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1996-10-15 City Council (26)
TO: City Manager’s of Palo Alto Summary Report HONORABLE CITY COUNCIL FROM:CITY MANAGER DEPARTMENT:ADMINISTRATIVE SERVICES AGENDA DATE: OCTOBER 15, 1996 CMR:413:96 SUBJECT:RECOMMENDATION TO AWARD AN OPTION TO LEASE THE RESTAURANT AT THE PALO ALTO MUNICIPAL GOLF COURSE, 1875 EMBARCADERO ROAD, TO R & T RESTAURANT CORPORATION REQUEST: This report transmits two proposals submitted in response to the Request for Proposals (RFP) for an option, to lease the restaurant at the Palo Alto Municipal Golf Course at 1875 Embarcadero Road, Palo Alto; transmits the Proposal Evaluation Committee’s (Committee) recommendation for a successful proposer and recommends that Council award the option to lease to R & T Restaurant Corporation. Due to their length, copies of the proposals are provided only for Council and Library packets. A summary of the proposals is provided in all packets. Complete copies of the proposals are available for review in the Real Property office on the fourth floor of City Hall, as well as at all libraries except Children’s Library. RECOMMENDATIONS: Staff recommends that Council authorize the Mayor to execute the attached option to lease between the City of Palo Alto and R & T Restaurant Corporation for the Golf Course Restaurant operation and improvement. POLICY IMPLICATIONS: This agreement does not represent any changes to existing City policy. CMR:413:96 Page 1 of 9 EXECUTIVE SUMMARY: On April 1, 1996, Council approved an RFP for an option to lease the restaurant at the Palo Alto Municipal Golf Course. The RFP was advertised with a deadline of July 2, 1996 and, on that date, proposals were received from R& T Restaurant Corporation and Hazards, Inc. A committee consisting of representatives of the Administrative Services and Community Services Departments and the Golf Advisory Committee evaluated the proposals and interviewed the proposers, based on the criteria included in the RFP. Based on this evaluation, the Committee recommends that CounCil award the option to lease to R & T Restaurant Corporation. The attached option to lease with R & T Restaurant Corporation is consistent with the terms of the RFP approved by Council and includes a $10,000 purchase price of the option; a 10 to 20-year term, based on the value of the tenant improvements; and a minimum annual rent of the greater of $48,000 or 6 percent of gross receipts. FISCAL IMPACT: Annual rental revenue from the lease will be a minimum of $48,000 for the first year, to be increased based on the Consumer Price Index (CPI) for the remaining years of the lease. Estimated value of the improvements to be made by the tenant is $255,500 to $359,000. ENVIRONMENTAL IMPACT ASSESSMENT: Granting of the option to lease is not a project under the California Environmental Quality Act (CEQA). An environmental impact assessment, as may be required by CEQA, will be prepared during the option period, in conjunction with the optionee’s application and approval of a conditional use permit for the proposed use and any improvements. ATTACHMENTS~XHIBITS: Attachment A (Summary of Golf Course Restaurant RFP) Attachment B ( Summary of Proposals for the Option to Lease the Golf Course Restaurant) Attachment C (Proposal Criteria Summary Table) Option to Lease Proposals (Council and Library Packets Only) CMR:413:96 Page 2 of 9 PREPARED BY: Janet Freeland, Senior Financial Analyst DEPARTMENT HEAD APPROVAL: Ern .y Harrison Deputy City Manager, Administrative Services CITY MANAGER APPROVAL: CC:R & T Restaurant Corporation Hazards, Inc. Golf Course Corporation Golf Advisory Committee members CMR:413:96 Page 3 of 9 SUBJECT: City of Palo Alto City Manager’s Report RECOMMENDATION TO AWARD AN OPTION TO LEASE THE RESTAURANT AT TttE PALO ALTO MUNICIPAL GOLF COURSE, 1875 EMBARCADERO ROAD, TO R & T RESTAURANT CORPORATION BACKGROUND: On October 1, 1979, the Council approved an RFP to solicit proposals for operation of the restaurant at the Palo Alto Municipal Golf Course. On April 25, 1980, the City entered into a ten-year lease with Hazards, Inc. for the restaurant operation. This lease terminated on May 20, 1990 and was put on month-to-month holdover pending resolution and approval of the Golf Course Master Plan, a conceptual proposal developed to upgrade various components of the Golf Course, which included improvements to the restaurant. In May 1995, Council approved a Site and Design Application and a Mitigated Negative Declaration for the Golf Course Master Plan. On April 1, 1996, Council approved an RFP and directed staffto solicit proposals for an option to lease the restaurant at the Palo Alto Municipal Golf Course. POLICY IMPLICATIONS: This agreement does not represent any changes to existing City policy. DISCUSSION: Solicitation Process In April and May 1996, RFP information flyers were sent to interested persons and organizations, and the RFP was advertised in the San Jose Mercury. News, San Jose Business Journal and the San Francisco Business Journal, and Palo Alto Weekly. A summary of the RFP is attached (Attachment A). In response to this advertising, approximately 25 proposal packages were mailed or given to interested parties. Proposals were due July 2, 1996 and on that date, two proposals were received, from R & T Restaurant Corporation (R & T), which currently operates restaurants in four California cities, including a golf course restaurant in CMR:413:96 Page 4 of 9 Hayward; and from Hazards Inc., the current leaseholder and operator of the Palo Alto Golf Course restaurant (Harry’s Hofbrau Palo Alto). These proposals are summarized in Attachment B, and complete c~)pies of the proposals are provided for Council and Library packets. Evaluation of Proposals The Committee formed to evaluate the proposals and make a recommendation to the Council was composed of staff from the Departments of Administrative Services and Community Services and four representatives of the Golf Advisory Committee. The Committee’s evaluation of the proposals included a review of the written proposals, interviews with the proposers and visits to the proposers’ existing restaurant operations. Evaluation of Proposals The proposals were evaluated based upon the criteria included in the RFP and listed in Attachment C. Proposed operational program with regard to providing the required and optional uses which best fit the community, golf and general public customers and the City. Both R & T and Hazards propose to provide the services and uses required by the RFP, which include minimum hours of operation for food and beverage service; scheduling of meeting rooms for golf and golf-related activities; and providing an express line for golfers. In addition, both proposers indicated a willingness to extend the minimum hours of operation from time to time, based on the needs and desires of customers. Both R & T and Hazards propose menus and prices similar and comparable to the existing golf course restaurant operation, with the addition of some new items. As optional uses, R & T proposes a mobile on-course food and beverage cart, catering, and promotion and maximum utilization of the Club House banquet and meeting facilities. Hazards proposes to install a call box on the ninth tee to allow golfers to call in orders available for pick-up upon arrival at the turn and possibly utilize a mobile cart or construct a food stand on the ninth hole. Hazards also proposes to offer catering and, after completion of the golf course parking lot lighting improvements, dinner service; however, these services would be more limited than those proposed by R & T. Both proposers indicated a willingness to work with the golf groups to meet their needs and to cooperate in promotions with the Parks and Golf Division and the golf professional. R & T proposes to conduct a customer survey to determine the needs and desires of customers concerning-hours, services and food preferences. Both proposers plan CMR:413:96 Page 5 of 9 to construct the deck and pass-through food service within the first year of operations. In addition, R & T proposes to expand the bar and dining room and to make other improvements to the restaurant included in the Golf Course Master Plan. These improvements would be constructed within the first four years of the lease or within six months after completion of City renovation of the Golf Course, whichever comes first. Proposer’s capabilities to improve and operate a first-class golf course restaurant. R & T has developed and maintained restaurant operations in four California cities for the past 24 years, including banquet and catering services and programs. R & T presently manages four restaurant facilities, including the Skywest Golf Course Restaurant in Hayward. R & T has operated Porky’s in Orinda for 1 year; Smugglers Inn in Fresno for 7 years; and Porky’s (formerly the Butcher Shop) in Hayward for 24 years. For 10 years until 1996, R & T managed the Velvet Turtle Restaurant in Pleasanton. R & T currently manages and operates its restaurants with a combined staff of 160 (70 percent full time). Tom Talia, who is President of R & T and who will direct and administrate the golf course restaurant operation, has a degree from UCLA in Business Administration and began his career in the restaurant profession in 1972. Darrien Talia, who will manage the golf course restaurant, is a 1988 graduate of the San Francisco Culinary Academy and has served as manager of several restaurants, including the Skywest Golf Course Restaurant. Gene Rapp, a principal partner in R & T who will administer and manage construction of the proposed tenant improvements, is a licensed general contractor and has knowledge and experience in designing, constructing and maintaining facilities. A review ofR & T’s five-year pro forma and financial statements indicates its operations are in healthy financial condition, and that sufficient capital exists or will be generated to complete the improvements. Hazards, Inc. is one of several companies which operate Harry’s Hofbrau restaurants in Redwood City, Mountain View and Palm Springs, and at the Palo Alto Golf Course Restaurant. Stephen L. Kramer, Vice President of Hazards, Inc., would operate and manage the Golf Course Restaurant. Mr. Kramer has 18 years experience in the restaurant business, the last 4 as general manager for Harry’s Hofbrau Palo Alto. In addition to his knowledge of the restaurant business, Mr. Kramer is a golfer, who feels he understands golfers’ needs and requirements. Hazards’ five-year pro forma and financial statements show its operations are in healthy financial condition and that sufficient capital is available or would be generated to complete the proposed improvements. CMR:413:96 Page 6 of 9 Experience of proposers in operating similar golf-related restaurants. R & T has managed and operated the restaurant at Skywest Golf Course in Hayward since 1989, when it entered into a lease agreement with the Hayward Area Recreation and Park District to operate its restaurant and bar facility. The lease agreement has been renewed twice, with the last being for a three-year period through August 31, 1997, with option clauses. According to the General Manager of the Hayward Area Recreation and Park District, the relationship between the District and R & T has been a rewarding and fruitful business experience and is worthy of the highest recommendation. Hazards Inc. has been the leaseholder and operator of the Palo Alto Golf Course restaurant (Harry’s Hofbrau) for 16 years. Stephen Kramer, who would operate and manage the golf course restaurant, has 18 years experience in the restaurant business, the last four as general manager for Harry’ Hofbrau Palo Alto. Under the management of Hazards, Harry’s Hofbrau Palo Alto has offered quality food at reasonable prices. Proposed rent, improvements and purchase price of option. Both proposals meet the minimum bid requirements of the RFP. R & T proposes a $10,000 purchase price for the option, minimum rent of the greater of $48,000 or 6 percent for the first year; 6.5 percent for the second year and 7 percent for years 3 through 10. R & T proposes to construct all the improvements included in the RFP as bid items, including the addition of a deck and outside pass-through food service; and expansion of the bar, dining room and kitchen. The cost of these improvements is estimated to be $255,500 to $359,000 and will result in a 20-year lease. In addition, R & T proposes to have a mobile on-course food and beverage cart ($5,000 estimated cost) and to improve the sound system in .the club house to facilitate conducting meetings, banquets, and receptions, ($10,000 to $20,000 estimated cost). The proposed schedule of improvements is to build the deck, and to install the mobile cart and sound system as soon as possible after the commencement of the lease. The remainder of the improvements would be completed within the first four years of the lease or within six months after completion of the City renovation of the golf course, whichever came first. Hazards proposes a $2,500 purchase price for the option, minimum rent of the greater of $36,000 or 5 percent for the first 5 years of the lease. Hazards proposes to construct a deck and pass-through food service. The cost of these improvements is estimated to be $36,960 which would qualify the tenant for a 10-year lease. Also proposed is installation of a call box on the ninth tee, so golfers could call ahead their orders; and possibly a mobile on-course cart CMR:413:96 Page 7 of 9 or a small food stand on the ninth hole. Improvements would be constructed as soon as possible after the commencement of the lease. Summary of Committee’s Evaluation The Committee concluded that R & T’s proposed operational program was superior to Hazards. R & T proposed significantly more improvements; and these improvements, along with R & T’s proposed maximization of services, would result in a better operation for the public and golf customers and more revenue to the City. In addition, the Committee was impressed with R & T’s demonstrated ability to provide higher quality customer service, its flexibility and willingness to vary and ex~end hours depending upon customer needs, and its commitment to operate the restaurant and work with the City and the golf professional over the long term. Both proposers have an impressive history of operating successful restaurants. However, the Committee concluded that R & T had superior capabilities to operate and improve a first-class golf course restaurant, based on the combined backgrounds and experience of the three principals who would be directly involved in the management, administration and improvement of the restaurant. The Committee was very impressed with the professionalism and commitment of the management ofR & T. Hazards has experience operating a golf course restaurant for a longer term than R & T; however, R & T’s customer service was more highly rated. R & T significantly outbid Hazards on the proposed rent, improvements and the purchase price of the option. Overall, based on the above evaluation and criteria, the Committee rated R & T higher than Hazards and unanimously recommends that Council award the option to lease to R & T. Option to Lease Agreement The attached option to lease is consistent with the terms of the RFP approved by Council on April 1, 1996. Under the option agreement (and attached lease), R & T is granted a one-year period to satisfy the specified conditions prior to exercising the option and entering into the lease. The major option conditions the optionee must satisfy are the following: pay the $10,000 purchase price of the option and the $9,734 carpet reimbursement; obtain City approval of the proposed operating plan and tentative price schedule; obtain Zoning Administrator and Architectural Review Board approval of operations and improvements, including mobil on-course food and beverage cart; obtain plan approvals for any proposed improvements; and provide evidence that sufficient finances are available to complete the proposed improvements. The option may be exercised any time within one year, upon completion of the conditions outlined in the option agreement. Upon exercise of the option, the Council must award the lease, which is attached to the option agreement as Exhibit I. The purpose and required use under the lease is to provide for the operation and maintenance CMR:413:96 Page 8 of 9 of a restaurant serving primarily the public and customers using the Municipal Golf Course. Major terms of the lease include a 10 to 20-year term, based on the value of tenant improvements, and a minimum annual rent in accordance with R & T’s bid as described above, to be paid monthly. Required improvements under the lease are those improvements approved by the City during the option period. The tenant will be responsible for providing evidence of insurance coverage acceptable to the City, and for all utilities supplied to the premises and for taxes and maintenance of the leased.premises. Transition and Alcoholic Beverage License Based upon the Committee’s decision to recommend R & T for the award of the option to lease, Hazards has given notice to terminate its month-to-month lease as of October 31, 1996. If Council approves the award of the option to lease to R & T, on November 1, 1996, R & T will assume operation of the restaurant under a temporary lease until it is ready to exercise the option and enter into the long-term lease. Staff will conduct inventories of City-owned restaurant equipment, both before the existing tenant leaves, and after the new tenant takes over, in order to determine its condition and ex)aluate the need for repair and/or replacement. ALTERNATIVES: Since the RFP and option to lease are consistent with the City’s policy for the Leased Use of City Land/Facilities that has been approved by Council, no alternatives to awarding the option to lease to one of the two proposers have been addressed in this report. FISCAL IMPACT: Annual rental revenue from the lease will be a minimum of $48,000 for the first year, to be increased based on the CPI for the remaining years of the lease. Estimated value of the improvements to be made by the tenant is $255,000 to $359,000. ENVIRONMENTAL IMPACT ASSESSMENT: Granting of the option to lease is not a project under the California Environmental Quality Act (CEQA). An environmental impact assessment, as may be required by CEQA, will be prepared during the option period, in conjunction with the optionee’s application and approval of a conditional use permit for the proposed use and any improvements. CMR:413:96 Page 9 of 9 ATTACHMENT A SUMMARY - GOLF COURSE I~STAURANT REQUEST FOR PROPOSAL The Request for Proposal (RFP) consists of: I) the Information flyer and IB the Proposal Package The Information Flyer summarizes the offering and will be sent to interested persons or businesses. The Information Flyer includes the following information: A.A general description of the property to be leased, including a location and site maps. B.The date and place the proposals are due (July 2, 1996). The bid items (Purchase Price of the Option, the first year’s rent and the value of the capital improvements) and the minimum acceptable bids ($2,500 for Purchase Price for the Option; the geater of $36,000 or 5% of goss receipts for first year’s rent; and although there is no minimum bid for capit.al improvements, the optionee will be required to reimburse the City in the amount of $9,734 for carpeting recently installed in the restaurant). D.Instructions for obtaining the Proposal Package. Proposal Package The Proposal Package summarizes the desired operation and improvements for the golf course restaurant, the option to lease, the proposal requirements and procedures, and lists the valuation criteria. It includes the Proposal Forms, Proposal Questionnaire, the Option to Lease and the Lease. Option to Lease - The term of the Option is 12 months, and it may not be exercised until the Optionee has fulfilled the following conditions: Paid the Purchase price of the Option (minimum of $2,500) and the $9,734 reimbursement for carpeting. Submitted schematic plans of all proposed improvements within 2 months of the commencement of the Option. Obtained all permits required for the proposed operation, including a conditional use permit and a license to sell alcoholic beverages, c:c:golfsum 1 Lease - 1. Obtained approval of the proposed operating plan and tentative price schedule from City Manager or designee. Obtained Architectural Review Board approval of any development plans. Obtained approvals of the City Engineer and the Chief Building Official of the construction drawings, including a construction schedule. Satisfied the City Real Property Manager that sufficient funds are available to implement plans approved by the City. Paid the security deposit required by the Lease ($5,000). the key provisions of the Lease are as follows: Premises: the 4,480 square foot restaurant and meeting rooms located at the Palo Alto Municipal Golf Course at 1975 Embarcadero Road, Palo Alto. Required uses: a food and beverage service, including sale of alcoholit beverages, to provide for the needs of the public and persons utilizing the Palo Alto Municipal Golf Course. Meeting rooms to be made available to various golf-related and public service groups at given hours. Term: 10 to 20 years, depending upon the value of improvements made by Tenant. Rent: Rent is a bid item; minimum bid for first year annual rent is the greater of $36,000 or 5% of gross receipts for the first year; 5.5% for the second year; 6% for the third to tenth year. Improvements to be made by Tenant: A bid item. While not required, the City encourages Tenant to make some or all the restaurant improvements allowed by the Golf Course Master Plan: i.e., the addition of new deck with a pass through food service from the bar area; the addition of a new meeting/seating area for club use and banquets, and the expansion of the kitchen and bar. Construction or additional alteration by tenant subsequent to the initial construction: Tenant may not make any changes to the property without prior City review and approval. Maintenance and repairs: Tenant shall be responsible for maintenance and repair of the leased premises including all plumbing and electrical, but excluding the heating and air conditioning systems within or serving exclusively the leased premises. City shall maintain the heating and air c:c:golfsum 2 10. conditioning systems, building exterior, public restrooms, exterior walkways, parking lot and landscaping and all mechanical systems serving areas outside the leased premises. Any assignment or encumbrance of the lease must receive prior City approval. Taxes and Assessments, Utilities: Tenant shall be responsible for all costs for utilities and taxes and assessments for the property. Insurance: the Tenant shall maintain insurance providing the following limits and coverage: Do Eo POLICY MINIMUM LIMITS OF LIABILITY WORKER’S COMPENSATION Statutory COMPREHENSIVE A UTOMOBILE LIABILITY, including owned, hired, and non-owned automobiles Bodily lnjur3’$1,000,000 ea. person Property Damage $1,000,000 ea. person COMPREHENSIVE Bodily Injur3’$1,000,000 ea.. person GENERAL $1,000,000 ea. occurrence LIABILITY $1,000,000 aggregate including products ProperO, Damage $1,000.000 ea. occurrence & completed operations,Personal Injur3’$1,000,000 ea. occurrence broad form contractual, and personal injury. FIRE LEGAL $500 000 Said sum represents the estimated cost of LIABILITY the improvements and fixtures within the care, custody and control of Tenant. Said sum shall be subject to annual review by Lessor’s Risk Manager to insure that coverage is adequate to cover changes in the replacement cost of improvements and fixtures within the care, custody and control of Tenant. CO URSE OF CONSTRUCTION Completed value of the project. c:c:golfsum 3 ATTACHMENT B R & T RESTAURANT CORPORATION Proposer: R& T Restaurant Corporation (R & T) currently operates four restaurants, including a golf course restaurant in Hayward. For the last 24 years, R & T has developed and maintained restaurant operations in four California cities, with banquet and catering services and programs. R & T presently manages four restaurant facilities in Orinda (Porky’s), Fresno (Smuggler’s Inn), and Hayward (Porky’s and the Skywest Golf Course Restaurant). From 1986 to 1996, R & T managed the Velvet Turtle Rest in Pleasanton. R & T currently operates its restaurants with a combined staff of 160, 70% of them full time. The restaurant operations wit! be under the administrative direction of Tom Talia, President of R & T, who graduated in 1972 from UCLA with a degree in Business Administration and began his career in the restaurant profession at the same time. Management of the restaurant will be done by Darrein Talia, a 1988 graduate of the San Francisco Culinary Academy who has served as Manager of several restaurants including the Skywest Golf Course Restaurant. Gene Rapp, a licensed general contractor and a principal partner in R & T, will administer and manage construction of the proposed tenant improvements. Mr. Rapp has broad knowledge and many years experience in designing, constructing and maintenance of facilities. Bid Items: Purchase Price of Option:$10,000 Minimum rent:the greater of $48,000 or 6% for 1 st year 6.5% for the second year and 7% for the 3 through 10th year. Proposed Improvements:the addition of a deck and pass through food service, expansion of the bar, club room and kitchen. ($255,485 - $358,985 estimated cost) Additional proposed improvements: mobile on-course food and beverage car ($5,000 estimated cost) sound system in the club house ($10-20,000 estimated cost). Schedule of Improvements: The proposed schedule of improvements is to build the patio and deck, and install the mobile cart and sound system as soon as possible after the commencement of the lease; the remainder of the improvements would be completed within the first four years of the lease or within 6 months after completion of City renovation of the golf course, whichever comes first. Proposed Use and Operation: Proposed hours of operation for the restaurant are 6 am to 4 pm for the restaurant and 11 am to 8 pm for the bar during daylight saving time and 6:30 am to 3:30 pm during standard time. The bar would be open 11 am to 8 pm during daylight saving time and 11:30 am to 8 p.m. during standard time. These hours could be extended from time to time based on the needs and desires of customer. The menu will consist of buffet and gril! food service with daily specials. The proposer plans to expand the existing hofbrau food service with the addition of some lighter fare, more salads and to conduct periodical surveys to ascertain the food selection desires of customers. Prices would be comparable to existing prices. An express line for golf customers will be established, and separate banquet and meeting menus will be developed to meet the desires of those planning the functions. The proposer intends to promote the use of the Club house banquet and meeting facilities to maximize use. The proposer also seeks to offer catering services as an optional service. Financial Information: The five-year pro-forma indicates expected annual gross receipts: $750,000 the first year to $1,050,000 the tenth year. Improvements would be financed internally. HAZARDS, INC. Proposer: Hazards, Inc. has been the leaseholder and operator of the Golf Course restaurant (Harry’s Hofbrau) for 16 years. Hazards, Inc. is one of several companies which also operate Harry’s Hofbrau restaurants in Redwood City, Mountain View and Palm Springs. Stephen Kramer, who would operate and manage the golf course restaurant, has 18 years experience in the restaurant business, the last four as general manager for Harry’ Hofbrau Palo Alto. He is also a golfer. Bid Items: Purchase Price of the Option Minimum Rent Proposed Improvements $2,500 the greater of $36,000 or 5% for the first 5 years of the lease deck and pass through food service (estimated cost: $36,960) Additional Improvements: Installation of a call box on the 9th tee so golfers could call ahead their orders, and possibly a mobile on-course cart or a small food stand on the 9th hole. Schedule of Improvements: Improvements would be constructed as soon as possible after the commencement of the lease, prior to the summer of 1997. Proposed Use & Operation: Proposed hours of operation would be in accordance with the minimum hours of operation required in the RFP. The proposer is open to extending the hours from time to time based on the needs and desires of customers. The menu will continue as it has been with the addition of more light fare and more salads. Prices will remain comparable to existing. An express line for golfers has recently been established and will continue under the new lease. The proposer would also offer catering to golf groups, possibly dinner service after completion of the City’s parking lot lighting improvements, and would work with the golf pro on promotions. Financial Information: The five-year pro-forma indicates expected annual gross receipts: $690,000 the first year to $825,000 tenth year. Improvements would be financed internally. ATTACHMENT C PROPOSAL CRITERIA SUMMARY TABLE ]Criteria .....,,[]R & T Restaurant Corp., 1. Proposed operational program with regard to providing the required and optional uses which best benefit the community, golf and general public customers and the City. 2. Proposer’s capabilities to improve and operate a first- class golf course restaurant. 