Loading...
The URL can be used to link to this page
Your browser does not support the video tag.
Home
My WebLink
About
WATERFRONT HILTON HOTEL - 2002-08-05
11P vve-D b-a-/ (C - 11-6Scur') ��NINGTo' 2000 Main Street, o� fie'. Huntington Beach,CA F 9 92648 O �C City of Huntington Beach File #: 22-964 MEETING DATE: 11/15/2022 REQUEST FOR CITY COUNCIL ACTION SUBMITTED TO: Honorable Mayor and City Council Members SUBMITTED BY: Al Zelinka, City Manager VIA: Ursula Luna-Reynosa, Director of Community Development PREPARED BY: Kriss Casanova, Economic Development Manager Subject: Approve an Amended and Restated Lease Agreement between the City of Huntington Beach and Waterfront Hotel, LLC, for the beach concession at 21351 Pacific Coast Highway Statement of Issue: The City Council is asked to approve an Amended and Restated Lease Agreement (the "Lease Agreement") between the City and Waterfront Hotel, LLC ("Lessee"), to operate the beach concession located at 21351 Pacific Coast Highway (formerly called the "Waterfront Beach Cabana Concession"). Financial Impact: The Lease Agreement will generate $13,200 annually in base rent in addition to shared percentage of revenue based on low (5%), middle (10%), and peak (12%) seasons. Revenues will be deposited into General Fund Account Nos. 10000100.43095 and 10000100.43090. Recommended Action: A) Approve an Amended and Restated Lease Agreement between the City of Huntington Beach and Waterfront Hotel, LLC for the Concession Stand at 21351 Pacific Coast Highway; and, B) Authorize the Mayor, City Manager, and City Clerk to execute the Agreement and other related documents. Alternative Action(s): Do not approve the Lease Agreement, and direct staff accordingly. Analysis: The Lessee is the owner of the Hilton Hotel and has operated the concession on the City beach since 1990. In 2001, the concession was demolished and rebuilt as part of the development agreement between Waterfront and the City for the construction of the new Hyatt Regency Huntington Beach City of Huntington Beach Page 1 of 3 Printed on 11/9/2022 powered$7,Legistar'. File #: 22-964 MEETING DATE: 11/15/2022 Resort and Spa. The existing lease commenced in 2003 and is set to expire January 31, 2023. The concession provides amenities for beachgoers and hotel guests including food, bike rentals, sunscreen, and firewood for the evening fire rings. The Lessee currently manages and operates the concession, "The Wave"and plans to remodel and offer an expanded menu beginning summer 2023. The Lease Agreement (Attachment 1) has been prepared in accordance with the City's current standards and lease format and models the existing license between the City and the PCH Beach Resort, LLC for the concession stand at 21529 Pacific Coast Highway (the former"Shor" concession). The lease terms have remained fairly consistent except for the structure of the percentage rent which has changed to better reflect the seasonal operations of the concession stand. The terms are summarized below: • 10-year term with one (10 year) extension option. • Monthly base rent: $1,100 with 2% annual increases. • Revenue share based on low (5%), middle (10%), and peak (12%) seasons. (Percentage rent in the prior lease increased on a sliding scale as gross revenue increased.) • Lessee to remodel the concession stand with fenced outdoor dining, new trellis, heaters, lighting, and signage. • Lessee may sell alcoholic beverages to concession customers if all required permits and licenses have been obtained, and all conditions are followed to ensure that Lessee operates in a responsible manner. • The exhibit of the premises has been updated and the total square footage remains the same. • Indemnification of the City against claims and damages arising from losses. • Concession must be open a minimum of 120 days for at least four hours a day. In addition to renewing the lease, Lessee is also seeking approval from regulatory agencies for a Coastal Development Permit (CDP) and a Conditional Use Permit(CUP)with a new Alcohol Beverage Control (ABC) license. The Design Review Board will also review visual upgrades and amenities to the concession stand such as a fenced, outdoor dining area with a new trellis and heaters. The ABC license request is to expand beverage offerings to include beer, wine, and distilled spirits. Proposed hours of operation would be 12:00 PM - 9:00 PM, Memorial Day Weekend through Labor Day Weekend and Friday, Saturday, and Sundays in the off-season. The concession will still include bicycle rentals and be managed and operated by Lessee. The proposed lease was prepared by City Attorney's Office, and the Economic Development Committee (EDC) reviewed the proposed lease terms at their August 10, 2022 meeting. Environmental Status: The actions to approve the amended and restated lease agreement to operate a concession meets the categorical exemption criteria set forth in the CEQA State Guidelines pursuant to Section 15301 (Existing Facilities), which exempts the operation, repair, maintenance, permitting, leasing, licensing City of Huntington Beach Page 2 of 3 Printed on 11/9/2022 powere.M Legrstar'' File #: 22-964 MEETING DATE: 11/15/2022 or minor alterations of existing public or private structures or facilities involving negligible or no expansion of use. Strategic Plan Goal: Economic Development & Housing Attachment(s): 1. Amended and Restated Lease Agreement between the City of Huntington Beach and Waterfront Hotel, LLC, for the concession stand at 21351 Pacific Coast Highway 2. Original Lease Agreement City of Huntington Beach Page 3 of 3 Printed on 11/9/2022 powere.W Leglstar'' AMENDED AND RESTATED AGREEMENT BETWEEN THE CITY OF HUNTINGTON BEACH AND WATERFRONT HOTEL, LLC, FOR THE CONCESSION STAND AT 21351 PACIFIC COAST HIGHWAY THIS AMENDED AND RESTATED AGREEMENT (the "Agreement") is dated for reference purposes only as of the/Sitay of,y /)J , 2022 (the "Agreement Date"), and is being entered into by and between the CITY OF HUNTINGTON BEACH, a municipal corporation of the State of California ("City") and WATERFRONT HOTEL, LLC, a California limited liability company ("Lessee"). City and Lessee are sometimes hereinafter individually referred to as a"Party" and collectively as the "Parties". RECITALS: A. On or about February 1, 2003, City and Lessee entered into an Agreement (herein, the "Original Agreement") for the lease by City to Lessee of that certain real property (the "Property") located at 21351 Pacific Coast Highway, in the City of Huntington Beach, California, and a concession building and other related improvements (collectively referred to as the "Improvements") situated thereon. The term "Premises" as used in this Agreement shall mean both the Property and the Improvements. B. The Original Agreement had a term of ten (10) years and granted to Lessee an option to extend the term for an additional ten (10) years. Lessee timely exercised its option to extend the term. As of the Agreement Date of this Agreement,the term of the Original Agreement is scheduled to expire on January 31, 2023. C. City and Lessee desire to enter into this Agreement to provide for Lessee to continue to lease the Premises for an additional ten (10) years, with an additional ten (10) year option to extend, all on the terms and subject to the conditions set forth herein. AGREEMENT: Based upon the foregoing Recitals, which are incorporated into this Agreement by reference, and for good and valuable consideration, the receipt and sufficiency of which is acknowledged by both Parties, City and Lessee covenant and agree as follows: 1. Effective Date. This Agreement shall become effective as of 12:00 AM on February 1, 2023, immediately upon expiration of the Original Agreement (the "Commencement Date"). As of the Commencement Date,this Agreement shall supersede the Original Agreement, which at that time shall be deemed to be terminated and of no further force or effect; provided, that neither Party waives any of its rights under the Original Agreement or releases the other Party from any of such other Party's obligations under the Original Agreement that have not been fully performed as of the Commencement Date,including without limitation with respect to the payment of Rent. 2. Grant of Concession on the Premises. Commencing as of the Commencement Date and continuing through the entire Term of this Agreement (see Section 5 below), City hereby grants to Lessee, for the purposes stated herein,the right,privilege, and duty to equip,operate,and maintain a concession stand open to the public located on the Premises (hereinafter sometimes 112/015800-0001 18480240.2 al1/07/22 22-1 207 6/29 5 1 1 3 referred to as the "Concession"). Lessee shall not use the Premises for any other purpose or business. A map depicting the Premises is set forth in Exhibit "A", which is attached hereto and incorporated herein by this reference. This Agreement is not intended to confer third-party beneficiary status to anyone. 3. Reservations, Encumbrances and Rights-of-Way. (a) City expressly reserves all natural resources in, on, or two hundred fifty (250)feet under the Premises, including,without limitation,oil, coal,natural gas, and other hydrocarbons, minerals, aggregates, timber, and other geothermal resources, as well as the right to grant agreements or other contractual arrangements in and over the Premises for the extraction of such natural resources. However, such leasing or other arrangement shall be neither inconsistent nor incompatible with the rights or privileges of Lessee under this Agreement. (b) City expressly reserves a right to enter upon the Premises with as much advance written,verbal, or electronic notice as possible to Lessee for any reason associated with public health, safety, or welfare, or for the protection of life, limb, or property. In all other cases unless otherwise specifically set forth herein. City reserves the right for such entry but City shall give Lessee at least twenty-four(24) hours advance written, verbal, or electronic notice. City shall have a right of reasonable access to the Premises across Lessee owned, controlled, or occupied lands adjacent to the Premises, if any, for any purpose associated with this Agreement. (c) City expressly reserves the right to convey, or encumber City's interest in the Premises, in whole or in part, for any purpose not inconsistent or incompatible with the rights or privileges of Lessee under this Agreement. In addition. Lessee agrees to subordinate this Agreement to any existing or future City financing regarding the Premises or any portion thereof, provided that any financing does not interrupt Lessee's business or rights under this Agreement. Lessee also agrees to cooperate and provide any documentation necessary for City to obtain any such financing at no cost to Lessee. (d) This Agreement is made without warranty by City of the condition of its title, or the condition or fitness of the Premises for Lessee's stated or intended use. 4. Time of Essence. Time shall be of the essence of this Agreement and each and all of its terms, covenants or conditions in which performance is a factor. 5. Term; Option to Extend. This Agreement shall commence at 12:00 a.m. on February 1, 2023, for a ten (10) year term, which shall end at 11:59 p.m. on January 31, 2033 (herein, the "Term"). Upon receipt of written approval from the City which shall not be unreasonably withheld, Lessee shall have the option to extend the Term of this Agreement for an additional ten(10)years. To exercise this option,Lessee must send City written notice specifically identifying its intent to exercise this option by July 31, 2032. 6. Conditions of Premises As Is. Lessee acknowledges that it has occupied the Premises since February 1, 2003, and that the Premises are in good condition. Lessee agrees to accept the Premises in their presently existing condition, "as is"," and agrees that City shall not be 1 1 2/0 1 5 8 00-00 0 1 18480240.2 all/07/22 -2- obligated to make any alterations, additions or betterments thereto except as expressly set forth in this Section 6 and Sections 7 and 25 of this Agreement. 7. Public Facilities. During the Term of this Agreement, City shall maintain in good condition and promptly repair and replace or cause to be maintained, repaired, or replaced, as required, all water, sanitary sewer, electrical, gas, drainage facilities, and other utilities located off of the Premises and outside the building on the Premises that are required for Lessee's intended use of the Premises. The existing `grass area' directly adjacent to the Premise, to the south, is to be maintained by the City. If the City does not maintain the"grass area", the Lessee can, if needed and approved by the City, repair/maintain the grass area to bring it back to the quality required by Lessee at Lessee's expense. Except as expressly set forth above, by entering into this Agreement, City makes no stipulation as to the type, size, location, or duration of public facilities, including, without limitation, any City parking lots to be maintained on property owned, controlled, or occupied by City. 8. Additions, Alterations, and Removal. (a) City hereby approves Lessee making the improvements and alterations to the Premises described in Exhibit "D" hereto. No other modifications, alterations, or additions to the Premises, including, without limitation, construction of Improvements or changes to structural design or exterior furnishings, shall be constructed or made by Lessee without Lessee first obtaining the prior written approval of City, which will not be unreasonably withheld. (b) Except as provided under this Agreement, no alteration or removal of existing Improvements on or natural features of the Premises shall be undertaken without Lessee first obtaining the prior written approval of City. (c) Lessee's obligation to obtain City's prior written approval is separate and independent of Lessee's obligation to obtain any permits from City, such as, without limitation, a building permit. 9. City's Contract Administrator. City's Director of Community Development or designee shall be City's Contract Administrator for this Agreement with the authority to act on behalf of City for the purposes of this Agreement, and all City approvals and notices required to be given herein to City shall be so directed and addressed. 10. Rent. Lessee agrees to pay to City for the use and occupancy of the Premises the amounts itemized in Exhibit "B" (the "Rent"). The Rent consists of the Base Rent and the Percentage Rent. Lessee shall pay the monthly Base Rent and Percentage Rent beginning on the Commencement Date of this Agreement. 112/015800-0001 184802402 all/07/22 -3- Lessee shall pay the Rent to City at the City Treasurer's Office, P.O. Box 711, Huntington Beach, California, 92648, or at such other place or places as City may from time-to-time designate by written notice delivered to Lessee. Lessee shall pay the Base and Percentage Rent within thirty (30) calendar days after the end of the month for which Rent is due and owing, or on the next business day if the thirtieth (30th) day falls on a weekend or holiday. 11. Late Charge and Penalty. If any installment of the Base Rent or Percentage Rent is not received by the City Treasurer within ten (10) calendar days after the date such payment is due, or the next business day if the tenth (10th) 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 any payment hereunder is due but unpaid; and(2)a one and a half percent(11/2%)penalty per month shall be added for each month the Base Rent or Percentage Rent, as applicable, is due but unpaid. With respect to any other payments required by Lessee, a one and a half percent(1'/2%)penalty per month shall be added for each month such payment hereunder is due but unpaid. 12. Gross Sales Defined. For the purpose of this Agreement, the term "Gross Sales" shall mean the total price of all sales processed on site (including interne sales), merchandise, services (including all food and beverage, alcohol or otherwise) sold or rendered, or equipment rented, in, on, or from the Premises by Lessee, or anyone contracting with Lessee, including, without limitation, its agents or sublessees (collectively or individually, "Lessee Party(ies)"), whether wholesale or retail,whether for cash or on credit, and if on credit whether or not paid, and whether in exchange for any other product,commodity, service,commercial paper,or forbearance, and shall include, without limitation,the following: (a) All revenues, receipts, commissions, or proceeds from on-line sales by Lessee Party(ies), and/or from all public telephones, vending, weighing and all other machines owned or operated by Lessee Party(ies) in, on, or from the Premises; (b) All revenues,receipts, commissions,or proceeds from sales based on orders solicited or taken, in, on, or from the Premises for merchandise, or services as described above, to be delivered or rendered off, or from sources outside, the Premises, including, without limitation, all orders taken in, on, or from the Premises although the orders may be filled elsewhere; (c) All revenues, receipts, commissions, or proceeds from the renting of equipment of any kind in, on, or from the Premises; (d) All revenues, receipts, commissions, or proceeds generated from offsite but delivered through the Concession; provided, however, that for purposes of this Agreement the term"Gross Sales"shall exclude all Hotel Sales. As used herein,the term"Hotel Sales" shall include all revenues, receipts, commissions, or proceeds generated from banquets, meetings, and any other group activities and events that are arranged or booked by or at the Hotel and delivered at the Premises. As used herein, the term "Hotel Sales" shall exclude any room charges for food, beverages, and services billed to guests of the Hotel but provided from the Premises(i.e.,such sales shall be included in the definition of"Gross Sales"within the meaning of this Agreement). As used herein,the term"Hotel"shall mean 112/015800-0001 18480240.2 all/07/22 -4- the Waterfront Hilton Beach Resort located at 21100 Pacific Coast Highway, Huntington Beach, California, that is owned and operated by Lessee; (e) All revenues,receipts, commissions, or proceeds made by Lessee Party(ies) or their employees or others acting on their behalf for the rendition of services of any kind whatsoever, made in, on, or from the Premises; (f) All other revenues, receipts, commissions, or proceeds generated by, or arising or derived whatsoever from the use of the Premises or derived whatsoever from any business conducted in, on, or from the Premises; and (g) All revenues, receipts, commissions, or proceeds generated from all goods and services (including food and/or beverage sales, including without limitation alcohol sales) made in, on, or from the Premises. For purposes of computing the Gross Sales figure on which to calculate the Percentage Rent, the amount of Gross Sales shall start over at zero dollars on the first day of each month. 13. Gross Sales Exclusions. Gross Sales shall not include the following items, and Lessee may deduct such items from Gross Sales to the extent they have been included therein or have been included in a prior computation of Gross Sales on which the Percentage Rent has been paid under this Agreement to City: (a) Any sales, excise, or other taxes otherwise includable in Gross Sales and which become part of the total price of merchandise, or goods or services sold or rendered, or equipment rented, in, on, or from the Premises where Lessee must account for and remit the taxes to the government entity or entities which impose them, but only if such taxes are added to the total price and collected from customers; (b) Any transfer of trade inventory from the Premises to the manufacturer or supplier from whom it was obtained by Lessee; (c) Sales of Trade Fixtures (as defined in Section 50 below); (d) Sums and credits received in the settlement of claims for loss of or damage to trade inventory or Trade Fixtures; (e) Any sales resulting in a cash or credit refund to a customer in the ordinary course of business; (f) Any sales of merchandise to City employees which take place at City Hall; and (g) Hotel Sales (as defined in Section 12(d) of this Agreement). 14. Books and Records. Lessee shall keep true and accurate books and records showing all of its business transactions (excluding Hotel Sales) in separate records of account for the Concession in a manner acceptable to City, and City and/or its designated representatives shall 112/015800-0001 184802402 al1/07/22 -5- have the right, at all reasonable times, to inspect such books and records including, without limitation. State of California sales or use tax returns or other State return records, and Lessee hereby agrees that all such records and instruments shall promptly be delivered and made available to City and/or its designated representatives within thirty (30) days of receiving written request therefor. Lessee shall furnish to City and/or its designated representatives copies of its quarterly California sales and use tax returns at the time each is filed with the State of California. The books and records shall show the total amount of Gross Sales made each calendar month in, on, or from the Premises and any exclusions listed in Section 13 above (with the exception that Hotel Sales need not be included in said books and records). All hotel guest and non-guest charges that are processed as cash, credit card, or room charges at the Concession will flow through a point of sale system and shall be summarized on financial statements for purposes of City's audit. Furthermore, said sales shall be broken out as a separate food and beverage outlet. All summarized financial statements from the Concession shall support the Percentage Rent calculations that are remitted to City. 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 shall record the total sales for that day. Lessee agrees to maintain on the Premises, or another location subject to the prior written approval of City, all records, books of account, and cash register tapes showing, or in any way pertaining to the Gross Sales made in, on, or from the Premises during such calendar month, including, without limitation, State of California sales or use tax returns or other State tax returns, for a period of five (5) years following the close of each calendar month. 15. Statement of Gross Sales/Audit. At the time specified in Section 10 of this Agreement for the payment of each installment of Percentage Rent, Lessee shall deliver to City a true and accurate statement signed by Lessee or by an authorized employee of Lessee showing the total Gross Sales and any exclusions listed in Section 13 above (again, with the exception that Hotel Sales need not be included) made during the preceding calendar month and the amount of the Percentage Rent then being paid calculated on such Gross Sales pursuant to this Agreement. The acceptance by City of any monies paid to City by Lessee as Percentage Rent, as shown by any statement furnished by Lessee, shall not be construed as an admission of the accuracy of the statement, or of the sufficiency of the amount of the Percentage Rent payment, and City shall be entitled to review the adequacy of such payment as set forth herein. By the end of each December, Lessee shall deliver to City a year-end statement showing the total amount of Gross Sales made in, on, or from the Premises in each month of the preceding year, the total of any exclusions, the total Percentage Rent paid to City for each of those months, all with year-end totals. City may at any time within three (3) years after receiving the year-end statement, at its sole cost and expense, cause all records, books of account and cash register tapes for the year purportedly covered by the statement, to be audited by City or an accountant selected by City. Lessee shall, within thirty (30) days of receiving written notice of City's desire for such an audit, deliver and make available all such records, books of account, and cash register tapes to City or its designated representative for City's use in the audit and/or for copying. If the audit discloses that Gross Sales were understated and/or exclusions overstated, Lessee shall immediately pay the additional Percentage Rent, together with a penalty thereon from the date it was due at the penalty rate set forth in Section 11 I12/015800-0001 18480240.2 al1/07/22 -6- above. Furthermore, Lessee shall promptly on demand reimburse City for the cost and expense of the audit should the audit disclose that the questioned year-end statement understated Gross Sales (including an overstatement of exclusions) by an amount such that Percentage Rent has been underpaid by an amount greater than Two Hundred Fifty Dollars ($250.00). City further reserves the right to examine and audit all such records, books of account, and cash register tapes at any time during the three (3)year period following the expiration or termination of this Agreement. In addition, City shall have the right to enter upon the Premises during business hours and with two (2)hours advance written,verbal, or electronic notice to Lessee to perform any audit or inspection function with respect to this Agreement. Lessee, its bookkeeper, and/or its accountant shall respond to all questions and inquiries of City with respect to the books, records, statements, and other documentation being examined, and shall promptly provide other further documentation as may be required by City. City is entitled to take statements by deposition under oath of Lessee, its officers, bookkeepers, and/or accountants or any person who prepared the books, records, statements, and other documentation required to be provided by Lessee under this Agreement. 16. Security Deposit. As of the Agreement Date, City is holding a Two Thousand Five Hundred Dollar ($2,500) Security Deposit advanced by Lessee pursuant to the Original Agreement. On or before the Effective Date of this Agreement, Lessee shall pay to City an additional Two Thousand Five Hundred Dollars ($2,500),to bring the total Security Deposit to be held by City during the Term of this Agreement to Five Thousand Dollars ($5,000) (collectively, the "Security Deposit"). The Security Deposit shall guarantee all of Lessee's obligations, liabilities, duties, and responsibilities under this Agreement, including, without limitation, the repair and maintenance of the Premises as provided herein. If paid other than in cash, the form of the Security Deposit shall be approved by the City Attorney and the City Treasurer. No interest shall accrue on cash deposits to the benefit of Lessee,but interest shall accrue on any CD or savings account and shall be paid to Lessee under the terms of the CD or savings account. Lessee shall send a copy of each renewal of the CD to the City Treasurer, if applicable, to ensure that City has the records of each active deposit account. 17. Quality of Sales, Rentals and Services. Lessee, at its sole cost and expense, shall equip, operate, manage, and maintain the Premises and Concession and shall keep the same equipped and maintained in a manner acceptable to City during the entire term of this Agreement or any renewals or extensions thereof or during any holdover period. It is the intent of City that the Concession's services be provided in a manner to meet the needs of the visiting public, and should City deem the Concession's hours of operation and/or food, merchandise, services, or rentals inadequate to meet such needs, City may require Lessee to make such changes requested by City. Lessee shall additionally have the right, but not the obligation, to utilize the Concession to stage banquets, meetings, and other group activities and events that are arranged or booked by or at the Hotel and delivered at the Premises (i.e., Hotel Sales), provided that Hotel Sales shall be excluded when determining whether Lessee has satisfied its minimum day/hour operational obligations set forth in the next paragraph below. Lessee shall not use or permit the Premises to be used, in whole or in part,during the entire term of this Agreement or any renewals or extensions thereof or during any holdover period for any purpose other than as herein set forth, without the prior written consent of City. 112/015800-0001 18480240.2 al l/07/22 -7- Lessee shall only sell concessions and related merchandise at the concession stand. The concession stand shall be in operation for a minimum of one hundred twenty (120)days during the calendar year and for a minimum of four(4)hours a day,plus any additional days to accommodate special events. The minimum number of operating days and hours may be modified due to weather conditions or unforeseen events. Any modification to this minimum number of days or requests for special events (other than Hotel Sales,which are a permitted use)must be approved in advance in writing by the Director of Community Development or his or her designee. Except as permitted in advance in writing by City, all foods and beverages shall be sold in disposable containers. No pull-top cans or Styrofoam containers are to be vended or dispensed from the Premise. Lessee, wherever feasible, shall eliminate the use of non-recyclable containers and plastics. City may from time to time review the items sold and containers or utensils used or dispensed by Lessee. City reserves the right to prohibit the sale or use of non-recyclable containers or plastics, and Lessee shall comply with City's requirement regarding prohibition of non- recyclable items. With the exception of Hotel Sales,Lessee shall comply with any City exclusivity agreement the City may have with any food or beverage sponsor. Subject to its obtaining all required permits and licenses from City, the California Coastal Commission (if applicable), the California Department of Alcoholic Beverage Control, and any other governmental agency with jurisdiction, and compliance with all applicable terms and conditions that may be set forth in such permit(s) and license(s), Lessee shall have the right to sell alcoholic beverages to customers at the Concession. Except as expressly set forth above and with the further exception of Hotel Sales, City in its sole discretion reserves the right to prohibit Lessee's sale, provision, or rental of any item or service rendered or performed which City deems objectionable or offensive, beyond the scope deemed necessary for proper service to the public, inappropriate for sale, provision, or rental by the Concession, or of inferior quality. 18. Indemnification, Defense and Hold Harmless Agreement. Lessee hereby agrees to protect, defend, indemnify,-and hold harmless City, its officers, elected or appointed officials, employees, agents, and volunteers from and against any and all claims,damages, losses, expenses, judgments, demands, and defense costs (including, without limitation, costs and fees of litigation (including arbitration) of every nature or liability of any kind or nature) arising out of or in connection with (1) the use or occupancy of the Premises by Lessee, its officers, employees, or agents, or(2) the death or injury of any person or the damage to property caused by a condition of the Premises, or (3) the death or injury of any person or the damage to property caused by any act or omission of Lessee, its officers, employees, or agents, or (4) any failure by Lessee to keep the Premises in a safe condition, or (5) Lessee's (or Lessee's agents and/or sublessees, if any) performance of this Agreement or its failure to comply with any of its obligations contained in this Agreement by Lessee, its officers, agents, or employees, except such loss or damage which was caused by the sole negligence or willful misconduct of City. Lessee shall hold all Trade Fixtures, personal property, and trade inventory on the Premises at the sole risk of Lessee and hold City harmless from any loss or damage thereto by any cause whatsoever, except such loss or damage which was caused by the sole negligence or willful misconduct of City. Lessee will Lessee shall conduct all defense at its sole cost and expense and City shall approve selection of Lessee's counsel. This indemnity shall apply to all claims and liability regardless of whether any insurance I12/015800-0001 18480240.2 a 1/07/22 -8- policies are applicable. The policy limits do not act as limitation upon the amount of indemnification to be provided by Lessee. 19. Workers' Compensation and Employers' Liability Insurance. Lessee acknowledges awareness of Section 3700 et seq. of the California Labor Code, which requires every employer to be insured against liability for workers' compensation. Lessee covenants that it shall comply with such provisions prior to the Commencement Date of this Agreement. Lessee shall obtain and furnish to City workers' compensation and employers' liability insurance in amounts not less than the State statutory limits. Lessee shall require all sub-lessees and contractors to provide such workers' compensation and employers' liability insurance for all of the sub- lessees' and contractors' employees. Lessee shall furnish to City a certificate of waiver of subrogation under the terms of the workers' compensation and employers' liability insurance and Lessee shall similarly require all sub-lessees and contractors to waive subrogation. 20. General Public Liability Insurance. In addition to the workers' compensation and employers' liability insurance and Lessee's covenant to defend, hold harmless, and indemnify City, Lessee shall obtain and furnish to City, a policy of general public liability insurance, including motor vehicle coverage against any and all claims arising out of or in connection with the Premises. This policy shall indemnify Lessee, its officers, employees and agents, while acting within the scope of their duties, against any and all claims arising out of or in connection with the Premises,and shall provide coverage in not less than the following amounts: combined single limit bodily injury and property damage, including products/completed operations liability and blanket contractual liability, of One Million Dollars ($1,000,000.00) per occurrence. If coverage is provided under a form which includes a designated general aggregate limit, the aggregate limit must be no less than One Million Dollars($1,000,000.00)for the Premises. This policy shall name City, its officers, elected or appointed officials, employees, agents, and volunteers as Additional Insureds, and shall specifically provide that any other insurance coverage which may be applicable to the Agreement shall be deemed excess coverage and that Lessee's insurance shall be primary. Lessee shall require all sub-lessees to obtain and furnish to City a policy of general public liability insurance, including motor vehicle coverage, against any and all claims arising out of or in connection with the Premises in the same amounts required under this section. Under no circumstances shall said above-mentioned insurance contain a self-insured retention, "deductible," or any other similar form of limitation on the required coverage in excess of One Thousand Dollars ($1,000). 21. Property Insurance. Prior to the Commencement Date of this Agreement, Lessee shall obtain and furnish to City, at Lessee's sole cost and expense,property and fire insurance with extended coverage endorsements thereon, by a company acceptable to City authorized to conduct insurance business in California, in an amount insuring for the full insurable value of all Improvements, Trade Fixtures, personal property (whether or not owned or d by Lessee), and all trade inventory in or on the Premises against damage or destruction by fire, theft, or the elements. This policy shall contain a full replacement cost endorsement naming Lessee as the insured and shall not contain a coinsurance penalty provision. The policy shall also contain an endorsement naming City as an Additional Insured. The policy shall contain a special endorsement that such proceeds shall be used to repair, rebuild, or replace any such Improvements, Trade Fixtures, personal property (whether or not owned or d by Lessee), and all trade inventory so damaged or 112/015800-0001 184802402 all/07/22 -9- destroyed; and if not so used, such proceeds (excluding any insurance proceeds for Trade Fixtures, personal property (whether or not owned or d by Lessee), and trade inventory, but only to the extent the insurance proceeds specifically cover those items, shall be paid to City. The policy shall also contain a special endorsement that if the Premises are so destroyed triggering the Parties' ability to terminate as set forth in Section 51 (Destruction) below, and either Party elects to terminate the Agreement, the entire amount of any insurance proceeds (excluding such proceeds for Trade Fixtures, personal property (whether or not owned or d by Lessee), and trade inventory, but only to the extent the insurance proceeds specifically cover those items, shall be paid to City. The proceeds of any such insurance payable to City may be used, in the sole discretion of City, for rebuilding or repair as necessary to restore the Premises or for any such other purpose(s) as City sees fit. This policy shall also contain the following endorsements: (a) The insurer shall not cancel or reduce the insured's coverage without (30) days' prior written notice to City; (b) City shall not be responsible for premiums or assessments on the policy. A complete and signed certificate of insurance with all endorsements required by this Section shall be filed with City prior to the Commencement Date of this Agreement. At least thirty (30)days prior to the expiration or termination of any such policy,a signed and complete certificate of insurance showing that coverage has been renewed shall be filed with City. Lessee shall require all sub-lessees and sub-licensees to obtain and furnish to City property and fire insurance with extended coverage endorsements thereon, by a company acceptable to City authorized to conduct insurance business in California, in compliance with the requirements and amounts set forth in this section. 22. Increase in Amount of General Public Liability and Property Insurance. Not more frequently than once every two (2) years, if, in the sole opinion of City, the amount and/or scope of general public liability insurance in Section 20 above and/or property insurance coverage in Section 21 above at that time is not adequate, Lessee shall increase the insurance coverage as reasonably required by City. 23. Certificates of Insurance; Additional Insured Endorsements. Prior to the Commencement Date of this Agreement, Lessee shall furnish to City certificates of insurance subject to approval of the City Attorney evidencing the foregoing insurance coverages as required by this Agreement; these certificates shall: (a) provide the name and policy number of each carrier and policy; (b) state that the policy is currently in force; and (c) provide that such policies shall not be canceled or modified without thirty (30) days' prior written notice of City; however ten (10) days' prior written notice shall be permitted in the event of cancellation for nonpayment of premium, which 10-day notice provision shall not apply to property insurance in Section 21 above. 112/015800-0001 18480240.2 all/07/22 -10- Lessee shall maintain the foregoing insurance coverages in force during the entire Term of the Agreement, including any renewals or extensions thereof and during any holdover period. The requirement for carrying the foregoing insurance coverages shall not derogate from Lessee's defense, hold harmless, and indemnification obligations as set forth in this Agreement. City or its representatives shall at all times have the right to demand the original or a copy of any or all the policies of insurance. Lessee shall pay, in a prompt and timely manner, the premiums on all insurance hereinabove required. 24. Insurance Hazards. Lessee shall not commit or permit the commission of any acts on the Premises nor use or permit the use of the Premises in any manner that will increase the existing rates for, or cause the cancellation of any liability, property, or other insurance policy for the Premises or required by this Agreement. Lessee shall, at its sole cost and expense, comply with all requirements of any insurance carrier providing any insurance policy for the Premises or required by this Agreement necessary for the continued maintenance of these policies at reasonable rates. 25. Maintenance of Premises. During the entire Term of this Agreement, City shall maintain,repair, and replace the Public Facilities outside the boundaries of the Premises which are City's responsibility as set forth in Section 7 of this Agreement. Lessee agrees to maintain the Premises in good order and repair, at Lessee's sole cost and expense, during the entire Term of this Agreement, including any renewals or extensions thereof, and during any holdover period, pursuant to the City's maintenance standards. A copy of the quarterly evaluation summary sheet setting forth City's maintenance checklist is attached as Exhibit "C", and incorporated herein by this reference. Lessee's obligation includes, without limitation, maintaining and operating the Premises in a clean, safe, wholesome, and sanitary condition, free of trash, garbage, or obstructions of any kind, and in compliance with any and all present and future laws, general rules, or regulations of any governmental authority now, or at any time during the entire Term of this Agreement, including any renewals or extensions thereof and during any holdover period, in force, relating to sanitation or public health, safety, or welfare, or for the protection of life, limb, or property; and Lessee shall at all times faithfully obey and comply with all laws, rules, and regulations applicable thereto. Lessee shall be responsible for maintenance of the mechanical door unless the failure of the door is caused by environmental factors, the determination of which is to be made by the Director of Community Development or his or her designee. Lessee, at its sole cost and expense, shall remedy without delay any defective, dangerous, or unsanitary conditions caused by Lessee or anyone related thereto. Lessee shall maintain ADA access around the entire Concession building. Lessee shall maintain grease trap(s)or grease interceptor(s)in accordance with the City's requirements set forth in Chapter 14.56 of the Huntington Beach Municipal Code. On a bi-monthly basis Lessee shall inspect, service, and maintain any outdoor drains to keep them free and clear of sand. Lessee shall paint, stain or seal the Premises' exterior surfaces a minimum of every three (3) years, unless City determines in its sole discretion that such work shall be done on a more frequent basis. All exterior metal surfaces, except the roof, shall be painted with rust resistant paint no less than once every other year. Any and all graffiti on the Premises shall be removed by 112/015800-0001 18480240.2 all/07/22 -1 1- Lessee,at its sole cost and expense,within forty-eight(48)hours of Lessee receiving notice thereof or of Lessee becoming aware of such graffiti. In addition,with or without notice from City, Lessee shall, at its sole cost and expense, repair and/or replace any broken glass within forty-eight (48) hours of its becoming broken, regardless of cause, except by fault of City. Except as provided above for graffiti and broken glass, Lessee, at its sole cost and expense and with or without notice from City, shall repair and/or replace all damage or destruction to the Premises caused by act(s) of vandalism as soon as possible but in no event later than fourteen days after the date such damage or destruction occurred. Lessee, at its sole cost and expense, shall repair and/or replace all other damage or destruction to the Premises, regardless of cause, except by fault of City. Lessee shall comply with all written notices served by City with regard to the care and maintenance of the Premises. Any written notice hereunder shall specify the work to be done and the period of time deemed to be reasonably necessary for completion of such work. Should Lessee fail to commence making the necessary repairs within seven (7) days after receiving such notice, or within twenty-four (24) hours of the glass becoming broken in the case of broken glass, or fail to diligently proceed to complete the necessary repairs within the period of time reasonably specified in the City's notice, or within forty-eight (48) hours of the glass becoming broken in the case of broken glass,or within the forty-eight(48)hour time period for removing graffiti,or within fourteen (14) days of the date that the vandalism damage or destruction occurred, City shall proceed to cause the required work to be performed, and Lessee shall promptly reimburse City for the cost of labor and materials thereof and pay City a penalty on such costs at the penalty rate set forth in Section 11 above from the date the costs were incurred by City to the date they are reimbursed to City by Lessee. Lessee hereby expressly waives the right to make repairs at the expense of City and the benefit, if any, of the provisions of Sections 1941 and 1942 of the California Civil Code relating thereto. Subject to Force Majeure delays, Lessee shall complete all proposed and approved improvements referred to in Exhibit"D"to this Agreement to the satisfaction of City no later than twelve (12) calendar months from the Commencement Date. 26. Rent Credit. A Rent credit may be available for some or all of any improvements, repairs, or maintenance performed by Lessee upon prior written approval by the Director of Community Development or his or her designee. The terms of payment of any Rent credit will be determined by the Director of Community Development. City in its sole discretion may decide to give Lessee a Rent credit if Lessee undertakes (1) any improvement, repair, or maintenance obligation of City under this Agreement,or(2)any work City in its sole discretion deems necessary and appropriate. Prior to Lessee undertaking any such work, City must agree in writing to the amount of and procedures for the Rent credit, the work to be done by Lessee, and the cost of such work. 27. Damage, Destruction or Nuisance. Lessee shall not commit or permit the commission by others of any damage or destruction of, on, or to the Premises and/or Concession. Lessee shall not maintain, commit, or permit the maintenance or commission of any nuisance, as defined in Section 3479 and/or Section 3480 of the California Civil Code on the Premises; and Lessee shall not use or permit the use of the Premises for any unlawful purpose. 