HomeMy WebLinkAboutC-519(J) - West Coast Highway, 1221 (Balboa Bay Resort) - Option Agreement for the Lease of Real Property, Amendment 1 2000L.�
FIRST AMENDMENT TO OPTION AGREEMENT FOR THE LEASE OF REAL
PROPERTY
THIS FIRST AMENDMENT TO OPTION AGREEMENT FOR
THE LEASE OF REAL PROPERTY (this "Amendment") is dated as of MayA, 2000, by
and between THE CITY OF NEWPORT BEACH, a charter city and municipal corporation
("Optionor") and BALBOA BAY CLUB, INC., a California corporation, as successor in
interest to BBC Property, Inc., a New York corporation ("Optionee").
RECITALS
A. Optionor and Optionee entered into that certain Option Agreement for the
Lease of Real Property dated as of June 30, 1996 (the "Option Agreement"), pursuant to which
Optionor granted to Optionee an exclusive right and option (the "Option") to lease that certain
parcel of real property located in the City of Newport Beach, County of Orange, State of
California, as more particularly described in Exhibit A attached thereto (the "Premises") (the
"New Lease").
B. BBC Property, Inc. ("N.Y. Corp.") and Optionee have agreed to merge or
otherwise reorganize with Optionee becoming the successor entity and assuming all of N.Y.
Corp.'s assets, liabilities, claims, profits, losses, cash flow and capital. In connection therewith
and pursuant to that certain Assignment and Assumption of Ground Lease Agreement, of even
date herewith (the "Assignment"), N.Y. Corp. has agreed to assign and convey to Optionee all
right, title and interest of N.Y. Corp., and Optionee has agreed to assume all of N.Y. Corp.'s
duties and obligations pursuant to the Option Agreement.
C. Through this Amendment, Optionor and Optionee wish to modify the
Option Agreement by deleting certain references to N.Y. Corp. and substituting Optionee in
place thereof, and by granting Optionee the right to extend the term of the Option (the "Option
Term") for a period of twelve (12) months, subject to certain terms and conditions.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing Recitals (which, by this
reference, are incorporated herein), the mutual covenants, agreements and conditions set forth
herein, and for other good and valuable consideration the receipt and sufficiency of which are
hereby acknowledged, Optionor and Optionee agree to amend the Option Agreement as follows:
1. Defined Terms. Capitalized terms used herein and not otherwise defined
herein shall have the meanings set forth in the Option Agreement.
2. References to Optionee. All references to N.Y. Corp. as "Optionee" under
the Option Agreement are hereby deleted and "Optionee" shall hereinafter mean and refer to
Optionee. In addition, all references to N.Y. Corp. as "Tenant" under the Ground Lease attached
to the Option Agreement as Exhibit "B" (the "Ground Lease") are hereby deleted and "Tenant"
NBl:465895.5
shall hereinafter mean and refer to Optionee. Optionor acknowledges that it consents to the
Assignment and agrees that Optionee, as the assignee, shall be entitled to the benefit of and may
enforce the provisions of the Option Agreement as if Optionee was the original "Optionee" under
the Option Agreement and the "Tenant" under the Ground Lease.
3. Extension of Option Term. Optionee shall have the right to extend the
Option Term until the sixth anniversary of this Option (June 30, 2002) (the "Extended Term"),
provided Optionee performs all of the following:
a. Optionee pays to Optionor the sum of One Hundred Thousand
Dollars ($100,000) on or before May 1, 2000 (the "First Payment");
b. In the event Optionee has not exercised the Option by Julyl, 2000,
Optionee pays to Optionor the sum of Five Thousand Dollars ($5,000) per month
beginning July 1, 2000 until the Option has been exercised (the "Second
Payments"); and
C. In the event Optionee has not exercised the Option by July 1, 2001,
Optionee pays to Optionor the sum of Twenty Thousand Dollars ($20,000) per
month, begim- ing July 1, 2001 and continuing on the first of the succeeding
eleven (11) months until the Option is exercised (the "Third Payments").
The First, Second and Third Payments are referred to individually as the
"Payment" and collectively as the "Payments".
4. Payments are Cumulative. The Payments are cumulative and are in addition
to the payment of Two Hundred Fifty Thousand Dollars ($250,000) pursuant to the Option
Agreement. For example, Optionee is required to make each of the Second Payments and each
of the Third Payments on and after July 1, 2001 if Optionee has not exercised the Option by July
1, 2001. The failure of Optionee to make any of the Payments within five business days when
due shall forfeit Optionee's right to the Extended Term (if the failure to make the Payment
occurs on or before July 1, 2001) or shall cause the Extended Term to terminate (if the failure to
make the Payment occurs on or after August 1, 2001). In the event Optionee fails to exercise the
Option on or before June 30, 2002, Optionor shall retain all Payments and Optionee shall not be
entitled to any Credit or other consideration.
5. Credit Under the New Lease. Upon Optionee's completion of the
construction of all improvements on the Premises contemplated by the New Lease and as
described in the Final Plans referenced in Section 8 of the Option Agreement, and provided that
Optionee is not in Material Default under the terms of the New Lease, Optionor shall provide to
Optionee credit against Rent due under the New Lease (the "Credit") for some or all of the First
Payment and/or Second Payments as provided in Sections 6 and 7 herein. Optionee shall not be
entitled to any Credit for Third Payments.
NBI: 465895.5
6. Credit Based on First Payment. Optionee shall be entitled to a Credit based
on the First Payment in accordance with the following:
a. In the event Optionee exercises the Option on or before June 30,
2001 the entire First Payment shall be a Credit; and
b. In the event Optionee exercises the Option on or after June 30,
2001, Optionee shall be entitled to a Credit for the First Payment of Five
Thousand Dollars ($5,000) for each full thirty (30) day period between the date on
which the Option is exercised and June 30, 2002.
7. Credit Based on Second Pam. Optionee shall be entitled to a Credit
based on Second Payments in accordance with the following:
a. In the event Optionee exercises the Option on or before June 30,
2001, Optionee shall be entitled to a Credit for all the Second Payments; and
b. In the event Optionee exercises the Option on or after June 30,
2001, Optionee shall be entitled to a Credit of Two Thousand Five Hundred
Dollars ($2,500) for each of the Second Payments made after June 30, 2001.
8. Ratification of Option Agreement. Except as otherwise expressly provided
herein, the Option Agreement shall remain in full force and effect as originally written.
9. Counterparts. This Amendment may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which, when taken together,
shall constitute one and the same instrument.
NB/: 465895.5
IN WITNESS WHEREOF, Optionor and Optionee have executed this Amendment as
of the day and year first above written.
"OPTIONOR"
CITY OF NEWPORT BEACH,
a municipal c oration,
By:
Name: Vayo
E. Noy s
Its: r
"OPTIONEE"
BALBOA BAY CLUB, INC.,
a California corporation
By:z 2w7z
Name: everly Ra/the
Its: Chairman o Boar
By:
Name: David C. Wooten
Its: President and Chief Executive Officer
NBI: 465895.5
DAVID C. WOOTEN
PRESIDENT
August 27, 1997
Mr. Kevin Murphy
City Manager
City of Newport Beach
3300 Newport Boulevard
Newport Beach, CA 92663
Dear Kevin:
This is to confirm our agreement for an extension for the 30 day period that the City of
Newport Beach has to review and approve the Conceptual Plan for The Balboa Bay Club
that was submitted to the City on June 25, 1997. Our agreement to so extend the City's
review period is with the understanding that all of the other dates in the "Option Agreement
for the Lease of Real Property" are extended by a corresponding time period. Since the
review period falls in the middle of summer vacation time, we are not uncomfortable with
granting the City's request for an extension of time to respond.
Regards,
David C. Wooten
DCW/lr
Jerry Johnson
Beverly Ray
Henry Schielein
1221 WEST COAST HIGHWAY, NEWPORT BEACH, CALIFORNIA 92663 • TELEPHONE (714) 645-5000
NOTICE OF EXERCISE
Reference is made to that certain Option Agreement for the Lease of Real
Property dated June 30, 1996 as amended (the "Option Agreement"), by and between the
City of Newport Beach, as "Optionor", and Balboa Bay Club, Inc., as the successor
"Optionee." Unless otherwise defined herein, capitalized terms used in this notice are
defined in the Option Agreement.
With your counsel's consent, the Escrow Holder identified in the Option
Agreement has been changed to Fidelity National Title Insurance, 1300 Dove Street,
Suite 310, Newport Beach, California 92660 under Order Number 9731037-B, Rick
Dominick, Title Officer ("Escrow Holder"). In accordance with Section 11 of the Option
Agreement, notice is hereby given of Optionee's exercise of the Option. Concurrently
herewith, Optionee is depositing with Escrow Holder two (2) executed counterparts of
the New Lease, two (2) executed and acknowledged counterparts of the Memorandum of
Ground Lease, and funds in the amount of $355,257.59 ($335,643.84 for the option fee of
$250,000.00 plus interest at eight percent (8%) per annum from June 30, 1996 to October
11, 2000 and $19,613.75 for the pro -rata increase in the base rent on the new lease over
the existing lease beginning on October 11, 2000). The Balboa Bay Club, Inc. will
remain obligated to pay any unpaid additional rent due under the existing lease.
Within five (5) days of the date hereof, Optionor is required to deposit with
Escrow Holder two (2) executed counterparts of the New Lease and two (2) executed and
acknowledged counterparts of the Memorandum of Ground Lease.
Dated: October 6, 2000 Balboa Bay Club, Inc.
By:�C"-� -- �
By:
Its: CA3 0
Its: Vo- Cf --c)
1221 West Coast Highway, Newport Beach, CA 92663-5026 (949) 645-5000 Fax (949) 642-6947
WEB: http://www.balboabayclub.com
C..:,., I!IllllllllllllDated: 01/25/07
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7114 7389 6621 1452 5639
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CALIFORNIA PRELIMINARY N. TICHN 2007
In accordance with sectionsa d 3098, Calif rnia; Civil Code
This is not a Lien, This is not a r i tegrity of any contractor or subcontrac#pr
Reputed Owner 1 -You are hereby nifified that
01/25/07 CA585154 R AMERICAN TECH & AMERICAN
CITY
2920 NOEWPORTOBLVD RT BEACH � � �RETION INC
WO WOOD AVE
NEWPORT BEACH CA 92663 OS�gF NGE CA 92865
-Vub�Ic '°r cwp°T03e�c
�� ° 2 -Has furnished or will furnish labor,
Reputed Construction Lender or Lessee
LESSEE FINANCED BY:
BALBOA BAY CLUB
1221 WEST COAST HWY
NEWPORT BEACH CA 92663
Reputed Original Contractor
AMERICAN TECH & AMERICAN
RESTORATION INC
210 BAYWOOD AVE
ORANGE CA 92865
A.D.C. UNKNOWN
NOTICE TO PROPERTY OWNER
IF BILLS ARE NOT PAID IN FULL FOR THE LABOR, SERVICES,
EQUIPMENT, OR MATERIALS FURNISHED OR TO BE
FURNISHED, A MECHANICS' LIEN LEADING TO THE LOSS,
THROUGH COURT FORECLOSURE PROCEEDINGS, OF ALL
OR PART OF YOUR PROPERTY BEING SO IMPROVED MA
BE PLACED AGAINST THE PROPERTY EVEN THOUGH YO
HAVE PAID YOUR CONTRACTOR IN FULL. YOU MAY WIS
TO PROTECT YOURSELF AGAINST THIS CONSEQUENCE B
(1) RFOUIRING YOUR CONTRACTOR TO FURNISH A RELEAS
SIGNED BY THE PERSON OR FIRM GIVING YOU THIS NOTICE
BEFORE MAKING FINAL PAYMENT TO YOUR CONTRACTOR
OR (2) ANY OTHER METHOD OR DEVICE THAT IS
APPROPRIATE UNDER THE CIRCUMSTANCES. OTHER THAN
RESIDENTIAL HOMEOWNERS OF DWELLINGS CONTAINING
FEWER THAN 5 UNITS, PRIVATE PROJECT OWNERS MUST
NOTIFY THE ORIGINAL CONTRACTOR AND ANY LIEN
CLAIMANT WHO HAS PROVIDED THE OWNER WITH A
PRELIMINARY 20 -DAY LIEN NOTICE IN ACCORDANCE WITH
SECTION 3097 OF THE CIVIL CODE THAT A NOTICE OF
COMPLETION OR NOTICE OF CESSATION HAS BEEN
RECORDED WITHIN 10 DAYS OF ITS RECORDATION. NOTICE
SHALL BE BY REGISTERED MAIL, CERTIFIED MAIL, OR FIRST-
CLASS MAIL, EVIDENCED BY A CERTIFICATE OF MAILING.
FAILURE TO NOTIFY WILL EXTEND THE DEADLINES TO
RECORD A LIEN.
services, equipment, or materials of
the following general description:
LABOR
3 - An estimate of the total price of the
labor, services, equipment, or materials
furnished or to be furnished is:
$19,500.00
4 - The building, structure or other work of
improvement is located at:
850-13-00092
BALBOA BAY CLUB
1221 WEST COAST HWY
MULTIPLE APARTMENTS
NEWPORT , CA 92663
5 --The name of the person or firm who contracted
for the purchase of such labor, services,
equipment or material is:
BALBOA BAY CLUB
122Land
AST HWY
NECH, CA 92663
S,-_Namere rust Funds to which
Sunge Benefits are payable
(if applicable):
7 - Jobsite is Federal Public Work Title 40 USC
Sec. 270A -270E.
