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HomeMy WebLinkAboutexhibitAMENDMENT TO LEASE AGREEMENT BETWEEN CITY OF MIAMI AND BISCAYNE BAY RESTAURANT TABLE OF CONTENTS 1. Incorporation of Recitals 2 2. Definitions 2 3. Term 3 4. Use 3 5. Ownership of Improvements 5 6. Pledge of Leasehold Interest 6 7. Rent 6 8. Gross Receipts 8 9. Records, Accounts and Statements 10 10. Manner of Operation 12 11. Maintenance and Repair 12 12. Destruction 14 13. Insurance 15 14. Notices 24 15. Capital Improvements 25 16. State Approval 27 17. Safety. 28 18. Americans With Disabilities Act 28 19. Force Majeure 28 THIS AMENDMENT to the Lease ("Amendment") is made and entered into as of the day of 2005 ("Execution Date"), between the CITY OF MIAMI, a municipal corporation of the State of Florida ("Lessor"), and BISCAYNE BAY RESTAURANT CORPORATION, a Florida Corporation, a wholly owned subsidiary of Specialty Restaurants Corporation, a California corporation, d/b/a Rusty Pelican ("Lessee"). RECITALS A. Lessor and Lessee entered into a Lease Agreement dated February 13, 1970 (the " 1970 Lease Agreement") whereby the City leased to Lessee the property described in Exhibit "A" attached hereto (the "Property"), for the development and operation of a first class waterfront restaurant now known as the Rusty Pelican Restaurant (the "Rusty Pelican"). The 1970 Lease Agreement has been amended by Supplemental Lease Agreement dated July 23, 1970, Amendment No. 1 to Lease Agreement dated May 28, 1982, undated Addendum to Lease Agreement authorized by Resolution 89-508 adopted by the City Commission on June 7, 1989, and Amendment to Lease Agreement dated December 18, 2001 (collectively the "Lease"). B. The term of the Lease, together with the options to renew, expires on October 1, 2012 (the "Original Expiration Date"). C. Lessee requested Lessor to extend the term of the Lease in order to amortize the cost of certain capital improvements that the Lessee plans to perform on the Property, which are more specifically described in Exhibit `B" hereto. D. Pursuant to Resolution No. 03-854, adopted July 24, 2003, the City Commission of the City of Miami (the "City Commission") authorized the submission for consideration by the electorate of the City, of a ballot question to amend Section 29-B of the Charter of the City of Miami to authorize the City Commission to amend the Lease to extend the Original Expiration Date and increase the minimum guarantee to the City. E. On a special municipal election held on November 4, 2003 the electorate of the City approved the proposed extension and modification of the Lease. NOW, THEREFORE, in consideration of the foregoing and the conditions, covenants and agreements hereinafter set forth and in consideration of other valuable consideration the parties hereto agree to amend the Lease as follows: 1. Incorporation of Recitals The recitals and findings set forth above are hereby adopted by reference thereto and incorporated herein as if fully set forth in this Amendment. 2. Definitions A new paragraph is hereby added immediately prior to Paragraph 1 to define certain terms and phrases of the Lease as follows: A. "Consumer Price Index" means the monthly indices for the applicable month published by the Bureau of Labor Statistics of the United States Department of Labor as "The Consumer Price Index for All Items, Miami -Ft. Lauderdale, (Base Year 1982-84=100). B. "Effective Date" means the first day of the month immediately following final approval of this Lease by the State of Florida Board of Trustees of the Internal Improvement Trust Fund (the "State Approval") and the City Commission. In the event the Effective Date does not fall on the first day of a calendar month, the Effective Date shall be adjusted to be the first day of the following calendar month. C. "Governmental Authorities" means all federal, state and municipal governments, agencies, departments, commissions, boards and officials having jurisdiction over the Premises, the Improvements or the construction thereof. D. "Gross Revenues" shall have the meaning ascribed to it in Paragraph 12 herein. E. "Improvements" means all improvements, including Lessee's Capital Improvements, buildings, structures and fixtures now or hereafter situated, placed, constructed or installed on the Land, including but not limited to, all attached fixtures, equipment, apparatus, machinery, fittings and appliances, and the Pedestrian Walkway and Floating Platform Deck, if Amd Ls Extension 6-23-05 2 constructed by Lessee as contemplated in this Amendment, and any additions to, substitutions for, changes in or replacements of, the whole or any part thereof. F. "Land" means approximately 5.886 acres of real property in the City of Miami, described in Exhibit "A". "Lessee's Capital Improvements" means the improvements described in Exhibit "B" as "Lessee's Future Capital Improvements," including the Pedestrian Walkway and Floating Platform Deck to be constructed by Lessee in whole or in part on Lessor's property, as the same may be modified, relocated, reduced or expanded, by mutual agreement, and as provided in this Lease Agreement, from time to time. H. "Premises" shall mean the Land and the Improvements. G. 3. Term Paragraph 2 of the Lease is hereby amended to read as follows: 2. Tenn. The base term of this Lease shall expire on October 1, 2012. In the event Lessee completes the Lessee's Capital Improvements, as provided in Paragraph 34, and subject to satisfaction of the condition set forth in Paragraph 35, then the base term of this Lease shall expire on October 1, 2027 and Lessee shall be granted two (2) options to renew the term of this Lease, under the same terms and conditions, for two additional successive periods of five (5) years each. If Lessee desires to exercise these options, Lessee shall give Lessor written notification not earlier than two (2) years, and not later than one (1) year prior to the expiration of the then current term. 4. Use Paragraph 4 of the Lease is hereby amended to read as follows: 4. Use. The Premises are leased to Lessee for the purpose of operating a first class restaurant, including dining and banquet facilities, cocktail lounge, outdoor patios/decks, walkways, and ancillary boat dock, gift shop, water taxi accommodations and related parking facilities, and for all purposes incidental or related thereto. Lessee shall not use Amd Ls Extension 6-23-05 3 the Premises for any other purposes without the prior written approval of the City Manager, which may be withheld or conditioned in his/her sole discretion. As consideration for the extension of the Original Expiration Date, Lessee has agreed to construct and manage a Pedestrian Walkway and optionally a Floating Platform Deck on land contiguous to the Premises, a portion of which may lie within the Premises, which is wholly owned by Lessor. The Pedestrian Walkway and Floating Platform Deck shall be treated as part of the Premises for all purposes under this Lease, including specifically, but without limitation, Paragraphs 10, 18, 20 and 21, but excluding specifically Paragraph 4; it being the intent of the parties that the Pedestrian Walkway and the Floating Platform Deck shall be open to use by the public and shall not be used by the Lessee in the operation of its business in the Premises. Notwithstanding the foregoing, in consideration of the Lessee's construction of the