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Item 10 - Reso Approving New Lease Agreement with Hamburger Factory Inc & 1st Amendment Transferring Lease to Cheeseburgers in Poway LLCDATE: TO: FROM: CONTACT: SUBJECT: Summary: AGENDA RE PO RT City of Poway August 1, 2023 Honorable Mayor and Members of the City Council Audrey Denham, Director of Community Services ~ Audrey Denham, Director of Community Services (858) 668-4585 or adenham@poway.org CITY COUNCIL Resolution Approving a New Lease Agreement with Hamburger Factory, Inc., and First Amendment Transferring the Lease to Cheeseburgers in Poway, LLC The Hamburger Factory has been owned and operated by the Spear and Casse family since 1998. The Spear family has decided to sell the Hamburger Factory to Cheeseburgers in Poway, LLC, owned by Josh Arbenz. The City owns the land and building that houses the Hamburger Factory. Staff recommends approving 1) the new Lease Agreement with Hamburger Factory, Inc.; and 2) the First Amendment to transfer the lease to Cheeseburgers in Poway, LLC, doing business as the Hamburger Factory. Staff has reviewed Josh Arbenz's Hamburger Factory business plan and determined he has the financial wherewithal to operate the Hamburger Factory. Recommended Action: It is recommended the City Council adopt the Resolution Approving a New Lease Agreement with Hamburger Factory, Inc. and the First Amendment to the Lease Agreement Transferring the Lease to Cheeseburgers in Poway, LLC, and authorize the City Manager to execute all necessary documents related to the Agreement. Discussion: In December 1986, the Poway Redevelopment Agency purchased a 5.5-acre parcel of land located at 14122 Midland Road for the development of Old Poway Park. The purchase included the building that currently houses the Poway Heritage Museum and the Hamburger Factory restaurant. Title to this property was later transferred to the City of Poway. In October 1989, the City of Poway entered into a lease agreement with Joseph and Lisa Lucidi for the Hamburger Factory building. In January 1999, City Council gave the Lucidis approval to assign their lease to Hamburger Factory, LLC. The lease was amended in July 2004, and updated to reflect the new owners, Phil and Cleta Spear, had formed a corporation, Hamburger Factory, Inc. In January 2011, a long-term lease was renegotiated with the Spear family and approved by City Council. 1 of 43 August 1, 2023, Item #10 The Hamburger Factory is well known among Poway residents and is a long-time tradition for many. The Spear and Casse family dedicated 25 years to the Poway community and their support goes beyond serving great food. Many will remember the Spear and Casse family for their generous donations and volunteer work across the community. After careful consideration and in coordination with the City, the Spear family decided to sell the Hamburger Factory to Josh Arbenz, owner of Cheeseburgers in Poway, LLC. The Spear family's decision to sell was made knowing Cheeseburgers in Poway, LLC would continue to operate the Hamburger Factory as a family restaurant with strong ties to the community. Per the Lease Agreement (Attachment B), the City is responsible for vetting and approving the transfer of the Lease Agreement. In the attached Hamburger Factory business plan (Attachment D), Josh Arbenz outlines his plan for the restaurant including cost control, revenue growth, concept plans, experience, and core values. Additionally,Josh Arbenz was required to demonstrate financial strength and experience. Based on the Hamburger Factory business plan, review of profit and loss statements and balance sheets for Josh Arbenz's existing businesses, staff determined he has the financial wherewithal to operate the Hamburger Factory. Additionally, Dave Casse, President of Hamburger Factory, Inc. submitted a letter supporting the transfer of the Lease Agreement to Cheeseburgers in Poway, LLC (Attachment E). Staff negotiated a new Lease Agreement with Hamburger Factory, Inc. The following is a summary of significant changes made to the Lease Agreement: 1. Term -the initial term of the lease is 10 years. Upon mutual agreement, the term of this Lease Agreement may be extended for one 10-year extension period and one 5-year extension period for a total of 25 years. 2. Rent -rent will remain the same at $7,550 and will increase to $8,643 beginning July 1, 2025. Beginning July 1, 2026, annual rent will be adjusted by the annual change in the Consumer Price Index, not to exceed 5%. 3. Repayment of Poway Emergency Assistance Recovery (PEARL) Loan and Unpaid Rent -upon sale of the Hamburger Factory business the current tenant is still responsible for paying the PEARL loan and unpaid rent as described in the Lease Agreement. 4. Repair and Maintenance -Beginning August 1, 2024, the tenant will be responsible for interior and exterior repair and maintenance of the building. The City's repair and maintenance responsibilities will be limited to the grounds outside the building, air conditioning and heating equipment, holiday lights, entrance signage on Midland Road and the fire riser located in the Poway Heritage Museum. Following approval of the Lease Agreement, City Council may approve the First Amendment (Attachment C), which transfers the Lease Agreement to Cheeseburgers in Poway, LLC. The First Amendment also ensures the responsibility of repayment of the PEARL loan and unpaid rent remains with Hamburger Factory, Inc. Environmental Review: This action is not subject to review under the California Environmental Quality Act (CEQA). Fiscal Impact: Approval of this action would not result in an increase in lease revenue until July 1, 2025. At that time, 2 of 43 August 1, 2023, Item #10 the lease revenue paid to account 205020-74600 would increase by $13,111 annually. This action would also result in a reduction in building maintenance expenses due to the transfer of most maintenance requirements to the tenant. Public Notification: None. Attachments: A. Resolution B. Lease Agreement C. First Amendment to Lease Agreement D. Hamburger Factory Business Plan E. Hamburger Factory Letter of Support Reviewed/Approved By: Wendy serman Assistant City Manager 3 of 43 Reviewed By: Alan Fenstermacher City Attorney Approved By: Ch~ City Manager August 1, 2023, Item #10 RESOLUTION NO. 23- A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF POWAY, CALIFORNIA, APPROVING AN AMENDED LEASE AGREEMENT WITH HAMBURGER FACTORY, INC., AND THE FIRST AMENDMENT TRANSFERRING THE LEASE TO CHEESEBURGERS IN POWAY, LLC WHEREAS, the City of Poway (the "City") is the owner of the building at 14122 Midland Road commonly referred to as the Hamburger Factory (the "Facility'); WHEREAS, City and Hamburger Factory, Inc. (the "Lessee") entered into that certain Hamburger Factory Lease dated January 1, 2011; WHEREAS, Lessee is in escrow to sell its business to Cheeseburgers in Poway, LLC (the "New Lessee"); WHEREAS, City, Lessee, and New Lessee have negotiated the terms for an Amended and Restated Lease Agreement with Hamburger Factory, Inc. (the "Amended Lease") included in the staff report as Attachment B and a First Amendment to the Lease Agreement with Hamburger Factory, Inc. (the "First Amendment") included in the staff report as Attachment C that will transfer the Amended Lease to the New Lessee; and WHEREAS, execution of the New Lease by the City and the Lessee is exempt from the California Environmental Quality Act (CEQA) because the continuation/extension of a lease of government property to a new lessee, without material physical changes, will not result in an result in any direct or reasonably foreseeable impacts on the environment, and thus the project is exempt under the Class 1, Class 2, Class 3 and Class 32 categorical exemptions (see, CEQA Guidelines sections 15301 through 15303, 15332), as well as the so-called "common sense" exemption set forth in Section 15061 (b)(3) of the CEQA Guidelines; and WHEREAS, the California Surplus Land Act ("SLA") does not apply to the Amended Lease, because the Facility was already been disposed by long term lease in 2011, and thus it is not surplus land, nor does change of the operator of the Facility or extension of the term of the Lease otherwise trigger the SLA. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Poway as follows: SECTION 1: The foregoing recitals are true and correct, and incorporated into this Resolution by this reference, as if fully set forth herein. SECTION 2. The City Council hereby authorizes and directs the City Manager or designee to 1) take all actions and to execute any and all documents, instruments, and agreements necessary or desirable on behalf of the City, as approved by the City Manager and City legal counsel, including, without limitation, the Lease Agreement with Hamburger Factory, Inc., to implement and effectuate the lease of the Facility by City to the New Lessee, and to effectuate all other actions approved by this Resolution, including, without limitation, approving changes, implementations, or revisions to documents, instruments, and agreements as determined necessary by the City Manager or designee and approved by City Attorney, and 2) administer the City's obligations, responsibilities, and duties to be performed pursuant to this 4of43 ATTACHMENT A August 1, 2023, Item #10 Resolution No. 23- Page 2 Resolution and all documents, instruments, and agreements required by and for the lease of the Facility by the City to the Lessee. SECTION 2: This Resolution shall take effect upon the date of its adoption. PASSED, APPROVED AND ADOPTED at a Regular Meeting of the City Council of the City of Poway, California on the 1st day of August, 2023, by the following vote, to wit: AYES: NOES: ABSTAINED: ABSENT: DISQUALIFIED: Steve Vaus, Mayor ATTEST: Carrie Gallagher, CMC, City Clerk 5 of 43 August 1, 2023, Item #10 LEASE AGREEMENT This AMENDED AND RESTATED LEASE AGREEMENT (the "Lease") is entered into as of August 1, 2023 (the "Effective Date"), by and between the City of Poway, a Municipal Corporation (the "City"), and Hamburger Factory, Inc., a California Corporation (the "Tenant"), collectively referred to herein as the "Parties". RECITALS WHEREAS, the City owns the property located at 14122 Midland Road, Poway, California, as shown in the attached Exhibit "A" (the "Premises"), and is commonly known as the Hamburger Factory (the "Hamburger Factory"); WHEREAS, on January 1, 2011, the City entered into the current Lease Agreement ("Original Lease") with the Tenant; WHEREAS, the Original Lease is over eleven (11) years old and will expire on January 1, 2025; WHEREAS, the Parties seek to enter into this amended and restated Lease, which shall completely supersede the Original Lease, to define the roles and responsibilities of the City and the Tenant, including the obligation for the payment of all expenses; WHEREAS, as set forth in more detail in Section 5 herein and unless specifically indicated otherwise in this Lease, the Parties agree that the Lease is generally a "triple net" lease, where Tenant is solely responsible for all utilities, taxes, insurance and maintenance; and WHEREAS, as of the Effective Date of this Lease, the Original Lease shall have no further force and effect; · WHEREAS, for good and adequate consideration, the Parties desire to enter into the Lease to allow continued operation of the Hamburger Factory by the Tenant. NOW, THEREFORE, the City and Tenant hereby agree as follows: ARTICLE I Section 1.01 DESCRIPTION OF LEASED PREMISES Description City leases to Tenant and Tenant leases from City the Premises situated at 14122 