Contract #
Bond Co:
Signed
Authorized Agent
Construction Notice Services, Inc. 1-800-366-5660
RECORDING REQUESTED
W.B. Powell, Inc.
AND WHEN RECORDED MAIL TO:
W.B. Powell, Inc.
1390 Railroad Street
Corona, CA 92882
Date 1
Copies Sent To:
❑ Mayor
❑ Council Member
❑ Manager
,,E7"Attorn. y
❑
SPACE ABOVE THIS LINE FOR RECORDER'S USE
MECHANICS' LIEN
The undersigned. W.B. Powell, Inc. claimant, claims a mechanic's lien upon the following described real
property: City of Newport Beach, County of Orange, California, 1221 W. Coast Hwy., Newport Beach, CA.
The sum of $207,464.00 together with interest thereon at the rate of 10.00 percent per annum from
September 11, 2003, is due claimant (after deducting all just credits and offsets) for the following work and/or
material furnished by claimant: Architectural millwork.
Claimant furnished the work and/or materials at the request of, or under contract with: Snyder Langston,
17962 Cowan, Irvine, CA 92614.
The owners and reputed owners of the property are: Balboa Bay Club, Inc., aka International Bay Clubs
CA, 1221 W. Coast Hwy., Newport Beach, CA 92663.
Firm Name: W.B. Powell, Inc.
rl
n
P By: l G'
NanU J. Raddatil Authorized Agent/
VERIFICATION
I, the undersigned, say: I am the Authorized Agent of the claimant of the foregoing mechanic's lien: I
have read said claim of mechanic's lien and know the contents thereof: the same is true of my own
knowledge.
I declare under penalty of perjury that the foregoing is true and correct.
Executed on December 3, 2003, at San Diego, California.
IHf "I
Nancie J. Raddatz / , thorized Agent
COPYRIGHT 1994, CONSTRUCTION NOTICE SERVICES, INC. (800)366-5660
C-' Ij 1(1
CALIFORNIA PRELIMINARY TWENTY (20) DAY NOTICE
In Accordance with Sections 3097 and 3098, California Civil Code
BUILOING DEPARTMEN'
`03 RPR .30 P2:24 APR 2 S 2003
CONSTRUCTION LENDER or
Reputed-Coristructori Lender
+
N/A I �0'�
Copies Sent To.
Mayor
+ ❑ Council Member +
❑ Manager
K Attorney
NOTICE: ACCOUNTS ARE CONSIDERED DELINQU 1
45 DAYS AFTER INVOICE DATE. IF IT BECOMES
NECESSARY TO RECORD A MECHANIC'S LIEN, TriE�/
WILL BE A $50.00 CHARGE ADDED TO YOUR ACCOEl
FOR EVERYONE'S PROTECTION❑ _
A JOINT CHECK IS REQUESTED.
-
OWNER or
Reputed Owner
CITY OF NEW PORT BEACH
3300 NEW PORT BLVD.
NEWPORT,CA 92660
+7000--,9c30 000/ 5 SSCP L1/3q +
THIS IS NOT A LIEN. THIS IS NOT A
REFLECTION ON THE INTEGRITY OF ANY
CONTRACTOR OF SUBCONTRACTOR.
FIRM FURNISHING
MRTE9F NE jfORNIA �
WILLIAM DALE YOUNG AND SONS
81-910 ARUS STREET
INDIO, CA. 92201
FIRM WHO CONTRACTED FOR PURCHASE:
VALLEY CREST
1920 S. YALE ST.
SANTA ANA CA 92704
P.O.# 1683211
+ 0o 30 cmo0
DATE OF FIRST DELIVERY
APRIL 4 2003
MATERIALS FURNISHED
PALM TREES
ESTIMATED OR BID PRICE
$ 6,105 60
JOB SITE LOCATION
BALBOA BAY CLUB
1221 WEST COAST HIGHWAY
NEWPORT BEACH CA 92663
Dat d this d3 day of i-, 1 2003
Signature and Title
NOTICE TO PROPERTY OWNER. IF BILLS ARE NOT PAID IN FULL FOR THE LABOR, MATERIALS, PROFESSIONAL SERVICES,
MACHINERY, FIXTURES OR TOOLS FURNISHED OR TO BE FURNISHED, A MECHANICS LIEN LEADING TO THE LOSS,
THROUGH COURT FORECLOSURE PROCEEDINGS, OF ALL OR PART OF YOUR PROPERTY BEING IMPROVED MAY BE
PLACED AGAINST THE PROPERTY. YOU MAY WISH TO PROTECT YOURSELF AGAINST THIS CONSEQUENCE BY EITHER:
(1) REQUIRING YOUR CONTRACTOR TO FURNISH A RELEASE SIGNED BY THE PERSON OR FIRM GIVING YOU THIS
NOTICE BEFORE YOU MAKE PAYMENT TO YOUR CONTRACTOR, OR (2) DEVICE THAT IS APPROPRIATE UNDER THE
CIRCUMSTANCES, OR (3) BY USING A JOINT CHECK.
ORIGINAL CONTRACTOR or
Reputed Contractor
GCI CONSTRUCTION
245 FISCHER AVE. STE. B-3
COSTA MESA CA 92626
Declaration of Service. True copies
were placed in the Indio, CA. Post
Office on theJ3 day of , 1
2003 at 4:30 PM.
Signature �r r'
fi-
5 Peat Marwick LLP
Center Tower
650 Town Center Drive
Costa Mesa, CA 92626
Independent Auditors' Report
The Board of Directors
International Bay Clubs, Inc.:
We have audited the accompanying schedule of receipts and percentage rental expense, as defined in the
lease agreement dated May 13, 1986 between the City of Newport Beach, as lessor, and the Balboa Bay
Club, Inc., as lessee, for the years ended September 30, 1998 and 1997. This schedule is the responsibility
of the Club's management. Our responsibility is to express an opinion on this schedule based on our
audits.
We conducted our audits in accordance with generally accepted auditing standards. Those standards
require that we plan and perform the audit to obtain reasonable assurance whether the schedule of receipts
and percentage rental expense is free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the schedule of receipts and percentage rental
expense. An audit also includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall schedule presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the schedule of receipts and percentage rental expense referred to above presents fairly, in
all material respects, the receipts and percentage rental expense of the Balboa Bay Club, Inc. for the years
ended September 30, 1998 and 1997, as defined in the lease agreement referred to in the first paragraph.
This report is intended solely for the information and use of the Board of Directors of International Bay
Clubs, Inc. and management of the City of Newport Beach and Balboa Bay Club, Inc.
fid mAAVJICei-
November 25, 1998
2
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BALBOA BAY CLUB, INC.
Note to Schedule of Receipts and Percentage Rental Expense
Years ended September 30, 1998 and 1997
Basis of Accounting
The Schedule of Receipts represents receipts recorded by the Balboa Bay Club, Inc. as defined in the lease
agreement dated May 13, 1986 between the City of Newport Beach, as lessor, and the Balboa Bay Club,
Inc., as lessee, for the years ended September 30, 1998 and 1997. The receipts are recorded on the accrual
basis of accounting, whereby revenue is recognized when earned, in accordance with the lease agreement.
7 or 8(a), respectively, the parties shall meet to select an Independent architect
satisfactory to both parties to whom the matter shall be referred for resolution. If the
parties are unable to mutually select such independent architect within such ten (10)
day period, each party shall select an architect of its choice within five (5) days
thereafter. Within five (5) days following the selection of the last selected architect,
the two (2) architects so selected shall select a third architect to assist in resolving
the dispute. If the two (2) architects so selected are unable to mutually select the
third architect, either party shall be entitled to petition the presiding judge of the
Orange County Superior Court to select such third architect. Any architect selected
hereunder must be licensed and have not less than (10) years experience in hotel
design. If only one architect Is utilized, the cost of such architect shall be shared
equally by the parties. If more than one architect is selected, each party shall bear
the cost of its own architect as well as one-half of the cost of the third architect. The
architect(s) selected shall meet with each of the parties Independently as well as
jointly within ten (10) days following the selection of the last architect to act
hereunder. Within ten (10) days following such joint meeting, the architect(s) shall
render its/their determination resolving the dispute.
IN FITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and
year first written above.
CITY OF NEWPORT BEACH,
App ved as to form: a municipal corporation
By: _� _Ujk_�
Obert H. Burnham John Hedges
CityAttorney Mayor
BBC PROPERTY, INC.,
a New York corporation
Be 'Ray
/
BoardChairman of the
B
David C. Wooten
President and Chief Executive Officer
NB ] -215] 7s.v] 6 14 09/11/96
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OPTION AGREEMENT FOR THE LEASE OF REAL PROPERTY
by and between
THE CITY OF NEWPORT BEACH
and
BBC PROPERTY, INC.
As of June 30, 1996
I•
• OPTION AGREEMENT FOR THE LEASE OF REAL PROPERTY
THIS OPTION AGREEMENT FOR THE LEASE OF REAL PROPERTY (this "Agreement")
Is made as of June 30, 1996, by and between THE CITY OF NEWPORT BEACH, a charter
• city and municipal corporation ("Optionor"), and BBC PROPERTY, INC., a New York
corporation ("Optionee").
RECITALS
• A. Optionor is the 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
on Exhibit A attached hereto (the "Premises"), pursuant to the provisions of the
Beacon Bay Bill (Chapter 74 of the Statutes of 1978).
• B. Optionee, as successor 1n Interest to Balboa Bay Club, Inc., is currently occupying
and in possession of the Premises pursuant to that certain Lease between Optionor,
as lessor, and Balboa Bay Club, Inc., as lessee, dated May 13, 1986 (the "Existing
Lease").
• 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 reviewed the form of this Agreement, and
• the New Lease attached hereto, and determined that such instruments are In
conformance with the provisions of relevant statutes, rules and regulations and have
approved such Instruments.
E. The City Council of the City of Newport Beach has determined that this Agreement,
• and the New Lease attached hereto, are consistent with the Charter of the City of
Newport Beach, and Its General Plan and Zoning Ordinances applicable thereto, and
of all other applicable State and local laws, including, without limitation, the Land
Use Plan of the Local Coastal Program.
F. The City Council of the City of Newport Beach has determined that it Is in the best
• Interests of the citizens of the City of Newport Beach to maintain the use and
character of the Premises for the general uses permitted thereon by the General Plan
and Zoning Ordinances of the City applicable thereto, and to enter into the New Lease
under the terms and conditions set forth therein.
• G. Optionor and Optionee each desires to enter Into an option agreement whereby
Optionor will grant to Optionee an option to terminate the Existing Lease
NB1-215179.V10 1 09/11/90
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concurrently with the entering Into by the parties of the New Lease for the Premises
as more particularly set forth hereinafter.
NOW, THEREFORE, with reference to the foregoing recitals, and In consideration of the
mutual covenants and agreements contained herein, and other good and valuable
consideration the receipt of which Is hereby acknowledged, the parties hereto agree as
follows:
AGREEMENT
1. Grant of Option. Optlonor hereby grants to Optionee an exclusive right and option
(the "Option") to lease the Premises for the rent and upon the terms and conditions
• set forth In the Ground Lease attached hereto as Embit B and Incorporated herein
by this reference (the "New Lease").
2. Option Consideration. In consideration for the Option, and notwithstanding the
provisions of Section 5.b of the Existing Lease, it shall be a condition precedent to
• the exercise by Optionee of the Option (and the obligation of Optionor to execute the
New Lease) that Lessee shall pay to Lessor, concurrently with and as a condition
precedent to the exercise of the Option, the sum of Two Hundred Fifty Thousand
Dollars ($250,000), with Interest on such sum at eight percent (8%) per annum from
the date hereof to the date of such payment. in further consideration of the Option,
• Optionee has further agreed herein to undertake certain design and planning work
In connection with the Project (as defined In the New Lease), at Its sole cost and
expense, In the manner and at the times set forth herein.
3. Option Term. Optionee may exercise the Option at any time prior to 5.00 p.m.
• California time on the fifth (e) anniversary of the date hereof (the "Option Term");
provided, however, that Optionee shall have no right to exercise the Option at any
time Optlonee Is in material default hereunder or under the Existing Lease, and, in
the event of any such default arising after the exercise of the Option but prior to
execution of the New Lease by all parties thereto, such prior exercise by Optionee of
• the Option shall be deemed null and void and of no force or effect ab initfo unless
Optionee shall have cured such default within any applicable cure period but In no
event later than the date the New Lease would otherwise become effective.
4. Conditions Precedent to the Exercise of Option. As a condition precedent to
the exercise of the Option by Optionee, Optionee shall, at its sole cost and expense,
(I) complete the processing for and obtain any and all permits, licenses and
entitlements from any governmental or quasi -governmental agency or authority
having jurisdiction over the renovation and reconstruction of the Improvements
located on the Premises; as contemplated by this Agreement and the New Lease,
• Including issuance of a Coastal Development Permit from the California Coastal
Commission, (11) obtain the approval of Optionor to the Conceptual Plan, Design
Development Plans, and Final Plans (as set forth In Sections 8, 7 and 8 hereinafter),
(111) provide evidence reasonably satisfactory to Optionor that Optionee has the
NB1-215179.V1B Y o9/11M
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financial resources available to it and/or has arranged and entered Into a financing
commitment from an institutional lender for financing the construction and
renovation of the Project 1n accordance with the Final Plans, and (Iv) have obtained
and paid for building permits for construction of the Improvements in accordance
with the Final Plans approved by Optionor.
