AGENDA REPORT
Meeting Date: April 12, 2022
Item Number:
To: Honorable Mayor & City Council
From: Logan Phillippo, Policy & Management Analyst
Jonathan Gernes, Management Analyst
Subject: APPROVAL OF FOURTH AMENDMENT TO LEASE BY AND
BETWEEN THE CITY OF BEVERLY HILLS AND MELIK S, INC. AT
444 NORTH REXFORD DRIVE
Attachment: 1. Fourth Amendment to Lease
RECOMMENDATION
Staff recommends City Council approve the Fourth Amendment to Lease by and between the City of Beverly Hills and Melik S, Inc. (the “Tenant”) at 444 North Rexford Drive.
INTRODUCTION
Due to continued substantial financial impacts related to COVID-19, the Tenant, located within the City Library building at 444 North Rexford Drive, currently has an unpaid balance of $70,898.87 representing monthly rent from March 1, 2021 through March 31, 2022. The proposed amendment modifies the monthly rent payable from April 2020 through June 2022 to $500 plus (i) 10% of the preceding month’s gross sales exceeding $5,000 and less than $15,000, plus (ii) 20% of the preceding month’s gross sales exceeding $15,000.
Concurrently with its execution and delivery of the Fourth Amendment to Lease, Tenant is to pay $2,956.12, which is the unpaid rent since April 1, 2020.
DISCUSSION
The City entered into a lease at 444 North Rexford Drive with Melik S, Inc. in 2006. The Tenant operates Kelly’s Coffee & Fudge Factory, which offers a variety of specialty coffee drinks, sandwiches, and baked goods. The tenant was selected to operate in the Library building after the completion of a request for proposals (RFP) process. The café is considered an amenity for patrons of the Library and civic center complex given there are limited food and beverage options in the immediate vicinity.
D-14
Meeting Date: April 12, 2022
Under the Los Angeles County Department of Public Health orders to mitigate the spread of COVID-19, the Tenant’s business has been operating under County-mandated restrictions that have substantially impacted its finances since March 2020. The Tenant’s business reported a significant decline in transactions due in part to its location within the Beverly Hills Library, and the Library’s closure to the public in 2020. The Tenant was required to reduce operating hours and provide a limited menu to help reduce the business’s losses. In November 2020, the City approved the Third Amendment to Lease with the Tenant to temporarily reduce the rent payable through February 28, 2021.
Beginning March 1, 2021, the Tenant has been responsible for repaying the unpaid rent balance accrued through February 28, 2021, in equal monthly installments alongside the full monthly rent obligation through February 29, 2024.
As of March 31, 2022, the Tenant has reported continued substantial financial impacts related to the COVID-19 Pandemic and has accrued a balance of $70,898.87 representing unpaid rent obligations from March 2021 through March 2022. This amount is in addition to the $31,878.94 that has been deferred and is to be amortized through February 29, 2024 under the Third Amendment to Lease.
The proposed Fourth Amendment to Lease provides the following key terms:
Reduced Rent: From April 1, 2020, through the month ending June 30, 2022, the Tenant will pay $500 per month plus (i) 10% of the preceding month’s gross sales exceeding $5,000 and less than $15,000, plus (ii) 20% of the Tenant’s gross sales exceeding $15,000, however, in no event shall the monthly payment exceed $4,926 through February 28, 2022, nor exceed $5,221.56 through June 30, 2022; Rent Balance: The Tenant shall pay as of the execution of this amendment the amount owed under this Fourth Amendment ($2,956.12) and shall have no further obligations to unpaid rent balances beyond the revised rent amounts.
