Exhibit 10.7
CITY AND COUNTY OF SAN FRANCISCO
XXXXXX XXXXXXXXX, MAYOR
LEASE
BETWEEN
SOUTHWEST MARINE, INC.
A CALIFORNIA CORPORATION
AND
THE CITY AND COUNTY OF SAN FRANCISCO,
A MUNICIPAL CORPORATION, ACTING BY AND THROUGH
THE SAN FRANCISCO PORT COMMISSION
SAN FRANCISCO PORT COMMISSION
XXXXXX X. XXXXXXX, M.D., PRESIDENT
XXXXX X. XXXXXX, COMMISSIONER
XXXXX X. XXXXXX, COMMISSIONER
XXXX X. XXXXXXX, COMMISSIONER
XXXXXXX X. X. XXXXX, COMMISSIONER
XXXXXX X. XXXXXXXX
PORT DIRECTOR
TABLE OF CONTENTS
PAGE
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1. LEASED PREMISES..................................................... 1
2. TERMINATION OF PRIOR LEASE.......................................... 1
3. TERM................................................................ 2
4. RENT................................................................ 3
A. Annual Rent................................................... 3
B. Cost of Living Index Adjustment............................... 3
C. Late Payment.................................................. 4
D. Manner of Payment............................................. 5
5. GUARANTEE........................................................... 5
6. TAXES............................................................... 6
7. USE OF PREMISES..................................................... 7
A. Permitted Uses................................................ 7
B. Requirement that Premises be Used............................. 7
C. Restrictions on Use........................................... 7
8. UTILITIES AND SERVICES.............................................. 8
9. MAINTENANCE AND REPAIR.............................................. 8
10. ALTERATIONS, ADDITIONS AND IMPROVEMENTS............................. 9
11. HAZARDOUS MATERIALS................................................. 13
12. LIENS............................................................... 15
13. DAMAGE OR DESTRUCTION............................................... 15
14. INDEMNIFICATION..................................................... 16
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15. WAIVER OF CLAIMS.................................................... 16
16. INSURANCE........................................................... 17
17. ASSIGNMENT AND SUBLETTING........................................... 19
18. MORTGAGE OF LEASEHOLD............................................... 21
19. ENTRY............................................................... 21
20. DEFAULT............................................................. 21
21. ENVIRONMENTAL HOLD HARMLESS......................................... 25
22. WAIVER OF RELOCATION ASSISTANCE RIGHTS.............................. 25
23. EMINENT DOMAIN...................................................... 25
24. JOB TRAINING PROGRAM................................................ 26
25. ATTORNEYS' FEES..................................................... 27
26. HOLDING OVER........................................................ 27
27. MINERAL RESERVATION................................................. 28
28. NON-DISCRIMINATION PROVISIONS....................................... 28
29. QUITCLAIM........................................................... 29
30. NO PARTNERSHIP...................................................... 29
31. WAIVER OF TERMS..................................................... 29
32. NOTICES............................................................. 30
33. COMPLETE AGREEMENT.................................................. 31
34. MODIFICATION OF LEASE............................................... 31
35. CAPTIONS............................................................ 31
36. CALIFORNIA LAW...................................................... 31
37. SEVERABILITY........................................................ 31
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38. TIME IS OF ESSENCE.................................................. 32
39. QUARTERLY REPORT.................................................... 32
iii
THIS LEASE is made and entered into on the 2nd day of December, 1987
between the CITY AND COUNTY OF SAN FRANCISCO, hereinafter called "CITY," a
municipal corporation, acting by and through the San Francisco Port Commission,
hereinafter called "PORT," as landlord, and SOUTHWEST MARINE INC., a California
corporation, hereinafter called "TENANT," as tenant. In consideration of the
rents to be paid under this lease and of the premises and agreements contained
herein and to be formed pursuant hereto, the parties promise and agree as
follows:
1. LEASED PREMISES
PORT hereby leases to TENANT and TENANT hereby hires from PORT, upon the
provisions hereof, the property situated in the City and County of San
Francisco, State of California, as described in Exhibit "A" attached hereto and
made a part hereof, all piers and improvements existing thereon, and the 22,000
ton and 66,000 ton lifting capacity drydocks and the six (6) gantry cranes
located thereon. Said real property, piers, improvements, drydocks and cranes
thereon and all replacements thereof and additions thereto are hereinafter
collectively called the "Premises." TENANT accepts the Premises subject to the
following matters of record: all existing liens, encumbrances, charges,
conditions, covenants, easements, restrictions and rights-of-way, including
without limitation and reserving to PORT and CITY that certain sewer easement as
depicted in Exhibit A. TENANT shall have a full and unimpaired right of ingress
to and egress from Premises over that certain portion of Port property
identified as Parcel Two all as depicted in Exhibit A.
2. TERMINATION OF PRIOR LEASE
A. PORT and TENANT entered into that certain lease dated May 8, 1978
(hereinafter called the "prior lease"), for premises located at Piers 26 and 28
in the City and
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Xxxxxx xx Xxx Xxxxxxxxx, Xxxxx xx Xxxxxxxxxx. Xx the commencement date of this
lease, as provided in paragraph 3A below, said prior lease shall be fully and
finally terminated.
B. Subject to Paragraph 3A below and conditioned on the performance by
the parties of the provisions of this lease and the prior lease, on the
commencement date of this lease PORT and TENANT shall be fully and
unconditionally released and discharged from the respective obligations arising
from or connected with the provisions of the prior lease. This termination of
the prior lease shall fully and finally settle all demands, charges, claims,
accounts or causes of action of any nature, including without limitation, both
known and unknown claims and causes of action that arose out of or in connection
with the prior lease and constitutes a mutual release with respect to the prior
lease.
3. TERM
A. The term of this lease shall be for a period of thirty (30) years
commencing upon the 120th day following the effective date of the ordinance by
the San Francisco Board of Supervisors approving this lease, which date is
December 17, 1987 ("Commencement Date" herein), provided that the PORT's prior
tenant for the Premises, Xxxx Shipyards Corporation, a New York corporation,
shall not within a 90-day period prior to said Commencement Date file any action
or proceeding of any kind under any provision of the Federal Bankruptcy Act
(hereinafter, an "Event of Insolvency"). Should an Event of Insolvency occur
within said 90-day period, TENANT shall have the option within said period, by
giving written notice to PORT, to terminate this lease and continue occupancy of
Piers 26 and 28 under the prior lease, in which latter event TENANT's option to
extend the term of the prior lease for an additional 5 years commencing May 1,
1988 shall be deemed by PORT to have been timely exercised by TENANT's notice
terminating this lease as provided in this paragraph. PORT shall not be liable
to TENANT for any damages arising from a termination of this lease as provided
in this
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paragraph, or as a result of an Event of Insolvency occurring subsequent to said
90-day period. Further, should this lease be terminated as a result of an Event
of Insolvency occurring subsequent to said 90-day period, TENANT agrees to pay
to PORT all rent accruing under this lease through the effective date of such
termination.
B. The term of this lease shall terminate at midnight thirty years from
the Commencement Date which termination date is December 17, 2017.
4. RENT
A. Annual Rent.
TENANT hereby covenants and agrees to pay to PORT for the Premises during
the term of this lease an annual rent of one Million Two Hundred Thousand
Dollars ($1,200,000.00), subject to adjustment as set forth in paragraph 4B of
this lease. As used in this lease, "Lease Year" means each successive period of
twelve (12) calendar months following the commencement of the lease term. Annual
rent shall be payable monthly in advance on the first day of each month in
installments of One Hundred Thousand Dollars ($100,000.00) per month. Monthly
rent for any partial month shall be prorated at the rate of one-thirtieth
(1/30th) of monthly rent per day.
B. Cost of Living Index Adjustment.
The amount of rent payable under paragraph 4A shall be subject to
adjustment at the commencement of the 6th Lease Year of the term and every 5th
Lease Year thereafter ("adjustment date" herein) as follows:
The base for computing the adjustment is the Department of Labor's Bureau
of Labor Statistics Consumer Price Index for All Urban Consumers (All Items:
1967=100), San Francisco - Oakland, California nearest the Commencement Date
("Beginning Index" herein). If the index published nearest the adjustment date
("Extension Index" herein) has increased over the
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Beginning Index, the monthly rent until the next adjustment date shall be set by
multiplying the monthly rent set forth in paragraph 4A by a fraction, the
numerator of which is the Extension Index and the denominator of which is the
Beginning Index. In no case shall the monthly rent be less than the monthly rent
set forth in paragraph 4A.
If the aforesaid index is no longer published, PORT shall use such index
as is mutually acceptable to the parties and substantially similar in nature to
the present publication; and an appropriate adjustment if necessary, shall be
made.
Following the second adjustment date, TENANT shall have the right to
renegotiate the monthly rent as provided in paragraph 4B. If the parties cannot
agree upon a monthly rental rate, to be adjusted as provided herein for the
remainder of the terms, then TENANT shall have the right to terminate this Lease
upon 90 days written notice to PORT.
C. Late Payment.
TENANT acknowledges that late payment by TENANT to PORT of rent or other
sums due under this lease will cause PORT to incur costs not contemplated by
this lease, the exact amount of which will be extremely difficult to ascertain.
Accordingly, a charge equivalent to 1.5% of all rent, charges and fees or any
portion thereof due and unpaid for more than thirty (30) days will be paid by
TENANT for each month that such rent, charges and fees or any portion thereof
remain due and unpaid, plus reasonable attorneys' fees incurred by PORT by
reason of TENANT's failure to pay rent or other charges, or both, when due under
this lease. The parties agree that such late charges represent a fair and
reasonable estimate of the cost that PORT will incur by reason of the late
payment by TENANT. Acceptance of such late charges by PORT shall in no event
constitute a waiver of TENANT's default with respect to such overdue amount
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nor shall such acceptance prevent PORT from exercising any other rights or
remedies it may have.
D. Manner of Payment.
All payments due from TENANT to PORT under this lease shall be made to
PORT without abatement, deduction, setoff, prior notice or demand, in lawful
money of the United States of America, at PORT's address for notices as set
forth in paragraph 32 of this lease or to such other person or at such other
place as PORT may from time to time designate in writing to TENANT.
5. GUARANTEE
On the Commencement Date, in addition to the advance payment of the first
month's rent, TENANT shall deliver to PORT a security deposit in an amount equal
to two (2) months' rent. The deposit shall be in the form of cash, certificates
of deposit or other similar instruments or securities payable to PORT and
acceptable to PORT, or a bond or undertaking written with an insurer admitted in
California and in a form acceptable to PORT. Said deposit shall be held by PORT
as guarantee for the full and faithful performance by TENANT of all of the
substantive covenants and agreements of this lease to be performed or observed
by TENANT; provided, that except as hereinafter expressed to the contrary, said
guarantee deposit shall be returned to TENANT at the expiration of the term of
this lease. Such deposit shall also guarantee the payment of any and all damages
suffered by PORT by reason of the tenancy by TENANT. Whenever the rent is
increased, the amount of the guarantee deposit shall also be increased to equal
such increased rent. Any increase in the guarantee deposit shall be delivered to
PORT on the same date that each increase in the rent is first due. The form of
deposit may be changed from time to time by mutual consent. If TENANT elects to
use a bond as a guarantee deposit, it shall supply evidence of satisfactory
renewal or reissuance promptly and prior to the expiration
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of any existing bond. If TENANT elects to deposit certificates of deposit or
other interest-bearing instruments, TENANT may obtain all interest payable on
such certificates or instruments as the same becomes due. In the event TENANT
fails to perform or observe any of the substantive provisions of this lease to
be performed or observed by it, then, at the option of the PORT, PORT may, but
shall not be obligated to, apply the guarantee deposit or so much thereof as may
be necessary to remedy any such default by TENANT; provided, that PORT shall
give TENANT fifteen (15) days notice before PORT so expends or applies the
guarantee deposit or any part thereof; and TENANT shall immediately upon demand
pay PORT a sum equal to the portion of the guarantee deposit expended or applied
by PORT in order to restore the guarantee deposit to the amount required by this
paragraph 5. PORT's obligations with respect to the guarantee deposit are those
of a debtor and not a trustee. To the extent that TENANT deposits cash as a
guarantee deposit, PORT may commingle the guarantee deposit with PORT's general
and other funds; and PORT shall not be required to pay TENANT interest on such
guarantee deposit. Nothing contained in this paragraph shall in any way diminish
or be construed as waiving any of PORT's other remedies set forth in this lease,
or by law or equity.
