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EXHIBIT 10.11
RESTAURANT LEASE
This Restaurant Lease ("Lease") is made and entered into this 21st day
of November, 1991 ("Effective Date") , by and between HOTEL SAINTE CLAIRE
PARTNERS, L.P., a California limited partnership ("Landlord"), and IL FORNAIO
(AMERICA) CORPORATION, a California corporation ("Tenant"), who agree as
follows:
ARTICLE 1
BASIC LEASE PROVISIONS
The following basic lease provisions supplement and summarize provisions
elsewhere in this Lease. They are presented to facilitate convenient reference
by the parties to this Lease, subject to further definition and discussion in
the referenced sections and elsewhere in this Lease. Although the basic lease
provisions are part of this Lease, if there is any conflict between the basic
lease provisions and provisions contained in the balance of this Lease, the
provisions contained elsewhere will control.
Use: Restaurant (Sec. 5.1)
Tenant's Trade Name: Il Fornaio (Sec. 5.1)
Hotel - Name: Hotel Sainte Claire (Sec. 2.2)
- Location: San Xxxx (Sec. 2.2)
Santa Xxxxx County
California
Premises - Address: 000 Xx. Xxxxxx Xxxxxx (Sec. 2.1)
San Jose, California (Sec. 2.1)
Term - Primary Term: 20 year (Sec. 3.2)
- Option Periods: 2 x 5 year (Sec. 3.3)
Landlord Contribution: * (Exh. "C")
Tenant Contribution: $1,550,000 (Exh. "C")
* Confidential treatment requested.
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Rent - Initial Minimum Rent: * (Sec. 4.2)
- Percentage Rent: * (Sec. 4.3)
Exhibits: "A" Floor Plan
"B" Confirmation of Term
"C" Initial Construction
ARTICLE 2
PREMISES
2.1 Leased Property. Landlord leases to Tenant and Tenant leases
from Landlord those portions of the Hotel St. Claire located in San Jose,
California ("Hotel") which are situated on the ground floor thereof and
designated as "Restaurant Area" and "Main Kitchen Area" on the floor plan
attached hereto as Exhibit "A" and which are situated on the roof thereof and
designated as the "Roof Area" on the floor plan attached hereto as Exhibit
"A-1" (collectively, "Premises").
2.2 Appurtenant Rights; Food Service Operations Agreement.
Tenant shall have the right, in connection with the operation of a restaurant or
restaurants (in accordance with Article 5) within the Premises, to utilize any
and all nonexclusive easements which the Hotel has retained for deliveries,
maintenance and related functions. Tenant's restaurant guests shall have the
right to use the ground floor common public areas of the Hotel to the extent
such uses are consistent with the patronage of Tenant's restaurant(s) within the
Premises.
Landlord shall also provide to Tenant additional areas within the
Hotel for storage, locker and restroom facilities for Tenant's employees and an
office for sales and banquet activities (collec-
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* Confidential treatment requested.
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tively, "Incidental Areas"). The location and dimensions of the Incidental
Areas are set forth in the plan attached hereto as Exhibit "A-2". The
Incidental Areas may be relocated in equivalent space in the Hotel as Landlord
shall reasonably determine from time to time.
Concurrently with the execution of this Lease, Landlord's affiliated
corporation, MOBEDSHAHI HOTEL GROUP, INC. ("MHG"), and Tenant have entered into
a "Food Service Operations Agreement" providing for Tenant's performance of
services in connection with the operation of food and beverage functions
throughout portions of the Hotel which are not part of the Premises ("Food
Service Operations Agreement"). Landlord hereby guarantees the performance of
all obligations of MHG under the Food Service Operations Agreement. In the
event of a default, bankruptcy, or other event that prevents MHG from
discharging its obligations under the Food Service Operations Agreement,
Landlord shall enter into an identical agreement directly with Tenant.
2.3 Landlord's Title and Authority. Tenant acknowledges that
Landlord's interest in the real property on which the Hotel is located
consists, or will consist, of a leasehold interest granted to Tenant pursuant
to that certain Ground Lease ("Ground Lease") entered into, or to be entered
into, by and between the Redevelopment Agency of the City of San Xxxx
("Agency"), as ground lessor, and Landlord, as ground lessee. Tenant hereby
acknowledges that all of Tenant's rights, obligations, and interests in this
Lease shall be subject to the Ground Lease and subordinated to the rights and
interests of the Agency thereunder. The Landlord represents and warrants that
Landlord's interest in the Ground Lease and in
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the real property upon which it is located shall be, and at all times shall
remain, free and clear of all liens and encumbrances, other than (a) those
exceptions listed in that certain title binder issued by First American Title
Insurance Company #505630 on August 30, 1991 (the "Title Binder"), (b) any
matter created by Tenant, (c) any refinancing of loans encumbering the Hotel,
and (d) any other matter arising in the ordinary course of Landlord's ownership
and operation of the Hotel to the extent such matters do not or will not have a
material impact on tenant's rights under this Lease. Landlord hereby
represents and warrants that none of the encroachments or other matters set
forth in Item 10 of the Title Binder will have a material and adverse impact on
the renovations, uses, or operations contemplated by the DDA, the Ground
Lease, or this Lease. Landlord has the full right and lawful authority to make
this Lease. At all times during the Lease Term, Landlord agrees to abide by
and perform all its obligations under the Ground Lease, the Acquisition
Disposition and Development Agreement with the Redevelopment Agency of the City
of San Xxxx with respect to the Hotel (the "DDA") , and the Hotel Operating
Agreement with Mobedshahi Hotel Group, including the continuous operation of
the Hotel in a first class manner as required by Sections 302 and 305 of the
Ground Lease.
2.4 Quiet Enjoyment. So long as Tenant is not in default under
the terms of this Lease, Tenant will have full, quiet, and peaceful possession
of the Premises for Tenant's use and enjoyment of the Premises and all rights
granted in this Lease without interference or interruption, including the
exclusive right to sell
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and serve food and beverages in the Hotel as provided in the Food Service
Operations Agreement.
2.5 Landlord's Access. Landlord will have the right to enter upon
the Premises for the purposes of inspection, serving or posting notices, making
any necessary repairs to the Premises, complying with laws, ordinances, or
regulations, protecting the Premises, or any other lawful purpose.
Landlord will exercise such rights reasonably, upon reasonable advance
notice (except in the case of emergencies), during ordinary business hours,
and in such manner as not to interfere unreasonably with the business of
Tenant.
ARTICLE 3
TERM
3.1 Commencement Date. This Lease will be effective upon its
execution by the last of the parties to so execute and the delivery to each
party of a fully executed original. If all of the conditions set forth in
Section 3.4 have been timely satisfied or waived pursuant to Section 3.6, the
term of this Lease and Tenant's obligation to pay rent will commence on the
date which is the date on which Tenant opens the Premises for business to the
public ("Commencement Date"). Tenant agrees to use its best efforts to open
for business on or before October 1, 1992. When the Commencement Date is
ascertained, the parties will promptly execute a confirmation of the term,
including options, substantially in the form and content of Exhibit "B"
("Confirmation of Term").
3.2 Primary Term. The main term ("Primary Term") will be for a
period of twenty (20) years beginning on the Commencement Date. If the
Commencement Date is not the first day of a calendar
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month, the Primary Term will be extended for the number of days remaining in
the month in which the Commencement Date occurs.
3.3 Options. Tenant will have options to extend the Primary Term
for two (2) consecutive, five (5) year periods ("Option Periods") on all the
provisions contained in this Lease, including the adjustment of Minimum Rent,
by giving Landlord written notice of the exercise of the option at least one
hundred eighty (180) days prior to the expiration of the Primary Term or the
then-current Option Period. Tenant's exercise of an option is conditioned upon
the Lease being in effect without existing default on the part of Tenant (a)
when notice of exercise is given, and (b) on the date immediately preceding the
first day of the subject Option Period.
3.4 Conditions to Commencement. The Commencement Date is
conditioned upon the following conditions:
(a) Permits and Licenses. Receipt by Tenant, within sixty
(60) days of the Effective Date, of all permits and licenses necessary for
Tenant to construct its improvements. The permits and licenses are to be
validly and irrevocably granted on terms and conditions reasonably satisfactory
to Tenant and no longer subject to appeal. Landlord agrees to execute any
applications or other documents reasonably requested by Tenant in order to
obtain the permits and licenses. Tenant will defend, indemnify and hold
Landlord harmless from all claims and liabilities arising from Landlord's
execution of the documents. Tenant will proceed with its best efforts to
secure the permits and licenses as soon as possible following the Effective
Date, at Tenant's sole cost and expense.
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(b) Landlord's Construction. Completion of Landlord's Work
(as defined in Section 6.1); provided, however, that Landlord shall only be
required, for the purpose of this condition, to have two (2) floors of guest
rooms completed as part of Landlord's Work.
(c) Possession. Delivery of possession of the Premises for
commencement of Tenant's construction of its improvements within ten (10)
business days following the Effective Date.
3.5 Conditions to Lease. The effectiveness of this Lease and
Tenant's obligations hereunder are subject to the approval by Tenant, on or
before December 31, 1991, of each and all of the following.
(a) The Lease by Tenant's Board of Directors.
(b) Non-disturbance Agreement from Agency.
(c) Non-disturbance Agreement from the Bank of
California.
(d) A title insurance policy for the benefit of Agency
as required by the DDA.
(e) The Disbursement Agreement between Landlord, Tenant
and Agency with respect to all funds needed for the renovation to the Hotel and
all Landlord's Work and Tenant's Work, as defined below.
(f) All consents and approvals of Agency to this Lease,
including Tenant's Work, the right of first refusal, and the Tenant's share of
profits on sale.
3.6 Satisfaction of Conditions. If any of the conditions set
forth in Section 3.4 or 3.5 are not satisfied by the particular time specified,
Tenant will have the right to notify Landlord within five (5) days, and this
Lease will be terminated as of
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Tenant's notice, or at Tenant's option, the Commencement Date shall be extended
until such conditions are satisfied. Tenant may waive satisfaction of any of
the conditions, each of which is for the benefit of Tenant. Failure to notify
Landlord timely of the failure of any of the conditions to be satisfied will be
deemed a waiver of the condition.
ARTICLE 4
RENT
4.1 Lease Year. The term "Lease Year" means a period of twelve
(12) consecutive full calendar months. The first Lease Year will begin on the
Commencement Date if the Commencement Date occurs on the first day of a
calendar month; if not, the first Lease Year will commence on the first day of
the calendar month next following the Commencement Date. Each succeeding Lease
Year will commence upon the anniversary of the first Lease Year.
4.2 Minimum Rent.
(a) Tenant will pay to Landlord for each Lease Year, as
minimum yearly base rent ("Minimum Rent"), without deduction, setoff, or prior
notice or demand, the sum of * (subject to adjustment as provided in (b)
below), payable in twelve (12) equal monthly installments, each in advance on or
before the first day of each and every calendar month. Notwithstanding the
foregoing, there shall be no Minimum Rent due and payable for any Lease Year, or
any portion of a Lease Year, until the 1st day of the month following the month
during which Gross Sales have cumulatively, since the Commencement Date, totaled
* . At such time, the Minimum Rent, as provided herein, shall commence. The
Minimum Rent during each
* Confidential Treatment Requested
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Option Period will be * percent * of the total of (a) the
average Minimum Rent for the three (3) Lease Years immediately preceding the
subject Option Period and (b) the average yearly Percentage Rent collected for
the three (3) Lease Years immediately preceding the subject Option Period, but
in no event less than the Minimum Rent in effect immediately prior to the
Option Period. On the first day of the second Lease Year of each such Option
Period, and on the first day of each Lease Year thereafter during said Option
Period, the Minimum Rent shall be adjusted as provided in Section 4.2(b) below.
(b) Commencing on the first day of the second Lease Year
and on the first day of each Lease Year thereafter (each an "Adjustment Date")
during the term of this Lease (including any Option Periods, if applicable), the
Minimum Rent shall be increased in accordance with the percentage increase, if
any, occurring over the twelve (12) month period preceding each Adjustment Date
in the Consumer Price Index-Urban Wage Earners and Clerical Workers (San
Francisco-Oakland-San Xxxx Area; Base 1982-84 = 100) ("Index") , as published by
the United States Department of Labor, Bureau of Labor Statistics; provided,
however, that in no event shall the percentage increase for any such twelve (12)
month period exceed five percent (5%) of the Minimum Rent amount in effect
prior to the applicable Adjustment Date. In no event shall the Minimum Rent, as
adjusted, be less than the Minimum Rent for the immediately preceding Lease
Year. Should the Bureau of Labor Statistics discontinue the publication of the
Index, publish the same less frequently or alter the same in some other manner,
then a substi-
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tute index or procedure which reasonably reflects and monitors consumer prices
shall be used.
4.3 Percentage Rent. Tenant shall pay to Landlord for each
Accounting Year, without deduction, setoff, or prior notice or demand,
"Percentage Rent" in an amount equal to * percent * of Gross Sales (as defined
in section 4.4 below) until Gross Sales, from the Commencement Date, have on a
cumulative basis exceeded *, at which time the Percentage Rent shall be *
percent * of Gross Sales. Percentage Rent shall be credited with the amount of
any Minimum Rent paid by Tenant in the Accounting Year in question. Percentage
Rent shall be paid on a monthly basis within ten (10) business days following
the end of each calendar month. At such time as the year-end statement is
provided by Tenant to Landlord pursuant to Section 4.5 below, Tenant shall pay
to Landlord any additional sums required to be paid as Percentage Rent to the
extent such sums have not been paid during the course of the previous Accounting
Year.
