TERMINAL 1 FOOD AND BEVERAGE CONCESSION LEASES RFP QUESTIONS and ANSWERS

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1 Subject Questions Responses Lease 1 Asian Quick Serve Restaurant 1 Rent If my monthly sales are- Jan. $150,000 Feb. $185,000 March $215,000 April $250,000 May $300,000 June $275,000 July $295,000 Aug. $325,000 Sept. $285,000 Oct. $315,000 Nov. $250,000 Dec. $375,000 Total $3,220,000 Then are my monthly RENT payments? Jan. $30,417 Feb. $30,417 March $45,000 April $70,000 May $102,000 June $135,000 July $170,000 Aug. $209,400 Sept. $243,600 Oct. $281,400 Nov. $311,400 Dec. $356,400 The rent is the higher of the Minimum Annual Guarantee ( MAG ) of $365,000.00, or the following tiered percentage rent: 8% of Gross Revenues achieved up to and including $500,000.00, plus, 10% of Gross Revenues achieved from $500, up to and including $1,000,000.00, plus, 12% of Gross Revenues achieved over $1,000, Based on your projected revenues of $3,220, for the first lease year, your rent payment for the first year will be the MAG of $365, since it is higher than the percentage rent of $356, The monthly MAG is 1/12 of the annual MAG. The tenant shall pay this amount on or before the first day of each calendar month. Percentage rent is calculated on a monthly basis against the monthly MAG payment; it is not to be calculated on a year to date basis during the Lease Year. A year end true-up is conducted annually whereby any adjustment necessary, to ensure the Tenant either paid 12 months of MAG or 12 months of percentage rent, is made. In other words, each month's rent payment is either 1/12 of $365,000 OR determined by using the sum of all prior month's gross revenue and multiplying it by the breakpoint percentage(s). Example- to determine

2 December's rent payment you would add up all gross sales from Jan - Nov and apply the tiered breakpoint percentages? 2 Concept I am wondering if F&B Lease Space #1 will allow for a full bar and counter seating as part of the concept? No. The concept for Lease 1 shall remain as a quick-serve restaurant. Full bar service will not be allowed at this location. 3 Design & Construction Can my Architect have access to base building Sketch-Up (3D) files for Terminal 1? The Conceptual Design portion of the RFP asks for 3D renderings and it would be very helpful to have the Sketch up files for context. If the base sketch up files are not available, can we get PDFs of the renderings? The available drawings we have are the CAD drawings, Lease Outline Drawings, Points of Connection drawings, and Terminal 1 Concession Design Guidelines. Instructions on how to gain access to all available drawings were sent to all interested parties on 2/1/18. If you would like access, please send your request via to Tomasi Toki at tomasi.toki@flysfo.com. 4 Can my Architect have access to the existing CAD elevations and Reflected Ceiling Plans in order to understand the heights of existing conditions? If there are no CAD elevations available, can my Architect get PDFs of the elevations showing the heights of the existing conditions? Lease 3 American Quick Serve Restaurant 5 Concept Can I use all 1600 sq. ft. as kitchen? Do I need seating? If all can be kitchen, does all three sides need to be open? No, you may not use the entire Premises as a kitchen. Please refer to this specific location in the Terminal 1 Concession Design Guidelines.

3 6 Can I incorporate some bar seatings? Any desire side to be front side? The concept for Lease 3 is a quick-serve restaurant and full bar service is not allowed. However, there is opportunity for seating within the Premises. Please refer to this specific location in the Terminal 1 Concession Design Guidelines. 7 Design & Construction 8 Evaluation Panel We plan to provide renderings for the RFP proposal. Would there be any way to get 3D SketchUp file information of the proposed terminal design and/or PDF renderings of the Lease 3 space? If that is not possible would we at least be able to get access to CAD or PDF Elevations of the lease space to determine heights and other volumes of the lease space? Do panelists have access to sound & internet? Lease 4 Sit Down Restaurant and Bar The available drawings we have are the CAD drawings, Lease Outline Drawings, Points of Connection drawings, and Terminal 1 Concession Design Guidelines. Instructions on how to gain access to all available drawings were sent to all interested parties on 2/1/18. If you would like access, please send your request via to Tomasi Toki at tomasi.toki@flysfo.com Yes. 9 Rent Would the airport consider lowering the 1st year MAG for the sit-down restaurants to $500,000? No. The Airport will retain the current MAG of $600,000 for Lease Design & Construction Given Lease #4 s raised platform (approx. 1.5 ft. above floor level), what are the expectations for Tenant s construction regarding ADA-compliant accessibility? The tenant will need to provide a code compliant design, meeting requirements as defined by BICE and SFO, including, but not limited to, California Building Code, ADAAG and SFO Tenant Design Guidelines. The Base-build design includes provisions for ramp access and stair access as part of the raised sub-floor. 11 Given Lease #4 s raised platform (approx. 1.5 ft. above grade), would the Tenant have the opportunity to do complete work prior to installation of the below-level conveyor system? If not, what precautions are necessary for working with the conveyor system during construction? The tenant will not have the opportunity to do complete work prior to installation of the below-level conveyor system. The project team has taken measures to coordinate and validate likely pathways for services serving the lease area to provided points of connections in the recommended back-of-house area, without impacting the baggage system. Many services, including power, mechanical, domestic water, fire alarm, come from overhead, and should not require work below the slab. It is strongly discouraged to work over the baggage system. To

