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HomeMy WebLinkAboutE-5 Staff Report - 890 The Promenade Letters of IntentCONSENT ITEM E-5 TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL VIA: DON PENMAN, INTERIM CITY MANAGER FROM: KURT E. CHRISTIANSEN, FAICP ECONOMIC AND COMMUNITY DEVELOPMENT DIRECTOR DATE: FEBRUARY 20, 2018 SUBJECT: REQUEST TO EXECUTE NON-BINDING LETTERS OF INTENT (LOI) WITH FIVE CONCEPTS FOR THE PROMENADE AT CITRUS (890 THE PROMENADE). SUMMARY: The City has received a total of five (5) letters of intent from tenants interested in leasing space at City- owned propert y located at 890 The Promenade for the purpose of quick serve restaurants, coffee and tea shops. The proposed actions authorize the execution of non-binding letters of intent with five (5) perspective tenants with the following concepts: Asian Café, Hot Pot, Mexican, Poki Cat Sakura, LLC and The Tea Exchange. RECOMMENDATION: Staff recommends the City Council take the following actions: 1) Authorize the Interim City Manager to execute non-binding letters of intent with five (5) concepts: Asian Café, Hot Pot, Mexican, Poki Cat Sakura, LLC and The Tea Exchange subject to any non-substantive changes made by the Interim City Manager or City Attorney; and 2)Authorize the Interim City Manager to execute the Letters of Intent, in a form acceptable to the City Attorney, on behalf of the City. DISCUSSION: Rosedale Land Partners II, LLC transferred ownership of approximately 8,250 square feet of commercial real estate located at 890 The Promenade to the City. The City’s primary interest is to lease out the six (6) suites to continue growing a diverse and stable economic base that supports ongoing City’s services and programs. Staff requested from its commercial real estate broker, Jones Lang Lasalle (JLL), to coordinate retailer and broker solicitations. A total of five (5) letters of intent (LOI) were received. APPROVED CITY COUNCIL 2/20/2018 Letters of Intent for 890 The Promenade February 20, 2018 Page 2 Letters of intent were received from the following concepts: • Asian Café • Hot Pot • Mexican • Poki Cat Sakura, LLC. • The Tea Exchange The LOI’s were reviewed by JLL to reflect the City’s best interest. Staff also requested Best Best & Krieger review the LOI’s. The letters of intent contain the following general terms and provisions: Concept Premises Use Term Rent Tenant Improvement Allowance Asian Café Suite C: 1,035 SF Boba drinks and a small selection of snacks. 10 Years $3.25 PSF NNN $25 PSF Hot Pot Suite D: 1,245 SF Hot pot quick serve restaurant. 10 Years $3.50 PSF NNN $20 PSF Mexican Suite C: 1,035 SF Mexican quick serve restaurant. 10 Years $3.50 PSF NNN $20 PSF Poki Cat Sakura, LLC. Suite F: 1,490 SF Poke bar concept. 10 Years $3.50 PSF NNN $25 PSF The Tea Exchange Suite A: 1,500 SF Tea and coffee concept. 10 Years $3.50 PSF NNN $20 PSF FISCAL IMPACT: The proposed actions would authorize the execution of letters of intent with five (5) prospective concepts. The letters of intent are non-binding and will not have a have a fiscal impact on the City. Prepared by: Reviewed and Approved: Carina Campos Kurt Christiansen, FAICP Economic Development Specialist Economic and Community Development Director Reviewed and Approved: Reviewed and Approved: Louie F. Lacasella Don Penman Senior Management Analyst Interim City Manager Letters of Intent for 890 The Promenade February 20, 2018 Page 2 Attachments: 1)Asian Café LOI 2) Hot Pot LOI 3)Mexican LOI 4) Poki Cat Sakura, LLC LOI 5)The Tea Exchange LOI Retail Brokerage, Los Angeles 11620 Wilshire Boulevard, Suite 1150, Los Angeles CA 90025 tel +1 310 473 4424 fax +1 310 473 6747 1/27/2018 Jordan Chang IRN Realty 556 W. Las Tunas Dr. Suite #101 Arcadia, CA 91007 RE: Proposal to Lease for TBD Rosedale Transit Plaza Azusa, CA Dear Blake, This proposal is intended to outline the material business points upon which agreement could preface the preparation, review and execution of a mutually acceptable lease. Landlord: City of Azusa or assignee Tenant: TBD (Please provide entity) Premises: Approximately 1,035 square feet Suite C, as indicated on the attached site plan. Minimum Rent: Tenant to pay Landlord a Minimum Rent of $3.25 per square foot, per month, triple net. Rental Adjustment: Commencing for year two (2) of the Term, the Minimum Rent shall increase 2.5% annually over the Minimum Rent in the preceding Lease Year beginning on the Rental Commencement Date. Term: The base term shall be for ten (10) years from Rental Commencement Date. Options: Provided Tenant is open and operating from the Premises and has not been in default under the Lease, Tenant shall be granted one Option to extend the Term of this Lease by an additional five years. Options are personal to Tenant and Tenant may exercise its Option by providing written Attachment 1 notice to Landlord at least 270 days