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HomeMy WebLinkAboutRUBYS DINER, INC. - 1993-10-25 ;, CITY OF HUNTIN ON BEACH 2000 MAIN STREET CALIFORNIA 92648 OFFICE OF THE CITY CLERK CONNIE BROCKWAY CITY CLERK LETTER OF TRANSMITTAL OF ITEM APPROVED BY THE CITY COUNCIL/ REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH r1�11 DATE: UJ To: bk 15 ATTENTION: � U t g l`t7 y N��e�o 6 b 6q r Q D J DEPARTMENT: set REGARDING: �� City,Statel Zip See Attached Action Agenda Item �' r Date of Approval Enclosed For Your Records Is An Executed Copy Of The Above Referenced Agenda Item. Remarks: Connie Brockway City Clerk Attachments: Action Agenda Page ✓ Agreement ✓ Bonds Insurance RCA ✓ Deed Other �y N e partment RCA Agreement Insurance Other V UA(Iel u ti ��-6 � . . S �me eppartment RCA Agreement Insurance Other G�ntilt(I OA V me a artm RCA Agreement Insurance Other fb *'�- Name Department RCA Agreement Insurance Other Name Department RCA Insurance gJfol lowup/letters/coverltr.doc (Telephone:714-536-5227) (13) December 16, 2002 -Council/Agency Agenda - Page 13 E-6. (City Council) Approve Reimbursement Agreement between the Citv and Makar Properties for Professional Planning, Engineering, Building, Legal and Fire Services Retroactive to October 1, 2002 (Makallon Atlanta Huntington Beach, LLC for Pacific City) (600.10) [ 1. Approve and Authorize the Mayor and City Clerk to execute the Reimbursement Agreement between the City of Huntington Beach and Makallon Atlanta Huntington Beach, LLC for Costs Incurred for Professional Planning, Engineering, Building, Legal and Fire Services; and 2. Authorize acceptance of$20,000 to cover professional planning services retroactive to October 1, 2002 of the current year. Submitted by the Planning Director. Funding source: Not applicable. Approved 7-0 E-7. (City Council) Adopt Resolution No. 2002-127 Extending through December 2003 Temporary, Partially Paid Military Leave Benefits for City Employees Called to Active Duty with the Armed Forces (Adopted by Resolution No. 2001-03 on November 19, 2001) (700.50)—Adopt Resolution No. 2002-127 — "A Resolution of the City Council of the City of Huntington Beach Extending Resolution No. 2001-93 and Providing for Additional Temporary Partially Paid Military Leave of Absence and Continuation of Benefits for City Employees Called to Active Duty with the Armed Forces. Submitted by the City Administrator. Funding source: Pay and benefits are currently funded in the existing budget. Adopted 7-0 E-8. (City Council) Approve Amendment No. 1 to the Lease Agreement between the City and Ruby's Diner,Inc.for Ruby's Restaurant at the Huntington Pier (600.35) Approve Amendment No. 1 to Lease Between the City of Huntington Beach and Ruby's Diner, Inc., effective June 1, 2002, with the terms and conditions as presented herein, and authorize the Mayor and City Clerk to execute the Amendment No. 1. Submitted by the Administrative Services Director and the Acting Community Services Director. Funding source: Not applicable. Approved 7-0 E-9. (City Council) Approve Grant of Easement from the City to Southern California Edison for Underground Electrical Utilities at Huntington Beach Central Park Sports Complex (650.80)—Authorize the Mayor and City Clerk to execute a Grant of Easement conveying a real property interest from the City of Huntington Beach to Southern California Edison. Submitted by the Administrative Services Director and the Public Works Director. Funding source: Not applicable. Approved 7-0 f lay parfill, AJAiA,�erviuL i le Now. bar m� Council/Agency Meeting Held: /4/6 z Deferred/Continued to: Approved ❑ Conditionally Approved ❑ Denied City Clerk's Signatu Council Meeting Date: December 16, 2002 Department ID Number: AS 02-26 CITY OF HUNTINGTON BEACH REQUEST FOR COUNCIL ACTION SUBMITTED TO: HONORABLE MAYOR AND CITY COUNCIL MEMBERS SUBMITTED BY: RAY SILVER, City Administrator��SP PREPARED BY: CLAY MARTIN, Director of Administrative Services JIM B. ENGLE, Acting Director of Community Service SUBJECT: APPROVE AMENDMENT NO. 1 TO LEASE WITH R Y'S DNER, INC., FOR THE RUBY'S HUNTINGTON PIER RESTAURANT Statement of Issue,Funding Source,Recommended Action,Alternative Action(s),Analysis,Environmental Status,Attachment(s) Statement of Issue: In 1993, the City of Huntington Beach entered into a lease with Ruby's Diner Inc. (Ruby's) to operate concessions on the Huntington Beach Pier. The lease obligated the City to build a minimum of three concession buildings on the Pier and for Ruby's to provide the tenant improvements and operate the three concessions. Ruby's has requested an Amendment No. 1 to the lease to extend the term of the lease for ten years, to decrease by one percentage point the percentage rents owed and to remove the City's obligation to construct the remaining two concession buildings and Ruby's obligation to operate them. Funding Source: N/A Recommended Action: Approve Amendment No. 1 to the lease between the City of Huntington Beach and Ruby's Diner, Inc., effective June 1, 2002, with the terms and conditions as presented herein, and authorize the Mayor and City Clerk to execute the Amendment No. 1. Alternative Action(s): 1. Do not approve Amendment No. 1 with Ruby's Diner, Inc. 2. Approve Amendment No. 1 with different terms and conditions from those presented herein. Analysis: In 1993, the City of Huntington Beach entered into a lease with Ruby's Diner Inc. (Ruby's) to operate concessions on the Huntington Beach Pier. The lease agreement called for the City to build a minimum of three buildings on the Pier and for Ruby's to provide the tenant improvements and operate the three concessions. The three concessions were to be Rubys1stAmend12-02-02 -- 1213/200211:45 AM AUEST FOR COUNCIL ACTIA MEETING DATE: December 16, 2002 DEPARTMENT ID NUMBER: AS 02-26 a combination sit-down/casual food service restaurant, a snack shop and a bait and tackle shop. The City completed construction of Ruby's Surf City Diner (Restaurant) at the end of the Pier, and Ruby's made the necessary tenant improvements. The Restaurant was granted a Certificate of Occupancy in June 1996, and the City's obligation to construct a sit- down/casual food service restaurant was fulfilled. The City's obligation to construct the remaining two concession buildings was subject to the availability of funds and there was no date set as to when the City was required to complete construction. To date, the City has been unable to provide sufficient capital funds for the permanent construction of the two remaining concession buildings. It is likely to be several years following completion of the South Beach Phase II construction before enough capital is amassed to commence construction. In addition, it is not assured that Ruby's would be the most appropriate operator for these two future visitor-serving concessions. To compensate for the lost revenues it would have received from the two unbuilt concession buildings, Ruby's has requested a one percent reduction in percentage rents it pays to the City (see Attachment 1). As discussed above, the City is obligated under the terms of the lease to construct two more concession buildings, subject to the availability of funds. In exchange for granting Ruby's request for the reduction in percentage rents, the Ruby's lease would be amended to remove all rights, responsibilities and obligations of both parties as it pertains to the two unbuilt concession facilities. This would allow the City to retain control of the facilities once they are built, and to select a concessionaire for the operation of the specific uses at the appropriate time. Ruby's has also requested a ten-year extension of the term of the lease until June 2012. If approved, Amendment No. 1 would be effective from June 1, 2002. A June 1 effective date for Amendment No. 1 would provide consistency with the effective date of the original lease. The Community Services Department, which administers concessionaire lease agreements, the Real Estate Division of the Administrative Services Department and the City Attorney's Office recommend approval of Amendment No. 1 to the lease with Ruby's Diner, Inc. Environmental Status: Not applicable. Attachment(s): City Clerk's - . . - Number No. Description Comparison of Percentage Rents 2 Amendment No. 1 w, RCA Author: Bodek x5445 D:\Documents and Settings\bodeka\My Documents\RCA Letters\RubyslstAmendl2-02-02.doc -2- 12/3/200211:45 AM ATTACHMENT # 1 Ruby's Surf City Diner Proposed Reduction in Percentage Rents Amendment No. 1 to Lease Current Proposed Sales Volume Percentage Rents Percentage Rents $0 to $800,000 7% 6% $800,001 to $1,300,000 8% 7% $1,300,001 to $ 2,000,000 10% 9% $2,000,001 and above 12% 11% ATTACHMENT #2 AMENDMENT NO. I TO LEASE BETWEEN THE CITY OF HUNTINGTON BEACH AND RUBY'S DINER, INC. fh THIS AMENDMENT is made and entered into the Y-L day of L5e;i�, 2002, b and between the CITY OF HUNTINGTON BEACH, a California municipal corporation, hereinafter referred to as "CITY" and RUBYS DINER, INC., a California corporation, hereinafter referred to as"TENANT." WHEREAS, CITY and TENANT are parties to that certain lease agreement, dated October 25, 1993, entitled "Lease Ruby's Diner, Inc. (Huntington Beach Pier Restaurant)which agreement shall hereinafter be referred to as the "Original Lease," and Since the execution of the Original Lease, CITY and TENANT now desire to amend the Lease to clarify the rights and responsibilities of the parties, NOW, THEREFORE, the parties covenant and agree as follows: 1. Section 1.1(m) is amended to read as follows: 1.1.1 (m) Premises — those portions of the Pier designated on Exhibits A, A-1 and E attached hereto and referred to herein as the Restaurant. 2. Section 2.2 is amended to read: 2.2 Definitions of Premises. Tenant covenants and agrees to operate and maintain one pierhead restaurant located at the end of the pier in an octagonal two-store structure of approximately 6,000 square feet where breakfast, lunch and dinner will be provided ("Restaurant"). 3. Section 2.3 is deleted. 4. Section 2.4 is added to read- 2.4 Non-Competition: City covenants and agrees to allow only the following products to be sold from any permanent or temporary concession on the pier: soft drinks, hot beverages, bottled water, juices, pre-packaged snacks, muffins, cookies, candy and pre-packaged sandwiches. In addition the City covenants and agrees not to allow any other food or beverages to be sold from the pier, except as required of the City under its Strategic Alliance and Long Term Partnership Agreement with the Coca-Cola Bottling Company of Southern California. 5. Section 3.1 is amended to read: 3.1 Term of Lease The term of the Lease shall be ten (10) years, commencing on June 1, 2002. 6. Section 3.2 is hereby deleted. Page 1 of 3 02agm-e.'ruby amcnd9,42'•02 GALimited Partnership\Doug DeCinces\Huntington BeacMl_ease amendmenMB REVISEDAtrendment final execution draft.doc 1015/02 1:15 PM 7. Section 5.2 is amended to read: 5.2 Restaurant Percentage Rent (a) Percentage In addition to Minimum Annual Rent, during the Term Tenant shall pay to City a sum (`Restaurant Percentage Rent") equal to the Percentage Rate set forth below multiplied by all Gross Sales at the Restaurant, as defined below, during each Lease Year, less aggregate Restaurant Minimum Annual Rent paid during the Lease Year. Restaurant Percentage Rent will be based on the following annual Gross Sales percentage: _ Sales Volume Percentage -0-- $800,000.00 6% $800,001.00 $1,300.000.00 7% $1,300.001.0 $2,000,000.00 9% $2,000,001.00 1 and above 11% Restaurant Percentage Rent shall become due and payable on the twenty-fifth (25'h) day of the month immediately following the month during which Gross Sales at the Restaurant exceed the Annual Sales Break Point for the current Lease Year and shall be paid on the twenty-fifth (2Vh) day of each month thereafter on all additional Gross Sales made at the Restaurant during the remainder of the Lease Year at the Percentage Rates specified above. By way of example, only, assuming that Gross Sales from the Restaurant during the first Lease Year equal $2,500,000.00 Tenant would pay $111,000.00 during the first Lease Year as the Restaurant Percentage Rent, determined as follows: 6% on the first$800,000.00 of gross sales ($48,000.00), 7% on the next $500,000.00 of Gross Sales ($35,000.00), 9% on the next $700,000.00 of Gross Sales ($63,000.00) and 11%© on the next $50,000.00 of Gross Sales ($55,000.00), for a total of $201,000.00, minus the $90,000.00 Restaurant Minimum Annual Rent for the first Lease Year, equals$11,000.00 in Restaurant Percentage Rent. 8. Section 5.3 is hereby deleted. 9. Section 5.5 is hereby amended to read: 5.5 Interest in Unpaid Rent: If the Minimum or Base Rent is not received by the City Treasurer within twenty (20) calendar days after the end of the month for which the Rent is being paid, or the next business day if the twentieth day fails on a weekend or holiday, Lessee shall pay the following late charge and penalty: (1) a late charge of ten percent (10%) shall be applied to any outstanding balance after the payment hereunder is due by unpaid; and (2) one and one-half percent (11/2%©) penalty per month shall be added for each month the Rent is due and unpaid, With respect to any other payments required by Lessee, one and one-half percent (1 Y2%) per month shall be added for each month such payment hereunder is due and unpaid. 10. REAFFIRMATION Except as specifically modified herein, all other terms and conditions of the Original Lease shall remain in full force and effect. Page 2of3 02agreclruby ameud9112,02 G_11imited Partnership\Doug DeCineesiHuntington Beachilease amendment\HB REViSEDRmendment final execution draft.doc 10/5/02 1:15 PM IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by and through their authorized offices the day, month and year first above written. RUBY'S DINER,AC. By: / ATTEST: 7�✓�c,aJ �_ �'�1✓ OaItiJGili 1� print name =� Its: (circle one) Chairman/Presiden ice City Clerk President and Approved as to form By: IM Attorney print name Its: (circle one) Secretary/ ief Financf INITIALED AND APPROVED Officer/Asst. Secretary-Treasurer REVIEWED AND APPROVED Veor of Community qervices City Administrator CITY OF HUNTINGTON BEACH, a INITIALED AP ROVED: municipal corporation of the State of California Director of ministrative Services Mayor Page 3 of 3 02agreefruby amcn(V212i02 t6:Aumiteu rarmersmgrt9oug eoetssncesamunungton tseamtease amenamentrtts rtevibebormenament tina+execution aratt.00c i tsw uA t:�e t-m At1 V" K) .. —■••.•.•s--awl@Ur LIMILITY INSURANCEI 1"/0z/2OOz • Psool)tdt t310}389-2227 FAX OM309-2633 19 ADAMA ! ► Sander A. Kessler a Associates, Inc. ONL Y AND C NO RN;HTS UPON THE t:ERTlRICATH 24SO Ocean Park Blvd.. Suite 200 HOMIL THISCERT*tCAW DOESMY AMM EXTEND OR At.UR INN C&RAGE AFFONM BY Ta PO ICum Mow. Santa Monica, CA 9040S Attn: Sylvia E. Brown MURERS AFFOROM COVERAM "y's inner. 3i�Mt. WUPMA: Nautilus Durance Company 66o Newport Canter Drive Ik seven Hills Insurance suite a50 ass me. ressive Insurance Company Nauport Beachl CA 92M AEI)- COMAGFS THE POUCIES OF MJRANCE LWW SMOW NAVE WXN wauW TO THE RMM NAMED ABOVE FOR THE POLICY FMOD 10CATEO.NOCWITNSTAMING ANY PROMBWNT.TERM OR COMMON OF ANY CONTRACT OR OTHER OOCLWW WITH AESFWT TO WwCH IRS CERTIFICATE MAY BE ISSUED OR MAY PERTAIN.THE INSURANCE AFFORDED BV THE POUCW$DESCMM NOM IS SUBJECT TO ALL THE TERMS.EXCLUSIONS AM CONDM(W OF SUCH POLICIES.AGGREGATE U W iS SHOWN MAY W1YCs BEEN REDUCED BY PAC CLAW. TYPE OF Q4JU NNAW POLICY N ASM Uw" LiA9LI1Y s" 07/1600-02 09/0l/2Qf13 IAcn4xv f 1.004 commew. L BENEIIAL Umm m FM dWAW jh*on **) f 300 aJu~/.s mum Q 0=0 Mau w KAIw—P+Mf'I : 5,0001 A ►UMONM.SADW WAW S I.M.080 O AGOREBAT6 $ 3 000 MKAGGAMIELARTAPPI.BSN* PRODUCTS-COUPWAGG f 1.000.000 P ucy we A1TOWDR UE UASMJrY Comm"0SMS E L"T ANY AUTO 047926970 07/16/z002 07/16/2003 03 s 10002 ALL OWNED AUTOS Y NAW f X gmuu W AUTOS (Per o rw) X "MAWDS Y110' D LS I✓it� At oxo'0y 90mv"A f X NOR-0MNEDAUTOS II,WTV , At OV ut, ritY � s rpAwsUAlINIY ; -:: AIUTO ONLY-CAAWMENT f ANYAUTO IFAACC s AUTOOKY' AGG S MCCOM LMORITY EACH OCCUArVIEW8 f O M Cj MA00 MADE AOMMATE y f S DEPUCTOLE i Wimwrm t ; WONK COMPSHMI WiA/ 000017• Q6/30 06/30/Z003 X IA MS 6WL0VEPW 6 L.E W ACgC60T S 1 000. B E.L.0196ASE•VA EMPLOVIR S 1.000 E.L.owAsE•PcucY Lmr f 1 000 OTHER �I rtiTicate "Dior 1�s� tii+ra in essoras s their interest in the property cated at Huntington Beach Pier, Mml ington Beach. CA - attached CGZOIO y notice of cancellation for non payment of pr&Auer :RTIFICATEMOf,DER X AaolfwNALwwxgmaIlamaLErnm A CANCELLATION =IMP ANY OF TIE ADM ONGR M r4 OM W cANCBI LEd BEFORE tI1E City of Huntington Beach. its Agents, 80ftMM W9 THMW.TIE MY ww.L Aura Officers and Ewployees *30 DAV$Wefre+Nor er0naceIMVICAI9NXM0MJMWTaTiEL"T, California State Lauds Comission Attn; Risk eft. 2000 main Street Huntingtw Beach, CA 92646 err/ ASNS g= 1RQ 258 FAX: (710174-10% UCORPORA 1989 City of Huntington leach, Its Agents, Certificate issued to City of Huntington Beach, its Agents, 08/02/206z Sander A. Kessler & Associates, Inc. POLICY NUMBER: COMMERCIAL GENERAL LIABILITY THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY. ADDITIONAL INSURED -- OWNERS, LESSEES OR CONTRACTORS (FORM B) This endorsement modified insurance provided under the following: COMMERCIAL GENERAL LIABILITY COVERAGE PART. SCHEDULE Name of Person or Organization: City of Huntington Beach, its agents, officers and employees (If no entry appears above, information required to complete this endorsement will be shown in the Declarations as applicable to this endorsement.) WIJO IS AN INSURED (Section II) is amended to include as an insured the person or organization shown in the Schedule, but only with respect to liability arising our of "your work" for that insured by or for you. G 20 10 11 8s 'opyright, Insurance Services Office, Inc., 1984 * TOTAL PAGE.02 ** EXHI BIT A LEGAL DESCRIPTION OF LEASED PREMISES FOR THE PIER RESTAURANT Beginning at the intersection of the centerline of Main Street and the Construction Centerline of Pacific Coast Highway (Ocean Avenue), said construction centerline being parallel with and 53.00 feet, measured at right angles, from the Southwesterly line of Block 104 as shown on Map of Huntington Beach recorded in book 3 page 36 of Miscellaneous Maps in the Office of the County Recorder of Orange County, California: thence South 41 degrees 37' 53" West 156.39 feet along the Southwesterly prolongation of the centerline of Main Street to a brass monument cap stamped °H.B.SURV." being the beginning of the Huntington Beach Municipal Pier structure; thence continuing South 41 degrees, 37' 53" West 1733.03 feet along said prolongation of Main Street, also being the centerline of said pier, to the True Point of Beginning; thence South 86 degrees 37' 55" West 66.00 feet; thence South 3 degrees 22' 05" East 66.00 feet; thence North 86 degrees 37' 55" East 66.00 feet; thence North 3 degrees 22' 05" West 66.00 feet to the True Point of Beginning. • EXHIBIT .A. 1 V g-vs FaFffL/ . V� INN Ire ZOIV/ `cv J _ o qOI EXHIBIT E CO ` L�l , r� yYE`JG„�,tv�rL' 01 My� cn �i w I: - I TNgn Fi LO rA fD Lor + �• r='r, _ �• n u __�.------ V�UNC' Ill ann l9/ 'a: 2:r7 J,9 � 1 f Att E 01- l. 3_ �0 1' .]r 9 . 44b� _ RLB'r5 •r - � � rt • a � - .. fur � • v I P� HUNTINriT . AMENDMENT NO. I TO LEASE BETWEEN THE CITY OF HUNTINGTON BEACH AND RUBY'S DINER, INC. THIS AMENDMENT is made and entered into the- day of 2002, b and between the CITY OF HUNTINGTON BEACH, a California municipal corporation, hereinafter referred to as "CITY" and RUBY'S DINER, INC., a California corporation, hereinafter referred to as"TENANT." WHEREAS, CITY and TENANT are parties to that certain lease agreement, dated October 25, 1993, entitled "Lease Ruby's Diner, Inc. (Huntington Beach Pier Restaurant) which agreement shall hereinafter be referred to as the"Original Lease,"and Since the execution of the Original Lease, CITY and TENANT now desire to amend the Lease to clarify the rights and responsibilities of the parties, NOW, THEREFORE, the parties covenant and agree as follows: 1. Section 1.1(m) is amended to read as follows: 1.1.1 (m) Premises — those portions of the Pier designated on Exhibits A, A-1 and E attached hereto and referred to herein as the Restaurant. 2. Section 2.2 is amended to read: 2.2 Definitions of Premises. Tenant covenants and agrees to operate and maintain one pierhead restaurant located at the end of the pier in an octagonal two-store structure of approximately 6,000 square feet where breakfast, lunch and dinner will be provided ("Restaurant"). 3. Section 2.3 is deleted. 4. Section 2.4 is added to read: 2.4 Non-Competition: City covenants and agrees to allow only the following products to be sold from any permanent or temporary concession on the pier: soft drinks, hot beverages, bottled water, juices, pre-packaged snacks, muffins, cookies, candy and pre-packaged sandwiches. In addition the City covenants and agrees not to allow any other food or beverages to be sold from the pier, except as required of the City under its Strategic Alliance and Long Term Partnership Agreement with the Coca-Cola Bottling Company of Southern California. 5. Section 3.1 is amended to read: 3.1 Term of Lease The term of the Lease shall be ten (10) years, commencing on June 1, 2002. 6. Section 3.2 is hereby deleted. Page 1 of 3 02agreei'ruby amenJ912'rt)2 G:%Limited Partnership\Doug DeCinces\Huntington Beach\Lease amendment\HB REWEDAmendmerd final execution draft.doc 1015/02 1:15 PM 7. Section 5.2 is amended to read: 5.2 Restaurant Percents ec e Rent (a) Percentage In addition to Minimum Annual Rent, during the Term Tenant shall pay to City a sum (`Restaurant Percentage Rent") equal to the Percentage Rate set forth below multiplied by all Gross Sales at the Restaurant, as defined below, during each Lease Year, less aggregate Restaurant Minimum Annual Rent paid during the Lease Year. Restaurant Percentage Rent will be based on the following annual Gross Sales percentage: Sales Volume Percenta e -0-- $800,000.00 6% $800,001.00 $1300.000.00 7% $1,300.001.0 $2,000,000.00 9% $2,000,001.00 and above 11% Restaurant Percentage Rent shall become due and payable on the twenty-fifth (25th) day of the month immediately following the month during which Gross Sales at the Restaurant exceed the Annual Sales Break Point for the current Lease Year and shall be paid on the twenty-fifth (25t) day of each month thereafter on all additional Gross Sales made at the Restaurant during the remainder of the Lease Year at the Percentage Rates specified above. By way of example, only, assuming that Gross Sales from the Restaurant during the first Lease Year equal $2,500,000.00 Tenant would pay $111,000.00 during the first Lease Year as the Restaurant Percentage Rent, determined as follows: 6%on the first$800,000.00 of gross sales ($48,000.00), 7%® on the next $500,000.00 of Gross Sales ($35,000.00), 9% on the next $700,000.00 of Gross Sales ($63,000.00) and 11% on the next $50,000.00 of Gross Sales ($55,000.00), for a total of $201,000.00, minus the $90,000.00 Restaurant Minimum Annual Rent for the first Lease Year, equals $11,000.00 in Restaurant Percentage Rent. 8. Section 5.3 is hereby deleted. 