fee on the Hotel
project or the amount of the affordable hotel room fee imposed by the California Coastal
Commission on the Hotel project is less than the maximum amount that Lessor is required to pay
pursuant to this Section 6.8, Lessee shall not be entitled to any payment, credit, or offset of its
other obligations set forth herein. In the event the affordable hotel room fee imposed by the
California Coastal Commission on the Hotel project exceeds the maximum amount that Lessor is
required to pay pursuant to this Section 6.8 Lessee shall be responsible for payment of the
balance of said fee. Neither Lessor nor Lessee makes any representation or warranty to the other
Party with respect to the validity, enforceability, or amount of such fee; provided, however, that
the Parties covenant to cooperate in good faith in an effort to not cause any uncertainty or
disagreement about the imposition or amount of such fee to delay the California Coastal
Commission's final action on the Coastal Development Permit for the Hotel project or result in a
disapproval thereof
ARTICLE 7
USE AND OPERATION OF HOTEL; CHANGES IN HOTEL MANAGEMENT
COMPANY/HOTEL MANAGEMENT AGREEMENT AND /OR HOTEL
FRANCHISOR/HOTEL FRANCHISE AGREEMENT
7.1 General: Use and Operation of the Premises, Hotel, and Improvements. Lessee
covenants and agrees that during construction and thereafter through the remainder of the Lease
Term, Lessee shall comply with all of the following use and operational requirements,
restrictions, and prohibitions:
(i) Lessee shall operate and maintain the Hotel in full compliance with the
Required Hotel Standard, all applicable Governmental Requirements, and the express provisions
set forth in this Lease, as the same may be amended from time to time. Uses normally incidental
to a hotel use, including without limitation a restaurant, cocktail lounge, cleaning and laundry
service, banquet and catering facilities, meeting rooms, gift shop, spa, resort retail, magazine
stand, barber or beauty shop, travel agency, airline ticket office, automobile rental operation, and
recreational facilities, shall also be permitted, subject to whatever special permits for such uses
may be required therefor from time to time in accordance with Governmental Requirements.
The business conducted by each sublessee, licensee, and concessionaire on the Premises
similarly shall be consistent with the Required Hotel Standard and the high quality required for
the Hotel generally.
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If the AAA four diamond hotel standards change, the Required Hotel Standard
automatically shall be deemed to change accordingly, subject to the provisions in this Section
7.1(i) set forth hereinbelow.
If the AAA ceases to publish hotel rating guidelines, then for purposes of this
Lease the "Required Hotel Standard" shall mean a standard of operation that meets all criteria for
the most substantially equivalent standard to a AAA four diamond hotel standard under such
other rating system that is then generally recognized by the hotel industry. If in connection with
any change in, or choice of a replacement raring system Lessor and Lessee are unable to agree
upon such changed or replacement rating system, then the City Manager or his or her designee
shall have the authority to select the replacement rating system to be used.
In addition to the foregoing, the Parties acknowledge that the Lease Term
provided for herein is lengthy, that the hotel marketplace in general and hotel standards in
particular change over time, and that flexibility needs to be built into the definition of "Required
Hotel Standard" to accommodate such changes. Accordingly, the Parties agree that the Required
Hotel Standard is intended to keep the Hotel on a par (or better) than the prevailing standard in
comparable quality hotels in the Orange County marketplace within a ten (10) mile radius of the
Premises, as currently represented by the AAA four diamond standard, but subject to deviations
from such standard as the market dictates, and that if either Parry believes at any time during the
Lease Term that changes in said hotel marketplace have occurred that warrant changes to the
then - applicable Required Hotel Standard, that Party shall have the right to notify the other Party
in writing of such position and the basis for such position, in which event the Parties agree
thereafter to meet and confer in good faith to consider whether to mutually approve a
modification in the Required Hotel Standard hereunder. If the Parties agree to a modification to
the Required Hotel Standard, they shall cooperate by approving and executing an appropriate
amendment to this Lease memorializing the agreed -upon change(s). If Lessee requests in writing
that Lessor approve one or more deviations from the AAA four diamond (or substitute) standard,
Lessor's approval of such deviation shall not be unreasonably delayed, conditioned, or denied. If
the Parties do not mutually agree to modify the Required Hotel Standard, either Party shall have
the right to have the dispute concerning changes to the Required Hotel Standard determined by
binding arbitration, which arbitration shall be conducted in accordance with the commercial
arbitration rules of the American Arbitration Association (with no right to discovery) or such
other method and procedure of arbitration to which the Parties may agree at the time. Each Party
shall bear its own costs with respect to any such arbitration and the Parties shall each pay fifty
percent (50 %) of the cost of the arbitrator(s). The final determination of the arbitrator shall be
memorialized in an appropriate amendment to this Lease, which shall be executed by both
Parties.
(ii) Lessee shall not allow the Premises to be used for any of the following
purposes, which are expressly prohibited: (i) Timeshare use; (ii) long -term residential use, which
for purposes of this Lease shall mean continuous occupancy of more than twenty -five percent
(25 %) of the guest rooms in the Hotel at any one time by the same occupants for periods in
excess of twenty -eight (28) consecutive days (and with the understanding that for purposes of
this clause (ii) a hotel guest shall be deemed to be continuously occupying a guest room for a
period in excess of twenty -eight (28) consecutive days if he or she continuously occupies any
room in the Hotel for a period in excess of twenty -eight (28) consecutive days, even if he or she
moves from one guest room to another guest room one or more times during or after the twenty-
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eight (28) day period); and (iii) any adult entertainment purpose, as defined from time to time in
the City of Newport Beach Municipal Code (provided that this prohibition is not intended and
shall not be interpreted to regulate in violation of applicable Governmental Requirements the
private non - business activity of an individual that is confined to such individual's individual
hotel room).
(iii) Subject to Sections 10.4 -10.6 and 14.3 -14.4 of this Lease and periods of
renovation, from the initial opening of the Hotel through the entire Lease Term, Lessee shall
cause the Hotel to be open for business to the general public every day of the year and Lessee
shall operate the Hotel in substantially complete fashion in accordance with the standards set
forth in this Lease. Lessee shall stock and maintain adequate working capital and adequate
inventories of food, beverages, operating equipment, and supplies consistent with the
business(es) conducted on the Premises.
(iv) Lessee shall not place or permit to be placed on any portion of the
Premises, in locations that are visible from any location off of the Premises, any art, displays,
monuments, signs, logos, or advertising unless such art, displays, monuments, signs, logos, or
advertising, including without limitation the size, design, subject, wording, composition, color,
and lighting thereof, are consistent with the City's Municipal Code and any other applicable
Governmental Requirements.
(v) To the maximum extent permitted consistent with applicable
Governmental Requirements, without the prior written approval of the City Manager or his or
her designee, which approval may be withheld in his/her sole and absolute discretion, Lessee
shall not erect or maintain or allow to be erected or maintained any antennae or other device for
the transmission or reception of television signals or any other form of electromagnetic radiation
outdoors above ground on any portion of the Premises, whether attached to an Improvement or
otherwise.
7.2 Management by pproved Hotel Management Company; Changes in Hotel
Management Company and New or Amended Hotel Management Agreement;
Removal/Replacement of Hotel Management. At all times from the date the Hotel opens for
business to the general public through the remainder of the Lease Term Lessee shall cause the
day -to -day operation of the Hotel to be managed by a Hotel Management Company approved by
Lessor and, in this regard, Lessee shall cause the Hotel Management Company to continuously
(24 hours per day during all days that the Hotel is open for business) maintain competent and
professional staff on the Premises.
The following Hotel Management Companies shall be deemed approved by
Lessor and shall require no further approval by Lessor hereunder: (i) Ace Hotels; (ii) Ascend
Collection offered by Choice Brands; (iii) the following Commune Hotels brands: Joie de Vivre
and Thompson Hotels; (iv) the following Denihan Hospitality brands: The James and Affinia; (v)
Destination Hotels; (vi) Dolce Hotels; (vii) Fairmont Hotels; (viii) Four Seasons Hotels; (ix) the
following Hilton Brands: Curio, Conrad and Waldorf - Astoria; (x) the following Hyatt brands:
Andaz, Grand Hyatt, Hyatt Regency, and Park Hyatt; (xi) Kimpton or the following Kimpton
Hotels brands: Argonaut, Monaco, and Palomar; (xii) Loews Hotels; (xiii) Magnolia Hotel; (xiv)
Mandarin Oriental; (xv) the following Marriott brands: Autograph Collection, AC, Bulgari, JW
Marriott, Marriott, Renaissance Hotels, and Ritz - Carlton; (xvi) Morgan Hotels (all brands); (xvii)
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the following Montage Hotels & Resorts brands: Montage Hotels and Pendry Hotels; ( xviii)
Omni Hotels; (xix) Orient Express Hotels; (xx) Pacific Hospitality Group; (xxi) Public Chicago
Hotel; (xxii) Radisson Blu offered by Carlson; (xxiii) Raffles Hotels and Resorts; (xxiv)
Standard International Hotels —all brands; (xxv) the following Starwood Capital Group brands: 1
Hotel, Baccarat Hotel, and Postcard Inn; (xxvi) the following Starwood Hotels & Resorts brands:
Le Meridien, Luxury Collection, Sheraton Resorts, St. Regis, Westin Hotels & Resorts, and W
Hotel; and ( xxvii) Trump Hotel Collection.
As to any Hotel Management Company that is not deemed approved pursuant to
the preceding paragraph, Lessee shall submit to the City Manager or his or her designee for his
or her review and approval the identity of the Hotel Management Company Lessee desires to
have manage the Hotel. The City Manager or his or her designee shall not unreasonably
withhold, condition, or delay approval of the Hotel Management Company and shall grant such
approval if Lessee provides evidence reasonably satisfactory to the City Manager or his or her
designee that (i) the executive management of the Hotel Management Company who will be
responsible for the management of the Hotel shall have a minimum of ten (10) years experience
in the successful operation of hotels in Southern California on a par (or better) than the
prevailing standard in comparable quality to the Hotel; (ii) the Hotel Management Company, its
principals, and all of the individuals who will be responsible for managing the Hotel on the
Premises are of good moral character and none of them ever has been convicted of a felony
involving moral turpitude, including without limitation any crime involving dishonesty, theft,
embezzlement, forgery, violence, or physical force against another person or persons; and (iii)
the Hotel Management Company has or will be in a position to participate in a nationwide
reservation system. Concurrently with submitting its request for approval of the Hotel
Management Company, Lessee shall submit to the City Manager or his or her designee all
information needed to demonstrate compliance with the foregoing criteria and thereafter, upon
Lessor's request, Lessee shall cooperate with Lessor and provide such additional information as
Lessor may reasonably request relating to such criteria or other factors bearing upon Lessor's
approval of the Hotel Management Company. If the City Manager or his or her designee
disapproves the Hotel Management Company, he or she shall do so by written notice to Lessee
stating the reasons for such disapproval.
In addition to the foregoing, at the time set forth in the Schedule of Performance
(as to the first Hotel Management Company to be approved or deemed approved prior to the
Lease Commencement Date pursuant to Sections 3.1.4 and 3.2.5 of this Lease) or prior to the
time that any new or different Hotel Management Company commences to manage and operate
the Hotel on the Premises, and whether of not such Hotel Management Company is deemed
approved by Lessor as provided herein, Lessee shall submit to the City Manager of Lessor or his
or her designee for his or her approval the form of the hotel management agreement that Lessee
proposes to enter into with the Hotel Management Company ( "Hotel Management
Agreement"); provided, that Lessee shall have the right to redact from the Hotel Management
Agreement submitted to Lessor the amount of the fees or charges payable by Lessee to the Hotel
Management Company. In addition, upon Lessor's request, Lessee shall cooperate with Lessor
and provide such additional information as Lessor may reasonably request relating to such
criteria or other factors bearing upon Lessor's approval of the Hotel Management Agreement.
The City Manager or his or her designee shall not unreasonably withhold, condition, or delay
approval of the Hotel Management Agreement and shall grant such approval if Lessee provides
evidence reasonably satisfactory to the City Manager or his or her designee that the Hotel
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Management Agreement incorporates the applicable obligations of Lessee set forth in this Lease,
including without limitation Section 7.4 hereof, and is consistent in all respects with this Lease.
If the City Manager or his or her designee disapproves the Hotel Management Agreement, he or
she shall do so by written notice to Lessee stating the reasons for such disapproval. Within five
(5) days after Lessee and the Hotel Management Company execute and deliver the Hotel
Management Agreement, Lessee shall deliver to Lessor a complete final executed copy
consistent with Lessor's approval; provided, that Lessee shall have the right to redact from the
Hotel Management Agreement submitted to Lessor the amount of the fees or charges payable by
Lessee to the Hotel Management Company as business trade information that is not a matter of
public record.
If after Lessor's approval of the Hotel Management Company and the Hotel
Management Agreement, as provided herein, Lessee desires either to (i) change the Hotel
Management Company or (ii) enter into a new Hotel Management Agreement (provided that a
mere amendment for an extension of the tern of the previously approved Hotel Management
Agreement shall not be deemed to constitute a new Hotel Management Agreement for purposes
of this Section 7.2), Lessee shall be required to submit such matter(s) to the City Manager or his
or her designee, who shall have the authority on behalf of Lessor to approve or disapprove the
same. The City Manager or his or her designee shall not unreasonably withhold, condition, or
delay approval of a change in the Hotel Management Company and/or a new Hotel Management
Agreement and shall grant such approval(s) consistent with the criteria and procedures set forth
above. In no event shall Lessee change the Hotel Management Company or amend or enter into
a new Hotel Management Agreement requiring Lessor's approval hereunder without first
obtaining Lessor's approval. Within five (5) days after Lessee enters into any new or amended
Hotel Management Agreement, Lessee shall deliver to Lessor a complete final executed copy
consistent with Lessor's approval; provided, that Lessee shall have the right to redact from any
such new or amended Hotel Management Agreement submitted to Lessor the amount of the fees
or charges payable by Lessee to the Hotel Management Company as business trade information
that is not a matter of public record.
In addition to the foregoing, Lessor shall have the right, but not the obligation, upon
delivery of ninety (90) days written notice to Lessee, to require Lessee to remove the Hotel
Management Company and replace the Hotel Management Company with another Hotel
Management Company meeting the requirements set forth in this Section 7.2 if Lessor
reasonably determines that the Hotel Management Company on the Premises is guilty of "Gross
Mismanagement." For purposes of this Lease, "Gross Mismanagement" shall include, but is
not limited to, any of the following: (i) the Hotel Management Company's intentional
underreporting of Gross Room Revenues or Gross Non -Room Revenues; (ii) the Hotel
Management Company's failure to timely cure a Default under Section 7.1 of this Lease after
and despite Lessor's delivery of written notice; and (iii) the Hotel Management Company's
failure to timely cure more than three (3) separate Defaults under Article 8 ( "Maintenance and
Repairs ") of this Lease that occur during any continuous one (1) year period during the Lease
Term, after and despite Lessor's delivery of written notice of Default.
7.3 Hotel Franchisor and Hotel Franchise Agreement. Lessee shall have the right but
not the obligation from time to time to operate the Hotel as a franchise of a hotel company.
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The following Hotel Franchisors shall be deemed approved by Lessor and shall require
no further approval by Lessor hereunder: (i) Ace Hotels; (ii) Ascend Collection offered by
Choice Brands; (iii) the following Commune Hotels brands: Joie de Vivre and Thompson Hotels;
(iv) the following Denihan Hospitality brands: The James and Affinia; (v) Destination Hotels;
(vi) Dolce Hotels; (vii) Fairmont Hotels; (viii) Four Seasons Hotels; (ix) the following Hilton
Brands: Curio, Conrad and Waldorf - Astoria; (x) the following Hyatt brands: Andaz, Grand
Hyatt, Hyatt Regency, and Park Hyatt; (xi) Kimpton or the following Kimpton Hotels brands:
Argonaut, Monaco, and Palomar; (xii) Loews Hotels; (xiii) Magnolia Hotel; (xiv) Mandarin
Oriental; (xv) the following Marriott brands: Autograph Collection, AC, Bulgari, JW Marriott,
Marriott, Renaissance Hotels, and Ritz- Carlton Hotels; (xvi) Morgan Hotels (all brands); (xvii)
the following Montage Hotels & Resorts brands: Montage Hotels and Pendry Hotels; (xviii)
Omni Hotels; (xix) Orient Express Hotels; (xx) Public Chicago Hotel; (xxi) Radisson Blu offered
by Carlson; (xxii) Raffles Hotels and Resorts; (xxiii) Standard International Hotels —all brands;
(xxiv) the following Starwood Capital Group brands: 1 Hotel, Baccarat Hotel, and Postcard Inn;
(xxv) the following Starwood Hotels & Resorts brands: Le Meridien, Luxury Collection,
Sheraton Resorts, St. Regis, Westin Hotels & Resorts, and W Hotel; and (xxvi) Trump Hotel
Collection.
As to any Hotel Franchisor that is not deemed approved pursuant to the preceding
paragraph, Lessee shall submit to the City Manager or his or her designee for his or her review
and approval the identity of the Hotel Franchisor with which Lessee desires to affiliate. The City
Manager or his or her designee shall not unreasonably withhold, condition, or delay approval of
the Hotel Franchisor is a nationally recognized hotel chain of comparable quality to the list of
pre- approved Hotel Franchisors listed in the preceding paragraph with a minimum of ten (10)
years experience in the successful franchising of hotels in Southern California comparable in
quality to the Hotel to be operated and maintained on the Premises. Concurrently with
submitting its request for approval of the Hotel Franchisor, Lessee shall submit to the City
Manager or his or her designee all information needed to demonstrate compliance with the
foregoing criteria and thereafter, upon Lessor's request, Lessee shall cooperate with Lessor and
provide such additional information as Lessor may reasonably request relating to such criteria or
other factors bearing upon Lessor's approval of the Hotel Franchisor. If the City Manager or his
or her designee disapproves the Hotel Franchisor, he or she shall do so by written notice to
Lessee stating the reasons for such disapproval.
in addition to the foregoing, at the time set forth in the Schedule of Performance (as to
the first Hotel Franchisor to be approved or deemed approved prior to the Lease Commencement
Date pursuant to Sections 3.1.5 and 3.2.6 of this Lease) or prior to the time that Lessee enters
into an agreement with any new or different Hotel Franchisor with respect to the Hotel on the
Premises, and whether or not such Hotel Franchisor is deemed approved by Lessor as provided
herein, Lessee shall submit to the City Manager of Lessor or his or her designee for his or her
approval the form of the franchise agreement that Lessee proposes to enter into with the Hotel
Franchisor ( "Hotel Franchise Agreement "); provided, that Lessee shall have the right to redact
from the Hotel Franchise Agreement submitted to Lessor the amount of the fees or charges
payable by Lessee to the Hotel Franchisor. In addition, upon Lessor's request, Lessee shall
cooperate with Lessor and provide such additional information as Lessor may reasonably request
relating to such criteria or other factors bearing upon Lessor's approval of the Hotel Franchise
Agreement. The City Manager or his or her designee shall not unreasonably withhold, condition,
or delay approval of the Hotel Franchise Agreement and shall grant such approval if Lessee
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provides evidence reasonably satisfactory to the City Manager or his or her designee that the
Hotel Franchise Agreement is consistent in all respects with this Lease. If the City Manager or
his or her designee disapproves the Hotel Franchise Agreement, he or she shall do so by written
notice to Lessee stating the reasons for such disapproval. Within five (5) days after Lessee and
the Hotel Franchisor execute and deliver the Hotel Franchise Agreement, Lessee shall deliver to
Lessor a complete final executed copy consistent with Lessor's approval; provided, that Lessee
shall have the right to redact from the Hotel Franchise Agreement submitted to Lessor the
amount of the fees or charges payable by Lessee to the Hotel Franchisor as business trade
information that is not a matter of public record.
If after Lessor's approval of the Hotel Franchisor and the Hotel Franchise Agreement, as
provided herein, Lessee desires either to (i) change the Hotel Franchisor or (ii) enter into a new
Hotel Franchise Agreement (provided that a mere amendment for an extension of the term of the
previously approved Hotel Franchise Agreement shall not be deemed to constitute a new Hotel
Franchise Agreement for purposes of this Section 7.3), Lessee shall be required to submit such
matter(s) to the City Manager or his or her designee, who shall have the authority on behalf of
Lessor to approve or disapprove the same. The City Manager or his or her designee shall not
unreasonably withhold, condition, or delay approval of a change in the Hotel Franchisor and/or a
new Hotel Franchise Agreement and shall grant such approval(s) consistent with the criteria and
procedures set forth above. In no event shall Lessee change the Hotel Franchisor or amend or
enter into a new Hotel Franchise Agreement requiring Lessor's approval hereunder without first
obtaining Lessor's approval. Within five (5) days after Lessee enters into any new or amended
Hotel Franchise Agreement, Lessee shall deliver to Lessor a complete final executed copy
consistent with Lessor's approval; provided, that Lessee shall have the right to redact from any
such new or amended Hotel Franchise Agreement submitted to Lessor the amount of the fees or
charges payable by Lessee to the Hotel Franchisor as business trade information that is not a
matter of public record.
7.4 Prohibition on Lessee's, Hotel Management Company's, and Subcontractors'
Employment or Retention of Certain Persons; Lessor's Right to Require Removal. To the
maximum extent permitted by law, during the entire Lease Term Lessee shall not knowingly
employ or retain and shall not permit the Hotel Management Company or any other independent
contractor, subcontractor, or firm operating on or from the Premises to employ or retain any
person who works at or from the Premises and who is not of good moral character, which for
purposes of this Lease shall mean that such person (i) is registered or is required to be registered
as a sex offender in California or any other state; (ii) has been convicted of a crime in another
country or state that would require such person to register as a sex offender in California if such
crime were committed in California; (iii) has been convicted in any country or state at any time
of a felony involving moral turpitude, including without limitation any crime involving
dishonesty, theft, embezzlement, forgery, extortion, or intimidation, violence, or physical force,
or the threat of violence or physical force against any other person or persons; or (iv) has a
criminal charge then pending based on the alleged commission of a felony meeting the
requirements of clause (iii) (provided, that as to persons who meet the disqualification of this
clause (iv) only, such persons shall not be considered to meet the disqualification of this clause
(iv) if the criminal charge is dropped, the person is acquitted of the alleged criminal offense, or
the criminal case is finally disposed of on a basis that does not result in the person meeting any
of the disqualifications in clauses (i)- (iii), inclusive). Lessee shall institute appropriate
employment screening procedures to verify that all of Lessee's employees who work at or from
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the Premises are of good moral character and through the Hotel Management Agreement and any
other contracts with independent contractors, subcontractors, and other firms operating on or
from the Premises Lessee shall require that those other firms and entities institute similar
appropriate employment screening procedures as well. The requirements of this Section 7.4
shall be included in the Hotel Management Agreement approved by Lessor in accordance with
Section 3.2.5 of this Lease (prior to the Commencement Date) and Section 7.2 (with respect to
any new or amended Hotel Management Agreement submitted to Lessor from and after the
Commencement Date). The requirements of this Section 7.4 shall be included in each contract
entered into by Lessee, the Hotel Management Company, or any other authorized agent of
Lessee with any other person, firm, or entity that occupies space or provides services on the
Premises during the Lease Term.
In addition to Lessor's rights under Section 7.2 to require removal/replacement of the
Hotel Management Company for Gross Mismanagement, to the maximum extent permitted by
law Lessor shall have the right, but not the obligation, to require Lessee, the Hotel Management
Company, and any other person, firm, or entity that occupies space or provides services on the
Premises during the Lease Term, as applicable, to immediately remove or cause the removal
from the Premises and to immediately terminate or cause termination of the employment or
retention of any person who is not of good moral character, as provided herein.
7.5 Name of Hotel Promotions and Advertising. At all times the Hotel shall be
operated under the trade name of Lido House, Lido House Hotel, or such other trade name that is
approved by Lessor in its reasonable discretion; provided that Lessee shall at all times have the
right to add or include in the name of the Hotel either or both of the following without Lessor's
written consent: (i) "Newport" or "Newport Beach'; and (ii) the trade name of the Hotel
Franchisor. All of Lessee's promotions and advertising for the Hotel shall refer to and use said
name and, if the word "Newport" or "Newport Beach" is not part of the name of the Hotel itself
all such promotions and advertising shall prominently include reference to the Hotel's location in
the City of Newport Beach.
ARTICLE 8
MAINTENANCE AND REPAIRS
8.1 Maintenance and Repairs; General. At Lessee's sole cost and expense, at all
times during the Lease Term Lessee shall be responsible for maintaining, repairing, and
operating the Premises, all Improvements constructed or to be constructed thereon (including
landscaping, lighting, and signage), and all equipment and personal property placed from time to
time on the Premises in a quality and condition consistent with the Required Hotel Standard and
similar quality hotel properties in the Southern California marketplace, in compliance with the
terms of the City of Newport Beach Municipal Code, other applicable Governmental
Requirements, and the following:
(i) All Improvements on the Premises shall be maintained in appropriate
condition in accordance with the practices prevailing in the operations of similar developments,
and in conformance and substantial compliance with all plans, drawings, and related documents
approved by Lessor pursuant to this Lease and all conditions of approval of land use entitlements
adopted by Lessor in its governmental or regulatory capacity, including without limitation the
interiors and exteriors of all buildings and structures and all grounds to the curbline, the
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entrances, windows, partitions, doors, lighting and plumbing fixtures, heating, ventilation and air
conditioning systems, benches, shelters, planters, kiosks, trash containers, signs, sculptures,
fountains, play areas, swimming pools, jacuzzis, spas, exercise rooms, platforms, stages, lateral
water and sanitary sewer lines, drainage facilities, sidewalks, driveways, parking areas and
facilities, landscaping and irrigation facilities, exterior lighting systems, and pedestrian
walkways.
(ii) All furnishings and fixtures on the Premises shall be kept at all times in a
neat, clean, and appropriate condition in accordance with the practices prevailing in the
operations of similar developments and shall be periodically repaired and replaced in accordance
with the practices prevailing in the operations of similar developments.
(iii) All exterior and interior painted surfaces shall be kept clean, shall be
periodically repainted, and shall not be allowed to show unreasonable peeling or worn surfaces.
(iv) All wallpapered or other treated surfaces shall be kept clean and shall be
periodically repaired or replaced in accordance with the practices prevailing in the operations of
similar developments.
(v) Landscape maintenance shall include, without limitation, periodic
watering/irrigation, fertilization, mowing, edging, trimming of grass, tree and shrub pruning,
trimming, and shaping of trees and shrubs to maintain a natural and healthy appearance, road
visibility, and irrigation coverage, and replacement, as needed, of all dead or diseased plant
materials, control of , veeds in all planters, shrubs, lawns, ground covers, and other planted areas;
and staking for support of trees.
(vi) Clean -up maintenance shall include, without limitation, maintenance of all
sidewalks, paths, and other paved areas to keep the same in a clean and weed -free condition,
maintenance of all such areas to keep the same clear of dirt, mud, trash, debris, and other matter
which is unsafe or unsightly, removal of all trash, litter, and other debris from improvements and
landscaping, and clearance and cleaning of all areas maintained prior to the end of each day on
which maintenance operations are performed to ensure that all cuttings, weeds, leaves, and other
debris are properly disposed of by maintenance workers.
(vii) Maintenance of appropriate entrance, exit, and directional signage,
markers, and lights shall be provided as reasonably required and in accordance with the practices
prevailing in the operation of similar developments.
(viii) Lighting fixtures shall be cleaned and lamps/bulbs shall be promptly
replaced if not operating.
(ix) Pavement striping, markers, directional signs, and similar improvements
shall be periodically repainted or replaced as necessary to maintain the same in appropriate
condition in accordance with the practices prevailing in the operations of similar developments.
(x) Adequate security personnel and security measures shall be instituted and
maintained in a commercially reasonable manner to provide a safe and secure environment in all
interior and exterior areas of the Premises and for all activities and events occurring on the
Premises.
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8.2 Waste. Lessee shall not commit or suffer to be committed any waste or
impairment of the Premises or the Improvements, or any part thereof.
8.3 Hazardous Substances. Lessee covenants each and all of the following:
(i) Following the Commencement Date and within commercially reasonable
time periods, Lessee shall remove all existing Hazardous Substances from the Premises in the
manner prescribed by law.
(ii) Upon completion of construction of the Hotel and prior to opening the
Hotel for business to the general public the Premises shall be free and clear of any Hazardous
Substances to the extent required by applicable law.
(iii) The development, construction, and uses of the Premises required and
permitted under this Lease do not require the presence of any Hazardous Substance on, in, or
under the Premises, except for those customarily used in the ordinary course of business for such
development, construction, and use consistent with applicable law.
(iv) If at any time during the Lease Term any Hazardous Substance is present
on, in, or under the Premises (including, without limitation, the soil and groundwater) in
violation of applicable law, Lessee, at no expense to Lessor, and at the earliest practicable date,
shall remove such Hazardous Substances from the Premises (including without limitation any
Hazardous Substances in the soil or groundwater) and any surrounding areas to which such
Hazardous Substances may have migrated from the Premises in accordance with and to the
extent required by any and all applicable legal requirements. The parties intend to require Lessee
to remove all Hazardous Substances from the Premises and surrounding areas to which such
Hazardous Substances may have migrated to the extent required by applicable law, if such
Hazardous Substances are present at levels of concentration which require removal under
applicable law. If, at any time during the Lease Term, Lessor has reasonable cause to believe
one or more Hazardous Substances may be present on, in, or under the Premises in violation of
applicable law, Lessor may by written notice inform Lessee of the basis for Lessor's concern and
require Lessee to cause the Premises to be tested for such Hazardous Substance(s) at Lessee's
sole expense in accordance with a testing plan and schedule first approved in writing by Lessor.
Lessee shall exercise reasonable diligence to submit a testing plan to Lessor within 30 days after
the date of the Lessor's notice, endeavor to obtain Lessor's approval of the testing plan as soon
as practicable thereafter, and cause the testing to begin within 30 days Lessor's approval of the
testing plan. Notwithstanding the foregoing, nothing in this Section 8.3(iv) is intended to limit,
restrict, or modify Lessor's obligations and responsibilities set forth in Section 3.5.2 of this
Lease.
(v) Lessee shall not bring or allow to be brought onto the Premises or use or
store on the Premises any Hazardous Substances without the prior express written consent of
Lessor, except for those Hazardous Substances (including without limitation fuel stored in motor
vehicles) customarily used in the ordinary course of business in the use and operation of the
Premises and the Improvements.
(vi) The following covenants pertain to Lessee's occupancy and use of the
Premises and Improvements:
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(a) No underground storage tanks for Hazardous Substances shall be
installed on or under the Premises.
(b) Lessor and its officers, employees, contractors and agents shall at
all times have the right to go upon and inspect the Premises and Improvements and the
operations conducted thereon to assure compliance with the requirements herein stated. Lessor
shall provide reasonable prior notice to Lessee of such entry, and shall seek to minimize
interference with and interruption to Lessee's use of the Premises and Improvements as much as
is reasonably feasible. Such entry shall be in compliance with all applicable safety rules and
regulations. This inspection may include taking samples for testing of substances and materials
present and/or testing soils on the Premises and Improvements. Lessor shall indemnify, defend,
and hold harmless Lessee from and against any claims, liabilities, losses, and damage caused by
Lessor during any such inspections (excepting that this indemnity obligation shall not apply to
claims, liabilities, losses, and damage not created by Lessor and resulting only from Lessor's
discovery of Hazardous Substances on the Premises), and Lessor shall be responsible for the
prompt repair and/or restoration of any such damage caused by Lessor during any such
inspection.
(c) Lessee shall be responsible for posting on the Premises and
Improvements any signs required by Section 25249.6 of the California Health and Safety Code
and regulations promulgated pursuant thereto. Lessee shall also complete and file any business
response plans or inventories required by Chapter 6.95. of the California Health and Safety Code
and regulations promulgated pursuant thereto. Lessee shall concurrently file a copy of any such
business response plan or inventory with Lessor.
(d) Lessee shall immediately notify Lessor in writing of the release of
any Hazardous Substance on the Premises and Improvements in violation of applicable law.
