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C-4017 - Corona Del Mar State Beach Concession and Lease Agreement
'/6/ 7 AGREEMENT TO TERMINATE CORONA del MAR STATE BEACH CONCESSION AND LEASE AGREEMENT BETWEEN THE CITY OF NEWPORT BEACH AND FUJI GRILL, INC. ,�� This Termination Agreement ( "Agreement ") is entered into on this day �1 o� m of November, 2010 ( "Effective Date ") by and between the City of Newport Beach, a California Municipal Corporation ( "City ") and Fuji Grill, Inc. a California Corporation ( "Tenant "). RECITALS City and Tenant entered into the Corona del Mar State Beach Concession and Lease Agreement ( "Lease Agreement ") on April 4, 2008. Pursuant to Section 3.1 of the Lease Agreement, Tenant had a five (5) year term to use the City's one thousand forty -three (1,043) square foot food concession facility located at Corona del Mar State Beach ( "Premises "). Tenant's business plans have changed and Tenant desires to terminate the Lease Agreement prior to expiration of the five (5) year term pursuant to Lease Agreement Section 14. City is willing to accept Tenant's early termination request subject to the conditions listed below. NOW THEREFORE, City and Tenant agree as follows: 1. In consideration of the loss of rent, and unanticipated expenses that will be incurred by City due to Tenant's early termination of the Lease Agreement Tenant agrees to give City, free of charge, all of the equipment listed in Exhibit "A" which is hereby incorporated by reference into this Agreement. 2. Tenant agrees to surrender the Premises to City pursuant to Lease Agreement Section 20.2 and agrees that all equipment, fixtures, and supplies existing at Premises as of the Effective Date shall be the property of City. 3. The Lease Agreement shall terminate and be of no further effect on the Effective Date. 4. City shall refund excess rent payments in the amount of Fifteen Thousand Nine Hundred and Eighty -Seven Dollars and Eighty -Eight Cents ($15,987.88) to Tenant within thirty (30) business days following the Effective Date. [SIGNATURES ON NEXT PAGE] IN WITNESS WHEREOF, the parties have executed this agreement on the date first written above. Approved as to Form: Office of the City Attorney Leonie Mulvihill Assistant City Attorney CITY OF NEWPORT BEACH A California Municipal Corporation DO Kiff City Manager Attteens't:�rt''' Leilani Brown City Clerk FUJI GRILL, INC. A California Corporation By: Na John J. Le Title: President By: Name: �a Title: Financial Officer [END OF SIGNATURES] LWAI DMIUM Equipment to remain with the City: 1. One (1) cool -air exhaust hood system with make -up air, fire system, grease filters; 2. Two (2) custom made counter -tops with cabinet for service counter; 3. One (1) gas fryer - frymaster #GF- 14 -SD; 4. Eight (8) Advance Tabco #ECC -1836 Shelving unit -wire 18 x 36 x 74 "; 5. One (1) Advance Tabco #KMS -11 B -305R Utility Table with sink 30 x 60 "; 6. One (1) prep sink 18" tub; 7. One (1) custom model mop sink; 8. One (1) custom model drop -in sink with faucet; 9. One (1) 3- compartment sink with faucet; 10. Twenty -four (24) Atlactic - Grossfillex seating chairs #49442002; 11. Twelve (12) Atlactic - Grossfillex tables #99851204; 12. Twelve (12) wooden market umbrellas — Pacific Blue Canopy; 13. Two (2) custom -made awnings by Russ Rinner; 14. Four (4) Grossfillex 24" square sand tables with base #013193; 15. Three (3) Grossfillex 30" round sand tables with base #035172; 16. Seven (7) Angelanio #013392 wood base seating patio chairs; and 17. Four (4) W3024 patio heaters. A09- 00098 — Termination Agreement CITY OF NEWPORT BEACH CITY COUNCIL STAFF REPORT Agenda Item No. .11 November 23, 2010 TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL FROM: Administrative Services Department Evelyn Tseng, Revenue Manager (949) 644 -3153 or ETsenaaNewportBeachCA.gov SUBJECT: TERMINATION OF CORONA DEL MAR CONCESSION AGREEMENT ISSUE Terminate the Agreement by and between the City of Newport Beach ( "City ") and Fuji Grill, Inc., a California corporation ( "Tenant'), dated April 4, 2008, Letter dated September 18, 2008, amending Section 5.15, and Third Amendment to Concession and Lease Agreement, dated March 10, 2009 (collectively, the "Agreement'). Authorize the City Manager to execute a termination agreement based on the terms described within this report. DISCUSSION Background: From November 1991 through September 2005, Kilmer Enterprises managed the Corona del Mar State Beach concession. 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. 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. On August 31, 2007, City issued a Request for Proposals for a concessionaire at the Project. In response, the City received six (6) proposals. City staff selected Fuji Grill, Inc., an established business in Newport Beach with franchises throughout Orange County, because it provided the most favorable response based on rent, menu, references and experience. City Council approved the selection, and on April 4, 2008, City entered into a Concession and Lease Agreement with the Tenant. Corona del Mar Concession Agreement Termination November 23, 2010 Page 2 The initial Concession and Lease Agreement required the Tenant to pay the greater of $80,000 /year for Base Rent, adjusted annually by the Consumer Price Index ( "CPI "), or Fifteen Percent (15 %) of Tenant's Gross Sales, to be paid monthly, but calculated on an annual basis. In addition, responding to Tenant's concerns regarding Corona del Mar Parking Lot's daily parking rate's negative impact on its business, City agreed to a Parking Refund Credit Program during the winter season, if an hourly parking rate program was not implemented by September 2, 2008. Tenant could reimburse a customer's bill for the value of their parking fee, and, upon documentary evidence each month, the City would credit that reimbursement amount to Tenant to the following month's rent. City did not implement an hourly rate at the CdM Parking Lot, and Tenant continued to be concerned about its revenues. In response to Tenant's concerns, City, through a series of negotiated lease amendments: September 2008 — in lieu of the Parking Refund Credit Program, agreed to provide sixteen (16) designated parking spaces for Tenant's customers during each winter season throughout the term of the Agreement until an hourly parking program might be implemented; 2. February 2009 — permitted Tenant to enclose the area adjacent to its Premises to use as a patio area; 3. February 2009 — moved its stingray treatment center from the north side of the building to the south for the benefit of Tenant's customers using the patio area; 4. March 2009 — decreased Tenant's Base Rent from $80,000 to $36,000 pursuant to the following revised rent 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 and; 5. Provided Tenant more discretion to determine its own Operating Hours during the winter season. For its part, Tenant invested a great deal of time and money in the concession. Unfortunately, despite Tenant's best efforts and the City's accommodations, Tenant, through a letter from its attorney on September 28, 2010, offered a termination of the Agreement, or a modification of the Base Rent to $2,000 (Percentage Rent would remain the same) and requested the installation of 25 metered parking spaces adjacent to the Concession. Pursuant to the terms of Council Policy F -7, staff recommends that the Agreement be terminated, and a new 30 -day Request for Proposals for the CdM concession be issued immediately. Staff anticipates that an agreement for a new vendor at CdM could be finalized by spring, 2011, well before the busy summer season. Corona del Mar Concession Agreement Termination November 23, 2010 Page 3 Proposed Terms of Termination Agreement If the Council approves this item, it would also authorize the City Manager to enter into a termination agreement based substantially on the following terms: RENT: Tenant's final Base Rent and Percentage Rent payments have been made, as of October 2010. No further payments are due. FINAL RENT Based on the most recent rent reconciliation report, City shall RECONCILIATION: pay $15,987.88 to Tenant upon the complete execution of the termination agreement. EQUIPMENT: Tenant will leave the equipment described in Exhibit "A" at the Premises, and leave the Premises in good condition. Environmental Review: This action is not subject to the California Environmental Quality Act ( "CEQA ") pursuant to Sections 15060(c)(2) (the activity will not result in a direct or reasonably foreseeable indirect physical change in the environment) and 15060(c)(3) (the activity is not a project as defined in Section 15378) of the CEQA Guidelines, California Code of Regulations, Title 14, Chapter 3, because it has no potential for resulting in physical change to the environment, directly or indirectly. 