HomeMy WebLinkAbout18 - Model Lease Template for Commercial Marinas & Marina Index4a�WP0_ Rr CITY OF
NEWPORT BEACH
City Council Staff Report
Agenda Item No. 18
September 25, 2012
TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: City Manager's Office
Dave Kiff, City Manager
949 - 644 -3001, dkiff @newportbeachca.gov
PREPARED BY: Dave Kiff — City Manager
APPROVED: �6aLU.
TITLE: Model Lease Template for Commercial Marinas and Marina Index
ABSTRACT:
The City of Newport Beach ( "City ") acts as the trustee of the State of California ( "State ")
in the administration of public tidelands property within Newport Harbor. In this
capacity, the City is effectively a landlord and is empowered by the 1978 Beacon Bay
Bill, as amended ( "Beacon Bay Bill "), to lease tidelands property to third parties for a
period of 50 years or less. Newport Beach Municipal Code ( "NBMC ") Section
17.60.060(A) requires that all commercial uses be memorialized in a lease agreement.
The Council Ad Hoc Committee on Harbor Charges ( "Committee ") has met with
commercial marina operators and key stake holders and is recommending, along with
the new commercial marina fair market rental rate based upon a Marina Index, to
transition current commercial marina permittees to longer term leases, compared to
their current status as annual permittees. The proposed model lease is consistent with
the City's obligations under the Beacon Bay Bill, as well as the City's municipal code,
and will provide users with a longer term property interest in the tidelands. If the
commercial marina model lease template is approved by the City Council, the City will
begin transitioning commercial marinas from annual permits to multi -year leases.
Model .Lease Template for Commercial Marinas and Marina Index
September 25, 2012
Page 2
RECOMMENDATION:
Adopt the attached resolution approving a model lease template for commercial marinas
located upon City administered tidelands.
FUNDING REQUIREMENTS:
The current budget allows for the resources needed to implement the model lease
template for commercial marinas. The City's income properties administration position
as well as the City Attorney and City Manager's office will handle lease implementation.
DISCUSSION:
A majority of the waterways in Newport Harbor are tidelands, owned by the State on
behalf of the people. The California Legislature through the Beacon Bay Bill granted the
City trusteeship of most of the tidelands within Newport Harbor (the County of Orange
also acts as trustee over some tidelands). The Beacon Bay Bill authorizes the City to
grant franchises or enter into leases with third parties to use the tidelands, for a term not
to exceed 50 years. Section 17.60.060(A) of the Municipal Code also requires the City
to enter leases with those desiring to engage in commercial purposes in the tidelands
where the City is trustee. Both the Beacon Bay Bill and the NBMC require the City to
receive fair market rent as consideration for entering into a commercial lease.
Commercial Marina !Model Lease Template
Historically, the City has issued annual permits to tidelands users, including commercial
marina operators. The Committee was tasked by the City Council to develop a lease
template that may be used in place of the permit to provide greater consistency with the
lease requirements in NBMC Section 17.60.060 and Section 1(b) of the Beacon Bay
Bill. The proposed lease also provides greater stability to commercial marina operators
through a longer term property interest (currently, the commercial marinas operate
under an annual permit that may be revoked or not renewed at any time).
The model lease template for commercial marinas under consideration by the City
Council was developed to be reflective of commercial tideland marina practices and
provisions that are relatively common throughout the State. The model lease was also
carefully drafted to ensure consistency with the NBMC and the Beacon Bay Bill and
contains the following key terms:
z
Model Lease Template for Commercial Marinas and Marina Index
September 25, 2012
Page 3
Term: The leases are proposed to be for a term of not less than 5
years and not more than 50 years. The majority of leases
are anticipated to fall within the 10 to 25 year range.
Renewal Option: The lease contemplates and allows for renewal options,
provided the entire term of the lease does not exceed 50
years.
Rent: The City Council established a fair market rent methodology
for commercial marinas at its September 12, 2012, special
meeting (and is refining the methodology at this meeting).
Pursuant to that methodology, rent will be determined
through the use of a Marina Index composed of seven
commercial marinas located within Newport Harbor as a
square footage rate reflective of 20% of slip revenue.
Rent Phase In: The fair market rent for commercial marinas will be phased
in over a period of 7 years and not reach the full fair market
phase in rate until 2020.
Rent Adjustment: The fair market rent will be recalculated every year by staff
to ensure it is reflective of any increases or decreases within
the Marina Index. There is also a discretionary adjustment
after 25 years to ensure the rate is reflective of fair market
value.
Available Uses: The uses will be generally, consistent with existing uses,
including marine - oriented activities, such as marinas, piers,
docks and related uses.
Security Deposit: A security deposit will be required (currently contemplated to
be 3 months' rent) in the form of a stand -by letter of credit or
cash.
It is proposed the lease would be offered first to current commercial marina operators.
Opening the tidelands occupied by a commercial marina up to an open bid process as
contemplated in City Council Policy F -7 is not advisable because redevelopment/reuse
of the tidelands by a third party would require excessive time, resources and costs
3
Model Lease Template for Commercial Marinas and Marina Index
September 25, 2012
Page 4
which would outweigh other financial benefits. Adoption of the attached resolution
approving use of the model lease template for commercial marinas satisfies the
requirements of NBMC Section 17.60.060(A), which requires the City Council to adopt a
resolution to convert a permit to a lease. If approved by the City Council, the City
Manager or his /her designee would take the lead in transitioning current commercial
marina operators to the lease. The City Manager would also have the discretion to refer
any lease to the City Council for consideration.
SETTING FAIR MARKET RENT
The Beacon Bay Bill, California Constitution Article 16, Section 6, NBMC Section
17.60.060(D), NBMC Section 17.60.020(E), and City Council Policy F -7(D) require the
City to receive fair market rent when leasing tidelands to third parties. The fair market
rent may be set by the City Council at any amount provided the amount is based on an
appraisal prepared by a "City- selected" appraiser and is reflective of fair market value.
The rental rate currently charged by the City for commercial marinas under the annual
permit system is well below the fair market rate due to a lack of regular rate increases.
For example, the City currently charges commercial permit holders $0.36 for every
square foot of tidelands rented per year. That amount has gone up about 24% since
2001 (roughly a little less than general inflation). However, during that same period,
some marina slip rates went up approximately 67% -150 %.
In response to this inequity, on September 12, 2012, the City Council adopted a new
methodology to calculate fair market rent for commercial marinas. Starting in 2014, rent
would be determined through the use of a Marina Index, composed of commercial
marinas located within Newport Harbor, as a square footage rate reflective of 20% of
slip revenue. But the Council also directed that the jump to 20% be phased in starting
in 2014 and ending at a fully- indexed rate by 2020. An example of the new rate
methodology is provided in Table #1. Table #1 reflects many assumptions — at its base,
it assumes a Target Index Rate of $2.52/SF and that varies and increases to $2.65 /SF
in 2020.
4
Model Lease Template for Commercial Marinas and Marina Index
September 25, 2012
Page 5
Table #1
aner u, eanverlen o: 2eA al Gross
C11y Council :o SP rase- pnesetldn so $ 0.36 S 0.36 $ 0.67 S 0.98 S 1.29 S 1.61 $ 1.94 S 2.27 S 2.62 $ 2.65
mmendantnn 29201TAn n2ln Z011
Assumed Target Ind" Rate
Previous Yeats Tidelands Rental R41e
Difference JA)
years Left to Fully- IndeRed Rate (8)
Increase for that Year (A /9)
The development of a square footage rental rate reflective of 20% slip revenue was
developed by the council after consideration of conclusions reached in appraisals the
city has obtained from James Netzer, dated August 10, 2012 (updating a 2006
appraisal), and Gary Rasmuson, dated August 8, 2012, as well as a review of other
marinas in Newport Harbor (see table in 9/12/12 Staff Report). The Netzer and
Rasmuson analyses indicated that the current rental range for fair market valuation is
between $1.50 - $1.40 per square foot and that the fair market gross revenue
percentage is between 17% - 25% depending on certain variables. While the City
selected Mr. Netzer, Mr. Rasmuson was recommended to the City by harbor permittees.
Using a 20% revenue benchmark is also consistent with two current county leases of
tidelands in Newport Harbor and is less than some other marinas in the harbor.
THE MARINA INDEX
At the September 12, 2012, meeting the City Council directed staff to return with
refinements to the methodology and a proposed group of commercial marinas to be
included within the Marina Index. The marinas in the Marina Index proposed by the
Committee on Harbor Charges and presented to the City Council on September 12,
2012 were:
1. Ardell
2. Bayshores Marina
3. Bayside Marina
4. Lido Yacht Anchorage
5. Harbor Towers Marina
6. Newport Dunes Marina
7. Newport Marina
5
$ 2.52
5 2.54
$ 2.50
$
2.57
$ 2.60
$ 2.60
5 2.62
S 2.65
N/A
5 0.36
S 0.67
S 0.96
$
1.28
5 1.61
5 1.94
5 2.27
tN/A
S 2.16
S 1.87
S 1.52
S
1.29
5 0.99
$ D.66
$ 0.35
NlA - A:
7
6
5
4
3
2
1
Fuu indea
Re:e
$ 0.31
5 0.31
1 5 0.30
I S
0.32
S 0.33
S 0.33
5 0.35
The development of a square footage rental rate reflective of 20% slip revenue was
developed by the council after consideration of conclusions reached in appraisals the
city has obtained from James Netzer, dated August 10, 2012 (updating a 2006
appraisal), and Gary Rasmuson, dated August 8, 2012, as well as a review of other
marinas in Newport Harbor (see table in 9/12/12 Staff Report). The Netzer and
Rasmuson analyses indicated that the current rental range for fair market valuation is
between $1.50 - $1.40 per square foot and that the fair market gross revenue
percentage is between 17% - 25% depending on certain variables. While the City
selected Mr. Netzer, Mr. Rasmuson was recommended to the City by harbor permittees.
Using a 20% revenue benchmark is also consistent with two current county leases of
tidelands in Newport Harbor and is less than some other marinas in the harbor.
THE MARINA INDEX
At the September 12, 2012, meeting the City Council directed staff to return with
refinements to the methodology and a proposed group of commercial marinas to be
included within the Marina Index. The marinas in the Marina Index proposed by the
Committee on Harbor Charges and presented to the City Council on September 12,
2012 were:
1. Ardell
2. Bayshores Marina
3. Bayside Marina
4. Lido Yacht Anchorage
5. Harbor Towers Marina
6. Newport Dunes Marina
7. Newport Marina
5
Model Lease Template for Commercial Marinas and Marina Index
September 25, 2012
Page 6
Each year, the City would determine the gross revenue from slip rentals for each of
these marinas. If actual gross was not available, the City would make an estimate of
gross based on the State Lands Commission's Southern California Marina Survey or a
similar document if that Survey is discontinued or not provided in any one year. At the
same time, the City would use existing or estimated tidelands square footages based on
existing leases or permits to identify the correct amount of tidelands under lease.
The basic calculation to generate a "Percent of Gross Equivalent in Square Feet" is this:
Aggregate of 7 Marinas' Gross Revenue from Slip Revenues x 0.20
Aggregate of 7 Marinas' Square Footage of Tidelands under Lease
An example of how the index would work is shown in Attachment A.
ENVIRONMENTAL REVIEW:
Staff recommends the City Council find this action is not subject to the California
Environmental Quality Act ( "CEQK) 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:
In addition to the stakeholder input noted above, this agenda item has been noticed
according to the Brown Act (at least 72 hours in advance of the meeting at which the
City Council considers the item).
Submitted by:
Dav iff
City Manager
Attachments: A. Marina Index Example
B. Resolution No. 2012-
2
Attachment A
Proposed
Marina
Index
Mdflnd Ndfite
TiaNaMSOi
Goss(may be
EP /. ai Gsozz
2oZ o1
G`ozsbg SF
Known SF
Y.n own
Est SF,
Known
Est
Gross,
Notes
Vaumay SF
es�hna )
(9-12)
Gross
Gross
Known SF
Known SF, estimated gross based on SLC So Ca Marina
Ardell
56,000
S 884,412
$ 176,882
5 3.16
J
J
Index on 9.12.
Ba shores Marina (Cal -Rec. County)
100,057
S 1,801,951
S 360,390
S 3.60
J
J
Known SF and Gross - County Lease
Known SF, estimated gross based on SLC So Ca Marina
Bayside Marina (Cal-Rec)
134,500
S L926,451
S 385,290
S 2.86
1 J
J
Index
Known SF, estimated gross based on SLC So Ca Marina
Lido Yacht Anchorage
204,000
S 4,578,240
S 915,648
S 4.49
J
J
Index 9.12.
Harbor Towers Marina
54,885
5 605,714
$ 121,143
5 2.21
J
tl
Known SF and Gross - City & Private Owner Lease
Newport Dunes Marina (County)
510,774
5 3,804,787
S 760,957
S 1.99
J
J
Known Gross - County Lease
Newport Marina (Swayles, County )
50,175
S 393,254
5 78,651
S 1.57
J
J
Known SF and Gross - Ccunr; Lease
Totals
1,110,391
S 15S9S.810
5 2.798,962
S 2.52
L4eighted SF Average of Marina Index (9 -12 -2012
RESOLUTION NO. 2012-
A RESOLUTION OF THE CITY COUNCIL
OF THE CITY OF NEWPORT BEACH
APPROVING A MODEL LEASE TEMPLATE FOR
COMMERICIAL MARINAS LOCATED UPON TIDELANDS
WHEREAS, pursuant to the 1978 Beacon Bay Bill, as amended, ('Beacon Bay
Bill ") the City of Newport Beach ( "City ") acts on behalf of the State of California as the
trustee of tidelands located within the City's limits, including Newport Harbor;
WHEREAS, Section 1(b) of the Beacon Bay Bill and Section 17.60.060 of the
Newport Beach Municipal Code ( "NBMC ") requires the City to enter into a lease with a
third party who desires to use tidelands for commercial purposes and such lease must
be for a term not to exceed fifty (50) years;
WHEREAS, The Beacon Bay Bill, California Constitution Article 16, Section 6,
NBMC Section 17.60.060(D), NBMC Section 17.60.020(E), and City Council Policy F-
7(D) require the City to receive fair market rent when leasing tidelands to third parties;
WHEREAS, NBMC Section 17.060.060(D) vests the City Council with the
exclusive discretion to determine fair market rent based upon the findings of a City-
selected appraiser;
WHEREAS, on July 27, 2010 the City Council formed the Council Ad Hoc
Committee on Harbor Charges ( "Committee ") and tasked the Committee with
performing a comprehensive review of tidelands uses to convert existing permits to
leases and to assist the City Council in developing a template tideland lease form and
determining fair market value rent;
WHEREAS, two independent appraisers (Gary Rasmuson and James Netzer), a
tidelands consultant (Alan Kotin) and outside counsel (Michael Houston) were retained
by the City to assist the Committee with its tasks;
WHEREAS, an appraisal report by Rasmuson Appraisal Services, dated August
8, 2012, entiled "A Summary Appraisal of Newport Harbor Commercial Tidelands Fair
Market Rent Study, Newport Beach CA" and an appraisal report by Netzer & Assoc.,
dated August 10, 2012, entitled "Appraisal Report, Commercial Tidelands, Newport
Harbor, Newport Beach, California" were prepared and delivered to the City and have
been reviewed and considered by the City Council, which reports are part of the record
for this matter;
-1- $
WHEREAS, the Rasmuson and Netzer reports concluded that the current rental
range for fair market valuation of tidelands in Newport Harbor is between $1.50 - $1.40
per square foot and that the current fair market gross revenue percentage rent is
between 17% - 25% for marina slip uses, depending on certain variables;
WHEREAS, other existing agreements for use of tidelands in the Newport Harbor
have percentage rent rates for marina slip uses ranging between 9% and 40 %,
including two County tideland leases with marina rental rates of 20 %;
WHEREAS, the Committee and members of the Committee held public outreach
meetings commercial marina operators to solicit their input and participation in the
tidelands review process and these meetings afforded the public the opportunity to
comment on this matter as well as provided the public information relating to this matter;
WHEREAS, the City Council held several study sessions where public input and
testimony was taken, including meetings on March 13, 2012 and September 12, 2012;
WHEREAS, the City Council has considered all documents and comments in the
record in connection with this resolution;
WHEREAS, on November 23, 2010 the City Council adopted Resolution No.
