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HomeMy WebLinkAbout14 - Corona del Mar State Beach ConcessionCITY OF NEWPORT BEACH CITY COUNCIL STAFF REPORT Agenda Item No. 14 January 22, 2008 TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL FROM: City Manager's Office Dave Kiff, Assistant City Manager 949 -644 -3002 DKifftity. newport- beach. ca. us Revenue Division, Administrative Services Evelyn Tseng, Income Contract Administrator 949 -644 -3153 ETseng(cDcitv.newport- beach.ca. us SUBJECT: Award of Concession at Corona del Mar State Beach ISSUE: Who should be selected as the next food, beverage, and beach goods concessionaire at Corona del Mar State Beach? RECOMMENDATIONS: 1) Select Fuji Grill, Inc. as the next concessionaire at CDM State Beach based on the proposal submitted by John Lee in response to City's Request for Proposals for the CDM concessionaire dated August 31, 2007. 2) Authorize the Mayor and City Clerk to execute a Concession Agreement based on the terms attached to this report. DISCUSSION: Background: From November 1991 through September 2005, Kilmer Enterprises managed the Corona del Mar State Beach concession. During that time, Kilmer Enterprises paid 45% of its monthly gross receipts for rent. In the last calendar year of its operation, 2004, Kilmer Enterprises paid $100,420.00 to the City. In September 2005, the concession agreement with Kilmer Enterprises was terminated in order to commence construction of the Corona del Mar Beachgoer Amenities Improvement Project (the "Project "). The Project included 1043 square feet for a concession facility. The Project opened in summer 2006 without a concessionaire. Award of CDM Concession January 22, 2008 Page 2 Council Policy F -7 requires the City to "seek revenue equivalent to the open market value of the highest and best use; and, whenever possible the City shall conduct an open bid or proposal process to insure the highest financial return" in negotiations regarding the lease of non- residential income property. Process. On October 27, 2005, the City issued a Request for Proposals for the concession operations at Corona del Mar State Beach. After careful review, City staff recommended, and City Council selected, Kilmer Enterprises to be the concessionaire. Unfortunately, an agreement could not be reached. On April 16, 2007, the City issued another Request for Proposals. At that time, City staff recommended Rudy's Pub and Grill to be the concessionaire, but City Council rejected staffs recommendation based on Rudy's request for a liquor license. On August 31, 2007, City issued its third Request for Proposals. Recommendation. The City received several proposals to its most recent RFP. Fuji Grill, Inc. , which is an established business in Newport Beach and has franchises throughout Orange County, provided the most favorable response based on rent, menu, references and experience. CdM Subcommitee Recommendations. On January 3, 2008, Steve Rosansky and Nancy Gardner met with staff to discuss Fuji Grill's proposal. Mr. Rosansky requested that John Lee, the principle owner of Fuji Grill, Inc. provide a personal guarantee. Ms. Gardner wanted to ensure that the outdoor dining furniture would not impede pedestrian flow, particularly during the summer months, and wanted to make sure the concession would only provide take -out — that there would be no table service. Mr. Lee agreed, later, to these terms. There was also some discussion about a parking program at CdM State Beach that would help the Tenant's customers defray the cost of parking at CdM. The subcommittee and John Lee agreed upon the program below. Proposed Terms of Agreement If the Council approves this item, it would also authorize the Mayor to enter into a contract based substantially on the provisions of.the Lease Agreement attached to the August 31 RFP and the following negotiated terms: TERM: 5 years, with two 5 -year extensions; RENT: The greater of $80,000 /year, as adjusted annually by CPI, or 15% of gross sales, whichever is greater; RENT COMMENCEMENT: Rent Commencement Date will be the earlier of Memorial Day or 3 months after the execution of the agreement; TENANT IMPROVEMENTS: Fuji Grill shall install all required fixtures and improvements, as may be required by the County Health Code and/or City regulations. Fuji Grill shall receive a rent credit for the lesser of the first 12 months rent (base and percentage) from the Rent Commencement Date, or the cost of the Tenant Improvements. Z Award of CDM Concession January 22, 2008 Page 3 City shall own the improvements upon the termination of the Agreement; EXCLUSIVE CONCESSION: City shall not enter into another agreement for concessions or beach rentals with another entity at CdM State Beach for the term of this agreement; OUTDOOR DINING: Fuji Grill shall be permitted to provide a maximum of 12 small tables and 24 chairs outside. Tenant may rearrange dining tables and chairs depending on weather and customer demand, so long as the number of chairs do not exceed 24, and the location of the tables and chairs are on the concrete pad and do not impede pedestrian flow, PARKING: From October through May, excepting Memorial Day weekend, City shall refund the parking fee to any driver who parks at the CdM parking lot for two hours or less and provides evidence that he/she has made a minimum $5.00 purchase at the concession. This parking refund program shall terminate if and when City implements hourly or metered parking at the CdM parking lot. City shall provide signage indicating Where driver should pull over in order to show proof of purchase and receive the refund. City and Tenant shall renegotiate this provision at the 1'` anniversary of the agreement; EMPLOYEE PARKING: City shall provide 8 Annual Blue Pole Parking Permits for Tenants employee parking. City shall not set aside designated parking spaces for Tenant's employees; INSURANCE: Tenant must provide insurance as required by the Request for Proposal, and as approved by the City's Risk Manager, HOURS OF OPERATION: (a) Daily from Memorial Day through Labor Day: 7:00 a.m. through 8:30 p.m., all sales and rentals to cease at 7:30 p.m. (b) From the day after Labor Day to the day before Memorial Day: Weekend days (Saturday and Sunday) - 7:00 a.m. through dusk Week days (Monday through Friday) — Hours at Tenant's discretion, but no earlier than 7:00 a.m. and no later than dusk; and ENVIRONMENTAL PROTECTION: Tenant must use food packaging consistent with good environmental practices, including prohibiting Styrofoam from the premises, minimizing the use of PVC plastics, and providing both trash receptacles and places for customers to dispose of recyclable products. 