HomeMy WebLinkAbout10- Galley Cafe AgreementCITY OF
NEWPORT BEACH
��,FORN City Council Staff Report Agenda Item No.. 10
December 10, 2013'
TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: Community Development Department
Kimberly Brandt, AICP, Director
949- 644 -3226, kbrandt @neWportbeachca.gov
PREPARED BY: Seimone Judis, PE, CBO, Chief Building Official
Lauren W,00ding, Real Property,Administrator
APPROVED: c �-C )LA
v � U
TITLE: Ten -Year Lease Agreement between the City of Newport Beach
and The Galley Cafe located at 829 Harbor Island Drive
ABSTRACT:
The Galley Cafe has operated at the City -owned Balboa Yacht Basin at 829 Harbor
Island Drive since 1957. The current lease agreement will expire on December 31,
2013, and the operators seek a new `lease with an initial term of 10 years with two (2)
five -year options.
RECOMMENDATIONS:
1. Approve The Galley Cafe to continue as the food services operator in the restaurant
premises at the Balboa Yacht Basin;
2. Approve a waiver of`City Council Policy F -7 based on the findings contained in this
staff report; and
3. Authorize the City Manager to execute a new Lease Agreement in substantially the
same form as the attached document (Attachment CC 1) with The Galley Cafe.
REVENUE ACCOUNT:
The revenue for the restaurant premises and three garages would continue to be split
_between the General Fund account (2365 -5428) and the Tidelands Fund account
(2370 - 5428), with the incremental increase in base rent being allocated to the Tidelands
Harbor Fund.
1
Lease Agreement with The Galley Cafe
December 10, 2013
Page 2
DISCUSSION:
Background
The Balboa Yacht Basin (BYB) located at 829 Harbor Island Drive was built in Newport
Harbor in 1950 on filled state tide and submerged lands and City -owned uplands. The
tidelands were granted to the City in a trust to administer and oversee via the "Beacon
Bay Bill." The BYB includes a 172 -slip marina, three residential apartments, 38 storage
garages, a yacht brokerage office, marine store and boatyard, public restrooms, offices
occupied by the City's Harbor Resources Division, associated parking, and a restaurant
space occupied by The Galley Cafe.
The Galley Cafe (Tenant) has operated at the BYB since 1957. The restaurant
premises includes 1,439 square feet of restaurant space and two adjacent garages
(approximately 200 square feet each) used for storage space. The tenant also leases a
third storage garage at the BYB, under a separate garage rental agreement.
The current agreement will expire on December 31, 2013 (Attachment CC 2), and the
tenant is requesting a new lease term to continue their restaurant operation. Staff
considered soliciting proposals from other tenants to operate the restaurant, but upon
discussion with several community stakeholders it was clear to staff that The Galley
Cafe is a beloved and iconic fixture at the BYB and in Newport Beach as a whole.
Therefore, staff did not conduct an open bid process because staff believes that the
following findings, as required by City Council Policy F -7, Income Property (Attachment
CC 3), can be made:
1. Converting the property to another use or changing the manager, concessionaire
or lessee of the property would result in excessive vacancy, relocation or
severance costs, which would outweigh other financial benefits. Soliciting
alternate tenants is a time - consuming process that would likely result in months
of vacancy and lost revenue as well as the potential for additional tenant
improvement costs for the City.
2. The current tenant provides an essential or unique service to the community that
might not otherwise be provided should an alternate tenant be selected to
operate the facility. The Galley Cafe is an iconic restaurant and is beloved by
generations of Newport Beach residents and visitors alike. It is an authentic
family-run diner that draws a crowd every day of the week and is especially well -
liked by the boating community given its accessible harbor location.
The current annual rental rate is the greater of percentage rent of 6% of gross sales or
base rent ($33,000 per year) for the restaurant premises and two garages. In addition,
the tenant pays for use of a third garage ($4,030.20 per year). Rent would continue to
be calculated as the greater of percentage rent at 6% of gross sales or base rent. Base
Rent, under the terms of the proposed agreement, would increase by $14,329.80 in
Year 1 to $51,360 and will escalate at 2% per year with an additional 10% increase at
2
Lease Agreement with The Galley Cafe
December 10, 2013
Page 3
Year 11 and an additional 5% increase. at year sixteen, so the. total increase in the Base
Rent is 15% over each five -year period. An appraisal of market conditions confirmed the
proposed rental rates (shown below in more detail) are consistent with fair market value.
The Galley Cafe owners possess the qualifications and experience necessary to
continue to operate the restaurant at the Balboa Yacht Basin. It is staff's
recommendation to allow, the tenant to continue to operate at the location and sign a
new ten -year lease per the below listed terms, with materially the same conditions as
the existing lease.
Summary of Proposed Agreement
The proposed terms of the Lease Agreement are summarized below:
1. The term of the agreement will be'for ten years with two (2) five =year extension
options, unless terminated as provided by the agreement;
2. Rent shall be set at. the greater of Base Rent or Percentage Rent as detailed in
the following chart.
Initial Term (Years 1 -10)
.-Z
Percentage Rent"
Base Rent"
Year 1
6 %
$51,360.00
Year 2
6%
$52,387.20
Year 3
6%
$53,434.94
Year 4
6%
$54,503.64
Year 5
6%
$55,593.72
Year 6
6%
$56,705.59
Year 7
6 %
$57,839,.70
Year 8
6%
$58,996.50
Year 9
6%
$60,176.43
Year 10
6%
$61,379.95
.-Z
Lease Agreement with The Galley Cafe
December 10, 2013
Page 4
Option Term (Years 11 -151
Option Term (Years 16 -201
Percenta e Rent
Base Rent "
Year 11
6%
$67,923.60
Year 12
6%
$69,282.07
Year 13
6%
$70,667.71
Year 14
6%
$72,081.07
Year 15
6%
$73,522.69
Option Term (Years 16 -201
`Monthly rent, percentage of gross sales.
"Upon each successive anniversary of the Effective Date of the
agreement, the Base Rent shall be increased two percent (2 %), with an
additional ten percent (10 %) increase at year eleven. and an additional five
percent (5 %) increase at year sixteen, to true -up the annual Base Rent
percentage increase of three percent (3 %) per year for a total of fifteen
percent (15 %) over each five year period.
3. Rent calculations include payment for the restaurant premises and three
garages.
4. Hours of Operation shall be daily between 7:00 a.m. and 7:00 p.m., with up to six
closure days per year (three holidays and three tenant selected days).
5. Insurance and Indemnity provisions updated to current standards, all other lease
terms are consistent with the previous lease and the City's standard terms.
This agreement has been reviewed by the City Attorney's office and has been approved
as to form.
N
Percenta e Rent"
Base Rent "
Year 16
6%
$78,112.14
Year 17
6%
$79,674.38
Year 18
6%
$81,267.87
Year 19
6%
$82,893.23
Year 20
6%
$84,551.09
`Monthly rent, percentage of gross sales.
"Upon each successive anniversary of the Effective Date of the
agreement, the Base Rent shall be increased two percent (2 %), with an
additional ten percent (10 %) increase at year eleven. and an additional five
percent (5 %) increase at year sixteen, to true -up the annual Base Rent
percentage increase of three percent (3 %) per year for a total of fifteen
percent (15 %) over each five year period.
3. Rent calculations include payment for the restaurant premises and three
garages.
4. Hours of Operation shall be daily between 7:00 a.m. and 7:00 p.m., with up to six
closure days per year (three holidays and three tenant selected days).
5. Insurance and Indemnity provisions updated to current standards, all other lease
terms are consistent with the previous lease and the City's standard terms.
This agreement has been reviewed by the City Attorney's office and has been approved
as to form.
N
Lease Agreement with The Galley Cafe
December 10, 2013
Page 5
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.
NOTICING:
The agenda item has been noticed according to the Brown Act (72 hours in advance of
the meeting at which the City Council considers the item).
Attachments: CC 1 — Proposed Lease Agreement
CC 2 — Current Lease Agreement, executed 02/08/1988
CC 3 — City Council Policy F -7 — Income Property
4�1
Proposed Lease Agreement
7
2
BALBOA YACHT BASIN LEASE AGREEMENT
BETWEEN THE CITY OF NEWPORT BEACH AND
GALLEY CAFE, INC.
This Balboa Yacht Basin Lease Agreement ( "Agreement ") is made and entered
into as of the1st day of January, 2014 ( "Effective Date "), by and between the City of
Newport Beach, a California municipal corporation and charter city ( "City "), and Galley
Cafe, Inc., a California corporation (operating as Galley Cafe) ( "Tenant ").
RECITALS
A. The Balboa Yacht Basin located at 829 Harbor Island Drive, Newport
Beach, California includes a public marina, public restrooms, shipyard, parking lot,
garage buildings used for storage, and buildings with residential apartments, offices and
a restaurant ( "Property'). The Property includes an approximately one thousand three
hundred fifty (1,350) square foot restaurant facility, and three (3) garage spaces of
approximately two hundred (200) square feet each, all of which are depicted on Exhibit
"A" and incorporated herein by this reference ( "Premises ").
B. Tenant has operated at the Premises since the 1950's, and most recently
under a lease with the City of Newport Beach dated February 8, 1988, which expires on
December 31, 2013.
C. Tenant and City desire to enter into this Agreement to allow Tenant to
continue to operate a concession business intended to provide food, drink, and catering
services to the Balboa Yacht Basin tenants, visitors, staff and the general public
( "Concession ").
D. Pursuant to City Council Policy F -7, City sought the assistance of an
appraiser to determine the fair market value rent for the Premises and determined that
an open bid process is not required because converting the Premises to another use or
changing the Tenant would result in excessive vacancy, relocation or severance costs,
which would outweigh other financial benefits.
IT711
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
City and Tenant hereby agree as follows:
1. DEFINITIONS
1.1 General Definitions. As used in this Agreement, the following words and
phrases shall have the following meanings:
(a) Alteration — any improvements, additions, alterations, changes, or
modifications of the Premises made by Tenant, its employees, agents, and contractors
including, but not limited to, fixtures and signage.
(b) Authorized City Representative — the City Manager or his /her
designee
(c) Common Area — the areas within the Property which are available
for non- exclusive use by City, Tenant, the public, and other tenants and /or users.
(d) Expiration — the lapse of the time specified as the Term of this
Agreement, including any extension of the Term resulting from the exercise of an option
to extend.
(e) Good Condition — neat and broom -clean and in substantially the
same condition as of the Effective Date (reasonable wear and tear excepted), and is
equivalent to similar phrases referring to physical adequacy in appearance and for use.
(f) Law — any judicial decision, statute, constitution, ordinance,
resolution, regulation, rule, administrative order, or other requirement of any municipal,
county, state, federal, or other government agency or authority having jurisdiction over
the parties hereto or the Premises.
(g) Maintenance or Maintain — repairs, replacement, maintenance,
repainting, and cleaning.
(h) Person — one (1) or more natural persons, or legal entities,
including, without limitation, partnerships, corporations, trusts, estates, associations, or
a combination of natural persons and legal entities.
(i) Provision — any term, covenant, condition, or clause in this
Agreement that defines, establishes, or limits the performance required or permitted by
either party.
Q) Rent — includes Base Rent, Percentage Rent, taxes, and other
similar charges payable by Tenant under the provisions of this Agreement.
(k) Rent Commencement — date Tenant begins paying Rent,
commencing upon the Effective Date.
(1) Successor - -- assignee, transferee, personal representative, heir, or
other Person succeeding lawfully, and pursuant to the provisions of this Agreement, to
the rights or obligations of either party.
(m) Termination — the termination of this Agreement, for any reason,
prior to Expiration.
1.2 Other Definitions. — The following additional terms are defined in the
following sections of this Agreement:
(a) Base Rent §4.2(a)
Galley Cafe, Inc. Page 2
i0
(b) Concession Recitals, §C
(c) Gross Sales §4.5
(d) Hazardous Materials §16
(e) Indemnified Parties §10.1
(f) Option Term(s) §3.2
(g) Percentage Rent §4.2(b)
(h) Property Recitals, §A
(i) Premises Recitals, §A
Q) Term §3.1
City finds it to be in the public interest and consistent with public facility uses to
grant an exclusive right to operate a Concession at the Property. Therefore, pursuant to
the terms and conditions set forth herein, City hereby grants to Tenant the exclusive
right, privilege and concession to conduct a business at the Premises engaged in selling
such items as those described in Section 5.1, Business Purposes. Tenant has
occupied the Premises since the 1950s and is familiar with its condition. Thus, Tenant
agrees to accept the Premises in an "as is" condition as tendered by City. Tenant
agrees that no representations with respect to the condition or improvements of the
Premises have been made by City except as specifically set forth in this Agreement.
3. TERM
31 Term of Agreement. The Term of this Agreement shall be ten (10) years
from the Effective Date and expiring on midnight on December 31, 2023, unless
terminated sooner as provided in Section 14, or extended as provided in Section 3.2.
3.2 Option to Extend. Provided Tenant is not then in default beyond
applicable notice and cure periods, and upon approval of the City, Tenant may extend
the term of this Agreement for two (2) additional successive terms of five (5) years (the
"Option Term" or "Option Terms') the first commencing on Expiration of the initial Term
and the second commencing on Expiration of the first Option Term, on the same terms
and conditions as contained in this Agreement. Tenant must exercise each option by
giving City written notice of its intention to extend the Term at least six (6) months prior
to Expiration of the initial Term or the expiration of the first Option Term, as the case
may be.
3.3 Hold Over. Should Tenant, with City's consent, hold over and continue in
possession of the Premises after Expiration of the Term or any Option Term, Tenant's
Galley Cafe, Inc. Page 3
11
continued occupancy of the Premises shall be considered a month -to -month tenancy
subject to all the terms and conditions of this Agreement, except the provisions of
Sections 3.1 and 3.2.
3.4 Redevelopment of Property. Should City redevelop the Property or
Premises during the term of the Lease, or any extensions thereof, which will materially
interfere with Tenant's ability to occupy the Premises, City shall provide Tenant with at
least one hundred eighty (180) calendar days prior written notice of termination of this
Agreement. City will make all best efforts to include space for Tenant to continue to
operate the Concession at Property, however, the City cannot guarantee that space will
be available.
4.2 Restaurant Facility. Tenant shall pay the greater of Base Rent or
Percentage Rent.
(a) Base Rent. Tenant shall commence payment of Base Rent upon
the Effective Date,
The Base Rent, which includes the use of three (3) garages,
depicted on Exhibit "A," shall be established at Fifty -One Thousand Three Hundred
Sixty Dollars and 00/100 Cents ($51,360.00) per year. Base Rent shall be paid, in
advance, in equal monthly installments on the first day of each month (e.g., Four
Thousand Two Hundred Eighty and 00/100 Cents ($4,280.00) per month). Base Rent
for any partial month shall be prorated in accordance with the actual number of days in
that month and shall be due on the first day of that month that falls within the Term.
Annually, upon each successive anniversary date of the Effective
Date, the Base Rent shall be increased in accordance with the following schedule:
Initial Term (Years 1 -10)
Galley Cafe, Inc. Page 4
12
Base Rent**
Year 1
$51,360.00
Year 2
$52,387.20
Year 3
$53,434.94
Year 4
$54,503.64
Year 5
$55,593.72
Galley Cafe, Inc. Page 4
12
Year 6
$56,705.59
Year 11
Year 12
Year 7
$57,839.70
$70,667.71
Year 8
Year 9
$58,996.50
$60,176.43
Year 15
Year 10
$61,379.95
Option Term Years 11 -15
Option Term Years 16 -20
Base Rent **
Year 11
Year 12
$67,923.60
$69,282.07
Year 13
$70,667.71
Year 14
$72,081.07
Year 15
$73,522.69
Option Term Years 16 -20
(b) Percentage Rent.
"Percentage Rent" shall be determined each calendar month and shall be calculated by
multiplying the percentage, as indicated by the table below, by the total Gross Sales (as
defined in Section 4.5) made in, upon, or from the Premises and/or otherwise
attributable to catering from the Premises for the calendar month. For each month that
Percentage Rent exceeds Base Rent, Tenant shall pay to City the Percentage Rent less
the Base Rent paid to the City for that month.
Galley Cafe, Inc. Page 5
IS
Base Rent **
Year 16
Year 17
$78,112.14
$79,674.38
Year 18
$81,267.87
Year 19
$82,893.23
Year 20
$84,551.09
(b) Percentage Rent.
