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HomeMy WebLinkAbout20 - Lease Agreement with Lighthouse CafeCITY OF NEWPORT BEACH - City Council Staff Report March 24, 2015 Agenda Item No. 20 TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL FROM: Kimberly Brandt, Community Development Director — (949) 644 -3226, kbrandt@newportbeachca.gov PREPARED BY: Lauren Whitlinger, Real Property Administrator /Seimone Jurjis, PE, CBO, Chief Building Official PHONE: (949) 644 -3236 TITLE: Lease Agreement between the City of Newport Beach and Lighthouse Cafe, LLC, Authorizing the Lease of Restaurant Space at the Marina Park Project Located at 1600 West Balboa Boulevard ABSTRACT: In February 2014, staff issued a request for proposals (RFP) for a restaurant or concession operator at the new Marina Park, and five proposals were received. After a thorough review and selection process, staff is recommending approval of a lease agreement with Lighthouse Cafe, LLC to operate "Lighthouse Cafe" at Marina Park. RECOMMENDATION: a) Find that the execution of the Lease Agreement is not subject to the California Environmental Quality Act (CEQA) pursuant to Sections 15060(c)(2) and 15060(c)(3) of the CEQA Guidelines; and b) Approve and authorize the Mayor and City Clerk to execute a 15 -year lease agreement with Lighthouse Cafe, LLC. (Staff Report Attachment CC 1) FUNDING REQUIREMENTS: The restaurant will bring in a base rent of $80,000 in Year One with the possibility of additional revenue through a mechanism of percentage of gross sales stipulated in the lease agreement. Revenue for the restaurant will be deposited to the Tidelands Fund (account 2370 - 5458), and catering revenue will also be deposited to the Tidelands Fund (account 2370- 545A). DISCUSSION: Background The City's Marina Park project (Attachment CC 2) includes a restaurant space of approximately 3,069 square feet. The two -story restaurant, located in the sailing center building adjacent to the marina, has a first -floor kitchen, dry storage area, indoor dining room, and exterior patio dining area, as well as a second - 20-1 floor exterior patio dining area (Attachment CC 3). Request for Proposals In February 2014, the City published RFP No. 14 -31 soliciting proposals for an operator for the restaurant or concession space. The City received proposals from the following: 24 Carrots, BlueWater Grill (operating as High Spot Kitchen), Perry's Pizza, Surfer Joe's, and Ruby's Diner (operating as Lighthouse Cafe). Selection Process Staff members from the City Manager's Office, Finance Department, Community Development Department, Recreation & Senior Services Department, and Public Works Department evaluated each of the proposals through a multi -step process. First, the panel members individually reviewed and evaluated each proposal based on an established set of technical criteria. Then, the panel interviewed representatives from each of the proposing firms. During the interviews the proposers were asked to discuss their experience, the proposed operations, theme, and design of the restaurant space, proposed menu offerings, the deal points, and their administrative structure. The panelists submitted separate scores for each proposal, based upon the interviews and established criteria; Lighthouse Cafe received the highest score with BlueWater Grill receiving the second highest score. The panelists unanimously supported Lighthouse Cafe (Attachment CC 4) as the tenant that would be the best fit at Marina Park. City Council Policy F -7, Income Property Pursuant to City Council Policy F -7, Income Property (Attachment CC 5), the City conducted an open bid process to select a tenant to operate the restaurant space. A review of recent appraisals, recent City approved concession agreements, and comparable market data for similar restaurant facilities was conducted to determine the fair market value rent for the Agreement. Proposed Agreement The proposed terms of the Lease Agreement are summarized below: 1. The term of the agreement will be for 15 years with two five -year extension options, unless terminated as provided by the agreement. 2. The greater of base rent or percentage rent of gross sales shall be charged each month. Base rent shall be set at $80,000 per year. Starting in Year Four of the lease, base rent shall adjust annually by the increase in the cost of living pursuant to the Consumer Price Index (CPI); increases shall not exceed four percent per year. 3. Percentage rent of gross sales from the restaurant space shall be charged each year during the term, including the option terms, as following: 6% of gross revenues from $0 to $1,500,000 7% of gross revenues from $1,500,001 to $2,500,000 8% of gross revenues from $2,500,001 and above 4. Percentage rent of gross sales for catering of alcoholic beverages at Marina Park shall be charged each year during the term, including the option terms, at 15% of gross revenues. 5. Tenant shall be the exclusive alcoholic beverage provider for all catered events held at Marina Park, pursuant to California Department of Alcoholic Beverage Control licensing requirements. Conditions related to the tenant's alcohol license have been provided by Newport Beach Police Department. (Please Note: The tenant does not have an exclusive right to provide food catering at Marina Park. A list of qualified caterers will be developed by the Recreation & Senior Services Department for food catering for events held in the Community Center rooms and other non - restaurant spaces at Marina Park.) 20 -2 6. Hours of operation shall be daily between 7:00 a.m. and 9:00 p.m., but no later than 11:00 p.m., with two closure days per year. 7. City shall provide tenant a total of four Marina Park parking permits annually for use of the Marina Park parking lot by tenant employees. 8. Tenant is responsible for all interior non - structural improvements to the lease premises, including build -out of the kitchen, storage area, installation of fixtures, furniture, and equipment in the interior and exterior, first and second -floor dining areas in order to operate the restaurant, subject to City review and approval of all plans, and approval of all necessary permits and approvals. 9. Tenant shall comply with all prevailing wage requirements for construction of the tenant improvements, subject to the Labor Code of the State of California. 10. Tenant shall obtain all necessary permits and approvals no later than August 1, 2015, and will have a 105 -day construction period, commencing upon delivery of the restaurant shell space from City, and shall be ready to open for business no later than December 5, 2015. 11. Tenant shall be subject to liquidated damages in the amount of $400 per day for each calendar day the tenant is not open for business past the date of the City's opening of Marina Park. 12. Tenant shall provide a Faithful Performance Bond and a Labor and Materials Payment Bond for 100% of the total amount to be paid to the tenant's contractor, and shall be used by the City to complete any incomplete tenant improvements in the restaurant in order to obtain a certificate of occupancy for Marina Park. 13. Tenant is responsible for operation and maintenance and repair of the lease premises, at its sole cost and without expense to the City. 14. Insurance and Indemnity provisions are consistent with current standards; all other lease terms are consistent with the City's standard terms. This agreement has been reviewed by the City Attorney's office and has been approved as to form. Contract Summary Proposed Vendor Name Lighthouse Cafe, LLC Term 15 Years, two 5 -Year options Escalation Clause CPI @ Year 4 Revenue /Year $50,000 Cost /Year $0 Cost /Contract Term (est) Selection Process Sole Source or RFP /RFQ? $0 RFP Method (QBS v Low Bid) QBS # of Respondents 5 # of Qualified Respondents 5 ENVIRONMENTAL REVIEW: 20 -3 The recommended action is not subject to the California Environmental Quality Act ( "CEQA ") pursuant to Sections 15060(c)(2) (the activity will not result in a direct or reasonably foreseeable indirect physical change in the environment) and 15060(c)(3) (the activity is not a project as defined in Section 15378) of the CEQA Guidelines, California Code of Regulations, Title 14, Chapter 3, because it has no potential for resulting in physical change to the environment, directly or indirectly. NOTICING: The agenda item has been noticed according to the Brown Act (72 hours in advance of the meeting at which the City Council considers the item). ATTACHMENTS: Description Attachment CC 1 - Proposed Lease Agreement Attachment CC 2 - Maps Attachment CC 3 - Lighhouse Cafe Draft Attachment CC 4 - Lighthouse Cafe Proposal Attachment CC 5 - Council Policy F -7 20 -4 ATTACHMENT CC 1 MARINA PARK LEASE AGREEMENT BETWEEN THE CITY OF NEWPORT BEACH AND LIGHTHOUSE CAFE, LLC This Marina Park Lease Agreement ( "Agreement ") is made and entered into as of the day of 2015 ( "Effective Date "), by and between the City of Newport Beach, a California municipal corporation and charter city ( "City "), and Lighthouse Cafe, LLC, a California limited liability company ( "Tenant "). RECITALS A. City, by virtue of a 1978 legislative grant found in Chapter 74 of the Statutes of 1978, as amended ( "Beacon Bay Bill "), acts on behalf of the State of California as the trustee of tidelands located within the City's limits. B. In 2012, the California Legislature amended the Beacon Bay Bill via State Senate Bill No. 1577 to include certain lands located in lower Newport Harbor between 15th Street and 18th Street on the Balboa Peninsula, commonly referred to as "Marina Park." C. On November 3, 1992, a majority of the electors in the City approved Measure M authorizing the City Council to lease tidelands and waterfront property consistent with the provisions of state law. D. The Beacon Bay Bill authorizes the City to lease tidelands for a period not exceeding fifty (50) years. E. At buildout, Marina Park ( "Property "), will include a public marina, public park with restrooms, public parking lot, a community center with offices, a sailing center, and a restaurant, as depicted on Exhibit "A" and incorporated herein by this reference. The Property includes an approximately three thousand sixty -nine (3,069) square foot restaurant facility ( "Premises "), consisting of a first floor kitchen, dry storage area, indoor dining room, exterior patio area, and a second floor exterior patio deck hall, located within the sailing center building, which are also depicted on Exhibit "A ". F. Pursuant to City Council Policy F -7, the City conducted an open bid process and issued a Request for Proposals (No. 14 -31) for Marina Park Project Restaurant /Cafe Space Operation on February 11, 2014. After a careful evaluation process, the City selected Tenant to operate the food service business at the Premises. G. Pursuant to City Council Policy F -7, City conducted a review of recent appraisals for similar restaurant facilities; recent City approved concession agreements, and comparable spaces on the market for rent or lease to determine the fair market value rent for the Premises. `x01.7 H. Tenant and City desire to enter into this Agreement to allow Tenant to operate a food service business at the Premises intended to provide food, drink, alcohol catering, and non - exclusive food catering services to the Property's tenants, visitors, staff and the general public ( "Concession "). AGREEMENT NOW, THEREFORE, in consideration of the mutual covenants herein contained, City and Tenant hereby agree as follows: 1. DEFINITIONS 1.1 General Definitions. As used in this Agreement, the following words and phrases shall have the following meanings: A. Alteration — any improvements, additions, alterations, changes, or modifications of the Premises made by Tenant, its employees, agents, and contractors including, but not limited to, fixtures and signage. B. Authorized City Representative — the City Manager or his /her designee C. Common Area — the areas within the Property which are available for non - exclusive use by City, Tenant, the public, and other tenants and /or users. D. Delivery Date — the date the City provides Tenant access to the Premises prior to Rent Commencement, in order for Tenant to prepare the Premises for operation. E. Expiration — the lapse of the time specified as the Term of this Agreement, including any extension of the Term resulting from the exercise of an option to extend. F. Good Condition — neat and broom -clean and in substantially the same condition as of the Effective Date (reasonable wear and tear excepted), and is equivalent to similar phrases referring to physical adequacy in appearance and for use. G. Law — any judicial decision, statute, constitution, ordinance, resolution, regulation, rule, administrative order, or other requirement of any municipal, county, state, federal, or other government agency or authority having jurisdiction over the parties hereto or the Premises. H. Maintenance or Maintain — repairs, replacement, maintenance, repainting, and cleaning. Lighthouse Cafe, LLC Page 2 PION1 L Person — one (1) or more natural persons, or legal entities, including, without limitation, partnerships, corporations, trusts, estates, associations, or a combination of natural persons and legal entities. J. Provision — any term, covenant, condition, or clause in this Agreement that defines, establishes, or limits the performance required or permitted by either party. K. Rent — includes Base Rent, Percentage Rent, taxes, and other similar charges payable by Tenant under the provisions of this Agreement. L. Rent Commencement — the date Tenant begins paying Base Rent. M. Rent Commencement Date - the earlier of (i) the first day of operation of the Concession from the Premises, or (ii) one - hundred five (105) calendar days after the Delivery Date. N. Successor — assignee, transferee, personal representative, heir, or other Person succeeding lawfully, and pursuant to the provisions of this Agreement, to the rights or obligations of either party. O. Termination — the termination of this Agreement, for any reason, prior to Expiration. 1.2 Other Definitions. — The following additional terms are defined in the following sections of this Agreement: A. Base Rent §4.1.1 B. Claim or Claims § 11.1 C. Concession Recitals, §H D. Gross Sales §4.4.1 E. Hazardous Materials §17 F. Indemnified Parties §6.3 and §11.1 G. Option Term(s) §3.2 H. Percentage Rent §4.1.3 I. Property Recitals, §E J. Premises Recitals, §E K. Term §3.1 Lighthouse Cafe, LLC Page 3 PRIVA 2. PREMISES 2.1 City finds it to be in the public interest and consistent with public facility uses to grant an exclusive right to operate a Concession at the Property. Therefore, pursuant to the terms and conditions set forth herein, City hereby grants to Tenant the exclusive right, privilege and concession to conduct a business at the Premises engaged in selling such items as those described in Section 5.1, Business Purposes. Tenant acknowledges, however, that Tenant's use of the first floor patio area shall be on a non - exclusive basis, pursuant to Section 5.5. Tenant agrees to accept the Premises with the improvements shown on Exhibit "E" having been completed by City, but otherwise in an "as is" condition. Tenant agrees that no representations with respect to the condition or improvements of the Premises have been made by City except as specifically set forth in this Agreement. Tenant expressly accepts the Premises in such condition and acknowledges that City has made no representations or warranties as to the suitability of the Premises or any construction or improvement. Tenant shall conduct all tests necessary to determine the suitability of the Premises for any proposed construction or improvement, including, without limitation, the amount and extent of any fill, and related factors. Tenant expressly acknowledges that City shall not be liable for any damage or loss resulting from any subsurface or soil condition in, on, or under the Premises or adjacent property. Tenant expressly acknowledges that the legislature of the State of California has placed public trust restrictions on use of the Premises pursuant to the Beacon Bay Bill as the Premises constitute filled tidelands. City has made no representation or warranty relative to the validity of the Beacon Bay Bill or the power of the legislature of the State of California to remove public trust restrictions on tidelands through legislation. 2.2 Tidelands Grant. The Premises are located on land that is the subject of a tidelands grant from the State of California to the City as trustee. Tenant shall not take any action that would cause the City to be in violation of any provisions of the Beacon Bay Bill. If the State of California terminates, or modifies the Beacon Bay Bill to prohibit the uses contemplated under this Agreement, this Agreement shall terminate as a result and the parties shall be released from all liabilities and obligations under this Agreement and City shall owe no compensation to Tenant. 3. TERM 3.1 Term of Agreement. The Initial Term of this Agreement shall be fifteen (15) years from the Effective Date unless terminated sooner as provided in Section 15 or extended as provided in Section 3.2. 3.2 Option to Extend. Provided Tenant is not then in default beyond applicable notice and cure periods, upon Tenant's request, and upon approval of the City, Tenant may extend the term of this Agreement for two (2) additional successive terms of five (5) years (the "Option Term" or "Option Terms ") commencing on Expiration of the Initial Term or an Option Term, on the same terms and conditions as contained in this Agreement as it may be amended. Tenant must exercise each option by giving City Lighthouse Cafe, LLC Page 4 NOW written notice of its intention to extend the Term at least six (6) months prior to Expiration of the Initial Term or the Expiration of the first Option Term, as the case may be. 3.3 Hold Over. Should Tenant, with City's consent, hold over and continue in possession of the Premises after Expiration of the Term or any Option Term, Tenant's continued occupancy of the Premises shall be considered a month -to -month tenancy subject to all the terms and conditions of this Agreement, except the provisions of Sections 3.1 and 3.2. 4. RENT 4.1 Restaurant Facility. Tenant shall pay the greater of Base Rent or Percentage Rent. 4.1.1 Base Rent. Tenant shall commence payment of Base Rent upon the Rent Commencement Date. Tenant shall open the Premises for operation of its Concession business concurrently with the City's opening of the entirety of the Property for business. After the Rent Commencement Date, if Tenant does not open the Premises for operation of its Concession business concurrently with the City's opening of the Property, Tenant shall pay liquidated damages in the amount of $400.00 to City for each calendar day Tenant is not open for business past the date of the City's opening of the Property (e.g.: grand opening, ribbon cutting, dedication ceremony). The Base Rent shall be established at Eighty Thousand Dollars and 00/100 Cents ($80,000.00) per year. Base Rent shall be paid, in advance, in equal monthly installments on the first day of each month (e.g., Six Thousand Six Hundred Sixty -Six Dollars and 67/100 Cents ($6,666.67) per month). Base Rent for any partial month shall be prorated in accordance with the actual number of days in that month and shall be due on the first day of that month that falls within the Term. 4.1.2 Rent Adjustments. Rent shall not be adjusted during the first three (3) Lease Years (the term "Lease Year" as used herein refers to successive twelve (12) month periods, commencing with the Rent Commencement Date of this Agreement). Rent may be adjusted on the 1St day of each Lease Year after the third Lease Year to reflect increases in the cost of living as indicated by the Consumer Price Index described below. Rent may be adjusted if the Consumer Price Index for the Los Angeles — Orange County - Riverside Area, All Urban Consumers, All Items ( "Index "), as published by the United States Department of Labor, Bureau of Labor Statistics ( "Bureau "), increases over the Base Period Index. The initial "Base Lighthouse Caf6, LLC Page 5 P1001 Period Index" shall be the Index for the calendar month which is four (4) months prior to the month of the Rent Commencement Date's annual anniversary. The initial Base Period Index shall be compared with the Index for the same calendar month for each subsequent Lease Year ( "Comparison Index "). The Comparison Index used for a given year's adjustment calculation will become the Base Period Index for purposes of the next annual Rent adjustment calculation. If the Comparison Index is higher than the Base Period Index, then Rent for the next Lease Year shall be increased by the amount of such percentage change, subject to a maximum increase of four percent (4 %) for the adjustments made in Lease Years four through fifteen (4 -15), adjustments after year fifteen (15) of the Agreement not subject to maximum increase cap. Should the Bureau discontinue the publication of the above Index, or publish same less frequently, or alter same in some other manner, then the parties shall adopt a substitute Index or substitute procedure which reasonably reflects and monitors consumer prices. 