SR-01-23-1979-6KSanta Monica, CalifL -nia January 10, 1979
TO: Mayor and City Council
JAN a s 197s
FROM: City Staff
SUBJECT: Assignment of Lease, Skipper's on the Santa Monica Pier
Introduction FEB 1 3 197
This report covers the request for the approval of the assignment of
the lease of Mr. Danny Frink dba Skipper's on the Santa Monica Pier
as part of the overall restoration of the Merry -Go -Round building,
and recommends approval by the City Council.
Background
On July 11, 1978,the City Council granted leases to the Knight-
Cruickshank Company for the building housing the Merry -Go -Round and
the adjacent area. The only area within that building previously under
lease was that held by Mr. Danny Frink. Since Mr. Frink did not want
to participate in the extensive investment required to the building,
and has several business interests elsewhere, in order to codify
the repairs to the building, the under structure, and to the Merry -
go- Round, the lessee arranged with the Knight- Cruickshank Company to
open an escrow for the purchase of that lease. (see exhibit "A ")
The new lessees plan to keep the present menu with prices affordable
to the lower income public. They are offering (see exhibit "B ") to,
the City an increase in the guarantee from the present $2988. per year
to $7500. per year, a 151.% increase. In return, the City would
agree to extend the term of the lease to 25 years with two 5 year
options to coincide with the other leases of Carousel Park.
This assignment has the advantage of having all of the building under
one management during the restoration and construction, and facilitates
the completion of the architect's plans to open up the walls of the
Carousel building into a park -like atmosphere. FE( /BQl- /31979
JAN 2 3 1979
I
Although the offer dated November 29, 1978 originally proposed a
drop in percentage rental to the City from 12%to 10 %, subsequent
negotiations have resulted in a continuation of the 12% percentage
rental to the City.
Recommendation
it is the recommendation of the city staff that the City Council approve
the assignment of the lease of Mr. Danny Frink dba Skipper's to the
Knight - Cruickshank Company, and authorize the City Manager to execute
the appropriate documents.
Exhibit "A" Escrow Documents
"B" Letter, November 29, 1978
Oct' Addendum 1
Prepared by: Jeremy Ferris
Peter Kipp
0
v
BANKOFAMERICA
NATIONAL TRUST ANO SAVINGS ASSOCIATION
Santa Honica
Santa )Bonita
_ OFFICE
—CALIFORNIA
218- 25918 -1
_ Escrow No,
Norma JOnO3
Escrow Officer
BULK SALE ESCROW INSTRUCTIONS
Bank of America National Trust and Savings Association, August lA 19!8
Gentlemen:
In consideration of your acting as escrow holder herein, it is agreed that you shall in no case or event be liable for the failure of any
of the conditions of this escrow or damage caused by the exercise of your discretion in any particular manner, or for any other reason,
except gross negligence or willful misconduct with reference to the said escrow, and you shall not be liable or responsible for your
failure to ascertain the terms or conditions, or to comply with any of the provisions of, any agreement, contract or other document
filed herewith or referred to herein, nor shall you be liable or responsible for forgeries or fraudulent impersonations.
It is further agreed that if any controversy arises between the parties hereto or with any third person, with respect to the subject
matter of this escrow, its terms or conditions, you shall not be required to determine the same or take any action in the premises, but
you may await the settlement of any su roversy by final appropriate legal proceedings or otherwise as you may require,
notwithstanding anything in th wing instructions to the contrary, and in such event you shall not be liable for interest or
damage,_
IT IS UNDERSTOOD that fees and usual charges agreed upon for your services hereunder shall be considered compensation for
your ordinary services as contemplated by these instructions, and in the event that the conditions of this escrow are not promptly
fulfilled or that you render any service hereunder not provided for in the following instructions, or that there is any assignment of any
interest in the subject matter of this escrow or modification hereof, or that any controversy arises hereunder or that you are made a
party to, or intervene in, any litigation pertaining to this escrow or the subject matter thereof, you shall be reasonably compensated
for such extraordinary services and reimbursed for all costs, attorney fees and expenses occasioned by such default, delay, controversy
or litigation and you shall have the right to retain all documents and /or other things of value at any time held by you hereunder until
such compensation, fees, costs and expenses shall be paid, the undersigned hereby jointly and severally promising to pay such sums
aa......,a . . - ._ .. .. ... ._
I
MEMO
PAID OUTSIDE OF ESCROW $
3 0.' 000
CASH THROUGH ESCROW
BALANCE OF EXISTING NOTE E.