"Percentage Rent" shall be determined each calendar month and shall be calculated by
multiplying the percentage, as indicated by the table below, by the total Gross Sales (as
defined in Section 4.5) made in, upon, or from the Premises and/or otherwise
attributable to catering from the Premises for the calendar month. For each month that
Percentage Rent exceeds Base Rent, Tenant shall pay to City the Percentage Rent less
the Base Rent paid to the City for that month.
Galley Cafe, Inc. Page 5
IS
Percentage Rent of Gross Sales from on-
site Premises sales
Year 1
6 %.
Year 2
6%
Year
6%
Year 4
6%
Year 5
6%
Year 6
6 %
Year 7
6 %
Year 8
6%
Year 9
6 %
Year 10
6%
Percentage Rent of Gross Sales from on -site Premises sales shall be six
percent (6 %) for each year of the Option Term beginning on the eleventh (11 ")
anniversary date.
(c) Accounting and Payment. Within, twenty -five (25) calendar days
after the end of each calendar month for the term hereof, as may be extended as
provided herein, commencing with the twenty -fifth (25th')' day of the month. following the
Effective Date, and ending with the twenty -fifth (25th) day of the month next succeeding
the last month of the term, as may be extended as provided herein, Tenant shall furnish
to City a statement in writing, certified by Tenant to be correct, showing the total Gross
Sales made in, upon, or from and/or otherwise attributable to the Premises or any
catering during the preceding calendar month (or fractional month at the beginning of
the term if the Effective Date is other than the first day of a month). The Percentage
Rent payment to City, less the Base Rent already paid to the City for that month; shall
be due and payable with the next installment of Base Rent (for example, the Percentage
Rent statement for the month of January is due on February 251h, and the Percentage
Rent payment for the month of January is due on March 15').
4.3 Revenue from. Premises Use in Film, Television, and /or Advertising.
Tenant may allow the Premises to 'be used for commercial film, television production;
advertising production, or other commercial media vehicle only upon written approval
from the City, which approval shall not be unreasonably withheld, conditioned or
delayed, and in compliance with the Newport Beach Municipal Code. Fifty percent
(50 %) of all monetary revenue received by Tenant as compensation or other payment
for the use of the Premises in a, film, television production, advertising production; or
other commercial media vehicle shall be paid to City. The payment of revenue pursuant
to this Section shall occur not less than thirty (30) calendar day_ s after Tenant receives
this compensation or other payment.
4.4 PaVment Location. All payments of Rent shall be made in lawful money of
the United States .of America and shall be paid to City in person or by United States'
Galley Cafe, Inc. Page 6
14
mail, or overnight mail service, at the Cashier's Office located at 100 Civic Center Drive,
P.O. Box 1768, Newport Beach, California, 92658, or to such other address as City may
from time to time designate in writing to Tenant. If requested by City, Tenant shall make
payments electronically (at www.newportbeachca.gov) or by wire transfer (at Tenant's
cost). Tenant assumes all risk of loss and responsibility for late charges and
delinquency rates if payments are not timely received by City regardless of the method
of transmittal.
4.5 Gross Sales.
(a) The term "Gross Sales" means:
(1) all money, cash receipts, assets, property or other things of
value, including but not limited to gross charges, sales, rentals, fees and commissions
made or earned by Tenant and /or any assignees, licensees, permittees or Tenants
thereof, whether collected or accrued from any business, use or occupation, or any
combination thereof, originating, transacted or performed in whole or in part, on the
Premises, including but not limited to rentals, the rendering or supplying of services and
the sale of goods, wares or merchandise, whether wholesale or retail, whether for cash
or credit, or otherwise, and including the value of all consideration other than money
received for any of the foregoing, without, except as expressly provided in Section
4.6(b), deduction from gross receipts for any overhead or cost or expense of operations,
such as, but without limitation to salaries, wages, costs of goods, interest, debt
amortization, credit, collection costs, discount from credit card operations, insurance
and taxes. Each installment or credit sale shall be treated as a sale for the full price in
the month during which such sale is made, irrespective of whether or when Tenant
receives payment therefore. Gross Sales shall include any amount allowed upon any
"trade in," the full retail price of any merchandise delivered or redeemed for trading
stamps or coupons and all deposits not refunded to purchasers;
(2) Orders taken by Tenant in or from the Premises, even if the
orders are filled elsewhere, and sales by any sub - Tenant in or from the Premises;
(3) Gross receipts of all coin - operated devices that are placed
on the Premises by Tenant or pursuant to any rent concession, percentage or other
arrangement (but excluding revenue from telephones that are collected by a public
and/or private utility); and
(4) Rentals of any equipment, furniture, goods, wares or
merchandise.
(b) Exclusions from Gross Sales. Gross Sales shall not include, or if
included there shall be deducted (but only to the extent they have been included), the
following:
(1) Sales and use taxes, so- called luxury taxes, consumers'
excise taxes, gross receipts taxes, and other similar taxes now or in the future imposed
on the sale of merchandise or services, but only if such taxes are added to the selling
Galley Cafe, Inc.
E
-15
price and collected from customers, and separately stated on customer sales check or
invoices;
(2) The amount of returns to shippers or manufacturers;
(3) The amount of any cash or credit refund made upon any
sale where the merchandise sold or some portion is returned by the purchaser. Each
sale upon installment or credit shall be treated as a sale for the full price in the month
during which such sale shall be made, irrespective of the time when Tenant shall
receive payment (whether in full or partial) from its customers;
(4) Sales of trade fixtures or personal property to be replaced by
Tenant that are not considered stock in trade;
(5) Sums and credits received in the settlement of claims for
loss of or damage to merchandise;
(6) Meals provided for officers or employees without charge;
(7) Meals, goods or products provided for promotional or
publicity purposes without charge;
(8) Cash refunds made to customers in the ordinary course of
business;
(9) Value added taxes ( "VAT') or other taxes added to the
selling price of products and other similar taxes now or hereafter imposed upon the sale
of merchandise or services, whether such taxes are added to, or included in the selling
price;
(10) Discounted sales to employees of Tenant, not to exceed two
percent (2 %) of the monthly Gross Sales;
(11) Uncollectible credit accounts and other bad debts, not to
exceed two percent (2 %) of the monthly Gross Sales.
(12) Amounts paid to charge card or credit card issuers; and
(13) Tips or gratuities paid directly to employees by customers.
(c) Annual Statements of Gross Sales. Within sixty (60) calendar days
after the end of each calendar year during the Term hereof, as may be extended as
provided herein, Tenant shall furnish to City a statement in writing, certified by Tenant
and a Certified Public Accountant to be correct, showing the total Gross Sales made in,
upon, or from and /or otherwise attributable to the Premises during the preceding
calendar year (or fractional year at the beginning of the term if the Effective Date is
other than the first day of the year).
Galley Cafe, Inc. Page 8
161
(d) Sales and Charges. Within one hundred twenty (120) calendar
days of the Effective Date of this Agreement, Tenant shall install equipment on the
Premises to allow all sales and charges to be recorded by means of cash registers that
display the amount of the transaction certifying the amount recorded. The register shall
be equipped with devices that log in daily sales totals, and record on tapes the
transaction numbers and sales details, including a separate line item for daily sales tax.
At the end of each day the tape will record the total sales for that day.
(e) Production of Statement Records and Audit. Tenant shall keep at
the Premises (and shall require any permitted subtenant to keep at the Premises), or at
such other location (provided City is provided the address of the other location), full,
complete and proper books, records and accounts of its daily Gross Sales, both for
cash and on credit, at any time operated in the Premises. Upon five (5) calendar days
prior written notice, Tenant agrees to make available for inspection by City at the
Premises, a complete and accurate set of books and records of all sales of goods,
wares, and merchandise and revenue derived from the conduct of business or activity
in, at or from the Premises from which Gross Sales can be determined. Tenant shall
also make available, upon City's written request, all supporting records. Upon five (5)
calendar days prior written notice, Tenant shall also furnish City copies of its quarterly
California sales and use tax returns filed with the State of California. Tenant shall
retain and preserve for at least three (3) years all records, books, bankbooks or
duplicate deposit books and other evidence of Gross Sales. City shall have the right,
upon reasonable notice, during the Term and within one hundred eighty (180) calendar
days after expiration or termination of this Agreement to inspect and complete an audit
of Tenant's books and records and to make transcripts to verify the Rent due to the City.
Upon five (5) calendar days prior written notice, the audit may be conducted at any
reasonable time during normal business hours. Tenant shall cooperate with City in
making the inspection and conducting the audit. The audit shall be limited to the
determination of Gross Sales and shall be conducted during usual business hours in a
manner that minimizes any interference with the conduct of Tenant's regular business
operations. If the audit concludes that there is a deficiency in the payment of any Rent,
the deficiency shall become due and payable within twenty (20) calendar days and if
there is an overpayment, City shall refund the amount of the overpayment within twenty
(20) calendar days. City shall bear its costs of the audit unless the audit shows that
Tenant understated Gross Sales by more than two percent (2 %), in which case Tenant
shall pay all City's reasonable costs of the audit. City shall not disclose financial
information received in confidence and pursuant to this Agreement except to carry out
the purposes of this Agreement unless disclosure is required (rather than permitted) by
law. However, City may disclose the results of any audit in connection with any
financing arrangements, pursuant to applicable law, the sale or transfer of City's interest
in the Premises, pursuant to order of a court or administrative tribunal, or to collect any
outstanding Rent.
(f) Tenant's Gross Sales Audit. In the event of any audit by City in
accordance with this Agreement, Tenant may contest the results of City's audit by
performing a confirming audit, at Tenant's expense, within ninety (90) calendar days of
Galley Cafe, Inc. Page 9
17
receipt of City's audit results and supporting evidence, using an independent Certified
Public Accountant reasonably acceptable to City.
(g) Acceptance. The acceptance by City of any money paid to City by
Tenant as Percentage Rent for the Premises, as shown by any statement furnished by
Tenant, shall not be construed as an admission of the accuracy of said statement, or of
the sufficiency of the amount of the Percentage Rent payment.
4.6 Late Payment. Tenant hereby acknowledges that the late payment of
Rent or other sums due hereunder will cause City to incur costs not contemplated by
this Agreement, the exact amount of which is extremely difficult to ascertain. Such
costs include, but are not limited to, processing and accounting charges. Accordingly,
any payment of any sum to be paid by Tenant not paid within five (5) calendar days of
its due date shall be subject to a ten percent (10 %) late charge. City and Tenant agree
that this late charge represents a reasonable estimate of such costs and expenses and
is fair compensation to City for its loss suffered by such late payment by Tenant.
4.7 Interest on Unpaid Sums. Unpaid sums due to either City or Tenant under
this Agreement shall bear interest at the rate of ten percent (10 %) per annum on the
unpaid balance, including but not limited to late payment penalties, from the date due
until paid.
4.8 Additional Rent. Any provision in this Agreement that requires Tenant to
pay additional amounts classified as "additional Rent" shall be paid within ten (10)
calendar days of City's written demand therefore (unless a different time for payment is
expressly provided in this Agreement). Additional Rent does not reduce or offset
Tenant's obligations to pay Rent.
5.1 Business Purposes. The Premises are to be used by Tenant for the
operation of a Concession. Alcoholic beverages may be sold /provided by Tenant in
accordance with the necessary permits and licenses. The Tenant shall be responsible
for obtaining all required permits and licenses for the provision of alcoholic beverages,
including, but not limited to, Alcoholic Beverage Control license(s).
5.2 Operation of Premises. Tenant shall operate and manage the
Premises in a manner comparable to other high quality businesses providing similar
food and services. Deliveries shall be made and completed only between 7:00 a.m. and
6:00 p.m. on non - holiday weekdays.
5.3 Prohibited Uses. Tenant shall not sell or permit to be kept, used, displayed
or sold in or about the Premises: (a) pornographic or sexually explicit books,
magazines, literature, films or other printed material, sexual paraphernalia, or other
material which would be considered lewd, obscene or licentious; (b) any article which
may be prohibited by standard forms of fire insurance policies; or (c) any alcoholic
beverages unless in accordance with the necessary permits and approvals. Vending
machines, gaming machines or video or arcade games shall not be used or installed on
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the Premises unless expressly permitted by this Agreement. Tenant shall not use or
permit the use of the Premises in any manner that: (a) creates a nuisance: or (b)
violates any Law. Tenant shall not offer entertainment or broadcast music or
entertainment through exterior speakers or other form of transmission without the
written approval of City. In this event, Tenant shall obtain all required City permits and
approvals.
5.4 Food Packaging and Debris. Tenant shall use food packaging consistent
with good environmental practices, including prohibiting polystyrene (also known as
Styrofoam) from the Premises, minimizing the use of PVC plastics (especially plastic
bags for carrying food), and providing both trash receptacles and places for customers
to dispose of recyclable products.
5.5 Reserved.
5.6 Reserved.
5.7 Operation. Tenant shall keep the Premises in operation and open to the
public for business on a daily basis, between the hours of 7:00 a.m. and 7:00 p.m.
(a) Tenant may only close on the following days: New Years' Day,
Thanksgiving Day, Christmas Day Tenant's Employee Appreciation Day, and upon ten
(10) calendar days prior written notice to City, two (2) other Tenant selected days per
year.
(b) Tenant may close the Concession during periods of remodeling,
reconstruction, inventory and /or emergencies or to comply with Laws with prior written
approval from the City.
5.8 Food Preparation. Tenant shall, at Tenant's own expense, install any
additional equipment required to prepare foods, which may be necessary to operate
Tenant's business. Tenant shall ensure that additional equipment is installed properly
pursuant to the manufacturer's specifications, does not exceed the electrical or other
utility loads designated for the Premises, and is in compliance with all applicable local
and state building codes and health department regulations.
5.9 Advertising Display. Tenant may, at its own expense, place signs in or
upon the Premises subject to the prior written consent of the City as to the size, type,
number, design and method of installation and in compliance with the City's sign code
regulations and the deed restrictions applicable to the Premises, provided any
illuminated signs placed on the Premises shall only be lit between the hours of 7:00
a.m. and 7:00 p.m. All signage placed by Tenant on, in or about the Premises shall
remain the property of Tenant and shall be removed by Tenant upon termination or
expiration of this Agreement at Tenant's expense; and any damage caused by removal
shall be repaired at Tenant's expense.
5.10 Personnel. Tenant shall be responsible for hiring the necessary personnel
to conduct the daily operation of Concession. Tenant shall comply with all applicable
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federal, state, and local Laws related to minimum wage, social security,
nondiscrimination, ADA, unemployment compensation, and workers' compensation. If
required by the City, Tenant's employees shall wear an identification badge.
(a) Independent Contractor. It is understood that Tenant is an independent
contractor and not an agent or employee of City. The manner and means of operating
the Concession are under the control of Tenant, except to the extent they are limited by
statute, rule or regulation and /or the expressed terms of this Agreement. No civil
service status or other right of employment shall accrue to Tenant's employees.
Nothing in this Agreement shall be deemed to constitute approval for Tenant or any of
Tenant's employees or agents, to be the agents or employees of City. Tenant shall
have the responsibility for and control over the means of operating the Concession,
provided that Tenant is in compliance with the terms of this Agreement. City
acknowledges that is has no interest in the business of Tenant.
5.11 No Distress Sales. No auction, fire, bankruptcy, "going out of business" or
other distress sales of any nature may be conducted on the Premises without the prior
written consent of the City Manager or his/her designee.
5.12 Parking for Employees. City grants a non - exclusive right to parking areas
showing on Exhibit "A ". City reserves the right to assign parking in the future, but
agrees that any such assignment of parking shall not materially diminish access to the
Premises.
5.13 Tenant shall comply with the Balboa Yacht Basin Rules and Regulations
attached hereto as Exhibit "B" and incorporated herein by reference.
6. TAXES, LICENSES AND OTHER OBLIGATIONS
6.1 Payment of Taxes. Tenant shall pay directly to the appropriate taxing
authorities all taxes applicable to this Agreement, fixtures and Tenant's personal
property on the Premises, that are levied or assessed against Tenant during the Term.
Taxes shall be paid before delinquency and before any fine, interest or penalty is due or
imposed by operation of law. Tenant shall, upon request, promptly furnish to the City
satisfactory evidence of payment. City hereby gives notice to Tenant, pursuant to
Revenue and Tax Code Section 107.6 that this Agreement may create a possessory
interest that is the subject of property taxes levied on such interest, the payment of
which taxes shall be the sole obligation of Tenant. Tenant shall advise in writing any
subtenant, licensee, concessionaire or third party using the Premises of the
requirements of Section 107.6. Tenant shall pay, before delinquency all taxes,
assessments, license fees and other charges ( "Taxes ") that are levied or assessed
against Tenant's interest in the Premises or any personal property installed on the
Premises.