112/015800-0001 18480240.2 al 1/07/22 -1 2- 28. Taxes. This Agreement may create a possessory interest in property, which is subject to taxation. In the event that such possessory interest is created,Lessee agrees to be subject to the payment of and to pay taxes levied on such interest, at its sole cost and expense. Lessee also agrees to pay, at its sole cost and expense, before they become delinquent, all other lawful taxes, assessments, or charges, which at any time may be levied by any governmental agency including, without limitation,the State,County,City,or any tax or assessment levying body upon any interest in this Agreement, or any possessory right which Lessee may have in or to the Premises, by reason of Lessee's use or occupancy thereof or otherwise, as well as all taxes, assessments, and charges on Trade Fixtures, personal property, and trade inventory in, on, or about the Premises. Upon request, Lessee shall promptly furnish to City satisfactory evidence establishing such payment. Lessee shall comply with all laws,regulations and ordinances regarding the collection of taxes due a government agency. 29. Payment of Obligations. Lessee shall promptly pay, at its sole cost and expense, before they become delinquent, any and all bills, debts, liabilities, and obligations incurred by Lessee in connection with Lessee's occupation and use of the Premises and/or operation of the Concession. Upon request, Lessee shall promptly furnish to City satisfactory evidence establishing such payment. 30. Utilities and Services. Lessee shall be responsible for the payment of all utility charges, including, without limitation, gas, electricity, water, telephone service, cable TV service, and the furnishing of all necessary refuse and garbage containers, and the removal and disposal of all rubbish,refuse,and garbage resulting from the operation of the Premises and/or the Concession. All such rubbish, refuse, and garbage removed shall be disposed of in accordance with applicable laws and local ordinances. All trash containers and/or trash bins shall be adequately screened and located to the satisfaction of City. For the purposes of this Section, sewage disposal shall be construed as a utility. All such charges shall be paid by Lessee directly to the provider of the service and shall be paid as they become due and payable. Upon request, Lessee shall promptly furnish to City satisfactory evidence establishing such payment. Lessee shall use good energy practices as described in the State of California Flex Your Power Best Practice Guide. 31. Business License. Lessee shall maintain a business license from City during the entire term of this Agreement or any renewals or extensions thereof or during any holdover period. 32. Signs, Advertising, and Approval of Name. City shall have the right to approve in its sole discretion and at any time require Lessee to change or remove signs, names, placards, decorations, or advertising placed on, or inscribed, painted, or affixed upon the Premises. No outdoor sales are allowed by Lessee unless prior written approval is obtained from the Director of Community Development or his or her designee. All outdoor displays or banners must first be approved in writing by the Director of Community Development or his or her designee. Should City approve of any sign,name,placard, decoration, or advertising, Lessee shall maintain the same at all times in good condition and repair during the entire Term of this Agreement, including any renewals or extensions thereof and during any holdover period. All signs, names, placards, decorations, and advertising must comply with all requirements of any governmental authority with jurisdiction. 112/015800-0001 18480240.2 all/07/22 -13- 33. No Assigning, Subleasing or Encumbering. (a) Prohibition of Assignment. The parties acknowledge that City is entering into the Agreement in reliance upon the experience and abilities of Lessee and its principals. Consequently, Lessee shall not voluntarily assign, encumber, or otherwise transfer its interest in the Agreement or in the Premises, or allow any other person or entity (except Lessee'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 City's consent shall not relieve Lessee from any and all of its obligations, liabilities, duties, or responsibilities under this Agreement. Any assignment, encumbrance, occupation or use, or other transfer without such consent shall be voidable and, at City's sole discretion, shall constitute a Default of this Agreement. (b) Consent to Transfer. City's consent to any assignment, encumbrance, occupation or use, or other transfer is subject to Lessee providing City with evidence satisfactory to City that the proposed, assignee, encumbrancer, occupier or user, or other transferee has suitable financial strength, experience, and character for operation and control of the Premises and the Concession and that the use of the Premises by the proposed assignee, encumbrancer, occupier, or user, or other transferee is consistent with that specified herein, and is commercially reasonable. Any proposed assignee, encumbrancer, occupier or user, or other transferee shall agree to abide by the terms and conditions of the Agreement including, without limitation, all the obligations, liabilities, duties, and responsibilities of Lessee, and other conditions imposed upon it pursuant to law. An approval by City to one assignment,encumbrance,occupation or use, or other transfer shall not be deemed to be an approval to any other assignment, encumbrance, occupation or use, or other transfer. (c) Voluntary Assignment Defined. Except as otherwise expressly provided herein, any dissolution, merger, consolidation, or reorganization of Lessee, or the sale or other transfer resulting in a transfer of a controlling percentage of the capital stock of Lessee (other than a transfer by will, devise, bequest, intestate succession, a transfer to or between the family members of Licensee, or a transfer to or between one or more trusts for the benefit of Lessee and/or Lessee's family members, where applicable) shall be deemed a voluntary assignment. (d) Exceptions. Notwithstanding the foregoing paragraphs or anything to the contrary contained herein, City's consent shall not be required for an assignment or subleasing to an Affiliate, Subsidiary, or Successor of Lessee (for purposes hereof, an "Affiliate," a "Subsidiary" and a "Successor" of Lessee are defined as follows: (a) an "Affiliate" is any corporation which directly or indirectly controls or is controlled or is under common control with Lessee (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 or partnership not less than twenty-five percent(25%)of whose outstanding stock shall,at the time,be owned directly or indirectly by Lessee and which is at least as creditworthy as Lessee, and (c) a "Successor" shall mean a corporation or partnership in which or with which Lessee is 112/015800-0001 18480240.2 all/07/22 —14- merged or consolidated, in accordance with applicable statutory provisions for merger or consolidation of corporations, or a corporation or partnership acquiring a substantial portion of the property and assets of Lessee. 34. Terms Binding on Successors. All the terms, covenants, and conditions of this Agreement shall inure to the benefit of and be binding upon the Parties and their successors, including, without limitation, their assignees, encumbrancers, occupiers or users, or other transferees. The provisions of this Section shall not be deemed as a (1) waiver of any of the prohibitions and conditions against assignments, encumbrances, occupations or uses, or other transfers hereinbefore set forth, or (2) City's consent thereto. If more than one Lessee is a Party to this Agreement, the obligations of the Lessees shall be joint and several. Even if City's consent is not required, Lessee shall immediately provide City with written notice of any assignment, encumbrance, occupation or use, or other transfer. 35. Default. The occurrence of any one or more of the following events shall constitute a material default and breach ("Default") of this Agreement by Lessee: (a) Lessee's failure to make any payment of the Rent or other payment required to be made by Lessee at the time required for payment under this Agreement. (b) Lessee's failure to obtain or maintain the insurances and/or the security deposit as required under this Agreement. (c) Lessee's vacating or abandonment of the Premises during the entire Term of this Agreement, including any renewals or extensions thereof and during any holdover period with the understanding that Lessee's failure to operate the Concession for the minimum periods referred to in Section 17 shall be deemed an abandonment of the Premises for purposes of this Section 35. (d) Lessee's violation of Section 18 (Indemnification, Defense and Hold Harmless Agreement), Section 33 (No Assigning, Subleasing or Encumbering), Section 46 (Hazardous Substances), Section 47 (Nondiscrimination), Section 48 (Sale of Alcoholic Beverages and Entertainment Prohibited), Section 61 (Conflict of Interest), or Section 63 (Compliance with Laws). (e) The insolvency of Lessee as evidenced by a receiver being appointed to take possession of all or substantially all of Lessee's assets located at or on the Premises or of Lessee's interest in this Agreement, or the making by Lessee of a general arrangement or assignment for the benefit of creditors, or Lessee's filing a petition in bankruptcy, whether voluntary or involuntary, or the attachment, execution or the judicial seizure of substantially all of Lessee's assets located at or on the Premises or of Lessee's interest in the Agreement. (0 Lessee's failure to observe or perform any other term, covenant, obligation, duty, responsibility, or condition of this Agreement to be observed or performed by Lessee when such failure shall continue for a period of thirty (30) days after City's giving written notice to Lessee, or such earlier period if specifically set forth in this Agreement;however, if the nature of such failure is such that more than thirty (30) days are reasonably required 112/015800-0001 18480240.2 a l l/07/22 —15- for its cure, then Lessee shall not be deemed to be in Default if Lessee notifies City of the length of the additional time required to cure and receives City's written approval of the additional time required, which approval will not be unreasonably withheld, and commences such cure within such thirty (30) day period and diligently proceeds with such cure to completion during such additional time period approved by City. 36. Remedies. (a) Cumulative Nature of Remedies. In the event of any Default by Lessee, City shall have the remedies described in this Section in addition to all other rights and remedies provided by law or equity, to which City may resort cumulatively or in the alternative: (i) Reentry without Termination. City may at City's sole discretion reenter the Premises, and,without terminating the Agreement, at any time and from time to time re-let the Premises or any part or parts of them for the account and in the name of Lessee or otherwise. Any re-letting may be for the remainder of the term or for a longer or shorter period. City may in City's sole discretion eject all persons or eject some and not others or eject none. In addition, City may in its sole discretion remove some or all of the Trade Fixtures, personal property, and trade inventory from the Premises. City may store such removed Trade Fixtures, personal property, and trade inventory in a public warehouse or other location at the sole cost, expense and risk of Lessee, and for the account of and in the name of Lessee. City shall apply all rents from re-letting 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 re-letting; second, to the reasonable expense of securing new subtenants; and third, to the fulfillment of Lessee's covenants to the end of the term. City may execute any Agreements or subs made under this provision either in City's name or in Lessee's name and City shall be entitled to all license fees and rents from the use, operation, or occupancy of the Premises. Lessee shall nevertheless pay to City on the dates specified in this Agreement the equivalent of all sums required of Lessee under this Agreement, plus City's expenses, less the proceeds of any re-letting or attornment. (ii) Termination. In the event of a Default by Lessee, City may at City's sole discretion terminate this Agreement by giving Lessee written notice of termination. In the event City terminates this Agreement, City may recover possession of the Premises (which Lessee shall immediately surrender and vacate upon demand) and remove all persons therefrom, and Lessee shall comply with, without limitation. Sections 55 and 56 below. City also shall be entitled to recover as damages all of the following: (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; 112/015800-0001 18480240.2 all/07/22 -1 6- (B) The worth at the time of the award of the amount by which the unpaid Rent(each month's Rent would be calculated as the average Rent for that same month in the preceding years, or if Lessee did own/operate the Concession in the preceding years, then each month's Rent would be calculated as the average of all months Lessee owned/operated the Concession) and other charges which would have been earned after termination until the time of the award exceeds the amount of the loss of such Rent and other charges that Lessee proves could have been reasonably avoided; (C) The worth at the time of the award of the amount by which the unpaid Rent(each month's Rent would be calculated as the average Rent for that same month in the preceding years, or if Lessee did not own/operate the Concession in the preceding years, then each month's Rent would be calculated as the average of all months Lessee owned/operated the Concession) and other charges for the balance of the term after the time of the award exceeds the amount of the loss of such Rent and other charges that Lessee proves could have been reasonably avoided; (D) Any other amount necessary to compensate City for the detriment proximately caused by Lessee's failure to perform its obligations, liabilities, duties, or responsibilities under this Agreement; and (E) At City's sole discretion, 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 Sections 36(a) (ii) (A) and (B) above, the "worth at the time of the award" shall be computed by allowing interest at the rate of twelve percent (12%) per annum. As used in Section 36(a) (ii)(C)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 Section 36(a) (ii) (D) above shall include, without limitation, any costs or expenses incurred by City in maintaining or preserving the Premises after such Default. (iii) Use of Personal Property. City may at City's sole discretion use the Trade Fixtures, personnel property, and/or trade inventory located on, about, or appurtenant to the Premises without compensation and without liability for use or damage, or store them in a public warehouse or other location at the sole cost, expense and risk of Lessee, and for the account of and in the name of Lessee. (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 Lessee's Default. Upon continuance of any Default, City may in its sole discretion, but is not obligated to, cure such Default at Lessee's sole 112/015800-0001 18480240.2 all/07/22 -1 7- cost and expense. If City at any time, by reason of such Default by Lessee, pays any sum or does any act, the sum paid by City plus the reasonable cost of performing such act, together with a penalty thereon at the penalty rate set forth in Section 11 above from the date the costs were incurred or the act performed by City to the date they are reimbursed to City by Lessee, shall be due as additional Rent not later than five (5) days after service of a written demand therefor on Lessee, 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. Lessee 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 Lessee is evicted or City takes possession of the Premises by reason of any Default by Lessee hereunder. (e) Other Rights of City. No act of City, including, without limitation, City's entry on the Premises, efforts to re-let the Premises, or maintenance of the Premises, shall be construed as an election to terminate this Agreement unless a written notice of such intention is given to Lessee by City or unless the termination thereof is decreed by a court of competent jurisdiction. Notwithstanding if City elects to continue the Agreement in full force and effect after a Default by Lessee and to re-let the Premises, City may at any time after such re-letting elect to terminate this Agreement for any such Default. 37. Cumulative Remedies. The remedies given to City in this Agreement shall not be exclusive but shall be cumulative and in addition to all remedies now or hereafter allowed by law or elsewhere provided in this Agreement, City shall have the right to exercise any other right or remedy which City may have at law or in equity including, without limitation, City's rights under the unlawful detainer laws, if applicable. 38. Waiver of Default. The waiver by City of any Default by Lessee of any of the provisions of this Agreement shall not constitute a continuing waiver or a waiver of any subsequent Default by Lessee either of the same or another provision of this Agreement. 39. City's Defaults/Lessee's Remedy. In the event City fails to perform any material obligation of City under this Agreement within sixty (60) days after receiving written notice from Lessee specifying the nature of such default, or, if the nature of City's obligation is such that more than sixty (60) days are required for its performance, if City fails to commence such performance within such sixty (60) day period and thereafter diligently prosecute the same to completion, then City shall be in default of this obligation. If City's default materially interferes with Lessee's use of the Premises for its intended purpose, Lessee shall have the option to terminate this Agreement by giving City at least sixty (60) days' written notice of its intent to terminate. In such a situation, Lessee must still comply with all of its obligations, liabilities, duties, and responsibilities under this Agreement, including, without limitation, paying any Rent due up to the time of termination and surrendering the Premises pursuant to Sections 55 and 56 below. 112/015800-0001 18480240.2 al 1/07/22 -1 8- 40. Consent. When City's consent/approval is required under this Agreement, its consent/approval for one transaction or event shall not be deemed to be a consent/approval to any subsequent occurrence of the same or any other transaction or event. 41. Holdover. Should Lessee hold over and continue in possession of the Premises after expiration or termination of this Agreement, with or without the express prior written consent of City, Lessee's continued occupancy of the Premises shall constitute a month-to-month tenancy, subject to all the terms and conditions of this Agreement, at a monthly Rent of one hundred ten percent(110%) of the previous calendar year's annual Rent divided by twelve(12) (or the average monthly Rent for all months Lessee owned/operated the Concession if Lessee has owned/operated the Concession for less than one (1) year) or that month's actual Rent, whichever is greater, and shall not constitute a renewal or extension of the Agreement term. 42. Waiver of Claims. Lessee hereby waives any claim against City, its officers, elected or appointed officials, employees, agents, or volunteers for damage or loss caused by any suit or proceeding directly or indirectly attacking the validity of this Agreement, or any part thereof, or caused by any judgment or award in any suit or proceeding declaring this Agreement null, void, or voidable, or delaying the Agreement or any part thereof from being carried out. 43. Inspection of Premises. Upon at least twenty-four (24) hours advance written, verbal, or electronic notice given by City to Lessee, Lessee shall permit City or City's agents, representatives, or employees to enter the Premises at all reasonable times for the purpose of inspecting, investigating, and surveying the Premises to determine whether Lessee is complying with the terms of this Agreement and for the purpose of doing other lawful acts that may be necessary to protect City's interest in the Premises or to perform City's duties under this Agreement. City shall make quarterly physical inspections of the Premises and may direct that interior maintenance or outdoor painting repairs are to be performed where such work is necessary to protect the Premises or to provide a clean, attractive,and well-maintained premise. Lessee shall perform those maintenance and repairs which they are responsible for within thirty (30) calendar days. City also shall have the right in its sole discretion to do any and all work of any nature necessary for the preservation, maintenance, and operation of property owned, controlled, or occupied by City. Lessee shall be given reasonable notice when such work becomes necessary, and Lessee shall adjust the operation of the Concession in such a manner that City may proceed expeditiously. 44. Reserved. 45. Photography. Lessee acknowledges and agrees that City may grant permits to third parties engaged in the production of still and motion pictures and related activities to take photographs or videos of or on the Premises when such permission shall not interfere with the primary business of Lessee, all without providing Lessee notice or requiring consent by Lessee. 46. Hazardous Substances. Lessee represents and warrants that its use or occupation of the Premises shall not generate any Hazardous Substance (as defined below in this Section), and it shall not store or dispose on the Premises nor transport to or over the Premises any Hazardous Substance during the entire Term of this Agreement or any renewals or extensions thereof or during any holdover period. The foregoing restrictions shall not be deemed to restrict or prohibit 112/015800-0001 18480240.2 a l 1/07/22 —1 9- the use by Lessee of ordinary cleaning products as customarily used in Lessee's ordinary course of business at the Concession, provided that Lessee complies with all provisions of law as to the use, storage, and disposal of such products. Lessee further agrees to clean up and remediate any such Hazardous Substance on the Premises, and agrees to protect, defend, indemnify, and hold harmless City, its officers, elected or appointed officials, employees, agents, and volunteers from and against any and all claims, damages, losses, expenses,judgments, demands, and defense costs (including, without limitation, costs and fees of litigation(including arbitration) of every nature or liability of any kind or nature) arising out of or in connection with any such Hazardous Substance and any damage, loss, or expense or liability resulting from any such Hazardous Substance including, without limitation, all attorney's fees, costs, and penalties incurred as a result thereof except any release caused by the sole negligence or willful misconduct of City. Lessee will conduct all defense at its sole cost and expense and City shall approve selection of Lessee's counsel. This indemnity shall apply to all claims and liability regardless of whether any insurance policies are applicable. The policy limits do not act as limitation upon the amount of indemnification to be provided by Lessee. "Hazardous Substance" shall be interpreted broadly to mean any substance or material defined or designated as a hazardous or toxic waste, hazardous or toxic material, hazardous or toxic or radioactive substance, or other similar term, by any Federal, State, or local environmental law, regulation, or rule presently in effect or promulgated in the future, as such law, regulation, or rule may be amended from time to time; and it shall be interpreted to include, without limitation, any substance which after re into the environment will or may reasonably be anticipated to cause sickness, death, or disease. 47. Nondiscrimination. Lessee and its employees shall not discriminate because of race, religion, color, ancestry, sex, age, national origin, or physical handicap against any person by refusing to furnish such person any accommodation, facility,rental, service,or privilege offered to or enjoyed by the general public. Nor shall Lessee or its employees publicize the accommodation, facilities, rentals, services, or privileges in any manner that would directly or inferentially reflect upon or question the acceptability of the patronage of any person because of race, religion, color, ancestry, sex, age, national origin, or physical handicap. In the performance of this Agreement, Lessee shall not discriminate against any employee or applicant for employment, because of race, religion, color, ancestry, sex, age, national origin, or physical handicap. Lessee shall take affirmative action to ensure that applicants are employed and that employees are treated during employment, without regard to their race, religion, color, ancestry, sex, age, national origin, or physical handicap. Such action shall include, without limitation,the following: employment,upgrading,demotion or transfer;recruitment or recruitment advertising; layoff or termination; rates of pay or other forms of compensation; and selection for training, including, without limitation, apprenticeship. Lessee shall post in conspicuous places, available to all employees and applicants for employment, notices setting forth the provisions of this Section. Subject to the privacy rights of its employees and applicable provisions of law,Lessee shall permit access to its records of employment, employment advertisements, application forms, and other pertinent data and records by City, the State Fair Employment Practices Commission or any other agency with jurisdiction over these matters, for the purpose of investigation to ascertain compliance with this Section. 112/015800-0001 184802402 all/07/22 -20- City may determine a violation of this Section to have occurred upon receipt of a final judgment having that effect from a court in an action to which Lessee was a party, or upon receipt of a written notice from the State Fair Employment Practices Commission or other government agency with jurisdiction over these matters that it has investigated and determined that Lessee has violated the Fair Employment Practices Act or other applicable discrimination law and has issued an order which has become final, or obtained an injunction. In the event of violation of this Section, City shall have the right to terminate this Agreement, and any loss of revenue sustained by City by reason thereof shall be borne and paid for by Lessee, at its sole cost and expense. 48. Sale of Alcoholic Beverages and Entertainment Prohibited. Notwithstanding anything to the contrary, the sale or provision of alcoholic beverages and/or live entertainment in, on, or from the Premises is expressly forbidden, unless expressly permitted in writing by City in advance. For any proposed sale or provision of alcoholic beverages, Lessee must first obtain written City approval prior to submitting any request for approval to the California Department of Alcohol Beverage Control. In addition, Lessee shall abide by the following conditions which are a substantive and material condition of this Agreement. Failure to abide by any of the following conditions may be considered material breach of this Agreement at the City's sole and absolute discretion and the City may immediately terminate this Agreement thereto. 1. The business shall obtain an Alcohol Beverage Control (ABC) license authorizing alcohol use in the business and outdoor patio. All ABC requirements shall be met prior to sales, service, or consumption of alcoholic beverages. 2. All areas of the alcohol business that are accessible to patrons shall be illuminated such that the appearance and conduct of all people in the alcohol business are visible from inside the alcohol business. 3. Food service from the regular menu must be available to patrons up to one hour before the scheduled closing time, including a cook and food servers shall be on duty. 4. An employee of the alcohol business must monitor all areas where alcohol is served. 5. Alcoholic drinks shall not be included in the price of admission. 6. All alcohol shall remain within alcohol business premises, including outdoor dining area. 7. Service of alcoholic beverages for consumption off-site shall not be permitted. 8. There shall be no requirement for patrons to purchase a minimum number of alcoholic drinks. 9. Games or contests requiring or involving consumption of alcoholic beverages shall be prohibited. 10. No reduced price or promotions of alcoholic beverages shall be allowed after 7:00 p.m. 11. Last call for drinks shall be no later than 15 minutes before closing. 112/015800-0001 18480240.2 all/07/22 -21- 12. Consumption of alcoholic beverages by on-duty employees; including servers, bartenders, kitchen staff, management and supervisory personnel is not permitted, except when training for knowledge of food pairing, if applicable. 13. Mandatory Responsible Beverage Service (RBS) training and certification shall be required for new employees within 60 days of being hired and for existing employees every 12 months. Training shall be provided by ABC or an ABC approved RBS trainer and records of the training must be maintained on-site for review. 14. All owners, employees, representatives, and agents must obey all federal, state, and local laws. In addition, all conditions of the Conditional Use Permit, Alcoholic Beverage Control License and any other regulations, provisions, or restrictions prescribed by an agency with jurisdiction over the premise are required as part of the CUP to be followed. 15. No patrons shall be permitted to loiter within the vicinity of any entrances and exits at any time. 16. The establishment shall employ a video surveillance security system with a minimum of one-month video library recorded to a DVR or Cloud based system. The cameras minimum requirements will be: clear, color, digital and able to record in low light. The business shall ensure all public areas, entrances, and exits to the front and adjacent to the business are covered by video surveillance. Electronic copies of video must be made available to the Huntington Beach Police Department within 48 hours of request. Digital recordings shall be made available for viewing on-scene upon request by police personnel conducting investigations. An employee able to operate the system shall be on duty during all business hours. 17. There shall be no exterior advertising or sign of any kind or type, including advertising directed to the exterior from within, promoting or indicating the availability of alcoholic beverages. Exclusion: Itemized alcohol beverage items listed on menu boards which are permanently affixed to the interior or exterior of the building are allowed. 18. There shall be no window coverings or advertisements that reduce the visibility inside of the business. 19. Signage, posters, and advertising with "Do Not Drink and Drive" shall be posted in the business. 20. Signs shall be posted in conspicuous locations at the entrance/exit points of the patio which shall state, "NO ALCOHOLIC BEVERAGES BEYOND THIS POINT." 21. Dancing and/or dance floor and/or live entertainment is prohibited. (Note: a new or amended Conditional Use Permit and an Entertainment Permit issued by the City is required for these additional activities). 22. No alcoholic beverages shall be consumed on any property adjacent to the Premises under the control of Lessee. 112/015800-0001 18480240.2 al l/07/22 -22- 23. The patio shall have a physical barrier minimum 36 inches in height surrounding the outdoor dining area and designed in a manner that will prohibit passing of alcohol through the barrier. 24. No dining or consumption of alcoholic beverages shall be permitted in the outdoor patio areas between the hours of 10:00 PM and 7:00 AM. The ability to sell alcoholic beverages is conditioned upon Lessee's maintenance of an active license with the California Department of Alcoholic Beverage Control ("ABC"). In the event Lessee faces disciplinary action before the ABC that results in the ABC recommending revocation of Lessee's license, the City may suspend or terminate Lessee's right to sell alcoholic beverages by providing written notice to Lessee and Lessee expressly agrees that the City will not be subject to damages in law or equity if the City exercises such right. 49. Liens. Lessee shall keep the Premises free and clear from any and all liens, including, without limitation, mechanics' or materialmens' liens, claims and demands for work performed, materials famished, or operations conducted on or about the Premises or by reason of any use or occupancy by Lessee, or any person claiming under Lessee. When applicable, Lessee shall cause a notice of non-responsibility to be posted and recorded pursuant to California Civil Code Section 3094. 50. Installation and Removal of Trade Fixtures. Lessee shall have the right during the entire Term of this Agreement, including any renewals or extensions thereof, at Lessee's sole cost and expense, to install or affix in, to, or on the Premises any machinery, equipment, and other objects(the"Trade Fixtures"), for use in Lessee's trade or business as Lessee may deem advisable. Any and all such Trade Fixtures that can be removed without structural damage to the Premises shall, subject to Section 56 below, remain the property of Lessee and may be removed by Lessee at any time prior to the expiration or termination of this Agreement, provided Lessee repairs any damage caused by the removal. Upon execution of this Agreement and every anniversary, Lessee shall provide City with a list of all Trade Fixtures on the Premises. 51. Destruction. Should the Premises be partially destroyed, this Agreement shall continue in full force and effect, and Lessee, at Lessee's sole cost and expense, shall complete the work of repairing and restoring the Premises to their prior condition providing such work can be accomplished under all applicable governmental laws and regulations within one hundred eighty (180) days. Notwithstanding the foregoing, should the damage to the Premises be substantial enough such that Lessee determines, in its reasonable discretion, that it will be unable to feasibly and economically repair and restore the Premises and still realize a reasonable return on its investment over the remaining portion of the Term, Lessee shall have the right, within ninety (90) days of the occurrence of the casualty loss, to terminate this Agreement by delivery of written notice of termination to City, together with an assignment to City of Lessee's rights with respect to the disposition and use of any property insurance proceeds (excluding such proceeds for Trade Fixtures, personal property whether or not owned or d by Lessee and trade inventory, but only to the extent that the insurance proceeds specifically cover those items). In addition, should the Premises be so far destroyed that in City's reasonable judgment they cannot be repaired or restored to their former condition within one hundred eighty (180) days, City shall have the right to give Lessee notice of such determination in writing and each Party may, in that Party's sole discretion: 112/015800-0001 18480240.2 al l/07/22 -23- (a) Continue this Agreement in full force and effect in which case, subject to its termination rights set forth above, Lessee shall repair and restore, at Lessee's sole cost and expense, the Premises to their former condition; or (b) Terminate this Agreement by giving the other Party thirty(30)days' written notice of such termination within sixty(60)days after the date that City gives Lessee notice that the Premises cannot be repaired or restored to their former condition within one hundred eighty(180)days. In the event that either Party elects to terminate this Agreement, the entire amount of any insurance proceeds (excluding such proceeds for Trade Fixtures, personal property whether or not owned or d by Lessee and trade inventory, but only to the extent that the insurance proceeds specifically cover those items) shall be paid to City. The proceeds of any such insurance payable to City may be used, in the sole discretion of City, for rebuilding or repair as necessary to restore the Premises or for any other such purpose(s) as City sees fit. In addition, if Lessee elects to terminate the Agreement, Lessee must still comply with all of its obligations, liabilities, duties, and responsibilities under the Agreement, including, without limitation, paying any Rent due up to the time of termination and surrendering the Premises, pursuant to Sections 56 and 57 below. In the event of the damage or destruction of Improvements, Trade Fixtures and/or personal property located on the Premises not giving rise to a termination of this Agreement, Lessee shall, at its sole cost and expense, replace and repair the same as soon as reasonably possible to permit the prompt continuation of Lessee's business at the Premises. 52. No Abatement of Rent During Repair Work. The Rent shall not be abated for the time Lessee is prevented from using the whole or a portion of the Premises. In addition, Lessee shall not be excused from the payment of taxes, insurance, or any other obligations for the time Lessee is prevented from using the whole or a portion of the Premises. 53. Eminent Domain. If, during the Term of this Agreement, including any renewals or extensions thereof and during any holdover period, City's real property (whether held by City in fee simple, an easement interest or otherwise) and/or the Premises is taken in eminent domain, the entire award (that is, all forms) of compensation, other than as provided herein, shall belong to and be paid to City. In the event of condemnation, Lessee shall be entitled to an award of only the following forms of compensation, if any, from the condemning authority: compensation for loss of business goodwill; compensation for the value of any of Lessee's Trade Fixtures; compensation for the value of any of Lessee's personal property; compensation for the value of any of Lessee's trade inventory; and compensation for relocation benefits as authorized by law. All other forms of compensation, such as, for example, but not by way of limitation, any bonus value of Lessee's interest in this Agreement, shall belong to and be paid to City. In the event of condemnation, unless Lessee is allowed by the condemning authority to continue its operations on the Premises, the Agreement shall terminate on the earliest of the following dates: the date the condemning authority obtains a prejudgment order for possession; the date title to the Premises vests in the condemning authority; or the date when Lessee is required by the condemning authority to cease its operations. 54. Relocation and Assistance, Business Goodwill and Bonus Value. Upon expiration or termination of this Agreement for any reason, but excluding eminent domain, Lessee shall not 112/015800-0001 18480240.2 all/07/22 -24- be entitled to any relocation rights or benefits, business goodwill, or bonus value attributable to this Agreement, and Lessee expressly waives any claim to the same. 55. Quitclaim Deed. Upon expiration or termination of this Agreement as provided for herein, Lessee shall execute and deliver to City within thirty (30) days thereof, a good and sufficient quitclaim deed to the rights and interests of Lessee in the Premises and the Agreement. Should Lessee fail or refuse to deliver to City this quitclaim deed, City may record in the Orange County Recorder's Office a written notice reciting the failure of Lessee to execute and deliver this quitclaim deed. The date of recordation of this notice by City shall be conclusive evidence against Lessee and all persons claiming under this Agreement of the expiration or termination of this Agreement and any rights or interests of Lessee in the Premises and/or this Agreement. Lessee also agrees to execute, acknowledge, and deliver to City any other instrument requested by City as necessary to perfect City's right, title, and interest to the Premises. 56. Restoration and Surrender of Premises/Title to Improvements to the Building. On expiration or termination of this Agreement, Lessee shall, without compensation to Lessee, promptly surrender and deliver the Premises to City in as good condition as such were at the commencement date of this Agreement, reasonable wear and tear excepted. Lessee also shall, without compensation to Lessee, surrender all Improvements to the building to City in good condition and repair, ordinary wear and tear excepted, free and clear of all liens and encumbrances. Lessee also shall remove all Trade Fixtures, personal property, and trade inventory. City may in its sole discretion accept all or any portion of the Premises, as then improved with Improvements and no sum whatsoever shall be paid to Lessee or any other person; or City may require Lessee to remove all or any portion of such Improvements to the building, at Lessee's own risk and cost and expense; or City may itself remove or have removed all or any portion of such Improvements to the building, at Lessee's own risk and cost and expense. If required by City to do so, in removing any such Improvements to the building, Lessee shall restore the Premises as nearly as possible to the conditions existing prior to their installation or construction. All such removal and restoration shall be to the satisfaction of City and shall be completed within thirty (30) days of the expiration or termination of this Agreement; provided, however, that Lessee shall be considered a holdover occupant(pursuant to Section 41 above) after expiration or termination of the Agreement until the time Lessee completes this removal and restoration work, including, without limitation, the removal of any Trade Fixtures, personal property, and trade inventory left on the Premises. In addition, any Trade Fixtures, personal property, or trade inventory left on the Premises after the expiration of this 30-day period, regardless of cause, shall be deemed abandoned by Lessee. In City's sole discretion, it may choose to do one or more of the following: (1)take any or all of such Trade Fixtures, personal property, and trade inventory as City property; (2) store any or all of such Trade Fixtures, personal property, and trade inventory in a public warehouse or other location at the sole cost, expense and risk of Lessee, and for the account and in the name of Lessee; or (3) dispose of any or all of such Trade Fixtures, personal property, and trade inventory without any liability to Lessee. In addition, Lessee's indemnification, hold harmless, and defense obligations set forth in this Agreement shall apply to such Trade Fixtures,personal property,and/or trade inventory, and to City's actions with respect thereto. 