HomeMy WebLinkAboutC-3404 - Harbor Island Drive, 829 - Lease (Tenant 1) "Balboa Yacht Basin"LEASE AGREEMENT
BALBOA YACHT BASIN
BASIN MARINE, INC.
THIS LEASE is made and effective as of the 1st day of January 2001 ("Effective
Date"), by and between the CITY OF NEWPORT BEACH, a Municipal Corporation
("City") and BASIN MARINE, INC., a California Corporation ("Tenant").
RECITALS
A. City is owner of certain harbor frontage and tidelands, together with
certain abutting upland property known as "Balboa Yacht Basin" located on Harbor
Island Drive in the City of Newport Beach, County of Orange in the State of California.
A portion of the area of the Balboa Yacht Basin is currently being used by Tenant for a
shipyard/boat repair facility with a marine hardware store, ("Premises") and is described
in Exhibit "A". Tenant is occupying the Premises pursuant to a Lease dated March 5,
1985, which will expire on June 30, 2010 ("Old Lease").
B. Under the Old Lease terms Tenant agreed to improve and repair the
shipyard and boat repair facilities on the Premises under terms and conditions that
would allow Tenant an opportunity to recover funds contributed to the redevelopment of
the site. The improvements have been completed and Tenant desires a new lease with
extended term to replace the Old Lease.
C. Landlord with Tenant's concurrence has obtained a recent appraisal (the
October 4, 2000 appraisal by George Jones, MAI) of the fair market value rental based
upon current conditions. The Base Rent and Percentage Rent described below is
based upon such appraisal.
D. Tenant and City desire to terminate the Old Lease and enter into a new
Lease of the Premises to allow Tenant to continue to operate shipyard/boat repair
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facilities for an extended term upon revised terms and conditions as provided in this
Agreement.
E. The uses to be made of the Premises are consistent with provisions of the
Local Coastal Plan and General Plan of the City of Newport Beach, and the terms and
conditions in this Lease are consistent with the provisions of the City Charter and the
ordinances of the City of Newport Beach.
F. The uses to be made of the property subject to this Lease are consistent
with provisions of the Tideland Grant pursuant to which the City obtained title to the
property.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants contained in this
Agreement, City and Tenant agree as follows:
1. DEFINITIONS
1.1 General Definitions. As used in this Lease, the following words and
phrases shall have the following meanings:
(a) Alteration — any addition or change to or modification of, the
Premises made by Tenant including, without limitation, fixtures.
(b) Annual Total Rent —Base Rent and Percentage Rent for a Lease
Year.
(c) Authorized Representative — any officer, agent, employee, or
independent contractor retained or employed by either Party, acting
within authority given by that Party.
(d) City — the CITY OF NEWPORT BEACH.
(e) Damage — an injury to or death of any Person, or the damage
destruction, or loss of property caused by another Person's acts or
omissions.
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(f) Damages — monetary compensation or indemnity that can be
recovered in the courts by any Person who has suffered Damage.
(g) Days — means calendar days, subject to extension for any
weekend or day when banks are not open in California if a deadline
occurs on any such Day.
(h) Expiration — the lapse of the time specified as the Term of this
Lease, including any extension of the Term resulting from the
exercise of an option to extend.
(i) Good Condition — the clean, safe, physical condition of the
Premises and each portion of the Premises in compliance with all
applicable governmental laws and regulations.
(j) Hazardous Materials — shall mean any substance whose nature
and/or quantity of existence, storage, use, manufacture, disposal or
effect, renders such substance and/or the user thereof and/or the
owner of real property affected thereby, subject to or controlled by
federal, state or local law, or regulation because such substance is
actually or potentially injurious or a threat to public health or welfare
or to the environment; or because such substance under federal,
state or local law requires remediation, removal, cleanup or other
action to bring such substance in any areas impacted into
conformance with applicable law.
(k) Hold Harmless — to protect, defend, indemnify and hold harmless
the other party (including that party's employees and, agents) from
all liability, losses, penalties, Damage, costs, attorney fees,
expenses, causes of action, claims, or judgments arising out of or
related to any Damage to any Person or property.
(I) Law — any judicial decision, statute, constitution, ordinance,
resolution, regulation, rule, administrative order, or other
requirement of any municipal, county, state, federal, or other
government agency or authority having jurisdiction over the Parties
and/or the Premises.
(m) Lease Year —means each calendar year of the term. (For
illustration, Lease Year one (1) is from January 1, 2001 to
December 31, 2001.)
(n) Maintenance or Maintain — repairs replacement, maintenance,
repainting, and cleaning.
(o) Material Default — means the failure of Tenant to cure a default
under Section 16, below, by the applicable Tenant cure deadline
which cure reasonably exceeds Five Thousand Dollars
($5,000.00).
(p) Person — one or more natural persons, or legal entities, including,
without limitation, partnerships, corporations, trusts, estates,
associations, or a combination of natural persons and legal entities.
(q) Premises — those portions of the Balboa Yacht Basin designated
on Exhibit "A" encompassing the marine hardware store and boat
repair yard, including all structures and improvements located
within the Premises.
(r) Provision — any term, covenant, condition, or clause in this Lease
that defines, establishes, or limits the performance required or
permitted by either Party.
(s) Rent — Base Rent, Percentage Rent, late payment penalties,
interest, taxes, and other similar monetary amounts and charges
payable by Tenant under the Provisions of this Lease.
(t) Rent Commencement Date — the Rent Commencement Date (and
the Effective Date) shall be January 1, 2001.
(u) Successor — assignee, transferee, personal representative, heir, or
other Person succeeding lawfully, and pursuant to the provisions of
this Lease, to the rights or obligations of either Party.
(v) Tenant — BASIN MARINE, INC., a California corporation, and any
approved Successor.
(w) Termination — the termination of this Lease, for any reason, prior to
Expiration.
2. LEASE OF PREMISES
City leases the Premises to Tenant and Tenant leases the Premises from City for
the Term and on the conditions contained in this Lease.
3. TERM
3.1 Base Term. The "Base Term" of this Lease shall be Fifteen (15) years
from the Effective Date unless sooner terminated in accordance with the other
provisions of this Lease.
3.2 Option to Extend. Provided Tenant is not then in Material Default, both at
the time of Tenant notice of exercise and also at the start of such Option Term, Tenant
may extend the term of this Lease for two additional successive terms of Five (5) years
(the "Option Term" or "Option Terms") the first commencing on Expiration of the Base
Term and the second commencing on Expiration of the first Option Term (which
assumes Tenant has exercised the first option). Tenant may exercise each extension
option by giving City written notice of its intention to do so at least Six (6) months prior
to Expiration of the Base Term or the first Option Term, as applicable.
3.3 Terms of Lease. The "Term" is defined as the Base Term and each
Option Term(s).
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3.4 Hold Over. Should Tenant hold over and continue in possession of the
Premises after Expiration of the Term or any Option Term, Tenant's continued
occupancy of the Premises shall be considered a month -to -month tenancy subject to:
(a) termination by either Party upon Thirty (30) days advance written notice; and (b)
also to all the terms and conditions of this Lease, except the provisions of Sections 3.1
and 3.2.
4. RENT
From and after the Rent Commencement Date, each month Tenant shall pay to
City Base Rent, as adjusted periodically pursuant to Section 4.1(b) below, plus
Percentage Rent. Base Rent and Percentage Rent are together part of the defined
term "Rent."
4.1 Base Rent.
(a) Base Rent. Tenant shall pay Base Rent to City in the sum of Sixty
Three Thousand Six Hundred Forty Two Dollars ($63,642.00) per
year. Base Rent shall be paid in equal monthly installments of Five
Thousand Three Hundred and Three Dollars ($5,303.00). Base
Rent for each full month shall be due on the Tenth (10th) day of that
month and late on the Twentieth (20'h) day of such month. Base
Rent for any partial month shall be prorated in accordance with the
actual number of days in that month. Any unpaid Base Rent due
for Lease Year 2001 will be paid within thirty (30) days of Lease
execution.