Floating Platform Deck, Lessee shall be authorized to use the Floating Platform Deck for events that in the regular course of business requires reserved rooms such as private parties. The Pedestrian Walkway can have gates to limit access to the deck area to provide for private use of the deck, which gates can be closed during the event and for a reasonable period of time before and after the event to provide for set-up and clean-up for the function. Additionally, Lessee shall have the right to close the gates after 6 PM each evening in order to provide for the safety and comfort of its patrons. Lessee may include a removable rooftop to the Floating Platform Deck. Reserved use of the Floating Platform Deck, including reserved use of up to six (6) events per calendar year by the City for City special events, shall be coordinated with and reserved through the General Manager of Lessee's restaurant. In no circumstance shall any City special event supersede a previously reserved event booked by the restaurant. Lessee shall have a right of first refusal to use the Floating Platform Deck on weekends, holidays and evenings. All food and beverage at non -City sponsored events shall be served through Lessee's restaurant. The City shall have the right to make alternative arrangements for food and beverage at its sole discretion. Notwithstanding same, the Lessee shall have the right to provide such food and beverage if it agrees to provide similar or better quality food and beverage, with a comparable menu, at the same or lesser price than that which the City was going to pay to a third party. Amd Ls Extension 6-23-05 4 5. Ownership of Improvements Paragraph 8 of the Lease is hereby amended to read as follows: 8. Ownership of Improvements. Except for the Pedestrian Walkway, as described in Exhibit "B" hereunder, which shall be constructed by the Lessee and once completed shall immediately become the property of the Lessor, all other improvements, furnishings, and equipment constructed or installed on the Premises by Lessee, including the Floating Platform Deck, shall be personal property of and Lessee shall have legal title thereto during the term of the Lease. Upon the expiration or termination of this Lease, title to all permanent improvements constructed on the Premises and all licenses used in the operation of the restaurant, shall vest in Lessor. Title, to all supplies, furniture, furnishings, inventories, removable fixtures and equipment, whether attached or not to the Premises, and other personal property, including the Floating Platform Deck, shall remain vested with the Lessee, and the Lessee shall have the right to remove such items, from the Premises provided that it repairs the damage caused by removal. Should Lessee fail to repair any damage caused to the Property within ten (10) days after receipt of written notice from the City directing the required repairs, the City shall cause the Property to be repaired at the sole cost and expense of Lessee. Lessee shall pay the City the full cost of such repairs within ten (10) days of receipt of an invoice indicating the cost of such required repairs. At the City's option, the City may require Lessee to remove any improvements constructed in connection with the Floating Platform Deck that remain following the removal of the Floating Platform Deck. Should Lessee fail to remove said improvements and other items of personalty by the last day of the Term, said property shall be deemed abandoned and thereupon shall become the sole personal property of the City. The City, at its sole discretion and without liability, may remove and/or dispose of same as the City sees fit, all at Lessee's sole cost and expense. Amd Ls Extension 6-23-05 5 6. Pledge of Leasehold Interest Paragraph 9 of the Lease is hereby amended to read as follows: 9. Pledge of Leasehold Interest. Lessee may pledge this leasehold interest as security for a bona fide loan, subject to the approval of the City Manager of the City, from reputable lenders or lending institutions, but not beyond the lease term and in an amount not to exceed Two Million Five Hundred Thousand Dollars ($2,500,000) for the sole purpose of funding capital improvements to the Premises. The leasehold interest shall not include public land. There shall be no pledge of leasehold interest as provided herein unless approved in writing by the City Manager. Prior to obtaining written approval, Lessee shall furnish to the City Manager all agreements and legal instruments pertaining thereto involving the pledge of leasehold interest as security. 7. Rent Paragraph 10 of the Lease is hereby amended to read as follows: 10. Rent A. Base Rent. Commencing on the Execution Date, Lessee shall pay Lessor as Base Rent the sum of Three Hundred Sixty Thousand Dollars ($360,000) per year, payable Thirty Thousand Dollars ($30,000) per month. Base Rent shall be paid in advance on the first day of each and every calendar month from the Execution Date. Commencing on the fifth (5th) anniversary of the Effective Date, and every five (5) years thereafter during the term of the Lease, the Base Rent shall be adjusted to that amount which equals fifty percent (50%) of the average total annual rent including Percentage Rent paid by Lessee to Lessor during the previous five (5) year period, provided however that in no event shall the annual Base Rent be reduced below the annual Base Rent applicable for the prior five year period. B. Percentage Rent. From the Execution Date and continuing throughout the term of the Lease, Lessee shall pay to Lessor a sum equal to a variable percentage of Lessee's Gross Revenues (as defined herein) made from or upon the Premises including Amd Ls Extension 6-23-05 6 the Floating Platform Deck during each month which exceeds the Base Rent for that same time period. Percentage Rent shall be computed on a monthly basis ("Percentage Rent Period") beginning with the Execution Date and continuing throughout the Term. Percentage Rent shall be calculated as follows: (1) From the Execution Date and continuing until the earlier of (a) completion of the required Capital Improvements as set forth in Paragraph 34 below; or (b) 24 months after issuance of the first building permit for the required Capital Improvements„ Percentage Rent shall be as follows: 2.5% of Gross Revenues from $0 to $100,000 per month 3% of Gross Revenues over $100,000 to $150,000 per month 5% of Gross Revenues over $150,000 per month (2) From the earlier of (a) completion of the required Capital Improvements as set forth in Paragraph 34 below; or (b) 24 months after issuance of the first building permit for the required Capital Improvements, and continuing through the base term of the Lease, Percentage Rent shall be as follows: 7% of Gross Revenues from $0 to $12,000,000 annually 8% of Gross Revenues over $12,000,000 annually (3) Thereafter, during any option period of the Lease, Percentage Rent shall be as follows: 8% of Gross Revenues. C. Percentage Rent Due. Percentage Rent shall be payable in monthly installments, in arrears, on the first (1st) day of each month during the Tenn, commencing on the first (1st) day of the month which is two months after the Execution Date (e.g., an installment due on July 1 shall be for the Percentage Rent for the preceding May). Lessee shall deliver to Lessor a statement setting forth such Gross Revenues during the Percentage Rent period, and