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EXHIBIT 10.57
CONCESSION AGREEMENT
by and between
County of Los Angeles
and
Sea View Restaurants, Inc., a California corporation
Dated as of November 1, 1997
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TABLE OF CONTENTS
1. BACKGROUND AND GENERAL......................................................... 1
1.1. Definitions......................................................... 1
1.2. Premises............................................................ 7
1.2.1. As-Is ..................................................... 8
1.2.2. Title ..................................................... 9
1.3. Concession.......................................................... 9
2. TERM........................................................................... 9
2.1. Term................................................................ 9
2.2. Holdover............................................................ 9
2.3. Ownership of Improvements During Term............................... 9
2.4. Reversion of Improvements........................................... 9
2.4.1. County's Election to Receive Improvements................... 10
2.4.2. Duty to Remove.............................................. 10
2.4.3. County's Right to Remove Improvements....................... 11
2.4.4. Duty to Remove Machinery, Etc............................... 11
2.4.5. Title to Certain Improvements............................... 11
3. USE OF PREMISES................................................................ 11
3.1. Specific Primary Use................................................ 11
3.2. Prohibited Uses..................................................... 12
3.2.1. Nuisance.................................................... 12
3.2.2. Restrictions and Prohibited Uses............................ 12
3.3. Active Public Use................................................... 14
3.4. Non-Interference.................................................... 14
3.7. Signs and Awnings................................................... 15
3.8. Compliance with Regulations......................................... 15
3.9. Rules and Regulations............................................... 15
3.10. Reservations........................................................ 15
4. PAYMENTS TO COUNTY............................................................. 16
4.1. Net Agreement....................................................... 16
4.1.1. Utilities................................................... 16
4.1.2. Taxes and Assessments....................................... 16
4.1.3. Certain Capital Improvements................................ 17
4.2. Rental Payments..................................................... 18
4.2.1. Annual Minimum Rent and Monthly Minimum
Rent................................................. 18
4.2.2. Percentage Rent............................................. 19
4.3. Adjustments to Annual Minimum Rent.................................. 22
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4.4. Renegotiation of Annual Minimum and Percentage Rents................ 23
4.4.1. Fair Market Rental Value.................................... 23
4.4.2. Renegotiation Period........................................ 23
4.4.3. Negotiation of Fair Market Rental Value..................... 24
4.4.4. Arbitration................................................. 24
4.5. Payment and Late Fees............................................... 25
4.6. Changes of Ownership and Financing Events........................... 26
4.6.1. Change of Ownership......................................... 26
4.6.2. Excluded Transfers.......................................... 27
4.6.3. Aggregate Transfer.......................................... 28
4.6.4. Beneficial Interest......................................... 28
4.7. Calculation and Payment............................................. 29
4.7.1. Transfer of Less Than Entire Interest....................... 30
4.7.2. Purchase Money Notes........................................ 30
4.7.3. Obligation to Pay Net Proceeds Share and
Administrative Charge................................ 30
4.8. Net Proceeds Share.................................................. 31
4.8.1. Transaction by Original Concessionaire....................... 31
4.8.2. Transfer by Concessionaire's Successor...................... 32
4.8.5. Net Refinancing Proceeds.................................... 33
4.8.6. Effect of Refinancing on Improvement Costs.................. 33
4.8.7. Transfers to which Sections 4.6 through 4.8
Apply................................................ 33
4.8.8. Payment..................................................... 34
4.8.9. Shareholder, Partner, Member, Trustee and
Beneficiary List..................................... 34
5. CONSTRUCTION OF IMPROVEMENTS BY CONCESSIONAIRE................................. 34
5.1. Improvements........................................................ 34
5.1.1. Landscaping................................................. 35
5.1.2. Cost of Improvements........................................ 35
5.1.3. Schedules................................................... 35
5.2. Plan Submittal Schedule; County Approval............................ 35
5.3. Schematics and Narrative............................................ 36
5.4. Preliminary Plans and Specifications................................ 36
5.5. Final Plans and Specifications...................................... 37
5.6. Conditions Precedent to the Commencement of
Construction........................................................ 38
5.6.1. Approval of Final Plans and Specifications.................. 38
5.6.2. Permits and Other Approvals................................. 38
5.6.3. Copies of Construction Contracts............................ 39
5.6.4. Performance and Payment Bonds............................... 39
5.6.5. Alternative Security........................................ 40
5.6.6. Evidence of Financing....................................... 40
5.7. County Cooperation.................................................. 40
5.8. Construction Schedule............................................... 41
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5.8.1. Substantial Commencement of Construction.................... 41
5.8.2. After Substantial Commencement.............................. 42
5.8.3. Extension of Dates.......................................... 42
5.8.4. Failure to Reach Substantial Commencement................... 45
5.8.5. Termination of Agreement.................................... 46
5.9. Manner of Construction.............................................. 46
5.9.1. General Construction Standards.............................. 46
5.9.2. Utility Work................................................ 47
5.9.3. Construction Safeguards..................................... 47
5.9.4. Compliance with Construction Documents and
Laws; Issuance of Permits............................ 47
5.9.5. Notice to Director; Damage to County
Improvements......................................... 47
5.9.6. Rights of Access............................................ 47
5.9.7. Notice of Completion........................................ 48
5.10. Use of Plans........................................................ 48
5.11. Additional Construction............................................. 48
5.12. Protection of County, State and City................................ 49
5.12.1. Posting Notices............................................ 49
5.12.2. Prompt Payment............................................. 49
5.12.3. Liens; Indemnity........................................... 49
5.13. Construction Schedule............................................... 50
6. QUALITY AND PRICES............................................................. 50
6.1. Quality of Restaurant Operations.................................... 50
6.2. Director's Right to Review/Approve Quality.......................... 50
6.3. Limitation on Prices to be Charged.................................. 51
6.4. Director's Right to Review/Modify Price............................. 51
7. CONDEMNATION................................................................... 52
7.1. Definitions......................................................... 52
7.1.1. Condemnation................................................ 52
7.1.2. Date of Taking.............................................. 52
7.1.3. Award ..................................................... 52
7.1.4. Condemnor................................................... 52
7.2. Parties' Rights and Obligations to be Governed by
Agreement........................................................... 52
7.3. Total Taking........................................................ 52
7.4. Effect of Partial Taking............................................ 52
7.5. Effect of Partial Taking on Rent.................................... 53
7.6. Waiver of Code of Civil Procedure Section 1265.130.................. 54
7.7. Payment of Award.................................................... 54
7.8. Partial Taking Without Termination.................................. 54
7.8.1. Taking For Temporary Use.................................... 54
7.8.2. Total Taking and Partial Taking with Termination............ 54
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7.8.3. Disputes.................................................... 55
8. SECURITY DEPOSIT............................................................... 55
8.1. Decrease in Deposit................................................. 55
8.2. Replacement......................................................... 56
9. INDEMNITY...................................................................... 56
10. INSURANCE. ................................................................... 57
10.1. Property Insurance.................................................. 57
10.2. Form of Policy...................................................... 57
10.3. Liability Insurance................................................. 58
10.4. Worker's Compensation Insurance..................................... 59
10.5. Required Provisions................................................. 59
10.6. Failure to Procure Insurance........................................ 60
11. MAINTENANCE AND REPAIR; DAMAGE AND DESTRUCTION................................. 60
11.1. Concessionaire's Maintenance and Repair Obligations................. 60
11.2. Option to Terminate for Uninsured Casualty.......................... 61
11.3. No Option to Terminate for Insured Casualty......................... 62
11.4. No County Obligation to Make Repairs................................ 62
11.4.1. Sand Replenishment......................................... 62
11.4.2. Jetty ..................................................... 62
11.4.3. Rip/Rap.................................................... 62
11.5. Repairs Not Performed by Concessionaire............................. 63
11.6. Other Repairs....................................................... 63
11.7. Bicycle Path........................................................ 63
11.8. Cellular Antenna.................................................... 63
11.9. Notice of Damage.................................................... 64
11.10. Waiver of Civil Code Sections....................................... 64
12. ASSIGNMENT AND SUBLEASE........................................................ 64
12.1. Subleases........................................................... 64
12.1.1. Definition................................................. 64
12.1.2. Approval Required.......................................... 64
12.1.3. Major Sublease............................................. 65
12.2. Assignments......................................................... 65
12.2.1. County's Use of Discretion and Limitation on
Permissible Assignees................................ 66
12.2.2. Involuntary Transfers Prohibited........................... 66
12.2.3. Procedure.................................................. 66
12.2.4. County Right of First Negotiation.......................... 69
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12.3. Terms Binding Upon Successors, Assigns and
Sublessees.......................................................... 70
13. ENCUMBRANCES................................................................... 70
13.1. Financing Events.................................................... 71
13.1.1. Encumbrances............................................... 71
13.1.2. Consent Not Required to Transfer Resulting
from Foreclosure..................................... 71
13.1.3. Effect of Foreclosure...................................... 72
13.2. Right to Notice and Cure Defaults................................... 72
13.3. No Subordination.................................................... 72
13.4. Delay in Exercising Termination Remedy.............................. 73
13.4.1. Manner of Curing Default................................... 73
14. DEFAULT........................................................................ 74
14.1. Events of Default................................................... 74
14.1.1. Monetary Defaults.......................................... 74
14.1.2. Failure to Substantially Commence Construction............. 74
14.1.3. Maintenance of Letter of Credit............................ 74
14.1.4. Failure to Perform Other Obligations....................... 74
14.1.5. Nonuse of Premises......................................... 75
14.1.6. Notices.................................................... 75
14.2. Limitation on Events of Default..................................... 75
14.3. Remedies............................................................ 75
14.3.1. Terminate Agreement........................................ 75
14.3.2. Keep Agreement in Effect................................... 76
14.3.3. Termination Following Continuance.......................... 76
14.4. Damages............................................................. 76
14.4.1. Unpaid Rent................................................ 76
14.4.2. Post-Termination Rent...................................... 76
14.4.3. Other Amounts.............................................. 76
14.5. Others' Right to Cure Concessionaire's Default...................... 77
14.6. Default by County................................................... 77
15. ACCOUNTING..................................................................... 77
15.1. Maintenance of Records.............................................. 77
15.2. Cash Registers...................................................... 77
15.3. Statement; Payment.................................................. 78
15.4. Availability of Records for Inspector's Audit....................... 78
15.4.1. Entry by County............................................ 78
15.4.2. Cost of Audit.............................................. 78
15.5. Audit Rights from Prior Agreement.................................. 79
15.6. Additional Accounting Methods...................................... 79
15.7. Accounting Year; Lease Year........................................ 79
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15.8. Annual Financial Statements......................................... 79
16. MISCELLANEOUS.................................................................. 80
16.1. Quiet Enjoyment..................................................... 80
16.2. Time................................................................ 80
16.3. County Disclosure and Concessionaire's Waiver....................... 80
16.3.1. Disclosures and Waiver..................................... 80
16.3.2. No Right of Offset......................................... 81
16.4. Holding Over Creates Month-to-Month Tenancy......................... 81
16.5. Waiver of Conditions or Covenants................................... 81
16.6. Remedies Cumulative................................................. 82
16.7. Authorized Right of Entry........................................... 82
16.8. Place of Payment and Filing......................................... 82
16.9. Service of Written Notice or Process................................ 82
16.10. Interest............................................................ 84
16.11. Captions............................................................ 84
16.12. Attorneys' Fees..................................................... 84
16.13. Amendments.......................................................... 84
16.14. Time For Approvals.................................................. 84
16.15. Arbitration......................................................... 84
16.15.1. Selection of Arbitrator................................... 85
16.15.2. Arbitrator................................................ 85
16.15.3. Scope of Arbitration...................................... 85
16.15.4. Immunity.................................................. 86
16.15.5. Section 1282.2............................................ 86
16.15.6. Statements of Position.................................... 87
16.15.7. Written Appraisal Evidence................................ 87
16.15.8. Evidence.................................................. 88
16.15.9. Discovery................................................. 88
16.15.10. Decisions of Arbitrators.................................. 88
16.15.11. Powers of Arbitrator...................................... 89
16.15.12. Costs of Arbitration...................................... 89
16.15.13. Appeal.................................................... 89
16.15.14. Amendment to Implement Judgment........................... 89
16.15.15. Impact of Gross Error Allegations......................... 89
16.16. Estoppel Certificates............................................... 90
16.17. Indemnity Obligations............................................... 90
17. DEFINITION OF TERMS; INTERPRETATION............................................ 90
17.1. Meanings of Words Not Specifically Defined.......................... 91
17.2. Tense; Gender; Number; Person....................................... 91
17.3. Business Days....................................................... 91
17.4. Parties Represented by Consultants, Counsel......................... 91
17.5. Termination for Improper Consideration.............................. 91
17.6. Governing Law....................................................... 92
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17.7. Reasonableness Standard............................................. 92
17.8. Compliance with Section 25907....................................... 93
EXHIBIT A..............................................................................A-1
EXHIBIT B..............................................................................B-1
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CONCESSION AGREEMENT
FOR WILL ROGERS STATE BEACH PARK RESTAURANT
THIS CONCESSION AGREEMENT ("Agreement") is made and entered
into as of the 1st day of November, 1997, by and between the COUNTY OF LOS
ANGELES ("County"), and SEA VIEW RESTAURANTS, INC., a California corporation
("Concessionaire").
W I T N E S S E T H
WHEREAS, County has been authorized to exercise the power
conferred by California Government Code Section 25907 to contract for
concessions and services that are consistent with public park and recreation
purposes within Will Rogers State Beach Park pursuant to the provisions of the
Joint Powers Agreement Between the City of Los Angeles and the County of Los
Angeles Providing for Lifeguard and Maintenance Services to be Rendered by the
County on Beaches Located Within the City, dated May 20, 1975 ("Joint Powers
Agreement"); and,
WHEREAS, in the exercise thereof, County and Concessionaire
have agreed, as more specifically provided herein, upon certain terms and
conditions in connection with the lease to Concessionaire, for concession
purposes, of the "Premises", as hereafter defined;
NOW, THEREFORE, in consideration of the foregoing and of the
mutual covenants, agreements and conditions set forth herein, and of other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto and each of them do agree as follows:
1. BACKGROUND AND GENERAL.
1.1. Definitions. For ease of reference, the definitions of many terms
contained within this Agreement are set forth in the context in which the term
is used. A listing of those defined terms and other definitions not defined in
context appears below:
1.1.1. "ACCEPTANCE NOTICE" shall have the meaning set
forth in subsection 4.1.3.
1.1.2. "ACCOUNTING YEAR" shall have the meaning set forth
in Section 15.7.
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1.1.3. "ACTUAL COST" shall mean the cost incurred by
County with respect to a particular activity or procedure, including
expenditures to third parties and County's overhead and administrative
cost, but excluding any mark-up for profit thereon to County.
1.1.4. "ADA" shall have the meaning set forth in
Section 1.2.
1.1.5. "ADMINISTRATIVE CHARGE" shall have the meaning
set forth in Section 4.6.
1.1.6. "AGGREGATE TRANSFER" shall have the meaning set
forth in subsection 4.6.3.
1.1.7. "AGREEMENT" shall mean this Concession Agreement
for Will Rogers State Beach Park Restaurant.
1.1.8. "ANNUAL MINIMUM RENT" shall have the meaning set
forth in subsection 4.2.1.
1.1.9. "ANTICIPATED COMMENCEMENT DATE" shall have
the meaning set forth in subsection 5.8.1.
1.1.10. "ANTICIPATED COMPLETION DATE" shall have the
meaning set forth in subsection 5.8.1.
1.1.11. "APPLICABLE LAWS" shall have the meaning set
forth in subsection 1.2.1.
1.1.12. "APPROVED FINAL PLANS, SPECIFICATIONS AND COSTS"
shall have the meaning set forth in subsection 5.6.1.
1.1.13. "AUDITOR-CONTROLLER" shall mean the Auditor-
Controller of the County of Los Angeles, California.
1.1.14. "AWARD" shall have the meaning set forth in
subsection 7.1.3.
1.1.15. "BENEFICIAL INTEREST" shall have the meaning set
forth in subsection 4.6.4.
1.1.16. "BOARD" means the Board of Supervisors for the
County of Los Angeles.
1.1.17. "BONUS VALUE" shall have the meaning set forth in
subsection 7.8.2.
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1.1.18. "BUSINESS DAY" shall have the meaning set forth in
Section 17.3.
1.1.19. "BUSINESS INTERRUPTION" shall have the meaning
set forth in Article 10.
1.1.20. "CALCULATION NOTICE" shall have the meaning set
forth in Section 4.7.
1.1.21. "CHANGE OF OWNERSHIP" shall have the meaning
set forth in subsection 4.6.1.
1.1.22. "CHANGE OF CONTROL" shall have the meaning set
forth in subsection 4.6.1.
1.1.23. "CITY" shall mean the city of Los Angeles,
California.
1.1.24. "CONCESSIONAIRE" shall mean Sea View Restaurants,
Inc., a California corporation and its successors in interest and
assigns.
1.1.25. "CONCESSIONAIRE SALE PRICE" shall have the meaning
set forth in subsection 12.2.4.
1.1.26. "CONDEMNATION" shall have the meaning set forth
in subsection 7.1.1.
1.1.27. "CONDEMNOR" shall have the meaning set forth in
subsection 7.1.4.
1.1.28. "CONDITIONAL TERMINATION NOTICE" shall have the
meaning set forth in subsection 4.1.3.
1.1.29. "COUNTY" shall have the meaning set forth in the
first paragraph of this Agreement.
1.1.30. "COUNTY OFFER TO PURCHASE" shall have the meaning
set forth in subsection 12.2.4.
1.1.31. "DATE OF TAKING" shall have the meaning set forth
in subsection 7.1.2.
1.1.32. "DECISION PERIOD" shall have the meaning set forth
in subsection 4.1.3.
1.1.33. "DEPARTMENT" means the Department of Beaches
and Harbors of the County of Los Angeles.
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1.1.34. "DIRECTOR" means the Director of the Department of
Beaches and Harbors of the County of Los Angeles or any successor County
officer responsible for the administration of this Agreement.
1.1.35. "DISQUALIFICATION JUDGMENT" shall have the
meaning set forth in subsection 16.15.15.1.
1.1.36. "DOCUMENTED TRANSACTION COSTS" shall have
the meaning set forth in subsection 4.8.1.2.
1.1.37. "ENCUMBRANCE" shall have the meaning set forth in
subsection 13.1.1.
1.1.38. "ENCUMBRANCE HOLDER" shall have the meaning
set forth in subsection 13.1.1.
1.1.39. "EVENTS OF DEFAULT" shall have the meaning set
forth in Section 14.1.
1.1.40. "EXCESS PERCENTAGE RENT PAYMENT" shall have
the meaning set forth in subsection 4.2.2.9.
1.1.41. "EXTENDED TIME" shall have the meaning set forth in
Section 16.14.
1.1.42. "FAIR MARKET RENTAL VALUE" shall have the
meaning set forth in subsection 4.4.1.
1.1.43. "FINANCING EVENT" shall have the meaning set forth
in Section 13.1.
1.1.44. "FORCE MAJEURE" shall have the meaning set forth
in subsection 5.8.2.
1.1.45. "GROSS ERROR" shall have the meaning set forth in
subsection 16.15.15.4.
1.1.46. "GROSS RECEIPTS" shall have the meaning set forth
in subsection 4.2.2.8.
1.1.47. "IMPROVEMENTS" shall have the meaning set forth in
Section 5.1.
1.1.48. "IMPROVEMENT COSTS" shall have the meaning set
forth in subsection 4.8.1.1.
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1.1.49. "INCOME APPROACH" shall have the meaning set
forth in Section 7.5.
1.1.50. "INITIATING PARTY" shall have the meaning set forth
in Section 16.15.
1.1.51. "JOINT POWERS AGREEMENT" shall have the meaning set
forth in the preamble to this Agreement.
1.1.52. "LATE FEE" shall have the meaning set forth in
Section 4.5.
1.1.53. "LEASE YEAR" shall have the meaning set forth in
Section 2.1.
1.1.54. "MAJOR SUBLEASE" shall have the meaning set forth
in subsection 12.1.1.
1.1.55. "MAJOR SUBLESSEE" shall have the meaning set forth
in subsection 12.1.1.
1.1.56. "MONTHLY MINIMUM RENT" shall have the meanings set
forth in subsection 4.2.1.
1.1.57. "NET AWARDS AND PAYMENTS" shall have the meaning set
forth in Section 7.7.
1.1.58. "NET PROCEEDS SHARE" shall have the meaning set
forth in Section 4.6.
1.1.59. "NET REFINANCING PROCEEDS" shall have the meaning
set forth in subsection 4.8.5.
1.1.60. "NET TRANSFER PROCEEDS" shall have the meanings set
forth in subsections 4.8.1 and 4.8.2.
1.1.61. "NON-TENANT H.M." shall have the meaning set forth
in subsection 1.2.1.
1.1.62. "NOTICE OF COMPLETION" shall have the meaning set
forth in subsection 5.9.7.
1.1.63. "PARKING LOT PARCEL" shall mean that portion of the
Premises described as the Parking Lot Parcel on Exhibit A attached
hereto.
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1.1.64. "PARTIAL TAKING" shall have the meaning set froth
in Section 7.5.
1.1.65. "PAYMENT BOND" shall have the meaning set forth in
subsection 5.6.4.2.
1.1.66. "PERCENTAGE RENT" shall have the meaning set
forth in subsection 4.2.2.
1.1.67. "PERFORMANCE BOND" shall have the meaning set
forth in subsection 5.6.4.1.
1.1.68. "PERMITTED DEDUCTION" shall have the meaning set
forth in subsection 4.1.3.
1.1.69. "PERMITTED USES" shall have the meaning set forth
in Section 3.1.
1.1.70. "PREMISES" shall have the meaning set forth in
Section 1.2, as more particularly described in Exhibit A hereto.
1.1.71. "PROPOSED TRANSFER" shall have the meaning set
forth in subsection 12.2.4.
1.1.72. "PUBLIC WORKS DIRECTOR" shall mean the Director of
Public Works Department of the County of Los Angeles.
1.1.73. "PURCHASE MONEY NOTE" shall have the meaning
set forth in subsection 4.7.2.
1.1.74. "RENEGOTIATION PERIOD" shall have the meaning
set forth in subsection 4.4.2.
1.1.75. "REPLY" shall have the meaning set forth in Section
16.15.5.
1.1.76. "RESPONDING PARTY" shall have the meaning set
forth in Section 16.15.
1.1.77. "RESTAURANT PARCEL" shall mean that portion of the
Premises described as the Restaurant Parcel on Exhibit A attached
hereto.
1.1.78. "SECTION" means a section of this Agreement.
1.1.79. "SHALL" and "WILL" are mandatory and the word
"MAY" is permissive.
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1.1.80. "STATE" shall mean the State of California.
1.1.81. "STATEMENT OF POSITION" shall have the meaning
set forth in subsection 16.15.6.
1.1.82. "SUBJECT COSTS" shall have the meaning set forth
in subsection 4.1.3.
1.1.83. "SUBJECT IMPROVEMENTS" shall have the meaning
set forth in subsection 4.1.3.
1.1.84. "SUBSECTION" means a subsection of a Section of
this Agreement.
1.1.85. "SUBLEASE" shall have the meaning set forth in
subsection 12.1.1.
1.1.86. "SUBLESSEE" shall have the meaning set forth in
subsection 12.1.1.
1.1.87. "SUBSTANTIAL COMMENCEMENT OF CONSTRUCTION" and
"SUBSTANTIALLY COMMENCED" shall have the meaning set forth in Section
5.8.
1.1.88. "TERM" shall have the meaning set forth in Section
2.1.
1.1.89. "TIME OF THE ESSENCE" shall have the meaning set
forth in Section 16.2.
1.1.90. "TRO" shall have the meaning set forth in subsection
5.8.3.1.
1.1.91. "UNINSURED LOSS" shall have the meaning set forth
in Section 11.2.
1.1.92. "UNREASONABLE COUNTY ACTIVITY" shall have the
meaning set forth in subsection 5.8.3.2.
1.1.93. "USABLE PREMISES" shall have the meaning set forth
in Section 3.1.
1.1.94. "WRITTEN APPRAISAL EVIDENCE" shall have the
meaning set forth in subsection 16.15.7.
1.2. Premises. County is the authorized contractor for concessions
in connection with that certain real property located in the County of Los
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Angeles, State of California, more particularly described in Exhibit A, attached
hereto and incorporated herein by this reference (the "Premises").
1.2.1. As-Is. Concessionaire acknowledges personal inspection
of the Premises and has fully evaluated the extent to which the physical
condition thereof will affect the rights granted herein. Concessionaire
accepts the Premises in their present physical condition and, except as
set forth in subsections 3.2.2.5, 11.4.3 and 11.8 of this Agreement,
County shall not be responsible for any improvement or alteration
thereof.
Concessionaire hereby agrees to accept the Premises on an "AS
IS WITH ALL FAULTS" basis and that, except as expressly set forth in
this Agreement, Concessionaire is not relying on any representation or
warranty of any kind whatsoever, express or implied, from County or any
other governmental authority or public agency, or their respective
agents, as to any matters concerning the Premises, including without
limitation: (i) the quality, nature, adequacy and physical condition and
aspects of the Premises, including, but not limited to, the structural
elements, foundation, roof, protections against ocean damage or sand
erosion, appurtenances, access, landscaping, parking facilities and the
electrical, mechanical, HVAC, plumbing, sewage and utility systems,
facilities and appliances, and the square footage of the land and within
the improvements and within each space therein, (ii) the quality,
nature, adequacy and physical condition of soils, geology and any
groundwater, (iii) the existence, quality, nature, adequacy and physical
condition of utilities serving the Premises, (iv) the development
potential of the Premises, and the Premises' use, habitability,
merchantability or fitness, or the suitability, value or adequacy of the
Premises for any particular purpose, (v) the zoning or other legal
status or entitlement or lack thereof of the Premises or any other
public or private restrictions on use of the Premises, (vi) the
compliance of the Premises with any applicable codes, laws, rules,
regulations, statutes, resolutions, ordinances, covenants, conditions
and restrictions of County, City, State, the California Coastal
Commission and/or any other governmental or quasi-governmental entity
("Applicable Laws") or of any other person or entity (including, without
limitation, relevant provisions of the Americans with Disabilities Act
("ADA"), (vii) the presence of any underground storage tank or hazardous
materials on, under or about the Premises or the adjoining or
neighboring property, (viii) the quality of any labor and materials used
in any improvements, (ix) the condition of title to the Premises, and
(x) the economics of the operation of the Premises. Notwithstanding the
foregoing, County represents that it has no "actual knowledge" of the
existence of hazardous materials existing in or on the Premises which
were not placed therein or thereon by Concessionaire or its predecessor
in interest ("Non-Tenant H.M."). For the purposes of the foregoing
sentence, "actual knowledge" shall mean the actual knowledge of
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Messrs. Stan Wisniewski, Dennis Heitmann and Roger Moliere as of
August 1, 1997, with no duty to investigate the matter.