6.2 Payment of Obligations. Tenant shall promptly pay, when due, any and all
bills, debts, liabilities and obligations incurred by Tenant in connection with Tenant's
occupation and use of the Premises.
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6.3 Challenge to Taxes. Tenant shall have the right in good faith, at its sole
cost and expense, to contest the amount or legality of any Taxes on or attributable to
this Agreement, the Premises, Tenant's personal property, or Tenant's occupation and
use of the Premises, including the right to apply for reduction. If Tenant seeks a
reduction or contests such taxes, Tenant's failure to pay the Taxes shall not constitute a
default as long as Tenant complies with the provisions of this Section. City shall not be
required to join in any proceeding or contest brought by Tenant unless the provisions of
any Law require that the proceeding or contest be brought by or in the name of City. In
that case, City shall join in the proceeding or contest or permit it to be brought in City's
name as long as City is not required to bear any cost. If requested by Tenant, City shall
execute any instrument or document necessary or advisable in connection with the
proceeding or contest. Tenant, on final determination of the proceeding or contest, shall
immediately pay or discharge any decision or judgment rendered, together with all
related costs, charges, interest and penalties. Tenant shall indemnify, defend and hold
harmless the City, its council members, boards, commissions, committees, office'rs,
employees, Authorized City Representatives, agents and volunteers ( "Indemnified
Parties ") from and against any liability, claim, demand, penalty, cost or expense arising
out of or in connection with any contest by Tenant pursuant to this Section.
6.4 No Rent Offset. Any payments under this Section 6 shall not reduce or
offset Rent payments. City has no liability for such payments.
7. UTILITIES.
7.1 Tenant shall be responsible for payment of all utilities furnished to or used
on the Premises exclusively by Tenant, or Tenant's pro rata share of all utilities
furnished to or used by Tenant on the Property, including, without limitation, gas,
electricity, sewer, water, refuse collection, telephone service, and cable TV.
7.2 Refuse collection shall occur between 7:00 a.m. and 6:00 p.m. on non -
holiday weekdays.
7.3 Tenant shall be responsible for all costs associated with the cleaning and
maintenance of the grease trap on the Premises. The City shall designate and contract
with an approved vendor and bill Tenant for the services as additional Rent.
7.4 Tenant shall be responsible for the maintenance, repair and /or
replacement of utility lines within and exclusively serving the Premises, or Tenant's pro
rata share of utility lines serving Tenant on the Property, as depicted on Exhibit "A ".
8.1 Tenant Improvements. Tenant acknowledges that City has delivered the
Premises with the improvements shown on Exhibit "A ". Subject to compliance with all
applicable laws, Tenant may make interior non - structural improvements totaling less
than Twenty -Five Thousand Dollars and 00/100 Cents ($25,000.00) to the Premises
annually, without the prior consent of the City Manager. Subject to compliance with all
applicable laws, all other improvements by the Tenant must be submitted for review of
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improvement plans and permitting, and construction shall be subject to the prior written
approval of the City Manager or his /her designee. Tenant improvements shall be
performed between 7:00 a.m. and 6:00 p.m. on non - holiday weekdays. Any contractors
hired by Tenant shall be fully licensed and bonded. Tenant's contractors and any
subcontractors shall obtain insurance in an amount and form to be approved by City's
Risk Manager, including workers compensation insurance as required by law, general
liability, automobile liability and builder's risk insurance covering improvements to be
constructed, all pursuant to standard industry custom and practice. City shall be named
as an additional insured on the contractor's and any subcontractor's policies.
8.2 Permits. Unless restricted by law, Tenant shall obtain, and be responsible
for the costs for all building permits, health department permits and other required
permits prior to commencement of Tenant improvements and operations.
8.3 Quality of Work Performed. All alterations, maintenance and other work
shall be performed in a good and workmanlike manner, shall comply with the plans and
specifications submitted to City, and shall comply with all applicable governmental
permit requirements and Laws in force at the time permits are issued.
8.4 Payment of Costs. Tenant shall pay all costs related to the construction of
the improvements and any alterations by Tenant or its agents.
8.5 Liens Prohibited: Tenant 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.
8.5.1 Release /Removal of Liens: In the event any lien or stop notice is
imposed or recorded on the Premises, or an Improvement permanently affixed to the
Premises, during the Term, Tenant shall pay or cause to be paid all such liens, claims
or demands before any action is brought to enforce the same against the Premises or
the Improvement. Notwithstanding the foregoing, if Tenant legitimately contests the
validity of such lien, claim or demand, then Tenant shall, at its expense, defend against
such lien, claim or demand provided that it provide City the indemnity in this Agreement
and provided Tenant shall pay and satisfy any adverse judgment that may be rendered
before any enforcement against City or the Premises.
8.6 Disposition of Alterations at Expiration or Agreement Termination. Any
alterations made to the Premises shall remain on, and be surrendered with, the
Premises on expiration or termination of this Agreement (excluding Tenant's fixtures,
equipment, furniture, and moveable decorations). Prior to expiration or within fifteen
(15) calendar days after termination of this Agreement, Tenant may remove any
moveable partitions, rnachinery, equipment, furniture, and trade fixtures previously
installed by Tenant, provided that Tenant repairs any damage to the Premises caused
by removal and restore the Premises to Good Condition.
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9.1 Maintenance and Repair by Tenant and City. Tenant agrees that it will
keep the non - structural portions of Premises in good condition. City may perform
maintenance or repairs in the event Tenant fails to commence required maintenance or
repairs within the time provided by City in the written notice requesting such
maintenance or repair. The cost of any maintenance or repairs by the City pursuant to
this Section shall be payable as additional Rent. All furnishings, equipment, facilities,
improvements, alterations, attachments and appurtenances provided by City or installed
by Tenant, and required for Concession operations, including all kitchen equipment and
interior furnishings, including items under warranty, shall be maintained in good
condition and repair by Tenant at its cost. City may perform required cleaning and
charge the costs to Tenant if the Tenant fails to perform said cleaning within the time
provided by City in the written notice requesting the cleaning and continue to maintain
the area as required by this Agreement.
9.2 Entry by City. Upon twenty -four (24) hours prior written notice to Tenant,
City and its authorized City representative(s) may enter upon and inspect the Premises
during normal business hours for any lawful purpose. In case of emergency, City or its
authorized City representative(s) may, without prior notice, enter the Premises by
whatever force reasonably necessary if Tenant is not present to open and permit an
entry. Any entry to the Premises by City under this Agreement shall not be construed
as a forcible or unlawful entry into, or a detainer of, the Premises, or an eviction of
Tenant from the Premises or any portion thereof. Any damage caused to the
Premises pursuant to this Section 9.2 by the City shall be repaired or replaced by the
City at the City's sole expense.
10. INDEMNITY AND EXCULPATION; INSURANCE
10.1 Hold - Harmless Clause. Tenant agrees to indemnify, defend and hold
harmless the City, its City Council, Boards, Commissions, Committees, officers, agents,
volunteers, and employees (collectively, the "Indemnified Parties ") from and against any
and all claims (including, without limitation, claims for bodily injury, death or damage to
property), demands, obligations, damages, actions, causes of action, suits, losses,
judgments, fines, penalties, liabilities, costs and expenses (including, without limitation,
attorney's fees, disbursements and court costs) of every kind and nature whatsoever
(individually, a "Claim "; collectively, "Claims "), which may arise from or in any manner
relate (directly or indirectly) to Tenant's, Tenant's employees, contractor, subcontractor,
agents, guests, invitees, subtenant's possession, occupation or use of the Premises,
specifically including, without limitation, any claim, liability, loss, or Damage arising by
reason of:
(a) The death or injury of any Person or damage to personal property
caused or allegedly caused by the condition of the Premises or an act or omission of
Tenant or an agent, contractor, subcontractor, supplier, employee, servant, or
sublessee of Tenant;
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(b) Any work performed on the Premises or materials furnished to the
Premises at the request of Tenant or any agent or employee of Tenant, with the
exception of Maintenance performed by City; and /or
(c) Tenant's failure to perform any provision of this Agreement or to
comply with any requirement of Law or any requirement imposed on the Premises by
any duly authorized governmental agency or political subdivision.
Tenant's obligations pursuant to this Subsection shall not extend to any
Claim proximately caused by the negligence, willful misconduct, or unlawful or
fraudulent conduct on the part of the Indemnified Parties. This indemnity shall apply to
all claims and liability regardless of whether any insurance policies are applicable.
10.2 Exculpation of City. Except as otherwise expressly provided in this
Agreement, City shall not be liable to Tenant for any damage to Tenant or Tenant's
property from any cause other than the sole negligence, intentional or willful acts of the
Indemnified Parties. Except as otherwise expressly provided in this Agreement, Tenant
waives all claims against the Indemnified Parties arising for any reason other than the
sole negligence, intentional or willful acts of the Indemnified Parties. City shall not be
liable to Tenant for any damage to the Premises, Tenant's property, Tenant's goodwill,
or Tenant's business income, caused in whole or in part by acts of nature.
10.3 Insurance. In addition to insurance required of Tenant to be obtained,
provided, and maintained during the construction of the improvements, and without
limiting Tenant's indemnification of City, Tenant shall obtain, provide and maintain at its
own expense during the term of this Agreement, a policy or policies of liability insurance
of the type and amounts described below and in a form satisfactory to City.
(a) Certificates of Insurance. Tenant shall provide certificates of
insurance with original endorsements to City as evidence of the insurance coverage
required herein. Insurance certificates must be approved (which approval shall not be
unreasonably withheld, conditioned or delayed) by City's Risk Manager prior to
execution of this Agreement by the City. Current certification of insurance shall be kept
on file with City at all times during the term of this Agreement.
(b) Signature. A person authorized by the insurer to bind coverage on
its behalf shall sign certification of all required policies.
(c) Acceptable Insurers. All insurance policies shall be issued by an
insurance company currently authorized by the Insurance Commissioner to transact
business of insurance in the State of California, with an assigned policyholders' Rating
of A- (or higher) and Financial Size Category Class VII (or larger) in accordance with the
latest edition of Best's Key Rating Guide, unless otherwise approved by the City's Risk
Manager.
(d) Coverage Requirements.
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(1) Workers' Compensation Coverage, Tenant shall maintain
Workers' Compensation Insurance at statutory limits and Employer's Liability Insurance
at. One Million. Dollars and 00/100 '($1,000;000.00) for his or her employees in
accordance with the taws of the State of California•. Any notice of cancellation or non -
renewal of all Workers' Compensation policies must be received by City at least thirty
(30) calendar days (ten (10) calendar days written notice of non- payment of premium)
prior to such change. The insurer shall agree to waive all rights of subrogation against
City, its officers, agents, employees and volunteers for all losses that relate in any way
to this Agreement.
(2) General Liability Coverage. Tenant shall maintain
commercial general liability insurance in an amount not less than Two Million Dollars
and 00/100 ($2,000,000.00) per occurrence for bodily injury, personal injury, and
property damage, including without limitation, contractual liability. If commercial general
liability insurance or other form with a general aggregate limit is used, either the general
aggregate limit shall apply separately to the work to be performed under this
Agreement, or the general aggregate limit shall be at least twice the required
occurrence limit.
(3) Products Liability Coverage. Tenant shall maintain products
liability insurance covering bodily injury and property damage for all activities of the
Tenant arising out of or in connection with products or services sold by the Tenant
under this Agreement, in an amount not less than Two Million. Dollars and 00/100
($2,000,000.00) combined single limit for each occurrence.
(4) Automobile Liability Coverage. Tenant shall maintain
automobile insurance covering bodily injury and property damage for all activities of the
Tenant arising out of or in connection with the services to be performed under this
Agreement, including coverage for any owned, hired, non -owned or rented vehicles, in
an amount not less than One Million Dollars and 001100 ($1,000;000'.00) combined
single limit for each occurrence.
(5) Fire and Extended Coverage. Tenant shall maintain fire' and
extended coverage insurance, together with insurance against vandalism, theft and
Malicious mischief, on the improvements and fixtures, alterations, trade fixtures, signs;
equipment, personal property and inventory on or upon the Premises from loss or
damage in an amount not less than One Million Dollars and 00 /100 ($1,000,000.00) per
occurrence,
(6) Tenant shall maintain loss of rent insurance insuring that the
Rent will be paid to City for a period up to six (6) months if the Premises are destroyed
or rendered unusable or inaccessible for commercial purposes'by a risk, insured under a
special form property coverage policy including vandalism and malicious mischief
endorsements.
(7) Liquor Liability Coverage, Tenant shall maintain liquor
liability insurance in an amount not less than Two Million Dollars and 00/100
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($2,000,000.00) per occurrence for bodily injury, personal injury, and property damage.
Tenant shall obtain a liquor liability insurance policy that covers all alcohol sold or
distributed under this Agreement. The policy shall specifically include assault and
battery coverage as well as coverage for Tenant's employees and patrons.
(e) Endorsements. Each insurance policy shall be endorsed with the
following specific language:
(1) The City, its elected or appointed officers, officials,
employees, agents and volunteers, and the State of California, its elected or appointed
officers, officials, employees, agents and volunteers, are to be covered as additional
insureds, with respect to liability arising out of work performed by or on behalf of the
Tenant.
(2) This policy shall be considered primary insurance as
respects to City, its elected or appointed officers, officials, employees, agents and
volunteers as respects to all claims, losses, or liability arising directly or indirectly from
the Tenant's operations or services provided to City. Any insurance maintained by City,
including any self- insured retention City may have, shall be considered excess
insurance only and not contributory with the insurance provided hereunder.
(3) This insurance shall act for each insured and additional
insured as though a separate policy had been written for each, except with respect to
the limits of liability of the insuring company.
(4) The insurer waives all rights of subrogation against City, its
elected or appointed officers, officials, employees, agents and volunteers.
(5) Any failure to comply with reporting provisions of the policies
shall not affect coverage provided to City, its elected or appointed officers, officials,
employees, agents or volunteers.
(6) The insurance provided by this policy shall not be
suspended, voided, canceled, or reduced in coverage or in limits, by either party except
after thirty (30) calendar days (ten (10) calendar days written notice of non - payment of
premium) written notice has been received by City.
(f) Timely Notice of Claims. Tenant shall give City prompt and timely
notice of claim made or suit instituted arising out of or resulting from Tenant's
performance under this Agreement.
(g) Additional Insurance. Tenant shall also procure and maintain, at its
own cost and expense, any additional kinds of insurance, which in its own judgment
may be necessary for its proper protection and prosecution of the work.
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11. DAMAGE OR DESTRUCTION OF PROPERTY /PREMISES
11.1 Destruction of Premises. If the Premises are totally or partially destroyed,
rendering the Premises or any portion thereof totally or partially inaccessible or
unusable, Tenant shall restore the Premises to substantially the same condition as
immediately prior to such destruction (including all trade fixtures, personal property,
improvements and Alterations as are installed by Tenant, which shall be replaced by
Tenant at its expense). Alternatively, Tenant may elect to terminate this Agreement by
giving notice of such election to City within sixty (60) calendar days after the date of the
occurrence of any casualty if the cost of the restoration exceeds the amount of any
available insurance proceeds, if the damage has been caused by an uninsured casualty
or event, or if Tenant reasonably estimates that repairs of the Premises will take more
than six (6) months. Upon such termination, insurance proceeds applicable to
reconstruction of the Property (excluding Tenant's personal property therein) shall be
paid to City and Tenant shall have no further liability or obligations under this
Agreement.
11.2 Replacement of Tenant's Property. In the event of damage or destruction
of improvements located on the Premises not giving rise to Tenant's option to terminate
this Agreement, Tenant shall, at its own expense, replace and repair all Tenant's trade
fixtures, equipment, machinery, furnishings, furniture and inventory as soon as
reasonably possible to permit the prompt continuation of Tenant's business at the
Premises.