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). The fees are not subject to any taxing limitation or voter requirement since as recommended they do not exceed the reasonable cost of providing the service and are not intended to be used for general revenue purposes. Fiscal Impact: If the termination agreement is approved, City would lose the $3,916.67/month it would have received in Base Rent until a new tenant is selected. Because of the winter season, historically, no percentage rent payments would have been made. Prepared and Submitted By: Evelyn<oeng Revenue Manager Attachments: Exhibit "A" — Equipment List EQUIPMENT LIST -FUJI GRILL -CDM 27- Sep -19 # DESCRIPTION QTY unit $ EA $ Q $ 1 Cool -air Exhaust hood system with make -up air, fire system, grease filters 1 - 18,468 18,468 18,468 2 Custom made counter top with cabinet for service counter 2 17,650 8,825 17,650 3 Beverage refregerator Counter work top #TS -72 1 4,385 4,385 1 4,385 4 Gas Fryer- Frymaster #GF -14SD 1.- 1,050 1,050 1,050 5 Ameican Range Salamander Gas Broiler #ASTM -36 1 1,404 1,404 1 1,404 6 Beverage refregerator- sandwich top #SPE72 -18 with Double Over Shelf 1 2,479 2,479 1 1 2,479 7 Advance Tabco #ECC -1836 Shelving unit -wire 18x36x74 "(dxwxh ") '$. : `' 1,176 147 1,176 8 Advance Taboo #KMS-1 1 B-305R Utility Table with sink 30x60 "(dxw") 1 1,995 1,195 1,195 9 Everest #ESR 3 Reach -In refrigerator, 1 3,039 3,039 1 3,039 10 Everest #ESF 3 Reach -In Freezer, three section 71 cu.ft 9 1 3,529 3,529 1 3,529 11 Duke #E304 Steam Table for hood NEMA 6 -20 1 832 832 1 832 12 Tri -Star Manual Counter lop Griddle #TSMG -36 1 833 833 1 833 13 Custom Model Gas Hose #48 5 179 8951 5 895 14 Tri-Star Custom Model #TSRB -36 Radiant Broiler Counter Top 1 1,295 1,295 1 1295 15 ICE- O -Matic #ICE0500HA Cube Style Ice Maker 1 2,656 2,656 1 2656 16 TriStar # TSR -6 6 Open Burner with Standard Oven 1 1,049 1049 1 1049 17 Rice Cooker -33 Cups 1 189 189 1 189 18 Prep -Sink 18" Tub , 1 :289 289 289 19 Custom Model Mop Sink 1 L 189 189 189 20 Cudtom Model Drop -in Sink (Hand Sink) with Faucet 1:. - ,180 180 180 21 3 Compartment -sink with Faucet ('Stock items) A 1,4$9 1,459 1,459 22 Taylor #754 Soft Serve Freezer for Yogurt 1 9,495 9,495 1 9,495 23 Atlactic - Grossfillex seating Chairs #49442002 24- 840 35 840 24 Atlactic-Grossfiliex Table with base #99851204 12 828 69 828 25 Wooden Maket Umbrella Pacific Blue Canopy _12 .2,148 179 2,148 26 Custom Made Awnings by Russ Rinner 2: A620 1,810 3,620 27 Fuji Grill -Out door Sign 1 5,497 5,497 1 5,497 28 Espresso Coffee machine 2 2,299 4,598 2 4,598 29 Espresso Coffee Grinder - Wazzer #0522509- (`Stock items) 1 0 0 1 0 30 #891614 Chrome plate shelf (`Stock Items) 4 0 01 41 0 31 Grosfilledx 24" sq. -sand Table with Base #013193 4 - 364 91 364 32 Grosfilledx 30" Round. -sand Table with Base ##035172 3.. 303 101 303 33 jAngel,nl, #013392 Wood Base Seating patio Chair 7. 406 58 406 34 W3024 Patio Heater 4. 1832 458 1,832 Gray color ,Relmaia to Clty; Yellow cdio'r';-fo be removed by Fyjr Gill, lob, ` 85 $ 51,997, $ 94,172 25 $ 42,175 Note #1: Most items do not include sales tax and freight charges. Note #2: Fuji Grill, Inc. has not verified the accuracy of the equipment prices shown herein and makes no warranty, express or implied, as to their accuracy. Some items were purchased by general contractors, and Fuji Grill, Inc. will not vouch for their accuracy. Note #3: All other unlisted non - fixture items shall be removed by Fuji Grill, Inc., including but not limited to computers, POS systems, security systems, kitchenware, food inventory, and other personal items. 1 l THIRD AMENDMENT TO CONCESSION AND LEASE AGREEMENT This Third Amendment to the Concession and Lease Agreement is entered into this 10th 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 1 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 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 15th: Open from 8:00 a.m. to 9:00 p.m., all sales and rentals to cease at 8:30 p.m. (b) September 160' through November 15`n: Open Saturdays and Sundays from 8:00 a.m. until 1 hour after dusk, and other days at Tenant's discretion. (c) November 16th through March 15`": 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." 7. 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] IN WITNESS WHEREOF, the parties hereto have executed this Third Amendment as of the date first written above. FUJI GRILL ("Tenant"), By: r �L J64 J. Lee, Pre dent By: _ q, ,-Z-e 601n l O J. Lee, Fin ciais r CITY OF NE -V PORTB a munici - 1 camorati n ATTEST: G�PL Leilani brown, U City Clerk APPROVED AS TO FORM: OFF E OF THE CITY ATTORNEY: .� C. ff Aa on C. Harp, Assistant City Attorney Attachments: ("City"), ,Gard D`NIich7 yor of the City of Newport Beach hPORN 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 r - l y TABLE OF CONTENTS 1. DEFINITIONS 1.1 General Definitions 1.2 Other Definitions 2. LEASE OF PREMISES 3. TERM 3.1 Term of Lease 3.2 Option to Extend 3.3 Hold Over 4. REFIT 4.1 Base Rent 4.2 Percentage Rent 4.3 Rent Credit 4.4 Revenue from Premises Use in Film, Television, and /or Advertising 4.5 Payment Location 4.6 Gross Sales 4.7 Late Payment 4.8 Interest on Unpaid Sums 5. BUSINESS PURPOSES AND USE OF PREMISES 5.1 Business Purpose 5.2 name of Concession 5.3 Operation of Premises 5.4 Prohibited Uses 55 Food Packaging and Debris 5.6 Outdoor Dining 5.7 Operating Hours 5.8 Food Preparation 5.9 Advertising Display 5.10 Personnel 5.11 Grand Opening Assistance 5.12 No Distress Sales 5.13 Parking for Employees 5.14 Reserved Parking Spot 5.15 Parking Refund Credit Program 5.16 Exclusive Concession 6. TAXES, LICENSES AND OTHER OBLIGATIONS 6.1 . Payment of Taxes 6.2 Payment of Obligations 6.3 Challenge to Taxes 2 2 3 4 5 5 5 5 5 5 6 7 7 7 7 12 12 12 12 13 13 13 13 14 14 15 15 15 15 16 16 16 16 17 17 17 18 18 UTILITIES ALTERATIONS TO THE PREMISES 8.1 Tenant Improvements 8.2 Permits 8.3 Quality of Work Performed 8.4 Payment of Costs 8.5 Liens B.6 Disposition of Alterations at Expiration or Lease Term 9. MAINTENANCE OF PREMISES 9.1 Maintenance and Repair by Tenant and City 9.2 Entry by City 10. INDEMNITY AND EXCULPATION; INSURANCE 10.1 Hold- Harmless Clause 10.2 Exculpation of City 10.3 Insurance 11. DAMAGE OR DESTRUCTION OF PROJECT /PREMISES 11.1 Destruction of Premises 11.2 Replacement of Tenant's Property 11.3 Destruction of Project 12. ABATEMENT OF RENT 12.1 General Rule 12.2 Abatement/Maintenance 13. PROHIBITION AGAINST GENERAL ASSIGNMENT, SUBLETTING AND ENCUMBERING 13.1 Prohibition of Assignment 13.2 One -Time Transfer 13.3 Exceptions 13.4 Continuing Effect 14. DEFAULT 14.1 Default by Tenant 14.2 Remedies 15 SUBJECT TO STATE OPERATING AGREEMENT 16. TASTE OR NUISANCE 17. NO CONFLICTS OF USE, HAZARDOUS MATERIALS 18. 19. firelyCa 19 19 19 20 20 20 20 20 21 21 21 22 22 22 23 26 26 27 27 28 28 28 28 28 29 30 30 30 30 31 33 34 34 20. GEKERAL PR0VfSl0NS 20.1 20.2 20.3 20.4 20.5 20.6 20.7 20.8 20.9 20.10 20.11 20.12 20.13 20.14 20.15 20.16 independent Contractor Surrender of Premises Compliance with all Laws Waivers Severability Applicable Law Entire Agreement; Amendments Time is of the Essence Successors Interpretation Brokers Tables of Contents; Headings Gender; Number Exhibits City Business License Costs and Attorneys Fees LIST OF EXHIBITS — -A Location of Premises B Proposed Menu and Sale and Rental Merchandise 36 36 36 36 36 37 37 37 38 38 38 38 38 39 39 39 39 This Concession and Lease Agreement ( "Lease ") is made and entered into as of the a 4 =" day of Dd , 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 "). 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 1 -yvas unable to reach agreement with any of the applicants. On August 20; 2007: a third (3`d) 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. (b) Authorized City Representative — is the City Manager or designee thereof. (c) CCU - 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 in good repair, and is equivalent to similar phrases referring to physical adequacy in appearance and for use. ._ 2 t (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 Bate 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 (c) Concession Recitals, §© (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 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 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 liar 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 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 _.l 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 I o 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 Percentage Rent. (a) Pa ment. 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 �l provided herein, commencing with the twenty -fifth (25th) day of the month follo -wing 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 f=ilm. 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 (1/2) 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 Citys Cashiering Division at 3300 Newport Boulevard, Newport Beach, California, or at such 7 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 i and /or private utility); and 8 I (4) Rentals of any beach equipment, Leach furniture, goods, dares or merchandise. (b) Exclusions from Gross Safes. 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; (8) Cash refunds made to customers in the ordinary course of business; (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 4 of merchandise or seRlices, vk1heiher such taxes are added, to, or iricluded in the selling price; (10) Discounted sales to employees of Tenant, not to exceed two percent (2 %) of the monthly Gross Sales; (11) Uncollectibie credit accounts and other bad debts, not to exceed two percent (2 %) of the monthly Gross Sales; and j (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 records. Tenant sha[I also furnish Cite 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 11 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 Representative prior to distribution or sale of such products. Tenant's proposed menu, proposed rental items and proposed sales merchandise shall be attached as Exhibft "S". 