1.2.2. Title. Concessionaire hereby acknowledges the title of
County and/or any other public entity or agency having jurisdiction
thereover, in and to the Premises, and covenants and agrees never to
contest or challenge the extent of said title, except as is necessary to
ensure that Concessionaire may occupy the Premises pursuant to the terms
and conditions of this Agreement.
1.3. Concession. For and in consideration of the payment of rentals and
the performance of all the covenants and conditions of this Agreement, County
hereby grants the concession to Concessionaire, to the extent authorized by
Government Code Section 25907 and the Joint Powers Agreement, and Concessionaire
hereby leases and hires from County, an exclusive right to possess and use, as
concessionaire, those portions of the Premises described in Exhibit A as the
"Restaurant Parcel" and the "Parking Lot Parcel", for the Term (as hereinafter
defined) and upon the terms and conditions and subject to the requirements
(including without limitation those set forth in Sections 3.5 and 3.6 of this
Agreement) set forth herein.
2. TERM.
2.1. Term. Unless terminated sooner in accordance with the provisions of
this Agreement, the term of the concession shall be for a period of twenty (20)
years, commencing on November 1, 1997 and expiring at 11:59 p.m. on October 31,
2017 ("Term"). Each twelve month period during the Term, commencing November 1
and ending October 31 of the following calendar year, is referred to herein as a
"Lease Year". Concessionaire acknowledges that this Agreement provides
Concessionaire with no right to renew or extend this Agreement or the Term upon
the expiration of the Term.
2.2. Holdover. In the event that Concessionaire holds over beyond the
Term with the written consent of County, which may be withheld or granted in
County's sole and absolute discretion, such holdover shall be from month to
month only, shall not be deemed to be a renewal or extension of the Term and
shall be at the monthly compensation provided herein.
2.3. Ownership of Improvements During Term. Concessionaire shall own all
structures, buildings or improvements now existing or hereafter constructed by
Concessionaire upon the Premises, and all alterations, additions, or betterments
made thereto by Concessionaire, until the expiration of the Term or sooner
termination of this Agreement.
2.4. Reversion of Improvements. Upon the expiration of the Term
or sooner termination of this Agreement, whether by cancellation, forfeiture or
otherwise:
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2.4.1. County's Election to Receive Improvements. At the
election of County, all structures, buildings, improvements and all
alterations, additions, and betterments thereto, and all other
improvements made to or upon the Premises shall remain upon and be
surrendered with the Premises as part thereof and title thereto shall
vest in County at the expiration of the Term or earlier termination of
this Agreement, without compensation therefor to Concessionaire. Nothing
contained herein shall be construed to deny or abrogate the right of
Concessionaire, prior to the expiration of the Term or termination of
this Agreement, to receive any and all proceeds which are attributable
to the Condemnation of business installations, improvements, structures
and buildings belonging to Concessionaire immediately prior to the
taking of possession by the Condemnor as said rights are set forth in
Article 7 of this Agreement or to remove any furniture, any fixtures or
equipment not intended to be permanently affixed, any signage, any
personal property or any ornamental fixtures upon the expiration of the
Term or earlier termination of this Agreement or at any time during the
Term, subject to Concessionaire's obligations under this Agreement to
use the Premises for the Permitted Uses. Notwithstanding anything in
this Agreement to the contrary, County shall not obtain title to, or a
license to use, the name or trademark "Gladstones" or any variation
thereof, at the expiration of the Term or earlier termination of this
Agreement.
2.4.2. Duty to Remove. The County may give written notice at
any time, no later than five (5) years prior to the expiration of the
Term or concurrently upon any earlier termination, of County's election
to require Concessionaire to remove, at the sole cost and expense of
Concessionaire, not later than ninety (90) days after the expiration of
the Term or earlier termination of this Agreement, all or substantially
all (but in no event less than all or substantially all) of the
structures, buildings and improvements of any kind whatsoever placed or
maintained on the Premises, whether placed thereon or maintained by
Concessionaire or others, including, but not limited to, concrete
foundations, pilings, structures and buildings; and if such structures
are removed by Concessionaire, then Concessionaire shall, upon the
expiration or termination of this Agreement, immediately restore, and
quit, and peacefully surrender possession of, the Premises to County in
good and usable condition, excepting ordinary wear and tear. If
Concessionaire has received written notice of County's election to
require Concessionaire to remove improvements hereunder, Concessionaire
shall, no later than December 31, 2012, provide County with a letter of
credit, bond or other security, in form and amount satisfactory to
County, to secure the discharge of Concessionaire's removal and
restoration obligations pursuant to this subsection. The ninety (90) day
removal period in this subsection may be extended by County to such
longer time as is necessary under the circumstances if Concessionaire
demonstrates to County such need.
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2.4.3. County's Right to Remove Improvements. Should
Concessionaire fail to so remove said structures, buildings and
improvements and restore the Premises, County may sell, remove or
demolish the same, in event of which sale, removal or demolition
Concessionaire shall reimburse County for any cost or expense thereof in
excess of any consideration received by County as a result of such sale,
removal or demolition.
2.4.4. Duty to Remove Machinery, Etc. Within thirty (30) days
after the expiration of the Term or sooner termination of this
Agreement, Concessionaire shall in any event remove at its cost and
expense such machinery, appliances or fixtures as are not firmly affixed
to said structures, buildings and improvements. Should Concessionaire
fail to so remove said appliances or fixtures within said period, and
said failure continues for ten (10) days after written notice from
County to Concessionaire, Concessionaire shall lose all right, title and
interest in and thereto, and County may elect to keep the same upon the
Premises or to sell, remove, or demolish the same, in event of which
sale, removal, or demolition Concessionaire shall reimburse County for
its Actual Costs in excess of any consideration received by County as a
result of said sale, removal or demolition.
2.4.5. Title to Certain Improvements Passes to County;
Concessionaire to Maintain. Title to all utility lines, transformer
vaults and all other utility facilities constructed or installed by
Concessionaire upon the Premises shall vest in County upon construction
or installation. Notwithstanding the foregoing sentence, such utility
lines, transformer vaults and all other utility facilities, shall be
maintained, repaired, and replaced, if and as needed, by Concessionaire
during the Term.
3. USE OF PREMISES.
3.1. Specific Primary Use. The Premises, excluding any sand portion
thereof not paved or otherwise covered with improvements, use of which sand area
is subject to Concessionaire obtaining a separate permit in each instance (as so
limited, the "Usable Premises") shall be used primarily by Concessionaire for
the operation of a first class restaurant (including banquet facilities), snack
bar and parking lot, each conforming to the Quality Standards set forth in
Article 6 of this Agreement, as well as other facilities directly related
thereto, and for the sale within the Premises of food and beverages, beach
equipment and other miscellaneous items of merchandise that are appropriate to
recreational use at the beach or for use as souvenirs, provided prior written
approval for the sale of anything other than food, beverages and the items
listed on Exhibit B hereto has been obtained from Director. Such approval shall
not be unreasonably withheld or delayed and such approval shall be deemed
withheld if Director fails to grant or deny his or her approval within sixty
(60) days after Director's receipt of a written request from Concessionaire
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(collectively, the foregoing shall be referred to herein as the "Permitted
Uses"). Except as specifically provided herein, the Premises shall be used for
no other purpose without the prior written consent of County. County makes no
representation or warranty regarding the continued legality of the Permitted
Uses or any of them, and Concessionaire bears all risk of an adverse change in
Applicable Laws; notwithstanding the foregoing, in the event that a change in
Applicable Laws renders it illegal for Concessionaire to continue to operate a
restaurant concession from the Premises, then Concessionaire, within ninety (90)
days after such change in law becomes effective, may elect to terminate this
Agreement, such termination to be effective upon the date that Concessionaire is
required by law to close its restaurant on the Premises. Concessionaire shall
have no duty to provide maintenance and/or repairs to areas outside the Usable
Premises, except (i) as specifically provided to the contrary in this Agreement,
(ii) as otherwise set forth in Concessionaire's responses (including
attachments) dated November 4, 1996 and February 24, 1997 to the Request For
Proposals for Concession Agreement released by County published August 7, 1996,
and (iii) to comply with the provisions of any Applicable Laws and any permits
obtained by Concessionaire in connection with the use of sand areas outside the
Usable Premises.
3.2. Prohibited Uses. Notwithstanding the foregoing:
3.2.1. Nuisance. Concessionaire shall not conduct or permit
to be conducted any private or public nuisance on or about the Premises,
nor commit any waste thereon.
3.2.1.1. No rubbish, trash, waste,
residue, brush, weeds or undergrowth or debris of any kind or
character shall ever be placed or permitted to accumulate
upon any portion of the Premises, except in appropriate
receptacles intended for such purposes, nor shall any portion
of the Premises be maintained so as to render said Premises a
fire hazard or unsanitary, unsightly, offensive, or
detrimental nor shall any similar activity be permitted on
any other portion of the Premises or on any public street or
adjacent property.
3.2.2. Restrictions and Prohibited Uses. Without expanding
upon or enlarging the Permitted Uses of the Premises as set forth in
this Agreement, the following uses of the Premises are expressly
prohibited:
3.2.2.1. The Premises shall not be used or
developed in any way which is inconsistent with any
applicable governmental or public agency requirements;
3.2.2.2. The Premises shall not be used or
developed in any way in a manner inconsistent with the
operation of a first class restaurant and snack bar
concession,
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and parking incidental thereto, conforming to the Quality
Standards. Without limiting the foregoing, the Premises may
be used for the Permitted Uses, but no part of the Premises
shall be used by Concessionaire or any licensee, invitee or
customer thereof, for any adult entertainment purposes, as
such term refers to graphic, explicit and/or obscene
depictions of sexual activity;
3.2.2.3. No improvement on the Premises
shall be permitted to fall into disrepair and all
improvements shall at all times be kept in first class
condition and repair consistent with the restaurant on the
Premises and its theme (including, without limitation,
substantially free of the presence of wood-destroying pests
and organisms) and adequately painted or otherwise finished;
3.2.2.4. Except as inherent and common to
normal and customary restaurant operations of the quality
required herein, no condition shall be permitted to exist
upon the Premises which shall induce, breed or harbor
infectious plant diseases, rodents, or noxious insects and
Concessionaire shall take such measures as are appropriate to
prevent any conditions from existing on the Premises which
create a danger to the health or safety of those employees
working at or patronizing the Premises and/or that portion of
Will Rogers State Beach Park adjacent to the Premises;
3.2.2.5. Without the prior written
approval of Director, no antennae or other device for the
transmission or reception of television signals or any other
form of electromagnetic radiation shall be erected, used or
maintained by Concessionaire outdoors above ground on any
portion of the Premises, whether attached to an improvement
or otherwise; provided, however, Concessionaire acknowledges
that, as disclosed in the Request For Proposals dated August
7, 1996, published by County, and as described in Section
11.8 hereof, County is negotiating with certain parties
toward the installation of a cellular telephone antenna and
related improvements on a portion of the Premises. County
shall use reasonable efforts to cause such cellular antenna
and related improvements to be kept in good condition and
operation and shall not allow same to interfere unreasonably
with the normal and customary operation of a restaurant.
Provided however, notwithstanding the foregoing, County
agrees that Concessionaire may utilize its own antennae and
equipment to bring to the Premises audio and visual
entertainment for the customers of the restaurant, subject to
Concessionaire having
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obtained all necessary governmental approvals for its
antennae and equipment, and all approvals required hereunder.
3.2.2.6. No tools, equipment, or other
structure designed for use in boring for water, oil, gas or
other subterranean minerals or other substances, or designed
for use in any mining operation or exploration, shall
hereafter be erected or placed upon or adjacent to the
Premises, except as is necessary to allow Concessionaire to
perform its maintenance and repair obligations pursuant to
this Agreement; and,
3.2.2.7. No adverse environmental
condition in violation of Applicable Laws shall be permitted
to exist on any portion of the Premises, nor shall any toxic
or hazardous wastes be permitted to be generated, treated,
stored, disposed of, or otherwise deposited in or on or
allowed to emanate from the Premises or any portion thereof,
including, without limitation, into the surface waters and
subsurface waters thereof; provided, however, that toxic or
hazardous substances may be stored or used, so long as such
storage and use is (a) ancillary to the ordinary course of
business of an otherwise Permitted Use with the intent that
such substances will be used in the ordinary course of
business, and (b) conducted in compliance with all applicable
laws, statutes, ordinances, rules and regulations of any
local, state or federal governmental body.
3.3. Active Public Use. The parties acknowledge that the ultimate
objective of this Agreement is the complete and continuous use of the Premises
by and for the benefit of the public, without discrimination as to race, gender
or religion, along with the generation and realization of revenue therefrom.
Accordingly, Concessionaire agrees and covenants that it will operate the
Premises fully and continuously toward the end that the public may enjoy maximum
benefits from the Premises and that it will use commercially reasonable efforts
so that County may obtain maximum revenue therefrom as contemplated by this
Agreement. In the event of any dispute or controversy relating hereto, this
Agreement shall be construed with due regard to the aforementioned objectives.
However, nothing herein shall require the Premises to be open twenty four (24)
hours per day or during such hours as comparable restaurants are not normally
open and Concessionaire may, to the extent necessary, close the restaurant to
make necessary repairs, renovations or to comply with Applicable Laws.
3.4. Non-Interference. Concessionaire shall not interfere with
the public use of or access to Will Rogers State Beach Park.
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3.5. Parking. Concessionaire shall permit both restaurant patrons and
the general public to park motor vehicles on the Parking Lot Parcel. Such
parking shall at all times be permitted on an unreserved, "first come, first
served" basis. Parking charges for the general beachgoing public for any given
period shall not exceed those charged by County for the same period in its other
lots serving Will Rogers State Beach Park but Concessionaire may,
notwithstanding the foregoing, charge restaurant patrons whatever parking
charges it may deem appropriate from time to time. If said parking charges by
County at Will Rogers State Beach Park fall below two dollars ($2.00) per day
during the summer season, Concessionaire shall have the right within sixty (60)
days after such reduction in price to notify County in writing that it wishes to
reopen negotiations with County as to the Percentage Rent to be paid pursuant to
Section 4.2.2.4 hereof. In such event, County and Concessionaire agree to
negotiate in good faith as to whether an adjustment in the parking percentage
rental is appropriate because of such price reduction.
3.6. Days of Operation. The Premises shall be open every day of the
year. Any changes in the days and/or hours of operation shall be subject to the
written approval of County. Provided, however, Concessionaire may close the
restaurant for up to four (4) days per calendar year on days which
Concessionaire believes are appropriate.
3.7. Signs and Awnings. Any and all art, displays, identifications,
monuments, awnings and advertising signs which are placed on, or are visible
from, the exterior of the Premises shall be only of such size, design, wording
of permanent signs and color as shall have been specifically submitted to and
approved by County, whether pursuant to Article 5 or this Agreement or
otherwise, in writing, prior to the erection or installation of said art, sign,
display, identification, monument, awning or advertising sign. Such art, sign,
display, identification, monument, awning or advertising signage shall be
limited to those which advertise either the on-site concession or the public
access to the Premises.
3.8. Compliance with Regulations. Concessionaire shall comply with all
Applicable Laws and shall pay for and maintain any and all licenses and permits
related to or affecting the use, operation, maintenance, repair or improvement
of the Premises.
3.9. Rules and Regulations. Concessionaire agrees to comply with such
other rules and regulations governing the use and occupancy of the Premises as
may be promulgated by County from time to time for general applicability to (i)
restaurants, (ii) parking lots and (iii) other operations conducted on the
Premises and delivered in writing to Concessionaire.
3.10. Reservations. Concessionaire expressly agrees that this
Agreement and all rights hereunder shall be subject to all prior encumbrances,
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reservations, licenses, easements and rights of way existing as of the date
hereof or otherwise referenced in this Agreement in, to, over or affecting the
Premises for any purpose whatsoever, including without limitation the Caltrans
right of way affecting a portion of the Premises, and to those placed on it by
Concessionaire or Concessionaire's predecessor-in-interest.
Without limiting the foregoing, Concessionaire expressly agrees that
this Agreement and all rights hereunder shall be subject to all matters of
record and the right of County or City, as their interests may appear, to
install, construct, maintain, service and operate sanitary sewers, fire access
roads, storm drains, drainage facilities, life guard towers and facilities,
electric power lines, telephone lines and access and utility easements, together
with the right of County or the City of Los Angeles to convey such easements and
transfer such rights to others. County in its governmental capacity shall have
the right to install and maintain a life guard tower and related equipment for
safety purposes on the beach portion of the Premises and/or the public beach
adjoining the Premises.
4. PAYMENTS TO COUNTY.
4.1. Net Agreement. The parties acknowledge that the payments to be made
by Concessionaire under this Agreement are intended to be absolutely net to
County. The rent and other sums to be paid to County hereunder are not subject
to any demand, set-off or other withholding. Except as specifically set forth
herein, Concessionaire shall be solely responsible for all capital costs
(including, without limitation, all structural and roof repairs or replacements)
and operating expenses attributable to the operation and maintenance of the
Premises, including without limitation the parking areas included within the
Premises.
4.1.1. Utilities. In addition to the rental charges as herein
provided, Concessionaire shall pay all utility and service charges for
furnishing water, power, sewage disposal, light, telephone service,
garbage and trash collection and all other utilities and services, to
said Premises.
4.1.2. Taxes and Assessments. Concessionaire agrees to pay
before delinquency all lawful taxes, assessments, fees, or charges which
at any time may be levied by the State, County, City or any tax or
assessment levying body upon any interest in this Agreement (treated for
this purpose as if this Agreement were a lease) or any possessory right
which Concessionaire may have in or to the Premises covered hereby or to
the improvements thereon for any reason, as well as all taxes,
assessments, fees, and charges on goods, merchandise, fixtures,
appliances, equipment, and property owned by it in, on or about the
Premises.
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The parties acknowledge that the Premises are and shall
continue to be subject to possessory interest taxes, and that such taxes shall
be paid by Concessionaire. This statement is intended to comply with Section
107.6 of the Revenue and Taxation Code. Concessionaire shall include a statement
in all Subleases to the effect that the interests created therein may also be
subject to possessory interest taxes, and that the Sublessee shall be
responsible for any and all possessory interest taxes on the Sublessee's
interest; however, Concessionaire acknowledges that the payment of such
possessory interest taxes is the ultimate responsibility of Concessionaire.
4.1.3. Certain Capital Improvements. In the event that
subsequent to October 31, 2012 Concessionaire is required to make a
capital expenditure for physical improvements to the Premises to comply
with an Applicable Law enacted after the date of this Agreement whose
mandatory performance date is after October 31, 2012, then if the cost
to be expended by Concessionaire exceeds an amount determined by
multiplying Ten Thousand Dollars ($10,000) by the number of months
remaining in the Term following the anticipated completion of such
Improvements ("Subject Costs"), Concessionaire may either (x) elect to
make such expenditures in accordance with this Agreement and fulfill its
obligations to repair and maintain the Premises whereupon this Agreement
will remain in full force and effect as if this provision did not exist
or (y) send County a notice ("Conditional Termination Notice") advising
County of the anticipated Subject Costs and the useful life of the
Improvements which are to be paid by the Subject Costs ("Subject
Improvements") and advising County that Concessionaire will only be
willing to perform the Subject Improvements for the Subject Costs if
County agrees that the Subject Costs will be amortized over the useful
life of the Subject Improvements (or, when appropriate, each separately
functioning component of the Subject Improvement) with County agreeing
that Concessionaire may deduct, over the balance of the Term of this
Agreement, from the amounts that become due and owing hereunder that
portion of the Subject Costs which is attributable to the useful life
falling outside the Term ("Permitted Deduction"). Within thirty (30)
days of County's receipt of the Conditional Termination Notice
("Decision Period"), County may send Concessionaire a notice
("Acceptance Notice") agreeing that Concessionaire may make the Subject
Improvements for the Subject Costs and consenting to the Permitted
Deduction whereupon Concessionaire will fulfill its obligations to
repair and maintain the Premises in accordance with this Agreement and
this Agreement will remain in full force and effect with Concessionaire
having the right to make Permitted Deduction. If County does not timely
send the Acceptance Notice to Concessionaire, this Agreement will
terminate on the later of (i) the last day the restaurant is permitted
by Applicable Laws to operate on the Premises without having made the
capital expenditure for physical improvements described above (but not
beyond the end of the Term hereof) or (ii) six (6) months after
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the end of the Decision Period. In the event that County does not send
the Acceptance Notice to Concessionaire, Concessionaire will promptly
confirm in writing to County the anticipated termination date of this
Agreement; if said termination date is more than six (6) months after
the date of such confirmation notice, County shall have the right to
terminate this Agreement upon sixty (60) days prior written notice to
Concessionaire at any time thereafter. To the extent that the amount of
the Permitted Deduction would exceed the amount that Concessionaire
would otherwise have been obligated to pay to County for the remainder
of the Term, Concessionaire shall have the right to terminate this
Agreement by sending the Conditional Termination Notice but County may
only send the Acceptance Notice if such notice is accompanied by a check
equal to the amount by which the Permitted Deduction exceeds the amounts
that Concessionaire would otherwise have been obligated to pay County
for the remainder of the Term.
4.2. Rental Payments. Throughout the Term, for the concession and use
granted herein, Concessionaire shall pay County a monthly amount equal to the
greater of (a) Monthly Minimum Rent and (b) Percentage Rent.
4.2.1. Annual Minimum Rent and Monthly Minimum Rent. As more
specifically provided herein, the minimum rent payable to County during
each year of the Term ("Annual Minimum Rent") shall be the sum of One
Million Seven Hundred Fifty Thousand and 00/100 Dollars ($1,750,000.00).
Annual Minimum Rent shall be payable by Concessionaire to County on a
monthly basis. "Monthly Minimum Rent" shall be computed by dividing
Annual Minimum Rent by twelve (12). Initially, Monthly Minimum Rent
shall be sum of One Hundred Forty Five Thousand Eight Hundred Thirty
Three and 33/100 Dollars ($145,833.33) per month; notwithstanding the
foregoing, for the period of time beginning upon the commencement of the
Term and expiring upon the earlier of (a) the completion of the
Improvements described in Section 5.1 hereof and (b) April 30, 1998,
Monthly Minimum Rent shall be the sum of Seventy Two Thousand Nine
Hundred Sixteen and 66/100 Dollars ($72,916.66) per month.
Concessionaire has elected to complete the Improvements in two stages,
commencing November 1, 1997 and November 1, 1998, respectively, and to
receive the six months of reduced Monthly Minimum Rent described in the
preceding sentence in two installments, the first commencing on November
1, 1997 and expiring on the earlier of completion of the Improvements or
January 31, 1998 and if the Improvements have not been completed by
January 31, 1998, the second commencing November 1, 1998 and expiring on
the earlier of completion of the Improvements or January 31, 1999. In no
event shall the January 31, 1998 and January 31, 1999 expiration dates
for the reduced Monthly Minimum Rent set forth in the preceding two
sentences be extended, regardless of any delays in the commencement or
completion of the Improvements pursuant to Article 5 of this
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Agreement; provided, however, that Concessionaire may, to the extent
commercially reasonable, work to complete the Improvements during times
other than the three (3) month periods expiring January 31, 1998 and
January 31, 1999, respectively.
4.2.2. Percentage Rent. For the purposes of this Agreement,
"Percentage Rent" for any given month or year shall be defined as the
sum of the following amounts:
4.2.2.1. Food. Ten Percent (10%) of
Concessionaire's Gross Receipts derived from the sale of food
and non-alcoholic beverages from the Premises;
4.2.2.2. Alcoholic Beverages. Twelve
Percent (12%) of Concessionaire's Gross Receipts derived from
the sale of alcoholic beverages from the Premises;
4.2.2.3. Merchandise. Twelve Percent (12%)
of Concessionaire's Gross Receipts derived from the sale of
miscellaneous items of merchandise, including souvenirs, and
beach equipment (1) from the Premises or (2) from outside the
Premises if the words "MALIBU" or "SUNSET" are used in
conjunction with the word "Gladstones";
4.2.2.4. Parking. Twelve Percent (12%) of
Concessionaire's Gross Receipts derived from the parking of
motor vehicles (including valet parking) on the Premises;
and,
4.2.2.5. Other Activities. Twelve Percent
(12%) of Concessionaire's Gross Receipts derived from
particular activities not otherwise provided for above,
including but not limited to the sale of goods and services
via television, mail order and/or the internet or similar
electronic communications networks, originating (1) from the
Premises or (2) from outside the Premises unless specifically
identified with another Gladstone's site (e.g. Citywalk or
Marina del Rey) and Twenty-five Percent (25%) of all fees,
charges, commissions, money, cash receipts or other things of
value received and retained by Concessionaire arising from
sales from all vending machines, public telephones, stamp
machines and the like located within or upon the Premises;
4.2.2.6. If County or Concessionaire
determine that a percentage of Gross Receipts is not suitable
or applicable for a particular activity not described in
subsections 4.2.2.1 through 4.2.2.4 above, although permitted
hereunder, County and Concessionaire shall mutually establish
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a minimum monthly payment to County as payment for the
privilege of engaging therein. Said minimum monthly amount
shall be included in Percentage Rent, as determined
hereunder, in lieu of a percentage of Gross Receipts
therefor.
4.2.2.7. Accounting Records and
Procedures. Concessionaire agrees to the recordkeeping and
accounting procedures, as well as the inspection and audit
rights granted to County, set forth in Article 15 of this
Agreement.
4.2.2.8. Gross Receipts. Except as herein
provided, the term "Gross Receipts" as used in this Agreement
means all money, cash receipts, or other things of value,
including but not limited to gross charges, sales, rentals,
fees and commissions made or earned by Concessionaire and/or
all its assignees, Sublessees, licensees, permittees or
concessionaires, whether collected or accrued from any
business, use, occupation or any combination thereof,
originating, transacted, or performed in whole or in part, on
the Premises, including but not limited to rentals, the
rendering or supplying of services and the sale of goods,
wares or merchandise.
(1) Except as otherwise set forth
herein, there shall be no deduction from Gross Receipts for
any overhead or cost or expense of operation, such as,
without limitation, salaries, wages, costs of goods,
interest, debt amortization, rent credit, collection costs,
discounts from credit card operations, insurance and taxes.
(2) Gross Receipts shall not include
direct taxes imposed upon the consumer and collected
therefrom by Concessionaire such as, without limitation,
retail sales taxes, excise taxes, or related direct taxes
paid periodically by Concessionaire to a governmental agency
accompanied by a tax return statement.
(3) Gross Receipts reported by
Concessionaire and its Sublessees, assignees, licensees,
concessionaires and permittees must include the usual charges
for any services, goods, rentals or facilities provided by
Concessionaire or its Sublessees, assignees, licensees,
concessionaires or permittees. Bona fide bad debts actually
incurred by Concessionaire may be deducted from Gross
Receipts; however, there shall be no deduction for bad debts
based on past experience or transfer to a bad debt reserve.