2010 -132 implementing a new phased in rent program for the City's on -shore and off-
shore moorings and directed that planned rent increases scheduled to occur in 2013
shall only incur upon the City's completion of the tidelands review process;
WHEREAS, the City Council on September 12, 2012, following input from the
public and upon consideration of all matters in the record relating to this matter,
exercised its exclusive discretion pursuant to NBMC Section 17.60.060(D) to establish a
fair market value rent based upon the findings of a City- selected appraiser that the fair
market rent for commercial marina tidelands users was to be (in summary) 20% of slip
revenue, based upon an index of commercial marinas, converted into a square footage
dollar amount, as more fully detailed and explained.in the attached template lease; and
WHEREAS, all previous resolutions regarding the fair market rent for commercial
marinas that are in conflict with the rent established by the City Council and re- stated in
this resolution and the attached model lease template for commercial marinas are
hereby repealed.
NOW, THEREFORE, the City Council of the City of Newport Beach resolves as
follows:
-2 -. 9
Section 1: The Recitals provided above are true and correct and are
incorporated into the substantive portion of this resolution.
Section 2: The City Council finds that the model lease template for commercial
marinas attached to this resolution satisfies the requirement of NBMC Section
17.60.060(A) covering the conversion of existing permits to leases. The City Council
further finds that the commercial marinas subject to the attached model lease template
for commercial marinas are not subject to the open bid process found in City Council
Policy F -7 because redevelopment/reuse of the tidelands by a third party would require
excessive time, resources and costs which would outweigh other financial benefits. The
City Council further finds pursuant to NBMC Section 17.60.060(D) that the rent
provision contained in the attached model lease template provides for the charging of
fair market rent and that the rental rate (and adjustments) in the attached model lease
template constitutes fair market rent, which findings are made by the City Council in its
exclusive discretion but are based on the information in the appraisals of its City -
selected appraisers and, in addition, on other testimony and documents in the record for
this matter.
Section 3: The City Council determines, even though it has discretion to make
determinations regarding the form of template lease and rental provisions therein, that
the evidence in the record constitutes substantial evidence to support the actions taken
and the findings made in this resolution, that the facts stated in this resolution are
supported by substantial evidence in the record, including, without limit, testimony
received at public hearings, the Staff presentations and Staff reports made in
connection with this matter, all materials in project files, and the Netzer and Rasmuson
appraisal reports. The City Council expressly declares that it considered all evidence
presented and reached these findings after due consideration of all evidence presented
to it and determines that evidence presented that was contrary to the findings made in
this resolution was not sufficient or substantial enough to outweigh the evidence
supporting this resolution.
Section 4: Pursuant to NBMC Section 17.60.060(A), the City Council approves
the model lease template for commercial marinas attached, and incorporated by
reference, to this resolution. Notwithstanding City Council Policy F -7, the City Council
authorizes the City Manager to enter into the attached lease, in a form that is
substantially similar to the attached model lease template, with commercial marinas
located upon City administered tidelands. At his /her discretion, the City Manager may
refer any commercial marina lease to the City Council for consideration.
Section 5: The City Council affirms that the price adjustments set to occur in
2013 for the City's on -shore and off -shore moorings pursuant to Resolution No. 2010-
132 shall be held in abeyance until the City Council completes its open and public
review and analysis of commercial piers not already on leases, and residential piers,
including rentals of residential piers. Once the City Council's open and public review
-3- 10
and analysis are completed, the price adjustments may take effect without further action
by the City Council.
Section 6: The City Council find this 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.
Section 7: This resolution shall take effect immediately upon its adoption by
the City Council, and the City Clerk shall certify the vote adopting the resolution.
ADOPTED this _ day of .2012.
Nancy Gardner,
Mayor
ATTEST:
Leilani I. Brown,
City Clerk
Attachment: Model Lease Template for Commercial Marinas
-4- 11
LEASE AGREEMENT [(WITH OPTIONS FOR RENEWAL)]
BY AND BETWEEN
City of Newport Beach, a California municipal corporation
( "Lessor ")
AND
F1
( "Lessee ")
12
TABLE OF CONTENTS
Page
1.
Definitions .......................................................................................... ..............................1
2.
Leased Premises .............................................................................. ...............................
2
3.
Term ................................................................................................. ...............................
2
4.
Rent .................................................................................................. ...............................
2
5.
Utilities, Taxes and Assessments ...................................................... ...............................
6
6.
Use of the Premises .......................................................................... ...............................
7
7.
Security Deposit ................................................................................ ...............................
9
8.
Acceptance of Condition of Premises - "As -Is" / Waiver / Release ..... .............................10
9.
Alterations or Construction ................................................................. .............................13
10.
Reconstruction ................................................................................... .............................15
11.
Maintenance and Repair .................................................................... .............................15
12.
Liens .................................................................................................. .............................18
13.
Reserved.
14.
Quitclaim Deed .................................................................................. .............._..............19
15.
Right to Enter the Premises for Inspection ......................................... .............................19
16.
Transfers / Hypothecation for Financing ............................................. .............................19
17.
Bankruptcy ......................................................................................... .............................23
18.
Defaults ............................................................................................. .............................23
19.
Remedies .......................................................................................... .............................24
20.
Surrender of Premises ....................................................................... .............................26
21.
Condemnation ................................................................................... .............................27
22.
Indemnification ................................................................................... .............................28
23.
Insurance ........................................................................................... .............................29
24.
Hazardous Substances ...................................................................... .............................29
25.
Quiet Possession ............................................................................... .............................31
26.
Compliance with Applicable Laws ...................................................... .............................31
27.
Not Agent of Lessor ........................................................................... .............................31
28.
No Third Party Beneficiaries .............................................................. .............................31
29.
Limitation of Leasehold / Easements ................................................. .............................31
30.
Notices ............................................................................................... .............................32
31.
Entire Agreement/ Amendments ......................................................... .............................32
32.
Waivers .............................................................................................. .............................33
33.
Lessor's Authorized Representative ................................................... .............................33
13
34.
City Business License ........................................................................ .............................33
35.
Governing Law ................................................................................... .............................33
36.
Interpretation ...................................................................................... .............................33
37.
Time is of the Essence ....................................................................... .............................34
38.
Prevailing Wages ............................................................................... .............................34
39.
Joint and Several Liability .................................................................. .............................34
40.
Memorandum of Lease Agreement .................................................... .............................34
41.
No Pre - commitment / Retention of Discretion / Assumption of Risk and Waiver .............34
42.
No Damages ...................................................................................... .............................36
43.
Appraisals; Lessee Review of Appraisal / Process for Disputing Lessor's Fair Market
Adjustments....................................................................................... .............................36
44.
Payment of Lessor's Costs; Lessee's Deposit Account ...................... .............................37
45.
Late Charges and Delinquency Rates ................................................ .............................37
46.
Bonding ............................................................................................. .............................37
47.
Government Claims Act ..................................................................... .............................38
14
This Lease Agreement [(With Options for Renewal)] ( "Agreement ") is entered into this
_ day of , 20_ by and between the City of Newport Beach, a California
municipal corporation and charter city ( "Lessor" or "City "), and a
( "Lessee').
RECITALS
A. Pursuant to the Tidelands Grant, the State of California granted to Lessor, as trustee,
certain Tidelands. The Tidelands must be used to promote the public's interest in water -
dependent or water - oriented activities, as described more fully in the Tidelands Grant;
B. The Tidelands Grant provides that the Tidelands shall not, at any time, be granted,
conveyed, given, or alienated to any individual, firm or corporation for any purpose
whatever except pursuant to Lessor's grant of either a franchise or lease;
C. The Tidelands Grant authorizes Lessor to enter into leases of the Tidelands for a period
not exceeding fifty (50) years so long as such leases are consistent with Lessor's
obligations to hold the Tidelands in trust for the uses and purposes contained in the
Tidelands Grant;
D. On 20_ the City Council approved this Agreement by adopting Resolution
No. _- as required by Municipal Code section 17.60.060(A); therefore, subject
to the terms and conditions of this Agreement, Lessor desires to lease a portion of the
Tidelands defined as the Premises to Lessee and Lessee desires to lease the Premises;
E. The City previously issued City Pier Permit Number for the Premises;
City Pier Permit Number has not been renewed and Lessee or any
other party has no continuing rights in this permit;
F. The parties desire to enter this Agreement for a term of less than fifty (50) years and to
grant Lessee an option to extend the term of this Agreement; and
G. To Lessee's knowledge, Lessee represents and warrants that it has obtained all rights
necessary from third parties (including former pier permit holders and adjacent
landowners) to use the piers and other Improvements located on the Premises,
previously operated pursuant to City Pier Permit Number ; and
In consideration of the mutual promises and obligations contained in this Agreement, the
receipt and sufficiency of which is hereby acknowledged, and the Recitals above, which are
incorporated by this reference, Lessee and Lessor hereby enter into this Agreement on the
following terms and conditions:
NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS:
1. Definitions
Capitalized terms that are not otherwise defined in the body of this Agreement (which
are identified in parentheses (" ")) have the meanings attributed in Exhibit "A" attached
hereto and incorporated herein by this reference.
1
15
2. Leased Premises
Lessor hereby leases to Lessee, for the Term specified in Section 3, the Premises. The
rights granted to Lessee by this Agreement are subject to Lessee's compliance with the
terms, covenants and conditions in this Agreement. Lessee covenants, as a material
part of the consideration for this Agreement, to keep and perform each and every term,
covenant and condition of this Agreement.
3. Term
(a) Initial Term: The Term of this Agreement shall be (_) years commencing
on the 1st day of , 20 , which shall be the "Commencement Date,"
and terminating on the _ day of , 20_, unless sooner terminated
as provided in this Agreement.
(b) Option for Renewal Term(s): If Lessee is not in default of its obligations in this
Agreement, then Lessee shall have the option to extend the Term of this
Agreement for _ (_) additional successive "Renewal Term(s)" of _ (_)
years each, on the same terms and conditions contained in this Agreement. As
provided by the Tidelands Grant, in no event shall the Term and any Renewal
Terms exceed a total of fifty (50) years.
(i) Each Renewal Term for which an option is exercised shall commence at
the expiration of the immediately preceding Term. Lessee must exercise
its option to a Renewal Term by giving a written "Option Notice" of its
election to Lessor no earlier than one hundred and eighty (180) days and
no later than one hundred and twenty (120) days prior to the expiration of
the immediately preceding Term. Time is of the essence to Lessee's
delivery of any Option Notice. If the expiration date to deliver an Option
Notice falls on a Saturday, Sunday or other day on which banks are not
generally open in the State of California, then the expiration date shall be
the prior business day.
(ii) Should Lessee fail to timely give an Option Notice, then the option for the
Renewal Term and all subsequent Renewal Terms shall be null and void
and of no further force and effect. Rent for the Renewal Term shall be
determined and adjusted as described in Section 4 below.
Rent
(a) Rent: Beginning on the Commencement Date, Lessee shall pay to Lessor, at the
times prescribed within this Agreement, an annual "Rent" during a Lease Term
Year in the sums identified in subsection 4(a)(i) as adjusted pursuant to
subsection 4(a)(i) and Section 4(b).
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(i) Rent: Rent shall be calculated on an annual basis as follows:
First, the Lessor shall determine the "Target Indexed Rate" as follows: the
"Aggregate 20% Equivalent Rent" shall be determined, which is
comprised of Gross Revenue for Slip Rentals for the preceding calendar
year of all marinas included within the Marina Index (as set forth in 4(a)(ii)
below) multiplied by point twenty (0.20) (i.e., if aggregate Gross Revenue
for Slip Rentals is $14,000,000, multiply $14,000,000 by 0.20 to yield an
Aggregate 20% Equivalent Rent of $2,800,000). The Aggregate 20%
Equivalent Rent for marinas included in the Marina Index for which Gross
Revenue for Slip Rentals is not known, shall be estimated by reference to
the State Lands Commission's Southern California Marina Survey (i.e.,
estimated slip revenue equals the number of slips multiplied by the
average occupancy rate, multiplied by the average monthly linear foot
rate, multiplied by twelve (12)) or a similar survey created by the Lessor if
the Commission's survey is not performed for any calendar year. The
Aggregate 20% Equivalent Rent shall then be divided by the aggregate
Premises' square footage for all marinas included in the Marina Index to
determine the Target Indexed Rate for the succeeding twelve (12) months
of Rent beginning on March 1 (i.e., if the Aggregate 20% Equivalent Rent
is $2,800,000 and the aggregate square footage for all marinas in the
Marina Index is 1,111,111 square feet, the Target Index Rate would be
$2.52 a square foot [$2,800,000 divided by 1,111,111 square feet]). The
Premises for the individual Marina Index marinas will be based on known
amounts determined by reference to existing City or County permits or
leases. Where the square footage of a Marina Index marina is not
known, it shall be estimated in good faith by the Lessor, in its sole and
absolute discretion, using the same method employed to determine
square footage for marinas currently under City permit or lease. The
Target Index Rate shall be calculated annually by the Lessor in
accordance with this paragraph as soon as practicable after December 31
of each calendar year.
For Lease Term Year beginning March 1, 2020, and thereafter, Rent shall
equal the then applicable Target Index Rate, rounded to the nearest cent,
times the Premises square footage as set forth in this Agreement (i.e., if
the Target Index Rate is $2.52 and the Premises is 10,000 square feet
the annual Rent would be $25,200. Until March 1, 2020, Rent will be set
in accordance with a phase -in procedure as follows: From the
Commencement Date until March 1, 2014 the Rent shall be equal to the
Premises' square feet multiplied by thirty -six cents ($0.36). Thereafter,
Rent shall be calculated annually each March 1 by reference to the
following methodology: Target Index Rate minus the prior calendar year
square footage rate divided by the number of years remaining within the
seven (7) year phase -in period plus the prior calendar year square
footage rate. An example of the Rent calculation is provided below in
Table #1 for illustrative purposes only:
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Assumed Target Index Rate
N/A
$
2.52
$
2.54
$ 2.50
$ 2.57
$ 2.60
$ 2.60
$ 2.62
$ 2.65
Previous Year's Tidelands Rental Rate
N/A
$
0.36
$
0.67
$ 0.98
$ 1.28
$ 1.61
$ 1.94
$ 2.27
Differenoe (A)
N/A
$
2.16
$
1.87
$ 1.52
$ 1.29
$ 0.99
$ 0.66
$ 0.35
N/A At
Years Left to Fully- Indexed Rate (8)
N/A
7
6
5
4
3
2
1
Full Index
Rate
Increase for that Year (A/13)
N/A
$
0.31
$
0.31
$ 0.30
$ 0.32
$ 0.33
$ 0.33
$ 0.35
In Table #1, the example assumes that the Targeted Index Rate is two dollars
and fifty -two cents ($2.52) per square foot in 2014 and two- dollars and fifty -four
cents ($2.54) per square foot in 2015. In the actual calculation in 2014 and
subsequent years, the Targeted Index Rate will be adjusted annually, as set forth
above, and may increase or decrease from two dollars and fifty -two cents ($2.52)
or two- dollars and fifty -four cents ($2.54) /square foot used for illustrative
purposes above. This increase or decrease shall be reflected in the subsequent
calculations using the same methodology as shown in the paragraph above.
(ii) Marina Index Composition: The Marina Index shall be comprised of the
following marinas:
1) Ardell
2) Bayshores Marina
3) Bayside Marina
4) Lido Yacht Anchorage
5) Harbor Towers Marina
6) Newport Dunes Marina
7) Newport Marina
The marinas included in the Marina Index may be revised by the City
Manager in the event that an index marina ceases operation, or in the
reasonable discretion of the City Manager ceases to be meaningful for
use in the Marina Index. In that event, the City Manager shall select a
new marina whose operating characteristics are similar to the marina to
be replaced, subject to review and approval by the City Council, in its sole
discretion.
(iii) Slip Rental Documentation: For those marinas included in the Marina
Index who voluntarily agree to provide actual Gross Revenue for Slip
Rentals information to Lessor, Lessor may, in its sole and absolute
discretion, require, and Lessee agrees to timely provide, each calendar
years Gross Revenue for Slip Rentals for the Premises for the prior
calendar year, certified by Lessee's external auditor to be true and
accurate, to the Lessor for purposes of calculation of the Marina Index.