Midland Road, Poway, California, consisting of approximately 5,280 square-feet, which 6 of43 I ATTACHMENT B 8/1/2023 August 1, 2023, Item #10 includes 1,493 square-feet of patio area, 3,575 square-feet of dining/kitchen area, and 212 square-feet of storage area, as shown in Exhibit "A". Also included as part of the Premises is 273 square-feet of trash enclosure. ARTICLE II Section 2.01 COMMON AREAS Tenant's Non-Exclusive Right to Use Common Areas Common Areas, include, but are not limited to, all parking spaces adjacent to the Premises, the boardwalk area adjacent to the Premises, outdoor park restrooms, grass lawn areas, and all park amenities. Common Areas are used by others who are entitled to use the Common Areas including the public using nearby public property and facilities, subject to City's rights set forth in Section 2.02. Tenant and its authorized representatives and invitees shall have the nonexclusive right to use the parking spaces adjacent to the Premises. The Common Areas are generally shown in the attached Exhibit C. Section 2.02 City's Maintenance and Management City shall maintain the Common Areas in good condition at all times. City shall have right to: a. Establish and enforce reasonable rules and regulations applicable to Tenant concerning the maintenance, management, use and operation of the Common Areas. b. Temporarily close any of the common areas for maintenance purposes. Except in the case of emergencies, Tenant will be given a minimum of 24-hour notice. c. Select a person to maintain and operate any of the Common Areas if at any time City determines that the best interests of all parties will be served by having any of the Common Areas maintained and operated by that person. City shall have the right to negotiate and enter into a contract with that person on such terms and conditions and for such period of time as City deems reasonable and proper, both as to service and as to cost. d. Make changes to the Common Areas, including, without limitation, changes in the location of driveways, entrances, exits, vehicular parking spaces, parking area, or the direction of the flow of traffic following written notice to Tenant. e. Control program hours and special events without the consent of Tenant. All park, recreation programming, and facility related concerns and coordination should be addressed by Tenant with the Community Services Director or designee. The City and Tenant shall meet quarterly to discuss Lease administration. 2 8/1/2023 7 of43 August 1, 2023, Item #10 f. Close parking lots, including the parking lot adjacent to the Premises, for special events. Tenant shall be given a minimum of forty-five (45) days' notice. g. The Director of Community Services or designee shall be the point of contact for the City. Both Parties shall designate, in writing, one point of contact responsible for Lease administration. Both Parties are responsible for promptly notifying the other party if there are changes in the point of contact. ARTICLE Ill Section 3.01 TERM Primary Term The term ("Term") of this lease shall be for a period of ten (10) years commencing August 1, 2023, and expiring, unless terminated or extended per Section 3.02 prior to the expiration of the Term, on the tenth anniversary of the date the Term commences. Section 3.02 Extended Term Provided Tenant shall not then be in default hereunder, the Tenant and City, upon mutual agreement, may extend the Term of this Lease for one (1) ten-year extension period and one (1) five-year extension period, upon the same terms and conditions herein contained, except for the minimum monthly rent, upon delivery by Tenant to City of its written notice of such election at least sixty (60) days prior to the expiration of the current Term. The minimum monthly rent during the extended term shall be subject to adjustment annually as set forth in Section 4.02 herein. ARTICLE IV Section 4.01 RENT Rent Subject to adjustments as hereinafter set forth, Tenant shall pay to City monthly rent, without deduction, setoff, prior notice, or demand, the sum of seven thousand, five hundred fifty dollars ($7,550) per month in advance on the first day of each month, commencing on the date the term commences. Effective July 1, 2025, Tenant shall pay to City monthly rent, without deduction, setoff, prior notice, or demand, the sum of eight thousand, six hundred, forty-three dollars ($8,643) per month in advance on the first day of each month and continuing for a twelve (12) month period . The Parties agree that this rent represents fair market value for the occupation of the Premises. Monthly rent for the first month or portion of it shall be paid on the day the term commences. Monthly rent for any partial month shall be prorated at the rate of one-thirtieth (1 /30) of the rent per day. Section 4.02 Annual Rent Adjustment a. Beginning on July 1, 2026 and annually thereafter rent shall increase each July by the annual change in the Consumer Price Index -All Urban Consumers, San Diego-Carlsbad (2021 = 319.761), as published by the United States Bureau of 3 8/1/2023 8 of43 August 1, 2023, Item #10 Labor Statistics, subject to rounding to the nearest whole dollar and not to exceed five percent (5%). If the index is discontinued or revised during the term, such other government index or computation with which it is replaced shall be used in order to obtain substantially the same result as would be obtained if the index had not been discontinued or revised. b. The City is responsible for calculating the rent increases annually and provide notice of the rent increase to Tenant by March 1. In the event that the City fails to provide notice of the rent increase to Tenant by March 1, Tenant shall continue to pay rent at the rate payable in the previous month until notice is received. Within fifteen (15) days after Tenant's receipt of the notice, Tenant shall pay to City any and all arrearage due between July 1 and the date of payment of the arrearage. City's failure to provide notice of the rent increase shall not constitute waiver thereof and City may, at any time during the term of the Lease, adjust the rent as provided herein, give notice of the rent increase to Tenant, and demand that Tenant pay the arrearage as provided herein. Section 4.03 Repayment of PEARL Loan To help Poway businesses, in 2020, the City established the Poway Emergency Assistance Recovery Loan ("PEARL Loan") program using City funds to provide bridge loans while businesses were waiting for state and federal relief funds. Tenant was the recipient of a fifty thousand dollars ($50,000) PEARL Loan. Under the terms of the signed promissory note, repayment was not due until the City declared an end to the ongoing local emergency related to the COVID-19 pandemic, at which point Tenant has 90 days to repay the PEARL Loan interest free. If the PEARL Loan is not repaid within 90 days, interest will accrue, and Tenant will have three (3) years total to repay the PEARL Loan . In alignment with the County of San Diego ending its declaration of emergency, the City declared an end to the ongoing local emergency at its February 21, 2023, City Council meeting. To repay the PEARL Loan without interest, the City must receive full payment from the Tenant no later than May 22, 2023. If Tenant is unable to repay the loan in full by May 22, 2023, the loan can be paid over three (3) years with interest, for a total repayment amount of fifty-two thousand, three hundred forty-six dollars and sixteen cents ($52,346.16). Section 4.04 Repayment of Unpaid Rent To help the Tenant during the COVID-19 pandemic the City temporarily suspended monthly rent payments. The Tenant has ninety-eight thousand, one hundred fifty-five dollars and twenty cents ($98,155.20) in unpaid rent. The City and Tenant verbally agreed that the Tenant is responsible for paying fifty percent (50%) of unpaid rent or forty-nine thousand, seventy-seven dollars and sixty cents ($49,077.60). The remaining balance of unpaid rent in the amount of forty-nine thousand seventy-seven dollars and sixty cents ($49,077.60) will be forgiven by the City due to the unprecedented economic impact of the pandemic on Tenant's business, which provided public benefits generally and a benefit to the City as its landlord by remaining in business, which it could not have done 4 8/1/2023 9 of 43 August 1, 2023, Item #10 had full rent been demanded during this time period. Tenant shall repay the $49,077.60 of back rent owed to the City on or before July 1, 2025. Section 4.05 Late Payment Tenant shall pay City a late payment charge equal to five percent (5%) of the monthly rent for any rent not paid within thirty (30) days after receipt of notice from City to Tenant. Any amounts not paid within the previously mentioned thirty (30) day period shall bear interest until paid at the lesser of the rate of two percent (2%) per month or the highest rate permitted by law. Section 4.06 Relocation Assistance Tenant hereby acknowledges and agrees that Tenant shall not incur any right, interest, or claim in or to any benefits or assistance arising under Government Code Section 7260, et seq. or any other federal, state or local law, rule, or regulation relating to or arising from Tenant's relocation from the Premises or the termination of this Lease. To the extent Tenant is eligible for such benefits Tenant hereby voluntarily and expressly waives each and every right, title or interest in and to such benefits. ARTICLE V UTILITIES AND TAXES Section 5.01 Utilities Tenant shall make all arrangements for and pay for all utilities and services furnished to or used by Tenant, including, without limitation, water, sewer, gas, electricity, cable, telephone service, trash collection and for all connection charges other than City initiated charges. Tenant shall provide electricity for the exterior holiday lights that are located on tenant's electric meter. Section 5.02 Personal Property Taxes Tenant shall pay before delinquency all taxes, assessments, license fees and other charges that are levied and assessed against Tenant's personal property installed or located in or on the Premises, and that become payable during the term. On demand by City, Tenant shall furnish City with satisfactory evidence of these payments. Section 5.03 Possessory Interest Taxes This lease may result in a taxable possessory interest and be subject to the payment of property taxes. Tenant agrees to and shall pay before delinquency all taxes and assessments of any kind assessed or levied upon Tenant or the Premises by reason of this Lease or of any buildings, machines, or other improvements of any nature whatsoever erected, installed or maintained by Tenant or by reason of the business or other activities 5 8/1/2023 10 of 43 August 1, 2023, Item #10 of Tenant upon or in connection with the Premises. Such taxes and assessments shall be in addition to Rent. ARTICLE VI Section 6.01 USE AND OCCUPANCY Use . Tenant shall use the Premises for the purposes of operating and conducting a restaurant and for no other use without City's consent. Section 6.02 Hours of Operation Tenant shall operate its business only during the following days and between the following hours: Sunday-Thursday: Friday and Saturday: 7 am-9 pm 7 am-10 pm Section 6.03 Compliance with Law Tenant shall comply with, and conform to, all laws and regulations, municipal, state and federal, and any and all requirements and orders of any municipal, state, or federal court or authority, present or future, in any way relating to the use or occupancy of the leased Premises throughout the entire term of this Lease and any extension or renewal thereof. Section 6.04 Licenses, Permits, Etc. Tenant represents and declares to City that it has all licenses, permits, qualifications, and approvals of whatever nature that are legally required to operate the restaurant business located on the Premises professionally. Tenant represents and warrants to City that Tenant shall, at its sole cost and expense, keep in effect at all times during the term of this Agreement, any license, permit, or approval which is legally required for Tenant to practice its profession . Section 6.05 Restriction of Tenant's Use Tenant agrees, in using the leased Premises: a. Not to commit any waste or suffer any waste to be committed upon the leased Premises . b. Not to commit any public or private nuisance or any other act or thing, which might or would disturb the quiet enjoyment of any occupant of nearby property. 