4.4 Gross Sales. The term Gross Sales means the gross selling
price of all food, beverages, goods, and services sold in or from the Premises
and Hotel by Tenant, its permitted subtenants, licensees, or concessionaires,
whether for cash or on credit (whether collected or not), including the gross
amount received by reason of orders taken on the Premises although filled
elsewhere, and whether made by employees or vending machines, and the value of
any food or beverage items, goods or services provided in exchange or trade for
other goods and services received by Tenant, and all Gross Revenues, as defined
in the Food Service Operations Agreement. Gross Sales do not include, or if
included there will be
*Confidential treatment requested
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deducted therefrom (but only to the extent included), the following: (i) cash or
credit refunds to customers; (ii) goods returned to sources or transferred to
other locations owned by or affiliated with Tenant when such exchange is not
made for the purpose of consummating a sale made in, at, or from the Premises;
(iii) refundable deposits and gift certificates or similar vouchers except as
converted into by a sale by redemption; (iv) sales of fixtures, machinery,
equipment, or other property which are not for sale or trade in the ordinary
course of Tenant's business; (v) sums or credits received in settlement of
claims for loss or damage to Tenant's goods; (vi) receipts from cigarette
vending machines and other machines and devices selling goods or services beyond
Tenant's net receipts; (vii) the value of meals furnished to Tenant's employees;
(viii) allowances, complimentary meals, coupons, and discounts in the ordinary
course of business to the extent there is no receipt of payment, goods or
services therefor; (ix) gratuities or service charges in lieu thereof given to
Tenant's employees; (x) taxes of whatever nature imposed on the sale of goods or
services, (xi) service charges paid to financial institutions on account of
credit card, debit card, or similar noncash purchases by customers; and (xii)
the value of food or services donated or sold, at an amount not exceeding the
approximate cost, for charitable purposes or non-profit community functions.
4.5 Statement of Gross Sales. Tenant will furnish to
Landlord statements of Gross Sales within thirty (30) days after the close of
each Accounting Quarter and an annual statement certified as accurate by an
officer of Tenant within ninety (90)
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days after the close of each Accounting Year. The annual statements will show
the determination of the Percentage Rent based on the Gross Sales of Tenant and
any sums paid to Landlord as Percentage Rent for the Accounting year. Tenant
will also furnish to Landlord an audited annual statement for each fiscal year
of Tenant promptly following the completion of said audit.
4.6 Records. Tenant will keep full and accurate books, records,
and other pertinent data which would normally be examined by an independent
accountant pursuant to generally accepted auditing standards in performing an
audit of Tenant's Gross Sales. All such books, records, and data will be
retained and preserved for at least thirty-six (36) months after the end of the
Accounting Year to which they relate. All statements provided pursuant to
Section 4.5 above shall be certified by an officer of Tenant as true and
correct.
4.7 Audit. Landlord is entitled, at any time and from time to
time during the term of this Lease, but no more frequently than one time per
year, and once after the expiration or termination of this Lease, to an
independent audit by an auditor designated by Landlord of Tenant's books,
records, and other pertinent data to determine Tenant's Gross Sales. The audit
may be at any reasonable time upon at least twenty (20) days' prior written
notice to Tenant, will be limited to the determination of Gross Sales, and will
be conducted during normal business hours at a mutually agreeable location.
Tenant will promptly pay to Landlord any deficiency or Landlord will promptly
refund to Tenant any overpayment, as the case may be, which is established by
the audit. The costs of the audit will be borne by Landlord unless the audit
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shows that Tenant understated Gross Sales by more than three percent (3%) for
the period examined, in which case the costs will be borne by Tenant. Any
previous understatements which have been disclosed and paid by Tenant will be
credited and thereby eliminated from a subsequent determination of
understatement. Any funds to be paid or refunded, as set forth herein, shall
be paid with interest at the rate set forth in Section 15.6 below, accruing
from the date of overpayment or underpayment, as the case may be.
4.8 Confidentiality of Information. Landlord will maintain the
confidentiality of and not disclose to third parties the information furnished
or revealed as the result of Sections 4.3 through 4.7 except as may be required
for the exercise of Landlord's rights under this Lease, or as may be required
by the Ground Lease with the Agency, by law, or for disclosure to prospective
lenders or purchasers, provided that any such recipients execute a
confidentiality agreement reasonably satisfactory to Tenant.
4.9 Accounting Year. For purposes of this Lease, the term
"Accounting Quarter" shall be defined as the quarterly time period beginning on
the first day of Tenant's fiscal year (the day following the last Sunday in
May) and continuing for thirteen (13) weeks thereafter, with each successive
thirteen (13) week quarter to be considered an Accounting Quarter, and the term
"Accounting Year" shall be defined as Tenant's fiscal year, which is each
approximate twelve (12) month period during the term ending on the last Sunday
in May, provided that the first Accounting Year shall commence on the
Commencement Date and shall end on the last Sunday
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in May following the Commencement Date, and the last Accounting Year shall end
upon the expiration of the Term. The Minimum Rent shall be prorated as of the
commencement and termination of each Accounting Year for the purposes of
determining Percentage Rental payable by Tenant during such Accounting Year of
the Term. In the event Tenant changes its Accounting Quarter or the day on
which the Accounting Quarter ends, Landlord and Tenant shall equitably adjust
the Accounting Year, the dates upon which it ends, and the due dates of all
statements and payments due Landlord hereunder.
4.10 Abatement. For each day following the Commencement Date that
the Hotel does not operate, Tenant may cease to operate or, if Tenant elects
to continue operations, minimum Rent shall xxxxx and Percentage Rate shall be
* percent * of Gross Sales.
ARTICLE 5
USE
5.1 Use. The Premises will continuously (subject to the terms
hereof) be used for the operation of a public restaurants and any purposes
incidental to such purpose. Landlord acknowledges that Tenant intends to
operate an Italian restaurant in the Restaurant Area of the Premises ("Ground
Floor Restaurant") and a restaurant in the Roof Area of the Premises ("Roof Top
Restaurant"). Such restaurants will include the service of alcoholic beverages
to the extent permitted by law. Tenant will not use or permit the Premises to
be used for any other purpose or under any other trade name without Landlord's
consent. Tenant shall operate the aforesaid restaurants in a first class
manner with service predominately oriented to seated dining service by
*Confidential treatment requested
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uniformly attired waiters, waitresses and/or wine stewards. Tenant shall not
operate on the Premises any game machines, pinball machines, pool tables or
other form of gaming. Tenant shall only have such entertainment on the
Premises which is consistent with a first class dining establishment. The
Ground Floor Restaurant shall, at all times, be operated under a name that
includes "Il Fornaio," which name shall not be changed without the prior
written consent of Landlord, which consent shall not be unreasonably withheld.
The name of the Roof Top Restaurant shall be subject to the reasonable approval
of Landlord. Operation of the restaurants in accordance with the foregoing
provisions is sometimes hereinafter referred to as the "First Class Standard".
Tenant shall not deviate from the First Class Standard as established in this
section without the prior written consent of Landlord, which consent may be
withheld in Landlord's reasonable discretion.
5.2 Compliance with Laws. Tenant will comply with all laws
concerning the use, condition, and occupancy of the Premises during the term.
Tenant shall, at its sole cost and expense, obtain and maintain any and all
permits to operate its business on the Premises, including, without limitation,
any conditional use permits and liquor licenses. Landlord agrees, however,
that Tenant may, without cost or expense to Landlord, and by appropriate
proceedings diligently conducted in good faith, contest the validity or
application of any law or instrument of record affecting the Premises, provided
neither Landlord nor the Premises would be in any danger of civil or criminal
liability or the filing and foreclosure of any lien for noncompliance.
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5.3 Conduct of Business. Subject to the First Class Standard set
forth above, Tenant will during the entire Term conduct its business upon the
Premises in accordance with its discretion as to the normal and customary
operation of its business and prudent business judgment so as to maximize its
profitability. Tenant will offer breakfast, lunch, and dinner daily at
locations and times to be established from time to time by Tenant. Unless it
elects to do so, Tenant will not operate in the Premises (i) if it is prevented
from doing so because of force majeure considerations, (ii) while refurbishment
or alterations are being made to the Premises, (iii) on legal holidays,
Thanksgiving, the day after Thanksgiving, Christmas and one other selected day
per Lease Year, and (iv) for a reasonable period of time to facilitate
inventory and at the end of the term to facilitate moving out, restoration, and
other activities incidental to Tenant winding up business at the Premises.
Tenant will carry on its business at all times in an efficient, quality, and
reputable manner for the type of business for which the Premises are leased,
including maintenance of an adequate number of employees and sufficient
inventory. Tenant will not use the Premises in any manner that will constitute
waste, nuisance, or unreasonable annoyance to other guests or patrons of the
Hotel, or which is inconsistent with the provisions of the Ground Lease with
the Agency. Landlord agrees that noise, odors and exhaust incidental to a
restaurant, excluding odors of deteriorating food, will not be deemed a
nuisance or objectionable.
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ARTICLE 6
IMPROVEMENTS
6.1 Landlord's Work. Landlord, at its sole cost and expense, will
construct the improvements described in Section 1.1 of Exhibit "C" ("Landlord's
Work"), subject to the terms thereof.
6.2 Tenant's Work. Tenant will construct the improvements and
provide the fixtures, furnishings, and equipment described in Section 1.2 of
Exhibit "C" ("Tenant's Work"), subject to the terms thereof.
6.3 Signs. Tenant will have the right to erect and maintain
upon the Premises any signs Tenant deems appropriate to the normal conduct
of its business, subject to compliance with applicable laws, including
approvals required by such laws, and the prior approval of the Agency and
Landlord. Landlord makes no representation with respect to the availability
of such approvals. Landlord's approval shall not be unreasonably withheld.
Tenant shall, at its sole cost, maintain and repair all of its signs consistent
with the First Class Standard.
6.4 Alterations. Tenant will not make any alterations, additions,
or improvements (collectively, "Alterations") to the Premises without the prior
written consent of Landlord, except that Tenant may make any nonstructural
Alterations to the Premises which do not diminish the then fair market value of
the Premises and do not exceed a cost of Twenty-five Thousand Dollars
($25,000.00) per Lease Year (as adjusted for inflation as provided in Section
4.2(b) during the Lease Term) without the prior written consent of Landlord if
such Alterations are internal to the Premises and do not alter, modify, or
affect the outside aesthetics of the
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Building. Except as otherwise provided for in this Lease, all Alterations which
may be made or installed upon the Premises will remain upon and be surrendered
with the Premises and become the property of Landlord at the termination of
this Lease. If Landlord requests removal of any Alterations at the time such
Alterations are approved by Landlord, or if approval is not required and
Landlord gives notice to Tenant at least one hundred eighty (180) days prior to
termination of this Lease, Tenant will remove the same at Tenant's expense.
6.5 Work Standards. All construction work done by Landlord and
Tenant will be performed in a good and workmanlike manner, in compliance with
all governmental requirements, with due diligence, and in such manner as to
cause a minimum of interference with other construction in progress and with
the transaction of business in the Hotel.
6.6 Mechanics' Liens.
(a) Discharge of Lien. Neither Landlord or Tenant shall
create or permit or suffer to be created or to remain, and will discharge, any
lien (including, but not limited to, the liens of mechanics, laborers,
materialmen, suppliers or vendors for work or materials alleged to be done or
furnished in connection with the Premises or the Hotel and the improvements
thereon), encumbrances or other charges upon the Premises or the Hotel and the
improvements thereon, or any part thereof, or upon the Ground Lease or Tenant's
leasehold interest; provided, however, that neither party shall be required to
discharge any such liens, encumbrances or charges as may be placed upon the
Premises or the Hotel by the act of the other party.
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(b) Right to Contest Liens. Landlord and Tenant shall
each have the independent right to contest in good faith and by appropriate
legal proceedings the validity or amount of any mechanics', laborers',
materialmen's, suppliers' or vendors' lien or claimed lien; provided that the
party contesting such claim shall utilize all reasonable means (including the
posting of adequate security for payment) to protect the Premises and the Hotel
and any part thereof or improvements thereon against foreclosure, and shall
indemnify and hold harmless the other party from any adverse effects resulting
from such lien.
(c) Protection of Landlord. Nothing in this Lease shall
be construed as constituting the consent of Landlord expressed or implied, to
the performance of any labor or the furnishing of any materials or any specific
improvements, alterations of or repairs to the Premises or the Hotel or the
improvements thereon, or any part thereof, by any contractor, subcontractor,
laborer or materialman, nor as giving Tenant or any other person any right,
power or authority to act as agent of or to contract for, or permit the
rendering of, any services or the furnishing of any materials in such manner as
would give rise to the filing of mechanics' liens or other claims against the
fee of the Premises or the Hotel or the improvements thereon, or the Ground
Lease. Landlord shall have the right at all times to post, and keep posted, on
the Premises any notices which Landlord may deem necessary for the protection
of Landlord and of the Premises and the Hotel and the improvements thereon from
mechanics' liens or other claims. In addition, but subject to Section 6.6(b)
hereof, Tenant shall make, or cause to be made, prompt payment of all
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monies due and legally owing to all persons doing any work or furnishing any
materials or supplies to Tenant or any of its contractors or subcontractors in
connection with the Premises and the improvements thereon.
ARTICLE 7
MAINTENANCE OF PREMISES
7.1 Tenant's obligations. Subject to the provisions of this Lease
concerning Landlord's maintenance and repair obligations and concerning
destruction and condemnation and any required approvals of Landlord, Tenant
will make all necessary repairs and replacements to maintain the Premises in
good order, condition, and repair, reasonable wear and tear excepted, and in
accordance with the First Class Standard. This obligation includes service
areas located on the Premises. Except as provided below, Landlord does not
have any responsibility to maintain the Premises and Tenant waives the
provisions of California Civil Code Sections 1941 and 1942.
7.2 Landlord's Right to Make Repairs. If Tenant fails to perform
its maintenance obligations within thirty (30) days after written notice from
Landlord, Landlord may perform such maintenance and Tenant will promptly
reimburse (as additional rent under this Lease) Landlord for its expenses
within ten (10) days after delivery of a statement reasonably detailing such
expenses.
