HomeMy WebLinkAboutC-519(Q) - West Coast Highway, 1221 (Balboa Bay Resort) - Ground Lessor's Estoppel 2013GROUND LESSOR'S ESTOPPEL
This GROUND LESSOR'S ESTOPPEL (this "Estoppel") is made as of October 29, 2013, by
THE CITY OF NEWPORT BEACH, a charter city and municipal corporation ("Lessor"), to and for
the benefit of ING LIFE INSURANCE AND ANNUITY COMPANY, a Connecticut corporation
("Lender"), in connection with a loan in the original principal amount of Fifty Million and 00/100
($50,000,000.00) Dollars ("Loan") made by the Lender to BALBOA BAY CLUB VENTURES, LLC, a
California limited liability company ("Lessee"), which Loan is secured by, among other things, a
Consolidated, Amended and Restated Leasehold Deed of Trust, Assignment of Leases, Security
Agreement and Fixture Filing ("Security Instrument") with respect to the Lessee's interest in that certain
Amended and Restated Ground Lease dated as of October 29, 2013 executed by and between the Lessor,
as ground lessor, and the Lessee, as ground lessee ("Ground Lease"), pursuant to which the Lessor has
leased to the Lessee certain real property located in the City of Newport Beach, California, and more
commonly known as 1221 West Coast Highway, Newport Beach, California (the "Leased Premises").
With the understanding that the Lender will rely upon the Lessor's statements made in this Estoppel
in making the Loan to the Lessee, the Lessor hereby represents and warrants to the Lender, as of the date
hereof, as follows:
(i) The copy of the Ground Lease attached hereto as Exhibit "A" is a true, correct and complete
copy of the Ground Lease, and there has been no assignment, amendment, modification,
extension, renewal or supplement thereto of any kind or nature.
(ii) The Lessor is the trustee of the Leased Premises on behalf of the State of California. To
the best of the Lessor's knowledge, the Leased Premises is unencumbered by any lien
(other than the lien of the Ground Lease), mortgage, or deed of trust.
(iii) The Lessor has no knowledge or notice of any adverse claim against the Leased
Premises. To the best knowledge of the Lessor, there are no mechanic's or materialmen's
liens against the Leased Premises filed or not yet filed, nor any claims for labor or
materials furnished for constructing, repairing, or improving the same which remain
unpaid.
(iv) The Ground Lease is in full force and effect, and all "Rent" (as such term is defined in
the Ground Lease), including, without limitation, all "Percentage Rent" (as such term is
defined in the Ground Lease), and any and all other payments due and owing pursuant to
the provisions of the Ground Lease have been paid through September 30, 2013.
(v) To the best knowledge of the Lessor, it has, and there are, no claims, defenses, or offsets
of any kind or character with respect to the Ground Lease, and all provisions of the
Ground Lease are in full force and effect.
(vi) To the best knowledge of the Lessor, there are no material judgments in any court in the
State of California or of any other state or in any court of the United States of America
against the Lessor remaining unpaid, unsatisfied, or uncancelled of record which are or
may be attached to the Leased Premises, and no proceedings in bankruptcy or insolvency
have been instituted by or against the Lessor.
(vii) To the best knowledge of the Lessor, the Lessor has not executed any contract or
agreement for the sale of the Leased Premises or granted to any person or entity an option
to purchase all or any portion of the Leased Premises.
(viii) To the best knowledge of the Lessor, the execution and delivery of the Ground Lease, the
performance by the Lessor of its obligations thereunder, and the consummation and
performance of the transactions contemplated thereby do not and will not violate or
constitute a default under, or conflict with or violate any provisions of any term or
provision of any indenture, mortgage, lease, deed of trust, contract, agreement or other
instrument, or of any judgment, decree, governmental order, statute, rule or regulation by
which the Lessor is bound or to which the Leased Premises is subject.
(ix) There is no action, proceeding, or investigation at law or in equity before or by any court,
public board, or body, pending or threatened, nor is the Lessor aware of or been informed
of any basis for such action, proceeding, or investigation which calls into question the
ability of the Lessor to perform its obligations under the Ground Lease or this Estoppel.
(x) No cancellation, termination, surrender, or acceptance of surrender of the Ground Lease
shall be made other than in accordance with the terms of the Ground Lease.
Amendments or modifications of the Ground Lease shall be made under the terms of the
Ground Lease.
(xi) The Lender assumes no liability or obligations under the Ground Lease, or any extension
or renewal thereof, unless or until it takes possession of the Leased Premises and then
only for such obligations arising from and after such possession date.
(xii) The Lessee took possession of the Leased Premises on or about October 25, 2000.
(xiii) The term of the Ground Lease commenced on October 29, 2013 and terminates on
October 29, 2063. At the end of the term of the Ground Lease, the Lessor shall become
the owner of the improvements located on the Leased Premises free and clear of any
encumbrances pursuant to the terms of the Ground Lease.
(xiv) The Ground Lease is unmodified except as indicated below (if none, indicate "None"):
None.
(xv) No default has occurred and no act, event, omission, or condition has occurred which,
with the giving of notice, the passage of time, or both, would constitute a default by any
party under the Ground Lease.
(xvi) As of the date of this Estoppel, the amount on deposit in the "Reserve Account" (as such
term is defined in the Ground Lease) is $0.00.
(xvii) Pursuant to Section 14.1 of the Ground Lease, the Lessor hereby consents to the Security
Instrument.
(xviii) The Loan satisfies the requirements of Section 14.1 of the Ground Lease.
(xix) The undersigned is duly authorized to execute, and has the power and authority to
execute, this Estoppel on behalf of the Lessor.
[SIGNATURES ON NEXT PAGE]
2
above.
IN WITNESS WHEREOF, the undersigned has executed this Estoppel as of the date set forth
CITY OF NEWPORT BEACH
By:
Dave i
City Manager
[END OF SIGNATURES]
EXHIBIT "A"
ATTACHED TO AND MADE A PART OF THAT CERTAIN GROUND LESSOR'S ESTOPPEL
GIVEN BY THE CITY OF NEWPORT BEACH, AS LESSOR, TO ING LIFE INSURANCE AND
ANNUITY COMPANY, AS LENDER,
DATED OCTOBER 29, 2013
Copy of Ground Lease
See Attached.
4
AMENDED AND RESTATED GROUND LEASE
by and between
CITY OF NEWPORT BEACH,
a California municipal corporation
"Landlord"
and
BALBOA BAY CLUB VENTURES, LLC.,
a California limited liability company
"Tenant"
Dated as of
2013
TABLE OF CONTENTS
Page
ARTICLE 1
DEFINITIONS, GRANT AND TERM
1.1 Definitions 2
ARTICLE II
GRANT OF LEASE AND TERM
2.1. Lease 8
2.2 Term 8
2.3 Quiet Possession 8
2.4 Ownership of Improvements 9
ARTICLE ID
CONSTRUCTION AND IMPROVEMENT OF PREMISES
3.1 Improvements to be Erected by Tenant 10
3.2 Coastal Approval and Entitlements 10
3.3 Compliance With Laws 10
3.4 Lien Free Completion 10
3.5 As -Built Drawings 11
3.6 Tenant's Architects and Contractors 11
3.7 Costs of Construction 11
3.8 Renovation and Maintenance of Hotel 11
3.9 Renovation and Maintenance of Apartments 12
3.10 Maintenance of Marina Operations 12
3.11 Inspection Rights 13
3.12 Landlord's Cooperation 13
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.1 Landlord's Representations and Warranties 13
4.2 Tenants Representations and Warranties 14
ARTICLE V
RENT
5.1 Rent 14
5.2 Percentage Rent 14
5.3 Extension Rent 16
5.4 Periodic Adjustments of Base Rent 16
TABLE OF CONTENTS
Page
5.5 Fair Market Adjustment of Base Rent 16
5.6 Payment of Rent 17
5.7 Charges for Goods and Services 17
5.8 Reconciliation of Annual Rent 17
5.9 Place for Payments of Rentals 17
5.10 Records and Reports of Sales 18
5,11 Additional Rent 19
5.12 No Abatement or Reduction in Rent 19
5.13 No Partnership Created 19
5.14 Net Lease 19
ARTICLE VI
TENANT'S OBLIGATION WITH RESPECT TO MAINTAINING PREMISES
6.1 Repairs and Maintenance 19
6.2 Taxes and Assessments 20
6.3 Capital Repairs and Replacements 20
6.4 Reserved 20
ARTICLE VII
USE OF PREMISES
7,1 Use of Premises 21
7.2 Pump -Out Station 21
7.3 Environmental Requirements 22
ARTICLE VIII
CONDUCT OF BUSINESS BY TENANT
8.1 Standards of Operation 22
8.2 Management 22
8.3 Competition by Tenant 23
8,4 Use of Name 23
ARTICLE XI
ALTERATIONS, FIXTURES AND SIGNS
9,1. Tenant's Right to Make Alterations 23
9.2 Prohibition Against Liens 23
9.3 Signs 24
TABLE OF CONTENTS
Page
ARTICLE X
INSURANCE, INDEMNITY AND CASUALTY
10.1 Insurance 24
10.2 Indemnification 28
10.3 Settlement of Insurance Claims 29
10.4 Casualty 29
10.5 Casualty Late in Term 29
10.6 No Abatement of Rent 30
ARTICLE XI
UTILITIES
11.1 Utilities 30
ARTICLE XII
EXTOPPEL CERTIFICATES
12.1 Estoppel Certificates 30
ARTICLE XIII
ASSIGNMENT AND SUBLEASING
13.1 Limitation on Right to Assign 31
13.2 Grant or Denial of Consent 32
13.3 Non -Application of Guest Rooms and Facilities 32
13.4 Assignment to Affiliate 32
13.5 Limitation on Transfer of Interest in Tenant 33
ARTICLE XIV
HYPOTHECATION
14.1 Tenant's Right to Hypothecate 33
14.2 Notice to and Rights of Mortgagees 34
14.3 Nonsubordination of Fee 37
14.4 Equipment Financing 37
14.5 Cross Collateralization of Premises 37
TABLE OF CONTENTS
Page
ARTICLE XV
WASTE AND GOVERNMENTAL REGULATIONS
15.1 Waste or Nuisance 37
15.2 Governmental Regulations 37
15.3 Tenant's Right to Contest Governmental Regulations 38
ARTICLE XVI
EMINENT DOMAIN
16.1 Lease Governs 38
16.2 Termination of Lease 38
16.3 Partial Taking; Rental Abatement 38
16.4 Partial Taking; Restoration 38
16.5 Distribution of Award 39
16.6 Allocation of Award; Partial Taking 39
16.7 Allocation of Award; Temporary Taking 39
16.8 Allocation of Award; Total Taking 39
16.9 Conduct of Proceedings 40
16.10 Notices 40
ARTICLE XVII
DEFAULT PROVISIONS
17.1 Events of Default 40
17.2 Remedies Upon Default 41
17.3 Landlord Acting for Tenant's Account 42
17.4 Limited Liability; Non -Recourse Ground Lease 42
ARTICLE XVIII
LANDLORD'S ACCESS
18.1 Landlord's Right of Access 43
ARTICLE XIX
MISCELLANEOUS
19.1 Waiver 43
19.2 Entire Lease 43
19.3 Termination of Existing Lease 43
19.4 Force Majeure 44
iv
TABLE OF CONTENTS
Page
19.5 Notices 44
19.6 Captions and Section Numbers 45
19,7 Construction of Language 45
19.8 Broker's Commission 45
19.9 Limitation of Landlord's Obligations 45
19,10 Landlord's or Tenant's Discretion 45
19.11 Interest 45
19.12 Successors 46
19.13 Applicable Law 46
19.14 Landlord's and Tenant's Rights are Cumulative 46
19.15 Saving Clause 46
19,16 Attorneys' Fees and Expenses 46
19.17 Injunctive Relief 46
19.18 Appraisal 46
19,19 Recording 46
19.20 Incorporation of Preamble, Recitals and Exhibits 46
v
AMENDED AND RESTATED GROUND LEASE
THIS AMENDED AND RESTATED GROUND LEASE ("Lease") is made as of An ,
2013 ("Commencement Date"), by and between THE CITY OF NEWPORT BEACH, a charter
city and California municipal corporation ("Landlord" or "City"), and BALBOA BAY CLUB
VENTURES, LLC, a California limited liability company ("Tenant"). Landlord and Tenant are at
times individually referred to as "Party" and collectively as "Parties" herein.
RECITALS
A. Landlord is grantee of that certain parcel of real property located in the City of Newport
Beach, County of Orange, State of California, as more particularly described and
depicted in Exhibit A attached hereto and incorporated by reference herein
("Premises"), Pursuant to the provisions of the Beacon Bay Bill (Chapter 74 of Statutes
of 1978, as amended).
B. Tenant is currently occupying and in possession of the Premises pursuant to that certain
Lease between Landlord, as lessor, and Tenant, as lessee, dated October 25, 2000
("Existing Lease"). The Premises are operated as a multi -use hotel and club facility by
Tenant, operating under the name "Balboa Bay Club". Tenant is a wholly -owned
subsidiary of International Bay Clubs, LLC.
C. On November 3, 1992, a majority of the electors of the City of Newport Beach approved
Measure M which authorized the City Council of the City of Newport Beach to lease
tidelands and waterfront property consistent with the provisions of State Law.
D. The California State Lands Commission has determined that this Lease conforms with
the provisions of relevant statutes, rules and regulations and has approved this Lease.
E. The City Council of the City of Newport has determined that this Lease is consistent with
the Charter of the City of Newport Beach, and its General Ran and Zoning Ordinance
applicable thereto, and all other applicable State, federal and local laws.
F. The City Council of the City of Newport Beach has determined that it is in the best
interests of citizens of the City of Newport Beach to maintain the use and character of
the Premises for the general uses permitted thereon by the current General Plan and
Zoning Ordinances of the City applicable thereto, and to enter into this Lease under the
terms and conditions set forth herein.
G. Landlord and Tenant acknowledge and agree that there exists no event of default under
the Existing Lease as of the date hereof.
Landlord and Tenant waive all notice and other applicable provisions and hereby
terminate the Existing Lease.
Landlord and Tenant agree that this Lease fully complies with and completely satisfies
the obligations of Landlord and Tenant under all prior agreements and understandings,
including the Existing Lease.
NOW, THEREFORE, in consideration of the mutual covenants contained herein and other good
and valuable consideration, the receipt of which is hereby acknowledged, the Parties hereto
agree as follows:
ARTICLE I
DEFINITIONS, GRANT AND TERM
1.1 Definitions. For purposes of this Lease, the following definitions shall apply:
"Accounting Period" means a calendar quarter,
"Affiliate" means any individual, corporation, partner, partnership, limited liability company, trust
or other entity which directly or indirectly controls, is directly or indirectly controlled by or is
under common control, whether it be direct or indirect, with the specified entity.
"Apartment Revenues" means Gross Revenues derived by the Tenant Parties from the rental
of apartments within the Project, whether for transient or long-term occupants, plus any portion
of any Award made on account of a temporary Taking allocated to "Apartment Revenues"
pursuant to Section 16.7 of this Lease.
"Business Day' means Monday through Friday, except for state or federal holidays.
"Calendar Year" means the period of January 1 through December 31 of each year of the
Term.
"Charter Commission Revenues" means Gross Revenues derived by the Tenant Parties from
commissions received for arranging boat charters of bay or ocean going vessels for guest trips
and special purpose occasions, including Newport Harbor cruises, whether or not such charters
depart from or arrive at the Premises, plus any portion of any Award made on account of a
temporary Taking allocated to "Charter Commission Revenues" pursuant to Section 16.7 of this
Lease.
"Charter Revenues" means Gross Revenues derived by the Tenant Parties from operating or
managing the boat charters of bay or ocean going vessels for guest trips and special purpose
occasions, including Newport Harbor cruises, whether or not such charters depart from or arrive
at the Premises, plus any portion of any Award made on account of a temporary Taking
allocated to "Charter Revenues" pursuant to Section 16,7 of this Lease,
"City" means the City of Newport Beach, located in the County of Orange, State of California, a
charter city formed pursuant to the laws of the State of California. References in this Lease to
the City (as distinguished from Landlord) are intended to distinguish actions, rights and powers
of the City in the exercise of its municipal and legislative powers and authority and the discharge
of its legislative and municipal responsibilities from the actions of Landlord pursuant to this
Lease. This Lease shall not limit, preclude or infringe upon the municipal and legislative powers
and authority of the City or the discharge of its legislative and municipal responsibilities, whether
or not any of such actions, authority, powers or responsibilities, are discretionary, administrative
or mandatory under law.
"Commencement Date" means the date set forth in the introductory paragraph of this Lease.
2
"Control", "Controlled by" or "Controlling" means the possession, direct or indirect, of the
power to direct or cause the direction of the management and policies of an entity whether
through ownership of an interest therein, through ownership of voting securities, by contract or
otherwise.
"Constituent Member" means any constituent partner, joint venture, holder of a beneficial
interest or shareholder in Tenant or in any partnership, joint venture, trust or corporation holding
a direct or indirect interest in Tenant.
"County" means the County of Orange, State of California.
"Default Rate" means the then Prime Rate plus five percent (5°l0) per annum. The Default Rate
shall change as and when the Prime Rate shall change.
"Dry Storage Revenues" means Gross Revenues derived by the Tenant Parties from the dry
storage of small boats on the Premises on behalf of guests, members and other persons, plus
any portion of any Award made on account of a temporary Taking allocated to "Dry Storage
Revenues" pursuant to Section 16.7 of this Lease.
"Dues Revenues" means Gross Revenues derived by the Tenant Parties from membership
dues and fees for membership in or use of the club, spa, recreational facilities or beach at the
Project (exclusive of security deposits), and Bay Window Magazine subscriptions and sales,
plus any portion of any Award made on account of a temporary Taking allocated to "Dues
Revenues" pursuant to Section 16.7 of this Lease; provided, however, that charges for or
income derived from any services or facility included in any other category of percentage Rent,
such as, by way of example and not limitation, food and beverage revenues or rental of guest
rooms, shall not be included in Dues Revenues.
"Event of Default" means the occurrence of any of the events listed in Section 17.1 and the
expiration of any applicable notice and cure period provided in said Section.
"Food and Beverage Revenues" means Gross Revenues derived by the Tenant Parties from
the sale of food and beverages (including food and beverages from all facilities, off -premises
food and beverage sales, cover charges, service charges and miscellaneous banquet revenue),
plus any portion of any Award made on account of a temporary Taking allocated to "Food and
Beverage Revenues" pursuant to Section 16.7 of this Lease, but shall not include (i) the value of
gratis meals furnished to Tenant's employees as an incident of their employment, (ii) gratuities
paid to employees, and (iii) the value of meals provided in connection with charitable events
when no Tenant Party receives payment therefore other than by reason of a charitable
contribution.
"Force Majeure" means, without limitation, such events as: strikes; lockouts; acts of God;
inability to obtain labor, materials, equipment of supplies; breaches of contract by contractors,
subcontractors or materials suppliers which materially affect the critical path of construction of
the improvements contemplated by this Lease; breaches of contract by any lender with a lien on
the Project which materially affect the critical path of construction of the improvements
contemplated by this Lease (but in no event shall such event of Force Majeure result in any
permitted delay in performance by Tenant of any obligation under this Lease by a period in
excess of six (6) months); governmental restrictions; moratoriums, initiatives, referenda imposed
by or occurring within the County or other governmental agency which now or hereafter has
jurisdiction over the Premises; war or enemy action or invasion; civil commotion; insurrection;
riot; mob violence; malicious mischief or sabotage; unusual failure of transportation; fire or any
other casualty; flood; earthquake; unusually adverse weather conditions; a Taking; any litigation
or other judicial or administrative proceeding or the passage, promulgation or application of any
law, order or regulation of any governmental, quasi-govemmental, judicial or military authority;
either Party's delay in responding to the other Party's request for approval or consent which the
requesting Party is required to obtain hereunder beyond the period of time the responding Party
is given under this Lease to respond; or other similar causes beyond the control of the delayed
Party; any of which has the effect of delaying, hindering or preventing such Party's performance
of its obligations hereunder. If the event of Force Majeure arises out of a Party's delay in
responding to the other's request for consent or approval, then the delayed Party shall notify the
other Party of such event of Force Majeure promptly after the delayed Party has knowledge that
such delay will or may occur as a result thereof, and the delayed Party shall use reasonable
efforts to minimize the effects thereof. With respect to the occurrence or threat of any event of
Force Majeure, the delayed Party agrees to notify the other Party promptly after the delayed
Party has knowledge that such event of Force Majeure may or will occur.
"Furnishing(s)" means all furniture, furnishings, fixtures and equipment used in the operation of
the Project, including: all wall coverings, draperies, blinds, shades, shutters ad other window
coverings, curtain rods, valances and other window treatments; tapestries, paintings, art and
sculpture; carpets, rugs and other floor coverings; bar, saloon, lounge, dining, banquet, meeting
and guest room furniture and furnishing; laundry, valet and dry cleaning equipment; office and
material handling equipment and machinery; maintenance, janitorial, cleaning and engineering
equipment; all kitchen equipment and facilities (whether or not permanently attached), and
machinery equipment and furnishings used in food and beverage storage, preparation, heating
and refrigeration; and all trade fixtures.
"Gross Revenues" means all gross receipts of every kind and nature, whether for cash, credit
or barter, from any business, use or occupation, or any combination thereof, transacted,
arranged or performed, in whole or in part, on, from or for services from the Premises, whether
operated by the Tenant or by a sublessee, licensee or concessionaire if such sublessee,
licensee or concessionaire is an Affiliate of Tenant for Room Revenues, Food and Beverage
Revenues, Apartment Revenues, Marina Revenues, Dry Storage Revenues, Charter Revenues,
Charter Commission Revenues, Dues Revenues, Retail Revenues and Miscellaneous
Revenues, In the computation of Gross Revenues for any of the abovementioned categories
thereof, there shall be excluded therefrom the following amounts: (i) rebates, refunds and
discounts (exclusive of credit card discounts or commissions paid to a credit card system) to
customers given in the ordinary course of obtaining such revenues; (ii) excise, sales and use
taxes collected directly from patrons or guests or as a part of the sales price of any goods or
services, such as gross receipts, admission, cabaret or similar taxes, which are accounted for
by Tenant to any governmental agency; (iii) income or interest derived from cash, securities and
other property acquired and held for investment by Tenant (including income or interest earned
on any amounts held in operating or replacement reserves for the Project); (iv) proceeds of
insurance other than business interruption or rental loss insurance, (v)up to five percent (5%) of
Tenant's advertising, promotional or charitable billings not actually charged or paid; and (vi) bad
or uncollectible debts. Sales upon credit shall be considered cash sales and shall be included
in the gross receipts for the period during which the goods or services are delivered or
performed. All Gross Revenues shall be computed without deduction or allowance for costs,
charges or expenses for the purchase, sale, transportation or delivery of merchandise or
4
services, or for labor and materials in connection with the rendering of services or the sale of
goods.
"Hazardous Material" means any flammable explosives, asbestos, asbestos containing
materials, radioactive materials, hazardous wastes, petroleum polychlorinated byphenyls, toxic
substances or related injurious materials, whether injurious by themselves or in combination
with other materials, "hazardous waste," "extremely hazardous waste" or "restricted hazardous
waste" as defined in Chapter 6.5 of Division 20 (Sections 25100 et seq.) of the California Health
Safety Code, as amended, or any successor statute, (b) "hazardous substance" as defined in
the Comprehensive Environmental Response, Compensation, and Liability Act (42 U.S.C.