The Lessor shall use its best efforts to maintain such actual Gross
Revenue for Slip Rentals information confidential. Failure to comply with
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this requirement, after notice and expiration of cure period shall constitute
an event of default hereunder.
(iv) Maximization of Slip Revenue: For those marinas included in the Marina
Index who voluntarily agree to provide actual Gross Revenue for Slip
Rentals information to Lessor, Lessor may, in its sole and absolute
discretion, require, and Lessee agrees to establish, slip rental rates based
on comparison of similarly situated slip rentals, or by the analysis of a
third -party appraiser, which shall be prepared in the manner provided in
Section 43.
(v) Audit: For those marinas included in the Marina Index who voluntarily
agree to provide actual Gross Revenue for Slip Rentals information to
Lessor, Lessor may, in its sole and absolute discretion, at any and all
reasonable times, examine and audit Books and Records, financial
statements, and documentation, without restriction, for the purpose of
determining the accuracy of the Gross Revenue for Slip Rentals for this
Premises reported to the Lessor for the prior year, and the accuracy of
the Rent paid to Lessor. If the Lessee's business operations conducted
within or from the Premises are part of a larger business operation of the
Lessee, and any part of the Books and Records, financial statements and
documentation is prepared only for the larger operation, and not solely for
the business operations of the Premises, then the Lessor shall also have
the right to examine and audit that part of the Books and Records,
financial statements, and documentation of the larger business operation.
In the event the Lessee does not make available the original Books and
Records, financial statements, and documentation at the Premises or
within the limits of Orange County, Lessee shall pay all necessary travel
expenses incurred by Lessor (including, without limit, the cost of Lessor's
agent's time) in conducting an audit at the location where Books and
Records are maintained.
(b) Fair Market Adjustment of Rent and Other Fees and Charges: In Lessor's sole
and absolute discretion, at the Market Adjustment Date, the Rent and the Security
Deposit shall be adjusted to reflect then - current fair market value, as such value
shall be determined by Lessor, in its discretion as trustee of the Tidelands and
such adjustment need not be based on or limited to the Target Indexed Rate
described above. However, Rent shall never be decreased from the Lease Term
Year prior to an adjustment. Any Rent adjustments shall apply retroactively to
commence on the Market Adjustment Date and Lessee shall pay any unpaid Rent
within fifteen (15) days of receipt of notice from Lessor. Lessee shall pay all
Lessor's cost of a market adjustment in the manner provided in Section 44.
(c) Periodic Payment of Rent: Twenty -Five percent (25 %) of annual Rent for a
particular Lease Term Year shall be payable on the first (1st) day of each
Accounting Period during the Term.
(d) Place for Payment of Rent: All payments of Rent shall be made in lawful money
of the United States of America and shall be paid to Lessor in person or by United
States' mail, or overnight mail service, at the Cashier's Office located at 3300
Newport Boulevard, Newport Beach, CA 92658, or to such other address as
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Lessor may from time to time designate in writing to Lessee. If requested by
Lessor, Lessee shall make payments electronically (at www.newportbeachca.gov)
or by wire transfer (at Lessee's cost). Lessee assumes all risk of loss and
responsibility for late charges and delinquency rates if payments are not timely
received by Lessor regardless of the method of transmittal.
(i) Additional Rent: Lessee shall pay as "Additional Rent" for the Premises,
within ten (10) days of Lessor's demand therefore (unless a different time
for payment is expressly provided in this Agreement), all other amounts
required by this Agreement, in addition to Rent. Additional Rent does not
reduce or offset Lessee's obligations to pay Rent.
(e) No Abatement or Reduction in Rent: Lessee has no right to any abatement, set-
off or reduction in Rent or Additional Rent. No endorsement or statement on any
check or any letter accompanying any check or payment will be deemed an
accord and satisfaction, and Lessor may accept such check or payment without
prejudice to Lessor's right to recover the balance or pursue any other available
remedy.
(f) Net Lease: Rent, as defined in this Agreement, is based upon Lessee's material
representation and covenant that it will pay all expenses, costs, taxes,
assessments, fees or charges, and incur all liabilities, of every kind in any way
relating to, or in connection with, the Premises and the Improvements during the
Term. Accordingly, Lessee will promptly pay all expenses, costs, taxes,
assessments, fees or charges, and incur all liabilities, of every kind and
description relating to, or in connection with, the Premises and the Improvements
during the Term.
Utilities. Taxes and Assessments
(a) Lessee is solely responsible for obtaining all utilities for the Premises, and shall
promptly pay, and discharge prior to delinquency, any and all charges for water,
gas, electricity, telephone, rubbish, telephone, garbage disposal, sewer, grease
interceptor and other services or utilities furnished to the Premises, or occupants
thereof.
(b) Lessee shall pay, prior to delinquency, any and all possessory interest taxes,
property taxes, all taxes assessed against and levied upon fixtures, furnishings,
equipment, or any other improvements (including without limitation piers, floats
and ways) and all other personal property of Lessee located on the Premises, real
property taxes, fees, service charges, development impact fees and assessments
which may at any time be imposed or levied by any public entity and attributable
to Lessee's use of the Premises and Improvements. Lessor hereby gives notice
to Lessee, 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 Lessee.
Lessee shall advise in writing any sublessee, licensee, concessionaire or third
party using the Premises of the requirements of Section 107.6.
(c) Any payments under this Section shall not reduce or offset Rent payments.
Lessor has no liability for such payments.
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6. Use of the Premises
(a) During the term of this Agreement, Lessee will use and occupy the Premises
solely and exclusively for the operation of an approximately _ slip marina and
those ancillary uses as specifically itemized as follows:
(i) Rental of approximately boat slips to the public ( "Boat Slip
Renters ").
(ii) Rental of lockers, dinghy racks, and dry storage spaces to Boat Slip
Renters only.
(iii) Boat launching and retrieving services for Boat Slip Renters only.
(iv) Vending machines, but not including gaming machines, or video or
arcade games.
(v) Offices for marina management, for tourism /visitor- serving businesses
and for maritime - related businesses, including fuel docks.
(vi) Rental of recreational equipment, including bicycles, kayaks, paddleboard
and similar equipment.
(vii) Sailing school.
(viii) Sale of new or used boats.
(ix) Yacht club.
(x) Installation of telecommunications equipment with prior written Lessor
approval.
(b) All vessels, including end and side ties, shall be berthed within the Premises;
vessels shall not be berthed partially or totally outside the Premises except as
expressly allowed in Municipal Code Title 17 (or any amended or successor Code
title or ordinance).
(c) Lessee will not use or permit the Premises to be used, directly or indirectly, for
any other uses or purposes whatsoever without the prior written approval of
Lessor, which approval may be granted or denied in Lessor's sole and absolute
discretion.
(d) Any use permitted by this Agreement, any Minor Alterations or Structural Changes
and any other construction, improvement or modification of the Premises or
Improvements must be independently consistent with, and not in violation of, the
provisions of the City of Newport Beach Charter and Municipal Code, the
provisions of the Tidelands Grant and Applicable Laws. Lessee is advised and
understands that in addition to this Agreement, Lessee may need to obtain (and if
necessary will obtain) permits, licenses or other regulatory approvals from the City
of Newport Beach or other governmental bodies prior to operating the permitted
uses or engaging in Minor Alterations or Structural Changes and any other
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construction, improvement or modification of the Premises or Improvements.
Lessee has read and understands that Section 41 applies to Lessee's uses and
construction of the Premises. Lessee understands and agrees that Lessor does
not make any representations or warranties of any kind that any use permitted by
this Agreement is consistent with the provisions of the City of Newport Beach
Charter and Municipal Code, the Tidelands Grant or any Applicable Laws.
(e) Lessee shall not commit or permit the commission by others of any waste on the
Premises. Lessee shall not maintain or permit any public or private nuisance,
including, without limit, actions constituting a nuisance as defined in Section 3479
of the California Civil Code or Municipal Code Section 1.04.020 (or any amended
or successor Code section or ordinance). Lessee shall not interfere with the rights
of other harbor permittees or nearby residents, and Lessee shall not use, or
permit the use of, the Premises for any unlawful purpose, or in violation of any
provision of Applicable Law.
(f) The State of California has reserved to itself in the Tidelands Grant the right to
use, without charge, any transportation, landing, or storage improvements,
betterments or structures constructed upon the Tidelands for any vessel or other
watercraft or railroad owned or operated by the state. Lessee understands and
agrees that this provision in the Tidelands Grant may limit Lessee's use of the
Premises and Lessee shall not deny the State any rights afforded by this provision
in the Tidelands Grant.
(g) Lessee shall not undertake any activity, including dredging of the Premises, that
causes water intrusion or damage to bulkheads and Lessee will be liable for any
damage to bulkheads resulting from such activity.
(h) Prohibited Activity. Without limiting the breadth of Sections 6(c), 6(e) or 26,
Lessee agrees that (i) the following shall not be kept, used, displayed or sold in,
from or about the Premises: (a) pornographic or sexually explicit books,
magazines, literature, films, videos, DVDs, CDs or other printed or recorded
material, sexual paraphernalia, or other material which would be considered lewd,
obscene or licentious or (b) any article which may be prohibited by standard forms
of fire insurance policies; (ii) gaming machines or video or arcade games shall not
be used or installed on the Premises; (iii) Lessee shall not offer entertainment and
shall not broadcast music or entertainment through exterior speakers or other
form of transmission in violation of Applicable Laws; (iv) no sign, supergraphic,
billboard, or mural (as those terms are defined in Municipal Code
Section 20.42.040, or any amended or successor Code section or ordinance) will
be located at the Premises in violation of Applicable Laws without Lessor's
consent, which may be granted, conditioned or withheld in Lessor's sole and
absolute discretion and (v) the following uses shall be prohibited from being
arranged, transacted or performed on, from or related to the Premises:
(a) massage establishments as defined in Municipal Code Chapter 5.50 or any
amended or successor Code section or ordinance, (b) holistic health providers as
defined in Municipal Code Chapter 5.64 or any amended or successor Code
section or ordinance, (c) adult oriented businesses as defined in Municipal Code
Chapter 5.96 or any amended or successor Code section or ordinance,
(d) escorts or escort services as defined in Municipal Code Chapter 5.90 or any
amended or successor Code section or ordinance and (e) any use not expressly
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permitted by the City's Zoning Code in the zoning designation applicable to the
Other Real Property.
(i) Unauthorized Use Charge: In addition to any Rent that may otherwise be owed,
Lessee will also pay Lessor Thirty -Five Percent (35 %) of the gross receipts for
any goods, service or use that is not expressly permitted by this Agreement.
Nothing will be deducted or excluded from the gross receipts of any goods,
service or use that is not permitted under this Agreement. Any payment shall be
delivered to Lessor on the due date for Rent. The provisions for late charges and
delinquency rates provided in Section 45 shall apply. However, late charges and
delinquency rates shall commence and accrue as of the date Lessor determines
the unpermitted use or service actually commenced (regardless of when Lessor
became aware of such service or use). The existence of the Thirty -Five Percent
(35 %) charge in this subsection and the payment of this charge, or any part
thereof, does not constitute authorization for a particular service or use, does not
waive Lessor's rights to terminate a service or use and does not absolve a default
by Lessee for participating in, or allowing, any unauthorized use of the Premises.
Security Deposit
(a) Amount: A security deposit of Dollars ($ ) will be
provided to Lessor by Lessee, on or before the Commencement Date. The
security deposit shall be held by Lessor and used for the purpose of guarantying
Lessee's faithful performance of its obligations in this Agreement, including,
without limitation, the payment of Rent and any other payments in this Agreement.
If Lessor uses or draws any portion of the security deposit then Lessee shall,
within ten (10) days after Lessor's written demand, restore the security deposit to
its original amount (as may be adjusted in Section 7(e)) or, as to letters of credit,
provide Lessor with additional letter(s) of credit in an amount equal to the
deficiency. Such additional letter(s) of credit shall comply with the provisions of
subsections (b) and (c).
(b) Type of Security Deposit: Except as provided below, the security deposit shall be
in the form of an irrevocable stand -by letter of credit. The principal sum shall be
made payable to Lessor or order. Each letter of credit provided during the term of
this Agreement shall be valid for a minimum of twelve (12) months from date of
issuance, except that in the final Lease Term Year the letter of credit shall be valid
for three (3) months past the termination date.
(c) Other Requirements: All or any portion of the principal sum of the letter of credit
shall be available unconditionally to Lessor for the purposes and uses provided
herein. The bank, and the form and provisions of the letter of credit shall be
acceptable to Lessor, in its sole discretion, and if not so acceptable, may be
rejected. The letter of credit and drawing certificate shall not be acceptable if it
requires Lessor to send written notice of default or request or demand payment
from Lessee after default, prior to Lessor drawing on any funds under the letter of
credit.
(d) Cash In -Lieu of Letter of Credit; Other Security as Alternatives: Notwithstanding
the above, Lessee may, subject to Lessor's consent, which it may grant or
withhold in its sole and absolute discretion, provide a security deposit in the form
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of cash. Any cash security deposit will be held by Lessor and any interest thereon
shall be Lessor's property and Lessee is not entitled to interest. Lessee may
utilize other forms of security (e.g., guaranties, certificate of deposit) to provide the
required security deposit if such alternative is approved in writing by Lessor in its
sole and absolute discretion.
(e) Adiustment: The amount of the security deposit may be adjusted periodically by
Lessor, in its sole and absolute discretion, at the same time as Rent adjustments
occur in this Agreement. Following any such adjustment, the amount of the
security deposit may not exceed three (3) months' Rent. In the event the amount
of the security deposit is increased, Lessee will submit the additional security
deposit within thirty (30) days of notification of the increase.
(f) Default for Failure to Maintain: Lessee will maintain the required security deposit
continuously. Failure to do so is a default subject to Lessee's right to cure as set
forth in Section 18(b).
(g) Release on Expiration/Waiver of Civil Code Section 1950.7: Lessee waives all of
its rights and all duties, and obligations Lessor may now, or in the future, have
relating to or arising from California Civil Code Section 1950.7. Without limiting
the generality of the foregoing, Lessee waives the provisions of California Civil
Code Section 1950.7 and all other provisions of law, now or hereafter in effect,
that (a) establish the time frame by which Lessor must refund a security deposit,
or (b) provide that Lessor may claim from the security deposit only those sums
reasonably necessary to remedy defaults in the payment of rent, to repair damage
caused by Lessee, or to clean the Premises.
8. Acceptance of Condition of Premises - "As -Is" / Waiver / Release
(a) Lessee's Acknowledgment: Lessee acknowledges that Lessee, Lessor or
unrelated third parties may have constructed improvements (some or all of which
may be Improvements as specified on Exhibit "D ") on and adjacent to the
Premises (including, without limit, bulkheads in the surrounding area adjacent to
and /or abutting the Premises). Lessee agrees and acknowledges that it is relying
solely on its own inspections and investigations regarding the Premises, the
condition of the Premises, the surrounding area and all other matters related
thereto. Lessee represents and warrants that it has obtained the advice of such
independent professional consultants as it deems necessary in connection with its
investigation and study of the Premises and surrounding area, including, without
limitation, water quality, Improvement quality, soils, hydrology, seismology,
archaeology, Applicable Laws (including, without limitation, the laws relating to the
construction, maintenance, use and operation of the Premises and Improvements
), and all environmental, zoning and other land use entitlement requirements and
procedures, height restrictions, floor area coverage limitations and similar matters.
(b) Only Lessor's Express Written Agreements Binding: Lessee acknowledges and
agrees that no person acting on behalf of Lessor is authorized to make, and that
except as expressly set forth in this Agreement, neither Lessor nor anyone acting
for or on behalf of Lessor has made, any representation, warranty, statement,
guaranty or promise to Lessee, or to anyone acting for or on behalf of Lessee,
concerning the condition of the Premises, any other aspect of the Premises or the
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surrounding area. Lessee further acknowledges and agrees that no
representation, warranty, agreement, statement, guaranty or promise, if any,
made by any person acting on behalf of Lessor which is not expressly set forth in
this Agreement will be valid or binding on Lessor.