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 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. 14 } (b) From the day after Labor Day to the day before- I kemorla[ 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. 15 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 Naar 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 10't' 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 i cars parked at the Corona del Mar State Beach parking lot belaiveen 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 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 7. UTli_IT €ES Tenant shall make all arrangements for utilities installation and pay for a[I utilities furnished to or used on the Premises, including, without limitation, gas, electr €city, 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. S. 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 �I covering improvements to be constructed, all pursuant to standard industry custom and i 19 practice. City shall be named as an additional insured an 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, 1 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 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 tease, 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 i 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 23 } 1 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 ) i aftLer thirty (30) calendar days (ten) (10) calendar days ,vniten notice of non- paymenf 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 F 1 .2 Replacement of Tenant's Prooert . In the event of darnage or destruction of improvements located on the Premises not giving rise to Tenant's option to terminate this Lease, Tenant shall, at its orFvn 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 shalt have no liability under this Lease. 27 12. ABATEMENT GP 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 assignor encumber its interest in this Lease or in the Premises, or sublease substantially all or any part of the Premises, i 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 } 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 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 (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 orof 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 (1) Reentry \t�ithout 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 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 shaft 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 as a result and the Pei-ties shall be released from ail liabilities and obFgations under fhis 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 re€nediation materially affects Tenant's ability to conduct its business in 34 ,S the Premises. "Hazardous N/laterials" shall ;Wean 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 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) 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 I j address has been given in accordance uR this Section, all notices shall be addressed as follows: if to City, to: If to Tenant, to: DU CITY OF NEWPORT BEACH Attention: City Manager 3300 Newport Boulevard Newport Beach, CA 92658 (949) 644 -3000 Fuji Grill, Inc. Attention: John J. Lee 1515 W. Chapman Orange, California 92868 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 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 terns and conditions of the attached exhibits or the documents 37 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 zeal estate broker or other agent (attorneys 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 I only and do not define, limit, augment, or describe the scope, content, or intent of this I 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 attomeys' fees. [Signature page follows] 39 !N WITNESS WHEREOF, the parties hereto have executed 'his Lease as of the date first written above. AT- By: City Clerk FUJI GRILL, INC. ( "Tenant'), By: �y Joh6A. Lee, V President By: fin ialOfficer APPROVE,ECAS TO FORM: By: Robin Clauson; City Attorney Attachments: Exhibit A — Location of Premises Exhibit B — Proposed Menu and Sale Merchandise i F:users /CAT /Shared /AG /Lease Agreements /FujiGrif103- 26- 08c[ean.doc 40 CITY OF NE)VPORTB�ACH ( "City "), a Munici. i Corporat'ionf r' 1 l By: t� f Edward D. Selich,' Mayor of Newport Beach 9,00 Q m oeoe 2 o \_ t m XN @ W o com 81OC cocu co \. 9l �� W Pl �e �� \ c z. 0 LL0 N U 3 nOj C o 0 U O a�,b�yii6 M v �2 a 7 a Y 3 a h P \ v a e \ a � 0 0 e 0 e v v e B s r r, 01 Y 9be � 5 6 fa =AJ k 9 YY 4 U C O U _ O IUD 0 IN m X W I 12 0 Fo a10 in EE IN o �17 NI MIN w C) AI z n co 94 42 5 'a 0 MID 0 o lo nj Wo m I QQ rj PL Q, HP, C) C3 � C) I!Y DO p I'a W. -4 1 ..... II I �17 NI MIN w C) AI z n co 94 42 5 'a 0 MID 0 o lo nj Wo m I QQ rj PL Q, HP, C) C3 � C) I. I!Y I'a W. I. Exhibit B .r+y'. September 18, 2008 Mr. John J. Lee, President Fuji Grill at the Beach 3029 Ocean Boulevard Corona del Mar. California 92625 VIA E -MA L AND US POSTAL_ SERVICE Re: Agreement by and between The City of Newport Beach ("City") and Fag's Grill, inc., a California corporation ("Tenant"), dated April 4, 2008 ( "Agreement") — Parktng at the CdM list 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 tc 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. ., llo r'i.3 "t .7 Sit °,HYKX: 'Caa. Swat ..... ... ,:, Le ?fv to A/,'r: Lee September 78, 2008 Page 2 City or Tenant ;rave the mutua! option to terminate this Section 5.45 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 courier -sign: this letter and return to my attertion. Sincerely yours, -- Assistant City Manager for the City of Newport Beach Fuji Grill at the Beach rry t ;lan Pv arrnar9 - Exhibit C `b February 3, 2009 Mr. John =. Lee President Fuii Grill at the Beach 302; Ocean Boulevard Corona del %far. California 92626 VIA E -MAIL AND US POSTAL SERVICE Re: Agreement by and between The City of Newport Beach ( "City ") area Fuji Gris`I, Inc„ a Califforriia corporation ("Tenant"), dated April 4, 2008 ( "Agreernant") – Perm. ission to use Patio Promises 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 tab ?es 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 t=he 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. :y Tlr,ll 33'(" Yj � —wron 3m lcv� sJ - llot� (9?7z_�� box Nlw }-o �f ejl r-r .xCB aeS . I — au"�rp te, -1 . pease ,. o-un:iersigm ":iS iP4!e! a li_ .-e. :f -1 8incvreiy yrcE:rs, Dare Kiff Assis tant Ci'N ivianacer for the C'v of Nel"VPon, Beac :_i Gr:il at the Sea.,n cc: M m,, to Beauchamp Glen _verrcac S °eve LeMs Eveiyn TspnQ EXHIBIT DB" From: 2134877188 Page; 2f4 Date: 2111/2009 11:48:31 AM rL0'11'4UY0 DTPVOrM rftUm'AUJINR IR4UNAHLC JCAYIbZO GIs 401 iloa 1'044 r.WA /U04 r -411 ,w CERTIFICATE F LIABILITY INSURANCE 1 6/r2E, PRODIKER KOSTAR INSURANCE �n FINANCIAL SERVICES, INC. THIS CERTIFICATE IS ISSUED AS A MATTER OF INFO 3460 WILSHIRE BLVD., #I " ^^ nxl v AND r:r�xEEwS Mn Pclr7HTS i114CIx THE cER LOS ANGELES, CA 90810 Fax: i2t31487 -2115 FUJI GRILL AT THE BEACH ISIS W. CHAPMAN AVENUE INSURERS AFFORDING COVERAGE 20 I ORANGE I CA 92868 1 INSURER E: I RfX(FQBC.FC THE POLICIES OF INSURANCE 61Si'ED BELOW HAVE BEEN ISSUED TO THE INSURED NAMED ABOVE FOR THE POLiOY PERIOD INDICATED, NOTWITHSTANDING ANY REQUiRFMENT TERRA OR CONDITION OF ANY CONTRACT OR OTHER DOCUMENT. WITH RESPECT TO WHICH THIS CERTIFICATE MAY: BE ISSUED OR MAY PERTAIN, THE INSURANCE AfFORDED BY THE POLICIES, DESCRIBED HEREIN IS SUBJECT TO ALL THE TERMS. EXCLUSIONS AND CONDITION$ OF SUCH POLICIES. AGGREGATE LIMITS SHOWN MAY HAVE BEEN REDUCED BY PAID CLAIMS, NCflCETO THE CERTIFICATE HOLDER NAMED TOTHE LEFT, OUT FAILURE ToDOSO £HALL NF _ P N , 89 ' _ICY E'I. Pm5ffw_ IT V TYPE OpfNSURANOE '3 POLICY NUMBER I Dv A ,nRDtTvL PAT I. t MM0OM - GERERALUA8ILITY'EAOY. X f ddML'E0.GIAL GENERAL LLtBILR'Y I —1 CWN£MADE Fx�OCdUR,. A CPOOT09168. 6/15/2008 6/75/2009 OCCURRENCE FIRE OAMAGE thr 0m In) ~NEUUP JAI/ "WG Fh) PEasaNALa AOV t.-JURY S 1,900,000 E 100,000 IS 5,000 is 1,000,000 5 Z,QOO,OOO = GENERAL RGflREG4T _ 1 GEN1AGGftE�^GATE E1hiPl'RPIPL�tCISP i:IPR000CTS•COMPIOP POLICY I 9CT Y 160C ADD 5 I,Q00000 'AUTOMOBILE QA&LrfY 1j RNYAUTO f COMBINED SINSLE LIMIT IEB 800116M) S ALLDVlNED AI,It04 i ~_1 SGHEDULEO AUTOS oBODILYINJORY (P4rp..I S �jI HIRED AUTOS NON-OWNED AUTOS AUTOS DaOI_Y INJURY (Pa e0dd6�U S I 1"RO0ERTYOANAGC M;: , ,: 14 m accl4era3 c.ARAGE UAS1LItY. t AUTO ONLY -EA MOMENT S ANYAUTO OTHER THAN .E..A� .A�CG: AUTO 0NLY: A4K31;:. S -.. — . EXCESS LIABILITY P""'j OCCUR 1 J CLAIMS MAO: EACH OCCURRWOE S 3,400,000 s 1,000.000 B 1 EBU4613063 6/15/2008 6/i5/2009- S OEOw"i'IBLE RETENTION 5: . ;s WORKERS COMPENSATION AND eMR.OYERT LVISILm C WEN0046493.01 6/i 5/2008 6/15/2909 XfT Rv uA1TR5. ER I ELL EACH ACCIDENT ! mseASE- EAEMPLOYE. 4 1,000,000 s 1,000,000 _..