7.3 Landlord's Obligations. Subject to the provisions of this
Lease concerning destruction and condemnation, Landlord, at its expense, shall
maintain the foundations, bearing and exterior walls, concrete sub-floors and
roofs of the Hotel, the loading dock, electrical, plumbing, and HVAC systems
that serve the
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Premises, elevators, the sidewalk in front of the Premises (except any sidewalk
repair or maintenance which is the responsibility of a person or entity other
than Landlord or Tenant) in good repair (collectively, the "Structural
Portions") ; except that Landlord (a) shall not be required to repair any
damage to the Structural Portions caused by the act or omission of Tenant or
its representatives, (b) shall not be required to maintain or repair any
specialized systems, components, or structure within the Premises which are
dedicated solely for providing and/or preparing food and beverages, and (c)
shall not be required to maintain or repair any items which are the
responsibility of Tenant under the Food Service Operations Agreement. Subject
to the foregoing, Landlord shall also maintain or repair all other portions of
the Hotel, other than the Premises and the Incidental Areas, including without
limitation, all public areas and the adjacent parking structure for as long as
Landlord has the right to use such structure.
7.4 Emergency Repairs. In the event of any life or property
threatening emergency, Landlord will have the immediate right to enter the
Premises to effect emergency repairs without prior notice to Tenant.
ARTICLE 8
COMMON AREAS
8.1 Definition. The term Common Areas means all public areas and
facilities within the Hotel that are provided for and designated by Landlord
from time to time for the common use of Hotel guests and patrons.
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8.2 Development. Landlord will use its best efforts to complete
its renovation of the ground floor Common Areas by October 1, 1992.
8.3 Modifications. Landlord may make no material changes to or on
the portion of the Common Areas demarcated as Tenant's Area of Control on the
Floor Plan without Tenant's prior written consent. Landlord will refrain from
doing or permitting to be done any act which would in any way materially impair
the visibility of or access to the Premises.
8.4 Tenant's Right to Use. Landlord gives Tenant and its
representatives, customers, and invitees the nonexclusive right to use the
Common Areas in common with Hotel guests and others to whom Landlord has
granted or will grant a similar right. Tenant and Tenant's employees shall
only use those portions of the Hotel not used by Hotel guests or patrons or
which are otherwise designated for "Hotel Staff."
8.5 Landlord's Maintenance and Management. At all times Landlord
will adequately insure the Common Areas and, except as set forth in Article 7
and as to items maintained by Tenant under the Food Service Operations
Agreement, maintain the Common Areas in good condition, including keeping the
Common Areas neat and clean, properly lighted (through the expected departure
of Tenant's employees after Tenant's normal business hours) and repaired.
Landlord will have the exclusive right to:
(a) Rules and Regulations. Establish and enforce
reasonable rules and regulations applicable to all non-Hotel guests and patrons
concerning the maintenance, management, use, and operation of the Common Areas.
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(b) Maintenance Closure. Close temporarily any of the
Common Areas for maintenance. Landlord will, however, use its best efforts to
maintain free access to the Premises during Tenant's normal business hours and
to minimize any disruption to Tenant's business operations.
(c) Dedication Avoidance. Close any of the Common Areas
to whatever extent required, in the opinion of Landlord's counsel, to prevent a
dedication of any of the Common Areas or the accrual of any rights of any
person or of the public to the Common Areas.
(d) Contracts. Enter into contracts with third parties
to insure and maintain the Common Areas.
(e) Management Agreements. Enter into operating
agreements with third parties to manage the maintenance, operation, and
security of the Common Areas in Landlord's behalf upon such terms and
conditions as Landlord elects in exercise of reasonable business judgment.
(f) Make Changes. Subject to Section 8.3, make changes
to the Common Areas.
ARTICLE 9
UTILITIES
9.1 Utilities. Tenant will pay the appropriate suppliers for all
water, electricity, gas, telephone, and other utility and communication
services used by Tenant on the Premises during the term. All such services
will be separately metered and billed to Tenant. If any such services are not
separately metered and billed to Tenant directly by suppliers, then, within
thirty (30) days following substantial completion of the improvements within
the
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Premises, and every year thereafter, Landlord and Tenant shall meet and confer
in good faith to establish Tenant's percentage of utilities that are not
separately metered. If the parties are unable to agree within thirty (30)
days, they shall engage an energy consultant reasonably acceptable to both
Landlord and Tenant for purposes of determining Tenant's use or expected use of
such services and establishing Tenant's percentage share of the same.
Thereafter, Tenant shall pay to Landlord as additional rent Tenant's percentage
share of the cost of such services within ten (10) days of Landlord's written
demand therefor. The cost of the energy consultant shall be shared equally by
Landlord and Tenant.
ARTICLE 10
TAXES AND ASSESSMENTS
10.1 Personal Property. Tenant will pay all taxes levied and
assessed against furnishings, trade fixtures, equipment, and other personal
property of Tenant kept upon the Premises that become payable during the term.
The parties will seek to cause Tenant's personal property to be assessed and
billed separately from Landlord's real property. If Tenant's personal property
is assessed and taxed with Landlord's real property, Tenant will pay Landlord
-the portion of such taxes attributable to Tenant's personal property.
Landlord will furnish Tenant with a copy of the tax xxxx, a written statement
setting forth the amount of personal property taxes due from Tenant, and the
method of calculation of such amount. Tenant will thereafter pay the amount of
its taxes to Landlord not later than ten (10) days prior to the date of
delinquency or thirty (30) days after receipt of the billing from Landlord,
whichever is later.
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10.2 Real Property.
(a) Obligation. In each Lease Year and as additional
rent, Tenant will pay fourteen percent (14%) of all Real Property Taxes
(defined in (b) below) levied and assessed against the Hotel not later than ten
(10) days prior to the date of delinquency or, if tax bills are not sent
directly to Tenant from the tax collector, thirty (30) days after receipt of
the xxxx from Landlord, whichever is later.
(b) Definition. The term Real Property Taxes includes
any form of real estate taxes, general or special assessments, and any license
fee, commercial rental tax, improvement bonds, levy, or tax imposed on the
Premises by any authority having the direct power to tax, including any city,
county, state, or federal government or any school, agricultural, sanitary,
fire, street, drainage, or other improvement or assessment district of the
governmental authority, as against (i) the legal or equitable interest of
Landlord in the Premises and the Hotel, (ii) Landlord's right to rent or other
income from the Premises, (iii) the act of entering into this Lease, or (iv)
the occupancy of the Premises by Tenant. If at any time during the term the
laws concerning Real Property Taxes are changed such that any other
governmental imposition, however described, including a so-called value-added
tax, is imposed on the Premises, the Hotel, or Landlord as a direct
substitution, in whole or in part, for, or in addition to, any Real Property
Taxes, Tenant will pay such imposition in the same manner and Tenant's
allocation of liability for any such imposition will be substantially the same
as Tenant's allocation liability for Real Property Taxes as provided in this
Lease.
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(c) Exclusions. Tenant will have no obligation to pay
(i) for penalties and interest other than those attributable to Tenant's
failure to comply timely with its payment obligations pursuant to this Lease,
(ii) any tax which may be levied upon net income, profits, or business of
Landlord or any personal property taxes, gift, franchise, inheritance, estate,
succession, capital levy, or transfer taxes which may be levied against any
estate or interest of Landlord, (iii) land development fees and assessments for
utilities and special improvements installed in connection with the development
of the Premises and the Hotel exclusive of Tenant's hook-up charges, or (iv)
increases in Real Property Taxes (whether the increases result from increased
rate, valuation, or both) attributable to (a) additional improvements to the
Hotel unless constructed for any food and/or beverage service area, or (b) a
transfer or sale by Landlord of any interest in the property upon which the
Hotel is located.
10.3 Apportionment. Any and all personal property taxes and Real
Property Taxes will be prorated and apportioned according to the number of days
in the fiscal tax year which were included in the Lease term.
10.4 Right to Contest. Tenant, at its own expense, may contest by
appropriate proceedings the amount of such taxes required to be paid by Tenant
pursuant to this Article and Tenant may endeavor at any time or times by
appropriate proceedings to obtain a reduction in the assessed valuation of the
Premises for tax purposes, and in any such event Landlord agrees, at the
request of Tenant, to join with Tenant, at Tenant's expense, in the
proceedings, and Landlord agrees to sign and deliver such papers
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and instruments as may be necessary to prosecute such proceedings. Tenant will
have the right to contest the amount of any such tax and to withhold payment of
the tax if the statute under which Tenant is contesting the tax so permits. In
the event of any such contest, Tenant will indemnify and hold Landlord harmless
with respect to any cost, damage, or expense, including attorneys' fees, in
connection with any such proceedings. Tenant, upon final determination of such
contest, will immediately pay and discharge any judgment rendered against it,
together with all costs and incidental charges.
10.5 Obligation of Landlord. Except to the extent Tenant fails to
comply with this Article 10, any taxes not directly payable by Tenant to the
tax collector relating to the Premises and Common Areas will be timely paid by
Landlord so as not to jeopardize Tenant's quiet enjoyment of the Premises
pursuant to the provisions of this Lease.
ARTICLE 11
INDEMNITY AND INSURANCE
11.1 Landlord Exculpation. Landlord will not be liable to Tenant
for any damage to Tenant or Tenant's property from any cause, and Tenant waives
all claims against Landlord for damage to person or property arising from any
reason, except that Landlord will be liable to Tenant for damage to Tenant
resulting from the negligence or willful misconduct of Landlord or its
representatives.
11.2 Tenant's Indemnity. Tenant will defend, indemnify, and hold
Landlord and its representatives harmless from and against any and all costs,
expenses (including attorneys' fees and court
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costs), losses, liabilities, damages, claims, and demands of every kind or
nature (collectively, "Losses"), arising in any way from (i) construction on or
use or occupancy of the Hotel by Tenant or any person claiming under Tenant,
(ii) the conduct of Tenant's business and any activity, work, or thing done at
the direction of Tenant in or about the Hotel, (iii) negligence or willful
misconduct of Tenant or its representatives, or (iv) any breach or default in
the performance of any obligation on Tenant's part to be performed under this
Lease. Tenant will defend any such action or proceeding brought against
Landlord or its representatives at Tenant's expense with counsel reasonably
satisfactory to Landlord. Tenant's foregoing indemnity obligation will,
however, exclude Losses arising in any way from the negligence or willful
misconduct of Landlord or its representatives.
11.3 Landlord's Indemnity. Landlord will defend, indemnify, and
hold Tenant and its representatives harmless from and against any and all
Losses arising in any way from (i) construction on or use of the Common Areas
and/or the Hotel (excluding the Premises and the Incidental Areas), (ii) the
management of the Common Areas and/or the Hotel and any activity, work, or
thing done or permitted by Landlord in or about the Common Areas and/or the
Hotel (excluding any activity, work or thing done by Tenant under the Food
Service Operations Agreement), (iii) negligence or willful misconduct of
Landlord or its representatives, or (iv) any breach or default in the
performance of any obligation on Landlord's part to be performed under this
Lease. Landlord will defend any such action or proceeding brought against
Tenant or its representatives at Landlord's expense with counsel reasonably
satisfactory to
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Tenant. Landlord's foregoing indemnity obligation will, however, exclude
Losses arising in any way from the negligence or willful misconduct of Tenant
or its representatives.
11.4 Tenant's Insurance. Tenant will, at all times after the
delivery of the Premises to Tenant, carry at its expense:
(a) Liability Insurance. Comprehensive general liability
insurance providing bodily injury and property damage including dram
shop/liquor liability coverage in the amount of the greater of the maximum
coverage currently maintained by Tenant or at least Two Million Dollars
($2,000,000.00) combined single limit insuring against all legal liability
(subject to usual policy exclusions, terms, and conditions) of Tenant and its
representatives arising out of the use, occupancy, or condition of the
Premises. Such insurance will name Landlord as an additional insured for the
specified amount. Tenant will have the right to effect all or any part of such
insurance by endorsement on any general liability insurance maintained by or on
behalf of Tenant or by a separate policy or policies of insurance. Not more
frequently than each three (3) years if, in Landlord's reasonable opinion, the
limit for general liability insurance coverage at that time is materially
inadequate, Tenant will increase such insurance coverage to an amount not to
exceed the amount of insurance coverage customarily required for like
businesses and properties.
(b) Fire Insurance. Insurance providing against loss or
damage to the Premises and Tenant's personal property, improvements, and
alterations in, on, or about the Premises (including, without limit, all of
Tenant's Work as described in Exhibit "C" and all of Tenant's FF&E (as defined
in Exhibit "C")) by (i) fire, (ii)
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perils included in the Extended Coverage endorsement in common use for
commercial structures, (iii) vandalism & malicious mischief, and (iv) sprinkler
leakage coverage, in an amount not less than the full replacement value. The
insurance policy will cover Tenant, Landlord, and their lenders, as their
interests may appear.
(c) Worker's Compensation. Worker's compensation
insurance as required by law.
(d) Business Interruption. Business interruption or
rental loss insurance providing for the payment of Minimum Rent and Percentage
Rent (calculated as the average of Percentage Rent in the two previous Lease
Years, but in no event less than the then applicable amount of Minimum Rent)
for a period of not less than twelve (12) months for any period in which the
Premises are inoperable due to a casualty to be insured pursuant to the
insurance described in subparagraph (b) above.
11.5 Certificates. Tenant will deliver to Landlord, prior to
delivery of possession of the Premises to Tenant, a certificate or certificates
of insurance evidencing the types of coverage, carriers, limits, and effective
dates of coverage. Each policy will be with insurance carriers reasonably
satisfactory to Landlord and will provide not less than ten (10) days' prior
notice to Landlord of cancellation, nonrenewal, or material modification of
that insurance. Tenant will provide current certificates or other satisfactory
evidence of renewal to Landlord throughout the term of this Lease.