57. Force Majeure—Unavoidable Delays. Should the performance of any act required by this Agreement to be performed by either City or Lessee be prevented or delayed by reason of an act of God, strike, lockout, labor troubles, inability to secure materials,restrictive governmental 112/015800-0001 18480240.2 a11/07/22 -25- laws or regulations, or any other cause except financial inability not the fault of the Party required to perform the act, the time for performance of the act shall be extended for a period equivalent to the period of delay and performance of the act during the period of delay shall be excused. Provided, however, that nothing contained in this Section shall excuse the prompt payment of the Rent or other consideration by Lessee as required by this Agreement or the performance of any act rendered difficult solely because of the financial condition of the Party, City or Lessee, required to perform the act. 58. City's Option to Close the Premises. City may close the Premises without liability to Lessee therefor at any time that City in its reasonable discretion deems such action necessary for the protection of life, limb, or property, or for imminent and serious public health or safety reasons; provided, that if the reason for such a closure is a City default of its obligations under this Agreement nothing in this Section 58 is intended to release City from liability therefor or constitute a waiver of Lessee's rights with respect thereto. Except in the event of an unanticipated emergency, City shall the maximum amount of prior notice to Lessee of any such closure that is reasonably practicable under the circumstances. 59. Deliveries of Supplies. The Director of Community Development of City may establish the days and times deliveries of supplies may be made and advise Lessee in writing thereof. 60. Employee Parking. All employee parking shall comply with Huntington Beach Municipal Code Section 13.08.290(d) and (g). City shall provide up to two (2) annual parking passes to Lessee. 61. Conflict of Interest. Lessee warrants and covenants that no official or employee of City, nor any business entity in which an official or employee of City is interested, (1) has been employed or retained by Lessee to solicit or aid in the procuring of this Agreement; or (2) shall be employed by Lessee in the performance of this Agreement without the immediate written divulgence of such fact to City. In the event City determines that the employment of any such official, employee, or business entity is not compatible with such official's or employee's duties as an official or employee of City, Lessee, upon request of City, shall terminate such employment immediately. For breaches or violation of this Section, City shall have the right both to terminate this Agreement without liability and, in its discretion, recover the full amount of any such compensation paid to such official, employee, or business entity. No official or employee of City shall have any financial interest in this Agreement in violation of the applicable provisions of the California Government Code. 62. Notice. Unless specifically providing for verbal or electronic notice, all notices, certificates, or other communications required to be given hereunder shall be in writing and made in the following manner, and shall be sufficiently given and deemed received when (a) personally delivered; or (b) three (3) business days after being sent via United States certified mail, return receipt requested; or (c) one (1) business day after being sent by reputable overnight courier, in each case to the addresses specified below; provided that City and Lessee, by notice given hereunder, may designate different addresses to which subsequent notices, certificates or other communications will be sent: 112/015800-0001 18480240.2 all/07/22 -26- CITY: LESSEE: City of Huntington Beach Waterfront Hotel, LLC ATTN: Director of Community do Waterfront Hotel Beach Resort Development 21351 Pacific Coast Highway 2000 Main Street Huntington Beach, CA 92648 Huntington Beach, CA 92648 Attention: General Manager With a Copy to: The Mayer Corporation 8951 Research Drive Irvine, CA 92618 Attention: Bob Mayer, President 63. Compliance With Laws. Lessee, at its sole cost and expense, shall comply with all statutes, ordinances, regulations, and requirements of all governmental entities, including, without limitation. Federal, State, county, or municipal, relating to Lessee's use and occupancy of the Premises and/or operation of the Concession, whether such statutes, ordinances, regulations, and requirements be now in force or hereinafter enacted. This Agreement is expressly subject to the laws, regulations, and policies of City. Lessee shall deliver to City a copy of any notice from any governmental entity received by Lessee regarding any alleged violation of law regarding the Agreement, Premises, or the Concession or from any person allegedly entitled to give notice under any conditions, covenants, or restrictions binding or affecting the Premises. The final non- appealable judgment of any court of competent jurisdiction, or the admission by Lessee in a proceeding brought against Lessee by any government entity, that Lessee has violated any such statute, ordinance, regulation, or requirement shall be conclusive as between City and Lessee and shall be grounds for termination of this Agreement by City. 64. Interpretation of This Agreement. The language of all parts of this Agreement shall in all cases be construed as a whole, according to its fair meaning, and not strictly for or against any of the Parties. If any provision of this Agreement is held by an arbitrator or court of competent jurisdiction to be unenforceable, void, illegal, or invalid, such holding shall not invalidate or affect the remaining covenants and provisions of this Agreement. No covenant or provision shall be deemed dependent upon any other unless so expressly provided here. As used in this Agreement, the masculine or neuter gender and singular or plural number shall be deemed to include the other whenever the context so indicates or requires. Nothing contained herein shall be construed so as to require the commission of any act contrary to law, and wherever there is any conflict between any provision contained herein and any present or future statute, law, ordinance, or regulation contrary to which the Parties have no right to contract, then the latter shall prevail, and the provision of this Agreement which is hereby affected shall be curtailed and limited only to the extent necessary to bring it within the requirements of the law. 65. Survival. Terms and conditions of this Agreement, which by their sense and context survive the expiration or termination of this Agreement, shall so survive. 66. Modification. No waiver or modification of any language in this Agreement shall be valid unless in writing and duly executed by both Parties. 112/015800-0001 18480240.2 all/07/22 -27- 67. Section Headings. The titles, captions, section, paragraph, and subject headings, and descriptive phrases at the beginning of the various sections in this Agreement are merely descriptive and are included solely for convenience of reference only and are not representative of matters included or excluded from such provisions, and do not interpret, define, limit, describe, or construe the intent of the Parties or affect the construction or interpretation of any provision of this Agreement. 68. 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 Agreement. 69. Independent Contractor. Lessee is, and shall be, acting at all times in the performance of this Agreement as an independent contractor herein and not as an employee of City. Lessee shall secure at its own cost and expense, and be responsible for any and all payment of all taxes, social security, state disability insurance compensation,unemployment compensation, and other payroll deductions for Lessee and its officers, agents, and employees, and all business licenses, if any, in connection with the Agreement and/or any services to be performed hereunder. 70. Attorney's Fees. In the event suit is brought by either Party to construe, interpret, and/or enforce the terms and/or provisions of this Agreement or to secure the performance hereof, each Party shall bear its own attorney's fees, such that the prevailing party shall not be entitled to recover its attorney's fees from the non-prevailing party. 71. Legal Services Subcontracting Prohibited. Lessee and City agree that City is not liable for payment of any subcontractor work involving legal services, and that such legal services are expressly outside the scope of services contemplated hereunder. Lessee understands that pursuant to Huntington Beach City Charter Section 309, the City Attorney is the exclusive legal counsel for City; and City shall not be liable for payment of any legal services expenses incurred by Lessee. 72. Governing Law. This Agreement shall be governed and construed in accordance with the laws of the State of California. 73. Duplicate Original. The original of this Agreement and one or more copies hereto have been prepared and signed in counterparts as duplicate originals, each of which so executed shall, irrespective of the date of its execution and delivery, be deemed an original. Each duplicate original shall be deemed an original instrument as against each Party who signed it. 74. Entirety. The Parties acknowledge and agree that they are entering into this Agreement freely and voluntarily following extensive arm's length negotiations, and that each has had the opportunity to consult with legal counsel prior to executing this Agreement. The Parties also acknowledge and agree that no representations, inducements, promises, agreements, or warranties,oral or otherwise,have been made by that Party,or anyone acting on that Party's behalf, which are not embodied in this Agreement, and that that Party has not executed this Agreement in reliance on any representation, inducement, promise, agreement, warranty, fact, or circumstance not expressly set forth in this Agreement. This Agreement, and the attached exhibits, contain the entire agreement between the Parties respecting the subject matter of this Agreement,the Premises, 112/015800-0001 18480240.2 all/07/22 -28- the leasing of the Premises to Lessee, and the Agreement Term created under this Agreement, and supersede all prior understandings and agreements, whether oral or in writing between the Parties respecting the subject matter hereof. [signature page follows] 112/015800-0001 18480240.2 al l/07/22 -29- IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed by and through their authorized officers the day, month, and year first above written. Each undersigned represents and warrants that he/she has the power, authority,and right to hind his/her respective principal to each of the terms of this Agreement, and each person signing on behalf of Lessee agrees to indemnify CITY fully for any injuries or damages to CITY in the event that such authority or power is not, in fact, held by such person or is withdrawn. WATERFRONT HOTEL, LLC CITY OF l IIJNTINGTON BEACH, (LESSEE) a municipal corporation of the State of Califo is / • / k - �' ' . ♦' It. LI`_ _ By: ___ L• �!' Sr. Mayor print ram ITS: Zi4 ,ua_14 .) V City Clcr. 4#97 (drt;�taur • at 'resider Vice President AND INI N PPROVED By: ___! 0 1 r L. ON/ {7_0 _____ . 41( print name y City Man' 111111 ITS: ,Ali i I. __ t,_ • --.).%,....__ . (ei de o re) ,� hicf Financial Officer/Asst. Director'of Community Development ktirI'reasurcr REVIE ►0A APPROV : : APPROVED A ' P'IF .• City Man - ay Attorney COUNTERPART II2/Ol5NOO•0001 11480240.2 al l/0722 S'I IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed by and through their authorized officers the day, month, and year first above written. Each undersigned represents and warrants that he/she has the power, authority, and right to bind his/her respective principal to each of the terms of this Agreement, and each person signing on behalf of Lessee agrees to indemnify CITY fully for any injuries or damages to CITY in the event that such authority or power is not, in fact, held by such person or is withdrawn. WATERFRONT HOTEL, LLC CITY OF HUNTINGTON BEACH, (LESSEE) a municipal corporation of the State of California By: w± L• 4"` -ey' Tr. Mayor print nam ITS: (cir a residen ice President City Clerk AND INITIATED AND APPROVED: By: o beo L. G'` 1i�/- print name U City Manager ITS: ,A (ci cle o e) wj chief Financial Officer/Asst. Treasurer Director of Community Development kftlr,REVIEWED AND APPROVED: APPROVED AS TO FORM: City Manager City Attorney y t 1) COUNTERPART 112/015800.0001 $-1 18480240.2 aI 1/07/22 IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed by and through their authorized officers the day, month, and year first above written. Each undersigned represents and warrants that he/she has the power, authority, and right to bind his/her respective principal to each of the terms of this Agreement, and each person signing on behalf of Lessee agrees to indemnify CITY fully for any injuries or damages to CITY in the event that such authority or power is not, in fact,held by such person or is withdrawn. WATERFRONT HOTEL, LLC CITY OF HUNTINGTON BEACH, (LESSEE) a municipal corporation of the State of California By: Mayor print name ITS: (circle one)Chairman/President/Vice President City Clerk AND INITIATED AND APPROVED: By: print name City Manager ITS: (circle one) Secretary/Chief Financial Officer/Asst. Director of Community Development Secretary-Treasurer REVIEWED AND APPROVED: APPROVED AS TO FORM: City Manager City Attorney Y u I COUNTERPART 112/015800-0001 S-I 18480240.2 all/07/22 EXHIBIT "A" DEPICTION OF THE PREMISES [On following page] EXHIBIT "A" 112/015800-0001 18480240.2 all/07/22 -1- 73 I m m Ir D r m ® li I\\\\ ® 1 ...• ,I\\\ • \ • ® 1 2 o ° 1 (1, . g5r O^ o S§,CD E�A 1- >- x Q ,VW''V 9 Z D 0 ip CO 1 68s 111 _N is El toLLJ ■ fa ME"M Q. • ° a' U ® 1!.. Via" ir;ii� • • • I 5_-IILL F9° x 0 "mii • w s /,‘,.,, , .� a g ® O ❑ _off ______, ,, ,, . .: 0 EXHIBIT "B" MONTHLY RENT SCHEDULE: Monthly Base Rent: Begins February 1,2023 Description Amount Monthly Base Rent* $1,100.00 * Subject to fixed 2% annual increase. Percentage Rent: Begins February 1, 2023 Season Percentage of Gross Sales Low Season: 5% (Jan., Feb.,Nov., Dec.) Mid Season: 10% (Mar., Apr., Oct.) Peak Season: 12% (May, June, July, Aug., Sept.) MONTHLY RENT CALCULATION EXAMPLE: Assumptions: Minimum Base Rent of$1,100 per month; Gross Sales of$5,500 Monthly Rent-Nov. (Low Season) MONTHLY BASE RENT $ 1,100.00 Percentage Rent—Nov. (Low Season) 5%x $5,500.00 $ 275.00 PERCENTAGE RENT $ 275.00 MONTHLY BASE RENT $ 1,100.00 PERCENTAGE RENT $ 275.00 MONTHLY RENT $ 1,375.00 EXHIBIT "B" 112/015800-0001 18480240.2 all/07/22 —1— EXHIBIT"C" QUARTERLY EVALUATION Month Year Today's Date Inspected By: Area O.K. Needs Attention: Doors & Locks Exterior Walls Exterior Area Graffiti Removal Grease Trap Hood Grease Filters Interior Walls Removal of Bird Droppings Rest Room Roof Rust Signage Trash Trim Windows COMMENTS: ACTION REQUIRED: EXHIBIT "C" 112/015800-0001 18480240.2 a I 1/07/22 —1 EXHIBIT "D" DESCRIPTION OF CITY-APPROVED IMPROVEMENTS/ALTERATIONS TO PREMISES • New outdoor trellis per plans to be approved by City • New fencing/gates per plans to be approved by City • New outdoor lighting per plans to be approved by City • New signage per plans to be approved by City EXHIBIT"D" 112/015800-0001 18480240.2 all/07/22 -1- / , ® DATE(MM(ODIY At Ko CERTIFICATE OF LIABILITY INSURANCE 7/20/2022 THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION ONLY AND CONFERS NO RIGHTS UPON THE CERTIFICATE HOLDER. THIS CERTIFICATE DOES NOT AFFIRMATIVELY OR NEGATIVELY AMEND, EXTEND OR ALTER THE COVERAGE AFFORDED BY THE POLICIES BELOW. THIS CERTIFICATE OF INSURANCE DOES NOT CONSTITUTE A CONTRACT BETWEEN THE ISSUING INSURER(S), AUTHORIZED REPRESENTATIVE OR PRODUCER,AND THE CERTIFICATE HOLDER. IMPORTANT: If the certificate holder is an ADDITIONAL INSURED,the pottcy(ies)must have ADDITIONAL INSURED provisions or be endorsed. If SUBROGATION IS WAIVED,subject to the terms and conditions of the policy,certain policies may require an endorsement. A statement on this certificate does not confer rights to the certificate holder In lieu of such endorsement(s). PRODUCER CONTACT NAME; Arthur J.Gallagher Arthur J.Gallagher&Co. PHONE FAX Insurance Brokers of CA, Inc.LIC#0726293 arc,No.Exit-949-349-9800 (Arc,No):949.349-9962 18201 Von Karman Ave Suite 200 ADDDRESS: Irvine CA 92612 INSURER(S)AFFORDING COVERAGE NAIC I INSURER A:ACE Property&Casualty Insurance Co 20699 INSURED INSURER B:Zurich American Insurance Company 16535 The Waterfront Hotel, LLC 21100 Pacific Coast Hwy INSURER c:National Union Fire Insurance Co of LA 32298 Huntington Beach CA 92648 INSURER D: - INSURER E: INSURER F: COVERAGES CERTIFICATE NUMBER:1307101885 REVISION NUMBER: THIS IS TO CERTIFY THAT THE POLICIES OF INSURANCE LISTED BELOW HAVE BEEN ISSUED TO THE INSURED NAMED ABOVE FOR THE POLICY PERIOD INDICATED. NOTWITHSTANDING ANY REQUIREMENT,TERM OR CONDITION OF ANY CONTRACT OR OTHER DOCUMENT WITH RESPECT TO WHICH THIS CERTIFICATE MAY BE ISSUED OR MAY PERTAIN, THE INSURANCE AFFORDED BY THE POLICIES DESCRIBED HEREIN IS SUBJECT TO ALL THE TERMS, EXCLUSIONS AND CONDITIONS OF SUCH POLICIES.LIMITS SHOWN MAY HAVE BEEN REDUCED BY PAID CLAIMS. !NU TYPE OF INSURANCE INSD AWL SWVD POLICY NUMBER (MEIR MIDDIYYYYY) IMMWODIYYYY) LIMITS B X COMMERCIAL GENERAL LIABILITY Y Y PRA9058280-02 5/27/2022 5/27/2023 EACH OCCURRENCE $1,000,000 CLAIMS-MADE X OCCUR PREMISES(Ea occGE TO urrence) $1,000,000 X Liquor Liability MED EXP(Any one person) $5,000 X $1000003 PERSONAL&ADV INJURY $1,000,000 GEN'L AGGREGATE LIMIT APPLIES PER: GENERAL AGGREGATE $3,000,000 POLICY n Sri X LOC PRODUCTS-COMP/OP AGG $3,000,000 OTHER: Innkeeper $2,500,000 B AUTOMOBILE LIABILITY BAP9058281-02 5/27/2022 5/27/2023 (Ea COMBINEaccident)D SINGLE LIMIT $1,000,000 X ANY AUTO BODILY INJURY(Per person) $ — OWNED SCHEDULED BODILY INJURY(Per accident) $ AUTOS ONLY AUTOS v HIRED X NON-OWNED PROPERTY DAMAGE $ AUTOS ONLY _ AUTOS ONLY (Per accident) X Garegekeeper COMP/COLLDED $1,000 A X UMBRELLA LIAB X OCCUR PUMB22-A-G27670209 5/27/2022 5/27/2023 EACH OCCURRENCE $170,000,000 EXCESS LIAB CLAIMS-MADE AGGREGATE $170,000,000 DEC X RETENTIONS inrnn APPROVED AS TO FORM $ c WORKERS COMPENSATION Y 015893811 8/30/2022 6/30/2023 X STATUTE ETH- AND EMPLOYERS'LIABILITY ' ANYPROPRIETORIPARTNER/EXECUTIVE Y( NI By -_ 3 E.L.EACH ACCIDENT $1,000,000 N/A OFFICERIMEMBEREXCLUDED7 I I HAEL E. $/ (Mandatory In NH) E.L.DISEASE-EA EMPLOYEE $1,000,000 If describe under CITY AT-'ORNEY DESCRIPTION OF OPERATIONS below CITY OF HUNTINGTOAI RFACJ-1 E.L.DISEASE-POLICY LIMIT $1,000,000 DESCRIPTION OF OPERATIONS I LOCATIONS I VEHICLES(ACORD 101,Additional Remarks Schedule,may be attached It more space Is required) Certificate holder is included as Additional Insured respect to General Liability per attached CG 20 26 04 13 and Waiver of Subrogation and Primary /Noncontributory respects to General Liability per attached U-GL-147-C CW(03/20). Waiver of Subrogation applies to the Certificate holder on the Workers Compensation,per the attached form WC040361. RE:Hilton Hotels Corp(Huntington Beach),Hilton Waterfront Beach Resort Certificate holder(s)Continued:City of Huntington Beach,its officers,elected or appointed officials,employees,agents and volunteers are named additional Insured. CERTIFICATE HOLDER CANCELLATION SHOULD ANY OF THE ABOVE DESCRIBED POLICIES BE CANCELLED BEFORE THE EXPIRATION DATE THEREOF, NOTICE WILL BE DELIVERED IN City of Huntington Beach, its agents,officers and ACCORDANCE WITH THE POLICY PROVISIONS. Employees 200 Main Street AUTHORIZED REPRESENTATIVE Huntington Beach CA 92648 ( , . 14 i. ©1988-2015 ACORD CORPORATION. All rights reserved. ACORD 25(2016/03) The ACORD name and logo are registered marks of ACORD ' POLICY NUMBER: PRA9058280-02 COMMERCIAL GENERAL LIABILITY CG 20 26 0413 THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY. ADDITIONAL INSURED - DESIGNATED PERSON OR ORGANIZATION This endorsement modifies insurance provided under the following: COMMERCIAL GENERAL LIABILITY COVERAGE PART SCHEDULE Name Of Additional Insured Person(s) Or Organization(s): City of Huntington Beach, its officers, elected or appointed officials, employees, agents and volunteers Information required to complete this Schedule, if not shown above, will be shown in the Declarations. A. Section II — Who Is An Insured is amended to B. With respect to the insurance afforded to these include as an additional insured the person(s) or additional insureds, the following is added to organization(s) shown in the Schedule, but only Section III—Limits Of Insurance: with respect to liability for"bodily injury", "property If coverage provided to the additional insured is damage" or "personal and advertising injury" required by a contract or agreement, the most we caused, in whole or in part, by your acts or will pay on behalf of the additional insured is the omissions or the acts or omissions of those acting amount of insurance: on your behalf: 1. In the performance of your ongoing operations; 1. Required by the contract or agreement; or or 2. Available under the applicable Limits of 2. In connection with your premises owned by or Insurance shown in the Declarations; rented to you. whichever is less. However: This endorsement shall not increase the 1. The insurance afforded to such additional applicable Limits of Insurance shown in the insured only applies to the extent permitted by Declarations. law; and 2. If coverage provided to the additional insured is required by a contract or agreement, the insurance afforded to such additional insured will not be broader than that which you are required by the contract or agreement to provide for such additional insured. CG 20 26 0413 ©Insurance Services Office, Inc., 2012 Page 1 of 1 General Liability Extended Coverages Z U RI C H THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY. Policy No. PRA9058280-02 Effective Date: 05/27/2022 This endorsement modifies insurance provided under the: Commercial General Liability Coverage Part The following changes apply to this Coverage Part. A. Fellow Employee And Incidental Medical Malpractice Coverage Paragraph 2.a.(1)of Section II—Who Is An Insured is replaced by the following: 2. Each of the following is also an insured: a. Your"volunteer workers"only while performing duties related to the conduct of your business, or your "employees", other than either your"executive officers"(if you are an organization other than a partnership, joint venture or limited liability company)or your managers (if you are a limited liability company), but only for acts within the scope of their employment by you or while performing duties related to the conduct of your business. However, none of these"employees"or"volunteer workers"are insureds for: (1) "Bodily injury"or"personal and advertising injury": (a) To you, to your partners or members(if you are a partnership or joint venture)or to your members(if you are a limited liability company); (b) For which there is any obligation to share damages with or repay someone else who must pay damages because of the injury described in Paragraph(1)(a) above; or (c) Arising out of his or her providing or failing to provide professional health care services, except any "bodily injury"or"personal and advertising injury"arising out of: (1) Medical or paramedical services to persons performed by any physician, dentist, nurse, emergency medical technician, paramedic or other licensed medical care person employed by you to provide such services; or (2) Emergency cardiopulmonary resuscitation (CPR)or first aid services performed by any other employee of yours who is not a licensed medical professional. B. Additional Insureds—Lessees Of Premises 1. Section II—Who Is An Insured is amended to include as an additional insured any person or organization who leases or rents a part of the premises you own or manage who you are required to add as an additional insured on this policy under a written contract or written agreement, but only with respect to liability arising out of your ownership, maintenance or repair of that part of the premises which is not reserved for the exclusive use or occupancy of such person or organization or any other tenant or lessee. However, the insurance afforded to such additional insured: a. Only applies to the extent permitted by law; U-GL-1477-C CW(03120) Page 1 of 9 Includes copyrighted material of Insurance Services Office,Inc.,with its permission. b. Will not be broader than that which you are required by the written contract or written agreement to provide for such additional insured; and c. Ends when the person or organization ceases to lease or rent premises from you. 2. With respect to the insurance afforded to the additional insureds under this endorsement, the following is added to Section III—Limits Of insurance: The most we will pay on behalf of the additional insured is the amount of insurance: a. Required by the written contract or written agreement referenced in Subparagraph B.1. above (of this endorsement); or b. Available under the applicable Limits of Insurance shown in the Declarations, whichever is less. This Paragraph B. shall not increase the applicable Limits of Insurance shown in the Declarations. C. Additional Insured—Vendors 1. The following change applies if this Coverage Part provides insurance to you for"bodily injury"and"property damage" included in the"products-completed operations hazard": Section II—Who Is An Insured is amended to include as an additional insured any person or organization (referred to throughout this Paragraph C.as vendor)who you have agreed in a written contract or written agreement, prior to loss, to name as an additional insured, but only with respect to"bodily injury"or"property damage"arising out of"your products"which are distributed or sold in the regular course of the vendor's business. However, the Insurance afforded to such vendor: a. Only applies to the extent permitted by law; and b. Will not be broader than that which you are required by the written contract or written agreement to provide for such vendor. 2. With respect to the insurance afforded to these vendors, the following additional exclusions apply: a. The insurance afforded the vendor does not apply to: (1) "Bodily injury" or"property damage"for which the vendor is obligated to pay damages by reason of the assumption of liability in a contract or agreement. This exclusion does not apply to liability for damages that the vendor would have in the absence of the contract or agreement; (2) Any express warranty unauthorized by you; (3) Any physical or chemical change in the product made intentionally by the vendor; (4) Repackaging, except when unpacked solely for the purpose of inspection, demonstration, testing, or the substitution of parts under instructions from the manufacturer, and then repackaged in the original container; (6) Any failure to make such inspections, adjustments, tests or servicing as the vendor has agreed to make or normally undertakes to make in the usual course of business, in connection with the distribution or sale of the products; (6) Demonstration, installation, servicing or repair operations, except such operations performed at the vendor's premises in connection with the sale of the product; (7) Products which, after distribution or sale by you, have been labeled or relabeled or used as a container, part or ingredient of any other thing or substance by or for the vendor; or (8) "Bodily injury" or"property damage"arising out of the sole negligence of the vendor for its own acts or omissions or those of its employees or anyone else acting on its behalf. However, this exclusion does not apply to: (a) The exceptions contained in Subparagraphs(4)or(6)above; or U-GL-1477-C CW(03/20) Page 2 of 9 Includes copyrighted material of Insurance Services Office,Inc.,with ils permission. (b) Such Inspections, adjustments, tests or servicing as the vendor has agreed to make or normally undertakes to make in the usual course of business, in connection with the distribution or sale of the products. b. This insurance does not apply to any insured person or organization from whom you have acquired such products, or any ingredient, part or container, entering into, accompanying or containing such products. c. This insurance does not apply to any of"your products"for which coverage is excluded under this Coverage Part. 3. With respect to the insurance afforded to these vendors under this Paragraph C., the following is added to Section Ill—Limits Of Insurance: The most we will pay on behalf of the vendor is the amount of insurance: a. Required by the written contract or written agreement referenced in Subparagraph C.1. above (of this endorsement); or b. Available under the applicable Limits of Insurance shown in the Declarations, whichever is less. This Paragraph C.shall not increase the applicable Limits of Insurance shown in the Declarations. D. Damage to Premises Rented or Occupied by You 1. The last paragraph under Paragraph 2. Exclusions of Section I—Coverage A—Bodily Injury And Property Damage Liability is replaced by the following: Exclusions c. through n.do not apply to damage by fire; lightning; explosion; windstorm or hail; smoke; aircraft or vehicles; vandalism; weight of snow, ice or sleet; leakage from fire extinguishing equipment, including sprinklers; or accidental discharge or leakage of water or steam from any part of a system or appliance containing water or steam to premises while rented to you or temporarily occupied by you with permission of the owner. A separate Damage To Premises Rented To You Limit of Insurance applies to this coverage as described in Section Ill— Limits Of insurance. 2. Paragraph 6. of Section ill—Limits Of Insurance is replaced by the following: 6. Subject to Paragraph 5.above, the Damage To Premises Rented To You Limit is the most we will pay under Coverage A for damages because of"property damage"to any one premises while rented to you, or in the case of damage by one or more covered perils to any one premises, while rented to you or temporarily occupied by you with permission of the owner. E. Limited Contractual Liability Coverage—Personal and Advertising Injury 1. Exclusion e. of Section I—Coverage B—Personal And Advertising Injury Liability is replaced by the following: 2. Exclusions This insurance does not apply to: e. Contractual Liability "Personal and advertising injury"for which the insured has assumed liability in a contract or agreement. This exclusion does not apply to: (1) Liability for damages that the insured would have in the absence of the contract or agreement; or (2) Liability for"personal and advertising injury" if: (a) The"personal and advertising injury"arises out of the offenses of false arrest, detention or imprisonment; (b) The liability pertains to your business and is assumed in a written contract or written agreement in which you assume the tort liability of another. Tort liability means a liability that would be imposed by law in the absence of any contract or agreement; and U-GL-1477-C CW(03/20) Page 3 of 9 Includes copyrighted material of Insurance Services Office,Inc.,with its permission. (c) The"personal and advertising injury" occurs subsequent to the execution of the written contract or written agreement. Solely for purposes of liability so assumed in such written contract or written agreement, reasonable attorney fees and necessary litigation expenses incurred by or for a party other than an insured are deemed to be damages because of"personal and advertising injury"described in Paragraph(a) above, provided: (i) Liability to such party for, or for the cost of, that party's defense has also been assumed in the same written contract or written agreement; and (ii) Such attorney fees and litigation expenses are for defense of that party against a civil or alternative dispute resolution proceeding in which damages to which this insurance applies are alleged. 2. Paragraph 2.d.of Section I—Supplementary Payments—Coverages A and B is replaced by the following: d. The allegations in the"suit"and the information we know about the"occurrence"or offense are such that no conflict appears to exist between the interests of the insured and the interests of the indemnitee. 3. The following is added to the paragraph directly following Paragraph 2.f.of Section I—Supplementary Payments—Coverages A and B: Notwithstanding the provisions of Paragraph 2.e.(2) of Section I—Coverage B—Personal And Advertising Injury Liability, such payments will not be deemed to be damages for"personal and advertising injury"and will not reduce the limits of insurance. F. Medical Payments—Increased Reporting Period Paragraph 1.a. of Section I—Coverage C—Medical Payments is replaced by the following; a. We will pay medical expenses as described below for"bodily injury"caused by an accident: (1) On premises you own or rent; (2) On ways next to premises you own or rent; or (3) Because of your operations; provided that: (a) The accident takes place in the"coverage territory"and during the policy period; (b) The expenses are incurred and reported to us within three years of the date of the accident; and (c) The injured person submits to examination, at our expense, by physicians of our choice as often as we reasonably require. G. Supplementary Payments The following changes apply to Supplementary Payments—Coverages A and B: Paragraphs 1.b.and 1.d. are replaced by the following: b. Up to$2,500 for the cost of bail bonds required because of accidents or traffic law violations arising out of the use of any vehicle to which the Bodily Injury Liability Coverage applies. We do not have to furnish these bonds. d. All reasonable expenses incurred by the insured at our request to assist us in the investigation or defense of the claim or"suit", including actual loss of earnings up to$500 a day because of time off from work. H. Broadened Property Damage 1. Elevator Property Damage a. The following is added to Exclusion j.of Section I—Coverage A—Bodily Injury And Property Damage Liability: Paragraphs (3)and (4)of this exclusion do not apply to"property damage"arising out of the use of an elevator at premises you own, rent or occupy, U-GL-1477-C CW(03/20) Page 4 of 9 Includes copyrighted material of Insurance Services Office,Inc.,with its permission. b. The following is added to Section III—Limits Of Insurance: Subject to Paragraphs 2., 3. and 5.above, the most we will pay under Coverage A for damages because of "property damage"to property loaned to you or personal property in the care, custody or control of the insured arising out of the use of an elevator at premises you own, rent or occupy is$25,000 any one"occurrence". 2. Property Damage To Borrowed Equipment a. The following is added to Exclusion j. of Section I—Coverage A—Bodily Injury And Property Damage Liability: Paragraph (4)of this exclusion does not apply to"property damage"to equipment you borrow from others at a jobsite. b. The following is added to Section III—Limits Of insurance: Subject to Paragraphs 2., 3.and 5.above, the most we will pay under Coverage A for damages because of "property damage"to equipment you borrow from others at a jobsite is$25,000 any one"occurrence". I. Expected or Intended Injury or Damage Exclusion a. of Section I—Coverage A—Bodily Injury And Property Damage Liability is replaced by the following: a. Expected Or Intended injury Or Damage "Bodily injury"or"property damage"expected or intended from the standpoint of the insured. This exclusion does not apply to"bodily injury"or"property damage" resulting from the use of reasonable force to protect persons or property. J. Definition—Bodily injury The"bodily injury"definition under the Definitions Section is replaced by the following: "Bodily injury"means bodily injury, sickness or disease sustained by a person. This includes mental anguish, mental Injury, shock, fright or death sustained by a person which results from that bodily injury, sickness or disease. K. Insured Status—Amateur Athletic Participants Section II—Who Is An insured is amended to include as an insured any person you sponsor while participating in amateur athletic activities. However, no such person is an insured for: a. "Bodily injury"to: (1) Your"employee", "volunteer worker"or any person you sponsor while participating in such amateur athletic activities; or (2) You, any partner or member(if you are a partnership or Joint venture), or any member(if you are a limited liability company)while participating in such amateur athletic activities; or b. "Property damage"to property owned by, occupied or used by, rented to, in the care, custody or control of, or over which the physical control is being exercised for any purpose by: (1) Your"employee", "volunteer worker"or any person you sponsor; or (2) You, any partner or member(if you are a partnership or joint venture), or any member(if you are a limited liability company). L. Aircraft, Auto Or Watercraft Exclusion g.of Section I—Coverage A—Bodily Injury And Property Damage Liability is replaced by the following: g. Aircraft, Auto Or Watercraft "Bodily injury"or"property damage"arising out of the ownership, maintenance, use or entrustment to others of any aircraft, "auto"or watercraft owned or operated by or rented or loaned to any insured. Use includes operation and"loading or unloading". This exclusion applies even if the claims against any insured allege negligence or other wrongdoing in the supervision, hiring, employment, training or monitoring of others by that insured, if the"occurrence"which caused U-GL-1477-C CW(03/20) Page 5 of 9 Includes copyrighted material of Insurance Services Office,Inc.,with its permission. the"bodily injury"or"property damage" involved the ownership, maintenance, use or entrustment to others of any aircraft, "auto"or watercraft that is owned or operated by or rented or loaned to any insured. This exclusion does not apply to: (1) A watercraft while ashore on premises you own or rent; (2) A watercraft you do not own that is: (a) Less than 51 feet long; and (b) Not being used to carry persons for a charge; (3) Parking an"auto"on, or on the ways next to, premises you own or rent, provided the"auto"Is not owned by or rented or loaned to you or the insured; (4) Liability assumed under any"insured contract"for the ownership, maintenance or use of aircraft or watercraft; or (5) "Bodily injury" or"property damage"arising out of: (a) The operation of machinery or equipment that is attached to, or part of, a land vehicle that would qualify under the definition of"mobile equipment" if it were not subject to a compulsory or financial responsibility law or other motor vehicle insurance law where it is licensed or principally garaged; or (b) The operation of any of the machinery or equipment listed in Paragraph f.(2) or f.(3) of the definition of "mobile equipment". M. Definitions—Leased Worker,Temporary Worker and Labor Leasing Firm 1. The"leased worker"and"temporary worker"definitions under the Definitions Section are replaced by the following: "Leased worker"means a person leased to you by a"labor leasing firm" under a written agreement between you and the"labor leasing firm", to perform duties related to the conduct of your business. "Leased worker"does not include a"temporary worker". "Temporary worker"means a person who is furnished to you to support or supplement your work force during "employee"absences, temporary skill shortages, upturns or downturns in business or to meet seasonal or short- term workload conditions. "Temporary worker"does not include a"leased worker". 2. The following definition is added to the Definitions Section: "Labor leasing firm" means any person or organization who hires out workers to others, including any: a. Employment agency, contractor or services; b. Professional employer organization; or c. Temporary help service. N. Definitions—Your Product and Your Work The"your product"and"your work"definitions under the Definitions Section are replaced by the following: "Your product": a. Means: (1) Any goods or products, other than real property, manufactured, sold, handled, distributed or disposed of by: (a) You; (b) Others trading under your name; or (c) A person or organization whose business or assets you have acquired; and (2) Containers (other than vehicles), materials, parts or equipment furnished in connection with such goods or products. U-GL-1477-C CW(03/20) Page 6 of 9 Includes copyrighted material of Insurance Services Office,Inc.,with its permission. b. Includes: (1) Warranties or representations made at any time with respect to the fitness, quality, durability, performance, use, handling, maintenance, operation or safety of"your product"; and (2) The providing of or failure to provide warnings or instructions. c. Does not Include vending machines or other property rented to or located for the use of others but not sold. "Your work": a. Means: (1) Work, services or operations performed by you or on your behalf; and (2) Materials, parts or equipment furnished in connection with such work, services or operations. b. Includes: (1) Warranties or representations made at any time with respect to the fitness, quality, durability, performance, use, handling, maintenance, operation or safety of"your work"; and (2) The providing of or failure to provide warnings or instructions. O. Duties in the Event of Occurrence, Offense, Claim or Suit Condition The following paragraphs are added to Paragraph 2. Duties In The Event Of Occurrence, Offense, Claim Or Suit of Section IV—Commercial General Liability Conditions: Notice of an "occurrence"or of an offense which may result in a claim under this insurance or notice of a claim or"suit" shall be given to us as soon as practicable after knowledge of the "occurrence", offense, claim or "suit" has been reported to any insured listed under Paragraph 1. of Section Ii —Who Is An Insured or an "employee"authorized by you to give or receive such notice, Knowledge by other"employees" of an "occurrence", offense, claim or"suit"does not imply that you also have such knowledge. In the event that an insured reports an"occurrence"to the workers compensation carrier of the Named Insured and this"occurrence" later develops Into a General Liability claim, covered by this Coverage Part, the insured's failure to report such"occurrence"to us at the time of the"occurrence" shall not be deemed to be a violation of this condition. You must, however, give us notice as soon as practicable after being made aware that the particular claim is a General Liability rather than a Workers Compensation claim. P. Other Insurance Condition Paragraphs 4.a. and 4.b.