3. Experience of proposers in operating similar golf- related restaurants. 4. Proposed rent, improvements and purchase price of option. ]]Hazards Inc. , Program in accordance with lease requirements (has recently added express line and longer hours). Catering & possible dinner service. Will add new deck and pass- through food service, 9th hole phone & possible mobile cart. Est. gross 1 st. yr - $690K 5th yr. - $750 K Menu: Hofbrau & new items Operates Harry’s Hofbrau restaurants in several cities. Proposed Manager has 18 yrs restaurant experience, 4 at PAMGC, and is a golfer. Hazards has been leaseholder at PAMGC. S.Kramer: 18 yrs ~in restaurant bus., 4 years at PAMGC. Harry’s Palo Alto has provided good food at reasonable prices. Yr.1 - $36,000 or 5% Yr.2 - $36,000+CPI or 5.5% Yr.3-10:$36,000+CPI or 6% Yr.10-15: negotiated Addition of deck & pass- through food service. (10 yr. term) $2,500 + $9,734 reimb.carpet In addition to required services, will promote ! banquet & meeting services; catering. Will add new deck & pass through food service; expansion of bar, club & kitchen; mobile on-course food/bev, cart: new sound system in club house. Est. gross 1st yr- $750K 5th yr - $937.5K; 10yr - $1050K. Menu comparable to existing. Managed/operated restaurants for 24 years including at Skywest Golf Course. Restaurants include Velvet Turtle, Porky’ s, Smuggler’ s Inn. R & T partner is a gen. contractor, manager is grad. of SF Culinary Academy. Highest references from Skywest & others. 24 years operating restaurants in Alameda County including 7 years at Skywest Golf Course. Yr.1:$48,000 or 6% Yr.2: $48,000+CPI or 6.5% Yr.3-10: $48,000+CPI or 7% Yr.10-20: negotiated Addition of deck and pass- through food service; expansion of bar, club room and kitchen. (20 yr. term) $10,000 + $9,734 reimb. Project Project Number- Golf Course CL27/25-95/15 OPTION AGREEMENT This Agreement is made this ~ day of 199_ by and between the City of Palo Alto, a municipal corporation, ("CITY") and R & T Restaurant Corporation, a California Corporation, ("OPTIONEE"). RECITALS CITY owns property located in the City of Palo Alto, Santa Clara County commonly referred to as The Palo Alto Municipal Golf Course Restaurant "PROPERTY") more specifically described and shown in the Lease attached hereto as Exhibit I, which Exhibit is made a part hereof. OPTIONEE desires to obtain an exclusive option to lease PROPERTY, in accordance with the terms and conditions of the Lease attached hereto as Exhibit I. Co CITY agrees to grant an exclusive option to OPTIONEE during which time OPTIONEE shall satisfy the conditions set forth below prior to the leasing and operation of PROPERTY. NOW THEREFORE,-in consideration of the premises set forth above, the parties hereto mutually agree as follows 1.GP~ANT OF OPTION (OL 4.0) S CITY hereby grants to OPTIONEE an exclusive option to purchase the rights to develop and operate PROPERTY.upon the terms and subject to the covenants and conditions set forth below and in the Lease attached to this Option Agreement as Exhibit I. 3.5RELEA.SES. I/OLGOLF 2.TERM OF OPTION (OL 5.0) S The term of this option shall be twelve (12) months and shall commence upon execution of this agreement by CITY. 3.PURCHASE PRICE OF OPTION (OL 6.0) S The purchase price of this option shall be $10,000.00 (Ten Thousand Dollars) due and payable to CITY upon execution of this option by OPTIONEE. In addition, OPTIONEE shall pay CITY an additional $9,734.00 (Nine Thousand Seven Hundred Thirty-Four Dollars as reimbursement for the cost of the recently installed carpeting within the PREMISES. 4.CONDITIONS PRECEDENT (OL 7.0) S This option may not be exercised by OPTIONEE unless and until each and every following condition has. been satisfied: OPTIONEE shall have made the payment required in accordance with Clause 3 (PURCHASE PRICE OF OPTION) above. Bo OPTIONEE shall have submitted schematic plans (the "Schematic Plans") to CITY within 2 months of the commencement of this option. Schematic Plans shall include a site layout of all buildings, landscape developments, schematic floor plans for all structures, simple elevations of all structures, a plan for fulfilling parking requirements, identification of proposed architectural theme or style, a detailed description of all proposed improvements (including proposed uses and methods of operation and a general outline specification which identifies proposed construction material and methods), and an estimate of the total construction cost for all proposed improvements. OPTIONEE shall have applied for and received a conditional use permit for the proposed development and operation from CITY’s Zoning Administrator. Do OPTIONEE shall have submitted to, and shall have received approval of its development plans (the "Development Plans") for PROPERTY from CITY’s Architectural Review Board (ARB). The Development Plans 3.5RELEASES. 110LGOLF 2 shall be consistent with published submittal requirements of th~ ARB. At a minimum, Development Plans shall include the Schematic Plans, interior plans, structural plans, exterior elevations, and landscaping plans and shall indicate specific plans and details of the resource conservation features to be included. mo OPTIONEE shall have complied with the California Environmental Quality Act (CEQA), as amended, and all related CITY procedures for implementing CEQA, to allow the PROJECT to be implemented. Fo OPTIONEE shall have submitted to CITY’s Chief Building Official certification that the plans for any proposed building construction comply, in all respects, with current building codes, the federal Americans with Disabilities Act of 1990, as amended, including any implementing regulations, and energy conservation requirements as set forth in California Code of Regulations. Title 24 for non- residential construction. The form and content of said certifications shall be in conformance with the requirements of California Code of Regulations, Title 24 for non-residential construction. OPTIONEE shall have obtained approval of the construction drawings for the proposed development (the "Construction Drawings") from the City Engineer and Chief Building Official, Construction Drawings shall include: Complete architectural, landscape and engineering working drawings: Complete construction specifications: Complete construction contract form: and Proposed construction schedule. H°OPTIONEE shall have provided to CITY’s Real Property Manager evidence that OPTIONEE has obtained any and all permits necessary to conduct and carry out the activities and purposes specified in the Lease, from any and all agencies having jurisdiction. These permits include, but are not limited to, alcoholic beverage license, health permits, occupancy permits, and building permits if any alternations are proposed by OPTIONEE. 3.5RELEASES. 1 IOLGOLF 3 OPTIONEE has submitted to the City Manager or designee for approval, OPTIONEE’s proposed operating plan and tentative price schedule as set forth in the Lease, and approval of said operating plan and tentative price schedule by City Manager or designee has been obtained. a o OPTIONEE shall have satisfied CITY’s Real Property Manager that OPTIONEE has sufficient finances or financial commitments to implement the plans approved by CITY in accordance with the above. OPTIONEE Shall have submitted to CITY’s Real Property Manager, a security deposit in accordance with Clause XIII SECURITY DEPOSIT) of the attached Lease. mo If OPTIONEE proposes to hypothecate the leasehold as security for a loan in accordance with Clause XXIV (ASSIGNING, SUBLETTING & ENCUMBERING) of the attached Lease, OPTIONEE shall have submitted to CITY’S Real Property Manager, any and all documents related to such hypothecation and shall pay the necessary processing fees as set forth in the attached Lease. 5.EXERCISE OF OPTION (OL 8.0) S At any time during the option term that OPTIONEE has satisfied each and every condition precedent set forth in Clause 4 CONDITIONS PRECEDENT) above, to the satisfaction of CITY, OPTIONEE may exercise this option by giving CITY’S Real Property Manager written notice of its election to do so, accompanied by two properly executed copies of the attached Lease. CITY shall execute the Lease within one month of receipt of the request to exercise option in accordance with this clause. 6.RETENTION OF PURCHASE PRICE OF OPTION (OL 9.0) S In the event that OPTIONEE does not exercise this option in accordance with the terms hereof, the Purchase Price of the Option shall be retained by CITY in consideration for the granting of this option, and the reimbursement for the cost of carpeting shall be refunded by CITY to OPTIONEE. 3° 5RELEA.SES. 1 IOLGOLF 4 7.GENERAL CONDITIONS (OL I0.0) S A. Review by City (OL 10.1) S OPTIONEE hereby acknowledges that one of the purposes of this option is to afford OPTIONEE and CITY the opportunity to determine whether or not OPTIONEE is able to meet the various conditions and obtain the required approvals as set forth in this option. Several of those conditions involve obtaining review and approval from officers, employees or agents of CITY. Each of those reviews shall be conducted in an independent manner and nothing contained herein shall be deemed to limit the jurisdiction or authority otherwise possessed by said officers, employees or agents in the conduct of such review. Nothing contained in this option shall be deemed to imply that said approvals will be forthcoming, and the failure to issue any such approval or permit by any officer, employee or agent of CITY shall not be deemed in any manner a breach of this option, nor shall any such denial give raise to any claim, liability, obligation, or cause of action with respect to this option or the attached Lease. CITY agrees to consent to any application by OPTIONEE with respect to any permits or approvals related to activities or improvements agreed to or required by CITY in accordance with the option which may be required by any governmental or other regulatory agencies aside from CITY. B.Assignment Prohibited (OL 10.2) S This option has been awarded based on the background and proposals of OPTIONEE; therefore, this Option cannot be sold, assigned or otherwise transferred without the prior written consent of CITY. Failure to obtain CITY’s required written consent shall render said sale, assignment, or transfer void. C.Extension of Option (10.3) S Upon written request of OPTIONEE stating the reasons therefore, the City Manager, or designee, may, at his or her sole discretion, extend the term of this option in writing as follows: 3.5RELEA.SES . IIOLGOLF City Manager or designee may grant an extension of the term of this option for a reasonable period of time, as determined by the City Manager or designee in the event OPTIONEE is delayed in fulfilling the conditions precedent to the exercise of this option by reason of any cause not the fault of, or within the control of, OPTIONEE or its agents or employees; or City Manager or designee may grant an extension of the term of the option for a period not to exceed forty-five(45)days, in the event OPTIONEE is delayed in fulfilling the conditions precedent to the exercise of this option for any other reason. However, the City Manager or designee may grant such extension only upon the following conditions: Written request for such extension shall have been delivered by OPTIONEE to CITY’S Real Property Manager at least fifteen (15) days prior to the expiration of the option term; bo Payment in an amount equal to one half the purchase price of the Option shall be submitted to CITY with the request for extension referred to above (in the event an extension is denied, CITY shall refund said amount to OPTIONEE.); and Co OPTIONEE shall submit, together with its request for extension, evidence of its progress toward fulfilling the conditions precedent to the exercise of this option, documentation ofits proposed actions and feasibility of satisfying said conditions within the term ~f the extension requested and such other information and material as may be required by the City Manager or designee. D.Termination of Option (OL 10.4) S Failure of OPTIONEE to meet the terms and conditions of this option fully and satisfactorily within the time limits stated shall absolutely and conclusively terminate OPTIONEE’S rights hereunder. Upon termination hereof without exercise of the option by OPTIONEE, OPTIONEE shall, within 3.5RELE!kSES, I/OLGOLF " . . -6 5 business days of receipt of request from CITY’S Real Property Manager~ deliver to CITY a properly executed Quitclaim Deed quitclaiming any and all interest in and to PROPERTY. Signing of a Lease by CITY and OPTIONEE substantially in the form of Exhibit I, attached hereto, shall be deemed a termination of this Option Agreement. E.Notices (OL 10.6) S Any notice, tender, or delivery to be given in accordance with this option by either party to the other shall be given in accordance with Clause XXIX(NOTICES) of the attached Lease. F.Representations (OL 10.7) S Each party represents to the other that it has employed no real estate broker or finder in connection with this agreement and hereby agrees to hold the other harmless, and free from any liability in connection with any commission or finder’s fee alleged to be incurred by it. G.Entire Agreement (OL 10.8) S This instrument contains the entire agreement between the parties relating to the option granted by this agreement. Any oral representations or modifications concerning thisinstrument shall be of no force and effect except in a subsequent modification which is made in writing, and signed by both parties. H.Recovery of Attorney’s Fees (OL 10.9) S In the event of any controversy, claim, or dispute between the parties hereto, arising out of or relating to this agreement or the breach thereof, the prevailing party shall be entitled to recover from the losing party reasonable expenses, including attorney’s fees, and other legal costs. 3.5RELEASES. 1/OLGOLF I. Binding on Successors (OL 10.10) S This agreement shall bind and inure to the benefit of the respective heirs, personal representatives, successors, and assigns of the parties hereto except as may be expressly provided elsewhere in this agreement. IN WITNESS WHEREOF, the parties hereto have executed this Option Agreement on the day and year first above written. CITY: CITY OF PALO ALTO OPTIONEE: By: Mayor AI-rEST: By: City Clerk Its: APPROVED AS TO FORM: City Attorney APPROVED AS TO AUDIT AND ACCOUNTING: City Auditor 3.5RELEASES. IlOLGOLF ~8 RECOMMENDED FOR APPROVAL: Director, Planning and Community Environment Manager. Real Property Parks & Golf Course Administration, Community Services Department Director, Public Works Director, Administrative Services Director, Community Services 3.5RELEASES. I/OLGOLF Exhibit I Project:GOLF COURSE RESTAURANT Project Number:CL27/25-95/15 This Lease is made this day Of , 19__ by and between the City of Palo Alto, a municipal corporation, (CITY) and R & T Restaurant Corporation, a California Corporation TENANT). RECITALS RL 2.0 S Now, therefore, in consideration of these covenants, terms and conditions, the parties hereto mutually agree as follows: CITY desires to lease the Premises to provide for the operation and maintenance of a restaurant serving primarily the public and customers using the Municipal Golf Course. o TENANT desires to lease the Premises from City to operate and maintain a restaurant serving primarily the public and customers using the Municipal Golf Course. I.PREMISES (RL 3.0) S Subject to the terms and conditions set forth in this Lease, CITY leases to TENANT that certain property (PREMISES) described and shown in "Exhibit B". Exhibit B is attached to and, by this reference, made a part of this Lease. Unless specifically provided elsewhere in this Lease, TENANT accepts the PREMISES "as-is" on the date of execution of this Lease. II.PURPOSE (RL 4.0) S The purpose of this Lease is to provide for the operation and REMASTERLZFORM / LZGOLFCF i ’ maintenance of restaurant serving primarily the customers using the Municipal Golf Course. public and III.REQUIRED AND OPTIONAL SERVICES AND USES (RL 5.0) NS In furtherance of the purposes stated above, the following required and optional services and uses shall be provided, permitted or prohibited: Required Services and Uses. Throughout the term of this Lease TENANT shall provide the following services and activities: TENANT is hereby authorized to and shall conduct in the Premises a food and beverage service, including sale of alcoholic beverages, in order to provide for the needs of the public and those persons utilizing the Palo Alto Municipal Golf Course in accordance with Exhibit C, attached hereto. In addition, TENANT is authorized to and shall make available to various golf related groups, meeting rooms which are a part of the Premises, except that TENANT shall not be required to make available such meeting rooms during lunch hour, i.e., between the hours of 11:30 a.m. and 2:00 p.m. (This exception shall prevail over the provision in the Golf Course Restaurant Policy Statement with respect to meeting rooms, attached hereto as Exhibit C.) Notwithstanding the above, TENANT shall give priority to the scheduling of meeting rooms for golf and golf-related activities including pre and post tournament activities in accordance with Exhibit C attached hereto. However, golf and golf-related activities shall not automatically bump already scheduled non-golf related activities. TENANT shall not charge room rental fee for any golf-related activities which are scheduled during TENANT’s approved regular business hours. For golf-related meetings scheduled during TENANT’s non business hours, TENANT may charge a reasonable room rental fee when no food service is provided. TENANT may, in accordance with Clause 5 of the General Conditions to this Lease, charge reasonable room rental fees for all other scheduled uses of the meeting rooms permitted by this Lease. TENANT shall provide an express line or area for golf customers requiring service before or in between rounds of golf. REMASTERLZFORM/LZGOLFCF 2 Optional Services and Uses. Subject to the prior written approval of the City Manager or designee, which approval shall be within the sole discretion of the City Manager or designee, and subject to agreement on Clause VI.B. (Rent for Optional Services and Uses) as provided below, TENANT may also use the demised PREMISES to provide additional services and uses which are ancillary to and compatible with the required services and uses set forth above. Examples of such ancillary services and uses may include but are not limited to the following: Vending machines, including games and convenience items. Meeting room rental for non-golf related activities. TENANT may, at its cost, place one identification sign on or beneath the existing golf course sign and one identification sign on the clubhouse building; and may place advertisements in newspapers, magazines or on radio. If, in the opinion of the City Manager, based upon his or her sole discretion, the number of non-golfing users is adversely affecting access to the facilities and services by the golfing public, TENANT agrees that upon 30 days’ written notice from the City Manager, advertising shall cease or be modified .to eliminate such adverse effect. The signs shall be approved by LESSOR in accordance with this Lease and applicable City of Palo Alto processes including ARB and Site and Design review prior to installation. IV.TERM (RL 6.0) NS This Lease shall commence on the date of execution by the CITY. The term of this Lease shall be in accordance with the following schedule: Extent of Leasehold Improvements Made by Tenant within First Five Years of Lease Addition of deck & pass-through food service (estimated cost: $36,960) Addition of deck & pass-through food service and expansion of bar (estimated cost: $124,935) Addition of deck & pass-through food service, expansion of bar, club room & kitchen (expan- sion of kitchen to be at option of TENANT) (estimated cost: $255,485 - $358,985) Initial Term I0 years 15 years 20 years REMASTERLZFORM / LZGOLFCF 3 The extent of TENANT’S leasehold improvements shall be determined according to actual costs for work and services performed on or supplied to the PREMISES by TENANT and a fair and reasonable estimate of value of donated materials or services excluding in either case, the costs or value of any TENANT furnishings and fixtures (other than plumbing and electrical and ~ther fixtures essential to the operation of the PREMISES and which must remain) which may be removed by TENANT without damage to the PREMISES as documented in accordance with Clause XIX (AS BUILT PLANS) below. Such costs shall hereinafter be referred to collectively as "DOCUMENTED COSTS." V.TERMINATION OF PRIOR AGREEMENTS (RL 6.1) S This Lease supersedes any and all prior leases or agreements entered into by CITY for use of the PREMISES.All such prior leases or agreements are null and void. VI.CONSIDERATION/RENT (RL 7.0) S Consideration of CITY.In consideration for TENANT’S use of the Premises provided by CITY, TENANT shall, in accordance with Clause X (RENT PAYMENT PROCEDURE), pay to CITY, the greater of the minimum annual rent or the percentage rent as follows: Minimum Annual Rent. The minimum annual rent for the first Lease year (being the first twelve months following the commencement of this Lease) shall be Forty Eight Thousand dollars ($48,000.00). The minimum annual rental for each subsequent lease year shall be adjusted automatically to the greater of the following: Seventy-five percent (75%) of the annual rent paid by TENANT to CITY in accordance with this Clause for the previous Lease Year, or Do The initial minimum annual rent adjusted in proportion to eighty-five percent (85%) of the change in the Consumer Price Index, All Urban Consumers (base years 1982-1984 = i00), San REMASTERLZFORM / LZGOLFCF 4 ¯ Francisco-Oakland-San Jose CSMA published by th~ United States Department of Labor, Bureau of Labor Statistics, or the official successor to this index. The adjustment shall be effective oneach anniversary of the commencement of this Lease and in no event shall the minimum rent be less than the minimum annual rent for the preceding lease year. Should this Lease be terminated during the Lease year, the applicable minimum annual rental shall be prorated. Percentaqe Rental. Percentage rental for TENANT’S use of the PREMISES shall be calculated using the following percentages of gross receipts from business operations conducted on or from the PREMISES: Minimum Year Percentaqe Rent First Year Second Year Third - Tenth.Year Eleventh Year and Beyond 6.0% 6.5% 7.0% Minimum of 7%, to be negotiated based on value of tenant improvements. Rent for ODtional Services and Uses. TENANT shall, in addition to the above, pay to CITY rent for approved optional services and uses. Rent for optional services and uses approved in accordance with Clause III REQUIRED & OPTIONAL USES) subparagraph B., shall be mutually agreeable to the City Manager and TENANT. VII.CHARGE FOR UNAUTHORIZED SERVICES AND USES (RL 7.4) S TENANT shall pay CITY a sum equal to one hundred percent (100%) of the gross receipts for any service or use that is not permitted or authorized by Clause III (REQUIRED & OPTIONAL USES). This payment is subject to the "due date" requirement provided in Clause XI(CHARGE FOR LATE PAYMENT). The existence of such charge or the payment or receipt of money under this clause, does not constitute an authorization of a particular service or use and does not constitute a waiver of CITY’S right to terminate such service or use. REMASTERLZFORM / LZGOLFCF VIII. CONTROL OF HOURS, PRICES AND PROCEDURES (RL 8.0) NS TENANT shall continuously use the PREMISES for the uses specified in Subparagraph A of Clause III REQUIRED AND OPTIONAL SERVICES & USES) during all usual business hours and on all such days as comparable businesses in the area or as are customary for the Required ~and Optional Services and Uses permitted in accordance with Clause III (REQUIRED AND OPTIONAL SERVICES & USES). Minimum hours for food service are 6 a.m. to 3 p.m. during daylight savings time and 7 a.m. to 3 p.m. for the remainder of the year. Minimum hours of operation for the bar and meeting rooms are ii:00 a.m. to dusk year-round. TENANT shall use only such space within the PREMISES for office, clerical or other non-sales or services uses as is reasonably required for TENANT’S required or approved uses of the PREMISES. TENANT shall at all times maintain a written schedule setting forth the operating hours and operating procedures for each required and optional use provided on or from the PREMISES. A schedule of prices charged for all goods and/or services related to the required and optional uses of this Lease shall also be maintained and individual merchandise must be clearly priced. TENANT agrees that when alternate forms of packaging are available, only items packaged in the manner most compatible with the goals of reducing litter and preserving the environment shall be sold. Upon written request, TENANT shall furnish the City Manager or designee a copy of the schedules and procedures. Should the City Manager or designee decide that any part of these schedules or procedures is not justified with regard to fairly satisfying the needs of the golfers using the restaurant, TENANT, upon written notice from the City Manager or designee, shall modify these schedules or procedures to the satisfaction of the City Manager. Prior to issuing such a notice, the City Manager or designee shall personally review the schedule and procedures and confer with TENANT or its representative. Primary consideration shall be given to the public’s benefit in implementing this clause. All prices charged for goods and/or service supplied to the public on or from the PREMISES shal! be fair and reasonable, based upon the following considerations: The degree of public service involved in the sale of the goods and/or services: REMASTERLZFORM / LZ GOLFCF 6 The market prices charged by other competing and/or comparabl~ businesses; and The reasonableness of the profit margin in relation to industry-wide standard. TENANT’S failure to comply with the provisions of this clause shall constitute a material breach of this Lease and shall be grounds for termination of this Lease. TENANT agrees that it will operate and manage the services and facilities offered in a competent and efficient manner at least comparable to other well managed operations of a similar type. TENANT shall at all times retain active, qualified, competent, and experienced personnel to supervise TENANT’S operation and to represent and act for TENANT. TENANT shall require its attendants and employees to be properly dressed, clean, courteous, efficient, and neat in appearance at all times. TENANT shall not allow any person(s) in or about the PREMISES who shall use offensive language and/or act in a boisterous or otherwise improper manner. TENANT shall strictly monitor and supervise attendants and employees to insure the maintenance of a high standard of service to the public. TENANT shall replace any employee whose conduct is detrimenta! to the best interests of the public. IX.DEFINITION OF GROSS RECEIPTS (RL 9.0) S The term "gross receipts" upon which percentage rentals are to be based shal! include: Ao The sale price of all goods, wares, merchandise, and products sold on or from the PREMISES by TENANT, whether for cash or credit and whether payment is actually made or not; The charges made by TENANT for sale or rendition on or from the PREMISES of services of any nature or kind whatsoever, whether for cash or credit and whether payment is actually made or not; C o All admission, entry rental, and other fees of any nature or kind charged by TENANT (including but not limited to deposits accepted by TENANT); REMAS TERLZFORM ! LZGOLFCF 7 All sums deposited in any coin-operated vending machine or other device maintained on the PREMISES, regardless of the ownership of the machine or device, or whether such sums are removed and counted by TENANT or others, and regardless of what percentage thereof TENANT is entitled to receive; m o The fair rental value of facilities used by TENANT or its employees for purposes other than the business purposes for which the PREMISES are leased; Security deposits collected by TENANT from its subtenants, agents, concessionaires or licensees and not placed in an escrow or trust account with interest not accruing to the TENANT. X.RENT PAYMENT PROCEDURE (RL i0.i) S io Payment of Rentals. On or before the twentieth day of each month, TENANT shall pay rent to CITY as set forth in Clause VI (CONSIDERATION/RENT) and shall render to CITY a correct statement of all applicable gross receipts and rent due for that portion of the current accounting year which ends with and includes the last day of the preceding calendar month. The statement shall be signed by TENANT or its responsible agent under penalty of perjury, and shall be substantially in the form of Exhibit E attached to, and by this reference, incorporated into this Lease. Commencement of Obliqation to Pay. TENANT’S obligation to pay percentage rent to CITY for activity or occupancy of any sublessee of all or a portion of the PREMISES shall commence with the earliest of the following dates (whether or not CITY has approved the sublease and regardless of whether or not a percentage rent