4.1.3 Percentage Rent. "Percentage Rent" shall be determined each calendar month and shall be calculated by multiplying the percentage, as indicated by the table below, by the total Gross Sales (as defined in Section 4.4.1) made in, upon, or from the Premises and /or otherwise attributable to catering from the Premises for the calendar month. For each month that Percentage Rent exceeds Base Rent, Tenant shall pay to City the Percentage Rent less the Base Rent paid to the City for that month. Percentage Rent of Gross Sales Percentage Rent from catering from (on -site) Premises sales: authorized under Section 5.6 All Years, including Option Terms: All Years, including Option Terms: Gross Revenues of $0 to 15% of Gross Sales for alcoholic $1,500,000 — 6% beverage sales. Gross Revenues of $1,500,001 to $2,500,000 — 7% Gross Revenues of $2,500,001 or above — 8% Lighthouse Cafe, LLC Page 6 f'I/b[/7 4.1.4 Accounting and Payment. Within twenty -five (25) calendar days after the end of each calendar month for the term hereof, as may be extended as provided herein, commencing with the twenty - fifth (25th) day of the month following the Rent Commencement Date, and ending with the twenty -fifth (25th) day of the month next succeeding the last month of the term, as may be extended as provided herein, Tenant shall furnish to City a statement in writing, certified by Tenant to be correct, showing the total Gross Sales made in, upon, or from and /or otherwise attributable to the Premises or any catering during the preceding calendar month (or fractional month at the beginning of the term if the Rent Commencement Date is other than the first day of a month). The Percentage Rent payment to City, less the Base Rent already paid to the City for that month, shall be due and payable with the next installment of Base Rent (for example, the Percentage Rent statement for the month of January is due on February 25th, and the Percentage. Rent payment for the month of January is due on March 15f) 4.2 Revenue from Premises Use in Film. Television, and /or Advertising. Tenant may allow the Premises to be used for commercial film, television production, advertising production, or other commercial media vehicle only upon written approval from the City, which approval shall not be unreasonably withheld, conditioned or delayed, and in compliance with the Newport Beach Municipal Code. Fifty percent (50 %) of all monetary revenue received by Tenant as compensation or other payment for the use of the Premises in a film, television production, advertising production, or other commercial media vehicle shall be paid to City. The payment of revenue pursuant to this Section shall occur not less than thirty (30) calendar days after Tenant receives this compensation or other payment. 4.3 Payment Location. All payments of Rent shall be made in lawful money of the United States of America and shall be paid to City in person or by United States' mail, or overnight mail service, at the Cashier's Office located at 100 Civic Center Drive, P.O. Box 1768, Newport Beach, California, 92658, or to such other address as City may from time to time designate in writing to Tenant. If requested by City, Tenant shall make payments electronically (at www.newportbeachca.gov) or by wire transfer (at Tenant's cost). Tenant assumes all risk of loss and responsibility for late charges and delinquency rates if payments are not timely received by City regardless of the method of transmittal. 4.4 Gross Sales. 4.4.1 The term "Gross Sales" means all money, cash receipts, assets, property or other things of value, including but not limited to gross charges, sales, rentals, fees and commissions made or earned by Tenant and /or any assignees, licensees, permittees or Tenants thereof, whether collected or accrued from any business, use or Lighthouse Cafe, LLC Page 7 20 -11 occupation, or any combination thereof, originating, transacted or performed in whole or in part, on the Premises, including but not limited to rentals, the rendering or supplying of services and the sale of goods, wares or merchandise, whether wholesale or retail, whether for cash or credit, or otherwise, and including the value of all consideration other than money received for any of the foregoing, without, except as expressly provided in Section 4.4.2, deduction from gross receipts for any overhead or cost or expense of operations, such as, but without limitation to salaries, wages, costs of goods, interest, debt amortization, credit, collection costs, discount from credit card operations, insurance and taxes. Each installment or credit sale shall be treated as a sale for the full price in the month during which such sale is made, irrespective of whether or when Tenant receives payment therefore. Gross Sales shall include any amount allowed upon any "trade in," the full retail price of any merchandise delivered or redeemed for trading stamps or coupons and all deposits not refunded to purchasers; 4.4.1.1 Orders taken by Tenant in or from the Premises, even if the orders are filled elsewhere, and sales by any sub - Tenant in or from the Premises; 4.4.1.2 Gross receipts of all coin - operated devices that are placed on the Premises by Tenant or pursuant to any rent concession, percentage or other arrangement (but excluding revenue from telephones that are collected by a public and /or private utility); and 4.4.1.3 Rentals of any equipment, furniture, goods, wares or merchandise. 4.4.2 Exclusions from Gross Sales. Gross Sales shall not include, or if included here shall be deducted (but only to the extent they have been included), the following: 4.4.2.1 Sales and use taxes, so- called luxury taxes, consumers' excise taxes, gross receipts taxes, and other similar taxes now or in the future imposed on the sale of merchandise or services, but only if such taxes are added to the selling price and collected from customers, and separately stated on customer sales check or invoices; 4.4.2.2 The amount of returns to shippers or manufacturers; 4.4.2.3 The amount of any cash or credit refund made upon any sale where the merchandise sold or some portion is Lighthouse Cafe, LLC Page 8 rzOaDa returned by the purchaser. Each sale upon installment or credit shall be treated as a sale for the full price in the month during which such sale shall be made, irrespective of the time when Tenant shall receive payment (whether in full or partial) from its customers; 4.4.2.4 Sales of trade fixtures or personal property to be replaced by Tenant that are not considered stock in trade; 4.4.2.5 Sums and credits received in the settlement of claims for loss of or damage to merchandise; 4.4.2.6 Meals provided for officers or employees without charge; 4.4.2.7 Meals, goods or products provided for promotional or publicity purposes without charge; 4.4.2.8 Cash refunds made to customers in the ordinary course of business; 4.4.2.9 Value added taxes ( "VAT') or other taxes added to the selling price of products and other similar taxes now or hereafter imposed upon the sale of merchandise or services, whether such taxes are added to, or included in the selling price; 4.4.2.10 Discounted sales to employees of Tenant, not to exceed two percent (2 %) of the monthly Gross Sales; 4.4.2.11 Uncollectible credit accounts and other bad debts, not to exceed two percent (2 %) of the monthly Gross Sales; and 4.4.2.12 Amounts paid to charge card or credit card issuers. 4.4.3 Annual Statements of Gross Sales. Within thirty (30) calendar days after the end of each calendar year during the Term hereof, as may be extended as provided herein, Tenant shall furnish to City a statement in writing, certified by Tenant and a Certified Public Accountant to be correct, showing the total Gross Sales made in, upon, or from and /or otherwise attributable to the Premises during the preceding calendar year (or fractional year at the beginning of the term if the Effective Date is other than the first day of the year). 4.4.4 Sales and Charges. All sales and charges shall be recorded by means of cash registers that display the amount of the transaction certifying the amount recorded. The register shall be equipped with Lighthouse Cafe, LLC Page 9 rzOare3 devices that log in daily sales totals, and record on tapes the transaction numbers and sales details, including a separate line item for daily sales tax. At the end of each day the tape will record the total sales for that day. 4.4.5 Production of Statement, Records and Audit. Tenant shall keep at the Premises (and shall require any permitted subtenant to keep at the Premises) full, complete and proper books, records and accounts of its daily Gross Sales, both for cash and on credit, at any time operated in the Premises. Tenant agrees to make available for inspection by City at the Premises, a complete and accurate set of books and records of all sales of goods, wares, and merchandise and revenue derived from the conduct of business or activity in, at or from the Premises from which Gross Sales can be determined. Tenant shall also make available, upon City's written request, all supporting records. Tenant shall also furnish City copies of its quarterly California sales and use tax returns filed with the State of California. Tenant shall retain and preserve for at least three (3) years all records, books, bankbooks or duplicate deposit books and other evidence of Gross Sales. City shall have the right, not more than once each calendar year, upon reasonable notice, during the Term and within one hundred eighty (180) calendar days after expiration or Termination of this Agreement to inspect and complete an audit of Tenant's books and records and to make transcripts to verify the Rent due to the City. The audit may be conducted at any reasonable time during normal business hours. Tenant shall cooperate with City in making the inspection and conducting the audit. The audit shall be limited to the determination of Gross Sales and shall be conducted during usual business hours in a manner that minimizes any interference with the conduct of Tenant's regular business operations. If the audit concludes that there is a deficiency in the payment of any Rent, the deficiency shall become due and payable within twenty (20) calendar days and if there is an overpayment, City shall refund the amount of the overpayment within twenty (20) calendar days. City shall bear its costs of the audit unless the audit shows that Tenant understated Gross Sales by more than two percent (2 %), in which case Tenant shall pay all City's reasonable costs of the audit. City shall not disclose financial information received in confidence and pursuant to this Agreement except to carry out the purposes of this Agreement unless disclosure is required by law or court order. However, City may disclose the results of any audit in connection with any financing arrangements, pursuant to applicable law, the sale or transfer of City's interest in the Premises, pursuant to order of a court or administrative tribunal, or to collect any outstanding Rent. Lighthouse Cafe, LLC Page 10 f'I/b[! 4.4.6 Tenant's Gross Sales Audit. In the event of any audit by City in accordance with this Agreement, Tenant may contest the results of City's audit by performing a confirming audit, at Tenant's expense, within sixty (60) calendar days of receipt of City's audit results and supporting evidence, using an independent Certified Public Accountant reasonably acceptable to City. 4.4.7 Acceptance. The acceptance by City of any money paid to City by Tenant as Percentage Rent for the Premises, as shown by any statement furnished by Tenant, shall not be construed as an admission of the accuracy of said statement, or of the sufficiency of the amount of the Percentage Rent payment. 4.5 Late Payment. Tenant hereby acknowledges that the late payment of Rent or other sums due hereunder will cause City to incur costs not contemplated by this Agreement, the exact amount of which is extremely difficult to ascertain. Such costs include, but are not limited to, processing and accounting charges. Accordingly, any payment of any sum to be paid by Tenant not paid within five (5) calendar days of its due date shall be subject to a ten percent (10 %) late charge. City and Tenant agree that this late charge represents a reasonable estimate of such costs and expenses and is fair compensation to City for its loss suffered by such late payment by Tenant. 4.6 Interest on Unpaid Sums. Unpaid sums due to either City or Tenant under this Agreement shall bear interest at the rate of ten percent (10 %) per annum on the unpaid balance, including but not limited to late payment penalties, from the date due until paid. 4.7 Additional Rent. Any provision in this Agreement that requires Tenant to pay additional amounts classified as "Additional Rent" shall be paid within ten (10) calendar days of City's written demand therefore (unless a different time for payment is expressly provided in this Agreement). Additional Rent does not reduce or offset Tenant's obligations to pay Rent. 5. BUSINESS PURPOSES AND USE OF PREMISES 5.1 Business Purposes. The Premises are to be used by Tenant for the operation of a Concession. Alcoholic beverages may be sold /provided by Tenant in accordance with the necessary permits and licenses, subject to the conditions included on Exhibit "B" and incorporated herein by this reference. The Tenant shall be responsible for obtaining all required permits and licenses for the provision of alcoholic beverages, including, but not limited to, Alcoholic Beverage Control license(s). Alcoholic beverages may be sold /provided by Tenant at catered events held at the Property with the prior written consent of the Authorized City Representative. The Tenant shall be responsible for obtaining all required permits and licenses for the provision of alcoholic beverages, including, but not limited to, Alcoholic Beverage Control license(s). Lighthouse Cafe, LLC Page 11 K182W 5.2 Operation of Premises. Tenant shall operate and manage the Premises in a manner comparable to other high quality businesses providing similar food and services. Deliveries shall be made and completed only between 7:00 a.m, and 6:00 p.m. on non - holiday weekdays. The loading zone designated for use by Tenant for deliveries, as shown on Exhibit "C" and incorporated herein by this reference, is shared with the community center and sailing center, and priority shall be given to deliveries for the community and sailing center. 5.3 Prohibited Uses. Tenant shall not sell or permit to be kept, used, displayed or sold in or about the Premises: (a) pornographic or sexually explicit books, magazines, literature, films or other printed material, sexual paraphernalia, or other material which would be considered lewd, obscene or licentious; (b) any article which may be prohibited by standard forms of fire insurance policies; or (c) any alcoholic beverages unless in accordance with the necessary permits, approvals, applicable City Council policies and municipal code regulations. Vending machines, gaming machines or video or arcade games shall not be used or installed on the Premises unless expressly permitted by this Agreement. Tenant shall not use or permit the use of the Premises in any manner that: (a) creates a nuisance: or (b) violates any Law. Tenant shall not offer entertainment, including live music or dancing, or broadcast music or entertainment through exterior speakers or other form of transmission without the written approval of City. In this event, Tenant shall obtain all required City permits and approvals. 5.3.1. No smoking or vaping is permitted on the Property and Premises. 5.4 Food Packaging and Debris. Tenant shall use food packaging consistent with good environmental practices, including prohibiting polystyrene (also known as Styrofoam) from the Premises, minimizing the use of PVC plastics (especially plastic bags for carrying food), and providing both trash receptacles and places for customers to dispose of recyclable products within the Premises, which shall be consistent with the design specifications of the Property when located outdoors. 5.5 Outdoor Dining. Tenant shall be permitted to place tables, chairs, and removable barriers to delineate seating area, and gas heaters on the paved area outside the dining area on the first floor adjacent to the Premises as identified and depicted on Exhibit "D" and incorporated herein by this reference; use of this area by Tenant is on a non - exclusive basis, and shall be in accordance with City zoning codes and State requirements. Furniture, barriers, or heating units and associated equipment may not be placed more than ten (10) feet from the building, as measured from the glass windows on the exterior of the lighthouse structure, as depicted on Exhibit D. Use of the outside dining area on the first floor may be revoked for any reason, with twenty - four (24) hours' notice from the City. Tenant shall also be permitted to place tables, chairs, and gas heaters in the outside dining area on the second floor dining area of the Premises, as identified and depicted on Exhibit "D." The layout of the tables in both areas is subject to approval by the City. Tenant may not expand into the walkways, open areas or beach, or place any temporary furniture or objects in the public areas of the Property without prior written approval of the City. Lighthouse Cafe, LLC Page 12 M18=1 5.6 Catering. Tenant shall be the exclusive alcoholic beverage provider for all catered events held at the Property, with the exception of: (1) City sponsored or co- sponsored events (e.g., receptions, festivals, etc.); and (2) deminimis staff expenditures of three hundred dollars ($300.00) or less. Concessionaire shall have first right of refusal for events as the exclusive alcohol caterer. If Tenant declines to cater the alcohol for an event or does not respond within the time provided by the City or a third - party, the City or the third -party may contract with a third -party for catering and alcohol services. 5.6.1 Competitive Pricing. Given the exclusive nature of the services provided under this Agreement, the City and Tenant have a mutual interest in providing competitive pricing for the food, beverages, and others items permitted to be sold under this Agreement. Therefore, Tenant shall from time -to -time survey the costs charged by other entities engaged in similar catering businesses and adjust its prices accordingly to remain competitive. The City may audit Tenant's pricing pursuant to Section 4.4.6. 5.7 Operation. Tenant shall keep the Premises in operation and open to the public for business on a daily basis, between the hours of 7:00 a.m. and 9:00 p.m., but no later than 11:00 p.m. 5.7.1 Tenant may only close on the following days: Thanksgiving Day and Christmas Day, and may close early on Thanksgiving Eve and Christmas Eve. 5.7.2 Tenant may close the Concession during periods of remodeling, reconstruction, inventory and /or emergencies or to comply with Laws with prior written approval from the City. 5.8 Food Preparation. Tenant shall, at Tenant's own expense, install any equipment required to prepare foods, which may be necessary to operate Tenant's business. Tenant shall ensure that equipment is installed properly pursuant to the manufacturer's specifications, does not exceed the electrical or other utility loads designated for the Premises, and is in compliance with all applicable local and state building codes and health department regulations. 5.9 Advertising Display. Tenant may, at its own expense, place signs in or upon the Premises subject to the prior written consent of the City as to the location, size, type, number, design and method of installation and in compliance with the City's sign code regulations and the deed restrictions applicable to the Premises, provided any illuminated signs placed on the Premises shall only be lit between the hours of 7:00 a.m. and 10:00 p.m. All signage placed by Tenant on, in or about the Premises shall remain the property of Tenant and shall be removed by Tenant upon termination or expiration of this Agreement at Tenant's expense; and any damage caused by removal shall be repaired at Tenant's expense. City shall be responsible for installing and maintaining limited directional or identifying signage in or upon the Property. Tenant Lighthouse Cafe, LLC Page 13 PIibIVJ signage shall be limited to advertising only for the Concessions provided at the Premises. 5.10 Personnel. Tenant shall be responsible for hiring the necessary personnel to conduct the daily operation of Concession. Tenant shall comply with all applicable federal, state, and local Laws related to minimum wage, social security, nondiscrimination, ADA, unemployment compensation, and workers' compensation. If required by the City, Tenant's employees shall wear a uniform and /or an identification badge. 5.11 Independent Contractor. It is understood that Tenant is an independent contractor and not an agent or employee of City. The manner and means of operating the Concession are under the control of Tenant, except to the extent they are limited by statute, rule or regulation and /or the expressed terms of this Agreement. No civil service status or other right of employment shall accrue to Tenant's employees. Nothing in this Agreement shall be deemed to constitute approval for Tenant or any of Tenant's employees or agents, to be the agents or employees of City. Tenant shall have the responsibility for and control over the means of operating the Concession, provided that Tenant is in compliance with the terms of this Agreement. City acknowledges that is has no interest in the business of Tenant. 5.12 No Distress Sales. No auction, fire, bankruptcy, "going out of business" or other distress sales of any nature may be conducted on the Premises without the prior written consent of the City Manager or his /her designee. 