4 do so will require additional coordination, limited work hours and an escort. Any complications with baggage system installation and start up as a result of third-party work have the potential to impact opening dates and pose a risk for the Airport and tenant. 12 To assess construction costs for Lease #4, can below-level plans (detailing baggage equipment location and size) be provided? Further information regarding the baggage handling systems below the lease area will be available upon award. The project team has taken measures to coordinate and validate likely pathways for services serving the lease area to provided points of connections in the recommended back-of-house area, without impacting the baggage system. Lease 6 Café 13 Concept Is it possible to have "dinner items" for lease 6? 14 Rent The MAGs for these locations are significantly higher than MAGs in previous RFPs in SFO. At the information conference you mentioned that this concourse would have 5M enplanements however, you also showed that there are 4 different phases to develop this concourse therefore it appears that the concourse will not have the full 5 M enplanements until 11/2022. Will the airport: Consider significantly reducing the MAG overall? Figure out a way to scale or tier the MAG to enplanements? You may carry items that are typically found in a café or coffee concept. Staff will seek Airport Commission s approval on March 20, 2018 to reduce the Minimum Annual Guarantee (MAG) of Lease 6 by 1/2 to $192, during Phase 1 and Phase 2. At the opening of Phase 3, the tenant for Lease 6 shall begin paying the full MAG of $385, The scheduled opening of each phase are as follows: Phase Opening Date Phase 1 July 23, 2019 Phase 2 March 24, 2020 Phase 3 May 1, 2021 Phase 4 November 1, 2022 The above schedule is subject to change. Please refer to the Terminal 1 Concessions Program Informational Conference presentation for the construction phasing plan at this link:

5 Lease 7 Asian Quick Serve Restaurant 15 Concept I wanted to know if it s possible to include specialty coffee alongside the fresh brewed coffee? 16 Proposal Bond If I want to submit same concept proposal for lease #1 and #7, can I do that? And would I submit two separate deposits of $37,000 and $35,000? 17 If we are bidding for multiple leases are we required to post bond for each lease or can we post one bond to apply to multiple proposals? No. Specialty coffee, such as espressos, cappuccinos, lattes, and mochas, whether hot or cold, is not allowed. The only coffee drink allowed is freshly brewed coffee or bottled coffee. The Airport will make change the Proposal Bond requirement for all Leases as follows: Proposers submitting proposals for more than one Lease are only required to submit one proposal bond in an amount equal to the highest proposal bond requirement for a single Lease for which the Proposer is proposing. For example, if you are proposing on Lease 1, Lease 2, and Lease 4, then you will only need to submit one proposal bond in the amount of $60, Minimum Qualification Requirements We just opened a brand new concept called last June (2017) and won't have enough sales data to confirm we will be a $1 million gross/ business yet. I calculated our sales to date and then averaged the remaining months with the sales data I have, and we are projected to do ~$1.1 million in the first 365 days of business since opening our doors. Is there another way that you would rather have me calculate the sales or will meet the requirement? I doubt that we will not reach $1million dollars. But in the case that we don t reach the $1mil mark, but are just shy of that mark, let s just say $990K, will we be denied a spot? Just want to make sure. The Airport will only accept achieved sales, not projected sales to determine whether a proposer meets the minimum qualification requirements. 19 Regarding "attach a copy of the Proposer s Certificate of Good Standing from the State of California (or state of formation)". How recent The Certificate of Good Standing from the California Secretary of State s office shall be issued within six months of the Submittal Deadline of May 2, 2018.