(c) Verification of Acceptance: Lessee further acknowledges and agrees that
Lessee's execution of this Agreement constitutes Lessee's representation,
warranty and covenant that the condition of the Premises and the surrounding
area has been independently verified by Lessee to its full satisfaction, and that,
except to the extent of the express covenants of Lessor set forth in this
Agreement, Lessee will be leasing the Premises based solely upon and in
reliance on its own inspections, evaluations, analyses and conclusions, or those
of Lessee's representatives. As material inducement to Lessor's entering this
Agreement, Lessee represents, warrants and covenants that LESSEE ACCEPTS
AND IS LEASING THE PREMISES, AND IS AWARE OF THE SURROUNDING
AREA, IN ITS "AS -IS, WITH ALL FAULTS" CONDITION AND STATE OF REPAIR
INCLUSIVE OF ALL FAULTS AND DEFECTS, WHETHER KNOWN OR
UNKNOWN, AS MAY EXIST AS OF THE LESSEE'S EXECUTION OF THIS
AGREEMENT, AND WITH NO WARRANTY EXPRESS OR IMPLED FROM
LESSOR AS TO ANY LATENT, PATENT, FORESEEABLE AND
UNFORESEEABLE CONDITIONS. Without limiting the scope or generality of the
foregoing, Lessee expressly assumes the risk that the Premises do not or will not
comply with any Applicable Laws now or hereafter in effect.
(d) Waivers, Disclaimers and Release:
(i) Waiver and Disclaimer: Lessee hereby fully and forever waives, and
Lessor hereby fully and forever disclaims, all warranties of whatever type
or kind with respect to the Premises and Improvements, whether
expressed, implied or otherwise including, without limitation, those of
fitness for a particular purpose, tenant ability, habitability or use.
(ii) Lessor's Materials: Lessee further acknowledges that any information
and reports including, without limitation, any engineering reports,
architectural reports, feasibility reports, marketing reports, soils reports,
environmental reports, analyses or data, or other similar reports,
analyses, data or information of whatever type or kind which Lessee has
received or may hereafter receive from Lessor or its agents or consultants
have been furnished without warranty of any kind and on the express
condition that Lessee will make its own independent verification of the
accuracy, reliability and completeness of such information and that
Lessee will not rely thereon. Accordingly, subject to terms of Section 8(e)
below, Lessee agrees that under no circumstances will it make any claim
against, bring any action, cause of action or proceeding against, or assert
any liability upon, Lessor or any of the persons or entities who prepared
or furnished any of the above information or materials as a result of the
inaccuracy, unreliability or incompleteness of, or any defect or mistake in,
any such information or materials. Lessee hereby fully and forever
releases, acquits and discharges Lessor and each person furnishing such
information or materials of and from, any such claims, actions, causes of
action, proceedings or liability, whether known or unknown.
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(e) Release and Waiver:
(i) Release: Except to the extent of Lessor's negligence or willful
misconduct, or any breach by Lessor of express covenants and
obligations in this Agreement, Lessee, on behalf of Lessee, its
successors and assigns, hereby fully and forever releases, acquits and
discharges Lessor of and from, and hereby fully forever waives:
Any and all claims, actions, causes of action, suits, liabilities, obligations,
proceedings, demands, rights, damages, costs, expenses, losses,
judgments, provisional relief, fines, penalties, fees, and costs and
expenses (including, without limitation, attorneys' fees, disbursements
and court costs), including, without limitation, any and all claims for
compensation, reimbursement, or contribution whatsoever, whether
known or unknown, direct or indirect, foreseeable or unforeseeable,
absolute or contingent, that Lessee or any of Lessee's successors or
assigns now has or may have or which may arise or be asserted in the
future arising out of, directly or indirectly, or in any way connected with:
(1) any act or omission of Lessor (or any person acting for or on behalf of
Lessor or for whose conduct Lessor may be liable), in connection with
prior ownership, maintenance, operation or use of the Premises or the
bulkheads in the surrounding area adjacent to and /or abutting the
Premises; (2) any condition of environmental contamination or pollution at
the Premises (including, without limitation, the contamination or pollution
of any soils, subsoil media, surface waters or groundwaters at the
Premises); (3) to the extent not already included in clause "(2)" above, the
prior, present or future existence, release or discharge, or threatened
release, of any Hazardous Substances at the Premises, (including,
without limitation, the release or discharge, or threatened release, of any
Hazardous Substances into the air at the Premises or into any soils,
subsoils, surface waters or groundwaters at the Premises); (4) violation
of, or noncompliance with, any Applicable Law now or hereafter in effect,
however and whenever occurring; (5) the condition of the soil at the
Premises; (6) the condition of any improvements located on the Premises
or surrounding area including, without limitation, the structural integrity
and seismic compliance of such improvements; (7) any matters which
would be shown on an accurate ALTA land survey of the Premises
(including, without limitation, all existing easements and encroachments,
if any); (8) matters which would be apparent from a visual inspection of
the Premises or surrounding area; or (9) Lessor's and the City of Newport
Beach's exercise of discretion to approve, deny, modify or condition,
CEQA documents, the Improvements, Minor Alterations, or Structural
Changes, or any other permits, license or regulatory approvals from the
City of Newport Beach in relation to this Agreement including, without
limit, any matters contained in Section 41; or (10) to the extent not
already covered by any of the foregoing clauses above, the use,
maintenance, development, construction, ownership or operation of the
Premises by Lessor or any predecessor(s) -in- interest in the Premises of
Lessor.
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(ii) Release: Except to the extent of Lessee's negligence or willful
misconduct, or except for any of Lessee's covenants and obligations in
this Agreement to the contrary including, without limitation, any of
Lessee's indemnification obligations in this Agreement, Lessor hereby
fully and forever releases, acquits and discharges Lessee of and from,
and hereby fully forever waives:
Any and all claims, actions, causes of action, suits, liabilities, obligations,
proceedings, demands, rights, damages, costs, expenses, losses,
judgments, provisional relief, fines, penalties, fees, and costs and
expenses (including, without limitation, attorneys' fees, disbursements
and court costs), including, without limitation, any and all claims for
compensation, reimbursement, or contribution whatsoever, whether
known or unknown, direct or indirect, foreseeable or unforeseeable,
absolute or contingent, that Lessor now has or which may arise or be
asserted in the future, to the extent caused by Lessor's sole negligence or
willful misconduct in its capacity as a landlord under this Agreement (and
not in any other capacity) or Lessor's failure to comply with Lessor's
express obligations in this Agreement.
(iii) Waiver of Civil Code Section 1542: With respect to all releases made by
Lessee or Lessor under or pursuant to this Section 8, Lessee or Lessor
hereby waives the application and benefits of California Civil Code
Section 1542 and hereby verifies that it has read and understands the
following provision of California Civil Code Section 1542:
"A general release does not extend to claims which the creditor does not
know or suspect to exist in his favor at the time of executing the release,
which if known by him must have materially affected his settlement with
the debtor."
Lessee: Lessor:
9. Alterations or Construction
(a) Minor Alterations: Lessee may make, at its sole expense, Minor Alterations
without Lessor's consent. Any Minor Alteration shall be consistent with the
limitations on use of the Premises, any franchise, permit, license or other
regulatory approval related to the use of the Premises and, if necessary, Lessee
shall obtain a CDP from the Coastal Commission.
(b) Structural Improvements: Structural Changes may be made at Lessee's sole
expense, provided, however, Structural Changes will not be made without first
complying with the requirements in this Section 9.
(c) Government Agency Permits: Lessee shall notify Lessor in writing at least thirty
(30) days prior to submitting application(s) to any governmental regulatory agency
(other than the City of Newport Beach) for any development or construction permit
or license pertaining to the Premises or the Improvements. Lessee shall provide
Lessor with a copy of all application(s) within five (5) days of making said
application(s), along with copies of all plans submitted as part of the
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application(s). Lessee shall also provide Lessor, within ten (10) days of Lessee's
receipt, a copy of all permits, licenses, or other authorizations subsequently
issued (other than by the City of Newport Beach).
(d) Lessee Payment of Costs: Lessee shall pay all Lessor's and the City of Newport
Beach's costs incurred in connection with review and approval of any Minor
Alterations, Structural Changes in the manner provided in Section 44. Lessor and
the City of Newport Beach shall bear no cost for their review or processing of any
Minor Alternations or Structural Changes.
(e) Project Financing or Equity Commitment: Lessee shall submit to Lessor evidence
that Lessee either has sufficient cash on -hand to build Structural Changes or the
Project in accordance with the approved Working Drawings or has obtained a
written commitment, in form and content reasonably acceptable to Lessor, to
provide financing to build Structural Changes in accordance with the approved
Working Drawings. Any financing commitment shall be subject to and shall
comply with Section 16. The lender (if any) will be prepared to close the loan
subject to delivery of Lessor's approval of the financing.
(f) Construction: The construction of any Structural Changes shall strictly conform to
the requirements and terms of this provision.
(i) Lessee shall submit an executed construction contract or contracts, in a
form and content reasonably acceptable to Lessor, with competent and
financially - responsible contractors for construction in accordance with the
Working Drawings approved by Lessor.
(ii) Lessee will commence construction within two (2) months of approval by
Lessor of the construction contract(s) and Lessee shall continuously and
diligently pursue construction to completion. Provided, however, the
commencement and completion dates may be extended pursuant to
Section 9(f)(iii). All construction will be substantially in accordance with
plans and specifications, including but not limited to the Working
Drawings, previously approved in writing by Lessor, subject to changes
thereto as may be approved by Lessor, in Lessor's sole discretion. Said
plans, and any approved changes thereto, are by this reference made a
part of this Agreement. In the event of any inconsistency between the
plans and the terms and conditions of this Agreement, the terms and
conditions of this Agreement shall prevail.
(iii) The time(s) during which Lessee's construction is delayed by acts of God,
war, invasion, rebellion, revolution, insurrection, riots, labor problems,
unavailability of materials, or government intervention, shall be added to
the times for the commencement and completion of construction
established above on a day- for -day basis. Any extension due to excused
delay shall not commence until such time as Lessee notifies Lessor in
writing of such delay.
(g) Changes Due to Applicable Law: Lessee shall make, at its sole expense,
changes, alterations or additions in and to Improvements and structures on the
Premises that may be required by any Applicable Law from time to time.
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(h) View Preservation: In connection with any proposed Minor Alterations or
Structural Changes, Lessee shall reconfigure the boat slips to increase the view of
water from upland property. Reconfiguration shall be subject to Lessor's written
approval, including without limitation approval of design, reduction in slip facilities
and the physical separation of vessels.
(i) Performance and Payment Bonds: Lessee shall not commence any construction
upon the Premises until Lessee has complied with the provisions of Section 46.
10. Reconstruction
Lessee will promptly cause the Improvements or any part thereof, which are
(a) damaged or destroyed or (b) declared unsafe or unfit for occupancy or use by a
public entity with the appropriate authority, to be restored or reconstructed to their
original design and layout, whether or not required to be insured against, at Lessee's
sole cost and expense. Restoration or reconstruction shall commence within sixty (60)
days from the date of the damage, and Lessee shall diligently pursue reconstruction to
completion. Lessee shall not be entitled to any abatement in Rent or other form of
compensation from Lessor for loss of use of the Premises or Improvements in the event
of damage or destruction of the Premises or Improvements . Damage to or destruction
of the Premises or the Improvements shall not permit Lessee to terminate this
Agreement. Restoration or reconstruction of Improvements within the Premises shall be
performed according to plans approved by the City of Newport Beach (unless Applicable
Law requires the approval of others). Alternatively, in the event of damage or
destruction, Lessee may remove all Improvements from the Premises and restore the
Premises to a condition acceptable to Lessor, and any other applicable public entity, and
terminate this Lease. Unless Lessee elects to terminate this Lease and remove all
Improvements, Lessee shall be in default if it does not restore or reconstruct as required
in this Section. The force majeure provisions in Section 9(f)(iii)9(f)(iii) shall apply to
reconstruction.
11. Maintenance and Repair
(a) Maintenance by Lessee: Lessee assumes full responsibility for operation and
maintenance and repair of the Premises throughout the Term at its sole cost, and
without expense to Lessor.
(i) Without limiting Lessee's obligations to maintain the Premises, Lessee
shall keep and maintain all Improvements in first -class order, condition
and repair consistent with similar marina improvements at first -class
marinas in the Newport Bay.
(ii) Maintenance dredging bayward of the property line, between the
bulkhead line and the pierhead line, shall be the responsibility of Lessee;
provided that with respect to this obligation Lessee shall not violate
Section 6(g). Lessee shall perform all maintenance in compliance with all
Applicable Laws.
(iii) Lessee shall maintain bulkheads adjacent to or abutting the Premises in
compliance with all Applicable Laws.
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(iv) Lessee shall keep the Premises free and clear of rubbish, litter, and any
other fire hazards.
(v) Lessee expressly waives (a) the right to require Lessor to make repairs;
(b) any right to make repairs at the expense of Lessor; (c) the right to
reduce or offset Rent as a consequence of the condition of the Premises
or the Improvements; (d) the benefits of California Civil Code
Sections 1932, 1941 and 1942, as amended from time to time; and (e)
any law, judicial pronouncement, or common law principle similar thereto,
which is now or hereafter in effect or is otherwise inconsistent with the
provisions of this Agreement.
(vi) Lessee shall designate in writing
responsible for the day -to -day
cleanliness, and general order.
an on -site representative who shall be
operation and level of maintenance,
(b) Violation of Maintenance and Repair Obliqation; Performance: Lessor may
inspect the Premises as provided in Section 15. If an inspection discloses the
Premises are not in the required condition, Lessee must commence the necessary
maintenance work within three (3) days after written notice of violation from
Lessor and diligently and continuously pursue completion of such work.
(c) Penalties for Violation: In addition to any other rights Lessor has under this
Agreement or law, and without waving such rights, should Lessee fail to
commence corrective work within three (3) days after receipt of a notice of
violation (or fail to diligently and continuously pursue completion of said work),
then as provided in Section 11(c), Lessor may make the necessary correction or
cause it to be made and the cost thereof, including but not limited to the cost of
labor, materials, equipment, and an administrative fee equal to fifteen percent
(15 %) of the sum of such items, shall be paid by Lessee within twenty (20) days of
demand from Lessor. Additionally, Lessee shall pay $100 per day from the date
of the notice of violation for each violation until the corrective work is completed
(whether by Lessee or Lessor) to the satisfaction of Lessor. Lessee and Lessor
agree that $100 per day per violation represents a fair and reasonable estimate of
the costs Lessor will incur in reviewing and considering how to address
maintenance violations.
(d) Maintenance Prior to Renewal Term: In addition to any other conditions to
Lessee's exercise of the option to extend the Term (or Renewal Term) of this
Agreement, no less than sixty (60) days prior to the end of a Term that may be
renewed, Lessee shall submit a maintenance report stating the condition of the
Improvements on the Premises. Improvements shall be inspected, and the
maintenance report shall be written, by a qualified marine engineer that is retained
and paid for by Lessee but approved by Lessor. The inspection and report shall
include, at a minimum, the following:
(i) Inspection of the structural elements of piers, ramps, pilings, and floats for
fractures, concrete spalling, dryrot, and deterioration such as rust, etc.;
(ii) Inspection of floats to ensure proper flotation of piers with dead and
typical live loads;
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(iii) Inspection of overall condition of cleats, rubber bumpers and trash
containers;
(iv) Inspection of all fire hose cabinets, hoses and extinguishers to meet Fire
Code standards;
(v) Inspection of handrails and all safety features of piers, ramps, and floats;
(vi) Inspection of the electrical system, including the condition of conduits,
circuit breakers, receptacles, panel boxes, fuses, light fixtures and
confirmation that the electrical system conforms with government codes
in force during time of inspection;
(vii) Inspection of all plumbing systems, pipelines, hoses, connectors and
valves;
(viii) Inspection of bulkheads for deterioration and void formation behind
concrete panels and seawalls; and
(ix) Inspection of asphalt and cement pads for major deterioration which
would indicate necessary repair or replacement of such surface areas.
(x) An estimate of the remaining useful life of the Improvements.