(b) Periodic Adjustment. At the end of every Third (3rd) Lease Year
(i.e. the start of Lease Year Four (4) (January, 2004) Seven (7),
Ten (10), Thirteen (13), etc.) the Annual Base Rent shall be
adjusted to the greater of either: (i) Seventy Five Percent (75%) of
the average Reconciled Annual Total Rent for such just ended
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Three (3) Lease Years; or (ii) the Annual Base Rent for the just
concluded Lease Year (Le. Base Rent for Lease Year Three (3),
Six (6), Nine (9), Twelve (12), etc.), (For illustration, assume for the
periodic Base Rent adjustment for Lease Year Four (4), the Base
Rent for Lease Year Three (3) was Sixty Three Thousand Six
Hundred Forty Two Dollars ($63,642.00) and the Reconciled Total
Annual Rent for Lease Years One (1), Two (2) and Three (3) was
Sixty Eight Thousand Dollars ($68,000.00), Eighty Five Thousand
Dollars ($85,000.00) and Seventy Eight Thousand Dollars
($78,000.00), respectively, then the adjusted Base Rent for Lease
Year Four (4) would remain at Sixty Three Thousand Six Hundred
Forty Two Dollars ($63,642.00) calculated as follows: Sixty Eight
Thousand Dollars ($68,000.00), Eighty Five Thousand Dollars
($85,000.00) and Seventy Eight Thousand Dollars ($78,000.00)
equals Two Hundred Thirty One Thousand Dollars ($231,000.00),
divided by Three (3) equals Seventy Seven Thousand Dollars
($77,000.00), times Seventy Five Percent (75%) equals Fifty Seven
Thousand Seven Hundred Fifty Dollars ($57,750.00), which is less
than Sixty Three Thousand Six Hundred Forty Two Dollars
($63,642.00).)
4.2 Percentage Rent.
(a) In addition to the Base Rent, during the term of this Lease, Tenant
shall pay to City each month„ a Percentage Rent calculated by
multiplying the Gross Sales Percentage Rates by the Gross Sales
(as defined in Section 4.4) for each of the following sales
categories attributable to the Premises during each Lease Year to
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the extent that such Percentage Rent exceeds the Base Rent due
for such month:
Gross Sales Percentage Rates:
1. Shipyard/boat repair
(labor, service and materials) 4% of Gross Sales
2. Outside labor and materials 10% of gross commissions
and fees received by
Tenant
3. Equipment and hardware sales,
exclusive of internal sales to
boat repair business 5% of Gross Sales.
(b) Percentage Rent shall be paid for the preceding month with
Tenant's monthly Base Rent payment, under Section 4.1(a), above.
With each monthly Rent payment Tenant shall furnish to City a
statement, in writing, signed and certified by Tenant to be correct (a
"Monthly Sales Statement"), showing the total Gross Sales during
the preceding calendar month, the applicable percentage for each
category, the Percentage Rent for each category, Total Gross
Sales plus Percentage Rent, Base Rent payable for such prior
month, amount of any Percentage Rent due and resulting Total
Rent due for such month. (For illustration of the above categories,
percentages and calculation of percentage rent; attached as
Exhibit "B" is Tenant's monthly Rent and Statement for May,
2000).
(c) Prior to January 31 st of each Lease Year, Tenant shall furnish City
a statement of Tenant's monthly and Annual Gross Sales made
during the previous Lease Year, or any partial Lease Year (if
applicable) with each category of sales calculated using the Gross
Sales Percentage Rates under Section 4.2(a), above, including any
authorized deductions, the Base Rent and percentage Rent paid
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per category and total for each month and for such entire Lease
Year and Base Rent paid by Tenant during such same Lease Year
("Annual Sales Statement"). The Annual Sales Statement shall be
signed and certified as correct by Tenant, or if Tenant is a
corporation, by an authorized officer of Tenant. If the Annual Sales
Statement shows that during the previous Lease Year Tenant paid
Tess Percentage Rent than obligated under the terms of this Lease,
Tenant shall pay to City within Thirty (30) days the amount of any
additional Percentage Rent that is payable to City. If the Annual
Sales Statement shows that during the previous Lease Year
Tenant paid more Percentage Rent than it was obligated to pay
under the terms of this Lease, the amount of this overpayment shall
be applied to the next monthly installment or installments of Base
Rent due or, if the overpayment was in the last year of the Term, or
Option Term(s), City shall refund to Tenant the full amount of this
overpayment within Thirty (30) days of City's receipt of the
statement. The net resulting reconciled Annual Total Rent for a
Lease Year is defined as the "Reconciled Annual Total Rent". (For
illustration, attached as Exhibit "C" is Tenants Annual Sales
Statement for Lease Year 2000, in which the Reconciled Annual
Total Rent was ($101,048.17), total Rent paid was $108,170.05,
and total credit to Tenant was $7,121.88).
(d) If Tenant fails to provide to City any Monthly Sales Statement or
Annual Sales Statement at the time and in the manner specified in
this Lease, this failure shall constitute a default under this Lease
and City shall have the right, in addition to any other rights or
remedies it may have under this Lease, to conduct an audit and
Tenant shall immediately reimburse City for the cost of the audit on
written demand by City. If any Monthly Sales Statement or Annual
Sales Statement is found to be more than Three Percent (3%) Tess
than the amount of Tenant's Gross Sales shown by this audit, the
understatement shall be deemed willful and City may terminate this
Lease upon written notice given at any time within Thirty (30) days
after receipt of the audit by City.
4.3 Payment Location. Rent shall be payable at the office of the City's
Revenue Division at 3300 Newport Boulevard, Newport Beach, California, or at such
other place or places as City may from time to time designate by written notice
delivered to Tenant.
4.4 Gross Sales.
(a) The term "Gross Sales" means:
(1) The entire amount of the actual sales price, whether
wholesale or retail, and whether wholly or partly for cash, on
credit or in exchange for any other product, commodity,
service, commercial paper or forbearance, of all sales of
merchandise, labor, service and materials and all charges
made by or on behalf of Tenant from or upon the Premises;
(2) Orders taken in or from the Premises, even if the orders are
filled elsewhere, and sales by any subtenant, or
subcontractor in or from the Premises;
(3) All sales originating at the Premises shall be considered as
made and completed therein, even though bookkeeping and
collection of the account may be transferred to another
place, and even though actual filling of the sale or service
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order and actual delivery of the merchandise may be made
from a place other than the Premises.
(4) Gross receipts of all coin -operated devices that are placed
on the Premises by Tenant or pursuant to any rent
concession, percentage or other arrangement (but excluding
revenue from one drink vending machine for employees and
telephones that are collected by a public and/or private
utility).
(5) Each sale upon installment or credit shall be treated as a
sale for the full price in the month during which such sale
shall be made, irrespective of the time when Tenant shall
receive payment (whether in full or partial) from its
customers.
(b) Exclusions from Gross Sales. Gross Sales shall not include, or if
included there shall be deducted (but only to the extent they have
been included), the following:
(1) Sales and use taxes, so-called luxury taxes, consumers'
excise taxes, and other similar taxes now or in the future
imposed on the sale of merchandise or services, but only if
such taxes are separately stated on the invoice and added
to the selling price and collected from customers.
(2) The amount of returns to shippers or manufacturers.
(3) The amount of any cash or credit refund made upon any
sale where the merchandise sold or some portion is returned
by the purchaser.
(4) Sums and credits received in the settlement of claims for
loss of or damage to merchandise.
(5) Cash refunds made to customers in the ordinary course of
business.
(6) Value Added Taxes ("VAT") or other taxes added to the
selling price of products and other similar taxes now or
hereafter imposed upon the sale of merchandise or services,
whether such taxes are added to, or included in the selling
price.
(7) Uncollectible credit accounts and other bad debts, not to
exceed Two Percent (2%) of Gross Sales.
(8) The proceeds of sale of Tenant's personal property, trade
fixtures or business equipment.
(c) Statements of Gross Sales. Tenant shall furnish to City statements
of Tenant's Gross Sales in accordance with Section 4.2(b) and
4.2(c), above. Each statement shall be signed and certified to be
true, complete and correct by an Authorized Representative of
Tenant.
(d) Sales and Charges. All sales and charges shall be recorded by
one of the following means: (1) cash registers that display the
amount of the transaction certifying the amount recorded. The
register shall be equipped with devices that log in daily sales totals,
and record on tapes the transaction numbers and sales details. At
the end of each day the tape will record the total sales for that day;
(2) or sales invoices.
(e) Production of Statement, Records and Audit. Tenant agrees to
make available for inspection by City, or its Authorized
Representative, at the Premises a complete and accurate set of
books and records of all sales of merchandise and revenue derived
from the conduct of business or activity in, at or from the Premises
from which Gross Sales can be determined. Tenant shall also
make available, upon City's request, all supporting records,
including federal, state and local tax returns. Tenant shall also
furnish City's Authorized Representative, upon request, copies of
its quarterly California sales and use tax returns filed with the State
of California. Tenant shall retain and preserve for at least Three (3)
years all records, books, bankbooks or duplicate deposit books and
other evidence of Gross Sales. City and its Authorized
Representative shall have the right, upon reasonable notice, during
the Term or any Option Term, to inspect and audit Tenant's books
and records and to make transcripts to verify the Rent due City.