11.6 Waivers of Subrogation. Landlord and Tenant hereby release
any rights each may have against the other in connection with any of the damage
occasioned to Landlord or Tenant, as the
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case may be, to their respective property, the Premises, or its contents or to
other portions of the Hotel arising from any risk generally covered by fire,
Extended Coverage endorsement, vandalism & malicious mischief, and sprinkler
leakage coverage. In addition, the parties each, on behalf of their respective
insurance companies insuring the property or its contents of either Landlord or
Tenant against any such damage, waive any right of subrogation that it may have
against Landlord or Tenant, as the case may be.
ARTICLE 12
ASSIGNMENT AND SUBLETTING
12.1 General Prohibition. Tenant will not voluntarily, by
operation of law, or otherwise, assign or sublet all or any portion of the
Premises or Tenant's interest in this Lease or suffer or permit all or any part
of the Premises to be operated, managed, or otherwise used by a third party
without Landlord's prior written consent. An "assignment or sublet" shall
include any sale, transfer, assignment, encumbrance or hypothecation of the
Premises, or all or any portion of Tenant's interest therein or in the Lease.
Tenant hereby acknowledges that Landlord has entered into this Lease with
Tenant because of Tenant's unique experience and expertise in the restaurant
business. For this reason, Tenant acknowledges that, except as expressly
provided in this Article 12, any proposed assignment or sublet by Tenant is
subject to Landlord's prior written consent, which consent may not be
unreasonably withheld. In this regard, Landlord will be deemed to have
reasonably rejected or denied any proposed assignment or sublet where it has
not been demonstrated that the proposed transferee (a) holds the requisite
experience and expertise to operate a restau-
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rant and food and beverage service throughout the Hotel in accordance with the
First Class Standard, (b) has other operating restaurants similar to those
operated on the Premises which are operating profitably, and (c) will staff the
Premises with management personnel possessing at least ten (10) years
experience in operating first class restaurants. The foregoing is not intended
to limit grounds upon which Landlord may reasonably reject any proposed
assignment or sublet.
12.2 Landlord's Consent Not Required. Landlord's consent is not
required for Tenant to assign this Lease or sublet the Premises to any entity
which (i) is Tenant's parent organization, (ii) is any corporation a majority
of whose voting stock is owned, directly or indirectly, by Tenant or Tenant's
parent organization, (iii) as a result of consolidation, merger, or other
reorganization with Tenant or Tenant's parent organization, will own all or
substantially all of the voting stock of Tenant or Tenant's parent corporation,
(iv) acquires all or substantially all of the voting stock of Tenant, (v)
acquires all or substantially all of the assets of Tenant, or (vi) acquires
three or more separate restaurant locations of Tenant in one transaction.
12.3 Information. When requesting Landlord's consent pursuant to
this Article 12, Tenant will submit in writing to Landlord (i) the name,
address, and legal composition of the proposed assignee or subtenant (ii) the
proposed effective date, (iii) the nature of the assignee's or subtenant's
business to be carried on at the Premises, (iv) the terms and provisions of the
proposed assignment or sublease, (v) reasonable financial information as
Landlord may request concerning the proposed assignee or
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subtenant, and (vi) such other information as Landlord may reasonably request
to determine the character and financial responsibility of the proposed
assignee or subtenant. Each assignment or sublease to which there has been
consent will be in writing and in a form reasonably satisfactory to Landlord.
12.4 No waiver or Release. Except as Landlord may otherwise agree
in writing, Landlord's consent to any assignment or sublease will neither waive
the requirement of Landlord's consent to any subsequent assignment or sublease
nor release Tenant from Tenant's payment and performance obligations in this
Lease. Tenant will remain jointly and severally liable for such payment and
performance. Any assignment or sublease requiring but lacking Landlord's prior
written consent will be void at Landlord's option.
12.5 Collection. Any rental payments or other sums received and
accepted by Landlord from Tenant or any other person in connection with
Tenant's obligations under this Lease will be conclusively presumed to have
been paid by Tenant or on Tenant's behalf. Tenant hereby assigns to Landlord
all rent or other sums received from any subletting of the Premises for
application by Landlord pursuant to the provisions of Article 15; provided,
however, that until the occurrence of any such default, Tenant will have the
right to collect such sums.
ARTICLE 13
DAMAGE AND DESTRUCTION
13.1 Obligation to Repair. In the event of (i) the partial or
total damage or destruction of the Premises or (ii) the Premises being declared
unfit or unsafe for occupancy by any authorized public authority, Tenant will,
at its sole cost and expense,
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promptly commence and diligently prosecute to completion such repairs as are
necessary to restore the Premises to substantially the same condition as it was
in immediately prior to such damage or destruction, but only if any insurance
proceeds Tenant receives for such damage are adequate to complete such repairs,
provided Tenant has complied with all insurance requirements in this Lease.
Likewise, Landlord will promptly commence and diligently prosecute to
completion such repairs as are necessary to correct any damage or destruction
of portions of the Hotel which render the Hotel totally or partially
inaccessible, unusable, or which materially and adversely affect Tenant's
business, but only if any insurance proceeds Landlord receives are adequate to
complete such repairs, provided Landlord has complied with the insurance
requirements of this Lease.
13.2 Option to Terminate.
(a) By Landlord. If the Hotel is damaged or destroyed
during (i) the last five (5) years of the term (unless Tenant exercises an
option, if any, such that a minimum of five (5) years remains in the term of
this Lease) or (ii) at any time during the term by a casualty which is not
ordinarily insurable, in either case to an extent in excess of thirty percent
(30%) of the replacement cost of the Hotel (exclusive of foundations and
footings), then Landlord may terminate this Lease by written notice to Tenant
given within thirty (30) days following the date such damage or destruction
occurs.
(b) By Either Party. If Landlord's and Tenant's repairs
cannot be made and completed within one hundred eighty (180) days after such
damage or destruction, then either party may
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terminate this Lease by written notice to the other given within thirty (30)
days following the date such damage or destruction occurs. In such event, this
Lease will be deemed terminated as of the date such damage occurred and all
rental will be prorated as of such date.
13.3 Insurance Proceeds. If either party elects to terminate this
Lease as allowed under Section 13.2, Tenant will deliver the Premises to
Landlord in its damaged condition and neither party will have any obligation to
repair or rebuild. In such event, Tenant's insurance proceeds, if any, will
belong to Landlord except any portion covering loss of or damage to Tenant's
personal property or loss of income. If this Lease is not so terminated, any
insurance proceeds remaining after complying with the provisions of this
Article 13 will be Tenant's sole property.
13.4 Continued Operation. Unless this Lease is terminated pursuant
to Section 13.2, Tenant will continue the operation of its business during any
such period to the extent reasonably practicable from the standpoint of prudent
and profitable business management. Unless this Lease is so terminated, there
will be no abatement or reduction of rent.
13.5 Statutory Waiver. Tenant waives the provisions of any statute
including California Civil Code Sections 1932(2) and 1933(4), with respect to
any rights or obligations concerning damage or destruction in absence of any
express agreement among the parties, and any similar statute now or hereafter
in effect will have no application to this Lease for any damage or
destruction to all or any part of the Premises.
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13.6 Deemed Sale of Building. In the event that Landlord elects to
terminate this Lease as provided in 13.2(a) or (b), any insurance proceeds
actually received by the Landlord shall be deemed to be gross cash proceeds
received from the sale of an interest in the Hotel within the meaning of
Section 18.3 and Landlord shall either immediately list the Hotel for sale and
use its best efforts to market and sell the Hotel in a commercially reasonable
manner, or have the then fair market value of the Hotel determined by an
appraiser appointed by the Agency which shall be deemed to be sales proceeds.
ARTICLE 14
EMINENT DOMAIN
14.1 Definitions. The term taking means (i) the exercise of any
governmental power, by legal proceedings or otherwise, by any public or
quasi-public authority or private corporation or individual in the exercise of
eminent domain and (ii) the voluntary sale or transfer under the threat of
exercise of eminent domain. The term date of taking means the earlier of the
date of taking of actual physical possession by the condemning authority or the
date the condemning authority gives notice that it is deemed to have taken
possession. The term total taking means a taking of so much of the Premises or
Hotel as, in Tenant's reasonable opinion, to render the Premises to be
unsuitable for Tenant's continued use as a restaurant. The term partial taking
means a taking of the Premises or Hotel which does not constitute a total
taking. The term temporary taking means a taking for less than one hundred
eighty (180) days.
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14.2 Determination of Taking. If there is a total taking, this
Lease will terminate on the date of taking. Within sixty (60) days after the
date the nature and extent of the taking are finally determined and Tenant
receives notice of such determination, Tenant must notify Landlord that Tenant
considers, in its sole discretion, a taking of less than the entire Premises or
Hotel to be a total taking; otherwise the taking will be deemed to be a partial
taking.
14.3 Partial Taking. If there is a partial taking, this Lease will
terminate as to the portion of the Premises taken and continue in full force
and effect as to the remainder of the Premises. Rent paid prior to the taking
with respect to the portion of the Premises taken will be promptly returned to
Tenant by Landlord. Rent, except Percentage Rent, after a partial taking will
be equitably reduced based on the extent to which the taking, including
restoration activity, interferes with Tenant's business on the Premises. To
the extent of any condemnation award paid to Landlord, Landlord will promptly
make all necessary repairs or alterations to make the remaining Premises a
complete architectural element and will promptly restore the Common Areas as
appropriate.
14.4 Temporary Taking. If there is a temporary taking, this Lease
will not terminate but rent, except Percentage Rent, will be equitably reduced
based on the extent to which the taking interferes with Tenant's business in
the Premises.
14.5 Award. In the event of any taking, Landlord and Tenant may
separately pursue their claims against the condemning authority. Tenant will
be entitled to receive, and Landlord will have no right to pursue for itself,
any award for claims based on (i) the adjusted book value (deemed to be
the unamortized or
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undepreciated value for book purposes) of construction of the Premises (except
to the extent paid for by Landlord under the Lease) and Alterations which
Tenant has no right to remove pursuant to the provisions of this Lease, (ii)
the value of Tenant's Alterations to the Premises which Tenant has the right to
remove pursuant to the provisions of this Lease but elects not to remove, (iii)
loss of or damage to Tenant's personal property, (iv) loss to Tenant because
of interruption of business, (v) Tenant's loss of goodwill, and (vi) Tenant's
cost of removal and relocation. Tenant will have no right to pursue a claim
based upon the residual value of the Land or pursue claims or retain any award
to which Landlord is entitled so as to diminish Landlord's award, except as
provided in Section 18.3.
14.6 Notice to Tenant. After Landlord has knowledge of the
intention of any authority to effect a taking, Landlord will promptly give
notice of such to Tenant.
ARTICLE 15
DEFAULT
15.1 Events of Default. The occurrence of any of the following
will constitute a default by Tenant:
(a) Abandonment. Abandonment of the Premises by Tenant
or vacation of the Premises by Tenant for ten (10) consecutive days, except as
permitted in Section 5.3.
(b) Nonpayment of Rent. Failure by Tenant to pay rent
when due if the failure continues for ten (10) days after written notice has
been given to Tenant that the rent is delinquent. "Rent" includes Minimum
Rent, Percentage Rent, and any and all
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items described herein as "additional rent" or which are otherwise payable by
Tenant to Landlord.
(c) Other Obligations. Failure by Tenant to perform any
provision of this Lease required of it other than (a) and (b) above if the
failure is not cured within a reasonable time not to exceed thirty (30) days
after notice has been given to Tenant. If, however, the failure cannot
reasonably be cured within the cure period, Tenant will not be in default of
this Lease if Tenant commences to cure the failure within the cure period and
diligently and in good faith continues to cure the failure.
(d) General Assignment. A general assignment for the
benefit of creditors by Tenant.
(e) Bankruptcy. A petition to have Tenant adjudicated a
bankrupt, or a petition for reorganization or arrangement under the federal
bankruptcy laws is filed by Tenant or against Tenant and not be dismissed
within sixty (60) days from the date of such filing.
(f) Receivership. The assumptions of the assets of
Tenant or of the business conducted by Tenant on the Premises by a trustee,
receiver, or other person where possession is not restored to Tenant within
thirty (30) days.
(g) Attachment. The attachment, execution, or other
judicial seizure of substantially all of Tenant's assets located at the
Premises or Tenant's interest in the Lease, where such seizure is not
discharged within thirty (30) days.
(h) Insolvency. The admission by Tenant of its inability
to pay its debts as they become due.
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Notices given under this Section 15.1 will (i) specify the
alleged breach and the applicable Lease provisions and (ii) demand that Tenant
perform the provisions of this Lease or pay the rent that is delinquent, as the
case may be, within the applicable period of time, or quit the Premises. No
such notice will be deemed a forfeiture or a termination of this Lease unless
Landlord so elects in the notice. The purpose of the notice requirements in
this Section 15.1 is to extend the notice requirements of the unlawful detainer
statutes. Such notice will not be in lieu of, but are in addition to, any
notice required under the unlawful detainer statutes.
15.2 Landlord's Remedies. Landlord will have the following
remedies if Tenant commits a default. These remedies are not exclusive; they
are cumulative in addition to any remedies now or later allowed by law.
(a) Recover Possession. Landlord can terminate Tenant's
right to possession of the Premises at any time. No act by Landlord other than
giving notice to Tenant will terminate this Lease. Acts of maintenance,
efforts to relet the Premises, or the appointment of a receiver on Landlord's
initiative to protect Landlord's interest under this Lease will not constitute
a termination of Tenant's right to possession. On termination, Landlord has
the right to recover from Tenant:
(b) The worth, at the time of the award, of the unpaid
rent that had been earned at the time of termination of this Lease.
(c) The worth, at the time of the award, of the amount by
which the unpaid rent that would have been earned after
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the date of termination of this Lease until the time of award exceeds the
amount of the loss of rent that Tenant proves could have been reasonably
avoided.
(d) The worth, at the time of the award, of the
amount by which unpaid rent for the balance of the term after the time of award
exceeds the amount of the loss of rent that Tenant proves could have been
reasonably avoided.
(e) Any other amount, including court costs,
necessary to compensate Landlord for all detriment proximately caused by
Tenant's default.