'� 15, ✓VJQ
NEW NOTE
OTHER
55,()0()
TOTAL CONSIDERATION $
_ OFFICE
—CALIFORNIA
218- 25918 -1
_ Escrow No,
Norma JOnO3
Escrow Officer
BULK SALE ESCROW INSTRUCTIONS
Bank of America National Trust and Savings Association, August lA 19!8
Gentlemen:
In consideration of your acting as escrow holder herein, it is agreed that you shall in no case or event be liable for the failure of any
of the conditions of this escrow or damage caused by the exercise of your discretion in any particular manner, or for any other reason,
except gross negligence or willful misconduct with reference to the said escrow, and you shall not be liable or responsible for your
failure to ascertain the terms or conditions, or to comply with any of the provisions of, any agreement, contract or other document
filed herewith or referred to herein, nor shall you be liable or responsible for forgeries or fraudulent impersonations.
It is further agreed that if any controversy arises between the parties hereto or with any third person, with respect to the subject
matter of this escrow, its terms or conditions, you shall not be required to determine the same or take any action in the premises, but
you may await the settlement of any su roversy by final appropriate legal proceedings or otherwise as you may require,
notwithstanding anything in th wing instructions to the contrary, and in such event you shall not be liable for interest or
damage,_
IT IS UNDERSTOOD that fees and usual charges agreed upon for your services hereunder shall be considered compensation for
your ordinary services as contemplated by these instructions, and in the event that the conditions of this escrow are not promptly
fulfilled or that you render any service hereunder not provided for in the following instructions, or that there is any assignment of any
interest in the subject matter of this escrow or modification hereof, or that any controversy arises hereunder or that you are made a
party to, or intervene in, any litigation pertaining to this escrow or the subject matter thereof, you shall be reasonably compensated
for such extraordinary services and reimbursed for all costs, attorney fees and expenses occasioned by such default, delay, controversy
or litigation and you shall have the right to retain all documents and /or other things of value at any time held by you hereunder until
such compensation, fees, costs and expenses shall be paid, the undersigned hereby jointly and severally promising to pay such sums
aa......,a . . - ._ .. .. ... ._
I
The undersigned, Transferor in this escrow, Dan Frir3e
will hand you a Bill of Sale of the stork°irKtade- fixtn�s, goodwill and trade :.etas and leasehold interest®
ofa. certain restaurant —
business known as sk, oer a
located at 220 Sa.Zts .ioaica Pier Santa Monica Califor -ata
The undersigned, Transferee in this escrow, Sajta Mooiea Carousel Park Corp
hands you herewith $ 54't•0 , and will hand you $ 29, 504.0 Notice to Creditors, and trots for $25,400.00.,
nd
and if a Security Agreement is to secure part of the purchase price, Transferee will also hand you a Financing Statement, duly
executed, all of which you are authorized and instructed to accept, hold and disburse as follows: Count tes at
1. Record the Notice(s) in the Office of the County recorder of
Les An3elet y(' )
least 10 days before date specified in paragraph 4.
2. Publish a copy of such Notice(s) in a newspaper of general circulation published in the appropriate Judicial District and /or
County in which the above referred to personal property is located. Said Notice shall be published not less than 10 days before date
specified in paragraph 4.
3. Send a copy of such Notice(s) by Registered or Certified Mail to the County Tax Collector in the County or Counties in which
the above referred to personal property is located, at least 10 days before date specified in paragraph 4.
