HomeMy WebLinkAbout12 - CdM Concession - Fuji GrillCITY OF NEWPORT BEACH
CITY COUNCIL STAFF REPORT
Agenda Item No. 12
April 14, 2009
TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: Administrative Services Department
Dennis C. Danner, Administrative Services Director
(949) 644 -3123 or ddanner(cilcity.newport- beach.ca.us
Evelyn Tseng, Income Contract Administrator
(949) 644 -3153 or etseng(a-city.newport- beach.ca.us
SUBJECT: Corona del Mar Concession (Fuji Grill) — Amendment to Concession
and Lease Agreement
ISSUE:
Should the City Council amend an agreement for Fuji Grill, the food and beach
concession at CDM State Beach?
RECOMMENDATION:
Authorize the Mayor to execute the Third Amendment to the Corona Del Mar State
Beach Concession and Lease Agreement.
DISCUSSION:
On April 4, 2008, the City entered into a Concession and Lease Agreement with
Mr. John Lee (doing business as Fuji Grill) for the food and beach concession at
Corona del Mar State Beach. On January 12, 2009, Mr. Lee requested, among other
things, that the City lower its Base Rent or terminate the Agreement. Mr. Lee had been
staffing the operation daily, with full staff, and found that starting a new restaurant
business during this economic downturn was extremely challenging.
City Council discussed Mr. Lee's request in Closed Session on February 24, 2009, and
March 10, 2009. Because Tenant created a good clean environment for the
concession, received no complaints from the neighborhood and spent, out -of- pocket,
over $90,000 in tenant improvements, the City Council requested that City staff draft an
amendment to the Agreement accommodating some of Mr. Lee's concerns.
Third Amendment to Concession and Lease Agreement
April 14, 2009
Page 2
The Third Amendment lowers the Base Rent from an annual Consumer Price Index
( "CPI ") adjusted base of $80,000 to the following schedule:
Year 1 (from May 25, 2008 to May 31, 2009) — no rent
Year 2 (June 1, 2009 — May 31, 2010) - $36,000
Year 3 (June 1, 2010— May 31, 2011) - $47,000
Year 4 (June 1, 2011 — May 31, 2012) - $58,000
Year 5 (June 1, 2012 — May 31, 2013) - $69,000
Year 6 (June 1, 2013 — May 31, 2014) - $82,012
After Year 6, the Base Rent is adjusted annually by CPI. Percentage Rent provisions
remain unchanged.
The Third Amendment also incorporates the provisions of the Second Amendment,
which permits Fuji Grill, with certain restrictions, to place removable dining tables and
chairs in the patio area around the concession. The Second Amendment is canceled
by the Third Amendment.
In addition, the Third Amendment allows Mr. Lee more discretion in determining his
restaurant's Operating Hours during the off - season and provides Fuji Grill with three (3)
additional parking spaces for Fuji Grill's staff at the Corona del Mar State Beach parking
lot. Mr. Lee agreed to the provisions and executed the Third Amendment. Council's
approval of this agenda item would finalize the amended agreement.
Environmental Review:
The Agreement has been reviewed for compliance with the California Environmental
Quality Act ( "CEQA ") and it has been determined that the Amendment is not a project
for purposes of CEQA.
Public Notice:
The agenda item has been noticed according to the Brown Act (72 hours in advance of
the meeting at which the City Council considers the item).
Prepared by:
Submitted by:
Evel n Tseng Dennis C. Danner
Income Contract Administrator Administrative Services Director
Attachments: Third Amendment to Concession and Lease Agreement
THIRD AMENDMENT TO
CONCESSION AND LEASE AGREEMENT
This Third Amendment to the Concession and Lease Agreement is entered into this 10'h
day of March 2009, by and between the City of Newport Beach, a municipal corporation
and charter city ( "City'), and Fuji Grill, Inc., a California corporation located at 1515 W.
Chapman, Orange, California 92868 ( "Tenant ").
RECITALS
A. On April 4, 2008, City entered into a Concession and Lease Agreement with
Tenant, which is attached hereto as Exhibit "A" (hereinafter "Lease Agreement ").
On September 18, 2008, City and Tenant entered into a Letter Agreement,
attached hereto as Exhibit "B ", which amended Section 5.15 of the Lease
Agreement ( "First Amendment "). On February 3, 2009, the City and Tenant
entered into a Letter Agreement, attached hereto as Exhibit "C ", related to the
use of the patio area adjacent to the Premises ( "Second Amendment "). The
Lease Agreement and amendments thereto shall be collectively referred to
herein as the "Lease."
B. Tenant has become concerned that current economic conditions have diminished
his ability to pay Base Rent pursuant to the terms of the Lease. In a letter to the
City dated January 12, 2009, Tenant proposed that the Lease be terminated
without further obligation to City or Tenant, or that the Base Rent be reduced. In
addition, Tenant requested three (3) additional reserved parking spaces year
round.
C. Because Corona del Mar State Beach is a start -up location for a full - service food
concession and concession services by Tenant is less than a year old, the City
agreed to consider Tenant's offer. On February 25, 2009, City provided a
counter- proposal to Tenant's offer, which Tenant accepted.
D. City and Tenant now desire to amend the Lease to reflect the new terms and
conditions as provided below.
Now therefore, City and Tenant hereby agree as follows:
Premises.
The parties hereto agree that the Second Amendment to the Lease related to the
Patio Premises is hereby canceled and shall have no further force and effect.
Section 2 of the Lease shall be amended to add the following paragraph:
"Tenant shall be permitted to use the area shown on Exhibit "D," which is
attached hereto and incorporated herein by this reference, as a dining area for its
patrons ( "Patio Premises "). Tenant may enclose the Patio Premises area with
temporary removable materials such as plastic and canvas, install up to four (4)
infrared heaters in the Patio Premises area and provide removable dining tables
and chairs in the Patio Premises area, all subject to approval of the City in its
sole discretion. City, in its sole discretion, shall have the right to permanently
terminate Tenant's use of the Patio Premises if Tenant's insurance, which shall
be the same insurance as required by Section 10 of this Lease, covering the
Patio Premises lapses or terminates, if there are any complaints regarding
Tenant's use of the Patio Premises, if Tenant fails to maintain the Patio Premises
in safe and aesthetically pleasing manner as determined by the City in its sole
discretion or if Tenant's use of the Patio Premises contravenes any state, federal
or local law, rule or regulation. All provisions of the Lease applicable to the
Premises shall be applicable to the Patio Premises."
2. Term.
Sections 3.1 and 3.2 of the Lease are hereby deleted in their entirety and
replaced with the following:
"3.1 Term of Lease. The Term of this Lease shall be ten (10) years from the
Rent Commencement Date, unless terminated sooner as provided in
Section 14, or extended as provided in Section 3.2.
3.2 Option to Extend. Provided Tenant is not then in default, Tenant may
extend the term of this Lease for one (1) additional successive term of
five (5) years (the "Option Term "), commencing on the Expiration of the
initial Term, on the same terms and conditions as contained in this Lease.
Tenant must exercise the option by giving City written notice of its
intention to do so at least three (3) months prior to Expiration of the initial
Term."
3. Base Rent.
Section 4.1 of the Lease is hereby deleted in its entirety and replaced with the
following:
"4.1 Base Rent. The annual Base Rent shall be as follows:
Year 1 (from May 25, 2008 to May 31, 2009) — no rent
Year 2 (June 1, 2009 — May 31, 2010) - $36,000.00
Year 3 (June 1, 2010 — May 31, 2011) - $47,000.00
Year 4 (June 1, 2011 — May 31, 2012) - $58,000.00
Year 5 (June 1, 2012 — May 31, 2013) - $69,000.00
Year 6 (June 1, 2013 — May 31, 2014) - $82,012.00
Base rent shall be paid monthly, in advance, in equal installments. Commencing
on June 1, 2014, and every year thereafter on June 1, the Base Rent shall be
adjusted in proportion to changes in the Consumer Price Index. Such adjustment
shall be made by multiplying the amount of Base Rent immediately preceding the
adjustment by a fraction, the numerator, of which is the value of the Consumer
Price Index for March of the year such adjustment is to be made, and the
denominator of which is the value of the Consumer Price Index for March of the
previous year. For example, for the year 2014, the index to be used for the
numerator is the index for March, 2014, and the index to be used for the
denominator is the index for the month of March, 2013. The "Consumer Price
Index" to be used in such calculation is the Consumer Price Index, All Urban
Consumers (All Items) for the Los Angeles — Riverside — Orange County, CA
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area, published by the United States Department of Labor, Bureau of Labor
Statistics (1982 -84 = 100). If both an official index and one or more unofficial
indices are published, the official index shall be used. If said Consumer Price
Index is no longer published at the_ adjustment date, it shall be constructed by
conversion tables included in such new index. In no event shall the adjusted
Base Rent be reduced below the Base Rent immediately preceding_ any
adjustment."
4. Reconciliation.
The last sentence of Section 4.2(a) of the Lease is hereby deleted in its entirety
and replaced with the following:
"In June of each year, City shall perform a reconciliation to calculate the total
amount owed pursuant to the requirements of this Lease."
5. Operating Hours.
Sections 5.7(a) and (b) of the Lease are hereby deleted in their entirety and
replaced with the following:
"(a) Memorial Day through September 15'":
Open from 8:00 a.m. to 9:00 p.m., all sales and rentals to cease at 8:30
p.m.
(b) September 16'" through November 15th:
Open Saturdays and Sundays from 8:00 a.m, until 1 hour after dusk, and
other days at Tenant's discretion.
(c) November 16" through March 15th:
Open at Tenant's discretion.
(d) March 16th through the day before Memorial Day:
Open Saturdays and Sundays from .8:00 a.m. until 1 hour after dusk, and
other days at Tenant's discretion."
6. Parking.
The first sentence of Section 5.13 of the Lease shall be deleted in its entirety and
replaced with the following:
"City shall designate (via surface striping) three (3) spaces in the CdM State
Beach Parking for staff of Fuji Grill. These spaces shall be in the line of spaces
parallel to the Parking Lot entranceway, and shall be selected by the City.
However, City does not have the ability to enforce the public's compliance with
this designation. Enforcement is the sole responsibility of Tenant (and cannot
involve the Police Department, Code Enforcement, the Parking Lot Attendants, or
any other City staff). Tenant's enforcement of public's compliance with the
designation shall be done in a professional and cordial manner. Enforcement
may include using traffic cones."
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Lease.
Except as expressly modified herein, all other provisions, terms, covenants and
conditions of the Lease shall remain unchanged and in full force and effect.
[Signature page follows]
I
IN WITNESS WHEREOF, the parties hereto have executed this Third Amendment as of
the date first written above.
FUJI GRILL ( "Tenant "),
M
ATTEST:
Leilani Brown,
City Clerk
APPROVED AS TO FORM:
OFFICE OF THE CITY ATTORNEY:
Aaron C. Harp,
Assistant City Attorney
Attachments:
CITY OF NEWPORT BEACH ( "City'),
a municipal corporation
M-
Edward D. Selich,
Mayor of the City of Newport Beach
Exhibit A: Concession and Lease Agreement
Exhibit B: First Amendment - September 18, 2008
Exhibit C: Second Amendment - February 3, 2009
Exhibit D: Depiction of Patio Premises
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EXHIBIT "A"
Concession and Lease Agreement
10
3 A
Corona de! Mar State Beach
CONCESSION AND LEASE AGREEMENT
between
THE CITY OF NEWPORT BEACH
mm
FUJI GRILL, INC.
�1
EFFECTIVE: March 2008
1 ?
TABLE OF CONTENTS
1.
DEFINITIONS
2
1.1 General Definitions
2
1.2 Other Definitions
3
2.
LEASE OF PREMISES
4
3.
TERM
5
3.1 Term of Lease
5
3.2 Option to Extend
5
3.3 Hold Over
5
4.