6. TAXES
TENANT acknowledges and understands that this lease may create a
possessory interest subject to property taxation and that this lease may be
subject to the payment of property taxes levied on such interest; TENANT agrees
to pay, or cause to be paid, when due, to the proper authority, any and all
taxes, assessments, assessments and similar charges on the Premises which accrue
following the Commencement Date, including all taxes levied or assessed on the
possession, use or occupancy, as distinguished from the ownership of the
Premises. TENANT shall not permit any such taxes, charges or other assessments
to become a defaulted lien on the Premises or the improvements thereon.
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Upon request of PORT, TENANT shall furnish the information required by
California Revenue and Taxation Code Section 480.4 as codified in San Francisco
Administrative Code Section 23.6-2, attached hereto as Exhibit B and
incorporated herein, within 30 days of the Commencement Date of this lease, or
of any subsequent renewal, sublease or assignment.
7. USE OF PREMISES
A. Permitted Uses.
The Premises shall be used solely for the purposes of operating a
shipbuilding and ship repair facility. Changes in the said uses shall be made
only upon the express written consent of PORT.
B. Requirement that Premises be Used.
It is the intent of this lease that TENANT shall not acquire the right to
use the Premises and then not use them. If TENANT fails to use the Premises for
the purposes or in the manner set forth herein, and unless failure shall be for
reasons beyond the control of TENANT such failure shall constitute a material
breach of this lease.
TENANT covenants to contract with other shipbuilding or ship repair firms
for the purpose of conducting the activity authorized in Subparagraph 7A on
their behalf when such drydocks are not in use, scheduled to be used or
reasonably anticipated to be used, by TENANT for its own activities under this
lease. TENANT shall charge the market rate for such work in accordance with
published tariffs and procedures which shall be provided to PORT.
C. Restrictions on Use.
TENANT shall not use or permit the Premises, or any part thereof, to be
used for any purpose other than the purpose for which the Premises are leased.
TENANT shall not perform any act which will cause a cancellation of any
insurance policy covering the Premises or any part thereof. TENANT shall not
violate any law, ordinance, rule or regulation of any governmental
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agency having jurisdiction over the Premises affecting the occupancy and use of
the Premises. Failure to comply with such law, ordinance, rule or regulation
shall constitute a material breach of this Lease. TENANT shall not obstruct or
interfere with the rights of PORT's other tenants or licensees.
8. UTILITIES AND SERVICES
A. TENANT shall procure and pay for all utilities and services
furnished to or used by it, including, without limitation, gas, electricity,
water, telephone service, trash collection, and janitorial service, and for all
connection and installation charges. PORT shall have no obligation to provide
such services to the Premises.
B. It is agreed that any and all utility improvements shall become part
of the realty and are not trade fixtures. During the term of this lease, TENANT
shall be obligated to insure the repair and maintenance of any and all utility
systems and fixtures related thereto in good operating condition.
9. MAINTENANCE AND REPAIR
TENANT, at all times during the term of this lease and at its sole cost
and expense, shall maintain the Premises or cause them to be maintained in as
good condition and repair as when leased or as subsequently improved by TENANT,
including but not limited to the exterior, interior, substructure and foundation
of all improvements from time to time constituting part of the Premises and all
fixtures, equipment, including, but not limited to the two drydocks and the six
cranes comprising a portion of the Premises, and landscaping from time to time
located on the Premises or any part thereof or appurtenant thereto. TENANT shall
also be required at all times during the term of this lease to maintain the
drydocks referenced in Paragraph One herein and which are a part of the
Premises, in accordance with the standards set forth in the United
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States Department of Defense Drydocking Facilities Safety Certification Criteria
for United States Navy Ships, MIL-STD 1625 A (SH) dated September 7, 1976.
Title to the Premises is in PORT. Despite the fact that the title is in
PORT, PORT shall have no obligation or responsibility whatsoever to maintain the
Premises or any part thereof during the term of this lease; provided, that
should TENANT fail to maintain the Premises or make any repairs under this
paragraph, PORT shall have the option to enter the Premises at reasonable times
and make or cause the same to be done if TENANT fails to do so after having
received reasonable notice from PORT, and TENANT shall immediately reimburse
PORT for the cost thereof. The making of such repairs by PORT shall in no event
be construed as a waiver of the duty of TENANT to maintain the Premises or make
repairs as herein provided. Within 30 days of the annual anniversary of the
Commencement Date, PORT and TENANT shall conduct a joint inspection of the
Premises to insure that the Premises are adequately maintained and repaired.
TENANT shall not make, nor cause or suffer to be made any repairs or other
work for which a permit is required by the San Francisco Building Code or by any
rule or regulation of PORT without first obtaining a permit therefor.
10. ALTERATIONS, ADDITIONS AND IMPROVEMENTS
A. TENANT has inspected the Premises or caused an inspection to be made
on its behalf, and, notwithstanding such inspection and the provisions of
paragraph 11, accepts and is leasing the premises in their "as is" condition as
of the date of commencement of the term of this lease and is not relying on any
representations or warranties made by PORT or any representative of PORT as to
the present or future physical condition of the Premises.
B. All capital improvements or any other alteration, addition or
improvement on the Premises which may not be removed without substantial injury
to the Premises shall become part
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of the realty, shall be owned by PORT and shall, at the end of the term hereof,
remain on the Premises without compensation to TENANT unless PORT first waives
its rights under this lease in writing.
C. TENANT is permitted to demolish and remove Pier 5 on the Premises,
as more particularly described in Exhibit "A", at its sole cost and expense,
including, but not limited to, any expense incurred in connection with TENANT's
compliance with any law, ordinance, rule or regulation concerning hazardous
materials as defined in paragraph 11 herein, subject to the provisions of this
paragraph. At the time of such demolition and removal, TENANT is permitted to
sell the gantry cranes which are located on said pier as of the Commencement
Date of this lease. All proceeds from this sale may be retained by TENANT, in an
amount not to exceed TENANT's actual costs of demolition and removal of Pier 5.
Any proceeds from the sale of said cranes located on Pier 5 on the Premises in
excess of TENANT's actual costs of demolition and removal shall be paid to PORT.
Within ninety (90) days after the completion of the demolition and removal
of Pier 5, TENANT shall furnish to PORT a statement of TENANT'S expenditures for
said removal and demolition. TENANT shall also furnish to PORT within ninety
(90) days of the sale of the cranes on Pier 5 a statement of the proceeds from
said sale (hereinafter called "Accounting Statements"). Each Accounting
Statement shall be signed and certified as accurate and complete on behalf of
TENANT by an authorized officer of TENANT. TENANT shall keep and maintain on the
Premises or at a location elsewhere in the City and County of San Francisco for
a period of three full Lease Years, a complete set of books of accounts,
records, receipts and other documentation supporting TENANT'S expenditures for
said removal and demolition, and the proceeds of the sale of cranes, which shall
be kept in accordance with generally accepted
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accounting principles and shall be open for inspection by the PORT or its
auditors during regular business hours and upon reasonable notice. PORT shall
keep any information derived from the Accounting Statements confidential to the
fullest extent permitted by law. If the PORT should determine that there has
been a deficiency in the payment of proceeds of the crane sale to the PORT
resulting from the overstatement of TENANT'S expenditures, this will constitute
a material breach of this lease.
D. All alterations, additions or improvements to the Premises shall be
subject to the following conditions, which TENANT covenants to observe and
perform:
(1) No work shall be undertaken until TENANT shall have procured
and paid for all PORT, municipal and other governmental permits and
authorizations of the various municipal departments and governmental agencies
having jurisdiction, including, but not limited to, any building or similar
permits required by PORT or its Chief Harbor Engineer in the exercise of its
jurisdiction with respect to PORT lands.
(2) All work shall be done in a good and workmanlike manner and in
compliance with the applicable building and zoning laws and terms of and
conditions imposed on any permit or authorization for the Premises.
(3) All work shall be prosecuted to completion with reasonable
dispatch, unavoidable delays excepted.
(4) At the completion of any work described in this paragraph,
TENANT shall furnish one (1) set of reproducible "as-built" drawings of all
alterations, additions or improvements made to the Premises so that PORT shall
at all times have a complete set of reproducible "as-built" drawings of all work
done to or on the Premises.
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E. Nothing contained in this paragraph shall limit the right of TENANT
to install and remove trade fixtures and equipment in any part of the Premises,
and PORT disclaims any ownership interest in such trade fixtures and equipment.
Any damage to the Premises occasioned by such installation or removal shall be
repaired at the cost of TENANT. The buildings, fences, piers, parking lots and
similar structures and appurtenances shall not be regarded as trade fixtures but
as "improvements".
F. At PORT's election, TENANT shall be obligated at its own expense to
demolish and remove any and all alterations, additions and improvements that
TENANT has made which are not or will not be reasonably capable of continued
occupancy for the purposes described in paragraph 7 of this lease without
substantial repairs or renovations following the termination of this lease.
G. Within ninety (90) days but not less than sixty (60) days prior to
the termination of this lease, unless termination should be the result of loss
or destruction of the improvements, in which event only written notice shall be
required of PORT, PORT shall advise TENANT as to which improvements or portions
of improvements it elects to have demolished and removed in accordance with
subparagraph F. In the event that removal or demolition is required under
subparagraph F and TENANT fails to make such demolition and removal within sixty
(60) days after the expiration or prior termination of this lease, PORT may
perform such work at TENANT's expense.
H. In addition to any other remedy available to PORT, PORT may require
TENANT to remove, at TENANT's expense, any or all alterations, additions or
improvements not approved by PORT under the provisions of this paragraph; and
PORT may require TENANT to repair in good workmanlike fashion any damage
occasioned thereby at TENANT's expense.
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TENANT shall pay to PORT all special inspection fees as set forth in the San
Francisco Building Code for inspections of work performed without required
permits.
I. At any termination of this lease, TENANT shall leave the Premises
free and clear of all debris and in as good condition as when leased and
subsequently improved, excepting reasonable wear and tear and damage caused by
uninsured casualty loss for which the TENANT is not responsible. TENANT shall
repair any damage to the Premises for which TENANT is liable under this lease,
subject to such adjustments as may be mutually agreed by the parties hereto in
writing. If TENANT fails to remove any improvements, equipment, furniture or
trade fixtures when requested to do so by PORT or fails to leave the property in
the condition required herein, PORT may remove such items and correct such
condition at TENANT's expense and charge said costs against the guarantee
deposit. TENANT shall be required to pay any expenses or portions thereof not
compensated by the guarantee deposit.
11. HAZARDOUS MATERIALS
A. TENANT shall be responsible for the removal and or disposal of any
and all hazardous materials discovered on the Premises during the term of this
lease and which are required to be so removed by any governmental agency,
including but not limited to, the sealing and/or disposal and removal of all
defective PCB transformers located on the premises. As used herein, the term
"hazardous material" shall mean any substance, water or material which has been
determined by any state, federal, or local government authority to be capable of
posing a risk of injury to health, safety and property, including, but not
limited to, all of those materials, wastes and substances designated as
hazardous or toxic by the United States Environmental Protection Agency, the
United States Department of Labor, the United States Department of
Transportation, the California State Department of Health Services and/or any
other governmental agency now or hereafter authorized to regulate materials and
substances in the
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environment Tenant shall dispose of such hazardous materials in compliance with
all applicable laws and regulations and, subject to the exception noted herein,
at its sole cost and expense. TENANT shall obtain prior PORT approval of all
contracts and expenditures for the removal or disposal of said hazardous
materials; however no such approval is required for the routine removal of
hazardous materials directly from ships undergoing repair. PORT shall have the
right to inspect the Premises for hazardous materials at reasonable times.
B. TENANT and PORT agree that prior to TENANT's occupancy of the
Premises, the parties hereto shall conduct a joint inspection of the Premises
and determine the existence and extent of any and all hazardous materials which
are identified on the Premises. Following said inspection, and as provided
herein, TENANT shall remove all such hazardous materials if such removal is so
required by any governmental agency. However, with respect to the removal of any
hazardous materials identified by PORT and TENANT in their initial joint
inspection, TENANT shall receive a credit against rental charges equal to the
actual costs it incurs in any such removal or disposal. TENANT shall also
receive a credit against rental charges for actual costs incurred in the removal
and disposal of non-leaking PCB transformers in the event that such removal of
non-leaking transformers is required by any governmental agency at any time
during the term of this lease. No rental credits shall be allowed for the
removal and disposal of any hazardous materials other than as provided in this
paragraph 11(B).