(e) Lessee shall to the extent required by applicable law immediately
remove any Hazardous Substances located on the Premises and Improvements and shall dispose
of such Hazardous Substances in a safe and legal manner. Lessee shall immediately disclose to
Lessor its disposal of any Hazardous Substance located on the Premises and Improvements and
upon Lessor's written request shall provide written documentation of its safe and legal disposal.
Notwithstanding the foregoing, nothing in this Section 8.3(vi)(e) is intended to limit, restrict, or
modify Lessor's obligations and responsibilities set forth in Section 3.5.2 of this Lease.
(f) Lessee shall be responsible for and bear the entire cost of removal
and disposal of Hazardous Substances. Lessor may also pass through to Lessee any and all
clean-up costs incurred by Lessor as a result of Lessee's activities on the Premises and
Improvements or the presence of any Hazardous Substance(s) on, in, or under the Premises and
Improvements. Upon termination of this Lease, Lessee is required, in accordance with all
applicable laws, to remove from the Premises and Improvements any equipment or improvement
to the Premises that is contaminated by Hazardous Substances. Notwithstanding the foregoing,
nothing in this Section 8.3(vi)(t) is intended to limit, restrict, or modify Lessor's obligations and
responsibilities set forth in Section 3.5.2 of this Lease.
(vii) From and after the Commencement Date, Lessee shall indemnify, defend,
and hold harmless City and its officials, officers, employees, agents, contractors, and consultants
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from and against any claims, actions, suits, legal and administrative proceedings, liability, injury,
deficiency, damages, fines, penalties, punitive damages, costs, and expenses (including, without
limitation, the cost of any cleanup, remediation, removal, mitigation, monitoring or testing of
Hazardous Substances, and reasonable attorneys' fees) resulting from, arising out of, or based
upon (a) the presence, release, use, generation, discharge, storage, or disposal of any Hazardous
Substances on, under, in, or about, or the transportation of any Hazardous Substances to or from,
the Premises; and (b) the violation, or alleged violation, of any statute, ordinance, order, rule,
regulation, permit, judgment, or license relating to the use, generation, release, discharge,
storage, disposal, or transportation or Hazardous Substances on, under, in, about, to, or from the
Premises. Notwithstanding the foregoing, nothing in this Section 8.3(vii) is intended to limit,
restrict, or modify Lessor's obligations and responsibilities set forth in Section 3.5.2 of this
Lease and Lessee's indemnity obligations set forth herein shall not apply if Lessor is obligated
and responsible thereunder for remediation and/or removal of the Hazardous Substances.
(viii) From and after the Commencement Date Lessee waives, releases, and
discharges Lessor and its officials, officers, employees, agents, contractors, and consultants from
any and all present and future claims, demands, suits, legal and administrative proceedings, and
from all liability for damages, losses, costs, liabilities, fees, and expenses (including, without
limitation, attorneys' fees) arising out of or in any way connected with Lessor's or Lessee's use,
maintenance, ownership, or operation of the Premises, any Hazardous Substances on the
Premises, and the existence of Hazardous Substances contamination in any state on the Premises,
however the Hazardous Substances came to be placed there, except that arising out of the
intentional misconduct of Lessor or its officials, officers, employees, agents, contractors, or
consultants. Lessee acknowledges that it is aware of and familiar with the provisions of Section
1542 of the California Civil Code which provides as follows:
"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."
As such relates to this Section 8.3, Lessee hereby waives and relinquishes all
rights and benefits which it may have under Section 1542 of the California Civil Code.
Notwithstanding the foregoing, nothing in this Section 8.3(viii) is intended to
limit, restrict, or modify Lessor's obligations and responsibilities set forth in Section 3.5.2 of this
Lease and Lessee's waiver of rights and release of claims set forth herein shall not apply if
Lessor is obligated and responsible thereunder for remediation and/or removal of the Hazardous
Substances.
8.4 Lessor Not Responsible for Maintenance or Repairs. Lessor shall have no
responsibility for and shall not be required to perform any maintenance, repairs, or services or to
assume any expense in connection with the Premises, the Improvements, or any furnishings,
fixtures, and equipment.
8.5 Capital Replacement Reserve Fund. Commencing no later than the Operating
Commencement Date and continuing thereafter through the balance of the Lease Term Lessee
shall establish and maintain a capital replacement reserve fund with a reputable financial
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institution reasonably acceptable to the City Manager or his or her designee (the "Capital
Replacement Reserve Fund ") and shall deposit into said fund a minimum of the following
amounts: (i) for the first Operating Year, two percent (2 %) of the sum of Gross Room Revenues
and Gross Non -Room Revenues for said year; (ii) for the second Operating Year, three percent
(3 %) of the sum of Gross Room Revenues and Gross Non -Room Revenues for said year; and
(iii) for the third and each subsequent Operating Year through the balance of the Initial Term,
four and one -half percent (4 -1/2 %) of the sum of Gross Room Revenues and Gross Non -Room
Revenues for each said year; and (iv) for each year during the Option Term, if applicable, four
percent (4 %) of the sum of Gross Room Revenues and Gross Non -Room Revenues for each said
year (collectively, the "Capital Replacement Reserve "). All interest and earnings on funds
deposited into the Capital Replacement Reserve Fund shall be kept in said fund but shall not be
credited against the minimum deposits required hereunder. Within thirty (30) days after the
close of each Operating Year during the Initial Term, Lessee shall submit to Lessor (i) evidence
that Lessee has deposited the required minimum amount in the Capital Replacement Reserve
Fund for the previous Operating Year (based upon Lessee's accounting for Gross Room
Revenues and Gross Non -Room Revenues that is due at that time), (ii) an itemization of all
withdrawals from and expenditures of funds deposited into the Capital Replacement Reserve
Fund in the preceding Operating Year and the purpose thereof, and (iii) the balance remaining in
the Capital Replacement Reserve Fund at the time the annual report is prepared. The Capital
Replacement Reserve Fund shall not be pledged or encumbered, except to a permitted
Mortgagee, and shall be used only for capital expenditures for additions, replacements,
renovations, or significant upgrades of or to the Improvements, including fixtures and
equipment, that have a useful life of not less than five (5) years which benefit the Premises and
which are approved in advance by the City Manager of City or his or her designee, which
approval(s) shall not be unreasonably withheld, conditioned, or delayed. Notwithstanding the
foregoing, Lessee acknowledges that its responsibility to maintain, repair, and replace the Hotel
and related Improvements as required hereunder shall not be limited or restricted based on the
amount of funds held from time to time in the Capital Replacement Reserve Fund. Upon the
expiration or earlier termination of this Lease, all funds in the Capital Replacement Reserve
Fund shall be allocated first to any repairs, maintenance, replacements, and renewals necessary
to place the Hotel in the physical condition required by this Lease, as reasonably determined by
Lessor, and any excess shall be the sole property of Lessee.
8.6 Lessor's Rights/Remedies for Deficient Maintenance and Repairs. In addition to
Lessor's rights and remedies for Lessee's Default hereunder, as set forth in Article 16 of this
Lease, Lessor shall have the rights and remedies set forth in this Section 8.6. If Lessor delivers
written notice to Lessee that the maintenance or condition of the Premises or any portion thereof
or any Improvements thereon does not comply with this Lease or that Lessee has committed
waste and such notice describes the deficiencies /conditions that need to be corrected, remedied,
or cured, Lessee shall correct, remedy, or cure the deficiencies (i) within two (2) business days
after receipt of Lessor's written notice if the deficiencies relate to dirt, mud, trash, debris, waste,
litter, graffiti, broken or inoperative irrigation systems, or other landscape maintenance
deficiencies or (ii) within thirty (30) days after receipt of Lessor's written notice if the
deficiencies relate to any other maintenance or repair requirements unless (as to deficiencies
otherwise subject to this clause (ii)) Lessor's notice states that the deficiencies are an urgent
matter relating to public health and safety, in which case Lessee shall correct, remedy, or cure
the deficiencies with all due diligence and shall complete the correction, remedy, or cure at the
earliest possible time but in no event more than two (2) business days after receipt of Lessor's
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written notice, subject only to extensions of time if Lessee's inability to correct, remedy, or cure
the deficiency(ies) within said two (2) day period is excusable due to an Event or Events of
Force Majeure. Notwithstanding the foregoing, in the event such deficiencies are of a nature
which takes longer than thirty (30) days or two (2) business days to cure, correct or remedy, then
such time frames shall be extended so long as Lessee commences to cure, correct, or remedy
such deficiencies, and diligently prosecutes same to completion. In the event Lessee fails to
maintain or repair the Premises or any portion thereof or any Improvements thereon in
accordance with this Lease and fails to cure any deficiencies within the applicable correction,
remedy, or cure period described above, Lessor, in addition to any other rights and remedies
hereunder, shall have the right to enter onto the Premises or to contract with a third party or
parties for the correction, remedy, and cure of any such deficiencies, and Lessee shall be
responsible for payment of all such costs actually and reasonably incurred by Lessor.
ARTICLE 9
TAXES ASSESSMENTS UTILITIES AND OTHER CHARGES
9.1 Lessee's Obligation to Pay Impositions. In accordance with California Revenue
and Taxation Code Section 107.6(a), the Parties acknowledge that from and after the
Commencement Date and for the balance of the Lease Term Lessee will have a possessory
interest in the Premises that will be subject to the obligation to pay possessory interest taxes.
Lessee agrees to pay or cause to be paid, as and when they become due and payable, and
before any fine, penalty, interest, or cost may be added thereto, or become due or be imposed by
operation of law for the nonpayment thereof, all taxes, assessments, franchises, excises, license
and permit fees, and other governmental levies and charges, general and special, ordinary and
extraordinary, unforeseen and foreseen, of any kind and nature whatsoever which at any time
during the Lease Term may be assessed, levied, confirmed, imposed upon, or grow or become
due and payable out of or in respect of, or become a lien on: (i) the Premises and Improvements
or any part thereof or any appurtenance thereto; (ii) the rent and income received by Lessee from .
subtenants, guests, or others for the use or occupation of the Premises and the hmprovements
thereon; or (iii) this transaction or any document to which Lessee is a party, creating or
transferring an interest or estate in the Premises and Improvements. All such taxes, franchises,
excises, license and permit fees, and other governmental levies and charges shall hereinafter be
referred to as "Impositions," and any of the same shall hereinafter be referred to as an
"Imposition ". Notwithstanding the foregoing or any other provision of this Lease, an Imposition
shall not include nor shall Lessor be responsible to pay any so- called "business license tax" or
"gross receipts tax" (or the like) imposed upon landlords generally in connection with the
operation of their business, even if such tax is calculated based upon rents payable under a lease.
Any Imposition relating to a fiscal period of the taxing authority, a part of which period is
included within the Lease Term and a part of which is included in a period of time either (i)
before the commencement of the Lease Term or (ii) after the expiration of the Lease Term, shall
(whether or not such Imposition shall be assessed, levied, confirmed, imposed upon, become a
lien upon the Premises and Improvements, or shall become payable, during the Lease Term) be
adjusted between Lessor and Lessee as of the commencement, expiration or termination of the
Lease Term, as applicable, so that Lessee shall pay that portion of such Imposition which is
applicable to the Lease Term, and Lessor shall pay the remainder thereof.
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The failure of Lessee to pay an Imposition that cannot under any circumstances give rise
to a lien against the Premises and Improvements shall not be a breach of the second paragraph of
this Section 9.1. Lessee hereby agrees to defend, indemnify, and hold harmless Lessor and
Lessor's officials, officers, employees, and agents from and against all claims, liability, loss,
damage, costs, or expenses (including reasonable attorney's fees and court costs) arising from or
as a result of Lessee's failure to pay any Imposition to the extent that such Imposition relates to a
fiscal period included within the Lease Term.
If, by law, any Imposition may at the option of the payer be paid in installments (whether
or not interest shall accrue on the unpaid balance of such Imposition), Lessee may exercise the
option to pay the same (and any accrued interest on the unpaid balance of such Imposition) in
installments and, in such event, shall pay such installments during the Lease Term as the same
respectively become due and before any fine, penalty, or further interest or cost may be added
thereto; provided, however, that the amount of all installments of any such Imposition which will
be the responsibility of Lessee pursuant to this Section 9.1, and which are to become due and
payable after the expiration or termination of the Lease Term, shall be deposited with Lessor for
such payment on the date which shall be ninety (90) days immediately prior to the date of such
expiration or termination.
Lessee shall furnish to Lessor, within thirty (30) days after the date when any real
property taxes, assessments, or any other Imposition which could have any effect on Lessor's
title to the Premises would become delinquent, official receipts of the appropriate taxing
authority or other evidence, satisfactory to Lessor, evidencing payment thereof
Nothing in this Section 9.1 shall alter, modify or limit in any way the rights and
obligations of Lessee to contest property tax assessments as set forth and. as limited in Section
9.2 of this Lease.
9.2 Contesting Impositions. Notwithstanding Section 9.1; Lessee shall have the right
to appeal or contest any Imposition subject to the limitations set forth in this Section 9.2. If
Lessee desires to appeal or contest any Imposition, the appeal, contest, opposition, or objection
shall be filed before the tax, assessment, or other Imposition at which it is directed becomes
delinquent, written notice of the appeal, contest, opposition, or objection shall be given to Lessor
before the date the tax, assessment, or other Imposition becomes delinquent, and Lessee shall
prosecute such proceeding to final adjudication with reasonable dispatch.. No such appeal,
contest, opposition, or objection shall be continued or maintained after the date the tax,
assessment, or other Imposition at which it is directed becomes delinquent unless Lessee has met
one of the following conditions:
(i) paid such tax, assessment, or other charge under protest prior to its
becoming delinquent; or
(ii) obtained and maintained a stay of all proceedings for enforcement and
collection of the tax, assessment, or other Imposition by posting such bond or other matter
required by law for such a stay; or
(iii) delivered to Lessor a good and sufficient bond in a form reasonably
acceptable to Lessor's City Manager or designee, in an amount equal to one hundred twenty -five
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percent (125 %) of the amount in controversy (inclusive of fines, interests, penalties, costs, and
other expenses that may have accrued or been imposed thereon) and issued by a surety company
authorized to issue undertakings in California, conditioned on the payment by Lessee of the tax,
assessment, or other Imposition, together with any fines, interest, penalties, costs, and expenses
that may have accrued or been imposed thereon within thirty (30) days after final determination
of Lessee's appeal, contest, opposition, or objection to such tax, assessment, or other Imposition.
Lessee may only exercise its right to contest an Imposition hereunder if the
subject legal proceedings shall operate to prevent the collection of the Imposition so contested,
or the sale of the Premises and Improvements, or any part thereof, to satisfy the same, and only if
Lessee shall, prior to the date such Imposition is due and payable, have given such reasonable
security as may be required in order to insure the payment of such Imposition and prevent any
sale, foreclosure, or forfeiture of the Premises and Improvements or any part thereof, by reason
of such nonpayment. In the event of any such contest and the final determination thereof
adversely to Lessee, Lessee shall, before any fine, interest, penalty, or cost may be added thereto
for nonpayment thereof, pay fully and discharge the amounts involved in or affected by such
contest, together with any penalties, fines, interest, costs, and expenses that may have accrued
thereon or that may result from any such contest by Lessee and, after such payment and
discharge by Lessee, Lessor shall promptly return to Lessee such security as Lessor shall have
received in connection with such contest.
Lessor shall not be required to join in any appeal, contest, opposition, or objection
brought by Lessee unless the provisions of any law requires that the proceeding be brought by or
in the name of Lessor or any owner of the Premises. In that case, Lessor shall join in the
proceeding or permit it to be brought in Lessor's name but such action shall be without cost or
other liability to Lessor, and in this regard Lessee agrees to pay to Lessor all costs incurred by
Lessor in connection therewith and Lessee further agrees to indemnify, defend, and save
harmless Lessor from and against any and all loss, cost, or expense of any kind, including, but
not limited to, reasonable attorneys' fees and expenses, which may be imposed upon or incurred
by Lessor in connection therewith.
9.3 Utilities. Lessee agrees to pay or cause to be paid, as and when they become due,
all hook -up and connection fees and all charges for water, sewer, electricity, gas, light, heat, air
conditioning, telephone, internet, cable television, solid waste/trash/refuse collection disposal,
recycling, and other utility and communication services furnished to or rendered or used on or
about the Premises and Improvements at all times during the Lease Term. Upon Lessee's written
request, Lessor agrees to join in the grant of such easements and licenses upon the Premises to
any supplier of utilities to the Premises as necessary to construct, install, operate, and maintain
any facilities, conduits, transmission lines, and pipelines for the provision of utility services to
the Premises; provided, however, that the locations of all such facilities, conduits, transmission
lines, and pipelines associated with utility services located upon the Premises shall be consistent
with the Development Entitlements and Final Building Plans and shall be located below grade in
subterranean easements.
9.4 Lessor's Right to Cure. If Lessee, in violation of the provisions of this Lease,
shall fail to pay and to discharge any Impositions or any utilities furnished to or rendered or used
on or about the Premises, Lessor shall have the right, but not the obligation, to pay or discharge
such obligation(s), and in such event the amount paid by Lessor plus all of related Lessor's costs
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and expenses, including attorney fees, together with interest at the maximum legal rate or the rate
of three percent (3 %) over the prime rate of the largest bank operating in the State of California
on the date payment is made by Lessor, whichever is lower shall be deemed to be and shall be
payable by Lessee as additional Ground Rent and shall be reimbursed by Lessee to Lessor
immediately upon demand.
9.5 Limits of Tax Liability. The provisions of this Lease shall not be deemed to
require Lessee to pay municipal, county, state, or federal income or gross receipts or excess
profits taxes assessed against Lessor, or municipal, county, state, or federal capital levy, estate,
succession, inheritance, gift, or transfer taxes of Lessor, or corporation franchise taxes imposed
upon any corporate owner of the fee of the Premises; provided, however, that in the event the
State of California or any taxing authority thereunder changes or modifies the system of taxing
real estate so as to tax the rental income from real estate in lieu of or in substitution (in whole or
in part) for the real estate taxes and so as to impose a liability upon Lessor for the amount of such
tax, then Lessee shall be liable under this Lease for the payment of the taxes so imposed during
the Lease Term, or any renewal thereof, to the same extent as though the alternative tax was a tax
upon the value of the Premises and Improvements. In order to determine the amount of such
alternative tax for which Lessee shall be liable, the Premises and Improvements shall be
considered as if it was the only asset of Lessor, and the rent paid hereunder shall be considered
as if it were the only income of Lessor.
ARTICLE 10
OWNERSHIP OF AND RESPONSIBILITY FOR IMPROVEMENTS
10.1 Ownership of Improvements During Lease Term. All Improvements on the
Premises constructed or installed by Lessee as pernritted or required by this Lease, shall, during
the Lease Term, be and remain the property of Lessee. All Improvements located on the
Premises, whether existing thereon at the Commencement Date or constructed or installed
thereon by Lessee as permitted or required by this Lease, shall, at the expiration or sooner
termination of the Lease Term, be and remain the property of Lessor. Subject to Lessee's rights
and obligations set forth in this Lease relating to alterations and additions, Lessee shall have no
right at any time to waste, destroy, demolish, or remove any of the Improvements. Lessee's
rights and powers with respect to the Improvements are subject to the terms and limitations of
this Lease. Lessor and Lessee covenant for themselves and all persons claiming under or
through them that the Improvements are real property.
10.2 Reversion of Improvements; Duty to Remove Personal Property. Upon the
expiration or earlier termination of the Lease Term, whether by cancellation, forfeiture, or
otherwise, all Improvements located on, in, or under the Premises (including all fixtures and
equipment affixed thereto) shall remain upon and be surrendered with the Premises as part
thereof, and title to such Improvements shall vest in Lessor without any compensation to Lessee.
Northing contained herein is intended or shall be construed to deny or abrogate Lessee's right,
prior to the expiration or earlier termination of the Lease Term, to (i) receive any and all
proceeds which are attributable to a Taking of Improvements belonging to Lessee immediately
prior to the Date of Taking, to the extent provided in Article 14 of this Lease, or (ii) remove any
finniture or equipment that is neither permanently affixed to, or reasonably necessary for the
operation of the Premises, any signage identifying Lessee (as distinguished from other signage
used in the operation of the Premises and Improvements), or any personal property, upon the
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expiration or earlier termination of the Lease Term or at any time during the Lease Term, subject
to Lessee's obligations under this Lease to use the Premises for the uses described in Section 7.1.
No later than the expiration or earlier termination of the Lease Term, Lessee shall
remove, at its sole cost and expense, all furniture, equipment, and other personal property that is
not affixed to the Improvements or reasonably necessary for the orderly operation of the
Premises or Irnprovements. Should Lessee fail to remove such furniture, equipment, and other
personal property within said period, and said failure continues for ten (10) days after written
notice from Lessor to Lessee, Lessee shall waive and lose all right, title, and interest therein, and
Lessor may elect to keep the same upon the Premises or to sell, remove, or demolish and destroy
the same, in which event Lessee shall reimburse Lessor for all of Lessor's actual and reasonable
costs for all of Lessor's actual and reasonable costs (including without limitation employee costs
at the full payroll rate) incurred in connection with any such sale, removal, or
demolition/destruction in excess of any consideration received by Lessor as a result thereof.
As between Lessor and Lessee, title to all utility lines, transformer vaults, and all
other utility facilities constructed or installed by Lessee upon the Premises shall vest in Lessor
upon construction or installation to the extent that they are not owned by a utility company or
other third party provider. Notwithstanding the foregoing, such utility lines, transformer vaults,
and all other utility facilities (other than any sewer, storm drain, or other utility systems that have
been dedicated to and accepted by Lessor pursuant to a dedication separate from this Lease) shall
be maintained, repaired, and replaced, if and as needed, by Lessee during the Lease Term.
10.3 Alteration of Improvements. Lessee shall not make or permit to be made any
alteration of, addition to, or change in the Improvements, other than (i) routine maintenance,
repairs, interior decoration, and minor interior alterations or (ii) interior alterations, additions, or
changes which cost in the aggregate over a cumulative period of one (1) year less than an amount
equal to Two Hundred and Fifty Thousand Dollars ($250,000) escalated from the Lease
Effective Date in accordance with the Consumer Price hidex, nor demolish all or any part of the
Improvements, without the prior written consent of Lessor, which consent shall not be
unreasonably withheld, conditioned or delayed. In requesting such consent, Lessee shall submit
to Lessor detailed plans and specifications of the proposed work and an explanation of the need
and reasons thereof. Notwithstanding the foregoing, Lessee may make such changes, repairs,
alterations, improvements, renewals, or replacements to the Improvements as are required by
reason of any law, ordinance, regulation, or order of a competent government authority.
10.4 Damage to or Destruction of Hotel and Improvements.
10.4.1 Lessee to Give Notice. In case of any damage to or destruction of the
Hotel or the Improvements, or any part thereof, in excess of an amount equal to Two Hundred
and Fifty Thousand Dollars ($250,000.00) escalated from the Commencement Date of this Lease
in accordance with increases in the Consumer Price Index, Lessee shall within ten (10) days after
Lessee becomes aware of such damage or destruction give written notice thereof to Lessor
generally describing the nature and extent of such damage or destruction.
10.4.2 Restoration. Lessee shall be responsible for the restoration of the Hotel or
other Improvements in accordance with the damage and destruction clauses of this Lease.
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In case of any damage to or destruction of the Hotel or other Improvements, or
any part thereof, Lessee shall commence the restoration, replacement, or rebuilding of the
Improvements with such alterations and additions as may be approved by Lessor (such
restoration, replacement, rebuilding, alterations, and additions, together with any temporary
repairs and property protection pending completion of the work being herein called
"Restoration ") within thirty (30) days of such damage or destruction, plus any additional period
reasonably required to obtain any Net Insurance Proceeds to be used to pay all or a portion of the
cost of such Restoration, and Lessee shall complete such Restoration within a reasonable period
of time thereafter.
As used herein, the term "Net Insurance Proceeds means the gross insurance
proceeds paid by an insurer to Lessee for loss or damage to the Improvements on the Premises
and Improvements, less any and all costs and expenses (including, but not limited to reasonable
attorneys' fees) incurred to recover said proceeds. Lessee agrees to promptly commence and
prosecute to completion the settlement of insurance proceeds with respect to any event of
damage or destruction of the Improvements on the Premises.
Lessee agrees that, notwithstanding any other provision of this Lease, upon any
event of damage or destruction to the Improvements, Lessee shall at its sole cost and expense
(whether or not Lessee terminates or intends to terminate this Lease pursuant to Section 10.6
below) immediately take or cause such work to be taken as is necessary to assure the safe
condition of the damaged Improvements pending the ultimate disposition of the Improvements.
In any instance in which Lessee may elect to terminate this Lease rather than restore the
Improvements pursuant to 10.6 below, if Lessee does not terminate this Lease, Lessee shall
restore the Improvements.
10.5 Application of Insurance Proceeds. Net Insurance Proceeds shall be applied as
follows:
(i) Within a reasonable time and in any event within 180 days after the
damage to or destruction of the Hotel or other Improvements, Lessee shall furnish or cause to be
furnished to Lessor and any Mortgagee evidence satisfactory to Lessor and the Mortgagee (a) of
the total cost of Restoration of the damaged or destroyed Improvements pursuant to Section
10.4.2 and (b) that the total amount of money available will, when added to the insurance
proceeds received and available to pay for the Restoration pursuant to the terns of this Section
10.5, be sufficient to pay the cost of such Restoration.
(ii) Net insurance proceeds received on account of any damage to or
destruction of the improvements, or any part thereof, shall be paid to Lessee or as Lessee may
direct (except that, during the term of any Mortgage, such net insurance proceeds shall be paid to
the Mortgagee which holds the highest priority. Mortgage, if required by such Mortgagee) from
time to time as Restoration progresses, solely to pay (or reimburse Lessee for) the cost of
Restoration. Upon receipt by Lessor and any Mortgagee of evidence that Restoration has been
completed and the cost thereof paid in full or has been adequately provided for, and that there are
no mechanic's or similar liens for labor or materials supplied in connection therewith which have
not been adequately provided for, the balance, if any, of such proceeds shall be paid to Lessee.
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(iii) Any insurance proceeds held by the recipient on any termination of this
Lease and not required to be paid to Lessor pursuant to the provisions of this Lease shall be paid
first to the expenses of clearing the Premises of any rubble, and next to the Mortgagee as its
interests may appear, and next to Lessee.
10.6 Damage or Destruction During Final Years of Lease Term. Notwithstanding
Sections 10.4 and 10.5 to the contrary, in the event of major damage or destruction to the
Improvements on the Premises during the last ten (10) years of the Lease Term, Lessor shall not
unreasonably withhold its approval if Lessee requests that this Lease be terminated on thirty (30)
days' notice, provided Lessee first complies with all of the following conditions:
(i) Lessee shall give Lessor notice of the damage or destruction within ten
(10) business days after the event causing such damage and destruction.
(ii) Lessee shall give Lessor notice requesting that this Lease be terminated as
a result of such damage or destruction within forty-five (45) days after settlement of insurance
proceeds, but in any event within one hundred eighty (180) days after the event causing such
damage or destruction.
(iii) Lessee shall pay to Lessor all applicable Ground Rent and other charges
that are Lessee's responsibility prorated to the date of such termination.
(iv) Lessee shall clear and remove all debris from the Premises, restore the
Premises to a safe and neat condition, deliver possession of the Premises to Lessor, and shall
quitclaim all of Lessee's right, title, and interest in the Premises to Lessor.
(v) Lessee shall transfer to Lessor all insurance proceeds (except that, during
the term of any Mortgage, such insurance proceeds shall be paid to the Mortgagee which holds
the highest priority Mortgage, if required by such Mortgagee) resulting from the casualty to be
retained by Lessor without limitation as to use.
Major damage or destruction to the Improvements as used in this Section means such
damage or destruction that the cost of Restoration will exceed fifty percent (50 %) of the cost to
replace the Improvements on the Premises in their entirety.
10.7 Faithful Performance and Labor and Material (Payment) Bonds: Indemnification;
Non - responsibility Notices. Lessee agrees to indemnify, defend, and hold harmless Lessor from
and against all claims, liabilities, costs, and expenses for labor and materials in connection with
all construction, repairs, or alterations on the Premises and Improvements and the Improvements,
including reasonable attorney's fees.
Lessee agrees to procure, or cause the procurement of, contractor's bonds covering labor,
materials, and faithful performance for all construction work on the public right of ways in
accordance with the following requirements:
(i) As to the initial construction work on any public right of ways required by
this Lease, such bonds shall be in an amount equal to one hundred percent (100 %) of the cost of
the Improvements on such public right of ways, as the same may be amended from time to time.
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(ii) As to subsequent work involving repair, alteration, or replacement of the
work on any public right of way in an aggregate amount exceeding $250,000 plus escalations to
such amount after the Lease Effective Date in accordance with the Consumer Price Index, such
bonds shall be in the amount equal to one hundred percent (100 %) of the construction price in
the contract entered into by Lessee and its general contractor. Subsequent work in an aggregate
amount of $250,000 (plus escalations to such amount after the Lease Effective Date in
accordance with the Consumer Price Index) or less shall not be subject to bonding requirements.
Said bonds and the construction contract must first be approved in writing as to content
and form by Lessor. Lessee shall, prior to commencement of construction, deliver to Lessor a
certificate or certificates from the bonding company or companies issuing the aforesaid bonds,
naming Lessor as additional insureds under said bonds.
Lessor shall have the right to post and maintain on the Premises and the Improvements
any notices of non - responsibility provided for under applicable law.
ARTICLE 11
ASSIGNMENT SUBLETTING TRANSFER
11.1 Restrictions on Lessee's Right to Transfer.
11.1.1 Lessee represents and warrants that this Lease, the construction of the
Improvements, and Lessee's other undertakings pursuant hereto are and will be used for the
purpose of redevelopment of the Premises and not for speculation in land holding. Lessee
further recognizes that (i) the qualifications and identity of Lessee and its principals are of
particular concern to the community and Lessor; (ii) it is because of such qualifications and
identity that Lessor is entering into this Lease with Lessee; (iii) the timely redevelopment of the
Premises is important to the general welfare of the community; (iv) the anticipated tax and
Ground Rent income to be generated by this Lease and the reduction and elimination of Lessor's
holding costs for the Premises are important financial /economic reasons for Lessor wishing to
ensure the timely redevelopment of the Premises; (v) Lessor does not intend to allow Lessee to
acquire leasehold rights in the Premises and then simply hold such rights or the Premises for
purposes of speculation; and (vi) a change in ownership or Control of Lessee, or any other act or
transaction involving or resulting in a direct or indirect change in the ownership or Control of
Lessee is for practical purposes a transfer or disposition of Lessee's leasehold rights and interest
hereunder. Accordingly, from the Agreement Date through the entire Lease Term, Lessee shall
be subject to the restrictions on its Transfer rights set forth herein.