Lessee shall pay to Lessor the amount, if any, by which applicable percentage of the Gross Revenues for such month exceeds the monthly installment of Base Rent for the same month. Each statement shall be signed and certified to be complete and correct by an officer of Lessee. Such statement shall show Amd Ls Extension 6-23-05 7 Gross Revenues and an itemization of any exclusions or deductions therefrom for such month, as well as year-to-date amounts for the current calendar year. Within one hundred twenty (120) days after the expiration of lessee's fiscal year [last Thursday in June], Lessee shall deliver to Lessor annual audited statements of the Gross Revenues for the Premises for the preceding calendar year prepared by an independent Certified Public Accountant. In the event Lessee has underpaid Percentage Rent, Lessee shall pay to Lessor within said one hundred twenty (120) day period any additional rent that is due. In the event Lessee has overpaid Percentage Rent, such overpayment shall be reimbursed to Lessee in the form of a credit to Lessee for the next accruing monthly Rent installments due hereunder. If Lessee shall fail to deliver such annual audited statement to Lessor within said one hundred twenty (120) day period, Lessor shall have the right thereafter to audit or cause an audit to be performed, including without limitation an audit of all records required by Paragraph 13 herein, as may be necessary to certify the amount of Gross Revenues for such rental year, and Lessee shall pay to Lessor the cost of the audit within ten (10) days of receipt from Lessor of the cost thereof. Any underpayment or overpayment of Percentage Rent shall be treated as provided above. D. Payment of Rent. All Rent and statements of Gross Revenues shall be paid and sent to Lessor at the following address, or such other address as may be designated by Lessor in writing: City of Miami Department of Finance Rent Collections 444 SW 2 Avenue, 6th floor Miami, FL 33130 8. Gross Receipts Paragraph 12 of the Lease is hereby amended to read as follows: 12. Gross Revenues Defined. "Gross Revenues" means the gross selling price of all merchandise or services sold, leased, licensed or delivered in, from or arising out of the use of the Premises and the Floating Platform Deck (if constructed) by Lessee, its permitted sublessees, licensees, Amd Ls Extension 6-23-05 8 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 store personnel or vending machines. Any transaction on an installment basis, including without limitation, any "lay -away" sale or like transaction, or otherwise involving the extension of credit, shall be treated as a sale for the full price at the time of the transaction, irrespective of the time of payment or when title passes. Gross Revenues also shall include any sums that Lessee receives from all mechanical or other vending devices placed in or on Premises, including but not limited to: pay telephones, stamp machines, music machines, or amusement machines. Gross Revenues shall also include any deposit not refunded. Gross Revenues shall not include, or if included there shall be deducted (but only to the extent they have been included), the following: (1) The selling price of all merchandise returned by customers and accepted for full credit, or the amount of discounts, refunds, and allowances made on such merchandise. (2) Merchandise returned to sources or transferred to another store or warehouse owned by or affiliated with Lessee. (3) Sums and credits received in the settlement of claims for loss of or damage to merchandise. (4) The price allowed on all merchandise traded in by customers for credit or the amount of credit for discounts and allowances made instead of acceptance of merchandise. (5) Sales and use taxes, so-called luxury taxes, consumers' excise taxes, gross receipt taxes, and other similar taxes now or in the future imposed on the sale of merchandise or services, but only if such taxes are added to the selling price, separately stated, collected separately from the selling price of merchandise or services, and collected from customers. (6) Receipts from the sale of waste or scrap materials resulting from Lessee's operations on Premises. Amd Ls Extension 6-23-05 9 (7) The costs or value of meals or discounts given to employees; for which no payment is received, payroll deduction made and no other consideration is received by Lessee. (8) The cost or value of food and beverages used for entertainment and promotion purposes. (9) The amount of gratuities given by patrons to employees of Lessee and banquet services charges paid to employees. Management or service fees retained by Lessee for managing and/or distributing gratuities shall be deemed part of Gross Receipts. (10) Parking gratuities collected at the Premises. (11) Receipts from the sale of tobacco, cigarettes and cigars. (12) Receipts from the sale or trade-in value of any furniture, fixtures or equipment used on the Premises. 9. Records, Accounts and Statements Paragraph 13 of the Lease is hereby amended to read as follows: 13. Records and Inspections. A. Records. Lessee shall maintain full and accurate books of account, records, cash receipts, and other pertinent data showing its Gross Revenues for the Premises, together with copies of all sales and tax returns covering its operations at the Premises, and any other governmental tax or other retums related to the Premises that show Lessee's sales therein. Lessee shall install and maintain accurate receipt -printing Point of Sale system(s) and shall record on the Point of Sale system(s) every sale and other transaction made from the Premises. At all times during the Term, upon providing ten (10) business days prior notice to Lessee, all records and accounts and all other supporting records, shall be available for inspection and audit by the Lessor and its duly authorized agents or representatives during the hours of 8:00 AM to 5:00 PM, Monday through Friday, and shall be in accordance with generally accepted accounting procedures. Said inspection and audit of such records and accounts shall not occur more than two (2) times in any given calendar year. Lessee shall, upon demand, deliver Amd Ls Extension 6-23-05 10 photographic copies or computer disks, if available, thereof to the Lessor at no cost. The Lessee will cooperate with the Lessor's internal auditors (or such other auditors designated by Lessor) in order to facilitate the Lessor's examination of records and accounts. Such books of account, records, cash receipts, and other pertinent data shall be kept for a period of five (5) years after the end of each year of the Lease. The receipt by Lessor of any statement, or any payment of Percentage Rent for any period, shall not bind Lessor as to the correctness of the statement or the payment. B. City's Right to Audit. Notwithstanding the provisions contained in Paragraph 5.3 requiring Lessee to provided annual audited statement, at its option, Lessor may cause, at its sole cost and expense, at any time within sixty (60) months of receipt of any Percentage Rent statement furnished by Lessee, and upon providing thirty (30) days written notice to Lessee, a complete audit to be made of Lessee and its subtenants, licensees and concessionaires' accounting records in connection with the sales on, from or related to the Premises for the period covered by any such statement furnished