The audit may be conducted at any reasonable time during normal
business hours. Tenant shall cooperate with City in making the
inspection and conducting the audit. City shall also be entitled,
once during each Lease Year and within Two (2) years after its
end, and once within One Hundred Eighty (180) days after
Expiration or Termination of this Lease, to an independent audit of
Tenant's books of account, records, cash receipts, and other
pertinent data to determine Tenant's Gross Sales. The audit shall
be conducted at City's sole cost and expense by a certified public
accountant designated by City. The audit shall be limited to the
determination of Gross Sales and shall be conducted during usual
business hours in a manner that minimizes any interference with
the conduct of Tenant's regular business operations. If the audit
concludes that there is a deficiency in the payment of any Rent, the
deficiency shall become due and payable within Twenty (20) days
and if there is an overpayment, City shall refund the amount of the
overpayment within Twenty (20) days. City shall bear its costs of
the audit unless the audit shows that Tenant understated Gross
Sales by more than Three Percent (3%), in which case Tenant
shall pay all City's reasonable costs of the audit. City and City's
Authorized Representative shall be required to keep any
information gained from such documents, statements, inspections
or audits confidential to the maximum extent permitted by law. City
and its Authorized Representative shall not disclose financial
information received in confidence and pursuant to this Lease
except to carry out the purposes of this Lease unless disclosure is
required (rather than permitted) by law. However, City may
disclose the results of any audit in connection with any financing
arrangements, the sale or transfer of City's interest in the Premises,
or pursuant to order of a court or administrative tribunal.
Tenant's Gross Sales Audit. In the event of any audit by City in
accordance with this Lease, Tenant may contest the results of
City's audit by performing a confirming audit within Thirty (30) days
of receipt of City's audit results and supporting evidence, using an
independent public accountant reasonably acceptable to City. If
Tenant's audit discloses that City's audit was incorrect by more
than Three Percent (3%), then City shall pay the cost of Tenant's
contesting audit.
Acceptance. The acceptance by City of any money paid to City by
Tenant as Percentage Rent for the Premises, as shown by any
statement furnished by Tenant, shall not be construed as an
admission of the accuracy of said statement, or of the sufficiency of
the amount of the Percentage Rent payment.
4.5 Late Payment Penalty. Rent shall be late if paid on or after the Twentieth
(20th) day of the month due. Late Rent shall be assessed a One (1) time penalty of Ten
Percent (10%) of the amount due and shall bear interest at the rate of Ten Percent
(10%) per annum on the unpaid balance calculated from the date such Rent was due to
the date that such Rent, late payment penalty and such interest is fully paid.
5. BUSINESS PURPOSES AND USE OF PREMISES
5.1 "Approved Use". The Premises are to be used by Tenant:
(a) For the principal operation of a shipyard/boat repair facility; and
(b) At Tenant's option, also to sell new or used boats and/or marine
equipment and hardware, so long as such uses are incidental to
the principal use in Section 5(a) above.
(c) Tenant may not use the Premises for any other use except with
prior written consent of the City.
5.2 Operation of Premises. Tenant shall operate and manage the Premises
in a manner comparable to other high quality businesses providing similar shipyard/boat
repair services. Tenant shall not use or permit the use of the Premises in any manner
that: (a) creates a nuisance; (b) violates any Law; or (c) is not in compliance with all
statutes, laws, permits, use restrictions and regulations of City applicable to the
Premises, Tenant and/or Tenant's use of the Premises. Tenant assumes the risk of
and shall cause all its workman, customers and independent contractors to also comply
with all laws regarding their activities at the Premises.
5.3 Sales Restrictions. Tenant shall not display, sell or store merchandise
outside the defined exterior walls and permanent doorways of said Premises, and no
sale by auction in, upon or from said Premises, whether said auction be voluntary,
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involuntary, pursuant to any assignment for benefit of creditors or pursuant to any
bankruptcy or other solvency proceedings, shall be conducted except such auctions
that may be conducted by officers of a court with respect to any vessels in custody of
Tenant.
5.4 Continuous Operation. Weather permitting, Tenant shall at a minimum
keep the Premises in operation and open to the public for business during normal
business hours, Monday — Friday 8:00 A.M. — 4:30 P.M. Tenant may close the
Premises on federal and state holidays and during periods of remodeling,
reconstruction, inventory and emergencies (including substantially inclement weather)
or to comply with laws, but such closure shall not:
(a) Excuse Tenant's payment of Base Rent;
(b) Be for a period of more than Four (4) months during any Three (3)
Lease Year segment of the Term, with the exception of major
repairs or reconstruction exceeding Two Hundred Fifty Thousand
Dollars ($250,000.00), when the closure period will be increased to
Eight (8) months.
5.5 Advertising Display. Tenant may, at its own expense, place signs in or
upon the Premises subject to the prior written consent of the City Manager as to the
size, type, design and method of installation. All signage placed by Tenant on, in or
about the Premises shall remain the property of Tenant and shall be removed by
Tenant upon Termination or Expiration of this Lease at Tenant's expense; and any
damage caused by removal shall be repaired at Tenant's expense. The permanent
signage in place as of the Execution Date of this Lease shall be deemed approved by
the City and the City Manager as to graphic design and sign placement.
5.6 Independent Contractor. City shall have no interest in the business of
Tenant, and no liability for the business operations or Gross Sales of Tenant, whether
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or not caused by City's enforcement of City laws and regulations which apply to the
Premises and/or Tenant.
5.7 No Distress Sales. No auction, fire, bankruptcy, "going out of business" or
other distress sales of any nature may be conducted on the Premises without the prior
written consent of the City Manager, which will not be unreasonably withheld, on the
condition that such event occurs once during the Term.
5.8 Parking. Tenant shall provide a total of Four (4) parking spaces on -site
which satisfy Newport Beach Municipal Code requirements. The required parking shall
be provided in an area that is visible to Tenant's customers and shall be available for
parking at all times. Tenant's employees shall park in City's adjacent marina parking lot
located in the northwest corner of such lot, nearest the Beacon Bay development, and
shall not exceed 15spaces (no repair, overnight storage or parking of Tenant customer
or employee vehicles is permitted, in such adjacent parking area).
6. SERVICES FOR CITY
Tenant, in addition to the obligation to pay Rent, shall perform the other terms
and conditions of this Lease and shall, at Tenant's sole expense, also do the following:
(a) Haul out and re -launch, each Lease Year, up to Four (4) of the vessels
owned and maintained by the City, of a size capable of being handled by
Tenant's equipment provided, however, all such Four (4) City vessels
shall be hauled out no more than Two (2) vessels at a time.;
(b) Transport the vessels to an area on the Premises suitable for the
purposes of repairs or maintenance;
(c) Allow each such vessel to remain on the Premises for a period of Two (2)
weeks immediately after haul -out; and
(d) Permit access to the vessels by employees or representatives of City for
the purpose of repairs and maintenance, which shall be performed by City
at no cost or liability to Tenant.
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City shall give Tenant Thirty (30) days' written notice prior to the date on which
the vessels are to be hauled -out and City shall waive such Tenant obligation each year
unless such City notice is given during such Lease Year.
7. TAXES, LICENSES AND OTHER OBLIGATIONS
7.1 Payment of Taxes. Tenant acknowledges that this Lease may create a
possessory interest subject to property taxation and that Tenant shall pay property
taxes levied on such interest. Tenant shall pay, before delinquency, all taxes,
assessments, license fees and other charges (Taxes) that are levied or assessed
against Tenant's leasehold interest in the Premises, any Tenant fixture, improvement,
equipment and other Tenant property (including any such property of any customer of
Tenant) installed or located on the Premises from time to time. Tenant shall pay
directly to the appropriate taxing authorities all such taxes at least Ten (10) days before
delinquency and before any fine, interest or penalty is due or imposed by operation of
law and furnish to the City with Tenant's next Rent installment a copy of Tenant's
payment check and the Tax bill thereby paid. Tenant shall not be required to pay any
real property taxes or assessments based upon City's ownership interest in the
Premises.
7.2 Payment of Obligations. Tenant shall promptly pay, when due, any and
all bills, debts, liabilities and obligations incurred by or charged to Tenant in connection
with Tenant's occupation and use of the Premises.
7.3 Challenge to Taxes. Tenant shall have the right in good faith, at its sole
cost and expense, to contest the amount or legality of any Taxes including the right to
apply for reduction. If Tenant seeks a reduction or contests such Taxes, Tenant's
failure to pay the Taxes shall not constitute a default as long as Tenant complies with
the provisions of this Section. City shall not be required to join in any proceeding or
contest brought by Tenant unless the provisions of any Law require that the proceeding
or contest be brought by or in the name of City or any owner of the Premises. In that
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case, City shall join in the proceeding or contest or permit it to be brought in City's
name and City shall execute any instrument or document necessary or advisable in
connection with the proceeding or contest as long as City is not required to bear any
cost nor be liable for payment of such Taxes. If requested Tenant, on final
determination of the proceeding or contest, shall immediately pay such disputed tax
and also discharge any decision or judgment rendered, together with all related costs,
charges, interest and penalties and provide City with a copy of Tenant's payment and
the underlying bill for such Taxes being paid with Tenant's next Rent payment. Tenant
shall indemnify and Hold Harmless the City and its officers and employees from and
against any liability, claim, demand, penalty, cost or expense arising out of or in
connection with any contest by Tenant pursuant to this Section. Any such contest of
Taxes by Tenant shall be concluded (meaning that such Taxes shall be fully paid or
cancelled by the Tax Authority) by Tenant, using Tenant's reasonable best efforts,
within Eighteen (18) months of starting such action, or end of the Term, if earlier.