Subsequent collection of bad debts previously not reported as
Gross
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Receipts shall be included in Gross Receipts at the time they
are collected.
(4) Gross Receipts shall not include any
of the following items:
a. goods returned to suppliers or which
are delivered for resale (as opposed to
delivery) to another store of
Concessionaire or to a warehouse of
Concessionaire or to any retailers without
profit to Concessionaire, where such
returns or deliveries are made solely for
the convenient operation of the business
of Concessionaire and not for the purpose
of consummating a sale made in, about or
from the Premises;
b. an amount equal to the cash refunded or
credit allowed on merchandise returned by
customers and accepted by Concessionaire,
or the amount of cash refunded or credit
allowed thereon in lieu of
Concessionaire's acceptance thereof, but
only to the extent that the sales relating
to such merchandise were made in, about or
from the Premises; provided that whenever
Concessionaire accepts a credit slip as
payment for goods or services, the amount
of credit shall be included in Gross
Receipts.
c. sales of fixtures, equipment or
property which are not Concessionaire's
stock in trade;
d. the imputed value in excess of the
amounts charged by Concessionaire to its
employees for meals provided to such
employees at no profit to Concessionaire,
where such meals are part of the terms of
employment;
e. the imputed value in excess of the
amounts charged by Concessionaire for
charitable meals at no profit to
Concessionaire, not to exceed three
percent (3%) of Gross Receipts in any
particular month;
f. receipts from insurance claims;
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g. tips, gratuities or service charges
given by restaurant patrons to
Concessionaire's agents, employees or
servants, whether automatically added to
the customer's bill or given by the patron
separate and apart from the bill.
4.2.2.9. Excess Payments Credit. If rent
payments actually made by Concessionaire in a particular
Lease Year exceed the total rentals actually due for that
year as computed on an annual basis, Concessionaire shall be
permitted to credit that excess amount ("Excess Percentage
Rent Payment") against the succeeding monthly installments of
Percentage Rent otherwise due under this Section 4.2 until
such time as the entire Excess Percentage Rent Payment has
been recouped. If Concessionaire makes an Excess Percentage
Rent Payment in the final Lease Year of the Term, County
shall refund such amount to Concessionaire within ninety (90)
days of the expiration of the Term.
4.2.2.10. Effect of Sublessee, etc. Doing
Business. Where any Sublessee, licensee, or permittee is
conducting any business or engaged in any use or occupation,
or any combination thereof, of a portion, but not all or
substantially all, of the Premises, Concessionaire shall,
with respect to each, report whichever of the following
results in the greater Percentage Rent to County, in
accordance with the appropriate subsections of this Section:
(1) the Gross Receipts of each Sublessee; or (2)
Concessionaire's Gross Receipts from each Sublessee.
4.2.2.11. Interest; Etc.. Interest,
service or late charges collected in conjunction with a
transaction, sale or activity of Concessionaire or Sublessee
shall be reported in the same percentage category as the
transaction, sale or activity is reported.
4.2.2.12. Percentage Rent Does Not Affect
Permitted Uses. It is understood and acknowledged by
Concessionaire that Section 3.1 of this Agreement sets forth
the Permitted Uses of the Premises by Concessionaire; thus,
the Percentage Rent categories listed in subsection 4.2.2 are
not all necessarily applicable to this Agreement and are in
no way intended to expand the Permitted Uses.
4.3. Adjustments to Annual Minimum Rent. Annual Minimum Rent
shall be adjusted as of the sooner to occur of (i) the first day of the first
month following the third anniversary of the filing of the Notice of Completion,
and (ii)
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May 1, 2001; thereafter, Annual Minimum Rent shall be adjusted as of the third
anniversary of each adjustment date. Until the Renegotiation Date provided in
Section 4.4 hereof, the Annual Minimum Rent shall be adjusted as of each
adjustment date to the amount which equals seventy five percent (75%) of the
average of the total annual rent due (including Monthly Minimum Rent and
Percentage Rent) from Concessionaire to County under Section 4.2 of this
Agreement during the thirty six (36) month period immediately preceding the
adjustment; provided, however, that (a) in no event shall any adjustment of
Annual Minimum Rent pursuant to this Section 4.3 result in a decrease in Annual
Minimum Rent payable by Concessionaire to County, and (b) the aforementioned
thirty six (36) month period shall be adjusted to exclude any portion of the
Term in which the Monthly Minimum Rent is the sum of Seventy Two Thousand Nine
Hundred Sixteen and 66/100 Dollars ($72,916.66) per month as provided in
subsection 4.2.1.
4.4. Renegotiation of Annual Minimum and Percentage Rents. Effective
November 1, 2007 (the "Renegotiation Date"), the Annual Minimum Rent and
Percentage Rent shall be readjusted to the greater of (1) the amount of Annual
Minimum Rent and Percentage Rent due, as provided hereunder, with respect to the
twelve months immediately preceding the Renegotiation Date, and (2) the Fair
Market Rental Value (as defined below) of the Premises.
4.4.1. Fair Market Rental Value. As used herein, "Fair Market
Rental Value" shall mean, as of the Renegotiation Date, the fair market
rent (including an annual minimum rent), expressed as respective
percentages of Gross Receipts in accordance with the categories
enumerated in subsection 4.2.2 (except as to the specific percentages
provided as of the date of this Agreement), which the Premises (with any
and all improvements existing thereon deemed to be owned by County as of
the Renegotiation Date) would bring, on an absolute net basis, taking
into account the Permitted Uses and all of the other terms, conditions
and covenants of this Agreement (except for Article 5 hereof), if
exposed for lease for a reasonable time on an open and competitive
market to a concessionaire for the purpose of operating and maintaining
a first-class restaurant on the Premises consistent with the Quality
Standards while preserving and encouraging public access to and use of
the Premises, where County and the respective concessionaire are dealing
at arms length and neither is under abnormal pressure to consummate the
transaction.
4.4.2. Renegotiation Period. Not more than one (1) year nor
less than nine (9) months prior to the Renegotiation Date,
Concessionaire shall deliver to County written notice setting forth
Concessionaire's determination of the Fair Market Rental Value of the
Premises. Concessionaire's notice shall include a list of comparable
properties and/or any appraisals which it has utilized in its
determination, together with such other information regarding such
competitive properties or the
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Premises as Concessionaire deems relevant or as may be reasonably
requested by County. Within sixty (60) days after receipt of
Concessionaire's notice, if County disagrees with Concessionaire's
determination, County shall deliver to Concessionaire written notice of
such disagreement, together with County's determination of Fair Market
Rental Value and a list of comparable properties and/or any appraisals
which it has utilized in its determination, together with such other
information regarding such comparable properties or the Premises as
County deems relevant or as may be reasonably requested by
Concessionaire, to the extent available to County. If Concessionaire
fails to deliver such notice within the aforementioned period and such
failure continues for fifteen (15) days after receipt of written notice
from County, then County shall submit its determination of Fair Market
Rental Value to Concessionaire, and Concessionaire shall have fifteen
(15) days to deliver to County written notice of Concessionaire's
agreement or disagreement with County's determination. If Concessionaire
fails to deliver notice of such disagreement, then County's
determination of Fair Market Rental Value shall be binding on
Concessionaire as of the Renegotiation Date.
4.4.3. Negotiation of Fair Market Rental Value. If County (or
Concessionaire, as the case may be) does so notify Concessionaire (or
County, as the case may be) of its disagreement as provided in
subsection 4.4.2, County and Concessionaire shall have sixty (60) days
from the end of the applicable response period in which to agree upon
the Fair Market Rental Value for the Premises. County and Concessionaire
shall negotiate in good faith during said sixty (60) day period. If the
parties do so agree, they shall execute an amendment to this Agreement
setting forth the Fair Market Rental Value so jointly determined, to be
effective upon the Renegotiation Date. During the period of negotiation,
Concessionaire shall abide by all of the terms and conditions of this
Agreement, including but not limited to the obligation to pay to County
Annual Minimum Rent and Percentage Rent.
4.4.4. Arbitration. If County and Concessionaire fail to
reach agreement during the sixty (60) day period set forth in subsection
4.4.3, then, unless the parties agree otherwise, the Fair Market Rental
Value of the Premises shall be determined by arbitration as set forth in
Section 16.15 of this Agreement and the parties shall execute an
amendment to this Agreement setting forth the Fair Market Rental Value
as determined by arbitration. In order to determine the Fair Market
Rental Value of the Premises, the arbitrator shall take into
consideration all of the terms, conditions and covenants of this
Agreement (except for Article 5 hereof), the franchise value, earning
power and all of the factors and data relating to such value required or
proper to be considered in determining the fair rental value of
leaseholds under the laws of eminent domain in the State of California.
During the period of arbitration, Concessionaire shall abide
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by all of the terms and conditions of this Agreement, including but not
limited to the obligation to pay to County Annual Minimum Rent and
Percentage Rent.
4.4.5. Retroactivity. In the event that, pursuant to
subsections 4.4.3 or 4.4.4 hereof, the parties execute an amendment to
this Agreement setting forth the Fair Market Rental Value and the Annual
Minimum Rent, such amendment, if executed prior to the Renegotiation
Date, shall be effective as of the Renegotiation Date; if executed after
the Renegotiation Date, such amendment shall be retroactive to the
Renegotiation Date. In the event that such amendment is executed after
the Renegotiation Date, then, within seven (7) days after the execution
of the Amendment by County, Concessionaire shall pay to County, or
County shall credit to Concessionaire, the difference, if any, between
(a) such Fair Market Rental Value for the Premises and (b) the actual
Annual Minimum Rent and Percentage Rent paid by Concessionaire to
County, for the period of time from the Renegotiation Date until the
date of such payment. Concessionaire (with respect to overpayments) or
County (with respect to underpayments) shall further be entitled to
interest on each portion of such payment from each date on which the
applicable rental payments were payable under this Agreement to the date
paid or credited, whichever is applicable, at the following rates:
(1) the interest rate applicable to the first six (6) months
following the Renegotiation Date shall be equal to the average daily
rate for the funds held and invested by the Treasurer and Tax Collector
of Los Angeles County during that period, computed by the
Auditor-Controller; and,
(2) the interest rate applicable to any period of time in
excess of six (6) months following the Renegotiation Date shall be the
average prime rate of interest published in the Wall Street Journal plus
three percent (3%) for the period between the date which is six (6)
months after the Renegotiation Date and the date of payment.
4.5. Payment and Late Fees. Payment of Monthly Minimum Rent shall be
made to County in advance, on or before the first day of each calendar month of
the Term. Percentage Rent due for such month, if any, shall be paid to County,
in arrears, on or before the fifteenth day of the calendar month following each
month of the Term calculated as follows: the Concessionaire shall calculate the
total Percentage Rent for the Lease Year owed to County as of the end of each
month; it shall deduct from said amount the total Monthly Minimum Rent and
Percentage Rent paid to County for the period ending on the same date; if the
resulting amount is a positive number, Concessionaire shall pay that amount to
County; if that amount is a negative number, no Percentage Rent shall be paid to
County that month but nevertheless the Monthly Minimum Rent shall be paid every
month of the Term hereof. Payment may be made by
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check or draft issued and payable to The County of Los Angeles, and mailed or
otherwise delivered to the Department of Beaches and Harbors, Los Angeles
County, 13483 Fiji Way, Trailer No. 2, Marina del Rey, California 90292. In the
event any payment is not made on or before the date due, Concessionaire
acknowledges that County will experience additional management, administrative
and other costs that are impracticable or extremely difficult to determine.
Therefore, a fee ("Late Fee") of six percent (6%) of the unpaid amount shall be
added to any amount unpaid when due; provided, however, that once in any
calendar year if Concessionaire does not make its minimum monthly payment when
due, County shall give written notice thereof to Concessionaire and
Concessionaire shall pay the amount due within one (1) business day after
delivery of such notice; in that event (and only that event) the Late Fee will
be due and payable if the amount due is not paid by the end of said one (1)
business day period. Any unpaid rent due shall bear interest at one and one-half
percent (1 1/2%) per month computed from the due date, compounded monthly, until
paid. Concessionaire acknowledges that such Late Fee and interest shall be
applicable to all identified monetary deficiencies under this Agreement.
4.6. Changes of Ownership and Financing Events. Except as otherwise
provided in this Section 4.6, each time Concessionaire proposes either (a) a
Change of Ownership or (b) a Financing Event, County shall be paid (1) an
Administrative Charge equal to the Actual Cost incurred by County in connection
with its review and processing of said Change of Ownership or Financing Event,
including without limitation the cost of investigating the acceptability of the
proposed transferee or lender as well as any and all other reasonable
administrative, financial, economic, accounting and/or legal costs and fees
(including without limitation the reasonable value of services provided by
in-house counsel, lease administrators and/or lease auditors) incurred or
expended in connection with any such proposed Change of Ownership or Financing
Event ("Administrative Charge") and (2) in the event County approves such
proposed Change of Ownership or Financing Event and such transaction is
consummated, a Net Proceeds Share; provided, however, that in the event County
disapproves a proposed Change of Ownership or Financing Event, the
Administrative Charge shall not exceed Thirty Thousand and 00/100 Dollars
($30,000) and, in the event County approves a Change of Ownership or Financing
Event, that portion, if any, of the Administrative Charge that exceeds Thirty
Thousand and 00/100 Dollars ($30,000) shall be paid out of, and shall reduce,
the Net Proceeds Share. "Net Proceeds Share" shall mean the applicable amount
determined pursuant to Section 4.8 of this Agreement. Changes of Ownership and
Financing Events are further subject to County approval as provided in Articles
12 and 13 of this Agreement.
4.6.1. Change of Ownership. "Change of Ownership" shall mean
(a) any transfer by Concessionaire of a five percent (5%) or greater
direct ownership interest in this Agreement or in any Major Sublease,
(b) Concessionaire's granting of a Major Sublease and (c) any
transaction or
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series of related transactions not described in subsections 4.6.1(a) or
(b) which constitute an Aggregate Transfer of fifty percent (50%) or
more of the beneficial interests in, or a Change of Control of,
Concessionaire, this Agreement or a Major Sublease. For the purposes of
this Agreement, "Change of Control" shall refer to a transaction whereby
the transferee acquires a beneficial interest in Concessionaire, this
Agreement or a Major Sublease which brings its cumulative beneficial
interest in Concessionaire, this Agreement or a Major Sublease, as
appropriate, to over fifty percent (50%).
4.6.2. Excluded Transfers. Notwithstanding anything to the
contrary contained in this Agreement, Changes of Ownership resulting
from the following transfers shall not be deemed to create an obligation
to pay County an Administrative Charge or a Net Proceeds Share, nor
shall County have any discretion under Articles 12 and 13 of this
Agreement to disapprove such transfers:
4.6.2.1. a transfer to a spouse in
connection with a property settlement agreement or decree of
dissolution of marriage or legal separation;
4.6.2.2. a transfer, directly or through
any trust, by way of gift, devise, intestate succession or
operation of law for the benefit of any member or members of
the transferor's immediate family (which for the purposes of
this subsection shall be limited to the transferor's spouse,
children, parents, siblings and grandchildren);
4.6.2.3. a transfer of a beneficial
interest resulting from public trading in the stock or
securities of an entity, where such entity is a corporation
whose stock is traded publicly on a national stock exchange
or is traded in the over-the-counter market and whose price
is regularly quoted in recognized national quotation
services; provided, however, that this exclusion shall not
apply to a single transaction or series of related
transactions whereby fifty percent (50%) or more of the
beneficial interests in such entity are transferred, or which
otherwise effects a Change of Control in such entity;
4.6.2.4. a mere change in the form, method
or status of ownership; it shall not include a transfer
between or among individuals and/or entities controlled by
such individuals, provided that this exclusion shall not
apply to a single transaction or series of related
transactions whereby an Aggregate Transfer of fifty percent
(50%) or more of the beneficial interests in Concessionaire,
this Agreement or a Major Sublease has occurred;
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4.6.2.5. any transfer resulting from a
Condemnation by County; or,
4.6.2.6. any transfer of the beneficial
interest in Concessionaire currently held by Bank of America
and its affiliates; provided, however, that (1) such transfer
is consummated prior to November 1, 1997, (2) such transfer
is effected at a net loss to Bank of America and/or its
affiliates (without taking into account prior writedowns of
any debt extended to Concessionaire by Bank of America or its
affiliates), and (3) the transfer of the beneficial interest
is made to one or more of the existing persons or entities
currently holding beneficial interests in Concessionaire.
4.6.3. Aggregate Transfer. "Aggregate Transfer" shall refer
to the total percentage of the shares of stock, partnership interests,
membership interests or any other equity interests (which constitute
beneficial interests in Concessionaire, this Agreement or a Major
Sublease, as appropriate) transferred in all transactions (other than
those enumerated in subsection 4.6.2) occurring since the later of (a)
the execution by Concessionaire of this Agreement or a Major Sublease,
as appropriate, or (b) the most recent Change of Ownership upon which an
Administrative Charge was paid to County.
4.6.4. Beneficial Interest. As used in this Agreement, the
"beneficial interest," "beneficial interest in this Agreement," or
"beneficial interest in a Major Sublease" shall refer to the interests
of the natural persons who comprise the ultimate owner or owners of
Concessionaire's interest in this Agreement or a Major Sublease, or a
Major Sublessee's interest in a Major Sublease, whichever is
appropriate, regardless of the form of such ownership and regardless of
whether such interests are owned through corporations, trusts,
partnerships, limited liability companies or layers thereof; provided,
however, that if an entity with an ownership interest in the Agreement
or a Major Sublease is a partnership, corporation or limited liability
entity (a) whose beneficial interest in this Agreement or a Major
Sublease, whichever is appropriate, comprises less than fifteen percent
(15%) of its total assets or (b) in which no ten (10) shareholders,
partners or members together own more than thirty percent (30%) of the
partnership interests, shares, membership interests or other equity
interests in the entity, then for the purposes of Sections 4.6 through
4.8 hereof, the entity itself shall be deemed to be the ultimate owner
of the beneficial interest in this Agreement or a Major Sublease, as
appropriate, and the owners of such entity shall not be treated as the
ultimate owners of such beneficial interest.
4.6.4.1. Interests Held By Entities.
Except as otherwise provided herein, an interest in
Concessionaire, this
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Agreement or a Major Sublease held or owned by a partnership,
limited liability company, corporation or other entity shall
be treated as owned by the partners, members, shareholders or
other equity holders of such entity in proportion to their
respective equity interests, determined by reference to the
relative values of the interests of all partners, members,
shareholders or other equity holders in such entity. Where
more than one layer of entities exists between Concessionaire
or a Major Sublessee, as appropriate, and the ultimate
owners, then the foregoing sentence shall be applied
successively to each such entity in order to determine the
ownership of the beneficial interests in Concessionaire, this
Agreement or a Major Sublease, as appropriate, and any
transfers thereof.
4.6.4.2. Ownership of Multiple Assets. The
proceeds of any event constituting or giving rise to a Change
of Ownership shall be apportioned to this Agreement or a
Major Sublease, whichever is appropriate, and to any other
assets transferred in the same transaction in proportion to
the relative fair market values of the respective assets
transferred. The Net Proceeds Share shall be calculated only
by reference to the amount of such proceeds apportioned to
this Agreement, a Major Sublease or the beneficial interests
therein, whichever is appropriate.
4.7. Calculation and Payment. A deposit of Fifteen Thousand and 00/100
Dollars ($15,000) toward the Administrative Charge shall be due and payable upon
Concessionaire's notification to County of the proposed Change of Ownership or
Financing Event and request for County's approval thereof. If the transaction is
approved, the balance of the Administrative Charge, if any, and the Net Proceeds
Share shall be due and payable concurrently with the Change of Ownership or
Financing Event giving rise to the obligation to pay such fee. If County
disapproves the proposed transaction then, within thirty (30) days after notice
of its disapproval, County shall deliver to Concessionaire a written notice
setting forth the Administrative Charge, together with a refund of the amount,
if any, of the deposit in excess of the Administrative Charge otherwise
allowable under Section 4.6. In the event that the Administrative Charge exceeds
the deposit, then Concessionaire shall pay County the balance of the
Administrative Charge otherwise allowable under Section 4.6. within thirty (30)
days after receipt of the notice from County setting forth the Administrative
Charge and any supporting documentation reasonably requested by Concessionaire
within five (5) days after its receipt of such notice. Together with its request
for County approval of the proposed transaction, Concessionaire, a Major
Sublessee or the holder of a beneficial interest in this Agreement or a Major
Sublease, whichever is appropriate, shall present to County its calculation of
the Net Proceeds Share (if any) to be derived
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therefrom, which shall include the adjustment to Improvement Costs, if any,
which may result from the payment of such Net Proceeds Share ("Calculation
Notice"). Each Calculation Notice shall contain such detail as may be reasonably
requested by County to verify the calculation of the Net Proceeds Share. Within
sixty (60) days after the receipt of the Calculation Notice, County shall notify
the party giving the Calculation Notice as to County's agreement or disagreement
with the amount of the Net Proceeds Share set forth therein or the related
adjustment of Improvement Costs, if any. Failure of County to approve the
Calculation Notice in writing within such sixty (60) day period shall be deemed
to constitute County's disapproval thereof. Failing mutual agreement within
thirty (30) days after the expiration of said sixty (60) day period, the dispute
shall be resolved by arbitration as set forth in Section 16.15 of this Agreement
in a manner similar to that prescribed herein for the resolution of disputes
concerning Fair Market Rental Value. In the event County approves a Change of
Ownership or Financing Event but a dispute exists as to the Net Proceeds Share
in respect thereof or the related adjustment, if any, in Improvement Costs, then
the transaction may be consummated; provided, however, that (i) Concessionaire
shall remit to County as otherwise required hereunder the undisputed portion of
the Net Proceeds Share and (ii) Concessionaire shall deposit the disputed
portion of the Net Proceeds Share into an escrow at the closing of the
transaction, which portion shall be distributed in accordance with the
arbitration of the dispute pursuant to Section 16.15 of this Agreement, in a
manner similar to that prescribed herein for the resolution of disputes
concerning Fair Market Rental Value.
4.7.1. Transfer of Less Than Entire Interest. Where a Change
of Ownership has occurred by reason of the transfer of less than all of
an owner's beneficial interest in Concessionaire, this Agreement or a
Major Sublease, the Net Proceeds Share shall be due and payable with
respect to those portions of such beneficial interest that have been
acquired by the transferee since the later of (a) the date of the
execution of this Agreement (or a Major Sublease) by Concessionaire, (b)
the most recent payment of an Administrative Charge with respect to this
Agreement (or a Major Sublease), or (c) the date which is twelve (12)
months prior to the transfer which constitutes the Change of Ownership.
4.7.2. Purchase Money Notes. If the transferor of an interest
accepts a note made by the transferee of such interest in payment of all
or a portion of the acquisition cost (a "Purchase Money Note"), such
note shall be valued at its face amount.
4.7.3. Obligation to Pay Net Proceeds Share and
Administrative Charge. With respect to a Change of Ownership giving rise
to the Administrative Charge and Net Proceeds Share, the obligation to
pay the Administrative Charge and Net Proceeds Share shall be the joint
and several obligation of the transferor and transferee. In the event
that the Administrative Charge or Net Proceeds Share is not paid when
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due with respect to the beneficial interest in this Agreement, then
County shall have the remedies set forth in Section 14.3 hereof.
4.8. Net Proceeds Share. In the event of a Change of Ownership, the Net
Proceeds Share shall be a sum equal to the greater of (a) five percent (5%) of
the gross sale or transfer proceeds or other consideration given for the
interests transferred (but in the case of a transfer to a party affiliated with
or otherwise related to the transferor, such consideration shall in no event be
deemed to be less than the fair value of the interests transferred), and (b)
twenty percent (20%) of the Net Transfer Proceeds from such transfer. With
respect to a Financing Event, the Net Proceeds Share (if any) shall be equal to
twenty percent (20%) of the Net Refinancing Proceeds from such Financing Event.
4.8.1. Transaction by Original Concessionaire. In the case of
a transfer by Concessionaire (but not a successor or assignee of
Concessionaire) constituting a Change of Ownership, "Net Transfer
Proceeds" shall mean the total cash and other consideration received
(but in the case of a transfer to a party affiliated with or otherwise
related to the transferor, such consideration shall in no event be
deemed to be less than the fair value of the interests transferred),
less the following costs with respect to Concessionaire (but not its
successors or assignees):
4.8.1.1. The lesser of (i) book value or
(ii) fair market value of certain equipment installed and
owned by Concessionaire and existing on the Premises as of
the commencement of the Term, together with the final
construction costs incurred by Concessionaire in connection
with the construction of the Improvements as set forth in the
Approved Final Plans, Specifications and Costs, which costs
shall be submitted to County within thirty (30) days after
the completion of the Improvements described therein and
which costs shall be approved in writing by County, together
with any subsequent expenditure incurred, whether or not
paid, by Concessionaire (but not a sublessee or other party),
for physical addition to or improvement or renovation of the
Premises (collectively, "Improvement Costs"), provided that
(a) with respect to the book value or fair market value of
such equipment installed and owned by Concessionaire on the
Premises, such costs, which the parties agree shall in no
event exceed three hundred thousand and 00/100 dollars
($300,000), shall have been submitted to County within ninety
(90) days after the commencement of the Term and are
thereafter approved by Director in writing within sixty (60)
days after submission, (b) with respect to the construction
of improvements costing in excess of twenty five thousand
dollars ($25,000), such costs have been submitted to County
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within thirty (30) days after the completion of such
addition, improvement or renovation and approved by County in
writing, and (c) with respect to the construction of
improvements costing less twenty five thousand dollars
($25,000), such costs may be submitted in accordance with (b)
above, or submitted to County as part of Concessionaire's
Calculation Notice and thereafter documented to County's
reasonable satisfaction, provided, however, that, if
Concessionaire elects to submit such costs in its Calculation
Notice, such costs, taken cumulatively, shall not exceed
twenty five thousand dollars ($25,000).
4.8.1.2. Commissions, title and escrow
costs, and other bona fide closing costs actually paid to
third parties and documented to the satisfaction of County,
which costs were directly attributable to the consummation of
the particular transaction giving rise to the obligation to
pay County a Net Proceeds Share (collectively, "Documented
Transaction Costs").
4.8.2. Transfer by Concessionaire's Successor. In the case of
a transfer by a Concessionaire other than the original Concessionaire,
"Net Transfer Proceeds" shall mean the total cash and other
consideration received by that successor Concessionaire (but in the case
of a transfer to a party affiliated with or otherwise related to the
transferor, such consideration shall in no event be deemed to be less
than the fair value of the interests transferred), minus the following
costs with respect to such successor Concessionaire:
4.8.2.1. The purchase price such successor
paid to Concessionaire or such successor's seller for the
interest acquired;
4.8.2.2. Improvement Costs actually paid
by such successor Concessionaire, provided that such costs
have been submitted to and approved by County to the extent
provided in subsection 4.8.1.1 with respect to
Concessionaire; and,
4.8.2.3. Documented Transaction Costs with
respect to the transfer of the interest by the successor.