RENT
5
4.1 Base Rent
5
4.2 Percentage Rent
6
4.3 Rent Credit
7
4.4 Revenue from Premises Use in
Film, Television, and /or Advertising
7
4.5 Payment Location
7
4.6 Gross Sales
7
4.7 Late Payment
12
4.8 Interest on Unpaid Sums
12
5.
BUSINESS PURPOSES AND USE OF PREMISES
12
5.1 Business Purpose
12
5.2 Name of Concession
13
5.3 Operation of Premises
13
5.4 Prohibited Uses
13
5.5 Food Packaging and Debris
13
5.6 Outdoor Dining
14
5.7 Operating Hours
14
5.8 Food Preparation
15
5.9 Advertising Display
15
5.10 Personnel
15
5.11 Grand Opening Assistance
15
5.12 No Distress Sales
16
5.13 Parking for Employees
16
5.14 Reserved Parking Spot
16
5.15 Parking Refund Credit Program
16
5.16 Exclusive Concession
17
6.
TAXES, LICENSES AND OTHER OBLIGATIONS
17
6.1 . Payment of Taxes
17
6.2 Payment of Obligations
18
6.3 Challenge to Taxes
18
A -
7.
UTILITIES
19
8.
ALTERATIONS TO THE PREMISES
19
8.1 Tenant improvements
19
8.2 Permits
20
8.3 Quality of Work Performed
20
8.4 Payment of Costs
20
8.5 Liens '
20
8.6 Disposition of Alterations at Expiration or Lease Term
20
9.
MAINTENANCE OF PREMISES
21
9.1 Maintenance and Repair by Tenant and City
21
9.2 Entry by City
21
10.
INDEMNITY AND EXCULPATION; INSURANCE
22
10.1 Hold- Harmless Clause
22
10.2 Exculpation of City
22
10.3 Insurance
23
11.
DAMAGE OR DESTRUCTION OF PROJECT /PREMISES
26
11.1 Destruction of Premises
26
11.2 Replacement of Tenant's Property
27
113 Destruction of Project
27
12.
ABATEMENT OF RENT
28
12.1 General Rule
28
12.2 Abatement/Maintenance
28
13.
PROHIBITION AGAINST GENERAL ASSIGNMENT, SUBLETTING
AND ENCUMBERING
28
13.1 Prohibition of Assignment
28
13.2 One -Time Transfer
29
13.3 Exceptions
30
13.4 Continuing Effect
30
14.
DEFAULT
30
14.1 Default by Tenant
30
14.2 Remedies
31
15.
SUBJECT TO STATE OPERATING AGREEMENT
33
16.
WASTE OR NUISANCE
34
17.
NO CONFLICTS OF USE, HAZARDOUS MATERIALS
34
18.
CITY'S DEFAULTS/TENANT'S REMEDIES
35
19.
NOTICES _
35
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20. GENERAL PROVISIONS
36
20.1
Independent Contractor
36
20.2
Surrender of Premises
36
20.3
Compliance with all Laws
36
20.4
Waivers
36
20.5
Severability
37
20.6
Applicable Law
37
20.7
Entire Agreement; Amendments
37
20.8
Time is of the Essence
38
20.9
Successors
38
20.10
Interpretation
38
20.11
Brokers
38
20.12
Tables of.Contents;. Headings
38
20.13
Gender; Number
39
20.14
Exhibits
39
20.15
City Business License
39
20.16
Costs and Attorneys Fees
39
LIST OF EXHIBITS
— .-A Location of Premises
B Proposed Menu and Sale and Rental Merchandise
iLi
Corona del Mar State Beach
Concession and Lease Agreement
This Concession and Lease Agreement ( "Lease ") is made and entered into as of the
4 =° day of Uafeli, 2008 ( "Effective Date "), by and between the City of Newport Beach,
a municipal corporation and charter city ( "City "), and Fuji Grill, Inc., a California
corporation located at 1515 W. Chapman, Orange, California, 92868 ('Tenant').
RECITALS
A. Corona del Mar State Beach is part of the California State Parks system,
but is operated by the City pursuant to the Operating Agreement by and between the
City and the State of California, dated August 1, 1999 (the "Operating Agreement').
Pursuant to the Operating Agreement, City agreed "to develop, operate, control and
maintain the premises as public recreational beach and park with related concession."
B. In September 2005, the concession then located at Corona del Mar State
Beach was closed to commence construction of the Corona del Mar Beachgoer
Amenities Improvement Project (the 'Project'). The Project includes a one thousand
forty -three (1,043) square foot concession facility, which is depicted on Exhibit "A,"
and incorporated herein by this reference ( "Premises ").
C. The City previously issued two (2) Requests for Proposal ( "RFP ") for
Concession Operations and Tenant Improvements at Corona del Mar State Beach, but
was unable to reach agreement with any of the applicants. On August 20, 2007, a third
(3rd) RFP was issued and City selected Tenant.
D. Tenant and City desire to enter into a Lease of the Premises for the
purpose of allowing Tenant to operate a concession facility intended to provide food
/drink service and beach rentals to beach visitors ( "Concession ")
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
City and Tenant hereby agree as follows:
1.
1.1 General Definitions. As used in this Lease, the following words and
phrases shall have the following meanings:
(a) Alteration — any improvements, additions, alterations, changes, or
modifications of the Premises made by Tenant including, but not limited to fixtures and
signage.
thereof.
(b) Authorized City Representative — is the City Manager or designee
(c) City - the City of Newport Beach, and any Successor to City's
interest to the Project.
(d) Expiration - the lapse of the time specified as the Term of this
Lease, including any extension of the Term resulting from the exercise of an option to
extend.
(e) Good Condition - neat and broom - ciean, and in good repair, and is
equivalent to similar phrases referring to physical adequacy in appearance and for use.
2 zy
(f) Law - any judicial decision, statute, constitution, ordinance,
resolution, regulation, rule, administrative order, or other requirement of any municipal,
county, state, federal, or other government agency or authority having jurisdiction over
the Parties hereto or the Premises.
(g) Maintenance or Maintain - repairs, replacement, maintenance,
repainting, and cleaning.
(h) Person - one or more natural persons, or legal entities, including,
without limitation, partnerships, corporations, trusts, estates, associations, or a
combination of natural persons and legal entities.
(i) Provision - any term, covenant, condition, or clause in this Lease
that defines, establishes, or limits the performance required or permitted by either party.
(j) Rent - Base Rent, Percentage Rent, taxes, and other similar
charges payable by Tenant under the provisions of this Lease.
(k) Rent Commencement Date - the Rent Commencement Date shall
be the earlier of May 25, 2008 , or three (3) months after the date of execution of this
Agreement, whichever occurs first.
(1) Successor - assignee, transferee, personal representative, heir, or
other Person succeeding lawfully, and pursuant:to the provisions of this Lease, to the
rights or obligations of either Party.
(m) Tenant — Fuji Grill, Inc. and any Successor.
(n) Tenant Improvements — shall include the cost to install shelving,
floor coverings, window coverings, food - service equipment, and other fixtures that allow
the Premises to be used as envisioned by this Lease.
(o) Termination - the termination of this Lease, for any reason, prior to
Expiration.
1.2 Other Definitions. - The following additional terms are defined in the
following sections of this Lease:
3 )►-�
(a)
Base Rent
§4.1
(b)
Claim or Claims
§10.1
(c)
Concession
Recitals, §Q
(d)
Gross Sales
§4.5
(e)
Hazardous Materials
§17
(f)
Indemnified Parties
§6.3
(g)
Option Term(s)
§3.2
(h)
Percentage Rent
§4.2 (a)
(i)
Project
Recitals, §B
(j)
Premises
Recitals, §B
(k)
Term
§3.1
2. LEASE OF PREMISES
City leases the Premises to Tenant and Tenant leases the Premises from City for
the Term and on the conditions set forth in this Lease. City finds it to be in the public
interest and consistent with park uses to grant an exclusive right to operate a
Concession at the Corona del Mar State Beach. Therefore, City hereby grants to
Tenant the exclusive right, privilege and concession to conduct a business at the
Premises engaged in selling such items as those described in Section 5.1, Business
Purposes. Tenant agrees to accept the Premises in an "as is" condition as tendered by
City. Tenant agrees that no representations with respect to the condition or
improvements of the Premises have been made by City except as specifically set forth
in this Lease.
4 ,1
3.1 Term of Lease. The Term of this Lease shall be five (5) years from the
Rent Commencement Date unless terminated sooner as provided in Section 14, or
extended as provided in Section 3.2.
3.2 Option to Extend. Provided Tenant is not then in default, Tenant may
extend the term of this Lease for two additional successive terms of five (5) years (the
"Option Term" or "Option Terms ") the first commencing on Expiration of the initial Term
and the second commencing on Expiration of the first Option Term, on the same terms
and conditions as contained in this Lease. Tenant must exercise the option by giving
City written notice of its intention to do so at least three (3) months prior to Expiration of
the initial Term or the first Option Term.
3.3 Hold Over. Should Tenant, with City's consent, hold over and continue in
possession of the Premises after Expiration of the Term or any Option Term, Tenant's
continued occupancy of the Premises shall be considered a month -to -month tenancy
subject to all the terms and conditions of this Lease, except the provisions of Sections
3.1 and 3.2.
4. RENT
4.1 Base Rent. The Base Rent shall be established at Eighty Thousand and
00/100 Dollars ($80,000.00) per year. Base Rent shall be paid monthly, in advance, in
equal installments of Six Thousand Six Hundred Sixty -Six and 67/100 Dollars
($6,666.67) on the first day of each month. Base Rent for any partial month shall be
prorated in accordance with the actual number of days in that month and shall be due
on the first day of that month that falls within the Term. Annually, upon the
anniversary date of the Rent Commencement Date, the Base Rent shall be adjusted in
proportion to changes in the Consumer Price Index. Such adjustment shall be made by
multiplying the original Base Rent by a fraction, the numerator of which is the value of
5 sa
the Consumer Price Index for the calendar month three (3) months preceding the
calendar month for which such adjustment is to be made and the denominator of which
is the value of the Consumer Price Index for the same calendar month immediately prior
LO the Rent Commencement Date. For example, if the adjustment is to occur effective
June 1, 2009, the index to be used for the numerator is the index for the month of March
2009 and the index to be used for the denominator is the index for the month of March
preceding the Rent Commencement Date. In no event shall the adjusted rent be
reduced below the Base Rent immediately preceding any adjustment. The "Consumer
Price Index" to be used in such calculation is the Consumer Price Index, All Urban
Consumers (All Items), for the Los Angeles Anaheim Riverside Metropolitan Area,
published by the United States Department of Labor, Bureau of Labor Statistics (1982
84 = 100). If both an official index and one or more unofficial indices are published, the
official index shall be used. If said Consumer Price Index is no longer published at the
adjustment date, it shall be 'constructed by conversion tables included in such new
index.
4.2 Percentaae Rent.
(a) Payment. For each month that Percentage Rent exceeds Base
Rent, Tenant shall pay to City the Percentage Rent less the Base Rent paid to the City
for that month. "Percentage Rent' shall be determined each calendar month and shall
be calculated by multiplying fifteen percent (15 %) by the total Gross Sales (as defined in
Section 4.5) made in, upon, or from the Premises and/or otherwise attributable to the
Premises for the calendar month. While Tenant shall pay rent on a monthly basis, the
rent amount shall be calculated on an annual basis. At the end of each calendar year,
City shall perform a reconciliation to calculate the total amount owed pursuant to the
requirements of this Lease.
