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C~t1 Cou~~ll ~ee~:~g OS/22/84
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NAY 2 2 19Sf
Mayor ar.d Clty CauDell
FROM: Clty Staff
SUBJECT: Recornmendati'Jn to Appro'/E- Stal"!dard Hethod f,)'r
Establishlr.g ~ll!':lmu:J R"'''lts f;)r Sar:ta M;)l'"ica ?:er
T e !'1 a ~ t s Cur r e r~ t 2. y c r: ~! G r: t h - ~ ~ - ~.1 ~ ~ ~ h L. e a s e 5 a r d t c
Authorize the Clty Ma~age~ ~o ~egotlate ard Exe~u~e 7~Q
Year Leases
INTROJlJCTION
ThlS repor~ prcvldes a summary of the !nearS cu~~ert11 ~sed to
calculate lease rates O~ ~he Sa~ta ~o~:ca P:er a~d re80x~e~cs
that C0uncll app;ove a sta~da~d ~e~hod for es~ab~lshl~g re~~s.
The report furtDer recom~e~cs tha~ Ccu~c11 autho~lze the C~ty
Ma~ager ~o ~egotlate and ~xecute two year ieas~s f~r te~u~~5
curre~t:y C~ ~~~th-to-~o~th :eases7 bas~d O~ the 5~arja!dlzed
ter~3 f~r m~~lmum a~d perce~tage re~ts.
:r: adc.: tlQr"', :.:-:e report
l~cl~ces a ioc~f:catlor to the eXlst!~g sta~Gard pier lease ~hlCh
1~carporate5 a~e~d~e~~s reoc~me~~ec ~y tte Cl:Y A~tcr~ey.
BACKGROUND
At 1:' s ; a!'l ~ a r y 1 0 , 1 9 8 iJ. me e"C::. r: g , t hoSe 1 T.. Y Co J r C : 1 .: 1 ..... e ~:. e d s:, a f f
to eXGe~d eXlstl~g mo~th-to-~o-:h ?le: :eases ~o t~o year :e~~s
fer the ~~~e ?lei t-e~arts r:,/~o cUY"!"2"':tly occupy t.~e=-; oLJ.s:.~esseS
en a mortn-to-mcnth basls. Councll d:rected that the :~O ~ear
exte'1S1cr: of the eXlstl"'g leases be sL:cJact ~o ~ereg.:;t:aJ:.:'o- 0::'"
certa1~ ~e2se ter~s a~d r3~e2.
Followi~g tha~ act.l.c~~, st3:f
revJ.ewed t.he .:urre~t lea.s~ terms, ol'""alyzed t~e Clt.ylS :neti~oC1 ;'''':;;r
collec~l~g M~~~~ly ~e~tSt a~c cc~~ac~ed ~~r~cipa: re~~ese~~at:ves
(l-A
MAY 2 2 1984
l~ Sar:ta Barbara, Sar:.ta C,uz, Ver:tura, Sar: D::.ego and Recor.do
Beach to disc~ss the structure of thelr pier/~arlr:a leases a~d
rates. Cor.currer:tly, the City Attorr.ey has reYle'Ned t!1e
eXlsti~g sta~dard lease for~ ar-d has recommended amer:dmer.ts
deemed r.ecessary to exter.d pier leases pursuant to City COUI"c:l.l
direct1.0nT
Calculatlo~ of Lease Rates
The method currently used to calculate lease rates or. the Pier
was establ::.shed many years ago a~d, 1.r practlce, l3 qUlte cO~9lex
ard cUmbersc~e. Lease rates are comprIsed of two compcr:erts:
mini~uro rents a~d perce~tage rer:ts.
Although the orlglnal ~ear.s
used ;:'0 deterrolf'e the ml.r.:.:nu"1 rer.t lS not currently kr.c....r., the
current ~ractlce ~s most easlly ur.derstood if quar.t~fied l~ ter~s
of leasehold square footage; lessees are charged a flxed anourt
per square footage of their leas~hold.
?ercerctage ~er.ts are
based or. sales volume per lease hole and appl~ed wher cumulatlve
gross sales exceed a certal~ level.
~hlS level l5 called the
m1.nlr:lUl'l ar.r:ual sales a-r::i 1.S de':.er-:nH.ec. by dlV1.Clrg the ;'l1.rimurn
3.l'!r.ual rer:tal by a certalr. perce,.tage. Or:ce gross sales exceec:
this mlrlmum a~nual ~umbe~t each ~or.th thereafter a perce~tage ~f
the gross sales is pa~d ~r. addltio~ to the m::.r.imum ~o~thly rer.;:..
The ~~~~murn apnual rertal thus ~eprese~ts a co~sta~t pred~ctab:e
exper.se for the lessee ar.d a cor.star.t reve~ue stream to tQe
lessor. The percer:.tage rer.t com~or.ert fluctuates de~e,.jl~5 or.
sales volume.
2
~eed fc~ Sta~dard Method of Lease Rate Calculat~on
As staff has proceeded to :.:nplemet!t Council's direct:;.ve, 1t has
anal yzed "the need to establi sh a stat!dard1 zed method for se I;, tlr;g
rents on the Pler. Attachment I outlines the existing lease
terms and rates for the tena~ts ourrently O~ mor:th-tc-mo~th
leases. The table shows that the minlmum rent per square foot
varles slgr.ficantly among lessees. The table also pc:;.~ts out the
fact that two lessees do not currently have the perce~t rert
component l~cluded i~ thelr lease payments.
.!I.5 mentio!'\ed earL.sr, staff c'.)ntaoted other 01 t1.es l!: an effort
to compare Sa~ta ~orica ?ler rates to co:nparable fa01lities.
This l!"formal survey revealed that rnll"!l!l1Um rer:tal rates on the
?ier are, lr. the maJor~ty of ir.sta~ces, hlgte, than those at the
S UT v eye d 1 0 cat 1 0 1'1 S . 0 r; the 0 the r h a r. d, per c e T! t, age r e r tal rat e s
were fou!"d to be i~ Ilne nith those of other pier/marlna
locations as well as the establ1shed lndustry star;dards for each
bUSH1.eSS type.
Staff bell eves that the ~l,-lmum ar.d perceT!tage re<.cal COmblT!atio~
is an appropriate method to use and has attempted 1;,0 develop a
ratlor.al ar:d eqUItable sys'Cen for settlr:g these rates.
Percentage rates as current~y used are 11': Ilne Wlth comparab:e
f3elli ties a!:d require ro adjustl'1snt.
Staff 1$ ~ropoSlr.g a ~ew
method for establlshlng ml~lmurn mont.hly rents that borrows fro~ a
method developed by the Clty of Sa!" Dlego ar.d appears to be qUlte
flexible and economical.
The SaT! Diego Method calculates m1!"lmum rent.s by taklr:g 80% of
3
~
~he preV10Us flve year average of percentage re~ts pald to the
City.
The percer.tage rel"t ln thlS ir:stance re:~ers to the
percentage paid or. annual gross sales. San Dlego rer.egotiates
the ml":imum rent every 2.5 years.
Staff believes that there are
many advantages of this method, lrcludlng the folloWl~g:
,) It more accurately reflects the current performance of the
lessee,
2) It reduces the need to cont~nually re-evaluate tte minl!JlUm
rents,
3) :It allows the lessor to more accurat.ely prOject lease
revenues for planrlng purposes.
Impact of Adaptlrg San Dlego, r-lethad, fa" ,Sar.ta Monica ?ier
Staff is propcsl~g that the San Diego Method be madlfied for
Santa Monica and be cased en 80% of the past three year average
of the percentage palO o~ gross sales for each lrdivldual lessee
and recalculated every 2.5 years. Three years IS used Slrce It
represents the ~umber of years for WhlCh sales Ga~a 1S available.
Attachment B ~llustrates the lm~a~~ of adoptlng the San D1SgO
Method. As ~an be see~ l~ the tab:e, thls method would reduce
m::.nimum :-er:ts
..~ r
,I, V ~
flve e;nsti".g
terants whlle ra~sing ml~lmUm
rer.ts for four others.
It should be pOlrted out that the arnual
rer.t would r.ot cha~ge Sl~ce annual rert wll: cor.tirue to be
comprlsed of both tne ml"'lmum ard percer:tage componer:ts.
Perce~tage rer.~s would still ~e charged O~ the gross sales.
Staff ::.s also proposu:g a new collectlcr. !:let':1od to Slffipllfy the
l.!
-~~ -~.;-
ac~ount~ng process which would work as follows: the ml~iMum
annual rent would be established based o~ the method descrlbed
above and dlvlded by 12 to determl;.e mlnimum mo~thly rent. This
amount would be paid each month al'!d gross sales reported. At the
end of each quarter tee respectl'!e percer.tage of gross would be
calculated. The a~ount of mln~mum rents alread paid would be
applled to this figure and the lessee would be requlred to pay
the dlfference. Thus it can be seen that although the m~r.lmUm
rent may be d~ffere!':!t thal"! 1S currently be~rg charged I 'Che full
annual rent wlll not change ur.less sales volume changes.
Add1t1oral Lease Term Chan~es
Two lease premlses, Beryl's StUd10 and the 3um~er Cars, do ~ot
currently pay percentage rents.
Staff recommer.ds that ~he
perce~tage rent charges be stardard for all tenants and that
these two lease prem1ses be assessed a percentage componen~ 1r.
addition to m~r.l~Um rent.
A further change coccerns the reco~figurat~or. of a lease premlse.
Beryl's St'..ld10 1S curre!:tly unde~-utilizil"g l.ts leasehold.
Oatman's
?tock Shop,
or e
~:'
oJ.
the lease prem1ses cestrcyed duri~g
the 1983 rilnter storms, lS currently operatlr.g from a ve~dor's
table ard pays only a perce~tage. Past dlSCUSS10rS by staff wlth
the proprietor of Beryl's StuClO have revealed that reduction ir
leasehold size from 2,55ll square feet to 1,000 square feet would
be acceptable.
ThlS actio~ would then make available ar
addit~or.al 1,55u square fee'C of leaseable space O~ the ?ler. The
owner of the Rock Shop has expressed 1r.terest 1r. leaslng 280
square feet of thls space. The rema1.r.i!'!g 1,274 square feet ceuld
be made avallable te a rew tena~t. Lease of thlS space ~ould be
1etermined l~ consultation wlth the Pier Restoratlo~ CorporatlO~.
Amendments to EXlstlng Lease
Based on the Council's directlon o~ January 10, 1984, the City
Attor!'!ey has prepared a form modl-fieatlon t;J the lessees'
existi~g standard lease. The standard lease modlficatlo'"
document appears as Attachment C to thIS report and covers the
followi!'!g neW clauses:
a) term
b) rer.t
c) ir.surance
d) prohl-bitier: agaInst trarsfer
e) taxes
f) security measures
Staff has determl~ed ttat the eXIsting standard lease permits the
lessor to undertake fi3.ca:ie Imprcve'11ents If so deslred, al'!d ewes
~ot require ar. addItlonal clause for thIS purpose.
For those
lessees who are not currently utilizi~g the stardard p~er form
lease, the Clty Attor"ey ''';1.11 prepare a st2t:card for~ lease
for execu~~on i~ add~t~on to the ~od~flcatior.s listed above.
BUDGET/FISCAL IMPACT
The recommended actions will r:ot have an i~pact O~ the City's FY
1983-84 budget. There may be several Impacts or. the FY 1984-85
budget.
FIrst, Slnce mi~lmum arnual re~ts r.ay be seer. as a
6
guara~teed revenue stream to the City, the result of establishirg
min~mum rents by the proposed ~ethod is projected to result in a
$9,40~ increase ~n revenues collected from mlTIlmUm rents for
exist~ng tentants.
Calculat~ons are shown 1n Attachment B.
Another impact is the potentlal revenue, both in m~nimurn and
perce~tage rents, for lease of the space made ava1lable by the
reco"'lfiguratlon of Beryl's Stud:o.
The thlrd lmpact will result
from standardizing the percentage require~ent for all tenants.