11.1.2 Except as expressly permitted herein, Lessee shall not make, allow, or
authorize any Transfer (as that term is hereinafter defined) to any person or entity (a
"Transferee "), without the prior written consent of Lessor and any permitted Mortgagee. Any
purported Transfer not permitted by this Article 11 or Article 12, as applicable, shall be ipso
facto null and void, and no purported voluntary or involuntary successor or assignee to any
interest of Lessee pursuant to such an attempted Transfer shall acquire any rights pursuant to this
Lease. These restrictions shall be binding on any successors, heirs, or permitted Transferee of
Lessee. Except as set forth in the next sentence herein, the term "Transfer" shall mean any
assignment or attempt to assign this Lease or any right herein, any total or partial transfer, sale,
assignment, lease, sublease, license, franchise, gift, hypothecation, mortgage, pledge,
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encumbrance, or the like. As used herein, the term "Transfer" shall also include any direct or
indirect transfer, assignment, or pledge, whether voluntary or involuntary, and determined on an
aggregate or cumulative basis from and after the Agreement Date, of (i) more than fifty percent
(50 %) of the beneficial interest (whether stock, partnership interest, membership interests, or any
other equity interest and whether in a single transaction or a series of related transactions) of
Robert D. Olson in Lessee or the transfer of management Control of Robert D. Olson to any
other person or entity, or (ii) more than thirty percent (30 %) of the beneficial interest (whether
stock, partnership interest, membership interests, or any other equity interest and whether in a
single transaction or a series of related transactions) of any person other than Robert D. Olson in
Lessee or the transfer of management Control by any person other than Robert D. Olson to
another person or entity. As used herein, the term "beneficial interest" shall refer to the ultimate
direct or indirect ownership interests in Lessee, regardless of the form of ownership and
regardless of whether such interests are owned directly or through one or more layers of
constituent partnerships, corporations, limited liabilities, trusts, or other persons or entities. In
addition, any transaction by which Lessee undergoes a merger or other reorganization, including
a sale of all or substantially all of its assets, wherein Lessee is not the surviving corporation (or
the shareholders of Lessee of Lessee immediately prior to the merger or reorganization do not
retain Control of the surviving corporation) shall be deemed a "Transfer" for purposes of this
Lease. Notwithstanding the foregoing, the term "Transfer" shall not include and Lessor's
approval shall not be required with respect to any of the following: (i) the execution by Lessee
and the Hotel Management Company of a new or amended Hotel Management Agreement
(approved by Lessor in accordance with Section 3.2.5 and/or Section 7.2 of this Lease, as
applicable; (ii) the execution by Lessee and the Hotel Franchisor of a new or amended Hotel
Franchise Agreement approved by Lessor in accordance with Section 3.2.6 and/or Section 7.3 of
this Lease, as applicable; (iii) the granting of easements or permits for the development of the
Premises consistent with the approved Development Entitlements and Final Building Plans for
the Hotel or otherwise as may be approved by Lessor; (iv) the renting of guest rooms, suites,
meeting rooms, or other guest facilities in the Hotel consistent with the permitted uses of the
Hotel; (v) the subleasing or licensing of space within the Hotel for incidental uses or concessions
that are consistent with the customary uses and practices of a hotel and related facilities and the
use restrictions set forth in Section 7.1 of this Lease, provided that any such subleases, licenses,
or concession agreements shall cumulatively cover a maximum of two thousand (2,000) square
feet of floor area, shall be done in arms- length transactions to persons unrelated to any of the
Lessee Parties, and shall be on customary terms for not less than fair rental value; (vi) if Lessee
is or becomes a publicly traded entity, any sale or other transfer of any outstanding stock of, or
limited partnership interests in Lessee, unless said sale or other transfer is made by a person or
entity owning a Controlling interest in Lessee and results in a change in the person(s) or
entity(ies) having Control of Lessee, (vii) a mere change in the form, method or status of
ownership, as long as there is no change in the actual beneficial ownership of the transferor (e.g.,
by virtue of a transfer of an individual ownership interest to a trust for the benefit of one or more
of the transferor's immediate family members, which for purposes of this Lease shall be limited
to the transferor's spouse, domestic partner, children, parents, siblings, and grandchildren), (viii)
a transfer of an individual ownership interest to one or more immediate family members (as
limited in clause (vii) above) on account of the death or mental or physical incapacity of the
transferor, and (ix) a Transfer occurring as a result of a Taking. In addition, the following
Transfers shall be deemed to be permitted Transfers and shall be allowed as long as the
transferor and Transferee execute and deliver to Lessor an assignment and assumption agreement
in a form subject to the reasonable approval of Lessor's counsel pursuant to which the Transferee
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assumes and agrees in writing to perform and be subject to all of the transferor's obligations set
forth herein: (i) the foreclosure of a permitted Mortgage or the acceptance of a deed in lieu of
foreclosure by a permitted Mortgagee; (ii) the subsequent Transfer by a permitted Mortgagee of
an interest acquired pursuant to clause (i) (provided, however, that subsequent Transfers by any
person or entity acquiring its interest in the Premises and/or this Lease from a permitted
Mortgagee in accordance with this clause (ii) shall not be deemed to be permitted Transfers and
shall require Lessor's approval); (iii) the acquisition at a foreclosure sale in connection with a
permitted Mortgage by any third party (provided, however, that subsequent Transfers by any
person or entity acquiring its interest in the Premises and/or this Lease at a foreclosure sale in
accordance with this clause (iii) shall not be deemed to be permitted Transfers and shall require
Lessor's approval); and (iv) the Transfer of this Lease to an entity (A) controlled by Lessee or
Robert D. Olson, (B) which has Lessee, Robert D. Olson, or an entity controlled by Lessee or
Robert D. Olson, as a manager, managing member or general partner, or (C) as to which Lessee
or Robert D. Olson has the power to name and/or approve a majority of the members of a
management board or committee which directs the management and policies of such entity, and
(D) in which Robert D. Olson owns, directly or indirectly, a minimum of fifty percent (50 %) of
the beneficial ownership interests.
11.1.3 Prior to completion of the Hotel and Improvements on the Premises and
the opening of the Hotel for business to the general public, Lessor may withhold its consent to a
Transfer requiring Lessor's approval hereunder in its sole and absolute discretion. After that
date, Lessor shall not unreasonably withhold its consent to a requested Transfer by Lessee that
requires Lessor's approval as long as all of the following conditions are satisfied: (i) Lessee is
not in Default under this Lease and no facts shall exist that, with the giving of notice or the
passage of time, would constitute a Default by Lessee hereunder; (ii) Lessee is proposing to
Transfer the Premises and Improvements and Lessee's rights therein as a whole and Lessee is not
proposing to subdivide the Premises and Improvements or its rights for the duration of the Lease
(which shall in no event be permitted); (iii) Lessor determines that the proposed Transferee has a
minimum net worth of Ten Million Dollars ($10,000,000.00) (with said figure increased from the
Commencement Date to the date Lessee requests approval of the Transfer based on increases in
the Consumer Price Index over that period of time); (iv) Lessor determines that the proposed
Transferee and its principals are of good moral character (as that term is defined in Section 7.4);
(v) Lessor determines that the proposed Transferee has a minimum of ten (10) years experience
in owning or operating three or more hotels in California on a par (or better) than the prevailing
standard in comparable quality to the Hotel and Improvements on the Premises; (vi) Lessor
determines that the requirements of Sections 7.2 -7.4 of this Lease with respect to the Hotel
Management Company and Hotel Management Agreement and the Hotel Franchisor and Hotel
Franchise Agreement, as applicable, will continue to be satisfied after the proposed Transfer is
completed or, if the proposed Transferee intends to operate and manage the Hotel and
Improvements itself, Lessor determines that the proposed Transferee satisfies all of the
requirements applicable to the approval of a Hotel Management Company by Lessor as set forth
herein; and (vii) the transferor and proposed Transferee execute and deliver to Lessor an
assignment and assumption agreement in a form subject to the reasonable approval of the City
Attorney of Lessor pursuant to which the Transferee assumes and agrees in writing to perform
and be subject to all of the transferor's obligations set forth herein.
11. 1.4 The acceptance by Lessor of any payment or other performance due from
Lessee hereunder from any person or entity other than Lessee shall not be deemed to be a waiver
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by Lessor of any provision of this Lease or to be a consent by Lessor to any Transfer requiring
Lessor's approval hereunder. Consent by Lessor to one or more Transfers of this Lease shall not
operate as a waiver or estoppel to the future enforcement by Lessor of its right to approve or
disapprove a subsequent Transfer in strict accordance with the provisions of this Lease.
11. 1.5 Even if Lessor consents to a Transfer pursuant to this Article 11 or Article
12 that requires Lessor's approval, such consent shall not be effective unless and until Lessee or
the proposed Transferee delivers written notice of the Transfer to Lessor, together with a copy of
any documents effecting and /or evidencing such Transfer and (if required) the fully executed
assignment and assumption agreement in the form approved by Lessor's legal counsel.
11.2 Notification to Lessor of Changes in Ownership and Control of Lessee. From the
Effective Lease Date through the expiration or earlier termination of the Lease Term, Lessee
shall promptly notify Lessor in writing of (i) any and all voluntary and involuntary changes in
the identity of the persons and entities having direct or indirect ownership interests in the
management control of Lessee of which Lessee or any of its members, officers, or directors have
been notified or otherwise have knowledge or information (excluding, however, any limited
partners or other purely passive investors who do not manage or control of Lessee) and (ii) the
nature and extent of such change(s), in order to enable Lessor to keep track of the cumulative
changes in ownership and control of Lessee.
11.3 Release of Transferor Upon Transfer. In the absence of Lessor's express written
approval, where applicable, a Transfer of this Lease and the Premises and Improvements by
Lessee shall not release the transferor (or any guarantor(s) of Lessee's obligations, if applicable)
from any obligations set forth in this Lease, whether such obligations arise prior to or after the
effective date of the Transfer; provided, however, that a Mortgagee shall be deemed to be
released from and after the date of a Transfer from such Mortgagee. If the transferor (or
guarantor(s) of Lessee's obligations, if applicable) submits a written request to Lessor to be
released in conjunction with an approved Transfer, Lessor shall approve such release if the
transferor and proposed Transferee provide reasonably satisfactory evidence to Lessor that the
proposed Transferee has suitable financial capability to perform the obligations that are being so
transferred by the transferor and the interests of Lessor hereunder will not be compromised or
jeopardized.
11.4 No Encumbrance of Lessor's Leased Fee Interest. No provision hereof
authorizing a Transfer or encumbrance of Lessee's interest herein shall be construed to authorize
encumbrance of Lessor's fee title to the Premises or Lessor's interest under this Lease, and
Lessee shall not by any act or deed cloud Lessor's fee title or Lessor's interest under this Lease.
11.5 Investigation of Proposed Transferee; Costs. In the event that Lessee requests
Lessor's written consent to a proposed Transfer pursuant to this Article 11 or Article 12 of this
Lease, Lessee agrees to provide Lessor with such information as Lessor may reasonably require
in order to evaluate whether to approve such request, including without limitation and to the
extent applicable, all information relating to the criteria to be considered by Lessor in
determining whether to approve such request that are set forth in Section 11.1.3.
Within thirty (30) days after the receipt of Lessee's written notice requesting Lessor
approval of a Transfer, Lessor shall respond in writing by stating what further information, if
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any, Lessor reasonably requires in order to determine whether or not to approve the requested
Transfer. Upon receipt of such a timely response, Lessee shall promptly furnish to Lessor such
further information as may be reasonably requested.
Lessee's request for approval of a Transfer pursuant to this Article 11 or Article 12 of this
Lease and delivery of necessary information with respect thereto shall be deemed complete thirty
(30) days after Lessor's receipt thereof if Lessor does not deny approval or if no timely response
requesting further information regarding the proposed Transferee is delivered to Lessee, or, if
such a timely response requesting further information is received, on the date which is fifteen
(15) days after the date that Lessee delivers such additional information to Lessor. None of the
foregoing shall restrict Lessor's rights to deny approval of any Transfer not found acceptable by
Lessor pursuant to this Lease. Any Transfer requiring Lessor's consent shall only be effective
upon Lessor's written consent to such Transfer.
Lessor shall approve or disapprove any requested Transfer for financing purposes
requiring Lessor approval within thirty (30) days after Lessee's request therefor is accepted as
complete or is deemed complete, and Lessor shall approve or disapprove any other type of
requested Transfer requiring Lessor approval within forty -five (45) days after Lessee's request
therefor is accepted as complete or is deemed complete. Any disapproval shall be in writing and
shall specify the reasons for the disapproval and, if applicable, the conditions required to be
satisfied by Lessee in order to obtain Lessor's approval. If Lessee's initial notice requesting
approval of an Transfer for financing purposes (but not any other type of Transfer) states that the
Transfer will be deemed approved unless rejected within the time required in this Lease, Lessor's
failure to timely disapprove the Transfer shall be conclusively deemed to constitute an approval.
11.6 Transfer by Lessor, Attomment by Lessee. Lessor shall at all times have the right
to assign, encumber, and/or convey all or a portion of its leased fee interest in the Premises
and/or in the Lease to any other person or entity. In the event of any assignment of all or a part
of Lessor's interest in either the Premises or the Lease to any other person or entity, Lessee shall
attom to such other person or entity and recognize such other person or entity as the landlord
under this Lease, and such other person or entity shall not disturb Lessee's right to possess the
Premises and Improvements, subject to the provisions of this Lease.
11.7 Right of First Opportunity. If at any from the Agreement Date through the end of
the Lease Term Lessor desires to consider selling its leased fee interest in the Premises, before
Lessor may enter into a purchase /sale agreement with a third party to do so Lessor- shall first
obtain an appraisal of Lessor's leased fee interest in the Premises. Said appraisal shall be
prepared by a qualified MAI appraiser who (i) has no history of being employed or retained by
Lessor or Lessee or any persons or entities affiliated with Lessor or Lessee and (ii) has a
minimum of ten (10) years experience appraising hotel properties in Southern California. Lessor
and Lessee shall cooperate and act reasonably in an effort to mutually agree upon the identity of
the appraiser. If the Parties are unable to agree on the identity of the appraiser to conduct the
appraisal within thirty (30) days after Lessor notifies Lessee in writing of Lessor's desire to
consider selling its lease fee interest in the Premises, the appraiser (meeting the same
qualifications) shall be appointed by the Orange County Superior Court upon the petition or
request of either Party. After receiving the appraisal, Lessor may elect to proceed with its efforts
to sell its leased fee interest in the Premises or it may abandon that effort in Lessor's sole and
absolute discretion; provided, however, that if Lessor abandons the effort to sell Lessor's leased
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fee interest in the Premises it shall not be entitled to initiate the process provided for in this
Section 11.7 for a minimum of one (1) year. The appraiser shall be instructed that in appraising
the value of Lessor's leased fee interest in the Premises, the appraiser shall assume that this
Lease is valid, binding, and enforceable on the Parties, the Hotel and Improvements are or shall
be consistent with the provisions of this Lease, and the permitted uses provided for in this Lease
constitute the highest and best use of the Premises. If, after receiving the appraisal, Lessor still
desires to sell its leased fee interest in the Premises, Lessor shall first offer to sell its leased fee
interest in the Premises to Lessee at the amount set forth in the appraisal. Lessee shall have
thirty (30) days after receipt of Lessor's offer within which to accept said offer and to negotiate
with Lessor concerning other terms and conditions of an agreement to purchase Lessor's leased
fee interest in the Premises. In so doing, both Lessor and Lessee covenant to negotiate in good
faith. If Lessee does not accept said offer or if an agreement to purchase Lessor's leased fee
interest in the Premises is not agreed upon between Lessor and Lessee within said thirty (30) day
period, Lessor shall be free to market and sell the Premises to a third party for a purchase price
that is not less.than the purchase price offered to Lessee and subject to terms and conditions that
are not less favorable than the terms and conditions offered to Lessee. Thereafter, if Lessor does
not enter into a binding written agreement with a third parry to sell Lessor's leased fee interest in
the Premises to such third party consistent with the foregoing parameters within one hundred
eighty (180) days (measured from the end of the thirty (30) day period referred to above),.the
procedure described in this Section shall again be applicable. In addition to the foregoing, any
sale by Lessor of its leased fee interest in the Premises pursuant to this Section 11.7 shall comply
with all applicable Governmental Requirements.
ARTICLE 12
MORTGAGES
12.1 Leasehold Mortgages.
12.1.1 From time to time during the Lease Term of this Lease, Lessee shall have
the right to mortgage, pledge, deed in trust, assign rents, issues and profits (for purposes of
security if required by any lender), enter into capitalized leases or other financing mechanisms in
connection with the acquisition of furniture, fixtures and equipment for the Hotel and other
Improvements, or otherwise encumber the interest of Lessee under this Lease, in whole or in
part, and any interests or rights appurtenant to this Lease, and to assign or pledge the same as
security for any debt (the holder of any such mortgage, pledge or other encumbrance, and the
beneficiary of any such deed of trust being hereafter referred to as "Mortgagee" and the
mortgage, pledge, deed of trust or other instrument hereafter referred to as "Mortgage "), upon
and subject to each and all of the following terms and conditions:
(i) Lessee shall not make or enter into an agreement to make any
Mortgage without the prior written approval of Lessor's City Manager or his or her designee.
Upon Lessee's request for approval of a proposed Mortgage and Lessee's submission to Lessor
of such information concerning the proposed Mortgage as Lessor may reasonably request,
Lessor's City Manager or designee shall not unreasonably delay its approval or disapproval of
the proposed Mortgage and, in any event, shall approve or disapprove the proposed Mortgage
within ten (10) business days. The City Manager or his or her designee shall be authorized to
approve minor non - substantive changes to this Article 12 that do not materially jeopardize or
impair Lessor's rights hereunder as reasonably requested by a proposed Mortgagee; provided,
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that the City Manager or designee shall be entitled to withhold consent to any such proposed
changes in his or her reasonable discretion.
(ii) The Mortgagee shall be an Institutional Lender or, if not, such
other lender that Lessor may approve in its reasonable discretion.
(iii) The Mortgage shall cover no interest in any real property other
than Lessee's interest in the Premises, the Hotel, and other Improvements or some portion
thereof, and the leasehold estate of Lessee under this Lease. The Mortgage shall be fully
subordinate to Lessor's fee title in and to the Premises and all of Lessor's rights set forth in this
Lease and shall state on its face that it does not encumber in any way Lessor's fee interest in the
Premises or Lessor's rights set forth in this Lease.
(iv) Prior to the completion of construction of the Hotel and related
hnprovements and the opening of the Hotel for business to the general public, Mortgages may be
made only for the purposes of financing necessary and appropriate to pay Project Costs.
(v) Prior to completion of construction of the Hotel and the opening of
the Hotel for business to the general public, the total amount of all loans secured by Mortgages
recorded against the Premises shall not exceed seventy -five percent (75 %) of the estimated
Project Costs (85% if Lessee is using EB -5 financing as part of its source of funds), as said
estimate may be revised from time to time.
(vi) Subsequent to completion of construction of the Hotel and opening
the Hotel for business to the general public, the total amount of all loans secured by Mortgages
recorded against the Premises shall not exceed seventy -five percent (75 %) of the fair market
value of Lessee's leasehold interest in the Premises (85% if Lessee is using EB -5 financing as
part of its source of funds), as determined by a licensed California appraiser retained at Lessee's
sole cost and expense who is a member of the Appraisal Institute and who has a minimum of ten
(10) years experience appraising hotel properties comparable to the Hotel and Improvements to
be developed on the Premises, with the City Manager or his or her designee having the right of
reasonable approval or disapproval of the appraisal; provided, however, that Lessee shall not be
deemed to be in Default of this Section 12.1.1(vi) if a loan or loans secured by Mortgages
recorded prior to completion of construction of the Hotel in compliance with Section 12.1.1(v),
including any amendment(s) or extension(s) of such loan(s) that do(es) not increase the total
outstanding principal balance of such loan(s) and whether or not such amendment(s) or
extension(s) occur(s) prior or subsequent to completion of construction of the Hotel and the
opening of the Hotel for business to the general public, exceed(s) seventy -five percent of the fair
market value of Lessee's leasehold interest in the Premises. In addition, it is understood and
agreed that the loan-to -value ratio constraint in this Section 12.1.1(vi) shall be made only at the
time Lessor is determining whether to approve or disapprove the proposed Mortgage and
thereafter this Section 12.1.1.(vi) shall not limit, restrict, invalidate, or result in the disapproval
of any such Mortgage or any amendment or extension of any such Mortgage that does not
increase the total outstanding principal balance of the loan secured by such Mortgage if the fair
market value of Lessee's leasehold interest in the Premises that was relied upon by Lessor in
approving the Mortgage declines.
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121.2 All rights acquired by a Mortgagee under a Mortgage shall be subject to
each and all of the covenants, conditions, and restrictions set forth in this Lease, and to all rights
of Lessor hereunder, none of which covenants, conditions, and restrictions is or shall be waived
by Lessor by reason of the giving of such Mortgage, except as expressly provided in this Article
12. Notwithstanding the foreclosure of any such Mortgage, Lessee shall remain liable for the
payment of the accrued but unpaid rent reserved in this Lease while Lessee remains in
possession of the Premises and Improvements.
12.1.3 Promptly upon the recording of a Mortgage, Lessee shall, at its own
expense, cause to be recorded in the Official Records of Orange County a written request
executed and acknowledged by Lessor for a copy of all notices of default and all notices of sale
under the Mortgage as provided by applicable law to be provided to Lessor. Inclusion of a
request for notice having the effect described above in the body of the recorded Mortgage shall
constitute compliance with this provision.
12.1.4 If Lessee encumbers its leasehold estate by way of a Mortgage in
accordance with this Article 12, and if such Mortgagee has registered its name and address in
writing with Lessor, then this Lease shall not be terminated or canceled on account of any
Default by Lessee in the performance of the terms, covenants, or conditions hereof until Lessor
shall have complied with the provisions of Sections 12.2 -12.6 as to the Mortgagee's rights to
cure and to obtain a new lease.
12.2 Rights and Obligations of Leasehold Mortgagees. If Lessee, or Lessee's
successors or assigns, shall mortgage the leasehold interest herein demised, then, as long as any
such Mortgage shall remain unsatisfied of record, the following provisions shall apply:
(i) If the holder of any Mortgage on the leasehold interest herein demised
shall register with Lessor its name and address in writing, no notice of default by Lessor to
Lessee shall be deemed to have been duly given unless and until a copy thereof has been mailed
to the Mortgagee in accordance with the notice provisions set forth in this Lease at the address
registered with Lessor.
(ii) In the event Lessee shall be in Default hereunder, the Mortgagee shall, at
any time prior to the termination of this Lease (which termination can occur only after notice to
the Mortgagee and an opportunity to cure in accordance with this Article 12) and without
payment of any penalty, have the right, but not the obligation, to pay all of the rents due
hereunder, to effect any insurance, to pay any taxes and assessments (subject to Lessor's right to
cure under Section 9.4 of this Lease), to make any repairs and improvements, to do any other act
or thing required or permitted of Lessee hereunder, and to do any other thing which may be
necessary and proper to be done in the performance and observation of the agreements,
covenants, and conditions hereof to prevent termination of this Lease. All payments so made
and all things so done and performed by such Mortgagee shall be accepted by Lessor and shall
be effective to prevent a termination of this Lease as the same would have been if made, done,
and performed by Lessee instead of such Mortgagee. Lessee hereby constitutes and appoints the
Mortgagee as Lessee's agent and attorney in fact with full power coupled with an interest, in
Lessee's name, place, and stead, and at Lessee's cost and expense, to enter upon the Premises
and Improvements and the Improvements, and perform all acts required to be performed herein.
No Mortgagee shall have the right to take or perform any action hereunder, under its leasehold
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Mortgage, or otherwise which might result in any detriment to the rights of a prior leasehold
Mortgagee with respect to the same lease or leasehold Premises.
(iii) While any such Mortgage remains unsatisfied of record, and an event or
events shall occur which shall entitle Lessor to terminate this Lease, Lessor shall forbear from
terminating this Lease if and to the extent that such forbearance is required under Section 12.4 of
this Lease or Mortgage documents.
(iv) If the holder of a Mortgage obtained in accordance with Section 12.1 of
this Lease acquires the leasehold estate created hereunder or otherwise acquires possession of the
Premises and Improvements pursuant to available legal remedies, Lessor will look to such holder
to perform the obligations of Lessee only from and after the date of foreclosure or possession and
will not hold such holder responsible for the past actions or inactions of the prior Lessee.
Notwithstanding the foregoing, (a) on and after the date of such foreclosure or possession, such
holder shall be required to perform and abide by each and all of the obligations of Lessee under
this Lease and (b) on and after the date of such foreclosure or possession, Lessor shall have the
right to enforce each and all of the provisions of this Lease against such holder. Nothing herein
is intended or shall be construed to limit or restrict Lessor's rights and remedies against any prior
Lessee, provided that Lessor's pursuit of such remedies shall not affect the rights of the holder of
any Mortgage obtained in accordance with Section 12.1 of this Lease to the use, enjoyment, or
operation of the Premises and Improvements
(v) The foreclosure of a Mortgage obtained in accordance with Section 12.1
of this Lease, or any sale thereunder, whether by judicial proceedings or by virtue of any power
of sale contained in such Mortgage, or any conveyance of the leasehold estate created hereby
from Lessee to the holder of any such Mortgage through, or in lieu of, foreclosure or other
appropriate proceedings in the nature thereof shall not require the consent or approval of Lessor
or constitute a Default under this Lease, and upon such foreclosure, sale, or conveyance Lessor
shall recognize the Mortgagee, or any other foreclosure sale purchaser, as the new Lessee
hereunder. In the event that such Mortgagee becomes the Lessee hereunder, or in the event that
the leasehold estate created hereunder is purchased by any other party at a foreclosure sale or by
any other lawful means, such Mortgagee, or such other foreclosure sale purchaser, shall be
responsible for performance of the obligations of Lessee under this Lease only for the period of
time that the Mortgagee or such other foreclosure sale purchaser remains Lessee hereunder, and
such Mortgagee or foreclosure sale purchaser shall thereafter have the right to assign this Lease
without need to obtain the approval of Lessor; provided, however, that any subsequent
assignment of this Lease shall be subject to the provisions of Article 11 of this Lease, including,
to the extent set forth therein, Lessor's right of approval of a Transfer. Notwithstanding anything
to the contrary herein: (a) as a precondition to any Mortgagee, foreclosure sale purchaser, or
other person obtaining the rights of Lessee hereunder, such person shall first be required to
expressly assume each and all of the obligations of Lessee under this Lease pursuant to a written
document in form and substance reasonably satisfactory to Lessor; (b) such new Lessee shall
have no right to construct any Improvements on the Premises unless and until such new Lessee
has submitted evidence reasonably satisfactory to Lessor that such new Lessee has the financial
capability and overall competence to perform the obligations of Lessee hereunder, provided that
this clause (b) shall not require submission of such evidence if such new Lessee is the holder of a
Mortgage obtained in accordance with Section 12.1 of this Lease but shall require submission of
such evidence if such new Lessee is the successor of such a holder; and (c) Lessor shall have the
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right of prior written approval over any prospective operator or manager (including but not
limited to such new Lessee) of the Hotel uses on the Premises and Improvements and any
prospective hotel franchisor, in accordance with Sections 7.2 -7.4 of this Lease.
(vi) In the event that the holder of any Mortgage obtained in accordance with
Section 12.1 of this Lease remedies or causes to be remedied, within the times specified herein,
all monetary Defaults of Lessee and all nonmonetary Defaults of Lessee which by their nature
are capable of being remedied by such Mortgagee, such Mortgagee shall have the right within
thirty (30) days after all such Defaults are remedied to request that Lessor promptly execute and
deliver to such Mortgagee a new lease of the Premises (naming such Mortgagee as Lessee) for
the remainder of the Lease Term with the same agreements, covenants, and conditions (except
for any requirements which have been fulfilled prior to execution of the Lease) as are contained
herein and with priority equal to that hereof, along with a Quitclaim Deed first approved in
writing by Lessor as to form and substance; provided, however; that if more than one Mortgagee
requests such a new lease, the Mortgagee holding the most senior Mortgage shall prevail; and
provided, further, that Lessor shall not be required to execute such new lease earlier than
concurrently with the execution of such new lease by such Mortgagee. Lessor shall prepare such
new lease at the expense of such Mortgagee, and all costs incurred by Lessor in preparing such
new lease (including attorneys' fees) shall be paid to Lessor by such Mortgagee prior to the
execution by Lessor of such new lease. The execution of a new lease by Lessor pursuant to this
subparagraph (vi) shall automatically and immediately terminate this Lease. Although not
necessary to effect the termination of this Lease, the former Lessee shall, upon Lessor's
execution of such new lease, execute any documents and perform any acts which may be
reasonably necessary to evidence the termination of this Lease. Upon Lessor's execution and
delivery of such new lease, Lessor, at the expense of the new Lessee, shall take such action as
shalt be necessary to remove the former Lessee from the Premises and Improvements.
Notwithstanding any provision herein, Lessor shall not be required to forbear from terminating
this Lease except to the extent required by Section 12.4 hereof and the Mortgage documents and
Lessor shall not be required to execute a new lease after the termination of this Lease in
accordance with the provisions hereof.
(vii) Anything herein contained to the contrary notwithstanding, the provisions
of this Section 12.2 shall inure only to the benefit of the holders of Mortgages and such other
persons that acquire the leasehold interest created hereunder pursuant to a foreclosure, sale, or
conveyance of the type described in this Section 12.2.
12.3 Notice. In the event that Lessee's interest under this Lease is subject to any
Mortgage, Lessor will simultaneously give to Mortgagee at such address as is specified by the
Mortgagee in accordance with Section 12.2 hereof a copy of each notice of default from Lessor
to Lessee hereunder at the time of giving such notice or communication to Lessee. Lessor shall
not exercise any right, power, or remedy with respect to any Default hereunder, and no notice to
Lessee of any such Default and no termination of this Lease in connection therewith shall be
effective, unless Lessor has given to Mortgagee written notice or a copy of its notice to Lessee of
such Default or any such termination, as the case may be.
12.4 Forbearance by Lessor. During the continuance of any Mortgage obtained in
accordance with Section 13.1 of this Lease and until such time as the lien of such Mortgage has
been extinguished:
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(i) Lessor shall not agree to any mutual termination nor accept any surrender
of this Lease, nor shall Lessor consent to any amendment or modification of this Lease, without
the prior written consent of the Mortgagee.
(ii) Notwithstanding any Default by Lessee in the performance or observance
of any agreement, covenant, or condition of this Lease on the part of Lessee to be performed or
observed, Lessor shall have no right to terminate this Lease unless an event of Default shall have
occurred and be continuing, Lessor shall have given such Mortgagee written notice of such event
of Default, and such Mortgagee shall have failed to remedy such Default, or caused such Default
to be deemed remedied, within the times specified in (iii) and (iv) below.
(iii) Should any event of Default under this Lease occur, any Mortgagee shall
have sixty (60) days after receipt of written notice from Lessor setting forth the nature of such
event of Default, and, if the Default is such that possession of the Premises is reasonably
necessary to remedy the Default, a reasonable time after the expiration of such sixty (60) day
period, within which to remedy such Default; provided, however that Lessor shall not be
required to forbear beyond such initial sixty (60) day period unless (a) the Mortgagee shall have
fully cured any Default in the payment of any monetary obligations of Lessee under this Lease
within such sixty (60) day period and shall continue to pay currently such monetary obligations
as and when the same are due, and (b) such Mortgagee shall have acquired Lessee's leasehold
estate created hereby or commenced foreclosure or other appropriate proceedings in the nature
thereof within such sixty (60) day period, or prior thereto, and shall be diligently prosecuting any
such proceeding. Lessor agrees that all payments so made and all things so done and performed
by such Mortgagee shall be accepted by Lessor and shall be effective to prevent a termination of
this Lease as the same would have been if made, done, and performed by Lessee instead of such
Mortgagee.
(iv) Any event of Default under this Lease which in the nature thereof cannot
be remedied by a Mortgagee shall be deemed to be remedied if the Mortgagee does all of the
following: (a) within sixty (60) days after receiving written notice from Lessor setting forth the
nature of an event of Default, or prior thereto, the Mortgagee shall have acquired Lessee's
leasehold estate created hereby or shall have commenced foreclosure or other appropriate
proceedings, (b) Mortgagee shall diligently prosecute any such proceedings to completion, (c)
within the sixty (60) day period referred to in (a) above, Mortgagee shall have fully cured any
Default in the payment of all monetary obligations of Lessee hereunder and any non - monetary
obligations which do not require possession of the Premises and Improvements, and (d) after
gaining possession of the Premises, Mortgagee shall perform and abide by each and all of the
obligations of Lessee under this Lease as and when the same are due; provided, however, that
Mortgagee shall not be required to cure any Default which occurs prior to the date on which
Mortgagee obtains possession of the Premises and which by its nature cannot be cured by such
Mortgagee.
(v) In the event that Mortgagee is prohibited by any process or injunction
issued by any court of competent jurisdiction or by reason of any action by any court having
jurisdiction of any bankruptcy or insolvency proceeding involving Lessee from commencing or
prosecuting foreclosure or other appropriate proceedings in the nature thereof, the times
specified in subparagraphs (iii) and (iv) immediately above for commencing and prosecuting
such foreclosure or other proceedings shall be extended for the period of such prohibition.
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Notwithstanding anything to the contrary herein, Lessor shall in no event be required to forbear
hereunder unless Mortgagee shall within sixty (60) days after the giving of notice by Lessor pay
all moneys due and in respect of which there exists a monetary event of Default.