11.3 Destruction of Property. In the event that all or a portion of the Property is
damaged, and the Premises or a material portion becomes inaccessible or
commercially unusable, and the damage or destruction cannot reasonably be repaired
within twelve (12) months after the date of the casualty, City shall have the right to
either:
(a) Terminate this Agreement by giving to Tenant written notice (which
notice shall be given, if at all, within thirty (30) calendar days following the date of the
casualty), in which case this Agreement shall be terminated thirty (30) calendar days
following the date of the casualty; or
(b) Give Tenant written notice of City's intention to repair such damage
as soon as reasonably possible at City's expense, in which event this Agreement shall
continue in full force and effect; however, Rent shall be abated in accordance with the
procedures set forth in Section 12. Tenant may terminate this Agreement by giving City
written notice at any time prior to the commencement of repairs if City agrees to repair
the Property pursuant to this Section and fails to commence repairs within one hundred
twenty (120) calendar days after giving Tenant written notice of its intention to repair. In
such event, this Agreement shall terminate as of the date of notice from Tenant to City,
and City shall have no liability under this Agreement.
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12. ABATEMENT OF RENT
General Rule. In the event of damage or destruction of the Premises or Damage to the
Property that impacts the Premises and this Agreement is not terminated, Tenant shall
continue to utilize the Premises for the operation of its business to the extent it may be
practicable and commercially reasonable. Rent shall abate only in proportion to the
area of the Premises that is rendered unusable. The abatement of Rent shall
commence on the date that use of the Premises is impacted and continue until the
completion of those repairs necessary to restore full use of the Premises and Tenant's
re- opening of the Premises. Tenant's obligation to pay Taxes pursuant to this
Agreement shall not be abated or reduced. Rent shall not abate if the damage or
destruction to the Premises is the result of the negligence or willful conduct of Tenant or
its employees, officers or agents. Tenant's right to abatement of Rent is contingent on
payment of insurance proceeds, if any, equal to the amount of Rent pursuant to
coverage required by Section 10.3(d)(6).
13. PROHIBITION AGAINST VOLUNTARY ASSIGNMENT, SUBLETTING AND
ENCUMBERING
13.1 Prohibition of Assignment. City and Tenant acknowledge that City is
entering into this Agreement in reliance upon the experience and abilities of Tenant.
Consequently, Tenant shall not voluntarily assign or encumber its interest in this
Agreement or in the Premises, or assign substantially all or any part of the Premises, or
allow any other person or entity to occupy or use all or any part of the Premises without
the prior written consent of City, which shall not be unreasonably withheld. Any
assignment or transfer made without the City's written consent is null and void. City's
consent to any assignment or other transfer is subject to Tenant providing City with
evidence reasonably satisfactory to City that the proposed transferee has financial
strength and restaurant or food service experience comparable to Tenant and the use of
the Premises by the proposed transferee is consistent with the terms of this Agreement.
Except as otherwise expressly provided herein, any dissolution, merger, consolidation,
reorganization of Tenant, or the sale or other transfer resulting in a transfer of a
controlling percentage of the capital stock of Tenant, shall be deemed a voluntary
assignment; provided, however, that the sale or transfer of a controlling percentage of
the capital stock of Tenant pursuant to a public offering(s) of equity or debt instruments
issued by Tenant, or other transfers of publicly traded capital stock or debt instruments
shall not constitute a voluntary assignment and shall not require City's consent or
approval. The phrase "controlling percentage" means the ownership of, or the right to
vote, stock possession of at least fifty percent (50 %) of the total combined voting power
of all classes of Tenant's capital stock issued, outstanding, and entitled to vote for the
election of directors, except for ownership of publicly traded shares, warrants or similar
equity interests in Tenant traded on a national exchange or over- the - counter markets.
13.2 Exceptions. Notwithstanding the foregoing paragraphs or anything to the
contrary contained herein, City's consent shall not be required for an assignment or
subletting to an Affiliate, Subsidiary, or Successor of Tenant. For purposes hereof, an
"Affiliate ", a "Subsidiary", and a "Successor" of Tenant are defined as follows:
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(a) an "Affiliate" is any corporation or other entity which directly or
indirectly controls or is controlled or is under common control with Tenant (for purposes
of this Section, "control" shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of such corporation or
other entity, whether through the ownership of voting securities or by contract or
otherwise);
(b) a "Subsidiary" shall mean any corporation or other entity not less
than twenty -five percent (25 %) of whose outstanding stock shall, at the time, be owned
directly or indirectly by Tenant and which is at least as creditworthy as Tenant; and
(c) a "Successor' shall mean a corporation or other entity in which or
with which Tenant is merged or consolidated, in accordance with applicable statutory
provisions for merger or consolidation of corporations or a corporation or other entity
acquiring a substantial portion of the property and assets of Tenant.
13.3 Continuing Effect. City's consent to any assignment or encumbrance shall
not relieve Tenant from its obligations or liabilities under this Agreement nor act as a
waiver of the requirement that such consent be obtained to any subsequent assignment
or encumbrance.
14. DEFAULT
14.1 Default by Tenant. The occurrence of any one (1) or more of the following
events shall constitute a default and material breach of this Agreement by Tenant:
(a) The vacating or abandonment of the Premises by Tenant for a
period of thirty (30) successive calendar days, without the prior permission of the City
Manager or his /her designee, excluding closures during periods of casualty,
condemnation or permitted closures set forth in this Agreement;
(b) The failure by Tenant to make any payment of Rent or any other
payment required by this Agreement, as and when due, when such failure shall
continue for a period of ten (10) calendar days after written notice of default from City to
Tenant;
(c) Except as specified in Subsection 14.1(b), the failure of Tenant to
observe or perform any of the material covenants, conditions or provisions of this
Agreement to be observed or performed by Tenant where such failure shall continue for
a period of thirty (30) calendar days after written notice thereof from City to Tenant;
provided, however, that if the nature of Tenant's default is such that more than thirty
(30) calendar days are reasonably required for its cure, then Tenant shall not be
deemed to be in default if Tenant commences such cure within said thirty (30) calendar
day period and thereafter diligently prosecutes such cure to completion;
(d) The making by Tenant of any general arrangement or assignment
for the benefit of creditors;
Galley Cafe, Inc.
Page 21
'tj
(e) Tenant becomes a "debtor" as defined in 11 U.S.C. Section 101 or
any successor statute thereto (unless, in the case of a petition filed against Tenant, the
same is dismissed within sixty (60) calendar days);
(f) The appointment of a trustee or receiver to take possession of
substantially all of Tenant's assets located at the Premises or of Tenant's interest in this
Agreement, where such appointment is not discharged within sixty (60) calendar days;
and
(g) The attachment, execution or the judicial seizure of substantially all
of Tenant's assets located at the Premises or of Tenant's interest in this Agreement,
where such seizure is not discharged within sixty (60) calendar days.
14.2 Remedies.
(a) Cumulative Nature of Remedies. If any default by Tenant shall
continue without cure beyond the time permitted under this Agreement, City shall have
the remedies described in this Section in addition to all other rights and remedies
provided by law or equity, to which City may resort cumulatively or in the alternative.
(1) Re -entry without Termination. City may re -enter the
Premises, and, without terminating this Agreement, re -let all or a portion of the
Premises. City may execute any agreements made under this provision in City's name
and shall be entitled to all rents from the use, operation, or occupancy of the Premises.
Tenant shall nevertheless pay to City on the dates specified in this Agreement the
equivalent of all sums required of Tenant under this Agreement, plus City's expenses in
conjunction with re- letting, less the proceeds of any re- letting or atonement. No act by
or on behalf of City under this provision shall constitute a termination of this Agreement
unless City gives Tenant specific written notice of termination.
(2) City may terminate this Agreement by giving Tenant written
notice of termination with a specified termination date. In the event City terminates this
Agreement, City may recover possession of the Premises (which Tenant shall surrender
and vacate upon demand) and remove all persons and property. City shall be entitled
to recover the following as damages;
(A) The value of any unpaid Rent or other charges that
are unpaid at the time of termination;
(B) The value of the Rent and other charges that would
have accrued after termination less the amount of Rent and charges the City received
or could have received through the exercise of reasonable diligence as of the date of
the award;
(C) Any other amount necessary to reasonably
compensate City for the detriment proximately caused by Tenant's failure to perform its
obligations under this Agreement; and
Galley Cafe, Inc.
Page 22
so
(D) At City's election, such other amounts in addition to or
in lieu of the foregoing as may be permitted from time -to -time by applicable California
law. City shall be entitled to interest at the rate of ten percent (10 %) per annum on all
Rent and other charges from the date due or the date they would have accrued. City
shall also be entitled to an award of the costs and expenses incurred by City in
maintaining or preserving the Premises after default, preparing the Premises for re-
letting, or repairing any damage caused by an act or omission of Tenant.
(3) Use of Tenant's Personal Property. In the event Tenant is in
default past applicable notice and cure periods, City may use Tenant's personal
property and trade fixtures located on the Premises or any of such property and fixtures
without compensation or liability to Tenant for use or damage. In the alternative City
may store the property and fixtures at the cost of Tenant. City shall not operate the
Concession in any manner tending to indicate that the Concession is affiliated with, part
of or operated in conjunction with Tenant's business. City shall not operate, or allow
any other person or entity to operate under the same or similar trade name as the
Tenant.
(b) City's Right to Cure Tenant's Default. Upon continuance of any
material default beyond applicable notice and cure periods, City may, but is not
obligated to, cure the default at Tenant's cost. If City pays any money or performs any
act required of, but not paid or performed by, Tenant after notice, the payment and/or
the reasonable cost of performance shall be due as additional Rent not later than ten
(10) calendar days after service of a written demand accompanied by supporting
documentation upon Tenant. No such payment or act shall constitute a waiver of
default or of any remedy for default or render City liable for any loss or damage resulting
from performance.
15. WASTE OR NUISANCE
Tenant shall not commit or permit the commission of any waste on the Premises.
Tenant shall not maintain, commit, or permit any nuisance as defined in Section 3479 of
the California Civil Code on the Premises. Tenant shall not use or permit the use of the
Premises for any unlawful purpose.
16. NO CONFLICTS OF USE, HAZARDOUS MATERIALS.
From the Effective Date and throughout the Term, Tenant shall not use, occupy
or permit any portion of the Premises to be used or occupied in violation of any law.
City represents and warrants that, to the best of City's knowledge, (1) Tenant's use of
the Premises does not conflict with applicable Laws, and City knows of no reason why
Tenant would be unable to obtain all required permits, licenses and approvals from the
appropriate governmental authorities; (ii) the Premises is not in violation of any
applicable Law, rules or regulations and Tenant's contemplated uses will not cause any
such violation; and (iii) the Premises is free of any and all Hazardous Materials as of the
date of this Agreement. In the event that the presence of any Hazardous Materials not
caused by Tenant or its guests, invitees, contractors, agents, subcontractors is detected
Galley Cafe, Inc.
Page 23
Sz
at the Premises at any time during the Term of this Agreement and any Option Term all
remedial work shall be performed by City at City's expense. Tenant's obligation to open
(or re -open, as the case may be) shall be delayed until the remedial work is completed if
the remedial work is performed prior to Tenant opening for business. Tenant's
obligation to pay Rent shall be abated in direct proportion to the extent Tenant is unable
to conduct its business upon the Premises as a result of any remedial work that is
performed subsequent to Tenant opening for business. Tenant shall have the right (but
not the obligation) to terminate this Agreement, upon thirty (30) calendar days advance
written notice to City in the event that Hazardous Materials are detected at the Premises
and the presence or the remediation materially affects Tenant's ability to conduct its
business at the Premises. "Hazardous Materials" shall mean any oil, flammable
explosives, asbestos, urea formaldehyde, radioactive materials or waste, or other
hazardous, toxic, contaminated or polluting materials, substances or wastes, including,
without limitation, any "hazardous substances ", "hazardous wastes ", "hazardous
materials" or "toxic substances" under applicable federal, state and local laws,
ordinances and regulations.
17. CITY'S DEFAULTS/TENANT'S REMEDIES.
17.1 City shall be in default if it fails to perform, or commence performance if
the obligation requires more than ten (10) calendar days to complete, any material
obligation within ten (10) calendar days after receipt of written notice by Tenant to City
specifying the nature of such default. City shall also be in default if it commences
performance within ten (10) calendar days but fails to diligently complete performance.
In the event of City's default, Tenant may:
(a) Upon thirty (30) calendar days written notice to City, cure any such
default, and City shall reimburse Tenant the amount of all reasonable costs and
expenses incurred by Tenant in curing the default, together with interest and expenses
at the maximum rate then allowed by law; or
(b) Terminate this Agreement if City's default materially interferes with
Tenant's use of the Premises for its intended purpose and City fails to cure such default
within thirty (30) calendar days after a second written demand by Tenant.
18.1 If this Agreement is assigned to any person or entity pursuant to the
provisions of the Bankruptcy Code, 11 U.S.C. Sections 101 et seq. or any similar or
successor statute ( "Bankruptcy Code'), any and all monies or other consideration
payable or otherwise to be delivered in connection with such assignment shall be paid
or delivered to City, shall be and remain the exclusive property of City and shall not
constitute property of Tenant or of the estate of Tenant within the meaning of the
Bankruptcy Code. Any and all monies or other consideration constituting City's property
under this Section not paid or delivered to City shall be held in trust for the benefit of
City and be promptly paid or delivered to City.
Galley Cafe, Inc.
Page 24
21 2)
18.2 Any person or entity to which this Agreement is assigned pursuant to the
provisions of the Bankruptcy Code shall be deemed without further act or deed to have
assumed all of the obligations arising under this Agreement on and after the date of
such assignment, including the obligation to operate the business which Tenant is
required to operate under this Agreement.
19. NOTICES.
Any notice, demand, request, consent, approval or communication that either
party desires or is required to give shall be in writing and shall be deemed given three
(3) calendar days after deposit into the United States registered mail, postage prepaid,
by registered or certified mail, return receipt requested. Unless notice of a different
address has been given in accordance with this Section, all notices shall be addressed
as follows:
If to City, to: City of Newport Beach
Attn: Real Property Administrator
100 Civic Center Drive
P.O. Box 1768
Newport Beach, CA 92658
If to Tenant, to: Galley Cafe, Inc.
829 Harbor Island Drive
Newport Beach, CA 92660
20. SURRENDER OF PREMISES
At the expiration or earlier termination of this Agreement, Tenant shall surrender
to City the possession of the Premises. Tenant shall leave the surrendered Premises,
required personal property, equipment and fixtures, in good and broom -clean condition,
reasonable wear and tear excepted. All property that Tenant is not required
tosurrender, but that Tenant does abandon shall, at City's election, become City's
property at expiration or termination. City shall owe no compensation to Tenant for any
personal property, equipment or fixtures left at the Premises by Tenant more than
fifteen (15) calendar days after the expiration or termination of this Agreement.
21. COMPLIANCE WITH ALL LAWS
Tenant shall at its own cost and expense comply with all statutes, ordinances,
regulations and requirements of all governmental entities, including federal, state,
county or municipal, whether now in force or hereinafter enacted. In addition, all work
prepared by Tenant shall conform to applicable City, county, state and federal laws,
rules, regulations and permit requirements and be subject to approval of the City
Manager or his /her designee.
Galley Cafe, Inc. Page 25
33
22. WAIVERS
The waiver by either party of any breach or violation of any term, covenant or
condition of this Agreement, or of any ordinance, law or regulation, shall not be deemed
to be a waiver of any other term, covenant, condition, ordinance, law or regulation, or of
any subsequent breach or violation of the same or other term, covenant, condition,
ordinance, law or regulation. The subsequent acceptance by either party of any fee,
performance, or other consideration which may become due or owing under this
Agreement, shall not be deemed to be a waiver of any preceding breach or violation by
the other party of any term, condition, covenant of this Agreement or any applicable law,
ordinance or regulation.
23. SEVERABILITY
If any term or portion of this Agreement is held to be invalid, illegal, or otherwise
unenforceable by a court of competent jurisdiction, the remaining provisions of this
Agreement shall continue in full force and effect.
This Agreement shall be construed in accordance with the laws of the State of
California in effect at the time of the execution of this Agreement. Any action brought
relating to this Agreement shall be adjudicated in a court of competent jurisdiction in the
County of Orange.
25. ENTIRE AGREEMENT; AMENDMENTS
25.1 The terms and conditions of this Agreement, all exhibits attached, and all
documents expressly incorporated by reference, represent the entire agreement of the
parties with respect to the subject matter of this Agreement.
25.2 This Agreement shall supersede any and all prior agreements, oral or
written, regarding the subject matter between Tenant and City.
25.3 No other agreement, promise or statement, written or oral, relating to the
subject matter of this Agreement, shall be valid or binding, except by way of a written
amendment to this Agreement.
25.4 The terms and conditions of this Agreement shall not be altered or
modified except by a written amendment to this Agreement signed by Tenant and the
City Manager or his /her designee.