9. Section 5.5 is hereby amended to read: 5.5 Interest in Unpaid Rent: If the Minimum or Base Rent is not received by the City Treasurer within twenty (20) calendar days after the end of the month for which the Rent is being paid, or the next business day if the twentieth day falls on a weekend or holiday, Lessee shall pay the following late charge and penalty: (1) a late charge of ten percent (10%) shall be applied to any outstanding balance after the payment hereunder is due by unpaid; and (2) one and one-half percent (1'f2%) penalty per month shall be added for each month the Rent is due and unpaid. With respect to any other payments required by Lessee, one and one-half percent (1 Y2%0) per month shall be added for each month such payment hereunder is due and unpaid. 10. REAFFIRMATION Except as specifically modified herein, all other terms and conditions of the Original Lease shall remain in full force and effect. Page 2 of 3 02agreelrubp ariend9f12;02 GAUrnited Partnership1Doug DeCinceslHuntington Beach\Lease amendment\HB REVISEDAmendment final execnfion dralt.doc 10l5102 1;15 PM • • IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by and through their authorized offices the day, month and year first above written. RUBY'S DINER, NC. By: __ ATTEST: 70✓6c.41' 1' C'p✓��a dG�1, .PAP, print namerc Its: (circle one) hairmanfPresident ice City Clerk �/Z President and Approved as to form By: j JCity Attorney print name Its: (circle one) SecretankQhief FinanciaD INITIALED AND APPROVED Officer/Asst. Secretary-Treasurer REVIEWED AND APPROVED Aegmect r of CommunityS ices nn 0 City Administrator CITY OF HUNTINGTON BEACH, a INITIALED P OVED: municipal corporation of the State of California Director of dministrative Services Mayor Page 3 of 3 Q2aeree/ruby ain tid9112i02 e oumutea rannersnipAwoug tseacrmease amenamentArtts mevibetniAmenarnent tinau execution aratt.aoc artrwt►e i:+e Hm EXHIBIT A LEGAL DESCRIPTION OF LEASED PREMISES FOR THE PIER RESTAURANT Beginning at the intersection of the centerline of Main Street and the Construction Centerline of Pacific Coast Highway (Ocean Avenue), said construction centerline being parallel with and 53.00 feet, measured at right angles, from the Southwesterly line of Block 104 as shown on Map of Huntington Beach recorded in book 3 page 36 of Miscellaneous Maps in the Office of the County Recorder of Orange County, California: thence South 41 degrees 37' 53" West 156.39 feet along the Southwesterly prolongation of the centerline of Main Street to a brass monument cap stamped "H.B.SURV." being the beginning of the Huntington Beach Municipal Pier structure; thence continuing South 41 degrees, 37' 53" West 1733.03 feet along said prolongation of Main Street, also being the centerline of said pier, to the True Point of Beginning; thence South 86 degrees 37' 55" West 66.00 feet; thence South 3 degrees 22' 05" East 66.00 feet; thence North 86 degrees 37' 55" East 66.00 feet; thence North 3 degrees 22' 05" West 66.00 feet to the True Point of Beginning. EXHIBIT A- 1 J . F�FFfL/ (ice.�G%7.) n1 (•�+!s�G12) CIL- o nn01 . W 9� � EXHIBIT E os 30 1002 12:57 9496446392 RUBYS PAGE 09 r �Zi x - Htf F19/3Ei12 �2 12:57 949�-.446332 RLIBYS PAGE f tit f i I �. t i u Q, '' • AMENDMENT NO. 1 TO LEASE BETWEEN THE CITY OF HUNTINGTON BEACH AND RUBY'S DINER, INC. THIS AMENDMENT is made and entered into the day of 2002, b and between the CITY OF HUNTINGTON BEACH, a California municipal corporation, hereinafter referred to as "CITY" and RUBY'S DINER, INC., a California corporation, hereinafter referred to as "TENANT." WHEREAS, CITY and TENANT are parties to that certain lease agreement, dated October 25, 1993, entitled "Lease Ruby's Diner, Inc. (Huntington Beach Pier Restaurant) which agreement shall hereinafter be referred to as the "Original Lease,"and Since the execution of the Original Lease, CITY and TENANT now desire to amend the Lease to clarify the rights and responsibilities of the parties, NOW, THEREFORE, the parties covenant and agree as follows: 1 Section 1.1(m) is amended to read as follows: 1.1.1 (m) Premises — those portions of the Pier designated on Exhibits A, A-1 and E attached hereto and referred to herein as the Restaurant. 2. Section 2.2 is amended to read: 2.2 Definitions of Premises. Tenant covenants and agrees to operate and maintain one pierhead restaurant located at the end of the pier in an octagonal two-store structure of approximately 6,000 square feet where breakfast, lunch and dinner will be provided ("Restaurant"). 3. Section 2.3 is deleted. 4. Section 2A is added to read: 2.4 Non-Competition: City covenants and agrees to allow only the following products to be sold from any permanent or temporary concession on the pier: soft drinks, hot beverages, bottled water, juices, pre-packaged snacks, muffins, cookies, candy and pre-packaged sandwiches. In addition the City covenants and agrees not to allow any other food or beverages to be sold from the pier, except as required of the City under its Strategic Alliance and Long Term Partnership Agreement with the Coca-Cola Bottling Company of Southern California. 5. Section 3.1 is amended to read: 3.1 Term of Lease The term of the Lease shall be ten (10) years, commencing on June 1, 2002. 6. Section 3.2 is hereby deleted. Page 1 of 3 02agee,iruby amemd%'12!02 GALimited PartnershipMoug OeCimestHunfinqton Be-w.h\Lease amendmentIMB REVISEDAmendment finat execution draft.doc 1015/02 1:15 PM . • i 7. Section 5.2 is amended to read: 5.2 Restaurant Percentage Rent (a) Percentage In addition to Minimum Annual Rent, during the Term Tenant shall pay to City a sum ("Restaurant Percentage Rent') equal to the Percentage Rate set forth below multiplied by all Gross Sales at the Restaurant, as defined below, during each Lease Year, less aggregate Restaurant Minimum Annual Rent paid during the Lease Year. Restaurant Percentage Rent will be based on the following annual Gross Sales percentage: Sales Volume Percentage -0-- $800,000.00 6% $800,001.00 $1,300.000.00 7% $1,300.001.0 $2,000,000.00 9% $2,000,001.00 1 and above 11% Restaurant Percentage Rent shall become due and payable on the twenty-fifth (25th) day of the month immediately following the month during which Gross Sales at the Restaurant exceed the Annual Sales Break Point for the current Lease Year and shall be paid on the twenty-fifth (25') day of each month thereafter on all additional Gross Sales made at the Restaurant during the remainder of the Lease Year at the Percentage Rates specified above. By way of example, only, assuming that Gross Sales from the Restaurant during the first Lease Year equal $2,500,000.00 Tenant would pay $111,000.00 during the first Lease Year as the Restaurant Percentage Rent, determined as follows: 6%on the first$800,000.00 of gross sales ($48,000.00), 7% on the next $500,000.00 of Gross Sales ($35,000.00), 9% on the next $700,000.00 of Gross Sales ($63,000.00) and 11% on the next $50,000.00 of Gross Sales ($55,000.00), for a total of $201,000.00, minus the $90,000.00 Restaurant Minimum Annual Rent for the first Lease Year, equals $11,000.00 in Restaurant Percentage Rent. 8. Section 5.3 is hereby deleted. 9. Section 5.5 is hereby amended to read: 5.5 Interest in Unpaid Rent: If the Minimum or Base Rent is not received by the City Treasurer within twenty (20) calendar days after the end of the month for which the Rent is being paid, or the next business day if the twentieth day falls on a weekend or holiday, Lessee shall pay the following late charge and penalty: (1) a late charge of ten percent (10%) shall be applied to any outstanding balance after the payment hereunder is due by unpaid; and (2) one and one-half percent (1%%) penalty per month shall be added for each month the Rent is due and unpaid With respect to any other payments required by Lessee, one and one-half percent (13/2%) per month shall be added for each month such payment hereunder is due and unpaid. 10. REAFFIRMATION Except as specifically modified herein, all other terms and conditions of the Original Lease shall remain in full force and effect. Page 2 of 3 02agree ruby arnend9/12/02 GAI_imited Partnership\Doug DeCinceslHuntington BeactfLease amendment',HB REVISEDAmendment final execution draft.doc 1015102 1:15 PM i • IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by and through their authorized offices the day, month and year first above written. RUBY'S DINER C. By: K4�O—� ATTEST: )OV&,as .S'_ C'jdva.,riMjjr1L print name Its: (circle one) hairman/Presiders ice City Clerk President and Approved as to form By: �-- /�/ jty Attom y print name Its: (circle one) Secretary(hief Financial INITIALED AND APPROVED Officer/Asst. Secretary-Treasurer 1 REVIEWED AND APPROVED AA� Di ct r of Community S9vices n City Administrator CITY OF HUNTINGTON BEACH, a INITIALED APPROVED: municipal corporation of the State of California Director of inistrative Services Mayor Page 3 of 3 0-1`19--/ruby amend)/12VQ2 "L.mnea trannersnpmug deetncesAmunnngton tseacmt_ease amenamentartrs Nevibtet:iArnenament tint execution aran.aoc ttomm i:'tb ran EXHIBIT A LEGAL DESCRIPTION OF LEASED PREMISES FOR THE PIER RESTAURANT Beginning at the intersection of the centerline of Main Street _ and the Construction Centerline of Pacific Coast Highway (Ocean Avenue), said construction centerline being parallel with and 53.00 feet, measured at right angles, from the Southwesterly line of Block 104 as shown on Map of Huntington Beach recorded in book 3 page 36 of Miscellaneous Maps in the Office of the County Recorder of Orange County, California: thence South 41 degrees 37' 53" West 156.39 feet along the Southwesterly prolongation of the centerline of Main Street to a brass monument cap stamped "H.B.SURV." being the beginning of the Huntington Beach Municipal Pier structure; thence continuing South 41 degrees, 37' 53" West 1733.03 feet along said prolongation of Main Street, also being the centerline of said pier, to the True Point of Beginning; thence South 86 degrees 37' 55" West 66.00 feet; thence South 3 degrees 22' 05" East 66.00 feet; thence North 86 degrees 37' 55 East 66.00 feet; thence North 3 degrees 22' 05" West 66.00 feet to the True Point of Beginning. r EXHIBIT Aml i 10 `y tip' �• tiy�,'� 70 �q. /715y-aj �aB • V � I • 1 T` EXHIBIT E oSi/321/2002 1 ':57 943-;4ah-Dy2 RUBVS PAGE 03 I 1 � a fr .1C MtliMNlITbN BEACH F19/33i 2FJ�1 ' 12:57 949 446332 RUBYS PAGE �a A . - I - i Li Ll 5. HUNTINGTON REACH d \ . RCA ROUTING SHEET INITIATING DEPARTMENT: Administrative Services SUBJECT: Approve 1S Amendment to Lease with Ruby's Diner, Inc. COUNCIL MEETING DATE: I December 16, 2002 RCA ATTACHMENTS STATUS Ordinance (w/exhibits & legislative draft if applicable) Not Applicable Resolution (w/exhibits & legislative draft if applicable) Not Applicable Tract Map, Location Map and/or other Exhibits Attached Contract/Agreement (w/exhibits if applicable) (Signed in full by the City Attorney) Attached Subleases, Third Party Agreements, etc. Approved as to form by City Attorne Not Applicable Certificates of Insurance (Approved by the City Attorney) Attached Financial Impact Statement (Unbudget, over$5,000) Not Applicable Bonds (If applicable) Not Applicable Staff Report (If applicable) Not Applicable Commission, Board or Committee Report (If applicable) Not Applicable Find!n s/Conditions for Approval and/or Denial Not Applicable EXPLANATION FOR MISSING ATTACHMENTS REVIEWED RETURNED FORWARDED Administrative Staff Assistant City Administrator Initial City Administrator Initial w•� City Clerk EXPLANATION FOR RETURN OF ITEM: E7D 15 611 � ✓ SST" Only)(Below Space For City Clerk's Use RCA Author: Bodek, 5445 CITY OF HUNTINGTON BEACH 2000 MAIN STREET CALIFORNIA 92648 OFFICE OF THE CITY CLERK CONNIE BROCKWAY CITY CLERK November 3, 1993 Ruby' s Diner, Inc. 110 Newport Center Drive Suite 110 Newport Beach, CA 92660 Attention: Douglas Cavanaugh Dear Mr. Cavanaugh: Enclosed is a copy of the executed Lease between Ruby' s Diner, Inc. , and the City of Huntington Beach for the operation of a restaurant on our Municipal Pier. If you have any questions regarding this document, please contact the City Attorney' s office at (714) 536-5555. Sincerely, 7 Hwfi U Connie Brockway, CMC City Clerk CB: jh Enclosure cc: Robert Franz, Deputy City Administrator Ron Hagan, Director of Community Services Jack Walker - Orange County Assessor ' s Office 2742k (Telephone:714-536-5227) REQ UESP FOR CITY COUNCIL ACTION October 18, 1993 . Date Submitted to: Honorable Mayor and City Council Me bers Submitted by: Michael T. Uberuaga, City Administrato Prepared by: Robert J. Franz, Deputy City Administra VQ'BY UNCI Ron Hagan, Director Community Services Subject: Ruby's Pier Concession Lease Consistent with Council Policy? [X4 Yes [ j New Policy or Exc t' Statement of Issue, Recommendation,Analysis, Funding Source,Alternative Actions,Attachments: STATEMENT OF ISSUE: The City Council by action dated August 6, 1990, chose "Ruby's Diner, Inc." to operate the Huntington Beach Pier Restaurant and two (2) other concessions on the pier. A lease has now been drafted that is executed by Ruby's representatives and is herein being presented to the City Council for approval. RECOMMENDATION: Approve the attached lease and instruct the Mayor and City Clerk to execute same. ANALYSIS: Following the decision to rebuild the City Pier, the process for the selection of a concessionaire to operate the proposed "End of the Pier" Restaurant was initiated in early 1989 by City Staff. Ten pier restaurant operators, along the California Coast, that submitted proposals were thoroughly investigated by the City Staff. The selction eventually focused on the final three proposals, including the proposal submitted by the Ruby's Group. A City Council subcommittee was appointed to make the recommendation to the full City Council regarding selection of a concessionaire. Ruby's was the final choice. The primary reason for selection of a concessionaire prior to final design of the restaurant building was to get the input of the concessionaire during the design process. Once this was accomplished and final design issues were resolved, work began on finalizing a concession lease agreement. The basic terms of the lease were agreed upon by the City and Ruby's in 1990. After exhaustive study and revisions by both the City Staff and Ruby's, an agreeable lease contract has been drafted incorporating all the relevant points and issues of concern of both parties. A summation of these points, drafted by the City Attorney's Office, is incorporated herein as Exhibit"A". This communication outlines the extent of tenants interest in the Pier, the term of the lease, rents, insurance and other relevent points of the contract. A copy of this contract is attached as Exhibit "B". An estimate of lease income is shown in attached Exhibit "C" I' Pl0 5185 REQUEST FOR CITY COUNCIL ACTION Ruby's Pier Concession Lease The City has established the goal of completing construction of the premises on the pier and delivering possession to Tenant on or before April 1, 1995. In the event City fails to complete construction and delivery by this final completion date, or if the City decides not to construct the building, Tenant may terminate the lease, in which case Tenant and City shall have no further obligation to each other. FUNDING SOURCE: Not applicable. ALTERNATE ACTION: Add or delete points of the contract. ATTACHMENTS: 1. Exhibit "A" - Attorney's communication. 2. Exhibit "B" - Lease contract. 3. Exhibit "C" - Ruby's estimate of Lease Payments. 4. Exhibit "D" - Basic lease terms agreed to in 1990. 5. Exhibit "E" - Pier Buildings/Concessionaire - Procedural History. EXHIBIT "A" Hc.,j CITY OF HUNTINGTON BEACH - _ INTER DEPARTMENT COMMUNICATION M TO: Honorable Grace Winchell, Mayor, and Members of the City Council FROM: Gail Hutton, City Attorney DATE: June 4 , 1993 SUBJECT: Ruby' s Restaurant - Pier Lease We have been working with the Ruby' s Restaurant Group; Inc. ("Ruby' s") on a. lease pursuant to which Ruby' s would operate a 2 story approximately 6,000 square foot Ruby' s restaurant, an approximately 600 square foot berm-line coffee shop, and an approximately 800 square foot bait/tackle/snack shop on the new Huntington Beach Pier. Representatives of the City and Ruby' s have agreed upon all of the material terms of the lease and associated construction documents -(collectively, the "Lease Documents") and are ready to finalize executable documents for approval by the City Council and Ruby' s . The proposed essential terms and conditions of the Lease Documents are as follows: 1. Exclusive. Tenant Ruby' s Diner shall lease portions of the pier .for three buildings and shall have the exclusive right to sales of food, beverages, sundry items and concessions on the pier. (if 2.2 . ) 2. construction and Delivery of the Premises. City will - construct and deliver to Tenant, at City' s expense,- the buildings, based upon mutually approved plans and specifications . The premises will be delivered to Tenant in - a "completed shell" condition, -which will include, without limitation, finished construction and/or installation of the exterior for each building, upstairs patio for the restaurant, windows, doors, demising walls, utilities stubbed to all fixture locations and suspended ceiling, _ flooring and heating, air conditioning and ventilation system(s) . The goal for completion of the premises and delivery is on or before September 1, 1994, subject to appropriation of funds (If 2.3, Construction Rider) . . • i Honorable Grace Winchell Mayor, and Members of the City Council June 4 , 1993 Page 2 3 . Tenant Improvement Allowance. None. Tenant shall be solely responsible for all tenant improvements to bring the premises from the completed shell condition to fully operational status, in accordance with the approved plans and specifications . 4 . Term. Ten (10) years, commencing on the date Tenant first opens for business. (1f 3 . ) 5. Option Terms . Two (2) five (5) year extension options. Tenant is required to give written notice of its intent to exercise each extension option at least three (3) months prior to the end of the preceding term. (11 3 .3 . ) 6 . Minimum Annual Rent. (a) Minimum Annual Restaurant Rent. $90, 000 per year for the first two (2) years of the lease and $100,000 per year thereafter, subject to scheduled rent increases as set forth below. (1f 5.1. ) (b) Minimum Annual Rent for the Coffee Shop and Bait/Tackle /Snack Shop. For each concession, the greater of $10,000 per year or 10% of gross sales. (If 5.3 . ) 7. Minimum Annual Restaurant Rent Increases . Minimum Annual Restaurant Rent is subject to increases every third (3rd) year based upon the lesser of (i) increases in the CPI for the immediately preceding year, or (ii) four percent (4%) per annum, commencing upon the expiration of the eighth lease year. 5. 1. ) 8 . Restaurant Percentage Rent. (If 5.2) Tenant will pay to City percentage rent for the restaurant for sales in excess of an 8% gross sales break point (the 8% gross sales break point is calculated by dividing the Minimum Annual Restaurant Rent by .08) . Percentage rent will be equal to the amount of gross sales made at the restaurant in excess of the gross sales break point multiplied by the "Percentage Rent Rate. " The Percentage Rent Rate will increase as gross sales increase, in accordance with the following schedule: Sales Volume Percentage Rent Rate -0- to $800,000 7% $800,000 to $1,300,000 8% $1,300,000 to $2, 000, 000 10% $2,000,000 and above 12% 9 . Late Fees. Interest of 1-1/2% per month is charged on °= unpaid sums. Honorable Grace Winchell, Mayor, and Members of the City Council June 4, 1993 Page 3 10 . Deposit . $5, 000 paid upon full execution of the Lease Documents . (if 18 . ) 11. Utilities . Tenant will make arrangements and pay for all utilities used at the premises, including gas, electricity, water, refuse removal, etc. (1f 8 . ) 12. Taxes . Tenant shall pay directly to all appropriate taxing authorities all possessory interest taxes and all property taxes on personal property located at the premises . (if 7. ) 13 . Subletting and Assignment. Tenant may not assign, sublet or encumber its interest in the premises without the prior written consent of City, which consent shall not be unreasonably withheld. It will be understood and acknowledged that Ruby' s intends, but is not obligated to, sublease or assign either or both of the coffee shop and the bait/tackle/snack shop. (1f 14 . ) 14 . Alcoholic Beverages . Upon obtaining appropriate licenses from the ABC, Tenant may sell only beer and wine at the premises. City will have anabsolute right to revoke Tenant' s right to sell beer and wine at the premises at any time during the first year of operation if the City determines that such sales are detrimental to pier operations. Thereafter, the City Council may revoke Tenant' s right to sell beer and wine at the premises if the City determines that such sales are detrimental to pier operations and after giving Tenant notice and an opportunity to be heard at a public hearing at which Tenant is given an opportunity to address the City Council. (if 6. 6. ) 15 . City' s Use of the Premises . City will have a limited right to use the second floor of the Restaurant for City-related purposes . (If 20 . ) 16. Arbitration. In the interests of prompt and economical resolution of disputes, we have added an arbitration clause. (1f 37. ) . 17. Attorneys Fees. Each party will bear its own attorney fees in any lease disputes . A _copy of the lease is attached to the RCA. 'Gail.