Concession Agreement

CONCESSION AGREEMENT


by and between


County of Los Angeles


and


Sea View Restaurants, Inc., a California corporation


Dated as of November 1, 1997


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TABLE OF CONTENTS


1. BACKGROUND AND GENERAL......................................................... 1


1.1. Definitions......................................................... 1
1.2. Premises............................................................ 7
1.2.1. As-Is ..................................................... 8
1.2.2. Title ..................................................... 9
1.3. Concession.......................................................... 9


2. TERM........................................................................... 9


2.1. Term................................................................ 9
2.2. Holdover............................................................ 9
2.3. Ownership of Improvements During Term............................... 9
2.4. Reversion of Improvements........................................... 9
2.4.1. County's Election to Receive Improvements................... 10
2.4.2. Duty to Remove.............................................. 10
2.4.3. County's Right to Remove Improvements....................... 11
2.4.4. Duty to Remove Machinery, Etc............................... 11
2.4.5. Title to Certain Improvements............................... 11


3. USE OF PREMISES................................................................ 11


3.1. Specific Primary Use................................................ 11
3.2. Prohibited Uses..................................................... 12
3.2.1. Nuisance.................................................... 12
3.2.2. Restrictions and Prohibited Uses............................ 12
3.3. Active Public Use................................................... 14
3.4. Non-Interference.................................................... 14
3.7. Signs and Awnings................................................... 15
3.8. Compliance with Regulations......................................... 15
3.9. Rules and Regulations............................................... 15
3.10. Reservations........................................................ 15


4. PAYMENTS TO COUNTY............................................................. 16


4.1. Net Agreement....................................................... 16
4.1.1. Utilities................................................... 16
4.1.2. Taxes and Assessments....................................... 16
4.1.3. Certain Capital Improvements................................ 17
4.2. Rental Payments..................................................... 18
4.2.1. Annual Minimum Rent and Monthly Minimum
Rent................................................. 18
4.2.2. Percentage Rent............................................. 19
4.3. Adjustments to Annual Minimum Rent.................................. 22


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4.4. Renegotiation of Annual Minimum and Percentage Rents................ 23
4.4.1. Fair Market Rental Value.................................... 23
4.4.2. Renegotiation Period........................................ 23
4.4.3. Negotiation of Fair Market Rental Value..................... 24
4.4.4. Arbitration................................................. 24
4.5. Payment and Late Fees............................................... 25
4.6. Changes of Ownership and Financing Events........................... 26
4.6.1. Change of Ownership......................................... 26
4.6.2. Excluded Transfers.......................................... 27
4.6.3. Aggregate Transfer.......................................... 28
4.6.4. Beneficial Interest......................................... 28
4.7. Calculation and Payment............................................. 29
4.7.1. Transfer of Less Than Entire Interest....................... 30
4.7.2. Purchase Money Notes........................................ 30
4.7.3. Obligation to Pay Net Proceeds Share and
Administrative Charge................................ 30
4.8. Net Proceeds Share.................................................. 31
4.8.1. Transaction by Original Concessionaire....................... 31
4.8.2. Transfer by Concessionaire's Successor...................... 32
4.8.5. Net Refinancing Proceeds.................................... 33
4.8.6. Effect of Refinancing on Improvement Costs.................. 33
4.8.7. Transfers to which Sections 4.6 through 4.8
Apply................................................ 33
4.8.8. Payment..................................................... 34
4.8.9. Shareholder, Partner, Member, Trustee and
Beneficiary List..................................... 34


5. CONSTRUCTION OF IMPROVEMENTS BY CONCESSIONAIRE................................. 34


5.1. Improvements........................................................ 34
5.1.1. Landscaping................................................. 35
5.1.2. Cost of Improvements........................................ 35
5.1.3. Schedules................................................... 35
5.2. Plan Submittal Schedule; County Approval............................ 35
5.3. Schematics and Narrative............................................ 36
5.4. Preliminary Plans and Specifications................................ 36
5.5. Final Plans and Specifications...................................... 37
5.6. Conditions Precedent to the Commencement of
Construction........................................................ 38
5.6.1. Approval of Final Plans and Specifications.................. 38
5.6.2. Permits and Other Approvals................................. 38
5.6.3. Copies of Construction Contracts............................ 39
5.6.4. Performance and Payment Bonds............................... 39
5.6.5. Alternative Security........................................ 40
5.6.6. Evidence of Financing....................................... 40
5.7. County Cooperation.................................................. 40
5.8. Construction Schedule............................................... 41