by Lessee. If such audit shall disclose an underpayment of Rent, Lessee shall pay Lessor any unpaid balance within thirty (30) days of receipt of notice from Lessor that such balance is due. If such audit shall disclose an overpayment, Lessor shall credit such overpayment towards the next payment of Rent due. Lessee shall allow the Lessor or the auditors of the Lessor to inspect all or any part of the compilation procedures for the aforesaid monthly reports. Said inspection shall be reasonable and is at the sole discretion of the Lessor. The acceptance by Lessor of payments of Percentage Rent shall be without prejudice to Lessor's right to conduct an examination of Lessee's books and records of its and inventories of merchandise on the Premises in order to verify the amount of annual sales made in and from the Premises. Lessor shall not re-examine an accounting period which has previously been audited, unless it has reasonable cause, and may not go back further than sixty (60) months from the receipt of Percentage Rent. To the extent permitted by law, Lessor shall keep any information gained from such statements, inspection or audit confidential and shall not disclose it other than to Amd Ls Extension 6-23-05 I 1 carry out the purposes of this Lease, except that Lessor shall be permitted to divulge the contents of any statements in connection with any financing arrangements or sale of Lessor's interest in the Premises. 10. Manner of Operation Paragraph 16 of the Lease is hereby amended to read as follows: 16. Manner of Operation. A. Lessee shall keep the restaurant and cocktail lounge reasonably stocked with food and beverage and reasonably staffed to serve the patrons thereof, and Lessee shall maintain a standard of quality of food and beverage at least equal to similar operations in the area at reasonably comparable prices.. B. The facilities shall be, at a minimum, open for lunch and dinner seven (7) days a week, with the exception of national holidays or such other days that are approved in writing by the City Manager. Lessee may also close the restaurant during construction of improvements, if deemed necessary or appropriate in its reasonable discretion, provided, however, that in no event shall the Premises be closed more than three (3) consecutive days during any one calendar year. There shall be no abatement of rent for any period of time that the Premises is closed. C. Except where the Premises are rendered untenantable by reason of fire or other casualty, the Lessee shall at all times during the Term occupy and continuously conduct operations of the Rusty Pelican on the Premises in accordance with this Lease. 11. Maintenance and Repair Paragraph 18 of the Lease is hereby amended to read as follows: 18. Maintenance, Repair and Alterations A. Duty to Repair. During the term hereof, Lessee, at Lessee's expense, shall keep and maintain the Premises and all improvements thereon in good and sanitary order, condition and repair consistent with the operation of a first-class quality restaurant in the Miami area. Upon expiration or termination hereof, Lessee shall surrender and deliver Amd Ls Extension 6-23-05 12 up to Lessor the Premises and all permanent improvements thereon in good and usable condition, ordinary wear and tear excepted. B. Periodic Inspections. Within sixty (60) days of every fifth (5th) anniversary of the Execution Date, Lessee and Lessor, together, and with their respective consultants shall conduct an inspection of the Premises for the purposes of assuring that the Premises are maintained in a first class condition. Lessee and Lessor will each prepare a list of suggested repairs. The parties shall endeavor, in good faith, to reconcile their respective repair lists within a further sixty (60) day period. Any disputes shall be submitted to arbitration as provided hereinafter. Once reconciled/agreed, or an arbitration decision has been rendered, Lessee will, within 120 days, submit to Lessor plans for such repairs and, after approval thereof, will perform such repairs in an expeditious manner. The cost of such repairs shall apply toward the Capital Repairs, Replacements and Improvements Fund pursuant to Subparagraph D below. C. Alterations and Additions. Lessee shall not make any alterations or additions to the Premises exceeding the cost of One Hundred Thousand Dollars ($100,000) in each instance, shall not make any structural alterations or alterations to the exterior of the Premises, shall not change the footprint of the Premises or install any signage to the exterior of the Premises, ("Alterations") without the prior written approval of the City Manager. All permitted Alterations shall be completed free of liens and in accordance with all applicable legal requirements. The City Manager may impose, as a condition of the consent to an Alteration, such requirements as he/she, in his/her reasonable discretion, may deem desirable, including, but not limited to, obtaining bonds and Builder's Risk Insurance. D. Capital Repair and Improvements. The parties recognize that the Premises require regular capital repairs to remain competitive in the marketplace. Therefore, commencing with the fourth anniversary date of the Effective Date, Lessee shall begin depositing 2.0% of monthly Gross Revenues into a separate Capital Repairs, Replacements and Improvements Fund, to be maintained by Lessee in a separate account, and spent by Lessee on capital expenditures including the costs of any repairs to the Premises and any improvements or equipment installed (including labor and materials, Amd Ls Extension 6-23-05 13 but excluding routine maintenance and landscaping payroll), repair or replacement of restaurant facility furniture, fixture and equipment ("FF&E"), replacement of china, glassware, and silverware and the repair of such FF&E, and landscaping replacements and improvements. Any such capital expenditures in excess of the 2.0 % of Gross Revenues made by Lessee in any one year shall be carried over and counted against future funding requirements of Lessee concerning the Capital Repair, Replacements and Improvements Fund. Lessee shall submit annual reports to Lessor, detailing such expenditures, and Lessor may audit such reports at Lessor's expense, within one (1) year of its receipt of any such report. E. Process for Disagreement. In the event of any unresolved dispute between the Lessor and Lessee regarding the reserve fund and/or reserve fund expenditures, the parties shall submit the dispute to arbitration conducted by the American Arbitration Association in accordance with the Commercial Arbitration Rules of the American Arbitration Association then in effect. Any such arbitration shall be held and conducted in Miami, Florida before an arbitrator who shall be selected by mutual agreement of the parties. If agreement is not reached on the selection of the arbitrator within ten (10) days, then such arbitrator shall be appointed by the presiding judge of the local state court. The provisions of the Commercial Arbitration Rules of the American Arbitration Association shall apply to and govern such arbitration, with the exception that the decision of the arbitrator shall be final, and judgment may be entered on it in accordance with applicable law in any court having jurisdiction over the matter. 