4.8.3. Transfers of Major Sublessee's Interest. With respect
to any Change of Ownership described in subsection 4.6.1(b), subsections
4.8.1 and 4.8.2 shall apply, except that any rents or other amounts
received by Concessionaire from the Major Sublessee and passed through
to County under any provision of this Agreement (other
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than payment of Net Proceeds Share) shall be disregarded in the
computation of Net Transfer Proceeds.
4.8.4. Other Transfers. With respect to any Change of
Ownership not described in subsections 4.8.1 through 4.8.3 (i.e., a
transfer of an interest in an entity holding a direct or indirect
ownership interest in this Agreement or in a Major Sublease),
subsections 4.8.1 and 4.8.2 shall apply to such Change of Ownership,
except that in lieu of deducting Improvement Costs in determining Net
Transfer Proceeds, the cost to the transferor of the interest being
transferred shall be deducted. Furthermore, in the event that any such
Change of Ownership produces a Net Proceeds Share, the then existing
Improvement Costs shall be increased by an appropriate amount to reflect
such Net Proceeds Share, as if it had been realized by Concessionaire
upon a transfer of a comparable interest in this Agreement or in a Major
Sublease, as appropriate.
4.8.5. Net Refinancing Proceeds. "Net Refinancing Proceeds"
shall mean the gross principal amount of any Financing Event after the
date of this Agreement, minus (i) the principal amount of
Concessionaire's existing financing, (ii) Improvement Costs incurred by
Concessionaire and not paid for or repaid with the proceeds of any
Financing Event and (iii) Documented Transaction Costs with respect to
such Financing Event.
4.8.6. Effect of Refinancing on Improvement Costs. Upon
payment to County of a Net Proceeds Share in connection with a Financing
Event, then the Improvement Costs incurred by Concessionaire prior to
such Financing Event shall be increased by the amount of Net Refinancing
Proceeds derived from such Financing Event and the Documented
Transaction Costs incurred with respect thereto and shall be in addition
to Improvement Costs incurred by Concessionaire after such Financing
Event.
4.8.7. Transfers to which Sections 4.6 through 4.8 Apply. The
provisions of Sections 4.6 through 4.8 hereof shall apply to all
transfers of beneficial interests in this Agreement or a Major Sublease
which constitute a Change of Ownership, unless such transfers are
otherwise excluded pursuant to subsection 4.6.2. Furthermore, the
provisions of Sections 4.6 through 4.8 of this Agreement, and the
principles set forth therein, shall apply to any transfer or series of
transfers which County can demonstrate was primarily structured for the
purpose of avoiding the obligation to pay Net Proceeds Share set forth
in Sections 4.6 through 4.8 of this Agreement and which, viewed
together, would otherwise constitute a Change of Ownership.
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4.8.8. Payment. Net Proceeds Share shall be due and payable
concurrently with the transfer giving rise to the obligation to pay such
fees and shall be the joint and several obligation of the transferee and
transferor. In the event that the proceeds of the transaction giving
rise to the obligation to pay Net Proceeds Share are comprised, in whole
or in part, of assets other than cash, then the cash payment of the Net
Proceeds Share shall reflect the fair market value of such non-cash
assets as of the date of the Change of Ownership, which shall be set
forth in the Calculation Notice. Notwithstanding the foregoing, in the
case of a Change of Ownership described in subsection 4.6.1(b), the Net
Proceeds Share shall be payable to County as and when the Net Transfer
Proceeds are received, with the Net Proceeds Share being equitably
apportioned to the payments derived by Concessionaire from said Change
of Ownership (other than any payments passed through to County under
this Agreement).
4.8.9. Shareholder, Partner, Member, Trustee and Beneficiary
List. Prior to the execution of this Agreement by County, prior to each
subsequent Change of Ownership or Financing Event and upon the request
of County (which requests shall be no more frequent than once per year),
Concessionaire shall permit County to review an updated schedule listing
the names and mailing addresses of all shareholders, partners, members
and other holders of equity interests in Concessionaire. In the event
that such shareholder, partner, member or other interest holder is a
trust, Concessionaire shall include in such schedule the name and
mailing address of each trustee of said trust, together with the names
and mailing addresses of each beneficiary of said trust with greater
than a five percent (5%) actuarial interest in distributions from, or
the corpus of, said trust; provided, however, that to the extent that
Concessionaire is prevented by Applicable Laws from obtaining such
information regarding the beneficiaries of said trust(s), Concessionaire
shall have complied with this provision if Concessionaire uses its best
efforts to obtain such information voluntarily and provides County with
the opportunity to review any such information so obtained.
Concessionaire agrees to use its best efforts to provide County with any
additional information reasonably requested by County in order to
determine the identities of the holders of five percent (5%) or greater
beneficial interests in Concessionaire or its constituent shareholders,
partners, members or other interest holders, this Agreement or a Major
Sublease.
5. CONSTRUCTION OF IMPROVEMENTS BY CONCESSIONAIRE.
5.1. Improvements. It is expressly understood and acknowledged that
Concessionaire shall renovate and rehabilitate the Premises at its sole cost and
expense with improvements in nature and cost substantially the same as or better
than those proposed by Concessionaire in its responses dated November
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4, 1996 and February 24, 1997 to the Request For Proposals for Concession
Agreement released by County published August 7, 1996 and the requirements
(including Attachment I thereto) set forth therein and substantially complying
with the rendering and descriptions set forth in said responses, all of which
are incorporated herein by this reference, with such modifications in cost and
scope as may be approved in writing by County or necessary in order to comply
with Applicable Laws (the "Improvements"). Concessionaire agrees to construct or
cause to be constructed the Improvements to meet the standards set forth above,
in compliance with Applicable Laws, including all current Building Code
requirements.
5.1.1. Landscaping. The Improvements shall include
appropriate landscaping upon the Premises including, without limitation,
the easterly and southerly perimeter of the parking lot. A general
layout of proposed landscaping shall be submitted to County as part of
the plans and specifications for the Improvements. All landscaping plans
and layout must have the approval of Director.
5.1.2. Cost of Improvements. The total cost of the
Improvements, including but not limited to design and construction
costs, construction financing costs, furniture, fixtures, and equipment
expended after April 15, 1997 (but with no more than Fifty Thousand and
00/100 Dollars ($50,000) expended on architectural work and new
equipment between April 15, 1997 and August 13, 1997 to be included),
but excluding Monthly Minimum Rent and Percentage Rent, shall not be
less than Two Million Seven Hundred Thousand and 00/100 Dollars
($2,700,000). Within sixty (60) days after the completion of the
Improvements, Concessionaire shall provide County with documentation to
evidence such expenditures with such detail as is reasonably requested
by County. Further, within ten (10) days after approval of this
Agreement by Board, Concessionaire shall deliver to Director for
Director's approval an itemized schedule of expenditures on
architectural work and new equipment incurred by Concessionaire between
April 15, 1997 and August 13, 1997. Only those expenditures approved by
Director shall be applied toward the aforementioned $50,000 and
$2,700,000 figures, respectively.
5.1.3. Schedules. The failure of Concessionaire to take all
appropriate and necessary actions within the applicable timeframes contained in
this Article 5 shall, if not cured within the applicable cure period set forth
in subsection 14.1.2, constitute a breach of Concessionaire's obligations and an
Event of Default hereunder.
5.2. Plan Submittal Schedule; County Approval. Concessionaire agrees to
prepare and file in accordance with the schedules set forth in Sections 5.3
through 5.8 below, plans and specifications, construction schedules and
construction cost estimates in connection with the Improvements with the
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Director for review and approval, which shall be based upon the conformity of
Concessionaire's submission with the descriptions set forth on in Section 5.1 as
well as the consistency of Concessionaire's submission with the Permitted Uses
and the other terms and conditions of this Agreement. If any submittal required
hereunder is not approved by Director upon the initial submittal, then Director
shall describe generally in writing the reason for such disapproval.
Concessionaire will then have the right to resubmit to Director for approval the
matter within thirty (30) days after notice of the disapproval of the initial
submission. Any plans and specifications submitted hereunder shall conform to
the descriptions set forth in Section 5.1 as well as to standards generally
accepted in the architectural, engineering and construction professions in
southern California in 1997.
5.3. Schematics and Narrative. Not later than thirty (30) days after the
execution of this Agreement by County, Concessionaire shall submit to the
Director six (6) sets of schematic plans together with a narrative description
and construction cost estimate summary clearly delineating the nature, size,
configuration and layout of any and all Improvements to be constructed, altered
or modified on the Premises. Such plans shall, among other things, clearly
delineate the architectural theme or motif of the Improvements and shall
identify and illustrate the boundaries of the Premises and all rights-of-way or
other areas reserved to County or third parties which are located thereon.
Director shall have sixty (60) days within which to approve or disapprove such
submission's compliance with this Agreement and particularly Section 5.1 hereof.
Failure of Director to approve such submission in writing within said sixty (60)
day period shall be deemed disapproval of said submission. After approval of
schematic plans (or subsequent approval of Preliminary or Approved Final Plans,
Specifications and Costs) by Director, if changes in such plans are required by
conditions of approval of the Improvements imposed by the California Coastal
Commission or other governmental agency having jurisdiction thereover,
Concessionaire shall promptly advise Director in writing of such changes and
Director shall not disapprove the changes required by the California Coastal
Commission or other governmental agency, as appropriate.
5.4. Preliminary Plans and Specifications. As soon as practicable, but
in no event later than thirty (30) days after Director's approval of the
materials submitted pursuant to the previous paragraph, Concessionaire shall
submit to Director six (6) sets of preliminary plans, outline specifications and
construction cost estimates for the Improvements set forth therein. The
preliminary plans, outline specifications and construction cost estimate shall
conform to, expand upon and reflect a natural evolution from the descriptions
and estimates set forth in the approved schematic plans and narrative. Any
difference in the scope, size, configuration, arrangement or motif of the
Improvements from those described in the approved schematics and narrative shall
be separately identified and described. Director shall have twenty one (21) days
within which to approve or reasonably disapprove such submission, and Director
may disapprove said preliminary plans on the grounds that they do not
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reflect a natural evolution from the approved schematic plans or that they
materially differ from the approved schematic plans and narrative. Failure of
Director to disapprove said preliminary plans within twenty one (21) days after
Director's receipt thereof shall be deemed Director's approval thereof;
provided, however, that in the event that the preliminary plans, outline
specifications and construction cost estimates contain substantial changes from
the approved schematics and narrative, then Director shall have sixty (60) days
in which to approve said submission, which approval shall be deemed withheld if
not granted in writing within such sixty (60) day period; and provided further,
that together with the submission of the preliminary plans, outline
specifications and construction cost estimates, Concessionaire must deliver to
Director a transmittal letter containing the following text prominently
displayed in bold faced type:
"PURSUANT TO SECTION 5.4 OF THE CONCESSION AGREEMENT, IF
THESE MATERIALS CONTAIN NO SUBSTANTIAL CHANGES FROM THE
MATERIALS PREVIOUSLY SUBMITTED TO YOU, YOU HAVE TWENTY ONE
(21) DAYS AFTER RECEIPT OF THESE MATERIALS IN WHICH TO
APPROVE OR DISAPPROVE THEM. FAILURE TO DISAPPROVE THESE
MATERIALS IN WRITING WITHIN TWENTY ONE (21) DAYS OF YOUR
RECEIPT OF THESE MATERIALS SHALL CONSTITUTE YOUR APPROVAL OF
THEM."
5.5. Final Plans and Specifications. As soon as practicable, but in no
event later than sixty (60) days after approval of the preliminary plans (or
when and to the extent appropriate, no later than sixty (60) days after final
approval is obtained from the California Coastal Commission as to items either
requiring California Coastal Commission approval or whose construction would be
materially adversely restricted or changed if California Coastal Commission
approval were not obtained for a related item), outline specifications and
construction cost estimate, Concessionaire shall submit for approval by Director
six (6) complete sets of final plans, detailed specifications and a construction
cost statement for all Improvements to be constructed, altered or modified by
Concessionaire on the Premises, together with one (1) set of appropriate
structural computations, identical to those requested or required by the County
Director of Public Works incident to the issuance of building permits under the
relevant provisions of the Los Angeles County Building Code. Concessionaire
shall file duplicate copies of the final plans, detailed specifications and
construction cost statement required by this Section with the County Director of
Public Works, together with the necessary and appropriate applications for
building permits. Any difference in the scope, size, configuration, arrangement
or motif of the Improvements from those described in the approved preliminary
plans and specifications shall be separately identified and described.
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5.6. Conditions Precedent to the Commencement of Construction. No
construction, alteration or modification by Concessionaire of any improvements
on the Premises shall be commenced until each and all of the following
conditions have been satisfied:
5.6.1. Approval of Final Plans and Specifications. The final
plans, detailed construction specifications and construction cost
statement described in Section 5.5 have been approved by Director
("Approved Final Plans, Specifications and Costs"). Director shall have
twenty one (21) days within which to approve or disapprove such
submission, and Director may disapprove such submission on the grounds
that they do not reflect a natural evolution from or that they
materially differ from the approved preliminary plans, outline
specifications and construction cost estimates. Failure of Director to
disapprove said preliminary plans within twenty one (21) days after
Director's receipt shall be deemed Director's approval thereof;
provided, however, that in the event that the preliminary plans, outline
specifications and construction cost estimates contain substantial
changes from the approved schematics and narrative, then Director shall
have sixty (60) days in which to approve said submission, which approval
shall be deemed withheld if not granted in writing within such sixty
(60) day period; and provided further, that together with the submission
of the final plans, detailed construction specifications and
construction cost statement, Concessionaire must deliver to Director a
transmittal letter containing the following text prominently displayed
in bold faced type:
"PURSUANT TO SECTION 5.6.1 OF THE CONCESSION AGREEMENT, IF
THESE MATERIALS CONTAIN NO SUBSTANTIAL CHANGES FROM THE
MATERIALS PREVIOUSLY SUBMITTED TO YOU, YOU HAVE TWENTY ONE
(21) DAYS AFTER RECEIPT OF THESE MATERIALS IN WHICH TO
APPROVE OR DISAPPROVE THEM. FAILURE TO DISAPPROVE THESE
MATERIALS IN WRITING WITHIN TWENTY ONE (21) DAYS OF YOUR
RECEIPT OF THESE MATERIALS SHALL CONSTITUTE YOUR APPROVAL OF
THEM."
Director's approval shall not be unreasonably withheld; provided, however, that
it shall be deemed reasonable to disapprove any submission not in substantial
conformity with the approved preliminary plans and specifications. No material
modification shall be made to the Improvements described in the Approved Final
Plans, Specifications and Costs without the prior written approval of Director,
which shall not be unreasonably withheld.
5.6.2. Permits and Other Approvals. Concessionaire shall
have received and furnished County with copies of all permits, licenses
and
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other governmental approvals necessary to construct the Improvements
described in the Approved Final Plans, Specifications and Costs.
Concessionaire agrees to apply for all such permits, licenses and other
governmental approvals at the earliest commercially reasonable time and
thereafter shall use its best efforts (which shall be deemed to include
expenditures of funds, including without limitation application fees,
travel, architectural, consulting and lobbying fees, as reasonably
necessary to expedite the permit, license or other approval process) to
procure such permits, licenses and other approvals at the earliest
possible time. Without limiting the foregoing, Concessionaire shall use
its best efforts to submit its application to the California Coastal
Commission for approval of the Improvements no later than January 1,
1998.
5.6.3. Copies of Construction Contracts. Concessionaire shall
have furnished County with copies of any contract(s) entered into
between Concessionaire and any general contractor(s) employed for the
purpose of constructing the Improvements described in the Approved Final
Plans, Specifications and Costs.
5.6.4. Performance and Payment Bonds. Concessionaire shall,
at its own cost and expense, have furnished County with the following
separate corporate surety bonds not less than ten (10) days prior to the
Construction Commencement Date (as defined hereinbelow), which bonds
must be in form and content reasonably satisfactory to County or with
other security for the construction of the Improvements as set forth in
subsection 5.6.5 below:
5.6.4.1. A corporate surety performance
bond ("Performance Bond") issued by a surety company licensed
to transact business as such in the State of California, in
an amount not less than the amount of all hard construction
costs approved by County in conjunction with the Approved
Final Plans, Specifications and Costs. The Performance Bond
and its issuer shall be in all material respects reasonably
satisfactory to County. It shall name Concessionaire as
principal and said issuer as surety, and County as obligee,
assuring full and satisfactory performance by Concessionaire
of Concessionaire's obligations herein to build, construct
and otherwise complete the Improvements described in the
Approved Final Plans, Specifications and Costs.
5.6.4.2. A corporate surety payment bond,
issued by a surety company licensed to transact business as
such in the State of California, with Concessionaire as
principal, said company as surety and County as obligee, in a
sum equal to one hundred percent (100%) of the total
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construction cost set forth in the Approved Final Plans,
Specifications and Costs, guaranteeing payment for all
materials, provisions, provender, supplies and equipment used
in, upon, for or about the performance of said construction
work or for labor done thereon of any kind whatsoever and
protecting County from any and all liability, loss or damages
arising out of or in connection with any failure to make such
payment (the "Payment Bond"). The Payment Bond shall be in
form and content reasonably satisfactory to County.
In the event that construction is
performed by a licensed general contractor on behalf of
Concessionaire, provided that such contractor provides County
with a bond or bonds compliant with this subsection, and in
all material respects reasonably satisfactory to County and
otherwise complying with this subsection, County will accept
such contractor's bonds in lieu of the Performance Bond
and/or Payment Bond by Concessionaire required by this
subsection 5.6.4.
5.6.5. Alternative Security. In lieu of providing Payment and
Performance Bonds, Concessionaire may deposit a Certificate of Deposit
with County or post an additional Letter of Credit in favor of County,
equal in amount to one hundred percent (100%) of the construction
contract price, which may be drawn upon by County to complete the
construction of the Improvements if same have not been completed by
Concessionaire or if an Event of Default has occurred under this
Agreement.
5.6.6. Evidence of Financing. Concessionaire shall have
provided evidence satisfactory to County of its having sufficient
financial resources, as determined by Director, to complete the
Improvements as set forth in the Approved Final Plans, Specifications
and Costs. Concessionaire shall furnish Director with copies of all
final notes, guarantees, partnership, shareholder or limited liability
company agreements, construction loan and/or permanent loan commitments,
documents evidencing equity contributions, documents creating and/or
perfecting security interests, and all documents and exhibits referred
to in any of the foregoing, together with any and all recorded documents
affecting an interest in the Premises within seven (7) days after such
document or instrument becomes effective.
5.7. County Cooperation. County shall cooperate with and assist
Concessionaire, to the extent reasonably requested by Concessionaire, in
Concessionaire's efforts to obtain the appropriate governmental approvals,
consents, permits or variances which may be required in connection with the
performance by Concessionaire of its obligations hereunder. Such cooperative
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efforts may include County's joinder in any application for such approval,
consent, permit or variance, where joinder therein by County is required or
helpful; provided, however, that, if required by Applicable Laws, such joinder
shall be at County's sole cost and expense and, if such joinder is helpful, but
not required by Applicable Laws, Concessionaire shall reimburse County for the
Actual Cost incurred by County in connection with such joinder or cooperative
efforts. Notwithstanding the foregoing, Concessionaire and County acknowledge
that the approvals given by County under this Agreement are approvals pursuant
to its authority under Section 25907 of the California Government Code; that
approvals given under this Agreement in no way release Concessionaire from
obtaining, at Concessionaire's expense, all permits, licenses and other
approvals required by law for the construction of improvements on the Premises
and operation and other use of such improvements on the Premises; and that
County's duty to cooperate and County's approvals under this Agreement do not in
any way modify or limit the exercise of County's governmental functions or
decisions as distinct from its proprietary functions pursuant to this Agreement.
5.8. Construction Schedule.
5.8.1. Substantial Commencement of Construction. It is a
condition of this Agreement that, except to the extent Concessionaire is
prevented from so doing by the events identified in subsection 5.8.3,
Concessionaire shall cause the Substantial Commencement of Construction
to have occurred in accordance with the Approved Final Plans,
Specifications and Costs no later than December 31, 1998 ("Anticipated
Commencement Date") and shall substantially complete same by May 1, 1999
("Anticipated Completion Date"). For the purposes of this Agreement,
"Substantial Commencement" or "Substantial Commencement of Construction"
shall mean that (1) all "Exterior Parking Lot Area and Asphalt Concrete
(AC) Beach Access" action items, as set forth in the Proposal for
Concession Agreement for the Renovation and Operation of a Restaurant at
Pacific Coast Highway at Sunset Boulevard, prepared by Concessionaire
and dated November 4, 1996, have been completed, and (2) all demolition
and excavation, including without limitation the removal of the existing
center steel structure on the north side of the Premises which
constitutes the covered patio area, has been completed in conformity
with the Approved Final Plans, Specifications and Costs. The Anticipated
Commencement Date and Anticipated Completion Date will only be extended
under the specific circumstances set forth in this Section 5.8, and
under no other circumstances. Notwithstanding the foregoing, the parties
hereto specifically agree that so long as Concessionaire is otherwise
diligently and in good faith attempting to satisfy such condition, and
as long as it would have been extremely unlikely that any other
restaurant operator could have caused the Improvements to be
Substantially Commenced and/or completed within such timeframe, then
Concessionaire will not be
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in breach of this subsection and not subject to termination of this
Agreement for its failure to achieve Substantial Commencement or
completion by the Anticipated Commencement Date or Anticipated
Completion Date, respectively.
5.8.2. After Substantial Commencement. Once construction of
the Improvements set forth in the Approved Final Plans, Specifications
and Costs has been Substantially Commenced, Concessionaire shall
thereafter use all due diligence to complete such construction by the
Anticipated Completion Date in substantial compliance with the Approved
Final Plans, Specifications and Costs. During this period, delays due to
fire, earthquake, flood, tornado, civil disturbance, war, organized
labor dispute or other unforeseeable event reasonably beyond the control
of Concessionaire ("Force Majeure") or a hidden condition relating to
the foundation of the Premises which is not known to Concessionaire as
of the Anticipated Commencement Date shall extend the time in which said
construction must be completed by the length of time of such delay,
although Concessionaire shall commence and complete the portions, if
any, of the Improvements not impacted by such delay within the timeframe
set forth in this Agreement. Concessionaire and Director shall discuss
and attempt to agree on the length of time of such delay. If they are
unable to agree within thirty (30) days after the event or occurrence
giving rise to Concessionaire's claim to an entitlement to a delay under
this subsection 5.8.2, the matter shall be arbitrated as set forth in
Section 16.15.
5.8.3. Extension of Dates. The Anticipated Commencement Date
and Anticipated Completion date shall be extended only for the reasons
set forth in this Section. In the event Concessionaire has not met the
condition in subsection 5.8.1, at the end of any extension granted
pursuant to this Section, this Agreement may, at County's option, be
terminated upon the end of such extension period.
5.8.3.1. Injunction by Third Party,
Nonregulatory Body. Except as provided in subsection 5.8.3.4,
the Anticipated Commencement Date shall be extended if the
commencement of construction of the Improvements has been
enjoined or restrained by a court action commenced by a
plaintiff other than County, the California Coastal
Commission or the City of Los Angeles acting in their
governmental capacities. In such case, the Anticipated
Commencement Date shall be extended until the earlier of (i)
the date the temporary restraining order ("TRO"), preliminary
injunction or any other judgment or final order prohibiting
construction is removed or (ii) the date the permanent
injunction becomes final and is no longer subject to appeal.
Whether or not a named party in such action, Concessionaire
shall diligently pursue the removal
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of any TRO, injunction, judgment or order so issued and shall
exhaust all commercially reasonable efforts to appeal such
TRO, injunction, judgment or order. In the event that a
permanent injunction prohibiting the construction of the
Improvements becomes final and is no longer subject to
appeal, then, at County's or Concessionaire's option, this
Agreement may be terminated without further liability, except
for liability previously accrued but theretofore unsatisfied.
5.8.3.2. Delay Caused by Unreasonable
County Acts. Subject to subsection 5.8.3.4, the Anticipated
Commencement Date shall be extended if Concessionaire has
been delayed in the obtaining of any permits or other
approvals necessary for the commencement of construction of
the Improvements set forth in the Approved Final Plans,
Specifications and Costs due to Unreasonable County Activity.
For the purposes of this Agreement, the following shall be
deemed to be "Unreasonable County Activity": County's failure
to support Concessionaire's proposals for the Improvements
described in the Approved Final Plans, Specifications and
Costs before any governmental agency; or, County's failure to
take such other actions in its proprietary capacity
reasonably requested by Concessionaire, at no cost or expense
to County, which are necessary for Concessionaire to proceed
with the permit/approval process or County's having taken
such actions without Concessionaire's consent which adversely
affected Concessionaire's rights and obligations hereunder,
which were unreasonable and which actually delayed the
Substantial Commencement of Construction and which action or
inaction occurred after the date hereof. Nothing contained in
this Section or this Agreement shall be construed as obliging
County to support proposals, issue permits, or otherwise act
in a manner inconsistent with County's regulatory powers. It
shall not be Unreasonable County Activity if County fails to
accelerate the County's customary regulatory permit/approval
process. An extension shall be available under this
subsection only if all of the following procedures have been
followed:
5.8.3.3. Within a reasonable time under
the circumstances, but in no event to exceed three (3) days
after Concessionaire's discovery of any alleged Unreasonable
County Activity, Concessionaire must notify Director in
writing of the specific conduct comprising the alleged
Unreasonable County Activity, and the next opportunity, if
any, for County to rectify such alleged conduct.
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5.8.3.4. Within seven (7) days following
receipt of the notice alleging Unreasonable County Activity,
Director shall meet with Concessionaire or its authorized
representative in order to determine whether Unreasonable
County Activity has occurred and, if so, how such
Unreasonable County Activity can be rectified and the
appropriate length of time of any extension pursuant to this
subsection. If Director determines that Unreasonable County
Activity has occurred and that County can and will take
rectifying action, then the extension shall equal the amount
of actual delay directly caused by the Unreasonable County
Activity. If Director determines that Unreasonable County
Activity has occurred, but that County cannot take rectifying
action (or if the proposed rectifying action will not produce
the results desired by Concessionaire), then Concessionaire
and Director shall establish the length of time of any
extension based on the actual delay of the permit/approval
process likely to be caused by the Unreasonable County
Activity.
5.8.3.5. If, within fourteen (14) days
following receipt of notice alleging Unreasonable County
Activity, Director and Concessionaire have not agreed in
writing as to whether or not an extension is appropriate, or
if appropriate, the length of any such extension, then the
matter shall be referred to binding arbitration in accordance
with Section 16.15 of this Agreement. The arbitrator shall be
instructed that, if Unreasonable County Activity has
occurred, then the standards set forth in subsection 5.8.3.4
will be applied to determine the length of any extension.
The period of any extension pursuant to
this subsection shall be equal to the period of the delay
caused by the Unreasonable County Activity.