-Hutton City Attorney cc: Michael Uberuaga, City Administrator Ray Silver, Assistant City Administrator -- - Robert Franz, Director of Administrative Services Exhibit "C" ESTIMATED LEASE PAYMENTS Ruby Resturant Group Sales Lease Year Volume Payments 1995 $1,125,000 $90,000 1996 1,500,000 116,000 1997 1,575,000 123,500 1998 1,653,750 131,375 1999 1,736,438 139,644 2000 1,823,259 148,326 2001 1,914,422 157,442 2002 2,010,143 167,217 2003 2,110,651 179,278 2004 2,216,183 191,942 2005 2,326,992 205,239 2006 2,443,342 219,201 2007 2,565,509 233,861 2008 2,693,784 249,254 2009 2,828,474 265,417 2010 2,969,897 282,388 2011 3,118,392 300,207 2012 3,274,312 318,917 2013 3,438,027 338,563 2014 3,609,929 359,191 TOTAL $4,216,963 AVERAGE $210,848 NOTES: 1. End of Pier resturant only 2. Assumes 1/1/95 opening date 3. Assumes sales volume of$1,500,000 starting in 1996 and increasing by 5% per year 4. Additional minimum rent of$20,000 per year for Bait/Tackle and Coffee Shop. EXHIBIT "D" LEASE PROVISIONS (HUNTINGTON BEACH PIER RESTAURANT) Proposed agreement between City of Huntington Beach and Ruby's Diner. Inc. Tenant desires to lease portions of pier from City for purposes of operating a combination sit-down, casual food-service restaurant, with a concession serve window and associated retail operation. Also including a separate coffee shop and a bait and tackle facility. TERM: Ten (10) years with two (2) optional five (5) year extensions. PREMISES: Three separate locations on pier. MINIMUM ANNUAL RENT: $70,000.00 for 1st year with $80,000.00 per year for the 2nd and 3rd years for the restaurant at the end of the pier. An additional $10,000.00 per year minimum would apply to each of the other two (2) pier concessions. PERIODIC ADJUSTMENTS: Every third year, on anniversary of lease date, the minimum rents are to be adjusted by contract. PERCENTAGE RENT: END OF THE PIER RESTAURANT SALES VOLUME PERCENTAGE RENT 0- $ 800,000.00 7% $ 800,000.00 $1,300,000.00 8% $1,300,000.00 $2,000,000.00 10% $2,000,000.00 and above 12% This percentage rent would be versus the base rent and these differing percentage rates would only be applicable to the sales within that bracketed sales category. Percentage rent of 10% would apply to the coffee shop and bait/tackle shop. ALCOHOLIC BEVERAGES: Beer/wine sales permitted. Continued sale of alcoholic beverages is subject to City's review at end of one (1) year. CONSTRUCTION CONDITION: Concessionnaire anticipates receiving the buildings in a "completed shell" condition. Concessionaire's proposal contingent on an upstairs patio dining deck above the restaurant. INSURANCE REQUIREMENTS: Standard City requirements per use and location. SIGNAGE: Logo sign on restaurant and at base of pier. ASSIGNMENT, SUBLETTING AND ENCUMBERING: By City's consent (ALL OTHER RECITALS AS PER STANDARD CONCESSIONAIRE CONTRACT WITH MINOR ADJUSTMENTS WHERE NECESSARY) EXHIBIT "E" PIER BUILDINGS/CONCESSIONAIRE PROCEDURAL HISTORY DATE ACTIOI�t May, 1989 Draft RFP for Concessionaire distributed for comment. August, 1989 RFP mailed, ads placed. October, 1989 Council authorizes proposals for individual pier concession operations as well as combined concession operations (ie, all 3 buildings). October, 1989 10 proposals received. January, 1990 City Council Committee appointed to review proposals. May, 1990 City Council approves guidelines for review of two finalists (Ruby's and Sea Cove). August, 1990 City Council approves selection of Ruby's as recommended by Committee. August, 1990 to Feb. 1991 Ruby's Restaurant Group works with Pier Design Committee, Pier Building Architect on design of buildings. February, 1991 City Council approves conceptual design of pier buildings. September 1991 Environmental Assessment Committee approves building project compliance with EIR. December, 1991 Pier Design Committee approves building materials. March, 1992 City Council approves building materials/colors. March, 1992 City Council requests analysis, by June, 1992, of funding alternatives for pier buildings. July, 1992 City Council defers consideration of funding alternatives for ninety (90) days. October, 1992 City Council approves the use of $1 million of Certificates of Participation (C.O.P's) as the funding source for the pier concession buildings. June, 1993 City Countil approves final design of pier buildings. r LEASE RUBY'S DINER, INC. HUNTINGTON BEACH PIER RESTAURANT TABLE OF CONTENTS Page 1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . 1 1. 1 General Definitions. . . . . . . . . . . . . . . . 1 1. 2 Other Definitions . . . . . . . . . . . . . . . . 3 2 . LEASE OF PREMISES . . . . . . . . . . . . . . . . . . . 4 2 . 1 Agreement to Lease . . . . . . . . . . . . . . . . 4 2 . 2 Definition of Premises . . . . . . . . . . . . . . 4 2 . 3 Additional Covenants Regarding Agreement to Lease . . . . . . . . . . . . . . . . . . . . . 4 3 . TERM . . . . . . . . . . . . . . . . . . . . . . . . . . 6 3 . 1 Term of Lease . . . . . . . . . . . . . . . . . . 6 3 . 2 Early Entry . . . . . . . . . . . . . . . . . . . 6 3 . 3 Option to Extend . . . . . . . . . . . . . . . . . 6 3 .4 Hold Over . . . . . . . . . . . . . . . . . . . . . 6 4 . CONDITION OF PREMISES . . . . . . . . . . . . . . . . . 6 5. RENT . . . . . . . . . . . . . . . . . . . . . . . . 7 5. 1 Minimum Annual Rent . . . . . . . . . . . . . . . 7 (a) Base Minimum Annual Rent . . . . . . . . . 7 (b) Periodic Adjustment . . . . . . . . . . . . 7 5. 2 Restaurant Percentage Rent . . . . . . . . . . . . 8 (a) Percentage . . . . . . . . . . . . . . . . 8 (b) Method of Payment . . . . . . . . . . . . . 8 5. 3 Coffee Shop and Bait/Tackle/Snack Shop Annual Rent . . . . . . . . . . . . . . . . . . . . . 9 5. 4 Gross Sales . . . . . . . . . . . . . . . . . 9 (a) Gross Sales . . . . . . . . . . . . . 9 (b) Gross Sales of Alcoholic Beverages . . . . 10 (c) Exclusions from Gross Sales . . . . . . . . 10 (d) Statements of Gross Sales and Gross Sales of Alcoholic Beverages . . . . . . . . . . 11 (e) Sales and Charges . . . . . . . . . . . . . 12 (f) Production of Statement, Records and Audit . . . . . . . . . . . . . . 12 (g) Tenant's Gross SalesAudit . . . . . 13 (h) Acceptance . . . . . . . . . . . . . . 13 5. 5 Interest on Unpaid Rent . . . . . . . . . . . . . 13 6. BUSINESS PURPOSES AND USE OF PREMISES . . . . . . . . . 13 6.1 Business Purposes . . . . . . . . . . . . . . . . 13 6. 2 Operation of Premises . . . . . . . . . . . . . . 13 6. 3 Continuous Operation . . . . . . . . . . . . . . . 14 6.4 Advertising Display . . . . . . . . . . . . . . . 14 6. 5 Independent Contractor . . . . . . . . . . . . . . 14 6. 6 Alcoholic Beverages . . . . . . . . . . . . . 15 6. 7 No Distress Sales . . . . . . . . . . . . . . . . 15 6.8 Parking and Delivery Access . . . . . . . . . . . 15 09-13-93 20476-00003 F:\D0C\177\93060003.LE4 i Paste 6. 9 Public Rest Rooms . . . . . . . . . . . . . . . . 16 6. 10 No Smoking . . . . . . . . . . . . . . . . . . . . 16 7 . TAXES, LICENSES AND OTHER OBLIGATIONS . . . . . . . . . 16 7 . 1 Payment of Taxes . . . . . . . . . . . . . . . . 16 7 .2 Payment of Obligations . . . . . . . . . . . . . . 16 7 . 3 Challenge to Taxes . . . . . . . . . . . . . . . . 16 8. UTILITIES AND SERVICES . . . . . . . . . . . . . . . . . 17 9. ALTERATIONS . . . . . . . . . . . . . . . . . . . . . . 17 10. MAINTENANCE OF PREMISES . . . . . . . . . . . . . . . 18 10. 1 Maintenance and Repair by Tenant . . . . . . . . . 18 10.2 Maintenance and Repair of Pier . . . . . . . . 19 10. 3 Entry by City. . . . . . . . . . . . . . . . . . . 20 10. 4 Additional Covenants of City Regarding Operation of the Pier and Maintenance Obligations . . . 20 11. INDEMNITY AND EXCULPATION; INSURANCE . . . . . . . . . . 21 11. 1 Exculpation of City . . . . . . . . . . . . . . . 21 11. 2 Hold-Harmless Clause . . . . . . . . . . . . . . . 21 11. 3 Insurance . . . . . . . . . . . . . . . . . . . 22 11.4 Increase in Amount of Public Liability and Property Damage Insurance . . . . . . . . . 22 11.5 Fire Insurance on Building and Other Improvements . . . . . . . . . . . . . . . . . . 22 11. 6 Determination of Replacement Value . . . . . . . . 23 11.7 Loss of Rent Insurance . . . . . . . . . . . . . . 23 11.8 Workers ' Compensation . . . . . . . . . . . . . 23 11.9 Waiver of Subrogation . . . . . . . . . . . 23 11. 10 Other Insurance Matters . . . . . . . . . . . 24 11. 11 Insurance Proceeds . . . . . . . . . . . . . . 25 12 . CASUALTY DAMAGE • . . . . . . . . . . . . . . . 25 12 . 1 Destruction 0f Premises . . . . . . . . . . . . . 25 12. 2 Replacement of Tenant's Property . . . . . . . . . 25 12 .3 Abatement of Rent . . . . . . . . . . . . . . . . 26 13 . DAMAGE OR DESTRUCTION OF THE PIER . . . . . . 26 13 . 1 Destruction of Pier . . . . . . . . . . . . . . . 26 13 . 2 Abatement of Rent . . . . . . . . . . . . . 27 14 . PROHIBITION AGAINST VOLUNTARY ASSIGNMENT, SUBLETTING, AND ENCUMBERING . , . . . . . . . . . . . . . . . . . . 27 14 . 1 Prohibition of Assignment . . . . . . . . . . . . 27 14 .2 Exceptions . . . . . . . . . . . . . . . . . . . . 28 14 . 3 Continuing Effect . . . . . . . . . . . . . . . . 29 15. DEFAULT . . . . . . . . . . . . . . . . . . . . . . 29 15. 1 Default by Tenant . . . . . . . . . . . . . . . 29 09-13-93 20476-00003 F:WOC\177\93060003 AE4 11 f Paae 15. 2 Remedies . . . . . . . . . . . . . . . . . . . . . 30 (a) Cumulative Nature of Remedies . . . . . . . 30 (b) Election of Remedy . . . . . . . . . . . 32 (c) City' s Right to Cure Tenant 's Default . . . 32 (d) Waiver of Rights . . . . . . . . . . . . . 32 16. CONDEMNATION . . . . . . . . . . . . . . . . . . . . . 32 16. 1 Eminent Domain Proceedings . . . . . . . . . . . 32 16. 2 Proportionate Termination of Lease . . . . . . . . 32 16. 3 Allocation of Award . . . . . . . . . . . . . . . 33 17 . SUBJECT TO STATE LANDS LEASE, OPERATING AGREEMENT AND CONSERVANCY AGREEMENTS . . . . . . . . . . . . . . . . . 33 18 . SECURITY DEPOSIT . . . . . . . . . . . . . . . . . . . 34 19. WASTE OR NUISANCE . . . . . . . . . . . . . . . . . 34 20. CITY DAYS . . . . . . . . . . . . . . . . . 34 21. NO CONFLICTS OF USE, HAZARDOUS MATERIALS . . . . . . . . 35 22 . CITY'S DEFAULTS/TENANT' S REMEDIES. . . . . . . . . . . . 36 23 . NOTICES . . . . . . . . . . . . . . . . . . . . . . 36 24 . Intentionally Omitted. 25. SURRENDER OF PREMISES . . . . . . . . . . . . . . . . . 37 26. WAIVER . . . . . . . . . . . . . . . . . . . . . . . . . 37 27. PARTIAL INVALIDITY . . . . . . . . . . . . . . . . . . . 38 28. GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . 38 29. ENTIRE AGREEMENT; MODIFICATION . . . . . . . . . . . . . 38 30. TIME OF ESSENCE . . . . . . . . . . . . . . . . . 39 31. SUCCESSORS . . . . . . . . . . . . . . . . . . . . . . . 39 32 . BROKERS . . . . . . . . . . . . . . . . . . . . . . . 39 33 . TABLE OF CONTENTS ; HEADINGS . . . . . . . . . . . . . 39 34. GENDER; NUMBER . . . . . . . . . . . . . . . . . . . . . 39 35. EXHIBITS . . . . . . . . . . . . . . . . . . . . . 39 36. EFFECTIVE DATE . . . . . . . . . . . . . . . . . . . . . 39 09-13-93 20476-00003 F:\D0C\1T7\93060003AE4 i i i Paste 3 7 . ARBITRATION . . . . . . . . . . . . . . . . . . . . . . 40 37 . 1 Disputes Subject to Mediation and Arbitration . . 40 37 . 2 Initial Mediation . . . . . . . . . . . . . . . . 40 37 . 3 Arbitration . . . . . . . . . . . . . . . . . . . 40 09-13-93 20476-00003 F:\DOC\177\93060003.LE4 iv LEASE RUBY'S DINER; INC. (Huntington Beach Pier Restaurant) THIS LEASE is made and entered into as of the _ y�5� day of sQ ,� , 1993 , by and between the CITY OF HUNTINGTON BEACH, a municipal corporation of the State of California ("City") and RUBY 'S DINER, INC. , a California corporation ("Tenant") . R E C I T A L S A. City is the owner of the Huntington Beach Pier ("the Pier") , subject to the terms of a Lease ("the State Lands Lease") dated May 7, 1984 , recorded May 21, 1985 as Instrument Number 85-183878 of Official Records of Orange County, California. B. Tenant desires to lease three buildings to be constructed by City on the Pier for the purpose of operating three concessions, including a combination sit-down, casual food- service restaurant, a snack shop, a bait/tackle/snack shop and related retail operations. C. City desires to lease portions of the Pier to Tenant for such purposes in accordance with the terms and conditions set forth in this Lease. A G R E E M E N T NOW, THEREFORE, in consideration of the mutual covenants herein contained, City and Tenant hereby agree as follows: 1. DEFINITIONS 1. 1 General Definitions. As used in this Lease, the following words and phrases shall have the following meanings: (a) Alteration - any addition or change to, or modification of, the Premises made by Tenant including, without limitation, fixtures. (b) Authorized Representative - any officer, agent, employee, or independent contractor retained or employed by either Party, acting within authority given him by that Party. (c) Cif - the City of Huntington Beach, a municipal corporation of the State of California, and any Successor to City's interest in the Pier or in the Premises. 09-13-93 20476-00003 F:\00C\177\93060003AE4 (d) City Administrator - the City Administrator of the City of Huntington Beach. (e) Damage - injury, deterioration, or loss to a Person or property caused by another Person's acts or omissions. Damage includes death. (f) Damages - a monetary compensation or indemnity that can be recovered in the courts by any Person who has suffered damage to his person, property, or rights through another's act or omission. (g) Expiration - the coming to an end of the time specified in this Lease as its duration, including any extension of the Term resulting from the exercise of an option to extend. (h) Good condition - the good physical condition of the Premises and each portion of the Premises, including, without limitation, signs, windows, show windows, and appurtenances. "In good condition" means first-class, neat, clean, and broom-clean, and is equivalent to similar phrases referring to physical adequacy in appearance and for use. (i) Hold harmless - to defend and indemnify from all liability, losses, penalties, Damages, costs, expenses, causes of action, claims, or judgments arising out of or related to any Damage to any Person or property. (j) Law - any judicial decision, statute, constitution, ordinance, resolution, regulation, rule, administrative order, or other requirement of any municipal, county, state, federal, or other government agency or authority having jurisdiction over the Parties or the Premises, or both, in effect either at the time of execution of this Lease or at any time during the Term, including, without limitation, any regulation or order of a quasi-official entity or body (e.g. , board of fire examiners or public utilities) . (k) Maintenance - repairs, replacement, repainting, and cleaning. (1) Person - one or more human beings, or legal entities or other artificial persons, including, without limitation, partnerships, corporations, trusts, estates, associations, and an- combination of human beings and legal entities. (m) Premises - those portions of the Pier designated on Exhibits A-1, A-2 and A-3 attached hereto and referred to herein as the Restaurant, Coffee Shop and the Bait/Tackle/Snack Shop. 10-06-93 20476-00003 S:\DOC\177\93060003_LE4 2 • (n) Provision - any term, agreement, covenant, condition, clause, qualification, restriction, reservation, or other stipulation in this Lease that defines or otherwise controls, establishes, or limits the performance required or permitted by either Party. (o) Rent - Minimum Monthly Rent, Percentage Rent, Taxes, and other similar charges payable by Tenant under the Provisions of this Lease. (p) Rent Commencement Date - the Rent Commencement Date for each structure (respectively, the Restaurant, Coffee Shop and Bait /Tackle/Snack Shop) shall be the date upon which Tenant or its assignee or sublessee(s) first opens such structure for business to the general public. As soon as the Rent Commencement Date occurs for each structure, the Parties shall immediately confirm such date in writing. The Parties acknowledge that there may be a different Rent Commencement Date for each structure, provided, however, that a differential in Rent Commencement Dates will not affect the Term, which shall be, in any case, as set forth in Section 3 .1. (q) Successor - assignee, transferee, personal representative, heir, or other Person succeeding lawfully, and pursuant to the provisions of this Lease, to the rights or obligations of either Party. (r) Tenant - RUBY'S DINER, INC. , a California corporation, and any Successor hereunder. (s) Termination - the ending of the Term for any reason before Expiration. 1. 2 Other Definitions. The following additional terms are defined in the following sections of this Lease: (a) ABC §5.4 (b) (b) Gross Sales §5.4 (c) Lease Year §5. 2 (b) (d) Percentage Rent §5. 2 (a) (e) Restaurant Minimum Annual Rent §5. 1(a) (f) Pier - Recital A (g) State Lands Lease Recital A (h) Term §3 . 1 09-13-93 20476-00003 F:\DOC\177\93060003.LE4 3 • . 2 . LEASE OF PREMISES 2 . 1 Agreement to Lease. City leases the Premises to Tenant and Tenant leases the Premises from City for the Term and on the conditions set forth in this Lease. 2. 2 Definition f Premises. Tenant ant covenants and agrees to n operate and maintain three (3) separate concessions, each with its own distinct function. Tenant shall have the exclusive right to provide food, beverages, sundry items, and rentals on the Pier, except for those concessions operated by persons or entities other than Tenant and identified on Exhibit B attached hereto. The three concessions shall consist of the following operations: (a) Pierhead restaurant located at the end of the pier in an octagonal two-story structure of approximately 6, 000 square feet where breakfast, lunch and dinner will be provided ("Restaurant") . (b) A berm line snack shop located in an approximately 600 square foot building, above the mean high tide line, providing coffee, doughnuts and sundries such as tee-shirts, postcards, pier/beach photos, and similar items ("Coffee Shop") . (c) A bait/tackle/snack shop, in an approximately 800 square foot building located approximately three-fourths of the way out onto the pier, providing bait, rentals, tackle, equipment and a takeout window ("Bait/Tackle/Snack Shop") . 2 . 3 Additional Covenants Regarding Agreement to Lease. It is understood that Tenant will operate the Restaurant and may but is not obligated to sublease one or both of the other concessions, but all subleases, including the identity of the sublessee(s) , rent, and other terms and conditions shall be approved by City, which approval may not be unreasonably withheld, conditioned or delayed. Upon execution of an approved sublease, Tenant shall remain liable to City for the performance of Tenant's obligations under the Lease. City agrees to commence design and construction of the Premises immediately upon full execution of this Lease and to diligently pursue the same to completion in accordance with the terms, conditions and schedule set forth in the Construction Rider attached hereto and incorporated herein by this reference. City shall establish a goal to complete construction of the Premises and deliver possession to Tenant on or before April 1, 1995 (the "Final Completion Date") . City's obligation to complete construction shall be subject to the availability and appropriation of funds for construction. In the event City fails to complete construction of the Premises and to 09-13-93 20476-00003 F ADOC\177\93060003 AE4 4 deliver possession to Tenant on or before the Final Completion Date, Tenant may, at any time prior to City's delivery of possession of the completed Premises to Tenant, terminate this Lease, in which case Tenant shall have no further obligation or liability to City hereunder and City shall promptly return to Tenant any and all consideration given by Tenant pursuant to or for execution of this Lease. Exercise if the foregoing right of termination shall be Tenant ' s sole remedy for City ' s failure to complete construction; provided, however, that in the event City fails to complete construction of the Premises and the Lease is terminated by Tenant in accordance with this Section 2 . 3 , Tenant shall have a continuing right of first opportunity to lease any space on the Pier proposed to be let by City for a period of ten (10) years (the "First Opportunity Period") from the date of such termination (the "Right of First Opportunity") . Prior to offering any space for lease on the Pier to any other person or entity during the First Opportunity Period, City shall offer the space to Tenant, by delivery of a written notice (an "Offer Notice") , on terms not less favorable than those to be offered to any other party at any time thereafter. Tenant shall have a period of not less than forty-five (45) days to respond to the Offer Notice by delivering to City a written notice of acceptance, rejection or counter-offer with respect to City's offer of space on the Pier. If Tenant rejects the offer, City may then offer the proposed space on the Pier for lease on terms no more favorable to the prospective tenant than those offered to Tenant. No lease of any space on the Pier entered into during the First Opportunity Period shall be valid unless it is fully executed within forty-five (45) days of City's receipt of written notice of Tenant' s rejection of the corresponding Offer Notice; if City fails to enter into a binding lease with a third-party within such forty-five (45) day period, then the Right of First Opportunity shall be in effect and the provisions of this paragraph shall apply to any future proposed lease of space on the Pier and the above-procedures shall be repeated (i.e. , City shall provide Tenant with written notice and a right of first opportunity to lease the space on terms at least as favorable as those to be offered to any party thereafter, in accordance with the procedure set forth above) . If Tenant provides City with a written counter-offer within forty-five (45) days of receipt of an Offer Notice, City and Tenant shall negotiate in good faith regarding the proposed lease space prior to City offering such space to any other person or entity. Upon Tenant' s request, City shall file a Notice of Option in the Official Records of the County where the- Premises are located providing notice of the existence of Tenant's Right of First Opportunity, in a form mutually acceptable to Tenant and City. City' s failure to complete construction of the Premises and deliver possession to Tenant by the Final Completion Date 09-13-93 20476-00003 F:\D0C\177\93060003AE4 5 shall not operate to give City any right to terminate this Lease or relieve City of its obligation to diligently pursue completion and delivery of the Premises. 3 . TERM . 3 . 