Based on past sales performance of busl~esses simllar to those of
the t'..so lessees I'!ot currently charged a percentage, it is
prOjected that an addlt10r:al $56,000 1n percer:tage rel'!ts may be
received.
RECOMHENDATIONS
Staff respectfully recommends that the Clty Councll:
1. Approve a standardlzed method for calculating minimum
monthly rents based on 80% of the previOUS three year
average of percertage rer:ts paid to the Clty.
2. Direct the City Manager to reduce the a~ou~t of lease space
i"'l Beryl'S Studio to 1,000 square feet, provlde 8 60 day
first rlght of refusal to Oatman's Rock Shop f~r 280 square
feet of space made aV8llable from the reconfkguration of
Beryl'S StudiO, and dlrect the Pier Restoratlo" Corporatlon
to actively proceed with leasi~g the remaining portlon of
space.
3. Authorize the City rlal'!ager to offer, ard wher; accepted,
execute two year leases amended as descrlbed herein, with
eXisting Santa Morica Pier tenants currertly o~ month-to-
month leases pursuant to the above conditions. Those
deciding not to acoept the extensIon 'Nould ramai>: on a
month-to-~onth basls.
7
Prepared by:
Ernesto R. Flores, ~anager
Allen D. Perry, Project Manager
Economic Development Dlvlsion
Community & Economic Development Department
Judith Melster, Manager
Pier Development Division
Communlty & Economlc Development Department
ATTACHMENTS
A. Existing Pier Lease Terms
B. Proposed Minimum Rents USlng San Dlego Method
C. Modlficatlor. of Agreement to Standard Lease Form
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HODIFICA'I'IO~ OF AGREE~iENT
NUMBER
(CCS)
(CC&),
198 by and
corporation
ThlS Modiflcat1on of Agreement Number
entered into thl s _ day of
between the CITY OF SANTA t-10K'ICA, a mun1c1pal
(here1nafter "Lessor"), and
(hereinafter "Lessee"), 1S made with reference to the
following:
R E. C I TAL 5:
A. On , 19__ Agreement ~umber
(CCS) was entered into by and between Lessor and Lessee
(here1nafter "Lease").
B. Lessor and Lessee des1re to modlfy the Lease on the
terms and condltlons set forth herein.
NOW, THEREFORE, lt 1S mutually agreed by and between
the underslgned part1es as follows:
1. Paragraoh 1 of the Lease 1S modified to read as
follows:
1 . TER~l .
The
term
of
this Lease, hereinafter
referred to as "Lease Term," shall be two (2)
years, commenc1ng on
198
and
exp~ring on 198_, unless sooner terminated as
provided below.
2. Paragraph 2 of the Lease and each subpart 1S
mod1f1ed to read as follows:
2. RENT.
2.1 MINIMUM MONTHLY RENT.
On the tenth day of each and every calendar
month during the t~rm hereof, Lessee shall pay a
sum of
Which 15 set as minimum monthly rent (hereinafter
"Hin1.mum Monthly Rent") for such month. M1.n1r.tum
Monthly Rent for any fract1.onal part of a month
between the COl'1mencement date and the first day
of the first full calendar month w1.thin the Lease
Term shall be prorated, and pa1.d by Lessee to
Lessor along wlth the flrst full month of Minimum
MontDly Rent due hereunder.
2.2 PERCENTAGE RENT.
In addlt1.0n to the Minimum Monthly Rent
specif1.ed in Section 2.1 above, Lessee shall pay
to Lessor a sum equal to the amount that
percent (__%) of Lessee's Gross Sales as deflned
hereln made from or upon the Premises exceeds the
M1nlmum Monthly Rent during each calendar year of
the Lease Term (here1nafter "Percentage Rent").
A. Gross Sales. The term "Gross Sales" as
used in th1.s Lease shall be construed to mean (i)
2
the entlre amount of the actual sales prlce,
whether wholesale or retall, and whether wholly
or partly for cash or on credl t or ln exchange
for any other product, commodlty, service,
commerclal paper or forebearance, of all sales of
merchandise and all charges made by Lessee or ltS
employees or others actlng on its behalf for the
rendition of services of any kind whatsoever;
(ill all otrer recelpts of all buslness conducted
in, at or from the prerrises, lncluding all
deposlts not refunded to purchasers, proceeds,
recelpts or any revenue
the use of the PreRises;
derived whatsoever from
(ill) orders taken in or
from the Premlses although sald orders may be
fl11ed elsewhere, and sales by any sublessee ln
or from the Premises, and all without credit to
Lessee for uncollected or uncollectlbl e creal t
accounts; (lV) gross recelpts of all coin-
operated devices which may be placed ln the
Premises by Lessee or under any rent concession,
percentage or other arrangement lncluding,
without 11ITlltatlon, suer. devices as pinball
l'1achines, vendlnq machlnes, video games and
simllar devices (but excludlng revenue from
telephone that is collected by a publlC utillty),
except that nothlng set fort'l. herein shall be
construed as Lessor's consent to the use of same
3
~n the Premlses to the extent thlS Lease
otherwlse required Lessor's consent thereto: and
(v) all other revenues or receipts generated by
o!" arislnq from the use of the Premises. All
sales orlg1nally Made in, at or for the Premlses
shall be considered as made and completed
therein, even though the payment of the account
may be transferred to some other off1ce of Lessee
for collectlon, or although delivery of
merchanolse sold 1n, at or fro~ the Premlses may
be made from a place other than the Prem1ses.
B. Exclusion from Gross Sales. There
shall be excluded from Gross Sales (1) any sums
collected and paid out for any sales tax or tax
based upon the sale or sales of Merchand1se and
requlred by law, whether now or hereafter 1n
force, to be paid by Lessee or collected frow lts
customers, to the extent that such taxes have
been added to exchange of merchandise and
included in the Gross Sales price; (li) the
transfer or exchange of merchandlse between the
stores of Lessee, if any, where such transfers or
exchanges or merch~ndlse are made solely for the
convenient operation of Lessee's bUSlness and not
for the purpose of consummatlng a sale which has
theretofore been made ln, at or from the PremLses
or for the purpose of depriving Lessor of the
4
beneflt of a sale WhlCh otherwise would be made
ln, at or froM the Premises; {li1} the amount of
returns to shlppers or manufacturers; and (lV)
the amount of any cash or credlt refund made upon
any sale where returned by the purchaser to and
accepted by Lessee. Each sale upon lnstallment
or credlt shall be treated as a sale for the full
prlce ln the nonth during which such sale shall
be made, irrespective of the time when Lessee
shall receive payment (whether 1n full or
partial) from ltS custoners.
C. Quarterly Cornpu~ation. Percentage Rent
shall be computed each calendar quarter durlng
each year of the Lease Tern to determ1ne the
amount that percent %) of Lessee's Gross
Sales exceeds the Mlnlmum Monthly Rent durlng the
preced1ng calend~r quarter. Any sales made
durlng the flrst fractional calendar quarter of
the Lease Term shall be added to the f1rst full
calendar quarter of the Lease Term.
The last
quarter for camputatlon and payment af Percentage
Rent shall end on the date the Lease Term explres
or terminates.
D. Method of Pa}~ent of Quarter~y
Percen~age Re~~. With1n ten (10) days of the end
of each quarter of each calendar year of Lease
TerM[ Lessee snaIl subm~t to Lessor an ltenized
5
statement of Gross Sales and Percentage Rent due
Lessor during the precedlng calendar quarter that
has been certlfied to be correct by a Certified
Public Accountant and an ltemizatlon and
co~putatlon of the Mlnimum Monthly Rent and paid
to Lessor during the preceding calendar quarter.
An adJustment to rental paid by Lessee during the
precedlng calendar quarter shall be made as
follows: Lessee shall, together wlth sald
certlfied statement, pay Lessor the amount by
which the sum so computed as Percentage Rent
exceeds the Mlnlmum Monthly Rent pald for the
preceding calendar quarter.
E. Yearly Reconcllatlon. Wlthln ten (10)
days of the end of each calendar year of the
Lease Term, Lessee shall submit to Lessor an
itemized statement of Gross Sales and Percentage
Rent and ~lnimum Rent due Lessor during the
precee~lng calendar year that has been certlfied
to be cor:ect by a Certlfied PubllC Accountant
and an itelcization and computatlon of the
Percentage Rent MlnHuum Nonthly Rent actually
paid to Lessor dur lng the precedlng calendar
year. Wlthln SlXty (60) days after the recelpt
of Lessee I s certified yearly statement, Lessor
shall furnlsh to Lessee a wrltten statement
("Reconcll1ation") reconcillng the amount of
6
Percentage Rent paid by Lessee for each calendar
quarter durlng the pr10r Lease Year with the
yearly Percentage Rent due therefor. In the
event that the Reconcll1atlon shows that
addit10nal Percentage Rent 15 due from Lessee,
Lessee shall pay the amount due withl.n ten (10)
days of the recelpt of the Reconc1l1at1on. In
the event that the ReconC111at1on shows that a
cred1t 15 due Lessee, such cred1t shall be
credited against the next sums becomlng due from
Lessee hereunder or 10 the event of expiratlon or
termination of the Lease Term, tre amount due
shall be promptly returned to Lessee.
2.3 LATE PAYMENT PENALTY.
If rental payable to Lessor by Lessee
pursuant to th1S Lease 1S not pald W1 th a ten
(10) day per10d from its due date, a penalty of
ten percent (lOi;) of the amount due and unpa1d
shall be added to the amount when due and the
total sum shall imnediately become due and
payable to Lessor. Thi s provlslon shall 1n no
way restrlct the rlght of Lessor to termlnate
this Lease for failure to pay rent as provided 10
this Lease.
7
2.4 RECORDS.
A. Lessee shall keep, or cause to be kept,
in a form acceptable to Lessor, full, campI ete
and proper books, records and accounts of the
Gross Sales both for cash and on cred1t, for each
separate bus1ness of Lessee, 1ts agents,
sublessees, concess10naires or licensees at any
till'e operateD on the Prem1ses.
Upon the glving
of four (4) days' wr1tten notice by Lessor, said
books, records and accounts, 1ncluding any and
all sales tax reports that Lessee, its agents,
sublessees, conceSS1ona1res or 11censees may be
required to furnish to any government or
governmental agency, and any and all bank
accounts ma1nta1ned by, controlled by, or 1n the
name of Lessee, its agents, sublessees,
concessiona1res or licensees In connection with
its or the1r business activ1tles operated upon
the Premises as descr1bed in Exhibit "B" attached
hereto and incorporated herein, shall be open to
the inspect10n of Lessor, lessor's audltor, or
other representative or agent of Lessor.
B. Lessee shall at all t1mes keep and
malntain 1n good operat1ng order and condi t1on,
upon the Preml.ses, a cash reglster WhlCh shall
register all s~les on a tape and be so
constructed that it cannot be reversed or turned
8
back or not reglster sales thereon Wl thout the
use of a key or other devlce which shall be
exclusively in the hands of Lessor; and Lessee
shall reglster on ald cash reglster every sale of
every klnd or character made ln or from the
Premlses, whether for cash or on credlt. Sald
cash reglster, or any other alternate method of
recording said sales, must be approved in wrltlng
by Lessor.
c. The acceptance by Lessor of any monles
pald to Lessor by Lessee as Percentage Rent for
the Premises, as shown on any stateMent furnlshed
by Lessee, shall not be an admlssion by Lessor of
tre accuracy of said statement or of the
sufflciency af the awaunt of sald Percentage Rent
paYT'1ent. Lessor shall be entltled at any tUlle
Wlthin three (3) years after the receipt of any
such Percentage Rent payment to questlon the
sufflciency of the amount thereof and/or the
accuracy of the st~tement or statements furnished
by Lessee to ]ustlfy the same. S110uld any audit
conducted pursuant to thls section dlsclose that
Percentage Rent on Gross Sales for the period in
questlon exceeds the amount of Percentage Rent
pald to Lessor by Lessee durl.ng said period,
Lessee shall immediately pay the amount of such
deficlency to Lessor.