5.8.3.6. Delay in Obtaining Permits or
Approvals. Except as otherwise provided in subsection
5.8.3.7, if as of the Anticipated Commencement Date (as it
may be extended as provided above), Concessionaire has not
obtained a permit or other approval necessary to the
commencement of construction from a regulatory body or agency
other than County, or such regulatory body has obtained an
injunction preventing the commencement of construction, and
such permits, approvals or the removal of such injunction
constitute(s) the major remaining impediment to the
commencement of construction, then the Anticipated
Commencement Date shall be extended to the date upon which
such permit is issued or injunction dissolved, provided
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that (1) Concessionaire has exhausted and continues to
exhaust all commercially reasonable efforts to obtain such
approval or permit or dissolution of such injunction, and (2)
such extended Anticipated Commencement Date shall not be
later than two (2) years after the commencement of the Term.
If the Anticipated Commencement Date is so extended, then the
Anticipated Completion Date shall be extended to the date
which is six (6) months after the Anticipated Commencement
Date, as extended. The extension provided by this subsection
shall be the only extension available in a situation where
such permits and/or approvals have not been issued or such
regulatory body or agency has obtained such an injunction.
5.8.3.7. Limitation of Extensions.
Notwithstanding the foregoing, Concessionaire shall not be
entitled to any extension unless Concessionaire had actually
been pursuing the process of obtaining all permits,
approvals, financing and other items necessary for the
Substantial Commencement of Construction with due diligence,
and unless all Improvements specified and plans and
specifications submitted by Concessionaire in connection with
any such permit, approval, financing or other item
substantially conformed to (i) the Approved Final Plans,
Specifications and Costs, and (ii) the land use laws and
regulations and the Local Coastal Plan existing as of the
date of execution of this Agreement by Concessionaire.
5.8.3.8. In the event that,
notwithstanding Concessionaire's diligent efforts, there is a
delay in the issuance of the necessary permits and approvals
beyond February 1, 1999, Director at his sole discretion may
relax or modify the requirements of Section 5.2 and
subsection 5.8.3 of this Agreement, taking into account,
among other things, the seasonal nature of Concessionaire's
intended use of the Premises.
5.8.3.9. Notwithstanding anything to the
contrary contained in this Agreement, no extension,
relaxation or modification of the requirement to
Substantially Commence construction of the Improvements by
the Anticipated Commencement Date and complete such
Improvements by the Anticipated Completion Date shall relieve
Concessionaire of its obligation to pay County the Annual
Minimum Rent, Percentage Rent and other amounts set forth in
Article 4 of this Agreement.
5.8.4. Failure to Reach Substantial Commencement.
Concessionaire agrees that the primary purpose for County having
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entered into this Agreement is to provide the public with the
opportunity to enjoy the Improvements described in the Approved Final
Plans, Specifications and Costs at the earliest practicable date.
Therefore, it is understood and agreed that the time periods and
requirements for extensions contained in Sections 5.3 through 5.8 shall
be strictly enforced and should Concessionaire, or any party claiming
through Concessionaire, fail to meet the conditions for Substantial
Commencement of Construction within the terms of Sections 5.3 through
5.8, then County shall have the option to reenter the Premises and
terminate this Agreement.
5.8.5. Termination of Agreement. Should Concessionaire, or
any party claiming through Concessionaire, fail to meet the conditions
for Substantial Commencement of Construction within the terms of and
time frames set forth in Sections 5.3 through 5.8, County may elect, in
its sole and absolute discretion, after five (5) days advance written
notice to Concessionaire, to reenter the Premises and terminate this
Agreement. If this Agreement is terminated under the provisions of this
subsection, Concessionaire shall as soon as is practicable remove any
property that Concessionaire may have placed upon the Premises, except
to the extent that County has elected to retain the improvements thereon
as provided in Article 2. Such election shall be delivered to
Concessionaire in writing at the time of the termination of this
Agreement. If Concessionaire fails to remove any such property required
to be removed within thirty (30) days after such termination, or such
longer time as is reasonable under the circumstances, not to exceed
sixty (60) days, at County's option, title thereto shall automatically
vest in County. Additionally, Concessionaire shall pay any and all rents
due through the time of any termination under the provisions of this
subsection 5.8.5.
5.9. Manner of Construction.
5.9.1. General Construction Standards. All construction,
alteration, modification or repairs permitted herein shall be accomplished by
Concessionaire with due diligence. Concessionaire shall take all reasonable
steps to minimize any damage, disruption or inconvenience caused by such work
and make adequate provisions for the safety and convenience of all persons
affected thereby. Concessionaire shall repair, at its own cost and expense, any
and all damage caused by such work, and shall restore the area upon which such
work is performed to a condition which is at least equal to or better than the
condition which existed before such work was commenced. Additionally,
Concessionaire shall pay or cause to be paid all costs and expenses associated
therewith and shall indemnify, defend and hold County harmless from and against
all damages, costs, losses or claims arising out of or in connection with the
performance of such work. Dust, noise and other effects of such work shall be
controlled using accepted measures customarily
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utilized in order to control such deleterious effects associated with
construction projects in well populated and developed areas of southern
California.
5.9.2. Utility Work. Any work performed by or on behalf of
Concessionaire or any occupant of the Premises to connect to, repair, relocate,
maintain or install any storm drain, sanitary sewer, water line, gas line,
telephone conduit, or any other utility service shall be performed in a manner
that minimizes interference with the provision of such services to the Premises
and other persons.
5.9.3. Construction Safeguards. Concessionaire shall erect
and properly maintain at all times, as required by the conditions and the
progress of work performed by or on behalf of Concessionaire, all necessary
safeguards for the protection of workers and the public.
5.9.4. Compliance with Construction Documents and Laws;
Issuance of Permits. All improvements on the Premises shall be completed in
substantial compliance with any construction documents approved by County and
also in compliance with all applicable local, state and federal laws and
regulations. Concessionaire shall have the sole responsibility for obtaining all
necessary permits and shall make application for such permits directly to the
person or governmental agency having jurisdiction thereover.
5.9.5. Notice to Director; Damage to County Improvements.
Concessionaire further agrees to keep Director apprised of the progress of the
work to the end that Director may timely inspect the Premises to assure proper
safeguarding of any County-owned improvements existing on or around the
Premises, including but not limited to seawalls, underground conduits and
utility lines. If any such County-owned improvement is damaged in connection
with said construction activity, Concessionaire agrees to repair such damage
immediately at no cost or expense to County or, in the event that Concessionaire
fails to effectuate such repair within five (5) business days after written
notice from County (or such longer period as may be reasonably required to
complete such repair so long as Concessionaire commences such repair within five
(5) business days and thereafter diligently prosecutes same to completion),
County may enter upon the Premises to make such repairs, the Actual Cost of
which shall be paid by Concessionaire within two (2) days after demand by
County.
5.9.6. Rights of Access. Representatives of the Department of
Beaches and Harbors of the County shall, upon reasonable notice and at
reasonable times, have the right of reasonable access to the Premises and the
improvements thereon without charges or fees, for the purpose of ascertaining
compliance with the terms and conditions of this Agreement, including but not
limited to the inspection of the construction work being performed. Such access
shall be reasonably calculated to minimize interference with Concessionaire's
construction and/or operations. In the event of any
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emergency which is life-threatening or which involves the threat of potential
substantial damage, County shall have the right to enter the Premises
immediately and without notice to Concessionaire.
5.9.7. Notice of Completion. Upon completion of the
Improvements set forth in the Approved Final Plans, Specifications and Costs,
Concessionaire shall file or cause to be filed in the Official Records of the
County of Los Angeles a Notice of Completion (the "Notice of Completion") with
respect to the improvements and Concessionaire shall deliver to County, at no
cost to County, two (2) sets of conoflex or mylar final as-built plans and
specifications of the Improvements.
5.10. Use of Plans. Contracts between Concessionaire and any architect,
design professional or licensed contractor in connection with the construction,
alteration or modification of improvements on the Premises shall provide, in
form and content reasonably satisfactory to County, for the assignment thereof
to County as security to County for Concessionaire's performance hereunder, and
County shall be furnished with a copy of any such contract, together with the
further agreement of the parties thereto, that if this Agreement is terminated
by County due to Concessionaire's default, County may, at its election, use any
plans and specifications created by such architect, design professional or
contractor in connection with the contract, upon the payment of any sums due to
any party thereto. County's right to elect to use plans and specifications as
described above shall not include the unauthorized right to use any trade marks,
trade names or logos of Concessionaire or any such architect, design
professional or contractor.
5.11. Additional Construction. Concessionaire may, at its own expense,
make or construct, or cause to be made or constructed, improvements in addition
to those required by this Article 5 as well as additional alterations,
modifications or changes in the Premises; provided however, that such
improvements, alterations, modifications or changes are within the scope of
permissible uses set forth in Article 3 and, subject to the last grammatical
paragraph of this Section 5.11, have been approved in writing in advance by
Director. Director may refuse permission for the construction of any proposed
improvement, addition, alteration, modification or change, and such decision, if
reasonable, will be final and binding upon Concessionaire. Concessionaire
acknowledges that such proposed improvement, addition, alteration, modification
or change will also be subject to other governmental requirements and
conditions, including those of the State of California Department of Parks and
Recreation, the California Coastal Commission and other governmental authorities
that may have jurisdiction.
If, where such approval is required, Director approves said
proposed construction, Concessionaire shall submit plans and specifications to
Director and may commence construction upon receipt of written approval thereof
from Director, which shall not be unreasonably withheld, conditioned or
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delayed and upon compliance with such terms and conditions relating to the
construction as Director may reasonably impose.
Notwithstanding the foregoing, Concessionaire shall not be
required to seek or obtain the approval of Director where all of the following
conditions are met: the total cost of the project is less than Twenty Five
Thousand and 00/100 Dollars ($25,000); none of the proposed construction
activity is structural in nature; and, none of the proposed construction,
additions, modifications or changes affect or are visible from the exterior of
the Premises; provided, however, that whenever Concessionaire makes or
constructs any improvements in the Premises it shall (i) give written notice
thereof (including a description of the work to be done and the permits obtained
for such work) and (ii) furnish a copy of "as-built" plans upon completion of
such work to County.
5.12. Protection of County, State and City. Nothing in this Agreement
shall be construed as constituting the consent of County, express or implied, to
the performance of any labor or the furnishing of any materials or any specific
improvements alterations or repairs to the Premises of any part thereof by any
contractor, subcontractor, laborer or materialman, nor as giving Concessionaire
or any other person any right, power or authority to act as agent of or to
contract for, or permit the rendering of, any services, or the furnishing of any
materials, in any such manner as would give rise to the filing of mechanics'
liens or other claims against the Premises, County, State or City.
5.12.1. Posting Notices. County shall have the right at all
reasonable times and places to post and, as appropriate, keep posted, on
the Premises any notices which County may deem necessary for the
protection of County, State, City, the Premises and the improvements
thereon from mechanics' liens or other claims. Concessionaire shall give
County at least ten (10) days prior written notice of the commencement
of any work to be done on the Premises, in order to enable County timely
to post such notices.
5.12.2. Prompt Payment. Concessionaire shall make, or cause
to be made, prompt payment of all monies due and owing to all persons
doing any work or furnishing any materials or supplies to Concessionaire
or any of its contractors or subcontractors in connection with the
Premises and the improvements thereon.
5.12.3. Liens; Indemnity. Subject to Concessionaire's rights
to contest the same prior to payment, Concessionaire shall keep the
Premises and any improvements thereon free and clear of all mechanics'
liens and other liens arising out of or in connection with work done for
Concessionaire and/or any parties claiming through Concessionaire.
Concessionaire agrees to and shall indemnify, defend and hold County,
State and City harmless from and against any claim, liability, loss,
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damages, costs, expenses, attorneys' fees incurred in defending and all
other expenses on account of claims of lien(s) of laborers or
materialmen or others for work performed or materials or supplies
furnished to Concessionaire or persons claiming under it.
In the event any lien is recorded, Concessionaire shall,
within five (5) business days after demand, furnish the bond described in
California Civil Code Section 3143, or successor statute, which results in the
removal of such lien from the Premises, together with any other evidence
requested by County to evidence that such claim will be paid, removed or
discharged as a claim against the Premises and/or County.
5.13. Construction Schedule. Concessionaire shall have provided County
with a construction schedule which will result in the completion of the
Improvements, as set forth in the Approved Final Plans, Specifications and
Costs, on or before the Anticipated Completion Date, as such date may be
extended as provided in this Article 5.
6. QUALITY AND PRICES.
6.1. Quality of Restaurant Operations. Service to the public, with goods
and merchandise of the best quality and at reasonable charges, is of prime
concern to County and is considered a part of the consideration for this
Agreement. Therefore, Concessionaire agrees to operate and manage the services
and facilities offered in a first-class manner, during the entire Term of this
Agreement. Concessionaire shall and will furnish and dispense foods and
beverages of the best quality and shall and will maintain a high standard of
service at least equal to those prevailing in the Los Angeles community for
similar products and services, and without discrimination. Concessionaire shall
provide food in accordance with its "Response to Evaluation Committee - February
24, 1997" and shall have as its Executive Chef a graduate of the Culinary
Institute of America or similar institution or a chef having substantially
similar training and work experience (collectively, the foregoing quality and
first class operation requirements of this Section 6.1 shall be referred to
herein as the "Quality Standards"). Concessionaire's performance in meeting the
Quality Standards shall be evaluated by a standard of commercial reasonableness
with reference to the operation of a high revenue-generating facility at a
distinctive coastal landmark destination. The parties shall apply a common sense
and commercially reasonable standard to the test of a first class operation,
fresh food and high quality foods.
6.2. Director's Right to Review/Approve Quality. At all times during the
Term, Director shall have the right to review and approve the quality of
Concessionaire's restaurant operations and Concessionaire's compliance with the
Quality Standards. Concessionaire agrees to provide access to the Premises and
such other information as may be reasonably requested by Director in order to
conduct such review. In the event that Director determines,
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in its reasonable judgment, that the restaurant operations, including without
limitation, food quality and value, service, other amenities, maintenance and
cleanliness are not being conducted in compliance with the Quality Standards, or
are otherwise not consistent with the operation of a first class restaurant
facility, then Director shall provide written notice of such determination to
Concessionaire with a general description of the reasons for such determination.
Within thirty (30) days after receipt of such notice, Concessionaire shall
provide County with evidence satisfactory to County that the items identified in
County's notice have been remedied and the restaurant operations are otherwise
in compliance with the Quality Standards. Any failure by Concessionaire to
provide such evidence shall constitute a breach of Concessionaire's obligations
hereunder. Any disagreement regarding this Section 6.2 not resolved by the
parties within thirty (30) days after written notice from either party that such
disagreement exists shall be submitted to arbitration as set forth in Section
16.15 of this Agreement.
6.3. Limitation on Prices to be Charged. Concessionaire shall at
all times maintain a complete list or schedule of the prices charged for all
goods or services, or combinations thereof, supplied to the public on or from
the Premises hereby demised, whether the same are supplied by Concessionaire or
by its Sublessees, assignees, concessionaires, permittees or licensees.
Said prices shall be fair and reasonable for a facility
complying with the Quality Standards, based upon the following considerations:
that the Premises herein demised is intended to serve a public use and to
provide needed facilities to the public at fair and reasonable cost; and, that
Concessionaire is entitled to a fair and reasonable return upon its investment
pursuant to this Agreement.
Concessionaire shall charge the general public no more for
parking than County charges for the same period in its other lots serving Will
Rogers State Beach Park.
6.4. Director's Right to Review/Modify Price. In the event that Director
notifies Concessionaire that any of said prices are not fair and reasonable,
Concessionaire shall have the right to confer with Director and to justify said
prices. If, after reasonable conference and consultation, Director shall
determine that any of said prices are not fair and reasonable, the same shall be
modified by Concessionaire or its Sublessees, assignees, concessionaires,
permittees or licensees, as directed. If Concessionaire disagrees with
Director's determination, Concessionaire may submit the issue to arbitration
pursuant to Section 16.15 hereof (as modified by this Section 6.4); if the
arbitrator's determination of the fair and reasonable price for the item(s) in
dispute is a price lower than the amount then charged by Concessionaire, then
within fifteen (15) days after the arbitrator issues his or her decision,
Concessionaire shall pay County an amount equal to the difference between (i)
the Gross Receipts collected by Concessionaire in connection with the sale of
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the item whose price was in dispute, during the period beginning upon the date
of Director's determination that said price was not fair and reasonable and
expiring upon the date that the price was reduced based on the arbitrator's
decision, and (ii) the Gross Receipts that Concessionaire would have collected
in connection with the sale of said item if, during the period described above,
it had charged the price that the arbitrator determined was fair and reasonable
for said item. In addition, Concessionaire shall reimburse County for any costs
incurred by County in connection with its retention of expert witnesses for the
arbitration proceeding. The prevailing party in such arbitration shall be
entitled to recover reasonable attorneys' fees from the other party. Following
the issuance of the arbitrator's decision, Concessionaire shall not raise the
price (as determined by the arbitrator) for said item for a period of no less
than six (6) months.
7. CONDEMNATION.
7.1. Definitions.
7.1.1. Condemnation. "Condemnation" means (1) the exercise by
any governmental entity of the power of eminent domain, whether by legal
proceedings or otherwise, and (2) a voluntary sale or transfer to any
Condemnor (as hereafter defined), either under threat of Condemnation or
while legal proceedings for Condemnation are pending.
7.1.2. Date of Taking. "Date of Taking" means the date the
Condemnor has the right to possession of the Premises being
condemned.
7.1.3. Award. "Award" means all compensation, sums or
anything of value awarded, paid or received from a total or partial
Condemnation.
7.1.4. Condemnor. "Condemnor" means any public or quasi-
public authority, or private corporation or individual, having the power
of eminent domain.
7.2. Parties' Rights and Obligations to be Governed by Agreement. If,
during the Term of this Agreement, there is any taking of all or any part of the
Premises, any improvements on the Premises or any interest in this Agreement by
Condemnation, the rights and obligations of the parties shall be determined
pursuant to the provisions of this Article 7.
7.3. Total Taking. If the Premises are totally taken by
Condemnation, this Agreement shall terminate on the Date of Taking.
7.4. Effect of Partial Taking. If a portion of the Premises or the
improvements thereon are taken by Condemnation, this Agreement shall remain
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in effect, except that Concessionaire may elect to terminate this Agreement if
the remaining portion of the Premises are rendered unsuitable (as defined
herein) for Concessionaire's continued use for the purposes contemplated by this
Agreement. The remaining portion of the Premises shall be deemed unsuitable for
Concessionaire's continued use if, following a reasonable amount of
reconstruction, Concessionaire's business on the Premises could not be operated
at an economically feasible level. Concessionaire must exercise its right to
terminate by giving County written notice of its election within ninety (90)
days after the nature and extent of the taking have been finally determined.
Such notice shall also specify the date of termination, which shall not be prior
to the Date of Taking. Failure to properly exercise the election provided for in
this Section 7.4 will result in this Agreement's continuing in full force and
effect, except that Annual Minimum Rent shall be abated pursuant to Section 7.5,
below.
In the event that Concessionaire does not elect to terminate
this Agreement as provided above, then Concessionaire, whether or not the Awards
or payments, if any, on account of such taking shall be sufficient for the
purpose, shall, at its sole cost and expense, within a reasonable period of
time, commence and complete restoration of the remainder of the Premises as
nearly as possible to its value, condition and character immediately prior to
such taking, taking into account, however, any necessary reduction in size
resulting from the taking; provided, however, that in case of a taking for
temporary use, Concessionaire shall not be required to effect restoration until
such taking is terminated.
7.5. Effect of Partial Taking on Rent. If any portion of the Premises is
taken by Condemnation and this Agreement remains in full force and effect as to
the portion of the Premises not so taken (a "Partial Taking"), the Annual
Minimum Rent shall be reduced as of the date of the Partial Taking to an amount
equal to the Annual Minimum Rent multiplied by the ratio of the fair market
value of the portion of the Premises not so taken to the fair market value of
the entire Premises immediately prior to the Partial Taking. Upon the next
Annual Minimum Rental adjustment date, as described in Section 4.3 above, if
any, for the purposes of adjusting the Annual Minimum Rent, all Annual Minimum
Rent and Percentage Rent paid by Concessionaire to County prior to the date of
the Partial Taking shall be adjusted, for the purposes of this calculation only,
to the proportion that the fair market value of the portion of the Premises
taken bears to the fair market value of the entire Premises immediately prior to
the taking. Any determinations of fair market value made pursuant to this
Section 7.5 shall be predicated upon the "income approach" or "income
capitalization approach" to property valuation, as defined in The Dictionary of
Real Estate Appraisal and/or The Appraisal of Real Estate, published by the
Appraisal Institute or any successor organization (the "Income Approach"). All
other obligations of Concessionaire under this Agreement, including but not
limited to the obligation to pay Percentage Rent, shall remain in full force and
effect.
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7.6. Waiver of Code of Civil Procedure Section 1265.130. Each party
waives the provisions of Code of Civil Procedure Section 1265.130 allowing
either party to petition the Superior Court to terminate this Agreement in the
event of a Partial Taking of the Premises.
7.7. Payment of Award. Awards and other payments on account of a taking,
less, costs, fees and expenses incurred in the collection thereof ("Net Awards
and Payments"), shall be applied as follows:
7.8. Partial Taking Without Termination. Net Awards and Payments
received on account of a Taking other than a total Taking or a Partial Taking
which results in termination hereof or a taking for temporary use shall be held
by County and shall be paid out to Concessionaire or Concessionaire's
designee(s), in progress payments, to pay the cost of restoration of the
Premises. The balance, if any, shall be divided between County and
Concessionaire pro rata, as nearly as practicable, based upon (1) the then value
of County's interest in the Premises (including its interest hereunder) and (2)
the then value of Concessionaire's interest in the remainder of the Term of this
Agreement including Bonus Value (for such purposes, the Term of this Agreement
shall not be deemed to have terminated even if Concessionaire so elects under
Section 7.4). Any determinations of fair market value made pursuant to this
Section 7.5 shall be predicated upon the Income Approach.
In case of a taking other than a total taking or a taking for
temporary use, Concessionaire shall furnish to County evidence satisfactory to
County of the total cost of the restoration required by Section 7.4.
7.8.1. Taking For Temporary Use. Net Awards and Payments
received on account of a taking for temporary use shall be paid to
Concessionaire; provided, however, that if any portion of any such award
or payment is paid by the Condemnor by reason of any damage to or
destruction of the improvements, such portion shall be held and applied
as provided in the first sentence of Section 7.8, above.
7.8.2. Total Taking and Partial Taking with Termination. Net
Awards and Payments received on account of a total taking or a Partial
Taking which results in the termination of this Agreement shall be
allocated as follows:
First: There shall be paid to County an amount equal to the
present value of all Annual Minimum Rent, Percentage Rent and other sums
which would become due until the end of the Term of this Agreement if it
were not for the taking less, in the event of a Partial Taking, an
amount equal to the present value of the fair rental value of the
portion of the Premises reverting to County from the date of the
termination of this Agreement to October 30, 2016;
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Second: There shall be paid to the Encumbrance Holder, if
any, an amount equal to the sum of any unpaid principal amount of any
Encumbrance secured by the Premises plus costs, expenses, and other sums
due under the loan documents, if any, and any interest accrued thereon,
all as of the date on which such payment is made; and
Third: There shall be paid to Concessionaire an amount equal
to the value of Concessionaire's interest in the remainder of the Term
of this Agreement, including the value of the ownership interest in and
use of the improvements constructed on the Premises, determined as of
the date of such taking, less payments made under paragraph Second
above. For such purposes, the Term of this Agreement shall not be deemed
to have terminated even if Concessionaire so elects under Section 7.4.
Concessionaire may also be entitled to compensation based upon the
difference, if any, between the then fair market rent of the Premises
and the rent actually being paid pursuant to this Agreement ("Bonus
Value").
Fourth: The balance shall be paid to County.
7.8.3. Disputes. Any dispute under Article 7 concerning the
fair market value of the Premises or any portion thereof, computation of
present value or the determination of the amount of Annual Minimum Rent
or Percentage Rent or other sums which would have become due over the
Term of this Agreement which are not resolved by the parties, shall be
submitted to arbitration pursuant to Section 16.15 of this Agreement.
Such valuations, computations and determinations of value shall be made
utilizing the Income Approach.
8. SECURITY DEPOSIT.
County hereby acknowledges receipt from Concessionaire of an
irrevocable letter of credit, in form and content satisfactory to County, in the
amount of Two Million and 00/100 Dollars ($2,000,000), securing Concessionaire's
obligations pursuant to this Agreement. This sum may be drawn on by County, in
whole or in part, to cover delinquent rent not paid by Concessionaire within any
applicable notice and cure period and any other Events of Default of
Concessionaire under this Agreement, and shall be applied at the discretion of
County.
8.1. Decrease in Deposit. Beginning on the third anniversary of the
commencement of the Term, and on each subsequent anniversary date, the amount of
the irrevocable letter of credit may be decreased by Concessionaire if
Concessionaire has satisfied both of the following conditions: (1)
Concessionaire has completed construction of the improvements in substantial
conformity with the Approved Final Plans, Specifications and Costs and the
Premises, as improved, are open to the public; and, (2) Concessionaire has
provided County with audited financial statements certified by a Certified
Public
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Accountant, together with any additional information reasonably requested by
County, evidencing that Concessionaire has maintained a net worth in excess of
Three Million and 00/100 Dollars ($3,000,000.00) for the most recent twelve
consecutive months. If Concessionaire has satisfied both of the foregoing
conditions, the amount of the letter of credit may be reduced to an amount which
represents three (3) times the Monthly Minimum Rent then in effect. If, at any
time after the amount of the letter of credit has been reduced as provided in
this Section 8.1, Concessionaire's net worth falls below Three Million and
00/100 Dollars ($3,000,000.00) then, within ten (10) days after it receives
notice of such fact, Concessionaire shall reinstate the letter of credit to the
amount of Two Million and 00/100 Dollars ($2,000,000). Failure to so reinstate
the letter of credit shall constitute an Event of Default hereunder. For
purposes of computing Concessionaire's net worth hereunder, value may be
attributed to the undepreciated amount of the Improvements, inventory, furniture
and fixtures at the Premises, but no value shall be attributed to the value of
the name "Gladstones" or to "goodwill".
8.2. Replacement. In the event that some or all of the letter of credit
described in Section 8.1 is drawn against by County and applied against any
delinquent rent not paid by Concessionaire within any applicable notice or cure
period or other Events of Default of Concessionaire hereunder, Concessionaire
shall, within five (5) days after receipt of written notice of the amount so
applied and the reasons for such application, cause the issuer of the letter of
credit to reinstate the letter of credit to its full face amount, so that at all
times that this Agreement is in effect (other than between the date of the draw
by County and the expiration of said five (5) day period), the required full
face amount of the letter of credit shall be available to County. Failure to
maintain or replenish the letter of credit, if not cured within the time period
set forth in subsection 14.1.3, shall constitute an Event of Default hereunder.