Sections 9601 et seq.), as amended, or any successor statute, (c) "hazardous material" as
defined in the Hazardous Materials Transportation Act (49 U.S.C. Sections 1801 et seq.), as
amended, or any successor statute, (d) "hazardous waste," "sludge," "used oil," "recycled oil,"
and "re -refined oil" as defined in the Resource conservation and Recovery Act of 1976 (42
U.S.C. Sections 6901 et seq.), as amended, or any successor statute, (e) "hazardous
substance" as defined in the Carpenter -Presley -Tanner Hazardous Substance Account Act,
Chapter 6.8 of Division 20 (Sections 253 et seq.) of the Califomia Health and Safety Code, as
amended, or any successor statute, (f) "hazardous substance' as defined in Chapter 6.7 of
Division 20 (Sections 25280 et seq.) of the California Health and Safety Code, as amended, or
any successor statute, (g) "hazardous material," "hazardous substance" or "hazardous waste"
as defined in Chapter 6.9 of Division 20 (Sections 25501 et seq.) of the California Health and
Safety Code, as amended, or any successor statute, (h) "hazardous substance" as defined in
the Clean Water Act (33 U.S.C. Sections 1251 et seq.), as amended, or any successor statute,
or (i) any substance, materials or wastes now or in the future listed in (1) the United States
Department of Transportation Hazardous Materials Table (49 C.F.R. Section 172.101), as
amended or any successor; (2) the Environmental Protection Agency list (40 C.F.R. Part 302),
as amended or any successor; (3) the list published in Title 26 of the California Administrative
Code, as amended or any successor; or (4) any other list published by City or any federal or
state governmental entity now or in the future.
"Hazardous Material Activity" means any storage, holding, release, emission, discharge,
generation, abatement, disposition, handling or transportation of any Hazardous Material from,
on or otherwise relating to the Premises exclusive of use of minor quantities of Hazardous
Materials in the ordinary course of business in compliance with applicable law.
"Inventories and Supplies" means inventory and supply items, including chinaware, linens,
silverware, utensils, uniforms, office supplies, paper supplies, guest room supplies, cleaning
supplies and other consumable supplies, food and beverage inventories and goods held for
resale or used or intended for use in connection with the conduct of Tenant's business on the
Premises,
"Lease Interest Rate" means the then Prime Rate plus two percent (2%) per annum. The
Lease Interest Rate shall change as and when the Prime Rate shall change.
"Leasehold" means the leasehold estate created by the terms and subject to the conditions of
this Lease.
"Marina Revenues" means Gross Revenues derived by the Tenant Parties from the rental of
boat slips and temporary dock or slip fees and charges (exclusive of utility reimbursements paid
5
by slip renters) plus any portion of any Award made on account of a temporary Talking allocated
to "Marina Revenues" pursuant to Section 16.7 of this Lease.
"Miscellaneous Revenues" means all Gross Revenues derived by the Tenant Parties from the
Project excepting those receipts previously categorized under Apartment Revenues, Charter
Revenues, Charter Commission Revenues, Dry Storage Revenues, Dues Revenues, Food and
Beverage Revenues, Marina Revenues, Retail Revenues and Room Revenues derived from the
Project, including but not limited to sales from gift and other shops, rentals or agreements for
other guest services, vending machines revenues, any revenue or income related to telephone
and telecommunication operations any revenue or income related to cable or video television
operations, parking charges or fees, proceeds of business interruption or rental loss insurance
(net of Tenant's reasonable costs of settling the claim giving rise to such proceeds with the
insurance carrier), plus any portion of any Award made on account of a temporary Taking
allocated to "Miscellaneous Revenues" pursuant to Section 16.7 of this Lease, plus all rentals or
other payments from sublessees, licensees or concessionaires who are not Affiliates of Tenant,
and any other Gross Revenues which may be received from time -to -time which are not
specifically provided for in the categories described in apartment Revenues, Charter Revenues,
Charter commission Revenues, Dry Storage Revenues, Dues Revenues, Food and Beverage
Revenues, Marina Revenues, Retail Revenues and Room Revenues.
"Mortgage" means any deed of trust, mortgage or similar security instrument entered into by
Tenant encumbering the leasehold estate created by this Lease, as permitted by the Lease,
including an assignment of this Lease as security therefor,
"Mortgagee" means the holder of or beneficiary under a Mortgage.
"Partial Taking" means a Taking which does not constitute a total Taking or a Temporary
Taking,
"Percentage Rent" means the rental calculated in accordance with Section 5.2 of this Lease.
"Premises" means the parcel of land located in the City of Newport Beach, County of Orange,
State of California, as more fully defined in Recital "A' of this Lease.
"Prime Rate" means the prime or base rate or interest or equivalent rate of interest, however
termed, as announced from time -to -time and as so identified by Bank of America. "Prime Rate"
means the prime or base rate of interest, or equivalent rate of interest, however termed, as
announced from time -to -time as so identified by the Wall Street Journal if at any time Bank of
America shall fail or cease to publish and announce a prime or base rate of interest.
"Project" means all improvements, elements and features constructed or to be constructed on
the Premises, including a private membership club, hotel, rental apartments, boat slips, spa and
health club, food and beverage facilities, recreational facilities, parking facilities, and all other
amenities and services customarily found in projects in Southern California of the type, size and
quality described herein.
"Qualified Manager' means, as to the hotel portion of the Project, during any time the hotel
portion of the Project is being managed by Tenant or an Affiliate, an individual employed by
Tenant or such Affiliate who is an experienced hotel operator with a good reputation for honesty
and integrity and who has not less than ten (10) years experience in the operation and
6
management of first class hotel facilities; and during any time the hotel portion of the Project is
being managed on behalf of Tenant by an independent operator under a management contract,
a regionally recognized hotel operator of first-class resort hotels of the type, size and quality of
the hotel portion of the Project, who has the financial ability to perform its obligations under a
conventional management agreement for the management and operation of the hotel portion of
the Project, who enjoys a reputation for honesty and integrity, who is experienced in the
management and operation of hotels meeting the first-class standards of the Project. As to the
restaurant portions of the Project, a "Qualified Manager" means, a Qualified Manager of the
hotel portion of the Project, or during any time the restaurant portion of the Project is being
managed by the Tenant or an Affiliate, an individual employed by Tenant or such Affiliate who is
an experienced restaurant operator with a good reputation for honesty and integrity and who
has not less than ten (10) years experience in the operation and management of first class
restaurant facilities; and during any time the restaurant portions of the Project is being managed
on behalf of Tenant by an independent operator under a management contract, a regionally
recognized restaurant operator of first-class restaurants of the type, size and quality of the
restaurant portions of the Project, who has the financial ability to perform its obligations under a
conventional management agreement for the management and operation of the restaurant
portions of the Project, who enjoys a reputation for honesty and integrity, and who is
experienced in the management and operation of restaurants meeting the first-class standards
of the Project.
"Reserve Account" shall have the meaning ascribed to it in Section 6.3.
"Retail Revenues" means Gross Revenues derived by the Tenant Parties from the sale of
goods and services from retail shops, including clothing and other soft goods, hair and beauty
salons, gift and sundries shops, plus any portion of any Award made on account of a temporary
Taking allocated to "Retail Revenues" pursuant to Section 16.7 of this Lease.
"Room Revenues" means Gross Revenues derived by the Tenant Parties from the rental, or
any other fee or charge in connection therewith, of hotel rooms intended for overnight
accommodations upon the Premises, meeting rooms and similar facilities, including revenues
derived from telephone, telex, facsimile and other such equipment and facilities, plus any
portion of any Award made on account of a temporary Taking allocated to "Room Revenues"
pursuant to Section 16.7 of this Lease.
"Taking" means any acquisition of or damage to all or any portion of the Premises, or any
interest therein or right accruing thereto, pursuant to or in anticipation of the exercise of the
power of condemnation or eminent domain, or by reason of the temporary requisition of the use
or occupancy of the premises, or any part thereof, by any governmental or quasi -governmental
authority, civil or military, or any other agency empowered by law to take property in the State of
California under the power of eminent domain.
"Tenant" means the person or entity owning the Leasehold estate created by this Lease.
"Tenant's Investment" has the meaning ascribed to it in Section 2.4.
"Tenant Parties" means Tenant and any and all of its Affiliates.
"Temporary Taking" means a Taking for a temporary period or use of the Premises or the
Project or any portion thereof.
7
"Term" has the meaning ascribed to it in Section 2.2.
"Total Taking" means a Taking of all of the Premises and the Project other than for a temporary
purpose; or a Taking of so much of the Premises or the Project as to render the balance of the
Premises unsuitable for the operation of the Project in the manner set forth in this Lease.
ARTICLE 11
GRANT OF LEASE AND TERM
2.1 Lease. In consideration of the covenants to be observed and performed by
the parties hereunder, Landlord hereby leases to Tenant, and Tenant hereby hires from
Landlord, the Premises. Landlord reserves all oil, oil rights, gas, minerals, mineral rights,
natural gas rights and other hydrocarbon substances in and under the Premises and the right to
grant and transfer the same, together with all necessary and convenient rights to explore for,
develop, produce and extract and take the same, subject to the express limitation that any and
all operations for the exploration, development, production, extraction and taking of any such
substance shall be carried on at levels below the depth of five hundred feet (500') from the
surface of the land by means of wells, derricks and other equipment from surface locations on
adjoining or neighboring land so long as such activities do not interfere with or impair the
operation, business or aesthetics of the Project, and subject further to all restrictions and
regulations concerning the drilling for, and production of, oil, gas, minerals, petroleum and other
hydrocarbon substances specified in the Newport Beach City Charter or the Newport Beach
Municipal Code.
2.2 Term. The term ("Term") of this Lease shall commence on the
Commencement Date and shall expire upon the fiftieth (50th) anniversary thereof ("Expiration
Date"), unless sooner terminated as herein provided.
2.3 Quiet Possession.
(a) Tenant shall be entitled to peaceably and quietly use and enjoy the Premises
for the Term, without hindrance or interruption by Landlord (other than in exercise of
Landlord's rights should Tenant be in breach or default hereunder) or any other person
or persons claiming by, through or under Landlord. Landlord shall in no event be liable
in damages or otherwise, because of the interruption or termination of any service
provided by the City (such as, water or sewer service), or a termination, interruption or
disturbance of any service attributable to any act or neglect of Tenant or its servants,
agents, employees, licensees, business invitees, or any person claiming by, through or
under Tenant; provided, however, Tenant's obligations hereunder, other than its
obligation of pay Rent in accordance with Article V, shall be excused to the extent such
interruption or termination interferes with the performance by Tenant of its obligations
hereunder.
(b) Tenant has satisfied itself, by its own investigation and research, regarding
all physical conditions affecting Tenant's use and enjoyment of the Premises and
construction of the Project on the Premises (including soil conditions and on -site and off -
site improvements which may be needed). By execution of this Lease, Tenant shall be
deemed to have accepted the Premises in an "AS IS" condition. Tenant acknowledges
8
that it has had the advice of such independent professional consultants and experts as it
deems necessary in connection with its investigation of the Premises, has (to the extent
it deems necessary) independently investigated the condition of the Premises, including
the soils, hydrology and seismology thereof, and the laws and regulations relating to the
construction and operation of the Project on the Premises, including environmental,
zoning and land use entitlement requirements and procedures, height restrictions, floor
area coverage limitations, and similar matters, and has not relied upon any statement,
representation or warranty of Landlord of any kind or nature in connection with its
decision to execute and deliver this Lease and its agreement to perform the obligations
of Tenant hereunder. In connection with the matters set forth in this Section 2.3(b)
Tenant acknowledges that it (or its affiliated predecessors in interest) has been in
possession and occupancy of the Premises under the Existing Lease and predecessor
leases since 1948, and Tenant is fully familiar with the condition of the Premises. As
between Landlord and Tenant, Tenant shall be solely responsible for any condition on
the Premises which may interfere with the construction, operation or maintenance of the
Project.
2.4 Ownership of Improvements. Except as hereinafter provided,
Tenant shall be the owner of all improvements presently existing or hereafter
constructed by Tenant upon the Premises (as the same may be altered, expanded
and/or improved from time to time), and all Furnishings, Inventories and Supplies and all
other personal property located on the Premises or in the Project (hereinafter referred to
collectively as the "Tenant's Investment"). Tenant shall retain all rights to depreciation
deductions and tax credits arising from its ownership of the Tenant's Investment. At any
time during the Term, upon Tenant's request therefor, and within a reasonable period of
time following said request, Landlord agrees to confirm, in writing, that Landlord has no
present possessory interest in any part of the Tenant's Investment. Following the
expiration or earlier termination of this Lease, all improvements constituting fixtures to
the Premises that cannot be removed without causing damage to the Project shall
automatically revert to and become the property of Landlord without compensation or
payment to, or requirement of consent or act of, Tenant, and Tenant shall thereafter
have no further rights thereto to interest therein, including any rights to depreciate
deductions or tax credits with respect thereto. Following the expiration or any earlier
termination of this Lease, Tenant shall retain its ownership in all items of personal
property comprising a portion of Tenant's Investment which may be removed without
causing damage to the Project; provided, however, if Tenant fails to remove the same
within thirty (30) calendar days following the expiration or earlier termination of this
Lease, any part of Tenant's Investment remaining on the Premises after said thirty (30)
calendar day period had expired shall become the sole property of Landlord without
compensation or payment to, or requirement of consent or act of, Tenant, and Tenant
shall thereafter have no further rights thereto or interest therein. Upon the expiration or
earlier termination of this Lease for any reason, Tenant shall surrender the Premises
and the Project to Landlord in good condition and repair, reasonable wear and tear,
casualty, and acts of God excepted. Furthermore, at such time, Tenant shall surrender
all keys to any and all parts of the Project to Landlord and shall inform Landlord of all
combinations of locks, safes and vaults, if any, in the Project or elsewhere on the
Premises. Tenant agrees to execute, acknowledge and deliver to Landlord any
9
instruments reasonably requested by Landlord to carry out the intention of this Section
2.4. Tenant's obligations and Landlord's rights under this Section 2.4 shall survive the
expiration or earlier termination of this Lease. Notwithstanding any other provision of
this Lease, as permitted by California Public Resources Code Section 6312, or any
successor statute, the Parties agree that upon expiration or earlier termination of this
Lease the City shall have no liability or obligation to pay compensation for any
improvements made to the Premises.
ARTICLE III
CONSTRUCTION AND IMPROVEMENT OF PREMISES
3.1 Reserved.
3.2 Coastal Approval and Entitlements. Tenant acknowledges and represents
that it has obtained a Coastal Development Permit (as such term is used in the certified land
use plan encompassing the Premises and approved by the California Coastal Commission) for
the Project, and to the extent not already obtained, Tenant shall, at its sole cost and expense,
apply for, process and use its best efforts to obtain all other approvals (including environmental
approvals) and use permits or variance required under applicable law for the construction and/or
operation of the Project.
3.3 Compliance With Laws. Subject to its right to contest as contained in
Section 15.3 below, Tenant shall cause any subsequent improvements on the Premises, to be
constructed and completed in substantial accordance with all applicable laws, ordinances,
resolutions, plans, permits, conditions, rules, regulations and orders of all governmental
authorities having jurisdiction over the Premises, construction of improvements thereon, or the
conduct of Tenant's business there at. Upon request of Landlord, Tenant shall furnish Landlord
with copies of any or all certificates and approvals relating to any work or installation done by
Tenant that may be required by any governmental authority or by all applicable underwriters and
insurers.
3.4 Lien Free Completion. Tenant agrees that any alterations, renovations, or
improvements to the Project shall be constructed free of liens for labor and materials, using
quality materials and workmanship, and substantially in accordance with City approved plans
and all applicable underwriters and insurance requirements, zoning regulations, building codes
and requirements of any governmental authority having jurisdiction over the Premises. Tenant
shall promptly discharge any such lien or claim of lien made or filed against the Premises:
provided, however, that Tenant shall have the right to contest in good faith and with reasonable
diligence the amount or validity of any such lien or claim of lien so long as Tenant shall provide
Landlord, at Tenant's sole cost and expense with such bond or other security as Landlord may
reasonably require to insure payment thereof and prevent any sale, foreclosure or forfeiture of
all or any part of the Premises. Tenant shall notify Landlord in writing of any and all liens and
claims of lien made or filed against the Premises within fifteen (15) calendar days after Tenant
becomes aware of the filing thereof, Tenant shall immediately satisfy any final judgment or
decree and cause the lien to be discharged. Any judgment shall be deemed final for the
purposes of this provision unless enforcement thereof is stayed pending appeal. If Tenant fails
promptly to discharge liens or claims of lien, or to contest such liens or claims of lien and in
connection therewith provide the security required under this Section 3.4 or, after having
complied with the provisions of this Section 3.4, there is an adverse order, judgment, decree or
10
award with respect to Tenant or Landlord and Tenant fails to satisfy the final judgment, order,
decree or award and cause the lien to be discharged, Landlord, following reasonable written
notice to Tenant, may, in its sole discretion, procure the release and discharge of any such lien
and any judgment or decree thereon and, in furtherance thereof, may in its reasonable
discretion, effect any settlement or compromise. All amounts reasonably expended by Landlord
in connection with the provisions of this Section 3.4 (including attorneys fees, charges and
expenses), together with interest thereon as the Default Rate from the date of expenditures to
the date of reimbursement, shall be payable by Tenant with five (5) calendar days following
demand therefore. Upon completion of any work of improvements to the Project and expiration
of all applicable lien periods, Tenant shall provide Landlord with an updated preliminary title
report to Landlord that such work on improvements and construction has been completed and
that there are no outstanding mechanics lien claims which have not been otherwise cured as
provided hereinabove.
3.5 As -Built Drawings. Upon completion of any work under this Article, Tenant
shall furnish Landlord with a set of drawings and specifications for all completed construction
hereafter occurring on the Premises which accurately reflect the nature and extent of all work
done on or to the Premises after the date hereof, and, where such drawings and specifications
are prepared in connection with any work or improvement contemplated in this Lease, any
existing improvements on the Premises all marked to show such construction "as built."
3.6. Tenant's Architects and Contractors. All improvements and landscaping
(other than minor seasonal plantings) on the Premises and any subsequent repairs, alterations,
additions or improvements to any of the foregoing shall be designed, selected or constructed, as
applicable, by qualified and licensed (where required) architectural, design, engineering and
construction firms selected by Tenant.
3.7 Costs of Construction. Tenant shall bear all costs and expenses
associated with the design, construction, maintenance, fumishing, equipping and supplying of
the Project, which costs and expenses include without limitation: (i) utility hook-up and
connection feels and all distribution facilities, conduits, pipelines and cables required in
connection with the development of the Project; (ii) all design, engineering, financing and
construction costs; and (iii) all necessary use permits or variances, and all grading, building and
like permits required to construct and operate the Project, including the Coastal Development
Permit and any fees assessed on the Premises by any governmental, or quasi -governmental
agency or authority in connection with any regional transportation or other public improvements
and school district taxes, development fees and assessments.
3.8 Renovation and Maintenance of Hotel. Subject to Sections 10.4 and 10.5
hereof, Tenant shall maintain the hotel component of the Project, and each part thereof, and the
furniture, fixtures, appliances and personal property used in connection therewith, in a condition
of repair and maintenance at least comparable to other first class hotels in the Newport Beach
area (such as, on the date hereof, the Marriott Fashion Island).. From time -to -time, but no more
frequently than once in any consecutive six (6) month period, upon request of Tenant, Landlord
shall provide an estoppels certificate to Tenant certifying whether, in the opinion of Landlord, the
Project, and each part thereof, and the furniture, fixtures, appliances and personal property
used in connection therewith, has or has not been maintained in a condition of repair and
maintenance at least comparable to other first class hotels in the Newport Beach area as of the
date of such certificate. Tenant shall maintain the hotel with not less than one hundred forty
(140) guest rooms and all related facilities necessary or desirable to achieve the standard
11
contemplated in this Lease, including food and beverage services, banquet, conference and
meeting facilities, restaurants, sundries and gift shops, and spa and health club; provided
however, if during the Term, Tenant reasonably determines that maintenance of such number of
guest rooms or related facilities is not as economically advantageous as some permitted use,
Tenant shall be entitled to reduce the number of required guest rooms or related facilities to
allow for such other permitted uses so long as there is no material reduction in economic
benefits accruing to Landlord or the City from the Project by reason of such change in use:
provided, however, in no event may the number of hotel rooms be reduced below one hundred
twenty-five (125) without the prior written consent of Landlord, which consent shall not be
unreasonably withheld or delayed.
3.9 Renovation and Maintenance of Apartments. Tenant shall maintain the
apartment component of the Project, and each rental unit therein, and the furniture, fixtures,
appliance and personal property used in connection therewith, in a condition of repair and
maintenance comparable to other quality apartment rentals in the Newport Beach area.. Tenant
shall, from time -to -time as each apartment unit is leased, but not less frequently than once
every five (5) years during the Term hereof, renovate each apartment unit to maintain such
quality by cleaning and/or replacing the carpeting, floor coverings and/ or window coverings as
reasonably required and painting the unit interior walls. Subject to Sections 10.4 and 10.5,
Tenant shall maintain and operate the Terrance Apartment building as apartment units available
for rental at all times during the Term in a manner consistent with the provisions of the Beacon
Bay Bill.
3.10 Maintenance of Marina Operations. Tenant shall maintain the marina
facilities, and the fixtures, appliances and personal property used in connection therewith, in a
condition of repair and maintenance at least comparable to comparable quality of marina
operations in Newport Harbor throughout the Term.. Tenant shall maintain and operate slips of
varying number and length for rental throughout the Term to the general public who are
members of the Balboa Bay Club, and shall make such slips available for rental at comparable
rental rates for comparably sized and maintained marina facilities in Newport Harbor from time -
to -time during the Term. Tenant shall be entitled to fluctuate the number of slips and to vary
configuration or operation, in order to increase the revenue generated by the marina operations;
provided that any proposed reduction in the number of slips or reconfiguration of the design or
layout of the marina shall be submitted to the City for its prior written approval. Tenant shall not
enter into rental or leasing agreements for boat slips (i) for a term of longer than one (1) year
unless such agreements have provision for adjustment of rent to full fair market rental value not
less often than each year, or (ii) with any person for a discounted or reduced rental below
comparable rental rates of the slip based upon membership in any club, facility or business
arrangement between tenant, or any affiliated entity, and a renter of a slip.
3.11 Inspection Rights. Not more than once in any calendar year, Landlord
shall have the right to conduct a physical inspection of the condition of the hotel, apartments,
and marina facilities to insure Tenant's compliance with its maintenance and repair obligations
set forth in this Article III. Unless otherwise agreed to by Landlord and Tenant, such inspection
shall take place within sixty (60) calendar days of the due date for the annual forecast of
budgeted capital improvements, replacements, repairs and maintenance pursuant to Section
5.10(f) herein, with the exact dates to be determined by Landlord and Tenant after consultation.
Landlord shall have the right to conduct a physical inspection, consisting of a visual review of all
of the common areas of the hotel, the marina and the apartments, and a representative number
of hotel rooms and apartments, depending upon availability.