C. Prior to the termination of this lease, PORT and TENANT shall
conduct a final joint inspection of the Premises for the purpose of identifying
hazardous materials existing on the Premises at that time. TENANT, at its sole
cost and expense, shall remove and dispose of all hazardous materials required
by any governmental agency to be so removed.
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D. TENANT shall be solely responsible for, and shall defend and
indemnify, and hold CITY, PORT and their officers, agents and employees harmless
from and against all claims, costs and liabilities, including attorneys' fees
and costs, arising out of or in connection with the removal, clean-up and
restoration work and materials necessary to return the Premises and any other
property of whatever nature and wherever located to their condition existing
prior to the appearance of the hazardous materials on the Premises, or use
thereof by TENANT. TENANT's obligations hereunder shall survive the termination
of this lease.
12. LIENS
TENANT shall keep the Premises and all improvements thereon free from any
liens arising out of any work performed or materials furnished.
13. DAMAGE OR DESTRUCTION
No loss or damage by fire or other cause insured against by PORT or
required to be insured against under this lease, resulting in either partial or
total destruction of any building or other improvement on the Premises, shall
operate to terminate this lease, or to relieve or discharge TENANT from the
payment of rents or amounts payable as rent as they become due and payable, or
from the performance or observance of any of the agreements, covenants and
conditions to be performed or observed by TENANT under this lease.
If any building or other improvement located on the Premises at any time
during the term of this lease shall be damaged or destroyed by fire or other
cause insured against by PORT or required to be insured against hereunder, then
TENANT, with all reasonable diligence, shall repair, reconstruct or replace such
building or other improvement with another building or improvement of comparable
size and quality to the extent permitted by said insurance proceeds, which shall
be made available to TENANT promptly following any receipt of such proceeds if
PORT is the insured. If TENANT is responsible for causing any loss, whether
insured or
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uninsured, then it shall be required to make such repairs, reconstruction or
replacements at its cost and expense in excess of any insurance proceeds, if
any, in order to restore or replace said building or improvement to the
condition it was in prior to the loss and in such event the lease shall not
terminate and rent shall be paid as it becomes due.
14. INDEMNIFICATION
TENANT agrees to indemnify and save harmless and to defend, without cost
to the PORT and CITY, the PORT and CITY and its officers, employees and agents
against all losses, claims, costs, damages and liability for or by reason of any
death or deaths of or any injury or injuries to any person or persons or damages
to property of any kind whatsoever, whether the person or property of TENANT,
its agents or employees, or third persons, arising out of, or alleged to arise
out of, any occupation, use or condition of the Premises or any activity carried
on by or act or omission of TENANT or the PORT and CITY or its officers,
employees or agents, excluding only the sole negligence of the PORT and CITY and
its officers, employees or agents. Approval of the insurance contracts mentioned
in this lease does not relieve TENANT from liability under this paragraph.
TENANT further agrees to indemnify and save harmless and to defend,
without cost to the PORT and CITY, the PORT and CITY and its officers, employees
and agents against all losses, claims, costs, damages and liability for or by
reason of the negotiations, drafting or finalization of this lease.
15. WAIVER OF CLAIMS
TENANT, as a material part of the consideration to be rendered to PORT,
hereby waives all claims against PORT and CITY and its officers, agents and
employees, except for intentionally harmful or negligent acts committed solely
by PORT and CITY or its officers, agents or employees, and agrees to hold PORT
and CITY and its officers, agents or employees
16
harmless from any claims for damages to goods, wares, goodwill, merchandise,
equipment and business opportunities and by persons in, upon or about said
Premises from any cause arising at any time, including all claims arising from
the joint or concurrent negligence of PORT or CITY, or their officers, agents or
employees, but excluding any intentionally harmful acts or negligent acts
committed solely by PORT or CITY.
16. INSURANCE
A. TENANT, at its sole cost and expense, shall maintain, or cause to be
maintained, throughout the term of this lease. insurance as follows:
1. Workers' Compensation insurance, with Employers' Liability
limits not less than one Million Dollars ($1,000,000.00) each accident for all
employees eligible for State Workers' Compensation benefits, including coverages
for U.S. Xxxxxxxxx and Harborworkers' Act benefits and Xxxxx Act benefits for
employees eligible for each;
2. Comprehensive general liability insurance, with limits not
less than Five Million Dollars ($5,000,000.00) each occurrence combined single
limit for Bodily Injury and Property Damage with any deductible not to exceed
$250,000.00 each occurrence; including coverages for contractual liability,
independent contractors, explosion, collapse and underground (XCU), broadform
property damage, personal injury, products and completed operations.
3. Protection and Indemnity insurance with limits not less than
One Million Dollars ($1,000,000.00) each occurrence (including coverage as
required by the Federal Maritime Commission for water pollution liability
arising under Section 11(F) of Public Law 91-224, if vessels exceed 300 tons)
with any deductible not to exceed $100,000.00 each occurrence; but this
insurance shall be required only if TENANT operates any watercraft;
4. Comprehensive Automobile Liability Insurance with limits not
less than One Million Dollars ($1,000,000.00) each occurrence combined single
limit for Bodily Injury
17
and Property Damage, with any deductible not to exceed $100,000.00 each
occurrence, including coverages for owned, non-owned and hired vehicles, as
applicable;
5. Ship Repairers Legal Liability Insurance with limits not less
than Ten Million Dollars ($10,000,000.00) each occurrence and any deductible not
to exceed Two Hundred Fifty Thousand Dollars ($250,000.00) each occurrence.
6. Marine equipment insurance on an all-risk form (excluding
earthquake and flood) covering the gantry crane referenced in Paragraph 1, which
are located on Piers 3 and 4 in the agreed amounts of Fifty Thousand Dollars
($50,000) each with any deductible not to exceed $5,000.00 each loss, and the
drydocks referenced in Paragraph 1 in the agreed amounts of Nine Hundred
Thousand Dollars ($900,000) for the 22,000 ton lifting capacity drydock and Five
Million Nine Hundred Thousand Dollars ($5,900,000) for the 66,000 ton lifting
capacity drydock, with deductibles on the drydocks not to exceed $250,000 each
loss. Port shall be a named insured as its interests may appear.
B. All liability policies required by this lease shall name as
additional insureds CITY and its officers, agents, employees, and shall be
primary to any other insurance available to the additional insureds. All
policies shall provide thirty (30) days prior written notice of cancellation,
non-renewal or reduction in coverage in person or by mail to PORT's address as
set forth in paragraph 32 of this lease. TENANT shall furnish certificates of
insurance in a form and with insurers acceptable to PORT (which acceptance shall
not be unreasonably withheld), prior to commencing any activities under this
lease, with copies of policies upon PORT's request. TENANT, unless otherwise
agreed to by PORT, hereby agrees to apply the proceeds from any insurance
recovery resulting from the damage or destruction of items specified in
paragraph 16.A6 toward the replacement or repair of same.
18
17. ASSIGNMENT AND SUBLETTING
A. Except as expressly permitted in this lease, TENANT shall not,
without the prior written consent of PORT, assign or hypothecate this lease or
any interest herein or sublet the Premises or any part thereof. Any of the
foregoing acts without such consent shall be void. This lease shall not, nor
shall any interest herein, be assignable as to the interest of TENANT by
operation of law without the consent of PORT.
PORT may withhold consent to assignment of this lease for any
reason. PORT and TENANT hereby agree that any assignment of this lease shall be
subject to an adjustment in the rent, including annual or other rent, to reflect
the fair market rate for the Premises at the time of such assignment. PORT and
TENANT further agree that if the proposed assignee does not agree to said rental
adjustment, PORT may withhold consent for the proposed assignment.
B. Notwithstanding the provisions of paragraph 17A, TENANT may assign
this lease without PORT's consent to any corporation which controls, is
controlled by or is under common control with TENANT, or to any corporation
resulting from the merger or consolidation with TENANT, or to any person or
entity which acquires all the assets of TENANT as a going concern; provided,
that said assignee shall assume, in full, the obligations of TENANT under this
lease.
C. TENANT shall have the right, in the regular and ordinary course of
its business of maintaining and operating the building and other improvements
now or hereafter located on the Premises and without the prior consent of PORT,
to sublease or otherwise rent or grant licenses, permits or concessions in, any
offices, spaces or related facilities in such buildings and other improvements
for a use necessary to TENANT's operation of the Premises as defined in Section
7A herein; provided, that each sublease or other rental, license, permit or
concession agreement
19
shall be subject and subordinate to this lease and the rights of PORT hereunder;
and, provided further, that the following conditions are met:
(1) TENANT shall deliver to PORT, within thirty (30) days of
execution of each sublease, license, permit or concession agreement, a copy of
such sublease or agreement together with documentation adequately identifying
the "subtenant" and the business activity to be conducted on the Premises.
(2) Each sublease, license, permit or concession agreement shall
contain a clause providing that all rental and other payments due TENANT under
the provisions of such sublease, license, permit or concession agreement shall
become due and owing directly to PORT upon the filing of any petition in the
bankruptcy court seeking the court's jurisdiction over the assets and operations
of TENANT regardless of whether such filing is considered voluntary or
involuntary.
(3) Each sublease, license, permit or concession agreement shall
contain an indemnification clause and waiver of claims provision identical to
that required under paragraphs of this lease.
(4) Each sublease, license, permit or concession agreement shall
contain a clause naming as "additional insureds" under all liability and other
insurance policies CITY, PORT, and all officers, employees, agents and
representatives of CITY and PORT and acknowledging PORT's right to demand
increased coverage to normal amounts consistent with the subtenant's licensee's,
permittee's or concessionaire's business activities on the Premises.
(5) Each sublease, license, permit or concession agreement shall
contain a clause providing that the sublessee, licensee, permittee or
concessionaire shall engage in no
20
activity which limits or adversely affects in any way the property insurance
coverage for the Premises.
D. If for any reason whatsoever this lease and the leasehold estate of
TENANT under this lease are terminated, such termination shall operate to
terminate all then existing subleases entered into by TENANT.
18. MORTGAGE OF LEASEHOLD
TENANT shall have the right from time to time to encumber the leasehold
estate created by this lease by one or more Leasehold Mortgages to secure
repayment of any loan and associated obligations of TENANT for the development
of the leased Premises upon prior written permission of PORT. TENANT shall have
no right to require PORT to encumber PORT's fee interest in the Premises.
19. ENTRY
PORT and CITY and their officers, agents, and employees shall have the
right at all reasonable times to enter upon the Premises for the purpose of
reasonable inspection and inventory and when otherwise deemed necessary for the
protection of their interests. TENANT waives all claims against PORT and CITY,
their officers, agents or employees for damages caused by PORT's and CITY's
reasonable exercise of their rights hereunder, including those claims for any
loss of occupation or quiet enjoyment of the Premises occasioned by PORT's or
CITY's reasonable exercise of its right of entry.
20. DEFAULT
Regardless of the provisions of Paragraph 4C, if any rental or other
payment shall be due and unpaid for thirty (30) days or if any other material
breach shall be made by TENANT of any of the conditions or covenants of this
lease and said other material breach shall continue for thirty (30) days after
notice in writing to TENANT or if TENANT shall become bankrupt or
21
insolvent or make a transfer in fraud of creditors, or make an assignment for
the benefit of creditors or bring in or have brought against TENANT any action
or proceedings of any kind under any provision of the Federal Bankruptcy Act or
under any other insolvency, bankruptcy or reorganization act and in the event
such proceedings are involuntary, TENANT is not discharged from the same within
sixty (60) days thereafter; or a receiver is appointed for a substantial part of
the assets of TENANT and such receiver is not discharged within sixty (60) days;
or TENANT shall vacate or abandon the Premises; or this lease or any of estate
of TENANT under this lease shall be levied upon by any attachment or execution
and such attachment is not stayed or lifted within sixty (60) days, then any
such event shall constitute a default by TENANT. Upon the occurrence of a
default by TENANT, PORT may, at its option and without further notice or demand
in addition to any other rights and remedies provided under this lease or by
law, do any one or none of the following:
(a) PORT shall have the right, so long as such default continues,
to give notice of termination to TENANT; and on the date specified in such
notice this lease shall terminate.