12.5 Conditions Precedent to Mortgagee Rights and Lessor Forbearance. Lessor shall
not be required to comply with Sections 12.2 through 12.4 of this Lease with respect to any
Mortgage, unless and until a true copy of the original thereof bearing the date and book and page
of recordation thereof, and a certified copy of the original note secured by such Mortgage has
been delivered to Lessor together with written notice of the address of the Mortgagee to which
notices may be sent; and in the event of an assignment of such Mortgage, such assignment shall
not be binding upon Lessor unless and until a certified copy thereof bearing the date and book
and page of recordation together with written notice of the address of the assignee thereof to
which notices may be sent, have been delivered to Lessor.
12.6 Performance on Behalf of Lessee. In the event that Lessee shall fail to make any
payment or perform any act required hereunder to be made or performed by Lessee, then Lessor
or Mortgagee may, but shall be under no obligation to, after such notice to Lessee, if any, as may
be reasonable under the circumstances, make such payment or perform such act with the same
effect as if made or performed by Lessee. Nothing herein shall limit the right of Mortgagee to
take action or make a payment if permitted under its Mortgage. Entry by Lessor or Mortgagee
upon the Premises and Improvements for such purpose shall not waive or release Lessee from
any obligation or Default hereunder (except in the case of any obligation or Default which shall
have been fully performed or cured by Mortgagee). Lessee shall reimburse Lessor (with interest
at the rate of three percent (3 %) over the prime rate of the largest bank operating in the State of
California or the maximum legal rate of interest, whichever is less) or Mortgagee (with interest
as provided in the Mortgage) for all sums so paid by Lessor or Mortgagee and all costs and
expenses incurred by Lessor and Mortgagee in connection with the performance of any such act.
12.7 Non - Merger. There shall be no merger of this Lease, or of the leasehold estate
created thereby, with the fee estate in and to the Premises and Improvements by reason of the
fact that this Lease, or the leasehold estate created thereby; or any interest in either thereof, may
be held directly or indirectly by or for the account of any person who shall own the fee estate in
and to the Premises and Improvements, or any portion thereof, and no such merger shall occur
unless and until all persons at the time having any interest in this Lease or the leasehold estate,
including the Mortgagee and the holder of any mortgage upon the fee estate in and to the
Premises and Improvements, shall join in a written instrument effecting such merger.
12.8 Lessor's Cooperation; Estoppels. Lessor covenants and agrees that it will act and
cooperate with Lessee in connection with Lessee's right to grant a Mortgage or Mortgages,
subject to the reserved rights of Lessor as set forth herein. At the request of Lessee or any
proposed or existing Mortgagee, Lessor shall within a reasonable time execute and deliver (i)
any documents or instruments reasonably requested to evidence, acknowledge, and/or perfect the
rights of a Mortgagee as herein provided; and (ii) an estoppel certificate certifying the status of
this Lease and Lessee's interest herein and such matters as are reasonably requested by Lessee or
such Mortgagee. Such estoppel certificate shall include, but not be limited to, certification, if
true, by Lessor that (i) this Lease is unmodified and in full force and effect (or, if modified, a
statement as to the nature of such modification and certification that this Lease, as so modified, is
in full force and effect); (ii) all rents currently due under the Lease have been paid or the status
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and amount of rent payments then owing, (iii) there are not, to Lessor's knowledge, any uncured
Defaults on the part of Lessee under this Lease or facts, acts, or omissions which with the giving
of notice or passage of time, or both, would constitute a Default, (iv) the requirements under
Section 12.1 of the Lease have been satisfied and Lessor consents to the execution and delivery
by Lessee to Mortgagee of a deed of trust encumbering Lessee's leasehold interest in the
Premises; (v) Lessee's use and operation of the Premises complies with any use covenants or
operating requirements contained in the Lease; (vi) Lessor has not received any notice of any
assignment, transfer, or encumbrance of the interest of Lessee in the Lease or any rights of
Lessee thereunder, except in favor of Mortgagee; and (vii) Lessor has received and/or by virtue
of this estoppel certificated acknowledges Mortgagee has registered its name and address with
Lessor in accordance with Section 12.1.4 of the Lease. Any such estoppel certificate may be
conclusively relied upon by any Mortgagee or permitted successor or assignee of Lessee's
interest in this Lease.
Lessee shall be responsible to pay or reimburse Lessor for the costs incurred by Lessor in
investigating the facts relating to Lessor's execution of an estoppel certificate, including without
limitation in -house administrative costs at the full payroll rate of the City employees performing
services with respect to same and, to the extent Lessor retains outside attorneys or consultants for
said purpose, the costs incurred by said attorneys or consultants. Lessor may withhold issuance
of an estoppel certificate until Lessee concurrently pays to Lessor the costs owing to Lessor
hereunder.
12.9 Enforceability. The rights granted herein to a Mortgagee shall be enforceable
only by such Mortgagee. In the event any action or proceeding is brought to enforce or interpret
the provisions hereof or to seek damages or performance or declare the rights of the parties
hereto or such Mortgagee, the prevailing party including such Mortgagee, if prevailing, shall be
entitled to attorneys' fees, costs, and expenses.
12.10 Equipment Financing. Lessor understands that Lessee, Hotel Manager or Hotel
Franchisor may lease and/or purchase with purchase money financing certain of the equipment
and furnishings which may be installed in or used in connection with the Hotel from time to time
during the Lease Term. Lessor hereby agrees, upon Lessee's written request, to release, waive,
or subordinate its landlord's lien to such equipment leases, retained title contracts, security
interest, or other forms of purchase money financing and to execute documents, in form and
substance reasonably satisfactory to Lessor, that permit the equipment lessors, title and lien
holders, as applicable, the right to enter the Premises for the sole purpose of exercising their
rights to remove such equipment and furnishings subject to such leases, retained title contracts,
security interests, or other forms of purchase money financing, and provided that the same
obligate the equipment lessors, title and lien holders, as applicable, to repair and restore any
damage caused to the Premises and the Improvements resulting from such removal.
ARTICLE 13
INDEMNIFICATION AND INSURANCE
13.1 Indemnification. To the maximum extent permitted by law and except as
hereinafter expressly limited, from and after the Agreement Date Lessee agrees to and shall
defend, indemnify, and hold harmless Lessor and Lessor's officials, officers, employees, agents,
contractors, and consultants from and against all claims, liability, loss, damage, costs, and
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expenses (including investigation costs, reasonable attorneys' fees, and court costs) arising from
or as a result of the death or injury of any person, property damage, economic loss, penalties,
fines, and other damages of any kind whatever which is directly or indirectly caused by or based
on (or alleged to be caused by or based on) Lessor's ownership of or interest in the Premises or
any portion thereof or any improvements thereon, the condition of the Premises or any portion
thereof or any Improvements thereon, Lessee's entry onto or occupancy of the Premises,
Lessee's acts or omissions with respect to the development, construction, use, maintenance,
operation, and repair of the Premises or any portion thereof or any Improvements thereon, and
any of Lessee's activities under this Lease, whether such actions or inactions be prior to or after
the Commencement Date, whether such actions or inactions be by Lessee or anyone directly or
indirectly employed or contracted with by Lessee, and whether such damage or injury shall
accrue or be discovered before or after the termination of this Lease. Notwithstanding the
foregoing, Lessee shall not be responsible for (and such indemnity shall not apply to) property
damage or bodily injury caused by Lessor's entry onto the Premises and Improvements pursuant
to various provisions of this Lease, and/or to the extent such damage or injury is caused by the
willful misconduct or active negligence of Lessor or its designated employees or agents. Each
Party shall promptly provide notice to the other Parry of any actual or threatened claim that gives
rise or may give rise to the indemnity obligations set forth herein and thereafter the Parties agree
to cooperate in the defense of any such claim.
13.2 Indemnification From Third Party Challenges to Lease and/or Development
Entitlements. In addition to the provisions set forth in Section 13.1 and except as stated in the
next paragraph hereinbelow, in the event of any legal action instituted by a third party (not a
Party to this Lease) challenging the validity or enforceability of (i) this Lease or any provision of
this Lease, (ii) any action by either Lessor or Lessee pursuant to this Lease, including without
limitation any consent or approval issued by Lessor pursuant hereto, or (iii) any Development
Entitlement or other permit or approval approved or issued by Lessor (in its regulatory capacity)
or any other governmental agency with jurisdiction over the Premises and the Hotel, the Parties
hereby agree to cooperate in defending said action; provided, however, Lessee shall indemnify,
defend (by counsel reasonably acceptable to Lessor), and hold harmless Lessor and Lessor's
officials, officers, employees, agents, contractors, and consultants from and against all claims,
liabilities, and losses, including without limitation all litigation expenses (including investigation
costs, reasonable attorneys' fees, and court costs), arising therefrom. In the event that such
action involves mediation, arbitration, or any other means of alternative dispute resolution, the
provisions of this Section 13.2 shall apply equally thereto. Lessor shall have the right to appoint
and designate independent counsel to represent Lessor and/or any of Lessor's officials, officers,
employees, agents, contractors, and consultants named as parties in any such third party action,
as reasonably determined to be necessary and appropriate by Lessor, at Lessee's expense;
provided, that in such event Lessor shall instruct its independent counsel to cooperate with
counsel retained by Lessee to defend the same persons and entities in order to avoid unnecessary
duplication of expense. Upon being served with process in any such legal action, the Party so
served shall promptly notify the other Party to this Lease. Lessee shall have the right to settle or
compromise any such action; provided, however, that no such settlement or compromise shall
terminate, modify, alter, or amend any of Lessor's rights or obligations set forth in this Lease or
with respect to any of the Development Entitlements or permits or approvals issued or approved
by any governmental agency with respect to the Premises without compliance with any
applicable legal procedures and requirements and without Lessor's prior written consent, which
consent Lessor may withhold in its sole and absolute discretion.
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Notwithstanding the foregoing, Lessee's indemnity obligations set forth in the preceding
paragraph shall not apply to the claims of Lido Partners that, as of the Agreement Date, are being
litigated in Orange County Superior Court Case No. 30- 2014- 00715029- CU- OR -CJC.
13.3 Required Insurance. During the entire Lease Term, Lessee, at its sole cost and
expense, shall maintain or cause to be maintained insurance policies protecting against all of the
following types of risk and loss:
(i) Insurance against loss or damage to the Improvements on the Premises,
resulting from fire, earthquake (to the extent commercially available at commercially reasonable
rates), windstorm, hail, lightning, vandalism, malicious mischief, riot and civil commotion, and
such other perils ordinarily included in extended coverage fire insurance policies. Such
insurance shall be maintained in an amount not less than one hundred percent (100 %) of the full
insurable value of the Improvements, all furnishings, fixtures, and equipment on the Premises
from time to time, and the estimated cost of any architectural and engineering fees, inspection
and supervision costs, and other costs that would be incurred to replace the Improvements on the
Premises to their pre- existing condition. As used herein, the term "full insurable value" shall
mean the actual replacement cost (excluding the cost of excavation, foundations, and footings
below the ground level and without deduction for depreciation) of the Improvements, including
without limitation the cost of construction of the Improvements, architectural and engineering
fees, inspection and supervision, and applicable governmental permit fees. To ascertain the
amount of coverage required, Lessee shall cause the full insurable value to be determined from
time to time by the insurer or by a qualified expert mutually acceptable to Lessor and Lessee, not
less often than once every three years. Lessor shall be included as a loss payee under the
commercial property insurance.
(ii) Use and occupancy or business interruption or rental income insurance
against the perils of fire, windstorm, hail, lightning, vandalism and malicious mischief, riot and
civil commotion, and such other perils ordinarily included in extended coverage fire insurance
policies, in an amount equal to not less than two times the sum of the highest Participation Rent
paid to Lessor in any year under this Lease and twelve (12) months fixed operating expenses of
Lessee, except to the extent such insurance is not commercially available at commercially
reasonable rates due to reasons other than the wrongful acts or omissions or dangerous or
hazardous activities of Lessee.
(iii) Commercial general liability insurance, to protect against loss from
liability imposed by law for damages on account of personal injury, including death therefrom,
suffered or alleged to be suffered by any person or persons whomsoever, resulting directly or
indirectly from any act or activities of Lessee or under Lessee's control or direction, and also to
protect against loss from liability imposed by law for damages to any property of any person
caused directly or indirectly by or from the acts or activities in connection with the Premises and
Improvements of Lessee or its invitees and sublessees, or any person acting for Lessee, or under
its control or direction. Any such property damage and personal injury insurance maintained by
Lessee at any time during the term of this Lease shall name Lessor and its officials, officers,
employees, agents, volunteers, and consultants as additional insureds and shall also provide for
and protect Lessor against incurring any legal cost in defending claims for alleged loss.
Coverage shall be at least as broad as that provided by Insurance Services Office form CG 00 01
and may be arranged through any combination of primary and excess insurance as required to
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achieve the limits specified, provided that any excess liability policy does not restrict coverage
provided in the primary policy. Such personal injury and property damage insurance shall be
maintained in full force and effect during the entire term of this Lease in an amount not less than
Ten Million Dollars ($10,000,000.00) combined single limit, Twenty Million Dollars
($20,000,000) in the aggregate, as of the Effective Date of Lease, which minimum amount of
coverage shall escalate on the January 1st next following the fifth anniversary of the
Commencement Date and once every five years thereafter in proportion to the escalation, if any,
during such period in the Consumer Price Index. Lessee agrees that the provisions of this
Section 13.3(iii) as to maintenance of insurance shall not be construed as limiting in any way the
extent to which Lessee may be held responsible for the payment of damages to persons or
property resulting from Lessee's activities, the activities of its invitees and sublessees, or the
activities of any other person or persons for which Lessee is otherwise responsible.
(iv) Business automobile coverage for bodily injury and property damage
liability for all activities of Lessee arising out of or in connection with the activities and services
to be performed and provided pursuant to this Lease, including coverage for any owned, hired,
non - owned, or rented vehicles, in an amount not less than Five Million Dollars ($5,000,000.00)
combined single limit for each occurrence, which minimum amount of coverage shall escalate on
the January 1st next following the fifth anniversary of the Commencement Date and once every
five years thereafter in proportion to the escalation, if any, during such period in the Consumer
Price Index.
(v) Builder's risk insurance during all periods of construction, reconstruction,
or alteration of any Improvements on the Premises against "all risk" of physical loss, including
without limitation the perils of flood, collapse, and transit, with deductibles acceptable to Lessor,
covering the total cost of work performed, equipment, supplies, and material furnished on a
replacement cost basis with no co- insurance penalty.
(vi) Contractor's pollution liability insurance for contractors or subcontractors
performing construction work written on a form acceptable to Lessor providing coverage for
liability arising out of sudden, accidental, and gradual pollution. The policy limit shall be not
less than One Million Dollars ($1,000,000.00) per claim and Two Million Dollars
($2,000,000.00) in the aggregate, which minimum amount of coverage shall escalate on the
January 1st next following the fifth anniversary of the Commencement Date and once every five
years thereafter in proportion to the escalation, if any, during such period in the Consumer Price
Index. When this insurance is required, all activities comprising the work shall be specifically
scheduled on the policy as "covered operations." The policy shall provide coverage for the
hauling of waste from the Premises to the final disposal location, including non -owned disposal
sites. Products /completed operations coverage must be maintained and evidence of insurance
must be provided for at least five (5) years after completion of the work.
(vii) Liquor liability coverage in the amount of not less than Ten Million
Dollars ($10,000,000) per occurrence and in the aggregate, which minimum amount of coverage
shall escalate on the January 1st next following the fifth anniversary of the Commencement Date
and once every five years thereafter in proportion to the escalation, if any, during such period in
the Consumer Price Index.
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(viii) Workers compensation insurance, statutory limits, and employer's liability
insurance with limits of at least One Million Dollars ($1,000,000) each accident for bodily injury
by accident and each employee for bodily injury by disease in accordance with the laws of the
State of California, Section 3700 of the Labor Code. Such workers compensation insurance shall
cover all persons employed by Lessee in connection with the Premises and Improvements, and
shall cover full liability for compensation under any such act aforesaid, based upon death or
bodily injury claims made by, for or on behalf of, any person incurring or suffering injury or
death in connection with the Premises and Improvements, or the operation thereof by Lessee. In
addition, Lessee shall require each subtenant and subcontractor to similarly maintain workers
compensation insurance and employer's liability insurance meeting the requirements of this
Section 13.1(iv) for all of said subtenant's and subcontractor's employees.
(ix) Lessee hereby agrees to waive rights of subrogation which any insurer of
Lessee may acquire from Lessee by virtue of payment of any loss. Lessee agrees to obtain any
endorsements that may be necessary to effectuate this waiver of subrogation. The workers
compensation policy shall be endorsed with a waiver of subrogation in favor of Lessor for all
work performed by Lessee, its employees, agents, and contractors and subcontractors.
In the event that the holder of a Mortgage obtained in accordance with Section 12.1 of
this Lease which has registered its name and address with Lessor acquires the leasehold interest
created by this Lease, such Mortgagee shall have the right to self - insure with respect to the risks
specified in this Section 13.3 if such Mortgagee is an Institutional Lender.
13.4 General Insurance Provisions and Requirements. Lessee shall provide copies of
all insurance policies or certificates of insurance, with original endorsements, to Lessor as
evidence of the insurance coverage required herein. Insurance certificates must be approved by
Lessor prior to the Commencement Date and prior to commencement of performance by Lessee
or issuance of any permit. Current certification of insurance shall be kept on file with Lessor at
all times during the Lease Term. Lessee shall also deliver to Lessor appropriate evidence of
payment of the premiums for all required insurance prior to the Commencement Date and
thereafter, during the entire Lease Term, at least thirty (30) days prior to expiration of coverage.
All insurance provided under Section 13.3 of this Lease shall be primary insurance for
the benefit of Lessee and Lessor and not contributory with any other insurance that may be
maintained from time to time by Lessor in its sole and absolute discretion. Each insurer shall
waive all rights of subrogation against Lessor, its elected and appointed officers, officials,
employees, agents, and volunteers. Lessor and its elected and appointed officers, officials,
employees, agents, and volunteers are to be covered as additional insureds under all general,
liquor, and pollution liability policies with respect to liability arising out of Lessee's activities
related to this Lease and with respect to Lessee's use and occupancy of the Premises. Said
insurance shall also be for the benefit of the Mortgagee, if any.
Lessor shall be listed as payee on property and builder's risk policies.
Lessee covenants not to keep on the Premises or permit to be kept, used, or sold thereon,
anything prohibited by any fire or other insurance policy covering the Premises.
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All insurance shall be written on an occurrence -made form except pollution liability
insurance.
Lessee shall require and verify that all contractors and subcontractors maintain insurance
meeting all the requirements stated herein and Lessee shall ensure that Lessor is an additional
insured on the insurance required from contractors and subcontractors. For CGL coverage,
contractors and subcontractors shall provide coverage with a form at least as broad as
CG20380413.
Any failure to comply with reporting provisions of the policies shall not affect coverage
provided to Lessor, its elected and appointed officers, officials, employees, agents, and
volunteers.
The insurance required by this Lease shall not be suspended, voided, canceled, or reduced
in coverage or limits except after thirty (3 0) calendar days (ten (10) calendar days written notice
of non - payment of premium) written notice has been received by Lessor. It shall be Lessee's
obligation to ensure that provisions for such notice have been established.
All insurance provided under Section 13.3 shall be periodically reviewed by the Parties
for the purpose of adjusting the minimum limits of such insurance to amounts which may be
reasonable and customary for similar facilities of like size and operation; provided, however, that
in no event shall Lessor be required to consent to or approve a reduction in the amount of
insurance to be provided pursuant to Section 13.3(iii).
The insurance to be provided by Lessee may provide for a deductible or self- insured
retention of not more than Ten Thousand Dollars ($10,000.00), with such amount to increase at
such times as Lessor may require increases in the policy limits as set forth above; provided that
the percentage increase in the deductible or self - insured retention shall not exceed the percentage
increase in the Consumer Price Index since the last requested adjustment; and further provided
that Lessee may maintain such higher deductibles or self - insured retention as may be approved in
writing by the City Manager or his or her designee. In the event such insurance does provide for
deductibles or a self - insured retention, Lessee agrees that it will fully protect Lessor, its boards,
officials, officers, employees, and consultants in the same manner as these interests would have
been protected had the policy or policies not contained the deductible or retention provisions.
All insurance herein provided for under Section 13.3 shall be effected under policies
issued by insurers of recognized responsibility licensed or permitted to do business in the State
of California with an assigned policyholders' Rating of A- (or higher) and Financial Size
Category Class VII (or larger), in accordance with the latest edition of Best's Key Rating Guide,
unless otherwise approved by the City Manager of Lessor or his or her designee.
Any insurance required to be maintained by Lessee pursuant to Section 13.3 may be
taken out under a blanket insurance policy or policies covering other premises or properties, and
other insureds in addition to the Parties hereto; provided, however, that any such policy or
policies of blanket insurance shall specify therein, or supplemental written certification from the
insurers under such policies shall specify, the amount of insurance irrevocably allocated to the
coverage to be provided under Section 13.3 and provided further, that in all other respects, any
such blanket policy shall comply with the other provisions of Section 13.3.
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Lessee hereby waives any claim against Lessor for any loss that is required to be covered
by insurance of the type specified in Section 13.3.
By requiring insurance herein, Lessor does not represent that coverage and limits will
necessarily be adequate to protect Lessee, and such coverage and limits shall not be deemed as a
limitation on Lessee's liability under the covenants set forth in this Lease, including without
limitation the indemnity provisions herein.
Lessee shall give Lessor prompt and timely notice of any claim made or suit instituted
arising out of or resulting from Lessee's performance under this Lease and confirmation, if such
be the fact, that the claim or suit has been tendered to Lessee's insurer and the insurer has
accepted said tender.
13.5 Failure to Maintain Insurance. If Lessee fails or refuses to procure or maintain
insurance as required by this Lease, Lessor shall have the right, but not the obligation, at
Lessor's election, and without notice to Lessee or any Mortgagee, to procure and maintain such
insurance. The premiums paid by Lessor shall be treated as additional rent due from Lessee, to
be paid on the first day of the month following the date on which the premiums are paid. Lessor
shall give prompt notice of the payment of such premiums, staring the amounts paid and the
name of the insured(s).
13.6 Disposition of Insurance Proceeds Resulting from Loss or Damage to
Improvements.
13.6.1 Subject to the provisions of Section 13.6.2 below, proceeds of insurance
with respect to loss or damage to the Improvements to be maintained and repaired by Lessee
during the Lease Term shall be payable, under the provisions of the policy of insurance, to
Lessee or, if such loss or damage involves the need for Lessee to obtain any governmental
approvals or permits, jointly to Lessee and Lessor, and said proceeds shall constitute a trust fund
to be used for the repair, restoration, or reconstruction of the Improvements in accordance with
plans and specifications approved in writing by Lessor.
13.6.2 In the event this Lease is terminated by mutual agreement of Lessor and
Lessee and the Improvements are not repaired, restored, or reconstructed, the insurance proceeds
shall be applied first to any payments due under this Lease from Lessee to Lessor, second to
restore the Premises to a neat and clean condition, and finally any excess shall be paid to Lessee;
provided, however, that during any period when there is an outstanding Mortgage upon the
Improvements, such proceeds shall be applied first to discharge the debt secured by the
Mortgage and then for the purposes and in the order set forth above in this paragraph.
ARTICLE 14
EMINENT DOMAIN
14.1 Lessee to Give Notice. In case of a Taking of all or any part of the Premises or
the commencement of any proceedings or negotiations which might result in a Taking, Lessee
shall promptly give written notice thereof to Lessor generally describing the nature and extent of
the Taking or the nature of such proceedings or negotiations and the nature and extent of the
Taking which might result therefrom, as the case may be.
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14.2 Total Taking. In case of a Taking of the fee of the entire Premises and
Improvements, or in case of the taking of only a part of the Premises and Improvements that
leaves the remainder of the Premises and Improvements in such location, or in such form, shape,
or reduced size or condition as to render the same not effectively and practicably usable for the
conduct thereon of the Hotel and ancillary uses required hereunder, this Lease shall terminate as
of the date title vests in the condemning authority or the date the condemning authority is entitled
to possession, whichever first occurs (the "Date of Taking "). Any Taking of the Premises and
Improvements of the character referred to in this Section 14.2 which results in the termination of
this Lease is referred to herein as a "Total Taking." Lessee shall continue to pay all Ground
Rent due hereunder and, in all respects, keep, observe, and perform all of the terms, covenants,
and conditions of this Lease to be kept, observed, and performed by Lessee until the Date of
Taking.
14.3 Partial Taking. In case of a Taking of a portion of the Premises and
Improvements that does not constitute a Total Taking (a "Partial Taking ") (i) this Lease shall
remain in full force and effect as to the portion of the Premises and Improvements remaining
immediately after such Partial Taking, and a fair and equitable proportion of the Ground Rent or
other sum payable hereunder shall be abated according to the nature and extent of the Partial
Taking and the duration and extent of the interruption of Lessee's operations due to such taking
and restoration of the Premises, and (ii) Lessee, to the extent the awards or payments, if any, on
account of such Partial Taking shall be sufficient for the purpose, at its expense, but first subject
to Section 14.4, shall within a reasonable period of time commence and complete, or cause to be
commenced and completed, restoration of the Premises and Improvements as nearly as possible
to their value, condition, and character immediately prior to such Partial Taking, except for any
reduction in area caused thereby; provided, however, that in case of a Partial Taking for
temporary use Lessee shall not be required to effect such restoration until such Partial Taking is
terminated.
14.4 Application of Awards and Other ,Payments. ents. Awards and other payments on
account of a Taking, less costs, fees, and 'expenses incurred in the collection thereof ( "Net
Awards and Payments ") shall be applied as follows:
(i) In the event of a Partial Taking, Lessee shall furnish to Lessor and any
Mortgagee evidence satisfactory to Lessor and the Mortgagee of the total cost of the restoration
required by Section 14.3.
(ii) In the event of a Partial Taking, Net Awards and Payments shall be held
and applied as provided with respect to proceeds of insurance as set forth in Section 13.6.1. The
balance, if any, shall be paid to Lessee and Lessor as their respective interests may appear in the
Premises and the Improvements.
(iii) Net Awards and Payments received on account of a Partial Taking for
temporary use shall initially be received by Lessee.
(iv) Net Awards and Payments received on account of a Total Taking shall be
allocated as follows:
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First: There shall be paid to each Mortgagee an amount equal to the sum of any
unpaid principal amount of the indebtedness secured by the Mortgage, if any, and any interest
accrued thereon, all as of the date on which such payment is made; provided, however, that each
such Mortgagee shall only be paid to the extent of its security in the applicable portion which is
the subject of the Taking.
Second: To Lessee and Lessor as their respective interests may appear in the
Premises and the Improvements; provided, that (i) any payment to a Mortgagee or pursuant to
the preceding paragraph shall be charged against Lessee's interest; and (ii) Lessee shall be
entitled to payment and receipt of any portion of Net Awards and Payments attributable to
leasehold bonus value.
14.5 Taking Prior to Commencement Date. Notwithstanding any other provision set
forth in this Lease to the contrary, Lessee shall have no right to share in any Net Awards and
Payments if the Date of Taking occurs prior to the Commencement Date. Notwithstanding the
foregoing sentence, in the event a Taking occurs prior to the Commencement Date, Lessee shall
have the right, in its sole and absolute discretion, to terminate this Lease.
ARTICLE 15
DEFAULTS REMEDIES AND TERMINATION
15.1 Defaults — General. Subject to the extensions of time for Events of Force
Majeure, the failure or delay by either Party to timely perform any term or provision of this
Lease constitutes a default under this Lease (herein, a "Default "). The Party who so fails or
delays must immediately commence to cure, correct, or remedy such failure or delay, and shall
complete such cure, correction, or remedy within such time as may be expressly stated in any
other provision of this Lease (including without limitation Section 8.6) and, if the time for
completion of such cure, correction, or remedy is not expressly stated in any other provision of
this Lease, within ten (10) days of such failure or delay for monetary Defaults and, for non -
monetary Defaults, within the minimum reasonable period of time within which such Default can
be cured if the Defaulting Party acts with commercially reasonable diligence to cure, correct, or
remedy the same (the "Cure Period ").
The injured Party shall give written notice of default to the Party in Default, specifying
the Default complained of by the injured Party. Except as required to protect against further
damages, and except as may be otherwise expressly provided elsewhere in this Lease, the injured
Parry may not institute proceedings against the Party in Default until the expiration of the
applicable Cure Period. In addition, Lessor's exercise of its remedies under this Article 15 shall
be subject to the provisions of Article 12 of this Lease.
In addition to the foregoing, each of the following shall be deemed to constitute a Default
hereunder and the Cure Period shall be deemed to have expired at the times specified: (i) if
Lessee becomes insolvent or files any debtor proceedings, or if any adjudication in bankruptcy is
rendered against Lessee, or if Lessee takes or has taken against it, in any court pursuant to any
statute either of the United States or of any State, a petition in bankruptcy or insolvency or for
reorganization or for the appointment of a receiver or trustee of all or any portion of Lessee's
property, and should the same not be discharged within one hundred twenty (120) calendar days
thereafter; (ii) if Lessee makes an assignment for the benefit of creditors or petitions for or enters
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into such an arrangement; (iii) if Lessee abandons or vacates the Premises for a period of fifteen
(15) consecutive calendar days after written notice to Lessee (excluding, however, any
abandonment or vacation attributable to an Event of Force Majeure or by the remodeling,
reconstruction, alteration, or repair of the Hotel); (iv) if a trustee or receiver is appointed to take
possession of substantially all of the assets of Lessee located at the Premises where possession is
not restored within one hundred twenty (120) calendar days; and (v) if Lessee permits or suffers
this Lease or any substantial portion of its property on the Premises or any portion of its interest
in the Premises or the Hotel to be taken under any writ of attachment or execution, and should
the same not be discharged within ninety (90) calendar days thereafter.
Except as may be otherwise expressly provided in this Lease, any failure or delay by
either Party in asserting any of its remedies or rights as to any Default shall not operate as a
waiver of any Default or of any such rights or remedies or deprive either such Party of its right to
institute and maintain any actions or proceedings which it may deem necessary to protect, assert,
or enforce any such rights or remedies. Failure or delay in giving a notice of default shall not
change the time of Default.
15.2 Legal Actions. in addition to any other rights or remedies it may have hereunder
or under applicable law, either Party may institute legal action to cure, correct, or remedy any
Default by the other Party, to recover damages for any Default by the other Party, or to obtain
any other remedy consistent with the purpose of this Lease. Such legal actions must be instituted
and maintained in the Superior Court of the County of Orange, State of California, in any other
appropriate court in that county, or in the United States District Court in the Central District of
California. To the fullest extent permitted by law, each Party consents to the jurisdiction of such
court(s) and waives any right it might have in the absence of this Lease to object to such
jurisdiction or transfer venue to another court.
In the event that any legal action is commenced by Lessor against Lessee, service of
process on Lessee shall be made on any officer of Lessee or any authorized agent for service of
process and shall be valid whether made within or without the State of California.
15.3 Attorneys' Fees and Court Costs. Subject to the express provisions of this Lease .
relating to indemnity, in the event of any legal action for enforcement of this Lease or arising out
of this Lease, the prevailing Party, in addition to whatever relief to which it may be entitled, shall
be entitled to recover all of its litigation expenses, including, to the maximum extent permitted
by law, its attorney's fees, expert witness fees, and costs, and including such litigation expenses
arising in preparation for litigation and prior to the commencement or filing of the initial
pleading, litigation expenses incurred with respect to any appeal, and litigation expenses as may
be incurred to enforce any judgment or settlement agreement that is entered or agreed to. The
foregoing provisions shall apply equally to any arbitration, mediation, or other alternative dispute
resolution proceeding.
15.4 Rights and Remedies are Cumulative. Except with respect to any rights and
remedies expressly declared to be exclusive in this Lease, the rights and remedies of the Parties
are cumulative, and the exercise by either Party of one or more of such rights or remedies shall
not preclude the exercise by it, at the same or different times, of any other rights or remedies for
the same Default or any other Default by the other Party.