5.13 Restroom Facilities. Tenant, its employees and customers shall have full use of restroom facilities located downstairs within the sailing center at the Property as depicted on Exhibit "C." Restroom facilities are shared with all employees and visitors to the Property, and are considered Common Area. Tenant shall be responsible for opening, closing, and securing the restroom facilities at the end of each day. 5.14 Parking for Employees. City grants Tenant a non - exclusive right to parking areas shown on Exhibit "C." City reserves the right to assign parking in the future, but agrees that any such assignment of parking shall not materially diminish access to the Premises. City shall provide a total of four (4) parking permits annually to Tenant for use of the Marina Park parking lot by employees. The permits issued by the City shall be designed to permit use by different employees from day to day. Tenant shall cause its employees to comply with the procedures and regulations established by the City from time -to -time to control parking. 5.15 Compliance with Marina Park Rules and Regulations. Tenant shall comply with the Marina Park Rules and Regulations which may be established at a future date, and shall be sent to Tenant pursuant to the Notice provisions in Section 20, and incorporated herein by reference. 5.16 Exclusive Use. City shall ensure that no portion of the Property other than the Premises is used as a Concession; with the exception of other pre- approved Lighthouse Caf6, LLC Page 14 K1851.1 caterers (including Tenant) that may provide services for City sponsored events or events booked through the City's Recreation and Senior Services Department at the Property and in the community rooms in the sailing center as identified on Exhibit "C." City shall ensure that Tenant shall be the exclusive alcohol caterer in the community rooms. 6. TAXES, LICENSES AND OTHER OBLIGATIONS 6.1 Payment of Taxes. Tenant shall pay directly to the appropriate taxing authorities all taxes applicable to this Agreement, fixtures and Tenant's personal property on the Premises, that are levied or assessed against Tenant during the Term. Taxes shall be paid before delinquency and before any fine, interest or penalty is due or imposed by operation of law. Tenant shall, upon request, promptly furnish to the City satisfactory evidence of payment. City hereby gives notice to Tenant, pursuant to Revenue and Tax Code Section 107.6 that this Agreement may create a possessory interest that is the subject of property taxes levied on such interest, the payment of which taxes shall be the sole obligation of Tenant. Tenant shall advise in writing any subtenant, licensee, concessionaire or third party using the Premises of the requirements of Section 107.6. Tenant shall pay, before delinquency all taxes, assessments, license fees and other charges ( "Taxes ") that are levied or assessed against Tenant's interest in the Premises or any personal property installed on the Premises. 6.2 Payment of Obligations. Tenant shall promptly pay, when due, any and all bills, debts, liabilities and obligations incurred by Tenant in connection with Tenant's occupation and use of the Premises. 6.3 Challenge to Taxes. Tenant shall have the right in good faith, at its sole cost and expense, to contest the amount or legality of any Taxes on or attributable to this Agreement, the Premises, Tenant's personal property, or Tenant's occupation and use of the Premises, including the right to apply for reduction. If Tenant seeks a reduction or contests such taxes, Tenant's failure to pay the Taxes shall not constitute a default as long as Tenant complies with the provisions of this Section. City shall not be required to join in any proceeding or contest brought by Tenant unless the provisions of any Law require that the proceeding or contest be brought by or in the name of City. In that case, City shall join in the proceeding or contest or permit it to be brought in City's name as long as City is not required to bear any cost. If requested by Tenant, City shall execute any instrument or document necessary or advisable in connection with the proceeding or contest. Tenant, on final determination of the proceeding or contest, shall immediately pay or discharge any decision or judgment rendered, together with all related costs, charges, interest and penalties. Tenant shall indemnify, defend and hold harmless the City, its council members, boards, commissions, committees, officers, employees, Authorized City Representatives, agents and volunteers ( "Indemnified Parties ") from and against any liability, claim, demand, penalty, cost or expense arising out of or in connection with any contest by Tenant pursuant to this Section. Lighthouse Cafe, LLC Page 15 f'I/b4] 6.4 No Rent Offset. Any payments under this Section 6 shall not reduce or offset Rent payments. City has no liability for such payments. 7. UTILITIES. 7.1 Tenant shall be responsible for payment of all utilities furnished to or used on the Premises exclusively by Tenant, or Tenant's pro rata share of all utilities furnished to or used by Tenant on the Property, including, without limitation, gas, electricity, sewer, water, refuse collection, telephone service, and cable TV. 7.2 Refuse collection shall occur between 7:00 a.m. and 6:00 p.m. on non - holiday weekdays. 7.3 Tenant shall be responsible for all costs associated with the cleaning and maintenance of the grease trap serving the Premises. Tenant to contract with a reputable local company to service and clean the grease interceptor each month, or as often as may be necessary to maintain the system in good working order consistent with the manufacturer's recommendations and warranty requirements, but not less than once every calendar year quarter. Should Tenant fail to maintain the equipment in good working order the City may, at its election, take over contracting for the service and charge the Tenant for the expense as additional rent, pursuant to the provisions in Section 10.1. 7.4 Tenant shall be responsible for the maintenance, repair and /or replacement of utility lines within and exclusively serving the Premises, or Tenant's pro rata share of utility lines serving Tenant on the Property, as depicted on Exhibit "A ". 8. ALTERATIONS TO THE PREMISES. 8.1 Required Tenant Improvements. Tenant acknowledges that City shall deliver the Premises with the improvements shown on Exhibit "E." Subject to compliance with all applicable laws, Tenant shall make interior non - structural improvements including build -out of the kitchen, storage area, and installation of fixtures and furniture in the interior and exterior, first and second floor dining areas to the Premises in order to operate the Concession ( "Tenant Improvements "), consistent with those shown on Exhibit 7," as may be revised or modified in order to obtain entitlements and /or building permits from the applicable local and state agencies. Subject to compliance with all applicable laws, all improvements by the Tenant must be submitted for review of improvement plans and permitting, and construction, and shall be subject to the prior written approval of the City Manager or his /her designee. City Manager or his /her designee's failure to provide written approval or disapproval of any such submittal by Tenant within thirty (30) calendar days shall be deemed approval thereof. City Manager's failure to provide such notice shall not relieve Tenant's responsibility to comply with all applicable laws. Tenant improvements shall be performed between 7:00 a.m. and 6:00 p.m. on non - holiday weekdays. Any contractors hired by Tenant shall be fully licensed and bonded. Tenant's contractors and any subcontractors shall obtain insurance in an amount and form to be approved by City's Lighthouse Cafe, LLC Page 16 KI PINS] Risk Manager, including workers compensation insurance as required by law, general liability, automobile liability and builder's risk insurance covering improvements to be constructed, all pursuant to standard industry custom and practice. City and City's general contractor, KPRS Construction Services, Inc. shall be named as an additional insured on the contractor's and any subcontractor's policies. 8.1.1 Design Requirements. Tenant acknowledges that City has designed, and is constructing, maintaining, and operating the Property in accordance with energy and environmental design practices as recommended by the U.S. Green Building Council's Leadership in Energy & Environmental Design (LEED) guidelines. Tenant's required Tenant Improvements should follow the same design and construction guidelines, as specified by the City's design contractor and general contractor. Should the Tenant elect not to use the City's design contractor for design of the Premises the City may furnish such written design guidelines to Tenant. 8.2 Tenant's Architects and Contractors. All Tenant improvements to the Premises, and any subsequent repairs, alterations, additions or improvements to any of the foregoing shall be designed, selected or constructed, as applicable, by qualified and licensed (where required) architectural, design, engineering and construction firms selected by Tenant. 8.3 Costs of Construction. Tenant shall bear all costs and expenses associated with the design, construction and maintenance of the Premises, which costs and expenses include without limitation: (i) build -out of the kitchen, storage area, and installation of fixtures and furniture in the interior and exterior, first and second floor dining areas, as well as utility relocation in the kitchen, utility hook -up, and connection fees and all distribution facilities, conduits, pipelines and cables required in connection with the Tenant Improvements required for operation of the Concession; (ii) all design, engineering, financing and construction costs; and (iii) all necessary studies and appraisals, use permits or variances, and all grading, building and like permits required to construct and operate the Premises, including any fees assessed on the Premises by any governmental, or quasi - governmental agency or authority in connection with any regional transportation or other public improvements and school district taxes, development fees and assessments. 8.3.1 Prevailing Wages. Pursuant to the applicable provisions of the Labor Code of the State of California, not less than the general prevailing rate of per diem wages including legal holidays and overtime work for each craft or type of workman needed to execute the work contemplated under this Section shall be paid to all workmen employed on the work to be done according to this Section by the Tenant's contractors and any subcontractor. In accordance with the California Labor Code (Sections 1770 et seq.), the Director of Industrial Relations has ascertained the general prevailing rate of per diem wages in the locality in which the work is to be performed for each craft, classification, or type of workman or Lighthouse Cafe, LLC Page 17 FIZOIPJJ mechanic needed to execute the Tenant Improvements. A copy of said determination is available by calling the prevailing wage hotline number (415) 703 -4774, and requesting one from the Department of Industrial Relations. Tenant's contractors and subcontractors are required to obtain the wage determinations from the Department of Industrial Relations and post at the job site the prevailing rate or per diem wages. It shall be the obligation of Tenant's contractors or any subcontractor under him /her to comply with all State of California labor laws, rules and regulations and the parties agree that the City shall not be liable for any violation thereof. 8.4 Schedule for Required Improvements. Tenant shall submit plans, diligently pursue their approval, and begin construction of Required Improvements according to the following schedule: Design Coordination, Preparation of Upon execution of this Agreement Construction Documents, and Obtain Tenant shall coordinate with City's Building Permits design architects, construction project manager, and City's construction contractor to coordinate all kitchen and dining area designs, delivery conditions, and construction drawings. Tenant shall obtain building permits no later than August 1, 2015. Begin Construction Upon delivery of Premises from City. Complete Construction Within one hundred five (105) days of delivery of Premises from City. Open for Business Tenant shall be ready to open for business no later than December 5, 2015, though Tenant's actual opening date shall be consistent with the grand opening of the Marina Park project, schedule for early December 2015. 8.4.1. Construction Period /Early Occupancy- The period commencing the date on which the Tenant receives notice of from City and ending on the Commencement Date (the "Early Occupancy Period "), Tenant shall be permitted to enter the Premises for the sole purpose of installing furniture, fixtures and equipment (including data and telephone lines and equipment), furnishings and decorations therein, provided that (a) Tenant's early entry does not interfere with City's performance of City's Work; (b) prior to Tenant's entry in the Premises, Tenant shall furnish to City Lighthouse Cafe, LLC Page 18 KPIPPA certificates of insurance satisfactory to City evidencing Tenant's compliance with the requirements of Section 11.3, and a schedule, for City's approval, which shall detail the timing and purpose of Tenant's entry; and (c) Tenant's work in the Premises prior to the Commencement Date shall comply with the requirements of Section 8. Tenant's occupancy of the Premises during the Early Occupancy Period shall be subject to all of the terms, covenants and conditions of this Agreement, including, without limitation, Tenant's indemnity obligations set forth in Section 11.3, except that City agrees that Tenant's obligation to pay Base Rent and Percentage Rent (defined in Section 4) shall be waived. Tenant shall, however, pay the cost of all utilities and other services provided to the Premises prior to the Commencement Date that are required by reason of Tenant's early occupancy. 8.4.2. Early Access. Subject to the provisions of this Section, City shall allow Tenant access to the Premises prior to the Commencement Date for purposes of installing Tenant's furniture, fixtures, equipment, millwork and telephone /data cabling ( "Tenant's Fixturing Work "). Tenant and Tenant's employees, agents, contractors, subcontractors, suppliers or any other person requiring access to the Premises in connection with the performance of Tenant Fixturing Work (each, "Tenant's Construction Representative" and collectively, "Tenant's Construction Representatives ") shall be subject to reasonable approval by Landlord prior to the commencement of their work, and Tenant shall cause Tenant's Construction Representatives to engage only labor that is harmonious and compatible with other labor working on the Property. Tenant and Tenant's Construction Representatives shall work cooperatively with City to coordinate the scheduling and performance of Tenant's Fixturing Work so as not to delay the completion of construction of the Property or the Premises.. As a condition to entering the Property, each of Tenant's Construction Representatives shall provide City with satisfactory evidence of such commercially reasonable insurance as City may reasonably require. Tenant's Construction Representatives shall comply with City's current contractor rules and regulations, while in the Premises or elsewhere in the Project. Tenant's Construction Representatives shall not interfere with or delay the construction of the Tenant Improvements or any other work on the Property. If at any time any of Tenant's Construction Representatives hinders or delays construction of the Tenant Improvements or any other work on the Property or performs any work that impairs the quality, integrity or performance of the Tenant Improvements or other work in any portion of the Property, upon written notice from City, Tenant shall promptly cause such Tenant's Construction Representative to leave the Property and remove all of its tools, equipment and Lighthouse Cafe, LLC Page 19 M18093 materials. Tenant shall reimburse City for the cost of any repairs to the Premises or other portions of the Property or common areas to the extent necessitated by the acts or omissions of Tenant's Construction Representatives. All entries into the Premises by Tenant or Tenant's Construction Representatives prior to the Commencement Date shall be subject to all of the terms, covenants and conditions of this Agreement, including, but not limited to, Tenant's insurance obligations contained in Section 11.3 and Tenant's indemnity obligations contained in Section 11, excluding the obligation to pay Base Rent and Percentage Rent. 8.4.3 Construction Coordination. Tenant shall be responsible for coordinating with City's design and construction teams to ensure that Tenant's proposed scope of Tenant Improvements to the Premises complies with the energy and resource efficient requirements, design guidelines for the project, points of connection with the utilities, during the development of Tenant's design and construction drawings, and coordination of trades and access to the site during Tenant's construction of the Tenant Improvements at Tenant's sole cost. 8.5 Permits. Unless restricted by law, Tenant shall obtain, and be responsible for the costs for all building permits, health department permits and other required permits prior to commencement of Tenant improvements and operations. If applicable, Tenant shall be responsible, at its sole cost and expense, for compliance with the California Environmental Quality Act ( "CEQA ") and the California Coastal Act in connection with Tenant's operation and use of the Property. 8.6 Quality of Work Performed. All alterations, maintenance and other work shall be performed in a good and workmanlike manner, shall comply with the plans and specifications submitted to City, and shall comply with all applicable governmental permit requirements and Laws in force at the time permits are issued. 8.7 Payment of Costs. Tenant shall pay all costs related to the construction of the improvements and any alterations by Tenant or its agents. 8.8 Liens Prohibited: Tenant shall not permit to be imposed, recorded or enforced against the Premises or Property, any portion thereof or any structure or Improvement thereon, any mechanics, materialmen's, contractors or other liens arising from, or any claims for damages growing out of, any work or repair, construction or alteration of improvements on the Premises. 8.8.1 Release /Removal of Liens: In the event any lien or stop notice is imposed or recorded on the Premises or Property, or an Improvement permanently affixed to the Premises or Property, during the Term Tenant shall pay or cause to be paid all such liens, claims or demands before any action is brought to enforce the Lighthouse Cafe, LLC Page 20 FIZOIPI! same against the Premises or Property or the Improvement. Notwithstanding the foregoing, if Tenant legitimately contests the validity of such lien, claim or demand, then Tenant shall, at its expense, defend against such lien, claim or demand provided that it provide City the indemnity in this Agreement and provided Tenant shall pay and satisfy any adverse judgment that may be rendered before any enforcement against City or the Premises or Property. 8.9 Disposition of Alterations at Expiration or Agreement Termination. Any alterations made to the Premises shall remain on, and be surrendered at no cost to City with, the Premises on expiration or termination of this Agreement (excluding Tenant's fixtures, equipment, furniture, and moveable decorations). Prior to expiration or within fifteen (15) calendar days after termination of this Agreement, Tenant may remove any moveable partitions, machinery, equipment, furniture, and trade fixtures previously installed by Tenant, provided that Tenant repairs any damage to the Premises caused by removal and restore the Premises to Good Condition. -IDA oIgIneI 9.1 Tenant shall obtain, provide, and maintain at their own expense during the term of construction of the Tenant Improvements both of the following: (1) a Faithful Performance Bond in the amount of one hundred percent (100 %) of the total amount to be paid to contractor as set forth in their respective contract with Tenant in the form attached as Exhibit I and incorporated herein by reference; and (2) a Labor and Materials Payment Bond in the amount of one hundred percent (100 %) of the total amount to be paid to contractor as set forth in their respective contract with Tenant and in the form attached as Exhibit J and incorporated herein by reference. Said bonds are necessary for City to complete any incomplete Tenant Improvements in order to obtain a Certificate of Occupancy. 9.2 The Faithful Performance Bond and Labor and Materials Payment Bond shall be issued by an insurance organization or surety (1) currently authorized by the Insurance Commissioner to transact business of insurance in the State of California, (2) listed as an acceptable surety in the latest revision of the Federal Register Circular 570, and (3) assigned a Policyholders' Rating A- (or higher) and Financial Size Category Class VII (or larger) in accordance with the latest edition of Best's Key Rating Guide: Property- Casualty. 