FISCAL IMPACT
The proposed lease amendment modifies the monthly rent payable from April 1, 2020, to June 30, 2022, to a minimum of $500 plus (i) 10% of the preceding calendar month’s gross sales above $5,000 and under $15,000, plus (ii) 20% of the preceding calendar month’s gross sales over $15,000. The current monthly rent is $4,926.00 (increasing annually according to annual change in the Consumer Price Index) plus an additional monthly $1,386.04 for repayment of the deferred unpaid rent balance accrued between April 2020 and February 2021 under the Third Amendment to Lease. As of March 31, 2022, $99,821.69 is to be abated under the Fourth Amendment to Lease. If only the minimum $500 monthly rent is collected from April 2022 through June 2022, an additional $14,164.68 in anticipated rent would be abated under this amendment.
There are no commissions associated with this lease amendment.
Gabriella Yap,
Deputy City Manager
Approved By
Attachment 1
-1-
B0785-0001\2611877v1.doc
FOURTH AMENDMENT TO LEASE
THIS FOURTH AMENDMENT TO LEASE (this “Fourth Amendment”) is dated as of _________________ __, 2022, and is entered into by and between the CITY OF BEVERLY HILLS (“Landlord”), and MELIK S, INC., a California corporation (dba “Kelly’s Coffee and Fudge Factory”) (“Tenant”).
R E C I T A L S
A. Landlord and Tenant executed that certain City of Beverly Hills Retail Lease dated June 27, 2006, and amended it by amendments dated July 7, 2009, September 5, 2017 and November 17, 2020 (the “Lease”).
B. A Memorandum of Lease dated June 27, 2006 was recorded on September 7, 2006 as Document No. 062001523 in the Official Records of Los Angeles County, California.
The First Amendment to Lease was recorded on August 6, 2019 as Document No. 20091210345 in such Official Records, and the Second Amendment to Lease was recorded on October 26, 2017 as Document No. 14411792 in such Official Records; however, neither the Third Amendment to Lease nor any Memorandum thereof was recorded.
C. Landlord and Tenant desire to further amend the Lease.
A G R E E M E N T
NOW, THEREFORE, in consideration of the foregoing recitals, and the mutual covenants and terms hereof and in the Lease, and for other good and valuable consideration, the sufficiency of which is hereby acknowledged, Landlord and Tenant agree as follows:
1. Monthly Rent Payments.
(a) From April 1, 2020 through June 30, 2022, the monthly rent for the Premises shall be: (i) Five Hundred and No/100 Dollars ($500.00) per calendar month, payable by the first (1st) day of each calendar month; plus (ii) ten percent (10%) of the amount by which the preceding calendar month’s Gross Sales (as hereinafter defined) exceed $5,000, but such amount to which such percentage is applied shall not exceed $15,000; plus (iii) twenty percent (20%) of the amount by which the preceding calendar month’s Gross Sales exceed $15,000. The rent described in clauses (ii) and (iii) shall be payable by the tenth (10th) day of the following calendar month.
On or before the date of this Fourth Amendment (which is dated as of the date of approval by the Landlord, this Fourth Amendment having been already executed by the Tenant), Tenant shall pay to Landlord the sum of $2,956.12 (which is the underpaid rent from April 1, 2020 through the date of this Fourth Amendment), as rent.
As used herein, the term “Gross Sales” shall mean all income paid to or for the benefit of Tenant relating in any way to Tenant’s business in the Premises. Tenant shall deliver to Landlord concurrently with its payment of monthly rent a statement of Gross Sales certified by Tenant’s DocuSign Envelope ID: 415D4E07-3E54-414E-BD52-64D398D29844 -2-
B0785-0001\2611877v1.doc
Chief Financial Officer as being true and correct. Tenant shall keep reasonable records of all Gross Sales for a period of three (3) calendar years, and shall provide Landlord with copies thereof requested by Landlord in writing promptly after each such request. Additionally, Landlord shall at all times have the right to inspect and audit such records at the Premises. (b) Commencing on July 1, 2022, the Monthly Base Rent for the Premises shall be Five Thousand Two Hundred and Twenty-One and 56/100 Dollars ($5,221.56) per month, but shall thereafter adjust annually, on March 1, 2023, and on each subsequent anniversary thereof (each an “Adjustment Date”) as follows: The Monthly Base Rent shall increase by a percentage equal to the percentage increase in the United States Department of Labor, Bureau of Labor Statistics’ Consumer Price Index for All Urban Consumers for the Los Angeles-Riverside-Orange County statistical area (CPI U) (1982 84=100) (“CPI”), which shall be calculated by multiplying the then-current Monthly Base Rent amount by a fraction, the numerator of which shall be the December CPI immediately prior to the applicable Adjustment Date and the denominator of which shall be the December CPI of the year preceding the numerator year; however, in no event shall Monthly Base Rent decrease. Should the Bureau of Labor Statistics discontinue the publication of the Index, or publish the same less frequently or alter the same in some other manner, then the most nearly comparable index or procedure as reasonably determined by Landlord shall be substituted therefor. In no case shall the annual adjustment be less than three percent (3%) of the monthly rent stated in effect immediately prior to the adjustment, nor greater than six percent (6%) of the monthly rent stated in effect immediately prior to the adjustment.