(1)of the Other Insurance Condition of Section IV—Commercial General Liability Conditions are replaced by the following: 4. Other Insurance If other valid and collectible insurance is available to the insured for a loss we cover under Coverages A or B of this Coverage Part, our obligations are limited as follows: a. Primary Insurance This insurance is primary except when Paragraph b. below applies. If this insurance is primary, our obligations are not affected unless any of the other insurance is also primary. Then, we will share with all that other insurance by the method described in Paragraph c, below. However,this insurance is also primary to and will not seek contribution from any other insurance available to an additional insured provided that: (1) The additional insured Is a Named Insured under such other insurance; and (2) You are required by written contract or written agreement that this insurance be primary and not seek contribution from any other insurance available to the additional insured. Other insurance includes any type of self insurance or other mechanism by which an insured arranges for funding of its legal liabilities. U-GL-1477-C CW(03/20) Page 7 of 9 Includes copyrighted material of Insurance Services Office,Inc.,with its permission. b. Excess Insurance (1) This insurance is excess over: (a) Any of the other insurance,whether primary, excess, contingent or on any other basis: (i) That is property insurance, Builder's Risk, Installation Risk or similar coverage for"your work"; (II) That is property insurance purchased by you (including any deductible or self insurance portion thereof)to cover premises rented to you or temporarily occupied by you with permission of the owner; (HI)That is insurance purchased by you(including any deductible or self insurance portion thereof)to cover your liability as a tenant for"property damage"to premises rented to you or temporarily occupied by you with permission of the owner; (Iv) If the loss arises out of the maintenance or use of aircraft, "autos"or watercraft to the extent not subject to Exclusion g.of Section I—Coverage A—Bodily Injury And Property Damage Liability; or (v) That is property Insurance(including any deductible or self insurance portion thereof) purchased by you to cover damage to: i Equipment you borrow from others at a jobsite; or ii Property loaned to you or personal property in the care, custody or control of the insured arising out of the use of an elevator at premises you own, rent or occupy. (b) Any other primary insurance (including any deductible or self insurance portion thereof)available to the insured covering liability for damages arising out of the premises, operations, products, work or services for which the insured has been granted additional insured status either by policy provision or attachment of any endorsement. Other primary insurance includes any type of self insurance or other mechanism by which an insured arranges for funding of its legal liabilities. (c) Any of the other insurance,whether primary, excess, contingent or on any other basis, available to an additional insured, in which the additional insured on our policy is also covered as an additional insured on another policy providing coverage for the same"occurrence", claim or"suit". This provision does not apply to any policy in which the additional insured is a Named Insured on such other policy and where our policy is required by written contract or written agreement to provide coverage to the additional insured on a primary and non-contributory basis. Q. Unintentional Failure to Disclose All Hazards Condition 6. Representations of Section IV—Commercial General Liability Conditions is replaced by the following: 6. Representations By accepting this policy, you agree: a. The statements in the Declarations are accurate and complete; b. Those statements are based upon representations you made to us; and c. We have issued this policy in reliance upon your representations. Coverage will continue to apply if you unintentionally: I. Fail to disclose all hazards existing at the inception of this policy; or H. Make an error, omission or improper description of premises or other statement of information stated in this policy. You must notify us in writing as soon as possible after the discovery of any hazards or any other information that was not provided to us prior to inception of this Coverage Part. U-GL-1477-C CW(03/20) Page 8 of 9 Includes copyrighted material of Insurance Services Office,Inc.,with its permission. R. Transfer Of Rights Of Recovery Against Others To Us I Waiver of Right of Subrogation Condition 8.Transfer Of Rights Of Recovery Against Others To Us of Section IV—Commercial General Liability Conditions Is renamed and replaced by the following: 8. Transfer Of Rights Of Recovery Against Others To Us/Waiver of Right of Subrogation a. If the insured has rights to recover all or part of any payment we have made under this Coverage Part, those rights are transferred to us. The insured must do nothing after loss to impair them. At our request, the insured will bring"suit"or transfer those rights to us and help us enforce them. b. If the insured waives its right to recover payments for injury or damage from another person or organization in a written contract executed prior to a loss, we waive any right of recovery we may have against such person or organization because of any payment we have made under this Coverage Part. The written contract will be considered executed when the insured's performance begins or when it is signed, whichever happens first. This waiver of rights shall not be construed to be a waiver with respect to any other operations in which the insured has no contractual interest. S. Liberalization Condition The following condition is added to Section IV—Commercial General Liability Conditions: Liberalization Clause if we revise this Coverage Part to broaden coverage without an additional premium charge, your policy will automatically provide the additional coverage as of the day the revision is effective in the state shown in the mailing address of your policy. All other terms, conditions, provisions and exclusions of this policy remain the same. U-GL-1477-C CW(03/20) Page 9 of 9 Includes copyrighted material of Insurance Services Office,Inc.,with its permission. BLANKET WAIVER OF OUR RIGHT TO RECOVER FROM OTHERS ENDORSEMENT This endorsement changes the policy to which it is attached effective on the inception date of the policy unless a different date Is indicated below. (The following "attaching clause" need be completed only when this endorsement is issued subsequent to preparation of the policy). This endorsement, effective 12:01 AM 06/30/2021 forms a part of Policy No. WC 015-89-3811 Issued to THE WATERFRONT HOTEL, LLC By NEW HAMPSHIRE INSURANCE COMPANY We have a right to recover our payments from anyone liable for an injury covered by this policy. We will not enforce our right against any person or organization with whom you have a written contract that requires you to obtain this agreement from us, as regards any work you perform for such person or organization. The additional premium for this endorsement shall be 2.00 % of the total estimated workers compensation premium for this policy. WC 04 03 61 Countersigned by �'^V (Ed, 11190) Authorized Representative 1#'ANT I N G T • ('``` ......... °� .• City of Huntington Beach i2000 Main Street ♦ Huntington Beach, CA 92648 '� (714) 536-5227 • www.huntingtonbeachca.gov a97i`••.,, COUNTY CPS%00 Office of the City Clerk � Robin Estanislau, City Clerk November 29, 2022 Waterfront Hotel, LLC do Waterfront Hotel Beach Resort 21351 Pacific Coast Highway Huntington Beach, CA 92648 Attn: General Manager Dear General Manager: Enclosed is a fully executed copy of the Amended and Restated Agreement between the City of Huntington Beach and Waterfront Hotel, LLC, for the Concession Stand at 21351 Pacific Coast Highway, approved by City Council on November 15, 2022. Sincerely, (6041,11 944414.1444) Robin Estanislau, CMC City Clerk RE:ds Enclosure Sister City: Anjo, Japan ANT I N G T � o�:�-;� �a:°�4TFo°��; City of Huntington Beach :_` 2000 Main Street ♦ Huntington Beach, CA 92648 - = ' Q j (714) 536-5227 • www.huntingtonbeachca.gov VFCp �`//• Office of the City Clerk , Robin Estanislau, City Clerk November 29, 2022 The Mayer Corporation 8951 Research Drive Irvine, CA 92618 Attn: Bob Mayer, President Dear Mr. Mayer: Enclosed is a fully executed copy of the Amended and Restated Agreement between the City of Huntington Beach and Waterfront Hotel, LLC, for the Concession Stand at 21351 Pacific Coast Highway, approved by City Council on November 15, 2022. Sincerely, qdinat4,1444) Robin Estanislau, CMC City Clerk RE:ds Enclosure Sister City: Anjo, Japan LEASE BETWEEN THE CITY OF HUNTINGTON BEACH AND WATERFRONT HOTEL, LLC FOR THE WATERFRONT BEACH CABANA Table of Contents SECTION PAGE 1 Superseding of Prior Lease 1 2 Grant of Concession on the Premises 1 3 Reservations,Encumbrances and Rights-of-Way 2 4 Time of Essence 3 • 5 Term 3 6 Conditions of Premises as Is 3 7 Duration of Public Facilities ' 4 8 Additions,Alterations and Removal 4 • 9 City's Contract Administrator 4 0 Rent 5 11. Late.Charge and Penalty 5 ' 12 Gross Sales Defined 6 13 Gross Sales Exclusions 7 14 Books and Records _ 8 15 Statement of Gross Sales/Audit•• • 9 16 Security Deposit 10 17 Use of Coca-Cola Products • 11 18 Quality of Sales,Rentals and Services 11 19 'Indemnification, Defense and Hold Harmless Agreement 12 20 Workers'Compensation and Employers'Liability Insurance 13 • 21 General Public Liability Insurance 14 22 Property Insurance 14. 23 Increase in Amount of General Public Liability and Property Insurance 16 24 Certificates of Insurance; Additional Insured Endorsements 16 25 Insurance Hazards 17 26 Maintenance of Premises 17 • 27 Rent Credit 19 28 Damage, Destruction or Nuisance 20 29 Taxes 20 30 Payments of Obligations 21 31 Utilities and Services 21 32 Business License 21 33 Signs,Advertising and Approval of Name 21 34 No Assigning, Subleasing or Encumbering 22 35 Terms Binding on Successors 24 36 Default 24 37 Remedies 26 02agree/Waterfront Beach Cabana/jmf/jn/6/26/2002 125 • • 38 Cumulative Remedies • 30 39 Waiver of Default 31 40 City's Defaults/Lessee's Remedy 31 41 Consent 31 42 Holdover 32 43 Waiver of Claims 32 44 Inspection of Premises 32 45 City's Right to Lease Buyout 33 46 Photography 36 47 Hazardous Substances 36 48 Nondiscrimination 37 49 Sale of Alcoholic Beverages and Entertainment.Prohibited 39 50 Liens 39 51 Installation and Removal of Trade Fixtures 39 52 Destruction 40 53 No Abatement of Rent During Repair Work 41 54 Eminent Domain 41 55 Relocation and Assistance,Business Goodwill and Leasehold.Bonus Value 42 56 Quitclaim Deed 42 57 . Restoration and Surrender of Premises/Title to Improvements 43 58 Force Majeure-Unavoidable Delays 44 59 City's Option to Close the-Premises 45. 60 Deliveries.of Supplies 45 61 ' Employee Parking 45 62 Conflici of Interest _45 63 Notice 46 64 Compliance with Laws 46 65 Interpretation of this Lease - 47. 66 Survival 47 67 Modification 48 68 Section Headings 48 69 Brokers 48 70 Independent Contractor 48 71 Attorney's Fees 48 72 Legal Services Subcontracting Prohibited 49 73 Governing Law • 49 74 Duplicate Original 49 75 Entirety 49 • 02agree/Waterfront Beach Cabana/jmf/jn/6/26/2002 126 J LEASE BETWEEN THE CITY OF HUNTINGTON BEACH AND WATERFRONT HOTEL, LLC FOR THE WATERFRONT BEACH CABANA THIS LEASE (the "Lease") is made and entered into effective February 1, 2003 by and between the CITY OF HUNTINGTON BEACH, a municipal corporation of the State of California("City") and WATERFRONT HOTEL, LLC, a California limited liability corporation ("Lessee"). WHEREAS, City wishes to lease certain real property (the "Property"), also known as the Waterfront Beach Cabana, whose address is 21351 Pacific Coast Highway, Huntington Beach, CA 92648, together with a building and other related improvements(collectively referred to as the "Improvements"). The term "Premises" as used in this Lease shall mean both the Property and the Improvements. Lessee desires to lease the Premises in the manner set forth below. NOW,THEREFORE,the parties covenant and agree as follows: SECTION 1. SUPERSEDING OF PRIOR LEASE This Lease shall supersede and replace any existing lease agreement(s) for the Premises currently entered into by and between the parties and all supplemental agreement(s) entered into by and between the parties regarding the existing lease agreement(s). SECTION 2. GRANT OF CONCESSION ON THE PREMISES City, pursuant to the terms of this Lease, grants to Lessee for the purposes stated herein, the right, privilege and duty to equip, operate and maintain a concession open to the public located on the Premises (hereinafter sometimes referred to as the "Concession"). Lessee shall not use the Premises for any other purpose or business. A map depicting the Premises is set forth 1 of 51 127 02agree/Waterfront Beach Cabanaljmf/jn/6/26/2002 in Exhibit "A", which is attached hereto and incorporated herein by this reference. This Lease is not intended to confer third-party beneficiary status to anyone. SECTION 3. RESERVATIONS,ENCUMBRANCES AND RIGHTS-OF-WAY (a) City expressly reserves all natural resources in,on,or two hundred fifty(250) feet under the Premises, including, without limitation, oil, coal, natural gas and other hydrocarbons, minerals, aggregates, timber and other geothermal resources, as well as the right to grant leases or other contractual arrangements in and over the Premises for the extraction of such natural resources. However, such leasing or other arrangement shall be neither inconsistent nor incompatible with.the rights or privileges of Lessee under this Lease. (b) City expressly reserves a right to enter upon the Premises with as much advance . written, verbal or electronic notice as possible to Lessee for any reason associated with public health, safety or welfare, or for the protection of life, limb or property. In all other cases unless otherwise specifically set forth herein, City reserves the right for such entry but City shall give Lessee at least twenty-four (24) hours advance written, verbal or electronic notice. City shall have a right of reasonable access to the Premises across Lessee owned, controlled or occupied lands adjacent to the Premises, if any, for any purpose associated with this Lease. (c) City expressly reserves the right to lease, convey, or encumber the Premises, in whole or in part, for any purpose not inconsistent or incompatible with the rights or privileges of Lessee under this Lease. In addition,Lessee agrees to subordinate the Lease to any existing or future City financing regarding the Premises or any • 2of51 • 02agree/Waterfront Beach Cabana/jmf/jn/6/26/2002 • 128 • portion thereof. Lessee also agrees to cooperate and provide any documentation necessary for City to obtain any such financing: (d) This Lease is subject to pre-existing contracts, leases, licenses, easements, encumbrances and claims affecting the Premises and it is made without warranty by City of title,condition or fitness of the land for the stated or intended use. SECTION 4. TIME OF ESSENCE Time shall be of the essence of this Lease and each and all of its terms, covenants or • conditions in which performance is a factor. J SECTION 5. TERM This Lease shall commence at 12:01 a.m. on February 1, 2003, for a ten (10) year term, which shall end at 11:59 p.m. on January 31, 2013, unless extended, or sooner terminated, as provided for herein. Lessee shall have an option to extend the term of the Lease for another ten (10)years. To exercise this option, Lessee must send City written notice specifically identifying its intent to exercise this option by July 31,2012. SECTION 6. CONDITIONS OF PREMISES AS IS • The taking of possession of the Premises by Lessee, upon City's issuance of the certificate of occupancy, shall, in itself,constitute acknowledgment that the Premises are in good and tenantable condition. Upon taking possession of the Premises, Lessee agrees to accept the `Premises in their presently existing condition, "as is", and agrees that City shall not be obligated to make any alterations, additions or betterments thereto. • 3of51 • 129 02agree/Waterfront Beach Cabana/jmf/jn/6/26/2002 SECTION 7. 'DURATION OF PUBLIC FACILITIES By entering into this Lease, City makes no stipulation as to the type, size, Iocation or duration of public facilities (excluding the Premises), including, without limitation, any City parking lots to be maintained on property owned,controlled or occupied by City. SECTION 8. ADDITIONS,ALTERATIONS AND REMOVAL (a) No modifications, alterations or additions to the Premises, including, without limitation, construction. of Improvements or changes to structural design, landscape design, or interior or exterior furnishings, shall be constructed or made by Lessee without Lessee first obtaining the prior written approval of City,which will not be unreasonably withheld. (b) Except as provided under this Lease, no alteration or removal of existing Improvements on or natural features of the Premises shall be undertaken without Lessee first obtaining the prior written approval of City. (c) Lessee's obligation to obtain City's prior written approval is separate and independent of Lessee's obligation to obtain any permits from City, such as, without limitation, a building permit. SECTION 9. CITY'S CONTRACT ADMINISTRATOR City's Director of Community Services, or his or her designee, shall be City's Contract Administrator for this Lease with the authority to act on behalf of City for the purposes of this Lease, and all City approvals and notices required to be given herein to City shall be so directed and addressed. 4of51 130 02agree/Waterfront Beach Cabana/jmf/jn/6/26/2002 • SECTION 10. RENT Lessee agrees to pay to City as rent (the "Rent") for the use and occupancy of the Premises a sum equal to the following percentages of the amount of"Gross Sales", as defined in Section 12 below: $0- $100,000.00 of Gross Sales = 7.5%; $100,000.01 -$150,000.00 of Gross Sales = 9.5%; Over$150,000.00 of Gross Sales = 11.5%. Lessee shall pay the Rent monthly to City at the City Treasurer's Office, P.O. Box 711, Huntington Beach, California, 92648, or at such other place or places as City may from time-to- time designate by written notice delivered to Lessee. Lessee shall pay the Rent, which must be received by the City Treasurer within fifteen (15) calendar days after the end of the month for which the Rent is being paid, or on the next business day if the fifteenth day falls on a weekend or holiday. SECTION 11. LATE CHARGE AND PENALTY If the 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 any payment hereunder is due but unpaid; and (2) one and a half percent (1 V2%) penalty per month shall be added for each month the Rent is due but unpaid. With respect to any other payments required by Lessee, a one and a half percent (1 'h%) penalty per month shall be added for each month such payment hereunder is due but unpaid. • 5 of 51 131 02agree/Waterfront Beach Cabana/jmf/jn/6/26/2002 • SECTION 12. GROSS SALES DEFINED For the purpose of this Lease, the term "Gross-Sales" shall mean the total price of all merchandise, food and beverages, or services sold or rendered, or equipment rented, in, on, or from the Premises by Lessee, or anyone contracting with Lessee, including, without limitation, its agents or sublessees (collectively or individually, "Lessee Party(ies)"), whether wholesale or retail, whether for cash or on credit, and if on-credit whether or not.paid; and whether in exchange for any other product, commodity, service, commercial paper or forbearance, and shall include,without limitation,the following: (a) All revenues, receipts, commissions or proceeds from on-line sales by Lessee Party(ies), and/or from all public telephones, vending, weighing and all other machines owned, operated, or leased to or by Lessee Party(ies) in, on, or from the Premises; (b) All revenues, receipts, commissions or proceeds from sales based on orders solicited or taken, in, on, or from the Premises for merchandise, food and beverages,or services to be delivered or rendered off, or from sources outside, the Premises, including, without limitation, all orders taken in, on, or from the Premises although the orders may be filled elsewhere; (c) All revenues, receipts, commissions or proceeds from the renting of equipment of any kind in,on,"or from the Premises; and (d) All revenues, receipts, commissions or proceeds generated from offsite but delivered through the Concession. 6of51 132 02agree/Waterfront Beach Cabana/jmf/jn/6/26/2002 (e) All revenues, receipts, commissions or proceeds made by Lessee Party(ies) or their employees or others acting on their behalf for the rendition of services of any kind whatsoever,made in,on, or from the Premises. (f) All other revenues, receipts, commissions or proceeds generated by, arising or derived whatsoever from the use of the Premises or derived whatsoever from any business conducted in, on, or from the Premises. For purposes of computing the Gross Sales figure on which to calculate the Rent, the amount of Gross Sales shall start over at zero dollars on January 1 of each year. If the Lease commences on any date other than January 1, the Gross Sales calculation begins from such commencement date and runs through December 31 of such Lease commencement year. SECTION 13. GROSS SALES EXCLUSIONS Gross Sales shall not include the following items, and Lessee may deduct such items from Gross Sales to the extent they have been included therein or have been included in a prior computation of Gross Sales on which the Rent has been paid under this Lease to City: (a) Any sales, excise or other taxes otherwise includable in Gross Sales and which become part of the total price of merchandise, food and beverages, or services sold or rendered, or equipment rented, in, on, or from the Premises where Lessee must account for and remit the taxes to the government entity or entities which impose them, but only if such taxes are added to the total price and collected from customers; (b) Any transfer of trade inventory from the Premises to the manufacturer or supplier from whom it was obtained by Lessee; (c) Sales of Trade Fixtures(as defined in Section 51 below); 7 of 51 • 02agree/Waterfront Beach Cabana/jmf/jn/6/26/2002 133 (d) Sums and-credits received in the settlement of claims for loss of or damage to trade inventory or Trade Fixtures; and (e) Any sales resulting in a cash or credit refund to a customer in the ordinary course of business. SECTION 14. BOOKS AND RECORDS Lessee shall keep true and accurate books and records showing all of its business transactions in separate records of account for the Concession in a manner acceptable to City, and City and/or its designated representatives shall have the right, at all reasonable times, to inspect such books and records including, without limitation, State of California sales or use tax returns or other State return records, and Lessee hereby agrees that, all such records and instruments shall promptly be delivered and made available to City and/or its designated representatives within thirty(30)days of receiving written request therefor. Lessee shall furnish to City and/or its designated representatives copies of its quarterly California sales and use tax returns at the time each is filed with the State of California. The books and records shall show the total amount of Gross Sales made each calendar month in, on, or from the Premises and any exclusions listed in Section 13 above. 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 shall record the total sales for that day. Lessee agrees to maintain on the Premises, or another location subject to the prior written approval of City, all records, books of account and cash register tapes, showing, or in any way pertaining to the Gross Sales made in, on, or from the Premises during such calendar month, including, without limitation, State of 8 of 51 134 02agree/Waterfront Beach Cabana/jmf/jn/6/26/2002 • California sales or use tax returns or other State tax returns, for a period of.five (5) years following the close of each calendar month. SECTION 15. STATEMENT OF GROSS SALES/AUDIT At the time specified in Section 10 of this Lease for the payment of the Rent, Lessee shall deliver to City a true and accurate statement signed by Lessee or by an authorized employee of Lessee showing the total Gross Sales and any exclusions listed in Section 13 above made during the preceding calendar month and the amount of the Rent then being paid calculated on such Gross Sales pursuant to this Lease. The acceptance by City of any monies paid to City.by Lessee as the Rent, as shown by any statement furnished by Lessee, shall not be construed as an admission of the accuracy of the statement, or of the sufficiency of the amount of the Rent payment, and City shall be entitled to review the adequacy of such payment as set forth herein. By the end of each January, Lessee shall deliver to City a year-end statement showing the total amount of Gross Sales made in, on, or from the Premises in each month of the preceding year, the total of any exclusions,the total Rent paid to City for each of those months, all with year-end totals. City may at any time within three (3) years after receiving the year-end statement, at its sole cost and expense, cause all records, books of account and cash register tapes for the year purportedly covered by the statement, to be audited by City or an accountant selected by City. Lessee shall,within thirty(30) days of receiving written notice of City's desire for such an audit, deliver and make available all such records, books of account and cash register tapes to City or its designated representative for City's use in the audit and/or for copying. If the audit discloses that Gross Sales were understated and/or exclusions overstated, Lessee shall immediately pay the additional Rent, together with a penalty thereon from the date it was due at the penalty rate set • forth in Section 11 above. Furthermore, Lessee shall promptly on demand reimburse City for the 9of51 135 02agree/Waterfront Beach Cabana/jmf/jnl6/26/2002 full cost and expense of the audit should the audit disclose that the questioned year-end statement understated Gross Sales (including an overstatement of exclusions) or the Rent by any amount greater than Two Hundred Fifty Dollars ($250.00). City further reserves the right to examine and audit all such records, books of account and cash register tapes at any time during the three (3) year period following the expiration or termination of this Lease. In addition, City shall have the right to enter upon the Premises during business hours and with two (2) hours advance written, verbal or electronic notice to Lessee to perform any audit or inspection function with respect to this Lease. Lessee, its bookkeeper and/or accountant shall respond to all questions and inquiries of City with respect to the books, records, statements and other documentation being examined, and shall promptly provide other'further documentation as may be required by City. City is entitled to take statements by deposition under oath of Lessee, its officers, bookkeepers and/or accountants or any person who prepared the books,records, statements and other documentation required to be provided by Lessee under this Lease. SECTION 16. SECURITY DEPOSIT Upon execution hereof, Lessee shall pay and maintain at all times during the entire term of this Lease or any renewals or extensions thereof or during any holdover period, a security deposit with City in a sum of not less than Two Thousand Five.Hundred Dollars ($2,500.00) to guarantee all of Lessee's obligations, liabilities, duties and responsibilities under the Lease, including, without limitation, the repair and maintenance of the Premises as provided herein. Such deposit shall be in the form of a cash bond or an assignment of certificate of deposit (the "CD")or savings account to City, and shall be provided to the City Treasurer. The form of any such security deposit shall be approved by the City Attorney and the City Treasurer. No interest • 10of51 136 02agree/Waterfront Beach Cabana/jmf/jn/6/26/2002 shall accrue on cash deposits to the benefit of Lessee, but interest shall accrue on a CD or savings account and shall be paid to Lessee under the terms of the CD or savings account. Lessee shall send a copy of each renewal of the CD to the City Treasurer to ensure that City has the records of each active deposit account. SECTION 17. USE OF COCA-COLA PRODUCTS Lessee shall comply with City's exclusivity agreement with the Coca-Cola Bottling Company of Southern California ("Coca-Cola") by doing the following: only Coca-Cola fountain and bottling products shall be bought and sold in,on,or from the Premises for the term of the City's agreement with Coca-Cola. This includes all carbonated and non-carbonated, non- alcoholic beverages defined as soft drinks,juices,juice drinks, teas, isotonics, water and frozen beverages. Frozen beverages shall not include ice creams and frozen yogurts. Lessee's failure to adhere to the Coca-Cola exclusivity clause shall constitute a Default of this Lease as defined in Section 36 below. This exclusivity shall not apply to third-party rentals that bring their own drink products. SECTION 18. QUALITY OF SALES,RENTALS AND SERVICES Lessee, at its sole cost and expense, shall equip, operate, manage and maintain the Premises and Concession and shall keep the same equipped and maintained in a manner acceptable to City during the entire term of this Lease or any renewals or extensions thereof or during any holdover period. It is the intent of City that the Concession's services be provided in a manner to meet the needs of the visiting public, and should City deem the Concession's hours of operation and/or food, merchandise, services or rentals inadequate to meet such needs, City may require Lessee to make such changes requested by City. Lessee shall not use or permit the Premises to be used, in whole or in part, during the entire term of this Lease or any renewals or 11 of 51 137 02agree/Waterfront Beach Cabana/jmf/jn/6/26/2002 extensions thereof or during any holdover period for any purpose other than as herein set forth, without the prior written consent of City. Except as permitted in advance in writing by City, all foods and beverages shall be sold in disposable paper or plastic containers. No pull-top cans or styrofoam containers are to be vended or dispensed from the Premises unless pre-approved in writing by City. Lessee, wherever feasible, shall eliminate the use of non-recyclable containers and plastics. City may from time to time review the items sold and containers or utensils used or dispensed by Lessee. City reserves the right to prohibit the sale or use of non-recyclable containers or plastics. City in its sole discretion reserves the right to prohibit Lessee's sale, provision or rental of any item or service rendered or performed,which it deems objectionable or offensive,beyond the scope deemed necessary for proper service to the public, inappropriate for sale, provision or rental by the Concession,or of inferior quality. SECTION 19. INDEMNIFICATION,DEFENSE AND HOLD HARMLESS AGREEMENT Lessee hereby agrees to protect, defend, indemnify and hold harmless City, its officers, elected or appointed officials, employees, agents and volunteers from and against any and all claims, damages, losses, expenses, judgments, demands and defense costs (including, without limitation, costs and fees of litigation (including arbitration) of every nature or liability of any kind or nature) arising out of or in connection with (1) the use or occupancy of the Premises by Lessee, its officers, employees or agents, or(2) the death or injury of any person or the damage to property caused by a condition of the Premises, or(3) the death or injury of any person or the damage to property caused by any act or omission of Lessee, its officers, employees or agents, or (4) any failure by Lessee to keep the Premises in a safe condition, or (5) Lessee's (or Lessee's agents and/or sublessees,-if any)performance of this Lease or its failure to comply with any of its 12 of 51 138 02agree/Waterfront Beach Cabana/jmf/jn/6/26/2002 obligations contained in this Lease by Lessee, its officers, agents or employees except such loss or damage which was caused by the sole negligence or willful misconduct of City. Lessee shall hold all Trade Fixtures, personal property and trade inventory on the Premises at the sole risk of Lessee and save City harmless from any loss or damage thereto by any cause whatsoever, except such loss or damage which was caused by the sole negligence or willful misconduct of City. City shall be reimbursed by Lessee for all costs and attorney's fees incurred by City in enforcing Lessee's obligations set forth in this Section. Lessee will conduct all defense at its sole cost and expense and City shall approve selection of Lessee's counsel. This indemnity shall apply to all claims and•liability regardless of whether any insurance policies are applicable. The policy limits do not act as limitation upon the amount of indemnification to be provided by Lessee. SECTION 20. WORKERS' COMPENSATION AND EMPLOYERS' LIABILITY INSURANCE Lessee acknowledges awareness of Section 3700 et seq. of the California Labor Code, which requires every employer to be insured against liability for workers' compensation. Lessee covenants that it shall comply with such provisions prior to the commencement of this Lease. Lessee shall obtain and furnish to City workers' compensation and employers' liability insurance in amounts not less than the State statutory limits. Lessee shall require all sublessees and contractors to provide such workers' compensation and employers' liability insurance for all of the sublessees' and contractors' employees. Lessee shall furnish to City a certificate of waiver of- subrogation under the terms of the workers' compensation and employers' liability insurance and Lessee shall similarly require all sublessees and contractors to waive subrogation. • 13 of 51 139 02agree/Waterfront Beach Cabana/jmf/jn/6/26/2002 • SECTION 21. GENERAL PUBLIC LIABILITY INSURANCE In addition to the workers' compensation and employers' liability insurance and Lessee's covenant to defend, hold harmless and indemnify City, Lessee shall obtain and furnish to City, a policy of general public liability insurance, including motor vehicle coverage against any and all claims arising out of or in connection with the Premises. This policy shall indemnify Lessee, its officers, employees and agents, while acting within the scope of their duties, against any and all claims arising out of or in connection with the Premises, and shall provide coverage in not less than the following amount: combined single limit bodily injury and property damage, including products/completed operations liability and blanket contractual liability, of One Million Dollars ($1,000,000.00) per occurrence. If coverage is provided under a form which includes a designated general aggregate limit, the aggregate limit must be no less than One Million Dollars ($1,000,000.00) for the Premises. This policy shall name City, its officers, elected or appointed officials,employees,agents,and volunteers as Additional Insureds, and shall specifically provide that any other insurance coverage which may be applicable to the Lease shall be deemed excess coverage and that Lessee's insurance shall be primary. Under no circumstances shall said above-mentioned insurance contain a self-insured retention,or a"deductible"or any other similar form of limitation on the required coverage. SECTION 22. PROPERTY INSURANCE Lessee shall provide before commencement of this Lease and shall obtain and furnish to City, at Lessee's sole cost and expense, property and fire insurance with extended coverage endorsements thereon,by a company acceptable to City authorized to conduct insurance business in California, in an amount insuring for the full insurable value of all Improvements, Trade Fixtures, personal property whether or not owned or leased by Lessee, and all trade inventory in 14of51 140 02agree/Waterfront Beach Cabana/jmf/jn/6/26/2002 or on the Premises against damage or destruction by fire, theft or the elements. This policy shall contain a full replacement cost endorsement naming Lessee as the insured and shall not contain a coinsurance penalty provision. The policy shall also contain an endorsement naming City as an Additional Insured. The policy shall contain a special endorsement that such proceeds shall be used to repair, rebuild or replace any such Improvements, Trade Fixtures, personal property whether or not owned or leased by Lessee, and all trade inventory so damaged or destroyed; and if not so used, such proceeds (excluding any insurance proceeds for Trade Fixtures, personal property whether or not owned or leased by Lessee, and trade inventory, but only to the extent the insurance proceeds specifically cover those items)shall be paid to City. The policy shall also contain a special endorsement that if the Premises are so destroyed triggering the parties' ability to terminate as set forth in Section 52 (Destruction) below, and either party elects to terminate the Lease, the entire amount of any insurance proceeds (excluding such proceeds for Trade Fixtures, personal property whether or not owned or leased by Lessee and trade inventory, but only to the extent the insurance proceeds specifically cover those items) shall be paid to City. The proceeds of any such insurance payable to City may be used, in the sole discretion of City, for rebuilding or repair as necessary to restore the Premises or for any such other purpose(s) as City sees fit. • This policy shall also contain the following endorsements: (a) The insurer shall not cancel or reduce the insured's coverage without(30) days prior written notice to City; (b) City shall not be responsible for premiums or assessments on the policy. A complete and signed certificate of insurance with all endorsements required by this Section shall be filed with City prior to the execution of this Lease. At least thirty (30) days • 15 of 51 141 02agree/Waterfront Beach Cabana/jmf/jn/6/26/2002 prior to the expiration or termination of any such policy, a signed and complete certificate of insurance showing that coverage has been renewed shall be filed with City. SECTION 23. INCREASE IN AMOUNT.OF GENERAL PUBLIC LIABILITY AND PROPERTY INSURANCE Not more frequently than once every two "(2) years, if, in the sole opinion of City, the amount and/or scope of general public liability insurance in Section 21 above and/or property insurance coverage in Section 22 above at that time is not adequate, Lessee shall increase the • insurance coverage as reasonably required by City. SECTION 24. CERTIFICATES OF INSURANCE;ADDITIONAL INSURED ENDORSEMENTS Prior to commencement of this Lease, Lessee shall furnish to City certificates of insurance subject to approval of the City Attorney evidencing the foregoing insurance coverages as required by this Lease; these certificates shall: (a) provide the name and policy number of each carrier and policy; (b) shall state that the policy is currently in force;and (c) shall promise to provide that such policies shall not be canceled or modified without thirty(30)days' prior written notice of City;however ten(10) days' prior written notice in the event of cancellation for nonpayment of premium, which 10-day notice provision shall not apply to property insurance in Section 22 above. Lessee shall maintain the foregoing insurance coverages in force during the entire term of the Lease or any renewals or extensions thereof or during any holdover period. 16of51 142 02agree/Waterfront Beach Cabana/jmf/jn/6/26/2002 The requirement for carrying the foregoing insurance coverages shall not derogate from Lessee's defense, hold harmless and indemnification obligations as set forth in this Lease. City or its representatives shall at all times have the right to demand the original or a copy of any or all the policies of insurance. Lessee shall pay, in a prompt and timely manner, the premiums on all insurance hereinabove required. • SECTION 25. INSURANCE HAZARDS Lessee shall not commit or permit the commission of any acts on the Premises nor use or permit the use•of the Premises in any manner that will increase the existing rates for,or cause the cancellation of any liability, property, or other insurance policy for the Premises or required by this Lease. Lessee shall, at its sole cost and expense, comply with all requirements of any insurance carrier providing any insurance policy for the Premises or required by this Lease necessary for the continued maintenance of these policies at reasonable rates. SECTION 26. MAINTENANCE OF PREMISES City's maintenance responsibilities of the Premises shall be limited to maintaining all sewers and drain lines, roofs and attached public restrooms(if they exist). Except as set forth in the preceding sentence, Lessee agrees to. maintain the Premises in good order and repair, at Lessee's sole cost and expense, during the entire term of this Lease or any renewals or extensions thereof or during any holdover period, pursuant to the City's maintenance standards. A copy of the quarterly evaluation summary sheet setting forth the City's maintenance checklist is attached as Exhibit "B",and incorporated herein by this reference. Except as provided above, Lessee, at its sole cost and expense, shall perform any maintenance and repairs including, without limitation, facility maintenance and landscape maintenance on the Premises. 17 of 51 143 02agree/Waterfront Beach Cabana/jntf/jn/6/26/2002 Lessee's obligation includes, without limitation, maintaining and operating the Premises and adjacent areas to a distance of not more than fifty(50) feet, in a clean;safe, wholesome and sanitary condition free of trash, garbage or obstructions of any kind and in compliance with any and all present and future laws, general rules or regulations of any governmental authority now, or at any time during the entire term of this Lease or any renewals or extensions thereof or during any holdover period, in force, relating to sanitation or public health, safety or welfare, or for the protection of life, limb or property; and Lessee shall at all times faithfully obey and comply with all laws, rules and regulations applicable thereto. Lessee, at its sole cost and expense, shall remedy without delay any defective, dangerous or unsanitary condition(s) caused by Lessee or anyone related thereto. Provided, however, that Lessee shall have no obligation to repair or maintain sewer lines or respond to sewer leaks. Lessee shall paint, stain or seal the Premises' exterior surfaces a minimum of every three (3) years, unless City determines in its sole discretion that such work shall be done on a more frequent basis. All exterior metal surfaces, except the roof, shall be painted with rust resistant paint no less than once every other year. Any and all graffiti on the Premises shall be removed by Lessee, at its sole cost and expense, within forty-eight (48) hours of Lessee receiving notice thereof or of Lessee becoming aware of such graffiti. In addition, with or without notice from City, Lessee shall, at its sole cost and expense, repair and/or replace any broken glass within forty-eight (48) hours of its becoming broken, regardless of cause, except by fault of City. Except as provided above for graffiti and broken glass, Lessee, at its sole cost and expense and with or without notice from City, shall repair and/or replace all damage or destruction to the Premises caused by act(s) of vandalism as soon as possible but in no event later than fourteen (14) days after the date such damage or destruction occurred. Lessee, at its sole cost and 18 of 51 02agree/Waterfront Beach Cabana/jrnf'jn/6/26/2002 144 expense, shall repair and/or replace all other damage or destruction to the Premises,regardless of cause, except by fault of City. Lessee shall comply with all written notices served by City with regard to the care and maintenance of the Premises. Any written notice hereunder shall specify the work to be done and the period of time deemed to be reasonably necessary for completion of such work. Should Lessee fail to commence making the necessary repairs within seven(7)days after receiving such notice, or within twenty-four (24) hours of the glass becoming broken in the case of broken glass, or fail to diligently proceed to complete the necessary repairs within the period of time reasonably specified in the City's notice, or within forty-eight (48) hours of the glass becoming broken in the case of broken glass, or within the forty-eight (48) hour time period for removing graffiti, or within fourteen (14) days of the date that the vandalism damage or destruction occurred, City,shall proceed to cause the required work to be performed, and Lessee shall promptly reimburse City for the cost of labor and materials thereof and pay City a penalty on such costs at the penalty rate set forth in Section 11 above from the date the costs were incurred by City to the date they are reimbursed to City by Lessee. Lessee hereby expressly waives the right to make repairs at the expense of City and the benefit, if any, of the provisions of Sections 1941 and 1942 of the California Civil Code relating thereto. SECTION 27. RENT CREDIT City in its sole discretion may decide to give Lessee rent credit if Lessee undertakes (1) any repair or maintenance obligation of City under this Lease, (2) any work City in its sole discretion deems necessary and appropriate or (3) any Lessee improvements. Prior to Lessee • 19 of 51 . 02agree/Waterfront Beach Cabana/jmf/jn/6/26/2002 145 undertaking any such work, City must agree in writing to the amount of and procedures for the rent credit,the work to be done by Lessee and the cost of such work. SECTION 28. DAMAGE,DESTRUCTION OR NUISANCE Lessee shall not commit or permit the commission by others of any damage or destruction of, on, or to the Premises and/or Concession. Lessee shall not maintain, commit or permit the maintenance or commission of any nuisance as defined in Section 3479 and/or Section 3480 of the California Civil Code on the Premises; and Lessee shall not use or permit the use of the Premises for any unlawful purpose. SECTION 29. TAXES This Lease may create a possessory interest in property, which is subject to taxation. In the event that such possessory interest is created, Lessee agrees to be subject to the payment of and to pay taxes levied on such interest, at its sole cost and expense. Lessee also agrees to pay, at its sole cost and expense, before they become delinquent all other lawful taxes, assessments or charges, which at any time may be levied by any governmental agency including, without limitation,the State, County, City or any tax or assessment levying body upon any interest in this Lease, or any possessory right which Lessee may have in or to the Premises, by reason of Lessee's use or occupancy thereof or otherwise, as well as all taxes, assessments, and charges on Trade Fixtures, personal property and trade inventory in, on, or about the Premises. Upon request, Lessee shall promptly furnish to City satisfactory evidence establishing such payment. Lessee shall comply with all laws, regulations and ordinances regarding the collection of taxes due a government agency. 