6 8/1/2023 11 of 43 August 1, 2023, Item #10 c. Not to burn refuse or other materials in or about the leased Premises, or permit any activity or activities, which might cause unreasonable annoyance to any occupant or nearby property. d. Not to overload, or permit the overloading of, any floor in the buildings located upon the leased Premises. e. Not to keep, use, sell, or offer for sale on the leased Premises, any article, or conduct any activity thereon, which may be prohibited by the standard form of fire insurance policy, and if Tenant does keep, use, sell or offer for sale any such article, or if any acts are performed on the leased Premises by Tenant which increase the rate of fire insurance premiums upon the leased Premises, Tenant agrees to pay to City the amount of increase in fire insurance and premiums attributable thereto on demand. f. Not to place, construct, or maintain any sign, advertisement, awning, banner or other exterior decoration on the exterior of the leased Premises or in the immediate vicinity thereof, without obtaining City's prior written consent and all applicable City permits. g. Tenant will be allowed two business designation signs on the exterior of the leased Premises, currently located on the roof and restaurant entrance, and one business designation sign on Midland Road at the park entrance, in accordance with the City's sign ordinance. Business designation signs must be approved by the City and be consistent with other park signage. h. The Tenant will prohibit smoking of a tobacco product inside and outside the restaurant, except in areas designated by the City, and otherwise comply with all applicable smoking laws and ordinances currently in effect. Tenant will ensure that signage is displayed in public view. Tenant's employees will comply with all applicable smoking laws and ordinances and will smoke in designated smoking areas only. i. All uses of the Leased Premises shall be in compliance with all applicable ordinances, resolutions, statutes, rules, regulations and laws of the City of Poway, and any Federal, State, or local government agency or competent jurisdiction. j. Tenant shall not have exclusive selling rights to types of food and beverage items sold at the Farmers Market and special events. ARTICLE VII TRADE FIXTURES Section 7.01 Installation 7 8/1/2023 12 of 43 August 1, 2023, Item #10 Tenant may install in and affix to the leased Premises such fixtures and equipment as Tenant deems desirable. Section 7.02 Removal Not later than the expiration or termination of this Lease, Tenant is required to surrender possession of the leased Premises to City. Tenant may, and if prior to the expiration of such time City gives written notice requiring Tenant to do so, Tenant shall remove and properly dispose of all trade fixtures installed in the leased Premises by Tenant. The removal of such trade fixtures shall be effected solely at the expense of Tenant and in the manner satisfactory to City and without injury or damages to the leased Premises or the building, and Tenant covenants to repair immediately, at Tenant's expense, any injury or damage caused by such removal. ARTICLE VIII ACCEPTANCE OF LEASED PREMISES AS-IS Section 8.01 Acceptance of Leased Premises As-ls Tenant currently occupies the leased Premises and has examined and inspected and knows the condition of the leased Premises and every part thereof and agrees to accept the same in their present condition. Tenant waives any right or claim against City for any cause, directly or indirectly, arising out of the condition of the leased Premises, appurtenances thereto, the improvements thereon, and the equipment thereof. ARTICLE IX Section 9.01 ALTERATIONS, REPAIRS AND IMPROVEMENTS Tenant's Installations, Additions and Improvements a. Tenant shall make no installations, additions, or improvements in or to the leased Premises except as otherwise authorized in the Lease, or structural alterations or changes either to the interior or exterior of the buildings located on the leased Premises, or in the bearing walls, supports, beams, or foundation, without first obtaining the written consent of the City. All applicable City permits and approvals must be obtained prior to the installation of any additions or improvements. b. Plans and specifications showing such proposed installations, additions, or improvements and alterations and changes, shall be submitted to City for approval upon the application for such written consent. c. All installations, additions, or improvements, and alterations and changes made, with the written consent of City, shall be made under the supervision of an architect or engineer satisfactory to City. Work shall be inspected and permitted by the City as required. All architects, engineers and contractors must be approved by the City, and must maintain insurance coverage deemed acceptable by the City. 8 8/1/2023 13 of 43 August 1, 2023, Item #10 d. If during the term of this Lease any additions, alterations, or improvements in or to the leased Premises, as distinguished from repairs, are required by any government authority or any law, ordinance, or governmental regulation because of the use to which the leased Premises are put by Tenant and not by reason of the character or structure of the building, they shall be made and paid for by Tenant. Section 9.02 Tenant's Repair and Maintenance Responsibilities a. Tenant agrees during the term thereof, and any extension or renewal thereof, to keep and maintain the leased Premises in good order, condition, and repair, including, without limiting the foregoing: i. Plumbing lines and plumbing fixtures and drains beginning at the point of entry into the building, ii. Natural gas lines beginning at the point of entry into the building, iii. Sewage facilities within the leased Premises and from the building to the two grease traps, iv. Fixtures, v. Signage vi. Interior walls and wall finishes, including restroom partitions, vii. Floors, doors, windows, and plate glass, viii. Ceilings and exhaust equipment, including roof mounted, ix. Interior building appliances and similar equipment, x. And lighting fixtures, bulbs, and ballasts on the interior. b. Tenant agrees during the term thereof, and any extension or renewal thereof, Tenant shall maintain in good working order two exterior grease traps necessary for Tenant's business operations. Grease traps should be cleaned in accordance with the City's FOG (Fat, Oil, Grease) Program requirements included as Exhibit "B". Tenant shall pressure wash, adhering to the Best Management Practices contained in the City's Jurisdictional Runoff Management Plan (JRMP), the boardwalk area between the kitchen door and outdoor public restrooms, the boardwalk area at the front entrance of the Premises where eating is permitted, and the dumpster area a minimum of once every three months, or as deemed necessary by City. Tenant shall keep the trash enclosure, and any other exterior areas affected by Tenant's business operations, clean and free from grease and debris. Tenant shall be responsible for ensuring that the interior of the Premises is kept free of insects and rodents. Tenant shall keep outdoor areas free of restaurant equipment and supplies. Tenant shall keep upstairs attic area clear and accessible. c. Beginning August 1, 2024, the Tenant agrees during the term thereof, and any extension or renewal thereof, to keep and maintain the leased Premises in good order, condition, and repair, including, without limiting the foregoing: 9 8/1/2023 14 of 43 August 1, 2023, Item #10 i. Plumbing lines and plumbing fixtures and drains beginning at the regulator and including the regulator, ii. Natural gas lines beginning at the San Diego Gas and Electric meter, iii. Exterior walls and wall finishes, iv. Lighting fixtures, bulbs, and ballasts on the exterior, v. Roof, vi. Security alarms and monitoring systems, vii. Electrical facilities including main breaker, electrical panel, and circuit breakers starting at the San Diego Gas and Electric meter, viii. And trash enclosure fencing and gate. d. Beginning August 1, 2024, Tenant shall inspect, test, maintain, and monitor fire protection systems, fire monitoring systems, fire extinguishers, fire alarm system, and fire sprinklers, pipes, and related systems within the Premises, in accordance with municipal, state and federal laws. Tenant shall inspect, test, and maintain cooking suppression systems including any Ansul Fire Suppression Systems. e. The City may at times require the Tenant to make repairs to the leased Premises during the time of the Lease. These repairs will be made within thirty (30) days of any written request for the reason of aesthetics or five (5) days for health and safety reasons. If the repairs are not made within the stated timeframe, the City may make the repairs and charge the costs to the Tenant. f. If during the term of the Lease the Tenant makes any changes to equipment or leased Premises, that create health or safety issues, or other building repair and maintenance issues, the Tenant shall be solely responsible for the cost of repairing the equipment or leased Premises, including all City expenses. If needed the City will determine the corrective action, and repair work may be completed by City or an outside contractor and Tenant shall reimburse City for all costs. Section 9.03 City's Repair and Maintenance Responsibilities a. Upon commencement of this Lease, and ending July 31, 2024, the City agrees during the term thereof, to maintain the following: i. Exterior of the building, ii. Grounds outside the building, iii. Air conditioning and heating equipment including thermostats, iv. Christmas lights on exterior of building, v. Sewer lines leaving the building beginning after the two grease traps located on the west and south sides of the building, vi. Interior electrical facilities, with exception of the lighting fixtures, bulbs, and ballasts, vii. Entrance signage at corner of Midland Road and Temple Street, viii. Fire protection systems, fire monitoring systems, fire extinguishers, fire alarm system, and fire sprinklers, pipes, and related systems within the Premises. 