(b) Accounting and Payment. Within twenty -five (25) calendar days
after the end of each calendar month for the term hereof, as may be extended as
6 c7
provided herein, commencing with the twenty -fifth (25th) day of the month fo €lowing the
Rent Commencement Date, and ending with the twenty -fifth (25th) day of the month
next succeeding the last month of the term, as may be extended as provided herein,
Tenant shall furnish to City a statement in writing, certified by Tenant to be correct,
showing the total Gross Sales made in, upon, or from and /or otherwise attributable to
the Premises during the preceding calendar month (or fractional month at the beginning
of the term if the Rent Commencement Date is other than the first day of a month), and
shall accompany each such statement with a payment to City equal to fifteen percent
(15 %) of the total monthly Gross Sales made in, upon, or from or otherwise attributable
to the Premises for the calendar month, less the Base Rent already paid to the City for
that month.
4.3 Rent Credit. Tenant shall receive a rent credit for the lesser of either (1)
the first twelve (12) months rent (Base Rent and Percentage Rent) from the Rent
Commencement Date, or (2) the amount of the reasonable cost of Tenant
Improvements to the Premises. Upon request from City, Tenant shall provide receipts
or other proof of Tenant Improvement costs. City shall own the Tenant Improvements
upon termination of the Agreement, at City's option.
4.4 Revenue from Premises Use in Film Television, and /or Advertising.
Tenant may allow the Premises to be used for film, television production, advertising
production, or other media vehicle upon written approval from the City. One -half (112) of
all monetary revenue received by Tenant as compensation or other payment for the use
of the Premises in a film, television production, advertising production, or other media
vehicle shall be paid to City. The payment of revenue pursuant to this Section shall
occur not less than thirty (30) calendar days after Tenant receives this compensation or
other payment.
4.5 Payment Location. Rent shall be payable at the office of the City's
Cashiering Division at 3300 Newport Boulevard, Newport Beach, California, or at such
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other place or places as City may from time to time designate by written notice delivered
to Tenant.
4.6 Gross Sales.
(a) The term "Gross Sales" means:
(1) All money, cash receipts, assets, property or other things of
value, including but not limited to gross charges, sales, rentals, fees and commissions
made or earned by Tenant and /or all the assignees, sublicensees, licensees, permittees
or concessionaires thereof, whether collected or accrued from any business, use or
occupation, or any combination thereof, originating, transacted or performed in whole or
in part, on the Premises, including but not limited to rentals, the rendering or supplying
of services and the sale of goods, wares or merchandise, whether wholesale or retail,
whether for cash or credit, or otherwise, and including the value of all consideration
other than money received for any of the foregoing, without, except as expressly
provided in Section 4.5(b), deduction from gross receipts for any overhead or cost or
expense of operations, such as, but without limitation to salaries, wages, costs of
goods, interest, debt amortization, credit, collection costs, discount from credit card
operations, insurance and taxes. Each installment or credit sale shall be treated as a
sale for the full price in the month during which such sale is made, irrespective of
whether or when Tenant receives payment therefore. Gross Sales shall include any
amount allowed upon any "trade in," the full retail price of any merchandise delivered or
redeemed for trading stamps or coupons and all deposits not refunded to purchasers;
(2) Orders taken in or from the Premises, even if the orders are
filled elsewhere, and sales by any subtenant in or from the Premises;
(3) Gross receipts of all coin- operated devices that are placed
on the Premises by Tenant or pursuant to any rent concession, percentage or other
arrangement (but excluding revenue from telephones that are collected by a public
and /or private utility); and
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(4) Rentals of any beach equipment, beach furniture, goods,
wares or merchandise.
(b) Exclusions from Gross Sales. Gross Sales shall not include, or if
included there shall be deducted (but only to the extent they have been included), the
following:
(1) Sales and use taxes, so- called luxury taxes, consumers'
excise taxes, gross receipts taxes, and other similar taxes now or in the future imposed
on the sale of merchandise or services, but only if such taxes are added to the selling
price and collected from customers;
(2) The amount of returns to shippers or manufacturers;
(3) The amount of any cash or credit refund made upon any
sale where the merchandise sold or some portion is returned by the purchaser. Each
sale upon installment or credit shall be treated as a sale for the full price in the month
during which such sale shall be made, irrespective of the time when Tenant shall
receive payment (whether in full or partial) from its customers;
(4) Sales of trade fixtures or personal property to be replaced by
Tenant that are not considered stock in trade;
(5) Sums and credits received in the settlement of claims for
loss of or damage to merchandise;
(6) Meals provided for officers or employees without charge;
(7) Meals, goods or products provided for promotional or.
publicity purposes without charge;
business;
(8) Cash refunds made to customers in the ordinary course of
(9) Value added taxes ("VAT ") or other taxes added to the
selling price of products and other similar taxes now or hereafter imposed upon the sale
9 d�
of merchandise or services, whether such taxes are added to, or included in the selling
price;
(10) Discounted sales to employees of Tenant, not to exceed two
percent (2 %) of the monthly Gross Sales;
(11) Uncollectible credit accounts . and other bad debts, not to
exceed two percent (2 %) of the monthly Gross Sales; and
(12) Amounts paid to charge card or credit card issuers.
(c) Annual Statements of Gross Sales. Within thirty (30) calendar days
after the end of each calendar year during the Term hereof, as may be extended as
provided herein, Tenant shall furnish to City a statement in writing, certified by Tenant
and a Certified Public Accountant to be correct, showing the total Gross Sales made in,
upon, or from and/or otherwise attributable to the Premises during the preceding
calendar year (or fractional year at the beginning of the term if the Rent
Commencement Date is other than the first day of the year).
(d) Sales and Charges. All sales and charges shall be recorded by
means of cash registers that display the amount of the transaction certifying the amount
recorded. The register shall be equipped with devices that log in daily sales totals, and
record on tapes the transaction numbers and sales details. At the end of each day the
tape will record the total sales for that day.
(e) Production of Statement. Records and Audit. Tenant shall keep at
the Premises (and shall require any permitted subtenant to keep at the Premises) full,
complete and proper books, records and accounts of its daily Gross Sales, both for
cash and on credit, at any time operated in the Premises. Tenant agrees to make
available for inspection by City at the Premises, a complete and accurate set of books
and records of all sales of goods, wares, and merchandise and revenue derived from
the conduct of business or activity in, at or from the Premises from which Gross Sales
can be determined. Tenant shall also make available, upon City request, all supporting
10 a `�
records. Tenant shall also fumish City copies of its quarterly California sales and use
tax returns at the time each is filed with the State of California. Tenant shall retain and
preserve for at least three (3) years all records, books, bankbooks or duplicate deposit
books and other evidence of Gross Sales. City shall have the right, upon reasonable
notice, during the Term and within one hundred eighty (180) days after Expiration or
Termination of this Lease to inspect and audit Tenant's books and records and to make
transcripts to verify the Rent due to the City. The audit may be conducted at any
reasonable time during normal business hours. Tenant shall cooperate with City in
making the inspection and conducting the audit. The audit shall be limited to the
determination of Gross Sales and shall be conducted during usual business hours in a
manner that minimizes any interference with the conduct of Tenant's regular business
operations. If the audit concludes that there is a deficiency in the payment of any Rent,
the deficiency shall become due and payable within twenty (20) days and if there is an
overpayment, City shall refund the amount of the overpayment within twenty (20) days.
City shall bear its costs of the audit unless the audit shows that Tenant understated
Gross Sales by more than two percent (2 %), in which case Tenant shall pay all City's
reasonable costs of the audit. City shall keep any information gained from such
statements, inspections or.audits confidential to the maximum extent permitted by law.
City shall not disclose financial information received in confidence and pursuant to this
Lease except to carry out the purposes of this Lease unless disclosure is required
(rather than permitted) by law. However, City may disclose the results of any audit in
connection with any financing arrangements, the sale or transfer of City's interest in the
Premises, pursuant to order of a court or administrative tribunal, or to collect any
outstanding Rent.
(f) Tenant's Gross Sales Audit. In the event of any audit by City in
accordance with this Lease, Tenant may contest the results of City's audit by performing
a confirming audit, at Tenant's expense, within sixty (60) days of receipt of City's audit
a
results and supporting evidence, using an independent Certified Public Accountant
reasonably acceptable to City. If Tenant's audit discloses that City's audit was incorrect
by more than twenty -five percent (25 %), then City shall pay the cost of Tenant's
contesting audit.
(g) Acceptance. The acceptance by City of any money paid to City by
Tenant as Percentage Rent for the Premises, as shown by any statement furnished by
Tenant, shall not be construed as an admission of the accuracy of said statement, or of
the sufficiency of the amount of the Percentage Rent payment.
4.7 Late Payment. Tenant hereby acknowledges that the late payment of
Base Rent, Percentage Rent, or other sums due hereunder will cause City to incur costs
not contemplated by this Lease, the exact amount of which is extremely difficult to
ascertain. Such costs include, but are not limited to, processing and accounting
charges. Accordingly, any payment of any sum to be paid by Tenant not paid within five
(5) days of its due date shall be subject to a ten percent (10 %) per month late charge.
City and Tenant agree that this late charge represents a reasonable estimate of such
costs and expenses and is fair compensation to City for its loss suffered by such late
payment by Tenant.
4.8 Interest on Unpaid Sums. Unpaid sums due to. either City or Tenant. under
this Lease shall bear interest at the rate of ten percent (10 %) per annum on the unpaid
balance, including but not limited to late payment penalties, from the date due until paid.
5. BUSINESS PURPOSES AND USE OF PREMISES
5.1 Business Purposes. The Premises are to be used by Tenant for the
operation of a concession selling food, non - alcoholic beverages, and miscellaneous
beach - related merchandise, as well as for the rental of beach - related products such as
umbrellas, beach chairs, and boogie boards. All food, beverage or other products
offered for sale to the public shall be approved in writing by the Authorized City
12 � to
Representative prior to distribution or sale of such products. Tenant's proposed menu,
proposed rental items and proposed sales merchandise shall be attached as Exhibit
"B ". All pricing of any food, beverage or other products must be competitive and
comparable to prices at nearby beach concession facilities. Alcoholic beverage sales,
cigarette sales and giveaways are prohibited.
5.2 Name of Concession. The name of the Concession shall be "Fuji Grill — At
the Beach." No changes to this name are permitted without prior written approval by
Authorized City Representative.
5.3 Operation of Premises. The management, maintenance and operation of
the Premises shall be under the supervision and direction of a qualified, competent
manager who shall at all times be authorized to act on behalf of Tenant. Tenant shall
operate and manage the Premises in a manner comparable to other high quality
businesses providing similar food and services. Deliveries shall be made and
completed between 7 a.m. and 6 p.m. on non - holiday weekdays.
5.4 Prohibited Uses. Tenant shall not sell or permit to be kept, used,
displayed or sold in or about the Premises (a) pornographic or sexually explicit books,
magazines, literature, films or other printed material, sexual paraphernalia, or other
material which would be considered lewd, obscene or licentious, (b) any article which
may be prohibited by standard forms of fire insurance policies, or (c) any alcoholic
beverages or cigarettes. Vending machines, gaming machines or video or arcade
games shall not be used or installed on the Premises unless expressly permitted by this
Lease. Tenant shall not use or permit the use of the Premises in any manner that (a)
creates a nuisance or (b) violates any Law. Tenant shall not offer entertainment or
broadcast music or entertainment through exterior speakers or other form of
transmission.
5.5 Food Packaging and Debris. Tenant shall use food packaging consistent
with good environmental practices, including prohibiting polystyrene (also known as
13 -a9l
Styrofoam) from the Premises, minimizing the use of PVC plastics (especially plastic
bags for carrying food), and providing both trash receptacles and places for customers
to dispose of recyclable products.