9. INDEMNITY.
Except to the extent caused by the gross negligence or
willful misconduct of any such indemnitee, Concessionaire shall at all times
relieve, defend, indemnify, protect, and save harmless County, State, City and
their respective Boards, officers, agents, employees and volunteers from any and
all claims, costs, losses, expenses or liability, including expenses and
reasonable attorneys' fees incurred in defending against the same by an attorney
selected by Concessionaire and reasonably satisfactory to County, for the death
of or injury to persons or damage to property, including property owned or
controlled by or in the possession of County, State, City or any of their Board,
officers, agents, employees or volunteers, to the extent that such arises from
or is caused by (a) the operation, maintenance, use, or occupation of the
Premises by Concessionaire or its Sublessees, (b) the acts, omissions, or
negligence of Concessionaire, its agents, officers, employees, permittees or
Sublessees, or (c) the failure of Concessionaire to observe and abide by any of
the terms or conditions of this Agreement or any applicable law, ordinance,
rule, or
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regulation. The obligation of Concessionaire to so relieve, indemnify, protect,
and save harmless County, State, City and each of their respective Boards,
officers, agents, employees and volunteers, shall continue during any periods of
occupancy or of holding over by Concessionaire, its agents, officers, employees,
or permittees, beyond the expiration of the Term or other termination of this
Agreement.
10. INSURANCE.
Concessionaire shall maintain at all times during the Term of
this Agreement policies of liability, worker's compensation and property
insurance from companies authorized to transact business in the State of
California by the Insurance Commissioner thereof.
10.1. Property Insurance. The policy of property insurance shall provide
fire insurance with extended coverage, insuring against loss or damage by fire,
lightning and the additional perils included in the standard extended coverage
endorsement, as well as those included in the "all risk" policy, as well as
burglary and theft insurance, on the structures, improvements, inventory, trade
fixtures, furnishings and equipment to be used by Concessionaire on the
Premises. Such insurance shall be in an amount sufficiently adequate to enable
the resumption of the concession operation by Concessionaire following the
occurrence of any of the risks covered by said insurance. The policy shall
provide standard fire and extended coverage insurance, and shall cover
vandalism, malicious mischief, and those risks ordinarily defined in "All-Risk
coverage." The policy shall also contain "business interruption", "rental
interruption" and/or continuous operation coverage payable to County equal to
one (1) year's Annual Minimum Rent. During periods of substantial construction
on the Premises, Concessionaire or Concessionaire's contractor will provide
completed value builder's risk insurance reasonably satisfactory to County,
together with (i) broad form liability and breach of warranty coverages by
endorsement; and (ii) non owned, non hired automotive liability coverage with a
policy limit of Two Million and 00/100 Dollars ($2,000,000). Such insurance
shall be in an amount equal to one hundred percent (100%) of the full
replacement value of said buildings, structures, equipment, and improvements,
with a deductible not greater than five percent (5%) of such replacement value)
(as such replacement value is determined by such insurance company and approved
by County's risk manager), and shall be placed and maintained with such
insurance company or companies and in such form as shall be reasonably
satisfactory to County.
10.2. Form of Policy. All such insurance policies, along with their
endorsements, shall name the Major Sublessee, if any, and State, City, County
and its respective Board of Supervisors and members thereof, and County's,
State's and City's respective officers, agents, employees and volunteers, as
additional insureds and any Encumbrance Holder as loss payee. Upon the
occurrence of any loss, the proceeds of such insurance shall be held by County
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in trust for the named insureds as their interests appear, and shall be
disbursed by County on a monthly basis to pay for work completed in accordance
with then-prevailing industry custom and practice. In the event of such loss
Concessionaire shall be obligated to rebuild or replace the destroyed or damaged
buildings, structures, equipment, and improvements, in accordance with the
procedures set forth hereinabove for the initial construction, except as
otherwise provided in Article 11 hereof. Any surplus or proceeds after said
rebuilding or replacement shall be distributed to Concessionaire.
Subject to the immediately following grammatical paragraph, a
duplicate policy or policies evidencing such insurance coverage, in such form as
shall be reasonably acceptable to County, shall be filed with Director prior to
the commencement of construction of such improvements, and such policy or
policies shall provide that such insurance coverage will not be cancelled or
reduced without at least thirty (30) days prior written notice to Director or
ten (10) days in case of cancellation for failure to pay the premium. At least
ten (10) days prior to the expiration of such policy, a certificate showing that
such insurance coverage has been renewed shall be filed with Director.
In lieu of submitting a copy of the policy or policies
evidencing the above insurance, Concessionaire may submit in a form reasonably
acceptable to County a certificate of insurance.
Any such policy may be issued in the form of a blanket policy
insuring other properties, in form, amount and content reasonably satisfactory
to County, taking into account any additional protection that County reasonably
deems prudent to provide for losses related to such other properties.
10.3. Liability Insurance. Concessionaire shall maintain in full force
and effect during the Term of this Agreement, comprehensive general liability
insurance together with premises operations, products, completed operations and
contractual liability coverages, including liquor liability, with combined
bodily injury and property damage liability limits of not less than One Million
Dollars ($1,000,000) per occurrence and Three Million Dollars ($3,000,000)
aggregate coverage; and Concessionaire agrees that State, City, County and its
respective Board of Supervisors and members thereof, and County's, State's and
City's respective officers, agents, employees and volunteers, shall be named as
additional insureds under such liability insurance policy or policies.
Subject to Concessionaire's option to provide a certificate
of insurance as set forth below, a duplicate policy or policies evidencing such
insurance coverage shall be filed with Director at least ten (10) days prior to
the commencement of the Term, and said policy shall provide that such insurance
coverage shall not be cancelled or reduced without at least thirty (30) days
prior written notice to Director or ten (10) days in case of cancellation for
failure to pay the premium. At least thirty (30) days prior to the expiration of
any such
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policy, a policy showing that such insurance coverage has been renewed or
extended shall be filed with Director.
The amounts of liability insurance required by this Section
required shall be subject to renegotiation on the tenth (10th) anniversary of
the commencement of the Term. If County and Concessionaire cannot agree upon the
amount of insurance by the sixtieth (60th) day preceding the renegotiation
anniversary, the matter shall be resolved by binding arbitration in accordance
with Section 16.15. In no event shall the amounts of liability insurance be
decreased as a result of such renegotiation or arbitration. Following such
renegotiation or arbitration, the parties shall execute an amendment to this
Agreement setting forth the renegotiated insurance provisions or the arbitration
judgment, as appropriate.
In lieu of submitting a copy of the policy or policies
evidencing the above insurance, Concessionaire may submit in a form reasonably
acceptable to County a certificate of insurance.
Any such policy may be issued in the form of a blanket policy
insuring other properties, in form, amount and content reasonably satisfactory
to County, taking into account any additional protection that County reasonably
deems prudent to provide for losses related to such other properties.
10.4. Worker's Compensation Insurance. Concessionaire shall
maintain in force during the Term of this Agreement, in an amount and with
coverage in compliance with applicable California law or, if no such law exists,
then reasonably satisfactory to Director, Worker's Compensation Insurance.
10.5. Required Provisions. Concessionaire's insurance policies
required by this Article 10 shall be for a term of not less than one year and
shall additionally provide:
(a) that the full amount of any losses to the extent
insurance proceeds are available shall be payable to additional insureds
notwithstanding any act, omission or negligence of Concessionaire which
might otherwise result in forfeiture of such insurance;
(b) in any property insurance policy, a waiver of all right
of subrogation against State, City, County and its respective Board of
Supervisors and members thereof, and County's, State's and City's
respective officers, agents, employees and volunteers with respect to
losses payable under such policies;
(c) in any property insurance policy, that such policies
shall not be invalidated should the insured waive, prior to a loss,
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any or all right of recovery against any party for losses covered by
such policies;
(d) that the policies shall provide coverage on a "primary
basis" with respect to the additional insureds, regardless of any other
insurance or self-insurance that such additional insureds may elect to
purchase or maintain;
(e) that losses, if any, shall be adjusted with and payable
to Concessionaire, County and Encumbrance Holders, if any, pursuant to a
standard mortgagee clause;
(f) that such policies shall not be suspended, voided,
cancelled, reduced in coverage or in limits or materially changed
without at least thirty (30) days prior written notice to County and all
Encumbrance Holders or ten (10) days in case of cancellation for failure
to pay the premium;
(g) that the insurance shall apply separately to each insured
against whom a claim is made, except with respect to the overall limits
of said insurer's liability; and,
(h) that such policies shall contain no special limitations
on the scope of protection afforded to the additional insureds, and no
failure to comply with the reporting provisions of such policies shall
affect the coverage afforded to such additional insureds.
10.6. Failure to Procure Insurance. Failure of Concessionaire to
procure or renew the herein required insurance shall, if not cured within two
(2) days after written notice from County, constitute a default hereunder. In
the event of such failure, in addition to the other rights and remedies provided
hereunder, County may, at its discretion, procure or renew such insurance and
pay any and all premiums in connection therewith and all monies so paid by
County shall be repaid by Concessionaire, with interest thereon at ten percent
(10%) per annum, to County upon demand.
11. MAINTENANCE AND REPAIR; DAMAGE AND DESTRUCTION.
11.1. Concessionaire's Maintenance and Repair Obligations. At
Concessionaire's sole cost and expense, but subject to the terms and conditions
of this Agreement, Concessionaire shall keep and maintain all equipment,
structures, improvements or physical structures of any kind which may exist or
be erected, installed or made on the Premises (including the asphalt portion of
the ramp from the parking lot to the beach and excepting any bike path or any
cellular antenna referred to in Section 11.8) in good and substantial repair and
condition, including without limitation capital improvements and structural and
roof repairs and replacement, and shall make all necessary repairs and
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alterations and replacements thereto, except as otherwise provided in this
Article 11. Concessionaire shall undertake such repairs, alterations or
replacements in compliance with any and all regulations, laws or ordinances of
the State of California, County of Los Angeles, City of Los Angeles, California
Coastal Commission or other governmental body, which may be applicable, or as
reasonably required in writing by Director to Concessionaire incident to the
provisions of this Article 11. Concessionaire shall maintain all improvements on
the Premises (including the asphalt portion of the ramp from the parking lot to
the beach and excepting any bike path or any cellular antenna referred to in
Section 11.8) in a safe, clean, wholesome and sanitary condition, to the
reasonable satisfaction of Director and in compliance with all applicable laws,
rules and regulations of County, the City of Los Angeles, the State of
California, the California Coastal Commission and all other applicable
governmental bodies. Concessionaire specifically agrees to provide proper
containers for trash and garbage which are screened from public view, to keep
the Usable Premises free and clear of rubbish and litter and to keep the entire
Premises, both land and water areas thereof, free and clear of rubbish and
litter originating from the Usable Premises. County in its proprietary capacity
shall have the right to enter upon and inspect the Premises at any reasonable
time to inspect the Premises for cleanliness, safety and compliance with this
Section 11.1, as long as such entrance is not done in a manner which would
unreasonably interfere with the operation of the restaurant. Concessionaire's
obligation to maintain and restore is absolute, and is not in any way dependent
upon the existence or availability of insurance proceeds, except as otherwise
provided in this Article 11. Restoration shall take place in accordance with the
provisions of Sections 5.3 to 5.8, inclusive.
11.2. Option to Terminate for Uninsured Casualty. Concessionaire
shall have the option to terminate this Agreement and be relieved of the
obligation to restore the improvements on the Premises where the damage or
destruction resulted from a cause not required to be insured against by this
Agreement (an "Uninsured Loss"), and where all of the following occur:
11.2.1. No more than fifty (50) days following the Uninsured
Loss, Concessionaire shall notify County of its election to terminate
this Agreement; to be effective, this notice must include both a copy of
Concessionaire's notification to the Encumbrance Holder, if any, of
Concessionaire's intention to exercise this option to terminate and
Concessionaire's certification under penalty of perjury that
Concessionaire has delivered or mailed such notification to the
Encumbrance Holder in accordance with this subsection 11.2.1. County
shall be entitled to rely upon the foregoing notice and certification as
conclusive evidence that Concessionaire has notified the Encumbrance
Holder regarding Concessionaire's desire to terminate this Agreement.
11.2.2. No more than thirty (30) days following the giving of
the notice required by subsection 11.2.1 or such longer time as may be
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reasonable under the circumstances, Concessionaire shall, at
Concessionaire's expense: remove all debris and other rubble from the
Premises; secure the Premises against trespassers; and, at County's
election, remove all remaining improvements on the Premises.
11.2.3. No more than sixty (60) days following the loss,
Concessionaire delivers to County a quitclaim deed to the Premises in
recordable form, or such other documentation as may be reasonably
requested by County or any title company on behalf of County,
terminating Concessionaire's interest in the Premises and reconveying
such interest to County free and clear of any and all Encumbrances and
Subleases.
11.2.4. Within ten (10) days following the County's receipt
of the notice referred to in subsection 11.2.1, County has not received
both written notice from the Encumbrance Holder, if any, objecting to
such termination and an agreement containing an effective assignment of
Concessionaire's interest in this Agreement to such Encumbrance Holder
whereby such Encumbrance Holder expressly assumes and agrees to be bound
by and perform all of Concessionaire's obligations under this Agreement.
11.3. No Option to Terminate for Insured Casualty. Concessionaire
shall have no option to terminate this Agreement or otherwise be relieved of its
obligation to restore the improvements on the Premises where the damage or
destruction results from a cause required to be insured against by this
Agreement.
11.4. No County Obligation to Make Repairs. Except as specifically
provided in this Agreement, County shall have no obligation whatsoever to make
any repairs or perform any maintenance on the Premises. Without limiting the
foregoing:
11.4.1. Sand Replenishment. County shall have no obligation
to replenish any sand on or about the Premises or the nearby or adjacent
beaches.
11.4.2. Jetty. County shall have no responsibility to build
or maintain any jetty or similar structure or device on, or in the
vicinity of, the Premises.
11.4.3. Rip/Rap. County shall have no responsibility to
construct a sea wall or rip-rap to protect the Premises from ocean
action, wind, storm or wave damage. Concessionaire specifically
acknowledges that it has agreed to accept the Premises "as-is" and bears
the risk, among others, of damage or wear and tear to the foundation of
the Premises; provided, however, and notwithstanding the foregoing,
County
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shall maintain and repair the existing rip-rap that protects the Parking
Lot Parcel, as defined in Exhibit A hereto; provided further that County
shall be the sole determinant of the adequacy of such maintenance and
repair.
11.5. Repairs Not Performed by Concessionaire. If Concessionaire fails
to make any repairs or replacements as required, Director may notify
Concessionaire of said failure in writing, and should Concessionaire fail to
cure said failure and make repairs or replacements within a reasonable time as
established by Director, County may make such repairs or replacements and the
cost thereof, including, but not limited to, the cost of labor, overhead,
materials and equipment, shall be charged against Concessionaire and shall be
paid to County by Concessionaire immediately upon demand. Any failure to make
such payment by Concessionaire within two (2) business days after County's
demand therefor shall constitute a default hereunder.
11.6. Other Repairs. Although having no obligation to do so, County may,
at its own cost and at its sole discretion, perform or permit others to perform
any necessary dredging, filling, grading, slope protecting, construction of sea
walls, or repair of water system, sewer facilities, roads, or other County
facilities on or about the Premises. Such work may include but not be limited to
the construction, repair and maintenance of an emergency sewage storage tank and
related improvements affecting a portion of the Premises by the City of Los
Angeles. Concessionaire hereby waives any claim against County arising out of
the temporary disruption caused by the installation, maintenance and/or repair
of such emergency sewage storage tank and related improvements,and County agrees
to pay to Concessionaire seven-eights (7/8) of the proceeds actually received by
County (at the rate of $4,000.00 per day) from City for delays in the City's
work beyond April 30, 1998 pursuant to the Agreement dated November 20, 1996
between City and County.
11.7. Bicycle Path. Concessionaire shall comply with all Applicable
Laws, including Coastal Development Permit 5-91-141, as amended as of 1/30/95,
which provides as follows: "The applicants shall agree to work jointly with the
City of Los Angeles to develop a feasible route and design for the Pacific Coast
Beach Bike Path for that portion of the path which passes by or through the
site." Concessionaire acknowledges that it has received from County a copy of
the plans as of February 13, 1997 for the development and construction of such a
bicycle path extension. Concessionaire shall bear the risk that such bicycle
path extension may affect Concessionaire's ability to provide parking for
restaurant patrons or may otherwise affect Concessionaire's business and
Concessionaire undertakes any financial risk therefrom.
11.8. Cellular Antenna. Concessionaire acknowledges that, as disclosed
in the Request For Proposals dated August 7, 1996, published by County, County
is negotiating with certain parties for the installation of a cellular telephone
antenna and related improvements on a portion of the Premises. Such antenna must
be installed in a manner which will not cause
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unreasonable interference with Concessionaire's restaurant operation.
Concessionaire shall permit the installation of such antenna and related
improvements by County's designee and shall further permit such designee access
to the Premises as is reasonably necessary to perform reasonable maintenance and
repairs thereto, subject to Concessionaire's reasonable approval as to the times
for periodic non-emergency maintenance and repairs. Concessionaire hereby waives
any claim against County arising out of the temporary disruption, if any, caused
by the installation, maintenance and/or repair of such antenna and related
improvements, as well as any claim of Concessionaire to participate in or share
any consideration payable to County or any other governmental authority or
agency on account of such installation, maintenance and/or repair.
11.9. Notice of Damage. Concessionaire shall give prompt notice to
County of any fire or damage affecting the Premises from any cause whatsoever.
11.10. Waiver of Civil Code Sections. The parties' rights shall be
governed by this Agreement in the event of damage or destruction. The parties
hereby waive the provisions of California Civil Code Section 1932 and any other
provisions of law which provide for contrary or additional rights.
12. ASSIGNMENT AND SUBLEASE.
12.1. Subleases.
12.1.1. Definition. The term "Sublease" shall mean any lease,
license, permit, concession or other interest in the Premises, a right
to use the Premises or a portion thereof, which is conveyed or granted
by Concessionaire to a third party, and which constitutes less than the
unrestricted conveyance of the entire Concessionaire's interest under
this Agreement. "Sublessee" shall be the person or entity to whom such
right to use is conveyed by a Sublease. A Sublease which grants or
conveys to the Sublessee the right to possess or use all or
substantially all of the Premises is sometimes referred to in this
Agreement as a "Major Sublease" and the Sublessee under such agreement
is sometimes referred to in this Agreement as a "Major Sublessee".
12.1.2. Approval Required. At least thirty (30) days prior to
the proposed effective date of any Sublease that is not a Major Sublease
or of any amendment or assignment of such Sublease, Concessionaire shall
submit a copy of such Sublease, amendment or assignment to Director for
approval, which approval shall be given or withheld at Director's sole
and absolute discretion. To the extent practical, Director shall approve
or disapprove said proposed Sublease, amendment or assignment within
thirty (30) days after receipt thereof.
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In no event, however, shall any such Sublease, amendment or
assignment be made or become effective without the prior approval of
Director. Each such Sublease shall specifically provide that the
Sublessee shall comply with all of the terms, covenants, and conditions
of this Agreement applicable to the portion of the Premises subject to
the Sublease.
12.1.3. Major Sublease. The Premises shall be subleased to
and operated by only a first-class restaurant operator meeting or
exceeding the Quality Standards. In light of the inherent detailed
nature of a restaurant sublease, Concessionaire shall deliver to County
a copy of any proposed Major Sublease, or any sub-sublease or any other
document pursuant to which an interest is proposed to be transferred in
all or substantially all of the Premises, not less than sixty (60) days
prior to the proposed effective date of such proposed Major Sublease or
other document, for County's review and approval pursuant to Section
12.2.
12.2. Assignments. Except as specifically hereinbefore provided in this
Article 12, Concessionaire shall not, without the prior written consent of
County, which shall be based upon the factors described in subsection 12.2.1
hereof, either directly or indirectly give, assign, hypothecate, encumber,
transfer, or grant control of this Agreement or any interest, right, or
privilege therein, or enter into a Major Sublease affecting the Premises, or
license the use of the same in whole or in part. Any Change of Ownership shall
constitute an assignment of Concessionaire's interest under this Agreement;
notwithstanding the foregoing, County shall have no discretion to disapprove
those events identified in subsection 4.6.2 of this Agreement. In addition, for
purposes of this provision, the following acts of Concessionaire shall require
the prior written consent of County to be effective: (1) the change in one or
more general partners or managing members in a Concessionaire which is a limited
partnership or limited liability entity, except (a) by death, insolvency,
incapacity, resignation (except for the sole general partner) or removal of a
general partner or managing member and his replacement by a vote of the limited
partners, the remaining general partners or remaining members, or (b) if any
general partner or managing member owning more than fifty percent (50%) of the
interests of the partnership or limited liability entity acquires the interest
of another general partner or managing member owning fifteen percent (15%) or
less of the interests in the partnership or limited liability entity; (2) the
sale, assignment, or transfer of fifty-percent (50%) or more of the stock in a
corporation which owns or is a general partner in a partnership owning an
interest in this Agreement. Concessionaire shall provide County with any
information reasonably requested by County in order to determine whether or not
to grant approval of the assignment as provided herein. These same limitations
and approval requirements shall apply with respect to the Sublessee's interest
under a Major Sublease.
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12.2.1. County's Use of Discretion and Limitation on
Permissible Assignees. In exercising its discretion to approve
assignments as provide in this Section 12.2, but without limiting the
scope of such discretion, County may take into account any or all
factors relevant to the continued operation of the Premises in
accordance with the terms of this Agreement and County's derivation of
maximum revenue therefrom. Such factors may include but shall not be
limited to the following: (a) the entity type and financial condition of
the proposed assignee; (b) the identity, nature and reputation of the
entity and the holders of the beneficial interests in the proposed
assignee; (c) the identity and experience of the proposed manager or
operator of the Premises; (d) the number, quality, reputation and sales
volume of the proposed assignee's other restaurant operations; (e)
County's financial analysis of the proposed assignee's operation of the
Premises; (f) County's assessment of the proposed assignee's ability to
comply with all of the terms and conditions of this Agreement; (g) any
improvements to the Premises to be constructed by the proposed assignee;
(h) the proposed price levels of such proposed assignee's restaurant
operations on the Premises; and, (i) the compatibility of such proposed
assignee's use of the Premises with maximum public use of and benefits
from the Premises. Notwithstanding anything to the contrary contained in
this Agreement, this Agreement may be assigned only to a first-class
restaurant operator satisfactory to County.
12.2.2. Involuntary Transfers Prohibited. Except as otherwise
specifically provided in this Agreement, neither this Agreement nor any
interest therein shall be assignable or transferable in proceedings in
attachment, garnishment, or execution against Concessionaire, or in
voluntary or involuntary proceedings in bankruptcy or insolvency or
receivership taken by or against Concessionaire, or by any process of
law including proceedings under the Bankruptcy Act.
12.2.3. Procedure. Requests for approval of any proposed
assignment shall be processed in accordance with the following
procedures:
12.2.3.1. Prior to entering into any
agreement requiring the approval of County pursuant to this
Section 12.2, Concessionaire (or the entity seeking approval
of such assignment) must contact County and deliver to County
all information relevant to the proposed assignment,
including without limitation any term sheets, letters of
intent, draft Subleases, or other documents which set forth
any proposed agreement regarding the Premises. County will
evaluate the information provided to it and County may
request additional information as may be reasonably necessary
to act on the request. Under no circumstances will County
formally discuss
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an assignment with any proposed assignee prior to reviewing
the proposal with Concessionaire.
12.2.3.2. In completing its review of the
proposal and granting or withholding its consent thereto,
County will not be bound by any deadline contained in any
proposed assignments, Subleases, escrow instructions or other
agreements to which County is not a party.
12.2.3.3. Concessionaire acknowledges that
the time needed for County to review a proposed assignment
depends on many factors, including without limitation the
complexity of the proposed transaction, the financial and
other information submitted for review, and the workload of
County's personnel. Notwithstanding the foregoing, County
shall act as promptly as governmental processes permit in
processing and acting upon a requested approval of an
assignment of Concessionaire's interest under this Article
12.
12.2.3.4. If County finds it necessary to
incur any costs for legal, financial or other analyses,
Concessionaire shall be required to reimburse County for such
costs, as well as in-house staff costs, whether or not County
ultimately grants its approval to the proposed assignment.
However, in the event that County approves the proposed
assignment, Concessionaire shall receive a credit toward
those costs to the extent that an Administrative Charge is
paid in connection with the assignment.
12.2.3.5. Concessionaire or the proposed
assignee shall provide County with sufficient information for
County to determine if the public interest will be served by
approving the proposed transaction. The information that must
be provided includes, but shall not be limited to, the
following:
(a) Nature of the Assignee. Full
disclosure is required in accordance with
this Agreement and County's applicant
disclosure policy then in effect.
Additionally, a flowchart identifying the
chain of ownership of the assignee and its
decision making authority shall be
provided to County. County shall be
advised if the proposed assignee, or any
other person or entity for whom disclosure
is required pursuant to County's
disclosure policy, has had any lease or
concession agreement cancelled or
terminated by the landlord due to the
tenant or concessionaire's breach or
default thereunder;
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(b) Financial Condition of Assignee.
County shall be provided with current,
audited financial statements, including
balance sheets and profit and loss
statements, demonstrating the proposed
assignee's financial condition for the
preceding five (5) years, or such shorter
period that assignee has been in
existence. This requirement shall also
apply to any related person or entity
which will be responsible for or guarantee
the obligations of the proposed assignee
or provide any funds or credit to such
proposed assignee.
(c) Financial Analysis. County shall be
provided with the proposed assignee's
financing plan for the operation of the
Premises and for any contemplated
improvement thereof, demonstrating such
proposed assignee's financial capability
to so operate the Premises and construct
such improvements. Such financing plan
shall include, but not be limited to,
information detailing (1) equity capital;
(2) sources and uses of funds; (3) terms
of financing; (4) debt service coverage
and ratio; and (5) loan to value ratio.
The proposed assignee shall also provide
County with documentation demonstrating
such proposed assignee's financial
viability, such as letters of commitment
from financial institutions which
demonstrate the availability of sufficient
funds to complete any proposed
construction or improvements on the
Premises. Further, such proposed assignee
shall authorize the release of financial
information to County from financial
institutions relating to the proposed
assignee or other information supplied in
support of the proposed assignment.
(d) Business Plan. County shall be
provided with the proposed assignee's
business plan for the Premises, including
pro forma financial projections for the
Premises for the five (5) year period
beginning upon the commencement of the
proposed assignment. Such pro forma
projections will include capital costs,
income and expenses, as well as debt
service and all other payments to
providers of debt and equity, and will be
accompanied by a statement of basic
assumptions and an identification of the
sources of the data used in the production
of such projections.
(e) Cure of Defaults. County shall be
provided with the proposed assignee's
specific plans to cure
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any and all delinquencies under this
Agreement which may be identified by
County.
(f) Prospectus Materials. County shall be
provided with any materials distributed to
third parties relating to the business of
the proposed assignee to be conducted on,
from or relating to the Premises.