Landlord shall notify Tenant in writing of each such annual adjustment; however, Tenant shall continue to pay Monthly Base Rent at the then-current rate until Landlord gives Tenant written notice of adjustment, but delay in giving such notice shall not waive the increase in Monthly Base Rent, and upon delivery of an adjustment notice, Tenant shall pay to Landlord all previous unpaid adjustments concurrently with Tenant’s next scheduled payment of Monthly Base Rent.
(c) A default by Tenant under this Fourth Amendment shall constitute a default under the Lease.
2. Time of Essence. Time is of the essence of every provision herein in which time is a factor.
3. Conflict. In the event of a conflict or inconsistency between the terms and conditions of the Lease and the terms and conditions of this Fourth Amendment, the terms and conditions of this Fourth Amendment shall prevail and control.
4. Continuing Effect. Except as specifically modified hereby, the Lease shall remain unaffected and unchanged by reason of this Fourth Amendment.
5. Counterparts. This Fourth Amendment may be executed in any number of counterparts, each of which, when executed and delivered, shall be deemed to be an original, and all of which, taken together, shall be deemed to be one and the same instrument.
6. City Manager Authority. The City Manager of Landlord shall have the authority to execute this Fourth Amendment and any and all other documents contemplated by this Fourth Amendment.
DocuSign Envelope ID: 415D4E07-3E54-414E-BD52-64D398D29844 -3-
B0785-0001\2611877v1.doc
7. Amendment of Recorded Memorandum of Lease. Upon its execution and delivery of this Fourth Amendment, Tenant shall concurrently execute and deliver a duly acknowledged counterpart of an Amendment to Memorandum of Lease in the form attached hereto as Exhibit “A”.
8. DocuSign. The parties may use DocuSign to execute and deliver this Fourth Amendment, but Tenant must deliver an executed original of the Amendment to Memorandum of Lease to Landlord, duly acknowledged, so that it can be executed and recorded by Landlord.
IN WITNESS WHEREOF, Landlord and Tenant have executed this Fourth Amendment as of the date and year first above written.
LANDLORD:
CITY OF BEVERLY HILLS
By: ________________________
Robert Wunderlich, Mayor
ATTEST:
Huma Ahmed, City Clerk
APPROVED AS TO FORM:
Laurence S. Wiener, City Attorney
APPROVED AS TO CONTENT:
George Chavez, City Manager
TENANT: MELIK S, INC.,
a California corporation
By:
Karo Alex Sayadyan,
President
By:
Goar Nazliyan,
Chief Financial Officer
DocuSign Envelope ID: 415D4E07-3E54-414E-BD52-64D398D29844 -4-
B0785-0001\2611877v1.doc
EXHIBIT “A”
FORM OF AMENDMENT TO MEMORANDUM OF LEASE
(Attached.)
DocuSign Envelope ID: 415D4E07-3E54-414E-BD52-64D398D29844 -5-
B0785-0001\2611877v1.doc
RECORDING REQUESTED BY, AND
WHEN RECORDED MAIL TO:
City of Beverly Hills
Office of the City Manager
455 North Rexford Drive
Beverly Hills, California 90210
Attn: City Clerk
(Space Above Line For Recorder’s Use)
Exempt from Recording Fees under California Government Code 27383.