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5.8.1. Substantial Commencement of Construction.................... 41
5.8.2. After Substantial Commencement.............................. 42
5.8.3. Extension of Dates.......................................... 42
5.8.4. Failure to Reach Substantial Commencement................... 45
5.8.5. Termination of Agreement.................................... 46
5.9. Manner of Construction.............................................. 46
5.9.1. General Construction Standards.............................. 46
5.9.2. Utility Work................................................ 47
5.9.3. Construction Safeguards..................................... 47
5.9.4. Compliance with Construction Documents and
Laws; Issuance of Permits............................ 47
5.9.5. Notice to Director; Damage to County
Improvements......................................... 47
5.9.6. Rights of Access............................................ 47
5.9.7. Notice of Completion........................................ 48
5.10. Use of Plans........................................................ 48
5.11. Additional Construction............................................. 48
5.12. Protection of County, State and City................................ 49
5.12.1. Posting Notices............................................ 49
5.12.2. Prompt Payment............................................. 49
5.12.3. Liens; Indemnity........................................... 49
5.13. Construction Schedule............................................... 50


6. QUALITY AND PRICES............................................................. 50


6.1. Quality of Restaurant Operations.................................... 50
6.2. Director's Right to Review/Approve Quality.......................... 50
6.3. Limitation on Prices to be Charged.................................. 51
6.4. Director's Right to Review/Modify Price............................. 51


7. CONDEMNATION................................................................... 52


7.1. Definitions......................................................... 52
7.1.1. Condemnation................................................ 52
7.1.2. Date of Taking.............................................. 52
7.1.3. Award ..................................................... 52
7.1.4. Condemnor................................................... 52
7.2. Parties' Rights and Obligations to be Governed by
Agreement........................................................... 52
7.3. Total Taking........................................................ 52
7.4. Effect of Partial Taking............................................ 52
7.5. Effect of Partial Taking on Rent.................................... 53
7.6. Waiver of Code of Civil Procedure Section 1265.130.................. 54
7.7. Payment of Award.................................................... 54
7.8. Partial Taking Without Termination.................................. 54
7.8.1. Taking For Temporary Use.................................... 54
7.8.2. Total Taking and Partial Taking with Termination............ 54


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7.8.3. Disputes.................................................... 55


8. SECURITY DEPOSIT............................................................... 55


8.1. Decrease in Deposit................................................. 55
8.2. Replacement......................................................... 56


9. INDEMNITY...................................................................... 56


10. INSURANCE. ................................................................... 57


10.1. Property Insurance.................................................. 57
10.2. Form of Policy...................................................... 57
10.3. Liability Insurance................................................. 58
10.4. Worker's Compensation Insurance..................................... 59
10.5. Required Provisions................................................. 59
10.6. Failure to Procure Insurance........................................ 60


11. MAINTENANCE AND REPAIR; DAMAGE AND DESTRUCTION................................. 60


11.1. Concessionaire's Maintenance and Repair Obligations................. 60
11.2. Option to Terminate for Uninsured Casualty.......................... 61
11.3. No Option to Terminate for Insured Casualty......................... 62
11.4. No County Obligation to Make Repairs................................ 62
11.4.1. Sand Replenishment......................................... 62
11.4.2. Jetty ..................................................... 62
11.4.3. Rip/Rap.................................................... 62
11.5. Repairs Not Performed by Concessionaire............................. 63
11.6. Other Repairs....................................................... 63
11.7. Bicycle Path........................................................ 63
11.8. Cellular Antenna.................................................... 63
11.9. Notice of Damage.................................................... 64
11.10. Waiver of Civil Code Sections....................................... 64