12. Destruction Paragraph 19 of the Lease is hereby amended to read as follows: 19. Destruction. In the event the Premises shall be substantially destroyed or so damaged or injured by fire or other casualty during the term of this Lease whereby the same shall be rendered completely or substantially untenantable, then Lessee shall commence repairs as soon as practicable (but not later than six months thereafter without the written consent of the City Manager) and complete such repairs within a reasonable period of time. Amd Ls Extension 6-23-05 14 In the event the Premises are substantially destroyed or so damaged or injured by fire or other casualty that the Premises cannot be rendered tenantable or that Lessee elects not to commence repair within the six month period as set forth above, or such additional period of time as agreed to by the Lessor's City Manager, then the proceeds of the insurance policy or policies covering such loss or damage shall be paid to the City of Miami and the Lessee as its interests appear, and this Lease shall be deemed terminated and the rent shall be payable only to the date that said Premises are rendered untenantable. Notwithstanding the above, all insurance proceeds received for loss relating to furniture, fixtures and equipment and business interruption shall be paid to Lessee. 13. Insurance Paragraph 21 of the Lease is hereby amended to read as follows: 21. Insurance. A. At all times during the Lease Term, Lessee shall, at Lessee's sole cost and expense but for the benefit of Lessor and Lessee as their interests may appear, maintain in full force and effect the following insurance: 1. Property Insurance. "All risk" property insurance with extended coverage against loss or damage by earthquake, mudslide, windstorm, flood with such endorsement for amended coverage, vandalism, malicious mischief, sprinkler leakage and special coverage, including flammable materials used for cooking. i) Amounts. Such coverage shall be in the following amounts: (i) as to windstorm, Seven Hundred Fifty Thousand Dollars ($750,000) building coverage and Two Hundred Fifty Thousand Dollars ($250,000) contents coverage; (ii) as to flood, Five Hundred Thousand Dollars ($500,000) building coverage and Five Hundred Thousand Dollars ($500,000) contents coverage; and (iii) as to all other perils, One Hundred Percent (100%) of the replacement cost of the Leasehold Improvements (exclusive of foundation and excavation costs), Lessee's alterations, improvements, fixtures, equipment, furniture, trade fixtures and floor Amd Ls Extension 6-23-05 15 coverings, including the expense of the removal of debris as a result of damage by an insured peril (collectively, the "Insured Property") on the Property. ii) Deductibles. The maximum deductibles for such coverage shall be as follows: (i) as to windstorm, greater of One Hundred Thousand Dollars ($100,000) or Five Percent (5%) of value of building and contents; (ii) as to flood, One Thousand Dollars ($1,000) on building and One Thousand Dollars ($1,000) on contents; and (ii) as to all other perils, One Percent (1%) of the insured value. iii) Loss Payees and Insureds. Lessor and Lessee shall be named as loss payees. Lessee shall be the first named insured, and Lessor shall be named as additional insured. iv) Special Considerations for Property and Windstorm Insurance. Notwithstanding the foregoing, the parties acknowledge and agree that coastal properties are often precluded from being insured by private insurers and that any casualty and windstorm insurance may have to be written through the Florida Joint Underwriters Association and/or other governmental or other insurance pool which may include certain prohibitions such as no replacement cost coverage and/or modifications to "deductibles". v) Adjustments to Amount of Insurance. Commencing September 1, 2006 and every twelve months thereafter (the "Adjustment Date"), the amounts of insurance coverage provided in paragraphs (i) and (ii) above shall be increased by any increase during the prior year in the CPI index (Index to be used to be determined) (hereinafter the "CPI"). Said adjustment shall be hereinafter referred to as the "CPI Escalation". The CPI Escalation shall be equal to the amount in effect for the immediately preceding year plus the product of that amount multiplied by the "CPI Percentage" (as defined below). Amd Ls Extension 6-23-05 16 The CPI Percentage shall equal the fraction (i) whose numerator equals the total of (a) the monthly Index published five months prior to the Adjustment Date (or the nearest reported previous month), minus (b) the monthly Index published five months prior to the Adjustment Date of the immediately preceding year and (ii) whose denominator is the same as (b) above. If the Index is discontinued with no successor Index, Lessor and Lessee shall agree to use a comparable index. Lessor shall compute the CPI Escalations and send a notice, with calculations, to Lessee setting forth the adjusted insurance amounts within sixty (60) days of each Adjustment Date or as soon as such Index is available. In the event the insured amounts increase, Lessee shall procure such coverage and submit evidence of same to Lessor within sixty (60) days of receiving such notice with such adjusted insurance coverage being effective August of the same year. vi. Notwithstanding the CPI increase set forth above, upon completion of each phase of the improvements contemplated in the amendment, the Lessee shall increase its property insurance to reflect the increased replacement cost of the improvements and shall obtain additional windstorm and flood insurance in the same ratio to building and content value in effect at the time of execution of the amendment, subject to the limitations set forth in Paragraph A(1)(iv) above. vii. Notwithstanding the above, unless expressly waived in writing by the City Manager, commencing on September 1, 2010 and every four years thereafter, the replacement cost of the insured property shall be adjusted pursuant to an appraisal conducted by an insurance appraiser, selected and paid for by the Lessee, provided that the Lessee shall obtain the Lessor's approval (which approval shall not be unreasonably withheld) of the appraiser before commencement of the appraisal. The appraiser selected by the Lessee shall submit a written Amd Ls Extension 6-23-05 17 report of the appraised replacement cost to the Lessor and the Lessee by July 15th in the year of the adjustment. If the Lessor or the Lessee is not satisfied with this report, the dissatisfied party shall serve upon the other a notice of dissatisfaction within thirty (30) days after receipt of the report and parties shall in good faith attempt to resolve any disputes concerning the appraised replacement cost. During this period of the dispute, the Lessee shall continue to maintain insurance in an amount equal to the greater of the amount determined by the appraiser or that maintained before the dispute arose. The Lessee shall procure and deliver to the Lessor written confirmation from the insurer(s) evidencing the increase in insurance which may be required to comply with the provisions above which increase in insurance shall be effective September 1 of the same year in which the appraisal is made. For those years in which an appraisal adjustment is made, there shall be no CPI Escalation to the insured amounts. 