The phrase "worth at the time of the award" as used in (i) and (ii)
above is to be computed by allowing interest at the prime commercial rate being
charged by the Bank of America N.T. & S.A. plus two percent (2%) per annum, but
not to exceed the then maximum legal rate of interest. The same phrase as used
in (iii) above is to be computed by discounting the amount at the discount rate
of the Federal Reserve Bank of San Francisco at the time of the award, plus one
percent (1%).
(f) Continuation of Lease. Landlord can continue this
Lease in full force and effect, and the Lease will continue in effect as long
as Landlord does not terminate Tenant's right to possession, and Landlord will
have the right to collect rent when due. During the period Tenant is in
default, Landlord can enter the Premises and relet them, or any part of them,
to third parties for Tenant's account. Tenant will be liable immediately to
Landlord for all costs Landlord incurs in reletting the Premises, including
brokers' commissions, and expenses of remodeling the Premises required to make
it rentable, but not improvements for a new
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tenant. Reletting can be for a period shorter or longer than the remaining
term of the Lease. Tenant will pay to Landlord the Minimum Rent due under this
Lease on the dates the rent is due, less the rent Landlord receives from any
reletting. No act by Landlord allowed by this Section 15.2(b) will terminate
this Lease unless Landlord notifies Tenant that Landlord elects to terminate
this Lease. After Tenant's default and for as long as Landlord does not
terminate Tenant's right to possession of the Premises, if Tenant obtains
Landlord's consent, Tenant will have the right to assign or sublet its interest
in this Lease, but Tenant will not be released from liability under this Lease.
If Landlord elects to relet the Premises as provided in this Section 15.2(b),
rent that Landlord receives from reletting will be applied to the payment of:
(i) first, any indebtedness from Tenant to Landlord other than rent due from
Tenant; (ii) second, all costs, including for maintenance, incurred by Landlord
in reletting; (iii) third, rent due and unpaid under the Lease. After
deducting the payments referred to in this Section 15.2(b), any sum remaining
from the rent Landlord receives from reletting will be held by Landlord and
applied in payment of future rent as rent becomes due under this Lease. In no
event will Tenant be entitled to any excess rent received by Landlord. If, on
the date rent is due under this Lease, the rent received from the reletting is
less than the Minimum Rent due on that date, Tenant will pay to Landlord, in
addition to the remaining minimum Rent due, all costs, including for
maintenance, Landlord incurred in reletting which remain after applying the
rent received from the reletting.
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(g) Right to Remedy. Landlord may, after expiration of
Tenant's cure period in Section 15.1(c) unless there is an emergency, correct
or remedy any failure of Tenant not timely cured. The reasonable cost paid by
Landlord to correct or remedy any such default will immediately become due and
payable to Landlord as additional rent.
15.3 Default by Landlord. Landlord will commit a default if
Landlord fails to perform any provision of this Lease required of it and the
failure is not cured within a reasonable time not to exceed thirty (30) days
after notice has been given to Landlord. If, however, the failure cannot
reasonably be cured within the cure period, Landlord will not be in default of
this Lease if Landlord commences to cure the failure within the cure period and
diligently and in good faith continues to cure the failure. Notices given
under this Section 15.3 will specify the alleged breach and the applicable
Lease provisions. Tenant may, after expiration of the cure period unless there
is an emergency, correct or remedy any failure of Landlord not timely cured and
the reasonable cost paid by Tenant will immediately become due and payable to
Tenant by Landlord.
15.4 Mitigation. Landlord and Tenant will each exercise best
efforts to mitigate the damages caused by the other party's breach of this
Lease. Efforts to mitigate damages will not be construed as a waiver of the
nonbreaching party's right to recover damages.
15.5 Lender's Right to Cure. The respective lenders of each party
will have the right, in the party's behalf, to cure the party's alleged breach
within the same time period allocated under this Lease.
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15.6 Interest Charges. Any amount not paid by one party to the
other when due to the other party will bear interest from the date due at the
lesser of (i) the prime commercial rate being charged by the Bank of America N.
T. & S. A. in effect on the date due plus two percent (2%) per annum or (ii)
the maximum rate permitted by law.
15.7 Late Charges. If either party fails to pay any amount due to
the other within ten (10) days after notice the amount is delinquent, the
delinquent party will pay to other party, as a late charge and in consideration
of the additional costs and record keeping incurred or required by the other, a
sum equal to $150. Such late charge shall be due in addition to interest
payable on delinquent amounts.
15.8 Limitation of Landlord's Liability. If Landlord is in default
of this Lease and as a consequence Tenant recovers a money judgment against
Landlord, the judgment will be satisfied only out of the proceeds of sale
received on execution of the judgment and levy against the right, title, and
interest of Landlord in the land and improvements which constitute the Hotel
and out of rent or other income from such real property receivable by Landlord
following occurrence of the default or out of the net consideration, after
payment of the first lien mortgage and reasonable costs of sale, received by
Landlord from the sale or other disposition of all or any part of Landlord's
right, title, and interest in the land and improvements which constitute the
Hotel. The foregoing limitations shall apply only in the event that the
Landlord has not placed, or suffered to be placed upon the Hotel parcel or
Landlord's leasehold estate in the Ground Lease,
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any lien or other encumbrance except as allowed under Section 902 of the Ground
Lease without the Ground Lessor's approval. In the event Landlord places or
allows an encumbrance to be placed upon the Hotel parcel or Landlord's
leasehold estate in the Ground Lease that would otherwise invalidate the
limitations in this Section 15.8, Landlord may at the time of Landlord's
agreement to such encumbrance, agree to permit Tenant to deduct and set off any
out-of-pocket expenses or judgments that Tenant may obtain against rent
otherwise due under this Lease, despite the prohibition against such a
deduction or offset found in Sections 4.2 and 4.3 of this Lease; provided,
however, that Landlord's right to so agree to the deduction and offset will be
effective only if the Minimum Rent thereafter due under the remaining term of
the Lease (or an option if the Tenant has exercised such option) equals or
exceeds the out-of-pocket expenses or judgments, if any, that Tenant then seeks
to recover against Landlord. Landlord's right to allow a deduction or offset,
as provided above, shall be exercisable in Landlord's sole discretion and, upon
such exercise, the limits of liability in the first sentence of this Section
15.8 shall apply notwithstanding encumbrances on the Hotel.
ARTICLE 16
SUBORDINATION, ESTOPPEL
16.1 Subordination. The Lease is and will be subordinate to any
encumbrance now of record and any encumbrance recorded after the date of this
Lease affecting the Premises and Hotel, subject to any written agreement that
provides that if Tenant is not in default under this Lease, Tenant will not be
disturbed in its
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peaceful enjoyment of the Premises pursuant to the provisions of this Lease.
16.2 Attornment. Provided the successor executes a non-disturbance
agreement reasonably approved by Tenant, Tenant will attorn to the successor in
interest of Landlord following any transfer of such interest, either
voluntarily or by operation of law, and recognize such successor as Landlord
under this Lease. If, however, any lender elects to have the Lease prior to
its encumbrance, the Lease will be deemed prior in lien to such encumbrance.
16.3 Documentation. Tenant will execute the written agreement and
any other documents required by the encumbrancer to accomplish the purposes of
Sections 16.1 and 16.2.
16.4 Successor Liability. Notwithstanding any other provision in
this Lease, if any lender or its successor in title succeeds to the interest of
Landlord under this Lease, the liability of such lender or successor will exist
only for matters relating to the duration it is the owner of any interest in
the Premises or is tenant under the Ground Lease.
16.5 Estoppel Certificates. Each party, within twenty (20) days
after notice from the other party, will execute and deliver to the other
party, or such other addressee as the other party may designate, a statement
certifying that the Lease is unmodified and in full force and effect, or in
full force and effect as modified and stating the modifications, and certifying
as to such other matters relating to the Lease and in such form, as the party
may reasonably request. Any such statement may be relied upon by any lender,
purchaser, or other interested party, other than the party requesting same.
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16.6 Quitclaim Deed. Tenant will execute in recordable form and
deliver to Landlord on the termination of this Lease, promptly after Landlord's
presentation, a quitclaim deed to the Premises designating Landlord as
transferee.
ARTICLE 17
ARBITRATION
17.1 Submission to Arbitration. Any disputes which arise between
Landlord and Tenant under this Lease as to any matter concerning the granting
or withholding of an approval or consent by a party (including, without
limitation, any matter involving a party's discretion), or any matter in
which the only issue is whether a party has complied with a non-monetary
covenant or condition of this Lease and does not involve a claim of monetary
damages (other than reasonable out-of-pocket expenses arising out of the cure
of a non-monetary default), shall be subject to final, binding arbitration upon
written request by either party in accordance with this Article 17. The
dispute will be submitted before the American Arbitration Association ("AAA")
within thirty (30) days after the requesting notice in accordance with the
Commercial Rules of the AAA as modified by this Article; a decision will be
issued within thirty (30) days after the close of the record; and judgment upon
the award may be entered in any court having jurisdiction over the judgment.
The substantive law of the state where the Premises are located will be applied
by the arbitrator, and this requirement will be deemed jurisdictional. This
arbitration provision will be deemed self-executing. If either party fails to
appear at any properly noticed arbitration proceeding, an award may be entered
against such party notwith-
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standing such failure to appear. Following any determination that a party has
failed to comply with a non-monetary covenant, the other party may pursue any
remedies provided in this Lease or at law or in equity.
17.2 Selection of Arbitrator. If the parties disagree on the
choice for an arbitrator, the parties will jointly request the AAA to furnish a
list of five available attorneys, businessmen, or both, experienced generally
in commercial matters. After receipt of such list and an opportunity to
consider the names, each party may designate in writing to the AAA not more
than two names to be eliminated from the selection process. If more than one
name remains after such eliminations are made, the selection of the arbitrator
will be made by lot from the remaining names.
17.3 Location. If either party makes demand upon the other for
arbitration, the arbitration will be conducted at the AAA offices in the city
nearest to the Premises in which the AAA maintains an office. The parties may
mutually agree to another location.
17.4 Costs. The expenses, wages, and other compensation of any
witnesses called before the arbitrator will be borne by the party calling the
witnesses. Other expenses incurred, including wages of participants, and
preparation of briefs and data to be presented to the arbitrator, will be borne
separately by the respective parties. The fee for the arbitration, the
arbitrator's fees and expenses, the cost of any hearing room, and the cost of a
shorthand or similar reporter and the original transcript will be borne by
Landlord and Tenant equally.
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ARTICLE 18
SALE, RIGHT OF FIRST REFUSAL, WORKING CAPITAL
18.1 Right of First Refusal. Notwithstanding any other term or
provision of this Lease, in the event that during the Lease term, Tenant
receives a bona fide offer (which it intends to accept) to acquire Tenant's
interest in the restaurants operated on the Premises (and no other assets or
interests of Tenant), or Landlord receives a bona fide offer (which it intends
to accept) to acquire Landlord's interest in the Hotel, then the party
receiving the offer ("Offering Party") shall submit such offer ("Bona Fide
offer") to the other party. The other party shall have a period of twenty (20)
business days in which to accept the Bona Fide Offer submitted by the Offering
Party. If the other party so accepts the Bona Fide Offer, then the Offering
Party shall sell the offered interest to the other party at a price and in
accordance with the terms and provisions set forth in the Bona Fide Offer. If
the other party rejects the Bona Fide Offer or fails to respond to the Offering
Party within the aforesaid twenty (20) business day period, then the Offering
Party shall be free to transfer the offered interest to the third party
originally submitting the Bona Fide Offer in accordance with the terms and
provisions thereof, provided that such transfer is consummated within one
Hundred Eighty (180) days following the end of the aforesaid twenty (20) day
period. If the Offering Party does not consummate a transaction pursuant to
the Bona Fide Offer on substantially the same terms (with no more than a five
percent (5%) reduction in the purchase price), within the aforesaid One Hundred
Eighty (180) days, then any contemplated transfer thereafter shall be subject
to
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the terms and provisions of this Section 18.1. In the event Landlord rejects
any offer from Tenant pursuant to this Section 18.1, Tenant's right thereafter
to transfer any interest in the Premises to a third party shall nevertheless be
subject to the terms and provisions of Article 12 above.
18.2 Working Capital Reserves. Commencing with the Commencement
Date, Tenant shall commit or make available, as the case may be, in connection
with the restaurants in the Premises and all of the food and beverage services
contemplated under the Food Service Operations Agreement, (i) not less than One
Hundred Fifty Thousand Dollars ($150,000) for pre-opening costs and expenses,
(ii) not less than One Hundred Thousand Dollars ($100,000) for inventories, and
(iii) not less than Four Hundred Thousand Dollars ($400,000) as working capital
to cover any operating deficits in the restaurants and the food and beverage
operations for the Hotel until Tenant's business at the Premises has been
profitable for a calendar quarter.