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15.5 Additional Remedies of Lessor. In addition to any other rights and remedies to
which Lessor may be entitled under applicable law or this Lease, including without limitation
Section 8.6, if Lessee commits a Default and fails to cure such Default within the applicable
Cure Period, and subject to any rights of a Mortgagee pursuant to Article 12, Lessor, at its
option, shall have the right but not the obligation to do any of the following:
(i) Correct or cause to be corrected said Default and charge the costs therefor
to the account of Lessee;
(ii) Correct or cause to be corrected said Default and pay the costs thereof
from the proceeds of any insurance;
(iii) Continue this Lease and Lessee's right to possession in effect and enforce
its rights and remedies under the Lease, including the right to recover rent as it becomes due, as
provided in Section 1951.4 of the California Civil Code;
(iv) Have a receiver appointed to take possession of Lessee's interest in the
Premises and Improvements, with power in said receiver to administer Lessee's interest therein,
collect all funds available to Lessee in connection with its operation and maintenance thereof,
and perform all other acts consistent with Lessee's obligations under this Lease as the court
deems proper;
(v) Maintain and operate the Premises and Improvements without terminating
this Lease;
(vi) Terminate this Lease pursuant to Section 15.7 hereof, by written notice to
Lessee of its intention to do so.
15.6 Lessee's Waiver of Right to Specific Performance Prior to Commencement Date.
Notwithstanding any other provision set forth in this Lease to the contrary, in no event shall
Lessee have the right to specific performance or similar injunctive or mandamus relief to compel
Lessor to execute and deliver the Memorandum of Lease or cause the Commencement Date to
occur. In the event Lessee alleges that Lessor has committed an uncured Default of its
obligations under this Lease by failing or refusing to perform any of its obligations hereunder,
and/or by failing or refusing to execute and record the Memorandum of Lease or consenting to or
causing the Commencement Date to occur, Lessee's sole and exclusive remedy shall be
compensatory (but not special or consequential) damages proximately caused thereby and
Lessee, upon receipt of written request from Lessor, shall promptly execute (in recordable form)
and deliver to Lessor a quitclaim deed disclaiming and terminating any right, title, and interest
Lessee may have or claim to have in the Premises.
15.7 Remedies and Rights of Termination.
15.7.1 In the event that at any time during the Lease Tenn, in violation of this
Lease, Lessee shall: (i) fail to commence and /or complete the construction of the Improvements
as required by this Lease or within the time required by this Lease; (ii) abandon or substantially
suspend construction of the Improvements as required by this Lease prior to the completion
thereof, (iii) use the Premises and Improvements for any purpose other than those provided for in
this Lease or fail to use and maintain the Premises and Improvements in accordance with Article
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7 of this Lease; (iv) fail or refuse to pay to Lessor when due the applicable rents and other sums
required by this Lease to be paid by Lessee; (v) fail or refuse to pay when due any taxes,
assessments, or other Impositions as required by this Lease; (vi) make or suffer to be made any
voluntary or involuntary conveyance, assignment, sublease, or other Transfer of all or any
portion of Lessee's leasehold interest in the Premises and Improvements, or of the rights of
Lessee under this Lease, in violation of any of the provisions of Article 11 and Article 12 hereof,
(vii) commit or suffer to be committed any waste or impairment of the Premises or the
Improvements, or any part thereof, (viii) alter the Improvements iii any manner except as
expressly permitted by this Lease; (ix) fail to maintain insurance as required by this Lease; (x)
fail to make full repair and restoration of the Improvements in the event of damage or destruction
in violation of the provisions of this Lease; (xi) engage in any financing except as permitted by
the terms of this Lease, or any other transaction creating any mortgage on the Premises, or
placing or suffering to be placed thereon any lien or other encumbrance, or suffering any levy or
attachment to be made thereon in violation of the provisions of this Lease; (xii) voluntarily file or
have filed against it any petition under any bankruptcy or insolvency act or law, or be
adjudicated a bankrupt, or make a general assignment for the benefit of creditors; (xiii) fail to
pay when due any payment or charge or otherwise default on any loan secured by a leasehold
Mortgage permitted by this Lease; (xiv) abandon or surrender possession of the Premises or
Lessee's interest therein; (xv) fail to perform any of Lessee's Hazardous Substances covenants;
or (xvi) fail to perform or comply with any other material term or provision hereof, and any such
Default of any of Lessee's covenants referred to in clauses (i)- (xvi), inclusive, is not be cured or
remedied within the applicable Cure Period, then, in such event, subject to the provisions of
Article 12 of this Lease running in favor of any Mortgagee, Lessor may, at its option and in
addition to any other remedy provided for in this Lease, terminate the Lease and revest in Lessor
the leasehold interest theretofore transferred to Lessee, by written notice to Lessee of its
intention to do so.
15.7.2 Upon termination of this Lease pursuant to this Section 15.7 it shall be
lawful for Lessor to re -enter and repossess the Premises without process of law, and Lessee, in
such event, does hereby waive any demand for possession thereof, and agrees to surrender and
deliver peaceably to Lessor immediately upon such termination in good order, condition, and
repair, except for reasonable wear and tear. Upon such termination title to all Improvements on
the Premises specified in this Lease shall remain in Lessor.
15.7.3 No ejectment, re- entry, or other act by or on behalf of Lessor shall
constitute a termination unless Lessor gives Lessee notice of termination in writing. Such
termination shall not relieve or release Lessee from any obligation incurred pursuant to this
Lease prior to the date of such termination.
15.7.4 Termination of this Lease under this Section 15.7 shall not relieve Lessee
from the obligation to pay any sum due to Lessor or from any claim for damages against Lessee.
Damages which Lessor may recover in the event of Default under this Lease shall include, but
are not limited to, the worth at the time of award of the amount by which the unpaid rent for the
balance of the Lease Term remaining after the time of award exceeds the amount of such rental
loss that Lessee proves could be reasonably avoided.
15.7.5 The right of termination provided by this Section 15.7 is not exclusive and
shall be cumulative to all other rights and remedies possessed by Lessor, and nothing contained
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herein shall be construed so as to defeat any other rights or remedies to which Lessor may be
entitled
ARTICLE 16
GENERAL PROVISIONS
16.1 Notices Demands and Communications between the Parties. Formal notices,
demands, and communications between Lessor and Lessee shall be sufficiently given if
personally delivered, delivered by reputable overnight delivery service providing a receipt
confirming delivery, or delivered by registered or certified mail, postage prepaid, return receipt
requested, to the following addresses:
If to City:
City of Newport Beach
100 Civic Center Drive
Newport Beach, CA 92660
Attention: City Manager
With copies to:
City of Newport Beach
100 Civic Center Drive
Newport Beach, CA 92660
Attention: City Attorney
and
City of Newport Beach
100 Civic Center Drive
Newport Beach, CA 92660
Attention: Community Development Department —
Real Estate Manager
If to Lessee:
Olson Real Estate Group, Inc.
Attn: Robert D. Olson
2955 Main Street, 3'a Floor
Irvine, CA 92614
With a copy to:
Scott S. Pollard, Esq.
Attorney at Law
2804 Cliff Drive
Newport Beach, CA 92663
Such written notices, demands, and communications may be sent in the same manner to
such other addresses as either Party may from time to time designate by delivery of written
notice of change of address in the same manner as provided in this Section. Notices shall be
deemed delivered upon receipt for purposes of calculating all times for performance and all Cure
Periods provided for herein.
162 Time of Essence. Time is of the essence with respect to the performance of each
of the covenants and agreements contained in this Lease.
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16.3 Conflict of Interests.
16.3.1 No official, officer, or employee of Lessor who participates in the making
of this Lease or in the implementation or enforcement of this Lease by or on behalf of Lessor
shall have any personal financial interest, direct or indirect, in this Lease.
16.3.2 Lessee represents and warrants to Lessor that neither Lessee nor any
official, officer, employee, consultant, or agent of Lessee has paid or given any official, officer,
employee, consultant, or agent of Lessor any money or other consideration for obtaining this
Lease.
16.4 Non - liability of Lessor Officials and Employees. No official, officer, employee,
consultant or agent of Lessor shall be personally liable to Lessee, or any successor in interest of
Lessee, in the event of any Default by Lessor or any for any amount which may become due to
Lessee or successor of Lessee with respect to the negotiation, execution, implementation, or
performance of this Lease.
16.5 Inspection of Books and Records. Lessor has the right at all reasonable times to
inspect the books and records of Lessee pertaining to the Premises and Improvements as
pertinent to the purposes of this Lease. Lessee shall maintain such books and records in Orange
County, California, or shall make such books and records available for inspection in Orange
County, California, during normal business hours on not less than two (2) business days' notice
from Lessor. Lessee also has the right at all reasonable times to inspect the books and records of
Lessor pertaining to the Premises and Improvements as pertinent to the purposes of this Lease.
16.6 No Partnership. Nothing in this Lease and no acts of Lessor or Lessee are
intended or shall be deemed or construed by any person to create the relationship of principal and
agent, or of partnership, or of joint venture, or of any association between Lessor and Lessee.
16.7 Compliance with Law. Lessee agrees, at its sole cost and expense, to comply and
secure compliance with all the applicable and valid requirements now in force, or which may
hereafter be in force, of all municipal, county, State, and federal authorities, pertaining to the
Premises and Improvements, as well as operations conducted thereon, and to faithfully observe
and secure compliance with, in the use of the Premises and Improvements, all applicable
municipal, county, State and federal statutes, ordinances, regulations, and official rules and
policies now in force or which may hereafter be in force, including all laws prohibiting
discrimination or segregation in the use, sale, lease, or occupancy of the Premises.
16.8 Obligation to Refrain from Discrimination. There shall be no discrimination
against or segregation of any person, or group of persons, on account of sex, sexual orientation
or identity, marital status, race, color, creed, religion, national origin, or ancestry in the sale,
lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the Premises and
Improvements, and Lessee itself or any person claiming under or through it shall not establish or
permit any such practice or practices of discrimination or segregation with reference to the
selection, location, number, use, or occupancy of subtenants, sublessees, or vendees of the
Premises and Improvements.
16.9 Lessor's Reservation of Police Power Authority. Lessee acknowledges that
Lessor is approving and entering into this Lease in its proprietary capacity as fee owner of the
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Premises only, that Lessor, as a municipality, also has governmental and regulatory authority
over the Premises, and that, notwithstanding any other provision set forth in this Lease to the
contrary, nothing in this Lease is intended or shall be deemed to limit or restrict in any respect
Lessor's exercise of its governmental and regulatory authority over the Premises, the
construction that occurs on or about the Premises, or the maintenance and use of the Premises,
nor is anything in this Lease intended to constitute a prejudgment or commitment by Lessor as to
how it will exercise its governmental and police power regulatory authority with respect to any
such matters. In no event shall Lessor be in Default of its obligations set forth in this Lease if it
takes or fails to take an action when acting in its governmental or regulatory capacity.
Notwithstanding the foregoing, nothing in this Lease is intended or shall be construed as a
waiver of any right or remedy Lessee would have in the absence of this Lease with respect to any
alleged act or omission of Lessor when acting in its governmental or regulatory capacity.
16.10 Applicable Law. The internal laws of the State of California shall govern the
interpretation and enforcement of this Lease, without regard to conflict of law principles.
16.11 Severability. If any provision of this Lease shall be adjudged invalid or
unenforceable by a court of competent jurisdiction, the remaining provisions of this Lease shall
not be affected thereby and shall be valid and enforceable to the fullest extent permitted by law.
16.12 Binding Effect. This Lease, and the terms, provisions, promises, covenants, and
conditions set forth herein shall be binding upon and shall inure to the benefit of the Parties
hereto and their respective and permitted heirs, legal representatives, successors, and assigns.
16.13 No Third Party Beneficiaries. Except to the limited extent set forth in Article 12
and any other provisions of this Lease specifying rights of permitted Mortgagees, this Lease is
intended to be for the benefit of only the Parties hereto and their respective permitted successors
and assigns and this Lease is not intended to create any third party beneficiaries. Not by way of
limitation of the foregoing, by entering into and administering and enforcing this Lease Lessor
does not intend to protect any third party against the risk of any particular kind of injury within
the meaning of California Government Code Section 815.6 and Lessor does not intend to create
any rights or liabilities thereunder.
16.14 Captions and Section Headings. The captions and section headings contained in
this Lease are merely a reference and are not to be used to construe or limit the text.
16.15 No Recording of this Lease. This Lease shall not be recorded.
16.16 Events of Force Maieure; Extensions of Times of Performance. In addition to
specific provisions of this Lease, performance by either Party hereunder shall not be deemed to
be in Default where delays or defaults are due to causes beyond the control and without the fault
of the Party claiming an extension of time to perform, including war, insurrection, strikes,
lockouts, riots, floods, earthquakes, fires, casualty losses, supernatural causes, acts of the public
enemy, epidemics, quarantine restrictions, freight embargoes, lack of transportation,
governmental restrictions or priority, litigation, unusually severe weather, inability to secure
necessary labor, materials or tools, delays of any contractor or supplier, and unanticipated and
unreasonable failures to timely act by any governmental agency acting in its regulatory capacity
(each, individually, an "Event of Force Majeure" and, collectively, "Events of Force
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Majeure "). An extension of time for any such cause shall be for the period of the enforced
delay and shall commence to run from the time of the commencement of the cause. A Party
claiming an extension of time to perform a covenant or satisfy a condition set forth in this Lease
due to an Event of Force Majeure shall promptly, and in no event more than sixty (60) days after
the commencement of any Event of Force Majeure that delays its performance of a covenant or
satisfaction of a condition set forth in this Lease, notify the other Party in writing of the Event of
Force Majeure, such Party shall continue with commercially reasonable diligence in an effort to
limit the period of the delay, and the period of the delay shall be limited accordingly. =If,
however, notice by the Party claiming such extension is sent to the other Party more than sixty
(60) days after the commencement of the cause, the period of the enforced delay shall commence
to run only sixty (60) days prior to the giving of such notice. Times of performance under this
Lease may also be extended in writing by Lessor and Lessee. In no event, however, shall an
Event or Events of Force Majeure extend the Commencement Date beyond the Outside
Commencement Date without Lessor's and Lessee's written approval, which approval either
Lessor or Lessee may withhold in its sole and absolute discretion.
16.17 Entire Agreement, Waivers, and Amendments. This Lease constitutes the entire
agreement between Lessor and Lessee with respect to the subject matter addressed herein and
supersedes all prior discussions, negotiations, and agreements between the Parties with respect
thereto, including without limitation the Exclusive Negotiating Agreement dated as of September
9, 2013.
All waivers of the provisions of this Lease must be in writing and signed by the
appropriate authorities of the Party or Parties to be charged and all amendments hereto must be
in writing and signed by the appropriate authorities of both Lessor and Lessee. Lessor and
Lessee shall each have the right to disapprove waivers of and amendments to this Lease in their
sole and absolute discretion. During the term of any Mortgage obtained in accordance with
Article 12 of this Lease, any amendment to this Lease additionally shall require the written
approval of the Mortgagee.
16.18 Attomment. In the event any proceedings are brought for the foreclosure of, or in
the event of the conveyance by deed in lieu of foreclosure, or in the event of exercise of the
power of sale under, any mortgage and/or deed of trust made by Lessor covering the Premises, or
in the event Lessor sells, conveys, or otherwise transfers its leased fee interest in the Premises,
Lessee hereby agrees to attom to the new owner, and Lessee further covenants and agrees to
execute an instrument in writing reasonably satisfactory to the new owner whereby Lessee
attorns to the successor in interest and recognize the successor as the Lessor under this Lease.
16.19 Subordination. Lessee agrees that this Lease shall be subordinate to any
mortgages or deeds of trust that may hereafter be placed upon the fee of the Premises by Lessor
and to any and all advances to be made thereunder, and to the interest thereon, and all renewals,
replacements, and extensions thereof, provided that the mortgagees or beneficiaries named in
said mortgages or trust deeds shall execute and deliver a written non - disturbance and recognition
agreement by and among Lessee, Lessor, and such mortgagees or beneficiaries, in form
reasonably satisfactory to Lessee and its counsel and the holder of any Mortgage and their
counsel, which shall provide the following assurances for the benefit of Lessee, Mortgagee, and
their permitted assignees, sublessees, successors, and assigns:
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(i) The leasehold estate granted by this Lease shall not be affected in any
manner by any foreclosure action, trustee's sale, or other action taken or proceeding commenced
under or in connection with any mortgages or deeds of trust placed upon the fee of the Premises
by Lessor, or by any taking of possession of the Premises pursuant thereto, or by the exercise of
any rights or remedies in connection therewith;
(ii) if the interest of Lessor under this Lease is transferred in connection with
any foreclosure action, trustee's sale, or other proceedings brought under any mortgages or deeds
of trust placed upon the fee of the Premises by Lessor (including, without limitation, any transfer
by deed in lieu of foreclosure), then, so long as Lessee is not in Default in the performance of the
terms, covenants, and conditions of this Lease beyond all applicable notice, grace, and Cure
Periods, the transferee of any such interest of Lessor (including, without limitation, the holder of
any such mortgage or deed of trust), together with its successors and assigns (collectively,
"Lessor's Transferee "), shall not terminate this Lease or interfere with or disturb Lessee in its
possession, use, occupancy, and quiet enjoyment of the Premises under this Lease, for the
remaining term of this Lease (as the same may be earlier terminated pursuant to any other Article
of this Lease), subject to all of the terms, covenants, and conditions of this Lease;
(iii) Lessee shall not be named or joined in any foreclosure action, trustee's
sale, or other proceeding to enforce any mortgages or deeds of trust placed upon the fee of the
Premises by Lessor; and
(iv) any Lessor's Transferee will accept the attornment of Lessee and will
assume and perform all of Lessor's obligations under the Lease for the benefit of Lessee and its
successors and assigns.
The foregoing written assurances shall, at Lessee's request, also be provided to any
permitted Transferee of Lessee under this Lease. Lessee also agrees that in the event Lessor and
any mortgagee or beneficiary elect to have this Lease prior to such mortgage or deed of trust, and
upon notification by Lessor or such mortgagee or beneficiary to Lessee to that effect, this Lease
shall be deemed prior in lien to such mortgage or deed of trust, whether this Lease is dated prior
to or subsequent to the date of said mortgage or deed of trust. Lessee agrees that upon the
request of Lessor, or any mortgagee or beneficiary, Lessee shall execute whatever instruments
may be required to carry out the intent of this section.
16.20 Approvals. Except to the extent that this Lease authorizes a Party to withhold its
approval or Consent to a specified request by the other Parry in its sole and absolute discretion,
approvals and consents required of Lessor and Lessee shall not be unreasonably withheld,
conditioned, or delayed.
The City Manager or his or her designee shall have the authority to implement and
enforce this Lease on behalf of Lessor; provided, however, that (i) in no event shall the City
Manager (or designee) have the authority, without City Council approval or express delegation
of authority, to approve substantive amendments to this Lease that materially increase Lessor's
obligations or materially impair or jeopardize its rights hereunder; (ii) in no event shall the City
Manager (or designee) have the authority, without City Council approval or express delegation
of authority, to approve waivers that materially impair or jeopardize Lessor's rights hereunder;
(iii) the City Manager (or designee) shall have the right, even if he or she has the authority to act
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hereunder without seeking City Council approval, to seek such approval, and in such event
Lessor shall not be deemed to be in Default hereunder; and (iv) the City Attorney's approval
shall also be required with respect to (A) the form and content of any agreement, estoppel
certificate, or other document approved by the City Manager or his or her designee, (B) whether
the City Manager's and/or his /her designee's approval is consistent with the terms and conditions
set forth in this Lease, including without limitation the provisions of clauses (i) and (ii) above,
and (C) whether the City Manager and/or his /her designee has the authority under this Lease and
applicable law to grant or provide such approval.
In the event that Lessee requests Lessor approval of any matter pertaining to this Lease,
including without limitation approval of Lessee's Evidence of Financial Capability, any of
Lessee's development or building plans or permits, Transfer of Lessee's interest, Transfer to a
Mortgagee, and execution of an estoppel certificate, as a condition to Lessor's taking such
action, and without regard to whether Lessor's final action is to approve, conditionally approve,
or deny such request, Lessee shall pay or reimburse Lessor for all of Lessor's actual and
reasonable costs and expenses in conjunction therewith, including without limitation the payroll
costs of Lessor's in -house staff and reasonable consultant fees incurred with respect thereto.
This obligation of Lessee shall survive the termination or expiration of this Lease.
16.21 Lessee's Representations and Warranties. As a material inducement to Lessor to
enter into this Lease, Lessee represents and warrants the following: (i) Lessee is a corporation
organized, validly existing, and in good standing under the laws of the State of California; (ii)
Lessee has all necessary power and authority to enter into this Lease and to carry out the
transactions and obligations contemplated herein; (iii) the execution and delivery of this Lease
and the performance by Lessee of its obligations hereunder will not violate or constitute an event
of default under the terms and provisions of any agreement, ordinance, regulation, law, or court
order to which Lessee is a parry or by which Lessee is bound; (iv) all actions required to be taken
by or on behalf of Lessee to authorize it to execute, deliver, and perform its obligations set forth
in this Lease have been taken; (v) the person(s) executing this Lease on behalf of Lessee have
full power and authority to bind Lessee to the terms hereof; and (vi) this Lease is a valid and
binding obligation of Lessee enforceable in accordance with its terms, except as the same may be
affected by bankruptcy, insolvency, moratorium, or similar laws, or by legal or equitable
principles relating to or limiting the rights of contracting parties generally.
16.22 Lessor's Representations and Warranties. As a material inducement to Lessee to
enter into this Lease, Lessor represents and warrants the following: (i) Lessor is a municipal
corporation duly organized, validly existing, and in good standing under the laws of the State of
California; (ii) the execution and delivery of this Lease and the performance by Lessor of its
obligations hereunder will not violate or constitute an event of default under the terms and
provisions of any agreement to which Lessor is a party or by which Lessor is bound; (iii) all
actions required to be taken by or on behalf of Lessor to authorize it to execute and deliver this
Lease have been taken; and (iv) the person(s) executing this Lease on behalf of Lessor have full
power and authority to do so.
16.23 No Liabilitv for Broker's Commissions or Finder's Fees. Each Party represents
and warrants to the other Party that it has not entered into any agreement or incurred any
obligation which might result in the obligation to pay a brokerage commission or finder's fee
with respect to this transaction. Each Party agrees to indemnify, defend, and hold harmless the
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other Party from and against any and all claims, liabilities, and losses, including attorney's fees,
which the other Party may incur as the result of any claim made by any person or entity to a right
to a brokerage commission or finder's fee in connection with this transaction to the extent such
claim is based, or purportedly based, on the acts or omissions of the indemnifying Party.
16.24 Counterparts. This Lease may be executed in counterparts and when so executed,
each such counterpart will constitute an original document and such counterparts will constitute
one and the same agreement.
16.25 Estoppel Certificates. Within fifteen (15) days after each request therefor by
either Party, the other Party agrees to deliver a certificate to any person designated by the
requesting Party (including a proposed Mortgagee or purchaser), or to the requesting Party,
certifying (if such be the case) that this Lease is in full force and effect, that to the best of such
Party's knowledge at that time, there are no Events of Default by Lessee hereunder or any
defaults by Lessor hereunder and that no events have occurred which, with the giving of notice
or the passage of time or both, would constitute an Event or Default with respect to Lessee or a
default with respect to Lessor hereunder, or stating those claimed by the responding Party, and
that to the best of such Party's knowledge, there are no defenses or off -sets in favor of either
Parry hereto, or stating those claimed by the responding Party, and /or certifying whether any
consent or approval required under this Lease has been denied or granted by the responding
Parry and whether any specified rights have been waived or deemed waived or expired. Any
such certificate shall also contain a warranty that the person signing has the authority to execute
the certificate on behalf of such Party. Each such estoppel certificate shall identify the Lease and
all amendments, shall specify the date to which Base Rent and Percentage Rent have been paid,
and shall specify the then applicable Base Rent payable hereunder. Nothing in this Section 16.25
shall be construed as reducing the period of time that either Party has under the terms of this
Lease to respond to a request by the other Party for a consent or an approval.
[The remainder of this page has been intentionally left blank. Signatures on next page.]
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Date: 2014
"LESSOR"
CITY OF NEWPORT BEACH,
a charter city
Rush N. Hill, II, Mayor
ATTEST: APPROVED AS TO, �FORM:
City Clerk Aaron C. Harp, City Attorney T1 { �
112/066751 -0097 -85-
6271361.10 e09 /04 /1A
"LESSEE"
OLSON REAL ESTATE GROUP, INC., a
California corporation doing business as R. D.
Olson Development
112/066751 -0097 _86.
6271361.10 a09/04/14
EXHIBIT "A-l"
LEGAL DESCRIPTION
"LEASE PARCEL"
THAT PORTION OF LOTS 6 AND 7 IN SECTION 28, TOWNSHIP 6 SOUTH, RANGE 10
WEST, SAN BERNARDINO MERIDIAN IN THE CITY OF NEWPORT BEACH, COUNTY OF
ORANGE, STATE OF CALIFORNIA, TOGETHER WITH THOSE PORTIONS OF LOT i AND
"THE HUDSON" OF "LANCASTER'S ADDITION TO NEWPORT BEACH ", AS SHOWN ON
A MAP RECORDED IN BOOK 5 PAGE 14 OF MISCELLANTEOUS MAPS; THAT PORTION
OF LOT 3 OF TRACT NO. 1117, AS SHOWN ON A MAP RECORDED IN BOOK 35, PAGE
48 OF MISCELLANEOUS MAPS AND THAT PORTION OF A 20.00 FOOT ALLEY, AS
ABANDONED BY THAT CERTAIN RESOLUTION NO. 3280 OF THE CITY COUNCIL OF
SAID CITY, A CERTIFIED COPY OF WHICH WAS RECORDED MARCH 11, 1946 IN BOOK
1400, PAGE 189, ALL OF OFFICIAL RECORDS OF SAID COUNTY, MORE
PARTICULARLY DESCRIBED AS FOLLOWS:
BEGINNING AT THE SOUTHWESTERLY CORNER OF SAID LOT 3, THENCE ALONG
THE WESTERLY LINE OF SAID LOT 3, NORTH 00 009'03" EAST 128.00 FEET TO THE
TRUE POINT OF BEGINNING, SAID POINT ALSO BEING THE SOUTHERLY CORNER
OF PARCEL 1, AS SHOWN ON PARCEL MAP RECORDED IN BOOK 85, PAGES 1 AND 2
OF PARCELS MAPS, RECORDS OF SAID COUNTY; THENCE ALONG THE SOUTHERLY
BOUNDARY OF SAID PARCEL 1, THE FOLLOWING FOUR (4) COURSES:
1. CONTINUING ALONG SAID WESTERLY LINE, NORTH 00 °09'03" EAST 53.55
FEET;
2, NORTH 39 053'38" WEST 108.61 FEET TO THE BEGINNING OF A CURVE
CONCAVE SOUTHWESTERLY HAVING A RADIUS OF 351.15 FEET;
3. NORTHWESTERLY AND WESTERLY ALONG SAID CURVE 306.25 FEET
THROUGH A CENTRAL ANGLE OF 49 058'10';
4. NORTH 89 051'48" WEST 92.71 FEET;
THENCE LEAVING SAID SOUTHERLY LINE, SOUTH 00 °27'00" WEST 47.79 FEET;
THENCE NORTH 89 033'00" WEST 7,65 FEET;
THENCE SOUTH 43 047'33" WEST 24.57 FEET TO THE BEGINNING OF A NON- TANGENT
CURVE CONCAVE EASTERLY HAVING A RADIUS OF 2,724.04 FEET, A RADIAL. LINE
TO SAID POINT BEARS NORTH 82 021'27" WEST;
M: \Mappmg\1100 \04V.egcfs \LEASEV 100_004LGX -ExF A -I.doc
8'12912014
112/066751 -0097 EXHIBIT "A -1"
6271361.10.09/04 /14
THENCE SOUTHERLY ALONG SAID CURVE 98.72 FEET THROUGH A CENTRAL ANGLE
OF 02 004'35" TO A POINT OF REVERSE CURVE HAVING A RADIUS OF 58.00 FEET, A
RADIAL LINE TO SAID POINT BEARS SOUTH 84 °26'01" EAST;
THENCE SOUTHERLY ALONG SAID CURVE 13.75 FEET THROUGH A CENTRAL ANGLE
OF 139510';
THENCE SOUTH 19 009'08" WEST 36.43 FEET TO THE BEGINNING OF A CURVE
CONCAVE EASTERLY HAVING A RADIUS OF 42.00 FEET;
THENCE SOUTHERLY ALONG SAID CURVE 10.88 FEET THROUGH A CENTRAL ANGLE
OF 14 050'20" TO A POINT OF COMPOUND CURVE HAVING A RADIUS OF 2,736.04 FEET,
RADIAL LINE TO SAID POINT BEARS NORTH 85 041'12" WEST;
THENCE SOUTHERLY ALONG SAID CURVE 62.82 FEET THROUGH A CENTRAL ANGLE
OF 01018'56" TO A POINT OF REVERSE CURVE HAVING A RADIUS OF 873.00 FEET, A
RADIAL LINE'FO SAID POINT BEARS SOUTH 87 000'07" EAST;
THENCE SOUTHERLY ALONG SAID CURVE 74.65 FEET THROUGH A CENTRAL ANGLE
OF 04 053'58" TO A POINT OF REVERSE CURVE HAVING A RADIUS OF 37.00 FEET, A
RADIAL LINE TO SAID POINT BEARS NORTH 82 006'09" WEST;
THENCE SOUTHERLY ALONG SAID CURVE 9.24 FEET THROUGH A CENTRAL ANGLE
OF 14 01813" TO A POINT OF NON - TANGENCY, A RADIAL LINE TO SAID POINT BEARS
SOUTH 83 035'18" WEST;
THENCE SOUTH 39029'57 EAST 40.40 FEET TO THE BEGINNING OF A NON - TANGENT'
CURVE CONCAVE NORTHERLY HAVING A RADIUS OF 37.00 FEET, A RADIAL LINE TO
SAID POINT BEARS SOUTH 17024'48" WEST;
THENCE EASTERLY ALONG SAID CURVE 9.24 FEET THROUGH A CENTRAL. ANGLE
OF 1401832 ".
THENCE SOUTH 86053'44" EAST 49.94 FEET;
THENCE NORTH 26 05646" WEST 21.09FEET,-
THENCE SOUTH 86056'46" EAST 1.72.05 FEET;
THENCE SOUTH 26056'46" EAST 21.18 FEET TO THE BEGINNING OF A CURVE
CONCAVE NORTHFASTERLY HAVING A RADIUS OF 8.50 FEET;
THENCE SOUTHEASTERLY AND EASTERLY ALONG SAID CURVE 9.33 FEET
THROUGH A CENTRAL ANGLE OF 62055'02 ";
THENCE SOUTH 89051'48" EAST 118.46 FEET TO THE BEGINNING OF A CURVE
CONCAVE NORTHERLY HAVING A RADIUS OF 700.00 FEET;
THENCE EASTERLY ALONG SAID CURVE 57.87 FEET THROUGH A CENTRAL ANGLE
OF 04044'13 ";
THENCE NORTH 85 023'59" EAST 74.86 FEET TO A POINT OF CUSP OF A NON - TANGENT
CURVE CONCAVE NORTHEASTERLY HAVING A RADIUS OF 1.0.00 FEET, A RADIAL
LINE TO SAID POINT BEARS SOUTH 00012'24" WEST;
A,1i \T4oppmg \l 100 \04 \LagaMLEASE\1100- 004LGX -ExhA i.dot
8/29/2014
112/066751 -0097 2-
6291361.10 s09/0444
THENCE. NORTHWESTERLY AND NORTHERLY ALONG SAID CURVE 15.92 FEET
THROUGH A CENTRAL ANGLE OF 91 012'25" TO A POINT OF REVERSE CURVE HAVING
A RADIUS OF 48.00 FEET, A RADIAL LINE TO SAID POINT BEARS SOUTH 88 °35'11"
EAST;
THENCE NORTHERLY ALONG SAID CURVE 25.97 FEET THROUGH A CENTRAL ANGLE
OF 3100019" TO A POINT OF NON -TANGENCY, A RADIAL LINE TO SAID POINT BEARS
NORTH 60 024'30" EAST;
THENCE NON- TANGENT TO SAID CURVE, NORTH 00 °43'30" EAST 29.78 FEET;
THENCE SOUTH 89 058'22" EAST 9.24 FEET;
THENCE NORTH 00 000'08" EAST 81.62 FEET TO SAID SOUTHERLY BOUNDARY;
THENCE ALONG SAID SOUTHERLY BOUNDARY, NORTH 89 °50'57" WEST 12.85 FEET
TO THE TRUE POINT OF BEGINNING.