12
3.12 Landlord's Cooperation. Landlord shall cooperate with Tenant in all of
Tenant's efforts to construct, operate and maintain the Project as set forth in this Article III, and
shall execute such applications and other undertakings as shall be reasonably required in its
capacity as the owner of the Premises to enable Tenant to file for and obtain all building
permits, licenses, variances, permissions and consents necessary to construct, operate and
maintain the Project and otherwise to perform its activities under this Article III; provided,
however, that nothing herein shall imply any obligation inconsistent with or result in any
diminution of City's legislative, quasi-judicial or administrative rights, obligations and
prerogatives in connection with reviewing and approving any license, permit for entitlement for
the development, construction or use of the Premises.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.1 Landlord's Representations and Warranties. As material inducement to
Tenant to enter into this Lease, Landlord represents and warrants the following as of the date
hereof:
(a) Power and Authority, That City is a municipal corporation duly organized,
validly existing and in good standing under the laws of the State of California; that City
has all necessary power and authority to enter into this Lease and to carry out the
transactions contemplated herein: and that the execution and delivery hereof and the
performance by Landlord of Landlord's obligations hereunder will not violate or constitute
an event of default under the terms and provisions of any agreement, ordinance,
regulation, lease, law or court order to which Landlord is a party or by which Landlord is
bound the remedy for which default would have a material adverse effect on Landlord's
ability to perform its obligations hereunder.
(b) Authorization; Valid Obligation. That all actions required to be taken by or
on behalf of Landlord to authorize it to execute, deliver and perform its obligations under
this Lease have been taken, and that this Lease is a valid and binding obligation of
Landlord enforceable in accordance with its terms, except as the same may be affected
by bankruptcy, insolvency, moratorium or similar laws, or by legal or equitable principles
relating to or limiting the rights of contracting parties generally.
(c) Executing Parties. That the persons executing this Lease on behalf of
Landlord have full power and authority to bind Landlord to the terms hereof.
(d) Possessory Rights. Landlord has no knowledge that anyone has any right
to occupy, possess or use the Premises, or any part thereof, other than Tenant under
the Existing Lease, rights imposed as a condition of approval of the construction or
operation of the Project by governmental authorities having jurisdiction over the
Premises, rights derived as a matter of law by virtue of the Premises being tidelands,
and any person deriving such rights by agreement or conduct of Tenant.
(e) Actions, Suits or Proceedings. Landlord has no knowledge of any actions,
suits or proceedings pending or threatened before any commission, board, bureau,
agency instrumentality, arbitrator(s), court or tribunal that would affect the Premises or
the right of Tenant to occupy or utilize same.
13
4.2. Tenant's Representations and Warranties, As a material inducement to
Landlord to enter into this Lease, Tenant represents and warrants the following as of the date
hereof:
(a) Power and Authority. That Tenant is a limited liability company duly
organized, validly existing and in good standing under the laws of the State of California;
that Tenant has all necessary power and authority to enter into this Lease and to carry
out the transactions and obligations contemplated herein; and that the execution and
delivery of this Lease and the performance by Tenant of its obligations hereunder will not
violate or constitute an event of default under the terms and provisions of any
agreement, ordinance, regulation, law or court order to which Tenant is a party or by
which Tenant is bound.
(b) Authorization; Valid Obligations. That all actions required to be taken by
or on behalf of Tenant to authorize it to execute, deliver and perform its obligations
under this Lease have been taken, and that this Lease is a valid and binding obligation
of Tenant enforceable in accordance with its terms, except as the same may be affected
by bankruptcy, insolvency, moratorium or similar laws, or by legal or equitable principles
relating to or limiting the rights of contracting parties generally.
(c) Executing Parties. That the persons executing this Lease on behalf of
Tenant have full power and authority to bind Tenant to the terms hereof.
ARTICLE V
RENT
5.1. Rent. Commencing upon the Commencement Date, Tenant shall pay to
Landlord the greater of (i) annual rent in the sum of Two Million Two Hundred Two Thousand
Three Hundred Seventy -Eight Dollars ($2,202,378) ("Base Rent") as adjusted pursuant to
Section 5.4 below, or (ii) the percentage rent set forth in Section 5.2 ("Percentage Rent"). Base
Rent and Percentage Rent are hereinafter referred to as "Rent."
5.2 Percentage Rent. Percentage Rent shall equal the total of the percentages
set forth below of the corresponding categories of Gross Revenues on an annual basis from
each transaction, sale or activity of Tenant on or from the Premises:
14
CATEGORY PERCENTAGE RENT
Dues Revenue 6%
Apartment Revenues 16.5%
Marina Revenues 31%
Storage Revenues 20%
Charter Commission Revenues 20%
Charter Revenues 6%
Room Revenues 5%
Beverage Revenues 5%
Food Revenues 3%
Retail Revenues 5%
Miscellaneous Revenues 10%
Cell Tower 15%
To the extent that Gross Revenues include proceeds of business interruption or rental loss
insurance which are based upon or in compensation for Percentage Rent payable under this
Lease, the Percentage Rent owed for any of the foregoing activities for which such proceeds of
business interruption or rental loss insurance were received during the period affected by such
insurance claim shall be greater of (i) the amount of such proceeds of business interruption or
rental loss insurance relating to Percentage Rent payable to Landlord hereunder, or (ii) the
amount of Percentage Rent calculated as set forth above after deduction from Gross Revenues
of the amount of such proceeds of business interruption or rental loss insurance relating to
Percentage Rent.
5.3 Extension Rent. In consideration of Landlord's agreement to enter into this
Lease and extend the Term, Tenant shall pay to Landlord: (i) One Million Five Hundred
Thousand Dollars ($1,500,000) upon execution of this Lease; and (ii) Two Hundred Thousand
Dollars ($200,000) upon the first anniversary of the Commencement Date and a second
payment of Two Hundred Thousand Dollars ($200,000) at the second anniversary of the
Commencement Date ("Extension Rent"). The Extension Rent shall accrue interest at a rate of
four percent (4%) per annum and the payments shall be due as shown on the table below. The
total Extension Rent due to the City shall be One Million Nine Hundred Thousand Dollar
($1,900,000) plus applicable interest. The Extension Rent shall be in addition to the Base
Rent, Percentage Rent, and other amounts payable by Tenant under this Lease. Tenant may
pay the Extension Rent early at anytime provided the Tenant pays the applicable remaining
principal plus any accrued interest.
15
Principal:
Interest Rate per
year:
Term (years):
Payment
Number
1
2
CITY OF NEWPORT BEACH
Amortization Schedule
$400,000.00
4.000%
Required Pmt:
Est. Total
Pmts:
2 Est. Total Int:
Payment
Amount
$212.078,43
$212,078,43
Principal
$196,078.43
$203,921.57
$212,078
$424,157
$24,157
Remaining Cumulative
Interest Principal Interest
16,000.00 $203,921.57 $00.00
$8,156.86 $00.00 $24,156.86
$2,252,430.70 $1,900,000.00 $352,430.70
16
5.4 Periodic Adjustments of Base Rent. Upon the first day of the sixty-first
(61st) month following the Commencement Date, and the first day of every sixty-one (61)
months thereafter (respectively, an "Adjustment Date"), Base rent shall be increased or
decreased as the case may be, to a sum equal to seventy-five percent (75%) of the average
annual total of Rent payable during the immediately preceding five (5) years. Following receipt
of the report of Gross Revenues and Percentage Rent for the year immediately preceding an
Adjustment Date. Landlord shall calculate the adjustment in Base Rent, if any, and shall notify
Tenant in writing of such adjustment, Subject to Tenant's right to contest, in good faith,
Landlord's calculation of the adjustment to Base Rent, any such adjustment shall be effective as
of the relevant Adjustment Date, and Tenant shall pay any accrued and unpaid Base Rent from
the Adjustment Date to the date of receipt of Landlord's notice of adjustment in Base Rent no
later than fifteen (15) calendar days following receipt of Landlord's notice of adjustment in Base
Rent.
5.5. Fair Market Adjustment of Base Rent. Upon the nineteenth (19°)
anniversary of the Commencement Date ("Market Adjustment Date"), the Base Rent shall be
increased or decreased, as the case may be, based upon the determination of the fair market
rental value of the Premises in the manner set forth in Section 19.19. For purposes of
appraising the fair market rental value of the Premises, the appraisers shall determine such
value including payment of Base Rent and Percentage Rent in excess thereof in the categories
set forth in Section 5.2 above. The Base Rent shall be adjusted to equal seventy-five percent
(75%) of the full fair market rental value of the Premises as so determined. In the event the
adjusted Base Rent determined pursuant to this Section 5,5 is one hundred twenty percent
(120%) or more of the average annual Base Rent payable during the five (5) Calendar Years
preceding the Adjustment Date, the amount by which the new Base Rent exceeds one hundred
twenty percent (120%) or more of the average annual Base Rent payable during the five (5)
Calendar Years preceding the Market Adjustment Date, the amount by which the new Base
Rent exceeds one hundred twenty percent (120%) or more of the average annual Base Rent
payable during the five (5) Calendar Years preceding the Market Adjustment Date shall be
added to Base Rent at the rate of twenty-five percent (25%) thereof per year in the ensuing four
(4) Calendar Years. For example, if the amount by which the new Base Rent exceeds one
hundred twenty percent (120%) or more of the average annual Base Rent payable during the
preceding five (5) Calendar Years is $4,000, then Base Rent shall be increased by $1,000 in
each of the ensuing four (4) Calendar Years. Landlord and Tenant agree to use the appraisal
methodology provided in Exhibit B, which is attached hereto and incorporated by reference.
5.6 Payment of Rent, Base Rent shall be payable on the first (1st) day of each
Accounting Period during the Term; provided, however, to the extent that Percentage Rent for
such Accounting Period exceeds the Base Rent paid during such Accounting Period, the
differential shall be payable in arrears concurrent with the next installment of Base Rent. Any
installment of Rent payable during any Accounting Period shall equal the greater of (i)
Percentage Rent computed from the commencement of that particular Calendar Year to the end
of the Accounting Period for which such Rent is due, or (ii) the Base Rent due from the
commencement of that particular Calendar Year to the end of the Accounting Period for which
such Rent is due, in each instance less the aggregate amount of any Rent previously paid to
Landlord during such Calendar Year,
5.7 Charges for Goods and Services. Tenant agrees to charge prices for all
goods, services and facilities (including boat slip rentals) offered at or provided on or from the
Premises comparable with prices for such goods, services and facilities charged at other private
17
clubs in Southern California; provided, however, (i) that for purposes hereof, the rent charged
for slips in the marina shall be adjusted, where necessary, to eliminate any discounts or reduced
fees and charges at such clubs based upon payment of membership fees or other comparable
arrangements, and (ii) nothing herein shall limit or impair Tenant's ability to charge less than
such amounts if, in the exercise of Tenant's reasonable business judgment, such lesser
amounts will stimulate revenue increases or in connection with advertising, promotions,
discounts to employees, guests or charitable functions.
5.8 Reconciliation of Annual Rent. Within thirty (30) calendar days following
receipt by Landlord of the annual statement set forth in Section 5.10(b), the Percentage Rent
due for such Calendar Year shall be determined, subject to audit as set forth in Section 5.10(e),
and the amount of Rent paid or payable for such Calendar Year shall be adjusted accordingly.
Landlord shall credit the amount of any Rent received from Tenant pursuant to Section 5,6
which is in excess of the amount of Rent determined to have been due and payable for such
Calendar Year, such excess to the installments of Rent next following. Tenant shall pay, within
five (5) calendar days following such determination, but in no event later than one hundred and
sixty (160) calendar days following the end of such Calendar Year, the full amount of Rent
determined to have been due and payable for such Calendar Year.
5.9 Place for Payment of Rentals. All payments of Rent shall be made in
lawful money of the United States of America and shall be paid to Landlord on-line at
www.newoortbeachca.qov, in person or by United States' mail, or overnight mail service, at the
Cashier's Office located at 100 Civic Center Drive, Newport Beach, CA 92658, or to such other
address as Landlord may from time -to -time designate in writing to the Tenant. The Tenant
assumes all risk of loss and responsibility for late charges and delinquency rates if Rent is not
timely received by the Landlord regardless of the method of transmittal.
5.10 Records and Reports of Sales.
(a) Quarterly Statement. Tenant shall provide to Landlord a statement setting
forth in reasonable detail the amount of Tenant's Gross Revenues (including a
breakdown among the categories set forth in Section 5.2 above) for the immediately
preceding Accounting Period within twenty (20) calendar days following the end of each
Accounting Period.
(b) Annual Statement. Tenant shall provide to Landlord a statement setting
forth in reasonable detail the amount of Tenant's Gross Revenues for the preceding
Calendar Year within one hundred twenty (120) calendar days following the end of each
Calendar Year.
(c) Payment of Percentage Rent. Tenant shall accompany the statement of
Gross Revenues for each Accounting Period and the Calendar Year with a payment of
the amount by which Percentage Rent exceeds the Base Rent paid during such
Accounting Period calculated in accordance with Section 5.2 of this Lease.
(d) Books and Records. Tenant shall prepare and keep full, complete,
accurate and proper books, records and accounts of all business conducted by Tenant
or its Affiliates from the Premises, in accordance with generally accepted accounting
principles consistently applied, which shall include equipment to record all sales at the
time of the transaction. Tenant shall keep at the Premises records of Tenant's Gross
18
Revenues for a period of not less than three (3) years after the expiration of the
Calendar Year to which such records relate and upon request shall furnish Landlord true
and accurate statements thereof. Within one hundred twenty (120) calendar days
following the close of each Calendar Year, Tenant shall deliver to Landlord an audited
statement prepared by a nationally recognized independent firm of certified public
accountants showing in reasonable detail, on a Calendar Year basis, the amount of
Tenant's Gross Revenues (including a breakdown among the categories set forth in
Section 5.2 above) for the immediately preceding Calendar Year,
(e) Audit Rights. Landlord shall have the right upon two (2) calendar days prior
notice to Tenant and during normal business hours, but not more often than one (1) time
during each Calendar Year of the Term, to audit the Tenant's statements of Gross
Revenues, and supporting records and data. Within ten (10) calendar days of receipt of
such audit, Tenant shall pay Landlord the additional Rent found to be due plus interest
thereon at the Lease Interest Rate if the audit discloses an understatement of annual
Gross Revenues. However, if the audit discloses Rent has been overpaid by Tenant,
the excess shall be applied to any amounts then due from Tenant to Landlord, and the
balance, if any, shall be credited against Base Rent thereafter due from Tenant. Tenant
shall pay for the reasonable cost of Landlord's audit if Landlord's audit discloses a total
underpayment of Rent for any Calendar Year which is in excess of five percent (5%).
Landlord shall have the right to receive a copy of the results of any audit conducted at
the request of Tenant of Tenant's statements of Gross Revenues during the Term.
Promptly following the completion of any such audit, Tenant shall deliver, or cause to be
delivered, to Landlord a copy of the result of such audit regardless of whether Landlord
shall have made a demand therefor.
(f) Annual Forecast of Operations. On or before December 31 of each year
during the Term, Tenant shall provide Landlord, for informational purposes, with a
forecast for the ensuing Calendar Year of the amount of (i) Gross Revenues expected to
be received by Tenant, and (ii) Percentage Rental expected to be payable hereunder (by
categories of Percentage Rental). On or before December 31 of each year during the
Term, Tenant shall provide Landlord with a forecast for the ensuing twelve (12) month
period of budgeted capital improvements, replacements, repairs and maintenance that
Tenant anticipates expending during such twelve (12) month period to maintain the
Project in a manner consistent with the original quality of the Project and as required by
this Lease..
5.11 Additional Rent. Tenant agrees to pay as rental for the Premises, within
ten (10) calendar days of Landlord's demand therefor, unless a different time for payment is
expressly provided herein, all other amounts Tenant is obligated to pay Landlord under the
provisions of this Lease in addition to Rent ("Additional Rent").
5.12 No Abatement or Reduction in Rent. Except as expressly provided to the
contrary elsewhere in this Lease, Tenant shall not be entitled to any abatement, set-off or
reduction in Rent or Additional Rent hereunder.
5.13 No Partnership Created. Landlord and Tenant shall in no event be
construed or held to be partners, co -owners, joint ventures or associates of one another in the
conduct of Tenant's business on the Premises, or in its ownership of the Project. The
19
relationship between Landlord and Tenant is and at all times shall remain that of lessor and
lessee for all purposes.
5.14 Net Lease. The Rent set forth in this Article V herein is based upon the
assumption that Landlord will not have to pay any expenses or incur any liabilities of any kind in
any way relating to, or in connection with, the Premises during the Term except for refunds,
interest, credits, or other payments herein specifically set forth. Accordingly, Tenant will
promptly pay all costs of every kind and description relating to or arising out of the Premises
during the Term.
ARTICLE VI
TENANT'S OBLIGATION WITH RESPECT TO MAINTAINING PREMISES
6.1. Repairs and Maintenance. Tenant shall at all times during the Term keep
in good order, condition and repair the entire Premises and all improvements and buildings
located thereon, including the structural and non-structural portions of the Project, the
entrances, the windows, partitions, doors, lighting and plumbing fixtures, heating, ventilation and
air conditioning systems, the grounds and all landscaping, the paving and other hardscape
surfaces, and all fixtures, equipment and appurtenances relating to the Premises and/or the
Project, subject to reasonable wear and tear, fire and other casualty, consistent with the
continued operation of a project of the type, size and quality of the Project.
6.2. Taxes and Assessments.
(a) Except as otherwise expressly permitted elsewhere in this Lease, during the
Term, Tenant shall pay prior to delinquency the amount of all taxes and assessments
levied against, or on account of, the Premises; provided, however, that, if by law any
such tax or assessment is payable or may at the option of taxpayer be paid in
installments, Tenant may pay the same, together with any accrued interest payable on
the unpaid balance of such tax or assessment, in installments as the same become due
and before any fine, penalty, interest or cost may be added thereto for the nonpayment
of any such installment and interest. Taxes and assessments shall be prorated for the
Term (or earlier termination) based upon the number of days during such final year that
this Lease is in effect. Notwithstanding the foregoing, in no event shall Tenant be liable
for increases in taxes or assessment, if any, attributable to a "change in ownership" of
Landlord's interest in the Premises.
(b) Tenant shall pay, before delinquency, all taxes and assessments levied
against, or on account of, all fixtures, equipment, equipment and personal property
located in or upon the Premises and/or the Project.
(c) Landlord and Tenant agree to consult with each other and to keep each
other advised concerning any controversy or contest pertaining to the amount or validity
of any tax or assessment referred to in this Section 6.2, which tax or assessment Tenant
is required to pay or reimburse to Landlord under the terms of this Lease. Tenant shall
have the right, at Tenant's sole cost and expense, to contest the amount or validity of
any tax or assessment levied upon, assessed, or proposed to be assessed, against the
Premises and/or the Project or any of the fixtures, equipment and personal property
therein to the extent permitted by applicable law; provided however, Tenant shall do the
20
following: (i) comply with all laws, orders, rules and regulations respecting such contest;
(ii) give Landlord prior written notice of Tenant's intent to so contest said amount or
validity; and, (iii) at Landlord's sole option, either (A) demonstrate to Landlord's
reasonable satisfaction that the proceedings to be initiated by Tenant shall conclusively
operate to prevent the sale of the Premises, the Project and all personal property
thereat, or any part thereof, to satisfy such tax or assessment prior to final determination
of such proceedings, or (B) furnish a good and sufficient bond or surety or other
assurance as requested by and reasonably satisfactory to Landlord, or (C) provide a
good and sufficient undertaking as may be required or permitted by law to accomplish a
stay of any such sale. Nothing in this Subsection 6.2(c) shall be deemed or construed as
relieving, modifying or extending Tenant's covenant to pay any such tax or assessment
at the time and in the manner provided in this Section 6.2.
6.3 Capital Repairs and Replacements. If during each rolling three (3) year
increment of the Term, commencing upon the Commencement Date, Tenant fails to expend a
sum equal to at least four percent (4%) of Gross Revenues per annum during such three (3)
year period on repairs, replacements and/or renewals of Furnishing, for routine repairs and
maintenance and non-structural refurbishments of the Project (including capital improvements,
but excluding substantially complete replacement of long term capital improvements, such as
replacement of the roof, mechanical, electrical or similar building systems, or major portions
thereof), Tenant shall deposit in a separate account ("Reserve Account") with a commercial
bank or savings and loan association approved by Landlord, or with or under the control of
Tenant's Mortgagee if such Mortgagee shall so require, an amount equal to the difference
between the sum actually expended by Tenant for the foregoing purposes during such three (3)
year period and four percent (4%) of Gross Revenues per annum during such period which
Reserve Account shall be used by Tenant for the specific purpose of accumulation therein and
disbursing therefrom funds to be used solely for the foregoing purposes. Tenant shall not
withdraw funds from the Reserve Account in any ensuing Calendar Year until Tenant has
expended for the foregoing purposes in such Calendar Year a sum of not less than four percent
(4%) of Gross Revenues during such Calendar Year. Nothing herein contained shall be
construed as a limitation on tenant's obligations under other provisions of this Lease to repair,
maintain and replace the Furnishing or Premises, and each portion thereof. At all times after
the Reserve Account has been established, Tenant shall include in each annual forecast to be
submitted to Landlord pursuant to Section 5.10(f) above a reconciliation of funds expended for
the foregoing purposes, and evidence of all amounts contained in and all deposits and
withdrawals from the Reserve Account during the preceding Calendar Year. Notwithstanding
anything to the contrary contained herein. Tenant shall not be obligated to make other than
ordinary repairs and replacements of Furnishings during the final five (5) years of the Term and
during such five (5) year period the amount that Tenant shall be required to expend or reserve
under this Section 6.3 shall be reduced to two percent (2%) per annum. Upon expiration or
earlier termination of this Lease, all funds required to be maintained in the Reserve Account
shall be allocated first to any repairs, maintenance, replacements and renewals necessary to
place the Project and Furnishings in a first class condition, as determined by Landlord, and any
excess shall be the sole property of Tenant.
6.4 Reserved.
21
ARTICLE VII
USE OF PREMISES
7.1 Use of Premises. The Premises may be used solely for construction,
renovation, maintenance and operation of the Project, which shall include the right to (i) operate
or enter into businesses or grant licenses, concessions or subleases covering less than ten
thousand (10,000) square feet of space in the Project in the aggregate to third parties provided
that the same shall be done in arm's length transactions to persons unrelated to Tenant on
commercially reasonable terms, and (ii) leases or subleases or apartment units in the Project.
Tenant shall be permitted to grant licenses, concessions or subleases to Affiliates on customary
terms for fair market value so long as all Gross Revenues derived by any such Affiliate in
connection with any such license, concession or sublease shall be included within the
appropriate category of Gross Revenues hereunder. The licenses, concessions and/or
subleases granted by Tenant in connection with its operation of the Project shall only be for
business that provide goods and/or services principally for the purpose of catering to the needs
and desires of hotel guests and club members, and the business conducted by such licensees,
concessionaires or sublessees shall be conducted in a manner consistent with the quality of
services required to be offered at the Project by the terms of this Lease. In no event shall
Tenant engage in any activity for the exploration, production, extraction, taking or transport of
any oil, oil rights gas, minerals, mineral rights, natural gas rights and other hydrocarbon
substances or minerals in and under the Premises. The portion of the Premises used for
residential apartment purposes ("Parcel D") is subject to the use restrictions in Chapter 728 of
the Statutes of 1994, and to the approval of the City that will occur through a separate written
amendment to this Lease (e.g., allowable uses, applicable rent, etc.).