In the event that sald
9
def~c~ency ~s ~n excess of f~ve percent (5%) of
the Percentage Rent paid to Lessor by Lessee
dur~ng sa~d period, the cost of sa~d aud~t shall
be p a ~ d by L e sse e . In the eve n t t hat s aid
def~ciency is in excess of ten percent (10%) of
the Percentage Rent pal.d to Lessor by Lessee
durl.ng said period, such event shall constitute a
material breach of this Lease, and shall be
subJect to the rerned~es contained in Art~cle 14
of thl.s Lease.
D. For the purposes of enabl~ng Lessor to
check the accuracy of any such statement or
statements furn~shed to Lessor by Lessee, and the
suff~c~ency of any add~tlonal rental payments
made ~n accordance therevH th, Lessee shall for a
perlod of three (3) years after submlssion to
Lessor of any such statements, keep safe and
~ntact all of Lessee's records, books, accounts,
and other data wh~ch in any way bear upon or are
required to estab11sh detail of Gross Sales and
any authorized deductions therefrOM as shcMn by
any such statement. Upon the giving of four (4)
days' written notice by Lessor, said records,
books, accounts and other data shall be open to
the inspect~on of Lessor, Lessor's aud~tor or
other representative or agent of Lessor.
10
3. Paragraph 12.5 of the Lease is Qod~fied to read as
follows and paragrapn 12.6 of the Lease is deleted:
12.5.
INSURANCE.
prior
to
the execut~on date of thlS
Modification of Agreement,
Lessor with certlflcates
Lessee shall furnlsh
showlng the type,
covered, effect~ve
amount, class of operat~ons
dates and dates of exp~ratlon of lnsurance
pollc~es.
Such cert~f~cates, which do not lim~t
Lessee' s lndemnlf~cation. shall also contaln
substantially the followlng state8ent: "The
lnsurance covered by this certificate will not be
cancelled or r;;aterially altered, except after
th~rty (30) days' wrltten not~ce has been
received by Lessor."
It is agreed that Lessee shall malntain in
force at all times during the perfornance of this
Lease all appropriate pol~c~es of lnsurance, and
that said pol~cles shall be secured from a good
and responslble company or companles, acceptable
to Lessor, dOlng 1nsurance buslness 1n the State
of California.
Lessee shall malntain the following
lnsurance coverage:
A. Llabillty Insurance. The general
liability coverage shall provide the followlng
minimum l~m1ts:
11
Bodlly InJury -- $250,000 each person
$500,000 each occurrence
$500,000 aggregate
Property Damage -- ~IOO,OOO each occurrence
$250,000 aggregate
A combined slngle limlt policy with
aggregate llmlts In the amount of $1,000,000 will
be consldered equivalent to the required minimum
llInl ts.
All sald coverage to include llability
for occurrences on the Premlses.
Lessor ['lay, at
lts option, requlre prODuct llability lnsurance.
B. viorker' s
Compensatlon.
All
employees of Lessee must be included under such
policy in an amount and wlth coverage to meet all
requlrements of the Labor Code of the State of
Cal1fornla.
C. Pr~perty Insurance. Lessee shall
obtaln and keep In force durlng the term of this
Lease a policy or policies of lnsurance coverlng
loss or damage to the Premlses, In the amount of
at least 100% of the full replace~ent value
thereof, as the same may eXlst from tlrne to tlrne,
against all perils lDcluded wlthlD the
classificatlon of fire, extended coverage,
vandallSID, mallclouS ~ischlef, flood, wave wash
and speclal extended perils.
Said insurance
shall provide for payment of loss thereunder to
Lessor.
Each year durlng the term of thls Lease,
Lessee shall provlde Lessor with an amended
12
~nsurance endorsement which reflects the current
full replacement value of the Prem~ses.
D. Bu~lder's R~sk Insurance.
Before
comMencement of any construction or demolition,
Lessee shall procure and shall maintain in force
until completion and acceptance of work, "all
rJ.sks" bUJ.lder's rlsk lnsurance lncludlng
vandallsm and mallCl0US mlshief, coverlng
lmprovernents in place and all rnaterlal and
equlpment at the JObsite furnlshed under
contract, but excluding contractor's,
subcontractor's and constructlon manager's tools
and equlpment and property owned by contractor's
or subcontractor's employees, with limlts in
accordance with proJect value.
E. BOller, Unusual Hazards and Other
Insurance. Lessee shall procure and keep in
force, in coverage satlsfactory to Lessor:
(1) Boiler and machinery
lnsurance if at any time from time to time such
equlpment is located on the Premises.
(2) If Lessee cor~"its, permits
or causes the cor:duct of any activlty or the
bring1.ng or operat~on of any equlpment on or
about the Premlses creating unusual hazards,
Lessee shall, promptly on notlce of demand from
Lessor, procure and malnta1.n in force, clurlng
13
such act~v~ty or operat~on, ~nsurance sufficient
to cover the risks represented thereby. Lessor's
demand for unusual hazard lnsurance shall not
constltute a wa~ver of Lessor's right, if Lessor
would otherw~se have that right, to demand the
removal, cessatlon or abatement of such actlvity
or operatJ.on.
(3) Lessee may procure and
ma~ntain any insurance not requlred by this
Lease, but all such insurance shall be subJect to
all of the provJ.sions hereof pertaining to
insurance and shall be for the benefit of Lessor
anc Lessee.
F. Subrogation WaJ.ver. Lessee
agrees that in the event of loss due to any of
the per1ls for wh1ch it has agreed to provlde
J.nsurance, that Lessee shall look solely to ~ts
J.nsurance for recovery. Lessee hereby grants to
Lessor, on behalf of any lnsurer providJ.ng
insurance to either Lessee or Lessor with respect
to the serVJ.CBS of Lessee hereln, a walver of any
right of subrogat1on which any such insurer of
sald Lessee may acquire against Lessor by virtue
of the payment of any loss under such insurance.
G. Failure to Secure. If Lessee at
any t1.me dur1.ng the terIll hereof should fail to
secure or maintain the foregoing insurance,
14
Lessor shall, after two (2) days I notice, be
perm~tted to obtain such insurance in Lessee's
name or as an agent of Lessee and shall be
compensated by Lessee for the costs of the
lnsurance premiums.
Lessee shall pay Lessor
lnterest on paid lnsurance premlums at the
maximum rate perJ\'ll tted by law computed fro!""L the
date wrltten notice 15 received that the premlums
have been pald.
H. Addltlonal Insured. Lessor, lts
City Councll, boards and commlssions, officers,
agents, servants, and employees shall be named as
an addltional lnsured under all policies of
lnsurance requlred by thlS Lease. The namlng of
an additlonal ln5ured shall not affect any
recovery to WhlCh such addl tional lnsured would
be entLtled under this polley lf not named as
sucP acJc'itional lnsured; and an additional
insured named herein shall not be held 11able for
any premium or expense of any nature on thlS
pol~cy or any extension thereof. Any other
insurance held by an addlt~onal insured shall not
be requlred to contrlbute anything toward any
less or expense covered by the insurance provlded
by this polley. Proceeds from any such policy or
pollc~es shall be payable to ~essor prlmarlly,
and to Lessee secondar~ly, if necessary.
15
19. UTILITIES.
The Lessee shall pay all charges for fuel, gas, water,
electr~city, pickup of refuse, telephone services and all
other ut1lities necessary to carryon the operations of
Lessee. Lessee understands and agrees that all service lines
for utility installations shall be below the deck of the Santa
Monica Pier and no wires, poles, pipes, conduits or other
facilities shall be placed, laid on or constructed on or above
the surface of the Pier. Lessor reserves the right to
designate the method and the place for the introduction of
said serv1ce lines into the Premises.
20. SIGNS. LIGHTING AND ADVERTISEMENT.
Lessee shall not paint or place any sign, liqht,
advertl-sement, antenna, or awning on the exterior of the
PreMises or the windows or doors or roof of the Premises
without the prior wr1tten consent of Lessor. All signs shall
be constructed in compliance with such requirements,
regulat~ons and ordinances as the C~ty of Santa Monica may. at
~ts sole discretion, establish. No overhanging roof or
prOJecting sign or other advertisement and no paper or
cardboard s~gns on or in the windows, doors or exterior of the
Premlses and no sidewalk racks or other displays shall be
permitted w~thout the prior wrltten consent of Lessor.
Lessee may not display. sell merchandise, allow grocery
carts, portable signs, devic es or any other obj ects to be
stored or to remain outside the defined exterior walls and
permanent doorways of the Premises without prior written
consent of Lessor.
Lessee shall keep the exterior of the Premises and
dlsplay w1ndows illuminated 1n the manner and during the time
specified by Lessor.
21. TAXES.
Lessee shall exonerate, indemnify, and hold Lessor
harmless from and ag-ainst, shall defend Lessor from and
against, and shall assume full responsibility for, payment of
all wages or salaries and all federal, state, and local taxes
or contributions imposed or required under the Unempl oymen t
Insurance, Social Security, Income Tax, and Worker' s
Compensation laws, or under other laws respecting Lessee's
employees engaged in the performance of Lessee's obligations
hereunder.
This Lease may create a possessory interest in public
property which is subject to taxation. In the event such
interest is created, Lessee shall pay any and all taxes levied
on such interest.
20
licensees with the same force and effect as
though specifically prov1ded here1n.
If Lessee desires at any time to assign or
otherwlse transfer th1S Lease or to sublet the
PreITlises or any port1on thereof. it must flrst
notify Lessor of its desire to do so and shall
submi~ in writing to Lessor the name of the
proposed sublessee or assignee, the nature of the
proposed sublessee's or ass1gnee's business to be
carrled on ln the Premises, the terms and
provlsions of the proposed sublease or
ass1gnment, and such flnanc1al 1.nfOrmatlon as
Lessor may reasonably request concerning the
proposed sublessee or ass1.gnee.
Lessor's consent to any ass1gnment,
sublett1ng or other transfer, is subJect to
compl1ance wlth all of the following:
A. Lessee shall remain fully 11.ab1e
under the Lease during the unexp1red term hereof.
B. Lessee shall provide Lessor with
eV1dence reasonably satisfactory to Lessor that
such transfer w1ll not nevalue Lessor's interest
under this Lease, the proposed transferee 1S
financially responsible, the f1nanc1a1 strength
of the proposed transferee equals or exceeds that
of the current LeS3ee and the use of the Premises
17
by the proposed transferee is consistent with
that specif~eq in Sect~on 2 of this Lease.
C. Lessee shall reimburse Lessor for
Lessor's reasonable attorneys' fees incurred in
connect~on w~th the review, processing and
docurnentatl.on of such transfer request. not to
exceed the sum of five hundred uollars (~500.00).
Nothl.ng contal.ned hereln shall be construed to
limit the amount of attorneys' fees under any
other provislon of thlS Lease.
Lessee's
D. Any
interest in
sublessee of part or all of
the Preml.ses shall agree
that in the event that Lessor glves such
sublessee notice that Lessee is in default under
this Lease. such sublessee shall thereafter make
all sublease or other payments directly to
Lessor, WhlCh payments wlll be recelved by Lessor
wlthout any llab~l~ty whether on the sublease or
otherwlse (except to credlt such sums against
those due under t~e Lease). and any sublessee
shall agree to attcrn to Lessor or its successors
and assl.gns should this Lease be tercinated for
any reason, except that l.n no event shall Lessor
or its successors or aSSlgns be obllgated to
accept such attornment.
E. Any such transfer and cons~nt
shall be effected on for~s approved by Lessor.
18
F. Lessee
shall not then be ~n
default hereunder in any respect.
G. Any such sublessee,
ass1gnee or
transferee must agree to assume, be bound by and
perform all of the terms, covenants and
condi t10ns of th~s Lease which could reasonably
be construed as appllcat-le to such transferee,
subJect to the condltion that Lessor shall not be
bound to any provision of any agreements
pertaining to such transfer to the extent such
agreement grants rights not possessed by Lessee
agalnst Lessor.