HAVING AN AREA OF 170,244 SQUARE FEET OR 3.908 ACRES, MORE OR LESS.
AS SHOWN ON EXHIBIT "A -2" ATTACHED HERETO AND BY THIS REFERENCE
MADE APART HEREOF.
DATED THIS ; "t DAY OF 2014
M: \Mopping \1100 \04 \l.egals \LEAH\J 100- 004LGX -Exh A-I .d.c
8129/2014
112/066751 -0097 3-
6271361.10 a09 /04/14
n
LW
L USUS
53kl-
EXHIBIT "A -2"
DEPICTION OF PREMISES
_ VIA OPORTO
TBr1C7 t4 i.'i. �i717 / SEE \�
LL7T I /DETAIL "B"
1`4.61. 36 4 "8' -E€i 2 1
._ T.P.O.B. 18
o Li
N NDO'04b3 "E- �i1.55' -✓/ �
ALLEY VACATED PER I /
BK. 1400, PG. 189, e
P.0.8.,
O.R. REC. 3 -17 -46 S'WLY
LOT 3. TR NO. 1117,
M.M. 35/48 U z
0
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LEGEND: ° I
P.0.8. POINT OF BEGINNING I p
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SEE LINE AND CURVE TABLE ON N p
SHEET 2 OF 2 3
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�6 C2 i zi C4
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I
n1� 1 I DATE: A.,.029,2014
['C CC EXHIBIT A -2 SCALE: 1`=80'
-' FSCC SKETCH TO ACCOMPANY LEGAL DESCRIPTION 1N� 110000401
-im, LEASE PARCEL DRAWN By )BF
e e a I x e L e I n c LIDO HOUSE HOTEL CHECKED BY AU
I045 Yen Kn,mon�'1 i4. 100 Inlna� c0ile-43CU6
1 v 1v 11 ivto. la. vnwens3w ...�..m...,.,." NEWPORT BEACH, CA SHEET I OF 2
R \4APPING \ItW \U4 \LEC.0.5 \l!"ASEli 100- OUALCX -EXX A -2.DWC (06- 29 -14)
112/066751 -0097 EXHIBIT "A -2"
6271361.10 09/04/14
DETAIL "B" i \
5883571 PRC)
L16 CA L'
T j
(
'- T �\
DETAIL "A" (�
�> AL : = I m I 1�
S1T24!48 "W (ft)I
� � D6I I
(, 883'35'18 "W (R) xs I I I /
--- �""° ---C6 x /
\ N82'0_6'09 "W L ' C7
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VI�
LINE TABLE
DATE: Ao9osl 29, 2014
LINE
BEARING
LENGTH
LI
L2
N00'OU 9
N39'53'38 W --.--.,
53,55'
108.61'
_ -L
-- N89'51''48 °W
92,7791
L4
80'2700
�-
4
L5
N8 0
65'
_._
L6
A 1 S43'47'33 "W 1
24.57'
C5
11856 273604
U
S'19'09'08'W
36.43'
L8
I S39'29'57 'E
40.40'
L9
( S86 53 44 "E
49.94'
UO
' N26-56'46 °W I.
21 -09'
9.33"
Ltt
5'''86'56'46 "E
172_05'
L 1
"E i_2118'
9112'25" 10.00'
L73
589'51'48 "E-}}
778.46'
—
_26'56'46
L74
N8523_59 "E
74.86'
L75
{{
�N00'43'30 'E
29.78'
Lib
589'58'22 "E
9.24'
L77
N00'00'08 "E
�
81.62'
L78�
N89'S0'S7 "W
72.85'
'- T �\
DETAIL "A" (�
�> AL : = I m I 1�
S1T24!48 "W (ft)I
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(, 883'35'18 "W (R) xs I I I /
--- �""° ---C6 x /
\ N82'0_6'09 "W L ' C7
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VI�
CURVE TABLE
DATE: Ao9osl 29, 2014
CURVE
DELTA ` RADIUS "', LENGTH
Cl
49.5810" 351.15' ; 306.25'
SKETCH TO ACCOMPANY LEGAL DESCRIPTION
..F.___._
.
C2
2-04'35- 1 2724,04
98.72'
C3
-_
�13351D 5800
13.75'
C4
i 14'50'20" 42,00'
10.88'
-------
t
C5
11856 273604
6282'
06
i 453'58" 873.00'11
74.65'
C7
14-18 33" 37 00 i
9.24'
C8
1418'32" 37.00'
9,24'
C9
6255'02" 8.50'
9.33"
C10
4'4493" 700.00'
57.87'
Cit
9112'25" 10.00'
15.92'
C12
_.j....__._.__
1 31'00'19" I 48,00'
25-97'
'- T �\
DETAIL "A" (�
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S1T24!48 "W (ft)I
� � D6I I
(, 883'35'18 "W (R) xs I I I /
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VI�
I 1
EXHIBIT A
DATE: Ao9osl 29, 2014
-2
SCALE: V =80'
:'= FUSCOE
SKETCH TO ACCOMPANY LEGAL DESCRIPTION
IN 1100.00401
DRAWN By 16F
IIIF..
LEASE PARCEL
[ • [ 1 • F [ e 1 e c
CHECKED BY: RU
'0'41411 Vm Karmnn, Suilu W,Irvine, l'olilarrrw 91a0d
9 19ao.
LIDO HOUSE HOTEL
NEWPORT BEACH, CA
SHEET 20F2
M:\ MAPPING\ 11G9\ a + \1.FGALS\�EASE \11w- Op4�G % -BRN A -zowG (08- 29 -14)
112/066751 -0097
6271361.10a09/04/14
EXHIBIT `B"
SCHEDULE OF PERFORMANCE
112/066751 -0097 EXHIBIT "B"
6271361.10 a09/04/14
ITEM OF PERFORMANCE
TIME FOR COMPLETION
1.
Lessor takes final administrative action to
Completed.
approve all Development Entitlements for
which City is the final administrative
decision -maker (i.e., all of the
Development Entitlements identified in
clauses (i) -(vi), inclusive, of the definition
of that term in Article 2 of this Lease
Sections 3.1.1, 3.2.1).
2.
Lessor files application with California
Within ten (10) days after Agreement Date.
Coastal Commission to approve
amendment to certified Coastal Land Use
Plan for Premises consistent with
Development Entitlements referred to in
Item 1 above Section 3.2.1).
3.
Lessor/Lessee cooperate and exercise
Subject to Events of Force Majeure, within
commercially reasonable diligence in
eighteen (18) months after Agreement Date.
Lessor's effort to cause California Coastal
Commission to approve amendment to
Lessor's certified Coastal Land Use Plan
for Premises, consistent with Development
Entitlements referred to in Item I above
Section 3.2.1).
4.
Lessee submits to Lessor, for "approval in
Within ten (10) days after the effective date of the
concept," the site plans, floor plans,
California Coastal Commission approval of the
landscaping, and elevations for Hotel,
Coastal Land Use Plan amendment for the
consistent with Development Entitlements
Premises.
referred to in Items 1 and 3 above.
5.
Lessor's staff issues its "approval in
Within thirty (30) days after Lessor's receipt of a
concept" of Lessee's site plan, floor plans,
complete submittal of the items referred to in Item
landscaping, and elevations for Hotel,
4.
consistent with Development Entitlements
referred to in Items 1 -3 above.
6.
Lessee files application with California
Subject to Events of Force Majeure, within ten
Coastal Commission for Coastal
(10) days after Lessor issues its "approval in
Development Permit (CDP) for Hotel,
concept" (Item 5 above).
consistent with Development Entitlements
referred to in Items 1 -4 above (Sections
3.1.1, 3.2.1)
112/066751 -0097 EXHIBIT "B"
6271361.10 a09/04/14
112/066751 -0097
6271361.10.09/04 /14 -2-
ITEM OF PERFORMANCE
TIME FOR COMPLETION
7.
Lessor /Lessee cooperate and exercise
Subject to Events of Force Majeure, within twelve
commercially reasonable diligence in
(12) months after Lessee files application for CDP
Lessee's effort to cause California Coastal
approval with Coastal Commission (Item 6
Commission to approve CDP for Hotel
above).
(Sections 3.1.1, 3.2.1).
8.
Lessee submits building permit
Within one hundred eighty (180) days after date
application(s) to Lessor for approval of
on which all Development Entitlements for Hotel
Final Building Construction Plans, security
become final and in full force and effect (Section
instruments, any applicable application
3.1.1).
fees, and other items (other than fees
payable upon issuance of permits) required
to obtain approval of all construction
permits for Hotel (Section 3.1.2).
9.
Lessor completes first plan check of
Within sixty (60) days after Lessor's receipt of
construction plans /documents referred to in
Lessee's Building Permit application submittal.
Item No. 8 and returns comments /requested
corrections to Lessee (Section 3.2.2).
10.
Lessee resubmits corrections to Lessor's
Within sixty (60) days after Lessee receives
plan check comments /review of
Lessor's plan check comments /review.
construction plans /documents (with any
applicable additional fees that are owed)
Section 3.1.2
11.
Lessor completes subsequent plan check(s)
Within sixty (60) days after Lessor's receipt of
of Lessee's resubmittal(s) of matters
Lessee's resubmittal(s).
referred to in Item No. 10 (Section 3.2.2).
12.
Lessee submits Evidence of Financial
Within thirty (30) days after Lessor approves
Capability, Construction Loan Documents,
Final Building Construction Plans (Item 1 I
Hotel Management Agreement, Hotel
above).
Franchise Agreement, as applicable, and
supporting documents /information to
Lessor for review/approval (Section 3.1.3).
13.
Lessor approves or disapproves Lessee's
Within thirty (30) days after Lessee submits
Evidence of Financial Capability,
complete request for approval.
Construction Loan Documents, Hotel
Management Agreement, and Hotel
Franchise Agreement, as applicable, and
notifies Lessee (Section 3.2.3).
112/066751 -0097
6271361.10.09/04 /14 -2-
It is understood that the foregoing Schedule is subject to all of the terms and conditions
set forth in the text of this Lease. The summary of the items of performance in this Schedule is
not intended to supersede or modify the more complete description in the text; in the event of
any conflict or inconsistency between this Schedule and the text of this Lease, the text shall
govern.
111066751-0097
6271361.10.09/04 /14 -3-
ITEM OF PERFORMANCE
TIME FOR COMPLETION
14.
Lessee resubmits any additional /new
Within fifteen (15) days after Lessee receives
information required to obtain Lessor
Lessor's notice of disapproval.
approval of Lessee's Evidence of Financial
Capability, Construction Loan Documents,
Hotel Management Agreement, and Hotel
Franchise Agreement, as applicable, in
response to Lessor's disapproval notice, if
applicable Section 3.1.3).
15.
Lessor approves Lessee's Evidence of
Within fifteen (15) days after Lessor receives
Financial Capability, Construction Loan
Lessee's revised request(s) for approval that
Documents, Hotel Management
cure(s) the reasons for Lessor's initial
Agreement, and Hotel Franchise
disapproval(s), if applicable.
Agreement, as a pplicable (Section 3.2.3).
16.
Parties execute and deliver Memorandum
Within one (1) week after satisfaction (or waiver
of Lease and cooperate in causing
by the benefited Party or Parties) of each of the
Memorandum of Lease to be recorded;
Lessor's Conditions to Commencement of Lease
Lease Commencement Date occurs
and Lessee's Conditions to Commencement of
(Section 3.4).
Lease (Sections 3.3.1 and 3.3.2), but not later than
the Outside Commencement Date.
17.
Lessee commences construction of Hotel
Within fifteen (15) days of construction permits,
(Section 6.1).
but in no event earlier than thirty (30) days after
Commencement Date.
18.
Lessee completes construction of Hotel and
Within one (1) year and six (6) months after
opens Hotel for business to the general
commencement of construction and not later than
public (Section 6.1).
eighteen (18) months and thirty (30) days after
Commencement Date.
It is understood that the foregoing Schedule is subject to all of the terms and conditions
set forth in the text of this Lease. The summary of the items of performance in this Schedule is
not intended to supersede or modify the more complete description in the text; in the event of
any conflict or inconsistency between this Schedule and the text of this Lease, the text shall
govern.
111066751-0097
6271361.10.09/04 /14 -3-
EXHIBIT "C"
FORM OF MEMORANDUM OF LEASE
[See Following pages]
I IM66751 -0097
62 7136 1. 10 a09/04/14 EXHIBIT "C"
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
City of Newport Beach
100 Civic Center Drive
Newport Beach, CA 92660
Attn: City Clerk
(SPACE ABOVE THIS LINE FOR RECORDER'S USE)
MEMORANDUM OF GROUND LEASE
This Memorandum of Ground Lease ( "Memorandum ") is entered into and is effective as
of 201_ (the "Commencement Date "), by and between the CITY OF
NEWPORT BEACH, a charter city and California municipal corporation ( "Lessor "), and
OLSON REAL ESTATE GROUP, INC., a California corporation doing business as R. D.
Olson Development ( "Lessee ").
RECITALS
A. Lessor and Lessee have entered into that certain Ground Lease ( "Lease ") dated as of
2014, relating to certain real property located in the City of Newport
Beach, County of Orange, State of California, described more particularly on Attachment
No. I hereto and by this reference made a part hereof ( "Premises "). Lessor and Lessee
desire to execute this Memorandum for recordation in the real property records of the
County of Orange in order to memorialize the existence of the Lease and the occurrence
of the Commencement Date thereof.
NOW, THEREFORE, with reference to the foregoing recital, Lessor and Lessee agree as
follows:
Lease of Premises. Lessor hereby leases the Premises to Lessee and Lessee hereby hires
to Premises from Lessor on the terms and conditions set forth in the Lease.
1 Term. The initial term of the Lease shall be for a period of fifty -five (55) years
commencing upon the Commencement Date, unless sooner terminated pursuant to the
provisions of the Lease. Lessee has an option to extend the initial term of the Lease for
an additional thirty (30) years, subject to the provisions set forth in the Lease.
3. Incorporation of Lease. This instrument is a memorandum of the Lease and is subject to
all of the terms and conditions of the Lease. The terms of the Lease shall prevail if there
is any inconsistency between the terms of this Memorandum and the terms of the Lease.
[end — signature page follows]
112 /066751 -0097 _
6271361.10 e09l04/14 -1
IN WITNESS WHEREOF, Lessor and Lessee have executed this Memorandum as of the
date first set forth above.
APPROVED AS TO FORM: LESSOR:
Aaron C. Harp, City Attorney
City of Newport Beach
ATTEST:
Leilani Brown, City Clerk
CITY OF NEWPORT BEACH,
a California charter city
Rush N. Hill, Mayor
LESSEE:
OLSON REAL ESTATE GROUP, INC.,
a California corporation doing business as
R. D. Olson Development
By:
Robert D. Olson, President
Its:
112/066751 -0097
6271361.10 a09/04/14 -2-
State of California
County of Orange
On before me, ,
(insert name and title of the officer)
Notary Public, personally appeared
who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is /are
subscribed to the within instrument and acknowledged to me that he /she /they executed the same
in his /her /their authorized capacity(ies), and that by his /her /their signature(s) on the instrument
the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that
the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature (Seal)
State of California
County of Orange
On before me, ,
(insert name and title of the officer)
Notary Public, personally appeared
who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are
subscribed to the within instrument and acknowledged to me that he /she /they executed the same
in his/her /their authorized capacity(ies), and that by his /her /their signature(s) on the instrument
the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that
the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
(Seal)
112/066751 -0097
6271361A a09/04/14 -3-
State of California
County of Orange
On before me,
(insert name and title of the officer)
Notary Public, personally appeared
who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is /are
subscribed to the within instrument and acknowledged to me that he /she /they executed the same
in his/her /their authorized capacity(ies), and that by his /her /their signature(s) on the instrument
the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that
the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature (Seal)
112/066751 -0097
6271361.10.09/04 /14 _4_
EXHIBIT "D"
AAA DIAMOND RATINGS CRITERIA
[See following pages]
112/066751-0097 EXHIBIT "D"
6271361.10 a09/04/14
Introduction
Dear Hospitality Professional,
On behalf of AAA, I am pleased to introduce to you the latest edition of the Lodging Approval Requirements &
Diamond Rating Guidelines. This year marks the 30ei anniversary of the AAA Diamond Ratings, as well as the 2Oe'
anniversary of the Diamond Rating Guidelines.
Since Its inception In 1902 as a federation of Independent motor clubs, AAA has existed to provide information, safety,
security, and peace of mind to its now more than 50 million members. AAA's services have evolved to encompass
roadside assistance, Insurance and financial services, safety education, and public affairs. AAA is also an undisputed
leader In travel information and services.
In 1937, the first AAA field representatives were hired to inspect lodgings and restaurants, and In 1963, AAA began
assigning lodging ratings from `good' to `outstanding'. In 1977 — AAA's 75°1 (diamond) anniversary — the Diamond
Rating system was introduced for lodgings, with restaurants Included in 1989.
In 1987, the first AAA Lodging Diamond Rating Guidelines booklet was introduced for Industry review. Prior to
this date, only minimum approval requirements were printed and distributed upon request.
The new edition of the AAA Approval Requirements and Diamond Rating Guidelines was designed with two
objectives In mind:
• To ensure that our ratings program is accurate and consistent when compared to meeting the travel needs of
over 50 million AAA members.
• To provide hospitality professionals a valuable reference so they may be successful In achieving their goal as it
relates to AAA Approval and our proprietary Diamond Rating Process.
To that end, we feel that it Is Important to partner with the hospitality industry by gathering input, discussing the
meaning of our ratings, and openly sharing how the Diamond Rating Process is applied at the property level. We
strongly urge property representatives to take full advantage of the information provided by AAA inspectors during an
evaluation, since our experts are exposed to a wide range of properties throughout the United States, Canada, Mexico
and the Caribbean. AAA evaluates more than 32,000 accommodations, 28,000 restaurants and neatly 11,000
campgrounds as key content for over 168 million copies of travel- related materials annually. AAA travel products are
wide- ranging and include 26 regional TourB000 guides, 11 regional CampBook° guides, AAA.com— including the
well -known TnpTiiks Travel Planner —as well as, numerous retail guidebooks, atlases and maps.
We look forward to your continued service on behalf of AAA members at large and appreciate your participation in
AAA programs.
Sincerely,,. j
!
Michael Petrone, CEC
Director/AAA Tourism Information Development
z
1::066751 -0097
6271361.10 A9 01 14
JAB! E.QF o "vU
Section One ...................................................................... ............................... i
Defining AAA Approval Requirements and AAA Diamond Rating Guidelines ..................... 1
Applying for a AAA Diamond Rating ....,...--........ ....... .......................... I-- ..................... 1
AAAApproval Requirements ............................................................. ............................... 2
The AAA Evaluation and Diamond Rating Process .............................. ..............................4
Section Two ....................................................................... ..............................6
What the Diamond Ratings Mean ....................................................... ..............................6
Diamond Rating Guidelines - Exterior .................... --...................................................... 7
Diamond Rating Guidelines - Public Areas ................. ......................................... .1,.......... 9
Diamond Rating Guidelines - Guestroom ...........-- ........................ ............................... 17
Diamond Rating Guidelines - Bathroom... ............................ ................................. .... 24
The AAA Four and Five Diamond Rating .......................................... ............................... 30
Four and Five Diamond Service Expectations .................................. ............................... 30
Section Three ................................................................... .............................37
The Listing ...................................................................................... ............................... 37
Lodging Classifications ...................................................................... ............................. 37
Accessibility ............................................:............... ...............................
Member Comment Procedures- ............................... ...............................
The AAA Appeals Process ........................................ ...............................
Green Programs ....................................... ...............................
Addresses and Phone plumbers ................ ...............................
-ii -
112:066751.0097
6 271161.10 a09'03 14 '$"
40
........................
40
........................
........................
41
Defining AAA 5o a Pe quirx.;'T_s,..;$as and t-AA Diamond
ik.'s.nd
Rating Guidelines
It is important to note the difference between AAA Approval Requirements and Diamond Rating Guidelines as this
concept is often misunderstood. The evaluation process is made up of three parts: Approval Requirements, objective
Diamond Rating Guidelines, and subjective elements based on the professional experience and training of AAA
inspectors — who visit over 32,000 lodgings each year.
The essential AAA Approval Requirements are common -sense qualifications that AAA members have told us are
important to them and, similarly, that most professional operators routinely employ. All nronerties must first meet
this set of criteria In arder to be mmildered E2r AAA Approval and Diamond Rating,
iummorlate Diamond Ratina level. Diamond Rating guidelines are simply a reflection of what is typically seen
throughout the various market segments of the lodging Industry. Therefore, failure to meet some of the components
listed for the ratings categories does not necessarily preclude the achievement of that rating. During our evaluation,
inspectors will assess the strengths and weaknesses of the property and assign the most appropriate rating that will
provide the hest match in meeting AAA member expectations.
Furthermore, not all of the Diamond Rating Guidelines will apply to all property types. For example: meeting moms
would not be expected at a Bed & Breakfast property, but would be essential at a convention- oriented hotel. Also, the
availability and type of swimming pool will be dictated by climatic influences and/or the property classification. AAA
Inspectors will only use the sections of the Diamond Rating Guidelines that are appropriate for the property
classification in assessing the overall Diamond Rating.
Applying for a AAA € f3 on Rating
AAA CONSIDERS ALL VALID APPLICATIONS FOR EVALUATION. To be considered a valid applicant for AAA
evaluation, lodging properties must meet all of the Approval Requirements for their property category. These
minimum requirements reflect members'
basic expectations.
Prior a on (provided an Application For
Evatuatlon(providov9id
As of August 1, 2006, lodging properties that request evaluation by AAA are
www AAiremeAOnrove Please review
char anonrefundable application fee: $150 for first-time applicants and $300
aer
verify
the requirements to verify your
for repeat for my re that Thefe previously d failed an ply to evaluation or were disassociated .
from AAA threasonnIngo does not apply to currently Approved and fisted
property's eligibility to apply,
hments
establishments that remain M good standing '.
Currently listed establishments
need not reapply, as our Inspectors
Please do not send a payment with the Met application. On receipt of your
will routinely conduct an
Application For Evaluation, AAA will provide written notice . regarding the stars of
evaluation of your property on a
your application and, 0 accepted for further consideration, an invoice for your
continual basis.
application fee. On receipt of payment, AAA will schedule your property for an
unannounced evaluation within one year.
Include recent and accurate pictures of
the exterior, public areas, as well as
All applkatlon tees should be made in U.S. funds and are nonrefundable and will
examples of a standard guest unit and
have no bearing on the outcome of evaluations. AAA conducts property
evaluations as a service to members, and does not guarantee that all applicants
bathroom, and return to AAA. Please
will be Approved and listed in member publicatiors.
note that if our research indicates past
disqualifying issues, you may be asked
Basic listings are provided without charge to Approved properties.
to provide written documentation of
the corrective action taken since then..
112 0667514)()97
6271361 10 n09703A A -�-
AAA does not guarantee an immediate evaluation of all properties that apply, but does guarantee a fair review of all
applications. Additionally, AAA reserves all rights to apply priority consideration to those Properties demonstrating
traits that provide the highest degree of AAA member value. Through ongoing member research, AAA has developed
criteria reflecting key elements of consideration in making travel related decisims. Some examples of AAA member
value criteria are:
• LOCATION
• NEWLY BUILT /RENOVATED
• HIGH DEGREE OF CLEANLINESS AND COMFORT
• APPROPRIATELY MAINTAINED CONDITIONS
• PRICE (willingness to provide a discount or best rate available)
Once your property is approved, it will be evaluated at least once par evaluation cycle by a AAA inspector. All
evaluations we unannounced to emure that our inspectors see your property just as our members would see it. The
conditions noted at the time A the annual evaluation wilt be the basis of the decision to list or rate a property. This
decision is at the see discretion el' AAA. BY applying for an evaluation, you agree to allow AAA to publish your
property information and the respective Diamond Rating in our travel publications. AAA Will make every
effort to ensure that you propte icy is fairly represented.
if, after continued review, or up to and including the end of one year, the property is determi red to be of limited AAA
member value, a letter will be sent advising that the property has been released from any further consideration.
4. A property may not use AAA trademarks — Including but not i mrtea to the AAA logo ano
Diamond Rating; without AAA's prior written consent.
5. The property must be appropriately located for business or leisure travel.
6. The establishmert must be a primarily transient operation with for or more units available for AAA members.
7. The establishment must provide AAA room rates for travel publications as requested.
e. The establishment must assist AAA in the resolution of member complaints.
9. The establishment must accommodate unannounced AAA property evaluations Within 20 minutes of rwtjce.
10. All property staff must conduct business in a professional and ethical manner providing attentive, conscientious
service to guests.
11. A property must only place AAA members in AAA inspected and approved guest units — overflow buildings or guest
units (associated vdth the property but not approved by AAA) are macceptable.
12. Property management, or their representative, must be readily accessible at all times for hest needs or requests.
13. Guests must have easy access to 24-hour incoming and outgoing phone service, ensuring prompt guest unit
message delivery. Emergency messages must be delivered to Me guest immediately upon mcalpt.
14. Management will readily Provide property information as requested by AAA on a continual basis for the purpose of
maintaining the most accurate travel information for AAA publications.
15. The establishment must be in compliance with all local, state, and federal codes.
_2_
❑2u66751 -0097
6271361.10 09/03/14 - j U-
16, properties must have accurate, legible signage in appropriate areas.
17. Ail facilities directly associated with a property (such as a restaurant, health club, gift shops, recreation facilities,
etc.) provided for guest's use must meet all appropriate AAA Approval Requirements,
18. Adequate illumination is required in all public areas. This includes sufficient lighting in all corridors, walkways,
stairways, landings, parking areas, etc.
19. Each guest unit must contain a comfortable bed with a mattress pad, two sheets, two prows with pnowcases, aria
an appropriate bed covering.
20. Each guest unit must have a nightstand or equivalent by each bed, a chair, a writing surface, a waste container,
clothes- storage space, and clothes- hanging facilities with hangars for two guests.
21. Each guest unit must have adequate shades, drapes, or blinds to cover all windows or other transparent areas to
provide the guest with privacy.
22. The level of soundproofing must be adequate to muffle outside noises and normal sounds in adjacent units and
public areas.
23. Each guest unit must have an active light switch at the main entry.
24. Each guest unit must have good illumination at a writing surface, a sitting area, and at each bed.
25. Each guest unit door must be equipped with both a primary lock and a secondary deadbolt lock
French Doors - to addition to the deadbolt I
top and bottom to secure the stebonary {auxil
lower doorframe or floor . and must be strong ai
7iieZ92
ks coal, be modified to meet a variety of ezcepddns: The most
arbitrator to all decisions of this nature.
sped with an effective locking dawce. A secondary security lock
a accessible ham common walkways and adjoining balconies.'
Irements, surface - mounted slide bolts must be provided at the
.':These bolts must extend Into the upper doorframe and the
mechanisms:
26. Each door to connecting guest units or maintenance corridors must be equipped with a deadbolk lock.
27. Each guest unit entry door must have a viewport or window convenient to the door.
28. Each window overlooking a common walkway or in a ground floor unit must be equipped with a functional lock.
29. Each guest unit must have an operational, single station smoke detector. Hard -wired smoke detectors are
preferred. When battery- operated detectors are used, there must be an adequate maintenance program to
routinely test and replace batteries.
31. All bathrooms must contain a toilet, a sink with a well -lit mirror and a convenient electrical outlet, adequate shelf
space, and a tub or a shower with a non -slip surface.
32. Each bathroom must be equipped with toilet tissue, a cloth bath mat, and two bars of soap or equivalent—
furthermore, each guest must be provided a bath towel, hand towel, face cloth, and a drinking tumbler.
33. All toilet area surfaces (floors, walls, baseboards, etc.) must be non - porous to facilitate proper sanitation. (For
example, carpeting is not acceptable in the toilet area.)
-3-
112,066751 0097
6271361.10 .09 03,14
The AAA rE-,'v»t#.lation and Diai7 sue. d Rating Process
The AAA Evaluation and Diamond Rating process primarily consists of three parts:
• INTRODUCTION, INTERVIEW
• PROPERTY TOUR AND PRACTICAL APPLICATION OF THE
APPROVAL REQUIREMENTS AND DIAMOND RATING GUIDELINES
• ASSESSMENT SUMMARY
RrsiL all establishments must meet AAA Approval Requirements and be determined to provide member value. Ths
validation is conducted through a combined process of applications, inspections, referrals, and made research.
if a property is presumed to qualify, one of our Inspectors will visit and observe the wrbside meal, exterior, and
otter factors pertaining to the basic foundation of the establishment. This preliminary review will verify that this
property dearly exhibits characteristics that would appeal to AAA members,
if satisfied, our representative will contact the owner, general manager, or property designee for a brief Interview.
This Interview is an extremely important part of the evaluation, as facalal data is gathered for InduSon Into our travel
information inventory with potential use In AAA's worldwide printed and electronic publications, This session also
gives the property representative a chance to advise AAA of any plans for improvement that may be forthcoming.
Following the interview, the Inspector will our the establishment with the property representative to assess the AAA
Approval Requirements It Diamond Rating Guidelines. The tour will Include an evaluator of all public areas and
a cross section of rooms. The Inspector will discuss both strengths and weaknesses of the property as it relates to our
c uldeline5, This dialogue is unique to the AAA Diamond Rating Process and is a valuable resource to any
Property,
The overall evaluation process will Include the review of six key areas!.
• CLEANLINESS AND CONDITION
• MANAGEMENT AND STAFF
• EXTERIOR, GROUNDS, AND PUBLIC AREAS
• GUESTROOM WCOR, AMBIANCE, AND AMENITIES
• BATHROOMS
• GUEST SERVICES (if applicable)
NI establishments must be dean, cam(ortable, and well - maintained. The inspettor wdl
evaluate the overall condition of the property N determine If the property meets above
average standards and should be considered for a Diamond Rating.
_4_
112,(766751 -0047
071161.10 a09 014 1
properties won receive a mark or vas; or par nesee on me manner or mreracuon mm au
property representatives. The inspector sill be evaluating the overall level of hospitality,
professionalism, and deportment. It is critical to receive a passing mark to be considered for a
Diamond Rating.
This area is assigned a specific ratir� overall based on ttre components listed urviar the -:"`� €
appl icabla Diamond Rating Guidelines section. Varying weights are applied based on the � a�,r a ,-
classification of the property. For example, the exterior, grounds, and public areas at a &..
resort carry more weight than at a downtown hotel. -„
T
=, Ratings. All properties must first match the physical guidelines; respective of the Four or Five
Diamond levels to oualify for a series of anonymous visits by AAA inspectors. Our overnight
hospitality assessment includes a review of twelve critical areas end measures approximately
300 guest interaction pants, All properties must achieve at least a Four Diamond Rating in
guest services to be considered for a Four Diamond Rating overall; similarly, a property must achieve a Five Diamond
Rating in guest services to be considered for a Five Diamond Rating overall.
THE ACHIEVEMENT OF A AAA DIAMOND RATING MEANS THAT AN ESTABLISHMENT IS ONE OF
AN EXCLUSIVE GROUP THAT HAS SUCCESSFULLY COMPLETED THIS THOROUGH EVALUATION
PROCESS.
If a property is approved, the inspector will assign, or recommend, a Diamond Rating or FYI designation as
appropriate based on concGtions that exist at the time of the evaluation. The inspector will provide the property
representative a written summary of the evaluation, including the rating decision. The frequency of subsequent AAA
evaluations varies slightly, depending on the classification and the assigned rating of each establishment.