prior to the expiration of the then-current Term. Option Rental: The Minimum Rent for year one (1) of the option Term shall be a three percent (3%) increase over the Minimum Rent in the preceding year, with 3% annual increases commencing in year two (2) of the option Term. Commencement Date and Rental Commencement Date: The Lease shall be effective as an enforceable obligation from mutual execution. The Lease Commencement Date shall be upon delivery of the Premises to Tenant. The Rental Commencement Date of lease term shall be the earlier of (a) 150 days following delivery of the Premises; or (b) when Tenant opens for business. Use: Subject to the existing leases within the Shopping Center, the Premises shall be used for the operation of an Asian Café which serves boba drinks and a small selection of snacks, and for no other use or purpose. (Please provide menu, prior to Lease execution) Condition of Premises: Please provide Landlord’s work letter. Tenant Improvement Allowance: Landlord shall provide Tenant a Tenant Improvement Allowance in the amount of $25 psf payable thirty (30) days following Tenant’s opening for business, delivery to Landlord of all lien releases for work performed to the Premises, and commencement of rent. Additional Charges: The lease shall be an "absolute net" lease providing for Tenant to pay Landlord, in addition to Minimum Rent, its pro-rata share of the cost of operations of the property by Landlord including, but not limited to, common area maintenance, real estate taxes, utilities, building repairs and maintenance, insurance and the customary fee of the administration and supervision of Additional Charges. Expenses and maintenance of roof and structure is Landlord’s responsibility as part of CAM. Initial Additional Charges are estimated at approximately $0.75 per square foot, per month. Security Deposit: Subject to Landlord’s review of Tenant’s financials, Tenant shall pay one month’s rent as Security Deposit to Landlord upon execution of lease. Assignment & Subletting: Tenant shall have the right to assign or sublease to a Franchisee or an affiliate without Landlord’s consent provided Tenant remains primarily liable for financial performance under the Lease. Tenant shall also have the right to assign or sublet to an unaffiliated third party with Landlord’s consent, not to be unreasonably withheld. To be further defined in the Lease. Continuous Operation: The Lease shall contain a convent of continuous operation so that Tenant must operate its business at all times during the Lease Term, subject to any casualty or force majeure events. Tenant shall be open [6] days a week, for lunch and dinner service, opening no later than [11am] and closing no earlier than [7pm]. Covenant to Open: Tenant shall be obligated to open its store for at least one day, fully improved, fully stocked and with employees sufficient to operate the business, such opening shall be no later than 90 days after the Rental Commencement Date. Lease Guarantee: Tenant’s performance of the terms and conditions of the Lease shall be guaranteed by Hanna Yu, Richard Shih, Yasmin Ko and Jordan Chang. Representation: Landlord and Tenant acknowledge and consent that Blake Kaplan of Jones Lang LaSalle (JLL) is representing the Landlord only and Jordan Chang (IRN) is representing the Tenant only in this transaction. JLL will split their leasing commission with Jordan Chang of IRN Realty on a 50/50 basis payable one-half (½) upon lease execution and removal of any contingencies and one-half (½) upon Tenant’s opening for business. Parking: Parking is extremely limited on site. Landlord reserves the right, at any time during the Lease, to limit employee and/owner parking on site, or to prohibit same, reserving all onsite parking for customers only. To be further detailed in the Lease. City Council Approval: The Letter of Intent and Lease shall be subject to City Council Approval. Since landlord is a public entity, the Lease terms shall be a public record available for request by the public and shall not be confidential in any way. Additional Terms and Conditions: This proposal is subject to Landlord’s final review and approval of Tenant’s financials. Agency Disclosure: Landlord and Tenant acknowledge and consent that JLL is representing the Landlord and Blake Kaplan is representing the Tenant in this transaction. The Parties warrant there are no other brokers entitled to commission with regard to these negotiations. Please review and execute the Agency Disclosure Form attached. This proposal, while not binding upon any party, shall be withdrawn if not accepted by 1/18/2018. The foregoing is not intended to constitute a binding agreement and shall in no event be construed to constitute a commitment or offer to enter into any leasing arrangements by either Landlord or Tenant. It is intended for discussion purposes only. Landlord