1 Term of Lease. The term of the Lease shall be ten (10) years, commencing on the City' s delivery of the completed Restaurant to Tenant and issuance of a Certificate of Occupancy therefor (the "Term") . When the date of commencement of the Term has been ascertained, the Parties shall immediately confirm such date in writing. Completion and delivery of the Restaurant and the commencement of the Term shall in no way relieve City of its obligation to complete construction of and deliver all of the Premises (including all three buildings) to Tenant by the Final Completion Date in accordance with Section 2 . 3 . 3 . 2 Early Entry. Prior to the Rent Commencement Date, Tenant may enter the Premises for the purpose of preparing to open the Premises for business. Such entry shall be subject to all of the Provisions of this Lease. 3 . 3 Option to Extend. Provided Tenant is not then in material default under this Lease beyond applicable notice and cure periods, Tenant may extend this lease for two further successive terms of five (5) years (collectively, the "Option Terms") , each commencing on expiration of the preceding term, by giving City written notice of Tenant's desire to do so at any time at least three (3) months prior to expiration of the Term or any extension thereof. City shall give Tenant written notice of the pending expiration of Tenant's opportunity to exercise its right to extend the Lease term not later than ten (10) days prior to the expiration of the time period during which Tenant is entitled to exercise each opportunity to extend the Lease term. 3 . 4 Hold Over. Should Tenant, with City's consent, hold over and continue in possession of the Premises after expiration of the Term of this Lease or any extension thereof, Tenant's continued occupancy of the Premises shall be considered a month- to-month tenancy subject to all the terms and conditions of this Lease, except the provisions of Paragraph 3 . 1. 4 . CONDITION OF PREMISES Upon Final Compl-etion and delivery of possession of the Premises to Tenant in compliance with all of the terms of this Lease and the Construction Rider attached hereto and incorporated herein by this reference, Tenant shall accept the Premises, as well as the improvements thereon and the facilities appurtenant thereto, and will provide written confirmation to City that the Premises as well as the improvements thereon and the facilities thereto are in good, clean, safe, and tenantable condition as of 09-13-93 20476-00003 F:\DM\IM93W003AE4 6 the date of occupancy. Tenant further agrees with and represents to City that Ten"nt will not accept possession of the Premises and acknowledge they are completed unless and until the Premises have been inspected by Tenant. Tenant covenants and agrees that prior to acceptance, Tenant shall have been assured by means independent of City or any agent of City of the truth of all facts material to this Lease and that the Premises are being leased by Tenant as a result of its inspection and investigation and not as a result of any representations made by City or any agent of City. The above acceptances and stipulation shall be deemed effective if no written notice of objection is received by City within ten (10) days after Certificate of Occupancy is issued by City. Tenant shall be solely responsible for all tenant improvements to bring the Premises from the completed shell condition to fully operational status, in accordance with approved plans and specifications. City' s approval of Tenant's plans and specifications shall not be unreasonably withheld, conditioned or delayed. City hereby approves the plans attached hereto as Exhibit E showing the tenant improvements to be constructed and installed in the Restaurant. 5. RENT 5. 1 Minimum Annual Rent. (a) Base Minimum Annual Rent. From and after the Rent Commencement Date, Tenant shall pay to City as minimum annual rent for the Restaurant ("Restaurant Minimum Annual Rent") , without deduction, setoff, prior notice, or demand, the sum of $90, 000. 00 for the first two years of the Term of this Lease. Commencing with the third year of the Term, and thereafter, the fixed Minimum Annual Rent shall be the sum of $100, 000. 00. One- twelfth of the Minimum Annual Rent shall be payable monthly in advance on the first day of each month of the Term. Minimum Rent for any partial month shall be prorated in accordance with the actual number of days in the month in which such proration occurs. Rent shall be payable at the office of City at 2000 Main Street, Huntington Beach, California or at such other place or places as City may from time to time designate by written notice delivered to Tenant. (b) Periodic Adjustment. From and after the expiration of the eighth (8th) full year of the Term, City will, every third year, on the anniversary of Rent Commencement Date, adjust the Restaurant Minimum Annual Rent by contract, measured by the base rent times the lesser of (a) the increase in the consumer price index for All Urban Consumers, All Items, base year 1982-1984 = 100, for the Los Angeles/Anaheim/Riverside geographical area as compiled by the United States Department of 09-13-93 20476-00003 F:\D0C\177\93060003AE4 7 Labor for the immediately preceding year, or (b) four percent (4%) . 5. 2 Restaurant Percentage Rent. (a) Percentage. In addition to Minimum Annual Rent, during the Term Tenant shall pay to City a sum ("Restaurant Percentage Rent") equal to the Percentage Rate set forth below multiplied by all Gross Sales at the Restaurant, as defined below, during each Lease Year, less aggregate Restaurant Minimum Annual Rent paid during the Lease Year. Restaurant Percentage Rent will be based on the following annual Gross Sales percentage: Sales Volume Percentage Rate -0- $ 800, 000. 00 07% $ 800, 000. 00 $1, 300, 000. 00 08% $1, 300, 000. 00 $2 , 000, 000. 00 10% $2 , 000, 000. 00 and above 12% Restaurant Percentage Rent shall become due and payable on the twenty-fifth (25th) day of the month immediately following the month during which Gross Sales at the Restaurant exceed the Annual Sales Break Point for the current Lease Year and shall be paid on the twenty-fifth (25th) day of each month thereafter on all additional Gross Sales made at the Restaurant during the remainder of the Lease Year at the Percentage Rates specified above. By way of example, only, assuming that Gross Sales from the Restaurant during the first Lease Year equal $1, 500, 000, Tenant would pay $26, 000 during the first Lease Year as Restaurant Percentage Rent, determined as follows: 7% on the first $800, 000 of Gross Sales ($56, 000) , 8% on the next $500, 000 of Gross Sales ($40, 000) and 10% on the next $200, 000 of Gross Sales ($20, 000) , for a total of $116, 000, minus the $90, 000 Restaurant Minimum Annual Rent for the first Lease Year, equals $26, 000 in Restaurant Percentage Rent. (b) Method of Payment. As used herein, the term "Annual Sales Break Point" shall mean the amount of Gross Sales above which Tenant would first be obligated to pay Restaurant Percentage Rent pursuant to Section 5. 2 (a) , above. Within 30 days after the end of each Lease Year, City shall determine the amount of Percentage Rent based on the Gross Sales of Tenant during the Lease Year and the sums paid to City as Minimum Annual Rent and Percentage Rent. If Tenant has paid to City an amount of Percentage Rent greater than the Percentage Rent it is in fact obligated to pay for the Lease Year pursuant to § 5. 2 (a) , Tenant shall be 09-13-93 20476-00003 F:\DOC\177\93060003.LE4 8 entitled to an immediate refund of the excess. If Tenant has paid to City an amount of Percentage Rent less than Tenant is required to pay, Tenant shall immediately pay the difference to City. A "Lease Year" is a one year period ending July 31. For purposes of computing the Percentage Rent for any partial Lease Year at the beginning or end of the Term, the sales volume for the applicable annual Gross Sales percentage shall be adjusted pro rata to the number of months in the Percentage Rent Period. 5. 3 Coffee Shop and Bait/Tackle)Snack Shop Annual Rent. Minimum Annual Rent for the Coffee Shop and for the Bait/Tackle/Snack shall be $10, 000 each. From and after the Rent Commencement Date, Tenant (or the sublessee or assignee of Tenant) shall pay to City one-twelfth (1/12th) of Minimum Annual Rent for the Coffee Shop and the Bait/Tackle/Snack Shop in advance on the first day of each month of the Term ($833 . 33 per month for each shop) . Tenant shall have the primary obligation to City for rent due City from the berm line Coffee Shop and Bait/Tackle/Snack Shop. In addition to Minimum Annual Rent, Tenant shall pay Percentage Rent equal to ten percent (10%) of Gross Sales at each of the Coffee Shop and Bait/Tackle/Snack Shop on Gross Sales made at each such concession to the extent such Gross Sales exceed Minimum Annual Rent ($10, 000 per concession) . Said Percentage Rent shall become due and payable on the twenty- fifth (25th) day of the month immediately following the month during which Gross Sales at the Coffee Shop and the Bait/Tackle/Snack Shop exceed $10, 000 and thereafter shall be paid monthly on all additional Gross Sales made at the Coffee Shop and the Bait/Tackle/Snack Shop during the remainder of the Lease Year. The audit and reimbursement provisions set forth in Section 5. 2 (b) above with regard to Restaurant Percentage Rent shall also apply to Coffee Shop and Bait/Tackle/Snack Shop Percentage Rent. 5. 4 Gross Sales. (a) Gross Sales. The term "Gross Sales" as used herein shall mean: (1) The entire amount of the actual sales price, whether wholesale or retail, and whether wholly or partly for cash or on credit or in exchange for any other product, commodity, service, commercial paper or forbearance, of all sales of merchandise and all charges made by Tenant or its employees or others acting on its behalf for the rendition of services of any kind whatsoever, made from or upon the Premises. 09-13-93 20476-00003 F:\DOC\177\93060003AE4 9 (2) All other receipts of all business conducted in, at or from the Premises, including all deposits not refunded to purchasers, proceeds, receipts or any revenue derived whatsoever from the use of Premises. (3) Orders taken in or from the Premises although said orders may be filled elsewhere, and sales by any subtenant in or from the Premises, and all without credit to Tenant for uncollected or uncollectible credit accounts. (4) Gross receipts of all coin-operated devices which may be placed in the Premises by Tenant or under any rent concession, percentage or other arrangement including, without limitation, such devices as pinball machines, vending machines, video games and similar devices (but excluding revenue from telephones that are collected by a public and/or private utility) , except that nothing herein shall be construed as City's consent to the use of same in the Premises; and (5) All other revenues or receipts generated by or arising from the use of the Premises. (b) Gross Sales of Alcoholic Beverages. The term "Gross Sales of Alcoholic Beverages" as used herein shall mean the entire amount of the actual sales price, whether wholesale or retail, and whether wholly or partly for cash or on credit or in exchange for any other product, commodity, service, commercial paper or forbearance, of all sales of beer, wine, liquor, mixed drinks or other alcoholic beverages, as defined in California Business and Professions Code §23004 or the regulations of the California Department of Alcoholic Beverage Control ("ABC") . (c) Exclusions from Gross Sales. Notwithstanding anything to the contrary contained herein, Gross Sales shall not include, or if included there shall be deducted (but only to the extent they have been included) , the following: (1) Sales and use taxes, so-called luxury taxes, consumers ' excise taxes, gross receipts taxes, and other similar taxes now or in the future imposed on the sale of merchandise or services, but only if such taxes are added to the selling price and collected from customers. (2) The transfer or exchange of merchandise between the stores or businesses of Tenant, if any, where such transfers or gxchanges of merchandise are made solely for the convenient operation of a business owned and operated by Tenant and not for the purpose of consummating a prior sale made in, to or from the Premises or for the purpose of depriving City of the benefit of a sale which otherwise would be made in, at or from the Premises. 09-13-93 20476-00003 F:\DOC\177\93060003.LE4 10 (3) The amount of returns to shippers or manufacturers. (4) The amount of any cash or credit refund made upon any sale where the merchandise sold or some part thereof is thereafter returned by the purchaser. Each sale upon installment or credit shall be treated as a sale for the full price in the month during which such sale shall be made, irrespective of the time when Tenant shall receive payment (whether in full or partial) from its customers. (5) Sales of trade fixtures or personal property to be replaced by Tenant which are not stock in trade. (6) Sums and credits received in the settlement of claims for loss of or damage to merchandise. (7) Gift certificates, or similar vouchers, until such time as they shall have been converted into a sale by redemption. (8) Meals provided for officers or employees without charge. (9) Meals, goods or products provided for promotional or publicity purposes without charge. (10) Cash refunds made to customers in the ordinary course of business. (11) Value added taxes ("VAT") or other taxes added to the selling price of products and other. similar taxes now or hereafter imposed upon the sale of merchandise or services, whether such taxes are added to the selling price or included therein. (12) Discounted sales to employees of Tenant, not to exceed 2% of Gross Sales. (13) Uncollectible credit accounts and other bad debts, not to exceed 2% of Gross Sales. (14) Amounts paid to charge card or credit card issuers. - (d) Statements of Gross Sales and Gross Sales of Alcoholic Beverages. Tenant shall furnish to City ;statements of Tenant ' s Gross Sales and Gross Sales of Alcoholic Beverages within twenty (20) days after the end of each Percentage Rent Period, and annual statements of Gross Sales and Gross Sales of Alcoholic Beverages within thirty (30) days after the end of each 09-13-93 20476-00003 F.\DOC\177\93060003.LE4 1 1 Lease Year. Each statement shall be signed and cert4-fied to be correct by an officer or employee of Tenant. (e) Sales and Charges. All sales and charges shall be recorded by -means of cash registers which display the amount of the transaction certifying the amount recorded. The register shall be equipped with devices which log in daily sales totals, and which shall record on tapes the transaction numbers and sales details. At the end of each day the tape will record the total sales for that day. (f) Production of Statement Records and Audit. Tenant agrees to make available for inspection by City at the Premises or at Tenant 's corporate headquarters in Orange County, California, a complete and accurate set of books and records of all sales of merchandise and revenue derived from the conduct of business in, at or from the Premises from which Gross Sales and Gross Sales of Alcoholic Beverages can be determined and all supporting records, including without limitation all federal, state and local tax returns. Tenant shall also furnish the City copies of its quarterly California sales and use returns at the time each is filed with the State of California. Tenant further agrees that it will keep, retain and preserve for at least one hundred eighty (180) days all records, books, bankbooks or duplicate deposit books and other evidence of Gross Sales and Gross Sales of Alcoholic Beverages. City shall have the right, upon reasonable notice, during the Term and within one hundred eighty (180) days after Expiration or Termination of this Lease to inspect and audit Tenant 's books and records and to make transcripts therefrom to verify the payment due City. Such audit may be made at any reasonable time during normal business hours. Tenant shall cooperate with City in making the inspection. City shall also be entitled, once during each Lease Year and once within one hundred eighty (180) days after Expiration or Termination of this Lease, to an independent audit of Tenant's books of account, records, cash receipts, and other pertinent data to determine Tenant's Gross Sales and Gross Sales of Alcoholic Beverages, by a certified public accountant to be designated by City, at City's sole cost and expense. The audit shall be limited to the determination of Gross Sales and Gross Sales of Alcoholic Beverages and shall be conducted during usual business hours in a manner which minimizes any interference with the conduct of Tenant's regular business operations. If the audit shows that there is a deficiency in the payment of any Percentage Rent, the deficiency shall become immediately due and payable and if there is an overpayment, City shall immediately refund the amount of the overpayment to Tenant. City shall bear its costs of the audit unless the audit shows 09-13-93 20476-00003 F:\D0C\177\93060003.LE4 12 that Tenant understated Gross Sales or Gross Sales of Alcoholic beverages by more than five percent (5%) , in which case Tenant shall pay all City' s reasonable costs of the audit. City shall keep any information gained from such statements, inspections or audits confidential and shall not disclose it other than to carry out the purposes of this Lease, except that City shall be permitted to divulge the results of any such audit in connection with any financing arrangements or sale of City ' s interest in the Premises. (g) Tenant ' s Gross Sales Audit. In the event of any audit by City in accordance with Section 5. 02 (f) of the Lease, Tenant may contest the results of City' s audit by performing a confirmatory audit within thirty (30) days of receipt of City's audit results and supporting evidence, using an independent public accountant reasonably acceptable to City. If Tenant's audit discloses that City' s audit was incorrect by more than five (5%) , then City shall pay the cost of such audit and shall pay the cost of City' s audit. (h) Acceptance. The acceptance by City of any monies paid to City by Tenant as Percentage Rent for the Premises, as shown by any statement furnished by Tenant, shall not be construed as an admission of the accuracy of said statement, or of the sufficiency of the amount of said Percentage Rent payment, but City shall be entitled to review the adequacy of such payment as herein above set forth. 5. 5 Interest on Unpaid Rent. Rent and other sums due City under this Lease shall be due when specified in this Lease and shall thereafter bear interest at the rate of one and one-half percent (1-1/2%) per month on the unpaid balance from the date due until paid. 6. BUSINESS PURPOSES AND USE OF PREMISES 6. 1 Business Purposes. The Premises are to be used by Tenant for the operation of a combination sit-down, casual food- service restaurant, together with a snack shop and bait/tackle/ snack shop and associated retail operations all in substantial accordance with Tenant's Proposal to City for operation of the Premises, relevant portions of which are attached hereto as Exhibit C, and for no other purpose, except in the case of an assignment of subletting of all or any portion of Tenant's interest hereunder, in which case City shall not withhold consent to commercially reasonable uses, consistent with City's operations of the Pier, requested by the assignee or sublessor. 6. 2 Operation of Premises. Tenant shall operate and manage the Premises in a first-class manner, comparable to other first- class businesses providing similar facilities. 09-13-93 20476-00003 F:\DOC\177\93060003.LE4 13 Tenant agrees that portions of the second floor of the Restaurant shall, during all business hours, be open to the public as a viewing area free of charge except that it may be closed from time to time, at the sole discretion of Tenant, for private engagements. City understands that employee dressing rooms and storage are required on the second floor of the Restaurant as reflected on Exhibit E hereof. Tenant shall not use or permit the use of the Premises in any manner which (i) creates a nuisance or an unreasonable annoyance (including, without limitation, live, recorded or broadcast entertainment or the use of loudspeakers or sound or light apparatus) to persons outside the Premises, other than as may be required by law or necessary or advisable for safety purposes and other then a customer paging system, or (ii) violates any Law. 6.3 Continuous Operation. Weather permitting, Tenant shall keep the Premises in operation and open to the public for business each calendar day of the year, except Thanksgiving Day, Christmas Day, and three other days per year approved in writing by City. Unless otherwise approved in writing by City (which approval may be revoked at any time) , the restaurant shall serve breakfast, lunch and dinner daily, with minimum hours of operation during the months of June, July and August from 7 : 00 a.m. to 10: 00 p.m. and during the other months from 7 :30 a.m. to 9 : 00 p.m. The concession shall have minimum hours of operation during the months of June, July and August from 9 : 00 a.m. to 6: 00 p.m. and during the other months from 11: 00 a.m. to 4 : 00 p.m. ; provided, however, that if the Restaurant is not open for breakfast (as may be permitted by City under the preceding sentence) , the concession shall provide breakfast service, and the minimum hours of operation of the concession shall commence at 6: 30 a.m. 6. 4 Advertising Display. Tenant may, at its own expense, place such signs in or upon the Premises as it deems necessary, provided the consent of the City Administrator as to the type, design and method of installation is first obtained, which consent shall not unreasonably be withheld, and proper permits are obtained, and provided further that the signage set forth on attached Exhibit D is- hereby approved. All signage placed by Tenant on, in or about the Premises shall remain the property of Tenant and shall- be removed by Tenant upon termination or expiration of this Lease at Tenant's expense; and any damage caused by such removal shall be repaired at Tenant's expense. 6. 5 Independent Contractor. City shall have no interest in the business of Tenant. 09-13-93 20476-00003 F:\DOC\177\93060003.1E4 14 6. 