8/1/2023 15 of 43 August 1, 2023, Item #10 b. Beginning August 1, 2024, the City agrees during the term thereof, and any extension or renewal thereof, to maintain the following: i. Grounds outside the building, ii. Air conditioning and heating equipment including thermostats, iii. Christmas lights on exterior of building, iv. Sewer lines leaving the building beginning after the two grease traps located on the west and south sides of the building, v. Electrical equipment up to the main service disconnect, vi. Entrance signage at corner of Midland Road and Temple Street, vii. And the fire riser. c. Upon commencement of this Lease, City shall be responsible for ensuring the exterior of the building is free of insects and rodents and City shall be responsible for removing graffiti from exterior of the building. d. City has the sole discretion to determine when repair and maintenance projects shall be completed based on available funding and resources. City shall not unreasonably delay repair and maintenance projects. If during the term of the Lease, the City has planned capital improvements to the building that will result in the need to close public access to the building for a period of time, the City and Tenant shall coordinate closures to minimize business disruptions, except in emergency situations where repairs need to be made immediately. The City shall make every effort to avoid closing public access to the Premises for planned capital improvements. Section 9.04 Mechanic's Liens a. Tenant agrees to pay promptly for all labor done or materials furnished for any work or repair, maintenance, improvements, alterations, or addition done by Tenant in connection with the leased Premises, and to keep and to hold the leased Premises free, clear, and harmless from all liens that could arise by reason of any such work. If any such lien shall at any time be filed against the leased Premises, Tenant shall either cause the same to be discharged of record within twenty (20) days after the date of filing the same, or if Tenant, in its discretion and in good faith, determines that such lien should be contested, Tenant shall furnish such security as may be necessary or required to prevent any foreclosure proceedings against the leased Premises during the pendency of such contest. If Tenant shall fail to discharge such lien within such period, or fails to furnish such security, then in addition to any other right or remedy, City may, but shall not be obligated to discharge the same, either by paying the amount claimed to be due or by procuring the discharge of such lien by deposit in court, or by giving security or in such other manner as is or may be prescribed by law. Tenant shall repay to City on demand all sums disbursed or deposited by City pursuant to the foregoing provisions hereof, including City's costs, expenses, and reasonable attorney's fees incurred by City in connection 11 8/1/2023 16 of 43 August 1, 2023, Item #10 therewith. Nothing contained herein shall imply any consent or agreement on the part of City to subject City's interest in the leased Premises to liability under any mechanic's lien law. b. City shall at all times have the right to post and to keep posted on the leased Premises notices provided for under the laws of the State of California for the protection of the leased Premises from mechanic's liens or liens of a similar nature. Section 9.05 Prevailing Wage Tenant shall be solely responsible, expressly or impliedly and legally and financially, for determining and effectuating compliance with all applicable federal, state and local public works requirements, prevailing wage laws, and labor laws and standards, and City makes no representation, either legally and/or financially, as to the applicability or non- applicability of any federal, state and local laws to any of the Tenant's work on the Premises. Tenant expressly, knowingly and V(?luntarily acknowledges and agrees that City has not previously represented to Tenant or to any representative, agent or affiliate of Tenant, or any contractor(s) or any subcontractor(s), in writing or otherwise, in a call for bids or otherwise, that any anticipated work on the Premises under this Section 19 is (or is not) a "public work," as defined in Section 1720 of the Labor Code or under the Davis-Bacon Act, 40 U.S.C. Section 3141, et seq., and the regulations promulgated thereunder set forth at 29 CFR Part 1 (collectively, "Davis-Bacon"). Tenant knowingly and voluntarily agrees that Tenant shall have the obligation to provide any and all disclosures or identifications as and to the extent required by Labor Code Section 1781 and/or by Davis-Bacon, as the same may be amended from time to time, or any other similar law or regulation. Tenant shall indemnify, protect, pay for, defend and hold harmless City from and against any and all loss, liability, damage, claim, cost, expense and/or "increased costs" (including reasonable attorney's fees, court and litigation costs, and fees of expert witnesses),which results or arises in any way from any of the following: (i) the noncompliance by Tenant or its contractor with any applicable local, state and/or federal law or regulation, including, without limitation, any applicable federal and/or state labor laws or regulations (including, without limitation, if applicable, the requirement to pay state and/or federal prevailing wages and hire apprentices); (ii) the implementation of Section 1781 of the Labor Code and/or of Davis-Bacon, as the same may be amended from time to time, or any other similar law or regulation; and/or (iii) failure by Tenant to provide any required disclosure or identification as required by Labor Code Section 1781 and/or by Davis-Bacon, as the same may be amended from time to time, or any other similar law or regulation. It is agreed by the Parties that, in connection with any work on hit Premises, including, without limitation, any and all public works (as defined by applicable law or regulation), Tenant shall bear all risks of payment or non-payment of prevailing wages under applicable federal, state and local law or regulation and/or the implementation of Labor Code Section 1781 and/or by Davis-Bacon, as the same may be amended from time to time, and/or any other similar law or regulation. The foregoing 12 8/1/2023 17 of 43 August 1, 2023, Item #10 indemnity shall survive termination of this Agreement and shall continue after completion of the construction and development of the Project. Section 9.06 Damage or Destruction by Fire or Other Casualty a. Should the building in which the leased Premises are located be damaged by fire or other casualty, then if damage is so slight as not to interfere substantially with Tenant's use of the leased Premises, Tenant shall notify City. The Tenant shall immediately undertake to make repairs to the building and improvements and restore the same to substantially the same condition as they were in immediately preceding such damage or destruction . Such work shall be done as rapidly as conditions permit and there shall not be abatement of rent. b. Should there be total or substantial destruction in such building and improvements so that the leased Premises are rendered unusable, either in whole or in part, either party shall have the right to terminate this Lease by mutual agreement of both parties. c. Unless the parties to the Lease can and do agree forthwith upon the extent and amount of such damage or destruction, the parties shall mutually agree to the selection of a certified architect, registered engineer, or licensed building contractor who shall determine such matters, and the determination of such architect, engineer or contractor shall be final and binding upon the parties to this Lease. d. Tenant shall repair or rebuild such building and improvements to substantially the same condition that they were in immediately preceding such damage or destruction, unless both parties agree to the termination of the Lease. e. Tenant, at its sole expense, shall procure and maintain a policy or policies of business interruption insurance in sufficient amounts to cover the Annual Minimum Rent hereunder for a period of not less than one (1) year during any casualty loss and restoration of the Premises while this Lease remains in force . ARTICLEX Section 10.01 CONDEMNATION Total Condemnation If during the term thereof there shall be a "total taking" by a public authority under the power of eminent domain, then the leasehold estate of Tenant in the leased Premises shall cease and terminate as of the date actual physical possession thereof shall be taken . "Total taking" is defined to be the taking of the entire leased Premises under the power of eminent domain or taking of so much of the leased Premises as to prevent or substantially impair the conduct of Tenant's business therein. Section 10.02 Partial Condemnation 13 8/1/2023 18 of 43 August 1, 2023, Item #10 If, during the term hereof there shall be a partial taking of the leased Premises, this Lease shall terminate as to the portion of the leased Premises taken upon the date which actual possession of the portion of the leased Premises is taken pursuant to eminent domain proceedings, but this Lease shall continue in force and effect as to the remainder of the leased Premises. The rental payable by Tenant for the balance of the term shall be abated in the ratio that the square footage of the floor area of the leased Premises taken bears to the total floor area of the leased Premises at the time of such taking. "Partial taking" is defined to be the taking of only a portion of the leased Premises under the power of eminent domain, which does not constitute a "total taking" as defined above in Section 10.01. ARTICLE XI Section 11.01 SUBORDINATION Liens to Which Lease is Subordinate a. This Lease, at City's option, shall be subordinate to any ground lease, mortgage, deed of trust, or any other hypothecation or security now or hereafter placed upon the real property of which the Premises are a part, and to any and all advances made on the security thereof, and to all renewals, modifications, consolidations, replacements, and extensions thereof. Notwithstanding such subordination, Tenant's right to quit possession of the Premises shall not be disturbed if Tenant is not in default, and so long as Tenant shall pay the rent and observe and perform all of the provisions of this Lease, unless this Lease is otherwise terminated pursuant to its terms. If any mortgagee, trustee, or ground lessor shall elect to have this Lease prior to the lien of its mortgage, deed of trust or ground lease, and shall give written notice thereof to Tenant, this Lease shall be deemed prior to such mortgage, deed of trust, or ground lease, whether this Lease is dated prior or subsequent to the date of said mortgage, deed of trust, or ground lease, or the date or recording thereof. b. Tenant agrees to execute any documents required to effectuate an attornment, a subordination , or to make this Lease prior to the lien of any mortgage, deed of trust, or ground lease, as applicable. Tenant's failure to execute such documents within twenty (20) days after written demand shall constitute a material default by Tenant hereunder, or, at City's option , City shall execute such documents on behalf of Tenant as Tenant's attorney-in-fact. Tenant does hereby make, constitute and irrevocably appoint City as Tenant's attorney-in-fact and in Tenant's name, place, and stead, to execute such documents in accordance with paragraph 11.01. Section 11.02 Statement of Modifications Tenant shall at any time, and from time to time, upon not less than twenty (20) days prior written request by City execute, acknowledge and deliver to City a statement in writing certifying that this Lease is unmodified and in full force and effect (or, if there shall have 14 8/1/2023 . 