and Tenant acknowledge that this letter does not contain all material terms and that they, therefore, contemplate the drafting and execution of a more detailed lease agreement, as indicated above. Landlord and Tenant agree that either party shall have the right to terminate the negotiation of leasing arrangements in accordance with this letter at any time, for any reason, or for no reason. Neither Landlord nor Tenant owes the other party any duty to negotiate a formal lease agreement. Once you have had the opportunity to review this letter, I would be pleased to speak or meet with you to discuss any questions or concerns. In the interim, please do not hesitate to call me at 909-702-3367 should any additional information be required. Sincerely, Jones Lang Lasalle Blake Austin Kaplan Associate CA License #02001158 AGREED AND ACCEPTED TO THIS_____DAY OF __________________2017. LANDLORD: TENANT: BY: ____________________ BY: ____________________ Site Plan: Retail Brokerage, Los Angeles 11620 Wilshire Boulevard, Suite 1150, Los Angeles CA 90025 tel +1 310 473 4424 fax +1 310 473 6747 11/16/2017 Jordan Chang IRN Realty 556 W. Las Tunas Dr. Suite #101 Arcadia, CA 91007 RE: Proposal to Lease for TBD Rosedale Transit Plaza Azusa, CA Dear Jordan This proposal is intended to outline the material business points upon which agreement could preface the preparation, review and execution of a mutually acceptable lease. Landlord: City of Azusa or assignee Tenant: TBD (Please provide entity) Premises: Approximately 1,245 square feet Suite D, as indicated on the attached site plan. Minimum Rent: Tenant to pay Landlord a Minimum Rent of $3.50 per square foot, per month, triple net beginning on the Rental Commencement Date. Rental Adjustment: Commencing for year two (2) of the Term, the Minimum Rent shall increase 3% annually over the Minimum Rent in the preceding Lease Year. Term: The base term shall be for ten (10) years from Rental Commencement Date. Options: Provided Tenant is open and operating from the Premises and has not been in default under the Lease, Tenant shall be granted one Option to extend the Term of this Lease by an additional five years. Options are personal to Tenant and Tenant may exercise its Option by providing written Attachment 2 notice to Landlord at least 270 days prior to the expiration of the then-current Term. Option Rental: The Minimum Rent for year one (1) of the option Term shall be the higher of (a) Fair Market Value, or (b) a three percent (3%) increase over the Minimum Rent in the preceding year, with 3% annual increases commencing in year two (2) of the option Term. Commencement Date and Rental Commencement Date: The Lease shall be effective as an enforceable obligation from mutual execution. The Lease Commencement Date shall be upon delivery of the Premises to Tenant. The Rental Commencement Date of lease term shall be the earlier of (a) 120 days following delivery of the Premises; or (b) when Tenant opens for business. Use: Subject to the existing leases within the Shopping Center, the Premises shall be used for the operation of a Hot Pot quick serve restaurant, and for no other use or purpose. (Please provide menu). Condition of Premises: Please provide Landlord’s work letter. Tenant Improvement Allowance: Landlord shall provide Tenant a Tenant Improvement Allowance in the amount of $20 psf payable thirty (30) days following Tenant’s opening for business, delivery to Landlord of all lien releases for work performed to the Premises, and commencement of rent. Additional Charges: The lease shall be an "absolute net" lease providing for Tenant to pay Landlord, in addition to Minimum Rent, its pro-rata share of the cost of operations of the property by Landlord including, but not limited to, common area maintenance, real estate taxes, utilities, building repairs and maintenance, insurance and the customary fee of the administration and supervision of Additional Charges. Initial Additional Charges are estimated at approximately $0.75 per square foot, per month. Security Deposit: Subject to Landlord’s review of Tenant’s financials, Tenant shall pay one month’s rent as Security Deposit to Landlord upon execution of lease. Assignment & Subletting: Tenant shall have the right to assign or sublease to a Franchisee or an affiliate without Landlord’s consent provided Tenant remains primarily liable for financial performance under the Lease. Tenant shall also have the right to assign or sublet to an unaffiliated third party with Landlord’s consent, not to be unreasonably withheld. To be further defined in the Lease. Continuous Operation: The Lease shall contain a convent of continuous operation so that Tenant must operate its business at all times during the Lease Term, subject to any casualty or force majeure events. Tenant shall be open [6] days a week, for lunch and dinner service, opening no