20 of 51 02agree/Waterfront Beach Cabana/jmf/jn/6/26/2002 146 SECTION 30. PAYMENT OF OBLIGATIONS Lessee shall promptly pay, at its sole cost and expense,-before they become delinquent, any and all bills, debts, liabilities and obligations incurred by Lessee in connection with Lessee's occupation and use of the Premises and/or operation of the Concession. Upon request, Lessee shall promptly furnish to City satisfactory evidence establishing such payment. SECTION 31. UTILITIES AND SERVICES Excluding any attached public restrooms, if they exist, Lessee shall be responsible for the payment of all utility charges, including, without limitation, gas, electricity, water, telephone service, cable TV service, and the furnishing of all necessary refuse and garbage containers and the removal and disposal of all rubbish, refuse and garbage resulting from the operation of the Premises and/or the Concession. All such rubbish,refuse and garbage removed shall be disposed of in accordance with applicable laws and local ordinances. All trash containers and/or trash bins shall be adequately screened and located to the satisfaction of City. For the purposes of this Section, sewage disposal shall be construed as a utility. All such charges shall be paid by Lessee directly to the provider of the service and shall be paid as they become due and payable. Upon request,Lessee shall promptly furnish to City satisfactory evidence establishing such payment. SECTION 32. BUSINESS LICENSE Lessee shall maintain a business license from City during the entire term of this Lease or any renewals or extensions thereof or during any holdover period. • SECTION 33. SIGNS,ADVERTISING AND APPROVAL OF NAME City shall have the right to approve in its sole discretion and at any time require Lessee to change or remove signs, names, placards, decorations or advertising placed on, or inscribed, painted or affixed upon the Premises. Should City approve of any sign, name, placard, 21 of 51 • 147 02agree/Waterfront Beach Cabana/jmf/jn/6/26/2002 decoration or advertising, Lessee shall maintain the same at all times during the entire term of this Lease or any renewals or extensions thereof or during any holdover period in good appearance and repair. All signs, names, placards, decorations or advertising must comply with all requirements of any governmental authority with jurisdiction. SECTION 34. NO ASSIGNING, SUBLEASING OR ENCUMBERING (a) Prohibition of Assignment. The parties acknowledge that City is entering into the Lease in reliance upon the experience and abilities of Lessee and its principals. Consequently,Lessee shall not voluntarily assign,encumber or otherwise transfer its interest in the Lease or in the Premises, or sublease all or any part of the Premises, or allow any other person or entity (except Lessee'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 City's consent shall not relieve Lessee from any and all of its obligations, liabilities, duties or responsibilities under this Lease. Any assignment, encumbrance, occupation or use, sublease or other transfer without such consent shall be voidable and, at City's sole discretion, shall constitute a Default of this Lease. (b) Consent to Transfer. City's consent to any assignment, encumbrance, occupation or use, sublease or other transfer is subject to Lessee providing City with evidence satisfactory to_City that the proposed, assignee, encumbrancer, occupier or user, sublessee or other transferee has suitable financial strength, experience and character for operation and control of the Premises and the Concession and that the use of the Premises by the proposed assignee, encumbrancer, occupier or user, 22of51 148 02agree/Waterfront Beach Cabana/jmf/jn/6/26/2002 • sublessee or other transferee is consistent with that specified herein, and is commercially reasonable. Any proposed assignee, encumbrancer, occupier or user, sublessee or other transferee shall agree to abide by the terms and conditions of the Lease including, without limitation, all the•obligations, liabilities, duties and responsibilities'Of Lessee, and other conditions imposed upon it pursuant to law. An approval by City to one assignment, encumbrance, occupation or use, sublease or other transfer shall not be deemed to be an approval to any other assignment, encumbrance,occupation or use,sublease or other transfer. (c) Voluntary assignment defined. Except as otherwise expressly provided herein, any dissolution, merger, consolidation or reorganization of Lessee, or the sale or other transfer resulting in a transfer of a controlling percentage of the capital stock of Lessee (other than a transfer by will, devise, bequest, intestate succession, a .transfer to or between the family members of Lessee, or a transfer to or between one or more trusts for the benefit of Lessee and/or Lessee's family members, where applicable)shall be deemed a voluntary assignment. (d) Exceptions. Notwithstanding the foregoing paragraphs or anything to the contrary contained herein, City's consent shall not be required for an assignment or subleasing to an Affiliate, Subsidiary or Successor of Lessee (for purposes hereof, an "Affiliate," a "Subsidiary" and a "Successor"of Lessee are defined as • follows: (a) an"Affiliate" is any corporation which directly or indirectly controls • or is controlled or is under common control with Lessee (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, 23of51 149 02agree/Waterfront Beach Cabana/jmf/jn/6/26/2002 whether through the ownership of voting securities or by contract or otherwise), (b) a"Subsidiary"shall mean any corporation or partnership not less than twenty- five percent (25%) of whose outstanding stock shall, at the time, be owned directly or indirectly by Lessee and which is at least as creditworthy as Lessee, and (c) a "Successor" shall mean a corporation or partnership in which or with • which Lessee is merged or consolidated, in accordance with applicable statutory provisions for merger or consolidation of corporations, or a corporation or partnership acquiring a substantial portion of the property and assets of Lessee. SECTION 35. TERMS BINDING ON SUCCESSORS All the terms, covenants and conditions of this Lease shall inure to the benefit of and be binding upon the parties and their successors, including, without limitation, their assignees, encumbrancers, occupiers or users, sublessees or other transferees. The provisions of this Section shall not be deemed as a (1) waiver of any of the prohibitions and conditions against assignments, encumbrances, occupations or uses, subleases or other transfers hereinbefore set forth, or(2) City's consent thereto. If more than one lessee is a party to this Lease, the obligations of the lessees shall be joint and several. Even if City's consent is not required, Lessee shall immediately provide City with written notice of any, assignment, encumbrance,occupation or use, sublease or other transfer. SECTION 36. DEFAULT The occurrence of any one or more of the following events shall constitute a material default and breach("Default")of this Lease by Lessee: (a) Lessee's failure to make any payment of the Rent or other payment required to be made by Lessee at the time required for payment under this Lease. 24of51 • 02agree/Waterfront Beach Cabana/jmf/jn/6/26/2002 150 (b) Lessee's failure to obtain or maintain the insurances and/or the security deposit as • required under this Lease. (c) Lessee's vacating or abandonment of the Premises during the entire term of this Lease or any renewals or extensions thereof or during any holdover period. Closure of the Concession for more than a combined total of one hundred eighty (180)days in a calendar year, minus any days of closure of the Concession caused by City, shall be deemed an abandonment of the Premises. (d) Lessee's violation of Section 19 (Indemnification, Defense and Hold Harmless Agreement), Section 34 (No Assigning, Subleasing or Encumbering), Section 47 (Hazardous Substances), Section 48 (Nondiscrimination), Section 49 (Sale of Alcoholic Beverages and Entertainment Prohibited), Section 62 (Conflict of Interest)or Section 64(Compliance with Laws). (e) The insolvency of Lessee as evidenced by. a receiver being appointed to take possession of all or substantially all of Lessee's assets located at or on the Premises or of Lessee's interest in this Lease, or the making by Lessee of a general arrangement or assignment for the benefit of creditors,or Lessee's filing a petition in bankruptcy, whether voluntary or involuntary, or the attachment, execution or the judicial seizure of substantially all of Lessee's assets located at or on the Premises or of Lessee's interest in the Lease. (f) Lessee's failure to observe or perform any other term, covenant, obligation, duty, responsibility or condition of this Lease to be observed or performed by Lessee when such failure shall continue for a period of thirty(30)days after City's giving written notice to Lessee, or such earlier period if specifically set forth in this Lease; however, if the nature of such failure is such that more than thirty (30) 25 of 51 151 02agree/Waterfront Beach Cabana/jmf/jn/6/26/2002 J days are reasonably required for its cure, then Lessee shall not be deemed to be in Default if Lessee notifies City of the length of the additional time required to cure and receives City's written approval of the additional time required, which approval will not be unreasonably withheld, and commences such cure within such thirty (30) day period and diligently proceeds with such cure to completion during such additional time period approved by City. SECTION 37. REMEDIES (a) Cumulative Nature of Remedies. In the event of any Default by Lessee, City shall have the remedies described in this Section 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 sole discretion reenter the Premises, and, without terminating the 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 Lessee or otherwise. Any reletting may be for the remainder of the term or for a longer or shorter period. City may in City's sole discretion eject all persons or eject some and not others or eject none. In addition, City may in its sole discretion remove some or all of the Trade Fixtures, personal property and trade inventory from the Premises. City may store such removed Trade Fixtures, personal property and trade inventory in a public warehouse or other location at the sole cost, expense. and risk of Lessee, and for the account of and in the name of Lessee. City shall apply all rents from reletting as follows: first, to the payment of 26 of 51 152 02agree/Waterfront Beach Cabana/jmf/jn/6/26/2002 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 Lessee's covenants to the end of the term. City may execute • any leases or subleases made under this provision either in City's name or in Lessee's name and City shall be entitled to all rents from the use, operation or occupancy of the Premises. Lessee shall nevertheless pay to City on the dates specified in this Lease the equivalent of all sums required of Lessee under this Lease, plus City's expenses, less the proceeds of any reletting or attornment. (2) Termination. In the event of a Default by Lessee, City may at City's • sole discretion terminate this Lease by giving Lessee written notice of termination. In the event City terminates this Lease, City may recover possession.of the Premises(which Lessee shall immediately surrender and vacate upon demand) and remove all persons therefrom, and Lessee shall comply with,without limitation, Sections 56 and 57 below. City also shall be entitled to recover as damages all of the following: (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 (each month's Rent would be calculated as the average Rent for that same month in the preceding years, or if • 27 of 51 153 02agree/Waterfront Beach Cabana/jmf/jn/6/26/2002 Lessee did own/operate the Concession in the preceding years, then each month's Rent would be calculated as the average of all months Lessee owned/operated the Concession) 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 and other charges that Lessee proves could have been reasonably avoided; (C) The worth at the time of the award of the amount by which the unpaid Rent (each month's Rent would be calculated as the average Rent for that same month in the preceding years, or if Lessee did not own/operate the Concession in the preceding years, then each month's Rent would be calculated as the average of all months Lessee owned/operated the Concession) 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 Lessee proves could have been reasonably avoided; (D) Any other amount necessary to compensate City for the detriment proximately caused by Lessee's failure to perform its obligations, liabilities, duties or responsibilities under this Lease; and (E) At City's sole discretion, 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 Sections 37(a)(2)(A) and (B) above, the "worth at the time of the award" shall be computed by allowing interest at the rate of twelve percent (12%) per 28 of 51 02agree/Waterfront Beach Cabana/jmVjn/6/26/2002 154 • annum. As used in Section 37(a)(2)(C) 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 Section 37(a)(2)(D) above shall include, without limitation, any costs or expenses incurred by City in maintaining or preserving the Premises after such Default. (3) Use of Personal Property. City may at City's sole discretion use the Trade Fixtures, personnel property and/or trade inventory located on, about or appurtenant to the Premises without compensation and without liability for use or damage, or store them in a public warehouse or other location at the sole cost, expense and risk of Lessee, and for the account of and in the name of Lessee. (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 Lessee's Default. Upon continuance of any Default, City may in its sole discretion, but is not obligated to, cure such Default at Lessee's sole cost and expense. If City at any time, by reason of such Default by Lessee, pays any sum or does any act, the sum paid by City plus the reasonable cost of performing such act, together with a penalty thereon at the penalty rate set forth in Section 11 above from the date the costs were incurred or the act performed by City to the date they are reimbursed to City by Lessee, shall be due as additional rent not later than five (5) days after service of a written demand therefor on 29 of 51 155 • 02agree/Waterfront Beach Cabana/jmf/jn/6/26/2002 • Lessee, 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. Lessee 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 Lessee is evicted or City takes possession of the Premises by reason of any Default by Lessee hereunder. (e) Other Rights of City. No act of City, including, without limitation, City's entry on the Premises,.efforts to relet the Premises, or maintenance of the Premises, shall be construed as an election to terminate this Lease unless a written notice of such intention is given to Lessee by City or unless the termination thereof is decreed by a court of competent jurisdiction. Notwithstanding if City elects to • continue the Lease in full force and effect after a Default by Lessee and to relet the Premises, City may at any time after such reletting elect to terminate this Lease for any such Default. SECTION 38. CUMULATIVE REMEDIES The remedies given to City in this Lease shall not be exclusive but shall be cumulative and in addition to all remedies now or hereafter allowed by law or elsewhere provided in this Lease. City shall have the right to exercise any other right or remedy which City may have at law or in equity including,without limitation,City's rights under the unlawful detainer laws. 30 of 51 • 156 02agree/Waterfront Beach Cabana/jmfljn/6/26/2002 SECTION 39. WAIVER OF DEFAULT The waiver by City of any Default by Lessee of any of the provisions of this Lease shall not constitute a continuing waiver or a waiver of any subsequent Default by Lessee either of the same or another provision of this Lease. SECTION 40. CITY'S DEFAULTS/LESSEE'S REMEDY In the event City fails to perform any material obligation of City under the Lease within ninety(90) days after receiving written notice from Lessee specifying the nature of such default, or, if the nature of City's obligation is such that more than ninety (90) days are required for its performance,if City fails to commence such performance within such ninety(90)day period and thereafter diligently prosecute the same to completion, then City shall be in default of this obligation. If City's default materially interferes with Lessee's use of the Premises for its intended purpose, Lessee shall have the option to terminate the Lease by giving City at least sixty (60) days' written notice of its intent to terminate. In such a situation, Lessee must still comply with all of its obligations, liabilities, duties- and responsibilities under the Lease, including,without limitation,paying any Rent due up to the time of termination and surrendering the Premises pursuant to Sections 56 and 57 below. This remedy of termination is Lessee's sole and exclusive remedy for a default by City. SECTION 41. CONSENT When City's consent/approval is required under this Lease, its consent/approval for one transaction or event shall not be deemed to be a consent/approval to any subsequent occurrence of the same or any other transaction or event. 31 of 51 02agree/Waterfront Beach Cabana/jmf/jn/6/26/2002 157 • SECTION 42. HOLDOVER Should Lessee hold over and continue in possession of the Premises after expiration or termination of this Lease, with or without the express prior written consent of City, Lessee's continued occupancy of the Premises shall constitute a month-to-month tenancy, subject to all the terms and conditions of this Lease, at a monthly rent of one hundred ten percent (110%) of the previous calendar year's annual Rent divided by twelve (12) (or the average monthly Rent for all months Lessee owned/operated the Concession if Lessee has owned/operated the Concession for less than one(1)year)or that month's actual Rent,whichever is greater, and shall not constitute a renewal or extension of the Lease term. SECTION 43. WAIVER OF CLAIMS Lessee hereby waives any claim against City, its officers, elected or appointed officials, employees, agents or volunteers for damage or loss caused by any suit or proceeding directly or indirectly attacking the validity of this Lease, or any part thereof, or caused by any judgment or award in any suit or proceeding declaring this Lease null, void or voidable, or delaying the Lease or any part thereof from being carried out. SECTION 44. INSPECTION OF PREMISES Upon at least twenty-four(24)hours advance written, verbal or electronic notice given by City to Lessee, Lessee shall permit City or City's agents, representatives or employees to enter the Premises at all reasonable times for the purpose of inspecting, investigating and surveying the Premises to determine whether Lessee is complying with the terms of this Lease and for the purpose. of doing other lawful acts that may be necessary to protect City's interest in the Premises or to perform City's duties under this Lease. City also shall have the right in its sole discretion to do any and all work of any nature necessary for the preservation, maintenance and 32of51 158 02agree/Waterfront Beach Cabana/jmf/jn/6/26/2002 operation of property owned, controlled or occupied by City. Lessee shall be given reasonable notice when such work becomes necessary, and Lessee shall adjust the operation of the Concession in such a manner that City may proceed expeditiously. SECTION 45. CITY'S RIGHT TO LEASE BUYOUT City shall have the right at any time during the entire term of this Lease or any renewals or extensions thereof to buyout the remaining years of the Lease and Lessee's interest in this Lease based upon the following buyout formula: Average of the most recent two (2)years (preceding the date of the notice of buyout) annual Gross Sales under this Lease or a prior lease multiplied by:a twelve and one-half percent (12.5%)profit margin multiplied by the • number of years remaining on the Lease discounted by twelve and one- half percent(12.5%) to present value. For example: The annual Gross Sales for the most recent two (2) years of the Concession are $335,000.00 and $350,000.00. If City gives Lessee notice of its buyout intention in September, - the preceding two (2) years would be the preceding twenty-four (24) months ending in August. There are three(3)years remaining.in the Lease. The average of the Gross Sales of the most recent two (2) years is $342,500.00 ($335,000.00+$350,000.00/2). The profit margin is 12.5% of the most recent two (2) year average which is $42,812.50 ($342,500.00 x 0.125). The profit margin is then discounted at the rate of 12.5% to present value over the remaining years of the Lease: • 33 of 51 159 02agree/Waterfront Beach Cabana/jmf/jn/6/26/2002 Year 1: $42,812.50/ 1.125 =$38,055.56 Year 2: $42,812.50/ 1.125 / 1.125 =$33,827.16 Year 3: $42,812.50/ 1.125/ 1.125/ 1.125=$30,068.59 All of the discounted cash flows for the remaining years of the Lease are totaled and the result is the buyout price of the Lease. In this case,the City's buyout price is $101,951.31. If Lessee has owned/operated the Concession for less than two (2) years, the City's buyout price will be the greater of (1) the amount calculated under the Gross Sales formula above or (2) all reasonable and provable start-up costs, which start-up costs will be determined by City in its sole discretion. The annual Gross Sales figure on which to calculate the buyout amount shall be calculated as follows: The average monthly Gross Sales for all months up to twenty-three (23) months converted into an annual Gross Sales figure. For example, if City decides to buyout the Lease of a new Lessee who has owned/operated the Concession for fifteen (15) months, with an average monthly Gross Sales figure of Five Thousand Dollars ($5,000.00), the annual Gross Sales figure for the option to buyout would be Sixty Thousand Dollars($60,000.00). For purposes of this calculation, a Lessee shall not be considered a new lessee if the Concession was previously owned/operated by a lessee, whose assignment, encumbrance, occupation or use, sublease or other transfer to Lessee did not require City approval in Section 34 above. At City's sole option, City shall have the right, but not the obligation, to purchase any or all of Lessee's Trade Fixtures (defined in Section 51 below), based on the appraised fair value market of the Trade Fixtures. 34 of 51 Aso 02agree/Waterfront Beach Cabana/jmf/jn/6/26/2002 If City desires to purchase any or all of Lessee's Trade Fixtures, City shall select an appraiser to provide an appraisal of such Trade Fixtures. If Lessee disagrees with City's appraisal, Lessee, at its sole cost and expense, shall select another appraiser to provide an appraisal. If City disagrees with Lessee's appraisal, City shall select another appraiser to perform an appraisal. In such case, the parties agree that the price for the Trade Fixtures will be the average of these three(3)appraisals. All appraisers must be members in good standing in the American Society of Appraisers. Notwithstanding the foregoing, at any time, City may elect not to purchase any or all of Lessee's Trade Fixtures. Upon City's request, Lessee shall provide City with proof of lien free, good and merchantable-title to any such Trade Fixtures City desires to purchase. Lessee shall protect, defend, indemnify, and hold harmless City, its officers, elected and appointed officials, employees, agents and volunteers from and against any and all liens, claims, damages, losses, expenses,judgments, demands and defense costs (including, without limitation, costs and fees of litigation (including arbitration) of every nature or liability of any kind or nature) arising out of or in connection with Lessee's fraud, omission or negligence regarding any purchase of Lessee's Trade Fixtures by City. City shall be reimbursed by Lessee for all costs and attorney's fees incurred by City in enforcing Lessee's obligations set forth in this Section. Lessee will conduct all defense at its sole cost and expense and City shall approve selection of Lessee's counsel. This indemnity shall apply to all claims and liability regardless of whether any insurance policies are applicable. The policy limits do not act as limitation upon the amount of indemnification to be provided by Lessee. Lessee acknowledges and agrees' that this Lease buyout option of City has been negotiated at arms-length and does not constitute nor does Lessee construe this to be an act of 35 of 51 161 02agree/Waterfront Beach Cabana/jmf/jn/6/26/2002 i eminent domain or inverse condemnation. In the event City exercises this buyout option,Lessee waives any and all claims of loss of business goodwill and relocation rights or benefits. Lessee also shall immediately surrender the Premises as set forth herein and comply with, without limitation, Sections 56 and 57 below. SECTION 46. PHOTOGRAPHY Lessee acknowledges and agrees that City may grant permits to third parties engaged in the production of still and motion pictures and related activities to take photographs or videos of or on the Premises when such permission shall not interfere with the primary business of Lessee, all without providing Lessee with notice or requiring consent by Lessee. SECTION 47. HAZARDOUS SUBSTANCES Lessee represents and warrants that its use or occupation of the Premises shall not generate any Hazardous Substance (as defined below in this Section), and it shall not store or dispose on the Premises nor transport to or over the Premises any Hazardous Substance during the entire term of this Lease or any renewals or extensions thereof or during any holdover period. The foregoing restrictions shall not be deemed to restrict or prohibit the use by Lessee of ordinary cleaning products as customarily used in Lessee's ordinary course of business at the Concession, provided that Lessee complies with all provisions of law as to the use, storage and disposal of such products. Lessee further agrees to clean up and remediate any such Hazardous Substance on the Premises, and agrees to protect, defend, indemnify and hold harmless City, its officers, elected or appointed officials, employees, agents and volunteers from and against any and all claims, damages, Iosses, expenses, judgments, demands and defense costs (including, without limitation, costs and fees of litigation (including arbitration) of every nature or liability of any kind or nature) arising out of or in connection with any such Hazardous Substance and 36 of 51 162 02agree/Waterfront Beach Cabana/jmf/jn/6/26/2002 any damage, loss, or expense or liability resulting from any such Hazardous Substance including, without limitation, all attorney's fees, costs and penalties incurred as a result thereof except any release caused by the sole negligence or willful misconduct of City. City shall be reimbursed by Lessee for all costs and attorney's fees incurred by City in enforcing Lessee's obligations set forth in this Section. Lessee will conduct all defense at its sole cost and expense and City shall approve selection of Lessee's counsel. This indemnity shall apply to all claims and liability regardless of whether any insurance policies are applicable. The policy limits do not act as limitation upon the amount of indemnification to be provided by Lessee. "Hazardous substance" shall be interpreted broadly to mean any substance or material defined or designated as a hazardous or toxic waste, hazardous or toxic material, hazardous or toxic or radioactive substance, or other similar term, by any Federal, State or local environmental law, regulation or rule presently in effect or promulgated in the future, as such law, regulation or rule may be amended from time to time; and it shall be interpreted to include, without limitation, any substance which after release into the environment will or may reasonably be anticipated to cause sickness,death or disease. SECTION 48. NONDISCRIMINATION Lessee and its employees shall not discriminate because of race, religion, color, ancestry, sex, age, national origin or physical handicap against any person by refusing to furnish such person any accommodation, facility,rental, service or privilege offered to or enjoyed by the general public. Nor shall Lessee or its employees publicize the accommodation, facilities, rentals, services or privileges in any manner that would directly or inferentially reflect upon or question the acceptability of the patronage of any person because of race, religion, color, ancestry, sex, age,national origin or physical handicap. • 37of51 163 02agree/Waterfront Beach Cabana/jmf/jn/6/26/2002 • In the performance of this Lease, Lessee shall not discriminate against any employee or applicant for employment, because of race, religion, color, ancestry, sex, age, national origin or physical handicap. Lessee shall take affirmative action to ensure that applicants are employed and that employees are treated during employment, without regard to their race, religion, color, ancestry, sex, age, national origin or physical handicap. Such action shall include, without limitation, the following: employment, upgrading, demotion or transfer; recruitment or recruitment advertising; layoff or termination;,rates of pay or other forms of compensation; and selection for training, including, without limitation, apprenticeship. Lessee shall post in conspicuous places, available to all employees and applicants for employment, notices setting forth the provisions of this Section. • Lessee shall permit access to its records of employment, employment advertisements, application forms, and other pertinent data and records by City, the State Fair Employment Practices Commission or any other agency with jurisdiction over these matters,for the purpose of investigation to ascertain compliance with this Section. City may determine a violation of this Section to have occurred upon receipt of a final judgment having that effect from a court in an action to which Lessee was a party, or upon receipt of a written notice from the State Fair Employment Practices Commission or other government agency with jurisdiction over these matters that it has investigated and determined that Lessee has violated the Fair Employment Practices Act or other applicable discrimination law and has issued an order which has become final, or obtained an injunction. In the event of violation of this Section, City shall have the right to terminate this Lease, and any loss of revenue sustained by City by reason thereof shall be borne and paid for by Lessee, at its sole cost and • expense. 1 38of51 164 02agree/Waterfront Beach Cabana/jmf/jn/6/26/2002 • SECTION 49. SALE OF ALCOHOLIC BEVERAGES AND ENTERTAINMENT PROHIBITED Notwithstanding anything to the contrary, the sale or provision of alcoholic beverages and/or live entertainment in, on, or from the Premises is expressly forbidden, unless expressly permitted in writing by City in advance. For any proposed sale or provision of alcoholic beverages, Lessee must first obtain written City approval prior to submitting any request for approval to the Alcohol Beverage Commission. SECTION 50. LIENS Lessee shall keep the Premises free and clear from any and all liens, including, without • limitation, mechanics' or materialmens' liens, claims and demands for work performed, materials furnished, or operations conducted on or about the Premises or by reason of any use or occupancy by Lessee, or any person claiming under Lessee. When applicable, Lessee shall cause a notice of nonresponsibility to be posted and recorded pursuant to California Civil Code Section 3094. SECTION 51. INSTALLATION AND REMOVAL OF TRADE FIXTURES Lessee shall have the right during the entire term of this Lease or any renewals or extensions thereof, at Lessee's sole cost and expense, to install or affix in, to, or on the Premises any machinery, equipment and other objects (the "Trade Fixtures"), for use in Lessee's trade or business as Lessee may deem advisable. Any and all such Trade Fixtures that can be removed without structural damage to the Premises shall, subject to Section 57 below,remain the property of Lessee and may be removed by Lessee at any time prior to the expiration or termination of this Lease, provided Lessee repairs any damage caused by the removal. Upon execution of this 39 of 51 165 02agree/Waterfront Beach Cabanaljmf/jn/6/26/2002 Lease and every anniversary, Lessee shall provide City with a list of all Trade Fixtures on the Premises. SECTION 52. DESTRUCTION Should the Premises be partially destroyed, this Lease shall continue in full force and effect, and Lessee, at Lessee's sole cost and expense, shall complete the work of repairing and restoring the Premises to their prior condition providing such work can be accomplished under all applicable governmental laws and regulations within one hundred eighty(180) days. Should the Premises be so far destroyed that in.City's reasonable judgment they cannot be repaired or restored to their former condition within one hundred eighty (180) days, City shall give Lessee notice of such determination in writing and each party may,in that party's sole discretion: (a) Continue this Lease in full force and effect in which case Lessee shall repair and restore, at Lessee's sole cost and expense,the Premises to their former condition; or (b) Terminate this Lease by giving the other party thirty (30) days' written notice of such termination within sixty(60)days after the date that City gives Lessee notice that the Premises cannot he repaired or restored to their former condition within one hundred eighty (180) days. In the event that either party elects to terminate this Lease, the entire amount of any insurance proceeds (excluding such proceeds for Trade Fixtures, personal property whether or not owned or leased by Lessee and trade inventory, but only to the extent that the insurance proceeds specifically cover those items) shall be paid to City. The proceeds of any such insurance payable to City may be used, in the sole discretion of City, for rebuilding or repair as necessary to restore the Premises or for any other such purpose(s) as City sees 40 of 51 166 02agree/Waterfront Beach Cabana/jmf/jn/6/26/2002 • fit. In addition, if Lessee elects to terminate the Lease, Lessee must still comply with all of its obligations, liabilities, duties and responsibilities under the Lease, including, without limitation, paying any Rent due up to the time of termination and surrendering the Premises,pursuant to Sections 56 and 57 below. In the event of the damage or destruction of Improvements, Trade Fixtures and/or personal property located on the Premises not giving rise to a termination of this Lease, Lessee shall, at its sole cost and expense,replace and repair the same as soon as reasonably possible to permit the prompt continuation of Lessee's business at the Premises. SECTION 53. NO ABATEMENT OF RENT DURING REPAIR WORK . The Rent shall not be abated for the time Lessee is prevented from using the whole or a portion of the Premises. In addition, Lessee shall not be excused from the payment of taxes, insurance or any other obligations for the time Lessee is prevented from using the whole or a portion of the Premises. SECTION 54. EMINENT DOMAIN If, during the term of this Lease or any renewals or extensions thereof or during any holdover period, City's real property(whether held by City in fee simple, an easement interest or otherwise) and/or the Premises is taken in eminent domain,the entire award(that is, all forms) of compensation, other than as provided herein, shall belong to and be paid to City. In the event of condemnation,Lessee shall be entitled to an award of only the following forms of compensation, if any, from the condemning authority: compensation for loss of business goodwill; compensation for the value of any of Lessee's Trade Fixtures; compensation for the value of any of Lessee's personal property; compensation for the value of any of Lessee's trade inventory; and compensation for relocation benefits as authorized by law. All other forms of compensation, 41 of 51 167 02agree/Waterfront Beach Cabana/jmf/jn/6/26/2002 • such as, for example, but not by way of limitation, any bonus value of Lessee's interest in this Lease, shall belong to and be paid to City. In the event of condemnation, unless Lessee is allowed by the condemning authority to continue its operations on the Premises, the Lease shall terminate on the earliest of the following dates: the date the condemning authority obtains a • prejudgment order for possession; the date title to the Premises vests in the condemning authority; or the date when Lessee is required by the condemning authority to cease its operations. SECTION 55. RELOCATION AND ASSISTANCE,BUSINESS GOODWILL AND LEASEHOLD BONUS VALUE Upon expiration or termination of this Lease for any reason, including, without limitation, if City exercises its Lease buyout option, but excluding eminent domain, Lessee shall not be entitled to any relocation rights or benefits, business goodwill or bonus value attributable to this Lease, and Lessee expressly waives any claim to the same. SECTION 56. QUITCLAIM DEED • Upon expiration or termination of this Lease as provided for herein, including, without limitation, in the event City exercises its Lease buyout option,Lessee shall execute and deliver to City within thirty (30) days thereof, a good and sufficient quitclaim deed to the rights and interests of Lessee in the Premises and the Lease. Should Lessee fail or refuse to deliver to City this quitclaim deed, City may record in the Orange County Recorder's Office a written notice reciting the failure of Lessee to execute and deliver this quitclaim deed. The date of recordation of this notice by City shall be conclusive evidence against Lessee and all persons claiming under Lessee of the expiration or termination of this Lease and any rights or interests of Lessee in the Premises and/or the Lease. Lessee also agrees to execute, acknowledge, and deliver to City any 42 of 51. 168 02agree(Waterfront Beach Cabanaljmf/jn/6/26/2002 other instrument requested by City as necessary to perfect City's right, title and interest to the Premises. SECTION 57. RESTORATION AND SURRENDER OF PREMISES/TITLE TO IMPROVEMENTS On expiration or termination of this Lease, including,without limitation,in the event City exercises its Lease buyout option, Lessee shall, without compensation to Lessee, promptly surrender and deliver the Premises to City in as good condition as such were at the commencement date of this Lease,reasonable wear and tear excepted. Lessee also shall, without compensation to Lessee, surrender all Improvements to City in good condition and repair, ordinary wear and tear excepted, free and clear of all liens and encumbrances. Lessee also shall remove all Trade Fixtures, personal property and trade inventory. City may in its sole discretion accept all or any portion of the Premises, as then improved with Improvements and no sum whatsoever shall be paid to Lessee or any other person; or City may require Lessee to remove all • or any portion of such Improvements, at Lessee's own risk and cost and expense; or City may itself remove or have removed all or any portion of such Improvements, at Lessee's own risk and cost and expense. If required by City to do so, in removing any such Improvements,Lessee shall restore the Premises as nearly as possible to the conditions existing prior to their installation or construction. All such removal and restoration shall be to the satisfaction of City and shall be completed within thirty (30) days of the expiration or termination of this Lease; provided, however, that Lessee shall be considered a holdover tenant (pursuant to Section 42 above) after expiration or termination of the Lease until the time Lessee completes this removal and restoration work, including, without limitation, the removal of any Trade Fixtures, personal property and trade inventory left on the Premises. In addition, any Trade Fixtures, personal • 43 of51 169 02agree/Waterfront Beach Cabana/jmf/jn/6/26/2002 property or trade inventory left on the Premises after the expiration of this 30-day period, regardless of cause, shall be deemed abandoned by Lessee. In City's sole discretion, it may. choose to do one or more of the following: (I) take any or all of such Trade Fixtures, personal property and trade inventory as City property; (2) store any or all of such Trade Fixtures, personal property and trade inventory in a public warehouse or other location at the sole cost, expense and risk of Lessee, and for the account and in the name of Lessee; or(3) dispose of any or all of such Trade Fixtures, personal property and trade inventory without any liability to Lessee. In addition, Lessee's indemnification, hold harmless and defense obligations set forth in this Lease shall apply to such Trade Fixtures, personal property and/or trade inventory, and to City's actions with respect thereto. SECTION 58. FORCE MAJEURE-UNAVOIDABLE DELAYS Should the performance of any act required by this Lease to be performed by either City or Lessee be prevented or delayed by reason of an act of God, strike, lockout, labor troubles, inability to secure materials, restrictive governmental laws or regulations, or any other cause except financial inability not the fault of the party required to perform the act, the time for performance of the act shall be extended for a period equivalent to the period of delay and performance of the act during the period of delay shall be excused. Provided, however, that nothing contained in this Section shall excuse the prompt payment of the Rent or other consideration by Lessee as required by this Lease or the performance of any act rendered difficult solely because of the financial condition of the party, City or Lessee, required to perform the act. 44 of 51 170 02agree/Waterfront Beach Cabana/jmf/jn/6/26/2002 SECTION 59. CITY'S OPTION TO CLOSE THE PREMISES City may close the Premises without liability and without advance notice to Lessee therefor at any time as City in its sole discretion deems necessary for the protection of life, limb or property, or for public health, safety or welfare purposes, or upon reasonable notice to effect any repair, remodeling or rebuilding deemed necessary by City in its sole discretion. The length of time of any closing of the Premises by City longer than two (2) weeks during a period when the Concession would otherwise be open shall extend the term of the Lease by the same amount of time. If this occurs,Lessee and City shall memorialize this extension in writing. SECTION 60. DELIVERIES OF SUPPLIES City may establish the days and times deliveries of supplies may be made and advise Lessee in writing thereof. SECTION 61. EMPLOYEE PARKING City shall establish the days, times and locations where Lessee and Lessee's employees may park, and the number of automobiles, trucks, and other motorized and non-motorized vehicles that Lessee and Lessee's employees may park,and advise Lessee in writing thereof. SECTION 62. CONFLICT OF INTEREST Lessee warrants and covenants that no official or employee of City, nor any business entity in which an official or employee of City is interested, (1) has been employed or retained by Lessee to solicit or aid in the procuring of this Lease; or (2) shall be employed by Lessee in the performance of this Lease without the immediate written divulgence of such fact to City. In • the event City determines that the employment of any such official, employee or business entity is not compatible with such official's or employee's duties as an official or employee of City, Lessee, upon request of City, shall terminate such employment immediately. For breaches or 45 of 51 171 02agree/Waterfront Beach Cabana/jmf/jn/6/26/2002 violation of this Section, City shall have the right both to terminate this Lease without liability and, in its discretion, recover the full amount of any such compensation paid to such official, employee or business entity. No official or employee of City shall have any financial interest in this Lease in violation of the applicable provisions of the California Government Code. SECTION 63. NOTICE Unless specifically providing for verbal or electronic notice, all notices, certificates, or other communications required to be given hereunder shall be in writing and made in the following manner, and shall be sufficiently given and deemed received when (a) personally delivered; or(b) three(3)business days after being sent via United States certified mail—return receipt requested;or (c) one (1) business day after being sent by reputable overnight courier, in each case to the addresses specified below;provided that City and Lessee,by notice given hereunder,may designate different addresses to which subsequent notices, certificates or other communications will be sent: CITY: LESSEE: City of Huntington Beach Robert Mayer Corporation ATTN: Director of Community Services ATTN: Stephen Bone 2000 Main Street,P.O.Box 190 660 Newport Center Drive,#1050 Huntington Beach,CA 92648 Newport Beach,CA 92658-8680 SECTION 64. COMPLIANCE WITH LAWS Lessee, at its sole cost and expense, shall comply with all statutes,ordinances,regulations and requirements of all governmental entities, including, without limitation, Federal, State, county or municipal, relating to Lessee's use and occupancy of the Premises and/or operation of the Concession whether such statutes, ordinances, regulations and requirements be now in force or hereinafter enacted. This Lease is expressly subject to the laws, regulations and policies of City. Lessee shall deliver to City a copy of any notice from any governmental entity received by Lessee regarding any alleged violation of law regarding the Lease,Premises or the Concession or 46 of 51 172 02agree/W aterfront Beach Cabana/jmf/jn/6/26/2002 from any person allegedly entitled to give notice under any conditions, covenants, or restrictions binding or affecting the Premises. The judgment of any court of competent jurisdiction, or the admission by Lessee in a proceeding brought against Lessee by any government entity, that Lessee has violated any such statute, ordinance, regulation or requirement shall be conclusive as between City and Lessee and shall be grounds for termination of this Lease by City. SECTION 65. INTERPRETATION OF THIS LEASE The language of all parts of this Lease shall in all cases be construed as a whole, according to its fair meaning, and not strictly for or against any of the parties. If any provision of this Lease is held by an arbitrator or court of competent jurisdiction to be unenforceable, void, illegal or invalid, such holding shall not invalidate or affect the remaining covenants and provisions of this Lease. No covenant or provision shall be deemed dependent upon any other unless so expressly provided here. As used in this Lease, the masculine or neuter gender and singular or plural number shall be deemed to include the other whenever the context so indicates or requires. Nothing contained herein shall be construed so as to require the commission of any act contrary to law, and wherever there is any conflict between any provision contained herein and any present or future statute, law, ordinance or regulation contrary to which the parties have no right to contract, then the latter shall prevail, and the provision of this Lease which is hereby affected shall be curtailed and limited only to the extent necessary to bring it within the requirements of the law. SECTION 66. SURVIVAL Terms and conditions of this Lease, which by their sense and context survive the expiration or termination of this Lease,shall so survive. 