18.3 Hotel Sale Proceeds. If Landlord, at any time during the
Lease Term, hypothecates, encumbers, sells or agrees to sell or transfer all or
any portion of its interest in the Hotel to any party other than Tenant, or of
the Hotel is condemned, all proceeds shall be disbursed as provided below and
thereafter Tenant shall be entitled to receive an amount equal to 5.3% of
either the Net Financing Proceeds or the Net Sale Proceeds (both as defined
below), as received by Landlord or any affiliate of Landlord in connection with
such transaction. "Net Financing Proceeds" shall mean the gross cash proceeds
received from a mortgage, deed of trust, or other encumbrance placed against
the Hotel, less (a) all
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amounts required to pay any and all encumbrances permitted under Section 902 of
the Ground Lease that do not require the consent of the Lessor under the Ground
Lease or encumbrances the proceeds of which were used to reduce the amounts of
(a) through (d) hereof or the net proceeds from which Tenant received a share
as provided herein, (b) the sum of $1,350,000 plus interest at the rate of
twelve percent (12%) per annum from February 28, 1991, minus any previous
distributions, to the partners of Landlord, (c) all amounts due to the Agency
pursuant to the Ground Lease, (d) all commissions, fees and other costs of the
financing, and (e) to Tenant the sum of (i) $1,000,000, reduced by $250,000 on
each anniversary of the Effective Date of this Lease, plus interest at the rate
of twelve percent (12%) per annum from the date Tenant has expended $1,000,000
on Tenant's Initial Work (minus any previous distributions to Tenant on account
of this item (e)(i)), and (ii) $550,000 minus the product of one and one-half
percent (1 1/2%) times the Gross Sales from the Commencement Date to the date
of such financing or sale ("Tenant's Preferred Return"). "Net Sales Proceeds"
shall mean the gross cash proceeds (or the cash equivalent of any property)
received from a sale or transfer of an interest in the Hotel, less (a) all
amounts required to pay any and all encumbrances permitted under Section 902 of
the Ground Lease that do not require the consent of the Lessor under the Ground
Lease, or encumbrances the proceeds of which were used to reduce the amounts of
(a) through (d) hereof or from which Tenant has received a share of Net
Financing Proceeds, (b) the sum of $1,350,000 plus interest at the rate of
twelve percent (12%) per annum from February 28, 1991, minus any previous
distributions, to
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the partners of Landlord, (c) all amounts due to the Agency pursuant to the
Ground Lease, (d) all commissions and other costs of the sale, and (e) to
Tenant, Tenant's Preferred Return. In the event that there is more than one
financing or a sale of partial interests, this provision shall apply to each
such financing and/or sale on a cumulative basis.
In the event of a financing or sale of the Hotel by Landlord, the
proceeds of any such financing or sales shall be disbursed in accordance with
the priority established in the foregoing definitions. In the event that
Tenant receives the Tenant's Preferred Return, then the Minimum Rent shall be
as provided in Section 4.2 above, irrespective of the then cumulative amount of
Gross Sales to date, commencing in the first calendar month following the
closing of such financing or sale, and the Percentage Rent provided for in
Section 4.3 above shall, commencing in the first calendar month following the
closing of such financing or sale, be increased to five percent (5%)
irrespective of the then cumulative amount of Gross Sales.
18.4 Sale of Premises. If Landlord sells or otherwise transfers
all of its interest in the Premises, excluding a transfer for security purposes
only, Landlord will be relieved of all liability accruing after the
consummation of the transfer under the Lease on the part of Landlord for acts,
occurrences, or omissions which occur after the consummation of the transfer if
the transferee has assumed in writing, for the benefit of Tenant, Landlord's
obligations under the Lease. The foregoing limitations shall apply only in the
event that the Landlord has not placed, or suffered to be placed upon the Hotel
parcel or Landlord's leasehold estate in
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the Ground Lease, any lien or other encumbrance except as allowed under Section
902 of the Ground Lease without the Ground Lessor's approval. In the event
Landlord places or allows an encumbrance to be placed upon the Hotel parcel or
Landlord's leasehold estate in the Ground Lease that would otherwise invalidate
the limitations in this Section 18.4, Landlord may nevertheless be relieved of
liability as provided above if at the time of Landlord's agreement to such
encumbrance, Landlord agrees to permit Tenant to deduct and set off any
out-of-pocket expenses or judgments resulting from a breach by Landlord of its
obligations under this Lease against rent otherwise due under this Lease,
despite the prohibition against such a deduction or offset found in Sections
4.2 and 4.3 of this Lease; provided, however, that Landlord's right to so agree
to the deduction and offset will be effective only if the minimum Rent
thereafter due under the remaining term of the Lease (or an option if the
Tenant has exercised such option) equals or exceeds the out-of-pocket expenses
or judgments, if any, that Tenant then seeks to recover against Landlord.
18.5 Surrender of Premises. Upon termination of this Lease, Tenant
will surrender the Premises to Landlord in good and clean condition, ordinary
wear and tear and damage not required to be repaired excepted. Tenant will
remove all of its furnishings, trade fixtures, and other personal property and,
if applicable, those Alterations designated to be removed by Landlord pursuant
to Section 6.4, and may remove or reasonably alter or obliterate evidence of
its trademarks and distinctive trade dress. Tenant will correct any damage
arising from its removal activity.
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18.6 Holding over. Any holding over after the termination of this
Lease without Landlord's consent will be construed as a tenancy from
month-to-month at the rents specified in this Lease plus twenty-five percent
(25%) of the Minimum Rent and otherwise upon the terms and conditions specified
in the Lease, so far as applicable. The foregoing sentence will not be
construed as Landlord's consent for Tenant to hold over.
ARTICLE 19
INTEGRATION OF AGREEMENT
19.1 Entire Agreement. This Lease constitutes the entire agreement
between the parties on the subject matter of this Lease and supersedes any
prior negotiation, understanding, representation, or agreement.
19.2 Amendment. This Lease may not be amended orally, but may be
amended only by a written instrument signed by both parties.
ARTICLE 20
HAZARDOUS SUBSTANCES
20.1 Tenant shall not cause or permit the following to occur:
(a) Any violation of any federal, state, or local law, ordinance
or regulation now or hereafter enacted, related to environmental conditions on,
under, or about the Premises, or arising, from Tenant's use or occupancy of the
Premises, including, but not limited to, soil and ground water conditions; or
(b) Any violation of any federal, state, or local law, ordinance
or regulation now or hereafter enacted, relating to the use, generation,
release, manufacture, refining, production, processing, storage or disposal of
any hazardous substances, petroleum products and other petrochemicals,
asbestos, polychlorin-
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ated biphenyls, or any other hazardous or toxic materials or waste
(hereinafter collectively referred to as "Hazardous Substances") on, under, or
about the Premises, or the transportation to or from the Premises of any
Hazardous Substances.
Tenant shall, at Tenant's sole cost and expense, comply with all laws,
ordinances and regulations regulating the use, generation, storage,
transportation, or disposal of Hazardous Substances ("Laws"). Tenant shall, at
Tenant's own expense, make all submissions to, provide all information required
by, and comply with all requirements of all governmental authorities
("Authorities") under the Laws. Should any Authorities or any third party
demand that a cleanup plan be prepared and that a cleanup be undertaken because
of any deposit, spill, discharge or other release of Hazardous Substances that
occurs during the term of this Lease, at or from the Premises, or which arises
at any time from Tenant's use or occupancy of the Premises, then Tenant shall,
at Tenant's sole cost and expense, prepare and submit the required plans and
all related bonds and other financial assurances; and Tenant shall carry out
all such cleanup plans at Tenant's sole cost and expense.
Tenant shall promptly provide all information regarding the use,
generation, storage, transportation or disposal of Hazardous Substances that
Tenant intends to use. If Tenant fails to fulfill any duty imposed under this
Article 20 within a reasonable time, Landlord may do so; and in such case,
Tenant shall cooperate with Landlord in order to prepare all documents Landlord
deems necessary or appropriate to determine the applicability of the Laws to
the Premises and Tenant's use thereof, and of compliance therewith, and
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Tenant shall execute all documents promptly upon Landlord's request. No such
action by Landlord and no attempt made by Landlord to mitigate damages under
any Laws shall constitute a waiver of any of Tenant's obligations under this
Article 20.
Tenant shall indemnify, defend, and hold harmless Landlord, the
manager of the property, and their respective officers, directors,
beneficiaries, shareholders, partners, agents and employees from any and all
damages, losses, liabilities, obligations, penalties, claims, litigation,
demands, defenses, judgments, suits, proceedings, costs, disbursements and
expenses of any kind or of any nature whatsoever (including, without
limitation,, attorneys and experts fees and disbursements) which may at any
time be imposed upon, incurred by or asserted or warranted against Landlord
arising from or out of any deposit, spill, discharge, or other release of
Hazardous Substances that occurs during the term of this Lease, at or from the
Premises, or which arises at any time from Tenant's use or occupancy of the
Premises, or from Tenant's failure to provide all information, make all
submissions, and take all steps required by all Authorities under the Laws and
all other environmental laws, unless such discharge was caused by Landlord or
the act or omission of an agent or representative of Landlord. Tenant's
obligations and liabilities under this Article 20 shall survive the expiration
or sooner termination of this Lease.
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ARTICLE 21
MISCELLANEOUS
21.1 Limitation on Other Restaurants. During the term of this
Lease, Tenant, or any subsidiary of Tenant shall not own, operate or manage any
full service restaurant for or on behalf of itself, or a subsidiary of Tenant,
within a three (3) mile radius of the Hotel if such restaurant uses in its
trade name "Il Fornaio." Nothing herein shall prevent Tenant from operating a
cafe or Veloce-style business within such restricted area.
21.2 Notices. Any notice, request, or other communication required
or permitted by this Lease will be in writing and will be deemed given if
personally delivered, mailed by registered or certified mail (return receipt
requested), delivered by national overnight delivery courier, or sent by
facsimile or similar transmission which is confirmed by mail or the recipient,
addressed as follows:
To Landlord: ___________________________________
___________________________________
___________________________________
Attention:_________________________
FAX:___________________________________
To Tenant: ___________________________________
___________________________________
Attention:_________________________
FAX:___________________________________
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with copy to: __________________________________
__________________________________
__________________________________
FAX: __________________________________
and: __________________________________
__________________________________
__________________________________
FAX: __________________________________
Service by registered or certified mail will be deemed given three business
days after mailing absent proof of sooner delivery. Service by national
overnight delivery courier will be deemed given the next business day. Either
party, by written notice, may change the place or places for future notices.
Each recipient must have a street address for notice purposes.
21.3 Construction and Interpretation.
(a) Governing Law. This Lease is to be construed in
accordance with the laws of the state within which the Premises are located.
(b) Captions. Exhibits. The titles and subtitles of the
various articles and sections of this Lease are inserted for convenience and
will not be deemed to affect the meaning or construction of this Lease in any
way. The Exhibits are made part of this Lease by the respective references to
them.
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(c) Plain Meaning. Unless defined otherwise, the words
used in this Lease will be construed according to their plain meaning in the
English language. The language used in this Lease will not be interpreted
strictly for or against either party. The word will is used as a command. The
word including is used in a nonexclusive sense. The word law includes federal,
state, and local constitutions, statutes, orders, writs, injunction, decrees,
ordinances, requirements, laws, rules and regulations. The word termination is
used in an all inclusive sense, that is, it includes the concepts of the
expiration of this Lease by lapse of time, rescission, and ending by reason of
default. The word transfer is used in an all inclusive sense, that is, it
includes each and every manner of disposing of any interest in or rights,
privileges, or obligations under any part of this Lease, including any sale,
gift, or assignment. The word notice means notices, request demands, and other
communications and includes all payments to be made and all materials to be
submitted for review or approval and all approvals or disapprovals. The term
rent means Minimum Rent, Percentage Rent and all other sums required to be paid
by Tenant pursuant to the terms of this Lease. The term representative means
officers, directors, partners, employees, agents, and authorized contractors of
a party when acting in such capacity.
(d) Conflicting Construction. If any provision of this
Lease is capable of two constructions, one of which would render the provision
void and the other of which would render the provision valid, then the
provision will have the meaning that renders it valid.
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(e) Singular and Plural, Gender. The singular includes
the plural and vice versa, and the masculine includes the feminine and neuter,
whenever the context so requires.
21.4 Time of Essence. Time is of the essence of each provision of
this Lease.
21.5 Severability. Nothing in this Lease will be construed as
requiring the commission of any act contrary to law. If there is any conflict
between any provision of this Lease and any present or future law, such
provision will be limited only to the extent necessary to bring it within the
requirement of the law. If any part of this Lease is held to be indefinite,
invalid, or otherwise unenforceable, the balance of this Lease will continue in
full force and effect. This Lease will be valid and enforceable and the
parties agree to be bound by and perform it.
21.6 Effect of Waiver. The failure of either party to exercise any
power reserved to it by this Lease or to insist on strict compliance by the
other party with any obligation or condition under the Lease, and no custom or
practice of the parties at variance with the terms of the Lease, will
constitute a waiver of the party's right to demand exact compliance thereafter
with each term of this Lease. Waiver by either party of any default by the
other will not affect or impair the waiving party's rights with respect to any
other default of a like, similar, or different nature. Any delay, forbearance,
or omission of a party to exercise any power or right arising out of any
default by the other of any provision of this Lease will not affect or impair
the party's rights to declare any subsequent default and to terminate this
Lease.
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21.7 Counterparts. This Lease may be executed in any number of
counterparts, each of which will be deemed to be an original and all of which
together will be deemed to be one and the same instrument.
21.8 Brokers. Each party represents and warrants that it has not
dealt with or taken any other action with any party in a manner so as to give
rise to any valid claim against either party for a broker's commission or
finder's fee in connection with the execution of this Lease. Each of the
party's will defend, indemnify, and hold the other harmless from and against
all liabilities from any other claims for broker's commissions or finder's fees
arising out of its breach of the foregoing representation and warranty.
21.9 Attorneys' Fees. If any action or proceeding is necessary to
enforce the provisions of this Lease, including any claim or demand or
declaratory relief action to interpret this Lease, the prevailing party will be
entitled to reasonable attorneys' fees, costs, and necessary disbursements, as
may be fixed by the court having jurisdiction over the matter, in addition to
any other relief to which it may otherwise be entitled.
21.10 Force Majeure. Except for payment obligations imposed
pursuant to this Lease, if there is any prevention, delay, or stoppage of an
act required of a party pursuant to this Lease because of strikes, lockouts,
other labor disputes, material shortages, embargoes, civil unrest, governmental
regulations, governmental controls, enemy or hostile governmental action,
judicial order, public emergency, fire, earthquake, other Acts of God, and
other causes beyond the reasonable control of the party
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obligated to perform, performance of the act will be excused for the period of
the delay.
21.11 Consent. Whenever the consent or approval of either party is
required pursuant to this Lease, such consent or approval will not be
unreasonably withheld or delayed. The failure to respond to a request for
consent or approval within the time period specified within this Lease or, if
none is specified, fifteen (15) days after the requesting notice, will be
deemed to be consent or approval of the request.