5.6 Outdoor Dining. Tenant shall be permitted to provide a maximum of 12
tables and 24 chairs onto a portion of the paved area outside of the Premises. Tenant
may rearrange the dining tables and chairs depending on weather and customer
demand, so long as the number of chairs and tables do not exceed the numbers set
forth herein, and so long as the tables and chairs remain on the concrete pad and do
not impede the pedestrian flow. Changes to the amount of tables and chairs set forth in
the Outdoor Dining Plan are subject to the prior written approval of the City Manager
and shall be in accordance with City zoning codes and State requirements. Tenant may
not expand onto the beach area, or place any temporary furniture or objects onto the
beach area.
5.7 Operating Hours. Weather permitting, Tenant shall keep the Premises in
operation and. open to the public for business each calendar day of the year in
accordance with the schedule in this Section. Tenant may close the Concession on
Thanksgiving Day, Christmas Day, during periods of remodeling, reconstruction,
inventory and emergencies (including substantially inclement weather) or to comply with
Laws. Notwithstanding the foregoing, if Tenant can show, on the second (2nd)
anniversary of the Rent Commencement Date, consistently low gross sales on certain
days of the year, then Tenant may close the Concession on those days upon written
approval of City Manager. Unless otherwise approved in writing by the City Manager,
which approval shall not be unreasonably withheld, the Concession shall follow this
schedule of operations:
(a) Daily from Memorial Day through Labor Day:
Open from 7:00 a.m. through 8:30 p.m., all sales and rentals to
cease at 7:30 p.m.
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(b) From the day after Labor Day to the day before Memorial Day:
Weekend days (Saturday and Sunday) -
Open 7:00 a.m. through dusk.
Weekdays (Monday through Friday) —
Hours of operation at Tenant's discretion, but in no event, no earlier
than 7:00 a. m. and no later than dusk.
5.8 Food Preparation. Tenant shall install, at Tenant's own expense, fire
protective systems in grill, deep fry, and cooking areas which are required by City,
County, and State fire ordinances, and such system when installed shall qualify for full
fire protective credits allowed by the fire insurance rating and regulatory body in whose
jurisdiction the Premises is located. Tenant shall also install adequate ventilation
systems to operate the cooking area.
5.9 Advertising Display. Tenant may, at its own expense, place unlit signs in
or upon the Premises subject to the prior written consent of the City Manager as to the
size, type, number, design and method of installation. All signage placed by Tenant on,
in or about the Premises shall remain the property of Tenant and shall be removed by
Tenant upon Termination or Expiration of this Lease at Tenant's expense; and any
damage caused by removal shall be repaired at Tenant's expense.
5.10 Personnel. Tenant shall be responsible for hiring the necessary personnel
to conduct the daily operation of Concession. Tenant shall comply with all federal,
state, and local Laws related to minimum wage, social security, nondiscrimination, ADA,
unemployment compensation, and workers' compensation. All of Tenant's employees
shall have a neat, clean and sanitary personal appearance. If required by the City,
Tenant's employees shall wear a uniform and/or identification badge.
5.11 Grand Opening Assistance. City shall assist Tenant in spreading
awareness of its Concession through City -owned media, such as its website, the
Newport Navigator publication, and the City Manager's Newsletter.
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5.12 No Distress Sales. No auction, fire, bankruptcy, "going out of business" or
other distress sales of any nature may be conducted on the Premises without the prior
written consent of the City Manager.
5.13 Parking for Employees. City shall not set aside designated parking
spaces for Tenant's employees. However, City shall provide eight (8) Annual Blue Pole
Parking Permits to Tenant for the use of its employees during their working hours.
Tenant shall cause its employees to comply with the procedures and regulations
established by City from time -to -time to control parking.
5.14 Reserved Parking Spot. City shall provide one (1) designated parking
space, adjacent to the Concession (preferably over the grease interceptor access
manhole), for customer food pickup and vendor loading and unloading. City shall not
provide enforcement for this parking space.
5.15 Parking Refund Credit Program. City intends to implement a new parking
program at Corona del Mar State Beach in which a daily rate shall be imposed from
Memorial Day through September, and an hourly rate from October through the Friday
before Memorial Day. If an hourly parking rate program is not in place by September 2,
2008, then City and Tenant shall participate in the following parking refund program:
Tenant may reimburse customer's bill for up to the value of that parking ticket.
Each parking stub shall be validated only once and only on the day the customer parked
at Corona del Mar State Beach. If a customer purchases less than the parking stub
amount, Tenant shall only be reimbursed up to the amount of the concession purchase.
By the 1 oth day of each month, Tenant shall present the amount of parking
reimbursements for the previous month to City, accompanied by evidence of such
reimbursements. Such evidence shall include the customer's parking stub and receipt
of customer's concession purchase. City shall credit that reimbursement amount to the
following month's rent. The monthly rent credit for the parking validation program shall
not exceed the lesser of the following month's rent, or the difference in the number of
16 1°
cars parked at the Corona del Mar State Beach parking lot between the previous month
and that same month for the year 2007, as confirmed by City's parking employees or
contractor. For example, if on September 2008, 100 cars parked at the Corona del Mar
parking lot, and on September 2007, 75 cars parked at the Corona del Mar parking lot,
Tenant's rent credit shall be the amount reimbursed to its customers, as evidenced by
receipts and proof of validation, but shall not exceed the actual cost of parking 25 cars.
The rent credit shall begin October 2008, if City has not implemented an hourly
rate program by that time; however, City shall apply the parking rent credit to Tenant's
first actual rent payment after the expiration of the Tenant Improvement rent credit. All
parking rent credits prior to that first rent payment shall be cumulatively applied to that
first months rent payment only. It is the parties' intent that such reimbursements shall
only be applied as a rent credit.
The parking refund /rent credit program shall be effective from the day after Labor
Day through the Friday before Memorial Day, and shall terminate in its entirety upon
City's implementation of the hourly parking rate for Corona del Mar State Beach.
5.16 Exclusive Concession. City shall not enter into another agreement for
concessions or beach rentals with any other entity at Corona del Mar State Beach for
the term of this Agreement.
6. TAXES, LICENSES AND OTHER OBLIGATIONS
6.1 Payment of Taxes. Tenant shall pay directly to the appropriate taxing
authorities all taxes applicable to this Lease, fixtures and Tenant's personal property on
the Premises, that are levied or assessed against Tenant during the Term. Taxes shall
be paid at least ten (10) days before delinquency and before any fine, interest or penalty
is due or imposed by operation of law. Tenant shall, upon request, promptly furnish to
the City satisfactory evidence of payment. Tenant acknowledges that this Lease may
create a possessory interest subject to property taxation and that Tenant may be
17 'y,
subject to the payment of property taxes levied on such interest. Tenant shall pay,
before delinquency all taxes, assessments, license fees and other charges ( "Taxes ")
that are levied or assessed against Tenant's leasehold interest in the Premises or any
personal property installed on the Premises.
6.2 Payment of Obligations. Tenant shall promptly pay, when due, any and all
bills, debts, liabilities and obligations incurred by Tenant in connection with Tenant's
occupation and use of the Premises.
6.3 Challenge to Taxes. Tenant shall have the right in good faith, at its sole
cost and expense, to contest the amount or legality of any Taxes on or attributable to
this Lease, the Premises, Tenant's personal property, or Tenant's occupation and use of
the Premises, including the right to apply for reduction. If Tenant seeks a reduction or
contests such taxes, Tenant's failure to pay the taxes shall not constitute a default as
long as Tenant complies with the provisions of this Section. City shall not be required to
join in any proceeding or contest brought by Tenant unless the provisions of any Law
require that the proceeding or contest be brought by or in the name of City or any owner
of the Premises. In that case, City shall join in the proceeding or contest or permit it to
be brought in City's name as long as City is not required to bear any cost. If requested
by Tenant, City shall execute any instrument or document necessary or advisable in
connection with the proceeding or contest. Tenant, on final determination of the
proceeding or contest, shall immediately pay or discharge any decision or judgment
rendered, together with all related costs, charges, interest and penalties. Tenant shall
indemnify, defend and hold harmless the City, its council members, boards,
commissions, officers, employees, Authorized City Representatives, agents and
volunteers ( "Indemnified Parties ") from and against any liability, claim, demand, penalty,
cost or expense arising out of or in connection with any contest by Tenant pursuant to
this Section.
18 �; c�
7. UTILITIES
Tenant shall make all arrangements for utilities installation and pay for all utilities
furnished to or used on the Premises, including, without limitation, gas, electricity, water,
telephone service, and cable TV. Tenant may use City's trash enclosures or public
trash cans, provided however, that City may, at City's discretion, require Tenant to
arrange for its own refuse collection. Tenant shall not use the Premises or any public
trash receptacle to dispose of any grease, oil, or similar substance that may cause harm
to the environment. Any repair to utility lines within the Premises is the sole
responsibility of Tenant. Tenant shall service and maintain the Concession's 1500 -
gallon grease interceptor and shall comply with all state and county requirements
regarding disposal of the waste. Refuse collection and grease interceptor maintenance
shall occur between 7 a.m. and 6 p.m. on non - holiday weekdays.
8. ALTERATIONS TO THE PREMISES
8.1 Tenant Improvements. Tenant acknowledges that City has delivered the
Premises without any improvements, and it shall be Tenant's responsibility to install
service runs, including gas, water and electricity, in addition to completing interior
finishes, installing equipment and providing other improvements (including a restroom)
as necessary for the Concession to operate. All Tenant improvement plans and
construction shall be subject to the prior written approval of the City Manager. Tenant
improvements shall be performed between 7 a.m. and 6 p.m. on non - holiday weekdays.
Any contractors hired by Tenant shall be fully licensed and bonded. Tenant's
contractors and any subcontractors shall obtain insurance in an amount and form to be
approved by City's Risk Manager, including workers compensation insurance as
required by law, general liability, automobile liability and builder's risk insurance
covering improvements to be constructed, all pursuant to standard industry custom and
19 305
practice. City shall be named as an additional insured on the contractors and any
subcontractors policies.
If Tenant does not complete its improvements by August 1, 2008, Tenant
shall be in default of this Agreement pursuant to Section 14.
8.2 Permits. Tenant shall obtain building permits, health department permits
and other required permits prior to commencement of Tenant improvements, and shall
pay all costs therefore.
8.3 Quality of Work Performed. All alterations, maintenance and other work
shall be performed in a good and workmanlike manner, shall comply with the plans and
specifications submitted to City, and shall comply with all applicable governmental
permit requirements and Laws in force at the time permits are issued.
8.4 Payment of Costs. Tenant shall pay all costs related to the construction of
the improvements and any Alterations by Tenant or its agents.
8.5 Liens. Tenant shall keep the Premises free from any liens arising out of
any work performed, material furnished, or obligation incurred by Tenant or alleged to
have been incurred by Tenant.
8.6 Disposition of Alterations at Expiration or Lease Termination. Any
Alterations made to the Premises shall remain on, and be surrendered with, the
Premises on Expiration or Termination of this Lease (excluding Tenant's fixtures,
equipment, furniture, and moveable decorations). However, City may elect not less
than thirty (30) days prior to Expiration or Termination of this Lease, to require Tenant to
remove any Alterations that Tenant has made to the Premises. if City requires removal
of Alterations, Tenant shall, at its cost, remove the Alterations and restore the Premises
to a broom -clean condition before the last day of the Term, or within thirty (30) days
after notice is given, whichever is later. Prior to Expiration or within fifteen (15) days.
after Termination of this Lease, Tenant may remove any moveable partitions,
20 .-
machinery, equipment, furniture. and trade fixtures previously installed by Tenant,
provided that Tenant repairs any damage to the Premises caused by removal.