3 Prepared by: RaWkv-WINA Submitted by: SIGNATURE Award of CDM Concession January 22, 2008 Page 4 Evely Tseng, I Contract Administrator Da <iff, Assistant ity Manager Attachments: Request for Proposals, dated August 31, 2007 CITY OF NEWPORT BEACH REQUEST FOR PROPOSALS Concession Operations and Tenant Improvements at Corona del Mar State Beach Deadline for Proposals August 31, 2007, at 4:00 PM Informational Meeting City Council Conference.Room City Hall 3300 Newport Blvd. Newport Beach, CA 92658 Monday, August 20, 2007 11:00 a.m. 5 REQUEST FOR PROPOSALS ( "RFP ") Concession Operations and Tenant Improvements at Corona del Mar State Beach The City of Newport Beach ( "City ") is soliciting proposals to identify individuals and /or businesses qualified to operate and manage a renovated concession located at Corona del Mar State Beach ( "CDM State Beach ") (See Exhibit "A "). CDM State Beach is part of the California State Parks system, but is managed and operated by the City. The City had previously issued two RFPs for this location, but was unable to come to an agreement with the proposers. This RFP is designed for those interested in entering into a contractual relationship with the City ( "Concession Lease Agreement ") in substantially the form attached as Exhibit "B" to lease the City- managed concession facility. I. RFP TERMS AND CONDITIONS A. This RFP does not commit the City to award a contract. No other party, including any applicant, is intended to be granted any rights hereunder. Proposals which, in the sole discretion of the City, do not meet the minimum requirements, including without limitation the minimum proposal submission requirements, will not be reviewed. This RFP and the process it describes are proprietary to the City and are for the sole and exclusive benefit of the City. Any response, including written documents and verbal communication by any applicant to this RFP, will become the property of the City, and if required by law may be subject to public disclosure by the City or any authorized agent of the City. The City is not liable for any costs associated with the development, preparation, transmittal or presentation of any proposal or materials submitted in response to this RFP. B. It shall be the applicant's responsibility to review and verify the completeness of its proposal. The City may request additional or clarifying information or more detailed information from any applicant at any time, including information inadvertently omitted by an applicant. The City may request to inspect properties or contact clients referenced in the applicant's proposal. The City also reserves the right to conduct investigations with respect to the qualifications of an applicant. C. Verbal communication made by any City employee or agent of the City with respect to this RFP is not binding and shall not in any way be considered as a commitment by the City. Only G written responses to questions submitted in writing to the City or written addenda to this RFP issued by the City may be relied upon. D. City employees and officials are prohibited from responding to this RFP or being a party, direct or indirect, to any contract resulting from the RFP, and no proposal shall be accepted from, or contract awarded to, any City employee or official who submits a proposal or solicits any contract in which he or she may have any direct or indirect interest. No applicant may submit more than one proposal pursuant to this RFP. Entities that are legally related to each other or to a common entity may not submit separate proposals. Any proposal may be rejected because it, in the City's sole judgment, violates these conditions or the spirit of these conditions. E. The City reserves and may exercise the following rights and options with respect to evaluation of proposals and selection for negotiation: To reject any and all proposals and re -issue the RFP at any time prior to execution of a final contract if, in the City's sole discretion, it is in the City's best interest to do so; ii. To supplement, amend, substitute or otherwise modify this RFP at any time prior to selection of one or more applicants for negotiation and to cancel this RFP with or without issuing another RFP; iii. To accept or reject any or all of the items in any proposal and award the contract in whole or in part if it is deemed in the City's best interest to do so; iv. To reject the proposal of an applicant that, in the City's sole judgment, has been delinquent or unfaithful in the performance of any contract with the City or other government entity, is financially or technically incapable or is otherwise not a responsible applicant; V. To reject as informal or non - responsive any proposal which, in the City's sole judgment, is incomplete, is not in conformity with applicable law, is conditioned in any way, deviates from this RFP or contains erasures, ambiguities, alterations, or items of work not called for by this RFP; vi. To waive any informality, defect, non - responsiveness and /or deviation from this RFP that is not, in the City's sole judgment, material to the proposal; vii. To permit or reject, at the City's sole discretion, amendments (including information inadvertently omitted), modifications, alterations and /or corrections of proposals by some or all of the applicants following proposal submission; viii. To request that some or all of the applicants modify proposals based upon the evaluation of the City. F. The