H. One executed copy of any and all
wrltten instrument8 eVldenclng or relatlng to any
such asslgnment, sublease or trans fer shall be
dellvered to Lessor.
I. The consent of Lessor to any
request for an aSSlgnment, sublease or other
transfer of th1S Lease shall not be unreasonably
withheld.
Lessor has the rigrt, at its sole
discretion, to asslgn, !;ublease, "hypothecate or
transfer this Lease or any interest there1n to
any person or ent1ty.
19
5. Paragraphs 21.1, 21.2 and 21.3 of the Lease are
modified to read as follows:
21.1 Lessee shall innemnify and hold
harmless Lessor, its City Council, boards and
commiss1ons, officers, agents, servants and
employees from and aga1nst, shall defend Lessor,
1 t s C 1 t Y Co un c i 1, boa r d san d com rn i 5 5 ion 5 ,
off~cers, agents, servants and employees from and
aga~nst, and shall assume full responsibility
for, payment of all wages or salaries and all
federal, state, and local taxes or contributions
ir:1posed or
Insurance,
req u ir ed un d er
Social Securit.y,
the Unemployment
Income Tax, and
v,orker's ccrnpensi'ltion laws, or under otner laws
respecting Lessee' s employees engaged in the
performance of Lessee's obligations hereunder.
21.2 Th1S Lease may create a possessory
interest in public property which is subject to
taxation. In the event such J.uterest is created,
Lessee shall pay any and all taxes levied on such
interest.
21.3 Lessee shall pay any and all taxes
upon personal property and improvements belonging
to Lessee and upon its possessory interest, if
any, 1n property of Lessor, and Lessee shall pay
all sales and other taxes levied against the
operation of its business.
20
6. Paragraph 27 of the Lease is added to the Lease as
fo 11 ows :
27. SECURITY MEASURES.
Lessee hereby acknowledges that the rental
payable to Lessor hereunder does not include the
cost of guard service or other security measures
and that Lessor shall have no obligation
whatsoever to provide same. Lessee assumes no
responsibillty for the protection of Lessee, its
employees and agents, invltees, customers, and
property from acts of third parties.
21
7. Except as expressly modified herein, all other
terms and COI.'enants set forth in the Lease shall remain the
same and shall be in full force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this
Modification of Agreement to be executed on the day and year
first above wr~tten.
LESSOR:
CITY OF SM~TA MONICA,
a municipal corporation
By
JOHN H. ALSCHULER, JR.
City Manager
APPROVED AS TO FORM:
ROBERT t-1. MYERS
City Attorney
LESSEr::
By
22
ATTACHNE~T C
MODIFICATION OF
day of
(ccs) ,
NUMBER
Th~s Modif~cation of Agreenen
entered into thi s
198_, by and
between the CITY OF SANTA
munic~pal corporation
(hereinafter "Lessor"). and
(hereinafter "Lessee"), is
ade with reference to the
following:
~~ I! !19~!:~:
( ~j! Agreement ~umber
edij by ~nd ~:tween Lessor and Lessee
~~ Lessee deslre to modify the Lease on the
/
terms and condi~io~s set forth herein.
,
NON, THEREWORE, it is mutually agreed by and between
I
I
the ~~dersigned part~es as follows:
A.
On
(ccs)
was e
(hereinafter
B.
1.
1 of the Lease ~s ~odif~ed to read as
fa 1 lows :
commening on
198
a:'ld
expir~ng on 198_, unless sooner terminated as
provided below.
2. Paragraph 2 of the Lease and each subpart is
modified to read as follows:
2 . RENT.
2.1 MINIMUM MONTHLY RE~T.
On the tenth day of each and every calendar
month dur~ng the term hereof, Lessee shall pay a
sum of dollars ($
which is set as minLmum monthly rent (hereinafter
"M~nimum "lonthly Rent") for such month. I-linimum
Monthly Rent for any fractional part of a month
between the commencement date and the f~rst day
of the first full calendar month within the Lease
Term shall be prorated, and paid by Lessee to
Lessor along with ~he first full month of M~nL~um
Monthly Rent due hereunder.
2.2 PERCE~TAGE RE~T.
In addition to the Minimufl Monthly Rent
specified in Section 2.1 above, Lessee shall pay
to Lessor a sum equal to the amoLlnt that
percent ( %) of Lessee's Gross Sales as defined
herein made from or upon the Pr~ises exceeds the
Minimum (.Jonthly Rent (hereinafter "Percentage
Rent").
A. Gross Sales. ':::'he term "Gross Sales" as
used in th~s Lease shall be construed to mean (i)
2
the entire amount of the actual sales price,
whether wholesale or retail, and whether wholly
or partly for cash or on credit or in exchange
for any other product, commodity, service,
commercial paper or forebearance, of all sales of
merchand~se and all charges made by Lessee or its
employees or others acting on its behalf for the
rendition of services of any kind whatsoever;
(ii) all other rece~pts of all business conducted
in, at or from the Premises, including all
deposits not refunded to purchasers, proceeds,
receipts or any revenue derived 'Nhatsoever from
the use of the Prem~ses; (~ii) orders taken in or
from the Pre;ruses although said orders ma~{ be
filled else'Nhere, and sales by any sublessee in
or from "the Premises, and all without cred~t to
Lessee for uncollected or Ul'1collectible credit
ace ou n t s ; ( i v ) g r 0 s s r e c e i p t s of all co in-
operated devl.ces which may be placed in the
Premises by Lessee or under any rent concession,
percentage or other arrangement includ~ng,
without lim~tat~on. such dev~ces as pinball
machines, vending machines, video games and
similar devices (but excluding revenue from
telephone that ~s collected by a public utill.ty),
except that ncthing set forth herein shall be
construed as Lessor's consent to the use of same
3
in the Premises to the extent this Lease
otherwise required Lessor's consent thereto~ and
(v) all other revenues or receipts generated by
or arisJ.ng from the use of the Premises. All
sales originally made in, at or for the Premises
shall be considered as made and completed
therein, even though the payment of the account
may be transferred to some other office of Lessee
for collection, or although delivery of
merchandise sold in, at or from the Premises ~ay
be made from a place other than the Premises.
B. Exclusion from Gross Sales. ~here
shall be excluded from Gross Sales (i) any sums
collected and paid out for any sales tax or tax
based upon the sale or sales of merchandise and
requ1.red by law, whether now or hereafter in
force, to be paid by Lessee or collected fro~ its
customers, to the extent that such taxes have
been added to exchange of merchandise and
included in the Gross Sales pr1.ce: (ii) the
trans fer or exchange of merchandise between the
stores of Lessee, if any, where such transfers or
exchanges or merchandise are made solely for the
convenient oprat1.on of Lessee's business and not
for the purpose of consummat1.ng a sale which has
theretofore been ~nde in, at or from the Premises
or for the purpose of depriving Lessor of the
4
benefit of a sale which otherwise would be made
in, at or from the pr~~ises; (i~~) the amount of
returns to shippers or manufacturers; and (iv)
the amoun t of any cash or credit refund made upon
any sale where returned by the purchaser to and
accepted by Lessee.
Each sale upon installment
or credit shall be treated as a sale for the full
price in the month during which such sale shall
be made, irrespect~ve of the time when Lessee
shall receive payment (whether in full or
partial) from its customers.
c. computation.
percentage Rent shall be
computed and pa~d for each calendar quarter
dur ing each ye ar of the Lease Term.
Any sales
made during the first fractional calendar quarter
of the Lease Tem shall be added to the first
full calendar quarter of the Lease Term. The
last quarter for computation and payment of
Percentage Rent shall end on the date the Lease
Term expires or terminates.
D.
Method of Payment
of Percentaae Rent.
r
Witrun ten (10) days of the end of each quarter
of each calendar year of Lease Term, Lessee shall
submit to Lessor an item~zed stat~rnent of Gross
Sales and Percentage Rent due Lessor dur~ng the
preceding calendar quarter that has been
certified to be correct by a Cert~f~ed Public
5
Accountant and an item~zation and computation of
the r-linimum r-lonthly Rent and paid to Lessor
during the preceding calendar quarter. An
adjustment to rental paid by Lessee dur ing the
preceding calendar quarter shall be made as
follows: Lessee shall, together with said
certified statement, pay Lessor the amount by
which the sum so computed as Percentage Rent
exceeds the Minimu::l Monthly Rent paid for the
preceding calendar quarter.
2.3 LATE PAYMENT PENALTY.
If rental payable to Lessor by Lessee
pursuant to this Lease ~s not pa id wi th a ten
(10) day period from its due date, a penalty of
ten percent (l0%) of the amount due and unpaid
shall be added to the amount when due and the
total sum shall immedia tely become due a!1d
payable to Lessor. This provis~on shall in no
way restr~ct the r~ght of Lessor to ter:rrinate
this Lease for failure to pay rent as provided in
th~s Lease.
2.4 RECORDS.
A. Lessee shall keep, or cause to be kept,
in a fom acceptable to Lessor, full, complete
and proper books, records and accounts of the
Gross Sales both =or cash and on credit, for each
separate business of Lessee, its agents,
6
sUblessees, concessionaires or licensees at any
time operated on the Pre.'11ises. Upon the giving
of four (4) days' written notice by Lessor, said
books, records and accounts, including any and
all sales tax reports that Lessee, its agents,
sublessees, concessionaires or licensees may be
required to furn~sh to any government or
governmental agency, and any and all bank
accounts maintained by, controlled by, or in the
n am e 0 f L e sse e . its age n t s , sub 1 e sse eSt
concessionaires or l1censees in connection with
its or the1r bUS1ness activities operated upon
the Premises as described 1n Exh1bit "E" attached
hereto and incorporated here1n, shall be open to
the inspection of Lessor. Lessor's auditor, or
other representative or agent of Lessor.
B. Lessee shall at all times keep and
maintain in good operating order and condition,
upon the Prer.l1ses, a cash register which shall
register all sales on a tape and be so
constructed that it cannot be reversed or turned
back or not regl.ster sales thereon wi thout the
use of a ~ey or other dev1ce wh~ch shall be
exclusively 1n the hands of Lessor: and Lessee
shall register on aid cash register every sale of
every k~nd or character made ~n or from the
Prem~ses, wnether for cash or on cred~ t.
Sa l.d
7
cash register, or any other alternate method of
recording said sales, must ~e approved in writing
by Lessor.
C. The acceptance by Lessor of any mon~es
paid to Lessor by Lessee as Percentage Rent for
the Premises, as shown on any statement furnished
by Lessee, shall not be an admission by Lessor of
the accuracy of said statement or of the
sufficiency of the amount of said Percentage Rent
payment. Lessor shall be entitled at any t~me
within three (3) years after the receipt of any
such Percentage Rent payment to question the
sufficiency of the amount thereof and/or the
accuracy of the statement or statements furnished
by Lessee to justify the same. Should any audi~
conducted pursuant to this section d~sclose that
Percentage Rent on Gross Sales for the pricd in
question exceeds the amount of Percentage Rent
paid to Lessor by Lessee during said period,
Lessee shall :lrn.mediately pay the amount of such
defic~ency to Lessor. In the event that sa~d
def~c~ency is in excess of f~ve percent (5%) of
the Percentage Rent paid to Lessor by Lessee
during said period, the cost of sa~d audit shall
be paid by Lessee. In the event that said
deflciency is in excess of ten percent (10%) of
the Percentage Rent paid to Lessor by Lessee
8
during said period, such event shall constitute a
material breach of this Lease, and shall be
subJect to the remedies contained in Article 14
of this Lease.
D. For the purposes of enabling Lessor to
check the accuracy of any such statement or
stata~ents furnished to Lessor by Lessee, and the
sufficJ.ency of any addl. tional rental payments
made in accordance therewith, Lessee shall for a
period of three (3) years after submission to
Lessor of any such statements, keep safe and
intact all of Lessee's records, books, accounts,
and other data which ln any wise bear upon or are
required to establish detall of Gross Sales and
any authorlozed deduct loons therefrom as shown by
any such statement. Upon the giving of four (~)
days' written notl.ce by Lessor, said records,
books, accounts and other data shall be open to
the inspectlon of Lessor, Lessor's auditor or
other representative or agent of Lessor.