9. MAINTENANCE OF PREMISES
9.1 Maintenance and Repair by Tenant and City. Tenant agrees that it will
keep the Premises in Good Condition. Tenant shall report graffiti by calling in to the
City's Graffiti Hotline for removal. City may perform Maintenance or repairs in the event
Tenant fails to commence required Maintenance or repairs within three (3) business
days after receipt of notice to do so. The cost of any Maintenance or repairs by the City
pursuant to this Section shall be payable as additional Rent. All furnishings, equipment,
facilities, improvements, alterations, attachments and appurtenances not provided by
City, but required for concession operations, including all kitchen equipment and interior
furnishings, shall be maintained in Good Condition and repair by Tenant at its cost. City
may perform required cleaning and charge the costs to Tenant if the Tenant fails to
perform within five (5) days after notice to do so and continue to Maintain the area as
required by this Lease.
9.2 Entry by City. Upon twenty -four (24) hour notice to Tenant, City and its
Authorized City Representatives may enter upon and inspect the Premises at any
reasonable time for any lawful purpose. In case of emergency, City or its Authorized
City Representative may enter the Premises by whatever force necessary if Tenant is
not present to open and permit an entry. Any entry to the Premises by City shall not be
construed as a forcible or unlawful entry into, or a detainer of, the Premises, or an
eviction of Tenant from the Premises or any portion thereof.
21 35
10. INDEMNITY AND EXCULPATION: INSURANCE
10.1 Hold- Harmless Clause. Tenant agrees to indemnify, defend and hold
harmless the Indemnified Parties from and against any and all claims (including, without
limitation, claims for bodily injury, death or damage to property), demands, obligations,
damages, actions, causes of action, suits, losses, judgments, fines, penalties, liabilities,
costs and expenses (including, without limitation, attorney's fees, disbursements and
court costs).of every kind and nature whatsoever (individually, a "Claim "; collectively,
"Claims "), which may arise from or in any manner relate (directly or indirectly) to
Tenant's occupation and use of the Premises, specifically including, without limitation,
any claim, liability, loss, or Damage arising by reason of:
(a) The death or injury of any Person or damage to personal property
caused or allegedly caused by the condition of the Premises or an act or omission of
Tenant or an agent, contractor, subcontractor, supplier, employee, servant, sublessee
or concessionaire of Tenant;
(b) Any work performed on the Premises or materials furnished to the
Premises at the request of Tenant or any agent or employee of Tenant, with the
exception of Maintenance performed by City; and /or
(c) Tenant's failure to perform any provision of this Lease or to comply
With any requirement of Law or any requirement imposed on the Premises by any duly
authorized governmental agency or political subdivision.
Tenant's obligations pursuant to this Subsection shall not extend to any Claim
proximately caused by the sole negligence, willful misconduct, or unlawful or fraudulent
conduct on the part of the indemnified Parties.
10.2 Exculpation of City. Except as otherwise expressly provided in this Lease,
City shall not be liable to Tenant for any damage to or loss of Tenant or Tenant's
property from any cause other than the sole negligence, intentional or willful acts of the
22 3,
Indemnified Parties. Except as otherwise expressly provided in this Lease, Tenant
waives all claims against the Indemnified Parties arising for any reason other than the
sole negligence, intentional or willful acts of the Indemnified Parties. City shall not be
liable to Tenant for any damage to the Premises, Tenant's property, Tenant's goodwill,
or Tenant's business income, caused in whole or in part by acts of nature including,
without limitation, waves, wind and ocean currents.
10.3 Insurance. In addition to insurance required of Tenant to be obtained,
provided, and maintained during the construction of the improvements, and without
limiting Tenant's indemnification of City, Tenant shall obtain, provide and maintain at its
own expense during the term of this Lease, a policy or policies of liability insurance of
the type and amounts described below and in a form satisfactory to City.
(a) Certificates of Insurance. Tenant shall provide certificates of
insurance with original endorsements to City as evidence of the insurance coverage
required herein. Insurance certificates must be approved by City's Risk Manager prior
to execution of this Lease by the City. Current certification of insurance shall be kept on
file with City at all times during the term of this Lease.
(b) Signature. A person authorized by the insurer to bind coverage on
its behalf shall sign certification of all required policies.
(c) Acceptable Insurers. All insurance policies shall be issued by an
insurance company currently authorized by the Insurance Commissioner to transact
business of insurance in the State of California, with an assigned policyholders' Rating
of A- (or higher) and Financial Size Category Class VII (or larger) in accordance with the
latest edition of Best's Key Rating Guide, unless otherwise approved by the City's Risk
Manager.
(d) Coverage Requirements.
I. Workers' Compensation Coverage. Tenant shall maintain
Workers' Compensation Insurance at statutory limits and Employer's Liability Insurance
23r
at One Million and 00/100 Dollars ($1,000,000.00) for his or her employees in
accordance with the laws of the State of California. Any notice of cancellation or non -
renewal of all Workers' Compensation policies must be received by City at least thirty
(30) calendar days (ten (10) calendar days written notice of non - payment of premium)
prior to such change. The insurer shall agree to waive all rights of subrogation against
City, its officers, agents, employees and volunteers for all losses that relate in any way
to this Lease;
ii. General Liability Coverage. Tenant shall maintain
commercial general liability insurance in an amount not less than Two Million and
00 /100 Dollars ($2,000,000.00) per occurrence for bodily injury, personal injury, and
property damage, including without limitation, contractual liability. If commercial general
liability insurance or other form with a general aggregate limit is used, either the general
aggregate limit shall apply separately to the work to be performed under this Lease, or
the general aggregate limit shall be at least twice the required occurrence limit;
iii. Automobile Liability Coverage. Tenant shall maintain.
automobile insurance covering bodily injury and property damage for all activities of the
Tenant arising out of or in connection with the services to be performed under this
Lease, including coverage for any owned, hired, non -owned or rented vehicles, in an
amount not less than Two Million Dollars and 00/100 Dollars ($2,000,000.00) combined
single limit for each occurrence;
iv. Fire and Extended Coverage. Tenant shall maintain fire and
extended coverage insurance, together with insurance against vandalism, theft and
malicious mischief, on the improvements and fixtures, alterations, trade fixtures, signs,
equipment, personal property and inventory on or upon the Premises from loss or
damage to the extent of their full replacement value; and
V. Tenant shall maintain loss of rent insurance insuring that the
Rent will be paid to City for a period up to six (6) months if the Premises are destroyed
24
or rendered unusable or inaccessible for commercial purposes by a risk insured under a
special form property coverage policy including vandalism and malicious mischief
endorsements.
(e) Endorsements. Each insurance policy shall be endorsed with the
following specific language:
i. The City, its elected or appointed officers, officials,
employees, agents and volunteers, and the State of California, its elected or appointed
officers, officials, employees, agents and volunteers, are to be covered as additional
insureds, with respect to liability arising out of work performed by or on behalf of the
Tenant;
ii. This policy shall be considered primary insurance as
respects to City, its elected or appointed officers, officials, employees, agents and
volunteers as respects to all claims, losses, or liability arising directly or indirectly from
the Tenant's operations or services provided to City. Any insurance maintained by City,
including any self- insured retention City may have, shall be considered excess
insurance only and not contributory with the insurance provided hereunder;
iii. This insurance shall act for each insured and additional
insured as though a separate policy had been written for each, except with respect to
the limits of liability of the insuring company;
iv. The insurer waives all rights of subrogation against City, its
elected or appointed officers, officials, employees, agents and volunteers;
V. Any failure to comply with reporting provisions of the policies
shall not affect coverage provided to City, its elected or appointed officers, officials,
employees, agents or volunteers; and
vi. The insurance provided by this policy shall not be
suspended, voided, canceled, or reduced in coverage or in limits, by either party except
25 3�
after thirty (30) calendar days (ten) (10) calendar days written notice of non - payment of
premium) written notice has been received by City.
(f) Timely Notice of Claims. Tenant shall give City prompt and timely
notice of claim made or suit instituted arising out of or resulting from Tenant's
performance under this Lease.
(g) Additional Insurance. Tenant shall also procure and maintain, at its
own cost and expense, any additional kinds of insurance, which in its own judgment
may be necessary for its proper protection and prosecution of the work.
(h) Subcontractors. In the event Tenant subcontracts, the contract
between Tenant and such subcontractor shall require the subcontractor to maintain the
same policies of insurance that Tenant is required to maintain pursuant to this Section.
11. DAMAGE OR DESTRUCTION OF PROJECT /PREMISES
11.1 Destruction of Premises. if the Premises are totally or partially destroyed,
rendering the Premises or any portion thereof totally or partially inaccessible or
unusable, Tenant shall restore the Premises to substantially the same condition as
immediately prior to such destruction (including all trade fixtures, personal property,
improvements and Alterations as are installed by Tenant, which shall be replaced by
Tenant at its expense). Tenant may elect to terminate this Lease by giving notice of
such election to City within sixty (60) days after the date of the occurrence of any
casualty if the cost of the restoration exceeds the amount of any available insurance
proceeds, if the damage has been caused by an uninsured casualty or event, or if
Tenant reasonably estimates that repairs of the Premises will take more than six (6)
months. Upon such termination, insurance proceeds applicable to reconstruction of the
Project (excluding Tenant's personal property therein) shall be paid to City and Tenant
shall have no further liability or obligations under this Lease.
26 i1
11.2 Replacement of Tenant's Property. In the event of damage or destruction
of improvements located on the Premises not giving rise to Tenant's option to terminate
this Lease, Tenant shall, at its own expense, replace and repair all Tenant's trade
fixtures, equipment, machinery, furnishings, furniture and inventory as soon as
reasonably possible to permit the prompt continuation of Tenant's business at the
Premises.
11.3 Destruction of Project. In the event that all or a portion of the Project is
damaged, and the Premises or a material portion becomes inaccessible or
commercially unusable, and the damage or destruction cannot reasonably be repaired
within twelve (12) months after the date of the casualty, City shall have the right to
either:
(a) Terminate this Lease by giving to Tenant written notice (which
notice shall be given, if at all, within thirty (30) calendar days following the date of the
casualty), in which case this Lease shall be terminated thirty (30) calendar days
following the date of the casualty; or
(b) Give Tenant written notice of City's intention to repair such damage
as soon as reasonably possible at City's expense, in which event this Lease shall
continue in full force and effect; however, Rent shall be abated in accordance with the
procedures set forth in Section 12. Tenant may terminate this Lease by giving City
written notice at any time prior to the commencement of repairs if City agrees to repair
the Project pursuant to this Section and fails to commence repairs within one hundred
twenty (120) calendar days after giving Tenant written notice of its intention to repair. In
such event, this Lease shall terminate as of the date of notice from Tenant to City, and
City shall have no liability under this Lease.
27 H 1
12. ABATEMENT OF RENT
12.1 General Rule. In the event of damage or destruction of the Premises or
Damage to the Project that impacts the Premises and this Lease is not terminated,
Tenant shall continue to utilize the Premises for the operation of its business to the
extent it may be practicable and commercially reasonable. Rent shall abate only in
proportion to the area of the Premises that is rendered unusable. The abatement of
Rent shall commence on the date that use of the Premises is impacted and continue
until the completion of those repairs necessary to restore full use of the Premises and
Tenant's re- opening of the Premises. Tenant's obligation to pay Taxes pursuant to this
Lease shall not be abated or reduced. Rent shall not abate if the damage or destruction
to the Premises is the result of the negligence or willful conduct of Tenant or its
employees, officers or agents. Tenant's right to abatement of Rent is contingent on
payment of insurance proceeds, if any, equal to the amount of Rent pursuant to
coverage required by Section 10.3.
12.2 Abatement/Maintenance. Tenant shall not be entitled to any abatement
of Rent for Maintenance that occurs during the Maintenance period.