- k . .....:....... _ .,.. EL.OISEASE- PQ te'OYGMIT S 1,000,000. OTHER 0 PESGRIPTlONOEOPERATIaNS .R.00ATraNyVEIiiCL.EWp %CLUSIONS AODEO av FNDaRSeMSTa'fSt�EGIAL PRQVISfONS: THE CITY, ITS ELECTED OR APPOINTED OFFICERS, OFFICIALS, EMPLOYEES, AGENTS AND VOLUNTEERS, AND TE,H S [ATE OF CALIFORNIA. ITS ELECTED OR APPOINTED OFFICERS, OFFICIALS, EMPLOYEES. AGENTS AND VOLUNTEERS, ARE TOLBE COVERED AS ADDITIONAL INSUREDS, WITH RES PECT TO LIABIL17Y AWSINC; OUT OF . WORK PERFORMED BY OR ON BEHALF OF THE TENANT, CERTIFICATE HOLDER. - ADOITBSNALIN5ukEp >wsuaeaLerteia: CANCELLATION- ACORp 25417(67! 0 ACORD CORPORATBON 1886 LM tPW Y1 . &ecn FJ2tlIC8. 13:LT by USa•NNnh LPLPWYIASa MNW- 1S51Ly UeaWi This fax was received.. by FAX-CNB on Line 2 from 2134877188 SHOULDARYOP THE ABOVE DESCRIBED P HIES DECANCELLED U LURE THE EXPIRATION CITY OF NEWPORT BEACH DATE TNEREOP, THE ISSUING!NSURER KLL RNDPAVOR TO MAIL 30 DAYS WRn'TFN NCflCETO THE CERTIFICATE HOLDER NAMED TOTHE LEFT, OUT FAILURE ToDOSO £HALL 3300 NEWPORT BEACH BLVD. RPOSE NO DENUDATION OR LIATBLRYOF ANY KIND. NPON THE =REP. ITS AGMTS OR .REPRESENTATIVES. AiTTNO REP ATY;tE NEWPORT BEACH '. CA 92658 -8915 ACORp 25417(67! 0 ACORD CORPORATBON 1886 LM tPW Y1 . &ecn FJ2tlIC8. 13:LT by USa•NNnh LPLPWYIASa MNW- 1S51Ly UeaWi This fax was received.. by FAX-CNB on Line 2 from 2134877188 From: 2134877188 Page:. 3/4 Date: 2J111200911:48:32 AM rCC'11 -MV U14DFY. rFVV- RVJIAX I Ii DVKM"'JCKVIVC: 414 401 t1*4 I-W4 r.YVOIVV9 x-411 Kostar Insurance & Financial Services, Inc 3460 Wilshire Blvd., #1200 Los Angeles, CA 90010 Tel: 213- 487 -4804 Fax: 213487 -2115 December 30, 2005 From: Koster Insurance & Financial Services, Inc 3460 Wilshire Blvd., 61200 Los Angeles, C.A. 90010 To: City of Newport Beach 3300 Newport Beach:Blvd, Newport Beach, CA 92558 -8915 Re:, Fuji Grill Corona Del Mar LLC DBA: Fuji Grill At The Beach Policy #: CPOOI09168 To whom it inay concern, PIease 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 ? C.P00109168. S' r yVkVi K .ar jai Services; Inc. his fax was received by FAX -CNB on tine 2 from 2134877188 From: 2134877588 Page: 4J4 Date: 2/11/200911.4632 AM rCO ^�I'tVVa VI :UOYM MM-NMAK iMOURM 6: JLSVf�[0 410 401 1100 I—V44 r.aV4 /0U4 r -41f THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY. CG 22012 07 98 ADDITIONAL INSURED -' TAtE OR POLITICAL SUBDIVISIONS - PERMITS This ondasement modifies Insurance provided under the following: COMMERCIAL GENERAL LIABILITY COVERAGE PART This endorsement changes the policy effective on the inception date of the policy unless another dare Is indicated below. Endorsement effealve r"o1 cy Nd: 05/13/2008 12.01 AM. standard time CP001091613 Nerfrts mad Countersigned by FUJI Ga IL1 C090PIA OF4 MAp tLG. OBA: FOJT 68313. .AT THE MEAGNN {Authorized Flepresehtativa) SCHEDULE State Of Political Sub dhrfsion: CITY OF NEW-PORT BEACH, 3300 NEWPORT BEACH BLVD. NEWPORT BBACn, CA 92558 -891s (If no entry appears above, information required to complete this endorsement will be shown in the Declarations as applicable to this endorsement.) 5eotlon If who is Art Insured 6 amended to include as an insured any state or political subdivision shown In the Schedule'subjeetto the following provisions: i. This insurer= applies only with respect to operations performad by you or on your behalf for which the stair or political subdivinfan has Issued a permit. 2. This Insurance does not apply to! a. 'Bodily injuey', 'property damage' or "personal and advertising injury arising out of operations performed for the state or municipality; or b. "Bodily injury'= or "property damage" Included within the "products- campioted operations hazartr. ' CL.942i7 -sal CG 20120798 Ck>MgM7,insuraine Services o€ ma, inc, 1AS7 page t of t EN this fez was received by FAX -CN6on Line 2from 2134877188 Exhibit D 1 \ ` r X I S T \ r ; k I I CITY OF NEWPORT BEACH CITY COUNCIL STAFF REPORT AN 1 4 2010q -1-C1f7 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 ddannerO- citv.newport- beach.ca.us Evelyn Tseng, Income Contract Administrator (949) 644 -3153 or etsengO- citv.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? 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 C6) n ession 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 U Dennis C. Danner Income Contract Administrator Administrative Services Director Attachments: Third Amendment to Concession and Lease Agreement J THIRD AMENDMENT TO CONCESSION AND LEASE AGREEMENT This Third Amendment to the Concession and Lease Agreement is entered into this W, 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 q 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 leas) 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 } 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 15th: Open from 8:00 a.m. to 9:00 p.m., all sales and rentals to cease at 8:30 p-m. (b) September 16th 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 16th through March 15th: Open at Tenant's discretion. (d) March 16t' 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." 5 l I 7. 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] 6 \i �i IN WITNESS WHEREOF, the parties hereto have executed this Third Amendment as of the date first written above. FUJI GRILL ('Tenant "), a 0 ATTEST: Leilani Brown, City Clerk APPROVED AS TO FORM: OFFICE OF THE CITY ATTORNEY: Aar n C. Harp, Assistant City Attorney Attachments: CITY OF NEWPORT BEACH ( "City "), a municipal corporation IN 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 EXHIBIT `°A" Concession and Lease Agreement 't-41 EFFECTIVE: Uarch 2008 n 1� 1. DEFINITIONS 1.1 General Definitions 1.2 Other Definitions 2. LEASE OF PREMISES 3. TERM 3.1 Term of Lease 3.2 Option to Extend 3.3 Hold Over !>l7�ii 4.1 4.2 4.3 4.4 4.5 4.6 4.7 4.8 Base Rent Percentage Rent Rent Credit Revenue from Premises Use in Film, Television, and/or Advertising Payment Location Gross Sales Late Payment Interest on Unpaid Sums 5. BUSINESS PURPOSES AND USE OF PREMISES 5.1 Business Purpose 5.2 Name of Concession 5.3 Operation of Premises 5.4 Prohibited Uses 5.5 Food Packaging and Debris 5.6 Outdoor Dining 5.7 Operating Hours 5.8 Food Preparation 5.9 Advertising Display 5.10 Personnel. 5.11 Grand Opening Assistance 5.12 No Distress Sales 5.13 Parking for Employees 5.14 Reserved Parking Spot 5.15 Parking Refund Credit Program 5.16 Exclusive Concession 6. TAXES, LICENSES AND OTHER OBLIGATIONS 6.1 Payment of Taxes 6.2 Payment of Obligations 6.3 Challenge to Taxes 2 2 3 LI 5 5 5 5 5 5 6 7 7 7 7 12 12 12 12 13 13 13 13 14 14 15 15 15 15 16 16 16 16 17 17 17 18 18 a 7. UTILITIES 19 81 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 PROJECTIPREMISES 26 11.1 Destruction of Premises 26 11.2 Replacement of Tenant's Property 27 11.3 Destruction of Project 27 12. ABATEMENT OF RENT 28 12.1 General Rule 28 12.2 Abatement(Maintenance 28 13. PROHIS171ON 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 DEFAULTSITENANT'S REMEDIES 35 19. NOTICES _ 35 1 "� 20.1 Independent Contractor 20.2 Surrender of Premises 20.3 Compliance with all Laws 20.4 Waivers 20.5 Severability 20.6 Applicable Law 20.7 Entire Agreement; Amendments 20.8 Time is of the Essence 20.9 Successors 20.10 Interpretation 20.11 Brokers 20.12 Tables of.Contents ;.Headings 20.13 Gender; Number 20.14 Exhibits 20.15 City Business License 20.16 Costs and Attorneys Fees LIST OF EXHIBITS — -A Location of Premises B Proposed Menu and Sale and Rental Merchandise W, 36 36 36 36 37 37 37 38 38 38 38 38 39 39 39 39 • ' pia ' . i This Concession and Lease Agreement ( "Lease ") is made and entered into as of the 4 4 day of A�eft, 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 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 1 , 4i . 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. 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 specked 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 in good repair, and is equivalent to similar phrases referring to physical adequacy in appearance and for use. 2 It (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. 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 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 Iq (a) Base Rent §4.1 (b) Claim or Claims §10.1 (c) Concession Recitals, §D (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 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 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. 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 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. UNNUM 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 fails 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 6 �I 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 .tune 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 (1382 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 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 go 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 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. 