3. Paragraph 12.5 of the Lease is ~odified to read as
follows and paragraph 12.6 of the Lease is dele~ed:
12.5. INSURANCS.
Pr io r
to
the executl.on date of tnl.s
Modificatl.on of Agreement, Lessee shall furnish
Lessor wl.th certl.ficates showing the ty:pe,
amount, class of operations covered, effective
9
dates and dates or expiration of insurance
policies.
Such certificates, '~ich do not limit
Lessee's indernn~fication, shall also contain
substantially the following statement:
"The
insurance covered by this certificate will not be
cancelled or materially altered, except after
thirty (30) days' written notice has been
received by Lessor. II
It is agreed that Lessee shall waintain in
force at all times during the performance of th~s
Lease all appropriate policies of insurance, and
that sa~d polic~es shall be secured from a good
and responsible caupany or companies, acceptable
to Lessor, doing insurance business in the State
of California.
Lessee shall mainta~n the following
insurance coverage:
A. Liabil~ty Insurance. The general
liabil.1.ty coverage shall prov.1.de the following
minimum lim~ ts:
Bodily InJury -- $250,000 each person
$500,000 each occurrence
$500,000 aggregate
Property Damage -- $100,000 each occurrence
$250,000 aggregate
A combined single limit ~ol~cy w~th
aggregate l.1.mits in the amount of $1,000,000 w.1.11
be conS.1.dered equivalent to the required rnini..rnum
10
limits. All said coverage to include liability
for occurrences on the Premises. Lessor may, at
its option, require product l~ability insurance.
B. Worker's Compensat~on. All
employees of Lessee must be included under such
policy in an amount and w~th coverage to meet all
requ~rernents of the Labor Code of the State of
Cal i fo rnia.
C. Property Insurance. Lessee shall
obtain and keep in force during the term of th~s
Lease a policy or policies of insurance covering
loss or damage to the Premises, in the amount of
at least 100% of the full replacement value
thereof, as the same ~y exist from time ~o time,
against all perils included within the
classification of fire. extended coverage,
vandalism, malic~ous mischief, fIcod, wave wash
and spec~al extended perLls. Said insurance
shall provLde for payment of loss thereunder to
Lessor. Each year during the term of thLs Lease,
Lessee shall provide Lessor with an amended
insurance endorsement which reflects the current
full replacement value of the Premises.
D. Builder's Risk Insurance. Before
canmencement of any constructLon or demolition,
Lessee shall procure and shall maintain Ln force
unt~l canpletion and acceptance of work, "all
11
risksh bU1lder's risk insurance including
vandalism and malicious mishief, covering
improvements 1n place and all material and
equ1pment at the jobs1te furnished under
contract, but excluding contractor's,
subcontractor's and construction manager's tools
and equipment and property owned by contractor's
or subcontractor I s employees, wi th limits 1n
accordance with proJect value.
E. Boiler, Unusual Hazards and Other
Insurance. Lessee shall procure and keep 1n
force, in coverage satisfactory to Lessor:
(1) B01ler and machinery
insurance if at any time from ti....ne to time such
equipment 1S located on the Premises.
(2) If Lessee commits, permits
or causes the conduct of any activity or the
bringing or operation of any equipment on or
about the Prem1ses creating unusual hazards,
Lessee shall, promptly on not1ce of demand from
Lessor, procure and r:la J.ntain 1n fo rce, dur ing
such activ~ty or operation, insurance suffJ.cJ.ent
to cover the risks represented thereby. Lessor's
demand for unusual hazard J.nsurance shall not
constitute a waiver of Lessor's rJ.ght, if Lessor
would otherwise have that right, -c.o demand the
12
~
II
(2) Without terminating this Lease, relet the Premises, or
any part of the Premises, as the agent and for the account of lessee upon such terms
and conditions as Lessor may deem advisable, in which event the rent received on such
reletting shall be applied first to the expenses of such reletting and collection,
including necessary renovation and alterations of the Premises, reasonable attorneys'
fees, any real estate commissions paid, and thereafter to payment of all sums due
or to become due Lessor under this Lease, and if a sufficient sum sha1 I not be
real ized to pay such sums and other charges, Lessee shall pay Lessor any defiCiency,
notwithstanding Lessor may have received rental in excess of the rental stipulated
to in this Lease in previous or subsequent months, and Lessor may bring an action
therefor as such monthly deficiencies shall arise. Lessor shall in no event be
liable in any way whatsoever for failure to relet the Premises or in the event
that the Premises are relet, for failure to collect the rent thereof under such
reletting.
(3) At the option of the Lessor, without terminating this
Lease, the Lessor may elect to enter the Premises for the purpose of removing,
sell ing, removing and selling, or destroying some or all of any buildings, structures,
instal lations, and other improvements placed on and about the Premises without the
prior written consent of Lessor, or to enter upon the Premises, or any portion
thereof, for the purpose of performing Lessee's obl igation and duty to repair, keep,
and maintain the Premises pursuant to Paragraph 7.1 of the Lease hereinabove. Such
removing, selling, removing and selling, or destroying some or all of the said
unauthorized buildings, structures, installations. or other imorovement, or any other
such repairing, or maintenance, may be done on Lessee's account, and Lessee shall
pay to Lessor the reasonable costs of such removal, sale, removal and sale. or
destruction, and any such repairing, or maintaining.
(4) At the option of the Lessor, without terminating this
Lease, the Lessor may elect to have the Lease continue in effect for the Lease Term
so long as the Lessor does not terminate the Lessee's right to possession, and
Lessor may enforce all of the rights and remedies under this Lease including, but
not by wa? of limitation, his right to recover from Lessee the rent as it becomes
due hereun de r.
(5) At the option of the Lessor, the Lessor may elect any
other remedy provided for in this Lease and by law under the laws of the State of
California, County of Los Angeles, or other governmental body.
14.3 CUMULATIVE REMEDIES
Any termination of this Lease as herein provided shall net relieve
Lessee from the payment of any sum or sums that shall then be due and payable to
Lessor hereunder or any claim for damages then or theretofore accruing against
Lessee hereunder and any such termination shall not prevent Lessor from enforcing
the payment of any such sum or sums or claim for damages by any remedy prOVided
for by law, or from recovering damages from Lessee for any default thereunder. All
rights, options, and remedies of Lessor contlned in this Lease shall be construed
and held to be cumulative, and no one of them shall be exclUSive of the other, and
Lessor shall have the right to anyone or all such remedies or any other remedy
or re1 ief which may be provided by law, whether or not stated in this Lease.
14.4 WAIVER
The waiver by Lessor of any breach of any term, covenant, or condi-
tion herein contained shal I not be deemed to be a waiver of such term, covenant, or
condition or any subsequent breach of the same or any other term, covenant, or
condition herein contained. The subsequent acceptance of rent ~ereunder by Lessor
shall not be deemed to be a waiver of any prior occurring breach by Lessee or any
term, covenant, or condition of this Lease, other than the failure of Lessee to
pay a particular rental so accepted, regardless of Lessor's ~nowledge of such prior
existing breach at tre time of acceptance of suc~ rent.
14.5
RIGHT OF RE-ENTRY
Lease shall be
I n damages for
Any such right of re-entry reserved uncer Paragraph 14.2 of thiS
al lowed by Lessee Without hindrance, and Lessor shall not be l,able
any such re-entry, or be guilty of trespassing or forceable entry.
-12-
interest on pa1d insurance premiums at the
maximum rate permitted by law computed from the
date written not1ce is received that the premiums
have been pa id .
H. Additional Insured. Lessor, its
City Council, boards and commissions, officers,
agents, servants, and employees shall be named as
an additional insured under all polic1es of
insurance required by this Lease. The naming of
an additional insur ed shall not a ffect any
recovery to which such additional 1nsured would
be entitled under th1s policy if not named as
such additional insured; and an additional
insured named herein shall not be held liable for
any premium or expense of any nature on this
policy or any extension thereof. Any other
insurance held by an additional insured shall not
be requ~;red to contr ibute anyth~ng toward any
loss or expense covered by the insurance provided
by this policy. Proceeds from any such policy or
polic1es shall be payable to Lessor pr imarily,
and to Lessee secondarily, if necessary.
4. Paragraph 3f the Lease is modified to read as
fOllows;
14
13. PROHIBITION AGAINST TRANSFER.
Lessee shall not assign. sublease,
hypothecate, or transfer this Lease or any
interest therein, directly or indirectly, by
operat~on of law or otherwise without the prior
written consent of Lessor; any attempt to do so
without ccmplying with the foregoing shall be
null and void, and any assignee, sublessee,
lienholder or transferee shall acquire no right
or interest by reason of such attempted
assignment, hypothecation or transfer.
The sale, assignIl'ent. transfer or other
disposition of any of the issued and outstanding
capital stock of Lessee, or of the interest - of
any general partner or joint venturer or
syndicate or cotenancy, Which shall be construed
as a transfer of tbis Lease. Control means f~fty
percent (50%) or more of the vot~ng power of the
corpo ratio n .
For the purpose of this Lease, any
concessionaire or licensee on the Prem~ses of
Lessee shall be deemed to be a sublessee. and all
of the provisions of this Section shall be
equally applicable to the granting of any
concession or license and to concessionaires or
licensees with the same force and effect as
though specifically provided herein.
15
If Lessee desires at any t~e to assign or
otherwise transfer th~s Lease or to sublet t11e
Premises or any portion thereof, it must first
notify Lessor of its desire to do so and shall
submit in writing to Lessor the name of the
proposed sublessee or assignee, the nature of the
proposed sublessee's or assignee's business to be
carried on in the Premises, the terms and
provisions of the proposed sublease or
assignment. and such financial information as
Lessor may reasonably request concern1ng the
proposed sublessee or assignee.
Lessor's consent to any assig~rnent,
sUbletting or other transfer, is subjet to
canpliance w1th all of the follow~ng:
A. Lessee shall remain fUlly l~able
under the Lease during the unexpired term hereof.
B. Lessee shall prov1de Lessor w1th
evidence. reasonably sat1sfactory to Lessor that
such transfer will not devalue Lessor's interest
under this Lease I the proposed trans feree is
financ1ally responsible, the f~nancial strength
of the proposed transferee equals or exceeds that
of the current Lessee and the use of the Premises
by the proposed transfe!:'ee 1S consistent Wl.th
that specif1ed in Section 2 of this Lease.
16
C. Lessee shall reimburse Lessor for
Lessor's reasonable attorneys' fees incurred in
connection with the review, processing and
documentat~on of such transfer reque st, not to
exceed the s~~ of f~ve hundred dollars ($500.00).
Nothing contained herein shall be construed to
limit the amount of attorneys I fees under any
other prov~s~on of this Lease.
D. Any sublessee of part or all of
Lessee's :l.nterest in the preIl'ises shall agree
that :l.n the event that Lessor gives such
sublessee notice that Lessee is In default under
this Lease, such sublessee shall thereafter ~ake
all sublease or other payments directly to
Lessor, which payments will be received by Lessor
without any liab:Llity wnether on the sublease or
otherw~se (except to credit suc"h suns aga::..nst
those dlle under the Lease), and any sublessee
shall agree to attorn to Lessor or :Lts successors
and asslgns should th:l.s Lease be teminated for
any reason, except that in no event shall Lessor
or its successors or assigns be obl:l.gatec to
accept s~ch attornment.
E. Any such transfer and consent
shall be effected on forms approved by Lessor.
F. Lessee shall not then be In
default hereunder in any respect.
17
G. Any such sublessee,
ass~gnee or
transferee must agree to assume, be bound by and
perform all of the terms, covenants and
condi tions of this Lease WhlCh could reasonably
be cons trued as applicable to such trans fe ree,
sUbJect to the condit~on that Lessor shall not be
bound to any prov~5ion of any agreements
pertaining to such transfer to the extent such
agreement grants rlghts not possessed by Lessee
against Lessor.