47 of 51 173 02agree/Waterfront Beach Cabana/jmf/jn/6/26/2002 SECTION 67. MODIFICATION No waiver or modification of any language in this Lease shall be valid unless in writing and duly executed by both parties. SECTION 68. SECTION HEADINGS The titles, captions, section, paragraph and subject headings, and descriptive phrases at the beginning of the various sections in this Lease are merely descriptive and are included solely for convenience of reference only and are not representative of matters included or excluded from such provisions, and do not interpret, define, limit or describe, or construe the intent of the parties or affect the construction or interpretation of any provision of this Lease. SECTION 69. 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. SECTION 70. INDEPENDENT CONTRACTOR Lessee is, and shall be, acting at all times in the performance of this Agreement as an independent contractor herein and not as an employee of City. Lessee shall secure at its own cost and expense, and be responsible for any and all payment of all taxes, social security, state disability insurance compensation,unemployment compensation and other payroll deductions for Lessee and its officers, agents and employees and all business licenses, if any, in connection with the Lease and/or any services to be performed hereunder. SECTION 71. ATTORNEY'S FEES Except as expressly set herein, in the event suit is brought by either party to construe, interpret and/or enforce the terms and/or provisions of this Lease or to secure the performance 48 of 51 174 02agree/Waterfront Beach Cabana/jmf/jn/6/26/2002 hereof, each party shall bear its own attorney's fees, such that the prevailing party shall not be entitled to recover its attorney's fees from the non-prevailing party. SECTION 72. LEGAL SERVICES SUBCONTRACTING PROHIBITED • Lessee and City agree that City is not liable for payment of any subcontractor work involving legal services, and that such legal services are expressly outside the scope of services contemplated hereunder. Lessee understands that pursuant to Huntington Beach City Charter Section 309, the City Attorney is the exclusive legal counsel for City; and City shall not be liable for payment of any legal services expenses incurred by Lessee. SECTION 73. GOVERNING LAW This Lease shall be governed and construed in accordance with the laws of the State of California. SECTION 74. DUPLICATE ORIGINAL The original of this Lease and one or more copies hereto have been prepared and signed in counterparts as duplicate originals, each of which so executed shall, irrespective of the date of its execution and delivery, be deemed an original. Each duplicate original shall be deemed an original instrument as against any party who signed it. SECTION 75. ENTIRETY The parties acknowledge and agree that they are entering into•this Lease freely and voluntarily following extensive arm's length negotiations, and that each has had the opportunity to consult with legal counsel prior to executing this Lease. The parties also acknowledge and agree that no representations, inducements, promises, agreements or warranties, oral or otherwise, have been made by that party, or anyone acting on that party's behalf, which are not embodied in this Lease, and that that party has not executed this Lease in reliance on any representation,inducement, 49 of 51 02agree/Waterfront Beach Cabana/jrnf/jn/6/26/2002 175 promise,agreement,warranty, fact or circumstance not expressly set forth in this Lease. The Lease, and the attached exhibits, contain the entire agreement between the parties respecting the subject matter of this Lease, the Premises, the leasing of the Premises to Lessee, or the lease term created under this Lease and supercede all prior understandings and agreements, whether oral or in writing between the parties respecting the subject matter hereof. [SIGNATURES ON NEXT PAGE] • • 50 of 51 176 02agree%Waterfront Beach Cabana/jm /6/26/2002 t%jn IN WITNESS WHEREOF,the parties hereto have caused this Lease to be executed by and through their authorized officers the day,month and year first above written. WATERFRONT HOTEL,LLC, CITY OF HUNTINGTON BEACH, a California limited liability corporation a municipal corporation of the State of California By: N ‘1,,c /124/44 61114 -Mayor • Its: (circle one)Chairma' 'residen Ice President ATTE 1: City Clerk 4- By: lir APPROVED AS TO FORM: • Its: (circle on:J / hie inancial Officer/ Asst.Secretary—Treasurer • MII.` City Attorney aPq40-,-• .,� INITIA D - ROV � lirector ofeanmunity Services APPROVE . Director Administrative Services • REVIEWED AND APPROVED: • Administrator • • 51 of 51 177 02agree/Waterfront Beach Cabana/jmf/jn/6/26/2002 ___ T go I 9F2d 'Mu .LI$IHX3 S99Z Si 0961 .' • , O,HW SI-IS 'S b V� !!3d 4 'N0P+ d SSVIie „Z/I Z • 1' \., I I • .0. P\�� PP '� JC), hoc�\p� a0 0f' .co F.c,�o \'l �`'� b' • o� 55 "7p • I . J a 3 fi.o..„7/--.1 I- :mO �s'I z N z 0 Q m O x ,J cr a0N I. W Z . CV ' a J L9a w ~ ZZ 2 O I- Z '' o / // j a. Q cc W a I Q I =.ov v >. 1 .„, t ag( .I>4- N J - M-, 5 ,b s o L�. s,az� ` m w _ 0 O ; 3� ? J a 3 3 a fio g 1 . J Iz J z z U 0 3- �FII 0 f9 --I Y a Q • z W N`IS;$c / �S °- ,••• °- ;."1,S 1 j /� I j l/ V U' Y Zv Q =w m 0 CITY OF HUNTINGTON BEACH Quarterly Evaluation Month Year Today's Date • - Inspected By: Area O.K. Needs Attention: Doors&Locks Exterior Walls Exterior.Area Graffiti Removal Grease Trap • Hood Grease Filters Interior Walls • Removal of Bird Droppings Rest Room • • • Roof Rust Signage • • Trash • Trim Windows • • COMMENTS: ACTION REQUIRED: AGREED TO: EXHIBIT "B" Page 1 of 2 179 • DEFINITIONS fixtures clean and rust free. Light fixtures dean and functioning. Air fresheners functioning. Doors and Locks Trash receptacles clean, lined and emptied Clean and in operable position and condition. regularly. All locks shall be regularly checked and maintained. Absolutely no chain locks are Roof allowed. Locks shall only be used on Free of debris and cleaned regularly as needed - authorized locations. to remove bird droppings, graffiti or vandalism.' Roof leaks shall be reported immediately to the Exterior Walls Community Services Department. clean and smooth,void of rust, graffiti, stickers, etching,or other materials or marks that were Rust not originally placed on the walls. No accumulation or degeneration to interior or exterior surfaces. Rusted areas shall be Graffiti Removal cleaned and painted on a regular basis to avoid All graffiti shall be removed within forty-eight long term damage. hours including painted or sprayed graffiti, magic markers,stickers,etching, and surf wax. Sionaae The building shall be kept free of graffiti. Clean, readable and in good condition. Bulbs in Interior rest room graffiti shall be removed on a lighted signs shall be replaced as needed regular basis not to exceed forty-eight hours. within twenty-four hours. No unauthorized signs'shall be posted. Grease Trap Free and dear flowing with regularly scheduled Trash maintenance to prevent buildup or clogging. Deposited in designated containers. There shall be no buildup of cardboard boxes, unused • Hood Grease Filter equipment, unwanted decorator items, etc. Removed and cleaned a minimum of every within the trash areas. Trash areas shall be three months, and checked regularly and secured from public use to avoid deposit of fish cleaned more often if necessary. Filters shall remains. be replaced at such time as required where volumes are no longer maintained. Trim Clean and smooth, void of corrosion and rust. Interior Walls Clean and smooth,void of dirt or corrosion. All Windows - fire-rated walls shall be solid and unpenetrated. Clean and void of cracks. No commercial stickers shall be used on windows. Removal of Bird Droppings the building in its entirety shall be cleaned a Exterior Area minimum of every three months to remove all Outside area around concession building that is bird droppings. If bird droppings present a utilized by the concessionaire. health problem,they shall be removed prior to • the minimum three month periods. Rest Rooms (Plumbing) Entry mats, floors and carpets shall be kept clean. Walls shall be kept fingermark free. Tile and wall surfaces shall be kept clean. Toilet bowls, rims,tank tops, and bodies shall be kept EXHIBIT „B,' clean. Mirrors shall be kept clean and streak Page 2 of 2 free. Soap dispensers clean and full. Paper towel dispensers clean and full. Toilet paper 180 dispensers clean and full. All sink and faucet LEASE BETWEEN THE CITY OF HUNTINGTON BEACH AND WATERFRONT HOTEL, LLC FOR THE WATERFRONT BEACH CABANA Table of Contents SECTION PAGE 1 Superseding of Prior Lease......................................................................................1 2 Grant of Concession on the Premises.....................................................:...............*I 3 Reservations, Encumbrances and Rights-of-Way....................................................2 4 Time of Essence ° 5 Term.........................................................................................................................3 6 Conditions of Premises as Is....................................................................................3 7 Duration of Public Facilities.: ... : ............................................................................... 4 8 Additions, Alterations and Removal........................................................................4 9 City's Contract Administrator...................................................................................4 10 Rent............................................................................................................... 5 11 Late. Charge and Penalty..............................................................................I ...........5 12 Gross Sales Defined.....................................................................I....._ I....................6 13 Gross Sales Exclusions ............. :....................................... ........................................ 7 14 Books and Records .................... ............. .................................................................. 8 15 Statement of Gross Sales/Audit: :................................................................ ..........9 16 Security Deposit ....................... ..........10 17 Use of Coca-Cola Products......................................................................................11 18 Quality of Sales, Rentals and Services ................. 19 Indemnification, Defense and Hold Harmless Agreement......................................12 20 Workers' Compensation and Employers' Liability Insurance..................................13 21 General Public Liability Insurance .............................................. ... 14 22 Property Insurance...................................................................................................14. 23 Increase in Amount of General Public Liability and Property Insurance................16 24 Certificates of Insurance; Additional Insured Endorsements..................................16 25 Insurance Hazards....................................................:...............................................17 26 Maintenance of Premises.........................................................................................17 27 Rent Credit...............................................................................................................19 28 Damage, Destruction or Nuisance...........................................................................20 29 Taxes........................................................................................................................20 30 Payments of Obligations ................................. 21 31 Utilities and Services...............................................................................................21 32 Business License......................................................................................................21 33 Signs, Advertising and Approval of Name..............................................................21 34 No Assigning, Subleasing or Encumbering.............................................................22 35 Terms Binding on Successors..................................................................................24 36 Default......................................................................................................................24 37 Remedies..................................................................................................................26 02agree/Waterfront Beach Cabana/jmf/jn/6/26/2002 38 Cumulative Remedies..............................................................................................30 39 Waiver of Default ............:.................. 40 City's Defaults/Lessee's Remedy.............................................................................31 41 Consent....................................................................................................................31 42 Holdover..................................................................................................................32 43 Waiver of Claims......................................................................................................32 44 Inspection of Premises..............................................................................................32 45 City's Right to Lease Buyout...................................................................................33 46 Photography.............................................................................................................36 47 Hazardous Substances..............................................................................................36 48 Nondiscrimination....................................................................................................37 49 Sale of Alcoholic Beverages and Entertainment. Prohibited ....................................39 50 Liens.........................................................................................................................39 51 Installation and Removal of Trade Fixtures.............................................................39 52 Destruction...............................................................................................................40 53 No Abatement of Rent During Repair Work...........................................................41 54 Eminent Domain.......................................................................................................41 55 Relocation and Assistance, Business Goodwill and LeaseholdBonus Value ......... 42 56 Quitclaim Deed ...................... :................................................................................. 42 57 • Restoration and Surrender of Premises/Title to Improvements...............................43 58 Force Majeure -Unavoidable Delays......................................................................44 .59 City's Option to Close the -Premises ................................... 60 Deliveries -of Supplies .............................. ..:........45 61 ' Employee Parking ........................................... :...................................... .......45 62 Conflici of Interest.....................................................................................................45 63 Notice........................................................................................................................46 64 Compliance with Laws ....................... .......46 , 65 Interpretation of this Lease::.: .................................................................................... 47 66 Survival..............................................................47 67 Modification...............................................................................................................48 68 Section Headings.......................................................................................................48 69 Brokers.....................................................................................................................48 70 Independent Contractor............................................................................................48 71 Attorney's Fees..........................................................................................................48 72 Legal Services Subcontracting Prohibited...............................................................49 73 Governing Law.:......................................................................................................49 74 Duplicate Original....................................................................................................49 75 Entirety.....................................................................................................................49 02agree/Waterfront Beach Cabana/jmf/jn/6/26/2002 J LEASE BETWEEN THE CITY OF HUNTINGTON BEACH AND WATERFRONT HOTEL, LLC FOR THE WATERFRONT BEACH CABANA THIS LEASE (the "Lease") is made and entered into effective February 1, 2003 by and between the CITY OF HUNTINGTON BEACH, a municipal corporation of the State of California ("City") and WATERFRONT HOTEL, LLC, a California limited liability corporation ("Lessee"). WHEREAS, City wishes to lease certain real property (the "Property"), also known as the Waterfront Beach Cabana, whose address is 21351 Pacific Coast Highway, Huntington Beach, CA 92648, together with a building and other related improvements (collectively referred to as the "Improvements"). The term "Premises" as used in this Lease shall mean both the Property and the Improvements. Lessee desires to lease the Premises in the manner set forth below. NOW, THEREFORE, the parties covenant and agree as follows: SECTION 1. SUPERSEDING OF PRIOR LEASE This Lease shall supersede and replace any existing lease agreement(s) for the Premises currently entered into by and between the parties and all supplemental agreement(s) entered into by and between the parties regarding the existing lease agreement(s). SECTION 2. GRANT OF CONCESSION ON THE PREMISES City, pursuant to the terms of this Lease, grants to Lessee for the purposes stated herein, the right, privilege and duty to equip, operate and maintain a concession open to the public located on the Premises (hereinafter sometimes referred to as the "Concession"). Lessee shall not use the Premises for any other purpose or business. A map depicting the Premises is set forth 02agree/Waterfront Beach Cabana/jmf/jn/6/26/2002 1 of 51 in Exhibit "A", which is attached hereto and incorporated herein by this reference. This Lease is not intended to confer third -party beneficiary status to anyone. SECTION 3. RESERVATIONS, ENCUMBRANCES AND RIGHTS -OF -WAY (a) City expressly reserves all natural resources in, on, or two hundred fifty (250) feet under the Premises, including, without limitation, oil, coal, natural gas and other hydrocarbons, minerals, aggregates, timber and other geothermal resources, as well as the right to grant leases or other contractual arrangements in and over the Premises for the extraction of such natural resources. However, such leasing or other arrangement shall be neither inconsistent nor incompatible with*the rights or privileges of Lessee under this Lease. (b) City expressly reserves a right to enter upon the Premises with as much advance written, verbal or electronic notice as possible to Lessee for any reason associated with public health, safety or welfare, or for the protection of life, limb or property. In all other cases unless otherwise specifically set forth herein, City reserves the right for such entry but City shall give Lessee at least twenty-four (24) hours advance written, verbal or electronic notice. City shall have a right of reasonable access to the Premises across Lessee owned, controlled or occupied lands adjacent to the Premises, if any, for any purpose associated with this Lease. (c) City expressly reserves the right to lease, convey, or encumber the Premises, in whole or in part, for any purpose not inconsistent or incompatible with the rights or privileges of Lessee under this Lease. In addition, Lessee agrees to subordinate the Lease to any existing or future City financing regarding the Premises or any 2of51 02agree/Waterfront Beach Cabana/jmf/jn/6/26/2002 portion thereof. Lessee also agrees to cooperate and provide any documentation necessary for City to obtain any such financing- (d) This Lease is subject to pre-existing contracts, leases, licenses, easements, encumbrances and claims affecting the Premises and it is made without warranty by City of title, condition or fitness of the land for the stated or intended use. SECTION 4. TIME OF ESSENCE Time shall be of the essence of :this Lease and each and all of its terms, covenants or conditions in which performance is a factor. J SECTION 5. TERM This Lease shall commence at 12:01 a.m. on February 1, 2003, for a ten (10) year term, which shall end at 11:59 p.m. on January 31, 2013, unless extended, or sooner terminated, as provided for herein. Lessee shall have an option to extend the term of the Lease for another ten (10) years. To exercise this option, Lessee must send City written notice specifically identifying its intent to exercise this option by July 31, 2012. SECTION 6. CONDITIONS OF PREMISES AS IS The taking of possession of the Premises by Lessee, upon City's issuance of the certificate of occupancy, shall, in itself, constitute acknowledgment that the Premises are in good and tenantable condition. Upon taking possession of the Premises, Lessee agrees to accept the `Premises in their presently existing condition, "as is", and agrees that City shall not be obligated to make any alterations, additions or betterments thereto. 3 of 51 02agree/Waterfront Beach Cabana/jmf/jn/6/26/2002 SECTION 7. 'DURATION OF PUBLIC FACILITIES By entering into this Lease, City makes no stipulation as to the type, size, location or duration of public facilities (excluding the Premises), including, without limitation, any City parking lots to be maintained on property owned, controlled or occupied by City. SECTION 8. ADDITIONS, ALTERATIONS AND REMOVAL . (a) No modifications, alterations or additions to the Premises, including, without limitation, construction. of Improvements or changes - to structural design, landscape design, or interior or exterior furnishings, shall be constructed or made by Lessee without Lessee first obtaining the prior written approval of City, which will not be unreasonably withheld. (b) Except as provided under this Lease, no alteration or removal of existing Improvements on or natural features of the Premises shall be undertaken without Lessee first obtaining the prior written approval of City. (c) Lessee's obligation to obtain City's prior written approval is separate and independent of Lessee's obligation to obtain any permits from City, such as, without limitation, a building permit. SECTION 9. CITY'S CONTRACT ADMINISTRATOR City's Director of Community Services, or his or her designee, shall be City's Contract Administrator for this Lease with the authority to act on behalf of City for the purposes of this Lease, and all City approvals and notices required to be given herein to City shall be so directed and addressed. 4of51 02agree/Waterfront Beach Cabana/jmf/jn/6/26/2002 SECTION 10. RENT Lessee agrees to pay to City as rent (the "Rent") for the use and occupancy of the Premises a sum equal to the following percentages of the amount of "Gross Sales", as defined in Section 12 below: $0 - $100,000.00 of Gross Sales = 7.5%; $100,000.01 - $150,000.00 of Gross Sales = 9.5%; Over $150,000.00 of Gross Sales = 11.5%. Lessee shall pay the Rent monthly to City at the City Treasurer's Office, P.O. Box 711, Huntington Beach, California, 92648, or at such other place or places as City may from time -to - time designate by written notice delivered to Lessee. Lessee shall pay the Rent, which must be received by the City Treasurer within fifteen (15) calendar days after the end of the month for which the Rent is being paid, or on the next business day if the fifteenth day falls on a weekend or holiday. SECTION 11. LATE CHARGE AND PENALTY If the 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 any payment hereunder is due but unpaid; and (2) one and a half percent (1 '/z%) penalty per -month shall be added for each month the Rent is due but unpaid. With respect to any other payments required by Lessee, a one and a half percent (1 '/2%) penalty per month shall be added for each month such payment hereunder is due but unpaid. 5 of 51 02agree/Waterfront Beach Cabana/jmf/jn/6/26/2002 SECTION 12. GROSS SALES DEFINED For the purpose of this Lease, the term "Gross- Sales" shall mean the total price of all merchandise, food and beverages, or services sold or rendered, or equipment rented, in,. on, or from the Premises by Lessee, or anyone contracting with Lessee, including, without limitation, its agents or sublessees (collectively or individually, "Lessee Party(ies)"), whether wholesale or retail, whether for cash or on credit, and if on credit whether or not .paid;. and whether in exchange for any other product, commodity, service, commercial paper or forbearance, and shall include, without limitation, the following: (a) All revenues, receipts, commissions or proceeds from on-line sales by Lessee Party(ies), and/or from all public telephones, vending, weighing and all other machines owned, operated, or leased to or by Lessee Party(ies) in, on, or from the Premises; (b) All revenues, receipts, commissions or proceeds from sales based on orders solicited or taken, in, on, or from the Premises for merchandise, food and beverages, or services to be delivered or rendered off, or from sources outside, the Premises, including, without limitation, all orders taken in, on, or from the Premises although the orders may be filled elsewhere; (c) All revenues, receipts, commissions or proceeds from the renting of equipment of any kind in, on,, or from the Premises; and (d) All revenues, receipts, commissions or proceeds generated from offsite but delivered through the Concession. 6of51 02agree/Waterfront Beach Cabana/jmf/jn/6/26/2002 (e) All revenues, receipts, commissions or proceeds made by Lessee Party(ies) or their employees or others acting on their behalf for the rendition of services of any kind whatsoever, made in, on, or from the Premises. (0 All other revenues, receipts, commissions or proceeds generated by, arising or derived whatsoever from the use of the Premises or derived whatsoever from any business conducted in, on, or from the Premises. For purposes of computing the Gross Sales figure on which to calculate the Rent, the amount of Gross Sales shall start over at zero dollars on January 1 of each year. If the Lease commences on any date other than January 1, the Gross Sales calculation begins from such commencement date and runs through December 31 of such Lease commencement year. SECTION 13. GROSS SALES EXCLUSIONS Gross Sales shall not include the following items, and Lessee may deduct such items from Gross Sales to the extent they have been included therein or have been included in a prior computation of Gross Sales on which the Rent has been paid under this Lease to City: (a) Any sales, excise or other taxes otherwise includable in Gross Sales and which become part of the total price of merchandise, food and beverages, or services sold or rendered, or equipment rented, in, on, or from the Premises where Lessee must account for and remit the taxes to the government entity or entities which impose them, but only if such taxes are added to the total price and collected from customers; (b) Any transfer of trade inventory from the Premises to the manufacturer or supplier from whom it was obtained by Lessee; (c) Sales of Trade Fixtures (as defined in Section 51 below); 7 of 51 02agree/Waterfront Beach Cabana/jmf/jn/6/26/2002 i (d) Sums and 'credits` received in the settlement of claims for loss' of or damage to trade inventory or Trade Fixtures; and (e) Any sales resulting in a cash or credit refund to a customer in the ordinary course of business. SECTION 14. BOOKS AND RECORDS Lessee shall keep true and accurate books and records showing all of its business transactions in separate records of account for the Concession in a manner acceptable to City, and City and/or its designated representatives shall have the right, at all reasonable times, to inspect such books and records including, without limitation, State of California sales or use tax returns or other State return records, and Lessee hereby agrees that, all such records and instruments shall promptly be delivered and made available to City and/or its designated representatives within thirty (30) days of receiving written request therefor. Lessee shall furnish to City and/or its designated representatives copies of its quarterly California sales and use tax returns at the time each is filed with the State of California. The books and records shall show the total amount of Gross Sales made each calendar month in, on, or from the Premises and any exclusions listed in Section 13 above. All sales and charges shall bexecorded by means of cash registers which display the amount of the transaction i 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 shall record the total sales for that day. Lessee agrees to maintain on the Premises, or another location subject to the prior written approval of City, all records, books of account and cash register tapes, showing, or in any way pertaining to the Gross Sales made in, } on, or from the Premises during such calendar month, including, without limitation, State of 8 of 51 02agree/Waterfront Beach CabanaJmf/jn/6/26/2002 California sales or use tax returns or other State tax returns, for a period of five (5) years following the close of each calendar month. SECTION 15. STATEMENT OF GROSS SALES/AUDIT At the time specified in Section 10 of this Lease for the payment of the Rent, Lessee shall deliver to City a true and accurate statement signed by Lessee or by an authorized employee of Lessee showing the total Gross Sales and any exclusions listed in Section 13 above made during the preceding calendar month and the amount of the Rent then being paid calculated on such Gross Sales pursuant to this Lease. The acceptance by City of any monies paid to City.by Lessee as the Rent, as shown by any statement furnished by Lessee, shall not be construed as an admission of the accuracy of the statement, or of the sufficiency of the amount of the Rent payment, and City shall be entitled to review the adequacy of such payment as set forth herein By the end of each January, Lessee shall deliver to City a year-end statement showing the total amount of Gross Sales made in, on, or from the Premises in each month of the preceding year, the total of any exclusions, the total Rent paid to City for each of those months, all with year-end totals. City may at any time within three (3) years after receiving the year-end statement, at its sole cost and expense, cause all records, books of account and cash register tapes for the year purportedly covered by the statement, to be audited by City or an accountant selected by City. Lessee shall, within thirty (30) days of receiving written notice of City's desire for such an audit, deliver and make available all such records, books of account and cash register tapes to City or its designated representative for City's use in the audit and/or for copying. If the audit discloses that Gross Sales were understated and/or exclusions overstated, Lessee shall immediately pay the additional Rent, together with a penalty thereon from the date it was due at the penalty rate set forth in Section 11 above. .Furthermore, Lessee shall promptly on demand reimburse City for the 9of51 02agree/Waterfront Beach Cabana/jmf/jn/6/26/2002 full cost and expense of the audit should the audit disclose that the questioned year-end statement understated Gross Sales (including an overstatement of exclusions) or the Rent by any amount greater than Two Hundred Fifty Dollars ($250.00). City further reserves the right to examine and audit all such records, books of account and cash register tapes at any time during the three (3) year period following the expiration or termination of this Lease. In addition, City shall have the right to enter upon the Premises during business hours and with two (2) hours advance written, verbal or electronic notice to Lessee to perform any audit or inspection function with respect to this Lease. Lessee, its bookkeeper and/or accountant shall respond to all questions and inquiries of City with respect to the books, records, statements and other documentation being examined, and shall promptly provide other further documentation as may be required by City. City is entitled to take statements by deposition under oath of Lessee, its officers, bookkeepers and/or accountants or any person who prepared the books, records, statements and other documentation required to be provided by Lessee under this Lease. SECTION 16. SECURITY DEPOSIT Upon execution hereof, Lessee shall pay and maintain at all times during the entire term of this Lease or any renewals or extensions thereof or during any holdover period, a security deposit with City in a sum of not less than Two Thousand Five.Hundred Dollars ($2,500.00) to guarantee all of Lessee's obligations, liabilities, duties and responsibilities under the Lease, including, without limitation, the repair and maintenance of the Premises as. provided herein. Such deposit shall be in the form of a cash bond or an assignment of certificate of deposit (the "CD") or savings account to City, and shall be provided to the City Treasurer. The form of any such security deposit shall be approved by the City Attorney and the City Treasurer. No interest 10 of 51 02agree/Waterfront Beach Cabana/jmf/jn/6/26/2002 shall accrue on cash deposits to the benefit of Lessee, but interest shall accrue on a CD or savings account and shall be paid to Lessee under the terms of the CD or savings account. Lessee shall send a copy of each renewal of the CD to the City Treasurer to ensure that City has the records of each active deposit account. SECTION 17. USE OF COCA -COLA PRODUCTS Lessee shall comply with City's exclusivity agreement with the Coca-Cola Bottling Company of Southern California ("Coca-Cola") by doing the following: only Coca-Cola fountain and bottling products shall be bought and sold in, on, or from the Premises for the term of the City's agreement with Coca-Cola. This includes all carbonated and non -carbonated, non- alcoholic beverages defined as soft drinks, juices, juice drinks, teas, isotonics, water and frozen beverages. Frozen beverages shall not include ice creams and frozen yogurts. Lessee's failure to adhere to the Coca-Cola exclusivity clause shall constitute a Default of this Lease as defined in Section 36 below. This exclusivity shall not apply to third -party rentals that bring their own drink products. SECTION 18. QUALITY OF SALES, RENTALS AND SERVICES Lessee, at its sole cost and expense, shall equip, operate, manage and maintain the Premises and Concession and shall keep the same equipped and maintained in a manner acceptable to City during the entire term of this Lease or any renewals or extensions thereof or during any holdover period. It is the intent of City that the Concession's services be provided in a manner to meet the needs of the visiting public, and should City deem the Concession's hours of operation and/or food, merchandise, services or rentals inadequate to meet such needs, City may require Lessee to make such changes requested by City. Lessee shall not use or permit the Premises to be used, in whole or in part, during the entire term of this Lease or any renewals or 11 of 51 02agree/Waterfront Beach Cabana/jmf/jn/6/26/2002 extensions thereof or during any holdover period for any purpose other than as herein set forth, without the prior written consent of City. Except as permitted in advance in writing by City, all foods and beverages shall be sold in disposable paper or plastic containers. No pull -top cans or styrofoam containers are to be vended or dispensed from the Premises unless pre -approved in writing by City. Lessee, wherever feasible, shall eliminate the use of non -recyclable containers and plastics. City may from time to time review the items sold and containers or utensils used or dispensed by Lessee. City reserves the right to prohibit the sale or use of non -recyclable containers or plastics. City in its sole discretion reserves the right to prohibit Lessee's sale, provision or rental of any item or service rendered or performed, which it deems objectionable or offensive, beyond the scope deemed necessary for proper service to the public, inappropriate for sale, provision or rental by the Concession, or of inferior quality. SECTION 19. INDEMNIFICATION, DEFENSE AND HOLD HARMLESS AGREEMENT Lessee hereby agrees to protect, defend, indemnify and hold harmless City, its officers, elected or appointed officials, employees, agents and volunteers from and against any and all claims, damages, losses, expenses, judgments, demands and defense costs (including, without limitation, costs and fees of litigation (including arbitration) of every nature or liability of any kind or nature) arising out of or in connection with (1) the use or occupancy of the Premises by Lessee, its officers, employees or agents, or (2) the death or injury of any person or the damage to property caused by a condition of the Premises, or (3) the death or injury of any person or the damage to property caused by any act or omission of Lessee, its officers, employees or agents, or (4) any failure by Lessee to keep the Premises in a safe condition, or (5) Lessee's (or Lessee's agents and/or sublessees; if any) performance of this Lease or its failure to comply with any of its 12 of 51 02agree/Waterfront Beach Cabana/jmf/jn/6/26/2002 obligations contained in this Lease by Lessee, its officers, agents or employees except such loss or damage which was caused by the sole negligence or willful misconduct of City. Lessee shall hold all Trade Fixtures, personal property and trade inventory on the Premises at the sole risk of Lessee and save City harmless from any loss or damage thereto by any cause whatsoever, except such loss or damage which was caused by the sole negligence or willful misconduct of City. City shall be reimbursed by Lessee for all costs and attorney's fees incurred by City in enforcing Lessee's obligations set forth in this Section. Lessee will conduct all defense at its sole cost and expense and City shall approve selection of Lessee's counsel. This indemnity shall apply to all claims and -liability regardless of whether any insurance policies are applicable. The policy limits do not act as limitation upon the amount of indemnification to be provided by Lessee. SECTION 20. WORKERS' COMPENSATION AND EMPLOYERS' LIABILITY INSURANCE Lessee acknowledges awareness of Section 3700 et seq. of the California Labor Code, which requires every employer to be insured against liability for workers' compensation. Lessee covenants that it shall comply with. such provisions prior to the commencement of this Lease. Lessee shall obtain and furnish to City workers' compensation and employers' liability insurance in amounts not less than the State statutory limits. Lessee shall require all sublessees and contractors to provide such workers' compensation and employers' liability insurance for all of the sublessees' and contractors' employees. Lessee shall furnish to City a certificate of waiver of - subrogation under the terms of the workers' compensation and employers' liability insurance and Lessee shall similarly require all sublessees and contractors to waive subrogation. 13 of 51 02agree/Waterfront Beach Cabana/jmf/jn/6/26/2002 SECTION 21. GENERAL PUBLIC LIABILITY INSURANCE In addition to the workers' compensation and employers' liability insurance and Lessee's covenant to defend, hold harmless and indemnify City, Lessee shall obtain and furnish to City, a policy of general public liability insurance, including motor vehicle coverage against any and all claims arising out of or in connection with the Premises. This policy shall indemnify Lessee, its officers, employees and agents, while acting within the scope of their duties, against any and all claims arising out of or in connection with the Premises, and shall provide coverage in not less than the following amount: combined single limit bodily injury and property damage, including products/completed operations liability and blanket contractual liability, of One Million Dollars ($1,000,000.00) per occurrence. If coverage is provided under a form which includes a designated general aggregate limit, the aggregate limit must be no less than One Million Dollars ($1,000,000.00) for the Premises. This policy shall name City, its officers, elected or appointed officials, employees, agents, and volunteers as Additional Insureds, and shall specifically provide that any other insurance coverage which may be applicable to the Lease shall be deemed excess coverage and that Lessee's insurance shall be primary. Under no circumstances shall said above -mentioned insurance contain a self -insured retention, or a "deductible". or any other similar form of limitation on the required coverage. SECTION 22. PROPERTY INSURANCE Lessee shall provide before commencement of this Lease and shall obtain and furnish to City, at Lessee's sole cost and expense, property and fire insurance with extended coverage endorsements thereon, by a company acceptable to City authorized to conduct insurance business in California, in an amount insuring for the full insurable value of all Improvements, Trade Fixtures, personal property whether or not owned or leased by Lessee, and all trade inventory in 14 of 51 02agree/Waterfront Beach Cabana/jmf/jn/6/26/2002 or on the Premises against damage or destruction by fire, theft or the elements. This policy shall contain a full. replacement cost endorsement naming Lessee as the insured and shall not contain a coinsurance penalty provision. The policy shall also contain an endorsement naming City as an Additional Insured. The policy shall contain a special endorsement that such proceeds shall be used to repair, rebuild or replace any such Improvements, Trade Fixtures, personal property whether or not owned or leased by Lessee, and all trade inventory so damaged or destroyed; and if not so used, such proceeds (excluding any insurance proceeds for Trade Fixtures, personal property whether or not owned or leased by Lessee, and trade inventory, but only to the extent the insurance proceeds specifically cover those items) shall be paid to City. The policy shall also contain a special endorsement that if the Premises are so destroyed triggering the parties' ability to terminate as set forth in Section 52 (Destruction) below, and either party elects to terminate the Lease, the entire amount of any insurance proceeds (excluding such proceeds for Trade Fixtures, personal property whether or not owned or leased by Lessee and trade inventory, but only to the extent the insurance proceeds specifically cover those items) shall be paid to City The proceeds of any such insurance payable to City may be used, in the sole discretion of City, for rebuilding or repair as necessary to restore the Premises or for any such other purpose(s) as City sees fit. This policy shall also contain the following endorsements: (a) The insurer shall not cancel or reduce the insured's coverage without (30) days prior written notice to City; (b) City shall not be responsible for premiums or assessments on the policy. A complete and signed certificate of insurance with all endorsements required by this Section shall be filed with City prior to the execution of this Lease. At least thirty (30) days 15 of 51 02agree/Waterfront Beach Cabana/jmf/jn/6/26/2002 prior to the expiration or termination of any such policy, a signed and complete certificate of insurance showing that coverage has been renewed shall be filed with City. SECTION 23. INCREASE IN AMOUNT. OF GENERAL PUBLIC LIABILITY AND PROPERTY INSURANCE Not more -frequently than once every two '(2) years, if, in the sole opinion of City, the amount and/or scope of general public liability insurance in Section 21 above and/or property insurance coverage in Section 22 above at that time is not adequate, Lessee shall increase the insurance coverage as reasonably required by City. SECTION 24. CERTIFICATES OF INSURANCE, ADDITIONAL INSURED ENDORSEMENTS Prior to commencement of this Lease, Lessee shall furnish to City certificates of insurance subject to approval of the City Attorney evidencing the foregoing insurance coverages as _required by this Lease; these certificates shall: (a) provide the name and policy number of each carrier and policy; (b) shall state that the policy is currently in force; and (c) shall promise to provide that such policies shall not be canceled or modified without thirty (30) days' prior written notice of City; however ten (10) days' prior written notice in the event of cancellation for nonpayment of premium, which 10-day notice provision shall not apply to property insurance in Section 22 above. Lessee shall maintain the foregoing insurance coverages in force during the entire term of the Lease or any renewals or extensions thereof or during any holdover period. 