7.4 License. Tenant shall maintain in good standing all required licenses and
permits required for operation of the business on the Premises, including but not limited
to a City Business License.
8. UTILITIES AND REFUSE COLLECTION
(a) Basic Utilities. Tenant shall make all arrangements for and pay for all
utilities furnished to or used on the Premises, including, without limitation,
gas, electricity, water, telephone service, cable TV and janitorial service.
Any repair to utility lines within the Premises is the sole responsibility of
Tenant. Tenant bears all risk of interruption, cancellation and/or
disruption of utility services, as well as the cost of all utilities Tenant
requires for its use of the Premises.
(b) Refuse Collection. Tenant shall make arrangements for and pay for all
weekly refuse collection and also Hazardous Materials disposal at least
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monthly (or more frequently if required by law). Tenant shall keep the
Premises free and clean of rubbish and litter and shall deposit
accumulated rubbish and litter in containers designated by City. Trash
containers shall be kept in an approved enclosed area. Tenant shall
comply with the provisions of the Newport Beach Municipal Code and all
other Laws regarding the use, storage and disposal of Hazardous
Materials. In no event shall Tenant allow Hazardous Materials related to
the Premises to enter, be disposed of into, seep or otherwise be released
into any sewer line, storm drain and/or adjacent bay waterway to the
Premises.
9. ALTERATIONS TO THE PREMISES
(a) Alterations Requiring Building Permits. Any alteration that requires a
building permit from City shall require the written consent of the City
Manager which shall not be unreasonably withheld so long as Tenant's
Approved Use is not thereby being changed.
(b) Non -Structural Alterations. Tenant shall have the right to make, at its sole
expense, such non-structural changes, alterations, improvements and
additions in and to the interior of the buildings, or to the piers, slips, floats
and ramps on Premises, and Tenant may install therein such trade
fixtures and equipment as it may deem advisable for the conduct of its
business for the Approved Use of the Premises.
(c) Alterations Costing More than $50,000. Tenant shall not make any
Alterations (other than non-structural Alterations costing less than Fifty
Thousand Dollars [$50,000.00]) to the Premises without the prior written
consent of the City Manager which shall not be unreasonably withheld if
the Approved Use is not thereby changed. In granting or withholding
consent to proposed Alterations by Tenant, the City Manager shall
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consider the impact of the proposed Alterations on public views adjacent
property owners, compliance of City codes and the impact of the
proposed Alterations on space available for public use of the Balboa
Yacht Basin. The City Manager may require, as a condition of approval,
that Tenant agree to amendments to this Lease, including amendments
increasing the amount of Rent payable under this Lease if the proposed
Alterations would materially increase the floor area or size of the building
structures on the Premises. The City Manager may also require Tenant to
provide, at Tenant's expense, appropriate engineering and feasibility
studies regarding the structural integrity of the Premises. Any damages or
destruction to the structural improvements or Tenant equipment at the
Premises shall not reduce or excuse Tenant's obligation to pay Rent in full
and on time.
(d) Quality of Work Performed. All work shall be performed in a good and
workmanlike manner, shall substantially comply with the plans and
specifications submitted to City and shall comply with all applicable
governmental permits and Laws in force at the time permits are issued.
(e) Payment of Costs. Tenant shall pay all costs related to the construction of
any Alterations by Tenant or its agents. Tenant shall keep the Premises
free and clear of all mechanics' liens resulting from construction
performed at the direction of Tenant. All construction improvements shall,
upon completion, become part of the Premises, owned by City.
(f) Indemnification. Tenant shall Hold Harmless City and its officers and
employees with respect to any Damage or Damages related to any work
performed on the Premises by Tenant. City shall promptly provide Tenant
with a copy of any claim filed by any third party with respect to work
performed by Tenant. City has no obligation to or liability to Tenant
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incident to City's approval of Tenant's plans or issuance of permits for any
improvements to the Premises.
(g) Disposition of Alterations at Expiration or Lease Termination. Any
Alterations made to the Premises shall remain on, and be surrendered
with, the Premises on Expiration or Termination of this Lease (Excluding
Tenant's fixtures, equipment, furniture, movable decorations and the like).
However, City may elect not less than Thirty (30) days prior to Expiration
or Termination of this Lease, to require Tenant to remove, at Tenant's
cost, any Alterations that Tenant has made to the Premises, except those
Alterations existing as of the date of this Lease or approved by City
excluding any Tenant related Hazardous Materials or other clean-up of
any environmental contamination which shall remain a Tenant obligation.
If City requires removal of Alterations, Tenant shall, at its cost, remove the
Alterations and restore the Premises to its condition prior to installation of
such Alterations, ordinary wear and tear excepted, before the last day of
the Term, or within Thirty (30) days after notice is given, whichever is
later. Prior to Expiration or within Fifteen (15) days after Termination of
this Lease, Tenant may remove any movable partitions, machinery,
equipment, furniture, and trade fixtures previously installed by and solely
paid for by Tenant, provided that Tenant repairs any damage to the
Premises caused by removal and the structural future of the foundation
and bulkhead areas of the Premises are not thereby worsened by such
Tenant removal.
10. REPAIRS AND MAINTENANCE OF PREMISES
10.1 Maintenance and Repair by Tenant and City. Tenant agrees that it will
maintain the Premises in Good Condition. City shall be responsible solely for the
maintenance of the vertical bulkheads serving the Premises excluding damage or
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deterioration caused to any bulkhead by Tenant or Tenant's operations for which
Tenant shall be responsible. Tenant shall also, at its sole cost and expense, at all
times during the term hereof, maintain all other improvements and all Tenant equipment
at the Premises and every portion thereof including, but not limited to, store fronts,
entrances and exits, plate glass, roofs, doors, exterior and interior painted areas, HVAC
equipment, electrical circuits and switchgear, and utility supply lines, plumbing and
other fixtures, equipment, interior walls, ceilings and floors, piers, concrete foundations,
fencing, gates, asphalt areas, slips, floats and ramps, in good order, condition and
repair, and Tenant shall comply with all Laws, applicable thereto.
City may perform Maintenance or repairs in the event Tenant fails to commence
required Maintenance or repairs within Fifteen (15) days after receipt of notice to do so.
The cost of any Maintenance or repairs by the City pursuant to this Subsection shall be
payable upon billing by City as additional Rent with the Tenant's next monthly Rent
payment.
(a) Entry by City. City and its Authorized Representatives may enter
upon and inspect the Premises at any reasonable time for
Maintenance or other purposes. In case of emergency, City or its
Authorized Representatives may enter the Premises by the master
key if Tenant is not present to open and permit an entry. During
entry City and its Authorized Representatives shall exercise
reasonable care relative to the Premises and to Tenant's property.
Any entry to the Premises by City shall not be construed as a
forcible or unlawful entry into, or a detainer of, the Premises, or an
eviction of Tenant from the Premises or any portion thereof.
(b) Additional Covenants of City Regarding Maintenance Obligations.
In addition to other provisions of this Lease:
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(1) Written Notice, Interference with Business Operations, and
Additional Improvements. City shall, at the earliest time
reasonably possible given the circumstances that may then
exist, provide Tenant with prior written notice of its intent to:
(i) perform any Maintenance, repair or remodeling of the
Balboa Yacht Basin which may reasonably be expected to
adversely affect, by interference with access, visibility,
availability of utilities or otherwise, Tenant's business
operations at the Premises or any portion; or (ii) except in
the case of an emergency, enter upon the Premises for any
of the purposes set forth in this Lease. City agrees not to
construct any additional improvements at the Balboa Yacht
Basin that relate to any commercial enterprise which might
conflict or compete with Tenant's business operations on the
Premises so long as Tenant operates the Premises for the
Approved Use.
(2) Due Diligence by City Regarding Repairs. Whenever City
elects or is obligated to repair or restore the Premises or any
portion of the Balboa Yacht Basin, City shall proceed, at
City's cost and with due diligence to repair or rebuild the
same, including any additions or improvements made by
City or by Tenant with City's consent, in accordance with the
same plan and design as existed immediately before such
City repairs and in accordance with all applicable Laws
subject to force majeure and inability to use same materials
by the City. The materials used in said repair or
reconstruction shall be as nearly like the original materials
as may then be reasonably procured.
10.2 Tenant is the long-time operator of the Premises, fully aware of the
condition of the Premises. Therefore, Tenant accepts the condition of the Premises as
of the date of this Lease without any current City warranty, representation or repair
obligation.