25.5 If any conflicts arise between the terms and conditions of this Agreement,
and the terms and conditions of the attached exhibits or the documents expressly
incorporated by reference, the terms and conditions of this Agreement shall control.
Galley Cafe, Inc. Page 26
25.6 Any obligation of the parties relating to monies owed, as well as those
provisions relating to limitations on liability and actions, shall survive termination or
expiration of this Agreement.
25.7 Each party has relied on its own inspection of the Premises and
examination of this Agreement, the counsel of its own advisors, and the warranties,
representations, and covenants in this Agreement. The failure or refusal of either party
to inspect the Premises, to read this Agreement or other documents, or to obtain legal
or other advice relevant to this transaction constitutes a waiver of any objection,
contention, or claim that might have been based on such reading, inspection, or advice.
26. TIME IS OF THE ESSENCE
Time is of the essence for this Agreement.
27. SUCCESSORS
Subject to the provisions of this Agreement on assignment and subletting, each
and all of the covenants and conditions of this Agreement shall be binding on and shall
inure to the benefit of the heirs, successors, executors, administrators, assigns, and
personal representatives of the respective parties.
The terms of this Agreement shall be construed in accordance with the meaning
of the language used and shall not be construed for or against either party by reason of
the authorship of this Agreement or any other rule of construction which might otherwise
apply.
29. TABLE OF CONTENTS; HEADINGS
The table of contents of this Agreement and the captions of the various sections
of this Agreement are for convenience and ease of reference only and do not define,
limit, augment, or describe the scope, content, or intent of this Agreement.
K1 �
The neuter gender includes the feminine and masculine, the masculine includes
the feminine and neuter, and the feminine includes the neuter, and each includes
corporation, partnership, or other legal entity whenever the context requires. The
singular number includes the plural whenever the context so requires.
31. EXHIBITS
All exhibits to which reference is made in this Agreement are incorporated by
reference. Any reference to "this Agreement' includes matters incorporated by
reference.
Galley Cafe, Inc. Page 27
15
32. CITY BUSINESS LICENSE
Tenant shall obtain and maintain during the duration of this Agreement, a City
business license as required by the Newport Beach Municipal Code.
33. NO ATTORNEYS' FEES
The prevailing party in any action brought to enforce the terms and conditions of
this Agreement, or arising out of the performance of this Agreement, shall not be
entitled to recover its attorneys' fees.
34. NONDISCRIMINATION
Tenant, for itself and its successors, agrees that in the performance under this
Agreement, Tenant shall not discriminate against any person because of the marital
status or ancestry of that person or any characteristic listed or defined in Section 11135
of the Government Code.
35. MEMORANDUM OF LEASE AGREEMENT
A Memorandum of Lease Agreement, in a form and content similar to that contained in
Exhibit "C" shall be recorded by the parties promptly upon execution of this Agreement.
Upon execution by both parties, the Memorandum of Lease Agreement shall be
recorded against the Premises in the office of the Orange County Clerk- Recorder, as
required by Government Code Section 37393.
• r r
City (both as a lessor and as the City of Newport Beach) and Tenant do not
intend, by any provision of this Agreement, to create in any third party, any benefit or
right owed by one party, under the terms and conditions of this Agreement, to the other
pa rty.
37. CALIFORNIA LABOR LAWS
It shall be the obligation of Tenant to comply with all laws, including, but not
limited to, State of California labor laws, rules and regulations and the parties agree that
the City shall not be liable for any violation by Tenant (or Tenant's agent, sublesse or
any party affiliated with Tenant) thereof.
Tenant acknowledges that City would not enter into this Agreement if it were to
be liable for damages (including, but not limited to, actual damages, economic
damages, consequential damages, lost profits, loss of rents or other revenues, loss of
business opportunity, loss of goodwill or loss of use) under, or relating to, this
Galley Cafe, Inc. Page 28
3(,�,
Agreement or any of the matters referred to in this Agreement, including, without
limitation, any and all plans, permits, licenses or regulatory approvals, and CEQA
documents. Accordingly, Tenant covenants and agrees on behalf of itself and its
successors and assigns, not to sue City (either in its capacity as lessor in this
Agreement or in its capacity as the City of Newport Beach) for damages (including, but
not limited to, actual damages, economic damages, consequential damages, lost
profits, loss of rents or other revenues, loss of business opportunity, loss of goodwill or
loss of use) or monetary relief for any breach of this Agreement by City or for any
dispute, controversy, or issue between City and Tenant arising out of or connected with
this Agreement or any of the matters referred to in this Agreement, including, without
limitation, any and all plans, permits, licenses or regulatory approvals, CEQA
documents, or any future amendments or enactments thereto, the parties agreeing that
declaratory relief, injunctive relief, mandate and specific performance shall be Tenant's
sole and exclusive] udicial remedies.
39. GOVERNMENT CLAIMS ACT
Tenant and City agree that in addition to any claims filing or notice requirements
in this Agreement, Tenant shall file any claim that Tenant may have against City in strict
conformance with the Government Claims Act (Government Code sections 900 et seq.),
or any successor statute.
[Signature page follows]
Galley Cafe, Inc. Page 29
37
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the dates written below.
APPROVED AS TO FORM:
THE CITY A TORNEY'S OFFICE
Date:
By:
Aaron C. Her
City Attorney
ATTEST:
Date:
By:
Leilani I. Brown
City Clerk
CITY OF NEWPORT BEACH,
a California municipal corporation
Date:
By:
David Kiff
City Manager
TENANT:
Date:
Brian White
Title:
Date:
By:
Sherri White
Title:
[End of Signatures]
Galley Cafe, Inc. Page 30
32
EXHIBIT "A"
Premises' Depiction
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Galley Cafe, Inc. Page B -1
45
BALBOA YACHT BASIN
829 Harbor Island Drive
Newport Beach, CA 92660
(949) 673 -0360
Rules and Regulations
When a boat enters the Balboa Yacht Basin ( "BYB "), it immediately comes under the
jurisdiction of BYB and shall be berthed only where ordered and maneuvered as directed.
Vessels may be relocated within BYB at City's discretion. The City ordinances, rules and
regulations, summarized herein and as amended from time to time, and all other regulations
established by regulatory bodies having jurisdiction at BYB, shall form a part of all Slip Rental
Agreements as though printed thereon.
The Balboa Yacht Basin is owned by the City of Newport Beach ( "City') and managed by
Basin Marine Inc., located onsite at 829 Harbor Island Drive.
There is no warranty of any kind as to the condition of the floats, walks, gangways, ramps or
mooring gear, nor shall City be responsible therefore, or for injuries to persons or property
occurring thereon or for any other reason, whether herein specifically stated or not.
No Vessel may be moored at the BYB unless a current Slip Rental .Agreement or
Temporary Slip Rental Agreement (collectively, the "Agreements ") is in effect between
Vessel Owner and City. All defined terms herein shall have the same meaning as in the
Agreements.
2. Only the Vessel described in the Agreements and registered to Vessel Owner may
occupy the assigned Slip. Only one boat is permitted to occupy a slip at any one time,
unless otherwise approved by the Marina Manager.
3. Use of boats moored at BYB for unauthorized commercial purposes is prohibited.
4. No major repairs or complete overhauls shall be made on boats in BYB. Extent of the
permitted repairs shall be at the discretion of the City. Disc sanding and spray painting
are strictly forbidden.
5. Supplies, materials, accessories or gear of all kinds shall not be stored within BYB
except. in approved lockers. No additional locker boxes shall be placed on the docks by
Vessel Owner. Maximum weight in lockers shall not exceed 70 pounds.
6. City reserves the right to inspect all boats to determine if they are properly identified and
equipped for safe operation in accordance with Coast Guard and other applicable
regulations.
No Vessel Owner shall throw, discharge, pump or deposit from any boat or float any
refuse, oil, spirits, flammable liquid, or other polluting matter into BYB. All such matter
shall be deposited in appropriately marked containers within BYB.
Pagel of 4 4 0
8. Use of boat toilets not equipped with storage devices approved by the state or local
health departments is not permitted within BYB. City reserves the right to inspect all
boats for installation and proper operation of such devices and holding tanks.
9. Unnecessary operation of engines in berths is not permitted. No excessive noise is
allowed. Halyards should be tied away from masts.
10. Except for entering or leaving slips, marine engines, power generating equipment or
other noise making machinery shall not be operated between the hours of 5:00 P.M. and
9:00 A.M. Engines may not be operated in gear while boats are secured to dock.
11, Water or power lines shall not cross main walks.
12. All boats shall be moored by Vessel Owner in a safe manner, on cleats, with strong and
adequate lines.
13. The speed limit within BYB shall be dead slow, or wakeless speed, whichever is slower.
14. Fishing from the slips is not allowed. No cleaning of fish is permitted in BYB.
15. There shall be no laundering or drying of wearing apparel on the docks or on the dock or
rigging of a boat in BYB.
16. Restrooms will remain locked at all times. All keys must be returned to the Marina
Manager office upon termination of the Agreement. If not returned, the Key Deposit will
be retained by the City. Keys must not be duplicated.
17. Vessel Owner shall notify the Marina Manager when they expect Vessel to be away
from the Slip for any period in excess of thirty (30) days. Vessel Owner shall not sublet
or otherwise grant others the use of the Slip. During any absence of the Vessel, City
may use the Slip for any purpose without credit or compensation to Vessel Owner.
18. For security reasons, no dinghy, sabot, float or other similar boat shall be permitted to
cruise up and down the fairways. All such boats must be kept on Vessel. The use of
another slip at any time, for ANY non - emergency reason is not permitted.
19. The maximum distance by which any boat (including all projections such as transom
platforms, booms, gait tanks, bowsprits, etc.) may extend beyond the end of the berth
may not be more than ten percent (10 %) of the length of the Slip beyond the end of the
Slip. No part of the Vessel shall at any time extend over any portion of any dock at BYB.
No part of any boat shall extend over the main walkway,
20. All equipment and electrical connections made by Vessel Owner must be approved by
the Marina Manager.
21. No fueling or transferring of fuel from docks shall be permitted at any time.
22. Vessel Owner shall be responsible for any oil, paint, or other materials spilled, dripped
or otherwise applied to the concrete fingers or walks adjacent to the boat slip.
Page 2 of 4 4
23. Boat boarding steps shall be a maximum of one -half (1/2) the width of the finger and
shall be of lightweight, open construction. No storage will be allowed under the boarding
steps.
24. No dinghies, masts, bicycles, hibachis, etc. shall be stored on the docks. Items left or
stored on the docks will be confiscated.
25. Trash containers are provided. Vessel Owners shall not place their own trash
containers on the docks.
26. No cleats, dock wheels or other accessories shall be installed by Vessel Owner. The
dockmaster should be contacted if additional accessories are necessary.
2.7. Any paint, varnish, etc. spilled on the docks or lockers shall be cleaned up immediately.
If the spill cannot be removed by Vessel Owner, he should contact the Marina Manager
for assistance.
28. Vessel Owner is encouraged to inform the Marina Manager of any leaks or other
malfunctions with water or electricity, etc., so that they may be corrected as soon as
possible.
29. ANIMALS SHALL BE LEASHED AT ALL TIMES. Should the size or temperament of a
pet disturb others or should the pet commit any nuisance on the property of BYB, such
animal shall be removed from BYB by Vessel Owner.
30. Children under twelve (12) years of age are not permitted on docks without the
immediate presence of a parent or other responsible adult.
31. Disorderly or discourteous conduct by Vessel Owner or guests that might injure a
person, cause damage to property or harm the reputation of BYB shall be cause for
termination of the Vessel Owner's Agreement.
32. Vessel Owner shall park vehicles in areas designated for Basin parking. Parking areas
shall not be used for storage of trailers without City's consent.
33. Vessel Owners are advised that it will be unlawful for any unauthorized person to solicit
business or to offer goods, wares, merchandise or services for sale on the premises of
BYB without the consent of the City.
34. "For Sale" or other unauthorized advertising signs are prohibited in BYB
35. City is not responsible for any losses or damage to boats at BYB. Each Vessel Owner is
responsible for damage which he and /or his boat may cause to other boats or
improvements in BYB.
36. No swimming is permitted in BYB waters.
37. The City will not provide space for the storage of dinghies or miscellaneous Vessel
Owner equipment on Basin property.
Page 3 of 4 4 2
38. Hydro -lift hoists will not be allowed in BYB.
39. The Marina Manager may ascertain that strangers aboard yachts are authorized by
Vessel Owner to be aboard.
40. Riding of skateboards, bicycles or motorcycles on the docks is not permitted.
Slip Fees specified in the Agreement are determined by the size of the slip space or vessel
size and permitted overhang. Rent is due in advance, payable by the first of the month.
Electricity is charged for the previous month's use. Vessel is subject to impound if the
account is delinquent. Vessel Owner will be liable for any cost of impounding and collection
of account.
These rules and regulations are subject to change upon five day's notice.
Dave New
Balboa Yacht Basin Manager
Dave 1(@BasinMarine.com
(949) 673 -0360
Revised February 4, 2013
Page 4 of 4 4J
Exhibit "C"
Galley Cafe, Inc. Page C -1
50
RECORDING REQUESTED AND
WHEN RECORDED RETURN TO:
Office of the City Clerk
City of Newport Beach
100 Civic Center Drive
PO Box 1768
Newport Beach, CA 92658
[Exempt from Recordation Fee - Govt. Code §§ 6103 & 27383]
This Memorandum of Lease Agreement ( "Memorandum ") is dated January 1, 2014 , and is
made between City of Newport Beach, a California municipal corporation and charter city (or
"City") and Galley Cafe, Inc., a California corporation (operating as Galley Cafe) ( "Tenant "),
concerning the Premises described in Exhibit "A ", attached hereto and by this reference made a
part hereof.
For good and adequate consideration, City leases the Premises to Tenant, and Tenant leases
the Premises from City, for the term and on the provisions contained in the Agreement dated
December _, 2013, including without limitation provisions prohibiting assignment, subleasing,
and encumbering said leasehold without the express written consent of City in each instance, all
as more specifically set forth in said Agreement, which said Agreement is incorporated in this
Memorandum by this reference.
The Agreement's term is ten (10) years, beginning January 1, 2014„ and ending December 31,
2024, unless extended by the parties.
This Memorandum is not a complete summary of the Agreement. Provisions in this
Memorandum shall not be used in interpreting the Agreement's provisions. In the event of
conflict between this Memorandum and other parts of the Agreement, the other parts shall
control. Execution hereof constitutes execution of the Agreement itself.
[Signatures on the next page]
11-
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the dates written below.
APPROVED AS TO FORM:
THE CITY ATT NEY'S OFFICE
Date:, 1 Z
By: a t
Aaron C. Harp
City Attorney
ATTEST:
Leilani I. Brown
City Clerk
CITY OF NEWPORT BEACH,
a California municipal corporation
By:
David Kiff
City Manager
TENANT:
Date:
Brian White
By:
Sherri White
[End of Signatures]
Galley Caf6, Inc. Page _..1
52
NOTARY ACKNOWLEDGMENT
State of California )
County of ORANGE )
On before me, , Notary Public,
personally appeared DAVE KIFF, who proved to me on the basis of satisfactory evidence to be
the person whose name is subscribed to the within instrument and acknowledged to me that he
executed the same in his authorized capacity(ies), and that by his signature on the instrument
the person, or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the
foregoing paragraph is true and correct.
WITNESS my hand and official seal
Signature
NOTARY ACKNOWLEDGMENT
State of California )
County of ORANGE )
On before me, , Notary Public,
personally appeared who proved to me
on the basis of satisfactory evidence to be the person whose name is subscribed to the within
instrument and acknowledged to me that s /he executed the same in his /her authorized
capacity(ies), and that by his /her signature on the instrument the person, or the entity upon
behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the
foregoing paragraph is true and correct.
WITNESS my hand and official seal
Signature
5�
F ° °.. n .w 9 (d
Current Lease Agreement, executed
02/08/1988
JJ
50
LEASE BETWEEN THE CITY OF NEWPORT BEACH AND
EDWARD HOFFMAN FLACK AND MYRTLE ELIZABETH FLACH,
TRUSTEES OF THE FLACH FAMILY TRUST,
U /T /A DATED 10/18182,
DOING BUSINESS AS THE GALLEY
C -2L,f3
'57
INDEX
ARTICLE PAGE
I.
LEASED PREMISES
1
2.
TERM
2
3.
RENTAL
2
4.
TAXES
7
5.
USE OF PREMISES
8
6.