4. Bold the B'di of Sale, cash deposited, and other documents until the n-' !h day of December. 119 78
S. On or after said date, unless bills of creditors have been filed in excess of the funds deposited and providing Transferee and
Transferor have complied with their respective requirements, deliver said Bill of Sale and
to the Transferee, and deliver to Transferor, or order, the Note secured by the Security Agreement, if any, and other documents to
which he may be entitled. File the Financing Statement, if any, in the Office of the Secretary of State at Sacramento. Pay escrow fees
TRU-258 7.74
Address: 11952 Darlington Ave #29 Ica Angeles
Telephone:
z
828 -5947 or 395 -7114
Address:166O Oceat Avetr 6 #6, SantIa Monica 90401
Telephone:
383 -6629 or 395 -5512
M
BAiNKOFAMERICA MEMO
NATIONAL TRUST A NGSAVINGS ASSOCIATION -
PAID OUTSIDE OF ESCROW 3 _
and all bills approved by the Transferor, withholding in escrow the amount of any unapproved bills for later adjustment, plus at least
fifty per cent thereof, and pay the balance to Transferor as hereinafter provided..
In the event bills of creditors and other items chargeable to Transferor exceed cash through escrow and additional funds required
are not deposited by Transferor, you will hold funds and documents deposited herein for further instructions of the undersigned.
6. After all bills are paid or adjusted, pay the balance to Transferor as hereinafter provided.
It is understood that the within instructions, authorizations and agreements are for the benefit of the parties hereto only, and are
not intended to constitute an assignment either legal or equitable to or in favor of any person or persons not a party to this escrow or
to create in any person or persons not a party hereto any interest either legal or equitable in the property being transferred through
this escrow or the consideration paid therefor.
YOU WILL ASSUME NO LIABILITY FOR THE PAYMENT OF ANY INSURANCE, PERSONAL PROPERTY TAX, SALES
TAX, BEVERAGE TAX, SOCIAL SECURITY OR UNEMPLOYMENT INSURANCE DEDUCTIONS, OR ANY OTHER TAX, IT
BEING UNDERSTOOD THAT SUCH MATTERS WILL BE PAID OR ADJUSTED OUTSIDE OF THE ESCROW. IT IS FURTHER
UNDERSTOOD THAT SHOULD YOU BE DIRECTED TO MAKE ANY SUCH PAYMENTS OF TAXES OR INSURANCE, SAME
MAY OR MAY NOT CONSTITUTE FULL OR FINAL PAYMENT THEREOF.
Transferee may at his option instruct you in writing before delivery of documents or disbursement of funds not to deliver any
documents or disburse any funds until such time as Transferee herein advises you that he has satisfied himself chat Transferor has
obtained releases or waivers, or authorized payment through escrow, of taxes affecting business described herein.
It is understood that you are to make no examination of the property nor of the title thereto, and that unless otherwise provided
herein you are not concerned with any conditional sale contract, lease contract, or security agreement that may affect the herein
referred to personal property, and are not to be responsible for the delivery of any papers other than described herein.
Regardless of the consummation of this transaction, without limiting the joint and several liability of the undersigned for all
compensation, fees, costs and expenses herein, the transferor and transferee each agree to pay one -half, unless otherwise provided, of
all of your usual charges.
Unless otherwise expressly provided, proration herein, if any, are to be made on basis of a 30 day month, as follows: personal
property taxes on figures to be furnished you by the transferor and approved by the transferee and such figures to be construed as
covering the period from July 1 to June 30, inclusive; principal and interest on encumbrances or contracts based on statements by
secured party, or holder thereof or holder for collection'. interest on new encumbrances by endorsement on notes; and, rents on basis
of statement furnished by transferor and approved by transferee. Assume that insurance premiums are paid and transfer on behalf of
the parties hereto any insurance policies (except Employe's Liability) as handed you. Forward such policies, upon close of escrow to
agent with the request that insurer consent to such transfer or attach secured party's clause or other additions pr correction, and that
agent thereafter forward such policies to parties entitled thereto.
The expression ,close of escrow," as used herein, shall mean the date you are authorized to disburse funds and deliver documents
pursuant to the provisions of paragraph 5.