was established by CITY): i. Commencement date of sublease; 2.Date of physical occupancy; or o Date of earliest activity (i.e., sale of goods, solicitation of business, construction or alteration by sublessee, etc.). Acceptance of rental hereunder shall not constitute approval REMASTERLZFORM / LZGOLFCF 8 of any unauthorized sublease or use. Co Place of Payment and Filinq. Rental payments shall be delivered to, and statements required by this clause and Clause XII (RECORDS AND ACCOUNTS) shall be delivered to the Revenue Collections Division, 250 Hamilton Avenue, PO Box 10250, Palo Alto, California 94303. The designated place of payment and filing may be changed at any time by CITY upon ten (i0) days written notice to TENANT. Rental payments may be made by check made payable to City of Palo Alto, however, TENANT assumes all risk of loss or delay if payments are made by mail. D°Acceptance of Late or Incorrect Rent. TENANT specifically agrees that acceptance of any late or incorrect rentals submitted by TENANT shall not constitute an acquiescence or waiver by CITY and shall not prevent CITY from enforcing Clause XI (CHARGE FOR LATE PAYMENT) or any other remedy provided in this Lease. XIo CHARGE FOR LATE PAYMENT (RL ii.0) S If any payment of rent As specified in Clause VI (CONSIDERATION/RENT) or if any other sum due CITY is not received by CITY, a late charge determined in accordance with the following formula shall be added to the delinquent payment, and the total sum shall become immediately due and payable to CITY: Where: L = A + D[(R + 2%)/12)] The charge for late payment due CITY The administrative costs involved with collection of past due sum, e°g., Delinquent Notices, legal fees, telephone contacts, etc., which for the purpose of this clause, shall be no less than $40.00. The amount of delinquent payments The current average annual rate of return on the City’s portfolio of invested funds As reported by Treasury Manager. REMASTERLZFORM / LZGOLFCF Acceptance of late charges and/or any portion of the overdue payment by CITY shall in no event constitute a waiver of TENANT’S default with respect to such overdue payment, nor prevent CITY from exercising any of the other rights and remedies granted hereunder or by any provision of law. XII.RECORDS AND ACCOUNTS (RL 12.0) S Ao Records. TENANT shall, at all times during the term of this Lease, keep or cause to be kept true and complete books, records, and accounts of all financial transactions conducted in the operation of all business activities, of whatever nature, conducted pursuant to the rights granted herein. The records, books and accounts shall be kept or made available to CITY at a location within Santa Clara or San Mateo County. The records must be supported by source documents such as sale slips, cash register tapes, purchase invoices, or other pertinent documents. Except as may be otherwise provided by this Lease, all retail sales and charges shall be recorded by means of cash registers or other comparable devices which display to the customer the amount of the transaction and automatically issue a receipt. The registers shall be equipped with devices which lock in sales totals and other transaction records, or with counters which are not resettable and which record transaction numbers and sales details. Totals registered shall be read and recorded at the beginning and end of each day. Retail sales and charges may be recorded by a system other than cash registers or other comparable devices provided that system is approved by the City Auditor. In the event of admission charges or rentals, TENANT shall issue serially numbered tickets for each such admission or rental and shall keep an adequate record of the tickets, both issued and unissued. Upon request of TENANT and at the City Auditor’s sole discretion, the City Auditor may authorize the keeping of the above-referenced books of account and records and supporting source documents in a single location outside the limits of Santa Clara or San Mateo County provided TENANT agrees to pay all expenses including, but not limited to, transportation, food, and lodging necessary for the City Auditor to send its representative to audit or review books and records. This right shall not be exercised by the City Auditor more than once each accounting year. Bo The Accountinq Year. The accounting year shall be twelve full calendar months. The accounting year may be established by TENANT, provided TENANT has notified CITY in writing of the accounting year to be used. The accounting year shall be deemed to be approved by CITY unless CITY objects to TENANT’S selection in writing within sixty (60) days of receipt of TENANT’S written notification. In the event TENANT fails to establish an accounting year of its choice, regardless of the cause, the accounting year shall be synonymous with the twelve (12 month period fol!owing commencement of this Lease. Once an accounting year is established, it shall be continued through the term of the Lease unless CITY specifically approves in writing a different accounting year. CITY shall approve a change in accounting years only in the event of undue hardship being placed on either the TENANT or CITY, and not because of mere convenience or inconvenience. C °Financial Statements and Audit bv CITY. Within ninety (90) days after the end of each accounting year, TENANT shall, at its own expense, submit to CITY a balance sheet and income statement prepared and audited by a Certified Public Accountant, reflecting business transacted on or from the PREMISES during the preceding accounting year. The Certified Public Accountant must attest that the balance and income statement submitted are an accurate representation of TENANT’S records As reported to [he United Sta~es of America for income tax purposes. At the same time, TENANT shall submit to CITY a statement certified As to the accuracy by a Certified Public Accountant wherein the total gross receipts for the accounting year are classified according to the categories of business established for percentage rental and listed in Clause VI (CONSIDERATION/RENT) and for any other business conducted on or from the PREMISES. The City Auditor may accept alterna- tives to the above Certified Public Accountant-audited statement provided that in the City Auditor’s sole opinion, the alternative provides sufficient assurance that the financial statement accurately reflect business transacted on or from the PREMISES. All of TENANT’S books of account and records and supporting source documents shall be made available to CITY’S representatives at any and all reasonable time during the term of this Lease and within two (2) years after expiration or termination of this Lease, for the purpose of determining the accuracy of the monthly statements of sales and monies received, and rent due and paid to CITY. Notwithstanding the previous paragraph, the full cost of any such audit by CITY, As determined by CITY, shall be borne by TENANT if either of the following conditions exists: The audit reveals an underpayment of more than two percent (2%) between the rent due as reported and paid by TENANT in accordancewith this Lease and the rent due as determined by the audit; or TENANT has failed to maintain true and complete books, records, accounts, and supporting source documents in accordance with subparagraph A above. The adequacy of records shall be determined by the City Auditor. Otherwise, CITY shall bear the cost of any such audit. Upon the request of CITY, TENANT shall promptly provide, at TENANT’S expense, necessary data to enable CITY to fully comply with any and all requirements of the State of California or the United States of America for information or reports relating to this Lease and to TENANT’S use of the PREMISES. Such data shall include, if required, a detailed breakdown of TENANT’S use of the PREMISES, and/or a detailed breakdown of TENANT’S receipts and expenses. XIII.SECURITY DEPOSIT (RL 13.0) S A security deposit in the sum of Five Thousand Dollars ($5,000.00) shall be provided to CITY by TENANT. The security deposit shall take one of the forms set out below and shall guarantee TENANT’S full and faithful performance of all the terms, covenants, and conditions of this Lease. A.Cash. The assignment to CITY of a savings deposit held in a financial institution in Santa Clara or San Mateo County RE~L~S TERLZFORM / LZGOLFCF 12 acceptable to CITY. At a minimum, such assignment shall be evidenced by the delivery to CITY of the original passbook reflecting the savings deposit and a written assignment of said deposit to CITY in a form approved by the Real Property Manager. C o A Time Certificate of Deposit from a financial institution in Santa Clara or San Mateo County wherein the principal sum is made payable to CITY or order. Both the financial institution and the form of the certificate must be approved by the Real Property Manager. Do A Letter of Credit or other instrument of credit from a financial institution, subject to regulation by the state or federal government, pledging that fund necessary to secure performance of the Lease terms,~ covenants, and conditions, are on deposit and guaranteed for payment, and agreeing that the funds shall be trust funds securing TENANT’S performance and that all or any part shall be paid to CITY or order upon demand by CITY. Both the financial institution(s) and the form of the instrument(s) must be approved by the Real Property Manager. Regardless of the form in which TENANT elects to make said security deposit, all or any portion of the principal sum shall be available unconditionally to CITY for correcting any default or breach of this Lease incurred by CITY As a result of the failure by TENANT, its successors or assigns, to faithfully perform all of the terms, covenants, and conditions of this Lease. Should TENANT elect to provide a Time Certificate of Deposit, Letter of Credit, or other instrument of credit, hereinafter collectively referred to as "INSTRUMENT", to fulfill the security deposit requirements of this Lease, the INSTRUMENT shall contain a provision whereby the institution issuing the INSTRUMENT agrees to provide CITY with written notice of its intent not to renew the INSTRUMENT at least thirty (30) days prior to expiration or termination of the INSTRUMENT. If TENANT has not provided CITY with an acceptable alternate form of security deposit at least ten (i0) days prior to expiration or termination of the INSTRUMENT, CITY may demand and obtain from the institution issuing the INSTRUMENT, the amount secured by the INSTRUMENT as satisfaction of the security deposit provision of this Lease. Should TENANT elect to assign the savings deposit to CITY, or REMASTERLZFORM / LZGOLFCF 13 provide an alternate INSTRUMENT, to fulfill the security deposit requirements of this Lease, the assignment, or issuance of the INSTRUMENT shall have the effect of releasing the depositor or creditor therein from liability on account of the payment of any or all of the principal sum to CITY or order upon demand of CITY. The agreement entered into by TENANT with a financia! institution to establish the deposit necessary to permit assignment or issuance of a certificate As provided above, may allow the payment of interest accruing on account of the deposit to TENANT, or order. TENANT shall maintain the required security deposit throughout the Lease term. Failure to do so shall be deemed a default and may be grounds for immediate termination of this Lease. The security deposit shall be rebated, reassigned, released, or endorsed to TENANT or order, as applicable, at the end of the Lease term, provided TENANT has fully and faithfully performed each and every term, covenant, and condition of this Lease. XIV. MAINTENANCE OBLIGATIONS OF TENANT (RL 14.0) NS TENANT shall, to the satisfaction of CITY, keep and maintain the demised premises and all improvements of any kind which may be erected, installed or made thereon in good condition and in substantial repair, including doors and locks, carpeting and floor coverings and replacement of broken windows, if such breakage is caused from within the demised premises. TENANT is responsible to keep and maintain all items owned and furnished by CITY listed in Exhibit D (Inventory of Golf Course Restaurant Furnishings). It shall be TENANT’S responsibility to take all steps necessary or appropriate to maintain such a standard of condition and repair, including plumbing and electrical systems within the demised premises or exclusively serving the demised premises. CITY shall conduct an annual inspection of al! cooking, refrigeration and other fixed equipment to assure that it is being maintained in good and safe condition. TENANT expressly agrees to maintain the PREMISES in a safe, clean, wholesome, and sanitary condition and substantial repair, to the complete satisfaction of CITY and in compliance with all applicable laws. TENANT further agrees to provide approved containers for trash and garbage including recycling containers for recyclable trash and garbage, and to keep the PREMISES free and clear of rubbish and litter. CITY shall have the right to enter upon and inspect the PREMISES at any time for cleanliness and safety. REMASTERLZFORM / LZGOLFCF 14 TENANT shall designate in writing to CITY an on-site representative who shall be responsible for the day-to-day operation and level of maintenance, cleanliness, and general order. If TENANT fails to maintain or make repairs or replacements as required herein, CITY may notify TENANT in writing of the failure. Should TENANT fail to correct the situation within a reasonable time thereafter, as established by the City Manager, the Real Property Manager may make, or cause to be made, the necessary corrections and the cost thereof, including but not limited to the cost of labor, materials, and equipment and a fifteen percent (15%) charge for administration and overhead, shall be paid by TENANT within ten (i0) days of receipt of a statement of the cost from the Real Property Manager. CITY may also, at its option, choose other remedies available herein, or available by law. XV.MAINTENANCE OBLIGATIONS OF CITY NS CITY shall maintain the three HVAC units and boiler serving the premises, the exterior of the building, public restrooms, exterior walkways, parking lot and landscaping, all mechanical systems serving areas outside of the demised premises and replacement of broken windows if such breakage is caused from outside of the demised premises. CITY shall also be responsible for any major structural repairs required, not as a result of damage caused by TENANT,its employees, agents or clients. XVI.INITIAL CONSTRUCTION BY TENANT (RL 15.0) S Minimum Construction and Timinq. TENANT shall in an efficient and workerlike manner, cause to be designed, constructed, and installed within the PREMISES, at no cost to CITY, appropriate improvements to adequately accommodate those services and uses required by Clause III (REQUIRED & OPTIONAL SERVICES AND USES). The plans prepared by TENANT and approved by CITY during the option period proceeding execution of this Lease shall be a master plan for development of the PREMISES, and the working drawings prepared by TENANT and approved by the City Engineer during the same period shall be the plans, specifications, and time schedule for constructing such improvements. Development proposed by TENANT in the REMASTERLZFORM / LZGOLFCF 15 master plan may be scheduled in increments approved by the Cfty Manager or designee. DeveloDment Plan and Construction Standards. All design and construction shall conform with the construction and architectural standards contained in City-approved plans and construction drawings and shall meet all other requirements contained in this Lease. XVII.CONSTRUCTION AND/OR ALTERATION BY TENANT (RL 15.1) S CITY’S Consent. No structures, improvements, or facilities shall be constructed, erected, altered, or made within the PREMISES without the prior written consent of City Council if required by City of Palo Alto procedures or ordinances, or otherwise by the City Manager. Any conditions relating to the manner, method, design, and construction of the structures, improvements, or facilities established by CITY shall be conditions of this clause As though originally stated herein. TENANT may, at any time and at its sole expense, install and place business fixtures and equipment within any building constructed by CITY, provided such fixtures and installation have been reviewed and approved by the City Manager. Strict Compliance with Plans and SDecifications. All improvements constructed by TENANT within the PREMISES shall be constructed in an efficient and workerlike manner and in strict compliance with detailed plans and specifications approved by the City Council if required by City of Palo Alto procedures or ordinances or otherwise by the City Manager, or designee, and applicable City of Palo Alto codes and ordinances. Certificate of Inspection. Upon completion of construction of any improvement, TENANT shall submit to the Real Property Manager, a Certificate of Inspection, verifying that the construction was completed in conformance with Title 20 of the California Code of Regulations for residential construction, or in conformance with Title 24 of the California Code of Regulations for non-residential construction, whichever is applicable. XVIII. A. DAMAGE TO OR DESTRUCTION OF IMPROVEMENTS (RL 15.4) S Total Destruction. In the event the PREMISES or a substantial portion thereof are destroyed by any cause that renders the PREMISES unfit for the purposes designated in Clause III (REQUIRED & OPTIONAL USES) and if the PREMISES are so badly damaged that they cannot be repaired within ninety (90) days from the date of such damage, either party may terminate this Lease by giving to the other party written notice within thirty (30) days of the occurrence of such damage. After such notice of termination has been given, rental (excepting percentage renta!, if any) shall be prorated to the date TENANT actually vacates the PREMISES which shall be no later than thirty (30) days from the giving of the notice of termination. Insured Partial Destruction. If the PREMISES are partially destroyed by any cause insurable under fire insurance with a standard extended coverage casualty endorsement and the destroyed portion can be rebuilt or repaired within ninety (90) days from the date of destruction, CITY shall repair the damage or destruction with reasonable diligence. In such event, this Lease shall remain in full force and effect; however, until the destroyed PREMISES are repaired, rental (excepting percentage rental, if any) paid by TENANT to CITY shall be reduced in the same proportion that TENANT’s square footage is reduced by such destruction. However there shall be no rent abatement or offset should the damage or destruction be caused by TENANT, its employees, agents or contractors. Non-Insured Partial Destruction. If the PREMISES are partially destroyed by any cause not insurable by fire insurance with an extended coverage casualty endorsement but the PREMISES can still be used for the purposes designated in Clause III (REQUIRED & OPTIONAL USES), TENANT may, at its option, terminate this Lease unless CITY commences rebuilding or repair of the destroyed portion of the PREMISES within 90 days from the date of destruction. However, there shall be no rent abatement or offset should the damage or destruction be caused by TENANT, its employees, agents or contractors. Such termination by TENANT shall be accomplished by giving CITY written notice of termination not sooner than ninety (90) days nor later than one hundred (i00) days after the occurrence of such damage or destruction. This Lease shall terminate on the date such notice of termination is given to CITY. If CITY accomplishes such repair or if TENANT fails to exercise its option to terminate, this Lease shall remain in full force and effect, however, until the destroyed PREMISES are repaired, rental paid by TENANT to CITY (excepting percentage rent, if any) shall be reduced in the same proportion that TENANT’S leased square footage is reduced by such destruction. However, there shall be no rent abatement or offset should the damage or destruction be caused by TENANT, its employees, agents or contractors. Glass breakage shall not be deemed a partial destruction within the meaning of this clause. XIX. AS BUILT PLANS (RL 15.5) S Upon completion of any major TENANT-constructed improvements, TENANT shall provide the Real Property Manager with a complete set of reproducible ~as built plans" reflecting actual construction within or upon the PREMISES. TENANT shall also provide the Real Property Manager with a statement signed by TENANT under penalty of perjury certified as to accuracy and of actual construction costs for all such improvements. XX. OWNERSHIP OF IMPROVEMENTS (RL 16.0) NS City has furnished and is owner of all items listed in Exhibit C (Inventory of Golf Course Restaurant Furnishings), and City shall retain ownership of this property during and following termination of the lease. All improvements constructed, erected or installed upon the PREMISES must be free and clear of all liens, claims, or liability for labor or material and shall become the property of CITY, at its election, upon expiration or earlier termination of this lease and, upon City’s election, shall remain upon the PREMISES upon termination of this Lease. Title to all equipment, furniture, furnishings and trade fixtures placed by TENANT upon the PREMISES shall remain in name of TENANT, and replacements, substitutions and modifications thereof may be made by TENANT throughout the term of this Lease. TENANT may REMASTERLZFORM / LZGOLF~F 18 remove such fixtures and furnishings upon termination of thisLease~ if TENANT is not then in default under this Lease, provided that TENANT shall repair to the satisfaction of CITY any damage to the PREMISES and improvements caused by such removal and provided that usual and customary lighting, plumbing and heating fixtures shall remain upon the PREMISES upon termination of this Lease. XXI.UTILITIES (RL 17.2) S TENANT shall be responsible for and shall pay, prior to delinquency, all charges for utilities supplied to the PREMISES. However, as gas service is not separately metered and it would be. uneconomical to separately meter this service, TENANT agrees to pay to CITY a monthly amount based on an estimate of TENANT’S consumption for this utility service. For the purposes of this clause, the estimated monthly TENANT consumption of this utility service is agreed to be 437* therms, and the amount due CITY for such period shall be the product of this consumption factor and the average rate charged by the supplier of this utility service for such period. TENANT shall include the required utility payment with each month’s rental payment, as shown on Exhibit E attached. *This amount is subject to adjustment by CITY should evidence indicate a change in TENANT’S consumption of gas therms. XXII.INSURANCE (RL 18.0) S TENANT shall maintain insurance acceptable to CITY in full force and effect throughout the term of this Lease. Minimum Scope of Insurance Coverage shall be at least As broad As: i) 2) 3) 4) Insurance Services Office Commercial General Liability coverage (occurrence form CG 0001). Insurance Services Office form number CA 0001 (Ed. 1/87) covering Automobile Liability, code 1 (any auto). Workers’ Compensation insurance As required by the State of California and Employer’s Liability Insurance. Course of Construction insurance form providing coverage for "all risks" of loss. The policy or policies of insurance maintained by TENANT shall provide the following limits and coverages: REMASTERLZFORM / LZGOLFCF 19 POLICY WORKERS’ COMPENSATION MINIMUM LIMITS OF LIABILITY Statutory COMPREHENSIVE Bodily Injury $i,000,000 ea. person AUTOMOBILE $i,000,000 ea. occurrence LIABILITY,Property Damage $i,000,000 ea. occurrence including owned, hired, and non-owned automobiles COMPREHENSIVE GENERAL LIABILITY including products and Bodily Injury $I,000,000 ea. person $i,000,000 ea. occurrence $i,000,000 aggregate Property Damage $i,000,000 ea. occurrence Personal Injury $i,000,000 ea. occurrence completed operations, broad form contractual, and personal injury. FIRE LEGAL LIABILITY $ 500,000.00 Said sum represents the estimated cost of the improvements and fixtures within the care, custody and control of TENANT. Said sum shall be subject to annual review by LESSOR’s Risk Manager toinsure that coverage is adequate to cover changes in the replacement cost of improvements and fixtures within the care, custody and control of TENANT. 5 COURSE OF CONSTRUCTION Completed value of the project. Deductibles and Self-Insured Retentions Any deductibles or self-insured retentions must be declared to and approved by the CITY. At the option of the CITY either: the insurer shall reduce or eliminate such deductibles or self-insured retentions As respects the CITY, its officers, officials, employees and volunteers; or the TENANT shall procure a bond guaranteeing payment of losses and related investigations, claim administration and defense expenses. firstInsurance shall be in full force and effect commencing on the day of the term of this Lease. Each insurance policy required by this Lease shall contain the following clauses: "Each insurance policy required by this clause shall be endorsed to state that coverage shall not be suspended, voided, canceled by either party, reduced in coverage or in limits except after thirty (30) days’ prior written notice by certified mail, return receipt requested, has been given to the CITY." "All rights of subrogation are hereby waived against the CITY OF PALO ALTO and the members of the City Council and elective or appointive officers or employees, when acting within the scope of their employment or appointment." o "The CITY OF PALO ALTO is named As a loss payee on the property and course of construction insurance policies described above." "The CITY, its officers, officials, employees, agents and volunteers are to be covered As insureds As respects: liability arising out of activities performed by or on behalf of the TENANT; products and completed operations of the TENANT; .premises owned, occupied or used by the TENANT; or automobiles owned, leased, hired or borrowed by the TENANT. The coverage shall contain no special limitations on the scope of protection afforded to the CITY, its officers, officials, employees, agents or volunteers." °"For any claims related to this Lease, the TENANT’s insurance coverage shall be primary insurance As respects the CITY, its officers, officials, employees, agents and volunteers. Any insurance or self-insurance maintained by the CITY, its officers, officials, employees, agents or volunteers shall be excess of the TENANT’s insurance and shall not contribute withit." o "Any failure to comply with reporting or other provisions of the policies including breaches of warranties shal! not affect coverage provided to the CITY, its officers, officials, employees, agents or volunteers." REMASTERLZ FORM / LZ GOLFC F 21 o "The TENANT’s insurance shall apply separately to each insured against whom claim is made or suit is brought, except with respect to the limits of the insurer’s liability." AcceDtability of Insurers Insurance is to be placed with insurers with a current A.M. Best’s rating of no less than A:X. XXIII. INSURANCE (RL 18.2) TENANT agrees to deposit with the Real Property Manager, on or before the effective date of this Lease, certificates of insurance necessary to satisfy CITY that the insurance provisions of this Lease have been complied with, and to keep such insurance in effect and the certificates therefore on deposit with CITY during the entire term of this Lease. Should TENANT not provide evidence of such required coverage at least three (3) days prior to the expiration of any existing insurance coverage, CITY may purchase such insurance, on behalf of and at the expense of TENANT to provide six months of coverage. CITY shall retain the right at any time to review the coverage, form, and amount of the insurance required hereby. If, in the opinion of the Risk Manager, the insurance provisions in this Lease do not provide adequate protection for CITY and for members of the public using the PREMISES, the Real Property Manager may require TENANT to obtain insurance sufficient in coverage, form, and amount to provide adequate protection As determined by the Risk Manager. CITY’S requirements shall be reasonable and shall be designed to assure protection from and against the kind and extent of risk which exists at the time a change in insurance is required. The Real Property Manager shall notify TENANT in writing of changes in the insurance requirements. If TENANT does not deposit copies of acceptable insurance policies with CITY incorporating such changes within sixty (60) days of receipt of such notice, or in the event TENANT fails to maintain in effect any required insurance coverage, TENANT shall be in default under this lease without further notice to TENANT. Such failure shall constitute a material breach and shall be grounds for immediate termination of this Lease at the option of CITY. The procuring of such required policy or policies of insurance shall not be construed to limit TENANT’S liability hereunder nor to fulfill the indemnification provision and requirements of this Lease. Notwithstanding the policy or policies of insurance, TENANT shall be obligated for the full and total amount of any damage, injury, or loss caused by or connected with this Lease or with use or occupancy of the PREMISES. XXIV.ASSIGNING, SUBLETTING, AND ENCUMBERING (RL 19.0) S Any mortgage, pledge, hypothecation, encumbrance, transfer, sublease, or assignment (collectively referred to As ENCUMBRANCE) of TENANT’S interest in the PREMISES, or any part or portion there of, shall first be approved in writing by the City Manager or designee. Any ENCUMBRANCE which has not been approved by CITY in writing shall be void. Occupancy of the PREMISES by a prospective transferee, subtenant, or assignee before approval of the transfer, sublease, or assignment by CITY shall constitute a breach of this Lease. If TENANT is a corporation, an unincorporated association or partnership, the ENCUMBRANCE or transfer of any stock or interest in corporation, association, or partnership in the aggregate exceeding twenty-five percent (25%) shall be deemed an assignment within the meaning of this Lease. Should CITY consent to any ENCUMBRANCE, such consent shall not constitute a waiver of any of the terms, covenants, or conditions of this Lease. Such terms, covenants, or conditions shall apply to each and every ENCUMBRANCE hereunder and shall be severally binding upon each and every assignee, transferee, subtenant, or other successor in interest of TENANT. Any document to encumber, transfer, sublet, or assign the PREMISES or any part thereof shall incorporate directly or by reference all the provisions of this Lease.