5. Cooperation of Optionor. Optionor shall cooperate with Optionee in Optionee's
• reasonable efforts to obtain all required permits and approvals, and shall execute
such applications and other undertakings reasonably required In Its capacity as the
owner of the Premises to enable Optionee to file for and obtain all permits, licenses,
variances, permissions and consents necessary to construct the Project and
otherwise to perform Its activities under this Agreement; provided, however, that
• nothing herein shall Imply any obligation Inconsistent with or result in any diminution
of Optlonor's legislative, quasi -legislative or administrative rights, obligations and
prerogatives as a municipal public agency, Including, without limitation, Optlonor's
rights, obligations and prerogatives In connection with reviewing and approving or
disapproving any application for any license, permit or entitlement for the
• development, construction or use of the Premises.
6. Conceptual Plan. Not later than the later June 30, 1997, Optlonee shall prepare,
or cause to be prepared, and shall submit to Optionor for its review and approval, a
proposed conceptual plan for the design, construction, furnishing and equipping of
• the Project (the "Conceptual Plan"). All elements of the Conceptual Plan shall be
prepared In wilting by an experienced, reputable and licensed architectural firm and
shall include those elements typically included in such types of plans and as required
by applicable ordinances and regulations of the City of Newport Beach, but in all
events shall Include the following: (1) the general configuration, size and relationship
• of the Project and all amenities relating thereto, Including all parking (surface and
structured), restaurants, lounges, banquet rooms and similar public assembly areas,
all guest support, health, exercise, recreational and sports facilities., (11) conceptual
elevations and representational sections for all Improvements, features and elements
to be constructed on the Property; (111) a general description of the various elements,
functions and layout of the Improvements (Interior and exterior); (tv) a site plan of
the Premises showing all improvements to be constructed thereon and showing the
relation of all said improvements to the adjacent properties and showing the
circulation and access plans; (v) schematic drawings of the Project; and (VI) outline
specifications for all exterior lighting and landscaping on the Premises. Optlonor's
right to approve the Conceptual Plan shall be limited to assuring that the proposed
• improvements are of first class quality and consist of the type and quality required
by this Agreement and the New Lease, and Optionor shall not have any right to
disapprove any component of the Conceptual Plan which would have the effect of
changing the plan previously approved by the City In connection with the zoning of the
Premises. It is not Intended by the Optionor's review and approval rights under this
• Agreement that Optionor will impose esthetic judgments on Optionee unless such
design criteria proposed by Optionee shall, In the reasonable judgment of Optionor,
result In improvements which are Inconsistent with the standards required by this
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Agreement and the New Lease. Any disapproval by Optionor must specify with
reasonable particularity the portion or portions disapproved and Optionor's
suggestions of alternatives It would approve. On or before three (3) months following
Its submission by Optionee to Optionor for approval, Optionor and Optlonee shall
have agreed upon the Conceptual Plan. The proposed conceptual plan shall be
deemed approved if Optionor does not disapprove all or specific portions of the
proposed conceptual plan within thirty (30) days following receipt thereof from
• Optionee. If Optlonee shall fall to submit a proposed conceptual plan to Optionor no
later than June 30, 1997, Optionor may by written notice to Optionee, terminate this
Agreement and any right of Optlonee to enter Into the New Lease shall thereafter be
of no force or effect. If, by three (3) months following submission of the proposed
conceptual plan to Optionor for Its approval, the parties are unable to agree upon the
• Conceptual Plan, or the proposed Conceptual Plan Is not deemed approved as
aforementioned, either party may by written notice to the other party terminate this
Agreement. In such event, this Agreement shall thereafter be of no force or effect,
and any right of Optionee to enter into the New Lease shall thereafter be of no force
or effect, without affecting the continuation of the Existing Lease.
•
7. Design Development Plans. Not later than one year following approval of the
Conceptual Plan by Optionor, Optionee shall prepare, or cause to be prepared,
proposed design development plans, containing all of the elements typically contained
In such plans and as required by applicable ordinances and regulations of the City of
• Newport Beach, and shall within such time period submit said proposed design
development plans to Optionor for its review and approval. The "Design Development
Plans" shall Include: (1) a site plan (scale 1" equals 40) Indicating the Items provided
for In the Conceptual Plan and showing in addition thereto principle utilities, setback
lines, general drainage plans including the capacities of storm drain and sewer lateral
lines; (I1) a proposed lighting and circulation system for both vehicular and pedestrian
• travel;Iii
( ) principal building plans, sections and elevations (minimum scale 1B"
equals 1'), study models and prospective sketches Indicating all exterior architectural
Information and all interior architectural Information relating to the principal hotel
lobby; (Iv) designs for lighting and signing the principal hotel lobby and all exteriors
• of Improvements to be constructed on the Premises; and (v) construction schedules
showing the principal stages, phases and durations of construction. On or before
three (3) months following Optionee's submission of same to Optionor, the parties
shall have agreed upon the Design Development Plans for the Project. The proposed
Design Development Plans shall be deemed approved if Optlonor does not disapprove
all or specli1c portions of the proposed Design Development Plans within thirty (30)
• days following submission thereof to Optionor by Optlonee. Optionor shall not
withhold its approval of the design development plans submitted by Optionee If and
to the extent that such design development plans conform In all material respects
with, and are a logical extension of, the Conceptual Plan approved by Optionor. If
Optionor reasonably believes that the proposed Design Development Plans submitted
• by Optlonee do not so conform, Optlonor shall advise Optlonee In writing of any
questions or objections which Optionor has with respect thereto. Optlonor shall set
forth Its comments, suggestions and objections to the proposed Design Development
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Plans with reasonable specificity In order to permit Optionee to address such
concerns. If Optionee shall fail to submit proposed design development plans to
Optionor by the date which is one year following approval of the Conceptual Plan by
Optionor, Optionor may by written notice to Optionee, terminate this Agreement and
any right of Optionee to enter Into the New Lease. If Optionee does submit the
proposed Design Development Plans to Optionor by such date, and within three (3)
months following such submission, the parties are unable to agree upon the Design
Development Plans, or the proposed Design Development Plans are not deemed
approved as aforementioned, either party may submit the matter to arbitration as
provided in Section 29 for resolution. All dates for compliance by Optionee with Its
obligations under this Agreement shall be extended by the number of days necessary
to resolve such dispute, but only with regard to such obligations of Optionee the
performance of which are reasonably delayed as a result of such dispute.
B. Flnal Plans and Specifications.
(a) Optionee shall submit to Optionor, for Optlonor's review and approval, final
0 and full plans and specifications (the "Final Plans") for the Project, Including
architectural, landscaping, structural, heating and ventilation systems,
utllltles, sections and detailed designs for lighting and signing of the exterior
of the Project, all of which shall conform in all material respects to the
Conceptual Plan and the Design Development Plans approved by Optionor.
0 Optionors right of approval with respect to the Final Plans shall include the
same items subject to Optlonor's approval with respect to the Conceptual Plan
and the Design Development Plans. Optlonor shall advise Optionee in writing
of any questions or objections which Optionor has If Optionor reasonably be-
Ileves that the Final Plans do not so conform In all material respects and shall
0 state Its objections with reasonable specificity, in such event, unless Optionee
disputes Optlonor's disapproval and submits such matter to arbitration as
hereinafter provided, Optionee shall make subsequent submissions of Final
Plans In order to comply with such questions or objections Optionor may have.
Landlord shall be deemed to have approved the Final Plans if Landlord fails
either to give its written approval or state in writing Its questions or objections
to any Final Plans submitted by Optionee within forty-five (45) days after the
date of said submission. If within ninety (90) days following submission of the
Final Plans to Optionor for review and approval, the parties are unable to
agree upon the Final Plans, or the Final Plans are not deemed approved as
aforementioned, the matter may be submitted to arbitration by either party as
• provided in Section 29 for resolution. All dates for compliance by Optionee
with its obligations under this Agreement shall be extended by the number of
days necessary to resolve such dispute, but only with regard to such ob-
ligations of Optionee the performance of which are reasonably delayed as a
result of such dispute.
(h) Optionee acknowledges that the approvals by Optionor required In this Section
8 are separate and distinct from any review, approval, permitting or licensing
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required by the City In Its municipal capacity, such as demolition, grading and
• building permits. The Issuance by the City of any such approval, permit or
license shall not constitute approval of any matter requiring the consent or
approval of Optionor under this Agreement.
9. Building Permits. Optionee shall apply for and thereafter diligently prosecute to
• Issuance or dental, at Its sole cost and expense, the procurement of all necessary
building permits from the City as well as any other governmental entity having
Jurisdiction over the Premises for the construction of the Project In accordance with
the Final Plans which have been approved by Optionor to the extent such approval
Is required by the terms of this Agreement. In that regard, should the City or any
• other governmental entity having Jurisdiction over the Premises require that Optlonee
modify a portion of the approved Final Plans, Optionee shall be required to consult
with Landlord and, if compliance with governmental requirements may be achieved
In more than one manner or fashion and the manner or fashion of Optionee's pro-
posed compliance shall not be consistent In all material respects with the Conceptual
• Plan and the Design Development Plans, to obtain Optionor's prior written approval
of the manner or fashion of Optionee's proposed compliance, which approval shall not
be unreasonably withheld or delayed. Any dispute between the parties regarding
Optionor's approval (or the need for such approval) of the manner or fashion of
Optionee's proposed compliance shall be submitted to arbitration In accordance with
Section 29; provided, however, that the agreement to arbitrate disputes shall apply
• solely to approvals required by Optionor pursuant to this Agreement, and shall not
apply to any determination by the City In Its municipal capacity in connection with the
Issuance of permits or licenses, including any matter concerning compliance with any
ordinance, resolution, condition of approval, law or regulation applicable to the
construction, operation or maintenance of the Project. All dates for compliance by
• Optionee with Its obligations under this Agreement shall be extended by the number
of days necessary to resolve such dispute, but only with regard to such obligations of
Optionee the performance of which are reasonably delayed as a result of such
dispute.
• 10. Delivery of Plans. In the event of expiration or termination of this Agreement for
any reason other than default by Optionor, Optionee shall deliver to Optionor a copy
of all plans and specifications for the Project, Including the Conceptual Plan, Design
Development Plans and Final Plans, and all components thereof, and Optionor shall
have the right to use such plans and specifications in any manner it determines in
• connection with the development of the Premises, subject only to the contractual
rights and limitations Imposed by the unrelated third party originators of such plans
and specifications.
11. Exercise of the Option.
•
(a) Provided that the conditions precedent set forth in Sections 3, and 6 through
8 are satisfied, Optionee may exercise the Option by:
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(f) delivering to Optlonor written notice of such exercise prior to the
expiration of the Option Term; and
(ii) delivering to an escrow established by the parties with First American
Title Insurance Company in Santa Ana, California (the "Escrow"), two
(2) executed and, with respect to the Memorandum of Ground Lease,
acknowledged originals of the New Lease and the Memorandum of
Ground Lease; and
(III) delivering to the Escrow a certified check or other immediately
available funds In the amount of Two Hundred Fifty Thousand Dollars
($250,000), plus Interest thereon at eight percent (8%) per annum
from the date hereof to the date of such payment, In payment of the
sum required by Section 2.
(b) Within five (5) days of Its receipt of the notice described in Section 11(a),
Optionor shall deliver to escrow two (2) executed and, with respect to the
Memorandum of Ground Lease, acknowledged originals of the New Lease and
the Memorandum of Ground Lease.
(c) Upon receipt of the Instruments referred to in Sections 11(a) (11) and 11(b),
escrow holder Is instructed to deliver executed counterparts to the parties,
deliver to Optionor the funds set forth In Section 11(a)(111), and record the
Memorandum of Ground Lease in the Official Records of the County of Orange.
(d) The parties shall execute such further Instructions as the escrow holder shall
reasonably require. Optionee shall bear all costs of title Insurance which
Optionee elects to purchase In connection with this Option or the New Lease.
All other fees and charges of the escrow shall be paid by the parties In
accordance with customary practice In Orange County.
12. State of Title. The parties acknowledge that Optionee has obtained a commitment
for title Insurance under Order No. 963807 from First American Title Insurance dated
May 24, 1996 (the "Title Report") showing the state of title to the Premises.
Optionee hereby approves all exceptions to title shown in said Title Report (the
"Permitted Exceptions"), and the parties acknowledge and agree that leasehold
title to the Premises granted pursuant to the New Lease shall be subject to the
Permitted Exceptions. It shall be a condition precedent to Optionee's obligations
under this Agreement that the title company Is able and willing to issue a leasehold
policy of title Insurance In favor of Optionee (and any Institutional lender providing
financing for the construction and renovation of the Project In accordance with the
Final Plans) In form and substance satisfactory to Optionee. In the event such
condition precedent Is not satisfied or waived by Optionee prior to consummation of
the transaction as contemplated in Section 11(c), this Agreement may be terminated
by Optionee upon written notice to Optionor and the parties shall have no further
liability or obligation thereunder.