2) Business Interruption Insurance. Business interruption insurance covering "All Risk" perils in the limits of which insurance, if available, shall not be less than the annual Base Rent and the debt service payments, if any, affecting Property during the full period of reconstruction following a total loss. Lessee shall be named as loss payees. Lessee shall be the first named insured and Lessor shall be named as additional insured. 3) Boiler and Machinery Insurance. Boiler and machinery insurance covering repair and replacement of all boilers and machinery serving or benefiting the Property. The policies of insurance shall be endorsed so as to provide use and occupancy coverage for the Property in such amount as may be reasonably acceptable to Lessor. Lessee shall be named as loss payee. Lessee shall be the first named insured, and Lessor shall be named as additional insured. As of the Execution Date, Two Million Five Hundred Thousand Dollars ($2,500,000) in coverage with a Ten Thousand Dollars ($10,000) deductible is acceptable to Lessor. Amd Ls Extension 6-23-05 18 B. Other Insurance To Be Carried. Lessee shall also, at Lessee's sole cost and expense but for the mutual benefit of Lessor (with Lessor being named as an additional insured thereunder) and Lessee, maintain the following insurance: 1. CGL insurance. Commercial General Liability insurance on a commercial general liability coverage form with "broad form" coverage, or its equivalent, including contractual liability, products and completed operations, personal injury, liquor legal liability, garage keepers liability, and products and completed operations, personal injury, and premises coverage against all claims, demands or actions, bodily injury, personal injury, death or property damage occurring in or about the Property. i) Amounts. The limits of such coverage shall not be less than One Million Dollars ($1,000,000) per occurrence, Two Million Dollars ($2,000,000) aggregate. No deductible in excess of Twenty-five Thousand Dollars ($25,000) will be carried under this coverage without the City Manager's prior written consent, which shall not be unreasonably withheld. The Lessor shall be named as Additional Insured on the policy or policies of insurance. ii) Umbrella Policy. Lessee shall further maintain an excess liability umbrella policy whose limits shall not be less than a combined single limit of Ten Million Dollars ($10,000,000). 2. Builder's Risk. During periods of excavation and/or construction or during periods of alteration or during periods of restoration in the event of damage or destruction or condemnation or during periods of razing or demolition at, in or on the Property, the improvements or any part of it, an all risk Builder's Risk policy (including extended coverage for fire, lightning, earth movement, flood, collapse, business interruption, hurricane, boiler and machinery) covering the interests of Lessor and Lessee. Such policy shall insure that portion of the improvements which is affected by such excavation and/or construction for not Amd Ls Extension 6-23-05 19 less than One Hundred Percent (100%) replacement cost on a completed value basis (including foundations and pilings), as well as the contingent liability from the operation of buildings, and coverage for the demolition cost of undamaged portions of buildings. This Builder's Risk coverage may be satisfied by an overall policy covering "additions" made to the buildings on the Premises or installation Floaters coverage. 3. E & 0 Coverage. Lessee shall cause all of the key or primary professionals retained by it in connection with any construction (e.g., architects and engineers) to procure errors and omission coverage reasonably satisfactory to Lessee for Lessee's and Lessor's benefit, in such amounts as are customarily carried by such professionals in Miami -Dade County, Florida. As of the Execution Date, One Million Dollars ($1,000,000) in coverage is acceptable to Lessor. Lessor shall be named as Additional Insured. 4. Worker's Compensation. Worker's compensation and occupational disease coverage in the amounts and types required by State law. Only Lessee shall be named as an insured. During the construction of any improvements, Lessee shall carry or cause to be carried worker's compensation insurance and any such other insurance as may be required by law to be carried by Lessor and Lessee or either of them in connection with the construction. 5. Automobile Liability. Automobile liability insurance covering all owned, non -owned and hired vehicles used in conjunction with operations covered by this Agreement. This automobile liability coverage may be satisfied by a policy obtained by an independent valet company if such valet service is contracted out by Lessee, subject to said valet company listing Lessor and Lessee as additional insureds, and Lessor receiving and approving such evidence of insurance. The policy or policies of insurance shall contain such limits as may be reasonably requested by Lessor from time to time but not less than Five Hundred Thousand ($500,000) for bodily injury and property damage. 6. Terrorism Coverage. The Lessor's Director of Risk Management shall have the right to require insurance coverage for terrorist acts, if such Amd Ls Extension 6-23-05 20 coverage is available in the insurance market, at a reasonable cost, with such limits and deductibles to be approved by the Director of Risk Management. 7. Other Coverage. In the event that any other type of legislation may be enacted imposing special liability upon Lessor or Lessee by virtue of its use for any special purposes, before Lessee shall so use the Property and/or the improvements or any part of it for such purposes, Lessee shall provide insurance in form and substance, and with insurers and limits reasonably satisfactory to Lessor's Director of Risk Management and meeting commercial standards insuring the interests of Lessor and Lessee and naming Lessor as additional insured. 8. Amendment to Coverage. The Lessor's Director of Risk Management shall have right to reasonably amend the herein insurance requirements by the issuance of a notice in writing to Lessee at least 90 days in advance of the renewal date on the insurance policy in question. Such amended coverage shall be procured by Lessee no later than the time for renewal and/or procurement of its next insurance policy. C. Policies Obtained by Independent Contractors. Lessee may cause its independent contractors to provide some or all of the insurance coverages required hereunder. To the extent that such independent contractors carry such coverages, Lessee shall not be required to carry such coverages, so long as the coverages obtained by Lessee and such independent contractors together satisfy the requirements of this section on insurance. Lessor and Lessee shall be named as additional insureds as to any such coverages obtained by Lessee's independent contractors. D. Delivery of Insurance Policies. All public liability and worker's compensation policies shall be retained by Lessee. All other policies of insurance required to be furnished shall be held jointly by Lessor and Lessee. Insurance company certificates evidencing the existence of all of these policies of insurance shall be delivered to Lessor. Amd Ls Extension 6-23-05 21 i) Required Policy Provisions. All policies of insurance required to be provided and obtained shall provide that they shall not be amended or canceled on less than thirty (30) days' prior written