later than [11am] and closing no earlier than [7pm]. Covenant to Open: Tenant shall be obligated to open its store for at least one day, fully improvement, fully stocked and with employees sufficient to operate the business, and such opening shall be no later than 60 days after Rental Commencement Date. Lease Guarantee: Tenant’s performance of the terms and conditions of the Lease shall be guaranteed by Hanna Yu, Richard Shih, Yasmin Ko and Jordan Chang. Representation: Landlord and Tenant acknowledge and consent that Blake Kaplan of Jones Lang LaSalle (JLL) is representing the Landlord only and Jordan Chang (IRN) is representing the Tenant only in this transaction. JLL will split their leasing commission with Jordan Chang of IRN on a 50/50 basis payable one-half (½) upon lease execution and removal of any contingencies and one-half (½) upon Tenant’s opening for business and commencement of rent. Parking: Parking is extremely limited on site. Landlord reserves the right, at any time during the Lease, to limit employee and/owner parking on site, or to prohibit same, reserving all on site parking for customers only. To be further detailed in the Lease. City Council Approval: The Letter of Intent and Lease shall be subject to City Council Approval. Since Landlord is a public entity, the Lease terms shall be a public record available for request by the public and shall not be confidential in any way. Additional Terms and Conditions: This proposal is subject to Landlord’s final review and approval of Tenant’s financials. Agency Disclosure: Landlord and Tenant acknowledge and consent that JLL is representing the Landlord and Blake Kaplan is representing the Tenant in this transaction. The Parties warrant there are no other brokers entitled to commission with regard to these negotiations. Please review and execute the Agency Disclosure Form attached. This proposal, while not binding upon any party, shall be withdrawn if not accepted by November 30, 2017. The foregoing is not intended to constitute a binding agreement and shall in no event be construed to constitute a commitment or offer to enter into any leasing arrangements by either Landlord or Tenant. It is intended for discussion purposes only. Landlord and Tenant acknowledge that this letter does not contain all material terms and that they, therefore, contemplate the drafting and execution of a more detailed lease agreement, as indicated above. Landlord and Tenant agree that either party shall have the right to terminate the negotiation of leasing arrangements in accordance with this letter at any time, for any reason, or for no reason. Neither Landlord nor Tenant owes the other party any duty to negotiate a formal lease agreement. Once you have had the opportunity to review this letter, I would be pleased to speak or meet with you to discuss any questions or concerns. In the interim, please do not hesitate to call me at 909-702-3367 should any additional information be required. Sincerely, Jones Lang Lasalle Blake Austin Kaplan Associate CA License #02001158 AGREED AND ACCEPTED TO THIS_____DAY OF __________________2017. LANDLORD: TENANT: BY: ____________________ BY: ____________________ Site Plan: Retail Brokerage, Los Angeles 11620 Wilshire Boulevard, Suite 1150, Los Angeles CA 90025 tel +1 310 473 4424 fax +1 310 473 6747 11/16/2017 Erik Westedt 3281 E. Guasti Rd. Suite 850 Ontario, CA 9171 RE: Proposal to Lease for TBD Rosedale Transit Plaza Azusa, CA Dear Erik This proposal is intended to outline the material business points upon which agreement could preface the preparation, review and execution of a mutually acceptable lease. Landlord: City of Azusa or assignee Tenant: TBD (Please provide entity) Premises: Approximately 1,035 square feet Suite C, as indicated on the attached site plan. Minimum Rent: Tenant to pay Landlord a Minimum Rent of $3.50 per square foot, per month, triple net beginning on the Rental Commencement Date. Rental Adjustment: Commencing for year two (2) of the Term, the Minimum Rent shall increase 3% annually over the Minimum Rent in the preceding Lease Year. Term: The base term shall be for ten (10) years from Rental Commencement Date. Options: Provided Tenant is open and operating from the Premises and has not been in default under the Lease, Tenant shall be granted one Option to extend the Term of this Lease by an additional five years. Options are personal to Tenant and Tenant may exercise its Option by providing written Attachment 3 notice to Landlord at least 270 days prior to the expiration of the then-current Term. Option Rental: The Minimum Rent for year one (1) of the option Term shall be the higher of (a) Fair Market Value, or (b) a three percent (3%) increase over the Minimum Rent in the preceding year, with 3% annual increases commencing in year two (2) of the option Term. Commencement Date and Rental Commencement