ALTERATIONS
9
(a) Less.or's Approval
9
(b) Repairs by Lessee
10
(c) No Eviction
11
7.
REPAIRS
11
8.
UTILITIESS
13
9.
LIABILITY INSURANCE
13
A. Liability Insurance
14
B. Workers' Compensation
14
C. Property Insurance
14
D. Subrogation Waiver
15
E. Failure to.Secure
15
F. Additional Insured
15
10.
RECONSTRUCTION
16
11.
RIGHT OF ENTRY
18
12.
SIGNS
19
13.
SALES RESTRICTIONS
19
14.
ASSIGNMENTS AND SUBLETTING
20
15.
BANKRUPTCY- INSOLVENCY
22
16.
BOLD HARMLESS
22
17.
LIENS
24
18.
LESSOR PAYING CLAIMS
25
19.
DEFAULTS
26
20.
TERMINATION
27
21.
ATTORNEY'S FEES
27
22.
REMOVAL
27
23.
PAYMENTS AND NOTICES
28
24.
EMINENT DOMAIN
29
(a) Definition of Terms
29
(b) Total Taking
30
(c) Partial Taking
30
(d) Allocation of Award
30
(e) Effect of Termination
31
(f) Voluntary Sales
31
25.
BOLDING OVER
31
26.
ACCEPTANCE OF PREMISES BY LESSEE
32
27.
SCOPE OF THE AGREEMENT
32
28.
AMENDMENT OF LEASE
32
29.
CONSTRUCTION AND EFFECT
32
S2
a
LEASE
THIS LEASE, executed this n ;z /, day of
1981_, by and between the CITY OF NEWPORT BEACH,` a municipal
corporation, hereinafter referred to as "LESSOR", EDWARD HOFFMAN
FLACH and MYRTLE ELIZABETH FLACH, TRUSTEES OF THE FLACH FAMILY
TRUST, U /T /A DATED 10/18/82, DOING BUSINESS AS THE GALLEY,
hereinafter referred to as "LESSEE ".
1. LEASED PREMISES: In consideration of the rent herein
specified to be paid and the covenants and conditions to be
observed and performed by LESSEE, LESSOR does hereby lease to
LESSEE that certain space (hereinafter referred to as the "said
Premises ") delineated in red on the attached Exhibit "A ", with
dimensions as shown thereon, known as the Galley Cafe, located at
829 Harbor Island Drive, in the City of Newport Beach, County of
Orange, State of California, said building being a part of the
development known as "Balboa Yacht Basin," and two (2) garage
spaces of approximately two hundred (200) square feet each
together with the non - exclusive right, in common with other
LESSEES and tenants of LESSOR, to the use of any parking area(s)
in the Balboa Yacht Basin which LESSOR may from time to time
designate for patron and employee parking.
_I_
2. TERM: The initial term of this Lease shall be for a
period of ten (10) years, commencing on the first day of January,
1988, . ( "Commencement Bate ") and ending on the 31st day of
December, 1998, subject, however, to earlier termination as
hereinafter provided.
LESSEE may, at his option, extend the term of this Lease to
three (3) additional periods of five (5) years each provided that
LESSEE notifies the LESSOR in writing of his election to extend
at least six (6) months prior to expiration of the term of this
Lease ( "Extended Term ") and execute a Modification of this Lease
to increase the rent during the Extended Term to the current fair
market rent. LESSOR, at its sole discretion, will determine the
current fair market rent. No.thwithstanding anything to the
contrary herein, if LESSEE is in default of their obligation
under this Lease on the date the Notice to Extend is given or the
date the Extended Term is to commence, the Extended Term shall
not commence and this Lease shall expire at the end of the last
term in effect.
3. RENTAL:
(a) Minimum Rent: LESSEE agrees to pay to LESSOR as
rental for the use and occupancy of the said Premises the sum of
seventeen thousand five hundred dollars ($17,500) per year
W ."
00
payable in monthly Installments in advance on or before the first
day of each month according to the following schedule:
January $ 1,308.33
February $ 1,308.33
March $ 1,308.33
April $ 1,608.33
May $ 1,608.33
June $ 1,608.33
July $ 1,608.33
August $ 1,608.33
September $ 1,608.33
October $ 1,308.33
November $ 1,308.33
December $ 1,308.33
Total: $17,500.00
The yearly rent and monthly payment shall be
adjusted during the Initial Term on the fifth (5th) year
following the Commencement Date. The adjusted minimum yearly
rent shall be set as the sum equal to seventy -five percent (75 %)
of the average of the prior three (3) years of the total rent
(Minimum Rent and Percentage Rental) paid to LESSOR under
Paragraph 3 of this Lease. In no event shall the adjusted
minimum rent be set at an amount less than $17,500.00.
(b) Percentage Rental: In addition to the minimum
guaranteed rental hereinabove provided, LESSEE shall pay to
LESSOR at the time and in the manner herein specified a
percentage rental of six percent (6 %) of the amount of all Gross
Sales made in, upon or from said Premises during each calendar
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01
year of the term hereof, less the aggregate amount of the minimum
guaranteed rental previously paid by LESSEE during said calendar
year.
Within thirty (30) days after the end of each
calendar month of the term hereof LESSEE shall furnish to LESSOR
a statement in writing, certified by LESSEE to be correct,
showing the total gross sales made in, upon or from said Premises
during the preceding calendar month, and on the first day of that
calendar month next succeeding, LESSEE shall pay to LESSOR the
percentage rent due.
Within twenty (20) days after the end of each
calendar year of the term hereof, LESSEE shall furnish to LESSOR
a statement in writing, certified by LESSEE to be correct,
showing the total gross sales by months made in, upon or from
said Premises during the preceding calendar year. At that time
any adjustment necessary shall be made between LESSOR and LESSEE,
so that the percentage rental, although payable monthly, shall be
computed on an annual basis. Any overpayment by LESSEE upon such
adjustment shall be credited by LESSOR on the monthly
installments of the minimum guaranteed rental falling due
thereafter, and with respect to the last month of the term of the
Lease if there is any overpayment LESSOR shall promptly reimburse
-4-
0::?,
the same to LESSEE, and any underpayment by LESSEE shall be paid
to LESSOR with the installment of minimum guaranteed rental next
falling due after notice of such underpayment to LESSEE.
(c) Gross Sales: The term "gross sales" of the LESSEE
as used in this Lease is defined to be the gross selling price of
all merchandise, or services sold in or from the Premises by the
LESSEE, its subtenants, licensees and concessionaires, whether
for cash or on credit and whether made by store personnel or by
vending machines, excluding therefrom the followings
(i) The selling price of all merchandise returned
by customers and accepted for full credit or the amount of
discounts and allowances made thereon;
(ii) Goods returned to sources or transferred to
another store or warehouse owned by or affiliated with LESSEE;
(iii) Sums and credits received in the settlement
of claims for loss of or damage to merchandise;
(iv) The price allowed on all merchandise traded
in by customers for credit or the amount of credit for discounts
and allowances made in lieu of acceptance thereof;
(v) Cash refunds made to customers in the ordinary
course of business, but this exclusion shall not include any
amount paid or payable for trading stamps;
(vi) Receipts from public telephones, stamp
machines or public toilet locks;
-5-
&3
(vii) Sales taxes, luxury taxes, consumers' excise
taxes, gross receipts taxes and other similar taxes now or
hereafter Imposed upon the sale of merchandise or services, but
only if collected separately from the selling price of
merchandise or services and collected from customers.
All sales originating at the Premises shall be
considered as made and completed therein, even though bookkeeping
and collection of the account may be transferred to another place
and even though actual filling of the sale or service order and
actual delivery of the merchandise may be made from a place other
than the Premises.
(d) LESSEE shall keep and maintain and shall cause each
of its sublessees and concessionaires, if any, to keep and
maintain on the Premises full, complete and accurate books,
records and accounts of all daily gross sales, both for cash and
on credit. LESSOR and its agents and employees shall have the
right at any and all times during regular business hours to
examine and inspect all of said books, records and accounts,
Including all sales tax reports and Federal and State Income Tax
Returns pertaining to that business conducted in, upon or from
said Premises, for the purpose of investigating and verifying the
accuracy of any statement of gross sales hereinabove provided for
in Subparagraph (c). If such inspection shall disclose a
liability for rent to the extent of two percent (2 %) or more of
04
gross sales theretofore computed and reported by LESSEE, LESSEE
shall promptly pay to LESSOR the cost of such inspection and the
amount of any deficiency in rent. Any information gained by
LESSOR from such statements or inspection shall be confidential
and shall not be disclosed except to carry out the purposes
hereof, providing, however, the LESSOR shall be permitted to
divulge such information in connection with any financing
arrangements or sale or exchange of said Premises by LESSOR.
(e) Any payment due from LESSEE to LESSOR under the
provisions of this Lease which shall not be paid when due shall
be subject to a late charge at the rate of ten percent (10%) per
annum from the date due and payable by the terms of this Lease
until the same shall be paid. All payments hereunder shall be
paid in lawful money of the United States.
4. TAXES:
(a) LESSOR shall pay and discharge all taxes, general
and special assessments which during the term of this Lease may
be levied upon or assessed against the said Premises and all
interest therein and all improvements and other property thereon.
(b) During the term hereof LESSEE shall pay prior to
delinquency all taxes assessed against and levied upon fixtures,
furnishings, equipment and all other personal property of LESSEE
contained in said Premises, and when possible LESSEE shall cause
said fixtures, furnishings, equipment and other personal property
_q_
C- 5
to be assessed and billed separately from the real property of
LESSOR. In the event any or all of the LESSEE'S fixtures,
furnishings, equipment and other personal property shall be
assessed and taxed with the LESSOR'S real property, the LESSEE
shall pay to LESSOR its share of such taxes within ten (14) days
after delivery to LESSEE by LESSOR of a statement in writing
setting forth the amount of such taxes applicable to LESSEE's
property.
5. USE OF PREMISES:
(a) During the term hereof LESSEE shall use and occupy
said Premises for the operation of a restaurant business and for
no other use or purpose, except by and with the prior written
consent of LESSOR.
(b) No use shall be made or permitted of said Premises
or any part thereof, nor any acts done which shall constitute a
nuisance or unreasonable annoyance to other LESSEES in the Balboa
Yacht Basin or which shall violate, make inoperative or increase
the existing rate of any insurance policy held by or for the
benefit of LESSOR. LESSEE shall not sell, or suffer or permit to
be kept, used or sold in, upon or about said Premises, any
gasoline, distillate or other petroleum or nuclear product, or
any substance or material of an explosive, inflammable or
radiological nature which may be prohibited by any insurance
policy held by or for the benefit of LESSOR, or which may
IM
00
endanger any part of the Balboa Yacht Basin or its occupants,
business patrons or invitees, without the written consent of
LESSOR, and all insurance companies carrying public liability,
rental income, fire, extended coverage, plate glass or other
casualty insurance pursuant to any provision hereof.
(c) LESSEE shall not commit or suffer to be committed
any waste upon said Premises, or any nuisance or act or thing
which may disturb the quiet enjoyment of any other LESSEE,
concessionaire, licensee or occupant in the Balboa Yacht Basin.
(d) LESSEE shall at all times comply with all
governmental rules, regulations, ordinances, statutes and laws
now in force or which may hereafter be in force pertaining to
said Premises and to LESSEE's use thereof, and a finding of
guilty by a competent court for any violation thereof shall be
conclusively deemed a default under this Subparagraph (d).
(e) Occupancy of said Premises after the date of
commencement of the term hereof shall constitute the acceptance
by LESSEE of the safety and good order and condition thereof.
6. ALTERATIONS:
(a) Lessor's Approval. No repairs, alterations,
changes or additions shall be made to said Premises without
LESSEES prior written consent and LESSOR'S approval of the plans
_g_
07
and specifications therefor. All such work which may be done
within said Premises by LESSEE shall be done pursuant to LESSOR'S
directions.
LESSOR agrees to physically connect one (1) of the
garage spaces with the restaurant structure subject to securing
all appropriate permits and licenses and in accordance with
approval of the Newport Beach Building Department.
(b) ReEairs by Lessee, LESSEE shall keep all of said
Premises in such repair, order and condition as the same are in
on the commencement of the Lease Term or may be put in by
subsequent changes, alterations, additions and repairs during the
Lease Term, except such damages as shall be due to reasonable use
and wear and /or damage by fire or unavoidable casualty. LESSEE
shall make such repairs as are required of LESSEE under the
foregoing sentence in and about said Premises necessary to
preserve said Premises in such repair, order and condition;
provided, however, that LESSOR may elect to make any such repairs
at the expense of LESSEE, which expense shall be due and payable
upon demand therefor by LESSOR and thereupon become a charge
under this Lease. Notwithstanding the foregoing, LESSOR shall
make, at its expense, all repairs to said Premises occasioned by
the act or neglect of LESSOR, its agents or employees. All
repairs shall be of the quality and class equal to the original
work. LESSEE expressly waives all right to make repairs at
CUM
r2
LESSOR'S expense under the provision of Sections 1041 and 1042 of
the Civil Code of the State of California. Any alterations,
improvements, changes or repairs to said Premises shall become
the property of LESSOR and shall remain upon and be surrendered
with said Premises subject to any rights of removal contained in
this Lease. LESSEE shall, at the expiration of earlier
termination of this Lease, surrender said premises to LESSOR In
as good condition and repair as reasonable and proper use thereof
will permit.
W No Eviction. Except as otherwise provided in
Paragraph 10, there shall be no allowance to LESSEE for
dimunition of rental value and no claim by LESSEE for eviction
from said Premises by reasons of inconvenience, annoyance or
injury to LESSEE arising from any repairs, alterations,
replacements or improvements made to said Premises. LESSOR shall
not be liable to LESSEE for failure to make repairs to said
Premises occasioned by the act or neglect of LESSOR or its
employees unless LESSOR has received from LESSEE written notice
of the need for such repairs and has failed to commence and
diligently complete such repairs within a reasonable time
thereafter.
7, REPAIRS: LESSOR agrees, at its sole cost and expense,
to keep and maintain in good order, condition and repair the
foundations, roof, exterior walls and structural portions of the
-11-
0J
building in which said Premises are located. LESSOR reserves the
right at any time and from time to time without the same
constituting an actual or constructive eviction and without
incurring any liability to LESSEE therefor or otherwise affecting
LESSEE'S obligations under this Lease, to make such changes,
alterations, additions, improvements, repairs or replacements in
or to the building (including said Premises if required so to do
by any law or regulation) and the fixtures and equipment thereof,
as well as in or to the street entrances, halls, passages, and
stairways thereof, or after .reasonable notice, to change the
name, number and designation by which the building is commonly
known, as LESSOR may deem necessary or desirable, and to change
the arrangement or location of entrances or passageways, doors
and doorways and corridors, provided, however, that there be no
unreasonable obstruction of the right of access to, or
unreasonable interference with the use and enjoyment of, said
Premises by LESSEE. Nothing contained in this Paragraph shall be
deemed to relieve LESSEE of any duty, obligation or liability of
LESSEE with respect to making any repair, replacement or
improvement or complying with any law, order or requirement of
any government or other authority and nothing contained in this
Paragraph shall be deemed or construed to impose upon LESSOR any
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70
obligation, responsibility or liability whatsoever, for the care,
supervision or repair of the building or any part thereof other
than as otherwise provided In this Lease.
8. UTILITIES: LESSEE shall pay for all water, gas, heat,
light, power and trash removal services and shall provide minimal
interior maintenance service.
9. LIABILITY INSURANCE. Prior to the Commencement Date of
this Lease, LESSEE shall furnish the LESSOR with certificates
showing the type, amount, class of operations covered, effective
dates and dates of expiration of insurance policies. Such
certificates, which do not limit LESSEES' indemnification, shall
also contain substantially the following statement:
"The Insurance covered by this certificate
will not be cancelled or materially altered,
except after thirty (30) days' written notice
has been received by the LESSOR."
It is agreed that LESSEE shall maintain in force at all time
during the performance of this Lease all appropriate policies of
insurance, and that said policies shall be secured from a good
and responsible company or companies, acceptable to LESSOR, doing
insurance business in the State of California.
-13-
71
LESSEES shall
maintain the
following insurance coverage:
A. Liability
Insurance.
The general
liability coverage
shall provide the
following minimum limits:
Bodily Injury
$250,000
each person
$500,000
each occurrence
$500,000
aggregate
Property
Damage
$100,000
each occurrence
$250,000
aggregate
A combined single limit policy with aggregate limits in the
m
amount of one million dollars ($1,000,000) will be considered
equivalent to the required minimum limits. All said coverage to
include liability for occurrences on the Premises.