6 Alcoholic Beverages. Except as permtted by this Section, Tenant shall not sell or serve alcoholic beverages on the Premises. If Tenant at any time holds a beer and wine license for -the Premises from ABC, Tenant may with the consent of City engage in the types of sales permitted under that license. Tenant shall not sell any alcoholic beverages other than beer and wine. After the first year of operation, such consent may be withdrawn at any time by the City Council of City, if the sale of alcoholic beverages constitutes a nuisance after a public hearing at which Tenant is given a reasonable opportunity to address the City Council . Tenant acknowledges that the grant or withdrawal of City's consent under this section is a matter of contract law created by this Lease, and is in addition to and not in lieu of any powers of City as a governmental body; consequently, the decision of the City Council to withdraw the City' s consent under this section shall be conclusive. Tenant waives any rights Tenant may at any time have to contest the decision of the City Council or to contend that the sale of alcoholic beverages on the Pier is under the exclusive jurisdiction of ABC or an other Y agency. Subject to the foregoing Provisions of this Section, City hereby consents to the sale of alcoholic beverages inside the restaurant portion of the Premises pursuant to a beer and wine license. In addition to all other requirements of this Lease, Tenant shall comply with all of the rules and regulations of ABC and comply with all of the terms and conditions of any license granted by ABC. 6. 7 No Distress Sales. No auction, fire, bankruptcy, "going out of business" or other distress sales of any nature may be conducted on the Premises without the prior written consent of City, which will not be unreasonably withheld, conditioned or delayed. 6. 8 Parking and Delivery Access. City shall have the right to control parking by Tenant' s employees by commercially reasonable means, and Tenant shall cause its employees to comply with the procedures and regulations established by City from time to time to control such parking. Tenant acknowledges that neither Tenant nor Tenant's suppliers may operate vehicles on the Pier without the prior written consent of City. City hereby consents to Tenant's use of a 1/2 ton or smaller pick-up truck or comparable vehicle, or such other vehicle as-may be mutually acceptable to City and Tenant, on the Pier for delivery purposes, so long as not more than one such vehicle operated by Tenant is on the Pier at any time, unless otherwise approved by City. 09-13-93 20476-00003 F:\DOC\177\93060003.LE4 15 6.9 Public Rest Rooms. Notwithstanding anything in this Lease to the contrary, Tenant shall make available to the general public (as well as restaurant patrons) any rest rooms which are a part of the Premises. Tenant shall keep the public rest rooms in good order and repair and in a clean and sanitary condition. 6. 10 No Smoking g. No smoking shall be permitted on the Premises. 7 . TAXES LICENSES AND OTHER OBLIGATIONS 7 . 1 Payment of Taxes. As additional Rent, Tenant shall pay direct to the appropriate taxing authorities all possessory interest taxes and all property taxes on personal property located on the Premises, levied or assessed upon or against the Premises or against Tenant during the Term. Such taxes shall be paid at least ten (10) days before delinquency and before any fine, interest or penalty shall become due or be imposed by operation of law for their non-payment, and, upon request, Tenant shall promptly furnish to the City satisfactory evidence establishing such payment. 7 . 2 Payment of Obligations. Tenant shall promptly pay, when due, any and all bills, debts, liabilities and obligations incurred by Tenant in connection with Tenant' s occupation and use of the Premises. 7 .3 Challenge to Taxes. Any provision herein contained to the contrary notwithstanding, Tenant shall have the right in good faith, at its sole cost and expense, to contest the amount or legality of any taxes on or attributable to the Premises, Tenant's personal property on or about the premises, or Tenant's occupation and use of the Premises, including the right to apply for reduction thereof. If Tenant seeks a reduction or contests such taxes, the failure on Tenant' s part to pay the taxes shall not constitute a default as long as Tenant complies with the provisions of this section. City shall not be required to join in any proceeding or contest brought by Tenant unless the provisions of any law require that the proceeding or contest be brought by or in the name of City or any owner of the Premises. In that case City shall join in the proceeding or contest or permit it to be brought in City's name as long as City is not required to bear any cost. If requested by Tenant, City shall execute or join in the execution of any instrument or document necessary or advisable in connection With any such contract. Tenant, on final determination of the proceeding or contest, shall immediately pay or discharge any decision or judgment rendered, together with all costs, charges, interest, and penalties incidental to the decisions or judgment. 09-13-93 20476-00003 F:\DOC\177\93060003.LE4 16 Tenant shall indemnify, hold harmless, protect and defend City from and against any liability, claim, demand, penalty, cost, or expense arising out of or in connection with any contest by Tenant pursuant to this Section. 8. UTILITIES AND SERVICES Tenant shall make all arrangements for and pay for all utilities furnished to or used on the Premises, including, without limitation, gas, electricity, water, refuse removal, telephone service, cable TV and janitorial service. Tenant shall keep the Premises free and clean of rubbish and litter and shall deposit accumulated rubbish and litter in containers designated by City. Trash containers shall be kept in an approved enclosed area. City shall charge Tenant monthly for rubbish removal and container rental, at rates no greater than the standard rate charged other commercial users for City rubbish removal services and container rental. City shall provide an adequate amount of containers for Tenant's business operations and shall provide such containers in close proximity to the Premises and, if required, City shall move the containers at appropriate times to locations at the base of the Pier or off the Pier so that the containers can be emptied by Tenant's refuse collection service. 9. ALTERATIONS Tenant shall not make any Alterations (other than non- structural Alterations costing less than $50, 000. 00) to the Premises without the prior written consent of City which consent shall not be unreasonably withheld. In granting or withholding its consent to proposed Alterations by Tenant, City may: (1) consider the views of the Public regarding the proposed improvements; (2) require as a condition of such approval that Tenant agree to amendments to this Lease, including without limitation amendments increasing the amount of Rent payable under this Lease if the proposed Alterations would increase the floor area of the structures on the Premises; and (3) require Tenant to provide at Tenant's expense appropriate engineering and feasibility studies regarding the structural integrity of the Pier and the Premises, provided, however, that it shall be deemed unreasonable for City to withhold its consent to any Tenant alterations or improvements which are in substantial conformity with preliminary plans approved by City and attached hereto as Exhibit E. All work shall be performed in a good and workmanlike manner, shall substantially comply with the plans and specifications submitted to City and shall comply with all 10-06-93 20476-00003 S:\DOC\177\93060003_LE4 17 applicable governmental permits, laws, ordinances and regulations in force at the time permits are issued. ` Tenant shall pay all costs for construction done by it or caused to be done by it on the Premises as permitted or required by this Lease. Tenant shall keep the Premises free and clear of all mechanics ' liens resulting from construction done by or for Tenant. Tenant shall defend and indemnify City against all liability and loss of any type arising out of work performed on the Premises by Tenant, together with all costs and expenses reasonably incurred by City in negotiating, settling, defending or otherwise protecting against such claims, provided that City has given Tenant written notice of any and all such claims prior to incurring any such costs and expenses and Tenant has been afforded a reasonable opportunity to negotiate, settle, defend or otherwise protect against such claims. Any Alterations made shall remain on and be surrendered with the Premises on expiration or Termination of the Term (excluding Tenant' s fixtures, equipment, furniture, movable decorations and the like) , except that City can elect not less than thirty (30) days prior to Expiration or Termination of the Term, to require Tenant to remove any Alterations that Tenant has made to the Premises. If City so elects, Tenant at its cost shall remove such Alterations and restore the Premises to their condition prior to installation of such Alterations, ordinary wear and tear excepted, before the last day of the Term, or within thirty (30) days after notice of election is given, whichever is later. Notwithstanding anything herein to the contrary, prior to Expiration or within 15 days after Termination of this Lease, Tenant may remove any movable partitions, machinery, equipment, furniture, and trade fixtures previously installed by Tenant, provided that Tenant repairs any damage to the Premises occasioned by such removal. 10. MAINTENANCE OF PREMISES 10. 1 Maintenance and Repair by Tenant and City. Tenant agrees that it will, at its cost during the Term of this Lease, keep the interior of the Premises and the exterior walls, windows and trim in good condition and repair. Tenant' s maintenance shall include washing- bird droppings and dirt off the Premises, including roof, windows and exterior walls as needed, but not less than quarterly and graffiti shall be removed by Tenant or painted over as soon as is reasonably practicable. In the event Tenant fails to commence making necessary repairs within three (3) business days after receipt of notice from City that such repairs are necessary, City may make such repairs or cause such repairs to be made and charge the cost of said repairs to P g P 09-13-93 20476-00003 F:\DOC\1M93060003.LE4 18 Tenant. The cost of such repairs shall be payable as additional Rent pursuant to § 15. 2 (e) . Tenant' s obligation to maintain any exterior portion of the Premises shall be limited to the maintenance identified in the immediately preceding paragraph and the performance of such maintenance and repairs as are covered by insurance required to be carried by Tenant pursuant to the terms of this Lease. City shall be solely responsible for repairing, and hereby covenants and agrees to repair all structural or other damage occurring to any exterior portion of the Premises (including, without limitation, walls, roof, windows and walkways) which damage requires more than cleaning or painting to repair and which is not fully covered by insurance policies required to be carried by Tenant pursuant to this Lease, whether such damage is caused by weather, vandalism, malicious mischief or any other cause. City shall cause such repairs to be commenced within three (3) business days of Tenant' s request and shall diligently prosecute the same to completion as soon as reasonably practicable and in any event within ten (10) days of Tenant's request, except for damage rendering the Premises totally or partially unusable or inaccessible, in which case the provisions of Section 12 shall apply. All furnishings, equipment, facilities, improvements, alterations, attachments and appurtenances not provided by City, but required for the proposed business operation, including all kitchen equipment and interior furnishings, shall be maintained in good condition and repair by Tenant at its cost. 10. 2 Maintenance and Repair of Pier. City agrees, at its expense, to operate and maintain the Pier in good order and repair. City shall repair, maintain and replace pier pilings and the understructure of the Pier. To the extent City does not so repair or maintain and replace pier pilings or the understructure and in the event the failure thereof materially affects the habitable and useful condition of the Premises and results in the inability of Tenant to cause the Premises to produce a fair and reasonable economic return in connection with Tenant's business operation conducted therein, Tenant may, at its option, on account of such failure to repair, maintain or replace, terminate this Lease on thirty (30) days ' written notice, provided that such failure shall persist for an unreasonable time after written notice of the need of such Maintenance is given to City by Tenant. There shall be no allowance to Tenant for a diminution of rental value, and no liability on the part of the City by reason of inconvenience,. annoyance or injury to business arising from the performance of any Maintenance in or to any portion of the Pier or the Premises. 09-13-93 20476-00003 f:\DM\1 M93%0003 AE4 19 City shall not be responsible for any loss suffered by Tenant as a result of malfunctioning of any equipment or facility provided by City. 10. 3 Entry by City. City and its Authorized Representatives may enter upon and inspect the Premises at any reasonable time for maintenance or other purposes. In case of emergency, if Tenant shall not be personally present to open and permit an entry into the Premises, City or its Authorized Representatives may enter the same by a master key, or may forcibly enter the same, without rendering City or such Authorized Representatives liable therefor, and without in any manner affecting the Provisions of this Lease. During such emergency entry City or its Authorized Representatives shall accord reasonable care to Tenant' s property. Any entry to the Premises obtained by City in accordance with this Section shall not under any circumstances be construed or deemed to be a forcible or unlawful entry into, or a detainer of, the Premises, or an eviction of Tenant from the Premises or any portion thereof. City shall be allowed to take all material into and upon the Premises that may be required therefor and may for that purpose erect scaffolding and other necessary structures where reasonably required by the character of the work to be performed, provided that the business of Tenant shall be interfered with as little as is reasonably practicable, all without the same constituting an eviction of Tenant in whole or in part. Minimum Annual Rent shall abate during the period of repairs by City by the proportion that the unusable part of the Premises bears to the whole thereof; provided, however, there shall be no Rental abatement during the period of repairs by City undertaken as a result of Tenant's failure to make such repairs as required pursuant to § 10. 1 herein. In the event the City determines that any condition(s) exists which poses a significant threat to public health and safety, the City may close the Pier, in which case Tenant shall vacate the Premises and the provisions of Section 13 regarding abatement of rent (Section 13 .2) and Tenant' s right to terminate in the event of prolonged closure (Section 13 . 1) shall apply. 10.4 Additional Covenants of City Regarding Operation of the Pier and Maintenance Obligations. Notwithstanding anything to the contrary contained herein: (a) City shall, at the earliest time reasonably possible given the circumstances which may then exist, provide Tenant with prior written notice of its intent to: (i) perform any maintenance or repair or remodeling of the Pier which may reasonably be expected to adversely affect, by interference with access, visibility, availability of utilities or otherwise, Tenant's business operations at the Premises or any portion thereof; or (ii) except in the case of an emergency, enter upon 09-13-93 20476-00003 P:\DX\17A93060003.LE4 20 the Premises for any of the purposes set forth in the Lease. City shall conduct any such n,aintenance, repair, remodeling or entry in a manner which minimizes to the extent reasonably possible City' s interference with Tenant' s use of, and business operations at, the Premises. Rent and all other charges under the Lease shall be reduced equitably during all periods during which City' s maintenance, repair, remodeling or entry on or use of the Premises or the Pier materially interferes with Tenant's use of the Premises or its business operations at the Premises by an amount equal to the proportionate amount of the Premises which are rendered unusable by such acts of City. (b) Whenever City elects or is obligated to repair or restore the Premises or the Pier or any part thereof under the terms of the Lease or any applicable governmental laws, rules or regulations, City shall immediately proceed, at City's cost, with due diligence to repair or rebuild the same, including any additions or improvements made by City or by Tenant with City's consent, in accordance with the same plan and design as existed immediately before such damage or destruction occurred and in accordance with all applicable Laws. The materials used in said repair or reconstruction shall be as nearly like the original materials as may then be reasonably procured in the regular supply channels. (c) City shall exercise its rights and obligations regarding the operation, maintenance and repair of the Pier and, where applicable, the Premises, including, without limitation, City' s rights and obligations under Sections 10. 02 and 10. 03 of this Lease, in a manner which minimizes to the greatest extent possible City's interference with Tenant' s use of, and business operations at, the Premises. Rent and all other charges under the Lease shall be reduced equitably during all periods during which City's use, closure or other acts in and to the Pier materially interferes with Tenant' s use of the Premises or its business operations at the Premises. 11. INDEMNITY AND EXCULPATION; INSURANCE 11. 1 Exculpation of City. City shall not be liable to Tenant for any damage to Tenant or Tenant ' s property from any cause other than the negligent, intentional or willful acts of City or its Authorized Representatives. Tenant waives all claims against City for damage to Person or property arising for any reason other than the- negligent, intentional or willful acts of City or its Authorized Representatives. 11. 2 Hold-Harmless Clause. Tenant agrees to indemnify, defend and hold City and the property of City, including the Premises, free and harmless from any and all claims, liability, loss, damage, or expenses resulting from Tenant' s occupation and 09-13-93 20476-00003 F:\DOC\177\93060003.LE4 2 1 use of the Premises, specifically including, without limitation, any claim, liability, loss, or damage arising by reason of: (a) The death or injury of any person or persons, including Tenant or any person who is an employee or agent of Tenant, or by reason of the damage to or destruction of any property, including property owned by Tenant or any person who is an employee or agent of Tenant, and caused or allegedly caused by either the condition of the Premises, or some act or omission of Tenant or of some agent, contractor, employee, servant, sublessee, or concessionaire of Tenant on the Premises; (b) Any work performed or. the Premises or materials furnished to the Premises at the instance or request of Tenant or any agent or employee of Tenant, with the exception of maintenance performed by City. (c) Tenant's failure to perform any provision of this Lease or to comply with any requirement of law or any requirement imposed on City or the leased Premises by any duly authorized governmental agency or political subdivision. 11. 3 Insurance. Tenant shall , at his own cost and expense, thirty (30) days prior to possession, secure and maintain during the entire Term of this Lease and any renewals or extensions of such Term a broad form comprehensive coverage policy of public liability insurance issued by an insurance company reasonably acceptable to City and insuring City, its officers, employees and agents, against loss or liability caused by or connected with Tenant' s occupation and use of the Premises under this Lease in amounts not less than: combined single limit bodily injury and property damage, including products/completed operations liability and blanket contractual liability, of $1, 000, 000 per occurrence. If coverage is provided under a form which includes a designated general aggregate limit, the aggregate limit must be no less than $1, 000, 000. The policy shall name City and such of its officers, and employees as have been reasonably designated by City as additional insureds, and shall specifically provide that any other insurance coverage which may be applicable to the Premises shall be deemed excess coverage and Tenant' s insurance shall be primary. 11.4 Increase in Amount of Public Liability and Property Damage Insurance. Not more frequently than once every three years, if, in the opinion of the Risk Manager or consultant retained by City, the amount of public liability and property damage insurance- coverage at that time is not adequate, Tenant shall increase the insurance coverage as reasonably required by City' s Risk Manager. 11. 5 Fire Insurance on Building and Other Improvements. Tenant at its cost shall maintain on the buildings and 09-13-93 20476-00003 F:\DOC\177\93060003AE4 22 other improvements that are or become a part of the Premises a policy of standard fire and extended coverage insurance, with vandalism and malicious mischief endorsements, to the extent of at least full replacement value, in a form acceptable to the City Attorney. _ The insurance policy shall be issued in the names of City and Tenant, as their interests appear. The insurance policy shall provide that any proceeds shall be made payable to City and Tenant jointly. 11. 6 Determination of Replacement Value. The "full replacement value" of the buildings and other improvements to be insured under § 11. 5 shall be determined by the company issuing the insurance policy at the time the policy is initially obtained. Not more frequently than once each year, either Party shall have the right to notify the other Party that it elects to have the replacement value redetermined by an insurance company. The redetermination shall be made promptly and in accordance with hthe rules and practices of the Board of Fire Underwriters, or a like board recognized and generally accepted by the insurance company, and each Party shall be promptly notified of the results by the company. The insurance policy shall be adjusted according to the redetermination. 11. 