AMENDMENT TO MEMORANDUM OF LEASE
THIS AMENDMENT TO MEMORANDUM OF LEASE (this “Amendment”) is dated as of ___________________, 2022, and is entered into by and between the CITY OF BEVERLY HILLS (“Landlord”), and MELIK S, INC., a California corporation (dba “Kelly’s Coffee and Fudge Factory”) (“Tenant”).
R E C I T A L S
A. Landlord and Tenant executed that certain City of Beverly Hills Retail Lease dated June 27, 2006, and amended it by three amendments dated July 7, 2009, September 5, 2017 and November 7, 2020 (the “Lease”).
B. A Memorandum of Lease dated June 27, 2006 was recorded on September 7, 2006 as Document No. 062001523 in the Official Records of Los Angeles County, California. (“Memorandum”). The First Amendment to Lease was recorded on August 6, 2019 as Document No. 20091210345 in such Official Records, and the Second Amendment to Lease was recorded on October 26, 2017 as Document No. 14411792 in such Official Records; however, neither the Third Amendment to Lease nor any Memorandum thereof was recorded.
C. Landlord and Tenant have entered into a Fourth Amendment of Lease (“Fourth Amendment”) and consequently, Landlord and Tenant desire to amend the Memorandum, as modified by the recorded First and Second Amendments to Lease, and reflect that there was a Third Amendment to Lease.
A G R E E M E N T
NOW, THEREFORE, Landlord and Tenant hereby amend the Memorandum to reflect that the Lease has been amended as set forth in the Fourth Amendment and the Third DocuSign Envelope ID: 415D4E07-3E54-414E-BD52-64D398D29844 -6-
B0785-0001\2611877v1.doc
Amendment to Lease (and the other amendments to the Lease described in Recital A above). The Lease, as amended, is incorporated herein by this reference.
IN WITNESS WHEREOF, Landlord and Tenant have executed this Amendment.
LANDLORD: CITY OF BEVERLY HILLS
By:
George Chavez, City Manager
TENANT: MELIK S, INC.,
a California corporation
By:
Karo Alex Sayadyan,
President
By:
Goar Nazliyan,
Chief Financial Officer
DocuSign Envelope ID: 415D4E07-3E54-414E-BD52-64D398D29844 B0785-0001\2611877v1.doc
State of California )
County of Los Angeles )
On _________________________, before me, ,
(insert name and title of the officer)
Notary Public, personally appeared ,
who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature (Seal)
A notary public or other officer
completing this certificate verifies only
the identity of the individual who signed
the document to which this certificate is
attached, and not the truthfulness,
accuracy, or validity of that document.
DocuSign Envelope ID: 415D4E07-3E54-414E-BD52-64D398D29844 B0785-0001\2611877v1.doc
State of California )
County of Los Angeles )
On _________________________, before me, ,
(insert name and title of the officer)
Notary Public, personally appeared ,
who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature (Seal)
A notary public or other officer
completing this certificate verifies only
the identity of the individual who signed
the document to which this certificate is
attached, and not the truthfulness,
accuracy, or validity of that document.
DocuSign Envelope ID: 415D4E07-3E54-414E-BD52-64D398D29844 B0785-0001\2611877v1.doc
State of California )
County of Los Angeles )
On _________________________, before me, ,
(insert name and title of the officer)
Notary Public, personally appeared ,
who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature (Seal)
A notary public or other officer
completing this certificate verifies only
the identity of the individual who signed
the document to which this certificate is
attached, and not the truthfulness,
accuracy, or validity of that document.
DocuSign Envelope ID: 415D4E07-3E54-414E-BD52-64D398D29844 Certificate Of Completion
Envelope Id: 415D4E073E54414EBD5264D398D29844 Status: Sent Subject: Please DocuSign: Fourth Amendment to Lease - Melik S, Inc.
