1 2022 LEASE AGREEMENT
(The Castaway - 1250 Harvard Road, Burbank CA 91503)
This 20
22 Lease Agreement (this "Lease") is made and entered into as of the ____ day of __________, 2022, between the CITY OF BURBANK, a municipal corporation and Charter City ("City" or “Landlord”), and VERDUGO RESTAURANT CORPORATION, a California corporation ("Tenant").
RECITALS
A. The C
ity has used the top of the knoll of the parcel, located at 1250 Harvard Road, Burbank, California 91503, as a restaurant facility affiliated with and overlooking the DeBell Municipal Golf Course (“The Castaway” or "Property") since 1960 to serve Burbank residents and members of the public.
B. On Dec
ember 28,1960, the City and Tenant entered into a 50 -year lease agreement to lease and operate The Castaway.
C. On O
ctober 7, 2005, the parties amended and restated the December 28, 1960, lease agreement. (“2005 Lease”.) After, on October 10, 2017, the parties amended the 2005 Lease to modify minor provisions of the 2005 Lease concerning overflow parking and continuous operations requirements. The 2005 Lease currently ends on November 1, 2025 but permits the Tenant to extend the term to November 1, 2035.
D. In
stead of Tenant exercising its option to extend the existing term to November 1, 2035, Tenant and City desire to enter into a new lease that expires on December 31, 2045, in accordance with the terms set forth herein.
E. Thi
s Lease is intended to supersede all previous leases between the City and the Tenant for this Property.
NO
W, THEREFORE, in consideration of the terms and conditions in this agreement, the parties agree as follows:
ARTICLE 1. EXHIBITS
1.1. E
xhibits. The following exhibits are attached and incorporated into this Lease by reference:
Exh
ibit "A" Site Map of Premises and Luau Grounds
Exhibit "B" Legal Description of Premises with Luau Grounds; and access to Luau Grounds
Exhibit "C” Overflow Parking Area
1.2. D
efined Terms. Certain defined terms may be defined and identified in bold throughout this Lease.
ATTACHMENT 2-1
2 A
RTICLE 2. USE OF PREMISES
2. 1. Premises. The premises subject to this Lease comprises of two types of areas: exclusive use areas and non-exclusive use areas as defined below (collectively, the “Premises”). The Premises include all improvements, buildings, structures and fixtures now or later situated, placed, constructed or installed on the premises, including but not limited to, all equipment, apparatus, machinery, fittings and appliances and any additions to, substitutions for, changes in or replacements of, the whole or any part thereof.
2. 2. Exclusive Use Areas. The exclusive use areas include the real property in the City of Burbank, as labeled as areas 1 and 2 in Exhibit "A", together with all easements, rights-of-way and appurtenances belonging in any way appertaining to the same (“Land” or “Exclusive Use Areas”).
2. 3. Non-Exclusive Use Areas. The non-exclusive use areas include all of the following:
2. 3.1. the lower parking lot existing near the Wildwood Canyon Park entrance and the 16th hole of the DeBell Municipal Golf Course, as more particularly described in Exhibit "C” (“Overflow Parking Area”). Tenant may use this Overflow Parking Area on a non-exclusive basis with City, each day, and only when there is no available parking elsewhere at the Premises, subject to coordination and approval of the Parks and Recreation Director.
2.3.2. the pathway to the Luau Grounds from the Overflow Parking Area as designated by City, which may be altered from time to time in City’s sole and absolute discretion as depicted as area 4 in Exhibit “A” (“Accessway to Luau Grounds”). This Accessway to Luau Grounds may be used by the Tenant on a nonexclusive basis and subject to the City’s use of this area as a golf course.
2. 4. Use of Premises.
2. 4.1. Use. Tenant must continuously use the Exclusive Use Areas of the Premises for the operation of a first-class restaurant, cocktail lounge, banquet facility, and gift shop and related uses and for no other purpose without the prior written consent of the City’s Community Development Director or its designee (“Director”).
2. 5. Additional Limitations and Conditions on Use. Tenant's use of the Premises must comply with the following limitations and conditions:
2. 5.1. Cancellation of Insurance. Tenant may not do, bring, or keep anything in or about the Premises that will cause a cancellation of any insurance covering the Premises.
2. 5.2. Compliance with Laws. Tenant must comply with all laws, ATTACHMENT 2-2
3 ordinances and regulations which pertain to or apply to the use of the Premises, now or subsequently imposed, concerning the Premises or Tenant's use of the Premises, including, without limitation, the obligation at Tenant's cost to alter, maintain, or restore the Premises in compliance and conformity with all laws relating to the condition, use, or occupancy of the Premises during the term.
2.5.3. Waste; Nuisance
. Tenant may not use the Premises in any manner
that will constitute waste, nuisance, or unreasonable annoyance (including, without limitation, traffic control matters, parking operations, the use of loudspeakers or sound or light apparatus that can be heard or seen outside the premises) to owners or occupants of adjacent residential properties. Tenant may not use the Premises for sleeping, or the preparation, manufacture, or mixing of anything that might emit any odor or objectionable noises or lights onto adjacent properties. Tenant may not use the Premises for any secondhand store, auction, distress or fire sale, or bankruptcy or going-out-of-business sale on the Premises without City's consent. Tenant may not sell or display merchandise outside the confines of the Premises, luau grounds or in the parking areas located and identified in Exhibits A, B and C.
2.5.4. Overloading. Tenant may not do anything on the Premises that will cause damage to the Premises. The Premises must not be overloaded. No machinery, apparatus, or other appliance may be used or operated in or on the Premises that will in any manner injure, vibrate, or shake the Premises.
2.5.5. Inventory. Tenant must provide City a list of any furniture, fixtures, or equipment at the Property, and identify which would remain at the end of the Lease, within six months of the signing of this lease. This inventory must be updated once every five years, by December 31st of that year.
2.5.6. Conditional Use Permits. Should Tenant seek a new or different use for the Premises that is not currently permissible, Tenant must obtain a conditional use permit from the City authorizing such use, in addition to any other requirement in this Lease.
2.5.7. Alcohol. Alcoholic beverages may be served on the Premises in accordance with a valid conditional use permit or other zoning permission.
2.5.8. Trade Name. Tenant must conduct its business at the Premises only under the trade name of “The Castaway”.
2.6. Covenant of Continuous Operation and Full Merchandising.
2.6.1. Periods of Use. Tenant must continuously use the Premises for the uses specified in this Lease and must continuously stock, open, and operate the Premises, at least three hundred sixty-two (362) days per year as follows:
Description of Use Days of Use Hours of Use
ATTACHMENT 2-3
4 Restaurant: Dinner Service Sunday through Thursday 11:00 am to 10:00 pm Restaurant: Dinner Service Friday and Saturday 11:00 am to 11:00 pm Lounge and Patio: Bar Service Sunday through Thursday 11:00 am to 11:00 pm Lounge and Patio: Bar Service Friday and Saturday 11:00 to 12:00 am Banquet Center: Cocktail and
Dinner Service (if used)
All Days 7:00 am to 1:00 am
Valet Parking All Days 4:00 pm to 1:00 am
Luau Grounds (if used) Sunday through Thursday 10:00 am to 10:00 pm Luau Grounds (if used) Friday and Saturday 10:00 am to 11:00 pm New Year’s Eve 11:00 am to 1:00 am
To the extent that Tenant is performing emergency repairs or remodeling that has been agreed upon with Landlord, then tenant shall be excused from performance of this covenant to use the Premises within those areas of the Premises that are affected by such remodel or repairs.
2.6.2. Holidays.
Any legal holiday will be treated like a Saturday for
purposes of hours of operation. Tenant must provide security guard(s) at Premises whenever an event goes beyond 12:00 am. Such security guard(s) must curtail customer noise and discourage litter. The provision of alcohol must cease at midnight, except on New Year’s Eve, when the provision of alcohol must cease at 12:30 am.
2.6.3. Luau Events.
With respect to any luau function which will extend past 9:00 pm on any evening, Tenant will notify the Burbank Police Department 72 hours prior to the event. City has the right to require traffic control at the Harvard/Sunset Canyon intersection at its sole discretion, which will be paid for by Tenant. Contingent upon staffing availability, the City police will provide such assistance and bill at current police staffing costs. This may be changed upon City approval of a conditional use permit. If a conditional use permit is issued, then the conditional use permit requirements and conditions may supersede upon written confirmation by the Director.
2.6.4. Continued Operations
. If the Premises are destroyed or partially
condemned and this Lease remains in full force and effect, Tenant must continue operation of its business at the Premises to the extent reasonably practical from the standpoint of good business judgment during any period of reconstruction. Tenant must carry and offer for sale at all times a full and complete stock of food and cocktails at competitive prices and must maintain adequate personnel for the efficient serving of its customers. Tenant may not lower the quality of its merchandise or change the quality of its business without City's consent. Tenant must employ its commercially reasonable efforts to operate the business conducted on the Premises in a manner that will produce the maximum volume of gross sales. Tenant may only use only such space in the Exclusive Areas for office, clerical, and other non-sale purposes as is reasonably required for Tenant's business on the Premises.
2.6.5. Administrative Exception. The Director may suspend any covenant in this Section 2.6 if the Tenant submits such a request and the Director determines that ATTACHMENT 2-4
5 such actions are in the best interests of the City. The Director may provide the City Council with such a request and request City Council’s consideration before granting such an exception.
2.7. Covenant Against Competition.
Tenant, or any individual, firm, or
corporation that controls Tenant or is controlled by Tenant, may not own, operate, or become financially interested in a gift shop on the Premises similar to the one conducted at the adjacent DeBell Golf Shop, located at DeBell Golf Club. This covenant is intended to prohibit Tenant sales of same or similar items provided by that DeBell Golf Shop. The Director has reasonable discretion in interpreting and applying this covenant. Should Tenant violate this covenant, Director may request Tenant to cease such use and treat any failure to comply as a breach of this Lease.
2.8. Use of Parking Areas.
2.8.1. Parking Plan.
2.8.2. General Requirement. Tenant must coordinate with the Director and provide to the City’s Fire Chief, Chief of Police, and Public Works Director for approval, a parking plan which must reflect the existing parking on Premises (which includes the Overflow Parking Area). (“Parking Plan”.) The Parking Plan must ensure that all access/egress routes remain unobstructed and open at all times; that all valet parking is available; and that self-parking is provided by the Tenant as an option to their customers. This approval will be at the Director’s reasonable discretion, and if approval is withheld, the Director must provide the basis for withholding such approval upon request.
2.8.3. Specific Overflow Parking Area Provision. Tenant must continue to enclose and maintain all or part of the Overflow Parking Area with bollards and a closure or gate at the entry as approved by the City. Additionally, the City, through the Director may require and impose operational requirements as to the use of all or part of the Overflow Parking Area during the Term such as regulating the hours of any closures to all or part of the Overflow Parking Area; and Tenant agrees to comply with all such rules.
Whenever rules are imposed, a letter identifying the rule will be provided to Tenant at least 30 days before the effective date of a rule that involves changed operational matters (which includes the temporary or permanent removal of the interior bollards). The City agrees that a portion of the Overflow Parking Area closest to Wildwood Canyon may remain open at all times; yet the remainder portion may be closed during times when neither the City nor Tenant use it. Tenant must maintain the bollards throughout the Term, as well as maintain the entire Overflow Parking Area (whether or not any bollards have been placed within the Overflow Parking Area). This provision is not intended to create exclusive use area for Tenant; Tenant may continue to use the Overflow Parking Area on a non-exclusive basis. The Burbank Police Department will continue to occasionally use the Overflow Parking Area for their Motorcycle Officer Training. Tenant will be responsible for overall general daily maintenance of parking lot, including trash pickup, sweeping and ensuring its cleanliness.
ATTACHMENT 2-5
6 2.8.4. Fire-related Provisions.