43 Rent Credit. Tenant shalt 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 (1/2) 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 7 a) 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 sal& 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 8 a� _J (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; (8) Gash refunds made to customers in the ordinary course of business; (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 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` records. Tenant shall also furnish City copies of its quarterly California sales and use tax returns at the time each is fled 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, I 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 Citys 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 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 fumished 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 } 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 ? ". 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 bay: Open from. 7 :00 a.m. through 8:30 p.m., all sales and .rentals to cease at 7:30 p.m. 14 a (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. 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 10th 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 a J , 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 2) � 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 -3 J^ 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. S. 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 1 3 �5 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 Citv. 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 3 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 ' 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 23 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 1 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 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 J 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 tease. 27 q1 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 tease 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 a I 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 43 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 44 l (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 } (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 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 personas 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 tease shall terminate 33 Li I 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 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 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) 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 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 20.1 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 35 (} 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 byway 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� 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 (imitations on liability and actions, shalt 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 (attorneys 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; 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 i 3 IN WITNESS WHEREOF, the parties hereto have executed this Lease as of the date first written above. AT' M City Clerk APPROV AS TO FORM: By: Robin Clauson, City Attorney CITY OF a Municit By : YK1A, I f 1l r ,:l Edward D. Selich" Mayor of Newport Beach FUJI GRILL, INC. ( "Tenant`), By: Joh . Lee, `•.% President By: Fin balOfficer f Attachments: Exhibit A — Location of Premises Exhibit B — Proposed Menu and Sale Merchandise Fusers /CAT /Shared /AG /Lease Agreements /FujiGriH03- 26- 08clean.doc. ( "City ") 40 ji r .X 3 GO��P 300 � o �C2 O � O �W 9� r �.. �r r Concession Stand Leasing Area N W I, s 0 40 80 Feet EXhibiU 3029 Ocean FUJI GPILL-at the beach-CDMIMENU 03-24-08 1:00P[J I Breakfast Burrito with ewes, salsa, cheese and bacon - D — an ish or un 3 --ga-ge-1- mM a—ndcre-a-m —chees'e 4 Egg and bacon sandwich on a bun 5 " Fresh fruit �bowl 6 Fat free yogurt with fruit 8 Cheeseburger 9 Chili cheeseburger 10 Chicken sandwich -11 Club wrap (turkey, bacon, cheese, tomato, lettuce and spicy mayo wrapped in a flour tortilla) - U Southwest fish wrap (fish filet, chipotle mayo, tomato and cheese) Chicken fingers, ranch dressing and fries 14 with chili, cheese and jalapcn�o 15 All Bed Hot Dog 16 Cajun spiced hot link sausage Fried shrimp with sweet Thai sauce and fries $275 $5.50 $4-5.0 $5.50 18 Hotdog r it $ 5M 19 Chicken fingers $4.51 20 Corn dog Kids pLates are served withfmit 21 Chicken Teriyaki Bento $ H Grilled Salmon Bento 23-LTokyo Steak Bento it 24 una Salad $ _�picy 25 Fuji Grill Salad $ 26 House Blend CoII6e (Regular or Decaf)-- 5.00 $ 8.00 27 Iced Coffee $ 1500 $ 2000 35 Cup of chili 36 i Chili Fries 37 Scoop of tuna -38 Add bacon to a Burger or Sandwich 39 i Fruit cup 40 I Jalaomos Beach Chairs IBoogie B-Pards . PYWRIT R r it $ 5M T- 1.75 V 11 5.00 $ 8.00 $ 1500 $ 2000 11 $ 5.00 $ 8.00 PYWRIT R J EXHIBIT "'B" First Amendment — September 18, 2008 59 G 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 Re: 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 Won City's implementation of the hourly parking rate program at Corona del Mar State Beach. Q itv 14311 - 9100 ;,feu -por{ . Roulcvard - Post 01411c its J 9 N- -wpo, t Beach CahfCrr' is 926551' -8914 s N�t'W.CIC'y. tlil4 1L?it- t7Ci3Clt. C� «2.ii l September 48. 2008 ?age 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 approvals, please counter -sign this letter and return to my attention. Sincerely yours, i Dave'Kiff Assistant City Manager for the City of !Newport Beach 30 l Le @., Pr eS _ nt Fuji Grill at the Beach ,' cc: Glen Everroad Heather Flaherty Dave Kiff Chris Miller Mike Pisani Lois Thompson EXHIBIT "C" Second Amendment — February 3, 2009 0 t�3 i LEFT tLv- ,SAN K Exhibit C February 3, 2009 Mr. John d. Lee President Fuji Grill at the Beach 3029 Ocean Boulevard Corona del Mar, Califomia 92625 VIA E -MAIL AND US POSTAL SERVICE Re: Agreement by and between The City of Newport Leach ("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 Tenants 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. City Hail a 3300 NI mrort Boulevard * Post Office Box I W . 'Vt;ti4rw r Be?.eh California 916')8 -891 4 w Li'lA " %'.i�kt "P,t L�Ij C?TY £1i ci.C:Ii. C. ri.l7:i a� tVel,n , F" , y iC, I% Felhryare3 21),V if Tenant agrees to ti,s aboVe ter'7�=., please ccjnter---iQn "JS letter and return to- my .-r,,Iio..-i -?arlK You. Sincerely yours, Dave Kiff Assistant City Manager far the C of Newpor Beach i I oHr , -ee P-e , -4-ent Pup Gr;il at the Beach cc: Mynette Beauchamp Glen Evei road Steve Lev4s Evelyn Ts-Dg _ / -u �\,/./ r.: -; 3 V V, r :7:� ..� r11 i //�� u "� ;v ':� /: . r i nT � �, L: � �: ,,``\ ' �`_ �/ ,^.� ''; l t '.� •� �, ti '.� •� � �. -\ � \��� ., .` �.� �p \ \\ `\ � \ o ' v < `�y~ vh �. 7, l� '� " �'-� �, T X s !�? ,--, � ': !+ i i _ ', � Z � �. i x% j ?\ � i h�i ��...J� �++ j ,- �'OT- ree -n °cwa ul:ueru cls gel f :l lot rosy r. u•:;.r uua r-v:r , CERTIFICATE OF LIABILITY WSURANCE 61'23/200HY1 PRODUcRR ROSTAR INSURANCE & FINANCIAL SERVICES, INC. THIS CERTIFICATE tS ISSUED AS A MATTER OF INFORMATION j 3 60 WILSHIRE BLVD., 07200 ONLY AND CONFERS NO RIGHTS UPON THE CER- IFICATE I HOLDER THIS CERTIFICATE DOES NOT AMEND, EXTEND OR j LOS ANGELES, CA 9001 o ALTER THE COVERAGE AFFORDED BY THE POL ;CIE$ BELOW. I Fax: f213j487 -2715 _..� a 1� 1 DI 1.07 AON IN$ORERS AFFOPDING COVERAGE FUJI GRILL AT THE BEACH . INSURERS: 1515 W. CHAPMAN AVENUE ; sS C: 12EAa E I CA 92868 INSURERS: I COVERAGES THE POLICIES OF INSURANCE LISTED BELOV✓ HAVE BEEN ISSUED TO THE INSURED 1YAMED ABOVE FOR THE POLICY PEEMOD INDIOATEO. NOTWI`.HSTAND!NG ANY REQUIREMENT. TERM OR CONDITION OF ANY CONTRACT OR OTHER DOCUMENT WITH RESPECT TD WHICH THIS CERTIFICATE MAY BE ISSVEO OR MAY PERTAIN, THE INSURANCE AFFORDED BY THE POLICIES DESCRIBED HEREIN IS SUBJECT TO ALL THE =RALS, F+CLUSIONS AND CONDITIONS OF SUCH POLICIES. AGGREGATE" UfATS SHOWN MAY HAVE BEEN REDUCCD BY PAID CLAIMS. (POJCY r� PtRkT O QF. TYPE OF RESVRANC6 •' POWCY N4RSDER pA I MIDDN�'„_I O YBM'! Q6M HE GENEPAI. WNbIf.NY OCAGEiArLE 15 1,000,000 X I COf VIERCIALGENERALLIABI -BY j F(R..UhUAGESAU'x lie) S FIRS 100,600 CLAIMS MADE CODuR, MED FXPiAn'✓mre PtnTP 1 �5 5.000 A �� 1 CF00T09J68 3 6/15/2008 6/75/2009 1 PERSONA45ADVmiuR! js GENeR LAGGP.EGATE 1 _ 1,G00,000¢ 2,000,000f GCNLAWR5SATS AST APPLES PER: j I I PRODUCTS- COSIYIOPAGG 5 U) 'GOO ^` r ! POJCY Pj a I LOS f I I AUTDOOSU UASILFW 1 iCOMBINED SINGLE I fiofl' AN YAUTD j ( S .B Rn.tie'1f: xLC:+NED AUros 'BODILY INJURY 5 SCHEOULEO AUTOS 1 NIREC AVID$ BODILY iN AIRY I S NON -MVNED ALROS ' t I (Pm acdter.V rROPEH7Y DAMAGE S T I . � ecrmenl r GARAGE LZABEITY 1AUTO ONLY -EA ACCIDENT s ANY AUTO + O. Ek TVAN TA ACC IS IT— f AUTO ONLY. AGG j 3 1 mess WABILfTY ,EACH OCCURRENCE 5 1,OU0,0GGI DCCUR CLARRSMACc AGGHECAYE _ I._O_QO.✓3_OO B : EBU4613063 6 /15,1ZOi,B 6/15/2009 ! ' DEDLcrIBI.E I s RETENTION S I 5 WORKERSCOMPFR&& ONA#O I I X Q4T UMl S 'si _ EMPLOYEES WAdWT.Y i EL EACH AGGIDENT is 1.000,0001 C WEN0046493 -01 6/75/2008 ! 6/15/2009 EL 015EASE -EA EMPLO s 1,000,0001 ( i EL.aSF.