B. Workers' Compensation. All employees of the LESSEE must
be included under such policy in an amount and with coverage to
meet all requirements of the Labor Code of the State of
California.
C. Property Insurance. LESSEE shall obtain and keep in
force during the term of this Lease a policy of policies of
insurance covering loss or damage to the Premises, and covering
loss or damage to LESSEE'S fixtures, equipment, improvements and
personal property ( "personal property ") in the amount of at least
eighty percent (80 %) of the full replacement value thereof, as
the same may exist from time to time, against all perils included
within the classification of fire, extended coverage, vandalism
and malicious mischief.
-14-
72
Each year during the term of this Lease, LESSEE shall provide
LESSOR with appropriate amended insurance endorsement which
reflects eighty percent (80 %) of the current replacement value of
the Premises and the full replacement value of LESSEE °S personal
property. Said insurance under this Subsection C shall provide
for payment of all structural loss or structural damage to the
Premises directly to LESSOR and all other payments directly to
LESSEE.
D. Subrogation Waiver. LESSEE hereby waives any and all
rights of recovery against LESSOR, or against the employees,
agents and representatives of LESSOR, for loss of or damage to
LESSEE or its property or the property of others under its
control, where such loss or damage is insured against under any
insurance policy, whether or not required by this Lease, in force
at the time of such loss or damage.
E. Failure to Secure. If LESSEE at anytime during the term
hereof, should fail to secure or maintain the foregoing
insurance, LESSOR shall, after two (2) days' notice, be permitted
to obtain such insurance in the LESSEE'S name or as an agent of
the LESSEE and shall be compensated by the LESSEE for the costs
of the insurance premiums. LESSEE shall pay LESSOR interest on
paid insurance premiums at the maximum rate permitted by law
computed from the date written notice is received that the
premiums have been paid.
-15-
�s
F. Additional Insured. LESSOR, its City Council, boards
and commissions, officers, agents, servants, and employees shall
be named as an additional insured under the policies of insurance
required by this Lease. The naming of an additional insured
shall not affect any recovery to which such additional insured
would be entitled under this policy if not named as such
additional insured; and an additional insured named herein shall
not be held liable for any premium or expense of any nature on
this policy or any extension thereof.
10. RECONSTRUCTION:
(a) In the event the building in which the said
Premises are located is damaged by fire, or perils covered by
extended coverage insurance, the LESSOR shall:
(1) In the event of total destruction, within a
period of ninety (90) days thereafter, commence repair,
reconstruction and restoration of said building and prosecute the
same diligently to completion in which event this Lease shall
continue in full force and effect; or within said ninety (90) day
period elect not to so repair, reconstruct or restore said
building, in which event this Lease shall cease and terminate.
In either event, LESSOR shall give the LESSEE written notice of
its intention within said ninety (90) day period.
-16-
74
(2) In the event of a partial destruction of the
building to an extent not exceeding twenty -five percent (25 %) of
the full insurable value thereof and if the damage thereto is
such that the building may be repaired, reconstructed or restored
within a period of ninety (90) days from the date of the
happening of such casualty, the LESSOR shall continence and proceed
diligently with the work of repair, reconstruction and
restoration and the Lease shall continue in full force and
effect; or if such work of repair, reconstruction and restoration
is such as to require a period longer than ninety (90) days or
exceed twenty -five percent (25 %) of the full insurable value
thereof, the LESSOR may either elect to so repair, reconstruct
and restore and the Lease shall continue in full force and effect
or said 'LESSOR may elect not to repair, reconstruct or restore
and the Lease shall in such event terminate. Under any of the
conditions of this subparagraph provided, the LESSOR shall give
written notice to the LESSEE of its intention within the period
of ninety (90) days.
(3) In the event that a partial or total
destruction (as described In (1) and (2) above) of the building
takes place during the term hereof, either the LESSOR or LESSEE,
at its option, may elect to terminate this Lease upon written
notice within thirty (30) days after such destruction.
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75
(b) In the event of repair, reconstruction and
restoration as herein provided, the rental provided to be paid
under Paragraph 3 hereof shall be abated proportionately in the
ratio which the LESSEE'S use of the Premises is impaired during
the period of such repair, reconstruction or restoration. The
LESSEE shall continue the operation of Its business on the
Premises during any such period to the extent reasonably
practicable from the standpoint of prudent business management.
The LESSEE shall not be entitled to any compensation or damages
for loss in the use of the whole or any part of the Premises
and /or any inconvenience or annoyance occasioned by any such
damage, repair, reconstruction or restoration.
11. RIGHT OF ENTRY; LESSEE shall permit LESSOR and its
agents to enter upon said Premises at all reasonable times for
the purpose of inspecting the same and for the purpose of posting
any notice deemed necessary by LESSOR for the protection of its
interest, and for malting any repairs or alterations provided for
in this Lease. During the last ninety (90) days of the term
hereof and at any time after notice of termination of this Lease
has been given as provided in this Lease, LESSOR may place and
maintain on said Premises customary "For Sale" and /or "For Lease"
signs and may, at all reasonable times, enter said Premises for
the purpose of displaying said Premises to prospective lessees.
-18-
LESSOR or its agents may, during the progress of any work on
the Premises, keep and store upon the Premises all necessary
materials, tools and equipment and LESSOR shall not in any such
event be liable for inconvenience, annoyance, disturbance, loss
of business or other damage to LESSEE and the obligations of
LESSEE under this Lease shall not be affected.
12. SIGNS: LESSEE shall not erect or maintain or permit to
be erected or maintained any sign, marquee or awning on said
Premises without the prior written consent of LESSOR. LESSOR
shall have the right to approve the type and size, location and
color of all signs which LESSEE desires to use or place in or
upon said Premises, The LESSEE shall affix and maintain upon the
glass panes and supports of the show windows and within twelve
(12) inches of any windows or upon the exterior walls of the
building only such signs, advertising placards, names, insignia,
trademarks and descriptive material as shall have first received
the written approval of the LESSOR as to size, type, color,
location, copy, nature and display qualities.
13. SALES RESTRICTIONS: Excepting normal sales of moored
boats, LESSEE shall not display, sell or store merchandise
outside the defined exterior walls and permanent doorways of said
Premises, and no sale by auction in, upon or from said Premises,
whether said auction be voluntary, involuntary, pursuant to any
_19_
7Y
assignment for benefit of creditors or pursuant to any bankruptcy
or other insolvency proceedings, shall be conducted.
14. ASSIGNMENTS AND SUBLETTING: (a) LESSEE may transfer or
assign this Lease, or any right or interest hereunder, or sublet
the Leased Premises or any part thereof, after first obtaining
the prior written consent and approval of LESSOR. However,
assignment of this Lease to Edward H. Flach, Jr. shall be allowed
unconditionally without consent of LESSOR upon transfer of
LESSEE'S business interest to Edward H. Flach, Jr. Such consent
will not be unreasonably withheld. LESSOR hereby reserves the
right to condition any such approval upon LESSOR'S determination
that the assignee or sublessee is (i) as financially responsible
as LESSEE and (ii) has demonstrated an ability and willingness to
pay or to operate a similar business generating a sales volume
sufficient to pay the yearly rent and make the monthly payments
as defined in Paragraph 3. No transfer or assignment, whether
voluntary or involuntary, by operation of law, under legal
process or proceedings, by receivership, in bankruptcy, or
otherwise, and no subletting, shall be valid or effective without
such prior written consent and approval. Should LESSEE attempt
to make or suffer to be made any such transfer, assignment or
subletting, except as aforesaid, or should any of LESSEE'S rights
under this Lease be sold or otherwise transferred by or under
court order or legal process or otherwise, or should LESSEE be
_20_
72
adjudged insolvent or bankrupt, then and in any of the foregoing
events LESSOR may, at its option, terminate this Lease forthwith
by written notice thereof to LESSEE. Should LESSOR consent to
any such transfer, assignment or subletting, such consent shall
not constitute a waiver of any of the restrictions of this
paragraph and the same shall apply to each successive transfer,
assignment or subletting hereunder, if any.
(b) if the LESSEE hereunder is a corporation, an
unincorporated association, or a partnership, the transfer,
assignment or hypothecation of any stock or interest in such
corporation, association or partnership in the aggregate in
excess of twenty -five percent (25 %) shall be deemed an assignment
within the meaning and provisions of this Paragraph; provided,
however, a transfer or assignment or any such stock or interest
by a shareholder or member to his spouse, children or
grandchildren is excepted from the foregoing provision.
(c) It the LESSOR consents to an assignment or transfer by
LESSEE of all or a portion of LESSEE'S interest under this Lease,
LESSEE shall pay, or cause to be paid, a transfer fee of one
hundred dollars ($100); provided, however, that such transfer fee
shall not be payable upon LESSOR'S consent to a transfer or
assignment of LESSEE'S interest hereunder as security for a loan.
-21°
79
15. BANKRUPTCY - INSOLVENCY: The LESSEE agrees that in the
event all or substantially all of the LESSEE's assets are placed
in the hands of a receiver or trustee, and such receivership or
trusteeship continues for a period of thirty (30) days, or should
the LESSEE make an assignment for the benefit of creditors or be
adjudicated a bankrupt, or should the LESSEE institute any
proceedings under the Bankruptcy Act or under any amendment
thereof which may hereafter be enacted, or under any other act
relating to the subject of bankruptcy wherein the LESSEE seeks to
be adjudicated a bankrupt, or to be discharged of its debts, or
to effect a plan of liquidation, composition or reorganization,
or should any involuntary proceeding be filed against the LESSEE
under any such bankruptcy laws and the LESSEE consent .thereto or
acquiesce therein by pleading or default, then this Lease or any
interest in and to the said Premises shall not become an asset in
any of such proceedings and, in any such event and in addition to
any and all rights or remedies of the LESSOR hereunder or by law
provided, it shall be lawful for the LESSOR to declare the term
hereof ended and to re -enter the said Premises and take
possession thereof and remove all persons therefrom, and the
LESSEE shall have no further claim thereon or hereunder.
16. HOLD HARMLESS: LESSEE shall indemnify and hold harmless
LESSOR, its City Council, boards and commissions, officers,
agents, servants and employees from and against any and all
_22-
20
actions, causes of action, obligations, costs, damages, losses,
cIalms, liabilities and demands of any nature whatsoever,
including reasonable attorneys' fees, regardless of the merit or
outcome of any such claim or suit, arising from or in any manner
connected to the use or possession of the Premises by LESSEE
conducted pursuant to this Lease.
LESSEE shall indemnify and hold harmless LESSOR, its City
Council, boards and commissions, officers, agents, servants and
employees from and against any and all actions, causes of action,
obligations, costs, damages, losses, claims, liabilities and
demands of any nature whatsoever, including reasonable attorneys'
fees, accruing or resulting to any and all persons, firms, or
corporations furnishing or supplying work, services, materials,
equipment or supplies in connection with services, materials,
equipment or supplies in connection with services or work
conducted or performed pursuant to this Lease by LESSEE and
arising out of such activities or work, and from any and all
claims and losses whatsoever, including reasonable attorneys'
fees, accruing or resulting to any person, firm or corporation
for damage, injury or death arising out of LESSEE'S use and
possession of the Premises.
Without limiting the generality of the foregoing, LESSEE
hereby agrees that the LESSOR, its City Council, boards and
commissions, officers, agents, servants and employees, shall not
_a3_
21
be liable for injury to LESSEE'S business or any loss of income
therefrom or for damage to the goods, wares, merchandise,
improvements or other property of LESSEE, LESSEE'S employees,
invitees, customers, or any other person in or about the
Premises, nor shall LESSOR, Its City Council, boards and
commissions, officers, agents, servants and employees be liable
for injury to the person of LESSEE, LESSEE'S employees, agents or
contractors, whether such damage or injury Is caused by or
results from fire, steam, electricity, gas, water or rain, or
from the breakage, leakage, obstruction or other defects of
pipes, sprinklers, wires, appliances, plumbing, air conditioning
or lighting fixtures, crime, or from any other cause, whether the
said damage or injury results of the building of which the
Premises are a part, or from other sources or places and
regardless of whether the cause of such damage or injury or the
means of repairing the same is inaccessible to LESSEE. LESSOR,
its City Council, boards and commissions, officers, agents,
servants and employees shall not be liable for any damages
arising from or any act or neglect of any other LESSEE, if any,
of the building in which the Premises are located.
17. LIENSt LESSEE shall not permit to be enforced against
said Premises, or any part thereof, any mechanics',
materialmen's, contractors' or other liens arising from, or any
claims for damages growing out of, any work of repair or
-24-
22
alteration as herein authorized or otherwise arising (except from
the actions of LESSOR), and LESSEE shall pay or cause to be paid
all of said liens and claims before any action is brought to
enforce the same against LESSOR or said Premises; and LESSEE
agrees to indemnify and hold LESSOR and said Premises free and
harmless from all liability for any and all such liens and claims
and all costs and expenses in connection therewith. LESSEE shall
give LESSOR no Iess than twenty (20) days' prior notice in
writing before commencing construction of any kind on the
Premises so that LESSOR may post notices of non - responsibility.
18. LESSOR PAYING CLAIMS: Should LESSEE fail to pay and
discharge, when dine and payable, any tax or assessment, or any
premium or other charge in connection with any insurance policy
or policies which LESSEE is obligated to pay, or any lien or
claim for labor or material employed or used in, or any claim for
damages arising out of the repair, alterations, maintenance and
use of said Premises, as provided in this Lease, after ten (10)
days' written notice from LESSOR, then LESSOR may, at its option,
and without waiving or releasing LESSEE from any of LESSEE's
obligations hereunder, pay any such tax, assessment, lien, claim,
insurance premium or charge, or settle or discharge any, action
therefor or satisfy any judgment thereon. All costs, expenses
and other sums, incurred or paid by LESSOR in connection
therewith, together with interest at the rate of ten percent
-2s-
2_s
(10 %) per annum on such costs, expenses and sums from the date
incurred or paid by LESSOR, shall be deemed to be additional rent
hereunder and shall be paid by LESSEE with and at the same time
as the next installment of rent hereunder, and any default
therein shall constitute a breach of the covenants and conditions
of this Lease.
19. DEFAULTS: The occurrence of any one (1) or more of the
following events shall constitute a material default and breach
of this Lease by LESSEE.
A. The vacating or abandonment of the Premises by
LESSEE.
S. The failure by LESSEE to make any payment of rent
required to be made by LESSEE hereunder, as and when due, where
such failure shall continue for a period of three (3) business
days after written notice thereof from LESSOR to LESSEE.
C. Except as specified in Subsection B, the failure by
LESSEE to observe or perform any of the covenants, conditions or
provisions of this Lease to be observed or performed by LESSEE
where such failure shall continue for a period of ten (10) days
after written notice hereon from LESSOR to LESSEE; provided,
however, that if the nature of LESSEE'S default is such that more
than ten (10) days are reasonable required for its cure, then
LESSEE shall not be deemed to be in default if LESSEE commenced
-2&-
24
actions, causes of action, obligations., costs, damages, losses,
claims, liabilities and demands of any nature whatsoever,
including reasonable attorneys' fees, regardless of the merit or
outcome of any such claim or suit, arising from or in any manner
connected to the use or possession of the Premises by LESSEE
conducted pursuant to this Lease.
LESSEE shall indemnify and hold harmless LESSOR, its City
Council, boards and commissions, officers, agents, servants and
employees from and against any and all actions, causes of action,
obligations, costs, damages, losses, claims, liabilities and
demands of any nature whatsoever, including reasonable attorneys'
fees, accruing or resulting to any and all persons, firms, or
corporations furnishing or supplying work, services, materials,
equipment or supplies in connection with services, materials,
equipment or supplies in connection with services or work
conducted or performed pursuant to this Lease by LESSEE and
arising out of such activities or work, and from any and all
claims and losses whatsoever, including reasonable attorneys'
fees, accruing or resulting to any person, firm or corporation
for damage, injury or death arising out of LESSEE'S use and
possession of the Premises.