(b) In the event of any such termination of this lease, PORT may
then or at any time thereafter, re-enter the Premises and remove therefrom all
persons and property and again possess and enjoy the Premises, without prejudice
to or limitation on any other remedies that PORT may have by reason of TENANT's
default or of termination.
(c) In the event of any such termination of this lease, and in
addition to any other rights and remedies PORT may have, PORT shall have all of
the rights and remedies of a landlord provided by Civil Code Section 1951.2. The
amount of damages which PORT may recover in event of such termination shall
include, without limitation, (1) the worth at the time of
22
award, computed by discounting such amount at the discount rate of the Federal
Reserve Bank of San Francisco at the time of award plus one percent (1%) of the
amount by which the unpaid rent for the balance of the term of the lease after
the time of award exceeds the amount of rental loss that TENANT proves could be
reasonably avoided; and (2) all reasonable legal expenses and other related
costs incurred by PORT following TENANT's default; and (3) all reasonable costs
incurred by PORT in restoring the Premises to as good order and condition as
when leased or as subsequently improved by TENANT (ordinary wear and tear
excepted), or in remodeling, renovating or otherwise preparing the Premises for
reletting; and (4) all reasonable costs (including, without limitation, any
brokerage commissions and legal fees and expenses incurred by PORT in reletting
the Premises.
(d) In the event TENANT defaults and abandons the Premises and
PORT does not elect to terminate this lease by reason of such default and
abandonment, this lease shall continue in full force and effect, and in addition
to any other rights and remedies PORT may have, PORT shall have all of the
rights and remedies of a landlord provided by Civil Code Section 1951.4,
including, without limitation, the right to recover rent as it falls due.
Without any obligation to TENANT to do so, PORT, subject to approval by CITY's
Board of Supervisors, may also relet the Premises as the agent of TENANT and for
TENANT's account for such term, which may extend beyond the term of this lease,
and upon such other terms and conditions as PORT may deem appropriate. PORT may
do all things reasonably necessary for such reletting, including repair,
remodeling and renovating of the Premises arising out of TENANT's failure to
perform the covenants and agreements of this lease; and TENANT shall reimburse
PORT on demand for all reasonable costs incurred by PORT in connection
therewith. In the event PORT relets the Premises PORT shall apply any sums
received upon such reletting in the following
23
order of priority: (1) to the payment of all rent and sums unpaid under this
lease from TENANT to PORT; (2) to the payment of all reasonable legal expenses
and other related costs incurred by PORT following TENANT's default; (3) to the
payment of all reasonable costs incurred by PORT in restoring the Premises to as
good order and repair as when leased or as subsequently improved by TENANT, or
in such remodeling, renovating or otherwise preparing the Premises for
reletting; (4) to the payment of all reasonable costs (including, without
limitation, any brokerage commissions and legal fees and expenses) incurred by
PORT in reletting the premises; and (5) the balance, if any, to the payment of
future rent as the same may become due under this lease. Notwithstanding any
failure by PORT to elect to terminate this lease, PORT may at any time elect to
terminate this lease either for any previous default hereunder by TENANT which
remains uncured or for any subsequent default.
(e) After terminating this lease, PORT may remove any and all
personal property of TENANT (other than the personal property which PORT may
have purchased pursuant to subparagraph (e) of this paragraph 19 located on or
about the Premises and place such property in a public or private warehouse or
elsewhere at the sole cost and expense of TENANT. In the event that TENANT shall
not immediately pay the cost of storage of such property after the same has been
stored for a period of thirty (30) days or more, PORT may sell any or all
thereof at a public or private sale in such manner and at such times and places
as PORT in its sole discretion may deem proper, without notice to or demand upon
TENANT. TENANT hereby waives all claims for damages, except claims arising from
PORT's willful misconduct or gross negligence, that may be caused by PORT's
removing or storing or selling the property as provided herein; and TENANT shall
indemnify and hold PORT free and harmless from and against any and all losses,
costs and damages, including without limitation
24
costs of court and reasonable attorneys' fees of PORT occasioned by any such
removal, storage or sale. TENANT hereby appoints PORT as TENANT's
attorney-in-fact with the rights and powers necessary in order to effectuate the
provisions of this subparagraph (c).
(f) PORT shall have the right to cause a receiver to be appointed
in any proceeding under the bankruptcy laws brought by or against TENANT to take
possession of the Premises, or to collect the rents or profits derived
therefrom, or both. The appointment of such receiver shall not constitute an
election on the part of PORT to terminate this lease unless notice of such
intention is given to TENANT.
21. ENVIRONMENTAL HOLD HARMLESS
TENANT agrees to hold PORT harmless from any violation or alleged
violation of any environmental quality law, act, regulation or rule which is
violated or purportedly violated by, arising out of or in the course of TENANT's
operations, uses and occupancies on or about the Premises except for violations
arising from the conditions identified by the parties in their initial
inspection of the Premises pursuant to Section 11B herein.
22. WAIVER OF RELOCATION ASSISTANCE RIGHTS
TENANT agrees to and does hereby waive any rights, benefits or privileges
of the California Relocation Assistance Law, as more particularly set forth in
Government Code Section 7260 et seq., and as it may hereinafter be amended.
23. EMINENT DOMAIN
A. If title to the entire Premises is taken for any public or
quasi-public use under any statute or by right of eminent domain, or by private
purchase in lieu of eminent domain, during the term of this lease, or if a
substantial portion of the Premises should be taken so as to impair materially
the use of the Premises contemplated under this lease and thereby frustrate
PORT's and TENANT's purpose in entering into this lease, then, in either event,
this lease shall terminate
25
on the date title to such portion of the Premises vests in such public or
quasi-public authority; provided, that the annual rent due under this lease
shall be proportionately reduced for any period of time for which TENANT does
not have full use of the Premises. In either event, all compensation and damages
payable for or on account of the value of the land underlying the Premises shall
be payable to and be the sole property of PORT.
B. If a taking shall occur which does not result in termination as
provided in subparagraph 23A, TENANT shall promptly reconstruct and restore the
portion of the Premises not so taken to an architecturally complete unit
suitable for use by TENANT; and the annual rent thereafter payable by TENANT
shall be proportionately reduced to account for the reduced economic value to
TENANT, if any, occasioned by reason of such taking. All compensation and
damages payable for or on account of such taking shall be applied first to the
reconstruction and restoration of the Premises by TENANT pursuant to this
subparagraph, and the remainder shall be paid to PORT.
C. No taking of TENANT's leasehold estate in the Premises or any part
thereof without a taking of the fee shall terminate, or give TENANT the right to
surrender, this lease; nor shall such taking excuse TENANT from full performance
of its covenants for the payment of rent and other charges or from full
performance of any other obligations under this lease capable of performance by
TENANT after any such taking. In such case, all compensation and damages payable
for or on account of such taking, including without limitation compensation and
damages for loss of anticipated income, shall be payable to and be the sole
property of TENANT.
24. JOB TRAINING PROGRAM
A. TENANT will undertake to provide a job training program for various
crafts pertinent to ship building, ship repair and related maritime activities
for a period of not less than
26
two (2) years. The program will be available to members of the San Francisco
community, including but not limited to TENANT's employees. The classroom
instructors and classroom space shall be furnished by the TENANT at its expense.
B. The PORT will use its best efforts to participate in the job
training program by furnishing, at its expense, demonstration equipment to
supplement the classroom instruction.
C. The job training program will be administered by TENANT and relevant
trade labor unions in conformance with TENANT's agreements with such unions and
shall consist of such curriculum, training and other features as shall be
described in a written program syllabus prepared by TENANT and furnished to PORT
within 180 days after Commencement Date.
25. ATTORNEYS' FEES
In the event of any action or proceeding at law or in equity between PORT
and TENANT to enforce any provision of this lease or to protect or establish any
right or remedy of either party to this lease, the prevailing party shall be
entitled to recover from the losing party reasonable attorneys' fees and costs
of suit, and if such prevailing party shall recover judgment in any such action
or proceeding, such costs, expenses and attorneys fees' shall be included in and
as a part of such judgment.
26. HOLDING OVER
Any holding over after the expiration of the term of this lease shall be
deemed a month-to-month tenancy and upon each and every one of the terms,
conditions and covenants of the within lease. In the event of a month-to-month
tenancy, PORT may cancel the same upon thirty (30) days notice left at the
Premises, and TENANT shall have the privilege of cancelling the same upon thirty
(30) days notice left at the Premises, and TENANT shall have the privilege of
cancelling the same upon thirty (30) days notice to PORT, all notices to be in
writing.
27
27. MINERAL RESERVATION
The State of California, pursuant to Section 2 of Chapter 1333 of the
Statutes of 1968, as amended, has reserved all subsurface mineral deposits,
including oil and gas deposits, on or underlying the Premises. In accordance
with the provisions of said statute, PORT and TENANT shall and hereby do grant
to the State of California the right to explore, drill for and extract said
subsurface minerals, including oil and gas deposits, from a point located by the
California Grid System, Zone 3, where x equals 1,457,000 and y equals 466,000,
which point is located in an area that was not improved on January 1, 1982.
28. NON-DISCRIMINATION PROVISIONS
TENANT at all times shall comply with the non-discrimination ordinances of
the City, which are San Francisco Administrative Code Sections 12B, 12C and 12D
and as these ordinances are amended from time to time. Said ordinances are
incorporated herein and made a part hereof by this reference. Where the term
"contractor" is used therein, it shall be deemed to mean "TENANT." Furthermore,
pursuant to Administrative Code Section 12D.11(D) TENANT agrees that it shall
actively solicit the employment of minority group members and women. TENANT
further agrees that it shall actively solicit bids for the subcontracting of
goods or services from qualified minority and women businesses. TENANT shall
furnish evidence of compliance with these requirements of minority and women
employment and solicitation. TENANT further agrees to consider the grant of
subcontracts to said minority and women bidders on the basis of substantially
equal proposals in the light most favorable to said minority and women
businesses. The tenant shall be required to submit evidence of compliance with
this section.
The failure of TENANT to comply with the non-discrimination ordinances
shall be deemed a material breach of lease. In the event TENANT fails to comply
in good faith with any
28
of the provisions of Administrative Code Section 12D, TENANT shall be liable for
liquidated damages for each violation in an amount equal to the TENANT's net
profit on the lease, or 10% of the total amount of the lease or $1000.00,
whichever is greatest. TENANT acknowledges and agrees that the liquidated
damages assessed shall be payable to the CITY upon demand and may be set off
against any monies due TENANT from any contract with the City and County of San
Francisco.
29. QUITCLAIM
TENANT shall, upon expiration or earlier termination of this lease,
peaceably and quietly leave, surrender and yield up to PORT, all and singular,
the Premises and, if requested, execute and deliver to PORT a good and
sufficient quitclaim deed with respect to any interest of TENANT in the
Premises. Should TENANT fail or refuse to deliver to PORT a quitclaim deed as
set forth in this paragraph, a written notice by PORT reciting the failure or
refusal of TENANT to execute and deliver said quitclaim deed shall from the date
of recordation of said notice in this lease shall, subject to the provisions as
to assignment, apply to and bind the heirs, successors, executors,
administrators and assigns of the parties hereto; and the parties hereto shall
be jointly and severally liable under this lease.
30. NO PARTNERSHIP
It is expressly understood by the parties hereto that PORT does not, in
any way or for any purpose, become a partner of TENANT in the conduct of its
business, or otherwise, or joint venturer or a member of a joint enterprise with
TENANT.
31. WAIVER OF TERMS
The waiver by PORT or TENANT of any term, covenant, agreement or condition
of these lease shall not be deemed to constitute a waiver of any subsequent
breach of the same or any other term, covenant, agreement or condition of this
lease; nor shall any custom or practice
29
which may grow up between the parties hereto in the administration of the
provisions of this lease be construed to waive or to limit in any way the right
of PORT or TENANT to insist upon the performance by the other party in strict
accordance with all of said terms, covenants, agreements and conditions. The
subsequent acceptance by PORT of rent or any other sum of money under this lease
shall not be deemed to be a waiver of any preceding breach by TENANT of any
term, covenant, agreement or condition of this lease, other than the failure of
TENANT to pay the particular rent or other sum so accepted, regardless of PORT's
knowledge of such preceding breach at the time of acceptance of such rent or
other sum. No act or omission by either PORT or TENANT shall constitute a
modification of this lease.