7 Loss of Rent Insurance. Tenant at its cost shall maintain loss of rent insurance insuring that the Minimum Rent will be paid to City for a period up to six months if the Premises are destroyed or rendered inaccessible by a risk insured against by a policy of standard fire and extended coverage insurance with vandalism and malicious mischief endorsements. 11. 8 Workers ' Compensation. Tenant shall comply with all of the provisions of the Workers ' Compensation Insurance and Safety Acts of the State of California, the applicable provisions of Divisions 4 and 5 of the California Labor Code and all amendments thereto; and all similar state or federal acts or laws applicable; and shall indemnify, defend and hold harmless City from and against all claims demands payments, suits actions g r r ► ► proceedings and judgments of every nature and description, presented, brought or recovered against City, for or on account of any liability under any of the acts which may be incurred by reason of any activity performed by Tenant under this agreement. 11. 9 Waiver of Subrogation. The parties release each other, and their respective Authorized Representatives, from any claims for Damage to any Person or to the Premises and to the fixtures, personal property, and Alterations of either in or on the Premises that are caused by or result from risks insured against under any insurance policies carried by the parties and in force at the time of any such Damage or required to be carried under this Lease. 09-13-93 20476-00003 F:\DW\177\93060003.LE4 23 Each party shall cause each insurance policy obtained by it to provide that the insurance company waives all rights of recovery by way of subrogation against the other party in connection with any Damage covered by any Policy. Neither party shall be liable to the other for any Damage caused by fire or any of the risks insured against under any insurance policy required by this Lease. If any insurance policy cannot be obtained with a waiver of subrogation, or is obtainable only by the payment of an additional premium charge above that charged by insurance companies issuing policies without waiver of subrogation, the party undertaking to obtain the insurance shall notify the other party of this fact. The other party shall have a period of 20 days after receiving the notice either to place the insurance with a company that is reasonably satisfactory to the other Party and that will parry the insurance with a waiver of subrogation, or to agree to pay the additional premium if such a policy is obtainable at additional cost. If the insurance cannot be obtained or the party in whose favor a waiver of subrogation is desired refused to pay the additional premium charged, the other party is relieved of the obligation to obtain a waiver of subrogation rights with respect to the particular insurance involved. 11. 10 Other Insurance Matters. All the insurance required under this Lease shall: (a) Be issued by insurance companies authorized to do business in the State of California, acceptable to City; (b) Be issued as a primary policy. (c) Be noncontributing with any insurance that may be carried by City; (d) Contain an endorsement requiring thirty (30) days' written notice from the insurance company to both parties before cancellation or material change in the coverage, scope, or amount of the policy. Each policy, or a certificate of the policy, together with evidence of payment of premiums, shall be deposited with City before Tenant' s entry on the Premises, and on renewal of the policy not less than thirty (30) days before expiration of the term of the policy. -At the election of City upon the Expiration of the Term, City shall reimburse Tenant pro rata for all prepaid premiums on insurance required to be maintained by Tenant, and Tenant shall assign all Tenant's right, title, and interest in that insurance to City; in the event of earlier Termination of this Lease City shall, at its election, have the right to require Tenant to make such assignment to City upon City's pro rata reimbursement to Tenant for prepaid premiums. The provisions of 09-13-93 20476-00003 F:\D0C\177\93060003.LE4 24 the preceding sentence shall be applicable only to the extent that Tenant's insurance carrier permits assignment to be made to City. Tenant shall use its best efforts to secure the prior consent of the carriers to such assignment whenever Tenant obtains, renews or replaces any of the insurance required by this section. Either Party may effect for its own account any insurance not required under this Lease. 11. 11 Insurance Proceeds. City shall promptly pay to Tenant all insurance proceeds, if any, payable to City for repair or replacement of Tenant' s fixtures, equipment, display cases and other personal property installations or any other item which Tenant is obligated to maintain, repair or replace under the Lease in the event of any damage to the Premises caused by fire or any other casualty or upon the occurrence of any other event requiring such maintenance, repair or replacement. Notwithstanding anything to the contrary contained herein or in the Lease, (i) if, during the last year of the Term or any extension thereof, twenty percent (20%) or more of the Premises or the Pier is damaged or destroyed, or (ii) any damage or repair which City or Tenant elects or is obligated under the Lease to undertake will take more than ninety (90) days to repair, Tenant shall have the right to terminate the Lease as of the date of such damage or destruction by written notice to City, given within thirty (30) days after such damage or destruction. 12 . CASUALTY DAMAGE 12 . 1 Destruction of Premises. If the Premises are totally or partially destroyed, rendering the Premises or any portion thereof totally or partially inaccessible or unusable, Tenant shall restore the Premises to substantially the same condition as immediately prior to such destruction (including all trade fixtures, personal property, improvements and Alterations as are installed by Tenant, which shall be replaced by Tenant at its expense) . If the cost of the restoration exceeds the amount of any available insurance proceeds or if the damage has been caused by an uninsured casualty or event, or if Tenant reasonably estimates that repairs of the Premises will take more than six (6) months, Tenant can elect to terminate this Lease by giving notice of such election to City within sixty (60) days after the date of the occurrence of the casualty. Upon such termination, insurance proceeds applicable to reconstruction of the Building(s) (excluding Tenant' s personal property therein) shall be paid to City and Tenant shall have no further liability or obligations under the Lease. 12 .2 Replacement of Tenant' s Property. In the event of the damage or destruction of improvements located on the Premises not giving rise to a Termination of this Lease, Tenant shall, at its 09-13-93 20476-00003 F:\000\177\93060003.LE4 25 own expense, replace and repair all Tenant's trade fixtures, equipment, machinery, furnishings, furniture and inventory as soon as reasonably possible to permit the prompt continuation of Tenant's business at the Premises. 12 . 3 Abatement of Rent. In the event of damage or destruction of the Premises and the Lease is not terminated, Tenant shall continue to utilize the Premises for the operation of its business to the extent it may be practicable and commercially reasonable, in Tenant ' s reasonable judgement, to do SO. Rent shall abate as provided in § 13 . 2 from the time any damage or destruction occurs until the earlier of: (i) the completion of restoration of the improvements on the Premises, and (ii) six months after the date of the damage or destruction. 13 . DAMAGE OR DESTRUCTION OF THE PIER 13 . 1 Destruction of Pier. In the event that the Pier, any part thereof or access-routes to the Pier is damaged or destroyed by fire or any other cause, so as to render the Premises or a material portion thereof inaccessible or untenantable, and such damage or destruction cannot reasonably be repaired within six months after the date of the casualty, City shall have the right to either (i) terminate this Lease by giving to Tenant written notice thereof (which notice shall be given, if at all, within thirty (30) days following the date of the casualty) , in which case this Lease shall be terminated as of the date of the casualty, or (ii) give written notice to Tenant within thirty (30) days following the date of the casualty of City's intention to repair such damage as soon as reasonably possible at City's expense, in which event this Lease shall continue in full force and effect; however, Minimum Annual Rent shall be abated in accordance with the procedures set forth in § 13 . 2 for the period from the occurrence of the damage to the completion of the repairs. If City g P agrees to repair or restore the Pier under the provisions of this Section and shall not commence such repair or restoration within one hundred twenty (120) days after giving Tenant written notice of its intention or agreement to repair, Tenant may, at Tenant' s option, cancel and terminate this Lease by giving City written notice of Tenant' s election to do so at any time prior to the commencement of such repair or restoration. In such event, this Lease shall terminate as of the date of such notice from Tenant to- City, and City shall have no liability under this Lease. Any insurance proceeds received by City because of the total or partial destruction of the Premises or the building on the premises shall be the sole property of City, free from any claims of Tenant, except any and all insurance proceeds, 09-13-93 20476-00003 F:\DOC\177\93060003.LE4 2 6 including business interruption insurance, which would ordinarily flow to the benefit of Tenant. 13 . 2 Abatement of Rent. Notwithstanding anything to the contrary contained herein, in the event that Tenant is prevented from using and does not use the Premises, or any portion thereof, for five (5) consecutive business days ("Eligibility Period") , as a result of any damage to or destruction to the Pier or the Premises, City' s acts or omissions, failure or interruption of utility services, or any failure of City to provide services or access to the Pier or the Premises (unless the Damage or destruction is caused by the negligence or wrongful intentional act of Tenant or any of Tenant ' s employees, invitees or customers) , then Tenant's Rent and all other charges under the Lease shall be abated or reduced, as the case may be, during the period during which Tenant is so prevented from using the Premises, or any portion thereof, in the proportion that the rentable area of the portion of Premises that Tenant is prevented from using, and does not use, bears to the total rentable area of the Premises. However, in the event that Tenant is prevented from conducting, and does not conduct, its business in any portion of the Premises for a period of time exceeding the Eligibility Period, and the remaining portion of the Premises is not sufficient to allow Tenant to conduct its business therein, and if Tenant does not conduct its business from such remaining portion, then during the period during which Tenant is so prevented from conducting its business therein, Rent and all other charges under the Lease for the entire Premises shall be abated; provided, however, if Tenant reoccupies and conducts its business from any portion of the Premises during such period, the rent allocable to such reoccupied portion, based on the portion that the rentable area of such reoccupied portion bears to the total rentable area of the Premises shall be payable by Tenant from the date such business operations commence. 14 . _PROHIBITION AGAINST VOLUNTARY ASSIGNMENT, SUBLETTING, AND ENCUMBERING 14 . 1 Prohibition of Assignment. The Parties acknowledge that City is entering into this Lease in reliance upon the L experience and abilities of Tenant and its principals. Consequently, Tenant shall not voluntarily assign or encumber its interest in this Lease or in the Premises, or sublease substantially all or any part of the Premises, or allow any other person or entity (except Tenant' s Authorized Representatives) to occupy or use all or any part of the Premises without the prior written consent of City, .which consent shall not be unreasonably withheld; provided, however, that Tenant and City anticipate, acknowledge and agree that the foregoing applies only to the Restaurant and that Tenant intends to sublease or assign the S o the Tackle Snack Shop, subject to Cit 's Coffee ho and. r Bait P, 7 Y P / / / written consent which shall not be unreasonably withheld, 09-13-93 2"76-00003 F:\DOC\1TT\93060003.LE4 27 conditioned or delayed. Any assignment, encumbrance, or sublease without such consent shall be voidable and, at City's election, shall constitute a default. City' s consent to any assignment, subletting or other transfer is subject to Tenant providing City with evidence reasonably satisfactory to City that the proposed transferee has suitable financial strength, experience and character for operation and control of the Premises and the use of the Premises by the proposed transferee is consistent with that specified herein or otherwise commercially reasonable uses consistent with City's operation of the Pier. Except as otherwise expressly provided herein, any dissolution, merger, consolidation, reorganization of Tenant, or the sale or other transfer resulting in a transfer of a controlling percentage of the capital stock of Tenant (other than a transfer by will, devise, bequest, intestate succession, a transfer to or between the family members of Doug Cavanaugh or Ralph Kosmides, or a transfer to or between one or more trusts for the benefit of Doug Cavanaugh, Ralph Kosmides and/or their family members) , shall be deemed a voluntary assignment; provided, however, that the sale or transfer of a controlling percentage of the capital stock of Tenant pursuant to a public offering(s) of equity or debt instruments issued by Tenant, or other transfers of publicly traded capital stock or debt instruments shall not constitute a voluntary assignment and shall not require City' s consent or approval. The phrase "controlling percentage" means the ownership of, or the right to vote, stock possessing at least 50% of the total combined voting power of all classes of Tenant' s capital stock issued, outstanding, and entitled to vote for the election of directors, except, for ownership of publicly traded shares, warrants or similar equity interests in Tenant traded on a national exchange or over-the counter markets. 14 . 2 Exceptions. Notwithstanding the foregoing paragraphs or anything to the contrary contained herein, City's consent shall not be required for an assignment or subletting to an Affiliate, Subsidiary or Successor of Tenant (for purposes "Affiliate, " n hereof, an Affiliate, a Subsidiary" and a "Successor" of Tenant are defined as follows: (1) an "Affiliate" is any corporation which directly or directly controls or is controlled or is under common control with Tenant (for this purpose, "control" shall mean -the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such corporation, whether through the ownership of voting securities or by contract or otherwise) , (b) a "Subsidiary" shall mean any corporation not less than twenty-five percent (25%) of whose outstanding stock shall, at the time, be owned directly or indirectly by Tenant and which is at least as creditworthy as Tenant, and (c) a "Successor" shall mean a 09-13-93 20476-00003 F:\DOC\177\93060003.LE4 28 • • corporation in which or with which Tenant is merged or consolidated, in accordance with applicable statutory provisions for merger or consolidation of corporations or a corporation acquiring a substantial portion of the property and assets of Tenant. 14 . 3 Continuing Effect. City' s consent to any assignment, encumbrance or sublease shall not relieve Tenant from its obligations or liabilities under this Lease nor act as a waiver of the requirement that such consent be obtained to any subsequent assignment, encumbrance or sublease. 15. DEFAULT 15. 1 Default by Tenant. The occurrence of any one or more of the following events shall constitute a material default and breach of this Lease by Tenant: (a) The vacating or abandonment of the Premises by Tenant. (b) The failure by Tenant two times in any six (6) month period to make any payment of Rent or any other payment required by this Agreement, as and when due, when such failure shall continue for a period of ten (10) days after written notice thereof from City to Tenant. (c) Except as specified in § 15. 1 (2) , the failure of Tenant to observe or perform any of the material covenants, conditions or provisions of this Agreement to be observed or performed by Tenant where such failure shall continue for a period of thirty (30) days after written notice thereof from City to Tenant; provided, however, that if the nature of Tenant's default is such that more than thirty (30) days are reasonably required for its cure, then Tenant shall not be deemed to be in default if Tenant commences such cure within said thirty (30) day period and thereafter diligently prosecutes such cure to completion. (d) The making by Tenant of any general arrangement or assignment for the benefit of creditors. (e) Tenant becomes a "debtor" as defined in 11 U.S.C. Section 101 or any successor statute thereto (unless, in the case of a petition filed against Tenant, the same is dismissed within sixty (60) days) . (f) The appointment of a trustee or receiver to take possession of substantially all of Tenant's assets located at the Premises or of Tenant's interest in this Agreement, where such appointment is not discharged within sixty (60) days. 09-13-93 20476-00003 F:\DOC\177\93060003AE4 29 (g) The attachment, execution or the judicial seizure of substantially all of Tenant' s assets located at the Premises or of Tenant' s interest in this Agreement, where such seizure is not discharged within sixty (60) days. 15. 2 Remedies. (a) Cumulative Nature of Remedies. If any default by Tenant shall continue uncured, following notice of default as required by this Lease, for the period, if any, applicable to the default under the applicable provision of this Lease, City shall have the remedies described in this § 15. 2 in addition to all other rights and remedies provided by law or equity, to which City may resort cumulatively or in the alternative: (1) Reentry without Termination. City may at City' s election reenter the Premises, and, without terminating this Lease, at any time and from time to time relet the Premises or any part or parts of them for the account and in the name of Tenant or otherwise. City may at City' s election eject all Persons or eject some and not others or eject none. City shall apply all rents from reletting as follows: first, to the payment of reasonable expenses (including brokers ' commissions) paid or incurred by or on behalf of City in recovering possession, placing the Premises in good condition, and preparing or altering the Premises for reletting; second, to the reasonable expense of securing new subtenants; third, to the fulfillment of Tenant' s covenants to the end of the Term; Any reletting may be for the remainder of the Term or for a longer or shorter period. City may execute any leases made under this provision either in City' s name or in Tenant's name and shall be entitled to all rents from the use, operation, or occupancy of the Premises. Tenant shall nevertheless pay to City on the dates specified in this Lease the equivalent of all sums required of Tenant under this Lease, plus City' s expenses, less the proceeds of any reletting or attornment. No act by or on behalf of City under this provision shall constitute a Termination of this Lease unless City gives Tenant specific notice of Termination. (2) Termination. In the event of a default described in Section 15. 1 excepting defaults described in Section 15. 1 (3) of this Lease, City may at City's election terminate this Lease by giving Tenant notice of Termination. In the event City terminates this Lease, City may recover possession of the Premises (which Tenant shall surrender and vacate upon demand) and remove all Persons and property therefrom, and City shall be entitled to recover as damages all of the following: 09-13-93 20476-00003 F:\DOC\177\93060003AE4 30 (A) The worth at the time of the award of any unpaid Rent or other charges which have been earned at the time of Termination; (B) The worth at the time of the award of the amount by which the unpaid Rent and other charges which would have been earned after Termination until the time of the award exceeds the amount of the loss of such rental or other charges that Tenant proves could have been reasonably avoided; (C) The worth at the time of the award of the amount by which the unpaid Rent and other charges for the balance of the Term after the time of the award exceeds the amount of the loss of such rental and other charges that Tenant proves could have been reasonably avoided; (D) Any other amount necessary to compensate City for the detriment proximately caused by Tenant' s failure to perform its obligations under this Lease or which in the ordinary course of things would be likely to result therefrom; and (E) At City' s election, such other amounts in addition to or in lieu of the foregoing as may be permitted from time to time by applicable California law. As used in §§ 15. 2 (a) (2) (A) and (B) above, the "worth at the time of the awards" shall be computed by allowing interest at the rate of twelve percent (12%) per annum. As used in § 15. 2 (c) (3) above, the "worth at the time of the award" shall be computed by discounting such amount at the discount rate of the Federal Reserve Bank of San Francisco at the time of the award, plus one percent (1%) . The amount recoverable by City pursuant to § 15. 2 (a) (2) (C) above shall include, but is not limited to, any costs or expenses incurred by City in maintaining or preserving the Premises after such default, preparing the Premises for reletting to a new tenant, accomplishing any repairs or alterations to the Premises for the purpose of such reletting, rectifying any damage thereto occasioned by the act or omission of Tenant or any other costs necessary or appropriate to relet the Premises. (3) Use of Tenant' s Personal Property. City may at City' s election use Tenant ' s personal property and trade fixtures located on, about or appurtenant to the Premises or any of such- property and fixtures without compensation and without liability for use or damage, or store them for the account and at the cost of Tenant; provided, however, that "City may not operate the Restaurant in any manner tending to indicate that the restaurant is affiliated with, part of or operated in conjunction with Tenant' s business. 