7.2 Pump -Out Station. At all times during the Term, Tenant covenants and
agrees to maintain a vessel holding tank pump -out facility in the marina area of the Premises
convenient and available for use by the public, which facility shall at all times be maintained and
operated in accordance with all applicable Federal, State or local laws, regulations and
ordinances.
7.3 Environmental Requirements.
(a) Tenant shall not use, nor permit the use of, any Hazardous Material in the
construction, reconstruction or renovations of, or additions to the Project in violation of
any applicable law, regulation, code or ordinance. Tenant shall, at its expense, comply,
and require each of its Affiliates, subtenants, licensees and/or concessionaires of space
in the Project or elsewhere on the Premises to comply, with all applicable laws,
regulations, codes and ordinances relating to any Hazardous Material or to any
Hazardous Material Activities, including obtaining and filing all applicable notices,
permits, licenses and similar authorizations.
(b) Tenant shall indemnify, defend, protect and hold Landlord, its City Council,
boards, commissions, agents, servants and employees, harmless from and against any
and all liability, claims, actions, and out-of-pocket costs or expenses of an kind or nature,
including damage to any property and injury (including death) to any person (collectively,
"Claims"), arising directly or indirectly from any Hazardous Material Activity of, Tenant or
any of Tenant's agents, employees, independent contractors, invitees, licensees, guests,
subcontractors, and Affiliates during the Term; provided, however, that Tenant shall
22
have no liability under this Section 7.3(b) for any portion of any Claim which arises out of
the negligence or willful misconduct of any party indemnified under this Section 7.3(b).
The foregoing indemnity shall include all costs and expenses of removal, remediation of
any kind and disposal of any such Hazardous Material and all reasonable consultants'
fees, attorneys' fees and investigation costs and all other reasonable costs, expenses
and liabilities incurred by any indemnified party or their counsel from the first notice that
any Claim is to be made or may be made. The obligation of Tenant under this Section
7.3(b) shall survive the expiration or earlier termination of the Term.
ARTICLE VIII
CONDUCT OF BUSINESS BY TENANT
8.1 Standards of Operation. Tenant shall continuously (except for reasonable
interruption during repairs, maintenance or renovations and during any delay caused by an
event of Force Majeure) during the Term, diligently operate, or cause to be operated, the Project
in a first-class manner and as otherwise required by this Lease. Tenant shall stock and
maintain adequate working capital and adequate inventories of food, beverages, operating
equipment and supplies.
8.2 Management. Tenant agrees that at all times during the Term, the hotel
and restaurant portions of the Project shall be managed and operated by Tenant, an Affiliate of
Tenant or a Qualified Manager. It shall not be deemed a default by Tenant under this Lease if
at any time during the Term it shall be determined that the then manager of the hotel and/or
restaurant portions of the Project is not a Qualified Manager so long as the applicable
management agreement or employment contract shall give Tenant the right to terminate said
agreement and Tenant shall promptly take all reasonable steps to terminate said agreement
and remove said manager from the Premises and secure a Qualified Manager.
8.3 Competition by Tenant. From and up to five (5) years following the
Commencement Date, Tenant agrees for itself and its Affiliates that Tenant and its Affiliates
shall not own, lease or operate, or participate in the ownership, lease, or operation of, including
any ownership interest in any partnership, joint venture or other equity participation, any
business venture or operation similar to the hotel, private membership club and marina
operations conducted by Tenant as part of the Project, located on Newport Harbor (that is, its
nearest boundary is within fifteen hundred (1,500) feet of the waterfront of Newport Harbor). It
is expressly acknowledged and agreed that Landlord is entering into this Lease in reliance upon
this covenant, and the rental payable to Landlord hereunder would be adversely affected by a
violation of this covenant by Tenant, and Landlord would not enter into this Lease in the
absence of such a covenant. The foregoing restriction shall not apply to: (i) any Mortgagee who
shall have acquired Tenant's leasehold estate hereunder pursuant to a judicial or non -judicial
foreclosure of its Mortgage or deed or other conveyance in lieu of such foreclosure; (ii) any
entity which shall be an institutional investor with a diversified investment portfolio containing
projects operated under three (3) or more trade names and under management agreements
with (3) or more unaffiliated national chain management companies; or (Hi) any business
venture or operation similar to the Project located upon land owned/managed by the City. The
foregoing prohibitions on ownership shall not be deemed to apply to ownership of less than a
Controlling interest in any publicly traded corporation, or ownership of hotels in a diversified
investment portfolio of insurance companies, pension funds or similar institutional investors
containing hotels operated under three (3) or more trade names with management contracts
23
with three (3) or more unrelated national hotel chain management companies. The restrictions
set forth in this Section 8.3 shall not be deemed to apply to any operations of Tenant or its
Affiliates (or any successor thereto) substantially similar to the Project that are owned, leased or
operated by Tenant or its Affiliates (or any successor thereto) as of the date of this Lease or in
which Tenant or any Affiliate (or any successor thereto) participates in the ownership, lease or
operation as of the Commencement Date.
8.4 Use of Name. At all times during the Term, the Project shall be operated
utilizing the words "Balboa Bay" in its name; provided, however, any Qualified Manager may
operate the Project under its trade name in conjunction with the foregoing words.
ARTICLE IX
ALTERATIONS, FIXTURES AND SIGNS
9.1 Tenant's Right to Make Alterations. Tenant shall have the right, at any
time and from time -to -time, to make any repair, alteration or addition which Tenant deems
advisable to the improvements constructed upon the Premises by Tenant; provided, however,
that all such repairs, alterations or additions to the Project shall be consistent with the Premises
being used for the purposes permitted by this Lease and be of the type and quality as other first
class hotels in the Newport Beach area.
9.2 Prohibition Against Liens. Tenant shall not create nor permit to be created
or to remain, any lien, encumbrance or charge (whether levied on account of any mechanic's,
laborer's or materialmen's lien or any conditional sale, title retention lease or chattel mortgage)
against the Premises or the Project, or any part thereof or interest therein, except for equipment
leases, title retention agreements and similar instruments in connection with financing of the
purchase or lease of Furnishings. Subject to Tenant's right to contest such liens as set forth in
this Lease, if any mechanic's laborer's or materialmen's lien shall at any time be filed against
the Premises and/or the Project, or any part thereof or interest therein, Tenant shall with all due
diligence cause the same to be discharged of record by payment, bonding in accordance with
applicable law, or transfer of such lien to other security pursuant to applicable law.
9.3 Signs. Tenant will not place or suffer to be placed or maintained on the
exterior of any improvements or on the Premises any signs, logos or advertising unless such
signs, logos or advertising are consistent with the City's Municipal Code, and other applicable
laws and regulations.
ARTICLE X
ALTERATIONS, INDEMNITY AND CASUALTY
10.1 Insurance. Without limiting Tenant's indemnification of Landlord, Tenant will
obtain, provide and maintain at its own expense during the Term of this Lease, a policy or
policies of insurance of the type, amounts and form acceptable to Landlord. The policy or
policies shall provide, at a minimum, those items described below.
(a) Coverage Requirements
(i) Workers' compensation insurance providing statutory benefits and
Employer's Liability Insurance in an amount not less than One Million
24
($1 million) dollars each accident, each employee and policy limit,
Coverage shall include USL&H and Maritime Coverages as appropriate.
In addition, Tenant shall require each subtenant or subcontractor to
similarly maintain workers compensation insurance and employer's
liability insurance, including USL&H and Maritime Coverages as
appropriate, in accordance with the laws of the State of California for all of
the subtenant's or subcontractor's employees. The insurer shall agree to
waive all rights of subrogation against Landlord, its officers, agents,
employees and volunteers for losses arising from work performed by
Tenant for Landlord, by endorsement to the policy.
(ii) Commercial general liability insurance in an amount not less than Ten
Million Dollars ($10,000,000) per occurrence and Ten Million Dollars
($10,000,000) General Aggregate for bodily injury, personal injury, and
property damage, which amount shall be subject to periodic adjustment in
accordance with Subsection 10.1(c)(ii) below. Coverage shall be at least
as broad as that provided by Insurance Services Office form CG 00 01
and may be arranged through any combination of primary and excess
insurance as required to achieve the limits specified provided that any
excess liability policy does not restrict coverage provided in the primary
policy. Other policy forms may be acceptable if more appropriate to the
exposures, such as Marina Operator's Liability insurance. None of the
policies required herein shall be in compliance with these requirements if
they include any limiting endorsement that has not been first submitted to
City and approved in writing.
(iii) Business automobile coverage for bodily injury and property damage
liability for all activities of the Tenant arising out of or in connection with
the services to be performed under this Lease, including coverage for any
owned, hired, non -owned or rented vehicles, in an amount not less than
Five Million Dollars and 00/100 Dollars ($5,000,000.00) combined single
limit for each occurrence.
(iv) "All Risk" property insurance and Boiler and Machinery insurance for the
full replacement cost of the Improvements (as improved or altered by
Minor Alterations or Structural Changes, if any) [and the Project], without
deduction for depreciation. Flood insurance shall apply per location with
a minimum limit of $500,000 Building/$500,000 Contents, provided no
flood insurance coverage shall be required for the apartments. "All Risk"
coverage shall be at least as broad as provide in Insurance Services
Office special causes of loss form (CP 10 30). Boiler and Machinery and
Flood coverage may be arranged separately. Policies must include
business income coverage sufficient to allow Tenant to meet its
obligations under this Lease for payment of rents. Any coinsurance
requirement in the policy shall be eliminated through the attachment of an
agreed value endorsement, the activation of an agreed value option, or as
is otherwise appropriate under the particular policy form.
(v) Builder's risk insurance during construction, reconstruction or alteration of
any Improvements (as improved or altered by Minor Alterations or
25
Structural Changes, if any) on the Premises [or the Project], against "all
risk" of physical loss, including, without limitation, the perils of flood,
collapse and transit, with deductibles acceptable to Landlord, covering the
total cost of work performed, equipment, supplies and material furnished
on a replacement cost basis.
{vi) Contractor's pollution liability insurance for contractors or subcontractors
performing construction work written on a form acceptable to City
providing coverage for liability arising out of sudden, accidental and
gradual pollution. The policy limit shall be no less than $1,000,000 per
claim and in the aggregate. When this insurance is required, all activities
comprising the work shall be specifically scheduled on the policy as
"covered operations." The policy shall provide coverage for the hauling of
waste from the Premises to the final disposal location, including non -
owned disposal sites. Products/completed operations coverage shall
extend a minimum of three (3) years after completion of the work.
(vii) Pollution legal liability applicable only to the marina operations at the
Project, including coverage for bodily injury; property damage, including
loss of use of damaged property or of property that has not been
physically injured or destroyed; cleanup costs; and defense, including
costs and expenses incurred in the investigation, defense, or settlement
of claims; all in connection with any loss arising from the insured facility.
Coverage shall be maintained in an amount of at least $1,000,000 per
loss, with an annual aggregate of at least $1,000,000.
(viii) Liquor liability coverage in the amount of not less than Ten Million Dollars
($10,000,000) shall be obtained.
(b) Endorsements: Policies shall contain or be endorsed to contain the following
provisions:
(i} Landlord, its elected or appointed officers, officials, employees, agents
and volunteers are to be covered as an additional insured under all
general, liquor and pollution liability policies with respect to liability arising
out of Tenant's activities related to this Lease and with respect to use or
occupancy of the Premises.
(ii) Policies shall be considered primary insurance as respects to Landlord,
its elected or appointed officers, officials, employees, agents and
volunteers as respects to all claims, losses, or liability arising directly or
indirectly from Tenant's operations. Any insurance maintained by
Landlord, including any self -insured retention Landlord may have, shall be
considered excess insurance only and not contributory with the insurance
provided hereunder.
(iii) Liability insurance shall act for each insured and additional insured as
though a separate policy had been written for each, except with respect to
the limits of liability of the insuring company.
26
(iv) The insurer waives all rights of subrogation against Landlord, its elected
or appointed officers, officials, employees, agents and volunteers.
(v) Any failure to comply with reporting provisions of the policies shall not
affect coverage provided to Landlord, its elected or appointed officers,
officials, employees, agents or volunteers.
{vi) The insurance required by this Lease shall not be suspended, voided,
canceled, or reduced in coverage or in limits except after thirty (30)
calendar days (ten (10) calendar days written notice of non-payment of
premium) written notice has been received by Landlord. It is Tenant's
obligation to ensure that provisions for such notice have been
established.
(vii) Landlord shall be included a loss payee under the commercial property
insurance.
(c) Additional Requirements
(i} All insurance shall be written on an occurrence -made form except
Pollution Liability; and
(ii) In the event Landlord determines that (i) the Tenant's activities in the
Premises creates an increased or decreased risk of loss to the Landlord,
(ii) greater insurance coverage is required due to the passage of time, or
(iii) changes in the industry require different coverages be obtained,
Tenant agrees that the minimum limits of any insurance policy required to
be obtained by Tenant may be changed accordingly upon receipt of
written notice from Landlord; provided that Tenant shall have the right to
appeal a determination of increased coverage to the City Council within
fourteen (14) calendar days of receipt of notice from the Risk Manager in
the manner provided in Municipal Code Section 17.65.010 et seq. (or any
amended or successor Code section or ordinance) If Tenant fails to
timely appeal a decision, it shall be deemed final. With respect to
changes in insurance requirements that are available from Tenant's then -
existing insurance carrier, Tenant shall deposit certificates evidencing
acceptable insurance policies with Landlord incorporating such changes
within thirty (30) days of receipt of such notice. With respect to changes
in insurance requirements that are not available from Tenant's then -
existing insurance carrier, Tenant shall deposit certificates evidencing
acceptable insurance policies with Landlord, incorporating such changes,
within ninety (90) days of receipt of such notice.
All insurance policies shall be issued by an insurance company currently
authorized by the California 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 Landlord.
27
(iv) Any deductibles applicable to the commercial property or insurance
purchased in compliance with the requirements of this section shall be in
commercially reasonable amounts and approved by Landlord.
(v) All licensees, sub -Tenants and concessionaires shall be subject to the
insurance requirements contained herein unless written approval is
granted by the Landlord.
(vi) By requiring insurance herein, Landlord does not represent that coverage
and limits will necessarily be adequate to protect Tenant, and such
coverage and limits shall not be deemed as a limitation on Tenant's
liability under the indemnities granted to Landlord in this Lease.
(vii) Tenant shall give Landlord prompt and timely notice of any claim made or
suit instituted arising out of or resulting from Tenant's performance under
this Lease.
(viii) Tenant shall provide certificates of insurance, with original endorsements
as required above, to Landlord as evidence of the insurance coverage
required herein. Insurance certificates must be approved by Landlord
prior to commencement of performance or issuance of any permit.
Current certification of insurance shall be kept on file with Landlord at all
times during the Term of this Lease.
(ix) All required insurance shall be in force on the Commencement Date, and
shall be maintained continuously in force throughout the term of this
Lease. In addition, the cost of all required insurance shall be borne by
Tenant.
(x) If Tenant fails or refuses to maintain insurance as required in this Lease,
or fails to provide proof of insurance, then, subject to the notice and cure
provisions set forth in Article XVII, Landlord has the right to declare this
Lease in default without further notice to Tenant, and Landlord shall be
entitled to exercise all available remedies.
(xi) Tenant agrees not to keep on the Premises or permit to be kept, used, or
sold thereon, anything prohibited by any fire or other insurance policy
covering the Premises. Tenant shall, at its sole expense, comply with all
reasonable requirements for maintaining fire and other insurance
coverage on the Premises.
10.2 Indemnification.
(a) To the fullest extent permitted by law, Tenant hereby agrees to defend,
indemnify, protect and hold Landlord harmless from and against any and all liability,
claims, damage, penalties, actions, demands or expenses of kind or nature, including
damage to any property and injury (including death) to any person (collectively,
"Claims"), arising from Tenant's or Affiliates use occupation of the Premises or the
Project, or from any activity, work or things done, permitted or suffered by Tenant or
Affiliate or any omission of Tenant or Affiliate on or about the Premises or the Project, or
28
from any litigation concerning any of the foregoing in which Landlord is made a party
defendant. Tenant shall not be required hereunder to defend indemnify or hold Landlord
or any other person or entity indemnified under this Section 10.2(a) harmless from or
against any of the aforementioned Claims to the extent such Claims arise out of the
negligence or willful misconduct of Landlord or any other person or entity indemnified
hereunder. This obligation to indemnify shall include reasonable attorneys' fees and
investigation costs and all other reasonable costs, expenses and liabilities incurred by
Landlord or its counsel from the first notice that any Claim is to be made or may be
made. To the fullest extent permitted by law, Landlord, in its capacity of Landlord
hereunder but not in its municipal capacity, hereby agrees to defend, indemnify, protect
and hold Tenant harmless from and against any and all Claims to the extent such Claims
arise out of the negligence or willful misconduct of Landlord, in its capacity of Landlord
hereunder but not in its municipal capacity, or any other person or entity indemnified by
Tenant under the first sentence of this Section 10.2(a). This obligation to indemnify shall
also include reasonable attorneys' fees and investigation costs and all other reasonable
costs, expenses and liabilities incurred by Tenant or its counsel from the first notice that
any such Claim is to be made or may be made.
(b) Any sums paid by an indemnified Party, with interest at the Lease Interest
Rate, costs and damages, shall be due from and paid by the indemnifying Party within
thirty (30) calendar days of written demand therefor. Upon receiving knowledge of any
Claim that an indemnified Party believes is covered by this indemnity, such indemnified
Party shall give the indemnifying Party notice of the matter and an opportunity to defend
it, at the indemnifying Party's sole cost and expense, with legal counsel reasonably
satisfactory to such indemnified Party. The indemnified Party may also require the
indemnifying Party to so defend the matter. So long as the indemnifying Party shall be
defending any such Claim, the indemnified Party shall not settle such claim without the
consent of the indemnifying Party.
(c) Effective upon the Commencement Date, Tenant shall obtain and maintain
during the Term, combined rental income and/or business interruption and extra
expense insurance against loss of Tenant's income from the Project for a period of
twelve (12) months due to the perils covered by the insurance referred to above, in an
amount sufficient to cover the Rent payable under the terms of this Lease. If the
improvements located on the Premises shall be destroyed or damaged resulting in any
reduction in income received by Tenant from the Project, the proceeds of such rental,
income and/or business interruption insurance shall be utilized by Tenant, subject to the
rights of a Mortgagee, in payment of such Rent and other charges hereunder until such
time as the improvements so damaged or destroyed have been fully restored and placed
in full operation.
(d) Notwithstanding Section 10.2(b), Tenant shall accept any tender of defense
by Landlord pursuant to the terms of Section 10.2(b), (unless the complaining party
alleges facts that reasonably indicate active negligence or willful misconduct by the
Landlord or its employees) and Tenant shall protect and hold Landlord harmless from
and against the subject Claim and defend Landlord as required under Section 10.2(b);
provided, however, that Tenant shall not be liable for any such Claim to the extent and in
proportion that such Claim is finally determined by a court of competent jurisdiction (or in
a negotiated settlement agreed to by Landlord) to be attributable to the negligence or
willful misconduct of Landlord.
29
10.3 Settlement of Insurance Claims. Subject to the rights of Tenant's
Mortgagees, if all or any part of the Project shall be damaged or destroyed by an insured peril or
otherwise, Tenant shall have the exclusive right to negotiate and accept any proposed
settlement, adjustment or compromise of any claim; provided however, subject to the rights of
Tenant's Mortgagees, Landlord is hereby authorized and empowered by Tenant, and Landlord's
option and in its sole discretion, to settle, adjust or comprise any and all claims if Tenant elects
to terminate under Sections 10.4 or 10.5 below.
10.4 Casualty. Except as provided in Section 10.5 below, Tenant shall promptly
cause the Project or the Premises, or any part thereof, which is damaged or destroyed, whether
or not required to be insured against under this Article X, to be repaired and restored to its
original condition or such other condition as may be mutually agreed upon by the Parties
(subject to changes necessary to comply with then existing laws applicable thereto any changes
in design approved by Landlord), at Tenant's sole cost and expense. To the extent the
insurance proceeds are insufficient to cover the cost of such repair and restoration, Tenant shall
make up the deficiency out of Tenant's own funds. Subject to events of Force Majeure, such
repair and restoration shall be commenced in good faith and with reasonable diligence within a
reasonable period of time following the casualty and shall be completed with due diligence.
Notwithstanding the foregoing, in the event the cost of such repair and restoration exceeds the
sum of (i) the amount of insurance proceeds available to Tenant plus (ii) the amount of the
deductible by an amount which Tenant reasonably determines renders reconstruction of the
Project economically not feasible, Tenant shall have the option to terminate this Lease and
surrender possession of the Premises to Landlord. Subject to the rights of Mortgagees, in the
event of such a termination, Tenant shall pay to Landlord the amount of the deductible and
assign to Landlord any and all rights Tenant may have in and to the insurance proceeds on
account of such damage or destruction.
10.5 Casualty Late in Term. If the Project or any part thereof is damaged or
destroyed at any time following the fortieth (40th) year of the Term and the costs of restoration
and repair are estimated to exceed thirty percent (30%) of the then full replacement cost of the
Project and Tenant elects not to repair or restore said damage or destruction, then either Party
shall have the right to terminate upon the other Party's receipt of written notice of termination
given not later than ninety (90) calendar days following the occurrence of such damage or
destruction. Subject to the rights of any Mortgagee, Landlord shall have the right to receive and
retain all insurance proceeds paid or payable to Tenant on account of any damage or
destruction to the Project if this Lease is terminated by Landlord or Tenant under this Section
10.5; provided, however, that Tenant shall receive out of any such insurance proceeds the
amount of actual out-of-pocket expenses incurred by Tenant in obtaining any settlement of
insurance claims and the costs of restoring the Premises to a good and orderly condition and
even grade, if any.
10.6 No Abatement of Rent. Except as provided in Sections 10.4 and 10.5
above, throughout the Term, no direct or indirect destruction of or damage to the Project by fire
or other casualty whatsoever, whether such damage or destruction be partial or total, shall (i)
permit Tenant to surrender or terminate the Lease, or (ii) except to the extent of rent abatement
insurance paid to Landlord, relieve Tenant from its obligation to pay in full the Rent and other
sums and charges payable by Tenant hereunder or from any other obligation under the Lease,
except as otherwise expressly set forth herein; provided, however, that if any such direct
damage is caused by the negligence or willful misconduct of Landlord, Rent shall be suitably
30
abated until such damage or destruction is repaired or restored; provided, further, however,
nothing herein shall limit or restrict Landlord's right to retain rental abatement insurance
proceeds.
ARTICLE XI
UTILITIES
11.1 Utilities. Tenant shall be solely responsible for obtaining and promptly
paying all hook-up or connection fees and other charges for heat, gas, water, air conditioning,
electricity, sewerage, cable television or any other utility used or consumed in or upon the
premises, Upon written request of Tenant, Landlord agrees to join in the grant of such
easements and licenses upon the Premises to any supplier of utilizes to the Project as
necessary to construct, install, operate and maintain any facilities, conduits, transmission lines
and pipelines for the provision of utility services to the Project; provided, however, that all such
conduits, transmission lines and pipelines, and all facilities and improvements associated with
utility services and located upon the Premises, shall be located below grade in subterranean
easements.