- CITY agrees that it will not arbitrarily withhold consent to any encumbrance, but CITY may withhold consent at its sole discretion if any of the following conditions exist: TENANT or any of its successors or assigns is in default of any term, covenant, or condition of this Lease, whether notice of default has or has not been given by CITY; Bo The prospective ENCUMBRANCER does not indicate in writing that such ENCUMBRANCE is subject to all the terms, covenants, and REMASTERLZFORM / LZGOLFCF 23 conditions of this Lease; C o All the terms, covenants, and conditions of the proposed ENCUMBRANCE including the consideration therefore of any and every kind, have not been revealed in writing to CITY; Do Any construction required of TENANT As a condition of this Lease has not been completed to the satisfaction of CITY; mo The processing fee required by CITY and set forth in the then current Palo Alto Municipal Fee Schedule has not been paid to CITY; mo If an assignment or sublease is proposed, and TENANT has not provided CITY with sufficient information to permit CITY to completely evaluate the background, skills, financial position, proposed operating plan changes and references of the prospective assignee or subtenant; or Go If the proposed assignee does not have the required skills, experience or financial standing to provide at least the same level of service As TENANT which determination shall be within the sole discretion of the City Manager. The above list is not inclusive but is intended to give TENANT some idea of the types of situation where CITY may withhold its consent to any ENCUMBRANCE. CITY reserves the right to withhold its consent to any ENCUMBRANCE that will, in CITY’S sole option, adversely affect the provision of service required by this Lease or adversely affect CITY’S interest in and to the land and structures covered by.this Lease. Hypothecation of the leasehold interest created by this Lease is expressly prohibited and any attempted hypothecation shal! be null and void. XXV. DEFAULT IN TERMS OF THE LEASE BY TENANT (RL 20.1) S Ao Act of Default Defined. The following events constitute acts of default under this Lease: Should TENANT fail to pay all or any portion of rental or any other payment due CITY at the times and in the manner provided in this Lease; REMASTERLZFORM/LZGOLFCF 2 4 ¯absenceShould TENANT a ) abandon or vacate the PREMISES ( from the PREMISES for ten (i0) days or more shall conclusively be deemed an abandonment of the PREMISES), b.) violate the provisions of Clause XXIV (ASSIGNING, SUBLETTING, and ENCUMBERING), or c.) fail to provide evidence of insurance coverage throughout the term of this Lease in accordance with Clause XXII INSURANCE); and o Should TENANT violate any other provision of this Lease, and such violation shall not be cured within thirty (30) days after written notice of such violation by CITY to TENANT. However, in the event of a violation which cannot reasonably be cured within thirty (30) days, TENANT shall have a reasonable period of time (As determined by the City Manager) to cure such violation. 4.Should TENANT: ao file a voluntary petition or have an involuntary petition filed against it in bankruptcy or under any insolvency act or law; b.be adjudicated a bankrupt; or C o attempt to make a general assignment for the benefit of its creditors. Bo Riqhts and Remedies of CITY. In the event TENANT commits an act of default, As defined in Subparagraph A. of this clause, the following rights and remedies shall be available to CITY which rights and remedies shall not be exclusive, but which shall be cumulative and in addition to any and all rights and remedies now or hereafter allowed by law or otherwise specifically provided in other clauses in this Lease: CITY may, at its election, continue this Lease in full force and effect and not terminate TENANT’S right to possession of the PREMISES, in which event CITY shall have the right to collect rental and other payments when due; °CITY shall also have the right to terminate this Lease and TENANT’S right to possession of the PREMISES at any time after the occurrence of an act of default by REMASTERLZFORM / LZGOLFCF 25 o o o TENANT upon written notice to TENANT together with the right to recover damages for such act of default; CITY shall also have the right to have a receiver appointed to collect rentals and conduct TENANT’S business; CITY may, at its election, at any time after TENANT commits an act of default and without notice, cure the act of default for the account and at the expense of TENANT. If CITY, by reason of an act of default by TENANT, is compelled to pay, or elect to pay, any sum of money or do any act that will require the payment of any sum of money, the sum or sums paid by CITY, together with an administrative charge equal to fifteen percent (15%) of said sum or sums, shall be deemed to be additional rental due CITY under this Lease and shall be due from TENANT with ten (i0) days of CITY’S mailing an invoice therefore by certified mail; CITY shall also have the right to seek an action or suit in equity to enjoin any acts or things which may be unlawful or in violation of the rights of CITY; CITY shall also have the right to seek a mandamus or other suit, action of proceeding at law or in equity to enforce its right against TENANT and any of its officers, agents, employees, assigns or subtenants, and to compel it to perform and carry out its duties and obligations under the law, the covenants and agreements As provided in this Lease. Co Termination and Damaqes CITY and TENANT specifically agree that acts of maintenance or preservation or efforts to relet the PREMISES (including the making of alterations and/or improvements to the PREMISES in connection with any reletting), and/or the appointment of a receiver upon initiative of CITY to protect CITY’S interests under this Lease wil! not constitute a termination of TENANT’S right to possession. REMASTEI%LZFORM / LZ GOLFCF 2 6 o Upon a termination of TENANT’S right to possession, shall have the right to recover from TENANT: iTY The worth at the time of award of the unpaid rental which had been earned at the time of termination of the Lease; and Do The worth at the time of award of the amount by which the unpaid rental which would have been earned after the date of termination of this Lease until the time of award exceeds-the amount of such rental loss that TENANT proved could have been reasonably avoided; and The worth at the time of award of the amount by which the unpaid rental for the balance of the term after the time of award exceeds the amount of such rental loss that TENANT proves could be reasonably avoided; and Any other amount necessary to compensate CITY for all detriment approximately caused by TENANT’S act of default or which in the ordinary course of things would be likely to result therefrom, including, without limitation, all costs incurred by CITY in connection with reletting the PREMISES, court costs and reasonable attorney’s fees. The phrase "the worth at the time of the award" As contained herein is to be computed by allowing interest at the rate equal to CITY’S average rate of return on invested funds plus two percent (2%), or the maximum allowed by law, whichever is greater. CITY’S efforts to mitigate the damages caused by TENANT’S act of default shall not constitute a waiver of CITY’S right to recover damages under the provisions of this clause. Upon termination of this Lease, pursuant to Subparagraph B. of this clause, CITY may immediately re-enter the PREMISES without due process of law, take possession of all buildings, improvements, additions, alterations, equipment, eject all parties in possession thereof therefrom, using such force for that purpose As may be necessary, without being liable to any prosecution for the re-entry or the use of such force. Any such re-entry by CITY shall be allowed by TENANT without hindrance, and CITY shall not be liable in damages or guilty of trespass because of any such re-entry. In the event of any re-entry or taking of REMASTERLZFORM / LZGOLFCF 27 possession of the PREMISES, CITY shall have the right, but not be obligated, to remove therefrom all of any part of the persona! property located therein, and CITY may place the same in storage at a public warehouse at the expense and risk of owner or owhers thereof. Nothing in this clause shall affect CITY’S right to indemnification for liability arising prior to termination of this Lease for personal injury or property damage pursuant to other provisions of this Lease. Do Appointment of Receiver. If a receiver is appointed at the request of CITY in any action against TENANT to take possession of the PREMISES and/or to collect the rents or profits derived therefrom, the receiver may, if it is necessary or cdnvenient in order to collect such rents from profits, conduct the business of TENANT then being carried on in the PREMISES, and may take possession of any personal property belonging to TENANT and used in the conduct of such business and may be used by the appointed receiver in conducting such business on behalf of CITY and TENANT. Neither the application for the appointment of such receiver nor the appointment of such receiver shall be construed As an election on CITY’S part to terminate this Lease unless a notice of such intention is given to TENANT. TENANT agrees to indemnify and hold CITY harmless from any liability arising out of the entry by any such receiver and the taking of possession of the PREMISES and/or use of personal property. XXVI.BANKRUPTCY BY TENANT (RL 20.2) S Neither TENANT’S interest in this Lease, nor any lesser interest of TENANT in this Lease, nor any estate of TENANT created by this Lease, shall pass to anytrustee, receiver, assignee for the benefit of creditors, TENANT As a Debtor-In-Possession or any other person or entity (hereinafter collectively referred to As "TRUSTEE") by operation of law under the laws of any state having jurisdiction of the person or property of TENANT under any bankruptcy proceeding unless CITY shall specifically consent to such transfer (hereinafter referred to As "TRANSFER") or assignment in writing. Acceptance by CITY of rent or any other payments due CITY from any such TRUSTEE shall not be deemed to be a waiver of the need to obtain CITY’S consent to any such TRANSFER. CITY’S consent to any such TRANSFER and CITY’S right to terminate this Lease under any bankruptcy proceedings shall be governed by the following paragraphs of this Lease. Ao CITY’S Consent to Transfer. CITY shall consent to TRANSFER only~ if the following terms and conditions have been satisfied: TRUSTEE has, in writing, elected to assume and has agreed to abide by all of the terms and conditions, specifically including the use restriction of this Lease within sixty (60) days from the date of the order for relief; o TENANT or TRUSTEE has cured, or provided adequate assurance that any monetary default under this Lease will be cured within thirty (30) days of such TRANSFER; o TENANT or TRUSTEE has compensated CITY or has provided CITY adequate assurance that within ten (i0) days of such TRANSFER, CITY will be compensated for any pecuniary loss incurred by CITY arising from the default of TENANT or TRUSTEE; TENANT or TRUSTEE has provided CITY with adequate assurance of the future performance of each and every obligation of TENANT or TRUSTEE under this Lease; o TENANT or TRUSTEE has deposited with CITY, As security for timely payment of rent, an amount equal to three (3) months rent and any other monetary charges which may accrue or come due within the three (3) months following such TRANSFER. Should rent be based on percentage rent, the rent shall be estimated by using the monthly average total rent paid by TENANT over the preceding three (3) years; o The TRANSFER shall not breach any provision relating to the leased PREMISES in any other lease, mortgage, financing agreement or other agreement by which CITY is bound. o TENANT or TRUSTEE has provided CITY with sufficient information regarding TRUSTEE, or any known proposed subsequent assignee, to enable CITY to determine that the TRUSTEE, or any known proposed subsequent assignee, has the skills, experience and financial standing to successfully provide the uses and services required by this Lease, which determination shall be within the discretion of the City Manager. For the purposes of this subparagraph A, CITY and TENANT REMASTERLZFORM / LZGOLFCF 29 acknowledge that, in the context of the bankruptcy proceeding of TENANT, "adequate assurance" shall, as a minimum, mean: TRUSTEE or TENANT has and shall continue to have sufficient unencumbered assets after the payment of all secured obligations and administrative expenses to assure CITY that TENANT or TRUSTEE will have sufficient funds to fulfill the obligations of TENANT or TRUSTEE under this Lease, and to keep the PREMISES stocked with sufficient merchandise and/or supplies and properly staffed to conduct a fully operational actively promoted business on the PREMISES; and o The Bankruptcy Court shall have entered an order segregating sufficient cash payable to CITY and/or TRUSTEE shall have granted a valid and perfected first lien and security interest and/or mortgage in property of TENANT or TRUSTEE, acceptable in value and kind to CITY securing TENANT’S or TRUSTEE’S obligation to cure the monetary defaults under this Lease within the time limits set forth above, or TRUSTEE shall have obtained guarantees satisfactory in form and substance to CITY from one or more persons or entities who satisfy CITY’S standards of credit worthiness; and o CITY has obtained all consents or waivers from any third party required under any lease, mortgage, financing arrangement or other agreement by which CITY is bound to permit CITY to consent to such TRANSFERS. Bo Termination of Lease. This Lease shall, at CITY’S option, terminate if any of the following conditions exist: If TENANT or TRUSTEE fails to assume this Lease in accordance with the requirements of subparagraph A. 1 above; o If a TRANSFER meeting each and every condition set forth in subparagraph A above has not been completed within 120 days of TENANT’S becoming a Debtor under Chapter 7 of the Bankruptcy Code, or within one hundred twenty (120) days of the date of filing of a Petition for reorganization or adjustment of debts under Chapter Ii or 13 of the Bankruptcy Code; or REMASTERLZFORM/LZGOLFCF 3 0 TENANTIf this Lease is assumed by a Trustee appointed for or by TENANT As Debtor-In-Possession under the provision of subparagraph A above and TENANT is thereafter liquidated or files a subsequent Petition for reorganization or adjustment of debts under Chapter ii or 13 of the Bankruptcy Code. CITY’S election to terminate this Lease shall be delivered to TENANT in writing no later than thirty (30) days after the occurrence of any of the above events. CITY shall thereupon be immediately entitled to possession of the PREMISES without further obligation to TENANT or TRUSTEE, and this Lease shall be canceled, but CITY’S right to be compensated for damages in such liquidation proceeding shall survive. XXVII.RESERVATION OF NAVIGATIONAL EASEMENT (RL 21.0) S CITY hereby reserves for the use and benefitsof the public, a right of navigation, flight and resulting noise forthe passage of aircraft landing at, taking off or operating fromthe adjacent airport operated by the County of Santa Clara. XXVIII.LIMITATION OF THE LEASEHOLD (RL 22.0) S This Lease and the rights and privileges granted TENANT in and to the PREMISES are subject to all covenants, conditions, restrictions, and physical or lega! encumbrances, including those which are set out in The Golf Course Master Plan approved by City Council on May 15, 1995. Nothing contained in this Lease or in any document related hereto shall be construed to imply the conveyance to TENANT of rights in the PREMISES which exceed those owned by CITY. XXIX.NOTICES (RL 23.0) S All notices, statements, demands, requests, consents, approvals, authorizations, offers, agreements, appointments or designations hereunder give by either party to the other, shall be in writing and shall be sufficiently given and served upon the other party if (i) personally served, (2) sent by United States Certified mail, postage, prepaid, (3) sent by express delivery service, or (4) in the case of a facsimile, if sent to the telephone number(s) set forth below during normal business hours of the receiving party and followed within 48 hours by delivery of hard copy of the material sent by facsimile, in accordance with (i), (2) or (3) above. Personal service shall include, without limitation, service by delivery REMASTERLZFORM / LZGOLFCF 31 service and service by facsimile transmission. Delivery of notices properly addressed shall be deemed complete when the notice is physically delivered to the Real Property Manager or the President of R&T Restaurant Corporation. A!l notices pursuant to this lease shall be addressed As set forth below or As either party may subsequently designate by written notice. TO:CITY TO: ~TENANT Real Property Manager City of Palo Alto P.O. Box 10250 250 Hamilton Avenue Palo Alto, CA 94303 FAX: (415) 323-1741 Tom Talai, President R & T Restaurant Corp. 23950 Mission Blvd. Hayward, CA 94544 Fax (510) 582-4921 with a copy to: City Clerk, City of Palo Alto P.O. Box 10250 250 Hamilton Avenue Palo Alto, CA 94303 FAX: (415) 328-3631 and City Attorney, City of Palo Alto P.O. Box 10250 250 Hamilton Avenue Palo Alto CA 94303 FAX: (415) 329-2646 XXX. ATTACHMENT TO LEASE (RL 24.0) S This Lease includes the following exhibits, which are attached hereto and by this reference incorporated into this Lease: Exhibit A - Genera! Conditions Exhibit B - Description of Leased Premises Exhibit C - Golf Course Restaurant Policy Statement REMASTERLZFORM/LZGOLFCF 3 2 Exhibit D - Inventory of Golf Course Restaurant Furnishings~~ Exhibit E - Monthly Statement of Gross Receipts~ and Rent Due The inclusion of clauses in Exhibit A (GENERAL CONDITIONS) is not in any way intended to lessen the importance of these clauses, but is merely done to enhance the organization of various clauses and this Lease. IN WITNESS WHEREOF, the parties have executed this Lease the day and year first above written. CITY: CITY OF PALO ALTO (LESSOR) TENANT: BY: Mayor BY : Its: ATTEST: BY: City Clerk By : Its : (Corporate Seal) APPROVED AS TO FORM: By: City Attorney REMASTERLZFORM / LZGOLFCF 33 APPROVED AS TO AUDIT AND ACCOUNTING: By: City Auditor RECOMMENDED FOR APPROVAL: By: Parks and Golf Course Admin. By: Real Property Manager By:, Director, Planning & Community Environment By: Director, Administrative Services By: Director, Public Works By: Director, Community Services ~EMAS TERLZ FOR!~ / L ZGOLFCF 3 4 (RL 27.0) EXHIBIT A GENERAL CONDITIONS i.DEFINITIONS (RL 27.1) S CITY shall mean the City Council of the City of Palo Alto, a municipal corporation. The City Manager is hereby authorized to take any actions under this Lease on behalf of CITY except for termination of this Lease. Clauses in this lease refer to specific officers or employees of CITY. Should these positions be eliminated or the title changes, it is understood and agreed that such references shall be considered to be to the new title for renamed positions or to the replacement official designated with the responsibilities of any eliminated position. Any reference to a City officer or employee includes a reference to the officer’s or employee’s designated representative. 2.PARTNERSHIP/CORPORATE AUTHORITY & LIABILITY (RL 27.2) S If TENANT is a partnership, each general partner: Ao represents and warrants that the partnership is a duly qualified partnership authorized to do business in Santa Clara County; and Bo shall be jointly and severally liable for performance of the terms and provisions of this Lease. If TENANT is a corporation, each individual signing this Lease on behalf of TENANT represents and warrants that; Ao he is duly authorized to do so in accordance with an adopted Resolution of TENANT’S Board of Directors or in accordance with the Bylaws of the corporation; and B°TENANT is a duly qualified corporation authorized to do business in State of California. As used in this Lease, the term "TENANT" shall include TENANT, its agents, sublessees, concessionaires, or licensees, or any person acting under contract with TENANT; however, the definition of TENANT used herein, shall not be construed to authorize or permit any REMASTERLZFORM / LZGOLFCF 3 5 sublease or licenses not authorized or permitted elsewhere in this Lease. 3. TIME (RL 27.3) S Time is of the essence of this Lease. 4.SIGNS (RL 27.4) S TENANT agrees not to construct, maintain, or allow any sign to be placed upon the PREMISES except As may be approved by CITY. Unapproved signs, banners, etc., may be removed by CITY. 5.PERMITS AND LICENSES (RL 27.5) S TENANT shall be required to obtain any and all permits and/or licenses which may be required in connection with the operation of, and any approved TENANT construction upon, the PREMISES As set forth in this Lease. 6.MECHANICS LIENS (RL 27.6) S TENANT shall at all times indemnify and save CITY harmless from all claims for labor or materials supplied in connection with construction, repair, alteration, or installation of structures, improvements, equipment, or facilities within the PREMISES, and from the cost of defending against such claims, including attorney fees. TENANT shall provide CITY with at least ten (i0) days written notice prior to commencement of any work which could give rise to a mechanics lien or stop notice. CITY reserves the right to enter upon PREMISES for the purposes of posting Notices of Non-Responsibility. In the event a lien is imposed upon the PREMISES As a result of such construction, repair, alteration, or installation, TENANT shall either: io Bo Record a valid Release of Lien; or Deposit sufficient cash with CITY to cover the amount of the claim on the lien in question and authorize payment to the extent of said deposit to any subsequent judgment holder that may arise As a matter of public record from litigation with regard to lienholder claim; or REMASTERLZFORM / LZGOLFCF 3 6 Procure and record a bond in accordance with Section 3143 of the Civil Code, which releases the PREMISES from the claim of the lien from any action brought to foreclose the lien. Should TENANT fail to accomplish one of the three optional actions within fifteen (15) days after the filing of such a lien, the Lease shall be in default and may be subject to immediate termination. 7.LEASE ORGANIZATION AND RULES OF CONSTRUCTION (RL 27.7) S Words of the masculine gender shall be deemed and construed to include correlative words of the feminine and neuter genders. Unless the context otherwise indicates, words importing the singular number shall include the plural number and vice versa, and words importing persons shall include corporations and associations, including public bodies, As well As natura! persons. The terms "hereby", "hereof", "hereto", "herein", "hereunder" and any similar terms, As used in this agreement, refer to this agreement. All the terms and provisions hereof shall be construed to effectuate the purposes set forth herein, and to sustain the validity hereof. The titles and headings of the sections of this agreement have been inserted for convenience of reference only, are not to be considered a part hereof and shall not in any way modify or restrict any of the terms of provisions hereof or be considered or given any effect in construing this agreement or any provision hereof in ascertaining intent, if any question of intent shall arise. 8.AMENDMENTS (RL 27.8) S This Lease sets forth all of the agreements and understandings of the parties and any modifications must be written and properly executed by both parties. 9.UNLAWFUL USE (RL 27.9) S TENANT agrees that no improvements shall be erected, placed upon, operated, nor maintained within the PREMISES, nor any business conducted or carried .on therein or therefrom, in violation of the terms of this Lease, or of any regulation, order of law, statute, or ordinance of a governmental agency having jurisdiction over TENANT’S use of the PREMISES. !0.NONDISCRIMINATION (RL 27.10) S Revised 8-19-93 TENANT and its employees shall not discriminate against any person because of race, color, religion, ancestry, age, sex, national origin, disability or sexua! preference. TENANT shall not discriminate against any employee or applicant for employment because of race, color, religion, ancestry, sex, age, national origin, disability or sexual preference. TENANT covenants to meet all requirements of the Palo Alto Municipal Code pertaining to nondiscrimination in employment. If TENANT is found in violation of the nondiscrimination provision of the State of California Fair Employment Practices Act or similar provisions of federal law or executive order in the conduct of its activities under this Lease by the State of California Fair Employment Practices Commission or the equivalent federal agency or officer, it shall thereby be found in default under this Lease, and such default shall constitute a material breach of this Lease. CITY shall then have the power to cancel or suspend this Lease in whole or in part. ii.INSPECTION (RL 27.11) S CITY’S employees and agents shall have the right at all reasonable times to inspect the PREMISES to determine if the provisions of this Lease are being complied with. 12.HOLD HARMLESS (RL 27.12) S TENANT hereby waives all claims, liability and recourse against CITY including the right of contribution for loss or damage of or to .persons or property arising from, growing out of or in any way connected with or related to this agreement. TENANT hereby agrees to indemnify, hold harmless and defend CITY, its officers, agents, and employees against any and all claims, liability, demands, damages, cost, expenses or attorneys’ fees arising out of the operation or maintenance of the property described herein or TENANT’S performance or non performance of the terms of this Lease. In the event CITY is named As co-defendant, TENANT shall notify CITY of such fact and shall represent CITY in such legal action unless CITY undertakes to represent itself As co-defendant in such legal action, in which event TENANT shall pay to CITY its litigation costs, expenses and attorneys’ fees. REMASTERLZFORM/LZGOLFCF 3 8 13 .TAXES AND ASSESSMENTS (RL 27 . 13) S This Lease may create a possessory interest which is subject to the payment of taxes levied on such interest. It is understood and agreed that al! taxes and assessments (including but not limited to the possessory interest tax) which become due and payable upon the PREMISES or upon fixtures, equipment, or other property installed or constructed thereon, shall be the ful! responsibility of TENANT and TENANT shall pay the taxes and assessments prior to delinquency. 14.SUCCESSORS IN INTEREST (RL 27.14) S Unless otherwise provided in this Lease, the terms, covenants, and conditions contained herein shal! apply to and bind the heirs, successors, executors, administrators, and assigns of all the parties hereto, all of whom shall be jointly and severally liable hereunder. 15.CIRCUMSTANCES WHICH EXCUSE PERFOB!VLANCE (FORCE MAJEURE) (RL 27.15) S If either party hereto shall be delayed or prevented from the performance of any act required hereunder by reason of acts of God, restrictive governmental laws or regulations, or other cause without fault and beyond the control of the party obligated (financial inability excepted), performance of such act shall be excused for the period of the delay and the period for the performance of any such act shal! be extended for a period equivalent to the period of such delay. 16.PARTIAL INVALIDITY (RL 27.16)S If any term, covenant, condition, or provision of this Lease is determined to be invalid, void, or unenforceable, by a court of competent jurisdiction, the remainder of the provisions hereof shall remain in full force and effect and shall in no way be affected, impaired, or invalidated thereby. 