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13. Broker's Commissions. In connection with this Agreement and upon exercising
• the Option and entering Into the New Lease, Optionor and Optionee 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 sales or brokerage commission or
11nder's fee with respect to this transaction. Optlonor and Optionee each agrees to
Indemnity, defend, protect and hold the other harmless from and against any and all
• losses, claims, damages, costa or expenses (including attorneys' fees) which the other
may Incur as a result of any breach of the foregoing representation. The
representations and obligations of Optionor and Optionee under this Section 13 shall
survive the exercise of the Option.
14. Memorandum of Option. Optlonor and Optionee agree that no memorandum or
• short form of this Agreement, or other public notice or filing of this Agreement, shall
be recorded In the public records of any authority or agency, Including the Official
Records of the County of Orange, State of California.
15. Assignment.
•
(a) Except as hereinafter set forth In this Section 15, Optionee may not transfer,
assign or hypothecate this Option, or Its interest therein, in whole or in part,
without the prior written consent of Optionor in each Instance having first
been obtained, which consent shall not be unreasonably withheld or delayed.
• The consent by Optionor to any transfer, assignment or hypothecation shall
not constitute a waiver of the necessity for such consent to any subsequent
assignment, transfer or hypothecation. This prohibition against assignment,
transfer or hypothecation shall be construed to include a prohibition against
any sale, hypothecation, transfer of possession, or any assignment or transfer
• by operation of law or otherwise. Optionor shall be deemed to be reasonable
In not granting Its consent If the proposed purchaser, transferee or assignee
falls to meet all of the following criteria:
(i) . the proposed purchaser, transferee or assignee, or, if the proposed
• purchaser, transferee or assignee Is a wholly owned subsidiary, Its
parent, or the constituent general partners of the proposed purchaser,
transferee or assignee shall have a net worth at least equal to the
greater of (1) Four Million Dollars ($4,000,000), or (11) ten percent
(10%) of the fair market value of the leasehold estate created by the
• New Lease. For purposes of determining the fair market value of the
leasehold estate created by the New Lease, such value shall be
conclusively determined by the purchase price to be paid by the
proposed purchaser, transferee or assignee for the Interest to be
acquired, as evidenced by Information reasonably required by Optionor
• (for purposes of calculating such net worth, It shall be permissible to
Include as an asset of said proposed purchaser, transferee or assignee
Its anticipated equity In the Project and the. leasehold estate created by
the New Lease);
I • NBf-215179.V10 0 0911 L96
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(ii) the proposed purchaser, transferee, or assignee shall either be a
• Qualified Manager (as defined In the New Lease) or, if the proposed
purchaser, transferee, or assignee 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 Optionee hereunder; and
(HI) the proposed purchaser, transferee, or assignee (or, with respect to a
transfer of a controlling Interest, the person or entity acquiring such
controlling Interest) shall have a reputation for honesty, Integrity and
sound business practices.
•
(b) Grant or Denial of Consent. Optionor shall grant or deny Its approval of,
or request additional reasonable Information and/or documentation with
respect to, any proposed transfer, hypothecation or assignment within thirty
(30) days following Optionors receipt of notification from Optionee regarding
• the proposed transfer, hypothecation or assignment. Following a request from
Optlonor for additional reasonable Information and/or documentation as
provided herein, Optionor shall have ten (10) days from Optlonor's receipt of
such additional Information and/or documentation in which to grant or deny
Its approval of the proposed transfer, bypothecatlon or assignment and/or
• transferee. Optionor shall be deemed to have granted its approval if Optionor
shall not request additional Information and/or documentation within such
thirty (30) day period and Optionor shall not notify Optionee within the time
periods herein specified of its decision either to grant or deny its approval.
From and after the effective date of a transfer or assignment by Optionee of
• the Existing Lease and this Agreement, the transferror or assignor shall
thereafter be relieved from any further liabilities or obligations under this
Option and Optlonor shall look solely to the assignee for performance of such
obligations hereunder and under the Existing Lease.
• (c) Assignment to A®liate. Optionee shall have the right, without Optionor's
consent, to assign this Option:
(i) to a partnership or limited liability company controlled by Optionee and
In which Optionee Is a general partner or member thereof and owns a
• legal and beneficial interest therein of not less than twenty-five percent
(2596), or to a corporation controlled by Optlonee and in which
Optionee 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
• 01) as security pursuant to a Mortgage;
is
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Provided, however, that any assignment by Optionee under this Section 15(c)
shall not relieve Optionee from liability hereunder.
(d) Limitation on Transfer of Interest In Optlonee. If Optionee 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 of
the New Lease) 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 vAthln the meaning of this
Section 15. Furthermore, any transaction by which Optionee undergoes a
merger or other reorganization, Including a sale of all or substantially all of
Its assets, wherein Optlonee is not the surviving corporation (or the stock
holders of Optionee 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 Agreement. If Optlonee is or becomes a
publicly traded entity, any sale or other transfer of any outstanding stock of,
or limited partnership Interests in, Optionee shall not be deemed an
assignment within the meaning of this Section 15 unless said sale or other
transfer is made by a person or entity owning a controlling interest in
Optionee and results In a change In the person(s) or entity(les) having control
of Optionee.
(e) Existing Mortgagee. Optionor acknowledges that, pursuant to the terms of
the deed of trust currently encumbering the Premises, this Agreement shall
be and become part of the security for such loan. Optlonor further agrees that
the terms and conditions of that certain Lessor's Estoppel Certificate,
Acknowledgement and Consent to Assignment of Leasehold Estate by Deed of
Trust dated May 21, 1989, by and between Financial Security Assurance, Inc.
and Optionor shall apply with full force and effect to this Agreement.
16. Participation in Sale Proceeds. In the event Optionee (1) sells, conveys,
transfers or assigns all or any portion of Its Interest in this Agreement, or the
leasehold estate created by the Existing Lease (other than to a Mortgagee as
security), or (11) sells, transfers or conveys any Interest in Optlonee or its constituent
shareholders, Including the stock of Optionee of any kind or class, common or
preferred, or the beneficial or equitable ownership interest in such stock or In
Optionee (collectively, a "Sale"), at any time prior to twenty-four (24) months
following the Issuance of the final certificate of occupancy for the Project, as
contemplated In the New Lease, Optionee shall pay to Optlonor an amount equal to
twenty percent (20%) of the Net Proceeds (as hereinafter defined). For purposes of
this Section 16:
(a) "Net Proceeds" shall mean the entire consideration paid or payable to or for
the benefit of Optionee or Its constituent shareholders In connection with a
Sale (whether In cash, note. In kind or other consideration) less (1) Project
• N61 -215179.v16 10 oe ilm
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Costs (as hereinafter defined) and (11) reasonable and customary actual out-of-
pocket costs and expenses of Optlonee Incurred in connection with
consummating such Sale (excluding any payment made to any Mortgagee or
lender to release any Mortgage or other security or otherwise);
(b) "Project Costs" shall mean and be limited to:
• (1) Five Hundred Thousand Dollars ($500,000), in reimbursement of all
third party predevelopment costs incurred and paid by Optionee prior
to the date of this Agreement;
(ii) all third party costs and expenses Incurred and paid by Optionee In
• connection with the design, development, construction and renovation
of the Project from and after the date of this Agreement through the
date of such Sale (Including, without limitation, any required offsite
Improvements, demolition of existing Improvements, permit and license
fees and charges, signage, furniture, fixtures and equipment,
• architecture, design and engineering fees, Insurance bonds,
construction management fees, legal and other professional fees
related to construction of the Project, financing fees and payments of
principal on any new loan obtained by Optionee In connection with the
construction and renovation of the Project, plus Interest thereon at the
• rate of interest charged on the loan obtained by Optionee in connection
with the construction and renovation of the Project (excluding any
equity kicker, shared appreciation or other similar payment);
(11111) an amount equal to fifteen percent (15%) of the sum of subparagraphs
• (1) and (11) above; and
(Iv) Thirty Million Dollars ($30,000,000), representing the appraised value
of Optionee's interest in the Premises as of May 15, 1996.
• (c) Project Costs shall exclude any operating cost or expense of the operation of
the business of Optionee on the Premises other than predevelopment and
development costs set forth above, any fees paid to Optionee or Its Affiliates
for any purpose, ground rent payable under this Lease, and any other costs or
expenses not specifically described In subparagraph (b)(1) through (Iv) above.
From time to time, but not less often than quarterly, Optionee shall provide
• Optionor with a certified schedule of Project Costs with reasonable supporting
documentation.
(d) Net Proceeds shall not Include any proceeds of a Sale which are not
distributed to or for the benefit of Optionee or its constituent shareholders,
• and which are used by Optionee In the payment of costs and expenses Incurred
In the construction and renovation of the Project.
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17. Successors In Interest. Subject to Section 15, this Agreement shall Inure to the
benefit of and be binding upon the successors, personal representatives, heirs and
• assigns of the parties hereto.
18. Time Periods. Unless "business day" Is specified, the term "day" means a calendar
day. Nevertheless, whenever action must be taken under this Agreement during a
certain period of time or by a certain date that ends or occurs on a day which is not
• a business day, the time for performance shall be extended to the next business day.
The term "business day" means any day other than a Saturday, Sunday or Federal or
State of California holiday.
19. Attorneys' Fees. If either party files any action or brings any proceeding against
the other arising out of this Agreement or any agreement executed pursuant hereto,
the prevailing party shall be entitled to recover as an element of its costs of suit, and
not as damages, reasonable attorneys' fees to be fixed by the court.
20. 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 Optionor: City of Newport Beach
3300 Newport Boulevard
P.O. Box 1768
Newport Beach, CA 92658-8915
• Attention: City Manager
With copy to: O'Melveny & Myers
610 Newport Center Drive
Suite 1700
• Newport Beach, CA 92660-6429
Attention: Lowell C. Martindale, Jr.
If to Optlonee: BBC Property, Inc.
1221 West Coast Highway
• Newport Beach, CA 92663
Attention: General Manager
With copy to: Pinto, Gromet, Dubla & Worcester
2 Park Plaza
I Suite 300
• Irvine, CA 92714
Attention: Saul B. Pinto
INB1-215179.x16 12 o9nlree
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Either party may change Its address for purposes of receiving notice hereunder by
• giving notice to the other party pursuant to the provisions hereof. Refusal to accept
delivery of any notice, request, demand, instruction or other communication shall be
deemed to be delivery thereof.
21. Time is of the Essence. Except as expressly provided otherwise in the
• Agreement, time Is of the essence of this Agreement.
22. Entire Agreement. This Agreement contains all of the agreements of the parties
hereto with respect to the matters contained herein, and no prior agreement or
understanding pertaining to any such matter shall be effective for any purpose. No
• provision of this Agreement may be amended or added to except by an agreement in
writing signed by the parties hereto or their respective successors in Interest.
23. Interpretation. This Agreement shall not be construed more strictly against one
party than against the other. It being recognized that both parties have contributed
• substantially and materially to the preparation of this Agreement.
24. Governing Law. The language In all parts of this Agreement shall be construed 1n
accordance with the internal laws of the State of California (without regard to
conflicts of law principles).
• 25. Section Headings. Headings at the beginning of each numbered section of this
Agreement are solely for the convenience of the parties and are not a part of this
Agreement.
26. Counterparts. This Agreement and any amendment or supplements to it may he
• executed In counterparts, and all counterparts together shall be construed as one
document.
27. Waiver. No covenant, term or condition of this Agreement shall be deemed to have
been waived by any party hereto unless such waiver 1s In writing signed by the party
• against whom such waiver is asserted.
28. Attorneys' Fees. If any party incurs any expense, Including reasonable attorneys'
fees and expenses, In connection with any action or proceeding against the other,
arising out of or in connection with this Agreement, whether or not such action
• proceeds to trial, the sums so paid by the prevailing party shall be due from and be
paid by the nonprevailing party on demand.
29. Arbitration. In the event of a dispute regarding the approval or disapproval by
Optionor of the Design Development Plans and/or the Final Plans, or any changes
• thereto as provided In Sections 7, 8 or 9 hereof, if the parties are unable to resolve
such dispute, the parties shall proceed under this arbitration provision. Within ten
(10) days following the expiration of the ninety (90) day period described in Sections
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7 or 8(a), respectively, the parties shall meet to select an independent architect
satisfactory to both parties to whom the matter shall be referred for resolution. If the
parties are unable to mutually select such independent architect within such ten (10)
day period, each party shall select an architect of its choice within five (5) days
thereafter. Within five (5) days following the selection of the last selected architect,
the two (2) architects so selected shall select a third architect to assist in resolving
the dispute. If the two (2) architects so selected are unable to mutually select the
• third architect, either party shall be entitled to petition the presiding judge of the
Orange County Superior Court to select such third architect. Any architect selected
hereunder must be licensed and have not less than (10) years experience in hotel
design. If only one architect Is utilized, the cost of such architect shall be shared
equally by the parties. If more than one architect is selected, each party shall bear
• the cost of its own architect as well as one-half of the cost of the third architect. The
architect(s) selected shall meet with each of the parties independently as well as
jointly within ten (10) days following the selection of the last architect to act
hereunder. Within ten (10) days following such joint meeting, the architect(s) shall
render itsAheir determination resolving the dispute.
• IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and
year first written above.