32. NOTICES
All notices to be given pursuant to this lease shall be in writing and
shall be addressed, if to PORT, to:
Executive Director
San Francisco Port Commission
0000 Xxxxx Xxxxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
or if to TENANT, to:
Southwest Marine, Inc.
Attention: Legal Department
X.X. Xxx 00000
Xxx Xxxxx, XX 00000-0000
with copy to:
General Manager, X.X. Xxx 0000
Xxx Xxxxxxxxx, XX 00000
or as may, from time to time, otherwise be directed in writing by the parties.
Notice shall be deemed to have been duly given if and when enclosed in a
properly sealed envelope, or wrapped,
30
addressed as aforesaid, and deposited, postage prepaid, in a post office or
branch post office regularly maintained by the United States Postal Service.
33. COMPLETE AGREEMENT
There are no oral agreements between PORT and TENANT affecting this lease;
and this lease supersedes and cancels any and all previous negotiations,
arrangements, agreements and understandings between PORT and TENANT. This lease
represents the sole and final agreement between PORT and TENANT, and all of
their rights and liabilities shall be determined under this lease.
34. MODIFICATION OF LEASE
Whenever it appears to be in the public interest, PORT and TENANT by
mutual agreement in writing, and subject to San Francisco Charter Section
7.402-1, may alter or modify the terms of this lease or may terminate the same
with such adjustments and for such consideration as may be fair and equitable in
the circumstances.
35. CAPTIONS
The captions in this lease are for convenience only, are not a part of
this lease, and do not in any way affect, limit or amplify the terms and
provisions of this lease.
36. CALIFORNIA LAW
This lease shall be construed and interpreted in accordance with the laws
of the State of California.
37. SEVERABILITY
Any provision of this lease which shall prove to be invalid, void or
illegal shall in no way affect, impair or invalidate any other provision of this
lease; and such remaining provisions shall remain in full force and effect.
31
38. TIME IS OF ESSENCE
Time is of the essence of this lease and of each and all of its
provisions.
39. QUARTERLY REPORT
On a quarterly basis each calendar year, TENANT shall submit to the Port's
Executive Director in a form acceptable to PORT, a report which includes the
following information: the number of days that a ship was in drydock or berthed
at the Premises; the average number of employees employed by TENANT at the
Premises; the number of contracts signed by TENANT for ship repair or
shipbuilding work at all of its facilities and the location of such work and the
dollar amount of such contracts. To the extent permitted by law, PORT shall keep
such information confidential.
32
IN WITNESS WHEREOF, PORT and TENANT have executed this lease at San
Francisco, California on the respective dates set forth below. SOUTHWEST MARINE,
INC., a California corporation
By /s/ Xxxxxx Xxxxx
---------------------------------
Title: President..
-----------------------------
Date Executed: July 22, 1987
---------------------
By /s/ Xxxxx X. Xxxxxxxx
---------------------------------
Title: Secretary..
-----------------------------
Date Executed: July 22, 1987
---------------------
CITY AND COUNTY OF SAN FRANCISCO
By /s/ Xxxxxx X. Xxxxx
---------------------------------
Title: Acting Executive Director
-----------------------------
Date Executed: December 2, 1987
---------------------
APPROVED AS TO FORM:
XXXXXX X. XXXXX
City Attorney
By /s/ Xxxxxx Karikus
---------------------------------
Deputy City Attorney
Authorization by Port Commission
Resolution No.: 87-101
Adopted: July 22, 1987
ATTEST:
By /s/ Signature Illegible
---------------------------------
Secretary, Port Commission
33
AMENDMENT TO LEASE AND TERMINATION OF LICENSE
THIS AMENDMENT TO LEASE AND TERMINATION OF LICENSE ("Amendment"), dated
for reference purposes only as of May 24, 1994, by and between THE CITY AND
COUNTY OF SAN FRANCISCO, a municipal corporation, acting by and through the SAN
FRANCISCO PORT COMMISSION ("Port"), and SOUTHWEST MARINE, INC., a California
corporation ("Tenant"), is made with reference to the following facts:
RECITALS
A. Port and Tenant entered into that certain Lease number 11320, dated
December 2, 1987 (the "Lease") of real property and all piers, improvements,
drydocks and cranes thereon, located in San Francisco, California (the
"Premises").
B. In addition to the Lease, Tenant currently licenses certain space
from Port other than the Premises, located at Pier 70 (the "License Area"), on a
month-to-month basis pursuant to Port License No. 11315, dated as of November
20, 1987 (the "License"). The License is terminable by either party upon thirty
(30) days' prior written notice.
C. Port and Tenant now desire to amend the Lease to adjust the annual
rent thereunder and to alter certain obligations of the parties thereunder in
accordance with the terms hereof. The parties also desire to provide for the
termination of the License and to address the execution of a new lease by the
parties for a reduced portion of the License Area.
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, Port and Tenant hereby agree to amend the Lease as follows:
AGREEMENT
1. RECITALS. The foregoing recitals are true and correct and are
incorporated herein by this reference.
2. TERMINATION OF LICENSE. TENANT and PORT hereby agree to terminate
the License, effective as of thirty (30) days after the date this Amendment has
been duly executed by the parties hereto, and has been finally approved by the
City and Count of San Francisco, on or before which date Tenant shall vacate the
License Area and tender possession back to Port in the condition as require by
the License upon or before the effective date of License termination, the
parties shall enter into a new month-to-month lease ("Month-to-Month Lease"),
commencing upon termination of the License. The Month-to-Month Lease shall cover
a reduced portion of the License Area as depicted in Exhibit "A" attached hereto
and the rent thereunder shall be One Dollar ($1.00) per month. The
Month-to-Month Lease shall be upon such other terms and conditions to be agreed
upon by the parties.
1
3. RENT. The following language is hereby added to the Lease as new
Paragraph 4.E:
"4.E. RENT EFFECTIVE JANUARY 1, 1994-DECEMBER 16, 1997.
1. Interim Rent. Notwithstanding the foregoing, for the Lease
period commencing on January 1, 1994 through and including December 16,
1997, TENANT hereby covenants and agrees to pay to Port for the Premises
an annual rent of One Million Dollars ($1,000,000.00) ("Interim Base
Rent").
Interim Base Rent shall not be subject to adjustment in accordance with
paragraph 4.B of the Lease. Port hereby waives its rights to the cost of
living index adjustment which was to be imposed upon the first adjustment
date of this Lease, as specified in paragraph 4.B hereof. Interim Base
Rent shall be payable monthly in advance on the first day of each month in
installments of Eighty Three Thousand Three Hundred Thirty Three and
33/100 Dollars ($83,333.33) per month. Except as otherwise provided in
this Section 4.E, Interim Base Rent shall be subject to all of the terms
and conditions of this Lease regarding payment of rent.
2. Percentage Rent.
(a) Agreement to Pay; Determination. Notwithstanding the
foregoing, for the Lease period commencing on January 1, 1994 through and
including December 16, 1997, Tenant agrees to pay Percentage Rent to Port
in the amount of Three Percent (3%) of Gross Receipts as defined below.
Tenant shall pay to Port the amount by which the sum, computed as a
percentage of Tenant's Gross Receipts received during each calendar year
of the Term, exceeds the Interim Rent for said year.
"Gross Receipts" means all amounts received from all sales and business
transacted on the Premises or services performed on the Premises for which
a charge is made by Tenant, or by any other person, firm, partnership or
corporation conducting sales or performing services of any sort in, upon,
or from any part of the Premises, (except that in the case of vending
machines and public telephones located on the Premises for which a fee is
paid to Tenant by the owners thereof, only the fees received or receivable
by Tenant from said owners shall be included in "Gross Receipts"). The
following items shall be excluded from Gross Receipts for purposes of
calculating the Percentage Rent: (a) returns and refunds, (b) the amount
of any sales tax, or similar tax or imposition, imposed on all sales or
charges where such sales tax, similar tax or imposition is billed to the
purchaser as a special item, (c) the amount of any sale of trade fixtures
or operating equipment, (d) all sums and credits received in settlement of
claims for loss or damage to materials in inventory, (e) the proceeds of
casualty insurance and (f) contingent revenues as defined in subparagraph
(e) below from claims arising prior to January 1, 1994.
2
Percentage Rent shall be calculated by Tenant for each calendar quarter of
the year and shall be payable by the thirtieth (30th) day of the following
quarter. In the event this Lease terminates other than on the last day of
any calendar quarter, payment of the Percentage Rent for the fractional
portion of the quarter during which sales are made or services for
compensation are performed on the Premises shall be determined and
reported by Tenant to Port within thirty (30) days after Tenant ceases
such activity on the Premises, but in the event this Lease terminates as a
result of Tenant's default, including insolvency thereof, any amounts due
hereunder shall be payable forthwith. At the time of paying the Percentage
Rent Tenant shall furnish a statement (herein "Percentage Rent Statement")
showing the computation of the Percentage Rent for the period covered by
such payment. If Port does not receive the Percentage Rent Statement by
the 30th day following the end of each quarter, a penalty charge will be
assessed. The penalty charge shall be calculated at the greater of 10% of
the Base Rent or 10% of the Percentage Rent (using an average of the
Percentage Rent for the prior two quarters as a base figure), and in no
event shall the penalty charge be less than Twenty-Five Dollars ($25.00)
nor more than One Hundred Dollars ($100.00). Within thirty (30) days of
the effective date of this Lease Amendment, Tenant shall provide Port with
all information required hereunder for the quarter ending March 31, 1994,
along with any Percentage Rent payment then due for that quarter.
(b) Books and Records. Tenant agrees to keep accurate books
and records according to generally accepted accounting principles. For
purposes herein "books and records" shall include, but not be limited to,
daily sales journals, monthly sales summaries summarizing daily sales,
general ledgers, income statements, sales tax returns, income tax returns
and any other bookkeeping documents Tenant utilizes in its business
operations. Tenant shall not co-mingle personal funds with business funds.
(c) Audit. Tenant agrees to make its books and records
available to Port, or to any City auditor, or to any auditor or
representative designated by Port (hereinafter collectively referred to as
"Port representative"), for the purpose of examining said books and
records to determine the accuracy of Tenant's earnings from Tenant's
business. Said books and records shall be kept for two (2) years and shall
be maintained and/or made available in San Francisco or Tenant's corporate
offices in San Diego, California to Port's representative for the purpose
of auditing or re-auditing these accounts, except that, if an audit is
made within said two-year period and Port claims that errors or omissions
have occurred, the books and records shall be retained and made available
until those matters are resolved.
If an audit reveals that Tenant has understated its gross receipts for
said audit period, Tenant shall pay Port, promptly upon demand, the
difference between the amount Tenant has paid and the amount it should
have paid to Port. If Tenant understates its gross receipts for any audit
period by three percent (3%) or more, the cost of the audit shall be borne
by Tenant.
3
(d) Month-to-Month Lease Area Included. For purposes of this
paragraph 4.E, the "Premises" shall include the Premises under the Lease
and under the Month-to-Month Lease.
(e) Contingent Revenues. It is recognized that from time to
time Tenant engages in activities which generate contingent revenues.
Contingent revenues for purposes of this lease shall be defined as claims
arising between January 1, 1994 and December 16, 1997 as a result of work
done by Tenant which, because of unusual circumstances or events, leads to
additional xxxxxxxx not included in the definition of Gross Receipts.
Contingent revenues will be subject to the percentage rent in effect at
the conclusion of arbitration, litigation or settlement of the claim and
on the amount of the settlement. At the end of each calendar year from
1994 through 1997, Tenant shall provide a list of all outstanding
contingent revenues. Upon the settlement of any claim for contingent
revenues, Tenant shall pay to Port the percentage rent set forth herein.
(f) Setoff Against Interim Base Rent. Notwithstanding
anything contained in this Paragraph 4.E to the contrary, if Tenant
determines, at any time during any calendar year and on an annualized
basis, that it has overpaid rent due to a prior payment of Percentage
Rent, Tenant shall provide Port with a written statement evidencing such
overpayment and may setoff the amount of said overpayment against the
installment or installments of Interim Base Rent next due after receipt by
Port of the statement of overpayment.
4.F. RENT EFFECTIVE DECEMBER 17, 1997-DECEMBER 17, 2017.
In the event that the parties have failed to renegotiate rent payable
under this Lease by December 17, 1997 in accordance with paragraph 4.B of
this Lease, on December 17, 1997, rent payable hereunder shall revert to
the original rent structure set forth in Section 4.A of the Lease,
including imposition of the Cost of Living Index Adjustment on the second
adjustment date in conformance with Paragraph 4.B.