11. LIENS
Tenant shall not permit to be enforced against said Premises, or any part
thereof, any mechanics', materialman's, contractors' or other liens arising from, or any
claims for damages growing out of, any work or repair or alteration (except from the
actions of City), and Tenant shall pay or cause to be paid said liens and claims before
any action is brought to enforce the same against Tenant or the Premises, or shall
adequately indemnify City and the Premises by payment bonds acceptable to City and
as provided for by Law. Tenant agrees to Hold Harmless City and the Premises free
and harmless from all liability for any and all such liens and claims and all costs and
expenses in connection therewith. Tenant shall give City notice in writing before
commencing construction of any kind on the Premises exceeding $2,500.00 and
provide any additional Tenant insurance required by this Lease.
12. INDEMNITY AND EXCULPATION; INSURANCE
12.1 Exculpation of City. Except as otherwise expressly provided in this Lease,
City shall not be liable to Tenant for any damage to Tenant or Tenant's property
(including any boat owned by any Tenant customer) goodwill, increased Tenant
operating costs, or loss of business or income by Tenant from any cause other than the
gross negligent, intentional or willful acts of City or its Authorized Representatives.
Except as otherwise expressly provided in this Lease, Tenant releases and also waives
all claims against City for Damages arising for any reason other than the gross
negligent, intentional or willful acts of City or its Authorized Representatives. City shall
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not be liable to Tenant for any Damage to the Premises, Tenant's property, Tenant's
goodwill, or Tenant's business income, caused in whole or in part by acts of nature
including, without limitation, waves, wind and tidal flows.
12.2 Tenant Release and Hold -Harmless. Tenant releases the City and also
agrees to Hold Harmless the City, its elected officials, officers and employees from any
and all claims, liability, loss, Damage, or expenses resulting from Tenant's occupation
and use of the Premises, specifically including, without limitation, any claim, liability,
loss, or Damage arising by and Tenant assumes all corresponding risk because of:
(a) The death or injury of any Person caused or allegedly caused by
the condition of the Premises or an act or omission of Tenant or an
agent, contractor, employee, servant, sublessee or concessionaire
of Tenant; and
(b) Any work performed on the Premises or materials furnished to the
Premises at the request of Tenant or any agent or employee of
Tenant, with the exception of Maintenance performed by City; and
(c) Tenant's failure to perform any provision of this Lease or to comply
with any requirement of Law or any requirement imposed on the
Premises by any duly authorized governmental agency or political
subdivision.
Tenant's obligations pursuant to this Subsection shall not extend to any claim,
loss, liability, Damages, costs or fees that are proximately caused by the sole gross
negligence, willful misconduct, or unlawful or fraudulent conduct on the part of the City
or its officers or employees.
12.3 Insurance Limits.
(a) Liability Insurance. Tenant shall, at its own cost and expense,
secure and maintain during the entire Term a broad form
commercial general liability insurance policy issued by an
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insurance company reasonably acceptable to City covering the
acts and omissions of Tenant, any Tenant employee, agent
customer, independent contractor or visitor to the Premises. The
policy shall name City, and its officers, employees and agents as
additional insureds and protect, against loss or liability caused by
or connected with Tenant's occupation and use of the Premises
under this Lease in amounts not less than: combined single limit
bodily injury and property damage, including products/completed
operations liability and blanket contractual liability, of Two Million
Dollars ($2,000,000.00) per occurrence, subject to increased limits
in accordance with Section 12.3(b) below.
(b) City's Ability to Increase Amount of Public Liability and Property
Damage Insurance. Not more frequently than once every Five (5)
years, Tenant shall increase the insurance coverage as reasonably
required by City so that at all times, the amount of public liability
and property damage insurance coverage maintained by Tenant
reasonably and fully protects the City.
(c) Deductibles. Any deductible amount under each insurance policy
shall not exceed Seven Thousand Five Hundred Dollars
($7,500.00), and Tenant is responsible for payment of such amount
in the event of loss.
12.4 Fire Insurance on Building and Other Improvements. Tenant at its cost
shall maintain on the Buildings and other improvements that are or become a part of
the Premises a policy of standard broad form all-risk fire and extended coverage
insurance, with vandalism and malicious mischief endorsements, to the extent of at
least full replacement value, with coverage for demolition and compliance with future
Building Codes in a form acceptable to the City's Risk Manager. The insurance policy
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shall be issued in the names of City and Tenant, as their interests appear. The
insurance policy shall provide that any proceeds shall be made payable to City and
Tenant jointly.
12.5 Determination of Replacement Value. The "full replacement value" of the
Buildings and other improvements to be insured under Section 12 shall be determined
by the company issuing the insurance policy at the time the policy is initially obtained.
Not more frequently than once each year, either Party shall have the right to notify the
other Party that it elects to have the replacement value re -determined by such
underwriting insurance company. The re -determination shall be made promptly and in
accordance with the rules and practices of the Board of Fire Underwriters, or a like
board recognized and generally accepted by the insurance company. Each Party shall
be promptly notified of the re -determination by the company. The insurance policy shall
be adjusted according to the re -determination.
12.6 Loss of Rent Insurance. Tenant at its cost shall maintain loss of rent
insurance (or business interruption insurance) insuring that the Base Rent will be paid
to City for a period up to Twelve (12) months if the Premises are destroyed or rendered
unusable or inaccessible for commercial purposes by a risk insured under a special
form property coverage policy including vandalism and malicious mischief
endorsements.
12.7 Workers' Compensation. Tenant shall comply with all of the provisions of
the Workers' Compensation Insurance and Safety Acts of the State of California and
the applicable provisions of Divisions 4 and 5 of the California Labor Code.
12.8 Waiver of Subrogation. The parties release each other, and their
respective Authorized Representatives, from any claims for Damage to any Person or
to the Premises and to the fixtures, personal property, and Alterations of either in or on
the Premises that are caused by or result from risks insured against under any
insurance policies carried by the parties and in force at the time of any Damage or
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required to be carried under this Lease. Tenant shall cause each insurance policy
obtained by it to provide that the insurance company waives all rights of recovery by
way of subrogation against the City in connection with any Damage covered by any
policy of property insurance. Neither party shall be liable to the other for any Damage
caused by fire or any of the risks insured against under any insurance policy required
by this Lease. If any insurance policy cannot be obtained with a waiver of subrogation,
or is obtainable only by the payment of an additional premium charge above that
charged by the insurance company issuing policies without a waiver of subrogation, the
Party undertaking to obtain the insurance shall notify the other Party of this fact. The
other Party shall have a period of Twenty (20) days after receiving the notice either to
place the insurance with a company that is reasonably satisfactory to the other Party
and that will carry the insurance with a waiver of subrogation, or to agree to pay the
additional premium. The Party is relieved of the obligation to obtain a waiver of
subrogation rights with respect to the particular insurance involved if the insurance
cannot be obtained with a waiver of subrogation or the other Party refuses to pay the
additional premium.
12.9 Other Insurance Matters. All the insurance required under this Lease
shall:
(a) Be issued by insurance companies authorized to do business in the
State of California, with a minimum Best Insurance Guide or
financial rating of A-VII unless otherwise approved in advance by
City Risk Manager;
(b) Be issued as a primary policy;
(c) Be noncontributing with any insurance that may be carried by City;
(d) Contain an endorsement requiring Thirty (30) days written notice
from the insurance company to both Parties before cancellation or
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material change in the coverage, scope or amount of the policy;
and
(e) Tenant shall maintain insurance for all boats being repaired or
stored at the Premises to thereby protect City from any liability
concerning such third party property located at the Premises.
Each policy, or a certificate of the policy, together with evidence of payment of
premiums, shall be deposited with City and on renewal of the policy not Tess than Thirty
(30) days before expiration of the term of the policy. Either Party may maintain for its
own account any insurance not required under this Lease, but any such policy shall be
separate from and non-contributory in the event of Toss covered by insurance carried by
the Party responsible for said loss as required by this Lease.
13. DAMAGE OR DESTRUCTION OF PREMISES
13.1 Destruction of Premises. If the Premises are totally or partially destroyed,
rendering the Premises or any portion thereof totally or partially inaccessible or
unusable, Tenant shall restore the Premises, at Tenant's sole cost and effort, to
substantially the same condition as immediately prior to such destruction (including all
trade fixtures, personal property, improvements and Alterations as are installed by
Tenant, which shall be replaced by Tenant at its expense, unless Tenant elects
toterminate this Lease under the conditions of this Section 13.1. Tenant can elect to
terminate this Lease by giving notice of such election to City within Sixty (60) days after
the date of the occurrence of any casualty and also proving to the reasonable
satisfaction of City that each of these conditions are satisfied: (a) the cost of the
restoration exceeds the amount of any available insurance proceeds by at least twice
the Total Annual Rent for the most recent Two (2) completed Lease Years; (b) at the
time of such casualty Tenant maintained all insurance required by this Lease; and (c)
no act attributable to Tenant voided insurance coverage otherwise available concerning
said loss. If the Lease is so terminated: (x) all insurance proceeds applicable to
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reconstruction (excluding Tenant's personal property therein) shall assigned by Tenant
to Landlord; (y) Tenant shall pay any policy deductible to City; and (z) quitclaim title to
the Premises to City, as conditions of such termination. Notwithstanding such Lease
termination, Tenant shall Hold Harmless the City from any expenses, liability or loss
regarding damage or loss to boats being repaired or stored by Tenant at the Premises
and any other liability or loss incurred by Tenant concerning such casualty and event.