16 of 51 02agree/Waterfront Beach Cabana/jmf/jn/6/26/2002 The requirement for carrying the foregoing insurance coverages shall not derogate from Lessee's defense, hold harmless and indemnification obligations as set forth in this Lease. City or its representatives shall at all times have the right to demand the original or a copy of any or all the policies of insurance. Lessee shall pay, in a prompt and timely manner, the premiums on all insurance hereinabove required. SECTION 25. INSURANCE HAZARDS Lessee shall not commit or permit the commission of any acts on the Premises nor use or permit the use -of the Premises in any manner that will increase the existing rates for, or cause the cancellation of any liability, property, or other insurance policy for the Premises or required by this Lease. Lessee shall, at its sole cost and expense, comply with all requirements of any insurance carrier providing any insurance policy for the Premises or required by this Lease necessary for the continued maintenance of these policies at reasonable rates. SECTION 26. MAINTENANCE OF PREMISES City's maintenance responsibilities of the Premises shall be limited to maintaining all sewers and drain lines, roofs and attached public restrooms (if they exist). Except as set forth in the preceding sentence, Lessee agrees to. maintain the Premises in good order and repair, at Lessee's sole cost and expense, during the entire term of this Lease or any renewals or extensions thereof or during any holdover period, pursuant to the City's maintenance standards. A copy of the quarterly evaluation summary sheet setting forth the City's maintenance checklist is attached as Exhibit "B", and incorporated herein by this reference. Except as provided above, Lessee, at its sole cost and expense, shall perform any maintenance and repairs including, without limitation, facility maintenance and landscape maintenance on the Premises. 17 of51 02agree/Waterfront Beach Cabana/jmf/jn/6/26/2002 Lessee's obligation includes, without limitation, maintaining and operating the Premises and adjacent areas to a distance of not more than fifty (50) feet, in a clean; safe, wholesome and sanitary condition free of trash, garbage or obstructions of any kind and in compliance with any and all present and future laws, general rules or regulations of any governmental authority now, or at any time during the entire term of this Lease or any renewals or extensions thereof or during any holdover period, in force, relating to sanitation or public health, safety or welfare, or for the protection of life, limb or property; and Lessee shall at all times faithfully obey and comply with all laws, rules and regulations applicable thereto. Lessee, at its sole cost and expense, shall remedy without delay any defective, dangerous or unsanitary condition(s) caused by Lessee or anyone related thereto. Provided, however, that Lessee shall have no obligation to repair or maintain sewer lines or respond to sewer leaks. Lessee shall paint, stain or seal the Premises' exterior surfaces a minimum of every three (3) years, unless City determines in its sole discretion that such work shall be done on a more frequent basis. All exterior metal surfaces, except the roof, shall be painted with rust resistant paint no less than once every other year. Any and all graffiti on the Premises shall be removed by Lessee, at its sole cost and expense, within forty-eight (48) hours of Lessee receiving notice thereof or of Lessee becoming aware of such graffiti. In addition, with or without notice from City, Lessee shall, at its sole cost and expense, repair and/or replace any broken glass within forty-eight (48) hours of its becoming broken, regardless of cause, except by fault of City. Except as provided above for graffiti and broken glass, Lessee, at its sole cost and expense and with or without notice from City, shall repair and/or replace all damage or destruction to the Premises caused by act(s) of vandalism as soon as possible but in no event later than fourteen (14) days after the date such damage or destruction occurred. Lessee, at its sole cost and 18 of 51 02agree/Waterfront Beach Cabana/jmf/jn/6/26/2002 expense, shall repair and/or replace all other damage or destruction to the Premises, regardless of cause, except by fault of City. Lessee shall comply with all written notices served by City with regard to the care and maintenance of the Premises. Any written notice hereunder shall specify the work to be done and the period of time deemed to be reasonably necessary for completion of such work. Should Lessee fail to commence making the necessary repairs within seven (7) days after receiving such notice, or within twenty-four (24) hours of the glass becoming broken in the case of broken glass, or fail to diligently proceed to complete the necessary repairs within the period of time reasonably specified in the City's notice, or within forty-eight (48) hours of the glass becoming broken in the case of broken glass, -or within the forty-eight (48) hour time period for removing graffiti, or within fourteen (14) days of the date that the vandalism damage or destruction occurred, City, shall proceed to cause the required work to be performed, and Lessee shall promptly reimburse City for the cost of labor and materials thereof and pay City a penalty on such costs at the penalty rate set forth in Section 11 above from the date the costs were incurred by City to the date they are reimbursed to City by Lessee. Lessee hereby expressly waives the right to make repairs at the expense of City and the benefit, if any, of the provisions of Sections 1941 and 1942 of the California Civil Code relating thereto. SECTION 27. RENT CREDIT City in its sole discretion may decide to give Lessee rent credit if Lessee undertakes (1) any repair or maintenance obligation of City under this Lease, (2) any work City in its sole discretion deems necessary and appropriate or (3) any Lessee improvements. Prior to Lessee 19 of 51 02agree/Waterfront Beach Cabana/jmf/jn/6/26/2002 undertaking any such work, City must agree in writing to the amount of and procedures for the rent credit, the work to be done by Lessee and the cost of such work. SECTION 28. DAMAGE, DESTRUCTION OR NUISANCE Lessee shall not commit or permit the commission by others of any damage or destruction of, on, or to the Premises and/or Concession. Lessee shall not maintain, commit or permit the maintenance or commission of any nuisance as defined in Section 3479 and/or Section 3480 of the California Civil Code on the Premises; and Lessee shall not use or permit the use of the Premises for any unlawful purpose. SECTION 29. TAXES This Lease may create a possessory interest in property, which is subject to taxation. In the event that such possessory interest is created, Lessee agrees to be subject to the payment of and to pay taxes levied on such interest, at its sole cost and expense. Lessee also agrees to pay, at its sole cost and expense, before they become delinquent all other lawful taxes, assessments or charges, which at any time may be levied by any governmental agency including, without limitation, the State, County, City or any tax or assessment levying body upon any interest in this Lease, or any possessory right which Lessee may have in or to the Premises, by reason .of Lessee's use or occupancy thereof or otherwise, as well as all taxes, assessments, and charges on Trade Fixtures, personal property and trade inventory in, on, or about the Premises. Upon request, Lessee shall promptly furnish to City satisfactory evidence establishing such payment. Lessee shall comply with all laws, regulations and ordinances regarding the collection of taxes due a government agency. 20 of 51 02agree/Waterfront Beach Cabana/jmf/jn/6/26/2002 SECTION 30. PAYMENT OF OBLIGATIONS Lessee shall promptly pay, at its sole cost and expense, -before they become delinquent, any and all bills, debts, liabilities and obligations incurred by Lessee in connection with Lessee's occupation and use of the Premises and/or operation of the Concession. Upon request, Lessee shall promptly furnish to City satisfactory evidence establishing such payment. SECTION 31. UTILITIES AND SERVICES Excluding any attached public restrooms, if they exist, Lessee shall be responsible for the payment of all utility charges, including, without limitation, gas, electricity, water, telephone service, cable TV service, and the furnishing of all necessary refuse and garbage containers and the removal and disposal of all rubbish, refuse and garbage resulting from the operation of the Premises and/or the Concession. All such rubbish, refuse and garbage removed shall be disposed of in accordance with applicable laws and local ordinances. All trash containers and/or trash bins shall be adequately screened and located to the satisfaction of City. For the -purposes of this - Section, sewage disposal shall be construed as a utility. All such charges shall be paid by Lessee directly to the provider of the service and shall be paid as they become due and payable. Upon request, Lessee shall promptly furnish to City satisfactory evidence establishing such payment. SECTION 32. BUSINESS LICENSE Lessee shall maintain a business license from City during the entire term of this Lease or any renewals or extensions thereof or during any holdover period. SECTION 33. SIGNS, ADVERTISING AND APPROVAL OF NAME City shall have the right to approve in its sole discretion and at any time require Lessee to change or remove signs, names, placards, decorations or advertising placed on, or inscribed, painted or affixed upon the . Premises. Should City approve of any sign, name, placard, 21 of 51 02agree/Waterfront Beach Cabana/jmf/jn/6/26/2002 ` decoration or advertising, Lessee shall maintain the same at all times during the entire term of this Lease or any renewals or extensions thereof or during any holdover period in good appearance and repair. All signs, names, placards, decorations or advertising must comply with all requirements of any governmental authority with jurisdiction. SECTION 34. NO ASSIGNING, SUBLEASING OR ENCUMBERING (a) Prohibition of Assignment. The parties acknowledge that City is entering into the Lease in reliance upon the experience and abilities of Lessee and its principals. Consequently, Lessee shall not voluntarily assign, encumber or otherwise transfer its interest in the Lease or in the Premises, or sublease all or any part of the Premises, or allow any other person or entity (except Lessee'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 City's consent shall not relieve Lessee from any and all of its obligations, liabilities, duties or responsibilities under this Lease. Any assignment, encumbrance, occupation or use, sublease or other transfer without such consent shall be voidable and, at City's sole discretion, shall constitute a Default of this Lease. (b) Consent to Transfer. City's consent to any assignment, encumbrance, occupation or use, sublease or other transfer is subject to Lessee providing City with evidence satisfactory to City that the proposed, assignee, encumbrancer, occupier or user, sublessee or other transferee has suitable financial strength, experience and character for operation and control of the Premises and the Concession and that the use of the Premises by the proposed assignee, encumbrancer, occupier or user, 22of51 02agree/Waterfront Beach Cabana/jmf/jn/6/26/2002 sublessee or other transferee is consistent with that specified herein, and is commercially reasonable. Any proposed assignee, encumbrancer, occupier or user, sublessee or other transferee shall agree to abide by the terms and conditions of the Lease including, without limitation, all the obligations, liabilities, duties and responsibilities *of Lessee, and other conditions imposed upon it pursuant to law. An approval by City to one assignment, encumbrance, occupation or use, sublease or other transfer shall not be deemed to be an approval to any other assignment, encumbrance, occupation or use, sublease or other transfer. (c) Voluntary assignment defined. Except as otherwise expressly provided herein, any dissolution, merger, consolidation or reorganization of Lessee, or the sale or other transfer resulting in a transfer of a controlling percentage of the capital stock of Lessee (other than a transfer by will, devise, bequest, intestate succession; a transfer to or between the family members of Lessee, or a transfer to or between one or more trusts for the benefit of Lessee and/or Lessee's family members, where applicable) shall be deemed `a voluntary assignment. (d) Exceptions. Notwithstanding the foregoing paragraphs or anything to the contrary contained herein, City's consent shall not be required for an assignment or subleasing to an Affiliate, Subsidiary or Successor of Lessee (for purposes hereof, an "Affiliate," a "Subsidiary" and a "Successor" of Lessee are defined as follows: (a) an "Affiliate" is any corporation which directly or indirectly controls or is controlled or is under common control with Lessee (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, 23 of 51 02agree/Waterfront Beach Cabana/jmf/jn/6/26/2002 whether through the ownership of voting securities or by contract or otherwise), (b) a "Subsidiary" shall mean any corporation or partnership not less than twenty- five percent (25%) of whose outstanding stock shall, at the time, be owned directly or indirectly by Lessee and which is at least as creditworthy as Lessee, and (c) a "Successor" shall .mean a corporation or partnership in which or with which Lessee is merged or consolidated, in accordance with applicable statutory provisions for merger or consolidation of corporations, or a corporation or partnership acquiring a substantial portion of the property and assets of Lessee. SECTION 35. TERMS BINDING ON SUCCESSORS All the terms, covenants and conditions of this Lease shall inure to the benefit of and be binding upon the parties and their successors, including, without limitation, their assignees, encumbrancers, occupiers or users, sublessees or other transferees. The provisions of this Section shall not be deemed as a (1) waiver of any of the prohibitions and conditions against assignments, encumbrances, occupations or uses, subleases or other transfers hereinbefore set forth, or (2) City's consent thereto. If more than one lessee is a party to this Lease, the obligations of the lessees shall be joint and several. Even if City's consent is not required, Lessee shall immediately provide City with written notice of any, assignment, encumbrance, occupation or use, sublease or other transfer. SECTION 36. DEFAULT The occurrence of any one or more of the following events shall constitute a material default and breach ("Default") of this Lease by Lessee: (a) Lessee's failure to make any payment of the Rent or other payment required to be made by Lessee at the time required for payment under this Lease. 24of51 02agree/Waterfront Beach Cabana/jmf/jn/6/26/2002 (b) Lessee's failure to obtain or maintain the insurances and/or the security deposit as required under this Lease. (c) Lessee's vacating or abandonment of the Premises during the entire term of this Lease or any renewals or extensions thereof or during any holdover period. Closure of the Concession for more than a combined total of one hundred eighty (180) days in a calendar year, minus any days of closure of the Concession caused by City, shall be deemed an abandonment of the Premises. (d) Lessee's violation of Section 19 (Indemnification, Defense and Hold Harmless Agreement), Section 34 (No Assigning, Subleasing or Encumbering), Section 47 (Hazardous Substances), Section48 (Nondiscrimination), Section 49 (Sale of Alcoholic Beverages and Entertainment Prohibited), Section 62 (Conflict of Interest) or Section 64 (Compliance with Laws). (e) The insolvency of Lessee as evidenced by. a receiver being appointed to take possession of all or substantially all of Lessee's assets located at or on the Premises or of Lessee's interest in this Lease, or the making by Lessee of a general arrangement or assignment for the benefit of creditors, or Lessee's filing a petition in bankruptcy, whether voluntary or involuntary, or the attachment, execution or the judicial seizure of substantially all of Lessee's assets located at or on the Premises or of Lessee's interest in the Lease. (f) Lessee's failure to observe or perform any other term, covenant, obligation, duty, responsibility or condition of this Lease to be observed or performed by Lessee when such failure shall continue for a period of thirty (30) days after City's giving written notice to Lessee, or such earlier period if specifically set forth in this Lease; however, if the nature of such failure is such that more than thirty (30) 25 of 51 02agree/Waterfront Beach Cabana/jmf/jn/6/26/2002 F J days are reasonably required for its cure, then Lessee shall not be deemed to be in Default if Lessee notifies City of the length of the additional time required to cure and receives City's written approval of the additional time required, which approval will not be unreasonably withheld, and commences such cure within such thirty (30) day period and diligently proceeds with such cure to completion during such additional time period approved by City. SECTION 37. REMEDIES (a) Cumulative Nature of Remedies. In the event of any Default by Lessee, City shall have the remedies described in this Section 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 sole discretion reenter the Premises, and, without terminating the 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 Lessee or otherwise. Any reletting may be for the remainder of the term or for a longer or shorter period. City may in City's sole discretion eject all persons or eject some and not others or eject none. In addition, City may in its sole discretion remove some or all of the Trade Fixtures, personal property and trade inventory from the Premises. City may store such removed Trade Fixtures, personal property and trade inventory in a public warehouse or other location at the sole cost, expense. and risk of Lessee, and for the account of and in the name of Lessee. City shall apply all rents from reletting as follows:. first, to the payment of 02agree/Waterfront Beach Cabana/jmf/jn/6/26/2002 26 of 51 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 Lessee's covenants to the end of the term. City may execute any leases or subleases made under this provision either in City's name or in Lessee's name and City shall be entitled to all rents from the use, operation or occupancy of the Premises. Lessee shall nevertheless pay to City on the dates specified in this Lease the equivalent of all sums required of Lessee under this Lease, plus City's expenses, less the proceeds of any reletting or attomment. (2) Termination. In the event of a Default by Lessee, City may at City's sole discretion terminate this Lease by giving Lessee written notice of termination. In the event City terminates this Lease, City may recover possession 'of the Premises (which Lessee shall immediately surrender and vacate upon demand) and remove all persons therefrom, and Lessee shall comply with, without limitation, Sections 56 and 57 below. City also shall be entitled to recover as damages all of the following: (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 (each month's Rent would be calculated as the average Rent for that same month in the preceding years, or if 27 of 51 02agree/Waterfront Beach Cabana/jmf/jn/6/26/2002 Lessee did own/operate the Concession in the preceding years, then each month's Rent would be calculated as the average of all months Lessee owned/operated the Concession) 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 and other charges that Lessee proves could have been reasonably avoided; (C) The worth at the time of the award of the amount by which the unpaid Rent (each month's Rent would be calculated as the average Rent for that same month in the preceding years, or if Lessee did not own/operate the Concession in the preceding years, then each month's Rent would be calculated as the average of all months Lessee. owned/operated the Concession) 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 Lessee proves could have been reasonably avoided; (D) Any other amount necessary to compensate City for the detriment proximately caused by Lessee's failure to perform its obligations, liabilities, duties or responsibilities under this Lease; and (E) At City's sole discretion, 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 Sections 37(a)(2)(A) and (13) above, the "worth at the time of the award" shall be computed by allowing interest at the rate of twelve percent (12%) per 28 of 51 02agree/Waterfront Beach Cabana/jmf/jn/6/26/2002 annum. As used in Section 37(a)(2)(C) 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 Section 37(a)(2)(D) above shall include, without limitation, any costs or expenses incurred by City in maintaining or preserving the Premises after such Default. (3) Use of Personal Property. City may at City's sole discretion use the Trade Fixtures, personnel property and/or trade inventory located on, about or appurtenant to the Premises without compensation and without liability for use or damage, or store them in a public warehouse or other location at the sole cost, expense and risk of Lessee, and for the account of and in the name of Lessee. (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 Lessee's Default. Upon continuance of any Default, City may in its sole discretion, but is not obligated to, cure such Default at Lessee's sole cost and expense. If City at any time, by reason of such Default by Lessee, pays any sum or does any act, the sum paid by City plus the reasonable cost of performing such act, together with a penalty thereon at the penalty rate set forth in Section 11 above from the date the costs were incurred or the act performed by City to the date they are reimbursed to City by Lessee, shall be due as additional rent not later than five (5) days after service of a written demand therefor on 29 of 51 02agree/Waterfront Beach Cabana/jmf/jn/6/26/2002 Lessee, 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. Lessee 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 Lessee is evicted or City takes possession of the Premises by reason of any Default by Lessee hereunder. (e) Other Rights of City. No act of City, including, without limitation, City's entry on the Premises, efforts to relet the Premises, or maintenance of the Premises, shall be construed as an election to terminate this Lease unless a written notice of such intention is given to Lessee by City or unless the termination thereof is decreed by a court of competent jurisdiction.. Notwithstanding if City elects to continue the Lease in full force and effect after a Default by Lessee and to relet the Premises, City may at any time after such reletting elect to terminate this Lease for any such Default. SECTION 38. CUMULATIVE REMEDIES The remedies given to City in this Lease shall not be exclusive but shall be cumulative and in addition to all remedies now or hereafter allowed by law or elsewhere provided in this Lease. City shall have the right to exercise any other right or remedy which City may have at law or in equity including, without limitation, City's rights under the unlawful detainer laws. 30of51 02agree/Waterfront Beach Cabana/jmf/jn/6/26/2002 SECTION 39. WAIVER OF DEFAULT The waiver by City of any Default by Lessee of any of the provisions of this Lease shall not constitute a continuing waiver or a waiver of any subsequent Default by Lessee either of the same or another provision of this Lease. SECTION 40. CITY'S DEFAULTS/LESSEE'S REMEDY In the event City fails to perform any material obligation of City under the Lease within ninety (90) days after receiving written notice from Lessee specifying the nature of such default, or, if the nature of City's obligation is such that more than ninety (90) days are required for its performance, if City fails to commence such performance within such ninety (90) day period and thereafter diligently prosecute the same to completion, then City shall be in default of this obligation. If City's default materially interferes with Lessee's use of the Premises for its intended purpose, Lessee shall have the option to terminate the Lease by giving City at least sixty (60) days' written notice of its intent to terminate. In such a situation, Lessee must still comply with all of its obligations, liabilities, duties. and responsibilities under the Lease, including, without limitation, paying any Rent due up to the time of termination and surrendering the Premises pursuant to Sections 56 and 57 below. This remedy of termination is Lessee's sole and exclusive remedy for a default by City. SECTION 41. CONSENT When City's consent/approval is required under this Lease, its consent/approval for one transaction or event shall not be deemed to be a consent/approval to any subsequent occurrence of the same or any other transaction or event. 31 of 51 02agree/Waterfront Beach Cabana/jmf/jn/6/26/2002 SECTION 42. HOLDOVER Should Lessee hold over and continue in possession of the Premises after expiration or termination of this Lease, with or without the express prior written consent of City, Lessee's continued occupancy of the Premises shall constitute a month -to -month tenancy, subject to all the terms and conditions of this Lease, at a monthly rent of one hundred ten percent (110%) of the previous calendar year's annual Rent divided by twelve (12) (or the average monthly Rent for all months Lessee owned/operated the Concession if Lessee has owned/operated the Concession for less than one (1) year) or that month's actual Rent, whichever is greater, and shall not constitute a renewal or extension of the Lease term. SECTION 43. WAIVER OF CLAIMS Lessee hereby waives any claim against City, its officers, elected or appointed officials, employees, agents or volunteers for damage or loss caused by any suit or proceeding directly or indirectly attacking the validity of this Lease, or any part thereof, or caused by any judgment or award in any suit or proceeding declaring this Lease null, void or voidable, or delaying the Lease or any part thereof from being carried out. SECTION 44. INSPECTION OF PREMISES Upon at least twenty-four (24) hours advance written, verbal or electronic notice given by City to Lessee, Lessee shall permit City or City's agents, representatives or employees to enter the Premises at all reasonable times for the purpose of inspecting, investigating and surveying the Premises to determine whether Lessee is complying with the terms of this Lease and for the purpose of doing other lawful acts that may be necessary to protect City's interest in the Premises or to perform City's duties under this Lease. City also shall have the right in its sole discretion to do any and all work of any nature necessary for the preservation, maintenance and 32 of 51 02agree/Waterfront Beach Cabana/jmf/jn/6/26/2002 operation of property owned, controlled or occupied by City. Lessee shall be given reasonable notice when such work becomes necessary, and Lessee shall adjust the operation of the Concession in such a manner that City may proceed expeditiously. SECTION 45. CITY' S RIGHT TO LEASE BUYOUT City shall have the right at any. time during the entire term of this Lease or any renewals or extensions thereof to buyout the remaining years of the Lease and Lessee's interest in this Lease based upon the following buyout formula: Average of the most recent two (2) years (preceding the date of the notice of buyout) annual Gross Sales under this Lease or a prior lease multiplied by! a twelve and one-half percent (12.5%) profit margin multiplied by the number of years remaining on the Lease discounted by twelve and one- half percent (12.501o) to present value. For example: The annual Gross Sales for the most recent two (2) years of the Concession are $335,000.00 and $350,000.00. If City gives Lessee notice of its buyout intention in September, the preceding two (2) years would be the preceding twenty-four (24) months ending in August. There are three (3) years remaining.in the Lease. The average of the Gross Sales of the most recent two (2) years is $342,500.00 ($335,000.00 + $350,000.00/2). The profit margin is 12.5% of the most recent two (2) year average which is $42,812.50 ($342,500.00 x 0.125). The profit margin is then discounted at the rate of 12.5% to present value over the remaining years of the Lease: 33 of 51 02agree/Waterfront Beach Cabana/jmf/jn/6/26/2002 Year 1: $42,812.50 / 1.125 = $38,055.56 Year 2: $42,812.50 / 1.125 / 1.125 = $33,827.16 Year 3: $42,812.50 / 1.125 / 1.125 / 1.125 = $30,068.59 All of the discounted cash flows for the remaining years of the Lease are totaled and the result is the buyout price of the Lease. In this case, the City's buyout price is $101,951.31. If Lessee has owned/operated the Concession for less than two (2) years, the City's buyout price will be the greater of (1) the amount calculated under the Gross Sales formula above or (2) all reasonable and provable start-up costs, which start-up costs will be determined by City in its sole discretion. The annual Gross Sales figure on which to calculate the buyout amount shall be calculated as follows: The average monthly Gross Sales for all months up to twenty-three (23) months converted into an annual Gross Sales figure. For example, if City decides to buyout the Lease of a new Lessee who has owned/operated the Concession for fifteen (15) months, with an average monthly Gross Sales figure of Five Thousand Dollars ($5,000.00), the annual Gross Sales figure for the option to buyout would be Sixty Thousand Dollars ($60,000.00). For purposes of this calculation, a Lessee shall not be considered a new lessee if the Concession was previously owned/operated by a lessee, whose assignment, encumbrance, occupation or use, sublease or other transfer to Lessee did not require City approval in Section 34 above. At City's sole option, City shall have the right, but not the obligation, to purchase any or all of Lessee's Trade Fixtures (defined in Section 51 below), based on the appraised fair value market of the Trade Fixtures. 34 of 51 02agree/Waterfront Beach Cabana/jmf/jn/6/26/2002 If City desires to purchase any or all of Lessee's. Trade Fixtures, City shall select an appraiser to provide an appraisal of such Trade Fixtures. If Lessee disagrees with City's appraisal, Lessee, at its sole cost and expense, shall select another appraiser to provide an appraisal. If City disagrees with Lessee's appraisal, City shall select another appraiser to perform an appraisal. In such case, the parties agree that the price for the Trade Fixtures will be the average of these three (3) appraisals. All appraisers must be members in good standing in the American Society of Appraisers. Notwithstanding the foregoing, at any time, City may elect not to purchase any or all of Lessee's Trade Fixtures. Upon City's request, Lessee shall provide City with proof of lien free, good and merchantable- title to any such Trade Fixtures City desires to purchase. Lessee shall protect, defend, indemnify, and hold harmless City, its officers, elected and appointed officials, employees, agents and volunteers from and against any and all liens, claims, damages, losses, expenses, judgments, demands and defense costs (including, without limitation, costs and fees of litigation (including arbitration) of every nature or liability of any kind or nature) arising out of or in connection with Lessee's fraud, omission or negligence regarding any purchase of Lessee's Trade Fixtures by City. City shall be reimbursed by Lessee for all costs and attorney's fees incurred by City in enforcing Lessee's obligations set forth in this Section. Lessee will conduct all defense at its sole cost and expense and City shall approve selection of Lessee's counsel. This indemnity shall apply to all claims and liability regardless of whether any insurance policies are applicable. The policy limits do not act as limitation upon the amount of indemnification to be provided by Lessee. Lessee acknowledges and agrees that this Lease buyout option of City has been negotiated at arms -length and does not constitute nor does Lessee construe this to be an act of 35 of 51 02agree/Waterfront Beach Cabana/jmf/jn/6/26/2002 r eminent domain or inverse condemnation. In the event City exercises this buyout option, Lessee waives any and all claims of loss of business goodwill and relocation rights or benefits. Lessee also shall immediately surrender the Premises as set forth herein and comply with, without limitation, Sections 56 and 57 below. SECTION 46. PHOTOGRAPHY Lessee acknowledges and agrees that City may grant permits to third parties engaged in the production of still and motion pictures and related activities to take photographs or videos of or on the Premises when such permission shall not interfere with the primary business of Lessee, all without providing Lessee with notice or requiring consent by Lessee. SECTION 47. HAZARDOUS SUBSTANCES Lessee represents and warrants that its use or occupation of the Premises shall not generate any Hazardous Substance (as defined below in this Section), and it shall not store or disposeon the Premises nor transport to or over the Premises any Hazardous Substance during the entire term of this Lease or any renewals or extensions thereof or during any holdover period. The foregoing restrictions shall not be deemed to restrict or prohibit the use by Lessee of ordinary cleaning products as customarily used in Lessee's ordinary course of business at the Concession, provided that Lessee complies with all provisions of law as to the use, storage and disposal of such products. Lessee further agrees to clean up and remediate any such Hazardous Substance on the Premises, and agrees to protect, defend, indemnify and hold harmless City, its officers, elected or appointed officials, employees, agents and volunteers from and against any and all claims, damages, losses, expenses, judgments, demands and defense costs (including, without limitation, costs and fees of litigation (including arbitration) of every nature or liability of any kind or nature) arising out of or in connection with any such Hazardous Substance and 02agree/Waterfront Beach Cabana/jmf/jn/6/26/2002 36 of 51 any damage, loss, or expense or liability resulting from any such Hazardous Substance including, without limitation, all attorney's fees, costs and penalties incurred as a result thereof except any release caused by the sole negligence or willful misconduct of City. City shall be reimbursed by Lessee for all costs and attorney's fees incurred by City in enforcing Lessee's obligations set forth in this Section. Lessee will conduct all defense at its sole cost and expense and City shall approve selection of Lessee's counsel. This indemnity shall apply to all claims and liability regardless of whether any insurance policies are applicable. The policy limits do not act as limitation upon the amount of indemnification to be provided by Lessee. "Hazardous substance" shall be interpreted broadly to mean any substance or material defined or designated as a hazardous or toxic waste, hazardous or toxic material, hazardous or toxic or radioactive substance, or other similar term, by any Federal, State or local environmental law, regulation or rule presently in effect or promulgated in the future, as such law, regulation or rule may be amended from time to time; and it shall be interpreted to include, without limitation, any substance which after release into the environment will or may reasonably be anticipated to cause sickness, death or disease. SECTION 48. NONDISCRIMINATION Lessee and its employees shall not discriminate because of race, religion, color, ancestry, sex, age, national origin or physical handicap against any person by refusing to furnish such person any accommodation, facility, rental, service or privilege offered to or enjoyed by the general public. Nor shall Lessee or its employees publicize the accommodation, facilities, rentals, services or privileges in any manner that would directly or inferentially reflect upon or question the acceptability of the patronage of any person because of race, religion, color, ancestry, sex, age, national origin or physical handicap. 37 of 51 02agree/Waterfront Beach Cabana/jmf/jn/6/26/2002 _ In the performance of this Lease, Lessee shall not discriminate against any employee or applicant for employment, because of race, religion, color, ancestry, sex, age, national origin or physical handicap. Lessee shall take affirmative action to ensure that applicants are employed and that employees are treated during employment, without regard to their race, religion, color, ancestry, sex, age, national origin or physical handicap. Such action shall include, without limitation, the following: employment, upgrading, demotion or transfer; recruitment or recruitment advertising; layoff or termination;, rates of pay or other forms of compensation; and selection for training, including, without limitation, apprenticeship. Lessee shall post in conspicuous places, available to all employees and applicants for employment, notices setting forth -the provisions of this Section. Lessee shall permit access to its records of employment, employment advertisements, application forms, and other pertinent data and records by City, the State Fair Employment Practices Commission or any other agency with jurisdiction over these matters, for the purpose of investigation to ascertain compliance with this Section. City may determine a violation of this Section to have occurred upon receipt of a final judgment having that effect from a court in an action to which Lessee was a party, or upon receipt of a written notice from the State Fair Employment Practices Commission or other government agency with jurisdiction over these matters that it has investigated. and determined that Lessee has violated the Fair Employment Practices Act or other applicable discrimination law and has issued an order which has become final, or obtained an injunction. In the event of violation of this Section, City shall have the right to terminate this Lease, and any loss of revenue sustained by City by reason thereof shall be borne and paid for by Lessee, at its sole cost and expense. 38 of 51 02agree/Waterfront Beach Cabana/jmf/jn/6/26/2002 SECTION 49. SALE OF ALCOHOLIC BEVERAGES AND ENTERTAINMENT PROHIBITED Notwithstanding anything to the contrary, the sale or provision of alcoholic beverages and/or live entertainment in, on, or from the Premises is expressly forbidden, unless expressly permitted in writing by City in advance. For any proposed sale or provision of alcoholic beverages, Lessee must first obtain written City approval prior to submitting any request for approval to the Alcohol Beverage Commission. SECTION 50. LIENS Lessee shall keep the Premises free and clear from any and all liens, including, without limitation, mechanics' or materialmens' liens, claims and demands for work performed, materials furnished, or operations conducted on or about the Premises or by reason of any use or occupancy by Lessee, or any person claiming under Lessee. When applicable, Lessee shall cause a notice of nonresponsibility to be posted and recorded pursuant to California Civil Code Section 3094. SECTION 51. INSTALLATION AND REMOVAL OF TRADE FIXTURES Lessee shall have the right during the entire term of this Lease or any renewals or extensions thereof, at Lessee's sole cost and expense, to install or affix in, to, or on the Premises any machinery, equipment and other objects (the "Trade Fixtures"), for use in Lessee's trade or business as Lessee may deem advisable. Any and all such Trade Fixtures that can be removed without structural damage to the Premises shall, subject to Section 57 below, remain the property of Lessee and may be removed by Lessee at -any time prior to the expiration or termination of this Lease, provided Lessee repairs any damage caused by the removal. Upon execution of this 39 of 51 02agree/Waterfront Beach Cabana/jmf/jn/6/26/2002 Lease and every anniversary, Lessee shall provide City with a list of all Trade Fixtures on the Premises. SECTION 52. DESTRUCTION Should the Premises be partially destroyed, this Lease shall continue in full force and effect, and Lessee, at Lessee's sole cost and expense, shall complete the work of repairing and restoring the Premises to their prior condition providing such work can be accomplished under all applicable governmental laws and regulations within one hundred eighty (180) days. Should the Premises be so far destroyed that in. City's reasonable judgment they cannot be repaired or restored to their former condition within one hundred eighty (180) days, City shall give Lessee notice of such determination in writing and each party may, in that party's sole discretion: (a) Continue this Lease in full force and effect in which case Lessee shall repair and restore, at Lessee's sole cost and expense, the Premises to their former condition; or (b) Terminate this Lease by giving the other party thirty (30) days' written notice of such termination within sixty (60) days after the date that City gives Lessee notice that the Premises cannot -be repaired or restored to their former condition within one hundred eighty (180) days. In the event that either party elects to terminate this Lease, the entire amount of any insurance proceeds (excluding such proceeds for Trade Fixtures, personal property whether or not owned or leased by Lessee and trade inventory, but only to the extent that the insurance proceeds specifically cover those items) shall be paid to City. The proceeds of any such insurance payable to City may be used, in the sole discretion of City, for rebuilding or repair as necessary to restore the Premises or for any other such purpose(s) as City sees 40 of 51 02agree/Waterfront Beach Cabana/jmf/jn/6/26/2002 fit. In addition, if Lessee elects to terminate the Lease, Lessee must still comply with all of its obligations, liabilities, duties and responsibilities under the Lease, including, without limitation, paying any Rent due up to the time of termination and surrendering the Premises, pursuant to Sections 56 and 57 below. In the event of the damage or destruction of Improvements, Trade Fixtures and/or personal property located on the Premises not giving rise to a termination of this Lease, Lessee shall, at its sole cost and expense, replace and repair the same as soon as reasonably possible to permit the prompt continuation of Lessee's business at the Premises. SECTION 53. NO ABATEMENT OF RENT DURING REPAIR WORK The Rent shall not be abated for the time Lessee is prevented from using the whole or a portion of the Premises. In addition, Lessee shall not be excused from the payment of taxes, insurance or any other obligations for the time Lessee is .prevented from using the whole or a portion of the Premises. SECTION 54. EMINENT DOMAIN If, during the term of this Lease or any renewals or extensions thereof or during any holdover period, City's real property (whether held by City in fee simple, an easement interest or otherwise) and/or the Premises is taken in eminent domain, the entire award (that is, all forms) of compensation, other than as provided herein, shall belong to and be paid to City. In the event of condemnation, Lessee shall be entitled to an award of only the following forms of compensation, if any, from the condemning authority: compensation for loss of business goodwill; compensation for the value of any of Lessee's Trade Fixtures; compensation for the value of any of Lessee's personal property; compensation for the value of any of Lessee's trade inventory; and compensation for relocation benefits as authorized by law. All other forms of compensation, 41 of 51 02agree/Waterfront Beach Cabana/jmf/jn/6/26/2002 such as, for example, but not by way of limitation, any bonus value of Lessee's interest in this Lease, shall belong to and be paid to City. In the event of condemnation, unless Lessee is allowed by the condemning authority to continue its operations on the Premises, the Lease shall terminate on the earliest of the following dates: the date the condemning authority obtains a prejudgment order for possession; the date title to the Premises vests in the condemning authority; or the date when Lessee is required by the condemning authority to cease its operations. SECTION 55. RELOCATION AND ASSISTANCE, BUSINESS GOODWILL AND LEASEHOLD BONUS VALUE Upon expiration or termination of this Lease for any reason, including, without limitation, if City exercises its Lease buyout option, but excluding eminent domain, Lessee shall not be entitled to any relocation rights or benefits, business goodwill or bonus value attributable to this Lease, and Lessee expressly waives any claim to the same. SECTION 56. QUITCLAIM DEED Upon expiration or termination of this Lease as provided for herein, including, without limitation, in the event City exercises its Lease buyout option, Lessee shall execute and deliver to City within thirty (30) days thereof, a good and sufficient quitclaim deed to the rights and interests of Lessee in the Premises and the Lease. Should Lessee fail or refuse to deliver to City this quitclaim deed, City may record in the Orange County Recorder's Office a written notice reciting the failure of Lessee to execute and deliver this quitclaim deed. The date of recordation of this notice by City shall be conclusive evidence against Lessee and all persons claiming under Lessee of the expiration or termination of this Lease and any rights or interests of Lessee in the Premises and/or the Lease. Lessee also agrees to execute, acknowledge, and deliver to City any 42 of 51. 