09-13-93 20476-00003 F:\DOC\177\93060003AE4 3 1 (b) Election of Remedy. The election of one remedy for any one item shall not foreclose an election of any other remedy for another item or for the same item at a later time. (c) City' s Right to Cure Tenant ' s Default. Upon continuance of any material default beyond applicable notice and cure periods, City may, but is not obligated to, cure such failure at Tenant' s cost. If City at any time, by reason of such failure by Tenant, pays any sum or does any act, the sum paid by City plus the reasonable cost of performing such act shall be due as additional Rent not later than five (5) days after service of a written demand therefor on Tenant, including reasonably detailed documentation of the amount owed. No such payment or act shall constitute a waiver of default or of any remedy for default or render City liable for any loss or damage resulting from any such act. (d) Waiver of Rights. Tenant hereby waives any right of redemption or relief from forfeiture under California Code of Civil Procedure Sections 1174 or 1179 , or under any other present or future law, in the event Tenant is evicted or City takes possession of the Premises by reason of any default by Tenant hereunder. 16. CONDEMNATION 16. 1 Eminent Domain Proceedings. In the event proceedings are taken pursuant to an exercise of the power of eminent domain by any lawful authority to condemn or otherwise acquire in excess of ten percent (10%) of the floor area within the Premises, or which taking materially and adversely affects the conduct of Tenant' s business in the Premises, or in the further event that the Premises will no longer be suitable for the conduct of Tenant' s business operations at the Premises as a result of any taking, Tenant shall have the option, by written notice to City at any time prior to the date of the taking by the condemning authority, to terminate this Lease on thirty (30) days notice to City, unless the condemning authority or its nominee takes possession of all or any portion of the Premises prior to the expiration of said thirty (30) day period, in which casethis Lease may terminated by Tenant immediately upon such taking of possession of all or any portion of the Premises. In the event of termination pursuant to this Section 16. 1, Minimum Annual Rent shall be prorated to the date of Termination, any unearned rent shall be refunded to Tenant and Tenant shall have no further obligations under this Lease. Tenant shall not grant a right of entry to any condemnor without the written consent of City. 16.2 Proportionate Termination of Lease. Should Tenant not elect to so terminate this Lease or should any such taking not be sufficient to allow such option to terminate, this Lease shall 09-13-93 20476-00003 F:\DOC\177\93060003.LE4 32 , terminate as to the portion of the Premises taken upon the date which possession of said portion is taken, but this Lease shall continue in force and effect as to the remainder of the Premises. Tenant shall , in the event of a taking of any portion of the Premises, be entitled to a reduction in the Minimum Annual Rent thereafter required to be paid, such that the reduced Minimum Annual Rent will be in the same proportion to the Minimum Annual Rent theretofore required to be paid that the rentable square footage of the Premises following such a taking and restoration and repair by City bears to the rentable square footage of the Premises immediately prior to such taking. 16. 3 Allocation of Award. In the event that an award is made for an entire or partial taking or for damage to the Premises or any interest therein in any action in direct or inverse condemnation or in the event of a taking under the power of eminent domain, the parties hereto agree that their respective rights to the award or compensation paid shall be as follows: (a) City shall be entitled to that Portion of the award received for the taking of the real property within the Premises, including all buildings and other improvements to which City is entitled on Expiration or Termination of this Lease, and for severance damages. (b) Tenant shall be entitled to any award that may be made for the taking of or injury to Tenant' s business and profits, including any amount attributable to Tenant's personal property, fixtures, installations, or improvements in or on the Premises, Tenant ' s relocation expenses, but excluding any "bonus value" attributable to this Lease. (c) Any interest payable on the total award shall be divided between City and Tenant in the same ratio as are the awards granted to them pursuant to the other provisions of this Section. 17. SUBJECT TO STATE LANDS LEASE OPERATING AGREEMENT AND CONSERVANCY AGREEMENTS This Lease is subject and subordinate to the provisions of the lease between the City and the State Lands Commission for use and occupancy of tidelands underlying the pier. Tenant shall not take any action which would cause City to be in violation of any Provisions of that agreement. If the State Lands Lease terminates and this Lease terminates as a result of such .termination (other than due to the fault of one of the Parties) , the Parties shall be released from all liabilities and obligations under this Lease. 09-13-93 20476-00003 F:\DOC\177\93060003.LE4 3 3 18 . SECURITY DEPOSIT Upon execution hereof, Tenant shall pay and maintain at all times hereunder, a security deposit with City in a sum of not less than Five Thousand and no/100 dollars ($5, 000. 00) to guarantee the repair and maintenance of the leased Premises as provided herein. Such deposit may be in the form of cash or an assignment of certificate of deposit or savings account. The form of any such assignment shall be approved by the City Attorney. The interest accrued on the deposit shall be paid to Tenant annually. A Security Bond approved by the City Attorney may be substituted for the above mentioned deposit. 19. WASTE OR NUISANCE Tenant shall not commit or permit the commission by others of any waste on the Premises; Tenant shall not maintain, commit, or permit the maintenance or commission of any nuisance as defined in Section 3479 of the California Civil Code on the Premises; and Tenant shall not use or permit the use of the Premises for any unlawful purpose. 20. CITY DAYS. City shall have the right to utilize the second floor of the Restaurant (the "Space") for City related purposes not more than twelve (12) days during each Lease Year, for a period of not more than five (5) hours on each such day, provided that City may only use the Space for one (1) day per year during the period from June 15 to September 15, subject to the terms and conditions of this Section 20. City shall provide Tenant with not less than thirty (30) days prior written notice of its intent to utilize the Space pursuant to this Section 20. Said written notice shall provide a reasonably detailed account of the date and time during which City intends to utilize the Space and will describe the purpose and manner of such use. The parties shall reasonably cooperate with one another to accommodate scheduling conflicts, taking into account Tenant's pre-existing commitments and other reasonable customer service and economic considerations. In utilizing the Space, City shall use its best efforts to minimize, to the greatest extent possible, Landlord's interference with Tenant's use of, and business operations at, the Premises. Rent and all other charges under the Lease shall be reduced equitably to reflect the extent to which Landlord's use of the Space materially interferes with Tenant' s use of the Premises or its business operations at the Premises. City shall indemnify, hold harmless, protect and defend (with counsel 09-13-93 20476-00003 F:\DOC\177\93060003.LE4 34 reasonably acceptable to Tenant) Tenant from and against any and all injuries, liabilities, claims, demaiids, penalties, costs and expense whatsoever to persons or property caused by, arising from, related to or in connection with the use of the Space by City, its officers, agents, employees, representatives, invitees, quests licensees, assignees using the Space during any City Day. . City hereby covenants and agrees, at City's sole cost and expense, to (i) immediately undertake, and prosecute diligently to completion, the repair and restoration of any damage, injury or excessive wear and tear caused to the Space, the Premises or any of Tenant' s personal property (including, but not limited to, equipment, fixtures, decorative items and furniture) during any City Day, to their condition prior to such damage or injury, and (ii) replace any of Tenant' s personal property which is lost or stolen during any such City Day, whether such damage or loss is caused by City, its officers, agents, employees, representatives, invitees, guests, licensees or assignees using the Space during such City Day. 21. NO CONFLICTS OF USE HAZARDOUS MATERIALS. Notwithstanding anything contained in this Lease to the contrary, City hereby represents and warrants that, to the best of City's knowledge, (i) Tenant's contemplated use of the Premises does not conflict with applicable laws, covenants, conditions or restrictions, and City knows of no reason why Tenant would be unable to obtain all required permits, licenses and approvals from the appropriate governmental authorities for such use; (ii) the Pier is not in violation of any environmental laws, rules or regulations and Tenant' s contemplated uses will not cause any such violation; and (iii) the Pier and the Premises are free of any and all Hazardous Materials (as hereinafter defined) as of the date Tenant takes possession thereof. In the event that the presence of any Hazardous Material (as defined below) not caused by Tenant is detected on the Premises (i) prior to the Commencement Date or (ii) at any time during the term of the Lease and any extensions thereof, then in such event, all remedial work shall be performed by City at City' s expense. In the event that such remedial work is performed prior to Tenant opening for business, Tenant' s obligation to open shall be delayed until such remedial work is completed. In the event that such remedial work is performed subsequent to Tenant opening for business, Tenant' s obligation to pay Rent shall be abated in direct proportion to the extent Tenant is unable to conduct its business upon the Premises as a result of such remedial work being necessary or while such remedial work is being performed. In the event that Hazardous Materials are detected on the Premises and the presence thereof or the remediation thereof materially and adversely affects Tenant' s ability to conduct its business in the Premises, then in addition to the abatement of Rent (as hereinabove described) , and for so long as such material adverse effect continues, Tenant shall have the right (but not 09-13-93 20476-00003 E:\DOC\177\93060003.LE4 35 the obligation) to terminate the Lease, upon thirty (30) days' advance written notice to City. City hereby agrees to indemnify and hold harmless Tenant, its directors, officers, employees and agents (the "Indemnitees") from and against any and all liability, including without limitation, all costs of defense and the cost of any required or necessary repair, detoxification or cleanup, claimed, threatened or asserted against any Indemnitee arising out of the use, generation, transportation, storage, release or disposal of Hazardous Materials on or about the Pier and/or the Premises. "Hazardous Materials" shall mean any oil, flammable explosives, asbestos, urea formaldehyde, radioactive materials or waste, or other hazardous, toxic, contaminated or polluting materials, substances or wastes, including, without limitation, any "hazardous substances, " "hazardous wastes, " "hazardous materials" or "toxic substances" under applicable federal, state and local laws, ordinances and regulations. 22 . CITY 'S DEFAULTS/TENANT' S REMEDIES. Notwithstanding anything to the contrary contained herein, in the event City fails to perform any material obligation of City under the Lease within ten (10) days after receipt of written notice by Tenant to City specifying the nature of such default, or, if the nature of City' s obligation is such that more than ten (10) days are required for its performance, if City fails to commence such performance within such ten (10) day period and thereafter diligently prosecute the same to completion, then City shall be in default of said obligation and Tenant may, but shall not be obligated to, without any limitation on or prejudice to any other rights or remedies of Tenant under the Lease or at law, (a) upon five (5) days notice to City cure any such default by City and City shall reimburse Tenant the amount of all costs and expenses incurred by Tenant in curing such default, together with interest on the amount of such costs and expenses at the maximum rate then allowed by law, or (b) if City' s default materially interferes with Tenant' s use of the Premises for their intended purpose and City fails to cure such default within ten (10) days after a second demand by Tenant, terminate the Lease, in which case Tenant shall have no further or continuing obligations thereunder. t 23 . NOTICES Any notice, demand, request, consent, approval or communication that either Party desires or is required to give to the other Party shall be in writing and shall be deemed given as of the time of hand delivery to the addresses set forth below, or by facsimile transmission, or three (3) days after deposit into the United States mail, postage prepaid, by registered or certified mail, return receipt requested. Unless notice of a different address has been given in accordance with this section, all such notices shall be addressed as follows: 09-13-93 20476-00003 F:\DOC\177\93060003.LE4 3 6 If to City, to: CITY OF HUNTINGTON BEACH Attention: City Administrator 2000 Main Street Huntington Beach, CA 92648 With a copy to: CITY ATTORNEY P.O. Box 2740 Huntington Beach, CA 92647 FAX No. (714) 536-1590 If to Tenant, to: RUBY'S DINER, INC. 110 Newport Center Drive Suite 110 Newport Beach, CA 92660 Attention: Douglas Cavanaugh With a copy to: Hewitt & McGuire 3501 Jamboree Road, Suite 250 Newport Beach, CA 92660 Attention: Dean Dunn-Rankin 24. Intentionally Omitted. 25. SURRENDER OF PREMISES At the expiration or earlier Termination of the Term, Tenant shall surrender to City the possession of the Premises. Surrender or removal of Alterations, fixtures and trade fixtures shall be as directed in the provisions of this Lease on ownership of Alterations, fixtures and trade fixtures at expiration or Termination. Tenant shall leave the surrendered property and any other property in good and broom-clean condition, reasonable wear and tear excepted. All property that Tenant is not required to surrender but that Tenant does abandon shall, at City's election, become City's property at Expiration or Termination. 26. WAIVER The waiver by City or Tenant of any breach by the other party of any term, covenant, or condition herein contained shall not be deemed to be a waiver of such term, covenant, or condition or any subsequent breach of the same or any other term, covenant, or condition herein contained. The subsequent acceptance of Rent hereunder by City shall not be deemed to be a waiver of any preceding breach by Tenant of any term, covenant, or condition of this Lease, other than the failure to pay the particular rents so accepted, regardless of City's knowledge of such preceding breach at the time of acceptance of such Rent. 10-06-93 20476-00003 S:\D0C\177\93060003.LE4 37 27. PARTIAL INVALIDITY If any term or Provision of this Lease or the application thereof to any Person or circumstance shall to any extent be invalid or unenforceable, the remainder of this Lease, or the application of such term or Provision to Persons or circumstances other than those as to which it isinvalid or unenforceable, shall not be affected thereby, and each term and Provision of this 'Lease shall be valid and be enforced as written to the fullest extent permitted by law. 28 . GOVERNING LAW This Agreement shall be governed by the Law of the State of California. Neither City' s execution of this Lease nor any consent or approval given by City hereunder in its capacity as landlord shall waive, abridge, impair or otherwise affect City's powers and duties as a governmental body. Any requirements under this Lease that Tenant obtain consents or approvals of City are in addition to and not in lieu of any requirements of Law that Tenant obtain approvals or permits. However, City shall attempt to coordinate its procedures for giving contractual and governmental approvals so that Tenant' s requests and applications are not unreasonably denied or delayed. 29. ENTIRE AGREEMENT• MODIFICATION This Lease contains the entire agreement between the parties. No verbal agreement or implied covenant shall be held to vary the provisions hereof, any statements, law or custom to the contrary notwithstanding. No promise, representation, warranty, or covenant not included in this Lease has been or is relied on by either party. Each party has relied on its own inspection of the Premises and examination of this Lease, the counsel of its own advisors, and the warranties, representations, and covenants in this Lease itself. The failure or refusal of either party to inspect the Premises, to read this Lease or other documents, or to obtain legal or other advice relevant to this transaction constitutes a waiver of any objection, contention, or claim that might have been based on such reading, inspection, or advice. No provision of this Lease may be amended or varied except by an agreement in writing signed by the parties hereto or their respective Successors. 09-13-93 20476-00003 F:\DOC\177\9306000AE4 38 • 30. TIME OF ESSENCE Time is of the essence with respect to the performance of every Provision of this Lease in which time of performance is a factor. 31. SUCCESSORS Subject to the Provisions of this Lease on assignment and subletting, each and all of the covenants and conditions of this Lease shall be binding on and shall inure to the benefit of the heirs, successors, executors, administrators, assigns, and personal representatives of the respective parties. 32 . BROKERS Each party warrants to and for the benefit of the other that it has had no dealings with any real estate broker or other agent (attorneys excepted) in connection with the negotiation or making of this Lease. 33 . TABLE OF CONTENTS ; HEADINGS The table of contents of this Lease and the captions of the various sections of this Lease are for convenience and ease of reference only and do not define, limit, augment, or describe the scope, content, or intent of this Lease or of any part or parts of this Lease. 34. GENDER; NUMBER The neuter gender includes the feminine and masculine, the masculine includes the feminine and neuter, and the feminine includes the neuter, and each includes corporation, partnership, or other legal entity whenever the context so requires. The singular number includes the plural whenever the context so requires. 35. EXHIBITS All exhibits to which reference is made in this Lease are hereby incorporated by reference. Any reference to "this Lease', includes matters incorporated by reference. 36. EFFECTIVE DATE - This lease shall not be effective until the City Council of City shall appropriate funds for construction of the Restaurant and appropriate funds for construction of the berm line Coffee Shop and Bait/Tackle/Snack Shop. 09-13-93 20476-00003 F:\DOC\177\93060003.LE4 39 37 . ARBITRATION 37 . 1 Disputes Subiect to Mediation and Arbitration. Any dispute between the parties relating to the interpretation and enforcement .of their rights and obligations under Sections 5.2, 5. 4, 9, 14, 15. 1, 15. 2 and 22 of this Lease shall be resolved solely by mediation and arbitration in accordance with the provisions of Sections 3i . 1, 37 . 2 and 37 . 3 of this Lease. 37 . 2 Initial Mediation. With respect to any dispute between the parties that is to be resolved by arbitration as provided in Section 37 . 1, the parties shall attempt in good faith first to mediate such dispute and use their best efforts to reach agreement on the matters in dispute. Within ten (10) days of the request of any party, the requesting party shall attempt to employ the services of a third person mutually acceptable to the parties to conduct such mediation within ten (10) days of his appointment. If the parties are unable to agree on such third person, or, if on completion of such mediation, the parties are unable to agree and settle the dispute, then the dispute shall be referred to arbitration in accordance with Section 37 . 3 . 37 . 3 Arbitration. Any dispute between the parties that is to be resolved by arbitration as provided in Section 37 . 2 shall be settled and decided by arbitration conducted by the American Arbitration Association in accordance with the Commercial Arbitration Rules of the American Arbitration Association, as then in effect, except as provided below. Any such arbitration shall be held and conducted in a mutually acceptable location before one arbitrator, who shall be selected by mutual agreement of the parties; if agreement is not reached on the selection of an arbitrator within fifteen (15) days, then such arbitrator(s) shall be appointed by the presiding judge of the superior court of the county in which the arbitration is to be conducted. The provisions of the Commercial Arbitration Rules of the American Arbitration Association shall apply and govern such arbitration, subject, however, to the following: (a) Any demand for arbitration shall be in writing and must be made within a reasonable time after the claim, dispute or other matter in question has arisen. In no event shall the demand for arbitration be made after the date that institution of legal or equitable proceedings based on such claim, dispute, or other matter would be barred by the applicable statute of limitations. (b) The arbitrator or arbitrators appointed must be former or retired judges or "attorneys" with at least seven (7) years experience in real property and commercial matters, or nonattorneys with like experience in the area of dispute. 