The following adjustments only are required in this escrow: Prorate hone.
7
Closing of this escrow to subieet to: (1) Buyer securing a 25 year lersae with two -five
year options (2) Seller depositing- into escrow Releases from the Board of Equalization
and Department of Rmploywent--Devo2o V --'- -"
Escrow will be given further Vistrur_tiois regarding lease deposit.
Disposition of transferor's funds (indicate by "X "):
( ) a. Credit account of
your Office.
RM) b. Mail check to address below.
( ) c. Other: .
at
In the event that the conditions of this escrow have not been fulfilled on the date designated in paragraph 4, you are instructed, .
nevertheless, to complete the escrow at any time thereafter as soon as the conditions have been fulfilled and without recording and
publishing a new notice to creditors unless otherwise specifically instructed herein, or the undersigned, or either of them, shall have
made written demand upon you for the return of money and instruments deposited by them.
Each of the undersigned states that he has read the foregoing it ff tuAdd(: 8esiiL � tor�RA1i011
bv:
aariy Lerink Transferor Transferee
Transferor
Address: 11952 Darlington Ave 42, Los A 291 e;
820 -5947 or 395 -7114
Telephone:
KOy w• 'I"Li1""""1`tansferee
Address1660 Oces-i Avenue 66, £ants 14onics 90401
383 -6629 or 395 -5512
Telephone:
0
L; 13ANKOFA[;AERICA
NATIONAL TRUST AND SAVINGS ASSOCIATION
Tot Mr. Danny Frink
11952 Darlington Avenue #2 Date August 23, 1978
Los Angeles, California 90049
Escrow No. 218- 25918 -J
Frink to Knight
Dear Mr. Frink:
which was opened at this office, we enclose the following items for your
In connection with our above numbered escrow,
approval, signatures and /or completion:
_._ Escrow Instruction
Statement of Information
.._ Deed
Trust Dead (and Note)
_ ----- Beneficiarfs Statement
Inventory
SIGN AND RETURN ONE COPY OF THE
ENCLOSED INSTRUCTIONS OR PAPERS;
2nd COPY IS FOR YOUR RECORDS.
—1 COMPLETE IN DETAIL, SIGN AND
f RETURN TO US.
SIGN & ACKNOWLEDGE BEFORE A NOTARY
EXACTLY THE WAY YOUR NAME APPEARS
ON DOCUMENTS, AND RETURN TO US.
SIGN, WHERE MARKED, TO INDICATE
_YOUR- APPROVAL OF PAPERS AND
RETURN THEM TO US. 2nd COPY IS
FOR YOUR RECORDS.
When retuming the above papers to us we would appreciate your also sending us the.following:
Fire Insurance Policy-
_ ^ Latest Tax Bill "-
A return envelope is enclosed
for your contimriience.
Sincerely your,
I Jones
Escrow Officer
a
/VV^
�a
November 29, 1978
Mr. Kipp
Director of Santa Monica Pier
Santa Monica Pier
Santa Monica, Ca. 90401
Dear Mr. Kipp:
We have purchased the remaining balance of Mr. Dan Frinks lease on
Skippers Restaurant. This, of course, is subject to city approval.
The acquisition of Skippers is germane to the overall plan of the
Carousel Park Project.
We plan to keep the menu at Skippers the same as it is at present.
We realize that this type of menu does not produce as high of an
income as the operations in the other three corners of the building.
Hoever, fulfills a
to lowsincomeo food
consumer.
On the other hand we do expect to increase the overall volume of
Skippers three -fold. Therefdre, we are prepared to offer the City
of Santa Monica a minimum rental of $7,500 a year against 10% of the
gross of the business.
Our escrow on Skippers will close January 1, 1979. It is important
that we have a new lease at that time so that we may start renovation
of the building as soon as possible.