6 does the Proposer's Certificate of Good Standing need to be? Within the last six months or more recent? Lease 8 Café and Market 20 Concept F&B Lease #8 indicates Cafe & Market. I understand that it is required to serve specialty coffee in this location as well as a variety of exciting food that represents what is popular and reflective of the San Francisco dining scene. The word "Market" leads me to think that the food section of this lease should be merchandised as grab-and-go with prepared food ready to be purchased. Or, is it acceptable/preferable that this "Market" be a full service food counter with staff quickly preparing hot and cold meals? The Café shall offer items that are typically found in a café or coffee concept. The Market shall include two or more quick serve restaurants or brands/concepts that are reflective of the San Francisco Bay Area's food and beverage scene. Each of the Market's brands/concepts shall offer hot and cold freshly prepared food by staff as well as an assortment of grab-n-go items. Lease 9 Sit Down Restaurant and Bar 21 Rent Would the airport consider lowering the 1st year MAG for the sit-down restaurants to $500,000? No. The Airport will retain the current MAG of $620,000 for Lease Part I Concession Opportunity General Previous lease opportunities (such as the 2018 T2 F&B) specified the following: "Limitation of Single Proposal in Response to a Single Lease No entity or individual may submit more than one Proposal for any single lease presented in this Request for Proposals. This limitation includes any level of ownership in the Proposer. In the event that an entity or individual submits more than one Proposal for Staff will seek Airport Commission s approval to add The Limitation of Single Proposal in Response to a Single Lease to all Terminal 1 Food and Beverage Concession Leases as follows: Limitation of Single Proposal in Response to a Single Lease No entity or individual may submit more than one Proposal for any single lease presented in this Request for Proposals. This limitation includes any level of ownership in the Proposer. In the event that an entity or individual submits more than one Proposal for any single lease in this Request for Proposals, the Airport will only evaluate the

7 any single lease in this Request for Proposals, the Airport will only evaluate the last Proposal received before the Submittal Deadline and will reject all other Proposals submitted..." Do these leases have the same provision? last Proposal received before the Submittal Deadline and will reject all other Proposals submitted by such entity or individual. 23 May an entity submit more than one proposal for the same lease package? 24 Part 1, #7 of RFP (Limitation of Total Airport Leases) stipulates that Proposals received from an entity or individual holding eight leases as of the Submittal Deadline will be rejected. What consideration is given for leases that are in holdover status or leases that will expire by the Commencement Date of a new lease? There is a huge lag between the time of the Submittal Deadline and the date many of the locations will be open and operating (May 2018 vs. March 2020), which would mean a lease would be counted against us for 2 years even though the location isn t actually open and operating. We request the airport count the number of leases based on the point in time said lease location will be open and operating, not the time of submittal. Leases that expire before the Commencement Date of the new lease will not be counted toward the limitation of eight. 25 Part III Submission Requirements RFP page 9, under Minimum Qualifications, Part b reads: newly-formed entity needs to be duly organized and validly existing prior to the Submittal Deadline. In the past, SFO has allowed a newly formed JV entity to be formed upon award (and in so doing, avoiding incurring unnecessary legal review costs for small business partners before awarded.) If the Proposer is a corporation or limited liability company that meets the Minimum Qualifications and intends to partner or joint venture with a small business, an executed letter of intent and copy of the agreement to be executed upon award is sufficient. Partners must be willing to execute the Lease awarded to the Proposer.

8 Would the airport consider allowing the JV to be formed upon award instead? 26 Can applicants apply for more than one food and beverage lease? 27 Part IV Evaluation and Award Process Is the current RFP Submittal deadline of May 2, 2018, for both Phase 1 and Phase 2? 28 Is there a limit on the number of leases one organization or entity can win? Yes. Yes. There is no limit on the number of Leases an entity can win for this concession opportunity; however, there is a limitation of eight (8) Leases that an individual or entity can hold at the Airport. 29 Part VII Submittal Forms Would it be possible to have the Item 6 of this submittal be fillable at the top of the box for the years? The fillable form does not allow for input of numbers greater than 999,999 to be read legibly once submitted. Is it possible to have this changed? Part IX - Lease All Submittals will be made available in fillable PDFs and will allow you to enter numbers greater than 999,999 in Submittal A, Section 6. They can be found at this link after March 20, 2018: 30 Rent Recent RFPs had lower percentage rent structures (i.e., 6, 8, 10%) as well as higher thresholds (i.e., $3M, $3.5M). With higher build out costs in this new terminal, high midterm, and increasing union labor, the additional rent increases are cost prohibitive to making the deal pencil. We request airport structure rent as in previous RFPs No. The Airport will retain the existing percentage rent structure for all Leases. 31 SFO has changed the % rent structure, sales thresholds have been lowered. Will the Airport consider going back to the previous % rent structure with previous thresholds?