17.WAIVER OF RIGHTS (RL 27.17) S The failure of CITY or TENANT to insist upon strict performance of any of the terms, covenants, or conditions of this Lease shall not be deemed a waiver of any right or remedy that CITY or TENANT may have, and shall not be deemed a waiver of the right to require strict performance of all the terms, covenants, and conditions of the Lease REMASTERLZFORM / LZGOLFCF 3 9 thereafter, nor a waiver of any remedy for the subsequent breach or default of any term, covenant, or condition of the Lease. 18.COSTS OF SUSTAINING AN ACTION FOR BREACH OR DEFAULT (RL 27.18) S In the event either CITY or TENANT commences legal action against the other claiming a breach or default of this Lease, the prevailing party in such litigation shall be entitled to recover from the other cost of sustaining such action, including reasonable attorney fees, As may be fixed by the Court. 19.RESERVATIONS TO CITY (RL 27.19) S The PREMISES are accepted "As is" and "where is" by TENANT subject to any and all existing easements, and encumbrances. CITY reserves the right to install, lay, construct, maintain, repair, and operate such sanitary sewers, drains, storm water sewers, pipelines, manholes, and connections; water, oil, and gas pipelines; telephone and telegraph power lines; and the applications and appurtenances necessary or convenient for connection therewith, in, over, upon, through, across and along the PREMISES or any part thereof, and to enter the PREMISES for any and all such purposes. CITY also reserves the right to grant franchises, easements, rights of way, and permits, in, over, upon, through, across, and along any and all portions of the PREMISES. No right reserved by CITY in this clause shall be so exercised As to interfere unreasonably with TENANT’S operation hereunder. CITY agrees that rights granted to third parties by reason of this clause shal! contain provisions that the surface of the land shall be restored As nearly As practicable to the original condition upon the completion of any construction. 20.HOLDING OVER (RL 27.20) S In the event TENANT shall continue in possession of the PREMISES after the term of the Lease, such possession shall not be considered a renewal of this Lease but a tenancy from month to month and shall be governed by the conditions, and covenants contained in this Lease. 21.CONDITION OF PREMISES UPON TERMINATION (RL 27.21) S Upon termination of this Lease, except As otherwise agreed to herein, TENANT shall redeliver possession of the PREMISES . to CITY in REMASTERLZFORM / LZGOLFCF 4O substantially the same condition that existed immediately TENANT’S occupancy, reasonable wear and tear, flood, earthquake, war, and any act of war excepted. prior~ 22.DISPOSITION OF ABANDONED PERSONAL PROPERTY (RL 27.22) S If TENANT abandons the PREMISES or is dispossessed thereof by process of law or otherwise, title to any personal property belonging to TENANT and left .on the PREMISES forty-five (45) days after such abandor~nent or dispossession shall be deemed to have been transferred to CITY. CITY shall have the right to remove and to dispose of such property without liability therefor to TENANT or to any person claiming under TENANT, and shall have no need to account therefor. 23.QUITCLAIM OF TENANT’S INTEREST UPON TERMINATION (RL 27.23) S Upon termination of this Lease for any reason, including but not limited to termination because of default by TENANT, TENANT shall, at CITY’S request execute, acknowledge and deliver to CITY within five (5) days after receipt of written demand thereof, a good and sufficient deed whereby all rights, title, and interest of TENANT in the PREMISES, is quitclaimed to CITY. Should TENANT fail or refuse to deliver the required deed to CITY, CITY may prepare and record a notice reciting the failure of TENANT to execute, acknowledge ~nd deliver such deed and the notice shall be conclusive evidence of the termination of this Lease, and of all right of TENANT or those claiming under TENANT in and to the PREMISES. 24.CITY’S RIGHT TO RE-ENTER (RL~27.24) S TENANT agrees to yield and peaceably deliver possession of the PREMISES to CITY on the date of termination of this Lease, whatsoever the reason for such termination. Upon giving written notice of termination to TENANT, CITY shall have the right to re-enter and take possession of the PREMISES on the date such termination becomes effective without further notice of any kind and without institution of regular legal proceedings. Termination of the Lease and re-entry of the PREMISES by CITY shall in no way alter. or diminish any obligation of TENANT under the Lease terms and shall constitute an acceptance or surrender. TENANT waives any and all rights of redemption under any existing or future law or statute in the event of eviction from or dispossession REMASTERLZFORM ! LZGOLFCF 41 of the PREMISES for any reason or in the event CITY re-enters and lawfully re-takes possession of the PREMISES. 25.CONFLICT OF INTEREST (RL 27.25) S TENANT warrants and covenants that no official or employee of CITY nor any business entity in which any official or employee of CITY is interested: (i) has been employed or retained to solicit or aid in the procuring of this agreement; or (2) will be employed in the performance of this agreement without the divulgence of such fact to CITY. In the event that CITY determines that the employment of any such official, employee or business entity is not compatible with such official’s or emp!oyee’s duties As an official or employee of CITY, TENANT upon request of CITY shall immediately terminate such employment. Violation of this provision constitutes a serious breach of this Lease and CITY may terminate this Lease As a result of such violation. 26.EMINENT DOMAIN (RL 27.26) S In the event the whole or any part of the PREMISES are condemned by a public entity in the lawful exercise of its power of eminent domain, this Lease shall cease As to the part condemned. The date of such termination shall be the effective date of possession of the whole or part of the PREMISES by the condemning public entity. If only a part is condemned and the condemnation of that part does not substantially impair the capacity of the remainder to be used for the purposes required by this Lease, TENANT shall continue to be bound by the terms, covenants and conditions of this Lease. However, the then current minimum annual rent shall be reduced in proportion to the relationship that the compensation paid by the condemning public entity for the portion condemned bears to the value of the entire PREMISES As of the date of possession of the part condemned. If the condemnation of a part of the PREMISES substantially impairs the capacity of the remainder to be used for the purposes required by this Lease, TENANT may: io Terminate this Lease and thereby be absolved of obligations under this Lease which have not accrued As of the date of possession by the condemning public entity; or Bo Continue to occupy the remaining PREMISES and thereby continue to be bound by the terms, covenants and conditions of this REMASTERLZFORM / LZGOLFCF 4 2 Lease. If TENANT elects remainder of the PREMISES, to continue in possession the then current annual minimum rental shall be reduced in proportion to the relationship that the compensation paid by the condemning public entity for the part condemned bears to the value of the entire leased PREMISES As of the date of possession by the condemning public entity. TENANT shall provide CITY with written notice advising CITY of TENANT’S choice within thirty (30) days of possession of the part condemned by the condemning public entity. CITY shall be entitled to and shall receive all compensation related to the condemnation of all or part of the PREMISES by the exercise of eminent domain except that TENANT shall be entitled to that portion of the compensation which represents the value of the TENANT constructed improvements for the remainder of the Lease term. The amount to which TENANT shall be entitled shal! not exceed the actual cost of improvements constructed by TENANT reduced in proportion to the relationship of the remaining Lease term to the original Lease term, using a straight line approach. 27.HAZARDOUS SUBSTANCES (RL 27.29) S io Definition. As used herein, the term "Hazardous Materials" means any substance or materialwhich has been determined by any state, federal or local governmental authority to be capable of posing risk of injury to health, safety, and property, including petroleum and petroleum products and all of those materials and substances designated As hazardous or toxic by the U.S. Environmental Protection Agency, the California Water Quality Control Board, the U.S. Department of Labor, the California Department of Industrial Relations, the California Department of Health Services, the California Health and Welfare Agency in connection with the Safe Water and Toxic Enforcement Act of 1986, the U.S. Department of Transportation, the U.S. Department of Agriculture, the U.S. Consumer Product Safety Commission, the U.S. Department of Health and Human Services, the. U.S. Food and Drug Administration or any other govern!nental agency now or hereafter authorized to regulate materials and substances in the environment. Without limiting the generality of the foregoing, the term "Hazardous Materials" shall include all of those materials and substances defined As "toxic materials" in Sections 66680 through 66685 ofTitle 22 of the California Code of Regulations, Division 4, Chapter 20, As the same may be REMASTERLZFOR-M / LZGOLFCF 43 amended from time to time. TENANT’S Use of PREMISES. During the term of this Lease, TENANT shall abide and be bound by all of the following requirements: TENANT shall comply with all laws now or hereafter in effect relating to the use of Hazardous Materials on, under or about the PREMISES, and TENANT shall not contaminate the PREMISES, or its subsurfaces, with any Hazardous Materials. ii.TENANT shall restrict its use of Hazardous Materials at the PREMISES to those kinds of materials that are normally used in constructing the Project. Disposal of any Hazardous Materials at the Premises are strictly prohibited. Storage of such permissible Hazardous Materials is allowed only in accordance with all applicable laws now or hereafter in effect. All safety and monitoring features of any storage facilities shal! be approved by CITY’S Fire Chief in accordance with all laws. iii.TENANT shall be solely and fully responsible for the reporting of all Hazardous Materials releases to the appropriate public agencies, when such releases are caused by or result from TENANT’S activities on the PREMISES. TENANT shall immediately inform CITY of any release of Hazardous Materials, whether or not the release is in quantities that would otherwise be reportable to a public agency. iv.TENANT shall be solely and fully responsible and liable for such releases at the Premises, or into CITY’S sewage or storm drainage systems. TENANT shall take all necessary precautions to prevent any of its Hazardous Materials from entering into any storm or sewage drain system or from being released on the Premises. TENANT shall remove releases of its Hazardous Materials in accordance with all laws. In addition to all other rights and remedies of CITY hereunder, if the release of Hazardous Materials caused by TENANT is not removed by TENANT within ninety (90) days after discovery by TENANT, CITY or any other third party, CITY may pay to have the same removed and TENANT shall reimburse CITY for such Costs within five (5) days of CITY’S demand for payment. REMASTERLZFORM/LZGOLFCF 4 4 ,harmlessvo TENANT shall protect defend, indemnify and hold CITY from and against all loss, damage, or liability (including all foreseeable and unforeseeable consequential damages) and expenses (incl~ding, without limitation, the cost of any cleanup and remediation of Hazardous Materials) which CITY may sustain As a result of the presence or cleanup of Hazardous Materials on the PREMISES. vi.TENANT’S-obligation under this Clause shall survive the expiration or earlier termination of this Lease. 28. ALL COVENANTS ARE CONDITIONS (RL 27.30) S All provisions of the Lease are expressly made conditions. 29. PARTIES OF INTEREST (RL 27.31) S Nothing in this agreement, expressed or implied, is intended to, or shall be construed to, confer upon or to give to any person or party other than CITY and TENANT the covenants, condition or stipulations hereof. All covenants, stipulations, promises and agreements in this Lease shall be for the sole and exclusive benefit of CITY and TENANT. R~SMASTERLZFORM/LZGOLFCF 4 5 Project: Golf Course Restaurant ~ Project #: CL 27/25-95/15 LEASE DESCRIPTION All the Demised Premises shown cross-hatched on a plotplan labeled "Exhibit B (2 of 2)" attached hereto and made a part hereof, being the restaurant, kitchen, lounge and meeting room portions of the Palo Alto Municipal Golf Course Clubhouse facility located at 1875 Embarcadero Road, Palo Alto, California, also including the fixntres and equipment listed on "Exhibit C" attached hereto and made apart hereof. EXHIBIT B (1 OF 2) NORTH SCALE ,seating LOCATION OF DECK & PASS THRU WINDOW : GOLF COURSE IT PARKING LOT LEGEND oreo PRO SHOP B GOLF CART STORAGE CITY MAINTENANCE Including BREEZE~WAY RESTAURANT/LOUNGE/MEETI NG ROOMS TOTAL net oreo sq. ft. 5,165 2,185 9,850 PALO. ALTO MUNICIPAL GOLF COURSE CLUE)ROUSE COMPLEX 1875 IEMBARCADERO ROAD EXHIBIT B’(2 of 2) MEETING ROOMS: 1984 12 each (14) 7 each (10) 2 eacl~ (18) 5each (5) 96 each (73) GOLF CLUBHOUSE COFFEE SHOP FURNITURE ( ) Denotes original 1980 inventory 36" square tables, w/oak tops and metal pedestal bases 24" x 48" tables w/oak plank table tops and metal bases chairs, stacking, armless, natural oak and leather window blinds solid oak arm chairs (Walsh & Simins #0529-2) SNACK LOUNGE: 10 each (10) 15 each (20) 24 each (20) 36" round tables with oak plant tops and metal pedestal bases chairs, oak with arms chairs, oak without arms COCKTAIL LOUNGE: 3 each ( 6 ) 13 each (16) 8each (8) SNACK BAR: ? each 1 each (1) 8 each (8) 9 each (9) 1 each (1) 6 each (6) 18" round tables, with oak plank tops and metal pedestal bases chairs, leather/chrome bar stools, leather/chrome, 30" high with foot rests 24" round tables, oak plank and metal pedestal bases 36" table, oak plank and metal pedestal base chairs, oak, without arms chairs, oak, with arms 12-hour electric wall clock lockers,double tier with locks Iqoflist Revised: October 3, 1995 EXHIBIT C (1 of 3) FOOD 1995 1995 1995 1995 1995 1995 SERVICE EQUIPMENT: 7 each (7) 1 each (1) 1 each (1) 1 each (1) 1 each (1) 1 each (1) 1 each (1) 1 each (I) 1 each (1) 2 each (1) 1 each (1) 1 each (1) 1 each (1) 1 each (1) 1 each (1) 1 each (1) 1 each (1) 1 each (1) 1 each (1) 1 each (1) 2 each (1) each (1) each (1) each (1) each (1) each each (1) each (1) each (1) each (1) each (1) each (1) each (1) each (1) each (1) each (1) each (I) each (1) each (1) each (1) each (1) cantilever stool base undercounter water station - Delfield #243 coffee shop and pick-up counter assembly drought beer station - Perlick C5063 schpl w/compressor display case - Delfield V15248-28 (refrigerated) pass-through shelf w/food warmer- Antco GRH24 utility unit - Delfield V16354-28 (w/sliding doors) ice cream cabinet - Delfield V13556-28 V12 (w/sink & dipper well) display case (wall mounted) -Delfield V11260 (non-refrigerated) paper cup dispenser - Shellymatic CD cabinet - Delfield custom utility cabinet -Delfield V16136 (w/doors) freezer - Traulsen RLT-2-32 WUT microwave oven - Litton 20/20 B cold food table - Delfield V18466-28 sink - Delfield V22014-28 hot food table - Delfield V14148-28 shelf spreader plate griddle, gas-fired (Montague URLC 36R charbroiler) double deck high shelf refrigerator - Traulsen RUL-3-32WSC (w/drawers) cook top w/oven - Montague 136-5A hood - Aquamatic EX-MC walk-in refrigerator - Lech shelving - Metro work table - Computer Sinls WT8554030 grill - Montague 4’ saytor utility ovens - Montague 236 doublestock hood - Aquamatic EX-MC. scrapping table assembly - fabricated garbage disposer - Bus Boy 1500 BB450 (1 ½ hp) dishwasher - Steno SC 20-1W/K 55 KIT clean dish table assembly - fabricated work table - Computer Stain WT857230 freezer - Traulsen RLT3-32 WI.FF pre-rinse unit (wall-mounted) T&S B 133 w/B 109 br’kt toaster - Toastmaster # 103 rack shelf- fabricated shelving draft beer tap and drainer assembly - Perlick Hoflist Revised: October 3, 1995 EXHIBIT C (2 of 3) 1 each I each 2-sect. backbar refrig, s/c w/drought beer system - Perliek C5063E glass chiller - Perlick 832455 Hoflist.doc FOOD SERVICE EOUIPMENT (CONT.): 1 1 1 1 1 I 1 1 1 1 each (I) each (1) each (1) each (l) each (1) each (1) each (1) each (1) each (1) each (1) back bar assembly bar top and die assembly 1’2" wide bar blender station - Perlick TS-BD 2’0" lg. ice chest w/cond, shelf unit - Perlick TS24CH sink and drainboard assembly w/speedrail, 5’ long - Perlick T553C shelving fire system - Ansul refrigeration system - Bally shelf- Perlick 705310 display case - Delfield V15248 (refrigerated) Hoflist Revised: October 3, 1995 EXHIBIT C (3 of 3) GOLF COURSE RESTAURANT POLICY STATEMENT It is the policy of the City of Palo Alto to provide a golf course and related facilities of the highest quality for the Use of its golfing community. Inherent in this policy is the concept that the Cit~ collect revenue from golf course users sufficient to pay costs of administration, management, maintenance, and future capital improvement for operation of the golf facilities. The restaurant and meeting rooms have been constructed to primarily serve golfing interests as an integral adjunct of golf play. It is the function and purpose of the concessionaire - lessee to provide food and related services primarily for the benefit of golf course users, to accommodate and support the overal! enjoyment of golf play. It is essential that the concessionaire understand the underlying attraction of the game of golf to its players and has an inner desire to be involved in the golf community. It is desired that the concessionaire’s business will be profitable and that profit will be directly proportionate to customer satisfaction. Golfer’s food purchasing habits and needs are extremely varied. However, to have a successful restaurant operation, these needs must be met. The following examples reflect the type of food purchases or services that concessionaire must be ableto provide: 1.Hot or cold drink. A quick snack between nines. A more leisurely snack or meal following play. A buffet following a tournament. An evening banquet or dinner. Light food service for periodic meetings of organized golf groups. 3.SRELEASES.1/GOLFPOL EXHIBIT D (Pg 1 of 2) Advantages and opportunities available to the concessionaire: Approximately 80,000 - 100,000 rounds are played annually which equates to approximately 500,000 people hours attracted to the golf course. The concessionaire has a food-bar service monopoly at this location. Additionally, the golf pro will be scheduling special events (tournaments). The men’s club, several women’s clubs, the Seniors, and others not only have periodic tournaments, . but also hold prescheduled meetings. Coordination with these groups on the part of the Concessionaire can increase business volume not previously obtained. Meeting Room U~e: The Concessionaire shall retain the right to schedule luncheon activities (banquets or overflow lunch) in the large meeting room. The following priorities shall apply to the small meeting room: Organized golf related activities involving service of a meal (breakfast, lunch or dinner) 2.Organized golf group without service of a meal 3.Non-golf related banquet involving service of a meal 4.Scheduled non-golf related meeting without service of a meal 5.Open access to room for non-organized golf-related activities (scoring etc.) 3.SRELEASES.1/C,’OLFPOL EXHIBIT D (Pg 2 of 2) MONTHLY STATEMENT OF GROSS RECEIPTS AND RENT DUE TENANT NAME:DATE: Gross Receipts This Month Applicable Percentage Rent Indicated Percentage Rent Due City this Month Bar $ Food $ Total $X 6%*= (1) $ Indicated Minimum Rent Due $4,000/month*(2) Indicated Rent Due City [Greater of (1) or (2) above](3) Monthly Utility Reimbursement Due City 437 therms X ~ (current average rate per therm)** (4) TOTAL MONTHLY PAYMENT TO CITY [(3) + (4)](5) * Adjusted in accordance with Clause XXI of the Lease **Adjusted in accordance with rates charged by the supplier of gas utility (City of Palo Alto Utilities Department). Exhibit E PROPOSAL SUBMITTED BY R & T RESTAURANT CORP. The R&T Restaurant Corporation 23950 Mission Blvd. Hayward, CA 94544 (510) 582-7500 Fax (510) 582-4921 July 1, 1996 Manager, Contract Administration City of Palo Alto 250 Hamilton Avenue P. O. box 10250 Palo Alto, CA 94303 Gentlepersons, Enclosed is our proposal in response to the City of Palo Alto’s request relative to the refurbishment and operation of the City’s golf course restaurant. We feel we have complied fully with the criteria set forth by the City. R & T Restaurant Corporation is proud to have managed and operated restaurants in Southern Alameda County since 1972, including the Skywest Golf Course Restaurant. In addition to the Southern Alameda County facilities, we also manage and operate restaurants in the cities of Fresno and Orlnda and, from 1986 through January, 1996, managed and operated The Velvet Turtle Restaurant in the City of Pleasanton. We sincerely appreciate the opportunity to respectfully submit, for your review and consideration, our proposal to manage and operate the restaurant facilities at the Palo Alto Municipal Golf Course. We, as well as other members of our team, are available to answer questions regarding our proposal, supply additional information if requested and make formal presentations to city representatives.We respectfully request your consideration of our proposal. R & T Restaurant Corporation Tom Talai President Attachments PROJECT: GOLF COURSE RESTAURAN! PROJECT NO: PROPOSAL PACKAGE (With Option to Lease) THIS IS A PROPOSAL TO ACQUIRE AN OPTION TO LEASE FOR City of Palo Alto Municipal Golf Course By:R & T Restaurant Corporation PROPOSER Name: Address: Phone No. R & T Restaurant Corporation III (Please print) 23950 Mission Blvd. Hayward California 94544 Home ~I 0) 426-046~Qr~ ~I 0) 582-7500 The undersigned ("PROPOSER"). hereby submits a proposal to the City of Palo Alto. ("CITY") to acquire a lease more fully described in the Option to Lease Agreement (AI-TACHMENT C) and its exhibits, in accordance with the terms, covenants, and conditions contained in this PROPOSAL and in the Option to Lease Agreement. A.PROPOSER HEREBY PROPOSES THE FOLLOWING: 1.Monetary Bid Items: a)PROPOSER agrees to pay to CITY as the purchase price o$ the option, as set forth in Clause 3 (PURCHASE PRICE OF OPTION) of 3.. L ES.1 the attached Option-to Lease Agreement: Please see attachment (Amount in Words)(Amount in Numbers) b)Additional monetary bid items (including proposed rental during lease term) : Pleas~ see attachment o Proposed tenant constructed improvements (i f any) : Please see ~ttachm,en.t TERMS AND CONDITIONS PROPOSER has carefully read and fullyunderstands this PROPOSAL document and the Option to Lease Agreement attached to this PROPOSAL. including its exhibits. °TheOption to Lease Agreement, and its exhibits, is an integral part of this PROPOSAL and must be attached to this PROPOSAL. PROPOSER warrants that it has the capability to successfully undertake and complete the responsibilities and obligations of OPTIONEE and TENANT contained in the Option to Lease Agreement and its exhibits. A PROPOSER’s Deposit in the sum of One Thousand Dollars ($1,000.00), in the form of a Cashier’s or Certified Check made payable to the City of Palo Alto, must be submitted with this PROPOSAL and is attached hereto. The PROPOSER’s Deposit will be held by CITY as a guarantee securing the obligations PROPOSER agrees to assume in this PROPOSAL. In the ~3.5RELEASES. II~F 2 A.PROPOSAL HEREBY PROPOSES FOLLOWING: I. Monetary Bid Items: a}PROPOSER agrees to pay to CITY as the purchase price of the option, as set forth in clause 3 (PURCHASE PRICE OF OPTION) of the attached Option to Lease Agreement: Ten Thousand (Amount in Words) ($ I0,000.00) (Amount in Numbers) Plus Nine Thousand Seven Hundred and Thirty Four Dollars ($9,734.00| as reimbursement for the cost of recently installed carpets within the premises. b)Additional monetary bid items (including proposed rental during lease term): i.Rent The first year rent to be the greater of ..... Forty Eight Thousand Dollars ($48,000.00) or 6.0% of Gross Receipts Second year rent .....6.5% of Gross Receipts Third to Tenth year rent ...,. 7.0% of Gross Receipts Eleventh year and beyond .....To be negotiated Mobile on course food and beverage car .....Five thousand Dollars ($5,000.00} estimate iii.Installation of Sound System in Club House to facilitate the conduct of meetings, banquets, receptions, etc.. Ten- twenty thousand dollars ( $10,OOO - $20,000) estimate. 2. Proposed tenant constructed improvements (if any): Improvement Size Estimated Cost Club room expansion 560 SF $89,600 Bar expansion 575 SF $87,975 Deck & Ra~np 420 SF $36,960 Kitchen Expansion 350 SF $40,950 Internal Partitions 150 SF $34,500 AC Relocation Allowance $ 9,000 Utilities Upgrade Allowance $I0,000 Misc. Upgrade Allowance $50,000 Total $358,985 Exhibit A R & T Restaurant Corporation, as tenant, with twenty year lease, proposes to construct all restaurant improvement in accordance with the City of Palo Alto Municipal Golf Course Master Plan, as set forth in the ~Palo Alto Municipal Golf Course restaurant Proposal Package=, ~bit A. Improvements to be constructed are: Club Room Expansion, Bar E~pansion, Deck and Ramp, Kitchen Expansion, Internal Partitions, Air Conditioning Relocation, Utilities Upgrade and Miscellaneous Upgrade(s}. Additionally we propose to install a quality sound system to accommodate and facilitate meetings, banquets and public announcements. The principal partner in R & T Restaurant corporation is Mr. Gene Rapp, who is also a licensed general contractor with many years of development experience (State of California Contractor License Number 251907 }. All proposed Tenant Constructed Improvements will be directly administered and managed by Mr. Rapp. Proposed Constructed improvements Schedule Relative to the Proposed Tenant Constructed Improvements, R & T Restaurant Corporation proposes the following: 1. Within 60 days following submittal of Schematic Plans, as required in section 4. B. CONDITIONS PRECEDENT, ATTACHMENT B of OPTION AGREEMENT, to the City, R & T Restaurant Corporation will submit plans and specifications for proposed Deck and Ramp and, following City approval, 2b complete construction of Deck and Ramp within 60 days of Building Permit approval. 2. The Remaining Master Plan Restaurant Improvements to be constructed during the first (four) years of the Lease or within six months after completion of the City renovation of the course, whichever comes F~rst. We believe coordinating the restaurant Improvements with the City’s renovation of the Golf Course would assure more reasonable continuity of service to the public, as it is anticipated attendance will decrease during major construction to the Golf Course and/or restaurant. It is our desire to fully cooperate with the City in its efforts refurbishing the Golf Course facilities. event this PROPOSAL is accepted by CITY and PROPOSER fails to meet the terms hereof, PROPOSER agrees that said sum represents a fair and reasonable estimate of CITY’s cost in preparing and soliciting this offering, and PROPOSER further agrees that said sum shall be retained by CITY as compensation for these costs~ Upon execution of the Option to Lease Agreement, said sum shall, at PROPOSER’S option, be returned to PROPOSER or shall be credited toward the Security Deposit required under the Option to Lease Agreement. PROPOSER’s Deposi~ will be returned to each proposer not selected by the City upon City’s execution of an Option to Lease Agreement with the successful proposer. This PROPOSAL may be withdrawn at any time prior to the time set for opening the proposals but may not be withdrawn after the time set for such opening, i.e., Tuesday, July 2, 1996 at 3:00 p.m. o Within ten (10) days after notification of the acceptance of this PROPOSAL by CITY, PROPOSER Will execute copies of the Option to bease Agreement in duplicate and deliver to CITY the executed copies of said agreement, the required Security Deposit and the balance of the purchase price of the option as set forth in the Option to Lease Agreement. PROPOSER has fully completed the Proposer’s Questionnaire (Attachment A). The completed Questionnaire and the Option to Lease Agreement with its exhibits, includipg the Lease (Attachment B), are attached to this-PROPOSAL together with any appropriate or requested supplemental material. o PROPOSER represents that all of the information contained in or supplementing said Questionnaire is true and correct to the best of PROPOSER’s knowledge. 10.CITY reserves the right to reject any or all PROPOSALS and to accept that PROPOSAL which will, in its opinion, best serve the public interest. 11.By submission of this proposal, PROPOSER acknowledges and agrees that the CITY has the right to make any inquiry or investigation it deems appropriate to substantiate or supplement information contained in this Questionnaire. and authorizes the release to CITY of any and all information sought in such inquiry or investigation. .