_5_
112)5675I -0097
6271361 10,M03'14 -�-��
AAA DIAMOND RATINGS REPRESENT A COMBINATION OF THE OVERALL QUALITY, THE RANGE OF
FACILITIES, AND THE LEVEL OF HOSPITALITY OFFERED BY A PROPERTY. These widely recognized and
trusted symbols help AAA members choose lodgings that will meet their needs and expectations.
AAA Inspectors are responsible for determining a property's Diamond Rating based on established standards that are
developed with Input from our trained professlonals, AAA members, and various lodging Industry professionals.
AAA's Diamond Rating Guidelines Indicate what Is typically found at each rating level. However, the size, age, and
overall appeal of an establishment are also considered, as well as regional architectural style and design. Diamonds
are assigned based on the average of all property characteristics, with a focus on overall guest Impression rather than
on Individual elements. Therefore, not meeting a guideline (in one area) may not necessarily affect the overall
Diamond Rating.
The final factor in determining the Diamond Rating for a property is professional Judgment, which is a very Important
part of the rating assessment. Our Inspectors are North America's travel experts based upon ongoing training and
experience In conducting more than 32,000 lodging evaluations per year.
What the Diamond atin s € }man
One Diamond
ICS
These establishments typically appeal to the budget minded traveler. They provide essential, no- frills
accommodations. They meet the bask requirements pertaining to comfort, cleanliness, and hospitality.
Two Diamond
W
These establishments appeal to the traveler seeking more than the bask accommodations. There are
modest enhancements to the overall physical attributes, design elements, and amenities of the facility -
typically at a moderate price.
Three Diamond
lwlww
These establishments appeal to the traveler with comprehensive needs. Properties are multifaceted with a
distinguished style, Including marked upgrades In the quality of physical attributes, amenities, and level of
comfort provided.
Pour Diamond
iii /' r F 'W
These establishments are upscale in all areas. Accommodations are progressively more refined and stylish.
The physical attributes reflect an obvious enhanced level of quality throughout. The fundamental hallmarks
at this level include an extensive array of amenities combined with a high degree of hospitality, service, and
attention to detail.
Five Diamond
IMP, gar IF r/11 Pop
These establishments reflect the characteristics of the ultimate In luxury and sophistication.
Accommodatons are first class. The physical attributes are extraordinary in every manner. The
fundamental hallmarks at this level are to meticulously serve and exceed all guest expectations while
maintaining an Impeccable standard of excellence. Many personalized services and amenities enhance an
unmatched level of comfort
_h_
112,X66751 db97
6271161,10A90314
14
Diarnand Rating Gliuidefines -- Exterior
7_
112066751 -009'.
6271361.10 x09103'14 _l5-
_g_
112 D667414097
627136 1, 10 aW 03 3'14 -16-
EXTERIOR
a a n
® a s
a v a
a a s
>
Bask or dated in
s..
Modest
Significantly
30, alms:
4D. Plus:
style
enhancements to
enhanced in form
Obviously
Extraordinary with
-
form and function
and function
upscale
unique
via roofing,
with some
architectural
windows, siding, or
rosidentief
features
some other
appointments,
architectural
such as:
feature(s)
enhanced roofs,
Intricate
moldings,
window
treatments,
balconies,
chimneys, etc.
No drive- through
Drive - through
ZD. olus;
30, plus:
a0. plus:
covered entry
covered an";
Increased capacity
Oversized
Elegant design and
Limited capacity
(two -car width);
capacity (two-
appointments
(one -car width)
Structure is
car width and
decorative
depth); Upscale
design and
appointments
Varied surfaces;
10
20
30 ,pJg�:
4D, pl4_s:
Illumination is
Paved and
Lighting is well-
lighting flatures
Valet parking is
adequate
marked areas
positioned, from
reflect upscale
automatic
multiple sources,
chamctaristics
and provides a
with respect to
good level of
the design of the
overall
property
Illumination
Valet parking upon
request or some
other upgraded
feature, such as:
covered/indoor
parking, shuttle
service, or
evidence of added
security
_g_
112 D667414097
627136 1, 10 aW 03 3'14 -16-
Diamond Rating Guidelines - Public Areas
--9-
112,066751 -6097
6271161,10 109 03 -'1 A
mats
112 066751-0097 -18-
6271361.10.09' 0?/ 14
PUBLIC AREAS
8
MMn'
Walls are of basic
Wall treatments
Decorative Wall
,jp ,pIus:
40, plus:
material and
are modestly
treatments, such
At least one
Wall finishes are of
_
design, such as:
enhanced, such
as: drywall with
significant upscale
the highest grade
cinder block with a
as: drywall with
textured and
design
materials;
'
plain paint finish,
basic paint finish
painted finish,
enhancement,
Accented with
standard grade
or plain vinyl
decorative vinyl
such as: accent
multiple luxurious
wood, prefab
coverings; Rubber
coverings, or
wall(s),
design
modular laminate
or vinyl
select grade
furnituredinish
enhancements
paneling, or
baseboards
wood /stone;
wood paneling,
wallpaper
Chair rails and
soft wall
carpeted
coverings, ceiling
baseboards
trim,
architectural
feature,
wainscot, etc.;
Wood
baseboards
Climate controlled
Climate controlled
Climate controlled
Climate controlled
Building structure
Weather
2D. plus:
2911Mjg @:
4D, plus:
and design is basic
appropriate
Building structure
Building
Extraordinary with
or dated in style
(provides
and design is
structure and
unique
protection and
significantly
design is
architectural
comfort with
enhanced in form
obviously
features
mapectto
and function
upscale
climatic
with some
elements);
residential
Building structure
appointments,
shows modest
such as:
enhancements to
enhanced roofs,
design and
makings,
function via
window
roofing, windows,
treatments, etc.
siding, or some
_
other architectural
feature(s)
UmRed quantity
Enhanced
Various
3D, olus
aD. plus:
and variety of
quantity, function,
landscape
Excellent variety of
Elegant and
landscaping: Basic
and variety of
features are
mature plants;
extensive variety
design
landscaping;
well-
Obviously
of landscaping,
Coordinated design
coordinated for
professionally
with meticulous
form, function,
planned and
attention to detail
and seasonality;
manicured
in placement and
An ample quantity
care
and variety of
plants arc
Integrated with
buildings,
walkways,
-Y,
parking lots,
s z
courtyards,
-
gardens, etc.
mats
112 066751-0097 -18-
6271361.10.09' 0?/ 14
SIO
I t2/066751 -0047 _ 19-
6271361.10 a09,03,14
PUBLIC AREAS
a
♦ a♦
o
♦ a ♦
r . e ♦
r a s
♦ a ♦
• .
Poster(s) or
Matted artwork
Variety of matted
$M olus:
_,_
commercial
(common or
and framed or
variety of styles
artwork with thin,
commercial) in
unframed canvas
and accent pieces,
un- enhanced
enhanced frame($)
artwork (varied
such as: Ilmoad
wood, metal, or
or other decorative
sizes and
edition prints,
plastic frame(s)
appointments
scenes) or other
canvas art,
appointments
tapestries, or
that provide a
lithographs with
distinctive or
enhanced matting
thematic upscale
and preservation
appeal
frames, assorted
artisan pieces or
sculptures, floral
displays or plants
Basic material and
Modest
Predominant use
3D. Plus:
4D. Plus
design, such as:
enhancements to
of decorative
One architectural
Multiple
drop Ole, concrete,
material and
elements to
or design feature,
architectural or
or standard grade
design, such as:
painted drywall,
such as: trays,
design features
wood
enhanced drop
such ar, an
beams,
die, pointed
advanced
medallions,
drywall, popcorn
textured finish
vaulted /volume,
Finish, sand
(knockdown,
murals /stencils,
textured concrete,
orange peel,
tin tiles or
am.
comb, slap
skylights, ceiling
brush, atc.) or
fans, special
select grade
effect lighting,
wood /stone
etc.
° Basic lighting
Ughdng fixtures
2D, slow:
30, DIU
40. aluae
fixtures that
are modestly
Lighting fixtures
Lighting fixtures
Custom lighting
provide an
enhanced In style,
are decorative and
reflect upscale
fixtures of
adequate level of
positioning, and
well- coordinated
design and provide
outstanding quality
overall Illumination
function to
for form and
an excellent level
provide a unique
provide a good
function
of overall
Illumination effect
level of overall
iilumination
Illumination
Basi<tleslgn in
Modestly enhanced
2D• Old
3•D.,Pllus:
40• elus:
_
limited locations
design In
Decorative
Upscale design in
Custom design
throughout the
appropriately
enhancements in
ample locations
creatively placed
property
placed locations
design
for a unique effect
throughout the
property
_ c?x
SIO
I t2/066751 -0047 _ 19-
6271361.10 a09,03,14
_iy
112'060751 -0097
6271361.10 a0T07;14 -20-
PUBLIC AREAS
MM
Obvously
Modest restrictions
No restrictions, as
Ike size and
Area size and
restricoed by size
due to size and /or
placement of
ement of
placement of
orplacement
ptacementof
appointments is
ointments
appointments
ppointrnents;
appointments;
well - propordoned
ide an obvious
provide a free
c counter
Seating
to area size;
ree of
flowing abundance
gistrabon with
arrangement for
Expanded seating
iousness
of space that
limited or no
one small group,
arrangement
allowing increased
contributes to the
seating capacity
such as: a sofa
accommodating
ease of movement
ultimate level of
and two arm chairs
two small groups;
for many guests;
comfort and
Placement of
Multiple
relaxation for
appoliuments Is
conversational
many guests;
well - proportioned
groupings,
Identifiable
to area size and
Including one or
concierge area
traffic tow
more privacy
areas; identifiable
guest service area
and bell stand
If available,
An increased level
Decorative and
30
4D, Plu ;:
predominantly
of coordination;
waif- coordinated
Modem or
luxurious, unique,
basic materials,
Modest
for form and
antique upscale
and elegant
such as: "rode
enhancements in
function; Overall
style and
custom design and
board, laminate, or
materials, design,
construction and
materials, such
workmanship
vinyl finishes;
and function;
design reflects
as: solid wood,
Dated styles with
Provides an
current industry
polished metals,
limited
enhanced level of
trends, such as:
leather, designer
coordination;
comfort
Melamine resins,
fabric, veneer
Provides an
solid wood elm, or
finishes with
adequate level of
upgraded laminate
solid woad
comfort
finishes; Provides
accents,
an obvious degree
laminate insets,
of comfort
etc.; provides an
exceptional
degree of
comfort
Ice machine(s)
Multiple sealed
ZD. must
,30. blue:
Specialized service,
_
available
ice machines
Located In a
Conveniently
delivery or in -room
recessed area
located and
honor bar
_
appropriately
soundproofed
Vending
Basic hygiene
Dedicated sundry
Upscale gift shop
Variety of first -
machine(s)
amenities, such
area offering a
class shops
available
as:
variety of
toothbrush /paste,
merchandise, such
razors,
as: health and
mouthwash,
beauty needs,
shower caps,
food, beverage,
combs, etc.,
and reading
available at the
materials
front desk. or in
vending machine
_iy
112'060751 -0097
6271361.10 a0T07;14 -20-
PUBLIC AREAS
• MONK
NOW,
Personal
Dedicated open
30. lus,
4U. °Iu_r
computer, with
area (out of traffic
Wall- appointed,
Luxurious
Internet access,
Pattern) with
enclosed area;
surroundings
available In lobby
desk and chair,
Multi -quest
Include the latest
for guests' use
to include at
capability With
business
least three
comprehensive
technology;
business - related
office supplies
professionally
Items, such as:
staffed area
PC, printer,
copier, fax
machine,
supplies, etc.
Elevator is
2D. Pl.
3D. plus :
4D- Pius:
available for
Primarily
Multiple
Elevator cabs
guests' use in
dedicated to
elevators Include
have dual call
multi-story
guests' use;
upscale
button panels;
buildings
Prompt
appointments;
landings are
response, quick
Landings Include a
elegantwith
moving, and
variety of upscale
luxurious, unique,
spacious; Elevator
furnishings
and artistic
Includes decorative
(five), such as:
appointments
appointments;
sofa table,
Landing Includes a
lamps /wall
limited (four)
sconce, phone,
amount of
artwork, chair,
decorative
coffee table,
furnishings, such
mirror,
as: tables, lamps,
flowers /plants,
phone, artwork,
etc.; Additional
chair, minor,
service elevator
flowers, etc., and
is available for
is recessed from
staffs use
the lobby and
guestroom
corridors
-
Artificial or live
Good variety of live
Abundant variety
Garden -fresh
_
plants In limited
plants or artificial
of live plants, silk,
condition,
locations
floral
or dried floral
outstanding variety
arrangements used
arrangements used
of live plants and
as appropriate for
as appropriate to
flowers that are
decorative accents
enhance an
uniquely arranged
throughou0the
upscale theme
to provide a
_
property
throughout the
luxurious appeal
property
throughout the
Property
-13-
112J066751 -0097 _
6271361.10.(1`);0314 -21
- 14-
111066751 -0097 -22- 6277 61.10 a09,03/14
PUBLIC AREAS
r a r
r a r
r r r
r a v
r a r
Limited (washer
Expanded coin-
Valet laundry
4D, plus:
and dryer only)
operated laundry
and pressing
Personalized
coin- operated
facilities, such as:
available
services available,
laundry facilities
multiple machines,
such as: one hour
vending supplies,
pressing,
folding table, etc.
shoeshine, tailoring
-or- valet laundry
or alterations, etc.
Luggage carts
2D. plus:
3D. alus:
Luggage assistance
available
Design
Upscale design
upon arrival is
enhancements,
enhancements,
automadc
such as: solid
such as: brass or
construction,
metal finish,
larger, smooth
carpeted base, and
tracking wheels,
multiple hanging
and bumper
capabilities.
guards
Luggage assistance
available upon
request
- _
Private meeting
Expanded meeting
A variety of
4D- plus:
room available;
space with
meeting rooms,
Luxuriously
basic audiovisual
decorative
such as:
appointed, first -
equipment
appointments;
ballroom,
class facilities;
available, such as:
increased variety
boardroom,
Custom conference
projectors,
of audiovisual
theatre, and /or
services
microphones,
equipment
meeting rooms
television, sound
available, such as:
of various sizes,
system, etc.
dropdown
with upscale
projector and
appointments; All
screen, smart
audiovisual
lectern, controlling
equipment is
lights and surround
state -of -the -art;
sound, mull-
Full conference
casting, wireless
services
communication,
available
etc.; Some
including on -site
conference
professional
services available,
conference
such as: planning
plannerand
assistance,
technical support
wtedng, and most
technology needs
- 14-
111066751 -0097 -22- 6277 61.10 a09,03/14
PUBLIC AREAS
a s a a a s
a s a
o s s
a a r
one full•simelae
22.91111111
Upscale, full-
40- aius•. Widpie
outlet or food
(comparable W a
service
outlets (at least
s E,
court
two diamond
restaurant
one Is comparable
(comparable to a
restaurant);
(comparable to a
to a four diamond
one diamond
Lounge or bar area
three diamond
restaurant); Room
restaurant) orsite:
restaurant);
service available
Separate lounge
24/7
or bar area;
Room service
available for
breakfast, lunch,
and dinner
W
- _
Standard
Expanded
continental
continental
breakfast
breakfast, or more,
_
(minimum: juice,
is served in a
_
pastry, and hot
dedicated area that
beverage) is
Is distinctly
_
served In a
separate from the
dedicated area
lobby traffic;
with modest
Appointments are
_
restrictions due to
well - proportioned
size and /or
to area size,
placementof
with appropriate
appointments;
seating for the size
Limited seating is
of the
available
establishment;
Television
Pool area with a
Weather
ales:
4o ells:
limited amount of
appropriate pool
Poo
thou area repeal
l
Pool area Is of
_
mixed of basic
(usable least
the use of upscale
elegant tlesign,
or mixed styles;
or
nt
nine months
building materials
with unique
Property location
annually), Area is
es
and design, with a
appointments,
determines
well-appointed
variety pool
such
seasonal
a good variety
furniture; Mot tub
e;
ter
sculptures,
availabiiiCy
of decorative,
or whirlpool ape,
waterfalls/features,
comfore P
comfortable pool
steam room,
and
exotic plants and
Hot out
n
sauna; Food and
gardens,
gardens, stone/Hle
or whirlpool spa
or whirlpool
beverage service
surfaces with
Is available
designer
poolside
etc.; Outstanding
variety
luxurioufurniture;
e
furniture; re; U
Cabanas; Full-time
professional
attendant is on
duty
-15-
113/0667514097
627136IA a09103�14 -23 _
PUBLIC AREAS
a
e
•b
,
B Y A
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6 a 0
Y $ Y
-
Foil spa services
Full spa onsite
available
_
Two pieces of
20,0105
3D. Ulu;:
40, plus:
equipment on site
Three or more
Five or more
Ten or more places
In a designated
pieces of
pieces of state -of-
of equipment;
room
equipment; Room
the -art
Wxurious health
is enhanced with
equipment,
club environment;
atieastthree
including cardio
dressing area
purposeful
and weight
includes: lockers,
appointments,
training
showers, and
such as:
capability
restrooms; Full.
mirrored wails,
time professional
television, water
attendant is on
cooler,
duty; In -room
bathroom,
exercise equipment
towels, clock,
available
scales, etc.
Multiple
3D-nius:
90, ,Pip
facilities/
Arrangements
Mrst -class
programs onsite;
are made for off-
facliides/
Some with off-
site services
programs with
site privileges
custom concierge
services provided
_
One unisex
Separate gender
3D. WA-.
4D. plus;
restrooms in a
Upscale
First -class with
convenient
appointmemts
luxurious
location (If
appointments
property has
expanded
meeting
facilities, then
additional
restroonus are
available in
Proportion)
-16-
111066751 -0047
6271361.10.,WW`14 -24-
Diagno.nd Rating Guidelines - Guest, own
_p..-
'271367.10 1 12:1)66751 -0097
A90114 -25
-d8 --
112,066751 -0)97
6271 )61.1 o .09:3`14 -26-
GUESYROOM
_ Basic material,
Enhanced material,
M plus:
M plus
E
AD, plus
such as: linoleum
such as: wood
Wood laminates or
Nigh grade
Custom Inlays or
or low density pile
laminates and
carpet with
wood, marble,
textured
carpet with
vinyl, " medium
enhanced
granite, or other
enhancements that
padding that
density pile
design, such as:
upscale stone
provide an overall
provides little or no
carpet with
patterns,
floors, or high
design that Is
comfort underfoot
padding that
textures, or
density pile
obviously elegant
(floor facts hard)
provides average
inlays; Decorative
carpetwith
and unique; Area
comfort
the (ceramic,
padding that
rugs are luxurious
underfaa,
stone, concrete,
provides
and unique
term cots, etc.);
exceptional
Hard surfaced
comfort
Doom have
underfoot
decorative area
rugs as
appropriate
Basic material and
Wail treatments
Decorative wall
3D' Dios:
4D- plus:
design, such as:
are modestly
treatments, such
At least one
Wall Finishes are of
cinder block with a
enhanced, such
as: drywall with
significant upscale
the highest grade
plain paint finish,
as: drywall with
textured and
design
materials;
standard grade
basic paint finish
painted finish,
enhancement,
Accented with
wood, prefab
or plain vinyl
decorative vinyl
such as: accent
multiple luxurious
modular laminate
coverings; Rubber
coverings, or
wall(s),
design
paneling, or
or vinyl
select grade
furniture -Frn®h
enhancements
wallpaper
baseboards
wood /stone;
wood paneling,
Carpeted
soft wall
baseboards
coverings,
ceiling trim,
architecture[
feature,
wainscot, chair
rails, etc.; Wood
baseboards
-
Poster(s) or
Matted and framed
Variety of
4 us:
commercial
artwork (common
matted and
Variety of styles
_
artwork with thin,
or commercial) In
framed artwork
and accent pieces,
-
un- enhanced
enhanced frame(s)
(varied sizes and
such as: limited
wood, metal, or
or other decorative
scenes) or other
edition prints,
plastic frame(s)
appointments
appo[ntmems
canvas art,
that provide a
tapestries, or
distinctive or
lithographs with
thematic upscale
enhanced matting
appeal
and preservation
frames, assorted
artsan pieces or
sculptures, floral
-
displays or plants
-d8 --
112,066751 -0)97
6271 )61.1 o .09:3`14 -26-
1 19-
1121066751 -0097
6? 71361, 10A9 03,14 -27-
GUESTROOM
g
v a m
m a a
m s m
m m m
a a a
. s n
Basic meCNlel and
Modest
Prodominent use
us;
4D, plus:
design, such as:
enhancements to
of decorative
One architectural
Multiple
drop die, concrete,
material and
enhancements to
or design feature,
architectural or
or standard grade
design, such as:
painted drywall:
such as: treys,
design features
wood
enhanced drop tile,
such as: an
beams,
painted drywall,
advanced
medallions,
popcorn finish,
textured finish
vaulted /volume,
sand textured
(knockdown,
murals /stencils,
concrete, etc.
orange peel,
tin tiles or
comb, slap
skylights, calling
brush, etc.) or
fans, special
select grade
affect lighting,
wood /stone
etc.
Basic drapes,
1D- plus:
20. glus:
3D. plus[
4D. plus:
blinds, or shades
Full blackout
Two design
Three or more
Elaborate,
offering limited
effect
enhancements,
design
luxurious, and
blackouteffect
such ea: blinds,
enhancements
unique visual effect
from the sun or
shutters, sheers,
outside light
fabric side
sources
panels, valance,
glass treatment,
cornice, etc.,
provides a
professional
design effect
_
No headboard
Headboard and
2D. plus
upscale
4D plums:
-or- headboard
mattress are of
Decorative
headboard, bed
Elaborate,
and mattress are
modestly
headboard
base and
luxurious, and
of basic materials
enhanced
mattress which
unique visual
end plain design
material and
Includes a
appeal
(vinyl fiat top);
design (quilted,
comfort
Box spring or bed
soft top); Box
enhancement,
base
spring or bed
such as: pillow
base
top, memory
foam padding,
adjustable
comfort level,
etc.
Bed coverings are
Bed coverings
2D plus :
Bed coverings
4D. plus:
of basic style;
are quilted or
Two accent
include three or
2 300 thread
Bed linens are of
modestly
features, such as:
mare accent
count bed linens
common blends
enhanced In
comforter, duvet,
features (see
(Egyptian cotton,
and thread counts
style; Bad linens
dust ruffles, bed
30); Bed linens
sawn, silk or
(sheer, coarse to
are of average
throw /scarf,
are of Increased
similar) provide a
much); Pillows are
(380 -250)
multiple pillows,
thread count
super soft, silk -like
-
of a standard
thread count,
accent pillows /
(>250), tightly
feel; Choice of
grade (thin
closely woven
shams or triple
woven, crisp, and
pillow fills, such
Polyester batbng)
and smooth to
sheeting
very soft to the
as: silk, wool,
touch; Pillows
touch; Pillows are
cashmere,
are of an
of an upscale
premium foams,
enhanced grade
grade, such as:
latex or goose
(thick Cluster
down or feather
down, em„ is
f.-
Fiber)
provided
1 19-
1121066751 -0097
6? 71361, 10A9 03,14 -27-
-20-
112,066751 -0097
6271361.10 aovr03a4 -28-
GUESTR40M
o
s r a
a
a r
r • r
• ,
® s r
a r s
. s _ Open wall -
Semi - enclosed
Fully - enclosed
3D, Dim:
40, plus:
mounted clothes
area with
with at least six
At least eight
At least ten
rack with simple
detachable wood,
open -hook wood
hangers
hangers (two of
wire or non-
plastic, or heavy
or heavy gauge,
which are soon or
detachable
metal hangers
sculptured
similar); One or
hangers
plastic matching
more designer
hangars; Some
features, such as:
with skirt or pant
drawers, shelves,
hanging
shoe rack, walk -in
attachments;
capability, etc.;
Closet depth is
Closet is
22 inches ( at
Illuminated
minimum) and
can enclose full
length apparel
Open clothes
Multiple
20, plus :
30, plus:
413. plus :.
storage space
enclosed
Sufficient space for
Sufficientspace
Total storage space
drawers; Total
one piece of
for two pieces of
can accommodate
storage space
luggage; such as:
luggage
the needs of four
can
folding metal rack,
(upgraded
or more guests
accommodate
bench, or credenza
wooden racks or
the reads of two
tap
designer -style
or more guests
benches); Total
storage space can
accommodate the
needs of three or
more guests
Two or more well-
Three or more
Four or more
3D. plus:
40• Plus:
Positioned basic
lighting fixtures;
well - positioned
Predominantly
Custom IlghHng
fighting fixtures;
Modestly enhanced
lighting fixtures;
freestanding
fixtures of
Provide an
In style,
Decorative and
fixtures of upscale
outstanding
adequate level of
Positioning, and
well - coordinated
design; Provide an
quality; Custom
overall Illumination
function; Provide a
for form and
excellent level of
function(s), such
good level of
function; Provide a
overall illumination
as: dimmers, Point
overall illumination
good level of
lighting, multiple
overall Illumination
switches, and /or
at each location
natural light
sources; Provide a
unique Illumination
effect
Predominantly
LD, nI},is:
Predominantly
3D, of..:
AID, Plus:
basic materials,
An increased level
freestanding;
Modern or
Luxurious, unique,
such as: particle
of coordination;
Decorative and
antique upscale
and elegant
board,
Modest
well- coordinated
style and
custom design and
pressboard,
enhancements in
for form and
materiaisr such
workmanship
laminate, or
materials, design,
function; Overall
as: solid woad,
vinyl finishes;
and function;
construction and
polished metals,
Dated styles with
Provides an
design reflects
leather, designer
limited
enhanced level of
current Industry
fabric, veneer
coordination;
comfort
trends, such as:
ffnisheswith
Provides an
Melamine resins,
solid woad
adequate level of
solid wood trim, or
accents,
comfort
upgraded laminate
laminate insets,
finishes; Provides
etc.; Provides an
$.,
an obvious degree
exceptional
u rs� _
of comfort
of
comfort
-20-
112,066751 -0097
6271361.10 aovr03a4 -28-
-21 -.
112066751 -0097
6271361.10 a09 i0114 "29-
GUESTROOM .
a • a
a e •
• o •
• • s
• a
One chair
11). plus:
Comfortable
3D. plus:
4D. plus:
(typically placed as
Additional sending
seating for two
Comfortable
Luxurious
part of a duplex,
for one guest;
guests - to
seating for three
materials and
triplex, or task
Vinyl or fabric
Include desk
guests; Upscale
design; Additional
table)
upholstery
chair with arms
materials and
furniture pieces,
and partial
design In an
such as: end
upholatery, such
expanded
tables, coffee or
as: vinyl, leather,
setting, such as:
occasional tables
or fabric; plus
a loveseat, sofa,
one additional
orovens(zed
fully upholstered
chairwith
easy /lounge
ottoman
chair that Is
positioned for
television
viewing
Duplex, triplex, or
Dmk or medium
Desk or large task
Large desk that
A211111 W.
small task table
task table that
table that provides
provides ample
Desktop
_
that provides
provides good
very good work
work space (e.g.,
enhancements,
adequate work
work space (e.g.,
space (e.g.,
enough space for
such as: desk
space (e.g.,
enough space for a
enough spa" for a
a laptop
blotter, pull -out
enough space for a
laptop computer
laptop computer
computeq three
writing surface,
laptop computer
and two 8x10 Inch
and three 8x10
8x16 Inch
stationery, and
and an 8x10 inch
reference material
inch reference
reference
other office
reference material
Items)
material items);
material items,
supplies
Item)
One electrical
and a portable
outlet (not in use)
printer); Multiple
conveniently
electrical outlets
placed at the desk
(not in use)
conveniently
placed at the
desk
Heat and /or air
ID, Plus:
20. plus
Heat and air
4D, plus:
conditioning
Conveniently
Heat and air
conditioning
Digital thermostat
available an a
located through-
conditioning
available on
control
seasonal basis as
wall units
available on
demand; Central
needed; Window
demand; Modern,
system with
style air-
quiet, with easily
thermostat control
conditioning units
accessible controls
in each guestrocm
Touch -tone
J.D. ajgs:
21L Plus
3.D. Plu€:
4D. plus:
_
'
telephone
Message light on
Voice messaging
Multiple
Comless
telephone
telephones; Two-
telephone;
line telephone or
Expanded phone
separate
features, such as:
Internet
pre-programmed
capability
dialing keys,
speaker capability,
personalized
display or
-`� -r..
voicemeil
-21 -.
112066751 -0097
6271361.10 a09 i0114 "29-
_i'2_
112 Obb751 -0047
GZ]13bi.Rt a(19= =03114 'j�-
GUESTROOM
NINNIMM
_ Dial -up capability
High -speed access
Highspeed cable
Highspeed
4D. Plus
(cable or wireless)
access available in
wireless access
Available in some
available in some
all rooms
available in all
public areas of the
rooms
rooms
property
_ Standard CRT TV
Wig:
2D. Wes:
31) ,plus:
40, Diu,
- (curved screen);
Standard CRT TV
t 25 inch screens
t 25 Inch Fiat
Custom, decorative
Wall- mounted;
(curved screen)
with portable full
Screen CRT or
enhancement
Limited viewing
with remote
function remote
Flat Panel TV
(e.g., framing,
angles; Basic
control; Located
control; With
(such as: LCD,
mantle placement,
cable
on credenza,
swivel ( pull -cut
Plasma, $ED,
emou, enclosure,
dresser, or other
base; Multiple
etc.); Located on
mirrored screen,
furniture piece
viewing angler,
credenza,
etc.); High-
without a swivel
Multiple
droseer, or onfin
definition channels
il
base; limited
televisions in
otherfumiture
available
viewing angles;
suites; Expanded
piece with a
#
Channel
Cable channel
swhrel /pull -out
cp
directory
selection (at
base or wall
Ieast35
mounted; Cables
channels); Plus
and cords am
one additional
hidden from view
feature, such as:
free movie
channel, pay -
per -view movie
channels, video
games, etc.
Cock
Standard clock
20. plus:
4C_RiuE:
4D, Plus
radio
Decorative
Digital display
CD player with at
design
least one CD
selection; MP3
docking station;
Surround sound
audio
DVD player (in lieu
DVD Player; DVD
of pay -per- view
library available
m.w.)