The maintenance report shall make repair and maintenance recommendations to
ensure that the City's harbor standard of "Good" to "Excellent' will be maintained
and the useful life of the Improvements will extend throughout the Renewal
Term(s). At the time of providing the maintenance report to Lessor, Lessee shall
sign a certification under penalty of perjury that Lessee shall, at its sole cost,
make all repairs and perform all maintenance identified in the maintenance report
to the satisfaction of, and on a schedule satisfactory to, Lessor. Lessor shall
have the right to require Lessee, at any time following ten (10) calendar days
written notice, to file and pay for payment and faithful performance bonds, in the
manner provided in Section 46, to assure prompt completion and payment of the
maintenance and repairs recommendations. Any costs incurred by Lessee to
make repair and maintenance recommendations is a qualification for the Term of
this Agreement and is not Rent. The cost of repair and maintenance
recommendations shall not be considered by the parties or appraiser in
determining any Rent or Rent adjustment during the term of this Agreement.
(e) Maintenance by Lessor
(i) Nothing in this Agreement requires Lessor to perform any maintenance or
repair to the Premises or to any adjacent property or bulkheads; or to
make any improvements whatsoever on or for the benefit of the
Premises. The rights reserved in this Section 11(e) do not create any
obligations or increase any obligations for Lessor elsewhere in this
Agreement.
(ii) For property other than the Premises, Lessor may, at its sole discretion,
dredge, fill, grade, slope protect, construct seawalls, or replace and repair
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facilities in order to protect the Premises or other property located in City
of Newport Beach's harbor. With no less than twenty -four (24) hours
notice from Lessor to Lessee, Lessor shall also have the right, but not the
obligation, to maintain or make any necessary repairs related to safety or
hazard concerns to or on the Premises. Lessee shall reasonably
cooperate with Lessor in any activity undertaken by Lessor on the
Premises.
(iii) Lessor's repair or maintenance of the Premises shall not constitute a
waiver of Lessee's default.
(iv) No exercise by Lessor of any rights herein reserved shall entitle Lessee
to any compensation, damages, or abatement of Rent from Lessor for
any injury or inconvenience occasioned thereby.
(f) Lessor's Costs: Lessor's costs of performing any action it has a right to perform in
this Section 11 shall be paid by Lessee in the manner provided in Section 44.
12. Liens
(a) Liens Prohibited: Lessee shall not permit to be imposed, recorded or enforced
against the Premises, 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. Lessee shall give Lessor at least
fifteen (15) days prior written notice before commencing construction of any kind
on the Premises so that Lessor may post appropriate notice of non - responsibility.
(b) Release /Removal of Liens: In the event any lien or stop notice is imposed or
recorded on the Premises during the Term, Lessee shall pay or cause to be paid
all such liens, claims or demands before any action is brought to enforce the same
against the Premises. Notwithstanding the foregoing, if Lessee legitimately
contests the validity of such lien, claim or demand, then Lessee shall, at its
expense, defend against such lien, claim or demand provided that it provide
Lessor the indemnity in Section 22 and provided Lessee shall pay and satisfy any
adverse judgment that may be rendered before any enforcement against Lessor
or the Premises.
(c) Bond: If a lien, or any other claim(s), lien(s) or levy(ies) of any nature caused by
Lessee or Lessee's sublessees, licensees, concessionaires, contractors,
subcontractors, or agents, is filed against the Premises, then Lessee shall, upon
written request of Lessor, deposit with Lessor a bond conditioned for the payment
in full of all claims upon which said claim(s), lien(s) or Ievy(ies) have been filed.
Such bond shall be in form and content provided in Section 46 and shall be
deposited with Lessor within ten (10) days after Lessor's written request.
(d) Exceptions: Section 12 shall not apply to a foreclosure of a Leasehold Mortgage
encumbering the Leasehold Estate if the Leasehold Mortgage has previously
received Lessor consent in accordance with Section 16(c) of this Agreement.
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13. Intentionally Omitted.
14. Quitclaim Deed
Upon expiration or the earlier termination of this Agreement for any reason, including but
not limited to termination because of default by Lessee, Lessee shall execute,
acknowledge, and deliver to Lessor within thirty (30) days after receipt of written demand
therefore a good and sufficient deed whereby all Lessee's right, title, and interest in the
Premises[, the Project] [and Improvements] is quitclaimed to Lessor. Should Lessee fail
or refuse to deliver the required deed to Lessor, Lessor shall have the right to prepare
and record a notice reciting the failure of Lessee to execute, acknowledge, and deliver
such deed. Said notice shall be conclusive evidence of the termination of this
Agreement and of all right of Lessee, or those claiming under Lessee, in and to the
Premises[, the Project] [and Improvements].
15. Right to Enter the Premises for Inspection
Lessor expressly reserves the right and shall be entitled to enter the Premises, and all
Improvements, including a right of reasonable access to the Premises across Lessee
owned or occupied lands adjacent to the Premises, to inspect the Premises for
compliance with the terms of this Agreement. Lessee shall provide Lessor access to the
Premises for such purposes, upon not less than twenty -four (24) hours written notice.
16. Transfers / Hypothecation for Financing
(a) Transfers: Except as expressly provided herein, Lessee and its successors shall
not either voluntarily, or by operation of law, engage in a Transfer without first
providing written request to Lessor and obtaining Lessor's prior written consent.
Lessee agrees that Lessor's discretion to provide, withhold or condition consent to
any Transfer includes, without limitation, Lessor's discretion in administering the
Tidelands, which are a valuable public resource held by Lessor in trust for the
people of the State of California; therefore, in the absence of fraud or arbitrary
action in deciding to provide or withhold consent, Lessor's decision to grant,
withhold or condition consent shall be final and shall be deemed reasonable. A
Transfer made in violation of this Section 16, including without limitation the
obligation to receive Lessor's prior consent, is a default subject to the cure right in
Section 18(b).
(i) Lessee shall comply with the following requirements for any Transfer.
Lessee agrees that failure to satisfy these requirements are reasonable
bases for Lessor to deny consent (but is not exhaustive bases to deny
consent):
(1) Lessee shall give Lessor at least thirty (30) days written notice of
its proposed Transfer and provide appropriate documentation
demonstrating to Lessor's satisfaction the financial and
operational responsibility and appropriateness of the proposed
transferee. Lessee shall provide Lessor within five (5) days such
other or additional information and /or documentation as may be
reasonably requested by Lessor.
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(2) Lessee shall provide the terms and provisions of the proposed
Transfer, including without limitation, disclosure of the full
consideration for such Transfer, including a copy of the final
agreement evidencing the proposed Transfer.
(3) Except as otherwise provided in this Agreement for a permitted
Leasehold Mortgagee, the proposed transferee shall, in
recordable form, expressly assume this Agreement.
(4) In the event the proposed transferee is acquiring only a portion of
the adjoining Other Real Property, the rights and obligations of
Lessee and the proposed assignee shall be proportionately
adjusted in the manner deemed appropriate by Lessor in light of
its obligations under the Tidelands Grants; and
(5) Lessee shall pay all Lessor's costs associated with Lessor's
consideration of the Transfer, regardless of whether such transfer
is consummated, or in connection with any other actions taken by
Lessor pursuant to this Section 16 in the manner provided in
Section 43(c).
(b) Transfer if Appurtenant to Other Real Property
(i) The Premises is appurtenant to the adjoining littoral or riparian land
and /or uplands more particularly described on Exhibit "E" as the "Other
Real Property' and Lessee is the [fee title owner] [lessee of the Other
Real Property pursuant to that certain , dated
by and between Lessee as " and
as " "] of the Other
Real Property.
(ii) Lessee shall not Transfer its interest or rights to use such Other Real
Property adjoining the Premises separately from the Premises or
Lessee's interest in this Agreement.
(iii) In connection with any transaction described in the immediately preceding
sentence, Lessee shall have the right to Transfer the Premises or
Lessee's interest in this Agreement to any successor of Lessee's interest
(or portion thereof) in the Other Real Property, provided that Lessor's
prior written consent has been obtained, which consent shall not be
unreasonably withheld, conditioned or delayed.
(c) Subletting Permitted to Boat Slip Renters
(i) Notwithstanding other provisions of this Section 16, Lessee shall have the
right to sublease the slips to Boat Slip Renters and to extend or renew
any subleases with Boat Slip Renters.
(d) Hypothecation for Financing: For the purpose of financing or refinancing the
acquisition of the Premises, the Improvements, the fixtures and equipment located
on the Premises, the alteration, construction or reconstruction of Improvements, or
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the Project, Lessee may engage in a Transfer to a Leasehold Mortgagee only if, in
addition to such other applicable provisions in this Agreement, the provisions in
this Section 16(d) are satisfied. In no event shall Leasehold Mortgages either
individually or collectively exceed a loan -to -value ratio of seventy -five percent
(75 %) of the Premises.
(i) Notice to Lessor. Lessee shall provide Lessor with a fully executed
complete copy of each Leasehold Mortgage, and all related loan
documents (including copies of all appraisals), any and all amendments
thereto, and the name and address of each Leasehold Mortgagee. In the
event of any assignment of a Leasehold Mortgage or in the event of a
change of address of a Leasehold Mortgagee, Lessee shall provide the
new name and address of the assignee or Leasehold Mortgagee to
Lessor. Notices of default and notices of foreclosure shall be given to
Lessor contemporaneously with service on Lessee.
(ii) Notices to Leasehold Mortgagees. A Leasehold Mortgagee shall not be
entitled to notice or a copy of any notice from Lessor unless Lessee
provides Lessor with Leasehold Mortgagee's name and address and
requests that such Leasehold Mortgagee receive notices.
(iii) Leasehold Mortgagee Opportunity to Remedy Default. Any Leasehold
Mortgagee who is entitled to notice as provided in Section 16(d)(ii) shall
have the right, but not the obligation, to remedy the default or acts or
omissions of Lessee within the period and in the manner specified in this
provision. Upon Lessee's default and subsequent expiration of the
applicable cure period in Section 18, a Leasehold Mortgagee shall be
permitted to remedy such default(s) at any time within fifteen (15) days
(for nonmonetary defaults) and five (5) days (for monetary defaults)
following the expiration of the Lessee's cure period; provided, however,
Lessor shall not be required to furnish any further notice(s) of default(s) to
said Leasehold Mortgagee.
(iv) Leasehold Mortgagee Procedure on Lessee's Default.
(1) Upon Leasehold Mortgagee's remedy of Lessee's default to the
reasonable satisfaction of Lessor, this Agreement shall continue
provided that a Leasehold Mortgagee:
a. Pays all Rent, and other monetary obligations of Lessee
under this Agreement as the same becomes due, and
perform all of Lessee's other obligations under this
Agreement; and
b. If not enjoined or stayed, takes steps to acquire or sell
Lessee's interest in this Agreement and in the Premises to
an assignee, future transferee or purchaser by foreclosure
of the Leasehold Mortgage or other appropriate means,
and prosecutes the same to completion with reasonable
diligence.
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(2) Nothing in this Section 16(d) shall extend this Agreement beyond
the Term; nor to require a Leasehold Mortgagee to continue such
foreclosure proceedings after a breach or default has been
remedied. If Lessee's breach or default is remedied and the
Leasehold Mortgagee discontinues such foreclosure proceedings,
this Agreement, at Lessor's option and in its sole and absolute
discretion, may continue as if no breach or default under this
Agreement occurred.
(3) Before a Leasehold Mortgagee, or any other assignee, future
transferee or purchaser by foreclosure of the Leasehold Mortgage,
acquires the Leasehold Estate, it shall, as an express condition
precedent, agree in writing to assume each and every obligation
under the Agreement. Regardless, with the exception of said
Leasehold Mortgagee, no Transfer to an assignee, future
transferee or purchaser by foreclosure of a Leasehold Mortgage
shall be effective without Lessor's prior written consent, which
shall not be unreasonably withheld.
(4) The assignee, purchaser or future transferee at any sale of this
Agreement or of the Leasehold Estate in any proceedings for the
foreclosure of or trustee's sale under any Leasehold Mortgage, or
pursuant to any deed in lieu of foreclosure, shall be deemed an
assignee or transferee of this Agreement, and shall be deemed to
have agreed to perform all of the terms, covenants and conditions
on the part of Lessee to be performed in this Agreement but only
from and after the date of such purchase and assignment, and
only for so long as such purchaser, future transferee or assignee
is the owner of the Leasehold Estate.
(5) If Lessor denies consent to (a) the successful bidder or purchaser
upon foreclosure or (b) a proposed future transferee, assignee or
sublessee of the Leasehold Mortgagee, the sole and exclusive
remedy shall be for such party or the Leasehold Mortgagee to
seek relief in the nature of specific performance.
(6) A Leasehold Mortgagee shall include a statement in any Notice of
Foreclosure Sale that provides the requirements for Lessor's
consent.
(v) Casualty Loss. A standard lender's loss payable endorsement naming
each Leasehold Mortgagee may be added to any and all insurance
policies required to be carried by Lessee hereunder. Nevertheless, the
provisions in any Leasehold Mortgage for the application of insurance
proceeds shall be subject to the provisions of this Agreement and, in the
event of any conflict between the provisions of this Agreement and the
provisions of any Leasehold Mortgage with respect thereto, the provisions
of this Agreement shall control.
(vi) Limitation on Lessee's Right to Encumber. Any Leasehold Mortgage now
or hereafter placed on Lessee's interest in the Premises shall be subject
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and subordinate to any limitations in the Tidelands Grants, Lessor's
interest in the Tidelands, this Agreement, and any mortgage now in
existence on the Leasehold Estate. Lessee shall not use, encumber or
Transfer this Agreement or the Premises as security or collateral for any
action unless directly related to the Tidelands and the permitted uses
allowed by this Agreement.
(vii) No Rights to Encumber Interest of Lessor. The provisions of Section 16
do not give any entity the right to mortgage, hypothecate, cause a
Transfer of, or otherwise encumber or cause any liens to be placed
against the Lessor's interest in the Premises as trustee of the Tidelands,
nor shall anything in this Agreement be construed as resulting in a
subordination in whole or in part of Lessor's interests.
(viii) Estoppel Certificate. Lessor shall, within ten (10) business days after
written request from Lessee or any Leasehold Mortgagee, certify by
written instrument to any Leasehold Mortgagee or proposed Leasehold
Mortgagee: (a) as to whether this Agreement has been modified,
supplemented, amended, extended or renewed; (b) as to the existence of
any breach or default of this Agreement; and (c) as to the commencement
and expiration dates of the term of this Agreement.
17. Bankruptcy
Lessee agrees that if all, or substantially all, of Lessee's assets are placed in the hands
of a receiver or trustee and remain so for a period of thirty (30) days; or if Lessee makes
an assignment for the benefit of creditors or be adjudicated bankrupt; or if Lessee
institutes any proceedings under the Bankruptcy Act or similar law wherein Lessee
seeks to be adjudicated bankrupt or to be discharged of its debts or seeks to effect a
plan of liquidation or reorganization; or if any involuntary proceedings be filed against
Lessee and not dismissed or stayed within sixty (60) days, then this Agreement or any
interest in and to the Premises shall not become an asset in any such proceeding and,
to the extent permitted by law (and in addition to the provisions of Section 18) Lessor
may declare this Agreement terminated and take possession of the Tidelands, Premises
[the Project] and Improvements.
18. Defaults
The occurrence of any of the following constitutes a default of this Agreement by
Lessee:
(a) Continued failure to operate, vacation or abandonment of the Premises for one
hundred twenty (120) consecutive days after the date of Lessor's written notice to
Lessee.
(b) Failure to make any payment required by this Agreement when such failure
continues for a period of ten (10) days after the date of Lessor's written notice that
payment is due (unless another time period within which to make payment is
specifically provided); provided that any such notice provided in this Section 18(b)
or in Section 18(c) shall be in lieu of, and not in addition to, any notice required
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under Section 1161 of the California Code of Civil Procedure, as may be
amended.
(c) Failure of Lessee to observe or perform any of the covenants, conditions, or
provisions in this Agreement, except for a monetary default specified in
Section 18(b)18(a) above, where such failure continues for a period of twenty (20)
days after the date of Lessor's written notice of the default (unless another time
period within which to perform is specifically provided in this Agreement);
provided, however, that if the nature of Lessee's default is such that more than
twenty (20) days are reasonably required to complete its cure, then Lessee shall
not be in default if Lessee commences to cure the default within twenty (20) days
after written notice and thereafter diligently and continuously pursues the cure to
completion.