ARTICLE XII
ESTOPPEL CERTIFICATES
12.1 Estoppel Certificates. Within fifteen (15) calendar days after each request
therefor by either Party, the other Party agrees to deliver a certificate to any person designated
by the requesting Party (including a proposed mortgagee or purchaser), or to the requesting
Party, certifying (if such be the case) that this Lease is in full force and effect, that, to the best of
such Party's knowledge at that time, there are no Events or Default by Tenant hereunder or any
defaults by Landlord hereunder and that no events have occurred which, with the giving of
notice or the passage of time or both, would constitute an Event or Default with respect to
Tenant or a default with respect to Landlord hereunder, or stating those claimed by the
responding Party, and that, to the best of such Party's knowledge, there are no defenses or off-
sets in favor of either Party hereto, or stating those claimed by the responding Party, and/or
certifying whether any consent or approval required under this Lease has been denied or
granted by the responding Party and whether any specified rights have been waived or deemed
waived or expired. Any such certificate shall also contain a warranty that the person signing has
the authority to execute the certificate on behalf of such Party. Each such estoppel certificate
shall identify the Lease and all amendments, shall specify the date to which Rent has been paid,
and shall specify the then applicable Base Rent payable hereunder. If the responding Party
fails to execute and deliver any such certificate within the aforementioned time period, insofar as
the requesting Party and any person designated by the requesting Party is concerned, the other
Party shall be conclusively deemed to have acknowledged that the certificate as submitted by
the requesting Party is correct. The requesting Party or the person designated by the
requesting Party as the recipient of said certificate (including, but not limited to, a proposed
Mortgagee or purchaser) may rely on the certifications made by the responding Party or the
certifications deemed made thereby (if such certificate is not delivered within such fifteen (15)
calendar day period). Nothing in this Section 12.1 shall be construed as reducing the period of
time that any Party has under the terms of this Lease to respond to a request by the other Party
for a consent or an approval.
ARTICLE XIII
ASSIGNMENT AND SUBLEASING
31
13.1 Limitation on Right to Assign. Except as hereinafter set forth in this
Article XIII and in Article XIV of this Lease, Tenant will not transfer assign or hypothecate this
Lease, or its interest therein, in whole or in part, nor sublease (which term shall be deemed to
include allowing anyone else to occupy) all or any part of the Premises and/or the Project,
without the prior written consent of Landlord in each instance having first been obtained, which
consent shall not be unreasonably withheld or delayed. The consent by Landlord to any
transfer, hypothecation, assignment or subleasing shall not constitute a waiver of the necessity
for such consent to any subsequent assignment, transfer, hypothecation or subleasing. This
prohibition against assigning or subleasing shall be construed to include a prohibition against
any sale, hypothecation, transfer of possession, or any assignment or subleasing by operation
of law or otherwise. Landlord shall be deemed to be reasonable in not granting its consent if the
proposed purchaser, transferee, assignee or sublessee fails to meet all of the following criteria:
(a) the proposed purchaser, transferee, assignee or sublessee, or, if the
proposed purchaser, transferee, assignee or sublessee is a wholly owned subsidiary, its
parent, or the constituent general partners of the proposed purchaser, transferee,
assignee or sublessee shall have a net worth at least equal to the greater of (i) Ten
Million Dollars ($10,000,000.00) (increased each five (5) years from the Commencement
Date by the percentage of any increase over such period in the Consumer Price Index
for All Urban Consumers, Los Angeles -Riverside -Orange County, CA, All Items,
published by the Bureau of Labor Statistics, Department of Labor), or (ii) ten percent
(10%) of the fair market of the leasehold estate created by this Lease. The successor or
most nearly comparable index published by some other brand or department of the
United States Government shall be used if said Bureau shall cease to publish the
Consumer Price Index. For purposes of determining the fair market value of the
leasehold estate created by this Lease, such value shall be conclusively determined by
the purchase price to be paid by the proposed purchaser, transferee, assignee or
sublessee for the interest to be acquired, as evidenced by information reasonably
required by Landlord (for purposes of calculating such net worth, it shall be permissible
to include as an asset of said proposed purchaser, transferee, assignee or sublessee its
anticipated equity in the Project and the leasehold estate created hereby);
(b) the proposed purchaser, transferee, assignee or sublessee shall either be a
Qualified Manager or, if the proposed purchaser, transferee, assignee or sublessee is
not a Qualified Manager, shall have entered into a binding agreement with a Qualified
Manager, to manage the Project, it being acknowledged herein that continued
management of the Project by a Qualified Manager is an affirmative obligation of Tenant
hereunder; and
(c) the proposed purchaser, transferee, assignee or sublessee (or, with respect
to a transfer of a Controlling interest under Section 13.5, the person or entity acquiring
such Controlling interest) shall have a reputation for honesty, integrity and sound
business practices.
13.2 Grant or Denial of Consent. Landlord shall grant or deny its approval of, or
request additional reasonable information and/or documentation with respect to, any proposed
transfer, hypothecation, assignment or sublease with in thirty (30) calendar days following
Landlord's receipt of written notification from Tenant regarding the proposed transfer. Following
a request from Landlord for additional reasonable information and/or documentation as provided
32
herein, Landlord shall have ten (10) calendar days from Landlord's receipt of such additional
information and/or documentation in which to grant or deny its approval of the proposed transfer
and/or transferee. Landlord shall be deemed to have granted its approval if Landlord shall not
request additional information and/or documentation within such thirty (30) calendar day period
and Landlord has not notified Tenant within the time periods herein specified of its decision
either to grant or deny its approval. From and after the effective date of an assignment by
Tenant of its entire Leasehold, the assignor shall thereafter be relieved from any further
liabilities or obligations under this Lease and Landlord shall look solely to the assignee Tenant
for performance of such obligations hereunder.
13.3 Non -Application to Guest Rooms and Facilities. This Article XIII shall
have no application to (i) rental of guest rooms or suites or other guest facilities within the
Project, (ii) rental of apartment units in the Project in the ordinary course of business for a term
of not more than one (1) year or such longer term if the rent paid by the apartment tenant
adjusts annually to the fair rental value of the unit, (iii) rental of stores and shops contained
within the Project, (iv) rental of boat slips in the marina in the ordinary course of business for a
term of not more than one (1) year, or (v) the granting of concessions, licenses or subleases in
the normal course of operations, provided that the term of any such concession, license, rental
or sublease shall not extend beyond the Term hereof.
13.4 Assignment to Affiliate. Tenant shall have the right, without Landlord's
consent, to assign this Lease:
(a) to a partnership or Limited liability company Controlled by Tenant and in
which Tenant is a general partner or member thereof and owns a legal and beneficial
interest therein of not less than twenty-five percent (25%), or to a corporation Controlled
by Tenant and in which Tenant owns and controls not less than twenty-five percent
(25%) of all issued and outstanding stock of such corporation in every class with full and
unrestricted voting rights and privileges; or
(b) as security pursuant to a Mortgage;
provided, however, that any assignment by Tenant under this Section 13.4 shall not
relieve Tenant from liability hereunder.
13.5 Limitation on Transfer of Interest in Tenant. If Tenant is a corporation, an
unincorporated association, a partnership or a joint venture, the transfer, assignment or
hypothecation (except for a hypothecation in connection with a loan transaction of the type
contemplated by Article XIV hereof) of a Controlling ownership interest in such entity, whether in
a single transaction or multiple transactions and whether to a single person or multiple persons,
shall be deemed an assignment within the meaning of this Article XIII. Furthermore, any
transaction by which Tenant undergoes a merger or other reorganization, including a sale of all
or substantially all of its assets, wherein Tenant is not the surviving corporation (or the stock
holders of Tenant immediately before the merger or reorganization do not retain Control of the
surviving corporation) shall be deemed, for purposes of the foregoing, a transfer of this Lease.
If Tenant is or becomes a publicly traded entity, any sale or other transfer of any outstanding
stock of, or limited partnership interests in. Tenant shall not be deemed an assignment within
the meaning of this Article XIII unless said sale or other transfer is made by a person or entity
owning a Controlling interest in Tenant and results in a change in the person(s) or entity(ies)
having Control of Tenant.
33
ARTICLE XIV
HYPOTHECATION
14.1 Tenant's Right to Hypothecate. Subject to any restrictions set forth in this
Article XIV, Tenant may, from time -to -time, without Landlord's consent or approval, assign,
hypothecate, mortgage, pledge or alienate Tenant's leasehold estate and rights hereunder
(including Tenant's interest in any subleases, licenses and concession agreements) to a lender
or lenders as security for payment of any indebtedness of Tenant incurred in connection with
the design, approval, construction, furnishing, renovation, remodeling, equipping and completion
of the Project or any portion thereof and any refinancing of the existing debt secured by the
Premises in connection therewith, and thereafter any refinancing of the Project and/or Tenant's
leasehold estate; provided, however, that any such lender shall be an institutional lender, such
as, without limitation, a bank, savings and loan or thrift institution, pension fund, real estate
investment fund, publicly traded limited partnership, or insurance company. In no event shall
Tenant, or its successors in interest, borrow any sum of money secured by a Mortgage in
excess, in the aggregate, of the greater (i) ninety percent (90%) of the appraised value of the
Project and Tenants leasehold interest hereunder as reflected in an appraisal thereof
completed no earlier than one hundred eighty (180) calendar days prior to the date such loan is
funded, which appraisal shall be subject to Landlord's reasonable approval if such appraisal is
not required and approved by such lender, or (ii) an amount which results in Tenant having a
net equity in the Project of not less than Ten Million Dollars ($10,000,000) (increased each five
(5) years by the percentage of any increase over such period in the Consumer Price Index for
All Urban Consumers, Los Angeles- Riverside -Orange County, CA, All Items, published by the
Bureau of Labor Statistics, Department of Labor). The successor or most nearly comparable
index published by some other branch or department of the United States Government shall be
used if said Bureau shall cease to publish the Consumer Price Index; provided, however, that in
connection with any refinancing of debt secured by the Premises, the Mortgage may be in the
amount of the debt being refinanced at the time of such refinancing. In calculating whether the
borrowed funds exceed ninety percent (90%) of the appraised value of the Project, any
participation in net revenues from operations, or proceeds of sale or refinancing granted to the
Mortgagee which are fully contingent shall not be included. The limitation on borrowing set forth
in the immediately preceding sentence shall not apply to any Mortgagee who acquires the
Project and the leasehold interest hereunder through foreclosure or deed -in -lieu thereof, or to a
Tenant who shall have acquired the Project and the leasehold interest hereunder from a
Mortgagee (or the trustee under a Mortgage) following a foreclosure of its Mortgage or its
acceptance of a deed -in -lieu thereof. If requested by Tenant, Landlord agrees to execute its
written consent to any such assignment, hypothecation, mortgage, pledge or alienation, which
consent shall be in form and content reasonably satisfactory to Tenant and Landlord. In no
event shall Landlord have any obligation to subject its interest in the Premises or this Lease to
the lien of any mortgage given by Tenant. Any such lien whether evidenced by a mortgage,
deed of trust or otherwise shall be referred to herein as a "Mortgage," and the holder or holders
of or beneficiary under any Mortgage shall be referred to herein as the "Mortgagee." The
Mortgagee may enforce such Mortgage and acquire title to the leasehold estate in any lawful
way and, pending foreclosure of such Mortgage, the Mortgagee may elect to take possession of
and operate the Premises and the Project, or any portion thereof, subject to its Mortgage,
perform all obligations performable by the Mortgagee, and upon foreclosure of such Mortgage
by power of sale, judicial foreclosure or otherwise, or upon acquisition of the leasehold estate by
a deed, assignment or other conveyance in lieu of foreclosure, the Mortgagee may elect to sell
and assign the leasehold estate hereby created subject to the terms of this Lease. Except for
34
payment of any delinquent Rent or other payments due hereunder and obligations reasonably
susceptible of cure by the Mortgagee or any such assignee, the Mortgagee or any such
assignee of the leasehold estate shall not be liable to perform the obligations imposed upon
Tenant by this Lease prior to the period such person or entity has ownership of said leasehold
estate or possession of the Project or the Premises or any portion thereof subject to the
Mortgage.
14.2 Notice to and Rights of Mortgagees.
(a) When giving notice to Tenant with respect to any default hereunder,
Landlord shall contemporaneously serve a copy of each such notice upon any
Mortgagee who shall have given Landlord a written notice specifying its name and
address. When giving any other notice to Tenant hereunder a type which a Mortgagee
has requested to receive in writing, Landlord shall, at the same time, serve a copy
thereof upon such requesting Mortgagee provided it shall have also given Landlord
written notice specifying its name and address. Any Mortgagee shall have the right, but
not the obligation, to cure a default by Tenant under this Lease, and Landlord shall
accept any such performance by any Mortgagees as though the same had been done or
performed by Tenant. The Mortgagees shall have an additional reasonable period of
time following the expiration of the applicable cure period granted Tenant hereunder to
effectuate such cure.
(b) In the case of a monetary default by Tenant under this Lease, Landlord will
take no action to obtain possession of the Premises or the Project (including possession
by a receiver) or to effect a termination of this Lease by reason thereof unless Landlord
shall have served a copy of such notice upon any Mortgagee and the default has
continued for a period of thirty (30) calendar days beyond the date the Mortgagee shall
have received said notice. In the case of any non -monetary default by Tenant under this
Lease, Landlord will take no action to obtain possession of the Premises or the Project
(including possession by a receiver) or to effect a termination of this Lease by reason
thereof unless Landlord has served a copy of a notice of such a default upon any
Mortgagee and such non -monetary default continues for a period of sixty (60) calendar
days beyond the date the Mortgagee received said notice and the Mortgagee shall not
have done any of the following:
(i) commence to cure such default, if such default is capable of cure by the
Mortgagee without the Mortgagee obtaining possession of the Premises, within said
sixty (60) calendar day period, and, thereafter, diligently proceed to cure such
default; or
(ii) commerce to obtain possession of the Project (including possession by
a receiver) within said sixty (60) calendar day period, and, thereafter, diligently
proceed to obtain said possession, and, once said possession is obtained,
commence and diligently proceed to cure such default in the case of a default which
is capable of being cured only after the Mortgagee has obtained said possession; or
(iii) institute foreclosure proceedings within said sixty (60) calendar day
period, and, thereafter, complete such foreclosure proceeding or otherwise acquire
Tenant's interest under this Lease with reasonable and continuous diligence in the
case of a default which cannot be cured in the manners set forth in (i) or (ii) above.
35
With respect to (ii) or (iii) above, no Mortgagee shall be required to continue such
possession or continue such foreclosure proceedings if the default which prompted
the service of such a notice has been cured or, if for any other reason such
Mortgagee elects to discontinue the same. The Mortgagee's period for taking any
such action shall be extended by the period of any stay if the Mortgagee is
prohibited from taking any action described in (ii) or (iii) above by order of any court
having jurisdiction over any bankruptcy or similar proceedings involving Tenant.
(c) If this Lease is terminated by Landlord on account of any Event of Default or
is terminated as a result of the rejection of this Lease by a trustee in a bankruptcy
proceeding involving Tenant and the Mortgagee shall have arranged to the reasonable
satisfaction of Landlord to cure all then -existing defaults of Tenant under this Lease
which are reasonably within the Mortgagee's ability to cure, then Landlord, within thirty
(30) calendar days after receiving a written request therefor which request shall be given
within thirty (30) calendar days after such termination, and upon payment to it of all
expenses (including reasonable attorneys' fees and expenses) incident thereto, shall
execute and deliver a new lease of the Premises to the Mortgagee or its nominee or to a
purchaser, assignee or transferee, as the case may be, which new lease shall contain
the same terms and provisions of this Lease.
(d) The Mortgagee may exercise, with respect to the Premises and Project or
any portion thereof, any right, power or remedy under such Leasehold Mortgage which
does not materially conflict with the provisions of this Lease in the event of a default
under any Leasehold Mortgage.
(e) During the period that a Mortgagee shall be in possession of the Premises
and/or Project and/or during the pendency of any foreclosure proceedings instituted by a
Mortgagee, the Mortgagee shall pay or cause to be paid the Rent specified in this Lease
and other charges of whatsoever nature payable by Tenant hereunder which have been
accrued and are unpaid and which will thereafter accrue during said period, to the extent
the amount of such charges are known or reasonably ascertainable by the Mortgagee. It
shall be an Event of Default if, following the acquisition of Tenant's leasehold estate by
the Mortgagee or its designee, the Mortgagee or party acquiring title to Tenant's
leasehold estate fails to commerce the cure of all defaults hereunder to be cured and
thereafter diligently process such cure to completion, except (i) such defaults which
cannot in the exercise of reasonable diligence be cured or performed by the Mortgagee
or party acquiring title to Tenant's leasehold estate, and (ii) non -monetary defaults
requiring performance of some affirmative obligations susceptible of cure by Mortgagee
upon obtaining possession of the Premises and which the Mortgagee confirms in writing
to landlord that the Mortgagee will require its successor to accomplish and which in all
events shall be accomplished by the Mortgagee or its successor within ninety (90)
calendar days following the obtaining of possession of the Premises by Mortgagee or its
designee. Any default that cannot reasonably be cured by the Mortgagee or party
acquiring title to Tenant's leasehold estate shall be, and shall be deemed to have been,
waived by Landlord (but only with respect to the Mortgagee or other party acquiring said
title) upon completion of the foreclosure proceedings or acquisition of Tenant's interest in
this Lease by any purchaser at the foreclosure sale or who otherwise acquires Tenant's
interest in the Premises. The Parties agree that the foregoing provision shall not be
deemed or construed to preclude Landlord from exercising any of Landlord's rights or
36
remedies against Tenant personally if and to the extent otherwise permitted under the
terms of this Lease.
(f) Nothing herein shall preclude Landlord from exercising any of its rights or
remedies with respect to any other default by Tenant during any period of any such
forbearance, subject to the rights of any Mortgagee as herein provided.
(g) All notices by Landlord to a Mortgagee shall be given, in the manner
provided under Section 19.6, addressed to the Mortgagee at the address last specified
to Landlord by the Mortgagee, and any such notice shall be deemed to have been given,
served, and received by the Mortgagee three (3) calendar days after mailing of said
notice by Landlord.
(h) The Mortgagee whose Leasehold Mortgage would be senior in priority if
there were a foreclosure shall prevail if two (2) or more Mortgagees exercise their rights
hereunder, and there is a conflict which renders it impossible to comply with all such
requests. Any Mortgagee who pays any Rent or other sums due hereunder which relate
to periods other than during its actual ownership of the leasehold estate shall be
subrogated to any and all rights which may be asserted against Tenant by Landlord with
respect to such period of time.
(i) Landlord shall have no obligation to pay any fees and expenses of any kind
or description incurred in connection with the procurement of any Leasehold Mortgages
pursuant to this Article XIV.
(i) Landlord agrees to include in this Lease by mutually agreed amendment
from time -to -time any provision which may reasonably be requested by any proposed
lender for the purpose of implementing the Mortgagee -protection provisions contained in
this Lease and allowing such lender reasonable means to protect or preserve the lien of
the leasehold mortgage on the occurrence of a default under the terms of this Lease;
provided, however, that such amendment shall not have an adverse effect on Landlord's
rights or obligations under this Lease. Landlord and Tenant each agree to execute and
deliver (and to acknowledge, if necessary, for recording purposes) any agreement
necessary to effect any such amendment agreed to by Landlord, acting within Landlord's
sole and absolute discretion.
All amendments or modifications to, or any voluntary termination or cancellation of (other
than as expressly permitted hereunder), this Lease shall require the written approval of
any Mortgagee (if its respective Mortgage so requires).
14.3 Nonsubordination of Fee. In no event will Landlord be required to
subordinate or subject its fee interest in the Premises to the lien of any Mortgagee or any other
person or entity providing financing to Tenant for any purpose. All such financing shall be the
sole responsibility of Tenant.
14.4 Equipment Financing. Landlord understands that Tenant may lease and/or
purchase with purchase money financing certain of the Furnishing which may be installed in or
used in connection with the Project from time -to -time during the Term. Landlord hereby agrees,
upon written request of Tenant, to release, waive or subordinate its landlord's lien to such
equipment leases, retained title contracts, security interest or other forms of purchase money
37
financing and to execute documents, in form and substance reasonably satisfactory to Landlord,
that permit the equipment lessors, title and lien holders, as applicable, the right to enter the
Premises for the sole purpose of exercising their rights to the Furnishings subject to such
leases, retained title contract, security interest or other forms of purchase money financing.
14.5 Cross Collateralization of Premises. Tenant shall not assign,
hypothecate, Mortgage, pledge or alienate Tenant's leasehold estate and rights hereunder
(including Tenant's interest in any subleases, license agreements and concession agreements)
to a lender as security for the payment of indebtedness or Tenant which mortgage, pledge or
other security agreement does not provide for the full release and reconveyance of such
mortgage pledge or security interest upon payment of a sum equal to the maximum amount of
financing permitted by Section 14.1 (less any principal sums paid under the loan agreements
and plus any sum expended by the Mortgagee in the exercise of its rights under the loan
agreements).
ARTICLE XV
WASTE AND GOVERNMENTAL REGULATIONS
15.1 Waste or Nuisance. Tenant shall not commit or suffer to be committed any
waste or nuisance in or upon the Project or the Premises. This provision shall in no way
preclude or restrict Tenant in the lawful performance of its rights to operate the Project pursuant
to the provisions of this Lease.
15.2 Governmental Regulations. Tenant, at its sole cost and expense, shall
comply with and observe, without exception, all of the laws, rules, ordinances, orders,
regulations and requirements of all county, municipal, state, federal and other applicable
govemmental authorities, now in force, or which may hereafter be in force, having jurisdiction
over the Premises, the Project and/or the operations to be conducted by Tenant thereon or
thereat. Without limiting the generality of the foregoing, Tenant shall obtain all permits and
licenses (such as building permits and operating permits and licenses) as may be required by
any such governmental authorities and shall make such alterations, changes, additions or
improvements in the Premises, the Project and its operations thereat as may be required by any
such governmental authorities (and approved by Landlord), including structural changes.
Landlord shall cooperate to the extent reasonably necessary to permit Tenant to comply with
the provisions of this Section 15.2 within the time periods necessary for such compliance.
15.3 Tenant's Right to Contest Governmental Regulations. Tenant shall have
the right to contest by appropriate proceedings conducted in good faith and with reasonable
diligence, without cost or expense to Landlord, the validity or application of any law, ordinance,
order, rule, regulation or requirement of the nature referred to in Section 15.2. Tenant may
delay compliance with any law, ordinance, rule regulation or requirement until the final
determination of such proceeding if compliance may legally be delayed pending the prosecution
of any proceeding with the incurrence of any lien, charge or liability of any kind against the
Premises or Tenant's interest therein and without subjecting Tenant or Landlord to any liability,
civil or criminal, for failure so to comply therewith. Even if such lien, charge or civil liability would
be incurred by reason of any such delay, Tenant may, following reasonable notice to Landlord,
contest as aforesaid and delay as aforesaid, provided that such contest or delay does not
subject Landlord to criminal liability, damages or expense, and provided that Tenant furnishes
Landlord security, reasonably satisfactory to Landlord, against any loss or injury by reason of
such contest or delay. Landlord shall not be required to join in any proceedings referred to in
38
this Section 15.3 unless the provisions of any applicable law, rule or regulation then in effect
shall require that such proceedings be brought by and/or in the name of Landlord or shall
otherwise require that Landlord be a party thereto, in which event Landlord shall join in the
proceeding or permit the same to be brought in its name, provided Tenant shall pay all
expenses in connection therewith. Tenant shall not contest the validity or application of any use
permits or approvals affecting the Premises and in existence as of the date of this Lease.