21.12 Relationship of Parties. This Lease, including the method of
computing rent, is not intended to create any relationship of partnership,
joint venture, principal-and-agent, or otherwise than the relationship of
landlord and tenant.
21.13 Successors. This Lease will be binding on and inure to the
benefit of the parties and their successors and assigns, subject to the
restrictions as to assignment pursuant to this Lease.
21.14 No Merger. The surrender of this Lease by Tenant, the mutual
cancellation of this Lease by agreement, or the termination of this Lease on
account of Tenant's default, will not work a merger and will, at Landlord's
option, terminate any subtenancies or operate as an assignment of any such
subtenancies to Landlord.
21.15 Nondiscrimination. Tenant herein covenants by and for itself,
its heirs, executors, administrators and assigns, and all persons claiming
under or through it, and this Lease is made and accepted upon and subject to
the following conditions:
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That there shall be no discrimination against or segregation of any person or
group of persons on account of race, color, creed, religion, sex, marital
status, age, handicap, ancestry or national origin in the leasing, subleasing,
transferring, use, occupancy, tenure or enjoyment of the Premises, nor shall
the Tenant itself, or any person claiming under or through it, establish or
permit any such practice or practices of discrimination or segregation with
reference to the selection, location, number, use or occupancy of tenants,
lessees, sublessees, subtenants or vendees in the Premises.
21.16 Memorandum of Lease. The parties shall execute a memorandum
of lease in recordable form upon the execution of this Lease.
21.17 Parking. Landlord shall, either directly or through MHG,
provide parking for employees, patrons and guests of Tenant in the adjacent
parking structure and/or the convention center as provided in Section 11 of the
Food Service Operations Agreement.
21.18 Submission. The submission of this document for consideration
does not vest legal rights in either party. This document will become
effective as of the Effective Date only after mutual execution and delivery of
this document to each party.
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The undersigned parties have caused this Agreement to be signed on the
respective dates set forth below.
LANDLORD: HOTEL SAINTE CLAIRE TENANT: IL FORNAIO (AMERICA)
PARTNERS, L.P., a CORPORATION
California Limited
Partnership
By: Manco Investment, a
California Corporation
By: /s/ Xxxxxxxxxx Xxxxxxxxxx By: /s/ Xxxxxxxx X. Xxxxxx
------------------------------ --------------------------------
Xxxxxxxxxx Xxxxxxxxxx Xxxxxxxx X. Xxxxxx
President Chairman of the Board
Date 11/21/1991 Date 11/21/1991
----------------------------- -------------------------------
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EXHIBIT A
[Floor plan of main Kitchen and Restaurant.]
66
Exhibit A-1
Floor Plan of Roof Garden
67
Exhibit A2
(page 1 of 2)
Floor Plan of Il Fornaio
Basement Area.
68
Exhibit A-2
(page 2 of 2)
[Floor Plan of Second Floor,
identifying pantry, banquet
storage and sales office.]
69
EXHIBIT "B"
CONFIRMATION OF TERM
This Confirmation of Term, dated for reference purposes
_________________________ 19___, is by and between ___________________________
("Landlord") and _________________________ ("Tenant").
1. Landlord and Tenant have entered into a lease dated
_____________________, 19__ ("Lease") for the Premises (as defined in
Section 2.1 of the Lease) commonly known as ________________________________.
2. Commencement Date (as defined in Section 3.1 of the Lease) is
_____________________, 19__, and the Primary Term (as defined in Section 3.2 of
the Lease) expires on __________________________.
3. Tenant has 2 options to extend the Primary Term of the Lease
for two (2) consecutive, five (5) year periods.
Landlord and Tenant have executed this Confirmation of Term as of the
respective dates set forth below.
LANDLORD:________________________ TENANT:___________________________
_________________________________ __________________________________
By_______________________________ By________________________________
Its______________________________ Its_______________________________
Date_____________________________ Date______________________________
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EXHIBIT "C"
INITIAL CONSTRUCTION
1. CONSTRUCTION.
1.1 Landlord. Landlord shall, at its sole cost and expense, and
except for the items which are included within Tenant's Work (as described in
Section 1.2 below), carry out the work of renovation of the Hotel in accordance
with the plans and specifications as approved by the Agency pursuant to the
Ground Lease, including Section 216 of the DDA with Agency ("Landlord's Work").
The items set forth in Exhibit C-1 are those items within the Premises which
are included within Landlord's Work.
1.2 By Tenant. Except for those items in Exhibit C-1 that are
part of Landlord's Work, Tenant shall carry out all work of improvement
necessary to construct within the Premises a fully fixturized, furnished and
equipped Ground Floor Restaurant and the Roof Top Restaurant, which restaurants
shall be constructed in compliance with the First Class Standard and in
accordance with plans and specifications which have been reviewed and approved
by Landlord ("Tenant's Work"). Tenant's Work as it relates to all portions of
the Premises, excluding the Roof Top Restaurant, is referred to as the
"Tenant's Initial Work."
2. COST OF CONSTRUCTION
2.1 Landlord's Contribution.
(a) Tenant's Initial Work. Landlord will be responsible
in the manner provided below, but not otherwise, for *
of Tenant's cost of construction
of the Tenant's Initial Work ("Landlord's Initial Contribution") . Landlord's
Initial Contribution shall be available
1
* Confidential Treatment Requested
71
for Tenant's Initial Work in the manner provided in the Disbursement Agreement
(defined below).
(b) Roof Top Restaurant. Landlord will be responsible in
the manner provided below, but not otherwise, for Two hundred Eighty Thousand
Dollars ($280,000) of Tenant's cost of construction of the Roof Top Restaurant
("Landlord's Roof Top Contribution").
2.2 Included Costs of Construction. As used in this
Lease, "cost of construction" for Tenant's Initial Work shall include the
following:
(a) The actual direct construction costs for labor and
materials to Tenant for the building of Tenant's Work;
(b) Plans and specifications (including reproduction
costs), fees, permits, licenses, inspection fees, plan check fees and
certificates required for the improvements by any governmental authority;
architects', engineers', surveyors' and consultants' fees and expenses; the
cost to install and hook up all utilities to serve Tenant's Work; and
(c) Costs for all of Tenant's Fixtures, Furnishings &
Equipment ("FF&E") included within Tenant's Work.
2.3 Excluded Costs of Construction. Landlord shall purchase and
install an elevator to the Roof Garden as part of Landlord's Work. Cost of
construction for the purpose of this Lease will not include any other items
paid or incurred by Tenant which will be the sole responsibility and expense of
Tenant, including the following: any costs of financing Tenant's share of the
cost of construction, attorneys' fees, or any amounts attributable to the work
to be performed by Landlord under Section 1.1 above.
*Confidential Treatment Requested
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3. PLANS AND SPECIFICATIONS.
3.1 Plans and Specifications for Tenant's Initial Work. The
Tenant's Initial Work shall be carried out in accordance with plans and
specifications prepared by Tenant's architect, which plans and specifications
are subject to review and approval by Landlord and the Agency (in accordance
with the DDA).
3.2 Plans and Specifications for Roof Top Restaurant. Plans and
specifications for the Roof Top Restaurant shall be prepared by Tenant's
architect, which plans and specifications are subject to the review and
approval by Landlord and the Agency. Tenant shall prepare the plans and
specifications for the Roof Top Restaurant and submit the same to Landlord and
the Agency for review and approval not later than six (6) months following the
opening date of the Ground Floor Restaurant. Tenant's costs and expenses
incurred in connection with preparation of the plans and specifications for the
Roof Top Restaurant shall be a credit to Tenant's Roof Top Contribution.
3.3 Change Orders. Tenant will be entitled, subject to Landlord's
approval to the extent that the cost of the change will exceed $25,000, to make
such changes as it may reasonably desire in the plans and specifications for
Tenant's Work, but the cost of construction will be adjusted to reflect such
changes by, as applicable, adding the cost of all such changes and by deducting
any appropriate credits; provided, however, that any resulting increase in the
cost of construction shall not increase Landlord's Contribution.
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4. COURSE OF CONSTRUCTION
4.1 Time for Completion for Tenant's Initial Work. Tenant will
use its best efforts to cause construction to be commenced by Tenant's general
contractor (which contractor shall be previously approved by Landlord) by a
date ("Construction Commencement Date") that will enable final completion of
the Tenant's Initial Work, fixturization, and opening for business by not later
than October 1, 1992, and, following the commencement of such construction,
will at all times continuously cause the construction to be prosecuted to final
completion with all due diligence. Notwithstanding the preceding sentence to
the contrary, if Tenant is unable to cause construction to be completed for
opening of business by October 1 1992 due to causes beyond the reasonable
control of Tenant, Tenant shall at all times continue to cause such
construction to be prosecuted to final completion with all due diligence and
otherwise in strict compliance with this Agreement.
4.2 Time for Completion of Roof Top Restaurant. Tenant shall use
its best efforts to cause construction of the Roof Top Restaurant to be
commenced by a date that will enable the final completion of the Roof Top
Restaurant, fixturization, and opening f or business not later than twelve (12)
months following the opening of the Ground Floor Restaurant and, following the
commencement of such construction, will at all times continuously cause such
construction to be prosecuted to final completion with all due diligence.
4.3 Permits and Approvals. Tenant will be responsible, at its
sole cost and expense, for obtaining all governmental approvals of the plans
and specifications to the full extent necessary for
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the issuance of a building permit for the improvements based upon such plans
and specifications. The actual cost of issuance of such building permit will
be included in the "cost of construction" as defined in Section 2.2 above.
Upon request of Tenant, Landlord will join, without cost or liability to
Landlord, in any and all applications for the building permit. Thereafter,
Tenant will also cause to be obtained all other necessary approvals and permits
from all governmental agencies having authority over the construction and
installation of the improvements in accordance with the approved plans and
specifications, and will undertake all things necessary to ensure that the
construction of the improvements is accomplished in strict compliance with all
laws applicable to such construction and the requirements and standards of any
insurance carrier who will provide insurance coverage on the Premises pursuant
to the Lease. Tenant shall also be responsible, at its sole cost and expense,
to assure that Tenant's Work is designed, developed and constructed in
accordance with the terms and provisions of the Ground Lease with the Agency.
Tenant shall also be responsible, at its sole cost and expense, for obtaining
any and all other permits and licenses (including any conditional use permits
and any on-sale liquor licenses) which are or may be necessary-in connection
with the operation of a food and beverage service in the Premises.
4.4 Workmanship. All work will be done in a good and workmanlike
manner with appropriate materials and in strict accordance with the approved
plans and specifications.
4.5 Inspections by Landlord. Landlord, through its agents and/or
architect, will have the right to inspect the construction
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work to be conducted by Tenant during its progress. If Landlord gives notice
of faulty construction or any other material deviation from the plans and
specifications, Tenant will cause its contractors or subcontractors to make
corrections promptly. However, neither this privilege granted to Landlord to
make such inspections, nor the making of such inspections by Landlord, will
operate as a waiver of any right of Landlord to require good and workmanlike
construction and improvements erected in accordance with the plans and
specifications.
4.6 Temporary Signs. Subject to the Ground Lease and any
applicable governmental requirements, Tenant may install temporary advertising
signs prior to or during the course of construction and will remove them within
a reasonable time after the installation of Tenant's permanent signs. All
signs are subject to approval of Landlord prior to installations.
4.7 Fixturization by Tenant. Tenant will promptly, upon
substantial completion of the Tenant's Initial Work and the Roof Top
Restaurant, at Tenant's sole cost and expense, install in and affix to the
completed areas such furnishings, fixtures, equipment,
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and signs as Tenant may deem desirable. All such furnishings, fixtures,
equipment, and signs, including additions and replacements, will be and remain
the sole property of Tenant and not subject to any lien or encumbrance which
may be placed upon the Premises by Landlord, even if such property is attached
to the realty, and may be removed by Tenant at any time. This Lease does not
grant a contractual lien or any other security interest to Landlord with
respect to Tenant's property. Landlord agrees from time to time during the
term, upon written request from Tenant, to execute and deliver any instrument,
release, or other document that may be required by any equipment supplier or
vendor whereby Landlord waives and/or releases any rights it may have or
acquire with respect to any equipment or trade fixtures which may be affixed to
the Premises and agrees that the same do not constitute realty regardless of
the manner some are attached.
5. COMPLETION OF CONSTRUCTION
5.1 Substantial Completion. "Substantial completion" means with
respect to Tenant's Work, that all construction in accordance with the plans
and specifications approved by Landlord and the Agency have been completed so
as to make the Premises ready for the installation of FF&E, subject to punch
list items.
5.2 Final Completion. Upon final completion of Tenant's Work in
good condition and repair, Tenant will furnish (a) a final certificate executed
by Tenant's architect or engineer certifying the final completion of the entire
work of improvement, and (b) a certificate of occupancy or its equivalent
providing that the Premises can be occupied lawfully by Tenant for the purposes
set forth in the Lease. "Final completion" means, as to Tenant's Work,
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that the entire work of improvement has been fully completed in accordance with
the plans and specifications approved by Landlord and the Agency.
6. FINANCING CONSTRUCTION OF THE IMPROVEMENTS.
6.1 Funding Contributions; Disbursements.
(a) Tenant's Initial Work. Upon the Effective Date of this Lease,
Landlord shall cause the funding of Landlord's Initial Contribution so that
such contribution will be available and ready for distribution to Tenant in
connection with Tenant's Initial Work at the time and in the manner provided in
the Disbursement Agreement. Tenant acknowledges that Landlord may fund
Landlord's Initial Contribution from funds advanced by the Agency pursuant to
the DDA. Upon the removal of all conditions set forth in Section 3.5 of the
Lease, Tenant shall provide to the Agency Tenant's Financial Confirmations (as
defined below) and, upon the commencement of construction of the Tenant's
Initial Work, Tenant shall be obligated to, in a prompt and timely manner, pay
all costs of construction related to such work. At such time as Tenant has
expended one Million Five Hundred Fifty Thousand Dollars ($1,550,000) in
connection with costs of construction for the Tenant's Initial Work, Tenant
shall provide an appropriate verification thereof to Landlord and the Agency.