9.3 Tenant's contractors shall deliver to both Tenant and City, concurrently with execution of their respective contracts with Tenant prior to commencement of any work under the contract upon the Premises and Property, the Faithful Performance Bond and Labor and Materials Payment Bond, and a certified copy of the "Certificate of Authority" of the Insurer or Surety issued by the Insurance Commissioner, which authorizes the Insurer or Surety to transact surety insurance in the State of California. Lighthouse Cafe, LLC Page 21 K181M 10. MAINTENANCE OF PREMISES 10.1 Maintenance and Repair by Tenant and City. Tenant agrees that it will keep the Premises in good condition. City may perform maintenance or repairs in the event Tenant fails to commence required maintenance or repairs within the time provided by City in the written notice requesting such maintenance or repair (which shall not be less than five (5) days unless and in case of emergency or urgent situation). The cost of any maintenance or repairs by the City pursuant to this Section shall be payable as Additional Rent. All furnishings, equipment, facilities, improvements, alterations, attachments and appurtenances provided by City or installed by Tenant, and required for Concession operations, including all kitchen equipment and interior furnishings, including items under warranty, shall be maintained in good condition and repair by Tenant at its cost. City may perform required cleaning and charge the costs to Tenant if the Tenant fails to perform said cleaning within the time provided by City in the written notice requesting the cleaning (which shall not be less than five (5) calendar days) and continue to maintain the area as required by this Agreement. 10.2 Entry by City. Upon twenty -four (24) hours prior written notice to Tenant, City and its authorized City representative(s) may enter upon and inspect the Premises during normal business hours for any lawful purpose. In case of emergency, City or its authorized City representative(s) may, without prior notice, enter the Premises by whatever force reasonably necessary if Tenant is not present to open and permit an entry. Any entry to the Premises by City under this Agreement shall not be construed as a forcible or unlawful entry into, or a detainer of, the Premises, or an eviction of Tenant from the Premises or any portion thereof. Any damage caused to the Premises pursuant to this Section 10.2 by the City shall be repaired or replaced by the City at the City's sole expense. 10.3 Maintenance by City. City shall keep and maintain in first class condition and repair or replace as necessary the Common Area, the roof of the Premises (including, but not limited to, the roof membrane, roof structure, and roof systems — e.g., gutters and downspouts), exterior walls, interior structural walls, structural parts and structural floor of the Premises, and all drainage and utility systems that are not an obligation of Tenant under this Agreement. 11. INDEMNITY AND EXCULPATION; INSURANCE 11.1 Hold- Harmless Clause. Tenant agrees to indemnify, defend and hold harmless the City, its City Council, Boards, Commissions, Committees, officers, agents, volunteers, and employees, as well as the State of California, its officers, employees and volunteers (collectively, the "Indemnified Parties ") from and against any and all claims (including, without limitation, claims for bodily injury, death or damage to property), demands, obligations, damages, actions, causes of action, suits, losses, judgments, fines, penalties, liabilities, costs and expenses (including, without limitation, attorney's fees, disbursements and court costs) of every kind and nature whatsoever (individually, a "Claim "; collectively, "Claims "), which may arise from or in any manner relate (directly or indirectly) to Tenant's, Tenant's employees, contractor, subcontractor, Lighthouse Cafe, LLC Page 22 FIZOINy agents, guests, invitees, subtenant's possession, occupation or use of the Premises, specifically including, without limitation, any claim, liability, loss, or Damage arising by reason of: A. The death or injury of any Person or damage to personal property caused or allegedly caused by the condition of the Premises or an act or omission of Tenant or an agent, contractor, subcontractor, supplier, employee, servant, or sublessee of Tenant; B. Any work performed on the Premises or materials furnished to the Premises at the request of Tenant or any agent or employee of Tenant, with the exception of Maintenance performed by City; and /or C. Tenant's failure to perform any provision of this Agreement or to comply with any requirement of Law or any requirement imposed on the Premises by any duly authorized governmental agency or political subdivision. Tenant's obligations pursuant to this Subsection shall not extend to any Claim proximately caused by the negligence, willful misconduct, or unlawful or fraudulent conduct on the part of the Indemnified Parties. This indemnity shall apply to all claims and liability regardless of whether any insurance policies are applicable. 11.2 Exculpation of City. Except as otherwise expressly provided in this Agreement, City shall not be liable to Tenant for any damage to Tenant or Tenant's property from any cause other than the sole negligence, intentional or willful acts of the Indemnified Parties. Except as otherwise expressly provided in this Agreement, Tenant waives all claims against the Indemnified Parties arising for any reason other than the sole negligence, intentional or willful acts of the Indemnified Parties. City shall not be liable to Tenant for any damage to the Premises, Tenant's property, Tenant's goodwill, or Tenant's business income, caused in whole or in part by acts of nature. 11.3 Insurance. Tenant shall maintain insurance in the types and amounts specified in Exhibit "G," attached hereto and incorporated herein by this reference. 12. DAMAGE OR DESTRUCTION OF PROPERTY /PREMISES 12.1 Destruction of Premises. If the Premises are totally or partially destroyed, rendering the Premises or any portion thereof totally or partially inaccessible or unusable, Tenant shall restore the Premises to substantially the same condition as immediately prior to such destruction (including all trade fixtures, personal property, improvements and Alterations as are installed by Tenant, which shall be replaced by Tenant at its expense). Alternatively, Tenant may elect to terminate this Agreement by giving written notice of such election to City within sixty (60) calendar days after the date of the occurrence of any casualty if the cost of the restoration exceeds the amount of any available insurance proceeds, if the damage has been caused by an uninsured casualty or event, or if Tenant reasonably estimates that repairs of the Premises will Lighthouse Cafe, LLC Page 23 Klelph take more than six (6) months. Upon such termination, insurance proceeds applicable to reconstruction of the Premises (excluding Tenant's personal property therein) shall be paid to City and Tenant shall have no further liability or obligations under this Agreement. 12.2 Replacement of Tenant's Propert v. In the event of damage or destruction of improvements located on the Premises not giving rise to Tenant's option to terminate this Agreement, Tenant shall, at its own expense, replace and repair all Tenant's trade fixtures, equipment, machinery, furnishings, furniture and inventory as soon as reasonably possible to permit the prompt continuation of Tenant's business at the Premises. 12.3 Destruction of Propert v. In the event that all or a portion of the Property is damaged, and the Premises or a material portion becomes inaccessible or commercially unusable, and the damage or destruction cannot reasonably be repaired within twelve (12) months after the date of the casualty, City shall have the right to either: A. Terminate this Agreement by giving to Tenant written notice (which notice shall be given, if at all, within thirty (30) calendar days following the date of the casualty), in which case this Agreement shall be terminated thirty (30) calendar days following the date of the casualty; or B. Give Tenant written notice of City's intention to repair such damage as soon as reasonably possible at City's expense, in which event this Agreement shall continue in full force and effect; however, Rent shall be abated in accordance with the procedures set forth in Section 13. Tenant may terminate this Agreement by giving City written notice at any time prior to the commencement of repairs if City agrees to repair the Property pursuant to this Section and fails to commence repairs within one hundred twenty (120) calendar days after giving Tenant written notice of its intention to repair. In such event, this Agreement shall terminate as of the date of notice from Tenant to City, and City shall have no liability under this Agreement. 13. ABATEMENT OF RENT General Rule. In the event of damage or destruction of the Premises or Damage to the Property that impacts the Premises and this Agreement is not terminated, Tenant shall continue to utilize the Premises for the operation of its business to the extent it may be practicable and commercially reasonable. Rent shall abate only in proportion to the area of the Premises that is rendered unusable. The abatement of Rent shall commence on the date that use of the Premises is impacted and continue until the completion of those repairs necessary to restore full use of the Premises and Tenant's re- opening of the Premises. Tenant's obligation to pay Taxes pursuant to this Lighthouse Cafe, LLC Page 24 NOW-- Agreement shall not be abated or reduced. Rent shall not abate if the damage or destruction to the Premises is the result of the negligence or willful conduct of Tenant or its employees, officers or agents. Tenant's right to abatement of Rent is contingent on payment of insurance proceeds, if any, equal to the amount of Rent pursuant to coverage required by Section 11.3. 14. PROHIBITION AGAINST VOLUNTARY ASSIGNMENT, SUBLETTING AND ENCUMBERING 14.1 Prohibition of Assignment. City and Tenant acknowledge that City is entering into this Agreement in reliance upon the experience and abilities of Tenant. Consequently, Tenant shall not voluntarily assign or encumber its interest in this Agreement or in the Premises, or assign substantially all or any part of the Premises, or allow any other person or entity to occupy or use all or any part of the Premises without the prior written consent of City, which shall not be unreasonably withheld. Any assignment or transfer made without the City's written consent is null and void. City's consent to any assignment or other transfer is subject to Tenant providing City with evidence reasonably satisfactory to City that the proposed transferee has financial strength and restaurant or food service experience comparable to Tenant and the use of the Premises by the proposed transferee is consistent with the terms of this Agreement. Except as otherwise expressly provided herein, any dissolution, merger, consolidation, reorganization of Tenant, or the sale or other transfer resulting in a transfer of a controlling percentage of the capital stock of Tenant, shall be deemed a voluntary assignment; provided, however, that the sale or transfer of a controlling percentage of the capital stock of Tenant pursuant to a public offering(s) of equity or debt instruments issued by Tenant, or other transfers of publicly traded capital stock or debt instruments shall not constitute a voluntary assignment and shall not require City's consent or approval. The phrase "controlling percentage" means the ownership of, or the right to vote, stock possession of at least fifty percent (50 %) of the total combined voting power of all classes of Tenant's capital stock issued, outstanding, and entitled to vote for the election of directors, except for ownership of publicly traded shares, warrants or similar equity interests in Tenant traded on a national exchange or over - the - counter markets. 14.2 Exceptions. Notwithstanding the foregoing paragraphs or anything to the contrary contained herein, City's consent shall not be required for an assignment or subletting to an Affiliate, Subsidiary, or Successor of Tenant. For purposes hereof, an "Affiliate", a "Subsidiary", and a "Successor" of Tenant are defined as follows: A. an "Affiliate" is any corporation or other entity which directly or indirectly controls or is controlled or is under common control with Tenant (for purposes of this Section, "control" shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such corporation or other entity, whether through the ownership of voting securities or by contract or otherwise); Lighthouse Cafe, LLC Page 25 rzPb�1 B. a "Subsidiary" shall mean any corporation or other entity not less than twenty -five percent (25 %) of whose outstanding stock shall, at the time, be owned directly or indirectly by Tenant and which is at least as creditworthy as Tenant; and C. a "Successor" shall mean a corporation or other entity in which or with which Tenant is merged or consolidated, in accordance with applicable statutory provisions for merger or consolidation of corporations or a corporation or other entity acquiring a substantial portion of the property and assets of Tenant. 14.3 Continuing Effect. City's consent to any assignment or encumbrance shall not relieve Tenant from its obligations or liabilities under this Agreement nor act as a waiver of the requirement that such consent be obtained to any subsequent assignment or encumbrance. 14.4 Estoppel Certificate. Within seven (7) calendar days of City's written request, Tenant shall execute and deliver to City, on City's form, a written statement, acknowledging that: A. Tenant currently occupies the Premises pursuant to a valid, written Lease; B. The date of the lease and the most recent renewal (collectively the "Lease "); C. The Lease is unmodified and in full force and effect (or, if modified, stating the nature of such modification and certifying that this Agreement, as so modified, is in full force and effect); D. City is not in default of the Lease (or, specifying such defaults, if any are claimed); E. City has performed all duties required under the Lease; F. Tenant has no knowledge that City is in violation of any law (or, specifying such violations, if any are claimed); G. Tenant has no offsets or credits against rent due under the Lease, nor any legal claims or defenses arising from the Lease or Tenant's use and occupancy of the Premises (or, specifying such offsets, credits, claims and defenses, if any are claimed); and H. Any other matters that City or City's lender may reasonably require. Lighthouse Caf6, LLC Page 26 fNIONCIS] 15. DEFAULT 15.1 Default by Tenant. The occurrence of any one (1) or more of the following events shall constitute a default and material breach of this Agreement by Tenant: A. The vacating or abandonment of the Premises by Tenant for a period of thirty (30) successive calendar days, without the prior permission of the Authorized City Representative, excluding closures during periods of casualty, condemnation or permitted closures set forth in this Agreement; B. The failure by Tenant to make any payment of Rent or any other payment required by this Agreement, as and when due, when such failure shall continue for a period of ten (10) calendar days after written notice of default from City to Tenant; C. Except as specified in Subsection 15.1(8), the failure of Tenant to observe or perform any of the material covenants, conditions or provisions of this Agreement to be observed or performed by Tenant where such failure shall continue for a period of thirty (30) calendar days after written notice thereof from City to Tenant; provided, however, that if the nature of Tenant's default is such that more than thirty (30) calendar days are reasonably required for its cure, then Tenant shall not be deemed to be in default if Tenant commences such cure within said thirty (30) calendar day period and thereafter diligently prosecutes such cure to completion; D. The making by Tenant of any general arrangement or assignment for the benefit of creditors; E. Tenant becomes a "debtor" as defined in 11 U.S.C. Section 101 or any successor statute thereto (unless, in the case of a petition filed against Tenant, the same is dismissed within sixty (60) calendar days); F. The appointment of a trustee or receiver to take possession of substantially all of Tenant's assets located at the Premises or of Tenant's interest in this Agreement, where such appointment is not discharged within sixty (60) calendar days; and G. The attachment, execution or the judicial seizure of substantially all of Tenant's assets located at the Premises or of Tenant's interest in this Agreement, where such seizure is not discharged within sixty (60) calendar days. 15.2 Remedies. Lighthouse Cafe, LLC Page 27 fNIONCE 15.2.1 Cumulative Nature of Remedies. If any default by Tenant shall continue without cure beyond the time permitted under this Agreement, City shall have the remedies described in this Section in addition to all other rights and remedies provided by law or equity, to which City may resort cumulatively or in the alternative. 15.2.2 Re -entry without Termination. City may re -enter the Premises, and, without terminating this Agreement, re -let all or a portion of the Premises. City may execute any agreements made under this provision in City's name and shall be entitled to all rents from the use, operation, or occupancy of the Premises. Tenant shall nevertheless pay to City on the dates specified in this Agreement the equivalent of all sums required of Tenant under this Agreement, plus City's expenses in conjunction with re- letting, less the proceeds of any re- letting or atonement. No act by or on behalf of City under this provision shall constitute a termination of this Agreement unless City gives Tenant specific written notice of termination. City may terminate this Agreement by giving Tenant written notice of termination with a specified termination date. In the event City terminates this Agreement, City may recover possession of the Premises (which Tenant shall surrender and vacate upon demand) and remove all persons and property. City shall be entitled to recover the following as damages; A. The value of any unpaid Rent or other charges that are unpaid at the time of termination; B. The value of the Rent and other charges that would have accrued after termination less the amount of Rent and charges the City received or could have received through the exercise of reasonable diligence as of the date of the award, provided, however, that City shall use its best efforts to re- lease the Premises and upon the City's re- leasing the Premises Tenant shall be released from all further liability for Rent and other charges that would have accrued after termination; C. Any other amount necessary to reasonably compensate City for the detriment proximately caused by Tenant's failure to perform its obligations under this Agreement; and D. At City's election, such other amounts in addition to or in lieu of the foregoing as may be permitted from time -to -time by applicable California law. City shall be entitled to interest at the rate of ten percent (10 %) per annum on all Rent and Lighthouse Cafe, LLC Page 28 FIZOMPA other charges from the date due or the date they would have accrued. City shall also be entitled to an award of the costs and expenses incurred by City in maintaining or preserving the Premises after default, preparing the Premises for re- letting, or repairing any damage caused by an act or omission of Tenant. 15.2.3 Use of Tenant's Personal Property. In the event Tenant is in default past applicable notice and cure periods, City may use Tenant's personal property and trade fixtures located on the Premises or any of such property and fixtures without compensation or liability to Tenant for use or damage. In the alternative City may store the property and fixtures at the cost of Tenant. City shall not operate the Concession in any manner tending to indicate that the Concession is affiliated with, part of or operated in conjunction with Tenant's business. City shall not operate, or allow any other person or entity to operate under the same or similar trade name as the Tenant. 15.3 City's Right to Cure Tenant's Default. Upon continuance of any material default beyond applicable notice and cure periods, City may, but is not obligated to, cure the default at Tenant's cost. If City pays any money or performs any act required of, but not paid or performed by, Tenant after notice, the payment and /or the reasonable cost of performance shall be due as additional Rent not later than ten (10) calendar days after service of a written demand accompanied by supporting documentation upon Tenant. No such payment or act shall constitute a waiver of default or of any remedy for default or render City liable for any loss or damage resulting from performance. 