9 32 This RFP has lowered the sales threshold for the 8% Tier from $3M in a recent past RFP to $1.5M now. Would the airport consider going back to the previous % rent structure with the same thresholds? 33 Please reconsider your new rent structure. The standard structure was very fair. 34 Would the Airport Commission consider lowering the first year s base rents? It seems that the airport is forecasting high sales. The MAG should be set lower at first then reset based on actual sales for years How was the MAG determined? Since it is unknown at what time ENP will hit the anticipated 5M, is it possible to create a phased approached such as % rent until such time as the ENP hit 5M? The MAG seems like it could be a bit high and given the phased approach to the terminal completion, it is difficult to determine at what time the full MAG would be appropriate. 36 Please reconsider your new MAG structure. Allow for a full of sales before a MAG is established. 37 How does the current MAG Adjustment model take into consideration enplanement fluctuations across the four phases of T1 construction, which will result in decreased sales at many locations toward the end of the terminal as phases 3 and 4 are completed? Staff will seek Airport Commission s approval on May 20, 2018 to reduce the Minimum Annual Guarantee (MAG) by 1/2 for each Lease that is open for business during Phase 1 and Phase 2 as follows: MAGs during Phase 1 and Phase 2 Lease 1: $182, Lease 2: $182, Lease 3: $237, Lease 4: $300, Lease 5: $155, Lease 6: $192, Lease 7: $120, Lease 8: $237, Lease 9: $310, At the opening of Phase 3, all tenants shall begin paying full MAGs as described in their respective Leases. The scheduled opening of each phase are as follows: Phase Opening Date Phase 1 July 23, 2019 Phase 2 March 24, 2020 Phase 3 May 1, 2021 Phase 4 November 1, 2022

10 The above schedule is subject to change. Please refer to the Terminal 1 Concessions Program Informational Conference presentation for the construction phasing plan at this link: 38 The 12% rent factor, does that include all occupancy cost? 39 In Section 4.10, there is a reference to possessory interest tax returns but that does not exist please remove or add if applicable. No. No. The Airport will retain the current lease specifications. 40 Assignment or Subletting 41 Taxes, Assessments and Liens 42 Mid-Term Refurbishment Can you please permit affiliated transfers within the company to be effectuated without consent? This would simplify any internal restructuring without impacting the lease or obligations in any way. 6.1(b): Can you delete the last sentence? does in fact take depreciation deductions on its assets. This provision implies that cannot do so. The current midterm refurbishment requirement of 35% of the initial capital investment on top an already high $1,000/sq. ft. minimum investment is a make or break factor for bidding, particularly for larger sitdown leases (no. 4 and 9). For example, initial build out for Lease #4 will cost $2.944M and the mid-term would subsequently cost over $1M. Such a high mid-term refurbishment is not only cost prohibitive but also counter intuitive for operators that like to No. The Airport will retain the current lease specifications. No. The Airport will retain the current lease specifications. No. The Airport will retain the current lease specifications. This provision already allows the Airport to waive, reduce or delay any refurbishment if the facility is in good condition.

11 invest in high quality buildouts from the start. We request the airport evaluate mid-term requirements on an as-needed basis instead of stipulating as a % of initial build out. 43 Midterms are set at 35% of original capital investment. Would the airport consider lowering this to as-needed, or a more reasonable amount? 44 Please reconsider your Mid Term Refurbishment. 35% is very excessive. 45 Term Will the airport consider extending lease terms (e.g., 10 plus 2 years), as the airport has done in the past? This especially makes sense for leases with larger footprint/sit-down concept with the larger capital investments needed, it s hard to pencil with only a 10-year term. Staff will seek Airport Commission s approval on March 20, 2018 to extend the Lease Term for all Terminal 1 Food and Beverage Concession Leases to 10 years, plus one two-year option, exercisable by the Airport Commission. 46 With the larger capital investments needed now, will Airport Commission consider going back to a 10 Year lease with 2 year extension or a 12 year lease? 47 Lease term is now 10 years versus 10 years with 2-year option; would the airport consider adding the 2-year option to these F&B leases? 48 Please consider longer terms for every opportunity. Construction costs are higher than ever and climbing. 49 Can you expand Section 2.4 to be clear that if the City delays in delivering possession the $500/day damages are also deferred? No. The Airport will retain the current lease specifications.