2.8.4.1. All fire lanes must be marked adequately at all times of the Term (and all re-markings are subject to the approval of the Fire Chief).
2.8.4.2. If parking is being operated in violation of the plan on file with the Fire Department, then the City will have the right to impose contractual penalties for violation of the Parking Plan. The fine will be $500.00 for a first offense and $750.00 for a second offense within twelve months. If Tenant fails to pay contractual fine within 30 days’ notice of City, then Tenant will be in breach of this Lease. Any changes to the Parking Plan, temporary or permanent, must be submitted to the Fire Chief for approval in writing at least seven days before the proposed changes.
2.8.4.3. Tenant may not allow blocking of designated fire lanes at any time, whether for valet parking or any other parking or loading. The fine for blocking fire lanes will be $500.00 for the first offense; and $750.00 for a second offense within twelve months.
2.8.5. Staff Training. Tenant must plan and implement quarterly staff training that focuses on occupancy law requirements, safety rules, and other permit conditions. All permits relating to fire regulations must be obtained and complied with. A written safety plan must be established, followed, and approved by the City Fire Chief.
2.8.6. Valet Parking.
Tenant may provide valet parking services and must
comply with any applicable transient parking taxes related to valet parking. If valet parking is offered, Tenant must comply with all applicable city regulations related to valet parking and include such operations in the Parking Plan with the City.
2.9. Deliveries to Premises. Tenant must require all deliveries to Premises in accordance with a delivery plan approved by the City Traffic Engineer and/or the Director.
Deliveries must occur between 7:00 am and 7:00 pm.
ARTICLE 3. TERM
3.1. Term. The term of this Lease commences on January 1, 2023 (the “Effective Date”) and ends on December 31, 2045 (“Term”), unless sooner terminated in accordance with this Lease.
3.2. Expiration or Termination of Term.
3.2.1. Surrender. On the expiration or earlier termination of the Term, Tenant will peaceably and quietly surrender the Premises in good repair, and in the same condition as the Premises were in on delivery of possession to Tenant by Landlord (except to the extent that Landlord has not required that Tenant remove alterations). Subject to the foregoing, Tenant will remove from the Premises all of Tenant’s trade fixtures, furniture, equipment, signs, improvements, additions, and Alterations to the extent these items are ATTACHMENT 2-6
7 not permanently affixed to the Premises and not identified in the inventory prepared in accordance with Section 2.5.5, and immediately repair any damage to the Premises caused by such removal so as to leave the Premises in a neat and clean condition. At Landlord’s election, any property (including trade fixtures) left in the Premises by Tenant after the expiration or earlier termination of the Term will become the property of Landlord without any cost to Landlord.
3.2.2. Holdover
. If Tenant holds over the Premises beyond the expiration or earlier termination of this Lease, the holding over will not constitute a renewal or extension of this Lease or give Tenant any rights under this Lease. In such event, Landlord may, in its sole discretion, treat Tenant as a tenant at will, subject to all of the terms and conditions in this Lease, except that Minimum Rent will be an amount equal to 1.5 times the Minimum Rent that was payable by Tenant during the 12-month period immediately preceding the expiration or earlier termination of this Lease (disregarding any temporary abatement of rent that may then have been in effect). The provisions of this section will survive the expiration or sooner termination of this Lease.
3.2.3. Indemnification. Tenant will indemnify, defend, and hold Landlord harmless from and against all losses, claims, liabilities, damages, costs, and expenses incurred by or asserted against Landlord and arising directly or indirectly from Tenant’s failure to timely surrender the Premises, including (a) any rent payable by, or any loss, cost, or damages, including lost profits, claimed by any prospective tenant of the Premises or any portion thereof; and (b) Landlord’s damages as a result of such prospective tenant rescinding or refusing to enter into the prospective lease of the Premises or any portion thereof by reason of the failure to timely surrender the Premises.
ARTICLE 4. RENT AND SECURITY DEPOSIT
4.1. Payment.
From and after the Effective Date, Tenant will pay “Rent” (as further defined in this article) to Landlord at the address set forth in the notice section set forth below, or, on written notice from Landlord to Landlord’s assignee or such other place as Landlord may designate from time to time in writing to Tenant, without prior demand, abatement, deduction, or setoff, as more particularly set forth in this article.
4.2. Rent.
4.2.1. Amount of Rent. The amount of Rent payable to the City is the Minimum Rent or the Percentage Rent (as defined below), whichever is higher. Such rent is due in accordance with the due date provisions set forth in Section 4.5 below.
4.2.2. Statement of Payment Due Requirement
. Tenant must furnish a
statement within 30 days after the end of each monthly period. The statement must include following: the Gross Sales for the month; the Percentage Rent calculation for the month based on the Gross Sales as required by Section 4.4.4; the Minimum Rent Calculation for the month; and the total amount due, as such terms are defined below. (“Statement of Payment Due”.) Each Statement of Payment Due must be signed and ATTACHMENT 2-7
8 certified to be correct by an officer of Tenant, and subject to verification by the city in accordance with Section 4.6 - Records and Inspections. This Statement of Payment Due may be used by the City to prepare any invoice or request for payment per Section 4.5.2 below.
4.3. Minimum Rent.
4.3.1. Minimum Rent. “Minimum Rent” is calculated by taking the Minimum Rent for the previous year, increased by 2 percent and rounded up to the nearest 100th dollar. For example, if the Minimum Rent paid for 2022 for each month was $42,159, then the amount due for each month in 2022 is $42,159 x 1.02, resulting in a Minimum Rent of $43,100 ($43,002.18 rounded up to the nearest 100th dollar), for each month in 2023. Such Minimum Rent will update automatically as of January 1st of each year.
4.3.2. Initial Amount of Minimum Rent
. The parties agree that the monthly
Minimum Rent for 2023 is $43,100 per month.
4.4. Percentage Rent.
4.4.1. Percentage Rent. “Percentage Rent” is the amount equal to the product of the applicable Percentage Rent Rate (as defined at Section 4.4.2) multiplied by the amount, of Tenant’s Gross Sales (as defined at Section 4.4.3) for each applicable monthly period.
Example 1: If Tenant’s Gross Sales for January 2023 was $1,000,000, then the Percentage Rent is the sum of $1,000,000 (Gross Sales for that month) x seven percent (Percentage Rent Rate), totaling $70,000. In this example, Tenant owes $70,000 in Percentage Rent. Because the Percentage Rent is higher than the Minimum Rent, the Tenant must pay that $70,000 for that period.
Example 2: If Tenant’s Gross Sales for January 2023 was $500,000, then the Percentage Rent is the sum of $500,000 (Gross Sales for that month) x seven percent (Percentage Rent Rate), totaling $35,000. Because the Percentage Rent is lower than the Minimum Rent, the Tenant must pay the amount of the Minimum Rent for that period.
4.4.2. Percentage Rent Rate
. The Percentage Rent Rate is as follows:
Time Period Percent
January 1, 2023 through December 31, 2025. 7%
January 1, 2026 through December 31, 2034. 8%
January 1, 2035 through December 31, 2045. 9%
4.4.3. Gross Sales. “Gross Sales” means the gross selling price of all merchandise and services sold or rented in or from the Premises by Tenant, its subtenants, licensees, and concessionaires (including food and beverages, provided that ATTACHMENT 2-8
9 this reference to food and beverages will not be deemed to permit the sale of food or beverages from the Premises if not otherwise expressly permitted by this Lease; and any parking services), whether for cash or on credit and whether made by store personnel or by machines or whether made by catalog or Internet sale (from on or off the Premises), excluding therefrom the following: (a) sales taxes, excise taxes, or gross receipts taxes imposed by governmental entities on the sale of merchandise or services, but only if collected from customers separately from the selling price and paid directly to the respective governmental entities; (b) proceeds from the sale of fixtures, equipment, or property that is not stock in trade; (c) any exchange or transfer of merchandise between stores or warehouses of Tenant or any subtenant, licensee, or concessionaire made solely for the convenient operation of Tenant’s or any subtenant’s, licensee’s, or concessionaire’s business and not to consummate a sale made in or from the Premises; (d) returns to shippers or manufacturers; and (e) cash or credit refunds to customers for any reason (collectively, Exclusions from Gross Sales). Tenant will use good faith efforts to maximize Gross Sales from the Premises.
Gross Sales may exclude: sums and credits received on the settlement of claims for loss of, or damage to, merchandise; sums paid to third parties; the costs or value of meals or discounts given to employees for which no payment is received, payroll deduction made, and no other consideration is received by tenants; the cost or value of food and beverages used for entertainment and promotion purposes; any parking-related revenues; and the amount of gratuities given by patrons to employees and/or contractors of Tenant, include for parking; any mandatory service charge assessed on users of the Premises, such as banquet groups which is paid to employees. For example purposes only, if the mandatory assessment is 18% and of that, 15% is distributed to the employees as a gratuity, then 3% is recorded as part of Gross Sales.
4.4.4. Monthly and Annual Statement of Gross Sales Requirement . Tenant
must submit to City a statement of Tenant's Gross Sales within 30 days after the end of each month and a calculation of the Percentage Rent due for such period, and whether such amount exceeds the Minimum Rent. (“Monthly Statement”.) Additionally, Tenant must submit an annual statement of Tenant's Gross Sales and calculation of Percentage Rent for the time period between January 1st and December 31st (“Fiscal Year”) within 30 days after the end of Tenant’s Fiscal Year, (“Annual Statement”). The purpose of this Annual Statement is to verify whether or not Tenant owes any additional Percentage Rent.
Each Statement must be signed and certified to be correct by an officer of Tenant, and subject to verification by the city in accordance with Section 4.6 - Records and Inspections.
Tenant must also furnish to City copies of its quarterly California sales and use tax returns at the time each is filed with the State of California at the same time or as soon thereafter as the Annual Statement.
4.5. Rent Due.
4.5.1. Due Date. Rent must be paid at the same time with the Statement of Payment Due, or in accordance with any alternative due date as established in an invoice from the City. (“Due Date”.)
ATTACHMENT 2-9
10 4.5.2. Invoicing. The City may, but is not required to, after receiving the Monthly Statement or the Statement of Payment Due, invoice the Tenant for such rent, and state the applicable due date on such invoice, which will be 30 days after delivery of the invoice.
4.5.3. Obligation to Pay. Closure due to pandemic, fire, renovation, or any other reason, will not excuse Tenant’s obligation to pay Minimum Rent.
4.6. Records and Inspections; Audits.
4.6.1. Record of Sales. Tenant must maintain full and accurate books of account, records, cash receipts, and other pertinent data showing its Gross Sales broken down into the following categories; all revenues from food and beverage sales and other income; all monies received by Tenant in relation to the use or operation of the parking lots and/or valet; and all other data necessary to determine the Percentage Rent. Tenant must install and maintain accurate receipt-printing or digital cash registers and/or point of sale equipment and must record on the cash registers/point of sale every sale and other transaction made from the Premises.
4.6.2. Books and Records. Tenant must furnish to City copies of its quarterly California sales and use tax returns at the time each is filed with the state of California, and Tenant must keep records of such returns at the Premises available for inspection. Such books of account, records, cash receipts, and other pertinent data must be kept for a period of three years after the end of each year of the Lease. The receipt by City of any statement, or any payment of percentage rent for any period, will not bind City as to the correctness of the statement or the payment. Tenant is required to maintain an accurate accounting of all receipts and disbursements and deductions in connection with the Gross Sales at the Premises. The method of accounting and bank accounts established for the operation must be separate from the accounting system and bank accounts used by Tenant for any other business locations. Tenant’s accounting system must be in accordance with generally accepted accounting principles. Such method must include the keeping of the following documents:
4.6.2.1. Regular books and/or electronic records of accounting such as general ledgers.
4.6.2.2. Journals and/or electronic records including any supporting and underlying documents such as vouchers, checks, tickets, bank statements, etc.
4.6.2.3. State and Federal income tax returns, sales tax returns and checks and other documents proving payment of sums shown.