• CITY OF NEWPORT BEACH,
App ved as to form: a municipal corporation
By:
obert H. Burnham John Hedges
City Attorney Mayor
• BBC PROPERTY, INC.,
a New York corporation
By:
• Bev y Ray
Chairman of the Board
• BcC� WQZZ�
David C. Wooten
President and Chief Executive Officer
NRI -215179W 14 oen 1Re
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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, CALIFORNIA, 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 U.S. BULKHEAD
STATION NO. 129 TO U.S. BULKHEAD STATION NO. 130, AS SAID BULKHEAD LINE AND
BULKHEAD STATIONS 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 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 NORTHERLY, 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 OF THE SOUTHWESTERLY PROLONGATION OF THE SOUTH-
EASTERLY LINE OF SAID PARCEL 1: THENCE ALONG SAID PROLONGATION AND SAID
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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 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 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; THENCE SOUTH 28
DEGREES 50'53" 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 SOUTHWESTERLY 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' S3" WEST 350.00 FEET FROM THE POINT OF
BEGINNING; THENCE NORTH 28 DEGREES 58' 53" EAST 350.00 FEET TO THE POINT OF
BEGINNING.
EXCEPT THAT PORTION DESCRIBED AS FOLLOWS:
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.
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• • •
PARCEL 3:
• A NON-EXCLUSIVE EASEMENT FOR INGRESS AND EGRESS OVER THAT CERTAIN PARCEL OF
LAND INCLUDED WITHIN A STRIP OF 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 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 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 591 27",
142.79 FEET TO A TANGENT LINE: THENCE SOUTH 74 DEGREES 21'30n 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 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:
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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 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 OF TRACT NO. 919, AS SHOWN ON A MAP RECORDED IN BOOK 29, PAGES 31 TO
34 INCLUSIVE OF MISCELLANEOUS MAPS 1N 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 AND SOUTHWESTERLY 350.00 FEET FROM SAID BULKHEAD
LINE; THENCE SOUTH 61 DEGREES 01'07" 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
• 2550.00 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.
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I• GROUND LEASE
by and between
•
CITY OF NEWPORT BEACH,
a municipal corporation
• "Landlord"
and
•
BBC PROPERTY, INC.,
a New York Corporation
• "Tenant'
I•
Dated as of
CM
• EXHIBIT B
0 N61 -216136.V23 08/11/96
• • •
GROUND LEASE
• TABLE OF CONTENTS
RECITALS PARTIES AND RECITALS ................................. 1
ARTICLE DEFINITIONS ........................................ 2
• ARTICLE II GRANT OF LEASE AND TERM ............................ 10
2.1 Lease .............................................. 10
2.2 Term ............................................... 10
2.3 Quiet Possession ...................................... 10
2.4 Ownership of Improvements ............................. 11
ARTICLE III CONSTRUCTION AND IMPROVEMENT OF PREMISES
........ ...................... I................... 12
• 3.1
Improvements to be Erected by Tenant .....................
12
3.2
Coastal Approval and Entitlements ........................
12
3.3
Compliance With Laws .................. I ..............
12
3.4
Lien Free Completion ..................................
13
3.5
As -Built Drawings .....................................
13
• 3.6
Tenant's Architects and Contractors .......................
14
3.7
Costs of Construction ..................................
14
3.8
Renovation and Maintenance of Hotel ......................
14
3.9
Renovation and Maintenance of Apartments .................
15
3.10
Maintenance of Marina Operations ........................
15
• 3.11
Landlord's Cooperation . ................................
16
ARTICLE IV
REPRESENTATIONS AND WARRANTIES ....................
16
4.1 Landlord's Representations and Warranties ................. 16
4.2 Tenant's Representations and Warranties ................... 17
•
ARTICLE V RENT ............................................... 18
5.1 Rent ............................................... 18
5.2 Percentage Rent ...................................... 18
• 5.3 Base Rent During Construction ........................... 19
5.4 Periodic Adjustments of Base Rent ........................ 19
5.5 Fair Market Adjustment of Base Rent ...................... 19
5.6 Payment of Rent ...................................... 20
5.7 Charges for Goods and Services .......................... 20
• 5.8 Reconciliation of Annual Rent ............................ 20
5.9 Place for Payment of Rentals ............................ 21
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5.10 Records and Reports of Sales ............................ 21
• 5.11 Additional Rent ....................................... 22
5.12 No Abatement or Reduction in Rent ........................ 22
5.13 No Partnership Created ................................. 22
5.14 Net Lease ........................................... 23
ARTICLE VI TENANT'S OBLIGATION WITH RESPECT TO
• MAINTAINING PREMISES ............................... 23
6.1 Repairs and Maintenance ............................... 23
6.2 Taxes and Assessments ................................. 23
6.3 Capital Repairs and Replacements ........................ 24
•
ARTICLE VII USE OF PREMISES .................................... 25
7.1 Use of Premises ...................................... 25
7.2 Pump -Out Station ..................................... 26
• 7.3 Environmental Requirements ............................ 26
ARTICLE VIII CONDUCT OF BUSINESS BY TENANT ...................... 26
8.1 Standards of Operation ................................. 26
• 8.2 Management ............ ................ I............. 27
8.3 Competition by Tenant .................................. 27
8.4 Use of Name .......................................... 28
ARTICLE IX ALTERATIONS, FIXTURES AND SIGNS ..................... 28
• 9.1 Tenants Right to Make Alterations
9.2 Prohibition Against Liens ............................... 28
9.3 Signs ............................................... 28
ARTICLE X INSURANCE, INDEMNITY AND CASUALTY ................... 29
•
10.1 Insurance ........................................... 29
10.2 Indemnification ....................................... 32
10.3 Settlement of Insurance Claims ........................... 34
10.4 Casualty ............................................ 34
• 10.5 Casualty Late In Term .................................. 34
10.6 No Abatement of Rent .................................. 35
ARTICLE XI UTILITIES ........................................... 35
• 11.1 Utilities ............................................. 35
N131 -215136.V23 11 09/11186
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•
ARTICLE XII
•
12.1
ARTICLE XIII
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13.2
13.3
13.4
13.5
13.6
ARTICLE XIV
14.1
14.2
14.3
14.4
14.5
ARTICLE XV
•
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15.2
15.3
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ESTOPPEL CERTIFICATES .............................. 35
Estoppel Certificates ................................... 35
ASSIGNMENT AND SUBLEASING ......................... 36
Limitation on Right to Assign ............................ 36
Grant or Denial of Consent .............................. 37
Non -Application to Guest Rooms and Facilities ............... 38,
Assignment to Affiliate ................................. 38
Limitation on Transfer of Interest in Tenant ................. 38
Participation in Sale Proceeds ........................... 39
HYPOTHECATION ..................................... 41
Tenant's Right to Hypothecate ............................ 41
Notice to and Rights of Mortgagees ........................ 42
Nousubordination of Fee ................................ 45
Equipment Financing ................................... 45
Cross Collateralization of Premises ....................... 46
WASTE AND GOVERNMENTAL REGULATIONS ............... 46
Waste or Nuisance .................................... 46
Governmental Regulations ............................... 46
Tenant's Right to Contest Governmental Regulations ........... 46
ARTICLE XVI
EMINENT DOMAIN ....................................
47
16.1
Lease Governs ........................................
47
16.2
Termination of Lease ...................................
47
16.3
Partial Taking; Rental Abatement .........................
47
16.4
Partial Taking; Restoration ..............................
48
16.5
Distribution of Award ..................................
48
16.6
Allocation of Award; Partial Taking ........................
48
16.7
Allocation of Award; Temporary Taking .....................
49
16.8
Allocation of Award; Total Taking .........................
49
16.9
Conduct of Proceedings .................................
49
16.10
Notices .............................................
50
ARTICLE XVII
17.1
• 17.2
17.3
DEFAULT PROVISIONS ................................. 50
Events of Default .....:................................ 50
Remedies Upon Default ................................. 51
Landlord Acting for Tenant's Account ...................... 52
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17.4 Limited Liability; Non -Recourse Ground Lease ............... 52
ARTICLE Xvlll LANDLORD'S ACCESS .................................. 53
18.1 Landlord's Right of Access .............................. 53
ARTICLE XIX
MISCELLANEOUS .....................................
54
19.1
Waiver ..............................................
54
19.2
Accord and Satisfaction .................................
54
19.3
Entire Lease .........................................
54
19.4
Termination of Existing Lease ............................
54
19.5
Force Majeure........................................
54
19.6
Notices .............................................
55
19.7
Captions and Section Numbers ...........................
56
19.8
Construction of Language ...............................
56
19.9
Broker's Commission ...................................
56
19.10
Limitation of Landlord's Obligations .......................
56
19.11
Landlord's or Tenant's Discretion .........................
56
19.12
Interest .............................................
57
19.13
Successors ..........................................
57
19.14
Applicable Law ........................................
57
19.15
Landlord's and Tenant's Rights are Cumulative ...............
57
19.16
Saving Clause ........................................
57
19.17
Attorneys' Fees and Expenses ............................
57
19.18
Injunctive Relief ......................................
57
19.19
Appraisal . .................... :......................
58
19.20
Recording ...........................................
58
19.21
Incorporation of Preamble, Recitals and Exhibits .............
58
• N81 -216136.V23 IV
'•
GROUND LEASE
THIS GROUND LEASE (this "Lease") is made as of _, by and
between THE CITY OF NEWPORT BEACH, a charter city and municipal corporation
("Landlord"), and BBC PROPERTY, INC., a New York Corporation ("Tenant").
'•
RECITALS
A. Landlord is the 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 on Exhibit A attached hereto (the "Premises"), pursuant to the
provisions of the Beacon Bay Bill (Chapter 74 of the Statutes of 1978).
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 May 13,
li • 1986 (the "Existing Lease"). The Premises are operated as a multi -use hotel and
club facility by International Bay Clubs, Inc., an Affiliate of Tenant, operating under
the name 'Balboa Bay Club."
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 Beach has determined that this Lease is
consistent with the Charter of the City of Newport Beach, and its General Plan and
Zoning Ordinances applicable thereto, and of all other applicable State and local
• laws.
F. The City Council of the City of Newport Beach has determined that it is In the best
Interests of the 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 entered into that certain Option Agreement for the Lease of
Real Property dated as of June 30. 1996 (the "Option Agreement") granting
• Tenant the right to enter Into a new lease for the Premises on the terms and
conditions set forth herein. Tenant has duly exercised such option, all conditions
precedent to such exercise have been satisfied, and there exists no event of default
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under the Existing Lease or the Option Agreement as of the date of the exercise
of the option by Tenant or the date hereof.
H. Landlord and Tenant each desires to terminate the Existing Lease and
concurrently therewith enter into this Lease.
J. Landlord and Tenant agree that the Option Agreement and this Lease fully comply
with and completely satisfy the obligations of Landlord and Tenant under all prior
agreements and understandings, including all prior Memoranda of Understanding
and 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 an individual, corporation, y p 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.
• "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 guests 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 guests
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
• N61.216136.V23 2 09111198
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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.
40 "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.
I•
"Constituent Member" means any constituent partner, joint venturer, 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%) 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 service
0 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.
NBt-21513B.V23 J 09/1Im
11
"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.
"Final Plans" means the final plans approved by Landlord as provided In the
Option Agreement.
• "Fiscal Year" means the period of October 1 through September 30 of each year
of the Term.
"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 (1) the value of gratis
meals furnished to Tenant's employees as an incident of their employment,
• (11) gratuities paid to employees, and (iii) the value of meals provided in connection
with charitable events when no Tenant Party receives payment therefor other than
by reason of a charitable contribution.
• NBt-215136.V23 4 08/11/86
"Force Majeure" means, without limitation, such events as: strikes; lockouts;
•
acts of God; Inability.to obtain labor, materials, equipment or supplies; breaches
of contract by contractors, subcontractors or material suppliers which materially
effect 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 effect 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 -governmental, 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
• NBt-215136.V23 4 08/11/86
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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 atter the delayed party has knowledge that such
event of Force Majeure may or will occur.
• "Furnishings" means all furniture, furnishings, fixtures and equipment used in
the operation of the Project, Including: all wall coverings, draperies, blinds,
shades, shutters and 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 furnishings; 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 above mentioned
categories thereof, there shall be excluded therefrom the following amounts:
(1) 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; (11) 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) 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
9 N61 -21613.v23 5 osi»res
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of merchandise or services, or for labor and materials In connection with the
• rendering of services or the sale of goods.
"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, glassware, 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.
0 NB1-215135.V23 6 08/11/96
"Hazardous Material" means any flammable explosives, asbestos, asbestos
containing materials, radioactive materials, hazardous wastes, petroleum
polychlorinated biphenyls, 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 (Section 25100 et seq.) of the California Health and
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. Section 9601 et seq.), as amended, or any successor
statute, (c) "hazardous material' as defined in the Hazardous Materials
Transportation Act (49 U.S.C. Section 1801 et seq.), as amended, or any successor
statute, (d) "hazardous waste," "solid 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. Section 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 (Section 25300 et seq.) of the
California Health and Safety Code, as amended, or any successor statute,
(1) "hazardous substance" as defined in Chapter 6.7 of Division 20 (Section 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 (Section 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. Section 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 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, glassware, 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.
0 NB1-215135.V23 6 08/11/96
• 0
"Lease Interest Rate" means the then Prime Rate plus two percent (295) 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 by slip renters) plus any portion of any Award made
on account of a temporary Taking 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 an deed of trust,
y mortgage or similar security instrument
entered into by Tenant encumbering the leasehold estate created by this Lease, as
permitted by this 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.