4.G RENT CREDIT FOR LICENSE AREA.
In the event Port enters into a lease or license agreement with a third
party for all or any portion of the License Area not covered by the
Month-to-Month Lease ("Rent Credit Area" as shown on Exhibit B attached
hereto), Port shall credit any amounts actually received by Port under
such lease or license agreement against Interim Base Rent payable
hereunder, up to a maximum of Four Hundred Thousand Dollars ($400,000.00)
per year through December 16, 1997. In the event a new tenant or licensee
is procured for any portion of the License Area not covered by the
Month-to-Month Lease, Port shall notify TENANT of the amount of payment
each time PORT receives a monthly rental payment from the tenant or
licensee. TENANT shall be given a credit against the following month's
rent due under this Lease in an amount equal to the rental or license
payment received by Port for the License Area not covered by the
Month-to-Month Lease. Such rent
4
credit shall cease when the total of rent credits taken by TENANT have
totalled $400,000.00. Nothing herein shall entitle Tenant to any payment
or compensation from Port with respect to the License Area not covered by
the Month-to-Month Lease other than in the form of rent credits."
4. Cost of Living Index Adjustment. The last paragraph of Paragraph
4.B on page 5 of the Lease is hereby amended to read as follows:
"On January 1, 1997, or as soon thereafter as is practical, TENANT and
PORT shall commence negotiations to renegotiate the monthly rent provided
in Paragraph 4.A of this Lease. The parties shall make best efforts to
reach an agreement and shall negotiate in good faith. In the event the
parties cannot agree upon a monthly rental rate, to be adjusted as
provided herein for the remainder of the Lease term, then TENANT shall
have the right to terminate this Lease upon one hundred eighty (180) days'
prior written notice to PORT, but in any event TENANT may not give such
written notice of intent to terminate earlier than June 17, 1997."
5. Decreased Guarantee. The following language is added to Paragraph 5
of the Leases.
"Notwithstanding anything contained herein to the contrary, the security
deposit (subject to restoration following expenditure or application of
all or a portion thereof by the Port) for the period of January 1, 1994
through and including December 16, 1997 shall be the sum of One Hundred
Sixty-six Thousand Six Hundred Sixty-six and 66/100 Dollars. Ten Thousand
Dollars ($10,000.00) of any overpayment of said security deposit as of
January 1, 1994 shall be applied by Port as a security deposit for
performance of Tenant's obligations under the Month-to-Month Lease and the
remainder of any overpayment shall be credited by Port to Interim Base
Rent as provided for in Paragraph 4.E."
6. Dredging. The following language is added to Paragraph 9 of the
Lease:
"TENANT shall be solely responsible, at its sole cost and expense, for all
dredging necessary for its operations. Any dredging performed by TENANT
shall be performed in compliance with all applicable laws, including
obtaining all required permits from Port and all other applicable federal,
state and local agencies having jurisdiction over dredging."
7. Drydock Insurance. The following language is hereby added to
Paragraph 16.A.6:
"Provided, however, that Tenant shall not be required to maintain an
outside insurance policy covering the requirements of this Paragraph
16.A.6 and 16.A.3 (collectively, the "Drydock Insurance") for the period
of January 1, 1994 through December 31, 1996, but shall self-insure
therefor. At any time after December 31, 1996, PORT reserves the right to
reimpose such insurance
5
requirements if so directed at the reasonable discretion of the City of
San Francisco Risk Manager and the Port Commission."
8. Drydock Access. The following language is hereby added to the Lease
as new Paragraph 41:
"41. DRYDOCK ACCESS. TENANT agrees that it shall take no direct or
indirect action to interfere with legitimate business access to the Pier
70 drydock facilities by other marine firms and shall allow such access at
competitive rates in accordance with published tariffs."
9. City Requirements. The following language is hereby added to the
Lease as new Paragraph 42:
"42. City Requirements.
42.1 Non-Discrimination. Tenant shall not, in the operation and use
of the Premises, discriminate against any person or group of persons
solely because of race, color, creed, national origin, ancestry, age, sex,
sexual orientation, disability or acquired immune deficiency syndrome
(AIDS) or AIDS related condition (ARC). The provisions of Chapters 12B and
12C of the San Francisco Administrative code, relating to
nondiscrimination by parties contracting with the City and County of San
Francisco, are incorporated herein by this reference and made a part
hereof as though fully set forth herein. Tenant agrees to comply with all
provisions of such Chapters 12B and 12C that apply to tenants of the City
and County of San Francisco.
42.2 XxxXxxxx Principles-Northern Ireland. City urges companies
doing business in Northern Ireland to move towards resolving employment
inequities and encourages such companies to abide by the XxxXxxxx
Principles. City urges San Francisco companies to do business with
corporations that abide by the XxxXxxxx Principles.
42.3 Tropical Hardwood Ban. City urges Tenant not to import,
purchase, obtain, or use for any purpose, any tropical hardwood or
tropical hardwood product."
10. Proximity of Mission Bay Project. The following paragraph is
hereby added to the Lease as Paragraph 43:
"Tenant acknowledges that during the term of the Lease, the Mission Bay
Project is scheduled to be constructed on property in the immediate
vicinity of the Premises. Tenant is aware that the construction of such
project and the activities associated with such construction will generate
certain adverse impacts which may result in some inconvenience to or
disturbance of Tenant. Said impacts may include, but are not limited to,
increased vehicle and truck traffic, traffic delays and re-routing, loss
of street and public parking, dust, dirt, construction noise and visual
obstructions. Tenant hereby waives any and all claims against Xxxx, Xxxx
0
and their officers, agents and employees arising out of such inconvenience
or disturbance, including without limitation any abatement or reduction of
rent."
11. Waiver of Claims. In consideration of the terms and conditions of
this Lease Amendment, TENANT and PORT, for themselves, commissioners, officers,
employees and agents, hereby waives the benefit of, releases and forever
discharges the other (including the City), and their commissioners, officers,
employees and agents (the "Releases"), from any and all presently existing
liabilities, claims, demands, damages, causes of action, rights of offset or
defenses of every kind and nature (including without limitation, tort claims),
whether known or unknown, which either party may have against the Releasees, or
which such party may be entitled to assert in connection with or arising in any
way out of the License, the Lease or the Premises, including without limitation
any presently existing claim or defense (including any and all claims or
defenses based upon the allegedly tortious or other conduct of the Releasees or
on their behalf) with respect to the License, the Lease or the Premises, whether
or not presently suspected, contemplated or anticipated to the extent the events
giving rise to the same shall have occurred on or prior to the date of this
Lease Amendment. Each party hereby expressly waives the benefits of the
provisions of Section 1542 of the California Civil Code, which provides as
follows:
"A general release does not extend to claims which the
creditor does not know or suspect to exist in his favor at the time
of executing the release which, if known by him, must have
materially affected his settlement with the debtor."
12. Remaining Terms. Except as expressly provided herein, all of the
terms and conditions of the Lease shall remain unchanged and in full force and
effect. The parties acknowledge that a material breach of any of the covenants
or conditions hereof shall be a default under the Lease in accordance with the
provisions of Paragraph 20 of the Lease.
7
IN WITNESS WHEREOF, the parties hereto have executed this Amendment to
Lease as of the date first set forth above.
PORT
CITY AND COUNTY OF SAN FRANCISCO, a
municipal corporation, acting by and
through the SAN FRANCISCO PORT
COMMISSION
APPROVED AS TO FORM:
/s/ XXXXXX X. XXXXX
---------------------------------------
XXXXXX X. XXXXX, City Attorney XXXXXX X. XXXXX
Executive Director
By: /s/ XXXXXX X. XXXXX
--------------------------------
Deputy City Attorney
TENANT
Port Commission Resolution No. 94-90. SOUTHWEST MARINE, INC., a California
corporation
By: /s/ XXXXXXX X. XXXXX
-----------------------------------
XXXXXXX X. XXXXX
President
By: /s/ XXXXX X. XXXXXXXX
-----------------------------------
XXXXX X. XXXXXXXX
Secretary
8
LEASE ASSIGNMENT
AND ASSUMPTION AGREEMENT
THIS AGREEMENT is made and entered into on September 29, 1994, by and
between SOUTHWEST MARINE, INC., a California corporation ("Assignor") and SAN
FRANCISCO DRYDOCK, INC., a California corporation ("Assignee").
RECITALS:
WHEREAS, Assignor, as tenant, and the CITY AND COUNTY OF SAN FRANCISCO, a
municipal corporation, acting by and through the San Francisco Port Commission
("Port"), as landlord, are parties to a certain written agreement dated December
2, 1987, being Port official document No. L-11320, as amended by agreement dated
as of May 24, 1994 (collectively, the "Lease"), covering certain drydocks,
gantry cranes and real property generally located at 00xx xxx Xxxxxxxx Xxxxxxx,
Xxx Xxxxxxxxx, Xxxxxxxxxx, described and depicted in Exhibit "A" attached
hereto; and
WHEREAS, paragraph 17B of the Lease, permits, among other things, the
assignment of the tenant's interest in the Lease to any corporation which is
under common control with the tenant, provided such corporate assignee assumes,
in full, all of the obligations of the tenant under the Lease; and
WHEREAS, Assignor and Assignee are under common control and Assignee is
agreeable to assuming all of the obligations of the tenant under the Lease
should Assignor assign its interest in the Lease to Assignee; and
WHEREAS, Assignor desires to assign its interest in the Lease and Assignee
is agreeable to accepting such assignment.
NOW, THEREFORE, in consideration of the premises, covenants herein
contained and other good and valuable consideration receipt of which is hereby
acknowledged by Assignor, the parties hereto agree as follows:
1. Assignor hereby grants, transfers and assigns to Assignee, its
successors and assigns, all of Assignor's right, title and interest in the
Lease, and Assignee agrees to and does accept said assignment.
2. Assignee expressly assumes and agrees to keep, perform and fulfill
all the terms, covenants, conditions and obligations required to be kept,
performed, and fulfilled by Assignor as tenant under the Lease, including the
payment of all rent and other charges payable by the tenant under the Lease when
the same are properly due and payable.
3. This Agreement and the parties rights, duties and obligations
hereunder shall be effective on October 1, 1994.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
day and year first above written.
ASSIGNEE: ASSIGNOR:
SAN FRANCISCO DRYDOCK, INC., a SOUTHWEST MARINE, INC., a California
California corporation corporation
By: /s/ XXXXXX X. XXXXX By: /s/ XXXXXXX X. XXXXX
------------------------------- ---------------------------------
XXXXXX X. XXXXX XXXXXXX X. XXXXX
Chief Executive Officer President
By: /s/ XXXXX X. XXXXXXXX By: /s/ XXXXXX X. XXXXX
------------------------------- ---------------------------------
XXXXX X. XXXXXXXX XXXXXX X. XXXXX
Secretary Assistant Secretary
SECOND AMENDMENT TO LEASE
This Second Amendment to Lease ("Amendment"), dated for reference purpose
only as of December 17, 1997, by and between the City and County of San
Francisco, a municipal corporation, acting by and through the San Francisco Port
Commission ("Port") and San Francisco Drydock, Inc., a California corporation
("Tenant"), is made with reference to the following facts:
RECITALS
A. Port and Tenant's predecessor in interest, Southwest Marine, Inc., a
California corporation entered into that certain lease (Port Lease
No. 11320), dated December 2, 1987 (hereinafter the "1987 Lease")
affecting certain real property and all piers, improvements, dry
docks and cranes thereon located in San Francisco, California
(hereinafter the "Premises") which Premises are more particularly
described in the 1987 Lease and are shown on Exhibit A attached to
the 1987 Lease;
B. Port and Tenant's predecessor in interest, Southwest Marine, Inc., a
California corporation entered into an agreement entitled "Amendment
to Lease and Termination of License" (hereinafter the "First
Amendment") dated May 24, 1994 whereby Port and Tenant agreed to
modify certain terms and conditions of the 1987 Lease;
C. The 1987 Lease, as amended by the First Amendment, are hereinafter
collectively referred to as the "Lease";
D. By an agreement entitled "Lease Assignment and Assignment and
Assumption Agreement" dated September 29, 1994, Tenant's predecessor
in interest, Southwest Marine, Inc., a California corporation,
assigned its interest in the Lease to San Francisco Drydock, Inc., a
California corporation;
E. On or about November 25, 1997, all of the issued and outstanding
capital stock of Tenant was acquired by SWM Holdings, Inc., a
Delaware corporation and Port consented to such acquisition;
F. By agreement dated December 17, 1997, Port and Tenant agreed to
extend the term of the First Amendment to February 18, 1998;
G. Port and Tenant now desire to further amend the Lease to change the
description of the Premises affected by the Lease; to adjust the
rent payable by Tenant; and to modify the obligations of Port and
Tenant in accordance with the terms hereof.