~3.5RELEASES. IIPRIZW~SOLF 3 12. 13. ATTACHMENT A (Proposer’s Questionnaire). and ATTACHMENT B (Option to Lease Agreement) are attached to and by this reference made a part of this PROPOSAL. PROPOSER acknowledges and agrees that the.Option to Lease Agreement and its exhibits, including the Lease, may .be subject to change and further negotiation with the City, based on the proposed use by the successful PROPOSER for the property. (Please sign) Tom Talai, President R & T Restaurant Corporation (Corporate seal ) Date PROPOSER’S QUESTIONNAIRE PROPOSER’S OUESTIONNAIRE All information requested in this questionnaire MUST be furnished by the PROPOSER. and MUST be submitted with the PROPOSAL. Statements must be complete and accurate. Omission, inaccuracy, or misstatement MAY be cause for rejection of this PROPOSAL. How did you learn of this PROPOSAL offering? (x)1. ( )2. ( )3. Received City direct mail flyer Word of mouth Read about offering in following newspaper, magazine or newsletter- Name of PROPOSER exactly as it appears on the PROPOSAL and as it will appear on any proposed agreement with the City: R & T Restaurant Corporation III Address of PROPOSER for purposes of notices or other communication relating to the PROPOSAL- 23950 Mission Blvd. Hayward, CA 94544 Telephone Number of PROPOSER: (51 01 582-75oo PROPOSER intends to operate as a Sole Proprietorship ( ) Partnership ( )- Corporation (x). Joint Venture ( )- or 3.5,RELEAS ES. 11GOLFB ATTACHMENT A 1 II. SOLE PROPRIETORSHIP STATEMENT If a Sole Proprietorship, furnish the following 1.Name in full ¯ 2.Address: 3.Bi rthdate:Place of Bi rth: 4.California Driver’s Lic. No. Is proprietor doing business under a fictitious business name? If so., furnish evidence that proprietor is authorized to do business under such fictitious business name (e.g.) notice published in n.ewspaper of general circulation: no. of filing with a County Clerk). III. PARTNERSHIP STATEMENT If a Partnership. furnish the following: 1.Date of Organization? 2.General Partnership ( ) Limited Partnership ( ) 3.Statement of Partnership recorded? Yes ( ) ~No 3.5RELEASES. 1/GOLFB Date Book Page County Has the partnership done business in Santa Clara County? Yes ( )No ( )When? AI-FACHMENrF A 2 Name, address, and partnership share of each partner. Address Furnish the birth date, place of birth, and California Driver’s License number of each person shown above. IV.CORPORATION STATEMENT If a Corporation, furnish the following: 2. 3. 4. When incorporated? Where incorporated? Agent for service: August 7, 1989 State of California Mr. Tom Talai 23950 Mission Blvd, Hayward, CA 94544 Is the corporation authorized to do business in California? Yes (x)No ( ) The corporation i s held: If so. as of what date: August 7, 1989 Publicly ( ) Privately (x) If publicly held, how and where is the stock traded? 3. SRE.LEASES. 11GOLFB ATTACHMENT A 3 7. Li st the fol 1 owing: Issued Outstandi n~ 10. a.Number of voting shares b.Number of non-voting shares c.Number of shareholders d.Value per share of common stock: Par $ Book $ Market $ Furnish the name. title, address, and the number of voting and non-voting shares of stock held by each officer, director, and principal shareholder. Furnish the birth date, place of birth, and California Driver’s License number of each person shown under Item 7 above. Attach a copy of Certificate of Good Standing obtainable from California Secretary of State. V. NON-PROFIT CORPORATION STATEMENT If a non-profit corporation, furnish one copy of the following. do Articles of incorporation Bylaws A letter from .the Internal Revenue Service stating that the organization is tax exempt under Section 501(c)(3) or 101(b) of the IRS Code. A tax-exempt status under section 170(b) or 509(a) is also acceptable. The IRS letter must contain the proper name and address of the organization, or a copy of the change notice which has been forwarded to them. A letter from the State of California stating that the organization is tax exempt. 3.5RELEASES. IIGOLFB ATTACHMENT A 4 2.State the mission of the organization:- o Please attach an organization chart showing Board of Directors, members, if any. management and staffing levels. Please include.a membership list of your Board of Directors. their city of residence, occupations, and dates of service on the Board. How often does your Board meet? What was the average attendance ofBoard members at Board meetings last year? Vl.JOINT VENTURE STATEMENT If a Joint Venture. answer the following: 1. 2. 3. Date of Organization Joint Venture Agreement recorded? Yes ( ) No ( ) Has the Joint Venture done business in Santa Clara County? Yes ( ) No ( ) When? Name and address of each Joint Venturer: Name Address 3.5R.ELEASES. 1/GOLFB ATTACHMENT A 5 Furnish the birth date. place of birth, and California Driver’s License number of each person or principals or officers of any entity shown under Item 4 above- 6.Attach a complete copy of the Joint Venture Agreement and any amendments. VII. FINANCIAL DATA A.FINANCIAL STATEMENT Attach complete audited financial statements, prepared in accordance with generally accepted accounting principles, reflecting your current financial condition and that of the previous five years. The report must include a balance sheet and income statement and must be audited by a licensed auditor. You must be prepared to substantiate all information shown. ~l~e~_~t~achment.- SURETY INFORMATION Have you ever applied for and obtained a bond? If so. provide details of ¯ most recent bond. Have you ever had a bond or surety denied, canceled or forfeited? Yes ( ) No (×) If yes. attach a statement naming the bonding company, date. amount of bond, and reason for such cancellation or forfeiture. 3.5RELEASES. IIG0(.FB ATTACHMENT A 6 C.BANKRUPTCY INFORMATION Have you ever filed bankruptcy or been declared bankrupt? Yes ( )- No (×) If yes. give details, state date(s), court jurisdiction(s), case docket number(s), amount of liabilities, and amount of assets. Do PROPOSED METHOD OF FINANCING REPAIRS/IMPROVEMENTS/USE/OPERATION The development and operation to which this proposal -relates shall be financed in the following manner: The development and operation of The Palo Alto Golf Course Restaurant will be financed in its entirety with Corporation Funds. Have you or any principals or officers of the partnership or officers or directors o; .the corporation, as applicable, ever been convicted of a fel ony? Yes ( ) No (X) If yes, please state date(s), court location(s) and details of conviction. 3.5RELF...ASES. IIGOt.FB Ai-FACHMENT A 7 YIII. EXPERIENCE STATEMENT Describe in detail the duration and extent of your experience with special .emphasis upon experience directly related to development and/or management of the type of operation proposed for this project. Also describe, in detail, the pertinent experience of the persons who will be directly involved in operation and/or management of the operation proposed for this project. Please include any construction experience. Please see attachment. 3.5RELEASES. IIGOLFB AI-I’ACHMENT A ~8 VIII EXPERIENC~_~TATEMENT R & T Restaurant Corporation has over the last 24 years developed and maintained restaurant operations in four cities in California and, as a result of those operations, established major restaurant, banquet and catering services and programs. Our initial restaurant was established 24 years ago in 1972 in the City of Hayward. Presently we manage and operate four restaurant facilities, as follows: I. PORKY’S (formerly THE BUTCHER SHOP, also operated by the R & T Restaurant Corporation) 410 West "A" Street, Hayward, CA 94541 2. SKYWEST MUNICIPAL GOLF COURSE RESTAURANT (Lease Agreement with the Hayward Area Recreation and Park District) 1401 Golf Course Road, Hayward, CA 94541 SMUGGLERS INN 3797 North Blackstone Street, Fresno, CA 93726 PORKY’S 2 Theatre Square, Orinda, CA 94588 We have managed and operated the aforementioned restaurants for the length of time as follows: Porky’s Restaurant (formerly The.Butcher Shop) City of Hayward 24 years Skywest Municipal Golf Course Restaurant City of Hayward 7 years 3. Smugglers Inn, City of Fresno 7 years 4. Porky’s Restaurant, City of 0rinda 1 year Additionally, we managed and operated The Velvet Turtle Restaurant, City of Pleasanton, for a 10-year period of time (1986-1996). Currently, we operate our restaurants with a combined staff of 160 individuals. Approximately 112 (70%) are employed full-time and 48 (30%) are hired on an hourly/part- time basis. As noted above, we have managed and operated the restaurant at Skywest Golf Course, which is located in the City of Hayward. We first entered into a Lease Agreement on September l, 1989 with the Hayward Area Recreation and Park 8a District to operate their restaurant and bar facility. The Lease Agreement has been renewed on two occasions, the last being for a three-year period of September i, 1994 through August 31, 1997 with option clauses. The individual representing R & T Restaurant Corporation who will be directly involved in the operation and management of the Palo Alto Golf Course Restaurant will be Mr. Tom Talai. Mr. Talai, President of R & T Restaurant Corporation, graduated from UCLA in 1972 with a degree in Business Administration. He began his career in the restaurant profession concurrent with entering the university, working for the very well known and prominent Associated Host Corporation, ultimately serving as District Manager, administrating the activities at the Beverly Hillcrest Hotel, The Century House Restaurant in Santa Barbara, and The Royal Inn in Monterey, to name but a few. Mr. Talai wil! be assisted in the operation of the Palo Alto Golf Course Restaurant by his son, Darrien Talai. Darrien graduated from the prestigious San Francisco Culinary Academy in 1988. He has served as Manager of the Butcher Shop Restaurant in Hay~’ard, supervised the management of the Skywest Golf Course Restaurant, also in The City of Hayward, and for many years managed The Smugglers Inn, in the City of Fresno. The Golf Course Master Plan Restaurant improvements will be under the administrative management of Mr. Gene Rapp, the principle partner of R & T Restaurant Corporation and a licensed Building Contractor, who has broad knowledge and many years experience in designing, constructing and maintenance of facilities. It is the intent of R & T Restaurant Corporation to join with and assist the City of Palo Alto in its continued efforts in making the Palo Alto Municipal Golf Course a truly outstanding leisure facility. 8b List at least four persons or firms with whom you have conducted business transactions during the past three years. At least two references named should have knowledge of your ability to finance the proposed project and your debt payment history. At least two references should have knowledge of your abilities to operate the proposed facility. REFERENCE NO. 1 Name: Firm: Title: Address: Telephone- Wes Asmussen Hayward Area Recreation and~Park District General Manager 1099 ’E’ Street Hayward, California Zip. 94541 (510) 881-6710 Nature and magnitude of purchase, sale. loan, bus-iness association, etc.- Restaurant Leasee 1989 to present, also served as caterer for District Board of Directors, Staff and Special Events from 1986 to present. REFERENCE NO, ? Name: Firm: Title: Address: Telephone- Scott Raty Hayward Chamber of Commerc~ Executive Director 22561 Main Street Hayward,. California Zip. 94541 (510) 537.-2424 Nature and magnitude of purchase, sale. loan. business association, etc. Serve as caterer for manyComminity Functions, and our two restaurants serve 25 Venues for many Corporate, Public Agency and individua! activities. 3.SP, ELEASES. I/GOLFB ATTACHMENT A 9 IX. ~ List at least four persons or firms with whom you have conducted business transactions during the past three years. At least two references named should have knowledge of your ability, to finance the proposed project and your debt payment history. At least two references should have knowledge of your abilities to operate the proposed facility. REFERENCE NO, 3 Name:- Firm: Title: Address: PHILLIP G. MICI~AELIDES wnnw PnTNTS HOTELS ~[YATT SHERATON 3737 NORTH BLACKSTONE AVE. ww~Nn: ~AT,TFORNIA Zip, 93726 Telephone- Nature and magnitude of purchase, sale. loan. business association, etc.- LESSOR REFERENCE NO, 4 Name: Firm: Title: Address: JAMI~.S T. ISAAC UNION BANK VTCE PRESIDENT / MANAGER 1494 SARATOGA AVENUE S~ jn~: ~T.TPORNTA Zip. 95129 Tel ephone-174-2400 Nature and magnitude of purchase, sale. loan. business association, etc. BANK 3.5RELEASES. I/GOLFB A1-FACHMENT A ./10 List at least four persons or firms with whom you have conducted business transactions during the past three years. At least two references named should have knowledge of your abilityto finance the proposed project and your debt payment history. At least two references should have knowledge of your abilities to operate the proposed facility. REFERENCE NO.~ Name:- Firm: Title: Address: David M. Brazil Chica~o Title Company of Alameda County President 22320 F~nth~ll BIvH. Hay~,rdt CA Zip 94541 Telephone: (B)-,(510) 537-2200 (H)-(51o)538-6126 Nature and magnitude of purchase, sale. loan, business association, etc.- REFERENCE NO, ~ Name: Firm: Title: Address: Telephone- Zip~ Nature and magnitude of purchase, sale. loan, business association, etc. 3. SREL~J~SES.~ZGOCFB ATTACHMENT A _~i0 Uni.n Bank 3une 28, 2995 R. £ T. Restaucant Corp To Whom i ~ rna’f Concern: i am pleased to repot= ti~at ! nave known and dealt with Tom Ta!ai in bo[h a business and personal capacity since 1987. During tb.e meriod he has ai~a.vs me: his obligations and has conducued all tus~ness ~ra~sac-~or~s as acreeJ. ! ho!d Nr. him for :.:hate’el bushess relacio[-~shzp ]-ou may be considering. Sincerely, Jar.~s T. Isaac -V~_ce President!Mgr. NHAYV~TARD AREA RECREATIO. AND PARK DISTRICT 1099 ’E’ Street, Hayward, Calit’ornia 94541-5299 ¯ Telephone (510) 881-6700 FAX (510) 881-1716 May 2, 1996 TO WHOM IT MAY CONCERN: It is my pZeasure to address you on behaZf of Mr. Tom TaZai, President, R & T Corporation III, Concessionaire of the Skywest Bar & GrZZZ, located at Skywest Golf Course in Hayward. The Hayward Area Recreation and Park District entered into a Lease Agreement with R & T Corporation III for the Skywest Bar & GrZZZ con- cession for a period off our (4) years commencing on September i, 1989, and terminating on August 31, 1993. At that time, it was the Recrea- tion and Park District’s plan to refurbish or construct a new clubhouse and restaurant facility; however, the plan did not materialize due to fiscal constraints facing the District, and the Board of Directors sub- sequentZy authorized an extension of the Concession Lease in order to provide additional time for the District to study its options for the development of plans for an expanded cZubhousefaciZity. On May 10, 1993, the Lease Agreement was extended for a one-year period commencing on September I, 1993, and terminating on August 31, 1994, with terms meeting the mutual ~nterests of both parties. During the period of the agreement, the relationship between the Recreation and Park District and R & T Corporation III has been an extremeZy reward- ing and fruitful busZness experience. The Skywest Bar & Grill has been improved and upgraded over the years through the jo~nt efforts of the Recreation and Park District and R & T Corporation III. On May 16, 1994, the Board of Directors of the Hayward Area Recreation and Park District once again unanimously approved the extension of the Skywest Bar & Grill Lease for the period of September i, 1994, through August 31, 1997, with an additional two (2) one-year options. I am confident that Mr. TaZai’s knowledge, experience and expertise in the field of restaurant management wZZZ more than equal any require- ments encountered, and this letter carries with it my highest recom- mendation. If you should have any questions, please feel free to contact me at (510) 881-6710. Sincere Zy, ~ ~,._J-.L.- ~--( ’\ - ,.- .. ,. ". ----"" >,3ARD OF Wes Asmussen;!RECTORS General ManagerLouis M. Andrade Harr)’ R. Francis Douglas F. Morrisson WA : Z e f Carol. A. Pereira Richard H. Sheridan "" ENEI:L~L MANAGER Wes Asmussen Serving Castro Valley, Hayward, and San Lorenzo since 1944 Hayward Chamber of Commerce May 24, 1996 To whom it may concern: Mr. Tom Talai of R&T Restaurant Corporation has operated successful restaurants and a catering business for many years. I have personally enjoyed excellent food and service at more than one of his East Bay establishments on numerous occasions. Every Talai- catered banquet that I have attended has been equally excellent, demonstrating to me that he has the unique ability to serve groups both large and small, formal and informal. I am pleased to say that Mr. Talai has been a member of the Chamber of Commerce for many years, and he is quite highly thought of by m~y in the greater Hayward business community. Sincerely, ¯ Scott Raty Executive Director FourPoints HOTELS July ~, 1998 To Whom it May Concern: On behalf of the ownership of the Four Points Hotel in Fresno, California, kindly accept this as our letter of recommendation for R & T Restaurant Corporation. Over the mast six years, R & T has leased and operated the bar/restaurant and banquet facility of the Four Points Hotel. They have been outstanding operators who have taken grea5 efforts to satisfy the needs of their patrons while accom~odating the requirements of the hotel facility. Based on our past experience with other operators, even those of national stature, the quality of service and operations by R & T has been superior. We feel that the owners are knowledgeable, versatile and accessible. Should you need additional infcrmation concerning R & T, kindly contact the undersigned. Very =rmiy yours, !NTS HO’’EL-FRESN© PGM:rs : Four Poln~ Hotel3737 North Blackstone Avenue, FresnO}, CA 93726, Telephone: (209) 226-2200, (800) 742-]91 l, Fax: 1209) 222-7147 CHICAGO TITLE COMPANY OE ALAMEDA COUNTY 22320 FOOTHILL BOULEVARD. HAYWARD, CALIFORNIA 94541 June 28,1996 DAVID M. BRAZIL PRESIDENT !510~ 537~2200 Mr. Tom Talai R & T Restaurant Corporation 23950 Mission Boulevard Hayward, CA 94544 To Whom It Concerns: Mr. Talai has provided catering services for our firm for more than 20 years and, without exception, has exceeded our expectations whether the event was an informal reception, a party for hundreds, a dinner-dance, brunch, a picnic barbecue and everything in between. His professionalism extends throughout his staff in the quality, presentation and serving of food. Additionally, his services and products are always priced competitively. You can rest assured you’re in the bestof hands if you utilize Tom’s catering services. Please contact me if I can be helpful in any way. Cordially, David M. Brazil X. METHOD OF OPERATION Describe your specific plan for development and/or operation of the proposed facility. Discuss any optional services and uses which you will seek permission to provide. Please See Attachment. 3.5RELEASES. I/GOLFB ATTACHMENT A ;...~11 X.METHODS OF OPERATIONS SCHEDULE It is R & T Restaurant Corporation intent upon being granted the Option to Lease the Palo Alto Golf Course Restaurant to immediately undertake the necessary steps to prepare and submit schematic plans for capital improvements, as required in Section B. CONDITIONS PKECEDENT, ATTACHMENT B of the OPTION AGREEMENT. The Capital Outlay Improvement Program will be accomplished in accordance with the proposed schedule as stated in the aforementioned Proposed Tenant Constructed Improvements. RESTAURANT R & T Restaurant Corporation has the experience, knowledge and desire to operate The Golf Course Restaurant to meet the highest standards desired by the City of Pa!o Alto. It is our intent to provide an aesthetic pleasing environment, serving quality food which will appeal not only to the golfing public, but to all residents of the community, a facility that al! can be proud of. HOURS OF OPERATION Hours of operation for basic restaurant and bar service shall be as follows: Daylight Savings Time: Restaurant:6:00 a.m. to 4:00 p.m. Bar :ii:00 p.m. to 8:00 p.m. Standard Time: Restaurant: Bar : 6:30 a.m. to 3:30 p.m. 11:30 a.m. to 8:00 p.m. (We will be prepared to extend the above hours from time to time based on needs and desires of customers.) lla HOURS OF OPERATION FOR BANQUET AND MEETING FACILITIES The proposer intends to vigorously promote the utilization of the Club House Banquet and Meeting Facilities to maximize use thereby creating additional revenue for the city. Therefore and in accordance with the city’s priorities schedule applying to meeting room use, we will work closely with the golf professional, men and women’s golf clubs, senior golf clubs and tournament chairpersons to coordinate their food and beverage requirements. Further, we propose to initiate a year around promotions campaign in cooperation with the golf professional, to attract additional golfers, as well as non-golfers, to the golf course. We see the banquet and meeting facilities as a seven day-a-week, 6:00 a.m. to midnight service opportunity and will attempt to encourage local service clubs, business and professional organizations and the general public to hold their meetings, social and professional functions at The Golf Course Restaurant. In addition, of course, to golf and golf tournament activities involving food and beverage service, we envision the restaurant banquet facilities as being a desirable venue for social gatherings, wedding receptions and company actives, to name but a few. We propose a restaurant menu consisting of buffet and grill food service, with daily specials. The grill will serve items made to order. Additional periodical surveys wil! be conducted to ascertain the food selection desires of our customers. An express line for golf customers will be established and operative during golf operations. Separate banquet and meeting menus will be developed to meeting the desires of those planning functions. The restaurant operations will be under the administrative direction of Mr. Tom Talai, President of R & T Restaurant Corporation. Mr. Darrien Talai, a graduate of The San Francisco Culinary Academy, will manage the restaurant. Staffing level will at all times be commensurate with levels usually found at high-quality food service establishments. llb One person will be charged with the responsibility of promoting and coordinating the reservation system for the banquet and meeting room facilities. OPTION SERVICES The proposer will additionally seek permission to offer catering services to the City of Palo Alto, it’s city council, administrative staff, commissions and departments and the general public. We are capable of catering functions of up to I000 people. Approval of catering, as an optional service, will also serve to generate an additional revenue source for the City. We also will seek permission to operate a mobile food and beverage car on the golf course. The operation of such a car will more fully and conveniently serve the golfing public and is of particular value and popular when utilized during tournament play. Of course, such use, if approved, wil! be coordinated with the golf professional. XI. FINANCIAL,INFORMATION ESTIMATE ,OF GROSS RECEIPTS - Provide your estimate of the expected average annual gross receipts to be derived during the first ten operating years from each required use or service and for each significant optional use or service which you plan to provide: PLEASE SEE ATTACHMENT SRELEASES. 1/C4~_FB ATTACHMENT A 12 PALO ALTO GOLF COURSE RESTAURANT ESTIMATE OF GROSS RECEIPTS REST REST i BANQUET /MOBILE OUTSIDE GROSS % INCREASE YEAR FOOD BAR MEETING CART iCATERING’ RECEIPTS FR. YEAR 1 1 516,000 129 000 75,000 15 000 15,000 750,000 N/A 2 567,600 1141.900 82,500 16 500 16,500 825,000 10% 3 579,600 144 900 94,875 17 250 25,875 862,500 15% 4 597,600 149 400 99,000 18 000 36,000 900,000 20% 5 607,500 1151 875 121,875 18 750 37,500 937,500 25% 6 614,400 i153 600 134,400 19 200 38,400 960,000 28% 7 613,080:1153 270 157,200 19 650 39,300 982,500 31% 8 619,080 154 770 170,850 20~100 40,200 1,005,000 34% 9 616,500 !154 125 195,225 20,550 41,100 1,027,500 37% 10 621,600 155 400 210,000 21,000 42,000 1,050,000 40% PALO ALTO GOLF COURSE RESTAURANT ESTIMATE OF SALES 1200 lOOO 8OO 600 400 200 2 3 4 5 6 YEAR 7 8 9 10 Rest Fd ¯ Rest Bar == Banquet [] Mobile Cart ¯ Cate~ng I XI.FINANCIAL INFORMATION B.ESTIMATED CONSTRUCTION COSTS 1.Land Related Direct Construction Costs: Land Preparation; including off-sites, grading, etc. Landscaping i0,000 57000 Sub-Total 15,000 Building Related Direct Construction Costs: Shell Construction Interior Finishes Fixtures & Other Improvements Indirect Costs: 176,240 58,,,,74,5 707000 Sub-Total 30~ Architect & Engi neeri ng Legal. Appraisal & Accounting: Construction Loan Costs*: 7~000 i.points ii.interest d. Other Sub-Total 39,000 Total Estimated Construction Costs358,9,,,85 *Assumes construction loan of $ tO- for -0-months construction period. will be: . with interest estimated @ -0- % Source of construction loan payments Project wJl] be finsnc.~d internally. C.PRO-FORMA ANALYSIS - On the attached page provide a five-year pro-forma analysis of income and expenses for the proposed project. PLEASE SEE ATTACHMENT 3o5R.ELEASES. IIGOLFB ATTACHMENT A 13 PALO ALTO GOLF COURSE RESTAURANT PRO-FORMA PROFIT & LOSS STATEMENT FOR THE YEARS OF 1997 THROUGH 2001 SALES - FOOD SALES - BAR NET SALES COST OF GOODS SOLD: PURCHASES - FOOD (32%0) PURCHASES - BAR (25%) PURCHASES - SUPP (3%) TOTAL C.O.G.S. 1997 1998 600,000 660,000 150,000 165,000 750,000 825,000 862,500 900,000 937,500 199920002001 690,000 720,000 750,000 172,500 180,000 187,500 192,000 211,200 220,800 230,400 240,000 37,500 41,250 43,125 45,000 46,875 22,500 24,750 25,875 27,000 28,125 252,000 277,200 289,800 302,400 315,000 498,0001 547,800 572,700 597,600 622,500GROSS PROFIT EXPENSES: SALARIES (30%)225,000 247,500 258,7501 270,000 281,250 PAYROLL TAXES 33,750~37,125 38,813 40,500 42,188 PAYROLL FEE 2,000~,2,200 2,300 2,300 2,300 VACATION 6,000 6,600~6,900 6,900 i 6,900 INS - WORKERS COMP 11,250 12,375 i 12,938 13,500 14,063 HEALTH INSURANCE 6,OO01 6,000 6,000 6,000 6,000 ADVERTISING 5,000 5,500 5,750 5,750 5,750 AUTO EXPENSE 2,400~,2,4001 2,400 2,400i 2,400 BANK FEE 1,200i 1,200 1,200 1,200 ’~1,200 INTEREST EXPENSES 6,000!6,000 !6,000 !6,000 !6,000 RESERVES ACCOUNT 37,500 41,250i 43,125 45,000 46,875 DUE~ & SUBSCRIPTION 2,400 2,400i 2,400 2,400i 2,400 BAR PROMOTION 2,400 2,6401 2,760!!2,760 2,760 RENTAL OF EQUIPMENT 1,000 1,000i 1,000 1,000i 1,000 GENERAL LIABILITIES INS.7,200 7,200~,7,2001 7,2001 7,200 JANITORIAL 12,000i 12,000i 12,000i 12,000 12,000i !LAUNDRY 3,500 i 3,850i 4,025 !4,025 4,025 LICENSES 2,4001 2,400 ~:2,400i 2,400 2,4001 OFFICE EXPENSE 1,2001 1,320i 1,380 1,380 1,380 ACCOUNTING & LEGAL 7,200~,7,200 7,200’:7,200 7,200 RENT 48,000!53,6251 60,375!63,000 65,625:~ REPAIR & MAINT 6,000 6,600i 6,900 6,900 6,900 TELEPHONE 1,200!1,200 1,200 1,200 1,200i KITCHENWARE SUPPLIES 8,0001 8,800:9,200 9,200 9,200UTILITIES30,OO0 !30,OO0 30,OO0 30,OOO 30,OO01 -_~ ............. ~ ............. ~ ................ i 468,600i 508,3851 532,215 550,215i 568,215i 29,400 i 39,415 40,485 47,385 i 54,285! 3.92%!4.78%4.69%5.27%5.79% i TOTAL EXPENSES NET INCOME i% OF NET INCOME 14A XII. OTHER INFORMATION Please provide any other information which you feel will be helpful in evaluating your ability to successfully develop and/or operate the proposed facility in compliance with the City’s Request for Proposals. Please see attachment. 3.5RELF..ASES. IIGOLFB AI-FACHMENT A 15 XII. OTHER INFORMATION Our confidence in the successful refurbishment and operation of The Palo Alto Golf Course Restaurant is based on our successful experience in managing our past and present respective businesses. Our experience in managing and operating The Skywest Golf Course Restaurant for The Hayward Area Recreation Park District for the past seven years has afforded us the opportunity to gain valuable insight and experience in working closely with a local government agency. This successful partnership will enable us to more fully meet the desires and goals of The City of Palo Alto. Skywest Golf Course is quite similar to the Palo Alto Golf Course as both courses are operated by public agencies. In fiscal year 1996 (July 1995-June 1996), 86,355 all purpose rounds of golf were played at Skywest; however, inclement weather was experienced throughout the winter months. On average, approximately 95,000 rounds of golf annually are played. For your information and/or comparative purposes, enclosed is a copy of Skywest Golf Course Annual Financial Report for fiscal year 1995/1996 and floor plans of the clubhouse facilities. We have extensive restaurant, banquet and cahering experience, combined with the strong background in marketing, merchandising and promotions. We have the resources, experience, zeal and desire you require to enhance your food and beverage operations and facility improvements. R & T Restaurant Corporation sincerely appreciates the opportunity to respectfully submit for your consideration our proposal. We look forward to joining within your efforts in developing a facility with ambience, quality food and service presented in manner that creates an environment which respond to the desires of the city and those who visit and enjoy The Palo Alto Golf Course. 