16. WASTE OR NUISANCE Tenant shall not commit or permit the commission of any waste on the Premises. Tenant shall not maintain, commit, or permit any nuisance as defined in Section 3479 of the California Civil Code on the Premises. Tenant shall not use or permit the use of the Premises for any unlawful purpose, including, but not limited to, any use that violates the City's charter or Municipal Code 17. NO CONFLICTS OF USE, HAZARDOUS MATERIALS. From the Effective Date and throughout the Term, Tenant shall not use, occupy or permit any portion of the Premises or Property to be used or occupied in violation of any law. City represents and warrants that, to the best of City's knowledge, (i) Tenant's use of the Premises does not conflict with applicable Laws, and City knows of no reason why Tenant would be unable to obtain all required permits, licenses and approvals from the appropriate governmental authorities; (ii) the Premises is not in violation of any applicable Law, rules or regulations and Tenant's contemplated uses will not cause any Lighthouse Cafe, LLC Page 29 NI ONCIe] such violation; and (iii) the Premises is free of any and all Hazardous Materials as of the date of this Agreement. In the event that the presence of any Hazardous Materials not caused by Tenant or its guests, invitees, contractors, agents, subcontractors is detected at the Premises at any time during the Term of this Agreement and any Option Term all remedial work shall be performed by City at City's expense. Tenant's obligation to open (or re -open, as the case may be) shall be delayed until the remedial work is completed if the remedial work is performed prior to Tenant opening for business. Tenant's obligation to pay Rent shall be abated pursuant to Section 13 to the extent Tenant is unable to conduct its business upon the Premises as a result of any remedial work that is performed subsequent to Tenant opening for business. Tenant shall have the right (but not the obligation) to terminate this Agreement, upon thirty (30) calendar days advance written notice to City in the event that Hazardous Materials are detected at the Premises and the presence or the remediation materially affects Tenant's ability to conduct its business at the Premises. "Hazardous Materials" shall mean any oil, flammable explosives, asbestos, urea formaldehyde, radioactive materials or waste, or other hazardous, toxic, contaminated or polluting materials, substances or wastes, including, without limitation, any "hazardous substances ", "hazardous wastes ", "hazardous materials" or "toxic substances" under applicable federal, state and local laws, ordinances and regulations. 18. CITY'S DEFAULTS /TENANT'S REMEDIES. 18.1 City shall be in default if it fails to perform, or commence performance if the obligation requires more than ten (10) calendar days to complete, any material obligation within ten (10) calendar days after receipt of written notice by Tenant to City specifying the nature of such default. City shall also be in default if it commences performance within ten (10) calendar days but fails to diligently complete performance. In the event of City's default, Tenant may: A. Upon thirty (30) calendar days written notice to City, cure any such default, and City shall reimburse Tenant the amount of all reasonable costs and expenses incurred by Tenant in curing the default, together with interest and expenses at the maximum rate then allowed by law; or B. Terminate this Agreement if City's default materially interferes with Tenant's use of the Premises for its intended purpose and City fails to cure such default within thirty (30) calendar days after a second written demand by Tenant. 19. EVENT OF BANKRUPTCY 19.1 If this Agreement is assigned to any Person or entity pursuant to the provisions of the Bankruptcy Code, 11 U.S.C. Sections 101 et seq. or any similar or successor statute ( "Bankruptcy Code "), any and all monies or other consideration payable or otherwise to be delivered in connection with such assignment shall be paid or delivered to City, shall be and remain the exclusive property of City and shall not Lighthouse Cafe, LLC Page 30 fNIONCEN constitute property of Tenant or of the estate of Tenant within the meaning of the Bankruptcy Code. Any and all monies or other consideration constituting City's property under this Section not paid or delivered to City shall be held in trust for the benefit of City and be promptly paid or delivered to City. 19.2 Any Person or entity to which this Agreement is assigned pursuant to the provisions of the Bankruptcy Code shall be deemed without further act or deed to have assumed all of the obligations arising under this Agreement and any Amendments on and after the date of such assignment, including the obligation to operate the business which Tenant is required to operate under this Agreement. 20. NOTICES. Any notice, demand, request, consent, approval or communication that either party desires or is required to give shall be in writing and shall be deemed given three (3) calendar days after deposit into the United States registered mail, postage prepaid, by registered or certified mail, return receipt requested. Unless notice of a different address has been given in accordance with this Section, all notices shall be addressed as follows: If to City, to: City of Newport Beach Attn: Real Property Administrator 100 Civic Center Drive P.O. Box 1768 Newport Beach, CA 92658 If to Tenant, to: Lighthouse Cafe, LLC Attn: Doug Cavanaugh 557 Wald Irvine, CA 92618 21. SURRENDER OF PREMISES At the expiration or earlier termination of this Agreement, Tenant shall surrender, at no cost, to City the possession of the Premises. Tenant shall leave the surrendered Premises, required personal property, equipment and fixtures, in good and broom -clean condition, reasonable wear and tear excepted. All property that Tenant is not required to surrender, but that Tenant does abandon shall, at City's election, become City's property at expiration or termination. City shall owe no compensation to Tenant for any personal property, equipment or fixtures left at the Premises by Tenant more than fifteen (15) calendar days after the expiration or termination of this Agreement. Lighthouse Cafe, LLC Page 31 fNIONCIA 22. COMPLIANCE WITH ALL LAWS Tenant shall at its own cost and expense comply with all statutes, ordinances, regulations and requirements of all governmental entities, including federal, state, county or municipal, whether now in force or hereinafter enacted. 23. WAIVERS The waiver by either party of any breach or violation of any term, covenant or condition of this Agreement, or of any ordinance, law or regulation, shall not be deemed to be a waiver of any other term, covenant, condition, ordinance, law or regulation, or of any subsequent breach or violation of the same or other term, covenant, condition, ordinance, law or regulation. The subsequent acceptance by either party of any fee, performance, or other consideration which may become due or owing under this Agreement, shall not be deemed to be a waiver of any preceding breach or violation by the other party of any term, condition, covenant of this Agreement or any applicable law, ordinance or regulation. 24. SEVERABILITY If any term or portion of this Agreement is held to be invalid, illegal, or otherwise unenforceable by a court of competent jurisdiction, the remaining provisions of this Agreement shall continue in full force and effect. 25. CONFLICT In case of conflict, the more specific provision of this Agreement shall control 26. APPLICABLE LAW This Agreement shall be construed in accordance with the laws of the State of California in effect at the time of the execution of this Agreement. Any action brought relating to this Agreement shall be adjudicated in a court of competent jurisdiction in the County of Orange. 27. ENTIRE AGREEMENT; AMENDMENTS 27.1 The terms and conditions of this Agreement, all exhibits attached, and all documents expressly incorporated by reference, represent the entire agreement of the parties with respect to the subject matter of this Agreement. 27.2 This Agreement shall supersede any and all prior agreements, oral or written, regarding the subject matter between Tenant and City. 27.3 No other agreement, promise or statement, written or oral, relating to the subject matter of this Agreement, shall be valid or binding, except by way of a written amendment to this Agreement. Lighthouse Cafe, LLC Page 32 K1801y 27.4 The terms and conditions of this Agreement shall not be altered or modified except by a written amendment to this Agreement signed by Tenant and the Authorized City Representative. 27.5 If any conflicts arise between the terms and conditions of this Agreement, and the terms and conditions of the attached exhibits or the documents expressly incorporated by reference, the terms and conditions of this Agreement shall control. 27.6 Any obligation of the parties relating to monies owed, as well as those provisions relating to limitations on liability and actions, shall survive termination or expiration of this Agreement. 27.7 Each party has relied on its own inspection of the Premises and examination of this Agreement, the counsel of its own advisors, and the warranties, representations, and covenants in this Agreement. The failure or refusal of either party to inspect the Premises, to read this Agreement or other documents, or to obtain legal or other advice relevant to this transaction constitutes a waiver of any objection, contention, or claim that might have been based on such reading, inspection, or advice. 28. TIME IS OF THE ESSENCE Time is of the essence for this Agreement. 29. SUCCESSORS Subject to the provisions of this Agreement on assignment and subletting, each and all of the covenants and conditions of this Agreement shall be binding on and shall inure to the benefit of the heirs, successors, executors, administrators, assigns, and personal representatives of the respective parties. 30. INTERPRETATION The terms of this Agreement shall be construed in accordance with the meaning of the language used and shall not be construed for or against either party by reason of the authorship of this Agreement or any other rule of construction which might otherwise apply. 31. TABLE OF CONTENTS; HEADINGS The table of contents of this Agreement and the captions of the various sections of this Agreement are for convenience and ease of reference only and do not define, limit, augment, or describe the scope, content, or intent of this Agreement. 32. GENDER; NUMBER The neuter gender includes the feminine and masculine, the masculine includes the feminine and neuter, and the feminine includes the neuter, and each includes Lighthouse Cafe, LLC Page 33 PIiHOA corporation, partnership, or other legal entity whenever the context requires. The singular number includes the plural whenever the context so requires. 33. EXHIBITS All exhibits to which reference is made in this Agreement are incorporated by reference. Any reference to "this Agreement" includes matters incorporated by reference. 34. CITY BUSINESS LICENSE Tenant shall obtain and maintain during the duration of this Agreement, a City business license as required by the Newport Beach Municipal Code 35. NO ATTORNEYS' FEES The prevailing party in any action brought to enforce the terms and conditions of this Agreement, or arising out of the performance of this Agreement, shall not be entitled to recover its attorneys' fees. 36. NONDISCRIMINATION Tenant, for itself and its successors, agrees that in the performance under this Agreement, Tenant shall not discriminate against any person because of the marital status, ancestry, gender, sexual orientation, etc, of that person or any characteristic listed or defined in Section 11135 of the Government Code. 37. MEMORANDUM OF LEASE AGREEMENT A Memorandum of Lease Agreement, in a form and content similar to that contained in Exhibit "H" shall be recorded by the parties promptly upon execution of this Agreement. Upon execution by both parties, the Memorandum of Lease Agreement shall be recorded against the Premises in the office of the Orange County Clerk- Recorder, as required by Government Code Section 37393. 38. NO THIRD PARTY BENEFICIARIES City (both as a lessor and as the City of Newport Beach) and Tenant do not intend, by any provision of this Agreement, to create in any third party, any benefit or right owed by one party, under the terms and conditions of this Agreement, to the other party. 39. LAWS It shall be the obligation of Tenant to comply with all laws, statutes, rules, and regulations including, but not limited to, State of California labor laws, rules and regulations and the parties agree that the City shall not be liable for any violation by Tenant (or Tenant's agent, sublessee or any party affiliated with Tenant) thereof. Lighthouse Cafe, LLC Page 34 K18019 40. NO DAMAGES Tenant acknowledges that City would not enter into this Agreement if it were to be liable for damages (including, but not limited to, actual damages, economic damages, consequential damages, lost profits, loss of rents or other revenues, loss of business opportunity, loss of goodwill or loss of use) under, or relating to, this Agreement or any of the matters referred to in this Agreement, including, without limitation, any and all plans, permits, licenses or regulatory approvals, and CEQA documents. Accordingly, Tenant covenants and agrees on behalf of itself and its successors and assigns, not to sue City (either in its capacity as lessor in this Agreement or in its capacity as the City of Newport Beach) for damages (including, but not limited to, actual damages, economic damages, consequential damages, lost profits, loss of rents or other revenues, loss of business opportunity, loss of goodwill or loss of use) or monetary relief for any breach of this Agreement by City or for any dispute, controversy, or issue between City and Tenant arising out of or connected with this Agreement or any of the matters referred to in this Agreement, including, without limitation, any and all plans, permits, licenses or regulatory approvals, CEQA documents, or any future amendments or enactments thereto, the parties agreeing that declaratory relief, injunctive relief, mandate and specific performance shall be Tenant's sole and exclusive judicial remedies. 41. GOVERNMENT CLAIMS ACT Tenant and City agree that in addition to any claims filing or notice requirements in this Agreement, Tenant shall file any claim that Tenant may have against City in strict conformance with the Government Claims Act (Government Code sections 900 et seq.), or any successor statute. 42. COUNTERPARTS This agreement may be executed in two (2) or more counterparts, each of which shall be deemed an original and all of which together shall constitute one (1) and the same instrument. [Signature page follows] Lighthouse Cafe, LLC Page 35 PZONCk] IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the dates written below. APPROVED AS TO FORM: THE CITY ATTORNEY'S OFFICE Date: i ho /I S (6-) Aaron C. Harp cA A o'3110117- City Attorney ATTEST: Date: CITY OF NEWPORT BEACH, a California municipal corporation Date: By: Edward D. Selich Mayor TENANT: LIGHTHOUSE CAFE, LLC, a California limited liability company Date: By: By: Leilani I. Brown Doug Cavanaugh City Clerk Managing Member Date: By: Tad Belshe Member [End of Signatures] Lighthouse Cafe, LLC Page 36 20 -40 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the dates written below. APPROVED AS TO FORM: THE CITY ATTO NEY'S OFFICE Date: 3 to l s By: A([` Aaron C, arp W& 031roUr City Attorney ATTEST: Leilani t. Brown City Clerk CITY OF NEWPORT BEACH, a California municipal corporation Date: By: Edward D. Selich Mayor TENANT: LIGHTHOUSE CAFE, LLC, a California limited liability company Date: By: C Doug Cavanaug Managing Member Date: 3 -1 6 -11S By: - � Tad Belshe Member [End of Signatures] Lighthouse Cafe, LLC Page 36 20 -41 i EXHIBIT "A" Property & Premises Depiction Lighthouse Cafe Page A -1 POOKIN EXHIBIT A - 1 20 -43 l (JJa ico .I .. .. .. .. ..� �1 1 11. 3 j I f� yayll wy 88 r� yow r`$1 �O Z-y1181HX3 1 J33HLS HLK I z wz EO Z_ O N Cs I d� GI Q O I z c CL `r 1 1 CL 0 w m 1 1 H EO U J � w J O O 2 O O N M o L N H 9 E L 'r O CL N T m w N N a9 o O E ° m� L m 0 Z PD w/1\- Q �j(�l\ w Z m aw �a �LL w� gg az �F 08 08 �o wog a f'j w� gff� m =m I UI m 9 O m R o c° O y� d riv O J rv` A y Y R o �--- O sr \ m \' Z 4 � g �f I MMa v, CD � o rr2 =H F \ Y� U) Ln LL 1 °o CM 0 'oa `O E- blI81HX3 Lo z a o O � LL Q X W W W Q m K In } CY w O (D z Q X0 w z d z W N z Ln yX m z W Q w O Z:) r z o' ED � 0 3 o a U z LL z(.9 x z N o z a oz Q .zi W z w Q 3 W 0 pm w W 3 N 0 twn Z 6 w a LLO w o m a Z 0 0 Y W W U C w H 0 U OU Q O Oa 0 (f) m =m I UI m 9 O m R o c° O y� d riv O J rv` A y Y R o �--- O sr \ m \' Z 4 � g �f I MMa v, CD � o rr2 =H F \ Y� U) Ln LL 1 °o CM 0 'oa `O E- blI81HX3 g� o 20 0 0 FQq� aQW o� z � I W Z z ¢ D o L) W r z m n o W Z Q dJ z z Z i O o } a m 0 Lu F ¢ ° a a W m d > z F J p Q = ¢ Q 0 W K H LL O v Z W co ¢ Z Z J W N Q Q¢ En 0 zr• O O Q w L j v W F ,d„ p� m 7 O p o Z p ril >¢ FE r cn El w 00� ii n I M I I i I I o \ \ I I � l I� I i x �C I 0 + o a tIld go I ! - - -_ -- b - V -LlglHX3 b EXHIBIT "B" Alcohol Conditions Lighthouse Cafe Page B -1 PliafJ Exhibit "B" Conditions Related to Alcohol License 1. State Department of Alcoholic Beverage Control license types classified as "Public Premises" shall be prohibited. 2. If required by the State Department of Alcoholic Beverage Control, the applicant shall provide the Chief of Police a statement of facts showing why the issuance of alcohol licenses for the proposed project would serve public convenience or necessity. 3. Approval of this lease agreement does not permit the restaurants to operate as nightclub as defined by the Newport Beach Municipal Code, unless the Planning Commission first approves such permit. 4. Prior to occupancy and operation of the proposed restaurant and its ancillary uses, a comprehensive security plan shall be submitted to the Newport Beach Police Department for review and approval. 5. There shall be no exterior advertising or signs of any kind or type, including advertising directed to the exterior from within, promoting or indicating the availability of alcoholic beverages. Interior displays of alcoholic beverages or signs which are clearly visible to the exterior shall constitute a violation of this condition. 6. No "happy hour" type of reduced price alcoholic beverage promotion shall be allowed except when offered in conjunction with food ordered from the full service menu. 7. No games or contests requiring or involving the consumption of alcoholic beverages shall be permitted. 8. All persons selling alcoholic beverages shall be over the age of 21 and undergo and successfully complete a certified training program in responsible methods and skills for selling alcoholic beverages. The certified program must meet the standards of the California Coordinating Council on Responsible Beverage Service or other certifying/licensing body, which the State may designate. Records of each owner's, managers and employee's successful completion of the required certified training program shall be maintained on the premises and shall be presented upon request by a representative of the City of Newport Beach. 9. The Tenant, as operator of the facility, shall be responsible for the control of noise generated by the subject facility including, but not limited to, noise generated by patrons, food service operations, and mechanical equipment. All noise generated by the proposed use shall comply with the provisions of Chapter 10.26 and other applicable noise control requirements of the Newport Beach Municipal Code. Pre- recorded music may be played in the tenant space, provided exterior noise levels outlined below are not exceeded. The noise generated by the proposed use shall comply with the provisions of Chapter 10.26 (Community Noise Control) of the Newport Beach Municipal Code. b 10. That no outdoor sound system, loudspeakers, or paging system shall be permitted in conjunction with the restaurant facility without the written approval of City, pursuant to Section 5.3 of this Agreement. Tenant shall obtain all required City permits and approvals. 11. The Tenant is required to take reasonable steps to discourage and correct objectionable conditions that constitute a nuisance within the facility, or surrounding public areas, sidewalks, or parking lots of the restaurant, during business hours, if directly related to the patrons of the establishment. 12. No alcoholic beverages shall be consumed on any property adjacent to the licensed premises under the control of the licensee. 13. A Special Events Permit is required for any event or promotional activity outside the normal operational characteristics of the approved use, as conditioned, or that would attract large crowds, involve the sale of alcoholic beverages, include any form of on -site media broadcast, or any other activities as specified in the Newport Beach Municipal Code to require such permits. 14. There shall be no on -site radio, televisions, video, film, or other electronic media broadcasts, including recordings to be broadcasted at a later time, which include the service of alcoholic beverages, without first obtaining an approved Special Event Permit issued by the City of Newport Beach. 15. Any event or activity staged by an outside promoter or entity, where the applicant, operator, owner or his employees or representatives share in any profits, or pay any percentage or commission to a promoter or any other person based upon money collected as a door charge, cover charge or any other form of admission charge is prohibited. 16. Tenant, as the operator of the establishment, shall not share any profits or pay any percentage or commission to a promoter or any other person based upon monies collected as a door charge, cover charge, or any other form of admission charge, including minimum drink orders or the sale of drinks. 17. The hours of operation for the interior of the restaurant shall be limited between 7:00 a.m. and 11:00 p.m., Sunday through Thursday, and 7:00 a.m. and 12:00 midnight, Friday through Saturday. 18. Service on the outdoor dining patio shall end by 10:00 p.m., daily. The outdoor dining patio shall be closed by 10:30 p.m., daily. 19. The exterior windows and doors of the facility shall be closed after 10:00 p.m. 20. The height of the boundary wall of the accessory outdoor first and second -floor dining areas shall be not less than forty -two (42) inches tall or consistent with the guardrail on the second - floor dining area, whichever is greater, and shall enclose the area where alcohol may be served. Fences, walls, or similar barriers shall serve only to define the outdoor dining area and not constitute a permanent all weather enclosure. The installation of roof coverings shall not have the effect of creating a permanent enclosure. The use of any type of overhead covering shall be subject to review and approval by the City Manager and necessary building permits. 