13.2 Replacement of Tenant's Property. In the event of the damage or
destruction of improvements located on the Premises not giving rise to Tenant's option
to terminate this Lease under Section 13.1, above, Tenant shall, at its own expense,
replace and repair all Tenant's trade fixtures, equipment, machinery, furnishings,
furniture and inventory as soon as reasonably possible to permit the prompt
continuation of Tenant's business at the Premises for the Approved Use.
13.3 Destruction of Balboa Yacht Basin. In the event that all or a portion of the
Balboa Yacht Basin or access to the Balboa Yacht Basin in areas to be maintained by
the City either under this Lease or because City owns such other areas, is damaged,
deteriorates or destroyed by fire or any other casualty not attributable to Tenant nor
covered by Tenant insurance and as a result the Premises or a material portion of the
Premises becomes inaccessible or commercially unusable for the Approved Use, and
the Damage or destruction cannot reasonably be repaired within Twelve (12) months
after the date of the casualty, City shall have the right, by notice to Tenant within Sixty
(60) days of such casualty, to either:
(a) Terminate this Lease by giving to Tenant written notice (which
notice shall be given, if at all, within Thirty (30) days following the
date of the casualty), in which case this Lease shall be terminated
Thirty (30) days following such City notice; or
(b) Within Thirty (30) days of such casualty confirm City's intention to
repair such damage as soon as reasonably possible at City's
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expense, in which event this Lease shall continue in full force and
effect; however, Rent shall be abated in accordance with the
procedures set forth in Section 14, below. Tenant may terminate
this Lease by giving City written notice at any time prior to the
commencement of repairs if City agrees to repair the Balboa Yacht
Basin pursuant to this Section 13.3(b) and City fails to commence
repairs within One Hundred Twenty (120) days after giving Tenant
written notice of its intention to repair. In such event, this Lease
shall terminate as of the date of notice from Tenant to City, and
City shall have no further liability to Tenant under this Lease.
13.4 City Liability After Casualty City has no liability to Tenant
concerning such casualty or City election to repair or not repair except solely arising
under Section 13.1, above.
14. ABATEMENT OF RENT
In the event of Damage or destruction of the Premises or Damage to the Balboa
Yacht Basin that impacts the Premises and this Lease is not terminated, Tenant shall
continue to utilize the Premises for the operation of its business for the Approved Use
to the extent it may be practicable and commercially reasonable. Base Rent shall
abate in proportion to the area of the Premises that is rendered unusable for the
Approved Use. The abatement of Rent shall commence on the date that use of the
Premises is impacted and continue until the completion of those repairs necessary to
restore full use of the Premises and Tenant's re -opening of the Premises. Tenant's
obligation to pay Taxes and other monetary obligations pursuant to this Lease shall not
be abated or reduced. Rent shall not abate if the Damage or destruction to the
Premises is the result of the negligence or willful conduct of Tenant or its employees,
officers or agents. Tenant's right to abatement of Base Rent is contingent on payment
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of insurance proceeds, if any, equal to the amount of Base Rent pursuant to coverage
required by Section 12.6, above.
15. PROHIBITION AGAINST VOLUNTARY ASSIGNMENT, SUBLETTING AND
ENCUMBERING
15.1 Prohibition of Assignment. The Parties acknowledge that City is entering
into this Lease in reliance upon the business experience and abilities of Tenant and its
principals to operate the Premises for the Approved Use. Consequently, Tenant shall
not voluntarily delegate, assign or encumber its interest in this Lease or in the
Premises, or sublease substantially all or any part of the Premises, or allow any other
person or entity (except Tenant's Authorized Representatives) to occupy or use all or
any part of the Premises without the prior written consent of City, which may be
withheld at the sole discretion of the City unless Tenant provides City with evidence
reasonably satisfactory to City that the: (a) proposed transferee has financial strength
and shipyard/boat repair experience comparable to Tenant so that such proposed
assignee will not likely cause the Percentage Rent payable to be Tess than Percentage
Rent paid for the most recent completed Lease Year; (b) the use of the Premises by the
proposed transferee is consistent with the terms of this Lease and is for the Approved
Use; (c) proposed transferee agrees to assume all current and future Tenant
obligations and agrees that the City is not in default of the Lease; and (d) Tenant is not
then in Material Default of this Lease. Except as otherwise expressly provided herein,
any dissolution, merger, consolidation, reorganization of Tenant, or the sale or other
transfer resulting in a transfer of a controlling percentage of the capital stock of Tenant,
shall be deemed a voluntary assignment requiring City's consent above except for inter -
Family transfer related David L. New. However, the sale or transfer of a controlling
percentage of the capital stock of Tenant pursuant to a public offering(s) of equity or
debt instruments issued by Tenant, or other transfers of publicly traded capital stock or
debt instruments shall not constitute a voluntary assignment and shall not require City's
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consent or approval if there is no change in the management of Tenant's business and
if such successor otherwise maintains the Approved Use and satisfies the prior
experience and business expertise tests above and is at least as creditworthy as
Tenant at the time this Lease is signed. The phrase "controlling percentage" means the
ownership of, or the right to vote, stock possession of at least Fifty Percent (50%) of the
total combined voting power of all classes of Tenant's capital stock issued, outstanding,
and entitled to vote for the election of directors, except for ownership of publicly traded
shares, warrants or similar equity interests in Tenant traded on a national exchange or
over-the-counter markets.
15.2 Additional Consideration for Extension of Lease
(a) Lessee to pay all appraisal and administrative costs associated
with Lease extension.
(b) If after satisfying City's approval rights in this Section 15 Tenant
transfers, sells or conveys, all or any portion or interest in this
Lease, Tenant shall pay City Five Percent (5%) of Tenant's gross
proceeds of the sale to City upon the day of such transfer and also
provide City with a signed copy of the original sale documents and
an amendment to this Lease confirming: (i) Tenant's successor's
assumption of all current and future Tenant obligations; and (ii)
Tenant's continued liability under this Lease, including all
obligations of transferee under this Lease. Excluded from such
payment obligation is any Inter -Family transfer allowed under
Section 15.1 above.
15.3 Exceptions. Notwithstanding the foregoing paragraphs or anything to the
contrary contained herein, City's consent shall not be required for a transfer or
assignment of any stock or interest by a share holder or member if the Approved Use of
the Premises is maintained, Tenant and transferee provide City the Lease amendment
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described in Section 15.2(b), above, if such transfer is to a spouse, children or
grandchildren or an assignment or subletting to an Affiliate, Subsidiary, or Successor of
Tenant defined as follows:
(a) An "Affiliate" is any corporation or other entity which directly or
indirectly controls or is controlled or is under common control with
Tenant (for this purpose, "control" shall mean the possession,
directly or indirectly, of the power to direct or cause the direction of
the management and policies of such corporation or other entity,
whether through the ownership of voting securities or by contract or
otherwise);
(b) A "Subsidiary" shall mean any corporation or other entity not less
than Twenty Five Percent (25%) of whose outstanding stock shall,
at the time, be owned directly or indirectly by Tenant and which is
at least as creditworthy as Tenant; and
(c) A "Successor" shall mean a corporation or other entity in which or
with which Tenant is merged or consolidated, in accordance with
applicable statutory provisions for merger or consolidation of
corporations or a corporation or other entity acquiring a substantial
portion of the property and assets of Tenant.
15.4 Continuing Effect. City's consent to any assignment, encumbrance, or
sublease shall not relieve Tenant from its obligations or liabilities under this Lease nor
act as a waiver of the requirement that such consent be obtained to any subsequent
assignment, encumbrance or sublease.
15.5 Tenant Financing. If Tenant is not then in Material Default, and Tenant
gives City Forty Five (45) days advance notice prior to City, then City shall sign a
commercial reasonable non -disturbance and attornment agreement from an institutional
commercial lender of Tenant's choice, in a form reasonably acceptable to the City
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Attorney. City's fee and leasehold interest shall be senior to and not security for such
Tenant loan.
16. DEFAULT
16.1 Default by Tenant. The occurrence of any one or more of the following
events shall constitute a "Material Default" of this Lease by Tenant:
(a) The vacating or abandonment of the Premises by Tenant.