15a oooo ~,~m oooo oooo oooo oo oooooo oooo oooo O0O0 oooO oo o~ oooo oo oo Inu~ o o 0o oo °° °i oo oo oo oo oo oo oo o o o o o o oo 0 0 O0 O0 O0 O0 0 O0 O0 0 O0 O0 oo oo ~o o~ or-, O0 O0 O0 O0 0 O0 O0 0 O0 O0 ----o -r 0 Io ©© >- II ¯ II t") 0 II C r~ oo O0 oo oo oo oo 0 oo oo oo --0 I~ 00000000000000000000000000000000000000000000000000000000 000000000000000000000000000000000000000~0000000000000000 XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX hi U ¯ LO U1 n- n n-" 0000000000000000000000~00000 IIIIIIIIIIIIIIIIIIIIIIIIII11 ~0000000000000000000000000000 ~ PROPOSER’s MINORITY EMPLOYMENT PLAN (TO BE COMPLETED UPON SELECTION ONLY) Using this form or additional sheets, please provide your proposed plans related to employment of minorities for all levels of employment opportunities related to the proposed operation on or from the Leased Premises. I.What steps have been or will be taken to: a.Recruit Minorities? b.Assure equal employment opportunity for all persons? c.Provide training for new .hires where necessary to assure ample opportunities for less qualified to improve their qualifications? d. Provide opportunities for employee upgrading and training to assure equal opportunity for advancement and promotion? e. Provide counseling service for all who may need help to advance especially for newer employees? f. Educate supervisors regarding nondiscrimination practices? Provide estimates of total employment by job classification and an estimate of the number of minorities, by job classification, for the proposed operation on and from the Leased Premises. Proposer Recommended for Acceptance:Accepted: Manager, Real Property Director of Purchasing Date: 3 .SRELEASES. IIGOLFATB [] City Manager [] Assistant City Manager ATTACHMENT A 16 Project: Parcel No. : gERTIFICATE OF NON-DISCRIMINATION By SUPPLIERS As suppliers of goods or services to the public on or from the Premises described elsewhere in this Request for-Proposal. Proposer certifies that it does not discriminate in its employment with regards to race. religion, creed, national origin or disability; that it is in compliance with all Federal. State and local directives and executive orders regarding non-discrimination in employment; and that it agrees to demonstrate positively and aggressively the principle of equal opportunity in employment. Proposer acknowledges that, if chosen as the successful proposer, the attached Proposer’s Minority Employment Plan will be completed with respect to the operation described elsewhere in this Request for Proposal. City’s City Manager shall determine whether or not the plan is adequate. It is Understood. however, that no estimate furnished as a part of the attached plans shall be construed as a hiring quota. It is further understood that a Tenant shall not be deemed in material breach of the lease upon award, when such Tenant has made a reasonable and substantial effort to comply with said Plan. Proposer: R & T Restaurant Corporation III Title of Person Signing:President Signature: Tom Talai Date: 3.5RELEASES, l/C.W31 FATB AI-FACHMENT A 17 PROPOSED CHANGES TO DOCUMENT* If you believe changes to the forms of the document(s) (Option to Lease Agreement and/or Lease) are necessa6y for you to successfully operate the proposed facility please identifythe clauses requiring changes below and specifically indicate the nature of the required change on the document or on another sheet of paper. IMPORTANT -any proposed changes should relate to the particular proposed use. Remember that CITY may reject any or all proposals, and required revisions to the document(s) may be grounds for rejection. Notwithstanding the foregoing, the form of the documents may also be subject to change by the City and further negotiation, based on the City Council’s selection of the proposed use of the property. Clauses requiring Changes- NON_._.~E Required Changes (use additional sheets if necessary) NONE 3.5RELEASES. I IGOLFAII~ATTACHMENT A .--18 OPTION AGREEMENT Project: Project Number: Golf Course CL27/25-95/15 OPTION AGREEMENT This Agreement is made this ~ day of 199m bY and between the City ~f Palo Alto, a municipal Qorporation, ("CITY") and ("OPTIONEE"). RECITALS Bo CITY owns property located in the City of Palo Alto, Santa Clara County commonly referred to as The Palo Alto Municipal Golf Course Restaurant "PROPERTY") more specifically described and shown in the Lease attached hereto as Exhibit I, which Exhibit is made a part hereof. OPTIONEE desires to obtain an exclusive option to lease PROPERTY, in accordance with the terms and conditions of the Lease attached hereto as Exhibit I. Co CITY agrees to grant an exclusive option to OPTIONEE during which time OPTIONEE shall satisfy the conditions set forth below prior to the leasing and operation of PROPERTY. NOW THEREFORE, in .consideration of the premises set forth above, the parties hereto mutually agree as follows: .1.GRANT OF OPTION (OL 4.0) S CITY hereby grants, to OPTIONEE an exclusive option to purchase the rights to develop and operate PROPERTY upon the terms and subject to the covenants and conditions set forth below and in the Lease attached to this Option Agreement as Exhibit I. 2.TERM OF OPTION (OL 5.0) S The term of this option shall be twelve (12) months and shall commence upon execution of this agreement by CITY. 3.S~L~ES.11~ATTACHMENT B 1 3. PURCHASE PRICE OF OPTION (OL 6.0) S The purchase price of this option shall be $~o( ) due and payable to CITY upon execution of this option by ~P~TT~’- In addition, OPTIONEE shall pay CITY an additional $9,734.00 (Nine Thousand Seven Hundred Thirty-Four Dollars as reimbursement for the cost of the recently installed carpeting within the PREMISES. 4.CONDITIONS PRECEDENT (OL 7.0) S This option may not be exercised by OPTIONEE unless and until each and every following condition has been satisfied: Ao OPTIONEE shall have made the payment required in accordance with Clause 3 (PURCHASE PRICE OF OPTION) above. Bo OPTIONEE shall have submitted schematic plans (the "Schematic Plans") to CITY Within 2 months of the commencement of this option.. Schematic Plans shall include a site layout of all buildings, landscape developments, schematic floor plans for all structures, simple elevations of all structures, a plan for fulfilling parking requirements, identification of proposed architectural theme or style, a detailed description of all proposed improvements (including proposed uses and methods of operation and a general outline specification which identifies proposed construction material and methods), and an estimate of the total construction cost for all proposed improvements. OPTIONEE shall have applied for and received a conditional use permit for the proposed development and operation from CITY’s Zoning Administrator. Do OPTIONEE shall have submitted to, and shall have received approval of its development plans(the "Development Plans") for PROPERTY from CITY’s Architectural Review Board (ARB). The Development Plans shall be consistent with published submittal requirements of the ARBo At a minimum, Development Plans shall include the Schematic Plans. interior plans, structural plans, exterior elevations, and landscaping plans and shall indicate specific plans and details of the-resource conservation features to be included. OPTIONEE shall have complied with the California Environmental Quality Act (CEQA). as amended, and all related CITY procedures for implementing CEQA, to allow the PROJECT to be implemented. OPTIONEE shall have submitted to CITY’s Chief Building Official certification that the plans for any proposed building construction comply, in all respects, with current building codes, the federal Americans with Disabilities Act of 1990, as amended, including any implementing regulations, and energy conservation requirements as set forth in California Code of Regulations. Title 24 for non- residential construction. The form and content of said certifications shall be in conformance with the requirements of California Code of Regulations, Title 24 for non-residential construction. Go OPTIONEE shall have obtained approval of the construction drawings for the proposed development (the "Construction Drawings’) from the .City Engineer and Chief Building Official, Construction Drawings shall include: 2. 3. 4. Complete architectural, landscap~ and engineering working drawings: Complete construction specifications: Complete construction contract form: and Proposed construction schedule. OPTIONEE shall have provided to CITY’s Real Property Manage~ evidence that OPTIONEE has obtained any and all permits necessary to conduct and carry out the activities and purposes specified in the Lease, from any and all agencies having jurisdiction. These permits include, but are not limited to, alcoholic beverage license, health permits, occupancy permits, and building permits if any alternations are proposed by OPTIONEE. OPTIONEE has submitted to the City Manager or designee for approval. OPTIONEE’s proposed operating plan and tentative price schedule as set forth in the Lease, and approval of said operating plan and tentative price schedule by City Manager or designee has been obtained. mo OPTIONEE shall have satisfied CITY’s Real Property Manager that OPTIONEE has sufficient finances or financial commitments to implement the plans approved by CITY in accordance with the above. OPTIONEE shall have submitted to CITY’s Real Property Manager, a security deposit in accordance with Clause XIII SECURITY DEPOSIT) of the attached Lease. mo If OPTIONEE proposes to hypothecate the leasehold as security for a loan in accordance with Clause XXIV (ASSIGNING, SUBLETTING & ENCUMBERING) of the attached Lease, OPTIONEE shall have submitted to CITY’S Real Property Manager. any and all documents related to such hypothecation and shall pay the necessary processing fees as set forth in the attached Lease. 5. EXERCISE OF OPTION (OL 8.0) S At any time during the option term that OPTIONEE has satisfied each and every condition precedent set forth in Clause 4 CONDITIONS PRECEDENT) above, to the satisfaction of CITY, OPTIONEE may exercise this option by giving CITY’S Real Property Manager written notice of its election to do so, accompanied by two properly executed copies of the attached Lease. CITY shall execute the Lease within one month of receipt of the request to exercise option in accordance with this clausel 6. RETENTION OF PURCHASE PRICE OF OPTION (OL 9.0) S In the event that OPYIONEE does not exercise this option in accordance with the terms hereof, the Purchase Price of the Option shall be retained by CITY in consideration for the granting of this option, and the reimbursement for the cost of carpeting shall be refunded by CITY to OPTIONEE. 7.GENERAL CONDITIONS (OL 10.0) S Ao Review by City (OL 10.1) S OPTIONEE hereby acknowledges that one of the purposes of this option is to afford OPTIONEE and CITY the opportunity to determine whether or not OPTIONEE is able to meet the various conditions and obtain the required approvals as set forth in this option. Several of those conditions involve obtaining review and approval from officers, employees or agents of CITY. Each of those reviews shall be conducted in an independent manner and nothing contained herein shall be deemed to limit the jurisdiction or authority otherwise possessed by said officers, employees or agents in the conduct of such review. Nothing contained in this option shall be deemed to imply that said approvals will be forthcoming, and the failure to issue any such approval or permit by any officer, employee or agent of CITY shall not be deemed in any manner a breach of this option. nor shall any such denial give raise to any claim, liability. obligation, or cause of action with respect to this option or the attached Lease. CITY agrees to consent to any application by OPTIONEE with respect to any permits or approvals related to activities or improvements agreed to or required by CITY in accordance with the option which may be required by any governmental or other regulatory agencies aside from CITY. B. Assignment Prohibited (OL 10.2) S This option has been awarded based on the background and proposals of OPTIONEE; therefore, this Option cannot be sold, assigned or otherwise transferred without the prior written consent of CITY. Failure to obtain CITY’s required written consent shall render said sale. assignment, or transfer void. C.Extension of Option (10.3) S Upon written request of OPTIONEE stating the reasons therefore, the City Manager. or designee, may. at his or her sole .discretion, extend the term of this option in writing as follows: City Manager or designee may grant an extension of the term of this option for a reasonable period of time. as determined by the City Manager or designee in the event OPTIONEE is delayed in fulfilling the conditions precedent to the exercise of this option by reason of any cause not the fault of, or within the control of. OPTIONEE or its agents or employees; or .2.City Manager or designee may grant an extension of the term of the option for a period not to exceed forty-five(45)days, in the event OPTIONEE is delayed in fulfilling the conditions precedent to the exercise of this option for any other reason. However. the City Manager or designee may grant such extension only upon the following conditions: a o Written request for such extension shall have been delivered by OPTIONEE to CITY’S Real Property Manager at least fifteen (15) days prior to the expiration of the option term; 3.SRELEASES. I/~GO~.F ATTACHMENT B 5 Payment.in an amount equal to one half the purchase price of the Option shall be submitted to CITY with the request for extension referred to above (in the event an e×tension is denied. CITY shall refund said amount to OPTIONEE.); and C÷ OPTIONEE shall submit, together with its request for extension, evidence of its progress toward fulfilling the conditions precedent to the exercise of this option, documentation of its proposed actions and feasibility of satisfying said conditions within the term of the extension requested and such other information and material as may be required by the City Manager or designee. D.Termination of Option (OL 10.4) S Failure of OPTIONEE to meet the terms and conditions of this option fully and satisfactorily within the time limits stated shall absolutely and conclusively terminate OPTIONEE’S rights hereunder. Upon termination hereof without exercise of the option by OPTIONEE, OPTIONEE shall, within 5 business days of receipt of request from CITY°S Real Property Manager, deliver to CITY a properly executed Quitclaim Deed quitclaiming any and all interest in and to PROPERTY. Signing of a Lease by CITY and OPTIONEE substantially in the form of Exhibit I, attached hereto, shall-be deemed a termination of this Option Agreement. E.Notices (OL 10.6) S Any notice, tender, or deliveryto be given in accordance with this option by either party to the other shall be given in accordance with Clause XXIX(NOTICES) of the attached Lease. F.Representations (OL 10.7) S Each party represents to the other that it has employed no real estate broker or finder in connection with this agreement and hereby agrees to hold the other harmless, and free from any liability in connection with any commission or finder’s fee alleged to be incurred by it. ATTACHMENT B 6 G.Entire Agreement (OL 10.8) S This instrument contains the entire agreement betweenthe parties relating to the option granted by this agreement. Any oral representations or modifications concerning this instrument shall be of no force and effect except in a subsequent modification which is made in writing, and signed by both parties. H.Recovery of Attorney’s Fees (OL 10.9) S In the event of any controversy, claim, or dispute between the parties hereto, arising out of or relating to this agreement or the breach thereof, the prevailing party shall be entitled to recover from the lo~ing party reasonable expenses, including attorney’s .fees, and other legal costs. I.Binding on Successors (OL 10.1b) S This agreement shall bind and inure to the benefit of the respective heirs, personal representatives, successors, and assigns of the parties hereto except as may be expressly provided elsewhere in this agreement. IN WITNESS WHEREOF, the parties hereto have executed this Option Agreement on the day and year first above written. CITY- CITY OF PALO ALTO OPTIONEE By.By Mayor Its Ai-FEST: City Clerk By" Its ¯ ~.SR~,~S.UO~-ATTACHMENT B 7 APPROVED AS TO FORM: City Attorney APPROVED AS TO AUDIT AND ACCOUNTING: City Auditor RECOMMENDED FOR APPROVAL: Di rector, Planning and Community Environment Manager, Real Property Parks & Golf Course Administration, Community Services Department Di rector, Public Works Director. Administrative Services Director, Community Services 3.5RELEASES. 1 IOLGOLF ATTACHMENT B CLOSING LETTER The R&T Restaurant Corporation 23950 Mission Blvd. Hayward, CA 94544 (510) 582-7500 Fax (510) 582-4921 July 1, 1996 Manager, Contract Administration City of Palo Alto 250 Hamilton Avenue P. O. Box 10250 Palo Alto, CA 94303 Gentlepersons, On behalf of The R & T Restaurant Corporation, we wish to express our sincere appreciation for the opportunity to briefly illustrate our involvement in the restaurant, banquet and catering business in Southern Alameda County and other areas of Northern California. We are confident that we have the backLrround, experience, resources and desire necessary to be favorably considered for the management and operation of the City of Palo Alto’s Municipal Golf Course Restaurant. Should you have any questions and/or require further information relative to our application, we would welcome the opportunity to meet with you at your convenience. Very truly yours, R & T RESTAURANT CORPORATION Tom Talai President PROPOSAL SUBMITTED BY HAZARDS, INC. July 1, 1996 City Of Palo Alto, First Floor 250 Hamilton Avenue P.O. Box 10250 Palo Alto, CA 94303 Attn.: Manager, Contract Administration The intentions of this letter is to brief you on events and modifications that occurred in the last year at the Hofbrau. The main issue I would like to address is any concerns of the Hotbrau’s level of commitment to the operation and success of the restaurant at the golf course. In addressing this issue I would like to make you aware of the financial loss that we acquired during the year and a half closure of the restaurant. While construction was in process the Hofbrau spent a great deal of time consulting with various contractors and ciU workers to get their expert opinions what modifications they thought the restaurant required to be more desirable to golf course customers, throughout various confabs with these people a deck extending out from the bar deemed to be the best addition. Prior to the reconstruction of the kitchen, the Hoforau offered to build this deck, as described in the master plan, at our cost. However, we were told several times to postpone construction of the deck. As a result of several postponements, we eventually retired the idea of the addition of the deck. As the corporation continues to add new locations, the Hofbrau restaurants as well as the management of them have incurred several functional changes. Although these operational changes suited our larger restaurants well we have found that our smaller restaurants have not adjusted wel!. As a direct result of this I opted to own and operate ihe Palo Alto location. In the last four months I have made several attempts to rectifi,., any doubts you or the golfers have about the restaurant not being "golfer friendly". I have recently added a "golfer express line". This allows the golfers to come in and get foods and beverages quickly, allowing minimal time loss for them. I have met with several pro-shop employees, golfers and Paul Dias to get their input on what food services they thought would best compliment the goff course. One suggestion, was longer operating hours, The restaurant hours were increased in mid-April to fulfill this request. As a golfer myself, I understand the needs and requirements that golfers have. In understanding these needs, I am continually tryi. ng new ideas. One idea I shared with Dave Davies’ the golf course Superintendent, was the installation of a call box on the ninth tee. This would allow golfers to call in orders available for pick-up upon arrival at the turn. This is just one of the many I ideas I have for the future operation of the restaurant. AS always I am open to any suggestions that would ensure anyone’s as well as golfers enjoyment of their time at the golf course. Thank you for your consideration. Sincerely, ~amer Vice President/General Manager Hazards Inc. DBA- Harry’s Hofomu. Stock Distribution Laro.’ Kramer-President DOB 05/21/41 14 Kilroy Way, Atherton CA 94027 CDL # G0594701 500 shares Stephen Kramer-Vice President 780 Third Ave. Redwood Cit)~, CA 94061 DOB 07/06/63 CDL # CO968232 500 shares To the City of Palo Alto I am writing this letter in support of Harry’s Hofbrau’s bid to continue a restaurant and bar operation at the Palo Alto Golf Course. I am the director of a Junior Golf Program for East Palo Alto youth, and we practice an play primarily at the Palo Alto Golf Course year round. The management and personnel of Harry’s Hofbrau have always been patient and respectful when dealing with me and my kids. This is not always easy when dealing with children in a business environment. During the past three years the Hofbrau has catered the luncheon for the celebration of Junior Golf (Our annual fund raiser) an the quality of their food and service has been a major factor in the overwhelming popularity of this event. The Hofbrau has provided the summer employment for at least one youth from our program for the past three years. Needless to say, we whole-heartedly support their efforts to continue as the food service vendor for the golf course. Si .r~erely;7 Robert Hoover East Palo Alto Jr. Golf Program PROJECT: GOLF COURSE RESTAURANT PROJECT NO" PROPOSAL PACKAGE (With Option to Lease) THIS !S A PROPOSAL TO ACQUIRE AN OPTION TO LEASE FOR PROPOSER Name: Address. Phone No. (Please ~rint) The undersigned ("PROPOSER"), herebysubmitS a proposal to the City of Palo Alto, ("CITY") to acquire a lease more fully described in the Option to Lease Agreement (ATTACHMENT C) and its exhibits, in accordance with the terms, covenants, and conditions contained in this PROPOSAL and in the Option to Lease Agreement. A.PROPOSER HEREBY PROPOSES THE FOLLOWING: 1.Monetary Bid Items- a)PROPOSER agrees to pay to CITY as the purchase price o~ the option, as set forth in Clause 3 (PURCHASE PRICE OF OPTION) of 3.5RELEKSES. I_/PROPGOLF 1 the attached Option .to Lease Agreement: (Amount in Words)(Amount in Numbers) b)Additional monetary bid items (including proposed rental during lease term)" f~O#/f o Proposed tenant constructed improvements (i f any) : TERMS AND CONDITIONS PROPOSER has carefully read and fully understands this PROPOSAL document and the Option to Lease Agreement attached to this PROPOSAL. including its exhibits. o The Option to Lease Agreement, and its exhibits, is an integral part of this PROPOSAL and must be attached to this PROPOSAL. PROPOSER warrants that it has the capability to successfully undertake and complete the responsibilities and obligations of OPTIONEE and TENANT contained in the Option to Lease Agreement and its exhibits. A PROPOSER’s Deposit in the sum of One Thousand Dollars ($1,000.00), in the form of a Cashier’s or Certified Check made payable to the City of Palo Alto, must be submitted with this PROPOSAL and is attached hereto. The PROPOSER’s Deposit will be held by CITY as a guarantee securing the obligations PROPOSER agrees to assume in this PROPOSAL. In the 3.5RELEASES . 1 IPROPGOLF 2 10. event this PROPOSAL is accepted by CITY and PROPOSER fails to meet the terms hereof, PROPOSER agrees that said sum represents a fair and reasonable estimate of CITY’s cost in preparing and soliciting this offering, and PROPOSER further agrees that said sum shall be retained by CITY as compensation for these costs. Upon execution of the Option to Lease Agreement, said sum shall, at PROPOSER’S option, be returned to PROPOSER or shall be credited toward the Security Deposit required under the Option to Lease Agreement. PROPOSER’s Deposi~ will be returned to each proposer not selected by the City upon City’s execution of an Option to Lease Agreement with the successful proposer. This PROPOSAL may be withdrawn at any time prior to the time set for opening the proposals but may not be withdrawn after the time set for such opening, i.e., Tuesday, July 2, 1996 at 3:00 p.m. Within ten (10) days after notification of the acceptance of this PROPOSAL by CITY, PROPOSER will execute copies of the Option to bease Agreement in duplicate and deliver to CITY the executed copies of said agreement, the required Security Deposit and the balance of the purchase price of the option as set forth in the Option to Lease Agreement. PROPOSER has fully completed the Proposer’s Questionnaire (Attachment A). The completed Questionnaire and the Option to Lease Agreement with its exhibits, including the Lease (Attachment B), are attached to this. PROPOSAL together with any appropriate or requested supplemental material. PROPOSER represents that all of the information contained in or supplementing said Questionnaire is true and correct to the best of PROPOSER’s knowledge. CITY reserves the right to reject any or all PROPOSALS and to accept that PROPOSAL which will, in its opinion, best serve the public interest. 11.By submission of this proposal, PROPOSER acknowledges and agrees that the CITY has the right to make any inquiry or investigation it deems appropriate to substantiate or supplement information contained in this Questionnaire, and authorizes the release to CITY of any and all information sought in such inquiry or investigation. 3.5RELEASES . I/PROPGOLF 3 12. 13. ATTACHMENT A (Proposer’s Questionnaire). and ATTACHMENT B (Option to Eease Agreement) are attached to and by this reference made a part of this PROPOSAL. PROPOSER acknowledges and agrees that the Option to Lease Agreement and its exhibits, including the Lease, may .be subject to change and further negotiation with the City, based on the proposed use by the successful PROPOSER for the property. (Please slgn) (Corporate seal) Date S. 5RELEASES . IIPROPGOLF 4 PROPOSER’S OUESTIONNAIRE All information requested in this questionnaire MUST be furnished by the PROPOSER, and MUST be submitted with the PROPOSAL. Statements must be complete and accurate. Omission. inaccuracy, or misstatement MAY be cause for rejection of this PROPOSAL. How did you learn of this PROPOSAL offering? ()I.Received City direct mail flyer ()2.Word of mouth ()3.Read about offering in following newspaper, magazine or newsletter: I. PROPOSER Name of PROPOSER exactly as it appears on the PROPOSAL and as it will appear on any proposed agreement with the City: Address of PROPOSER for purposes of notices or other communication relating, to the PROPOSAL: -7-A;cA__. Telephone Number of PROPOSER: dz-/lS) 7 7L/Z 7 PROPOSER intends to operate as a Sole Proprietorship ( ) Partnership ( )- Corporation (X) Joint Venture (). or 3.5RELEASES . IlGOL FB ATTACHMENT A I II. SOLE PROPRIETORSHIP STATEMENT If a Sole Proprietorship, furnish the following: I. Name in full: 2. Address: 3. Birthdate:Place of Birth: 4. California Driver’s Lic. No. Is proprietor doing business unde~ a fictitious business name? If so, furnish evidence that proprietor is authorized to do business under such fictitious business name (e.g.) notice published in newspaper of general circulation; no. of filing with a County Clerk). Ill. PARTNERSHIP STATI~MENT If a Partnership. furnish the following: I.Date of Organization? 2.General Partnershi~ ( ) Limited Partnership ( ) 3. Statement of Partnership recorded? Yes ( )No ( ) Date Book Page County Has the partnership done business in Santa Clara County? Yes ( ) No ( ) When? 3.5RELEASES. I/GOLFB A’I-I’ACHMENT A 2 BILL JONES CALIFORNIA SECRETARY OF STATE CORPORATE FILING AND SERVICES DIVISION STATUS UNIT 1500 - 1 lth Street Sacramento, California 95814 (916) 653-7315 Enc " a computer printout of corporate information in response to your recent request. Information contained in the computer files is shown on the prkitout, and an explanation of the printout is on the reverse side of this page. i?the compute~ scrolls do not show the name for which you requested informatlon, a printout of the scroll will be provided. A.n arrow near the center of the alpha scroll will identify where the name would be located if it were of record. "No record" may be noted by the name as entered on the top of the scroll page. If you require information on any of the other names on the scroll, you may request a printout for that name. The fee is $4.00 for each name requested. A copy of the filed statement of officers may be obtained for a fee of $5.00, uncertified, or $10.00, certified. Information regarding related businesses of individual corporate entities is not required to be filed with this office, and subsidiaries of corporations are not identified as such in the records. Copies of bylaws and names of shareholders or owners of corporations are not required to be filed in this office, and names of persons associated with corporations are not cross referenced by the name of the individual. Telephone numbers of corporations and social security numbers for employees of corporations are not of record in this office. Information concerning bankruptcies of corporations, or other businesses or individuals, is not available from this office. Federal identification numbers, employer identification numbers and business licenses are not of record in this office. Information regarding stock issuance, or the application for a permit to issue stock, is not filed in this office. You may direct requests regarding these matters to the Department of Corporations, for such information as may be available from that agency. For information concerning application to revive a suspended corporation to good standing, contact the Franchise Tax Board, Sacramento, CA, Attention: Corporation Revivor Unit. Fictitious business names, partnerships and Sole proprietorships are registered with county clerk/recorder offices. Limited Partnerships, and Limited Liability Companies are filed with the Limited Partnership Division, 1500 Eleventh Street, Third Floor, Sacramento, CA 95814. This office does not have statutory, regulatory or investigative authority over corporate and noncorporate entities, nor is there information available in this office regarding a corporation’s business practices. STATUS UNIT CORPORATION RECORDS SECTION STA TUS.1NQ STATUS (SOI)L> - EXPLANATION (Item 4) (DATE) STATUS INQUIRY Page 1 ACTIVE: FTB SUSP:NAME . (1) SOS SUSP: SOSfFTB SP:CORP NO (2)INC. DATE (3)STATUS (4) (5)CLASS (6)FTB FP,_H’:NO OF PAGES (7)ST/CTRY (8)SOS FRFT: SOS/FIB FT:STMT/OFFICERS LAST COMPLETE (9) DATE (l0)NO (l l) COMPfINC (12) DATE (13)NO (14)FTB/SOS SP:OFFICERS CERT EXEMPTION CODE(15) DATE(16)NO (17) PRINCIPAL EXECUTIVE ADDR (18)FTB/SOS FT: , CITY/ST/CNvTRY ZIP DISSOLVED: COND DISS:C.