Tenant shall be thereafter entitled to submit draw requests for Landlord's
Initial Contribution, which requests will be made and paid pursuant to the
Disbursement Agreement.
(b) Roof Top Restaurant. Upon the commencement of construction of
the Roof Top Restaurant, Landlord shall deposit Landlord's Roof Top
contribution into a joint account or accounts
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established pursuant to the Disbursement Agreement for the funding of
construction costs of the Roof Top Restaurant. Likewise, upon the commencement
of construction of the Roof Top Restaurant, the amount, if any, of Landlord's
Initial Contribution that remains undisbursed according to the Disbursement
Agreement after the completion of Tenant's Initial Work may be used for the
funding of construction costs of the Roof Top Restaurant.
6.2 Tenant's Financial Confirmations. Upon the removal of all
conditions set forth in Section 3.5 of the Lease (the "Conditions"), Tenant
shall provide to Landlord and the Agency the following items (collectively,
"Tenant's Financial Confirmations");
(a) Confirmation from Security Pacific Bank that Tenant
has an established and available line of credit to fund construction costs for
the Tenant's Initial Work in an amount not less than One Million Five Hundred
Fifty Thousand Dollars ($1,550,000);
(b) The audited financial statements of Tenant for its
fiscal year ended May 31, 1991;
(c) A letter of credit from Security Pacific Bank showing
the Agency as beneficiary in the amount of One Million Five Hundred Fifty
Thousand Dollars ($1,550,000) ("Tenant's Letter of Credit"), which letter of
credit shall: (i) be irrevocable and stand-by for a period of not less than
one year following the commencement of construction of the Tenant's Initial
Work; (ii) provide for the right on the part of the Agency to draw upon the
letter of credit on October 1, 1992, of the difference between One Million Five
Hundred Fifty Thousand Dollars ($1,550,000) and amounts actually expended by
Tenant in connection with the Tenant's Initial work; (iii) provide that the
balance of the face amount of
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the letter of credit will decline in accordance with funds expended by Tenant
pursuant to 6.1(a) above. The cost of the Letter of Credit shall be paid by
Landlord.
(d) Landlord agrees that the Letter of Credit may be
amended monthly as Tenant completes Tenant's Initial Work. Upon the submission
by Tenant to Landlord of evidence of the payment by Tenant for such work (in
the form required by the Disbursement Agreement) , Landlord shall execute an
amendment to the Letter of Credit reducing the amount of the Letter of Credit
by the amount paid by Tenant.
6.3 Landlord's Financial confirmations. Upon the Effective Date,
Landlord shall provide to Tenant either of the following items ("Landlord's
Financial Confirmations");
(a) The personal guaranty of Xxxxx Xxxxxxxxxx in a form
reasonably acceptable to Tenant for Landlord's Roof Top Contribution; or
(b) A letter of credit from Security Pacific Bank or an
equivalent national bank reasonably acceptable to Tenant showing the Tenant as
beneficiary in the amount of Two Hundred Eighty Thousand Dollars ($280,000),
which letter of credit shall: (i) be irrevocable and stand-by for a period of
not less than one year following the commencement of construction of the Roof
Top Restaurant; (ii) provide for the right on the part of the Tenant to draw
upon the letter of credit in the event Landlord does not make the deposit
required by Section 6.2(b) above; and (iii) provide that any funds drawn on the
letter of credit be paid into the appropriate account established in the
Disbursement Agreement.
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6.4 Compliance with Disbursement Agreement. Tenant will timely
comply with the requirements of the Agency for the funding of amounts pursuant
to the Disbursement Agreement, such as submittal of draw requests approved by
appropriate architects and engineers, certificates of Tenant's contractor as to
amounts due and payment of subcontractors and materialmen, title insurance date
downs, conditional lien releases during the course of construction and
unconditional lien waivers upon final completion.
6.5 Financing of Construction by Tenant and Tenant Responsibility
for all Costs of Constructing the Improvements in Excess of Landlord's
Contribution. Except as provided in Section 1.1 and 2.1 above, Tenant will be
responsible, at Tenant's sole cost and expense, for the full cost of
constructing Tenant's Work. By reason of the foregoing, Tenant shall be
responsible for all costs of construction (together with those costs which, as
provided in Section 2.3 above, are not regarded as "costs of construction")
associated with the Tenant's Initial Work which are in excess of the Two
Million Four Hundred Thirty-Two Thousand Dollars ($2,432,000) and, further,
Tenant shall be responsible for all costs of construction (together with those
costs which, as provided in Section 2.3 above are not regarded as "costs of
construction") relating to the Roof Top Restaurant which are in excess of the
amount funded as provided in Section 6.1 (b) above. Tenant will have no
authority, express or implied, to create or place any lien or encumbrance, of
any kind or nature whatsoever, upon, or in any manner to bind the interest of
Landlord in the Premises or to change the rentals payable hereunder for any
claim in favor of any person dealing with Tenant, including those who may
furnish
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materials or perform labor for any construction or repairs. Rather, each such
claim will affect and each such lien will attach to, if at all, only the
leasehold interest granted to Tenant by this Lease and will be inferior and
subject to the rights, titles, and interests of Landlord. Any right or
authority given to Tenant in accordance with any of the provisions of this
instrument to erect or cause to be erected, the improvements on the Premises,
or to make any alterations or repairs to the improvements, will not constitute
an express or implied agency in Tenant to bind Landlord's interest in any way.
Tenant will pay or cause to be paid all sums legally due and payable by it, or
in the alternative post a bond, on account of any labor performed on the
Premises on which any lien is or can validly and legally be asserted against
its leasehold interest in the Premises or the improvements and that it will
save Landlord harmless from any and all asserted claims or liens against the
leasehold estate or against the rights, titles, and interests of Landlord in
the Premises or under the terms of this Lease which are created by, under, or
through Tenant. Notwithstanding the foregoing or anything to the contrary
herein, the improvements (exclusive of FF&E) will at all times belong to and be
the property of Landlord.
6.6 Cost Verification. Tenant will deliver or cause to be
delivered to Landlord copies of invoices to Tenant by the general contractor
and all other persons or firms whose labor, material, or service are part of
the cost of construction of the improvements and who will xxxx Tenant directly
for such cost and, in addition, any changes, additions, or deletions in the
invoices.
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6.7 General Contractors. Landlord has given Tenant pre-approval
to proceed to contract on a negotiated basis with as general contractor for
the improvements. If any other general contractor will be engaged to
construct the improvements, Tenant must obtain Landlord's prior approval.
LANDLORD: HOTEL SAINTE CLAIRE TENANT: IL FORNAIO (AMERICA)
PARTNERS, L.P., a CORPORATION
California Limited
Partnership
By: Manco Investment, a
California Corporation
By: /s/ XXXXXXXXXX XXXXXXXXXX By: /s/ XXXXXXXX X. XXXXXX
------------------------------ -----------------------------------
Xxxxxxxxxx Xxxxxxxxxx Xxxxxxxx X. Xxxxxx
President Chairman of the Board
Date 11/21/1991 Date 11/21/91
----------------------------- --------------------------------
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LANDLORD'S WORK - EXCLUSIVE OF $2,423,000 BUDGET:
1. Build-out of 3,600 square feet of basement area for employee lounge and
restrooms, also shared with hotel staff, storage rooms, employee locker
rooms, storage rooms to Il Fornaio operational needs and Santa Xxxxx
County Health Department requirements. Build-out of basement garbage area
for location of Il Fornaio's trash compactor. Build-out of upstairs
banquet pantry ready for Il Fornaio's equipment installation. Total
allocated budget for these improvements to be $77,000, bringing the
total restaurant budget to $2,500,000. Improvement costs in excess of
$77,000 for this work to be Landlord responsibility and not attributable
to restaurant budget.
2. 800 Amp, 208 Volt, 3-phase, 4-wire electrical service, separately metered,
to Il Fornaio basement area with pull cords in conduits from stub-out
location to step-down transformer, if required, which is to be located
outside tenant's premises. If roof garden is added, electrical service to
be 1,000 Amp capacity.
3. *Separately metered natural gas service sized to Il Fornaio's requirements
and stubbed to tenant's premises at a location mutually agreed upon.
4. *Separately metered two-inch domestic water service stubbed to premises at
a location designated by Il Fornaio.
5. Six-inch sanitary sewer line stubbed to premises at a location which is
mutually agreed upon. Il Fornaio shall be allowed to route any
appropriate waste lines to kitchen's existing grease trap.
6. Fire sprinkler system of sufficient capacity for a minimum of Ordinary
Hazard Group II rating throughout tenant's premises.
7. (2) 1-inch diameter conduits with pull cords from building's main
telephone back board to a location designated by Il Fornaio.
8. Location in the laundry room area adjacent to the existing remote
refrigeration rack for placement of Il Fornaio's remote refrigeration
rack. Il Fornaio to take out existing units in said area and provide
appropriate air intake.
9. If any governmental agency requires that kitchen exhaust be "scrubbed" by
means of electronic precipitators, charcoal filtration, or any other
"scrubbing" device, said equipment, including periodic on-going
maintenance thereof, to be provided and installed and maintained by Il
Fornaio and located outside of tenant's premises. If the Landlord requires
that kitchen exhaust be "scrubbed", as defined above, equipment and
periodic on-going maintenance will be provided, installed and maintained
by Landlord.
10. Architecture budget of $75,000 is based upon total architectural fees
which include reimbursibles and liability insurance surcharge.
Architectural fee above the $75,000 level to be a Landlord cost not
attributable to restaurant budget.
* If separate meters are not installed, then an energy audit will be
conducted to ascertain utility use.
EXHIBIT "C-1"
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November 21, 1991
Il Fornaio (America) Corporation, Inc.
0000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxx Xxxxxxxxx, XX 00000
ATTN: Xxxxxxxx Xxxxxx
Re: Hotel St. Claire ("Hotel")
Dear Xx. Xxxxxx:
This letter is being provided in connection with the execution by and
between Hotel St. Claire Partners, L.P. ("St. Claire") and Il Fornaio (America)
Corporation, Inc. ("Il Fornaio") of a Restaurant Lease and a Food Service
Operations Agreement for the purpose of confirming the following understandings:
(a) Each party shall be responsible for all labor negotiations
respecting the personnel hired by each party to operate their respective
facilities within the Hotel and to perform services under the Restaurant Lease
and Food Service Operations Agreement;
(b) Prior to either party negotiating with any labor union or entering
into any collective bargaining agreement with any labor union in connection
with such party's employees, such party shall provide prior written notice of
such action to the other party;
(c) Neither party, in connection with negotiations with any labor
union, shall enter into any agreement therewith which in any way binds the
employees of the other party, or otherwise materially adversely impacts the
facility operations to be conducted by the other party pursuant to the
Restaurant Lease and/or Food Service Operations Agreement.
85
Il Fornaio (America) Corporation, Inc.
November 21, 1991
Please signify your agreement to the foregoing by executing a copy of
this letter where indicated below.
HOTEL ST. CLAIRE PARTNERS L.P., a
California limited partnership
BY: MANCO INVESTMENT, a California
corporation
BY: /s/ Xxxxxxxxxx Mobedshami,
--------------------------
Xxxxxxxxxx Mobedshami,
President
The terms of the aforesaid letter are hereby agreed and accepted on
this 21st day of November, 1991.
IL FORNAIO (AMERICA) CORPORATION, INC.
BY: /s/ Xxxxxxxx X. Xxxxxx
---------------------------------
-2-
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GUARANTEE
1. In consideration of the execution by IL FORNAIO (AMERICA)
CORPORATION, a California corporation ("Il Fornaio") of that certain restaurant
lease dated November 21, 1991 by and between Il Fornaio, as "Tenant," and Hotel
Sainte Claire Partners, L.P., a California Limited Partnership, as "Landlord,"
(the "Lease") and subject to the terms and conditions hereof, Xxxxxxxxxx
Xxxxxxxxxx ("Guarantor") does hereby guarantee unconditionally to Il Fornaio,
its successors and assigns, Landlord's contribution of Two Hundred Eighty
Thousand Dollars ($280,000) at the time and in the manner set forth in Section
6.1(b) of Exhibit "C" to the Lease (the "Obligation").
2. This Guarantee shall not be affected by a deviation from or
alteration of the terms, covenants or conditions of the Lease or by any
assignment or other transfer by Landlord of its rights under the Lease except
to the extent that, in connection with such an assignment or transfer, Il
Fornaio agrees to release Landlord from the Obligation or from its obligations
under the Lease. This Guarantee shall not be released, extinguished, modified
or in any way affected by failure on the part of Il Fornaio to enforce any or
all of its rights or remedies whether pursuant to the terms of the Lease or at
law or in equity.
3. This Guarantee shall become effective upon the date set forth below
and shall terminate upon the earlier of (a) the performance of the Obligation,
or (b) the termination of the Lease. Guarantor waives notice of acceptance by
Il Fornaio of this Guarantee.
4. Guarantor agrees that Il Fornaio may from time to time extend the
time for performance or otherwise modify, alter or change the Lease and any or
all of the provisions thereof without in any way releasing or discharging
Guarantor from its obligations under this Guarantee.
5. Guarantor further consents that it shall not be necessary for Il
Fornaio, in order to enforce this Guarantee, to institute suit or exhaust its
legal remedies against Landlord.
6. This Guarantee may be immediately enforced upon any default by
Landlord in the performance of the Obligation and upon the giving of notice to
Guarantor of such default.
7. In the event that any action should be commenced by Il Fornaio
against Guarantor to enforce any of the terms or conditions of this Guarantee,
the prevailing party in any such action shall be entitled to recover from the
opposing party reasonable attorneys' fees which shall be fixed as part of the
costs by the court in which the action is pending.
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