�sE- PGtcYwnlT s 1,0 0Q000 pESP.RIPTIONOF OPERATIDK &A.0CA1'bN"JVEWiCLE3/EXCLU51ON5 AQUE06Y €NDQRSEMETFl /$PECyL PROViSiONS THE CITY, ITS ELECTED OR APPOINTED OFFICERS, OFFICIALS, EMPLOYEES, AGENTS AND VOL LINTEL ERS, AND TEH STATE OF CALJFORNfA, ITS ELECTED OR APPOINTED OFFICERS, OFFICIALS, EMPLOYEES, AGENTS AND VOLUNTEERS. ARE TO BE COVERED AS ADDITIONAL INSUREDS, WITH RESPECT TO LIABILITY ARISING OUTOF WORK PERFORMED BY OR ON BEHALF OF THE TENANT. r ' 360UG0AYYCFTHEA901iEDESORIBEb POL'GES BECAIWELLED0r3UftEitLE XPIRAtION CAY OF NEWPORT BEACH DATE TNEgG3F, mE IBBWNG NsuRER mu ENDEAVOR TO PM 30 DAYS Wkm?.N NOTYETO THE CERTIFICATE HOLDER NAMED TOTHE LEFT, OUT PAXURE MDO W SHALL 3300 NEWPORT SEACX BLVD. � a4PDSE NO 09UGAMN OR UABILn : Di^ ANY KIND UPON THE INSURER ITS AGENTS Ok REPRESENTATNSS NEWPORT BEACH CA 92659-8915 A/ RPS�prAYr✓E/ '�. LAX LE W el Ram a=b� 13.57m W9.I AN LP: LAW OAS w e123W -1353 Cl Uesrnem» PF "'IL' This fax was received by FAX -CN9 on Line 2 Itam 2134877188 I Kostar Insurance & Financial Stn-ices, !no 3460 Wilshire Blvd., #1200 Los Angeles, CA 900I0 Tel: 213 -487 -4800 Fax: 213-487-2115 December 30, 2008 From: Kostar Insurance & Financial Services, Inc 3460 Wilshire Blvd., #1200 Los Angeles, CA 90010 To: City of Newport Beach 3300 Newport Beach;Blvd, NewWrn Beach, CA 92658 -8915 Re: Fuji Grill Corona Del Mar LLC DBA: Fuji Grill At The Beach Policy #: CF00109169 To whom it may concern, Please be advised ;hat the patio area of Fuji Grill Corona Del Mar LLC, (DBA: Fuji Grill At The Beach) has coverage under Acceptance Indemnity Company - policy # CP00109M. Si nar. K win-al Servlccs, Inc. This fax was received by FAX -CN6 op Line 2 from 2134877188 b1 From 1134877 88 Pa, 314 U -' "1110011q •1 A.^ 32 •t1 rGC- 1i -4uub ul INUM-0.116R IN2VAM 4;4Y; GC: L(, 'Of 1100 1-0J- . uVVV' r -411 Kostar Insurance & Financial Stn-ices, !no 3460 Wilshire Blvd., #1200 Los Angeles, CA 900I0 Tel: 213 -487 -4800 Fax: 213-487-2115 December 30, 2008 From: Kostar Insurance & Financial Services, Inc 3460 Wilshire Blvd., #1200 Los Angeles, CA 90010 To: City of Newport Beach 3300 Newport Beach;Blvd, NewWrn Beach, CA 92658 -8915 Re: Fuji Grill Corona Del Mar LLC DBA: Fuji Grill At The Beach Policy #: CF00109169 To whom it may concern, Please be advised ;hat the patio area of Fuji Grill Corona Del Mar LLC, (DBA: Fuji Grill At The Beach) has coverage under Acceptance Indemnity Company - policy # CP00109M. Si nar. K win-al Servlccs, Inc. This fax was received by FAX -CN6 op Line 2 from 2134877188 b1 From. 013 ,1877'88 Page ^la D-i - 9rt'ror ^4 t� eF a� nn _ Lf'uarm rwM—nvd ixrt InSuaAnbc nx?iyw c,: ccI I 10 s rOaG r. VVgfu THIS ENDORSEMENT CHANOES Tilt POLICY. PLEASE REAR IT CAREFULLY, CG 2012 07 96 AE3DMOVAL INSURED a STAtE OR POLMICAL SUBDIVISIONS - PERMITS h s ardor semenid fie& €nsurance provided under the following: COMMERCIAL GENERAL I IABUTY COVERAGE PART This endorsement changse the policy effective on the inception date of the policy unless another date is indicated below. Endorsement effecW -3 Polley No. 061'15/2008 12:01A_M. standard time CP00109I68 Named insured Countersigned by pp i TTHF. DBA: FUJI SRILL s 13 Cg--' SCHEDULE State Or Political SUbdl aka: CITY OF NEWPORT BEACH. 3300 NB ?ORT B ACH BLVD A-EVMCRT BEACH, CA 92658 -8915 (Auftrizod Representetive) (tf no entry appears above, infotmadlon required to complete this endorsement wAl be spawn in the Declarations as applicable tothis endorsement.) Section If - Who is Art Insured is amended to Include as an Irtei red any state or political subdivision shown In the. Schedule, subject to the fallowing prrWisions: 1, This insurance applies only with respect to opera ions periornned by you or on your behalf for which the Meteor pordfral subdivision has Issued a permit 2. This insurance does not apply to: a- "Bodily in)urY,', `property damage" or'persoraf and adve ilsing injury' arising out of operations Wormed for the state or municipality, or b. "Bodily injury or `property damage° Ino€uded within the " products- mmpieted opetatiarts e4tzardo- cL942t7 -" ca 20 12 07 as [kowaln, IAInn�ftm services ofce, pia.,.IM7 Pogo I of 1 This fax was received by FAX -CN8 on Line 2 from 213077188 I EXHIBIT "D" Depiction of Patio Premises Exhibit D P ANTING ='De s° °canoe PLANTING B ❑ X BpX MARINE LIFE REFUGE ° SUPERVISOR �e ° �v ,JI GRILL_ —AT Q�'F -1E BEACH Q 9 ° EXISTING o SEAT WALL O� p , I ° O LIFEGUARD OFFICE STORAGE o' °r. pA7io , PRCH19tS 14529523 JDHN 08 JOHN i 0 0 C -yol7 Corona del Mar State Beach CONCESSION AND LEASE AGREEMENT between THE CITY OF NEWPORT BEACH m FUJI GRILL, INC. &p EFFECTIVE&p,:', q, 'a.b� 0 0 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 Tenn 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 0 T. UTILITIES 19 S. ALTERATIONS TO THE PREMISES 8.1 Tenant Improvements 19 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 Tenn 20 9. MAINTENANCE OF PREMISES 9.1 Maintenance and Repair by Tenant and City 21 9.2 Entry by City 21 21 10. INDEMNITY AND EXCULPATION; INSURANCE 10.1 Hold - Harmless Clause 22 22 10.2 Exculpation of City 22 10.3 Insurance 23 11. DAMAGE OR DESTRUCTION OF PROJECT /PREMISES 11.1 Destruction of Premises 26 26 11.2 Replacement of Tenant's Property 27 11.3 Destruction of Project 27 12. ABATEMENT OF RENT 12.1 General Rule 28 12.2 Abatement/Maintenance 28 28 13. PROHIBITION AGAINST GENERAL ASSIGNMENT, SUBLETTING AND ENCUMBERING 13.1 Prohibition of Assignment 28 13.2 One -Time Transfer 28 29 13.3 Exceptions 30 13.4 Continuing Effect 30 14. DEFAULT 14.1 Default by Tenant 30 30 14.2 Remedies 31 15. SUBJECT TO STATE OPERATING AGREEMENT 33 1B. WASTE OR NUISANCE 34 17. NO CONFLICTS OF USE, HAZARDOUS MATERIALS 34 18. CITY'S DEFAULTS/TENANrS REMEDIES 35 19. NOTICES 35 0 41 20. GENERAL PROVISIONS 36 20.1 Independent Contractor 36 36 20.2 Surrender of Premises 36 20.3 Compliance with all Laws 36 20.4 Waivers 37 20.5 Severability 37 20.6 Applicable Law 37 20.7 Entire Agreement; Amendments 38 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 39 20.13 Gender; Number 39 20.14 Exhibits 39 20.15 City Business License 39 20.16 Costs and Attorneys Fees LIST OF EXHIBITS A Location of Premises B Proposed Menu and Sale and Rental Merchandise 0 0 Corona del Mar State Beach Concession and Lease Agreement This Concession and Lease Agreement ( "Lease ") is made and entered into as of the L&day of f aW2008 ( "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 ill 10 was unable to reach agreement with any of the applicants. On August 20, 2007, a third (3ro) 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 - clean, and in good repair, and is equivalent to similar phrases referring to physical adequacy in appearance and for use. 2 • (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. 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 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 • i (a) Base Rent §4.1 (b) Claim or Claims §10.1 (c) Concession Recitals, §D (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 0) 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. 0 0 0 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 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 001100 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 671100 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 0 0 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 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 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 T 0 10 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 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 (1/2) 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 7 0 0 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 T 0 0 (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 E 0 0 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 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 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 11 0 • 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 0 0 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 0 0 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. 14 • (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. 15 0 0 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 10th 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 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 pavment 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 • 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. W] i 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 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 9 9 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 0 10. INDEMNITY AND EXCULPATION; INSURANCE E 10.1 Hold -Hann less 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 9 0 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 23 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 0 0 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: L 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 • 0 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 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 (3o) 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 0 0 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 W 0 0 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 Citys 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 • • 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; w 0 0 (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 0 (1) Reentry without Termination. 