(g) Other Information. County shall be
provided with a clear description of the
terms and conditions of the proposed
assignment, including a description of the
proposed use of the Premises and any
proposed alterations or improvements to
the Premises. Additionally, County shall
be provided with any and all other
materials pertinent to the issues noted in
this subsection to the extent that they
exist, including without limitation escrow
instructions, security agreements,
personal property schedules, appraisals,
market reports, lien releases, UCC
Statements, preliminary title reports,
management agreements affecting the
Premises, contracts in excess of $25,000
affecting the Premises, schedules of
pending or threatened litigation, and
attorneys' closing opinions relating to
Concessionaire, the proposed assignee or
the Premises. County shall endeavor to
keep the foregoing materials confidential,
subject to the Public Records Act and
other Applicable Laws.
12.2.3.6. Final Documents. Prior to
granting its approval over any proposed assignment, County
shall be provided with executed Assignment and Acceptance of
Assignment forms prepared substantially in accordance with
the standard form available from County. Ten (10) copies of
each must be submitted to County, of which five (5) shall be
signed originals and properly acknowledged.
12.2.4. County Right of First Negotiation. If Concessionaire
proposes to assign its interest in this Agreement or enter into any
Major Sublease affecting the Premises ("Proposed Transfer"), it shall
provide County with written notice of such desire and the sale price
("Concessionaire Sale Price") at which it is willing to consummate the
Proposed Transfer. Within thirty (30) days, the County shall provide
Concessionaire written notification as to whether it is interested in
purchasing the interest subject to the Proposed Transfer. In the event
County has responded in the affirmative, it shall deliver to
Concessionaire, within sixty (60) days, a written offer to purchase
("County Offer to Purchase") at the price deemed suitable by County.
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Such County Offer to Purchase shall provide for the closing of the
transaction within one hundred eighty (180) days. County and
Concessionaire shall have sixty (60) days to negotiate a final sale
price for the interest subject to the Proposed Transfer. In the event
that County declines to seek to purchase the interest subject to the
Proposed Transfer or the parties are unable to agree on a final purchase
price following the sixty (60) day negotiation period described in the
immediately preceding sentence, Concessionaire shall be entitled to
consummate the Proposed Transfer with a third party (subject to County's
approval rights as otherwise set forth in this Agreement) during the
ensuing nine (9) month period so long as the Proposed Transfer price is
equal to or greater than the sale price last offered to County. In the
event of a proposed Sublease or other permitted assignment of less than
all of the Premises, County's election shall pertain to such portion of
the Premises subject to the proposed Sublease or assignment and, in the
event that County elects to acquire such portion of the Premises,
Concessionaire's Annual Minimum Rent shall be proportionally reduced and
Concessionaire's obligation to pay Percentage Rent shall pertain only to
the amounts derived from the portion of the Premises retained by
Concessionaire. In the event that County elects to recapture all or any
portion of the Premises as provided herein, Concessionaire agrees to
execute promptly a termination agreement and such other documentation
as may be reasonably necessary to evidence the termination of this
Agreement, to set a termination date and to prorate rent and other
charges with respect to the termination. County's rights pursuant to
this subsection 12.2.4 shall not apply to Financing Events or those
events identified in subsection 4.6.2 of this Agreement.
12.3. Terms Binding Upon Successors, Assigns and Sublessees. Except as
otherwise specifically provided for herein, each and all of the provisions,
agreements, terms, covenants, and conditions herein contained to be performed,
fulfilled, observed, and kept by Concessionaire hereunder shall be binding upon
the heirs, executors, administrators, successors, and assigns of Concessionaire,
and all rights, privileges and benefits arising under this Agreement in favor of
Concessionaire shall be available in favor of its heirs, executors,
administrators, successors, and assigns. Notwithstanding the foregoing, no
assignment or subletting by or through Concessionaire in violation of the
provisions of this Agreement shall vest any rights in any such assignee or
Sublessee. Any approved assignment of this Agreement shall release the assignor
of all liability arising on or after the effective date of such assignment,
provided the assignee assumes all of such liability. Provided, further, the
assignor shall not be relieved of any liability for the payment of the
Administrative Charge or the required portion of any Net Proceeds Share or Net
Refinancing Proceeds which arise upon such assignment as provided herein.
13. ENCUMBRANCES
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13.1. Financing Events. Concessionaire may, with the prior written
consent of Director, which shall not be unreasonably withheld, and subject to
any specific conditions which may be imposed by Director, consummate one or more
Financing Event(s) (as defined below). Concessionaire shall submit to Director a
complete set of all proposed transaction documents in connection with each
proposed Financing Event. Director shall have ninety (90) days in which to grant
or withhold approval of the Financing Event. If not approved in writing within
such ninety (90) day period, the proposed Financing Event shall be deemed
disapproved by Director. Concessionaire shall further reimburse County for
County's Actual Cost incurred in connection with its review of the proposed
Financing Event, including without limitation the costs of in-house counsel,
outside counsel and third party consultants. For the purposes of this Agreement,
including without limitation the provisions of Sections 4.6 through 4.8 hereof,
a "Financing Event" shall mean any financing or refinancing consummated by
Concessionaire, whether with private or institutional investors or lenders,
where such financing or refinancing is (a) an Encumbrance (as defined below) or
(b) has been underwritten based upon, or is intended to be repaid from, the
proceeds of Concessionaire's operation of the Premises or the sale, assignment
or transfer of Concessionaire's interest as provided herein.
13.1.1. Encumbrances. As used in this Agreement, an
"Encumbrance" shall be defined as any grant, assignment, transfer,
mortgage, hypothecation, grant of control over, or encumbrance of all or
any portion of Concessionaire's interest under this Agreement and the
estate so created to a lender (the "Encumbrance Holder") on the security
of Concessionaire's interest in the Agreement and the Premises. One (1)
copy of any and all security devices or instruments as finally executed
or recorded by the parties in connection with any approved Encumbrance
shall be filed with Director not later than seven (7) days after the
effective date thereof. These same limitations and approval requirements
shall apply with respect to the financing and the Encumbrance Holder of
any Major Sublessee's interest pursuant to a Major Sublease.
13.1.2. Consent Not Required to Transfer Resulting from
Foreclosure. The written consent of County shall not be required in the
case of:
13.1.2.1. A transfer of this Agreement or
a Major Sublease at a foreclosure sale or at a judicial
foreclosure or voluntary conveyance to the Encumbrance Holder
in lieu thereof; or
13.1.2.2. A single subsequent transfer of
the Agreement or a Major Sublease by an Encumbrance Holder
who was a purchaser at such foreclosure sale or transfer in
lieu thereof, provided the transferee expressly agrees in
writing to
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assume and to perform all of the obligations under this
Agreement or a Major Sublease.
13.1.3. Effect of Foreclosure. In the event of a transfer
under subsection 13.1.2, the Encumbrance Holder shall forthwith give
notice to County in writing of any such transfer setting forth the name
and address of the transferee and the effective date of such transfer,
together with a copy of the document by which such transfer was made.
13.1.3.1. Any transferee under the
provisions of subsection 13.1.2.1 shall be liable to perform
the full obligations of Concessionaire under this Agreement
until a subsequent transfer of the Agreement approved by
County.
13.1.3.2. Any subsequent transferee under
the provisions of subsection 13.1.2.2 shall be liable to
perform the full obligations of Concessionaire under this
Agreement and as a condition to the completion of such
transfer must cure, remedy, or correct any Event of Default
existing at the time of such transfer.
13.1.3.3. Neither an
Administrative Charge nor any Net Proceeds Share shall be
payable in respect of or charged against any amount payable
under the Encumbrance to or for the benefit of the
Encumbrance Holder in a foreclosure proceeding.
13.2. Right to Notice and Cure Defaults. All Encumbrance Holders and
Major Sublessees shall have the right, at any time during the Term and during
the term of its encumbrance, to do any act or thing required of Concessionaire
in order to prevent termination of Concessionaire's rights hereunder, and all
such acts or things so done hereunder shall be treated by County the same as if
performed by Concessionaire.
13.3. No Subordination. County's rights in the Premises and this
Agreement, including without limitation County's right to receive Annual Minimum
Rent and Percentage Rent, shall not be subordinated to the rights of any
Encumbrance Holder. Notwithstanding the foregoing, an Encumbrance Holder shall
have all of the rights set forth in the security instrument creating the
Encumbrance, as approved by County in accordance with Section 13.1, to the
extent that such rights are not inconsistent with the terms of this Agreement,
including the right to commence an action against Concessionaire for the
appointment of a receiver and to obtain possession of the Premises under and in
accordance with the terms of said Encumbrance, provided that all obligations of
Concessionaire hereunder shall be kept current, including but not limited to the
payment of rent and curing of all defaults or Events of Default hereunder.
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13.4. Delay in Exercising Termination Remedy. County shall not exercise
any remedy available to it upon the occurrence of an Event of Default (other
than pursuant to Section 14.5), unless it first shall have given written notice
of such default to each and every Major Sublessee and Encumbrance Holder, where
the Event of Default is one where notice is required to be given to
Concessionaire pursuant to the terms of this Agreement and the Encumbrance
Holder and/or Major Sublessee have notified Director in writing of its interest
in the Premises or this Agreement and the addresses to which such notice should
be delivered. Such notice shall be sent simultaneously with the notice or
notices to Concessionaire. An Encumbrance Holder or Major Sublessee shall have
the right and the power to cure the Event of Default specified in such notice in
the manner prescribed below. If such Event or Events of Default are so cured,
this Agreement shall remain in full force and effect.
13.4.1. Manner of Curing Default. Events of Default may be
cured by an Encumbrance Holder or Major Sublessee in the following manner:
(1) If the Event of Default is in the payment of rental,
taxes, insurance premiums, utility charges or any other sum of money, an
Encumbrance Holder or the Major Sublessee may pay the same, together with any
Late Fee or interest payable thereon, to County or other payee within thirty
five (35) days after mailing of the aforesaid notice of default to the
Encumbrance Holder or the Major Sublessee. If, after such payment to County,
Concessionaire pays the same or any part thereof to County, County shall refund
said payment (or portion thereof) to such Encumbrance Holder or Major Sublessee.
(2) If the Event of Default cannot be cured by the payment of
money, but is otherwise curable, the default may be cured by an Encumbrance
Holder or Major Sublessee as follows:
(a) If an Encumbrance Holder or Major
Sublessee cures, remedies and corrects the default within ten (10) days
after the end of Concessionaire's cure period as provided in Section
14.1 hereof; provided, however, if curing of such default requires
activity over a period of time, such default may be cured if within said
ten (10) day period, such Encumbrance Holder or Major Sublessee
commences and thereafter continues to use due diligence to perform
whatever acts may be required to cure the particular default; in the
event Concessionaire commences to cure the default within
Concessionaire's applicable cure period and thereafter fails or ceases
to pursue the cure with due diligence, the Encumbrance Holder's and
Major Sublessee's ten (10) day period shall commence upon the later of
the end of Concessionaire's cure period or the date upon which County
notifies the Encumbrance Holder and/or Major Sublessee that
Concessionaire has failed or ceased to cure the default with due
diligence.
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(b) With respect to an Encumbrance Holder,
but not a Major Sublessee, if before the expiration of said ten (10) day
period, said Encumbrance Holder notifies County of its intent to
commence foreclosure of its interest, and within sixty (60) days after
the mailing of said notice, said Encumbrance Holder (i) actually
commences foreclosure proceedings and prosecutes the same thereafter
with due diligence, said sixty (60) day period shall be extended by the
time necessary to complete such foreclosure proceedings, or (ii) if said
Encumbrance Holder is prevented from commencing foreclosure proceedings
by any order, judgment or decree of any court or regulatory body of
competent jurisdiction, and said Encumbrance Holder diligently seeks
release from or reversal of such order, judgment or decree, said sixty
(60) day period shall be extended by the time necessary to obtain such
release or reversal and thereafter to complete such foreclosure
proceedings. Within thirty five (35) days after such foreclosure sale
and the vesting of title in the purchaser thereat (whether or not such
purchaser is the Encumbrance Holder), said purchaser shall, as a
condition to the completion of such transfer, cure, remedy or correct
the default, or commence and thereafter pursue with due diligence, the
performance of the thing or acts required to be done to cure, correct
and remedy said default.
14. DEFAULT.
14.1. Events of Default. The following are deemed to be "Events of
Default" hereunder:
14.1.1. Monetary Defaults. The failure of Concessionaire to
pay the rentals due, or make any other monetary payments required under
this Agreement, within ten (10) days after written notice that said
payments are overdue and Concessionaire may cure such nonpayment by
paying the amount overdue, with interest thereon and the applicable Late
Fee, within three (3) days after receipt of such written notice.
14.1.2. Failure to Substantially Commence Construction. The
failure of Concessionaire to comply with the obligations and timeframes
set forth in Article 5 of this Agreement if not cured within ten (10)
days after written notice of such failure, if no other notice of such
failure is otherwise required hereunder.
14.1.3. Maintenance of Letter of Credit. The failure of
Concessionaire to maintain and/or replenish the letter of credit
required pursuant to Article 8 of this Agreement if not cured within ten
(10) days after written notice of such failure.
14.1.4. Failure to Perform Other Obligations. The failure of
Concessionaire to keep, perform, and observe any and all other promises,
covenants, conditions and agreements set forth in this Agreement within
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thirty (30) days after written notice of Concessionaire's failure to
perform from Director; provided, however, that where Concessionaire's
performance of such covenant, condition or agreement is not reasonably
susceptible of completion within such thirty (30) day period and
Concessionaire has in good faith commenced and is diligently continuing
to perform the acts necessary to perform such covenant, condition or
agreement within such thirty (30) day period, County will not exercise
any remedy available to it hereunder for so long as Concessionaire uses
reasonable due diligence in continuing to pursue to completion the
performance such covenant, condition or agreement.
14.1.5. Nonuse of Premises. The abandonment, vacation, or
discontinuance of use of the Premises, or any substantial portion
thereof, for a period of thirty (30) days, except when prevented by
Force Majeure or when closed for renovations or repairs required to be
made under this Agreement.
14.1.6. Notices. Any notice required to be given by County
pursuant to subsections 14.1.1 through and including 14.1.4 shall be in addition
to, and not in lieu of, any notice required under Section 1161 of the California
Code of Civil Procedure.
14.2. Limitation on Events of Default. Concessionaire shall not be
considered in default as to any provision of this Agreement when such default is
the result of or pursuant to, any process, order, or decree of any court or
regulatory body of competent jurisdiction, or any other circumstances which are
physically impossible to cure provided Concessionaire uses due diligence in
pursuing whatever is required to obtain release from or reversal of such
process, order, or decree or is attempting to remedy such other circumstances
preventing its performance.
14.3. Remedies. Upon the occurrence of an Event of Default,
County shall have, in addition to any other remedies in law or equity, the
following remedies which are cumulative:
14.3.1. Terminate Agreement. County may terminate this
Agreement by giving Concessionaire written notice of termination. On the
giving of the notice, all Concessionaire's rights in the Premises and in
all improvements shall terminate. Promptly after notice of termination,
Concessionaire shall surrender and vacate the Premises and all
improvements in broom-clean condition, and County may re-enter and take
possession of the Premises and all remaining improvements and, except as
otherwise specifically provided in this Agreement, eject all parties in
possession or eject some and not others, or eject none. Termination
under this subsection shall not relieve Concessionaire from the payment
of any sum then due to County or from any claim for damages against
Concessionaire as set forth in subsection 14.4.3, or
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from Concessionaire's obligation to remove improvements at County's
election in accordance with Article 2. County agrees to use reasonable
efforts to mitigate damages.
14.3.2. Keep Agreement in Effect. Without terminating this
Agreement, so long as County does not deprive Concessionaire of legal
possession of the Premises and allows Concessionaire to assign or sublet
subject only to County's rights set forth herein, County may continue
this Agreement in effect and bring suit from time to time for rent and
other sums due, and for Concessionaire's breach of other covenants and
agreements herein. No act by or on behalf of County under this provision
shall constitute a termination of this Agreement unless County gives
Concessionaire written notice of termination. It is the intention of the
parties to incorporate the provisions of California Civil Code Section
1951.4 by means of this provision.
14.3.3. Termination Following Continuance. Even though it may
have kept this Agreement in effect pursuant to subsection 14.3.2,
thereafter County may elect to terminate this Agreement and all of
Concessionaire's rights in or to the Premises unless prior to such
termination Concessionaire shall have cured the Event of Default or
shall have satisfied the provisions of Section 14.2, hereof. County
agrees to use reasonable efforts to mitigate damages.
14.4. Damages. Should County elect to terminate this Agreement
under the provisions of the foregoing Section, County shall be entitled to
recover from Concessionaire as damages:
14.4.1. Unpaid Rent. The worth, at the time of the award,
of the unpaid rent that had been earned at the time of termination of
this Agreement;
14.4.2. Post-Termination Rent. The worth, at the time of the
award, of the unpaid rent that would have been earned under this
Agreement after the date of termination of this Agreement until the date
Concessionaire surrenders possession of the Premises to County; and
14.4.3. Other Amounts. The amounts necessary to compensate
County for the sums and other obligations which under the terms of this
Agreement become due prior to, upon or as a result of the expiration of
the Term or sooner termination of this Agreement, including without
limitation, those amounts of unpaid taxes, insurance premiums and
utilities for the time preceding surrender of possession, the cost of
removal of rubble, debris and other above-ground improvements,
attorney's fees, court costs, and unpaid Administrative Charges, Net
Proceeds Shares and Net Refinancing Proceeds.
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14.5. Others' Right to Cure Concessionaire's Default. County (and any
Encumbrance Holder, as provided in the last sentence of this section), at any
time after Concessionaire's failure to perform any covenant, condition or
agreement contained herein beyond any applicable notice and cure period, may
cure such failure at Concessionaire's cost and expense. If County at any time,
by reason of Concessionaire's failure, pays or expends any sum, the sum expended
by County shall be due immediately from Concessionaire to County at the time the
sum is paid. To the extent practicable, County shall give any Encumbrance
Holders the reasonable opportunity to cure Concessionaire's default prior to
County's cure herein.
14.6. Default by County. County shall be in default in the performance
of any obligation required to be performed by County under this Agreement if
County has failed to perform such obligation within thirty (30) days after the
receipt of notice from Concessionaire specifying in detail County's failure to
perform; provided, however, that if the nature of County's obligation is such
that more than thirty (30) days are required for its performance, County shall
not be deemed in default if it shall commence such performance within thirty
(30) days and thereafter diligently pursues the same to completion.
Concessionaire shall have no rights as a result of any default by County until
Concessionaire gives thirty (30) days notice to any person having a recorded
interest pertaining to County's interest in this Agreement or the Premises. Such
person shall then have the right to cure such default, and County shall not be
deemed in default if such person cures such default within thirty (30) days
after receipt of notice of the default, or such longer time as may be reasonably
necessary to cure the default. Notwithstanding anything to the contrary in this
Agreement, County's liability to Concessionaire for damages arising out of or in
connection with County's breach of any provision or provisions of this Agreement
shall not exceed the value of County's equity interest in the Premises and its
right to insurance proceeds.
15. ACCOUNTING.
15.1. Maintenance of Records. In order to determine the amount of and
provide for the payment of the rent, Administrative Charge, Net Proceeds Share,
Net Refinancing Proceeds and other sums due under this Agreement, Concessionaire
and all Sublessees, if any, shall at all times during the Term of this
Agreement, and for thirty six (36) months thereafter, keep, or cause to be kept,
locally, to the reasonable satisfaction of Director, true, accurate, and
complete records and double-entry books of account for the current and five (5)
prior Accounting Years, such records to show all transactions relative to the
conduct of operations, and to be supported by data of original entry.
15.2. Cash Registers. All sales shall be recorded by means of cash
registers or computers which automatically issue a customer's receipt or certify
the amount recorded in a sales slip. Said cash registers shall in all cases have
locked-in sales totals and transaction counters which are constantly
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accumulating and which cannot, in either case, be reset, and in addition
thereto, a tape (or other equivalent security mechanism) located within the
register on which transaction numbers and sales details are imprinted. Beginning
and ending cash register readings shall be made a matter of daily record.
Concessionaire shall cause to be implemented point of sale
systems which can accurately verify all sales for audit purposes and customer
review purposes, which system shall be submitted to the Director in advance of
installation for his approval, which approval will not be unreasonably withheld.
15.3. Statement; Payment. No later than the fifteenth (15th) day of
each calendar month, Concessionaire shall render to County a detailed statement
showing Gross Receipts during the preceding calendar month, together with its
calculation of the amount payable to County under Sections 4.2 through 4.8
inclusive, and shall accompany same with remittance of amount so shown to be
due.
15.4. Availability of Records for Inspector's Audit. Books of
account and records hereinabove required shall be kept or made available at the
Premises or at such other location within Los Angeles County, and County and
other governmental authorities shall have the right at any reasonable times to
examine and audit said books and records, without restriction, for the purpose
of determining the accuracy thereof and of the monthly statements of Gross
Receipts derived from occupancy of the Premises and the compliance of
Concessionaire with the terms of this Agreement and other governmental
requirements.
15.4.1. Entry by County. County and its duly authorized
representatives or agents may enter upon the Premises at any and all
reasonable times during the Term of this Agreement for the purpose of
determining whether or not Concessionaire is complying with the terms
and conditions hereof, or for any other purpose incidental to the rights
of County.
15.4.2. Cost of Audit. In the event Concessionaire does not
make available its original records and books of account at the Premises
or at a location within Los Angeles County, Concessionaire agrees to pay
all expenses incurred by County in conducting any audit at the location
where said records and books of account are maintained. In the event
that any audit discloses a discrepancy in County's favor of greater than
two percent (2%) of the revenue due County for the period audited, then
Concessionaire shall pay County audit contract costs, together with the
amount of any identified deficiency, with interest thereon and Late Fee
provided by Section 4.5.
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15.5. Audit Rights from Prior Agreement. Under Article 5 of the
Concession Agreement relating to the Premises between County and Concessionaire
which terminated on October 31, 1997, Concessionaire had the obligation, inter
alia, to maintain certain accounting records and County had the right to
inspect, audit and receive payment for delinquencies, if any. County and
Concessionaire hereby agree that County's rights under said Article 5 shall
continue until October 31, 2000 as to Concessionaire's activities prior to the
date hereof.
15.6. Additional Accounting Methods. County may require the installation
of any additional accounting methods or machines which are typically used by
major food service and major parking service companies and which County
reasonably deems necessary if the system then being used by Concessionaire does
not adequately verify sales for audit or customer receipt purposes.
15.7. Accounting Year; Lease Year. The term "Accounting Year" as used
herein shall mean a period of twelve (12) consecutive calendar months, the first
Accounting Year commencing January 1, 1997 and ending on December 31, 1997;
thereafter the "Accounting Year" shall be each period of twelve (12) consecutive
calendar months.
15.8. Annual Financial Statements. Within six (6) months after the end
of each Accounting Year or, at Concessionaire's election, after the completion
of Concessionaire's fiscal year, Concessionaire shall deliver to County a set of
audited financial statements prepared by a Certified Public Accountant, setting
forth Concessionaire's financial condition and the result of Concessionaire's
operations for such Accounting Year and shall include certification of Gross
Receipts (including a breakdown by category) and the certification of
Concessionaire's Net Worth required in Section 8.1. All financial statements
prepared by or on behalf of Concessionaire shall be prepared in a manner that
permits County to determine the financial results of operations in connection
with Concessionaire's activities at, from or relating to the Premises,
notwithstanding that Concessionaire may have income and expenses from other
activities unrelated to its activities on the Premises.
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16. MISCELLANEOUS.
16.1. Quiet Enjoyment. Concessionaire, upon performing its
obligations hereunder, shall have the quiet and undisturbed possession of the
Premises throughout the Term of this Agreement, subject, however, to the terms
and conditions of this Agreement, including without limitation the provisions of
Section 11.6. County shall provide Concessionaire with a nondisturbance or
recognition agreement from State, recognizing Concessionaire's rights under this
Agreement and stating in addition that State will require any authority
administering concession rights over the Premises during the portion of the Term
after January 31, 1999 to similarly recognize Concessionaire's rights.
16.2. Time. Except as specifically otherwise provided for in this
Agreement, time is of the essence of this Agreement and applies to all times,
restrictions, conditions, and limitations contained herein.
16.3. County Disclosure and Concessionaire's Waiver.
16.3.1. Disclosures and Waiver.
16.3.1.1. "AS IS". Concessionaire acknowledges
that it is currently in possession of the Premises and that
Concessionaire or its predecessor-in-interest has
continuously occupied and operated the Premises since 1980.
Concessionaire accepts the Premises in their present
condition notwithstanding the fact that there may be certain
defects in the Premises, whether or not known to either party
to this Agreement, at the time of the execution of this
Agreement by Concessionaire and Concessionaire hereby
represents that it has performed all investigations
necessary, including without limitation soils and engineering
inspections, in connection with its acceptance of the
Premises "AS IS".
16.3.1.2. Concessionaire acknowledges that the
condition of the land may cause additional engineering and
construction costs above and beyond those contemplated by
either party to this Agreement at the time of the execution
hereof and Concessionaire agrees that, except as specifically
provided by subsections 3.2.2.5, 11.4.3 and 11.8 of this
Agreement, it will make no demands upon County for any
construction, alterations, or any kind of labor that may be
necessitated by said conditions or any one of them.
16.3.1.3. In addition, Concessionaire hereby waives,
withdraws, releases, and relinquishes any and all claims,
suits,
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causes of action (other than a right to terminate as
otherwise provided in this Agreement), rights of rescission,
or charges against County, its officers, agents, employees or
volunteers which Concessionaire now has or may have or
asserts in the future which are based upon any defects in the
physical condition of the Premises and the soil thereon and
thereunder, regardless of whether or not said conditions were
known at the time of the execution of this instrument.
16.3.2. No Right of Offset. Concessionaire acknowledges that
the rent provided for in this Agreement has been agreed upon in light of
Concessionaire's construction, maintenance and repair obligations set
forth herein, and, notwithstanding anything to the contrary provided in
this Agreement or by applicable law, Concessionaire hereby waives any
and all rights, if any, to make repairs at the expense of County and to
deduct or offset the cost thereof from the Annual Minimum Rent, Monthly
Minimum Rent, Percentage Rent or any other sums due County hereunder.
16.4. Holding Over Creates Month-to-Month Tenancy. If
Concessionaire holds over after the expiration of the Term for any cause, such
holding over shall be deemed to be a tenancy from month-to-month only, at the
same rental per month and upon the same terms, conditions, restrictions and
provisions as herein contained.
Such holding over shall include any time employed by
Concessionaire to remove machines, appliances and other equipment during the
time periods herein provided for such removal.