• N81 -215136.V23 7 69111196
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"Premises" means the parcel of land located in the City of Newport Beach, County
• of Orange, State of California, as more fully described in Exblblt A attached hereto
and by this reference incorporated herein.
"Prime Rate" means the prime or base rate of 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 and
as so identified by The Wall Street Journal if at any time Bank of America shall fall
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, all in accordance with the Final Plans approved by Landlord
• pursuant to the Option Agreement.
"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 management of first class
hotel facilities, and who does not own, lease, manage or have an interest In any
other hotel prohibited by Section 8.3 (except for ownership of less than a
Controlling interest in a corporation whose capital stock is publicly traded); 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, and who does not own, lease,
manage or have an Interest in any other hotel prohibited by Section 8.3 (except for
ownership of less than a Controlling interest in a corporation whose capital stock
is publicly traded). 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 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
0
NB1-215136.V23 8 09/11196
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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.
"Term" has the meaning ascribed to it in Section 2.2.
0 N81 -215136.V23 9 09111/98
•
"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 construction or operation
of a Project of the type and in the manner set forth In this Lease.
ARTICLE If
• 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.
I•
2.2 Term. The term ("Term") of this Lease shall commence on the Commencement
Date and shall expire upon. the fiftieth (50th) anniversary thereof (the "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 to 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.
NB1.215136.V23 10 08111!96
•
I•
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(b) Tenant has satisfied itself, by its own investigation and research, regarding
0 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 that It has had the
0 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
0 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
0 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
0 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 or interest therein, including any rights to depreciation
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 falls
0
NBi-215136.V23 11 09/11/95
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to remove the same within thirty (30) days following the expiration or earlier
• termination of this Lease, any part of Tenant's Investment remaining on the
Premises after said 30 -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 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 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.
ARTICLE 111
CONSTRUCTION AND IMPROVEMENT OF PREMISES
•
3.1 Improvements to be Erected by Tenant. Tenant shall, at its sole cost and
expense, use its best efforts to design, construct, furnish and equip the Project
(including parking facilities adequate to fully comply with all applicable
ordinances, resolutions and conditions of approval of the Project) upon the
• Premises as herein provided. Construction of the Improvements, consisting of
Issuance of one or more building permits for construction of the Project (including
demolition of existing improvements), shall commence on or before ninety (90)
days following commencement of the Term (as said date is extended by events of
Force Majeure). Tenant shall, at its sole cost and expense, use its best efforts to
• construct and complete the Project, which shall include all Improvements and
amenities as are contemplated in the Final Plans approved by Landlord under the
Option Agreement and as otherwise required by the terms of this Lease or by
applicable law so that completion is achieved on or before three (3) years
following the date of commencement of the Term (as said date is extended by
• events of Force Majeure).
3.2 Coastal Approval and Entitlements. Tenant 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 variances
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 the construction of the Project, and any subsequent
Improvements on the Premises, to be completed in substantial accordance with
• N81 -215136.V23 12 09/11/96
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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 thereat. 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 the Project shall be constructed
free of liens for labor and materials, using quality materials and workmanship, and
substantially in accordance with the Final 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) 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 compiled with the
• provisions of this Section 3.4, there is an adverse order, judgment, decree or
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 at the Default Rate from the date of
expenditures to the date of reimbursement, shall be payable by Tenant
Immediately following demand therefor.
•
3.5 As -Built Drawings. Upon completion of the work, Tenant shall furnish Landlord
with a set of drawings and specif9cations 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
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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, furnishing, equipping and supplying of the Project,
which costs and expenses include without limitation: (1) utility hook-up and
connection fees and all distribution facilities, conduits, pipelines and cables
required in connection with the development of the Project, (if) 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); provided, however, that Tenant shall not
be required by this Section 3.8 to make any material capital Investment in the
hotel component of the Project to upgrade facilities, systems and equipment which
are included In comparable quality hotels designed and constructed after the date
of Landlord's approval of the Final Plans as provided In the Option Agreement, but
0 which were not customary in such other quality hotels at the time of such design
approval. 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 estoppel
certificate to Tenant certifying whether, in the opinion of Landlord, the Project,
and each part thereof, and the furniture, fixtures, appliances and personal
0 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 contemplated in this
Lease, including food and beverage services, banquet, conference and meeting
0 facilities, restaurants, sundries and gift shops, and spa and health club; provided,
however, if during the Term, Tenant reasonably determines that maintenance of
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such number of guest rooms or related facilities is not as economically
advantageous as some other 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, appliances 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; provided, however, that Tenant shall not be
required by this Section 3.9 to make any material capital Investment in the
apartment component of the Project to upgrade facilities, systems and equipment
which are not included in the apartment component of the Project as of the date
• of Landlord's approval of the Final Plans as provided in the Option Agreement.
Tenant shall, from time to time as each apartment unit is leased, but not less
frequently than once every live (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 Terrace Apartment Building as apartment units available for rental at
all times during the Term in a manner consistent with the provisions of Chapter
74, Statutes of 1978, as amended, including but not limited to Sec. 4.5(b) as added
by Chapter 728, Statutes of 1994.
• 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 the Newport harbor throughout the
Term; provided, however, that Tenant shall not be required by this Section 3.10 to
• make any material capital investment In the marina component of the Project to
upgrade facilities, systems and equipment which are Included In the existing
marina as of the date of Landlord's approval of the Final Plans as provided in the
Option Agreement. Tenant shall maintain and operate not less than one hundred
forty (140) slips with a reasonable number suitable for boats of up to one
• hundred (100) feet In 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 the Newport Harbor from time to time during the Term. Tenant shall
not enter into rental or leasing agreements for boat slips (i) for a term of longer
j • 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
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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 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
Landlord's legislative, quasi-judicial or administrative rights, obligations and
prerogatives as a municipal public agency, Including Landlord's rights, obligations
and prerogatives in connection with reviewing and approving any license, permit
or entitlement for the development, construction or use of the Premises.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.1 Landlord's Representations and Warranties. As a 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 it is a municipal corporation duly organized,
validly existing and in good standing under the laws of the State of
California; that it 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.
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(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.
• 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 It is a corporation duly organized, validly
existing and in good standing under the laws of the State of New York; that
it is qualified to conduct business in the State of California; that it 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 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.
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ARTICLE V
RENT
5.1 Rent. Subject to the limitations of Section 5.3 below, commencing upon the
Commencement Date, Tenant shall pay to Landlord the greater of (1) annual rent
In the sum of One Million One Hundred Twenty -Five Thousand Dollars
($1,125,000) (the "Base Rent") as adjusted pursuant to Section 5.4 below, or
(11) the percentage rent set forth in Section 5.2 (the "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:
CATEGORY PERCENTAGE RENT
Dues Revenues 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%
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 the
greater of (I) the amount of such proceeds of business interruption or rental loss
NBt-215136.V23 1 8 08111196
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Insurance relating to Percentage Rent payable to Landlord hereunder, or (11) 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 Base Rent During Construction. Notwithstanding Section 5.1 above, from
and after the Commencement Date until the earlier of (1) thirty (30) months
following the Commencement Date, or (11) such time as certificates of occupancy
have been issued with respect to the renovation of the hotel portion of the Project
as contemplated in this Lease, the Base Rent payable hereunder shall be limited
to Forty -Six Thousand Eight Hundred Thirty -Three and 341100 Dollars
($46,833.34) per month; provided, however, Tenant shall remain obligated to pay
Percentage Rent to the extent it exceeds such Base Rent during such period.
5.4 Periodic Adjustments of Base Rent. Upon the first day of the ninety-seventh
(97`") month following the Commencement Date, and the first day of every sixty-
one 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) days
• following receipt of Landlord's notice of adjustment In Base Rent.
5.5 Fair Market Adjustment of Base Rent. Upon the twenty-sixth (26th)
anniversary of the Commencement Date (the "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
minimum 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) Fiscal 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) Fiscal Years preceding
the Market Adjustment Date shall be added to Base Rent at the rate of twenty-five
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percent (25%) thereof per year in the ensuing four (4) Fiscal Years. For example,
0 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) Fiscal Years is $4,000, then Base Rent shall be increased by $1,000 in each
of the ensuing four (4) Fiscal Years. Landlord and Tenant agree to use the
appraisal methodology utilized by Landlord's appraisal conducted by William
Hansen & Associates, dated November 4, 1994, in the computation of the market
rent upon the commencement of this Lease.
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 (1) Percentage Rent computed from
the commencement of that particular Fiscal Year to the end of the Accounting
Period for which such Rent is due, or (11) the Base Rent due from the
• commencement of that particular Fiscal 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 Fiscal Year.
5.7 Charges for Goods and Services. Tenant agrees to charge prices for all
0 goods, services and facilities (including boat slip rentals) offered at or provided on
or from the Premises comparable with prices for such goods and services charged
at other private clubs in Southern California; provided, however, (f) 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
(Il) 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) days following receipt by
Landlord of the annual statement set forth in Section 5.10(b), the Percentage Rent
due for such Fiscal Year shall be determined, subject to audit as act forth In
Section 5.10(e), and the amount of Rent paid or payable for such Fiscal 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 Fiscal Year, such excess to the
installments of Rent next following. Tenant shall pay, within five (5) days following
such determination, but in no event later than one hundred and sixty (160) days
following the end of such Fiscal Year, the full amount of Rent determined to have
been due and payable for such Fiscal Year.
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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 at Landlord's
address as set forth in Section 19.6 or to such other parties and/or to such other
address as Landlord may from time to time designate in writing to Tenant.
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)
! 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 Fiscal Year within one hundred twenty (120) days following the
end of each Fiscal Year.
(c) Payment of Percentage Rent. Tenant shall accompany the statement
of Gross Revenues for each Accounting Period and the Fiscal 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 Revenues for a period of
not less than three (3) years after the expiration of the Fiscal Year to which
• such records relate and upon request shall furnish Landlord true and
accurate statements thereof. Within one hundred twenty (120) days
following the close of each Fiscal 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 Fiscal 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 Fiscal Year.
(e) Audit Rights. Landlord shall have the right upon two (2) days prior
notice to Tenant and during normal business hours, but not more often than
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one (1) time during each Fiscal Year of the Term, to audit the Tenant's
• statements of Gross Revenues, and supporting records and data. Within
ten (10) 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 Fiscal
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 May 1 of each year
during the Term, Tenant shall provide Landlord, for informational purposes,
with a forecast for the ensuing Fiscal Year of the amount of (1) Gross
Revenues expected to be received by Tenant, and (11) Percentage Rental
expected to be payable hereunder (by categories of Percentage Rental). On
• or before September 30 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 upon completion of construction in accordance with the Final Plans
as required by Section 6.3.
5.11 Additional Rent. Tenant agrees to pay, as rental for the Leased Premises,
within ten (10) 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 venturers or associates of one another in
the conduct of Tenant's business on the Premises, or in Its ownership of the
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Project. The 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 anyway 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 final year of 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 and personal property
located in or upon the Premises and/or the Project.
NB7-215136.V23 23 08/11/96
(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, Imposed, assessed, or proposed to be assessed,
• against the Premises and/or the Project or any of the personal property
therein to the extent permitted by applicable law; provided, however,
Tenant shall do the following: (1) comply with all laws, orders, rules and
regulations respecting such contest; (11) give Landlord prior written notice
of Tenant's intent to so contest said amount or validity; and, (111) 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 (S) 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 third (3rd) anniversary of the
• completion of construction of the hotel portion of the Project, Tenant fails to
expend a sum equal to at least four percent (4%) of Gross Revenues per annum
during such period on repairs, replacements and 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 (the "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 period and four percent (440) 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 Fiscal Year until Tenant has expended for the foregoing
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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 (1)
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 (11) leases or subleases of 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 businesses 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 businesses 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.
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purposes in such Fiscal Year a sum of not less than four percent (445) of Gross
•
Revenues during such Fiscal 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 Furnishings or the 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 Fiscal 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 (246) 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 and any excess shall be the sole
•
property of Tenant.
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 (1)
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 (11) leases or subleases of 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 businesses 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 businesses 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.
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7.2 Pump -Out Station. At all times during the Term, Tenant covenants and agrees
• to Install and 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 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 any 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 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.
I•
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
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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 the 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.
8.3 Competition by Tenant. Beginning on the Commencement Date and continuing
for a period of five (5) years following substantial completion of the construction
• and renovation of the Project, as contemplated in the Final Plans approved by
Landlord under the Option Agreement, Tenant agrees for itself and Its Affiliates
that Tenant and its Affiliates shall not own, lease, manage or operate, or
participate in the ownership, lease, operation or management of, including any
ownership interest in any partnership, joint venture or other equity participation,
any business venture or operation similar to the Project, or any component or
• business conducted within or as part of the Project, located on Newport Harbor
(that is, its nearest boundary is within fifteen hundred (1,500) feet of the
waterfront). 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 a deed or other conveyance in lieu of such
foreclosure, or (Ii) any entity which shall be an institutional investor with a diversl-
• fled investment portfolio containing projects operated under three (3) or more
trade names and under management agreements with three (3) or more
unaffiliated national chain management companies. 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 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
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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
• 8.1 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 required by this Lease, shall be at least
equal to the quality of the design and construction of the Project contemplated in
the Final Plans.
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.
8.3 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 signage program outlined
• on Exhibit C attached hereto and otherwise conform to the signage regulations of
the City and the Coastal Commission, as applicable.