H. One executed copy of any and all
written instruments eV1dencing or relating to any
such assl.gnment, sublease or trans fer shall be
delivered to Lessor.
Lessor has the rlght, at its sole
discretion, to assign, sublease, hypothecate or
transfer ti'us Lease or any interest there1n to
any person or entlty. In the event of any bona
fide transfer or transfers of the tJ.tle 0:': suet:.
fee ownership, Lessor here~n named, except as
hereinafter ?rov1ded (and J.n case of any
subsequent transfers or conveyances, the then
grantor after the date of such transfer or
conveyance) shall be automatically freed and
relleved from all pe rsonal liabil i ty as respects
the perfor:r>ance or any covenants or obllgations
on the part of Lessor conta1ned 1n this Lease
18
thereafter to be performed.
Any funds in the
hands of such Lessor, or the then gra~tor, at the
time of such transfer in \vhich Lessee has an
interest shall be turned over to the grantee, and
any amount then due and payable to Lessee by
Lessor, or the then grantor, under any prov~sion
of th~s Lease shall be pa~d to Lessee. It being
intended hereby that the covenants and
obl~gations conta~ned in the Lease on the part of
Lessor shall, subject as aforesaid, be bind~ng on
Lessor, ~ts successors and ass~gns only during
and in respect of their respective success~ve
periods of ownership.
5. Paragraphs 21.1, 21.2 and 21.3 of the Lease are
modified to read as follows:
21.1 Lessee shall
harmless Lessor, its City
inda~n~fy and hold
Counc~l, boards and
commissions, offlcers, agents, servants and
employees from and against, shall defend Lessor,
its Clty Council, boards and commiSSlons,
officers, agents, servants and a~p~oyees from and
agalnst, and shall assume full responslbillty
for, payment of all ......ages or salarles and all
federal, state, and local taxes or contributions
imposed or requ~red under the Unemployment
Insurance, Social Security, Income Tax, and
ilorker's Compensation la\.,rs, or under other laws
19
respect~ng Lessee I s employees engaged ~n the
performance of ~essee's obl~qat~ons hereunder.
21.2 Th~s Lease may create a possessory
interest J.n publ~c property which is subject to
taxation.
In the event such interest is created,
Lessee shall pay any and all taxes levied on such
interest.
21.3 Lessee shall pay any and all taxes
upon personal property and improvements belonging
to Lessee and upon its possessory interest, if
any, in property of Lessor, and Lessee shall pay
all sales and other taxes levied against the
operation of ~ts business.
6. Paragraph 27 of the Lease ~s added to the Lease as
fol113WS:
27. SECURITY MEASURES.
Lessee hereby acknowledges that the rental
payable to Lessor hereunder does not include the
cost of guard service or other security measures
and that Lessor shall have no ooligatJ.on
whatsoever to prov~de sar-:e. Lessee aSSU!'1es no
responsioJ.1J.ty for the protection of Lessee, its
e!:lployees and agents, invJ.tees, customers, and
property fram acts of third parties.
20
7. Except as expressly mod~f~ed herein, all other
terms and covenants set forth in the Lease shall remain the
same and shall be in full force and effect.
IN WITNESS \1HEREOF, the parties hereto have caused this
Modification of Agreement to be executed on the day and year
first above wr~tten.
LESSOR:
CITY OF SANTA MONICA,
a municipal corporation
By
JOHN H. ALSCHULER, JR.
City Manager
APPROVED AS TO FOID<1:
ROBERT N. MYERS
Ci ty Attorney
LESSEE:
By
21
'l
r~DIFleATION OF AGREEMENT
NutlBER
(ees)
'nas tlod:t Clc'ition of Agreement NUMber
(CCS),
entered :tnto th:ts __ day of
between the CITY OF SANTI\, ~IONICA.
198_, by and
a nun:tcipal corporat1on
(herelnafter "Les<;or"), and
(herelnafter "Lessee"), lS I'la>ie with reference to the
following:
R Eel TAL s:
A.
On
19
Agree~ent Number
(CC.:i) was entered lnto by and between Lessor and Lessee
(herelnaft<:,r "Lease").
B. Lessor and Lessee deslre to modlfy the Lease on the
ter~s and condltlons set forth hereln.
NOW, TBl:HI:rORE, It lS "lutually agreed by and between
the underslgned partles as follows:
1. Paragrarh I of the Lease is Rodified to read as
follows:
1. TERM.
The
term
of
thls Lease,
hereinafter
referred to as "Le2se 'fer!"," shall be two (2)
years, CCTlTH'ncUFJ on
198
and
expl.rincJ 00 loq, 1l!lless sooner term1naten as
rr::wlded t',:,l n,'l.
2. P3 r<'i'] cIPh 7 of tl,e L'C'ase and each subpart is
enel1fled to read as ~ollows:
2. RC'H.
2. 1 ~ll';r mm ~10Nr iL Y R!;:';T.
On the tent]l day of each and every calendar
llonth dur 1.ng the tenTl hereof, Le ssee shall pay a
dollars {$
s urn of
Wh1Ch lS s~t 'lS fPln:LITlUIil monthly rent (hereinafter
"1>11n1.!'1UI'1 ~lonthly I':.ent") for such !'1onth.
M1nimuIIl
t10nthly Rent for 3'1Y fract10nal part of a month
between the connencer'lent_ 'late and t'he flrst day
of the f1rst full c:Ilero.lar month ,,,itpin the Lease
TerrI shall be proratej, awl paid by Lessee to
Lessor al0ng vl1 th U'<:, flxst full .~onth of Hinil"lum
Monthly Rent due hereunder.
2.2 FLRCEUTAGE REUT.
In "i'id1t1on to the ~11nimll'T1 ~lonthly Rent
speclfl.ed 1.11 Sectlon 2.1 above, LeSSAe shall pay
to Lessr)r a SU"1 equCl.l to the al:lount that
percent (
%) of L2S5~~'S Gross Sales as deflned
hereUl narle froi" or upon the l're'Tl1Ses exceeds the
r'1l-Il1rTlUn ~IQntl'ly Rer,t rlur lln e"lch ciJlendar year of
the Lease '{'Pro" (l1erCI'Vlf~"r "PercentClae Rent").
l'J..
Gross Sales.
'T'he tr.::-rrl IIGross Sales II as
used in thlS Le~s~ shall he construe1 to mean (i)
2
the entire .3.mOllnt of the actual sales price,
\.;hether ~vholesale or retall, and whether wholly
or partly for ca'3h or on credl t or ln exchange
[or ':\ny other product, commodity, service,
comr:lerClal ['3.per or forebearance, of all sales of
merchandlse and all charges made by Lessee or its
employees or others actH(l on 1ts behalf for the
renditlon of serVlces of any l<ind whatsoever;
(11) all other recelpts of all buslness conducted
ln, at or from the PreJ111SeS, including all
deposits not refunded to purchasers, proceeds,
receipts or any revenue derived whatsoever from
the use of the PremlSCS; (iii) orders taken in or
fro"! the l'renlses althou')h sald orders !'lay be
fllled elsevh'"re, a'ld sales by a:1Y sublessee in
or frm the Prerllscs, and all wlthout credit to
Lessee for uncollected or uncollectlble cred 1 t
a c c aU n t s ; (1 v) 9 r 0 s s r e c e 1 p t s 0 f all Cain -
operated deV1CCS Whlch ladY be placed in the
Premises by L'~ssee 'Jr under any rent concession,
percentage or other arrangement lncluding,
wlthout Ilmltatlon, such iJevicPs as pinball
macl11.nes, venoiin'J maChlne'3, vldeo games and
slpular devices (hut "'!xcllldln'] revenue from
telephone th<lt 15 C'r:>l1ecte'l. by a pc::bllC utility),
except tha-l-_ n0thlrYl set forth herein shall he
canst_rued RS Lcss'Je'S consent tr:> the use of same
.3
In the Prernlses to thg extent thIS Lease
otherWIse required Lessor's consent thereto; and
(v) a] lather revenues or receipts generated by
or arISII13 fron the use of the preMises. All
sales origInally maje ~n, at or for the PremIses
shall be cons~dere~ as made and completed
thereIn, even th(Y":Jh the payment of the account
nay be transferred to SaMe other offIce of Lessee
for co11ectIo~, or although del~very of
merchandIse so l'J In, at or from the PremIses may
be made froIn a place other than the PremIses.
B.
LXcluSIon
from Gross Sales.
There
shall be excluderi fror'1 Gross Sales (1) any sums
collected a'd pa ~-i (".l~ fr:>r any s"Iles tax or tax
based up:ln the sale or sa1,o-s of ITlerchandIse and
reqUIred by law, \v'l1ether now or hereafter In
force, to be pal'~ r-y Lessee or collected from its
custoners, t.o the extent th'\t such taxes 'have
been addetl to E''{C11Ctll'JE' of nerchandlse an'l
l!lCludeii u) tne Cross S"des pr~ce; (:Li) the
transfer or exch",oc!c of 'Ilcrcrlandlse [1etween the
stores of Lessee, 1 f any, where such transfers or
exchanJes or 'Tlerchancl~se are made solely for the
convenlent operat~on of Lesspe's hus~ness and not
for the pllrp')s'~ of COtlSUt1Wlt.Jn<J a s<11e WhICh has
t-heretafore 1Ycef' nacle In, at or frOI'1 the PremIses
or f'.Jr t'l1e P'lt:pUSC of ,jepr~v~ng Lessor of the
4
b'O'nef"tt of ii sale ..mIen othl'rvnse would be made
In, at or from t11E' ['re[luses; (i1i) the amount of
returns to slllpoers or rn1.nuEacturers; and (iv)
the anDUl] t :Jf any cash or cr-edi t refund made upon
any sale where returned by the purchaser to and
i'lccepted by Lessee.
each si'iLe upon installment
or cred1t S'lilL L be treated as a sale for the full
pr lce ln the h'onth dur 1ng wh 1ch such sale shall
be :n,1.de, irTesuectlve of the tll'le when Lessee
shal 1 reCP1ve DaYli'ent (whether ln full or
partial) from lts customers.
C. Quarte~!x C'onputation. Percentage Rent
shall be c0"lpute:! eilc'I1 calendar quarter durin')
ei'lch year ,)f ':he Le"1se Term to determine the
aTTlount that
percent
%) of Lessee's Gross
Sales 'O'xcee<ls the t.hn1i'lU]:l I'lonthly Rent dur1ng the
preceding calendar quarter. Any sales made
dur 1ng the f1rst frClct10nal calendar quarter of
the LeClse Tem shCll1 be added to the first full
calendar '.J'.larter of the Lease TerTI.
The last
quarter for computat1':J1l and payment of Percentage
Rent shall en'} an tl1e dat~ the Lease Term expires
or terrrnnates.
of PaL~ent of Quarterly
v,']_ thin ten (I 0) days of the end
D. Nethot'l
Percent3ge Rent.
of each quarter of e"tch c'3.lendar year of Lease
Teen, Lessee shall SUl"lUt to Lessor an iteMlzed
'}
staterr.ent of Gr-oss S3.1<:!s anl Percentage Rent due
Lessor durlDq the pr-eceJll1g calendar quarter that
has bf'C'11 c....rL 1 fLPJ V-) be correct by a Certl fled
FubIle l\.cc"untant '1tld a.n ltemlzat10n and
CG"[JLltatlon of the ~hnF1u'" !lonthly Rent and paid
to Lesso r chr ing the:' precedIwj' calendar quarter.
An adJustl'lent to rental pa.Ll by Lessee durlng the
precedll13 calendar qu,lrter shall be made as
follows:
c.essee shall. together 'tilth sald
certlfleJ stateMent. pay Lessor the amount by
WhlCh the sum so cOJlputed as Percentage Rent
exceeds the nlrll:'ll\n tlonthly Rent pald for the
precedlng calenr'lar quarter.