09-13-93 20476-00003 F:\DOC\1T7\93060003AE4 40 (c) All proceedings involving the parties shall be reported by a certified shorthand court reporter and written transcripts of the proceedings shall be prepared and made available to the parties. (d) The arbitrator or arbitrators shall prepare in writing and provide to the parties factual findings and the reasons on which the decision of the arbitrator or arbitrators is based. e Final decision b the arbitrator or arbitrators ( ) Y must be made within ninety (90) days from the date the arbitration proceedings are initiated. (f) The prevailing party shall be awarded reasonable expert and nonexpert witness costs and expenses, and other costs and expenses incurred in connection with the arbitration, unless the arbitrator or arbitrators for good cause determine otherwise. (g) Costs and fees of the arbitrator or arbitrators shall be borne by the non-prevailing party, unless the arbitrator or arbitrators for good cause determine otherwise. (h) The award or decision of the arbitrator or arbitrators, which may include equitable relief, shall be final and judgment may be entered on it in accordance with applicable law in any court having jurisdiction over the matter. (i) The provisions of Title 9 of Part 3 of the California Code of Civil Procedure, including Section 1283 . 05, and successor statutes, permitting expanded discovery proceedings shall be applicable to all disputes which are arbitrated pursuant to this paragraph. 09-13-93 20476-00003 F:\000\177\93060003.LE4 41 i • IN WITNESS WHEREOF, the parties hereto have executed this Lease as of the date first written above. CITY OF HUNTINGTON BEACH ("City") , a municipal corporation of the State of California F� By: Mayor ATTEST: • RUBY 'S DINER, INC. , City Clerk a California corporation ("Tenant") APPROVED AS TO FORM: By: President City Att rn y l��-' � ��"3 By Secretary REVIEWED AND APPROVED: ED A OV City Adm n1strator Dep rlt Admini trat 09-13-93 20476-00003 f:\00C\177\93060003 AE4 42 EXHIBIT LIST Exhibit A-1 - Description of Leased Premises - Restaurant Exhibit A-2-- Description of Leased Premises - Coffee Shop Exhibit A-3 - Description of Leased Premises - Bait/Tackle/Snack Shop Exhibit B - Existing Concessions on Pier Not Covered by Exclusive Exhibit C - Relevant Portions of Tenant Proposal to City Exhibit D - Approved Signage Exhibit E - Approved Preliminary Plans 10-06-93 20476-00003 S:\000\177\93060003.LE4 43 LEGAL DESCRIPTION OF LEASED PREMISES FOR THE PIER RESTAURANT Beginning at the intersection of the centerline of Main Street and the Construction Centerline of Pacific Coast Highway ( Ocean Avenue) , said construction centerline being parallel with and 53.00 feet, measured at right angles, from the Southwesterly line of Block 104 as shown on Map of Huntington Beach recorded in book 3 page 36 of Miscellaneous Maps in the Office of the County Recorder of Orange County, California: thence South 41 degrees 37' 53" West 156.39 feet along the Southwesterly prolongation of the centerline of Main Street to a brass monument cap stamped "H.B.SURV." being the beginning of the Huntington Beach Municipal Pier structure; thence continuing South 41 degrees, 37' 53" West 1733.03 feet along said prolongation of Main Street, also being the centerline of said pier, to the True Point of Beginning; thence South 86 degrees 37' 55" West 66.00 feet; thence; thence South 3 degrees 22' 05" East 66.00 feet; thence North 86 degrees 37' 55" East 66.00 feet; thence North 3 degrees 22' 05 West 66.00 feet to the True Point of Beginning. EXHIBIT A- 1 F- lot a lti , 70 3 77. 171j�o3 f'o-8 /7fo763 w \ } /S I ! , LEGAL DESCRIPTION OF LEASED PREMISES FOR THE PIER BAIT/TACKLE/SNACK Beginning at the intersection of the centerline of Main Street and the Construction Centerline of Pacific Coast Highway ( Ocean.Avenue) , said construction centerline being parallel with and 53.00 feet, measured at right angles, from the Southwesterly line of Block 104 as shown on Map of Huntington Beach recorded in book 3 page 36 of Miscellaneous Maps in the Office of the County. Recorder of Orange County, California: thence South 41 degrees 37' 53" West 156.39 feet along the Southwesterly prolongation of the centerline of Main Street to a brass monument cap stamped "H.B. SURV.", being the beginning of the Huntington Beach Municipal Pier structure; thence continuing South 41 degrees, 37' 53" West 1281.94 feet along said prolongation of Main Street, also being the centerline of said pier; thence South 86 degrees 37' 55" West 39.60 feet to the True Point of Beginning; thence continuing South 86 degrees 37' 55" West 16.97 feet; thence South 41 degrees 37'� 55" West 28.00 feet; thence. South 3 degrees 22' 05" East 16.97 feet; thence North 86 degrees 37' 55" East 16.97 feet; thence North 41 degrees 37' 55" East 28.00 feet; thence North 3 degrees 22' 05" West 16.97 feet to the True Point of Beginning. EXHIBIT A-2 U r v • an LEGAL DESCRIPTION OF LEASED PREMISES FOR THE PIER COFFEE SHOP . Beginning at the intersection of the centerline of Main Street and the Construction Centerline of Pacific Coast Highway ( Ocean Avenue) , said construction centerline being parallel with and 53.00 feet, measured at right angles, from the Southwesterly line of Block 104 as shown on Map of Huntington Beach recorded in book 3 page 36 of Miscellaneous Maps in the Office of the County Recorder of Orange County, California: thence South 41 degrees 37' 53" West 156.39 feet along the Southwesterly prolongation of the centerline of Main Street to a brass monument cap stamped "H.B.SURV." being the beginning of the Huntington Beach Municipal Pier structure; thence continuing South 41 degrees, 37' 53" West 348.69 along said prolongation of Main Street, also being the centerline of said pier; thence South 86 degrees 37' 55" West 38.18 feet to the True Point of Beginning; thence continuing South 86 degrees 37' 55" West 14.14 feet; thence South 41 degrees 37' 55" West 28.00 feet; thence South 3 degrees 22' 05", East 14.14 feet; thence North 86 degrees 37' 55" East 14.14 feet; thence North 41 degrees 37' 55" East 28.00 feet; thence North 3 degrees 22' 05" West 14.14 feet to the True Point of Beginning. EXHIBIT /S �J 9 cam- �•,r 2 O 37 17' A T i P.aQ �1 f e Ilk I r I UCAN 0409 WATER(4.77 ULLW) ' 7) )O a so q �O �s )0 If 7V b ID VV7 ? • • (►AOr1t tOwSl R NCAD RC URANT , eNT A TACKU,/SNACKSNDPI 1 1 1� eERu LM[SNACK9(YHprrwY rSTR RYd1YCR 10.61. f °� i °~ w R STROW el U WARD T R Q to •. ns"ctcAmNe srAixw(TwicAL) I Z PLAtj 0 r u7e fY F rAtt of cnslwc Z • (2cAA H*4 WATER (1.71 uLLI) mTA~C •ALL as cl 7e uitw rc,N(l�l.ef'uLLr _ _ _ _ _ _ I4Tc-*1r1C0 'TO fl neAT'' L.00AMCW, o.n MA551N6,PERM � GiZ6s g►�+ ' tU'I.GINCO F1r4l"SH i�N:cRl�.r, \y►t)/ • CG7�-Gu6,t�T/1C-6 G'1'G 1MU,°S� 1`•'/" f '".R''M1nVco AT fSItRJ(zE• !'lam h . -- Pl P w hbPtTh Cf6T �t-�IAl ION hYs E a I' _._ �04 R IE.�f ei aGtrbN 'A-owl C"1st.rT. 9 { i 0 d - xwz 1 I ITZj ctFJ 0-tem milli BEACH ' �1't�c�5.ii7o otco n,nt n�►tr_c c z 4IL k i { z 8� O) I I f'IU(MVV0 HUNTik-iON BEACH RSsTtu(VtjT PIER BUILDINGS &7FMIMAMLY at. �� MEGt1JN1G�- f f OMGR 'J2 55 LPL r. 70TAt. O 4]Dylcw s o a 4[]D a[ JD1119 OOD OE]D l a ODD 4[]D a U Q Q — wa CD ze 0 r: 2i z MP_t.l to o•: .• .• .• ..• ' LRC1-t 'S t111 7 UFf>rR LL-vEL FLCOcZ Pi 4-1 h—r-o �9D9 J rnL� Z . ( t 1 I � . t I „I V d ptv • MOL Y 00 F _ I HUNTINGTON BEACH �•.•••••,• EXHIBIT B . None. 06-03-93 20476-000% F:\DOC\177\93060003.LES EXHIBIT D No pre-approved signage. 06-03-93 20476-00003 F:\DOC\177\93060003.LES • Exhibit E . ,�7. \ i I a I o � Page 1 of 3 IF • ...,� HUNTINaTON BEACH Exhibit E • _ . 1 Li i 0 Page 2 of 3 f1��r+E�O, �HUNTiNGTON BEACH CONSTRUCTION RIDER THIS CONSTRUCTION RIDER is attached to and made a part of that certain Lease (the "Lease") by and between the City of Huntington Beach, a municipal corporation of the state of California ("City") and Ruby's Diner, Inc. , a California corporation ("Tenant") . Words, phrases and capitalized terms used in this Construction Rider shall have the same meanings as in the Lease unless specifically provided otherwise. The provisions of this Construction Rider shall govern the planning, construction and completion of each of the structures to be constructed by City on the Pier (the "Buildings") , which shall consist of: (i) a two-story octagonal structure of approximately 6, 000 square feet to be located at the end of the Pier (the "Restaurant") ; (ii) a building of approximately 600 square feet to be located on the Pier above the mean high tide line (the "Coffee Shop") ; and (iii) a building of approximately 800 square feet to be located approximately three-fourths of the way out onto the Pier (the "Bait/Tackle/Snack Shop") . I. PLANS AND PERMITTING FOR BUILDINGS A. Preliminary Plans. Attached to the Lease as Exhibits A-1, A-2 and A-3 are preliminary construction plans and specifications (the "Preliminary Plans") for each of the Buildings, which are hereby approved and accepted by City and Tenant. City hereby designates Anthony and Langford as City's Architect for the Buildings (the "Architect") . City shall not change such designation without Tenant's prior consent, which consent shall not be unreasonably withheld or delayed. If the Preliminary Plans for any structure are not attached hereto, City shall complete the same and deliver them to Tenant for approval as soon as reasonably practicable. B. Final Plans. As soon as reasonably practicable, City shall cause to be prepared and delivered to Tenant for Tenant's approval two (2) sets of final plans and specifications and working drawings ("Final Plans") covering the Buildings, which Final Plans shall be consistent with the approved Preliminary Plans. C. Permitting. After Tenant approves the Final Plans, in writing, City shall, if it has not already done so, commence seeking from all appropriate governmental entities having jurisdiction over the Pier all necessary building permits, licenses and certificates (hereinafter collectively referred to as "Permits") for construction of the Buildings pursuant to the Final Plans. If proceedings are brought to invalidate any Permit, the obtaining of the Permit shall not be considered complete until final judgment, decree, or other appropriate decision has been entered and the time for appeal therefrom shall have expired, or if an appeal has been taken, until the appeal has finally been determined. City, with Tenant's cooperation, 09-13-93 20476-00003 F:\D0C\177\93040025.RD3 shall cause to be made any changes in the Final Plans necessary to obtain the Permit , . After the Permits have been obtained, no material change or modification to the Final Plans shall be made without City's and Tenant's consent, which consent shall not be unreasonably withheld, conditioned or delayed. II. CONSTRUCTION OF BUILDINGS A. Commencement and Completion of Construction of Buildings. After City obtains the Permits and authorizations covering construction of the Buildings, City, at its sole cost and expense except as hereinafter provided, shall, through a construction contract with a licensed, bonded contractor reasonably acceptable to Tenant (the "General Contractor") , commence construction or cause to be commenced construction of the Buildings and diligently pursue completion thereof within the applicable time frames set forth herein and in the Lease. City shall not change the General Contractor without Tenant's prior written consent, which consent shall not be unreasonably withheld or delayed. The construction of the Buildings shall be done in a good and workmanlike manner with new or like new materials and in substantial conformity with the Final Plans, subject to the provisions of this Construction Rider. B. Inspections by Tenant. Tenant, through its agents and architect, shall have the right upon reasonable notice and with a representative of City to inspect the work during the progress thereof provided Tenant does not materially interfere with such work. If Tenant shall give notice of faulty construction or any other material deviation from the Final Plans, as applicable, City agrees to cause its contractors and subcontractors to correct such faulty construction or deviation promptly. C. Temporary Signs. Tenant may install temporary advertising signs prior to or during the course of construction and shall remove them within a reasonable time after the installation of Tenant's permanent signs. Tenant acknowledges that the right to erect and maintain such sign(s) and the location, size, design, color and other physical aspects of such sign(s) shall be subject to (i) the written approval of City prior to installation, which approval shall not be unreasonably withheld, conditioned or delayed, and (ii) any applicable municipal or other governmental permits and approvals. D. Substantial Completion. When the Buildings have been Substantially Completed, as defined below, City shall file or cause to be filed a notice of completion with respect thereto, and Tenant agrees to execute same if requested by City. E. Excusable Delay. City's obligation to commence construction of the Buildings and diligently pursue completion thereof shall be subject to delays resulting from strikes, acts 09-13-93 20476-00003 FADOC\177\93040025.03 2 of God, acts or delays of governmental agencies (other than City) , voter initiatives, inclement weather and unavailability of materials, provided, however, that excusable delays shall not extend or otherwise affect the Final Completion Date. F. Change Orders. Tenant may from time to time request and obtain change orders during the course of construction and prior to Substantial Completion, as defined below, provided that: W each such request shall be reasonable, shall be in writing and signed by Tenant, and shall not result in any structural change in the Buildings, as reasonably determined by City; and (ii) all additional charges and costs, including architectural and engineering costs, construction and materials costs shall be borne by Tenant. Upon Tenant's request for a change order, City shall as soon as reasonably possible submit to Tenant a written estimate of the increased or decreased cost and anticipated delay, if any, attributable to such requested change. Within three (3) days of the date of delivery to Tenant of each such estimate of cost and delay, Tenant shall advise City whether Tenant wishes to proceed with the change order. If Tenant elects to proceed with the change order, Tenant shall deliver to City Tenant's notice to proceed. Notwithstanding the foregoing, change orders which may be necessary or advisable in order to comply with any rule, regulation, statute or ordinance of any governmental entity having jurisdiction over the Pier or in connection with obtaining the Permits, whether requested by City or Tenant, shall be completed by City at City's sole cost and expense. III. COMPLETION OF CONSTRUCTION A. Notification of Readiness. City shall notify Tenant in writing at least ninety (90) days in advance of the date that City contemplates the Buildings will be Substantially Completed, as defined below. B. Substantial Completion. When the Buildings have been Substantially Completed, City shall deliver possession of the Premises to Tenant. "Substantially Completed" mean the Architect has certified in writing that the Buildings have been fully completed in accordance with the Final Plans, including, without limitation, finished construction and/or installation of exterior for each Building, upstairs area for the Restaurant, elevators, general area lighting, restrooms, windows, doors, demising walls, utilities stubbed to all fixture locations, suspended ceiling, flooring and heating, air conditioning and ventilation system(s) , and excepting mechanical adjustments or decoration which do not interfere with Tenant's bse and enjoyment of the Premises (items normally referred to as "punch list" items) . With respect to punch list items, Tenant shall list same (the "Punch List") and submit the Punch List to City within thirty (30) days of City's tender of possession to Tenant. City hereby agrees to complete 09-13-93 20476-00003 F:\DOC\177\93040025.RD3 3 r the work outlined on the Punch List which City is obligated under this Lease to complete within thirty (30) days of receipt of t..z Punch List or if such work cannot reasonably be completed within the thirty (30) day period, to commence to complete the work within the thirty (30) day period and diligently prosecute the work to completion. C. Final Completion. Upon Final Completion (as hereinafter defined) of the Buildings, City shall furnish to Tenant (1) a final certificate executed by the Architect in favor of Tenant certifying the Final Completion of the Buildings, and (2) a certificate of occupancy for the Buildings. "Final Completion" means that the Buildings have been fully completed in accordance with the Final Plans. D. Timing of Completion. Notwithstanding anything to the contrary contained herein or in the Lease, City shall achieve Final Completion of the Buildings in accordance with all of the terms of this Construction Rider and deliver possession of the completed structures to Tenant on or before April 1, 1995 (the "Final Completion Date") . E. Acceptance of Premises. When the Buildings are Substantially Completed, Tenant agrees to accept possession thereof and to proceed with due diligence to perform and complete Tenant's tenant improvements and the placement of operating fixtures and equipment in the Buildings (the "Tenant Improvements") , all at Tenant's sole cost and expense. If Tenant has or intends to sublease or assign the Coffee Shop and/or Bait/Tackle/Snack Shop in accordance with the terms of the Lease, Tenant may elect to have the assignee or sublessee of the structures perform, in whole or in part, the Tenant Improvements to the Coffee Shop and/or Bait/Tackle/Snack Shop, including, without limitation, preparing and obtaining City approval of plans and specifications therefor. F. Early Occupancy. Concurrently with City's notification of readiness to Tenant as described in Section III .A. , above, Tenant shall be granted a license by City to enter upon the Premises, at Tenant's sole risk and expense, during ordinary business hours prior to the Commencement Date, for the sole purpose of installing Tenant's Tenant Improvements, furniture, trade fixtures and equipment in the Buildings; provided, however, that (i) prior to any such entry, Tenant shall pay for and provide evidence of the insurance to be provided by Tenant pursuant to the applicable provisions of the Lease, and (ii) Tenant shall not unreasonably interfere, delay or hinder City, the Architect, the` General Contractor or its or their agents, contractors or subcontractors in their construction work. 09-13-93 20476-00003 F:\DOC\177\93040025.RD3 4 IV. TRADE FIXTURES AND EQUIPMENT Tenant acknowledges and agrees that, except as set forth herein or in the Final Plans, Tenant is solely responsible for obtaining, delivering and installing in the Premises the Tenant Improvements and all necessary and desired furniture, business and trade fixtures and equipment, and that City shall have no responsibility whatsoever with regard thereto. V. COST OF CONSTRUCTION BORNE BY CITY Except as otherwise expressly set forth in this Construction Rider or the Lease, City shall be responsible for and shall pay any and all costs and expenses in connection with construction of the Buildings pursuant to the terms of this Construction Rider, which shall include the following costs: (i) Preparation of site plans, the Preliminary Plans, the Final Plans, and all fees charged by governmental entities (including, without limitation, fees for Permits and plan checks, utility connection fees, transportation corridor fees and other road fees) in connection therewith; (ii) Construction work for completion of the Buildings as reflected in the Final Plans, the Final Working Drawings and the construction contract(s) therefor, including without limitation the costs for materials required thereby; (iii) All contractors' charges, general conditions and construction fees; and (iv) All construction mortgage costs and fees and City's attorneys' and other professionals' and consulting fees. VI. CONSTRUCTION OF TENANT IMPROVEMENTS - APPROVAL OF PLANS AND SPECIFICATIONS City hereby approves and accepts the preliminary plans attached to the Lease for the construction and installation of Tenant Improvements in the Restaurant, to bring the building from the completed shell condition to fully operational status. When the Buildings have been completed by City and Tenant has accepted the Buildings in accordance with the terms of this Construction Rider and the Lease, Tenant shall cause to be prepared and delivered to City for City's approval two (2) sets of final plans (the "Restaurant TI Final Plans") showing the Tenant Improvements to be installed in the Restaurant. City shall approve the Restaurant TI Final Plans, or such portion as has from time to time been submitted, within five (5) business days after receipt of same, or shall designate by written notice given within such time period to Tenant the specific changes reasonably required to be made to the Restaurant TI Final Plans in order to correct any 09-13-93 2D476-00003 F ADOC\177\93040025.03 5 alleged design problems, and shall return the Restaurant TI Final Plans to Tenant. Tenant shall make the minimum changes necessary in order to correct any such problems and shall return the Restaurant TI Final Plans to City, which City shall approve or disapprove within three (3) business days after City receives the revised Restaurant TI Final Plans. This procedure shall be repeated until the Restaurant TI Final Plans are finally approved by City and written approval has been delivered to and received by Tenant. Upon such final approval, Tenant shall proceed to install the Tenant Improvements in the Restaurant to bring the building from the completed shell condition to fully operational status, at Tenant's sole cost and expense. Upon completion and acceptance of the Coffee Shop and the Bait/Tackle/Snack Shop buildings in accordance with the terms of the Lease and this Construction Rider, the plan approval procedure set forth in this Section VI shall apply to the design and installation of the Tenant Improvements to the Coffee Shop and the Bait/Tackle/Snack Shop, provided, however, that Tenant may elect to have its assignee or sublessee of said structures perform, in whole or in part, the design and installation of Tenant Improvements to the Coffee Shop and/or the Bait/Tackle/Snack Shop. VII. RESOLUTION OF CONSTRUCTION RIDER DISPUTES All claims, disputes and other matters in question arising out of, or relating to, this Construction Rider or the interpretation or breach hereof, shall be decided by arbitration in accordance with the Article 37 of the Lease. 09-13-93 20476-00003 F:\D0C\177\93040025.RD3 6