I•
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• • •
ARTICLE X
• INSURANCE, INDEMNITY AND CASUALTY
10.1 Insurance. Tenant shall maintain at Its sole cost and expense during the Term,
unless otherwise specified, the following types of Insurance under conditions and
in at least the amounts and forms specified below:
•
(a) Insurance Carriers; Forms of Policies. All primary insurance (as
compared to excess insurance) described under this Article X shall be
maintained by Tenant with insurance carriers licensed and approved to do
business in California, having a general policyholders rating of not less than
• "A" and financial rating of not less than "VII" (or, if any Leasehold
Mortgagee shall require a higher rating, such higher rating) in the most
current Best's Key Rating Guide. In no event will such insurance be
terminated or otherwise allowed to lapse without replacement prior to
expiration or earlier termination of this Lease. Tenant may provide the
• insurance described in this Article X In whole or in part through a policy or
policies covering other liabilities and properties of Tenant or its Affiliates;
provided, however, that any such policy or policies shall: (a) allocate to the
Project the full amount of insurance required hereunder, and (b) contain,
permit or otherwise unconditionally authorize the waiver contained in
•
Section 10.1(1) below.
(b)
•
Evidence of Insurance. As evidence of specified insurance coverage,
Landlord shall receive certificates Issued by Tenant's insurance carriers or
authorized representatives acceptable to Landlord showing such policies
In force for the specified period. Such evidence shall be delivered to
Landlord prior to the Commencement Date. Each such policy shall not be
subject to material alteration or cancellation without thirty (30) days' prior
written notice to be delivered to Landlord. Should any policy expire or be
canceled before expiration of the Lease and Tenant fails immediately to
procure other insurance as specified, Landlord reserves the right to
procure such Insurance and to receive payment from Tenant for the cost
thereof. Tenant shall also allow Landlord to Inspect such evidence of
Insurance Tenant obtains from its contractors.
Damages. Nothing contained in these insurance requirements is to be
construed as limiting the type, quality or quantity of insurance Tenant may
maintain or the extent of Tenant's responsibility for payment of damages
resulting from Its operations under this Lease.
Workers' Compensation Insurance. Tenant shall maintain full
Workers' Compensation Insurance for all persons whom it employs in
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accordance with the requirements of the most current and applicable State
Workers' Compensation Insurance Laws in effect.
(e) Comprehensive General Liability Insurance. Tenant shall maintain
Comprehensive General Liability Insurance with a combined single limit for
bodily Injury and property damage of Ten Million Dollars
($10,000,000)(which amount shall be subject to periodic adjustment in
accordance with subsection (1) below) covering Operations, Independent
Contractors, Products and Completed Operations, Contractual Liability
specifically covering the indemnifications of Landlord contained in this
Lease, Broad Form Property Damage, Severability of Interest or Cross
Liability clauses, Personal Injury, Liquor Law Liability, and Explosion,
Collapse and Underground Hazards (X,C,U). In the event Liquor Law
Liability Insurance shall become commercially unavailable at reasonable
rates and terms in the amounts required above, Tenant shall be permitted
to obtain such lower limit as then may be commercially available at
reasonable rates and terms In the commercial insurance marketplace,
provided that, in no event, may Tenant be permitted to obtain or maintain
Liquor Law Liability insurance with a limit of coverage lower than Five
Million Dollars ($5,000,000) (which amount shall be subject to periodic ad-
justment In accordance with subsection (1) below). The limits of liability of
the Insurance coverage specified in this paragraph may be provided by any
combination of primary and excess liability Insurance policies.
(f) Automobile Liability Insurance. Tenant shall maintain owned, hired
and non -owned automobile liability insurance covering all use of all
automobiles, trucks and other motor vehicles utilized by Tenant in
connection with the Premises with a combined single limit for bodily injury
and property damage of Five Million Dollars ($5,000,000)(which amount
shall be subject to periodic adjustment in accordance with subsection (1)
below).
(g) Property Insurance -Construction. During construction of any
Improvements on the Premises, Tenant shall maintain builder's risk
Insurance against "all risk" of physical loss, including the perils of flood,
collapse and transit, with commercially reasonable deductibles, covering
the total cost of work performed, equipment, supplies and materials
furnished on a replacement cost basis. Tenant shall be permitted to obtain
and maintain the flood insurance required hereunder in such amounts and
forms as are available, from time to time, under the National Flood
Insurance Program.
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(j) Compliance. Tenant shall at all times use diligent efforts to observe and
• comply with the requirements of all policies of insurance In force with
respect to the Premises or the Project, or any part thereof, and Tenant
shall so perform and satisfy the requirements of the companies writing
such policies If It is commercially reasonable to do so. Tenant shall, if any
subtenant, licensee, concessionaire or other user of any portion of the
• Premises or Project engages in any activity in violation of the requirements
of all policies of insurance In force with respect to the Premises or the
Project, or any part thereof, take steps, immediately upon becoming aware
of such activity, to remedy or prevent the same, as the case may be.
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(h) Property Insurance -Operations. Upon completion of construction of
•
the Project but in no event prior to the time that the insurance required
under Section 10.1(g) above ceases, Tenant shall obtain insurance on the
Project and shall maintain Insurance continuously during the Term, against
"all risk" perils of physical loss and "Boller and Machinery" perils, Including
fire, lightning, riot and civil commotion, vandalism and malicious mischief,
•
and insurance against loss or damage from explosion of boilers, generators,
transformers, heating apparatus and air conditioning systems and against
such other risks or hazards as may customarily be Insured against for
projects in Southern California of the type, size and quality of the Project.
Such insurance shall be in amounts not less than ninety percent (90%) of
the then full replacement cost of the Project without deduction for
•
depreciation, and otherwise sufficient to satisfy the requirements of any
Mortgagee. Such policies of insurance shall contain the "Replacement Cost
Endorsement." Such full replacement cost shall pertain to the Project and
Furnishings and be determined not less often than each two (2) years
during the Term.
•
(1) Waiver of Subrogation. Each policy of insurance procured pursuant to
this Article X shall contain a waiver by the Insurer of the right of
subrogation against either party hereto for negligence of such party. To the
extent such Insurance is not impaired thereby, Landlord and Tenant each
•
hereby waives any and all rights of recovery against the other, and against
its shareholders, officers, directors, employees, subsidiaries, partners,
servants, agents and representatives, for loss or damage arising from any
cause Insured against under the form of insurance policies required to be
carried pursuant to this Article X or under any other policy of insurance
•
carried by either Landlord or Tenant. Tenant and Landlord each agrees to
use reasonable efforts to obtain its liability Insurance carriers' permission
as to such waiver of subrogation.
(j) Compliance. Tenant shall at all times use diligent efforts to observe and
• comply with the requirements of all policies of insurance In force with
respect to the Premises or the Project, or any part thereof, and Tenant
shall so perform and satisfy the requirements of the companies writing
such policies If It is commercially reasonable to do so. Tenant shall, if any
subtenant, licensee, concessionaire or other user of any portion of the
• Premises or Project engages in any activity in violation of the requirements
of all policies of insurance In force with respect to the Premises or the
Project, or any part thereof, take steps, immediately upon becoming aware
of such activity, to remedy or prevent the same, as the case may be.
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(k) Additional Insured. Landlord shall be included as an additional named
• insured under the coverage specified in Sections 10.1(e) and (t) above. The
Insurance required under Sections 10.1(e) and (0 shall be primary and any
other Insurance maintained by any such additional insured shall be non-
contributing with said insurance required hereunder. Landlord shall be
Included as additional named insured as Its interest appears In regard to
• insurance described in Sections 10.1(g) and (h).
(1) Index Each sum which, by the terms of this Article X, is subject to
periodic adjustment In accordance with this subsection (1) shall be in-
creased on each seven (7) year anniversary of the Commencement Date
• during the Term by the percentage of any increase for the preceding year
In the Consumer Price Index for All Urban Consumers, Los Angeles -
Anaheim -Riverside, All Items (1982-84 Base), published by the Bureau of
Labor Statistics, Department of Labor. The successor or most nearly com-
parable 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.
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 any
kind or nature, including damage to any property and injury (including
death) to any person (collectively, "Claims"), arising from Tenant's use or
occupation of the Premises or the Project, or from any activity, work or
• things done, permitted or suffered by Tenant or any omission of Tenant on
or about the Premises or the Project, or 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 indemnity 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
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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) days of 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 In Section 10.1(h) 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 City 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.
•
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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 author-
ized and empowered by Tenant, at 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 (subject to changes necessary to comply with
then existing laws applicable thereto and 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
• Maleure, 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 (1) 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) 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.
•
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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 (11)
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 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 beat, 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 utilities 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 X11
ESTOPPEL CERTIFICATES
12.1 Estoppel Certificates. Within fifteen (15) days after each request therefor by
• either party, the other party agrees to deliver a certificate to any person
designated by the requesting party (including a proposed Mortgagee or purchaser),
or to the requesting party, certifying (if such be the case) that this Lease is In full
force and effect, that, to the best of such party's knowledge at that time, there are
no Events of Default by 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
NBt-215136.V23
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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) 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
• 13.1 Limitation on Right to Assign. Except as hereinafter set forth in this Article
X111 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 (f) Four Million Dollars ($4,000,000) (increased
• each five (5) years from the date of the Option Agreement by the
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percentage of any increase over such period in the Consumer Price Index
• for All Urban Consumers, Los Angeles -Anaheim -Riverside, All Items (1982-
84 Base), published by the Bureau of Labor Statistics, Department of La-
bor), or (ii) ten percent (10%) of the fair market value of the leasehold
estate created by this Lease. The successor or most nearly comparable
index published by some other branch or department of the United States
• Government shall be used 1f 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 within thirty (30)
• days following Landlord's receipt of notification from Tenant regarding the
proposed transfer. Following a request from Landlord for additional reasonable
Information and/or documentation as provided herein, Landlord shall have ten (10)
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) day
period and Landlord shall not notify 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
•
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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 (1) rental of guest rooms or suites or other guest facilities within
the Project, (I1) rental of apartment units In the Project in the ordinary course of
• business for a term of not more than one year or such longer term if the rent paid
by the apartment tenant adjusts annually to the fair rental value of the unit, (ill)
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
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 (2586), 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
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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(les) having. Control of Tenant.
13.6 Participation In Sale Proceeds.
(a) In the event Tenant (1) sells, conveys, transfers or assigns all or any portion
of its interest in this Lease and the leasehold estate created hereby (other
than to a Mortgagee as security and other than a transfer to a partnership,
limited liability company, joint venture or other entity pursuant to a
• transfer in which Tenant receives only an Interest in such entity in
consideration of its contribution of this Lease and the leasehold estate
created hereby), (ii) subleases all or substantially all of the Premises,
whether in one or more transactions, or (iii) sells, transfers or conveys any
interest in Tenant or its constituent shareholders, Including the stock of
• Tenant of any kind or class, common or preferred, or the beneficial or
equitable ownership interest in such stock or in Tenant (collectively, a
"Sale"), at any time prior to twenty-four (24) months following the
issuance of the final certificate of occupancy for the Project, as constructed
and renovated In accordance with the Final Plans, as contemplated in the
Option Agreement, Tenant shall pay to Landlord an amount equal to twenty
• percent (20%) of the Net Proceeds (as hereinafter defined). For purposes
of this Section 13.6:
(1) "Net Proceeds" shall mean the entire consideration paid or payable
to or for the benefit of Tenant or Its constituent shareholders in
• connection with a Sale (whether In cash, note, In kind or other
consideration, but excluding a transfer to a partnership, limited
liability company, joint venture or other entity pursuant to a transfer
In which Tenant receives only an interest in such entity in
consideration of its contribution of this Lease and the leasehold estate
• created hereby) less (i) Project Costs (as hereinafter defined) and (ii)
reasonable and customary actual out-of-pocket costs and expenses of
Tenant Incurred in connection with consummating such Sale (excluding
any payment made to any Mortgagee or lender to release any Mortgage
or other security or otherwise);
•
(ii) "Project Costs" shall mean and be limited to:
(A) Five Hundred Thousand Dollars ($500,000), In reimbursement
of all third party predevelopment costs incurred and paid by
Tenant prior to the date of the Option Agreement;
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(B) all third party costs and expenses incurred and paid by Tenant
• in connection with the design, development, construction and
renovation of the Project from and after the date of the Option
Agreement through the date of such Sale (including, without
limitation, any required offsite improvements, demolition of
existing improvements, permit and license fees and charges,
• signage, furniture, fixtures and equipment, architecture, design
and engineering fees, insurance bonds, construction
management fees, legal and other professional fees related to
construction of the Project, financing fees and payments of
principal on any new loan obtained by Tenant in connection with
the construction and renovation of the Project, plus interest
• thereon at the rate of interest charged on such loan (excluding
any equity kicker, shared appreciation or other similar
payment);
(C) an amount equal to fifteen percent (15%) of the sum of
• subparagraphs (A) and (B) above; and
(D) Thirty Million Dollars ($30,000,000), representing the
appraised value of Tenant's Interest in the Premises as of May
15, 1996.
•
(iii) Project Costs shall exclude any operating cost or expense of the
operation of the business of Tenant on the Premises other than
predevelopment and development costs set forth above, any fees paid
to Tenant or its Affiliates for any purpose, Rent payable under this
• Lease, and any other costs or expenses not specifically described in
subparagraph (a)(ii)(A) through (D) above. From time to time, but
not less often than quarterly. Tenant shall provide Landlord with a
certified schedule of Project Costs with reasonable supporting
documentation.