Without limiting the generality of the foregoing, LESSEE
hereby agrees that the LESSOR, its City Council, boards and
commissions, officers, agents, servants and employees, shall not
_2g_
RJ
be liable for injury to LESSEE'S business or any loss of income
therefrom or for damage to the goods, wares, merchandise,
improvements or other property of LESSEE, LESSEE'S employees,
invitees, customers, or any other person in or about the
Premises, nor shall LESSOR, its City Council, boards and
commissions, officers, agents, servants and employees be liable
for injury to the person of LESSEE, LESSEE'S employees, agents or
contractors, whether such damage or injury is caused by or
results from fire, steam, electricity, gas, water or rain, or
from the breakage, leakage, obstruction or other defects of
pipes, sprinklers, wires, appliances, plumbing, air conditioning
or lighting fixtures, crime, or from any other cause, whether the
said damage or injury results of the building of which the
Premises are a part, or from other sources or places and
regardless of whether the cause of such damage or injury or the
means of repairing the same is inaccessible to LESSEE. LESSOR,
its City Council, boards and commissions, officers, agents,
servants and employees shall not be liable for any damages
arising from or any act or neglect of any other LESSEE, if any,
of the building in which the Promises are located.
17. LIENS: LESSEE shall not permit to be enforced against
said Premises, or any part thereof, any mechanics',
materialmen's, contractors' or other liens arising from, or any
claims for damages growing out of, any work of repair or
-24-
R0
alteration as herein authorized or otherwise arising (except from
the actions of LESSOR), and LESSEE shall pay or cause to be paid
all of said liens and claims before any action is brought to
enforce the same against LESSOR or said Premises; and LESSEE
agrees to indemnify and hold LESSOR and said Premises free and
harmless from all liability for any and all such liens and claims
and all costs and expenses in connection therewith. LESSEE shall
give LESSOR no less than twenty (20) days' prior notice in
writing before commencing construction of any kind on the
Premises so that LESSOR may post notices of non-responsibility.
18. LESSOR PAYING CLAIMS- Should LESSEE fail to pay and
discharge, when due and payable, any tax or assessment, or any
premium or other charge in connection with any insurance policy
or policies which LESSEE is obligated to pay, or any lien or
claim for labor or material employed or used in, or any claim for
damages arising out of the repair, alterations, maintenance and
use of said Premises, as provided in this Lease, after ten (10)
days` written notice from LESSOR, then LESSOR may, at its option,
and without waiving or releasing LESSEE from any of LESSEE's
obligations hereunder, pay any such tax, assessment, lien, claim,
insurance premium or charge, or settle or discharge any action
therefor or satisfy any judgment thereon. All costs, expenses
and other sums, incurred or paid by LESSOR in connection
therewith, together with interest at the rate of ten percent
dl610
2
(10 %) per annum on such costs, expenses and sums from the date
incurred or paid by LESSOR, shall be deemed to be additional rent
hereunder and shall be paid by LESSEE with and at the same time
as the next installment of rent hereunder, and any default
therein shall constitute a breach of the covenants and conditions
of this Lease.
19. DEFAULTS: The occurrence of any one (1) or more of the
following events shall constitute a material default and breach
of this Lease by LESSEE..
A. The vacating or abandonment of the Premises by
LESSEE.
B. The failure by LESSEE to make any payment of rent
required to be made by LESSEE hereunder, as and when due, where
such failure shall continue for a period of three (3) business
days after written notice thereof from LESSOR to LESSEE.
C. Except as specified in Subsection B, the failure by
LESSEE to observe or perform any of the covenants, conditions or
provisions of this Lease to be observed or performed by LESSEE
where such failure shall continue for a period of ten (10) days
after written notice hereon from LESSOR to LESSEE; provided,
however, that if the nature of LESSEE'S default is such that more
than ten (10) days are reasonable required for its cure, then
LESSEE shall not be deemed to be in default if LESSEE commenced
-26-
22
such cure within said ten (10) day period and thereafter
diligently prosecutes such cure to completion.
20. TERMINATION: LESSEE shall have the option to terminate
this Lease upon adjustment of the yearly rent and monthly payment
under Section 3a of this Lease by giving sixty (60) days' prior
written notice to LESSOR as provided herein. Upon termination of
this Lease, LESSEE shall pay to LESSOR that portion of the rent
that is due and unpaid prior to the effective date of
termination.
21. ATTORNEY'S FEES: LESSEE shall pay to LESSOR such
amounts for resonable attorney's fees incurred by LESSOR in
connection with LESSEE'S breach or default under this Lease. In
addition, In the event that any action shall be instituted by
either o.f the parties hereto for the enforcement of any of its
rights or remedies in and under this Lease, the party in whose
favor judgment shall be rendered therein shall be entitled to
recover from the other party all costs incurred by said
prevailing party In said action, including reasonable attorney's
fees to be fixed by the court therein.
22. REMOVAL: Upon the expiration of the term of this Lease,
or upon any earlier termination of this Lease, LESSEE shall quit
and surrender possession of the said Premises to LESSOR in the
.same condition as upon delivery of possession to LESSEE
hereunder, reasonable wear and tear and damage by fire, acts of
-27-
U
God, the elements and unavoidable casualty excepted. Before
surrendering possession of said Premises as aforesaid, LESSEE
shall without expense to LESSOR, remove or cause to be removed
from said Premises all signs, furnishings, equipment, trade
fixtures, merchandise and other personal property installed or
placed therein, and all debris and rubbish, and LESSEE shall
repair all damage to said Premises resulting from such removal.
If LESSEE fails to remove any of its signs, furnishings,
equipment; trade fixtures, merchandise or other personal property
within ten (10) days after the expiration or termination of this
Lease, then LESSEE may, at its sole option (a) treat LESSEE as a
holdover in which event the provisions of Paragraph 24 shall
apply; or (b) deem any or all of such items abandoned and the
sole property of LESSOR; or (c) remove any or all of such items
and dispose of same in any manner or store same for LESSEE, in
which event the expense of such disposition or storage shall be
borne by LESSEE and shall be immediately due and payble.
23. PAYMENTS AND NOTICES, All rents and other sums payable
by LESSEE to LESSOR hereunder shall be paid to LESSOR at its
business office at CITY OF NEWPORT BEACH, FINANCE DEPARTMENT,
3300 NEWPORT BOULEVARD, P.O. BOX 1768 NEWPORT BEACH, CALIFORNIA,
92658 -8915, or at such other place as LESSOR may hereafter
designate in writing.
ST-M
90
Any notice to be given or other document to be delivered
by either party to the other hereunder may be delivered in person
to an officer of LESSOR or to LESSEE or any officer of LESSEE, if
a corporation, or may be deposited in the united States mail in
Orange County, State of California, duly registered or certified,
postage prepaid, and addressed to LESSOR at its said business
office and to LESSEE at the addresses designated below. Either
party hereto may from time to time, by written notice to the
other, served in the manner herein provided, designate a
different address. If any notice or other document is sent by
mail, as aforesaid, the same shall be deemed served or delivered
twenty -four (24) hours after the mailing thereof. If more :than
one (1) lessee is named under this Lease, service of any notice
upon any one of said lessees shall be deemed as service upon all
of said lessees.
Address of LESSEE: THE GALLEY, 829 HARBOR ISLAND DRIVE,
NEWPORT BEACH, CALIFORNIA 92662.
24. EMINENT DOMAIN:
(.a) Definition of Terms: The term "total taking" as
used in this Paragraph means the taking of the entire Premises
under the power of eminent domain or a taking of so much of said
Premises as to prevent or substantially impair the conduct of
LESSEE's business therein. The term "partial taking" means the
M M
taking of a portion only of said Premises which does not
constitute a total taking as above defined.
(b) Total Taking: If during the term hereof there
shall be a total taking by public authority under the power of
eminent domain, then the leasehold estate of LESSEE in and to
said Premises shall cease and terminate as of the date actual
physical possession thereof shall be so taken.
(c) Partial Taking: If during said term there shall be
a partial taking of said Premises, this Lease shall terminate as
to the portion of said Premises taken upon the date upon which
actual possession of sa.id portion of said Premises Is taken
pursuant to said eminent domain proceedings, but said Lease shall
continue in force and effect as to the remainder of said
Premises. The yearly rent and monthly payment by LESSEE for the
balance of said term shall be abated in the ratio that the square
footage of floor area of said Premises taken bears to the total
floor area of said Premises at the time of such taking.
(d) Allocation of Award: A11 compensation and damages
awarded for the taking of said Premises or any portion or
portions thereof, shall, except as otherwise herein provided,
belong to and be the sole property of LESSOR. LESSEE shall be
entitled to any award based upon value of its leasehold hereunder
and LESSEE shall be entitled to any award that may be made for
the taking of or injury to on account of any cost or loss LESSEE
_30_
92
may sustain in the removal of LESSEE's fixtures, equipment and
furnishings.
(e) Effect of Terminations if this Lease is
terminated, in whole or in part, pursuant to any of the
provisions of this Paragraph, all rentals and other charges
payable by LESSEE to LESSOR hereunder and attributable to the
Premises taken, shall be paid up to the date upon which actual
physical possession shall be taken by the condemnor, and the
parties shall thereupon be released from all further liability in
relation thereto.
(f) Voluntary Sales: A voluntary sale by LESSOR to any
public body or agency having the power of eminent domain, either
under threat of condemnation or while condemnation proceedings
are pending, shall be deemed to be a taking under the power of
eminent domain for the purposes of this Paragraph.
25. HOLDING OVER: This Lease shall terminate and become
null and void without further notice upon the expiration of the
term herein specified, and any holding over by LESSEE after such
expiration shall not constitute a renewal hereof or give LESSEE
any rights under this Lease, except as otherwise herein provided,
LESSOR and LESSEE understand and agree that this Lease cannot be
renewed, extended or in any manner modified except in writing
signed by both parties hereto; provided, however, that nothing in
this Paragraph shall be construed to alter or impair the
-31-
/S
provisions of Paragraph 21 hereof. If LESSEE shall hold over for
any period after the expiration of said term, LESSOR may, at its
option, exercised by written notice to LESSEE, treat LESSEE as a
tenant from month -to -month commencing on the first day following
the expiration of this Lease and subject to the terms and
conditions herein contained except that the monthly payments,
which shall be payable in advance, shall be one hundred fifty
percent (150 %) of said monthly payments applicable at the date of
expiration. If LESSEE fails to surrender the Premises upon the
expiration of this Lease despite demand to do so by LESSOR,
LESSEE shall Indemnify and hold LESSOR harmless from all loss or
liability, including without limitation, any claims made by any
succeeding LESSEE founded on or resulting from such failure to
surrender.
26. ACCEPTANCE OF PREMISES BY LESSEE: By taking possession
of the said Premises, LESSEE accepts the improvements in the
condition in which they may then be, and waives any right or
claim against LESSOR arising out of the condition of the said
Premises, including the improvements thereon, the appurtenances
thereto, and the equipment thereof.
27. SCOPE OF THE AGREEMENT: This Lease is and shall be
considered to be the only agreement between the parties hereto.
All negotiations and oral agreements acceptable to both parties
are included herein.
_32_
94
28. AMENDMENT OF LEASE: No amendment or other ratification
of this Lease shall be effective unless in a writing signed by
all parties to this Lease.
29. CONSTRUCTION AND EFFECT: Time is of the essence of this
Lease. The Paragraph headings herei.n are used only for the
purpose of convenience and shall not be deemed to contain or
limit the subject matter of the Paragraphs hereof, nor to be
considered in the construction thereof. Each and all of the
obligations, convenants, conditions and restrictions of this
Lease shall insure to the benefit of and be binding upon and
enforceable against, as the case may require, the successors and
assigns of LESSOR, and subject to the restrictions of Paragraph
14 hereof, any authorized assignee, transferee, sublessee and
other successor in interest of LESSEE.
In this Lease the neuter gender includes the feminine and
masculine and the singular number includes the plural wherever
the context so requires. If more than one LESSEE is named above,
the obligation of each of such LESSEES hereunder shall be and is
joint and several.
-33-
9J
IN WITNESS WHEREOF, each of the parties hereto has
caused this Lease to be executed on the day and year first above
written.
.APPROVED AS TO FORM:
eN .k (�- 1
C-M ATTORNEY
®R 0101
-.34-
LESSOR:
Cl
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EW
LESSEE:
EDWARD HOFFMAN FLACH and
MYRTLE ELIZABETH FLACH.,
TRUSTEES OF THE FLACH FAMILY
TRUST, U/T /A DATED 10/18182,
DOING BUSINESS AS THE C4LLEY
EDWARD gqHO F FLACH, TRUSTEE
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.--d
MYPgLE ELI7. ETH FLACH, TRUSTEE
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City Council Policy F -7 — Income
Property
9.9
100
E -7
INCOME PROPERTY
The City owns and manages an extensive and valuable assortment of property
including streets, parks, beaches, public buildings and service facilities. The Citv also
owns and operates a yacht basin, a mobile home park, a luxury residential development
and various other income properties. Most of the income property is tidelands, filled
tidelands or waterfront. Unencumbered fee value of income property is estimated at
upwards of one hundred million dollars, and income typically contributes ten percent
of all City revenues.
As owner /manager of property, the City is the steward of a public trust, and state law
requires the City to maximize its returns on state - managed property or be subject to a
charge of making a gift of public funds. Nevertheless, the City Council recognizes the
importance of this property not only as a revenue generator, but also as a means to
provide otherwise unfeasible uses and facilities to benefit the community.
In managing its property, the City will continually evaluate the potential of all City
owned property to produce revenue. This may include leasing unused land., renting
vacant space, and establishing concessions in recreation areas or other ,similar
techniques. 'The City Council will evaluate the appropriateness of establishing new
income properties using sound business principles and after receiving input from
neighbors and users.
The policy of the City Council is that income property be managed in accordance with
the following:
A. Whenever a lease, management contract, concession, sale or similar action
regarding income property is considered by the City, an analysis shall be
conducted to determine the maximum or open market value of the property.
This analysis shall be conducted using appraisals or other techniques to
determine the highest and best use of the property and the highest value of the
property.
B. All negotiations regarding the lease, management contract, concession, sale or
similar action regarding income property shall include review of an appraisal or
analysis of the use being considered for the property conducted by a reputable
and independent professional appraiser, real estate consultant or business
consultant.
C. The City shall seek, whenever practical and financially advantageous, to operate
or manage all property and facilities directly with City staff or contractors.
D. In all negotiations regarding the lease, management contract, concession, sale or
similar action regarding a non- residential income property, the City shall seek
I
1D1
F -7
revenue equivalent to the open market value of the highest and best use; and,
whenever possible the City shall conduct an open bid or proposal process to
insure the highest financial return.
E. Whenever less than the open market or appraised value is received or when an
open bid process is not conducted, the City shall make specific findings setting
forth the reasons thereof.
Such findings may include but need not be limited to the following:
1. The City is prevented by tideland grants, Coastal Commission guidelines or
other restrictions from selling the property or converting it to another use.
2. Redevelopment of the property would require excessive time, resources and
costs which would outweigh other financial benefits.
3. Converting the property to another use or changing the manager,
concessionaire or lessee of the property would result in excessive vacancy,
relocation or severance costs, which would outweigh other financial benefits.
4. Converting residential property to another use or opening residential leases
to competitive bid would create recompensable liabilities and other inequities
for long -terra residents.
5. The property provides an essential or unique service to the community that
might not otherwise be provided were full market value of the property be
required.
6. The property serves to promote other goals of the City such as affordable
housing, preservation of open space or marine related services.
F. Generally, lengths of leases, management contracts, concessions or similar
agreements will be limited to the minimum necessary to meet market standards
and will contain appropriate reappraisal and inflation protection provisions.
Also, all agreements shall contain provisions to assure complete audits
periodically through their terms.
G. All negotiations regarding the lease, management contract, concession, sale or
similar action regarding income property shall be conducted by the City
Manager or his /her designee under the direction of any appropriate City
committees.
Ff. To provide an accurate accounting of actual net revenues generated by the City's
income property, all costs and charges directly attributable to the management of
2
102
F -7
a specific income property shall be debited against the gross revenues collected
on that property in the fiscal year the costs are incurred. Costs and charges
include property repairs and maintenance, property appraisals, and consultant
fees, as authorized by the City Council, City Manager or by this Income Property
Policy.
I. The City Manager or his /her designee is authorized to sign a lease, management
contract, concession or similar agreement or any amendment thereto, on behalf
of the City. Notwithstanding the foregoing, the City Manager or his /her
designee, or a City Council member, may refer any lease, management contract,
concession or similar agreement or any amendment thereto, to the City Council .
for its consideration and /or action.
Adopted - July 27,1992
Amended - Jan uary 24, 1994
Amended - February 27,1995
Amended - February 24,1997
Amended -May 26,1998
Amended - August 11, 2009
Amended - May 14, 2013
Formerly F -24
3
iO3