4.6.2.4. Cash register tapes and receipts and/or electronic records.
Daily receipts may be separated but may be retained so that from day-to-day the sales can be identified. All receipts must be reconciled on a daily basis.
ATTACHMENT 2-10
11 4.6.2.5. Any other accounting records, electronic or written, that City, in its reasonable discretion, deems necessary for proper reporting of receipts.
4.6.3. Audits.
4.6.3.1. Requirement. Tenant is required to maintain and City has the right during the Term on an annual basis and within three years after expiration or termination of this Lease to inspect and examine all Tenant's books of account, records, cash receipts, and other pertinent data for the three years prior, so City can ascertain Tenant's Gross Sales and other related financial information relevant to City, such as compliance with the capital account. Tenant must cooperate fully with City in making the inspection.
4.6.3.2. Deadlines. Within 90 days after the expiration of each Tenant Fiscal Year under this Lease, Tenant must deliver to City annual audited statements of the Gross Revenues, Percentage Rent and compliance with the Capital Improvement Reserve Fund (as defined below), for the preceding fiscal year prepared by an independent Certified Public Accountant and once within 30 days following the expiration of this Lease. (“Audited Statement”.) If Tenant fails to deliver such annual Audited Statement to City within the 90-day period, City may immediately audit all records as may be necessary to certify the amount of Gross Receipts and Percentage Rent for such fiscal year. The audit may be conducted during usual business hours at the Premises. An audit may be accomplished, in the City’s sole discretion, by either City forces or an outside auditing firm chosen by the City. In addition, City retains the right to perform spot check audits no more than once a year and upon providing notice of at least 48 hours; this limitation does not apply to audits required to investigate criminal or suspicious behavior.
4.6.3.3. Penalties. Due to the uncertainty of damages related to Tenant’s failure to deliver records for such annual audits, Tenant agrees that City may assess penalties of $1,000 per month for each month such records are overdue.
4.6.3.4. Confidentiality; Public Records Act. City will attempt to keep any information gained from such statements, inspection, or audit confidential and will not disclose it other than to carry out the purposes of this Lease. However, Tenant acknowledges that City is a public entity and any records provided to the City may be treated as a public record by the City, as determined by the City, to comply with state law.
4.7. Capital Improvement Reserve Account.
4.7.1. Contribution and Monthly Report Requirement. In addition to all other rent, and on or before the Due Date, Tenant must deposit into an account identified as the “Capital Improvement Reserve Fund”, an amount equal to two percent of Tenant's Gross Sales for that monthly rental period unless the balance of the account exceeds $500,000. In that case, tenant must deposit one percent of the Tenant’s Gross ATTACHMENT 2-11
12 Sales for that monthly rental period. At no time should the total within the account be lower than $100,000, for a two-month period each year. If the account is lower than $100,000 for a two-month period, tenant must replenish the Reserve Fund back to $100,000. Deposits must be made monthly throughout the Term of the Lease. The Capital Improvement Reserve Fund must be segregated from all other accounts of Tenant. Tenant will provide City with a monthly report detailing all deposits by the 15th day of each calendar month and an annual December bank statement showing the balance in this account by January 31 of each year. This monthly report may be included with the Monthly Statement in a format acceptable to the City.
4.7.2. Use of the Capital Improvement Reserve Fund
.
4.7.2.1. Generally. The Capital Improvement Reserve Fund may be used for certain capital improvements (“Capital Improvements”), which includes but is not limited to the following: replacement of building elements, including mechanical systems, replacement of roofing, structural repairs.
These funds must be used for costs reasonably and actually incurred on the Premises for the previous 12-month period for the replacement of building elements, including mechanical systems, roofing, structural repairs, to the extent that they are consistent with generally accepted accounting principles.
Tenant’s obligation to fund required Improvements to maintain the property as a first-class restaurant and banquet facility is not limited to the availability of funds from the Capital Improvement Reserve Fund.
4.7.2.2. Discretionary FF & E. In addition, but not more than once every two years, Tenant may request from the Director expenditures for the replacement or refurbishment of furniture, fixtures, equipment and carpet (“Discretionary FF & E Expenditure”).
4.7.2.3. Additional Requests. Tenant may request such
Discretionary FF & E Expenditure, by providing the Director with a budgeted request and proof or reasonable reserves remaining in the Capital Improvement Account after the Discretionary FF & E Expenditure. The Director in its sole and absolute discretion has the right to approve or disapprove any or all of the proposed Discretionary FF & E Expenditure. No Discretionary FF & E Expenditure will be approved if sufficient funds are not available in the Capital Improvement Reserve Fund for purposes of making then needed replacement of building elements such as mechanical systems, roofing and structural repairs. Additionally, no Discretionary FF & E Expenditure will be approved if, in the sole and absolute discretion of the Director, accrual of funds in the Capital Improvement Reserve Fund is required for long term anticipated expenditures or for unanticipated emergency expenditures.
4.7.2.4. Limitations. The Capital Improvement Reserve Fund may not be used for the following: management fees; taxes or assessments imposed on the ATTACHMENT 2-12
13 premises; premiums for property damage and liability insurance; utility services that Tenant may not yet have paid; annual license fees required for the operation of the premises; security systems; advertising and marketing; wages, inventory, or any other operational expense.
4.7.3. Disbursements
. Tenant must prepare an annual report, within 30
days of the end of each year, for Capital Improvement expenditures made by Tenant for such quarter and submit the report to City for approval and request reimbursement from the Capital Improvement Fund. Adequate proof of payment by Tenant, such as receipts and invoices, must accompany the request for reimbursement before any reimbursement may be made. The City’s approval of the request will not be unreasonably denied or delayed provided such expenditures have been included in the approved Capital Improvement Replacement Plan (as defined below), and adequate evidence of payment has been provided to the City.
If the parties fail to agree upon the reimbursement request, the parties will submit this dispute to non-binding mediation. Any such mediation will be held and conducted in Burbank, California before a mediator who will be selected by mutual agreement of the parties. The parties would share equally in all costs related to payment of the mediator. If not resolved in mediation, such despite will be resolved in accordance with the dispute resolution mechanisms of this Lease
4.7.4. Inspection
. On or soon after the Effective Date, the City and Tenant will jointly inspect the Premises and prepare a list of repairs eligible for payment from the Capital Improvement Reserve Fund. Every 12 months thereafter, the parties will conduct a joint physical inspection of the premises for purposes of assuring the facility is maintained in a first-class condition. On an annual basis, Tenant will prepare a Capital Improvement Replacement Plan (“Capital Improvement Replacement Plan”) describing specific items to be replaced over the ensuing year, which items will be eligible for expenditures from the Capital Improvement Replacement Fund. The Capital Improvement Replacement Plan is subject to the approval of the Director, and which approval will be in its sole and absolute discretion. The Capital Improvement Replacement Plan may be revised as needed so that it is approved by City prior to any expenditure made by Tenant which is eligible for reimbursement from the Capital Improvement Reserve Fund, including any Discretionary FF & E Expenditures. The Capital Improvement Replacement Plan may contain improvements on the Premises as well as improvements adjacent to Premises when necessary, such as replacement or installation of certain fencing around the Luau Grounds and the Overflow Parking Area.
4.7.5. Termination - Inspection
. Upon termination of the Lease, a final
inspection may occur between Tenant and City, if Tenant chooses to participate. A final Capital Improvement Replacement Plan will be prepared by City that identifies all of the final work required by Tenant so that the Premises is left in a first-class condition to the City. Funds from the Capital Improvement Reserve Fund may be used to pay for all of the final work identified by the Capital Improvement Replacement Plan as well as any funds needed to cure a breach if one should exist. All remaining funds may be released and ATTACHMENT 2-13
14 returned to Tenant.
4.8. Security Deposit.
4.8.1. Acknowledgment and Consent. Tenant and City acknowledge that Tenant has provided City $20,000.00 as a security deposit for the performance by Tenant of the provisions of this Lease. (“Security Deposit”.) If Tenant is in default, City can use the security deposit, or any portion of it, to cure the default or to compensate City for all damage sustained by City resulting from Tenant's default. Tenant must immediately on demand pay to City, or replace or supplement the certificate of deposit if needed, in a sum equal to the portion of the security deposit expended or applied by City as provided in this paragraph so as to maintain the security deposit in the sum initially deposited with City.
4.8.2. Assignment or Encumbrance of Security Deposit
. Tenant may
not assign or encumber the Security Deposit or its interest in the Security Deposit without the prior written consent of Landlord. Any attempt to do so will be void and will not be binding on Landlord.
4.8.3. Waiver of Statutory Requirements; No Interest on Security Deposit. Tenant waives any and all rights, duties, and obligations either party may now, or in the future, have relating to or arising from California Civil Code §1950.7. Without limiting the generality of the foregoing, Tenant waives the provisions of California Civil Code §1950.7 and all other provisions of law, now or hereafter in effect, that (a) establish the time frame by which Landlord must refund a security deposit under a lease, or (b) provide that Landlord may claim from the Security Deposit only those sums reasonably necessary to remedy defaults in the payment of rent, to repair damage caused by Tenant, or to clean the Premises. Tenant agrees that Landlord may, in addition, claim those sums specified in this section and those sums reasonably necessary to compensate Landlord for any loss or damage caused by Tenant’s default under this Lease or the acts or omission of Tenant or any employee, agent, contractor, or invitee of Tenant or that Landlord reasonably estimates that it will suffer as a result of any breach of this Lease by Tenant. Landlord will not be required to keep the Security Deposit separate from its general funds, and Tenant will not be entitled to interest on the Security Deposit.
4.8.4. Return of Security Deposit
. If Tenant is not in default at the
expiration or termination of this Lease, City will release the security deposit to Tenant, subject to any deduction of for which Landlord is entitled under the provisions of this Lease or applicable law.
4.9. Late Payments. Tenant acknowledges that late payment by Tenant to Landlord of rent or other sums due under this Lease will cause Landlord to incur costs that are extremely difficult to ascertain in an exact amount. These costs include, but are not limited to, processing and accounting charges, and late charges that may be imposed on Landlord by the terms of any mortgage or deed of trust covering the Premises.
Accordingly, if any installment of rent or any other sum due from Tenant is not received by ATTACHMENT 2-14
15 Landlord or Landlord’s designee within 10 days when due, then Tenant will pay to Landlord a late charge equal to 10 percent of the amount due, provided that this amount will not exceed the maximum rate permitted by law, plus any actual attorney fees incurred by Landlord because of Tenant’s failure to pay rent or other charges when due under this Lease. The parties agree that the late charge represents a fair and reasonable estimate of the costs that Landlord will incur by reason of Tenant’s late payment. Acceptance of the late charge by Landlord will not constitute a waiver of Tenant’s default on the overdue amount or prevent Landlord from exercising any of the other rights and remedies granted in this Lease. A $50 charge will apply for any returned or non-cashable checks. Such charges are in addition to any applicable interest penalties set forth in this Lease.
ARTICLE 5. TAXES AND UTILITIES
5.1. Taxes.
Tenant must pay before delinquency all real estate taxes, possessory interest taxes, assessments, license fees, transient parking taxes, and other charges of every kind (including general and special assessments, foreseen and unforeseen) with respect to all land, buildings, and improvements on Premises (collectively "Taxes") and that become payable during the Term, and to the extent any such bills for Taxes are sent to the City, the City agrees to send them to Tenant within a reasonable time frame. On demand by City, Tenant must furnish City with satisfactory evidence of these payments. Tenant recognizes and understands that this Lease may create a possessory interest subject to property taxation levied on such interest. Tenant agrees to pay promptly, prior to delinquency, all such Taxes, if any, directly to the tax collector during the period of Tenant's occupancy, without liability of the City.