City may enter into negotiations for a contract, on terms and conditions satisfactory to the City with one or more selected applicants. However, the City reserves the right to terminate any negotiations at any time or conduct simultaneous, competitive negotiations with multiple applicants. The City reserves the right to negotiate acceptable terms in an otherwise unacceptable proposal. Such negotiations may result in changes in terms material to this RFP; in such an event, the City shall not be obligated to inform other applicants of the changes, or permit them to revise their proposals accordingly, unless the City, in its sole discretion, determines that doing so and permitting such is in the City's best interest. Should negotiations not prove satisfactory with the selected applicant(s), the City reserves the right to discontinue negotiations. Additional firms may be asked to enter into negotiations, and /or the City may solicit new proposals. Because previous negotiations delayed the opening of the beach concession facility, time is of the essence. It is critical that the concession facility open as soon as possible, therefore the City reserves the right to immediately and permanently terminate negotiations with any applicant who is delaying or slowing down the negotiation process. II. BACKGROUND The public amenities at CDM State Beach have been recently upgraded and improved with replacement infrastructure and visitor - serving amenities such as public restrooms, showers, a lifeguard facility, and landscaping. The facility includes a self- contained concession area intended to provide V] food /drink service and beach rentals to beach visitors. CDM State Beach includes open shoreline, day use parking, and nearby City parks. CDM State Beach also hosts major special events, including an annual sandcastle building competition and an antique car show. CDM State Beach is one of the community's most family - friendly beaches because it has ocean -level parking and (typically) gentle surf conditions. The City is pleased to present this opportunity for interested individuals and /or businesses to submit proposals and qualifications for the operation of the beach concession facility. III. PROJECT DESCRIPTION The concession facility is intended for food and drinks as well as beach rentals, such as umbrellas and body boards. The concession area is approximately one thousand forty -three (1,043) square feet in size and centrally located within the Lifeguard Observation building. IV. PROPOSED AGREEMENT Concession operations are a key component to the overall character of CDM State Beach. Applicants shall review the proposed agreement attached hereto as Exhibit "B" and: 1) Agree, in writing, to the agreement as -is; OR 2) Provide, in writing, counter - proposals to any provision in the proposed agreement at the time the applicant submits a response to this RFP. Requested changes to the proposed agreement after the RFP period closes are highly unlikely to be approved by the City. V. QUALIFICATIONS To ensure a high - quality level of operation for the facility, applicants must demonstrate minimum experience and qualifications. Applicants must complete the City's Vendor Application Form (see Exhibit "C ") and provide evidence of the following: • Experience in successfully operating and managing a similar type of business for a minimum of three (3) years. • Fiscal solvency and capacity to complete necessary tenant improvements. • Demonstrated track record of being an equal opportunity employer. 9 • Must not be currently indebted to the federal government,. State of California, or the City of Newport Beach for non - payment of taxes, fines, judgments, liens, or fees. Note: At City's discretion, City may require the principals of an LLC, corporation, or other entity, to execute a personal guarantee for the prompt, full and complete performance of any and all covenants and provisions of the lease agreement. The applicant or its employees may be subject to the provisions of the California Political Reform Act of 1974 (the "Act "), which (1) requires such persons to disclose any financial interest that may foreseeably be materially affected by the work to be performed pursuant to this RFP, and (2) prohibits such persons from making, or participating in making, decisions that will foreseeably financially affect such interest. If subject to the Act, the applicant shall conform to all requirements of the Act. Failure to do so constitutes a material breach and is grounds for immediate rejection of the applicant's proposal, or, if the Concession Lease Agreement is already entered into with the applicant, immediate termination of that Agreement by City. The applicant shall be required to indemnify, defend and hold harmless City for any and all claims for damages resulting from the applicant's violation of this provision. Additional copies of this RFP, as well as copies of documents referenced in this RFP, may be obtained online at www.city.newport- beach.ca.us. Copies may also be obtained at the Revenue Division, City of Newport Beach, 3300 Newport Blvd., Newport Beach, CA 92658 -8915. VI. PROPOSAL INSTRUCTIONS Submission Date and Requirements Proposals must be submitted to: Evelyn Tseng Revenue Division City of Newport Beach 3300 Newport Blvd. P.O. Box 1768 Newport Beach, CA 92658 -8915 The following conditions apply to this submission: 10 • Proposals must be submitted by 4:00 PM, on August 31, 2007. • Proposals must be signed, in ink, by an individual duly authorized to bind the applicant. • Please provide one (1) original and five (5) copies of completed proposals. Do not bind the DroDOSals - a simple buck clip is appropriate. • Proposals or proposal components will not be accepted via facsimile (fax) transmission. • Proposals shall remain binding for one hundred twenty (120) days from the date of proposal submission. • The City reserves the right, at its sole discretion, to reject and return, without evaluation, any acceptance or counter - proposal received after the proposal submission time and date, whether it is delivered by mail or otherwise. VII. REQUIRED ELEMENTS OF PROPOSALS Applicants may submit any information they deem necessary and appropriate for the City to fully and completely evaluate their qualifications. The proposal must, at a minimum, include the following general information: 1. Vendor Application (Use form listed as Exhibit "C ") 2. Checklist for a Complete Submission (Use form listed as Exhibit "D ") 3. Description of the applicant's business structure, key staff and their qualifications. 