20 -49 21. Storage outside of the leased Premises or outside of the building in the front or at the rear of the Property shall be prohibited, with the exception of the required trash container enclosure. 22. All trash shall be stored within the Premises or within dumpsters stored in the trash enclosures for the Property, or otherwise screened from view of neighboring properties, except when placed for pick -up by refuse collection agencies. The trash enclosure shall remain closed at all times, except when being loaded or while being collected by the refuse collection agency. 23. The Tenant shall ensure that the trash dumpsters and /or receptacles are maintained to control odors. This may include the provision of either fully self- contained dumpsters or periodic steam cleaning of the dumpsters, if deemed necessary by the Code Enforcement Division. Cleaning and maintenance of trash dumpsters shall be done in compliance with the provisions of Title 14, including all future amendments (including Water Quality related requirements). 24. Trash receptacles for patrons shall be conveniently located inside of the Premises. The exterior of the business shall be maintained free of litter and graffiti at all times. The City shall provide for daily removal of trash, litter debris and graffiti from the Property. Tenant shall immediately notify the City of any such issues at the premises. 25. Deliveries and refuse collection for the facility shall be prohibited between the hours of 10:00 p.m. and 8:00 a.m., daily, unless otherwise approved by the City Manager. 26. The Tenant is required to take reasonable steps to discourage and correct objectionable conditions that constitute a nuisance within the Premises, adjacent properties, or surrounding public areas, sidewalks, or parking lots of the restaurant, during business hours, if directly related to the patrons of the establishment. 27. Tenant shall limit their use and operation of the Premises to the establishment of an eating and drinking establishment as defined by Title 20 of the Municipal Code, with the principal purpose for the sale or service of food and beverages with sale and service of alcoholic beverages incidental to the food use. 28. The type of alcoholic beverage license issued by the California Board of Alcoholic Beverage Control shall be a Type 41 (On -Sale Beer and Wine for a Bona Fide Public Eating Place) in conjunction with the service of food as the principal use of the facility. Any upgrade in the alcoholic beverage license shall be subject to the approval of an amendment to this lease Agreement and shall require the approval of the City Council. 29. Execution of this Agreement does not permit the Premises to operate as a bar, tavern, cocktail lounge, or nightclub as defined by the Newport Beach Municipal Code. 30. Food service from the regular menu shall be available to patrons up to thirty (30) minutes before the scheduled closing time. 31. No alcoholic beverages shall be consumed on any property adjacent to the licensed premises under the control of the licensee. 32. There shall be no live entertainment or dancing allowed on the Premises without the Tenant first obtaining a Special Event Permit from the City. 20 -50 33. Strict adherence to maximum occupancy limits is required. 34. A Special Events Permit is required for any event or promotional activity outside the normal operational characteristics of the approved user, as conditioned, or that would attract large crowds, involve the sale of alcoholic beverages, include any form of on -site media broadcast, or any other activities as specified in the Newport Beach Municipal Code to require such permits. 35. Should the Property be sold or the Premises leased to a new tenant, subtenant, or otherwise come under new ownership, operation, or management, a new Operator License shall be required. 36. To the fullest extent permitted by law, Tenant shall indemnify, defend and hold harmless City, its City Council, its boards and commissions, officials, officers, employees, and agents from and against any and all claims, demands, obligations, damages, actions, causes of action, suits, losses, judgments, fines, penalties, liabilities, costs and expenses (including without limitation, attorneys' fees, disbursements and court costs) of every kind and nature whatsoever which may arise from or in any manner related (directly or indirectly) to City's approval of Tenant's use of the Premises. This indemnification shall include, but not be limited to, damages awarded against the City, if any, costs of suit, attorney's fees, and other expenses incurred in connection with such claim, action, causes of action, suit or proceeding whether incurred by Tenant, City, and /or the parties initiating or bringing such proceeding. The Tenant shall indemnify the city for all of City's costs, attorneys' fees, and damages, which City incurs in enforcing the indemnification provisions set forth in this condition. The Tenant shall pay to the City upon demand any amount owed to the City pursuant to the indemnification requirements prescribed in this condition. 20 -51 Exhibit "C" Delivery /Loading Zone, Common Areas, Parking Lighthouse Cafe Page C -1 rzOBWa ^tea s >� 6 - 0 ilOIHX3 x r- --- - - - - -- 1 L - d� �a W m 133tl1S FUR z wZ ON E 3 � 0 m 0 m i; I z g � � V5 U � � J Q 0 0 w Z O > ca L N ❑ N 133tl1S FUR z wZ ON E 3 � 0 m 0 m i; I z g � � V5 U � � J Q 0 O w Z O > ca L N ❑ N m F= 0 E 0 o m ❑� N T CO w �: m N 0— m� rn o -0 0 EL 0 L� m 0 z Q w Y LL i ^ a L 2 M 0 N -- �,- s�s� -r -• - -- _�:+,4� Vie.- �_., - �__._..._,�:�r � � c� , --- -- ------- I 1r7 J 1 0 v E o,� ' I O_ _ ai ______________ _________________ 1 Z - 3 ilSIHX3 0 i 1 1 C o N CL 1 1 E 1J c 1 1 o9 1 Z - 3 ilSIHX3 0 i [1Y w a (Do Q2 J W Y 2 LL i{ z ON m LL'- 1 1 C o g CL 1 1 E F c 1 1 o9 Z75 m m O o ` ° m w ti3 0 z 2 °-' g3 Q 0 > > N _7 Z = -0 w N o- L >0) 0 0 2 E L m a) W (n 0 z W F zz J w ~ U w v w n E' O F- z LL w D a z H z LL O w F z K O Y Q Z a m � z H W U ] 0 O U) w Z Q J m in w z F p Ln n a in z a f w UO < OJ 3 °v w Ln 3 p W w a 'a U 0 3 n - 5 w [1Y w a (Do Q2 J W Y 2 LL i{ z ON m LL'- Exhibit "D" Outdoor Dining Areas (First & Second Floor) Lighthouse Cafe Page D -1 MOB&I 1� �o $g o¢ zo F -z -og Aga pm � fo N i z 0 f 7�-2 J M o I�Qv 0 0 LL AD ¢ Q � w f o a w w m o! w z z Ni m �o I 1 7 UIL zu z � ti I « -tom �Fr pzp N H oo ,og � Z�¢ / 1111 e u S -JI T I I r� II u 14 LU z Q O w F z J Y m � to Z Q Z Z 8 Z lu y m f m O F Z ° Q d m >w Z F J Iz v = 0 0 O z z W m o z z w w m W M f zm) ? o Z�, W a m Ln W o --� a w z a O i a z w w Fw- a O 3 w t I I G D z -a IISTHXH z O 0 LL 0 Z O w CO 0 N Exhibit "E" Delivery Condition Lighthouse Cafe Page E -1 MOB-1.1 II l i r -. r -- T -LSD 44F I Z, �l yo r �Y Z 1 1 0) a '0 g �0 o d o l l a E wF U 1 1 o— L m U) 0 0 (D m 0 0o N� (D 0z.0� 3 cr ° > >� s .00 Z W N 0- Q u m P- -iat > 0) w 0 0 N 2 Z Y L K O m W m Z I I I < J W Y LL > z J u w Z w ~ > m w LU U) w D z Q z W Q u w F• Z LL K O � Z 0 Y U Q W a I m Z j w O LU LD m at F 3 ¢ a 0. ¢ o u~i w 3 w z w O f J ,a7 .n Q J0 u - vv w j m Q K c7 3 w w w w F Q 3 W V I I I < J W Y LL in z -a IIEZxxa 0 0 c o 0 �rnEE10o•.NC� w'N d L oy,aam�"E p t s p p —a - c� cU.....- m x m07 mama 3`�vn°m�'m: am C� mON- « C C C O o N c G o p m o O w o a rO'n - 2y E "o cU C c C U C 6 d c y d m m TcH O N c z L o O c N m_ 0 N "0 p C TUc Nao E o c m - -Z o m d m 10 aE mat.. a- omdcmo « oCT CZ 0010 -am oc ap am a0 - 0 00<m--c `p= N 0 ac N EOEE. 0-magi 'OEmazmM> o c a,�- c m 'N m L O > m _ W,--,Ow D! p°'oo E —u _m N m a.p� m C N N O;ZC woo Ea EC ca n.mm0 aE X M m O N O mc,l 'o�- C- C m m 30 a9 00 c • - . m U NmLFd m� m N m r m o E � E °-00 c TE C8"Pamrn d ma0w fit... 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UJ ` ° ° ul oz : e JLJ cc o ;=c kW 2 G)\ z < CC Dui w o OF <r< z9w0 \ - �e \ c §2R�u� oe & °«k 3U AM.Mz< x z 2 (2 §k (j2�Gk §kde \ \�!B <§ wZZV) )0 §a LUL0k§k� \§§ m L) (\())\§(§) y DDDDRDRD �w a'z a R r Z� a� (�9�C uLL o� l7 Z O O � z w o O x Fu U) Z o Z } w a (f) H O F J C7 Z w u u Q z w a O J - n J Q Lu (f) � w � Q Z E El N ED 0 } N O F w L > O F Oa wwa L ~ w zaC D w W < >>u O m Q F Q w ae FO F O 7 H J w C) w Z O J K Z S a Z Q Q Q F2: • Q� Illllr IIIIIIIIIIIIIWI_ e_ ° ©o • © • • I' UU �Z gg >w a � b� v� Np or W K w m = Q w > w O g W J O Co > _ O Q Q m Z Z w F LL Q W J U w O w Q > Q U 0 w } Y = N a Z Z w rvVi W W J o W g zz in F > N z J W U 0 Q p O f C N C9 w 0 w d d © y I Y� p � O • O o p _n g d r z N J 0 oU • + e o w o U o ° - °. - p o F ° U p o O p N LL w U � O O O O Y 0 O p LL LL ti O CO O 2 LL N - p _ OT-S SIHIHX3 b w gZZs JU� �y o fa 0 �W �o v NNw moo Q � 1�1 i1 L I o 1 Q z CL CL o z z J ���• b n W LLJ U H a U J LL w �I LL o W i N _ 7 �A tt -a szarxxa 0 N 0 0 O ,u C7 Q 0 W `J F L n W a U a = o u Q `J N W o Z d z w > Z U 0 g a U Z W a 3 a 5 o o > a �00❑a 1 Q z CL CL o z z J ���• b n W LLJ U H a U J LL w �I LL o W i N _ 7 �A tt -a szarxxa 0 N Exhibit "F" Tenant Improvements [To be attached upon City approval of Tenant's plans.] Lighthouse Cafe Page F -1 POOSAM Exhibit "G" Insurance Without limiting Tenant's indemnification of City, Tenant will obtain, provide and maintain at its own expense during the Term of this Agreement, a policy or policies of insurance of the type, amounts and form acceptable to City. The policy or policies shall provide, at a minimum, those items described below. 1. Provision of Insurance. Without limiting Tenant's indemnification of City, and prior to commencement of work on Premises by Tenant or Tenant's agents, representatives, consultants, contractors and /or subcontractors, Tenant shall obtain, provide and maintain at its own expense during the term of this Agreement policies of insurance of the type and amounts described below and in a form satisfactory to City. Tenant agrees to provide insurance in accordance with requirements set forth here. If Tenant uses existing coverage to comply and that coverage does not meet these requirements, Tenant agrees to amend, supplement or endorse the existing coverage. 2. Acceptable Insurers. All insurance policies shall be issued by an insurance company currently authorized by the insurance commissioner to transact business of insurance 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's Risk Manager. 3. Coverage Requirements. A. Workers' Compensation Insurance. Tenant and Tenant's agents, representatives, consultants, contractors and /or subcontractors, shall maintain 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. Tenant and Tenant's agents, representatives, consultants, contractors and /or subcontractors, shall submit to City, along with the certificate of insurance, a Waiver of Subrogation endorsement in favor of City, its officers, agents, employees and volunteers. B. General Liability Insurance. Tenant and Tenant's agents, representatives, consultants, contractors and /or subcontractors, shall maintain commercial general liability insurance, and if necessary umbrella liability insurance, with coverage at least as broad as provided by Insurance Services Office form CG 00 01, in an amount not less than two million dollars and 00/100 ($2,000,000) per occurrence, five million dollars and 00/100 ($5,000,000) Lighthouse Cafe Page G -1 KPIVA general aggregate. The policy shall cover liability arising from premises, operations, personal and advertising injury, and liability assumed under an insured contract (including the tort liability of another assumed in a business contract) with no endorsement or modification limiting the scope of coverage for liability assumed under a contract. C. Products Liability Coverage. Tenant shall maintain products liability insurance covering bodily injury and property damage for all activities of the Tenant arising out of or in connection with products or services sold by the Tenant under this Agreement, in an amount not less than two million dollars and 00/100 ($2,000,000) combined single limit for each occurrence. D. Liquor Liability Coverage. Tenant shall maintain liquor liability insurance in an amount not less than two million dollars and 00/100 ($2,000,000) per occurrence for bodily injury, personal injury, and property damage. Tenant shall obtain a liquor liability insurance policy that covers all alcohol sold or distributed under this Agreement. The policy shall specifically include assault and battery coverage as well as coverage for Tenant's employees and patrons. E. Fire and Extended Coverage. Tenant shall maintain fire and extended coverage insurance, together with insurance against vandalism, theft and malicious mischief, on the improvements and fixtures, alterations, trade fixtures, signs, equipment, personal property and inventory on or upon the Premises from loss or damage in an amount not less than one million dollars and 00/100 ($1,000,000) per occurrence. F. Loss of Rent. Tenant shall maintain loss of rent insurance insuring that the Rent will be paid to City for a period up to six (6) months if the Premises are destroyed or rendered unusable or inaccessible for commercial purposes by a risk insured under a special form property coverage policy including vandalism and malicious mischief endorsements. G. Professional Liability (Errors & Omissions) Insurance. Tenant shall require that Tenant's consultants, contractors and /or subcontractors providing any design, engineering, surveying or architectural services for the Premises maintain professional liability insurance that covers the services to be performed, in the minimum amount of one million dollars and 00/100 ($1,000,000) per claim and two million dollars and 00/100 ($2,000,000) in the aggregate. Any policy inception date, continuity date, or retroactive date must be before the Effective Date of this Agreement and Tenant shall require that Tenant's consultants, contractors and /or subcontractors agree to maintain continuous coverage through a period no less than three (3) years after completion of the services performed. Lighthouse Cafe Page G -2 DOOM &A H. Automobile Liability Insurance. Tenant and Tenant's consultants, contractors and /or subcontractors shall maintain automobile insurance at least as broad as Insurance Services Office form CA 00 01 covering bodily injury and property damage for all activities of Tenant or all activities of Tenant's consultants, contractors and /or subcontractors arising out of or in connection with work to be performed on the Premises, including coverage for any owned, hired, non -owned or rented vehicles, in an amount not less than two million dollars and 00/100 ($2,000,000) combined single limit each accident. Builder's Risk Insurance. During construction, Tenant shall require that Tenant's construction contractors and subcontractors maintain Builders Risk insurance or an installation floater as directed by City, covering damages to the work for "all risk" or special causes of loss form with limits equal to one hundred percent (100 %) of the completed value of the work, with coverage to continue until final acceptance of the work by Tenant and City. City shall be included as an insured on such policy, and Tenant shall provide City with a copy of the policy. J. Pollution Liability Insurance. Tenant shall require that Tenant's construction contractors and subcontractors maintain a policy providing contractor's pollution liability ( "CPL ") coverage with a total limit of liability of no less than two million dollars and 00/100 ($2,000,000) per loss and in the aggregate per policy period dedicated to this project. The CPL shall be obtained on an occurrence basis for a policy term inclusive of the entire period of construction. If all or any portion of CPL coverage is available only on a claims -made basis, then a 10 -year extended reporting period shall also be purchased. The CPL policy shall include coverage for cleanup costs, third -party bodily injury and property damage, including loss of use of damaged property or of property that has not been physically injured or destroyed, resulting from pollution conditions caused by contracting operations. Coverage as required in this paragraph shall apply to sudden and non - sudden pollution conditions resulting from the escape or release of smoke, vapors, fumes, acids, alkalis, toxic chemicals, liquids, or gases, waste materials, or other irritants, contaminants, or pollutants. The CPL shall also provide coverage for transportation and off - site disposal of materials. The policy shall not contain any provision or exclusion (including any so- called "insured versus insured" exclusion or "cross- liability" exclusion) the effect of which would be to prevent, bar, or otherwise preclude any insured or additional insured under the policy from making a claim which would otherwise be covered by such policy on the grounds that the claim is brought by an insured or additional insured against an insured or additional insured under the policy. 4. Endorsements: Policies shall contain or be endorsed to contain the following provisions: Lighthouse Cafe Page G -3 rzOsK3 A. Additional Insured Status. City, its elected or appointed officers, officials, employees, agents and volunteers are to be covered as an additional insured under all general liability and pollution liability policies with respect to liability arising out of Tenant's activities related to this Agreement and with respect to use or occupancy of the Premises. City and City's general contractor, KPRS Construction Services, Inc. shall be named as an additional insured on any of Tenant's contractor's and subcontractor's policies. B. Primary and Non Contributory. Policies shall be considered primary insurance as respects to City, its elected or appointed officers, officials, employees, agents and volunteers as respects to all claims, losses, or liability arising directly or indirectly from Tenant's operations. Any insurance maintained by City, including any self- insured retention City may have, shall be considered excess insurance only and not contributory with the insurance provided hereunder. C. Liability Insurance. Liability insurance shall act for each insured and additional insured as though a separate policy had been written for each, except with respect to the limits of liability of the insuring company. D. Waiver of Subrogation. All insurance coverage maintained or procured pursuant to this Agreement shall be endorsed to waive subrogation against City, its elected or appointed officers, agents, officials, employees and volunteers or shall specifically allow Tenant or others providing insurance evidence in compliance with these requirements to waive their right of recovery prior to a loss. Tenant hereby waives its own right of recovery against City, and shall require similar written express waivers from each of its consultants, contractors or subcontractors. E. Reporting Provisions. Any failure to comply with reporting provisions of the policies shall not affect coverage provided to City, its elected or appointed officers, officials, employees, agents or volunteers. F. Notice of Cancellation. The insurance required by this Agreement shall not be suspended, voided, canceled, or reduced in coverage or in limits except after thirty (30) calendar days (ten (10) calendar days written notice of non - payment of premium) written notice has been received by City. It is Tenant's obligation to ensure that provisions for such notice have been established. G. Loss Payee. City shall be included a loss payee under the commercial property insurance. 