~LIFORNIA ADDRESS (19)MERGED OUT:CITY CA INACTIVE: MAILING ADDRESS (20) CITY/ST/CNTRY ZIP PP,_ES NAME (2 I) ADDRESS CITY/ST/CNWRY ZIP AGENT NAME (22) ADDRESS CITY CA TYPE OF BUSINESS (23) TERM EXP: SURRENDER: CANCELLATION: Corporation is in good legal standing. Suspended by order of the Franchise Tax Board. Suspended by the Secretary of State. Suspended by both the Secretary of State and the Franchise Tax Board. Forfeited by order of the Franchise Tax Board. Forfeited by the Secretary of State. Forfeited by the Secretary of State and the Franchise Tax Board. Suspended by the Franchise Tax Board and the Secretary o.f State. Forfeited by the Franchise Tax Board and the Secretary of State. The corporation is dissolved. The corporation has filed a conditional dissolution. The corporation has merged out of existence. The corporation has become inactive by conversion to a federal entity, ~ of existence expired or other reason as provided. Term of existence expired. Foreign corporation withdrawa from California. Cancelled for filing fees not honored. EXPLANATION OF STATUS INQUIRY SCREEN - Refer to number on sample screen shox~ above left. (1) (2) (3) (4) (5) (6) (7) (8) (9) (lO) (11) (12) (13) (14) (15) (16) (I7) 08) (19) (20) (21) (22) (23) Name of corporation as shown on the computer file in the records of this office. Corporation number. Date of incorporation or qualification. Status of corporation (See explanation of status codes above right). Type of corporation, e.g., domestic stock, domestic nonprofit, foreign. Class code ff domestic nonprofit corporation: . (PB=Public Benefit) (MU=Mutual Benefit) (RE=Religious) (SL=Corporation Sole) (CC=Co-op) (UN=Undassified). Number of pages in Articles of Incorporation or Statement and Designation by Foreign Corporation, if filed after March, 1987. State or country of incorporation for a foreign corporation. "C" denotes the last complete statement of officers filed for the corporation. Date last complete statement of officers filed. Number assigned to last complete statement of officers. "C" denotes previous complete statement of officers filed. "N" denotes a "no change" statement of officers filed. Date previo~ or "no change" statem_,mt filed. Number assigned to the statement. " Internal code regarding Officers’ Cmificate - Foreign Corporation. Also denotes that the Officers’ Cmificate - Foreign Corporation was filed. (Section 2108, CCC) Date Officers’ Cmificate - Foreign Corporation was filed. Number assigned to the Officers’ Certificate - Foreign Corporation. Address of principal executive office as set forth in the statement of officers. Address in California as set forth in the statement of officers. Last mailing address for the corporation as supplied to this office. Name and address of the chief executive officer as set forth in the statement of officers. Name and address of the designated agent for service of process. If a foreign corporation has surrendered, the agent for service of process is automatically withdrawn at time of surrender. Type of business in which the corporation is engaged, as set forth in the statement of officers. PLEASE NOTE:If spaces are blank, the information is not contained in the computer file. If items 9, 10, and 11 are blank, a statement of officers has not been filed. STATEMENT OF OFFICERS IS ONE OF THE FOLLOWING: Statement by Domestic Stock Corporation, Statement by Domestic Nonprofit Corporation, or Statement by Foreign Corporation, all of which are required to be filed annually in accordance with statutory provisions. 06/18/96 SSCPS54 NAME HAZARDS, INC. STATUS INQUIRY PAGE 1 11:42:38.2 CPOISTA3 CORP NO C0982392 DOMESTIC STOCK STMNT/OFFICERS OFFICERS CERT INC. DATE 05/05/1980 CLASS NO OF PAGES 00 STATUS ACTIVE ST/CTRY LAST COMPLETE C DATE 04/04/83 NO 0119679 COMPL/NC N DATE 11/13/95 NO 0496974 EXEMPTION CODE DATE NO A/P PRINCIPAL EXECUTIVE ADDR CITY/ST/CNTRY CALIFORNIA ADDRESS ZIP CITY CA MAILING ADDRESS 1875 E EMBARCADERO CITY/ST/CNTRY PALO ALTO PRES NAME LARRY KRAMER ADDRESS 14 KILROY WY CITY/ST/CNTRY ATHERTON AGENT NAME ED THOMAS ADDRESS 1148 CRANE ST CALIFORNIA ZIP 94303 CA ZIP 94025 TYPE OF BUSINESS ENTR=CONTINUE CITY MENLO PARK CA 94025 PF2=HISTORY PF3=BACKTO WORKSCREEN PFI0=MAIN MENU Name, address, and partnership share of each partner. Name Address Furnish the birth date, place of birth, and California Driver’s License number of each person shown above. IV. CORPORATION STAT~,~ENT If a Corporation, furnish the following" I.When incorporated? 2.Where incorporated? 3.Agent for service: .~,wJr~,-_ Is the corporation authorized to do business in California? Yes (>() No ( ) If so, as of what date- ./~,~/ ~J; /~L~. " The corporation is held. Publicly ( ) Privately (A~~) If publicly held, how and where is the stock traded? 3.5RELEASES . 1/GOLFB ATTACHMENT A 3 7.Li st the fol l owing: a. Number of voting shares: b. Number of non-voting shares: c. Number of shareholders: d. Value per share of common stock: Par $ Book $ /~U~c~.,O Market $ ~ Issued / o0 Outstanding o o 10. Furnish the name, title, address, and the number of voting and non-voting shares of stock held by each officer, director, and principal shareholder. Furnish the birth date, place of birth, and California Driver’s License number of each person shown under Item 7 above. Attach a copy of Certificate of Good Standina obtainable from California Secretary of State. V. NON-PROFIT CORPORATION STATEMENT If a non-profit corporation, furnish one copy of the following: ao Articles of incorporation Bylaws A letter from .the Internal Revenue Service stating that the organization is tax exempt under Section 501(c)(3) or 101(b) of the IRS Code. ¯ A tax-exempt status under section 170(b) or 509(a) is also acceptable. The IRS letter must contain the proper name and address of the organization, or a copy of the change notice which has been forwarded to them. A letter from the State of Californiastating that the organization is tax exempt. 3.5RELEASES. IlGOLFB ATTACHMENT A 4 2.State the mission of the organization: o Please attach an organization chart showing Board of Directors, members, if any, management and staffing levels. Please include a membership list of your Board of Directors, their city of residence, occupations, and dates of service on the Board. How often does your Board meet? What was the average attendance of Board members at Board meetings last year? VI.JOINT VENTURE STATEMENT If a Joint Venture, answer the following: 1.Date of Organization 2.Joint Venture Agreement recorded? Yes ( ) No ( ) 3.Has the Joint VentUre done business in Santa Clara County? Yes ( ) No ( ) When? 4. Name and address of each Joint Venturer: Name Address 3.5RELEASES. i/GOLFB ATTACHMENT A 5 Furnish the birth date, place of birth, and California Driver’s License number of each person or principals or officers of any entity shown under Item 4 above: 6.Attach a complete copy of the Joint Venture Agreement and any amendments. VII. FINANGIAL DATA Ao FINANCIAL STATEMENT Attach complete audited financial statements, prepared in accordance with generally accepted accounting principles, reflecting your current financial condition and that of the p{evious five years. The report must include a balance sheet and income statement and must be audited by a licensed auditor. You must be prepared to substantiate all information shown. Bo SURETY INFORMATION Have you ever applied for and obtained a bond? most recent bond. If so, provide details of Have you ever had a bond or surety denied, canceled or forfeited? Yes ( ) No (~k~) If yes, attach a statement naming the bonding company, date, amount of bond, and reason for such cancellation or forfeiture. 3.5RELEASES . 1/GOLFB ATTACHMENT A 6 C.BANKRUPTCY INFORMATION Have you ever filed bankruptcy or been declared bankrupt? Yes ( ) No (~/) If yes, give details, state date(s), court jurisdiction(s), case docket number(s), amount of liabilities, and amount of assets. PROPOSED METHOD OF FINANCING REPAIRS/IMPROVEMENTS/USE/OPERATION The development and operation to which this proposal .relates shall be financed i n the fol l owi ng manner: Have you or any principals or officers of the partnership or officers or directors of the corporation, as applicable, ever been convicted of a " felony? Yes ( ) NO (,~’) If yes, please state date(s), court location(s) and details of conviction. 3.5RELEASES . I/GOLFB ATTACHMENT A 7 VIII. EXPERIENCE STATEMENT. Describe in detail the duration and extent of your experience with special emphasis upon experience directly related to development and/or management of the type of operation proposed for this project. Also describe, in detail, the pertinent experience of the persons who will be directly involved in operation and/or management of the operation proposed for this project. Please include any construction experience. 3.5RELEASES. IIGOLFB ATTACHMENT A 8 IX. ~ List at least four persons or firms with whom you have conducted business transactions during the past three years. At least two references named should have knowledge of your ability to finance the proposed project and your debt payment history. At least two references should have knowledge of your abilities to operate the proposed facility. REFERENCE NO.1 Name: Firm: Title: Address: Tel ephone- Nature and magnitude of purchase, sale, loan, business association, etc." REFERENCE NO.2 Name:~D (’~ ~ ~ ~-.- Firm: Title: ress-" Zip. Telephone: Nature and magnitude of purchase, sale, loan, business association, etc. 3.5RELEASES. 11GOLFB AI-I’ACHMENT A 9 List at least four persons or firms with whom you have conducted business transactions during the past three years. At least two references named should have knowledge of your ability to finance the proposed project and your debt payment history. At least two references should have knowledge of your abilities to operate the proposed facility. REFERENCE NO. ~ Name: Firm: Title: Address: Telephone- Zip q .L:/()~ ~ Nature and magnitude of purchase, sale, loan, business association, etc.- REFERENCE NO. 4 Name: Firm: Title: Address: Telephone Nature and magnitude of purchase, sale, loan, business association, etc. 3.5RELEAS ES . 11GOLFB ATFACHMENTA I0 X. HETHOD OF OPERATION Describe your specific plan for development and/or operation of the proposed facility. Discuss any oPtional services and uses which you will seek permission to provide. 3.5RELEASES , 11GOLFB ATTACHMENT A 11 XI.FINANCIAL INFORMATION ESTIMATE OF GROSS RECEIPTS - Provide your estimate of the expected average annual gross receipts-to be derived during the first ten operating years from each required use or service and for each significant optional use or service which you plan to provide: 3.5RELEASES . IlGOLFB ATTACHMENT A 12 Bo XI.FINAN~IAL INFORMATION ESTIMATED CONSTRUCTION COSTS - 1.Land Related Direct Construction Costs a.Land Preparation; including off-sites, grading, etc. b. Landscaping 2.Building Related Direct Construction Costs: a.Shell Construction b.Interior Finishes c.Fixtures & Other Improvements 3.Indirect Costs: a.Architect & Engineering b.Legal, Appraisal & Accounting: c.Construction Loan Costs*: i.points ii.interest d. Other .. *Assumes construction loan of $ for months construction period. will be: Sub-Total Sub-Total Sub-Total Total Estimated Construction Costs with interest estimated @ % Source of construction loan payments PRO-FORMA ANALYSIS - On the attached page provide a five-year pro-forma analysis of income and expenses for the proposed project. 3.5RELEASES. IlGOLFB ATTACHMENT A 13 t) r4 ~ 0 O. kP XII. OTHER INFORMATION Please provide any other information which you feel will be helpful in evaluating your ability to successfully develop and/or operate the proposed facility in compliance with the City’s Request for Proposals. 3.5RELEASES. IlGOLFB A’FFACHMENT A 15 PROPOSER’s MINORITY EMPLOYMENT PLAN (TO BE COMPLETED UPON SELECTION ONLY) Using this form or additional sheets, please provide your proposed plans related to employment of minorities for all levels of employment opportunities related to the proposed operation on or from the Leased Premises. What steps have been or will be taken to: a. Recruit Minorities? b. Assure equal employment opportunity for all persons? c.Provide training for new .hires where necessary to assure ample opportunities for less qualified to improve their qualifications? d.Provide opportunities for employee upgrading and training to assure equal opportunity for advancement and promotion? e.Provide counseling service for all who may need help to advance especially for newer employees? f. Educate supervisors regarding nondiscrimination practices? Provide estimates of total employment by job classification and an estimate of the number of minorities, by job classification, for the proposed operation on and from the Leased Premises. Proposer Recommended for Acceptance:Accepted: Manager, Real Property Director of Purchasing Date: [] City Manager [] Assistant City Manager 3.5RELEASES. 11GOLFATB AI-I’ACHMENT A 16 Project" Parcel No. CERTIFICATE OF NON-DISCRIMINATION BY SUPPLIERS As suppliers of goods or services to the public on or fromthe Premises described elsewhere in this Request for Proposal, Proposer certifies that it does not discriminate in its employment with regards to. race, religion, creed, national origin or disability; that it is in compliance with all Federal, State and local directives and executive orders regarding non-discrimination in employment; and that it agrees to demonstrate positively and aggressively the principle of equal opportunity in employment. Proposer acknowledges that, if chosen as the successful proposer, the attached Proposer’s Minority Employment Plan will be completed with respect to the operation described elsewhere in this Request for Proposal. City’s City Manager shall determine whether or not the plan is adequate.. It is Understood, however, that no estimate furnished as a part of the attached plans shall be construed as a hiring quota. It is further understood that a Tenant shall not be deemed in material breach of the lease upon award, when such Tenant has made a reasonable and substantial effort to comply with said Plan. 3.5RELEASES . I IGOLFATB ATTACHMENT A 17 pROPOSED CHANGES TO DOCUMENT* If you believe changes to the forms of the document(s) (Option to Lease Agreement and/or Lease) are necessagy for you to successfully operate the proposed facility please identify the clauses requiring changes below and specifically indicate the nature of the required change on the document or on another sheet of paper. IMPORTANT -any proposed changes should relate to the particular proposed use. Remember that CITY may reject any orall proposals, and required revisions to the document(s) may be grounds for rejection. Notwithstanding the foregoing, the form of the documents may also be subject to change by the City and further negotiation, based on the. City Council’s selection of the proposed use o# the. property. Clauses requiring Changes:Required Changes (use additional sheets if necessary) 3.5RELEASES . IlGOLFATB ATTACHMENT A 18 Project: Project Number: Golf Course CL27/25-95/15 OPTION AGREEMENT This Agreement is made this ~ day of ......... 199_ bY and between the City ~f Palo Alto, a municipal corporation, ("CITY") and ("OPTIONEE"). RECITALS CITY owns property located in the City of Palo Alto, Santa Clara County commonly referred to as The Palo Alto Municipal Golf Course Restaurant "PROPERTY") more specifically described and shown in the Lease attached hereto as Exhibit I, which Exhibit is made a part hereof. OPTIONEE desires to obtain an exclusive option to lease PROPERTY, in accordance with the terms and conditions of the Lease attached hereto as Exhibit I. CITY agrees %o grant an exclusive option to OPTIONEE during which time OPTIONEE shall satisfy the conditions set forth below prior to the leasing and operation of PROPERTY. NOW THEREFORE, in consideration of the premises set forth above, the parties hereto mutually agree as follows: I.GRANT OF OPTION (OL 4.0) S CITY hereby grants to OPTIONEE an exclusive option to purchase the rights to develop and operate PROPERTY upon the terms and subject to the covenants and conditions set forth below and in the Lease attached to this Option Agreement as Exhibit I. 2.TERM OF OPTION (OL 5.0) S The term of this option shall be twelve (12) months and shall commence upon execution of this agreement by CITY. 3.5RELEASES.I/OLGOLF ATTACHMENT B 1 3.PURCHASE PRICE OF OPTION (OL 6.0) S The purchase price of this option shall be $~,~’,(~0~-° ~,~ ~/~,~ ) due and payable to CITY upon execution of this option by OPTIONEE. In addition, OPTIONEE shall pay CITY an additional $9,734.00 (Nine Thousand Seven Hundred Thirty-Four Dollars as reimbursement for the cost of the recently installed carpeting within the PREMISES. 4.CONDITIONS PRECEDENT (OL 7.0) S This option may not be exercised by OPTIONEE unless and until each and every following condition has been satisfied: Ao OPTIONEE shall have made the payment required in accordance with Clause 3 (PURCHASE PRICE OF OPTION) above. OPTIONEE shall have submitted schematic plans (the "Schematic Plans") to CITY Within 2 months of the commencement of this option. Schematic Plans shall include a site layout of all buildings, landscape developments, schematic floor plans for all structures, simple elevations of all structures, a plan for fulfilling parking requirements, identification of proposed architectural theme or style, a detailed description of all proposed improvements (including proposed uses and methods of operation and a general outline specification which identifies proposed construction material and methods), and an estimate of the total construction cost for all proposed improvements. OPTIONEE shall have applied for and received a conditional use permit for the proposed development and operation from CITY’s Zoning Administrator.. OPTIONEE shall have submitted to, and shall have received approval of its development plans (the "Development Plans") for PROPERTY from CITY’s Architectural Review Board (ARB). The Development Plans shall be consistent with published submittal requirements of the ARB. At a minimum. Development Plans shall include the Schematic Plans, interior plans, structural plans, exterior elevations, and landscaping plans and shall indicate specific plans and details of the resource conservation features to be included. OPTIONEE shall have complied with the California Environmental Quality Act (CEQA), as amended,and all related CITY procedures for ATTACHMENT B 2 implementing CEQA, to allow the PROJECT to be implemented. OPTIONEE shall have submitted to CITY’s Chief Building Official certification that the plans for any proposed building-construction comply, in all respects, with current building codes, the federal Americans with Disabilities Act of 1990, as amended, including any implementing regulations, and energy conservation requirements as set forth in California Code of Regulations. Title 24 for non- residential construction. The form and content of said certifications shall be in conformance with the requirements of California Code of Regulations, Title 24 for non-residential construction. Go OPTIONEE shall have obtained approval of the construction drawings for the proposed development (the "Construction Drawings") from the City Engineer and Chief Building OfficialConstruction Drawings shall include: No a ° o Complete architectural, landscaPe and engineering working drawings: Complete construction specifications: Complete construction contract form: and Proposed construction schedule. OPTIONEE shall have provided to CITY’s Real Property Manager evidence that OPTIONEE has obtained any and all permits necessary to conduct and carry out the activities and purposes specified in the Lease, from any and all agencies having jurisdiction. These permits include, but are not limited to, alcoholic beverage license, health permits, occupancy permits, and building permits if any alternations are proposed by OPTIONEE. OPTIONEE has submitted to the City Manager or designee for approval, OPTIONEE’s proposed operating plan and tentative price schedule as set forth inthe Lease, and approval of said operating plan and tentative price schedule by City Manager or designee has been obtained. OPTIONEE shall have satisfied CITY’s Real Property Manager that OPTIONEE has sufficient finances or financial commitments to implement the plans approved by CITY in accordance with the above. OPTIONEE shall have submitted to CITY’s Real Property Manager, a ~.5RELEASES.1/OLGOLF ATTACHMENT B 3 security deposit in accordance with Clause XIII SECURITY DEPOSIT) of the attached Lease. If O~TIONEE proposes to hypothecate the leasehold as security for a loan in accordance with Clause XXIV (ASSIGNING, SUBLETTING & ENCUMBERING) of the attached Lease, OPTIONEE shall have submitted to CITY’S Real Property Manager, any and all documents related to such hypothecation and shall pay the necessary processing fees as set forth in the attached Lease. 5.EXERCISE OF OPTION (OL 8.0) S At any time during the option term that OPTIONEE has satisfied each and every condition precedent set forth in Clause 4 CONDITIONS PRECEDENT) above, to the satisfaction of CITY, OPTIONEE may exercise this option by giving CITY’S Real Property Manager written notice of its election to do so, accompanied by two properly executed copies of the attached Lease. CITY shall execute the Lease within one month of receipt of the request to exercise option in accordance with this clause. 6.RETENTION OF PURCHASE PRICE OF OPTION (OL 9.0) S In the event that OPTIONEE does not exercise this option in accordance with the terms hereof, the Purchase Price of the Option shall be retained by CITY in consideration for the granting of this option, and the reimbursement for the cost of carpeting shall be refunded by CITY to OPTIONEE. 7.GENERAL CONDITIONS (OL 10.0) S A.Review by City (OL 10.1) S OPTIONEE hereby acknowledges that one of the purposes of this option is to afford OPTIONEE and CITY the opportunity to determine whether or not OPTIONEE is ab!e to meet the various conditions and obtain the required approvals as set forth in this option. Several of those conditions involve obtaining review and approval from officers, employees or agents of CITY. Each of those reviews shall be conducted in an independent manner and nothing contained herein shall be deemed to limit the jurisdiction or authority otherwise possessed by said officers, employees or agents in the conduct of such review. Nothing contained in this option shall be deemed to imply that said approvals will be forthcoming, and the failure to issue any such approval or permit by any officer, employee or agent 3.SRELEASES.I/O~.GOLF ATTACHMENT B 4 of CITY shall not be deemed in any manner, a breach of this option, nor shall any such denial give raise to any claim, liability, obligation, or cause of action with respect to this option or the attached Lease. CITY agrees toconsent to any application by OPTIONEE with respect to any permits or approvals related to activities or improvements agreed to or required by CITY in accordance with the option which may be required by any governmental or other regulatory agencies aside from CITY. B. Assignment Prohibited (OL 10.2) S This option has been awarded based on the background and proposals of OPTIONEE; therefore, this Option cannot be sold, assigned or otherwise transferred without the prior written consent of. CITY. Failure to obtain CITY’s required written consent shall render.said sale, assignment, or transfer void. C.Extension of Option (10.3) S Upon written request of OPTIONEE stating the reasons therefore, the City Manager, or designee, may, at his or her sole .discretion, extend the term of this option in writing as follows: City Manager or designee may grant an extension of the term of this option for a reasonable period of time, as determined by the City Manager or designee in the event OPTIONEE is delayed. in fulfilling the conditions precedent to the exercise of this option by reason of any cause not the fault of, or within the control of, OPTIONEE or its agents or employees; or o City Manager or designee may grant an extension of the term of the option for a period not to exceed forty-five(45)days, in the event OPTIONEE is delayed in fulfilling the conditions precedent to the exercise of this option for any other reason. However, the City Manager or designee may grant such extension only upon the following conditions: a °Written request for such extension shall have been delivered by OPTIONEE to CITY’S Real Property Manager at least fifteen (15) days prior to the expiration of the option term; 3.SRELEASES.I/OLGOLF AI-TACHMENT B 5 Payment in an amount equal to one half the purchase price of the Option shall be submitted to CITY with the request for extension referred to above (in the event an extension is denied, CITY shall refund said amount to OPTIONEE.); and OPTIONEE shall submit, together with its request for extension, evidence of its progress toward fulfilling the conditions precedent to the exercise of this option, documentation of its proposed actions and feasibility of satisfying said conditions within the term of the extension requested and such other information and material as may be required by the City Manager or designee. D.Termination of Option (OL 10.4) S Failure of OPTIONEE to meet the terms and conditions of this option fully and satisfactorily within the time limits stated shall absolutely and conclusively terminate OPTIONEE’S rights hereunder. Upon termination hereof without exercise of the option by OPTIONEE, OPTIONEE shall, within 5 business days of receipt of request from CITY’S Real Property Manager, deliver to CITY a properly executed Quitclaim Deed quitclaiming any and .all interest in and to PROPERTY. Signing of a Lease by CITY and OPTIONEE substantially in the form .of Exhibit I, attached hereto, shall .be deemed a termination of this Option Agreement. E.Notices (OL 10.6) S Any notice, tender, or deliveryto be given in accordance with this option by either party to the other shall be given in accordance with Clause XXIX(NOTICES) of the attached Lease. F.Representat4ons (OL 10.7) S Each party represents to the other that it has employed no real estate broker or finder in connection with this agreement and hereby agrees to hold the other harmless, and free from any liability in connection with any commission or finder’s fee alleged to be incurred by it. G.Entire Agreement (OL 10.8) S , This instrument contains the entire agreement between the parties relating to the option granted by this agreement. Any oral representations or modifications concerning this instrument shall be of no force and effect except in a subsequent modification which is made in writing, and signed by both parties. H.Recovery of Attorney’s Fees (OL 10.9) S In the event of any controversy, claim, or dispute between the parties hereto, arising out of or relating to this agreement or the breach thereof, the prevailing party shall be entitled to recover from the losing party reasonable expenses, including attorney’s fees, and other legal costs. I.Binding on Successors (OL 10.1Q) S This agreement shall bind and inure to the benefit of the respective heirs, personal representatives, successors, and assigns of the parties hereto except as may be expressly provided elsewhere in this agreement. IN WITNESS WHEREOF, the parties hereto have executed this Option Agreement on the day and year first above written. CITY: CITY OF PALO ALTO OPTIONEE: By:By: ..... Mayor Its: AI-TEST: City Cl erk By: Its: J.SRELEASES.1/OLGOLF ATTACHMENT B 7 APPROVED AS TO FORM: City Attorney APPROVED AS TO AUDIT AND ACCOUNTING: City Auditor RECOMMENDED FOR APPROVAL: Director, Planning and Community Environment Manager, Real Property Parks & Golf Course Administration Community Services Department Director, Public Works Di rector, Admi ni strati ve Services Director, Community Services 3.5RELEASES . 1 IOLGOLF AI-~ACHMENT B