5.2. Utilities. Tenant may obtain the utilities, (including but not limited to gas, electricity, water, telephone and any and all other utility services provided to the Premises; and all charges for rubbish collection and other service to the Premises), during the Term, at its sole cost and without liability of the City. Utilities may be supplied to the Premises by City, and in accordance with the rules of the utility company supplying the service. City will incur no liability if any utility becomes unavailable or is interrupted for any reason not within City's reasonable control, and Tenant may not be entitled to terminate this Lease. Tenant agrees and acknowledges that Landlord will not be liable in damages or otherwise for any failure, delay, or interruption of any utility service delivered to or provided for the Premises, and that no such failure, delay, or interruption (a) constitutes an eviction or a disturbance of Tenant’s use or possession of the Premises, (b) entitles Tenant to terminate this Lease or withhold any Rent or any other amounts due under the terms of this Lease, or (c) relieves Tenant from any of Tenant’s obligations under this Lease. If City is required to construct new or additional utility installations, including, without limitation, wiring, plumbing, conduits, and mains, resulting from Tenant's changed or increased utility requirements, Tenant must on demand pay to City the total cost of these items.
ARTICLE 6. MAINTENANCE, ALTERATIONS, AND IMPROVEMENTS
6.1. General Repairs and Maintenance.
ATTACHMENT 2-15
16 6.1.1. Tenant Obligations. Tenant agrees, at its own sole cost and expense, without right of reimbursement from the City, to make such repairs, maintenance, and improvements to the Premises as may be necessary for Tenant's use and to keep the Premises in compliance with all applicable laws, ordinances and regulations, and to maintain the Premises in first class and good and sanitary order and repair, including, without limitation, all tenant's personal property, signs, plate glass, and surrounding hillside. Tenant must maintain the heating, ventilating, and air-conditioning system servicing the Premises, and Tenant must engage a maintenance firm to service same. Tenant agrees to surrender the Premises in as good and sanitary order, condition, and repair as when received from the City; permitted or approved alterations, improvements, additions and reasonable wear and tear excepted. Tenant will be liable for any damages related to the maintenance or failure to maintain Premises, including but not limited to damages caused to City improvements resulting from the acts or omissions of Tenant or its authorized representatives. The maintenance obligation of this article is in addition to the obligation to make Capital Improvements to the Premises as required in Article 4.
6.1.2. City Obligations. City is not responsible for maintaining the Premises.
Tenant waives the provisions of Civil Code sections 1941 and 1942 regarding City’s obligations for tenant-ability of the Premises and Tenant’s right to make repairs and deduct the expenses of such repairs from rent.
6.2. Specific Maintenance Obligations.
6.2.1. Parking Areas. Tenant must resurface and restripe the parking areas on the Premises, which includes the Overflow Parking Area (collectively, “Parking Area”), when determined necessary by the annual City and Tenant inspection referenced in Section 6.5. Notwithstanding the inspection findings, Tenant must restripe the Parking Area at least once within every three years and resurface the Parking Area at least once every 10 years, beginning on the Effective Date.
6.2.2. Wastewater Pretreatment Equipment
. Tenant must maintain in proper
working order the installed wastewater pretreatment equipment (including, but not limited to, the grease interceptor), and serviced by a licensed waste hauler at a minimum frequency of once every 60 calendar days. Wastewater events (including but not limited to line blockages, sanitary sewer overflows, and stormwater conveyance system contamination) occurring on Premises due to any action or inaction of Tenant resulting in a response by the City or its agents will be the sole liability of Tenant, and Tenant must bear all costs resulting from such event(s). Additionally, Tenant must pay to the City as a contractual penalty fine $1,000.00 for the first event, $2,000.00 for the second event; $3,000.00 for the third event, and continuing on in additional increments of $4,000.00 for each subsequent violation within a 12-month period. Such contractual penalties do not restrict or in any way limit the City from bringing separate criminal or civil actions which may also result in additional fines or penalties. Failure to pay such penalties within 30 days of notice is a breach of this Lease.
ATTACHMENT 2-16
17 6.2.3. Americans with Disabilities Act Upgrades. Tenant must make all modifications or upgrades to Premises to maintain compliance with all laws, especially laws relating to disabled persons accessibility to the Premises. Tenant is also responsible for any future upgrades in response to complaints made to City, and upon notification by City of such complaints.
6.2.4. Brush Clearance – Hillside.
Tenant must maintain the hillsides within
the Premises, in accordance with the City’s ordinance for brush, to the reasonable satisfaction of City’s Parks and Recreation Director and the Fire Chief.
6.2.5. Fines to increase annually. The fines specified in this article will increase by the same amount as the local consumer price index (“CPI”) increase in effect 12 months from the Effective Date, and annually thereafter. In no event may any fine be decreased should the CPI decrease.
6.3. Mechanics Liens.
Tenant must pay or cause to be paid the total cost and
expense of all works required to maintain Premises. No such payment may be construed as rent. Tenant will not suffer or permit to be enforced against the Premises or any part of it any mechanic’s, materialman’s, contractor’s, or subcontractor’s lien arising from any work of Tenant Improvement or any other part of Premises. Tenant must defend and indemnify City against all liability and loss of any type arising out of work performed on the premises by Tenant, together with reasonable attorney’s fees and all costs and expenses incurred by City in negotiating, settling, defending, or otherwise protecting against such claims.
6.4. Alterations and Additions. Except as stated in this article and in Article 4, Tenant may not make any alterations or additions to the Premises without the prior written approval of the Director. Any approved work in accordance with a scope of work approved in Article 4, or maintenance work identified by a City inspection authorized in this Article, will automatically be incorporated into this Lease by this reference, as required and approved alterations and additions, or other work. Should such work fail to be repaired or improved within time limits agreed to in writing, then Tenant will be in breach of this Lease.
All work and improvements must be legally permitted and performed in accordance with the law, including without limitation City zoning laws. With respect to the Luau Area, any expansion of the existing square footage (as of the Effective Date) requires a conditional use permit, in additional to the approvals required hereto.
6.5. Tenant-Paid Annual Inspection Program.
Every 12 months after the
Effective Date, and each 12 months thereafter, City will inspect Premises as for compliance with this Lease. City will provide Tenant 24 hours’ notice before such inspection. Tenant must pay City, within thirty days after receipt of a bill, for the annual inspection costs for the time spent by inspectors. Subsequent to each inspection, Tenant and City will meet to discuss the results of the inspection as well as any other ongoing ATTACHMENT 2-17
18 issues. Additional meetings can be called by either party at any time. If follow-up inspections are necessitated, Tenant must pay for those costs.
6.6. Additional Rights to Inspect. In addition to the annual inspection program, City has the right to enter on the Premises upon reasonable notice and at reasonable times during the term of this Lease for the purpose of inspecting the Premises for damages and to determine if Tenant is in full compliance with this Lease, or in accordance with any other inspection rights set forth in this Lease.
6.7. Ownership of Improvements.
All improvements which are affixed to any
structures at the Premises belong to the City upon expiration of the term or sooner termination of this Lease. Tenant may not, however, remove any other improvements from the Premises nor waste, destroy, or modify any improvements on the Premises, except as permitted by this Lease. The parties covenant for themselves and all persons claiming under them that the improvements are real property. All improvements on the Premises at the expiration of the Term or sooner termination of the lease will without compensation to Tenant, then become City property free and clear of all claims to or against them by Tenant or any third person, and Tenant must defend and indemnify City against all liability and loss arising from such claims or from all liability and loss arising from such claims or from City's exercise of the rights conferred by this paragraph. An inventory of all affixed property must be conducted within 6 months of the signing of this lease and provided to the City, and thereafter, the inventory must be updated every two years thereafter and submitted to the City, in accordance with Section 2.5.5.
ARTICLE 7. ENVIRONMENTAL COMPLIANCE
7.1. Hazardous Materials; Compliance With Environmental Laws. Tenant, at its sole cost and expense, will comply with all Environmental Laws (as defined in this article), including all federal, state, and local laws and regulations relating to the generation, handling, presence, storage, transportation, use, and disposal of all Hazardous Materials (as defined in this article).
7.1.1. Definition of Hazardous Materials . For purposes of this Lease, “Hazardous Materials” means (a) substances that now or in the future are defined or regulated by Environmental Laws as “contamination,” “contaminants,” “hazardous,” “hazardous substances,” “hazardous materials,” “hazardous wastes,” “pollutants,” “pollution,” “toxic,” “toxic substances,” “toxins,” or “ultra-hazardous” or are otherwise listed or regulated under any Environmental Laws; (b) petroleum products, crude oil (or any fraction thereof), and their derivatives; (c) asbestos, explosives, lead -based paint, polychlorinated biphenyls, radioactive materials, and urea formaldehyde; and (d) noxious fumes, soot, or vapors.
7.1.2. Definition of Environmental Laws
. For purposes of this Lease,
“Environmental Laws” means (a) any and all federal, state, and local laws relating to protection of human health or the environment (including air, surface water, groundwater, land surface or subsurface), whether currently in force, previously enforced, or subsequently ATTACHMENT 2-18
19 enacted, including the following laws: 15 United States Code §§2601 –2697 (the Toxic Substances Control Act of 1976, as amended by the Frank R. Lautenberg Chemical Safety for the 21st Century Act (TSCA)); 33 United States Code §§1251–1388 (the Clean Water Act); 42 United States Code §§6901–6992k (the Resource Conservation and Recovery Act of 1976 (RCRA)); 42 United States Code §§7401 –7671q (the Clean Air Act); 42 United States Code §§9601–9675 (the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA)); 49 United States Code §§5101–5128 (the Hazardous Materials Transportation Act); 33 United States Code §§2701–2762 (the Oil Pollution Act of 1990); California Health and Safety Code §§25100–25259 (the Hazardous Waste Control Law); California Health and Safety Code §§25270–25270.13 (the Aboveground Petroleum Storage Act); California Health and Safety Code §§25300 –25395.45 (the Carpenter - Presley-Tanner Hazardous Substance Account Act); California Health and Safety Code §§25404–25404.9 (Unified Hazardous Waste and Hazardous Materials Management Regulatory Program); California Health and Safety Code §§25500– 25547.8 (Hazardous Materials Release Response Plans and Inventory); California Health and Safety Code §§25249.5–25249.14 (the California Safe Drinking Water and Toxic Enforcement Act of 1986, or Proposition 65); California Health and Safety Code §§25280 –25299.8 (Underground Storage of Hazardous Substances); Cal ifornia Health and Safety Code §§18901–18949.31California Building Standards Law); California Water Code §§13000– 16104 (which includes the Porter-Cologne Water Quality Control Act); and California Fish and Game Code §§5650–5656; (b) all regulations that have been adopted or promulgated under such statutes or that are adopted under such statutes after the Effective Date; and (c) all enforceable demands, directives, and orders of any court, administrative body, or government entity relating to Hazardous Materials, whether currently in force, previously enforced, or enacted after the Effective Date.
7.2. Use of Hazardous Materials.
Without the prior written consent of Landlord,
Tenant will not cause or permit any Hazardous Materials to be brought on, disposed of, generated, released, stored, transported, treated, used, or otherwise handled at, on, under, or about the Premises, except for such types and in such quantities as are commonly and customarily associated with Tenant’s Permitted Use of the Premises. Tenant will ensure that all such materials, including any related wastes, are at all times managed, disposed of, and otherwise handled in strict compliance with all applicable laws, including all Environmental Laws.