notice to Lessor and all insureds and beneficiaries of the policies; provided, however, that if thirty (30) days' notice is ever commercially unavailable, then the required number of days' notice shall be reduced to such number as is commercially available. All policies of insurance shall further provide that they shall not be cancelled for non-payment of premium on less than ten (10) days' prior written notice to Lessor and all insureds and beneficiaries of the policies. All such policies shall contain waiver of subrogation rights endorsements as required below. Lessor shall have no obligation to pay premiums or make contributions to the insuring company or any other Person or satisfy any deductible. ii) Delivery. On or before the Execution Date and then not less than twenty (20) days prior to the expiration date of any policy required to be carried pursuant to this Article, Lessee shall deliver to Lessor the applicable respective policies and insurance company certificates evidencing all policies of insurance and renewals required to be furnished hereunder, including those policies that may be provided by a valet company or other independent contractor. Receipt of any documentation of insurance by Lessor or by any of its representatives which indicates less coverage than required does not constitute a waiver of Lessee's obligation to fulfill the insurance requirements herein. E. Lessor's Right to Obtain. If Lessee fails to pay insurance premiums when due or to comply with other insurance requirements set forth in this Lease, Lessor shall have the right, at its option but not an obligation, to order insurance policies and to advance such sums as are required to maintain or procure, such insurance, and to the extent of the money so advanced, Lessor shall be entitled to reimbursement by Lessee in which event the amount of the premium paid shall be paid by Lessee to the Lessor as additional rent upon demand and shall in each instance be collectible on the first day of the month or any subsequent month following the date of payment by the City. Lessee's failure to procure insurance shall in no way release Lessee from its obligations and Amd Ls Extension 6-23-05 22 responsibilities as provided hereof. Unless there would ensue a lapse of coverage, Lessor shall, before making any such advance, provide Lessee with thirty (30) days' prior written notice and the opportunity to obtain the required policies. F. Insurer To Be Approved; Premium Receipts. All policies of insurance of the character described herein shall be effected under policies issued by insurers permitted to do business in the State of Florida as an admitted or non -admitted carrier and rated in Best's Insurance Guide, or any successor thereto (or, if there is none, an organization having a national reputation for rating insurance companies) as having a general policyholder rating of "A" and a financial strength rating of at least "X". In the event that a carrier with such rating is not available, .the policy must be submitted to Lessor's Director of Risk Management for review and acceptance. On written request by Lessor, Lessee shall provide photocopies of receipts showing the payment of premiums for all insurance policies required to be maintained by this Lease. G. Waiver of Subrogation i) Mutual Waiver. Each Party waives all rights to recover against the other Party for any damage arising from any cause covered by any insurance required to be carried by the waiving party, or any insurance actually carried by the waiving party; provided, however, that such waiver shall apply only to the extent the applicable insurers issue the appropriate waiver of subrogation rights endorsements described below. ii) Endorsements. Each party shall cause its insurer(s) to issue appropriate waiver of subrogation rights endorsements to all policies of insurance carried in connection with the Premises. Amd Ls Extension 6-23-05 23 14. Notices Paragraph 27 of the Lease is hereby amended to read as follows: 27. Notices. All notices shall be sent to the parties at the following addresses: LESSOR: The City of Miami, Florida City Manager 3500 Pan American Drive Miami, FL 33133 With copy to: City of Miami City Attorney 444 SW 2 Avenue, 9th Floor Miami, FL 33130 City of Miami Director of Economic Development 444 SW 2 Avenue, 3rd floor Miami, FL 33130 LESSEE: Biscayne Bay Restaurant Corporation 8191 East Kaiser Boulevard Anaheim, CA 92808 Attention: President With copy to: Same Address Attention: General Counsel Lessor and Lessee may change such addresses at any time upon giving the other party written notification. All notices under this Lease must be in writing and shall be deemed to be served when delivered to the address of the addressee. All notices served by mail shall be registered or certified mail, return receipt requested. Lessee may designate additional persons for notification of default. Amd Ls Extension 6-23-05 24 15. Capital Improvements A new Paragraph 34 is hereby added to read as follows: 34. Capital improvements. A. Lessee's Capital Improvements. In consideration of this amendment, Lessee has agreed to construct certain required Capital Improvements as described in Exhibit "B". The parties have further agreed that additional optional Capital Improvements may be constructed on the Premises as described in Exhibit "B". The required Capital Improvements and the optional Capital Improvements are collectively referred to as "Lessee's Capital Improvements". With respect to the required Capital Improvement of a Pedestrian Walkway, Lessee shall use its best efforts to obtain all permits and approvals from Governmental Authorities (collectively, the "Pedestrian Walkway Permits") which are required to construct the Pedestrian Walkway. If deemed necessary or desirable by the Lessor, any applications for Pedestrian Walkway Permits shall be made with the City as the named applicant or co -applicant, as required by law. Lessor shall in good faith cooperate with Lessee and use good faith efforts to coordinate the prompt review and processing of the plans for Lessee's Capital Improvements by all City personnel with jurisdiction over such plans and applications for necessary permits and approvals within the City. Lessee agrees to make such changes to the Pedestrian Walkway Permit applications as may be necessary to obtain the Pedestrian Walkway Permits even if such modification results in the elimination of the optional Floating Platform Deck. If after using its best efforts, Lessee cannot obtain the Pedestrian Walkway Permits, Lessee shall provide written notice of same to Lessor and Lessee shall thereafter be released from its obligation to construct this required Capital Improvement. Lessee may phase Lessee's Capital Improvements as described in Exhibit "B", each such phase being referred to herein as a "Project". Subject to the provisions of Paragraph 35 below, and conditioned upon Lessee receiving Lessor's approval pursuant to Paragraph 34(B) below and all necessary approvals and permits from all applicable Governmental Authorities, on a Project -by -Project basis Lessee shall cause to be constructed and/or installed Lessee's Capital Improvements at a total cost of not less than Amd Ls Extension 6-23-05 25 Three Million Dollars ($3,000,000), including costs of permits, architectural, engineering and other professional fees and related costs. B. Plans and