19 of 43 August 1, 2023, Item #10 15 8/1/2023 been modifications, that the Lease is in full force and effect as modified and stating the modification or modifications), and the dates to which the fixed rent and other charges or payments have been paid in advance. It is expressly understood and agreed that any such statement delivered pursuant to this paragraph may be relied upon by City, or by any prospective purchaser, mortgagee, assignee of any mortgagee, or the trustee or beneficiary of any deed of trust placed upon the leased Premises. ARTICLE XII INDEMNITY AND INSURANCE Section 12.01 Responsibility for Acts of Tenant a.City shall not be liable at any time for any cause of action, claim, administrativeor governmental action, loss, damage, or injury to any property or person, at any time, (”Claims”) arising out of any act or omission of Tenant, or Tenants’ occupancy or use of the leased Premises or any part thereof , or directly orindirectly from any state or condition of the leased Premises or any part thereofduring the Term of this Lease. Tenant expressly assumes all risks of anyClaims arising out of its use or occupancy of the Premises, or the condition of the Premises during the Term of this Lease. b.Notwithstanding any provisions of this Lease to the contrary and irrespectiveof the limits of any insurance carried by Tenant for the benefit of City, Tenantagrees to fully protect, indemnify, and hold City harmless from any and all Claims, damages or liabilities of whatsoever nature arising under the terms of this Lease, or arising out of or in connection with the operation carried on byTenant on, or its use or occupancy of, the leased Premises, or any challengeto or governmental or administrative action relating to the City’s approval of thisLease, including all of the City’s attorneys’ fees and litigation expenses incurred in defense thereof. Section 12.02 Insurance Tenant shall obtain, at its own cost and expense, and maintain in full force and effect, the following types and amounts of insurance during the term of this agreement: a.Property Insurance Coverage. Tenant shall possess property insurance, including fire and extended coverage insurance, covering Tenant's personal property, including removable trade fixtures, located in the Property, on a replacement cost basis. Tenant must also have business interruption expense or similar coverage as part of their property insurance policy or under a separate form sufficient to cover rental payments in the event of business interruption. b.General Liability Insurance. Tenant shall possess a policy or policies of comprehensive general liability insurance with respect to the Premises with coverage of not less than Two Million Dollars ($2,000,000) per occurrence, 20 of 43 August 1, 2023, Item #10 with a minimum aggregate amount of Four Million Dollars ($4,000,000) combined single limit coverage of bodily injury, property damage or combination thereof. An excess, or umbrella policy is also acceptable to provide the aggregate amount of coverage. c. Workers' Compensation Insurance. Tenant shall possess workers' compensation insurance as required by law. Tenant shall also provide employer's liability coverage in the minimum amount of One Million Dollars ($1,000,000) per accident or disease and must also provide a waiver of subrogation in favor of City. d. Automobile Liability. Tenant shall possess automobile insurance to include owned, hired, and non-owned vehicles with a minimum coverage amount of One Million Dollars ($1,000,000), combined single limit. e. Liquor Liability. Tenant shall possess liquor liability insurance to extend coverage to drunk driving accidents, assault and battery claims, accusations of sexual assault, and any other claims associated, with a minimum coverage amount of One Million Dollars ($1,000,000) per occurrence. f. Additional Insurance Requirements. All liability insurance shall include, but not be limited to, personal injury, cross liability, and severability of interest clauses, products/completed operations, broad form property damage, independent contractors, and owned, non-owned and hired vehicles. All insurance policies shall be an admitted surety, or an insurance company listed by the State Insurance Commissioner, and shall have a rating in the latest AM Best Rating Guide of a minimum of "A-" and a minimum of Class VI. g. If Tenant maintains broader coverage and/or higher limits than the minimums required herein, the City requires and shall be entitled to the broader coverage and/or higher limits maintained by the Tenant. h. City shall maintain physical damage insurance coverage for the Premises during the entire term hereof in a coverage amount of City's determination. City shall be the sole loss payee and, in the event of a total loss of the Premises, shall at its sole discretion determine whether to utilize any insurance proceeds to rebuild the Premises or to terminate the Lease as per section 9.06 of this Lease. Tenant shall have no rights to any proceeds or payments resulting from City's physical damage insurance coverage. Tenant also acknowledges that said policy of insurance shall not insure Tenant's personal or business property, nor Tenant's trade fixtures or equipment. Tenant shall have no rights to any proceeds or payments resulting from City's insured coverage of boiler and machinery under City's physical damage insurance coverage. 16 8/1/2023 21 of 43 August 1, 2023, Item #10 Section 12.03 Endorsements Endorsements shall be obtained so that each liability policy contains the following three provisions: a. Additional Insured. (Not required for Professional Errors and Omissions Liability Insurance or Workers' Compensation.) "City of Poway and its elected and appointed boards, officers, agents, and employees are additional insureds with respect to this subject project and contract with City." b. Notice. "Said policy shall not terminate, nor shall it be canceled, until thirty (30) days after written notice is given to City." c. Primary Coverage. "The policy provides primary coverage to City and its elected and appointed boards, officers, agents, and employees. It is not secondary or in any way subordinate to any other insurance or coverage maintained by City." Section 12.04 Insurance Certificates Tenant shall provide City certificates of insurance and their endorsements showing the insurance coverages described in the paragraphs above, in a form and content approved by City, prior to beginning work under this Agreement. Section 12.05 Indemnification Tenant shall immediately defend, indemnify and hold the City, its elected and appointed officers, employees and agents, harmless from all Claims and liability whatsoever, or for any injury to or death of persons or damage to property of Tenant or any other person, occurring during the Term of this Lease arising from any of the following: (i) the use, occupancy or enjoyment of the Premises, or Tenant's operations thereon, by Tenant or Tenant's customers, employees, contractors, subcontractors, invitees, permittees, and assignees, or (ii) Tenant's negligence or intentional misconduct, including any breach of this Lease beyond any applicable notice and cure period, or (iii) liens, claims and demands related to Tenant's use of the Premises, or (iv) the City's approval of this Lease. Except to the extent arising due to City's negligence or intentional misconduct, Tenant shall in all cases accept any tender of the defense of any action or proceeding arising out of the foregoing in which City is named or made party and shall defend the City as provided herein with counsel chosen by the City. Tenant shall not be liable for such damage or injury to the extent and in the proportion that the same is ultimately determined to be attributable to the negligence or misconduct of the City or its officers, employees, agents or representatives, or the City's failure to perform its obligations pursuant to this Lease. Tenant's obligation to indemnify shall include reasonable attorneys' fees and investigation costs and all other reasonable costs, expenses and liabilities incurred by City. This 17 8/1/2023 22 of 43 August 1, 2023, Item #10 indemnity provision shall apply to all claims that accrued, or injuries that occurred, prior to Tenant vacating the Premises, regardless of when such claims or injuries were discovered. Section 12.06 Exemption of City from Liability Lessee agrees that City shall not be liable for injury to Lessee's business or any loss of income therefrom or for damage to the goods, wares, merchandise or other property of Lessee, Lessee's employees, invitees, customers or any person in or about the Premises, nor shall City be liable for personal injury to Lessee's employees, agents or contractors, whether such damage or injury is caused by or results from fire, steam, electricity, gas, water or rain or from the breakage, leakage, obstruction or other defects of pipes; sprinklers, wires, appliances, plumbing, air conditioning or lighting fixtures or from any other cause relating to the physical condition or location of the Premises, or utility services provided thereto. Section 12.07 Assumption of Risk Except for injuries to persons caused by the willful misconduct of City, and not covered by insurance maintained, or required by this Lease to be maintained, by Tenant: (a) Tenant hereby assumes the risk of any and all injury and damage to the personnel (including death) and property of Tenant, including its employees, contractors and subcontractors, in or about the Premises; and (b) the Parties hereby agree that the City is not to be liable for any injury ordamage which may be sustained by the person, goods or property of Tenant or its employees, contractors, subcontractors in or about the Premises, whether said damage or injury results from conditions arising within the Premises or from other sources. ARTICLE XIII Section 13.01 ASSIGNMENT AND SUBLEASING City's Consent Required a. Tenant shall not assign, mortgage, or hypothecate this Lease in whole or in part, not sublet all or any part of the leased Premises, without the prior written consent of City in each instance . This prohibition against assigning or subletting shall be construed to include a prohibition against any assignment or subletting by operation of law. City's consent will not unreasonably be withheld. Tenant agrees to reimburse City for any out-of-pocket expense and fees involved with any Lease Assignment or Sublease. b. If Tenant sells the Hamburger Factory business, prior to the sale the buyer shall provide to the City a proposal to operate the business and demonstrate financial strength and experience. If approved by the City, the Lease may be assigned to the buyer. Upon sale of the Hamburger Factory business Tenant shall payoff the PEARL Loan per section 4.03 and unpaid rent per section 4.04. 