7.3. Environmental Questionnaire and Disclosure Statement.
If Tenant
desires to dispose of, generate, store, use, transport, treat, or otherwise handle Hazardous Materials at, on, under, or about the Premises other than those types and quantities specifically approved by Landlord or that (a) are commonly used for cleaning and maintenance of the premises and other operational aspects of Tenant’s business; (b) do not require a filing, permitting, or reporting under any Environmental Law, including filing of a Hazardous Materials Business Plan under California Health and Safety Code §§25500 – 25547.8 (Hazardous Materials Release Response Plans and Inventory) or with a local agency having jurisdiction over the Premises; (c) productions containing Hazardous Material that are used for common household, yard or family purposes, provided that same are held for sale at retail in their original manufacturer’s containers and provided that the same are ATTACHMENT 2-19
20 at all times stored, used, handled and disposed of in compliance with all Environmental Laws; or (d) are commonly and customarily associated with Tenant’s permitted use of the Premises, then, before the execution of this Lease, or no less than 10 days before the first appearance of these materials at the Premises, Tenant will complete, execute, and deliver to Landlord an Environmental Questionnaire and Disclosure Statement in Landlord’s then- current form of this document ( “Environmental Questionnaire”). On review of the completed Environmental Questionnaire, Landlord, in its sole and reasonable discretion, may approve, condition, or reject, in whole or in part, Tenant’s proposed use of the Hazardous Materials at or about the Premises. The completed Environmental Questionnaire will be deemed incorporated into this Lease for all purposes, and Landlord will be entitled to rely fully on the information contained in it. Tenant will update and resubmit to Landlord the Environmental Questionnaire periodically, as required by Landlord, and immediately if material changes occur in the nature or quantity of Hazardous Materials being disposed of, generated, stored, transported, treated, used, or otherwise handled at, on, under, or about the Premises.
7.4. Notice.
Tenant will immediately notify Landlord of (and provide to Landlord copies of all documents, including all permits, relating to) the use, presence, release, or suspected release of Hazardous Materials at, on, under, or about the Premises. In addition, Tenant will immediately notify Landlord of (and provide to Landlord copies of all documents relating to) any action, claim, demand, inquiry, order, request, or suit by any entity, including any government agency, relating to the use, presence, release, or suspected release of Hazardous Materials at, under, or emanating from the Premises.
7.5. Investigation and Remediation.
Tenant will be solely responsible for
investigating and fully remediating any discharge, disposal, or release of Hazardous Materials at, on, under, or about the Premises caused in whole or in part by Tenant, or any of Tenant’s agents, contractors, employees, guests, invitees, servants, or any other entity acting on Tenant’s behalf, at Tenant’s request, or with Tenant’s permission, at Tenant’s sole cost and expense, and regardless of whether the materials are present at levels that require remediation under applicable laws. Tenant will conduct all investigation and remediation work under the oversight of the appropriate environmental regulatory agency, in accordance with all applicable laws (including all Environmental Laws) and good commercial practice, and under a written site assessment and (if remediation is required) a remediation work plan, each of which, including the Tenant’s choice of the environmental professionals and contractors that will perform the work, must be reviewed and approved in writing by Landlord (such approval not to be unreasonably withheld) before commencement of any work. Tenant will take all actions necessary to restore the Premises to the condition existing before the introduction of the Hazardous Materials at, on, under, or about the Premises, despite any less stringent standard or remediation allowable under applicable law, regulation, or governmental policy.
7.6. Indemnification by Tenant.
In addition to any other indemnification
obligation, Tenant will defend, indemnify, and hold Landlord harmless against and from all actions, causes of action, claims, costs, demands, fines, judgments, liabilities, orders, penalties, requests, and expenses of any kind or type, including attorney and expert fees ATTACHMENT 2-20
21 and costs (collectively, “Claims”) arising out of, directly or indirectly, or in connection with (a) any noncompliance by Tenant, or any of Tenant’s agents, contractors, emp loyees, guests, invitees, servants, or any other entity acting on Tenant’s behalf (collectively, “Tenant Parties”), with any Environmental Laws, or with any of Tenant’s other obligations under this article; (b) any disposal, disturbance, generation, production, release, storage, transportation, treatment, use, or other handling of Hazardous Materials at, on, under, about, or otherwise affecting the Premises, caused in whole or in part by Tenant Parties; and (c) the presence of any Hazardous Materials at, on, under, about, or otherwise affecting the Premises, regardless of the source or cause of origination and irrespective of whether such Hazardous Materials first become present at, on, under, about, or otherwise affecting the Premises before or during the Term of the Lease or any holdover period. As between Landlord and Tenant, Tenant will be solely responsible for, will pay for, and will defend, indemnify, and hold Landlord harmless against and from, all Claims arising out of Tenant’s indemnity or relating thereto, including costs associated with all investigation, cleanup, and restoration work and all materials necessary to return the Premises to their condition as they existed before the introduction of the Hazardous Materials. The indemnification set forth in this section survives the expiration or earlier termination of this Lease.
Under this section, Tenant agrees to defend Landlord against all Claims actually or potentially within the scope of Tenant’s indemnity, even if such Claims may be groundless, fraudulent, or false. In the event any Claim is made against Landlord that may be within the scope of the indemnity provision of this section, Landlord will provide notice of the claim to Tenant within a reasonable time after learning of the Claim, and thereafter will reasonably cooperate with Tenant in the defense of such claims; provided that any failure to provide notice will not affect Tenant’s indemnity obligations except to the extent Tenant is materially prejudiced by the failure.
Tenant will be entitled to select counsel and control the defense of all indemnified Claims, subject to Landlord’s approval, which will not be unreasonably withheld. Landlord will be entitled to participate in its defense at its own expense. If Tenant fails within a reasonable time following notice from Landlord alleging a failure to take reasonable and appropriate action to defend any Claim s, then Landlord will have the right to promptly hire outside counsel to carry out the defense, and Landlord’s costs will be reimbursed by Tenant within 30 business days after receipt of an invoice by Tenant. The indemnification set forth in this section survives the expiration of the Term or earlier termination of this Lease.
7.7. Asbestos. Landlord
has advised Tenant whether the Premises contains, or
is likely to contain, asbestos -containing materials. If Tenant undertakes, or intends to undertake, any additions, alterations, or improvements to the Premises, then Tenant will, at no cost to Landlord, (a) conduct all such activities in accordance with all applicable laws, including all Environmental Laws relating to the presence, management, handling, removal, and disposal of asbestos -containing materials; (b) prevent the disturbance or spread of asbestos-containing materials at, within, or from the Premises; and (c) provide all required notices, including any notices required by California Health and Safety Code §§25915– 25919.7 (Asbestos Notification Act), applicable provisions of the California Labor Code, and the National Emission Standard for Asbestos (40 Code of Federal Regulations §§61.140– ATTACHMENT 2-21
22 61.157). Tenant will additionally comply with all requirements imposed under any Environmental Laws regarding abatement of conditions arising from the presence of asbestos-containing materials on the Premises.
7.8. Termination of Lease
. Despite any other provisions of this Lease, if at any time the reasonably anticipated costs associated with any required investigation or remediation of Hazardous Materials at or affecting the Premises exceed 20 percent of the then full replacement cost of the Premises, then Landlord has the right to terminate this Lease on 30 days’ written notice without further obligation to Tenant. If this Lease is terminated as provided in this section, then Landlord is entitled to retain any insurance proceeds payable by reason of the Hazardous Materials discharge.
7.9. Wastewater Discharge Permit.
Tenant is subject to a wastewater discharge
permit issued by City. This permit will include additional requirements to ensure the proper usage of City’s sewer and drain system by Tenant. Tenant will also be in default of this Lease if such permit, or any other permit required by the City, is ever revoked or otherwise not valid.
ARTICLE 8. INSURANCE AND INDEMNITY
8.1. Insurance. At all times throughout the Term of this Lease and any extensions thereof, Tenant must secure and maintain, at its sole cost, the following types of insurance acceptable to the City against claims for injuries to persons or damage to property at Premises which may arise from or in connection with the performance of this Lease by the Tenant, its agents, representatives, employees or subcontractors:
8.1.1. Comprehensive General Liability. Tenant will maintain comprehensive general liability insurance in an amount not less than $1,000,000 combined single limit each occurrence for bodily injury, personal injury or death, and property damage with a $2,000,000 aggregate. An umbrella policy in a minimum amount of $10,000,000 must be maintained during the Term. All liability insurance required under this section must include personal injury, blanket contractual, cross -liability, and severability of interest clauses; products-completed operations; broad form property damage; independent contractors; owned, non-owned, and hired vehicles; and, if alcoholic beverages are served, sold, consumed, or obtained in the Premises, liquor law liability.
8.1.2. Workers’ Compensation Coverage
. Tenant will maintain w orkers’
compensation coverage as required by law, including employer’s liability coverage, with a limit of not less than $1,000,000, and waiver by Tenant’s insurer of any right of subrogation against Landlord and Landlord’s property manager by reason of any payment under such coverage.
8.1.3. Business Interruption Insurance . Tenant will maintain business interruption or loss-of-income insurance in amounts sufficient to insure Tenant’s business operations for a period of not less than one year.
ATTACHMENT 2-22
23 8.1.4. Tenant’s Property Insurance. Tenant will maintain insurance covering all of Tenant’s Work, Tenant’s leasehold improvements, alterations permitted under Article 6, trade fixtures, merchandise, and personal property from time to time in, on, or about the Premises in an amount not less than their full replacement value from time to time, including replacement cost endorsement, providing protection against any peril included within the classification “Named Perils Coverage,” sprinkler damage, vandalism, malicious mischief, and such other additional perils as covered in an “all-risk” standard insurance policy. Any policy proceeds will be used for the repair or replacement of the property damaged or destroyed unless this Lease ceases and terminates under the provisions of this Lease.
Tenant’s property insurance must provide insurance coverage with a minimum limit of at least $6,000,000 to cover replacement of the building or premises.
8.1.5. Construction Insurance. Tenant will maintain any insurance policies designated necessary by Landlord with regard to Tenant’s, or Tenant’s contractors’, construction of Tenant’s work as well as with regard to the construction of alterations including contingent liability and “all-risk” builders’ insurance, in amounts acceptable to Landlord.
8.1.6. Automobile Liability Insurance. Tenant will maintain in an amount not less than $1,000.000 combined single limit per accident for bodily injury and property damage covering owned, non-owned and hired vehicles and business auto liability policy, to include garage keeper’s legal liability, with a limit of not less than $1,000,000 for each accident. The City of Burbank must be covered as an additional insured under the business auto liability policy of any valet parking operator.
8.1.7. Commercial Crime Insurance . Coverage for all losses emanating from the handling of money and/or securities, including but not limited to losses resulting from dishonest or criminal acts, fraud, embezzlement, forgery, misappropriation or loss of funds and errors in the processing or reporting of funds. This policy shall be written for a minimum limit of $500,000.
8.2. No Cancellation. Each insurance policy must be endorsed to state that coverage may not be cancelled by either party, reduced in coverage or in limits, except after 30 days prior written notice has been given to City and must be primary and not contributing to any other insurance or self-insurance maintained by City.
8.3. Minimum Insurance.
City reserves the right to reasonably increase
minimum insurance requirements identified herein and may provide Tenant 180 days’ notice of any required increase. Tenant agrees to increase its insurance coverage within 30 days of the new insurance coverage requirements being effective. The minimum insurance required under Section 8 may be modified upon tenant’s application and written consent of the City Risk Manager.
8.4. Insurance Ratings. Acceptable insurance coverage must be placed with carriers admitted to write insurance in California, or carriers with a rating of or equivalent to A:VIII by A.A. Best & Company and may be subject to such self-insurance or deductible as ATTACHMENT 2-23
24 may be approved by the City ’s r isk manager, and the City Attorney , which will not be unreasonably withheld.
8.5. Deductibles. All deductibles are subject to City’s written approval, which will not be unreasonably withheld
8.6. Endorsements.
All policies must include a separate endorsement, in a form reasonably satisfactory to the City Attorney and the City Risk Manager, naming the City of Burbank, its officers and employees as additional insureds as respects liability arising out of activities performed by or on behalf of the City. Tenant must secure a “Per Location endorsement” or equivalent reasonably acceptable to City so that the general aggregate and other limits apply separately and specifically to the Premises.