Sincerely,
(/Jack Knight
JK /cc
CA RLK:SSS.:mc Santa ML_ica, California
Council Mtg. 1 -2.� 19
ADDENDUM NO. 1
ThiA ad�d-ndum shall be attached to and become'
part of Contract No. ,
(City Council Series), being
the lease and agreement'@ntered into between the City of
Santa Monica and Mr. Jack "'Knight, assignee of Danny Frink, dba
Skipper's.
THE.PARTIES HERETO AGREE AS FOLLOWS:
1, Paragraph 1 is hereby amended and as amended
shall read as follows: _
1. TERM ``\
ase, hereinafter ref erred
The term of this le
to as the "Lease Term" shall be twenty\;ive (25) years, commencing
on February 1, 1979 and expiring on Janu \ry 31, 2004, unless sooner
terminated as provided below.
a ended as follows:
2. Paragraph 2.1 is hereby
"Two thousand nine hundred eighty\ -eight dollars"
($2,988.) is deleted, and "Seven thousand five hundred dollars"
($7,500.00) is substituted in lieu of the delete amount.
3. Paragraph 2.2 is hereby amended a d as amended
shall read as follows:
2,2 ADDITIONAL PERCENTAGE RENTAL AND NTAL
OFF -SET
In addition to the minimum monthly rental, \durin�
the Lease Term lessee shall pay to lessor percentage rental due
and payable on or before the tenth (10th) day of the month
immediately following the month in which the cumulative gross
sales, during the lease year covering said month, exceeds the
CA RLK:SSS:mc
Council Mtg. 1 -23; Santa nica, California
minimum annual sales. Said minimum annual sales shall be determined
by dividing the minimum annual rental by the percentage established
below. Said percentage rental shall be in the amount of twelve
percent (12 %) of said cumulative gross sales in excess of said
minimum annual sales.
Thereafter, during each and every month of the lease year,
lessee shall pay to lessor percentage rental in the amount of twelve
percent (12 %) of the gross sales made during each month. Said
percentage rental shall be due and payable on or before the tenth
(10th) day of the month immediately following said month.
For purposes of this Article 2.2, said cumulative gross
sales shall only be cumulated during each and every lease year of
the lease term and not from lease year to lease year.
as follows:
4. .Paragraph 243 is hereby added to the lease to read
2.3 PERCENTAGE RENTAL OFF -SET
Initially, no additional percentage rental shall be
paid by the Lessee to the Lessor until a rental off -set not to
exceed Eight Hundred Twenty Nine Thousand Two Hundred and Eighty
($829,280) Dollars, less costs if any that the Lessor may advance
for repairs to the carousel or the Wurlitzer organ, has been received
by lessee for repairs to the carousel building, the carousel, the
Wurlitzer organ, the pier decking, stringers, caps, pilings and
associated supports within underneath and appurtenant to the area
covered by this Addendum, but in no case later than five (5) years
from the date minimum annual rental commences to be due.
Lessee agrees that the City Engineer or his representative
shall be the sole determining authority as to what pier repair
ded the repair contract, when
CA RLK:SSS:mc
Council Mtg. 1 -23=
Santa' )nica, California
the work has been done to the satisfaction of the City, what the
actual costs are for pier repairs or other capital expenditures,
and all other matters regarding such repairs or expenditures.
Upon Lessee's being reimbursed through a rental
off -set as above for carousel building, and pier repairs, Lessee
shall pay an additional percentage rental as recited in paragraph
2.2 of this Lease.
5, Paragraph 3.1 is hereby added to the lease to
read as follows:
3.1 APPROVAL OF PRICE CHANGES
The - Lessor shall have the right of approval of any
menu or item price changes.
This agreement represents the full and complete understanding
of every kind or nature whatsoever between the parties hereto
with respect to the premises and all preliminary negotiations and
agreements of whatsoever kind or nature are merged herein. No
verbal agreement of implied covenant shall be held to vary the
provisions hereof.
CITY OF SANTA MONICA,
a municipal corporation
By
CITY MANAGER
(Lessor)
SKIPPER'S
By
JACK KNIGHT
(Lessee)
CA RLK:SSS:mc
Council Mtg. 1 -23
APPROVED AS TO FORM:
Santa Mo.- ca, California