18 8/1/2023 23 of 43 August 1, 2023, Item #10 Section 13.02 No Waiver The consent by City to any assignment or subletting shall not constitute a waiver of the necessity for such consent to any subsequent assignment or subletting. If this Lease be assigned, or if the leased Premises or any part thereof be sublet or occupied by anybody other than Tenant, City may collect rent from the assignee, subtenant, or occupant, and apply the new amount collected to the rent herein reserved, but no such assignment, subletting, occupancy, or collection shall be deemed a waiver of this covenant, or a release of Tenant from the further performance by Tenant of covenants on the part of Tenant. Section 13.03 Liability of Tenant Notwithstanding any assignment or sublease, Tenant shall remain fully liable on this Lease and shall not be released from performing any of the terms, covenants, and conditions of this Lease. ARTICLE XIV Section 14.01 DEFAULT AND REMEDIES Tenant's Insolvency, Bankruptcy, or Dissolution a. This Lease shall be deemed repudiated and breached by Tenant if, during the term of this Lease: i. A petition to have Tenant adjudicated as bankrupt, or a petition for reorganization or arrangement under any of the laws of the United States relating to bankruptcy be filed by Tenant, or be filed against Tenant, and if so filed against Tenant, not be dismissed within ninety (90) days from the date of such filing. ii. The assets of Tenant or the business conducted by Tenant on the leased Premises be assumed by a trustee or other person pursuant to any judicial proceedings. iii. Tenant becomes insolvent or makes an assignment for the benefit of creditors, or commits any act of bankruptcy. b. Tenant expressly agrees that City may at its election terminate this Lease in the event of the occurrence of any of the contingencies hereinabove described by giving not less than ten (10) days written notice to Tenant and when so terminated, City may re-enter the leased Premises, and the leasehold interest created by this Lease shall not be treated as an asset of Tenant's estate. It is further expressly understood and agreed that City shall be entitled upon such re-entry, notwithstanding any other provisions of this Lease, to exercise such rights and remedies, and to recover from Tenant as damages for loss of the bargain resulting from such breach, and not as a penalty, such amounts as are specified in Section 14.03, unless any statute or rules or law governing the 19 8/1/2023 24 of 43 August 1, 2023, Item #10 proceeding in which such damages are to be proved shall lawfully limit the amount of such claims capable of being so proved, in which case City shall be entitled to recover as and for liquidated damages, the maximum amount which may be held under any such statute or rule of law. Section 14.02 Default The occurrence of any of the following shall constitute a material default and breach of this Lease by Tenant: a. Any failure by Tenant to pay the rent or to make any other payment required to be made by Tenant under this Lease (when that failure continues for ten (10) days after written Notice to Quit or Pay Rent is given by City to Tenant), specifically including the back rent owed and repayment of the PEARL loan, pursuant to the terms and conditions set forth hereinabove b. The abandonment or vacation of the Premises by Tenant (the absence of Tenant from or the failure by Tenant to conduct business on the Premises for a period in excess of fourteen (14) consecutive days, shall constitute an abandonment or vacation for purposes of this Lease). c. A failure by Tenant to observe and perform any other provisions of this Lease to be observed or performed by Tenant, when that failure continues for ten (10) days after written notice of Tenant's failure is given by City to Tenant; provided, however, that if the nature of the default is such that it cannot reasonably be cured within a ten (10) day period, Tenant shall not be deemed to be in default if Tenant commences that cure within the ten (10) day period and thereafter diligently prosecutes it to completion. d. Tenant's bankruptcy, insolvency, or dissolution as provided in Section 14.01 above. Section 14.03 Remedies On any breach, default, or abandonment, City may exercise any of the following rights: a. Immediately re-enter and remove all persons and property from the leased Premises, storing _ the personal property in a public warehouse or elsewhere at the cost of, for the account of, and at the risk of Tenant. In the event of any such re-entry by City, City may make any repairs, additions, or improvements in, to, or upon the leased Premises which may be necessary or convenient; provided, however, that City shall be entitled to recover from Tenant the expense of such repairs or alterations only to the extent necessary to restore the building to the condition it was in on the commencement of the term of the Lease, reasonable wear and tear excepted. In such instance, the Lease will 20 8/1/2023 25 of43 August 1, 2023, Item #10 be terminated, and City will be entitled otherwise to recover all damages allowable under the law of this Lease. b. To collect by suit or otherwise each installment of rent or other such sum as it becomes due hereunder, or to enforce, by suit or otherwise, any other term or provision hereof on the part of Tenant required to be kept or performed, it being specifically agreed that all unpaid installments of rent or other sums shall bear interest at the highest legal rate from the due date thereof until paid . c. Terminate this Lease, in which event Tenant agrees to immediately surrender possession of the leased Premises, and to pay to City, in addition to any other remedy City may have, all damages City may incur by reason of Tenant's default, including the cost of recovering the leased Premises. Section 14.04 No Waiver of Default City's or Tenant's failure provide notice of any default or breach of covenant on the part of City or Tenant shall not be, or be construed as, a waiver thereof, nor shall any custom or practice which may grow up between the parties in the course of administering this instrument be construed to waive or to lessen the right of City or Tenant to insist upon the performance by City or Tenant of any term, covenant, or condition hereof, or to exercise any rights given City or Tenant on account of any such default. A waiver of a particular breach, or default, shall not be deemed to be a waiver of the same or any other subsequent breach or default. The acceptance of rent hereunder shall not be or construed to be, a waiver of any term, covenant, or condition of this Lease. Section 14.05 Remedies Cumulative The rights, powers, elections, and remedies of City contained in this Lease shall be construed as cumulative and no one of them is or shall be considered exclusive of the other or exclusive of any rights or remedies allowed by law, and the exercise of one or more rights, power, elections, or remedies shall not impair City's right to exercise any other. Section 14.06 City's Rights to Cure Default If Tenant shall be in default in the performance of any covenant on its part to be performed under this Lease, then, after notice and without waiving or releasing Tenant from the performance thereof, City may, but shall not be obligated so to do, perform any such covenant, and in exercising any such right, pay necessary and incidental costs and expenses in connection therewith. All sums so paid by City, together with interest thereon at the rate of ten percent (10%) per annum, shall be deemed additional rent and shall be payable to City on the next date that rent is owed under the terms of this Lease. ARTICLE XV CITY'S GENERAL PROTECTIVE PROVISIONS 21 8/1/2023 26 of 43 August 1, 2023, Item #10 Section 15.01 Surrender at End of Term Tenant shall peaceably give up and surrender the leased Premises and every part thereof to City at the termination of the Term of this Lease in substantially as good a condition and repair as at the commencement of the Term. Section 15.02 No Merger-Termination of Subtenancies The voluntary or other surrender of this Lease by Tenant, or mutual termination thereof, shall, at the option of City, terminate all of any existing subleases or subtenancies, or may, at the option of City, operate as an assignment to City of any or all subleases or subtenancies. Section 15.03 Release of City After Sale In the event of a sale or conveyance by City of the leased Premises, City shall be released from any future liability upon any of the covenants or conditions, expressed or implied, in favor of Tenant, and in such event, successor in interest to City will assume all of City's rights and responsibilities under this Lease. Section 15.04 City's Right to Inspect City shall be entitled, at all reasonable times, to go on the leased Premises for the purpose of inspecting the leased Premises, or for the purpose of inspecting the performance by Tenant of the terms and conditions of this Lease, or for the purpose of posting and keeping posted thereon notices of non-responsibility for any construction, alteration, or repair thereof, as required or permitted by any law or ordinance. ARTICLE XVI Section 16.01 GENERAL PROVISIONS Conditions and Covenants All of the provisions of this Lease shall be deemed as running with the land, and construed to be "conditions" as well as "covenants" as though the words specifically expressing or imparting covenants were used in each separate provision. Section 16.02 No Waiver of Breach No failure by either City or Tenant to insist upon the strict performance by the other of any covenant, agreement, term, or condition of this Lease, or to exercise any right or remedy consequent upon a breach thereof, shall constitute a waiver of any such breach or of such covenant, agreement, term, or condition. No waiver of any breach shall affect or alter this Lease, but each and every covenant, condition, agreement, and term of this Lease shall continue in full force and effect with respect to any other existing or subsequent breach. Section 16.03 Time of Essence 22 8/1/2023 27 of43 August 1, 2023, Item #10 Time is of the essence of this Lease and of each provision. Section 16.04 Computation of Time The time in which any act provided by this Lease is to be done is computed by excluding the first day and including the last, unless the last is a Saturday, Sunday, or holiday, and then it is also excluded. The term "holiday" shall mean all holidays specified in Sections 6700 and 6701 of the Government Code. Section 16.05 Unavoidable Delay -Force Majeure If either party shall be delayed or prevented from the performance of any act required by this Lease by reason of Acts of God, strikes, lockouts, labor troubles, inability to procure materials, restrictive governmental laws, or regulations or other cause, without fault and beyond the reasonable control of the party obligated (financial inability excepted), performance of such act shall be excused for the period of the delay; and the period for the performance of any such act shall be extended for a period equivalent to the period of such delay, provided, however, nothing in this section shall excuse Tenant from the prompt payment of any rental or other charge required of Tenant except as may be expressly provided elsewhere in this Lease. Section 16.06 Successors in Interest Each and all of the covenants, conditions, and restrictions in this Lease shall inure to the benefit of and shall be binding upon the successors in interest of City, and subject to the restrictions of Article XIII, the authorized encumbrancers, assignees, transferees, subtenants, licensees, and other successors in interest of Tenant. The Tenant's interest in this Lease Agreement shall not be transferred or sold to any other party without the approval of the City. Section 16.07 Entire Agreement This Lease contains the entire agreement of the parties with respect to the matters covered by this Lease, and no other agreement, statement or promise made by any party, or to any employee, officer, or agent of any party, which is not contained in this Lease shall be binding or valid . This lease will supersede all prior leases between Tenant and City related to this property. Section 16.08 Partial Invalidity If any term, covenant, condition or provision of this Lease is held by a court of competent jurisdiction to be invalid, void, or unenforceable, the remainder of the provisions shall remain in full force and effect, and shall in no way be affected, impaired, or invalidated. Section 16.09 Relationship of Parties 23 8/1/2023 28 of 43 August 1, 2023, Item #10 Nothing contained in this Lease shall be deemed or construed by the