Specifications. Lessee shall furnish plans and drawings for the Lessee's Capital Improvements to the City Manager for approval, which approval shall not be unreasonably delayed or withheld. The plans and drawings shall be prepared by a licensed architect and in sufficient detail to obtain a building permit from the City of Miami. C. Completion of Lessee's Capital Improvements. Lessee shall obtain all applicable permits for Lessee's required Capital Improvements within six (6) months after the Effective Date. Lessee shall substantially complete construction of each such Project in an expeditious manner but no later than twenty-four (24) months of obtaining a building permit for each such Project, provided, however, that all of the required Capital Improvements and the expenditure of no less than Three Million Dollars ($3,000,000) shall be completed not later than two (2) years from the Effective Date. Failure to complete the required Capital Improvements and the expenditure of no less than Three Million Dollars ($3,000,000) within two (2) years from the Effective Date shall result in this Lease not being extended and the Lease shall terminate on the Original Expiration Date. Lessee shall further not be entitled to reimbursement of any funds so expended towards completion of Lessee's Capital Improvements. D. Performance Bond. As assurance for the faithful and timely performance and construction of the Lessee's Capital Improvements, Lessee shall, prior to commencement of construction of each Project in excess of $200,000, furnish Lessor a bond (or such alternate form of security, such as a letter of credit, as may be approved by Lessor) in the amount of 100% of the cost of each Project. The surety on said bond (or issuer of any alternate form of security), shall be subject to the approval of the City Manager, which approval shall not be unreasonably withheld or delayed. The bond (or alternate form of security) shall be released by Lessor upon completion of each Project of Lessee's Capital Improvements as evidenced by the issuance of a Temporary Certificate of Occupancy (TCO), or Certificate of Occupancy (CO) if no TCO is issued, or a certificate of completion if no CO is required. Amd Ls Extension 6-23-05 26 16. State Approval A new paragraph 35 is hereby added as follows: 35. State Approval Lessee acknowledges that the Land is subject to certain restrictions contained in Deed No. 18030 made by the Trustees of the Internal Improvement Fund of the State of Florida to the City dated July 23, 1929. Lessee and Lessor will fully cooperate and work together utilizing best efforts and diligence in order to obtain a finding of compliance with the deed restriction or a waiver of deed restriction if a finding of compliance cannot be obtained from the State of Florida Board of Trustees of the Internal Improvement Trust Fund. The extension of the Term beyond the Original Expiration Date, as contemplated in Paragraph 2 above is subject to, among other things, the City obtaining the approval of the Trustees of the Internal Improvement Fund of the State of Florida (the "State Approval"), for the use of the Premises, as set forth in this Lease. The City and Lessee shall share 50/50 in any and all fees that may be due the State from the Effective Date and through the expiration of the Term. The Lessee's 50% share of the annual payment due to the State shall in no event be more than the greater of: (i) 1 % of its Gross Revenues in any fiscal year of Lessee or (ii) Ninety Thousand Dollars ($90,000) ("Lessee's Cap"). In the event on the Effective Date (i) Lessee's 50% share exceeds Lessee's Cap or is in an amount that if paid by the City could result in the City receiving less. than the Base Rent, or (ii) the payment of the City's 50% share could result in the City receiving less than the Base Rent, then the term will expire on the Original Expiration Date unless the Lessee agrees to raise its cap accordingly to cover the difference. In the event that the State requires fees on a retroactive basis prior to the Effective Date, the City and Lessee agree that no fees will be retroactive to the Lessee. However, the City will advise Lessee in writing, within fifteen (15) days of its receipt of notice from the State, that retroactive fees will apply and Lessee will have fifteen (15) days to respond in writing to the City as to whether or not Lessee is willing to share on a 50/50 basis the retroactive fees. In the event that the Lessee is not willing to share the retroactive fees on a 50/50 basis, or fails to respond within said fifteen (15) day period, then the Term shall expire on the Original Amd Ls Extension 6-23-05 27 Expiration Date. In the event that the State Approval is not obtained within eighteen (18) months from the Execution Date, then the Term shall expire on the Original Expiration Date. If the Lease expires on the Original Expiration Date, then all other provisions which under this Amendment become effective on the Effective Date will be null and void. 17. Safety. A new paragraph 36 is hereby added as follows: 36. Safety, Lessee will allow City inspectors, agents or representatives the ability to monitor its compliance with safety precautions as required by federal, state or local laws, rules, regulations and ordinances. By performing these inspections the City, its agents, or representatives are not assuming any liability by virtue of these laws, rules, regulations and ordinances. Lessee shall have no recourse against the City, its agents, or representatives from the occurrence, non-occurrence or result of such inspection(s). 18. Americans With Disabilities Act A new paragraph 37 is hereby added to read as follows: 37. Americans With Disability Act. Lessee shall affirmatively comply with all applicable provisions of the Americans with Disabilities Act ("ADA") in the course of providing any work, labor or services funded by the City including Titles I and II of the ADA (regarding nondiscrimination on the basis of disability) and all applicable regulations, guidelines and standards. Additionally, Lessee shall take affirmative steps to ensure nondiscrimination in employment of disabled persons. 19. Force Maieure A new paragraph 38 is hereby added to read as follows: 38. Force Majeure. In the event that the ability of the parties hereto to perform their respective obligations under this Lease are rendered impossible or impractical by acts of God Amd Ls Extension 6-23-05 28 (including fire, flood, hurricane, windstorm, and/or earthquake), war, civil unrest or strife, terrorist acts or threats, or labor shortage, walkouts, unrest or stoppages and other conditions or causes beyond such party's reasonable control ("Force Majeure"), then the time or times for the performance of the obligation so affected (except for the payment of rent) shall be extended for such time until such Force Majeure condition ceases. Amd Ls Extension 6-23-05 29 IN WITNESS WHEREOF, the parties have executed this Lease as of the date first above written. "LESSOR" Attest: THE CITY OF MIAMI Priscilla A. Thompson City Clerk By: Joe Arriola City Manager Date APPROVED AS TO INSURANCE APPROVED AS TO FORM AND REQUIREMENTS: CORRECTNESS: Dania F. Carrillo, Director Jorge L. Fernandez Risk Management Department City Attorney Attest: By: "LESSEE" BISCAYNE BAY RESTAURANT CORPORATION By: Print Name and Title David C. Tallichet, CEO Date Date Amd Ls Extension 6-23-05 30