(d) Any of the events in Section 17 occur; provided that this provision is not
applicable or binding on a Leasehold Mortgagee which is of record and has been
consented to by Lessor, or to said Leasehold Mortgagee's successors in interest
consented to by Lessor, as long as (i) there remains any monies to be paid by
Lessee to such Leasehold Mortgagee under the terms of such Leasehold
Mortgage, (ii) that such Leasehold Mortgagee or its successors in interest,
continuously and timely pays to Lessor all Rent due or coming due under the
provisions of this Agreement and the Premises are continuously and actively used
and (iii) that said Leasehold Mortgagee agrees in writing to assume and perform
each and every obligation under the Agreement.
19. Remedies
(a) Cumulative Nature of Remedies. If any default by Lessee continues without being
cured in the time period specified in Section 18, then Lessor shall have the
remedies described in this Section 19, which are in addition to all other rights and
remedies provided by law, equity or elsewhere in this Agreement. Lessor shall
have the right to elect its remedies and may resort to any such remedies
cumulatively, or in the alternative.
(i) Reentry without Termination / Assignment of Gross Receipts. Lessor
may reenter the Premises, and, without terminating this Agreement, re -let
all or a portion of the Premises. Lessor may execute any agreement
made under this provision in Lessor's name and shall be entitled to all
rents from the use, operation, or occupancy of the Premises. Lessee
shall nevertheless pay to Lessor on the dates specified in this Agreement
the equivalent of all sums required of Lessee under this Agreement, plus
Lessor's expenses in conjunction with re- letting, less the proceeds of any
re- letting or atonement. No act by or on behalf of Lessor under this
provision shall constitute a termination of this Agreement unless Lessor
gives Lessee specific written notice of termination.
(ii) Maintain Agreement. Lessor may maintain this Agreement in full force
and effect and recover Rent, Additional Rent, payment or other charges
or consideration as they become due, without terminating Lessee's right
of possession, regardless of whether Lessee has abandoned the
Premises.
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(iii) Termination. Lessor may terminate this Agreement by giving Lessee five
(5) days written notice. If Lessor terminates this Agreement, Lessor may
recover possession (which Lessee shall surrender and vacate upon
demand) and remove all persons and property. Lessor shall be entitled to
recover the following as damages:
(1) The Worth at the Time of Award of the unpaid Rent, Additional
Rent or other charges which had been earned at the time of
termination;
(2) The Worth at the Time of Award of the amount by which the
unpaid Rent, Additional Rent or other charges which would have
been earned after termination until the time of award exceeds the
amount of such loss that Lessee proves could have been
reasonably avoided;
(3) The Worth at the Time of Award of the amount by which the
unpaid Rent, Additional Rent or other charges for the balance of
the Term of this Agreement after the time of award exceeds the
amount of such loss that Lessee proves could have been
reasonably avoided;
(4) Any other amount necessary to reasonably compensate Lessor
for the detriment proximately caused by Lessee's failure to
perform its obligations under this Agreement;
(5) At Lessor'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; and
(6) Lessor shall also be entitled to an award of the costs and
expenses (including, without limitation, actual attorneys' fees and
costs) incurred by Lessor in maintaining or preserving the
Premises after default, preparing the Premises for re- letting, or
repairing any damage caused by the act or omission of Lessee.
The "Worth at the Time of Award" of the amounts referred to in "(1)" and
"(2)" above shall be computed by charging interest at ten percent (10 %)
per annum from the dates such amounts accrued to Lessor. The "Worth
at the Time of Award" of the amount referred to in "(3)" above shall be
computed by discounting such amount at ten percent (10 %) per annum.
(b) Lessor's Right to Cure Lessee's Default. Upon continuance of any default beyond
applicable notice and cure periods, Lessor may, but is not obligated to, cure the
default at Lessee's cost. If Lessor pays any money or performs any act required
of but not paid or performed by Lessee after notice, the payment and /or the
reasonable cost (including, without limitation, actual attorneys' fees and costs) of
performance shall be paid by Lessee as Additional Rent. No such payment by
Lessor or act shall constitute a waiver of default, or of any remedy for default, or
render Lessor liable for any loss or damage resulting from performance.
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(c) Waiver of Rights. Lessee waives any right of redemption or relief from forfeiture
under California Code of Civil Procedure Sections 1174 or 1179, or under any
other present or future law, if Lessee is evicted or Lessor takes possession of the
Premises by reason of any default by Lessee.
20. Surrender of Premises
(a) Upon expiration or earlier termination, of this Agreement Lessee shall peaceably
surrender the Premises to Lessor. At surrender, the Premises shall be in as good
condition as they were at the Commencement Date, except as the Premises were
repaired, rebuilt, restored, altered, or added to as permitted or required by the
provisions of this Agreement, ordinary wear and tear excepted, and subject to
those provisions below.
(b) Upon expiration or earlier termination of this Agreement, Lessor may, at its option
and upon written notice to Lessee, take title to any or all fixtures and /or
improvements (including all Improvements to the extent that Lessee is entitled to
transfer title to such Improvements), including fills, without any obligation to make
payment or any compensation to Lessee or Lessor may require Lessee to remove
all or any such fixtures, improvements (including all Improvements, to the extent
that Lessee has title to such Improvements) at Lessee's sole cost. Alternatively,
Lessor may remove all or any portion of such fixtures, improvements (including all
Improvements to which Lessee has title) at Lessee's sole cost and such costs
shall be paid by Lessee as Additional Rent. Lessee shall deliver to Lessor such
documentation as may be necessary to convey title to such fixtures,
improvements (including all Improvements, to the extent Lessee has title to such
Improvements) to Lessor, free and clear of any liens, mortgages, loans or any
other encumbrances. Notwithstanding any other provision of this Agreement, as
permitted by California Public Resources Code Section 6312, or any successor
statute, the parties agree that upon expiration or earlier termination of this
Agreement Lessor shall have no liability or obligation to pay compensation for any
improvements made to the Premises.
(c) If Lessor elects for Lessee to remove any fixtures, improvements (including all
Improvements to which Lessee has title), then Lessee shall restore the Premises
to the conditions existing prior to the Commencement Date. All plans for Lessee's
subsequent removal and restoration shall be to the satisfaction of Lessor and
shall be completed no later than sixty (60) days after the expiration or sooner
termination of this Agreement. In removing any or all of the fixtures,
improvements (including all Improvements to which Lessee has title), Lessee shall
obtain any permits or other governmental approvals required by Applicable Law.
During any period of time employed by Lessee to remove fixtures, improvements
(including all Improvements to which Lessee has title) Lessee shall continue to
pay Rent to Lessor in accordance with this Agreement, which said Rent shall be
prorated daily.
(d) Any holding over by Lessee after either expiration or earlier termination shall not
constitute a renewal or extension, or give Lessee any rights in or to the Premises.
If Lessee, with Lessor's consent, remains in possession of the Premises after
Agreement expiration or earlier termination (including for the purpose of Lessee's
removal of Improvements), such possession shall be deemed a month -to -month
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tenancy terminable upon thirty (30) days' notice furnished at any time by either
party to the other. In addition, all provisions of this Agreement, except those
pertaining to Term, shall apply to the month -to -month tenancy, and Lessee shall
continue to pay all Rent required by this Agreement. Provided, however, Rent
shall be paid monthly on the first (1s) day of the month.
21. Condemnation
(a) Lessor shall notify Lessee of any Condemnation by providing written notice
thereof no later than thirty (30) days after the later of (i) the filing of a complaint in
eminent domain by Condemnor or (ii) any voluntary final agreement by Lessor
and Condemnor of the extent of the scope and extent of property interests in the
Premises to be included within the Condemnation.
(b) If the Premises are totally taken by Condemnation, this Agreement shall terminate
as of the date on which Condemnor actually takes physical possession of the
Premises, which date is referred to in this Section 21 as the "Termination Date." If
less than all but more than fifty percent (50 %) of total area of the Premises are
taken through Condemnation, Lessee shall have the option to terminate this
Agreement by providing written notice to Lessor. Lessee's notice must be given
within thirty (30) days after Lessee's receipt of Lessor's notice provided pursuant
to subparagraph (a) above, and if Lessee's notice of termination is not timely
given, then Lessee shall conclusively be deemed to have elected not to terminate
this Agreement. If this Agreement is terminated under this Section, the
termination shall be effective on the Termination Date, and Lessor shall prorate
Rent to that date. Lessee must pay Rent for the period up to, but not including,
the Termination Date, as prorated by Lessor. Lessor shall return to Lessee any
prepaid Rent allocable to any period on or after the Termination Date.
(c) If any part of the Premises is taken by Condemnation and this Agreement is not
terminated, Rent shall be proportionately reduced based on the value of the actual
portion of the Premises taken as a percentage of the value of the entire Premises,
in its "before" condition and without regard to any injury to the remainder, or
benefit to the remainder, resulting from the taking or the construction of the project
for which the taking occurs. Lessor shall make such determination of the amount
of reduction in Rent in its reasonable discretion, based upon either the appraisal
for the Condemnation provided by the Condemnor, or pursuant to an appraisal
prepared in the manner provided in Section 43, as Lessor shall determine. Lessor
and Lessee agree to execute an amendment or other appropriate instrument
modifying this Agreement within thirty (30) days after a partial taking, confirming
the reduction in Premises and reduction in Rent.
(d) If a temporary taking of part of the Premises occurs through (i) the exercise of any
government power by Condemnor or (ii) a voluntary sale or transfer by Lessor to
any Condemnor, either under threat of exercise of eminent domain by a
Condemnor or while legal proceedings for condemnation are pending, Rent shall
abate during the time of such taking but only with respect to that physical portion
of the Premises actually temporarily taken, and all rent or other compensation
paid by the Condemnor shall be the sole and exclusive property of Lessor.
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(e) All damages awarded for any Condemnation or a temporary taking shall belong to
and be the property of Lessor, whether such damages shall be awarded as
compensation for the value of the property taken, severance or other damages to
the remainder, improvements pertaining to the Premises, damages for loss of use
or access, loss of abutter's rights, diminution in value to the leasehold or loss of
bonus value, or reimbursement for any costs of any appraisal or litigation
expenses or recoverable costs. Notwithstanding the foregoing, however, Lessor
shall not be entitled to any separate award made to Lessee for the taking of any
moveable inventory or tangible personal property of Lessee, any relocation
benefits or moving expense reimbursements paid to Lessee, and any award to
Lessee for loss of Lessee's business goodwill.
22. Indemnification
In addition to any other indemnity provided for in this Agreement, and notwithstanding
any other provisions of this Agreement to the contrary, Lessee indemnifies, defends
(with counsel selected by Lessor) and holds harmless Lessor, its elected officials,
officers, employees, agents, attorneys, volunteers and representatives from and against
all claims, 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 that may arise from or in
any manner relate to (directly or indirectly): (i) Lessee's rights, obligations, acts or
omissions under this Agreement, (ii) Lessee's occupancy and use, or Lessee's guests,
invitees, sublessees, or licensees occupancy and use, of the Premises, or
Improvements or (iii) Lessor's consent, approval, conditioning, denial or modification, in
its capacity as a lessor or as the City of Newport Beach, of this Agreement, Lessee's
occupation and use of the Premises, the Improvements, Minor Alterations, CEQA
documents, Structural Changes, or any and all plans, permits, licenses, or regulatory
approvals relating to the Premises (individually, each a "Claim" and, collectively,
"Claims "). The indemnification in this Section 22 specifically includes, without limitation,
all Claims arising by reason of:
(a) The death or injury of any person or damage to real or personal property caused
or allegedly caused by the condition of the Premises, Improvements, Minor
Alterations, or Structural Changes or an act or omission of Lessee or an agent,
contractor, subcontractor, supplier, employee, servant, sublessee or
concessionaire of Lessee;
(b) Any work performed on the Premises, Improvements, or materials furnished to the
Premises, Improvements, Minor Alterations or Structural Changes, by or at the
request of Lessee or any agent, contractor, subcontractor, supplier, employee,
servant, sublessee or concessionaire of Lessee, with the exception of
maintenance performed by City; and /or
(c) Lessee's failure to perform any provision of this Agreement or to comply with any
requirement of Applicable Law or any requirement imposed on the Premises or
Improvements by any duly authorized governmental agency or political
subdivision.
Lessee's obligations in this Section (or any other provision providing indemnity in this
Agreement) shall not extend to the degree any Claim is proximately caused by the sole
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negligence or willful misconduct of Lessor, subject to any immunities which may apply to
Lessor with respect to such Claims. This indemnification provision and any other
indemnification provided elsewhere in this Agreement shall survive the termination of
this Agreement and shall survive for the entire time that any third party can make a
Claim.
23. Insurance
Without limiting Lessee's indemnification of Lessor, Lessee 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 Lessor. The policy or policies
shall provide, at a minimum, those items described in Exhibit "G" attached hereto and
incorporated herein by this reference.
24. Hazardous Substances
(a) From the Commencement Date and throughout the Term, Lessee will not use,
occupy, or permit any portion of the Premises to be used or occupied in violation
of any Hazardous Substance Laws.
(b) Notwithstanding any contrary provision of this Agreement, and in addition to the
indemnification duties of Lessee set forth elsewhere in this Agreement, Lessee
indemnifies, defends with counsel reasonably acceptable to Lessor, protects, and
holds harmless Lessor, its elected officials, officers, employees, agents, attorneys,
volunteers and representatives from and against any and all losses, fines,
penalties, claims, demands, obligations, actions, causes of action, suits, costs and
expenses (including, without limitation, attorneys' fees, disbursements and court
costs), damages, judgments, or liabilities, including, but not limited to, any repair,
cleanup, detoxification, or preparation and implementation of any remedial,
response, closure or other plan of any kind or nature which the Lessor, its officials,
officers, employees, agents, attorneys, volunteers or assigns may sustain or incur,
or which may be imposed upon them, in connection with any breach of Lessee's
obligations or representations in this Agreement or the use of the Premises under
this Agreement, arising from or attributable to the storage or deposit of Hazardous
Substances, This Section is intended to operate as an agreement pursuant to
Section 107(e) of CERCLA, 42 USC Section 9607(e), and California Health and
Safety Code Section 25364, to insure, protect, hold harmless, and indemnify
Lessor for any claim pursuant to the Hazardous Substance Laws or the common
law.
(c) Lessee does not, and will not, authorize any third party to use, generate,
manufacture, maintain, permit, store, or dispose of any Hazardous Substances in
violation of Applicable Laws on, under, about or within the Premises.
(d) Upon expiration or earlier termination of this Agreement, Lessee shall deliver
possession of the Premises in compliance with Hazardous Substance Laws.
(e) If during the Term of this Agreement, Lessee becomes aware of (i) any actual or
threatened release of any Hazardous Substances on, in, under, from, or about the
Premises in violation of Hazardous Substance Laws; or (ii) any inquiry,
investigation, proceeding, or claim by any government agency or other person
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regarding the presence of any Hazardous Substances in violation of Hazardous
Substance Laws on, in, under, from or about the Premises, Lessee shall give
Lessor written notice of the release or inquiry within five (5) days after Lessee
becomes aware or first has reason to believe there has been a release or inquiry
and shall simultaneously furnish to Lessor copies of any claims, notices of
violation, reports, warning or other writings received by Lessee that concern the
release or inquiry.
(f) If the presence of any Hazardous Substances brought onto the Premises by
Lessee or Lessee's employees, agents, sublessees, licensees, concessionaires,
contractors, or invitees, or generated by same during the Term of this Agreement,
results in contamination of the Premises or adjacent properties or the Newport
Harbor in violation of Hazardous Substance Laws, Lessee shall promptly take all
necessary actions, at Lessee's sole expense, to remove or remediate such
Hazardous Substances in full compliance with Applicable Laws. Lessee shall
provide notice to Lessor prior to performing any removal or remedial action.