0 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 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 0 0 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 0 0 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 DEFAULTSITENANT'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 Tenants 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 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) 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 W7 • • 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 9 0 0 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 Agreements 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 0 0 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 (attorneys excepted) in connection with the negotiation or making of this Lease. 20.12 Table of Contents: Headinos. The table of contents of this Lease and the captions of the various sections of this Lease are for convenience and ease of reference RE • • 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 bro ught 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 IN WITNESS WHEREOF, the parties hereto have executed this Lease as of the date first written above. ATTEST: llz� f M - da'lzw B LaVonne Harkless, City Clerk APPRO `;AS TO FORM: By: Robin Clauson, City Attorney CITY OF NF,�VPORT CH ("City"), a Munici l Corporati n Edward D. Sellch, ' Mayor of Newport Beach FUJI GRILL, INC. ("Tenant"), By: Jo J. Lee, President By: FinarVial officer Attachments: Exhibit A — Location of Premises Exhibit B — Proposed Menu and Sale Merchandise F: users/CAT/Shared/AG/Lease Agreements/FujiGriII03-26-08clean.doc .R a a EXHIBIT B FUJI GRILL -at the beach -CDM MENU 03 -24-08 1:OOPM 1 Breakfast Burrito with eggs._ salsa, chase and bacon $5.50 2 . Danish or muffin $3.00 3 _ Bagel and cream cheese $2_75 4 Egg and bacon sandwich on a bun - - -- $5.50 5 Fresh fruit bowl $4.5_0 6 Fat free yogurt with fruit _ - - - - $5.50 7 Angus beef hambur$er $5.50 . 8 cheeseburger .._ - - i .. $5.75 9 Chili cheeseburger - - - -- - - -- - - - - -- - - -- - _ -- i- $6.25 - 10 _.. Chicken sandwich $5.50 11 _._ _Club wrap (turkey, bacon, cheese, tomato, lettuce and spicy mayo wrapped in a flour tortilla) - _ _ $6.50 _ 12 Southwest fish wrap (fish filet, cbipotle mayo, tomato and cheese) $6.25 13 - - Chicken fingers, ranch dressing and fries - -- $6.95 1_4 _ _ _ _ Nachos with chili, cheese and jalapenos_ _ _ _ _ - _ ! 1 ._ - $5.25 _ 15 _ .... All Beef Hot Dog $3.75 16 _ Cajun spiced hot link sausage $4.25 17 _ Friod shrimp with sweet Thar sauce and fnes - - _ $9.50 18 Ilot dog $2.75 19 Chicken fingers $4.50 -- - -- -- - - -- - -- - - -- - $4.00 .Kids plates are served with fruit 21 ChickmTeriyaki Bento $6.25 22 - --- --- - -- -- - r Grilled Salmon Bento - - - - .. 23 Tokyo Steak Bento $8.00 24 i Spicy Tuna Salad $6.95 25 Fuji Grill Salad $7.50 26 : _House Blend Coffee (Regular or Decafl _ -- - -- - - - -- -_- $ _ 2.00 _ - 27 ' Iced Coffee 1 ! $ 2.50 28 - _ _ - _ _ - _ Iced Tea $ 2.00 $ 2.50 29 Bottled Water $ 2.00 30.Smoothie -SITS _ (Blueberry or Wild Cherry)-- __ - - -, -_ _._-- ._._... oda - - - - S - - - $ 4.50 125 $ 1.95 32 j Non -Fat Frozen Yogurt (Plain or Flavored *) $ 3.00 1 $ 5.75_ _ _ ' Rotating Flavors: Green Tea,_Bluebmy, Strawberry *Yogurt Toppings: M&Ws. Gummy Bears. Granola, Almonds, Bluebemes, Strawberries. $ 0.75 - 33 Crispy Ines 2.50 - 34 Onion rings $ 3.00-: _ 35 Cup of chili- $ 3.00 1 _ 36 Chili Fries $ 4.50 i 37 1 Scoop of tuna $ 5.00 38 _ Add bacon to a Burger or Sandwich 1 $ 1.75 39 Fruit cup - - - 40 Jal os $ 1.25 Beach Chairs S.. 3.00 $ 5.00 $ _ 8_00 Boogie Boards $ 8.00 $ 15.00 $..--20.00. Umbrellas $ 3.00 i $ 5.00 $ 8.00 EXHIBIT B FL-2) 0 • CITY OF NEWPORT BEACH CITY COUNCIL STAFF REPORT Agenda Item No. ' February 12, 2008 TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL FROM: City Manager's Office Revenue Division, Administrative Services Dave Kiff, Assistant City Manager Evelyn Tseng, Income Contract Administrator 949- 644 -3002 949 -644 -3153 DKiff0city.newport- beach.ca.us ETseng(a)citv.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? 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: 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. 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 rAward of CDM Concession February 12, 2008 Page 2 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 staff's recommendation based on Rudy's request for a liquor license. On August 31, 2007, City issued its third Request for Proposals. The City received six proposals: 1. Beach Concepts, Inc. - $72,000 base rent for first 3 years, 5% increase for 4'h and 5'" years. 2. Fujiyama Grill - $80,000 or 15% of gross, whichever is greater. 3. Gallo's - $3.00 /sq. ft ($37,548 /year) or 15% of Gross Receipts, whichever is greater. 4. Gina's Pizza — declined City's RFP offer, but did not counter -offer. 5. Nickerson - $80,000 or 15% of gross, whichever is greater. 6. Purple Urchin - $1- $250,000 - 12% of gross receipts; $250,000+ - 15% of gross receipts Recommendation. City staff selected Fuji Grill, Inc., an established business in Newport Beach with franchises throughout Orange County, because it provided the most favorable response based on rent, menu, references and experience. Council Subcommitee Review. On January 3, 2008, Council Members 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 described 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. City shall own the improvements upon the termination of the Agreement; • • Award of CDM Concession February 12, 2008 Page 3 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. Fuji Grill 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: City shall provide one (1) designated parking space for customer food pickup and vendor loading and unloading. PROPOSED PARKING PROGRAM: City intends to implement a new parking program at the CdM parking lot in which a daily rate shall be imposed from Memorial Day through September, and an hourly rate, with a Pay Machine, from October through the Friday before Memorial Day. If a Pay Machine (or similar) program is not in place by September 2, 2008, then City and Tenant shall participate in the following parking refund program: FALLBACK PARKING PROGRAM: Tenant shall 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 CdM. 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 10th of each month, Tenant shall present the amount of parking reimbursements for the previous month to City, with receipts and proof of validation. 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 difference in the number of cars parked at the CdM 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 CdM parking lot, and on September 2007, 75 cars parked at the CdM 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, i.e. — after the expiration of the TI rent credit. All parking rent credits prior to that first rent payment shall be cumulatively applied to that first months rent payment. 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 CdM. • • Award of CDM Concession February 12, 2008 Page 4 EMPLOYEE PARKING: City shall provide 8 Annual Blue Pole Parking Permits for Tenant's 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 eadier 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. Prepared by: SIGNATURE Submitted by: SIGNATURE Evel Tseng come Contract Administrator Dave Kiff, Assistant City Manager Attachments: Request for Proposals, dated August 31, 2007 • • Award of CDM Concession February 12, 2008 Page 5 Attachment is available for review in Dave Kiff's office. 0 0-4011 0 CITY 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 Ki f, Assistant City Manager 949 - 6443002 DKif 0cdtv.newport- beach.ca.us Revenue Division, Administrative Services Evelyn Tseng, Income Contract Administrator 949 - 6443153 ETsenaecitv.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. 0 0 Award ofCOMCon OMWn 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 $80,0001year, as adjusted annually by CPI, or 15% of gross sales, whichever is greater; RENT COMMENCEMENT: Rent Commencement Date will be the eartier 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 Tenant's 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. M • *Award orCOM Concession January 22, 2008 Page 4 Prepared by: Submitted by: SIGNATURE SIGNATURE Evelyr%Teeng, lreo9 Contract Administrator Dakr%iff. Assistant iiy Manager Attachments: Request for Proposals, dated August 31, 2007 9 0 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 92858 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's 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 to 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. The City reserves and may exercise the following rights and options with respect to evaluation of proposals and selection for negotiation: i. 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; H. 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 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. • 0 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: 16 0 • 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 proposals - 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 • 41 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. 