Date: The Lease shall be effective as an enforceable obligation from mutual execution. The Lease Commencement Date shall be upon delivery of the Premises to Tenant. The Rental Commencement Date of lease term shall be the earlier of (a) 120 days following delivery of the Premises; or (b) when Tenant opens for business. Use: Subject to the existing leases within the Shopping Center, The Premises shall be used for the operation of a Mexican quick serve restaurant, and for no other use or purpose. Condition of Premises: Please provide Landlord’s work letter. Tenant Improvement Allowance: Landlord shall provide Tenant a Tenant Improvement Allowance in the amount of $20 psf payable thirty (30) days following tenant’s opening for business, delivery to Landlord of all lien releases for work performed to the Premises, and commencement of rent. Additional Charges: The lease shall be an "absolute net" lease providing for Tenant to pay Landlord, in addition to Minimum Rent, its pro-rata share of the cost of operations of the property by Landlord including, but not limited to, common area maintenance, real estate taxes, utilities, building repairs and maintenance, insurance and the customary fee of the administration and supervision of Additional Charges. Initial Additional Charges are estimated at approximately $0.75 per square foot, per month. Security Deposit: Subject to Landlord’s review of Tenant’s financials, Tenant shall pay one month’s rent as Security Deposit to Landlord upon execution of lease. Assignment & Subletting: Tenant shall have the right to assign or sublease to a Franchisee or an affiliate without Landlord’s consent provided Tenant remains primarily liable for financial performance under the Lease. Tenant shall also have the right to assign or sublet to an unaffiliated third party with Landlord’s consent, not to be unreasonably withheld. To be further defined in the Lease. Continuous Operation: The Lease shall contain a convent of continuous operation so that Tenant must operate its business at all times during the Lease Term, subject to any casualty or force majeure events. Tenant shall be open [6] days a week, for lunch and dinner service, opening no later than [11am] and closing no earlier than [7pm]. Covenant to Open: Tenant shall be obligated to open its store for at least one day, fully improvement, fully stoked and with employees sufficient to operate the business, and such opening shall be no later than 60 days after the Rental Commencement Date. Lease Guarantee: Tenant’s performance of the terms and conditions of the Lease shall be guaranteed by _______________________. Representation: Landlord and Tenant acknowledge and consent that Erik Westedt of Jones Lang LaSalle (JLL) is representing the Landlord only and Blake Kaplan of Jones Lang LaSalle (JLL) is representing the Tenant only in this transaction. JLL will split their leasing commission with Blake Kaplan of Jones Lang LaSalle (JLL) on a 50/50 basis payable one-half (½) upon lease execution and removal of any contingencies and one-half (½) upon Tenant’s opening for business and commencement of rent. Parking: Parking is extremely limited on site. Landlord reserves the right, at any time during the Lease, to limit employee and/owner parking on site, or to prohibit same, reserving all on site parking for customers only. To be further detailed in the lease. City Council Approval: The Letter of Intent and Lease shall be subject to City Council Approval. Since landlord is a public entity, the Lease terms shall be a public record available for request by the public and shall not be confidential in any way. Additional Terms and Conditions: This proposal is subject to Landlord’s final review and approval of Tenant’s financials. Agency Disclosure: Landlord and Tenant acknowledge and consent that JLL is representing the Landlord and Blake Kaplan is representing the Tenant in this transaction. The Parties warrant there are no other brokers entitled to commission with regard to these negotiations. Please review and execute the Agency Disclosure Form attached. This proposal, while not binding upon any party, shall be withdrawn if not accepted by November 30, 2017. The foregoing is not intended to constitute a binding agreement and shall in no event be construed to constitute a commitment or offer to enter into any leasing arrangements by either Landlord or Tenant. It is intended for discussion purposes only. Landlord and Tenant acknowledge that this letter does not contain all material terms and that they, therefore, contemplate the drafting and execution of a more detailed lease agreement, as indicated above. Landlord and Tenant agree that either party shall have the right to terminate the negotiation of leasing arrangements in accordance with this letter at any time, for any reason, or for no reason. Neither Landlord nor Tenant owes the other party