(b) The failure by Tenant to make any payment of Rent or any other
payment required by this Lease, as and when due, when such
failure shall continue for a period of Ten (10) days after written
notice of default from City to Tenant.
(c) The failure of Tenant to observe or perform any of the "material"
(meaning costing Five Thousand Dollars ($5,000.00) or more to
fully remedy covenants, conditions or provisions of this Lease to be
observed or performed by Tenant where such failure shall continue
for a period of Thirty (30) days after written notice thereof from City
to Tenant; provided, however, that if the nature of Tenant's default
is such that more than Thirty (30) days are reasonably required for
its cure, then Tenant shall not be deemed to be in default if Tenant
commences such cure within said Thirty (30) day period and
thereafter diligently prosecutes such cure to completion. However,
no Thirty (30) day cure period is allowed for any Tenant caused
environmental event involving Hazardous Substances at the
Premises or otherwise caused by Tenant or Tenant's agents or
customers which likely costs Fifteen Thousand Dollars
($15,000.00), or more, to fully remediate. Immediately following
any such environmental event Tenant shall use Tenant's best
efforts to fully remediate or prove to the reasonable satisfaction of
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City that remediation is underway and will be completed in Ninety
(90) days without any risk of further environmental damage to the
Premises and/or surrounding area.
(d) The making by Tenant of any general arrangement or assignment
for the benefit of creditors.
(e) Tenant becomes a "debtor" as defined in 11 U.S.C. Section 101 or
any successor statute thereto (unless, in the case of a petition filed
against Tenant, the same is dismissed within Sixty (60) days).
(f) The appointment of a trustee or receiver to take possession of
substantially all of Tenant's assets located at the Premises or of
Tenant's interest in this Lease, where such appointment is not
discharged within Sixty (60) days.
(g) The attachment, execution or the judicial seizure of substantially all
of Tenant's assets located at the Premises or of Tenant's interest in
this Lease, where such seizure is not discharged within Sixty (60)
days.
16.2 Remedies,
(a) Cumulative Nature of Remedies. If any Material Default by Tenant
shall continue to not be cured after notice and the cure period
provided under this Lease, City shall have the remedies described
in this Subsection, in addition to all other rights and remedies
provided by law or equity, to which City may resort cumulatively or
in the alternative.
(1) Reentry without Termination. City may reenter the
Premises, and, without terminating this Lease, re -let all or a
portion of the Premises. City may execute any leases made
under this provision in City's name and shall be entitled to all
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rents from the use, operation, or occupancy of the Premises.
Tenant shall nevertheless pay to City on the dates specified
in this Lease the equivalent of all sums required of Tenant
under this Lease, plus City's expenses in conjunction with
re -letting, less the proceeds of any re -letting or attornment.
No act by or on behalf of City under this provision shall
constitute a Termination of this Lease unless City gives
Tenant specific notice of Termination.
(2) Termination. City may terminate this Lease by giving Tenant
notice of Termination. in the event City terminates this
Lease, City may recover possession of the Premises (which
Tenant shall surrender and vacate upon demand) and
remove all Persons and property. City shall be entitled to
recover the following as damages:
(i) The value of any unpaid Rent or other charges that
are unpaid at the time of Termination;
(ii) The value of the Rent and other charges that would
have accrued after Termination less the amount of
Rent and charges the City received or could have
received through the exercise of reasonable diligence
as of the date of the award;
(iii) Any other amount necessary to reasonably
compensate City for the detriment proximately caused
by Tenant's failure to perform its obligations under
this Lease; and
(iv) At City's election, such other amounts in addition to or
in lieu of the foregoing as may be permitted from
time -to -time by applicable California law.
City shall be entitled to interest at the rate of Ten Percent
(10%) per annum on all Rent and other charges from the
date due or the date they would have accrued. City shall
also be entitled to an award of the costs and expenses
incurred by City in maintaining or preserving the Premises
after default, preparing the Premises for re -letting, or
repairing any damage caused by the act or omission of
Tenant.
(3) Use of Tenant's Personal Property. City may use Tenant's
personal property and trade fixtures located on the Premises
or any of such property and fixtures without compensation or
liability to tenant for use or damage. In the alternative City
may store the property and fixtures at the cost of Tenant.
City shall not operate the Premises in any manner tending to
indicate that the Premises is affiliated with, part of or
operated in conjunction with Tenant's business.
(b) City's Right to Cure Tenant's Default. Upon continuance of any
material default beyond applicable notice and cure periods, City
may, but is not obligated to, cure the default at Tenant's cost. If
City pays any money or performs any act required of, but not paid
or performed by, Tenant after notice, the payment and/or the
reasonable cost of performance shall be due as additional Rent not
later than Five (5) days after service of a written demand
accompanied by supporting documentation. No such payment or
act shall constitute a waiver of default or of any remedy for default
or render City liable for any loss or damage resulting from
performance.
(c) Waiver of Rights. Tenant waives any right of redemption or relief
from forfeiture under California Code of Civil Procedure Sections
1174 or 1179, or under any other present or future law, in the event
Tenant is evicted or City takes possession of the Premises by
reason of any default by Tenant.
17. CONDEMNATION
17.1 Termination of the Lease. Tenant or the City shall have the right to
terminate this Lease as of the date a public agency with lawful authority to condemn
obtains possession or title to Ten Percent (10%), or more of the land area at the
Premises, or the condemnation materially affects the conduct of Tenant's business in
the Premises, or the Premises will no longer be suitable for the conduct of Tenant's
business for the Approved Use. In the event of Termination pursuant to this
Subsection, Base Rent shall be prorated to the date of Termination, any unearned Rent
shall be refunded to Tenant and Tenant shall have no further obligations under this
Lease. Tenant shall not grant a right of entry to any condemnor without the written
consent of City.
17.2 No Termination of Lease. If this Lease is not terminated under Section
17.1, above, then this Lease shall terminate as to the portion of the Premises taken
upon the date which possession of said portion is taken, but this Lease shall continue in
force and effect as to the remainder of the Premises. Tenant shall, in the event of a
taking of any portion of the Premises, be entitled to a reduction in the Base Rent in
reasonable proportion to the area of the Premises so taken verses its impact on
Tenant's continued operations for the Approved Use.
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17.3 Allocation of Award. In the event that an award is made for an entire or
partial taking or for damage to the Premises or any interest therein in any action in
direct or inverse condemnation or in the event of a taking under the power of eminent
domain, the Parties hereto agree that their respective rights to the award or
compensation paid shall be as follows:
(a) City shall be entitled to that Portion of the award received for the
taking of the real property within the Premises, the value of this
leasehold, including all buildings and other improvements to which
City is entitled on Expiration or Termination of this Lease, and for
severance damages.
(b) Tenant shall be entitled to any award that may be made for the
taking of or injury to Tenant's business and profits, including any
amount attributable to Tenant's personal property, fixtures,
installations, or improvements in or on the Premises, Tenant's
relocation expenses, but excluding any "bonus value" attributable
to this Lease.
(c) Any interest payable on the total award shall be divided between
City and Tenant in the same ratio as are the awards granted to
them pursuant to the other provisions of this Section.
18. SUBJECT TO STATE LANDS COMMISSION GRANT
The Premises are located on property that is the subject of a grant from the
State of California to the City that is administered by the State Lands Commission.
Tenant shall not take any action that would cause the City to be in violation of any
provisions of that grant. If the State Lands Commission terminates this grant for any
reason or prevents the Premises from being used for the Approved Use, this Lease
terminates as a result and the Parties shall be released from all liabilities and
obligations under this Lease.
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19. WASTE OR NUISANCE
Tenant shall not commit or permit the commission of any waste on the Premises.
Tenant shall not maintain, commit, or permit any nuisance as defined in Section 3479 of
the California Civil Code on the Premises. Tenant shall not use or permit the use of the
Premises for any unlawful purpose.
20. PRIOR TENANT USE AND HAZARDOUS MATERIALS
The Parties acknowledge that Tenant has been in possession of the Premises
pursuant to the provisions of a Lease since September 20, 1973. Tenant represents
and warrants that, to the best of Tenant's knowledge: (i) Tenant's continued use of the
Premises does not conflict with applicable Laws; (ii) the Premises is not and has not
been operated in violation of any environmental laws, rules or regulations and Tenant's
contemplated uses will not cause any such violation; and (iii) the land underlying the
Premises is free of any and all Hazardous Materials as of the date of this Lease caused
by the Tenant. In the event that the presence of any Hazardous Material caused by
Tenant is detected in the land underlying the Premises or the bay or any tidelands'
areas adjacent to this Premises at any time during the Term of this Lease and any
Option Term all remedial or clean up work shall be immediately performed by Tenant at
Tenant's expense to fully remediate such environmental condition so that the Premises
and such affected area(s) are promptly brought into full compliance with all Laws. This
clause and this lease does not restrict or limit Tenant's right to lawfully use Hazardous
Materials on the Premises, if in strict conformance with all Laws.