12. ASSIGNMENT AND SUBLEASE........................................................ 64


12.1. Subleases........................................................... 64
12.1.1. Definition................................................. 64
12.1.2. Approval Required.......................................... 64
12.1.3. Major Sublease............................................. 65
12.2. Assignments......................................................... 65
12.2.1. County's Use of Discretion and Limitation on
Permissible Assignees................................ 66
12.2.2. Involuntary Transfers Prohibited........................... 66
12.2.3. Procedure.................................................. 66
12.2.4. County Right of First Negotiation.......................... 69


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12.3. Terms Binding Upon Successors, Assigns and
Sublessees.......................................................... 70


13. ENCUMBRANCES................................................................... 70


13.1. Financing Events.................................................... 71
13.1.1. Encumbrances............................................... 71
13.1.2. Consent Not Required to Transfer Resulting
from Foreclosure..................................... 71
13.1.3. Effect of Foreclosure...................................... 72
13.2. Right to Notice and Cure Defaults................................... 72
13.3. No Subordination.................................................... 72
13.4. Delay in Exercising Termination Remedy.............................. 73
13.4.1. Manner of Curing Default................................... 73


14. DEFAULT........................................................................ 74


14.1. Events of Default................................................... 74
14.1.1. Monetary Defaults.......................................... 74
14.1.2. Failure to Substantially Commence Construction............. 74
14.1.3. Maintenance of Letter of Credit............................ 74
14.1.4. Failure to Perform Other Obligations....................... 74
14.1.5. Nonuse of Premises......................................... 75
14.1.6. Notices.................................................... 75
14.2. Limitation on Events of Default..................................... 75
14.3. Remedies............................................................ 75
14.3.1. Terminate Agreement........................................ 75
14.3.2. Keep Agreement in Effect................................... 76
14.3.3. Termination Following Continuance.......................... 76
14.4. Damages............................................................. 76
14.4.1. Unpaid Rent................................................ 76
14.4.2. Post-Termination Rent...................................... 76
14.4.3. Other Amounts.............................................. 76
14.5. Others' Right to Cure Concessionaire's Default...................... 77
14.6. Default by County................................................... 77


15. ACCOUNTING..................................................................... 77


15.1. Maintenance of Records.............................................. 77
15.2. Cash Registers...................................................... 77
15.3. Statement; Payment.................................................. 78
15.4. Availability of Records for Inspector's Audit....................... 78
15.4.1. Entry by County............................................ 78
15.4.2. Cost of Audit.............................................. 78
15.5. Audit Rights from Prior Agreement.................................. 79
15.6. Additional Accounting Methods...................................... 79
15.7. Accounting Year; Lease Year........................................ 79


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15.8. Annual Financial Statements......................................... 79


16. MISCELLANEOUS.................................................................. 80


16.1. Quiet Enjoyment..................................................... 80
16.2. Time................................................................ 80
16.3. County Disclosure and Concessionaire's Waiver....................... 80
16.3.1. Disclosures and Waiver..................................... 80
16.3.2. No Right of Offset......................................... 81
16.4. Holding Over Creates Month-to-Month Tenancy......................... 81
16.5. Waiver of Conditions or Covenants................................... 81
16.6. Remedies Cumulative................................................. 82
16.7. Authorized Right of Entry........................................... 82
16.8. Place of Payment and Filing......................................... 82
16.9. Service of Written Notice or Process................................ 82
16.10. Interest............................................................ 84
16.11. Captions............................................................ 84
16.12. Attorneys' Fees..................................................... 84
16.13. Amendments.......................................................... 84
16.14. Time For Approvals.................................................. 84
16.15. Arbitration......................................................... 84
16.15.1. Selection of Arbitrator................................... 85
16.15.2. Arbitrator................................................ 85
16.15.3. Scope of Arbitration...................................... 85
16.15.4. Immunity.................................................. 86
16.15.5. Section 1282.2............................................ 86
16.15.6. Statements of Position.................................... 87
16.15.7. Written Appraisal Evidence................................ 87
16.15.8. Evidence.................................................. 88
16.15.9. Discovery................................................. 88
16.15.10. Decisions of Arbitrators.................................. 88
16.15.11. Powers of Arbitrator...................................... 89
16.15.12. Costs of Arbitration...................................... 89
16.15.13. Appeal.................................................... 89
16.15.14. Amendment to Implement Judgment........................... 89
16.15.15. Impact of Gross Error Allegations......................... 89
16.16. Estoppel Certificates............................................... 90
16.17. Indemnity Obligations............................................... 90