NOW, THEREFORE, in consideration of the foregoing and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, Port
and Tenant do hereby agree as follows:
1
AGREEMENT
1. RECITALS: The foregoing recitals are true and correct and are incorporated
herein by this reference.
2. EFFECTIVE DATE: The Effective date of this Second Amendment to Lease shall
be December 17, 1997 (hereinafter the "Effective Date").
3. PREMISES: Effective January 1, 1999, Exhibit A-1 dated November 30, 1998
attached hereto, together with the two non-exclusive easements for ingress
and egress across Port property and identified thereon as "License A" and
"License B", is hereby substituted for and hereby replaces the Exhibit A
dated December 14, 1987 attached to the Lease for the duration of the
Second Amendment Term only. Upon expiration of the Second Amendment Term
the Premises will be as described in Exhibit A attached to the Lease.
4. TERM: Without otherwise affecting the Term of the Lease, the term of this
Second Amendment to Lease (hereinafter the "Second Amendment Term") shall
be from the Effective Date through December 16, 2002. Upon the expiration
of the Second Amendment Term only Paragraph 5D hereof (adding Section 4.F)
establishing Tenant's rent effective from December 17, 2002 through
December 17, 0000, Xxxxxxxxx 5.E hereof (deleting the last paragraph of
Section 4.B of the Lease) and Paragraph 6 hereof, (amending Section 9 of
the Lease regarding City Requirements) shall survive the expiration of the
Second Amendment Term. All other terms and conditions of this Second
Amendment to Lease will expire at the expiration of the Second Amendment
Term, and will be of no further force or effect, provided, however, that
the Lease will continue in effect, unchanged except as otherwise agreed to
in writing by the parties and subject to the surviving provisions of this
Second Amendment as discussed in this Paragraph 4.
5. RENT:
A. SECTION 4.E (RENT EFFECTIVE JANUARY 1, 1994 - DECEMBER 17, 1997) of the
Lease as set forth in Section 3 in the First Amendment is hereby deleted
in its entirety.
B. SECTION 4.F (RENT EFFECTIVE DECEMBER 17, 1997 - DECEMBER 17, 2017) of the
Lease as set forth in Section 3 of the First Amendment is hereby deleted
in its entirety.
C. A NEW SECTION 4.E IS HEREBY ADDED TO THE LEASE TO READ AS FOLLOWS:
"4.E RENT EFFECTIVE FROM DECEMBER 17, 1997 THROUGH DECEMBER 16, 2002. The
other provisions of Sections 4.A and 4.B of this Lease notwithstanding, as
of the Effective Date and through the expiration of the Second Amendment
Term, Tenant shall pay to Port the following rent:
i. For the period from December 17, 1997 through December 16, 1999:
$66,667.00 per calendar month;
2
ii. For the period December 17, 1999 through December 16, 2000:
$75,000.00 per calendar month;
iii. For the period December 17, 2000 through December 16, 2002:
$104,167.00 per calendar month.
Tenant shall pay the Rent, in advance, on or before the first day of each
calendar month throughout the Second Amendment Term. If the first day of
the Second Amendment Term is other than the first day of the month, or the
Second Amendment Term shall terminate on other than the last day of the
month, the rent for the first calendar month and the last calendar month
of the Second Amendment Term shall be apportioned as the number of days of
the occupancy bears to those months.
D. A NEW SECTION 4.F, IS HEREBY ADDED TO THE LEASE TO READ AS FOLLOWS:
"4.F RENT EFFECTIVE FROM DECEMBER 17, 2002 THROUGH DECEMBER 17, 2017:
Effective as of December 17, 2002, Tenant shall pay rent as set forth in
Section 4.A of the Lease and in an amount as adjusted from the original
Commencement Date of December 17, 1987 pursuant to the "Cost of Living
Index Adjustment Formula" as set forth in Section 4.B of the Lease and as
adjusted every fifth Lease Year thereafter in accordance with Section 4.B.
Notwithstanding the foregoing, Tenant shall have the right to renegotiate
the rent effective as of December 17, 2002, by giving Port written notice
exercising such right no earlier than 270 days, and no later than 180 days
prior to December 17, 2002. Within 30 days of Tenants' notice, the parties
shall enter into good faith negotiations to determine a new monthly rent
and adjustment schedule for the remainder of the term. If the parties
cannot agree upon such a monthly rental rate and adjustment schedule, then
within 180 days after Tenant's initial notice to renegotiate, Tenant shall
have the right to terminate the Lease upon 90 days' written notice to
Port. This right to terminate presumes that Tenant has given proper notice
to renegotiate the rent as hereinabove required."
6. SECTION 4.G OF THE LEASE IS HEREBY AMENDED IN ITS ENTIRETY TO READ AS
FOLLOWS:
"4.G REIMBURSEMENT AND RENT CREDITS FOR CAPITAL IMPROVEMENTS: During the
Second Amendment Term, Tenant agrees to undertake certain capital repairs
and to design and construct certain alterations and improvements to the
Premises which capital repairs, alterations and improvements are listed on
Exhibit B attached hereto and incorporated herein by reference
(hereinafter the "Exhibit B Capital Improvements").
Subject to the further provisions of this Section 4.G, Port shall
reimburse Tenant for Tenant's Certified Construction Costs directly
related to such Exhibit B Capital Improvements undertaken during the
Second Amendment Term not to exceed $1,100,000.00 in cash for the Exhibit
B Capital Improvements to those portions of the Premises actually damaged
during the "Loma Prieta" earthquake of October 1989, and an additional sum
not to exceed $200,000.00 in rent credits for such other capital repairs
to such other portions of the Premises as may be approved by Port as
further provided herebelow.
3
For purposes of this Second Amendment to Lease, "Certified Construction
Costs" shall mean those Construction Costs certified by Port in accordance
with this Section 4.G. "Construction Costs" shall be Tenant's actual and
reasonable costs to design, construct (including without limitation
construction administration costs) and install the Exhibit B Capital
Improvements and including Tenant's actual reasonable labor costs
attributable to Tenant's employee's, if any, directly related to
performing such design, construction and/or installation of the Exhibit B
Capital Improvements or undertaking the Exhibit B Capital Improvements.
In order for the Exhibit B Capital Improvements Construction Costs to be
certified by Port: (1) Tenant must first obtain, prior to commencing the
construction and/or repair project, written approval from the Port that
the proposed construction and/or repair project would qualify as work for
which Tenant would be entitled to receive a cash reimbursement under the
terms of this Lease, and that the proposed work and the anticipated budget
categories and amounts for the Construction Costs of the proposed
construction and/or repair project are reasonable, and (2) Tenant must
obtain all required governmental approvals, including, but not limited to
building permits and environmental clearances. After the completion of the
approved construction and/or repair project, Tenant must deliver to Port
an itemized statement of the actual Construction Costs expended by Tenant
on the approved construction and/or repair project, accompanied by
documentation evidencing to the reasonable satisfaction of Port, all said
expenditures. Such documentation of expenditures may include: (1) copies
of executed contracts; (2) copies of invoices for labor, services and/or
materials marked "Paid", copies of bills of lading, and/or copies of other
bills or receipts for goods, materials and/or services marked "Paid"; (3)
copies of canceled checks; and (4) copies of Tenant's payroll records and
other records supporting Tenant's labor costs attributable to Tenant's
employees; (5) such other proofs of expenditures as may be reasonably
requested by Port. All such proofs of expenditure must be attributable
directly to the Exhibit B Capital Improvements or such other capital
repair work as is approved in advance by Port in Port's sole discretion.
Such proofs of expenditure shall not include items related to Tenant's
trade fixtures, office equipment and supplies, furniture, communications
facilities (whether voice or data) or any other items of personality not
intended to be affixed to or become a part of the realty comprising the
Premises. Upon receipt of and based upon said statement and accompanying
documentation which substantiate the actual Construction Costs expended,
Port in its reasonable discretion shall determine the Certified
Construction Costs.
All reimbursements by Port to Tenant of such Certified Construction Costs
for the Exhibit B Capital Improvements shall be by cash made promptly upon
certification of the Construction Costs by Port.
Tenant understands that Port's ability to reimburse Tenant in cash is
contingent upon Port securing the approval of the Board of Supervisors of
the City and County of San Francisco of a request by Port for the release
from reserve of $1,100,000.00 in previously approved supplemental funding
for use primarily toward refurbishing that portion of the Premises shown
on Exhibit A and labeled "Administration Building #104" and for other
capital improvement projects shown on Exhibit B. Should Port not secure
the approval
4
of the Board of Supervisors of the City and County of San Francisco for
the release of such previously approved supplemental funding, by June 30,
1999, then this Second Amendment to Lease shall then and by its own terms
become null and void and Tenant thereafter shall have the right, unless
the parties agree upon a new monthly rental rate, to terminate this Lease
upon 90 days' written notice to Port, to be given no earlier than July 1,
1999 and no later than July 15, 1999."
7. SECTION 14 (INDEMNIFICATION) of the lease is hereby amended to add the
following provision:
"The parties acknowledge that Tenant requires an NPDES Permit from the
California Regional Water Quality Control Board for the San Francisco Bay
Region ("RWQCB") in order to conduct its contemplated uses and activities
on the Premises. The RWQCB is considering the reissuance of Tenant's
current NPDES Permit as of the date hereof, and has indicated that the
Port will be named responsible in the event that Tenant fails to comply
therewith. The parties agree that Tenant shall be solely responsible for
obtaining the NPDES Permit as further provided in this Section. Throughout
the permit process for the NPDES Permit, and any other regulatory approval
where Port is required to be a co-permittee or will be a responsible party
(collectively, "Regulatory Approval"), Tenant shall consult and coordinate
with Port in Tenant's efforts to obtain such Regulatory Approval, and Port
shall cooperate reasonably with Tenant in its efforts to obtain such
Regulatory Approval, provided that Port shall have no obligation to make
expenditures or incur expenses other than administrative expenses. Tenant
shall not agree to the imposition of conditions or restrictions in
connection with its efforts to obtain a permit from any other regulatory
agency, if Port is required to be a co-permittee under such permit or the
conditions or restrictions could create any obligations on the part of
Port, whether on or off the Property, unless in each instance Port has
previously approved such conditions in writing in Port's sole and absolute
discretion. No such approval by Port shall limit Tenant's obligation to
pay all the costs of complying with such conditions under this Section.
Port shall have no obligation to join in any application for, or execute,
the NPDES Permit or other Regulatory Approval, if the Port does not
approve the conditions imposed thereby as provided herein. All costs
associated with applying for and obtaining any necessary Regulatory
Approval shall be borne by Tenant. Tenant shall be responsible for
complying, at no cost to Port or the City, with any and all conditions
imposed by any regulatory agency as part of a Regulatory Approval. With
the consent of Port (which shall not be unreasonably withheld or delayed),
Tenant shall have the right to appeal or contest in any manner permitted
by law any condition imposed upon any such Regulatory Approval. Tenant
shall pay and discharge any fines, penalties or corrective actions imposed
as a result of the failure of Tenant to comply with the terms and
conditions of any Regulatory Approval and Port shall have no liability for
such fines and penalties. Without limiting the indemnification provisions
of Section 14, Tenant shall indemnify the Port, City, and their agents,
employees and officers from and against any and all such fines and
penalties, together with attorneys' fees and costs, for which Port may be
liable in connection with Tenant's failure to comply with any Regulatory
Approval.
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8. SECTION 42 (CITY REQUIREMENT) of the Lease is hereby amended in its
entirety to read as follows:
42.1 NON-DISCRIMINATION.
(a) Covenant Not to Discriminate. In the performance of this
Lease, Tenant covenants and agrees not to discriminate on the basis of the
fact or perception of a person's race, color, creed, religion, national
origin, ancestry, age, sex, sexual orientation, gender identity, domestic
partner status, marital status, disability or Acquired Immune Deficiency
Syndrome or HIV status (AIDS/HIV status) against any employee of, any City
employee working with, or applicant for employment with Tenant, in any of
Tenant's operations within the United States or against any person seeking
accommodations, advantages, facilities, privileges, services, or
membership in all business, social, or other establishments or
organizations operated by Tenant.