E. Yearly
days of the end
Reconcilation. Within ten (10)
of each calendar year of the
Lease Term. Lessee shall subm1t to Lessor an
lten1zed statement of Gross Sales an~ Percentage
Rent and ~lln~l'1urn Rent due Lessor durlng the
preceed1ng calendar year that has been certified
to be correct by a CertlfLed Publ~c Accountant
and an 1tel'llza.t1.0n and Corclputatlon of the
Percentage Rent t.hn1!:1um f'lonthly Rent actually
paid to Lessor durlng the precedlng calendar
year.
Wlttun SLxty (60) ddYS after the recelpt
of Lessee's certifle,l yedrly statement. Lessor
shall furnlsh to Lessee a written statement
("Reconcllla.t1on") reconclllng the amount of
')
Percentilge Rent. pd1d by Lessee for each calendar
quarter Jur 1ng the pr lor Lease Year wi th the
yearly Percentage Rent due therefor.
In the
event that the keconclliatlou shows that
add1t1onal Percentage Rent 1S due from Lessee,
Lessee shall pay the ill'lOunt due wlthin ten (10)
days of the receIpt of the Reconciliation. In
the event that the Reconclliation shows that a
credit 1-S rlue Lec,see, such credlt shall be
cred1 ted aga1nst t1-je next sums beCOI'lln1 due from
Lessee hereunder or 1n the event of eXplratlon or
terrnnatloll of the Lease Term, the amount due
shall be promptly returnee,! to Lessee.
2.3 Li'\TE PA'nll:~:T PLNALTY.
If rental pay~ble to Lessor by Lessee
pursuClnt to thlS Lease 15 not pa 1d loll th a ten
(10) day per:cod from Its due date, a penalty of
ten percent (101;) of the eWlc)Unt uue and unpa1d
shall be addeu t') tne amount when due and the
total SUc,1 shall uTJTT1ed:cately become due and
payable to Less')r.
ThlS provls~on shall in no
way restrlct the rlght of Lessor to termlnate
thlS Lease for fa~lure to pay rent as provlded ln
tlns Lease.
7
2.4 Rr:CORDS.
A. Lessee s~~ll keep, or cause to be kept,
H\ a fon"1 acceptable t':l Lessor. f1)ll. complete
and proper books, records and accounts of the
Gross Sales b:)th for cash and on credit, for each
sep'lr:tt.e bus1.ness of Lessee, its agents,
sublessees, CO;\CeSSl':>ti<llrc>s or li:-ensees at any
tl:rre operated 9n thoo Prer"lses.
Upon the gIVIng
of four (4) days' wrl~ten notlce Py Lessor, said
books, records and aecounts, includlng any and
all sales tax reports that Lessee, lts agents,
sublessees, C':lnCeSSI'Jnalres or lIcensees may be
requlreJ to furnIsh to any government or
governi:'lental agency, and any and all bank
accounts ~aIntaIne~ by, controlled by, or In the
name of Lessee,
Its a~ents, sublessees,
concesslonalr~s or lIcensees In connection with
its or the1.r bUSIness ilCtl'Jltles operated upon
the Prernlses as d'?5crIbed In ExhibIt "B" attached
hereto an(l Incorporate<l hereIn, shall be open to
the inspectIon of 1.'O',>sor, LE>SS0r'S au<iitor, or
other representCltIve or aQe'1t .of Les5'lr.
13.
I.essee
5h,"Ill
at "11 I
times keep and
rJaInti.l1.n In ']oor] C'P':'ratlT1? up]"r i.lll'l condJ.tlon,
upon th'C' J'rr!"lS':'S, it c.tsh reJISll'r WhICh shall
regIster all stles on i.l ti.lpe and he so
constructed that It Cil'![l()t he reversed or turned
"
back or no'_ re?l.st_er sal~s thereon \nthout the
use of a >:ey or other dev1.ce which shall be
excluslv~Jy 1.n the hanc1s of Lessor: and Lessee
shall reg-1.ster on >lld ("ash register every sale of
every klWi or character made 1.n or froM the
Premlses, \,:'!ether for cash or on credlt.
Said
cash Yeqlst_er, or dll')' other alternate T'Icthod of
recoulln'] S'lL'] sales, !r>ust be approved 1.n wr1.t~ng
by Lessor.
c. The acceptance by Lessor of any monles
pald to Lessor by Lessee as Percentage Rent for
the Prerlses, as shown on any state'Tlent furnlshed
by Lessoe, shall not ne an a~m~sslon by Lessor of
the accur"lcy of sald st"tenent or of the
sufflclency of the ?~~unt of sa~d Percentage Rent
pay:rent. Lessor shall be entitled at any ti:ne
~lth~n three (3) years after the recelpt of any
such Percenta?e fle'lt pay'nent to quest1.on the
suff1-c1-e!lcy of the a'TIount theJ:"eof and/or the
accuJ:" acy of the stat_e"1ent. or st.atements fUJ:"nlshed
by Lessee to ]ust1-fy the s~me.
Should any aud~ t
conducted pursuant to thlS seetlon dlsclose that
PeJ:"centage Rent on Gr05S Sales for the period 1n
questlon exceecls the ilf'lOunt of Percentage Rent
pald to LessoJ:" hy Lessee durlng said p'O'riod,
Lessee shall l'Tlnec11at.'O'ly pay tl1e arlount of such
defic~ency to Lessor.
In the event that said
9
.::lefIClc>nc}' lS 1n "x(''-'s~, of flve percent (5%) of
the Perc:entFlg<2 Relit F'Oil-d to Lessor by Lessee
Jura)'} sdL,1 p'C'rlocl, tloe cost of sald audit shall
bp palO hy Lessee.
In the event that sald
def1clen"y IS 1n e'Ccess of ten percent (lO%) of
the' ['"r~'''ntJI'}c Rent pal'] to LC'ssor by Lessee
Jur:LIYl 8,11 f'oe'rlc'vl, sllcll e'Ifcnt sn"l11 constitute a
''1.aterii'il t'roacn Clf tnls LeasC', and shall be
9'cl"bJect t., t!l'~ r",',e.1:Les """r>t_alne<1 ln l\rtlcle 14
of thlS 1.'2-'1S0.
D. For the rurp0s8s ')f eflab 1 ing Les'3or to
check tile ,ccurClcy of any c,~ch statement or
'" t'l teTT'ents fClr rllshe(~ to i.':css;)r by Less~e, and the
suftlcLc'ncy of any ,d.llt1.':Jflal rental payments
made III accnr]-".nce therew'ith, Les'3ee shall for a
perloc1 0f three (3) Y'~Cl.rs "lfter SUb'lllssion to
Lessor of dny such state"ents, keep safe and
lnt~ct all of Lessee's rec0rds. books, accounts,
and othE'r '10. t'i wh lch 1 n 'l.'1Y way bear upon or are
reqtarer] to establ tsil 'latenl of Gross Sales and
any authorlZ'?cl de'~uctio'1s therefrom
any s'lch strtternBnt.
I,:pon the <Jlvin'1
of
shown by
four (4)
as
days' wrlttc>n notlce 1->y I,'?ssor, si)1.<l records,
rooks, rtccnlJnt'3 ,our:] other l"lta sh"lll be CJpen to
the lqST'~ct1c'n ()E Lf~s~;or, L-8ss"'Jr~s al.l'~li.tor or
oth~r rppre-:"l.i.?nt:;'lt l~~n 'Jr .~('IAnt 0f Ll'"'ssf)r.
10
3. ParCl.'l rarh 12.5 of the Lease ~s modi fied to read as
follows and para1raph 12.6 of the Lease 15 deleted:
12.5.
EJSlJRl\'ICr:.
Pr 10 r
to
t~e e~ecution date of this
'1001 fleatl,:>n of Agreerlent, Lessee shall fur nigh
Lessor w1th certlflCCl.tes '3how~ng the type,
aT"oun t, class of operdtlons covered, effective
dates and dat~5 of eXplrat~on of ~nsurance
pol~C:1.es.
Such cert1ficates, WhlCh do not limlt
Lessee's 111,iet'!'nlflcat1on, shall also contain
slJbstantlally the followlng statement:
"The
~nsuranC'e covereJ by Uus certif~cate will not be
cancelled or Tnater-1ally altered, except after
th1rty (30) days' wrltten not1.ce nas been
re-::e1ved by Less'Jr. II
It lS agrecrl that Lessee shall rlainta1n in
force at all times dur1ng the performance of this
Lease all a,'f'ropr late po 1 H:: les of 1nsurance, and
that 5'11.1 pollc~es shall be secured
and responsible carpany or cornpanles,
from a good
acceptable
to Lessor, dOlng l11surance buslness In the State
of Cal~forn~a.
Lessee shrtll ma1nta1n the follow~ng
lnsurance coverage:
i\. Llatnlity Insurance. Tl1e general
1~ab11ity CQverCl]e shc:tll provFle the followlng
min1r.lum IlffiltS:
11
3'),hl Y In] ury -- $250,000 each pe rson
$500,000 each occurrence
$500,000 aggregate
Property DaO''':qe -- $lOl),OOO each occurrence
~250,OOO aggregate
A C Of'. h 1. n e d S l. n c~ I e I i m i t pol icy IN 1. t h
aggre'Jate 11''lLts 1n the aT"ount of $1.000,000 will
te consi'lcred egulvalent to the requ1.red l'1in1.mum
lunt').
1\11 salo coverage to inclU'le 11.abil1.ty
for occurrences on t~e PreT"lSes.
Lessor may, at
its opt1on, reqlll.re product liability 1.nsurance.
B. \vorker' s
COJ11pensation.
All
employe es of Lessee must 1:'e l.nclude(l under such
POlICY 1n an a1'10ullt '1.'11 v,nth coverage to meet all
reqUl.renent~~ of the Labor Coue of the State of
Call. fornlil.
c. ~!_~"erty Insurance. Lessee shall
obta1n aml keep In for<~e dur ing the term. of thls
Lease a pollcy or p<Jllcles of ll1SUrance coverlng
loss or daEia')e to the PremIses, In the amount of
at least lOf)%; of the full replacement value
thereof, as the same ![lay exist froTTJ tUlle to time,
agalnst all perlls lDclude'l ,.;lthln the
classlf1catlon of flre, extencled coverage,
vandalism, -['allclous r'llSChlef, floo'l, wave wash
a'ld special extewl.ecl perlls.
Saln insurance
shall !yovHle for rnycr",nt 'Jf loss thereunder to
Lessor.
L'lCfl ye."lrlllr lrl1 tho t,:,p;'\ of th1.S Lease,
Lesse!" sh3.] 1 i=T::Jvl'le Lf"s,:;nT 'w!.th an anended
l?
lnSUraTlce enoorseT'lent ,..hlen reflects the current
full replace''1ent value of the PremlS8S.
D.
BUllder's R1Sk Insurance.
Before
can'"1encenen': of any cO'lst_ruction or demoll tion,
Lessee shall procure and shall malntain In force
untll cGi'pletlon and acceptance of work, "all
rls~s" bUll~er's rls~ lnSuraTlce including
vandallST'l and l'1allC1.JUS r11shlef, coverlng
lm~ravements lD place and all mater1al and
equlpment at the JObsite furnlshed under
contract, but excludlng contractor's,
subcontr3ctor's anJ cOllstructloll manager's tools
and equlp"lent anj pr0perty owned by contractor's
or subcontractor's employees, with limlts in
accordance with proJect value.
~. BOller, Unusual Hazards and Other
Insurance.
Lessee shall procure and keep ln
force, ln coveraJe satisfactory to Lessor:
(1)
]301] er
and
1'[1achinery
lnsllrClnce 1 f at any tlme from t1me to time such
equl[:wlent lS located on the Prem1ses.
(2) If Lessee comm1ts, permits
or causes the conduct of any actlvity or the
brln'Jing or operatlon of any equ1pJ11ent on or
ahout thE' f'rem1ses creatun lHlll'>llal hazards,
Lessee shall, pronptly on nnt1.ce of demand from
Lessor, procure and nal.ntal.n In force, durl.ng
13
such ilcll.v~ty 0r np<:rCitlon, ~nsurance sllfflcient
to cover the r 1sks r'O'pr eSE'nted tner'O'by.