02agree/Waterfront Beach Cabana/jmf/jn/6/26/2002 other instrument requested by City as necessary to perfect City's right, title and interest to the Premises. SECTION 57. RESTORATION AND SURRENDER OF PREMISES/TITLE TO IMPROVEMENTS On expiration or termination of this Lease, including, without limitation, in the event City exercises its Lease buyout option, Lessee shall, without compensation to Lessee, promptly surrender and deliver the Premises to City in as good condition as such were at the commencement date of this Lease, reasonable wear and tear excepted. Lessee also shall, without compensation to Lessee, surrender all Improvements to City in good condition and repair, ordinary wear and tear excepted, free and clear of all liens and encumbrances. Lessee also shall remove all Trade Fixtures, personal property and trade inventory. City may in its sole discretion accept all or any portion of the Premises, as then improved with Improvements and no sum whatsoever shall be paid to Lessee or any other person; or City may require Lessee to remove all or any portion of such Improvements, at Lessee's own risk and cost and expense; or City may itself remove or have removed all or any portion of such Improvements, at Lessee's own risk and cost and expense. If required by City to do so, in removing any such Improvements, Lessee shall restore the Premises as nearly as possible to the conditions existing prior to their installation or construction. All such removal and restoration shall be to the satisfaction of City and shall be completed within thirty (30) days of the expiration or termination of this Lease; provided, however, that Lessee shall be considered a holdover tenant (pursuant to Section 42 above) after expiration or termination of the Lease until the time Lessee completes this removal and restoration work, including, without limitation, the removal of any Trade Fixtures, personal property and trade inventory left on the Premises. In addition, any Trade Fixtures, personal 43 of 51 02agree/Waterfront Beach Cabana/jmf/jn/6/26/2002 property or trade inventory left on the Premises after the expiration of this 30-day period, regardless of cause, shall be deemed abandoned by Lessee. In City's sole discretion, it may. choose to do one or more of the following: (1) take any or all of such Trade Fixtures, personal property and trade inventory as City property; (2) store any or all of such Trade Fixtures, personal property and trade inventory in a public warehouse or other location at the sole cost, expense and risk of Lessee, and for the account and in the name of Lessee; or (3) dispose of any or all of such Trade Fixtures, personal property and trade inventory without any liability to Lessee. In addition, Lessee's indemnification, hold harmless and defense obligations set forth in this Lease shall apply to such Trade Fixtures, personal property and/or trade inventory, and to 'City's actions with respect thereto. SECTION 58. FORCE MAJEURE - UNAVOIDABLE DELAYS Should the performance of any act required by this Lease to be performed by either City or Lessee be prevented or delayed by reason of an act of God, strike, lockout, labor troubles, inability to secure materials, restrictive governmental laws or regulations, or any other cause except financial inability not the fault of the party required to perform the act, the time for performance of the act shall be extended for a period equivalent to the period of delay and performance of the act during the period of delay shall be excused. Provided, however, that nothing contained in this Section shall excuse the prompt payment of the Rent or other consideration by Lessee as required by this Lease or the performance of any act rendered difficult solely because of the financial condition of the party, City or Lessee, required to perform the act. 44of51 02agree/Waterfront Beach Cabana/jmf/jn/6/26/2002 SECTION 59. CITY'S OPTION TO CLOSE THE PREMISES City may close the Premises without liability and without advance notice to Lessee therefor at any time as City in its sole discretion deems necessary for the protection of life, limb or property, or for public health, safety or welfare purposes, or upon reasonable notice to effect any repair, remodeling or rebuilding deemed necessary by City in its sole discretion. The length of time of any closing of the Premises by City longer than two (2) weeks during a period when the Concession would otherwise be open shall extend the term of the Lease by the same amount of time. If this occurs, Lessee and City shall memorialize this extension in writing. SECTION 60. DELIVERIES OF SUPPLIES City may establish the days and times deliveries of supplies may be made and advise Lessee in writing thereof. SECTION 61. EMPLOYEE PARKING City shall establish the days, times and locations where Lessee and Lessee's employees may park, and the number of automobiles, trucks, and other motorized and non -motorized vehicles that Lessee and Lessee's employees may park, and advise Lessee in writing thereof. SECTION 62. CONFLICT OF INTEREST Lessee warrants and covenants that no official or employee of City, nor any business entity in which an official or employee of City is interested, (1) has been employed or retained by Lessee to solicit or aid in the procuring of this Lease; or (2) shall be employed by Lessee in the performance of this Lease without the immediate written divulgence of such fact to City. In the event City determines that the employment of any such official, employee or business entity is not compatible with such official's or employee's duties as an official or employee of City, Lessee, upon request of City, shall terminate such employment immediately. For breaches or 45 of 51 02agree/Waterfront Beach Cabana/jmf/jn/6/26/2002 violation of this Section, City shall have the right both to terminate this Lease without liability and, in its discretion, recover the full amount of any such compensation paid to such official, employee or business entity. No official or employee of City shall have any financial interest in this Lease in violation of the applicable provisions of the California Government Code. SECTION 63. NOTICE Unless specifically providing for verbal or electronic notice, all notices, certificates, or other communications required to be given hereunder shall be in writing and made in the following manner, and shall be sufficiently given and deemed received when (a) personally delivered; or (b) three (3) business days after being sent via United States certified mail — return receipt requested; or (c) one (1) business day after being sent by reputable overnight courier, in each case to the addresses specified below; provided that City and Lessee, by notice given. hereunder, may designate different addresses to which subsequent notices, certificates or other communications will be sent: CITY: City of Huntington Beach ATTN: Director of Community Services 2000 Main Street, P.O. Box 190 Huntington Beach, CA 92648 SECTION 64. COMPLIANCE WITH LAWS LESSEE: Robert Mayer Corporation ATTN: Stephen Bone 660 Newport Center Drive, #1050 Newport Beach, CA 92658-8680 Lessee, at its sole cost and expense, shall comply with all statutes, ordinances, regulations and requirements of all governmental .entities, including, without limitation, Federal, State, county or municipal, relating to Lessee's use and occupancy of the Premises and/or operation of the Concession whether such statutes, ordinances, regulations and requirements be now in force or hereinafter enacted. This Lease is expressly subject to the laws, regulations and policies of City. Lessee shall deliver to City a copy of any notice from any governmental entity received by Lessee regarding any alleged violation of law regarding the Lease, Premises or the Concession or 46 of 51 02agree/Waterfront Beach Cabana/jmf/jn/6/26/2002 from any person allegedly entitled to give notice under any conditions, covenants, or restrictions binding or affecting the Premises. The judgment of any court of competent jurisdiction, or the admission by Lessee in a proceeding brought against Lessee by any government entity, that Lessee has violated any such statute, ordinance, regulation or requirement shall be conclusive as between City and Lessee and shall be grounds for termination of this Lease by City. SECTION 65. INTERPRETATION OF THIS LEASE The language of all parts of this Lease shall in all cases be construed as a whole, according to its fair meaning, and not strictly for or against any of the parties. If any provision of this Lease is held by an arbitrator or court of competent jurisdiction to be unenforceable, void, illegal or invalid, such holding shall not invalidate or affect the remaining covenants and provisions of this Lease. No covenant or provision shall be deemed dependent upon any other unless so expressly provided here. As used in this Lease, the .masculine or neuter gender and singular or plural number shall be deemed to include the other whenever the context so indicates or requires. Nothing contained herein shall be construed so as to require the commission of any act contrary to law, and wherever there is any conflict between any provision contained herein and any present or future statute, law, ordinance or regulation contrary to which the parties have no right to contract, then the latter shall prevail, and the provision of this Lease which is hereby affected shall be curtailed and limited only to the extent necessary to bring it within the requirements of the law. SECTION 66. SURVIVAL Terms and conditions of this Lease, which by their sense and context survive the expiration or termination of this Lease, shall so survive. x 47 of 51 02agree/Waterfront Beach Cabana/jmf/jn/6/26/2002 SECTION 67. MODIFICATION No waiver or modification of any language in this Lease shall be valid unless in writing and duly executed by both parties. SECTION 68. SECTION HEADINGS The titles, captions, section, paragraph and subject headings, and descriptive phrases at the beginning of the various sections in this Lease are merely descriptive and are included solely for convenience of reference only and are not representative of matters included or excluded from such provisions, and do not interpret, define, limit or describe, or construe the intent of the parties or affect the construction or interpretation of any provision of this Lease. SECTION 69. 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. SECTION 7.0. INDEPENDENT CONTRACTOR Lessee is, and shall be, acting at all times in the performance of this Agreement as an independent contractor herein and not as an employee of City. Lessee shall secure at its own cost and expense, and be responsible for any and all payment of all taxes, social security, state disability insurance compensation, unemployment compensation and other payroll deductions for Lessee and its officers, agents and employees and all business licenses, if any, in connection with the Lease and/or any services to be performed hereunder. SECTION 71. ATTORNEY'S FEES Except as expressly set herein, in the event suit is brought by either party to construe, interpret and/or enforce the terms and/or provisions of this Lease or to secure the performance 48 of 51 02agree/Waterfront Beach Cabana/jmf/jn/6/26/2002 hereof, each party shall bear its own attorney's fees, such that the prevailing party shall not be entitled to recover its attorney's fees from the non -prevailing party. SECTION 72. LEGAL SERVICES SUBCONTRACTING PROHIBITED Lessee and City agree that City is not liable for payment of any subcontractor work involving legal services, and that such legal services are expressly outside the scope of services contemplated hereunder. Lessee understands that pursuant to Huntington Beach City Charter Section 309, the City Attorney is the exclusive legal counsel for City; and City shall not be liable for payment of any legal services expenses incurred by Lessee. SECTION 73. GOVERNING LAW This Lease shall be governed and construed in accordance with the laws of the State of California. SECTION 74. DUPLICATE ORIGINAL The original of this Lease and one or more copies hereto have been prepared and signed in counterparts as duplicate originals, each of which so executed shall, irrespective of the date of its execution and delivery, be deemed an original. Each duplicate original shall be deemed an original instrument as against any party who signed it. SECTION 75. ENTIRETY The parties acknowledge and agree that they are entering into - this Lease freely and voluntarily following extensive arm's length negotiations; and that each has had the opportunity to consult with legal counsel prior to executing this Lease. The parties also acknowledge and agree that no representations, inducements, promises, agreements or warranties, oral or otherwise, have been made by that party, or anyone acting on that party's behalf, which are not embodied in this Lease, and that that party has not executed this Lease in reliance on any representation, inducement, 49 of 51 02agree/Waterfront Beach Cabana/jmf/jn/6/26/2002 promise, agreement, warranty, fact or circumstance not expressly set forth in this Lease. The Lease, and the attached exhibits, contain the entire agreement between the parties respecting the subject matter of this Lease, the Premises, the leasing of the Premises to Lessee, or the lease term created under this Lease and supercede all prior understandings and agreements, whether oral or in writing between the parties respecting the subject matter hereof. [SIGNATURES ON NEXT PAGE] 50 of 51 02agreeNVaterfront Beach Cabana/jmf/jn/6/26/2002 IN WITNESS WHEREOF, the parties hereto have caused this Lease to be executed by and through their authorized officers the day, month and year first above written. WATERFRONT HOTEL, LLC, a California limited liability corporation By: Its: (circle one) Chairma resident/ cc President By: Its: (circle on Egcr�yhie inancial Officer/ Asst. Secretary —Treasurer CITY OF HUNTINGTON BEACH, a municipal corporation of the State of California 10j4j-9 &"k". - Mayor ATTEST: City Clerk 4- —02. APPROVED AS TO FORM: a 14.4 Z City Attorney �10 INITIA D A PROV "T�9oa— irector of Community Services APPROVE I C7 Director Administrative Services REVIEWED AND APPROVED: OWy Administrator 51 of 51 02agree/Waterfront Beach Cabana/jmf/jn/6/26/2002 Q (44 = O Ln BUILDING LEASE �j N SETBACK LINE .� cTI `t U-' `n -100 N52°-05_09"w PK.#TIN ONLEASF,LINE� -- SERVICE ROAD — PROD. 0.99 \ BEACNFRONT LEASE THE CITY OF HUNTINGTON BEACH CALIFORNIA Month Inspected By: CITY OF HUNTINGTON BEACH Quarterly Evaluation Year Today's Date Area O.K. Needs Attention: Doors & Locks Exterior Walls Exterior. Area Graffiti Removal Grease Trap Hood Grease Filters Interior Walls Removal of Bird Droppings Rest Room Roof Rust Signage Trash Trim Windows COMMENTS: ACTION REQUIRED: AGREED TO: EXHIBIT "B" Page 1 of 2 DEFINITIONS Doors and Locks Clean and in operable position and condition All locks shall be regularly checked and maintained. Absolutely no chain locks are allowed. Locks shall only be used on authorized locations. Exterior Walls clean and smooth, void of rust, graffiti, stickers, etching, or other materials or marks that were not originally placed on the walls. Graffiti Removal All graffiti shall be removed within forty-eight hours including painted or sprayed graffiti, magic markers, stickers, etching, and surf wax. The building shall be kept free of graffiti. Interior rest room graffiti shall be removed on a regular basis not to exceed forty-eight hours. Grease Trap Free and clear flowing with regularly scheduled maintenance to prevent buildup or clogging. Hood Grease Filter Removed and cleaned a minimum of every three months, and checked regularly and cleaned more often if necessary. Filters shall be replaced at such time as required where volumes are no longer maintained. Interior Walls Clean and smooth, void of dirt or corrosion. All fire -rated walls shall be solid and unpenetr-ated. Removal of Bird Drogging_s the building in its entirety shall be cleaned a minimum of every three months to remove all bird droppings. If bird droppings present a health problem, they shall be removed prior to the minimum three month periods. Rest Rooms (Plumbing) Entry mats, floors and carpets shall be kept clean. Walls shall be kept fingermark free. Tile and wall surfaces shall be kept clean. Toilet bowls, rims, tank tops, and bodies shall be kept clean. Mirrors shall be kept clean and streak free. Soap dispensers clean and full. Paper towel dispensers clean and full. Toilet paper dispensers clean and full. All sink and faucet fixtures clean and rust free. Light fixtures dean and functioning. Air fresheners functioning. Trash receptacles clean, lined_ and emptied regularly. Roof Free of debris and cleaned regularly as needed to remove bird droppings, graffiti or vandalism. Roof leaks shall be reported immediately to the Community Services Department. Rust No accumulation or degeneration to interior or exterior surfaces. Rusted areas shall be cleaned and painted on a regular basis to avoid long term damage. Siona e Clean, readable and in good condition. Bulbs in lighted signs shall be replaced as needed within twenty-four hours. No unauthorized signs shall be posted. Trash Deposited in designated containers. There shal be no buildup of cardboard boxes, unused equipment, unwanted decorator items, etc. within the trash areas. Trash areas shall be secured from public use to avoid deposit of fish remains. Trim Clean and smooth, void of corrosion and rust. Windows Oean and void of cracks. No commercial stickers shall be used on windows. Exterior Area Outside area around concession building that is utilized by the concessionaire. EXHIBIT "B" Page 2 of 2 Cf I CLE,��( Lift-- CITY rr ACORD� CLRTIFICA E OF LIABILITY INSUk AA NCIra �p Iv Y .. A 08 13/02 PRODUCEROl. Arthur J . Gallagher i Co. CN v`-� License #0726293 vM\T T-ikr-- 1S Enterprise, Suite 200 Aliso Viejo CA 9265E fo0a-35 Phone: 949-349-9800 i'ax:94.9-349-9900 THIS CERTIFICATE IS ISSUED AS A R ONLY AND CONFERS NO RIGHTS UPON THE CERTiF►CAIU ' HOLDER. THIS CERTIFICATE DOES NOT AMEND, EXTEND OR ALTER THE COVERAGE AFFORDED BY THE POLICIES BELOW. INSURERS AFFORDING COVERAGE INSURED ront Hotel, LLC Y tungonBeach-CA H48 INSURER A- Fireman r s rand rnsurance Co. INSURER&: Zenith Insurance C2MpLny INSURER QNntfcha - INSURER D O/"ER E GUV r_KAUr_5 THE POLICIES OF INSURANCE LISTED BELOW NAVE BEEN ISSUED TO THE W SUREO NAMM ABOVE FOR YHE POLICY PENDO INDICATED. NOTWM4STANDING ANY REQUMU:MENT. TERM OR CONDITION OP ANY CONTRACTOR OTHER OOCUMENT WITH RESPECT TO WBCN THIS CERTIFICATE MAY BE ISSUED OR MAY PERTAIN, THE INSURANCE APPORMO SY THE POLICIES DESCRIBED HEREIN 18 BU&eCT TO ALL THE TERMS. EXCLUSIONS AND CONDITIONS OP SUCH POLICIES. AGGREGATE LIMITS SHOWN MAY NAVE BEEN REDUCED BY PAID CLAIMS. L!R TYPE OFWSURANCE POLICYWJMBER OATS MMfO PUCJCY EXPIRATION QATE M LIADTS A GENERAL LIABILITY X COMMERCIAL CMWJ�AI.LIABILITY CLAIMS MADE U OCCUR 1=80197673 04/01/02 04/01/03 EACHOCCURRENCE S 1 000 000 FmDAAAGE(my s - 50,000 ME D EXP (Any one perm,) i 5 000 PERSONALLAOVINJURY S 1,000,000 ' _ GENERAL AGGREGATE S 2,000,000 . GENT AGGREGATE LIMIT APPLIES PER: x POLICY JECT LOC PRODUCTS-COMPIOP AOG S 2,000.000 ' AUTOMOBILE LwBILTTY ANY AUTO ALL OWI+EO AUTOS SCHEDULED AUTOS HIREDAUTOS NOWOWNEO AUTOS ` ' ^ • `-- IG�`� ' -' COMBINED SINGLE LIMIT (EA eedeenl) S BODILY INJURY BOXY INJURY = PROPERTY DAMAGE (Par a wbnq S GARAGE LIABILITY ANY AUTO AUTO ONLY - EA ACCIDENT S On" THAN EA ACC AUTO ONLY: AGG s t EXC 15S LIABILITY OCCUR CLAIMS MADE DEDUCTIBLE RETENTION S EACH OCCURRENCE S AGGREGATE S M s S S B WORKERS COMPENSATION AND FAPLDYEWUMLITY Z047355202 07/02/02 07/02/03 E.LtEACHACCIDENT 51,000,000 E.L.OISEASE.EAEMPLOYEE s 1,000 000 E.L.OISEASE- POLICY LIMIT s i 000 000 A OTHER Property b=80797673 04/01/02 04/01/03 Bldg. $350,000 Per.Pro . 315,000 DESCRIPTION OF OPERATIONWLOCATI WWftMCLEWEXCLUSION6 ADDED BY ENDORSEMENABPWAL PROVISIONS The City of Huntington Beach, its agents, officers and employees are named as additional insured (see CG2010) as respects to Waterfront Beach Cabana, 21351 Pacific Coast Highway, Huntington Beach. CERTIFICATE HOLDER I Y I ADDITIONAL INSURED,* INSURER LETTER* HUNTING The City of Huntington Beach, its agents, officers and employees 200D Main street Huntington Beach CA 92648 CANCELLATION SHOULD ANY OF THU ABOVE DESCRWD POLICIES BE CANCELLED BEFORE THE EXPI RATIO DATE THEREOF, THE ISSUING INSURM WILL SH960 tOR4AMAIL IA_ DAYS IMRITTEN U071CF TO THE CERTIFICATE HOLDER NAIIIED TO THE LEFT. L acoao zss (7197) ( p b/1 '� -P6 ftIII- f ,0wy-'qlyv-1,- P TION wd?z:s HH U MV INSURED: Waterfront Hotel, L..%; POLICY NUMBER: MXX80797673 �_I\X_ No- V* l 00.35 COMMERCIAL GENERAL LIABILITY THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY ADDITIONAL INSURED -- OWNERS, LESSEES OR CONTRACTORS (FORM B) This endorsement modifies insurance provided under the following. COMMERCIAL GENERAL LIABILITY COVERAGE PART. SCHEDULE Name of Person or Organization! The City of Huntington Beach, its agents, officers & employees 2000 Main Street Huntington Beach, CA 92648 RE: Waterfront Beach Cabana (if no entry appears above, Information required to complete this endorsement will be shown in the Declarations as applicable to this endorsement.) WHO IS AN INSURED (Section 11) is amended to Include as an insured the person .or organization shown in the Schedule, but only with respect to liability arising out of "your work" for that insured by or for,you. CO 20 10 1185 6/Z 'd [ IL£ 'ON Copyright, Insurance Servtce9 Office, Inc. 1984 Page 1 of 1 O WVEZ:6 NOZ LZ MV RCA ROUTING SHEET INITIATING DEPARTMENT: COMMUNITY SERVICES SUBJECT: APPROVE LEASE AGREEMENT WITH WATERFRONT FOR THE BEACH CABANA CONCESSION COUNCIL MEETING DATE: Au ust 5, 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 Not Applicable Contract/Agreement (w/exhibits if applicable) (Signed in full by the City Attome Attached Subleases, Third Party Agreements, etc. (Approved as to form by City Attorney) Not Applicable Certificates of Insurance Approved by the City Attorne) 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 Finding 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 [City Clerk F�_ AL17� RCA Author: � JUL. 12. 2002- 9:59A1� N0. 2524 P. 2 acORD CERTIFICATE OF LIABILITY INSURANC�,�Rj1G� ""o i1z a Arthur Gallagher 6 Cc. License. 0726293 15 Ruter- 'so, suite 200 Aliso Vis�d CA 92656 Phona,,949-3 -9B00 Fase949-349-9900 f`FMFRAPFR ONLY AND CONFERS NO RIGHTS UPON THE CERTIFICATE HOLDER THIS CERTIFICATE 130ES NOT AMEND. EXTEND OR ALTER THE COVERAGE AFFORDED BY THE POLICIES BELOW. INSURERS AFFORDING COVERAGE INSURERA;- rireman � 8 Fund Insurance Co. INSURER& Zenith Xnaurance Company INSURER C; INSURER D; INSURER E THE POLICIES OF INSURANCE LISTED BELOW VE OFEN ISSUFO TO THE INSURED NAMED ABOVE FOR THE POLICY PERIOD INDICATED. NommSTANDING ANY REQUIREMENT, TERM OR CONOmDN OF AN CONTRACT OR OTHER DOCUMENT WITH RESPECT TO WHICH THIS CERTIFICATE MAY BE ISSUED OR MAY PERTAIN, THE INSURANCE AFFORDED BY THE OLICIES DESCRIBED HEREIN IS SUBJECTTO ALL THE TERMS, EXCLUSIONS AND CONDITIONS OF SUCH POLICIES. AGGREGATE LIMITS SHOWN MAY HAVE BE REDUCED BY PAID CLAIMS. L TYPE OF INSURANCE POLICY NUMBER PATE POL DA LIMITS GENERAL LIABILITY EACH OCCURRENCE S 1,000,000 FIRE DAMAGE(Anycmrm) s 50,000 A X COMMERCIALGENERALLIABILIIY 1, M0797 73 04/01/02 04/01/03 MED EXP (Any wm pprcpn) i 5 000 CLAIMS MADE a OCCUR PERSONAL &ADVINJURY S 1,000 000 GENERALAGOREGATE E 2,000,000 GEN'LAGGREGATELIMITAPPLIESPER.' PRODUCTS -COMPlOPAGG s 2 000 OOO X POLICY PECT LOC AUTOMOBILE LIABILITY ANY AUTO COMBINED SINGLE LIMIT (Ea awwm s BODILY INJURY (Per Person) s ALL OWNED AUTOS SCHEOULEDAUT09 BODILY INJURY (PereeedeN) S HIRED AUTOS NON-CMED AUTOS TYDAMAGE (Permd Pereoddenp s APP OV TO RM "RAGELUWILITY U AUTO ONLY -EA ACCIDENT 3 -� OTHER THAN FA ACC AUTO ONLY. AGO s ANY AUTO r D U lE A IT TO R N 6 EXCESS LABILITY EACH OCCURRENCE S OCCUR CLAIMS MADE AGGREGATE $ S = DEDUCTIBLE s RETENTION i WORKERS COMPENSATION AND N, TORY LIMITS B ELkKMRWLIABILITY Z047355201 07/02/01 07/02/ E.L HACCIOENT 61,000,000 E. iSFASE-EA EMPLOY f l 000,000 L DISEASE -POLICY LIMIT $1 OOQ O00 OTHER A Property T!ID[B0797673 04/01/02 04/01/03 Bldg. $350,000 er.Pr . $15 000 DESCRIP110N OF OPERATIONSILOCAMONSMIGGLESMWLUSIONS ADO® BY ENOOASEMENTiSPECAL PROVISIONS The City of Huntington Beach, its agents, officers and employees are name as additional insured (see CG2010) as respects to Waterfront Beach Cabana, 21351 Pacific Coast Highway, Huntington Beach. CERTIFICATE HOLDER I Y I ADDITIONAL INSURED; INSURER LETTER: A LpANI4FLLA I wN HUMXNG SHOULD ANY OF THE ABOVE DE9010BED POLICIES BE CANCELLED EFORE THE FIIPLRATMN DATE THEREOF, THE ISSUING INSURER WILL BNKAVQX=6AIAIL DAYS WRITTEN The City of Huntington Beach, NOTICE TO THE CERTIFICATE HOLDER NAMED TO THE LEFT, its agents, officers and employees 2000 Main street Huntington Beach CA 92648 auTlmwzEOREPRESEHTaTrvE ACORD 26-8 (7197) JUL. 12.2002 10:00AM \VSURED: Waterfront Hotel, LLC POLICY NUMBER: MXX80797673 NO, 2524 P. 3 COMMERCIAL GENERAL LIABILITY ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY DDITIONAL INSURED -- OWNERS, LESSEES OR CONTRACTORS (FORM B) This endorsement modifikinsurance provided under the following: COMMERCIAL GENE L LIABILITY COVERAGE PART. SCHEDULE Name of Person or Organization: Th City of Huntington Beach, its agents, officers &employees 2000�IUlain Street Huntin� n Beach, CA 92648 RE: Wate ont Beach Cabana (if no entry appears above, Information required to complet this endorsement will be shown in the Declarations as applicable to this endorsement.) WHO IS AN INSURED (Section II) is amended to Include as an i sured the person or organization shown in the Schedule, but only with respect to liability arising out of "your work" for th 'nsured by or for you. CG 20 10 1185 Copyright, Insurance Services Office, Inc.1984 Page 7 of 1 0 City Clerk's Office File No. WA 600.35 10/31/02 Arer vnAv VGR 1 IrIV/1 I G Vr L P'LUIL1 I i IIr�7V1�/�11rV�TER01 r 10/02/02 PRODUCER THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION Arthur J. Gallagher & Co. ONLY AND CONFERS NO RIGHTS UPON THE CERTIFICATE License #0726293 HOLDER. THIS CERTIFICATE DOES NOT AMEND, EXTEND OR 15 Enterprise, Suite 200 ALTER THE COVERAGE AFFORDED BY THE POLICIES BELOW. INSURERS AFFORDING COVERAGE 111iso Viejo CA 92656 Phone:949-349-9806 Fax:949-349-9900 NSURED INSURERA National Surety Corporation INSURERS: USFSG INSURERC: Waterfront Hotel, LLC NSURERD: 21100 Pacific Coast High way Huntington Beach CA 92648 INSURER E: COVERAGES THE POLICIES OF INSURANCE USTED BELOW HAVE BEEN ISSUED TO THE INSURED NAMED ABOVE FOR THE POLICY PERIOD INDICATED. NOTWITHSTANDING ANY REQUIREMENT, TERM OR CONDITION OF ANY CONTRACT OR OTHER DOCUMENT WITH RESPECT TO WHICH THIS CERTIFICATE MAY BE ISSUED OR MAY PERTAIN. THE INSURANCE AFFORDED BY THE POUCIES DESCRIBED HEREIN IS SUBJECT TO ALL THE TERMS, EXCLUSIONS AND CONDITIONS OF SUCH POLICIES. AGGREGATE LIMITS SHOWN MAY HAVE BEEN REDUCED BY PAID CLAWS. NSR LTR Cl TYPE OF INSURANCE POLICY NUMBER POLICY EFFECTIVE DATE POLICY EXPIRATION DATE LIMITS A GENERALUAINUTY X COMMERCIALGENERALLIABILITY CLAIMS MADE F—X] OCCUR MXX80797673 04/01/02 04/01/03 EACH OCCURRENCE $ 1,000,000 FIRE DAMAGE WW one fire) s 50,000 MED EXP (Any one person) $ 5,000 PERSONAL BADV INJURY s 1,000,000 GENERAL AGGREGATE s 2,000,000 GEWL AGGREGATE LIMIT APPLIES PER: X I POLICY JECT LOC PRODUCTS - COMPIOP AGG s 2,000,000 AUTOMOBILE LIABILITY ANY AUTO ALL OWNED AUTOSp�0 SCHEDULED AUTOS HIRED AUTOS NON -OWNED AUTOS YWTTOcd, Cit�t C A IL g putg C its BY = _ OY� rn®A (e 6 �/ ;� t i _ COMBINED) SINGLE LIMIT $ (Per � ,i INJURY $ BODILY INJURY (per �) PROPERTY DAMAGE (Per ecdderu) s GARAGE LIABILITY ANY AUTO AUTO ONLY - EA ACCIDENT S OTHER THAN EA ACC AUTO ONLY: AGG s s EXCESS LIABILITY OCCUR CLAIMS MADE DEDUCTIBLE RETENTION i EACH OCCURRENCE s AGGREGATE S s s S B WORKERS COMPENSATION AND EMPLOYERS'LABIUTY -- - - D18SW00008 - - - 09/30/02 - --- - 06/30/03 -- TORY LIMITS ER E.LEACH ACCIDENT $1,000 000 EL DISEASE = EA EMPLOYE S 1 ; 000 -, 000- ELDISEASE - POLICY LIMIT $l 000 000 A OTHER Property b=80797673 04/01/02 04/01/03 Bldg. $350,000 Per.Pro . $15 000 DESCRIPTION OF OPERATTOtAWLOCATIONSNEHICLESIEXCLUSKRM ADDED BY ENDORSEMENTISPECIIL PROVISIONS The City of Huntington Beach, its agents, officers and employees are named as additional insured (see CG2010) as respects to Waterfront Beach Cabana, 21351 Pacific Coast Highway, Huntington Beach. CERTIFICATE HOLDER Y I ADDITIONAL INSURED; INSURER LETTER: A CANCELLATION HUNTING SHOULD ANY OF THE ABOVE DESCRIBED POLICIES BE CANCELLED BEFORE THE EXPIRATION DATE THEREOF, THE ISSUING INSURER WIL IL -3Q- DAYS WRITTEN The City of Huntington Beach, NOTICE TO THE CERTIFICATE HOLDER NAMED TO THE LEFT, its agents, officers and IM employees REPRESENWAWVM 2000 Main Street Huntington Beach CA 92648 AUTHORIZED ACORD 25-S (7/97) CORPORATION 1988 City Clerk's Office File -No. 4 600.35 10/31/02 INSURED: Waterfront Hotel, POLICY NUMBER: MXX80797673 COMMERCIAL GENERAL LIABILITY THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY ADDITIONAL INSURED -- OWNERS, LESSEES OR CONTRACTORS (FORM D) This endorsement modifies insurance provided under the following: COMMERCIAL GENERAL LIABILITY COVERAGE PART. SCHEDULE Name of Person or Organization: The City of Huntington Beach, its agents, officers & employees 2000 Main Street Huntington Beach, CA 92648 RE: Waterfront Beach Cabana (if no entry appears above, Information required to complete this endorsement will be shown in the Deciarations as applicable to this endorsement.) WHO 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 out of "your work" for that insured by or for you. ttor-a '{ r.i.�3 /0(��` CIS 2010 1f 85 Copyright, Insurance Services Office, Inc.1984 Page 1 of 1 0 LEASE AGREEMENT WITH WATERFRONT HOTEL, LLC FOR THE "WATERFRONT BEACH CABANA CONCESSION" Along the Strand between Huntington St. and Beach Blvd. adjacent to Pacific Coast Highway within the South Beach Phase I Improvements. Z- �1, c -I � o \ �\ ` /. l G-1 G.J i^F L � �r\� � n�. Y \ ^� G� �'�• r\J :-.�, % \ ^;. /r,\ n /:..^'> G� r> � /.('� n' z^; ��� n' n � r `v - ra J .,� ,_�'`�`..;`. �.C;.;L,�C�.... ,;�;; J „ C'J I,JC`O�`O:J � �J• ✓rail �.,'.���'., .;``,�• �:U �`� v C:,.��_�L J 1. LJ v9\�::9 C%CUCJo �\ G 1 �-J r . r -J �_\. ^ =l 1 . ^�, j �",, Gi1 < S ^ 1 "(.� �n\,c r > CI �:. )C. (, 1. ` `J !� /i J ,r,�,l :;\ ^r'� ^• r 2 ,iV�.;C Vim' .. C� -1.;J ., �J.,;v ;, J��:='l.: �.SU U,. U �JJ .>�� C �� iU �'V, `:> �/.�.! l�l:ri 'V `v ``- r5 a LiU(U v> L- l U ::IJ L�9 wU9J U>U Q—jJ C - D n r' r; O,/. r r �, n �' ^ ` 0.1 �Jr . > 1 G�rJ/1 lG1r?./ .jCJ ir\ j /^i ��/.,_\. L' '� i,C.;J`� V`•.i,,�-., L ��„�c� ., �.����:.;c� ����i ..,��� � `�!�-�.;Cv'J'�^,��; :fJ'.� r- .�-o,\J '^T ✓� �� ^r G1 C� rI C.'•.�.,JJ.,�, � 'L �` JL�C'JC:��J �,J��'.io '`�'�� U.�'`�,, J J U�. .,�.5 Ci ii � >�1 �1. i \.�''.;i ,L\ r �� ` �• G I � �\,r�i,. i`T .'I -�J "emu L ^. C-.",, JL,'., L'l J'L'atgL 2"; o• ^o . .^.�n, JG�.�^z\GJ/\ J J .r1 J ('•J r� 'f`, C n ri ji >t) ;' ( C C �1 ^' �i 1 `I>: J Ulm L9 V v `9 rJ `9 LD�i�J LJU J ,:C v'� J(.,� J .1 l> JLq ri �.. .'✓L'�/E:.i :� ., \J � J\: Jl, .:L a �`�J„ -. �L ., �7 \J.: L.:J ., �ic�:-J .: �'.. C�c,- �-L. �:v� v�1 CJ7J�J�`%�JJ �J„ JI,Li\:�C�S.. I:�J vl,. L\J �- Z- 't- Z� Z• Z• ��r r r'�i'/� U ; ��U. c~7C;Jl 'J U�oo �Z�)0c r °P.r,.;�r., r� 1 l G � . n� n` i '�! C��lj r c/ JL .,�' vj ^� �`�.rJ �-.l J'�>J ! 21�� �J J rl ° �� ° %, r �j Jri u /V J J J ii. JJ., ;1 °J � ivo n o n o o r rr. 0 (�• o-�, � �' n I r;��a s �.o' a ( i (, r 5 �' arc J r, 3 00 C c. onn l�^�"^, ��J /J/\,nJc^ �r� ��7 `JLJU c^> \ i� �J Gam,; i.;,. G, ro �J Ly ,. .i ",n' r^.,,�irl ^�: ,. c�`u 'L ``J`J �J�� L JL� �%J'J i ���// l_J -J'�� %`�'� �%� �%� �� a L� 1 Jcl ��c vu ��U \' `u c � C"J ^ o �,;\�J<n ^an,>^•/.-.1.r;.1 ��\/., 'V.. �;,^;.\r;� ./��r;:,c?,•� ^ o 0 �.,1.:-i��r,^/�'J^ n.�J v�'�l->J �7'��.. �1.. ;�� �r;,�<>•�J ;-��,�� nr;� ';� � .%..^-.,,.��� ^ate.(('%` < :,,�: I r G.1 IC�J:,V[JCJ`=9 i� l;`-� .'..�\_�:�.;�-�J .. \��CJ,::J.0 J., L�� �7w.�., .,\_�\�,.;��1.`�\�.; i���J `c�� ,i\-�L U c��:•'.,., � L'.:., J`�J ��``'%�'uNJo o �'(!^>G-.`�J�;.�, /rJ/J. 1� �J.rl ,_. CJ��..���i,.. �\i\�'i'J�\�'Uc>cJ.,'U.,.,C�i J�J �, ;iiJ o^ o r,> G� '>r� nr ;,l".=,1!1r�•G-�. F� r^' G._.�,, ,)^�,.�i< n�)rJ <���r� �•(�/\G1�J ;�.�^.i,�\ �.r,> �.;G �� .,,,,,�_JCJJ .�._JJ;,!> �:,.,;J��., l,�` J'\JJ �`✓/ \-]�,J\.i ��, �J��l; ���� C:JCI z�> ;;�:��, ,�r,�.r \�J' �.;�_ SSA /1 �� 'VJ .i�7c� ..�%IJ �J v/:.��:./�`7 :,L' \�i�:J�..�✓VC;.iL_i'„ ''\/ �G1�J�i�.l ri�/�1 �:�`I ^��J U �U Ul.:��.'-JuCJc� �-J^, n^'.1 (`J /i-J "�r1G1^F;` Cii..:.,�U JCiV� �J'`J� �� �i�l .";JJU�\�C`�.~i� ^ foC.0 r.f �l"F��d N7\ o<�nu (J?rU CC`,✓/\MC—" JCj IJJ,Ji� GCJiU0 l ' � ' �..', t �n, /�\ ^ �, �I� i^ i� ✓ G "� G� Orr r !! n J LL j `:r �./ ��., l�>L lJ C� •. �J J L� l L C��'..L .. L f 7 �` �/� ., .. ',.'✓ L i 'U ✓U' 1. •. (l�L J .;.... L 7 /J J J \ �:.I li '•: CJ n ^n n G�.l r /1 G•.: i/\r\ �\�r'r !.:,'?,^. r�\��» �>/�. �J':�.lG�",�!'i J ; ?nr=-�•rJ�^a/\�\"� ��.: �C�\J C,., ,.J���/V Gam'\J v\�L �)�:.1 ��-iC�l�C �>w \`iu J��J •.: N \`� �J\`O ., .J C-i .��J '�'>��\9L,. v ��J\'JJ�•, C:io �>(\,/?r_�;":,1<^�\J\/ .i^; �:\��%.. .`��`V `%il 1..J _ :�. v cr>�;-";��\r .i. ,;' r., �."1 ' �l (��.. :. ..` ��; n �r'�lf'i'1�,� '\�.G.1Jr��\;�^. ,v!�C-J �I �.'.�^.%l1 G'1 ^�•' ^Vi i.'��r<1<�i C.i _i 19 ��% \:., .. IJ`�.. ,. ,. .. „(.:, �'>.. .�..%�,.�\ .. .;`� \'J�i.,NJ:. .: J'�`;J •. .; 1. �' \>``�.� �/ •:\%\"%C� .. /�\"J' J`�'' i o n'.l^/pc>n ./, /;.^ oo , I/\� Q 7 \'1 l cJ �C?J'J C o c n 0 ^ �: n n 0^ .ao o II ;���. G,� J�_\ n,•^" >G�. /\ !1c=>/�. �J� ^ :�. 1,^.:;. ^ :.1/, i /` �'n n� i �J •> %,�.rl I1 :I !I J l 'v '`�'`�I.J \ u J'�c� a 0 0 nn� r;" ^, r" I%l�^ II^� r 'JJJ� c�� v`v .;JL�' \• �' JJ Jc7J J %` cJ ..I \//:. C. n 0 ^ o '1 0, i1 c >.�, ;1 ^-1 `, . c , .%�,. �i,.'^i r,� n^J �� 'n r n G1 �J G �. r / - J /,_\ �' < ^; �. G \\/�it^ \\ /-: �. ,.. „C1'>li�\lit 'vLG:.;�.,c��„l;�J J 1 f/ C :�. �i� `, f n 0 ^ o o n!;^.-ac �l "(.�,� "� '�c,,. Ji-.�.`?rl ,bra t'> jl,�^nrl^ ";,.^,.. -��J t,i„r��a.nf----,/,_1'iS cj,� .^ �l : f ( > ^r ^>' �•'� ��- r :� f� fit\ �1 ^''1 ./� ^f, l /'` `V 1. \�� \`=.... .. l.' \`� �:•, L.:� L `7 i. 1, J L J U U l J L� L' '✓ ��% �.'�% I ,J �.i Jr 1. \�� U J v (� �i C%; J �`�'�7 �l 1. ,.'�7 J v J V L l o`rJ vl�%\:J C.'.l `'9 .�.- (l•J., ,� .,C�J ,. •lI \i.:(�J`.�iv•U v �.%v v V v �%.i .. UL�.,C"/ �.'" J\-.,�..1J\.% ,. J�"J8 CJ`^'G-`I �.�,^^awn ,.'!1 /�, G-1�Jri• �.1 �l'�rJ,/>�J !-J�!,-1 r��. Gam. r\J (-fl!J Recommended Action: Q�l Q'I "'I �v 'd: I, 7). In p K. _ ac T-a,\ (TID -10 F,� I �I-il ji 0 0 - 7m, L-I 31 /27 IQ, 7/11 N Z3 Huntington Beach Records Management Office of the City Clerk Summary L13 �! �O 011 1 ID Ref Catgry. Entered Status Document Expires Box Checked Out -IN 2 j�fli IM,:&-o f -il m F -7 62, 1186 L!��, 1/ :J5 / j 2�] �� I MAYER ROBERT -�Tthe W4te'rfront.;,ZACK'S Beach Concessioa '10(formerly Wheat; ,'Cecil & Virginia N) 1961-1991 ",-EXPI /1 /95'-- 05/01/19951JActivo F 77 �86 Ej 1 600-351 E [fA-C—W§--TbQ Beach Concession - Michael Ali 5-1-95 (formerly Wheat) (Exp. Mofith to (Month) 4 Printout Filter: Official Copy City •., Records ......:�..-,.-a,�..;._,,,.r..,.-_:;:....x._.;_..?._,_ ...,,. ,... _..,..:�,..;�:_:_ .,.. • This information has onginated from the City Clerk s Office-.: Ref Category Entered Status Document Expires Box ID Label AL 600.35 12/31/1991 Microfilmed 01/01/1995 262 .1190 ALI, MIKE 1951-1991 Beach Concession ZACK'S TOO (Formerly Robert Mayer -Waterfront) (Formerly Cecil & Virginia Wheat) (Formerly Poores Lease) EXP 1/1/95 _ ._................_.. -- -.._ ..... _-....... MA 600.35 12/31/1991 Microfilmed 01/01/1995 262 1186 MAYER ROBERT - The Waterfront ZACK'S Beach Concession (formerly -Wheat, Cecil &Virginia N) 1961-1991 EXP 1/1/95 ZA 600.35 05/01/1995 Active 12/31/1999:5786' ZACK'S TOO Beach Concession - Michael Ali 5-1-95 (formerly Wheat) (Exp. Month to.Month) - - - .......... ...._......._..__....... _._......... _ _ -- ? Total Records Selected: 3 ` Copyright© 2002 CiME August 14, 2002•.. Brockway, Connie From: Robinson, Cheryl Sent: Wednesday, August 28, 2002 9:58 AM To: Brockway, Connie Subject: RE: ZACKS TOO No, that's not really right. Zack's Too is still Mike Ali's, who took it over from Cecil Wheat. But Cecil also had Zack's which he reassigned to the Waterfront, who named it the Beach Cabana. Unless you used to keep both of Wheat's concessions in the same folder or maybe put Zack's in an inactive file, you should still have a file called Zack's, which was renamed Beach Cabana by Waterfront Hotels, LLC, the lessee. c -----Original Message ----- From: Brockway, Connie Sent: Wednesday, August 28, 2002 9:48 AM To: Robinson, Cheryl Subject: ZACKS TOO Hi Cheryl, I want to be sure that I am putting the Cabana lease in the correct file. The only active file I have for Zacks is Zacks Too Beach Concession, formerly Ali formerly Wheat. Connie 9_ 4 oe — C. mlvrw j Alm. goy- Council/Agency Meeting Held:.. 08-.0.5.-a. Deferred/Continued to: �Ap roved Conditions y A roved ❑Denied >+ X2 1 ----------- D0- Cie s Signature Council Meeting Date: August 5, 2002 Department ID Number: CS02-027 CITY OF HUNTINGTON BEACH REQUEST FOR ACTION o c SUBMITTED TO: HONORABLE AND CITY COUNCIL MEMBERS —`== co %ter -- SUBMITTED BY: RAY SILVER, City Administrator ol-"W PREPARED BY: RON HAGAN, Director, Community Service CLAY MARTIN, Director of Administrative Services y SUBJECT: APPROVE LEASE AGREEMENT WITH WATERFRO T HOTEL, LLC FOR THE WATERFRONT BEACH CABANA CONCESSION Statement of Issue, Funding Source, Recommended Action, Alternative Action(s), Analysis, Environmental Status, Attachment(s) Statement of Issue: Should the city renew the lease agreement with Waterfront Hotel, LLC for the Beach Cabana concession using the standard concessionaire lease agreement? Funding Source: Not applicable. Recommended Action: Motion to: Approve the Lease with Waterfront Hotel, LLC for the Waterfront Beach Cabana using the standardized lease agreement with terms and conditions as presented herein, authorize the Mayor and �qjit Clerk to execute the lease; and give the Director of Administrative Services the authority to amend the lease to revise the term dates and insert a legal description of the leased premises. Alternative Action(s): 1. Do not approve the lease with Waterfront Hotel, LLC for the Waterfront Beach Cabana; 2. Approve the lease for the Waterfront Beach Cabana using a different form of lease. Analysis: The Beach Cabana concession on the city beach, which has been operated by the Waterfront Hotel, LLC (WATERFRONT), owner of the Hilton Hotel, since 1990 was demolished and is being rebuilt as part of the development agreement between WATERFRONT and the city for the construction of the new Hyatt Regency Huntington Beach Resort and Spa. Staff has prepared a new lease agreement with WATERFRONT using the standard lease agreement previously approved by City Council. The Beach Cabana is being rebuilt along with fagade improvements. to the Beach Hut concession and - Zack's Too concession, all of which are located within the South Beach Phase I Improvement Master Plan. REQUEST FOR ACTION MEETING DATE: August 5, 2002 DEPARTMENT ID NUMBER: CS02-027 Originally, these improvements were to be included in the award of contract for the South Beach Phase I improvements. However, the bids received at that time were over the engineering estimate for what the work should cost. Staff has prepared a new bid package, which City Council is considering as a separate agenda item. Upon the city's completion of the shell facility for the Beach Cabana, WATERFRONT will install all tenant improvements. Staff is requesting Council approval for the Director of Administrative Services to amend the lease agreement to revise the term date when the city completes construction of the Beach Cabana and turns it over to WATERFRONT to do tenant improvements, and to insert a legal description of the leased premises when they are completed. The current timeline is for the city to turn the completed Beach Cabana shell over to WATERFRONT for tenant improvements by March 1, 2003. It should take 90 days for tenant improvements to be completed. The grand opening of the Beach Cabana is anticipated to be June 1, 2003. This timeline depends on the weather and the city's ability to secure a contractor who can complete the project on schedule. This lease is expected to generate approximately $35,000 per year to the city in lease revenue. The Community Services Department, which administers concessionaire lease agreements, the Real Estate Division of Administrative Services, and the City Attorney's Office recommend the approval of this lease. Environmental Status: N/A Attachment(s): RCA Author: RH:cr 02-027 Waterfront Beach Cabana Lease -2- 7/17/2002 11:50 AM CITY OF HUNTINGTON 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 DATE: August 27, 2002 TO: Robert Mayer Corporation ATTENTION: Stephen Bone Name 660 Newport Center Drive, #1050 DEPARTMENT: Street Newport Beach, CA 92658-8680 REGARDING: Lease — the Waterfront City, State, Zip Beach Cabana See Attached Action Agenda Item F-1 Date of Approval 8/ 5/ 02 Enclosed For Your Records Is An Executed Copy Of The Above Referenced Agenda Item. Remarks: Connie Brockway City Clerk Attachments: Action Agenda Page _x— Agreement x Bonds x Insurance RCA Deed Other CC: C. Martin Adm. Serv. x x x Name Department RCA Agreement Insurance Other R. Hagan Com. Serv. x x x Name Department RCA Agreement Insurance Other Name Department RCA Agreement Insurance Other OC Assessor's Office Spec. Proj. X. x Name Department RCA . Agreement Insurance Other Name Department RCA Insurance (Telephone: 714-536.5227) ATTACHMENT #1 Send "Possessory Interest" Documents to: OC Assessor's Office Special Projects Attn: Liz Canzano 12 Civic Center Plaza Santa Ana, CA 92702'�47- ph. 714-834-2553