5. Additional Requirements. A. In the event City determines that (i) the Tenant's activities on the Property creates an increased or decreased risk of loss to the City, (ii) greater Lighthouse Cafe Page G -4 POOMIJ insurance coverage is required due to the passage of time, or (iii) changes in the industry require different coverage be obtained, Tenant agrees that the minimum limits of any insurance policy required to be obtained by Tenant or Tenant's consultants, contractors or subcontractors, may be changed accordingly upon receipt of written notice from City. With respect to changes in insurance requirements that are available from Tenant's then - existing insurance carrier, Tenant shall deposit certificates evidencing acceptable insurance policies with City incorporating such changes within thirty (30) calendar days of receipt of such notice. With respect to changes in insurance requirements that are not available from Tenant's then- existing insurance carrier, Tenant shall deposit certificates evidencing acceptable insurance policies with City, incorporating such changes, within ninety (90) calendar days of receipt of such notice. B. Any deductibles applicable to the commercial property or insurance purchased in compliance with the requirements of this section shall be approved by City. C. Tenant and Tenant's consultants, contractors and /or subcontractors shall be subject to the insurance requirements contained herein unless otherwise specified in the provisions above or written approval is granted by the City. Tenant shall verify that all consultants, contractors. and /or subcontractors maintain insurance meeting all the requirements stated herein, and Tenant shall ensure that City is an additional insured on insurance required from contractors, consultants and /or subcontractors. D. For General Liability coverage, contractors, consultants and /or subcontractors shall provide coverage with a format at least as broad as provided by Insurance Services Office form CG 203 80413. E. If Tenant maintains higher limits than the minimums shown above, the City requires and shall be entitled to coverage for the higher limits maintained by the tenant. Any available insurance proceeds in excess of the specified minimum limits of insurance and coverage shall be available to the City. F. Tenant shall give City prompt and timely notice of any claim made or suit instituted arising out of or resulting from Tenant or Tenant's agents, representatives, consultants, contractors or subcontractors performance under this Agreement. G. Tenant shall provide certificates of insurance, with original endorsements as required above, to City as evidence of the insurance coverage required herein. Insurance certificates must be approved by City prior to commencement of work or issuance of any permit. Current certification of insurance shall be kept on file with City at all times during the term of this Agreement. Lighthouse Cafe Page G -5 M182M H. All required insurance shall be in force on the Effective Date, and shall be maintained continuously in force throughout the term of this Agreement. In addition, the cost of all required insurance shall be borne by Tenant or by Tenant's consultants, contractors or subcontractors. If Tenant or Tenant's consultants, contractors or subcontractors fail or refuse to maintain insurance as required in this Agreement, or fail to provide proof of insurance, City has the right to declare this Agreement in default without further notice to Tenant, and City shall be entitled to exercise all available remedies. Tenant agrees not to use the Premises in any manner, even if use is for purposes stated herein, that will result in the cancellation of any insurance City may have on the Premises or on adjacent premises, or that will cause cancellation of any other insurance coverage for the Premises or adjoining premises. Tenant further agrees 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. Tenant shall, at its sole expense, comply with all reasonable requirements for maintaining fire and other insurance coverage on the Premises. Lighthouse Cafe Page G -6 rzOscy Exhibit "H" Memorandum of Lease Lighthouse Cafe Page H -1 PIi3rJ RECORDING REQUESTED AND WHEN RECORDED RETURN TO: Office of the City Clerk City of Newport Beach 100 Civic Center Drive PO Box 1768 Newport Beach, CA 92658 [Exempt from Recordation Fee - Govt. Code §§ 6103 & 27383] MEMORANDUM OF LEASE AGREEMENT This Memorandum of Lease Agreement ( "Memorandum ") is dated , 2015, and is made between City of Newport Beach, a California municipal corporation and charter city ( "City ") and Lighthouse Cafe, LLC , a California limited liability company (operating as) ( "Tenant "), concerning the Premises described in Exhibit "A ", attached hereto and by this reference made a part hereof. For good and adequate consideration, City leases the Premises to Tenant, and Tenant leases the Premises from City, for the term and on the provisions contained in the Agreement dated 2015, including without limitation provisions prohibiting assignment, subleasing, and encumbering said leasehold without the express written consent of City in each instance, all as more specifically set forth in said Agreement, which said Agreement is incorporated in this Memorandum by this reference. The Agreement's term is fifteen (15) years, beginning 2015, and ending , unless extended by the parties. This Memorandum is not a complete summary of the Agreement. Provisions in this Memorandum shall not be used in interpreting the Agreement's provisions. In the event of conflict between this Memorandum and other parts of the Agreement, the other parts shall control. Execution hereof constitutes execution of the Agreement itself. [Signatures on the next page] KPIN-9 IN WITNESS WHEREOF, the parties hereto have executed this Memorandum of Lease as of the dates written below. CITY City of Newport Beach A California Municipal Corporation Date: Dave Kiff City Manager ATTEST: Date: Leilani I. Brown City Clerk APPROVED AS TO FORM: Date: Aaron C. Harp LAIA -31,0119' City Attorney TENANT Lighthouse Cafe, LLC, a California limited liability company Date: By: Doug Cavanaugh Managing Member Date: By: Tad Belshe Member 20 -79 NOTARY ACKNOWLEDGMENT A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. State of California ) County of ORANGE ) On before me, Notary Public, personally appeared DAVE KIFF, who proved to me on the basis of satisfactory evidence to be the person whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his authorized capacity(ies), and that by his signature on the instrument the person, 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 NOTARY ACKNOWLEDGMENT A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. State of California ) County of ORANGE ) On before me, Notary Public, personally appeared who proved to me on the basis of satisfactory evidence to be the person whose name is subscribed to the within instrument and acknowledged to me that s /he executed the same in his /her authorized capacity(ies), and that by his /her signature on the instrument the person, 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) NOX -18] Exhibit "I" CITY OF NEWPORT BEACH BOND NO. FAITHFUL PERFORMANCE BOND The premium charges on this Bond is $ , being at the rate of $ thousand of the Contract price. WHEREAS, Tenant LIGHTHOUSE CAFE, LLC, as Tenant of the City of Newport Beach, State of California, has awarded to [Contractor] hereinafter designated as the "Principal," a contract for the work necessary for the completion of this contract consists of; It is CONTRACTOR's responsibility to verify all controlling field dimensions before ordering or fabricating any material in the City of Newport Beach, in strict conformity with the Contract on file with Tenant /LIGHTHOUSE CAFE, LLC and the office of the City Clerk of the City of Newport Beach, which is incorporated herein by this reference. WHEREAS, Principal has executed or is about to execute the Contract and the terms thereof require the furnishing of a Bond for the faithful performance of the Contract. NOW, THEREFORE, we, the Principal, and ' duly authorized to transact business under the laws of the State of California as Surety (hereinafter "Surety "), are held and firmly bound unto the City of Newport Beach, in the sum of Dollars and _/100 ($ ) lawful money of the United States of America, said sum being equal to 100% of the estimated amount of the Contract, to be paid to the City of Newport Beach, its successors, and assigns; for which payment well and truly to be made, we bind ourselves, our heirs, executors and administrators, successors, or assigns, jointly and severally, firmly by these present. THE CONDITION OF THIS OBLIGATION IS SUCH, that if the Principal, or the Principal's heirs, executors, administrators, successors, or assigns, fail to abide by, and well and truly keep and perform any or all the Work, covenants, conditions, and agreements in the Contract and any alteration thereof made as therein provided on its part, to be kept and performed at the time and in the manner therein specified, and in all respects according to its true intent and meaning, or fails to indemnify, defend, and save harmless Tenant /LIGHTHOUSE CAFE, LLC, and the City of Newport Beach, its officers, employees and agents, as therein stipulated, then, Surety will faithfully perform the same, in an amount not exceeding the sum specified in this Bond; otherwise this obligation shall become null and void. Lighthouse Cafe Page 1 -1 rzea; As a part of the obligation secured hereby, and in addition to the face amount specified in this Performance Bond, there shall be included costs and reasonable expenses and fees, including reasonable attorneys fees, incurred by City, only in the event City is required to bring an action in law or equity against Surety to enforce the obligations of this Bond. Surety, for value received, stipulates and agrees that no change, extension of time, alterations or additions to the terms of the Contract or to the Work to be performed thereunder shall in any way affect its obligations on this Bond, and it does hereby waive notice of any such change, extension of time, alterations or additions of the Contract or to the Work or to the specifications. This Faithful Performance Bond shall be extended and maintained by the Principal in full force and effect for one (1) year following the date of formal acceptance of the Project by Tenant and City. In the event that the Principal executed this bond as an individual, it is agreed that the death of any such Principal shall not exonerate the Surety from its obligations under this Bond. IN WITNESS WHEREOF, this instrument has been duly executed by the Principal and Surety above named, on the day of 20_ Name of Contractor (Principal) Name of Surety Address of Surety Telephone Authorized Signature/Title Authorized Agent Signature Print Name and Title NOTARY ACKNOWLEDGMENTS OF CONTRACTOR AND SURETY MUST BE ATTACHED Lighthouse Cafe Page 1 -2 rzeaPa ACKNOWLEDGMENT A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. State of California County of ) ss. On 20 before me, Notary Public, personally appeared proved to me on the basis of satisfactory evidence to be t subscribed to the within instrument and acknowledged to same in his /her /their authorized capacity(ies), and that b y instrument the pemon(s), or the entity upon behalf of which instrument. who he person(s) whose name(s) is /are me that he /she /they executed the his /her /their signatures(s) on the the person(s) acted, executed the 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 ACKNOWLEDGMENT A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. State of California County of ss. (seal) On 20 before me, Notary Public, personally appeared proved to me on the basis of satisfactory evidence to be t subscribed to the within instrument and acknowledged to same in his /her /their authorized capacity(ies), and that by instrument the person(s), or the entity upon behalf of which who he person(s) whose name(s) is /are me that he /she /they executed the his /her /their signatures(s) on the 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) NiII ie] Exhibit "J" CITY OF NEWPORT BEACH BOND NO. LABOR AND MATERIALS PAYMENT BOND WHEREAS, Tenant /LIGHTHOUSE CAFE, LLC, as Tenant of the City of Newport Beach, State of California, has awarded to [Contractor] hereinafter designated as the "Principal," a contract for the work necessary for the completion of this contract consists of: It is CONTRACTOR's responsibility to verify all controlling field dimensions before ordering or fabricating any material in the City of Newport Beach, in strict conformity with the Contract on file with Tenant /LIGHTHOUSE CAFE, LLC and the office of the City Clerk of the City of Newport Beach, which is incorporated herein by this reference. WHEREAS, Principal has executed or is about to execute the Contract and the terms thereof require the furnishing of a bond, providing that if Principal or any of Principal's subcontractors, shall fail to pay for any materials, provisions, or other supplies used in, upon, for, or about the performance of the Work agreed to be done, or for any work or labor done thereon of any kind, the Surety on this bond will pay the same to the extent hereinafter set forth. NOW, THEREFORE, We the undersigned Principal, and, duly authorized to transact business under the laws of the State of California, as Surety, (referred to herein as "Surety ") are held and firmly bound unto the City of Newport Beach, in the sum of Dollars and _ /100 ($ ) lawful money of the United States of America, said sum being equal to 100% of the estimated amount payable by the Tenant /LIGHTHOUSE CAFE, LLC, of the City of Newport Beach under the terms of the Contract; for which payment well and truly to be made, we bind ourselves, our heirs, executors and administrators, successors, or assigns, jointly and severally, firmly by these present. THE CONDITION OF THIS OBLIGATION IS SUCH, that if the Principal or the Principal's subcontractors, fail to pay for any materials, provisions, or other supplies, implements or machinery used in, upon, for, or about the performance of the Work contracted to be done, or for any other work or labor thereon of any kind, or for amounts due under the Unemployment Insurance Code with respect to such work or labor, or for any amounts required to be deducted, withheld and paid over to the Employment Development Department from the wages of employees of the Principal and subcontractors pursuant to Section 13020 of the Unemployment Insurance Code with respect to such work and labor, then the Surety will pay for the same, in an amount not exceeding the sum specified in this Bond, and also, in case suit is brought to enforce Lighthouse Cafe Page J -1 MOVE the obligations of this Bond, a reasonable attorneys' fee, to be fixed by the Court as required by the provisions of Section 9554 of the Civil Code of the State of California. The Bond shall inure to the benefit of any and all persons, companies, and corporations entitled to file claims under Section 9100 of the California Civil Code so as to give a right of action to them or their assigns in any suit brought upon this Bond, as required by and in accordance with the provisions of Sections 9500 et seq, of the Civil Code of the State of California. And Surety, for value received, hereby stipulates and agrees that no change, extension of time, alterations or additions to the terms of the Contract or to the Work to be performed thereunder shall in any wise affect its obligations on this Bond, and it does hereby waive notice of any such change, extension of time, alterations or additions to the terms of the Contract or to the Work or to the specifications. In the event that any principal above named executed this Bond as an individual, it is agreed that the death of any such principal shall not exonerate the Surety from its obligations under this Bond. IN WITNESS WHEREOF, this instrument has been duly executed by the above named Principal and Surety, on the day of , 20_ Name of Contractor (Principal) Name of Surety Address of Surety Telephone Authorized Signature /Title Authorized Agent Signature Print Name and Title NOTARY ACKNOWLEDGMENTS OF CONTRACTOR AND SURETY MUST BE ATTACHED Lighthouse Cafe Page J -2 NION &I ACKNOWLEDGMENT A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. State of California County of } ss. On 20 before me, 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 signatures(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 ACKNOWLEDGMENT A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. State of California County of } ss. (seal) On 20 before me, 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 signatures(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) MON-11 Attachment CC - 2 20 -87 F7-Am JL Y 1. — eM . r-= L IL n co 0 N s O N L u `Vf C rl %nI 0 00E X x W V e O � fI t O 0 a J i1 2 W 2 LL 2 7 i it c�wa H N ¢ I ,r _ =L i �w r. U � I UZ �3 ¢ a 5� w� a� > � E 0 i o � m mm 0o m 00 xF i Q om f,.r o ` ¢x � �3ais Fua1 X z g I 1 N w x U I I N ON J O O i it c�wa H N ¢ I ,r _ =L i �w r. 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Ln z w o D a U z W w w m a D w m E a° 0 a ❑'-' ❑N ❑M ❑� ❑�n ❑io j ❑nI O II Ln ', -- - - - - -- 10 ON O e U- o p z m O Ell LU I �I I �I I Ins 1p 9 VlNHO=lllVO'HOVD9 1HOdM3N HOVD8 iUOdMaN =10 AilO LN"nY.I.SaN � � � � 11 N3NM03 301AU3SCOOJ <I 4 4 <I A AHVd VNIUM jvo 3snOH.LHE)ll O co ................ - ------ ....... Lu ji EE Cf 0 0 LEM W z C- D- ---------------- ----------------------------------- ----------------------------- 0 0 1 i I El o Lj U EAD 0 Ci L-1 171, � < (If 0 0 u li 0 Dtj L) 1-10 > w - -------------- — -------------------- ATTACHMENT CC 4 Marina Park Project The Light House Cafe Proposal Submittal By CAVCO RESTAURANT SERVICES RFP -No 14 -31— Marina Park Project Restaurant / Cafe Space Operation March 7, 2014 20 -93 Marina Park Restaurant Concept The Lighthouse Cafe For over thirty years I have specialized in creating restaurants that take advantage of great locations. Some of these locations are not particularly easy to get to. Starting with a long walk on the Balboa Pier to Ruby's, and then a bus ride to The Beachcomber Cafe at Crystal Cove State Beach, these restaurants had to be destinations. I think the combination of a beautiful location like Marina Park, beautiful architecture, a fun concept, and great food will provide the draw to make this location an absolute success with residents & tourists alike. The Lighthouse Cafe concept is intended to work with the exciting architecture that has been developed for Marina Park. The lighthouse feature that ascends from the park is an attractive and appropriate centerpiece, giving us the inspiration for the name. Since the star of the show is the architecture, other design elements will be limited. We want to let what is to be built shine. We will start with stylish stainless steel and teak tables and chairs, setting a sophisticated yet casual vibe for the restaurant. This seating will be within the lighthouse rotunda, and on the exterior patio. The upper deck will feature the same furniture where there will be an overlook bar serving the same great menu along with beer and wines. On the limited walls that we do have, we would propose incorporating great murals featuring photography from various periods that pays tribute to Newport Bay's rich history. Starting with the construction of the Pier and Pavilion, and continuing with the Harbor construction, the Pacific Electric Red Cars, The original Fun Zone, Boat Parades, Boy Scout Jamboree, and the Balboa Ferry. Another focus for the decor will be celebrating the watercraft that people have used in Newport over the years. Vintage to modern surfboards signed by the legends of yesterday and today could be displayed on the vertical elements of the lighthouse structure. The key will be to complement the architecture, and not compete. How beautiful can a floor be? Very beautiful. We would propose a custom designed terrazzo floor that would incorporate wave elements that encircle the dining area. This terrazzo design would also feature a mariner's compass on the floor. This compass rose will be visible from within the rotunda, and also the floor level above. The fun and unique centerpiece of the restaurant would be a periscope located directly in the middle of the compass rose. Guests would be able to view surrounding scenes afforded by a rotating camera atop the lighthouse tower. Because of the height of the tower, these views would include vistas of the ocean and Catalina island. This is the kind of fun feature people will talk about. RFP NO. 14 -31 - Marina Park Project Restaurant / Cafe Space Operation 20 -94 The Lighthouse Cafe will offer breakfast, lunch and dinner, seven days a week. The quality of the food will match the quality of the location and architecture. A full breakfast menu would feature all of the classics along with specialties to entice special occasion visits. We envision The Lighthouse Cafe as a gathering place for locals in the morning, as well as a place for you to just relax and read your paper (or Ipad). You can then enjoy a breakfast as healthy or as decadent as you choose, all the way from freshly made steel cut oatmeal to Eggs Benedict. Lunch would feature a full selection of great soups, salads, burgers, sandwiches, and simply grilled fish. To complement your meal, a good selection of wines and craft beers will be featured. Dinner would offer the same items as lunch, but would also offer some larger plates featuring entrees like Seafood Pot Pies, Seafood Pasta, Grilled Salmon, Swordfish and Steak Frites. We would also offer an appetizer menu for the upstairs deck, for those who want to enjoy a beverage along with a tasty appetizer. The proposed To -Go menu served from the window will feature quick and delicious options including great soups, salads, sandwiches and burgers along with kid friendly items like shaved ice and Balboa Bars. We would envision the average check per person being roughly $10 at breakfast, $12 at lunch, and $18 to $25 at dinner. The items served from the To Go window would be designed to be offered at a lower price. While the kitchen is small, we are confident we can produce these menus out of the proposed kitchen footprint. I currently operate kitchens of this size, with volumes three times of what is being proposed here. We applaud the creative effort and investment that has been poured into the Marina Park project. Our intention is to work in concert with this great design, and provide a facility that the City and its residents can be proud of. Thank you for your consideration of this proposal Sincerely, Zti'Q Doug Cavanaugh RFP NO. 14 -31 - Marina Park Project Restaurant/ Cafe Space Operation 20 -95 LIGHTHOUSE CAFE ORGANIZATIONAL INFORMATION MANAGEMENT TEAM Executive Management Team Bios Doug Cavanaugh - President and CEO, Founder Doug Cavanaugh, founder and owner of Ruby's Diner, a 1940's diner concept that originated in Newport Beach at the end of the Balboa Pier in 1982. Ruby's Diner has grown to over 40 restaurants in over six states with new restaurants opening this year in San Diego, Hawaii and Atlantic City. Ruby's remains a California icon with three pier locations (Balboa, Huntington Beach, and Oceanside), seven mall locations, and multiple airports (including John Wayne) and neighborhood locations throughout the United States. Mr. Cavanaugh is also the founder of The Beachcomber Cafe and Shake Shack at Crystal Cove, located in Newport Coast. The Beachcomber quickly became a local favorite, as well as a destination for visitors to Newport Beach and the surrounding communities. Tad Belshe – Executive Vice President, Operations As Executive Vice President, Mr. Belshe is focused on building the Ruby's Diner and Beachcomber