Lessor'
jema~1d fur u[\us,,0.1 haza rei ~nsurance shall not
constlt~te a wa~ver of Lessor's rlght. If Lessor
would othen.ase have that r~ght, to demand the
remo\ii1.1. ceS'Flt Ion or abate'1ent of such act1vity
or operatlon.
(3 )
Lessee
may procure and
'palntaln any lnSUri1.nce not requIred by this
Lease, but 211 silch H~surance shall be subJect to
all of the prOVIsIons hereof pertalning to
U1surance an'} slnll be for the benefit of Lessor
a'1Q Lessee.
r.
SubrOl1atlon
..;aiver.
Les'3ee
a)rees that In the event of loss due to any of
the perlJs for w'd:::h It has agroed to provIde
Insurance, that Lessee s>1all look solely to its
Insurance frJr recovery.
Lesse~ hereby grants to
Lessor. on behalf <')f any lnsurer provlding
lnsurance to elther Lessee or Lessor WIth respect
to the serVlces of Lessee heraln. a waiver of any
rIght of subrogation WhICh any such l.nsurer of
sal'! Lessee may ac']ulre a<1(llDst Lessor by virtue
of the paynent of rtny loss under sucn lnsurance.
G.
FaIlure to Secure.
If Lessee at
any tl-ne dUrlrlJ' t'lC' term lH'reof slton1rl fall to
secure or r~"ll1t"iIr, the foreqoin-J lnsurance,
14
Lessor shall. after two (2) days' notice, be
penrntted to obtaln such insurance in Lessee's
name or as an a,ent of Lessee and shall be
conpensateJ by Lessee for the costs of the
insurance premiuMs. Lessee shall pay Lessor
interest 0'1 pal(l lnsuranC'e premiums at the
rraXl.J'jur' r-'lts p<:= ml tted by law computed from the
date wrltt~n notice lS rec€lved that the premiums
'la\;e been pa 1'1 .
'1.
Addltlonal Insured.
Lessor, lts
Clty Councll, boar,Js and C-:JnmlSSlons, offlcers,
agents, servants, and er'1ployees shall be named as
an a<LlltloTFll lnc;urcd un,1Ar all policles of
lnsurance requlred by thls Lease. The nanling of
an addi tl.cnal lns Llr ed shall not a ffect any
recovery to wTIlch sLlch ad'jltlonal l.nsured would
be entltle':l under tIns pollCY if not named as
such ad-:lltional lnsured; and an ad.ditional
lnsured na."cd hereln shal] not be held liable for
Olny prerrtlU"Tl or expen5e of any nature on this
po llcy or any ex tens lon thereof.
Any othe r
lnsurance helel by an addl tlonal lnsured shall not
be requlred to cantr1bute anything toward any
loss or expense covered by the insurance provided
by thls pollCY.
Proceeds
from any sllch policy or
to Lessor pr imarlly,
lf necessary.
policles sh,:l11 be payac'Jle
and to Lessee secondar~ly,
15
4.
l'''lrc1'3raph
3f
the Led se 1S 'I'och fied to read as
fC) 11 OW5 :
13. PROlUf3ITIO~.r ,,,Gri.U:S I TRj'\.;;rSFl~R.
Lessee
shall
not
"iSS1'jn,
sublease,
hypothecate, or trosfer thls Lease or any
lnterest thereln, d~rectly or lnd~rectly, by
operatlon of l'l.W or otherwlse Wl thout the pr ior
wrltten consent of Lessor; any attempt to do so
wlthout CQ<"lplYln9 'wLth the foreyOlng shall be
null and vOld, an~ any asslgnee, sublessee,
11enholder or transferee shall acquire no right
or lnterest by reason of such attempted
asslgnr'lent, hypothecatlOt1 or transfer.
Tl-}e sale. ClSS1Cll1'ne!1t, transf'"r or other
dl5po5l tlO!l of allY of th",
capl tal stock of Lessee,
any general partner or
i sSlleu ClW'l outstandlng
or of the interest of
]Olnt venturer or
syndLca te or cotena:1cy, ...h ich sha 11 be construed
as a transfer of th1.s Lease. Control means fifty
percent (50%) or Flore of the voting power of the
corporatlon.
For the purpose of thLs Lease, any
conceSS10na1.re or llcensee on the premises of
Lessee shall be .ieel'1ecl to be a sublessee, and all
of the pr0V1.5l.')r}S of thic; SE'ctLon shall be
equally Olpollcable to the gr<lntLng of any
conceSSlon or llc':'nse and t.':) conCC5Slonalres or
16
llcensees wlth the sawe force and effect as
though speCl fically provHled herein.
If Lessee des~res at any time to asslgn or
otherwise transfer tens Lease or to sublet the
Premises or any portlOrl thereof, it must first
notl.fy LeSS0r of j ts deSlre to (10 so and shall
subm:Lt in \-nltlng to Lec;'3Qr the name of the
proposej sublessee or assilrlee, the nature of the
propose"! sublessee's or asslg'1e'2"S bus~ness to be
carr led
0"
u
ln
the
P r em 1. s e s .
the
terms
and
prOVlslons of the proposed sublease or
asslgnment, and such flnanClal ],nformat],on as
Lessor "TIay rea'3onably request concernlng the
proposed sublessee or asslg~ee.
Lp'3sor's consent to any asslgnment,
subletting or other transfer, is subJect to
canpl],ance wlth all of the followlng:
1\.
Lessee
shall reI'1aln fully llable
under the Lease cluring the llnexp],red term hereof.
B. Lessee shall provide Lessor with
eVldence reasonably sat1.sfactory to Lessor that
such transfer w1.11 not devalue Lessor's interest
under thls Lease, the propose,j transferee is
flnarlclally responslble, the flnanCl<ll strength
of the proposed transferee eCluals or exceeds that
of the current Lessee and the use of the Premlses
17
by the [Jroposed tI3nsfcree lS conslstent with
that sneCl flE'.j
l~ Spctlon 2 of thls Lease.
n
'--.
Lpc;c;ep <;hi'l11 reImburse Lessor for
Lessor's reasonable attorneys' fees lncurred in
c()rlne.~tl{,)~ ,nth the reVleW. processlng and
:lr)''':ll'1E'nt'ltv1n .}f sllcl' trallsfer re'luest, not to
exceei the sw~ of five hundred dollars ($500.00).
';othlTl'J CUilta 1!1eU hereln shilll be construed to
lllnlt tile i'inrmnt of attorneys' fees under any
other provlslon of thls Lease.
D.
^ny
sublessee of part or all of
LeS3ee's lntpLest_ 1.'1 the Fre~'1ises shall agree
that in the event thOlt Lessor 'Jlves such
sublessee I1Qtice tloat_ L('ss'~e 1S in def'l.ult under
tins Lease, such sul)lessee shall tt-ereafter make
all sublease or other payments uIrectly to
Lesser, WhlCh pay~ents wll] be recBlved by Lessor
wIthout any 1lablllty whether on the sublease or
other\.ollse (except to creult such suns agalnst
those due under the Lease), and any sublessee
shall agree to attorn to Lessor or Its successors
and asslgns shQuld this Lease be termInated for
any reason, except that Ul no event shall Lessor
or lts successors or aSShTns be obllgated to
accept such attornnent.
E.
l\!l'i
sucn
trdIlS fe r
and
consent
shall be effected on fonns "Iprroved by Lessor.
] 3
F.
Lesc;ee
shall not then be
in
default hereunder in any respect.
G.
r,ny
such suhlessee,
aSSlgnee or
transferee T'1USt agree to assume, be bound by and
perform all of the terms, covenants and
candl tlons of Un s Lease whlch could reasonably
be construed as appIlcClble to such transferee,
subJect to the condltl.On that Lessor shall not be
bound to any provlsion of any agreements
pertalnlng to sLlch trOlnsfer to the extent such
agreement grants r1.ghts not possessed by Lessee
agalnst Lessor.
'!. ()'1e
executed copy of any and all
eVloencin1 or relatlng to any
v;rltten
l.ns trul"'le n t: e;
,;uch ass~')n"'ent, ,;ublease or transfer shall be
dellvered to Lessor.
I. The consent of Lessor to any
request for an assl'jnment, sublease or other
transfer of thlS Lease shall not be unreasonably
withheld.
Lessor has the rlght, at lts sole
ol.SCretlon, to ass1.gn, sublease, hypothecate or
transfer thls Lease or any lnterest therel.n to
a'lY person or entlty.
19
5.
Parilqr3prlS
21.1,
21.2 3nd 21.3 of the Lease are
rodl fled to reel'! ns in llo\ols ~
21.1 j,essec shell 1 l.nde"1nify and hold
harmless Lessor, 1. ts Cl ty CouncIL, boards and
c om r J s s 1 0 n s , 0 l' f ] C e r s , a J e n t 5 , 5 e r van t san d
e"llployees from and "'J:J.lnst, shall defend Lessor,
lts Clty Council, boards and comwlssions,
rJfflCers, agents, servants awl employees from and
a?31nst, a'1'1 shall assur.'e full responslblllty
for, p3YI'1ent of all ....ages or salarles and all
federal, state, and local taxes or contrlbutions
F1f'Osed or requ"lcreQ unrler the UnemplOYMent
l'1c;llr"~lC'?, SOCIal Secl\rity, I'lcone Tax, and
~,.;')rl:er's COI"pens,tl.Ol1 1;:1'';5, or uOl1er other la"...s
resr>ectln-l Le!"s2e's el"ployees en]a]ed in the
perfonnance of Lessee's oblIgations hereunder.
21. 2 ~hIS Lease may create a possessory
Interest 1.!1 p'-1bllC property WhlCh lS subJect to
taxatl':Jn.
In the ,,",lent suell lnter~st lS created,
Lessee shall pay any Ll'd all tilxes levl.ed on such
Blterest.
21.3 Lessee shall pay any and all taxes
upon personal property and lT1prOVel71ents belonging
to Lessee and upon l.ts possessory lnterest, if
any, In prooe rty of Le SSG r, and Le ssee shall pay
311 sales ard 0ther taxes leVlei against the
operatlon of lts bUSl'1ess.
20
6. Paragraph 27 of the Lease ~s added to the Lease as
follows:
27. SECURITY [II::ASURES.
Lessee hereby acknowledges that the rental
payable to Lessor hereunder does not include the
cost of guard serVlce or other security roeasures
and that Lessor shall have no obligation
whatsoever to provlcle sane.
Lessee assumes no
responsibillty for the protectlon of Lessee, its
employees and a~ents, lnvitees. customers, and
property from acts of third parties.
2t
. .
7.
Except as expressly !1Iodifled hereln,
all other
terms and covenants set forth ln the Lease shall remaln the
same and shall be in ful l force i'l.nd effect.
IN WITNESS W~ICP-COF, the partles hereto have caused this
NOUlficatlon of AgreeMent to be executed on the day and year
flrst above wrltten.
LESSOR:
CITY OF Sl\lHh ~lONICA,
a il1u!llcipal corporatlon
By
JOl!'>! H. ALSCHULER, JR.
Clty ~lanager
i\P['ROVCD JiB TO FOl:Ul:
RC'BL:R:r 11. [lYCRS
C~ty httorney
LEssee:
By
22
tfcz.r- (JtJtf
-f~
'- -$
r"-' .,-
~......-- '--
6-F: PIER TENANTS: CounciLmember Jennin~s moved to approve the
Letter of Intent, which will accompany the lease termination not~ce
to Pier tenants whose businesses were destroyed during winter
storms, with the following language change in paragraph three,
sentence two: after the word "Before," add "entering into
negotiations for." Second by Counc~lmember Conn. The mot~on was
approved by the following vote:
Council Vote: Unan~mous1y approved 6-0
Absent: Mayor Edwards
CITY COUNCIL MINUTES
July 12, 1983