(b) Subleases and Other Subcontracts. Tenant shall include in all
Subleases and other subcontracts relating to the Premises a
non-discrimination clause applicable to such Subtenant or other
subcontractor in substantially the form of subsection (a) above. In
addition, Tenant shall incorporate by reference in all Subleases and other
subcontracts the provisions of Sections 12B.2(a), 12B.2(c)-(k) and 12C.3
of the San Francisco Administrative Code and shall require all Subtenants
and other subcontractors, unless exempt, to comply such provisions.
Tenant's failure to comply with the obligations in this subsection shall
constitute a material breach of this lease.
(c) Non-Discrimination in Benefits. Tenant does not as of the date
of this Lease and will not during the Term, in any of its operations
within the United States, discriminate in the provision of any non-ERISA
benefits between employees with domestic partners and employees with
spouses, and/or between the domestic partners and spouses of such
employees, where the domestic partnership has been registered with a
governmental entity pursuant to state or local law authorizing such
registration, subject to the conditions set forth in Section 12.2(b) of
the San Francisco Administrative Code.
(d) Condition to Lease. As a condition to the effectiveness of
this Lease, Tenant shall execute and deliver to Port the Nondiscrimination
in Contracts and Benefits form (Form HRC 12B-101), along with supporting
documentation showing evidence of the non-discrimination provisions of any
non-ERISA benefit to employees, with spouses and employees with domestic
partners, and a completed Declaration of Market Participation (form HRC
12B-107).
(e) Incorporation of Administrative Code Provisions by Reference.
The provisions of Chapters 12B and 12C of the San Francisco Administrative
Code relating to non-discrimination by parties contracting for the lease
of City property are incorporated in this Section by reference and made a
part of this Agreement as though fully set forth herein. Tenant shall
comply fully with and be bound by all of the provisions that apply to this
Lease under such Chapters of the Administrative Code, including but not
limited to the remedies provided in such Chapters. Without limiting the
foregoing, Tenant understands that pursuant to Section 12B.2(h) of the San
Francisco Administrative Code,
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a penalty of $50 for each person for each calendar day during which such
person was discriminated against in violation of the provisions of this
Lease may be assessed against Tenant and/or deducted from any payments due
Tenant.
(f) Partial Exemption. Tenant has received a partial exemption
from compliance with Chapter 12B of the San Francisco Administrative Code,
attached hereto as Exhibit C. To the extent any of the foregoing is
inconsistent with such exemption, the exemption shall be controlling. In
the event that a change in law, regulation or judicial decision occurs
which would have the effect of voiding such exemption, then Tenant, upon
no less than 90 days prior written notice, shall have the option to
terminate this Lease. Notwithstanding the foregoing, if Port agrees in
writing at any time during said notice period to absorb through rent
credits or other form of compensation to Tenant any additional costs
accruing to Tenant as the result of the voiding of such exemption, then
Tenant's election to terminate, if so exercised, shall be ineffective."
42.2 XXXXXXXX PRINCIPLES-NORTHERN IRELAND.
City urges companies doing business in Northern Ireland to
move towards resolving employment inequities and encourages such
companies to abide by the XxxXxxxx Principles. City urges San
Francisco companies to do business with corporations that abide by
the XxxXxxxx Principles.
42.3 TROPICAL HARDWOOD BAN.
City urges Tenant not to import, purchase, obtain or use for
any purpose, any tropical hardwood, tropical hardwood product,
virgin redwood or virgin redwood product.
42.4 TOBACCO PRODUCTS ADVERTISING BAN.
Tenant acknowledges and agrees that no advertising of
cigarettes or tobacco products is allowed on any real property owned
by or under the control of the City, including the property, which
is the subject of this Lease. This prohibition includes the
placement of the name of a company producing, selling or
distributing cigarettes or tobacco products or the name of any
cigarette or tobacco product in any promotion of any event or
product. This prohibition does not apply to any advertisement
sponsored by a state, local or non-profit entity designed to
communicate the health hazards of cigarettes and tobacco products or
to encourage people not to smoke or to stop smoking.
42.5 BURMA (MYANMAR) BUSINESS PROHIBITION.
Tenant represents to Port that Tenant is not the government of
Burma (Myanmar), that Tenant is not a person or business entity
organized under the laws of Burma (Myanmar), and that Tenant is not
a "prohibited person or entity" defined in Section 12J.2.G of the
San Francisco Administrative Code as any person or entity designated
by the Investor Responsibility Research Center as having investments
or employees in Burma, or any person or entity that licenses
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any person or entity organized under the laws of Burma (Myanmar) to
produce and market its products. Port reserves the right to
terminate this Lease for default if Tenant violates the terms of
this section 42.5.
Chapter 12J of the San Francisco Administrative Code is hereby
incorporated by reference as though fully set forth herein. In the
event that Tenant fails to comply in good faith with any of the
provisions of Chapter 12J of the San Francisco Administrative Code,
Tenant shall be liable for liquidated damages for each violation in
the amount of One Thousand Dollars ($1,000.00)."
The other provisions of this Second Amendment to Lease
notwithstanding, the provisions of this Paragraph 8 (amending
Section 42 of the Lease) shall survive the expiration of the Second
Amendment Term.
9. Time is of the essence as to each and every provision of this Second
Amendment to Lease.
10. Section 32 (Notices) of the Lease is hereby amended to substitute the
following address for notice to Tenant:
San Francisco Drydock, Inc.
Attention: Legal Department
X.X. Xxx 00000
Xxx Xxxxx, XX 00000-0000
With copy to:
President
San Francisco Drydock, Inc.
X.X. Xxx 0000
Xxx Xxxxxxxxx, XX 00000
11. Except as modified herein all other terms and conditions of the Lease are
to remain in full force and effect.
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IN WITNESS WHEREOF, Port and Tenant have executed this Second Amendment to
Lease as of the date last set forth herebelow:
PORT:
CITY AND COUNTY OF SAN FRANCISCO, a municipal corporation, operating by and
through the SAN FRANCISCO PORT COMMISSION
By /s/ Xxxxxxx Xxxx
-------------------------------
Xxxxxxx Xxxx
Executive Director
Port Commission Resolution No. 99-11
Dated: February 9, 1999
----------------------------
TENANT:
SAN FRANCISCO DRYDOCK, INC.,
A CALIFORNIA CORPORATION
By /s/ D. Xxxx Xxxxxx By /s/ Xxxxx X. Xxxxxxxx
-------------------------------- ------------------------------
Its President Its Secretary
-------------------------------- ------------------------------
Dated: February 4, 1999 Dated: February 3, 1999
----------------------------- ---------------------------
APPROVED AS TO FORM:
XXXXXX X. XXXXX, City Attorney
By /s/ XXXXXX X. XXXXX
---------------------------------
Deputy City Attorney
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THIRD AMENDMENT TO LEASE
THIS THIRD AMENDMENT TO LEASE ("Amendment"), dated for reference purposes
only as of August ____, 1999, by and between THE CITY AND COUNTY OF SAN
FRANCISCO, a municipal corporation, acting by and through the SAN FRANCISCO PORT
COMMISSION ("Port"), and SAN FRANCISCO DRYDOCK, INC., a California corporation
("Tenant"), is made with reference to the following facts:
RECITALS
A. Port and Tenant's predecessor in interest, Southwest Marine, Inc., a
California corporation ("SWM") entered into that certain lease (Port
Lease No. 11320), dated December 2, 1987 affecting certain real
property and all piers, improvements, dry docks and cranes thereon
located in San Francisco, California (hereinafter the "Premises")
which Premises are more particularly described in said lease and in
Exhibit A attached thereto;
B. Port and SWM entered into an agreement entitled "Amendment to Lease
and Termination of License" dated as of May 24, 1994 (hereinafter
"First Amendment") whereby Port and SWM agreed to modify certain
terms and conditions of said lease.
C. By an agreement entitled "Lease Assignment and Assumption Agreement"
dated September 29, 1994 SWM assigned all of its interest in said
lease to Tenant.
D. Port and Tenant entered into an agreement entitled "Second Amendment
to Lease" dated as of December 17, 1997 (hereinafter "Second
Amendment") whereby Port and Tenant agreed to further modify certain
terms and conditions of said lease.
E. Said lease and the First Amendment and Second Amendment are
hereinafter collectively referred to as the "Lease";
F. Port and Tenant now desire to further amend the Lease by addition of
certain personal property to the Premises, provision for the
deletion and removal of certain personal property from the Premises
and to otherwise modify the obligations of Port and Tenant in
accordance with the terms hereof.
NOW, THEREFORE, in consideration of the foregoing and other valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, Port
and Tenant hereby agree as follows:
AGREEMENT
1. RECITALS: The foregoing recitals are true and correct and are incorporated
herein by this reference.
2. EFFECTIVE DATE: The effective date of the modifications to the Lease as
contained in this Amendment shall be August ____ , 1999 (hereinafter the
"Effective Date").
3. ADDITIONS TO PREMISES: From and after the Effective Date the Premises
shall be deemed to and include an additional dry dock known as the AFDM-14
Steadfast, Medium Auxiliary Floating Dry Dock (hereinafter the
"Steadfast") which Port acquired at a transfer fee and cost of $93,600.00
from the United States of America, acting through the State of California,
State Agency for Surplus Property, pursuant to the terms and conditions of
a certain agreement entitled "Vessel Conditional Transfer Document" dated
July 7, 1999, a copy of which is attached hereto as Exhibit D (hereinafter
the "Transfer Document"). Tenant shall be solely responsible for all costs
and expenses associated with relocation of the Steadfast from Susin Bay,
California to the Premises and making the Steadfast operational at the
Premises, which shall be accomplished by Tenant within 60 days of Port's
payment of the aforementioned transfer fee, failing which Port may
undertake all such obligations for and on behalf of Tenant and Tenant
shall immediately reimburse Port the costs thereof. Tenant acknowledges
and agrees that it is accepting the Steadfast for inclusion in the
Premises in its "AS IS, WHERE IS" condition and that Port has made no
representation or warranty, express or implied, concerning the condition
or fitness of the Steadfast for a particular use or purpose. Upon
relocation of the Steadfast to the Premises, and annually thereafter if
requested by Port, Tenant and Port shall conduct a joint physical
inspection of the condition of the Steadfast and its operating systems and
inventory all associated appurtenances and equipment. Such inspection and
inventory will be documented in writing and a copy provided to both Tenant
and Port.
4. DELETION TO PREMISES: At any time during the term of the Lease and in no
event later than 180 days from the Effective Date, Tenant shall, at its
sole cost and expense, relocate that portion of the Premises consisting of
the 22,000 ton lifting capacity dry dock to Port property located at Pier
70, San Francisco, California. Tenant shall be allowed rights of
reasonable ingress and egress to Pier 70 for such purpose and upon the
appropriate mooring afloat by Tenant of said dry dock to and at Pier 70,
the same shall be deemed for all purposes to be deleted from the Premises
and otherwise returned to the Port in the condition required by the Lease
and as if the term of the Lease had expired.
5. TRANSFER DOCUMENT COMPLIANCE: Except to the extent inconsistent with the
Lease, Tenant agrees to comply with all of the terms and conditions of the
Transfer Document as if Tenant was the Donee thereunder.
Except as modified herein, all other terms and conditions of the Lease are
and shall remain in full force and effect.
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IN WITNESS WHEREOF, Port and Tenant have executed this Amendment as of the
date last set forth below.
APPROVED AS TO FORM: PORT:
XXXXXX X. XXXXX, City Attorney CITY AND COUNTY OF SAN FRANCISCO, a
municipal corporation, operating by
and through the SAN FRANCISCO PORT
By: COMMISSION
-------------------------------
Deputy City Attorney
By:
-----------------------------------
XXXXXXX X. XXXX
Executive Director
Port Commission Resolution No. 99- Dated:
---------------------------------
---------
TENANT:
SAN FRANCISCO DRYDOCK, INC., a
California corporation
By:
-----------------------------------
D. XXXX XXXXXX
President
By:
-----------------------------------
XXXXX X. XXXXXXXX
Secretary
Dated:
---------------------------------
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