13. PROHIBITION AGAINST VOLUNTARY ASSIGNMENT, SUBLETTING AND
ENCUMBERING
13.1 Prohibition of Assignment. City and Tenant acknowledge that City is
entering into this Lease in reliance upon the experience and abilities of Tenant and its
principals. Consequently, Tenant shall not voluntarily assign or encumber its interest in
this Lease or in the Premises, or sublease substantially all or any part of the Premises,
or allow any other person or entity (except Tenant's authorized representatives) to
occupy or use all or any part of the Premises without the prior written consent of City,
which shall not be unreasonably withheld. City's consent to any assignment, subletting
or other transfer is subject to Tenant providing City with evidence reasonably
28 4 )
satisfactory to City that the proposed transferee has financial strength and restaurant or
food service experience comparable to Tenant and the use of the Premises by the
proposed transferee is consistent with the terms of this Lease. Except as otherwise
expressly provided herein, any dissolution, merger, consolidation, reorganization of
Tenant, or the sale or other transfer resulting in a transfer of a controlling percentage of
the capital stock of Tenant, shall be deemed a voluntary assignment; provided,
however, that the sale or transfer of a controlling percentage of the capital stock of
Tenant pursuant to a public offering(s) of equity or debt instruments issued by Tenant,
or other transfers of publicly traded capital stock or debt instruments shall not constitute
a voluntary assignment and shall not require City's consent or approval. The phrase
"controlling percentage" means the ownership of, or the right to vote, stock possession
of at least fifty percent (50 %) of the total combined voting power of all classes of
Tenant's capital stock issued, outstanding, and entitled to vote for the election of
directors, except for ownership of publicly traded shares, warrants or similar equity
interests in Tenant traded on a national exchange or over - the - counter markets.
13.2 One -Time Transfer. Within 60 days after executing this Lease, Tenant
intends to transfer its interest in this Lease to a new business entity to be called: "Fuji
Grill, Inc. — CDM, LLP." This name change shall reflect the transfer of ownership of Fuji
Grill, Inc., from John J. Lee, who will have an initial one hundred percent (100 %)
ownership, to a partnership that will include an individual and /or company with relevant
and sufficient concessionaire experience. John J. Lee, as an individual, agrees to retain
at least fifty -one percent (51 %) ownership in the new. business entity that will hold the
interest in this Leasehold /Concession. City agrees to this one -time transfer so long as
John J. Lee provides the City with a personal guarantee of Eighty- Thousand Dollars.
($80,000.00), in a form acceptable to the City, and provided that the City is given final
approval of the proposed transferee, which approval will not be unreasonably withheld.
29 H 3
13.3 Exceptions. Notwithstanding the foregoing paragraphs or anything to the
contrary contained herein, City's consent shall not be required for an assignment or
subletting to an Affiliate, Subsidiary, or Successor of Tenant. For purposes hereof, an
"Affiliate ", a "Subsidiary", and a "Successor" of Tenant are defined as follows:
(a) an "Affiliate" is any corporation or other entity which directly or
indirectly controls or is controlled or is under common control with Tenant (for purposes
of this Section, "control" shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies, of such corporation or
other entity, whether through the ownership of voting securities or by contract or
otherwise);
(b) a "Subsidiary" shall mean any corporation or other entity not less
than twenty -five percent (25 %) of whose outstanding stock shall, at the time, be owned
directly or indirectly by Tenant and which is at least as creditworthy as Tenant; and
(c) a "Successor" shall mean a corporation or other entity in which or
with which Tenant is merged or consolidated, in accordance with applicable statutory
provisions for merger or consolidation of corporations or a corporation or other entity
acquiring a substantial portion of the property and assets of Tenant.
13.4 Continuing Effect. City's consent to any assignment, encumbrance, or
sublease shall not relieve Tenant from its obligations or liabilities under this Lease nor
act as a waiver of the requirement that such consent be obtained to any subsequent
assignment, encumbrance or sublease.
14. DEFAULT
14.1 Default by Tenant. The occurrence of any one or more of the following
events shall constitute a default and breach of this Lease by Tenant:
(a) The vacating or abandonment of the Premises by Tenant;
30 qN
(b) The failure by Tenant to make any payment of Rent or any other
payment required by this Lease, as and when due, when such failure shall continue for
a period of ten (10) calendar days after written notice of default from City to Tenant;
(c) Except as specified in Subsection 14.1(b), the failure of Tenant to
observe or perform any of the material covenants, conditions or provisions of this Lease
to be observed or performed by Tenant where such failure shall continue for a period of
thirty (30) calendar days after written notice thereof from City to Tenant; provided,
however, that if the nature of Tenant's default is such that more than thirty (30) calendar
days are reasonably required for its cure, then Tenant shall not be deemed to be in
default if Tenant commences such cure within said thirty (30) calendar day period and
thereafter diligently prosecutes such cure to completion;
(d) The making by Tenant of any general arrangement or assignment
for the benefit of creditors;
(e) Tenant becomes a "debtor" as defined in 11 U.S.C. Section 101 or
any successor statute thereto (unless, in the case of a petition filed against Tenant, the
same is dismissed within sixty (60) calendar days);
(f) The appointment of a trustee or receiver to take possession of
substantially all of Tenant's assets located at the Premises or of Tenant's interest in this
Lease, where such appointment is not discharged within sixty (60) calendar days; and
(g) The attachment, execution or the judicial seizure of substantially all
of Tenant's assets located at the Premises or of Tenant's interest in this Lease, where
such seizure is not discharged within sixty (60) calendar days.
14.2 Remedies.
(a) Cumulative Nature of Remedies. If any default by Tenant shall
continue without cure as required by this Lease, City shall have the remedies described
in this Section in addition to all other rights and remedies provided by law or equity, to
which City may resort cumulatively or in the alternative.
31 q5
(1) Reentry without Termination. City may reenter the
Premises, and, without terminating this Lease, re -let all or a portion of the Premises.
City may execute any leases made under this provision in City's name and shall be
entitled to all rents from the use, operation, or occupancy of the Premises. Tenant shall
nevertheless pay to City on the dates specified in this Lease the equivalent of all sums
required of Tenant under this Lease, plus City's expenses in conjunction with re- letting,
less the proceeds of any re- letting or atonement. No act by or on behalf of City under
this provision shall constitute a Termination of this Lease unless City gives Tenant
specific written notice of Termination.
(2) City may terminate this Lease by giving Tenant notice of
Termination. In the event City terminates this Lease, City may recover possession of
the Premises (which Tenant shall surrender and vacate upon demand) and remove all
Persons and property. City shall be entitled to recover the following as damages;
(A) The value of any unpaid Rent or other charges that
are unpaid at the time of Termination;
(B) The value of the Rent and other charges that would
have accrued after Termination less the amount of Rent and charges the City received
or could have received through the exercise of reasonable diligence as of the date of
the award;
(C) Any other amount necessary to reasonably
compensate City for the detriment proximately caused by Tenant's failure to perform its
obligations under this Lease; and
(D) At City's election, such other amounts in addition to or
in lieu of the foregoing as may be permitted from time -to -time by applicable California
law. City shall be entitled to interest at the rate of ten percent (10 %) per annum on all
Rent and other charges from the date due or the date they would have accrued. City
shall also be entitled to an award of the costs and expenses incurred by City in
32 H IJ
maintaining or preserving the Premises after default, preparing the Premises for re-
letting, or repairing any damage caused by the act or omission of Tenant.
(3) Use of Tenant's Personal Property. City may use Tenant's
personal property and trade fixtures located on the Premises or any of such property
and fixtures without compensation or liability to Tenant for use or damage. In the
alternative City may store the property and fixtures at the cost of Tenant. City shall not
operate the Concession in any manner tending to indicate that the Concession is
affiliated with, part of or operated in conjunction with Tenant's business.
(b) City's Right to Cure Tenant's Default. Upon continuance of any
material default beyond applicable notice and cure periods, City may, but is not
obligated to, cure the default at Tenant's cost. If City pays any money or performs any
act required of, but not paid or performed by, Tenant after notice, the payment and /or
the reasonable cost of performance shall be due as additional Rent not later than five
(5) calendar days after service of a written demand accompanied by supporting
documentation. No such payment or act shall constitute a waiver of default or of any
remedy for default or render City liable for any loss or damage resulting from
performance.
(c) Waiver of Rights. Tenant waives any right of redemption or relief
from forfeiture under California Code of Civil Procedure Sections 1174 or 1179, or under
any other present or future law, in the event Tenant is evicted or City takes possession
of the Premises by reason of any default by Tenant.
15. SUBJECT TO STATE OPERATING AGREEMENT
The Premises are located on property that is the subject of an Operating
Agreement from the State of California to the City. Tenant shall not take any action that
would cause the City to be in violation of any provisions of that Operating Agreement. If
the State of California terminates the Operating Agreement, this Lease shall terminate
33 N7
as a result and the Parties shall be released from all liabilities and obligations under this
Lease.
16. WASTE OR NUISANCE
Tenant shall not commit or permit the commission of any waste on the Premises.
Tenant shall not maintain, commit, or permit any nuisance as defined in Section 3479 of
the California Civil Code on the Premises. Tenant shall not use or permit the use of the
Premises for any unlawful purpose.
17. NO CONFLICTS OF USE, HAZARDOUS MATERIALS
City represents and warrants that, to the best of City's knowledge, (i) Tenant's
use of the Premises does not conflict with applicable Laws, and City knows of no reason
why Tenant would be unable to obtain all required permits, licenses and approvals from
the appropriate governmental authorities; (ii) the Project is not in violation of any
environmental laws, rules or regulations and Tenant's contemplated uses will not cause
any such violation; and (iii) the Project is free of any and all Hazardous Materials as of
the date of this Lease. In the event that the presence of any Hazardous Materials not
caused by Tenant is detected at the Project at any time during the Term of this Lease
and any Option Term all remedial work shall be performed by City at City's expense.
Tenant's obligation to open shall be delayed until the remedial work is completed if the
remedial work is performed prior to Tenant opening for business. Tenant's obligation to
pay Rent shall be abated in direct proportion to the extent Tenant is unable to conduct
its business upon the Premises as a result of any remedial work that is performed
subsequent to Tenant opening for business. Tenant shall have the right (but not the
obligation) to terminate this Lease, upon thirty (30) calendar days advance written
notice to City in the event that Hazardous Materials are detected at the Project and the
presence or the remediation materially affects Tenant's ability to conduct its business in
34 y I
the Premises. "Hazardous Materials" shall mean any oil, flammable explosives,
asbestos, urea formaldehyde, radioactive materials or waste, or other hazardous, toxic,
contaminated or polluting materials, substances or wastes, including, without limitation,
any "hazardous substances ", "hazardous wastes', "hazardous materials" or "toxic
substances" under applicable federal, state and local laws, ordinances and regulations.
18. CITY'S DEFAULTS /TENANT'S REMEDIES
City shall be in default if it fails to perform, or commence performance if the
obligation requires more than ten (10) calendar days to complete, any material
obligation within ten (10) calendar days after receipt of written notice by Tenant to City
specifying the nature of such default. City shall also be in default if it commences
performance within ten (10) calendar days but fails to diligently complete performance.
In the event of City's default, Tenant may:
(a) Upon five (5) calendar days notice to City, cure any such default,
and City shall reimburse Tenant the amount of all costs and expenses incurred by
Tenant in curing the default, together with interest and expenses at the maximum rate
then allowed by law; or
(b) Terminate this Lease if City's default materially interferes with
Tenant's use of the Premises for its intended purpose and City fails to cure such default
within ten (10) calendar days after a second demand by Tenant in which case Tenant
shalt have no further or continuing obligations.
19. NOTICES
Any notice, demand, request, consent, approval or communication that either
party desires or is required to give shall be in writing and shall be deemed given three
(3) calendar days after deposit into the United States registered mail, postage prepaid,
by registered or certified mail, return receipt requested. Unless notice of a different
35 k�
address has been given in accordance with this Section, all notices shall be addressed
as follows:
If to City, to: CITY OF NEWPORT BEACH
Attention: City Manager
3300 Newport Boulevard
Newport Beach, CA 92658
(949) 644 -3000
If to Tenant, to: Fuji Grill, Inc.