ARTICLE XVI
EMINENT DOMAIN
16.1 Lease Governs. Subject to the rights of any Mortgagee, the rights and
obligations of the Parties with respect to any Award, as defined in Section 16.5, shall be as
provided in this Article XVI if there is any Taking during the Term of this Lease.
16.2 Termination of Lease. This Lease shall terminate effective on the date of
surrender of possession of the Premises, or so much thereof or interest therein as has been
taken, to the condemning authority in the event of a Total Taking. Tenant shall continue to pay
all Rent due hereunder and, in all respects, keep, observe and perform all of the terms,
covenants and conditions of this Lease to be kept, observed and performed by Tenant until the
date of such termination.
16.3 Partial Talking; Rent Abatement. If there is a Partial Taking, this Lease
shall remain in full force and effect with respect to that portion of the Premises not taken, and a
fair and equitable proportion of the Rent shall be abated according to the nature and extent of
the Partial Taking, and the duration and extent of the interruption of Tenant's operations due to
such taking and restoration of the Project.
16.4 Partial Taking; Restoration. If there is a Partial Taking, Tenant may, at its
sole cost and expense, whether or not the condemnation award on account of such Taking shall
be sufficient for the purpose, promptly commence and diligently proceed to effect restoration of
the Project on the remaining portion of the Premises as nearly as possible to their value,
condition and character immediately prior to such Taking.
16.5 Distribution of Award. All awards and damages received on account of
any Taking, whether partial or total (including all amounts in respect to both the Premises,
improvements constructed thereon, and personal property located thereon or thereat), including
interest received, if any, whether such award or damages are paid in respect to the Taking of
the fee or leasehold interest in the Premises (hereinafter collectively referred to as the "Award"),
shall be paid promptly by the person(s) receiving the same to an escrow agent mutually
acceptable to Landlord, Tenant, and any Mortgagee, to be released as hereinafter provided
upon appropriate instruction from the parties hereto. The Award may be paid to a Mortgagee
who will then act as the escrow agent if such Mortgagee agrees in writing for express benefit of
Landlord and Tenant to be bound by the terms of Sections 16.6 and 16.8 below. The
Mortgagee whose lien shall have the highest priority shall be selected to act as escrow agent if
there shall be more than one (1) Mortgagee who shall so agree in writing.
16.6 Allocation of Award; Partial Taking. Any Award in a Partial Taking shall
be distributed by the aforementioned escrow agent in the following order of priority:
39
(a) First, to Landlord, Tenant and all Mortgagees, as herein provided, as
reimbursement for all costs and expenses incurred in the condemnation proceeding
unless Landlord is the condemning authority;
(b) Second, to Tenant, as reimbursement for the costs and expenses or
restoration of the Project, as such costs and expenses are incurred by Tenant;
(c) Third, to the Mortgagees, in the order of their respective priorities, such sum
as is necessary to reduce the aggregate principal amount of the liens thereof unless and
to the extent such liens are to remain against the Leasehold; and
(d) Fourth, if Landlord and Tenant are unable to agree upon the allocation of the
balance of the Award, if any, it shall be deposited by said escrow agent into a court of
competent jurisdiction to be equitably allocated between Landlord and Tenant based on
the respective interests of Landlord and Tenant in the balance of said Award as
determined by said court after taking into account the interests of Landlord and Tenant
previously compensated in the distributions provided for in (b) and (c) of this Section
16.6.
16.7 Allocation of Award; Temporary Taking. In the event of a Taking for
temporary use or occupancy, this Lease shall continue in full force and effect without reduction
or abatement of any Rent payable hereunder, and Tenant shall be entitled to claim, recover and
retain any Award made on account of such temporary Taking remaining after paying the
reasonable costs and expenses of Tenant incurred in collecting such Award; provided, however,
that if the period of such Temporary Taking extends beyond the Term of this Lease, such Award
shall be apportioned between Landlord and Tenant as of the date of expiration of the Term of
this Lease.
16.8 Allocation of Award; Total Taking. Any Award in a Total Taking shall be
distributed by the aforementioned escrow agent in the following priority:
(a) First, to Landlord, Tenant and all Mortgagees, as herein provided, as
reimbursement for all costs and expenses incurred by each of them in the collection of
the Award, including fees and expenses incurred in the condemnation proceeding;
(b) Second, to the Mortgagees, in the order of their respective priorities, such
sum as is necessary to satisfy and discharge the liens thereof; and
(c) Third, if Landlord and Tenant are unable to agree upon the allocation of the
balance of the Award, if any, it shall be deposited by said escrow agent into a court of
competent jurisdiction to be equitably allocated between Landlord and Tenant based on
the respective interests of Landlord and Tenant in the balance of said Award as
determined by said court after taking into account the interests of Landlord and Tenant
previously compensated in the distribution provided for in Section 16.8(a).
The determination of the value of Tenant's and Landlord's respective interests in the
Project and the Premises for the purposes of Section 16.8(c) shall be made as if the
Lease were to continue in full force and effect until the Expiration Date.
40
16.9 Conduct of Proceedings. Subject to the rights of any Mortgagee to
participate therein, Tenant and Landlord shall jointly commence, appear in and prosecute any
action or proceeding involving a Taking of the Premises, or any part thereof or interest therein,
by condemnation or under the power of eminent domain, or otherwise and shall jointly make any
compromise or settlement in connection therewith.
16.10 Notices. Upon any Party receiving notice of or becoming aware of any
condemnation proceedings, or threat thereof, such Party shall promptly give written notice to the
other Party in the manner specified in Section 19.6 below.
ARTICLE XVII
DEFAULT PROVISIONS
17.1 Events of Default. The occurrence of any one (1) or more of the following
shall constitute a default by Tenant under this Lease:
(a) Failure of Tenant to pay any Rent or Additional Rent due hereunder within
three (3) calendar days after written notice from Landlord; provided however, that any
such notice shall be in lieu of, and not in addition to, any notice required by the Code of
Civil Procedure of the State of California, as amended from time -to -time; or
(b) Any failure by Tenant to perform any of the other terms, conditions or
covenants of this Lease to be observed or performed by Tenant other than a failure to
pay any Rent or Additional Rent due hereunder within thirty (30) calendar days after
written notice from Landlord; provided, however, that any such notice shall be in lieu of,
and not in addition to, any notice required by the Code of Civil Procedure of the State of
California, as amended from time -to -time. A default by Tenant described in this Section
17.1(b) which is not reasonably susceptible of cure within thirty (30) calendar days after
receipt of Landlord's notice of default shall be deemed cured if Tenant commences to
cure said default within thirty (30) calendar days of receipt of Landlord's notice of default
and Tenant, in fact, diligently proceeds to cure said default and does cure said default
within a reasonable period of time thereafter; or
(c) Tenant becoming insolvent or filing any debtor proceedings, or should any
adjudications in bankruptcy be rendered against Tenant, or should Tenant take or have
taken against it, in any court pursuant to any statute either of the United States or of any
State, a petition in bankruptcy or insolvency or for reorganization or for the appointment
of a receiver or trustee of all or a portion of Tenant's property, and should the same not
be discharged within one hundred twenty (120) calendar days thereafter; or
(d) Tenant making an assignment for the benefit of creditors, or petition for or
enter into an arrangement; or
(e) The abandonment or vacation of the Project by Tenant for a period of fifteen
(15) consecutive calendar days after written notice to Tenant (except for such
abandonment or vacation attributable to any event of Force Majeure or by the
remodeling, reconstruction, alteration or repair of the Project); or
41
(f) The appointment of a trustee or receiver to take possession of substantially
all of the assets of Tenant located at the Premises where possession is not restored
within one hundred twenty (120) calendar days; or
(g) Tenant permitting this Lease or any substantial portion of its property on the
Premises or any portion of its interest in the Premises or the Project to be taken under
any writ of attachment or execution, and should the same not be discharged within
ninety (90) calendar days thereafter.
17.2 Remedies Upon Default.
(a) Except as provided in Section 17.4 and subject to the rights of Mortgagees,
should there be an Event of Default by Tenant under this Lease and should Landlord
take possession pursuant to legal proceedings or pursuant to any notice provided for by
law, Landlord shall be entitled to proceed in accordance with and recover the amounts
specified in California Civil Code Sections 1951.4. Landlord may either terminate this
Lease, or it may from time -to -time without terminating the Lease, make such alterations
and repairs as may be necessary in order to continue operation of business at the
Premises, and relet the Premises, or any part thereof, for such term or terms (which may
be for a term extending beyond the term of this Lease) and at such rent and charges and
upon such terms and conditions as Landlord in its sole discretion may deem advisable;
upon each such reletting all Rent received by Landlord shall be applied, first, to the
payment of any indebtedness other than Rent due hereunder from Tenant to Landlord;
second, to the payment of any costs and expenses of such reletting, including brokerage
fees and attorneys' fees and expenses and of costs of such alternations and repairs;
third, to the payment of Rent due and unpaid hereunder, and the residue, if any, shall be
held by Landlord and applied in payment of future Rent as the same may become due
and payable hereunder. Tenant shall pay any such deficiency to Landlord if such Rent
received from such reletting during any month is less than that which would be due
during that month from Tenant hereunder. Such deficiency shall be calculated and paid
monthly. No such reentry or taking possession of the Premises by Landlord shall be
construed as an election on Landlords part to terminate this Lease unless a written
notice of such intention is given to Tenant or unless the termination thereof is decreed by
a court of competent jurisdiction. Notwithstanding any such reletting without termination,
Landlord may at any time elect to terminate this Lease for such Event of Default. Should
Landlord at any time terminate this Lease for any such Event of Default, in addition to
any other remedies it may have, it may recover from Tenant all damages it may
reasonably incur by reason of such Event of Default, including the cost of recovering the
Premises and its reasonable attorneys' fees and expenses.
(b) Following an Event of Default by tenant hereunder, Tenant shall promptly
deliver to Landlord all plans and specifications and all working drawings prepared in
connection with the development or remodeling of the Project not previously delivered to
Landlord. Tenant's obligations under the Section 17.2(b) shall survive the expiration or
earlier termination of this Lease.
17.3 Landlord Acting for Tenant's Account. If Tenant shall fail in the
performance of any provision, covenant or condition on its part to be performed under this
Lease, Landlord may, at is option, any time after the expiration of any applicable notice and cure
period granted to Tenant and Mortgagees under this Lease (unless Landlord reasonably
42
believes there to be an emergency threatening damage to Landlord's interest in the Premises or
the Project, in which event no notice is required and Landlord may act immediately), perform the
same for the account of, and at the expense of Tenant. The sums so paid or reasonably
incurred by Landlord, together with interest at the default Rate, costs and damages shall be due
from and paid by Tenant, as Additional Rental, on demand,
17.4 Limited Liability; Non -Recourse Ground Lease.
(a) Notwithstanding anything to the contrary contained in this Lease, including
without limitation the remedies of Landlord contained in this Article XVII, except as
otherwise provided in Subsection (b) below, if at any time Tenant shall fail to perform or
pay any covenant or obligation on its part to be performed or paid hereunder, and as a
consequence thereof, Landlord or its successors and assigns shall obtain a money
judgment against Tenant, Landlord agrees to look solely to the interest of Tenant in the
Project for the satisfaction of such judgment, and if such interest is insufficient to satisfy
the judgment amount, Landlord shall have no right of action nor shall Tenant be liable for
any insufficiency.
(b) Notwithstanding the foregoing provisions of Subsection (a) above, nothing
herein is intended to relieve Tenant from the performance of any of its obligations
hereunder, but rather to limit Tenant's liabilities as aforesaid. Nothing in Subsection (a)
shall be deemed to prejudice the rights of Landlord against Tenant, and Tenant shall be
fully liable to Landlord for damages suffered by Landlord, to the extent provided by law:
(i) as a result of fraud, misrepresentation or gross negligence by Tenant;
(ii) as the result of the retention of any rental or other income arising with
respect to the Premises which is collected by Tenant after Landlord has given
notice to Tenant that it is in default under the Lease (to the full extent of such rental
or other income collected by Tenant after the giving of any such notice);
(iii) for the fair market value as of the time of giving of any notice referred to
in (ii) hereinabove of any personal property of fixtures located, attached and/or used
in connection with the Project which are removed or disposed of by Tenant; and
(iv) as the result of the misapplication of any proceeds under any insurance
policies, condemnation awards or settlements attributable to all or any portion of the
Premises or Project.
ARTICLE XVIII
LANDLORD'S ACCESS
18.1 Landlord's Right of Access. Upon reasonable prior notice to Tenant,
Landlord and Landlord's agents shall have the right to enter the Premises and/or the Project
during regular business hours for the purpose of determining Tenant's compliance with any
provision, covenant or condition on Tenant's part to be performed under this Lease; provided,
however, that Landlord shall not interfere with the normal conduct of Tenant's business on the
Premises. Landlord hereby agrees to indemnify, defend with counsel satisfactory to Tenant and
hold Tenant free and harmless from any and all losses costs, damages or expenses suffered or
43
incurred, directly or indirectly by activities conducted by Landlord or Landlord's agents under
this Section 18.1. Tenant agrees to have available to Landlord at reasonable times and upon
reasonable notice a representative who may accompany Landlord's representative in the
exercise by Landlord of its right of entry and access.
ARTICLE XIX
MISCELLANEOUS
19.1 Waiver. The waiver by either Landlord or Tenant of any breach of any term,
covenant or condition herein contained shall not be deemed to be a waiver of such term,
covenant or condition or any subsequent breach of the same or any other term, covenant or
condition herein contained. The subsequent acceptance of any Rent hereunder by Landlord
shall not be deemed to be a waiver of any preceding breach by Tenant of any term, covenant or
condition of this Lease other than the failure of Tenant to pay the particular Rent so accepted,
regardless of Landlord's knowledge of such preceding breach at the time of acceptance. No
covenant, term or condition of this Lease shall be deemed to have been waived by Landlord or
Tenant, unless such waiver is in writing signed by the Party against whom such waiver is
asserted.
19.2 Entire Lease. This Lease sets forth all the covenants, promises, conditions
and understandings between Landlord and Tenant, oral or written, relating to the subject matter
hereof. No subsequent alterations, amendments, changes or additions to this Lease shall be
binding upon Landlord and Tenant unless reduced to a writing, signed by them and approved by
the Mortgagees, if and to the extent required under their respective Mortgages.
19.3 Termination of Existing Lease. Concurrently with execution of this Lease
by the Parties, the Existing Lease is hereby terminated; provided, however, that any accrued
and unpaid rental obligations of Tenant thereunder not included in the rental obligations of this
Lease shall be immediately due and payable and remain in full force and effect under this
Lease.
19.4 Force Majeure. The performance of any act required hereunder shall be
excused for the period of any delay, hindrance or prevention of such act due to an event of
Force Majeure and the period for the performance of any act shall be extended for a period
equivalent to the period of such delay. The performance of such act shall be excused if either
party shall be indefinitely prevented from the performance of any act required hereunder by
reason of such event of Force Majeure. No event of Force Majeure shall excuse the timely
payment of money when due hereunder except as otherwise expressly provided in this Lease.
19.5 Notices. Any notice, request, demand, instruction or other communication
to be given to either Party hereunder shall be in writing and shall be deemed to have been duly
given when personally delivered, twenty-four (24) hours after deposited with a reliable overnight
carrier, guaranteeing next day delivery, postage prepaid, addressed as set forth below, or forty-
eight (48) hours after mailed by United States Registered mail, return receipt requested,
postage prepaid as follows:
If to Landlord:
City of Newport Beach
100 Civic Center Drive
Newport Beach, California 92658
Attention: City Manager
44
With copy to:
If to Tenant:
With copy to:
City of Newport Beach
100 Civic Center Drive
Newport Beach, California 92658
Attention: City Attorney
c/o International Bay Clubs, Inc.
1221 West Coast Highway
Newport Beach, California 92663
Attention: General Manager
The Busch Firm
2532 Dupont Drive
Irvine, California 92612
Attention: George P. Mulcaire
Pacific Hospitality Group, LLC
2532 Dupont Drive
Irvine, California 92612
Attention: Kory J. Kramer
And: Tenant's Mortgagee(s) provided Landlord has received
Written notice of and the address of such Mortgagee(s)
Any notice party may change its address for purposes of receiving notice hereunder by giving
written notice to the other party pursuant to the provisions hereof. Refusal to accept delivery of
any notice, demand, instruction or other communication shall be deemed to be delivery thereof.
In the event of a partial assignment of either Landlord's or Tenant's interest under this Lease, no
notice or payment shall be given or made to any such partial assignee, but only to one (1)
person, firm or corporation as shall have been duly designated by an instrument executed and
acknowledged by all such partial assignees and a duplicate original shall have been served
upon the other party hereto. Notice or payment shall be given or made only to the last assignee
of this Lease as a whole or the one (1) person, firm or corporation named in the most recent
designation duly made and served. Neither Tenant nor Landlord shall have any liability to see
to the proper distribution of any notice or payment so made to the other party.
19.6 Captions and Section Numbers. The captions, section numbers, article
numbers and index appearing in this Lease are inserted only as a matter of convenience, and in
no way define, limit, construe or describe the scope or intent of such section or article, nor in
any way affect this Lease.
19.7 Construction of Language. The language in all parts of this Lease shall be
construed simply, according to its fair meaning, and not strictly for or against either Landlord or
Tenant. The term "permit" shall be interpreted to include "cause to be permitted or suffered to
be permitted," and the term "include" shall be interpreted not to imply any limitation on the more
general preceding provision, unless in each instance otherwise expressly provided in this
Lease.
45
19.8 Broker's Commission. In connection with the transaction contemplated by
this Lease, Landlord and Tenant each represents to the other that it has not entered into any
agreement or incurred any obligation which might result in the obligation to pay a brokerage
commission or finder's fee with respect to this transaction. Landlord and Tenant each agree to
indemnify, defend, protect and hold the other harmless from and against any and all losses,
claims, damages, costs or expenses (including attorneys' fees) which the other may incur as a
result of any claim made by any person to a right to brokerage commission or finder's fee in
connection with this transaction to the extent such claim is based, or purportedly based, on the
acts or omissions of Landlord or Tenant, as the case may be.
19.9 Limitation of Landlord's Obligations. Landlord shall not be called upon or
required at any time to make any improvements, alterations, changes, additions, repairs or
replacements of any nature whatsoever in or to the Premises.
19.10 Landlord's or Tenant's Discretion. Landlord or Tenant, as applicable,
shall not have a right to unreasonably withhold, condition or delay such consent or approval if
Landlord's or Tenant's consent or approval is required hereunder unless the provision of the
Lease states that such approval or consent is in the sole or absolute discretion of the applicable
Party. Whenever Landlord's or Tenant's approval or consent is required under this Lease,
Landlord or Tenant, as applicable, shall be deemed to have granted such approval or consent if
Landlord or Tenant, as applicable, has failed to respond to such request within the period of
time expressly given such Party to respond under the applicable section hereof or if no deadline
for a response is given under the applicable section, within thirty (30) calendar days of its
receipt of such written request delivered in accordance with the terms of Section 19.6.
19.11 Interest. Interest shall accrue at the Lease Interest Rate on any sums owed
by Tenant to Landlord, or vice versa, starting from the first date of delinquency and continuing
until the full amount including interest is paid; provided, however, that if the due date for any
payment of Rent or other amounts due hereunder does not fall on a Business Day, then the due
date for such payment shall be extended until the first Business Day following such date,
19.12 Successors. Except as herein otherwise provided the terms hereof shall be
binding upon and shall inure to the benefit of the successors and assigns, respectively, of
Landlord and Tenant.
19.13 Applicable Law. This Lease and all provisions hereof, irrespective of the
place of execution or performance, shall be construed and enforced in accordance with the laws
of the State of California without giving effect to conflict of law's provisions. Venue shall be in
Orange County, California.
19.14 Landlord's and Tenant's Rights are Cumulative. The rights and remedies
conferred upon both Landlord and Tenant in this Lease and by law are cumulative.
19.15 Saving Clause. If any provision of this Lease, the deletion of which would
not adversely affect the receipt of any material benefit by any Party hereunder or substantially
increase the burden on any Party hereto, shall be held to be invalid or unenforceable to any
extent, the same shall not affect in any respect whatsoever the validity or enforceability of the
remainder of this Lease.
46
19.16 Attorneys' Fees and Expenses. In the event of any litigation or other
action arising under this Lease the prevailing Party shall not be entitled to attorneys' fees.
19.17 Injunctive Relief. In addition to any remedies expressly mentioned in this
Lease, the other Party shall have the right of injunction and the right to invoke any remedy
allowed at law or in equity if there is any breach or threatened breach by either Party of any of
the covenants or provisions of this Lease.
19.16 Appraisal. If an appraisal is required under the terms of this Lease for the
purposes of determining "fair market value," unless otherwise specified herein, such appraisal
shall be determined by the appraisal by three (3) disinterested real estate appraisers, each with
at least ten (10) years' experience in the appraisal of similar property interests, one (1)
appraiser being chosen by Landlord, one (1) appraiser by Tenant, and the third appraiser by the
other two (2) appraisers. The average of the two (2) appraisals closest in value shall be
deemed the "fair market value." Landlord shall pay the costs of the appraiser selected by
Landlord, Tenant shall pay the costs of the appraiser selected by Tenant, and Landlord and
Tenant shall split the costs of the third appraiser.
19.19 Recording. Landlord and Tenant shall execute for purposes of recordation
in the Office of the County Recorder a memorandum or short form of this Lease in the form
attached hereto as Exhibit C, and incorporated herein by reference. The cost and expenses of
recording the memorandum or short form of the Lease shall be borne by the Party asking for the
memorandum to be recorded. Each Party agrees that it will not record the Lease in its entirety.
19.20 Incorporation of Preamble, Recitals and Exhibits. The preamble, recitals
and exhibits hereto are hereby incorporated into this Lease and made a part hereof.
[SIGNATURES ON NEXT PAGE]
47
IN WITNESS WHEREOF, Landlord and Tenant have duly executed and delivered this Lease as
of the day and year first written above.
Attest:
Leilarii I. Brown
City Clerk
Approved as to Form:
CITY ATTO&N Y'S OFFICE
(Car)
Aaron C. H
City Attorney
LANDLORD:
CITY OF NEWPORT BEACH,
a California municipal corporation
By:
Keith D. Curry
Mayor
TENANT:
BALBOA BAY CLUB/U'ENTCJRES, LLC,
a California li i ed liabillii ,company
B: (
Y I
Ken C. M
President
By:
in
Todd M. Piclup
Secretary
[END OF SIGNATURES]
48
EXHIBIT A
LEGAL DESCRIPTION
ALL THAT CERTAIN LAND SITUATED IN THE STATE OF CALIFORNIA, COUNTY OF
ORANGE, CITY OF NEWPORT BEACH, DESCRIBED AS FOLLOWS;
PARCEL 1:
THAT PORTION OF LOT 171, BLOCK 54 OF IRVINE'S SUBDIVISION, AS SHOWN ON A
MAP RECORDED IN BOOK 1, PAGE 88 OF MISCELLANEOUS RECORD MAPS, IN THE
OFFICE OF THE COUNTY RECORDER OF ORANGE COUNTY, CALFORNIA, AND THAT
PORTION OF THE NAVIGABLE TIDE AND SUBMERGED LANDS, DESCRIBED AS
FOLLOWS:
BEGINNING AT A POINT ON THE U.S. BULKHEAD LINE EXTENDING FROM US.