(Iv) Net Proceeds shall not include any proceeds of a Sale which are not
distributed to or for the benefit of Tenant or its constituent
shareholders, and which are used by Tenant In the payment of costs
and expenses incurred In the construction and renovation of the
Project.
(b) The rights of Landlord under this Section 13.6 shall be subject and
subordinate to the rights of any Mortgagee.
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•
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 as contemplated in the Final Plans and any
0 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.
0 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 of (1) ninety
percent (900) of the appraised value of the Project and Tenant's leasehold
Interest hereunder as reflected in an appraisal thereof completed no earlier than
one hundred eighty (180) days prior to the date such loan is funded, which
appraisal shall be subject to Landlord's reasonable approval if such appraisal is
0 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 Four Million Dollars
($4,000,000) (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 -
Anaheim -Riverside, All Items (1982-84 Base), 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
0 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
0 consent to any such assignment, hypothecation, mortgage, pledge or alienation,
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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 without restriction (other than the
requirement that the assignee of the leasehold estate satisfy the requirements of
this Lease with respect to management of the Premises by a Qualified Manager).
• Except for 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 of 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 Mprtgagee 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 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
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upon any Mortgagee and the default has continued for a period of thirty
(30) 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 default upon any Mortgagee and such non -monetary default
continues for a period of sixty (60) 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) day period, and, thereafter, diligently
proceed to cure such default; or
(ll) commence to obtain possession of the Project (including possession
by a receiver) within said sixty (60) 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
(W) institute foreclosure proceedings within said sixty (60) day period,
and, thereafter, complete such foreclosure proceedings 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 (it) above.
With respect to (ii) or (Ill) 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 (11) or (lil) 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
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Mortgagee's ability to cure, then Landlord, within thirty (30) days after
receiving a written request therefor which request shall be given within
thirty (30) 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.
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(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
0
Rent specified In this Lease and all 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
0
leasehold estate by the Mortgagee or its designee, the Mortgagee or party
acquiring title to Tenant's leasehold estate falls to commence 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
0
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) days following the
0
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
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of Landlord's rights or 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 and served when received by the Mortgagee.
(h) The Mortgagee whose Leasehold Mortgage would be senior in priority if
there were a foreclosure shall prevail If two 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.
• (1) 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.
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 Furnishings 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 any such equipment leases, retained title
contracts, security Interest or other forms of purchase money financing and to
execute documents. In form and substance reasonably satisfactory to Landlord,
• that permit the equipment lessors, title and lien holders, as applicable, the right
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to enter the premises for the sole purpose of exercising their rights to the
• Furnishings subject to such leases, retained title contracts, 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 of 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 GOVERMIIENTAL 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 governmental 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,
NRI -215136.V23 46 0911 I
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ordinance, order, rule, regulation or requirement until the final determination of
• such proceeding if compliance may legally be delayed pending the prosecution of
any such proceeding without 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 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 land 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 Rental 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 Taking; Rental 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 Rental 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.
•
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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 the 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 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:
(a) First, to Landlord, Tenant and all Mortgagees, as herein provided, as
• reimbursement for all costs and expense incurred by each of them in the
collection of the Award, including fees and expenses incurred In the
condemnation proceeding unless Landlord is the condemning authority;
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(b) Second, to Tenant, as reimbursement for the costs and expenses of
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
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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) 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.
C7
16.8 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
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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 XVI[
DEFAULT PROVISIONS
17.1 Events of Default. The occurrence of any one 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) 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) 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) days after receipt of
• Landlord's notice of default shall be deemed cured if Tenant commences to
cure said default within thirty (30) 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
f (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) days thereafter; or
(d) Tenant making an assignment for the benefit of creditors, or petition for or
enter Into an arrangement; or
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(e) The abandonment or vacation of the Project by Tenant for a period of fifteen
• 0 5) consecutive days after written notice to Tenant (except for such
abandonment or vacation attributable to any event of Force Malcure or by
the remodeling, reconstruction, alteration or repair of the Project); or
(f) the appointment of a trustee or receiver to take possession of substantially
• all of the assets of Tenant located at the Premises or Tenant's interest in
this Lease or the Premises, where possession is not restored within one
hundred twenty (120) 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) 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, as a result thereof, elect to re-enter, as provided in this Article
XVII, or should it 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 1951.2 and 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 Rental received by Landlord shall be applied, first,
to the payment of any indebtedness other than Rental 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 alterations and repairs; third, to the payment of Rental
due and unpaid hereunder, and the residue, if any, shall be held by
Landlord and applied in payment of future Rental as the same may become
• due and payable hereunder. Tenant shall pay any such deficiency to
Landlord if such Rental received from such reletting during any month is
less than that which would be due during that month from Tenant
hereunder. Such deficiency shall he calculated and paid monthly. No such
reentry or taking possession of the Premises by Landlord shall be
• construed as an election on its part to terminate this Lease unless a
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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 of the Project not previously
delivered to Landlord. Tenant's.obligations under this 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 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.
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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
following completion of the Project, as contemplated in the Final Plans,
Tenant shall fall 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 such"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.
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Nothing In paragraph (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:
•
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(i) as a result of fraud, misrepresentation or gross negligence by
Tenant;
(ll) 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);
(Ili) for the fair market value as of the time of giving of any notice
referred to in (ii) hereinabove of any personal property or 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
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.
•
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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 Accord and Satisfaction. Except as otherwise expressly provided In this
Lease, no payment by Tenant or receipt by Landlord of a lesser amount than the
Rent herein stipulated shall be deemed to be other than on account of the earliest
stipulated Rent, nor shall any endorsement or statement on any check or any letter
accompanying any check or payment be deemed an accord and satisfaction, and
Landlord may accept such check or payment without prejudice to Landlord's right
to recover the balance of such Rent or pursue any other remedy In this Lease.
19.3 Entire Lease. This Lease and the Option Agreement set 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.
19.4 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.
19.5 Force Maleure. 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 Maleure and the period for the performance of any such 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
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Majeure. No event of Force Majeure shall excuse the timely payment of money
• when due hereunder except as otherwise expressly provided In this Lease.
19.6 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
• 3300 Newport Boulevard
P. 0. Box 1768
Newport Beach, California 92658-8915
Attention: City Manager
• With copy to: City of Newport Beach
3300 Newport Boulevard
P. 0. Box 1768
Newport Beach, California 92658-8915
Attention: City Attorney
• O'Meiveny & Myers
610 Newport Center Drive
Suite 1700
Newport Beach, California 92660-6429
Attention: Lowell C. Martindale, Jr.
•
If to Tenant: do International Bay Clubs, Inc.
1221 West Coast Highway
Newport Beach, California 92663
Attention: General Manager
•
With copy to: Pinto, Gromet, Dubia & Worcester
2 Park Plaza, Suite 300
Irvine, California 92714
Attention: Saul B. Pinto
•
And: Tenant's Mortgagee(s) provided Landlord has received
notice of and the address of such Mortgagee(s)
Any notice party may change its address for purposes of receiving notice
• hereunder by giving notice to the other party pursuant to the provisions hereof.
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Refusal to accept delivery of any notice, request, 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
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 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.
19.7 Captions and Section Numbers. The captions, section numbers, article
numbers and index appearing in the 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.
19.5 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.
19.9 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 a brokerage commission or finder's fee In connection
with this transaction to the extent such claim is based, or purportedly based, on
the acts or omissions of Landlord or Tenant, as the case may be.
19.10 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.
19.11 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
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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) days of its receipt of such written request delivered In accordance with the
terms of Section 19.6.
19.12 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.
•
19.13 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.
• 19.14 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 laws
provisions.
• 19.15 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.
19.16 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.
19.17 Attorneys' Fees and Expenses. If either party incurs any expense, including
• reasonable attorneys' fees and expenses, In connection with any action or
proceeding against the other, arising out of or in connection with this Lease,
whether or not such action proceeds to trial, the sums so paid by the prevailing
party shall be due from and be paid by the nonprevalling party on demand.
• 19.18 Injunctive Relief. In addition to any remedies expressly mentioned in this
Lease, the other party shall have the right of InjunctJon 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.
•
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19.19 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 being chosen by Landlord, one by Tenant, and the
third by the other two appraisers. The average of the two 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.
• 19.20 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 A 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.
•
19.21 Incorporation of Preamble, Recitals and Exhibits. The preamble, recitals
and exhibits hereto are hereby incorporated into this Lease and made a part
hereof.
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IN WITNESS WHEREOF, Landlord and Tenant have duly executed and delivered this Lease
• as of the day and year first above written.
LANDLORD:
CITY OF NEWPORT BEACH,
• a municipal corporation
By:
• Mayor
Attest:
• City Clerk
Approved as to Form:
City Attorney
•
•
C]11111111111
0
TENANT:
BBC PROPERTY, INC.,
a New York Corporation
By:
Its:
By. _
Its:
59
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LEGAL
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 SUBDMSION, 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, CALIFORNIA, 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 U.S. BULKHEAD
• STATION NO. 129 TO U.S. BULKHEAD STATION NO. 130, AS SAID BULKHEAD LINE AND
BULKHEAD STATIONS 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 01'07m 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 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 NORTHERLY, 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 OF THE SOUTHWESTERLY PROLONGATION OF THE SOUTH-
EASTERLY LINE OF SAID PARCEL 1: THENCE ALONG SAID PROLONGATION AND SAID
• A-1
• • •
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SOUTHEASTERLY LINE, NORTH 28 DEGREES 58'53" EAST 350.00 FEET TO THE POINT OF
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 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 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 -60-13, 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 50' 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 SOUTHWESTERLY 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.
EXCEPT THAT PORTION DESCRIBED AS FOLLOWS:
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.
• A-2
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C
0 0
PARCEL 3:
A NON-EXCLUSIVE EASEMENT FOR INGRESS AND EGRESS OVER THAT CERTAIN PARCEL OF
LAND INCLUDED WITHIN A STRIP OF 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 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 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 -60-13, 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 591 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 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:
0 A-3
1•
0
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 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 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' 2711
,
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 58'53R WEST 480.00 FEET
TO A LINE PARALLEL WITH AND SOUTHWESTERLY 350.00 FEET FROM SAID BULKHEAD
LINE; THENCE SOUTH 61 DEGREES 01' 07" 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
2550.00 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.
•
•
• A-4
I• •
EXHIBIT B
• MEMORANDUM OF GROUND LEASE
RECORDING REQUESTED BY AND
• WHEN RECORDED RETURN TO:
I•
International Bay Clubs, Inc.
1221 W. Coast Highway
Newport Beach, California 92663
MEMORANDUM OF GROUND LEASE
•
•
This Memorandum of Ground Lease ("Memorandum") is entered into effective as of
(the "Commencement Date'), by and between THE CITY OF
NEWPORT BEACH, a municipal corporation ("Landlord"), and BBC PROPERTY, INC., a
New York Corporation ("Tenant").
I•
RECITALS
A. Landlord and Tenant have entered Into that certain Ground Lease (the "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
(the "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.
•
NBt-215136.23 0911 I
I•
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 instrument and
the terms of the Lease.
IN WITNESS WHEREOF, Landlord and Tenant have executed this Memorandum as of the
• date first set forth above.
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•
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•
N61-215MN23
•
THE CITY OF NEWPORT BEACH,
a municipal corporation
Un
BBC PROPERTY, INC.,
a New York Corporation
By: _
Its:
By: _
Its:
08/11/96
I0
0 0
STATE OF CALIFORNIA )
• ) ss.
COUNTY OF ORANGE
On before me personally appeared , personally
known to me (or proved to me on the basis of satisfactory evidence) to be the person whose
• name is subscribed to the within instrument and acknowledged to me that he executed the
same In his authorized capacity, and that by his signature on the instrument the person, or
entity upon behalf of which the person acted, executed the instrument.
K]
WITNESS my hand and official seal.
(SEAL)
STATE OF CALIFORNIA )
ss.
COUNTY OF ORANGE )
Notary Public
On before me personally appeared , personally
(mown to me (or proved to me on the basis of satisfactory evidence) to be the person whose
name Is subscribed to the within instrument and acknowledged to me that he executed the
same in his authorized capacity, and that by his signature on the instrument the person, or
• entity upon behalf of which the person acted, executed the instrument.
•
(SEAL)
•
NBt-215136.V23
•
WITNESS my hand and official seal.
Notary Public
09111M
I•
0 9
STATE OF CALIFORNIA )
• ) ss.
COUNTY OF ORANGE )
On before me personally appeared , personally
known to me (or proved to me on the basis of satisfactory evidence) to be the person whose
• name is subscribed to the within instrument and acknowledged to me that he executed the
same in his authorized capacity, and that by his signature on the instrument the person, or
entity upon behalf of which the person acted, executed the instrument.
I•
(SEAL)
I•
•
I•
I•
I•
I•
NB1-215136.V23
I•
WITNESS my hand and official seal.
Notary Public
091111%
I.
EXHIBIT C
SIGNAGE REGULATIONS
[TO BE AGREED UPON AND ATTACHED TO THIS LEASE
• PRIOR TO EXECUTION BY THE PARTIES]
K.
[:
I.
I.
I.
I.
I.
NBi-21513&V23
L
09/11!%