any duty to negotiate a formal lease agreement. Once you have had the opportunity to review this letter, I would be pleased to speak or meet with you to discuss any questions or concerns. In the interim, please do not hesitate to call me at 909-702-3367 should any additional information be required. Sincerely, Jones Lang Lasalle Blake Austin Kaplan Associate CA License #02001158 AGREED AND ACCEPTED TO THIS_____DAY OF __________________2017. LANDLORD: TENANT: BY: ____________________ BY: ____________________ Site Plan: Retail Brokerage, Los Angeles 11620 Wilshire Boulevard, Suite 1150, Los Angeles CA 90025 tel +1 310 473 4424 fax +1 310 473 6747 11/16/2017 Catherine Morris 111 W. Ocean Blvd. Suite 1020 Long Beach, CA 90802 RE: Proposal to Lease for Poki Cat Rosedale Transit Plaza Azusa, CA Dear Catherine, This proposal is intended to outline the material business points upon which agreement could preface the preparation, review and execution of a mutually acceptable lease. Landlord: City of Azusa or assignee Tenant: Poki Cat Sakura, LLC. Premises: Approximately 1,490 square feet Suite F, as indicated on the attached site plan. Minimum Rent: Tenant to pay Landlord a Minimum Rent of $3.50 per square foot, per month, triple net beginning on the Rental Commencement Date. Rental Adjustment: Commencing for year two (2) of the Term, the Minimum Rent shall increase 3% annually over the Minimum Rent in the preceding Lease Year. Term: The base term shall be for ten (10) years from Rental Commencement Date. Options: Provided Tenant is open and operating from the Premises and has not been in default under the Lease, Tenant shall be granted one Option to extend the Term of this Lease by an additional five years. Options are personal to Tenant and Tenant may exercise its Option by providing written Attachment 4 notice to Landlord at least 270 days prior to the expiration of the then-current Term. Option Rental: The Minimum Rent for year one (1) of the option Term shall be the higher of (a) Fair Market Value, or (b) a three percent (3%) increase over the Minimum Rent in the preceding year, with 3% annual increases commencing in year two (2) of the option Term. Commencement Date and Rental Commencement Date: The Lease shall be effective as an enforceable obligation from mutual execution. The Lease Commencement Date shall be upon delivery of the Premises to Tenant. The Rental Commencement Date of lease term shall be the earlier of (a) 120 days following delivery of the Premises; or (b) when Tenant opens for business. Use: Subject to the existing leases within the Shopping Center, the Premises shall be used for the operation of a Poke Bar Concept. (Please provide menu) Condition of Premises: Please provide Landlord’s work letter. Tenant Improvement Allowance: Landlord shall provide Tenant a Tenant Improvement Allowance in the amount of $25 psf payable thirty (30) days following Tenant’s opening for business, delivery to Landlord of all lien releases for work performed to the Premises, and commencement of rent. Additional Charges: The lease shall be an "absolute net" lease providing for Tenant to pay Landlord, in addition to Minimum Rent, its pro-rata share of the cost of operations of the property by Landlord including, but not limited to, common area maintenance, real estate taxes, utilities, building repairs and maintenance, insurance and the customary fee of the administration and supervision of Additional Charges. Initial Additional Charges are estimated at approximately $0.75 per square foot, per month. Security Deposit: Subject to Landlord’s review of Tenant’s financials, Tenant shall pay one month’s rent as Security Deposit to Landlord upon execution of lease. Assignment & Subletting: Tenant shall have the right to assign or sublease to a Franchisee or an affiliate without Landlord’s consent provided Tenant remains primarily liable for financial performance under the Lease. Tenant shall also have the right to assign or sublet to an unaffiliated third party with Landlord’s consent, not to be unreasonably withheld. To be further defined in the Lease. Continuous Operation: The Lease shall contain a convent of continuous operation so that Tenant must operate its business at all times during the Lease Term, subject to any casualty or force majeure events. Tenant shall be open [6] days a week, for lunch and dinner service, opening no later than [11am] and closing no earlier than [7pm]. Covenant to Open: Tenant shall be obligated to open its store for at least one day, fully improvement, fully stocked and with employees sufficient to operate the business, and such opening shall be no later than 60 days after the Rental Commencement Date. Lease Guarantee: Tenant’s performance of the terms and conditions of the Lease shall be guaranteed by Element Catering Group, Inc., Robert Luo, Lingyun Xiang and Jin Luo. Representation: Landlord and Tenant acknowledge and consent that Blake Kaplan of Jones Lang LaSalle (JLL) is representing the Landlord only and Catherine Morris is representing the Tenant only in this transaction. JLL will split their leasing commission with Catherine Morris on a 50/50 basis payable one-half (½) upon lease execution and removal of any contingencies and one-half (½) upon Tenant’s opening for business and commencement of rent. Parking: Parking is extremely limited on site. Landlord reserves the right, at any time during the Lease, to limit employee and/owner parking on site, or to prohibit same, reserving all on site parking for customers only. To be further detailed in the lease. City Council Approval: The Letter of Intent and Lease shall be subject to City Council Approval. Since landlord is a public entity, the Lease terms shall be a public record available for request by the public and shall not be confidential in any way. Additional Terms and Conditions: This proposal is subject to Landlord’s final review and approval of Tenant’s financials. Agency Disclosure: Landlord and Tenant acknowledge and consent that JLL is representing the Landlord and Blake Kaplan is representing the Tenant in this transaction. The Parties warrant there are no other brokers entitled to commission with regard to these negotiations. Please review and execute the Agency Disclosure Form attached. This proposal, while not binding upon any party, shall be withdrawn if not accepted by November 30, 2017. The foregoing is not intended to constitute a binding agreement and shall in no event be construed to constitute a commitment or offer to enter into any leasing arrangements by either Landlord or Tenant. It is intended for discussion purposes only. Landlord and Tenant acknowledge that this letter does not contain all material terms and that they, therefore, contemplate the drafting and execution of a more detailed lease agreement, as indicated above. Landlord and Tenant agree that either party shall have the right to terminate the negotiation of leasing arrangements in accordance with this letter at any time, for any reason, or for no reason. Neither Landlord nor Tenant owes the other party any duty to negotiate a formal lease agreement. Once you have had the opportunity to review this letter, I would be pleased to speak or meet with you to discuss any questions or concerns. In the interim, please do not hesitate to call me at 909-702-3367 should any additional information be required. Sincerely, Jones Lang Lasalle Blake Austin Kaplan Associate CA License #02001158 AGREED AND ACCEPTED TO THIS_____DAY OF __________________2017. LANDLORD: TENANT: BY: ____________________ BY: ____________________ Site Plan: Retail Brokerage, Los Angeles 11620 Wilshire Boulevard, Suite 1150, Los Angeles CA 90025 tel +1 310 473 4424 fax +1 310 473 6747 11/16/2017 Erik Westedt 3281 E. Guasti Rd. Suite 850 Ontario, CA 9171 RE: Proposal to Lease for TBD Rosedale Transit Plaza Azusa, CA Dear Erik This proposal is intended to outline the material business points upon which agreement could preface the preparation, review and execution of a mutually acceptable lease. Landlord: City of Azusa Tenant: The Tea Exchange Premises: Approximately 1,500 square feet Suite A, as indicated on the attached site plan. Minimum Rent: Tenant to pay Landlord a Minimum Rent of $3.50 per square foot, per month, triple net beginning on the Rental Commencement Date. Rental Adjustment: Commencing for year two (2) of the Term, the Minimum Rent shall increase 3% annually over the Minimum Rent in the preceding Lease Year. Term: The base term shall be for ten (10) years from Rental Commencement Date. Options: Provided Tenant is open and operating from the Premises and has not been in default under the Lease, Tenant shall be granted one Option to extend the Term of this Lease by an additional five years. Options are personal to Tenant and Tenant may exercise its Option by providing written Attachment 5 notice to Landlord at least 270 days prior to the expiration of the then-current Term. Option Rental: The Minimum Rent for year one (1) of the option Term shall be the higher of (a) Fair Market Value, or (b) a three percent (3%) increase over the Minimum Rent in the preceding year, with 3% annual increases commencing in year two (2) of the option Term. Commencement Date and Rental Commencement Date: The Lease shall be effective as an enforceable obligation from mutual execution. The Lease Commencement Date shall be upon delivery of the Premises to Tenant. The Rental Commencement Date of lease term shall be the later of (a) 120 days following delivery of the Premises; or (b) when Tenant opens for business. Use: Subject to the existing leases within the Shopping Center, the Premises shall be used for the operation of a tea and coffee concept, and for no other use or purpose. Condition of