BULKHEAD STATION NO. 129 TO U.S. BULKHEAD STATION NO. 130, AS SAID BULKHEAD
LINE AND BULKHEAD STATIONS, INCLUDING THE PIERHEAD LINES AND STATIONS,
SAID PIERHEAD LINES BEING PARALLEL WITH AND 80 FEET BAYWARD OF SAID
BULKHEAD LINES, ARE LAID OUT AND SHOWN ON A MAP OF NEWPORT BAY,
CALIFORNIA, SHOWING HARBOR LINES APPROVED BY THE WAR DEPARTMENT,
JANUARY 18, 1917, SAID POINT BEING DISTANT SOUTH 61 DEGREES 01' 07" EAST,
MEASURED ALONG SAID BULKHEAD LINE, 1498.00 FEET FROM THE INTERSECTION OF
SAID BULKHEAD LINE WITH THE SOUTHWESTERLY PROLONGATION OF THE
CENTERLINE OF IRVINE AVENUE, AS SHOWN ON A MAP OF FIRST ADDITION TO
NEWPORT HEIGHTS, RECORDED IN BOOK 4, PAGE 94 OF MISCELLANEOUS MAPS, IN
THE OFFICE OF THE COUNTY RECORDER OF SAID ORANGE COUNTY, SAID POINT
ALSO BEING ON THE SOUTHEASTERLY BOUNDARY LINE OF PARCEL 1, PER A DEED
OF TRUST RECORDED MARCH 30, 1966 IN BOOK 7884, PAGE 298 OF OFFICIAL
RECORDS IN THE OFFICE OF THE COUNTY OF THE COUNTY RECORDER OF SAID
ORANGE COUNTY; THENCE ALONG SAID SOUTHEASTERLY BOUNDARY LINE, THE
FOLLOWING COURSES: NORTH 28 DEGREES 58' 53" EAST 130,00 FEET; THENCE
NORTH 27 DEGREES 00' 00" WEST 16.66 FEET: THENCE NORTH 28 DEGREES 58' 53"
EAST 195.71 FEET TO A POINT IN THE SOUTHWESTERLY LINE OF THE 100-FOOT
RIGHT-OF-WAY OF THE CALIFORNIA STATE HIGHWAY ORA-60-B, THENCE LEAVING
SAID SOUTHEASTERLY BOUNDARY, SOUTH 74 DEGREES 21' 30" EAST ALONG SAID
SOUTHWESTERLY LINE, 130.08 FEET TO THE BEGINNING OF A TANGENT CURVE
CONCAVE NORTHLY, HAVING A RADIUS OF 2550.00 FEET; THENCE EASTERLY 715.57
FEET ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 16 DEGREES 04' 41" TO AN
INTERSECTION WITH THE NORTHEASTERLY PROLONGATION OF THE
NORTHWESTERLY LINE OF TRACT NO. 1140, AS SHOWN ON A MAP THEREOF
RECORDED IN BOOK 36, PAGE 28 OF MISCELLANEOUS MAPS, IN THE OFFICE OF THE
COUNTY RECORDER OF SAID ORANGE COUNTY, THENCE SOUTH 28 DEGREES 58' 53"
WEST 975.03 FEET TO A LINE PARALLEL WITH AND DISTANT SOUTHWESTERLY 350.00
FEET FROM SAID BULKHEAD LINE; THENCE NORTH 61 DEGREES 01' 07" WEST 776.91
FEET ALONG SAID PARALLEL LINE , TO THE SOUTHWESTERLY PROLONGATION OF
THE SOUTHEASTERLY LINE OF SAID PARCEL 1: THENCE ALONG SAID PROLONGATION
AND SAID SOUTHEASTERLY LINE, NORTH 28 DEGREES 58' 53" EAST 350.00 FEET TO
THE POINT OF BEGINNING.
PARCEL 2:
THAT CERTAIN PARCEL OF LAND MORE PARTICULARLY DESCRIBED AS FOLLOWS:
BEGINNING AT A POINT ON THE U.S. BULKHEAD LINE, EXTENDING FROM U.S.
BULKHEAD STATION NO. 129 TO U.S. BULKHEAD STATION NO. 130, AS SAID BULKHEAD
LINE AND BULKHEAD STATIONS, INCLUDING THE PIERHEAD LINES AND STATIONS,
SAID PIERHEAD LINES BEING PARALLEL WITH AND 80 FEET BAYWARD OF SAID
BULKHEAD LINES, ARE LAID OUT AND SHOWN ON A MAP OF NEWPORT BAY,
CALIFORNIA, SHOWING HARBOR LINES APPROVED BY THE WAR DEPARTMENT,
JANUARY 18, 1917, WHICH SAID POINT IS DISTANT SOUTH 61 DEGREES 01' 07" EAST,
MEASURED ALONG SAID BULKHEAD LINE, 700.00 FEET FROM THE INTERSECTION OF
SAID BULKHEAD LINE WITH THE SOUTHWESTERLY PROLONGATION OF THE
CENTERLINE OF IRVINE AVENUE, AS SHOWN ON A MAP OF FIRST ADDITION TO
NEWPORT HEIGHTS RECORDED IN BOOK 4, PAGE 94 OF MISCELLANEOUS MAPS IN
THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, SAID POINT OF
INTERSECTION BEING THE MOST SOUTHERLY CORNER OF LOT H TRACT NO. 919 AS
PER MAP RECORDED IN BOOK 29, PAGES 31 TO 34 INCLUSIVE OF MISCELLANEOUS
MAPS IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY; THENCE NORTH
28 DEGREES 58' 53" EAST 154.19 FEET TO A POINT IN THE SOUTHWESTERLY LINE OF
THE 100-FOOT RIGHT OF WAY OF THE CALIFORNIA STATE HIGHWAY ORA-60-B, SAID
POINT BEING RADIAL TO ENGINEER'S STATION 6+56.15 IN THE CENTERLINE OF SAID
HIGHWAY, SAID RADIAL BEARS NORTH 19 DEGREES 37' 57" EAST FROM SAID POINT,
SAID SOUTHWESTERLY LINE BEING A CURVE CONCAVE NORTHEASTERLY AND
HAVING A RADIUS OF 2050.00 FEET; THENCE SOUTHEASTERLY ALONG SAID
SOUTHWESTERLY LINE, THROUGH A CENTRAL ANGLE OF 3 DEGREES 59' 27" 142.79
FEET TO A TANGENT LINE; THENCE SOUTH 74 DEGREES 21' 30" EAST ALONG SAID
TANGENT LINE AND SAID SOUTHWESTERLY LINE, 66208 FEET; THENCE SOUTH 28
DEGREES 58' 53" WEST 195.71 FEET; THENCE SOUTH 27 DEGREES 00' 00" EAST 16.66
FEET; THENCE SOUTH 28 DEGREES 58' 53" WEST 480.00 FEET TO A LINE PARALLEL
WITH AND SOUTHWESTELY 350.00 FEET FROM SAID BULKHEAD LINE; THENCE NORTH
61 DEGREES 01' 07" WEST ALONG SAID PARALLEL LINE, A DISTANCE OF 798.00 FEET
TO A POINT WHICH BEARS SOUTH 28 DEGREES 58" 53" WEST 350.00 FEET FROM THE
POINT OF BEGINNING; THENCE NORTH 28 DEGREES 58' 53" EAST 350.00 FEET TO THE
POINT OF BEGINNING.
INCLUDING THAT PORTION DESCRIBED AS FOLLOWS (AS SHOWN ON INCLUDED MAP
EXHIBIT FOR "PARCEL 2"). *AREA SHALL BECOME PART OF THE LEASED PREMISES
UPON EXECUTION AND RECORDATION OF A TRANSFER DOCUMENT AND INDEMNITY
LANGUAGE ACCEPTABLE TO THE CITY OF NEWPORT BEACH.*
BEGINNING AT A POINT ON THE SOUTHERLY LINE OF THE 100-FOOT RIGHT OF WAY
OF THE CALIFORNIA STATE HIGHWAY ORA-60-B, SAID POINT OF BEGINNING BEING AT
RIGHT ANGLES TO ENGINEER'S STATION 7+95.46 IN THE CENTERLINE OF SAID
HIGHWAY; THENCE SOUTH 15 DEGREES 38' 30" WEST 44.00 FEET; THENCE NORTH 74
DEGREES 21' 30" WEST 34.00 FEET; THENCE NORTH 15 DEGREES 38' 30" EAST TO AN
INTERSECTION WITH THE SAID SOUTHERLY LINE OF THE STATE HIGHWAY; THENCE
SOUTHEASTERLY ALONG SAID SOUTHERLY LINE TO THE POINT OF BEGINNING.
PARCEL 3:
A NON-EXCLUSIVE EASEMENT FOR INGRESS AND EGRESS OVER THAT CERTAIN
PARCEL OF LAND INCLUDED WITHIN A STRIP OF A LAND 25.00 FEET IN WIDTH, THE
NORTHEASTERLY LINE OF WHICH IS DESCRIBED AS FOLLOWS:
BEGINNING AT A POINT ON THE U.S. BULKHEAD LINE EXTENDING FROM U.S.
BULKHEAD STATION NO. 129 TO U.S. BULKHEAD STATION NO. 130, AS SAID BULKHEAD
LINE AND BULKHEAD STATIONS, INCLUDING THE PIERHEAD LINES AND STATIONS,
SAID PIERHEAD LINES BEING PARALLEL WITH AND 80 FEET BAYWARD OF SAID
BULKHEAD LINES, ARE LAID OUT AND SHOWN ON A MAP OF NEWPORT BAY,
CALIFORNIA, SHOWING HARBOR LINES APROVED BY THE WAR DEPARTMENT,
JANUARY 18, 1917, WHICH SAID POINT IS DISTANT SOUTH 61 DEGREES 01' 07" EAST,
MEASURED ALONG SAID BULKHEAD LINE, 700 FEET FROM THE INTERSECTION OF
SAID BULKHEAD LINE WITH THE SOUTHWESTERLY PROLONGATION OF THE
CENTERLINE OF IRVINE AVENUE, AS SHOWN ON A MAP OF FIRST ADDITION TO
NEWPORT HEIGHTS RECORDED IN BOOK 4, PAGE 94 OF MISCELLANEOUS MAPS IN
THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, SAID POINT OF
INTERSECTION BEING THE MOST SOUTHERLY CORNER OF LOT H OF TRACT NO. 919,
AS PER MAP RECORDED IN BOOK 29, PAGES 31 TO 34 INCLUSIVE OF MISCELLANEOUS
MAPS IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY; THENCE NORTH
28 DEGREES 58' 53" EAST 154.19 FEET TO A POINT IN THE SOUTHWESTERLY LINE OF
THE 100-FOOT RIGHT OF WAY OF THE CALIFORNIA STATE HIGHWAY ORA-60-B, SAID
POINT BEING RADIAL TO ENGINEER'S STATION 6+56.15 IN THE CENTERLINE OF SAID
HIGHWAY, SAID RADIAL BEARS NORTH 19 DEGREES 37' 57" EAST FROM SAID POINT,
SAID SOUTHWESTERLY LINE BEING A CURVE CONCAVE NORTHEASTERLY AND
HAVING A RADIUS OF 2050.00 FEET; THENCE SOUTHEASTERLY ALONG SAID
SOUTHWESTERLY LINE, THROUGH A CENTRAL ANGLE OF 3 DEGREES 59' 27", 142.79
FEET TO A TANGENT LINE; THENCE SOUTH 74 DEGREES 21' 30" EAST ALONG SAID
TANGENT LINE AND SAID SOUTHWESTERLY LINE, 662.08 FEET TO THE TRUE POINT OF
BEGINNING; THENCE SOUTH 74 DEGREES 21' 30" EAST 130,08 FEET TO THE
BEGINNING OF A CURVE ON SAID SOUTHWESTERLY LINE, CONCAVE
NORTHEASTERLY, HAVING A RADIUS OF 2550.00 FEET; THENCE SOUTHEASTERLY
715.56 FEET ALONG SAID CURVE, THROUGH A CENTRAL ANGLE OF 16 DEGREES 04'
40" TO THE NORTHEASTERLY PROLONGATION OF THE NORTHWESTERLY LINE OF
TRACT NO. 1140, AS PER MAP RECORDED IN BOOK 36, PAGE 28 OF MISCELLANEOUS
MAPS IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY.
THE SOUTHWESTERLY LINE OF SAID 25.00-FOOT STRIP IS TO BE SHORTENED SO AS
TO TERMINATE IN SAID NORTHWESTERLY PROLONGATION AND LENGTHENED SO AS
TO TERMINATE ON A LINE WHICH BEARS SOUTH 28 DEGREES 58' 53" WEST FROM THE
TRUE POINT OF THE BEGINNING.
PARCEL 4:
A NON-EXCLUSIVE EASEMENT FOR AUTO PARKING PURPOSES OVER THE
SOUTHWESTERLY 20.00 FEET OF THE NORTHEASTERLY 45.00 FEET OF THAT CERTAIN
PARCEL MORE PARTICULARLY DESCRIBED AS FOLLOWS:
BEGINNING AT A POINT ON THE U.S. BULKHEAD LINE EXTENDING FROM U.S.
BULKHEAD STATION NO. 129 TO U.S. BULKHEAD STATION NO. 130, AS SAID BULKHEAD
LINE AND BULKHEAD STATIONS, INCLUDING THE PIERHEAD LINES AND STATIONS,
SAID PIERHEAD LINES BEING PARALLEL WITH AND 80 FEET BAYWARD OF SAID
BULKHEAD LINES, ARE LAID OUT AND SHOWN ON A MAP OF NEWPORT BAY,
CALIFORNIA, SHOWING HARBOR LINES APPROVED BY THE WAR DEPARTMENT,
JANUARY 18, 1917, WHICH SAID POINT IS DISTANT SOUTH 61 DEGREES 01' 07" EAST,
MEASURED ALONG SAID BULKHEAD LINE, 700.00 FEET FROM THE INTERSECTION OF
SAID BULKHEAD LINE WITH THE SOUTHWESTERLY PROLONGATION OF THE
CENTERLINE OF IRVINE AVENUE, AS SHOWN ON A MAP OF FIRST ADDITION TO
NEWPORT HEIGHTS RECORDED IN BOOK 4,PAGE 94 OF MISCELLANEOUS MAPS IN
THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, SAID POINT OF
INTERSECTION BEING THE SOUTHERLY CORNER OF LOT H OF TRACT NO. 919, AS
SHOWN ON A MAP RECORDED IN BOOK 29, PAGES 31 TO 34 INCLUSIVE OF
MISCELLANEOUS MAPS IN THE OFFICE OF THE COUNTY RECORDER OF SAID
COUNTY; THENCE NORTH 28 DEGREES 58' 53" EAST 154.19 FEET TO A POINT IN THE
SOUTHWESTERLY LINE OF THE 100-FOOT RIGHT OF WAY OF THE CALIFORNIA STATE
HIGHWAY ORA-60-B, SAID POINT BEING RADIAL TO ENGINEER'S STATION 6+56.15 IN
THE CENTERLINE OF SAID HIGHWAY, SAID RADIAL BEARS NORTH 19 DEGREES 37' 57"
EAST FROM SAID POINT, SAID SOUTHWESTERLY LINE BEING A CURVE CONCAVE
NORTHEASTERLY AND HAVING A RADIUS OF 2050,00 FEET; THENCE SOUTHEASTERLY
ALONG SAID SOUTHWESTERLY LINE, THROUGH A CENTRAL ANGLE OF 3 DEGREES 59'
27", 142.79 FEET TO A TANGENT LINE; THENCE SOUTH 74 DEGREES 21' 30" EAST
ALONG SAID TANGENT LINE AND SAID SOUTHWESTERLY LINE, 662.08 FEET TO THE
TRUE POINT OF BEGINNING; THENCE SOUTH 28 DEGREES 58' 53" WEST 195.71 FEET;
THENCE SOUTH 27 DEGREES 00' 00" EAST 16.66 FEET; THENCE SOUTH 28 DEGREES
58' 53" WEST 480.00 FEET TO A LINE PARALLEL WITH SOUTHWESTERLY 350.00 FEET
FROM SAID BULKHEAD LINE; THENCE SOUTH 61 DEGREES 01' 17" EAST 235.68 FEET
ALONG SAID PARALLEL LINE; THENCE NORTH 29 DEGREES 30' 13" EAST 697.99 FEET;
THENCE NORTH 11 DEGREES 45' 40" EAST 49.32 FEET TO SAID SOUTHWESTERLY LINE
OF THE STATE HIGHWAY, SAID SOUTHWESTERLY LINE BEING A CURVE CONCAVE
NORTHEASTERLY, HAVING A RADIUS OF 2,550.00 FEET; THENCE NORTHWESTERLY
118.56 FEET ALONG SAID CURVE, THROUGH A CENTRAL ANGLE OF 2 DEGREES 39' 50"
TO THE NORTHWESTERLY TERMINUS THEREOF; THENCE NORTH 74 DEGREES 21' 30"
WEST 130.08 FEET TO THE TRUE POINT OF BEGINNING.
Balboa Bay Club
(Lease Area - Parcel 1)
cF
* DEVELOPMENT AND USE OF PREMISES SUBJECT
TO ALL CITY MUNICIPAL CODES AND CITY
COUNCIL POLICIES, AND STATE AND FEDERAL
REGULATIONS.
TENANT'S EXISTING USE OF THE
MARINA IN THE CURRENT CONFIGURATION
AS DEPICTED IS APPROVED.
Parcel 1- Lease Area
Parcel 3 - 25' Ingress\Egress Easement
Parcel 4 - 20' Parking Easement
Radius = 2550*
ArcLength.= 715.57,ft•
OJ
is
525, ."t5125'
Feet'
10/29/2013BalboaBayClubLease-Le seAgreement JPcll:mxd
Balboa Bay Club
(Lease Area - Parcel 2)
* Point of Beginning for
OCSD Parcel * (See Detail)
D eta i I ((O CS D7P.a_r`cel I*,),
* AREA SHALL BECOME PART OF THE LEASED PREMISES
UPON EXECUTION AND RECORDATION OF A TRANSFER
DOCUMENT AND INDEMNITY LANGUAGE ACCEPTABLE TO
THE CITY OF NEWPORT BEACH.
* DEVELOPMENT AND USE OF PREMISES SUBJECT
TO ALL CITY MUNICIPAL CODES AND CITY
COUNCIL POLICIES, AND STATE AND FEDERAL
REGULATIONS.
TENANT'S EXISTING USE OF THE MARINA IN THE
CURRENT CONFIGURATION AS DEPICTED IS APPROVED.
/ 9/2013 BalboaBayCi i ase*LeaseAgreementd 2 mkdj
EXHIBIT B
VALUATION METHODOLOGY
Sales Comparison Approach:
The sales comparison approach considers that an informed
purchaser would pay no more for a property than the cost of acquiring
another property with the same utility. It is the process of analyzing sales
(or leases) of similar properties, with dates of sale (lease) near in time to
the date of valuation in order to derive an indication of the subject property
value. This approach is most applicable when an active market provides
sufficient quantities of reliable data which can be verified from authoritative
sources,
In addition to rental survey information, the sales comparison
approach also provides the basis in estimating the underlying land value
for the subject property. However, special consideration must be given not
only to current market conditions, but also to the tidelands classification of
the subject ownership (see Condition of Title). In addition, the lack of
recent data tends to limit the overall reliability of the sales comparison
approach.
Cost Approach:
Use of the Cost Approach is limited since this appraisal excludes
consideration of the existing leasehold improvements. Technically, the
cost approach has been utilized in identifying elements of accrued
depreciation and determining the necessity for renovation of certain
leasehold improvements (see Improvement Description).
Income Approach:
As applicable to an income producing property, the income
approach involves a set of procedures utilized to convert the anticipated
benefits of net cash flow and property reversion into property value.
In application to the subject appraisal problem, the historical
income produced from the various revenue generating sources of the
leasehold operation have been processed. This analysis provides the
basis for estimates of stabilized income and projecting future income
proposed leasehold renovation.
In addition, the residual net operating income provides a basis to
measure the appropriate level of land rent applicable to the individual
revenue sources.
Return on Asset Value:
Many ground leases provide for rent and/or revaluation of rent to be
based upon a percentage of underlying land value. Comparison and
measurement of economic rent is typically expressed as an annualized
percentage rate. Utilizing rates of return on competitive investment
alternatives as applied to the indicated site value (derived from sales
comparison and residual analysis) provides an additional measure of
economic land rent.
Reconciliation:
The final step in the valuation process involves reconciling the
various techniques and methods to a final conclusion of fair market rental
value. The mixture of uses comprising the highest and best use of the site
require rental estimates for various use classifications.
For this reason and depending upon the availability and accuracy of
applicable data, certain rent categories may be best related to the survey
data of the sales comparison approach while other categories may be
more accurately estimated based upon the residual analysis of the income
approach. The return on asset value provides a check to the cumulative
rent generated from the various categories.
EXHIBIT C
MEMORANDUM OF GROUND LEASE
RECORDING REQUESTED BY AND
WHEN RECORDED RETURN TO:
City of Newport Beach
100 Civic Center Drive
P.O. Box 1768
Newport Beach, California 92658-8915
Attn: City Clerk
(Exempt from Recording Fees Pursuant to Cal. Gov. § 27383
(SPACE ABOVE THIS LINE FOR RECORDER'S USE)
MEMORANDUM OF GROUND LEASE
This Memorandum of Ground Lease ("Memorandum") is entered into and effective as of
, , ("Commencement Date"), by and between THE CITY OF NEWPORT
BEACH, a charter city and California municipal corporation ("Landlord"), and BALBOA BAY
CLUB VENTURES, LLC, a California limited liability company ("Tenant").
RECITALS
A. Landlord and Tenant have entered into that certain Ground Lease ("Lease") dated as of
the Commencement Date relating to certain real property located in the City of Newport
Beach, County of Orange, State of Califomia described more particularly on Exhibit A
attached hereto and by this reference made a part hereof ("Premises") Landlord and
Tenant each desires to execute this Memorandum for recordation in the real property
records of the County of Orange in order to memorialize the existence of the Lease.
NOW THEREFORE, with reference to the foregoing recital the parties hereto agree as follows:
1. Lease of Premises. Landlord hereby leases to Tenant, and Tenant hereby hires from
Landlord, the Premises, on the terms and conditions set forth in the Lease.
2. Term. The term of the Lease shall be for a period of fifty (50) years commencing upon
the Commencement Date, unless sooner terminated pursuant to the provisions of the
Lease.
Incorporation of Lease, This instrument is a memorandum of the Lease and is subject
to all of the terms and conditions of the Lease. The terms of the Lease shall prevail if
there is any inconsistency between the terms of this Memorandum and the terms of the
Lease.