4. Description of the applicant's relative experience in operating a concession or other similar business enterprise, including relative size of business operated, type of retail sales, etc. 5. An audited financial statement (or a financial statement prepared by a certified public accountant) from the last full year of operation of a similar business enterprise. If you wish for this financial information to be kept out of the public record, please submit ONE COPY in a separate envelope, with the words `FINANCIAL INFORMATION: along with your name on the envelope. This information will be held apart from the proposal and will be returned upon completion of the selection process. 6. A proposed annual budget for the operation of the beach concession for the first five years. Include a brief narrative that generally describes the anticipated expenses, revenues, and net income for each year. 7. At least three persons or businesses that have first hand knowledge of the applicant's ability to successfully operate and maintain a business enterprise as described in Section 4, above. If possible, at least one reference should be a public entity other than the City of Newport Beach. VIII. ADDITIONAL REQUIREMENTS Insurance The concessionaire must meet all the insurance requirements required by the agreement attached as Exhibit "B ". These requirements are not open to counter - proposals. All applicants are encouraged to contact their insurance carriers during the review of qualifications stage to ensure that the insurance requirements can be met if the applicant is selected for negotiation of a contract. IX. REVIEW OF PROPOSAL RESPONSES Review process All proposals received by the deadline will be evaluated by a committee ( "Review Committee's established by the City Manager or his designated representative. Upon the review and discussion of the quality and responsiveness of the proposals received, the Review Committee will make recommendations to the Newport Beach City Council. The City discourages any proposer's advocacy before Members of the City Council until such time as the Review Committee has brought forth its recommendation to the City Council. Notification of Awards 1z The successful applicant will be required to execute the Concession Lease Agreement with the City, which is subject to formal approval by the Newport Beach City Council. EXHIBITS A. Concession Floor Plan B. Proposed Agreement C. Vendor Application Form D. RFP Submission Checklist W EXHIBIT "A" CONCESSION FLOOR PLAN (ATTACHED) l9 ......E :: . i. i. { i { { j �S nii :; "A' . ......E :: . i. i. { i { { j �S EXHIBIT "B" PROPOSED CONCESSION LEASE AGREEMENT (ATTACHED) IC, LEASE AGREEMENT Corona del Mar Concession This Lease is made and entered into as of the _ day of ( "Effective Date "), by and between the City of Newport Beach, a municipal corporation ( "City ") and ( "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 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 for Concession Operations and Tenant Improvements at Corona del Mar State Beach, but was unable to reach agreement with any of the applicants. On , 2007, a third (3rtl) RFP was issued and City selected Tenant. r-1 D. Tenant and City desire to enter into a Lease of the Premises for the purpose of allowing Tenant to operate a concession area 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. DEFINITIONS 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 - clean, and is equivalent to similar phrases referring to physical adequacy in appearance and for use. (f) Law - any judicial decision, statute, constitution, ordinance, resolution, regulation, rule, administrative order, or other requirement of any municipal, is 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. Q) 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 2007, 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 — and any Successor. (n) 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: (a) Base Rent §4.1 (b) Claim or Claims §10.1 (c) Concession Recitals, §D (d) Gross Sales §4.5 (e) Hazardous Materials §17 �s (f) Indemnified Parties §6.3. (g) Option Term(s) §3.2 (h) Percentage Rent §4.2 (a) (i) Project Recitals, §B Q) 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 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. 3. TERM 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 70 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, in advance, in equal monthly 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 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 to 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 zI 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 Percentage 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 Reny' 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.. (b) Accounting and Payment. Within twenty -five (25) days after the end of each calendar month for the term hereof, as may be extended as provided herein, commencing with the twenty -fifth (25th) day of the month following 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 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 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. za 4.3 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) days after Tenant receives this compensation or other payment. 4.4 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 other place or places as City may from time to time designate by written notice delivered to Tenant. 