Lessee shall not propose nor agree to any covenant of use restriction as part of
any removal or remediation required as a result of this provision without Lessor's
written consent. Lessee shall pay, in the manner provided in Section 43(c), any
costs Lessor incurs in performing Lessee's obligation to clean -up contamination
resulting from Lessee's operations or use of the Premises. Any amounts not paid
when due shall be subject to late charges and delinquency rates as provided in
Section 45.
(i) Should any clean -up of Hazardous Substances for which Lessee is
responsible not be completed prior to the expiration or sooner termination
of the Agreement, including any extensions thereof, then Lessor shall
transfer the amounts deposited by Lessee pursuant to Section 44 into an
escrow account, together with Lessor - approved instructions for the
disbursement of such amount in payment of the costs of any remaining
clean -up as it is completed, and (ii) if the nature of the contamination or
clean -up required of Lessee is of such a nature as to make the Premises
untenable or unleaseable, then Lessee shall be liable to Lessor as a
holdover lessee until the clean -up has been sufficiently completed to
make the Premises suitable for lease to third parties. The estimated cost
of the clean -up shall require approval of the Lessor.
(ii) If Lessor determines, in its reasonable discretion, that Lessee does not
have insurance or other financial resources sufficient to enable Lessee to
fulfill its obligations under this provision, whether or not accrued,
liquidated, conditional, or contingent, then Lessee shall, at the request of
Lessor, procure and thereafter maintain in full force and effect such
environmental impairment liability and /or pollution liability insurance
policies and endorsements, or shall otherwise provide such collateral or
security reasonably acceptable to Lessor as is appropriate to assure that
Lessee will be able to perform its duties and obligations hereunder.
(g) Lessee's obligations in this Section 24 shall survive the expiration or earlier
termination of this Agreement.
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25. Quiet Possession
(a) So long as no default by Lessee has occurred and is continuing uncured under
this Agreement, and subject to the Tidelands Grant or any amendment to that
grant, Lessee shall peaceably and quietly use and enjoy the Premises for the
Term, without hindrance or interruption by Lessor.
(b) Lessor shall in no event be liable in damages or otherwise, nor shall Lessee be
released from any obligations hereunder, because of the interruption or
termination of any service provided by Lessor (such as water or sewer service), or
a termination, interruption or disturbance of any service attributable to any act or
neglect (other than gross negligence or willful misconduct) of Lessor or its
servants, agents, employees, licensees, business invitees, or any person claiming
by, through or under Lessee.
26. Compliance with Applicable Laws
Lessee agrees that, in all activities on or in connection with the Premises, and in all uses
thereof, it will comply with and conform to all Applicable Laws. In particular and without
limitation, Lessee shall have the sole and exclusive obligation and responsibility to
comply with the requirements of Title VII of the Civil Rights Act of 1964, as amended; the
Civil Rights Act of 1991, the Unruh Civil Rights Act (Civil Code Section 51, et seq.), the
California Fair Employment and Housing Act, and the Americans With Disabilities Act of
1990, including but not limited to regulations promulgated thereunder. Lessee is solely
responsible for compliance with Applicable Laws.
27. Not Agent of Lessor
Neither anything in this Agreement nor any acts of Lessee shall authorize Lessee or any
of its employees, agents or contractors to act as agent, contractor, joint venturer or
employee of Lessor for any purpose. The parties' relationship under this Agreement is
exclusively that of a lessor and lessee.
28. No Third Party Beneficiaries
Lessor (both as a lessor and as the City of Newport Beach) and Lessee 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.
29. Limitation of Leasehold / Easements
This Agreement and the rights and privileges granted Lessee in and to the Premises and
Improvements are subject to all covenants, conditions, restrictions, and exceptions of
record, including those which are set out in the Tidelands Grant by the State of California
to Lessor. Nothing contained in this Agreement or in any related document shall be
construed to imply the conveyance to Lessee of rights in the Premises or Improvements
that exceed those owned by Lessor. This Agreement and the rights and privileges
granted Lessee in and to the Premises shall be further subject to future easements and
rights -of -way for access, gas, electricity, water, sewer, drainage, telephone, telegraph,
television transmission, and such other utilities as Lessor may determine from time to
time to be in the best interests of the development of the lands within Lessor's
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jurisdiction, provided, however, that no easements, rights -of -way, or the installation of
such facilities by Lessor, shall materially interfere with Lessee's business. Lessee is not
entitled to any monetary payment or other remuneration for any such future easements
and rights -of -way.
30. Notices
All notices and other communications required or permitted to be given under this
Agreement, including any notice of change of address, shall be in writing and given by
personal delivery, or deposited with the United States Postal Service, certified and
postage prepaid, or by national overnight mail service addressed to the parties intended
to be notified. Notice shall be deemed given as of the date of personal delivery, or if
mailed, two (2) days following the date of deposit with the United States Postal Service.
Notice shall be given as follows:
To Lessor: City of Newport Beach
Attn: City Manager
PO Box 1768
3300 Newport Boulevard
Newport Beach, CA, 92658
949 - 644 -3153
With Copy To: City Attorney (at same address)
To Lessee:
31. Entire Agreement /Amendments
(a) The terms and conditions of this Agreement, all exhibits attached hereto, and all
documents expressly incorporated by reference, represent the entire Agreement
of the parties with respect to the subject matter of this Agreement.
(b) This Agreement may be executed in counterparts, including electronic
counterparts, each of which, after all the parties have signed this Agreement, shall
be deemed to be an original, and such counterparts shall constitute one
Agreement binding on the parties.
(c) This written Agreement shall supersede any and all prior agreements, oral or
written, regarding the subject matter. Notwithstanding the foregoing sentence,
with respect to City Pier Permit No. , nothing herein is a release of
any violation of Lessee's duties or obligations with respect to City Pier Permit No.
, whether known or unknown at this time or upon the effective
date of this Agreement.
(d) Except as permitted by Section 33 below, 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.
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32
33.
34.
35.
(e) The terms and conditions of this Agreement shall not be altered or modified
except by a written amendment to this Agreement signed by Lessee and Lessor.
(f) 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.
(g) Any obligation of the parties relating
relating to limitations on liability and
of this Agreement.
Waivers
to monies owed, as well as those provisions
actions, shall survive termination or expiration
The waiver by either party of any breach, default or violation of any term, covenant or
condition of this Agreement, or of any Applicable Law, shall not be deemed a waiver of
any other term, covenant, condition, or Applicable Law, or of any subsequent breach or
violation of the same or other term, covenant, condition, or Applicable Law. 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.
Lessor's Authorized Representative
Unless otherwise specified in this Agreement or unless Applicable Law requires action of
the City Council or some other person or body of Lessor (in its capacity as the City of
Newport Beach), Lessor shall maintain the authority to implement this Agreement on its
behalf through the City Manager of the City of Newport Beach (or his or her designee).
The City Manager (or his or her designee) shall have authority (but not the obligation) to
issue interpretations, waive provisions (including, without limitation, imposition of late
charges and delinquency rates, Lessee's payment of costs and times of performance),
and /or enter into amendments of this Agreement on behalf of the Lessor.
City Business License
Lessee shall obtain and maintain during the duration of this Agreement a City business
license as required by the Newport Beach Municipal Code.
Governing Law
This Agreement shall be construed in accordance with the laws of the State of California.
Any action brought relating to this Agreement shall be adjudicated in a court of
competent jurisdiction in the County of Orange. Lessee is advised that Public
Resources Code Section 6308 may require that the State of California be joined to any
action against the City involving title to or boundaries of the Tidelands.
36. 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
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authorship of the Agreement or any other rule of construction which might otherwise
apply.
37. Time is of the Essence
Time is of the essence to the performance of each and every act required to be per-
formed by this Agreement.
38. Prevailinq Wailes
It shall be the obligation of Lessee or any subcontractor under Lessee to comply with all
State of California labor laws, rules and regulations and the parties agree that the Lessor
shall not be liable for any violation thereof.
If applicable, pursuant to the applicable provisions of the California Labor Code, not less
than the general prevailing rate of per diem wages including legal holidays and overtime
for each craft or type of workman needed to perform Minor Alterations, Structural
Changes [construct the Project], or perform any other work for construction ( "Work ")
contemplated under this Agreement shall be paid to all workmen employed by the
Lessee and any subcontractor on the Premises. 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 mechanic. 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. Lessee is required to
obtain the wage determinations from the Department of Industrial Relations and post at
the Premises the prevailing rate or per diem wages.
39. Joint and Several Liability
If Lessee, as a party to this Agreement, is a partnership, joint venture, or is comprised of
more than one party or entity, or a combination thereof; the obligations imposed on
Lessee under this Agreement shall be joint and several, and each general partner, joint
venturer, party or entity of Lessee shall be jointly and severally liable for said obligations.
40. Memorandum of Lease Agreement
A Memorandum of Lease Agreement, in a form and content similar to that contained in
Exhibit "F 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 in the office of the Orange County Clerk- Recorder, as required by Government
Code Section 37393.
41. No Pre- commitment / Retention of Discretion / Assumption of Risk and Waiver
(a) By its execution of this Agreement, Lessor is not committing itself or agreeing to
undertake any activity requiring the subsequent exercise of discretion by the City
of Newport Beach, or any department thereof, including but not limited to the
approval of any Minor Alterations, Structural Changes, CEQA documents,
, the approval of any development proposal or land use regulation
governing the Premises, or any other act or approval.
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(b) Lessee understands and agrees that Lessor in its capacity as the City of Newport
Beach reserves the right to exercise its discretion as to all matters which it is, by
law, entitled or required to exercise its discretion, including, but not limited to, the
consideration of Minor Alterations, Structural Changes, CEQA documents the
consideration of a final development, the consideration of any and all plans,
permits, licenses or regulatory approvals, or any other acts or activities requiring
the subsequent independent exercise of discretion by the City of Newport Beach
or any agency or department thereof. Lessee understands and agrees that the
City of Newport Beach may, in its sole and absolute discretion, certify or not certify
a CEQA document and approve, approve with modifications, or not approve Minor
Alterations, Structural Changes or may consider other alternatives, including those
presented in the CEQA documents.
(c) Lessee acknowledges and agrees that the City of Newport Beach or other
governmental agencies (including without limitation the Coastal Commission)
may, at their sole and absolute discretion, approve any and all plans, permits,
licenses or regulatory approvals, the Minor Alterations or Structural Changes only
upon the imposition and performance of additional conditions or mitigation
measures.
(d) Nothing in this Agreement shall obligate the Lessor in its capacity as the City of
Newport Beach to exercise its discretion in any particular manner, and
notwithstanding any provision of this Agreement to the contrary any exercise of
discretion required by law or permitted by this Agreement shall not be deemed to
constitute a breach of Lessor's duties under this Agreement.
(e) Lessee accepts and assumes the risk that the City of Newport Beach or other
governmental agencies (including without limitation the Coastal Commission) will
not approve or certify the Minor Alterations, Structural Changes, CEQA
documents or any and all plans, permits, licenses or regulatory approvals sought,
that the City of Newport Beach may consider or approve other alternatives to the
Minor Alterations, Structural Changes, CEQA documents, that the Minor
Alterations, Structural Changes, any and all plans, permits, licenses or regulatory
approvals, or CEQA documents might be approved or certified subject to
modifications or the performance of certain additional conditions or mitigation
measures imposed by the City of Newport Beach or other governmental agencies
(including without limitation the Coastal Commission) in their sole and absolute
discretion, or that third parties may file litigation against or otherwise delay the
Minor Alterations, Structural Changes, any and all plans, permits, licenses or
regulatory approvals sought, or CEQA documents. Lessee agrees it has no claim,
cause of action, or right to damages, compensation or reimbursement from Lessor
or the City of Newport Beach if (i) the Minor Alterations, Structural Changes,
CEQA documents or any and all plans, permits, licenses or regulatory approvals
sought are not approved by the City of Newport Beach or other governmental
agencies (including without limitation the Coastal Commission) for any reason,
(ii) other alternatives to the Minor Alterations, Structural Changes, CEQA
documents or any and all plans, permits, licenses or regulatory approvals sought
are approved, and (iii) Minor Alterations, Structural Changes, or CEQA documents
are approved or certified subject to modification or the performance of certain
additional conditions or mitigation measures, or (iv) third parties file litigation
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against or otherwise delay the Minor Alterations, Structural Changes, or CEQA
documents.
42. No Damages
Lessee acknowledges that Lessor 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, CEQA documents, Minor Alterations,
Structural Changes, and Transfers. Accordingly, Lessee covenants and agrees on
behalf of itself and its successors and assigns, not to sue Lessor (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 Lessor
or for any dispute, controversy, or issue between Lessor and Lessee 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, Minor Alterations, Structural Changes, Transfers or any future
amendments or enactments thereto, the parties agreeing that declaratory relief,
injunctive relief, mandate and specific performance shall be Lessee's sole and exclusive
judicial remedies.
43. Appraisals: Lessee Review of Appraisal / Process for Disputing Lessor's Fair Market
Adjustments
(a) Appraisal: This Section governs the process for all appraisals required or
permitted in this Agreement and shall establish Lessee's exclusive rights with
respect to such appraisals. Any time an appraisal is required or permitted by this
Agreement, Lessor shall select an appraiser with qualifications to appraise
tidelands properties, as such qualifications are determined by Lessor. Lessor
shall review and consider an appraisal, but Lessor's ultimate determinations with
respect to the actions requiring or permitting the appraisal shall be consistent with
its statutory obligations to establish fair market value and to prevent a gift of public
funds, as determined in Lessor's discretion. Lessor shall furnish Lessor's staff
recommendation on the actions requiring or permitting an appraisal to Lessee
along with a copy of the final appraisal. Lessee shall cooperate at Lessee's cost
in the preparation of any appraisal.
(b) Lessee's Review: With respect to any actions that require or permit an appraisal,
Lessee shall have fourteen (14) days to review an appraisal. During such
fourteen (14) day period, Lessee may appeal to the City Council by filing an
appeal in compliance with the procedures in Municipal Code Chapter 17.65 (or
any amended or successor Code section or ordinance). If Lessee does not file an
appeal prior to termination of the review period, Lessee shall be deemed to have
accepted Lessor's decision and shall be estopped from denying or challenging
such determination. If a timely appeal is filed, the City Council's decision shall be
final.
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(c) Lessee Pays Costs: Lessee and Lessor shall equally split the cost of obtaining
any appraisal required by this Agreement. Lessee shall pay for Lessor's cost of
determining fair market adjustment in Section 4(b). Lessee shall pay for any other
cost incurred by Lessor relating to any action requiring or permitting the appraisal
and any costs of an appeal. Lessee's payment of such costs shall occur in the
manner provided in Section 44.
44. Payment of Lessor's Costs: Lessee's Deposit Account
This section governs any provision that requires Lessee to pay Lessor's costs to perform
certain actions identified in this Agreement. Any time this Agreement uses the term
"Lessor's cost" (or similar term), such costs shall include all third -party actual costs and
expenses relating to Lessor's performance and any actions taken by Lessor in its
capacity as the City of Newport Beach, including, without limit, costs of materials, and
costs of outside consultants, vendors, and attorneys. Upon Lessor's demand and in
connection with commencing actions that require Lessee to pay Lessor's cost, Lessee
shall deposit into an account with Lessor ( "Lessee's Deposit Account ") an initial amount
reasonably determined by Lessor to be not less than Lessor's costs. Lessee shall make
this initial deposit within three (3) days of demand. Lessor has the right to draw from
Lessee's Deposit Account at any time to pay for Lessor's costs as such costs incur. If
funds in the Lessee's Deposit Account are insufficient at any time to pay Lessor's costs
then within three (3) days of Lessor's demand, Lessee shall deposit additional funds into
Lessee's Deposit Account. Lessee's failure to deposit funds in Lessee's Deposit
Account shall be a default and, without limiting any remedies available to Lessor for such
defaults, shall subject Lessee to late charges and delinquency rates on the demanded
amount in the manner provided in Section 45. Any funds remaining in Lessee's Deposit
Account after payment of all Lessor's costs shall be returned to Lessee. Lessee shall be
entitled to interest on funds deposited in Lessee's Deposit Account in excess of ten
percent (10 %) of Lessor's actual costs at a rate of one and a half percent (1 '/2 %) per
month.