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') 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 12 0 The successful applicant Agreement with the City, Beach City Council. EXHIBITS 0 will be required to execute the Concession Lease which is subject to formal approval by the Newport A. Concession Floor Plan B. Proposed Agreement C. Vendor Application Form D. RFP Submission Checklist is 0 0 EXHIBIT "A" CONCESSION FLOOR PLAN (ATTACHED) p 0 0 X&RIAlf -•Al t16 Rt t I j 95 UE t16 Rt t I j 95 EXHIBIT "B" 0 PROPOSED CONCESSION LEASE AGREEMENT (ATTACHED) If, 0 0 LEASE AGREEMENT Corona del Mar Concession This Lease is made and entered into as of the _ day of _ ( "Effective Dotal, 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 (r) RFP was issued and City selected Tenant. 11 • i 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. 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 -dean, 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 0 0 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. 0) 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 A 0 0 (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 Me 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 Bead. 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 0 0 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 confinue in possession of the Premises after Expiration of the Term or any Option Term, Tenants 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. UNNIMI 4.1 Base Rent. The Base Rent shall be established at Eighty Thousand and 001100 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 charges 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 Departrnent 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) _PAM nt. 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 Renr 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 (251h) 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. sz 0 0 4.3 Revenue from Premises Use in Film. Television. and/or Adverfisina. 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 Citys 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, sublicansees, licensees, permitiees 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.W), 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 21 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 stall 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 i (5) Sums and credits received in the settlement of claims for loss of or damage to merchandise; (8) 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 (S) 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 andfor 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 zs 0 • 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 (295), in which case Tenant shall pay all City's reasonable costs of the audit. City shall keep any information gained from such YL 0 0 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 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.shail 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. Z-1 • • 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 penatties, from the date due until paid. S. BUSINESS PURPOSES AND USE OF PREMSES 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 W. 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 woiclt 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. 29 0 9 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 Dinina. 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 bead 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) - z9 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 Eood 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 Disalay. 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. 5.9 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 lM 0 0 written consent of the City Manager, which approval will not be unreasonably withheld but may be conditioned. 5.12 Parking for Employees. City shall provide four (4) designated parking spaces and eight (S) 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 Payment of Taxes. Tenant shall pay directly to the appropriate taxing authorities all taxes applicable to this Lease, fixtures and Tenants 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 Tenants 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 Tenants 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, Tenants personal property, or Tenants occupation and use of the Premises, including the right to apply for reduction. If Tenant seeks a reduction or contests such taxes, Tenants failure to pay the taxes shall not constitute a default as 31 s • 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 pennit 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 B p.m. on non - holiday weekdays. 3Z 0 0 S. 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 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 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. 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 Tenants 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 fumishings, equipment, facilities, improvements, alterations, attachments and appurtenances not provided by City, but required for concession operations, including all kitchen equipment and interior furnishings, shalt 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¢ 0 0 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, servard, 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 cerfificates 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. so (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 Califomia, 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. H. 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 body 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 3-) i • 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. 31 0 9 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 pokey 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 Tenants 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 PROJECTIPREMISES 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, 51 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 Reolaoement of Tenant's Prooeln. 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 foctures, 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 i • 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 Wopening 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 7 • principals. Consequently, Tenant shah 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 show 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 -17- • s 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 (2596) 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. Citys 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, conditkms 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 looted 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 Tenant's 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 sg 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 Tenants 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 Cafitomia 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 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 Tenants Personal Property. City may use Tenants 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 45 operate the Concession in any manner tending to indicate that the Concession is affiliated with, part of or operated in conjunction with Tenants business. (b) CIWs Riots to Cure Tenants Default Upon continuance of any material default beyond applicable notice and cure periods, City may, but is not obligated to, cure the default at Tenants 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 performancee 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. 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 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 14 • a 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 Tenn 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) days advance written notice to City in the event that Hazardous Materials are detected at the Project and the presence or the remediiation 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. 41 0 0 113. CITY'$ DEFAULTSfrENANTS 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 92656 (949) 6443000 49 20. If to Tenant, to: 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 AA 0 0 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 tirne of the execution of this Lease. Any action brought relating to this Lease shalt be adjudicated in a court of competent jurisdiction in the County of Orange. 25. 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. x, 25.5 if any conflicts arise between the terms and conditions of this Lease, and the terns 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. 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. 5% 0 0 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. 32 0 0 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] 0 0 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 By: Steve Rosansky, Mayor of Newport Beach ATTEST: LaVonne Harkless City Clerk ('Tenant'} BY President APPROVED AS TO FORM: Aaron Harp Assistant City Attorney 34 EXHIBIT "C" CITY OF NEWPORT BEACH VENDOR APPLICATION FORM TYPE OF APPLICANT: Legal Contractual Name of Business: Owner's Name: Business Mailing Address: Clty, State and Zip Code: E -Mail Address Phone: General Business ❑ NEW ❑ CURRENT OPERATOR Fax: 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 55 0 0 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 Ea 0 Please provide the following: Federal Tax Identification Number: 0 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" C 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 wr