_i'2_
112 Obb751 -0047
GZ]13bi.Rt a(19= =03114 'j�-
Local telephone
,10,,- plus :
20,01£:
3D, Plus:
40, plus:
directory
Local Business
Guest- service
Enhanced guest-
Uniquely appointed
plastic, cardboard,
flyers (food,
directory;
service directory in
guest-service
M.) with
attractions,
Complimentary
folder, binder, or
directory in folder,
disposable cups
transportation,
daily newspaper
digital format;
binder or digital
Extra pillows and
etc.); Notepad and
available;
Complimentary
format; In -room
pencil
Notepad and pen
daily newspaper
comfort menu
In -room safe
delivered to room;
providing exercise,
Coffee maker
enough fora
Additional
spa, butler, or
Including tea
laptop computer
reading
other personalized
Full- length mirror
Framed or
materials, such
services;
beveled full -
as: magazines,
Assortment of
books, etc.;
complimentary
Upgraded
daily newspapers
stationery
available for
package
delivery to room
(envelopes,
Postcards,
writing paper)
Basic ice bucket
Plastic ice bucket
Insulated plastic
ice bucket with lid
Ice bucket of
(polystyrene foam,
with lid and
Ice bucket with lid
of upscale design,
luxurious design,
plastic, cardboard,
disposable cups
and disposable
such as: insulated
such as: designer
M.) with
Microwave oven
cups
and padded vinyl,
glass, silver,
disposable cups
acrylic or metal;
brushed or glossy
Extra pillows and
request
Glass tumblers
metal finish, rings
available
or handles, etc.;
In -room safe
that is large
Selection of
Coffee maker
enough fora
and supplies,
glassware; Ice
Including tea
laptop computer
tongs
Iron B board
Full -size iron and
available
board
Refrigerator
3D. plus:
available
In -room snacks,
mini bar, or a
Microwave oven
refrigerator that
available
can be custom
stocked upon
Extra pillows and
request
blankets
available
In -room safe
In -room safe
that is large
Coffee maker
enough fora
and supplies,
standard 12'
Including tea
laptop computer
bags
Full- length mirror
Framed or
beveled full -
length mirror
-23-
112 = 066751 -0097
h271161,1049 03 r14
40. ulus:
Two robes; Two
pairs of slippers
Umbrella
In -room comfort
menu providing
exercise, spa,
butler, or other
personalized
services
Ditacriond Rating Guidelines - Bathroom
_2q_
112 066751.0097 -32-
6271361.10 a09 03 14
-25 -
112 M0751-0097
6271361.10 a0903 14 -33-
BATHROOM
Basic material and
Wall treatments
Decorative wall
30. Dim:
41D. plus:
design, such as:
are modestly
dd
treatments, such
t
At West one
wall finish" are Of
cinder block d, a
such as
enhanced, as;
as all with
significant upscale
the highest grade
plain paint finish,
'w it .sit
drywall with basic
he and
design
materials;
standard grade
paint finish or plain
painted finish,
enhancement,
Accented with
wood, prefab
vinyl coverings;
decorative vinyl
such as: accent
multiple luxurious
modular laminate
Rubber, vinyl, or
coverings, or
wall(s),
design
paneling, clausd
ceramic ble
select grade
furniture -finish
enhancements
ceramic tile or
baseboards
wood/stone;
wood paneling,
wallpaper
Wood or
soft wall
decorative
coverings, getting
ceramic tite
trim,
baseboards
architectural
feature,
wainscot etc.;
Wood or high-
and stone
baseboards,
Matted and
4D. alu
framed artwork
Variety of styles
or other
and accent pieces,
appointments
such as: limited
that provide a
edition print,
distinctive or
canvas art,
thematic upscale
tapestries, or
appeal
lithographs with
enhanced matting
and preservation
frames, assorted
artisan pieces or
sculptures, flrai
displays or plants
Basic material and
Modest
Predominant use
3D. plus:
4D, olu
design, such as:
enhancements to
of decorative
one architectural
Multiple
drop ble, concrete,
material and
enhancements to
or design feature,
architectural or
or standard grade
design, such as:
painted drywall,
such as: trays,
design features
wood
enhanced drop ble,
such as: an
Immune,
painted drywall,
advanced
moldings,
popcorn finish,
textured finish
medallions,
mW textured
(knockdown,
raised /vaulted(
concrete, etc.
orange Past,
volume,
comb, slap
murals /stencils,
brush, at..) as
tin or skylights,
select grade
ceiling fans,
wood /stone
special effect
lighting, etc.
-25 -
112 M0751-0097
6271361.10 a0903 14 -33-
26--
111,0667514 097
6.771161.. 10.W203 14 —34-
BATHROOM
®
s I.
a m r
a a a
a a
r a
Basic
ID,ylus:
20. plus:
Enhancements to
4D. plus:
rectangular
Modest design
Decoratively
size (>41/. ft.
Obvious
style, size (41h
enhancement
enhanced In
length and
enhancements in
ft. length and
design, or
>141n. depth),
comfort, design,
14 in. depth) and
augmented for
design, and /or
function, and /or
materials
comfort or function
style, such as:
material, such as:
(fiberglass,
oval, round, or
larger, two person
acrylic, or
free form
capability,
porcelain on
contoured backs,
steal); Simple
built -in lumber
design (straight
back support,
sided)
water jets,
enamel - coated
cast Iron, natural
marble, stone, or
other designer
features
If separate from
J.D. plus:
If separate from
If separate from
4D. elder
tub (or shower
if separate from
tub (or shower
tub (or shower
Separate shower
only), base is of
tub (or shower
only), base is
only), base Is of
stall M addition to
basic material
only), base is of
decorative ceramic
upscale material,
the tub; base is of
(metal or
enhanced material
tile, cultured
such as: marble,
outstanding
Fiberglass) and of
(acrylic or ceramic
marbieygranite, or
granite, stone, or
material and
plain design
File)
poured acrylic
porcelain dies,
artistic design,
such as: marble,
Basic square size
Modest
Very good size
Oversized
granite, stone, or
(19 04. ft.)
enhancement to
(>9 sq. ft.)
( >12 sq. ft.)
porcelain tiles with
design -or-
complementary
irregular shape
Inlays or
(rectangular,
treatments
rounded comer or
neo angle)
Fiberglass or metal
Acrylic or ceramic
Acrylic with
Marble, granite,
4. D, of ss:
tie
enhancements for
stone, or porcelain
Luxurious material
comfort, style, or
dies; Enhanced
and artistic design,
lumbar, -or-
solid surface; Tub
such as: marble,
decorative ceramic
and shower
granite, stone, or
his or other solid
height soap
porcelain Was wim
surface, such as:
dishes
complementary,
cultured
inlays or
marble/granite,
treatments;
poured acrylic,
Seating Is
etc.)
Integrated into
design
Lightweight vinyl
Heavyweight vinyl
Decoratve vinyl,
3D-plus:
4D. plus'
curtain
curtain or ptexi-
polyester, or nylon
Double curtains
Fixed door
glass door with
curtains with
-or- heavyweight
enclosure (framed
aluminum frame
curved shower rod;
glass door
or frameless);
-or- lightweight
with /without metal
Enhanced (etched,
glass door with
frame
frosted, embossed,
aluminum frame;
tinted, eta.) glass
-or- effective
door -less design
26--
111,0667514 097
6.771161.. 10.W203 14 —34-
- 27-
112 066751A097
6271361.10 a09,03114 -35-
BATHROOM.
i i i
t • t
Y . -•
Y • i
t 5 t
Traditional, single
Multiple setting
Multiple setting
Enhanced style, of
Custom water
function shower
shower head
shower head with
modem design,
features, such as:
head
metal finish
fixed shower head
body jets, hand-
held sprayers,
multiple shower
heads, min
showers, or gende
flow
environmentally
friendly features
Two - piece,
ID. plus
Two - piece,
30- ajug:
40, plus
round; Basic style
Enhanced style
elongated; Basic
Enhanced style
Distinct toilebonly
style
or function
area; Enclosed or
semi - enclosed
_ Combined with
ID, plus:
ZD.,pfus
30�plus:
-49,jd n:
toilet area within
Modest restrictions
No restrictions, as
Vanity is well-
Room size and
an enclosed
due to size and /or
placement of
Integrated Into the
placementof
space that Is
placement of
appointments are
overall scheme of
appointments
r _ restricted by size
appointments
well - proportioned
the bathroom for
provide a free
and /or placement
to room size
convenience and
flowing abundance
of appointments
comfort; Room
of space that
2R
gg
size and placement
contributes lot the
of appointments
ultimate level of
If vanity area is
If vanity area Is
provide an obvious
comfort and
separate from the
separate from the
degree of
relaxation for
toilet area, It Is
toilet area, It Is
spaciousness,
multiple guests
Positioned in plain
Positioned In
allowing increased
view of the
restricted view
ease of movement
guestroom
from the rest of
for multiple guests
the guestroom
Wall - mounted,
Standard self-
Seamless (Poured
Porcelain or
4D, plus:
basic style,
rimming porcelain
acrylic or cultured
porcelain on steel,
Multiple sinks of
porcelain
or Porcelain on
marble/granite{
with an upscale
ornate design,
steel
quartz) -or-
counter
such as: above
Under-mounted
enhancement,
counter vessel or
Porcelain or
such as: wall
pedestal or- of
Porcelain on steel
faucets or
designer materials,
upscale counter-
such as: glass,
mounted faucets
stainless steel,
vitreous china,
enameled cast
Iron, fireclay,
brass, nickel,
copper, marble, or
either
reallsynthetic
stone
sF
- 27-
112 066751A097
6271361.10 a09,03114 -35-
_2g_
112 066751 0097
6471161. I009/03 14 —36-
SATiiRI,
a
s a a
•
v e r
r e r
a.
e a •
r o
Small size (c2 sq.
Moderate size
Very good size
Oversized
4D. plus:
ft.) shelf of basic
(2 2 sq. ft.)
(z9 sq, ft.)
(t 6 sq. ft.)
Multiple counters
material, such as:
laminate counter
counter space of
counter space of
and /or shelves;
glass, metal, or
solid surface, such
excellent quality,
Artistic design,
sheet laminate
as: poured acrylic,
such as: marble,
such as: marble,
cultured marble]
granite, or other
granite, wild
granite /quartz, or
solid stone
stone, or porcelain
commit big
tiles with
complementary
Inlays or
treatments
_ Small (1 K R. x
Medium -sized
2D. gjgst
Large (3 ft. x 5
4D. Wit g:
2 ft.) mirror
( >3 sq, ft.)
Beveled or
ft.) mirror with
Artistic design
mirror
decoratively
an ups ®le frame
enhancement
harried mirror
Skirting partially
Enhanced skirting
Upscale,
AD, plus:
conceals plumbing
conceals plumbing
fumitum-
Elaborate design
finished skirting
features,
cabinetry, multiple
shelving, and /or
drawers
Basic design and
Modest design
Decorative, well-
30, plus:
412..g)ga:
function, such as:
enhancements,
coordinated for
Upscale design;
Designer fixtures;
bulb and cover;
such as: box /egg
form and
Multiple
Custom
Provide an
crate style or
function;
locations;
function(s), such
atlequaCa level &
enhanced glass
Multiple bulbs
Illuminated
as: dimmers, point
overall illumination
cover; Provide a
and covers
shower, Provide
lighting, multiple
good level of
provide a good
an excellent level
switches, and /or
overall illumination
level of overall
of overall
natural light
Illumination
Illumination at
sources; Provide a
each location
unique Illumination
effect
v. ,:.. Standard
SD. plus:
20. plmi
Upscale design
40. plus:
function; Basic
Modestdesign
Metal with
enhancements,
Designer materials
materials of plain
enhancements
decorative finishes,
such as: satin or
and style; Unique
design
such as: chrome,
enamel finishes,
appointments
pewter, brass,
two or more
nickel, gold, etc.
metal
combinations,
embossing, etc.
_
Basic,
10, plus:
Medium weight;
Heavyweight;
do, plus
lightweight;
Modest
Soft to touch;
Plush to touch;
Generous sized
Rough to touch;
enhancements in
Medium
Firm, salt-
towels or bath
Limp feel; Low
design; Displayed
absorbency
supporting feel;
sheets; Luxurious
absorbency;
on bars and /or
premium cotton
appearance, with
Displayed on
shelves
with high
intricate and
caddies
absorbency
detailed
enhancements to
�$
design
x ��rri
_2g_
112 066751 0097
6471161. I009/03 14 —36-
29- .
112066731 -0097
6271361.10 09 M 14 -37-
BATHRQPM
m e m
m v m
r a e
• • a
m e a
_ Two small (< Y.
Two medium (2 ah
Four - piece
30, plus:
AIM .p)gs:
oz.) bars of soap
oz.) bars of soap
personal care
Sevan -piece
Ten -piece personal
(or equivalent)
(or equivalent);
package, Includes:
personal care
care package Of
one packet or
one large Q PA
package; Toiletries
designer /spa
bonded item;
oz.) and one
are enhanced by
toiletries; Ample
modest
medium (2 a / + oz.)
fragrance, natural
sized (2 VAOZ.)
presentation
bars Of soap (or
supplement,
bars of soap and
equivalent); MO
packaging, am.;
bottled Items (21Y.
(a 114 or.) bottled
Includes: two large
oz.); Unique
Items; Decorative
(Z I'Api.) bars of
presentation
presentation;
soap (or
Additional
equivalent), three
amenities (such
(k 1 oz.) bottled
as: toothpaste/
Items, and two
brush, comb,
additional Items;
$owing idt,
Upscale
mouthwash,
presentation;
etc.) are
Freestanding
available onsite
soap dish at sink
Facial tissues
.11), plust
Facia( tissues inset
Facial tissues
40, plus:
Wall-mounted wtth
In vanity (no
freestanding in
Custom designed
chrome covers
chrome)
decorative
container
container
Wall - mounted hair
Freestanding
40 u
dryer
hair dryer
Mminated
Makeup mirror
makeup mirror;
scale; vanity
seating
0
Night•gght
3H.s[sis:
4D, plus:
lamlline or
Television
cordless
telephone
available
29- .
112066731 -0097
6271361.10 09 M 14 -37-
Thie AAA Four and Five Diamond Rating
These prestigious ratings are achieved by less than four percent of all Approved properties — typically the most
luxurious and pampering properties throughout North America. Less than one third of one percent of lodgings
receives the Five Diamond® Rating while approximately three and me half percent receives the Four Diamonds
Rating. Establishments must consistently reflect upscale and extraordinary characteristics (respectively) in both
physical attributes and level of guest services.
If the AAA inspector determines that your establishment meets our Four or Five Diamond Guidelines, the property vull
next be schaduied for an anonymous hospitality evaluation. Only the Four and Five Diamond evaluations incorporate
a review of tveive critical service areas and measure over 306 guest interaction pants into the overall rating. In
addition, all Five Diamond Rating recommendations are forwarded to AAA's Five Diamond Committee for further
review. Once the committEe'sassessment is concluded, the establishment will be advised in Mting of the outcome,
Four and Five Dianyond Service Expectations
IN ADDITION TO THE FOLLOWING GUEST SERVICE INTERACTION POINTS, each section is assessed a
subjective point value based onthe overall levels of competency, refinement, ant hospitality.
� ` Reservation Se'rvice�;
4D
X
Accepted 24 hours, either at property or through a central reservation system
X
Operator answers phone promptly within three rings
X
Operator provides a warm and sincere greeting
X
Reservabonistthanks caller for contacting the promfty
X
Reservabonist provides an introduction
X
Reservationist asks for callers name
Reservationist addresses caller by name prior to dosing
Reservatiomst anticipates callers mods or offers a personalized recommendation
X
Reservatlomst provides raze stmoture and room availability
H
Reservationist provides an overview of facilities and services
Reservabomst exhibits competent lmowledge of al associated fwilkies ant hours of operation
Reservatlomst collects registration information
%
Resen abomst "pains deposit and cancellation polices
Reservaionist explains unusual payment options
%
Reservationist reviews reservation request
Resmationist exhibits a sincere desire and compliance to all guest requests
X
Reservatbnlst provides con im action number or contact's name
Reservabomst is efficient yet unhurried and sensitive to the manner of the guest
E ,
%
Reservationist provides d wdm) ard sincere thank you to guest for calling
Operator addresses guest by name during closing
X
The guest feels well served
Property o ers low -up reservation iron i ation to guest in advance of arrival
—30—
11M66751 -0097
6271361,10 a09 03,14 -38-
2
Arrival Services .
{ _..40
Cars in queue are acknowledged . and directed as appropriate upon arrival
X
Uniformed attendant promptly opens the car door
•
Attendant provides a warm and sincere welcome greeting
•
Attendant makes a proper Introduction
X
Attendant Inquires about the guests name
Attendant uses guests name at least once prior to closing
X
Attend ant explains parking procedure
Viet parking is automatic
X
Attendant promptly unloads luggage
X
Attendant explains luggage handling procedure
X
Attendant provides direction to registration area
Attendant anticipates guests needs or offers a personalized recommendation
Attendant is efficient yet unhurried and sensitive to the manner of the guest
Attendant exhibits sincere desire and compliance to all guest requests
Attendant escorts guest to appropriate area
•
Attendant provides a warm and sincere closing
Attendant addresses guest by name during closing
•
The guest feels well served
Lobby greeters are available to escort guest to appropriate area
3.
6eckIn! Services
-: :.40
X
Attendant provides a warm and sincere greeting; recognizes guest appropriately
•
Attendant Inquires about guest's name
Attendant addresses guest by name during initial greeting without inquiry
Attendant uses guest's name at least once prior to closing
Staff associate acknowledges (with a warm and welcoming greeting) guests waiting in line
•
Registered guests are not asked for duplicate Information
X
Attendant confirms rate and type of room
X
Attendant provides room number discreetly
Attendant places all registration materials into the guest's hand
Attendant exhibits a sincere desire and compliance to all guest requests
Attendant anticipates guest's needs or offers a personalized recommendation
Attendant Is efficient yet unhurried and sensitive to the manner of the guest
?
X
Attendant arranges escort of guest and belongings ro room
Attendant provides introduction to escort
�,-
X
Attendant provides a warm and sincere closing
Attendant addresses guest try name during dosing
��. [
X
Tn¢ goes[ Feels well served
31 ...
62MOI MaNO3 14 -39-
x
s name at least once prior to
rovide information about fact
,itlative In providing Informat
guest's needs or offers a per
sincere desire and compliance
[age on luggage stand or In a
atures and functions of room
I ice bucket
yet unhurried and sensitive b
warm and sincere closing
Quest by name during closing
room
as:
3:..
guest
1120667i1 {0097
6271361.10,09.JI1 14 -40-
guest
6.
Fake -Up Call Services
4D
X
Some type of service Is available 240; Alarm clock or alternative method is used If there are no
hones in room
X
Service number is answered within three rings
X
Operator provides a warm and sincere greeting
Operator uses guest's name at least once prior to closing
X
Operator asks appropriate questions and replies In a professional manner
Operator anticipates guest's needs or offers a personalized recommendation
Operator is efficient yet unhurried and sensitive to the manner of the guest
X
Operator provides a warm and sincere closing
Operator addresses guest by name during closing
X
fall Is received within five minutes of requested time
X
Call Is an automated message
Call is a live message
X
Message Includes a warm and sincere greeting
Message includes the use of guest's name
Message includes time of call
Message includes other pertinent information, such as weather
Operator anticipates guest's needs or offers a personalized recommendation
Operator is efficient yet unhurried and sensitive to the manner of the guest
Operator provides a warm and sincere closing
Operator addresses guest by during closing
X
The guest feels well served
There is additional evidence of personalized services
7A,
Room Service (Order Services)
X
Service Is available at limited hours
Service is available 2417
X.
Service number is answered within three rings
X
Operator provides a warm and sincere greeting
-
Operate uses guest's some at least once prior to closing
Operator exhibits a sincere desire and compliance to all guest requests
Operator anticipates guest's needs or offers a personalized recommendabon
r.
X
Operator asks appropriate questions and replies in a professional manner
Operator repeats order to guest
Dperator is efficient yet unhurried and sensitive to the manner of the guest
�°
X
Operator provides time estimate for delivery(within 30 minutes)
X
Operator provides a warm and sincere closing
Operaor addresses guest by name during dosing
"'
X
Operator calls Co advise guest if order will be late or if Items ordered are not evaila6le
-33-
112 066151 -0097
6271361 10 009,0394 -41
_34_.
112 06051 -0097
6271361.10 a09:0314 -42-
X
The guest feels well served
X
Special express services are available for breakfast orders
Evdence of personalized services exists
7B.
Rnom Service (Delivery Services)
a
'¢D
HINIONTATMEAREAMENEFREM
•
Delivered within five minutes of time Promised
•
Morning newspaper Is presented with breakfast
•
Attendant provides a warm and sincere greeting
Attendant uses guest's name at least once prior to closing
Attendant exhibits a sincere desire and compliance to all guest requests
Attendant antictpows guests needs or provides a personalized recommendation
X
Attendant provides a suggestion as to tray /table placement
Attendant is conversant during setup and delivery
•
Attendant reviews guest order
i
•
Attendant prepares table set up and i amovas food covers, with guest permission
•
Food presentation and quality of ingredients reflects an upscale experience
•
All appropriate dishware and linens are of an upscale quality
•
Ali food is served at the proper temperature (hot food hot and cold food cold)
•
All food is prepared as ordered
There is additional evidence of personalized services
•
Attendant offers to pour beverage
X
Attendant provides written or verbal direcdon for table /tray removal
Attendant is efficient yet unhurried and sensitive te the manner of the guest
•
Attendant provides a warm and sincere closing
Attendant addresses guest by name during closing
•
The guest feels well served
X
Prompt (within 15 minutes) removal of trays /tables, upon request
B.
Bell Services (Check Out)
X
Service number is answered within three rings
X
Operator provides a warm and sincere greeting
Operator uses guest's name at least once prior to closing
Operator exhibits a sincere desire and compliance to all guest requests
Operator anticipates guest's needs or offers a personalized recommendaton
X
Operator offers to retrieve car or arrange other transportation
Operator Is efficient yet unhurried and sensibim to the manner of the guest
X
DDeYBGOr provides a warm and sincere closing
Operator addresses guest by name during closing
X
The guesC feels well served
X
Beil staff arrives promptly; if notwithin five minutes, guest is nodfied of delay at time of request
X
Bell staff provides a warm and sincere greeting
_34_.
112 06051 -0097
6271361.10 a09:0314 -42-
- 35-
I I1'066Z51 -(1497
527136110 09 ;W 14 -43-
lY.
Concierge Services
AM
40
•
Concierge is on duty with limited hours of availability
Concierge is an duty, or a °special services` number is available for guests, 24p
-£ •
Attendant provides a warm and sincere greeting
Attendant uses guest's name at least once prior to closing
Attendant exhibR6 a sincere desire and compliance to all guest requests
Attendant anticipates guest's needs or offers a personalized recommandabon
•
Attendant demonstrates a general knowledge of area attractions and services
Attendant demonstrates an extensive knowledge of area attractions and services
Attendant fulfills guest's special request(s)
Attendant is efficient yet unhurried and sensitive to the manner of the guest
•
Attendant provides a warm and sincere dosing
Attendant addresses guest by name during closing
•
The guest feels well served
12 ;
,' - `MisceUaneous Sfaff Services ,
e 4D
All associates exhibit a professional vocabulary that is devoid of common slang
Guests are graciously escorted te areas when directions are requested
All associates consistently maintain eye contact with guests
There Is evidence that all associates are empowered by management to resolve guest Issues
Immediately
X
NI staff associates fulfill guest's special request(s)
PlI phone calls are answered promptly within three rings
X
All associates are appropriately attired; name tags are clearly visible
.. X
Ali associates demonstrate appropriate behavior
X
Pli associates demonstrate appropriate hygiene
Short -notice pressing Is available
$hoe shine service Is available
X
Accurate pre-programmed phones
X
Miscellaneous charges are billed directly to the guest room
Butler services are available for all rooms
X
AC least one food and beverage outlet Is comparable to a Three Diamond rating
At least one food and beverage outlet is comparable to a frour Diamond rating
At least one food and beverage oudat Is comparable to a five Diamond rating
_gb_
11206675 I -0097
6271.161,10491V 14 -44-
The Listing
ONCE A PROPERTY IS APPROVED, AAA PUBLISHING ESTABLISHES THE CONTENT AND FORMAT OF EACH
LISTING IN ALL OF OUR PUBLICATIONS. The listing is provided at no cost So the establishment and does
not contain advertisirg or promotional verbiage provided by the operator,
The listing copy describing the lodging is based in part on objective information provided by the establishment, This
listing information is Updated annu4ly, and your esWishment will be contacted either in Person, by mail, or via the
telephone.
Failure to provide this information in a timely manner may result In the deletion of your establishment from our
publications,
Additionally,. AAA`s professionally tra ed inspectors enhance our inventory Nsth descriptive Prose for each
establishmant. This skilled degree of subjectivity enables us to capture the feel of an experience and pass along this
valuable information to AAA members.
Each Diamond Rated property has the opportunity to participate in the AAA Official Appointment Program, enticing the
establishment to use the renowned AAA (CAA in Canada) emblem and Diamond Rating in its advertising and
pronottons. This program also entitles the establishment to an enhanced listing in AAA' publications. Personalized
display advertising in AAA publications is also available.
FYI Designation `
This designation means that a property has not been Diamond Rated by a AAA inspector, but is of notable significance
and potential member value: The property is urnrated due to one of the following reasons:
. The property . is too new to rate.
. The property is under construction.
The property is undergoing extensive renovatlons.
The property has not been evaluated.
The property does not meet all Diamm it Racing +'eg+b`remen[s.
L SOS g S}
ALL DIAMOND RATED LODGINGS ARE CLASSIFIED USING KEY DESCRIPTIVE ELEMENTS,
FIRST, ALL LODGINGS ARE CLASSIFIED BY STYLE OF OPERATION:
Bed and Breakfast: Typically smalls scale properties emphasizing a high degree of personal touches that provide
guests an 'at homer. feeling. Guest units tend on be individually decorated. Rooms may not include some modern
amenities such as televisions and telephones, and may have a sham :bathroom. Usually owner - operated with a
common room or parlor separate from the innkeeper's living quarters, where guests and operators can interact during
evening and breakfast hours, Evening office dosures are normal. A continertai ar full, hot breakfast is served "is
included in the mom rate.
-37-
112,066751-au7
(,171361, 10 nm4l1)7 /14 -45-
Cabin: Vacation- oriented, typically smaller scale, freestanding units of simple construction — roughly finished logs or
stone -and basic design or decor. ' often located in wooded, rural, or waterfront locations. As a rule, basic leaning
supplies, kitchen utensils, and complete bed and bath linens are supplied. The guest registration area may be located
off site;'
Condominium: Vacation - oriented — commonly for ext ended -stay purposes— apartment -style accommodation of
varying design or decor. Routinely available for rent through a management company, units often contain one or
more bedrooms, a living room, full kitchen, and an eating area. Studio-type models combine the sleeping and living
areas into one room. As a rule, basic cleaning supplies, .kitchen utensils, arid complete bed and bath linens are
supplied. The guest registration area may be located off site.
Cottage: Vacation- oriented, typically smaller scale, freestanding units with home style enhancements in architectural
design. and Interior: decor. Often located in wooded, rural, or waterfront locati Units may vary in design and
decor. As a rule, basic cleaning supplies, kitchen utensils, and complete bed and bath linens are supplied. The guest
.registration area may be located off site.
Country inn: Although similar in definition to a bed and breakfast, country inns are usually larger an scale with
spacious public areas and offer a pining facility that serves —at a minimum - breakfast and dinner.
SECOND, A DETERMINATION IS MADE PERTAINING TO OVERALL CONCEPT — AND (IF
APPLICABLE), .A LODGING MAY BE FURTHER DEFINED AS:
Boutiaua: Feeling small and intimate, offering a highly individualized experience; may have a luxurious or quirky
;style which is fashionable or unique.
Castro: Extensive gambling facilities are available, such as: blackjack, . craps, keno, and slot machines,
classic: Renowned and landmark properties, older than Sg years, well known for their unique style and ambiance.
Contemporary; Overall design and theme reflects characteristics of the present era's mainstream tastes and style.
Trendy, modern, and typically equipped with all current technology.
Extended Stii Offers a predominance of long -term accommodations . with a designated full - service . kitchen area or
efficiency within each unit.
Historic: These properties are typically over 75 years of age and exhibit many features of a historic nature with
respect to architecture, design, furnishings, public record, or acclaim. Properties must meet one of the following
criteria:
• Maintained the Integrity of the historical nature
• Listed on the National Register of Historic Places
• National Historic Landmark gr located In a National Register Historic District
_3g_.
112:066751 -0097
071361.10 n09r03 /Id -46-
esraccommooanors;
rail design and theme reflects a contemporary design reinterpreting styles from a bygone era.
entail Typically houses, condos, cottages or Cabins; these propertes are a'home away from home'
off -site lacatim. Housekeeping services may be limited or not induced during slap.
yinl l . Offers a Window to the past ad provides an experience reflecting a predominance of traits associated with
the we of their origin.
Accessibility
Accessible Features: This property has some accessible features. R may be fully accessible, semi -
accessible, or meet some of the needs of hearing impaired individuals.
AccesslbtBty is not a requirement for fisting and WIN not affect yourDfamond Rating. However, we strum y encouraoe
you to make g en 8ff= to meet the needs of &U your guests - including the mature traveler and those with
disabltides.
Me , "Wief Ck. m- `s`en't ski cedur s
AAA CLOSELY MONITORS THE NUMBER AND TYPE OF COMMENTS WE RECEIVE FROM MEMBERS
REGARDING ALL APPROVED PROPERTIES. When members write to us expressing dissatisfaction with a particular
lodging, it is tracked through the AAA National Office Member Relations department. All complaints are carefully
reviewed for validity. The establishment is then rwbfied of each complaint so they have an opporoanity to respond
and resolve the matter within a reasonable period of time, Even though a compWrk may be satisfactorily resolved,
the complaint becomes a permanent part of the estabiishmeWs record.
If a member complain is determined to be of an extreme nature, an establishment may be disapproved immediately
and without wanting. This action is at AAA's sole discretion.
if a property has been disapproved for excessive member complaints, a wrban request for a reevaluation may be
submitted, accompanied by an explanation of the adions taken to limit future complaints.
Noce: Such properties may not reapply until one year has passed from the date of disapproval. All requests
may be addressed to:
AAA Tourism Information Development
1000 AAA Drive
Mail Stop SS
Heathrow, FL 32746-5063
-39-
112;066751 0097
6271361 10 n09/03 14 -47-
f h AAA Appeals Process
THE APPEALS PROCESS WAS ESTABLISHED AS A RESOURCE FOR ALL RESTAURANTS, LODGINGS,
CAMPGROUNDS, AND ATTRACTIONS EVALUATED BY AAA.
What can I appeal?
We value our relationship Wth all properties; therefore, properties can appeal any acct of their status with AAA
Each stuaticn is keptconfidendal and is handed on an individual bass.
Now do I file an appeal?
First, contact the AAA Customer Service Center, Monday through Friday, from 8:30am to S: iSpm (Eastern Time) at
407 -444 -8370. In many cases, our analysts Will be able to ansvver your concern immediately.
If resolution lariat obtained, your call Wil be directed to the AAA Regional Manager for your area.
if an issue remains onresolved after the above steps, an establishment is asked to state its concerns in writing for
review by the AAA Appeals Committee. All appeals eMertaned by the committee must be in svitirg from the
ncrnniisbmenf nnly. In order to expedite this process, appeals should outline the specific concerns in a succinct
manner. Each appeal is thoroughly researched and given thoughtful consideration and a substantive reply.
All appeals should be sent to the attention of
AAA Appeals Commtttoo
1000 AAA Drive
Mail Stop 51
Heathrow, FL 32746 -5063
Please note: The committee's decision on your appeal will be considered as AAA's final decision. you WWI be
notified by mail asto the status of your appeal within 45 days of receipt of your written statement .
AAA SUPPORTS ENVIRONMENTAL MANAGEMENT AND SUSTAINABtUTY THROUGHOUT THE
HOSPITALITY INDUSTRY TO THE EXTENT THAT TRULY EFFECTIVE PROGRAMS MAINTAIN QUALITY
STANDARDS OF GUEST COMFORT. We strongly encourage continued use of programs that offer
guests choices without corsequences for noncompliance. Effective green programs are intended to
reduce waste without reducing guest comfort
-40-
112;066751 -6047
6271361.10 n0405 14 -48-
Addresses and Phone Hur srer
If you have additional questions...
► Pease cal AAA at:
(407) 444-8370
Evaluation Applications, Operations, Rating and Listing Information
(407) 444 -8280
Display Advertising & official Appointments
P� Visit us at www A.AA.biz /Approved
r Or, write to us at:
AAA
Tourism Information Development'z
Mail Stop 51
1000 AAA Drive
Heathrow, FL 32746 -5063
Establishments located in Southern California should contact the following
AAA club:
Automobile Club of Souther California
- P.O. Box 25001
Santa Ana, CA 92799 -5001
(714) 885 -2247, option #2
Evaluations, Ratings, and Official Appointments.
(714) 885 -2410
TourBookAdvertisirg
_41_
112066751 -0097
627196]A 0 n091)1 14 -49-
STATE OF CALIFORNIA }
COUNTY OF ORANGE } ss.
CITY OF NEWPORT BEACH }
I, Leilani I. Brown, City Clerk of the City of Newport Beach, California, do hereby certify that the
whole number of members of the City Council is seven; that the foregoing resolution, being Resolution
No. 2014 -83 was duly and regularly introduced before and adopted by the City Council of said City at a
regular meeting of said Council, duly and regularly held on the gch day of September, 2014, and that the
same was so passed and adopted by the following vote, to wit:
Ayes: Council Member Gardner, Council Member Petros, Council Member Curry,
Council Member Daigle, Mayor Pro Tern Selich, Mayor Hill
Nays: None
Recused: Council Member Henn
IN WITNESS WHEREOF, I have hereunto subscribed my name and affixed the official seal of
said City this 10th day of September, 2014.
W, N� C
City Clerk
Newport Beach, California
(Seal)
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