21. CITY'S DEFAULTS/TENANT'S REMEDIES
City shall be in Material Default if it fails to perform, or commence performance if
Tenant gives notice of nonperformance specifying the nature of such default and/or City
nonperformance and City either does not cure such noticed item(s) within Thirty (30)
days or City does not commence such cure performance within said Thirty (30) days
-42-
and then diligently completes said cure to City's reasonable best efforts. In the event of
City's Material Default, Tenant may:
(a) Upon Fifteen (15) days notice to City cure any such default by City and
City shall reimburse Tenant the amount of all costs and expenses incurred
by Tenant in curing the default, together with interest and expenses at the
maximum rate then allowed by law;
(b) Terminate this Lease if City's default materially interferes with Tenant's
use of the Premises for their intended purpose and City fails to cure such
default within Fifteen (15) days after a second demand by Tenant in which
case Tenant shall have no further or continuing obligations and City shall
have no liability to Tenant; or
(c) Commence an action for specific performance and recover costs and
expense, including reasonable attorney fees if Tenant is the prevailing
party.
22. NOTICES
Any notice, demand, request, consent, approval or communication that either
Party desires or is required to give shall be in writing and shall be deemed given Three
(3) days after deposit into the United States registered mail, postage prepaid, by
registered or certified mail, return receipt requested or upon delivery if personally
served or upon transmission if sent by facsimile. Unless notice of a different address
has been given in accordance with this Section, all notices shall be addressed as
follows:
If to City:
If to Tenant:
CITY OF NEWPORT BEACH
Attention: City Manager
3300 Newport Boulevard
Newport Beach, CA, 92658
Facsimile: 949-644-3020
BASIN MARINE, INC.
Attention: David L. New
829 Harbor Island Drive, #1
Newport Beach, CA, 92660
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Facsimile: 949-673-0625
23. SURRENDER OF PREMISES
At the Expiration or earlier Termination of this Lease, Tenant shall surrender to
City the possession of the Premises. Tenant shall leave the surrendered Premises,
required personal property and fixtures in good and broom -clean condition, reasonable
wear and tear excepted. All property that Tenant is not required to surrender, but that
Tenant does abandon shall, at City's election, become City's property at Expiration or
Termination.
24. WAIVER
The waiver by City or Tenant of any breach of this Lease by the other shall not
be deemed to be a waiver of any term, covenant, or condition or any subsequent
breach. The acceptance of Rent by City shall not be deemed a waiver of any breach by
Tenant other than the failure to pay the particular rent accepted.
25. PARTIAL INVALIDITY
If any term or Provision of this Lease is declared invalid or unenforceable, the
remainder of this Lease shall not be affected.
26. GOVERNING LAW
This Lease shall be governed by the laws of the State of California. Neither
City's execution of this Lease nor any consent or approval given by City in its capacity
as landlord shall affect City's powers and duties as a governmental body. Any consent
or approval Tenant is required to obtain from City pursuant to this Lease is in addition to
any permits or approvals Tenant is required to obtain pursuant to law or ordinance.
However, City shall attempt to coordinate its procedures for giving contractual and
governmental approvals so that Tenant's requests and applications are not
unreasonably denied or delayed.
27. ENTIRE AGREEMENT; MODIFICATION
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This Lease contains the entire agreement between the Parties. No verbal
agreement or implied covenant shall be held to vary the provisions of this Lease. Each
Party has relied on its own inspection of the Premises and examination of this Lease,
the counsel of its own attorney or other advisors, and has a complete understanding of
the overall warranties, representations, and covenants in this Lease. The failure or
refusal of either Party to inspect the Premises, to read this Lease or other documents,
or to obtain legal or other advice relevant to this transaction shall not be the basis for
later claim that all or part of this Lease is not enforceable or was not understood by a
Party when this Lease was signed. No provision of this Lease may be amended or
varied except by an agreement in writing signed by the Parties or their respective
Successors. Upon execution of this Lease by both Parties, the OLD Lease will be
terminated and of no further force and effect.
28. TIME OF ESSENCE
Time is of the essence with respect to the performance of every Provision of this
Lease in which time of performance is a factor. All time deadlines are meant to be
strictly construed. A "day" means a calendar day, with extension if a deadline occurs on
a weekend or day when banks are not open in California.
29. SUCCESSORS
Subject to the Provisions of this Lease on assignment and subletting, each and
all of the covenants and conditions of this Lease shall be binding on and shall inure to
the benefit of the heirs, successors, executors, administrators, assigns, and personal
representatives of the respective parties.
30. NO BROKERS
Each party warrants to and for the benefit of the other than it has had no
dealings with any real estate broker or other agent (attorneys excepted) in connection
with the negotiation or making of this Lease, and that no commission, fee or other
compensation is owed regarding this Lease by such other Party.
-45-
31. GENDER; NUMBER
The neuter gender includes the feminine and masculine, the masculine includes
the feminine and neuter, and the feminine includes the neuter, and each includes
corporation, partnership, or other legal entity whenever the context requires. The
singular number includes the plural whenever the context so requires.
32. EXHIBITS
All exhibits to which reference is made in this Lease are incorporated by
reference. Any reference to "this Lease" includes matters incorporated by reference.
IN WITNESS WHEREOF, the parties hereto have executed this Lease as of the
date first written above.
CITY OF NEWPORT BEACH ("City"),
a Municipal Corporation
By:1•1111"""' 1�
ATTEST: Garold B. Adams, May
LaVonne Harkless
City Clerk
AP I► : D AS TO FORM:
R. Clauson
Assistant City Attorney
BASIN A'' E, INC.
A Califo i orporation ("Tenant")
By:
F:\users\cat\shared\da\BalboaYachtBasin\080601Final.doc
Dq, id L. New
Its: President
Beatrice E. New
Its: Secretary and Treasurer
-46-
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CITY OF NEWPORT BEACH
PUBLIC WORKS DEPARTMENT
8.4 G ,8C 4 C A7/ 7' 49 d /,C/
F llTBTT
PE /SED '- 27- `85
DRAWN fl"- DATE 5 - / - 'e4r
APPROVED
PUBLIC WORKS DIRECTOR
R.E. NO
DRAWING NO. Z/w- 48/-.L
NI 1AIFoCsPl- r ®E ela.CP4
mareom. ,lama
829 Harbor Island Drive • Newport 3eai • California 92660 • (714) 673-O360 • Fax (714) 6734625
SALES' VOLUME REPORT
rr�
CITY OF NEWPORT BEACH
FINANCE DEPARTMENT
3300 NEWPORT BLVD.
NEWPORT BEACH, CA.92663
MAY 1 THRU MAY 31, 2000
pro RE/s4T ,L
1. ACCOUNTS RECEIVABLE SALES $ 174,548.15 04% $ 6,981.93
2, STORE SALES 8 3,112,40 05% 8 165.62
I. OUTSIDE LABOR AND MATERIALS $ 2,573.87 10% $�- 257.39
4. TOTAL (ADD LINE 1,2, & 3 8 180,234.42 $ '7,40494
R
5. LESS MINIMUM RENTAL PAID FOR PERIOD COVERED • 4,266.66
6, TOTAL PERCENTAGE RENT PAYABLE $ 3,138.28
7. OTHER PAYMENTS INCLUDE:
MINIMUM RENT FOR CURRENT PERIOD
8. TOTAL AMOUNT DUE ON THE :
LESSEE: BASJN MARINE, INC.
BY:
DATE:
EXHIBIT
N/A
$ 4,266,66
S 7,404.94
829 Harbor Island Drive o Newport Beach a California 92660 0 (949) 673-0360 a Fax(949) 673-0625
BASIN MARINE, INC.
SUMMARY OF ANNUAL RENTAL REPORT 2000
GROSS SALES:
RECOVERY:
RENTAL %:
SUBTOTAL SALES:
(SEE SCHEDULE A)
SUBTOTAL PAID:
(SEE SCHEDULE B)
BALANCE:
SUMMARY:
SCHEDULE
SCHEDULE
TOTAL DUE
A: TOTAL DUE
B: TOTAL PAID
ACCOUNTS
RECEIVABLE
SALES
$ 2,473,434.31
N/A
4%
OUTSIDE
LABOR AND
STORE SALES MATERIAL TOTAL
$ 42,216.07
N/A
5%
$ (20,697.15) 2,494,953.23
N/A
10%
$ 98, 937.37
$ 92,755.87
$ 6,181.50
OR (CREDIT DUE)
$ 2,110.80 $
$ 101,048.17
$ 2,047.44 $ 13, 366.74 $ 108,170.05
$ 63.36 $ (13,366.74) $ (7,121.88)
$ 101,048.17
$ 108,170.05
$ (7,121.88)
F BTBIT C