16.5. Waiver of Conditions or Covenants. Except as stated in
writing by the waiving party, any waiver by either party of any breach of any
one or more of the covenants, conditions, terms, and agreements of this
Agreement shall not be construed to be a waiver of any subsequent or other
breach of the same or of any other covenant, condition, term, or agreement of
this Agreement, nor shall failure on the part of either party to require exact
full and complete compliance with any of the covenants, conditions, terms, or
agreements of this Agreement be construed as in any manner changing the terms
hereof or estopping that party from enforcing the full provisions hereof, nor
shall the terms of this Agreement be changed or altered in any manner whatsoever
other than by written agreement of County and Concessionaire. No delay, failure,
or omission of County to re-enter the Premises or of either party to exercise
any right, power, privilege, or option, arising from any default, nor any
subsequent acceptance of rent then or thereafter accrued shall impair any such
right, power, privilege, or option or to be construed as a waiver of or
acquiescence in such default or as a relinquishment of any right. No notice to
Concessionaire shall be required to restore or revive "time of the essence"
after the waiver by County of any default. Except as specifically provided in
this
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Agreement, no option, right, power, remedy, or privilege of either party shall
be construed as being exhausted by the exercise thereof in one or more
instances.
16.6. Remedies Cumulative. The rights, powers, options, and
remedies given County by this agreement shall be cumulative except as otherwise
specifically provided for in this Agreement.
16.7. Authorized Right of Entry. In any and all cases in which
provision is made herein for termination of this Agreement, or for exercise by
County of right of entry or re-entry upon the Premises, or in case of
abandonment or vacation of the Premises by Concessionaire, Concessionaire hereby
irrevocably authorizes County to enter upon the Premises and remove any and all
persons and property whatsoever situated upon the Premises and place all or any
portion of said property, except such property as may be forfeited to County, in
storage for the account of and at the expense of Concessionaire.
Concessionaire hereby exempts and agrees to save harmless
County from any cost, loss or damage arising out of or caused by any such entry
or re-entry upon the Premises and the removal of persons and property and
storage of such property by County and its agents.
16.8. Place of Payment and Filing. All rentals shall be paid to and
all statements and reports herein required shall be filed with the Department.
Checks, drafts, and money orders shall be made payable to the County of Los
Angeles.
16.9. Service of Written Notice or Process. Any notice required to
be sent under this Agreement shall be in compliance with and subject to this
Section 16.9. If Concessionaire is not a resident of the State of California, or
is an association or partnership without a member or partner resident of said
State, or is a foreign corporation, Concessionaire shall file with Director a
designation of a natural person residing in the County of Los Angeles, State of
California, or a service company, such as CT Corporation, which is authorized to
accept service, giving his or its name, residence, and business address, as the
agent of Concessionaire for the service of process in any court action between
Concessionaire and County, arising out of or based upon this Agreement, and the
delivery to such agent of written notice or a copy of any process in such action
shall constitute a valid service upon Concessionaire.
If for any reason service of such process upon such agent is
not possible, then Concessionaire may be personally served with such process
outside of the State of California and such service shall constitute valid
service upon Concessionaire; and it is further expressly agreed that
Concessionaire is amenable to such process and submits to the jurisdiction of
the court so acquired and waives any and all objection and protest thereto.
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Written notice addressed to Concessionaire at the addresses
below-described, or to such other address that Concessionaire may in writing
file with Director, shall be deemed sufficient if said notice is delivered
personally, by telecopy or facsimile transmission or, provided in all cases
there is a return receipt requested and postage or other delivery charges
prepaid, by registered or certified mail posted in the County of Los Angeles,
California, Federal Express or DHL, or such other services as Concessionaire and
County may mutually agree upon from time to time. Each notice shall be deemed
received and the time period for which a response to any such notice must be
given or any action taken with respect thereto (including cure of any
prospective Event of Default) shall commence to run from the date of actual
receipt of the notice by the addressee thereof in the case of personal delivery,
telecopy or facsimile transmission, or upon the expiration of the third (3rd)
business day after such notice is sent from within Los Angeles County in the
case of such registered or certified mail as authorized in this Section.
Copies of any written notice to Concessionaire shall also be
simultaneously mailed to any Encumbrance Holder, Major Sublessee or encumbrancer
of such Major Sublessee of which County has been given written notice and an
address for service. Notice given to Concessionaire as provided for herein shall
be effective as to Concessionaire notwithstanding the failure to send a copy to
such Encumbrance Holder, Major Sublessee or encumbrancer.
As of the date of execution hereof, the persons authorized to
receive notice on behalf of County and Concessionaire are as follows:
COUNTY: Director
Department of Beaches and Harbors,
Los Angeles County
13837 Fiji Way
Marina del Rey, California 90292
Phone: 310/305-9522
Fax: 310/821-6345
With a Copy to:: Office of County Counsel
Los Angeles County
500 West Temple Street
Los Angeles, California 90012
Attn: County Counsel
Phone: 213/974-1921
Fax: 213/617-7182
CONCESSIONAIRE: Sea View Restaurants, Inc.
c/o California Beach Restaurants, Inc.
17383 Sunset Boulevard, Suite 140
Pacific Palisades, CA 90272
Attn: Mark Segal
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Phone: 310/459-9676
Fax: 310/459-9356
16.10. Interest. In any situation where County has advanced sums on
behalf of Concessionaire pursuant to this Agreement, such sums shall be due and
payable immediately upon demand. If not paid in full within two (2) days after
written demand, the unpaid amounts shall bear interest at the rate of ten
percent (10%) per annum, compounded monthly, from the date such sums were first
advanced, until the time payment is received.
16.11. Captions. The captions contained in this Agreement are for
informational purposes only, and are not to be used to interpret or explain the
particular provisions of this Agreement.
16.12. Attorneys' Fees. In the event of any action, proceeding or
arbitration arising out of or in connection with this Agreement, whether or not
pursued to judgment, the prevailing party shall be entitled, in addition to all
other relief, to recover its costs and reasonable attorneys' fees. In the event
County is represented by the County Counsel, the court shall award reasonable
attorneys' fees for County Counsel's services.
16.13. Amendments. This Agreement may only be amended in
writing executed by duly authorized officials of Concessionaire and County.
Notwithstanding the foregoing, Director shall have the power to execute such
amendments to this Agreement as are necessary to implement any arbitration
judgment issued pursuant to Section 16.15 of this Agreement.
16.14. Time For Approvals. Except where a different time period is
specifically provided for in this Agreement, whenever in this Agreement the
approval of Director is required, approval shall be deemed not given unless
within thirty (30) days after the date of the receipt of the written request for
approval from Concessionaire, Director either (a) approves such request in
writing, or (b) notifies Concessionaire that it is not reasonably possible to
complete such review within the thirty (30)-day period, provides a final date
for approval or disapproval by Director (the "Extended Time") and approves such
request in writing prior to such Extended Time. If Director does not approve
such request in writing within such Extended Time, the request shall be deemed
to be disapproved.
16.15. Arbitration. Disputed matters which may be arbitrated
pursuant to this Agreement shall be settled by binding arbitration in accordance
with the then existing provisions of the California Arbitration Act, which as of
the date hereof is contained in Title 9 of Part III of the California Code of
Civil Procedure, commencing with Section 1280, except as otherwise provided by
this Section 16.15. Either party (the "Initiating Party") may initiate the
arbitration process by sending written notice to the other party (the
"Responding Party") requesting initiation of the arbitration process. However,
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notwithstanding anything to the contrary which may now or hereafter be contained
in the California Arbitration Act, the parties agree that the following
provisions shall apply to any and all arbitration proceedings conducted pursuant
to this Agreement:
16.15.1. Selection of Arbitrator. The parties shall attempt
to agree upon an arbitrator who shall decide the matter. If, for any
reason, the parties are unable to agree upon the arbitrator within
twenty five (25) days of the date the Initiating Party sends written
notice to the Responding Party, then at any time on or after such date
either party may petition for the appointment of the arbitrator as
provided in California Code of Civil Procedure Section 1281.6.
16.15.2. Arbitrator. The arbitrator shall be a retired judge
of the California Superior Court, Court of Appeal or Supreme Court, or
any Federal District Court or Court of Appeals located within the State,
who has agreed to resolve civil disputes.
16.15.3. Scope of Arbitration. County and Concessionaire
affirm that the mutual objective of such arbitration is to resolve the
dispute as expeditiously as possible. The arbitration process shall not
apply or be used to determine issues other than (i) those presented to
the arbitrator by the Initiating Party, (ii) cross claims presented to
the arbitrator by the Responding Party, provided that any such cross
claims constitute arbitrable disputes pursuant to this Agreement and
(iii) such related preliminary or procedural issues as are necessary to
resolve (i) and/or (ii) above. The arbitrator shall render an award or
decision. Either party may, at its sole cost and expense, request a
statement of decision explaining the arbitrator's reasoning which shall
be in such detail as the arbitrator may determine. Any such statement
shall not be used for any purpose whatsoever, including without
limitation as grounds for a petition to confirm, vacate or modify an
award or any appeal that may be taken pursuant to this Section 16.15;
provided, however, that either party may utilize such statement of
decision (x) in subsequent arbitration proceedings between the parties
pertaining to the issues resolved in such statement of decision and (y)
as necessary to resolve allegations of Gross Error (as defined in
subsection 16.15.15) as provided in subsection 16.15.15. The award shall
be made by the arbitrator no later than the sooner of six (6) months
after the date on which the arbitrator is selected by mutual agreement
or court order, whichever is applicable, or five (5) months after all
conflicts or potential conflicts regarding such arbitrator have been
resolved. County and Concessionaire hereby instruct the arbitrator to
take any and all actions deemed reasonably necessary, appropriate or
prudent to ensure the issuance of an award or decision within such
period. Notwithstanding the foregoing, failure to complete the
arbitration process within such period shall not render such arbitration
or any determination made therein void or voidable.
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16.15.4. Immunity. The parties hereto agree that the
arbitrator shall have the immunity of a judicial officer from civil
liability when acting in the capacity of arbitrator pursuant to this
Agreement.
16.15.5. Section 1282.2. The provisions of Code of Civil
Procedure Section 1282.2 shall apply to the arbitration proceedings
except as follows:
(1) The arbitrator shall appoint a time and place for the
hearing and shall cause notice thereof to be served as provided in said
Section 1282.2 not less than ninety (90) days before the hearing,
regardless of the aggregate amount in controversy.
(2) No later than forty (40) days prior to the date first set
for the hearing, in lieu of the exchange and inspection authorized by
Code of Civil Procedure Section 1282.2(a)(2)(A), (B) and (C), the
parties shall simultaneously exchange the following documents by
personal delivery to each other and to the arbitrator:
(a) a written Statement of Position, as further defined
below, setting forth in detail that party's final position
regarding the matter in dispute;
(b) a list of witnesses each party intends to call at the
hearing, designating which witnesses will be called as expert
witnesses;
(c) a list of the documents each intends to introduce at the
hearing, together with complete and correct copies of all of
such documents; and,
(d) a list of all Written Appraisal Evidence (as defined
below) each intends to introduce at the hearing, together
with complete and correct copies of all of such Written
Appraisal Evidence.
(3) No later than twenty (20) days prior to the date first
set for the hearing, each party may file a reply to the other party's
Statement of Position ("Reply"). The Reply shall contain the following
information:
(a) a written statement, to be limited to that party's
rebuttal to the matters set forth in the other party's
Statement of Position;
(b) a list of witnesses each party intends to call at the
hearing to rebut the evidence to be presented by the other
party, designating which witnesses will be called as expert
witnesses;
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(c) a list of the documents each intends to introduce at the
hearing to rebut the evidence to be presented by the other
party or impeach the witnesses identified by the other party,
together with complete and correct copies of all of such
documents; and,
(d) a list of all Written Appraisal Evidence each intends to
introduce at the hearing to rebut the evidence presented by
the other party, together with complete and correct copies of
all of such Written Appraisal Evidence.
16.15.6. Statements of Position. The Statement of Position to
be delivered by subsection 16.15.5 shall comply with the following
requirements:
(1) Where the dispute involves rent to be charged,
or other monetary amounts, the Statements shall set forth all
relevant existing and proposed rents and/or monetary amounts.
(2) If the dispute relates to Unreasonable County
Activity or delays under subsection 5.8.3.2 of this
Agreement, the Statements of Position shall set forth the
party's position (and the facts supporting such position)
regarding the existence of the Unreasonable County Activity
or delay, where appropriate, and the length of the delay.
(3) If the dispute relates to Improvement Costs, the
Statements of Position shall set forth the facts supporting
such party's position and the amount of each cost which the
party believes should be allowed or disallowed.
16.15.7. Written Appraisal Evidence. Neither party may, at
any time during the proceedings, introduce any written report which
expresses an opinion regarding Fair Market Rental Value or the fair
market value of the Premises, or any portion thereof, ("Written
Appraisal Evidence") unless such Written Appraisal Evidence
substantially complies with the following standards: it shall describe
the Premises; identify the uses permitted thereon; describe or take into
consideration the terms, conditions and restrictions of this Agreement;
correlate the appraisal method(s) applied; discuss the relevant factors
and data considered; review rentals paid by concessionaires and lessees
within Southern California who are authorized to conduct similar
activities on comparable leaseholds, if any; and, describe the technique
of analysis, limiting conditions and computations that were used in the
formulation of the valuation opinion expressed. With respect to disputes
regarding Fair Market Rental Value, such Written Appraisal Evidence
shall express an opinion regarding the fair market rental value of the
Premises as
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prescribed by Section 4.4.1. Written Appraisal Evidence in connection
with disputes arising out of Article 7 of this Agreement shall predicate
any valuation conclusions contained therein on the Income Approach.
Written Appraisal Evidence shall in all other respects be in material
conformity and subject to the requirements of the Code of Professional
Ethics and the Standards of Professional Practice of The Appraisal
Institute.
16.15.8. Evidence. The provisions of Code of Civil Procedure
ss. 1282.2(a)(2)(E) shall not apply to the arbitration proceeding. The
arbitrator shall have no discretion to allow a party to introduce
witnesses, documents or Written Appraisal Evidence unless such
information was previously delivered to the other party in accordance
with subsection 16.15.5 and, in the case of Written Appraisal Evidence,
substantially complies with the requirements of subsection 16.15.7, or
such evidence consists of a transcript of a deposition of an expert
witness conducted pursuant to subsection 16.15.9. Notwithstanding the
foregoing, the arbitrator may allow a party to introduce evidence which,
in the exercise of reasonable diligence, could not have been delivered
to the other party in accordance with subsection 16.15.5, provided such
evidence is otherwise permissible hereunder.
16.15.9. Discovery. The provisions of Code of Civil Procedure
ss. 1283.05 shall not apply to the arbitration proceedings except to the
extent incorporated by other sections of the California Arbitration Act
which apply to the arbitration proceedings. There shall be no
pre-arbitration discovery except as provided in subsection 16.15.5;
provided, however, each party shall have the right, no later than seven
(7) days prior to the date first set for the hearing, to conduct a
deposition, not to exceed three (3) hours in duration, of any person
identified by the other party as an expert witness pursuant to
subsections 16.15.5 (2)(b) or 16.15.5 (3)(b).
16.15.10. Decisions of Arbitrators.
16.15.10.1. Monetary Issues. With respect
to monetary disputes (including without limitation disputes
regarding Percentage Rent and the amount of coverage under
the policies of insurance required pursuant to Article 10 of
this Agreement, but excluding disputes under Sections 6.3 and
6.4 regarding Concessionaire's prices for goods and
services), the arbitrator shall have no right to propose a
middle ground or any proposed modification of either
Statement of Position. The arbitrator shall instead select
whichever of the two Statements of Position is the closest to
the monetary or numerical amount that the arbitrator
determines to be the appropriate determination of the rent,
expense, claim, cost, delay,
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coverage or other matter in dispute and shall render a
decision or award consistent with such Statement of Position.
The Statement of Position so chosen and the award or decision
rendered by the arbitrator shall be final and binding upon
the parties, absent Gross Error on the part of the
arbitrator.
16.15.10.2. Nonmonetary Issues. With
respect to nonmonetary issues and disputes, the arbitrator
shall determine the most appropriate resolution of the issue
or dispute, taking into account the Statements of Position
submitted by the parties, and shall render a decision
accordingly. Such determination and decision shall be final
and binding upon the parties, absent Gross Error on the part
of the arbitrator.
16.15.11. Powers of Arbitrator. In rendering the award or
decision, the arbitrator shall have no power to consult or examine
experts or authorities not disclosed by a party pursuant to subsection
16.15.5(2) hereof, regardless of whether such proposed consultation or
examination is to be undertaken in the presence of both parties or is to
include any right of cross-examination.
16.15.12. Costs of Arbitration. Concessionaire and County
shall equally share the expenses and fees of the arbitrator, together
with other expenses of arbitration incurred or approved by the
arbitrator, excluding counsel fees or witness fees or other fees
incurred by a party for its own benefit, which expenses shall be paid by
that party, except as provided by Section 6.4. Failure of Concessionaire
to pay its share of expenses and fees constitutes a breach of
Concessionaire's obligations hereunder.
16.15.13. Appeal. The parties waive any right to appeal from
a judgment confirming an arbitration award, from an order dismissing a
petition to correct or vacate an award, from an order vacating an award
in which a rehearing in arbitration is ordered, or from a special order
after final judgment. The provisions of Code of Civil Procedure ss.
1294(d) and (e) shall not apply.
16.15.14. Amendment to Implement Judgment. Within seven (7)
days after the issuance of any award, decision or judgment by the
arbitrator, Concessionaire shall execute and deliver to County for its
execution an amendment to this Agreement setting forth the terms of such
decision or judgment.
16.15.15. Impact of Gross Error Allegations. Where either
party has charged the arbitrator with Gross Error:
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16.15.15.1. The decision shall not be
implemented if the party alleging Gross Error obtains a
judgment of a court of competent jurisdiction stating that
the arbitrator was guilty of Gross Error and vacating the
arbitration award or decision ("Disqualification Judgment").
In the event of a Disqualification Judgment, the arbitration
process shall begin over immediately in accordance with this
Section 16.15.
16.15.15.2. If the Gross Error is charged
in an arbitration regarding Unreasonable County Activity,
then that decision shall not be implemented until the earlier
of: a final judgment of a court of competent jurisdiction
that there was no Gross Error or that the challenged decision
was correct; or an identical decision by a new arbitrator
which has not also been challenged for Gross Error. Once
Gross Error has been alleged regarding such Unreasonable
County Activity, a new arbitrator shall be appointed
immediately and shall determine the matter in accordance with
this Section 16.15. Nothing in this subsection 16.15.15 shall
operate to extend the time by which Substantial Commencement
must occur should the arbitrator not be found guilty of Gross
Error. The party alleging Gross Error shall have the burden
of proof.
16.15.15.3. Such arbitration shall be
conducted as expeditiously as reasonably possible.
16.15.15.4. For the purposes of this
Section 16.15, the term "Gross Error" shall mean that the
arbitration award is subject to vacation pursuant to
California Code of Civil Procedure Section 1286.2 or any
successor provision.
16.16. Estoppel Certificates. Each party agrees to execute, within ten
(10) business days after the receipt of a written request therefor from the
other party, a certificate stating: that this Agreement is in full force and
effect and is unmodified (or stating otherwise, if true); that, to the best
knowledge of such party, the other party is not then in default under the terms
of this Agreement (or stating the grounds for default if such be the case).
Prospective purchasers and lenders may rely on such statements.
16.17. Indemnity Obligations. Whenever in this Agreement there is an
obligation to indemnify, hold harmless and/or defend, irrespective of whether or
not the obligation so specifies, it shall include the obligation to defend and
pay reasonable attorney's fees, reasonable expert fees and court costs.
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17. DEFINITION OF TERMS; INTERPRETATION.
17.1. Meanings of Words Not Specifically Defined. Words and phrases
contained herein shall be construed according to the context and the approved
usage of the English language, but technical words and phrases, and such others
as have acquired a peculiar and appropriate meaning by law, or are defined in
Section 1.1, are to be construed according to such technical, peculiar, and
appropriate meaning or definition.
17.2. Tense; Gender; Number; Person. Words used in this Agreement
in the present tense include the future as well as the present; words used in
the masculine gender include the feminine and neuter and the neuter includes the
masculine and feminine; the singular number includes the plural and the plural
the singular; the word "person" includes a corporation, partnership, limited
liability company or similar entity, as well as a natural person.
17.3. Business Days. For the purposes of this Agreement, "business
day" shall mean a business day as set forth in Section 9 of the California Civil
Code.
17.4. Parties Represented by Consultants, Counsel. Both County
and Concessionaire have entered this Agreement following advice from
independent financial consultants and legal counsel of their own choosing. This
document is the result of combined efforts of both parties and their consultants
and attorneys. Thus, any rule of law or construction which provides that
ambiguity in a term or provision shall be construed against the draftsperson
shall not apply to this Agreement.
17.5. Termination for Improper Consideration. County may, by written
notice to Concessionaire, immediately terminate the right of Concessionaire to
proceed under this Agreement if it is found that consideration, in any form, was
offered or given by Concessionaire, either directly or through an intermediary,
to any County officer, employee or agent with the intent of securing the
Agreement or securing favorable treatment with respect to the award, amendment
or extension of the Agreement or the making of any determinations with respect
to the Concessionaire's performance pursuant to the Agreement. In the event of
such termination, County shall be entitled to pursue the same remedies against
Concessionaire as it could pursuant to an event of default by Concessionaire.
Concessionaire shall immediately report any attempt by a
County officer or employee to solicit such improper consideration. The report
shall be made either to the County manager charged with the supervision of the
employee or to the County Auditor-Controller's Employee fraud hotline at (213)
974-0414 or (800) 544-6861.
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Among other things, such improper consideration may take the
form of cash, discounts, service, the provision of travel or entertainment, or
tangible gifts.
17.6. Governing Law. This Agreement shall be governed by and
interpreted in accordance with the laws of the State of California.
17.7. Reasonableness Standard. Except where a different standard is
specifically provided otherwise herein (e.g. Section 2.2, Section 11.6,
subsections 5.8.3.8, 5.8.5, 11.4.3 and 12.1.2), whenever the consent of County
or Concessionaire is required under this Agreement, such consent shall not be
unreasonably withheld and whenever this Agreement grants County or
Concessionaire the right to take action, exercise discretion, establish rules
and regulations or make allocations or other determinations, County and
Concessionaire shall act reasonably and in good faith. These provisions shall
only apply to County acting in its proprietary capacity.
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17.8. Compliance with Section 25907. County and Concessionaire
agree and acknowledge that this Agreement satisfies the requirements of Section
25907 of the California Government Code as a result of various provisions
contained herein.
IN WITNESS WHEREOF, County has, by order of its Board of
Supervisors, caused this Agreement to be subscribed by the Chairman of said
Board and attested by the Clerk thereof, and Concessionaire has executed the
same on the day and year hereinbelow written.
APPROVED AS TO FORM:
DeWITT CLINTON,
County Counsel
By [SIG]
-------------------------
THE COUNTY OF LOS ANGELES
By [SIG]
----------------------------
Chairman, Board of Supervisors
(CORPORATE SEAL)
JOANNE STURGES , Clerk of
- --------------------
the Board of Supervisors
SEA VIEW RESTAURANTS, INC.,
By [SIG] Deputy a California corporation
-------------------
ADOPTED By [SIG]
BOARD OF SUPERVISORS ------------------------
COUNTY OF LOS ANGELES Its President
24 SEP 30 1997 -----------------------
Dated: 9/11 , 1997.
------------
/s/ JOANNE STURGES
- ------------------------------
JOANNE STURGES
EXECUTIVE OFFICER
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EXHIBIT A
LEGAL DESCRIPTION
The Premises consists of the Restaurant Parcel and the
Parking Lot Parcel, as more particularly described below:
Restaurant Parcel
That portion of Lot F, Tract No. 8940, in the City of Los Angeles,
County of Los Angeles, State of California, as shown on map filed in Book 162,
pages 42 to 45 inclusive, of Maps, in the office of the Registrar-Recorder of
said County, and that portion of the Rancho Boca de Santa Monica, in said City,
as shown on map recorded in Book 3, pages 12 and 13 of Patents, in the office of
said Registrar-Recorder, within the following described boundaries:
Beginning at the northwesterly corner of that certain parcel of land
described as Parcel No. 4 in deed to State of California, recorded on October
27, 1947 in Book 25674, page 296, of Official Records, in the office of said
Registrar-Recorder; thence easterly along the general southerly boundary of
Pacific Coast Highway, formerly Malibu Road, as shown on map of Tract No. 10238,
filed in Book 206, pages 23 to 26 inclusive, of said Maps, to the easterly
boundary of Sunset Boulevard, formerly Beverly Boulevard, as shown on the last
mentioned map; thence southerly along said easterly boundary to the mean high
tide line of the Pacific Ocean; thence westerly along said mean high tide line
to the westerly line, or its southerly prolongation, of said certain parcel of
land; thence northerly along said westerly line or said southerly prolongation
and said westerly line to the point of beginning.
Parking Lot Parcel
That portion of Rancho Boca de Santa Monica, as shown on map recorded in
Book 3, pages 12 and 13, of Patents, in the office of the Registrar- Recorder of
the County of Los Angeles described as PARCEL 4, PARCEL 5 and PARCEL 6 all in
deed to the State of California, recorded in Book 25674, page 296, of Official
Records, in the office of said registrar-recorder within the following described
boundaries:
Beginning at the intersection of the easterly line of Beverly Boulevard,
60 feet wide, now known as Sunset Boulevard, as shown on map of Tract No. 10238,
filed in Book 206, pages 23 to 26 inclusive, of Maps, in the office of said
registrar-recorder and that certain 2,370-foot radius curve in the southerly
boundary of Malibu Road, 140 feet wide, now known as Pacific Coast
A-1
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Highway, as shown on said last mentioned map, a radial of said curve to said
intersection bears S. 2(DEGREE) 48' 41" W.; thence easterly along said southerly
boundary to a point in that certain 2,340-foot radius curve in said southerly
boundary, a radial of said last mentioned curve to said last mentioned point
bears S. 13(DEGREE), 45" 33" E.; thence along the southerly prolongation of said
last mentioned radial S. 13(DEGREE) 45' 33" E. 70.03 feet; thence S. 48(DEGREE)
50' 16" W. 107.64 feet; thence S. 63(DEGREE) 25' 39" W. 221.92 feet; thence N.
88(DEGREE) 09' 20" W. 327.99 feet; thence N. 63(DEGREE) 56' 13" W. 115.48 feet
to said easterly line of Beverly Boulevard; thence northerly along said easterly
line to the point of beginning.
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EXHIBIT B
SCHEDULE OF APPROVED MERCHANDISE
Apparel Items (T-Shirts, tank tops, sweatshirts, hats, visors, denim shirts,
polo shirts, aprons, boxer shorts, etc.)
Glassware
Coffee Mugs
Disposable Cameras
Camera Film
Suntan Lotion
Lip Balm
Postcards
Maps
Mints
Key Chains
Sunglasses
Beach Towels
Pens/Pencils
Stuffed Animals
"Refrigerator" Magnets
Mallets or Crackers (to open crab or lobster)
B-1