parties or by any third person to create the relationship of principal and agent, or of partnership or of joint venture, or of any association between City and Tenant, and neither any provisions contained in this Lease nor any acts of the parties shall be deemed to create any relationship between City and Tenant, other than the relationship of City and Tenant. Section 16.10 Interpretation and Definitions The language in all parts of this Lease shall in all cases be simply construed according to its fair meaning and not strictly for or against City or Tenant. Unless otherwise provided in this Lease, or unless the context otherwise requires, the following definitions and rules of construction shall apply to this Lease: a. In this Lease, the neuter gender includes the feminine and masculine, and the singular number includes the plural, and the word "person" includes corporation, partnership, firm, or association whenever the context so requires. b. "Shall," "will," and "agrees" are mandatory; "may" is permissive. c. The captions contained herein are for convenience and reference only, and the words contained therein shall in no way be held to explain, modify, amplify, or aid in the interpretation, construction, or meaning of the provisions of this Lease. d. All references to the term of this Lease shall include any extensions of such term. e. Leased Premises shall include the improvements to the land and outside eating areas. f. Parties shall include the City and Tenant named in this Lease. g. As used herein, the word "sublessee" shall mean and include in addition to a sub lessee and subtenant, a licensee, concessionaire, or other occupant or user of any portion of the leased Premises or buildings or improvements thereon. Section 16.11 Attorney's Fees Should either party commence any legal action or proceeding against the other arising out of this Lease the prevailing party shall be entitled to an award of reasonable attorney's fees. Section 16.12 Interest 24 8/1/2023 29 of43 August 1, 2023, Item #10 The total of rent payments, which are five (5) or m·ore days late, shall be assessed a late payment penalty of five percent (5%) thereof each calendar month that such payment is late. Section 16.13 Modifications This Lease is not subject to modification except in writing executed by all parties thereto. Section 16.14 Notices a. All notices, demands, or requests from one party to another may be personally delivered or sent by mail, certified or registered, postage prepaid, to the addresses stated in this section, and shall be deemed to have been given at the time of personal delivery, or at the end of the second full day following the date of mailing. b. All rents and other sums payable by Tenant to City, or notices, demands, or requests from Tenant to City, shall be delivered in person, or mailed to City at: City of Poway Attn: Community Services P.O. Box 789 Poway, CA 92074 c. All notices, demands, or requests from City to Tenant shall be given to Tenant at the leased Premises. d. Each party shall have the right, from time to time, to designate a different address by written notice given in conformity with this section . Section 16.15 Holding Over In the event that Tenant shall hold over after expiration of the term of this Lease with consent, expressed or implied, of City, such holding over shall be deemed merely a tenancy from month-to-month, on the same terms, covenants, and conditions so far as applicable as herein contained until such tenancy is terminated in a manner prescribed by law. ARTICLE XVII Section 17.01 EXECUTION Entire Lease This Lease shall constitute the entire understanding between City and Tenant relating to the terms and conditions of the Lease. 25 8/1/2023 30 of43 August 1, 2023, Item #10 IN WITNESS WHEREOF, the parties hereto have duly executed this Lease on the date first above written. CITY OF POWAY HAMBURGER FACTORY, INC. Chris Hazeltine, City Manager Name and Title ATTEST: By: Carrie Gallagher, CMC City Clerk APPROVED AS TO FORM: Alan Fenstermacher, City Attorney 26 8/1/2023 31 of 43 August 1, 2023, Item #10 w N 0 -,, .i:,. w r 1 r- 1-,.,, 30.66 r ~~ <( U) 1 ~~ 1-N U) ~9.00 12~1 I -7 TRASH ENCLOSURE II-ZS _l 273SF 7'.Zt 37.7, 37.7' l PATIO AREA JO.ZS 1,493 SF =a 3L67 -45.:13 DINING/ KITCHEN 3,575 SF ~9-99 NOTES: 1. ALL DIMENSIONS IN FEET. 2. ALL DIM. TO OUTSIDE FACE OF BUILDING. 3. TRASH ENCLOSURE NOT SHOWN IN CORRECT LOCATION, SHOWN FOR AREA PURPOSES ONLY. 4. ALL INTERIOR WALLS NOT SHOWN. 5. PATIOAREA: 1,493.tS.F. 6. DINING/KITCHEN AREA: 3574.lS.F. 7. STORAGE AREA: 212.0S.F. 8. TRASH ENCLOSURE AREA: 272.8S.F. 9. NOT TO SCALE. 10. TOTAL SQUARE FOOTAGE OF PA TIO, DINING AND STORAGE JS: 5,280 SF. HAMBURGER FACTORY EXHIBIT A NOV. 30, 2010 SHEET1 OF1 ~ >-'• O"' >-'• ..-t- > August 1, 2023, Item #10 EXHIBIT B City of Poway Public Works, Wastewater Division FOG Program for Food Establishment Wastewater Discharge Maintenance of Grease Removal Equipment (GRE) The City of Poway's Industrial Wastewater Pretreatment Program (Chapter 13.05 of the Poway Municipal Code) requires that GRE (Grease Removal Equipment: grease traps and interceptors) be maintained in efficient operating condition by periodic removal of the accumulated grease and solid food waste. The cleaning interval varies with the amount of food preparation/clean-up activities and with the facility's housekeeping procedures. This interval must be determined by each facility, but will be mandated by the City when maintenance is found to be unsatisfactory. On the back of this page are acceptable grease and oil levels for different size grease traps and interceptors. Methods Two maintenance methods are approved by the City of Poway: 1. Manual Removal of Grease. This consists of skimming out accumulated grease and oil and removing solids that have settled at the bottom. None of the removed material can be disposed of in the sewer or storm drain system. Collected material can be put in a grease-recycling barrel if the barrel is specifically designated to hold grease trap waste. If applicable, you must ensure that your grease recycler or waste hauler accepts grease trap waste. Any of the material that is disposed of in the trash must be in a container and may not be over 50% liquid. 2. Pumping. You may hire a pumping service to empty your GRE. If you have a grease interceptor, pump all grease, oil, and food matter from each chamber and sample box including solids or sludge at the bottom of each chamber, specifically at the bottom of all standpipes. The City requires a complete pump out at each cleaning. Additional Information Bacterial products may help to reduce cleaning frequency. However, high temperature, high or low pH level, sanitizers and other cleaning products render them ineffective. Bacterial products may also cause the accumulated grease to "fluff-up" or take more space in your GRE than if left alone. These products are not to be substituted instead of Methods 1 or 2. 33 of 43 August 1, 2023, Item #10 Maintenance of GRE Page 2 Enzyme products are never allowed because they keep grease and oil suspended in the water, which causes them to pass through your grease trap or interceptor. They may also contribute to the corrosion of your GRE. IN ALL CASES, FACILITY OPERATORS ARE SOLELY RESPONSIBLE FOR PROPER GRE MAINTENANCE. Summary GRE collects grease that would otherwise enter the sewer lines and cause blockages and overflows. Methods 1 and 2 are the best ways of disposing grease. Bacteria may reduce the frequency of manual cleaning or pumping , but it does not eliminate the need for manual cleaning or pumping. A record of the dates, methods and identity of the people/company cleaning GRE must be kept at the facility and be available for review at any time. During facility inspections, all GRE will be required to be opened and will be examined for proper maintenance. The maximum grease and/or oil levels, including any solids or sludge that has accumulated on the bottom of your grease trap or grease interceptor, are as follows : Grease Trap/Grease Interceptor 25% Capacity Standard The 25% rule is used to determine when a grease trap/grease interceptor (or oil separator) is full. "The total depth of the floating grease layer plus the settle-able solids layer cannot exceed 25% of the total liquid depth of the interceptor." Determination is made by taking a core sample with a Sludge Judge or Dipstick Pro. The device is lowered slowly through the fats , oils, and grease layer all the way to the bottom through the solids layer of the trap/interceptor and then capped or plugged and slowly removed and set aside to rest. This allows the captured FOG to collect at the top of the device while the solids settle at the bottom. A measurement is taken, typically in inches, from the top of the FOG layer to the bottom of the device, which represents the tanks total water column. Then the FOG and solids layers are each measured, also typically in inches, and added together. If the combined FOG and solids layers are equal to or greater than 25% of the total water column, then the interceptor is considered full. At no time should there be visible grease or oil in the sample box. https://powaycity-my.sharepoint.com/personal/adenham_poway_org/Documents/Hamburger Factory/FOG Program.doc 34 of43 August 1, 2023, Item #10 Exhibit C 35 of 43 August 1, 2023, Item #10 FIRST AMENDMENT TO LEASE AGREEMENT BETWEEN THE CITY OF POWAY AND HAMBURGER FACTORY, INC. This FIRST AMENDMENT TO LEASE AGREEMENT BETWEEN THE CITY OF POWAY AND THE HAMBURGER FACTORY, INC. ("First Amendment") is made and entered into effect this 1st day of August, 2023, by and between the City of Poway, a Municipal Corporation (the "City"), Hamburger Factory, Inc., a California Corporation (the "Tenant"), and Cheeseburgers in Poway, LLC., a California Corporation (the "New Tenant"), collectively referred to herein as the "Parties". RECITALS WHEREAS, City owns the property located at 14122 Midland Road, Poway, California, commonly known as the Hamburger Factory (the "Hamburger Factory"); WHEREAS, City and Tenant entered into that certain AMENDED AND RESTATED LEASE AGREEMENT (the "Lease") dated August 1, 2023, by which City and Tenant established their respective roles and responsibilities in the leasing of the Hamburger Factory; WHEREAS, Tenant has represented it is selling its business to New Tenant, who wishes to have the Lease transferred to it under the same terms and conditions; and WHEREAS, this First Amendment is necessary to transfer responsibilities of the Lease from Tenant to New Tenant. NOW, THEREFORE, the Parties hereby agree as follows: 1. Contingent upon completion of the sale of Tenant's business to New Tenant, all instances of Hamburger Factory, Inc., in the Lease shall be changed to Cheeseburgers in Poway, LLC, with the exception noted below in Item 2. 2. Responsibility for all repayment requirements listed in Sections 4.03, 4.04, and 13.01 shall remain with Tenant and shall not transfer to New Tenant. 