12 50 Section 2.7, If the Director elects to terminate in its sole discretion, Tenant will receive the unamortized cost of its hard construction costs, but there is no consideration for earnings that will be lost as a result of the termination. Can Tenant receive some fair market value compensation for this loss? 51 Insurance 12.7(c): please add except for 10-days notice for cancellation for non-payment after reduction in line 2. When non-payment is the concern, the insurance company can t know that 30 days in advance. 52 Exhibit B Exhibit B, 6.B (ii): Please delete other than City or its authorized employees. 53 ACDBE Goals Is there a desire or expectation that RFP proposals contain ACDBE participation-or that the proposer take steps to help the airport meet its ACDBE goals, either officially or unofficially? 54 Enplanements Will Terminal 1 projected passenger traffic be provided? No. The Airport will retain the current lease specifications. The Airport agrees. Insurance Section 12.7 (c) shall be changed to the following:the Airport agrees. Insurance Section 12.7 (c) shall be changed to the following: (c) The insurance company shall give thirty (30) days prior written notice to the City for cancellation, non-renewal, or reduction in scope of limits or coverage, except for 10 days prior written notice of cancellation for nonpayment of premiums. No. Retain current lease specifications. We seek and encourage ACDBE participation in all of our concession activities. Federal regulations require SFO to have an ACDBE program and our goal is to achieve 11.4% ACDBE participation across our concessions. SFO has a longstanding commitment to maximizing contracting and leasing opportunities for small businesses and aspires to 40% of its contracting expenditures and concession revenues going to firms with a local, state, or federal small business designation. The projected enplanements for Terminal 1 when it is fully operational in November 2022 are as follows: Terminal 1 Projected Enplanements Boarding Area B 5,000,000 Boarding Area C 3,000,000 Please note that the Airport does not guarantee future enplanements.

13 55 How are gate usage and enplanements being phased over Phases 1, 2, 3, and 4? How many enplanements can be expected as part of each individual phases completion? 56 Will historical average departure seats by hour be provided (as they were with the Terminal 2 RFP)? Projected enplanements for each Phase are as follows: Phase Projected Enplanements Phase 1 - Boarding Area B 2,000,000 Phase 2 - Boarding Area B 3,000,000 Phase 3 - Boarding Area B 5,000,000 Phase 4 - Boarding Areas B & C 8,000,000 Please note that the Airport does not guarantee future enplanements. The calendar year 2017 daily average departing seats by hour for existing Boarding Area B are as follows: Hour Avg. Departing Seats 12 am - 1 am 20 1 am - 2 am 0 2 am - 3 am 0 3 am - 4 am 0 4 am - 5 am am - 6 am am - 7 am am - 8 am am - 9 am am - 10 am am - 11 am am - 12 pm pm - 1 pm pm - 2 pm pm - 3 pm pm - 4 pm pm - 5 pm pm - 6 pm pm - 7 pm 451

14 7 pm - 8 pm pm - 9 pm pm - 10 pm pm - 11 pm pm - 12 am 0 The above-mentioned report reflects the existing airlines that operated in Boarding Area B in calendar year 2017, which was Southwest Airlines and Frontier Airlines. Additional airlines will be operating in Terminal T1 Sales Reports Will Terminal food and beverage revenue by operator be provided? Calendar year 2017 sales for all current food and beverage facilities in Terminal 1, Boarding Area B are as follows: Facility CY 2017 Sales Go Bistro $4,653,746 Max s Eatz $4,296,752 Peet s Coffee & Tea $3,679,567 Willow Creek Grill $3,824, Design and Construction Prior to submitting proposal, will there be a date and time allocated for a construction contractor walk through? There will not be a walkthrough date prior to the Submittal Deadline as Terminal 1 is still under construction. 59 Other Looking to lease a location in Terminal 2- the old Perry's. Are the submittal criteria the same? Do we follow the same submission criteria as in the case of Terminal 1? The location you re referring to is not part of this concession opportunity. Please refer to the RFP for the criteria. 60 When is the deadline to submit application for the Perry's location in Terminal 2?