4.5 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 23 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 (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; 24 (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 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) 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 25 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 records. Tenant shall also furnish 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 zC. 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 results and supporting evidence, using an independent Certified Public Accountant reasonably acceptable to City. If Tenants 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. 4.6 Late Pavment. 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 %) 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. ZI 4.7 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. Tenant's proposed menu, proposed rental items and proposed sales merchandise shall be attached as Exhibit "B ". Pricing for these products will be comparable to prices at nearby beach concession facilities. Alcoholic beverage sales or giveaways are prohibited. 5.2 Operation of Premises. 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 7a.m. and 6 p.m. on non - holiday weekdays. 5.3 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. 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. 1 5.4 Food Packaging and Debris. Tenant shall use food packaging consistent with good environmental practices, including prohibiting polystyrene (also known as 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. 5.5 Outdoor Dining. Tenant shall be permitted to place two (2) picnic tables from Memorial Day through Labor Day, and four (4) picnic tables during the winter season, onto a portion of the paved area outside of the Premises, subject to prior written approval of the City Manager and 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. 5.6 Operation. 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: 7:00 a.m. through 8:30 p.m., all sales and rentals to cease at 7:30 p.m. (b) From the day after Labor Day to the day before Memorial Day: Weekend days (Saturday and Sunday) - 29 7:00 a.m. through dusk. Weekdays (Monday through Friday) — Hours at Tenant's discretion, but in no event, no earlier than 7:00 a.m. or later than dusk. 5.7 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. 5.8 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 Tenants expense; and any damage caused by removal shall be repaired at Tenants expense. 5.9 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. If required by the City, employees shall wear a uniform and /or identification badge. 5.10 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 5.11 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, which approval will not be unreasonably withheld but may be conditioned. 5.12 Parkinq for Employees. City shall provide four (4) designated parking spaces and eight (8) parking passes to Tenant for its employees. Tenant shall cause its employees to comply with the procedures and regulations established by City from time - to -time to control parking. 6. TAXES, LICENSES AND OTHER OBLIGATIONS 6.1 Pavment 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 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 Pavment of Obiiations. 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 3 1 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. 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. 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. Refuse collection and grease interceptor maintenance shall occur between 7 a.m. and 6 p.m. on non - holiday weekdays. 317- 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. Tenants 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 practice. City shall be named as an additional insured on the contractors and any subcontractors policies. 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 therefor. 8.3 Qualitv 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 Pavment 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. 33 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, 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. Graffiti shall be called 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. 3¢ 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. 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 Sr (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 Tenant or Tenant's property from any cause other than the sole negligence, intentional or willful acts of the 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. 34 (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 at One Million and 001100 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 001100 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 31 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. 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 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 Tenants 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. 3& 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. vi. The insurance provided by this policy shall not be suspended, voided, canceled, or reduced in coverage or in limits, by either party except 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, 39 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. 11.2 Replacement of Tenant's Propertv. 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) days following the date of the casualty), in which case this Lease shall be terminated thirty (30) 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 qo 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) 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. 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 91 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 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 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 4i 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. 