Attention: John J. Lee
1515 W. Chapman
Orange, California 92868
20. GENERAL PROVISIONS
20.1 Independent Contractor. It is understood that Tenant is an independent
contractor and not an agent or employee of City. Nothing in this Lease shall be deemed
to constitute approval for Tenant or any of Tenant's employees or agents, to be the
agents or employees of City. City shall have no interest in the business of Tenant.
20.2 Surrender of Premises. At the Expiration or earlier Termination of this
Lease, Tenant shall surrender to City the possession of the Premises. Tenant shall
leave the surrendered Premises, required personal property and fixtures, in good and
broom -clean condition, reasonable wear and tear excepted. All property that Tenant is
not required to surrender, but that Tenant does abandon shall, at City's election,
become City's property at Expiration or Termination.
20.3 Compliance With All Laws. Tenant shall at its own cost and expense
comply with all statutes, ordinances, regulations and requirements of all governmental
entities, including federal, state, county or municipal, whether now in force or hereinafter
enacted. In addition, all work prepared by Tenant shall conform to applicable City,
county, state and federal laws, rules, regulations and permit requirements and be
subject to approval of the City Manager and the City.
20.4 Waivers. The waiver by either party of any breach or violation of any term,
covenant or condition of this Lease, or of any ordinance, law or regulation, shall not be
36 50
deemed to be a waiver of any other term; covenant, condition, ordinance, law or
regulation, or of any subsequent breach or violation of the same or other term,
covenant, condition, ordinance, law or regulation. The subsequent acceptance by either
party of any fee, performance, or other consideration which may become due or owing
under this Lease, shall not be deemed to be a waiver of any preceding breach or
violation by the other party of any term, condition, covenant of this Lease or any
applicable law, ordinance or regulation.
20.5 Severability. If any term or portion of this Lease is held to be invalid,
illegal, or otherwise unenforceable by a court of competent jurisdiction, the remaining
provisions of this Lease shall continue in full force and effect.
20.6 Applicable Law. This Lease shall be construed in accordance with the
laws of the State of California in effect at the time of the execution of this Lease. Any
action brought relating to this Lease shall be adjudicated in a court of competent
jurisdiction in the County of Orange.
20.7 Entire Agreement; Amendments.
(a) The terms and conditions of this Lease, all exhibits attached, and
all documents expressly incorporated by reference, represent the entire agreement of
the parties with respect to the subject matter of this Lease.
(b) This Lease shall supersede any and all prior agreements, oral or
written, regarding the subject matter between Tenant and City.
(c) No other agreement, promise or statement, written or oral, relating
to the subject matter of this Lease, shall be valid or binding, except by way of a written
amendment to this Lease.
(d) The terms and conditions of this Lease shall not be altered or
modified except by a written amendment to this Lease signed by Tenant and City.
(e) If any conflicts arise between the terms and conditions of this
Lease, and the terms and conditions of the attached exhibits or the documents
37 5,
expressly incorporated by reference, the terms and conditions of this Lease shall
control.
(f) Any obligation of the parties relating to monies owed, as well as
those provisions relating to limitations on liability and actions, shall survive termination
or expiration of this Lease.
(g) Each party has relied on its own inspection of the Premises and
examination of this Lease, the counsel of its own advisors, and the warranties,
representations, and covenants in this Lease. The failure or refusal of either party to
inspect the Premises, to read this Lease or other documents, or to obtain legal or other
advice relevant to this transaction constitutes a waiver of any objection, contention, or
claim that might have been based on such reading, inspection, or advice.
20.8 Time Is Of The Essence. Time is of the essence for this Lease.
20.9 Successors. Subject to the provisions of this Lease on assignment and
subletting, each and all of the covenants and conditions of this Lease shall be binding
on and shall inure to the benefit of the heirs, successors, executors, administrators,
assigns, and personal representatives of the respective parties.
20.10 Interpretation. The terms of this Lease shall be construed in accordance
with the meaning of the language used and shall not be construed for or against either
party by reason of the authorship of this Lease or any other rule of construction which
might otherwise apply.
20.11 Brokers. Each party warrants to and for the benefit of the other than it has
had no dealings with any real estate broker or other agent (attomeys excepted) in
connection with the negotiation or making of this Lease.
20.12 Table of Contents: Headings. The table of contents of this Lease and the
captions of the various sections of this Lease are for convenience and ease of reference
38 `5;'
only and do not define, limit; augment: or describe the scope, content, or intent of this
Lease.
20.13 Gender: Number. The neuter gender includes the feminine and
masculine, the masculine includes the feminine and neuter, and the feminine includes
the neuter, and each includes corporation, partnership, or other legal entity whenever
the context requires. The singular number includes the plural whenever the context so
requires.
20.14 Exhibits. All exhibits to which reference is made in this Lease are
incorporated by reference. Any reference to "this Lease" includes matters incorporated
by reference.
20.15 City Business License. Tenant shall obtain and maintain during the
duration of this Lease, a City business license as required by the Newport Beach
Municipal Code.
20.16 Costs and Attorneys Fees. The prevailing party in any action brought to
enforce the terms and conditions of this Lease, or arising out of the performance of this
Lease, shall not be entitled to recover its attorneys' fees.
[Signature page Follows]
39 �3
IN WITNESS WHEREOF, the parties hereto have executed 'this Lease as of the date
first written above.
ATl
City Clerk
APPRO/nV� AS TO FORM:
By:
Robin Clauson,
City Attorney
CITY OF N}fJPORTACH ( "City "),
a Munici i Corporation
0
Edward D. Selich
Mayor of Newport Beach
FUJI GRILL, INC. ( "Tenant'),
By:
JohCA. Lee,
President
By:
Fin cialOfficer
Attachments: Exhibit A — Location of Premises
Exhibit B — Proposed Menu and Sale Merchandise
F: users /CAT /Shared /AG /Lease Agreements /FujiGriII03- 26- 08clean.doc
40 5q
v
.3000
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to
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Concession Stand Leasing Area
N
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S.
0 40 80
Exhibit
Feet X
3 30 go alt
I 31v,
029 Oceart 310
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If
to
--It I tfld-p
Concession Stand Leasing Area
N
W
S.
0 40 80
Exhibit
Feet X
3 30 go alt
I 31v,
029 Oceart 310
FUJI GRILL -at the beach-CDM MENU 03-24-08 1:00PM
WEE _ICED C0
27 feed Coffee
28 Iced Tea
$7.50
t�i.00
$6.95
$7.50
?
1 $ 2.00 2.50
C0 Smoothie (Blueber 4.50
or Wild Cherry)
!Ii Sods $ 1-25 _j$ --i-5
Non Fat FrozmYop_q Llun or Flavored•) 1.00 L$ 5-
Rotating Flavors: Green Teo Blueberry,.! tPvwberq
_34-
LSKLAKFA31-Until 1U:UUaM
20
I
Breakfast Burrito with eg2s, salsa, cheese and h3con
- $5.53
21
Dar or li�
$no
Grilled Salmon Bento
23
$2.75
4
md basandwich on a bun
$5.50
.._Egg
5
Fresh fruit bowl
$4.50
'ii
Fat free yogurt with fruit
$5.50
Fruit
7
Angus beef hamburger-_
$5.50
8-
Cheeseburger$5.75
9
Chili cheeseburger
$6-25
TO
_Chili
sandwich
$5.50
- --
1
wrap (tur��bacon, cheese, tomato, lettuce and spicy nt o wrappedin a flour tortilla)
- __. ay
$6.50
$
_Club
rn�yo, a�d
Southwest fish wrap (fish MM tomato
$6.25
13
_Eh�tle
Chicken fingers, ranch dressing and fries
$6.95
iT
Nachos with chili, cheese and jalaken
$5.25
TS�
All Beef Hot Dog
$3.75
16 : :Cajun
spiced hot link sausage
$4.25
17-
Fried shrimp with sweet Thai sauce and fries
$9.50
WEE _ICED C0
27 feed Coffee
28 Iced Tea
$7.50
t�i.00
$6.95
$7.50
?
1 $ 2.00 2.50
C0 Smoothie (Blueber 4.50
or Wild Cherry)
!Ii Sods $ 1-25 _j$ --i-5
Non Fat FrozmYop_q Llun or Flavored•) 1.00 L$ 5-
Rotating Flavors: Green Teo Blueberry,.! tPvwberq
_34-
Chicken fingers
20
Cotn
35
-dog
Kids plates we serwd wlthfrui
21
Chicken Teriyaki Bento
22
Grilled Salmon Bento
23
Tokyo Steak Bento
Y4-,
Svicv Tuna Salad
WEE _ICED C0
27 feed Coffee
28 Iced Tea
$7.50
t�i.00
$6.95
$7.50
?
1 $ 2.00 2.50
C0 Smoothie (Blueber 4.50
or Wild Cherry)
!Ii Sods $ 1-25 _j$ --i-5
Non Fat FrozmYop_q Llun or Flavored•) 1.00 L$ 5-
Rotating Flavors: Green Teo Blueberry,.! tPvwberq
_34-
Onion nngs
3.00 1
35
Cu Rf4i]i
$ 3. DO I
36
Chili Fries-
$ 4.50
37
Scoop of tuna-
$ -5.00
Add bacon to a Burger or Sandwich
T 5
........
39 I.
Fruit
2.50 i
40
Jalapenos
$ 125 1
Beach Chairs
1$
3.00 $ 5.DO $ 8.00
f$
Boogie Boards
00 1500 $ 20.00
$
3.00 i $ 5.00 $ 8.00
5b
FXHIBIT B
EXHIBIT "B"
First Amendment — September 18, 2008
M
y�
Exhibit B
September 18, 2008
Mr. John J. Lee, President
Fuji Grill at the Beach
3029 Ocean Boulevard
Corona del Mar, California 92625
VIA E -MAIL AND US POSTAL SERVICE
4e: Agreement by and between The City of Newport Beach ( "City ") and Fuji Grill,
Inc., a California corporation ( "Tenant"), dated April 4, 2008 ( "Agreement ") —
Parking at the CdM lot
Dear Mr, Lee:
The terms of this letter shall replace Section 5.15 of the Agreement.
Section 5.15 Parking.
City intends to implement a new parking program at Corona del Mar State Beach in which a
daily rate shall be imposed from Memorial Day through Labor Day, and an hourly rate from
the day after Labor Day through the Friday before Memorial Day. If an hourly parking rate
program is not in place by September 8, 2008, then City and Tenant shall participate in the
following parking program:
From September 8 through May 22, City shall provide the sixteen (16) designated parking
spaces, as indicated on the attachment, for Tenant's customers. Tenant's customers may
park at such designated parking spaces without charge for two (2) hours.
As Tenant's customers enter the Corona del Mar parking lot, the parking attendant shall
provide the driver with a two -part ticket. The customer shall be instructed to leave one part
of the ticket on the dashboard and provide one part to Tenant.
City may, at City's option, provide enforcement for the parking spaces.
City and Tenant agree to meet in 2009 to discuss the efficacy of this parking program. The
program shall terminate in its entirety upon City's implementation of the hourly parking rate
program at Corona del Mar State Beach.
5�
September 18, 2008
Page 2
City or Tenant have the mutual option to terminate this Section 5.15 and return to the original
parking refund/credit program as described in the original Section 5.15 of the Agreement.
If the above-described program meets with your approval, please counter-sign this letter and
return to my attention.