3. Except as otherwise amended by this First Amendment, all other terms and conditions of the Lease shall remain in full force and effect. [Remainder of Page Left Intentionally Blank] 36 of 43 ATTACHMENT C August 1, 2023, Item #10 IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to be executed the day and year first above written. City of Poway, a California municipal corporation Chris Hazeltine, City Manager ATTEST: Carrie Gallagher, CMC, City Clerk 37 of 43 Hamburger Factory, Inc., a California corporation Name and Title Cheeseburgers in Poway, LLC., a California corporation Name and Title APPROVED AS TO FORM: Alan Fenstermacher, City Attorney August 1, 2023, Item #10 Hamburger Factory Business Plan and Background of Josh Arbenz The Hamburger Factory Family Restaurant is a Poway gem and institution, having been in business approximately 40 years. That sort of longevity is extremely rare in the restaurant business. The Hamburger Factory has a loyal following, a unique, large, and versatile space, and employee loyalty almost unheard of (multiple employees with over 15, some over 20 years on staff). The current ownership group has long been respected and established strong ties in the community. This is a solid starting point for a new owner. The restaurant took a big hit in 2020 due to COVID, as did most. On the positive side, revenues bounced back to near pre COVID levels fairly quickly. Unfortunately, those numbers had been fairly flat over the past several years. My plan is to leverage the existing strengths of Hamburger Factory and implement simple yet tried and true changes to improve on an already proven concept. Cost Control 1. Reduce Controllable Prime Costs (mostly labor and food) Goal: Reduce to industry standard: <65% "'· 38 of 43 ATTACHMENT D August 1, 2023, Item #10 Labor: Despite revenue increases in both 2021 and 2022 coming out of COVID, Hamburger Factory's labor cost jumped two points to 43.85% of revenue. An increase is expected given continued minimum wage increases. That said, the industry standard is 28-33% ... my other 3 restaurants average 31 %. I am conservatively estimating we can lower the labor rate to 33% by using our existing and proven model of budgeting labor based on projected sales. While we do not plan to reduce the number of total staff, we do plan on increasing the efficiency of existing staff. We will be investing in a new POS system (Toast) that will increase efficiency, partly by implementing server handheld devices which will eliminate documenting customer orders twice. Food: On the food cost side, even though revenue has increased back to pre COVID levels, food cost increased over 2 points. This is due in part to inflationary effects on food costs but with diminishing ownership presence and oversight, waste/loss is likely up and portion control, employee meals, and purchasing are likely less efficient. In order to bring food costs in line with industry standards (25-30% of revenue), 1 of 3 things needs to happen ... 1.) portions need to be reduced, 2.) prices need to increase, or 3.) better prices need to be negotiated with food suppliers. Likely all 3 will need some adjustment and that process has already begun. I have already negotiated improved pricing from my main food supplier. The menu at Hamburger Factory is exhaustive with dozens of items. I plan to focus on world class burgers, fries, and great milkshakes, and certainly some variety for the whole family, but I plan to eliminate 30% of the menu ... specifically the least popular and relevant items. Reducing ingredients and menu items will decrease waste and spoilage and eliminate inefficiencies. The following are practices utilized at my other stores that will be implement at Hamburger Factory: • Efficiently manage staffing levels. We are rigorous about this at my other stores. We set a weekly budget for projected revenue and associated staffing. We do not staff at higher than 35% of projected sales. • Reduce food costs by pricing menu items 3 to 4x their cost. Modify food portions if necessary to minimize price increases. • Evaluate all food vendors and pricing on a regular basis. Summary: Prime Costs at 65% or less are the makings of a financially healthy restaurant. I am extremely confident this is achievable. Revenue Growth Goal: Maintain existing clientele, which is composed of a majority of senior citizens, while also attracting younger patrons and young families with children, and grow catering and event channels. 39 of 43 August 1, 2023, Item #10 Concept: I would describe the existing theme of Hamburger Factory as charming, historic, americana. I believe a lot of people like it. I also believe there's room for improvement, especially in attracting younger families and patrons. My plan is to continue to embrace Poway's 'the City in the Country' motto along with the park's railroad theme, but a more modern version of it. .. • For starters, deep clean the restaurant. The bathroom is specifically notable but overall the restaurant is not particularly clean. Cleaning up the restaurant will bring in or bring back customers who have experienced this and stopped coming. • Reduce the clutter: Hamburger Factory's interior is very charming, it's also a bit dated. We will paint some of the side walls white and eliminate some of the wall decor that doesn't apply so the space is less dark and busy ... not a total facelift, just a modernized version of a classic. We will also conduct maintenance where improvements are needed. • Improve the staff, morale, and customer service. I used to come to this restaurant as a kid. It had a great vibe because of friendly staff, fun music, and a great theme. They have some great staff who genuinely care about the customer experience, but customer service needs to be prioritized and constantly managed. I'm not sure that's happening presently. Happy, energetic, accommodating staff brings back customers and this will be highly prioritized. • Modernize the menu. I plan to freshen up the menu by creating a new design with chef inspired burgers, creative and unique dishes, proven menu items from our other stores, while keeping the existing items the locals love. • Improve digital presence: My other stores have professional and modern websites with professional photography connected to our POS system for easy ordering for takeout or delivery services. We also are highly engaged on social media platforms like lnstagram and Facebook. • Promote San Diego sports. I have no interest in becoming a sports bar, but I want moms and dads who's kids play sports and that love San Diego sports to see Hamburger Factory as a family friendly place to bring the kids, watch the Padres or their favorite team on TV, and have a beverage while their kids play in the park or in the game room . We will also upgrade the television's and sound system, not to be louder, but to have better sound quality and improve the overall ambience. • Network: Poway has a small town feel even though it isn't that small! Most of my high school friends are back in Poway. When I talk to them about Hamburger Factory, most of them don't go to Hamburger Factory anymore. All of them have kids on sports teams and involved with school, church, etc. I will use my connections in Poway to sponsor teams, do promotions with my existing network and work to grow it, and invite teams and community groups to host their events and team parties at Hamburger Factory. • I believe I will be able to generate buzz simply because it's a new owner of a Poway institution. Being a Poway High grad will work in my favor (especially at the beginning) with the community and regulars. Summary: Revenue growth is more difficult to predict and plan for than controllable costs, however, my experience has demonstrated that top line growth is tied to putting out a great product. We place the majority of our resources and emphasis on 3 things: 40 of 43 August 1, 2023, Item #10 1. The People: we are in the hospitality business. We need to hire and keep exceptional people that will represent our core values to guests every time they visit. 2. The Menu: The menu needs to look good on paper, in pictures, and on the calculator (food cost) 3. The Space: Guests want to enjoy great food and service in a clean, attractive, and fun environment. Hamburger Factory's existing following is enough to sustain, but I believe bolstering the customer base is very achievable given the changes and emphasis listed above. Experience After graduating Poway High in 1998 I attended Cal Poly, SLO, where I earned a bachelors in Speech Communication and a Masters in Business Administration. I spent nearly 10 years in the software business as a Salesperson, Sales Manager, and Business Unit Manager. It was during this tenure that I began researching and exploring my desire to get into the restaurant business. In 2014, I quit my corporate job and purchased Stratford at the Harbor in Oceanside. I operated that business as the day to day manager for five years. Since purchasing Stratford at the Harbor our revenues have nearly doubled. In 2018 I purchased Pier View Coffee Co. in Oceanside. I remodeled the interior and modernized the concept and revenues have also nearly doubled since that time. In 2021 I purchased Stratford Ct. Cafe in Del Mar and revenues are up nearly 50% in two years. All 3 stores have either 4 or 4.5 stars on Yelp and Google. Here are their websites: www.stratfordattheharbor.com www.stratfordcourtcafe.com www.pierviewcoffeeco.com Our Core Values The following are the core values we emphasize with existing staff and during the hiring process: Integrity, Respect, Teamwork, Consistency, Accountability, Kaizen (constant improvement), and Hospitality. My goal is that myself and each staff member lives out these core values, and I believe these have been a major factor in the growth and health of our business. Scale In order to effectively manage and oversee 3 restaurants and now 4, I have in place a talented management team who will play a large role in ensuring Hamburger Factory has the resources to succeed. I believe my industry experience and qualified team will put us in an excellent position to ensure Hamburger Factory performs at its full potential. 41 of 43 August 1, 2023, Item #10 I am thrilled to be the new owner of Hamburger Factory. Because there exists so much history, I see it not only as a great opportunity, but also a huge responsibility. The residents of Poway should have a great restaurant space to bring family and friends, feel a warm and welcoming environment, and experience a modern menu made up of old favorites and fun new flavors. And most important. .. it's called the Hamburger Factory, so we will ensure they get a world class burger! I can't wait to get started. 42 of 43 August 1, 2023, Item #10 July 17, 2023 Stave Vaus Mayor, City of Poway 13325 Civic Center Dr Poway, CA 92064 RE: Transfer of Lease Agreement between the City of Poway and The Hamburger Factory Dear Mayor Vaus, It is my pleasure to write this letter of support of the transfer of lease agreement between the City of Poway and The Hamburger Factory. For the past 25+ years, The Hamburger Factory and its ongoing relationship with the City of Poway have been the focal point and pride of the Spear and Casse family. After careful consideration of the mutual interests of our family and the city, we have decided to sell our business to Mr. Josh Arbenz who will acquire and operate it as Cheeseburgers in Poway, LLC d.b.a. Hamburger Factory. This decision was considered very carefully to ensure that the legacy of The Hamburger Factory and its unique tie to the City of Poway is both understood and carried into the future of the business. We are honored to have been a part of such a wonderful community as both residents and business owners and are confident that Mr. Arbenz will successfully carry the future of the business forward. We fully support and appreciate the Council's approval to transfer the current lease agreement to Mr. Arbenz to facilitate the successful sale transaction of The Hamburger Factory. Sincerely, 1r71:-----·, /' ~ ,, ~ (~~:-:-:-L,,,, ----(.___.,. David Casse President, The Hamburger Factory Inc. 43 of43 ATTACHMENT E August 1, 2023, Item #10