This Document wee electronically recorded by
CR South County D
Recorded in Official Records, Orange County
Hugh Nguyen, Clerk -Recorder
MEMORANDUM OF
RECORDING REQUESTED BY AND
WHEN RECORDED RETURN TO:
City of Newport Beach
100 Civic Center Drive
P.O. Box 1768
Newport Beach, California 92658-8915
Attn: City Clerk
NgIUMUIIIII��NO FEE
2013000606524 11:23am 10/30/13
276 402 M 11 F 13 11
0.00 0.00 0.00 0.00 30.00 0.00 0.00 0.00
(Exempt from Recording Fees Pursuant to Cal. Gov. § 27383
(SPACE ABOVE THIS LINE FOR RECORDERS USE)
MEMORANDUM OF GROUND LEASE
h s Me Aandum of Ground Lease ("Memorandum") is entered into and effective as of
r 2,0 7 ("Commencement Date"), by and between THE CITY OF NEWPORT
BEACH, a charter city and California municipal corporation ("Landlord"), and BALBOA BAY
CLUB VENTURES, LLC, a California limited liability company ("Tenant").
RECITALS
A. Landlord and Tenant have entered into that certain Ground Lease ("Lease") dated as of
the Commencement Date relating to certain real property located in the City of Newport
Beach, County of Orange, State of California described more particularly on Exhibit A
attached hereto and by this reference made a part hereof ("Premises") Landlord and
Tenant each desires to execute this Memorandum for recordation in the real property
records of the County of Orange in order to memorialize the existence of the Lease.
NOW THEREFORE, with reference to the foregoing recital the parties hereto agree as follows:
1. Lease of Premises. Landlord hereby leases to Tenant, and Tenant hereby hires from
Landlord, the Premises, on the terms and conditions set forth in the Lease.
2. Term. The term of the Lease shall be for a period of fifty (50) years commencing upon
the Commencement Date, unless sooner terminated pursuant to the provisions of the
Lease.
3. Incorporation of Lease. This instrument is a memorandum of the Lease and is subject
to all of the terms and conditions of the Lease. The terms of the Lease shall prevail if
there is any inconsistency between the terms of this Memorandum and the terms of the
Lease.
IN WITNESS WHEREOF, Landlord and Tenant have executed this Memorandum as of the date
first set forth above.
Attest:
Leilani I. Brown
City Clerk
Approved as to Form:
CITY ATT
Aaron C. Harp
City Attorney
LANDLORD:
CITY OF NEWPORT BEACH,
a California municipal corporation
By:
Keith D. Curr
Mayor
TENANT:
BALBOA BAY$LUB VE, TUBES; LC,
a California li i yd liabil' , ompany
By:
By:
K:vin P"":rtin
President
Todd M. Pi d up
Secretary
EXHIBIT A
LEGAL DESCRIPTION
ALL THAT CERTAIN LAND SITUATED IN THE STATE OF CALIFORNIA, COUNTY OF
ORANGE, CITY OF NEWPORT BEACH, DESCRIBED AS FOLLOWS;
PARCEL 1:
THAT PORTION OF LOT 171, BLOCK 54 OF IRVINE'S SUBDIVISION, AS SHOWN ON A
MAP RECORDED IN BOOK 1, PAGE 88 OF MISCELLANEOUS RECORD MAPS, IN THE
OFFICE OF THE COUNTY RECORDER OF ORANGE COUNTY, CALFORNIA, AND THAT
PORTION OF THE NAVIGABLE TIDE AND SUBMERGED LANDS, DESCRIBED AS
FOLLOWS:
BEGINNING AT A POINT ON THE U.S. BULKHEAD LINE EXTENDING FROM US.
BULKHEAD STATION NO, 129 TO U.S. BULKHEAD STATION NO, 130, AS SAID BULKHEAD
LINE AND BULKHEAD STATIONS, INCLUDING THE PIERHEAD LINES AND STATIONS,
SAID PIERHEAD LINES BEING PARALLEL WITH AND 80 FEET BAYWARD OF SAID
BULKHEAD LINES, ARE LAID OUT AND SHOWN ON A MAP OF NEWPORT BAY,
CALIFORNIA, SHOWING HARBOR LINES APPROVED BY THE WAR DEPARTMENT,
JANUARY 18, 1917, SAID POINT BEING DISTANT SOUTH 61 DEGREES 01' 07" EAST,
MEASURED ALONG SAID BULKHEAD LINE, 1498.00 FEET FROM THE INTERSECTION OF
SAID BULKHEAD LINE WITH THE SOUTHWESTERLY PROLONGATION OF THE
CENTERLINE OF IRVINE AVENUE, AS SHOWN ON A MAP OF FIRST ADDITION TO
NEWPORT HEIGHTS, RECORDED IN BOOK 4, PAGE 94 OF MISCELLANEOUS MAPS, IN
THE OFFICE OF THE COUNTY RECORDER OF SAID ORANGE COUNTY, SAID POINT
ALSO BEING ON THE SOUTHEASTERLY BOUNDARY LINE OF PARCEL 1, PER A DEED
OF TRUST RECORDED MARCH 30, 1966 IN BOOK 7884, PAGE 298 OF OFFICIAL
RECORDS IN THE OFFICE OF THE COUNTY OF THE COUNTY RECORDER OF SAID
ORANGE COUNTY; THENCE ALONG SAID SOUTHEASTERLY BOUNDARY LINE, THE
FOLLOWING COURSES: NORTH 28 DEGREES 58' 53" EAST 130.00 FEET; THENCE
NORTH 27 DEGREES 00' 00" WEST 16.66 FEET: THENCE NORTH 28 DEGREES 58' 53"
EAST 195.71 FEET TO A POINT IN THE SOUTHWESTERLY LINE OF THE 100-FOOT
RIGHT-OF-WAY OF THE CALIFORNIA STATE HIGHWAY ORA-60-B, THENCE LEAVING
SAID SOUTHEASTERLY BOUNDARY, SOUTH 74 DEGREES 21' 30" EAST ALONG SAID
SOUTHWESTERLY LINE, 130.08 FEET TO THE BEGINNING OF A TANGENT CURVE
CONCAVE NORTHLY, HAVING A RADIUS OF 2550.00 FEET; THENCE EASTERLY 715.57
FEET ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 16 DEGREES 04' 41" TO AN
INTERSECTION WITH THE NORTHEASTERLY PROLONGATION OF THE
NORTHWESTERLY LINE OF TRACT NO. 1140, AS SHOWN ON A MAP THEREOF
RECORDED IN BOOK 36, PAGE 28 OF MISCELLANEOUS MAPS, IN THE OFFICE OF THE
COUNTY RECORDER OF SAID ORANGE COUNTY, THENCE SOUTH 28 DEGREES 58' 53"
WEST 975.03 FEET TO A LINE PARALLEL WITH AND DISTANT SOUTHWESTERLY 350.00
FEET FROM SAID BULKHEAD LINE; THENCE NORTH 61 DEGREES 01' 07" WEST 776.91
FEET ALONG SAID PARALLEL LINE , TO THE SOUTHWESTERLY PROLONGATION OF
THE SOUTHEASTERLY LINE OF SAID PARCEL 1: THENCE ALONG SAID PROLONGATION
AND SAID SOUTHEASTERLY LINE, NORTH 28 DEGREES 58' 53" EAST 350.00 FEET TO
THE POINT OF BEGINNING.
PARCEL 2:
THAT CERTAIN PARCEL OF LAND MORE PARTICULARLY DESCRIBED AS FOLLOWS:
BEGINNING AT A POINT ON THE U.S. BULKHEAD LINE, EXTENDING FROM U.S.
BULKHEAD STATION NO. 129 TO U.S. BULKHEAD STATION NO. 130, AS SAID BULKHEAD
LINE AND BULKHEAD STATIONS, INCLUDING THE PIERHEAD LINES AND STATIONS,
SAID PIERHEAD LINES BEING PARALLEL WITH AND 80 FEET BAYWARD OF SAID
BULKHEAD LINES, ARE LAID OUT AND SHOWN ON A MAP OF NEWPORT BAY,
CALIFORNIA, SHOWING HARBOR LINES APPROVED BY THE WAR DEPARTMENT,
JANUARY 18, 1917, WHICH SAID POINT IS DISTANT SOUTH 61 DEGREES 01' 07" EAST,
MEASURED ALONG SAID BULKHEAD LINE, 700.00 FEET FROM THE INTERSECTION OF
SAID BULKHEAD LINE WITH THE SOUTHWESTERLY PROLONGATION OF THE
CENTERLINE OF IRVINE AVENUE, AS SHOWN ON A MAP OF FIRST ADDITION TO
NEWPORT HEIGHTS RECORDED IN BOOK 4, PAGE 94 OF MISCELLANEOUS MAPS IN
THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, SAID POINT OF
INTERSECTION BEING THE MOST SOUTHERLY CORNER OF LOT H TRACT NO. 919 AS
PER MAP RECORDED IN BOOK 29, PAGES 31 TO 34 INCLUSIVE OF MISCELLANEOUS
MAPS IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY; THENCE NORTH
28 DEGREES 58' 53" EAST 154.19 FEET TO A POINT IN THE SOUTHWESTERLY LINE OF
THE 100-FOOT RIGHT OF WAY OF THE CALIFORNIA STATE HIGHWAY ORA-60-B, SAID
POINT BEING RADIAL TO ENGINEER'S STATION 6+56.15 IN THE CENTERLINE OF SAID
HIGHWAY, SAID RADIAL BEARS NORTH 19 DEGREES 37' 57" EAST FROM SAID POINT,
SAID SOUTHWESTERLY LINE BEING A CURVE CONCAVE NORTHEASTERLY AND
HAVING A RADIUS OF 2050.00 FEET; THENCE SOUTHEASTERLY ALONG SAID
SOUTHWESTERLY LINE, THROUGH A CENTRAL ANGLE OF 3 DEGREES 59' 27" 142.79
FEET TO A TANGENT LINE; THENCE SOUTH 74 DEGREES 21' 30" EAST ALONG SAID
TANGENT LINE AND SAID SOUTHWESTERLY LINE, 662.08 FEET; THENCE SOUTH 28
DEGREES 58' 53" WEST 195.71 FEET; THENCE SOUTH 27 DEGREES 00' 00" EAST 16.66
FEET; THENCE SOUTH 28 DEGREES 58' 53" WEST 480.00 FEET TO A LINE PARALLEL
WITH AND SOUTHWESTELY 350.00 FEET FROM SAID BULKHEAD LINE; THENCE NORTH
61 DEGREES 01' 07" WEST ALONG SAID PARALLEL LINE, A DISTANCE OF 798.00 FEET
TO A POINT WHICH BEARS SOUTH 28 DEGREES 58' 53" WEST 350.00 FEET FROM THE
POINT OF BEGINNING; THENCE NORTH 28 DEGREES 58' 53" EAST 350.00 FEET TO THE
POINT OF BEGINNING.
INCLUDING THAT PORTION DESCRIBED AS FOLLOWS (AS SHOWN ON INCLUDED MAP
EXHIBIT FOR "PARCEL 2"). *AREA SHALL BECOME PART OF THE LEASED PREMISES
UPON EXECUTION AND RECORDATION OF A TRANSFER DOCUMENT AND INDEMNITY
LANGUAGE ACCEPTABLE TO THE CITY OF NEWPORT BEACH. *
BEGINNING AT A POINT ON THE SOUTHERLY LINE OF THE 100-FOOT RIGHT OF WAY
OF THE CALIFORNIA STATE HIGHWAY ORA-60-B, SAID POINT OF BEGINNING BEING AT
RIGHT ANGLES TO ENGINEER'S STATION 7+95.46 IN THE CENTERLINE OF SAID
HIGHWAY; THENCE SOUTH 15 DEGREES 38' 30" WEST 44.00 FEET; THENCE NORTH 74
DEGREES 21' 30" WEST 34.00 FEET; THENCE NORTH 15 DEGREES 38' 30" EAST TO AN
INTERSECTION WITH THE SAID SOUTHERLY LINE OF THE STATE HIGHWAY; THENCE
SOUTHEASTERLY ALONG SAID SOUTHERLY LINE TO THE POINT OF BEGINNING.
PARCEL 3:
A NON-EXCLUSIVE EASEMENT FOR INGRESS AND EGRESS OVER THAT CERTAIN
PARCEL OF LAND INCLUDED WITHIN A STRIP OF A LAND 25.00 FEET IN WIDTH, THE
NORTHEASTERLY LINE OF WHICH IS DESCRIBED AS FOLLOWS:
BEGINNING AT A POINT ON THE U.S. BULKHEAD LINE EXTENDING FROM U.S.
BULKHEAD STATION NO. 129 TO U.S. BULKHEAD STATION NO. 130, AS SAID BULKHEAD
LINE AND BULKHEAD STATIONS, INCLUDING THE PIERHEAD LINES AND STATIONS,
SAID PIERHEAD LINES BEING PARALLEL WITH AND 80 FEET BAYWARD OF SAID
BULKHEAD LINES, ARE LAID OUT AND SHOWN ON A MAP OF NEWPORT BAY,
CALIFORNIA, SHOWING HARBOR LINES APROVED BY THE WAR DEPARTMENT,
JANUARY 18, 1917, WHICH SAID POINT IS DISTANT SOUTH 61 DEGREES 01' 07" EAST,
MEASURED ALONG SAID BULKHEAD LINE, 700 FEET FROM THE INTERSECTION OF
SAID BULKHEAD LINE WITH THE SOUTHWESTERLY PROLONGATION OF THE
CENTERLINE OF IRVINE AVENUE, AS SHOWN ON A MAP OF FIRST ADDITION TO
NEWPORT HEIGHTS RECORDED IN BOOK 4, PAGE 94 OF MISCELLANEOUS MAPS IN
THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, SAID POINT OF
INTERSECTION BEING THE MOST SOUTHERLY CORNER OF LOT H OF TRACT NO, 919,
AS PER MAP RECORDED IN BOOK 29, PAGES 31 TO 34 INCLUSIVE OF MISCELLANEOUS
MAPS IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY; THENCE NORTH
28 DEGREES 58' 53" EAST 154.19 FEET TO A POINT IN THE SOUTHWESTERLY LINE OF
THE 100-FOOT RIGHT OF WAY OF THE CALIFORNIA STATE HIGHWAY ORA-60-B, SAID
POINT BEING RADIAL TO ENGINEER'S STATION 6+56.15 IN THE CENTERLINE OF SAID
HIGHWAY, SAID RADIAL BEARS NORTH 19 DEGREES 37' 57" EAST FROM SAID POINT,
SAID SOUTHWESTERLY LINE BEING A CURVE CONCAVE NORTHEASTERLY AND
HAVING A RADIUS OF 2050.00 FEET; THENCE SOUTHEASTERLY ALONG SAID
SOUTHWESTERLY LINE, THROUGH A CENTRAL ANGLE OF 3 DEGREES 59' 27", 142.79
FEET TO A TANGENT LINE; THENCE SOUTH 74 DEGREES 21' 30" EAST ALONG SAID
TANGENT LINE AND SAID SOUTHWESTERLY LINE, 662.08 FEET TO THE TRUE POINT OF
BEGINNING; THENCE SOUTH 74 DEGREES 21' 30" EAST 130.08 FEET TO THE
BEGINNING OF A CURVE ON SAID SOUTHWESTERLY LINE, CONCAVE
NORTHEASTERLY, HAVING A RADIUS OF 2550,00 FEET; THENCE SOUTHEASTERLY
715.56 FEET ALONG SAID CURVE, THROUGH A CENTRAL ANGLE OF 16 DEGREES 04'
40" TO THE NORTHEASTERLY PROLONGATION OF THE NORTHWESTERLY LINE OF
TRACT NO. 1140, AS PER MAP RECORDED IN BOOK 36, PAGE 28 OF MISCELLANEOUS
MAPS IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY,
THE SOUTHWESTERLY LINE OF SAID 25.00-FOOT STRIP IS TO BE SHORTENED SO AS
TO TERMINATE IN SAID NORTHWESTERLY PROLONGATION AND LENGTHENED SO AS
TO TERMINATE ON A LINE WHICH BEARS SOUTH 28 DEGREES 58' 53" WEST FROM THE
TRUE POINT OF THE BEGINNING.
PARCEL 4:
A NON-EXCLUSIVE EASEMENT FOR AUTO PARKING PURPOSES OVER THE
SOUTHWESTERLY 20.00 FEET OF THE NORTHEASTERLY 45.00 FEET OF THAT CERTAIN
PARCEL MORE PARTICULARLY DESCRIBED AS FOLLOWS:
BEGINNING AT A POINT ON THE U.S, BULKHEAD LINE EXTENDING FROM U.S.
BULKHEAD STATION NO. 129 TO U.S. BULKHEAD STATION NO. 130, AS SAID BULKHEAD
LINE AND BULKHEAD STATIONS, INCLUDING THE PIERHEAD LINES AND STATIONS,
SAID PIERHEAD LINES BEING PARALLEL WITH AND 80 FEET BAYWARD OF SAID
BULKHEAD LINES, ARE LAID OUT AND SHOWN ON A MAP OF NEWPORT BAY,
CALIFORNIA, SHOWING HARBOR LINES APPROVED BY THE WAR DEPARTMENT,
JANUARY 18, 1917, WHICH SAID POINT IS DISTANT SOUTH 61 DEGREES 01' 07" EAST,
MEASURED ALONG SAID BULKHEAD LINE, 700.00 FEET FROM THE INTERSECTION OF
SAID BULKHEAD LINE WITH THE SOUTHWESTERLY PROLONGATION OF THE
CENTERLINE OF IRVINE AVENUE, AS SHOWN ON A MAP OF FIRST ADDITION TO
NEWPORT HEIGHTS RECORDED IN BOOK 4,PAGE 94 OF MISCELLANEOUS MAPS IN
THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, SAID POINT OF
INTERSECTION BEING THE SOUTHERLY CORNER OF LOT H OF TRACT NO. 919, AS
SHOWN ON A MAP RECORDED IN BOOK 29, PAGES 31 TO 34 INCLUSIVE OF
MISCELLANEOUS MAPS IN THE OFFICE OF THE COUNTY RECORDER OF SAID
COUNTY; THENCE NORTH 28 DEGREES 58' 53" EAST 154.19 FEET TO A POINT IN THE
SOUTHWESTERLY LINE OF THE 100-FOOT RIGHT OF WAY OF THE CALIFORNIA STATE
HIGHWAY ORA-60-B, SAID POINT BEING RADIAL TO ENGINEER'S STATION 6+56.15 IN
THE CENTERLINE OF SAID HIGHWAY, SAID RADIAL BEARS NORTH 19 DEGREES 37' 57"
EAST FROM SAID POINT, SAID SOUTHWESTERLY LINE BEING A CURVE CONCAVE
NORTHEASTERLY AND HAVING A RADIUS OF 2050.00 FEET; THENCE SOUTHEASTERLY
ALONG SAID SOUTHWESTERLY LINE, THROUGH A CENTRAL ANGLE OF 3 DEGREES 59'
27", 142.79 FEET TO A TANGENT LINE; THENCE SOUTH 74 DEGREES 21' 30" EAST
ALONG SAID TANGENT LINE AND SAID SOUTHWESTERLY LINE, 662.08 FEET TO THE
TRUE POINT OF BEGINNING; THENCE SOUTH 28 DEGREES 58' 53" WEST 195.71 FEET;
THENCE SOUTH 27 DEGREES 00' 00" EAST 16.66 FEET; THENCE SOUTH 28 DEGREES
58' 53" WEST 480.00 FEET TO A LINE PARALLEL WITH SOUTHWESTERLY 350.00 FEET
FROM SAID BULKHEAD LINE; THENCE SOUTH 61 DEGREES 01' 17" EAST 235.68 FEET
ALONG SAID PARALLEL LINE; THENCE NORTH 29 DEGREES 30' 13" EAST 697.99 FEET;
THENCE NORTH 11 DEGREES 45' 40" EAST 49.32 FEET TO SAID SOUTHWESTERLY LINE
OF THE STATE HIGHWAY, SAID SOUTHWESTERLY LINE BEING A CURVE CONCAVE
NORTHEASTERLY, HAVING A RADIUS OF 2,550.00 FEET; THENCE NORTHWESTERLY
118.56 FEET ALONG SAID CURVE, THROUGH A CENTRAL ANGLE OF 2 DEGREES 39' 50"
TO THE NORTHWESTERLY TERMINUS THEREOF; THENCE NORTH 74 DEGREES 21' 30"
WEST 130.08 FEET TO THE TRUE POINT OF BEGINNING.
Radius: =.255O�ft
ArcLenngth.= 715.57,ft
Y * DEVELOPMENT AND USE OF PREMISES SUBJECT
TO ALL CITY MUNICIPAL CODES AND CITY
COUNCIL POLICIES, AND STATE AND FEDERAL
REGULATIONS.
T[ NANT'S EXISTING USE OF THE
MARINA IN THE CURRENT CONFIGURATION
AS DEPICTED IS APPROVED.
Parcel 1- Lease Area
Parcel 3 - 25' Ingress\Egress Easement
Parcel 4 - 20' Parking Easement
1 Ij l9/2013" BalboaBayClubLease LeaseAgr41,
eement Pcllap
Parcel
Detailj(OGSD
Balboa Bay Club
(Lease Area - Parcel 2)
(Tidelands
215,330
* Point of Beginning for
OCSD Parcel • (See Detail)
Portion)'
* AREA SHALL BECOME PART OF THE LEASED PREMISES
UPON EXECUTION AND RECORDATION OF A TRANSFER
DOCUMENT AND INDEMNITY LANGUAGE ACCEPTABLE TO
THE CITY OF NEWPORT BEACH.
* DEVELOPMENT AND USE OF PREMISES SUBJECT
TO ALL CITY MUNICIPAL CODES AND CITY
COUNCIL POLICIES, AND STATE AND FEDERAL
REGULATIONS.
TENANT'S EXISTING USE OF THE MARINA IN THE
CURRENT CONFIGURATION AS DEPICTED IS APPROVED.
j' k� 17stine
20/229/2013 +BalboaBayClubLa`eb LeaseAgreemerit -,Pd2.mxd
Parcel
254,180
State of California 11,
^ ,
County of �1 V�i
J
ACKNOWLEDGMENT
before me I\JI S (1 \l c c/o ( MN
(insert name and title of the officer)
personally appeared h"(1'h Di 1, uI r`1
who proved to me on the basis of satisfactory evidence to be the persons whose name4
is/are subscribed to the within instrument and acknowledged to me that he/a/they executed
the same in his/tte�/theie authorized capacity(iesl, and that by his/heritheirsignatureiS1 on the
instrument the person(s) or the entity upon behalf of which the person( acted, executed the
instrument.
1 certify under PENALTY OF PERJURY under the laws of the State of California that the
foregoing paragraph is true and correct,
WITNESS my hand and official seal.
Signature
(Seal)
State of California
nvIn
County of L w I
On icl17i )02
ACKNOWLEDGMENT
before me, NcS\ld \\cbcv I � (o\ (:,
(insert name and tifle of the officer)
personally appeared PV��1 \ar- v1
who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s)
is/are subscribed to the within instrument and acknowledged to me that he/she/they executed
the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the
instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the
instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the
foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature
(if t
(Seal)
CRISTAL MCDONALD
Commission 91950140
Notary Public - California z
Orange County Mr Comm. Wires Auo 211, 2015 t
State of California
County of
ACKNOWLEDGMENT
v%tl'1
I
before me,
insert name and title of the offider)
personally appeared
who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s)
is/are subscribed to the within instrument and acknowledged to me that he/she/they executed
the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the
instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the
instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the
foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature
117
(Seal)
CRISTAL MCDONALD
Commission M 1950148
Notary public - California
Orange County
Comm. E sires Au 28.20