Source Envelope:
Document Pages: 9 Signatures: 3 Envelope Originator:
Certificate Pages: 3 Initials: 0 Jonathan Gernes
AutoNav: Enabled
EnvelopeId Stamping: Enabled
Time Zone: (UTC-08:00) Pacific Time (US & Canada)
455 N. Rexford Drive
Beverly Hills, CA 90210
[email protected]
IP Address: 104.175.193.255
Record Tracking
Status: Original
1/10/2022 5:10:34 PM
Holder: Jonathan Gernes
[email protected]
Location: DocuSign
Signer Events Signature Timestamp
Goar Nazliyan
[email protected]
Security Level: Email, Account Authentication
(None)
Signature Adoption: Drawn on Device
Using IP Address: 47.39.117.114
Sent: 1/11/2022 3:49:24 PM
Resent: 3/29/2022 2:43:22 PM
Viewed: 3/29/2022 5:48:04 PM
Signed: 3/29/2022 6:43:58 PM
Electronic Record and Signature Disclosure:
Not Offered via DocuSign
Karo Alex Sayadyan
[email protected]
Security Level: Email, Account Authentication
(None)
Signature Adoption: Drawn on Device
Using IP Address: 47.39.117.114
Sent: 1/11/2022 3:49:25 PM
Resent: 3/29/2022 2:43:23 PM
Viewed: 3/29/2022 5:44:00 PM
Signed: 3/29/2022 5:44:47 PM
Electronic Record and Signature Disclosure:
Not Offered via DocuSign
Bruce Galloway for
[email protected]
Security Level: Email, Account Authentication
(None)
Signature Adoption: Pre-selected Style
Using IP Address: 208.87.234.201
Sent: 3/29/2022 6:43:59 PM
Viewed: 3/30/2022 7:16:53 AM
Signed: 3/30/2022 7:17:00 AM
Electronic Record and Signature Disclosure:
Not Offered via DocuSign
Logan Phillippo
[email protected]
Senior Management Analyst
City of Beverly Hills
Security Level: Email, Account Authentication
(None)
Sent: 3/30/2022 7:17:02 AM
Electronic Record and Signature Disclosure:
Not Offered via DocuSign
George Chavez
[email protected]
Security Level: Email, Account Authentication
(None)
Signer Events Signature Timestamp
Electronic Record and Signature Disclosure:
Not Offered via DocuSign
Robert Wunderlich
[email protected]
Security Level: Email, Account Authentication
(None)
Electronic Record and Signature Disclosure:
Not Offered via DocuSign
Huma Ahmed
[email protected]
Security Level: Email, Account Authentication
(None)
Electronic Record and Signature Disclosure:
Not Offered via DocuSign
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Logan Phillippo
[email protected]
Senior Management Analyst
City of Beverly Hills
Security Level: Email, Account Authentication
(None)
Sent: 1/11/2022 3:49:25 PM
Electronic Record and Signature Disclosure:
Not Offered via DocuSign
Adrianne Tarazon
[email protected]
Security Level: Email, Account Authentication
(None)
Electronic Record and Signature Disclosure:
Not Offered via DocuSign
Dorina Mohan
[email protected]
Security Level: Email, Account Authentication
(None)
Electronic Record and Signature Disclosure:
Not Offered via DocuSign
Jackie Perez
[email protected]
Security Level: Email, Account Authentication
(None)
Electronic Record and Signature Disclosure:
Not Offered via DocuSign
Carbon Copy Events Status Timestamp
Lourdes Sy-Rodriguez
[email protected]
Security Level: Email, Account Authentication
(None)
Electronic Record and Signature Disclosure:
Not Offered via DocuSign
Witness Events Signature Timestamp
Notary Events Signature Timestamp
Envelope Summary Events Status Timestamps
Envelope Sent Hashed/Encrypted 1/11/2022 3:49:25 PM
Payment Events Status Timestamps