13.3 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; (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) 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) days after written notice thereof from City to Tenant; provided, however, that if 43 the nature of Tenant's default is such that more than thirty (30) 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) 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) 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) days; and (g) The attachment, execution or the judicial seizure of substantially all of Tenants assets located at the Premises or of Tenants interest in this Lease, where such seizure is not discharged within sixty (60) 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. (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 41} 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°x) 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 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 415 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) 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. 1'5. 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 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 94 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 Tenants 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. Tenants 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) 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 Tenants ability to conduct its business in 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. 9l 18. CITY'S DEFAULTSITENANT'S REMEDIES. City shall be in default if it fails to perform, or commence performance if the obligation requires more than ten (10) days to complete, any material obligation within ten (10) 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) days but fails to diligently complete performance. In the event of City's default, Tenant may: (a) Upon five (5) 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 Tenants use of the Premises for its intended purpose and City fails to cure such default within ten (10) days after a second demand by Tenant in which case Tenant shall 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) days after deposit into the United States registered mail, postage prepaid, by registered or certified mail, return receipt requested. Unless notice of a different 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 9$ If to Tenant, to: 20. 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. 21. 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. 22. 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 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 4ck party of any term, condition, covenant of this Lease or any applicable law, ordinance or regulation. 23. 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. 24. 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. 25. ENTIRE AGREEMENT: AMENDMENTS 25.1 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. 25.2 This Lease shall supersede any and all prior agreements, oral or written, regarding the subject matter between Tenant and City. 25.3 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. 25.4 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. 50 25.5 If any conflicts arise between the terms and conditions of this Lease, and the terms and conditions of the attached exhibits or the documents expressly incorporated by reference, the terms and conditions of this Lease shall control. 25.6 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. 25.7 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. 26. TIME IS OF THE ESSENCE Time is of the essence for this Lease. 27. 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. 28. 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. 51 29. 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 (attorneys excepted) in connection with the negotiation or making of this Lease. 30. 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 only and do not define, limit, augment, or describe the scope, content, or intent of this Lease. 31. 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. 32. 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. 33. 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. 52 34. 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] 53 IN WITNESS WHEREOF, the parties hereto have executed this Lease as of the date first written above. CITY OF NEWPORT BEACH ( "City "), a Municipal Corporation Steve Rosansky, Mayor of Newport Beach ATTEST: LaVonne Harkless City Clerk APPROVED AS TO FORM: Aaron Harp Assistant City Attorney ( "Tenant') President 54 EXHIBIT "C" CITY OF NEWPORT BEACH VENDOR APPLICATION FORM TYPE OF APPLICANT: ❑ NEW ❑ CURRENT OPERATOR Legal Contractual Name of Business: Owner's Name: Business Mailing Address: City, State and Zip Code: E -Mail Address Phone: Fax: General Business Contact Person for Business Operations: Title: E -Mail Address for Business Operations Business Telephone: Business Fax: Fiscal Contact Person for Fiscal Operations: Title: E -Mail Address for Fiscal Operations Business Telephone: Business Fax: Is your business: (check one) ❑ NON PROFIT CORPORATION ❑ FOR PROFIT CORPORATION ss Is your business: (check one) ❑ CORPORATION ❑ LIMITED LIABILITY PARTNERSHIP ❑ INDIVIDUAL ❑ SOLE PROPRIETORSHIP ❑ PARTNERSHIP ❑ UNINCORPORATED ASSOCIATION Names & Titles of Co- Owners, Partners, or Board Members (Also list Names & Titles of persons with written authorization /resolution to sign contracts) Names Title Phone Names and Titles of Business Officers Names Title Phone Does business have any liens or claims? (If so, please indicate by whom and specify lien or claim, including any tax delinquencies) Name of Company Claim Lien Amount 54 Please provide the following: Federal Tax Identification Number: City of Newport Beach Business License Number: (If none, selected vendor must obtain a Newport Beach Business License prior to execution of contract.) 51 EXHIBIT "D" CORONA DEL MAR STATE BEACH CONCESSION RFP SUBMISSION CHECKLIST Name of Applicant ❑ Vendor Application ❑ RFP Checklist ❑ Business Structure, Key Staff and their Qualifications ❑ Description of Experience ❑ Financial Information ❑ Budget Information ❑ References sg