45. Late Charges and Delinquency Rates
A ten percent (10 %) late charge shall be added to all payments due but not received by
Lessor with five (5) days following the due date, unless another due date is specified in
this Agreement. In addition, all unpaid amounts shall accrue at a delinquency rate of
one and a half percent (1 '/2 %) per month or any portion of a month until paid in full.
Lessor and Lessee hereby agree that such late charges and delinquency rates represent
a fair and reasonable estimate of the costs Lessor will incur by Lessee's late payment,
including, without limitation, lost opportunities and the cost of servicing the delinquent
account. Lessee agrees that such late charges and delinquency rates are Additional
Rent and are not interest. Acceptance of such late charges and delinquency rates
(and /or any portion of the overdue payment) by Lessor does not constitute a waiver of
Lessee's default with respect to such overdue payment, or prevent Lessor from
exercising any of the other rights and remedies granted in this Agreement.
46. Bonding
(a) Payment and Performance Bonds: This section governs any provision that
requires Lessor to obtain payment and /or performance bonds. Lessee shall
obtain, provide and maintain at its own expense when required by this Agreement:
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(1) a labor and materials payment bond in the amount of one hundred percent
(100 %) of the total amount to be paid for the action requiring such bond and in a
form and content acceptable to Lessor; and (2) a faithful performance bond in the
amount of one hundred percent (100 %) of the total amount to be paid for the
action requiring such bond in a form and content acceptable to Lessor.
(b) Surety Qualifications: The labor and materials payment bond and faithful
performance bond referenced above 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.
(c) Certificate of Authority: The Contractor shall deliver, concurrently with execution
of the labor and materials payment bond and faithful performance bond a certified
copy of the "Certificate of Authority' of the Insurer or Surety issued by the
California Insurance Commissioner, which authorizes the insurer or surety to
transact surety insurance in the State of California.
47. Government Claims Act
Lessee and Lessor agree that in addition to any claims filing or notice requirements in
this Agreement, Lessee shall file any claim that Lessee may have against Lessor in strict
conformance with the Government Claims Act (Government Code sections 900 at seq.).
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed in
duplicate on the date and year first written herein.
LESSOR
City of Newport Beach
A Municipal Corporation
Mayor
ATTEST:
Leilani Brown
City Clerk
LESSEE
91
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APPROVED AS TO FORM:
Aaron C. Harp
City Attorney
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EXHIBIT "A"
DEFINITIONS
Accounting Period means each period as follows: Commencement Date (or any anniversary
thereof) to to to
and to [day immediately prior to
the anniversary of the Commencement Date]. [Note: Complete once Commencement Date is
known. There are 4 three -month Accounting Periods in each Lease Term Year. ]
Additional Rent is defined in Section 4
Adjustment Date means the fifth anniversary of the Commencement Date 1 ,
20), and every subsequent fifth anniversary thereafter ( 20,
20_) [including, any fifth anniversary during a Renewal Term].
Aggregate 20% Equivalent Rent is defined in Section 4(a)(i).
Agreement is defined in the Preamble.
Applicable Law(s) mean and include, but are not limited to, those prescribed by Title 17 of the
Newport Beach Municipal Code; any ordinances of the City of Newport Beach, including the
Building Code thereof; the City Charter of Newport Beach; any regulations, policies and general
rules of the City of Newport Beach; the Tidelands Grant; Hazardous Substances Laws; CEQA;
and any other Federal, State or local statute, law, ordinance, resolution, code, rule, regulation,
order or decree as any of the same now exist or may hereafter be adopted or amended.
Boat Slip Renters is defined in Section 6(a)(i).
Books and Records means full, complete, accurate and proper books, records and accounts of
all business, use or occupation, or any combination thereof, transacted, arranged or performed,
in whole or in part, on, from or for goods, services or events from or related to the Premises,
whether by the Lessee or by a sublessee, licensee, concessionaire or other party, in
accordance with generally accepted accounting principles consistently applied, which shall
include equipment to record all sales at the time of transactions and shall also include, without
limit, income, sales and property tax returns and information.
CDP means a Coastal Development Permit.
CEQA means the California Environmental Quality Act, codified at California Public Resources
Code Sections 21000 et seq. as may be amended from time -to -time.
Claim(s) is defined in Section 22.
Commencement Date is defined in Section 3(a).
Condemnation means a permanent taking of the Premises through (i) the exercise of any
government power, by any public or quasi- public authority or by any other party having the right
of eminent domain (Condemnor) or (ii) a voluntary sale or transfer by Lessor to any Condemnor,
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either under threat of exercise of eminent domain by a Condemnor or while legal proceedings
for condemnation are pending.
Fiscal Year means the period of July 1 through June 30 of each year of the term.
Gross Revenue for Slip Rentals means all receipts of every kind and nature, whether for
cash, credit or barter, received /due for the rental or use of a slip, dock, or pier on the
Premises. Without limiting the breadth of the prior sentence, Gross Revenue for Slip
Rentals shall include, without limitation, receipts of every kind and nature derived from
any promotion, package deal, service, or other item that is associated in any way with
the rental or use of a slip, dock, or pier on the Premises. For purposes of determining
Gross Revenue for Slip Rentals any fixed, annual, monthly and /or recurring charge that
a person or entity is required to pay shall be counted as part of the Gross Revenue for
Slip Rentals. For instance, if a person or entity is required to rent a parking spot to use
a slip, dock or pier on the Premises, the parking spot revenue is included in the Gross
Revenue for Slip Rentals. Gross Revenue for Slip Rentals shall not be offset or
reduced for any reason, including, but not limited to, the payment of taxes, fees, repairs,
maintenance, construction, or inability or failure to collect any cash, credit, or barter due
for the use of a slip, dock, or pier on the Premises.
Hazardous Substance means: (i) any substance, product, waste or other material of any
nature whatsoever which is or becomes listed, regulated, or addressed pursuant to the
Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C.
Section 9601 at seq. (CERLCA); the Hazardous Materials Transportation Act, 49 U.S.C.
Section 1801, et seq.; the Resource Conversation and Recovery Act, 42 U.S.C. Section 6901 et
seq. "RCRA "); the Toxic Substances Control Act, 15 U.S.C. Section 2601 at seq.; the Clean
Water Act, 33 U.S.C. Section 1251 et seq.; the California Hazardous Waste Control Act, Health
and Safety Code Section 25100 et seq.; the California Hazardous Substance Account Act,
Health and Safety Code Sections 25330 et seq.; the California Safe Drinking Water and Toxic
Enforcement Act, Health and Safety Code Sections 25249.5 et seq.; California Health and
Safety Code Sections 25280 at seq. (Underground Storage of Hazardous Substances); the
California Hazardous Waste Management Act, Health and Safety Code Sections 25170.1 et
seq.; California Health and Safety Code Sections 25501 et seq. (Hazardous Materials
Response Plans and Inventory); or the Porter - Cologne Water Quality Control Act, Water Code
Sections 13000 et seq., all as they, from time -to -time may be amended or re- codified, (the
above -cited statutes are here collectively referred to as "the Hazardous Substances Laws ") or
any other Federal, State or local statute, law, ordinance, resolution, code, rule, regulation, order
or decree regulating, relating to, or imposing liability or standards of conduct concerning, any
hazardous, toxic or dangerous waste, substance or material, as now or at any time hereafter in
effect; (ii) any substance, product, waste or other material of any nature whatsoever which may
give rise to liability under any of the above statutes or under any statutory or common law
theory, including but not limited to negligence, trespass, intentional tort, nuisance, waste or strict
liability or under any reported decisions of a state or federal court; (iii) petroleum or crude oil;
and (iv) asbestos.
Improvements means those items described on Exhibit D as they may be modified, altered,
restored, or rebuilt pursuant to this Agreement.
Leasehold Estate means Lessee's interest in the Premises and Improvements created by this
Agreement.
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Leasehold Mortgage means a Transfer or security instrument by which the Leasehold Estate is
used to secure a debt or other obligation arising from or related to Lessee's use or operation of
the Premises.
Leasehold Mortgagee means a holder or holders of the Leasehold Mortgage.
Lease Term Year means each twelve (12) month period beginning on the Commencement
Date (or anniversary thereof) and ending on the day prior to the next anniversary of the
Commencement Date.
Lessee is defined in the Preamble.
Lessee's Deposit Account is defined in Section 44.
Lessor is defined in the Preamble.
Marina Index is comprised of the marinas listed in Section 4(a)(ii)
Market Adjustment Date means the twenty -fifth (25th) [or other year that is mid -point through
the lease Term] anniversary of the Commencement Date, 2 (including
during any Renewal Term).
Minor Alterations means changes, alterations, improvements and additions in and to the
Premises or Improvements that do not either do not exceed $20,000 or do not require a Harbor
Development Permit.
Option Notice is defined in Section 3(b)(i).
Premises means those Tidelands consisting of approximately r square feet of land
area and approximately] square feet of water area located generally at
in the City of Newport Beach, California, more particularly described in Exhibit "B" and depicted
on the map set forth in Exhibit "C" along with all Improvements existing as of the
Commencement Date on, above or under said Tidelands that are identified in Exhibit "D" to the
extent that the City has title or right to such Improvements]. [Notwithstanding the previous
sentence, Lessor makes no representation or warranty as to whether Lessor or any other third
parties have an interest or title to the Improvements and Lessee agrees that no such
representation or warranty has been made.]
Renewal Term(s) is defined in Section 3(b).
Rent is defined in Section 4(a)
Structural Changes means any alteration, improvement, or addition in and to the Premises or
Improvements that does not constitute a Minor Alteration.
Target Indexed Rate is defined in Section 4(a)(i).
Term is defined in Section 3(a).
Tidelands means certain tidelands and submerged land (whether filled or unfilled), located in
the City of Newport Beach, County of Orange, State of California granted to the City of Newport
Beach, as trustee, by the State of California pursuant to the Tidelands Grant.
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Tidelands Grant means uncodified legislation related to the State of California's grant of certain
rights in the Tidelands to the City of Newport Beach, including, without limitation, the Beacon
Bay Bill (Chapter 74 of the Statutes of 1978, as amended [citations omitted]).
Transfer(s) means any attempt to sell, convey, assign, transfer, mortgage, pledge, grant,
hypothecate or encumber this Agreement or any interest in this Agreement, or the Premises or
any portion of the Premises, and any attempt to sublet (which shall also include management
and /or operating agreements covering the Premises), license or grant any concession to the
Premises, in whole or in part, or allow any person other than Lessee's employees, members,
agents, servants and invitees to occupy or use all or any portion of the Premises. Without
limiting the term Transfer in the prior sentence, the following shall be deemed to be Transfer
within the meaning of this Agreement:
(i) If Lessee is a corporation, (a) any dissolution, merger, consolidation or other
reorganization of Lessee, or sale or other transfer of a percentage of capital
stock of Lessee which results in a change of controlling persons, or the sale or
other transfer of substantially all the assets of Lessee or (b) a contract for the
management or operation of the whole or any part of the Premises.
(ii) If Lessee is a partnership, (a) a transfer of any interest of a general partner, a
withdrawal of any general partner from the partnership, or the dissolution of the
partnership or (b) a contract for the management or operation of the whole or any
part of the Premises. It is mutually agreed that the personal qualifications of the
parties controlling Lessee, specifically including, but not limited to, the general
partner(s), are a part of the consideration for granting this Agreement. Said
parties do hereby specifically agree to, except as prohibited as a result of death
or disability, maintain active control and supervision of the operations conducted
on the Premises.
(iii) If Lessee is a limited liability company, (a) an assignment, hypothecation,
withdrawal, admittance, dissolution, change, pledge, encumbrance, transfer or
sale, whether voluntary or involuntary, of any interest of a member's managing
interests, limited interests or membership interests, (b) a contract for the
management or operation of the whole or any part of the Premises, or (c)
permitting the transfer of the Agreement or possession of the Premises by any
changes in the respective interests of the parties comprising Lessee. It is
mutually agreed that the personal qualifications of the parties controlling Lessee,
specifically including, but not limited to, members of the limited liability company,
are a part of the consideration for granting this Agreement. Said parties do
hereby specifically agree, except as a result of death or disability, to maintain
active control and supervision of the operations conducted on the Premises.
Work is defined in Section 38.
Working Drawings shall be prepared by an architect or engineer, as appropriate, licensed to
do business in the State of California, and shall consist of the following:
(1) Complete architectural, civil, structural, mechanical, electrical,
plumbing, utility layout, landscaping and irrigation, stormwater,
and public artworks plans, and site horizontal (coordinate) and
vertical control plans included in the civil drawings.
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(2) Complete specifications, materials, and color list, and engineering
calculations for all improvements.
(3) Complete outline specifications to cover all phases of work.
(4) Construction contract form.
(5) Construction schedule.
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EXHIBIT "B"
PREMISES
59
EXHIBIT "C"
MAP OF PREMISES
60
EXHIBIT "D"
IMPROVEMENTS EXISTING AT COMMENCEMENT
61
EXHIBIT "E"
OTHER REAL PROPERTY
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RECORDING REQUESTED AND
WHEN RECORDED RETURN TO:
Office of the City Clerk
City of Newport Beach
3300 Newport Boulevard
Newport Beach, CA, 92658
EXHIBIT "F"
[Exempt from Recordation Fee - Govt. Code Sec. 6103]
MEMORANDUM OF LEASE AGREEMENT
((WITH OPTIONS FOR RENEWAL)I
This Memorandum of Lease Agreement [(With Options for Renewal)] ( "Memorandum ") is dated
20 , and is made between City of Newport Beach, a California municipal
corporation and charter city ( "Lessor" or "City') and
( "Lessee'), concerning the Premises described in Exhibits "A" and "B," attached hereto and by
this reference made a part hereof.
For good and adequate consideration, Lessor leases the Premises to Lessee, and Lessee hires
them from Lessor, for the term and on the provisions contained in the Agreement dated
, 20_, including without limitation provisions prohibiting assignment, subleasing,
and encumbering said leasehold without the express written consent of Lessor in each instance,
all as more specifically set forth in said Agreement, which said Agreement is incorporated in this
Memorandum by this reference.
The term is (_) years, beginning , 20 , and ending ,
20. [If needed, insert recitation of Options and Renewal Terms(s).]
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]
63
LESSOR
LESSEE
City of Newport Beach _
A Municipal Corporation a
Mayor
23
Name:
ATTEST:
Leilani Brown
City Clerk
APPROVED AS TO FORM:
Aaron Harp
City Attorney
[NOTE: Attach Exhibits A and B from Agreement as Exhibits to this Memorandum behind
attached Notary form]
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CALIFORNIA ALL - PURPOSE ACKNOWLEDGMENT
STATE OF CALIFORNIA
ss:
COUNTY OF ORANGE
On this _ day of , 2011, before me, the undersigned
notary public, personally appeared
NAME(S) OF SIGNER(S)
proved to me on the basis of satisfactory evidence to be the
person(s) whose name(s) is /are subscribed to the within
instrument, and acknowledged to me that he /she /they executed
the same in his /her /their authorized capacity(ies), and that by
his /her /their signature(s) on the instrument the person(s), or the
entity(ies) 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 OF NOTARY
OPTIONAL SECTION
OPTIONAL SECTION- -
CAPACITY CLAIMED BY SIGNER
Though statute does not require the Notary
to fill in the data below, doing so may
prove invaluable to persons relying on the
document.
❑ INDIVIDUAL
❑ CORPORATE OFFICER(S)
TITLE(S)
❑ PARTNER(S)
❑ LIMITED
❑ GENERAL
❑ ATTORNEY -IN -FACT
❑ TRUSTEE(S)
❑ GUARDIAN /CONSERVATOR
❑ OTHER:
SIGNER IS REPRESENTING:
NAME OF PERSON(S) OR ENTITY(IES)
THIS CERTIFICATE MUST BE ATTACHED TO THE TITLE OR TYPE OF DOCUMENT:
DOCUMENT DESCRIBED AT RIGHT:
Though the data requested here is not required by
law, it could prevent fraudulent reattachment of this
form.
NUMBER OF PAGES:
DATE OF DOCUMENT:
OTHER SIGNER(S) THAN NAMED ABOVE:
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EXHIBIT "G"
INSURANCE REQUIREMENTS
The Insurance required by Section 23 shall be as provided in this exhibit as follows:
[Insert provisions as provided by City Risk Management particular to the Premises.]