8.7. Provision of Certificates of Insurance.
Upon execution of this Lease and
every 12 months thereafter, Tenant must deliver to the Community Development Director and Purchasing Department appropriate certificates for each policy of insurance required by this Lease. Tenant further agrees to deliver to the Director sufficient evidence of each policy not later than 30 days before its expiration.
8.8. Tenant’s Failure to Maintain Insurance.
If Tenant refuses or neglects to
secure and maintain insurance policies complying with the provisions of this article, Landlord may, after three business days’ notice within which any such failure is not cured by Tenant, secure the appropriate insurance policies and Tenant will pay, on demand, the cost of the policies to Landlord as additional rent.
8.9. Waiver of Subrogation. Landlord and Tenant each waive any rights each may have against the other on account of any loss or damage occasioned to Landlord or Tenant, as the case may be, their respective property and the Premises, arising from any liability, loss, damage, or injury caused by fire or other casualty for which property insurance is carried or required to be carried under this Lease. The insurance policies obtained by Landlord and Tenant under this Lease will contain endorsements waiving any right of subrogation that the insurer may otherwise have against the non-insuring party.
8.10. Indemnity Reflective in Insurance .
The in surance policies obtained by
Tenant pursuant to this section must specifically insure performance by Tenant of the indemnity set forth in this article, provide that the coverage is primary, and any coverage that the City may maintain will be in excess thereto, include a cross-liability or severability of interest endorsement and provide that it may not be canceled or modified without thirty (30) days prior written notice to the City. The li ability limits of the above-described insurance policy will in no manner limit the liability of Tenant under the terms of the indemnification set forth in this article.
8.11. Indemnity and Hold Harmless.
In addition to any other indemnity or
insurance obligation in this Lease, Tenant will pay for, defend (with an attorney approved by Landlord), indemnify, and hold Landlord harmless against and from any real or alleged ATTACHMENT 2-24
25 damage or injury and from all claims, judgments, liabilities, costs, and expenses, including attorney fees and costs, arising out of or connected with Tenant’s use of the Premises and its facilities, or any repairs, alterations, or improvements (including original improvements and fixtures specified as Tenant’s work) that Tenant may make or cause to be made on the Premises, any breach of this Lease by Tenant, and any loss or interruption of business or loss of rental income resulting from any of the foregoing; provided (and though Tenant will in all cases accept any tender of defense of any action or proceeding in which Landlord is named or made a party and will, despite any allegations of negligence or misconduct on the part of Landlord, defend Landlord as provided in this section) that Tenant will not be liable for such damage or injury to the extent and in the proportion that it is ultimately determined to be attributable to the negligence or misconduct of Landlord in which case Landlord will also reimburse Tenant for any related legal costs. This obligation to indemnify will include all of Landlord’s attorney fees, litigation costs, investigation and court costs, and all other costs, expenses, and liabilities incurred by Landlord or its counsel from the first notice that any claim or demand is to be made or may be made.
Tenant specifically holds the City of Burbank harmless from any claims relating to death, injury, or damage of any kind to persons or property from any cause whatsoever by reason of the use and occupancy of the Premises by Tenant, its agents, servants, employees, or invitees, and Tenant hereby waives all claims and causes of actions against City for any such injury or damage as well as for consequential damages, loss of profits, business interruptions, and damages relating to mold or golf related claims, whether on the Access to the Luau Grounds as designated or which may be designated in the future, or anywhere on Premises. City will not be liable to Tenant, its agents, servants, employees, or invitees for any damage, loss, or injury caused by the condition or design of, or any defect in, the Premises, unless the loss, damage, or injury is the result of the negligence or willful misconduct of the City or its duly authorized employees, officers, or agents.
It is further understood and agreed that all rights under Section 1542 of the Civil Code of California and any similar law of any state or territory of the United States are hereby expressly waived. This means that Tenant may not invoke the benefits of Section 1542 or any similar law in order to prosecute or assert in any manner any claims released hereunder. Said section reads as follows:
"Section 1542. Certain claims not affected by general release. A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have materially affected his settlement with the debtor."
Tenant agrees that compliance with the Americans with Disabilities Act and all other local, State and Federal laws, will be Tenant sole responsibility and Tenant will defend, indemnify, and hold harmless City from any such liability.
ARTICLE 9. DEFAULTS
ATTACHMENT 2-25
26 9.1. Events of Default – Tenant. At the option of Landlord, an “Event of Default” by Tenant will exist if any of the following events occur:
9.1.1. Tenant fails to pay any Minimum Rent, Percentage Rent, or any other rent or charge payable by Tenant under this Lease, when such is due, and such default continues uncured for a period of 30 days after written notice from Landlord to Tenant.
9.1.2. Tenant fails more than twice within a 12-month period to make any payment of rent when due, provided that in each instance Landlord has given Tenant any applicable required written notice (the third failure will be a non-curable default).
9.1.3. Tenant abandons or vacates the Premises.
9.1.4. Tenant assigns this Lease or subleases any portion of the Premises without the express consent of the City.
9.1.5. Tenant fails continuously to operate in the manner required by this Lease.
9.1.6. The filing by or against Tenant or any guarantor of any petition under an insolvency or bankruptcy law, including the Federal Bankruptcy Code, or a general assignment by Tenant or any guarantor of this Lease for the benefit of creditors, unless in the case of an involuntary petition filed against Tenant or any guarantor, the same is dismissed within 90 days, or the appointment of a trustee or receiver to take possession of all or substantially all of the assets of Tenant or any guarantor, unless possession is restored to Tenant or such guarantor within 30 days, or any execution or other judicially authorized seizure of all or substantially all of Tenant’s assets located on the Premises or of Tenant's interest in this Lease, unless the seizure is discharged within 30 days.
9.1.7. If Tenant drops below an A rating as issued by the Health Department, it must notify City immediately and provide City with a written explanation of the problem and copies of any citations issued by the Health Department. The City will then provide Tenant a period for compliance in writing. If in the Health Department’s next inspection, or within six months, whichever is so designated by the City in writing, and Tenant has failed to remedy the problem, then Tenant will be in breach of this Lease. In no event, may Tenant fall below a “B” rating, and if so, Tenant will be in default of this Lease.
9.1.8. Tenant fails to perform fully any of its other promises, covenants, or agreements under this Lease as and when due, and such default continues for more than 30 days after written notice from Landlord to Tenant specifying the particulars of the default (provided that if the default cannot be rectified or cured within the 30 day period, then the default will be considered rectified or cured if Tenant, within the 30 day period, begins to rectify or cure the default and thereafter diligently and continuously pursues it to completion).
ATTACHMENT 2-26
27 9.2. Notices of Default. Any notice required to be given by Landlord under this article will supersede and be in lieu of, and not in addition to, any notice required under the laws of the state of California. Tenant waives any notice required by applicable laws. If there is an alternative date for compliance in any notice of default, that alternative date will govern.
9.3. Remedies
. If an Event of Default occurs, Landlord will have the following remedies, which will not be exclusive but will be cumulative and in addition to any or all rights or remedies of Landlord provided under this Lease or by law or in equity.
9.3.1. Right of Landlord to Perform
. If Tenant fails to make any payment required
under this Lease (other than Minimum Rent, Percentage Rent, or additional rent) or fails to perform any of its other obligations under this Lease, Landlord may, but will not be obligated to, and without waiving any default of Tenant or releasing Tenant from any obligations to Landlord under this Lease, make any such payment or perform any other such obligation on Tenant’s behalf. All sums so paid by Landlord and all necessary incidental costs in connection with the performance by Landlord of an obligation of Tenant (together with interest from the date of such payment by Landlord until paid at the Interest Rate) will be payable by Tenant to Landlord on demand, and Tenant’s failure to make such payment on demand will entitle Landlord to the same remedies provided Landlord in the event of nonpayment of rent.
9.3.2. Termination
. Landlord will have the right, at Landlord’s option, without further notice or demand of any kind to Tenant or any other person, to declare the Lease terminated and to reenter and take possession of the Premises and remove all persons from it. No act by Landlord other than giving written notice to Tenant of Landlord’s election to terminate Tenant’s right to possession will terminate this Lease. Acts of maintenance, efforts to relet the Premises, or the appointment of a receiver on Landlord’s initiative to protect Landlord’s interest under this Lease will not constitute a termination of Tenant’s right to possession.
Tenant waives, for itself and all persons claiming by and under Tenant, all rights and privileges that it may have under any present or future Applicable Laws, including, but not limited to, California Code of Civil Procedure §§1174(c) and 1179, to redeem the Premises or to continue this Lease after being dispossessed or ejected from the Premises.
9.3.3. Continue Lease in Effect
. Landlord will have the remedy described in
California Civil Code §1951.4 (a landlord may continue the lease in effect after the tenant’s breach and abandonment and recover rent as it becomes due, if the tenant has the right to sublet and assign subject only to reasonable limitations), and may continue this Lease in full force and effect and enforce all of its rights and remedies under this Lease, including the right to recover rent ATTACHMENT 2-27
28 as it becomes due. After the occurrence of an Event of Default, Landlord may enter the Premises without terminating this Lease and sublet all or any part of the Premises for Tenant’s account to any person, for such term (which may be a period beyond the remaining term of this Lease), at such rents, and on such other terms and conditions as Landlord deems advisable. In the event of any such subletting, rents received by Landlord from the subletting will be applied (a) first, to the payment of the costs of maintaining, preserving, altering, and preparing the Premises for subletting, the other costs of subletting, including brokers’ commissions, attorney fees, and expenses of removal of Tenant’s personal property, trade fixtures, and Alterations; (b) second, to the payment of rent then due and payable under this Lease; (c) third, to the payment of future rent as it may become due and payable under this Lease; and (d) fourth, the balance, if any, will be paid to Tenant on (but not before) expiration of the term of this Lease. If the rents received by Landlord from such subletting, after application as provided above, are insufficient in any month to pay the rent due and payable under this Lease for that month, then Tenant will pay the deficiency to Landlord monthly on demand. Despite any such subletting for Tenant’s account without termination, Landlord may at any time thereafter, by written notice to Tenant, elect to terminate this Lease by virtue of a previous Event of Default.
9.4. Surrender of Premises
. Upon termination of this Lease, Tenant, without
further notice, must deliver all of the keys to the Premises to the Director located at 150 N.
Third Street, Burbank, California 91502. All such removal must be accomplished at a time reasonably specified by the City and in a good workmanlike manner so as not to damage any part of the Premises. Any holding over by the Tenant after expiration of the Lease may not be construed to be a renewal or extension and will not give Tenant any right in or to the Premises except as expressly provided in this Lease.