Cafe brands and driving overall company growth. His responsibilities include all aspects of operations at both Ruby's Diner and The Beachcomber —from menu planning and staffing to marketing and expansion opportunities. He brings more than 20 years of experience in restaurants, top -tier resorts, hotels, and private membership clubs to Ruby's Diner and The Beachcomber Cafe. Prior to Ruby's Diner and The Beachcomber Cafe, Tad was General Manager at The St. Regis' Monarch Bay Club, where he expanded member offerings, creating membership demand and increased profitability. He also held key leadership roles within The Ritz - Carlton Hotel Company, including the opening team trainer of two Asian - Pacific properties. Tad completed his BS in Business Management at Pepperdine University. *Doug Cavanaugh and Tad Belshe will be the primary contacts for the City of Newport Beach. RFP No. 14 -31 – Marina Park Project Restaurant /Cafe 20 -96 The Lighthouse Cafe Corporate and Anticipated Restaurant Employee Overview Functional Area Count Functional Area Vq� =M Senior Management 2 Team Members 30 Restaurant Management 2 Catering Director 1 Chef/ Kitchen Manager 1 TOTAL 36 The Lighthouse Cafe Restaurant Level Structure: The Lighthouse Cafe is structured to include one general manager and one assistant manager. Additional support leadership may exist to assist the management team, which may include a supervisor and /or a certified trainer. General Manager: The Lighthouse Cafe General Manager is developed to intimately understand every detail of their individual restaurant. They ensure guest safety through monitoring of established systems, guest satisfaction through being actively involved in dining room operations, financial success through monitoring of every cost factor and variable expenses. The Lighthouse Cafe's General Manager is continually driving success through continued training and team development. Assistant Manager / Manager: The Lighthouse Cafe's Assistant Manager is the backbone of the General Manager and while their specific role includes more focus on operating an individual shift, they are developed to operate as a General Manger in the absence of the General Manager. Supervisor: The Supervisor position may be in place if needed based on business levels and coverage needs. The Supervisor assists the management team in running a shift or at key business demand times. Their role includes guest satisfaction, oversight of the expediter position, break and meal management, and training. Customer - Facing Positions: These include Servers, Hosts, and Bus Boys. These individuals are the best trained and friendliest employees in the business, creating a genuine and memorable dining experience. Culinary Staff: Chef, Cooks, preparation and dishwashers. The kitchen teams at The Lighthouse are the heart of the restaurant and place great care into every dish that is presented to a Lighthouse Cafe guest. RFP No. 14 -31 — Marina Park Project Restaurant/Cafe Space Operation 20 -97 Operational Experience Doug Cavanaugh, founder and owner of Ruby's Diner, a 1940's diner concept that originated in Newport Beach at the end of the Balboa Pier in 1982, leads the Lighthouse Marina Cafe's leadership team. Ruby's Diner has grown to over 40 restaurants in over six states with new restaurants opening this year in San Diego, Hawaii and Atlantic City. Ruby's remains a California icon with three pier locations (Balboa, Huntington Beach, and Oceanside), seven mall locations, and multiple airports (including John Wayne) and neighborhood locations throughout the United States. Mr. Cavanaugh is also the founder of The Beachcomber Cafe and Shake Shack at Crystal Cove, located in Newport Coast. The Beachcomber quickly became a local favorite, as well as a destination for visitors to Newport Beach and the surrounding communities. Tad Belshe joins Mr. Cavanaugh in operational support to create an icon at Marina Park. Mr. Belshe was bom and raised in Newport Beach, and has over 28 years of experience in hotels and restaurants. Mr. Belshe leads, in an executive and oversight capacity, several brands under Mr. Cavanaugh's control. He has worked closely with government officials within California State Parks on contracts, operations, and project proposals related to restaurant operations. Mr. Belshe's daily involvement in restaurant operations provides for a deep understanding of the necessary requirements to generate sales, control cost, and create relationships and synergies to drive success. RFP No. 14 -31 — Marina Park Project Restaurant/Cafe Space Operation REFERENCES Dave Kit'it') City Manager City of Newport Beach 100 Civic Center Drive Newport Beach, CA 92660 949 - 844 -3309 dkiff(a,newportbeachca.2ov Dave Dominguezi1l Facilities Development & Concessions Mgr City of Huntington Beach 714 - 374 -5309 ddominguez(asurfcity -h b.org Dan Gee (3) Chairman Crystal Cove Alliance 5 Crystal Cove Newport Coast, CA 92657 949 - 854 -8308 dan2ee(a cox.net Todd Lewis (3) State Parks Superintendent Crystal Cove State Park 949 - 497 -1582 tlewis(a), parks.ca.2ov (1) Reference for Ruby's Diner (2) Reference for Beachcomber Cafe (3) Reference for Shake Shack Rush Hill(') Mayor City of Newport Beach 100 Civic Center Drive Newport Beach, CA 92660 949 - 644 -3309 rhill(- ,newportbeachca.eov Anton Segerstrom(') General Manager South Coast Plaza - Management Office 3333 Bear Street Costa Mesa, CA 92626 (714) 435 -2165 seaerstroma (nsouthcoastplaza.com Tom Tait") Mayor City of Anaheim 200 S. Anaheim Boulevard Anaheim, CA 92805 (714) 765 -4311 sray(a )anaheim.net Bill SteinerM Political Consultant 8143 East Cheshire Road Orange, CA 92867 (714) 287 -9604 WGSteiner(a,aol.com 20 -99 Conceptual Approach and Business Plan The Lighthouse Cafe will offer the perfect match for the various visitors to the Marina Park by offering dining opportunities seven days a week, all tailored to the visitors and residents alike. Guests will feel comfortable enjoying breakfast in the dining room or outside overlooking the harbor. The setting and ambiance make every guest feel as if they belong, regardless of whether they are just coming off their boat for a quick bite, spending the day on the beach, or enjoying a business lunch or celebratory dinner. The success of our operations is built on delivering excellence, and process driven initiatives. These are supported and driven through our marketing and advertising strategies, hiring and employment practices, sophisticated yet casual design elements, solid culinary execution, and community involvement. Marketing and Advertising: Marketing efforts will include the highlighting of the Marina Park location through our public relations firm aimed at local food and lifestyle writers and editors. Strategic advertising in local publications such as Where Magazine, Newport Visitors Guide, and OC Metro, along with participation in the local chamber of commerce and visitor bureaus will provide awareness and interest in the entire Marina Park project. The Lighthouse Cafe will maintain a professional website and a strong following due via our prospected E -Club, Facebook, and Twitter followers creating an instant strong base of diners. Continuous measurement of marketing and advertising results will be analyzed frequently and adjusted to meet the necessary needs of the business, to drive interest and desired business results. Hiring. Training and Employment: The Lighthouse Cafe selects only the finest ladies and gentlemen to join our service team. Team member uniforms are carefully designed to enhance the image of the brand, and grooming standards are enforced to ensure a wholesome image. Training of team members involves a careful recruiting and selection process, an in -depth orientation, classroom sessions, and on -the- job shadowing prior to ever engaging in the operational tasks. New team members must complete a full training program, and are required to pass certification tests prior to taking full command of their role. Each and every team member is held to strict standards, and there is no tolerance of harassment or discrimination of any kind. Adherence to policies and standards is a requirement. A complete outline of standards is provided to each team member in the form of an employee manual. Community Involvement: The involvement of The Lighthouse Cafe within the community is solid. It includes networking with local hotels and resorts, developing relationships with area businesses, and supporting organizations through fundraisers and award based programs. These fund raising programs have raised millions of dollars over the past 30 years. Mr. Cavanaugh served for years on the RFP No. 14 -31 — Marina Park Project Restaurant/Cafe Space Operation 20 -100 Newport Beach Chamber of Commerce. He was the Founder of the Newport Beach Chapter of the California Restaurant Association as well as Director Emeritus with that statewide association. Cleanliness and Maintenance: The Lighthouse Cafe's team members will maintain the restaurant, as well as nearby areas that visitors would perceive as related to the restaurant. Daily maintenance tasks will be used, along with a checklist to ensure regular spot checks are completed and accountability is secured. All furniture, fixtures, and equipment will be maintained to represent a fine dining establishment. Our budgets are planned to account for capital expenses annually, to ensure items are replaced as needed due to the proximity of the harbor and beach and the impact of salt air to those items. Summer Season Community Event Initiatives: The Lighthouse Cafe foresees outdoor barbeque grilling from time -to -time, a "community barbeque" or "clam bake' style event. We also envision summer luau themed community nights from time -to -time. These events are available to all and food and beverages would be moderately priced, creating a community center that truly celebrates bringing people together. Proiect Scone: I fully understand and acknowledge the scope of the Marina Park project. Our commitment will be strong to the visitors of the community center, beach, park, and Girl Scout Leadership Center, along with visitors from local business and neighborhoods. We understand how seasonality impacts this type of location. We have the experience to maintain adequate levels of service throughout each season to service visitors in a manner desired, and in a way that represents the City of Newport Beach in a positive way. The size, design, layout, and initial condition of delivery will be taken into account in our conceptual vision for the restaurant. As illustrated within this proposal, our service offerings and model will meet the criteria of the ideal applicant, one that provides a variety of offerings at a variety of levels of service. There is a full understanding of parking and delivery schedules. Our current operations throughout the City have similar operational challenges and requirements. The maintenance of grease interceptors, trash services, pest control, and environmentally sensitive coast conditions are well within our scope of knowledge. We look forward to working with the City on approvals to maintain consistency with the design and quality of the Marina Park. RFP No. 14 -31 — Marina Park Project Restaurant/Cafe Space Operation 20 -101 SAMPLE MENU OFFERING 20 -102 Lighthouse Cafe Proposed Menu Sample BREAKFAST Two Eggs and Bacon $8 BRIOCHE FRENCH TOAST Golden brioche bread, dipped in egg batter, grilled to perfection $9 GARDEN SCRAMBLE Scrambled eggs with mushrooms, spinach, onions, bell peppers, Cheddar cheese $9 SMOKED SALMON OMELETTE with Boursin cheese and chives $16 STEEL CUT OATMEAL Perfect for the start of any day, pecans, raisons, brown sugar $6 EGGS BENEDICT Thinly sliced, lean smoked ham complements this favorite $13 NOVA SCOTIA BENEDICT Smoked salmon with saut6ed spinach $15 CALIFORNIA BENEDICT Sliced California avocado and fresh turkey breast $14 MACADAMIA NUT PANCAKES with coconut syrup $11 CORNED BEEF HASH with poached eggs $13 APPETIZERS GRILLED ARTICHOKE Grilled to perfection served with chipotle aioli dipping sauce $8 ALMOND COATED GOAT CHEESE Served warm with sun dried tomatoes, watercress and flat -bread crackers $9 JUMBO SHRIMP COCKTAIL Cocktail sauce $15 SMOKED SALMON Lemon dill cr6me fraiche, marinated red onions, capers and flat -bread crackers $12 TINY AHI TACOS Blackened, sweet soy sauce reduction, wasabi aioli $14 CRAB CAKES on a bed of petite greens, chipotle aioli $15 CALAMARI fried calamari, aioli and cocktail sauce $13 SOUPS & SALADS VEGETARIAN CHILI $6 TOMATO BAKED BLUE SOUP Organic tomato soup with blue cheese crumbles $7 NEW ENGLAND CLAM CHOWDER chunks of clams in every bite $6 MIXED GREEN HOUSE SALAD Ranch, bleu cheese, or balsamic vinaigrette $8 KALE CAESAR SALAD Baby hearts of romaine, croutons and Asiago cheese $9 with chicken $13, with shrimp $15 HARBOR COBB SALAD Chicken breast, crumbled Bleu cheese, bacon, avocado, tomatoes, choice of dressing $15 STEAK AND NOODLE SALAD Vanilla bean vinaigrette, goat cheese and petite greens $15 SEARED AHI SALAD mixed greens, seared AN, sesame ginger wasabi dressing $16 CHOPPED SALAD blue cheese, tomatoes, avocado, olives, Iceberg lettuce $13 SANDWICHES TRI TIP DIP Open faced, topped with onion rings, and served with fries $16 CRISPY CHICKEN BREAST SANDWICH Jack, cheddar, Swiss or blue cheese, fries $10 ROASTED TURKEY BREAST SANDWICH Fresh out of the oven turkey, lettuce, cranberry aioli, fries $9 ALBACORE TUNA MELT Albacore salad served on toast sourdough with melted cheese, fries $9 BURGERS LIGHTHOUSE BURGER Premium Natural Beef, Jack, Cheddar, Swiss or bleu cheese, fries $11 GRILLED PARM BURGER Swiss cheese, crisp lettuce, tomato, avocado, homemade sauce on parmesan bread, fries $10 TURKEY BURGER Melted low fat cheese, crisp lettuce, tomato, non -fat mayonnaise, fries $9 AHI TUNA BURGER Seared AN tuna, crisp lettuce, wasabi aioli, fries $14 GO FIT BURGER a Lean Veggie Protein burger, topped with crisp lettuce, tomato, and our special homemade sauce $10 DINNER ENTREES STEAK FRITES U.S.D.A. Prime served with French fries seasonal vegetableschoice of onion rings or twice baked potato $21 SEA SCALLOPS Lemon butter caper sauce, cheese polenta and saut6ed spinach $29 CHAR - BROILED SALMON Lemon butter sauce, wild rice and saut6ed spinach $24 SEAFOOD PASTA Artichokes, fresh tomatoes, garlic, shallots, white wine broth $18 BABY BACK RIBS House smoked, glazed with homemade style barbeque sauce, fries $24 GIANT FRIED SHRIMP Crispy fried jumbo shrimp, farm fresh vegetables, cocktail and tartar sauce $19 SEAFOOD POT PIE SHRIMP Scallops, salmon, vegetables, puff pastry crust $21 FRIED CHICKEN Our homemade batter, mashed potatoes, fresh vegetables $16 RFP No. 14 -31 — Marina Park Project Restaurant /Cafe Space Operation 20 -103 Lighthouse Cafe Proposed Menu Sample DESSERTS HOMEMADE APPLE PIE $5 GRANDMAS CHOCHOLATE CAKE $7 GIRL SCOUT SMORE'S SUNDAE $5 BUTTERSCOTCH PUDDING $5 BROWNIE SUNDAE $7 SNACK WINDOW TO -GO MENU Breakfast BREAKFAST BURRITO $7 EGG SANDWICH $8 STEEL CUT OATMEAL $5 FRUIT BOWL $4 Sandwiches ALBACORE TUNA MELT $6 GRILLED CHEESE $6 CRISPY CHICKEN BREAST SANDWICH $7 ROASTED TURKEY BREAST SANDWICH $7 Burgers LIGHTHOUSE BURGER $6 GRILLED FARM BURGER $7 TURKEY BURGER $7 AHI TUNA BURGER $12 GO FIT BURGER $8 SNACKS BALBOA BARS $4 ICE CREAM $3.00 CHIPS $1.50 TRAIL MIX $1.50 COOKIES $1.00 WHOLE FRUIT $1 -2.00 HOT CHOCOLATE $1.50 WATER $1.50 SODA $2.00 ORANGE JUICE $3.00 VITAMIN WATER $2.50 LEMONADE $2.50 ICED TEA $2.50 COFFEE $2.50 RFP No. 14 -31 — Marina Park Project Restaurant/Cafe Space Operation 20 -104 CONCEPTUAL RESTAURANT FLOOR PLAN AND DESIGN ELEMENTS 20 -105 The Lighthouse Caf6 RFP NO. 14 -31 - Marina Park Project Restaurant / Caf6 Space Operation Conceptual First Floor Plan 20 -106 The Lighthouse Cafe RFP NO. 14 -31 - Marina Park Project Restaurant/ Cafe Space Operation Conceptual Second Floor Plan 20 -107 The Lighthouse Cafe RFP NO. 14 -31 - Marina Park Project Restaurant Conceptual Section showing Periscope / Cafe Space Operation 20 -108 ATTACHMENT CC 5 F -7 INCOME PROPERTY The City owns and manages an extensive and valuable assortment of property including streets, parks, beaches, public buildings and service facilities. The City also owns and operates a yacht basin, a mobile home park, a luxury residential development and various other income properties. Most of the income property is tidelands, filled tidelands or waterfront. Unencumbered fee value of income property is estimated at upwards of one hundred million dollars, and income typically contributes ten percent of all City revenues. As owner /manager of property, the City is the steward of a public trust, and state law requires the City to maximize its returns on state- managed property or be subject to a charge of making a gift of public funds. Nevertheless, the City Council recognizes the importance of this property not only as a revenue generator, but also as a means to provide otherwise unfeasible uses and facilities to benefit the community. In managing its property, the City will continually evaluate the potential of all City owned property to produce revenue. This may include leasing unused land, renting vacant space, and establishing concessions in recreation areas or other similar techniques. The City Council will evaluate the appropriateness of establishing new income properties using sound business principles and after receiving input from neighbors and users. The policy of the City Council is that income property be managed in accordance with the following: A. Whenever a lease, management contract, concession, sale or similar action regarding income property is considered by the City, an analysis shall be conducted to determine the maximum or open market value of the property. This analysis shall be conducted using appraisals or other techniques to determine the highest and best use of the property and the highest value of the property. B. All negotiations regarding the lease, management contract, concession, sale or similar action regarding income property shall include review of an appraisal or analysis of the use being considered for the property conducted by a reputable and independent professional appraiser, real estate consultant or business consultant. C. The City shall seek, whenever practical and financially advantageous, to operate or manage all property and facilities directly with City staff or contractors. D. In all negotiations regarding the lease, management contract, concession, sale or similar action regarding a non - residential income property, the City shall seek 1 20 -109 1 &A revenue equivalent to the open market value of the highest and best use; and, whenever possible the City shall conduct an open bid or proposal process to insure the highest financial return. E. Whenever less than the open market or appraised value is received or when an open bid process is not conducted, the City shall make specific findings setting forth the reasons thereof. Such findings may include but need not be limited to the following: 1. The City is prevented by tideland grants, Coastal Commission guidelines or other restrictions from selling the property or converting it to another use. 2. Redevelopment of the property would require excessive time, resources and costs which would outweigh other financial benefits. 3. Converting the property to another use or changing the manager, concessionaire or lessee of the property would result in excessive vacancy, relocation or severance costs, which would outweigh other financial benefits. 4. Converting residential property to another use or opening residential leases to competitive bid would create recompensable liabilities and other inequities for long -term residents. 5. The property provides an essential or unique service to the community that might not otherwise be provided were full market value of the property be required. 6. The property serves to promote other goals of the City such as affordable housing, preservation of open space or marine related services. F. Generally, lengths of leases, management contracts, concessions or similar agreements will be limited to the minimum necessary to meet market standards and will contain appropriate reappraisal and inflation protection provisions. Also, all agreements shall contain provisions to assure complete audits periodically through their terms. G. All negotiations regarding the lease, management contract, concession, sale or similar action regarding income property shall be conducted by the City Manager or his /her designee under the direction of any appropriate City committees. H. To provide an accurate accounting of actual net revenues generated by the City's income property, all costs and charges directly attributable to the management of 2 20 -110 l0FA a specific income property shall be debited against the gross revenues collected on that property in the fiscal year the costs are incurred. Costs and charges include property repairs and maintenance, property appraisals, and consultant fees, as authorized by the City Council, City Manager or by this Income Property Policy. I. The City Manager or his /her designee is authorized to sign a lease, management contract, concession or similar agreement or any amendment thereto, on behalf of the City. Notwithstanding the foregoing, the City Manager or his /her designee, or a City Council member, may refer any lease, management contract, concession or similar agreement or any amendment thereto, to the City Council for its consideration and /or action. Adopted - July 27,1992 Amended - January 24,1994 Amended - February 27,1995 Amended - February 24,1997 Amended - May 26,1998 Amended - August 11, 2009 Amended - May 14, 2013 Formerly F -24 3 20 -111