Sincerely yours,
Davii'kiff
Assistant City Manager for the City of Newport Beach
o n L &e. P-es
Fuji Grill at the Beach
cc: Glen Everroad
Heather Flaherty
Dave Kiff
Chris Miller
Mike Pisani
Lois Thompson
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EXHIBIT "C"
Second Amendment — February 3, 2009
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Exhibit C
February 3, 2009
Mr. John J. Lee
President
Fui Grill at the Beach
3029 Ocean Boulevard
Corona del Mar. California 92625
VIA E -MAIL AND US POSTAL SERVICE
Re: Agreement by and between The City of Newport Beach ( "City ") and Fuji Grill,
Inc., a California corporation ( "Tenant "), dated April 4, 2008 ( "Agreement ") —
Permission to use Patio Premises
Dear Mr. Lee:
in exchange for providing a benefit to the public with expanded services, the City hereby
permits Tenant ( "Letter Agreement ") to use the area shown on Exhibit "A" ( "Patio Premises ")
attached hereto, as a dining area for its patrons. Tenant may enclose the area with
temporary removable materials such as plastic and canvas, install no more than four (4)
infrared heaters in the Patio Premises, and provide removable dining tables and chairs in
that area.
Tenant has provided proof of insurance for the Patio- Premises, attached hereto as Exhibit
"B ". Such insurance must be in full force and effect throughout the term of Tenant's use of
the Patio Premises. The termination or lapse of such insurance shall immediately and
automatically, without any required notice from City, terminate this Letter Agreement.
Tenant understands and agrees that although City intends to move the stingray victim
treatment center to another area, the stingray victim treatment center is currently located at
the Patio Premises. Tenant, therefore, agrees that City may, at any time, suspend Tenant's
use of the Patio Premises in order to treat stingray victims. City may also, at any time,
permanently terminate Tenant's use of the Patio Premises pursuant to this Letter
Agreement, at City's sole discretion, with or without cause.
Tenant's use of the Patio Premises shall commence upon Tenant's counter- signature of this
letter below, and shall terminate upon the earlier of the termination of the Agreement,
termination or lapse of Tenant's insurance, or City's termination of Tenant's use as
described above. Upon termination, Tenant shall remove all furniture and materials added
to the Patio Premises and restore the Patio Premises to its original condition at no cost to
the City.
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Febri�,12
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if 7enan' agrees to ve please ccl-lnte—sio-i t..is lettel, and rt'ff-I to my
�e mun « zan-, YC
since—rA ycum
Dave Kiff
Assistait 11"Ay Mana,-,e,, for the
City of Newport Beach
Fuji G.rli at the Beach
c, M yn c B a a u c h a m P
Glen Eve.-rcad
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Exhibit"A'
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L ^'Il LWa V:: U "v�M .•RVtlPhW 11:6 IROURflNLC :CFVI.CO (1: CEI 100 YuJ4 Y. Y'.L /YY5 I
I AcORD, CERTIFICATE OF LIABILITY INSURANCE � 5,23/200II" �
3460 WILSHIRE BLVD., *1200
LOS ANGELES, CA 9441 D
Fax 1213I487 -2175
FUJI GR!LL AT THE BEACH
15 t S W. CHAPMAN AVENUE:
CA
CERTIFICATE IS ISSUED AS A MATTER OF RiFORIMTION
Y AND CONFERS NO PIGKT73 UPON THE CER- IFICATF
DER. THIS CERTIFICATE WES NOT AMEND, EXTEND OR
_R THE COVERAGE AFFORDED BY THE POUlar$ 9ELOW- _ „__
INSURERS AFFORDING COVERAGE
THE POLICIES OF INSURANCE LISTEO BELOW HAVE BEEN ISSUED TO THE INSURED NAMED ABOVE FOR THE POLICY PEROD INDIGATEO. NGTWPH`TANDING
ANY REQUIREMENT, TERM OR GCNDMOA OF ANY CONTRACT OR OTHER DOCUMENT YJI'.H R: -SPELT TO WHIUH THIS CERTIF'.CATE MAY EE ISSUED OR
MAY PERTAIN, THE INSURANCE AFFORDED BY THE POLICIES DESCRIBED HEREIN IS SUBJECT TO ALL THE - ERAIS. EXCLLIMNS AND CONDITIONS OF SUCH
POLICIES. AGGREGATE LINBTS SHONN MAY HAVE BEEN REDUCED BY PAID MAIMS.
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LTR TYPEOPINSURANCF ' POLICY NUMB” LV.TEI MIODTYJa YE tNMIbA oN
G:SRS
GpjEO °� ilAglyRy
EACH. 000U(WCNCE `e I �OO,000
- X C.dERCIAL GENERAL!IA&! OY
PIPE DAMAGE (Arty 's6lte) L !00,000
cum MAM OJC4R .
M 9 UP (Amy mw lxx 7 5 s,OOa
A C :'00109168 6j S/2008 6/15/2009
PERsoNALBADVTJJRY Is 1000,000;
GCHERAL ACGREGA L flOO; QOQa j
-GENV AGCAEGATE 4167Nf AFPIGS PD2
- PROOUOTS•CCi!PIpP AGC I i I.00D,ODO
POL I_Y P RO. LC4
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AUTOMOBILE
11A6411Y I
COMSIkEO SINGLE LAST i
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ALLDWNEC N.T05 1
i BOGEY INJURYR 5
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'BCMCCULEO AU703
`rar per:Pnl
Y.IFK„' AUTOS
BODILY iN VRY
N0.bD',YNEP AUTOS �
(Pa-acdtlerl)
PROPERTY PASAAGE S
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GARAGELiABCriV (
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AUTO ONLY• EA ACCDENT .i
-..., ANY AUTO I
OTYFA THAN EAACC S
Imo_ I I
AUTO ONLY:
I!IX'CIESS LLeeILiTY
EACIk OCCIitRENCES I,QOL',UOO
C IAN S MAC:
) AGGRECAYE 1,000_000
B EBU4613063
6/ t 5,2008
6/15/2009
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DBDt3CVIB:e
i III
RETEN]IDN 5
WORKERS DDMPENSATIDN ANC �!
X do 11 RM 5 1 _
ErePLDYE1tS'LaASaJTY
EL EACH ACCIDENT S 1,000,000
C i - I WEN0046493 -01
5/15/2008
6/15/2009
q
I,(JOD,OOD
EL DISEASE -EA 9 OYE 3
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E.L. 0I5EASE- P.4icY LOUT 1 i 1,040,000
OR1ER -�
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DESCR(P77ON OFOPERAFffiNSrLOCk `fRCN^GM1rEHIC1E.4rCXGLLfSKN.'S AWED BY E PCRSEM91617SKWL PROVI6WIR
THE CITY, ITS ELECTED OR APPOINTED OFFICERS, OFFICIALS, EMPLOYEES, AGENTS AND VOLUNTEERS, AND E
1'EH STAIE OF CALIFORNIA, ITS CUCCrtE) OR APPOINTEE) OFFICERS, OFFICIALS, EMPLOYEES, AGENTS AND
VOLUNTEERS, ARE TO BE COVERED AS ADDITIONAL INSUREDS, WITH RESPECT TO LIABILITY
ARISING OUT OF
WORK PERFORMED BY OR ON BEHALF OF THE TENANT.
C17Y OF NEWPORT BEACH nave TNEREDF, me rxRANE MrsuRER rnLL RwPEAVDR TD rasa. 30 DAYS WRr n
NCflCETQ'"r@ CFFTSDATE HOLO93 WtMEC TD 7kE lEi£, PVT FAp.URF TO CO FO SMALL
3300 NEWPORT BEACH BLVD. RDGSE MO OBLIGATION OR €IABILFi , OF ANY KIND BPON THE INSURER RE A='KTa M
�PREBENTATIY6.
NEWPORT BEACH CA 92658 -8915 A�O REPRFSP�r'TAYIVE
ACORD 2$-S (7197) 3 ACORO CORPORATION 1888
LSE.. I.PSN V1.9.0 aR WbC6 -15:ar DE) LPW YO.S.6 m (Lrz]rI9 - OS :S) t, UWNi
This fax was received by FAX -CNB on Line 2 from 2134877188
S
From 713487TH, _.yam "i!4 ^Nlnnrgli 4932 "N --
rFUM-p'.Jtirt'IiiJURlUPI.f JCRV: G:J CtJ eCr II:C r-a.< -.vYJ /V44 r`4rr
Kos €ar Insurance & Financial Services, Inc
3460 Wilshire Blvd., #1200
Los Angeles, CA 900I0
Tel: 213- 487 -4800
Fax: 213- 487 -21.1-5
December 30, 2008
From,; Kosras Insurance & Financial Services, Inc
3460 Wilshire Blvd,, #1200
Los Angeles, CA 90010
To: City of Newport Beach
3300 Newport Beach. Blvd.
NewWn Beach, CA 92558 -8915
Re: Fuji Cell Carona Del Mar L LC
DBA: Fuji Gill At The Beach
Policy #: CP00109168
To wham it lnay concern,
Please be advised that the patio area of Fuji Grill Corona Del Mar LLC, (DBA: Fuji Grill
At The Beach) has coverage under Acceptance Indemnity Company - policy #
CP00109168.
S' y
K .es M Ain Jal SenAiws. Inc.
1
`his fax was received by FAX -CN8 on Line 2 from 2134877188
61
_ _ _ From- _2M S72L8a Gaga 414 "'��_ oti ,2Cu9.i ?.nfi �� �o= --.._..---------
TCb'fi',Cu- 779T +- rm...X.5IXR 414
THIS ENDORSEMENT CHANGES THE POLICY_ PLEASE READ IT CAREFULLY,
CG 2012 07 96
ADDITIONAL INSURED _ STATE OR P®LrTICAL SUBDIVISIONS - PERMITS
This enclo.•someni modifies Insurance provided under the following:
COMMERCIAL GENERAL LIABUTY COVERAGE PART
This endorsement alnemgas the policy effective on the Inception date of the policy unless another date is indicated
brJovj.
Endorsement eiiectvta
Potty No-
0 6 / i -5 / 2 :) 0 a 12:01 A.N. standardthrte
Cro0109Z66
Named Insured
Countetsagned by
FUJI GULL rOROPiA DEL MH F
D8A: FUJI 6HILL AT WE B AL
SCHEDULE
State Or Political SubdtvisEon:
CITY OF NEWPORT BEACH.
3300 NEWPORT BEACH BLVD_
XEWPORT BEACH, CA 92659 -8915
IAlj'Jmrized PlailMantativaj
(If no entry appears above Information required to complete this endorsement WEI be shown in the Declarations as
applicable to this endorsement)
Section fI - Who is Art Insured Is amended to in dude as an insured any state or political subdivision shown In the
8chsdutte> subject to the fallowing provisions:
1, This insurance applies only with respect to openxrions pettomied by yoiss or on your behalf fcr which the state or
politfe4€ suhdivi�.ion has Issued a permit.
2. This Insurance does not apply to:
a. "Bodily injure, `property damage" or "personaf and advertlsir g Injury' arising out of opermlons performed
for the state cr municipality, or
b. 'Bodily injury or "property damage" Included within the " products- wmpletad oparattons tazard".
CL Vd (7-M)
CS 2012d798 DcWghi, inwranm Servioee (YBIm, Inc, W Prge 1 of t
GENT
This fax was received by FAX -CN8 on mine 2 from 2134877188
i
EXHIBIT "D"
Depiction of Patio Premises
9�
PLANTING
I BOX
0�1
8'
Exhibit D
45x9523
11 -01 -06
JOHN J. 1_EE
V
EXISTING
SEAT WALL
PREh19ES
MARINE
LIFE
REFU C3 E
SUPERVISO
GRII —I_ —AT
B E A C H
LIFEGUARD OFFICE
& STORAGE
PLANTING
BOX
4/
ti
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+ c
c. z� F✓i
45x9523
11 -01 -06
JOHN J. 1_EE
V
EXISTING
SEAT WALL
PREh19ES
MARINE
LIFE
REFU C3 E
SUPERVISO
GRII —I_ —AT
B E A C H
LIFEGUARD OFFICE
& STORAGE
PLANTING
BOX
4/