9.5. Insolvency Default Remedies
. In addition to any rights or remedies
conferred on Landlord under the terms of this Lease, the following remedies and provisions will specifically apply in the event Tenant engages in any one or more of the acts contemplated by the provisions of section 9.1 of this Lease:
9.5.1. Any (i) receiver or (ii) debtor-in-possession or trustee in bankruptcy will either expressly assume or reject this Lease within 120 days following the filing of a voluntary petition in bankruptcy or the entry of an “Order For Relief” (as defined in 11 USC §§102(6), 301(b), and 303(h) or any similar provisions of law subsequently enacted) or within such earlier time as may be provided by applicable law;
9.5.2. In the event of an assumption of this Lease by a debtor-in- possession or by a trustee in bankruptcy, the debtor or trustee will, within 15 days after the assumption: (1) cure any default or provide adequate assurance that defaults will be promptly cured; (2) compensate Landlord for actual pecuniary loss or provide adequate assurance that compensation will be made for actual pecuniary loss, including all attorney fees and costs incurred by Landlord resulting from any such proceedings; and (3) provide ATTACHMENT 2-28
29 adequate assurance of future performance;
9.5.3. When a default exists under this Lease, the trustee or debtor assuming this Lease may not require Landlord to provide services or supplies incidental to this Lease before its assumption by the trustee or debtor unless (1) Landlord is compensated for those services and supplies provided and (2) any existing default is cured before the assumption of the Lease;
9.5.4. Debtor or trustee may assign this Lease only if each of the following conditions is satisfied: (1) the Lease is assumed; (2) adequate assurance of future performance by the assignee is provided, whether or not the Tenant is in default under this Lease; and (3) any consideration paid by any assignee in excess of the rent reserved in this Lease will be the sole property of, and paid to, Landlord;
9.5.5. Landlord will be entitled to the fair market value of occupancy of the Premises and the services provided by Landlord (but in no event less than the rent reserved in this Lease) subsequent to the commencement of a bankruptcy event;
9.5.6. Any security deposit given by Tenant to Landlord to secure the future performance by Tenant of all or any of the terms and conditions of this Lease will be automatically transferred to Landlord on the entry of an order of relief by a court of competent jurisdiction; and
9.5.7. Landlord will be entitled to adequate assurance of further performance of the terms and provisions of this Lease in the event of any assumption and assignment of the Lease under the provisions of the Federal Bankruptcy Code. For purposes of any such assumption or assignment, the parties agree that “adequate assurance,” as used throughout this section 12.8, will include the following:
9.5.7.1. Any proposed assignee must have demonstrated to Landlord’s satisfaction that it has a net worth (as defined in accordance with generally accepted accounting principles consistently applied) of an amount sufficient to ensure that the proposed assignee will have the resources with which to conduct the business to be operated in the Premises, including the payment of all Rent and other charges under this Lease, for the balance of the Term. The financial condition and resources of Tenant are material inducements to Landlord having entered into this Lease.
9.5.7.2. Any proposed assignee must have engaged in the Permitted Use described in Article 2 of this Lease for at least five consecutive years prior to the proposed assignment.
9.5.7.3. Any proposed assignee must have had minimum sales at each location at which it operated such a business equal to at least 90 percent of Tenant’s average monthly sales at the Premises for the 18-month period preceding initiation of a proceeding under the Federal Bankruptcy Code.
ATTACHMENT 2-29
30 9.5.7.4. Any proposed assignee must use the Premises only for the permitted use as set forth under Article 2.
9.9. Landlord’s Default. In no event will Landlord be deemed to be in default under this Lease unless all of the following occur: (1) Landlord fails to perform when due its obligations under this Lease; (2) Tenant delivers to Landlord (and to any mortgagee of Landlord who has provided Tenant with its address for notice) written notice specifying the nature of Landlord’s alleged default; and (3) Landlord fails to cure the default within 60- days following receipt of such notice (or, if the default cannot reasonably be cured within that period, to begin taking curative action within the 60-day period and proceed diligently thereafter to cure the default. If Landlord defaults, Tenant’s sole remedy will be to pursue an action for money damages or equitable relief against Landlord, and Tenant will not be entitled to terminate this Lease as a result of the default. In no event will Landlord be liable for consequential damages.
9.10. Nonwaiver.
The City's consent to, or approval of, any act will not be deemed to render unnecessary the obtaining of the City's consent to or approval of any subsequent act by any tenant.
ARTICLE 10. MISCELLANEOUS PROVISIONS
10.1. Assignment and Renting
. Tenant may not voluntarily assign, sublet,
transfer, mortgage, or otherwise transfer or encumber all or any part of Tenant's interest in this Lease or in the Premises, or rent said Premises or any part thereof, without the prior written consent of the City, which consent may be withheld in the sole and absolute discretion of the City. Any attempted assignment, transfer, sublease, encumbering or renting without such consent is void and constitutes a breach of this Lease. In the event a receiver, trustee or conservator is appointed to take possession of the assets of Tenant, or the possession of the Premises, or a general assignment is made by Tenant for the benefit of creditors, or any action is taken by or against Tenant under any insolvency law or bankruptcy act, the City, at its option, may forthwith terminate this Lease. Any consent by the City to the assignment or other transfer of rights hereunder by the Tenant will not release the Tenant from any obligations under this Lease, and the City's consent, unless expressly provided therein, will not include consent to any subsequent assignment or transfer by Tenant or the Tenant's heirs, successors or assigns.
10.2. Notices
. All notices, demands and communications which either party is required or desires to give to the other must be given in writing by certified mail, return receipt requested with appropriate postage paid; by personal delivery; or by private overnight courier service to the address set forth below for the respective party with copy also sent by fax to the fax number set forth below, provided that if any party gives notice of a change of name or address or number, notices to that party may thereafter be given as demanded in that notice and demands so given may be effective upon receipt by the party to whom notice or demand is being given, except that any notice given by certified mail will be deemed delivered three (3) days after deposit in the United States mails.
ATTACHMENT 2-30
31 If to City: City of Burbank
Attn: Community Development Department/
Real Estate Division
150 N. Third Street
Burbank, CA 91502
Facsimile No.:(818) 238-5321
With a copy to: Office of the City Attorney
275 East Olive Avenue
Burbank, CA 91502
Facsimile No.: (818) 238-5724
If to Tenant: Verdugo Restaurant Corporation/ Specialty Restaurant Corporation
Attn: John D. Tallichet
150 Paularino Ave. Building C,
Costa Mesa CA 92626
[email protected]
714-279-6101
With a copy to: Castaway Restaurant
1250 E. Harvard Road
Burbank, CA 91501
10.3. G ender and Number. Words used in the masculine gender will include the feminine or neuter, and the singular will include the plural, when appropriate.
10.4. Anti-Terrorism Representations. Tenant represents and warrants to Landlord to the best of Tenant’s knowledge, and covenants with Landlord that:
10.4.1. Tenant, its partners, members, officers, directors, investors, shareholders, or affiliates are not and will not during the Term become a person or entity with whom Landlord is restricted from doing business under the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (USA PATRIOT Act) (Pub L 107–56, 115 Stat 272), Executive Order No. 13224 (Sept. 24, 2001), and regulations promulgated thereunder (collectively, Anti-Terrorism Laws).
10.4.2. Tenant, its partners, members, officers, directors, investors, shareholders, or affiliates are not and will not during the Term be included as persons or entities named on the Department of the Treasury’s Office of Foreign Assets Control (OFAC) Specially Designated Nationals and Blocked Persons List (SDN List) (collectively, Prohibited Persons).
10.4.3. Tenant is not currently, nor during the Term will become, engaged ATTACHMENT 2-31
32 in (1) any transactions or dealings, or otherwise associated with any Prohibited Persons in connection with the use or occupancy of the Premises; (2) making or receiving any contribution of funds, goods, or services to or for the benefit of any Prohibited Person; or (3) any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in any anti-money laundering or Anti- Terrorism Laws.
10.4.4. Breach of the representations, warranties, and covenants contained in this section constitutes a material breach of this Lease and will entitle Landlord to any and all remedies available under this Lease, or at law or in equity.
10.5. W aiver of Claims. Tenant hereby irrevocably waives on behalf of itself, its successors and assigns and all persons claiming through it, any claim which Tenant may assert against the City for inverse condemnation, relocation payment or assistance under California Government Code Section 7260 et seq., lost business goodwill, compensation for fixtures and equipment, and/or any other costs, expenses, or claims not specifically listed herein incurred by Tenant in connection with any termination, either by operation of law or otherwise, of this Lease. Tenant specifically acknowledges that this Lease may be pleaded as a defense and a bar to any such claim. Tenant further specifically acknowledges that in making this waiver, Tenant has consulted with its attorney and that this waiver is made freely and with knowledge of the character and extent of the rights thus waived.
10.6. Interest Rate. Except when another rate of interest is specifically provided for in this Lease, any amount due from either party to the other under this Lease that is not paid when due will bear interest at the rate per annum (Interest Rate) equal to 10 percent per annum. Despite anything contained in this Lease to the contrary, in no event will the total liability for interest payments on any amount due under this Lease exceed the limits, if any, imposed by the usury laws of the State of California. Any interest paid by Tenant in excess of those limits will be refunded to Tenant by application of the amount of excess interest paid against any amounts otherwise payable under this Lease in any order that Landlord requires. If the amount of any excess interest paid by Tenant exceeds any amounts otherwise payable, then the portion exceeding those amounts will be refunded in cash to Tenant by Landlord. Landlord and Tenant hereby agree and acknowledge that the Interest Rate is reasonable. Additionally, Landlord and Tenant hereby agree and acknowledge that the actual damage caused by a late payment under this Lease would be impracticable or extremely difficult to fix; thus, any interest payment under this Lease that is payable by reason of a late payment represents an agreed-on amount between Landlord and Tenant.
10.7. Authority to Execute. If Tenant is a corporation, partnership, or limited liability company, then each individual executing this Lease on behalf of the corporation, partnership, or limited liability company (in his/her representative capacity only) represents and warrants that he or she is duly authorized to execute and deliver this Lease on behalf of the corporation, partnership, or limited liability company and that this Lease is binding upon the corporation, partnership, or limited liability company.
ATTACHMENT 2-32
33 10.8. Attorney’s Fees and Costs. If either party engages legal counsel to secure compliance by the other party with any of the terms of this Lease or regarding any matter arising out of this Lease, whether or not such engagement requires institution of litigation, arbitration, or other legal services, then the defaulting party will be responsible for and will promptly pay to the non-defaulting party the reasonable value of the attorney fees and any other cost or expense incurred as a result of the default.
10.9. Severability. If any term, covenant, condition or provision of this Lease, or the application thereof to any person or circumstance, is held by a count of competent jurisdiction or rendered by the adoption of a statute by the State of California or the United States invalid, void or unenforceable, the remainder of the terms, covenants, conditions or provisions of this Lease, or the application thereof to any person or circumstance, will remain in full force and effect and will in no way be affected, impaired or invalidated thereby.
10.10. Legal Advice. Each party has received independent legal advice from its attorneys with respect to the advisability of executing this Lease and the meaning of the provisions hereof. The provisions of this Lease will be construed as to the fair meaning and not for or against any party based upon any attribution of such party as the sole source of the language in question.
10.11. Time of the Essence. Time is of the essence as to all dates and times of performance, whether they are contained herein or contained in any escrow instructions to be executed pursuant to this Lease, and all escrow instructions must contain a provision to this effect.
10.12. Relationship of Parties. The parties agree that their relationship is that of landlord and tenant, and that nothing in this Lease may be deemed to create any form of business organization between the parties hereto, nor is either party granted the right or authority to assume or create any obligation or responsibility on behalf of the other party, nor may either party be in any way liable for any debt of the other.
10.13. Brokers. Except as stated in this paragraph, City and Buyer each represents and warrants to the other that they have neither dealt with nor been represented by any brokers or finders in connection with the purchase and sale of the Property. Buyer and City each agree to indemnify and hold harmless the other against any loss, liability, damage, cost, claim or expense (including reasonable attorneys' fees) incurred by reason of any brokerage fee, commission or finder's fee which is payable or alleged to be payable to any broker or finder by the indemnifying party.
10.14. Exhibits. All of the exhibits referenced in this Lease and attached to it are a part of this Lease and are incorporated into this Lease by this reference. In the event of any inconsistency between the provisions of the body of this Lease and anything contained in the exhibits referenced in this Lease and attached to it, the provisions of the body of this Lease will control.
ATTACHMENT 2-33
34 10.15. Force Majeure. If Landlord or Tenant is delayed, hindered in or prevented from the performance of any required act by reason of strikes, lock-outs, labor troubles, inability to procure materials, failure of power, restrictive governmental laws or regulations, riots, insurrection, the act, failure to act or default of the other party, war or other reason beyond their control (“Force Majeure”), then performance of such act may be excused for the period of the delay and the period for the performance of any such act may be extended for a period equivalent to the period of such delay. Force Majeure will not excuse Tenant from making any payments due as set forth in this Lease or from performing any covenant or obligation imposed under this Lease by reason of the financial inability of Tenant.