Premises: Please provide Landlord’s work letter. Tenant Improvement Allowance: Landlord shall provide Tenant a Tenant Improvement Allowance in the amount of $20 psf payable thirty (30) days following Tenant’s opening for business, delivery to Landlord of all lien releases for work performed to the Premises, and commencement of rent. Additional Charges: The lease shall be an "absolute net" lease providing for Tenant to pay Landlord, in addition to Minimum Rent, its pro-rata share of the cost of operations of the property by Landlord including, but not limited to, common area maintenance, real estate taxes, utilities, building repairs and maintenance, insurance and the customary fee of the administration and supervision of Additional Charges. Initial Additional Charges are estimated at approximately $0.75 per square foot, per month. Security Deposit: Subject to Landlord’s review of Tenant’s financials, Tenant shall pay one month’s rent as Security Deposit to Landlord upon execution of lease. Assignment & Subletting: Tenant shall have the right to assign or sublease to a Franchisee or an affiliate without Landlord’s consent provided Tenant remains primarily liable for financial performance under the Lease. Tenant shall also have the right to assign or sublet to an unaffiliated third party with Landlord’s consent, not to be unreasonably withheld. To be further defined in the Lease. Continuous Operation: The Lease shall contain a convent to continuous operation so that Tenant must operate its business at all times during the Lease Term, subject to any casualty or force majeure events. Tenant shall be open [6] days a week, for lunch and dinner service, opening no later than [11am] and closing no earlier than [7pm]. Covenant to Open: Tenant shall be obligated to open its store for at least one day, fully improvement, fully stocked and with employees sufficient to operate the business, and such opening shall be no later than 60 days after the Rental Commencement Date. Lease Guarantee: Tenant’s performance of the terms and conditions of the Lease shall be guaranteed by ____________. Representation: Landlord and Tenant acknowledge and consent that Erik Westedt of Jones Lang LaSalle (JLL) is representing the Landlord only and Blake Kaplan of Jones Lang LaSalle (JLL) is representing the Tenant only in this transaction. JLL will split their leasing commission with Blake Kaplan of Jones Lang LaSalle (JLL) on a 50/50 basis payable one-half (½) upon lease execution and removal of any contingencies and one-half (½) upon Tenant’s opening for business and commencement of rent. Parking: Parking is extremely limited on site. Landlord reserves the right, at any time during the Lease, to limit employee and/owner parking on site, or to prohibit same, reserving all on site parking for customers only. To be further detailed in the Lease. City Council Approval: The Letter of Intent and Lease shall be subject to City Council Approval. Since landlord is a public entity, the Lease terms shall be a public record available for request by the public and shall no tbe confidential in any way. Additional Terms and Conditions: This proposal is subject to Landlord’s final review and approval of Tenant’s financials. Agency Disclosure: Landlord and Tenant acknowledge and consent that JLL is representing the Landlord and Blake Kaplan is representing the Tenant in this transaction. The Parties warrant there are no other brokers entitled to commission with regard to these negotiations. Please review and execute the Agency Disclosure Form attached. This proposal, while not binding upon any party, shall be withdrawn if not accepted by November 30, 2017. The foregoing is not intended to constitute a binding agreement and shall in no event be construed to constitute a commitment or offer to enter into any leasing arrangements by either Landlord or Tenant. It is intended for discussion purposes only. Landlord and Tenant acknowledge that this letter does not contain all material terms and that they, therefore, contemplate the drafting and execution of a more detailed lease agreement, as indicated above. Landlord and Tenant agree that either party shall have the right to terminate the negotiation of leasing arrangements in accordance with this letter at any time, for any reason, or for no reason. Neither Landlord nor Tenant owes the other party any duty to negotiate a formal lease agreement. Once you have had the opportunity to review this letter, I would be pleased to speak or meet with you to discuss any questions or concerns. In the interim, please do not hesitate to call me at 909-702-3367 should any additional information be required. Sincerely, Jones Lang Lasalle Blake Austin Kaplan Associate CA License #02001158 AGREED AND ACCEPTED TO THIS_____DAY OF __________________2017. LANDLORD: TENANT: BY: ____________________ BY: ____________________ Site Plan: