1 EXCLUSIVE NEGOTIATING AGREEMENT
THIS EXCLUSIVE NEGOTIATING AGREEMENT (the “Agreement”) is made and entered into as of ____________, 20______, by and between the City of Glendale, a municipal corporation (the “City”), and Events at Eden, a California corporation (the “Proposer”) (the Proposer and the City are collectively referred to herein as the “Parties”).
RECITALS
The following recitals are a substantive part of this Agreement.
A. City desires to review the feasibility of entering into a lease and management agreement for certain City-owned land and improvements commonly known as the Glendale Civic Auditorium located at 1401 N. Verdugo Road, Glendale, California (the “Civic”), as depicted on a site map which is attached hereto as Exhibit “A” and incorporated herein (the “Site”).
B. The City is interested in assessing whether the Proposer has an economically viable proposal to lease, manage and operate the Civic building on behalf of the City with the goal of increasing use of the Civic building as an assembly and event space.
C. The Parties agree and acknowledge that the purpose of this Agreement is to establish a time period during which the Proposer shall have the exclusive right work with the City to present a proposal and for the City to complete due diligence in evaluating that proposal in anticipation of negotiating a potential building lease (“Lease”) and management agreement (“Management Agreement”) for the Civic.
D. The Parties further agree and acknowledge that the City shall determine, in its sole and absolute discretion, whether the proposal to lease, manage and operate the Civic building is viable and whether the Proposer has provided evidence of sufficient experience and financial capacity to justify moving forward with negotiating the terms of a Lease and a Management Agreement to operate the Civic on behalf of the City.
E. The Parties further agree and acknowledge that the transaction anticipated in this Agreement, specifically approval of a lease of a publicly owned property, is subject to review under the Surplus Land Act (SLA) and that City’s further consideration of Proposer’s proposal must take into compliance with the SLA.
F. The Parties intend that during and for the period of negotiations set forth herein (the “Negotiating Period”) each will perform certain actions and responsibilities under this Agreement.
NOW, THEREFORE, the Parties mutually agree as follows:
2 1. Recitals. The recitals hereinabove are an important part of this Agreement and are incorporated herein by this reference.
2. Agreement to Negotiate.
(a) Agreement to Negotiate. The City and Proposer, by and through their authorized respective staff and consultants, agree that for the term of the Negotiating Period (which includes the Initial Term and any City-authorized extended term as defined below, whether said period expires or is earlier terminated by the provisions herein), each party shall negotiate diligently and in good faith to carry out its obligations under this Agreement and to complete due diligence review of the Proposal, which includes an assessment of Proposer’s experience and financial capability in order to determine whether Proposer is qualified to enter into a Lease and Management Agreement. (b) Initial Term. The initial term of the Negotiating Period shall be for six (6) months from the date of approval hereof by the City (“Initial Term”). The Initial Term Proposer shall provide the City with the details of its proposal to lease and operate the Civic building on behalf of the City (the “Proposal”); said Proposal shall include details about Proposer’s experience as tenant capable of undertaking tenant improvements and Proposer’s experience as an event space manager. The Proposal shall define and cost out any proposed Civic building improvements (the “Improvements”) Proposer believes are necessary to undertake the Proposal. Further, the Proposal shall include whether the City or Proposer would be responsible for undertaking the proposed Improvements. The City will be determining whether the Proposer has the requisite experience and financial capacity to successfully undertake the Proposal.
(c) Extended Term. Should the City determine, in its sole and absolute discretion, that additional time is needed to either complete an assessment of the Proposer’s qualifications, or that, following the successful completion of such assessment, that the Parties need additional time to complete negotiations of the terms of a Lease and Management Agreement, the City may extend the Initial Term for up to an additional six (6) months (the “Extended Term”). Any further extensions are subject to the written approval of the City Council.
(d) Exclusivity. During the Negotiating Period City agrees to negotiate exclusively with Proposer, and not with any other person or entity, with regard to the proposed lease and management of the Site.
(e) Proposer Submissions. Within thirty (30) days after the commencement of the Initial Term, the Proposer shall submit to the City the following:
(1) A detailed narrative describing the Proposal, including any proposed tenant improvements to be undertaken by Proposer including the costs therefor;
3 (2) A description of any building improvements the Proposer wants the City to undertake;
(3) Whether the Proposal includes use or lease of City-owned parking spaces, and if so approximately how many;
(4) Whether the Proposer will be responsible for maintaining the grounds and landscaping surrounding the Civic building; and
(5) A premises operation and management plan.
(f) Within ninety (90) days of submission of the items required in Section 4(e) herein above, Proposer shall submit to the City’s financial consultant the following:
(1) A financial feasibility analysis of the Proposal, which shall include a detailed estimate of tenant improvement costs, building improvement costs;
(2) An estimate of project income;
(3) A pro forma statement of project return;
(4) A description of the proposed method of financing and amounts and sources of equity and debt capital, which together shall be adequate to enable the City to evaluate the economic feasibility of the Proposal; (5) A description of any proposed revenue sharing; and
(6) A list of financial references.
Proposer financial information submitted to the City’s third-party financial consultant that is proprietary, trade-secret, confidential or otherwise legally privileged from disclosure, shall be so marked. The City’s financial consultant will provide the City with analysis and summary of the data provided for evaluation purposes only. (g) City Verification of Proposer Submissions. It is understood that City may take appropriate steps to verify information in the Proposer’s submissions, including hiring a financial consultant, and Proposer agrees to cooperate in furnishing information to City and to the City’s financial consultant(s). In the event that this Agreement is terminated for any reason, the City shall have the right to use the materials submitted pursuant to this paragraph for its own purposes, and Proposer agrees to assign to the City any rights it has in and to the above submissions to the extent such submissions are not proprietary or otherwise protected by legal privilege, including trade secrets. The Proposer shall execute any further documents provided by the City to reasonably confirm such assignment.
4 (h) City Evaluation of Proposal. Upon the City’s receipt of the Proposer’s complete submissions as provided in subparagraph 2(e) and (f) above, the City shall evaluate such submissions and shall consider the Proposer's proposal, which evaluation shall include, but is not limited to obtaining financial feasibility analyses from its financial or other consultants as appropriate.
(i) Termination of Agreement. Except as this Agreement is extended as otherwise provided in this Agreement, if on the three hundred sixty fifth (365th) day from the date of approval by the City of this Agreement, Proposer has not fully performed its obligations in accordance with this Agreement, or the Parties have not completed the negotiations of the terms and provisions of a mutually acceptable Lease and Management Agreement, and provided that the Proposer and the City have performed their obligations in accordance with this Agreement, then this Agreement shall automatically terminate without further written notice. Upon such automatic termination and expiration of the Negotiating Period, both Parties knowingly agree that neither Party shall have any further rights or remedies to the other. Notwithstanding the foregoing, the City and Proposer reserve the right in their respective sole and absolute discretion to mutually agree to further extend the Negotiating Period by a written extension. City undertakes no commitment or obligation to Proposer to grant any such extension.
3. Supplemental Progress Reports. In addition to the information required in Section 2 herein above, at sixty (60) day intervals from the date of this Agreement (including all extended periods), Proposer shall provide to the City written reports regarding its progress in meeting the terms and obligations of this Agreement.
4. City Reimbursement for Financial Analysis. Proposer shall reimburse the City for the City’s financial consultant’s actual fees and costs for preparing a report on the Proposer’s financial qualifications to undertake the Proposal (the “Financial Report”). The Proposer shall submit reimbursement to the City for preparation of the Financial Report in a form acceptable to the City within thirty (30) days following the presentation to the Proposer of an invoice for the Financial Report. The City shall maintain documentation of expenditures for preparation of the Financial Report, which information shall be made available to the Proposer upon request. Proposer’s failure to provide timely reimbursement to the City for preparation of the Financial Report shall constitute a breach of this Agreement. The City reserves the right to terminate this Agreement for such breach.
5. Hazardous Materials Assessment. The Proposer at its sole cost and expense shall be entitled to conduct or cause to be conducted environmental assessments, audits and/or testing of the Site. The Proposer shall have the right to terminate this Agreement if the Proposer is not reasonably satisfied with the findings and the recommendations made in an environmental audit conducted by or for the Proposer. However, both Parties acknowledge and agree that specific representations or warranties, agreements, obligations, liabilities or responsibilities pertaining to the condition of the Site and/or the Proposed Development will
5 be the subject of negotiations between the Parties in connection with the negotiations of any Lease and Management Agreement entered into by the Parties.
6. Relocation Indemnification. Each party will defend, indemnify and hold the other harmless with respect to any claims for relocation made as a result of the indemnifying parties’ activities in connection with the Site.
7. Costs and Expenses. Except as provided in Section 4 above, each party shall be responsible for its own costs and expenses in connection with any activities and negotiations undertaken in connection with the performance of its obligations under this Agreement.
8. Change in Proposer. The qualifications of the Proposer as an experienced and successful manager and operator of restaurant establishments and events are of particular interest to the City. Consequently, no person or entity, whether a voluntary or involuntary successor of Proposer, shall acquire any rights or powers under this Agreement nor shall the Proposer assign all or any part of this Agreement without the prior written approval of the City, which approval the City may grant, withhold or deny at its sole and absolute discretion. Any other purported transfer, voluntarily or by operation of law, shall be absolutely null and void and shall confer no rights whatsoever upon any purported assignee or transferee. This Agreement shall not be construed to constitute the City's approval of Proposer or any party affiliated with Proposer as the general contractor of the Development.
9. Lead Negotiators. The City Manager, or his or her designee(s), shall be the lead negotiator(s) for the City with respect to the subject matter of this Agreement; provided, however, that the City Council reserves its rights to consider and approve or disapprove the proposed Lease and Management Agreement. Erik Khojoyan shall be the lead negotiator for the Proposer with respect to the subject matter of this Agreement.
10. Proposer Cooperation. Proposer agrees to cooperate with the City in supplying financial information, if available and not otherwise privileged, to facilitate the feasibility analysis of the Proposal. The Proposer shall also cooperate with City’s professional consultants and associates in providing any information and assistance in connection with the evaluating Proposer’s submissions to the City pursuant to this Agreement or as required by state or local laws and regulations.
11. City Cooperation. City agrees to cooperate with the Proposer in supplying financial institutions with appropriate information, if available and not otherwise privileged, to facilitate the obtaining of financing for the Proposal, if required. The City shall also cooperate with Proposer’s professional consultants and associates in providing them with any information and assistance reasonably within the capacity of the City to provide in connection with the preparation of the Proposer’s submissions to the City pursuant to this Agreement or as required by state or local laws and regulations. This requirement does not obligate the City to incur any monetary costs therefor.
6 12. Non-Discrimination. Proposer shall not discriminate against nor segregate, any person, or group of persons on account of sex, race, color, marital status, religion, creed, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Site, nor shall the Proposer establish or permit any such practice or practices of discrimination or segregation in the selection, location, number, use, or occupancy of tenants, lessees, subtenants, sublessees or vendees of the land.
13. Environmental Requirements. Certain state and local environmental requirements (including, but without limitation, the California Environmental Quality Act of 1970, Public Resources Code Section 21000, et seq.) may be applicable to the Proposal. Pursuant to such requirements, certain environmental documents may be required to be prepared and certified prior to the Lead Agency’s approval of the Proposal.
14. Address for Notices. Any notices pursuant to this Agreement shall be in writing and sent (i) by Federal Express (or other established express delivery service which maintains delivery records), (ii) by hand delivery, or (iii) by certified or registered mail, postage prepaid, return receipt requested, or (iv) email, to the following addresses:
To City: City of Glendale
Community Development
Department
633 E. Broadway, Suite 100
Glendale, CA 91206-4387
Attention: Director
Phone:
Email: [email protected]
To Proposer: Events at Eden
214 N. Brand Blvd.
Glendale, CA 91203
Phone:
Email:
15. Default. Failure by either party to negotiate in good faith or to perform any other of its duties as provided in this Agreement shall constitute an event of default under this Agreement. The non-defaulting party shall give written notice of a default to the defaulting party, specifying the nature of the default and the action required to cure the default. If the default remains uncured fifteen (15) days after the date of such notice, the non-defaulting party may exercise the remedies set forth in Section 15 of this Agreement.
16. Remedies for Breach of Agreement. In the event of an uncured default under this Agreement, the sole remedy of the non-defaulting party shall be to terminate this Agreement.
Following such termination, neither party shall have any further rights, remedies or
7 obligations under this Agreement. Neither party shall have any liability to the other for monetary damages or specific performance for the breach of this Agreement, or failure to reach agreement on a Lease and Management Agreement, and each party hereby waives and releases any such rights or claims it may otherwise have at law or at equity.
Furthermore, the Proposer knowingly agrees that it shall have no right to specific performance for conveyance of, nor to claim any right of title or interest in the Site or any portion thereof.
17. Attorney’s Fees. In the event any action is taken by either party to this Agreement to enforce this Agreement, the prevailing party shall be entitled to recover from the other party its actual attorneys' fees and costs.
18. Entire Agreement. This Agreement constitutes the entire understanding and agreement of the parties, integrates all of the terms and conditions mentioned herein or incidental hereto, and supersedes all negotiations or previous agreements between the parties or their predecessors in interest with respect to all or any part of the subject matter hereof.
19. Time of Essence. Time is of the essence of every portion of this Agreement in which time is a material part. During the Negotiating Period the time periods set forth in this Agreement for the performance obligations hereunder shall apply and commence upon a complete submittal of the applicable information or occurrence of an applicable event. In no event shall an incomplete submittal by the Proposer trigger any of the City’s obligations of review, approval and/or performance hereunder; provided, however that the City shall notify the Proposer of an incomplete submittal as soon as is practicable and in no event later than the applicable time set forth for the City's action on the particular item in question. Further, the time periods set forth herein are outside dates of performance. In the event a party completes a performance item earlier than the time required hereunder, the time for the next performance obligation of a party shall commence. Thus, the parties agree that the requirements hereunder may occur and be completed in a shorter time frame than set forth herein.
20. Agreement Does Not Constitute a Lease or Approval of a Project or Management Agreement. The Parties agree and acknowledge that nothing in this Agreement in any respect does or shall be construed to affect or prejudge the City's discretion to consider, negotiate, or undertake the disposition and/or development of any portion of the Site; provided, however, no portion of the Site shall be voluntarily disposed of during the term of this Agreement, and such disposition is will be subject to the City’s review for compliance with the Surplus Land Act. The City reserves the final discretion and approval as to any lease and management agreement and all proceedings and decisions in connection therewith. This Agreement shall not be construed as a grant of development rights or land use entitlements, or a lease the Site or authority to perform any tenant improvements or any other project. All design, architectural, and building plans for the
8 Proposal shall be subject to the review and approval of the City. By its execution of this Agreement, the City is not committing itself to or agreeing to undertake the disposition of the Site or other real property to the Proposer, or any other acts or activities requiring the subsequent independent exercise of discretion by the City, or any City department.
21.Governing Law. This Agreement shall be construed in accordance with the laws of the State of California.
22.Implementation of Agreement. The City shall maintain authority to implement this Agreement through the City Manager (or his or her duly authorized representative). The City Manager shall have the authority to issue interpretations, waive provisions, and/or enter into certain amendments of this Agreement on behalf of the City so long as such actions do not materially or substantially change the uses or concept of the Proposal, or add to the costs incurred or to be incurred by the City as specified herein, and such interpretations, waivers and/or amendments may include extensions of time to perform. All other materials and/or substantive interpretations, waivers, or amendments shall require the consideration, action and written consent of the City Council.
NOW THEREFORE, the Parties have executed this Exclusive Negotiating Agreement as of the date and year first set forth above.
CITY OF GLENDALE
By:____________________________ Date: __________________ Roubik Golanian,
City Manager
PROPOSER: Events at Eden
By: ____________________________ Date:__________________ Erik Khojoyan,
President
APPROVED AS TO FORM:
MICHAEL J. GARCIA, CITY ATTORNEY
By:________________________
Gillian van Muyden,
Chief Assistant City Attorney
9 EXHIBIT “A”
SITE