10.16. Plain Meaning. Each party hereto, together with their respective legal counsel, has reviewed this Lease and negotiated these terms, and agrees that each provision is to be given its plain meaning. Each party agrees that they have been advised that they should seek legal counsel, and if they have not done so, that they have not done so based on their own volition. Each party agrees that if any issue arises as to the meaning or construction of any word, phrase, or provision hereof, that no party shall be entitled to the benefit of the principles of the construction and interpretation of contracts of written instruments that provide that any ambiguity is to be construed in favor of the party who did not draft the disputed word, phrase, or provision.
10.17. Survival. Any obligations to make payments of amounts that are due under this Lease and any other provisions of this Lease which expressly survive the expiration or termination of this Lease shall survive such expiration or termination and remain in full force and effect.
10.18. Headings. The headings of articles, sections, and the table of contents, if any, of this Lease are for convenience only and have no effect on the interpretation of the provisions of this Lease
10.19. Binding Effect. All rights and obligations of Landlord and Tenant under this Lease will extend to and bind the respective heirs, executors, legal representatives, administrators, and the permitted concessionaires, successors, subtenants, and assignees of the parties.
10.20. Governing Law; Venue. This Lease will be governed by and construed in accordance with the laws of the State of California. Venue on any action arising out of this Lease will be proper only in the superior court of the county in which the Property is located.
10.21. Recordation. In accordance with Government Code section 37393, Tenant must record this Lease with the office of the recorder for Los Angeles County.
10.22. Entire Agreement; Amendments. Landlord and Tenant agree to the following: (a) that there are no oral or written agreements (or any representations or warranties of any kind) between the parties affecting this Lease and neither party has been ATTACHMENT 2-34
35 induced to enter into this Lease by (and neither party is relying on) any agreements, representations, or warranties other than those expressly set forth in this Lease; (b) that this Lease and all of its exhibits constitute the final, complete, and exclusive statement of the terms of the agreement between Landlord and Tenant pertaining to Tenant’s lease of the Premises from Landlord and supersede and cancel any previous and contemporaneous negotiations, arrangements, representations, warranties, brochures, agreements, and understandings, if any, between Landlord and Tenant; and (c) that no provision of this Lease may be amended except by an agreement in writing signed by Landlord and Tenant.
10.23. Counterparts. This Lease may be executed simultaneously in any number of counterparts (which may be by facsimile or electronic transmission), each of which will be considered an original, but all of which together will constitute one and the same instrument. A wet-signed copy of this Lease delivered by facsimile or electronic transmission has the same legal effect as an original signed copy of this Lease.
ATTACHMENT 2-35
36 IN WITNESS WHEREOF, this Agreement has been executed by the parties, in the State of California, as of the last chronological date set forth by the signatories below.
Date _________________, 2022
" CITY"
THE CITY OF BURBANK, a
municipal corporation
Attest:
_____________________________ By:___________________________ Zizette Mullins Justin Hess
City Clerk City Manager
Date _________________, 2022 " TENANT”
VERDUGO RESTAURANT
CORPORATION
_________________________
By:___________________________
Name: ________________________
Title: _________________________
_________________________
By:___________________________
Name: ________________________
Title: _________________________
Approved as to Form
City Attorney’s Office
__________________________________
By: Kane Thuyen, Sr. Asst. City Attorney
ATTACHMENT 2-36
Exhibit “A”
Castaway and Luau Grounds
Site Map of Premises
1 1
3 2
4 Restaurant & Banquet Center
Luau Grounds
Overflow Parking
Access Road
1 2
3 4
ATTACHMENT 2-37
Castaway Legal Description
EXHIBIT "B”
That portion of land in the City of Burbank, County of Los Angeles, State of California lying in the North Half of Section 1, Township 1 North, Range 14 West, SBM, in V Beaudry's Mountains as shown on a map recorded in Book 36, Pages 67 - 71 of Miscellaneous Records in the Office of the County Recorder of said County, also lying in Part of Lot 40 of Rancho San Rafael as shown on a map recorded in Book 3, Pages 220 - 223 of Patents in the Office of the County Recorder of said County, and described as follows
Beginning at a found County Surveyor's Monument on the
southwesterly line of V Beaudry's Mounta ins, said monument shown on County Surveyor's Map B-725 entitled “V Beaudry's Mountains and Adjacent Property lines," filed in the Office of the County Surveyor of said County, said monument being shown as a Witness Corner on said County Surveyor ’s Map and lying North 56° 00' 00” West, 256 .93 feet from that certain intersection of the southwesterly line of V Beaudry’s Mountains and the westerly line of Section 36, Township 2 North, Range 14 West, SBM, and shown on said map, thence South 56° 00' 00" East, 549.56 feet along the said southwesterly line to a found County Surveyor’s Monument and shown on said County Surveyor's Map, said found monument being the intersection of said southwesterly line and the southerly line of Township 2 North, Range 14 West, SBM, thence continuing along said the southwesterly line South 56° 00' 00" East, 2026 .57 feet to the True Point of Beginning for this description, thence along the following numbered courses and distances (1) South 25° 22' 04” East, 78.94 feet, (2) South 54” 01' 00” East, 16.77 feet, (3) South 69° 04' 19” East, 277 .74 feet, (4) South 79° 04' 52" East, 54 .14 feet, (5) South 85° 10’ 35" East, 89.66 feet, (6) South 83° 23' 36” East, 97 .03 feet, (7) South 88° 25' 33” East, 102 .39 feet, (8) North 84° 59' 10" East, 98.79 feet, (9) North 81° 13’ 37" East, 76.64 feet, (10) North 0° 11’ 50” East, 80.21 feet, (11) North 2° 10' 09" East, 89.14 feet, (12) North 25° 45' 48” West, 41 .00 feet, (13) North 31° 05' 56" West , 128.71 feet, (14) North 37° 14' 53” West, 29.38 feet, (15) North 43° 24' 12" West, 17.87 feet, (16) North 49° 52' 44" West, 455 .79 feet, ATTACHMENT 2-38
(17) North 50° 20' 39" West, 75.62 feet, (18) North 56° 54' 00° West,
19.94 feet, (19) North 62° 52' 31” West, 18 .17 feet, (20) North 69° 00' 49" West, 34 .63 feet, (21) North 70° 37' 00" West, 84 .00 feet, (22) North 62° 22' 47" West, 37.98 feet, (23) South 38° 17' 58” West, 100.46 feet (24) South 49° 09' 38'' West, 102.31 feet, (25) South 53° 02' 52" West , 32.19 feet, (26) South 38° 48' 58" West, 14 .07 feet, (27) South 21° 04’ 32” West, 20.12 feet, (28) South 13° 38' 24" West,
32.72 feet, (29) South 7° 57' 19" West, 66 .29 feet, (30) South 2° 01' 40" West, 47 .43 feet, (31) South 9° 06' 52" East, 46 .92 feet, (32) South 13° 51' 04" East, 80 .40 feet, (33) South 21 ° 21' 11” East, 106.68 feet, (34) South 25° 22' 04" East, 18.33 feet to the True Point of Beginning
Said portion containing 10.7 acres, more or less
End of Description
ATTACHMENT 2-39
ATTACHMENT 2-40
Exhibit B
Luau Grounds Legal Description
That portion of land in the City of Burbank, County of Los Angeles, State of California lying in the Northwest Quarter of Section 1, Township ,1 North, Range 14 west, SBM, in V Beaudry's Mountains as shown on a map recorded in Book 36, Pages 67 - 71 of Miscellaneous Records in the Office of the County Recorder of said portion further described as follows and shown on accompanying plat
Beginning at a found County Surveyor's Monument on the
southwesterly line of V Beaudry's Mountains, said monument shown on County Surveyor's Map B -725 entitled “V Beaudry's Mountains and Adjacent Property Lines” filed in the Office of the County Surveyor of said County, said monument being shown as a Witness Corner on said County Surveyor ’s Map and lying North 56° 00' 00” West, 256 .93 feet from that certain intersection of the southwesterly line of V Beaudry's Mountains and the westerly line of Section 36, Township 2 North, Range 14 West, SBM, and shown on said map, thence South 56° 00' 00'' East, 549 .56 feet along the said southwesterly line to a found County Surveyor's Monument and shown on said County Surveyor's Map, said found monument being the intersection of said southwesterly line and th e southerly line of Township 2 North, Range 14 West, SBM, thence continuing along said the southwesterly line South 56° 00' 00 ” East, 3059.63 feet, thence North 34° 00' 00" East, 661 .81 feet measured at right angles to said last mentioned course to the True Point of Beginning for this description, thence along the following numbered courses and distances (1) North 87° 49’ 39" East, 35 .86 feet, (2) South 82° 24' 34” East, 27 .75 feet, (3) South 76° 36' 15" East, 24 .86 feet, (4) South 69° 43' 30" East , 26.24 feet, (5) South 58° 35' 47” East,
53.31 feet, (6) South 47° 01' 20” East, 36 .55 feet, (7) South 37° 02’ 40" East, 40.62 feet, (8) South 27° 34' 56” East, 50.69 feet. (9) South 25° 01' 44" East, 168.53 feet, (10) North 64° 37' 27” East, 7 .83 feet, (11) South 24° 34' 27" East, 44 .38 feet, (12) North 63° 52' 59" East,
68.58 feet, (13) North 24° 43' 14” West, 58 .17 feet (14) North 70° 38' 47” East, 10.15 feet, (15) North 04° 19' 42" East, 226.58 feet, (16) South 88° 55’ 05" West , 81.76 feet, (17) North 70° 42' 56” West, ATTACHMENT 2-41
1 ' 1 1
158.06 feet, (18) South 86° 47' 09" West, 105 .07 feet, (19) North 33° 43' 57'' West, 159.53 feet, (20) North 35°46’ 02” West, 165 .90 feet, (21) North 57° 21' 15" East, 17.86 feet, (22) North 32° 00’ 08” West, 46.75 feet, (23) North 23° 47' 16" East, 60.70 feet, (24) North 49° 44' 56” East, 43.08 feet, (25) North 41° 22’ 38" East, 49.07 feet, (26) North 25° 23' 07'' East, 42.49 feet, (27) North 05° 33' 55" West,
51.73 feet, (28) North 26° 16' 12” West, 3 6.93 feet, (29) South 56° 08' 07'' West, 21 .96 feet, (30) South 49° 29’ 16” West, 41 .82 feet, (31) South 67° 25' 19” West, 40.29 feet, (32) North 47° 15’ 37" West,
38.46 feet, (33) South 54° 24' 30” West, 23 .01 feet, (34) South 11° 01' 19" East, 20.06 feet, (35) South 74° 34' 14” West, 25 .53 feet, (36) South 87° 10' 33” West, 59.42 feet, (37) South 64° 03’ 29" West,
56.38 feet, (38) South 13° 23' 45 ” West, 20.19 feet, (39) South 56° 13' 24” East, 43.02 feet, (40) South 49° 52' 25” East, 29.27 feet, (41) South 42° 20' 09" West, 11 .15 feet, (42) South 47° 23' 08” East,
86.64 feet, (43) South 33° 51' 53” East, 28.54 feet, (44) South 25° 33' 09° East, 35 .97 feet, (45) South 17° 35' 33" East, 22 .27 feet, (46) South 04° 56' 18" East, 15.05 feet, (47) South 13° 51' 42” West, 17.18 feet, (48) South 49° 51' 38” East, 18.03 feet, (49) North 68° 01' 26” East, 14.58 feet, (50) North 85° 03' 42” East, 15 .05 feet, (51) South 81° 33' 32” East, 13.91 feet, (52) South 37° 16' 55” East, 80.46 feet, (53) South 31" 06' 55” East, 52.37 feet, (54) South 34° 19' 16" East, 132.21 feet, (55) South 59° 53' 28” West, 40.57 feet to the True Point of Beginning
Said portion containing 2.3 acres, more or less
End of Description
ATTACHMENT 2-42
ATTACHMENT 2-43
Non-Exclusive Use Area
ATTACHMENT 2-44