17. DEFINITION OF TERMS; INTERPRETATION............................................ 90


17.1. Meanings of Words Not Specifically Defined.......................... 91
17.2. Tense; Gender; Number; Person....................................... 91
17.3. Business Days....................................................... 91
17.4. Parties Represented by Consultants, Counsel......................... 91
17.5. Termination for Improper Consideration.............................. 91
17.6. Governing Law....................................................... 92


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17.7. Reasonableness Standard............................................. 92


17.8. Compliance with Section 25907....................................... 93


EXHIBIT A..............................................................................A-1


EXHIBIT B..............................................................................B-1


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CONCESSION AGREEMENT
FOR WILL ROGERS STATE BEACH PARK RESTAURANT


THIS CONCESSION AGREEMENT ("Agreement") is made and entered into as of the 1st day of November, 1997, by and between the COUNTY OF LOS ANGELES ("County"), and SEA VIEW RESTAURANTS, INC., a California corporation ("Concessionaire").


W I T N E S S E T H


WHEREAS, County has been authorized to exercise the power conferred by California Government Code Section 25907 to contract for concessions and services that are consistent with public park and recreation purposes within Will Rogers State Beach Park pursuant to the provisions of the Joint Powers Agreement Between the City of Los Angeles and the County of Los Angeles Providing for Lifeguard and Maintenance Services to be Rendered by the County on Beaches Located Within the City, dated May 20, 1975 ("Joint Powers Agreement"); and,


WHEREAS, in the exercise thereof, County and Concessionaire have agreed, as more specifically provided herein, upon certain terms and conditions in connection with the lease to Concessionaire, for concession purposes, of the "Premises", as hereafter defined;


NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants, agreements and conditions set forth herein, and of other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto and each of them do agree as follows:


1. BACKGROUND AND GENERAL.


1.1. Definitions. For ease of reference, the definitions of many terms contained within this Agreement are set forth in the context in which the term is used. A listing of those defined terms and other definitions not defined in context appears below:


1.1.1. "ACCEPTANCE NOTICE" shall have the meaning set forth in subsection 4.1.3.


1.1.2. "ACCOUNTING YEAR" shall have the meaning set forth
in Section 15.7.


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1.1.3. "ACTUAL COST" shall mean the cost incurred by
County with respect to a particular activity or procedure, including
expenditures to third parties and County's overhead and administrative
cost, but excluding any mark-up for profit thereon to County.


1.1.4. "ADA" shall have the meaning set forth in
Section 1.2.


1.1.5. "ADMINISTRATIVE CHARGE" shall have the meaning
set forth in Section 4.6.


1.1.6. "AGGREGATE TRANSFER" shall have the meaning set
forth in subsection 4.6.3.


1.1.7. "AGREEMENT" shall mean this Concession Agreement
for Will Rogers State Beach Park Restaurant.


1.1.8. "ANNUAL MINIMUM RENT" shall have the meaning set
forth in subsection 4.2.1.


1.1.9. "ANTICIPATED COMMENCEMENT DATE" shall have
the meaning set forth in subsection 5.8.1.


1.1.10. "ANTICIPATED COMPLETION DATE" shall have the
meaning set forth in subsection 5.8.1.


1.1.11. "APPLICABLE LAWS" shall have the meaning set
forth in subsection 1.2.1.


1.1.12. "APPROVED FINAL PLANS, SPECIFICATIONS AND COSTS"
shall have the meaning set forth in subsection 5.6.1.


1.1.13. "AUDITOR-CONTROLLER" shall mean the Auditor-
Controller of the County of Los Angeles, California.


1.1.14. "AWARD" shall have the meaning set forth in
subsection 7.1.3.


1.1.15. "BENEFICIAL INTEREST" shall have the meaning set
forth in subsection 4.6.4.


1.1.16. "BOARD" means the Board of Supervisors for the
County of Los Angeles.


1.1.17. "BONUS VALUE" shall have the meaning set forth in
subsection 7.8.2.


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1.1.18. "BUSINESS DAY" shall have the meaning set forth in
Section 17.3.


1.1.19. "BUSI ...